REG - TClarke PLC - TClarke - Preliminary Results
08/03/2023 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:20230308:nRSH1942Sa&default-theme=true
RNS Number : 1942S TClarke PLC 08 March 2023
TClarke plc
Results for the year ended 31 December 2022
TClarke delivers record revenues of £426m
TClarke plc ("the Group" or "TClarke"), the Building Services Group, announces
its preliminary results for the year ended 31 December 2022.
Financial Highlights
RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2022 2021 Change
Revenue £426.0m £327.1m +30%
Operating profit £11.5m £8.8m +31%
Profit before tax £10.3m £7.8m +32%
Basic Earnings per share 19.60p 14.99p +31%
Net cash at year end £7.5m £5.3m +42%
Total dividend per share 5.35p 4.85p +10%
FY 2022 summary
· Record results with the Group on course to achieve its strategic
target of £500m annual revenue
· Revenue up 30% to £426m
· Operating margin 2.7% (2021: 2.7%)
· Earnings per share up 31% to 19.6p
· Strong balance sheet
· Net Cash £7.5m (2021: £5.3m)
· Average month end cash £2.6m (2021: -£2.9m)
· Net Assets £38.7m (2021: £26.5m)
· High quality and growing forward order book of £555m, up 4% on
2021
· Data centre business expanding rapidly; 2022 revenue £129m (2021:
£39m)
· Further progress made in expanding in the healthcare sector, large
projects outside London and smart buildings. Total 2022 revenues from these
sectors £91m (2021: £51m)
· Progressive dividend policy with total dividend up 10%
· Record intake of 50 Apprentices, with 210 now employed across
TClarke
· New target of 25% women in apprenticeship and training roles by
2028
· Total type 1 and 2 emissions fall to 4.8 tCO2e/£m revenue (2021:
5.8 tCO2e/£m revenue)
Mark Lawrence, CEO commented
"2022 has been a transformational year in the history of TClarke with a
significant step change in the size of the Group. Our record results reflect
the high quality of our operations and talent and commitment of our people and
supply chain partners.
The Group is in fantastic shape. We have an excellent order book of high
quality projects across a wide range of sectors. The business is supported
by our strong balance sheet, which continues to grow, with net assets
increasing by 46% compared with 2021. We remain committed to delivering
economic, social and environmental value for all our stakeholders and are
working towards achieving net zero by 2026.
Looking ahead, we continue to make excellent progress in our chosen markets
and our well-positioned to achieve our £500m revenue target in 2023.''
-ends-
Date: 8(th) March 2023
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
Online Investor Presentation
Mark Lawrence and Trevor Mitchell will be hosting a live online investor
presentation at 2.00pm on Thursday 9(th) March 2023.
The presentation is open to all existing and potential shareholders and the
Group welcomes the interaction with shareholders. It will be structured to
provide investors with a greater understanding of the Group, its markets and
its growth strategy. The management team will be presenting the Group's
financial performance during the year and will be explaining its strategy and
operational strengths. They will also be presenting how the order book is
growing and which sectors the Group is winning work in.
Questions can be submitted at any time during the live presentation.
Shareholders and potential investors can register to join the webinar for
free via this link:
Zoom Webinar Registration - TClarke Investor Presentation
(https://us06web.zoom.us/webinar/register/WN_VD8VH-DlR5SL9lLZ3eDX8w)
For those that cannot attend, a recording of the presentation will be
available to view on the company's corporate website www.tclarke.co.uk
(http://www.tclarke.co.uk)
No material new financial or other information will be provided during the
presentation.
Chairman's Statement
In 2022 TClarke has again continued to grow and deliver excellent results. Our
record revenue of £426m is a significant step towards achieving our near-term
target of £500m annual revenue. Our operating profit is £11.5m at a margin
of 2.7%, which is an outstanding result in the current economic and political
environments in which we operate.
Our growth and margin performance is a result of the successful implementation
and delivery of our strategy. It is also the result of effective and
continuous strategic and operational management oversight and direction,
supported by strong financial, management and delivery disciplines which are
constantly and consistently applied across the Group.
