2022
Annual Report and Financial Statements
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TClarke
Annual Report and Financial Statements 2022
Who we are
Engineering Services
Leading in mechanical, electrical and
technology infrastructures, offsite manufacture
and digital systems integration. Incorporating
Modern Methods of Construction (MMC) that
deploy prefabrication, pre-assembly and
design standardisation.
Technologies
We design and deliver the critical
mechanical and electrical infrastructure for
data centres. We are a leader in smart
buildings technologies.
Infrastructure
We focus on healthcare, education, defence
and other areas of public sector infrastructure
where high-level skills are most valued.
Residential & Hotels
Residential accommodation including luxury
hotels, affordable homes, student
accommodation and private residential.
Facilities Management
We operate in the higher value and specialist
areas of FM, with clients like Canary Wharf
Contractors, BAE Systems, CBRE and UK and
USA Airforce Bases.
are employed in the design, installation, integration and maintenance of the
mechanical and electrical systems and technologies that a 21st century building
We currently operate from nineteen locations serving the whole of the UK.
We are a proud employer of local people in the towns and cities that we serve.
Our reputation for high quality and the successful application of new technologies
has been built over 133 years operating in five market sectors:
Contents
Strategic Report
2022 Key Performance Indicators (KPIs)
01
Chairman’s Statement
02
Purpose, Strategy and Values
03
Chief Executive’s Report
05
Market Sectors
09
Business Model
11
Group Financial Review
13
Being a Responsible Business
17
Principal Risks
29
Task Force on Climate-Related Financial Disclosures (TCFD)
33
Section 172 Statement
36
Long-term Viability Statement
38
Governance
Board of Directors
39
Corporate Governance Report
40
Statement of Compliance
41
Audit Committee Report
45
Nomination Committee Report
48
Remuneration Committee Report
49
Directors’ Remuneration Policy
50
Annual Report on Remuneration
57
Directors‘ Report
65
Statement of Directors‘ Responsibilities
68
Independent Auditor‘s Report
69
Financial Statements
Consolidated Financial Statements
75
Company Financial Statements
106
Shareholder Information
110
Newcastle
Leeds
Manchester
Peterborough
Huntingdon
Colchester
Sittingbourne
Eurocentral
Liverpool
Derby
Birmingham
Newport
Portishead
Plymouth
St. Austell
Stansted
London
Oxford
Coatbridge
Strategic Report
02
In 2022 TClarke has again continued to grow and deliver
excellent results. Our record revenue of £426m is a
significant step towards achieving our near-term target of
£500m annual revenue. Our operating profit is £11.5m at a
margin of 2.7%, which is an outstanding result in the current
economic and political environments in which we operate.
Our growth and margin performance is a result of the
successful implementation and delivery of our strategy. It is
also the result of effective and continuous strategic and
operational management oversight and direction, supported
by strong financial, management and delivery disciplines which
are constantly and consistently applied across the Group.
We continue to grow and successfully deliver in our core
Engineering Services markets; we are experiencing significant
growth across our chosen market sectors. This is particularly
the case in the Technologies sector, where revenue has
trebled to £145m. The Technologies sector is benefiting
from the investments we have made in capabilities,
leadership and client relationships over the last few years.
The forward order book stands at £555m (2021: £534m) of
which £430m (2021: £379m) represents committed revenue
for 2023.
Building on our existing balance sheet strength is another
key part of our strategy as we grow the business. Net assets
of the Group have grown by 46% during 2022 and now
amount to £38.7m (2021: £26.5m). Within this net cash has
increased to £7.5m (2021: £5.3m).
We are fully committed to a progressive dividend policy while
at the same time balancing the interests and needs of all
stakeholders. We are proposing a 2022 final dividend of 4.1p
per share (2021: 4.1p), which together with the interim
dividend of 1.25p paid in October 2022 brings the full 2022
dividend to 5.35p per share (2021: 4.85p), an increase
of 10.3%.
Throughout 2022 TClarke has continued to build and deliver
on our commitment to being a sustainable business,
delivering ever improving environmental and sustainability
performance and targets. We have become a Business
Champion with Build UK demonstrating our commitment to
the Construction Leadership Council’s zero carbon change
programme. During the year, we have also embedded
stronger sustainability targets and requirements into our
procurement strategy and supplier requirements and into
our fleet management systems.
At TClarke we recognise that our growth and success could
not be delivered without the skills, experience, focus and
commitment of our people, subcontractors and suppliers in
all areas of the business. We continue to invest heavily in our
resources to ensure we have the capacity and skills to deliver
our growth ambitions in both our core Engineering Services
market and our identified strategic growth markets. For
example, we currently have 210 apprentices, representing
16% of our people, which is significantly above the industry
norm of 5%. This is a substantial and positive investment
made with our confidence in TClarke and the future.
The Board was strengthened by Aysegul Sabanci’s
appointment as a non-executive director on 1st May 2022.
Aysegul’s experience in operating in Europe in particular, will
be invaluable as we expand our operations.
As we move through 2023 and beyond, we face significant
external economic and national and geopolitical challenges
and uncertainties which will affect all businesses and sectors.
As I look forward, however, I am confident that TClarke is
well placed to address and work through these challenges
and continue to perform and deliver. Our strategy is well
developed and being successfully implemented. This
together with our strong commercial and management focus
and controls gives TClarke the strength and stability to
continue to grow, prosper and perform. We have the
capacity, the order book and the opportunities.
The TClarke brand is very strong, built upon our reputation
for high quality engineering, reliability and on time delivery.
This is made possible through the collective efforts of all of
our people. It is their outstanding effort and output that
enables us to grow and perform and to face the future
with confidence.
Iain McCusker
Chairman
20th March 2023
Chairman’s Statement
For further information and for a definition of forward order book and dividend per share, see pages 13 and 15 of the Group Financial Review.
See page 15 for definition and calculation of net cash. KPI performance is described within the Strategic Report.
£426
m
Group Revenue
2021: £327m
£
7.
5
m
Net Cash
2021: £5.3m
21
0
Apprentices
Record intake of 50
apprentices in 2022
2021: 195
19.60p
Earnings per share
2021: 14.99p
0.32
Lost time incident rate
as a result of accidents
2021: 0.31
£11.
5m
Operating Profit
2021: £8.8m
£
2.6
m
Average month end
net cash
2021: -£2.9m
4.8
Emissions (tC02e)
per £m revenue
2021: 5.8
£
555
m
Forward Order Book
2021: £534m
2.7%
Operating Margin
2021: 2.7%
5.3
5
p
Dividends per
share
2021: 4.85p
58
Average supplier
payment days
2021: 60
2022 Key Performance Indicators (KPIs)
Financial
strength and
shareholder
returns
Social and
environmental
value
Strong
operating
performance
TClarke
Annual Report and Financial Statements 2022
01
Strategic Report
TClarke
Annual Report and Financial Statements 2022
03
04
Purpose, Strategy and Values
Our purpose is inspiring
talent to deliver excellence
in our chosen markets
Our core values drive
our culture
Our strategy is to pursue
organic growth by focusing
on our five core market
sectors; Engineering Services,
Technology, Infrastructure,
Residential & Hotels and
Facilities Management.
We believe we can make
a difference
•
Recruiting people with diverse perspectives,
who are passionate about what they do
•
Delivering projects of exceptional quality
•
Pursuing our strategy to reach net zero carbon
emissions by 2026
•
Adding value to the communities where we
work by procuring locally, providing job and
training opportunities, and supporting
local charities
•
Being guided by our Core Values in
everything we do
•
25% five year target for women in
apprenticeships and training
Maintain a strong balance sheet and
significant levels of available funds at
all times
Being a responsible business
•
Protecting people
•
Developing people
•
Improving the environment
•
Working together with our supply chain
•
Enhancing communities
Increase our quality of earnings
Through project selectivity, operational efficiency
and Investment
Secure long-term workstreams
Through client and partner relationships,
generating repeat business
Excel in project delivery for our customers
Our strategic priorities
The following priorities are essential to achieving
our purpose and strategy:
The customer comes first
Talented people are key to our success
We must adopt new technology and drive change
Consistent achievement is key to our future
Strategic Report
TClarke
Annual Report and Financial Statements 2022
05
06
Chief Executive’s Report
A Resilient and Successful Business
Few other years in the history of TClarke. Have seen world
events reshape our outlook like the last two. Yet despite all
the challenges, TClarke has stayed true to its values and
remained a unique and successful business, a great employer,
and the partner of choice for our customers and supply chain.
My thanks go to our people, customers, partners,
shareholders, and the community for your continued support.
Delivering Our £500m Strategy
All in our sector have witnessed inflationary pressures and
supply issues during the course of the year; generally our
teams have been able to mitigate any impact on a
project-by-project basis, without disruption to our operations.
We have previously declared our ambitious plan to achieve
profitable revenues of £500m by the end of 2023 and I am
pleased to report that the continued strength of our forward
order book - of £555m and over £1bn of active opportunities
– means we remain on track to achieve it.
Our order book has been replenished whilst maintaining our
disciplined and selective bidding approach to opportunities,
which is even more crucial in times of economic uncertainty;
this business is not driven by winning projects that do not have
the opportunity to return an acceptable margin.
Our business model is very straightforward and designed
to provide consistent, balanced and complementary work
stream opportunities for our five market sectors, across our
UK locations. Its effectiveness is evidenced by our 2022
revenues which we have grown by almost £100m in 2022
delivering revenue of £426m; exceeding £400m for the first
time (2021: 327m). This is a remarkable achievement and is a
testament to the dedication of our people and the
commitment and teamwork of our supply chain. A breakdown
of our revenues is shown below:
£145m Technologies, including Data Centres
& Smart Buildings
£125m Engineering Services
£80m Infrastructure
£45m
Residential and Hotels
£31m Facilities Management
The Group has invested, proactively and heavily in resources
and capacity, to ensure our growth ambitions are fully
supported, and our clients’ projects are delivered on time.
Our organic growth strategy is based on the established
engineering strengths of the business and targets additional
revenue streams - which are now contributing significantly
towards our £500m revenue goals. We are focused on
maintaining our premier position in our five core market sectors
whilst growing revenue from larger projects outside of London,
expanding our healthcare offering, becoming a major player in
the data centre market and investing in our capability to deliver
smart building solutions. 2022 revenues from these growth areas
total £220m (2021: £90m) and are shown below.
£129m UK Data Centres
£47m
Healthcare projects
£37m
Larger projects outside London
£7m
Developing innovative smart
building solutions.
2021 revenues were £39m, £31m, £16m and £4m respectively.
The standout growth revenue stream is from UK Data
Centres where TClarke is delivering five data centres as
principal contractor. There remain many opportunities for
growth in this sector and we expect Data Centres to continue to
contribute significant revenues in the medium term.
We now have 19 projects outside of London which have a
contract value of £5m or more where we are either on site or the
project is in the order book due to commence in 2023 or 2024.
What makes TClarke Unique
Brand and Heritage
Since 1889, when we pioneered the most advanced
technology of the age, we have constantly changed and
evolved our skill base to stay at the edge of technology and
technical skills. But the emphasis on quality jobs for quality
clients has never changed.
In the 21st century we must embrace new challenges, none
greater than to mitigate the impacts of climate change.
TClarke is committed to achieving net zero emissions and
has a detailed road map in place to achieve this by 2026.
To ensure we and our sector achieve sustainable results in
reaching this goal, we are working collaboratively and
tirelessly aligning with our customers and working with our
partners and suppliers to provide the innovative engineered
solutions that are needed, in many cases pioneering or
learning new skills.
In 2022 TClarke successfully achieved Build UK Business
Champion status within the Construction Leadership Councils
Co
2
nstruct Zero programme; the industry’s zero carbon
change programme.
Client Retention
Our client retention rate is an integral part of the success of
TClarke and 90% of our projects are with repeat clients and or
principal contractors. We are rightly proud of the projects that
we have secured and continue to deliver. Our focus remains
on being selective when tendering projects and managing the
risks, with established and well-defined processes throughout
the life of a project.
Our unique retention rate and the depth and length of
relationships we build with our clients and supply chain is a
testament to the strong culture at all levels within our business.
It is no coincidence that we maintain a record order book
having closely aligned ourselves with clients particularly major
developers in London who have shown a long term
commitment to the markets we operate in.
Onsite Resource
We have always believed that by giving our people lifelong
career paths, we can build a stronger business and play a
leading role in our communities.
No one matches our ability to dedicate our high quality,
established teams complemented by our two prefabrication
facilities in Stansted, Essex and Coatbridge, Central Scotland
to our clients’ projects. Those facilities help us maximise the
use of MMC (Modern Methods of Construction), improve
onsite logistics, reduce waste, and meet our
environmental goals.
Growing our business and achieving our ambitions could
not happen without the relentless drive and quality of our
in-house teams. Our competitors, whose models are overly
dependent upon the use of sub-contractors cannot
achieve this.
Last year, we invested £6m (2021: £6m) in our apprentices
across the UK. These ongoing investments lead to an
exceptional and unique wealth of future talent, designed to
deliver both skilled operatives and future leaders in volume
and quality to meet our needs.
Engineering Expertise
Risks and rewards are highest for larger, more complex
projects such as commercial offices, luxury hotels and leisure
complexes, hospitals and major education or research
facilities. This drives clients and principal contractors
towards engineering services providers such as TClarke which
have the necessary skills, governance and financial strength
required to mitigate those risks.
Our team has the depth of experience, knowledge, and
talent that no other company can match. Our staff are
driven with passion and pride to complete projects across
the electrical, mechanical, and technologies sectors. We have
completed major and complex landmark projects that no
other team in the market can match. Crucially, our
expertise stays in our business and builds over time. This
body of knowledge allows us to hand pick the right team for
our clients’ project needs.
An insight to our activities is provided in the following pages
of this report, but some notable highlights include, at the end
of 2022 TClarke was active on five UK data centre projects
with further opportunities of additional phases.
In London, the excellent performance of our engineering
services teams continues, recent project wins include a major
infrastructure project at Canary Wharf, a commercial office
scheme at 76 Upper Ground on London’s South Bank and
the refurbishment of two landmark five star hotels in the
West End.
In Cambridge we secured Phase 2 of Unity Campus which
features three new wet laboratory buildings of 32,500
2
ft,
31,000
2
ft and 24,500
2
ft.
Our Infrastructure teams remain focused on the major areas
of public sector infrastructure where complexity and new
technologies play to our skill and quality advantages. During
the year we enjoyed ongoing success in education, delivering
76 education projects and adding 42 new education projects
in the forward order book.
We continue to work in hospitals across the country
delivering major upgrades to the healthcare infrastructure.
For example, TClarke has delivered a major CT and MRI
facility for Basildon University Hospital. TClarke continues to
win major projects such as the National Rehabilitation
Centre which is one of the first of 40 new hospitals to be built
by 2030.
Full Breakdown and comparatives can be found on pages 9 and 10.
Nationwide Capability
Technology Leadership
Client Retention
Onsite Resource
Brand and Heritage
Engineering Expertise
Unique
What makes
TClarke
Strategic Report
TClarke
Annual Report and Financial Statements 2022
07
08
Chief Executive’s Report
continued
Nationwide Capability
Our ability to deliver is unparalleled, employing engineers
and skilled operatives from local communities nationwide,
offering clients the full range of our services across the
country. Our capabilities and ability to deliver are
underpinned by the support we give our people and the
process and procedures we have in place. Moreover, the
strength of our balance sheet gives our customers confidence
in all aspects of the business.
Our delegated approach to project management
empowers and motivates our teams on the front lines to
make informed decisions that result in exceptionally
well-engineered projects.
Technology Leadership
No one leads quite like us in smart buildings technology.
TClarke Intelligent Buildings is a division which has been
built steadily in scale and capability through the last 15 years,
designing and delivering the critical mechanical and electrical
infrastructure for data centres as well as schools, house builders,
commercial offices, and hospitals across the UK.
Smart Buildings could quite easily become the “Dark Art” of
the industry, so our ambition is to demystify the whole topic
and support our customers with the right product and to
deliver this under the trusted TClarke brand.
This could be as simple as making a building smart ready with
a TClarke Gateway, the provision of Smart Platforms,
undertaking the role of the MSI (Master Systems Integrator)
or a full turnkey solution.
Very few of our competitors can match the depth and range
of the in house capabilities and access to technology partners
that we offer.
Being a Responsible Business
As a responsible business TClarke strives to deliver social value
and environmental protection and improvement of long lasting
benefit to local communities.
Social value is defined as the contribution you make to society
and in particular to the local and community where you operate.
TClarke is proud to be based in the communities it serves and
wants to ensure that we offer our teams the best environments
to collaborate, share knowledge and build exciting careers. We
create social value by keeping everyone safe, developing our
people, building long term relationships and enhancing local
communities by providing training and work opportunities and
supporting local community projects.
Leadership on Women in Apprenticeships and Training
For many years, we have been working, with some success,
on the challenge of expanding our talent pool and bringing
more women into our business across all roles.
But we can see a bigger prize if we can find a way to bring
substantially more women into our apprenticeship and training
programmes – particularly as these programmes provide the
foundations for our professional standards and culture.
If we can do this, then we are certain it will increase the
quality of our engineering services and give us ongoing
business advantages – as well as offering women across the
UK excellent long-term career opportunities.
We therefore decided to announce a five-year target of filling
25% of our apprenticeship and training positions with women
(currently 2%). This is recognised by our partners in the
industry as an extremely ambitious target. It will require more
than hard work on our part, we know we will need to listen
carefully and adapt our business in various ways, to learn and
to accept that there will be challenges.
It will be a very significant long-term project but, as the
industry leader in apprenticeship and training provision, we
are best placed to address it and get results.
The prize of a fully diverse workforce, fit for the future, accessing
the greatest range of talent and capable of delivering TClarke
Engineering Services is one which we want to win.
By collaborating with partners across our industry and taking
the lead on such a major issue, we also recognise that what
we achieve here will create far wider value and our successes
will help reset everyone’s standards and expectations.
Outlook
TClarke is in excellent shape, focused on repositioning the
businesses and delivering our growth strategy which will aim
to achieve a bigger overall business with record revenues of
£500m in 2023.
Beyond this the board has approved a strategy and
framework for our next stage of organic growth which will
focus on maintaining our market share in our chosen markets
whilst taking full advantage with our existing clients to pursue
growth opportunities in areas such as European Data Centres
and the Pharmaceutical technology sector.
We see the period beyond 2023 as an opportunity to lay the
foundations for an even stronger TClarke with the business
ideally positioned and focused on delivering the most high
tech and engineering rich projects for our clients, whilst
building our existing balance sheet strength, enabling all
stake holders to share in the continuing success of TClarke.
We have some exciting opportunities ahead of us and remain
confident that the group will continue to achieve optimum
revenues and margins.
Mark Lawrence
Group Chief Executive Officer
20th March 2023
25%
Five Year Target
for Women in
Apprenticeships
and Training
Market Sectors
The growth in the technologies sector is driving us towards our
£500m revenue target.
Strategic Report
TClarke
Annual Report and Financial Statements 2022
09
10
£12 1m
Forward order book
2021: £104m
Infrastructure
£ 73m
Forward order book
2021: £103m
Residential
& Hotels
£225m
Forward order book
2021: £174m
Engineering
Services
£25m
Forward order book
2021: £18m
Facilities
Management
£ 111m
Forward order book
2021: £135m
Technologies
No. of 2022 Projects in
Projects
Order Book
Commercial
Offices
44
38
Leisure
16
10
Retail
24
7
Other
26
18
Totals
110
73
£125
m
2022 Revenue – 2021 £116m
No. of 2022 Projects in
Projects
Order Book
Manufacturing
and
Prefabrication
5
2
Data Centres
6
5
Smart
Buildings
31
24
Other
15
13
Totals
57
44
£145m
2022 Revenue – 2021 £50m
No. of 2022 Projects in
Projects
Order Book
Defence
10
9
Education
76
42
Healthcare
55
44
Prisons
6
7
Other
Government
10
5
Totals
157
107
£80m
2022 Revenue – 2021 £79m
No. of 2022 Projects in
Projects
Order Book
Hotels
3
4
New Build
106
79
Refurbishment
7
5
Student
accommodation
0
1
Totals
116
89
£45m
2022 Revenue – 2021 £56m
2022
Order
Revenue
Book
Long Term
Frameworks
£8m
£9m
Planned and
Reactive
Maintenance
£23m
£16m
Totals
£31m
£25m
£31m
2022 Revenue – 2021 £26m
Strategic Report
TClarke
Annual Report and Financial Statements 2022
11
12
Our strategic advantages give us market leadership.
Our service mix allows us to deliver value at each
stage of the project. Our delivery is underpinned by
our core values, known as
The TClarke Way
.
Business Model
What we do
Our strategic advantages
The value we create for our stakeholders
Attractive Market
Positions
Attractive positions in our markets
where we operate with scale,
operational capability at both national
and regional levels as well as
project delivery including
processes and expertise
Client
Relationships
Building long term relationships with
our blue chip customer base
Sustainability
Committed to achieving net zero
carbon across our own operations
and offering energy efficient
solutions to our customers
Design and Engineering
Capability
Experienced engineers supported
by internal prefabrication facility
to deliver modern methods
of construction
Performance
Excellence
The delivery of high quality
projects safely, on time and to
budget across the business
Project
Management
Experienced high quality project
management delivered through
our own workforce
Our People
•
We directly employ professional engineering
staff and operatives and run industry leading
apprenticeship and future leader schemes to
sustain our talent pipeline.
Shareholders
•
Shareholder returns – we aim to generate
long-term sustainable shareholder returns
through the execution of our strategy
•
Dividend – we have a progressive dividend
policy increasing dividends by 34% over the
last five years.
Integrated Services and Technology
•
We offer a broad range of engineering services.
We are a high-technology business and leaders in
the delivery of complex installations utilising Modern
Methods of Construction (MMC) that deploy
prefabrication, pre-assembly, design standardisation
and the use digital technologies.
Our People
•
Industry leading career paths and project work to
take pride in. Currently 43 participants in Future
Leaders Programme and 210 apprentices in training.
Supply Chain Partners
•
We work to build strong, collaborative relationships
with our suppliers including co-operative design and
development activities
•
We support our suppliers to meet high standards of
compliance expected by us and our customers
Market Opportunities
•
The UK Government has published a pipeline of
£650bn infrastructure projects focussing on schools,
hospitals, power networks, roads and railways.
TClarke has a strong market presence in a number
of these market sectors
•
Net Zero - We offer a wide range of energy efficient
smart building solutions.
•
Data Centres – significant number of data centres
are being built in the UK and Europe over the next
five years.
Clients
•
We aim to deliver projects safely on time and to
budget using our workforce, design and project
management skills. We adopt a collaborative and
open approach to work which maximises value,
efficiency and productivity
•
ESG activities support our customers on their
path to achieving net zero emissions.
Nationwide Coverage
•
We cover the whole of the UK with 19 offices.
Reputation
•
Our performance maintains our brand reputation
for total reliability, safety, delivery and quality.
Environmental
•
Support our customers through implementing
energy efficient smart building solutions
•
Building of solar farms and installation of
heat pumps for customers.
•
Type 1 and type 2 emissions per £1m of turnover
have dropped 57% in last 10 years.
Key Highlights
Progress against strategic objectives:
The Group has performed strongly throughout the year
and we end 2022 with a record level of revenue driving up
operating profit to £11.5m (2021: £8.8m). The outlook for
2023 looks equally healthy with the Forward Order Book
now standing at £555m (2021: £534.2m). The growth in
revenue represents a c.£100m increase on 2021 levels (up
30%), with a similar percentage increase in earnings per
share. 2022 has seen a scale change in the size of the
business. The rate of growth has been particularly strong
within the Technologies Sector which now represents over
a third of the Group’s turnover, up from c.15% last year.
The proposed overall dividend for the year represents a
10% increase on 2021, and net assets now stand some 40%
higher year on year, driven by our strong operating
performance and a significant reduction in our defined
benefit pension liability. Our growth has not been driven by
acquisitions and this will remain our policy going forward.
Performance
Operating profit for 2022 was £11.5m (2021: £8.8m) on
revenue of £426.0m (2021: £327.1m). Earnings per share
were 19.60p for the year (2021: 14.99p) on an operating
margin of 2.7% (2021: 2.7%). TClarke remains financially
secure, ending the year with net cash of £7.5m with £30m
of bank facilities at its disposal.
Finance costs were £1.2m (2021: £1.0m), comprising a
£0.1m increase in bank interest and facility fees to £0.6m
(2021: £0.5m); the Group’s defined benefit pension scheme
interest charge of £0.4m (2021: £0.4m); and an interest
charge of £0.2m arising from IFRS 16 (2021: £0.1m).
The tax charge for the year was £1.9m (2021: £1.5m).
TClarke maintains an open and collaborative working
relationship in all interactions with HMRC, and there are no
uncertain tax positions at present.
The Group paid its 2021 final dividend in full in May 2022 and
an increased interim dividend in September 2022 of 1.25p
(2021: 0.75p). The Board is proposing a final dividend of 4.1p
(2021: 4.1p) which if approved at the AGM will be recorded
and paid on 19 May 2023. The total proposed dividend
therefore rises to 5.35p (2021: 4.85p), an increase of 10%.
The dividend is covered 3.7 times by earnings. TClarke
recognises that many of its shareholders invest for dividends.
Strategic Report
14
Summary of Financial Performance
2022
2021
£m
£m
Revenue
426.0
327.1
Operating profit
11.5
8.8
Finance costs
(1.2)
(1.0)
Profit before tax
10.3
7.8
Taxation
(1.9)
(
1.5)
Profit after tax
8.4
6.3
Earnings per share - basic
19.60p
14.99p
Dividend per share
5.35p
4.85p
Net assets
38.7
26.5
Dividend per share represents the interim and final dividend proposed or
paid for the year in question.
Group Financial Review
TClarke
Annual Report and Financial Statements 2022
13
London
Revenue from our London operations rose to £270.0m
(2021: £189.4m), generating an operating profit of £10.6m
(2021: £6.2m). Operating margin was 3.9% (2021: 3.3%).
The growth in revenue has been primarily driven by the
success of our data centre offering where in addition to our
current five live projects the tendering pipeline identifies
many further opportunities. Our success in this area has been
the key driver to our growth within the Technologies market
sector. Our core Engineering Services have also continued to
deliver strongly, with work on a number of high-profile
commercial and hotel developments, with many of which
offering future fit-out opportunities. Our medical division,
operating out of our Stansted facility, continues to go from
strength to strength.
UK South
Revenue from UK South rose to £78.0m (2021: £67.1m), with
the region delivering an operating profit of £2.1m (2021:
£2.6m) and giving rise to an operating margin of 2.7% (2021:
3.9%). The region has developed a high-quality customer
base providing a significant quantity of repeat business and is
particularly strong in infrastructure with many projects being
undertaken in defence, education and healthcare.
The region saw significant revenue growth compared to
2021, with strong performances in both Security and Climate
divisions. Our new Oxford office is now fully operational
having started to trade in the first half of the year and
delivered a profit in its first full year. Operating margins are
expected to recover in 2023 back to the UK South’s
normal operating margin of circa 3.5%.
UK North
Revenue rose to £78.0m (2021: £70.6m) with the region
delivering an operating profit of £2.4m (2021: £3.0m) and giving
rise to an operating margin of 3.1% (2021: 4.2%). Highlights for
the year include the successful delivery of a major engineering
services project in Manchester, our continued success in winning
and delivering a number of educational projects through our
Leeds office, and Scotland’s increased pipeline of Engineering
Services work, alongside its core residential business. Further
diversification of Scotland’s revenue streams is expected in 2023,
with examples in the Forward Order Book including a
regeneration contract in Charlotte Square, Edinburgh for the
provision of office accommodation, and an education-related
project with the Neilston Learning Campus.
2022 Revenue by
Business Sector
Technologies as
percentage of total revenue
(2020 - 2022)
£m
Facilities Management
31.3
Infrastructure
79.5
Engineering Services
124.7
Residential and Hotels
45.3
Technologies
145.2
Total
426.0
Strategic Objective:
Deliver £500m revenue
by end 2023
Grow organically
Sustain a 3%
operating margin
Maintain premium
position in core markets
Progress
•
2022 Revenue: £426m
•
Increase of £99m
•
Forward order book
1
£555m
•
Technology orders £111m
•
Major project wins
across the UK
•
2022: 2.7% margin
achieved
•
Order book replenished
and increased
•
Technology, one third of
the business
•
90% of turnover from
repeat clients
Progressive Dividend Policy
2020-2022 (pence per share)
5.35
4.85
4.40
2022
2021
2020
Earnings per share 2020-2022 (pence per share)
0
5
10
15
20
25
0
200
50
250
100
300
400
150
350
450
EPS (p)
Revenue (£m)
2020
2021
2022
2.87
14.99
19.60
Revenue
EPS
Technologies as
percentage of total revenue
(2020-2022)
0%
5%
10%
15%
20%
25%
30%
35%
40%
2021
2020
2022
1 The forward order book comprises jobs which are secured through
contracts or letters of intent.
Forward Order Book
The closing Forward Order Book of £555m represents a 4%
increase compared to last year’s, with a strong pipeline in all
key markets. Importantly, we are securing large jobs across all
regions, with every office reporting a profit in 2022. The Group
has invested heavily in resources and capacity, ensuring that
the Group’s growth ambitions are fully supported, and our
clients’ projects continue to be delivered on time.
Cash Flow and Funding
Cash balances totalled £22.5m at 31 December 2022 (2021:
£20.3m). £15m was drawn down under the Group’s Revolving
Credit Facility (“RCF”) at both 31 December 2022 and 2021,
resulting in net cash of £7.5m at the 2022 balance sheet date,
an improvement of £2.2m on the prior year (£5.3m).
The increase in net cash has been largely driven by the Group’s
operating profit for the year once allowances have been made for
other cash outflows such as dividend payments and the Group’s
commitment to the pension deficit reduction plan. Furthermore
the Group’s continued focus on strong credit control processes
has ensured that the growth in revenue has been achieved
without any significant increase in working capital balances.
The Group renewed its banking facilities during the year
and the total amount available under the RCF now stands at
£25.0m (previously £15.0m). The RCF is committed until 31st
August 2026. A £5.0m overdraft facility (2021: £10.0m) is also
available which is repayable on demand. Interest on overdrawn
available which is repayable on demand. Interest on overdrawn
balances is charged at 2.0% above base rate, and interest on
balances drawn down under the RCF is charged at 1.9% above
SONIA. The Group was compliant with the terms of the
facilities throughout the year ended 31st December 2022 and
the Board’s detailed projections demonstrate that the Group
will continue to meet its obligations in the future.
The Board’s projections show that TClarke is expected to
maintain a healthy cash position throughout the next
three-year period, and we do not anticipate seeking any
additional facilities during this time.
TClarke
Annual Report and Financial Statements 2022
15
Strategic Report
16
Group Financial Review
continued
The Group also has in place £65.1m of bonding facilities (2021:
£50.1m), of which £34.3m were unutilised at 31st December
2022 (2021: £24.3m).
Defined Benefit Pension Scheme Obligations
The deficit on the Group’s defined benefit pension scheme,
as measured on an IAS 19 valuation basis for inclusion in
these financial statements, has now reduced to £12.9m (2021:
£23.9m). The reduction of £11.0m over the year has been
largely driven by changes in financial assumptions, in
particular around the discount rate applied to the liabilities,
as well as benefiting from a significant transfer out of the
scheme. The overall reduction has primarily been recognised
through the Statement of Comprehensive Income.
A formal actuarial valuation of the pension scheme was
conducted at 31st December 2021 showing a deficit of
£19.8m, representing a funding level of 71%. The pension
scheme’s actuary has also looked at the position at 31
December 2022 in view of the very different macroeconomic
conditions that currently exist. At that date the funding level
remains at 71% but the deficit is estimated to have fallen to
approximately £11m. Following the valuation the Group has
committed to a deficit reduction plan to eliminate the
deficit over a 8 year period, through additional contributions
of £1.2m per annum. During the year the Group made
additional contributions at the rate of £1.5m per annum, as
agreed in the previous deficit reduction plan.
Net Assets and Capital Structure
The Group is funded by equity capital, retained reserves
and bank facilities, and there are no plans to change this
structure or to raise new capital. We have built on our existing
strong balance sheet and net assets are now £38.7m (2021:
£26.5m), an increase of 46%. The increase largely reflects
the combined impact of the Group’s profit after tax for the
year, dividends paid, and the reduction in the defined benefit
pension deficit.
Goodwill stood at £25.3m at the year-end (2021: £25.3m).
