Tclarke Share Discussion Threads

[cc2014] 25/4/2018 13:23

Good afternoon,

I think the matter of the directors package is a difficult one. One first sight it appears generous and one might suggest they are being rewarded for an improvement from a low baseline. On the other hand the package is only available to 3 directors and other companies might well hand out lower levels of remuneration but to a far greater number of individuals.

I think it also needs to be put in context of construction is a very easy industry to get things wrong and the directors have steered the company through the recession coming out the other side in good financial health with a strong reputation in the industry. Throughout this time there has been a dividend stream and we should be clear the directors are investing in the future (Eton, Birmingham, off-site prefabrication) and have a strong focus on margin improvement and being selective around their client portfolio.

I think I'm probably ok with it, although concerned.

[cwa1] 25/4/2018 09:53

LOL, graham, no worries. I did wonder if there was a touch of the "brain malaise" in your comment :-) Sadly all too easy a symptom to exhibit I find :-(

[grahamburn] 25/4/2018 09:46

Ooops.... my brain's failed today. Why did I think it was Thursday, because I knew it was Wednesday due to other results announcements?

Apologies to all!

[cwa1] 25/4/2018 09:40

grahamburn

Curious comment:-the share price hasn't shown much evidence of going "ex div".

Don't think it will show any sign of going XD until it ACTUALLY goed XD tomorrow!

[profdoc] 25/4/2018 09:35

I raised the issue of director's remuneration two years, openly in the meeting and privately with the chairman afterward. I was told it was to be looked at again. Now we see large increases. Note that the NEDs are bunged large amounts as well as the executives.
Perhaps more of us will vote against this year??
I plan to be at the AGM next month.

[grahamburn] 25/4/2018 09:29

Interesting that, so far, the share price hasn't shown much evidence of going "ex div", at least so far as the bid price is concerned, though the spread has closed up considerably.

Is that a sign of some new underlying strength?

[ivancampo] 25/4/2018 08:16

Need some shareholder activism, perhaps Miton, as the largest holder? Though they maybe the seller of course.

[grahamburn] 24/4/2018 18:25

Doesn't look like a good fit.

Your logic for a RNWH takeover?

[dozey3] 24/4/2018 16:32

Interesting that the directors are extracting an obscene proportion of profits and have minimal skin in the game. That explains the rather pitiful divi and continued undervaluation of the shares by most metrics. It is not as if directors have an unblemished record, having failed to sniff out fraud in one of the districts a short while ago.
Sharescope gives a forecast p/e of 6.3, yield of 4.9, div cover over 3 times, peg of 0.44 and cash p/share of 39p (though a good deal of this could be advance payments).
Whatever, the shares are way undervalued and it is time shareholders had a fair deal, and a 50% divi increase would be a good start. (Though I would prefer a takeover by Renew (RNWH) personally).

[cc2014] 24/4/2018 13:58

Good afternoon Tuscan.

I will be going to the AGM and look forward to chatting to the Board about a few things although none of it I will be raising in the open meeting as that's not my style.

I share your concerns over the Directors pay as their reward is linked to profitability and not share price. One should follow the other but it hasn't with CTO. I do think they are making good long term strategic decisions and have ambition but I remain frustrated this doesn't flow to the share price.

I examined the pension fund deficit calculation in some detail and if you look at the assumptions, it is the usual CTO cautious stance. I would suggest based on others I've looked at, when we come to the three yearly revaluation the deficit will drop. Interestingly they had £6m in cash in the pension fund at the end of the year which would represent about 15% of the assets. Probably a good move given the market peaked at the end of the year and asset values are now significantly lower.

Yes those arrows on the risks did my head in. At first reading they looked the wrong way round to me. It could have been clearer.


I see we have managed to get through nearly 6 hours today without someone selling any shares. Yesterday we had a whole raft of sellers again with some very strange price action on L2 at the end of the day where despite all those sells the offer went up in the last 10 minutes on the basis of one 10k buy.

We are XD this week for 2.9p

I too look forward to a significant re-rating in the share price. Something beginning with a 1 would be a good start.

[tuscan4] 24/4/2018 13:09

A few comments on the Annual Report in no particular order.
After reading every page I was left feeling that something was missing. Yes all good stuff but missing some very salient sections that were in the 2016 report.ie breakdown of staff last year,bits about London M & E missing,forward orders in the specialist markets quietly dropped. Are these now commercially more sensitive?
Seems to be more PR driven.
Principal Risks summary is really confusing with coloured arrows not clearly suggesting if risk has fallen or risen.
16, yes SIXTEEN pages on Directors Remuneration. Reinforced my view that the Directors are overcompensated. The performance targets are set at very modest achievement levels. Chief Executive / MD/ FD are between them taking a third of Pre Tax and could take up to 50% this year(as I read it) if certain profit levels are achieved. Disparity between them and their employees is widening. Disparity with shareholders is huge. Directors remuneration in 2017 £2.1m Dividends £1.45m.
Directors have negligible shareholdings. Needs to change.
Intangible Asset Assumptions on page 108 reinforce the strong performance of London in 2017, so there might be some difficulty in matching London this year. Falling London revenue expected in next three years. Elsewhere OK
Pension Scheme deficit reduction surprisingly glacial, hopefully next review at the end of this year will show more progress. Scheme cannot cope well with a severe setback in equities/bonds.
Finally slight concern over sharp rise in overdue trade receivables £4.1 to £ £12m in the year.
If anybody is going to the AGM and wants to raise any of these points please do so.
I remain, despite these concerns, which may or may not be relevant, a major shareholder with a price expectation nearer to 150p

[cc2014] 19/4/2018 15:47

What can we do? The seller goes on and on. Who could it be? How many have they got left? And once they finish will the brake they have put on the share price be released.

