Tclarke Share Discussion Threads

[sspurt] 10/5/2017 14:36

I am wondering how and where the company has acquired expertise in mechanical contracting. It seems to have appeared out of nowhere over the last 12m or have I missed strategic signposts along the way to being able to offer the full electro-mech package?
I like CTO and am long but have not figured out yet quite why it has taken management so long to raise margins in an environment that has been favourable for a few years now. In theory the ability to offer a more enhanced service is a positive but execution will be everything given the low margins. With the upside comes elevated risk and management's track record is not exemplary, as yet anyway.

[rivaldo] 10/5/2017 14:08

Agreed EC, CC2014. It's these types of situations, where the market hasn't yet fully appreciated the changes taking place at a company, where one can benefit from a substantial re-rating whilst the company continues to perform.

Worth noting that online is improving fast - I can now only buy a maximum 15k shares at 90.82p, whilst I can sell at least 20k at 88.5p.

[cc2014] 10/5/2017 13:01

Agreed the margin is the key. The mechanical margin is even more interesting imho. Instead of subcontracting out some of the package they can do it in-house in that new enlarged pre-fab building.

I really do think this company is going to surprise the market for some time to come.

I see it as a very good sign that the stock is holding here at just below 90 as the 90 brigade have now had plenty of time to sell

[effortless cool] 10/5/2017 12:36

Thanks, rivaldo, I hadn't realised how advanced these intelligent buildings were actually becoming in practice. The exciting thing for CTO is that this sort of work potentially opens them up to gross margins that are multiples of what they can hope to achieve from a standard electrical fit out.

[allstar4eva] 10/5/2017 11:41

Thanks Rivaldo. Things are looking very positive here.

[ivancampo] 10/5/2017 11:02

A few chunky delayed trades went through after hours yesterday, good sign that the overhang is getting chipped away at.Unable to get a quote to buy 50k this morning, previously been no problem inside the spread, seller about to clear?

[rivaldo] 10/5/2017 10:51

More good stuff from CTO about the complete package they now offer:



"Why is 22 Bishopsgate a true ‘gamechanger’?
Posted: 05th May 2017

TClarke’s Group CEO Mark Lawrence explains why 22 Bishopsgate merits that title and changes the landscape for both the commercial office construction sector and the TClarke group.

This is a world-scale construction project with 1.275 million sq ft of office space, plus 100,000 sq ft of amenity space for 12,000 occupiers. Sir Stuart Lipton of Lipton Rogers calls it “a new Vertical Village campus, reflecting the City’s ever changing consumer base.” Pierre Vaquier, the CEO of the building owners AXA IM - Real Assets, says “22 Bishopsgate will deliver a new standard of workplace.” When you look at the project specification, both of those statements are readily validated; that’s why it is a very big deal to be involved, as TClarke are, in delivering the full range of M&E services.

A new standard for intelligent office buildings

When you walk into 22 Bishopsgate, advanced recognition systems will identify you automatically and give you entry to the building. The building’s systems will have the ability to then go on to find your team’s location on that day and the specific workspace you’ve been allocated. You will then get access to all of the services that you need - from lockers to gyms and so on - as well as your computer and, crucially, your data.

If you pause to think all of that through, you can see that this makes huge differences to the way in which people can occupy, manage and use their space and services. Everything has the potential to become far more dynamic and far better attuned to the ways will want to work and collaborate with colleagues.

The TClarke package is complex and comprehensive

When you realise how advanced the building will be, you can understand the significance of being selected to deliver not just one but the whole series of mechanical, electrical, fire alarm, information systems and the extra low voltage packages.

Bringing a building like this to life, helping to maximise the practical buildability of design, identifying key areas of challenge and opportunities for value creation and then having the capability and scale to deliver through the construction phase is a world-scale engineering challenge.

We recognise the scale of the challenge and also the opportunity, working with Multiplex, to establish our expertise and leadership in the market, doing something that takes the whole industry forward.

A project with strategic potential for the TClarke group

TClarke is a highly skilled, value adding engineering business. We work on some of the most complex and challenging construction projects and this is what allows our people to remain among the most skilled and expert in the industry.

This new standard of intelligent building gives building owners and occupiers vast extra potential to maximise the usage and value of a commercial office. As well as creating a fresh standard for new-build office developments, there may be market opportunities to retrofit this standard of intelligence and integration into existing buildings. Being a leader in that capability will be a major commercial advantage."

[interceptor2] 09/5/2017 16:20

Share option granted to directors seem very fair, they vest in 3 years time but to exercise 100% of these shares the EPS must increase each year by 10% over RPI, and a sliding scale the lower the EPS performance.

Shows confidence imo.

[dozey3] 09/5/2017 15:42

Fair enough, rivaldo, perhaps a bit picky, but when I choose my surgeon, dentist, or car mechanic come to that, I like them to pay attention to small details, and expect the same of top management.

[rivaldo] 09/5/2017 15:04

It's great news that CTO have the confidence to build a big expansion of facilities, and that it's been completed on time and on budget.

CTO should be congratulated rather than be met with cynicism and moaning about typos. Dozey3, I really hope you're not being serious about the news being overshadowed by a misspelling :o))

[dozey3] 09/5/2017 10:13

Well that is good news. Pity they got the wrong 'peak' in the headline though, rather takes the gloss off. Let us hope it is not like HAYT's much hyped 'Centre of Excellence' which was soon followed by financial wheels wobbling if not actually coming off.