The Board has undertaken an impairment review in respect of
goodwill and has concluded that no impairment is necessary.
Financial Risk Management
The Group’s main financial assets are contract and other trade
receivables, and bank balances. These assets represent the
Group’s main exposure to credit risk, which is the risk that a
counterparty will fail to discharge its obligations, resulting in
financial loss to the Group. The Group may also be exposed
to financial and reputational risk through the failure of a
subcontractor or supplier.
The financial strength of counterparties is considered prior to
signing contracts and reviewed as contracts progress where
there are indications that a counterparty may be experiencing
financial difficulty. Procedures include the use of credit
agencies to check the creditworthiness of existing and new
clients and the use of approved suppliers’ lists and
Group-wide framework agreements with key suppliers.
Accounting Policies
The Group’s consolidated financial statements are prepared
in accordance with the requirements of the Companies Act
2006 and in accordance with UK-adopted international
standards. There have been no new accounting policies
adopted in the year.
Trevor Mitchell
Group Finance Director
20th March 2023
Secured projects
with revenue
greater than £5m
2022
2021
Change
£m
£m
£m
Cash
22.5
20.3
2.2
Amounts drawn under RCF
(15.0)
(15.0)
–
Net Cash
7.5
5.3
2.2
Cash Performance (£m)
Pension deficit
reduction
Corporation
tax paid
Operating
profit
Interest paid
31 Dec 2021
Net cash
Non-cash
items /
movement in
working capital
Purchase of
Property, Plant
& Equipment
Purchase
of shares
by ESOT
Repayment
of lease
obligation
Dividends
paid
31 Dec 2022
Net cash
0
4
2
8
6
10
14
12
18
16
5.3
(0.5)
(1.6)
(1.8)
(0.8)
(2.1)
(2.3)
7.5
1.3
(1.5)
11.5
Increase in net assets (£m)
Tax expense
Finance costs
Operating
profit
31 Dec 2021
Net assets
Net actuarial gain
on pension fund
Dividends
paid
Share based payment
expense / property
revaluation
31 Dec 2022
Net assets
20
25
30
35
40
26.5
(1.2)
(2.3)
(0.7)
38.7
6.8
(1.9)
11.5
TClarke
Annual Report and Financial Statements 2022
17
Being A Responsible Business
The TClarke Way
Our Purpose, Strategy and Values on pages 3 and 4
provide the framework for our responsible business
strategy. As a responsible business it’s about delivering
social value and environmental protection and
improvement that will remain long after we have
completed our work.
Social Value
Social value is about supporting our people, our supply chain
and the communities in which we work. We create social
value by keeping everyone we come into contact with safe
and well, developing our employees and subcontractors
through education and training, building long-term supplier
relationships and enhancing local communities by providing
training and work opportunities and supporting local
community projects. The promotion of diversity and
inclusion is important to us, both within our own organisation
and through the creation of opportunities for people who
live locally to our projects, including young people and those
who have been out of work for a long time.
TClarke is very proud of its apprenticeship programmes.
Currently the Group employs 210 apprentices representing
16% of its total work force of 1300 people. We are also very
proud of our direct delivery model that
means projects are
delivered by TClarke employees living in their local
community.
TClarke does much to support the local communities in which
the Group works. For example TClarke is one of the lead
partners for the Stanhope Foundation which helps London’s
most vulnerable people.
Further information on the Stanhope Foundation can be
found on page 27.
Improving The Environment
We are a leader in our sector in addressing climate change,
committed to minimising the impact our business operations
have on the environment. In 2022 TClarke became a Build
UK Business Champion within the Construction Leadership
Council’s Co
2
nstruct Zero programme specifically focusing
on fleet management, modern methods of construction and
implementing carbon measurement. See page 23.
Our people are highly engaged in our commitment to
achieving net zero carbon emissions by 2026.
Using Targets to Drive Performance
We have set clear targets that are regularly reviewed to
ensure they remain sufficiently challenging and fit for the
future. These are detailed on pages 24 to 25.
Non-financial Information Statement
This section provides information as required by regulation
in relation to:
•
Environmental matters (pages 23 - 25)
•
Our employees (pages 18 - 22)
•
Social matters (pages 17, 27 - 28)
•
Human rights (page 22)
•
Anti-bribery and corruption (page 19)
Other related information
•
Our business model (pages 11 to 12)
•
Principal risks (pages 29 to 32)
Relationships
A modern, open and
highly proactive
approach, taking
responsibility
to collaborate at
every level
Safety
We invest to remain
an industry leader:
safety is our number
one priority
The
TClarke
Way
Our values
and how we work
every level
Innovation
Embracing new
technologies and
techniques: expert in
buildability and
integrated thinking
Quality
World-class skills,
experience and
motivation to deliver
high quality work
Resource
A market-leading
resource of directly
employed, high-quality
professionals
Value
Market leader in
value engineering:
focused on client and
end-user goals
Health, Safety and Wellbeing
The health, safety and wellbeing of all our employees and
suppliers is of paramount importance. TClarke has an
‘absolute’ accident reporting regime which ensures that each
accident, no matter how apparently small or insignificant, is
reported and included in our statistics. We are proud of the
culture that we have created and maintained. Our goal is that
everyone who comes into contact with our activities, on or off
site, goes home safe and well.
In 2022, the lost time incident rate in the Group was very
similar to 2021 at 0.32 (2021 0.31). The number of incidents
reported through our
absolute reporting system increased
from 46 in 2021 to 75 in 2022. A third of these incidents were
walking to site or to/from the place of work on site.
An awareness campaign has been launched particularly
relating to the hazards of using mobile phones and ignoring
potential trip hazards. The number of RIDDOR (reporting
of injuries, diseases and dangerous occurrences regulations
2013) accidents rose to 6 in 2022 (2021 : 4) as our hours
worked on site increased by 35%.
Action Taken to Prevent Accidents
You See, You Say!
Our unique ‘You See, You Say! reporting app, which has been
built inhouse, is fundamental to employee and
subcontractor engagement with potential hazards and
corrective action being reported as it happens.
The greater the amount of reports submitted, the greater the
level of engagement of our people in accident prevention.
Senior Management Site Visits
All senior managers are required to undertake regular Health
& Safety site visits, which provide an opportunity to engage
with our people to reinforce the importance of Health and
Safety. Results from the visit and any corrective action
required are recorded via our Health and Safety Tour app
and shared with the teams.
Strategic Report
Being a Responsible Business
Protecting Our People
18
2022
2021
2020
2019
2018
7,382
6,632
3,304
6,124
5,316
0.32
Lost time incident rate
1
2021: 0.31
1. Number of lost time incidents x 100,000
divided by the number of hours worked.
Lost time incidents are resulting in absence
from work for a minimum of one working day,
excluding the day the incident occurred.
2. You See, You Say! is our reporting
system of potentially hazardous situations
that encourages engagement and
accident prevention.
7, 382
You See, You Say! Reports
2
2021: 6,632
TClarke
Annual Report and Financial Statements 2022
19
Use of Apps
TClarke has a suite of apps that
range from a site safety
induction, behavioural observation through to specific
requirements such as mobile tower, podium steps and
stepladders. Through the use of these apps we can ensure that
all of our people receive the appropriate safety training as well
as access to specific technical requirements.
Glove Policy
The 2021 Annual Report stated that TClarke had introduced a
more robust Glove Policy which provided additional protection
whilst maintaining comfort and dexterity. As a result, in 2022
there were just 3 cuts to hands/fingers. In addition the number
of gloves bought fell by 6,000 reducing total spend but more
importantly providing significant environmental benefits.
Health and Wellbeing
TClarke has a Mindful Worker initiative, supported by a mindful
worker campaign. We are proud to have introduced Mental
Health First Aid training sessions across the Group and currently
have 17 qualified Mental Health First Aiders.
Our Green Hearts Mindfulness classes for all staff & supervisors
have been well attended and appreciated. The classes cover
practical breathing and meditation techniques which help to
manage stress. The classes were so successful that we have
now created a series of videos. These measures are a big step
forward within the construction industry and prove how serious
TClarke is about managing every aspect of our employees’
mental health, health and wellbeing.
Mental Health awareness has been further enhanced by
activities around Mental Health Awareness day and toolbox talks
and information cards and newsletters provided to all
employees. In addition, we proactively encourage activities
such as promoting lunchtime walks participating in sports
competitions. We also participate in national health campaigns
such as prostate and breast cancer awareness.
Anti-Bribery and Corruption
TClarke values its reputation for lawful and ethical behaviour
and has zero tolerance of any form of bribery or inappropriate
inducement to ensure that business can be conducted in a free
and fair market. Our anti-bribery and corruption policy has been
communicated to all staff and is published on TOMMY, the
TClarke employee hub. Every individual and organisation that
acts on the Group’s behalf or represents the Group is
responsible for ensuring that this principle is upheld and the
policy is implemented so that the Group conducts all business in
an honest and professional manner in line with the Bribery
Act 2010.
Modern Slavery
TClarke is committed to compliance with the Modern Slavery
Act 2015, go to www.tclarke.co.uk/downloads for full policy.
Positive culture, local employment and one of the industry’s
premier training schemes producing a pipeline of world
class engineers.
TClarke aims to provide an inclusive work environment where
everyone has access to the knowledge, technology and
services they need to achieve their personal ambitions whilst
delivering the best possible outcomes for our customers.
TClarke recognises that as a specialist engineering business,
we can play our role by rooting ourselves in local
communities and providing high quality, long term career
paths and opportunities for people. Equally we can promote
and deliver the highest possible standards of health, safety,
wellbeing and respect for people – our own employees and
those with whom we work.
Our apprenticeships, advanced future leaders training
programme and our health, safety and wellbeing
programmes are by accepted metrics, absolute industry
leaders and deliver far beyond the benchmark norms.
High quality apprenticeships have been core to our culture
since the 1900s. Today, 2 out of 3 of our Executive Board
were TClarke apprentices; 3 of the 6 other members of the
Group Management Board were as well. The pattern continues
through every layer of our professional resource – for example
13 out of 20 Project Surveyors and 4 out of 7 Major Project
Directors in London were TClarke apprentices. This resource is
recognised as among the very best in UK engineering.
Our business strategy is on track for 50% organic revenue
growth from £330m in 2021 to £500m in 2023. Our
apprenticeship scheme drives our talent pipeline - it’s
business critical and must deliver, regardless of systemic
skills shortages.
We invest fully in a complete apprenticeship programme with
dedicated skills training facilities across the UK from our 19
offices. Our apprenticeship scheme exceeds internal targets
for quality intake, output of successful completions and
career progress.
Our Apprentice of the Year competition is fundamental to our
culture and rewards all finalists with automatic enrolment on
our Future Leaders programme.
Industry targets a gold standard of 5% of apprenticeships;
TClarke has consistently achieved 16%. Overall, TClarke
apprenticeship completion rates achieved are 95-98% year
on year.
TClarke apprentices win major regional and national
apprenticeship awards in our industry and beyond, every
year, decade by decade.
Being a Responsible Business
Developing Our People
21,
206
Training days completed in 2022
2021: 19,645
43
Future Leaders enrolled on our
training programme
2021: 40
5
Former apprentices on Group
Management Board
2021: 5
210
Number of apprentices in 2022
Record intake of 50 apprentices 2022
2021: 195
Strategic Report
20
Good To Go
Mobile Tower
Podium Steps
Stepladders
Behavioural Observations
Apps. In use
4X43B
06
TG3220
Traffi.
CE
Traffi.
4X43B
06
TG3240
Traffi.
CE
4X43C
06
TG3240
Traffi.
CE
CUT
LEVEL
B
CUT
LEVEL
C
CUT
LEVEL
C
CUT
LEVEL
B
Protecting Our People
continued
TClarke
Annual Report and Financial Statements 2022
21
Developing Our People
continued
Our frontline engineering operatives and site teams, of which
an overwhelming majority will have been TClarke apprentices
themselves, take real pride in bringing the next generation
through ‘The TClarke Way’. Our apprenticeships lead to
permanent long-term employment and the opportunity to
work on some of the most iconic buildings in the country.
We are active in seeking to increase diversity and inclusion
across our business and we will continue to expand outreach
across communities nationwide. This includes an active role in
encouraging more women in construction.
TClarke Academy
TClarke operates a Career Pathway and Training Academy
designed to provide employees with a clear career pathway
with training and opportunities for personal and professional
growth to achieve their goals. We have successfully rolled
out an eLearning platform to ensure all staff are trained in
TClarke’s procedures and kept up to date with new systems
and technologies.
Future Leaders
The Future Leaders Programme identifies strong leadership
candidates at various stages of their careers within our
business and provides them with continuous additional
professional training, networking, and personal development.
We currently have 43 employees enrolled on the Future
Leaders Programme.
All Future leaders gain opportunities for growth and career
progression, and many have moved into management positions
across the TClarke Group, some are currently project managing
some of the biggest projects TClarke has in London.
Diversity and Inclusion
We cultivate an inclusive work environment where everyone
has access to the relevant knowledge, technology and
services they need to achieve their personal ambitions and
drive the business forward. We want to encourage greater
diversity within our sector and ensure that no discrimination
occurs, however unintentional it may be.
TClarke recognises the need to actively foster and create an
environment where everyone is respected and fully empowered
to be their best. As an organisation which relies heavily on the
qualities its people display daily when working in collaboration
with our partners, this idea has strong practical value and
application and is embedded within our working culture.
We are a traditional industry with a long-standing skills
shortage. In order for us to address this, we have to be able
to attract a much more diverse range of talented people to
come and work for us - which means we need a better
understanding of diversity and inclusion, what it means to us
as a business and how it can help us to become better.
TClarke have used The Chickenshed Theatre Company to
conduct training on unconscious bias with further training
planned in 2023. Chickenshed is a pioneering and inclusive
company that bring together people of all ages and from all
backgrounds to produce outstanding theatre productions
that entertain, inspire, challenge and inform both audience
and participants alike.
The Shard
The London
Stadium
Battersea
Power Station
Canary Wharf
We aim for fairness, respect, equality, diversity, inclusion and
engagement in the workplace, and we commend the
dedication of businesses, individuals and teams that continue
to make a significant contribution to improving the culture
and practices of our organisation.
Gender Pay
Gender is just one aspect of diversity, we remain steadfast
in our commitment to create a diverse, inclusive culture, one
which supports and encourages everyone to give their best,
and bring their whole selves to work.
The tables below show the percentage by which womens’
average hourly pay and bonus pay is lower compared to men.
In the construction sector, there is a long-standing lack of
women in the industry. For those women who are employed
in the industry they are usually in non-delivery or non-client
facing roles and often in more junior positions. This means
that across construction a significant pay and bonus gap
exists between men and women. The small proportion of
women employed means that the measures above,
particularly the bonus measure, can be volatile from one
year to the next.
TClarke is engaged with Women in Construction and has
taken on another female apprentice. This follows our female
apprentice of the year, Emma Nichols, and our increased
focus for women in construction across the group in the last
decade with a number of roles being fulfilled by women such
as Procurement Director, Quality Manager, Commissioning
Manager, Quality Surveyor, Design Manager and Planner.
TClarke has recently announced an initiative to significantly
increase the number of new female apprentices and trainees.
See page 7 for further details.
Human Rights
Whilst TClarke does not have a separate human rights policy,
a respect for human rights is implicit in all our employment
policies, corporate values and policies on data protection,
privacy, modern slavery, anti-bribery and corruption.
Disability
We are committed to an open and inclusive culture, including
the fair treatment of disabled people. We give full and fair
consideration to job applications made by disabled people. Our
procedures include making reasonable adjustments to roles and
responsibilities and providing training and support to ensure
they have the same opportunities for career development and
promotion as other employees.
Our Pensioners
Our pensioners like to keep abreast of developments in
TClarke. We produce a yearly newsletter to keep our
pensioners informed of any matters of interest concerning
their pension in addition to news stories on our website.
Strategic Report
22
Hourly pay
2022
2021
34%
29%
30%
28%
Bonus pay
2022
2021
88%
79%
71%
60%
Mean pay differential (average)
Median pay differential (mid-point)
Major Data Centres
Board
6
1
6
1
Senior management
(Group Management Team)
1
6
0
6
1
Group Management Team
direct reports
40
15
43
21
Apprentices
205
5
191
4
All employees
1,176
118
1,121
115
Number of UK employees
at 31 December, on which
1,294
1,236
data is based
excludes executive directors
1
Men
Women
2022
Men
Women
2021
TClarke is acting to combat climate change by working
towards net zero carbon emissions by 2026 and reducing the
level of carbon in the projects and buildings we deliver.
In 2022 we achieved a 17% reduction in our total carbon
emissions since we began measuring them in 2013 and
a 57% reduction in carbon intensity (emissions per £1m
revenue), although total type 1 and 2 emissions rose by 9%
during 2022 as turnover increased by 30%.
In key areas of environmental sustainability, the nature of our
work as specialist engineers means that our strongest impacts
can be generally achieved by collaborating with progressive
clients and principal contractors nationwide upon whose
programmes we work. By doing so, our teams not only
adhere to and help deliver benchmark standards for
sustainable performance; we also support the achievement
of ground-breaking sustainability targets and the highest
standards of environmental performance.
We are committed to leading our industry in the efficient
consumption and preservation of critical resources. Through
creative design and implementation, programmatic inclusion
of renewable resources, and operational excellence, we have
and will continue to take strides in adopting new technology
and working practices for resource management. The TClarke
collaborative approach will be for all disciplines to operate as
an integrated part of the overall project team, in a partnering
environment, and carry this philosophy through the design
stages and the delivery phase. This will deliver a healthier
and more sustainable environment, as well as associated cost
efficiencies, to the benefit of our people, customers, and the
communities in which we operate.
Our Net Zero Carbon Roadmap is our first step in
identifying key steps forward in our carbon reduction journey.
The sector is responsible for around 43% of UK emissions,
and 36% globally. Without our collective engagement and
participation, we will not meet the UK’s Net Zero targets. For
our sector, there are three key over-arching areas: Transport,
Buildings and Construction Activity. Based on these areas,
the Construction Leadership Council (“CLC”) has determined
nine priorities to focus our efforts both as an industry and as
individual businesses to maximise the impact we can make.
Being a Responsible Business
Improving The Environment
2,
062
tCO
2
e
Scope 1 and scope 2 emissions
2021: 1,892
4.8
tCO
2
e
Emissions per £1m revenue
2021: 5.8
TClarke
Annual Report and Financial Statements 2022
23
Strategic Report
24
Our Roadmap to Net Zero Carbon Emissions Based
on Science
As part of our commitment to sustainable development,
TClarke successfully maintain an Environmental
Management System to BS EN ISO 14001:2015 to provide
its clients and other stakeholders with verifiable evidence
that environmental performance is integral to
business management.
In December 2020 we committed to achieving net zero
emissions for Scope 1 and Scope 2 across our business
operations by 2030.
TClarke, in partnership with businesses within our sector have
decided to incorporate Scope 3 into our carbon reduction
strategy. TClarke aim to be carbon neutral for Scope 1 and
Scope 2 now by 2026 and then push the boundaries and
expedite the process to hit relevant criteria and achieve net
zero status by 2030.
Key Actions to Achieve Net Zero Emissions
Reduce Embodied Carbon
•
By 2024 TClarke will have identified all the major impacts
that contribute to our Embodied Carbon and have added
these to a critical action list to be addressed.
•
Engage with our supply chain and work with them to
identify and source alternative products – By 2024 we
will have engaged with ALL our supply chain and aim to
reduce this element of our embodied carbon by 50%.
•
By 2026 we will have continued our work with our supply
chain and further reduced our embodied carbon or found
suitable offsets to support our drive for Net Zero.
Electrification of Fleet and Plant
•
By 2026 TClarke will reduce their fleet of vehicles by 25%.
This will be achieved by exploring efficiencies for day to
day activities and alternative methods of transport.
•
By 2024 TClarke will no longer offer Petrol or Diesel
Vehicles as part of any new contracts for PAYE staff.
•
By 2024 new TClarke vehicles will be Hybrid or Fully
Electric where possible.
Definitions:
1. Scope 1 emissions: Combustion
of fuel and operation of facilities.
2. Scope 2 emissions: Electricity
purchased from the national grid.
3. tCO2e: Tonnes carbon
dioxide equivalent.
Net Zero Carbon Roadmap to 2026
*2019 starting point
DECARBONISATION ACTIONS
2309
*
tonnes CO
2
e
0
Scope 2
Emissions
Scope 1
Emissions
Scope 2 Emissions
Scope 1 Emissions
Reduce
embodied
carbon
Electrification
of fleet
and plant
Reduce
energy
intensity
Increase
renewable
energy supply
Offset residual
emissions
to net zero
tonnes CO
2
e
www.tclarke.co.uk
TClarke
Annual Report and Financial Statements 2022
25
Strategic Report
26
Key Actions to Achieve Net Zero Emissions
continued
Reduce Energy Intensity
•
By 2024 TClarke will utilise their smart buildings
knowledge to understand its energy usage within all
aspects of the business and where possible, gather data
and review this to enable suitable suggestions to be made
on how energy intensity can be reduced.
•
By Dec 2023 TClarke will audit our buildings’ energy use
and implement energy saving measures. This shall be
reported in compliance with Phase 3 of the Energy Savings
Opportunity Scheme (ESOS).
Increase Renewable Energy Supply
•
By 2025 TClarke offices will be supplied by renewable
energy suppliers.
•
TClarke have offered all its employees the opportunity to
utilise Green living with“Renogy” through Tommy Treats
Employee Benefit Green Shop.
Offset Residual Emissions to Net Zero
•
By 2025 we will reduce our overall carbon footprint by
50% with Offsetting Opportunities such as Rain Forest
Protection and Tree Planting.
•
By 2024 London business travel will be via operators
who are 100% Carbon Neutral.
•
By 2025 any emissions from our business operations will be
offset through Gold Standard programmes.
Scope 3
•
By 2024 TClarke will have incorporated Scope 3 into this
action plan.
TClarke are part of the Construction Leadership Council’s
campaign to help drive carbon out of the industry focusing
our efforts and are a ‘Business Champion’ focusing on the
priorities below:
•
Fleet Management - Accelerating the shift of the
construction workforce to zero emission vehicles and onsite
plant. Our Stansted Manufacturing Facility is now trialling
fully electric vans and is installing 11 electric charging
points that are individually fob-operated and allow team
members to charge their vehicles while at work.
•
Modern Methods of Construction (MMC) - Maximising use
of MMC and improved onsite logistics, reducing waste and
transport to sites. TClarke’s Advanced Manufacturing
Facility in Stansted is one of the largest dedicated MMC
facilities in the UK, with the latest development and
investments at the facility improving the organisation’s
carbon footprint and digital capabilities. MCC is a core
function at TClarke. We employ a MMC approach to every
build which utilises offsite manufacture and lean
manufacturing. We will encourage our clients, partners
and suppliers to embrace low carbon solutions and
investigate value engineering and innovative solutions at
every opportunity.
Greenhouse Gas Emissions (CO
2
e)
Energy consumption was measured across the Group by
recording data on the combustion of fuel and the use of
electricity within our offices and premises, and we have
collated Scope 1 and Scope 2 emissions data for the year
ended 31st December 2022. Our total energy consumption
used to calculate our 2022 UK emissions was 781,827 kwh
(2021: 720,521 kwh).
Definitions:
1. Scope 1 emissions: Combustion of fuel and operation
of facilities.
2. Scope 2 emissions: Electricity purchased from the
national grid.
3. tCO
2
e: Tonnes carbon dioxide equivalent.
Data Collection
Our CO
2
e emissions have been calculated using UK
Government guidelines for conversion of fuels and electricity.
Data was collected across the group as follows:
Utility Data:
This was collected from energy suppliers in the
form of Half Hourly Data or Non-Half Hourly
(Monthly/Quarterly Tariffs) consumption summary reports.
Transport:
This was collected from reports provided by the
business fuel card providers.
Other Fuels:
These were collected from delivery invoices
during the financial year.
Carbon Conversion
To perform the carbon conversion, we utilised the
Government conversion factors for company reporting of
greenhouse gas emissions:
https://www.gov.uk/government/collections/government-
conversion-factors-for-company-reporting
Scope
3
Greenhouse Gas Emissions
2022
2021
Scope 1 emissions (tCO
2
e)
1,911
1,740
Scope 2 emissions (tCO
2
e)
151
152
Total Scope 1 & 2 emissions (tCO
2
e)
2,062
1,892
Revenue (£m)
426.0
327.1
Emissions / £m revenue (£1m) (tCO
2
e/£m)
4.8
5.8
We have built longstanding relationships with our supply
chain. Together we are always looking for innovative ways to
achieve quality for our clients and fulfil our responsible
business goals. When needed, we work with our supply chain
partners to help them succeed.
Our supply chain partners play a fundamental role in our
resilience and success
Working Together on Sourcing Supplies
Our strong supplier relationships have continued to help
us manage the reduced availability of certain materials. We
share our project delivery requirements early enough to allow
advanced planning, sufficient lead-in periods, and for
suppliers to build their capacity.
Our relationships are critical to ensure that we can maintain
the supply of key materials for our projects. Our supply chain
performance during 2022 has been exceptional in sourcing
materials in the face of global shortages. Our supply chain
enabled TClarke to deliver record revenues in 2022.
Procuring Locally, From Smaller Suppliers
Our nationwide network of offices use smaller, local suppliers
and subcontractors where they can.
Paying Promptly
We aim to pay our suppliers fairly and have worked hard
to reduce our average days to pay invoices, in line with the
Prompt Payment Code. Payment days are calculated in
accordance with statutory reporting on payment practices
and performance requirements. This reporting was based
on volume of invoices received. TClarke invoice volumes
are 90% material items, 10% subcontractors. Our standard
agreed material supplier terms are 60 days month end and
therefore, our payment days normally average 60 days.
Working Together to Improve Safety
All our subcontractors follow TClarke Health & Safety
practices including using the ‘You See, You Say!’ App. to
report potentially hazardous situations. All receive full site
inductions and regular tool box talks.
Being a Responsible Business
Working Together With Our Suppliers
58 days
Average supplier payment days
2021: 60 days
Improving The Environment
continued
The establishment
of long-term
relationship
with suppliers
Procuring
Locally
Sourcing and
Securing Supply
TClarke
Annual Report and Financial Statements 2022
27
Strategic Report
28
We want to leave a positive legacy by improving the built
environment and creating social and economic value for the
communities where we work.
Through our core activities of engineering services, we
deliver new, improved and more efficient housing,
workplaces, education facilities and hospitals. In addition,
we contribute to local communities by employing locally,
providing training and work opportunities and supporting
community projects and charities.
Delivering For Our Community
TClarke recognises that as a specialist engineering
business, we can play our role by rooting ourselves in local
communities and providing high-quality, long-term career
paths and opportunities for people.
TClarke is one of the lead partners for the Stanhope
Foundation to help London’s most vulnerable people. The
Stanhope Foundation is focused on increasing employability
among vulnerable and young people in London, so they can
find hope and pride through meaningful employment.
TClarke has always made significant efforts to offer the best
pathways into meaningful and high-quality employment
within the construction and engineering sectors. Whenever
we look to extend the opportunities we offer, we aim to
ensure that they are meaningful and well supported.
The Stanhope Foundation was set up to partner with charities
that have existing employment focused programmes in place.
These include helping people getting into work for the first time,
or after a prolonged break, or tackling work-related issues due
to ill health. Funds raised by The Foundation go directly
towards the employment focused areas of the Foundations
chosen charities which are: Maggie’s on their ‘Back to Work
Scheme’ for people living with cancer; The Prince’s Trust on
their ‘Skills Development and Employability’ programmes;
Construction Youth Trust on their ‘Transitions Coaching’
programme which supports students aged 16-18 who are
interested in exploring higher-level apprenticeship pathways
in the Built Environment; St Mungo’s on the charity’s ‘Recovery
College Initiative’ and also the support charities Mencap helping
people with learning disability find paid employment and the
Mayor’s Fund for London creating opportunities for young
Londoners from low socio-economic backgrounds.
TClarke and its people value the contribution we can make
through supporting charitable organisations and sponsored
events and employees are encouraged to become involved
in community projects and programmes. We are proud to
support a number of charities directly as well as indirectly
through supporting events organised by our clients. Two
examples are:
TClarke continued its sponsorship of Bingham RUFC mini and
junior players with this year being our fifth year of sponsorship.
The sponsorship provided has allowed the club to grow and
develop offering subsidised rates and kits which has gone a
long way to community engagement and was a big part of
the planning process for the new clubhouse that is about to
be built to continue the growth and allow a new offering to
children who are less physically able.
Being a Responsible Business
Enhancing Communities
1,
294
Local employees
2021: 1,236
210
Apprentices
Record number of 50 apprentices in
2022 intake
2021: 195
During July 2022 in the height of summer TClarke
Peterborough, whilst working with Wilmott Dixon at the
Luton and Dunstable Hospital A&E Refurbishment project,
provided labour, plant and materials to refurbish two NICU
temporary accommodation gardens. The houses are used to
provide temporary accommodation to the parents of children
who are in the Neo Natal Intensive Care Unit of Luton and
Dunstable Hospital. Chris Collins a Level 2 Apprentice from
TClarke Peterborough utilised previous landscaping
knowledge to lead the team of operatives provided by other
trades on site to refurbish the overgrown gardens to allow
them to be used by the parents whist their children are in
hospital. The refurbishment took 2 weeks overall.
Working With Schools and Colleges
We work closely with schools, colleges and universities to
encourage young people to consider careers in construction,
to help increase diversity and address potential skills
shortages in the industry. Our activities range from
mentoring, STEM (science, technology, engineering and
mathematics) activities and workshops to career talks, site
visits and work experience.
Decarbonising Communities
We offer an industry leading Apprenticeship scheme. We
currently have 210 apprentices representing 16% of our
workforce.
In addition, we employ local people through our
direct delivery model.
TClarke’s projects often enhance the local community for
example TClarke played a major role in the design and build
of the ground breaking Passivhaus Leisure Complex at St.
Sidwell’s Point in Exeter.
It is the world’s first multi-climate,
large sale Passivhaus Leisure Centre and achieves 70% more
energy efficiency when compared to a ‘standard’ design.
TClarke is passionate about leaving the right sort of social,
environmental, and economic legacy and creating whole life
value for the local and wider community in which we work.
Another example is the work undertaken with Hertfordshire
County Council to install their first carbon net zero school
project at Leavesden Primary School. TClarke removed the
gas boilers replacing them with nine air source heat pumps
with a combined output of 409KW to supply heating and hot
water. In addition, a hybrid thermal mixing ventilation system
was installed to maintain air quality.
CONSTRUCTION
YOUTH
TRUST
Prince’s Trust
Principal Risks
TClarke
Annual Report and Financial Statements 2022
29
Strategic Report
30
Audit Committee
Group Management Board
Quality Assurance Function
Risk Reviews
Strategy Planning
Delegated Authorities
Divisional Reporting
The Group’s risk profile continues to be supported by a strong balance sheet and secured workload, and a continued
focus on contract selectivity.
Our Approach
Risk is inherent in our business and cannot be eliminated. Our risk governance model ensures that our principal risks and
the controls implemented throughout the Group are under regular review at all levels.
Risk Governance
Group Board
The Board is responsible for setting the Group’s risk appetite and for ongoing risk management, including assessing
the principal risks that threaten our strategy and performance. The principal risks faced by the Group and the mitigating
actions were formally received by the Audit Committee and Board in June 2022 and February 2023.
The audit committee assists the Board in monitoring risk management and internal control, and formally reviews the
Group and divisional risk registers on behalf of the Board.
The board ensures that inherent and emerging risks across the Group are identified and managed appropriately.
The Quality Assurance Team reviews the divisional risk registers to check that they have been reviewed, maintained, and
updated. The Group Finance Director draws from the divisional risk registers when compiling the Group risk register.
Twice a year each
business unit carries out
a detailed risk review,
recording significant
matters in its risk register.
Each risk is evaluated,
both before and after
mitigation, as to its
likelihood of occurrence
and severity of impact
on strategy. This is then
reviewed by the Group
Finance Director
conferring with the Group
Management Board.
Risk management is part
of our business planning
process. Each year
objectives and strategies
are set that align with the
risk appetite defined by
the Board.
The Group has produced
a schedule of delegated
authorities that assigns
approval of material
decisions to appropriate
levels of management.
Such decisions include
project selection,
tender pricing, and capital
requirements. Certain
matters are reserved for
Board approval.
The divisional risk
registers record the
activities needed to
manage each risk, with
mitigating activities
embedded in day-to-day
operations for which
every employee has
some responsibility.
