interim financial statement to 30th june 2006 · interim financial statement to 30th june 2006...

Interim financial statement to 30th June 2006T.Clarke plc Electrical Engineers and Contractors

Registered Office: Stanhope House, 116-118 Walworth Road, London SE17 1JY

Registered in England and Wales with registered number 119351020 7358 5000 [email protected] www.tclarke.co.uk

1 Chairman’s statement

2 Business review

4 Consolidated income statement

5 Consolidated balance sheet

6 Consolidated cash flow statement

7 Consolidated statement

of changes in equity

8 Notes to the interim financial

statements

Contents

T.Clarke plc electrical engineers & contractors

Group turnover during the half year was 9% up at £100.2m (2005 : £91.6m). 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). In

the light of these figures, and the prospects for the Group, the Board has decided to increase the interim

dividend to 3.675p per share, a 5% increase over 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 and Home Counties

operations of the Group, a common feature was the pressure on operating margins which all

experienced. The wider spread of customer base and business type, which our acquisitions in recent

years have brought us, were therefore important in enabling us to achieve an advance in turnover and

profits during what has proved to be a difficult period.

Initial positive progress has been made in bringing the regional operations more closely together, so

that all can share in best practice and benefit from the financial strength and experience of the parent

company.

Looking forward the prospects for the group are improving. The size of our current order book, and

the likely upswing in construction industry activity in the 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 likely

that the current year results will be broadly similar to those achieved in 2005.

R.J.Race

Chairman

18th August 2006

Chairman’s statement

1


Operations reviewOur core operations are key to our future growth, operating currently at around 75% of capacity.

Whilst seeking sensible savings in central overheads we must avoid making false economies, we have a

big investment in our skilled workforce and will need all our resources to meet the expected demand for

our services.

The regional board is actively involved in the ‘harmonisation’ of our regional businesses, which

includes achieving improvements in management efficiency, tougher financial controls and cost

reductions. Our companies are experiencing mixed fortunes. In the provinces we have suffered

unexpected bad debts and unforeseeable increases in material costs (copper prices increased by over

100% between October 2005 and April 2006). In the South East there has been some recent slippage

in the timing of two major projects.

Whilst still challenging, the industry is showing signs of improvement in all areas. There is growing

demand for new commercial office space in Central London and many large schemes will come on stream

during 2007. Infrastructure works associated with 2012 will ‘kick-off’ in 2008 and will put increasing

demands on the 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 Elk Dunoon Waste Water Treatment;

David Wilson Homes, Edinburgh; Buxton Spring Bottling Plant; Cromwell College, Chatteris; RV1 Histo

Pathology Department, Newcastle; McCarthy & Stone, Grappenhall; Altrincham Library; Norwich City

Football Club; seven Waitrose Stores; HMP Lewes; Cardiology Unit, Harrogate Hospital 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; Burton College; Peterborough Hospital; Howlands Farm, Durham University;

McCarthy & Stone, Llangollen; Barry Town Hall; Grand Arcade, Cambridge; twelve Waitrose Stores;

Warrington Bus Interchange; Grand Theatre, Leeds and HMP Lindholme.

Recently Won Contracts include; RBS, Aldgate Union; Mizuho Bank; Golden Jubilee Hospital, Glasgow;

Campsfield House Detention Centre, Derby; Framwell Gate Hotel, 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.The forward order book

currently stands at £175m, of which £85m is scheduled for completion this year. We have seen some

setbacks but the strength of our brand and the order pipeline for 2006 and 2007 position us well to

deliver our strategy for continuous improvement, customer satisfaction, profitable growth, enhancing

value and increasing returns to our shareholders, whilst managing the risk associated with the industry.

Business review

2


3

Financial reviewTurnover and operating profit

Turnover for the half year increase by 9% to £100m (2005 : £92M). The regional companies 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 margin improved slightly

from 3.96% to 4.09%. The group administrative costs increased by £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 in the same period last year (£3.6m)

and included a net finance charge of £69,000 (2005 : net investment 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 interim dividend will be 3.675p

up 5% on last year (2005 : 3.50p).

Cash flow

The net cash absorbed by operating activities was £0.5m compared with a net cash generation 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 net decrease of cash and cash equivalents of £2.8m (2005 : £5.6m). The increased difficulty

in collecting debtor monies particularly in the regions which resulted 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, the indications are still that this position will improve strongly during the remainder of the year.

Pension obligations

Discount rate movements in recent months have been a significant factor in the actuarial gain in the

defined benefit pension scheme of £1.9m, net £1.3m after deferred tax. This improvement is reflected

in the net assets on the balance sheet.

Pat Stanborough

Chief Executive

18th August 2006

John Daly

Finance Director

18th August 2006

Consolidated income statement

Audited12 months to

31 12 2005£000s

193,729

165,848

27,881

19,282

8,599

(45)

8,554

2,844

5,710

14.3p

(538)

161

(377)

5,710

5,333

Unaudited6 months to30 06 2006

£000s

100,197

84,416

15,781

11,684

4,097

(69)

4,028

1,329

2,699

6.76p

1,893

(568)

1,325

2,699

4,024


£000s

91,646

78,168

13,478

9,850

3,628

26

3,654

1,204

2,450

6.14p

(33)

9

(24)

