REG - TClarke PLC - Final Results
15/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240315:nRSO9562Ga&default-theme=true
RNS Number : 9562G TClarke PLC 15 March 2024
TClarke plc
Results for the year ended 31 December 2023
TClarke delivers record revenues of £491m
TClarke plc ("the Group" or "TClarke"), the Building Services Group, announces
its preliminary results for the year ended 31 December 2023.
Financial Highlights
RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2023 2022 Change
Revenue £491.0m £426.0m +15%
Operating profit £9.4m £11.5m -18%
Profit before tax £7.6m £10.3m -26%
Basic Earnings per share 13.75p 19.60p -30%
Net cash at year end £19.3m £7.5m +157%
Total dividend per share 5.9p 5.35p +10%
Forward order book £943m £555m +70%
2023 summary
· Group delivering on its growth strategy
· Revenue up 15% to £491m
· Forward order book up 70% to £943m
· Operating margin of 1.9% (2022: 2.7%), in line with the Company's
trading update of November 2023
· Strong balance sheet
· Net Cash £19.3m (2022: £7.5m)
· Net Assets £53.4m (2022: £38.7m)
· Successful equity placing raised gross proceeds of £10.7m during
the period
· Data centre business expanding rapidly with £346m of orders
(2022: £88m)
· Progressive dividend policy with total dividend up 10%
· Apprentices now number 247 (2022: 210) making up 18% of workforce
· Total type 1 and 2 emissions fall to 4.4 tCO2e/£m revenue (2022:
4.8 tCO2e/£m revenue)
Mark Lawrence, CEO commented:
"Initiated in March 2021, our ambitious journey aimed to double our revenues
through organic expansion. It is very pleasing to report that in 2023 we
successfully achieved these growth plans.
Our growth reflects the high quality of our operations and the talent and
commitment of our people, supply chain partners and the ongoing support of our
clients.
The Group boasts a robust forward order book comprising top-tier projects in
our target sectors, underpinned by a strong balance sheet with our net assets
having increased by 38% compared to 2022, reflecting our financial strength.
Looking forward, we are poised to maintain our progress in our targeted
markets, positioning us favourably to achieve our growth plans for 2024 and
beyond."
-ends-
Date: 15(th) March 2024
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/)
Cavendish Capital Markets Limited (Corporate Broker)
Ben Jeynes (Corporate Finance)
Dale Bellis / Andrew Burdis (Sales and ECM)
Tel: 020 7220 0500
www.cavendish.com (http://www.cavendish.com)
RMS Partners
Simon Courtenay
Tel: 020 3735 551
Chairman's Statement
2023 has been another year of significant achievement for TClarke. In a very
challenging marketplace revenue increased by 15% to £491m (2022: £426m). The
composition of this revenue number and order book reflects the successful
implementation and delivery of our strategy in our chosen markets.
Our strategy is to pursue organic growth by focusing on our five core market
sectors, whilst building our market presence in data centres, large projects
outside of London, smart buildings and healthcare. Whilst revenues from these
areas reduced to £189m in 2023 (2022: £220m) they form a substantial part of
our Forward Order Book with data centres alone accounting for £346m.
Our forward order book now stands at £943m, an increase of 70% (2022: £555m)
which again demonstrates the successful implementation and delivery of our
strategic development plans.
In common with the wider market, we have faced significant economic and
political upheavals and uncertainties throughout 2023, and this has perhaps
been particularly the case in our Engineering Services sector. Despite this,
we have achieved an operating profit of £9.4m in 2023 (2022: £11.5m), which
is a very creditable result given the uncontrollable external pressures we
have had to manage this year. This performance results not just from the
successful implementation of our strategy, but also from the effective and
continuous strategic and operational management and focus on delivery and
performance.
During the year we completed a successful share placing which raised
additional net proceeds of £10.1m. The rationale behind the placing was to
increase our working capital levels to support our increased levels of
activity and the changing nature of our working capital requirements given the
increased size and complexity of current and future projects. The placing was
oversubscribed, and new shares were taken up by both existing major
shareholders and several new institutional investors. The support and
increased investment by both existing and new shareholders through this
placing is further evidence of the recognised success of our chosen strategies
and investor confidence in our forward growth and performance.
We remain committed to a progressive dividend policy while at the same time
balancing the interest and needs of all stakeholders. We are proposing a 2023
final dividend of 4.525p per share (2022: 4.1p) which together with the
interim dividend of 1.375p paid in October 2023 brings the full 2023 dividend
to 5.9p per share (2022:
5.35p), an increase of 10%.
We have continued to invest in our responsible business activities, and I'm
extremely proud of the enormous amount of work and innovation by our teams in
enabling us to address climate change and deliver social value to the
communities where we work.
Our manufacturing facilities in Stansted and Coatbridge have enabled TClarke
to significantly reduce its carbon footprint. In addition, investment has been
made into our carbon calculator for calculating Scope 3 emissions; information
from which has been used on several tenders.
During the year our offices switched to 100% renewable energy, and we have
introduced our first wave of electric vans within the Group's fleet.