Rigorous reporting
procedures are in place
to monitor significant risks
throughout the divisions
and ensure they are
communicated to the
Group’s board reporting
and delegated
authorities process.
Health & Safety (H&S)
H&S will always feature
significantly in the risk profile
of a construction business.
Accidents could result in legal
action, fines, costs and
insurance claims as well as
project delays and damage to
reputation. Poor H&S
performance could also affect
our ability to secure future
work and achieve targets.
Changes in the Economy
There could be fewer or less
profitable opportunities in our
chosen markets. Allocating
resources and capital to
declining markets or less
attractive opportunities would
reduce our profitability and
cash generation.
Insolvency of Key Client,
Subcontractor or Supplier
An insolvency of a key client
could impact cash flow and
profitability. An insolvency of a
subcontractor or supplier could
disrupt projects, cause delay
and incur costs of finding a
replacement.
Inadequate Funding and
Cash Flow Management
A lack of liquidity could impact
our ability to continue to trade
or restrict our ability to achieve
market growth or invest in
regeneration schemes.
1. The Group Health & Safety Director monitors
and responds to legal and regulatory
developments.
2. Industry leading health and safety policies and
procedures are maintained.
3. All employees receive regular training and updates
to ensure they are aware of their responsibilities.
4. Our teams adapted well to new site operating
procedures introduced as a result of the
pandemic. These procedures remain in place
across the whole business, and should enable
us to navigate further waves of the pandemic in
a productive and safe manner. We are very
focused on reducing our days lost as a result of
accidents (lost time incident rate LTIR).
5. Continued focus on ‘You See You Say’.
1. We balance our business by strategic
management of our order book with a blend
of existing markets of Infrastructure, Residential
and Hotels, Engineering Services, renewing FM
contracts and new markets such as Technologies.
2. The Group monitors its order book to ensure an
appropriate balance of work between London
and the regions across the various sectors in
which it operates.
1. We work for a number of large well funded clients.
2. We have a rigorous due diligence regime both
for existing and new clients.
3. Working with preferred suppliers where possible,
which aids visibility of both financial and workload
commitments.
4. Regular monitoring of work in progress
(uninvoiced income) debts and retentions.
5. Ability to substitute supply chain in the event
of insolvency.
1. The Group has a Revolving Credit Facility of
£25m committed to 31st August 2026 and an
overdraft facility of £5m.
2. Daily monitoring of cash levels and regular
forecasting of future cash balances and facility
headroom.
3. Regular stress-testing of long-term cash forecasts.
4. Funding of significant projects signed off by
Group Finance.
No Change
Greater use of Modern
methods of construction and
prefabrication have reduced
number of hours worked
on site.
Our LTIR is 0.32.
Elevated
Currently there is a very
challenging macro economic
environment arising from the
combination of the impact of the
Russia/Ukraine war; shutdowns
particularly in China and the
ongoing impact of Brexit. The
result has been historically high
material price inflation and
severe supply issues of certain
items of kit. In addition funding
costs have risen significantly of
certain items of kit. There is a
cost of living crisis whose impact
on wage inflation is still to be
determined.
Elevated
Repayment of government
backed Covid Loans by our
supply chains to their lenders
and general tightening of credit
result in increased risk of
insolvency, particularly in the
supply chain.
No Change
At 31st December 2022 The
Group had £22.5m of cash and
£15m of unused facilities. Our
balance sheet continues to
provide assurance for our
employees, clients, supply chain
and counterparties in an
increasingly uncertain market.
Risk and potential impact
Update on Risk Status
Mitigation and Action
TClarke
Annual Report and Financial Statements 2022
31
Strategic Report
32
Attracting and Retaining
Talented People
Attracting and retaining
appropriately qualified staff
to deliver our ambitious
growth plan.
Contract Selection
In a market where competition
is high a Region might accept
a contract with a main
contractor that is poor in
managing projects. The impact
to us is the risk of increasing
our costs and causing delays.
Research and Development
(Innovation)
A failure to produce or
embrace new products and
techniques could diminish our
delivery to clients and reduce
our competitive advantage.
It could also make us less
attractive to existing
or
prospective employees.
Mispricing a Contract
If a contract is under priced this
could lead to contract losses and
an overall reduction in gross
margin. If it is over priced the
Group will not secure sufficient
tenders to secure the order book
and grow the business. Mispricing
contracts may also damage the
relationship with the client.
Cyber Security
Investment in IT is necessary
to meet the future needs of the
business in terms of expected
growth, security and innovation,
and enables
its long-term
success. It is also essential in
order to avoid reputational and
operational impacts and loss
of data that could result in
significant fines and/or
prosecution.
Project Delivery
Failure to meet client
expectations could incur costs
that erode profit margins, lead
to the withholding of cash
payments and impact working
capital. It may also result in
reduction of repeat business
and client referrals.
Climate Change and
Sustainability
The impact of increased costs
arising from a zero carbon
economy. The loss of key
clients through not addressing
carbon emissions adequately.
Contract Variations and
Disputes
Changes to contracts and
contract disputes could lead
to costs being incurred that
are not recovered, loss of
profitability and delayed
receipt of cash.
Material Availability & Inflation
The majority of TClarke
contracts are tendered at a
fixed price lump sum. Material
inflation during the contract
period will increase costs and
impact profitability.
1. The Group remains committed to providing
apprenticeships, career paths and ongoing
training and development for all employees.
2. Remuneration packages for all staff are linked
to performance and monitored to ensure they
remain competitive.
1. Clear selectivity, strategy and business plan to
target optimal markets, sectors, clients and
projects which have proven to have delivered
favourable outcomes.
2. Weekly calls with all our business leaders are held
to discuss new opportunities and customers.
Our employees enjoy working on high-profile,
innovative projects that provide them with the
opportunity to enhance their knowledge and
experience. Business and IT come together to
promote new innovations across the business.
1. A well-established bidding process with
experienced estimating teams.
2. Our Estimating Teams are office based and
continue to take off physical drawing
measurements rather than using standard
measurement rates.
3. All tenders have director/sign off.
A dedicated team focused on providing a stable
and resilient IT environment, and continued
investment in core infrastructure and applications.
The Group maintains robust cyber security policies
to guard against third party access and malicious
attacks. The Group’s core systems are outsourced to
a third party with robust processes and procedures.
1. Contracts of significant size or risk are regularly
reviewed by Regional Managing Directors and
the Executive Board.
2. Regular performance reviews of all key suppliers
and subcontractors.
3. Ongoing assessment and management of
operational risk throughout project lifecycle.
4. Train and maintain industry-leading teams of
directly employed engineers, surveyors,
supervisors and skilled tradespeople.
5. Profit and cash flow are monitored throughout
the project lifecycle with regular review at
contract and business unit level.
1. We have a Climate and Sustainability Committee
led by the Group Managing Director to oversee
our carbon reduction journey to get to net zero.
2. The Board considers climate related issues when
reviewing and guiding-strategy, major plans of
action, risk management policies, annual budgets,
and business plans as well as setting the
organisations performance objectives.
1. Review contract terms at tender stage and
ensuring any variations are approved
by the appropriate level of management.
2. Well established systems of measuring and
reporting project progress and estimated out
turns that include contract variations and
impact on programme, cost and quality.
3. Use and development of electronic dashboards
for project management and change control,
and commercial metrics designed to highlight
areas of focus and provide early warnings.
Formal supplier framework agreements are
maintained to mitigate this risk, with prices locked
in through procurement at the beginning of a
contract wherever possible.
No Change
We have an industry leading
apprenticeship scheme with
on average 210 apprentices
accounting for 16% of our
workforce. Our Future Leaders
Programmes identifies strong
leadership and currently has
circa. 40 people.
No Change
The quality of our order book
in terms of projects and
repeat clients enables us to
remain highly selective when
bidding future work. Over
90% of contracts are with
repeat clients.
No Change
Continued development of
TClarke Smart Building
Solutions, implementation of
business dashboards and
development of apps for
Procurement, Time Sheets,
H&S and Expenses.
No Change
Almost all contracts are
profitable at a time when the
order book is at a record high.
No Change
In order to protect against
increasing levels of UK cyber
attack, we continue to invest in
established security controls and
external security partners who
actively advise on strategy.
Security awareness training was
provided to all our employees
during 2022. Cyber essentials
plus accreditation achieved.
No Change
TClarke’s processes and
controls continue to ensure
that projects are delivered in
accordance with their agreed
programs.
Elevated
The focus on the impacts of
climate change has increased
significantly. We have begun to
communicate our strategy for
addressing climate change and
the actions we are taking in order
to meet the expectations of our
stakeholders. We are a Build UK
Business Champion.
No Change
We continue to monitor the
agreement of variations on a
monthly basis. It is the Groups
policy to recognise variations
when it is highly probable that
they won’t reverse.
Elevated
We are experiencing significant
price inflation across much of
our material supply chain along
with shortages of certain key
components.
Risk and potential impact
Risk and potential impact
Update on Risk Status
Update on Risk Status
Mitigation and Action
Mitigation and Action
TClarke
Annual Report and Financial Statements 2022
33
Strategic Report
34
Task Force on Climate-Related Financial Disclosures (TCFD)
Opportunities
Commercial opportunities from
the transition towards net zero
will continue to shape our
portfolio and strategy.
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
Risks
We have a strategy of
reaching net carbon zero by
2026. There is a risk that the
cost/availability of an electric
charging network delay
achievement of this target.
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
Impacts
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
The decarbonisation of heat presents significant opportunities for our technology
businesses as electric heating solutions are sought for homes, offices and buildings.
We are currently installing heat pumps across the UK and are building solar farms.
We believe our smart building offering affords significant opportunities for our business
as our customers seek to reduce their carbon footprints. We are on the NHS Smart
building framework.
Our prefabrication facility at Stansted enables us to have far less labour onsite,
minimising journeys and reducing our carbon footprint which is attractive to our customers.
We are a Build UK business champion within the Construction Leadership Council’s
Co
2
nstruct Zero programme which is the industry’s response to the climate challenge.
Whilst decarbonisation creates significant market opportunities across all time frames
we continue to focus on our five market sectors in order that TClarke doesn’t become
dependent on the rate of take up of technologies such as air source heat pumps.
Our key actions in reducing our carbon footprint are described on pages 24 and 25.
One of the key actions involves decarbonisation of fleet. There are risks to the timing of
this due to:
1 Availability of electric vehicles
2. Charging network across the UK
3. Ranges of vehicles before a charge
4. Costs associated with moving to an electric fleet
Based upon our fleet renewal plan we will
move to an electric fleet by 2026. We also
plan to use fully renewable electricity by this date. In addition decarbonisation of the
economy may raise costs of other items across the cost base. In a low margin industry
any material cost increases may occur due to increases in transportation costs for
example. These will need to be able to be passed on to customers. There is a risk
that this may not be possible. The likely impact would be to extend the time frame for
TClarke becoming net carbon zero. Our plan is to offset any residual Type 1 and 2
emissions through a Gold Standard scheme in 2026.
Overall we believe the market opportunities available to TClarke significantly outweigh
potential cost risks. It is the Board’s expectation that costs risks will be mitigated through
market price changes and or lengthening of the decarbonisation timeframe.
Our net zero roadmap is on page 24 along with a detailed plan. The market
opportunities for TClarke in an economy transitioning to net zero are significant. 2022
Smart Building revenue was double 2021. In the short and medium term The Board
expect factors other than climate change to have a greater impact on supply chain.
These are detailed on pages 29 to 32.
Risk/opportunity type
and description
Our response
Our Strategy for Responding to
Climate Change
Governance
Climate Strategy
Overview of our climate-related risks and opportunities
The scale of ambition and speed of change required to meet
net zero emission targets, along with the changes in
temperature and weather patterns present both risks and
opportunities to our business. These risks and opportunities,
along with a summary of the work we are doing to address
them, are presented in the table below. Short-, medium- and
long-term timeframes are defined in our risk methodology as
one year or less, one to three years and three or more years
respectively, and this is reflected in the table below.
Direct and advise
Report and escalate
Working Groups
Responsible for:
•
Setting the
environmental strategy
and monitoring overall
performance against
targets
Board
Audit Committee
•
Identifying all
climate-related risks
and opportunities,
including and
developing appropriate
mitigation strategies
•
Establishing action plans
to deliver our
environmental targets,
tracking progress against
the targets and reporting
to the PLC Board/Audit
Committee and Group
Management Board
•
Embedding accountability
in each business area for
delivery of the targets
and monitoring progress
and actions
Chaired by the Group Managing Director this group is responsible for:
Responsible for:
•
Delivering the relevant
actions related to their
area to meet our
environmental targets
•
Day-to-day
management of
climate-related risks
•
Embedding the climate
change culture and
mindset within their
business area
•
Working groups are led
by senior business
leaders from across
TClarke supported by
colleagues within
their area
Responsible for
supporting the Board in
its responsibilities with
respect to climate
change, including:
•
Considering climate
change risks as part of
the bi-annual review
of principal and
emerging risks
•
Overseeing
compliance with, and
progress on, climate
change reporting
•
Reviewing key
climate-related risks
and opportunities, and
overseeing mitigation
strategies as part
of the bi-annual review
of principal and
Emerging risks
Climate Change Delivery Group
•
Considering climate
change as part of
stakeholder engagement
•
Consider climate change
issues when setting
strategy and approving
business plans.
•
The group meets
quarterly and comprises
senior business leaders
from across the group,
who also lead working
groups in their respective
business to deliver
actions required
Responsible for:
•
Reviewing and
monitoring climate-
related risks at least
bi-annually, as part of
the principal and
emerging risks reviews
and establishing
effective mitigation and
controls to manage risks
Group Management Board
•
Ensuring appropriate
action is being taken to
meet our environmental
targets, through review
of quarterly reporting
on climate change issues,
including proposed
metrics and KPIs
Improving the environment is one of our five core elements
of being a responsible business. In this section we provide
our comprehensive TCFD disclosure including details on
climate change scenarios and how they may impact our
business in the short, medium and long term.
The Board believe that TClarke complies fully with the TCFD
recommendations and recommended disclosures. By this
we mean the four TCFD recommendations and the 11
recommended disclosures set out in figure 4 of section C of
the report entitled ‘Recommendations of The Task Force on
Climate-related Financial Disclosures’ published in June 2017
by the TCFD. Our processes will continue to evolve and we
will incorporate any information arising from our ongoing
engagement with our supply chain, including identification
of, and response to, any new emerging risks. We will also
continue to develop our reporting of our metrics and targets
as our scope 3 mapping project is completed and more
information becomes available.
TClarke
Annual Report and Financial Statements 2022
35
Strategic Report
36
Climate Strategy
continued
Risk Management
Metrics
Transition Risk Analysis
To further understand the risk that climate change could
have on our business, we undertook a high-level scenario
analysis, where we considered scenarios out to 2030. We used
two scenarios:
Our Climate Change Scenario Analysis
The first assumed that the global response to the threat
of climate change is enough to limit global average
temperature increases to no more than 1.5ºC above
pre-industrial levels (as set out in the Paris Agreement)
by 2100 (the 1.5ºC scenario). In this scenario, rapid
changes are made to progress decarbonisation goals:
coordinated policy, regulation and customer behaviour
favours bans on polluting technologies, and support for
low-carbon solutions.
The second scenario assumed that the 1.5ºC target is
missed by some margin, comparable to a 4ºC global
average temperature increase (the 4ºC scenario). In this
scenario, changes are less rapid and less comprehensive,
and emissions remain high, so that the physical
ramifications of climate change are more apparent
by 2030.
Under this scenario significant market opportunities are
available to TClarke as building owners seek to
substantially reduce their carbon footprint. These
opportunities are forecast to significantly outweigh the
cost risks faced by the Group.
The main impacts of this scenario were increased
weather events of escalating severity and frequency,
which could increase disruption to our sites and to our
customers, market opportunities are likely to be less
and risks significantly higher than 1.5ºC scenario due to
extreme weather events. The Directors have considered
these risks and feel that the industry will adapt working
practices and do not consider temperature risks to be a
significant risk to the Group’s viability.
Scenario
Impact
The process for identifying, assessing and managing
climate related risks are identified in the Governance
section above.
Our key climate risk is detailed in the Key Risk
Assessment on page 32.
The Board has overall responsibility for determining the
Group’s risk appetite ensuring that risk is managed
appropriately and that there is an effective risk
management framework in place. Climate risks are fully
integrated into the Group’s risk identification and
framework described on page 29.
Metrics are described on pages 23 to 25.
Making informed decisions for the
benefit of all our stakeholders
The objective of the Board and Group Management Team,
when taking strategic, financial and operational decisions, is
to promote the success of the Company for the benefit of all
stakeholders, acting in good faith, in line with their duties
under section 172 of the Companies Act 2006. In promoting
the success of the Company each Director must have regard,
amongst other matters to:
•
The interests of the Company’s employees;
•
The need to foster the Company’s business relationships
with suppliers, customers and others;
•
The impact of the Company’s operations on the
community and the environment;
•
The reputation for high standards of business conduct;
•
The need to act fairly between members of
the Company.
and the likely consequences of any decision in the long term.
Through the Board and its Committees, Directors have taken
action to promote and support these objectives across the
Group, details of which can be found throughout this Annual
Report and set out here:
•
The Company’s purpose, values and behaviours on
pages 3 and 4.
•
A description of key stakeholder groups and how the
Company has engaged with these stakeholders is on
the page following and forms the Directors’ statement
required under section 414CZA of the Companies
Act 2006.
•
The range of activities undertaken across the Group
relating to sustainability matters on pages 23 to 25.
•
The proactive and pragmatic approach of the Group
toward risk on pages 29 to 32.
•
Details of the Company’s governance processes and
practice on pages 40 to 44.
The Board of Directors have complied with the requirements
of section 172.
As a Board we have always taken decisions for the long term,
and collectively and individually our aim is always to uphold the
highest standards of conduct. Similarly, we understand that our
business can only grow and prosper over the long term if we
understand and respect the views and needs of our customers,
colleagues and the communities in which we operate, as well as
our suppliers, the environment and the shareholders to whom
we are accountable.
Iain McCusker
Chairman
20th March 2023
Section 172 Statement
TClarke
Annual Report and Financial Statements 2022
37
Strategic Report
38
Stakeholder
Group
Why we engage
How we engage
What matters to
this Group
•
Continued access to capital is
important for the long term success
of our business
•
We work to ensure that our
shareholders and their
representatives have a good
understanding of business
•
The Group’s long-term success is
predicated on the commitment of
our workforce to the values
embodied in the TClarke Way
•
We engage with our workforce to
ensure that we are fostering an
environment that they are happy to
work in and that best supports their
well-being
•
Our pensioners continue to feel
part of TClarke through retirement
so they feel part of the business that
they helped to develop and grow.
•
Our purpose is to design, install,
integrate and maintain the full range
of technology-enabled mechanical
and electrical services and the digital
infrastructure to create a 21st
century building
•
We aim to build long-term lasting
relationships with principal contractors
and clients and remain the contractor
of choice for landmark projects and
developments.
•
Our supply chain partners are
fundamental to the quality of our
product and services and to ensuring
we maintain the high standard of
work we set ourselves
•
Suppliers and subcontractors must
demonstrate that they operate in
accordance with recognised
standards that uphold human rights
and safety, prohibit modern slavery
and promote sustainable sourcing
•
We aspire to be responsible
members of our community as it
reflects our principle to do the
right thing
•
We are committed to minimising
the impact of our business
operations on the environment
•
The community and environment
is also important to our workforce,
customers and shareholders
•
Long term value creation
•
Growth opportunity
•
Financial stability
•
Culture
•
Transparency
•
Dividend policy
•
Health and safety
•
Fair employment
•
Fair pay and benefits
•
Diversity and inclusion
•
Training, development and
career opportunities
•
Ethics and sustainability
•
Safety of pension
•
Financial stability
•
Engagement
•
Total reliability in project
delivery
•
Quality of product
•
Health and safety
•
Responsible use of
personal data
•
Environment
•
Ethics and sustainability
•
Fair trading and payment
terms
•
Anti-bribery
•
Ethics and slavery
•
Environment and
sustainable sourcing
•
Charitable donations
and sponsorships
•
Volunteering
•
Energy usage
•
Recycling
•
Waste management
•
Corporate website, social media
•
Results announcements and
presentations, AGM
•
Shareholder and analyst meetings
with management
•
Private investor events
•
Designated Non-Executive Director
has Board responsibility for
engagement with the workforce
•
The TOMMY employee hub
•
TClarke Career Pathway and
Training Academy
•
TClarke Future Leaders Programme
•
Whistleblowing Policy
•
Business-wide health, wellbeing and
mindfulness campaigns
•
AGM
•
Pensioner newsletter
•
Corporate Website
•
TClarke has deep, long-term
partnerships with both major
principal contractors and with
property/facility owners and
developers
•
We offer a full, comprehensive
service during the lifecycle of a
project through design,
procurement, installation and
maintenance
•
TClarke employ a formal supply
chain management selection process
to build our approved and preferred
supply chain list.
•
Key supply chain partners are
invited to TClarke’s Health, Safety
and Environmental meetings to
understand Health & Safety best
practice
•
Regular performance reviews of
all key supply chain partners for total
reliability in project delivery
•
TClarke is proactive in its corporate
responsibility to the local and wider
community in which we work
•
We encourage employee
involvement in community projects
and programmes
Shareholders
and potential
shareholders
Our employees
Our pensioners
Clients
Suppliers and
subcontractors
Community and
environment
The Directors have assessed the Group’s prospects and viability,
taking into account its current position and the principal risks
outlined on pages 29 to 32.
The UK construction market in which the Group operates is
subject to considerable peaks and troughs. The Directors
consider a three year period as appropriate for assessing the
ongoing viability of the Group as most of the projects
undertaken by the Group are completed within a three year
time horizon from initial tender and the Group uses a three year
time frame for the preparation of its strategic business plans
and financial projection models.
The Group’s prospects are assessed primarily through its
strategic business planning process and the ongoing
monitoring of the principal risks and mitigating actions. The
process is led by the Chief Executive and involves senior
management throughout the Group.
All business units formally update their strategic plans on an
annual basis. This process, which takes place in the fourth
quarter each year, includes:
•
an assessment of the business unit’s current position taking
into account its operating environment and the threats and
opportunities it faces;
•
the business unit’s achievements over the previous twelve
months measured against its strategic objectives;
•
a detailed review of the risks faced by the business units and
the strength of the controls and mitigating actions in place;
•
the agreement of financial and strategic targets covering the
following three years; and
•
the preparation of detailed budgets and projections for the
next three years in support of the strategic business plan.
The business unit strategic plans are formally reviewed and
challenged by the Executive Directors prior to presentation to
the full Board.
Based on the financial models submitted by the business units,
the Group’s financial projections are updated and tested using a
range of sensitivities to identify potential threats to the financial
viability of the Group over the three year projection period.
These sensitivities included reductions of 25% and 50% to
forecast profitability. The key assumptions underlying the
financial model include the renewal and continuing availability
on similar terms of the Group’s existing banking facilities, which
comprise a £5m overdraft facility repayable on demand and a
committed £25m revolving credit facility expiring on 31 August
2026, and the ability to flex the cost base sufficiently to address
any significant change in workload. See note 2 on page 79 for
further discussion of the key assumptions underpinning the
going concern basis of preparation and the financial viability of
the Group.
The three year projections demonstrate that taking into account
reasonable sensitivities around revenue and profitability, the
Group will be able to operate within its existing facilities over the
three year projection period, and the Directors are confident that
the Group’s business model allows sufficient flexibility to meet any
significant change in demand for its services. The Group ended
2022 with a forward order book of £555m, as we move towards
our £500m per annum revenue target. The Group is in a strong
position both operationally and financially and is well placed
to respond quickly to any changes in market conditions whilst
remaining profitable.
The Group takes a conservative approach to strategic risk. The
business case for all significant investments and entry into or exit
from specific markets is reviewed and signed off by the Board.
Risk registers are maintained and reviewed regularly throughout
the year to identify potential threats to the Group’s business, to
assess the financial, operational and strategic impact of these
threats, and to determine appropriate mitigating actions.
Based on their assessment of prospects and viability above,
the Directors confirm that they have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the three year period ending
31st December 2025.
Strategic Report Approval
The Board confirms that, to the best of its knowledge, the
Strategic report on pages 1 to 38 includes a fair review of the
development and performance of the business and the position
of the Company, and the undertakings included on the
consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
Approved by the Directors and signed on behalf of the Board
on
20th March 2023
Mark Lawrence
Group Chief Executive Officer
20th March 2023
Long-term Viability Statement
Section 172 Statement
continued
Executive Directors
Mark Lawrence
Group Chief Executive Officer
Appointed to the Board on 2nd May 2003.
Mark has been with the Company for 37 years and started at
TClarke as an electrical apprentice in 1985. As Group Chief
Executive Officer since January 2010, Mark has led strategic
change across the Group.
Mike Crowder
Group Managing Director
Appointed to the Board on 1st January 2007.
Mike has over 37 years of significant experience in the
Construction industry and started at TClarke as an
apprentice. Mike has overall responsibility for Operations
and is responsible for Group Health and Safety.
Trevor Mitchell
Group Finance Director and Company Secretary
Appointed to the Board on 1st February 2018.
Trevor is a Chartered Accountant with extensive experience
across many sectors. Prior to his appointment, Trevor had
been working with TClarke since October 2016, assisting with
simplifying the structure and improving the Group’s financial
controls and procedures.
Group Management Board
The Group Management Board comprises the Executive
Directors and:
Chris Harris
Rob Faro
Garry Julyan
1
UK North Director
UK South Director
London Director
Kevin Mullen
2
Anton Malia
UK North Director
UK South Director
Andy Griffiths
2
Systems Director
1 Statutory director of TClarke Contracting Limited
2 Statutory director of TClarke Services Limited and TClarke Contracting Limited
Associate Members of the Group Management Board
Sally Higgins
Josh Bourne
Group Procurement
Group Health &
Director
Safety Director
Non-Executive Directors
Iain McCusker
Chairman
Chair of the Nomination Committee
Appointed to the Board on 1st January 2009 and appointed
Chairman on 1st October 2015. Iain is a Chartered Accountant
and has significant international financial and management
experience, Iain is a former member of the Qualifications
Board of the Institute of Chartered Accountants of Scotland.
He is Senior Visiting Fellow, City, University of London, and
Chairman of NPA Insurance.
Peter Maskell
Senior Independent Director
Chair of the Remuneration Committee
Non-Executive Director for Employee Engagement
Appointed to the Board on 1st January 2018. Peter worked at
Philips Electronics for 37 years after studying Electrical and
Electronic Engineering at Kingston University. For the last 20
years, he held a number of senior management positions in
both the UK and Europe.
Jonathan Hook
Independent Director
Chair of the Audit Committee – (from 22nd June 2022)
Appointed to the Board on 1st July 2021. Jonathan was
formerly a partner at PwC where he was the global leader of the
Engineering & Construction practice.
Aysegul Sabanci
Independent Director – (appointed 1st May 2022)
Appointed to the Board on 1st May 2022. Aysegul has
considerable international experience at executive level in the
Construction and Services sectors.
Committees
Audit Committee
Nomination Committee
Remuneration Committee
Chair
Board of Directors
Governance
TClarke
Annual Report and Financial Statements 2022
39
40
Chairman’s Introduction
The Board is committed to high standards of corporate
governance and complies with the principles contained in
the UK Corporate Governance Code 2018 (‘the Code’), which
took effect for accounting periods starting on or after 1st
January 2019. The Code sets out principles to which the
Listing Rules require all listed companies to adhere,
supported by more detailed provisions. This governance
section describes the principal activities of the Board and its
committees and how the Group has applied the principles
contained within the Code. Our statement of compliance
with section 172 of the Companies Act 2006 is set out on
pages 36 to 37.
The Board recognises that a high standard of corporate
governance is essential to support the growth of our business
and to protect and enhance shareholder value. The Directors,
whose names and details are set out on page 39, are
collectively responsible to shareholders for the long-term
success of the Group. The Board does this by supporting
entrepreneurial leadership from the Group’s executive team
whilst ensuring effective controls are established that enable
the proper assessment and management of risk. The Board
is ultimately responsible for the Group’s strategic aims and
long-term prosperity; it seeks to achieve this by ensuring
that the right financial resources and human talent are in
place to deliver the Group’s strategy and objectives. Our
culture is fundamental to the successful delivery of our
strategic objectives.
The day-to-day management and leadership of the Group is
delivered by the Group Management Board, which
comprises the Executive Directors and other key members
of the Group’s senior management team, including
representatives of the regional businesses, details of whom
are provided on page 39.
During 2022, we undertook a formal, internal evaluation
of the Board’s and its committees’ effectiveness. The results
of this exercise are summarised on page 48. I am pleased
to report that I am satisfied that the Board and each of the
Directors are operating effectively. I am happy to recommend
that all Directors standing for election should be re-elected at
the 2023 AGM.
As Chairman, I will continue to evolve our governance
framework, being mindful of best practice and the latest
developments surrounding corporate governance.
Iain McCusker
Chairman
20th March 2023
Corporate Governance Report
Governance
TClarke
Annual Report and Financial Statements 2022
41
42
Statement of Compliance
Throughout the year ended 31st December 2022, the Board
considers that it has complied with the principles and
provisions of the UK Corporate Governance Code 2018
(‘the Code’), other than the tenure of the Chairman, which
is explained below. The Code is issued by the Financial
Reporting Council (FRC) and is publicly available on the FRC’s
website, www.frc.org.uk.
Structure of the Board
The Company is managed by the Board of Directors, which
currently consists of four Non-Executive Directors (including
the Chairman) and three Executive Directors. The
Non-Executive Directors who served during the year ended
31st December 2022 were deemed to be independent,
notwithstanding their shareholdings held during the year,
which are not considered significant by the Board. At the time
of his appointment as Chairman, Iain McCusker was
considered to be independent, but is now not considered to
be independent by virtue of his appointment as Chairman.
All Directors are subject to annual re-election unless a
Director has been newly appointed during the year, when
they will seek election. At the forthcoming AGM on 10th May
2023, all Directors will be retiring and all are offering
themselves for re-election.
All Executive Directors have signed service agreements which
take into account best practice, are fully aligned with the
remuneration policy and contain a notice period of 12
months from either party. All Non-Executive Directors have
letters of appointment specifying their roles, responsibilities
and required time commitment to the Board.
The Board maintains procedures whereby potential conflicts
of interests are reviewed regularly. The Board has considered
the other significant commitments undertaken by the
Directors, details of which are provided in their biographies
on page 39, and considers that the Chairman and each of the
Directors are able to devote sufficient time to fulfil the duties
required of them under the terms of their service agreements
or letters of appointment.
Iain McCusker was appointed Chairman in October 2015,
although he has been a Non-Executive Director since 2009.
The Board notes that the Code states that the Chair should
not remain in the post beyond nine years from the date of
first appointment to the Board, but provides that this period
may be extended to facilitate the development of a diverse
Board, particularly in those cases where the Chair was an
existing Non-Executive Director on appointment. The Board
considers that Iain McCusker’s experience and leadership
throughout the unprecedented macro economic challenges
in recent years has been invaluable and therefore, Iain
McCusker will stand for re-election at the 2023 AGM and his
position as Chairman will be kept under review.
The Chairman is responsible for the leadership and
management of the Board and its governance. By promoting
a culture of openness and debate, he facilitates the effective
contribution of all Directors and helps maintain constructive
relations between Executive and Non-Executive Directors.
The Chief Executive Officer is responsible for the executive
leadership and day-to-day management of the Company,
to ensure the delivery of the strategy agreed by the Board.
Through his leadership of the Group Management Board, he
demonstrates his commitment to health and safety,
operational and financial performance.
The Senior Independent Director acts as a sounding board
for the Chairman and serves as an intermediary for the other
Directors, where necessary. The Senior Independent
Director is also an additional point of contact for shareholders
if they have reason for concern and where contact through
the normal channel of the Chairman, Chief Executive or other
Executive Directors has failed to resolve or for which such
contact is inappropriate.
Independent of management, the Non-Executive
Directors bring diverse skills and experience vital to
constructive challenge and debate. The Non-Executive
Directors provide the membership of the Audit,
Remuneration and Nomination Committees.
Board Diversity
The Board recognises the benefits of Board diversity,
including, but not limited to, the appropriate mix of skills,
experience, gender, age, ethnicity, background and
personality. The Board endorses a balance of diversity and
experience to promote Board effectiveness, whilst taking into
account the appropriate financial, managerial and industry
skills which are relevant to the calibre of a Director
of TClarke.
