Building innovation
Building relationships
Building services
We are a nationwide building services contractor delivering the
full range of mechanical, electrical and ICT services. Our strong
teams across the country cover the whole lifecycle of the building
from concept and design through construction to lifetime
maintenance. Our focus is on being the partner of choice in each
of the specialist areas we work in - and equally on the retention
and enhancement of our traditional reputation for delivering
good value, total trustworthiness and excellent work quality
“ Our first class team has the knowledge,
skills and reputation to continue to be
regarded as one of the best contractors
in the sector.” Mark Lawrence, CEO
What we do
Intelligent
buildings
Design
& Build
Prefabrication
M&E contracting
Our core business
nationwide
Transport
Mission
Critical
Facilities
Management
Residential
& Hotels
S
W
What we contribute
Driving higher standards of quality,
environmental impact, value and efficiency to
improve living and working environments across
the UK, creation of a high volume of directly
employed high quality UK engineering careers
including world class apprenticeship schemes.
What we offer
Safety
Safety is our number
one daily priority
Quality
High quality work
that’s right first time
Innovation
Expert in buildability
and integrated thinking
Contents
Strategic report
02 Chairman’s statement
04 Chief Executive Officer’s review
06 Our operating environment
08 Markets & opportunities
10 Strategic operating model
12 The TClarke Way
14 Projects The TClarke Way
16 What we do - our services
18 UK nationwide coverage
20 A balanced range of projects
22 Our people
28 Principal risks
31 Viability statement
32 Financial review
38 Corporate social responsibility
Governance
42 Board of Directors
£
T
skills and reputation to continue to be
regarded as one of the best contractors
in the sector.”
£16.2m
£41.8m
£56.9m
£129.1m
Our results
Revenue
£242.4m
2014: £207.9m
from continuing
operations
Profit
before tax
£3.5m2014: (£0.8m)
from continuing
operations
Forward
order book
£300m2014: £300m
Net cash
£6.7m2014: £5.3m
Scotland
North
Central &
South West
London &
South East
Where we operate
TClarke provides complete UK coverage
from fourteen locations nationwide. We are
Our strategy is to sustain world class building
services capability and build a ‘growth-ready’
organised in four regions in order to allow us
platform capable of exploiting existing and
maximum agility in tendering, winning and
delivering the projects we target.
fast-changing opportunities for value creation.
Our strategy
Value
Delivering against
innovative end-user-
focused contracts
People
Directly-employed,
high quality building
services personnel
Relationships
Taking responsibllity
at every level for
collaboration
44 Corporate governance report
50 Audit Committee report
54 Nomination Committee report
55 Directors’ remuneration report
69 Directors’ report
72 Directors’ responsibilities statement
73 Independent Auditors report
Financial statements
80 Consolidated income statement
80 Consolidated statement of comprehensive income
81 Consolidated statement of financial position
82 Company statement of financial position
83 Consolidated statement of cash flows
83 Company statement of cash flows
84 Consolidated statement of changes in equity
85 Company statement of changes in equity
86 Notes to the financial statements
133 Shareholder information
D
W
S
Strategic report - Chairman’s statement
Chairman’s statement
Strong performance
I am pleased to report that in the year ended 31st December 2015
Group revenue increased 16.6% to £242.4m (2014: £207.9m)
year on year, and underlying profit before tax rose to £3.7m (2014:
£0.6m) despite tough market conditions and competition within the
industry, with underlying earnings per share at 7.11p (2014: 0.85p).
The net cash position also improved to £6.7m (2014: £5.3m).
The Board proposes a final dividend of 2.6p (2014: 2.6p) for the
year ended 31st December 2015, maintaining the total dividend
for the year at 3.1p (2014: 3.1p), reflecting the Board’s continued
confidence in the Group and commitment to shareholders.
Board Governance
Having been involved with the Company as a Non-Executive
Director for many years now, I am delighted to assume the post of
Chairman. It is a role I relish and I have recently established a very
active programme for the Non-Executive team, visiting our offices
and projects across the UK, with different members of the Executive
board, meeting staff and clients, seeing projects close up and
spending enough time to get into the deeper issues. It has been
extremely valuable in informing our views when probing business
plans with the Executive team.
I would like to welcome Mike Robson to the Board of Directors. Mike
joined the Company as a Non-Executive Director in November and
took over from me as Chair of the Audit Committee given his depth
of financial experience. The Board made good progress in enhancing
corporate governance procedures in 2015 and remains committed to
delivering against our objectives.
TClarke also announces that Danny Robson, an Executive Director
of the Company, will be leaving the business to pursue other
business interests. Accordingly, Danny’s resignation was accepted
by the Board on 21st March 2016.
When TClarke acquired DGR, Danny committed to work with us for
a period of three years to diversify and enhance the Group's
earnings profile by building our mechanical capabilities in London.
The Board is therefore grateful for the six years he has committed
to TClarke and wish him well in his new ventures. Following the
successful integration of our London Mechanical and Electrical
business units we have established a strong leadership team to
further take advantage of opportunities that meet our strategy.
2
Annual Report & Financial Statements 2015
Strategic report - Chairman’s statement
process, the review of our regional businesses
involved some tough decisions. In 2015 this
included the closure of our Bristol and Cardiff
operations which had not been delivering the
necessary results to drive the business forward.
This has been disclosed as a discontinued
operation and incurred a loss for the year of
£2.7m (2014: profit £0.1m). Although this was
a difficult decision, the outcome ensures that
resources can be better targeted towards those
sectors and geographies where we can achieve
greater value for stakeholders.
Partner of Choice
As the construction sector becomes increasingly
complex and as digital technologies drive
innovation, I am proud to say that TClarke is
increasingly seen as the partner of choice. This
fact is proved many times over in this report
and it is a massive achievement in competitive
markets. As well as providing value for
shareholders, this firm is a leading provider
of high quality long-term engineering careers,
distinctive and British with roots in communities
across the country.
Outlook
As we exit the recession, and market conditions
continue to improve, our Executive team is
focused on taking advantage of market
opportunities as they present themselves to
grow the business and deliver increased value
to shareholders.
I would like to take this opportunity to thank our
employees across the UK, together with our clients
and shareholders for their continued support and
I look forward to a successful year ahead.
Rob Faro, MD of TClarke South West talks Iain McCusker and
Tony Giddings through safety performance on-site in Cornwall
Our People
What continues to impress me, more perhaps than
anything, is the involvement and loyalty that our
people across the UK feel for the TClarke brand.
It is as true in Cornwall and Falkirk as it is in
London. There is immense pride in the work we do
and in what the Company is all about, and this is
most obvious in the switched-on attitude to safety.
Safety is taken very seriously and rather than talk
about the good things they do, people on our visits
talk about their need to avoid complacency.
Business Agility
TClarke’s business agility was demonstrated by the
increase in mechanical contracting in London taking
advantage of rising demand, in the strong entry
into the design and build sector and the successful
targeted tender process across our regional
businesses; all of which resulted in exceptionally
strong order books as we entered 2016.
2015 saw the further integration of our regional
businesses with shared systems, resources,
marketing and buying power and an improved
focus on meeting client needs. As part of this
Iain McCusker
Chairman
22nd March 2016
3
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Chief Executive Officer’s review
2015 was a year of progression; still marked by some bumps, but
also by increased demand for our services, which was reflected in
the improved quality of our order book, first in London and then
also in the regions. As markets have improved, our simple
message ‘TClarke has the resources you need to deliver
your project’ has become steadily more compelling.
Trust in TClarke
Our clients need certainty around project delivery and we have
deliberately chosen to align ourselves with clients and contractors
who share our vision for high quality installations where we can
deliver full service packages, which ensures accountability,
responsibility and control. Together with our collaborative partners,
we add value to contracts, where safety is fully enforced and high
quality is the shared focus.
Although the London market has led the upturn in demand, it is
also extremely good to report our best ever forward order books
across the regions. This is highly significant, since it also allows us
to be more focused and selective in seeking further work which
will, in turn, help us to deliver better value for our stakeholders.
I am delighted by many of the projects we’ve delivered and won
in 2015 and am particularly pleased to see our Northern region
winning work with Overbury, who we have collaborated with for
many years in the London region.
Investing in our people
When preparing this report, I have again been struck by the truth
that everything we offer to the market depends upon our people.
Our brand reputation is not a marketing gambit, it is something
real that people on construction sites earn every day by being
switched on, hard-working, open and highly capable. We believe in
investing heavily in our workforce in order to maintain our skilled
resource of people.
We have brought together our training portfolios across the Group
and reorganized our training procedures under what we have
branded the ‘TClarke Academy’. Alongside our industry-leading
apprenticeship schemes, the TClarke Academy provides an in-
house training capability which ensures consistency of operations
4
Annual Report & Financial Statements 2015
Forward order book 2015
£300m
“This is highly significant since it also
allows us to be more focused and
selective in seeking further work which
will, in turn, help us to deliver better
value for our stakeholders.”
Strategic report - Chief Executive Officer’s review
Strategic report - Chief Executive Officer’s review
Our daily priority is safety
Health and safety is paramount to our business
and our safety performance remains strong.
I am very proud of the work that we do, on site
every day across the UK, where TClarke people
take an active approach on safety. Our
investment in safety in 2015 continued at the
same high level - and that will not change.
Safety is this firm’s number one daily priority.
Outlook
Our first class team has the knowledge, skills
and reputation to continue to be regarded as
one of the best contractors in the sector. This
key advantage helps to drive our business
forward and deliver value for our shareholders.
The Company is focused on improving
performance and margins throughout the Group.
We remain alert to any challenges that we may
face, yet we approach the future with confidence
and enthusiasm. The future for the Group
remains solid.
Mark Lawrence
Chief Executive Officer
22nd March 2016
Seventy five apprentices joined the Group in 2015.
TClarke apprenticeships are among the most highly valued
across UK construction and engineering.
throughout our Group. This allows our people
to learn new skills so that we can build strong
teams and our employees can develop their
careers within TClarke.
We have always had a strong commitment to
providing apprenticeships and our unrivalled
commitment continues - in 2015 the Group took
on a total of 75 new apprentices across the UK.
Our apprenticeships are highly prized because
they lead to real jobs and real careers. I
know this personally, having completed an
apprenticeship within TClarke myself in 1987. It
is a matter of great pride for me to see so many
people starting as apprentices with us and then
moving up through the business, developing new
skills, showing huge commitment and endeavour
and being rewarded with great opportunities.
5
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Our operating environment
The key drivers of change in our operating environment are the
market cycles (driven by public and private sector demand), new
competitors or propositions in the market place and the forces of
innovation and technology.
Construction sector cycle
The London market showed signs of recovery
during the latter parts of 2015 and, despite variable
signals from the wider economy, there is sustained
confidence that this recovery will continue during
2016 and 2017. Our regional markets, in general, lag
three or four quarters behind London in the cycle.
As the London market gets substantially busier, at
the end of 2015 we reported a growing trend in
clients negotiating with us to lock our resource into
their jobs. This trend has been sustained and, as
we move into 2016, TClarke businesses with strong
order books will be well positioned to be selective in
seeking out those jobs with the best value potential.
As regional markets pick up, the difference between
this cycle and the last is that TClarke is now
better organised internally - following our regional
restructuring and systems integration - to be able to
target, tender, win and deliver higher value projects
and to offer more complete integrated services that
fit major clients and main contractors’ requirements.
Changes in competitor landscape
Company failures continued to mark
the construction sector in 2015, again
highlighting the continuation of extreme
pressure on margins, with many firms still
making non-economic bids on projects in
order to keep cash flow going.
Although new competitors continue to
enter our markets, TClarke’s long-term
approach to taking on apprentices
and replenishing the quality and scale of
our resources, and our work on landmark
projects across the UK, means that at the
end of 2015, we saw our competitive
position as relatively improved, year-on-
year. This gives us the opportunity now
to cement an improved competitive
position as stronger markets persist.
TClarke has chosen to align itself with
major contractors who share our view
that larger building service packages
delivered by trusted and high-quality
partners, offer a surer route to value,
quality and reliable delivery.
6
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Innovation and technology
2015 saw two particular innovative trends; the
emergence of a new generation of BIM-driven major
construction projects (where 3D design tools drive
almost every aspect of the job including the work
of operatives on site) and also innovative contracts
designed to align all the parties far more closely to
end user benefits so that value engineering can be
maximised. TClarke has been involved in several such
projects during the year. We have also achieved
significant milestones in technical innovation (in areas
ranging from prefabrication to ICT systems) and this
has allowed us to maintain our reputation as market
leaders for innovation. Within comparatively short
timeframes we also see new areas of technology
emerging and in some cases these become specialist
sectors or service areas themselves, whereas in others
(for example green technologies) they become part of
the existing M&E mix. For this reason, at the end of
2015 we ceased to present Green Technologies as a
separate business offering.
7
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Markets and opportunities
In understanding our markets and opportunities going into
2016/17, it is very useful to consider the quality and depth of our
order book at the end of 2015. Throughout the years of recession,
TClarke was successful in building a strong order book; however
as we reported year by year, there was exceptional pressure on
margins. In the final quarter of 2015 we began reporting a turn
in the market, marked by less pressure on margins and by a
greater appetite amongst our client base to lock our teams into
their jobs, so that they can feel fully confident of quality delivery,
without compromise to safety, as skills shortages begin to impact
the sector.
As the markets become more buoyant and skills shortages
emerge, and as trends towards greater complexity and technical
London & South East
There are good opportunities for our business across
London and the South East, working with long term
partners who value the services we offer and the
benefits they bring to project delivery. While prospects
for our electrical business are strong, reflecting our
longstanding market leadership, there is also much
optimism that we will continue to win more mechanical
and large scale M&E projects. The mix of skills,
including our Mission Critical, Prefabrication and
Intelligent Buildings teams, give us significant
additional market advantages and differentiation and
there are also good prospects for the further steady
growth of our Transport division.
Central & South West
The Central and South West region entered 2016
with a strong order book that allows us the freedom
to target work with care. Across the region there is
a strong and diverse portfolio of growth opportunities
beyond our traditional M&E markets. These include
our growing strength in healthcare - from framework
agreements to our specialist healthcare panel
manufacturing operation. We are also seeing growth
and opportunity in end user FM, Intelligent Buildings,
residential and in the retail sectors. Our growth in the
SW means expansion in Plymouth to new premises
during Spring 2016.
8
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
sophistication grow, we can see more opportunity to create
value for our stakeholders as we target the opportunities that
best suit our skills.
Regionally, TClarke is better placed now than in previous cycles
to target, tender for and win larger scale opportunities as
we have sought to match our client and main contractors
requirements better in the shape and scale of operations we
can offer.
TClarke approaches growth in a steady and managed way, that
focuses first on safety and quality. Going into the next year our
nationwide message is simple:
TClarke has the resources you need
to deliver your project.
North
Our strategy of managed growth in the North, based
on building our reputation with key clients and main
contractors, will be extended right across the region,
taking in our North West operation as we look to take
advantage of the range of projects that emerge as the
Northern Powerhouse programme gets underway and the
markets improve. Changes in our organisation, bringing
the whole Northern region under a single, integrated
management is something we expect to bring further
results as we bring the TClarke brand name to new
clients and build on the progress made in the last 12
months. The securing of our client, Overbury, in the
Newcastle market in 2015 is something we are
particularly looking to build on in coming years.
Scotland
The prospects for the Scotland division are good,
with its best ever forward order book and the market’s
increased confidence in our ability to deliver. We see
continued strength in the residential markets in which
we are a recognised leader and alongside this we see
substantial growth potential in residential FM markets.
In 2016 we see a continuation in the trend of
increasing complexity and therefore value in the
projects we deliver both in residential and wider M&E
markets where our advanced Intelligent Buildings
capability gives us a clear market advantage.
9
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Strategic operating model
Our strategic operating model is market-focused and allows us the
agility to operate successfully, enhance our reputation and build
Our strategy
Guides our operations
Vision statement
TClarke aims to be a successful and highly capable
building services contractor, organised to create and take
advantage of market opportunities for profitable growth
across the construction industry, retaining our traditional
focus on delivery of high quality work, by highly motivated
and expert teams, sustaining long-term relationships
and unlocking new streams of innovation to create value
for all our stakeholders.
Strategy statement
Our strategy is to sustain world class building services
capability and build a ‘growth-ready’ platform capable of
exploiting existing and fast-changing opportunities for
value creation.
Quality system and
risk management
TClarke invests heavily and consistently over the
long term in the areas that are known to drive
safety, quality and excellence - particularly through
sustaining our market leading resource of directly
employed people. This, allied to a strong, well focused
risk management approach, underpins every aspect of
our strategic approach and decision making.
What we do
We are a nationwide building services contractor
delivering the full range of mechanical, electrical and ICT
services from strong regional teams across the country.
Our focus is to be recognised as an industry leader in
each of the specialist areas we work in - and equally
on the retention and enhancement of our traditional
reputation for delivering good value, total trustworthiness
and excellent work quality.
Resource
Everything TClarke achieves depends on our people.
TClarke’s directly employed workforce allows us to
deliver the six key advantages the market wants.
Supporting our frontline teams, we have very high quality,
highly experienced technical directors, divisional directors,
foremen and specialist teams. Our executive leadership
brings considerable professional experience and
understanding of the brand, values and attitudes required
to deliver the TClarke service.
UK coverage
TClarke provides complete UK coverage from fourteen
locations nationwide. We are organised in four regions in
order to allow us maximum agility in tendering, winning
and delivering the projects we target.
Strategy drives our selection
of target sectors, investment in
resources and operational
management
Our resource, sector focus and
UK coverage allow us to deliver
six key market requirements
10
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
long-term value within a sector that is cyclical, competitive and
increasingly complex.
Creates
sustained value
Sustained
Stakeholder Value
Agility in identifying and taking market opportunities
- and in redirecting resource efficiently to new
opportunities. Sustained capability to target and win
high-value projects, and enter high-value sectors
successfully.
Sustained
Market Leadership
Continued focus on virtuous circle of retention
and enhancement of in-house skills and resource in order
to win major and innovative projects that deliver results,
build relationships and brand reputation and allow us to
invest in our skills and resource.
Benefits to society
Driving higher standards of quality, environmental impact,
value and efficiency to improve living and working
environments across the UK, creation of a high volume
of directly employed high quality UK engineering careers
including world class apprenticeship schemes.
Delivers advantages
the market wants
Safety
Investment to remain industry leader:
safety is our number one daily priority.
Quality
World class skills, experience and
motivation to deliver high quality work
that’s right first time.
Innovation
Embracing new technology and techniques;
expert in buildability and integrated
thinking.
Value
Market leader in value engineering through
in-house resources delivering against
innovative end-user-focused contracts.
People
Market leading resource of large scale,
directly-employed, high-quality building
services personnel.
Relationship
A modern, open and highly-proactive
approach taking responsibility at every
level for delivery, resulting in long-term
relationships.
Sustained delivery of brand
advantages, delivery platform
for sustained growth
and market leadership
11
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
The TClarke Way
In competitive and cost conscious markets, people choose TClarke
because of six key market advantages we offer:
Safety
Investment to remain industry leader:
Safety is our number one priority
TClarke is an industry leader in safety. Investment in safety teams and infrastructure
has stayed high throughout the recession. Indeed, as well as advancing best practice,
we have also innovated substantially, introducing smartphone safety apps across our
Group and supply chain to complement an ongoing series of safety campaigns and
systems. TClarke’s safety establishment comprises a head office team led by a
Technical Director for Group Health and Safety and a team of six specialists in London,
supported fully by fourteen health and safety managers across our business. In relation
to the frontline teams it serves, we believe this is one of the very best resourced safety
teams in the industry.