Our teams have continued to build partnerships with schools, charities, and
social organisations to provide work and training opportunities for local
communities and introduce young people to careers in construction. This will
help promote diversity while building a talent pipeline for the industry. We
have been decarbonising schools, making them more energy efficient.
We continue to be the leading provider of apprenticeships in our sector, with
247 apprentices currently in place across the Group. This represents 18% of
the total workforce (2022: 16%) - significantly more than the industry norm of
5%. This is a positive and substantial investment made with our confidence in
TClarke and the future.
As we look forward to 2024 and beyond it seems unlikely that the current
significant external economic and national and geopolitical challenges will
lessen. Despite this, I look to the future with confidence for TClarke. We
have a significant and growing order book at record levels. Our strategy is
delivering and the successful share placing in 2023 demonstrates the
confidence and support of the investment community in our performance and
prospects. Our management, delivery focus and capabilities give TClarke the
ability to continue to grow and prosper.
As ever, however, it is the collective and outstanding effort and output of
our people which delivers the distinctive TClarke brand - a brand which is
very strong, built upon our reputation for high quality engineering,
reliability and on time delivery. It is our people and our brand that enable
us to grow and perform and to face the future and its challenges with
confidence.
Chief Executive's Report
An effective model and a fresh target for growth
In March 2021, we began a journey to double our revenues. As we approach and
pass this goal, the Company will continue to deliver organic growth, delivered
with our consistent commitment to strong engineering with good values - and
achieved without the costs or risks of acquisition.
We are able to increase our growth target significantly only because we can
rely on the steadfast support we receive from our partners, customers,
shareholders, and most importantly, our dedicated TClarke team, even amidst
ongoing market challenges. I extend my heartfelt thanks to each of you for
your invaluable contribution to our ongoing achievements.
This business model outputs sustainable growth
The challenges of inflation and supply that persisted throughout the year
appear likely to persist further due to conflicts around the world. These
factors continue to affect our markets, yet our robust business model and risk
management practices enable us to mitigate risks, minimise disruptions, and
capitalise on opportunities to keep on track with growth.
Once again in 2023, this business has succeeded in winning high-quality work,
delivering it to our clients' satisfaction, and building our resource of
people, skills, and capabilities to enable further headroom for growth.
Organic growth of this kind is sustainable. It allows us to broaden our client
base, diversifying our risks and increasing both the scope and scale of
opportunities available to us. This growth increases our resilience, while
also increasing the value delivered to our stakeholders.
Together we operate a consistent and straightforward strategy
We operate in competitive, commercially driven markets, delivering complex
engineering services. But our strategy is simple, fully understood by our
people, and executed with precision across our business.
We maintain a disciplined and selective approach to tendering. We do not
tender for projects where the margin is unacceptable.
We focus on workstream opportunities within five market sectors which we
understand well, where our brand is known, where opportunities for growth
exists and where we have market-leading expertise and skills.
We build and invest in our resource to maximise operational flexibility,
adopting and pioneering new services like MMC (Modern Methods of Construction)
which significantly expand our resource capabilities. We also balance and flex
our growth across and between these sectors to take advantage of market
opportunities and cycles and manage our risks effectively.
This approach has been followed consistently and fine-tuned, year by year. Our
investments in systems, processes and skills have been focused on improving
our ability to deliver this strategy.
Our goal in each of our five core markets is to be 'contractor of choice' in
the marketplace, recognised for the quality and value of our work.
Every team in the business understands the strategy and what it requires from
us. I am very proud of the performance levels which our people have achieved
throughout the year. We can always do better - but their
focus has been excellent and should be recognised.
Delivering record revenues
2023's record revenues of £491m are headlined by our performance in the
Engineering Services market sector, but fully supported by strong revenues
across all markets.
Large projects outside London achieved notable growth from £37m in 2022 to
£88m in 2023. This reflected a step change across our regional operations -
for example, during the year we were able to report the doubling of the
average Engineering Services tender size in Scotland and a total of 19
projects of £5m + being delivered across our regions.
Delivering record forward orders
Our success in 2023 can be measured in the exceptional growth in our forward
order book. In competitive markets, clients have actively sought to lock in
TClarke teams to deliver their projects. Our order book has grown 70% in the
last year, from £555m in 2022 to £943m in 2023. This delivers a major
strategic advantage - allowing us to manage efficiently, invest for value and
select future projects from a position of greater strength.
Although 2023's order book growth has been led by Technologies, which has more
than trebled from 2022, that should not mask the exceptional growth enjoyed in
Engineering Services and Infrastructure.
The Infrastructure order book has grown 47% compared to last year to £178m -
reflecting both our long-term play in the healthcare sector and pleasing
growth in other sectors including defence.
Engineering Services orders are up 39% - reflecting both our ongoing strength
in major London markets and our growing presence and relationships across the
country.
The order book growth for Technologies of 223% is in large part due to our
growing reputation and leadership in the data centres market. Appetite and
demand for TClarke teams and services, matched by our expanding resource base
and skills, make this a strong area for our business. As the data centre
industry approaches an 'iPhone moment', with the adoption of AI accelerating
demand and need for data centre services, we see substantial opportunities in
the years ahead.
Delivering the same unique brand experience
We are now entering our 135(th) Anniversary year.