The Board stipulates that new appointments to the Board will
be based on merit and suitability to the role, whilst also giving
due consideration to diversity. Non-Executive Directors should
have the ability to fulfil the requisite time commitment.
Statement of Compliance
Board Meetings
The composition of the Board is designed to ensure effective
management, control and direction of the Group.
The Board is collectively responsible for the effective oversight
of the Company, its businesses and its culture. It also
determines the strategic direction and governance structure
of the Company to enable it to achieve long-term success and
deliver sustainable shareholder value, whilst taking account of
the interests of all stakeholders. The Board takes the lead in
safeguarding the reputation of the Company and ensuring that
the Company maintains a sound system of internal control.
The Board’s full responsibilities are set out in the schedule of
matters reserved for the Board.
Matters Reserved for the Board Include:
•
Consideration and approval of the Group’s strategy,
budgets, structure and financing requirements.
•
Consideration and approval of the Group’s annual and
half-yearly reports and financial statements.
•
Consideration and approval of interim and final dividends.
•
Consideration and approval of the Group’s trading
statements.
•
Ensuring the maintenance of a sound system of internal
controls and risk management.
•
Conducting a robust assessment of the principal risks
facing the Company and setting risk appetite.
•
Changes to the structure, size and composition of
the Board as recommended by the Nomination
Committee.
•
Establishing committees of the Board and determining
their terms of reference.
The Board meets regularly to consider and decide on matters
specifically reserved for its attention. Board papers are
circulated sufficiently in advance of Board meetings to
enable time for review. The attendance of individual Directors
at formal monthly Board and sub-committee meetings is set
out in the table below.
At each Board meeting the Board reviews management
accounts in order to provide effective monitoring of financial
performance. At the same time, the Board considers other
significant strategic risk management, operational and
compliance issues to ensure that the Group’s assets are
safeguarded and financial information and accounting records
can be relied upon. The Board monitors monthly progress on
contracts formally. Furthermore, the Company’s risk appetite is
discussed and considered when making key decisions.
Board Committees
The Board has delegated certain responsibilities to the Audit
Committee, Remuneration Committee and Nomination
Committee, which report directly to the Board. The terms of
reference of each committee are available in the Investor
section of the Company’s website.
The Board also established an Administration Committee at
its Board meeting in January 2019 to which it delegated items
of a routine and administrative nature. The Committee meets
as and when required and is constituted by any two or more
Directors. It met 15 times during 2022 to deal with the exercise
of options under the TClarke Savings Related Share Option
Scheme and executing the new bank facilities.
Number of Meetings Attended by the Directors
Board
(Maximum 9)
Audit
(Maximum 6)
Nomination
(Maximum 2)
Remuneration
(Maximum 6)
Iain McCusker
9
–
2
6
Peter Maskell
9
6
2
6
Jonathan Hook
9
6
2
6
Louise Dier (retired 30th April 2022)
3
2
1
4
Aysegul Sabanci (appointed 1st May 2022)
6
4
1
2
Mark Lawrence
9
–
–
–
Trevor Mitchell
9
–
–
–
Mike Crowder
9
–
–
–
All Directors attended their maximum possible number of meetings.
Governance
TClarke
Annual Report and Financial Statements 2022
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44
Group Management Board
The Group Management Board comprises the Executive
Directors and other key members of the Group’s senior
management team, including representatives of the regional
businesses. The role of the Group Management Board is to
co-ordinate and direct the efforts of the three regional
businesses and the individual offices below them to manage
risk and deliver value for the Group as a whole across our
target sectors in line with the Group’s strategy. The Group
Management Board considers Group initiatives on matters
such as health and safety, procurement, employee
engagement, and the development of new services and areas
of expertise. The Group Management Board also reviews the
operational effectiveness of the business units in matters such
as tender submission and success rates, cash generation and
maintenance, and health and safety performance. The Group
Management Board is responsible for the implementation of
the Group’s ESG strategy.
Performance Evaluation
The effectiveness of the contribution and level of
commitment of each Director to fulfil the role of a Director of
the Company is the subject of continuing evaluation, having
regard to the regularity with which the Board meets, the
limited size of the Board and the reporting structures which
are in place within the Company to monitor performance.
The Chairman primarily, but acting in conjunction with the
Chief Executive Officer, undertakes the task of annual
evaluation of performance and commitment of individual
Board members by conducting individual interviews. The
evaluation of the Board as a whole, and its committees, is
also undertaken on an annual basis. New Directors receive a
formal induction, overseen by the Chairman and Chief
Executive Officer in conjunction with the Company Secretary.
Training is available for all Directors as and when necessary.
The Senior Independent Director, in conjunction with the
other independent Non-Executive Directors, undertakes the
annual appraisal of the Chairman.
During the year, the Board conducted its annual internal
appraisal of its own performance, led by the Chairman in
conjunction with the Nomination Committee, covering the
composition, procedures and effectiveness of the Board and
its committees. The Board members are of the opinion that
the Board and its committees operate effectively.
Performance is regularly monitored to ensure ongoing
obligations are adequately met and the Board regularly
considers methods for continuous improvements.
Company Secretary
All Directors have access to the advice and services of the
Company Secretary, who is responsible for advising the
Board on all governance matters and ensures that the Board
receives appropriate and timely information, that Board
procedures are followed and that statutory and regulatory
requirements are met.
Relationship with Shareholders
The Company recognises the importance of dialogue with
both institutional and private shareholders in order to
understand their views on governance and performance
against strategy.
Presentations are made to brokers, analysts and institutional
investors at the time of the announcement of the year-end
and half-year results, and there are regular meetings and
presentations with analysts and investors throughout the year.
The aim of the meetings is to explain the strategy and
performance of the Group and to establish and maintain a
dialogue so that the investor community can communicate
its views to the executive management. All such meetings
are reported at Board meetings. In addition, the Chairman is
available to meet with major shareholders periodically to
discuss Board governance and strategy.
The Board has always invited communication from
shareholders and encouraged their participation at the
Annual General Meeting. All Board members present at the
Annual General Meeting are available to answer questions
from shareholders, including the Chairs of the Audit,
Remuneration and Nomination Committees, during the
meeting and remain available after the meeting to talk
informally with shareholders. Notice of the Annual General
Meeting is given in accordance with best practice and the
business of the meeting is conducted with separate
resolutions, each being voted on initially by a show of hands,
with the results of the proxy voting being provided at the
meeting. Further shareholder information is available in the
Investor section of the Company’s website.
Internal Control
The Board is responsible for the Group’s system of internal
control and for reviewing its effectiveness. Such a system is
designed to manage, rather than eliminate, the risk of failure
to achieve business objectives, and can only provide
reasonable and not absolute assurance against material
misstatement or loss.
Risk management and internal control procedures are
delegated to Executive Directors and Senior Management
in the Group, operating within a clearly defined divisional
structure. Each division assesses the level of authorisation
appropriate to its decision-making process after the
evaluation of potential benefits and risks. A three-year
strategic plan is prepared for each division and updated
annually, including the identification and consideration of
significant risks to the division’s strategic objectives. Progress
against the strategy and the management of the risks
identified is formally reviewed on a regular basis by the
Group Management Board.
The Audit Committee reviews the Company’s risk register
and monitors risk management procedures as a regular
agenda item and receives reports thereon from Group
management. The Audit Committee Chairman provides a
report on its findings to the Board. The emphasis is on
obtaining the relevant degree of assurance and not merely
reporting by exception.
At its meeting on 22nd February 2023, the Board carried out
the annual internal controls and risk management assessment
Statement of Compliance
continued
by considering documentation from the Audit Committee.
In accordance with the Code, the Board confirms that, for the
year ended 31st December 2022, it has carried out a robust
assessment of the principal risks facing the Group, including
those that would threaten its business model, future
performance, solvency or liquidity. The principal risks
identified and the controls and mitigating actions in place are
described on pages 29 to 32.
Further details concerning the Audit Committee’s review of
internal controls and risk management processes are included
in the Audit Committee report on pages 45 to 47.
Historically, the internal audit function has been covered
through regular site visits conducted by Quality Assurance
and Group finance personnel and the role was expanded
in 2018 to include detailed reviews that the Committee felt
appropriate. The Audit Committee reviewed the need for a
separate internal audit function during 2022 and agreed that
the current process worked well and should continue.
Share Capital Structures
The statements within the Directors’ report on share capital
structures are incorporated by reference into this statement
of compliance.
Fair, Balanced and Understandable Assessment
In relation to compliance with the Code, the Board has given
consideration as to whether or not the Annual Report and
Financial Statements, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Company’s position, performance,
business model and strategy and concluded that this is the
case. A statement to this effect is included in the Directors’
Responsibilities Statement on page 68. The preparation of
this document is co-ordinated by the Finance team and the
Company Secretary with Group-wide input and support from
other areas of the business. Comprehensive reviews have
been undertaken at regular intervals throughout the process
by Senior Management and other contributing personnel
within the Group.
The Directors’ responsibilities for preparing the financial
statements and supporting assumptions that the Company is
a going concern are set out on page 65.
Long-term Viability Statement (‘LTVS’)
In relation to compliance with the Code, the Board has
assessed the prospects of the Group, taking into account the
Group’s current position and principal risks. The LTVS and
supporting assumptions are set out on page 38.
Trevor Mitchell
Company Secretary
20th March 2023
Governance
TClarke
Annual Report and Financial Statements 2022
45
46
Audit Committee Report
Dear Shareholder
As Chairman of the Audit Committee, I am pleased to
present the report of the Audit Committee for the year
ended 31st December 2022.
The Audit Committee continues to support the Board by
providing detailed scrutiny of the integrity and relevance
of the Group’s financial reporting, monitoring the
appropriateness of the Group’s internal control and risk
management systems and overseeing the external
audit process.
The Audit Committee has continued to follow a programme
of meetings which are timed to coincide with key events in
the financial calendar. As a Committee, we are committed
to discharging our responsibilities effectively and
constructively challenge the information we receive. Over
the past year, the regular reports the Audit Committee has
received from management and the external auditors have
been timely and well presented, which has enabled the
Committee to discharge its responsibilities effectively.
Where necessary, we request additional detailed information
so that we may better assess certain issues, and the risks
and opportunities presented.
PricewaterhouseCoopers LLP resigned as auditors of the
Group in June 2022. The Audit Committee had only recently
undertaken a competitive tender exercise and based upon
the results of that exercise recommended to the Board that
Mazars LLP be appointed to undertake the 2022 TClarke
audit. As a result, Mazars LLP were appointed auditor of the
Group on 22 June 2022.
I would also like to express my thanks to Louise Dier who
chaired this committee until her retirement from the Board
on 30 April 2022.
Further information concerning the activities of the
Audit Committee during the year are set out on the
following pages.
Jonathan Hook
Chair of the Audit Committee
20th March 2023
Matters Considered by the Audit Committee
The Audit Committee met on four occasions during the year
ended 31st December 2022. The principal matters discussed
at the meetings are set out below.
Principal Matters Considered
June 2022
•
Resignation of PricewaterhouseCoopers LLP.
•
Recommendation of appointment of Mazars LLP as
auditor of the Group.
July 2022
•
Review of the half year results.
•
Consideration of the internal audit work undertaken by
the Quality Assurance team.
•
Review of risk register and mitigating actions.
•
Mazars presentation of a high level audit plan.
September 2022
•
Governance and independence of the external auditor.
•
Consideration of the need for a separate internal audit
function.
•
Review of policy on non-audit services.
•
Management response to external auditor internal
control observations.
•
Consideration of the internal audit work undertaken by
the Quality Assurance team.
•
Accounting policy review.
November 2022
•
Audit plan presented by Mazars LLP.
•
Audit fee discussion and agreement.
•
Mazars engagement letter approved.
February 2023
•
Draft Annual Report and Financial Statements for the
year ended 31st December 2022, including significant
judgements and disclosures therein.
•
Finance Director’s report on going concern and viability
statement.
•
Finance Director’s report on goodwill impairment.
•
Interim report of external auditor detailing their
assessment on key risk audit areas.
•
Review of risk register and mitigating actions.
•
Annual assessment of internal controls and risk
management.
March 2023
•
Draft Annual Report and Financial Statements for the
year ended 31st December 2022, including significant
judgements and disclosures therein.
•
Audit representation letter.
•
Report of external auditor on their audit of the 2022
Annual report and Financial Statements.
•
Consideration of the reappointment of external auditor.
•
Review of effectiveness and Independence of
external auditor.
Significant Judgements, Key Assumptions and Estimates
The Audit Committee pays particular attention to matters it
considers to be important by virtue of their impact on the
Group’s results and remuneration of
Senior Management, or the level of complexity, judgement or
estimation involved in their application on the consolidated
financial statements. The main areas of focus during the year
are set out below:
Matters Considered and Actions
Matter Considered:
Contract Profit and
Revenue Recognition
Action:
The recognition of revenue and profit on
construction contracts involves significant judgement
due to the inherent difficulty in forecasting the final
costs to be incurred on contracts in progress and the
process whereby applications are made during the
course of the contract with variations, which can be
substantial, often being agreed as part of the final
account negotiation.
The Committee considered the consistency and
appropriateness of the Group’s policies and the
effect of IFRS 15 in respect of profit and revenue.
Their specific application to a number of large
contracts was considered, including key
judgements made by management and the
external audit thereof.
The Committee concurred with management’s
assessment of the contracts and the revenue
recognised.
Matter Considered:
Pension Scheme
Accounting
Action:
The Group’s defined benefit pension scheme
is valued annually by external advisers in accordance
with IFRSs. The valuation is subject to significant
fluctuations based on actuarial assumptions, including:
•
discount rates;
•
mortality assumptions;
•
inflation;
•
salary increases;
•
expected return on plan assets.
The Committee reviewed the basis of the
valuation, including the assumptions used,
and considered the sensitivity of the
pension scheme valuation to changes in
those key assumptions. Further details of
the valuation, including the key assumptions
used, are disclosed in note 22 to the
financial statements on pages 99 to 102.
Matter Considered:
Carrying Value of
Intangible Assets
and Investments
Action:
Intangible assets comprise a significant
element of the Group’s net assets. As required by
IFRSs, the Company conducts an impairment review
of these assets every year.
The Committee considered the papers presented by
the Group Finance Director supporting management’s
assertion that goodwill is not impaired. Other
intangible assets comprise customer relationships
on acquisition and are amortised. This assertion was
supported by detailed cash flow and profit projections
covering a three-year period, including sensitivity
analysis and an analysis of secured workload. It also
considered the independent auditor’s comments on
the key assumptions and detailed forecasts made.
The issue of impairment involves making significant
judgements about individual cash-generating units
and the risks they face.
The Committee agreed with management’s
recommendation that no impairment
charge should be made. Further details
concerning the make-up of intangible
assets, the assumptions used and the
sensitivity of the carrying value of intangible
assets can be found in note 11 to the
financial statements on pages 89 and 90.
Aligned to the review of the carrying value
of intangible assets, the Committee also
considered the carrying value of the
subsidiaries in the Parent Company’s
financial statements.
Matter Considered:
Going Concern and
Viability Statement
Action: The Group conducts a review to ensure it
has sufficient working capital to support its 3 year business
plan. The review considers impact on working capital
requirements of various sensitivities to ensure that plans
are sufficiently robust to cater for reasonable worst case
scenarios whilst still meeting all bank covenants.
The Committee considered the papers presented
by the Group Finance Director supporting management’s
assertion that the Group remains a going concern and has
sufficient working capital to support its business plans.
The Committee agreed with management’s
recommendation that the Group is a going
concern. On all scenarios modelled the
Group was able to meet all banking
covenants with significant headroom.
Further details can be found in the long
term viability statement on page 38.
Membership of the Audit Committee
The members of the Committee during the year were Louise Dier (Chair to 30th April 2022), Jonathan Hook (Chair from
22nd June 2022), Peter Maskell and Aysegul Sabanci (from 1st May 2022). Biographies of the current member of the Audit
Committee are included on page 39.
Governance
TClarke
Annual Report and Financial Statements 2022
47
48
Audit Committee Report
continued
Governance
The Committee members are all independent
Non-Executive Directors. The Board is satisfied that Jonathan
Hook has the necessary skills and experience to chair the
Audit Committee and the Committee as a whole has the
requisite recent and relevant financial experience to the
construction industry. The Committee routinely meets four
times a year, and additionally as required, to review or discuss
other significant matters.
The Group Finance Director and the Group Chief Executive
Officer attend the meetings; the external auditor also attend
parts of the meetings.
The terms of reference of the Committee are available on the
Company’s website under the Investor section – Governance.
Internal Controls
The Audit Committee receives regular updates on internal
controls and has concluded that our controls are adequate
and appropriate to our business. Following an independent
review of the controls over expenses a number of changes
and improvements have been made to the expenses policy
and processes.
Internal Audit
The internal audit function is covered through regular site
visits conducted by Quality Assurance and Group finance
personnel. The Audit Committee reviewed the need for a
separate internal audit function during the year and agreed
that the current practice worked well and was appropriate
to our business.
Risk Management
Assisted by Executive Directors, the Audit Committee has
focused on maintaining and improving the procedures to
identify, manage and mitigate the risks facing the business
and to drill down on selected risks on a rolling basis through
the year.
External Audit
The Audit Committee is responsible for overseeing relations
with the external auditor, including the approval of fees, and
makes recommendations to the Board on their appointment
and reappointment. Details of the auditor’s remuneration can
be found in note 7 to the financial statements on page 87.
On 22 June 2022 PwC formally resigned as auditors to
the Group following an 11 year tenure. PwC deposited a
statement with the committee that confirmed there were no
matters they wished to bring to the attention of the Group’s
shareholders or creditors.
The Audit Committee had undertaken a thorough tender
process within the previous financial year and as such
decided that using this tender as the basis for recommending
the appointment of an auditor for the Group was the most
appropriate. As such the committee recommended to the
Board that Mazars LLP be appointed the Group’s auditor.
The Committee accepts in principle that certain work of a
non-audit nature is most efficiently undertaken by the
external auditor. The policy on non-audit services provided
by Mazars LLP is that the Chairman of the Audit Committee
reviews and, if appropriate, approves all non-audit services
and fees, and any such approval is put to the Audit
Committee for review and ratification at the next Committee
meeting. No non-audit services were provided during the
year (2021: £nil).
The Company complies with the Competition and Markets
Authority’s requirements around independence. The
independence of the external auditor is essential to
the provision of an objective opinion on the true and fair
presentation in the financial statements. Auditor
independence and objectivity is safeguarded by limiting the
nature and value of non-audit services performed by the
external auditor and ensuring the rotation of the lead
engagement partner at least every five years. The current
lead engagement partner has held the position for one year.
The Audit Committee reviews the effectiveness of the audit
process through quality service reviews with the external
auditor post-audit. At the end of the review process, the
Audit Committee decides whether, given the results of the
review, to recommend to shareholders that the auditors
be reappointed.
Jonathan Hook
Chair of the Audit Committee
20th March 2023
The Roles and Responsibilities of the Audit
Committee Include:
•
Monitoring the integrity of the financial statements of the
Company and any formal announcements relating to
the Company’s financial performance, reviewing significant
financial reporting issues and judgements contained therein.
•
Reviewing the Company’s internal controls and risk
management systems and reviewing the need for an internal
audit function on an annual basis.
•
Making recommendations to the Board, to be put to
shareholders, in relation to the appointment of external
auditors and their remuneration and terms of engagement.
•
Reviewing and approving the audit plan and ensuring it is
consistent with the scope of audit engagement.
•
Reviewing the independence of the external auditor and
reviewing the effectiveness of the audit process.
•
Reviewing the extent of non-audit services provided by the
external auditor.
Dear Shareholder
As Chairman of the Nomination Committee, I am pleased to
present the report of the Nomination Committee for the year
ended 31st December 2022.
During the year, the Nomination Committee comprised Iain
McCusker (Chair), Peter Maskell, Louise Dier (Until 30th April
2022), Jonathan Hook and Aysegul Sabanci (from 1st May
2022). Biographies of the current members of the Nomination
Committee are included on page 39.
The Nomination Committee met twice during the year to
review the structure, size and composition of the Board
and its Committees, undertake a Board evaluation process
and to consider the formal succession plan for Directors and
senior management. The Nomination Committee also
recommended to the Board that Aysegul Sabanci be
appointed a Non-Executive Director.
The Committee gives due consideration to diversity in the
make-up of the Board but, due to the size of the Company, the
most important consideration is to achieve an appropriate mix
of skills, knowledge and experience, taking into account the
Company’s Board Diversity policy. Before any appointment is
made by the Board, the Nomination Committee evaluates
the balance of skills, experience, independence and
knowledge on the Board and, in the light of this evaluation,
prepares a description of the role and capabilities required for
a particular appointment.
The Committee’s succession planning not only takes into
consideration the Company’s long-term and medium-term
needs and natural evolution to the Board, but also short-term
needs such as unforeseen departures and contingency for
unexpected Board changes. The Committee also formulated
succession plans for the Group Management Board taking
into account the challenges and opportunities facing the
Company, and the skills and expertise needed on the Board
in the future.
The performance of individual Directors, the Board, its
committees and the Chairman is reviewed annually. In 2022, in
order to evaluate the performance of the Board, each member
of the Board was asked to complete a detailed questionnaire.
The responses to the questionnaire were summarised and were
reviewed and discussed by the Nomination Committee and
subsequently shared with and discussed by the Board.
Topics covered in the review included strategy, risk
management and the conduct and effectiveness of Board
meetings. Whilst acknowledging that there are always
opportunities for development and improvement, the Directors
have concluded that the Board had effectively discharged its
duties during the year.
As part of the evaluation process, as Chairman of the
Nomination Committee and acting in conjunction with the
Chief Executive Officer, I undertook the task of annual
evaluation of performance and commitment of individual
Board members by conducting individual interviews. The
review of my own performance and commitment was
undertaken by the Senior Independent Director.
Based upon the evaluation of the Board, its committees and
the continued effective performance of individual Directors,
the Committee recommended to the Board that those
directors wishing to be considered stand for re-election at the
Company’s AGM in 2023.
Iain McCusker
Chair of the Nomination Committee
20th March 2023
The Roles and Responsibilities of the
Nomination Committee Include:
•
Regularly reviewing the structure, size and composition
(including the skills, knowledge, experience and diversity)
of the Board and making recommendations to the Board with
regard to any changes.
•
Evaluating the balance of skills, experience, independence
and knowledge on the Board and preparing or approving a
description of the role and capabilities required for a
particular appointment.
•
Responsibility for identifying and nominating, for the approval
of the Board, candidates to fill Board vacancies as and when
they arise.
•
Satisfying itself with regard to succession planning for
Directors and senior management, taking into account the
challenges and opportunities facing the Company and the
skills and expertise needed on the Board in the future.
•
Making recommendations to the Board concerning
membership of the Audit and Remuneration Committees.
•
Reviewing annually the time required from Non-Executive
Directors.
Nomination Committee Report
Governance
TClarke
Annual Report and Financial Statements 2022
49
50
Dear Shareholder
I am pleased to present the remuneration report for the year to
31st December 2022. This report aims to set out how the Group
pays our Directors, decisions made on their pay and how much
they have received in the last financial year.
The report is split into two sections:
•
The Directors’ Remuneration Policy, which will be put to
shareholders in a binding vote at the 2023 AGM.
•
The Annual Report on Remuneration, which includes
this letter and will be subject to an advisory shareholder
vote at our AGM on 10 May 2023.
Our Directors’ remuneration policy was last approved by
shareholders in 2020 and has served the Company well over the
last three years. The Committee has carried out a comprehensive
review of the current policy and of Directors service contracts with
the assistance of Pinsent Mason, one of the foremost legal firms
practising in the UK. The revised policy has been designed to be
materially similar to the previously approved policy, which the
Remuneration Committee continues to consider meets the
primary objectives of the policy. In addition the executive
directors have been issued with new service agreements fully
aligned to the remuneration policy.
Proposed Remuneration Policy
The primary objective of the Remuneration Policy is to
promote the long-term success of the Company.
Our remuneration policy is designed to be sustainable and simple,
and to encourage the effective stewardship that is vital to
delivering our strategy of creating long-term value for all
stakeholders. It promotes long term sustainable performance
through significant deferral of remuneration through shares.
Executive Directors are expected to build and maintain substantial
personal shareholdings in the business. The Committee has
reviewed the current Remuneration Policy and concluded that the
existing overarching framework of base salary, pension, benefits,
annual bonus and 2021 LTIP plan is effective and remains aligned
with TClarke’s strategy. The policy ensures that performance-related
components will form a significant proportion of the overall
remuneration package, with maximum rewards earned only
through the achievement of challenging performance targets
based on measures aligned with our long-term strategy. ESG
objectives now comprise a significant proportion of our strategic
targets. We are not proposing any significant changes to the
existing policy and we believe that our policy is sufficiently flexible
to remain applicable over the three year period 2023-2025.
Performance and Reward for 2022
2022 is the second year of our 3 year plan to grow revenues
to £500m. 2022 has seen TClarke deliver a record revenue
of £426m in what has been extremely challenging economic
environment. The Remuneration Committee believe this is an
outstanding result. Earnings per share have increased by 30%
Our order book has been replenished with £430m already
secured for 2023. There is a well-founded confidence of
achieving our target of £500m in 2023.
The Executive Directors’ targets were set by the Remuneration
Committee at the start of 2022. Financial performance of TClarke
combined with and the performance of the Executive Directors
in executing against the strategic annual bonus objectives set for
them resulted in the maximum bonus of 150% of salary being
payable to each of the Executive Directors. LTIP awards granted
in 2020, which vest on three year performance to 31 December
2022, will vest in full. Further information on the actual targets set,
and performance against them, is provided on page 58.
Implementation of the Remuneration Policy for 2023
The key highlights of how we intend to apply it for 2023 are:
•
Fixed Pay – five percent increase in Executive Directors base
salaries on 1 January 2023 is in line with the wider monthly
salaried workforce.
•
Variable pay – annual bonus maximum will be 150% of
salary and a LTIP award of up to 100% of salary will be made
in March 2023.
•
Performance measures – will continue to be focused on simple
and transparent measures. For the annual bonus, profit before
tax and interest will apply for two-thirds of the opportunity and
key strategic objectives aligned with the Group’s three year
plan to deliver £500m annual revenue in a sustainable
manner will apply for the remaining one-third of bonus. Specific
ESG objectives account for 40% of the total amount potentially
payable for achievement of key strategic objectives. The LTIP
performance conditions will be based on stretching earnings
per share targets.
Alignment with Shareholders
We are mindful of our shareholders’ interests and are keen to
ensure a demonstrable link between reward and value creation.
We are proud of the support we have received in the past from our
shareholders, with over 99% approval of the Directors’ remuneration
report received last year at the 2022 AGM. We hope that we will
continue to receive your support at the forthcoming AGM in 2023.
Peter Maskell
Chair of Remuneration Committee
20th March 2023
The Role and Responsibilities of the
Remuneration Committee Include
•
Determining the service contracts and base salary levels for
the Executive Directors and other senior management.
•
Setting remuneration policy for all Executive Directors and the
Company’s Chairman, taking into account relevant legal and
regulatory requirements, the provision of the code and
associated guidance.
•
Approving the design of, and determining targets for, any
performance-related pay schemes operated by the
Company and approving the total annual payments made
under such schemes.
•
Determining the policy for, and scope of, pension
arrangements for each Executive Director and other
designated senior executives.
•
Reviewing the design of all share incentive plans for approval
by the Board and shareholders.
2022
2021
Revenue
£426.0m
£327.1m
Operating profit
£11.5m
£8.8m
Earnings per share
19.60p
14.99p
Dividend per share
5.35p
4.85p
Remuneration Committee Report
This part of the Directors’ remuneration report summarises the
Directors’ Remuneration Policy for the Company which
shareholders will be asked to approve at the 2023 AGM. If
approved, the policy will come into effect from the date of the
AGM and will operate as though in place for the whole of the
2023 financial year. The policy has been designed to be
materially similar to the previously approved policy, which the
Remuneration Committee continues to consider meets the
primary objectives of the policy noted below.
Policy Overview
The primary objective of the remuneration policy is to promote
the long-term success of the Company. In working towards the
fulfilment of this objective, the Committee takes into account a
number of factors when formulating the remuneration policy for
the Executive Directors, including the following:
•
the need to provide a remuneration structure that is
sufficiently competitive to attract, retain and motivate
Executive Directors of an appropriate calibre to deliver
long-term, sustainable growth of the business;
•
the alignment of interests between executives and
shareholders through share ownership and appropriate
recovery and withholding provisions;
•
internal levels of pay and employment conditions
across the Group as a whole;
•
the principles and recommendations set out in the UK
Corporate Governance Code and the views of
institutional shareholders and their representative
bodies; and
•
periodic external comparisons of market trends and
practices in similar companies taking into account their
size (and in particular their FTSE ranking) and complexity.
Our remuneration structure is intended to be simple and
transparent, and to contribute to the building of a sustainable
performance culture. Our policy ensures that
performance-related components will form a significant
proportion of the overall remuneration package, with maximum
total potential rewards earned only through the achievement of
challenging performance targets based on measures selected to
promote the long-term success of the Company.
The main elements of the remuneration package for
Executive Directors are a base salary, benefits and pension
provision, as well as an annual bonus plan and shares
awarded under a long-term incentive plan (‘LTIP’), both of
which are subject to stretching performance conditions.
The Committee has determined that this structure will
provide an appropriate balance between fixed and
performance-related pay elements. The Committee will
continue to review the remuneration policy to ensure it takes
due account of remuneration best practice and that it remains
aligned with shareholders’ interests.
How the Executive Directors’ Remuneration Policy Relates to
the Wider Workforce
The Committee does not directly consult with employees
regarding the remuneration of Directors. However, the pay and
conditions elsewhere in the Company are considered when
designing the policy for Executive Directors and continue to
be considered in relation to implementation of the policy. The
Committee regularly monitors pay trends across the workforce
and salary increases will ordinarily be (in percentage of salary
terms) in line with those of the wider workforce. Reflecting the
UK Corporate Governance Code and investor guidelines, new
external Executive Director appointees will also have company
pension contributions set in line with the level offered to the
majority of the salaried workforce (in percentage of salary terms).
The remuneration policy described here provides an overview
of the structure that operates for the most senior executives in
the Company. Employees below executive level have a lower
proportion of their total remuneration made up of
incentive-based remuneration, with pay driven by market
comparators and the impact of the role in question. Long-term
incentives are reserved for those judged as having the greatest
potential to influence the Group’s strategic direction, earnings
growth and share price performance.
How Shareholders’ Views are Taken into Account
The Committee seeks to engage with its major shareholders
when any significant changes to the remuneration policy are
proposed. The Committee also considers shareholder feedback
received in relation to the Directors’ remuneration report and
at the AGM each year, and this, plus any additional feedback
received from time to time, is considered as part of the
Committee’s annual review of remuneration policy. The
Committee also closely monitors developments in institutional
investors’ best practice expectations.
Directors’ Remuneration Policy
Governance
TClarke
Annual Report and Financial Statements 2022
51
52
Summary Director Policy Table
The table below summarises the remuneration policy
for Directors.
