TClarke plc
Results for the year ended
31 December 2023
TClarke delivers record
revenues of £491m
TClarke plc ("the Group" or
"TClarke"), the Building Services Group, announces its preliminary
results for the year ended 31 December 2023.
Financial Highlights
RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER
|
2023
|
2022
|
Change
|
Revenue
|
£491.0m
|
£426.0m
|
+15%
|
Operating profit
|
£9.4m
|
£11.5m
|
-18%
|
Profit before tax
|
£7.6m
|
£10.3m
|
-26%
|
Basic Earnings per share
|
13.75p
|
19.60p
|
-30%
|
Net cash at year end
|
£19.3m
|
£7.5m
|
+157%
|
Total dividend per share
|
5.9p
|
5.35p
|
+10%
|
Forward order book
|
£943m
|
£555m
|
+70%
|
|
|
|
|
2023 summary
· Group
delivering on its growth strategy
· Revenue up 15% to £491m
· Forward order book up 70% to £943m
· Operating margin of 1.9% (2022: 2.7%), in line with the
Company's trading update of November 2023
· Strong
balance sheet
· Net
Cash £19.3m (2022: £7.5m)
· Net
Assets £53.4m (2022: £38.7m)
· Successful equity placing raised gross proceeds of £10.7m
during the period
· Data
centre business expanding rapidly with £346m of orders (2022:
£88m)
· Progressive dividend policy with total dividend up
10%
· Apprentices now number 247 (2022: 210) making up 18% of
workforce
· Total
type 1 and 2 emissions fall to 4.4 tCO2e/£m revenue (2022: 4.8
tCO2e/£m revenue)
Mark Lawrence, CEO commented:
"Initiated in March 2021, our ambitious journey aimed to
double our revenues through organic expansion. It is very pleasing
to report that in 2023 we successfully achieved these growth
plans.
Our
growth reflects the high quality of our operations and the talent
and commitment of our people, supply chain partners and the ongoing
support of our clients.
The
Group boasts a robust forward order book comprising top-tier
projects in our target sectors, underpinned by a strong balance
sheet with our net assets having increased by 38% compared to 2022,
reflecting our financial strength.
Looking forward, we are poised to maintain our progress in our
targeted markets, positioning us favourably to achieve our growth
plans for 2024 and beyond."
-ends-
Date: 15th March
2024
For further information
contact:
TClarke plc
Mark Lawrence Group Chief
Executive
Trevor Mitchell Finance
Director
Tel: 020 7997 7400
www.tclarke.co.uk
Cavendish Capital Markets Limited (Corporate
Broker)
Ben Jeynes (Corporate
Finance)
Dale Bellis / Andrew Burdis (Sales
and ECM)
Tel: 020 7220 0500
www.cavendish.com
RMS
Partners
Simon Courtenay
Tel: 020 3735 551
Chairman's
Statement
2023 has been another year of
significant achievement for TClarke. In a very challenging
marketplace revenue increased by 15% to £491m (2022: £426m). The
composition of this revenue number and order book reflects the
successful implementation and delivery of our strategy in our
chosen markets.
Our strategy is to pursue organic
growth by focusing on our five core market sectors, whilst building
our market presence in data centres, large projects outside of
London, smart buildings and healthcare. Whilst revenues from these
areas reduced to £189m in 2023 (2022: £220m) they form a
substantial part of our Forward Order Book with data centres alone
accounting for £346m.
Our forward order book now stands at
£943m, an increase of 70% (2022: £555m) which again demonstrates
the successful implementation and delivery of our strategic
development plans.
In common with the wider market, we
have faced significant economic and political upheavals and
uncertainties throughout 2023, and this has perhaps been
particularly the case in our Engineering Services sector. Despite
this, we have achieved an operating profit of £9.4m in 2023 (2022:
£11.5m), which is a very creditable result given the uncontrollable
external pressures we have had to manage this year. This
performance results not just from the successful implementation of
our strategy, but also from the effective and continuous strategic
and operational management and focus on delivery and
performance.
During the year we completed a
successful share placing which raised additional net proceeds of
£10.1m. The rationale behind the placing was to increase our
working capital levels to support our increased levels of activity
and the changing nature of our working capital requirements given
the increased size and complexity of current and future projects.
The placing was oversubscribed, and new shares were taken up by
both existing major shareholders and several new institutional
investors. The support and increased investment by both existing
and new shareholders through this placing is further evidence of
the recognised success of our chosen strategies and investor
confidence in our forward growth and performance.
We remain committed to a progressive
dividend policy while at the same time balancing the interest and
needs of all stakeholders. We are proposing a 2023 final dividend
of 4.525p per share (2022: 4.1p) which together with the interim
dividend of 1.375p paid in October 2023 brings the full 2023
dividend to 5.9p per share (2022:
5.35p), an increase of
10%.
We have continued to invest in our
responsible business activities, and I'm extremely proud of the
enormous amount of work and innovation by our teams in enabling us
to address climate change and deliver social value to the
communities where we work.
Our manufacturing facilities in
Stansted and Coatbridge have enabled TClarke to significantly
reduce its carbon footprint. In addition, investment has been made
into our carbon calculator for calculating Scope 3 emissions;
information from which has been used on several tenders.
During the year our offices switched
to 100% renewable energy, and we have introduced our first wave of
electric vans within the Group's fleet.
Our teams have continued to build
partnerships with schools, charities, and social organisations to
provide work and training opportunities for local communities and
introduce young people to careers in construction. This will help
promote diversity while building a talent pipeline for the
industry. We have been decarbonising schools, making them more
energy efficient.
We continue to be the leading
provider of apprenticeships in our sector, with 247 apprentices
currently in place across the Group. This represents 18% of the
total workforce (2022: 16%) - significantly more than the industry
norm of 5%. This is a positive and substantial investment made with
our confidence in TClarke and the future.
As we look forward to 2024 and
beyond it seems unlikely that the current significant external
economic and national and geopolitical challenges will lessen.