We continue to grow and successfully deliver in our core Engineering Services
markets; we are experiencing significant growth across our chosen market
sectors. This is particularly the case in the Technologies sector, where
revenue has trebled to £145m. The Technologies sector is benefitting from the
investments we have made in capabilities, leadership and client relationships
over the last few years.
The forward order book stands at £555m (2021: £534m) of which £430m (2021:
£379m) represents committed revenue for 2023.
Building on our existing balance sheet strength is another key part of our
strategy as we grow the business. Net assets of the Group have grown by 46%
during 2022 and now amount to £38.7m (2021: £26.5m). Within this net cash
has increased to £7.5m (2021: £5.3m).
We are fully committed to a progressive dividend policy while at the same time
balancing the interests and needs of all stakeholders. We are proposing a 2022
final dividend of 4.1p per share (2021: 4.1p), which together with the interim
dividend of 1.25p paid in October 2022 brings the full 2022 dividend to 5.35p
per share (2021: 4.85p), an increase of 10.3%.
Throughout 2022 TClarke has continued to build and deliver on our commitment
to being a sustainable business, delivering ever improving environmental and
sustainability performance and targets. We have become a Business Champion
with Build UK demonstrating our commitment to the Construction Leadership
Council's zero carbon change programme. During the year, we have also embedded
stronger sustainability targets and requirements into our procurement strategy
and supplier requirements and into our fleet management systems.
At TClarke we recognise that our growth and success could not be delivered
without the skills, experience, 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 and skills to
deliver our growth ambitions in both our core Engineering Services market and
our identified strategic growth markets. For example, we currently have 210
apprentices, representing 16% of our people, which is significantly above the
industry norm of 5%. This is a substantial and positive investment made with
our confidence in TClarke and the future.
The Board was strengthened by Aysegul Sabanci's appointment as a non-executive
director on 1st May 2022. Aysegul's experience in operating in Europe in
particular, will be invaluable as we expand our operations.
As we move through 2023 and beyond, we face significant external economic and
national and geopolitical challenges and uncertainties which will affect all
businesses and sectors. As I look forward, however, I am confident that
TClarke is well placed to address and work through these challenges and
continue to perform and deliver. Our strategy is well developed and being
successfully implemented. This together with our strong commercial and
management focus and controls gives TClarke the strength and stability to
continue to grow, prosper and perform. We have the capacity, the order book
and the opportunities.
The TClarke brand is very strong, built upon our reputation for high quality
engineering, reliability and on time delivery. This is made possible through
the collective efforts of all of our people. It is their outstanding effort
and output that enables us to grow and perform and to face the future with
confidence.
Chief Executive's Report
A Resilient and Successful Business
Few other years in the history of TClarke have seen world events reshape our
outlook like the last two. Yet despite all the challenges, TClarke has stayed
true to its values and remained a unique and successful business, a great
employer, and the partner of choice for our customers and supply chain. My
thanks go to our people, customers, partners, shareholders, and the community
for your continued support.
Delivering Our £500m Strategy
All in our sector have witnessed inflationary pressures and supply issues
during the course of the year; generally our teams have been able to mitigate
any impact on a project-by-project basis, without disruption to our
operations.
We have previously declared our ambitious plan to achieve profitable revenues
of £500m by the end of 2023 and I am pleased to report that the continued
strength of our forward order book - of £555m and over £1bn of active
opportunities - means we remain on track to achieve it.
Our order book has been replenished whilst maintaining our disciplined and
selective bidding approach to opportunities, which is even more crucial in
times of economic uncertainty; this business is not driven by winning projects
that do not have the opportunity to return an acceptable margin.
Our business model is very straightforward and designed to provide consistent,
balanced and complementary work stream opportunities for our five market
sectors, across our UK locations. Its effectiveness is evidenced by our 2022
revenues which we have grown by almost £100m in 2022 delivering revenue of
£426m; exceeding £400m for the first time (2021: 327m). This is a remarkable
achievement and is a testament to the dedication of our people and the
commitment and teamwork of our supply chain. A breakdown of our revenues is
shown below:
£145m Technologies, including Data Centres & Smart
Buildings
£125m Engineering Services
£80m Infrastructure
£45m Residential and Hotels
£31m Facilities Management
The Group has invested, proactively and heavily in resources and capacity, to
ensure our growth ambitions are fully supported, and our clients' projects are
delivered on time.
