Tolent Share Discussion Threads

[santangello] 08/3/2005 21:52

A good call Jeff.

Good luck to you with these, wish I was still on board.

Santangello

[jeff h] 08/3/2005 18:53

A strong set of results and lots of positives to look forward to.

I like the bit about 2005:-

"..we enter the year however with a record order book and several major schemes at a very advanced stage of negotiation"

The property developments such as Leeds are coming on stream, so 2005
looks like it will be another year of increased profits and dividends.

The IC is bound to give it a good write up.

My £2.50 - £3.00 a share forecast made in Post 67 could come sooner than
I was expecting.

[dr agon] 08/3/2005 14:20

look like very solid results to me!!

Tolent PLC
08 March 2005


TOLENT PLC ('TOLENT' OR 'THE GROUP')



PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2004



CHAIRMAN'S STATEMENT



8 March 2005



Introduction



I am pleased to report another year of record profits. There was a substantial
increase in operating profit on a marginal increase in turnover but this was
helped by an exceptional profit of £429,000 on the surrender of the lease of an
investment property.



Construction in 2004 included the completion of the £60 million Sage
headquarters in Newcastle upon Tyne and the first phase of the major leisure
facility in Sunderland. Other construction completed during the year involved an
office block in Central London for the Guardian Newspaper, a bingo hall in York
for Mecca and a production facility in Manchester for Shepborough Developments.
Major ongoing works include residential developments for Bellway Homes in
Gateshead and Gleeson Homes in Richmond, a distribution warehouse in Doncaster
and an office park near Liverpool.



Financial Summary



Turnover increased by 4.9% from £117.1 million in 2003 to £122.8 million in
2004.



Operating profits, including a lease surrender of £429,000, increased by 33.3%
from £2.7 million in 2003 to £3.6 million in 2004. Margins, excluding the lease
surrender, improved from 2.3% in 2003 to 2.6% in 2004.



Profit before tax increased by 37.9% from £2.9 million in 2003 to £4.0 million
in 2004.



Earnings per share increased by 46.5% from 15.5 pence in 2003 to 22.7 pence in
2004.



The Group had net funds in hand at the end of 2004 of £10.4 million compared
with £16.7 million at the end of 2003. This figure fluctuates from year to year
depending upon the type and quantity of work in progress at a year-end.



Shareholders' funds increased during 2004 from £4.5 million at 31 December 2003
to £6.5 million at 31 December 2004.



Dividends



I am delighted to announce a recommended final dividend for 2004 of 4.25 pence
per share payable on 1st July 2005 to shareholders of record on 3rd June 2005.
The total in respect of 2004 is 7.5 pence compared with 5.0 pence for 2003, an
increase of 50%.



Operational Highlights



During 2004 we have successfully undertaken a wide range of projects for blue
chip clients including: Goldman Sachs, Biffa Waste, Sage, Mecca, Helioslough,
Gleeson Homes, Terrace Hill and Bellway Homes.



Our involvement with the pharmaceutical and petrochemical industries continues
with clients including: Dupont, Huntsman, Air Products and BOC.



We went into 2005 with an order book of £98 million.



Employees



On behalf of the board of directors I would like to thank our subsidiary company
directors and all of the Groups' employees for their efforts in 2004.



Outlook for 2005



On 1st January 2005 we had a substantial construction workload and we look
forward to another profitable year.



The first unit at Temple Point office park south east of Leeds of 10,000 square
feet was completed in 2004. We anticipate increased development activity there
in 2005.



Property investment activities in 2005 should again be profitable on a virtually
fully let portfolio.





Stuart N. Gordon
Chairman
8th March 2005





MANAGING DIRECTOR'S REVIEW



Introduction



Tolent operates across the construction sector providing services in building,
civil engineering and property development. Our objective is to continue to
achieve our maximum potential in each of these activities by maintaining our
focus on quality, value for money and delivering a service in a non-adversarial
customer friendly manner.