Despite this, I look to the future with confidence for TClarke. We
have a significant and growing order book at record levels. Our
strategy is delivering and the successful share placing in 2023
demonstrates the confidence and support of the investment community
in our performance and prospects. Our management, delivery focus
and capabilities give TClarke the ability to continue to grow and
prosper.
As ever, however, it is the
collective and outstanding effort and output of our people which
delivers the distinctive TClarke brand - a brand which is very
strong, built upon our reputation for high quality engineering,
reliability and on time delivery. It is our people and our brand
that enable us to grow and perform and to face the future and its
challenges with confidence.
Chief Executive's
Report
An
effective model and a fresh target for growth
In March 2021, we began a journey to
double our revenues. As we approach and pass this goal, the Company
will continue to deliver organic growth, delivered with our
consistent commitment to strong engineering with good values - and
achieved without the costs or risks of acquisition.
We are able to increase our growth
target significantly only because we can rely on the steadfast
support we receive from our partners, customers, shareholders, and
most importantly, our dedicated TClarke team, even amidst ongoing
market challenges. I extend my heartfelt thanks to each of you for
your invaluable contribution to our ongoing
achievements.
This business model outputs sustainable
growth
The challenges of inflation and
supply that persisted throughout the year appear likely to persist
further due to conflicts around the world. These factors continue
to affect our markets, yet our robust business model and risk
management practices enable us to mitigate risks, minimise
disruptions, and capitalise on opportunities to keep on track with
growth.
Once again in 2023, this business
has succeeded in winning high-quality work, delivering it to our
clients' satisfaction, and building our resource of people, skills,
and capabilities to enable further headroom for growth.
Organic growth of this kind is
sustainable. It allows us to broaden our client base, diversifying
our risks and increasing both the scope and scale of opportunities
available to us. This growth increases our resilience, while also
increasing the value delivered to our stakeholders.
Together we operate a consistent and straightforward
strategy
We operate in competitive,
commercially driven markets, delivering complex engineering
services. But our strategy is simple, fully understood by our
people, and executed with precision across our business.
We maintain a disciplined and
selective approach to tendering. We do not tender for projects
where the margin is unacceptable.
We focus on workstream opportunities
within five market sectors which we understand well, where our
brand is known, where opportunities for growth exists and where we
have market-leading expertise and skills.
We build and invest in our resource
to maximise operational flexibility, adopting and pioneering new
services like MMC (Modern Methods of Construction) which
significantly expand our resource capabilities. We also balance and
flex our growth across and between these sectors to take advantage
of market opportunities and cycles and manage our risks
effectively.
This approach has been followed
consistently and fine-tuned, year by year. Our investments in
systems, processes and skills have been focused on improving our
ability to deliver this strategy.
Our goal in each of our five core
markets is to be 'contractor of choice' in the marketplace,
recognised for the quality and value of our work.
Every team in the business
understands the strategy and what it requires from us. I am very
proud of the performance levels which our people have achieved
throughout the year. We can always do better - but their
focus has been excellent and should
be recognised.
Delivering record revenues
2023's record revenues of £491m are
headlined by our performance in the Engineering Services market
sector, but fully supported by strong revenues across all
markets.
Large projects outside London
achieved notable growth from £37m in 2022 to £88m in 2023. This
reflected a step change across our regional operations - for
example, during the year we were able to report the doubling of the
average Engineering Services tender size in Scotland and a total of
19 projects of £5m + being delivered across our regions.
Delivering record forward orders
Our success in 2023 can be measured
in the exceptional growth in our forward order book. In competitive
markets, clients have actively sought to lock in TClarke teams to
deliver their projects. Our order book has grown 70% in the last
year, from £555m in 2022 to £943m in 2023. This delivers a major
strategic advantage - allowing us to manage efficiently, invest for
value and select future projects from a position of greater
strength.
Although 2023's order book growth
has been led by Technologies, which has more than trebled from
2022, that should not mask the exceptional growth enjoyed in
Engineering Services and Infrastructure.
The Infrastructure order book has
grown 47% compared to last year to £178m - reflecting both our
long-term play in the healthcare sector and pleasing growth in
other sectors including defence.
Engineering Services orders are up
39% - reflecting both our ongoing strength in major London markets
and our growing presence and relationships across the
country.
The order book growth for
Technologies of 223% is in large part due to our growing reputation
and leadership in the data centres market. Appetite and demand for
TClarke teams and services, matched by our expanding resource base
and skills, make this a strong area for our business. As the data
centre industry approaches an 'iPhone moment', with the adoption of
AI accelerating demand and need for data centre services, we see
substantial opportunities in the years ahead.
Delivering the same unique brand experience
We are now entering our
135th Anniversary year.
In 1889, it was TClarke's 'wires
encased in fire-proof materials' that enabled electrification for
Royal Palaces including Windsor Castle and St James' Palace. Modern
Methods of Construction (MMC), Smart Buildings and Alternative
Energy Solutions are just three of the technologies where our
leadership is enabling progress today. Our brand reputation has
been built one project at a time during this year, just as it has
every year since 1889. Today it operates as a significant
commercial asset alongside our financial strength - allowing people
to place their trust in TClarke.
I am very pleased to report that in
2023 our ability to retain clients remains central to our success.
During the year, 92% of projects have been with repeat clients
and/or principal contractors. At the same time, particularly in the
field of data centres, we are also building a broad new portfolio
of long-term partners, operating frequently as the General
Contractor (GC) in these projects, where the building services
dominate.
The continued strength of our
business is due in no small part to the long-term relationships we
enjoy - with major
developers in London, housebuilders
in Scotland and the NHS and defence sectors nationwide to name just
a few. Our retention rate and the depth and length of relationships
we build with our clients and supply chain is testament to the
strong culture at all levels within our business.
Everything starts with our Resource
Culture depends on people. Once
again, this year we have invested in excess of £6m in our
apprentices across the UK and had 247 apprentices within the
business (compared with 210 in 2022). Moreover, in 2023 we also
reported a record 900 applications for our apprenticeships. This
substantial commitment and interest creates a pipeline of future
talent, designed to deliver both skilled operatives and future
leaders in the volume and quality we require to meet our needs for
growth. It also means that TClarke has deep roots in our local
communities.