Quality
World class skills, experience and motivation
to deliver high quality work that’s right first time
TClarke’s people have the skills, experience and motivation to deliver high quality
work that’s right first time. As the industry develops more technical complexity and
integration of advanced building services, TClarke remains a market leader. The
Aircelle clean room facility, completed by our North West team for new client and
world scale multinational aerospace business Safran, is all about quality. This is
extreme engineering on a large scale to create an environment where multi-tonne
high speed robots precision manufacture carbon fibre aerospace components to
ultimate levels of accuracy. TClarke’s ability to deliver, within a challenging timeframe
and to client satisfaction, is an excellent example of the quality levels we have
achieved during 2015.
Innovation
Embracing new technology and techniques;
Expert in buildability and integrated thinking
The scale and nature of projects we work on keep us at the cutting edge of technical
innovation - not just in introducing new technology and construction techniques but
in developing the depth of knowledge on the practical buildability involved. In 2015
Facebook announced that its UK HQ would be at Rathbone Place and during the year,
our teams have worked here with Lendlease on a full BIM level 2 project, where the
entire project is modelled in 3D - and 3D ‘drawings’ on iPads are used onsite by our
installation teams. During 2015 TClarke’s BIM capability and practical experience has
been substantially enhanced - we see this as a strategic advance for the industry and
our firm, with increasing call for our resource of BIM operators who are also fully
qualified and experienced engineers.
12
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Value
Market leader in value engineering through
in-house resources delivering against innovative
end-user-focused contracts
TClarke’s depth and range of in-house technical skills, product knowledge and
experience of building complex and challenging projects through the design, build
and maintainance phases of construction give us major advantages when it comes to
innovating with confidence to deliver value. One of the most direct ways we showed
leadership in this area during 2015 is in the power of our combined design and
estimating teams in London. These are ’full-spectrum, expert’ services ranging across
all building services and the value to clients comes in their ability to strip cost,
increase design accuracy and deliver total confidence in the solution. These practical
‘designability’ advantages come from our wealth of expertise and practical experience
and are central to value engineering.
Resource
Market leading resource of large scale, directly
employed, high-quality building services personnel
The quality of our resource is the cornerstone of our market reputation and TClarke
stands out as a firm that provides world class apprentices and exceptional career
paths. The motivation, team spirit and proactive approach to collaboration we have at
every level, is what gives us the edge in delivery. During 2015 the quality and scale of
our resource has once again demonstrated its value as the Company’s single greatest
advantage. Across London and the regions, as markets have returned, so clients and
main contractors have increasingly turned to us as the people who have the quality
of resource they need to deliver their projects. During 2015 our apprenticeship
programme and new TClarke Academy showed our commitment to further
strengthening this advantage.
Relationships
A modern, open and highly proactive approach,
taking responsibility at every level for delivering
real collaboration
TClarke’s people at every level have a strong culture of taking responsibility and being
open to full collaboration. We see substantial opportunities to create value for all
parties by being fully collaborative as a firm, as teams and as individuals. Across
the UK, our clients often ask for specific teams to work with again - our people
are trusted. In 2015 TClarke’s design and build operation in the South East enjoyed
considerable success, hitting all its targets, introducing the business to new clients
and delivering quality work and value back to our business. Going into this specialist
market segment, with a very clear relationship-focused proposition, this new venture
for TClarke has again demonstrated the power of this approach.
13
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Projects The TClarke Way
How has the TClarke brand delivered for
clients in 2015?
These six examples are not necessarily the largest or most
significant projects we’ve been working on during 2015, but they
are all good at demonstrating The TClarke Way at work.
Quality:
Selfridges
The upgrading of mechanical,
electrical and ICT systems at
Selfridges, without disrupting
trading, has been an enormously
complex exercise, well illustrated
by the 1,500 separate safety
documents and 400 risk assessment
and method statements we’ve
delivered. Works including a wide
range of diversions and
replacements under five separate
contracts, linked by a common
management contract, have
required very high levels of
expertise in planning and execution.
It is a classic TClarke job, led by our
Mission Critical team.
Innovation:
Medical team
TClarke’s agility in getting behind
an innovation and exploiting it is
very well demonstrated in the
rapid and 100% organic growth
of our medical business based in
Huntingdon. Starting with some
deep insight into the market and
an innovative business idea, Nigel
Thompson had led the development
of a series of incredibly successful
and innovative value engineering
solutions to the creation of strategic
partnerships with global medical
technology businesses and delivery
of solutions in hospitals across the
UK. In 2015 the team exceeded
targets by 100% and there’s
potentially a lot more to come - and
it all came from our own resources.
Safety:
‘Absolute’ Campaign
Our ‘Absolute’ campaign, introduced
in 2015, had the effect of engaging
our workforce to ensure that we are
‘absolute’ in our determination to
report every single accident in the
business, however trivial it may
seem. Even though this inevitably
drives our accident figures up that’s
something we welcome and seek
because it allows us a better focus
on safety in every detail. Safety isn’t
something we do for show.
14
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Value:
Bank Station
upgrade
The Bank Station upgrade project
has pioneered a new approach to
value. Bids were not only assessed
on added value rather than lowest
cost, but bidders were also
rewarded for ideas presented at
tender stage. TClarke partnered
with Dragados and their solution
will cut journey times through the
station, boosted the scheme’s
benefit-to-cost ratio from 2.4:1 to
3.5:1 and it also cut the estimated
final cost by almost 10%. This
project has given us a major
opportunity to move up the value
chain working directly with end
users and helping Dragados deliver
exceptional levels of value.
Resource:
FM for Factors
Across the Group in 2015 TClarke,
after having received many requests
from our client base and beyond,
successfully developed a series of
new strategic Facilities Maintenance
(FM) Teams that are linked up
across the UK offering a cohesive
and trusted service. Our team in
Scotland has been highly successful
in this market, utilising the
backbone of their long established
residential customer service team
and service call centre, they have
locked in many partners in the
building management sector whilst
also servicing fully the Scottish
property factoring market.
Relationship:
Waitrose &
John Lewis
Waitrose doesn’t just look for quality,
speed and value in project delivery,
they look for partners who take
responsibility. For TClarke, this
is exactly the kind of relationship
we target; long-term, personal,
collaborative, decent and dependent
on motivated people being honest
with each other. What has been
particularly pleasing in 2015 has
been our progression within the
Group to win and begin work on a
number of John Lewis stores.
15
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
What we do - our services
We go to market with a nationwide building services offer that is anchored by a core of world-class skills in
mechanical, electrical and ICT contracting.
The key business advantage of our core skillset is that we can move rapidly in and out of specialist sectors in order
to achieve best value for stakeholders. Therefore, as market opportunities present themselves, we can deploy these
skills in particular sectors or services lines. Equally, as technology and techniques advance, we can develop leading
edge skills quickly and cost effectively, from our own resources.
In some cases, as with ICT, it makes commercial sense for us to go to market with distinctive offerings; meanwhile in
others such as Green technologies, the market gradually begins to expect these as normal elements within an M&E
package, and we no longer present them as separate offerings, although our capability in fact keeps on growing.
M&E Contracting
This is our core business nationwide and
we are recognised as a market leader.
Within M&E contracting we have
considerable experience in many sectors
including commercial offices, retail,
education, healthcare, financial services
and media and, as these sectors offer
more or less opportunity within the cycle,
we focus our operations and tendering
strategy accordingly to get the optimal
balance within the order book.
In 2015 we fully integrated our London
mechanical and electrical teams under
cohesive joint leadership and we see this
as a significant and long-term action in
maximising our brand’s reach across London
building services markets. The major London
electrical contracting market (TClarke’s
traditional core business) saw key strategic
partnerships flourishing - for example, with
Sir Robert McAlpine at Bloomberg London,
and with Lendlease and Brookfield at a
number of major projects. In many cases
TClarke was involved early and identified
as the preferred partner.
On the mechanical side we have had
considerable success. A key milestone was
the successful completion of our first project
at Chiswick Park with Lendlease as principal
contractor. The performance on this project
has helped secure the Ruskin Square fit-out
project (first of five phases on the large-scale
Croydon development). The relationship
with Lendlease has also expanded to include
the Lendlease Developments division with
whom we have secured a first package on
the TIQ development at Stratford.
R
Intelligent
Buildings
Design
& Build
Prefabrication
M&E Contracting
Our core business
nationwide
£126m
Mission
Critical
Transport
Facilities
Management
Residential
& Hotels
Other clients we have seen added to our
Mechanical portfolio over the year include
Structuretone Ltd, with the Shard Fit-Out
(Levels 8-13 & 18-22) and Bird & Bird
refurbishment; with ongoing negotiations
on further works alongside the TClarke
Mission Critical Division.
Regional performance in M&E contracting
has seen the first fruits of our regional
restructuring and increased focus on larger
projects, often involving combined resources
from different TClarke offices. Projects have
included HMRC Newcastle, John Lewis Leeds,
Beckley Court Plymouth and the Botanics
Glasgow and at Manchester Airport, our first
major M&E project in the city for a number
of years.
16
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
2015
£15m
Transport
Solely through organic growth, TClarke has built a market-leading transport specialism, developing
full accreditation and then winning projects of increasing scale and complexity over the past decade
to the point where in 2015, at Bank and Victoria Station upgrades and with our work at Paddington
on Crossrail, we were working on some of the most significant projects in the industry.
2015
£20m
2015
£5m
2015
£10m
2015
£13m
Design & Build
In 2014, to complement our existing design & build capabilities across the regions, TClarke saw the
opportunity to develop a specific design and build operation targetting projects within the London and
South East region. The team has been highly successful in introducing the TClarke brand and approach
into this market and we are optimistic for future growth.
Intelligent Buildings
TClarke’s Intelligent Buildings team delivers ICT infrastructures and solutions on every scale - and
increasingly, our capability in this area is instrumental in helping us to win major M&E contracts in
London and across the regions, as the ICT component in construction projects increases.
Prefabrication
Our prefabrication of a variety of mechanical components at our workshop facilities in Harlow gives
us a market-leading advantage that helps us win major mechanical and M&E projects - particularly in
London. 2015 saw us retain our market position as pre-eminent specialist pipework, pre-fabrication
and modularisation contractor in London - particulary with our work this year on NOVA Victoria. Our
continued performance and commitment on this large scale scheme for Mace MEP has resulted in a
significant opportunity for repeat work on future major developments in London.
Mission Critical
Our Mission Critical team of highly skilled and highly experienced engineers is one of TClarke’s most
valuable advantages and we deploy it as a strategic asset to win and also to deliver the most complex
high-value projects. In 2015 these projects included works at Dungeness and Sizewell Nuclear power
stations, Deutsche Bank, ITV, Imperial College, Thompson Reuters and Selfridges.
2015
£33m
Residential & Hotels
TClarke has a very strong track record in this sector, ranging from our market leadership in the
residential sector in Scotland, to work on hotels and student accommodation across the UK and on
high end luxury developments in London. We integrate M&E and ICT and operate as a highly innovative
partner. In 2015 we continued our approach of selective tendering in order to maximise value and
minimise risks of over-exposure and won significant end-user FM contracts across the UK.
2015
£20m
Facilities Management
We have a strategic interest in FM since it is far less cyclical than other construction sectors and it is
also a sector in which the ability to deploy high-quality, motivated and reliable people is critical - and
this is a very good fit with our brand offer. We are further diversified with an operation in the North
West, focused on supplying global defence, aerospace and blue chip engineering clients, regional FM
operations serving smaller markets and in 2015 a nationwide FM capability based on our new FM hub
in Leeds. This nationwide operation won and began to deliver major contracts during the year such
as the Mitie contract to provide services for 500 care homes nationwide and the GO4 Maintenance
contract to service 60 office buildings.
17
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
UK nationwide coverage
The TClarke Group operates in four geographic regions from 14 locations. This allows us to offer
UK coverage and to match our service provision to market needs and the opportunities we target.
Recent reorganisations have integrated and improved the efficiency of all our Group back office,
IT and operational systems and our accounting and administrative functions.
Over the last two years we have also been integrating our Group sales and marketing activities
and, as the next logical stage in this process, in 2015 we introduced a new regional structure based
around four operating divisions: London & South East, Central & West, North and Scotland.
The business rationale has been to match our regional resources and skills in the most effective
way to the market opportunities we seek and to the way our main contractor clients are set up
across the UK. During 2015, this reorganisation delivered significant value, not only in our ability to
deploy regional resources together, and therefore to target and deliver larger contracts regionally,
but also in making us more effective at marketing our brand and proposition in the regions.
Scotland - £16.2m
TClarke Scotland ended 2015 confidently, with a very strong secured work bank. 2015 was a year marked
by continued strength and innovation in the residential market, a strong entry into the FM market, servicing
Factors, innovative product and service development from our Intelligent Buildings team, whose work has
ongoing strategic value Group wide and also the re-emergence of our M&E business with significant contract
wins, based on a selective tendering approach.
North - £41.8m
2015 has been a very important year for our new Northern region with strong leadership supporting steady
managed growth through a series of new strategic partnership wins, collaborative approaches to tender, win
and deliver projects and the move of our North West team to expanded new offices prior to plans for
growth into wider M&E markets in the North West. The approach in this region will continue to feature the
delivery of quality services through our traditional high quality resource.
Central & South West - £56.9m
In our Central & West region, even though markets were not fully recovered, we saw TClarke’s business
move ahead with considerable optimism, ending the year with strong order books and a range of strategic
wins, including collaborative wins involving teams from across the region and beyond. During 2015 the
Group discontinued its Cardiff and Bristol operations, focusing investment on relationships and markets
where the returns our stakeholders require are available.
London & South East - £129.1m
As mentioned previously in this report, our London & South East region saw considerable success towards
the end of 2015, which has been the first year of integration of our mechanical and electrical businesses in
London. Our success in winning large scale M&E contracts - like BP Sunbury, winning mechanical work with
longstanding electrical clients - like Stanhope, and working as preferred bidders with several strategic
clients, has allowed us to build a strong order book and confidence going into 2016.
18
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
1
2
3
5
6
4
1. Aberdeen
2. Falkirk
3. Newcastle
4. Chorley
5. Leeds
6. Derby
7. Peterborough
8. Huntingdon
9. Colchester
10. Harlow
11. London
Head Office
12. Sittingbourne
13. Plymouth
14. St Austell
7
8
10
11
9
12
14
13
19
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
A balanced
range of
projects
It is a key strategic priority of TClarke
to target and win a balanced portfolio
of work so that our risks of exposure
in any one market are mitigated and
so we are also capable of taking full
advantage of market opportunities as
they change.
Large Mechanical London
1. Chiswick Park
One of many major projects
for Lendlease
Large M&E London
3. BP Sunbury
Among first of our large
scale M&E projects
Large M&E
Regional
4. Beckley Court
A flagship major M&E
project in South West
Large M&E
Regional
5. HMRC Newcastle
Large M&E combining
Leeds (M) and Newcastle
(E) teams
Large Electrical London
2. Principal Place
One of a series of major projects
for Brookfield Multiplex
M&E Regional NW
6. Promat UK
Specialist equipment relocations
M&E Regional
7. Kettering Hospital
Innovative specialist medical design,
manufacture and installation team
based in Huntingdon
20
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Design & Build
8. Mizuho Bank
One of a series of new
D&B, M&E projects
Mission Critical
13. Imperial College
Blackett Building services
riser replacement
Intelligent
Buildings
9. Rathbone Square
Flagship development with
advanced ICT components
Transport
10. Victoria Station
Upgrade
Ongoing major transport
hub programme
Prefabrication
11. Project Nova
Flagship large scale prefabrication
programme
Residential Regional
12. Botanics, Glasgow
Flagship high-spec M,E and ICT
installation
Facilities Management
14. Mitie Care Home
FM contract delivered across UK
Facilities Management
15. BAE Scrubber Plant
Installation
Part of BAE facilities management
programme in Salmesbury
21
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Our people - our key asset
TClarke’s key strategic asset is our resource of people. The
advantages they offer can be set out simply in three areas:
Frontline teams
From Aberdeen to St Austell we
train, directly employ and retain
strong teams throughout the
business. Their long-term stability,
together with the constant influx of
new people, through our world-class
apprenticeship and training
schemes, means that we can
develop a very strong culture that
emphasises the things that matter
most - safety, pride in the work,
delivery whatever the challenge and
an open approach to collaboration.
Once they are booked onto a
job, our teams give clients real
confidence that the job will be
done, on time on budget and to
high standards of quality and safety
- and that’s exactly what they need.
Senior management
The TClarke senior management team is a
team of people who have enormous personal
investment in the values of the firm - indeed
many of our senior managers and two of
our main Board members were TClarke
apprentices themselves. The approach at this
level is direct and open. Our Executives are
always available for clients and themselves
bring high levels of expertise and experience
to the business. The sense of cohesion and
shared values, directly linking our apprentices
and most senior leaders, means that clients
can place trust in the firm at every level, in
every situation.
22
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Leaders and specialists
TClarke offers very clear career paths
for people with the aptitude and
attitude to lead, to take further
professional qualifications and to
take responsibility on our projects.
And since TClarke wins complex and
challenging projects, our leaders and
specialists have the opportunity to
gain high level experience very
quickly. At TClarke we are also keen
to give young leaders plenty of this
kind of opportunity. The strength in
depth of our leadership, specialist
and managerial staff is absolutely
critical in allowing us to add
substantial value at design stage, to
deliver during implementation and to
handle complexity and challenges
whatever they may be. Very often
our teams of leaders are asked for
by name on major projects.
The leadership team at work on our
Victoria Station Underground are all
in their twenties and all former
TClarke apprentices.
23
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Our people - better career paths
One of the chief reasons that our people are committed to the firm is that the firm is committed to them and offers career
paths with very strong prospects. The result is that our firm is led at every level by people who really believe in the standards
and values of TClarke and who take responsibility for driving them forward.
Danny Needham
Construction Manager
Danny Needham started as a TClarke
apprentice in August 1989 on Broadgate
and his career of project work, including
Buckingham Palace, 10 & 11 Downing
Street, London Eye, Houses of
Parliament, Tate Modern and Westfield
Shopping Centre speaks for itself.
He has received a very full range
of training including first aid, fire
marshall, Pasma mobile scaffold
tower and SSMTS. In many
ways Danny Needham
exemplifies the quality and
experience that TClarke offers
its clients.
Wendy Turner
Office Manager
Starting as an office junior in 1986
(with Mitchell and Hewitt, which TClarke
acquired in 2004), Wendy Turner has
played a leading role in delivering one
of the key elements of TClarke’s back
office rationalisation and integration
programme over recent years. Her
career moved on first in 1990 when she
assumed main office duties within the
firm. In 2010, she worked on the
roll out of the COINS (construction
software) system and subsequently
has gone on to lead the
successful set up of the Derby
shared services centre for the
business. Wendy now runs a team
of 11 and processes in the region
of 5,000 invoices per month.
Tom Anglim
Mechanical Project Manager
Tom joined the firm six years ago as
a young mechanical engineer, having
worked on the Olympic Village
infrastructure, added to his skills as
a Site Manager and is now a Project
Manager on his first multi-service
mechanical project. As part of his
development, Tom has been
supported to develop planning,
procurement, control,
information and CAD
process engineering skills.
He has also developed the
deep proactive relationships
with Commercial teams that
we and our clients need.
Paul Keogh
Director
Paul started with TClarke Midlands in 1984
working on measured term contracts for
British and American military bases. In
1992 he was appointed Contracts Manager
and two years later began working
on our Waitrose/John Lewis account
in 1994. Two years later he was
appointed Technical Director and
in 2002 he was appointed
Director of our Peterborough
operation. Paul’s consistent
ability to deliver for Waitrose
and John Lewis, like many
other members of the team
he leads, can be seen in the
light of 22 years professional
experience working alongside
them.
