REG - TClarke PLC - Final Results
09/03/2022 07:00
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RNS Number : 0892E TClarke PLC 09 March 2022
TClarke plc
Results for the year ended 31 December 2021
TClarke delivers in the First Year of £500m Revenue Growth Plan
TClarke plc ("the Group" or "TClarke"), the Building Services Group, announces
its preliminary results for the year ended 31 December 2021.
Financial Highlights
RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2021 2020 Change
Revenue £327.1m £231.9m +41%
Operating profit - adjusted £8.8m £6.0m +47%
Profit before tax-adjusted £7.8m £5.1m +53%
Earnings per share-adjusted 14.99p 10.29p +46%
Net cash at year end £5.3m £10.2m -48%
Total dividend per share 4.85p 4.4p +10%
Operating profit-reported £8.8m £2.1m +319%
Profit before tax-reported £7.8m £1.2m +550%
Basic earnings per share-reported 14.99p 2.87p +422%
2020 adjusted operating profit, profit before tax and earnings per share are
stated before amortisation of intangible assets and restructuring costs. There
were no such costs in 2021.
Operational Highlights
· Performance accelerated into the second half of 2021
· Forward Order Book reaches record level of £534m
· Successfully positioned winning larger projects outside of London
· Data Centre business expanding
· Further progress made in broadening healthcare and smart building
offering
· The Group remains on track to achieve its growth plan to reach
£500m annual revenue
Mark Lawrence, CEO commented
"The business is in excellent shape having finished 2021 on a high and
delivering the first year of our £500m revenue growth plan, winning a wide
range of work across our chosen market sectors. This is clearly reflected in
the strength of our order book which again has reached a new record high.
We offer our clients the widest possible range of services from a single
contractor, complemented by the depth of our resources.
It is this quality and commitment of our people that gives us real confidence
for the future performance of TClarke."
-ends-
Date: 9(th) March 2022
For further information contact:
TClarke plc
Mark Lawrence Group Chief Executive
Trevor Mitchell Finance Director
Tel: 020 7997 7400
www.tclarke.co.uk (http://www.tclarke.co.uk/)
Cenkos Securities plc (Corporate Broker)
Ben Jeynes (Corporate Finance)
Alex Pollen (Sales)
Tel: 020 7397 8900
www.cenkos.com (http://www.cenkos.com/)
RMS Partners
Simon Courtenay
Tel: 020 3735 551
Chairman's Statement
TClarke has continued to grow and deliver outstanding performance and results
in 2021. Our revenue of £327m has exceeded the target of £300m that we set
at the start of 2021. Our operating profit is £8.8m; over £6.5m of which was
delivered in the last 6 months of the year at a margin of 3.3% as our revenues
accelerated.
The success of our strategies and deliveries, the quality of our products,
services and methods, and the strength and depth of our client relationships
have enabled significant progress to be made in the achievement of our medium
term revenue target of £500m.
While we continue to grow and deliver in our core Engineering Services
markets, we are also delivering significant growth and performance in our
strategic growth sectors, particularly Technology, in which we have developed
capabilities, leadership and new client relationships. These are making a
significant and growing contribution to our revenue growth and target. This
growth and performance is supported by strong financial, management and
delivery disciplines which are constantly and consistently applied across the
Group. The forward order book stands at a record level of £534m, an increase
of 17% on the year, of which £379m represents committed revenue for 2022. The
proportion of the order book represented by Technology has risen to 25% from
10% in 2020.
We know that our shareholders and investors value our progressive dividend
stream. We continue to be fully committed to a progressive dividend policy
while at the same time balancing the needs and interests of all
stakeholders. We are proposing a 2021 final dividend of 4.1p per share,
which together with the interim dividend paid in October 2021 brings the full
2021 dividend to 4.85p per share - an increase of 10%.
TClarke is committed to becoming a more sustainable business, delivering
improved environmental and sustainability targets and performance. It is
TClarke's ambition to be a Business Champion with Build UK demonstrating our
commitment to the Construction Leadership Council's zero carbon change
programme CO(2)nstruct Zero.
Our growth and success is delivered through the skills, experiences, focus and
commitment of our people, subcontractors and suppliers in all areas of the
business. We continue to invest heavily in our resources to ensure we have
the capacity to deliver our growth ambitions. We are strongly committed to
developing and adding to the skills and experience of our people through our
national apprenticeship schemes and our personal and management development
frameworks, and to be the employer of choice in our markets. For example, we
currently have 195 apprentices representing 16% of our people whilst the
industry norm is just 5%. This is a significant investment made with the long
term belief in TClarke.
I look forward to 2022 and beyond, confident in our ability to deliver our
growth strategy. We have the capacity, a healthy order book and many
opportunities. The TClarke brand is very strong, built upon our reputation for
high quality engineering, reliability, and delivery on time. This is made
possible through the collective efforts of all our people. It is their
outstanding effort that has allowed us to be so optimistic for the future and
I want to thank them all for their hard work and dedication.
Iain McCusker
Chairman
8th March 2022
Chief Executive's Report
Ready to Deliver
TClarke is a trusted engineering partner to blue chip clients and principal
contractors. Within this report I set out our strategic plans and achievements
for the past year but more importantly describe with confidence how the
business is achieving its goals.
Last year we committed to a strategy of moving TClarke to the next level and
we described very clearly and concisely our ambitions, whilst adapting quickly
and decisively to the continually changing circumstances that the country
faced.
TClarke aims to be a £500m revenue business with sustainable margins of 3%
supporting a progressive dividend policy. Our business is underpinned by
strict financial and operational controls and strong governance. Our growth
ambitions are supported and financed without the need for often risky and
distracting acquisitions.
New Revenue Streams
Within our business model we target five market sectors. Our established
annual revenues for the business are around £330m and our strategy to reach
revenues of £500m is based upon these five established sectors and the new
revenue streams described below which should easily generate an additional
£170m of annual revenues.
· Securing larger projects outside of London with typical project
values of £5m - £10m and £10m+.
· Securing data centres particularly in the UK, with typical project
values of £25m - £50m with the European data centre market remaining an
aspiration.
· Securing healthcare projects across the UK with typical project
values ranging from £200k to £20m+.
· Developing innovative smart building solutions which bring recurring
revenue streams.
I am confident that our £500m revenue target can be achieved by organic
growth whilst remaining true to the established engineering strengths of the
business.
This strategy is evidenced by the continuous growth of our forward order book;
our order book stood at a record £534m as at 31st December 2021 (£456m 31st
December 2020). The order book growth has been achieved whilst continuing to
follow our selective tendering approach.
Investing in the Best People
Differentiated by the quality of our people and their relentless drive to
deliver the most successful projects, the ability to grow our business and
meet our ambitions could not be achieved without the dedication of our great
teams. Our careful attention to resource planning will ensure we always match
our capacity to our available teams.
Being one of the few industry trainers of apprentices across the UK leads to a
wealth of future talent, designed to deliver both engineering operatives and
future leaders in volume and quality to meet our needs. The ability to deliver
projects primarily with a trusted reliable workforce ensures that our
reputation for quality and delivery on time is more secure compared to that of
our competitors whose models are dependent upon the use of sub-contractors.
Scale and Resource Across the UK
TClarke is very well established in its London heartland and 2021 has seen
significant progress in ensuring that we can offer our clients the same scale
and breadth of services across the UK. During 2021 we expanded our capacity in
our Engineering Services Divisions in Falkirk, Peterborough and Newcastle; the
increased opportunities are now translating into additional revenues for these
locations.
Our teams in Manchester and Peterborough have been successful in securing four
projects valued in excess of £25m for an international financial institution
at several locations including two solar farm projects covering 1,800 m(2) and
our new Oxford office celebrated its successful opening by securing a project
at the prestigious Oxford Saïd Business School.
We continue to invest in our own purpose-built facility at Stansted, that
supports Modern Methods of Construction (MMC). The use of offsite
prefabrication benefits our clients and can bring programme certainty and
factory standard quality, and by utilising less on-site resources gives us
more capacity to deliver additional revenues as a part of our strategy to
achieve £500m revenue.
