Tclarke Share Discussion Threads

[ivancampo] 21/5/2018 14:13

Agreed! Looks like we're nearly there. Buy buy buy!

[cc2014] 21/5/2018 13:52

lol Rivaldo. I don't want to get overenthusiastic as this stock has disappointed me some so many times in the past but I do like the look of the trades this morning. We can see some more lumpy sells before 11 o'clock, a 25k and 2x20k's but they have been absorbed by the market and we now seem to be moving up.

We've also got a 20k buy at 85.3 and and 25k buy at 85.99 and someone has just ripped the 15k on the book off. This heartens me as these kind of trade sizes are large enough that even if our seller hasn't finished or reappears at 90p, they are large enough to wear him down.

L2 now looks like this. Looks like it's getting there to me. I suspect the market is responding either to the N+1 note or the answers to directors questions at the AGM

[rivaldo] 21/5/2018 13:33

Hello - 46,000 shares bought in the last few minutes, and suddenly things are happening.

[rivaldo] 21/5/2018 12:39

Norbert Colon, and CC2014, many thanks for your notes from the AGM. Norbert's notes in particular are terrific and well worth linking through to.

[muckshifter] 21/5/2018 11:47

I don't agree with the content of your post 2589 above, CC2014. I'm fairly sure that one culprit implicated in the case of the fraud, has, or at least had, plenty of assets to enable a repayment of £1.5m out of the identified misappropriation of £2.9m, not £2.4m, which was the stated "share" of the person being pursued initially.

When you look in detail at the situation, everything fits, even down to the change in policy adopted by the Directors Remuneration Committee, immediately after the "resignation", and immediate disappearance, of someone I believe was at least part of the problem:
" Introduction of recovery and withholding provisions – in
line with best practice, the revised policy will enable the
Committee to recover and/or withhold remuneration in
certain exceptional negative circumstances such as a
material misstatement, error and gross misconduct."

[norbert colon] 21/5/2018 11:30

My notes of the AGM:https://www.stockopedia.com/content/tclarke-cto-overlooked-intelligent-building-provider-365804/

[cc2014] 21/5/2018 09:34

So, how did Friday go? Well for me nothing has changed except for after spending a couple of hours talking to the directors and senior managers I am even more confident after T. Clarke’s future.

The RNS itself on Friday which I think is worth repeating was really helpful:
We are pleased to report that we continue to expect revenues and profits for 2018 to be in line with current market expectations. To put those in context for the year ending 31 December 2018, these are forecast to be revenues of £300 million, underlying profit before tax of £7.0 million and underlying EPS of 13.2p. We also expect to maintain our trend of underlying positive movement in net cash year-on-year.
Our forward order book has been replenished and as at 30th April 2018 stood at £368 million, increasing from £337 million as at 31st December 2017. Encouragingly, we are seeing no lack of opportunities, but we maintain a strict policy only to bid for projects that meet our internal risk analysis and where we are comfortable with the covenant and market reputation of the contractual counterparty.


I conclude:
1. Directors usual underperform and overdeliver will ensure targets are met for this year and I’m prepared to bet right now the actual profit will come in just over £7m, as they always beat things by a bit.

2. Margins are indeed improving as promised

3. The order book is starting to recover after the slow-down last year. The commercial property sector has been really depressed this last year so it’s great news that the growth is coming from diversification, especially intelligent buildings

4. The directors will absolutely not contract with any party where there is a risk of non-payment. Great. I don’t want my investment put at risk.


There were a few other points from the questions at the AGM, around the balance of cash, dividend yield and returns to shareholders.

5. The directors wish to continue to strengthen the balance sheet this year and no special dividends or buybacks will be made. The directors did say they have clients who financial assess them and if contractors don’t meet the criteria they don’t go on the tender list. I entirely support this.

6. Mention was made of acquisition. Should future acquisitions take place they would likely be the same size as Eton and the directors would want to fund from cash resources rather than debt. The directors of course pointed out that nothing should be read into this.

As we all know construction companies have a habit of screwing up because they either overextend themselves financially (CLLN, AMEY), don’t have a large enough buffer when things go wrong (IRV) or don’t control the tender process and margins (CLNN, AMEY and IRV). I perceive this holds the valuation down in this sector as it’s difficult for investors to sort the wheat from the chaff so to speak. CTO are a bit different. They have all of these covered off and put enough information into the public domain you can test this.

It is good to see for a change a company investing in its future (Eton, off-site prefab, additional offices) , building up it’s balance sheet rather than directors raping and pillaging the company to keep shareholders happy in the short term with little thought to the future.

I shall continue to let this play out over the next 3-5 years.

[edmundshaw] 21/5/2018 09:00

Me, I am in this company because of current trading and prospects, and a good balance sheet and general reputation. The fraud is a past issue and barely material to the prospects (though obviously a further recovery would be good), and the past margin problems do seem to be also historical.