Our organic growth strategy is based on the established engineering strengths
of the business and targets additional revenue streams - which are now
contributing significantly towards our £500m revenue goals. We are focused on
maintaining our premier position in our five core market sectors whilst
growing revenue from larger projects outside of London, expanding our
healthcare offering, becoming a major player in the data centre market and
investing in our capability to deliver smart building solutions. 2022 revenues
from these growth areas total £220m (2021: £90m) and are shown below:
£129m UK Data Centres
£47m Healthcare projects
£37m Larger projects outside London
£7m Developing innovative smart building solutions
2021 revenues were £39m, £31m, £16m and £4m respectively.
The standout growth revenue stream is from UK Data Centres where TClarke is
delivering five data centres as principal contractor. There remain many
opportunities for growth in this sector and we expect Data Centres to continue
to contribute significant revenues in the medium term.
We now have 19 projects outside of London which have a contract value of £5m
or more where we are either on site or the project is in the order book due to
commence in 2023 or 2024.
What makes TClarke Unique
Brand and Heritage
Since 1889, when we pioneered the most advanced technology of the age, we have
constantly changed and evolved our skill base to stay at the edge of
technology and technical skills. But the emphasis on quality jobs for quality
clients has never changed.
In the 21st century we must embrace new challenges, none greater than to
mitigate the impacts of climate change. TClarke is committed to achieving net
zero emissions and has a detailed road map in place to achieve this by 2026.
To ensure we and our sector achieve sustainable results in reaching this
goal, we are working collaboratively and tirelessly aligning with our
customers and working with our partners and suppliers to provide the
innovative engineered solutions that are needed, in many cases pioneering or
learning new skills.
In 2022 TClarke successfully achieved Build UK Business Champion status within
the Construction Leadership Councils Co2nstruct Zero programme; the industry's
zero carbon change programme.
Client Retention
Our client retention rate is an integral part of the success of TClarke and
90% of our projects are with repeat clients and or principal contractors. We
are rightly proud of the projects that we have secured and continue to
deliver. Our focus remains on being selective when tendering projects and
managing the risks, with established and well-defined processes throughout the
life of a project.
Our retention rate and the depth and length of relationships we build with our
clients and supply chain is a testament to the strong culture at all levels
within our business.
It is no coincidence that we maintain a record order book having closely
aligned ourselves with clients particularly major developers in London who
have shown a long term commitment to the markets we operate in.
Onsite Resource
We have always believed that by giving our people lifelong career paths, we
can build a stronger business and play a leading role in our communities.
No one matches our ability to dedicate our high quality, established teams
complemented by our two prefabrication facilities in Stansted, Essex and
Coatbridge, Central Scotland to our clients' projects. Those facilities help
us maximise the use of MMC (Modern Methods of Construction), improve onsite
logistics, reduce waste, and meet our environmental goals.
Growing our business and achieving our ambitions could not happen without the
relentless drive and quality of our in-house teams. Our competitors, whose
models are overly dependent upon the use of sub-contractors cannot achieve
this.
Last year, we invested £6m (2021: £6m) in our apprentices across the UK.
These ongoing investments lead to an exceptional and unique wealth of future
talent, designed to deliver both skilled operatives and future leaders in
volume and quality to meet our needs.
Engineering Expertise
Risks and rewards are highest for larger, more complex projects such as
commercial offices, luxury hotels 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.
Our team has the depth of experience, knowledge, and talent that no other
company can match. Our staff are driven with passion and pride to complete
projects across the electrical, mechanical, and technologies sectors. We have
completed major and complex landmark projects that no other team in the market
can match. Crucially, our expertise stays in our business and builds over
time. This body of knowledge allows us to hand pick the right team for our
clients' project needs.
An insight to our activities is provided in the following pages of this
report, but some notable highlights include, at the end of 2022 TClarke was
active on five UK data centre projects with further opportunities of
additional phases.
In London, the excellent performance of our engineering services teams
continues, recent project wins include a major infrastructure project at
Canary Wharf and the refurbishment of two landmark five star hotels in the
West End.
