Tclarke Regulatory News (CTO)

Interim results for the six months ended 30th June 2011

Highlights:

·; Group revenue £92.6m (30th June 2010: £85.7m)

·; Profit before taxation £1.4m (30th June 2010: £3.2m)

·; Profit before taxation - underlying* £2.2m (30th June 2010: £3.8m)

·; Underlying* operating profit £2.5m (30th June 2010: £3.9m)

·; Earnings per share 2.38p (30th June 2010: 4.57p)

·; Earnings per share - continuing 2.38p (30th June 2010: 5.65p)

·; Earnings per share - underlying* 3.90p (30th June 2010: 6.68p)

·; Interim dividend per share 1.0p (2010: 4.25p)

·; Net cash and deposits £3.4m (31st December 2010: £7.2m)

·; Forward order book £193m (30th June 2010: £220m)

*Underlying profit and earnings stated before amortisation of intangible assets, restructuring costs, long term employee benefit costs arising from acquisitions and acquisition expenses. Underlying earnings is adjusted for tax on these items

New contracts secured include:

·; Collegelands Office Development, Glasgow

·; Detica, London & Guildford

·; Freshfields Bruckhaus Deringer, London

·; Imperial Tobacco, Bristol

·; John Lewis, Tamworth

·; London Cable Car, London

·; Normanton Fire Station, West Yorkshire

·; North East Quadrant, London

·; Tate Modern 2, London

·; Treviglas Sports Hub, Newquay

·; Walkergate Medical Centre, Newcastle

Contracts completed include:

·; Barrhead Health & Social Care Centre, Glasgow

·; Cottenham Village College, Cambridgeshire

·; Mylor Yacht Club, Cornwall

·; Nottingham University, Humanities Building

·; Oxford Aviation Academy, Stockport, Greater Manchester

·; Rocket House Apartments, Newquay

·; Rothschild Head Office, London

·; The State Hospital, Carstairs

·; Waitrose, Jersey, Knutsford and Alderley Edge

Contracts in progress:  

·; Aspire Defence, Various Locations

·; Archbishop Courtney School, Maidstone

·; Deutsche Bank, London

·; INTO Newcastle University, Newcastle

·; Park House, London

·; St James Hospital, Renal Ward, Leeds

·; Vogt Solar PV installations Kent & Isle of Wight

·; Westfield Stratford City, London

Mark Lawrence, Chief Executive commented:

"Our core markets remain challenging. However, we are delighted to have been appointed on a number of the largest and most significant commercial and office development projects in the UK. But given the increased levels of competition across the market, margins remain under pressure. The group is very active in tendering for work, but we will not be drawn into accepting projects where we cannot meet our financial expectations.

"We have positioned the business to weather the current market environment. The positive steps we have taken to broaden the range of services that we are able to offer have been successful and our recent acquisitions are making a very useful contribution to the Group, which remains cash positive. However we remain cautious about the timing of recovery in our core markets.

-ends-

Date 26th August 2011

For further information contact:

T. Clarke plcMark Lawrence Martin Walton

Group Chief Executive Finance DirectorTel: 020 7358 5000 Tel: 020 7358 5000

www.tclarke.co.uk

City ProfileSimon CourtenayTel: 020 7448 3244

Chairman's statement

The Group has delivered financial results for the period which are a reflection of the challenges we face.

The Board has repeatedly reported that the markets in which it operates have been extremely difficult. The Board makes conservative assessments of final accounts from project completions and the likely outcome for ongoing projects. The Group has seen no improvement in the trading environment and does not expect to see any significant improvement in the short term. Accordingly, we expect underlying earnings for the second half to be at a similar level to that of the first six months.

Against this backdrop, the Board intends to pay an interim dividend of 1.0p.

The forward order book is £193m (30th June 2010: £220m) of which £69m is scheduled for completion this year. Net cash and bank deposits remain positive at £3.4m (31st December 2010: £7.2m).

Operating throughout the UK, the Group has a diversified range of services and an excellent customer base. In the short term, we will continue to seek out opportunities in our traditional markets as well as those markets we do not currently fully serve.

The main issue the Group faces is the timing and strength of recovery in our markets. Conditions remain challenging but the Group is well placed to deliver on its business plans in the coming years.