Offsite manufacture allows us to
prefabricate major components of a building's engineering services
in safe, factory conditions - and vastly improve efficiency and
onsite logistics and environmental performance. During 2023 our two
prefabrication facilities in Stansted, Essex and Coatbridge,
Central Scotland completed a number of successful projects for our
clients. Our confidence in resetting growth targets is only
possible because of this exceptional resource of people, skills and
facilities in-house. We keep investing and innovating to create
further headroom for growth. Our competitors, whose models are
overly dependent upon the use of sub-contractors, cannot achieve
this level of confidence.
Our
people build and retain Engineering Expertise
In 2023 our Bankside Yards project
delivered a new industry benchmark for integrated offsite
manufacture, helping achieve the UK's first fossil-fuel free major
mixed-use development. This was one of several major London
Engineering Services projects in 2023 where TClarke teams advanced
the industry standard - in everything from smart buildings to
upgraded energy performance.
During 2023, TClarke London was also
highly successful in quietly delivering some extremely complex
major projects - including our largest Engineering Services project
ever. These performance highlights in London were
fully matched nationwide by the
delivery of high profile, complex projects ranging from laboratory
suites at Sawston Unity Campus in Cambridge, to numerous scanning
facilities for hospitals across Britain to The Bristol Beacon - the
year's largest arts project outside London.
Within the world of data centre
engineering, TClarke progressed at pace in 2023, not only
delivering £100m of revenue but securing a pipeline of £346m. These
project wins are far more than figures in a financial report -
they
directly reflect the fact that we
have made ourselves acknowledged leaders in the engineering of data
centres. Our engineering expertise - in particular the scale and
number of high-quality in-house teams we can offer - has been the
single most important factor in driving the growth of our data
centre business.
Overall, our depth of engineering
experience and talent, our passion and pride to complete projects
successfully for our partners and track record of complex landmark
projects is one that no other team in the market can match.
Crucially, due to our commitment to in-house careers, our
engineering expertise stays within our business and builds over
time. This body of knowledge has grown yet again in 2023, allowing
us to hand pick the right team for our clients' project needs -
from our own people.
A
Responsible and progressive business
As well as being a high-quality
engineering services business, TClarke has played a progressive
role in society throughout 2023, in directly tangible ways that
impact our local communities.
Our nationwide apprenticeship scheme
sets the industry Gold Standard for quality - measured by its scale
within our business and our consistently high percentages of
successful completions. We need it because of our longstanding
belief in high quality in-house careers, career development and
employment for our people. During 2023 our directly employed
workforce increased by 9%. Our number of training days also
increased by 62%. The significant investments we make every year in
local people are at the heart of our difference and the substantial
social value which TClarke delivers to our communities. We work
hard to offer our teams the best environments to collaborate, share
knowledge, work safely and build careers. We are also proud to
support many local community projects, charities and sporting teams
for boys and girls of all ages nationwide.
At the start of 2023, we launched 25
by 28 - our five-year plan to fill 25% of our apprenticeship and
training positions with women by 2028. During our 2023
apprenticeship intake we took our first small steps to make that a
reality. Over the next five years we will continue to work at what
is a deliberately ambitious target.
We have set the bar at this level
because a fully diverse workforce, fit for the future, accessing
the greatest range of talent, is a prize we want to win.
By collaborating with partners
across our industry and taking the lead on such a major issue, we
also recognise that what we achieve here will create far wider
value and our successes will help reset everyone's standards and
expectations.
Most importantly of all, TClarke is
committed first and last to the safety and wellbeing of all our
people and those with whom we work. During 2023 these commitments
were expressed in a wide-ranging series of safety events, training,
services and metrics for our staff to improve safety performance in
every way we can. The increase in usage of our You Say You See
reporting tool of 45% has been one of many highlights achieved
during the year.
Outlook
The strength of our £943m forward
order book is matched by a robust pipeline of current opportunities
and a strong balance sheet with net assets of £53.4m. We have
clarity in our strategy, balance across our sectors and a depth of
available resource and capabilities across our business for further
growth.
These strengths have allowed the
board to approve our next medium term growth target of £650m.
Within that medium term outlook, we see that our Technologies
businesses have continued strong prospects, fueled by the emergence
of AI, driving ongoing growth in data centre markets. At the same
time, the advance towards Net Zero is driving the adoption of new
alternative energy and smart buildings technologies, transforming
needs across our Engineering Services markets. Our continued
leadership in London engineering services and our growth in
infrastructure and large regional projects adds further
confidence.
While we expect and plan for
challenges on every scale, we are looking forward to continued
growth for all our stakeholders, achieving optimum revenues and
margins. We are also focused on doing things the right way - the
TClarke Way.
Our brand has been around for one
hundred and thirty-five years; right now, our leadership in
critical new engineering services technologies is more assured than
ever.
That fact is not determined by our
board but by the customers who choose and the TClarke teams who
deliver. It is a matter of great pride that we have been able to
immediately revise our target upward. There is great optimism in
our business - based on the ongoing potential for organic growth we
see in the immediate years ahead.
Group Financial
Review
Key
Highlights
Progress against strategic
objectives:
Strategic Objective:
|
Progress
|
Deliver £500m revenue by end
2023
|
· 2023
Revenue: £491m
· Increase of £65m
|
Grow organically
|
· Order
book £943m
· Technology orders £359m
· Major
project wins across the UK
|
Sustain a 3% operating
margin
|
· 2023:
1.9% margin achieved
|
Maintain premium position in core
markets
|
· Order
book replenished and increased
· Technology, now 38% of Order book
· 90% of
turnover from repeat clients
|
The Group has continued to grow
strongly recording revenues of £491m (2022 £426m). 2023 marks the
end of the 3 year growth plan to grow revenues organically from
£300m pa to £500m pa. This plan has substantially been achieved. In
addition through the opportunities and orders TClarke has generated
we are confident that our growth will continue throughout the next
period. Our order book has grown to £943m (2022 £555m) as shown
below:
|
2023
Forward
Order
Book
|
2022
Forward
Order
Book
|
Market Sector
|
£m
|
£m
|
Engineering Services
|
313
|
225
|
Technologies
|
359
|
111
|
Infrastructure
|
178
|
121
|
Residential & Hotels
|
66
|
73
|
Facilities Management
|
27
|
25
|
Grand Total
|
943
|
555
|
We have seen revenue growth across
all of our market sectors in 2023, with the exception of
Technologies, where the phasing of our data centre work has seen a
number of large projects complete during the year, with the next
batch of large projects featuring heavily in our secured work for
2024.