In Cambridge we secured Phase 2 of Unity Campus which features three new wet
laboratory buildings of 32,500sq. ft., 31,000sq. ft. and 24,500sq. ft.
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 76 education projects and adding 42 new education projects in the
forward order book.
We continue to work in hospitals across the country delivering major upgrades
to the healthcare infrastructure. For example, TClarke has delivered a major
CT and MRI facility for Basildon University Hospital. TClarke continues to win
major projects such as the National Rehabilitation Centre which is one of the
first of 40 new hospitals to be built by 2030.
Nationwide Capability
Our ability to deliver is unparalleled, employing engineers and skilled
operatives from local communities nationwide, offering clients the full range
of our services across the country. Our capabilities and ability to deliver
are underpinned by the support we give our people and the process and
procedures we have in place. Moreover, the strength of our balance sheet gives
our customers confidence in all aspects of the business.
Our delegated approach to project management empowers and motivates our teams
on the front lines to make informed decisions that result in exceptionally
well-engineered projects.
Technology Leadership
No one leads quite like us in smart buildings technology. TClarke Intelligent
Buildings is a division which has been built steadily in scale and capability
through the last 15 years, designing and delivering the critical mechanical
and electrical infrastructure for data centres as well as schools,
housebuilders, commercial offices, and hospitals across the UK.
Smart Buildings could quite easily become the "Dark Art" of the industry, so
our ambition is to demystify the whole topic and support our customers with
the right product and to deliver this under the trusted TClarke brand.
This could be as simple as making a building smart ready with a TClarke
Gateway, the provision of Smart Platforms, undertaking the role of the MSI
(Master Systems Integrator) or a full turnkey solution.
Very few of our competitors can match the depth and range of the in house
capabilities and access to technology partners that we offer.
Being a Responsible Business
As a responsible business TClarke strives to deliver social value and
environmental protection and improvement of long lasting benefit to local
communities.
Social value is defined as the contribution you make to society and in
particular to the local and community where you operate. 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. We create social value by keeping everyone safe, developing our
people, building long term relationships, and enhancing local communities by
providing training and work opportunities and supporting local community
projects.
Leadership on Women in Apprenticeships and Training
For many years, we have been working, with some success, on the challenge of
expanding our talent pool and bringing more women into our business across all
roles.
But we can see a bigger prize if we can find a way to bring substantially more
women into our apprenticeship and training programmes - particularly as these
programmes provide the foundations for our professional standards and culture.
If we can do this, then we are certain it will increase the quality of our
engineering services and give us ongoing business advantages - as well as
offering women across the UK excellent long-term career opportunities.
We therefore decided to announce a five-year target of filling 25% of our
apprenticeship and training positions with women (currently 2%). This is
recognised by our partners in the industry as an extremely ambitious target.
It will require more than hard work on our part, we know we will need to
listen carefully and adapt our business in various ways, to learn and to
accept that there will be challenges.
It will be a very significant long-term project but, as the industry leader in
apprenticeship and training provision, we are best placed to address it and
get results.
The prize of a fully diverse workforce, fit for the future, accessing the
greatest range of talent and capable of delivering TClarke Engineering
Services is one which 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.
Outlook
TClarke is in excellent shape, focused on repositioning the businesses and
delivering our growth strategy which will aim to achieve a bigger overall
business with record revenues of £500m in 2023.
Beyond this the board has approved a strategy and framework for our next stage
of organic growth which will focus on maintaining our market share in our
chosen markets whilst taking full advantage with our existing clients to
pursue growth opportunities in areas such as European Data Centres and the
Pharmaceutical technology sector.
We see the period beyond 2023 as an opportunity to lay the foundations for an
even stronger TClarke with the business ideally positioned and focused on
delivering the most high tech and engineering rich projects for our clients,
whilst building our existing balance sheet strength, enabling all stake
holders to share in the continuing success of TClarke.
We have some exciting opportunities ahead of us and remain confident that the
group will continue to achieve optimum revenues and margins.
