Tclarke Share Discussion Threads

[cc2014] 28/3/2017 20:58

We know nothing allstar. But read the last sentence below. That's a pretty bullish statement only 3 months in.

(ShareCast News) - Building services group TClarke announced its year-end trading update on Friday for the year ended 31 December, ahead of its preliminary results which will be announced on 28 March.
The London-listed firm reported that underlying profits were substantially ahead of last year, saying it entered 2017 in a "strong, confident position", supported by an improved net cash balance and improved forward order book.

"Further to our announcement on 31 October 2016, the 2016 results will include exceptional charges and provisions in relation to the internal fraud at our DGR subsidiary," the board said in a statement.

"These are estimated at £2.2m, including a provision for professional costs of £0.4m directly associated with our efforts to recover the misappropriated funds.

"Profits for the year are expected to be in line with market expectations after reflecting the full impact of the accounting adjustment for the fraud in the period, other than the provision for related professional costs referred to above."

TClarke said legal proceedings to recover the misappropriated funds were ongoing.

The group said its year-end net cash position improved 39% for the fourth successive year to £9.2m.

"Supporting our growth, our banking facilities with NatWest were renewed successfully as planned.

"The Group now has access to an increased three year £10m - previously £5m - revolving credit facility and a £5m - previously £8m - overdraft facility."

The firm's forward order book as at 31 December strengthened to £330m from £300m.

Notable new project wins included two significant London office fit out projects for a social media client and a major asset manager client, along with projects at The University of Gloucester Business School & Growth Hub and The Plymouth History Centre.

"The exceptionally strong underlying trading performance for the 2016 financial year and the year end cash position are, to an extent, a reflection of the timing of major project completions and stage payments received in the second half," the board explained.

"Nonetheless, the cautious improvements in the group's core markets, supported by a strong forward order book that has seen no project cancellations, together mean that we enter the 2017 financial year in optimistic mood.

"It is the board's expectation that the group's actual performance will exceed current market expectations for the year.

[allstar4eva] 28/3/2017 20:47

Yep I said results were not factored into the share price but it seems they were. Today was just profit taking and a weak market imho. The shares had had a good run and punters tend to cut their winners first when nervous. Still offer great value from here and you would think they can only head up in the coming weeks and months wider markets permitting but wdfdik!

[cc2014] 28/3/2017 20:40

I've had a chance to digest the numbers in detail now and today's price action tells me someone hadn't done their research before the results as nothing was a surprise.
Turnover up 10% - probably in line with expectation
Margin up 18% to 2.5% - probably line or better than expectations
Profit up exactly as in the trading statement earlier in the year
Fraud - no change from previous statement in January

So, it must be all down to the pension deficit which has improved by £1.4m from the half year. Yes improved. I guess someone got upset by the additional contribution of £1m a year to fix the issue but that's been on the cards for some considerable time. It was fairly obvious at least to me that as soon as profits starting ramping up, the pension deficit needed attention.

So, for me nothing has changed, so what of next year.

Underlying profit 6.9m
Additional profit from 10% increase in turnover 0.7m
Additional profit from 0.5% margin improvement 1.5m (same level of increase as this year)
Reduction in finance/interest costs 0.2m (elimination of revolving credit facility)
Additional pension contribution -1.0m
Predicted profit for 2017 £8.3m.

That's pretty good for a company with a market cap of £34m even with the pension deficit (which we now know is reducing as annuity rates are improving)

[cc2014] 28/3/2017 15:47

Slowly creeping back up as the afternoon progresses. Can't quite see it turning positive but it's looking more optimistic

[igoe104] 28/3/2017 15:27

CC2014, I hope they recover, at least £1.5 million.

Otherwise what`s the point of spending 400k in trying to recover funds ?

[cc2014] 28/3/2017 13:00

On another note the pension fund deficit is annoying at 20.6m, but it was £13.4 twelve months earlier which shows the sensitivity to the annuity rate and just how fast this would disappear as annuity rates rise in line with inflation.

Even if you take the most pessimistic view, the company would seem on track to deliver say £8m profit next year, (maybe more) is in a very good cash position and with that level of profit the pension fund deficit can be dealt with in an orderly manner.

CTO is in a good place. The competing demands on cash are for dividends and pension deficit only as the only loan is the £3m revolving credit facility which is easily outweighed by the £12.3m in the bank

[cc2014] 28/3/2017 12:53

Igoe - I doubt they will recover any significant sum over the fraud case. I've already assumed zero.

The kind of individual who defrauds £3m over a number of years doesn't tend to put it away for their retirement or a rainy day as the first £1m would be enough for that.
Usually they are addicted to gambling...

[tjbird] 28/3/2017 11:58

Hope to get a few if retrace to 68-70p area

[allstar4eva] 28/3/2017 11:42

Still wouldn't be surprised to see a blue finish once profit takers have finished.

[allstar4eva] 28/3/2017 11:41

Markets jittery. Punters taking cash off the table. Many have made huge recent gains and wait for results to take profits. Results looked excellent to me. At a different time these would be 10% up on the day imho.