Summary of Financial Performance
|
2023
£m
|
2022
£m
|
Revenue
|
491.0
|
426.0
|
Operating profit
|
9.4
|
11.5
|
Net finance costs
|
(1.8)
|
(1.2)
|
Profit before tax
|
7.6
|
10.3
|
Taxation
|
(1.1)
|
(1.9)
|
Profit after tax
|
6.5
|
8.4
|
|
|
|
Earnings per share -
basic
|
13.75p
|
19.60p
|
|
|
|
Dividend per share
|
5.90p
|
5.35p
|
|
|
|
Net assets
|
53.4
|
38.7
|
|
|
|
Dividend per share represents the
interim and final dividend proposed or paid for the year in
question.
In line with our strategic objective
of targeting large jobs outside London, 2023 revenue for the year
for such jobs (project size >£5m and based outside the M25) is
now £88.2m (2022: £37m). We have also seen continued strong
performance in our healthcare and smart buildings
offerings.
Operating profit for 2023 was £9.4m
(2022: £11.5m). Earnings per share were 13.75p for the year (2022:
19.60p) on an operating margin of 1.9% (2022: 2.7%). This was below
our 3% target, reflecting several strategic decisions taken by
management to preserve the business's strong market and financial
position in view of the construction sector's turbulent trading
conditions. These decisions have included early settlement of final
contract amounts and the changing of some supply chain partners
mid-contract to protect project completion dates. On one large
contract in particular it was necessary to replace a key part of
our supply chain and re-procure the work across a number of smaller
packages. It is anticipated that these projects will continue to be
delivered to their project programmes albeit at reduced
margin.
The Group took a number of actions
during the year to strengthen its balance sheet, including the
raising of net proceeds of £10.1m by way of an oversubscribed
placing of new ordinary shares in the Company. The issue price was
122p per share representing a 14% discount to the closing price of
141.5p on 5 July 2023. The placing was for 8,749,337 ordinary
shares with a nominal value of 10p. The proceeds provide additional
resources with which to capture and deliver attractive contract
opportunities in the London business and in doing so drive further
growth and margin expansion. The placing attracted a number of new
institutional investors and in doing so has broadened our
shareholder base.
Our growth has not been driven by
acquisitions and this will remain our policy going forward. TClarke
remains financially secure, ending the year with net cash of £19.3m
(2022: £7.5m) with £30m of bank facilities at its disposal. Despite
the tough prevailing market conditions and the high level of
insolvencies amongst our supply chain, competitors, and potential
customers, we are pleased to report that our robust credit control
processes have limited our bad debt expense for the year to £0.3m
(against total revenue of £491.0m), and in line with
our historical average.
Net finance costs were £1.8m (2022:
£1.2m), comprising: a £0.4m increase in bank interest and facility
fees to £1.0m (2022: £0.6m); the Group's defined benefit pension
scheme interest charge of £0.6m (2022: £0.4m) and an interest
charge of £0.3m arising from leases (2022: £0.2m), offset by £0.1m
of interest received on cash balances.
The tax charge for the year was
£1.1m (2022: £1.9m). TClarke maintains an open and collaborative
working relationship in all interactions with HMRC, and there are
no uncertain tax positions at present.
The Group paid its 2022 final
dividend in full in June 2023 and an increased interim dividend in
September 2023 of 1.375p (2022: 1.25p). The Board is proposing a
final dividend of 4.525p (2022: 4.1p). The total proposed dividend
therefore rises to 5.9p (2022: 5.35p), an increase of 10%. The
dividend is covered two times by earnings.
TClarke recognises that many of its
shareholders invest for dividends.
Cash Flow and Funding
Cash balances totalled £29.3m at 31
December 2023 (2022: £22.5m). £10m was drawn down under the Group's
Revolving Credit Facility ("RCF") at 31 December 2023 (2022: £15m),
resulting in net cash of £19.3m at the 2023 balance sheet date, an
improvement of £11.8m on the prior year (£7.5m).
|
2023
|
2022
|
Change
|
|
£m
|
£m
|
£m
|
Cash
|
29.3
|
22.5
|
6.8
|
Amounts drawn under RCF
|
(10.0)
|
(15.0)
|
5.0
|
Net Cash
|
19.3
|
7.5
|
11.8
|
The increase in net cash has been
largely driven by the share placement in July together with the
Group's operating profit for the year once allowances have been
made for other cash outflows such as dividend payments and the
Group's commitment to the pension deficit reduction plan.
Furthermore, the Group's continued focus on strong credit control
processes has ensured that the growth in revenue has been achieved
without any significant increase in working capital
balances.
The Group's banking facilities
comprise a £5.0m overdraft facility and a £25.0m revolving credit
facility ('RCF'), both with National Westminster Bank plc, with the
level of usage available dependent on covenant compliance. The RCF
charges commitment fees at market rates and drawings bear interest
at a margin of 1.9% above SONIA. Interest is charged on the
overdraft at 2.00% above base rate. The RCF includes financial
covenants in respect of interest cover and net leverage ratios
which are tested quarterly. The RCF is available until 31 August
2026 and the overdraft facility is subject to annual
review.
The Group was compliant with its
obligations under the RCF and the overdraft facility throughout the
year and the Board's detailed projections demonstrate that the
Group will continue to meet its obligations in the future and is
expected to operate well within its existing facilities throughout
the next three-year period. The Group also has in place £70.1m of
bonding facilities (2022: £65.1m), of which £37.7m were unutilised
at 31st December 2023 (2022: £34.3m).