Element of Remuneration: Basic Salary
Element of Remuneration: Benefits
Purpose and Link to Strategy
•
To provide competitive fixed remuneration to attract and
retain Executive Directors of superior calibre in order to
deliver growth for the business
Operation
•
Normally reviewed annually with changes typically effective
1st January
•
Paid in cash on a monthly basis
•
Comparison against companies with similar characteristics are
taken into account as part of the review
•
Internal reference points, the responsibilities of the individual
role, progression within the role and individual performance
are also taken into account
•
Executive Directors under notice of termination of
employment are not eligible for an annual salary review
Purpose and Link to Strategy
•
To support recruitment and retention
•
To provide a market consistent benefits package
Operation
•
Benefits may include a combination of car or car
allowance, private medical insurance and life insurance
•
Executive Directors will be eligible for any other benefits
which are introduced for the wider workforce on broadly
similar terms
•
Travel allowances or time-limited relocation benefits
may be offered if considered appropriate and reasonable
by the Committee
•
Any reasonable business-related expenses (including
tax thereon) can be reimbursed if determined to be a
taxable benefit
•
Executive Directors are also eligible to participate in any
all-employee share plans operated by the Company, in line
with prevailing HMRC guidelines (where relevant), on the
same basis as for other eligible employees
Maximum Opportunity
•
There is no prescribed maximum annual basic salary or
salary increase. Details of the current salary levels are
set out in the Annual Report on Remuneration on page 57
•
Any salary increase (in percentage of salary terms) will
ordinarily be up to the general increase for the broader
employee population; however, a higher increase may
be awarded to recognise, for example, an increase in
the scale, scope or responsibility of the role and/or to
take account of relevant market movements
•
Where an Executive Director’s salary is set below
market levels at appointment, a series of increases may
be given (in addition to the factors listed above) in
order to achieve the desired salary positioning, subject
to satisfactory individual performance
Performance Targets
•
None, although the overall performance of the individual
and the wider business context is considered as part of the
salary review process
Maximum Opportunity
•
There is no maximum limit but the Committee reviews the
cost of the benefits provision on a regular basis to ensure
that it remains appropriate
•
Participation in the all-employee share plans is subject to
the limits set out by HMRC
Performance Targets
•
Not applicable
Directors’ Remuneration Policy
continued
Element of Remuneration: Pension
Element of Remuneration: Bonus
Purpose and Link to Strategy
•
Provide competitive retirement benefits
Operation
•
Defined benefit or defined contribution scheme (or cash
alternative)
•
Where the promised levels of benefits cannot be
provided through an appropriate pension scheme, the
Group may provide benefits through the provision of
salary supplements
Purpose and Link to Strategy
•
Incentivise annual achievement of performance targets
relating to the Company’s KPIs
•
Maximum bonus only payable for achieving demanding
targets
Operation
•
Normally payable in cash
•
Levels of award are determined by the Committee
after the year end based on performance against the
targets set at the start of the year
•
All bonus payments are at the ultimate discretion of
the Committee and the Committee retains an overriding
discretion (within the limits of the scheme) to ensure that
overall bonus payments reflect its view of corporate
performance during the year
•
Payments in relation to the annual bonus are subject to
withholding and recovery provisions
Maximum Opportunity
•
For Executive Directors appointed externally from 1
January 2020, defined contribution pension contributions
(or cash equivalents in lieu) will be aligned with the wider
salaried staff
•
Current employees who are existing members of the
Company’s defined benefit scheme, and who become
Executive Directors, may be entitled to continue to accrue
benefits under these arrangements rather than
participating in the defined contribution (or cash equivalent)
arrangements. The maximum pension per year on
retirement at age 65 is 1/60th of final pensionable salary for
service before March 2010, and 1/80th of revalued
pensionable salary for service thereafter and these rates are
consistent for all participants. A salary supplement may be
provided in order to compensate the individual up to the
value of benefits lost as a results of HMRC limits or if the
individual opts-out of the plan.
•
None of the current Executive Directors participate in
any defined benefit pension schemes or arrangements.
Performance Targets
•
Not applicable
Maximum Opportunity
•
Maximum of 150% of salary per annum
•
Target performance would normally result in 60% of
maximum becoming payable
Performance Targets
•
Group financial measures (e.g. profit-related measures)
will apply for the majority of the bonus
•
If used, personal or strategic objectives will be applied
for the minority of the bonus
•
Measures and objectives will be determined over a
one-year performance period
Governance
TClarke
Annual Report and Financial Statements 2022
53
54
Element of Remuneration: Long-Term Incentive Plan
Element of Remuneration: Share Ownership Guidelines
Purpose and Link to Strategy
•
Aligned to delivery of strategy and long-term
value creation
•
Align Executive Directors’ interests with those of
shareholders
•
To promote retention
Operation
•
LTIP awards take the form of conditional rights or nil,
nominal cost or market value options and are normally
granted annually
•
Awards vest after three years’ subject to the achievement
of pre-set performance criteria and continued employment.
Awards made from 2020 onwards are subject to a
mandatory two-year holding period following the end of the
vesting period, other than those sold to cover tax and NI
liabilities and dealing costs
•
The Committee reviews the quantum of awards annually
and monitors the continuing suitability of the performance
measures
•
The Committee may determine at grant that an amount
(in cash or shares) equivalent to the dividends paid or
payable on vested shares up to the release date may
become payable; any amount payable may assume the
reinvestment of dividends over the period
•
Awards under the LTIP are subject to withholding and
recovery provisions, further details of which are included as
a note to the policy table
Purpose and Link to Strategy
•
To increase alignment between Executives and
shareholders
Operation
•
Executive Directors are required to build and maintain
a shareholding of 100,000 shares through the retention
of vested share awards or through open market purchases
•
Wholly owned shares and vested LTIP shares in the
mandatory holding period (net of tax) will count towards
the guideline
Maximum Opportunity
•
Annual awards of no more than 100% of salary (with this
level generally reserved for exceptional circumstances).
Performance Targets
•
Performance is measured over three years
•
Awards currently vest based on performance against
stretching earnings per share (‘EPS’) targets set and
assessed by the Committee. However, different financial,
strategic or share price-based measures may be set for
future award cycles as appropriate to reflect the strategic
priorities of the business at that time
•
Notwithstanding the performance outcome, the
Remuneration Committee retains the discretion to adjust
the vesting outcome upwards or downwards (within the
scheme limits) to reflect the underlying performance of the
Company over the three-year period
•
A maximum of 25% vests at threshold, increasing to 100%
vesting at maximum on a straight-line basis
Maximum Opportunity
•
Not applicable
Performance Targets
•
Not applicable
Directors’ Remuneration Policy
continued
Element of Remuneration: Post-employment Share Ownership Guidelines
Element of Remuneration: Non-Executive Director
Purpose and Link to Strategy
•
To provide further long-term alignment between Executives
and shareholders
•
To ensure a focus on successful succession planning
Operation
•
Executive Directors will normally be expected to maintain
a holding of TClarke shares for two years after their
employment as a Director has ceased
•
The post-employment guideline will be equal to the lower of:
the actual shareholding at the time of ceasing to be a
Director and 100,000 shares
•
The guideline will apply only to shares acquired from LTIP
awards made from 2020 onwards; open market purchases
are excluded from the post-employment guidelines
•
The specific application of the shareholding guideline will be
at the Committee’s discretion
Purpose and Link to Strategy
•
To provide competitive fees to attract and retain high-calibre
Non-Executive Directors
•
To reflect the time commitment and responsibilities of
the role
Operation
•
The Chairman’s fee is set by the Board on the
recommendation of the Remuneration Committee. The
Non-Executive Directors’ fees are set by the Board on the
recommendation of the Executive Directors. No Director
takes part in discussions relating to their own remuneration
•
Non-Executives may be paid additional fees for chairing one
of the major Board committees or for holding the Senior
Independent Director position
•
The fees are set taking into account the time commitment
and responsibilities of the role
•
In exceptional circumstances, if there is a temporary
yet material increase in the time commitments for
Non-Executive Directors, the Board may pay extra fees to
recognise the additional workload
•
Fees are normally paid monthly in cash and are normally
reviewed annually
•
Directors can be reimbursed for any reasonable
business-related expenses (including the tax thereon if
determined to be a taxable benefit)
Maximum Opportunity
•
Not applicable
Performance Targets
•
Not applicable
Maximum Opportunity
•
There is no prescribed maximum fee or fee increase
•
Any increase will be guided by changes in market rates,
time commitments and responsibility levels as well as by
increases for the broader employee population
Performance Targets
•
Not applicable
4 For the avoidance of doubt, in approving this Directors’ Remuneration Policy, authority is given to the Company to honour any commitments entered into with current or
former Directors (such as the exercise of past share awards). Details of any payments to former Directors will be set out in the Annual Report on Remuneration as they arise.
Notwithstanding the above, pension arrangements for new appointees after 1 January 2020 will be consistent with the wider workforce.
5 Consistent with HMRC legislation and market practice, the HMRC all-employee share plans do not have performance conditions.
6 The annual bonus and LTIP include withholding and recovery provisions which may be applied in certain circumstances, including following a material misstatement of the
Company’s financial accounts, fraud, gross misconduct on the part of the award-holder, an error in calculating the award outcome, conduct causing material damage to the
Company’s reputation or financial or operational performance.. In respect of the annual bonus, the provisions apply for up to two years following payment, whilst LTIP awards
remain subject to the provisions throughout the vesting and holding period (where applicable). Participants in both schemes are now required to acknowledge their
understanding of the withholding and recovery provisions to help ensure that the provisions would be enforceable the circumstances arise.
7 Executive Directors and their spouse or partner are each eligible to receive private medical insurance coverage for life following termination of the Executive Director’s
employment with TClarke for any of the ‘good leaver’ reasons noted in the section titled ‘Service Contracts and Approach to Leavers’ on page 56.
Notes:
1 The choice of the performance metrics applicable to the annual bonus scheme reflects the Committee’s belief that any incentive compensation should be appropriately
challenging and tied to both the delivery of targets relating to a key financial measure, profit, and which support the Company’s strategic objectives through individual and/or
strategic performance measures intended to ensure that Executive Directors are incentivised to deliver across a range of objectives for which they are accountable. The
Committee has retained some flexibility on the specific measures which will be used over the life of the policy to ensure that any measures are fully aligned with the strategic
imperatives prevailing at the time they are set. Targets are generally set with reference to the Group’s budget, with target performance typically requiring meaningful
improvement on the previous year’s outturn.
2 The performance condition applicable to the 2023 LTIP awards is earnings per share growth (EPS). EPS was selected by the Remuneration Committee on the basis that it is
aligned with the delivery of long-term returns to shareholders and it is the Group’s key financial metrics. The Committee has retained flexibility on the measures which will be
used for future award cycles to ensure that the measures are fully aligned with the strategy prevailing at the time the awards are granted. LTIP targets are intended to be
stretching but achievable taking into account the Group’s long-term strategic plan, as well as a range of relevant internal and external reference points.
3 The Committee operates the annual bonus, LTIP and all employee share plans in accordance with the relevant plan rules and, where appropriate, the Listing Rules and HMRC
legislation. The Committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration of the plans. These include,
for example, the timing of awards and setting performance criteria each year, dealing with leavers, discretion to retrospectively amend performance targets in exceptional
circumstances (providing the new targets are no less challenging than originally envisaged) and in respect of share awards, to adjust the number of shares subject to an award
in the event of a variation in the share capital of the Company.
Governance
TClarke
Annual Report and Financial Statements 2022
55
56
Pay for Performance Scenarios
The charts below provide an illustration of the potential
future reward opportunities for the Executive Directors, and
the potential split between the different elements of
remuneration under four different performance scenarios:
‘Minimum’, ‘Target’, ‘Maximum’ and ‘Maximum including the
impact of a 50% share price appreciation on LTIP awards’.
Potential reward opportunities are based on TClarke’s
remuneration policy, applied to the base salaries effective 1
January 2022. The annual bonus and LTIP are based on the
maximum opportunities set out under the remuneration policy
for normal circumstances; being 150% of salary and 100% of
salary respectively. Note that the LTIP awards granted in a year
do not normally vest until the third anniversary of the date of
grant, and the projected value is based on the face value at
award rather than vesting (i.e. the scenarios exclude the impact
of any share price movement over the period).
The ‘minimum’ scenario reflects base salary, pension and
benefits (i.e. fixed remuneration) which are the main elements
of the Executive Director remuneration packages not linked
to performance.
The ‘target’ scenario reflects fixed remuneration as above,
plus a bonus payout of 60% of maximum and LTIP threshold
vesting at 25% of maximum award.
The ‘maximum’ scenario includes fixed remuneration and full
payout of all incentives (150% of salary under the annual
bonus and 100% of salary under the LTIP) but no movement
in share price over the three-year period. Under the
‘maximum’ scenario, if TClarke share price increased by 50%
over the three-year performance period ( in effect valuing this
element of pay at 150% of salary) the indicative total
remuneration value would be £1,877,406 for the Group Chief
Executive, £1,604,870 for the Group Managing Director and
£1,407,697 for the Group Finance Director.
Approach to Recruitment and Promotions
The remuneration package for a new Executive Director would
be set in accordance with the terms of the prevailing approved
remuneration policy at the time of appointment and take into
account the skills and experience of the individual, the market
rate for a candidate of that experience and the importance of
securing the relevant individual.
Salary would be provided at such a level as required to attract
the most appropriate candidate and may be set initially at a
below mid-market level on the basis that it may progress
towards the mid-market level over a period of two to three
years once expertise and performance has been proven and
sustained.
New appointees would receive company pension contributions
or an equivalent cash supplement aligned to that offered to the
wider salaried workforce at the time of appointment, and would
be eligible to receive benefits of the same type and at similar
levels as other Executive Directors. If the new appointee were
promoted from within the business and was already a member
of the defined benefit scheme, they would remain eligible for
benefits from it in the same way as other members of the
workforce who are members.
The maximum level of variable pay which may be awarded to
new Executive Directors will be in line with the policy set above.
In addition to this, the Committee may make buyout awards
in the form of additional cash and/or share-based elements to
replace remuneration forfeited by an executive as a result of
leaving his or her previous employer. It will, where possible,
ensure that these awards are consistent with awards forfeited in
terms of vesting periods, expected value and performance tests.
The Committee may apply different performance measures,
performance periods and/or vesting periods for initial awards
made following appointment under the annual bonus and/or
long-term incentive arrangements, subject to the rules of the
scheme, if it determines that the circumstances of the
recruitment merit such alteration. LTIP awards can be made
shortly following an appointment (assuming the Company is
not in a close period), whilst the maximum annual bonus in the
year of appointment would generally be pro-rated to reflect the
period of service during the year.
Minimum
Target
Maximum
£491,406
100%
48%
30%
41%
42%
28%
£1,646,406
11%
£1,022,706
Mark Lawrence
fixed pay
Annual
Bonus
long-term
incentives
2023
Total
Minimum
Target
Maximum
£423,620
100%
48%
30%
41%
42%
28%
£1,407,995
11%
£876,432
Mike Crowder
fixed pay
Annual
Bonus
long-term
incentives
2023
Total
Minimum
Target
Maximum
£368,197
100%
48%
30%
41%
42%
28%
£1,234,447
11%
£766,672
Trevor Mitchell
fixed pay
Annual
Bonus
long-term
incentives
2023
Total
Directors’ Remuneration Policy
continued
For an internal Executive Director appointment, any variable pay
element awarded in respect of the prior role may be allowed to
pay out according to its original terms.
For external and internal appointments, the Committee may
agree that the Company will meet certain relocation and/or
incidental expenses as appropriate.
The fee structure for Non-Executive Director appointments will
be based on the Non-Executive Director fee policy as set out in
the policy table.
Service Contracts and Approach to Leavers
The Company’s policy is for Executive Directors to have service
contracts which may be terminated with no more than 12
months’ notice from either party. The Executive Directors’
service contracts are available for inspection by shareholders at
the Company’s registered office.
No Executive Director has the benefit of provisions in their
service contract for the payment of pre-determined
compensation in the event of termination of employment. It is
the Committee’s policy that the service contracts of Executive
Directors will provide for termination of employment by giving
notice or by making a payment of an amount equal to basic
salary in lieu of the notice period. It is the Committee’s policy
that no Executive Director should be entitled to a notice period
or payment on termination of employment in excess of the
levels set out in his or her service contract. Incidental expenses
may also be payable, if appropriate.
Annual bonus may be payable with respect to the period of the
financial year served, although it will be pro-rated for time and
paid at the normal payout date. Any share-based entitlements
granted to an Executive Director under the Company’s share
plans will be determined based on the relevant plan rules. In
certain circumstances, such as death, ill health, disability,
retirement or other circumstances at the discretion of the
Committee, ‘good leaver’ status may be applied. For good
leavers, awards will normally vest at the normal vesting date,
subject to the satisfaction of the relevant performance
conditions at that time and reduced pro-rata to reflect the
proportion of the vesting period actually served. Awards subject
to a holding period will normally be released following
completion of the holding period. Under the plan rules, the
Remuneration Committee has overarching discretion to
determine that awards vest at cessation of employment and/
or to disapply the time pro-rating requirement if it considers it
appropriate to do so.
In relation to a termination of employment, the Committee may
make payments in relation to any statutory entitlements or
payments to settle compromise claims as necessary. The
Committee also retains the discretion to reimburse reasonable
legal expenses incurred in relation to a termination of
employment and to meet any transitional costs if deemed
necessary. Payment may also be made in respect of accrued
benefits, including untaken holiday entitlement.
There is no provision for additional compensation on a change
of control. In the event of a change of control, the LTIP awards
will normally vest on (or shortly before) the change of
control and the Committee shall determine the extent to which
outstanding awards shall vest. Awards may alternatively be
exchanged for new equivalent awards in the acquirer where
appropriate. Outstanding awards under any/all employee share
plans will vest in accordance with the relevant scheme rules.
Bonuses will become payable on the change of control and
in full.
External Appointments
The Board allows Executive Directors to accept external
Non-Executive Director positions provided the appointment
is compatible with their duties as Executive Directors. The
Executive Directors may retain fees paid for these services. Any
appointment will be subject to approval by the Board.
Non-Executive Directors
The Chairman and Non-Executive Directors’ terms are set out
in letters of appointment. The letters of appointment of the
Non-Executive Directors are available for inspection at the
Company’s registered office during normal business hours.
Governance
TClarke
Annual Report and Financial Statements 2022
57
58
Single Total Figure Remuneration (Audited)
The table below reports the total remuneration receivable in respect of qualifying services by each Director during the year:
Year ended 31st December 2022
Total salary
and fees
£
Taxable
benefits
£
Annual
bonus
£
Long-term
incentives
£
Pension
related
benefits
£
Total
£
Fixed
pay
£
Variable
pay
£
Total
£
Executive:
Mark Lawrence
440,000
29,406
660,000
528,198
–
--
1,657,604
469,406 1,188,198
1,657,604
Mike Crowder
375,000
29,870
562,500
450,577
–
--
1,417,947
404,870 1,013,077
1,417,947
Trevor Mitchell
330,000
21,697
495,000
392,933
–
--
1,239,630
351,697
887,933
1,239,630
Non-Executive:
Iain McCusker
102,000
–
–
–
–
--
102,000
102,000
–
102,000
Peter Maskell
58,750
–
–
–
–
--
58,750
58,750
–
58,750
Louise Dier
1
24,479
–
–
–
–
--
24,479
24,479
–
24,479
Jonathan Hook
56,668
–
–
–
–
--
56,668
56,668
–
56,668
Aysegul Sabanci
35,833
–
–
–
–
--
35,833
35,833
–
35,833
Year ended 31st December 2021
Total salary
and fees
£
Taxable
benefits
£
Annual
bonus
£
Long-term
incentives
£
Pension
related
benefits
£
Total
£
Fixed
pay
£
Variable
pay
£
Total
£
Executive:
Mark Lawrence
418,500
26,410
380,835
217,982
–
--
1,043,727
444,910
598,817
1,043,727
Mike Crowder
357,000
30,803
324,870
185,984
–
--
898,657
387,803
510,854
898,657
Trevor Mitchell
311,375
20,718
283,351
162,162
–
--
777,606
332,093
445,513
777,606
Non-Executive:
Iain McCusker
97,000
–
–
–
–
--
97,000
97,000
–
97,000
Mike Robson
23,417
–
–
–
–
--
23,417
23,417
–
23,417
Peter Maskell
56,200
–
–
–
–
--
56,200
56,200
–
56,200
Louise Dier
54,117
–
–
–
–
--
54,117
54,117
–
54,117
Jonathan Hook
2
25,600
–
–
–
–
--
25,600
25,600
–
25,600
1 Louise Dier retired from the Board on 30 April 2022
2 Jonathan Hook was appointed to the Board on 1 July 2021
Annual Report on Remuneration
The figures in the single total figure remuneration table are derived from the following:
Total salary and fees
The amount of salary and fees received in the year.
Taxable benefits
The taxable value of benefits received in the year. These are a car or car allowance, private
medical insurance, fuel and train allowance.
Annual bonus
The 2022 annual bonus was subject to operating profit targets (two-thirds of bonus)
alongside a scorecard of strategic objectives closely aligned with the KPIs of the business
(one-third of bonus).
The actual performance of £11.5m operating profit resulted in 100% of maximum for this
element being payable. The stretch target for operating profit was £11.34m.
The measures selected for strategic objectives reflect a range of key financial and operational
goals which support the Company’s strategic objectives. The respective targets have not been
disclosed as they are considered by the Board to be commercially sensitive. Objectives were
set across three strategic imperatives; delivering the growth strategy (up to 60% of strategic
bonus), delivering strategic ESG goals aligned with strategy (up to 20%), and delivering Health
and Safety systems (up to 20%). Performance against strategic objectives resulted in 100% of
maximum for this element being payable.
Overall this resulted in a bonus of 150% of salary (maximum 150%) for Mark Lawrence,
Mike Crowder and Trevor Mitchell being payable.
Long-term incentives
The value of LTIP awards that vest in respect of a performance period that is completed by the
end of the relevant financial year. For 2022 this includes the 2020 Conditional shares awards
which will vest in full on 1st May 2023. 50% of the award is based upon earnings per share
growth (EPS). EPS has increased by 32% over the three year performance period exceeding the
trigger for full vesting of 26%.
For the remaining 50% of the award Remuneration Committee assessed that the performance
condition had been met as the 2020 profit after tax was £1.2m. The Company also met all of its
banking covenants for the three year period.
The value is based on the 3-month average share price ending 31 December 2022 of 120.15p
The performance conditions are detailed on page 52. The 2021 numbers have been updated
to reflect the actual exercise price on 24th April 2022.
Pension-related benefits
The Directors received no pension benefits in 2022 (2021: nil)
TClarke
Annual Report and Financial Statements 2022
59
60
Governance
Directors’ Interests and Minimum Shareholding Requirement (‘MSR’) (Audited)
Directors’ interests in the issued share capital of TClarke plc are set out below. There is a current MSR for the Executive Directors
whereby each Executive Director is required to build and maintain a holding of 100,000 shares in TClarke plc. For Non-Executive
Directors, the MSR requirement is 2,000 shares in TClarke plc as defined in the Company’s Articles of Association.
The beneficial interests of Directors in the Ordinary share capital of TClarke plc at 31st December 2022 and 31st December 2021 were:
At
31st December 2022
10p Ordinary shares
At
31st December 2021
10p Ordinary shares
Outstanding
conditional
share awards
1
Outstanding
options held
under SAYE
MSR achieved at
31st December 2022
Mark Lawrence
402,908
331,285
1,052,123
–
100%
Mike Crowder
359,790
298,681
897,276
–
100%
Trevor Mitchell
280,906
227,624
784,557
–
100%
Iain McCusker
2,000
2,000
–
–
100%
Peter Maskell
41,500
41,500
–
–
100%
Jonathan Hook
20,000
20,000
–
–
100%
Aysegul Sabanci
2,000
–
–
–
100%
1 The outstanding conditional share awards are subject to performance conditions.
There have been no changes to Directors’ interests since 31st December 2022.
The Directors’ interests over shares as a result of their participation in the TClarke Equity Incentive Plan (‘EIP’) and the 2021 Long Term
Incentive Plan, are as follows:
Award date
01/01/2022
Number
Granted
Exercised
Lapsed
31/12/2022
Number
Earliest date
of exercise
Date of
expiry
Mark Lawrence
Conditional shares
24/04/2019
119,344
–
(119,344)
–
–
24/04/2022
24/04/2029
Conditional shares
01/05/2020
439,601
–
–
–
439,601
01/05/2023
01/05/2030
Conditional shares
28/04/2021
311,152
–
–
–
311,152
28/04/2024
28/04/2031
Conditional shares
16/03/2022
–
301,370
–
–
301,370
16/03/2025
16/03/2032
Mike Crowder
Conditional shares
24/04/2019
101,825
–
(101,825)
–
–
24/04/2022
24/04/2029
Conditional shares
01/05/2020
375,000
–
–
–
375,000
01/05/2023
01/05/2030
Conditional shares
28/04/2021
265,427
–
–
–
265,427
28/04/2024
28/04/2031
Conditional shares
16/03/2022
–
256,849
–
–
256,849
16/03/2025
16/03/2032
Trevor Mitchell
Conditional shares
24/04/2019
88,783
–
(88,783)
–
–
24/04/2022
24/04/2029
Conditional shares
01/05/2020
327,025
–
–
–
327,025
01/05/2023
01/05/2030
Conditional shares
28/04/2021
231,505
–
231,505
28/04/2024
28/04/2031
Conditional shares
16/03/2022
–
226,027
–
–
226,027
16/03/2025
16/03/2032
Annual Report on Remuneration
continued
The conditional share awards and options will vest subject to continued employment with the Group and satisfaction of the following
performance conditions over a three-year period ending 31st December preceding the earliest vesting date.
For 50% of the 2020 and 2021 awards the following performance conditions apply:
Annual growth rate in underlying EPS above RPI
1
Proportion of award vesting
Less than 3%
Nil
3%
25%
Between 3% and 10%
Between 25% and 100% on a straight-line basis
Above 10%
100%
1 The base point is based on average underlying EPS for the three years ending with the year preceding date of grant.
For 50% of the 2022 award CPI rather than RPI is used.
The remaining 50% of the 2020 award performance conditions relate to the actions taken by the Executive Directors to enable TClarke
to increase retained reserves for the year ended 31 December 2020 (excluding any impact from Pension Deficit Movements). The
Remuneration Committee assessed that the performance condition had been met as the 2020 profit after tax was £1.2m. For the
shares to vest the Company must not breach any banking covenants for the remainder of the three year period.
The remaining 50% of the 2021 award performance conditions are as follows:
Annual growth rate in underlying EPS above RPI
1
Proportion of award vesting
Less than 20%
Nil
Between 20% and 30%
Between nil and 100% on a sliding scale
Above 30%
100%
The remaining 50% of the 2022 award was made to incentivise the achievement of the Company’s 3 year ambitious organic growth
plan, achievement of which should substantially enhance earnings per share. This element of the award will be subject to satisfaction of
the Total Shareholder Return (TSR) performance condition as set out below:
TSR*
Proportion of award vesting
Less than 35%
Nil
35%
25%
Between 35% and 50%
Between 25% and 100% on a straight-line basis
Above 50%
100%
* Base point share price is the 3-month average to 31 December 2021. The share price at maturity is the 3-month average to
31 December 2024
The Directors’ had no interest in the TClarke Savings Related Share Option Scheme (‘SAYE Scheme’) during 2022.
External Appointments
Mark Lawrence and Mike Crowder do not hold any external appointments. Trevor Mitchell is an Executive Director of It’s Purely
Financial Limited.
Pensions
At 31 December 2022 none of the Directors were members of the Company pension scheme. (2021: None)
TClarke
Annual Report and Financial Statements 2022
61
62
Governance
Performance Graph
The graph below shows the total shareholder return that would have been obtained over the past ten years by investing £100 in shares
of TClarke plc on 31st December 2013 and £100 in a notional investment in the FTSE All-Share Index and the FTSE All-Share
Construction & Materials Index on the same date. In all cases it has been assumed that all income has been reinvested. The FTSE
All-Share Index and the FTSE All-Share Construction & Materials Index are considered to be the most appropriate broad equity indices
to use as a comparison because the Company is a constituent of both.
Shareholder Return 2013–2022
Total Remuneration (Audited)
The total remuneration figures for the Group Chief Executive Officer during each of the last ten financial years are shown in the table
below. The total remuneration figure includes the annual bonus based on that year’s performance and LTIP awards based on three-year
performance periods ending in the relevant year. The annual bonus pay out and LTIP vesting level as a percentage of the maximum
opportunity are also shown for each of these years.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total remuneration (£000s)
308
300
436
567
875
1,056
1,137
922
1,016
1,658
Annual bonus (%)
9%
0%
24%
32%
69%
100%
78%
30%
61%
100%
LTIP vesting (%)
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
Ratio of Chief Executive’s Remuneration Relative to all UK Employees
The table below shows the ratio of the Group Chief Executive Officer’s single total figure of remuneration compared to all UK
employees at the 25th percentile, median and 75th percentile. The method used for the calculation is Option C. Three employees
were identified at each percentile from the list of all full time employees in the UK. The report will build up over time to show a ten year
period on each year accompanied by narrative to explain any movements.
Remuneration (£)
Pay Ratio
Remuneration (£)
Pay Ratio
Group
Chief Executive Officer
1,657,604
1,043,727
25th Percentile
34,257
48:1
32,984
32:1
Median
47,922
35:1
46,465
22:1
75th Percentile
64,168
26:1
61,443
17:1
FTSE All-Share
TClarke plc
FTSE AIM All-Share / Construction and Materials – SS
FTSE All-Share / Construction and Materials – SEC
2022
2021
Annual Report on Remuneration
continued
300
250
200
400
150
350
100
50
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Percentage Change in Remuneration of all Directors’
The table below shows the percentage change in the Directors salary, benefits and annual bonus between the financial year ended
31st December 2021 and 31st December 2022, compared with that of the total amounts for all UK employees of the Group for each of
these elements of pay. Monthly salaried staff received their pay review on 30th September 2021; the Directors 1st January 2022.
1 When Directors are appointed or retired the percentage change figures have been calculated on a full year equivalent to give a meaningful comparison.
2 Jonathan Hook was appointed chair of the Audit Committee on 22nd June 2022 and received an additional fee as a result.
3 Louise Dier was appointed chair of Audit Committee on 1st June 2021 and received an additional fee as a result.
Relative Importance of Spend on Pay (Audited)
The following table illustrates the year-on-year change in total remuneration for all employees in the Group relative to dividends and
total operating expenses. Total operating expenses comprise cost of sales and administrative expenses before amortisation of
intangible assets and other non-underlying costs.
2022
£m
2021
£m
Staff costs
88.0
76.3
Dividends
2.3
1.9
Total operating expenses
414.5
318.3
Service Contracts and Letters of Appointment
All Executive Directors have 12-month notice periods from the Company (and 12 months from the Executive Director) in accordance
with their service agreements.
Non-Executive Directors have letters of appointment which include initial terms of three years.
Consideration by the Directors of Matters Relating to Directors’ Remuneration
The Company’s approach to the Chairman’s and Executive Directors’ remuneration is determined by the Board on the advice of the
Remuneration Committee.
During the year, the Remuneration Committee comprised Peter Maskell (Chair), Iain McCusker, Louise Dier (until 30 April 2022),
Jonathan Hook and Aysegul Sabanci (from 1 May 2022). Biographical information on the Committee members and details of
attendance at the Remuneration Committee’s meetings during the year are set out on pages 39 and 42 respectively.
The Remuneration Committee has access to independent advice where appropriate. The Committee appointed Pinsent Mason
LLP in August 2022 to provide independent advice on Directors service contracts and remuneration policy. The Committee is satisfied
that the advice provided by Pinsent Mason was objective and independent.
The Committee also receives input from the Group Chief Executive Officer and advice from the Company Secretary. No individuals are
present when their own remuneration is being discussed.
2022
2021
2020
Salary
1
Benefits
Bonus
Salary
1
Benefits
Bonus
Salary
1
Benefits
Bonus
% change % change % change
% change % change % change % change % change % change
Mark Lawrence
5%
11%
73%
0%
1%
102%
33%
24%
(51%)
Mike Crowder
5%
(3%)
73%
0%
(1%)
102%
33%
(47%)
(51%)
Trevor Mitchell
5%
4%
73%
0%
0%
102%
6%
0%
(51%)
Iain McCusker
5%
N/A
N/A
0%
N/A
N/A
47%
N/A
N/A
Peter Maskell
5%
N/A
N/A
0%
N/A
N/A
15%
N/A
N/A
Jonathan Hook
2
10.7%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Louise Dier
3
5%
N/A
N/A
5.7%
N/A
N/A
5%
N/A
N/A
Aysegul Sabanci
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
UK employee average
2.6%
0%
67%
7.2%
10%
22%
(11%)
67%
(13%)
TClarke
Annual Report and Financial Statements 2022
63
64
Governance
Statement of Voting at Annual General Meeting
The Company remains committed to ongoing shareholder dialogue and takes a keen interest in voting outcomes. The following table
sets out voting outcomes in respect of the resolutions relating to approving Directors’ remuneration matters at the Company’s AGM on
11th May 2022:
Resolution
Votes for/
discretionary
% of vote
Votes
against
% of vote
Votes
withheld
Approval of Directors’ remuneration report
11,044,882
99.5%
55,814
0.5%
16.080
Implementation of the Remuneration Policy for the year ending 31st December 2023
A summary of how the Directors’ Remuneration Policy will be applied during the year ending 31st December 2023 is set out below.