In 1889, it was TClarke's 'wires encased in fire-proof materials' that enabled
electrification for Royal Palaces including Windsor Castle and St James'
Palace. Modern Methods of Construction (MMC), Smart Buildings and Alternative
Energy Solutions are just three of the technologies where our leadership is
enabling progress today. Our brand reputation has been built one project at a
time during this year, just as it has every year since 1889. Today it operates
as a significant commercial asset alongside our financial strength - allowing
people to place their trust in TClarke.
I am very pleased to report that in 2023 our ability to retain clients remains
central to our success. During the year, 92% of projects have been with repeat
clients and/or principal contractors. At the same time, particularly in the
field of data centres, we are also building a broad new portfolio of long-term
partners, operating frequently as the General Contractor (GC) in these
projects, where the building services dominate.
The continued strength of our business is due in no small part to the
long-term relationships we enjoy - with major
developers in London, housebuilders in Scotland and the NHS and defence
sectors nationwide to name just a few. Our retention rate and the depth and
length of relationships we build with our clients and supply chain is
testament to the strong culture at all levels within our business.
Everything starts with our Resource
Culture depends on people. Once again, this year we have invested in excess of
£6m in our apprentices across the UK and had 247 apprentices within the
business (compared with 210 in 2022). Moreover, in 2023 we also reported a
record 900 applications for our apprenticeships. This substantial commitment
and interest creates a pipeline of future talent, designed to deliver both
skilled operatives and future leaders in the volume and quality we require to
meet our needs for growth. It also means that TClarke has deep roots in our
local communities.
Offsite manufacture allows us to prefabricate major components of a building's
engineering services in safe, factory conditions - and vastly improve
efficiency and onsite logistics and environmental performance. During 2023 our
two prefabrication facilities in Stansted, Essex and Coatbridge, Central
Scotland completed a number of successful projects for our clients. Our
confidence in resetting growth targets is only possible because of this
exceptional resource of people, skills and facilities in-house. We keep
investing and innovating to create further headroom for growth. Our
competitors, whose models are overly dependent upon the use of
sub-contractors, cannot achieve this level of confidence.
Our people build and retain Engineering Expertise
In 2023 our Bankside Yards project delivered a new industry benchmark for
integrated offsite manufacture, helping achieve the UK's first fossil-fuel
free major mixed-use development. This was one of several major London
Engineering Services projects in 2023 where TClarke teams advanced the
industry standard - in everything from smart buildings to upgraded energy
performance.
During 2023, TClarke London was also highly successful in quietly delivering
some extremely complex major projects - including our largest Engineering
Services project ever. These performance highlights in London were
fully matched nationwide by the delivery of high profile, complex projects
ranging from laboratory suites at Sawston Unity Campus in Cambridge, to
numerous scanning facilities for hospitals across Britain to The Bristol
Beacon - the year's largest arts project outside London.
Within the world of data centre engineering, TClarke progressed at pace in
2023, not only delivering £100m of revenue but securing a pipeline of £346m.
These project wins are far more than figures in a financial report - they
directly reflect the fact that we have made ourselves acknowledged leaders in
the engineering of data centres. Our engineering expertise - in particular the
scale and number of high-quality in-house teams we can offer - has been the
single most important factor in driving the growth of our data centre
business.
Overall, our depth of engineering experience and talent, our passion and pride
to complete projects successfully for our partners and track record of complex
landmark projects is one that no other team in the market can match.
Crucially, due to our commitment to in-house careers, our engineering
expertise stays within our business and builds over time. This body of
knowledge has grown yet again in 2023, allowing us to hand pick the right team
for our clients' project needs - from our own people.
A Responsible and progressive business
As well as being a high-quality engineering services business, TClarke has
played a progressive role in society throughout 2023, in directly tangible
ways that impact our local communities.
Our nationwide apprenticeship scheme sets the industry Gold Standard for
quality - measured by its scale within our business and our consistently high
percentages of successful completions. We need it because of our longstanding
belief in high quality in-house careers, career development and employment for
our people. During 2023 our directly employed workforce increased by 9%. Our
number of training days also increased by 62%. The significant investments we
make every year in local people are at the heart of our difference and the
substantial social value which TClarke delivers to our communities. We work
hard to offer our teams the best environments to collaborate, share knowledge,
work safely and build careers. We are also proud to support many local
community projects, charities and sporting teams for boys and girls of all
ages nationwide.
At the start of 2023, we launched 25 by 28 - our five-year plan to fill 25% of
our apprenticeship and training positions with women by 2028. During our 2023
apprenticeship intake we took our first small steps to make that a reality.
Over the next five years we will continue to work at what is a deliberately
ambitious target.
We have set the bar at this level because a fully diverse workforce, fit for
the future, accessing the greatest range of talent, is a prize we want to win.
By collaborating with partners across our industry and taking the lead on such
a major issue, we also recognise that what we achieve here will create far
wider value and our successes will help reset everyone's standards and
expectations.
Most importantly of all, TClarke is committed first and last to the safety and
wellbeing of all our people and those with whom we work. During 2023 these
commitments were expressed in a wide-ranging series of safety events,
training, services and metrics for our staff to improve safety performance in
every way we can. The increase in usage of our You Say You See reporting tool
of 45% has been one of many highlights achieved during the year.