Every construction company is moving up today. Kier in the lead up 3.1%.

And why not. With yesterday's inflation figures interest rate rises look to be moving at a slower pace. Great article from Rivaldo above. And there's this one too as well today. You can see why someone came out buying this morning.

Only the seller has wiped out all those lovely buyers on L2 albeit we are now just above 80.





Construction workloads appear to be holding up rather well, judging by the latest market survey by the Royal Institution of Chartered Surveyors (RICS).
Good quantity surveyors are in short supply
Above: Good quantity surveyors are in short supply
RICS’ quarterly surveys have indicated moderate but steady growth since early 2016 and this now continues into 2018.

The Q1 2018 RICS Construction & Infrastructure Market Survey found a net balance of 23% of surveyors reporting their workloads to have risen in the first three months of the year.

While 63% of respondents noted that weather conditions had impacted on activity, the week-long snowstorm in February was not enough to slow the pace of growth in a sector already facing limited spare capacity.

The findings were broadly positive across all sub-sectors with both new work and repair & maintenance (R&M) activity rising steadily. Private housing reported the strongest rise in workloads with 36% more respondents citing an increase rather than a decrease (compared to 27% in the previous quarter) – the most positive since the beginning of 2016.

Growth in activity across the private commercial and industrial categories was broadly unchanged and with net balances of 19% and 16%, respectively.

In infrastructure, 21% more contributors reported a rise rather than a fall in workloads. Nationally, respondents expect the rail and energy categories to post the most significant increases in construction output over the coming 12 months.

[ivancampo] 19/4/2018 15:31

Just in case we weren't aware the seller was still active.

[cc2014] 19/4/2018 10:46

So, 10 minutes after a really boring RNS with no additional information (unless there's something in the accounts I haven't found yet and you've have to be a genius to read it that fast), the share price pops up, L2 is covered decent sized buy orders.

What do I know

[cc2014] 17/4/2018 09:52

yeah - based on that 32k buy at 84.7 someone is definitely absorbing all the sells

[cc2014] 11/4/2018 09:53

Good morning.

The bid concept is something I have mixed feelings about. At the current share price the P/E and cashflow is going to make CTO look very cheap to anyone who wants to acquire a building services company in the UK.

NG Bailey, CTO's main competitor and the biggest in the UK certainly have the clout. Their accounts show that at the end of Feb 17 they have cash and liquid investments of £84m. NG Bailey are privately owned and have been around for decades. Interestingly the type of work they do is sufficiently differentiated from CTO that it would make a good fit. NG Bailey of course do the commercial office blocks and infrastructure but not on the same scale as CTO. NG Bailey do far more term maintenance, facilities maintenance and some of the really big stuff like Hinkley point nuclear power station. I'm pretty sure NG Bailey will pick up HS2 which CTO wouldn't be interested in.

I don't think any takeover is on the cards though. What's more interesting is showing where CTO could go given time. At the moment CTO are focused on technical innovation (better margins) and spreading geographically in markets they have a great reputation in. A good strategy and one I support. Lots of opportunities related to diversification though at the right time which I don't think is now. Best to continue to do what you do well rather than overstretching.

Actually I would cry if there were a takeover bid at 110p. 150p I could cope with I guess but I'd much rather the share price moved to 100p by the end of the month so that the P/E only looked "stupidly low" rather than "bizarrely low". That doesn't seem too likely though. lol.


Finally I do agree there is someone out there collecting stock. They were collecting in the run up to results at 78p and now I think they are prepared to pay about 83p. I say this as the trade flow suggest more sells than buys yet the share price is stable. Whoever it is, I consider them professional. They are extremely patient and are clearly trying to get the stock as cheap as possible rather than embarking on a smash and grab raid by pushing the price up. This strategy will work for them as long as a second buyer doesn't come along.

[ivancampo] 11/4/2018 08:10

Such a big spread is typical of market makers working a large order, let's hope this is the case and the overhang will soon be gone.

[ivancampo] 09/4/2018 16:42

Agreed, would be closer to 150p though.

[tuscan4] 09/4/2018 16:20

I like the clear inference that whilst turnover growth will be subdued margins are improving. My guess is £310m in 2018 and £8m pre tax. Is there any possibility of takeover? N G Bailey acquisition last week and a M & E acquisition in H Kong . CTO is a sitting duck IMO. Pity to lose this at 110p after so much patience and heartache.

[cc2014] 06/4/2018 16:45

For those who want an interesting read over the weekend the investor pack related to the 2017 results is out. I see considerable effort has gone into explaining the value proposition

[cc2014] 06/4/2018 16:24

L2 not much use. It's not being manipulated so suggest the move up is simply part of the ebb and flow. There is decent volume at 83.4 although if one of those 20k sells comes along I'd be surprised if the price would hold.

I do note GFRD is up nearly 5% today so maybe someone is casting an eye across the sector.

Edit: interesting that 10k just went through at 85 and the volume at 83.4 remains.

[ivancampo] 06/4/2018 15:56

What's L2 Riv?

[rivaldo] 06/4/2018 15:54

Now up today to 85p mid-price and looking strong - cheap enough to climb nicely from here.