Interim Results
Clarke(T.) PLC
19 August 2005
Interim Results for the six months to 30 June 2005
T. CLARKE CONFIDENT AS NEW CONTRACTS UNDERLINE REGIONAL EXPANSION
T. Clarke plc, the electrical engineering and contracting company, has announced
its interim results for the six months to 30 June 2005.
Highlights:
2005 2004
• Profit before Tax £3.65m £3.45m
• Turnover £91.6m £71.2m
• Earnings per Share* 6.14p 5.93p
• Interim dividend* 3.5p 3.33p
• Smith Contracting Services Limited acquired for £4.1 m
• Waldon Electrical Contractors Limited acquired for £1.7 m
* Adjusted for Bonus Issue of May 2005
Major completions include: - Bishops Square, Bishopsgate
Near completion - BBC West One,
- Cardinal Place, Victoria
- BP International, Canary Wharf
Major projects won include: - White City Shopping Centre, London
- Allen and Overy Offices, London
- Grand Arcade Shopping Centre, Cambridge
- Grand Theatre, Leeds
Pat Stanborough, Chief Executive commented:
' I am pleased with the performance of the Group. Despite pressure on margins
within our core operations, the Group has delivered a very solid set of results.
The acquisitions of Smith Contracting Services Ltd and Waldon Electrical
Contractors Ltd reinforce our aim of increasing regional coverage and focussing
on specialist markets. I am delighted with the success of our regional
businesses in securing a number of significant projects.
' The upturn in the London commercial property market is continuing and the
Group has won a number of major projects. We have an excellent pipeline of work
both in London and the regions and our order book currently stands at £170
million. We can approach 2006 and 2007 with increasing confidence.
-ends-
Date: 19 August 2005
For further information, please contact:
T. Clarke plc City Profile Group
Pat Stanborough, Chief Executive Simon Courtenay
John Daly, Finance Director Oliver Winters
Tel: 020-7358-5000 Tel: 020-7448-3244
web: www.tclarke.co.uk
CHAIRMAN'S STATEMENT
Turnover in the first half was 29% up at £91.6m (2004 : £71.2m) whilst on a
like-for-like basis it rose by 14%. Although it proved to be a challenging
period for the group profit before tax was up 9% to £3.6m (2004 : £3.3m).
Earnings per share for the period (adjusted for the bonus issue) were 6.14p
(2004 : 5.93p) and the Board has declared an increased interim dividend of 3.50p
(2004 : 3.33p). During this period we acquired Smith Contracting Services Ltd.,
based in Falkirk, Scotland for £4.1m, and Waldon Electrical Contractors Ltd, in
St. Austell, Cornwall for £1.7m.
Cash at 30th June 2005 was £5.6m (£11.2m at 31 December 2004) with the movement
in the period reflecting investment in acquisitions and work in progress.
Current Trading
Margins during this period were under considerable pressure, particularly in our
core operations. However, we are now experiencing an upturn in the London
commercial market, in both new build and fit out. We have secured orders for
three new build projects on More London, at Tower Bridge, also secured White
City Shopping Centre and fit outs for Allen and Overy, Bishopsgate, DrKW,
Gresham Street, and Unilever, Blackfriars. We have recently completed Bishops
Square, Bishopsgate, and are close to completion of BBC West One; Cardinal
Place, Victoria and BP International, Canary Wharf.
Our Regional businesses have been successful in securing a wide range of
projects which include: Grand Arcade Shopping Centre, Cambridge; Grand Theatre,
Leeds; Barry Town Hall; Donnington Valley Hotel; BST Newcastle College; 16
Waitrose supermarkets and Liberty Village, RAF Lakenheath.
Outlook
We are building a strong pipeline of work and our current order book is around
£170m (not including framework agreements and term contracts). The full year
outturn is likely to be in line with current market expectations. An improvement
in margins will show through in 2006 and the Company is in excellent shape and
looking forward to the exciting challenges ahead of us.