Previously our regional teams would have focused on the smaller to medium
sized projects, often teaming up with local partners. Today from our three
operating divisions that serve 20 UK locations, we offer the full range of
Engineering Services, alongside all the complementary technology and smart
building solutions, backed up by technical expertise.
TClarke is proud to be based in the communities it serves and wants to ensure
that we offer our teams the best environments to collaborate, share knowledge
and build exciting careers. In October our team in Manchester moved to larger
premises in Salford Quays, in early 2022 our teams in Falkirk will be moving
to new offices in Eurocentral, Scotland and our London Head Office will
relocate to 30 St Mary Axe whereby our teams will operate from a single
productive floor space.
Exponential Growth in Data Centre Opportunities
The growth in the demand for data centres has been fuelled by the needs of
cloud storage, more devices being connected to the internet (IoT), gaming,
streaming services, e-commerce, the arrival of 5G and the working from home
revolution.
The UK data centre market is the largest in Western Europe. Brexit and the
switch to new UK specific data protection legislation has led many
organisations to open or expand data centre facilities. Several large-scale
developers have entered the data centre market in the last 12 months. Arizton
Advisory and Intelligence predict the UK data centre market size to reach
£6bn by 2026.
At the end of 2021 TClarke were active on 5 data centre projects with a
collective value of £150m with further opportunities of additional phases.
Depending on the pace of our clients' expansion plans this value could grow by
negotiation by an additional £75m. Through 2022 we are aware of and tracking
bidding opportunities of circa £900m and a further pipeline of project
opportunities that will build out well into 2026.
The strength of the TClarke balance sheet and the depth of our engineering
resources means we expect to see strong growth within our revenues in the
technologies sector. This could represent at least 30% of our expanded annual
revenues in 2022 and beyond.
Healthcare, Healthcare, Healthcare
The 2021 UK Government Spending Review confirmed a total of £100bn of
investment in economic infrastructure up to 2024-25. The Chancellor of the
Exchequer announced that this includes a £5.9bn capital investment in the
National Health Service (NHS) in addition to the £12bn per year that was
promised in September 2021. The NHS has launched a six year National Framework
Agreement for the provision of Smart Building Solutions, TClarke has
successfully secured a place on this framework agreement.
Secured orders in healthcare schemes now stand at £42m. In addition, we
have preferred bidder status for a further £63m of projects. Whilst it takes
longer to convert a tender to a secured order in this sector there are
tremendous opportunities both as a participant in one of the seven frameworks
we are on, but also from standalone capital projects.
Example of secured projects within the Group include:
· Modernising Medicine - Kings College Hospital NHS Foundation Trust
· Emergency Department Refurbishment - Royal Devon and Exeter Hospital
NHS Foundation Trust
· New MRI and Oncology Unit - Royal Cornwall Hospitals Trust
· Infrastructure Upgrade - University Hospitals Bristol and Weston NHS
Foundation Trust
· Emergency Department Refurbishment - Luton and Dunstable University
Hospital
A Smart New World
Our clients are setting ambitious decarbonisation plans. Smart Buildings - new
or retrofits - will be integral to UK plans to reduce its carbon footprint and
control energy consumption. The global smart building market is projected to
triple in the next decade. The increasing costs of energy and legislation
related to the environment in areas such as carbon emission and pollution are
all driving building owners towards smart building solutions.
Our technologies business recently secured the Smart Buildings contract for
the European Bank of Redevelopment at One Bank Street, including the role of
Master Systems Integrator.
Taking part in the smart buildings revolution involves the design and
installation of the building's mechanical, electrical, security and safety
systems - all existing TClarke strengths. As we move forward each project
opportunity that we bid has the ability to lead to a Smart Building
Opportunity for our Technologies Division. Furthermore, by utilising our
shared workforce and project teams, the more of our services from our
Mechanical, Electrical and Technologies teams that are selected, the more
compelling the value engineering solutions we can offer to our clients.
The Specialist Contractor of Choice
Risks and rewards are highest for larger, more complex projects such as
commercial offices, luxury hotel and leisure complexes, hospitals and major
education or research facilities. This drives clients and principal
contractors towards engineering services providers such as TClarke which have
the necessary skills, governance and financial strength required to mitigate
those risks.
In London the excellent performance of our engineering services teams has not
only completed significant schemes such as Project Green and 1 Newman Street,
but has also been rewarded with landmark wins such as the Apple fit out at
Battersea Power Station, Plot A2 at Canada Water and Building S4 at the
International Quarter London, our 4th successive project win at this
development in Stratford.
TClarke has experienced a mini boom in luxury and high-end hotels. We
successfully completed the Pan Pacific Hotel, and the Hilton City Canopy Hotel
in London and work continues on the Peninsular Hotel at Hyde Park Corner. This
is another major market sector where the quality of our work and collaborative
approach is highly valued and has led to TClarke becoming the preferred
contractor on significant hotel schemes in London's West End.
Our UK North and UK South teams both won significant major residential
projects as part of our targeted tendering approach. Building our order book
with these quality residential projects and quality relationships is key to
sustainable long-term growth and repeat business. The trend towards more
complex, high value residential developments featuring a range of luxury
facilities has substantially increased the complexity and value of package of
works in those projects.
Our Infrastructure teams remain focused on the major areas of public sector
infrastructure where complexity and new technologies play to our skill and
quality advantages. During the year we enjoyed ongoing success in education,
delivering 63 education projects and adding 36 new education projects in the
forward order book.
Educational projects that were completed last year include:
· Foxgrove School, Leatherhead
· Nanksar Primary School, Hillingdon
· Pinner High School, Harrow
· Tring School, Hertfordshire
· Turing House, Richmond
· Uckfield College, East Sussex
In summer 2021, a further 50 new schools were announced within the second
round of the UK government's School Rebuilding Programme which is due to
deliver 500 rebuilding projects over the next decade we are confident that
this sector will continue to be a good revenue stream.
Summary and Outlook
Our people share our vision for the future of TClarke. We are a business with
people on the ground delivering our projects. Their innovation, commitment and
dedication is something that this business is rightly proud of.
Our order book will translate to record revenues; TClarke can offer our
clients the widest possible solutions from a single contractor, utilising our
resources so that they are assured we have the ability to deliver. That's
why we believe TClarke remains the contractor of choice for so many and we
remain focused on maintaining our market leading position.
We start 2022 in excellent shape and well placed to deliver a strong future
performance.
Mark Lawrence
Group Chief Executive Officer
8th March 2022
Group Financial review
The Group has delivered a very strong set of results for the year, with
revenue returned to 2019 levels and a record run rate in quarter 4 of £100m
revenue providing confidence for our prospects for 2022 and beyond. We end
2021 with a record order book of £534m (2020: £456m), with £379m of this
due for delivery in 2022 alone (2020: £257m due for delivery in 2021). The
rate of growth is particularly strong within the Technologies sector where we
are currently working on five large data centre schemes totalling £150m.
Technologies are forecast to represent a third of the Group's turnover for
2022, up from c.15% at present. We reported at the outset that revenue and
profit for 2021 would be slanted towards the last six months of the year and
this has proved to be the case, with revenue and profit both accelerating
rapidly during the period. The operating margin of 3.3% for the second half of
the year restores profit margin. Our growth has not been driven by
acquisitions and this will remain our policy going forward.
Performance
Underlying operating profit was £8.8m (2020: £6.0m) on revenue of £327.1m
(2020: £231.9m). There have been no non-underlying items in 2021 (2020:
£3.9m) and therefore underlying and reported numbers are the same for 2021.
Earnings per share were 14.99p for the year (2020: 2.87p) on an operating
margin of 2.7% (2020: 2.6%). TClarke remains financially secure, ending the
year with net cash of £5.3m with £25m of bank facilities at its disposal.
Finance costs were £1.0m (2020: £0.9m), comprising: a £0.2m increase in
bank interest and facility fees to £0.5m (2020: £0.3m); the Group's defined
benefit pension scheme interest charge of £0.4m (2020: £0.5m); and an
interest charge of £0.1m arising from IFRS 16 (2020: £0.1m).
The tax charge for the year was £1.5m (2020: nil), reflecting a more
representative effective rate of tax for the Group, with the 2020 charge
having been heavily impacted by prior year tax adjustments. TClarke maintains
an open and collaborative working relationship in all interactions with HMRC.