24
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Kevin Bent
Construction Manager
Kevin’s great depth of project experience,
including upgrades and extensions of live
‘operational’ data centres, banking and
trading environments, is of huge value in
delivering projects and adding value during
the major installations for which he is
responsible. Kevin joined the Company
in 1987 and is another TClarke leader
whose potential was recognised
early. In 1989 he won TClarke
‘Apprentice of the Year’ along
with Brixton Technical College and
the ECA Southeast Apprentice
Of The Year Awards. Kevin has
had a range of supervisory roles
covering everything from fire
alarm installation to electrical
commissioning with specialisms
in HV/LV infrastructure and
Central UPS Systems.
Derek Ramage
Surveying Manager
Derek Ramage’s father was a TClarke
engineer and Derek chose to leave university
when a TClarke apprenticeship came up in
2003. Following his apprenticeship, spent
working on CALA homes’ flagship
development at Jordanhill, Glasgow,
Derek served his time and was
appointed first trainee and then
Quantity Surveyor, at which time
he studied for and achieved an
HNC in Quantity Surveying
moving from residential to larger
commercial projects. In 2015
he was appointed Surveying
manager and the business has
continued investing in his
development as he himself
now supports the development
of people in his team.
Phil Leonard
Director
Phil joined TClarke at the age of 18 and,
having completed his apprenticeship,
progressed through the grades of Electrician
and Approved Electrician to become a Site
Foreman running projects such as Eldon
Square Shopping Centre, responsible
for up to 20 electricians and over-
seeing sub-contractors. In 1995
he was appointed Outside Works
Manager and became NICEIC
Qualifying manager for the Company.
In 1997 he was appointed Contract
Engineer and began running and
estimating projects of varying size and
complexity. Appointed Director of our
Newcastle operations in 1998, Phil
has been responsible for many of our
landmark projects in the North East,
delivering on time and profitably in
each case - and building the brand
reputation of our business.
George Antino
Electrical Project Manager
George Antino’s career has advanced
quickly since starting as an apprentice in
2008. In 2012 he won the firm’s Group
wide and highly competitive ‘Apprentice of
the Year’. Subsequently, that year he was
appointed Electrical Contracts Engineer
working within the firm’s rapidly
developing Transport Division
and in 2014 he was appointed
Project Manager and offered
the opportunity to run one
of the highest profile jobs
across UK transport
engineering - the Victoria
Station Upgrade in London,
where he leads a young
team who are all in their
twenties.
25
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Our people - safety
Switched on to safety,
a commitment that doesn’t falter
TClarke’s commitment to a high
quality in-house Health and Safety
function stretches back to times
when safety was by no means the
universal industry priority it is today.
Over the years since then, our
investment has stayed at high levels,
regardless of economic conditions
and today our safety establishment is
pro-rata one of the very best
resourced and most innovative in the
construction industry, with 21 staff
and Board responsibility taken by the
Group MD for all safety issues.
The scale and cohesion of our
nationwide team has increased as
Group systems have been further
integrated. The ‘You See, You Say’
near miss reporting system, including
our innovative smartphone app, has
helped this. Our ‘Have Your Say’
programme allows individuals to
make comments, questions or
statements via our SHE committee
meetings. The ‘Good to Go’ file and
pre-task briefing sheets have been
developed to assist in the
requirement for Pre-Start Briefings,
Safe Starts, Daily Briefings (DABS)
and any other project requirements
for day-to-day Safety Briefings.
It is an important feature of our
safety approach that with all this
activity, we have also actively sought
an increase in our reported accidents
- through our ‘Absolute’ Accident
Reporting programme that seeks to
record and report every single
incident, no matter how seemingly
trivial.
It is good to report the increased
reach during 2015 of our ‘You See,
You Say’ smartphone app in London
and right across the Group. Response
times for the app are virtually
instantaneous.
26
Annual Report & Financial Statements 2015
Strategic report - Chief Executive Officer’s review
Our people - ongoing training
The TClarke Academy
TClarke Academy provides a wide
range of technical and professional
training opportunities for our staff.
The Academy has been founded
with the clear purpose of supporting
and encouraging people to develop
their careers further and to move
ahead in new directions.
Looking ahead and thinking in the
long-term, we see an increasing
need for skills in every area of our
operation and we see value for our
people and our firm in significantly
increasing the ease of access, range
of options and motivation for people
to take their careers forward.
Our intake of 75 apprentices was
supported from day one in London
by an innovative ‘buddy’ scheme,
pairing new joiners with experienced
apprentices - our aim is to make their
experience as good as possible. The
picture below is Apprentices Day at
Moorfields, London, September 2015.
27
Annual Report & Financial Statements 2015
Strategic report - Principal risks
Principal risks
Risk management
The ability of the Group to identify and manage effectively
the risks to its business and operations is fundamental to
the successful delivery of the Group’s strategy and the
protection of its assets and reputation.
The Board is responsible for defining the Group’s appetite
for and approach to risk, including the Group’s system of
risk management and internal controls. The Board has
delegated to the Audit Committee the responsibility for
reviewing the effectiveness of the Group’s internal
controls, including the systems established to identify,
assess, manage and monitor risk and provide assurance.
On the recommendation of the Audit Committee the Board
has concluded that the Group maintained adequate risk
management and internal control systems throughout the
year ended 31st December 2015.
Our risk management process
The Group’s risk management framework requires
all business units to identify, assess and quantify
the specific risks facing them which could impact on
their ability to deliver their financial and operational
objectives. The business units maintain a register of
the significant risks facing the business, including an
assessment of the potential and likely impact pre-
and post-mitigation, and an assessment of the
effectiveness of the controls in place to identify and
manage potential risks. Actions designed to mitigate
identified risks and implement control and process
improvements are discussed and agreed with Group
Management. Developments in key risks, including
an assessment of the effectiveness of mitigating
actions and controls, are reported to and discussed
by the Board each month.
Principal risks
The principal risks faced by the Group and the
mitigating actions and controls in place to address
these risks were reviewed in March 2016, and are
presented below.
28
Annual Report & Financial Statements 2015
Strategic report - Principal risks
Risk Strategy Mitigation Change Main drivers
impact from 2014 of change
Sustainable
Growth
Political, economic and market
conditions
1. The construction sector is highly
cyclical. The Group is dependent
on the planned level of
construction and maintenance
expenditure by both the public
and private sectors.
2. The Group is subject to complex
and evolving tax, legal and
regulatory requirements. A breach
of laws and regulations could lead
to litigation, investigations or
disputes, resulting in additional
costs being incurred, civil and/or
criminal proceedings and
reputational damage.
Financial strength
The Group’s ability to secure and
deliver work depends on its perceived
financial strength and the availability
of cash resources, banking facilities
and the ability to provide
performance and other bonds as
necessary.
Growth
Ready
Platform
1. The Group continues to operate throughout the UK using
its core M&E skill base to enable agile movement in and
out of sectors to meet changing market demands.
2. The Group monitors its order book to ensure an appropriate
balance of work between London and the regions and
across the various sectors in which it operates.
3. The Group develops long-term client and contractor
relationships and seeks to secure framework agreements
to mitigate against demand fluctuations.
4. Cost and skills bases are aligned to reflect anticipated
work load.
5. The Group monitors legal and regulatory developments
in the areas in which it operates, and seeks legal or other
specialist advice as appropriate. All employees, suppliers
and subcontractors are required to comply with all
applicable laws and regulations. Training is provided on
legal and regulatory changes as required.
1. Capital structure and dividend policy managed to ensure
adequate reserves maintained to fund growth strategy.
2. The Group monitors cash flow requirements and seeks to
match maturity profiles of financial assets and liabilities at
contract level.
3. Efficient utilisation of resources monitored via group-wide
business management system.
4. The Group has in place a £5m Revolving Credit Facility,
committed to 31st March 2017, and an £8 million overdraft
facility to help manage short-term fluctuations in working
capital.
5. The Group also has in place £17.5m committed bonding
facilities.
6. Surplus cash is placed on deposit only with large UK
financial institutions.
7. Creditworthiness of counterparties monitored on an
ongoing basis.
Construction activity in
London has increased
as projects put on hold
during the recession are
released, however there
are resource constraints
and inflationary pressures.
The regions are generally
slower to recover, lagging
the London market by
approximately a year.
Bristol, Cardiff & Kent
retained stubbornly low
tender margins. Bristol
and Cardiff have been
discontinued and Kent
absorbed into London
M&E.
Improved financial
performance in 2015,
net cash increased and
IAS 19 pension deficit
reduced, strong order
book.
Delivering
Quality
1. The Group supports high standards of business ethics,
sustainability and compliance, and is committed to
improving health and safety at work for all.
2. Feedback is sought from key stakeholders on a regular
basis and actions arising from this feedback are discussed
and agreed at an appropriate level.
1. Focus on strong relationships enables us to understand
client needs and focus our tendering activity accordingly.
2. We have experienced teams of estimators throughout the
country, with all bids reviewed by a Director and checks
carried out to avoid incorrect or non-competitive pricing.
3. The Board remains committed to the principle that we will
not bid for work below commercially acceptable rates.
4. A detailed business case is prepared for any proposed
expansion into new geographic areas or business sectors,
and is subject to prior Board approval.
Tender prices and margins
are improving as clients
and contractors seek to
lock in scarce M&E
resource.
The Group’s order book
has continued to grow.
Reputation
The Group’s ability to tender for new
business and to maintain strong
relationships with customers,
suppliers, employees and other
stakeholders is dependent on how it
is perceived by others.
Winning new work
Our ability to secure profitable new
work is dependent on our ability to:
• adequately resource tenders;
• understand the technical and
commercial challenges incumbent
in each tender; and
Building
Strong
Relationships
and
Sustainable
Growth
• price the associated risks
accordingly.
If risks are under-priced, contract
losses and reputational damage may
result; if risks are overpriced, the
Group will not secure sufficient
tenders to replenish the order book
and grow the business.
29
Annual Report & Financial Statements 2015
Strategic report - Principal risks
Risk Strategy Mitigation Change Main drivers
impact from 2014 of change
Health and safety
Failure to manage health, safety and
environmental risks could cause
serious injury or loss to employees or
third parties and expose the Group to
significant financial and reputational
loss and litigation.
Commitment
to Safety
1. The Group Managing Director has overall responsibility for
health and safety across the Group, ensuring safety is
prioritised throughout the Group.
2. The Group Health and Safety Director and Group
Environmental Manager monitor and respond to legal and
regulatory developments.
3. Industry leading health and safety policies and procedures
are maintained.
4. All employees receive regular training and updates to
ensure they are aware of their responsibilities.
5. All employees, suppliers and subcontractors are required to
comply with all applicable laws, regulations and standards.
Contract delivery
1. Ongoing assessment and management of operational risk
The Group concurrently runs several
hundred contracts across the country,
some of huge complexity. These
require high quality, proactive
management to ensure delivery of
value objectives for all stakeholders.
Failure to deliver could result in
significant financial and reputational
damage.
Innovation
and
Building
Strong
Relationships
throughout project lifecycle.
2. Train and maintain industry leading teams of directly
employed engineers, surveyors, supervisors and skilled
tradespeople.
3. Regular performance reviews of all key suppliers and
subcontractors.
4. Insurance cover reassessed each year, to guard against
People and skills
Attracting, retaining and developing
high calibre staff and skilled
tradespeople is key to our ability to
deliver value for our stakeholders.
Growth
Ready
Platform
liability claims.
5. Profit and cash flow are monitored throughout the project
lifecycle, with regular reviews at contract and business unit
level.
6. Contracts of a significant size or risk are regularly reviewed
by executive management and discussed at Board level.
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.
3. Labour rates are monitored regularly to ensure tender rates
are realistic and increases are managed. We have
continuous dialogue with the trade unions and continue to
review our policies and procedures in managing this risk.
Delivering
Quality and
Building
Strong
Relationships
1. Formal supplier framework agreements are maintained to
mitigate this risk, with prices locked in through
procurement at the beginning of a contract wherever
possible.
2. Regular performance reviews of all key suppliers and
subcontractors.
Growth
Ready
Platform
1. The Group’s defined benefit scheme closed to new
members from January 2015.
2. Ongoing regulatory and funding requirements are
monitored in conjunction with external actuarial advisers
and regular meetings are held with the pension scheme
trustees.
3. The Group is reviewing options in respect of the pension
scheme following a raft of changes to pensions and tax
legislation in recent years and the continuing adverse
actuarial climate.
Although the IAS 19
deficit decreased in 2015,
actuarial assumptions,
driven by falling bond
yields, have significantly
increased the Group’s
exposure to defined
benefits pension risk
during the recession.
Supply chain
To deliver projects to the correct
specification and to budget requires
the availability of sub-contractors,
components and materials of
sufficient quality and at the right
price. The majority of projects we
secure do not allow for the recovery
of increased material costs.
Pensions
The Group is exposed to funding risks
arising from changes in longevity,
inflation and investment assumptions
in relation to its defined benefit
pension scheme.
The last triennial valuation of the
scheme as at 31 December 2012
showed that the scheme had a
significant deficit. The next valuation
as at 31 December 2015 is likely to
show an increase in the deficit
following a further deterioration in
actuarial assumptions during the
intervening period and changes to
pensions legislation.
30
Annual Report & Financial Statements 2015
Strategic report - Viability statement
three year projection period. These sensitivities include
changing assumptions with regard to margins, workload
and liquidity of financial assets and liabilities. 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 an £8
million overdraft facility repayable on demand and a £5
million revolving credit facility expiring on 31st March
2017, and the ability to flex the cost base sufficiently to
address any significant change in workload. The three
year projections demonstrate that, taking into account any
reasonable sensitivities, the Group will be able to operate
within its existing facilities over the three year projection
period, and the Directors are confident, as demonstrated
by our experience during the recent recession, that the
Group’s business model allows sufficient flexibility to meet
any significant change in demand for its services.
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 is liabilities as they fall due over the
three year period ending 31st December 2018.
The Directors also considered it appropriate to prepare
the financial statements on the going concern basis, as
explained in Note 3A on page 88.
Viability statement
The Directors have assessed the Group’s prospects and
viability, taking into account its current position and the
principal risks outlined on pages 28 to 30.
The nature of the Group’s business is long-term and its
business model is open-ended. 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 Officer 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
unit 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
31
Annual Report & Financial Statements 2015
Strategic report - Financial review
Financial review
Martin Walton
Finance Director
Revenue
2013
2014
2015
£m
250
200
150
100
50
0
Summary of financial performance
2015 2014
(Restated)1
Continuing operations £m £m
Revenue 242.4 207.9
Operating profit
- Underlying2
1.3
- Reported 4.4 (0.1)
4.6
Profit / (loss) before tax
- Underlying2
3.7 0.6
- Reported 3.5 (0.8)
Profit / (loss) after tax
- Underlying3
3.0 0.4
- Reported 2.8 (0.7)
Discontinued operations1
Profit / (loss) for the year 0.1 (0.6)
(2.7) 0.1
Earnings / (loss) per share:
- Underlying3
0.85p
- Continuing operations 6.66p (1.78p)
- Basic 0.13p (1.58p)
7.11p
Dividend per share 3.1p 3.1p
1 Prior year restated to show Bristol and Cardiff operations as discontinued.
2 Underlying operating profit and profit before tax are stated before amortisation of intangible
assets and non-recurring items – see Note 7 to the financial statements.
3 Underlying profit after tax and earnings per share are stated after adjusting for the tax effect
of amortisation and non-recurring items.
5%
4%
3%
2%
1%
0
-1%
-2%
11%
10%
9%
8%
7%
6%
8
6
4
2
0
-2
Scotland
North
Central & South West
London & South East
Underlying
operating margin
2013
2014
2015
Overhead
revenue percentage
2015
2013
2014
Earnings per share
2015
2014
Underlying
Continuing operations
Basic
32
Annual Report & Financial Statements 2015
Strategic report - Financial review
Accounting policies and segmental
reporting
The Group’s consolidated financial statements
are prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted
by the European Union. There have been no
significant changes to accounting policies during
the year ended 31st December 2015.
As previously disclosed, the Group has revised
its segmental reporting this year to split the
South region into two distinct geographic
regions, London & South East and Central &
South West, enabling the management of the
two business segments to focus better on their
distinct markets whilst continuing to support
the wider activities of the Group. During 2015
we took the strategic decision to close our
underperforming businesses in Bristol and
Cardiff, and realign our operations in the South
West to focus on key relationships to drive
opportunities. Prior year information has been
restated to reflect these changes.
Underlying Group performance
Overview
Revenue from continuing operations increased
by 16.6% to £242.4m (2014: £207.9m), and
underlying profit before tax increased by £3.1m
to £3.7m (2014: £0.6m), with recovery gaining
momentum in our markets. London & South East,
Central & South West and the North all delivered
improved underlying margins, and net underlying
overheads as a percentage of revenue fell to
9.3%. We move into 2016 with a replenished
£300m order book improving in quality.
London & South East
Revenue from our London & South East
operations increased by 36.6% to £129.1m
(2014: £94.5m), generating an underlying profit
of £1.5m (2014: loss £1.4m). Underlying
operating margin increased to 1.2% (2014:
negative 1.5%), as contracts let during the
recession reached completion and the benefits
of the recovery, evident in our increasing order
book in recent reporting cycles, began to feed
through into profit and margins.
Central & South West
Revenue from our Central & South West
operations increased by 3.1% to £56.9m
(2014: £55.2m), with the region benefitting from
strong client relationships and repeat business.
Although revenue growth was modest, the
improved profitability supports our strategy of
concentrating on good quality opportunities with
well-respected clients and principal contractors,
and expansion of our facilities management and
healthcare capabilities. Underlying operating
profit improved to £0.9m (2014: £0.5m), with
underlying operating margins improving to 1.6%
(2014: 0.9%).
North
The North generated £41.8m revenue (2014:
£43.4m), with 2014 having benefited from
some significant add on projects for one of
our principal facilities management clients.
Underlying operating profit increased to £1.9m
(2014: £1.6m). This represents an underlying
operating margin of 4.5% (2014: 3.7%), with the
region continuing to benefit from strong client
relationships and repeat business.
Scotland
Scotland’s revenue was £16.2m (2014: £18.3m),
and underlying operating profit was £0.3m
(2014: £0.6m), representing an underlying
operating margin of 1.9% (2014: 3.3%).
Scotland experienced a slow start to 2015, a
knock on effect of the uncertainty caused by
the independence referendum and resource
33
Annual Report & Financial Statements 2015
Strategic report - Financial review
constraints in the region’s core residential market. Activity picked
up in the second half of the year, and the region has a strong
order book for delivery in 2016.
Exceptional and non-underlying items
Exceptional and non-underlying items comprise £0.2m (2014:
£0.2m) amortisation of intangible assets. There were no other
exceptional or non-underlying costs during the year (2014: £1.2m
exceptional claim settlement costs).
Finance costs
Net finance costs were £0.9m (2014: £0.7m), including a £0.6m
(2014: £0.5m) non-cash finance charge in respect of the pension
scheme. Net interest on bank loans and overdrafts increased to
£0.3m (2014: £0.2m), reflecting increased use of our banking
facilities during the year with a number of significant London
projects requiring up front working capital funding.
Taxation
As a wholly UK based group, our tax charge is dependent on
UK corporation tax rates. Our cost base includes a hard core of
expenditure that is not deductible for tax purposes, which has the
effect of pushing up our effective tax rate during periods of low
profits (or reducing the effective rate on losses). For 2015, the
effective tax rate was 20.1% (2014: 12.5% on reported loss).
Discontinued operations
On 19th November 2015 the Group announced its intention to
discontinue its operations in the Cardiff and Bristol areas. The
Group’s activities in these areas ceased and the closure of Cardiff
and Bristol offices was successfully completed by 31st December
2015, with the remaining employees and any outstanding
contractual commitments transferring to our TClarke South West
operation. The Bristol and Cardiff operations have been reported
as discontinued operations for the year ended 31st December
2015, and the previous year’s results have been represented
accordingly.
