Interim Results
Clarke(T.) PLC
18 August 2006
Interim Results for the six months to 30 June 2006
T CLARKE SIGNALS IMPROVING OUTLOOK
T. Clarke plc, the electrical engineering and contracting company, has announced
its interim results for the six months to 30 June 2006.
• Profit Before Tax up to £4.0m (2005: £3.6m)
• Turnover increased by 9% to £100m (2005: £92m)
• Basic EPS up 10% to 6.76p (2005: 6.14p)
• Order book grows to £175m
• Interim Dividend up 5% to 3.675p (2005: 3.5p)
Major completions include:
- DrKW HQ, London
- Nomura House, London
- Chiswick Park, Building 5, London
- Plots 3, 4 and 5 More London
- Wrigleys, Plymouth
Major projects won include:
- RBS Aldgate Union, London
- Mizuho Bank, London
- Framwell Gate Hotel, Durham
- Golden Jubilee Hospital, Glasgow
- McMillan Academy, Middlesborough
Pat Stanborough, Chief Executive commented:
' The market has been challenging during the first half of the year. Margins
have remained under pressure, but we are positive about the future. Our order
book is growing and the prospects for our core business in London are very good.
' In the build up to the Olympics in 2012, there are many new major
infrastructure projects that are planned to start in 2008. This combined with a
number of large commercial office schemes in central London that are on the
starting blocks, bodes well. All these new projects will put increasing demands
on the construction industry. In anticipation of this work, we are making sure
that the group is in the right shape to take advantage of these opportunities.
We have made strides to invest in the ability of the group to manage and deliver
this projected increase in workload.
' In light of the positive outlook for the group, we have raised the interim
dividend by 5%.'
-ends-
Date: 18 August 2006
For further information contact:
T. Clarke plc cityPROFILE
Pat Stanborough, Chief Executive Simon Courtenay
John Daly, Finance Director Tel: 020-7448-3244
Tel: 020-7358-5000
web: www.tclarke.co.uk
Interim Results to 30th June 2006 - T. Clarke plc
Chairman's Statement
Group turnover during the half year was 9% up at £100.2m ( 2005: £91.6m ). The
like for like increase was 7%. Profit before tax was up by 10% to £4.0m ( 2005:
£3.6m ), whilst earnings per share also rose by 10% to 6.76p ( 2005: 6.14p ). In
the light of these figures and the improving prospects for the Group, the Board
has decided to increase the interim dividend to 3.675p per share, a 5% increase
over last year's payment of 3.5p per share.
Cash stood at £2.0m at the end of June (£4.8m at 31 December 2005) reflecting
the build up of debtors and work in progress.
Whilst there was some disparity of performance between the various regional and
Home Counties operations of the Group, a common feature was the pressure on
operating margins which all experienced. The wider spread of customer base and
business type, which our acquisitions in recent years have brought us, were
therefore important in enabling us to achieve an advance in turnover and profits
during what has proved to be a difficult period.
Initial positive progress has been made in bringing the regional operations more
closely together, so that all can share in best practice and benefit from the
financial strength and experience of the parent company.
Looking forward, the prospects for the Group are improving. The size of our
current order book, and the likely upswing in construction industry activity in
the latter part of this year and beyond, give us confidence for the future.
However, bearing in mind the timing of major contract completions, it is likely
that the current year results will be broadly similar to those achieved in 2005.
R.J.Race
Chairman
18th August 2006
Business Review
Operations Review
Our core operations are key to our future growth, operating currently at around
75% of capacity.
Whilst seeking sensible savings in central overheads we must avoid making false
economies, we have a big investment in our skilled workforce and will need all
our resources to meet the expected demand for our services.
The regional board is actively involved in the 'harmonisation' of our regional
businesses, which includes achieving improvements in management efficiency,
tougher financial controls and cost reductions. Our companies are experiencing
mixed fortunes. In the provinces we have suffered unexpected bad debts and
unforeseeable increases in material costs (copper prices increased by over 100%
between October 2005 and April 2006). In the South East there has been some
recent slippage in the timing of two major projects.