Group Financial Review
Key Highlights
Progress against strategic objectives:
Strategic Objective: Progress
Deliver £500m revenue by end 2023 · 2022 Revenue: £426m
· Increase of £99m
Grow organically · Order book £555m
· Technology orders £111m
· Major project wins across the UK
Sustain a 3% operating margin · 2022: 2.7% margin achieved
Maintain premium position in core markets · Order book replenished and increased
· Technology, one third of the business
· 90% of turnover from repeat clients
The Group has performed strongly throughout the year, and we end 2022 with a
record level of revenue driving up operating profit to £11.5m (2021: £8.8m).
The outlook for 2023 looks equally healthy with the Forward Order Book now
standing at £555m (2021: £534.2m). The growth in revenue represents a
c.£100m increase on 2021 levels (up 30%), with a similar percentage increase
in earnings per share. 2022 has seen a scale change in the size of the
business. The rate of growth has been particularly strong within the
Technologies Sector which now represents over a third of the Group's turnover,
up from c.15% last year.
The proposed overall dividend for the year represents a 10% increase on 2021,
and net assets now stand some 40% higher year on year, driven by our strong
operating performance and a significant reduction in our defined benefit
pension liability. Our growth has not been driven by acquisitions and this
will remain our policy going forward.
Performance
Operating profit for 2022 was £11.5m (2021: £8.8m) on revenue of £426.0m
(2021: £327.1m). Earnings per share were 19.60p for the year (2021: 14.99p)
on an operating margin of 2.7% (2021: 2.7%). TClarke remains financially
secure, ending the year with net cash of £7.5m with £30m of bank facilities
at its disposal.
Finance costs were £1.2m (2021: £1.0m), comprising a £0.1m increase in bank
interest and facility fees to £0.6m (2021: £0.5m); the Group's defined
benefit pension scheme interest charge of £0.4m (2021: £0.4m); and an
interest charge of £0.2m arising from IFRS 16 (2021: £0.1m).
The tax charge for the year was £1.9m (2021: £1.5m). 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 2021 final dividend in full in May 2022 and an increased
interim dividend in September 2022 of 1.25p (2021: 0.75p). The Board is
proposing a final dividend of 4.1p (2021: 4.1p) which if approved at the AGM
will be recorded and paid on 2 June 2023. The total proposed dividend
therefore rises to 5.35p (2021: 4.85p), an increase of 10%. The dividend is
covered 3.7 times by earnings. TClarke recognises that many of its
shareholders invest for dividends.
Summary of Financial Performance
2022 2021
£m £m
Revenue 426.0 327.1
Operating profit 11.5 8.8
Finance costs (1.2) (1.0)
Profit before tax 10.3 7.8
Taxation (1.9) (1.5)
Profit after tax 8.4 6.3
Earnings per share - basis 19.60p 14.99p
Dividend per share 5.35p 4.85p
Net assets 38.7 26.5
Dividend per share represents the interim and final dividend proposed or paid
for the year in question.
London
Revenue from our London operations rose to £270.0m (2021: £189.4m),
generating an operating profit of £10.6m (2021: £6.2m). Operating margin was
3.9% (2021: 3.3%). 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
success in this area has been the key driver to our growth within the
Technologies market sector. Our core Engineering Services have also continued
to deliver strongly, with work on a number of high-profile commercial and
hotel developments, with many of which offering future fit-out opportunities.
Our medical division, operating out of our Stansted facility, continues to go
from strength to strength.
UK South
Revenue from UK South rose to £78.0m (2021: £67.1m), with the region
delivering an operating profit of £2.1m (2021: £2.6m) and giving rise to an
operating margin of 2.7% (2021: 3.9%). 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. The region saw significant revenue
growth compared to 2021, with strong performances in both Security and Climate
divisions. Our new Oxford office is now fully operational having started to
trade in the first half of the year and delivered a profit in its first full
year. Operating margins are expected to recover in 2023 back to the UK South's
normal operating margin of circa 3.5%.
UK North
Revenue rose to £78.0m (2021: £70.6m) with the region delivering an
operating profit of £2.4m (2021: £3.0m) and giving rise to an operating
margin of 3.1% (2021: 4.2%). Highlights for the year include the successful
delivery of a major engineering services project in Manchester, our continued
success in winning and delivering a number of educational projects through our
Leeds office, and Scotland's increased pipeline of Engineering Services work,
alongside its core residential business. Further diversification of Scotland's
revenue streams is expected in 2023, with examples in the Forward Order Book
including a regeneration contract in Charlotte Square, Edinburgh for the
provision of office accommodation, and an education-related project with the
Neilston Learning Campus.