Earnings per share
Basic earnings per share from continuing operations was 6.66p
(2014 - loss: 1.78p), and basic earnings per share after
discontinued operations was 0.13p (2014 - loss: 1.58p).
34
Annual Report & Financial Statements 2015
Strategic report - Financial review
Basic underlying earnings per share after adjusting for amortisation
of intangible assets and non-recurring costs and the tax effect of
these items, was 7.11p (2014: 0.85p).
Dividends
The Board is proposing a final dividend of 2.60p (2014: 2.60p),
leaving the total dividend for the year maintained at 3.10p (2014:
3.10p). The dividend is covered 2.5 times by underlying earnings.
The final dividend will be paid, subject to shareholder approval,
on 13th May 2016 to those shareholders on the register at 15th
April 2016. The dividend will go ex-dividend on 14th April 2016.
A dividend reinvestment plan (DRIP) is available to shareholders.
Cash flow and funding
Net cash
2013
£m
7
2014
2015
Cash generated
by operations
6
5
4
3
2
1
0
2013
2014
2015
£m
5
4
3
2
1
0
-1
-2
-3
The Group’s net cash balances improved to £6.7m at 31st
December 2015 (2014: £5.3m) after deducting the £5.0m
(2014: £5.0m) outstanding under the revolving credit facility.
As well as the committed £5.0m revolving credit facility, which is
committed until 31st March 2017, the Group has in place an £8.0m
overdraft facility, renewable annually. Interest on overdrawn
balances is charged at 2.75% above base rate, and interest on
balances drawn down under the revolving credit facility is charged
at 3% above LIBOR, fixed for the duration of each drawdown
(typically three to six months). The Group was compliant with the
terms of the facilities throughout the year ended 31st December
2015 and the Board’s detailed projections demonstrate that the
35
Annual Report & Financial Statements 2015
Strategic report - Financial review
Group will continue to meet its obligations in the future. During the
year the Group arranged an additional short-term £3m overdraft
facility with Royal Bank of Scotland to provide additional working
capital during the start-up of phase of some significant London
projects; this facility remained unused and was allowed to expire
in January 2016.
Cash inflow generated by operating activities was £2.7m (2014:
£5.0m), enabling the Group to continue to invest in resources to
meet the increasing demand for our services.
Net assets and capital structure
The Group is funded by equity capital, retained reserves and
bank loans, and there are no plans to change this structure.
Shareholders’ equity increased by £0.7m during the year to
£19.6m (2014: £18.9m).
At £23.0m (2014: £23.2m), goodwill and intangible assets arising
on previous acquisitions represent a significant proportion of
the Group’s total assets of £109.4m (2014: £103.2m). The Board
has undertaken a rigorous impairment review in respect of the
intangible assets at 31st December 2015 and concluded that no
impairment is necessary.
Financial risk management
The Group’s main financial assets are contract and other trade
receivables and cash 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.
36
Annual Report & Financial Statements 2015
Strategic report - Financial review
Pension obligations
The last triennial valuation of the pension scheme as at 31st
December 2012 showed a deficit of £11.5m, which represents
a funding level of 68%. The Group has put in place a deficit
reduction plan to eliminate the deficit over a number of years, with
total employer contributions rising from 18% of pensionable salary
for the year ended 31st December 2014 to 20.7% for 2015 and
2016, 21.7% for 2017 through 2019, and 22.7% thereafter.
Employer contributions amount to approximately £1.3m per
annum. The Group has provided security to the pension scheme
in the form of a charge over property assets up to a combined
market value of £3.1m. The scheme is closed to new members
and the Group continues to meet its ongoing obligations to the
scheme.
The next triennial actuarial valuation, as at 31st December 2015,
is underway and is expected to show a further deterioration in
the funding level due to market related factors. The results of this
valuation and its impact on future funding will be known towards
the end of 2016.
In accordance with IAS 19 ‘Employee Benefits’, an actuarial gain
of £2.2m, net of tax, has been recognised in the reserves, with the
pension scheme deficit decreasing by £2.9m to £13.4m (2014:
£16.3m). The decrease in the deficit is primarily due to an increase
in the discount rate applied to scheme liabilities, driven by higher
bond yields.
Martin Walton
Finance Director
22nd March 2016
37
Annual Report & Financial Statements 2015
Strategic report - Corporate social responsibility
Corporate social responsibility
The Company is committed to conducting business with
fairness, honesty and integrity. The Board recognises its
responsibility for establishing high ethical standards of
behaviour and corporate governance, and the Group
has several established policies in place including, but
not limited to: anti-bribery and corruption, health and
safety, environmental, sustainable development, quality
assurance, equal opportunities, equality and diversity,
training and development and other human resources
policies which support our approach to conducting
business in an open and transparent manner.
The Company expects its employees to conduct
themselves in a manner which reflects the highest ethical
standards, with a personal commitment to compliance
with all applicable laws and regulations. Employees will be
judged not only on the results they achieve, but also on
the means by which they achieve them. Furthermore, the
Company has a zero tolerance policy towards any form of
bribery or corruption and has an appropriate procedure in
place whereby any concerns in relation to malpractice can
be raised in an appropriate forum.
It is our policy to ensure that the highest possible
standards are achieved and maintained operationally
throughout our full scope of operation. We therefore
operate a business management system in accordance
with the requirements of ISO 9001:2008 (Quality
Management Systems).
Health and Safety at TClarke
Health & Safety remains paramount in our undertakings
and is our number one daily priority across the
organisation, a fact that is reflected by the prominence
given to Health & Safety within this report.
We recognise Health & Safety as an essential part of our
business, underpinning our operations. As such, we have
always invested consistently in this area. The primary
challenge in 2015, as ever, was to keep Health & Safety
at the forefront of everybody’s mind and to scrutinise the
existing procedures and systems in order to continuously
evolve and improve our performance.
A full range of safety programmes
During 2015, TClarke continued to implement ‘our’ full
range of Health & Safety initiatives under the umbrella
‘Switched on to Safety’ campaign which has run
continuously since 2005. These initiatives included ‘Have
Your Say’ which focuses on drawing out Health & Safety
topics and issues for discussion, which encourages
engagement and consultation with the employees,
‘Good to go’ which is the TClarke procedure for pre-task
briefings, ‘Clear as you go’ which is our system for
collecting waste as it is created and housekeeping and
‘Would You?’ which is the new poster and toolbox talk
campaign focusing on Health, Safety and Environmental
risks.
Improved ‘You See, You Say’ response times
‘You See, You Say’ is our long term Health & Safety ‘Near
Miss’ reporting initiative and in 2013 we introduced a
smartphone app to compliment the card issuing format.
In 2015 we saw substantial improvements in the uptake
of the initiative.
Introduction of a new dedicated email address for
the ‘You See, You Say’ card reports has improved the
efficiency of response times, with the whole Health
& Safety team now able to receive and process them
expediently. Addressing of card report issues begins
immediately on site as soon as they are handed to the
responsible person who then forwards them to our Health
& Safety team. Throughout 2015, smartphone app report
handling was in the majority of cases achieved in ‘real
time’ with safety issues being dealt with at the
appropriate level almost as soon as they are received.
In order to promote and encourage the ‘You See, You
Say’ campaign, in 2015 the Group introduced a monthly
award which has helped to keep the concept fresh in
people’s minds and, in return, targets the issues with the
potential to cause accidents or incidents.
‘You See, You Say’
2015
2014
2013
3215
1876
396
No.
4000
3000
2000
1000
0
38
Annual Report & Financial Statements 2015
Strategic report - Corporate social responsibility
Absolute accident reporting
As detailed earlier in this report, a key element in 2015
was the introduction of ‘Absolute’ Accident Reporting
which has very simply sought to make sure that each
and every accident which occurs within the business, no
matter how apparently small or insignificant, is dutifully
recorded. No accident is accepted lightly but more
importantly none are hidden and so it follows that no
statistic is buried.
Accident statistics
2015
2014
2013
No.
80
60
40
20
0
• Scotland
• North
• Central & South West
• London & South East
Environment
TClarke recognises and accepts the known environmental
implications of its engineering works and procedures.
As part of our commitment to sustainable development
we undertake regular appraisals as a means of identifying
significant impacts for our works including: health
and safety, climate change and air quality, travel and
transport, energy consumption, noise vibration, water
and drainage, geology and soils and wastage.
TClarke maintains an Environmental Management System
accredited to ISO 14001:2004 to provide its clients and
other stakeholders with verifiable evidence that
Environmental Performance is integral to business
management.
As a registered waste carrier we ensure that materials
are handled and disposed of in a manner that does not
damage the environment or cause pollution. Furthermore,
the Company aims to recycle so far as practicable.
Energy consumption was measured across the Group by
recording data on the combustion of fuel and the use of
electricity at its facilities. The Company complied with the
requisite Energy Saving Opportunity Scheme (“ESOS”)
by 5th December 2015 to meet the recent changes in
legislation regarding energy reporting.
Greenhouse gas emissions
As a responsible company we take our environmental
responsibilities seriously. This is the third year we have
been required to report on Greenhouse Gas (“GHG”)
emissions in accordance with the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations
2013.
Energy consumption was measured across the Group by
recording data on the combustion of fuel and the use of
electricity at its offices and facilities and we have collated
Scope 1 and Scope 2 emissions data for the year ended
31st December 2015 across the Group companies, which
are reported in our consolidated financial statements.
Our GHG emissions have been calculated using UK
Government guidelines for conversion of fuels and
electricity.
2015
Scope 1 emissions
Scope 2 emissions
Total scope 1 & 2 emissions
Revenue
Emissions / £1m revenue
2014
Scope 1 emissions
Scope 2 emissions
Total scope 1 & 2 emissions
Revenue
Emissions / £1m revenue
Measure
London
& SE
Central
& SW
North
Scotland
tC02e
tC02e
tC02e
£m
tC02e
tC02e
tC02e
£m
102
147
249
129.1
1.9
87
159
246
93.9
2.6
1,187
77
1,264
56.2
22.5
1,138
128
1,266
54.1
23.4
348
57
405
41.8
9.7
410
68
478
43.4
11.0
333
43
376
15.3
24.6
376
52
428
16.5
25.9
Total
1,970
324
2,294
242.4
9.5
2,011
407
2,418
207.9
11.6
Definitions
1. Scope 1 emissions Combustion of fuel and operation of facilities
2. Scope 2 emissions Electricity purchased from the national grid
3. tC02e Tonnes Carbon Dioxide equivalent
39
Annual Report & Financial Statements 2015
Strategic report - Corporate social responsibility
Supporting charities and local communities
The Board encourages our businesses and our employees to support charities and their local communities, which
not only raises money for good causes, but also brings employees together. In 2015 the Group has participated
in a wide range of fundraising events including:
1. Top: Our Falkirk office continued their support for their
longstanding relationship with the Teenage Cancer Trust
and held a ‘Get Spooky’ day.
4. Top: TClarke assembled a team to participate in Brookfield
Multiplex’s annual charity seven-a-side football tournament
in aid of the Chickenshed and Willow Foundation charities.
2. Middle: Eleven employees, also from our Falkirk office,
participated in a charity event, cycling from Glasgow to
Edinburgh.
5. Above: Our Derby office organised a ‘Wear It Pink’ day
with a company raffle to raise money for breast cancer
awareness.
3. Above: Our South West office supported one employee in
climbing Mount Kilimanjaro and with the help of colleagues,
he raised over £5,300 for the Alzheimer’s Society.
6. Not pictured: Our London office organised a Christmas
raffle with proceeds donated to The Evelina London
Children’s Hospital.
40
Annual Report & Financial Statements 2015
Strategic report - Corporate social responsibility
Diversity and equality
The Group maintains an equality and diversity policy,
selecting and promoting employees based on their
aptitudes and abilities. TClarke is committed to providing
equal opportunities to all current and future employees
and values the differences that a diverse workforce can
contribute to the organisation. Data concerning gender
diversification is given below:
Gender diversification
2015
Male Female Total
Directors 7 1 8
Senior management 24 1 25
Staff 308 87 395
Skilled operatives 718 5 723
Apprentices and trainees 136 1 137
Total 1,193 95 1,288
2014
Male Female Total
Directors 6 1 7
Senior management 26 0 26
Staff 271 79 350
Skilled operatives 763 12 775
Apprentices and trainees 102 3 105
Total 1,168 95 1,263
The Group recognises its obligations towards employment
of disabled people and gives full and fair consideration to
suitable applicants, having regard to individuals’ aptitudes
and abilities. The Company is committed to ensuring that
everyone is treated equally regardless of disability or any
other condition which cannot be shown to be relevant to
performance. The Company is committed to ensuring that
any individual who becomes disabled during the course
of their employment remains in their own role where
possible, or is employed in another suitable position.
Training, career development and promotion of disabled
employees should, as far as possible, be identical to that
of other employees.
Investing in our workforce
The Board recognises that as a service business, our
talented and diverse workforce is our key strategic asset.
The long-term success of the Group is dependent on the
quality, skill, dedication and motivation of our people and
keeping them inspired is one of our highest priorities.
We therefore invest heavily in our workforce, dedicating
time and resources to our people so that they can
develop career paths within TClarke. The Academy
encourages our employees to undertake training and
development, with options ranging from a variety of
technical opportunities to professional qualifications
to develop their skills across a breadth of areas and gain
valuable experience whilst working.
As our people are our most valuable asset, we appreciate
the mutual benefits of keeping employees informed and
take appropriate steps to ensure that employees are kept
aware of matters that are of concern to them and factors
that affect the performance of the Company. We value
the views of our employees and consult with employees,
or their representatives, when making decisions which
affect their interests.
We operate in a competitive marketplace and the
Company recognises the importance of rewarding
employees appropriately for the value they bring to
the business and aims to offer rewards that attract and
retain key talent. In addition, the Company encourages
employees to share in its success through share
ownership. As such, TClarke has a share save scheme
for eligible employees, the TClarke Savings Related
Share Option Scheme (“the Scheme”). The Scheme was
relaunched in 2015 and was well received by employees.
Details of share options granted under the scheme are
disclosed in Note 20 to the financial statements.
The Strategic Report on pages 2 to 41 was approved by
the Board of Directors on 22nd March 2016.
Mark Lawrence
Chief Executive Officer
22nd March 2016
41
Annual Report & Financial Statements 2015
Governance - Board of Directors
Non-Executive Directors
Iain McCusker, Chairman
Appointed to Board: 1st January 2009. Age 64.
Relevant skills and experience:
• A Chartered Accountant and former
Coopers & Lybrand Partner.
• Significant international financial and
management experience through senior
executive roles at Xerox, Unisys and
ACCA.
• In depth commercial, operational and
risk management experience.
• Former member of the Qualifications
Board of The Institute of Chartered
Accountants of Scotland.
External Appointments:
• Non-Executive Director, Cripps LLP
• Visiting Fellow, CASS Business School
• Chairman, NPA Insurance
Tony Giddings, Senior Independent Director
Appointed to Board: 1st October 2014. Age 64.
Relevant skills and experience:
• BSc Building Administration.
• Fellow of the Chartered Institute of
Building.
• Previously held Board positions at
Argent LLP, and British Council for
Offices and was Chairman of the Design
and Build Foundation from 2001 to
2003.
• Successful career in property
development, having delivered over
£1.8 billion of construction projects.
External Appointments:
• Trustee of CRASH
• Director, London South Bank University
Beverley Stewart, Independent Non-Executive Director
Appointed to Board: 1st January 2005. Age 55.
Relevant skills and experience:
• Degree in Building Economics.
• Qualified as a Chartered Surveyor in
1988.
• Gained over 15 years experience at
Axtell Yates Hallett where became a
Partner before becoming Owner of
a partnership providing project
management, cost planning and asset
management consultancy.
• Over 25 years Board level experience
in the construction industry.
• Successful career in delivery of Real
Estate Integration programmes and
Occupier Real Estate reorganisation
for corporate clients.
Mike Robson, Independent Non-Executive Director
Appointed to Board: 18th November 2015. Age 55.
Relevant skills and experience:
• Chartered Accountant with experience of
• Strong focus on improving business
audit, financial management and
reporting gained at PwC and in industry.
performance and developing
management teams.
• 23 years Board level experience in a
range of business sectors as a Finance
Director, Managing Director, owner or
Advisor.
• Launched, developed and successfully
sold his own internationally based
business.
External Appointments:
• Director, Azure Partners Ltd
42
Annual Report & Financial Statements 2015
Governance - Board of Directors
Executive Directors
Mark Lawrence, Group Chief Executive Officer
Appointed to Board: 2nd May 2003. Age 48.
Relevant skills and experience:
• 31 years with the Company following
completion of an electrical apprenticeship
with the Company in 1987.
• Progression through the Company
including Electrical Engineer, Technical
Director (1997), Executive Director
(2003), Managing Director - London
Operations (2007). Chief Executive
Officer from 1st January 2010.
• A hands-on leader who takes personal
accountability, and pride, in TClarke’s
performance and, ultimately, our client's
satisfaction.
• Regularly walks projects sites and gets
involved personally with many of our
clients, contractors and our supply chain.
Mike Crowder, Group Managing Director
Appointed to Board: 1st January 2007. Age 51.
Relevant skills and experience:
• Over 25 years of significant experience
in the construction industry.
• Project based experience delivering
flagship jobs and a detailed knowledge
of large infrastructure projects.
• Overall responsibility for Operations to
ensure all projects are properly
managed. Monitors engineering
departments and projects on a regular
basis as a Main Board Member.
• Responsible for Group health and
safety. Actively involved with health
and safety risk management, raising
awareness, influencing attitudes and
changing behaviours.
Martin Walton, Group Finance Director
Appointed to Board: 26th October 2010. Age 51.
Relevant skills and experience:
• Chartered accountant with over 25
years experience in the profession and
within industry.
• Joined TClarke as Group Financial
Controller October 2007.
• Led the implementation of the Group’s
• Worked with numerous plcs across a
management reporting system.
range of sectors with KPMG and BDO.
• First Class Honours Degree in
Accountancy and Finance from the
London School of Economics.
43
Annual Report & Financial Statements 2015
Governance - Corporate governance report
Corporate governance report
“Having served as a non-executive director for six years,
I was delighted to be appointed as Chairman of the
Company in October 2015.”
Iain McCusker, Chairman
Chairman’s introduction
The Board is committed to high standards of corporate governance and
continues to embrace the principles contained in the UK Corporate Governance
Code (‘the Code’). The Code sets out principles to which the Listing Rules
require all listed companies to adhere, supported by more detailed provisions.
We acknowledge the changes to the Code, which came into force in the
September 2014 edition, and applies to financial years beginning on or after
1st October 2014. The changes place increased responsibilities on the Board,
therefore our Governance section on pages 44 to 79 sets out how we manage
the Group, and how we apply the principles and comply with the provisions of
the Code.
Having served as a non-executive director for six years, I was delighted to
be appointed as Chairman of the Company in October 2015 following David
Henderson’s departure from the Board.
The appointment of a full-time Company Secretary in April 2015 was a
significant step forward in enhancing our Corporate Governance procedures
throughout the year, including benchmarking our governance framework
against the provisions of the Code, a review of the Company’s Audit,
Remuneration and Nomination Committee terms of reference and formalising
a compliance calendar to ensure our governance responsibilities are carried
out in full in a timely manner throughout the year. We have also further
developed, and continue to improve, our internal controls and risk
management procedures to meet the new requirements of the Code this
year and to benefit the Company as a whole.
As Chairman I am committed to delivering high standards of Corporate
Governance and will endeavour to develop our governance framework on
an ongoing basis to ensure continuous improvement.