Russell Race
Chairman
19th August 2005
CONSOLIDATED INCOME STATEMENT
Unaudited Audited
Unaudited 6 Months to 12 Months to
6 Months to 30 June 2004 31 December 2004
30 June 2005 (restated) (restated)
£,000 £,000 £,000
Revenue 91,646 71,235 156,627
Cost of Sales 78,168 60,906 134,470
----------- ----------- -----------
Gross Profit 13,478 10,329 22,157
Administration Expenses 9,850 6,996 14,563
----------- ----------- -----------
Profit from Operations 3,628 3,333 7,594
Investment Income/Finance Cost 26 115 193
----------- ----------- -----------
Profit Before 3,654 3,448 7,787
Taxation
Taxation 1,204 1,139 2,547
----------- ----------- -----------
Profit for the period from continuing operations 2,450 2,309 5,240
----------- ----------- -----------
Earnings per Share (adjusted for bonus issue) 6.14p 5.93p 13.39p
----------- ----------- -----------
GROUP STATEMENT OF RECOGNISED INCOME & EXPENSE
Actuarial gains/(losses) on defined benefit pension scheme. (33) (639) (1,277)
Tax on items taken direct to equity 9 191 383
----------- ----------- -----------
Net income recognised directly in equity (24) (448) (894)
Profit for the period 2,450 2,309 5,240
----------- ----------- -----------
Total recognised income & expense for the period 2,426 1,861 4,346
----------- ----------- -----------
CONSOLIDATED BALANCE SHEET
Audited
Unaudited at 12 Months to
Unaudited at 30 June 2004 31 December 2004
30 June 2005 (restated) (restated)
£'000 £'000 £'000
Non Current
Assets
Goodwill 14,358 9,703 10,538
Tangible Fixed Assets 7,921 6,450 6,903
Deferred Taxation 36 43 21
---------------- ----------------- ----------------
22,315 16,196 17,462
---------------- ----------------- ----------------
Current Assets
Work in Progress 14,394 12,703 4,981
Debtors 22,304 17,248 25,289
Cash and Cash Equivalents 5,562 5,368 11,211
---------------- ----------------- ----------------
42,260 35,319 41,481
---------------- ----------------- ----------------
Total Assets 64,575 51,515 58,943
---------------- ----------------- ----------------
Current Liabilities
Bank Overdraft 2,786 1,700 2,603
Creditors and 36,145 27,508 31,927
Accruals
---------------- ----------------- ----------------
38,931 29,208 34,530
---------------- ----------------- ----------------
Net Current Assets 3,329 6,111 6,951
---------------- ----------------- ----------------
Non Current Liabilities
Retirement Benefit Obligation 3,885 3,326 3,830
Other 676 240 264
---------------- ----------------- ----------------
4,561 3,566 4,094
---------------- ----------------- ----------------
Total Liabilities 43,492 32,774 38,624
---------------- ----------------- ----------------
Net 21,083 18,741 20,319
---------------- ----------------- ----------------
Assets
Equity
Share Capital 3,995 1,307 1,315
Share Premium 1,234 2,473 2,914
Profit and Loss Account 15,820 14,924 16,055
Revaluation Reserve 34 37 35
---------------- ----------------- ----------------
Total Equity 21,083 18,741 20,319
---------------- ----------------- ----------------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited
Unaudited Six Months Audited
Six Months Ended Year Ended
Ended 30 June 2004 31 December 2004
30 June 2005 (restated) (restated)
£,000 £,000 £,000 £,000 £,000 £,000
Net Cash from Operating Activities (see note 4) 2,291 (3,108) 4,154
----------- ----------- -----------
Investing Activities
Interest received 130 191 383
Purchase of Tangible Fixed Assets (263) (1,489) (2,113)
Receipts on Disposal of Fixed Assets 72 160
Purchase of Subsidiary Undertakings (4,847) (3,867) (4,993)
Net Cash Acquired with Subsidiaries 171 (4,676) 413 (3,454) 711 (4,282)
------------------------------------------- -------------------
Net Cash used in Investing Activities (4,809) (4,680) (5,852)
----------- ----------- -----------
Financing Activities
Equity Dividends
Paid (2,663) (2,483) (3,791)
Repayments of obligations under finance leases (205) (107) 51
Increase/(decrease) in bank overdrafts (263) (1,318) (415)
Net Cash (used in)/from Financing Activities (3,131) (3,908) (4,155)
----------- ----------- -----------
Net Increase/(Decrease) in cash and cash equivalents (5,649) (11,696) (5,853)
Cash and Cash Equivalents at beginning of period 11,211 17,064 17,064
----------- ----------- -----------
Cash and Cash Equivalents at end of period 5,562 5,368 11,211
=========== =========== ===========
CONSOLIDATED STATEMENT of CHANGES in EQUITY
Audited
Unaudited at 12 Months to
Unaudited at 30 June 2004 31 December 2004
30 June 2005 (restated) (restated)
£'000 £'000 £'000
Balance at start of period 20,319 17,864 17,864
Profit for period 2,450 2,309 5,240
Interim dividend paid (1,308)
Prior year final dividend paid (2,663) (2,483) (2,483)
Actuarial gains/ (losses) on defined benefit pension scheme. (33) (639) (1,277)
Corporation tax provision on pension benefits. 9 191 383
Shares issued on acquisition 18 25 33
Premium on shares issued 983 1,474 1,867
------------- -------------- -------------
Balance at end of period 21,083 18,741 20,319
------------- -------------- -------------
Notes to the interim financial statements (unaudited)
1. Key changes in accounting policy
Pensions
The expense of the defined benefit pension scheme is determined using
the projected unit method and charged to the income statement based on
actuarial assumptions at the beginning of the year. Actuarial gains
and losses are recognised in full in the statement of recognised
income and expense in the period in which they occur. Net pension
obligations are included in the balance sheet at the present value of
the scheme liabilities, less the fair value of the scheme assets.
