Tclarke Regulatory News (CTO)

18 Aug 2006 07:00

Clarke(T.) PLC18 August 2006 Interim Results for the six months to 30 June 2006 T CLARKE SIGNALS IMPROVING OUTLOOK T. Clarke plc, the electrical engineering and contracting company, has announcedits interim results for the six months to 30 June 2006. • Profit Before Tax up to £4.0m (2005: £3.6m) • Turnover increased by 9% to £100m (2005: £92m) • Basic EPS up 10% to 6.76p (2005: 6.14p) • Order book grows to £175m • Interim Dividend up 5% to 3.675p (2005: 3.5p) Major completions include: - DrKW HQ, London - Nomura House, London - Chiswick Park, Building 5, London - Plots 3, 4 and 5 More London - Wrigleys, Plymouth Major projects won include: - RBS Aldgate Union, London - Mizuho Bank, London - Framwell Gate Hotel, Durham - Golden Jubilee Hospital, Glasgow - McMillan Academy, Middlesborough Pat Stanborough, Chief Executive commented: " The market has been challenging during the first half of the year. Marginshave remained under pressure, but we are positive about the future. Our orderbook is growing and the prospects for our core business in London are very good. " In the build up to the Olympics in 2012, there are many new majorinfrastructure projects that are planned to start in 2008. This combined with anumber of large commercial office schemes in central London that are on thestarting blocks, bodes well. All these new projects will put increasing demandson the construction industry. In anticipation of this work, we are making surethat the group is in the right shape to take advantage of these opportunities.We have made strides to invest in the ability of the group to manage and deliverthis projected increase in workload. " In light of the positive outlook for the group, we have raised the interimdividend by 5%." -ends- Date: 18 August 2006For further information contact: T. Clarke plc cityPROFILEPat Stanborough, Chief Executive Simon CourtenayJohn Daly, Finance Director Tel: 020-7448-3244Tel: 020-7358-5000web: www.tclarke.co.uk Interim Results to 30th June 2006 - T. Clarke plc Chairman's Statement Group turnover during the half year was 9% up at £100.2m ( 2005: £91.6m ). Thelike for like increase was 7%. Profit before tax was up by 10% to £4.0m ( 2005:£3.6m ), whilst earnings per share also rose by 10% to 6.76p ( 2005: 6.14p ). Inthe light of these figures and the improving prospects for the Group, the Boardhas decided to increase the interim dividend to 3.675p per share, a 5% increaseover last year's payment of 3.5p per share. Cash stood at £2.0m at the end of June (£4.8m at 31 December 2005) reflecting the build up of debtors and work in progress. Whilst there was some disparity of performance between the various regional andHome Counties operations of the Group, a common feature was the pressure onoperating margins which all experienced. The wider spread of customer base andbusiness type, which our acquisitions in recent years have brought us, weretherefore important in enabling us to achieve an advance in turnover and profitsduring what has proved to be a difficult period. Initial positive progress has been made in bringing the regional operations moreclosely together, so that all can share in best practice and benefit from thefinancial strength and experience of the parent company. Looking forward, the prospects for the Group are improving. The size of ourcurrent order book, and the likely upswing in construction industry activity inthe latter part of this year and beyond, give us confidence for the future.However, bearing in mind the timing of major contract completions, it is likelythat the current year results will be broadly similar to those achieved in 2005. R.J.Race Chairman 18th August 2006 Business Review Operations Review Our core operations are key to our future growth, operating currently at around75% of capacity. Whilst seeking sensible savings in central overheads we must avoid making falseeconomies, we have a big investment in our skilled workforce and will need allour resources to meet the expected demand for our services. The regional board is actively involved in the 'harmonisation' of our regionalbusinesses, which includes achieving improvements in management efficiency,tougher financial controls and cost reductions. Our companies are experiencingmixed fortunes. In the provinces we have suffered unexpected bad debts andunforeseeable increases in material costs (copper prices increased by over 100%between October 2005 and April 2006). In the South East