Russell Race

Chairman

26th August 2011

Business review

Operational review

The integration of the Group has continued across the country. 70% of the Group's revenue is being delivered by businesses that are now trading under the T.Clarke brand. We have made encouraging progress in the first half of the year within our new target sectors. This has helped the Group to broaden the range of services that we can offer and diversify the sectors in which we operate. This strategy is aiming to reduce our dependency on traditional contracting. As part of this move to diversify our operations, we were pleased that £15m of Facilities Management type contracts were undertaken, together with £5m of "Green" Photovoltaic Installations that were secured. Our Intelligent Buildings Division has become a recognised alternative within the market place and we are building upon initial project wins within this sector.

In the short term, there continues to be immense pressure on margins. In many instances the number of bidders for projects remains excessively high, which can lead to the project being awarded at an unsustainable level. We have been reluctant to become involved in such bidding wars.

Material price increases, as well as commodity and currency fluctuations during the life of individual projects, require careful monitoring to assess the ongoing risk on our projects.

Looking beyond 2011, we are building our forward order book with a number of significant wins from a range of impressive blue chip clients. A contributing factor to securing these projects is the confidence that our clients have in the strength and reputation of the business, and of our ability to deliver on time and on budget very large, complex schemes.

Our forward order book for commercial office developments in London now stretches to 2014 and will support our future growth.

T.Clarke - South

We are currently completing Europe's largest urban shopping centre. The 1.9 million sq ft Westfield Stratford City Shopping Centre is nearing completion and opens to the public on 13th September. Adjacent to Stratford City, we have completed the electrical installation works on the 2012 Olympic Stadium and the team is now undertaking the initial FM contract running until the end of 2012.

We have secured some of the most significant schemes in the capital, such as the London Cable Car for TfL, the Tate Modern 2 extension project, a large office scheme at the North East Quadrant at Regent's Place for British Land and the fit out project for JP Morgan at Canary Wharf.

In addition, we have been awarded preferred bidder status for 100 Bishopsgate, a joint development between Brookfield and Great Portland Estates. This commercial office scheme, when completed in 2014, will provide three new buildings totalling 820,000 sq ft which will include a 39 storey, 166m tall office tower.

Over £5m of Photovoltaic Installations have been completed, including three solar farms covering 11 acres for Vogt Solar at St. Nicholas at Wade and Ebbsfleet, Kent and at Durrants, Isle of Wight.

Our successful acquisition of DG Robson Mechanical Services ("DGR") has meant we have been able to offer our clients in London a wider range of services that complement our electrical capabilities. Building and maintaining close relationships with existing clients and contractors has resulted in a number of opportunities. To underscore the synergies of the two businesses, we plan to bring T.Clarke (London) and DGR together to operate from a common central location.

T.Clarke - North

Despite the Government cuts we have secured a meaningful number of projects for the public sector.

From the beginning of the year, three businesses within the Group were rebranded T.Clarke. Aylward EMS (located in Huntingdon) and Anglia Electrical Services (located in Kings Lynn) are now T.Clarke East. T.Clarke Midlands (based in Peterborough) has expanded to incorporate Mitchell and Hewitt (located in Derby). The integration of these businesses and the further use of the T.Clarke brand have been completed as planned.

D&S Engineering Facilities ("D&S") continues to make significant contributions to the Group since being acquired in March 2010. The integration of this business within the Group is enabling us to build our market share in one of our target sectors, FM (Facilities Management). The Group as a whole is also benefiting from the D&S client base whereby we have been able to offer D&S clients a broader offering in more geographical locations across the UK.

T.Clarke - Scotland

Last year our operations in Scotland suffered as a result of the weak economic environment. The Division has made good progress in reducing its cost base. It has also worked hard to focus on margin improvement, despite the contracting scene in Scotland remaining fiercely competitive.

Our Scottish business has been focusing on sectors where it is believed there are opportunities both in terms of margin and future works with a particular attention to residential, engineering and IT led projects.

Over £4m of residential projects have been secured so far this year across a wider area than we have traditionally worked. Our solution to house builders means they have confidence in T.Clarke that we can not only offer the complete M&E solution for their developments but also an excellent lifetime aftercare service.

Summary

Our forward order book is encouraging and stands at £193m (30th June 2010: £220m) but pressure on margins remain. The timing and strength of the recovery in our markets is key to the return of improved margins. Until then we are focused on keeping the business in shape and seeking out further opportunities.

Outlook

The outlook is very much similar to this time last year which highlights the lack of recovery in our core markets. We are pleased that we have secured some of the most significant projects that have come to the market. It is a reflection of the strength and confidence that clients have with T.Clarke in terms of technical ability, the depth of management and our skilled workforce.