Iain McCusker
Chairman
22nd March 2016
44
Annual Report & Financial Statements 2015
Governance - Corporate governance report
Alexandra Dent
Appointed Company Secretary 14th April 2015
Statement of compliance
Throughout the year ended 31st December 2015 the
Board considers that it has complied with the provisions
of the Code. The Code is issued by the Financial
Reporting Council (FRC) and is available on the FRC’s
website https://www.frc.org.uk
Structure of the Board
The Company is managed by the Board of Directors,
which during the year was comprised of four executive
directors and the non-executive directors (including the
Chairman). 2015 saw a number of changes to the Board
of Directors. Danny Robson joined as an executive
director on 1st January 2015. David Henderson, having
been appointed as a Non-Executive Director since
1st January 2014 and having served as Chairman
following the AGM on 9th May 2014, stepped down
from the Board on 30th September 2015. Iain McCusker,
having served as a Non-Executive Director since 1st
January 2009, was appointed by the Board to fulfil the
role of Chairman on 1st October 2015. As Iain McCusker
had served as Senior Independent Director during the
year, Tony Giddings was appointed as Senior Independent
Director on 14th October 2015. Furthermore, our Board
was strengthened by the appointment of Mike Robson as
a Non-Executive Director on 18th November 2015. Post-
year end, Danny Robson stepped down from the Board
on 21st March 2016.
The Articles of Association require that one-third of the
Directors shall retire by rotation each year and become
eligible for re-election. This excludes those Directors who
may be newly appointed during the year, who are eligible
for election at the next Annual General Meeting.
Therefore Mark Lawrence and Martin Walton will retire
and offer themselves for re-election and Mike Robson will
offer himself for election at the forthcoming Annual
General Meeting on 6th May 2016.
Beverley Stewart, by virtue of having served as a director
of the Company for more than ten years, is deemed
not to be independent according to the Code and will
henceforth be subject to annual re-election. However,
Beverley Stewart is deemed by the Board to be
independent in character and judgement, in spite of
her length of service, and is considered to be a valuable
member of the Board given her knowledge and industry
experience. As a consequence, at least half of the
directors were deemed to be independent throughout
the year.
All Executive Directors signed revised service agreements
during 2015. Although there were no material changes,
the revised agreements take into account best practice
and recent changes in employment legislation. The
service agreements contain a notice period of 12 months
for all Executive Directors.
All Non-Executive Directors have letters of appointment
specifying their roles, responsibilities and required time
commitment to the Board.
Prior to appointment as Chairman, Iain McCusker
disclosed his significant commitments to the Board. These
commitments, and all directors’ biographies are provided
on pages 42 and 43.
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
45
Annual Report & Financial Statements 2015
Governance - Corporate governance report
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.
Board meetings
The composition of the Board is designed to ensure
effective management, control and direction of the Group.
Matters reserved for the Board’s attention include:
• Consideration and approval of the Group’s strategy, budgets,
structure and financing requirements
• Consideration and approval of the Group’s annual and interim
reports and financial statements
• Consideration and approval of interim and final dividends
• Consideration and approval of the Group’s interim
management 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
recommended by the Nomination Committee
• Establishing committees of the Board and determining their
terms of reference
The Board is collectively responsible for the effective
oversight of the Company and its businesses. 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.
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.
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, as well as shareholders as required.
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
Nominations Committees. The roles of Chairman, Chief
Executive Officer and Senior Independent Director are
clearly defined and disclosed on the Company’s website.
The Board meets formally once a month 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 below:
Number of meetings attended
Board
(Maximum 11)
Audit
(Maximum 5)
Nomination
(Maximum 2)
Remuneration
(Maximum 2)
David Henderson1 7 – – –
Iain McCusker2 11 4 2 2
Beverly Stewart 11 5 1 2
Tony Giddings 10 5 2 2
Mike Robson3 2 1 – –
Mark Lawrence 11 – – –
Martin Walton 11 – – –
Mike Crowder 11 – – –
Danny Robson4 9 – – –
1 Retired 30th September 2015 and ceased membership of
Remuneration Committee with effect from 18th June 2015
2 Ceased membership of Audit Committee with effect from
18th November 2015
3 Appointed 18th November 2015
4 Resigned 21st March 2016.
The Group Management Board
The Group Management Board comprises the Executive
Directors and other key members of the Group’s
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 four
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
46
Annual Report & Financial Statements 2015
Governance - Corporate governance report
on matters such as Health & Safety, employee
involvement, 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 Non-Executive Directors meet with members of
the Group Management Board and other members of
the senior management team at least once a year. In
addition, the Non-Executive Directors make visits to the
subsidiary companies in order to acquaint themselves
with the regional businesses and their senior
management.
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
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 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.
The Board conducted an internal appraisal of its own
performance, covering the composition, procedures and
effectiveness of the Board and its committees. Overall the
Board members felt that the Board operated effectively,
however the feedback also identified some opportunities
for the Board to improve its effectiveness. The points
raised will be addressed by the Board during 2016.
Opportunities for enhancement of Board effectiveness
are addressed throughout the year to promote continual
development.
Company Secretary
All directors have access to the advice and services of the
Company Secretary, who ensures that the Board receives
appropriate and timely information, that Board procedures
are followed and that statutory and regulatory
requirements are met. The role of Company Secretary
was previously filled by the Finance Director. Alexandra
Dent joined the Company on 1st April 2015 and was
appointed Company Secretary at the subsequent Board
meeting held on 14th April 2015. Thereafter, Alexandra
was appointed Company Secretary of all subsidiary
companies.
Board Committees
The Board has established the following committees,
whose terms of reference are available on the Company’s
website.
Audit Committee
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 review 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 approve the audit plan and ensure it is
consistent with the scope of audit engagement
• Reviewing the independence of the external auditors and
review the effectiveness of the audit process
• Reviewing the extent of non-audit services provided by the
external auditors
• Reviewing the Company’s whistleblowing and anti-bribery
procedures
The Board is satisfied that Iain McCusker (Chair)
had sufficient relevant financial experience during his
appointment as Chair of the Audit Committee, and that
Mike Robson has the requisite financial experience to
Chair the Audit Committee going forward.
47
Annual Report & Financial Statements 2015
Governance - Corporate governance report
Nomination Committee
The role 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 other senior executives, 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 Audit and Remuneration Committees
• Reviewing annually the time required from Non-Executive
Directors
Remuneration Committee
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 determine targets for, any
performance-related pay schemes operated by the Company
and approve 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
• Agreeing the policy for authorizing claims for expenses from
the Directors
Shareholder relations
The Company recognises the importance of dialogue with
both institutional and private shareholders.
Presentations are made to brokers, analysts and
institutional investors at the time of the announcement
of final and interim results and there are regular meetings
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.
It is usual that Mark Lawrence and Martin Walton are
present at these meetings and that feedback reports
provided by the Company’s broker are communicated to
the Non-Executive Directors so that they can be informed
regarding shareholder opinion. 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 private
investors 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. 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 on our website at
www.tclarke.co.uk under the Investor Relations tab.
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.
In accordance with the Code, the Board confirms that, for
the year ended 31st December 2015, 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 28 to 30.
Risk management and internal control procedures are
delegated to Executive Directors and senior management
48
Annual Report & Financial Statements 2015
Governance - Corporate governance report
Directors report - Corporate Governance Report
in the Group, operating within a clearly defined divisional
structure. Each division or subsidiary 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 quarterly basis.
On a quarterly basis 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.
The Board reviews the Company’s risk register and
monitors risk management procedures as a regular
agenda item and the Board receives reports thereon from
Group management. The emphasis is on obtaining the
relevant degree of assurance and not merely reporting
by exception. Given the importance of an effective risk
management process, the Company has engaged external
advisors to assist with further developing the Company’s
risk management procedures in 2016.
At its meeting on 15th March 2016, the Board carried
out the annual internal controls and risk management
assessment of the year ended 31st December 2015 by
considering documentation from the Audit Committee and
reviewing the need for an internal audit function. It was
considered unnecessary to establish an internal audit
function because the regular site audits under the quality
control procedures, together with regular review visits
by the Group finance team to the subsidiaries, provide a
similar assurance that internal control systems are being
properly adhered to.
Going concern
The Group had positive net cash balances at the year
end and has in place an £8 million overdraft facility.
The Group draws on the overdraft facility as and when
required to meet working capital requirements. As with
all such facilities, the overdraft is subject to annual review
and is repayable on demand. During the year the Group
agreed an additional £3m short-term overdraft facility
which was not used and subsequently expired in
January 2016.
The Group has a three-year committed £5 million
Revolving Credit Facility (‘RCF’) in place until 31st March
2017. The RCF was fully drawn at 31st December 2015.
The RCF imposes certain financial and other covenants
on the Group, which are tested on a quarterly basis. The
Group was compliant with its obligations under the RCF
throughout the year.
The Directors have received confirmation from the
Company’s lenders that they know of no reason why the
overdraft facility will not be renewed when it next falls
due for review and that they would expect to be able to
reach agreement to a new facility on similar terms to the
RCF when it falls due for renewal. There is no other
external debt apart from the RCF and finance lease and
hire purchase commitments.
The Group prepares detailed three year profit, cash flow
and covenant projections, taking into account secured
work, pipeline and other opportunities, and available
resources. The projections include sensitivities to test
the resilience of the Group to changes in trading volumes,
margins, interest rates and payment terms. After making
appropriate enquiries the directors are satisfied that the
Company and Group have adequate resources to continue
their operations for at least the next twelve months
following the date of this report. Accordingly the Directors
continue to adopt the going concern basis in preparing
the financial statements.
Further information relating to the financial position of
the Group, its cash flows, liquidity position and borrowing
facilities is given in the financial review on pages 32
to 37.
Approved by the Board and signed on its behalf
Alexandra Dent
Company Secretary
22nd March 2016
49
Annual Report & Financial Statements 2015
Governance - Audit Committee report
Audit Committee Report
Mike Robson
Chair of the Audit Committee
(With effect from 18th November 2015)
Former Chair - Iain McCusker
The Audit Committee supports the Board by providing detailed scrutiny over
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. Where necessary, we
request additional detailed information so that we may better assess certain
issues, and the risks and opportunities presented.
Having joined the Board on 18th November 2015 I was pleased to be
appointed as Chair of the Audit Committee and am focused on maintaining
the robust procedures implemented by the former Chair, Iain McCusker. 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.
Mike Robson
Chair - Audit Committee
22nd March 2016
50
Annual Report & Financial Statements 2015
Governance - Audit Committee report
Membership of the Audit Committee
The Audit Committee is comprised of the Non-Executive
Directors Mike Robson (Chairman), Beverley Stewart and
Tony Giddings. Iain McCusker also served on, and Chaired,
the Audit Committee throughout the year until 18th
November 2015 when Mike Robson (who has the requisite
financial experience to Chair the Audit Committee) was
appointed to the Board and as Chairman of the Audit
Committee. Biographies of the members of the Audit
Committee are included on page 42.
Matters considered by the Audit Committee
The Audit Committee met on five occasions during the year
ended 31st December 2015. Four of the meetings were
attended by the external auditors, PricewaterhouseCoopers
LLP. The principal matters discussed at each meeting are set
out below:
Date Principal matter considered
March
2015
July
2015
July
2015
• Draft annual report and financial statements
for the year ended 31st December 2014,
including significant judgements and
disclosures therein
• Audit representation letter
• Annual assessment of internal controls and
risk management
• Review of risk register and mitigating actions
• Finance Director’s report on internal control
• Finance Director’s report on going concern
• Consideration of the need for an internal
audit function
• Independence of external auditors
• Review of risk register and mitigating actions
• Review of anti-bribery and corruption and
whistleblowing procedures
• Draft half-year report and financial
statements for the six months ended 30th
June 2015, including significant judgements
and disclosures therein
October
2015
• Audit plan presented by the auditors
• Governance and independence of the
external auditors
• Review of risk register and mitigating actions
December
2015
• Pre-year end audit work
• Review of goodwill carrying value
• Review of accounting policies
• Review of risk register and mitigating actions
• Implications of the revised 2014 UK
Corporate Governance Code (applicable for
2015 onwards)
51
Annual Report & Financial Statements 2015
Governance - Audit Committee report
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:
Matter considered & Action
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 Finance Director supporting
management’s assertion that goodwill and
other intangible assets were not impaired. 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 auditors’ 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
but that there remains a risk of impairment
of TClarke Scotland, TClarke South West and
TClarke Midlands and East in the future and
relevant disclosures have therefore been
included in the financial statements. 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 12 to the financial statements
on page 105 to 107.
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.
An impairment charge of £0.3m was booked
to reduce to £nil the carrying value of the
Company’s investment in TClarke (Bristol)
Ltd which comprised the Bristol and Cardiff
operations which were discontinued during
the year.
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.
respect of profit and revenue recognition during
the year, and their specific application to a
number of contracts.
The Committee considered the consistency and
appropriateness of the Group’s policies in
The Committee concurred with management’s
assessment of the contracts and the revenue
recognised at those times.
Matter considered: Accounting for discontinued operations
Action: The treatment of the Bristol and Cardiff
operations as discontinued was considered,
including the operating results during the year,
the treatment of losses arising on
discontinuation and the disclosures in the
financial statements.
The Committee concurred with the treatment
of the Bristol and Cardiff operations as
discontinued and considered that appropriate
disclosures had been made.
Matter considered: Going concern
Action: The Committee reviewed papers
presented by the Finance Director on the
Group’s viability as a going concern. Discussion
focused on the Group’s cash flow projections,
which covered a period of three years and
included key sensitivities, facility headroom and
projected covenant compliance, and actual and
potential breaches in the terms of the Group’s
banking facilities. Where necessary, clarification
of the bank’s position was sought and
appropriate disclosures made in the annual and
interim reports.
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; and
• 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 24 to the financial statements
on pages 123 to 127.
Matter considered: Non-recurring items
Action: The Committee considered the
quantification, disclosure and presentation in
the financial statements of amounts arising in
respect of potential non-recurring costs. The
Committee concurred with the accounting for
these costs and considered the disclosures in
the financial statement appropriately described
the issues arising. Further details are disclosed
in Note 7 on page 99.
52
Annual Report & Financial Statements 2015
Governance - Audit Committee report
Internal control assessment and internal audit
The Audit Committee has reviewed arrangements by
which staff of the Company may, in confidence, raise
concerns. At its meeting on 15th March 2016 the Audit
Committee carried out its formal review of the internal
controls and risk management processes in place during
the year and considered the need for an Internal Audit
function. The Audit Committee confirmed that the systems
in place were appropriate, and no material weaknesses
were identified. The Audit Committee concluded that,
based on presentations received from management
concerning the operation of internal controls and risk
management procedures during the year, there is no need
at present to instigate a formal internal audit process.
External audit
The Audit Committee is responsible for overseeing
relations with the external auditors, including the approval
of fees, and makes recommendations to the Board on
their appointment and reappointment. Details of the
auditors’ remuneration can be found in Note 7 to the
financial statements on page 99. The auditors fees for
non-audit services during the year were £nil (2014:
£38,000).
The independence of the external auditors is essential
to the provision of an objective opinion on the true and
fair view presented in the financial statements. Auditor
independence and objectivity is safeguarded by limiting
the nature and value of non-audit services performed by
the external auditors, ensuring that employees of the
external auditors who have worked on the audit in the
past two years are not appointed to senior financial
positions in the Company, and ensuring the rotation of
the lead engagement partner at least every five years.
The current lead engagement partner, Jonathan Hook,
has held the position for five years and in accordance
with UK auditing standards is due to rotate off the audit
engagement following the conclusion of the audit for the
year ended 31st December 2015. The Audit Committee
would like to thank Jonathan for his excellent service over
the last five years and look forward to working with his
successor.
Mike Robson
Chair - Audit Committee
22nd March 2016
53
Annual Report & Financial Statements 2015
Governance - Nomination Committee report
Nomination Committee report
Iain McCusker
Chair of the Nomination Committee
The Nomination Committee comprised Iain McCusker (Chair), Beverley
Stewart, Tony Giddings and, until his retirement effective 30th September
2015, David Henderson. Mike Robson also joined the Nomination Committee
upon his appointment to the Board on 18th November 2015. Biographies of
the members of the Nomination Committee are included on page 42. The
Chair of the Committee, Iain McCusker, was Senior Independent Director
throughout the year until 1st October 2015 when he was appointed as
Chairman.
The Nomination Committee met twice during the year to consider candidates
to be recommended to join the Board. The Committee gives due consideration
to diversification in the make up of the Board, but due to the size of the
Company and Board the most important consideration is to achieve an
appropriate mix of skills, knowledge and experience. Following David
Henderson’s retirement, the Committee interviewed two candidates for the role
of Non-Executive Director and recommended the appointment of Mike Robson
as a Non-Executive Director. As the Nomination Committee was presented with
two suitable candidates for interview, it was felt that an external search
consultancy firm was not required.
The Company’s Nomination Committee is mandated to review the appropriate
balance of skills and experience on the Board, taking into account the
Company’s Board Diversity Policy, on behalf of the Board. The Nomination
Committee believes the composition and structure of the Board is such that
the Board operates effectively, as confirmed by the Board evaluation process.
The Nomination Committee also takes the board diversity policy into account
when looking at succession planning for the Company.
Following rigorous review, the Nomination Committee has recommended that
Beverley Stewart be nominated for re-election at the Company’s forthcoming
Annual General Meeting, even though Beverley has served as a Non-Executive
Director for more than ten years as detailed on page 45.
Iain McCusker
Chair - Nomination Committee
22nd March 2016
54
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Directors’ remuneration report
Tony Giddings
Chair of the Remuneration Committee
(With effect from 18th June 2015)
Former Chair - Beverley Stewart
Annual Statement
The Remuneration Committee is focused on ensuring that our policies
and procedures are right for our business and are capable of driving and
incentivising our executives to create long-term value for our shareholders.
The focus of the executives this year has been on further strengthening the
organisation, resolving contractual issues from previous years, and ensuring
effective execution of our strategy in readiness for future economic growth.
Pay for performance
We believe in rewarding our executives based on their performance and on
the value created for our shareholders. The variable elements of executive
remuneration are focused on simple and transparent measures of profit
before tax, EPS growth and key strategic objectives. Our bonus and long-term
incentive structures are based on challenging targets, which we believe are in
line with market best practice. These are outlined on pages 58 to 59.
Our executive directors have shown great resolve and commitment in guiding
the Company through the prolonged recession, yet bonuses were not paid
during recent years as the targets set against underlying performance of the
Group were not met during this difficult time.
I am pleased to report that the underlying profit before tax target was indeed
met in 2015 and, under the terms of the remuneration policy, a bonus would
be payable to directors. However, the Remuneration Committee recognises that
the discontinuation of the Bristol and Cardiff operations affected the overall
results of the Group. To be equitable to both the executive directors and
shareholders, the Remuneration Committee has decided to award the
executive directors 50% of the bonus payable.
The minimum vesting conditions for our 2013 LTIP award, which is based
on earnings per share growth, were not met, once again demonstrating the
challenging targets we set as a business.
Clarity and openness in disclosure
The Remuneration Committee strives to operate and demonstrate best practice
in the area of executive remuneration and disclosure. We trust that our report
demonstrates transparency and clarity in our disclosures.
Our report has three sections as follows: this Annual Statement, which
summarises and explains the major decisions and changes in respect of
55
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
directors’ remuneration; a Directors’ Remuneration Policy setting out the
forward-looking remuneration policy for the Company’s directors, which
was approved at the AGM on 9th May 2014; and an Annual Report on
Remuneration, providing details of how the policy for 2016 will be operated
and the remuneration earned by the Company’s directors in relation to the
year ended 31st December 2015.
At the forthcoming AGM on 6th May 2016, the Annual Report on Remuneration
will be subject to an advisory shareholder vote. The Directors’ Remuneration
Policy is subject to a binding vote every three years (sooner if changes are
made to the policy), with the next vote being due in 2017.