The Group paid its 2020 final dividend in full in May 2021 and has maintained
its interim dividend. The Board is proposing a final dividend of 4.1p (2020:
3.65p) which if approved at the AGM will be recorded and paid on 20 May 2022.
Total proposed dividend therefore rises to 4.85p (2020: 4.4p), an increase of
10%. The dividend is covered 3 times by underlying earnings. TClarke
recognises that many of its shareholders invest for dividends.
Summary of financial performance
2021 2020
£m £m
Revenue 327.1 231.9
Operating profit
-Underlying(1) 8.8 6.0
-Reported 8.8 2.1
Profit before tax
-Underlying(1) 7.8 5.1
-Reported 7.8 1.2
Profit after tax
-Underlying(1) 6.3 4.3
-Reported 6.3 1.2
Profit for the year 6.3 1.2
Earnings per share
-Underlying(2) 14.99p 10.29p
-Reported 14.99p 2.87p
Dividend per share 4.85p 4.4p
1. Underlying operating profit, profit before tax and operating
margin are stated before amortisation of intangible assets and restructuring
costs.
2. Underlying earnings per share is calculated by dividing
underlying profit after tax by the weighted average number of shares in issue.
3. Dividend per share represents the interim and final dividend
proposed or paid for the year in question.
Forward Order Book
2021 2020 %
Market sector £m £m change
Infrastructure 104.6 99.9 5%
Residential & Hotels 102.7 115.1 (11%)
Technologies 134.8 46.8 188%
Engineering Services 174.0 175.2 (1%)
Facilities Management 18.1 19.0 (5%)
Total 534.2 456.0 17%
Forward Order Book comprises jobs which are secured through contracts or
letters of intent.
London
Revenue from our London operations rose to £189.4m (2020: £134.6m),
generating an underlying operating profit of £6.2m (2020: £4.9m). Underlying
operating margin was 3.3% (2020: 3.6%). The growth in revenue has been
primarily driven by the success of our data centre offering where in addition
to our current five live projects the tendering pipeline identifies many
further opportunities. Our core Engineering Services have also continued to
deliver strongly, with work on a number of high-profile shell and core
commercial and hotel developments, with many of which offering future fit-out
opportunities.
UK South
Revenue from UK South rose to £67.1m (2020: £55.1m), with the region
delivering an underlying operating profit of £2.6m (2020: £2.7m) and giving
rise to an underlying operating margin of 3.9% (2020: 4.9%). The region has
developed a high-quality customer base providing a significant quantity of
repeat business and is particularly strong in infrastructure with many
projects being undertaken in defence, education and healthcare.
UK North
Revenue rose to £70.6m (2020: £42.2m) with the region delivering an
underlying operating profit of £3.0m (2020: £0.7m) and giving rise to an
underlying operating margin of 4.2% (2020: 1.7%). This strong performance has
been driven by the completion of our first major engineering services project
in Liverpool, our continued success in winning and delivering a number of
educational projects through our Leeds office and Scotland's residential work.
In addition our Manchester office has recently started work on a significant
engineering services project for a major financial institution.
Forward Order Book
The closing Forward Order Book of £534m represents a 17% increase compared to
last year's, with the largest increase being in respect of Technologies (up
188%), driven by the success of our data centre business.
Cash Flow and Funding
Cash balances totalled £20.3m at 31 December 2021 (2020: £25.2m). The £15m
RCF was drawn down at both 31 December 2021 and 2020, resulting in net cash of
£5.3m at the 2021 balance sheet date (2020: £10.2m). The movement in cash
can be largely attributed to VAT following the introduction of the
Construction Industry reverse charge VAT regime on 1 March 2021 and repayment
of deferred amounts. The Group has also self-funded the increase in turnover,
with working capital increasing by £6.5m over the year.
The Group has a £15.0m revolving credit facility, which is committed until
31st August 2024, and a £10.0m overdraft facility which is repayable on
demand. Interest on overdrawn balances is charged at 2.0% above base rate, and
interest on balances drawn down under the revolving credit facility is charged
at a margin above SONIA, fixed for the duration of each drawdown. The Group
was compliant with the terms of the facilities throughout the year ended 31st
December 2021 and the Board's detailed projections demonstrate that the Group
will continue to meet its obligations in the future.
The Board's projections show that TClarke is expected to maintain a healthy
cash position throughout the next three-year period, and we do not anticipate
seeking any additional facilities during this time.
The Group also has in place £50.1m of bonding facilities (2020: £40.1m), of
which £24.3m were unutilised at 31st December 2021 (2020: £27.0m).
Net Assets and Capital Structure
The Group is funded by equity capital, retained reserves and bank facilities,
and there are no plans to change this structure or to raise new capital.
Shareholders' equity is £26.5m (2020: £15.7m).
Goodwill stood at £25.3m at the year-end (2020: £25.3m). The Board has
undertaken an impairment review in respect of goodwill and has concluded that
no impairment is necessary.
Defined Benefit Pension Scheme Obligations
The most-recent formal actuarial valuation of the Group's defined benefit
pension scheme at 31st December 2018 showed a deficit of £24.9m, representing
a funding level of 59%. Following the valuation the Group committed to a
deficit reduction plan to eliminate the deficit over a 12 year period, and
throughout 2021 it continued to make additional contributions at the agreed
rate of £1.5m per annum. The Group also continues to provide security to the
pension scheme in the form of a charge over property assets up to a combined
market value of £3.1m. A new formal funding valuation is being carried out as
at 31 December 2021 and the results will be reported in next year's Annual
Report & Financial Statements.
The methodology underlying the formal valuation differs from that used for the
annual IAS 19 valuation included in these financial statements, particularly
in respect of the calculation of financial assumptions. When calculated in
accordance with IAS 19 the deficit stood at £23.9m at 31st December 2021,
representing a reduction of £6.3m over the year, recognised primarily through
the Statement of Comprehensive Income. The reduction was predominantly driven
by an increase in the discount rate applied.
Financial Risk Management
The Group's main financial assets are contract and other trade receivables,
and bank balances. These assets represent the Group's main exposure to credit
risk, which is the risk that a counterparty will fail to discharge its
obligations, resulting in financial loss to the Group. The Group may also be
exposed to financial and reputational risk through the failure of a
subcontractor or supplier.
The financial strength of counterparties is considered prior to signing
contracts and reviewed as contracts progress where there are indications that
a counterparty may be experiencing financial difficulty. Procedures include
the use of credit agencies to check the creditworthiness of existing and new
clients and the use of approved suppliers' lists and Group-wide framework
agreements with key suppliers.
We have performed a thorough analysis of our supply chain during the year to
ensure we comply with the Government's new IR35 off payroll working
requirements, a process which will continue in the future.
Accounting Policies
The Group's consolidated financial statements are prepared in accordance with
the requirements of the Companies Act 2006 and in accordance with UK-adopted
international standards. There have been no new accounting policies adopted in
the year.