Our success has been brought about by the quality of the people involved in our
business together with sub-contractors and suppliers who share our ethos of
providing a pro-active and responsive service that meets our customer's demands.
This policy has resulted in consistent repeat business on an ever expanding
customer base.



Our strategy is to continue to grow organically, but at the same time make
selective acquisitions should a suitable opportunity arise.



A programme of continuous improvement in Health and Safety management and staff
training has resulted in an excellent safety record with accident statistics
that far outperform our competitors. This has been recognised by annual Gold
Awards from the Royal Society for the Prevention of Accidents (RoSPA).



Our belief that people are our most precious asset is supported by our
commitment to training and personal development. This will ensure that our
long-term objectives can be delivered to customers on a consistent basis.



Tolent Construction Limited



2004 has seen a modest increase in turnover and by concentrating on quality
negotiated work we have built strong relationships with blue chip clients that
has resulted in improved margins.



As in previous years we have successfully completed several major projects. A
particular highlight in the north east was the completion of the new £60m Sage
Headquarters building which subsequently resulted in the awards for best
regional building and contractor.



We continue to operate from five regional offices on a national basis and we are
pleased to report an improving market in the south east as well as further
development of our Manchester office.



The variety of work carried out can best be demonstrated by projects completed
during the year:

• an office block in central London for the Guardian Newspaper £7m

• a bingo hall in York for Mecca £3m

• a production facility for Shepborough Developments in Manchester £4m,
and

• a multiplex cinema and associated leisure facilities in Sunderland
£11m.



Although the industry is buoyant it remains very competitive, we enter the year
however with a record order book and several major schemes at a very advanced
stage of negotiation.



We can therefore look forward with confidence to another satisfactory year.



Checkhire - Joint Venture



Checkhire is a 50/50 joint venture company owned by Tolent and Amco Property
Investments Plc. The company own 15.5 acres of land adjacent to Junction 46 on
the M1 and has planning permission to develop 166,000ft(2) of office space.



The infrastructure is now complete and the first 10,000ft(2) office unit is
occupied with enquiries for other units coming on stream.



Given its excellent location and increasing interest we anticipate that this
will be a very successful development.



Ravensworth Properties



We have agreed the sale of the building occupied by Serco in Guisborough and
Tolent are negotiating to redevelop the site.



All other premises are 100% occupied consequently we can look forward to another
steady performance.



John G. Wood
Managing Director
8th March 2005




FINANCIAL DIRECTOR'S REPORT



Results



Total group turnover increased by 4.9% in 2004 from £117.1m in 2003 to £122.8m.
The mix of work undertaken by the Group continues to evolve and although
turnover was £30.9m below the level achieved in 2001 the operating margin has
continued to improve as low margin office fit-out work has been replaced with
higher margin construction work.



Operating profits in 2004 increased to £3.6m, up by 33.3% from £2.7m in 2003.
Operating margins also increased from 2.3% to 3.0% of turnover.



Net interest received improved to a £0.4m credit from a £0.2m credit in 2003.
Bank balances remained high during the year and generated almost £0.6m of
interest, which offset the £0.2m of interest payable relating to property loans
on the Group's investment properties.



The profit before tax increased by £1.1m in the year to £4.0m, an increase of
37.9% from the £2.9m profit in 2003.



Taxation and earnings per share



The tax charge in 2004 was £1.2m, which equates to 29.2% of pre-tax profits.
This is below the standard rate of corporation tax in the United Kingdom of 30%
as a result of the utilisation of capital losses brought forward. Earnings per
share increased by 46.5% from 15.5p in 2003 to 22.7p in 2004.



Dividends



An interim dividend of 3.25p was paid during the year and a final dividend of
4.25p is proposed. The total proposed dividend for 2004 of 7.5p is three times
covered by the profit after taxation and is an increase of 50% over the dividend
paid in respect of 2003 of 5.0p. Shareholders' funds during the year have
increased from £4.5m to £6.5m.