Defined Benefit Pension Scheme Obligations
A formal actuarial valuation of the
Group's defined benefit pension scheme was conducted at 31st
December 2021 showing a deficit of £19.8m, representing a funding
level of 71%. The pension scheme's actuary also looked at the
position at 31 December 2022 in view of the worsening macroeconomic
conditions. At that date the funding level remained at 71% but the
deficit was estimated to be approximately £11m.
Following the valuation, the Group
has committed to a deficit reduction plan to eliminate the deficit
over an 8 year period, through additional contributions of £1.3m
per annum. The deficit on the pension scheme, as measured on an IAS
19 valuation basis for inclusion in these financial statements, has
now reduced to £11.8m (2022: £12.9m). The reduction of £1.1m over
the year has been largely driven by the £1.3m additional
contributions made by the
Group as part of the deficit
reduction plan.
Net
Assets and Capital Structure
The Group is funded by equity
capital, retained reserves and bank facilities, and there are no
plans to change this structure. We have built on our existing
strong balance sheet and net assets are now £53.4m (2022: £38.7m),
an
increase of 38%. The increase
largely reflects the combined impact of the Group's profit after
tax for the year, the proceeds of the share placement, dividends
paid, and the reduction in the defined benefit pension
deficit.
Goodwill stood at £25.3m at the
year-end (2022: £25.3m). The Board has undertaken an impairment
review in respect of goodwill and has concluded that no impairment
is necessary.
Financial Risk Management
The Group's main financial assets
are contract and other trade receivables, and bank balances. These
assets represent the Group's main exposure to credit risk, which is
the risk that a counterparty will fail to discharge its
obligations, resulting in financial
loss to the Group. The Group may also be exposed to financial and
reputational risk through the failure of a subcontractor or
supplier.
The financial strength of
counterparties is considered prior to signing contracts and
reviewed as contracts progress where there are indications that a
counterparty may be experiencing financial difficulty. Procedures
include the use of credit agencies to check the creditworthiness of
existing and new clients and the use of approved suppliers' lists
and Group-wide framework agreements with key suppliers.
Accounting Policies
The Group's consolidated financial
statements are prepared in accordance with the requirements of the
Companies Act 2006 and in accordance with UK-adopted international
standards. There have been no new accounting policies adopted in
the year.
Consolidated Income Statement
For the year ended 31st
December 2023
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Revenue
Cost of sales
|
3
|
491.0
(441.7)
|
426.0
(378.6)
|
Gross profit
|
|
49.3
|
47.4
|
Administrative expenses
|
|
(39.9)
|
(35.9)
|
Operating profit
Finance income
|
|
9.4
0.1
|
11.5
-
|
Finance costs
|
|
(1.9)
|
(1.2)
|
Profit before taxation
Taxation
|
4
|
7.6
(1.1)
|
10.3
(1.9)
|
Profit for the financial year
|
|
6.5
|
8.4
|
Earnings per share
Attributable to owners of TClarke
plc
Basic
Diluted
|
5
5
|
13.75p
13.73p
|
19.60p
19.51p
|
Consolidated Statement of Comprehensive
Income
For the year ended 31st
December 2023
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Profit for the year
|
|
6.5
|
8.4
|
Other comprehensive (expense)/income
Items that will not be reclassified to the income
statement
Actuarial gain on defined benefit
pension scheme
Revaluation of freehold
property
Deferred tax relating to items that
will not be reclassified
|
|
0.2
(0.5)
(0.1)
|
9.2
(0.2)
(2.4)
|
Total other comprehensive (expense)/income for the year (net
of tax)
|
|
(0.4)
|
6.6
|
Total comprehensive income for the year
|
|
6.1
|
15.0
|
Consolidated Statement of Financial Position
As at 31st December
2023
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Non-current assets
Intangible assets
Property, plant, and
equipment
Deferred tax assets
Trade and other
receivables
|
7
|
25.3
11.8
3.2
12.0
|
25.3
13.5
3.6
6.3
|
Total non-current assets
|
|
52.3
|
48.7
|
Current assets
Inventories
Contract assets
Trade and other
receivables
Current tax receivables
Cash and cash equivalents
|
7
10
|
0.5
84.2
52.9
0.2
29.3
|
0.5
54.3
55.3
-
22.5
|
Total current assets
|
|
167.1
|
132.6
|
Total assets
|
|
219.4
|
181.3
|
Current liabilities
Bank loans
Contract liabilities
Trade and other payables
Obligations under leases
|
8
|
(10.0)
(7.2)
(126.1)
(2.6)
|
(15.0)
(7.7)
(96.1)
(2.7)
|
Total current liabilities
|
|
(145.9)
|
(121.5)
|
Net
current assets
|
|
21.2
|
11.1
|
Non-current liabilities
Obligations under leases
Trade and other payables
Retirement benefit
obligations
|
8
9
|
(5.2)
(3.1)
(11.8)
|
(5.7)
(2.5)
(12.9)
|
Total non-current
liabilities
|
|
(20.1)
|
(21.1)
|
Total liabilities
|
|
(166.0)
|
(142.6)
|
Net
assets
|
|
53.4
|
38.7
|
Equity attributable to owners of the parent
Share capital
Share premium
Revaluation reserve
Retained earnings
|
|
5.3
13.6
-
34.5
|
4.4
4.4
0.4
29.5
|
Total equity
|
|
53.4
|
38.7
|
Consolidated Statement of Cash Flows
For the year ended 31st
December 2023
|
|
2023
|
2022
|
|
|
Note
|
£m
|
£m
|
|
Net
cash generated from/(used in) operating
activities
|
10
|
8.7
|
10.6
|
|
Investing activities
Purchase of property, plant and
equipment
|
|
(0.5)
|
(1.8)
|
|
Proceeds from disposal of property,
plant and equipment
|
|
0.7
|
-
|
|
Net
cash used in investing activities
|
|
0.2
|
(1.8)
|
|
Financing activities
New shares issued
Interest paid
Repayment of borrowings
Repayment of lease
obligations
Equity dividends paid
Shares allotted in respect of share
option schemes
Facility fee paid
Acquisition of shares by
ESOT
|
|
10.1
(1.0)
(5.0)
(2.9)
(2.5)
-
-
(0.8)
|
-
(0.5)
-
(2.1)
(2.3)
0.2
(0.3)
(1.6)
|
|
Net
cash used in financing activities
|
|
(2.1)
|
(6.5)
|
|
Net
increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
|
10
|
6.8
22.5
|
2.2
20.3
|
|
Cash and cash equivalents at the end of the
year