[tuscan4] 08/5/2017 19:22

Watched a film about Warren Buffet on the plane back from Dubai yesterday. His early investment forays were nearly always small under researched companies and I am sure that CTO would have been in his comfort zone with an enormous "margin of error" and a steadily increasing " moat" being built around its business which is becoming very high tech indeed. Once CTO market capitalisation goes above £50m it will attract smaller institutions/pension funds/high net worth investors, and it could(IMO) become a £500m T/O company with 3 maybe 4% margins and a Mkt. Cap of c £100m

[mcfly79] 08/5/2017 17:36

Thanks rivaldo,Great stuff.

[ivancampo] 08/5/2017 14:02

We're off ! 120 short term target

[its the oxman] 08/5/2017 13:54

100p soon.

[ivancampo] 08/5/2017 13:39

On the cusp of breaking 90 once again, got to come soon!

[rivaldo] 08/5/2017 12:02

Good news - and shows CTO's transformation from solely an electrical contractor:



"Southbank Place is our largest mechanical project to date
Posted: 05th May 2017

TClarke’s selection to work with Principal Contractor Canary Wharf Contractors is a major success as TClarke London Director Barrie Nightingale explains.

This is a landmark project on London’s Southbank and our scope comprises mechanical and electrical packages for shell and core on two towers and also the M&E fit out on Building two. For anyone who has an interest in TClarke, this project win is worth taking note of because it shows how our strategy in our core London M&E business is developing.

If you have followed the business over the last few years, you will know that in London only a few years ago we were solely an electrical contractor. You will know that we acquired a mechanical business with the purpose of growing our mechanical capability to match our electrical capability and compliment it.

Strategically, this would open up a very much larger market to our services and it would also give us the potential to tender for integrated projects. Southbank Place is our largest to date and it is precisely the kind of very large scale combined M&E project for which TClarke would not previously have been able to compete.

Of course it is easy to talk about ‘capability’. It is far, far harder to develop the practical excellence and to deliver the TClarke service onsite, day after day - and build a reputation in this industry. That takes time and it takes a lot of people working hard and doing a very good job. So selection for Southbank Place represents a moment to recognise the quality and commitment of the people in TClarke London who have built our mechanical business in the last few years, working project by project to earn an opportunity like this - they really are helping to secure our prospects for now and the future."

[cc2014] 08/5/2017 11:49

CTO have a much higher proportion of direct labour than the rest of the industry and their commitment to this is shown through the apprentice scheme.

The pension scheme although in deficit is a bit plus in terms of recruitment and retention.

[interceptor2] 08/5/2017 11:02

Have been buying again this morning but for family accounts.

As mentioned on Friday I did work out what this years earnings might be and was pleasantly surprised by what they might achieve, but I resisted the urge to post my estimates because it might be viewed as ramping at this early stage in the financial year.

But well worth the effort even when using deliberate conservative estimates for revenue and margin figures.

Have often seen a situation where a company release a surprising catalyst early in the financial year and then releases further positive update for the rest of the year. The market share price can never reflect all of the positive news in just one day.

[rivaldo] 08/5/2017 10:22

Good to see continued AT trade (institutional?) buying today in 5k and 10k lots. And also to see both opodio and larva here - they and their colleagues must be extremely keen to buy in. They don't normally work this hard and together on one stock :o))

[larva] 08/5/2017 09:24

Massive pension deficit aside

Think the elephant in room is the fact they use a lot of eastern european electricians who are leaving the UK

Brexit is a horror show for this one

[mcfly79] 08/5/2017 09:20

The pension deficit is of course a negative but it is manageable.

The last triennial valuation of the scheme was on 31 Dec 2015 and valued the deficit at £14.9m.

Based on that valuation the company will pay pension deficit reduction contributions of £1.0m for the year ending 31st December 2017, rising to £1.25m for the year ending 31st December 2018 and £1.5m per annum thereafter.

Under the latest plan agreed with the pension regulator the company is aiming to eliminate the deficit by 31st March 2029. Given this time frame the £1.5m annual funding appears adequate.

The company had net cash of £9.3m as at 31 Dec 2016 and made £4m of operating cash flow in 2016. These additional pension contributions are easily manageable.

The deficit has increased to £20.7m as at 31 Dec 2016 due to historic low bond yields. The next triennial valuation is on 31 Dec 2018 and it is the actuarial valuation on this date that will determine any increase in future contributions for 2019 onwards. I hope that the pension deficit will have reduced by this date.

The company is also being proactive in managing the deficit. It has proposed an increase in employee contributions from 8% to 10% of pensionable salary, closed the defined benefit scheme to new employees and altered the benefit from a final salary scheme with an accrual rate of 1/60th to a Career Average Revalued Earnings scheme with an accrual rate of 1/80th.

I don't think the pension payments will have any impact on the business. Free cash flowing is well in excess of the payments required and the company's cash pot should continue to increase over the coming years (while at the same time the pension deficit will gradually get paid off).

[rivaldo] 08/5/2017 07:38

At least opodio has the virtue of lifting this thread to the top all the time :o))

[opodio] 08/5/2017 07:36

#21 million pound pension black hole sucks a lot of spare cash


the cash isnt also theirs as is it prepayments