T Clarke – the 2018 Annual General Meeting
Ticker ($CTO.L) – Full Market Listing (FTSE Fledgling)
Share price 85.5p (market cap £36m approx.)
Book value £16.5m approx. / EV £24m approx
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I was pleased to attend on Friday (18th) my first AGM for T Clarke (CTO), a UK based building services and information / communications technology (ICT) business that has been in existence since 1889.

http://www.tclarke.co.uk/

http://www.tclarke.co.uk/images/uploads/documents/TClarke_Annual_Report_2017.pdf

I have been aware of this business for a number of years given my engineering background but have only recently invested after it was flagged to me by another value investor who suggested I might be interested.

Having reached the giddy heights of 291p in 2005 during the last property boom the share price sank to sub 40p by late 2011 and has very slowly recovered to the current £36m valuation (85.5p) albeit with some ups and downs along with way.

AGM Trading Update
This was fairly impressive, but investors may have been a little disappointed with the PBT expectation of £7m and adjusted earnings per share of 13.2p, which are about the same as 2017. Also revenue is anticipated to be lower than 2017 at £300m.

Nevertheless, the order book has jumped significantly to £368m from £337m since December and half of 2019’s revenues have already been secured along with a decent chunk of 2020 revenue.

The directors are optimistic: “we are seeing no lack of opportunities, but we maintain a strict policy only to bid for projects that meet our internal risk analysis and where we are comfortable with the covenant and market reputation of the contractual counterparty.”

Investors may be concerned that the company is heavily dependent on prestigious office building work in London. From reviewing the list of projects won in the last six weeks it is clear that TClarke are equally orientated to medical/research lab/hospital work (e.g. Royal Orthopaedic Hospital, Royal Cornwall Hospital) and then there are schools, universities (St John’s Durham), manufacturing facilities (Rolls Royce Derby, BAE systems) and data centres (Virtus Data Centre, Slough).

The trading update finishes with an optimistic flourish, “TClarke has made an excellent start to the year and the Board looks to the future with continued confidence”. My impression from our conversations is…

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