Remuneration policy for 2016
During 2015 the Remuneration Committee took advice from its solicitors,
Pinsent Masons LLP, in connection with the terms of service contracts
for executive directors and matters concerning other members of senior
management, and had previously taken advice from BDO LLP concerning the
level and structure of executive remuneration packages. The committee’s most
recent conclusions are that the existing senior executive remuneration policy
remains appropriate and should continue to operate for 2016 without major
changes.
Consideration of employment conditions elsewhere in the Group
The Committee considers the general basic salary increase for the broader
employee population when determining the annual salary increases and
remuneration for the executive directors. Employees have not been consulted
in respect of the design of the Company’s senior executive remuneration policy
to date, although the committee will keep this under review.
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 very proud of the support we have received in the past from our
shareholders, with 98.7% approval of the remuneration policy at the 2014
AGM and 99.47% approval of the remuneration report received last year.
We hope that we will continue to receive your support at the forthcoming
AGM.
Tony Giddings
Chair - Remuneration Committee
22nd March 2016
56
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Directors’ Remuneration Policy
In formulating the remuneration policy, full consideration
has been given to the principles set out in the Code and
the committee regularly reviews the policy to ensure it
takes due account of best practice and the particular
circumstances of the Company.
Specifically, the committee concluded that:
• Basic salary levels remain appropriately positioned in
the market, noting that they sit in the median range
compared with similar companies;
• The structure and quantum of the annual bonus
continues to be appropriate and aligned to
shareholders’ interests; and
• The long-term incentive plan policy, whereby
conditional shares and options are granted annually
with vesting over a three year period based on
earnings per share growth conditions, provide a strong
alignment between the senior executive team and
shareholders.
The Directors’ Remuneration Policy Report was approved
by a binding shareholder vote at the AGM on 9th May
2014 and will be in operation until the 2017 AGM.
Policy overview
The Remuneration Committee regularly reviews the senior
executive remuneration policy to ensure it promotes the
attraction, motivation and retention of the high quality
executives who have been key to delivering the
Company’s strategy in the past and who will be key to
delivering sustainable earnings growth and shareholder
return in the future.
The Company aims to provide a remuneration structure
that is aligned with shareholder interests and, as such,
is competitive in the marketplace to attract, retain and
motivate Executive Directors of superior calibre in order to
deliver continued growth of the business. Company policy
is that performance related components should form a
significant portion of the overall remuneration package,
with maximum total potential rewards being earned
through the achievement of challenging performance
targets based on measures that represent the best
interests of shareholders.
Consideration of shareholder views
The Remuneration Committee considers shareholder
feedback received in relation to the AGM. This feedback,
plus any additional feedback received during any
meetings from time to time, is then considered as part
of the Company’s annual review of remuneration policy.
In addition, the Remuneration Committee will seek to
engage directly with major shareholders and their
representative bodies should any material changes be
made to the remuneration policy.
Summary remuneration policy
The table overleaf summarises the Directors’
remuneration policy for 2014 onwards:
57
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Element of
remuneration Purpose and link to strategy Operations Maximum Performance targets
Salary
Benefits
Bonus
To provide competitive fixed
remuneration to attract and
retain executive directors
of superior calibre in order
to deliver growth for the
business. Intended to
reflect that paid to senior
management of comparable
companies
To provide market consistent
benefits, including insured
benefits to support the
individual and their family
during periods of ill health,
accidents or death and a
company car or car allowances
to facilitate effective travel
Incentivises annual
achievement of performance
targets. Maximum bonus only
payable for achieving
demanding targets
The basic salary for each
executive director is reviewed
annually by the Remuneration
Committee. Individual salary
adjustments take into account
each executive director's
performance against agreed
challenging objectives and the
Group's financial
circumstances, as well as
comparing each executive
director's basic salary to senior
management in the Group and
relative to the external market
Current benefit provision
includes a company car or car
allowance and private medical
insurance
Other benefits may be payable
where appropriate
Not pensionable
Not applicable
There is no prescribed
maximum annual increase.
The Committee is guided by
RPI and the general increase
for the broader employee
population but on occasions
may need to recognise, for
example, an increase in the
scale, scope or responsibility
of the role. Current salary
levels are set out on page 62
There is no prescribed
maximum but the percentage
increase is not expected to
rise significantly in excess of
the basic salary increase
Not applicable
Profit Related - Paid in cash
up to 100% of salary
Up to 100% of salary
Profit related bonuses in
excess of 100% of basic salary
are paid in TClarke shares
Strategic Target Bonuses are
paid in cash providing targets
are met and certain profit
thresholds are crossed
Up to 50% of salary
Up to 50% of salary
Targets are set for underlying
profit before tax, and bonuses
are paid on a sliding scale
according to how the Group
performs against targets
The bonus for strategic
targets is payable only if,
in the opinion of the
Remuneration Committee,
the targets are met
Non-
executive
director
fees
Reflects time commitments
and responsibilities of each
role
Reflects fees paid by similarly
sized companies
Cash fee paid
Fees are reviewed on an
annual basis
No fees are payable for
any membership of board
committees
Long-Term
Incentive
Plan
Designed to align with both
the strategic objectives of
delivering sustainable earnings
growth and the interests of
shareholders
Awards normally vest three
years from grant, subject to
performance targets and
continued service
Participants will normally have
a seven year period from the
date each tranche vests in
which to exercise nil cost
options
As per executive directors,
there is no prescribed
maximum annual increase
Non-executive directors do
not participate in variable pay
arrangements
The committee is guided by
the general increase in the
non-executive director market
and for the broader employee
population but on occasions
may need to recognise, for
example, an increase in the
scale, scope or responsibility
of the role. Current fee levels
are set out on page 63
Aggregate value of shares
over which options are
granted and conditional share
awards shall not exceed 100%
of basic salary in any one year
LTIP performance measured
over three years based on
annualised EPS growth in
excess of RPI as follows:
nil
<3%
25% award
3%
3-10%
25-100%
on a straight line basis
>10%
100%
58
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Element of
remuneration Purpose and link to strategy Operations Maximum Performance targets
All
employee
share plans
To encourage employee share
ownership and therefore
increase alignment with
shareholders.
The SAYE Scheme was
approved by shareholders
on 13th May 2011 and was
approved by HMRC on 14th
July 2011
Sharesave Plan: HMRC
approved plan under which
regular monthly savings are
made over a three year period
and can be used to fund the
exercise of an option, where
the exercise price is
discounted by up to 10%.
Provides tax advantages to UK
employees
Maximum permitted
savings of £500 per month
across all ongoing Sharesave
contracts in line with HMRC
limits
Not applicable
Share
ownership
guidelines
Pension
To increase alignment
between executives and
shareholders
All directors are required to
hold at least 2,000 TClarke
shares
Not applicable
Not applicable
To provide retirement
benefits
Defined benefit or defined
contribution scheme. 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
Defined benefit
contribution in line with rates
approved by the scheme
actuary for all members,
currently 20.7%
Not applicable
6. All employee share plans (SAYE) do not
operate performance conditions.
7. As highlighted above, the Company has a
share ownership policy which requires all
directors to hold at least 2,000 10p ordinary
shares, in accordance with the Articles of
Association. Details of the extent to which the
directors had complied with this policy as at
31st December are set out on page 66.
8. 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 payment of a
pension or the vesting/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.
Notes
1. A description of how the Company intends to
implement the policy set out in this table for
2016 is set out in the Annual Report on
Remuneration on pages 62 to 68.
2. The following differences exist between the
Company’s policy for the remuneration of
executive directors as set out above and
its approach to the payment of employees
generally:
• A lower level of maximum annual bonus
opportunity (or zero bonus opportunity) may
apply to employees other than the executive
directors and certain senior executives
• Benefits offered to other employees
generally comprise provision of healthcare
and company car benefits where required
for the role or to meet market norms
• The majority of employees participate
in local defined contribution pension
arrangements or in industry wide pension
schemes. Staff and senior management in
certain subsidiaries are able to participate
in the TClarke Group Retirement and Death
Benefits Scheme
• Participation in the LTIP is open to all
members of senior management at the
Remunerations Committee’s discretion, but
at present membership is limited to the
executive directors.
In general, these differences arise from the
development of remuneration arrangements
that are market competitive for the various
categories of individuals. They also reflect
the fact that, in the case of the executive
directors and senior executives, a greater
emphasis tends to be placed on performance
related pay.
3. The choice of the performance metrics
applicable to the annual bonus scheme reflect
the Committee’s belief that any incentive
compensation should be appropriately
challenging and tied to both the delivery
of profit growth and specific individual
objectives.
4. The EPS performance conditions applicable
to the LTIP (further details of which are
provided on page 63) were selected by the
Remuneration Committee on the basis that
they reward the delivery of long-term returns
to shareholders and the Group’s financial
growth and are consistent with the
Company’s objective of delivering superior
levels of long-term value to shareholders.
The Group’s EPS growth is derived from the
audited financial statements.
5. The Committee operates share plans in
accordance with their respective rules and in
accordance with the Listing Rules and HMRC
where relevant. The Committee, consistent
with market practice, retains discretion over a
number of areas relating to the operation and
administration of certain plans.
59
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Illustrations of application of remuneration policy
The chart below illustrates how the composition of the Executive Directors’ remuneration packages varies at
different levels of performance under the approved remuneration policy, both as a percentage of total remuneration
opportunity and as a total value:
Application of remuneration policy for 2016
£000s
1000
800
600
400
200
0
Notes
Mark Lawrence
Mike Crowder
Martin Walton
Danny Robson*
898
62%
410
17%
340
315
375
16%
791
60%
Fixed pay
Annual bonus
LTIP (see Note 4)
682
61%
676
61%
267
319
16%
261
313
17%
100% 83%
38%
100% 84%
40%
100% 84%
39%
100% 83%
39%
Fixed pay
In line with
expectations
M axim u m
Fixed pay
In line with
expectations
M axim u m
Fixed pay
In line with
expectations
M axim u m
Fixed pay
In line with
expectations
M axim u m
* Danny Robson stepped down from the Board on 21st March 2016.
1. The value of benefits receivable in 2016 is taken to be the value of benefits received in 2015.
(as calculated under the Directors’ Remuneration table, set out on page 63).
2. The value of pension is presented on the same basis as under the Directors' Remuneration table on page 63.
3. The on-target level of bonus assumes the Group's internal budgets are met.
4. Performance targets for LTIP shares vesting in 2016 have not been met, therefore the maximum vesting in 2016 is nil.
Service contracts for Executive Directors
The service contracts for the Executive Directors are renewed each year as at 31st December and are terminable by
either party with 12 months’ notice. There is no specific provision for any compensation upon early termination of
the contract.
Incidental expenses may also be payable where appropriate. In calculating the amount payable to a Director on
termination of employment, the Board would take into account the commercial interests of the Company. The
Remuneration Committee reviews the contractual terms for new Executive Directors to ensure these reflect best
practice.
Provision
Detailed terms
Notice period 12 months
Termination payment Up to 12 months’ salary
Remuneration entitlements A bonus may be payable (pro-rated where relevant) and outstanding share awards may vest
Change of control No executive director’s contract contains additional provisions in respect of change of control
60
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Approach to recruitment and promotions
The remuneration package for a new Executive Directors
- ie basic salary, benefits, pension, annual bonus and
long-term incentive awards - is set in accordance with the
terms of the Company’s prevailing approved remuneration
policy at the time of appointment and reflects the
experience of the individual. The salary for a new
executive director may be set below the normal rate,
with phased increases over the first few years, as the
executive director gains experience in their new role. In
addition, the committee may offer additional cash and/or
share-based elements when it considers these to be
in the best interests of the Company (and therefore
shareholders) to take account of remuneration
relinquished when leaving the former employer and
would, where possible, reflect the nature, time horizons
and performance requirements attaching to that
remuneration. Shareholders will be informed of any
such payments at the time of appointment.
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 terms.
In addition, any other ongoing remuneration obligations
existing prior to appointment may continue, provided that
they are put to shareholders for approval at the earliest
opportunity. This may be awarded in addition to ongoing
participation in the bonus and long-term incentive awards
under the approved policy.
For external and internal appointments, the committee
may agree that the Company will meet certain relocation
and/or incidental expenses as appropriate.
Approach to leavers
An 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. The default
treatment under the LTIP is that any outstanding awards
lapse on cessation of employment. However, in certain
prescribed 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
on cessation, subject to the satisfaction of the relevant
performance conditions at that time and reduced pro-rata
to reflect the proportion of the performance period
actually served.
However, the Remuneration Committee has discretion
to determine that awards vest at a later date and/or
to disapply time pro-rating. The default treatment for
deferred bonus awards is that any outstanding awards
lapse on cessation of employment. However, in certain
‘good leaver’ circumstances (as described under the
LTIP), awards will normally vest in full on the date
of cessation (unless the Remuneration Committee
determines otherwise).
Non-Executive Directors
Non-Executive Directors are appointed under
arrangements that may generally be terminated by either
party without compensation and their appointment is
generally for a three year period.
61
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Annual Report on Remuneration
Implementation of the remuneration policy for the
year ending 31st December 2016
A summary of how the Directors’ Remuneration Policy will
be applied during the year ending 31st December 2016
is set out below.
Basic salary
2016 increases are shown below and reflect inflationary
pressures being felt throughout the industry due to
increasing demand for resources.
The Group’s employees are, in general, receiving pay
rises ranging from 2% to 5% depending on promotional
increases and individual performance. The average
increase across the business is 3%.
Director
2016
2015 % increase
Mark Lawrence
Mike Crowder
Martin Walton
Danny Robson1
£279,000
£238,000
£207,500
£207,500
£270,500
£231,000
£201,500
£201,500
3%
3%
3%
3%
1 Danny Robson stepped down from the Board on 21st March 2016
Pension arrangements
The Company operates a defined benefit pension and
death benefits scheme (see Note 24 to the financial
statements) of which all the Executive Directors are
members. The total Company contribution during 2015
was 20.7% (which comprises an employer contribution of
7.7% and a deficit reduction contribution of 13%) (2014:
18%) and the individual Directors contributed 8% (2014:
8%). From 1st January 2017, the Company’s contribution
increases to 21.7%, in line with the scheme actuary’s
recommendations for all scheme members. Until 31st
December 2008, averaged bonuses were included in
pensionable salary under the rules of the scheme, but the
rules changed with effect from 1st January 2009 to
exclude executive directors’ bonuses from pensionable
salary, in line with best practice. Details of the accrued
pension benefits are shown in the table on page 66. The
life assurance benefit is 2.25 times pensionable salary,
rising to four times pensionable salary after five years’
service with the Group.
Where the promised levels of benefits cannot be provided
through the appropriate scheme, the Group can continue
to provide benefits through the provision of salary
supplements.
Annual bonus
The maximum bonus potential for the year ending
31st December 2016 is 200% 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, and strategic targets 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.
Bonus targets will only be amended during the course
of the year if, in the opinion of the Remuneration
Committee, there is a significant change in the structure
of the Group.
Bonus make up as % of basic salary
Bonus make up as % of basic salary
Strategic up to
50% of salary
payable in CASH
Profit related
bonus up to
50% of salary
payable in SHARES
Profit related bonus;
up to 100% of salary
payable in CASH
62
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Long-term incentives
Consistent with past awards, LTIP awards that will be granted in 2016 will vest subject to continued employment
with the Group and satisfaction of the following performance conditions over a three year period ending on the
31st December preceding the earliest vesting date:
Annual growth in EPS above RPI*
Proportion of award vesting
Less than 3%
3%
Between 3% and 10%
Above 10%
Nil
25%
Between 25% and 100% on a straight line basis
100%
* Based on average underlying EPS for the three years ended 31st December 2015
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. No additional fees are paid in respect of membership of any Board committees.
A summary of current fees is shown in the table below.
Non-executive directors
2016
2015
% increase
David Henderson1
Iain McCusker2
Beverley Stewart
Tony Giddings
Mike Robson3
– £37,125 n/a
£49,500 £45,375 12.4%
£45,500 £44,000 3.4%
£45,500 £44,000 3.4%
£45,500 £5,308 3.4%
Notes 1 David Henderson stepped down as Chairman on 30th September 2015
2 Iain McCusker received fees of £44,000 for the year to 30th September 2015 and £49,500 from 1st October 2015 following his
appointment as Chairman
3 Mike Robson was appointed to the Board on 18th November 2015
Directors’ remuneration for the year ended 31st December 2015
The Directors’ remuneration for the year ended 31st December 2015 is set out in the table below.
£000s
Executive
Mark Lawrence
Mike Crowder
Martin Walton
Danny Robson1
Non-executive
David Henderson2
Iain McCusker
Beverley Stewart
Tony Giddings
Mike Robson3
Total
Fees & Salary
Benefits4
Bonus
LTIP5
Pension6
Total
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
270
231
201
201
37
45
44
44
5
1,078
246
210
183
–
43
40
40
10
–
772
23
26
19
25
–
–
–
–
–
93
18
16
16
–
–
–
–
–
–
50
105
90
78
78
–
–
–
–
–
351
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
38
51
40
29
–
–
–
–
–
158
36
30
32
–
–
–
–
–
–
98
436
398
338
333
37
45
44
44
5
1,680
300
256
231
–
43
40
40
10
–
920
Notes
1 Danny Robson was appointed to the Board on 1st January 2015
and stepped down from the Board on 21st March 2016
2 David Henderson stepped down from the Board on
30th September 2015
3 Mike Robson joined the Board on 18th November 2015
4 Benefits comprise a car or car allowance and private medical insurance
5 No LTIP awards vested in 2015 or 2014
6 Pensions are calculated based on HMRC's pension input method.
63
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Directors’ interests in the TClarke Equity Incentive Plan (audited)
The Directors’ interests over shares as a result of their participation in the TClarke Equity Incentive Plan are as follows:
Award 01/01/2015 31/12/2015 Exercise Earliest date Date of
Executive director date Number Granted Lapsed number price of exercise expiry
Mark Lawrence
Conditional shares 01/05/2012 115,000 – 115,000 – – – –
Conditional shares 30/04/2013 115,000 – – 115,000 – 30/04/2016 30/04/2023
Conditional shares 29/04/2014 85,000 – – 85,000 – 29/04/2017 29/04/2024
Conditional shares 29/04/2015 – 90,000 – 90,000 – 29/04/2018 29/04/2025
Options 01/05/2012 59,000 – 59,000 – – – –
Options 30/04/2013 59,000 – – 59,000 52.00p 30/04/2016 30/04/2023
Mike Crowder
Conditional shares 01/05/2012 115,000 – 115,000 – – –
Conditional shares 30/04/2013 115,000 – – 115,000 – 30/04/2016 30/04/2023
Conditional shares 29/04/2014 85,000 – – 85,000 – 29/04/2017 29/04/2024
Conditional shares 29/04/2015 – 90,000 – 90,000 – 29/04/2018 29/04/2025
Options 01/05/2012 59,000 – 59,000 – – – –
Options 30/04/2013 59,000 – – 59,000 52.00p 29/04/2017 30/04/2023
Martin Walton
Conditional shares 01/05/2012 115,000 – 115,000 – – – –
Conditional shares 30/04/2013 115,000 – – 115,000 – 30/04/2016 30/04/2023
Conditional shares 29/04/2014 85,000 – – 85,000 – 29/04/2017 29/04/2024
Conditional shares 29/04/2015 – 90,000 – 90,000 – 29/04/2018 29/04/2025
Options 01/05/2012 59,000 – 59,000 – – – –
Options 30/04/2013 59,000 – – 59,000 52.00p 29/04/2017 30/04/2023
Danny Robson1
Conditional shares 29/04/2015 – 90,000 – 90,000 – 29/04/2018 29/04/2025
1 Danny Robson stepped down from the Board on 21st March 2016 therefore these conditional share awards have now lapsed.
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
Annual growth in EPS above RPI*
Proportion of award vesting
Less than 3%
3%
Between 3% and 10%
Above 10%
Nil
25%
Between 25% and 100% on a straight line basis
100%
* For the years from 2012 to 2014 the target is based on basic EPS for the year preceeding the date of grant. For 2015 the target is based on
average underlying EPS for the three years ended 31st December 2015
64
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Directors’ interests in the TClarke Savings Related Share Option Scheme (“SAYE Scheme”) (audited)
The following options were outstanding during the year:
Executive director
Award
date
01/01/2015
Number
Granted Exercised
31/12/2015
number
Exercise
price
Earliest date
of exercise
Date of
expiry
Mark Lawrence 08/11/2011 6,750 – 6,750 – 40.00p 01/01/2015 30/06/2015
12/10/2012 12,857 – – 12,857 42.00p 01/01/2016 30/06/2016
11/10/2013 1,666 – – 1,666 54.00p 01/01/2017 30/06/2017
08/10/2015 – 10,322 – 10,322 69.75p 01/12/2018 31/05/2019
Mike Crowder 08/11/2011 6,750 – 6,750 – 40.00p 01/01/2015 30/06/2015
12/10/2012 12,857 – – 12,857 42.00p 01/01/2016 30/06/2016
11/10/2013 1,666 – – 1,666 54.00p 01/01/2017 30/06/2017
08/10/2015 – 10,322 – 10,322 69.75p 01/12/2018 31/05/2019
Martin Walton 08/11/2011 6,750 – 6,750 – 40.00p 01/01/2015 30/06/2015
12/10/2012 12,857 – – 12,857 42.00p 01/01/2016 30/06/2016
11/10/2013 1,666 – – 1,666 54.00p 01/01/2017 30/06/2017
08/10/2015 – 10,322 – 10,322 69.75p 01/12/2018 31/05/2019
* Options exercised on 2nd January 2015
The market price of a 10p ordinary share on 30th December 2015 (being the last day of trading of 2015) was 82.0p and the range during the
year ended 31st December 2015 was 37.50p to 88.56p.