Forward Order Book
The closing Forward Order Book of £555m represents a 4% increase compared to
last year's, with a strong pipeline in all key markets. Importantly, we are
securing large jobs across all regions, with every office reporting a profit
in 2022. The Group has invested heavily in resources and capacity, ensuring
that the Group's growth ambitions are fully supported, and our clients'
projects continue to be delivered on time.
Cash Flow and Funding
Cash balances totalled £22.5m at 31 December 2022 (2021: £20.3m). £15m was
drawn down under the Group's Revolving Credit Facility ("RCF") at both 31
December 2022 and 2021, resulting in net cash of £7.5m at the 2022 balance
sheet date, an improvement of £2.2m on the prior year (£5.3m).
2022 2021 Change
£m £m £m
Cash 22.5 20.3 2.2
Amounts drawn under RCF (15.0) (15.0) -
Net Cash 7.5 5.3 2.2
The increase in net cash has been largely driven by 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 renewed its banking facilities during the year and the total amount
available under the RCF now stands at £25.0m (previously £15.0m). The RCF is
committed until 31(st) August 2026. A £5.0m overdraft facility (2021:
£10.0m) is also available 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 RCF is charged at 1.9% above SONIA. The Group was compliant
with the terms of the facilities throughout the year ended 31st December 2022
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 £65.1m of bonding facilities (2021: £50.1m), of
which £34.3m were unutilised at 31st December 2022 (2021: £24.3m).
Defined Benefit Pension Scheme Obligations
The deficit on the Group's defined benefit pension scheme, as measured on an
IAS 19 valuation basis for inclusion in these financial statements, has now
reduced to £12.9m (2021: £23.9m). The reduction of £11.0m over the year has
been largely driven by changes in financial assumptions, in particular around
the discount rate applied to the liabilities, as well as benefiting from a
significant transfer out of the scheme. The overall reduction has primarily
been recognised through the Statement of Comprehensive Income.
A formal actuarial valuation of the 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 has also looked at the position at 31
December 2022 in view of the very different macroeconomic conditions that
currently exist. At that date the funding level remains at 71% but the deficit
is estimated to have fallen to 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 £1.2m per annum.
During the year the Group made additional contributions at the rate of £1.5m
per annum, as agreed in the previous 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 or to raise new capital. We
have built on our existing strong balance sheet and net assets are now £38.7m
(2021: £26.5m), an increase of c.46%. The increase largely reflects the
combined impact of the Group's profit after tax for the year, dividends paid,
and the reduction in the defined benefit pension deficit.
Goodwill stood at £25.3m at the year-end (2021: £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 2022
2022 2021
Note £m £m
Revenue 3 426.0 327.1
Cost of sales (378.6) (286.6)
Gross profit 47.4 40.5
Administrative expenses (35.9) (31.7)
Operating profit 11.5 8.8
Finance costs (1.2) (1.0)
Profit before taxation 10.3 7.8
Taxation 4 (1.9) (1.5)
Profit for the financial year 8.4 6.3
Earnings per share
Attributable to owners of TClarke plc
Basic 5 19.60p 14.99p
Diluted 5 19.51p 13.91p
Consolidated Statement of Comprehensive Income
For the year ended 31(st) December 2022
2022 2021
Note £m £m
Profit for the year 8.4 6.3
Other comprehensive income
Items that will not be reclassified to the income statement
Actuarial gain on defined benefit pension scheme 9.2 5.6
Revaluation of freehold property (0.2) -
Deferred tax relating to items that will not be reclassified (2.4) 0.4
Total other comprehensive income for the year (net of tax) 6.6 6.0
Total comprehensive income for the year 15.0 12.3
Consolidated Statement of Financial Position
As at 31(st) December 2022
2022 2021
Note £m £m
Non-current assets
Intangible assets 25.3 25.3
Property, plant, and equipment 13.5 7.5
Deferred tax assets 3.6 6.4
Trade and other receivables 6.3 4.9
Total non-current assets 48.7 44.1
Current assets
Inventories 0.5 0.4
Contract assets 54.3 51.7
Trade and other receivables 55.3 52.5
Current tax receivables - 0.2
