Tclarke Share Discussion Threads

[jeff h] 26/10/2020 10:44

Contract wins keep coming in:-

[owenski] 03/10/2020 09:20

Excellent cogent post CC

[cc2014] 03/10/2020 09:01

I'm not getting this folks mostly on the basis of comparative value.

My observation here is what is the opportunity cost of owning CTO? Which is more likely out of the following choice? BP. rising to 420p in 3 years time or CTO doubling to 180p? Or perhaps a large number of REITS if you don't like BP or perhaps Llodys at 27p. Or Aviva. I could go on.



Anyways here's my view on the update.

1. I'm kind of with Investors Champion on what is the profit, because what I care about is how much profit a company makes after everything. Construction companies have a habit of producing exceptional costs all for different valid reasons and a spin back through CTO's annual accounts will show they are no different.

What strikes me most though is that if the company has made a significant number of people redundant then it has already positioned itself for lower turnover or at best it contrains it's capacity to grow.

Also, why was it that in the May trading update CTO was able to tell us this years benefit and the full year benefit of the restructing but was not able to also tell us the cost of the restructing programme? Perhaps just a simple ommission... or perhaps not... Regardless we must appluad them for the speed of response to Covid and £4m of on-going cost savings per annum is a large number.


2. I'm definetly with Tuscan on the order book. CTO turnover last year was £334m so say £167m for a half year. This year first half £106m and around £134m for the second half. They are doing around £22m of work a month and replacing it with £22m of orders, which results in long term a fall in turnover to around the £250m level

3. They can't afford for turnover to fall to £250m because there are too many employees to pay. CTO's high level of employed staff is their strength when there is a shortage of labour but it's going to work the opposite way in difficult times. Other contractors will shed their subcontract labour first but CTO will is faced with a choice of either very low productivity or having to get sufficient work to keep the labour force busy. Inevitably placing pressure on margins

4. Cash. Hmm. No update on that so I assume that cash is no longer net positive

5. Nothing to do with the update but credit risk is a concern. CTO are ruthless at trying to avoid credit risk but margins are so thin...


In the end it always comes down to the order book and margins. That's 95% of what you need to know about CTO, the other 5% being the pension scheme and justification for the goodwill.

[tuscan4] 02/10/2020 17:58

The order book has already collapsed by £90m this year. As they work through these deferred orders next year, , say turnover is £330m in 2021 and new orders are £200m end 2021 order book will fall to £270m. In 2022 £300m of turnover (still working off the previously won orders) with a further depressed order intake of £200m ends with £190m order book going into 2023. I know these new orders may seem too harsh,but in the absence of one or two chunky Data Centre contracts, they will be unable to be quite so choosy..........margins will not be at 3% in these circumstances.

[edmundshaw] 02/10/2020 16:46

So you don't expect other firms will bounce back and assume that orders are permanently down?

Given that CTO are choosy in their contracts, I suspect the order book will be fine. I do not see any reason the order book should collapse by £140m over the next 12 months. Even if it did drop sharply it would surely be a one-off year.

[tuscan4] 02/10/2020 16:01

Order Book at £410m is misleading. They have "lost " £90m plus of output in 2020. If they had delivered £330m turnover the order book would have fallen to c £320m. I suspect that 2021 will end with an order book of c£270m with 2022 being a very difficult year, unless they win decent Data Centre contracts.

[fredfishcake] 02/10/2020 15:27

Edmundshaw - I agree with you in that it's a typical bit of financial journalism, where they just give a potted summary. I suspect we know more about this company than they do....but for someone who knows nothing about CTO, it's reasonable to point out that they (like most building services cos) work on a very thin margin. To their credit, CTO are trying to improve this. It's not like they tried to hide the restructuring costs either, so the implication that they did is wrong - but they need a headline! As for "set their sites" I'm hoping that's an attempt at a pun....

[owenski] 02/10/2020 14:02

It is the problem with these kind of companies, 3% is still a wafer thin margin and easily wiped out in a crisis.

They run a good company and execute their project management bidding and risk well, but it's still a tight margin business.

If this was on a c6% yield, then it can be worth sitting around and use it as an income stock, but it's not at those levels to moderate the capital risk imo.

Also, I'm surprised they're not hitting well beyond 3% even pre covid, being as they have a lot of specialist verticals to their name including the higher margin so called growth sector of data centre fit outs. If the blend includes this then they're below par on a lot of their core work.