Cashflow



The Group had net funds at the end of 2004 of £10.4m, which is a net outflow of
funds of £6.3m from the net funds position of £16.7m at the end of 2003. Cash at
bank and in hand has reduced by £6.6m to £12.8m. The year end cash position can
be a misleading figure as it only represents the cash balances on one day during
the year. The interest receivable on bank balances increased by 70.6% during
2004 and as well as reflecting higher interest rates this indicates that cash
balances within the Group remained positive during 2004.


Employee Share Ownership Plan



The Employee Share Ownership Plan acquired a further 125,000 shares in the
Company during the year at a cost of £138,000. The Employee Share Ownership Plan
now owns 365,000 shares at a cost of £256,000 and a market value at 8th March
2005 of £606,000.



Ian Swire
Financial Director
8th March 2005




Profit and loss account for the year ended 31st December 2004
2004 2003
£000 £000 £000 £000
Turnover 122,780 117,100
Raw materials and consumables 9,426 8,166
Other external charges 89,360 87,914
(98,786) (96,080)
23,994 21,020
Staff costs 16,553 15,112
Depreciation 90 99
Other operating charges 3,719 3,121
(20,362) (18,332)
Operating profit 3,632 2,688
Net interest 394 186
Profit on ordinary activities before taxation 4,026 2,874
Taxation on profit on ordinary activities (1,178) (921)
Profit on ordinary activities after taxation 2,848 1,953
Dividends (929) (951)
Profit transferred to reserves 1,919 1,002
Basic earnings per share 22.7p 15.5p



Statement of total recognised gains and losses
2004 2003
£000 £000 £000 £000
Profit for the financial year 2,848 1,953
Unrealised surplus on revaluation of investment 168 320
properties
Total recognised gains and losses for the year 3,016 2,273




Consolidated balance sheet at 31st December 2004
2004 2003
£000 £000 £000 £000
Fixed assets
Tangible assets 8,115 6,080
Investments in joint ventures
share of gross assets 5,525 3,809
share of gross liabilities (5,408) (3,823)
117 (14)
8,232 6,066
Current assets
Amounts recoverable on contracts 9,873 8,275
Debtors 17,232 11,855
Cash at bank and in hand 12,831 19,454
39,936 39,584
Creditors: amounts falling due (38,757) (37,921)
within one year
Net current assets 1,179 1,663
Total assets less current liabilities 9,411 7,729
Creditors: amounts falling due (2,345) (2,630)
after more than one year
Provisions for liabilities and charges (585) (567)
(2,930) (3,197)
6,481 4,532
Capital and reserves
Called up share capital
Equity 1,283 1,283
Non-equity 13 13
1,296 1,296
Property revaluation reserve 1,390 1,222
Other reserve (256) (118)
Profit and loss account 4,051 2,132
Shareholders' funds 6,481 4,532




Consolidated cashflow statement for the year ended 31st December 2004
2004 2003
£000 £000 £000 £000
Net cashflow from operating activities (2,795) 5,930
Returns on investments and servicing of finance
Interest received 592 347
Interest paid (198) (161)
Net cash inflow from returns on investments and 394 186
servicing of finance
Taxation (1,083) (954)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,957) (41)
Net cash outflow from capital expenditure and (1,957) (41)
financial investment
Equity dividends paid (747) (604)
Net cashflow before financing (6,188) 4,517
Financing
Bank loans (297) (123)
Employee Share Ownership Plan
Purchase of shares (138) (118)
Net cashflow from financing (435) (241)
(Decrease)/increase in cash (6,623) 4,276



Notes:



1. Basis of preparation



The financial information in this preliminary announcement has been prepared in
accordance with the accounting policies set out in the financial statements of
Tolent Plc for the year ended 31st December 2003, which have remained unchanged
for the financial year ended 31st December 2004.