there has been somerecent slippage in the timing of two major projects. Whilst still challenging, the industry is showing signs of improvement in allareas. There is growing demand for new commercial office space in Central Londonand many large schemes will come on stream during 2007. Infrastructure worksassociated with 2012 will 'kick-off' in 2008 and will put increasing demands onthe industry as a whole. Completions during the period under review included; DrKW, Gresham Street;Nomura House, St. Martins Le Grand; Plots 3, 4 & 5 More London; Wrigleys,Plymouth; Nationwide BS, Swindon; Lanhydrock Golf Club and Hotel; Loch ElkDunoon Waste Water Treatment; David Wilson Homes, Edinburgh; Buxton SpringBottling Plant; Cromwell College, Chatteris; RV1 Histo Pathology Department,Newcastle; McCarthy & Stone, Grappenhall; Altrincham Library; Norwich CityFootball Club; seven Waitrose Stores; HMP Lewes; Cardiology Unit, HarrogateHospital and Christchurch College, Canterbury. Current Major Projects include; Romford and Havering Hospital; Allen & Overy,Bishopsgate; 201 Bishopsgate and Broadgate Tower; White City Retail Development;Unilever House; Shell Centre; O2 Arena; Drake Circus Shopping Centre, Plymouth;Bordeaux Quay, Bristol; Oceaneering, Rosyth; Wilkies Carpet Store, Leeds; BurtonCollege; Peterborough Hospital; Howlands Farm, Durham University; McCarthy &Stone, Llangollen; Barry Town Hall; Grand Arcade, Cambridge; twelve WaitroseStores; Warrington Bus Interchange; Grand Theatre, Leeds and HMP Lindholme. Recently Won Contracts include; RBS, Aldgate Union; Mizuho Bank; Golden JubileeHospital, Glasgow; Campsfield House Detention Centre, Derby; Framwell GateHotel, Durham; McMillan Academy, Middlesborough; South Lynn Millennium Village;Leigh Sports Village and Huddersfield Media Centre. Outlook Overall our business has achieved improvement in a tough market place. Theforward order book currently stands at £175m, of which £85m is scheduled forcompletion this year. We have seen some setbacks but the strength of our brandand the order pipeline for 2006 and 2007 position us well to deliver ourstrategy for continuous improvement, customer satisfaction, profitable growth,enhancing value and increasing returns to our shareholders, whilst managing therisk associated with the industry. Financial review Turnover and operating profit Turnover for the half year increased by 9% to £100m (2005: £92m). The Regionalcompanies contributed £58m to turnover (58%) compared with £43m (47%) in 2005. Group operating profit improved by 13% to £4.1m (2005: £3.6m) and the marginimproved slightly from 3.96% to 4.09%. The group administrative costs increasedby £1.8m but this included an unusually high bad debt experience (£0.34m 2005:£0.14m) and one off staff costs that will result in lower costs in the future. Profit before tax Profit before tax of £4.0m for the half year was 10% better than at the sameperiod last year (£3.6m) and included a net finance charge of £69,000 (2005: netinvestment income £26,000). Profit after tax Profit after tax was £2.70m (2005: £2.45m) reflecting a tax charge of £1.33m(2005: £1.20m) giving an effective tax rate of 33% (2005 33%). Earnings per share and dividends Earnings per share went from 6.14p to 6.76p an increase of 10%. The interimdividend will be 3.675% up 5% on last year (2005: 3.5p). Cash flow The net cash absorbed by operating activities was £0.5m compared with a net cashgeneration of £2.3m in 2005. After the final dividend payment of £2.8m (2005:£2.7m), no expenditure on acquisitions (2005: £4.7m) net capital expenditure of£0.3m (2005: £0.3m) and payments for tax and finance costs there was a netdecrease of cash and cash equivalents of £2.8m (2005: £5.6m). The increaseddifficulty in collecting debtor monies particularly in the regions whichresulted in an increase of net debtors and work in progress of £4.54m (2005:£2.16m) was a major influence on the group cash performance. However, theindications are still that this position will improve strongly during theremainder of the year. Pension obligations The movement in the discount rate in recent months has been a significant factorin the actuarial gain in the defined benefit pension scheme of £1.9m, net £1.3mafter deferred tax (2005: £0.033m loss and £0.024m loss). This improvement isreflected in the net assets on the balance sheet. CONSOLIDATED INCOME STATEMENT Unaudited Unaudited Audited 6 Months to 6 Months to 12 Months to 30 06 2006 30 06 2005 31 12 2005 £,000 £,000 £,000 