Whilst still challenging, the industry is showing signs of improvement in all
areas. There is growing demand for new commercial office space in Central London
and many large schemes will come on stream during 2007. Infrastructure works
associated with 2012 will 'kick-off' in 2008 and will put increasing demands on
the industry as a whole.
Completions during the period under review included; DrKW, Gresham Street;
Nomura House, St. Martins Le Grand; Plots 3, 4 & 5 More London; Wrigleys,
Plymouth; Nationwide BS, Swindon; Lanhydrock Golf Club and Hotel; Loch Elk
Dunoon Waste Water Treatment; David Wilson Homes, Edinburgh; Buxton Spring
Bottling Plant; Cromwell College, Chatteris; RV1 Histo Pathology Department,
Newcastle; McCarthy & Stone, Grappenhall; Altrincham Library; Norwich City
Football Club; seven Waitrose Stores; HMP Lewes; Cardiology Unit, Harrogate
Hospital and Christchurch College, Canterbury.
Current Major Projects include; Romford and Havering Hospital; Allen & Overy,
Bishopsgate; 201 Bishopsgate and Broadgate Tower; White City Retail Development;
Unilever House; Shell Centre; O2 Arena; Drake Circus Shopping Centre, Plymouth;
Bordeaux Quay, Bristol; Oceaneering, Rosyth; Wilkies Carpet Store, Leeds; Burton
College; Peterborough Hospital; Howlands Farm, Durham University; McCarthy &
Stone, Llangollen; Barry Town Hall; Grand Arcade, Cambridge; twelve Waitrose
Stores; Warrington Bus Interchange; Grand Theatre, Leeds and HMP Lindholme.
Recently Won Contracts include; RBS, Aldgate Union; Mizuho Bank; Golden Jubilee
Hospital, Glasgow; Campsfield House Detention Centre, Derby; Framwell Gate
Hotel, Durham; McMillan Academy, Middlesborough; South Lynn Millennium Village;
Leigh Sports Village and Huddersfield Media Centre.
Outlook
Overall our business has achieved improvement in a tough market place. The
forward order book currently stands at £175m, of which £85m is scheduled for
completion this year. We have seen some setbacks but the strength of our brand
and the order pipeline for 2006 and 2007 position us well to deliver our
strategy for continuous improvement, customer satisfaction, profitable growth,
enhancing value and increasing returns to our shareholders, whilst managing the
risk associated with the industry.
Financial review
Turnover and operating profit
Turnover for the half year increased by 9% to £100m (2005: £92m). The Regional
companies contributed £58m to turnover (58%) compared with £43m (47%) in 2005.
Group operating profit improved by 13% to £4.1m (2005: £3.6m) and the margin
improved slightly from 3.96% to 4.09%. The group administrative costs increased
by £1.8m but this included an unusually high bad debt experience (£0.34m 2005:
£0.14m) and one off staff costs that will result in lower costs in the future.
Profit before tax
Profit before tax of £4.0m for the half year was 10% better than at the same
period last year (£3.6m) and included a net finance charge of £69,000 (2005: net
investment income £26,000).
Profit after tax
Profit after tax was £2.70m (2005: £2.45m) reflecting a tax charge of £1.33m
(2005: £1.20m) giving an effective tax rate of 33% (2005 33%).
Earnings per share and dividends
Earnings per share went from 6.14p to 6.76p an increase of 10%. The interim
dividend will be 3.675% up 5% on last year (2005: 3.5p).
Cash flow
The net cash absorbed by operating activities was £0.5m compared with a net cash
generation of £2.3m in 2005. After the final dividend payment of £2.8m (2005:
£2.7m), no expenditure on acquisitions (2005: £4.7m) net capital expenditure of
£0.3m (2005: £0.3m) and payments for tax and finance costs there was a net
decrease of cash and cash equivalents of £2.8m (2005: £5.6m). The increased
difficulty in collecting debtor monies particularly in the regions which
resulted in an increase of net debtors and work in progress of £4.54m (2005:
£2.16m) was a major influence on the group cash performance. However, the
indications are still that this position will improve strongly during the
remainder of the year.