Better risk reward levels out there imo.

[edmundshaw] 02/10/2020 13:58

I find that whole piece rather superficial, to be honest. 3%+ is a good margin for building services generally, and that is testament to the focus on good selection of contracts (which we can afford being he best-in-sector), management and secotrs in which we operate.

As for the criticism of underlying profit and restructuring exceptionals: What is he on about? That is completely normal practice, trying to pretend it is some company-specific smoke and mirrors is just clumsy or (to put it politely) inexperienced.

[fredfishcake] 02/10/2020 13:39

I think Investor's Champion comment is reasonable - as it's a short piece it's pasted below. This is indeed a low margin business and they're trying to improve this.

"Shares in building services group T Clarke (LON:CTO) leaped on a positive trading update, but the weakness of the business is clear for all to see.

A target underlying operating profit margin of only 3% suggests there isn’t a lot of room for manoeuvre - they achieved the target in Q1, broke even in Q2 and will deliver this in the second half.

However, this doesn’t present the full picture for the current year as the £3.6m cost of their restructuring programme will be excluded from the underlying results. This is ultimately set to achieve cost savings of £4m per annum, which will of course magically benefit the underlying numbers – oh what a web they weave!

Management is now guiding for turnover of £240m in 2020 and ‘underlying217; EBIT of approximately £6m or, put differently, real profit of around £2m?

The forward order of £410m looks reassuring, but that big number will shrink to very little at the bottom line.

The results commented on focusing on projects and markets that meet their margin criteria, however, it might be better to set their sites on higher margin activities. In mitigation this is a capital light business delivering attractive returns on equity. "

[edmundshaw] 01/10/2020 21:43

Energeticbacker just a mouthpiece for Investor's Champion, he mentions them in every post.
Energeticbacker
1 Oct '20 - 16:38 - 3795 of 3795 (Filtered)

[energeticbacker] 01/10/2020 16:38

Investor's Champion draws attention to questionable adjustments 'oh what a web they weave"

[18bt] 01/10/2020 11:19

Amazing what a well managed company can do in these times. Great management will out.

[owenski] 01/10/2020 10:33

Doesn't matter if anyone bashes a share, either one knows what one is doing or one doesn't in which case they resent any opinion that makes them feel insecure.

Negative posts, just like positive posts, make no difference to a company's prospects' nor to its share price. The market decides and the market aint just a very narrow selection of folks on a BB.

[cc2014] 01/10/2020 10:05

I'm here Igoe, always here.

Out of respect for you guys who are long you hardly want me posting with what I think. I know what it's like when you are long and someone comes along and bashes the share regardless of whether they have a point or not.

[igoe104] 01/10/2020 09:29

Cenkos have brought out a positive note on CTO.

Where the grim reaper CC0214, only posts when the forums are in a negative mood?

[skinny] 01/10/2020 08:03

Extended auction - encouraging.

[paleje] 01/10/2020 08:00

Don't know proportions but IC had an article on them in July and said....

"In addition, TClarke is currently working on 56 UK government funded projects, worth £70m, across the healthcare and education sector, having just completed a £6.5m contract to deliver the mechanical & electrical infrastructure (including medical gasses, generators, ventilation, heating and cooling equipment) to the new 200-bed Nightingale Hospital in Exeter. TClarke is well placed to pick up new work from the UK government’s bold investment in hospital infrastructure (40 new hospital projects will be built in the next decade) and in the education sector (50 projects and £1bn of funding in the current fiscal year alone).

It’s also well placed to pick up contracts from clients looking to optimise their Environmental, Social and Governance (ESG) commitment. In the first half, TClarke invested £2m in Gooee, a smart buildings software solution that connects a building’s control systems via a ‘single pane’ to reduce energy consumption, cut operational costs, lower carbon footprint, and improve return on investment. Moreover, it can prolong the life of existing estates as Gooee can be retrofitted into existing buildings as well as new builds."

Seems they're under the radar, too much excitement elsewhere.

[fredfishcake] 01/10/2020 07:49

I suspect the worry with this share was its exposure to office fitouts - if WFH became the new normal there would be less requirement for offices. For this reason it's good that they've pointed out their strength in healthcare, education and data centre sectors. Does anyone know what the proportions were last year?

[skinny] 01/10/2020 07:20

.




TClarke plc, the Building Services Group, today issues a Trading Update covering the period from 30th June 2020 to date and announces that the Board is proposing an interim dividend.