Outlook
The strength of our £943m forward order book is matched by a robust pipeline
of current opportunities and a strong balance sheet with net assets of
£53.4m. We have clarity in our strategy, balance across our sectors and a
depth of available resource and capabilities across our business for further
growth.
These strengths have allowed the board to approve our next medium term growth
target of £650m. Within that medium term outlook, we see that our
Technologies businesses have continued strong prospects, fueled by the
emergence of AI, driving ongoing growth in data centre markets. At the same
time, the advance towards Net Zero is driving the adoption of new alternative
energy and smart buildings technologies, transforming needs across our
Engineering Services markets. Our continued leadership in London engineering
services and our growth in infrastructure and large regional projects adds
further confidence.
While we expect and plan for challenges on every scale, we are looking forward
to continued growth for all our stakeholders, achieving optimum revenues and
margins. We are also focused on doing things the right way - the TClarke Way.
Our brand has been around for one hundred and thirty-five years; right now,
our leadership in critical new engineering services technologies is more
assured than ever.
That fact is not determined by our board but by the customers who choose and
the TClarke teams who deliver. It is a matter of great pride that we have been
able to immediately revise our target upward. There is great optimism in our
business - based on the ongoing potential for organic growth we see in the
immediate years ahead.
Group Financial Review
Key Highlights
Progress against strategic objectives:
Strategic Objective: Progress
Deliver £500m revenue by end 2023 · 2023 Revenue: £491m
· Increase of £65m
Grow organically · Order book £943m
· Technology orders £359m
· Major project wins across the UK
Sustain a 3% operating margin · 2023: 1.9% margin achieved
Maintain premium position in core markets · Order book replenished and increased
· Technology, now 38% of Order book
· 90% of turnover from repeat clients
The Group has continued to grow strongly recording revenues of £491m (2022
£426m). 2023 marks the end of the 3 year growth plan to grow revenues
organically from £300m pa to £500m pa. This plan has substantially been
achieved. In addition through the opportunities and orders TClarke has
generated we are confident that our growth will continue throughout the next
period. Our order book has grown to £943m (2022 £555m) as shown below:
2023 Forward 2022 Forward
Order Book Order Book
Market Sector £m £m
Engineering Services 313 225
Technologies 359 111
Infrastructure 178 121
Residential & Hotels 66 73
Facilities Management 27 25
Grand Total 943 555
We have seen revenue growth across all of our market sectors in 2023, with the
exception of Technologies, where the phasing of our data centre work has seen
a number of large projects complete during the year, with the next batch of
large projects featuring heavily in our secured work for 2024.
Summary of Financial Performance
2023 2022
£m £m
Revenue 491.0 426.0
Operating profit 9.4 11.5
Net finance costs (1.8) (1.2)
Profit before tax 7.6 10.3
Taxation (1.1) (1.9)
Profit after tax 6.5 8.4
Earnings per share - basic 13.75p 19.60p
Dividend per share 5.90p 5.35p
Net assets 53.4 38.7
Dividend per share represents the interim and final dividend proposed or paid
for the year in question.
In line with our strategic objective of targeting large jobs outside London,
2023 revenue for the year for such jobs (project size >£5m and based
outside the M25) is now £88.2m (2022: £37m). We have also seen continued
strong performance in our healthcare and smart buildings offerings.
Operating profit for 2023 was £9.4m (2022: £11.5m). Earnings per share were
13.75p for the year (2022: 19.60p) on an operating margin of 1.9% (2022:
2.7%). This was below our 3% target, reflecting several strategic decisions
taken by management to preserve the business's strong market and financial
position in view of the construction sector's turbulent trading conditions.
These decisions have included early settlement of final contract amounts and
the changing of some supply chain partners mid-contract to protect project
completion dates. On one large contract in particular it was necessary to
replace a key part of our supply chain and re-procure the work across a number
of smaller packages. It is anticipated that these projects will continue to be
delivered to their project programmes albeit at reduced margin.
The Group took a number of actions during the year to strengthen its balance
sheet, including the raising of net proceeds of £10.1m by way of an
oversubscribed placing of new ordinary shares in the Company. The issue price
was 122p per share representing a 14% discount to the closing price of 141.5p
on 5 July 2023. The placing was for 8,749,337 ordinary shares with a nominal
value of 10p. The proceeds provide additional resources with which to capture
and deliver attractive contract opportunities in the London business and in
doing so drive further growth and margin expansion. The placing attracted a
number of new institutional investors and in doing so has broadened our
shareholder base.
Our growth has not been driven by acquisitions and this will remain our policy
going forward. TClarke remains financially secure, ending the year with net
cash of £19.3m (2022: £7.5m) with £30m of bank facilities at its disposal.
Despite the tough prevailing market conditions and the high level of
insolvencies amongst our supply chain, competitors, and potential customers,
we are pleased to report that our robust credit control processes have limited
our bad debt expense for the year to £0.3m (against total revenue of
£491.0m), and in line with
our historical average.