Trevor Mitchell
Group Finance Director
8th March 2022
Consolidated income statement
for the year ended 31st December 2021
2021 2020
Note Underlying Non-underlying items Total Underlying Non-underlying items Total
£m £m £m £m £m £m
Revenue 3 327.1 - 327.1 231.9 - 231.9
Cost of sales (286.6) - (286.6) (199.0) - (199.0)
Gross profit 40.5 - 40.5 32.9 - 32.9
Administrative expenses
Amortisation of intangible assets - - - - (0.2) (0.2)
Restructuring costs - - - - (3.7) (3.7)
Other administrative expenses (31.7) - (31.7) (26.9) - (26.9)
Total administrative expenses (31.7) - (31.7) (26.9) (3.9) (30.8)
Operating profit 8.8 - 8.8 6.0 (3.9) 2.1
Finance costs (1.0) - (1.0) (0.9) - (0.9)
Profit before taxation 7.8 - 7.8 5.1 (3.9) 1.2
Taxation 4 (1.5) - (1.5) (0.8) 0.8 -
Profit for the financial year 6.3 - 6.3 4.3 (3.1) 1.2
Earnings per share
Attributable to owners of TClarke plc
Basic 5 14.99p - 14.99p 10.29p (7.42)p 2.87p
Diluted 5 13.91p - 13.91p 9.66p (6.97)p 2.69p
Consolidated statement of comprehensive income
for the year ended 31st December 2021
2021 2020
£m £m
Profit for the year 6.3 1.2
Other comprehensive income/(expense)
Items that will not be reclassified to the income statement:
Actuarial gain/(loss) on defined benefit pension scheme 5.6 (6.5)
Revaluation of minority shareholding equity investment - (2.0)
Deferred tax relating to items that will not be reclassified 0.4 1.7
Total other comprehensive income/(expense) for the year, net of tax 6.0 (6.8)
Total comprehensive income/(expense) for the year 12.3 (5.6)
Consolidated statement of financial position
as at 31st December 2021
2021 2020
Note £m £m
Non-current assets
Intangible assets 25.3 25.3
Property, plant and equipment 7.5 8.0
Deferred tax assets 6.4 6.2
Trade and other receivables 4.9 3.6
Total non-current assets 44.1 43.1
Current assets
Inventories 0.4 0.4
Amounts due from customers under construction contracts 51.7 41.7
Trade and other receivables 52.5 34.5
Current tax receivables 0.2 0.7
Cash and cash equivalents 8 20.3 25.2
Total current assets 125.1 102.5
Total assets 169.2 145.6
Current liabilities
Bank loans (15.0) (15.0)
Amounts due to customers under construction contracts (2.9) (1.1)
Trade and other payables (96.3) (77.5)
Obligations under leases (1.6) (1.3)
Total current liabilities (115.8) (94.9)
Net current assets 9.3 7.6
Non-current liabilities
Obligations under leases (1.3) (2.2)
Trade and other payables (1.7) (2.6)
Retirement benefit obligations 7 (23.9) (30.2)
Total non-current liabilities (26.9) (35.0)
Total liabilities (142.7) (129.9)
Total net assets 26.5 15.7
Equity attributable to owners of the parent
Share capital 4.4 4.3
Share premium 4.2 3.8
Revaluation reserve 0.7 0.8
Retained earnings 17.2 6.8
Total equity 26.5 15.7
Consolidated statement of cash flows
for the year ended 31st December 2021
2021 2020
Note £m £m
Net cash (used in)/generated from operating activities 8 (0.6) 3.7
Investing activities
Investment in minority shareholding - (2.0)
Purchase of property, plant and equipment (0.4) (0.2)
Net cash used in investing activities (0.4) (2.2)
Financing activities
New shares issued 0.5 -
Facility fee (0.1) (0.1)
Proceeds from bank borrowing - 15.0
Equity dividends paid (1.9) (1.9)
Acquisition of shares by ESOT (0.9) (0.1)
Repayment of lease obligations (1.5) (1.6)
Net cash (used in)/generated from financing activities (3.9) 11.3
Net (decrease)/increase in cash and cash equivalents (4.9) 12.8
Cash and cash equivalents at the beginning of the year 8 25.2 12.4
Cash and cash equivalents at the end of the year 8 20.3 25.2
Consolidated statement of changes in equity
for the year ended 31st December 2021
Share Share Revaluation Retained
capital premium reserve earnings Total
£m £m £m £m £m
At 1st January 2020 4.3 3.8 0.9 13.9 22.9
Comprehensive income/(expense)
Profit for the year - - - 1.2 1.2
Other comprehensive expense
Actuarial loss on retirement benefit obligation - - - (6.5) (6.5)
Deferred income tax on actuarial loss on retirement benefit obligation - - - 1.7 1.7
Minority shareholding equity investment - - - (2.0) (2.0)
Total other comprehensive expense - - - (6.8) (6.8)
Total comprehensive expense - - - (5.6) (5.6)
Transactions with owners
Transfer on depreciation of freehold property - - (0.1) 0.1 -
Share-based payment credit - - - 0.4 0.4
Shares acquired by ESOT - - - (0.1) (0.1)
Dividends paid - - - (1.9) (1.9)
Total transactions with owners - - (0.1) (1.5) (1.6)
At 1st January 2021 4.3 3.8 0.8 6.8 15.7
Comprehensive income
Profit for the year - - - 6.3 6.3
Other comprehensive income
Actuarial gain on retirement benefit obligation - - - 5.6 5.6
Deferred income tax on actuarial gain on retirement benefit obligation - - - 0.4 0.4
Total other comprehensive income - - - 6.0 6.0
Total comprehensive income - - - 12.3 12.3
Transactions with owners
Transfer of depreciation of freehold properties - - (0.1) 0.1 -
Share-based payment charge - - - 0.8 0.8
Shares acquired by ESOT - - - (0.9) (0.9)
Allotted in respect of share option schemes 0.1 0.4 - - 0.5
Dividends paid - - - (1.9) (1.9)
Total transactions with owners 0.1 0.4 (0.1) (1.9) (1.5)
At 31st December 2021 4.4 4.2 0.7 17.2 26.5
Notes to the preliminary financial information
Note 1 - Basis of preparation
TClarke plc is a public limited company listed on the London Stock Exchange,
incorporated and domiciled in the United Kingdom. The nature of the Group's
operations and its principal activities is providing electrical and mechanical
contracting and related services to the construction industry and end users.
The Company is limited by shares.
This preliminary financial information has been prepared in accordance with
the Disclosure and Transparency Rules of the UK Financial Conduct Authority,
and the principles of UK-adopted international accounting standards and has
been prepared on a going concern basis under the historical cost convention as
modified by the revaluation of land and buildings.
This preliminary financial information does not constitute the statutory
financial statements of the Group. The financial statements themselves were
approved by the Board on 8th March 2022. The report of the auditor on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006. The Annual Report and Financial Statements will be filed with the
Registrar in due course. This preliminary financial information has been
prepared in accordance with the accounting policies disclosed in the full
financial statements.
Note 2 - Significant judgements and sources of estimation uncertainty
The preparation of this financial information in conformity with UK-adopted
international standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial information are set out below.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Revenue and margin
The recognition of revenue and profit on construction contracts is a key
source of estimation uncertainty due to the difficulty of forecasting the
final costs to be incurred on a contract in progress and the process whereby
applications are made during the course of the contract with variations, which
can be significant, often being agreed as part of the final account
negotiation.
Commercial reviews of all live contracts are undertaken on a regular basis,
with all significant contracts being reviewed on a monthly basis. The
Directors also take into account the recoverability of contract balances and
trade receivables, and allowances are made for those balances which are
considered to be impaired. The Group only recognises revenue once there is a
formal contractual entitlement and the recognition criteria of IFRS 15 have
been met. As at 31 December 2021 the Group had approximately £25m (2020:
£15m) of formally instructed, unagreed variations, of which £15m (2020:
£9m) satisfy the highly probable test under IFRS 15 and as such have been
taken to revenue.
Retirement benefit obligations
The costs, assets and liabilities of the defined benefit scheme operated by
the Group are determined using methods relying on actuarial estimates and
assumptions, which are largely dependent on factors outside the control of the
Group. Details of the key assumptions are set out in note 7, and include the
discount rate, expected return on assets, rate of inflation and mortality
rates. The Group takes advice from independent actuaries relating to the
appropriateness of the assumptions. Changes in the assumptions used may have a
significant effect on the income statement, statement of comprehensive income
and the statement of financial position.
Note 3 - Segment information
(i) Reportable segments
The Group provides electrical and mechanical contracting and related services
to the construction industry and end users.
For management and internal reporting purposes, the Group is organised
geographically into three regional divisions: London, UK South and UK North,
reporting to the Board who represent the "Chief Operating Decision-Maker" as
per IFRS 8. The measurement basis used to assess the performance of the
divisions is underlying operating profit, stated before amortisation of
intangible assets and other non-underlying items.
All transactions between segments are undertaken on normal commercial terms.
All the Group's operations are carried out within the United Kingdom, and
there is no significant difference between revenue based on the location of
assets and revenue based on location of customers. The accounting policies for
the reportable segments are the same as the Group's accounting policies
disclosed in note 1. Segmental information is based on internal management
reporting.
