Interim Results

Clarke(T.) PLC 18 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 announced its 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. Margins have remained under pressure, but we are positive about the future. Our order book 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 major infrastructure projects that are planned to start in 2008. This combined with a number of large commercial office schemes in central London that are on the starting blocks, bodes well. All these new projects will put increasing demands on the construction industry. In anticipation of this work, we are making sure that 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 deliver this projected increase in workload. ' In light of the positive outlook for the group, we have raised the interim dividend by 5%.' -ends- Date: 18 August 2006 For further information contact: T. Clarke plc cityPROFILE Pat Stanborough, Chief Executive Simon Courtenay John Daly, Finance Director Tel: 020-7448-3244 Tel: 020-7358-5000 web: 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 ). The like 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 ). In the light of these figures and the improving 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 Business Review Operations Review Our 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. Financial review Turnover and operating profit Turnover for the half year increased 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 at 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 3.675% up 5% on last year (2005: 3.5p). Cash flow The net cash absorbed by operating activities was £0.5m compared with a net 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 The movement in the discount rate in recent months has been a significant factor in the actuarial gain in the defined benefit pension scheme of £1.9m, net £1.3m after deferred tax (2005: £0.033m loss and £0.024m loss). This improvement is reflected 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 91,646 193,729 Cost of Sales 84,416 78,168 165,848 -------------------------------------------------------------------------------- Gross Profit 15,781 13,478 27,881 Administrative Expenses 11,684 9,850 19,282 -------------------------------------------------------------------------------- Profit from Operations 4097 3,628 8,599 Investment Income/Finance Cost (69) 26 (45) -------------------------------------------------------------------------------- Profit Before Taxation 4,028 3,654 8,554 Taxation 1,329 1,204 2,845 -------------------------------------------------------------------------------- Profit for the period from continuing operations 2,699 2,450 5,710 -------------------------------------------------------------------------------- Earnings per Share 6.76p 6.14p 14.3p -------------------------------------------------------------------------------- GROUP STATEMENT OF RECOGNISED INCOME & EXPENSE Actuarial gains/(losses) on defined benefit pension scheme 1,893 (33) (538) Tax on items taken direct to equity (568) 9 161 -------------------------------------------------------------------------------- Net income recognised directly in equity 1,325 (24) (377) Profit for the period 2,699 2,450 5,710 -------------------------------------------------------------------------------- Total recognised income & expense for 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 £'000 Non Current Assets Goodwill 14,385 14,358 14,385 Tangible Fixed Assets 8,335 7,921 8,384 Deferred Taxation 61 36 61 -------------------------------------------------------------------------------- 22,781 22,315 22,830 -------------------------------------------------------------------------------- Current Assets Construction contracts inventories 15,373 14,394 17,715 Debtors 28,836 22,304 21,954 Cash 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 2,311 Corporation tax liabilities 1,427 1,748 2,273 Creditors and Accruals 37,154 34.399 35,465 -------------------------------------------------------------------------------- 41,819 38,933 40,049 -------------------------------------------------------------------------------- Net Current Assets 4,429 3,327 4,448 -------------------------------------------------------------------------------- Non Current Liabilities Retirement Benefit Obligation 3,004 3,885 4,284 Other 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 3,995 Share Premium 1,234 1,234 1,234 Profit and Loss Account 18,556 15,818 17,328 Revaluation 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 75 130 243 Purchase of Tangible Fixed Assets (287) (263) (1,438) Receipts on Disposal of Fixed Assets 12 - 1,531 Purchase of Subsidiary Undertakings - (4,676) (4.717) -------------------------------------------------------------------------------- Net Cash used in Investing Activities (200) (4,809) (4,381) -------------------------------------------------------------------------------- Financing Activities Equity Dividends Paid (2,796) (2,663) (4,061) Repayments of obligations under finance leases (164) (205) (326) Increase/(decrease) in bank overdrafts 927 (263) (1,149) -------------------------------------------------------------------------------- Net Cash (used in)/from Financing Activities (2,033) (3,131) (5,536) -------------------------------------------------------------------------------- Net Increase/(Decrease) in cash and cash equivalents (2,789) (5,648) (6,382) Cash and Cash Equivalents at beginning of period 4,828 11,210 11,210 -------------------------------------------------------------------------------- Cash and Cash Equivalents 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 5,710 Interim dividend paid - - (1,398) Prior year final dividend paid (2,796) (2,663) (2,663) Actuarial gains/(losses) on defined benefit pension scheme. 1,893 (33) (538) Corporation tax provision on pension benefits. (568) 9 161 Shares issued on acquisition - 17 17 Premium on shares issued - 983 983 -------------------------------------------------------------------------------- Balance at end of period 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 those adopted for the year ended 31st December 2005. The results for the half year are unaudited. 2. Earnings per share Earnings 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). 3. Interim Dividend An 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 30 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. 4. Pension commitments The present value of the defined benefit pension scheme, the related past and current service costs were measured using the project 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: June 2006 June 2005 Dec 2005 £,000 £,000 £,000 Present value of defined benefit obligations 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 the balance 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 in payment 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 Fixed Assets 4 - (1,014) -------------------------------------------------------------------------------- Operating cash flows before movements in working capital 4,624 4,041 8,501 (Increase) / Decrease in Debtors (6,882) 6,703 (2,145) (Increase) / Decrease in Work in Progress 2,342 (8,867) (3,170) Increase / (Decrease) in Creditors 1,669 1,783 3,507 -------------------------------------------------------------------------------- Cash generated by operations 1,753 3,660 6,693 Corporation tax paid (2,195) (1,314) (2,975) Interest Paid (114) (54) (183) -------------------------------------------------------------------------------- Net cash from operating activities (556) 2,292 3,535 -------------------------------------------------------------------------------- 6. The interim report will be circulated to members on 22 August 2006, from which date copies will be available at or on application to the Company's registered office: T. Clarke plc, Stanhope House, 116-118 Walworth Road, London SE17 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

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