Revenue 100,197 91,646 193,729Cost of Sales 84,416 78,168 165,848-------------------------------------------------------------------------------- Gross Profit 15,781 13,478 27,881AdministrativeExpenses 11,684 9,850 19,282-------------------------------------------------------------------------------- Profit from Operations 4097 3,628 8,599Investment Income/Finance Cost (69) 26 (45)--------------------------------------------------------------------------------Profit Before Taxation 4,028 3,654 8,554Taxation 1,329 1,204 2,845--------------------------------------------------------------------------------Profit for the period from continuingoperations 2,699 2,450 5,710 --------------------------------------------------------------------------------Earnings per Share 6.76p 6.14p 14.3p-------------------------------------------------------------------------------- GROUP STATEMENT OF RECOGNISED INCOME & EXPENSE Actuarialgains/(losses) ondefined benefit pension scheme 1,893 (33) (538) Tax on itemstaken direct to equity (568) 9 161--------------------------------------------------------------------------------Net income recogniseddirectly in equity 1,325 (24) (377) Profit for the period 2,699 2,450 5,710-------------------------------------------------------------------------------- Total recognised income & expensefor the period 4,024 2,426 5,333-------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited 6 months to 6 months to 12 Months to 30 06 2006 30 06 2005 31 12 2005 £'000 £'000 £'000Non Current AssetsGoodwill 14,385 14,358 14,385Tangible Fixed Assets 8,335 7,921 8,384Deferred Taxation 61 36 61-------------------------------------------------------------------------------- 22,781 22,315 22,830-------------------------------------------------------------------------------- Current Assets Construction contracts inventories 15,373 14,394 17,715Debtors 28,836 22,304 21,954Cash and Cash Equivalents 2,039 5,562 4,828-------------------------------------------------------------------------------- 46,248 42,260 44,497 --------------------------------------------------------------------------------Total Assets 69,029 64,575 67,327-------------------------------------------------------------------------------- Current Liabilities Bank Overdraft 3,238 2,786 2,311Corporation tax liabilities 1,427 1,748 2,273Creditors and Accruals 37,154 34.399 35,465-------------------------------------------------------------------------------- 41,819 38,933 40,049 --------------------------------------------------------------------------------Net CurrentAssets 4,429 3,327 4,448-------------------------------------------------------------------------------- Non Current LiabilitiesRetirement Benefit Obligation 3,004 3,885 4,284Other 388 676 404-------------------------------------------------------------------------------- 3,392 4,561 4,688--------------------------------------------------------------------------------Total Liabilities 45,211 43,494 44,737-------------------------------------------------------------------------------- Net Assets 23,818 21,081 22,590-------------------------------------------------------------------------------- Equity Share Capital 3,995 3,995 3,995Share Premium 1,234 1,234 1,234Profit and Loss Account 18,556 15,818 17,328Revaluation Reserve 33 34 33-------------------------------------------------------------------------------- Total Equity 23,818 21,081 22,590-------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 Months to 6 Months to 12 Months to 30 06 2006 30 06 2005 31 12 2005 £,000 £,000 £,000 Net Cash from Operating Activities (see note 5) (556) 2,292 3,535 --------------------------------------------------------------------------------Investing Activities Interest received 75 130 243Purchase of TangibleFixed Assets (287) (263) (1,438)Receipts on Disposal of Fixed Assets 12 - 1,531Purchase of Subsidiary Undertakings - (4,676) (4.717) --------------------------------------------------------------------------------Net Cash used inInvesting Activities (200) (4,809) (4,381)-------------------------------------------------------------------------------- Financing ActivitiesEquity Dividends Paid (2,796) (2,663) (4,061)Repayments ofobligations underfinance leases (164) (205) (326)Increase/(decrease) inbank overdrafts 927 (263) (1,149) -------------------------------------------------------------------------------- Net Cash (used in)/fromFinancing Activities (2,033) (3,131) (5,536)--------------------------------------------------------------------------------Net