2023
Basic salary
Other*
Total
2022
Basic salary
Other*
Total
Mark Lawrence
Minimum
£462,000
£29,406
£491,406
£440,000
£29,406
£469,406
Target
£462,000
£560,706
£1,022,706
£440,000
£535,406
£975,406
Maximum
£462,000
£1,184,406
£1,646,406
£440,000
£1,129,406
£1,569,406
Mike Crowder
Minimum
£393,750
£29,870
£423,620
£375,000
£29,870
£404,870
Target
£393,750
£482,682
£876,432
£375,000
£461,100
£836,100
Maximum
£393,750
£1,014,245
£1,407,995
£375,000
£967,370
£1,342,370
Trevor Mitchell
Minimum
£346,500
£21,697
£368,197
£330,000
£21,697
£351,697
Target
£346,500
£420,172
£766,672
£330,000
£401,197
£731,197
Maximum
£346,500
£887,947
£1,234,447
£330,000
£846,697
£1,176,697
* Other includes benefits at Minimum level; at target level includes benefits plus bonus payout of 60% of maximum and LTIP threshold vesting at 25% of maximum award in normal
circumstances. Maximum level includes benefits plus full payout of bonus and LTIP at Maximum level.
Basic Salary
Salaries of Executive Directors are shown in the table above.
Pension Arrangements
None of the current Executive Directors receive any pension benefit from the Company.
Annual Bonus
The maximum bonus potential for the year ending 31st December 2023 is 150% of salary for all the Executive Directors.
Awards are determined based on a combination of both the Group’s financial results, being growth in Group profit before tax
(two-thirds of overall bonus) and strategic targets (one-third of overall bonus) being met.
Maximum bonus will only be payable when both the financial results of the Group have significantly exceeded expectations and all
strategic targets have been met.
The measures have been selected to reflect a range of key financial and operational goals which support the Company’s Growth Plan
and ESG initiative. ESG accounts for 40% of the strategic target bonus opportunity. The respective targets have not been disclosed as
they are considered by the Board to be commercially sensitive.
The Executive Directors’ performance will be assessed individually by the Committee against the measures and targets, relying on
audited information where appropriate, and having regard to the value which has been created for shareholders.
Annual Report on Remuneration
continued
Long-term Incentives (Audited)
Consistent with past awards, LTIP awards that will be granted in 2023 will vest subject to continued employment with the Group and
satisfaction of performance conditions over a three-year period ending on 31st December 2025. These performance conditions are
expected to be based upon earnings per share targets.
Non-Executive Directors
The Company’s approach to Non-Executive Directors’ remuneration is set by the Board with account taken of the time and
responsibility involved in each role. Fees are shown below:
On behalf of the Board
Peter Maskell
Chair of the Remuneration Committee
20th March 2023
Non-Executive
2023
Committee
2022
Committee
Directors
Position
base fee
fee
base fee
fee
Iain McCusker
Chairman
£107,100
–
£102,000
–
Peter Maskell
Remuneration Committee Chair
£56,438
£5,000
£53,750
£5,000
Louise Dier
Audit Committee Chair (to 30 April 2022)
–
–
£22,396
£2,083
Jonathan Hook
Audit Committee Chair (from 22 June 2022)
£56,438
£5,000
£53,750
£2,918
Aysegul Sabanci
Independent Director (from 1 May 2022)
£56,438
£35,833
–
TClarke
Annual Report and Financial Statements 2022
65
66
Governance
The Directors’ report should be read in conjunction with the Strategic report on pages 01 to 38 and the Corporate Governance report
on pages 39 to 68. The Directors’ report comprises sections of the Annual Report incorporated by reference as set out below which,
taken together, contain the information to be included in the Annual Report, where applicable, under Listing Rule 9.8.4.
Board membership
Page 39
Dividends
Page 13
Directors’ long-term incentives
Pages 49 to 64
Corporate Governance report
Pages 39 to 68
Engagement with employees
Pages 17 to 22
Engagement with stakeholders
Future developments of the business of the Group
Pages 26 to 28, 37
Pages 5 to 13
Employee equality, diversity and involvement
Pages 20 to 22
Carbon emissions
Pages 23 to 25
Disabled persons
Page 22
Statement of Directors’ responsibilities in respect of the financial statements
Page 68
Financial risk management
Pages 103 to 105
Subsidiaries
Page 109
KPI’s
Page 01
Directors
The directors who held office during the year and up to the date of signing these financial statements were as follows:
Name
Appointment
Iain McCusker
Chairman
Peter Maskell
Senior Independent Director
Louise Dier
Independent Director (retired 30 April 2022)
Jonathan Hook
Independent Director
Aysegul Sabanci
Independent Director (appointed 1 May 2022)
Mark Lawrence
Group Chief Executive Officer
Mike Crowder
Group Managing Director
Trevor Mitchell
Group Finance Director
Brief biographies of current serving Directors, indicating their experience and qualifications, can be found on page 39.
In line with the UK Corporate Governance Code, all the Directors shall be subject to annual election or re-election at the forthcoming
Annual General Meeting (‘AGM’) on 10th May 2023.
Powers of Directors
The powers of the Directors are determined by the Company’s Articles of Association, the Companies Act 2006 and the directions
given by the Company by resolutions passed in general meetings. The Directors are authorised by the Articles of Association to issue
and allot Ordinary shares, to disapply statutory pre-emption rights and to make market purchases of the Company’s shares. The
Directors currently have shareholder approval for the issue of Ordinary share capital up to an aggregate nominal amount of £1,464,901
and for the buyback of Ordinary shares up to a maximum aggregate of 10% of the issued Ordinary share capital. The Directors will be
seeking to renew their authorities at the forthcoming AGM.
Going Concern
In determining the appropriate basis of preparation of the financial statements, the directors are required to consider whether the Group
and Company can continue in operational existence for the foreseeable future.
As at 31 December 2022 the Group held cash of £22.5m (2021: £20.3m) and had drawn down short-term borrowings of £15m under a
revolving credit facility. This resulted in net cash of £7.5m (2021: £5.3m). The Group also has access to a further £10m under a revolving
credit facility and £5m overdraft facility. No balances were drawn down under the overdraft facility at either 31st December 2022 or 2021.
The Group uses the above banking facilities as and when required to meet working capital requirements. The revolving credit facility
expires on 31st August 2026. The overdraft facility is subject to annual review with any amounts borrowed repayable on demand. The
Directors have received confirmation from the bank that they know of no reason why the overdraft facility will not be renewed when it falls
due for review.
The Directors have reviewed the Group’s forecasts and projections for the next three year period. The model assumes delivery of the
2023-25 Group Business Plan, and that the banking facilities will remain in place throughout the projection period. The projections show
that the Group will remain profitable, with a significant amount of headroom against covenants and borrowing limits.
Directors‘ Report
Management have also produced sensitivity analysis to assess the Group’s resilience to more adverse outcomes which could arise from
one of the principal risks to the business (discussed on pages 29 to 32), including a scenario whereby revenue and profitability remain at
current levels and a severe but plausible scenario whereby profitability drops by 50%. In all scenarios, including the reasonable worst case,
the Group is able to comply with its financial covenants, operate within its current facilities, and meet its liabilities as they fall due. Based on
current interest rates the Directors have calculated that forecast operating profit could fall by 82% and the Group still comply with all
covenants under its current funding arrangements. Any additional drop in operating profit would require further discussion with our
lenders. Based on the strength of our Forward Order Book management do not consider such a scenario to be at all plausible.
Accordingly, the directors consider there to be no uncertainties that may cast significant doubt on the Group’s ability to continue to
operate as a going concern. They have formed a judgement that there is a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of signing of
these financial statements. For this reason, they continue to adopt the going concern basis in the preparation of these financial statements.
Share Capital
The Company’s share capital consists of Ordinary shares with a nominal value of 10p each. The issued share capital as at 31 December
2022 was £4,410,104 consisting of 44,101,443 Ordinary shares of 10p each. The Company’s issued Ordinary shares are fully paid and
rank equally in all respects. There are no restrictions on the size of a holding nor on the transfer of Ordinary shares in the Company or
on the exercise of voting rights attached to them, save that:
• certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws and market
requirements relating to close periods); and
• pursuant to the Listing Rules of the Financial Conduct Authority, whereby certain employees of the Company require the approval
of the Company to deal in the Company’s shares.
Further details on share capital are shown in note 18 to the financial statements.
Substantial Shareholdings
As at 31 December 2022 the following information has been disclosed to the Company under the FCA’s Disclosure Guidance and
Transparency Rules (’DTR 5’), in respect of notifiable interests in the voting rights in the Company’s issued share capital:
Name of holder
Total voting
rights
1
% of voting
rights
2
Regent Gas Holdings Limited
7,366,407
16.71%
Interactive Investor
4,676,826
10.61%
Hargreaves Lansdown, stockbrokers
3,616,123
8.20%
Heritage Capital Management
2,510,000
5.69%
Barclays Smart Investor
2,249,885
5.10%
1
Total voting rights attaching to the ordinary shares at the Company at the time of disclosure to the Company.
2
Percentage of total voting rights at the date of disclosure to the Company.
As at 20th March 2023
, the Company had not been notified of any changes to major shareholdings.
Significant Agreements – Change of Control
The Directors are not aware of any significant agreements that take effect, alter or terminate upon a change of control of the Company
following a takeover bid.
The Company has the 2021 Long Term Incentive Plan (‘LTIP’) in place for Directors and senior management, and an employee share
save scheme in place which is available to all employees. The rules of the LTIP provide that awards made under the LTIP may vest on a
change of control of the Company, at the discretion of the Remuneration Committee. The rules of the Savings Related Share Option
Scheme provide that in the event of a change of control, outstanding options may be exchanged or replaced with similar options on
the same terms. Further details on employee share schemes are disclosed in note 18 to the financial statements. The rules of the
Directors Annual Bonus scheme state that the performance period ends on change of control and bonuses should be paid as soon as
practicable unless the Remuneration Committee determines otherwise.
There are no other known agreements between the Company and its Directors or employees providing for compensation for loss of
office or employment that occurs because of a takeover bid.
Significant Interests
Save for interests in service agreements, none of which extend beyond 12 calendar months, the Directors have no material interest in
any contract of significance that would have required disclosure under the continuing obligations of the Financial Conduct Authority
Listing Rules, nor have they any beneficial interest in the issued share capital of the subsidiary companies.
•
•
TClarke
Annual Report and Financial Statements 2022
67
68
Governance
Qualifying Third Party Indemnities
The Articles of Association of the Company entitle the Directors,
to the extent permitted by the Companies Act 2006 and other
applicable legislation, to be indemnified out of the assets of the
Company in the event that they suffer any expenses in
connection with certain proceedings relating to the execution
of their duties as Directors of the Company.
In addition, the Company has in place insurance in favour of its
Directors and officers in respect of certain losses or liabilities to
which they may be exposed due to their office up to a limit of
£10m. The insurance was in force throughout the year.
Research and Development
The Group undertakes research and development activity in
creating innovative design and construction solutions integral to
the delivery of its projects. The direct expenditure incurred is not
separately identifiable as the investment is usually contained
within the relevant project.
Political Contributions
No contributions were made to any political parties during the
current or preceding year.
Events After the Balance Sheet Date
There have been no significant events since the balance sheet date
which would have a material effect on the financial statements.
Independent Auditors
A resolution is proposed at the AGM for the appointment of
Mazars LLP as independent auditor of the Company at a rate of
remuneration to be determined by the Audit Committee.
Annual General Meeting (‘AGM’)
The AGM of the Company will be held at 30 Crown Place,
Earl Street, London EC2A 4ES at 10am on Wednesday
10th May 2023.
The Notice convening the AGM, together with details of the
special business to be considered and explanatory notes for
each resolution, is contained in a separate circular sent to
shareholders. It is also available to be viewed on the
Company’s website.
Approved by the Directors and signed by order of the Board.
Trevor Mitchell
Company Secretary
20th March 2023
TClarke plc is registered in England No. 00119351.
Directors‘ Report
continued
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance
with UK-adopted international accounting standards and the
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law).
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of
the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
•
state whether applicable UK-adopted international
accounting standards have been followed for the Group
financial statements and United Kingdom Accounting
Standards, comprising FRS 101 have been followed for the
Company financial statements, subject to any material
departures disclosed and explained in the financial
statements;
•
make judgements and accounting estimates that are
reasonable and prudent; and
•
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Directors’ confirmations
The Directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s and company’s position and performance, business
model and strategy.
Each of the Directors, whose names and functions are listed in
Directors’ report confirm that, to the best of their knowledge:
•
the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Group;
•
the Company financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities and financial position of the Company; and
•
the Annual Report and Financial Statements includes a fair
review of the development and performance of the business
and the position of the Group and Company, together with a
description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’
report is approved:
•
so far as the Director is aware, there is no relevant audit
information of which the Group’s and Company’s auditor is
unaware; and
•
they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and
Company’s auditor is aware of that information
On behalf of the Board
Trevor Mitchell
Group Finance Director
Iain McCusker
Chairman
20th March 2023
TClarke plc
Registered number: 00119351
Statement of Directors‘ Responsibilities in Respect of the
Financial Statements
TClarke
Annual Report and Financial Statements 2022
69
70
Governance
Opinion
We have audited the financial statements of TClarke Plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2022 which comprise the following:
•
Consolidated Income Statement,
•
Consolidated Statement of Comprehensive Income,
•
Consolidated Statement of Financial Position,
•
Consolidated Statement of Cash Flows,
•
Consolidated Statement of Changes in Equity,
•
Company Statement of Financial Position,
•
Company Statement of Changes in Equity, and
•
notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
UK-adopted international accounting standards.
The financial reporting framework that has been applied in the
preparation of the parent company financial statements is United
Kingdom Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
•
the group financial statements give a true and fair view of the
state of the group’s affairs as at 31 December 2022 and of the
group’s profit or the year then ended;
•
the parent company financial statements give a true and fair
view of the state of the parent company’s affairs as at 31
December 2022;
•
the group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
•
the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice;
•
the group financial statements and the parent company
financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
“Auditor’s responsibilities for the audit of the financial statements”
section of our report. We are independent of the group and the
parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
We have not provided any non-audit services to the group in the
period under audit. Accordingly, to the best of our knowledge
and belief, we confirm that non-audit services prohibited by the
FRCs Ethical Standard were not provided.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. However,
because not all future events or conditions can be predicted,
this conclusion is not a guarantee as to the group’s and the
parent company’s ability to continue as a going concern.
Our audit procedures to evaluate the directors’ assessment of
the group’s and the parent company's ability to continue to
adopt the going concern basis of accounting included, but were
not limited to:
•
Undertaking an initial assessment at the planning stage of
the audit to identify events or conditions that may cast
significant doubt on the group’s and the parent company’s
ability to continue as a going concern;
•
Obtaining an understanding of the relevant controls relating
to the directors’ going concern assessment;
•
Assessing the historical accuracy of projections prepared by
the directors;
•
Assessing the data inputs and the assumptions underlying
the base case going concern model, and the assumptions
used in the downside and upside scenarios;
•
Reviewing management’s forward order book;
•
Testing the forecast model and covenant calculations for
mathematical accuracy and logical integrity;
•
Assessing projected liquidity and projected covenant
compliance over the going concern period;
•
Evaluating the appropriateness of the directors’ disclosures in
the financial statements on going concern.
•
Considering whether the group’s forecasts in the going
concern assessment are consistent with other forecasts used
by the group in its accounting estimates, including the
goodwill impairment assessment.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group’s and the parent company’s ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
In relation to TClarke Plc’s reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in
the financial statements about whether the director’s considered
it appropriate to adopt the going concern basis of accounting.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Independent Auditors‘ Report to the Members of TClarke PLC
Report on the Audit of the Financial Statements
Key Audit Matter
How our scope addressed this matter
Long-term contract
accounting in relation to
Construction revenue (group)
Revenue: £391.2m
Refer to Note 3 (iv) and (v)
(Significant accounting policies),
Note 4 (Significant accounting
estimates), Note 5 (Segment
Information and Revenue Analysis)
and Note 15 (Contract assets /
liabilities).
The group recognises revenue for
construction contracts over time
using the input method under
IFRS 15. Therefore revenue
recognised in the period is
calculated based on the
percentage of completion of the
project, which is calculated based
on the total costs incurred to date
compared with the total expected
costs for the project (Life).
The forecast life costs are based on
management estimates and could
be manipulated to influence the
revenue and profit recognised in
the year.
The revenue on contracts includes
amounts relating to variations
and claims, which fall under the
variable consideration or contract
modification requirements of IFRS
15. These amounts are recognised
on a contract-by-contract basis
when evidence supports that the
contract modification is
enforceable or when it is
considered highly probable that a
significant reversal in the amount
of variable consideration
recognised will not occur.
There is a risk that revenue
recognised over a period of time
on construction contracts and
related contract balances are
materially misstated due to the
requirement for significant
judgements and estimates to be
made by management, which
involve inherent subjectivity and
complexities.
Our audit procedures included, but were not limited to:
•
Understanding of the process over contract accounting and assessing the design and
implementation of the related controls;
•
Review of retentions against certifications and assessment of recoverability;
•
Test of details on costs incurred in the year for a sample of materials and equipment,
including allocation to project, through agreement to supporting documentation;
•
Test of detail on payroll cost allocation to contracts;
•
Test of detail on contract accruals at year end through review of the supporting calculations
and review or post year end information;
•
Review of historical margins across the 2022 contract portfolio over the last 3 years to assess
management’s ability to forecast project profitability; and
•
For certain selected contracts, attendance at monthly contract management meetings and
site visits.
Using a variety of quantitative and qualitative criteria, we selected a sample of contracts to
assess and challenge the most significant and complex contracts involving judgement and
estimates. For the sample selected, we performed the following procedures:
•
Review key contract terms and management’s assessment of performance obligations;
•
Review of key contract staff experience and qualifications;
•
Meeting with contract teams to gain an understanding of the contract, including principal
opportunities and risks;
•
Background media search on the related construction project;
•
Review of financial stability of the largest subcontractors and the customer;
•
Review of forecast revenue to signed initial contract, signed contract amendments and signed
variations;
•
Test a sample of variations to contractual terms, certification, or instructions as appropriate
to support management’s judgement that no subsequent significant reversal of revenue
will occur,
•
Review latest client certification and subsequent cash receipts;
•
Comparison of year end contract assets against subsequent certification and cash receipts;
•
Assessment of management calculation of estimated costs to complete through both
analytical review and test of details;
•
Assessment of costs incurred to date through test of details;
–
For a sample of subcontractors - latest certifications and purchase invoices.
–
For a sample of material, equipment and labour - purchase invoices.
•
Reperformance of calculation of revenue recognised, contract asset and/or contract
liability; and
•
Review of contractual completion date together with any signed extension-of-time compared
to anticipated completion date to assess any exposure to potential liquidated damages.
Our observations
Based on all the evidence obtained from our audit testing, we concluded that revenue from
construction contracts, contract assets and contracts liabilities are fairly stated.
We summarise below the key audit matters in forming our
opinion above, together with an overview of the principal audit
procedures performed to address each matter and our key
observations arising from those procedures.
These matters, together with our findings, were communicated
to those charged with governance through our Audit
Completion Report.
TClarke
Annual Report and Financial Statements 2022
71
72
Governance
Independent Auditors‘ Report to the Members of TClarke PLC
continued
Report on the Audit of the Financial Statements
Our application of materiality and an overview of the
scope of our audit
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and on the
financial statements as a whole. Based on our professional
judgement, we determined materiality for the financial
statements as a whole as follows:
As part of designing our audit, we assessed the risk of material
misstatement in the financial statements, whether due to fraud
or error, and then designed and performed audit procedures
responsive to those risks.
We looked at where the directors made subjective
judgements, such as assumptions on significant accounting
estimates, in particular in relation to revenue recognition,
goodwill impairment and the defined benefit pension scheme.
We tailored the scope of our audit to ensure that we
performed sufficient work to be able to give an opinion on the
financial statements as a whole. We used the outputs of our
risk assessment, our understanding of the group and the
parent company, their environment, controls, and critical
business processes, to consider qualitative factors to ensure
that we obtained sufficient coverage across all financial
statement line items.
Overall materiality
Overall materiality
How we determined it
How we determined it
Rationale for
benchmark applied
Rationale for
benchmark applied
Performance materiality
Performance materiality
Reporting threshold
Reporting threshold
£2.13m
£673,000
0.5% of revenue
1% of total assets
We used revenue as a basis for determining materiality as revenue is a main key performance
indicator in the Annual Report and is a focus for both investors and management.
We used total assets as a benchmark for materiality as the parent company does not trade and
acts as a group holding entity.
Performance materiality is set to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £1.278m, which represents 60% of overall materiality.
In determining performance materiality, we considered the fact that this is our first year as
auditor, together with a number of other factors such as the history of misstatements detected in
previous years, and the effectiveness of the control environment.
We set performance materiality at £403,800 which, as for group materiality, represents 60% of
overall materiality.
We agreed with the Audit Committee that we would report to them misstatements identified
during our audit above £64,000 as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
We agreed with the Audit Committee that we would report to them misstatements identified
during our audit above £64,000 as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Our scope included an audit of the group and the parent
company financial statements. Our group audit included a full
scope audit of all the significant group entities, being TClarke
Contracting Limited, Weylex Properties Limited and TClarke
Services Limited. All audit procedures were performed by the
group audit team. The above entities accounted for 100% of
the group’s revenue and profit before tax.
At the parent company level, the group audit team also
tested the consolidation process and carried out analytical
procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated
financial information.
Other information
The other information comprises the information included in
the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the
other information which includes reporting based on the
Task Force on Climate-related Financial Disclosures (TCFD)
recommendations.
Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is
a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, the part of the Annual Report on Remuneration
to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
•
the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements and
those reports have been prepared in accordance with
applicable legal requirements;
•
the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Guidance and Transparency Rules
sourcebook made by the Financial Conduct Authority (the
FCA Rules), is consistent with the financial statements and
has been prepared in accordance with applicable legal
requirements; and
•
information about the parent company’s corporate
governance code and practices and about its administrative,
management and supervisory bodies and their committees
complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group
and the parent company and their environment obtained in
the course of the audit, we have not identified material
misstatements in the:
•
strategic report or the directors’ report; or
•
information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the parent company financial statements and the part of the
Annual Report on Remuneration to be audited are not in
agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law
are not made; or
•
we have not received all the information and explanations we
require for our audit; or
•
a corporate governance statement has not been prepared by
the parent company.
Corporate governance statement
The Listing Rules require us to review the directors' statement
in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to
compliance with the provisions of the UK Corporate
Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement, included within the Statement of
Compliance, is materially consistent with the financial statements
or our knowledge obtained during the audit:
•
Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified, set out on pages 65 to 67;
•
Directors’ explanation as to its assessment of the entity’s
prospects, the period this assessment covers and why they
period is appropriate, set out on page 38;
•
Directors' statement on fair, balanced and understandable, set
out on page 68;
•
Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks, set out on page 44;
•
The section of the annual report that describes the review of
effectiveness of risk management and internal control
systems, set out on pages 42 to 43; and;
•
The section describing the work of the Audit Committee, set
out on pages 45 to 47.
Group materiality
Parent company materiality
TClarke
Annual Report and Financial Statements 2022
73
74
Governance
Other matters which we are required to address
Appointment
Following the recommendation of the audit committee, we
were appointed by the board of directors on 22 June 2022 to
audit the financial statements for the year ending 31 December
2022, our first year as the group and parent company’s auditor,
and subsequent financial periods. Therefore, the period of total
uninterrupted engagement is 1 year.
Use of the audit report
This report is made solely to the company’s members as a
body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the company and the company’s members as a body for our
audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority Disclosure
Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial
report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditor’s
report provides no assurance over whether the annual financial
report has been prepared using the single electronic format
specified in the ESEF RTS.
William Neale Bussey (Senior Statutory Auditor)
for and on behalf of Mazars LLP, Chartered Accountants and
Statutory Auditor
30 Old Bailey
London
EC4M 7AU
20th March 2023
Independent Auditors‘ Report to the Members of TClarke PLC
continued
Report on the Audit of the Financial Statements
Responsibilities of directors
As explained more fully in the Statement of Directors’
Responsibilities in Respect of the Financial Statements, the
directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
Based on our understanding of the group and industry, we
considered that non-compliance with the following laws
and regulations might have a material effect on the financial
statements: Listing Rules, Bribery Act and Modern Slavery Act
2015, Employment Regulation, Health and Safety regulation,
anti-money laundering regulation, General Data Protection
Regulation (GDPR), CDM 2015 (Construction Design and
Management) Regulation, Electrical and Water Supply
Regulations.
To help us identify instances of non-compliance with these
laws and regulations, and in identifying and assessing the risks
of material misstatement in respect to non-compliance, our
procedures included, but were not limited to:
•
Gaining an understanding of the legal and regulatory
framework applicable to the group and the parent
company, the industry in which they operate, and the
structure of the group, and considering the risk of acts by
the group and the parent company which were contrary to
the applicable laws and regulations, including fraud;
•
Inquiring of the directors, management and, where
appropriate, those charged with governance, as to whether
the group and the parent company is in compliance with
laws and regulations, and discussing their policies and
procedures regarding compliance with laws and regulations;
•
Reviewing minutes of directors’ meetings in the year; and
•
Discussing amongst the engagement team the laws and
regulations listed above, and remaining alert to any
indications of non-compliance.
We also considered those laws and regulations that have a
direct effect on the preparation of the financial statements,
such as the Companies Act 2006.
In addition, we evaluated the directors’ and management’s
incentives and opportunities for fraudulent manipulation of
the financial statements, including the risk of management
override of controls, and determined that the principal risks
related to posting manual journal entries to manipulate
financial performance, management bias through judgements
and assumptions in significant accounting estimates, in
particular in relation to revenue recognition (which we
pinpointed to the completeness, existence and accuracy
assertions), goodwill impairment, pension liabilities and
significant one-off or unusual transactions.
Our procedures in relation to fraud included but were not
limited to:
•
Making enquiries of the directors and management on
whether they had knowledge of any actual, suspected or
alleged fraud;
•
Gaining an understanding of the internal controls established
to mitigate risks related to fraud;
•
Discussing amongst the engagement team the risks of fraud;
•
Addressing the risks of fraud through management override
of controls by performing journal entry testing;
•
Challenging assumptions and judgments made by
management in their significant accounting estimates, in
particular those that involve the assessment of future events,
which are inherently uncertain – the key estimates determined
in this respect are those relating to revenue and margin,
impairment of goodwill and retirement benefit obligations;
The primary responsibility for the prevention and detection of
irregularities, including fraud, rests with both those charged
with governance and management. As with any audit, there
remained a risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect
on our audit are discussed in the “Key audit matters” section
of this report.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Note
2022
£m
2021
£m
Revenue
5
Cost of sales
(378.6 )
(286.6 )
Gross profit
Administrative expenses
(35.9 )
(31.7 )
Operating profit
7
Finance costs
6
(1.2 )
(1.0 )
Profit before taxation
Taxation
9
(1.9 )
(1.5 )
Profit for the financial year
Earnings per share
Attributable to owners of TClarke plc
Basic
10
Diluted
10
Financial Statements
TClarke
Annual Report and Financial Statements 2022
75
76
Note
2022
£m
2021
£m
Profit for the year
Other comprehensive income
Items that will not be reclassified to the income statement
Actuarial gain on defined benefit pension scheme
22
Revaluation of freehold property
12
(0.2 )
Deferred tax relating to items that will not be reclassified
13
(2.4 )
Total other comprehensive income for the year (net of tax)
Total comprehensive income for the year
The notes on pages 79 to 105 form part of these financial statements.
Consolidated Income Statement
For the year ended 31st December 2022
Consolidated Statement of Comprehensive Income
For the year ended 31st December 2022
Consolidated Statement of Financial Position
As at 31st December 2022
Note(s)
2022
£m
2021
£m
Non-current assets
Intangible assets
11
Property, plant and equipment
12
Deferred tax assets
13
Trade and other receivables
16
Total non-current assets
Current assets
Inventories
14
Contract assets
15
Trade and other receivables
16
Current tax receivables
Cash and cash equivalents
19
Total current assets
Total assets
Current liabilities
Bank loans
20
(15.0 )
(15.0 )
Contract liabilities
15
(7.7 )
(2.9 )
Trade and other payables
17
(96.1 )
(96.3 )
Obligations under leases
23,25
(2.7 )
(1.6 )
Total current liabilities
(121.5 )
(115.8 )
Net current assets
Non-current liabilities
Obligations under leases
23,25
(5.7 )
(1.3 )
Trade and other payables
17
(2.5 )
(1.7 )
Retirement benefit obligations
22
(12.9 )
(23.9 )
Total non-current liabilities
(21.1 )
(26.9 )
Total liabilities
(142.6 )
(142.7 )
Net assets
Equity attributable to owners of the parent
Share capital
18
Share premium
18
Revaluation reserve
Retained earnings
Total equity
The notes on pages 79 to 105 form part of these financial statements.
behalf by:
Iain McCusker
Mark Lawrence
Director
Financial Statements
TClarke
Annual Report and Financial Statements 2022
77
78
Note
2022
£m
2021
£m
Net cash generated from/(used in) operating activities
19
(0.6 )
Investing activities
Purchase of property, plant and equipment
(1.8 )
(0.4 )
Net cash used in investing activities
(1.8 )
(0.4 )
Financing activities
Shares allotted in respect of share option schemes
Facility fee paid
(0.3 )
(0.1 )
Equity dividends paid
18
(2.3 )
(1.9 )
Acquisition of shares by ESOT
18
(0.8 )
(0.9 )
Repayment of lease obligations
(2.1 )
(1.5 )
Net cash used in financing activities
(5.3 )
(3.9 )
Net increase/(decrease) in cash and cash equivalents
(4.9 )
Cash and cash equivalents at the beginning of the year
19
Cash and cash equivalents at the end of the year
19
The notes on pages 79 to 105 form part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31st December 2022
Share
capital
£m
Share
premium
£m
Revaluation
reserve
£m
Retained
earnings
£m
Total
Equity
£m
At 1st January 2021
Comprehensive income
Profit for the year
Other comprehensive income
Actuarial loss on retirement benefit obligation
Deferred income tax on actuarial gain on
Retirement benefit obligation
Total other comprehensive income
Total comprehensive income
Transactions with owners
Transfer on depreciation of freehold properties
(0.1 )
Share-based payment expense
Acquisition of shares by ESOT
(0.9 )
(0.9 )
Shares allotted in respect of share option schemes
Dividends paid
(1.9 )
(1.9 )
Total transactions with owners
(0.1 )
(1.9 )
(1.5 )
At 31st December 2021
Comprehensive income
Profit for the year
Other comprehensive income
Actuarial gain on retirement benefit obligation
Deferred income tax on actuarial gain on
Retirement benefit obligation
(2.4 )
(2.4 )
Revaluation of freehold property
(0.2 )
(0.2 )
Total other comprehensive income
(0.2 )
Total comprehensive income
(0.2 )
Transactions with owners
Transfer on depreciation of freehold property
(0.1 )
Share-based payment expense
Acquisition of shares by ESOT
(1.6 )
(1.6 )
Shares allotted in respect of share option schemes
SAYE option cost
Dividends paid
(2.3 )
(2.3 )
Total transactions with owners
(0.1 )
(2.9 )
(2.8 )
At 31st December 2022
The notes on pages 79 to 105 form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31st December 2022
Note
22
13
12
18
18
18
22
13
12
18
18
18
18
Financial Statements
TClarke
Annual Report and Financial Statements 2022
79
80
General Information
The address of its registered office and principal place of business is disclosed on page 110. The nature of the Group’s operations and
The Group’s consolidated financial statements are prepared in accordance with the requirements of the Companies Act 2006 and in
accordance with UK-adopted international standards; and have been prepared on a going concern basis under the historic cost convention as
modified by the revaluation of land and buildings. They comprise the consolidated financial statements of TClarke plc and all its subsidiaries
made up to 31st December 2022 and have been presented in £m. There have been no new accounting policies adopted in the year.
The preparation of financial statements in conformity with UK-adopted international standards requires the use of certain critical
In determining the appropriate basis of preparation of the financial statements, the directors are required to consider whether the
Group and Company can continue in operational existence for the foreseeable future.
As at 31 December 2021 the Group held cash of £22.5m (2021: £20.3m) and had drawn down short-term borrowings of £15m under
a revolving credit facility. This resulted in net cash of £7.5m (2021: £5.3m). The Group also has access to a further £10.0m of the
revolving credit facility and a £5.0m overdraft facility. No balances were drawn down under the overdraft facility at either
31st December 2022 or 2021.
The Group uses the above banking facilities as and when required to meet working capital requirements. The revolving credit facility expires
on 31st August 2026. The overdraft facility is subject to annual review with any amounts borrowed repayable on demand. The Directors have
received confirmation from the bank that they know of no reason why the overdraft facility will not be renewed when it falls due for review.