|
10
|
29.3
|
22.5
|
|
Consolidated Statement of Changes in Equity
For the year ended 31st
December 2023
|
|
|
Share
|
Share
|
Revaluation
|
Retained
|
Total
|
|
capital
|
premium
|
reserve
|
earnings
|
Equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At
1st January 2022
|
4.4
|
4.2
|
0.7
|
17.2
|
26.5
|
Comprehensive income
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
8.4
|
8.4
|
Other comprehensive
expense
|
|
|
|
|
|
Remeasurement gain on retirement
benefit obligation
|
-
|
-
|
-
|
9.2
|
9.2
|
Deferred income tax on remeasurement
gain on retirement benefit obligation
|
-
|
-
|
-
|
(2.4)
|
(2.4)
|
Revaluation of freehold
property
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
Total other comprehensive
income
|
-
|
-
|
(0.2)
|
6.8
|
6.6
|
Total comprehensive
income
|
-
|
-
|
(0.2)
|
15.2
|
15.0
|
Transactions with owners
|
|
|
|
|
|
Transfer on depreciation of freehold
property
|
-
|
-
|
(0.1)
|
0.1
|
-
|
Share-based payment
expense
|
-
|
-
|
-
|
0.8
|
0.8
|
Acquisition of shares by
ESOT
|
-
|
-
|
-
|
(1.6)
|
(1.6)
|
Shares allotted in respect of share
option schemes
|
-
|
0.2
|
-
|
-
|
0.2
|
SAYE option cost
|
-
|
-
|
-
|
0.1
|
0.1
|
Dividends paid
|
-
|
-
|
-
|
(2.3)
|
(2.3)
|
Total transactions with
owners
|
-
|
0.2
|
(0.1)
|
(2.9)
|
(2.8)
|
At
31st December 2022
|
4.4
|
4.4
|
0.4
|
29.5
|
38.7
|
Comprehensive income
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
6.5
|
6.5
|
Other comprehensive
income
|
|
|
|
|
|
Remeasurement gain on retirement
benefit obligation
|
-
|
-
|
-
|
0.2
|
0.2
|
Deferred income tax on remeasurement
gain on retirement benefit obligation
|
-
|
-
|
-
|
(0.1)
|
(0.1)
|
Revaluation of freehold
property
|
-
|
-
|
(0.4)
|
(0.1)
|
(0.5)
|
Total other comprehensive
income
|
-
|
-
|
(0.4)
|
-
|
(0.4)
|
Total comprehensive
income
|
-
|
-
|
(0.4)
|
6.5
|
6.1
|
Transactions with owners
|
|
|
|
|
|
New shares issued in the
year
|
0.9
|
9.2
|
-
|
-
|
10.1
|
Share-based payment
expense
|
-
|
-
|
-
|
1.7
|
1.7
|
Transactions in own shares in
respect of share awards
|
-
|
-
|
-
|
(0.8)
|
(0.8)
|
SAYE option cost
|
-
|
-
|
-
|
0.1
|
0.1
|
Dividends paid
|
-
|
-
|
-
|
(2.5)
|
(2.5)
|
Total transactions with
owners
|
0.9
|
9.2
|
-
|
(1.5)
|
8.6
|
At
31st December 2023
|
5.3
|
13.6
|
-
|
34.5
|
53.4
|
Notes to the preliminary financial
information
Note 1 - Basis of
preparation
TClarke plc is a public limited
company listed on the London Stock Exchange, incorporated and
domiciled in the United Kingdom. The nature of the Group's
operations and its principal activities is providing electrical and
mechanical contracting and related services to the construction
industry and end users. The Company is limited by
shares.
The financial statements included in
this preliminary announcement have been prepared in accordance with
the Disclosure and Transparency Rules of the UK Financial Conduct
Authority, and the principles of UK-adopted international
accounting standards, but do not comply with the full disclosure
requirements of these standards. The
financial information for the year ended 31 December 2022 is
derived from the statutory financial statements for that year which
have been delivered to the Registrar of Companies. The auditor
reported on those financial statements: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under s498(2) or (3) of
the Companies Act 2006. The financial information has been prepared
on a going concern basis under the historic cost convention as
modified by the revaluation of land and buildings.
The unaudited financial information
contained in this announcement does not constitute the statutory
financial statements of the Group as at and for the year ended 31
December 2023, but is derived from those financial statements,
which have been prepared in accordance with UK-adopted
international accounting standards. The financial statements
themselves will be approved by the Board of Directors and reported
on by the auditor and then subsequently delivered to the Registrar
of Companies following the Company's Annual General Meeting.
Accordingly, the financial information for 2023 is presented as
unaudited in this announcement.
Note 2 - Significant accounting
estimates
In the application of the Group's
accounting policies, the Directors are required to make estimates
and assumptions about the carrying amounts of assets and
liabilities at the reporting date and the amounts of revenue and
expenses
incurred during the period that may
not be readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
The estimates and assumptions that
have the most significant impact are set out below.
Revenue and profit recognition for
construction contracts
In order to determine the revenue
and profit recognition in respect of the Group's construction
contracts, the Group has to estimate the total costs to deliver the
contract as well as the final contract value. The Group has to
allocate total expected costs between the amount incurred on the
contract to the end of the reporting period and the proportion to
complete in a future period. The assessment of the total costs to
be incurred and final contract value requires a degree of judgement
and estimation.
The final contract value may include
assessments of the recovery of contractual variations which have
yet to be agreed with client, as well as additional compensation
claim amounts. The amount of variations and claims are often not
fully agreed with the customer due to timing and requirements of
the normal contractual process. Therefore, assessments are based on
an estimate of the potential cost impact of the compensation claims
and revenue is constrained to amounts that the Group believes are
highly probable of being received. The estimation of costs to
complete is based on all available relevant information and may
include estimates of any potential defect liabilities or liquidated
damages for unagreed scope or timing variations. Costs incurred in
advance of the contract that are directly attributable to the
contract may also be included as part of the total costs to
complete the contract.