2. Accounts



The summary accounts set out above do not constitute statutory accounts as
defined by Section 240 of the UK Companies Act 1985. The summarised balance
sheets at 31 December 2004, the summarised consolidated profit and loss account,
the summarised consolidated cash flow statement and the summarised statement of
total recognised gains and losses for the year then ended have been extracted
from the Group's 2004 statutory financial statements upon which the auditors'
opinion is unqualified. The statutory financial statements for the year ended 31
December 2004 were approved by the directors on 8 March 2005, but have not yet
been delivered to the Registrar of Companies.



3. Earnings per share



Earnings per ordinary share have been calculated on the basis of profit for the
period after tax, divided by the weighted average number of ordinary shares in
issue in the year of 12,525,503 (2003 - 12,636,023).




4. Preliminary announcement



Copies of the preliminary announcement are available from the company's
registered office at Amco House, Cedar Court Office Park, Denby Dale Road,
Wakefield, WF4 3QZ. The Annual Report and Accounts for the year ended 31st
December 2004 will be posted to shareholders on or about 2nd May 2005.


This information is provided by RNS
The company news service from the London Stock Exchange



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Company Announcements takes no responsibility for the accuracy of the information within this site. The announcements are supplied by the Primary Information Provider (PIP), denoted by the announcement source. Queries

[jeff h] 19/1/2005 17:59

Brewin Dolphin now upgraded 2005

Y/E 31/12/05 £4.0m Pre Tax 21.6p EPS 7.0p Div

[santangello] 09/1/2005 20:14

Hi Jeff.

I added last week, and will top up again this week.
Been looking at HVE too, well worth a look.

Catch you soon,
Santangello

[jeff h] 08/1/2005 13:31

Looks as though punters are waking up to the attractions of this co.

The current property rental and cash interest means that £1m or so
is being earned each year.

Metnor the other jv partner in the Wirral development expect to make
£900k from thier share of the project.

Leeds is being marketed at £16.50 sq.ft rental.

The wholly owned Teesside has planning permission for offices/business park.

Oh it has a growing construction business as well.

£2.50 - £3.00 a share once the developments are all finished I reckon.

[beasties] 14/12/2004 16:13

Chart is a worry. It's back to support today at 128p down 6p. If it doesn't tick up tomorrow it's not a good sign.

[esmerelda] 14/12/2004 15:15

A bit of a quiet board and company but here are a couple of items copied from their website. I had the opportunity to stay at Seaham Hall where Tolent built the Serenity Spa. Very nice building, hopefully they'll get a bit of business from the second phase of the Baltic Business Park. Anyone know how are other Construction companies doing, is this a sector to be in at the moment?

27/09/04 - Tolent wins first phase of Baltic Business Park, Gateshead

Work includes demolition, mine shaft grouting, earthworks including dealing with contamination issues, retaining walls, roads and services. Work is due for completion in March 2006 although the first areas will be available for development in early 2005.

The Baltic Business Park will accommodate up to 1.5 million sq.ft of office/education space and is immediately south of the Baltic Arts Centre/Gateshead Millennium Bridge/Sage Music Centre.

01/12/04 - Due to continued expansion Central East office is moving.

As from 20th December, 2004, all Central East regional activities will be conducted from our new premises in Leeds. Contact details can be found under the contacts section.

[diogenesj] 21/9/2004 23:13

E: I suppose we can always hope - but there's never been any hint of takeover interest.

[esmerelda] 21/9/2004 22:48

Is there any prospect of a takeover pushing the price up further? This one has done really well for me over the years. I still hold 3k that I bought back in 02. I just wish I hadn't blown everything else on tech stocks :-((

[diogenesj] 21/9/2004 22:34

Lol - topvest: your last point is certainly true, and I have agreed with you about the risk attached to all construction companies (especially small ones, because the risk is spread over fewer contracts). Some of the above are bigger and some smaller than Tolent.