Cash and cash equivalents 8 22.5 20.3
Total current assets 132.6 125.1
Total assets 181.3 169.2
Current liabilities
Bank loans (15.0) (15.0)
Contract liabilities (7.7) (2.9)
Trade and other payables (96.1) (96.3)
Obligations under leases (2.7) (1.6)
Total current liabilities (121.5) (115.8)
Net current assets 11.1 9.3
Non-current liabilities
Obligations under leases (5.7) (1.3)
Trade and other payables (2.5) (1.7)
Retirement benefit obligations 7 (12.9) (23.9)
Total non-current liabilities (21.1) (26.9)
Total liabilities (142.6) (142.7)
Net assets 38.7 26.5
Equity attributable to owners of the parent
Share capital 4.4 4.4
Share premium 4.4 4.2
Revaluation reserve 0.4 0.7
Retained earnings 29.5 17.2
Total equity 38.7 26.5
Consolidated Statement of Cash Flows
For the year ended 31(st) December 2022
2022 2021
Note £m £m
Net cash generated from/(used in) operating activities 8 9.3 (0.6)
Investing activities
Purchase of property, plant and equipment (1.8) (0.4)
Net cash used in investing activities (1.8) (0.4)
Financing activities
Shares allotted in respect of share option schemes 0.2 0.5
Facility fee paid (0.3) (0.1)
Equity dividends paid (2.3) (1.9)
Acquisition of shares by ESOT (0.8) (0.9)
Repayment of lease obligations (2.1) (1.5)
Net cash used in financing activities (5.3) (3.9)
Net increase/(decrease) in cash and cash equivalents 2.2 (4.9)
Cash and cash equivalents at the beginning of the year 8 20.3 25.2
Cash and cash equivalents at the end of the year 8 22.5 20.3
Consolidated Statement of Changes in Equity
For the year ended 31(st) December 2022
Share Share Revaluation Retained Total
capital premium reserve earnings Equity
£m £m £m £m £m
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 expense
Actuarial loss 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 on depreciation of freehold property - - (0.1) 0.1 -
Share-based payment expenses - - - 0.8 0.8
Shares acquired by ESOT - - - (0.9) (0.9)
Shares 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 31(st) December 2021 4.4 4.2 0.7 17.2 26.5
Comprehensive income
Profit for the year - - - 8.4 8.4
Other comprehensive income
Actuarial gain on retirement benefit obligation - - - 9.2 9.2
Deferred income tax on actuarial 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 expenses - - - 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
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
2021 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 2022, 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 2022 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 7.
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) 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 - Current Year
London UK South UK North Group costs and Total
Unallocated
£m £m £m £m £m
Revenue from contracts with customers 270.0 78.0 78.0 - 426.0
Depreciation (1.0) (0.7) (0.7) (0.6) (3.0)
Operating profit 10.6 2.1 2.4 (3.6) 11.5
Finance costs - - - (1.2) (1.2)
Profit before tax 10.6 2.1 2.4 (4.8) 10.3
Taxation expenses - - - (1.9) (1.9)
Profit for the year 10.6 2.1 2.4 (6.7) 8.4
London UK South UK North Total
£m £m £m £m
Business sector
Facilities Management 2.7 16.4 12.2 31.3
Infrastructure 20.6 38.9 20.0 79.5
Engineering Services 91.9 15.6 17.2 124.7
Residential & Hotels 18.5 0.8 26.0 45.3
Technologies 136.3 6.3 2.6 145.2
Total revenue 270.0 78.0 78.0 426.0
(iii) Segment information and revenue analysis - Prior Year
London UK South UK North Group costs and Total
Unallocated
£m £m £m £m £m
Revenue from contracts with customers 189.4 67.1 70.6 - 327.1
Depreciation (0.5) (0.5) (0.3) (0.7) (2.0)
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
Engineering Services 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 revenue 189.4 67.1 70.6 327.1
Note 4 - Taxation
2022 2021
£m £m
Current tax expense
UK corporation tax payable on profits for the year 1.7 1.5
Adjustment in relation to prior years (0.4) (0.2)
Deferred tax expense
Arising on:
Origination and reversal of timing differences 0.6 0.2
Total income tax expense 1.9 1.5
Reconciliation of tax charge
Profit before tax for the year 10.3 7.8
Tax at standard UK tax rate of 19% (2021: 19%) 1.9 1.5
Tax effect of:
Adjustment in relation to prior years (0.4) (0.2)
Permanently disallowed items 0.4 0.2
Total income tax expense 1.9 1.5
2022 2021
£m £m
Deferred tax credited to other comprehensive income (2.3) (0.4)
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.