Retirement Benefit
Obligations
The cost of the defined benefit
pension scheme and the present value of the pension obligation are
determined using actuarial valuations. An actuarial valuation
involves making various assumptions that may differ from actual
developments in the future. These include the determination of the
discount rate, future salary increases, mortality rates and future
pension increases. Due to the complexities involved in the
valuation and its long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions. All assumptions
are reviewed at each reporting date, taking advice from independent
actuaries. Details of the key assumptions are set out in note
9.
The valuation is most sensitive to
changes in the discount rate assumption. In determining the
appropriate discount rate, the Group considers the interest rates
of corporate bonds, extrapolated as needed along the yield curve to
correspond with the expected term of the defined benefit
obligation. The mortality rate is based on publicly available
mortality tables. These mortality tables tend to change only at
intervals in response to demographic changes. Future salary
increases and pension increases are based on expected future
inflation rates.
Note 3 - Segment
information
(i) Change in operating
segments
The Group provides electrical and
mechanical contracting and related services to the construction
industry and end users. At the beginning of the year the Group
changed its internal management reporting, moving away from the
previous geographic split of segments, and adopting one operating
segment. In delivering the Board's growth strategy, including
focusing on winning large projects outside of London, the previous
split ceased to be fully representative of the way the Group
operates, with contracts often being won through entity-wide
relationships or delivered outside of a segment's geographic
footprint. As such, the Board, in its role as 'chief operating
decision-maker', now only receives financial information for the
Group as a whole, representing the Group's one operating
segment and discrete financial
information is no longer prepared at a more disaggregated
level.
This approach has also been
reflected in the preparation of this financial information which as
a result no longer require separate segmental analysis, as it is
only at a Group level where the definition of an operating segment
is met and this information is shown in the primary statements
themselves.
(ii) Revenue analysis
|
2023
|
2022
|
|
£m
|
£m
|
Business Sector
|
|
|
Facilities Management
|
37.1
|
31.3
|
Infrastructure
|
101.8
|
79.5
|
Engineering Services
|
193.5
|
124.7
|
Residential & Hotels
|
48.1
|
45.3
|
Technologies
|
110.5
|
145.2
|
Total revenue
|
491.0
|
426.0
|
Note 4 - Taxation
|
2023
|
2022
|
|
£m
|
£m
|
Current tax expense
|
|
|
UK corporation tax payable on
profits for the year
|
1.3
|
1.7
|
Adjustment in relation to prior
years
|
(0.5)
|
(0.4)
|
Deferred tax expense
|
|
|
Arising on:
|
|
|
Adjustment in relation to prior
years
|
0.1
|
-
|
Origination and reversal of timing
differences
|
0.2
|
0.6
|
Total income tax expense
|
1.1
|
1.9
|
Reconciliation of tax
charge
|
|
|
Profit before tax for the
year
|
7.6
|
10.3
|
Tax at standard UK tax rate of
23.52% (2022: 19%)
|
1.8
|
1.9
|
Tax effect of:
|
|
|
Adjustment in relation to prior
years
|
(0.4)
|
(0.4)
|
Permanently disallowed
items
|
(0.3)
|
0.4
|
Total income tax expense
|
1.1
|
1.9
|
|
2023
|
2022
|
|
£m
|
£m
|
Deferred tax charged to other
comprehensive income
|
0.1
|
2.4
|
Note 5 - Earnings per
share
(i) Basic earnings per
share
Basic earnings per share is
calculated by dividing the profit attributable to owners of the
Company by the weighted average number of Ordinary shares in issue
during the year.
|
2023
|
2022
|
|
£m
|
£m
|
Earnings:
|
|
|
Profit attributable to owners of the
Company
|
6.5
|
8.4
|
Weighted average number of Ordinary
shares in issue (000s)
|
47,119
|
43,056
|
Basic earnings per share
|
13.75p
|
19.60p
|
(ii) Diluted earnings per
share
Diluted earnings per share is
calculated by adjusting the weighted average number of Ordinary
shares outstanding to assume conversion of all dilutive potential
Ordinary share options granted under the Save As You Earn
schemes.
For the share options, a calculation
is made to determine the number of shares that could have been
acquired at fair value (determined as the average annual market
share price of the Company's shares) based on the monetary value of
the subscription rights attached to outstanding share options. The
number of shares calculated as above is compared with the number of
shares that would have been issued assuming the exercise of the
share options.
|
2023
|
2022
|
|
£m
|
£m
|
Earnings:
|
|
|
Profit attributable to owners of the
Company
|
6.5
|
8.4
|
Weighted average number of Ordinary
shares in issue (000s)
|
47,119
|
43,056
|
Adjustments:
|
|
|
Savings Related Share Option
Schemes
|
88
|
187
|
Weighted average number of Ordinary
shares for diluted earnings per share (000s)
|
47,207
|
43,243
|
Diluted earnings per
share
|
13.73p
|
19.51p
|
Note 6 - Dividends
|
2023
£m
|
2022
£m
|
Final dividend of 4.1p (2022: 4.1p)
per ordinary share paid during the year relating to the previous
year's results
|
1.8
|
1.8
|
Interim dividend of 1.375p (2022:
1.25p) per ordinary share paid during the year
|
0.7
|
0.5
|
Total
|
2.5
|
2.3
|
The Directors are proposing a final
dividend of 4.525p (2022: 4.1p) per ordinary share totalling £2.4
million (2022: £1.8m). The dividend has not been accrued at the
reporting date.
Subject to approval at the Annual
General Meeting, the final dividend will be paid on 14th
June 2024 to shareholders on the register as at 17th May
2024. The shares will go ex-dividend on 16th May 2024. A
dividend reinvestment plan is available to shareholders. Those
shareholders who have not elected to participate in the plan, and
who would like to do so in respect of the 2023 final payment, may
do so by contacting Link Group on 0371 664 0381. The last day for
election for the final dividend reinvestment is 24th May
2024.