Acquisitions
In accordance with IFRS3 'Business Combinations', goodwill is no
longer amortised but stated at cost less any provision for impairment
in value. Goodwill will be reviewed at least annually.
Dividends
Under IAS 10 'Events after the Balance Sheet Date' a liability should
only be recognised once there is an obligation to pay. As a result the
dividend will only be recognised once the shareholders approve it or
in the case of interim dividends when the directors approve it at a
board meeting (see note 4).
2. Earnings per share are calculated on the basis of the weighted average
of 39,928,297 ordinary shares in issue. (2004: 38,922,114 after
adjusting for bonus issue) and profit attributable to shareholders of
£2,450,000 (2004: £2,309,000 after adjusting for changes in accounting
practice)
3. An interim dividend of 3.50p per share (2004 : 3.33p after adjusting
for bonus issue) was approved by the board on 18th August 2005 and has
not been included as a liability at 30 June 2005. This dividend will
be payable on 21st September 2005 to shareholders on the register on
2nd September 2005. The shares will go ex-dividend on 31st August
2005.
4. Reconciliation of Operating Profit to Net Cash from Operating
Activities:-
Unaudited
Unaudited Six Months Audited
Six Months Ended Year Ended
Ended 30 June 2004 31 December 2004
30 June 2005 (restated) (restated)
£,000 £,000 £,000
Profit from Operations 3,628 3,333 7,594
Depreciation Charges 418 336 776
Increase in Provisions (5) 47 94
Profit on Sale of Fixed Assets 1 3
---------- ---------- ----------
Operating cash flows before movements in working capital 4,041 3,717 8,467
(Increase) Decrease in Debtors 6,703 473 (6,564)
(Increase) Decrease in Work in Progress (8,867) (8036) (243)
Increase (Decrease) in Creditors 1,782 1,819 5,078
---------- ---------- ----------
Cash generated by operations 3,659 (2,027) 6,738
Corporation tax paid (1,314) (1,041) (2,466)
Interest Paid (54) (40) (118)
---------- ---------- ----------
Net cash from operating activities 2,291 (3,108) 4,154
========== ========== ==========
5. Acquisition of businesses
On 7th January 2005 T Clarke plc acquired 100% of the share capital of
Smith Contracting Services Ltd. The final consideration was £4,147,000
and the net assets acquired were £1,627,000 and the resultant goodwill
was £2,520,000.
On 4th May 2005 T Clarke plc acquired 100% of the share capital of
Waldon Electrical Contractors Ltd for a consideration of £1,700,000.
The net assets currently recognised are £400,000 and therefore the
resultant goodwill currently stands at £1,300,000.
6. This interim report will be circulated to members on 23rd August 2005
from which date copies will be available to the public at or on
application to the company's registered office: T Clarke plc,
Stanhope House, 116-118 Walworth Road, London SE17 1JY, telephone
number 020-7358-5000 (Ext 211) or e-mail: info@tclarke.co.uk
Reporting under International Financial Reporting Standards (IFRS)
T Clarke plc will produce its consolidated report and accounts in accordance
with IFRS with effect from 1 January 2005, where previously the group had
reported under UK Generally Accepted Accounting Practice UK GAAP). The group's
date of transition to IFRS is 1 January 2004, which is the beginning of the
comparative period for the 2005 financial year. This will mean that the opening
balance sheet for IFRS purposes is that reported at 31 December 2003 as amended
for IFRS.
This interim financial report is the first to be prepared under IFRS, and the
comparatives have been prepared on the same basis and therefore restated from
those previously reported under UK GAAP. In order to assist in understanding the
impact of this change reconciliations have been produced to show the changes
made to statements previously reported under UK GAAP in arriving at the
equivalent statements under IFRS and are included in the notes to these
financial statements along with details of the key accounting policy changes.