65
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Pension scheme (audited)
Details of the accrued pension benefits that the Executive Directors would be entitled to on leaving service are as follows:
Total pension
accrued at
31.12.14
£ p.a.
57,688
58,879
15,362
6,778
Increase in
accrued
pension
(including
inflation)
£ p.a.
Increase in
accrued
pension
(excluding
inflation)
£ p.a.
Total pension
accrued at
31.12.15
£ p.a.
3,575
4,137
2,959
2,307
2,883
3,430
2,775
2,226
61,263
63,016
18,321
9,085
Transfer
value
of accrued
pension at
31.12.14
£
1,153,764
1,177,584
307,234
135,564
Increase in
transfer
value less
director’s
contributions
£
37,921
50,830
40,093
29,105
Transfer
value
of accrued
pension at
31.12.15
£
1,225,265
1,260,319
366,429
181,709
Mark Lawrence
Mike Crowder
Martin Walton
Danny Robson1
Inflationary increases were assumed to be 1.2% per annum during 2015 in line with increases in the Consumer Price Index during the year
1 Danny Robson stepped down from the Board on 21st March 2016
Payments to past Directors (audited)
No payments were made to past directors.
Payments for loss of office (audited)
No payments were made in respect of loss of office during the year ended 31st December 2015.
Directors’ interests
Directors’ interests in the issued share capital of TClarke plc are set out below.
The Directors’ interest in share options and conditional shares under long-term incentive schemes are set out on
page 64 and 65.
1/1/2015 31/12/2015 22/03/2016
Mark Lawrence 20,000 26,750 39,607
Mike Crowder 12,000 18,750 31,607
Martin Walton 10,000 16,750 29,607
Danny Robson1 1,451,906 1,451,906 n/a
Iain McCusker 2,000 2,000 2,000
Beverley Stewart 21,000 21,000 21,000
Tony Giddings 2,000 2,000 2,000
Mike Robson2 – 2,000 2,000
Notes 1 Danny Robson stepped down from the Board on 21st March 2016.
As at his date of resignation Mr. Robson held a beneficial interest in 1,451,906 of the Company’s shares.
2 Mike Robson joined the Board on 18th November 2015
66
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Performance graph
The graph shows the total shareholder return that would have been obtained over the past five years by investing £100
in shares of TClarke plc on 31st December 2010 and £100 in a notional investment in the FTSE All-Share Index and the
FTSE All-Small Construction and Building 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-Small Construction and Building 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 2010-2015
250
200
150
100
50
0
2010
FTSE All-Small Construction
& Building Materials Index
FTSE All-Share Index
T Clarke plc
2011
2012
2013
2014
2015
Total remuneration
The total remuneration figures for the Chief Executive during each of the last five 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 payout and LTIP vesting level
as a percentage of the maximum opportunity are also shown for each of these years.
Total remuneration
Annual bonus %
LTIP vesting %
2011
245
0%
0%
2012
2013
2014
2015
266 279 300 436
0% 0% 0% 0%
0% 0% 0% 0%
67
Annual Report & Financial Statements 2015
Governance - Directors’ remuneration report
Percentage change in Chief Executive’s
remuneration
The table below shows the percentage change in the
Chief Executive’s salary, benefits and annual bonus
between the financial year ended 31st December 2014
and 31st December 2015, compared with that of the total
amounts for all UK employees of the Group for each of
these elements of pay.
2015 2014 % change
Salary
Chief Executive
UK employee average
Benefits
Chief executive
UK employee average
Annual bonus
Chief executive
UK employee average
270.5
42
23
1
105
1
246
40
18
1
–
–
10.0%
5.4%
27.4%
0.0%
100%
100%
Average number of UK employees
1,247
1,237
Relative importance of spend on pay
The following table shows the Group’s total spend on pay
relative to dividends and total operating expenses.
Total operating expenses comprise cost of sales and
administrative expenses before amortisation of goodwill
and non-recurring costs.
Staff costs
Dividend
Total operating expenses
2015
2014 % change
59.6
1.3
219.2
56.3
1.1
208.0
5.9%
18.2%
5.4%
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.
The members of the Remuneration Committee (all of
whom were independent non-executive directors) during
the year under review were as follows:
• Tony Giddings (Chair with effect from 18th June 2015)
• Beverley Stewart (Chair throughout 2015 until 18th
June 2015)
• Mike Robson (with effect from 18th November 2015)
• Iain McCusker (until 18th June 2015)
Biographical information on the committee members and
details of attendance at the committee’s meetings during
the year are set out on pages 42 and 46 respectively.
The Remuneration Committee has access to independent
advice where it considers it appropriate. During the year
the committee took advice from its solicitors, Pinsent
Masons LLP, in connection with the terms of service
contracts for executive directors and matters concerning
other members of senior management.
The Committee has considered any potential conflicts
of interest and has decided that there are none. It will
continue to monitor the position.
Statement of voting at Annual General Meeting
At last year’s AGM, 99.47% of shareholders voted in
favour to approve the Directors’ Remuneration Report.
2015 AGM Number
Votes cast in favour 15,380,633
Votes cast against 82,661
Total votes cast 15,463,294
Abstentions 70,496
%
99.47
0.53
By order of the Board
Tony Giddings
Chair - Remuneration Committee
22nd March 2016
68
Annual Report & Financial Statements 2015
Governance - Directors’ report
Directors’ report
The Directors present their Annual Report and the Group
audited financial statements for the year ended 31st
December 2015.
election for the final dividend reinvestment is 18th April
2016 and any request should be made in good time
ahead of that date.
The Strategic Report on pages 2 to 41, the Corporate
Governance Report on pages 44 to 49 and certain Notes
to the financial statements are also incorporated into this
report by reference.
The Company’s registered office is at 45 Moorfields,
London EC2Y 9AE. The Company’s principal place of
business is the United Kingdom.
Strategic Report
A description and review of the Group’s activities during
the financial year and likely future developments within
the business is described in the Strategic Report on pages
2 to 41, including the principal risks and uncertainties on
pages 28 to 30, disclosure concerning employees on page
41 and greenhouse gas emissions on page 39.
Corporate governance
Details of how the Company has complied with the main
provisions of the UK Corporate Governance Code can
be found in the Corporate Governance report on pages
44 to 49.
Directors
The Directors who held office throughout the year ended
31st December 2015 are as follows:
Iain McCusker, Tony Giddings, Beverley Stewart, Mark
Lawrence, Mike Crowder, Martin Walton, Danny Robson,
David Henderson (resigned 30th September 2015) and
Mike Robson (appointed 18th November 2015). Danny
Robson stepped down from the Board on 21st March
2016.
Brief biographies of current serving Directors can be
found on pages 42 and 43.
The Articles of Association state that a maximum of 12
Directors may sit on the Board of the Company. The
Company has rules regarding the appointment of
Directors with regard to their election at the first Annual
General Meeting following their appointment, which are
detailed in the Corporate Governance Report on pages 44
to 49. There are no specific rules relating to the
replacement of Directors.
Results for the year
The results for the year are set out in the Consolidated
income statement on page 80.
Directors’ interests
The beneficial interests of the Directors in the share
capital of the Company are set out on pages 64 to 66.
Dividends
The Directors recommend the payment of a final dividend
for the year of 2.60p per share, (2014: 2.60p) which,
together with the interim dividend of 0.50p paid on 10th
October 2015, makes a total distribution of 3.10p for the
year (2014: 3.10p).
Subject to approval at the Annual General Meeting,
the final dividend will be paid on 13th May 2016 to
shareholders on the register at 15th April 2016. The
shares will go ex-dividend on 14th April 2016.
A dividend reinvestment plan (‘DRIP’) is available to
shareholders. Those shareholders who have not elected
to participate in the plan, and who would like to do so
in respect of the 2015 final payment, may do so by
contacting Capita Registrars on 0871 664 0300 (lines are
open 8:30 am - 5:30 pm Monday to Friday. Calls cost 10p
per minute plus network charges). The last day for
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 to issue and allot ordinary
shares, to dis-apply 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 a maximum amount of
£817,043, 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 Annual General Meeting.
69
Annual Report & Financial Statements 2015
Governance - Directors’ report
Share Capital
The Company’s share capital consists of ordinary shares
with a nominal value of 10p each.
The issued share capital as at 22nd March 2016 was
£4,182,957.70, consisting of 41,829,577 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 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 Services
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 20 to
the financial statements.
Substantial shareholdings
At 22nd March 2016 the Company had been notified of
the following substantial interests of 3% or more in its
issued ordinary share capital:
% of issued Number of
ordinary share capital shares held
Miton Asset Management Ltd 12.92 5,405,611
JP Morgan Asset Management UK Ltd 9.84 4,118,000
Henderson Global Investors Ltd 4.84 2,022,502
TD Asset Management Inc 4.65 1,946,499
Walker Crips Wealth Management Ltd 4.18 1,749,426
Mr D.G. Robson 3.47 1,451,906
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 an Equity Incentive Plan (“EIP”) 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 EIP provide that awards
made under the EIP may vest on a change of control
of the Company, at the discretion of the Remuneration
Committee. The rules of the 2012, 2013 and 2015
Savings Related Share Option Schemes 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 20 to the financial statements.
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.
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 £10 million.
70
Annual Report & Financial Statements 2015
Governance - Directors’ report
Disclosure of information to auditors
As far as each Director who is in office at the time when
the directors’ report is approved is aware, there is no
relevant audit information of which the auditors are
unaware and each such Director has taken all reasonable
steps to make themselves aware of any relevant audit
information and to establish that the auditors are aware
of that information.
Special resolutions
Details of special resolutions to be considered at the
forthcoming Annual General Meeting are given in the
notice to the Annual General Meeting.
Annual General Meeting (“AGM”)
The AGM of the Company will be held at 200 Aldersgate,
St Pauls, London EC1A 4HD at 10.00am on 6th May 2016.
The Notice of AGM will be sent separately to shareholders
with this report.
Approved on behalf of the Board
Alexandra Dent
Company Secretary
22nd March 2016
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.
Donations
The Group made no political donations during the year
(2014: £nil).
Post balance sheet events
There were no post balance sheet events requiring
disclosure in the annual report and financial statements.
Financial instruments
Details of the financial risk management objectives and
policies of the Group, together with its exposure to
material financial risk, are set out in Note 28 to the
financial statements.
Going Concern
The statement regarding going concern forms part of the
Corporate Governance Report and is set out on page 49.
Company status
So far as the Directors are aware, the Company is not a
close company.
Stock exchange transactions
Members are advised that trading in the Company’s
shares is conducted via the London Stock Exchange SETS
service. For further information we would refer you to our
corporate broker N+1 Singer (020 7496 3000). The daily
price of the Company’s shares continues to be listed in
the Financial Times under the construction and building
materials sector, and on our website www.tclarke.co.uk.
71
Annual Report & Financial Statements 2015
Governance - Directors’ report
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual
Report, the Directors Remuneration Report and the
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
directors have prepared the Group and parent company
financial statements in accordance with International
Financial Reporting Standards as adopted by the
European Union (IFRSs) and applicable law. Under
company law the 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 these financial statements the
directors are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates that are
reasonable and prudent;
• State whether applicable IFRSs as adopted by the
European Union have been followed subject to any
material departures disclosed or explained in the
financial statements;
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and the Group and enable them to ensure that
the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of
the IAS Regulations. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Having taken advice from the Audit Committee, the
directors consider that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement of directors pursuant to the disclosure
and transparency rules
Each of the Directors, whose names and functions are
listed on pages 42 and 43, confirms that, to the best of
each person’s knowledge and belief:
• The financial statements, prepared in accordance with
IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position
and profit of the Group and company, and
• The Strategic Report and other reports contained in the
annual report include a fair review of the development
and performance of the business and the position of
the Company and Group, together with a description
of the principal risks and uncertainties they face.
On behalf of the Board
Martin Walton
Finance Director
Iain McCusker
Chairman
22nd March 2016
TClarke plc
Registered number: 119351
72
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Independent Auditors report to the members of TClarke plc
Report on the financial statements
Our opinion
In our opinion:
• TClarke plc’s Group financial statements and parent
company financial statements (the “financial
statements”) give a true and fair view of the state of
the Group’s and of the parent company’s affairs as at
31st December 2015 and of the Group’s profit and the
Group’s and the parent company’s cash flows for the
year then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the
European Union;
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
Our audit approach
Overview
What we have audited
The financial statements, included within the Annual
Report, comprise:
• the Group and parent company statements of financial
position as at 31st December 2015;
• the Group income statement and statement of
comprehensive income for the year then ended;
• the Group and parent company statements of cash
flows for the year then ended;
• the Group and parent company statements of changes
in equity for the year then ended; and
• the notes to the financial statements, which include a
summary of significant accounting policies and other
explanatory information.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the notes
to the financial statements. These are cross-referenced
from the financial statements and are identified as
audited.
The financial reporting framework that has been applied
in the preparation of the financial statements is applicable
law and IFRSs as adopted by the European Union and, as
regards the parent company financial statements, as
applied in accordance with the provisions of the
Companies Act 2006.
• Overall Group materiality: £605,000 which represents 0.25% of revenue.
Materiality
• Component materiality: ranges from £50,000 to £350,000
• The majority of our audit work was conducted from the head office in London.
• We visited all of the trading entities in the course of the audit, this included 7 local
operating locations.
Audit scope
• Revenue recognition and long term contract accounting in respect of construction
contracts.
• Discontinued operations.
Area of
focus
• Goodwill and intangibles impairment assessment.
• Defined benefit pension plan net assets and liabilities.
• Going concern – compliance with loan covenants.
73
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
The scope of our audit and our areas of focus
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (“ISAs (UK &
Ireland)”).
We designed our audit by determining materiality and
assessing the risks of material misstatement in the
financial statements. In particular, we looked at where
the directors made subjective judgements, for example in
respect of significant accounting estimates that involved
making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also
addressed the risk of management override of internal
controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
The risks of material misstatement that had the greatest
effect on our audit, including the allocation of our
resources and effort, are identified as “areas of focus” in
the table below. We have also set out how we tailored
our audit to address these specific areas in order to
provide an opinion on the financial statements as a
whole, and any comments we make on the results of
our procedures should be read in this context. This is
not a complete list of all risks identified by our audit.
Area of focus
How our audit addressed the area of focus
Revenue recognition and long term contract accounting in
respect of construction contracts
Refer to Page 50 to 53 (Audit Committee Report) and Note 4
(Significant judgements and sources of estimation uncertainty).
We focused on the revenue and profit recognised on long term
contracts because they result in material balances, involve
judgements and can be complex. IFRSs require revenue to be
recognised over the course of the contract, using a ‘percentage
completion’ method. If a project is or is forecast to be loss making,
they require the full loss to be recognised.
The Group generates revenue from long term contracts relating
mainly to mechanical and electrical services. The Group has a large
number of contracts; we focused on contracts which stood out
individually as being higher risk at the year end. Factors that would
have caused a contract to stand out included, for example, material
amounts receivable which were un-agreed by the client, disputes
with clients or subcontractors, or a high level of variations or
changes to the contract scope relative to the original contract total.
The percentage completion of contracts is calculated based on the
amount of costs incurred to date compared with the total expected
costs to be incurred on the project, except where this would not be
representative of the stage of completion. Forecast end of life costs
are inherently subjective, although we note that TClarke plc does not
have any heightened level of subjectivity or judgement compared to
other companies in the industry.
We selected a sample of contracts to test, based on both quantitative and
qualitative criteria including:
• high levels of revenue recognised in the year;
• high margins;
• significant loss-making contracts;
• contracts with significant balance sheet exposure;
• contracts with a large variance to the profit margin applied year on year.
We obtained an understanding of management’s own process for reviewing
long term contracts (including the process for identifying loss-making and/or
higher risk contracts and assessing the supporting revenue recognition and cost
estimates, including contract variations) and gained an understanding of the
key judgements involved and background to the specific contracts selected in
our sample.
We tested the significant judgements adopted by the Directors in relation to the
revenue and margin recognition, and, in particular, judgements with respect to
the percentage completion, by:
• agreeing forecast costs to completion to documentary evidence (orders
signed with subcontractors or supporting calculations) and applying industry
knowledge and experience to critique the completeness of the forecast costs
to completion;
• agreeing total projected income to signed contracts plus a listing of
variations;
• tracing a sample of variations to supporting certifications or instructions from
clients;
• reconciling revenue recognised with amounts applied for and amounts
certified by clients and confirming, using our industry knowledge and
experience, that the reconciling items were appropriate;
• re-performing the key calculations behind the margin applied, the profit
taken and the stage of completion, as well as balance sheet exposure; and
• assessing the recoverability of balance sheet items by comparing to external
certification of the value of work performed.
We assessed the Directors’ estimates by comparing the budgeted total profit on
each selected contract with that budgeted at the prior year end and tested
significant variances to confirm they were supported by documentary evidence.
We found these movements to be driven by contract specific issues, such as
unforeseen delays, as opposed to inaccurate or optimistic budgeting.
We considered the judgements made by the Directors concerning the
recoverability of contract variations reasonable in light of the evidence.
74
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Area of focus
Discontinued operations
Refer to page 50 to 53 (Audit Committee Report), Note 3
(Accounting policies – Discontinued operations) and Note 10
(Discontinued operations)
During the year TClarke closed down the operations of the Bristol
subsidiary which had offices in Bristol and Cardiff and no new work
is being pursued in this region. There were residual customer
contracts transferred to the South West subsidiary.
IFRS5 (Non-current assets held for sale and discontinued operations)
requires discontinued operations to be shown separately on the face
of the income statement with additional disclosure in the notes. This
is considered a judgemental area as only operations that represent a
separate major line of business or geographical area and have closed
by the year end should be classified as discontinued.