[cc2014] 28/3/2017 11:39

Can't understand the fall myself. Turnover up 10%, Order book up 10%, cash up.
Pension deficit actually lower than at interims by £1.3m.

It seems to have pulled off a base from an hour ago. Hopefully the big boys have come out to play and we will gradually see the price rise this afternoon.

[rivaldo] 28/3/2017 10:56

Bonkers markdown imo, with presumably a seller or two taking advantage of post-results liquidity.

Good to see the price bouncing now.

The order book has increased to a huge £350m now - that's up £20m since 31st December alone. There's terrific visibility through to 2019.

I can see a good re-rating upwards from here given the secure revenues going forward and the likelihood of continued good results.

There will be an AGM trading statement soon, and that's likely to continue the positive vibes.

[dozey3] 28/3/2017 10:24

Must confess a tinge of disappointment. Orders announced seem exclusively in the south and the market place elsewhere may be contracting. IMO a very small increase in interest rates would be beneficial to industry in signalling easing of pension liabilities.
That said, the cash cushion, increased margins helped no doubt by burgeoning reputation as quality operator make it compelling value. Could well be on the radar of larger contractors - RNWH for example. Hope so.

[basem1] 28/3/2017 10:22

Just picked up 20k at 78.25 inc costs. 4% yield, Typical buy the rumour, sell the fact situation.

[igoe104] 28/3/2017 09:38

id like to know a bit more details regarding the fraud case, has the individual assets been frozen?

How much of funds are CTO looking to recoup ?

[allstar4eva] 28/3/2017 09:17

Opodio = albanyvillas= troll same thing

[rivaldo] 28/3/2017 09:15

PBT at £6.2m was well ahead of expectations of £5.96m.

EPS of 11.6p was similarly ahead of 11.18p expectations.

The 3.2p dividend was spot on forecasts.

The pension liability will rise and fall over time, but is easily manageable at £1m-£1.5m per annum given the strong Balance Sheet with a £9.2m and rising cash pile..

[opodio] 28/3/2017 08:37

Pension obligations

The triennial valuation of the pension scheme at 31st December 2015 showed a deficit of £14.9m, representing a funding level of 67% (2012 valuation: deficit £11.5m, funding level 68%).

The Group has been pursuing an agreed deficit reduction plan over a number of years, however market factors have meant that the deficit has not been reduced as intended and the cost of funding current pension commitments has increased. Following provisional agreement of the draft 2015 valuation, the Group has proposed a revised deficit reduction plan which includes making additional contributions and continuing to provide security to the pension scheme in the form of a charge over property assets up to a combined market value of £3.1m. From 1st January 2017 the future service contribution will increase to 21.4% of pensionable payroll (including employee contributions) and the deficit reduction contribution has been set at £1.0m for the year ending 31st December 2017, £1.25m for the year ending 31st December 2018 and £1.5m per annum thereafter.

The Group has proposed an increase in employee contributions from 8% to 10% of pensionable salary and is consulting with employees on this proposal. The scheme is closed to new members and the Group continues to meet its ongoing obligations to the scheme.

In accordance with IAS 19 'Employee Benefits', an actuarial expense of £6.3m, net of tax, has been recognised in reserves, with the pension scheme deficit increasing by £7.2m to £20.6m (2015: £13.4m). The increase in the deficit is primarily due to a fall in the discount rate applied to scheme liabilities, which arose due to the significant fall in bond yields during 2016, offset by changes in mortality assumptions.



Bit of a hole there

[allstar4eva] 28/3/2017 08:14

Well it was....

[nw99] 28/3/2017 08:14

Taken profits on my balance had been reducing into strength. Good numbers but stock has had a great run recently.

[rivaldo] 28/3/2017 08:09

Bought some more this morning - excellent results.

CTO are cheap purely on fundamentals - then add in the £9.2m cash against a £35m m/cap and it's looking pretty good.

There should be some nice tips in the press for CTO too after this.

[allstar4eva] 28/3/2017 08:09

Starting to move up now...

[eagle eye] 28/3/2017 07:54

The fraud was announced in October, so is 'old news':



The following update was provided in January:

'Further to our announcement on 31st October 2016, the 2016 results will include exceptional charges and provisions in relation to the internal fraud at our DGR subsidiary. These are estimated at £2.2m, including a provision for professional costs of £0.4m directly associated with our efforts to recover the misappropriated funds. Profits for the year are expected to be in line with market expectations after reflecting the full impact of the accounting adjustment for the fraud in the period, other than the provision for related professional costs referred to above. Legal proceedings to recover the misappropriated funds are ongoing.'

'The Group's year end net cash position improved for the fourth successive year to £9.2m (31st December 2015: £6.6m), an increase of 39% on the previous year.'

[allstar4eva] 28/3/2017 07:53

He's a troll. Ignore imho...

[cc2014] 28/3/2017 07:51

All provided for Albanyvillas. It's old news