Pension obligations
The movement in the discount rate in recent months has been a significant factor
in the actuarial gain in the defined benefit pension scheme of £1.9m, net £1.3m
after deferred tax (2005: £0.033m loss and £0.024m loss). This improvement is
reflected in the net assets on the balance sheet.
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 06 2006 30 06 2005 31 12 2005
£,000 £,000 £,000
Revenue 100,197 91,646 193,729
Cost of Sales 84,416 78,168 165,848
--------------------------------------------------------------------------------
Gross Profit 15,781 13,478 27,881
Administrative
Expenses 11,684 9,850 19,282
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Profit from Operations 4097 3,628 8,599
Investment Income/Finance Cost (69) 26 (45)
--------------------------------------------------------------------------------
Profit Before Taxation 4,028 3,654 8,554
Taxation 1,329 1,204 2,845
--------------------------------------------------------------------------------
Profit for the period from continuing
operations 2,699 2,450 5,710
--------------------------------------------------------------------------------
Earnings per Share 6.76p 6.14p 14.3p
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GROUP STATEMENT OF RECOGNISED INCOME & EXPENSE
Actuarial
gains/(losses) on
defined benefit pension scheme 1,893 (33) (538)
Tax on items
taken direct to equity (568) 9 161
--------------------------------------------------------------------------------
Net income recognised
directly in equity 1,325 (24) (377)
Profit for the period 2,699 2,450 5,710
--------------------------------------------------------------------------------
Total recognised income & expense
for the period 4,024 2,426 5,333
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
6 months to 6 months to 12 Months to
30 06 2006 30 06 2005 31 12 2005
£'000 £'000 £'000
Non Current Assets
Goodwill 14,385 14,358 14,385
Tangible Fixed Assets 8,335 7,921 8,384
Deferred Taxation 61 36 61
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22,781 22,315 22,830
--------------------------------------------------------------------------------
Current Assets
Construction contracts inventories 15,373 14,394 17,715
Debtors 28,836 22,304 21,954
Cash and Cash Equivalents 2,039 5,562 4,828
--------------------------------------------------------------------------------
46,248 42,260 44,497
--------------------------------------------------------------------------------
Total Assets 69,029 64,575 67,327
--------------------------------------------------------------------------------
Current Liabilities
Bank Overdraft 3,238 2,786 2,311
Corporation tax liabilities 1,427 1,748 2,273
Creditors and Accruals 37,154 34.399 35,465
--------------------------------------------------------------------------------
41,819 38,933 40,049
--------------------------------------------------------------------------------
Net Current
Assets 4,429 3,327 4,448
--------------------------------------------------------------------------------
Non Current Liabilities
Retirement Benefit Obligation 3,004 3,885 4,284
Other 388 676 404
--------------------------------------------------------------------------------
3,392 4,561 4,688
--------------------------------------------------------------------------------
Total Liabilities 45,211 43,494 44,737
--------------------------------------------------------------------------------
Net Assets 23,818 21,081 22,590
--------------------------------------------------------------------------------
Equity
Share Capital 3,995 3,995 3,995
Share Premium 1,234 1,234 1,234
Profit and Loss Account 18,556 15,818 17,328
Revaluation Reserve 33 34 33
--------------------------------------------------------------------------------
Total Equity 23,818 21,081 22,590
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 06 2006 30 06 2005 31 12 2005
£,000 £,000 £,000
Net Cash from Operating Activities
(see note 5) (556) 2,292 3,535
--------------------------------------------------------------------------------
Investing Activities
Interest received 75 130 243
Purchase of Tangible
Fixed Assets (287) (263) (1,438)
Receipts on Disposal of Fixed Assets 12 - 1,531
Purchase of Subsidiary Undertakings - (4,676) (4.717)
--------------------------------------------------------------------------------
Net Cash used in
Investing Activities (200) (4,809) (4,381)
--------------------------------------------------------------------------------