Transition to IFRSs
The unaudited reconciliation of equity at 1 January 2004 (date of transition to
IFRS), at 30 June 2004, and at 31 December 2003 (date of the last UK GAAP
financial statements) and the unaudited reconciliation of profit for 2004 (both
interim and final) are published below. Audited reconciliations will be included
in the published financial statements for 2005.
Unaudited reconciliation of equity at 31 December 2003
Effect of
transition
UK GAAP to IFRSs IFRSs
£000s £000s £000s
Non Current Assets
Goodwill 5,654 5,654
Tangible Fixed Assets 4,685 4,685
Deferred Taxation 40 40
-------- -------- --------
10,379 - 10,379
-------- -------- --------
Current Assets
Work in Progress 4,617 4,617
Debtors 14,738 14,738
Cash and cash equivalents 17,064 17,064
-------- -------- --------
36,419 - 36,419
-------- -------- --------
Total Assets 46,798 46,798
Current Liabilities
Bank Overdraft 3,018 3,018
Creditors and Accruals 25,434 - 2,436 22,998
-------- -------- --------
28,452 - 2,436 26,016
-------- -------- --------
Net Current Assets 7,967 2,436 10,403
-------- -------- --------
-------- -------- --------
Non Current Liabilities 98 2,820 2,918
-------- -------- --------
Total Liabilities 28,550 384 28,934
Net Assets 18,248 - 384 17,864
-------- -------- --------
Equity
Share Capital 1,282 1,282
Share Premium 1,046 1,046
Profit & Loss Account 15,884 - 384 15,500
Revaluation Reserve 36 36
-------- -------- --------
Total Equity 18,248 - 384 17,864
-------- -------- --------
Notes to Reconciliation of Equity at 31 December 2003.
There are only three elements that materially effect the transition of the group
accounts from UK GAAP to IFRSs and they are:
Amortisation of Goodwill - There will be no amortisation of goodwill
after the 1st January 2004 and goodwill provided after that date will
be written back.
Pension Commitments - The company will adopt IAS 19 arrangements for
the reporting of its pension commitments with effect from 1 January
2004. The opening pension fund deficit was 2,820,000 at 1 January
2004.
Dividends - Dividends are reported on a dividends paid basis rather
than on an accruals basis and the accrual at 1 January 2004
(£2,436,000) has been written back.
Unaudited reconciliation of equity at 30 June 2004
Effect of
transition
UK GAAP to IFRSs IFRSs
£000s £000s £000s
Non Current Assets
Goodwill 9,213 490 9,703
Tangible Fixed Assets 6,450 6,450
Deferred Taxation 43 43
-------- -------- --------
15,706 490 16,196
-------- -------- --------
Current Assets
Work in Progress 12,703 12,703
Debtors 17,248 17,248
Cash at Bank and in Hand 5,368 5,368
-------- -------- --------
35,319 - 35,319
-------- -------- --------
Total Assets 51,025 490 51,515
-------- -------- --------
Current Liabilities
Bank Overdraft 1,700 1,700
Creditors and Accruals 28,815 - 1,307 27,508
-------- -------- --------
30,515 - 1,307 29,208
-------- -------- --------
Net Current Assets 4,804 1,307 6,111
-------- -------- --------
Non Current Liabilities 240 3,326 3,566
-------- -------- --------
Total Liabilities 30,755 2,019 32,774
Net Assets 20,270 - 1,529 18,741
-------- -------- --------
Equity
Share Capital 1,307 1,307
Share Premium 2,473 2,473
Profit & Loss Account 16,453 - 1,529 14,924
Revaluation Reserve 37 37
-------- -------- --------
Total Equity 20,270 - 1,529 18,741
-------- -------- --------
Notes to Reconciliation of Equity at 30 June
2004
There are only three elements that materially effect the transition of the group
accounts from UK GAAP to IFRSs and they are:
Amortisation of Goodwill - There will be no amortisation of goodwill
after the 1st January 2004 and goodwill provided after that date
(£490,000) has been written back.
Pension Commitments - The company will adopt IAS 19 arrangements for
the reporting of its pension commitments with effect from 1 January
2004. The opening pension fund deficit was 2,820,000 at 1 January
2004, and was estimated at £3,326,000 at 30 June 2004.
Dividends - Dividends are reported on a dividends paid basis rather
than on an accruals basis and the accrual at 1 July 2004 (£1,307,000)
has been written back.