Note 7 - Trade and other
receivables
|
2023
|
2022
|
|
£m
|
£m
|
Trade receivables - gross
|
38.8
|
36.7
|
Trade receivables - allowances for
credit losses
|
(0.2)
|
(0.4)
|
Net trade receivables
|
38.6
|
36.3
|
Other receivables (including
retentions) - gross
|
26.2
|
24.7
|
Other receivables (including
retentions) - allowances for credit losses
|
(0.8)
|
(0.9)
|
Net other receivables (including
retentions)
|
25.4
|
23.8
|
Prepayments
|
0.9
|
1.5
|
Total
|
64.9
|
61.6
|
Trade and other receivables are
analysed as follows on the statement of financial
position:
|
2023
|
2022
|
|
£m
|
£m
|
Current assets
|
52.9
|
55.3
|
Non-current assets
|
12.0
|
6.3
|
Total
|
64.9
|
61.6
|
Note 8 - Trade and other
payables
|
2023
|
2022
|
|
£m
|
£m
|
Current
Trade payables (including
retentions)
Other taxation and social
security
Accruals
|
65.8
3.2
56.3
|
51.5
6.4
37.7
|
Other payables
|
0.8
|
0.5
|
Total
|
126.1
|
96.1
|
Non-current
Trade payables (including
retentions)
|
3.1
|
2.5
|
Total
|
3.1
|
2.5
|
Note 9 - Pension
commitments
The present value of the defined
benefit obligation, the related current service cost and the past
service cost were measured using the projected unit credit method.
The amounts recognised in the consolidated statement of financial
position are as follows:
|
2023
|
2022
|
|
£m
|
£m
|
Present value of funded
obligations
|
42.3
|
40.6
|
Fair value of plan assets
|
(30.5)
|
(27.7)
|
Deficit of funded plans
|
11.8
|
12.9
|
The key assumptions used to value
the pension scheme liability are set out below:
|
2023
|
2022
|
|
%
|
%
|
Average Rate of increase in
salaries
|
3.07
|
3.26
|
Rate of increase of pensions in
payment
|
2.94
|
3.05
|
Discount rate
|
4.51
|
4.77
|
Inflation assumption
(RPI)
|
3.00
|
3.12
|
Inflation assumption
(CPI)
|
2.57
|
2.76
|
|
|
|
The mortality assumptions used in
the valuation were:
|
|
|
|
2023
|
2022
|
|
Years
|
Years
|
Life expectancy at age 65 for
current pensioners
|
|
|
- Men
|
21.0
|
21.2
|
- Women
|
23.0
|
23.2
|
Life expectancy at age 65 for future
pensioners (current age 45)
|
|
|
- Men
|
22.0
|
22.1
|
- Women
|
24.1
|
24.3
|
Note 10 - Notes to the statement of
cash flows
(i) Reconciliation of operating
profit to net cash generated from operating activities
|
2023
|
2022
|
|
£m
|
£m
|
Operating profit
|
9.4
|
11.5
|
Depreciation charge
|
3.1
|
3.0
|
Equity-settled share-based payment
net expense
|
1.8
|
0.8
|
Pension deficit reduction
contribution
|
(1.3)
|
(1.5)
|
Defined benefit pension scheme
credit
|
(0.1)
|
(0.7)
|
Operating cash flows before movement
in working capital
|
12.9
|
13.1
|
Movement in inventories
|
-
|
(0.1)
|
(Increase)/decrease in contract
balances
|
(30.4)
|
2.2
|
(Increase)/decrease in operating
trade and other receivables
|
(3.7)
|
(3.8)
|
Increase/(decrease) in operating
trade and other payables
|
30.3
|
0.8
|
Cash generated from
operations
|
9.1
|
12.2
|
Corporation tax paid
|
(0.5)
|
(1.6)
|
Interest received
|
0.1
|
-
|
Net cash generated from operating
activities
|
8.7
|
10.6
|
(ii) Cash and cash
equivalents
Cash and cash equivalents comprise
cash at bank and other short-term highly liquid investments that
are readily convertible into cash, less bank overdrafts, and are
analysed as follows:
|
2023
|
2022
|
|
£m
|
£m
|
Cash and cash equivalents
|
29.3
|
22.5
|
Net cash after deducting total
borrowings was as follows:
|
2023
|
2022
|
|
£m
|
£m
|
Cash and cash equivalents
|
29.3
|
22.5
|
Less borrowings
|
(10.0)
|
(15.0)
|
Net cash
|
19.3
|
7.5
|
Note 11 - Related party
transactions
(i) Key management
personnel
The key management personnel of the
Group comprise members of the TClarke plc Board of Directors and
the Group Management Board. The key management personnel
compensation is as follows:
|
2023
|
2022
|
|
£m
|
£m
|
Short-term benefits
|
4.2
|
4.4
|
Share-based payment
|
1.7
|
1.5
|
Post-employment employee
benefits
|
0.1
|
-
|
Total
|
6.0
|
5.9
|
Further disclosures, including
details of the highest-paid Director, are included in the
Directors' remuneration report in the latest annual
report.
Transactions between the Company and
its subsidiary undertakings, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
There were no other related party transactions requiring
disclosure.
Note 12 - Contingent
liabilities
Group banking facilities of £30m and
surety bond facilities of £70m are supported by cross guarantees
given by the Company and participating companies in the Group. All
operating companies within the Group are included within the Group
banking arrangement, and National Westminster Bank plc has a
floating charge over the assets of the Group. There are contingent
liabilities in respect of surety bond facilities, guarantees and
collateral warranties under contracting and other arrangements
entered into in the normal course of business.
As part of a Group reorganisation, a
subsidiary company, TClarke Services Limited, became the principal
employer of the scheme with effect from 23rd December 2016, and the
pension scheme liability and related deferred tax asset were
transferred to TClarke Services Limited at that date. The Company
and its subsidiary, TClarke Contracting Limited, have provided a
guarantee to the trustees of the scheme in respect of TClarke
Services Limited's obligations to the pension scheme.
Note 13 - Subsequent
events
There were no subsequent events that
affected the financial statements of the Group.