Net finance costs were £1.8m (2022: £1.2m), comprising: a £0.4m increase in
bank interest and facility fees to £1.0m (2022: £0.6m); the Group's defined
benefit pension scheme interest charge of £0.6m (2022: £0.4m) and an
interest charge of £0.3m arising from leases (2022: £0.2m), offset by £0.1m
of interest received on cash balances.
The tax charge for the year was £1.1m (2022: £1.9m). TClarke maintains an
open and collaborative working relationship in all interactions with HMRC, and
there are no uncertain tax positions at present.
The Group paid its 2022 final dividend in full in June 2023 and an increased
interim dividend in September 2023 of 1.375p (2022: 1.25p). The Board is
proposing a final dividend of 4.525p (2022: 4.1p). The total proposed dividend
therefore rises to 5.9p (2022: 5.35p), an increase of 10%. The dividend is
covered two times by earnings.
TClarke recognises that many of its shareholders invest for dividends.
Cash Flow and Funding
Cash balances totalled £29.3m at 31 December 2023 (2022: £22.5m). £10m was
drawn down under the Group's Revolving Credit Facility ("RCF") at 31 December
2023 (2022: £15m), resulting in net cash of £19.3m at the 2023 balance sheet
date, an improvement of £11.8m on the prior year (£7.5m).
2023 2022 Change
£m £m £m
Cash 29.3 22.5 6.8
Amounts drawn under RCF (10.0) (15.0) 5.0
Net Cash 19.3 7.5 11.8
The increase in net cash has been largely driven by the share placement in
July together with the Group's operating profit for the year once allowances
have been made for other cash outflows such as dividend payments and the
Group's commitment to the pension deficit reduction plan. Furthermore, the
Group's continued focus on strong credit control processes has ensured that
the growth in revenue has been achieved without any significant increase in
working capital balances.
The Group's banking facilities comprise a £5.0m overdraft facility and a
£25.0m revolving credit facility ('RCF'), both with National Westminster Bank
plc, with the level of usage available dependent on covenant compliance. The
RCF charges commitment fees at market rates and drawings bear interest at a
margin of 1.9% above SONIA. Interest is charged on the overdraft at 2.00%
above base rate. The RCF includes financial covenants in respect of interest
cover and net leverage ratios which are tested quarterly. The RCF is available
until 31 August 2026 and the overdraft facility is subject to annual review.
The Group was compliant with its obligations under the RCF and the overdraft
facility throughout the year and the Board's detailed projections demonstrate
that the Group will continue to meet its obligations in the future and is
expected to operate well within its existing facilities throughout the next
three-year period. The Group also has in place £70.1m of bonding facilities
(2022: £65.1m), of which £37.7m were unutilised at 31(st) December 2023
(2022: £34.3m).
Defined Benefit Pension Scheme Obligations
A formal actuarial valuation of the Group's defined benefit pension scheme was
conducted at 31st December 2021 showing a deficit of £19.8m, representing a
funding level of 71%. The pension scheme's actuary also looked at the position
at 31 December 2022 in view of the worsening macroeconomic conditions. At that
date the funding level remained at 71% but the deficit was estimated to be
approximately £11m.
Following the valuation, the Group has committed to a deficit reduction plan
to eliminate the deficit over an 8 year period, through additional
contributions of £1.3m per annum. The deficit on the pension scheme, as
measured on an IAS 19 valuation basis for inclusion in these financial
statements, has now reduced to £11.8m (2022: £12.9m). The reduction of
£1.1m over the year has been largely driven by the £1.3m additional
contributions made by the
Group as part of the deficit reduction plan.
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. We have built on our existing
strong balance sheet and net assets are now £53.4m (2022: £38.7m), an
increase of 38%. The increase largely reflects the combined impact of the
Group's profit after tax for the year, the proceeds of the share placement,
dividends paid, and the reduction in the defined benefit pension deficit.
Goodwill stood at £25.3m at the year-end (2022: £25.3m). The Board has
undertaken an impairment review in respect of goodwill and has concluded that
no impairment is necessary.
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.
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.