Increase/(Decrease)in cash and cash equivalents (2,789) (5,648) (6,382) Cash and CashEquivalents atbeginning of period 4,828 11,210 11,210-------------------------------------------------------------------------------- Cash and CashEquivalents at end of period 2,039 5,562 4,828 -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 months to 6 months to 12 Months to 30 06 2006 30 06 2005 31 12 2005 £'000 £'000 £'000 Balance at start of period 22,590 20,318 20,318 Profit for period 2,699 2,450 5,710Interim dividend paid - - (1,398)Prior year finaldividend paid (2,796) (2,663) (2,663)Actuarialgains/(losses) ondefined benefitpension scheme. 1,893 (33) (538)Corporation taxprovision on pensionbenefits. (568) 9 161Shares issued on acquisition - 17 17Premium on shares issued - 983 983 -------------------------------------------------------------------------------- Balance at end ofperiod 23,818 21,081 22,590 -------------------------------------------------------------------------------- Notes to the interim financial statements 1. Accounting policy The accounts have been prepared using accounting policies consistent with thoseadopted for the year ended 31st December 2005. The results for the half year areunaudited. 2. Earnings per share Earnings per share are calculated on the basis of the weighted average of39,947,889 ordinary shares in issue. (2005: 39,928,297 and profit attributableto shareholders of £2,699,000 (2005: £2,450,000). 3. Interim Dividend An interim dividend of 3.675p per share (2005 : 3.50p) was approved by the boardon 17th August 2006 and has not been included as a liability at 30 June 2006.This dividend will be payable on 20th September 2006 to shareholders on theregister on 1st September 2006. The shares will go ex-dividend on 30th August2006. 4. Pension commitments The present value of the defined benefit pension scheme, the related past andcurrent service costs were measured using the project unit credit method. Theamount included in the balance sheet arising from the group's obligations inrespect of its defined benefit retirement scheme is as follows: June 2006 June 2005 Dec 2005 £,000 £,000 £,000 Present value of defined benefitobligations 21,102 19,271 21,904 Fair values of assets 16,810 13,721 15,784-------------------------------------------------------------------------------- Deficit in scheme 4,292 5,550 6,120 Related deferred tax asset 1,288 1,665 1,836--------------------------------------------------------------------------------Liability recognised in thebalance sheet 3,004 3,885 4,284 --------------------------------------------------------------------------------The key assumptions used: Rate of increase in salaries 4.10% 4.40% 3.90% Rate of increase in pensions inpayment 2.70% 2.60% 2.60% Discount rate 5.20% 5.30% 4.70% Inflation assumption 3.10% 2.90% 2.90% Expected return on scheme assets 6.80% 7.00% 6.20% -------------------------------------------------------------------------------- 5.Reconciliation of Operating Profit to Net Cash from Operating Activities:- Unaudited Unaudited Audited 6 Months 6 Months Year Ended Ended Ended 30 06 2006 30 06 2005 31 12 2005 £,000 £,000 £,000 Profit from Operations 4,097 3,628 8,599 Depreciation Charges 478 418 905 Increase in Provisions 45 (5) 11 Profit on Sale of FixedAssets 4 - (1,014)-------------------------------------------------------------------------------- Operating cash flows beforemovements in workingcapital 4,624 4,041 8,501 (Increase) / Decrease inDebtors (6,882) 6,703 (2,145) (Increase) / Decrease inWork in Progress 2,342 (8,867) (3,170) Increase / (Decrease) inCreditors 1,669 1,783 3,507-------------------------------------------------------------------------------- Cash generated byoperations 1,753 3,660 6,693 Corporation tax paid (2,195) (1,314) (2,975) Interest Paid (114) (54) (183)-------------------------------------------------------------------------------- Net cash from operatingactivities (556) 2,292 3,535 -------------------------------------------------------------------------------- 6. The interim report will be circulated to members on 22 August 2006, fromwhich date copies will be available at or on application to the Company'sregistered office: T. Clarke plc, Stanhope House, 116-118 Walworth Road, LondonSE17 1JY, or via the Company's website, www.tclarke.co.uk or telephone:020-7358-5000. This information is provided by RNS The company news service from the London Stock Exchange