(ii) Segment information and revenue analysis - year ended 31st December 2021
London UK South UK North Group costs and Unallocated Total
£m £m £m £m £m
Revenue from contracts with customers 189.4 67.1 70.6 - 327.1
Operating profit 6.2 2.6 3.0 (3.0) 8.8
Finance costs - - - (1.0) (1.0)
Profit before tax 6.2 2.6 3.0 (4.0) 7.8
Taxation expenses - - - (1.5) (1.5)
Profit for the year 6.2 2.6 3.0 (5.5) 6.3
London UK South UK North Total
£m £m £m £m
Business sector
Facilities Management 2.7 13.6 9.7 26.0
Infrastructure 15.1 34.4 29.3 78.8
M&E Contracting 91.7 14.3 10.9 116.9
Residential & Hotels 31.5 4.8 19.6 55.9
Technologies 48.4 - 1.1 49.5
Total 189.4 67.1 70.6 327.1
(iii) Segment information and revenue analysis - year ended 31st December 2020
Group costs
and
London UK South UK North Unallocated Total
£m £m £m £m £m
Revenue from contracts with customers 134.6 55.1 42.2 - 231.9
Underlying operating profit 4.9 2.7 0.7 (2.3) 6.0
Restructuring costs - - - (3.7) (3.7)
Amortisation of intangibles - - (0.2) - (0.2)
Operating profit 4.9 2.7 0.5 (6.0) 2.1
Finance costs - - - (0.9) (0.9)
Profit before tax 4.9 2.7 0.5 (6.9) 1.2
Taxation expenses - - - - -
Profit for the year 4.9 2.7 0.5 (6.9) 1.2
London UK South UK North Total
£m £m £m £m
Business sector
Facilities Management and Frameworks 2.4 9.7 5.7 17.8
Infrastructure 20.6 22.1 16.2 58.9
M&E Contracting 59.4 15.7 6.5 81.6
Residential & Hotels 21.7 7.6 12.8 42.1
Technologies 30.5 - 1.0 31.5
Total revenue 134.6 55.1 42.2 231.9
Note 4 - Taxation
2021 2020
£m £m
Current tax expense
UK corporation tax payable on profits for the year 1.5 -
Adjustment in relation to prior years (0.2) (0.3)
Deferred tax expense
Arising on:
Origination and reversal of timing differences 0.2 0.3
Total income tax expense 1.5 -
Reconciliation of tax charge
Profit before tax for the year 7.8 1.2
Tax at standard UK tax rate of 19% (2018: 19%) 1.5 0.2
Tax effect of:
Adjustment in relation to prior years (0.2) (0.3)
Permanently disallowed items 0.2 0.1
Total income tax expense 1.5 -
2021 2020
£m £m
Income tax credited to other comprehensive income (0.4) (1.7)
Note 5 - Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of Ordinary shares in
issue during the year.
2021 2020
£m £m
Earnings:
Profit attributable to owners of the Company 6.3 1.2
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Basic earnings per share 14.99p 2.87p
(ii) Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average
number of Ordinary shares outstanding to assume conversion of all dilutive
potential Ordinary shares. The Company has two categories of dilutive
potential Ordinary shares: share options granted under the Save As You Earn
Schemes and options granted under the Long-term Incentive Plan.
For the share options, a calculation is made to determine the number of shares
that could have been acquired at fair value (determined as the average annual
market share price of the Company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
2021 2020
£m £m
Earnings:
Profit attributable to owners of the Company 6.3 1.2
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Adjustments:
Savings Related Share Option Schemes 471 295
Equity Incentive Plan:
Conditional share awards 2,790 2,453
Weighted average number of Ordinary shares for diluted earnings per share 45,545 45,043
(000s)
Diluted earnings per share 13.91p 2.69p
(iii) Underlying earnings per share
Underlying earnings per share represents profit for the year adjusted for
amortisation of intangible assets and other non-underlying items and the tax
effect of these items, divided by the weighted average number of shares in
issue. Underlying earnings is the basis on which the performance of the
operating divisions of the business is measured. There have been no underlying
items in 2021 and therefore underlying and reported numbers are the same for
2021.
2021 2020
£m £m
Profit attributable to owners of the Company 6.3 1.2
Adjustments:
Amortisation of intangible assets - 0.1
Restructuring costs - 3.0
Underlying earnings 6.3 4.3
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Adjustments:
Savings Related Share Option Schemes 471 295
Equity Incentive Plan:
Conditional share awards 2,790 2,453
Weighted average number of Ordinary shares for diluted earnings per share 45,545 45,043
(000s)
Diluted underlying earnings per share 13.91p 9.66p
Basic underlying earnings per share 14.99p 10.29p
Note 6 - Dividends
2021 2020
£m £m
Final dividend of 3.65p (2020: 3.65p) per ordinary share proposed and paid 1.6 1.6
during the year relating to the previous year's results
Interim dividend of 0.75p (2020: 0.75p) per ordinary share paid during the 0.3 0.3
year
Total 1.9 1.9
The Directors are proposing a final dividend of 4.1p (2020: 3.65p) per
ordinary share totalling £1.8 million (2020: £1.6 million). The dividend has
not been accrued at the reporting date.
Subject to approval at the Annual General Meeting, the final dividend will be
paid on 20th May 2022 to shareholders on the register as at 22(nd) April 2022.
The shares will go ex-dividend on 21(st) April 2022. A dividend reinvestment
plan is available to shareholders. Those shareholders who have not elected to
participate in the plan, and who would like to do so in respect of the 2021
final payment, may do so by contacting Link Asset Services on 0371 664 0381.
The last day for election for the final dividend reinvestment is 29(th) April
2022.
Note 7 - Pension commitments
The present value of the defined benefit obligation, the related current
service cost and the past service cost were measured using the projected unit
credit method. The amounts recognised in the consolidated statement of
financial position are as follows:
2021 2020
£m £m
Present value of funded obligations 73.4 76.3
Fair value of plan assets (49.5) (46.1)
Deficit of funded plans 23.9 30.2
Key assumptions used:
2021 2020
% %
Rate of increase in salaries 3.39 2.60
Rate of increase of pensions in payment 3.15 3.00
Discount rate 1.89 1.40
Inflation assumption (RPI) 3.25 2.90
2021 2020
The mortality assumptions used in the IAS 19 valuation were: Years Years
Life expectancy at age 65 for current pensioners
- Men 21.5 21.8
- Women 23.4 24.1
Life expectancy at age 65 for future pensioners (current age 45)
- Men 22.5 22.8
- Women 24.6 25.2
Note 8 - Notes to the statement of cash flows
(i) Reconciliation of operating profit to net cash (outflow)/inflow from
operating activities
2021 2020
£m £m
Operating profit 8.8 2.1
Depreciation charges 2.0 2.1
Equity-settled share-based payment expense 0.8 0.4
Amortisation of intangible assets - 0.2
Pension deficit reduction contributions (1.5) (1.5)
Defined benefit pension scheme charge/(credit) 0.4 (1.7)
Operating cash flows before movement in working capital 10.5 1.6
Movement in inventories - (0.2)
(Increase)/decrease in contract balances (8.2) 3.9
(Increase)/decrease in operating trade and other receivables (18.8) 3.8
Increase/(decrease) in operating trade and other payables 16.4 (4.5)
Cash (used in)/generated from operations (0.1) 4.6
Corporation tax paid - (0.6)
Interest paid (0.5) (0.3)
Net cash (used in)/generated from operating activities (0.6) 3.7
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other short-term highly
liquid investments that are readily convertible into cash, less bank
overdrafts, and are analysed as follows.
2021 2020
£m £m
Cash and cash equivalents 20.3 25.2
Net cash after deducting total borrowings was as follows:
2021 2020
£m £m
Cash and cash equivalents 20.3 25.2
Less borrowings (15.0) (15.0)
Net cash 5.3 10.2
Note 9 - Related party transactions
(i) Key management personnel
The key management personnel of the Group comprise members of the TClarke plc
Board of Directors and the Group Management Board. The key management
personnel compensation is as follows:
2021 2020
£m £m
Salaries, fees and other short-term employee benefits 3.3 3.3
Share-based payment charge 0.6 0.5
Post-employment employee benefits 0.1 0.1
Total 4.0 3.9
Further disclosures, including details of the highest-paid Director, are
included in the Directors' remuneration report in the latest annual report.