Consolidated Income Statement
For the year ended 31(st) December 2023
2023 2022
Note £m £m
Revenue 3 491.0 426.0
Cost of sales (441.7) (378.6)
Gross profit 49.3 47.4
Administrative expenses (39.9) (35.9)
Operating profit 9.4 11.5
Finance income 0.1 -
Finance costs (1.9) (1.2)
Profit before taxation 7.6 10.3
Taxation 4 (1.1) (1.9)
Profit for the financial year 6.5 8.4
Earnings per share
Attributable to owners of TClarke plc
Basic 5 13.75p 19.60p
Diluted 5 13.73p 19.51p
Consolidated Statement of Comprehensive Income
For the year ended 31(st) December 2023
2023 2022
Note £m £m
Profit for the year 6.5 8.4
Other comprehensive (expense)/income
Items that will not be reclassified to the income statement
Actuarial gain on defined benefit pension scheme 0.2 9.2
Revaluation of freehold property (0.5) (0.2)
Deferred tax relating to items that will not be reclassified (0.1) (2.4)
Total other comprehensive (expense)/income for the year (net of tax) (0.4) 6.6
Total comprehensive income for the year 6.1 15.0
Consolidated Statement of Financial Position
As at 31(st) December 2023
2023 2022
Note £m £m
Non-current assets
Intangible assets 25.3 25.3
Property, plant, and equipment 11.8 13.5
Deferred tax assets 3.2 3.6
Trade and other receivables 7 12.0 6.3
Total non-current assets 52.3 48.7
Current assets
Inventories 0.5 0.5
Contract assets 84.2 54.3
Trade and other receivables 7 52.9 55.3
Current tax receivables 0.2 -
Cash and cash equivalents 10 29.3 22.5
Total current assets 167.1 132.6
Total assets 219.4 181.3
Current liabilities
Bank loans (10.0) (15.0)
Contract liabilities (7.2) (7.7)
Trade and other payables 8 (126.1) (96.1)
Obligations under leases (2.6) (2.7)
Total current liabilities (145.9) (121.5)
Net current assets 21.2 11.1
Non-current liabilities
Obligations under leases (5.2) (5.7)
Trade and other payables 8 (3.1) (2.5)
Retirement benefit obligations 9 (11.8) (12.9)
Total non-current liabilities (20.1) (21.1)
Total liabilities (166.0) (142.6)
Net assets 53.4 38.7
Equity attributable to owners of the parent
Share capital 5.3 4.4
Share premium 13.6 4.4
Revaluation reserve - 0.4
Retained earnings 34.5 29.5
Total equity 53.4 38.7
Consolidated Statement of Cash Flows
For the year ended 31(st) December 2023
2023 2022
Note £m £m
Net cash generated from/(used in) operating activities 10 8.7 10.6
Investing activities
Purchase of property, plant and equipment (0.5) (1.8)
Proceeds from disposal of property, plant and equipment 0.7 -
Net cash used in investing activities 0.2 (1.8)
Financing activities
New shares issued 10.1 -
Interest paid (1.0) (0.5)
Repayment of borrowings (5.0) -
Repayment of lease obligations (2.9) (2.1)
Equity dividends paid (2.5) (2.3)
Shares allotted in respect of share option schemes - 0.2
Facility fee paid - (0.3)
Acquisition of shares by ESOT (0.8) (1.6)
Net cash used in financing activities (2.1) (6.5)
Net increase/(decrease) in cash and cash equivalents 6.8 2.2
Cash and cash equivalents at the beginning of the year 10 22.5 20.3
Cash and cash equivalents at the end of the year 10 29.3 22.5
Consolidated Statement of Changes in Equity
For the year ended 31(st) December 2023
Share Share Revaluation Retained Total
capital premium reserve earnings Equity
£m £m £m £m £m
At 1st January 2022 4.4 4.2 0.7 17.2 26.5
Comprehensive income
Profit for the year - - - 8.4 8.4
Other comprehensive expense
Remeasurement gain on retirement benefit obligation - - - 9.2 9.2
Deferred income tax on remeasurement gain on retirement benefit obligation - - - (2.4) (2.4)
Revaluation of freehold property - - (0.2) - (0.2)
Total other comprehensive income - - (0.2) 6.8 6.6
Total comprehensive income - - (0.2) 15.2 15.0
Transactions with owners
Transfer on depreciation of freehold property - - (0.1) 0.1 -
Share-based payment expense - - - 0.8 0.8
Acquisition of shares by ESOT - - - (1.6) (1.6)
Shares allotted in respect of share option schemes - 0.2 - - 0.2
SAYE option cost - - - 0.1 0.1
Dividends paid - - - (2.3) (2.3)
Total transactions with owners - 0.2 (0.1) (2.9) (2.8)
At 31(st) December 2022 4.4 4.4 0.4 29.5 38.7
Comprehensive income
Profit for the year - - - 6.5 6.5
Other comprehensive income
Remeasurement gain on retirement benefit obligation - - - 0.2 0.2
Deferred income tax on remeasurement gain on retirement benefit obligation - - - (0.1) (0.1)
Revaluation of freehold property - - (0.4) (0.1) (0.5)
Total other comprehensive income - - (0.4) - (0.4)
Total comprehensive income - - (0.4) 6.5 6.1
Transactions with owners
New shares issued in the year 0.9 9.2 - - 10.1
Share-based payment expense - - - 1.7 1.7
Transactions in own shares in respect of share awards - - - (0.8) (0.8)
SAYE option cost - - - 0.1 0.1
Dividends paid - - - (2.5) (2.5)
Total transactions with owners 0.9 9.2 - (1.5) 8.6
At 31(st) December 2023 5.3 13.6 - 34.5 53.4
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.
The financial statements included in this preliminary announcement have 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, but do not comply with the full disclosure requirements
of these standards. The financial information for the year ended 31 December
2022 is derived from the statutory financial statements for that year which
have been delivered to the Registrar of Companies. The auditor reported on
those financial statements: their report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a statement
under s498(2) or (3) of the Companies Act 2006. The financial information has
been prepared on a going concern basis under the historic cost convention as
modified by the revaluation of land and buildings.
The unaudited financial information contained in this announcement does not
constitute the statutory financial statements of the Group as at and for the
year ended 31 December 2023, but is derived from those financial statements,
which have been prepared in accordance with UK-adopted international
accounting standards. The financial statements themselves will be approved by
the Board of Directors and reported on by the auditor and then subsequently
delivered to the Registrar of Companies following the Company's Annual General
Meeting. Accordingly, the financial information for 2023 is presented as
unaudited in this announcement.
