Trading Statement

RNS Number : 4604Z

Clarke(T.) PLC

14 January 2011

 



T. CLARKE ANNOUNCES TRADING UPDATE AND NOTICE OF RESULTS

T. Clarke plc ("T.Clarke" or the "Group") the Building Services Group announces a trading update ahead of the announcement of its results for the year ended 31 December 2010. Overall the Group's businesses continue to trade positively. However, the Group has not been immune from the impact of one of the worst recessions in the construction sector in living memory.

The Board has reported throughout 2010 that the markets in which it operates have been extremely difficult and trading in the fourth quarter has been particularly challenging.  Despite the revival of some construction projects, notably in London, margins across the general contracting sector remained under extreme pressure.  The performance of the Group at the end of the year has also been affected by the extreme weather conditions experienced across the country which disrupted work at a large number of our sites, particularly in the north of England and Scotland. 

The Board has continued to take conservative assessments of final accounts from project completions and the likely outcome for a number of ongoing projects.  Following this year end assessment the Board believes that results for 2010 will be below current market expectations. The Board also expects the trading environment and consequently the outlook for 2011 will be challenging and as a result that the Group's performance for 2011 could be below that of 2010.

Cash and Dividend

The Group continues to maintain its positive cash position and as at 31 December 2010 cash balances were in excess of £7m with no borrowings.  The Board is committed to continuing to focus on shareholder value whilst retaining a sensible level of cash to underpin the business and take advantage of opportunities in the future.

Given the difficult trading conditions, it is the Board's intention to reduce the final dividend to a level equal to that of the interim payment.  It is also the Board's intention to rebase its dividend policy.  

Order Book

At the end of the period under review our forward order book remains impressive, standing at  £190m (£160m December 2009). 

Strategy

Against the current difficult trading background we have continued to evolve our strategies to address the future growth and performance of the business. Going forward we are focused on eight key sectors in building services that offer good growth potential namely: 

·     Facilities Management.	·     Utilities and Technologies.
·     Intelligent Buildings.	·     Manufacturing.
·     Green Technologies.	·     Residential.
·     Rail.	·     M&E Contracting.

We are able to offer clients a broader range of services that will ensure that we can continue to develop long-term relationships that will lead to an enhanced earnings profile.

Our Intelligent Buildings division is completing works on the Olympic Stadium in London and has secured contracts for a Data Centre in Leeds, projects for Aberdeen University and Fife Council and for the installation of CCTV to four power stations in Scotland for British Energy.

Green Technologies, our new ECO Solar division based in the South West is now operating, specifically aimed at providing customers with energy saving solutions including solar Photovoltaics.  The Government's feed-in-tariff scheme enables customers to earn a good return on their investment in green technology. Going forward we are exploring a number of opportunities particularly with Schools, Colleges and Housing Associations.

In the public sector, despite the Government's  spending cuts, we have secured a number of new education projects including Highwood Primary School at Bushey in Hertfordshire, Roecroft Lower School at Stotfold in Bedfordshire, Heathcote School 6th Form Block in Chingford, Essex, Newcastle University and Campsmount Technology College in Doncaster.  We have also won projects at Wellingborough Health Care Centre, Northamptonshire and the upgrade of HMP Buckley Hall.

Other notable project wins include a Flight Crew Training Centre in Greater Manchester for Oxford Aviation, the upgrade of the HV Power Network for Springfields Nuclear Fuels in Preston, the redevelopment of Gateshead International Stadium and a project for the ITV Studios in Leeds.

For the John Lewis Partnership we have recently completed John Lewis at Home stores in Tunbridge Wells and Croydon and are the preferred bidder for their store in Exeter. We are also progressing with the refurbishment of the Waitrose store at Canary Wharf as well as three new stores in the Channel Islands.

In London we are working on schemes for the Bovis Lend Lease New Head Office, Deutsche Bank, Land Securities' commercial development scheme at Park House on Oxford Street, Reuters and Rothschilds. We are also preferred bidder for Turner Broadcasting, part of Time Warner, for the extensive upgrade of the infrastructure to their broadcasting facilities in London.

Group Structure

It is a natural progression to adopt the T. Clarke name which will allow our regional businesses to align more effectively with the Group's operations in the Building Services sector and to provide an identity which reflects the future ambitions of the T. Clarke Group.  

From the 1^st January 2011 three more existing subsidiaries were rebranded T. Clarke. Aylward EMS Ltd based in Huntingdon and Anglia Electrical Services based in Kings Lynn will come together as one business under the name of T. Clarke East.  T. Clarke Midlands, based in Peterborough will be expanded to incorporate Mitchell and Hewitt based in Derby. The Group prides itself on providing a consistent high quality and cost effective service to its clients and this will remain the primary focus of T. Clarke East and the expanded T.Clarke Midlands.

Outlook

Looking forward, the longer-term prospects for the Group are encouraging. The Board remains confident in the resilience of the business, despite these challenging times.  In particular during 2010 the Group invested £17m in two strategic acquisitions. The Board is pleased to report that both businesses are trading in line with expectations and making a positive contribution to the Group.

T.Clarke is well positioned for the eventual upturn, particularly in the London commercial sector which is seeing significant activity with several large office development schemes progressing.  The Group is confident that it will win a number of these new projects, albeit we will see limited revenue benefit until 2012 on any schemes that we are successful in securing.  The Group will also benefit from offering a wider range of services to many of its clients.

Notification of Results

T. Clarke will announce its preliminary results for the year ended 31 December 2010 on Friday 18 March 2011.  There will be an analysts' presentation at 9.30am on 18 March 2011 in the offices of City Profile, Augustine House, 6A Austin Friars, London, EC2N 2HA.

Commenting, Mark Lawrence, Group Chief Executive said,

"Whilst the competitive market has adversely impacted the Group's performance, we remain confident about the long-term potential.  There are a number of significant projects commencing over the next 12 months. 

T.Clarke is a profitable business and extremely well placed to benefit from this upswing in work and this underpins our strategy for organic growth and our unstinting commitment to deliver long-term value for all our shareholders."

Date: 14^th January 2011.

For further information contact:

T. Clarke plc Mark Lawrence, Chief Executive   Martin Walton, Finance Director	Tel: [phone]
City Profile Simon Courtenay	Tel: [phone]
www.tclarke.co.uk

 

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