Transactions between the Company and its subsidiary undertakings, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. There were no other related party transactions requiring
disclosure.
Note 10 - Annual General Meeting
The Annual General Meeting of the Company will be held at 200 Aldersgate, St
Pauls London EC1A 4HD at 10am on Wednesday 11th May 2022.
1. Underlying operating profit, profit before tax and operating
margin are stated before amortisation of intangible assets and restructuring
costs.
2. Underlying earnings per share is calculated by dividing
underlying profit after tax by the weighted average number of shares in issue.
3. Dividend per share represents the interim and final dividend
proposed or paid for the year in question.
Forward Order Book
2021 2020 %
Market sector £m £m change
Infrastructure 104.6 99.9 5%
Residential & Hotels 102.7 115.1 (11%)
Technologies 134.8 46.8 188%
Engineering Services 174.0 175.2 (1%)
Facilities Management 18.1 19.0 (5%)
Total 534.2 456.0 17%
Forward Order Book comprises jobs which are secured through contracts or
letters of intent.
London
Revenue from our London operations rose to £189.4m (2020: £134.6m),
generating an underlying operating profit of £6.2m (2020: £4.9m). Underlying
operating margin was 3.3% (2020: 3.6%). The growth in revenue has been
primarily driven by the success of our data centre offering where in addition
to our current five live projects the tendering pipeline identifies many
further opportunities. Our core Engineering Services have also continued to
deliver strongly, with work on a number of high-profile shell and core
commercial and hotel developments, with many of which offering future fit-out
opportunities.
UK South
Revenue from UK South rose to £67.1m (2020: £55.1m), with the region
delivering an underlying operating profit of £2.6m (2020: £2.7m) and giving
rise to an underlying operating margin of 3.9% (2020: 4.9%). The region has
developed a high-quality customer base providing a significant quantity of
repeat business and is particularly strong in infrastructure with many
projects being undertaken in defence, education and healthcare.
UK North
Revenue rose to £70.6m (2020: £42.2m) with the region delivering an
underlying operating profit of £3.0m (2020: £0.7m) and giving rise to an
underlying operating margin of 4.2% (2020: 1.7%). This strong performance has
been driven by the completion of our first major engineering services project
in Liverpool, our continued success in winning and delivering a number of
educational projects through our Leeds office and Scotland's residential work.
In addition our Manchester office has recently started work on a significant
engineering services project for a major financial institution.
Forward Order Book
The closing Forward Order Book of £534m represents a 17% increase compared to
last year's, with the largest increase being in respect of Technologies (up
188%), driven by the success of our data centre business.
Cash Flow and Funding
Cash balances totalled £20.3m at 31 December 2021 (2020: £25.2m). The £15m
RCF was drawn down at both 31 December 2021 and 2020, resulting in net cash of
£5.3m at the 2021 balance sheet date (2020: £10.2m). The movement in cash
can be largely attributed to VAT following the introduction of the
Construction Industry reverse charge VAT regime on 1 March 2021 and repayment
of deferred amounts. The Group has also self-funded the increase in turnover,
with working capital increasing by £6.5m over the year.
The Group has a £15.0m revolving credit facility, which is committed until
31st August 2024, and a £10.0m overdraft facility which is repayable on
demand. Interest on overdrawn balances is charged at 2.0% above base rate, and
interest on balances drawn down under the revolving credit facility is charged
at a margin above SONIA, fixed for the duration of each drawdown. The Group
was compliant with the terms of the facilities throughout the year ended 31st
December 2021 and the Board's detailed projections demonstrate that the Group
will continue to meet its obligations in the future.
The Board's projections show that TClarke is expected to maintain a healthy
cash position throughout the next three-year period, and we do not anticipate
seeking any additional facilities during this time.
The Group also has in place £50.1m of bonding facilities (2020: £40.1m), of
which £24.3m were unutilised at 31st December 2021 (2020: £27.0m).
Net Assets and Capital Structure
The Group is funded by equity capital, retained reserves and bank facilities,
and there are no plans to change this structure or to raise new capital.
Shareholders' equity is £26.5m (2020: £15.7m).
Goodwill stood at £25.3m at the year-end (2020: £25.3m). The Board has
undertaken an impairment review in respect of goodwill and has concluded that
no impairment is necessary.
Defined Benefit Pension Scheme Obligations
The most-recent formal actuarial valuation of the Group's defined benefit
pension scheme at 31st December 2018 showed a deficit of £24.9m, representing
a funding level of 59%. Following the valuation the Group committed to a
deficit reduction plan to eliminate the deficit over a 12 year period, and
throughout 2021 it continued to make additional contributions at the agreed
rate of £1.5m per annum. The Group also continues to provide security to the
pension scheme in the form of a charge over property assets up to a combined
market value of £3.1m. A new formal funding valuation is being carried out as
at 31 December 2021 and the results will be reported in next year's Annual
Report & Financial Statements.
The methodology underlying the formal valuation differs from that used for the
annual IAS 19 valuation included in these financial statements, particularly
in respect of the calculation of financial assumptions. When calculated in
accordance with IAS 19 the deficit stood at £23.9m at 31st December 2021,
representing a reduction of £6.3m over the year, recognised primarily through
the Statement of Comprehensive Income. The reduction was predominantly driven
by an increase in the discount rate applied.
Financial Risk Management
The Group's main financial assets are contract and other trade receivables,
and bank balances. These assets represent the Group's main exposure to credit
risk, which is the risk that a counterparty will fail to discharge its
obligations, resulting in financial loss to the Group. The Group may also be
exposed to financial and reputational risk through the failure of a
subcontractor or supplier.
The financial strength of counterparties is considered prior to signing
contracts and reviewed as contracts progress where there are indications that
a counterparty may be experiencing financial difficulty. Procedures include
the use of credit agencies to check the creditworthiness of existing and new
clients and the use of approved suppliers' lists and Group-wide framework
agreements with key suppliers.
We have performed a thorough analysis of our supply chain during the year to
ensure we comply with the Government's new IR35 off payroll working
requirements, a process which will continue in the future.
Accounting Policies
The Group's consolidated financial statements are prepared in accordance with
the requirements of the Companies Act 2006 and in accordance with UK-adopted
international standards. There have been no new accounting policies adopted in
the year.