Tendering activity and opportunities remain high across the group, and the prospects for the Group remain encouraging despite the challenges in the short term. The Board is focused on delivering value for our customers and shareholders. The steps we have taken to reduce our cost base and reposition the business as a more broadly based service provider will fuel the future profitability of the business.

Mark Lawrence

Chief Executive

26th August 2011

Financial review

Summary of financial performance

The group's performance in the first half of the year reflects trading conditions which continue to be challenging.

Revenue increased by £6.9m (8%) to £92.6m (2010: £85.7m), reflecting the impact of the acquisitions completed in 2010.

Gross profit reduced by £0.9m from £13.7m (16.0%) to £12.8m (13.9%) and underlying operating profit fell by £1.4m to £2.5m (2010: £3.9m), reflecting a lack of significant contract completions in the first half of the year and a prudent assessment of contracts in progress.

Profit before tax decreased by £1.8m to £1.4m (2010: £3.2m). Underlying profit before tax was £2.2m (2010: £3.8m). Underlying profit before tax is stated before amortisation of intangible assets, restructuring costs and long term employee benefit costs arising from previous acquisition totalling £0.9m (2010: £0.5m). Taxation was £0.4m (2010: £1.0m), and the effective tax rate was 28.3% (2010: 30.3%).

Earnings per share were 2.38p (2010: 4.57p), and earnings per share on continuing operations were 2.38p (2010: 5.65p). Underlying earnings per share were 3.90p (2010: 6.68p).

The results by division are considered below. 2010 comparatives have been restated to include the results of our Derby operations within the South division following its amalgamation with our Peterborough operations. Derby was previously reported as part of the North division.

T.Clarke - South

Revenue in the South rose by £3.8m to £60.2m (2010: £56.4m), reflecting the impact of DG Robson (acquired in the second half of 2010). Operating profit was £0.4m (2010: £3.4m), with 2010's results having been boosted by a number of project completions.

Underlying operating profit was £1.0m (2010: £3.6m), after adjusting for £0.1m intangibles amortisation, £0.3m restructuring costs and £0.2m long term employee benefit costs arising from the acquisition of DG Robson (2010: £0.2m restructuring costs).

T.Clarke - North

Revenue in the North increased by £2.7m to £22.7m (2010: £20.0m). Operating profit increased by £0.5m to £1.3m (2010: £0.8m), including a full 6 months contribution from D&S Engineering Facilities (acquired at the end of March 2010).

Underlying operating profit was £1.5m (2010: £1.1m), after adjusting for £0.2m intangibles amortisation (2010: £0.1m intangibles amortisation and £0.2m acquisition expenses).

T.Clarke Scotland

Revenue in Scotland increased by £0.5m to £9.7m (2010: £9.2m), with underlying operating losses of £0.2 million (2010: £1.1m) before restructuring costs of £0.1m (2010: £nil).

Cash flow and dividend

Net cash outflow in the period was £3.8m (2010: £10.2m), after dividend payments of £1.8m (2010: £3.5m).

Net cash outflow from operating activities was £1.9m (2010: £5.7m), due to decreased net working capital outflows. Net cash at 30th June 2011 remained positive at £3.4m, compared to £7.2m at 31st December 2010, and the group has no debt apart from £0.3m owed under finance leases. Cash management, and in particular the management of credit risk, remain a key area of focus for the group.

The interim dividend will be will be paid on 14th October 2011 to shareholders on the register at 16th September 2011 as detailed in note 6.

Banking and audit arrangements

As part of our strategy to strengthen the finance function across the group, audit and banking arrangements have been consolidated during 2011. PricewaterhouseCoopers LLP, who were appointed as the company's auditors at the AGM, have now been appointed as auditors to all subsidiary companies, and all group companies now have banking arrangements with the existing PLC bankers Royal Bank of Scotland.

Martin Walton

Finance Director

26th August 2011

Notes to the condensed consolidated financial statements for the six months to 30th June 2011

Note 1 - Basis of preparation

T.Clarke plc (the 'company') is a company incorporated and domiciled in the United Kingdom. The consolidated interim financial statements comprise the condensed financial statements of the company and its subsidiaries (together the 'group').

These interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34') as adopted by the European Union, and the Disclosure and Transparency Rules ('DTR') of the Financial Services Authority. They do not include all the information required for the full annual financial statements, and should be read in conjunction with the financial statements of the group as at and for the year ended 31st December 2010.