Note 2 - Significant accounting estimates
In the application of the Group's accounting policies, the Directors are
required to make estimates and assumptions about the carrying amounts of
assets and liabilities at the reporting date and the amounts of revenue and
expenses
incurred during the period that may not be readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. 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.
The estimates and assumptions that have the most significant impact are set
out below.
Revenue and profit recognition for construction contracts
In order to determine the revenue and profit recognition in respect of the
Group's construction contracts, the Group has to estimate the total costs to
deliver the contract as well as the final contract value. The Group has to
allocate total expected costs between the amount incurred on the contract to
the end of the reporting period and the proportion to complete in a future
period. The assessment of the total costs to be incurred and final contract
value requires a degree of judgement and estimation.
The final contract value may include assessments of the recovery of
contractual variations which have yet to be agreed with client, as well as
additional compensation claim amounts. The amount of variations and claims are
often not fully agreed with the customer due to timing and requirements of the
normal contractual process. Therefore, assessments are based on an estimate of
the potential cost impact of the compensation claims and revenue is
constrained to amounts that the Group believes are highly probable of being
received. The estimation of costs to complete is based on all available
relevant information and may include estimates of any potential defect
liabilities or liquidated damages for unagreed scope or timing variations.
Costs incurred in advance of the contract that are directly attributable to
the contract may also be included as part of the total costs to complete the
contract.
Retirement Benefit Obligations
The cost of the defined benefit pension scheme and the present value of the
pension obligation are determined using actuarial valuations. An actuarial
valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount
rate, future salary increases, mortality rates and future pension increases.
Due to the complexities involved in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date, taking
advice from independent actuaries. Details of the key assumptions are set out
in note 9.
The valuation is most sensitive to changes in the discount rate assumption. In
determining the appropriate discount rate, the Group considers the interest
rates of corporate bonds, extrapolated as needed along the yield curve to
correspond with the expected term of the defined benefit obligation. The
mortality rate is based on publicly available mortality tables. These
mortality tables tend to change only at intervals in response to demographic
changes. Future salary increases and pension increases are based on expected
future inflation rates.
Note 3 - Segment information
(i) Change in operating segments
The Group provides electrical and mechanical contracting and related services
to the construction industry and end users. At the beginning of the year the
Group changed its internal management reporting, moving away from the previous
geographic split of segments, and adopting one operating segment. In
delivering the Board's growth strategy, including focusing on winning large
projects outside of London, the previous split ceased to be fully
representative of the way the Group operates, with contracts often being won
through entity-wide relationships or delivered outside of a segment's
geographic footprint. As such, the Board, in its role as 'chief operating
decision-maker', now only receives financial information for the Group as a
whole, representing the Group's one operating
segment and discrete financial information is no longer prepared at a more
disaggregated level.
This approach has also been reflected in the preparation of this financial
information which as a result no longer require separate segmental analysis,
as it is only at a Group level where the definition of an operating segment is
met and this information is shown in the primary statements themselves.
(ii) Revenue analysis
2023 2022
£m £m
Business Sector
Facilities Management 37.1 31.3
Infrastructure 101.8 79.5
Engineering Services 193.5 124.7
Residential & Hotels 48.1 45.3
Technologies 110.5 145.2
Total revenue 491.0 426.0
Note 4 - Taxation
2023 2022
£m £m
Current tax expense
UK corporation tax payable on profits for the year 1.3 1.7
Adjustment in relation to prior years (0.5) (0.4)
Deferred tax expense
Arising on:
Adjustment in relation to prior years 0.1 -
Origination and reversal of timing differences 0.2 0.6
Total income tax expense 1.1 1.9
Reconciliation of tax charge
Profit before tax for the year 7.6 10.3
Tax at standard UK tax rate of 23.52% (2022: 19%) 1.8 1.9
Tax effect of:
Adjustment in relation to prior years (0.4) (0.4)
Permanently disallowed items (0.3) 0.4
Total income tax expense 1.1 1.9
2023 2022
£m £m
Deferred tax charged to other comprehensive income 0.1 2.4
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.
2023 2022
£m £m
Earnings:
Profit attributable to owners of the Company 6.5 8.4
Weighted average number of Ordinary shares in issue (000s) 47,119 43,056
Basic earnings per share 13.75p 19.60p
(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 share options granted under the Save As You Earn schemes.
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.
2023 2022
£m £m
Earnings:
Profit attributable to owners of the Company 6.5 8.4
Weighted average number of Ordinary shares in issue (000s) 47,119 43,056
Adjustments:
Savings Related Share Option Schemes 88 187
Weighted average number of Ordinary shares for diluted earnings per share 47,207 43,243
(000s)
Diluted earnings per share 13.73p 19.51p
Note 6 - Dividends
2023 2022
£m £m
Final dividend of 4.1p (2022: 4.1p) per ordinary share paid during the year
relating to the previous year's results
1.8 1.8
Interim dividend of 1.375p (2022: 1.25p) per ordinary share paid during the 0.7 0.5
year
Total 2.5 2.3
The Directors are proposing a final dividend of 4.525p (2022: 4.1p) per
ordinary share totalling £2.4 million (2022: £1.8m). 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 14(th) June 2024 to shareholders on the register as at 17(th) May
2024. The shares will go ex-dividend on 16(th) May 2024. 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 2023 final payment, may do so by contacting Link Group on 0371 664
0381. The last day for election for the final dividend reinvestment is 24(th)
May 2024.