Trevor Mitchell
Group Finance Director
8th March 2022
Consolidated income statement
for the year ended 31st December 2021
2021 2020
Note Underlying Non-underlying items Total Underlying Non-underlying items Total
£m £m £m £m £m £m
Revenue 3 327.1 - 327.1 231.9 - 231.9
Cost of sales (286.6) - (286.6) (199.0) - (199.0)
Gross profit 40.5 - 40.5 32.9 - 32.9
Administrative expenses
Amortisation of intangible assets - - - - (0.2) (0.2)
Restructuring costs - - - - (3.7) (3.7)
Other administrative expenses (31.7) - (31.7) (26.9) - (26.9)
Total administrative expenses (31.7) - (31.7) (26.9) (3.9) (30.8)
Operating profit 8.8 - 8.8 6.0 (3.9) 2.1
Finance costs (1.0) - (1.0) (0.9) - (0.9)
Profit before taxation 7.8 - 7.8 5.1 (3.9) 1.2
Taxation 4 (1.5) - (1.5) (0.8) 0.8 -
Profit for the financial year 6.3 - 6.3 4.3 (3.1) 1.2
Earnings per share
Attributable to owners of TClarke plc
Basic 5 14.99p - 14.99p 10.29p (7.42)p 2.87p
Diluted 5 13.91p - 13.91p 9.66p (6.97)p 2.69p
Consolidated statement of comprehensive income
for the year ended 31st December 2021
2021 2020
£m £m
Profit for the year 6.3 1.2
Other comprehensive income/(expense)
Items that will not be reclassified to the income statement:
Actuarial gain/(loss) on defined benefit pension scheme 5.6 (6.5)
Revaluation of minority shareholding equity investment - (2.0)
Deferred tax relating to items that will not be reclassified 0.4 1.7
Total other comprehensive income/(expense) for the year, net of tax 6.0 (6.8)
Total comprehensive income/(expense) for the year 12.3 (5.6)
Consolidated statement of financial position
as at 31st December 2021
2021 2020
Note £m £m
Non-current assets
Intangible assets 25.3 25.3
Property, plant and equipment 7.5 8.0
Deferred tax assets 6.4 6.2
Trade and other receivables 4.9 3.6
Total non-current assets 44.1 43.1
Current assets
Inventories 0.4 0.4
Amounts due from customers under construction contracts 51.7 41.7
Trade and other receivables 52.5 34.5
Current tax receivables 0.2 0.7
Cash and cash equivalents 8 20.3 25.2
Total current assets 125.1 102.5
Total assets 169.2 145.6
Current liabilities
Bank loans (15.0) (15.0)
Amounts due to customers under construction contracts (2.9) (1.1)
Trade and other payables (96.3) (77.5)
Obligations under leases (1.6) (1.3)
Total current liabilities (115.8) (94.9)
Net current assets 9.3 7.6
Non-current liabilities
Obligations under leases (1.3) (2.2)
Trade and other payables (1.7) (2.6)
Retirement benefit obligations 7 (23.9) (30.2)
Total non-current liabilities (26.9) (35.0)
Total liabilities (142.7) (129.9)
Total net assets 26.5 15.7
Equity attributable to owners of the parent
Share capital 4.4 4.3
Share premium 4.2 3.8
Revaluation reserve 0.7 0.8
Retained earnings 17.2 6.8
Total equity 26.5 15.7
Consolidated statement of cash flows
for the year ended 31st December 2021
2021 2020
Note £m £m
Net cash (used in)/generated from operating activities 8 (0.6) 3.7
Investing activities
Investment in minority shareholding - (2.0)
Purchase of property, plant and equipment (0.4) (0.2)
Net cash used in investing activities (0.4) (2.2)
Financing activities
New shares issued 0.5 -
Facility fee (0.1) (0.1)
Proceeds from bank borrowing - 15.0
Equity dividends paid (1.9) (1.9)
Acquisition of shares by ESOT (0.9) (0.1)
Repayment of lease obligations (1.5) (1.6)
Net cash (used in)/generated from financing activities (3.9) 11.3
Net (decrease)/increase in cash and cash equivalents (4.9) 12.8
Cash and cash equivalents at the beginning of the year 8 25.2 12.4
Cash and cash equivalents at the end of the year 8 20.3 25.2
Consolidated statement of changes in equity
for the year ended 31st December 2021
Share Share Revaluation Retained
capital premium reserve earnings Total
£m £m £m £m £m
At 1st January 2020 4.3 3.8 0.9 13.9 22.9
Comprehensive income/(expense)
Profit for the year - - - 1.2 1.2
Other comprehensive expense
Actuarial loss on retirement benefit obligation - - - (6.5) (6.5)
Deferred income tax on actuarial loss on retirement benefit obligation - - - 1.7 1.7
Minority shareholding equity investment - - - (2.0) (2.0)
Total other comprehensive expense - - - (6.8) (6.8)
Total comprehensive expense - - - (5.6) (5.6)
Transactions with owners
Transfer on depreciation of freehold property - - (0.1) 0.1 -
Share-based payment credit - - - 0.4 0.4
Shares acquired by ESOT - - - (0.1) (0.1)
Dividends paid - - - (1.9) (1.9)
Total transactions with owners - - (0.1) (1.5) (1.6)
At 1st January 2021 4.3 3.8 0.8 6.8 15.7
Comprehensive income
Profit for the year - - - 6.3 6.3
Other comprehensive income
Actuarial gain on retirement benefit obligation - - - 5.6 5.6
Deferred income tax on actuarial gain on retirement benefit obligation - - - 0.4 0.4
Total other comprehensive income - - - 6.0 6.0
Total comprehensive income - - - 12.3 12.3
Transactions with owners
Transfer of depreciation of freehold properties - - (0.1) 0.1 -
Share-based payment charge - - - 0.8 0.8
Shares acquired by ESOT - - - (0.9) (0.9)
Allotted in respect of share option schemes 0.1 0.4 - - 0.5
Dividends paid - - - (1.9) (1.9)
Total transactions with owners 0.1 0.4 (0.1) (1.9) (1.5)
At 31st December 2021 4.4 4.2 0.7 17.2 26.5
Notes to the preliminary financial information
Note 1 - Basis of preparation
TClarke plc is a public limited company listed on the London Stock Exchange,
incorporated and domiciled in the United Kingdom. The nature of the Group's
operations and its principal activities is providing electrical and mechanical
contracting and related services to the construction industry and end users.
The Company is limited by shares.
This preliminary financial information has been prepared in accordance with
the Disclosure and Transparency Rules of the UK Financial Conduct Authority,
and the principles of UK-adopted international accounting standards and has
been prepared on a going concern basis under the historical cost convention as
modified by the revaluation of land and buildings.
This preliminary financial information does not constitute the statutory
financial statements of the Group. The financial statements themselves were
approved by the Board on 8th March 2022. The report of the auditor on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006. The Annual Report and Financial Statements will be filed with the
Registrar in due course. This preliminary financial information has been
prepared in accordance with the accounting policies disclosed in the full
financial statements.
Note 2 - Significant judgements and sources of estimation uncertainty
The preparation of this financial information in conformity with UK-adopted
international standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial information are set out below.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Revenue and margin
The recognition of revenue and profit on construction contracts is a key
source of estimation uncertainty due to the difficulty of forecasting the
final costs to be incurred on a contract in progress and the process whereby
applications are made during the course of the contract with variations, which
can be significant, often being agreed as part of the final account
negotiation.
Commercial reviews of all live contracts are undertaken on a regular basis,
with all significant contracts being reviewed on a monthly basis. The
Directors also take into account the recoverability of contract balances and
trade receivables, and allowances are made for those balances which are
considered to be impaired. The Group only recognises revenue once there is a
formal contractual entitlement and the recognition criteria of IFRS 15 have
been met. As at 31 December 2021 the Group had approximately £25m (2020:
£15m) of formally instructed, unagreed variations, of which £15m (2020:
£9m) satisfy the highly probable test under IFRS 15 and as such have been
taken to revenue.
Retirement benefit obligations
The costs, assets and liabilities of the defined benefit scheme operated by
the Group are determined using methods relying on actuarial estimates and
assumptions, which are largely dependent on factors outside the control of the
Group. Details of the key assumptions are set out in note 7, and include the
discount rate, expected return on assets, rate of inflation and mortality
rates. The Group takes advice from independent actuaries relating to the
appropriateness of the assumptions. Changes in the assumptions used may have a
significant effect on the income statement, statement of comprehensive income
and the statement of financial position.
Note 3 - Segment information
(i) Reportable segments
The Group provides electrical and mechanical contracting and related services
to the construction industry and end users.
For management and internal reporting purposes, the Group is organised
geographically into three regional divisions: London, UK South and UK North,
reporting to the Board who represent the "Chief Operating Decision-Maker" as
per IFRS 8. The measurement basis used to assess the performance of the
divisions is underlying operating profit, stated before amortisation of
intangible assets and other non-underlying items.
All transactions between segments are undertaken on normal commercial terms.
All the Group's operations are carried out within the United Kingdom, and
there is no significant difference between revenue based on the location of
assets and revenue based on location of customers. The accounting policies for
the reportable segments are the same as the Group's accounting policies
disclosed in note 1. Segmental information is based on internal management
reporting.
