Another year of improved profitability and operating performance
TClarke today announced its preliminary results for the year ended 31st December. Chairman Ian McCusker commented:
Another year of improved profitability and operating performance
Whilst 2017 has been challenging for our sector, I am pleased to report that it has been another year of improved profitability and operating performance for TClarke. The cash position continues to strengthen (26% increase year on year after major strategic investment) and the Group is debt free on a net basis.
Our current and forward order book – in terms of both value and project quality – is evidence of the continuing confidence of our clients, and the market in general, in our performance, strength, strategic positioning, quality of service and ability to deliver.
Strong Headline Performance
I am pleased to report another year of strong performance by the Group, meeting market expectations.
We continue to be seen as the supplier of choice to major, business critical projects for multi-national companies. During the year, our forward order book hit record levels and at the end of the year stood at £337million.
Turnover in the year increased by 12% to £311 million and underlying profit before tax grew by 5% to £6.5 million. Underlying EPS increased to 12.37p (2016: 11.6p).
Continued focus on cost discipline and cash management
Our performance and results have benefited from our ongoing focus on cost discipline and cash management. This reflects our ever strengthening disciplines in the internal management and delivery of projects, together with our focused client and partner management approach, and is a result of our project management and delivery skills across the Group in all regions.
Average cash balances throughout the year continued to improve. The net cash balance at the end of 2017 was £11.7 million This has been achieved after the initial cash consideration of £1.5 million in the acquisition of Eton Associates and £1.0 million in our enhanced manufacturing capabilities, based in our new facility at Stansted.
The Board is committed to a progressive dividend policy, improving returns to shareholders and delivering a sustainable increase in dividend over the longer term.
The Board is therefore pleased to recommend a final dividend for the year ended 31st December 2017 of 2.9 pence per share, making a total of 3.5 pence per share for the year, reflecting the Group’s performance and our confidence in the business going forward, whilst balancing the rewards to shareholders with the interests of other stakeholders.
TClarke in an excellent position and focused on the future
Commenting on the company’s results for 2017, CEO Mark Lawrence commented:
I am pleased to report that TClarke is in an excellent position. We are focused on the future and have a clear strategy to deliver on our five key strategic markets. We are confident that this will enable us to continue to drive improving returns for our shareholders, as is demonstrated by our setting ourselves the medium term target to increase underlying operating margin to 3%.
Underlying this, TClarke shows strong and improving cash generation, rigorous risk control, excellent revenue visibility, a balanced quality order book and improving profitability. This financial and strategic strength is allowing us to invest for future growth in our markets, driven by investments in infrastructure and the digital world.”
Building our specialisms and sectors
In 2017, we have had considerable success across our markets. Our Transport team’s selection by Manchester Airport Group brings us a major airport contract, our Design and Build team continues its excellent performance and growth trajectory, our Mission Critical team’s work on data centres and the complex Selfridges project has been highly valued and our TClarke Intelligent Buildings team has won major data, fire and alarm projects. Manufacturing has had its most successful year ever with the opening of our multi-skilled, purpose-designed operation at Stansted and Healthcare continues with its world class partnerships, winning projects under the NHS’s new P22 framework agreements. Our Residential business again won a series of awards and expanded its footprint and our successful in-house specialist FM business has also won new partnerships.
It is also important to note that we have been extremely successful in winning and delivering research and laboratory projects across every region of our business. Once again, this shows how our business can adapt as demand and opportunity shifts in the marketplace.
Going forward, we are reorganising our go-to market strategy with five new market offerings: Infrastructure, M&E Contracting, Residential & Accommodation, Technologies and FM & Frameworks. This will give us an improved focus on growth and a better prospect of valuable metrics going forward - both for the business and our shareholders to see and measure progress.
Deepening our partnerships
TClarke is not unusual in talking about partnership as being key to success, but 2017 shone a light on the range and variety of those relationships and their value to us. Michael Bloomberg in London followed the actions of the local teams at David Wilson Homes in Glasgow, Rolls-Royce’s team in the North East and the engineering team at the Royal Cornwall Hospital – they all took the time to commend our people and their work.
These testimonials and commendations are of direct value to our shareholders because they signal the continued and growing preference for our brand. Brand reputation and the expressed demand and encouragement from our clients in 2017 has led us to open new offices in Portishead, Birmingham and Dumfries, and immediately won major new projects in geographic areas that were new to us.
The ongoing success of targeted tendering
2017’s order book was a record one for scale – but more importantly for quality. We can define quality broadly as meaning the kind of projects where clients value our services appropriately and where our people want to be engaged upon because they are professionally rewarding. Targeted tendering continued to prove successful for TClarke in 2017 as we have consciously matched our skills and resource to quality opportunities, with the purpose of delivering value.
Sustaining our key advantage – our people
As I have travelled around our business and projects this year, my strongest single impression has been of a pride in our people – many of whom have built their whole careers with us and some of whom are just starting out. The relative scale and quality of our new apprentice intake massively exceeds the best industry targets.
In 2017, our Training Academy was launched. It is focused on developing the best career paths for our people and has senior level commitment within TClarke and will be a key feature of our business going forward. In 2017, we saw TClarke people achieving degrees and professional qualifications, winning awards and moving into new disciplines within our business. We saw previous winners and finalists of our Apprentice of the Year award growing into leadership roles. All of these achievements have given me a considerable sense of pride and satisfaction in what we are building at TClarke.
A record year for safety
In concluding, I want to spotlight our safety record in 2017. We have an absolute accident reporting regime, in which every accident however small, was recorded, we also achieved an 17% reduction in the annual accident rate, against the backdrop of a record order book. This didn’t happen by accident! It has been the result of constant vigilance and focus across our business and the work of our dedicated nationwide safety operation. This work sits at the heart of the TClarke Way.