Unaudited reconciliation of profit for six months ended 30 June 2004
Effect of
transition
UK GAAP to IFRSs IFRSs
£000s £000s £000s
Revenue 71,235 71,235
Cost of Sales 60,906 60,906
-------- -------- --------
Gross Profit 10,329 10,329
Administration Expenses 7,439 - 443 6,996
-------- -------- --------
Profit from Operations 2,890 - 443 3,333
Investment Income/Finance Cost 151 - 36 115
-------- -------- --------
Profit before Taxation 3,041 - 407 3,448
Taxation 1,164 - 25 1,139
-------- -------- --------
Profit for the period 1,877 - 382 2,309
-------- -------- --------
Notes to Reconciliation of Profit at 30 June 2004
The items that materially effect the transition of the group accounts from UK
GAPP to IFRSs are the following:
Pension Commitments
a) The provision within administration expenses for current service
cost in excess of contributions made. (£47,000)
b) The provision within investment income/finance cost for interest
on pension liabilities offset by the expected return on pension
fund assets. (£36,000)
c) The adjustment of the provision for taxation for the above.
Amortisation of Goodwill - No amortisation of goodwill is provided
after 1 January 2004, and the provision at 30 June 2004 of £490,000
shown in administration expenses is written back.
Unaudited reconciliation of equity at 31 December 2004
Effect of
transition
UK GAAP to IFRSs IFRSs
£000s £000s £000s
Non Current Assets
Goodwill 9,469 1,070 10,539
Tangible Fixed Assets 6,903 6,903
Deferred Taxation 21 21
-------- -------- --------
16,393 1,070 17,463
-------- -------- --------
Current Assets
Work in Progress 4,981 4,981
Debtors 25,289 25,289
Cash at Bank and in Hand 11,211 11,211
-------- -------- --------
41,481 - 41,481
-------- -------- --------
Total Assets 57,874 1,070 58,944
-------- -------- --------
Current Liabilities
Bank Overdraft 2,603 2,603
Creditors and Accruals 34,557 - 2,629 31,928
-------- -------- --------
37,160 - 2,629 34,531
-------- -------- --------
Net Current Assets 4,321 2,629 6,950
-------- -------- --------
Non Current Liabilities 264 3,830 4,094
-------- -------- --------
Total Liabilities 37,424 1,201 38,625
Net Assets 20,450 - 131 20,319
-------- -------- --------
Equity
Share Capital 1,315 1,315
Share Premium 2,914 2,914
Profit & Loss Account 16,186 - 131 16,055
Revaluation Reserve 35 35
-------- -------- --------
Total Equity 20,450 - 131 20,319
-------- -------- --------
Notes to Reconciliation of Equity at 31 December 2004
There are only three elements that materially effect the transition of the group
accounts from UK GAAP to IFRSs and they are:
Amortisation of Goodwill - There will be no amortisation of goodwill
after the 1st January 2004 and goodwill provided after that date
(£1,070,000) has been written back.
Pension Commitments - The company will adopt IAS 19 arrangements for
the reporting of its pension commitments with effect from 1 January
2004. The opening pension fund deficit was £2,820,000 at 1 January
2004, and the deficit at 31 December 2004 was 3,830,000.
Dividends - Dividends are reported on a dividends paid basis rather
than on an accruals basis and the accrual at 1 January 2005
(£2,629,000) has been written back.
Unaudited reconciliation of profit for year ended 31 December 2004
Effect of
transition
UK GAAP to IFRSs IFRSs
£000s £000s £000s
Revenue 156,627 71,235
Cost of Sales 134,470 60,906
-------- -------- --------
Gross Profit 22,157 10,329
Administration Expenses 15,539 - 976 14,563
-------- -------- --------
Profit from Operations 6,618 976 7,594
Investment Income/Finance Cost 265 - 72 193
-------- -------- --------
Profit before 6,883 904 7,787
Taxation
Taxation 2,598 - 51 2,547
-------- -------- --------
Profit for the period 4,285 955 5,240
-------- -------- --------
Notes to Reconciliation of Profit at 31
December 2004
The items that materially effect the transition of the group accounts from UK
GAPP to IFRSs are the following:
Pension Commitments
a) The provision within administration expenses for current service
cost in excess of contributions made. (£94,000)
b) The provision within investment income/finance cost for interest
on pension liabilities offset by the expected return on pension
fund assets. (£72,000)
c) The adjustment of the provision for taxation for the above.
Amortisation of Goodwill - No amortisation of goodwill is provided
after 1 January 2004, and the provision at 31 December 2004 of
£1,070,000 shown in administration expenses is written back.
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