However, on current forecasts the prospective PE (at a price of 140.5p) is not 10 but 6.85 for this year and 6.24 for next.

At 150p, the prospective PE would be 7.32 for this year and 6.67 for next. The price would have to rise to 163.5p to make the prospective PE for this year 7.98, equal to that of North Midland Construction, a much smaller company (market cap £15m against Tolent's £21m) with a lower projected growth rate.

All I've said is that I agree with Brewin Dolphin that the shares are worth a good 150p.

At 200p, in the absence of unexpected good news, even I would be tempted to call it a day and sell. :-)

[aderemi] 21/9/2004 22:17

Agree to disagree, disagree to agree.

[topvest] 21/9/2004 22:01

Tolent are a small construction company - hardly comparable to the above in relation to quality of earnings or its competitive position. Most of the above have stronger competitive positions in niche markets. A P/E of 10 is well over the top for this company unless it is backed up by assets which it isn't. Don't get me wrong - it's a quality co. and may go higher..possibly to close to £2. There is just more downside risk than upside at todays price imo. I bought mine at 27.5p...that's when there was more upside than downside!

[diogenesj] 21/9/2004 10:24

Well, you keep saying that, topvest, but what is your source for it? Today's FT gives the trailing PE for the construction and building sector as 10.10x (and that includes a large number of low-rated housebuilders). Optimistically assuming 10% growth, that gives a prospective average of about 9x. Three construction companies chosen at random from my own notes (see above) are on prospective PEs averaging 9.7x.

Here are most of the prospective PEs for other construction and building materials companies from Sharescope (excluding housebuilders):

Amec 11.60x
Balfour Beatty 11.65x
Baggeridge Brick 12.00x
Boot, H 11.48x
BPB 12.02x
Carillion 11.23x
Costain 10.33x
Clarke T 13.65x
Gleeson 8.80x
Hanson 9.60x
Havelock Europa 12.48x
Heywood Williams 24.77x
Kier Gp 7.58x (but most profits are from housebuilding)
McAlpine (Alfred) 8.33x
McInerny 7.20x
Mowlem 14.18x
NBA Quantum 10.63x
North Midland Construction 7.98x

I have not been able to find a construction company there (as opposed to a housebuilder) that has a prospective PE as low as 7. :-)

Can't be bothered to work out the price-book ratio on all of those, but I don't believe that any of them are priced at anywhere near NAV.

[topvest] 21/9/2004 07:00

I'm not sure that they are that cheap. Asset value is only £5m. I wouldn't get carried away with a construction company rating - a p/e of 7 is top-end.

[diogenesj] 20/9/2004 23:52

And let's not forget the reason for the share price rise over the last few years: quite apart from the yield (still about 4.66% prospective at the current price of 141.5p), earnings per share have grown from 7.40p in 2000 to a forecast 20.50p in 2004.

That's a compound growth rate of, er, well, quite a lot more than you might have expected. And the shares are still cheap compared with the sector or the market.

[jeff h] 17/9/2004 19:53

I think the profits that accrue from the one off development
projects....and they got 3 at the moment, more than make up for
potential duff contracts.

I can see them making several £ million from the current developments.

Add on the properties,cash and growing construction business and
I feel the shares are still very good value.

[diogenesj] 17/9/2004 15:57

Ader: yes, still holding, and thanks for posting that. I was expecting the forecasts to be upgraded, but that is a much bigger increase than I expected. Worth a good 150p, I'd say (but they dropped back a few days after the boost given by the last IC tip, so if that pattern is repeated you might be able to buy cheaper in a few days' time). (Edit: sorry, you're not buying, you're a holder.)

Topvest: prospective PE on that forecast at today's 135p = 6.59x (3.29x book value)

Prospective PEs of a few other small construction companies chosen at random:

Keller 10.30x (5 x book value)
Morgan Sindall 9.80x (5.6 x book value)
ROK 10.96x (8.6 x book value)

(Taking book value in each case as net tangible assets.)