Financing Activities
Equity Dividends Paid (2,796) (2,663) (4,061)
Repayments of
obligations under
finance leases (164) (205) (326)
Increase/(decrease) in
bank overdrafts 927 (263) (1,149)
--------------------------------------------------------------------------------
Net Cash (used in)/from
Financing Activities (2,033) (3,131) (5,536)
--------------------------------------------------------------------------------
Net Increase/(Decrease)
in cash and cash equivalents (2,789) (5,648) (6,382)
Cash and Cash
Equivalents at
beginning of period 4,828 11,210 11,210
--------------------------------------------------------------------------------
Cash and Cash
Equivalents at end of period 2,039 5,562 4,828
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to 12 Months to
30 06 2006 30 06 2005 31 12 2005
£'000 £'000 £'000
Balance at start of period 22,590 20,318 20,318
Profit for period 2,699 2,450 5,710
Interim dividend paid - - (1,398)
Prior year final
dividend paid (2,796) (2,663) (2,663)
Actuarial
gains/(losses) on
defined benefit
pension scheme. 1,893 (33) (538)
Corporation tax
provision on pension
benefits. (568) 9 161
Shares issued on acquisition - 17 17
Premium on shares issued - 983 983
--------------------------------------------------------------------------------
Balance at end of
period 23,818 21,081 22,590
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Notes to the interim financial statements
1. Accounting policy
The accounts have been prepared using accounting policies consistent with those
adopted for the year ended 31st December 2005. 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. (2005: 39,928,297 and profit attributable
to shareholders of £2,699,000 (2005: £2,450,000).
3. Interim Dividend
An interim dividend of 3.675p per share (2005 : 3.50p) was approved by the board
on 17th August 2006 and has not been included as a liability at 30 June 2006.
This dividend will be payable on 20th September 2006 to shareholders on the
register on 1st September 2006. The shares will go ex-dividend on 30th August
2006.
4. Pension commitments
The present value of the defined benefit pension scheme, the related past and
current service costs were measured using the project 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 2006 June 2005 Dec 2005
£,000 £,000 £,000
Present value of defined benefit
obligations 21,102 19,271 21,904
Fair values of assets 16,810 13,721 15,784
--------------------------------------------------------------------------------
Deficit in scheme 4,292 5,550 6,120
Related deferred tax asset 1,288 1,665 1,836
--------------------------------------------------------------------------------
Liability recognised in the
balance sheet 3,004 3,885 4,284
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The key assumptions used:
Rate of increase in salaries 4.10% 4.40% 3.90%
Rate of increase in pensions in
payment 2.70% 2.60% 2.60%
Discount rate 5.20% 5.30% 4.70%
Inflation assumption 3.10% 2.90% 2.90%
Expected return on scheme assets 6.80% 7.00% 6.20%
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5.Reconciliation of Operating Profit to Net Cash from Operating Activities:-
Unaudited Unaudited Audited
6 Months 6 Months Year
Ended Ended Ended
30 06 2006 30 06 2005 31 12 2005
£,000 £,000 £,000
Profit from Operations 4,097 3,628 8,599
Depreciation Charges 478 418 905
Increase in Provisions 45 (5) 11
Profit on Sale of Fixed
Assets 4 - (1,014)
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Operating cash flows before
movements in working
capital 4,624 4,041 8,501
(Increase) / Decrease in
Debtors (6,882) 6,703 (2,145)
(Increase) / Decrease in
Work in Progress 2,342 (8,867) (3,170)
Increase / (Decrease) in
Creditors 1,669 1,783 3,507
--------------------------------------------------------------------------------
Cash generated by
operations 1,753 3,660 6,693
Corporation tax paid (2,195) (1,314) (2,975)
Interest Paid (114) (54) (183)
--------------------------------------------------------------------------------
Net cash from operating
activities (556) 2,292 3,535
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6. The interim report will be circulated to members on 22 August 2006, from
which date copies will be available at or on application to 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.
This information is provided by RNS
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