The Directors have reviewed the Group’s forecasts and projections for the next three year period. The model assumes delivery of the
2023-25 Group Business Plan, and that the banking facilities will remain in place throughout the projection period. The projections
show that the Group will remain profitable, with a significant amount of headroom against covenants and borrowing limits.
The Directors have also produced sensitivity analysis to assess the Group’s resilience to more adverse outcomes which could arise from
one of the principal risks to the business (discussed on pages 29 to 32), including a scenario whereby revenue and profitability remain
at current levels and a severe but plausible scenario whereby profitability drops by 50%. In all scenarios, including the reasonable worst
case, the Group is able to comply with its financial covenants, operate within its current facilities, and meet its liabilities as they fall due.
Based on current interest rates the Directors have calculated that forecast operating profit could fall by 82% and the Group still comply
with all covenants under its current funding arrangements.
Any additional drop in operating profit would require further discussion with
our lenders.
Based on the strength of our Forward Order Book management do not consider such a scenario to be at all plausible.
Accordingly, the Directors consider there to be no uncertainties that may cast significant doubt on the Group’s ability to continue to
operate as a going concern. They have formed a judgement that there is a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of signing of
The principal accounting policies applied in the preparation of these consolidated financial statements are set out in note 3 below.
There have been no new standards, amendments to standards or interpretations adopted from 1 January 2022 that had a material
effect. Future standards, amendments to standards, and interpretations not yet effective are noted below. None of these are expected
to have a material impact on the Group.
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2
Making Materiality Judgements
:
Disclosure of Accounting Policies (Issued February 2021)
• Amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
: Definition of Accounting Estimates
(Issued February 2021)
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Issued
Notes to the Financial Statements
For the year ended 31st December 2022
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31st December each year. Control is achieved when the Company has power over the investee, is
exposed, or has rights, to variable returns from its involvement with the investee, and has the ability to use its power to affect its returns.
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All
(ii) Employee Share Ownership Trust (‘ESOT’)
As the Company is deemed to have control of its ESOT, it is included in the consolidated financial statements. The ESOT’s assets (other
than investments in the Company’s shares), liabilities, income and expenses are included on a line-by-line basis in the consolidated
financial statements. The ESOT’s investment in the Company’s shares is deducted from equity in the consolidated statement of financial
position as if they were treasury shares. The Trustee of the ESOT has waived its right to dividends on the shares held in the ESOT.
Operating divisions are reported in a manner consistent with internal reporting provided to the Board who, representing the ‘Chief
Operating Decision-Maker’ as per IFRS 8, are responsible for allocating resources to, and assessing the performance of, operating
Revenue derives from two sources: most significantly, from long-term contracts whereby the Group designs, installs and integrates
mechanical and electrical systems for customers (‘construction contracts’); and less significantly, from the provision of maintenance and
small works services. In both instances revenue comprises the fair value of the consideration received or receivable, net of value added
tax, rebates and discounts. Further principles for revenue and profit recognition are as follows:
These services are provided to customers across our market sectors. The majority of contracts are considered to contain only one
performance obligation for the purposes of recognising revenue. While the scope of works may include a number of different
components, these are usually highly interrelated and produce a combined output for the customer. Contracts are typically satisfied
over time as the benefit is transferred to the customer.
The Group uses an input method to measure progress. The percentage of completion is measured using cost incurred to date as a
proportion of the estimated full costs of completing the contract and is applied to the total expected contract revenue to determine
the revenue to be recognised to date. Variations and claims are only included in the total expected contract revenue to the extent that
it is considered highly probable that they will not reverse in the future.
Once the outcome of a construction contract can be estimated reliably, profit is recognised in the income statement in line with the
corresponding stage of completion. Where a contract is forecast to be loss-making, the full loss is recognised immediately in the
consolidated income statement.
Mobilisation costs incurred in respect of a specific contract that has been won or an anticipated contract that is expected to be won
(e.g. when the Group has secured preferred bidder status) are carried forward in the balance sheet as capitalised mobilisation costs if:
the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations
in the future; and the costs are expected to be recovered (i.e. the contract is expected to be sufficiently profitable to cover the
mobilisation costs). Capitalised mobilisation costs are amortised over the expected contract duration in accordance with the stage of
Revenue and profit from services rendered under maintenance and small works contracts is recognised when each of the performance
obligations are satisfied. Unless part of a longer term package of work revenue on such contracts is normally recognised at the point in
(v) Contract assets and liabilities
When the Group transfers goods or services to a customer before the customer pays consideration or before payment is due, the
amount of revenue associated with the transfer of goods or services is accrued and presented as a contract asset in the balance sheet
(excluding any amounts presented as a receivable). A contract asset represents the Group’s right to consideration in exchange for
goods or services that the Group has transferred to a customer.
If a customer pays consideration, or the Group has a right to an amount of consideration that is unconditional (i.e. a receivable), before
the Group transfers a good or service to the customer, the amount is presented as a contract liability on the statement of financial
position. A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the entity has
received consideration (or an amount of consideration is due) from the customer.
Where revenue that has been recognised is subsequently determined not to be recoverable due to the inability of a customer to meet
its payment obligations, these amounts are charged to administrative expenses as a credit loss.
combination is measured at fair value, which is calculated as the aggregate of the fair values at the acquisition date of assets
transferred, liabilities incurred and equity instruments issued, to the former owners by the Group in exchange for control of the
Purchased goodwill is measured as the excess of the sum of the fair value of the consideration transferred over the net of the acquisition
date fair values of the identifiable assets and liabilities acquired, and is capitalised and classified as an intangible asset in the consolidated
statement of financial position.
The acquiree’s identifiable assets, liabilities and contingent liabilities are recognised at their fair values at the acquisition date, except for
non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 ‘Non-current assets held for sale and
discontinued operations.’
When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the
contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
Impairment tests on goodwill are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests
whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an
asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s
cash-generating unit (i.e. the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).
For the purposes of impairment testing, goodwill is allocated on initial recognition to each of the Group’s operating segments that are
expected to benefit from the synergies of the combination giving rise to the goodwill.
Impairment charges are included in non-underlying costs in the consolidated income statement, except to the extent they reverse gains
Land and buildings comprise mainly offices occupied by the operating units of the Group. Land and buildings are shown at fair value,
based on valuations carried out by external independent valuers, less subsequent depreciation. Valuations are performed with sufficient
regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated
depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to
the revalued amount of the asset. On disposal of the asset the balance of the revaluation reserve pertaining to the asset is transferred
from the revaluation reserve to retained earnings.
3
Significant Accounting Policies
continued
All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will it flow to the Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during
the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as
revaluation reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged in other comprehensive
income and debited against revaluation reserves directly in equity; all other decreases are charged to the income statement.
and depreciation based on the asset’s original cost is transferred from the revaluation reserve to retained earnings. On disposal of the
asset, the balance of the revaluation reserve pertaining to the asset is transferred from the revaluation reserve to retained earnings.
Depreciation is calculated on a straight-line basis so as to write off the cost less residual values of the relevant assets over their useful
lives, using the following rates:
Freehold properties: 2%
Leasehold improvements: 10% or life of lease if shorter
Plant, machinery and motor vehicles: 10%–33%
Right-of-use assets held under leases are depreciated over their expected useful lives on the same basis as owned assets or, where
Inventories of raw materials and consumables are initially recognised at cost, and subsequently at the lower of cost and net realisable
value. Cost is determined on a first-in first-out basis and comprises all costs of purchase, costs of conversion and other costs incurred in
The Group assesses whether a contract is or contains a lease at the start of a contract. The Group recognises a right-of-use asset and a
corresponding lease liability for all lease agreements in which it is the lessee (with the exception of short-term and low value leases as
defined in IFRS 16 (Leases) which are recognised as an operating expense on a straight-line basis over the term). The lease liability is
initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate
implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate. The right-of-use asset recognised initially is the amount of the lease liability, adjusted for any lease payments
and lease incentives made before the commencement date.
The Group does not materially act as a lessor. Any lease income rounds to zero and is recognised on a straight line basis over the term
The Group’s financial instruments comprise trade and other receivables (excluding prepayments), trade and other payables (excluding
deferred income and taxation), bank loans, and cash and cash equivalents. The Group classifies its financial assets and liabilities as held
at amortised cost. The Group does not trade in any financial derivatives. Financial assets and liabilities are offset and the net amount
reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Trade and other receivables are non-interest bearing and are measured on initial recognition at fair value and subsequently at
amortised cost. On initial recognition, a loss allowance is created which reflects the lifetime expected credit loss on that asset. This loss
allowance is subsequently reassessed at each reporting period date.
Bank deposits comprise cash placed on deposit with financial institutions with an initial maturity of six months or more, and are
measured at amortised cost. Finance income is recognised using the effective interest method and is added to the carrying value of the
Cash and cash equivalents comprise cash at bank and in hand, bank overdrafts, demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Bank
overdrafts are included within current liabilities in the statement of financial position. Finance income and expense are recognised using
Interest-bearing bank loans are recorded at the fair value of the proceeds received, net of direct issue costs. Finance charges are
accounted for on an accruals basis in the income statement using the effective interest method, and are added to the carrying value of
Trade and other payables are initially measured at fair value and subsequently at amortised cost. Trade and other payables are
Income tax expense represents the sum of the tax currently payable and deferred tax.
Tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible.
financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
The amount of any deferred tax asset or liability recognised is determined using tax rates that have been enacted or substantively
enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered.
Deferred tax assets and liabilities are offset as the Group has a legally enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied on either the same company, or on different companies, where there is an
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the loan is drawn down. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, these are
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The retirement benefit obligation represents the fair value of the defined benefit obligation at each reporting date as reduced by the
fair value of scheme assets. For defined benefit retirement benefit schemes, the cost of providing benefits is determined using the
Projected Unit Credit Method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are
recognised in full in the period in which they occur. They are recognised outside the income statement and presented as a component
of other comprehensive income.
The current service cost of defined benefit retirement benefit schemes is recognised in ‘employee benefit expense’ in the income
statement, except where included in the cost of an asset, and reflects the increase in the defined benefit obligation resulting from service
in the current year, benefit changes, curtailments and settlements. Past service cost is recognised immediately in the income statement.
(xvi) Long-term Employee Benefits
Long-term employee benefits are accrued when the Group has a legal or constructive obligation to make payments under long-term
employee benefit arrangements and the amount of the obligation can be reliably measured. The liability is discounted to present value
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity
instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set
out in note 18.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the
end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate
In the application of the Group’s accounting policies, which are described above, the Directors are required to make estimates and
assumptions about the carrying amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses
incurred during the period that may not be readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
The estimates and assumptions that have the most significant impact are set out below.
(see note 5 (Segment Information) and note 15 (Contract assets/liabilities))
In order to determine the revenue and profit recognition in respect of the Group’s construction contracts, the Group has to estimate
the total costs to deliver the contract as well as the final contract value. The Group has to allocate total expected costs between the
amount incurred on the contract to the end of the reporting period and the proportion to complete in a future period. The assessment
of the total costs to be incurred and final contract value requires a degree of judgement and estimation.
The final contract value may include assessments of the recovery of contractual variations which have yet to be agreed with client, as
well as additional compensation claim amounts. The amount of variations and claims are often not fully agreed with the customer due
to timing and requirements of the normal contractual process. Therefore, assessments are based on an estimate of the potential cost
impact of the compensation claims and revenue is constrained to amounts that the Group believes are highly probable of being
received. The estimation of costs to complete is based on all available relevant information and may include estimates of any potential
defect liabilities or liquidated damages for unagreed scope or timing variations. Costs incurred in advance of the contract that are
directly attributable to the contract may also be included as part of the total costs to complete the contract.
Revenue in 2022 was £426.0m (2021: £327.1m). As at 31 December 2022 contract assets were £54.3m (2021: £51.7m) and contract
Retirement Benefit Obligations
(see note 22 (Pension Commitments))
The cost of the defined benefit pension scheme and the present value of the pension obligation are determined using actuarial
valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future.
These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the
complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date, taking advice from independent actuaries. Details of the key
assumptions are set out in note 22, together with associated sensitivity analysis.
The valuation is most sensitive to changes in the discount rate assumption. In determining the appropriate discount rate, the Group
considers the interest rates of corporate bonds, extrapolated as needed along the yield curve to correspond with the expected term of the
defined benefit obligation. The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at
intervals in response to demographic changes. Future salary increases and pension increases are based on expected future inflation rates.
(i) Reportable Segments
The Group provides mechanical and electrical contracting and related services to the construction industry and end users.
For management and internal reporting purposes, the Group is organised geographically into three regional divisions: London, UK
South and UK North, reporting to the Board who represent the ‘chief operating decision-maker’ as per IFRS 8. The measurement basis
used to assess the performance of the divisions is underlying operating profit, stated before amortisation of intangible assets and other
non-underlying items.
All transactions between segments are undertaken on normal commercial terms. All the Group’s operations are carried out within the
United Kingdom, and there is no significant difference between revenue based on the location of assets and revenue based on the
location of customers. The accounting policies for the reportable segments are the same as the Group’s accounting policies disclosed
in note 3. Segmental information is based on internal management reporting.
(ii) Segment Information and Revenue Analysis – Current Year
London
£m
UK South
£m
UK North
£m
Group costs
and
Unallocated
£m
Total
£m
Revenue from contracts with customers
270.0
78.0
78.0
–
426.0
Depreciation
(1.0)
(0.7)
(0.7)
(0.6)
(3.0)
Operating profit
10.6
2.1
2.4
(3.6)
11.5
Finance costs
–
–
–
(1.2)
(1.2)
Profit before tax
10.6
2.1
2.4
(4.8)
10.3
Taxation expense
–
–
–
(1.9)
(1.9)
Profit for the year
10.6
2.1
2.4
(6.7)
8.4
London
£m
UK South
£m
UK North
£m
Total
£m
Business sector
Facilities Management
2.7
16.4
12.2
31.3
Infrastructure
20.6
38.9
20.0
79.5
Engineering Services
91.9
15.6
17.2
124.7
Residential & Hotels
18.5
0.8
26.0
45.3
Technologies
136.3
6.3
2.6
145.2
Total revenue
270.0
78.0
78.0
426.0
(iii) Segment Information and Revenue Analysis – Prior Year
London
£m
UK South
£m
UK North
£m
Group costs
and
Unallocated
£m
Total
£m
Revenue from contracts with customers
189.4
67.1
70.6
–
327.1
Depreciation
(0.5)
(0.5)
(0.3)
(0.7)
(2.0)
Operating profit
6.2
2.6
3.0
(3.0)
8.8
Finance costs
–
–
–
(1.0)
(1.0)
Profit before tax
6.2
2.6
3.0
(4.0)
7.8
Taxation expense
–
–
–
(1.5)
(1.5)
Profit for the year
6.2
2.6
3.0
(5.5)
6.3
London
£m
UK South
£m
UK North
£m
Total
£m
Business sector
Facilities Management
2.7
13.6
9.7
26.0
Infrastructure
15.1
34.4
29.3
78.8
Engineering Services
91.7
14.3
10.9
116.9
Residential & Hotels
31.5
4.8
19.6
55.9
Technologies
48.4
–
1.1
49.5
Total revenue
189.4
67.1
70.6
327.1
Revenue is wholly attributable to the principal activity of the Group and arises solely within the United Kingdom.
Revenue recognised in the year that was included in the contract liability balance at the beginning of the year was £2.9m
(2021: £1.1m).
The amount of revenue recognised in the year from performance obligations satisfied (or partially satisfied) in previous periods was
£317.2m (2021: £196.8m).
At the end of the year, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially
unsatisfied) was £401.8m (2021: £465.0m). These will be recognised as revenue in accordance with the satisfaction of the performance
obligations. At the year end £344.2m of the £401.8m was expected to be recognised as revenue within one year and £57.6m after one
year. For 2021 £334.5m was expected to be recognised as revenue within one year and £130.5m after one year.
2022 revenue includes £60.7m which arose from sales to a single customer (2021: £34.3m and £34.2m from single customers).
In the current year, the incremental costs of obtaining a contract with a customer which has been recognised as an asset is £nil
(2021: £nil).
In the current year, the costs to fulfil a contract with a customer which has been recognised as an asset is £nil (2021: £nil).
Of the £426.0m revenue recognised in 2022 (2021: £327.1m), £391.2m was recognised over time (2021: £299.2m) and £34.8m was
recognised at a point in time (2021: £27.9m). The latter relates to maintenance and small works contracts.
The standard payment method for revenue is monthly applications and certificates, with cash typically received between 30 and 45
days afterwards. The amount receivable is transferred from contract assets to trade and other receivables on receipt of the certificate.
Revenue is received net of retentions. On practical completion half the retention is received, with the remaining retention received at
Finance Costs
2022
£m
2021
£m
Finance costs
Interest on lease liabilities
0.2
0.1
Interest on bank overdrafts and loans
0.6
0.5
Interest cost in respect of defined benefit pension schemes
0.4
0.4
Total
1.2
Operating Profit
Operating Profit is Stated After Charging
2022
£m
2021
£m
Depreciation of property, plant and equipment
3.0
2.0
Project-related raw materials and consumables recognised as an expense
111.4
81.0
Fees payable to the Company’s auditors for the audit of:
The Company and consolidation
0.4
0.3
Subsidiary companies
0.1
0.1
Employee benefit expense (see note 8)
88.0
76.3
No non-audit services were provided by the Company’s auditors during the year (2021: nominal fee for access to online technical
Employee Benefit Expense
(i) Employee Benefit Expense
2022
£m
2021
£m
Staff costs during the year were as follows:
Wages and salaries
76.2
65.7
Share awards and options granted to Directors and Employees (see note 18)
1.0
0.8
Social security costs
8.2
6.5
Other Pension costs
2.6
3.3
Total employee benefit expense
88.0
76.3
2021 staff costs included £0.4m of furlough grant income from the Government’s Job Retention Scheme (2022: £nil).
Details of Director remuneration are included in the Annual Report on Remuneration on pages 49 to 56.
2022
Number
2021
Number
Staff (including Directors)
510
450
Operatives
784
754
Total
1,294
Taxation
2022
£m
2021
£m
Current tax expense
UK corporation tax payable on profit for the year
1.7
1.5
Adjustment in relation to prior years
(0.4)
(0.2)
Deferred tax expense
Arising on:
Origination and reversal of temporary differences
0.6
0.2
Total income tax expense
1.9
1.5
Reconciliation of tax charge
Profit before tax for the year
10.3
7.8
Tax at standard UK tax rate of 19% (2021: 19%)
1.9
1.5
Tax effect of:
Adjustment in relation to prior years
(0.4)
(0.2)
Permanently disallowed items
0.4
0.2
Total income tax expense
1.9
1.5
2022
£m
2021
£m
Deferred tax credited to other comprehensive income
(2.4)
Earnings Per Share
(i) Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of
Ordinary shares in issue during the year.
2022
£m
2021
£m
Earnings:
Profit attributable to owners of the Company
8.4
6.3
Weighted average number of Ordinary shares in issue (000s)
43,056
42,284
Basic earnings per share
19.60p
14.99p
(ii) Diluted Earnings Per Share
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary shares outstanding to assume
conversion of dilutive potential Ordinary share options granted under the Save As You Earn schemes (see note 18).
For the share options, a calculation is made to determine the number of shares that could have been acquired at fair value (determined
as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to
outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been
issued assuming the exercise of the share options.
2022
£m
2021
£m
Earnings:
Profit attributable to owners of the Company
8.4
6.3
Weighted average number of Ordinary shares in issue (000s)
43,056
42,284
Adjustments:
Savings Related Share Option Schemes
187
471
Equity Incentive Plan:
Conditional share awards
–
2,790
Weighted average number of Ordinary shares for diluted earnings per share (000s)
43,243
45,545
Diluted earnings per share
19.51p
Intangible assets
£m
Cost
At 1st January 2021, 31st December 2021 and 31st December 2022
27.5
Accumulated impairment
At 1st January 2021, 31st December 2021 and 31st December 2022
(2.2)
Net book value
At 1st January 2021, 31st December 2021 and 31st December 2022
25.3
Goodwill relates to the purchase of subsidiary undertakings. Goodwill is not amortised but is tested for impairment in accordance with
IAS 36 ‘Impairment of assets’ at least annually or more frequently if events or changes in circumstances indicate a potential impairment.
Goodwill is allocated to operating segments as follows:
Operating segment
2022
and 2021
£m
London
11.3
UK South
6.1
UK North
7.9
Total
25.3
Value in use
The carrying value of goodwill has been compared to its recoverable amount based on the value in use of the operating segment to
which the goodwill has been allocated, being the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other groups of assets (i.e. cash generating unit). Cash generating units are deemed to be the
operating segments of the Group.
Value in use has been calculated using budgets and forecasts approved by the Board covering the period 2023 to 2025, which take
into account secured orders, business plans and management actions. The results of the period subsequent to 2025 have been
projected using 2025 forecasts with 2% per annum growth assumed to perpetuity. The extrapolated cash flow projections have been
discounted using a pre-tax discount rate derived from the Group’s cost of capital.
Assumptions
The key assumptions, to which the assessment of the recoverable amounts of operating segments is sensitive, are the projected
revenue and operating margin to 2025 and beyond, and the discount rate applied. The range of these assumptions applied to the
operating segments is as follows:
2022
2021
Pre-tax discount rate
12.0%
10.3%
Average annual revenue growth (2022–2025) (2021: 2021–2024)
London
2.3%
15.1%
UK South
11.7%
18.0%
UK North
11.9%
15.9%
Operating margins (2023–2025) (2021: 2022–2024)
London
3.3%
3.7% - 4.0%
UK South
3.3%
3.7% - 4.0%
UK North
3.3%
3.7% - 4.0%
Sensitivities
For each operating segment, management has considered the level of headroom resulting from the impairment tests, and performed
further sensitivity analysis by changing the base case assumptions applicable to each operating segment. The sensitivities tested
related to changes in profitability and discount rate, including consideration of how many times the value in use of a particular
operating segment exceeded its carrying value. This analysis has indicated that no reasonably possible changes in any individual key
assumption would cause the carrying amount of the operating segment to exceed its recoverable amount.
At 31st December 2022, based on these valuations, no increase in the impairment provision was required against the carrying value
of goodwill (2021: £nil).
An assessment of the subsidiary investments using consistent methodology amended for pre-tax cash flows indicates that there is no
Goodwill
Properties
£m
Leasehold
improvements
£m
Plant,
machinery
and vehicles
£m
Total
£m
Cost or valuation
At 1st January 2021
5.7
2.9
7.0
15.6
Additions
–
0.1
1.4
1.5
Disposals
–
–
(0.1)
(0.1)
Transfer from depreciation
(0.1)
(1.0)
(2.6)
(3.7)
Revaluation
0.1
–
_
0.1
At 31st December 2021
5.7
2.0
5.7
13.4
Additions
4.4
1.1
3.7
9.2
Disposals
–
–
(0.5)
(0.5)
Reclassification
0.2
0.1
(0.3)
–
Revaluation
(0.2)
–
–
(0.2)
At 31st December 2022
10.1
3.2
8.6
21.9
Accumulated depreciation and impairment
At 1st January 2021
(1.1)
(2.2)
(4.3)
(7.6)
Charge for the year
(0.4)
(0.2)
(1.4)
(2.0)
Transfer to cost
0.1
1.0
2.6
3.7
At 31st December 2021
(1.4)
(1.4)
(3.1)
(5.9)
Charge for the year
(1.0)
(0.3)
(1.7)
(3.0)
Disposals
–
–
0.5
0.5
At 31st December 2022
(2.4)
(1.7)
(4.3)
(8.4)
Net book value
At 1st January 2021
4.6
0.7
2.7
8.0
At 31st December 2021
4.3
0.6
2.6
7.5
At 31st December 2022
7.7
1.5
4.3
The net book values shown above at 31st December 2022 reflect the following right-of-use assets: Properties £4.8m (2021: £1.4m) and
Plant, machinery and vehicles £3.5m (2021: £2.1m). Additions in the year for right-of-use assets were £4.4m for Properties (2021: £nil)
and £3.0m for Plant, machinery and vehicles (2021: £1.4m). The depreciation charge for right-of-use assets was £0.8m for Properties
(2021: £0.4m) and £1.2m for Plant, machinery and vehicles (2021: £0.9m).
The Group’s freehold land and buildings were last valued at 31 December 2022 based on an external valuation provided by an
independent valuer. The external valuation was conducted on the basis of market value as defined by the RICS Valuation Standards,
and was determined by reference to recent market transactions on arm’s length terms. The book and fair value of the properties at
31st December 2022 was £2.8m (2021: £3.1m). The fair value measurement is categorised as level 3 within the fair value hierarchy.
The net book value of the freehold properties on a historical cost basis would have been £2.2m (2021: 2.3m). The Group has granted a
charge in favour of the TClarke Group Retirement and Death Benefits Scheme over these properties up to a maximum value of £2.8m,
Group
Revaluations
£m
Retirement
benefit
obligation
£m
Other
£m
Total
£m
(Liability)/asset at 1st January 2021
(0.1)
6.1
0.2
6.2
Charged to income
–
(0.2)
–
(0.2)
Credited to other comprehensive income
–
0.4
–
0.4
(Liability)/asset at 31st December 2021
(0.1)
6.3
0.2
6.4
Charged to income
(0.4)
–
(0.4)
Charged to other comprehensive income
–
(2.4)
–
(2.4)
(Liability)/asset at 31st December 2022
(0.1)
3.5
0.2
3.6
The amount of deferred tax recoverable within one year is insignificant. The deferred tax asset arises in respect of the deficit on
the retirement benefit obligation. A deficit reduction plan is in place to reduce this deficit over a number of years (see note 22).
The deferred tax asset will be recovered over time as the deficit is reduced. There were £0.4m unrecognised deferred tax assets at
31 December 2022 (2021: £0.4m).
The net deferred tax asset reported on the Statement of Financial Position can be analysed as follows:
2022
£m
2021
£m
Deferred tax liabilities
(0.1)
(0.1)
Deferred tax assets
3.7
6.5
Total
3.6
6.4
The main rate of UK corporation for the period is currently 19%. The Finance Act 2021 was substantively enacted in May 2021 and has
increased the corporation tax rate to from 19% to 25% with effect from 1 April 2023. The deferred taxation balances have been
2022
£m
2021
£m
Raw materials and consumables, net of provision
0.5
15 Contract assets/liabilities
2022
£m
2021
£m
Contracts in progress at the reporting date
Contract assets
54.3
51.7
Contract liabilities
(7.7)
(2.9)
Total
46.6
48.8
At 31st December 2022, retentions held by customers of the Group for contract work amounted to £22.2m (2021: £19.5m).
These amounts are included in trade receivables (see note 16).
Contract amounts are shown net of impairment of £nil (2021: £nil).
Significant changes in contract assets/liabilities during the year are as follows:
2022
Contract
assets
£m
2022
Contract
assets
£m
2021
Contract
assets
£m
2021
Contract
assets
£m
As at 1 January
51.7
(2.9)
41.7
(1.1)
Performance obligations satisfied in year
391.2
2.9
299.2
1.1
Cash received for performance obligations not yet satisfied
–
(7.7)
–
(2.9)
Amounts transferred to trade receivables
(388.6)
–
(289.2)
–
At 31 December
54.3
(7.7)
51.7
(2.9)
£m
2021
£m
Trade receivables – gross
36.7
35.3
Trade receivables – allowances for credit losses
(0.4)
(0.2)
Net trade receivables
36.3
35.1
Other receivables (including retentions) - gross
24.7
21.4
Other receivables (including retentions) - allowances for credit losses
(0.9)
–
Net other receivables (including retentions)
23.8
21.4
Prepayments
1.5
0.9
Total
61.6
57.4
Movements in provision for expected credit losses
At 1st January
(0.2)
(0.4)
Provided in year
(1.1)
0.2
At 31st December
(1.3)
(0.2)
Net trade receivables are due as follows
Due within 3 months
30.0
32.1
Due in 3 to 6 months
–
–
Due in 6 to 12 months
–
–
Due after more than one year
–
–
Overdue
6.3
3.0
Total
36.3
35.1
The ageing of trade receivables past due but not impaired is as follows
30 days or less
5.3
2.4
31–60 days
1.0
0.6
60–90 days
–
–
Greater than 90 days
–
–
Total
6.3
The expected credit losses on trade receivables and contract assets are estimated based on past default experience of the debtor and
2022
£m
2021
£m
Trade and other receivables are analysed as follows on the statement of financial position:
Current assets
55.3
52.5
Non-current assets
6.3
4.9
Total
61.6
£m
2021
£m
Current
Trade payables (including retentions)
51.5
47.9
Other taxation and social security
6.4
3.9
Accruals
37.7
43.8
Other payables
0.5
0.7
Total
96.1
96.3
Non-current
Trade payables (including retentions)
2.5
1.7
Total
2.5
1.7
Trade payables payment terms are as follows:
30 days or less
39.5
23.4
31 to 60 days
13.7
22.7
Greater than 60 days
0.8
3.5
Total
54.0
(i) Components of Owners’ Equity
The nature and purpose of the components of owners’ equity are as follows:
Component of owners’ equity
Description and purpose
Share capital
Amount subscribed for share capital at nominal value.
Share premium
Amount subscribed for share capital in excess of nominal value, net of allowable
expenses.
Revaluation reserve
Cumulative gains recognised on revaluation of land and buildings above
depreciated cost.
Retained earnings
Cumulative net gains and losses recognised in the income statement and the
statement of comprehensive income.
Retained earnings include shares in TClarke plc purchased in the market and held by the TClarke Employee Share Ownership Trust
(’the Trust’) to satisfy options under the Company’s Share incentive schemes. The number of shares held by the trust at 31 December
2022 was 1,110,376 (2021: 1,068,637) with a cost of £1.4m (2021: £1.2m). All of the shares held by the Trust were unallocated at the
year-end and dividends on these shares have been waived. Based on the Company’s share price at 31 December 2022 of £1.20
(2021: £1.60), the market value of the shares was £1.3m (2021: £1.7m).
The cost of shares held in the Trust has moved as follows:
2022
£m
2021
£m
Opening cost of shares
1.2
0.7
Cost of shares purchased by Trust
1.3
0.8
Cost of shares disposed of by Trust
(1.1)
(0.3)
Closing cost of shares
1.4
1.2
(ii) Share Capital and Premium
Allotted, called up and fully paid (nominal value 10p per share)
Number of shares
Share
capital
£m
Share
premium
£m
At 31st December 2022
44,101,443
4.4
4.5
At 31st December 2021
43,882,861
4.4
4.2
All shares rank equally in respect of shareholder rights.
(iii) Save As You Earn Scheme
The following options granted to employees and Directors of the Group under approved Save As You Earn (‘SAYE’)
share option
schemes were outstanding at the end of the year:
Number
of options
Grant date
Exercise date
Exercise
price
Fair value at
date of grant
TClarke plc 2021 Sharesave Scheme
(‘2021 SAYE Scheme)
1,179,122
06/10/2021
01/12/2024
to
31/05/2025
124.2
30.1p
In accordance with the scheme rules, all employees of the Group with at least six months’ continuous service were eligible to participate in
the scheme; the only vesting condition being that the individual remains an employee of the Group over the savings period. The impact of
recognising the fair value of employee share option plan grants as an expense was £0.1m for the year ended 31st December 2022 (2021:
£nil). The scheme is open to all eligible employees including the Executive Directors. Under the rules of the scheme all participating
employees have entered into an approved Save As You Earn contract (‘SAYE contract’) under which the employee agrees to make monthly
contributions, of between £10 to £500 for a period of three years, at the end of which the employee may use part or all of the proceeds to
acquire the shares under option. Options will be exercisable within a period of six months commencing on the date of maturity of the
participant’s SAYE contract. The fair value at date of grant was calculated using a Black-Scholes model reflecting a three year option life, an
annual risk free rate of 0.3% and annualised volatility of 9.69%.
The number of options outstanding during the year were as follows:
2022
Number
2022
Weighted
average
exercise
price (p)
2021
Number
2021
Weighted
average
exercise
price (p)
At 1st January
1,585,821
116.49
1,146,971
74.88
Granted
–
–
1,341,031
124.20
Exercised
(218,582)
74.88
(800,314)
74.88
Lapsed
(188,117)
124.16
(101,867)
76.45
At 31st December
1,179,122
124.20
1,585,821
116.49
The above table also reflects the final exercising of 218,582 share options and lapsing of 133 share options granted to employees of
the Group under the TClarke plc Savings Related Share Option Scheme (’2018 SAYE Scheme’). There were no outstanding share
options under this scheme at 31 December 2022 (2021: 218,715).