Obviously if someone has lost money in the past in a company (any company) they are going to be wary of it. That can be a drag on recovery, but can also create mispricing and a good opportunity. I feel that is the case here.

[cc2014] 21/5/2018 08:50

um. Not that I want to teach anyone how to commit fraud and I'm not saying this was how it was done.

You put an invoice in from a false company with BACS details of your own bank account. Approve it yourself. The accounts then balance as there's an invoice to match the cash going out the bank account.

The company is quiet as there is no new news. £1m has been recovered as the last RNS. The individual concerned is subject to police investigation, the progress on which is down to the police and not something CTO can influence. I expect the directors are as few up with how slowly the investigation is going as you are Igoe.

[igoe104] 21/5/2018 08:36

I don't get that, how can you make 1.4 million disappear with-out showing any type of assets. it must be hidden away, or put someone else name. this individual should have to do several years inside for this kind of fraud.

Why has the company suddenly gone quite on the subject ?

[cc2014] 21/5/2018 08:29

Whilst it's easy to see why you've jumped to that conclusion over who the fraudster was, you have reached the wrong conclusion muckshifter.

£1m has been recovered out of the £2.4m stolen so far. The rest is still being pursued. It will not all be recovered as the individual involved doesn't have sufficient assets to cover it all

[muckshifter] 21/5/2018 08:03

5chipper,
CTO are currently coming out of a prolonged bad spell, imho, even though they just about managed to remain profitable throughout that period. If you look at Balfour Beatty and look back at their RNSs about three years ago, you would see a year or more of regular severe profit warnings. A very big chunk of those huge losses was created (and identified in the RNSs) by Balfour's electrical and mechanical division in London, which lost huge amounts of money over a few years while tendering against CTO in their main market - London and South East. So during those few years CTO would have had great difficulty winning work, and their margins would have been crushed by Balfour's unrealistic competition. Then they had a problem with a serious fraud within a company they had bought. They identified approx £3m that had been stolen and have so far managed to get £1m back, but if they identified £3m you can be almost certain that the true cost is double that.

The good news, hopefully, is that those causes of poor profits are now behind them, and their performance should improve greatly as a result - hope so anyway!

Incidentally, the (unnamed) person who is being pursued for £1.5m of company theft, owned about 1.5m shares if I've identified him correctly.

[5chipper] 20/5/2018 21:18

Ok, thanks Rivaldo.

I meant sentimentally caught up rather that materially caught up though!

[rivaldo] 20/5/2018 20:53

Au contraire, 5chipper. CTO managed to avoid the Carillion fiasco with only a small dent, as per their RNS on the subject, probably due to their scrupulous avoidance of contracts on onerous terms etc:



CTO have simply suffered imo from there being a large-ish seller dripping out stock for some time, plus perceptions of cyclicality which, whilst true to an extent, are outweighed at present by:

(1) the already secured revenues for 2018 and 2019, and
(2) the transition taking place to a higher margin business and to a business which will be in demand in any environment due to an increase in specialist expertise, particularly with regard to Intelligent Buildings etc

Good to see decent coverage of the excellent AGM update here:

Http ://www.proactiveinvestors.co.uk/companies/news/197265/t-clarke-trading-in-line-after-excellent-start-to-the-year--197265.html

[5chipper] 20/5/2018 08:10

Bought in on Friday following the positive update.

C£15m net cash for this year end

E/V of £20m

Adj PBT £7m

Seems too cheap...

Did they just get badly caught up in the Carillion debacle?

[ivancampo] 19/5/2018 08:11

Was the underperformance (consensus on here) touched on at any time? Thanks in advance.

[ivancampo] 18/5/2018 23:24

I've got a young family. Really? If that's what was said this shouldn't be listed.

[rhomboid] 18/5/2018 22:18

Thx Jane

It always makes me wince when Directors go for that line of defence 🙄

[jane deer] 18/5/2018 22:08

Rhomboid

I was at AGM. Only in passing - despite head of Remuneration Committee resigning. There was a slightly longer discussion about the low stock holdings of the board -particularly the CEO. His reply was that he was exposed through LTIP and SAYE (which rather missed the point) and that he had a young family (maybe more relevant but seemed a bit lame).

[rhomboid] 18/5/2018 16:46

Hi NC

Was director remuneration touched on?

[norbert colon] 18/5/2018 16:06

RivHave doubled my holding today off the back of positive AGM.

[rivaldo] 18/5/2018 15:52

Plenty of buying coming in, and the mid-price is up 4p today to 85p. This could be about to get interesting.

[mfhmfh] 18/5/2018 14:32

generally positive write up by Paul Scott on stockopedia.

PE ratio: 5.97
PEG: 0.45

Ranked as a 'Super stock' with a Stock Rank of 90.

GLA.

[ivancampo] 18/5/2018 13:49

Right on cue...