(ii) Segment information and revenue analysis - year ended 31st December 2021
London UK South UK North Group costs and Unallocated Total
£m £m £m £m £m
Revenue from contracts with customers 189.4 67.1 70.6 - 327.1
Operating profit 6.2 2.6 3.0 (3.0) 8.8
Finance costs - - - (1.0) (1.0)
Profit before tax 6.2 2.6 3.0 (4.0) 7.8
Taxation expenses - - - (1.5) (1.5)
Profit for the year 6.2 2.6 3.0 (5.5) 6.3
London UK South UK North Total
£m £m £m £m
Business sector
Facilities Management 2.7 13.6 9.7 26.0
Infrastructure 15.1 34.4 29.3 78.8
M&E Contracting 91.7 14.3 10.9 116.9
Residential & Hotels 31.5 4.8 19.6 55.9
Technologies 48.4 - 1.1 49.5
Total 189.4 67.1 70.6 327.1
(iii) Segment information and revenue analysis - year ended 31st December 2020
Group costs
and
London UK South UK North Unallocated Total
£m £m £m £m £m
Revenue from contracts with customers 134.6 55.1 42.2 - 231.9
Underlying operating profit 4.9 2.7 0.7 (2.3) 6.0
Restructuring costs - - - (3.7) (3.7)
Amortisation of intangibles - - (0.2) - (0.2)
Operating profit 4.9 2.7 0.5 (6.0) 2.1
Finance costs - - - (0.9) (0.9)
Profit before tax 4.9 2.7 0.5 (6.9) 1.2
Taxation expenses - - - - -
Profit for the year 4.9 2.7 0.5 (6.9) 1.2
London UK South UK North Total
£m £m £m £m
Business sector
Facilities Management and Frameworks 2.4 9.7 5.7 17.8
Infrastructure 20.6 22.1 16.2 58.9
M&E Contracting 59.4 15.7 6.5 81.6
Residential & Hotels 21.7 7.6 12.8 42.1
Technologies 30.5 - 1.0 31.5
Total revenue 134.6 55.1 42.2 231.9
Note 4 - Taxation
2021 2020
£m £m
Current tax expense
UK corporation tax payable on profits for the year 1.5 -
Adjustment in relation to prior years (0.2) (0.3)
Deferred tax expense
Arising on:
Origination and reversal of timing differences 0.2 0.3
Total income tax expense 1.5 -
Reconciliation of tax charge
Profit before tax for the year 7.8 1.2
Tax at standard UK tax rate of 19% (2018: 19%) 1.5 0.2
Tax effect of:
Adjustment in relation to prior years (0.2) (0.3)
Permanently disallowed items 0.2 0.1
Total income tax expense 1.5 -
2021 2020
£m £m
Income tax credited to other comprehensive income (0.4) (1.7)
Note 5 - Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of Ordinary shares in
issue during the year.
2021 2020
£m £m
Earnings:
Profit attributable to owners of the Company 6.3 1.2
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Basic earnings per share 14.99p 2.87p
(ii) Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average
number of Ordinary shares outstanding to assume conversion of all dilutive
potential Ordinary shares. The Company has two categories of dilutive
potential Ordinary shares: share options granted under the Save As You Earn
Schemes and options granted under the Long-term Incentive Plan.
For the share options, a calculation is made to determine the number of shares
that could have been acquired at fair value (determined as the average annual
market share price of the Company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
2021 2020
£m £m
Earnings:
Profit attributable to owners of the Company 6.3 1.2
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Adjustments:
Savings Related Share Option Schemes 471 295
Equity Incentive Plan:
Conditional share awards 2,790 2,453
Weighted average number of Ordinary shares for diluted earnings per share 45,545 45,043
(000s)
Diluted earnings per share 13.91p 2.69p
(iii) Underlying earnings per share
Underlying earnings per share represents profit for the year adjusted for
amortisation of intangible assets and other non-underlying items and the tax
effect of these items, divided by the weighted average number of shares in
issue. Underlying earnings is the basis on which the performance of the
operating divisions of the business is measured. There have been no underlying
items in 2021 and therefore underlying and reported numbers are the same for
2021.
2021 2020
£m £m
Profit attributable to owners of the Company 6.3 1.2
Adjustments:
Amortisation of intangible assets - 0.1
Restructuring costs - 3.0
Underlying earnings 6.3 4.3
Weighted average number of Ordinary shares in issue (000s) 42,284 42,295
Adjustments:
Savings Related Share Option Schemes 471 295
Equity Incentive Plan:
Conditional share awards 2,790 2,453
Weighted average number of Ordinary shares for diluted earnings per share 45,545 45,043
(000s)
Diluted underlying earnings per share 13.91p 9.66p
Basic underlying earnings per share 14.99p 10.29p
Note 6 - Dividends
2021 2020
£m £m
Final dividend of 3.65p (2020: 3.65p) per ordinary share proposed and paid 1.6 1.6
during the year relating to the previous year's results
Interim dividend of 0.75p (2020: 0.75p) per ordinary share paid during the 0.3 0.3
year
Total 1.9 1.9
The Directors are proposing a final dividend of 4.1p (2020: 3.65p) per
ordinary share totalling £1.8 million (2020: £1.6 million). The dividend has
not been accrued at the reporting date.
Subject to approval at the Annual General Meeting, the final dividend will be
paid on 20th May 2022 to shareholders on the register as at 22(nd) April 2022.
The shares will go ex-dividend on 21(st) April 2022. A dividend reinvestment
plan is available to shareholders. Those shareholders who have not elected to
participate in the plan, and who would like to do so in respect of the 2021
final payment, may do so by contacting Link Asset Services on 0371 664 0381.
The last day for election for the final dividend reinvestment is 29(th) April
2022.
Note 7 - Pension commitments
The present value of the defined benefit obligation, the related current
service cost and the past service cost were measured using the projected unit
credit method. The amounts recognised in the consolidated statement of
financial position are as follows:
2021 2020
£m £m
Present value of funded obligations 73.4 76.3
Fair value of plan assets (49.5) (46.1)
Deficit of funded plans 23.9 30.2
Key assumptions used:
2021 2020
% %
Rate of increase in salaries 3.39 2.60
Rate of increase of pensions in payment 3.15 3.00
Discount rate 1.89 1.40
Inflation assumption (RPI) 3.25 2.90
2021 2020
The mortality assumptions used in the IAS 19 valuation were: Years Years
Life expectancy at age 65 for current pensioners
- Men 21.5 21.8
- Women 23.4 24.1
Life expectancy at age 65 for future pensioners (current age 45)
- Men 22.5 22.8
- Women 24.6 25.2
Note 8 - Notes to the statement of cash flows
(i) Reconciliation of operating profit to net cash (outflow)/inflow from
operating activities
2021 2020
£m £m
Operating profit 8.8 2.1
Depreciation charges 2.0 2.1
Equity-settled share-based payment expense 0.8 0.4
Amortisation of intangible assets - 0.2
Pension deficit reduction contributions (1.5) (1.5)
Defined benefit pension scheme charge/(credit) 0.4 (1.7)
Operating cash flows before movement in working capital 10.5 1.6
Movement in inventories - (0.2)
(Increase)/decrease in contract balances (8.2) 3.9
(Increase)/decrease in operating trade and other receivables (18.8) 3.8
Increase/(decrease) in operating trade and other payables 16.4 (4.5)
Cash (used in)/generated from operations (0.1) 4.6
Corporation tax paid - (0.6)
Interest paid (0.5) (0.3)
Net cash (used in)/generated from operating activities (0.6) 3.7
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other short-term highly
liquid investments that are readily convertible into cash, less bank
overdrafts, and are analysed as follows.
2021 2020
£m £m
Cash and cash equivalents 20.3 25.2
Net cash after deducting total borrowings was as follows:
2021 2020
£m £m
Cash and cash equivalents 20.3 25.2
Less borrowings (15.0) (15.0)
Net cash 5.3 10.2
Note 9 - Related party transactions
(i) Key management personnel
The key management personnel of the Group comprise members of the TClarke plc
Board of Directors and the Group Management Board. The key management
personnel compensation is as follows:
2021 2020
£m £m
Salaries, fees and other short-term employee benefits 3.3 3.3
Share-based payment charge 0.6 0.5
Post-employment employee benefits 0.1 0.1
Total 4.0 3.9
Further disclosures, including details of the highest-paid Director, are
included in the Directors' remuneration report in the latest annual report.
Transactions between the Company and its subsidiary undertakings, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. There were no other related party transactions requiring
disclosure.
Note 10 - Annual General Meeting
The Annual General Meeting of the Company will be held at 200 Aldersgate, St
Pauls London EC1A 4HD at 10am on Wednesday 11th May 2022.
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