2,450

2,426

Revenue

Cost of sales

Gross profit

Administrative expenses

Profit from operations

Investment income / finance cost

Profit before taxation

Taxation

Profit for the period from continuing operations

Earnings per share

Group statement of recognised income & expense

Actuarial gains / (losses) on defined benefit pension scheme

Tax on items taken direct to equity

Net income recognised directly in equity

Profit for the period

Total recognised income & expense for the period

4

Consolidated balance sheet


5

Audited12 months to

31 12 2005£000s

14,385

8,384

61

22,830

17,715

21,954

4,828

44,497

67,327

2,311

2,273

35,465

40,049

4,448

4,284

404

4,688

44,737

22,590

3,995

1,234

17,328

33

22,590


£000s

14,385

8,335

61

22,781

15,373

28,836

2,039

46,248

69,029

3,238

1,427

37,154

41,819

4,429

3,004

388

3,392

45,211

23,818

3,995

1,234

18,556

33

23,818


£000s

14,358

7,921

36

22,315

14,394

22,304

5,562

42,260

64,575

2,786

1,748

34,399

38,933

3,327

3,885

676

4,561

43,494

21,081

3,995

1,234

15,818

34

21,081

Non current assets

Goodwill

Tangible fixed assets

Deferred taxation

Current assets

Construction contracts and inventories

Debtors

Cash and cash equivalents

Total assets

Current liabilities

Bank overdraft

Corporation tax liabilities

Creditors and accruals

Net current assets

Non current liabilities

Retirement benefit obligation

Other

Total liabilities

Net assets

Equity

Share capital

Share premium

Profit and loss account

Revaluation reserve

Total equity

Consolidated cash flow statement

Audited12 months to

31 12 2005£000s

3,535

243

(1,438)

1,531

(4,717)

(4,381)

(4,061)

(326)

(1,149)

(5,536)

(6,382)

11,210

4,828


£000s

(556)

75

(287)

12

–

(200)

(2,796)

(164)

927

(2,033)

(2,789)

4,828

2,039


£000s

2,292

130

(263)

–

(4,676)

(4,809)

(2,663)

(205)

(263)

(3,131)

(5,648)

11,210

5,562

Net cash from operating activities (see note 5)

Investing activities

Interest received

Purchase of tangible fixed assets

Receipts on disposal of fixed assets

Purchase of subsidiary undertakings

Net cash used in investing activities

Financing activities

Equity dividends paid

Repayments of obligations under finance leases

Increase / (decrease) in bank overdrafts

Net cash (used in) / from financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

6

Consolidated statement of changes in equity


7

Audited12 months to

31 12 2005£000s

20,318

5,710

(1,398)

(2,663)

(538)

161

17

983

22,590


£000s

22,590

2,699

–

(2,796)

1,893

(568)

–

–

23,818


£000s

20,318

2,450

–

(2,663)

(33)

9

17

983

21,081

Balance at start of period

Profit for period

Interim dividend paid

Prior year final dividend paid

Actuarial gains / (losses) on defined benefit pension scheme

Corporation tax provision on pension benefits

Shares issued on acquisition

Premium on shares issued

Balance at end of period

8

Notes to the interim statements

Dec 2005£000s

21,904

15,784

6,120

1,836

4,284

3.90%

2.60%

4.70%

2.90%

6.20%

June 2006£000s

21,102

16,810

4,292

1,288

3,004

4.10%

2.70%

5.20%

3.10%

6.80%

June 2005£000s

19,271

13,721

5,550

1,665

3,885

4.40%

2.60%

5.30%

2.90%

7.00%

Note 1 – Accounting policyThe accounts have been prepared using accounting policies consistent with those adopted for the year ended

31st December 2005.

The results for the half year are unaudited.

Note 2 – Earnings per shareEarnings per share are calculated on the basis of the weighted average of 39,947,889 ordinary shares in issue.

(2005 : 39,928,297) and profit attributable to shareholders of £2,699,000 (2005 : £2,450,000).

Note 3 – Interim dividendAn interim dividend of 3.675p per share (2005 : 3.50p) was approved by the board on 17th August 2006 and has

not been included as a liability at 30th June 2006. This dividend will be payable on 20th September 2006 to

shareholders on the register on 1st September 2006. The shares will go ex-dividend on 30th August 2006.

Note 4 – Pension commitmentsThe present value of the defined benefit pension scheme, 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:

Present value of defined benefit obligations

Fair values of assets

Deficit in scheme

Related deferred tax asset

Liability recognised in the balance sheet

The key assumptions used:

Rate of increase in salaries

Rate of increase of pensions in payment

Discount rate

Inflation assumption

Expected return on scheme assets


9

Auditedyear ended31 12 2005

£000s

8,599

905

11

(1,014)

8,501

(2,145)

(3,170)

3,507

6,693

(2,975)

(183)

3,535

Unaudited6 months

ended30 06 2006

£000s

4,097

478

45

4

4,624

(6,882)

2,342

1,669

1,753

(2,195)

(114)

(556)

Unaudited6 months

ended30 06 2005

£000s

3,628

418

(5)

–

4,041

6,703

(8,867)

1,783

3,660

(1,314)

(54)

2,292

Note 5 – Reconciliation of operating profit to net cash from operating activities:

Profit from operations

Depreciation charges

Increase in provisions

Profit on sale of fixed assets

Operating cash flows before movements in working capital

(Increase) / decrease in debtors

(Increase) / decrease in work in progress

Increase / (decrease) in creditors

Cash generated by operations

Corporation tax paid

Interest paid

Net cash from operating activities

T.Clarke plc, LondonElectrical Engineers & ContractorsStanhope House116-118 Walworth RoadLondon SE17 1JY020 7358 [email protected] www.tclarke.co.uk

interim financial statement to 30th june 2006 · interim financial statement to 30th june 2006...

Documents