Approaching 2016 with confidence and enthusiasm
2015 was a year of progression; still marked by some bumps, but also by increased demand for our services, which was reflected in the improved quality of our order book, first in London and then also in the regions. As markets have improved, our simple message 'TClarke has the resources you need to deliver your project' has become steadily more compelling.
Our clients need certainty around project delivery and we have deliberately chosen to align ourselves with clients and contractors who share our vision for high quality installations where we can deliver full service packages, which ensures accountability, responsibility and control. Together with our collaborative partners, we add value to contracts, where safety is fully enforced and high quality is the shared focus.
Although the London market has led the upturn in demand, it is also extremely good to report our best ever forward order books across the regions. This is highly significant, since it also allows us to be more focused and selective in seeking further work which will, in turn, help us to deliver better value for our stakeholders.
Everything we offer to the market depends upon our people. Our brand reputation is not a marketing gambit, it is something real that people on construction sites earn every day by being switched on, hard-working, open and highly capable. We believe in investing heavily in our workforce in order to maintain our skilled resource of people.
We have brought together our training portfolios across the Group and reorganised our training procedures under what we have branded the 'TClarke Academy'. Alongside our industry-leading apprenticeship schemes, the TClarke Academy provides an in-house training capability which ensures consistency of operations throughout our Group. This allows our people to learn new skills so that we can build strong teams and our employees can develop their careers within TClarke.
We have always had a strong commitment to providing apprenticeships and our unrivalled commitment continues - in 2015 the Group took on a total of 75 new apprentices across the UK.
Health and safety is paramount to our business and our safety performance remains strong. Our investment in safety in 2015 continued at the same high level - and that will not change. Safety is this firm’s number one daily priority.
Our first class team has the knowledge, skills and reputation to continue to be regarded as one of the best contractors in the sector. This key advantage helps to drive our business forward and deliver value for our shareholders. The Company is focused on improving performance and margins throughout the Group. We remain alert to any challenges that we may face, yet we approach the future with confidence and enthusiasm. The future for the Group remains solid.
Increased revenue, momentum in markets and a replenished order book
The Group has revised its segmental reporting this year to split the South region into two distinct geographic regions, London & South East and Central & South West, enabling the management of the two business segments to focus better on their distinct markets whilst continuing to support the wider activities of the Group. During 2015 we took the strategic decision to close our underperforming businesses in Bristol and Cardiff, and realign our operations in the South West to focus on key relationships to drive opportunities. Prior year information has been restated to reflect these changes.
Revenue from continuing operations increased by 16.6% to £242.4m (2014: £207.9m), and underlying profit before tax increased by £3.1m to £3.7m (2014: £0.6m), with recovery gaining momentum in our markets. London & South East, Central & South West and the North all delivered improved underlying margins, and net underlying overheads as a percentage of revenue fell to 9.3%. We move into 2016 with a replenished £300m order book improving in quality.
Revenue from our London & South East operations increased by 36.6% to £129.1m (2014: £94.5m), generating an underlying profit of £1.5m (2014: loss £1.4m). Underlying operating margin increased to 1.2% (2014: negative 1.5%), as contracts let during the recession reached completion and the benefits of the recovery, evident in our increasing order book in recent reporting cycles, began to feed through into profit and margins.
Revenue from our Central & South West operations increased by 3.1% to £56.9m (2014: £55.2m), with the region benefitting from strong client relationships and repeat business. Although revenue growth was modest, the improved profitability supports our strategy of concentrating on good quality opportunities with well-respected clients and principal contractors, and expansion of our facilities management and healthcare capabilities. Underlying operating profit improved to £0.9m (2014: £0.5m), with underlying operating margins improving to 1.6% (2014: 0.9%).
The North generated £41.8m revenue (2014: £43.4m), with 2014 having benefited from some significant add on projects for one of our principal facilities management clients. Underlying operating profit increased to £1.9m (2014: £1.6m). This represents an underlying operating margin of 4.5% (2014: 3.7%), with the region continuing to benefit from strong client relationships and repeat business.
Scotland's revenue was £16.2m (2014: £18.3m), and underlying operating profit was £0.3m (2014: £0.6m), representing an underlying operating margin of 1.9% (2014: 3.3%). Scotland experienced a slow start to 2015, a knock on effect of the uncertainty caused by the independence referendum and resource constraints in the region's core residential market. Activity picked up in the second half of the year, and the region has a strong order book for delivery in 2016.