The weighted average remaining contractual life of the options at 31 December 2022 was 882 days (2021: 1,076 days).
(iv) Long-term Incentive Plan
All employees, including Executive Directors, are eligible to participate in the TClarke Long-term Incentive Plan (‘the Plan’) at the discretion of the
Remuneration Committee. Awards may be made in the form of approved options, unapproved options, conditional awards of shares and
matching awards of shares. Awards may be made in the six-week periods after adoption of the Plan and after the announcement of the Group’s
interim or final results. No award may be made more than ten years after the date on which the Plan was last approved by shareholders (5th May
2021). Options and awards of shares are subject to performance conditions as determined by the Remuneration Committee.
The total number of shares issued pursuant to the Plan, when aggregated with the total number of shares issued pursuant to any other
employee share scheme in the ten years immediately preceding the date upon which an award is made, shall not exceed 10% of the
Company’s issued share capital at the date of the grant. Our practice is to only issue shares for the Save As You Earn Scheme; shares for the
Long-term Incentive Plan are satisfied through market purchases.
At 31st December 2022, 2,733,956 conditional share awards were outstanding (2021: 2,789,712 outstanding).
Conditional
shares
Conditional
shares
Conditional
shares
Date of grant
01/05/2020
28/04/2021
16/03/2022
Number of awards
1,141,626
808,084
784,246
Share price at date of grant
93.50p
135.50p
150.25p
Exercise price
–
–
–
Contract life
3 years
3 years
3 years
The conditional share awards and options will vest subject to continued employment with the Group and satisfaction of the following
performance conditions over a three-year period ending 31st December preceding the earliest vesting date.
For 50% of the 2020 and 2021 awards the following performance conditions apply:
Annual growth rate in underlying EPS above RPI
1
Proportion of award vesting
Less than 3%
Nil
3%
25%
Between 3% and 10%
Between 25% and 100% on a straight-line basis
Above 10%
100%
1 The base point is based on average underlying EPS for the three years ending with the year preceding date of grant.
For 50% of the 2022 award CPI rather than RPI is used.
The remaining 50% of the 2020 award performance conditions relate to the actions taken by the Executive Directors to enable TClarke
to increase retained reserves for the year ended 31 December 2020 (excluding any impact from Pension Deficit Movements). The
Remuneration Committee assessed that the performance condition had been met as the 2020 profit after tax was £1.2m. For the
shares to vest the Company must not breach any banking covenants for the remainder of the three year period.
The remaining 50% of the 2021 award performance conditions are as follows:
Annual growth rate in underlying EPS above RPI
1
Proportion of award vesting
Less than 20%
Nil
Between 20% and 30%
Between nil and 100% on a sliding scale
Above 30%
100%
The remaining 50% of the 2022 award was made to incentivise the achievement of the Company’s 3 year ambitious organic growth
plan, achievement of which should substantially enhance earnings per share. This element of the award will be subject to satisfaction of
the Total Shareholder Return (TSR) performance condition as set out below:
TSR*
Proportion of award vesting
Less than 35%
Nil
35%
25%
Between 35% and 50%
Between 25% and 100% on a straight-line basis
Above 50%
100%
* Base point share price is the 3-month average to 31 December 2021. The share price at maturity is the 3-month average to
31 December 2024
The charge to the income statement takes into account the number of shares and options that are expected to vest. The impact
of recognising the fair value of Long-term Incentive Plan grants as an expense is a £0.8m charge for the year ended
31 December
2022
£m
2021
£m
Final dividend of 4.1p (2021: 3.65p) per Ordinary share paid during the year relating
to the previous year’s results
1.8
1.6
Interim dividend of 1.25p (2021: 0.75p) per Ordinary share paid during the year
0.5
0.3
Total
2.3
1.9
The Directors are proposing a final dividend of 4.1p (2021: 4.1p) per Ordinary share totalling £1.8m (2021: £1.8m).
(i) Reconciliation of operating profit to net cash generated from/(used in) operating activities
2022
£m
2021
£m
Operating profit
11.5
8.8
Depreciation charge
3.0
2.0
Equity-settled share-based payment expense
0.1
0.8
Pension deficit reduction contribution
(1.5)
(1.5)
Defined benefit pension scheme (credit)/charge
(0.7)
0.4
Operating cash flows before movement in working capital
12.4
10.5
Movement in inventories
(0.1)
–
Decrease/(increase) in contract assets and liabilities
2.2
(8.2)
(Increase)/decrease in operating trade and other receivables
(3.8)
(18.8)
Increase/(decrease) in operating trade and other payables
0.7
16.4
Cash generated from/(used in) operations
11.4
(0.1)
Corporation tax paid
(1.6)
–
Interest paid
(0.5)
(0.5)
Net cash generated from/(used in) operating activities
9.3
(0.6)
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments that are readily convertible into cash,
less bank overdrafts, and are analysed as follows.
2022
£m
2021
£m
Cash and cash equivalents
22.5
During the year the Group renewed its banking facilities, which now comprise a £5.0m overdraft facility and a £25.0m revolving credit
facility (‘RCF’), both with National Westminster Bank plc, with the level of usage available dependent on covenant compliance. The RCF
charges commitment fees at market rates and drawings bear interest at a margin of 1.9% above SONIA. Interest is charged on the
overdraft at 2.00% above base rate. The RCF includes financial covenants in respect of interest cover and net leverage ratios which are
tested quarterly. The RCF is available until 31 August 2026 and the overdraft facility is subject to annual review. The Group was
compliant with its obligations under the RCF and the overdraft facility throughout the year.
All operating companies within the Group are included within the overdraft facility, and National Westminster Bank plc has a floating
charge over the assets of the Group.
At 31st December 2022 the Group had unused overdraft facilities of £5.0m (2021 £10.0m) and had drawn down £15.0m of the RCF
The key management personnel of the Group comprise members of the TClarke plc Board of Directors and the Group Management
Board. The key management personnel compensation is as follows:
2022
£m
2021
£m
Short-term benefits
4.4
3.3
Share-based payments
1.5
0.6
Post-employment employee benefits
–
0.1
Total
5.9
4.0
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
(iii) Transactions with pension schemes
Details of transactions between the Group and pension schemes in which its employees participate are detailed in note 22.
(iv) Directors’ Material Interests in Contracts with The Company
No director held any material interest in any contract with the Company or any Group company in the year or in the subsequent
Defined Contribution Schemes
The Group operates defined contribution pension schemes for all qualifying employees of all its operating companies. The assets of
these schemes are held separately from those of the Group in funds under the control of the trustees.
The total cost charged to income of £3.1m (2020: £2.5m) represents contributions payable to these schemes by the Group at rates
specified in the rules of the separate plans.
Defined Benefit Scheme
The Group operates a funded defined benefit scheme for qualifying employees. The scheme is registered with HMRC and is
administered by the trustees.
With effect from 1st March 2010, the benefit structure was altered from a final salary scheme with an accrual rate of 1/60th to a Career
Average Revalued Earnings scheme with an accrual rate of 1/80th. No other post-retirement benefits are provided. The assets of the
scheme are held separately from those of the participating companies.
The most recent triennial actuarial valuation of the scheme, carried out at 31st December 2021 by D. Pettit, Fellow of the Institute of
Actuaries, showed a deficit of £19.8m, which represented a funding level of 71%.
Following agreement of the valuation, deficit
reduction contributions of £1.2m per annum will be made. The Group continues to provide security in the form of a charge over the
Group’s property portfolio up to a combined value of £2.8m.
From 1st April 2020, the service contribution increased from 21.4% to 22.4% of pensionable payroll (including employee contributions,
which, increased from 10% to 12% of pensionable payroll).
As part of a Group reorganisation, a subsidiary company, TClarke Services Limited, became the principal employer of the scheme with
effect from 23rd December 2016, and the pension scheme liability and related deferred tax asset were transferred to TClarke Services
Limited at that date. The Company and its subsidiary, TClarke Contracting Limited, have provided a guarantee to the trustees of the
scheme in respect of TClarke Services Limited’s obligations to the pension scheme.
The key assumptions used to value the pension scheme liability in the financial statements are set out below:
2022
%
2021
%
Average rate of increase in salaries
3.26
3.39
Rate of increase of pensions in payment
3.05
3.15
Discount rate
4.77
1.89
Inflation assumption (RPI)
3.12
3.25
Inflation assumption (CPI)
2.76
2.05
The mortality assumptions used in the IAS 19 valuation were:
2022
Years
2021
Years
Life expectancy at age 65 for current pensioners
– Men
21.2
21.5
– Women
23.2
23.4
Life expectancy at age 65 for future pensioners (current age 45)
– Men
22.1
22.5
– Women
24.3
24.6
The amounts recognised in the consolidated statement of financial position are as follows:
2022
£m
2021
£m
Present value of funded obligations
40.6
73.4
Fair value of plan assets
(27.7)
(49.5)
Deficit of funded plans
12.9
23.9
22 Pension Commitments
continued
The movement in the defined benefit obligation is as follows:
Present value
of obligation
£m
Fair value of
plan assets
£m
Total
£m
At 1st January 2021
76.3
(46.1)
30.2
Current service cost
0.7
–
0.7
Interest expense/(income)
1.1
(0.7)
0.4
Total
1.8
(0.7)
1.1
Remeasurements
Return on plan assets, excluding amounts included in interest expense
–
(1.8)
(1.8)
Change in demographic assumptions
(1.2)
–
(1.2)
Loss from change in financial assumptions
(4.8)
–
(4.8)
Experience loss
2.2
–
2.2
Total
(3.8)
(1.8)
(5.6)
Contributions
Employers
–
(1.8)
(1.8)
Employees
0.5
(0.5)
–
Payment from plans
Benefit payments
(1.4)
1.4
–
At 31st December 2021
73.4
(49.5)
23.9
Current service cost
0.3
–
0.3
Settlement gain
(0.6)
–
(0.6)
Interest expense/(income)
1.3
(0.9)
0.4
Total
1.0
(0.9)
0.1
Remeasurements
Return on plan assets, excluding amounts included in interest expense
–
22.3
22.3
Change in demographic assumptions
(0.3)
–
(0.3)
Gain from change in financial assumptions
(29.6)
–
(29.6)
Experience loss
(1.6)
–
(1.6)
Total
(31.5)
22.3
(9.2)
Contributions
Employers
–
(1.9)
(1.9)
Employees
0.5
(0.5)
–
Payment from plans
Benefit payments
(2.8)
2.8
–
At 31st December 2022
40.6
(27.7)
12.9
Current service cost and settlements are included in administrative expenses.
Interest expense is included in finance costs.
Remeasurement gains and losses have been included in other comprehensive income/expense.
Plan assets are held in professionally managed multi-asset funds, cash and bank accounts managed by the trustees, and an insurance
annuity contract. Plan assets are comprised as follows:
2022
2021
£m
Quoted
£m
Unquoted
£m
Total
%
£m
Quoted
£m
Unquoted
£m
Total
%
Equities
23.8
–
23.8
86%
31.2
–
31.2
63%
Bonds
1.1
–
1.1
4%
14.4
–
14.4
29%
Property
1.1
–
1.1
4%
0.8
–
0.8
2%
Cash
–
1.0
1.0
4%
–
1.3
1.3
2%
Insurance annuity
contracts
–
0.7
0.7
2%
–
1.8
1.8
4%
Other
–
–
–
–
–
–
–
–
Total
26.0
1.7
27.7
100%
46.4
3.1
49.5
100%
Through the defined benefit pension scheme the Group is exposed to a number of risks, the most significant of which are set out below.
Asset Volatility
The objective of the investment strategy is to have sufficient assets to pay benefits to members as they fall due. The scheme assets are
invested in a diversified portfolio of growth assets (such as multi-asset funds and equities) and matching assets (such as bonds held in
multi-asset funds and cash). Multi-asset funds include property investments. In addition, the scheme holds a number of annuity policies
which are used to back a number of pensions in payment, reducing the volatility of the results.
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this
yield, this will create a deficit. A proportion of scheme assets are held in equities, which are expected to outperform bond yields in the
long term while providing volatility and risk in the short term.
The Group believes that due to the long-term nature of scheme liabilities and the strength of the Group, it is appropriate to continue
to hold a proportion of the assets in equities.
Change in Corporate Bond Yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the
scheme’s bond holdings.
Inflation Risk
Some of the pension obligations are linked to inflation, and higher inflation will lead to higher liabilities. Caps are in place for
inflationary increases which protect the scheme against the impact of extreme inflation. The majority of the plan’s assets are largely
unaffected by inflation, meaning that any increase in inflation will also increase the deficit.
Life Expectancy
Pension obligations are payable for the life of the member, and where elected by the member, the member’s spouse.
Increases in life expectancy will result in increases in scheme liabilities.
Age Profile
The weighted average duration of the unsecured liabilities is approximately 17 years.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Impact on defined benefit obligation
Change in assumption
Increase in assumption
Decrease in assumption
Discount rate
0.25%
Decrease by 4%
Increase by 4%
Inflation assumption
0.25%
Increase by 2%
Decrease by 2%
Rate of increase in salaries
1%
Increase by 1%
Decrease by 1%
Life expectancy
1 year
Increase by 3%
Decrease by 3%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is
unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the
projected unit credit method at the end of the year) has been applied as when calculating the pension liability recognised within the
statement of financial position.
In addition to the recognition of right-of-use-assets in note 12 the impact of the Group’s lease arrangements on the financial statements
is shown below.
31st December 2022
Properties
£m
Plant,
machinery
and vehicles
£m
Total
£m
Lease liability
5.1
3.3
8.4
Total value of lease payments
1.0
1.2
2.2
Total payments for short-term and low value leases
–
–
–
Interest expense
0.1
0.1
0.2
31st December 2021
Properties
£m
Plant,
machinery
and vehicles
£m
Total
£m
Lease liability
1.3
1.6
2.9
Total value of lease payments
0.4
1.1
1.5
Total payments for short-term and low value leases
0.4
–
0.4
Interest expense
0.1
–
0.1
Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight line basis over the
Group banking facilities of £30.0m and surety bond facilities of £65m are supported by cross guarantees given by the Company and
participating companies in the Group. There are contingent liabilities in respect of surety bond facilities, guarantees and collateral
warranties under contracting and other arrangements entered into in the normal course of business.
Group’s Defined Benefit Pension
As part of a Group reorganisation, a subsidiary company, TClarke Services Limited, became the principal employer of the scheme with
effect from 23rd December 2016, and the pension scheme liability and related deferred tax asset were transferred to TClarke Services
Limited at that date. The Company and its subsidiary, TClarke Contracting Limited, have provided a guarantee to the trustees of the
The Group manages its capital to ensure that each entity within the Group will be able to: continue as a going concern; to maintain a
strong financial position to support business development, tender qualification and procurement activities; and to maximise the overall
return to shareholders over time. Dividends form an important part of the overall return to shareholders. The Group is mindful of the need
to ensure that the dividend is covered by earnings over the business cycle and paid out of cash reserves in order to secure the long-term
interests of shareholders. The Board considers that it has sufficient capital to undertake its activities for the foreseeable future.
The capital structure of the Group consists of net funds, including cash and cash equivalents, bank loans and overdrafts and lease
obligations, and equity attributable to equity holders of the Parent Company, comprising issued capital, reserves and retained earnings.
The Group does not use derivative financial instruments.
The capital structure of the Group at 31st December 2022 and 2021 was as follows:
2022
£m
2021
£m
Cash and cash equivalents
22.5
20.3
Less borrowings
(15.0)
(15.0)
Net cash
7.5
5.3
Obligations under leases
8.4
2.9
Total equity
38.7
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the bases of measurement
and the bases on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity
instrument are disclosed in note 3. The fair value of the Group’s and the Company’s financial assets and financial liabilities is not
The Group’s financial assets comprise trade and other receivables held at amortised cost, and cash and cash equivalents as follows:
31st December 2022
Cash and cash
equivalents
£m
Trade and other
receivables
1
£m
Total
£m
Carrying value
22.5
60.1
82.6
Contractual cash flows
Less than one year
22.5
53.5
76.0
One to two years
–
6.3
6.3
Two to three years
–
0.3
0.3
More than three years
–
–
–
Total
22.5
60.1
82.6
31st December 2021
Carrying value
20.3
56.5
76.8
Contractual cash flows
Less than one year
20.3
51.6
71.9
One to two years
–
4.1
4.1
Two to three years
–
0.7
0.7
More than three years
–
0.1
0.1
Total
20.3
56.5
76.8
The carrying values of the Group’s financial liabilities (held at amortised cost) and maturity profile of the associated contractual cash
flows are shown below. As the carrying value of the Group’s obligations under leases are discounted the contractual cash flows differ
from the carrying values. Trade and other payables are not discounted on grounds of materiality.
31st December 2022
Bank loans
£m
Trade and other
payables
1
£m
Obligations
under leases
£m
Total
£m
Carrying value
15.0
8.4
115.6
Contractual cash flows
Less than one year
15.0
2.7
107.4
One to two years
–
2.4
4.8
Two to three years
–
2.0
2.1
More than three years
–
1.9
1.9
Total
15.0
9.0
116.2
31st December 2021
Carrying value
15.0
2.9
112.0
Contractual cash flows
Less than one year
15.0
1.2
108.6
One to two years
–
0.8
2.3
Two to three years
–
0.7
0.9
More than three years
–
0.8
0.8
Total
15.0
3.5
112.6
Financial risk management is integral to the way in which the Group is managed. The overall aim of the Group’s financial risk
management policies is to minimise any potential adverse effects on financial performance and net assets.
The Group does not enter into any derivative transactions and has minimal exposure to exchange rate movement as its trade is based
in the United Kingdom.
The financial risks to which the Group is exposed comprise credit risk, market risk and liquidity risk.
The Group seeks to manage these risks as follows:
Credit Risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual
obligations (i.e defaulting) and arises primarily in respect of the Group’s trade receivables and contract assets.
The degree to which the Group is exposed to this credit risk depends on the individual characteristics of the contract counterparty and
the nature of the project. The Group’s credit risk is also influenced by general macroeconomic conditions. The Group does not have
any significant concentration risk in respect of contract assets or trade receivable balances at the reporting date with receivables spread
across a wide range of clients. Due to the nature of the Group’s operations, it is normal practice for clients to hold retentions in respect
of contracts completed. Retentions held by clients at 31 December 2022 were £22.2m (2021: £19.5m). These will be collected in the
normal operating cycle of the Group.
The Group manages its exposure to credit risk through the application of its credit risk management policies, including assessing the credit
worthiness of prospective clients prior to accepting a contract and requesting progress payments on contract work in progress.
92.2
89.7
2.4
0.1
–
92.2
94.1
92.4
1.5
0.2
–
94.1
The Group manages the collection of retentions through its post completion project monitoring procedures and ongoing contract with clients
to ensure that potential issues that could lead to the non-payment of retentions are identified and addressed promptly. The directors always
estimate the loss allowance on contract assets and trade receivables at the end of the reporting period at an amount equal to lifetime
expected credit losses. Taking into account the historical default experience and the future prospects in the industry, the loss allowance for
contract assets is not material.
The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the
debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of
conditions at the reporting date. Details of the provision for expected credit losses are shown in note 16, including a reconciliation of
movements in the year. There has not been any significant change in the gross amounts of trade receivables that has affected the
estimation of the loss allowance.
In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from
the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being
large and spread across the Group’s operating segments. Accordingly, the directors believe that there is no further credit provision
required in excess of the provision for impairment losses. At the reporting date, there were no trade and other receivables which have
had renegotiated terms that would otherwise have been past due. Financial assets are written off and derecognised when the Group
has no reasonable expectation of recovering the balance.
Liquidity risk is the risk that the Group will not generate sufficient cash and liquid funds to be able to settle its financial liabilities as and
when they fall due. The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by monitoring cash flows
and by matching the maturity profiles of financial assets and liabilities within the bounds of its contractual obligations.
The Group’s facilities were renegotiated during the year and comprise a £25.0m RCF and a £5.0m overdraft facility. The RCF is a
committed facility available until 31st August 2026 and is subject to quarterly financial covenant tests. Management has prepared
three-year cash flow projections that demonstrate that the Group will be able to meet these financial covenants. There have been no other
significant changes to the nature of financial risks or the Group’s objectives and policies for managing these risks.
Based on a base rate of 3.5%, provided that the Group is utilising its banking facilities, the effect of a delay/acceleration in the maturity
of the Group’s trade receivables at the balance sheet date would be to decrease/increase profit by approximately £0.2m (2021: £0.1m)
for each month of delay/acceleration, and the effect of a delay/acceleration in the maturity of the Group’s trade payables at the
reporting date would be to increase/decrease profit by approximately £0.2m (2021: £0.1m) for each month of delay/acceleration. If the
Cash Flow Interest Rate Risk
The Group is exposed to changes in interest rates on its bank deposits and borrowings. Surplus cash is placed on short-term deposit at
fixed rates of interest. Bank overdrafts are at floating rates, at a fixed margin of 2.00% above base rates. The interest rate on amounts
drawn down under the RCF are set at 1.9% above SONIA. The Group’s lease obligations are at fixed rates of interest determined at the
inception of the lease.
The effect of each 1% increase in interest rates on the Group’s borrowings at the reporting date would be to reduce profits by
Note
2022
£m
2021
£m
Non-current assets
Investments
1
44.1
44.1
Total non-current assets
44.1
44.1
Current assets
Amounts owed by subsidiary undertakings
12.9
6.4
Trade and other receivables
0.1
0.2
Current tax receivables
1.3
1.2
Cash and cash equivalents
8.9
17.5
Total current assets
23.2
25.3
Total assets
67.3
69.4
Current liabilities
Bank loans
(15.0)
(15.0)
Amounts owed to subsidiary undertakings
(2.3)
(6.5)
Other tax and social security
(4.3)
(1.7)
Trade and other payables
(0.2)
(0.1)
Total current liabilities
(21.8)
(23.3)
Net current assets
1.4
2.0
Non-current liabilities
Amounts owed to subsidiary undertakings
(28.3)
(28.3)
Total non-current liabilities
(28.3)
(28.3)
Total liabilities
(50.1)
(51.6)
Net assets
17.2
17.8
Equity
Called up share capital
4.4
4.4
Share premium
4.5
4.3
Retained earnings
8.3
9.1
Total equity
17.2
17.8
The Company has taken advantage of section 408 of the Act and consequently the statement of comprehensive income (including the
profit and loss account) of the Parent Company is not presented as part of these accounts. The profit after tax for the year was £2.2m
(2021: £2.2m).
The notes on pages 108 to 109 form part of these financial statements.
The financial statements of the Company were approved by the Board and authorised for issue on 20th March 2023 and signed on its
behalf by:
Iain McCusker
Mark Lawrence
Director
Director
Company Statement of Financial Position
As at 31st December 2022
TClarke PLC
Registered number 00119351
Financial Statements
TClarke
Annual Report and Financial Statements 2022
107
108
Attributable to owners of the parent
Called up
share
capital
£m
Share
premium
£m
Retained
earnings
£m
Total
Equity
£m
At 1st January 2021
4.3
3.8
8.9
17.0
Comprehensive income
Profit for the year
–
–
2.2
2.2
Total comprehensive income
–
–
2.2
2.2
Transactions with owners
New shares
0.1
0.5
–
0.6
Shares acquired by ESOT
–
–
(0.8)
(0.8)
Share-based payment charge
0.7
0.7
Dividends paid
–
–
(1.9)
(1.9)
Total transactions with owners
0.1
0.5
(2.0)
(1.4)
At 31st December 2021
4.4
4.3
9.1
17.8
Comprehensive income
Profit for the year
–
–
2.2
2.2
Total comprehensive income
–
–
2.2
2.2
Transactions with owners
Shares allotted/issued in respect of share option schemes
–
0.2
(0.8)
(0.6)
Shares acquired by ESOT
–
–
(0.8)
(0.8)
Share-based payment charge
–
–
0.8
0.8
SAYE option cost
–
–
0.1
0.1
Dividends paid
–
–
(2.3)
(2.3)
Total transactions with owners
–
0.2
(3.0)
(2.8)
At 31st December 2022
4.4
4.5
8.3
17.2
The notes on pages 108 to 109 form part of these financial statements.
Company Statement of Changes in Equity
For the year ended 31st December 2022
Notes to the Financial Statements
For the year ended 31st December 2022
Basics of Accounting
The separate financial statements of the Company are presented as required by the Companies Act 2006 (‘the Act’). The Company
meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council.
Accordingly, the Company has prepared its financial statements in accordance with FRS 101 (Financial Reporting Standard 101)
‘Reduced Disclosure Framework’ as issued by the Financial Reporting Council.
The Company’s accounting policies are consistent with those described in the consolidated accounts of TClarke plc, except that, as
permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to
share-based payments, financial instruments, capital management, presentation of a cash flow statement and related party
transactions. Where required, equivalent disclosures are given in the consolidated accounts. In addition, disclosures in relation to share
capital (note 18 (ii)) and dividends (note 18 (vi)) have not been repeated here as there are no differences to those provided in the
consolidated accounts. There are no critical judgements the directors have made within the Company financial statements.
These financial statements have been prepared on the going concern basis as set out in the Directors’ Report on page 65, and under
the historical cost convention. The financial statements are presented in pounds sterling, which is the Company’s functional currency,
and unless otherwise stated have been rounded to the nearest £0.1m.
Investments in subsidiaries are recorded at cost, being the fair value of consideration paid, and subsequently at cost less provisions for
impairment. Cost includes the fair value of equity-settled share-based payment arrangements relating to options to acquire shares in
TClarke plc granted to subsidiary employees under Savings Related Share Option schemes.
An annual impairment review of the carrying value of the Company’s subsidiaries is undertaken at 31st December each year in
conjunction with the goodwill impairment review (see note 11 of consolidated financial statements), using the same underlying cash
flow projections and other key assumptions. The impairment provision comprises the entire cost of subsidiaries where operations have
ceased, or a reduction to recoverable amount where there has been a significant reduction in underlying trading and significant losses
have been incurred, such that the Group is unable to recover the cost of the investment through its net asset value or future trading.
Amounts owed by subsidiary undertakings are initially recorded at their fair value. Subsequent to their initial recognition, the balances
are measured at amortised cost. By virtue of cross guarantees which exist across the group, and all group companies having access to
the Group banking arrangement, the subsidiaries had access to sufficient facilities to enable them to repay the balances, if demanded,
at the reported date, and as such do not represent a credit risk. Therefore no adjustment has been made to the value of the balances
for any expected credit loss provisions.
Financial Statements
TClarke
Annual Report and Financial Statements 2022
109
110
1 Investments
All subsidiaries are wholly and directly owned by TClarke plc unless otherwise stated, and all are incorporated within the United Kingdom.
Principal operating company
Type of shares
TClarke Contracting Limited
Ordinary
Group services company
TClarke Services Limited
Ordinary
Property holding company
Weylex Properties Limited
Ordinary
Non-trading and dormant companies
Eton Associates Limited
Ordinary
TClarke Europe Limited
Ordinary
Anglia Electrical Services Limited
Ordinary
D G Robson Mechanical Services Limited
Ordinary
G.D.I. Electrical Co. Limited
Ordinary
J.J. Cross Limited
Ordinary
J.J. Cross Services Limited
*
Ordinary
Mitchell and Hewitt Limited
Ordinary
T. Clarke East Limited
Ordinary
TClarke Leeds Limited
Ordinary
TClarke Newcastle Limited
Ordinary
T.Clarke (Northern) Limited (dissolved 22 February 2022)
Ordinary
T Clarke North West Limited
Ordinary
T. Clarke (Scotland) Limited
Ordinary
TClarke South East Limited
Ordinary
TClarke South West Limited
Ordinary
Waldon Security Limited
**
Ordinary
* Shares held by J.J. Cross Limited.
** Shares held by TClarke South West Limited.
All subsidiary companies have their registered office at 30 St Mary Axe, London EC3A 8BF apart from T. Clarke (Scotland) Limited
whose registered office is at Eurocentral Parklands Avenue, Holytown, Motherwell, Scotland ML1 4WQ and T.Clarke (Northern) Limited
(now dissolved) whose registered office was at Stanhope House, 116-118 Walworth Road, London SE17 1JL.
Investments comprise:
Subsidiary undertakings
2022
£m
2021
£m
Cost
At 1st January
53.7
53.2
Capital Contributions
–
0.5
At 31st December
53.7
53.7
Impairment
At 1st January
(9.6)
(9.6)
At 31st December
(9.6)
(9.6)
Net book value
At 31st January
44.1
43.6
At 31st December
44.1
44.1
Capital contributions of £0.5m were made during the year ended 31 December 2021 in relation to share based payments on behalf of
subsidiaries (2022: £nil).
Notes to the Financial Statements
For the year ended 31st December 2022
Company Details
Registered office:
Telephone: 020 7997 7400
Email: info@tclarke.co.uk
Company registration number: 00119351
The TClarke PLC Website
Shareholders are encouraged to visit our website www.tclarke.co.uk for further information about the Company. The dedicated investor
section on the website contains information specifically for shareholders, including regulatory announcements and copies of the latest
and past financial statements.
Registrar
The Company’s shareholder register is maintained by our Registrar, Link Group. If you have any queries relating to your TClarke plc
shareholding, you should contact Link Group directly by one of the methods below:
Email: shareholderenquiries@linkgroup.co.uk
Telephone: 0371 664 0300
By post: 10th Floor, Central Square, 29 Wellington Street, Leeds
LS1 4DL
Shareholder portal: www.signalshares.com
If you are yet to register, you will need your investor code.
Analysis of Shareholdings
The tables below show an analysis of Ordinary shareholdings as at 31st December 2022.
Shares
Percentage
Holdings
Percentage
Individuals
6,459,068
14.65%
703
80.07%
Banks or nominees
35,025,023
79.42%
150
17.08%
Other corporations
2,617,352
5.93%
25
2.85%
Totals
44,101,443
100%
878
100%
Number of shares held:
1 to 5,000
993,393
2.25%
525
59.79%
5,001 to 10,000
841,157
1.91%
114
12.99%
10,001 to 50,000
3,449,928
7.82%
157
17.88%
50,001 to 500,000
10,660,292
24.17%
65
7.41%
500,001 to 1,000,000
4,440,439
10.07%
6
0.68%
1,000,001 +
23,716,234
53.78%
11
1.25%
Totals
44,101,443
100%
878
100%
Substantial Shareholdings
As at 31 December 2022 the following information has been disclosed to the Company under the FCA’s Disclosure Guidance and
Transparency Rules (’DTR 5’), in respect of notifiable interests in the voting rights in the Company’s issued share capital:
Name of holder
Total voting
rights
1
% of voting
rights
2
Regent Gas Holdings Limited
7,366,407
16.71%
Interactive Investor
4,676,826
10.61%
Hargreaves Lansdown, stockbrokers
3,616,123
8.20%
Heritage Capital Management
2,510,000
5.69%
Barclays Smart Investor
2,249,885
5.10%
1
Total voting rights attaching to the ordinary shares at the Company at the time of disclosure to the Company.
2
Percentage of total voting rights at the date of disclosure to the Company.
As at 20th March 2023, the Company had not been notified of any changes to major shareholdings.
Shareholder Information
TClarke
Annual Report and Financial Statements 2022
111
Independent Auditors
Mazars LLP
30 Old Bailey
London EC4M 7AU
Corporate Broker
Cenkos Securities plc
6-8 Tokenhouse Yard
London EC2R 7AS
Tel: 020 7397 8900
Investor Relations
RMS Partners Limited
160 Fleet Street
London EC4A 2DQ
Tel: 020 3735 6551
Financial Calendar
Annual General Meeting
10th May 2023
Final Dividend for 2022
Ex-dividend
4th May 2023
Record date
5th May 2023
Payment due
2nd June 2023
Half Year Results Announcement
13th July 2023
Interim Dividend for 2023
Ex-dividend
31st August 2023
Record date
1st September 2023
Payment due
29th September 2023
Trading Update Release
30th November 2023
These dates are indicative only and may be subject to change.
Dividend Reinvestment Plan
A dividend reinvestment plan (‘DRIP’) is available to shareholders. Those shareholders who have not elected to participate in the DRIP
and who would like to do so, should contact our Registrar, Link Group on 0371 664 0381. The last day for election for the final dividend
for 2022 is 12th May 2023.
Designed by: Jon Budd Design Limited
30 St Mary Axe, London EC3A 8BF | 020 7997 7400 | www.tclarke.co.uk