LONDON (Alliance News) - Building services group T Clarke PLC Tuesday halved its interim dividend, as it continues to be affected by legal and contractual issues and the slow uptake of schemes in its largest operating division.
The company posted pretax profit of GBP200,000 for the six months ended June 30, down from GBP800,000 a year earlier, as revenue fell to GBP109.8 million from GBP114.7 million.
T Clarke shares were quoted down 20% at 52.44 pence Tuesday morning, having hit a 52-week low of 42.75p in early trade.
The London-based firm has been beset by legal and contractual woes in recent times which have taken its toll on the business.
A T Clarke subsidiary is one of a number of parties subject to a damages claim in respect of work carried out in 2007. Damages were awarded against the company, which were settled by the company's insurers during the year. However, following an unsuccessful appeal, the apportionment of costs exceeded the insurance cover in place.
The subsidiary company has since entered into dialogue with the other party in order to negotiate a full and final settlement. T Clarke said it has received legal advice that the award notification may not, of itself, cause a breach of the group's obligations under its banking facilities.
"Whilst this legal view has not been confirmed with our bankers, they have provided us with an indication that they remain supportive and have no current intention to withdraw facilities as a consequence of the award," T Clarke said.
In addition, the company said it has still not been paid in full for a project within its Mission Critical division. In March, T Clarke had said it was making slow progress with the principal contractor on the contract concerned, but it is utilising the provisions of the contract to pursue its entitlement.
T Clarke said Tuesday that discussions are still progressing, and it also continues to progress closing out the accounts of its downstream supply chain.
In light of its woes, T Clarke cut its interim dividend in half to 0.5 pence from 1.0 pence.
T Clarke said the South Division, the largest of its three operating units, saw revenue fall by GBP11.6 million to GBP79.7 million from GBP91.3 million a year earlier. The company said the start-up of schemes in the London market in particular took longer than expected, while it was also hurt by a shortfall in volume during the period.
However, the North and Scotland divisions did better. The North arm saw revenue rise to GBP20.5 million from GBP17.0 million, while in Scotland revenue rose to GBP9.6 million from GBP6.4 million, buoyed by the strength of the residential market which complemented a number of commercial projects.
T Clarke said as part of its growth strategy the Scottish unit will continue to seek opportunities in the wider mechanical and electrical sector building upon the success of the work being undertaken at First Bus in Glasgow and Castlecrags Centre in Edinburgh.
The company said its forward order book currently stands at GBP275 million, compared with GBP225 million on June 30, 2013.
Overall, 90% of the company's targeted revenues for 2014 have now been secured, and it said it is in advance stage of negotiations on a number of high-profile schemes with a significant amount in London.
Looking ahead, T Clarke said current trading remains "sluggish affected by the slower than anticipated progress of some projects that will fuel our wider recovery."
"Whilst there are positive signs of improvement and we expect to see continued opportunities for growth next year, we still maintain it will be late in 2015 before we begin to see the benefits of the recovery translating into improved margins," Chairman David Henderson said in a statement.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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