TClarke – a very useful annual general meeting

PUBLISHED: May 19 2018 @ 06:43 | Comments (0) |

Yesterday I made it out of Leicestershire and ventured into the City for TClarke’s (LSE:CTO) annual meeting. It was well worth it. We shareholders had plenty of opportunity to ask questions at both the formal meeting and at the after-meeting refreshments.

A reminder of some key statistics for the company (more detail in previous Newsletters: 5^th – 10^th November 2015, 19^th and 26^th November 2015, 19^th – 22^nd April 2016, 9^th May 2016, 19^th – 25^th April 2017) ):

Current share price: 88p

Market capitalisation: £36m

After-tax profit: 2017 £5.2m, 2016 £4.9m

Cash flow from operations: 2017 £6.8m, 2016 £4m

Earnings per share: 2017 13.44p, 2016 5.45p

Cyclically adjusted price earnings ratio (13 years): Basic eps 88p/8.67p = 10.1, Adjusted eps 88p/10.82p = 8.1

Dividend yield: 3.5p/88p = 4%

Net cash: £11.7m

Pension deficit: £23.4m

Piotroski score: 8 out of 9

I’ll report the salient information I gained, in no particular order.

The trading update

This was fairly impressive, but perhaps I was a little disappointed with the profit before tax expectation of £7m and adjusted earnings per share of 13.2p, which are about the same as 2017. Also revenue is anticipated to be lower than 2017 at £300m.

Nevertheless, solid building blocks are in place – the order book has jumped since December to £368m from £337; already, half of 2019’s revenues have been secured.

And this has occurred when the message is going out from head office to be fussy about which contracts to bid for and ensure there is a good margin (“Targeted Tendering”).

The directors are optimistic: “we are seeing no lack of opportunities, but we maintain a strict policy only to bid for projects that meet our internal risk analysis and where we are comfortable with the covenant and market reputation of the contractual counterparty.”

I was worried that the company is heavily dependent on prestigious office building work in London. But looking at the list of project won in the last six weeks I find that they are as much orientated to medical/research lab/hospital work (e.g. Royal Orthopaedic Hospital, Royal Cornwall Hospital) as much as office blocks; and then there are schools, universities (St John’s Durham), manufacturing facilities (Rolls Royce Derby, BAE systems) and data centres (Virtus Data Centre, Slough).

This diversity will be very useful should the London office market suffer one of its regular downturns.

The trading update finishes with an optimistic flourish, “TClarke has made an excellent start to the year and the Board looks to the future with continued confidence”. My impression from our conversations is that they really are full of confidence.

Resignation of Tony Giddings

I was taken aback by the sudden resignation of Tony Giddings (he was on the resolution list for re-election). The phrase “in order to concentrate on his other business interests” was not that reassuring. Was he pushed? Did he resign after falling out with the ot

………………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.