2020 Trading Update

TClarke has continued to deliver an encouraging trading performance; all of our sites are now open and we are pleased with improving levels of productivity being achieved.

The Group has demonstrated its resilience despite the inevitable impact on the business; b y taking action so quickly TClarke remains financially strong and profitable. TClarke achieved its target 3% underlying operating profit (EBIT) margin in Q1, broke even on much reduced volumes in Q2 and is pleased to report that it expects to return to 3% EBIT margin in H2.

As previously announced, TClarke undertook a swift restructuring programme that has resulted in savings in excess of £4m per annum, with 2020 benefitting from £2.5m of these savings. The cost of the restructuring programme is £3.6m which will be included in non underlying items in the year end accounts.

Dividend

As a result of the Board's growing confidence, an interim dividend of 0.75p per share (2019 0.75p) is being proposed. This will be paid on 13 November 2020 to shareholders on the register on 16 October 2020 (the shares will be marked ex dividend on 15 October).

Outlook

As a result of the current market conditions and activity levels, the Board is now in a position to reinstate guidance for the 2020 financial year. Accordingly, we currently anticipate turnover for 2020 to be circa £240m and underlying EBIT to be approximately £6m.

The strength of the business is underpinned by our forward order book which remains at a near record of £410m. Throughout the year there continues to be high levels of bidding opportunities. Assuming there are no further significant business interruptions arising from any widespread secondary lockdown the Board is cautiously optimistic for the medium term outlook and continuing to meet our 3% EBIT margin.

Looking beyond 2020 our proven strategy remains to focus on projects and markets that meet our margin and growth criteria. The business is resilient and is agile, being able to shift its resources and focus accordingly. The strategy we have followed has resulted in TClarke being particularly strong in the healthcare, education and data centre market sectors, whilst continuing to serve the commercial office market.

Once again, the Board would like to thank all the dedicated TClarke employees who have supported the business throughout this period.

[igoe104] 01/10/2020 07:17

Extremely encouraging update, interim dividend. So why has this share fallen do much ?

[igoe104] 25/9/2020 13:39

TClarke delivers 18th GE Healthcare Pop up modular CT scanner.

TClarke delivers 18th GE Healthcare Pop up modular CT scanner and 50% more control panel orders to support NHS
Nigel Thompson Divisional Director, Healthcare, reports on the response of healthcare teams to a vast increase in orders and workload in response to the pandemic.

Following the government lockdown earlier this year, we were engaged by one of our partners GE Healthcare to support the delivery and installation of 18 modular CT scanners throughout the UK. The scanners were purchased by the NHS to support treatment of Covid-19 during the pandemic allowing hospitals to continue supporting outpatients with Other services using their existing imaging facilities.

TClarke teams working around the clock, around the country and under pressure

Our people and our supply chain partners worked tirelessly around the clock to survey, design, deliver and install the CT scanners across the UK, with sites in Scotland, Devon, Wales, Northern Island, the West Midlands, Cambridgeshire, and London.

With the UK’s lockdown at its height the availability of resources and materials was under pressure however collaboration and innovation with our partners ensured that the projects were all delivered on time.

TClarke also supplied and installed support units adjacent to the modular CT unit, fitted out with DDA changing / toilet and reception waiting areas making the patient experience more comfortable and Covid-19 safe.

Control Panel team works flat out to handle 50% increase in orders

In addition to the CT scanners, our control panel division located at our 52,000 square foot manufacturing facility in Stansted saw a 50% increase in emergency panel orders for Siemens Healthcare, GE Healthcare, Philips and Canon, this resulted in all our staff working long hours to complete theses critical components supporting both our medical imaging equipment partners and the NHS. TClarke have been manufacturing and providing theses panels now for over 10 years with continued repeat business not only from our imaging partners but direct purchasing by many NHS trusts.

The requirement for modular CT, X-Ray and MRI units continues and sees TClarke engineers working across the UK to support the NHS.

[owenski] 17/9/2020 15:33

It's a well run outfit Igoe and they actually know how to price, risk and run contracts. I think at these levels with a bit of patience, you'll be rewarded.

[igoe104] 17/9/2020 15:31

Added a few today, these look extremely cheap at this level..

[edmundshaw] 04/9/2020 12:32

Agree RNWH doing well, and it looks a quality company with good prospects, just like CTO. However it is nowhere near as cheap as CTO, so logically there should be a lot more upside here... somtime...