As I said above, I think you may be confusing construction with housebuilding. Housebuilding firms are on very low ratings because the market fears a house price collapse. Land, a large part of their book value, is therefore their safety net.

Of course, you are right in saying that construction companies are inherently risky, because margins are very tight and contracts can go expensively wrong. Risk is part of the game, and seems to be more than reflected in the Tolent share price imo.

[topvest] 17/9/2004 08:03

Think this is a bit misguided. Tolent was very good value a couple of years back, but is no more than fair value now. You would struggle to get many businesses to buy this company at 3/4 times book value imo. One bad contract and the price will collapse. Construction companies don't normally command a multiple of more than 5-7. 150p it may well reach, but I that's not much upside from today's price.

[aderemi] 17/9/2004 06:44

DJ, Are you still in these? Again tipped by IC. I will also suggest you check out this new site for your viewing pleasure.

Tipped in today's IC
17 September 2004

TOLENT (TLT)

122p - Aim - Gateshead-based construction firm Tolent is trading well, but its shares fail to reflect this progress. It currently has an order book in excess of £80m, and is also securing plenty of new business. So, with the outlook for both this year and 2005 positive, combined with a decent dividend yield of 5 per cent, the company is worth a closer look.

Recent interim results were ahead of forecast, fuelled by the completion of its largest project to date: the £58m construction of a new head office for Sage. Typical contracts are valued at up to £20m, and span areas such as retail fit-out, industrial, housing, petrochemical and engineering.

Tolent operates from five UK offices, and provides a full design-and-build service. Though it employs almost 500 people directly, it relies heavily on contract labour, so its costs vary depending on the work in hand. Recent deals include a waste-processing complex for BIFFA, a leisure club in Cambridge, and even a recording studio in London.

And the second half of 2004 has started well. Work is under way on an £18m project in Sunderland, to create a new leisure complex that will include retail spaces, a casino and restaurants. It has also won a £10m-plus contract to redevelop the Round House in Islington.

Further out, Tolent expects to benefit from a joint venture with Amco to create a 170,000 sq ft office site in Leeds. Tolent is undertaking the building work, and will receive a share of development profits. The rising cost of raw materials has not helped, but the company is factoring this into new contracts. There is also a £6m property portfolio in the north-east, which comprises several fully-let offices.

House broker Brewin Dolphin has recently upgraded its forecasts and, for 2005, expects profits of £3.8m, giving EPS of 20.5p. It has also set a share price target of 150p and, given the progress that has been made on a one-year view, that is probably conservative. Buy.

[diogenesj] 03/9/2004 22:00

Not sure that the book value is tremendously relevant for a construction company (as opposed to a housebuilder, which this is not). Most other pure construction companies are on a multiple of book value.

However, you are right about banana skins - they are always there to be slipped on. The related company Amco (which shares some directors with Tolent) hit one last year, but seems to have made a good recovery.

Still good value, imo, and on a prospective yield of about 5.4%, but not without risk. Good luck anyway, and I hope you find somewhere better for the cash!

[topvest] 03/9/2004 20:16

Sold out of these recently. Can't help thinking the shares are fully valued at 3x the book value for a construction company. Still a good dividend, but I've made a good profit on this one. Time to move on. Construction companies always have the potential to disappoint - it only takes one dodgy contract and Tolent have escaped one of these for a few years now. Good luck to those that remain.

[aderemi] 01/9/2004 15:41

It looks as though it could be the case. I do have a position in htp/woc/mph as it happens but I tend not follow some of the other threads too often. I like the quiet threads as it well.

[santangello] 01/9/2004 15:15

touchee my friend......

Don't see you on the HTP/MPH/VRY/RWA/WOC threads......to give you a little clue as to some of the stocks I am watching, just in case you were stalking me lol.