The figures for the year ended 31st December 2010 do not constitute statutory accounts but have been extracted from the group's statutory accounts for that year. The statutory accounts for the year ended 31st December 2010 have been delivered to the Registrar of Companies and a copy has been made available on the company's website at www.tclarke.co.uk. The auditors' report on those accounts was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The interim financial statements have not been audited or reviewed by the company's auditors.

Note 2 - Accounting policies

Except as described below, the financial statements have been prepared using the accounting policies and presentation that were applied in the audited financial statements for the year ended 31st December 2010.

Taxes on income in the interim periods are accrued using the estimated effective tax rate that would be applicable to expected total annual earnings.

Note 3 - Segmental information

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; the South, the North and Scotland, and an internal property division, reporting to the Chief Executive, who is the chief operating decision maker. All assets and liabilities of the group have been allocated to segments, apart from the retirement benefit obligation and tax assets and liabilities.

Following an internal reorganisation, with effect from 1st January 2011 the operations of our Derby office have been merged with those of our Peterborough office and included within the South division. Previously our Derby operations were reported as part of the North division. Comparative information has been restated.

The group also monitors revenue and gross profit split between electrical and mechanical contracting and other services, including facilities management.

Note 4 - Taxation expense

The effective income tax rate applied for the period is 28.3% (30th June 2010: 30.3%; 31st December 2010: 30.5%)

Note 5 - Earnings per share

A. Basic earnings per share

The earnings per share represents the profit for the period divided by the weighted average number of ordinary shares in issue. The number of ordinary shares for the purpose of this calculation is 41,399,795 (30th June 2010: 39,947,889; 31st December 2010: 40,433,184). The profit for the period is as follows:

B. Underlying earnings per share

Underlying earnings per share represents the profit for the period from continuing operations adjusted for goodwill impairment, amortisation of intangible assets, acquisition expenses, other long-term employee benefit costs arising from the DGR acquisition and restructuring costs, divided by the weighted average number of ordinary shares in issue. The number of ordinary shares for the purpose of this calculation is 41,399,795 (30th June 2010: 39,947,889; 31st December 2010: 40,433,184). The underlying profit for the period is calculated as follows:

C. Diluted earnings per share

There is no material difference between the diluted earnings per share and basic earnings per share.

Note 6 - Interim dividend

An interim dividend of 1.0p per share (2010: 4.25p) was approved by the board on 25th August 2011 and has not been included as a liability as at 30th June 2011. The shares will go ex-dividend on 14th September 2011 and the dividend will be paid on 14th October 2011 to shareholders on the register as at 16th September 2011. A dividend reinvestment plan is available for shareholders. Those shareholders who have not elected to participate in this plan, and who would like to participate with respect to the 2010 interim dividend, may do so by contacting Capita Registrars on 0870 162 3131. The last day for election for the interim dividend reinvestment is 12th September 2011 and any requests should be made in good time ahead of that date.

Note 7 - Notes to the consolidated statement of cash flows

b. 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:

Note 8 - Pension commitments

The present value of the defined benefit pension scheme and the related past and current service costs were measured using the projected unit credit method. The amount included in the balance sheet arising from the group's obligations in respect of its defined benefit retirement scheme is as follows:

Note 9 - Related party transactions

Transactions between the company and its subsidiary undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Full disclosure of the group's other related party transactions is given in Note 23 to the group's financial statements for the year ended 31st December 2010. There have been no material changes in these relationships in the six months ended 30th June 2011 that have materially affected the financial position or performance of the group during that period.

Note 10 - Risks and uncertainties

Details of the key risks facing the group are included on pages 9, 10 and 13 of the group's annual report and financial statements for the year ended 31st December 2010. Details of further potential risks and uncertainties arising for the six months ended 30th June 2011 are included within the Chairman's statement and the Business and Financial Reviews as appropriate. The directors consider that the main areas of risk and uncertainty with respect to the remainder of 2011 remain market conditions, operational risk, cost inflation, people, health & safety, credit and liquidity risk, cash flow interest rate risk and risk from pension obligations.

Statement of directors' responsibilities

The directors confirm that the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8 (disclosure of related party transactions and changes therein). The directors also confirm that the interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and present a true and fair view of the assets, liabilities, financial position and profit of the group.

On behalf of the Board

R J Race - Chairman

M Lawrence - Chief Executive

M R Walton - Finance Director

26th August 2011