2022 2021
£m £m
Earnings:
Profit attributable to owners of the Company 8.4 6.3
Weighted average number of Ordinary shares in issue (000s) 43,056 42,284
Basic earnings per share 19.60p 14.99p
(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.
2022 2021
£m £m
Earnings:
Profit attributable to owners of the Company 8.4 6.3
Weighted average number of Ordinary shares in issue (000s) 43,056 42,284
Adjustments:
Savings Related Share Option Schemes 192 471
Equity Incentive Plan:
Conditional share awards - 2,790
Weighted average number of Ordinary shares for diluted earnings per share 43,243 45,545
(000s)
Diluted earnings per share 19.51p 13.91p
Note 6 - Dividends
2022 2021
£m £m
Final dividend of 4.1p (2021: 3.65p) per ordinary share paid during the year
relating to the previous year's results
1.8 1.6
Interim dividend of 1.25p (2021: 0.75p) per ordinary share paid during the 0.5 0.3
year
Total 2.3 1.9
The Directors are proposing a final dividend of 4.1p (2021: 4.1p) per ordinary
share totalling £1.8 million (2021: £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 2nd June 2023 to shareholders on the register as at 5th May 2023. The
shares will go ex-dividend on 4(th) May 2023. 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 2022
final payment, may do so by contacting Link Group on 0371 664 0381. The last
day for election for the final dividend reinvestment is 12(th) May 2023.
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:
2022 2021
£m £m
Present value of funded obligations 40.6 73.4
Fair value of plan assets (27.7) (49.5)
Deficit of funded plans 12.9 23.9
The key assumptions used:
2022 2021
% %
Average Rate of increase in salaries 3.26 2.55
Rate of increase of pensions in payment 3.05 3.15
Discount rate 4.77 1.89
Inflation assumption (RPI) 3.12 3.25
Inflation assumption (CPI) 2.76 2.05
The mortality assumptions used in the IAS 19 valuation were:
2022 2021
Years Years
Life expectancy at age 65 for current pensioners
- Men 21.2 21.5
- Women 23.2 23.4
Life expectancy at age 65 for future pensioners (current age 45)
- Men 22.1 22.5
- Women 24.3 24.6
Note 8 - Notes to the statement of cash flows
(i) Reconciliation of operating profit to net cash generated from/(used in)
operating activities
2022 2021
£m £m
Operating profit 11.5 8.8
Depreciation charges 3.0 2.0
Equity-settled share-based payment expense 0.1 0.8
Pension deficit reduction contributions (1.5) (1.5)
Defined benefit pension scheme (credit)/charge (0.7) 0.4
Operating cash flows before movement in working capital 12.4 10.5
Movement in inventories (0.1) -
Decrease/(increase) in contract balances 2.2 (8.2)
(Increase)/decrease in operating trade and other receivables (3.8) (18.8)
Increase/(decrease) in operating trade and other payables 0.7 16.4
Cash generated from/(used in) operations 11.4 (0.1)
Corporation tax paid (1.6) -
Interest paid (0.5) (0.5)
Net cash generated from/(used in) operating activities 9.3 (0.6)
(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:
2022 2021
£m £m
Cash and cash equivalents 22.5 20.3
Net cash after deducting total borrowings was as follows:
2022 2021
£m £m
Cash and cash equivalents 22.5 20.3
Less borrowings (15.0) (15.0)
Net cash 7.5 5.3
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:
2022 2021
£m £m
Short-term benefits 4.4 3.3
Share-based payment 1.5 0.6
Post-employment employee benefits - 0.1
Total 5.9 4.0
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.
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 JRMFTMTMMBLJRecent 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