Note 7 - Trade and other receivables
2023 2022
£m £m
Trade receivables - gross 38.8 36.7
Trade receivables - allowances for credit losses (0.2) (0.4)
Net trade receivables 38.6 36.3
Other receivables (including retentions) - gross 26.2 24.7
Other receivables (including retentions) - allowances for credit losses (0.8) (0.9)
Net other receivables (including retentions) 25.4 23.8
Prepayments 0.9 1.5
Total 64.9 61.6
Trade and other receivables are analysed as follows on the statement of
financial position:
2023 2022
£m £m
Current assets 52.9 55.3
Non-current assets 12.0 6.3
Total 64.9 61.6
Note 8 - Trade and other payables
2023 2022
£m £m
Current
Trade payables (including retentions) 65.8 51.5
Other taxation and social security 3.2 6.4
Accruals 56.3 37.7
Other payables 0.8 0.5
Total 126.1 96.1
Non-current
Trade payables (including retentions) 3.1 2.5
Total 3.1 2.5
Note 9 - 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:
2023 2022
£m £m
Present value of funded obligations 42.3 40.6
Fair value of plan assets (30.5) (27.7)
Deficit of funded plans 11.8 12.9
The key assumptions used to value the pension scheme liability are set out
below:
2023 2022
% %
Average Rate of increase in salaries 3.07 3.26
Rate of increase of pensions in payment 2.94 3.05
Discount rate 4.51 4.77
Inflation assumption (RPI) 3.00 3.12
Inflation assumption (CPI) 2.57 2.76
The mortality assumptions used in the valuation were:
2023 2022
Years Years
Life expectancy at age 65 for current pensioners
- Men 21.0 21.2
- Women 23.0 23.2
Life expectancy at age 65 for future pensioners (current age 45)
- Men 22.0 22.1
- Women 24.1 24.3
Note 10 - Notes to the statement of cash flows
(i) Reconciliation of operating profit to net cash generated from operating
activities
2023 2022
£m £m
Operating profit 9.4 11.5
Depreciation charge 3.1 3.0
Equity-settled share-based payment net expense 1.8 0.8
Pension deficit reduction contribution (1.3) (1.5)
Defined benefit pension scheme credit (0.1) (0.7)
Operating cash flows before movement in working capital 12.9 13.1
Movement in inventories - (0.1)
(Increase)/decrease in contract balances (30.4) 2.2
(Increase)/decrease in operating trade and other receivables (3.7) (3.8)
Increase/(decrease) in operating trade and other payables 30.3 0.8
Cash generated from operations 9.1 12.2
Corporation tax paid (0.5) (1.6)
Interest received 0.1 -
Net cash generated from operating activities 8.7 10.6
(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:
2023 2022
£m £m
Cash and cash equivalents 29.3 22.5
Net cash after deducting total borrowings was as follows:
2023 2022
£m £m
Cash and cash equivalents 29.3 22.5
Less borrowings (10.0) (15.0)
Net cash 19.3 7.5
Note 11 - 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:
2023 2022
£m £m
Short-term benefits 4.2 4.4
Share-based payment 1.7 1.5
Post-employment employee benefits 0.1 -
Total 6.0 5.9
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 12 - Contingent liabilities
Group banking facilities of £30m and surety bond facilities of £70m are
supported by cross guarantees given by the Company and participating companies
in the Group. All operating companies within the Group are included within the
Group banking arrangement, and National Westminster Bank plc has a floating
charge over the assets of the Group. There are contingent liabilities in
respect of surety bond facilities, guarantees and collateral warranties under
contracting and other arrangements entered into in the normal course of
business.
As part of a Group reorganisation, a subsidiary company, TClarke Services
Limited, became the principal employer of the scheme with effect from 23rd
December 2016, and the pension scheme liability and related deferred tax asset
were transferred to TClarke Services Limited at that date. The Company and its
subsidiary, TClarke Contracting Limited, have provided a guarantee to the
trustees of the scheme in respect of TClarke Services Limited's obligations to
the pension scheme.
Note 13 - Subsequent events
There were no subsequent events that affected the financial statements of the
Group.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FLFFAVVISLISRecent news on Tclarke
See all newsREG-Samson Rock Capital LLP: Form 8.3 - TClarke Plc
AnnouncementREG - Cavendish Securities TClarke PLC - Form 8.5 (EPT/NON-RI) - TClarke PLC
AnnouncementREG-Samson Rock Capital LLP: Form 8.3 - TClarke Plc
AnnouncementREG - Vinay Velji Shah TClarke PLC - Form 8.3 - TClarke PLC
AnnouncementREG - TClarke PLC TClarke PLC - Form 8 (OPD) - TClarke plc
Announcement