As a result of the closure, the investment of £0.3m held by the
parent company has been written off within the parent company
financial statements. There is no goodwill balance held in respect of
the subsidiary.
Goodwill and intangibles impairment assessment
Refer to page 50 to 53 (Audit Committee Report), Note 4 (Significant
judgements and sources of estimation uncertainty) and Note 12
(Intangible assets).
We focused on this area because the Directors’ assessment of the
carrying value of goodwill and intangible assets involves complex
and subjective judgements about the future results of the business.
No impairment was recognised during the year.
We focused on those Cash Generating Units (CGUs) we considered
to carry more judgement because of current year losses or historic
underperformance against budgets, or for which management’s
impairment assessment model gave lower headroom relative to
other CGUs.
The value in use calculations in relation to the Group’s TClarke South
West (goodwill of £1.3m) CGU was most sensitive to changes in key
assumptions. The key judgements involved were future revenue
growth, margin assumptions and the discount rate applied as set out
in Note 12 to the Group financial statements.
How our audit addressed the area of focus
We assessed management’s rationale for the classification of the activities as
discontinued against the criteria provided by IFRS5. In particular, we challenged
the Board on whether the operations were significant enough and agreed with
them that, due to the historic contribution to revenue and profit, the separate
geographical area covered, and the separate monitoring of this CGU by
management, the classification was appropriate.
We also compared the disclosure in the Annual Report to the requirements of
IFRS5 and confirmed it to be appropriate.
Three residual contracts were transferred to TClarke South West. These
contracts were included in the sample discussed above.
We considered the judgements made by the Directors concerning the
classification and disclosure of the discontinued operations to be appropriate in
light of the evidence available.
We evaluated the Directors’ future cash flow forecasts, which were prepared to
a sufficiently detailed level, including comparing them to the latest Board
approved budgets, testing the integrity of the underlying calculations and
assessing how both internal and external drivers of performance were
incorporated into the projections. We also challenged the discount rate used by
independently recalculating the cost of capital, which was consistent with the
discount rate used.
Because the TClarke South West CGU has been loss making historically, the
carrying value of the goodwill is dependent on the CGUs ability to make profits
from 2016 onwards. We tested the level of secured work by tracing it to
supporting orders. We tested the cost forecasts by comparing a sample to
tenders from subcontractors or calculations of man hours required. 78% of the
2016 forecast revenue for TClarke South West’s revenue has been secured. We
also compared 2015 financial performance to budget and understood the
drivers of improvement in profitability.
For the Group’s TClarke South West CGU, we also performed sensitivity analysis
around the key drivers of the cash flow forecasts, in particular the revenue
growth and margin assumptions. Having ascertained the extent of change in
those assumptions that either individually or collectively would be required for
the goodwill and intangible assets to be impaired, we considered the likelihood
of such movement arising in those key assumptions. We noted that the value in
use of this business is more sensitive to changes in the assumptions concerning
future revenue growth and, in particular, gross margin than assumptions
surrounding the discount rate.
The Directors have built increased profitability into their forecasts for the CGU
and, we challenged them on the realistic impact of the actions they have taken
and intend to take to improve the profitability. Although we considered the
Directors' expectations of the impact of their actions to be reasonable in light of
the evidence available, failure to meet these forecasts and to generate a profit
may result in impairment of the goodwill and investment value associated with
the TClarke South West CGU.
75
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Area of focus
How our audit addressed the area of focus
Defined benefit pension plan net assets and liabilities.
Refer to page 50 to 53 (Audit Committee Report), Note 4 (Significant
judgements and sources of estimation uncertainty) and Note 24
(Pension commitments).
The Group operates a funded defined benefit pension scheme for
qualifying employees; this was closed to new members after 31st
December 2014.
The scheme has assets of £29.8m and post-retirement liabilities of
£43.2m, which are significant in the context of the overall balance
sheet of the Group.
The valuation of the pension liabilities requires significant levels of
judgement and technical expertise in choosing appropriate
assumptions. Unfavourable changes in a number of the key
assumptions (including salary increases, inflation, discount rates and
mortality) can have a material impact on the calculation of the
liability.
As a result of the size of the pension scheme deficit and the
judgements inherent in the actuarial assumptions involved in the
valuation of the pension benefit obligations we considered this to be
an area of focus.
Going concern – compliance with loan covenants
Refer to page 50 to 53 (Audit Committee Report), Note 3
(Accounting Policies) and Note 22 (Bank overdraft and loans).
We focused on the Directors’ conclusion that it is appropriate to
adopt the going concern basis in preparing the financial statements.
The Group operates in the construction industry, which has
traditionally experienced low margins and in addition has been
significantly impacted by the economic downturn in recent years
resulting in lower margins and cash flow pressures. In addition to an
£8m annual overdraft facility and a £3m short term overdraft facility
that expired on 30th January 2016, the Group has a £5m Revolving
Credit Facility which expires on 31st March 2017 and which includes
financial covenants around interest cover and net leverage ratios,
tested quarterly.
We obtained the actuarial report for the scheme as at 31st December 2015.
We agreed the material assets of the scheme to third party confirmations. For
applicable assets we recalculated relevant asset valuations based on the quoted
prices. No material differences were identified.
We tested the valuation of the pension liabilities as follows:
• We agreed the discount and inflation rates used in the valuation of the
pension liability to our internally developed benchmarks, finding these to be
within an acceptable range. Our benchmarks are based on our view of
various economic indicators.
• We discussed with the Directors the rationale for the discount rate that they
used and agreed that the rationale was appropriate.
• We tested the Directors’ assumptions around inflation and mortality rates by
comparing them to, and finding them consistent with, national and industry
averages, recognising the particular economic and health and safety factors
that affect the construction industry.
There was no new census data in the year so we assessed the assumptions
made by the actuary in rolling forward the information from the most recent
census data.
We obtained the Directors’ forecast of the Group’s funding requirements and
covenant compliance for years 2016-2018 and details of the financing facilities
in place and we focused on the 12 months from the date of signing of the
Annual Report. The forecasts showed sufficient funding and compliance with
covenants. We obtained a copy of the letters from the company’s lenders
indicating that they would expect to be able to reach agreement to a new /
extended facility and that they are not aware of any reason why the annual
overdraft facility would be withdrawn.
We read the relevant parts of the agreements relating to available financing
and re-performed the calculations of the covenants at each test point.
We performed sensitivity analysis around the covenant forecasts and the cash
flow forecasts including adjusting future revenue growth and margin
assumptions to industry average forecast levels. At its lowest level, EBIT would
need to fall by over 35% before the most sensitive covenant is breached.
We further evaluated assumptions relating to changes in working capital,
including debtors/creditors days by comparing to the actual changes over the
previous year and found them to be consistent with our expectation, which was
based on previous experience by the Group. We assessed the Directors’
budgeting ability by comparing past budgets to actual results achieved.
We discussed with the Directors the actions that they considered they could
take to alter the timing and/or amount of cash flows, considered whether they
were consistent with previous actions taken by the Directors and used our
knowledge of the business to consider the feasibility and likely impact of the
Directors' intentions. We then assessed the sensitivity of the Directors’
calculations to changes in key inputs, in particular forecast underlying profit
before tax.
Our opinion on Going Concern is outlined below.
76
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Going concern
Under the Listing Rules we are required to review the
directors’ statement, set out on page 49, in relation to
going concern. We have nothing to report having
performed our review.
Under ISAs (UK & Ireland) we are required to report
to you if we have anything material to add or to draw
attention to in relation to the directors’ statement about
whether they considered it appropriate to adopt the going
concern basis in preparing the financial statements. We
have nothing material to add or to draw attention to.
As noted in the directors’ statement, the directors have
concluded that it is appropriate to adopt the going
concern basis in preparing the financial statements. The
going concern basis presumes that the Group and parent
company have adequate resources to remain in operation,
and that the directors intend them to do so, for at least
one year from the date the financial statements were
signed. As part of our audit we have concluded that the
directors’ use of the going concern basis is appropriate.
However, because not all future events or conditions can
be predicted, these statements are not a guarantee as to
the Group’s and parent company’s ability to continue as a
going concern.
How we tailored the audit scope
We performed a full scope audit over all trading entities
within the Group, this ensured that we were able to give
an opinion on the financial statements as a whole.
The Group is structured into four regional trading
segments which are subdivided into twenty five legal
entities (nine of which are dormant) for the purposes
of financial reporting. The majority of our audit work
was conducted from the head office in London as this
is where the key accounting processes and controls are
undertaken from. We also visited a number of the offices
and sites across all four regions to ensure we obtained a
comprehensive understanding from local management of
key matters that had arisen in the year.
Materiality
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:
Overall Group materiality
£605,000 (2014: £500,000).
How we determined it
0.25% of revenue.
Rationale for benchmark
applied
We used revenue as a basis for
materiality to avoid the volatility
that would result from a profit
based calculation
Component materiality
range
£50,000 to £350,000 (2014:
£47,000 to £217,000)
We agreed with the Audit Committee that we would
report to them misstatements identified during our audit
above £30,250 (2014: £25,000) as well as misstatements
below that amount that, in our view, warranted reporting
for qualitative reasons.
77
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, 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.
ISAs (UK & Ireland) reporting
• information in the Annual Report is:
− materially inconsistent with the information in the audited financial statements; or
− apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and parent
company acquired in the course of performing our audit; or
− otherwise misleading.
We have no
exceptions to report.
• the statement given by the directors on page 72, in accordance with provision C.1.1 of the UK Corporate
Governance Code (the “Code”), that they consider the Annual Report taken as a whole to be fair, balanced and
understandable and provides the information necessary for members to assess the Group’s and parent company’s
position and performance, business model and strategy is materially inconsistent with our knowledge of the Group
and parent company acquired in the course of performing our audit.
We have no
exceptions to report.
• the section of the Annual Report on pages 50 to 53, as required by provision C.3.8 of the Code, describing the
work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.
We have no
exceptions to report.
The directors’ assessment of the prospects of the Group and of the principal risks that would threaten the
solvency or liquidity of the Group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention
to in relation to:
• the Directors’ confirmation on page 48 of the Annual Report, in accordance with provision C.2.1 of the Code, that
they have 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.
We have nothing material to
add or to draw attention to.
• the disclosures in the Annual Report that describe those risks and explain how they are being managed or
mitigated.
• the Directors’ explanation on page 31 of the Annual Report, in accordance with provision C.2.2 of the Code, as to
how they have assessed the prospects of the Group, over what period they have done so and why they consider
that period to be appropriate, and their statement as to whether 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 period of their
assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust
assessment of the principal risks facing the Group and the Directors’ statement in relation to the longer-term viability
of the Group. Our review was substantially less in scope than an audit and only consisted of making inquiries and
considering the Directors’ process supporting their statements; checking that the statements are in alignment with the
relevant provisions of the Code; and considering whether the statements are consistent with the knowledge acquired
by us in the course of performing our audit. We have nothing to report having performed our review.
We have nothing material to
add or to draw attention to.
We have nothing material to
add or to draw attention to.
78
Annual Report & Financial Statements 2015
Governance - Independent Auditors report
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
• we have not received all the information and
explanations we require for our audit; or
• 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 Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns.
We have no exceptions to report arising from this
responsibility.
Directors’ remuneration
Directors’ remuneration report - Companies Act
2006 opinion
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report
to you if, in our opinion, certain disclosures of directors’
remuneration specified by law are not made. We have no
exceptions to report arising from this responsibility.
Corporate governance statement
Under the Listing Rules we are required to review the part
of the Corporate Governance Statement relating to ten
further provisions of the Code. We have nothing to report
having performed our review.
Responsibilities for the financial
statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 76, the directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable law
and ISAs (UK & Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared for
and only for the parent company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report
is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the
Group’s and the parent company’s circumstances and
have been consistently applied and adequately
disclosed;
• the reasonableness of significant accounting estimates
made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing
the directors’ judgements against available evidence,
forming our own judgements, and evaluating the
disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures or
a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Jonathan Hook (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
79
Annual Report & Financial Statements 2015
Financial statements for the year ended 31st December 2015
Consolidated income statement
for the year ended 31st December 2015
Continuing operations:
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses:
Amortisation of intangible assets
Non-recurring costs
Other administrative expenses
Total administrative expenses
Profit / (loss) from operations
Finance income
Finance costs
Profit / (loss) before taxation
Taxation
Profit / (loss) from continuing operations
Note
5
7
7
7
6
9
(Loss) / profit from discontinued operations
10
Profit / (loss) for the year
Earnings / (loss) per share for profit / (loss) from continuing operations
Attributable to owners of TClarke plc:
Earnings / (loss) per share
Attributable to owners of TClarke plc:
Basic
Diluted
Basic
Diluted
* Restated to disclose the Bristol and Cardiff operations as discontinued.
2015
£m
242.4
(214.9)
27.5
0.1
(0.2)
–
(23.0)
(23.2)
4.4
0.1
(1.0)
3.5
(0.7)
2.8
(2.7)
0.1
6.66p
6.44p
0.13p
0.12p
Consolidated statement of comprehensive income
for the year ended 31st December 2015
2015
£m
Profit / (loss) for the year
Other comprehensive income / (expense):
Items that will not be reclassified to profit or loss
Actuarial gain / (loss) on defined benefit pension scheme
Other comprehensive income / (expense) for the year, net of tax
Total comprehensive income / (expense) for the year
0.1
2.2
2.2
2.3
80
Annual Report & financial statements 2015
2014
Restated*
£m
207.9
(185.5)
22.4
0.1
(0.2)
(1.2)
(21.2)
(22.6)
(0.1)
0.1
(0.8)
(0.8)
0.1
(0.7)
0.1
(0.6)
(1.78)p
(1.78)p
(1.58)p
(1.58)p
2014
£m
(0.6)
(4.2)
(4.2)
(4.8)
Financial statements for the year ended 31st December 2015
Consolidated statement of financial position
as at 31st December 2015
Note
12
13
19
15
16
17
21
16
18
25
22
18
24
20
20
Non current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Amounts due from customers under construction contracts
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Amounts due to customers under construction contracts
Trade and other payables
Current tax liabilities
Obligations under finance leases
Net current assets
Non current liabilities
Bank loans
Other payables
Retirement benefit obligation
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium
ESOT share reserve
Revaluation reserve
Retained earnings
Total equity
The financial statements on pages 80 to 132 were approved by the
Board of Directors on 22nd March 2016 and were signed on its behalf by:
I. McCusker Director M. Lawrence Director
81
Annual Report & financial statements 2015
2015
£m
23.0
4.6
2.3
29.9
0.4
31.1
36.3
11.7
79.5
2014
£m
23.2
5.0
2.9
31.1
0.4
26.7
34.7
10.3
72.1
109.4
103.2
(4.1)
(67.1)
–
(0.1)
(71.3)
8.2
(5.0)
(0.1)
(13.4)
(18.5)
(89.8)
19.6
4.2
3.1
(0.4)
0.6
12.1
19.6
(2.9)
(59.6)
(0.1)
(0.1)
(62.7)
9.4
(5.0)
(0.3)
(16.3)
(21.6)
(84.3)
18.9
4.1
3.1
(0.1)
0.8
11.0
18.9
Financial statements for the year ended 31st December 2015
Company statement of financial position
as at 31st December 2015
Note
13
14
19
16
17
21
16
18
22
24
20
20
Non current assets
Property, plant and equipment
Investments
Deferred tax assets
Current assets
Amounts due from customers under construction contracts
Trade and other receivables
Current income tax receivables
Cash and cash equivalents
Total assets
Current liabilities
Amounts due to customers under construction contracts
Trade and other payables
Current income tax payable
Net current assets
Non current liabilities
Bank loans
Retirement benefit obligation
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium
ESOT share reserve
Retained earnings
Total equity
The financial statements on pages 80 to 132 were approved by the
Board of Directors on 22nd March 2016 and were signed on its behalf by:
I. McCusker Director M. Lawrence Director
Registered number: 119351
82
Annual Report & financial statements 2015
2015
£m
0.3
32.1
2.6
35.0
13.6
13.7
–
14.1
41.4
76.4
(1.7)
(37.6)
(0.3)
(39.6)
1.8
(5.0)
(13.4)
(18.4)
(58.0)
18.4
4.2
3.1
(0.1)
11.2
18.4
2014
£m
0.3
32.4
3.3
36.0
13.4
12.7
0.6
6.2
32.9
68.9
(0.7)
(31.9)
–
(32.6)
0.3
(5.0)
(16.3)
(21.3)
(53.9)
15.0
4.1
3.1
(0.1)
7.9
15.0
Financial statements for the year ended 31st December 2015
Consolidated statement of cash flows
for the year ended 31st December 2015
Net cash generated from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Receipts on disposal of property, plant and equipment
Net cash generated from investing activities
Financing activities
Proceeds from bank borrowing
Equity dividends paid
Acquisition of shares by ESOT
Disposal of share by ESOT
Net cash (used in) / generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Company statement of cash flows
for the year ended 31st December 2015
Net cash generated from / (used in) operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Dividends received from subsidiaries
Net cash generated from investing activities
Financing activities
Proceeds from bank borrowing
Equity dividends paid
Acquisition of shares by ESOT
Disposal of share by ESOT
Net cash (used in) / generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
21
22
20
20
21
21
Note
21
22
20
20
20
21
21
83
Annual Report & financial statements 2015
2015
£m
2.7
0.2
(0.5)
0.5
0.2
–
(1.3)
(0.7)
0.5
(1.5)
1.4
10.3
11.7
2015
£m
7.4
0.1
(0.2)
1.9
1.8
–
(1.3)
(0.5)
0.5
(1.3)
7.9
6.2
14.1
2014
£m
5.0
0.1
(0.5)
0.9
0.5
5.0
(1.1)
(0.1)
–
3.8
9.3
1.0
10.3
2014
£m
(0.5)
0.1
(0.1)
2.4
2.4
5.0
(1.1)
(0.1)
–
3.8
5.7
0.5
6.2
Financial statements for the year ended 31st December 2015
Consolidated statement of changes in equity
for the year ended 31st December 2015
Attributable to owners of the parent
At 1st January 2014
Comprehensive income:
Loss for the year
Other comprehensive income
Actuarial loss on retirement benefit obligation
Deferred income tax credit on actuarial loss
on retirement benefit obligation
Effect of change in tax rate
Total other comprehensive expense
Total comprehensive expense
Transactions with owners
Share based payment credit
Shares acquired by ESOT
Dividends paid
Total transactions with owners
At 31st December 2014
Comprehensive income:
Profit for the year
Other comprehensive income
Actuarial gain on retirement benefit obligation
Deferred income tax charge on actuarial gain
on retirement benefit obligation
Effect of change in tax rate
Total other comprehensive income
Total comprehensive income
Transactions with owners
Share based payment debit
Share distributed by ESOT
Shares acquired by ESOT
Shares issued to ESOT
Dividends paid
Total transactions with owners
Transfers
At 31st December 2015
Share
capital
£m
4.1
Share
premium
£m
3.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.1
3.1
–
–
–
–
–
–
–
–
–
0.1
–
0.1
–
4.2
–
–
–
–
–
–
–
–
–
–
–
–
–
3.1
ESOT
share
reserve
£m
–
–
–
–
–
–
–
–
(0.1)
–
(0.1)
(0.1)
–
–
–
–
–
–
–
0.5
(0.7)
(0.1)
–
(0.3)
–
(0.4)
Revaluation
reserve
£m
Retained
earnings
£m
0.8
16.7
Total
£m
24.7
–
–
–
–
–
–
–
–
–
–
0.8
–
–
–
–
–
–
–
–
–
–
–
–
(0.2)
0.6
(0.6)
(0.6)
(5.3)
(5.3)
1.2
(0.1)
(4.2)
(4.8)
0.2
–
(1.1)
(0.9)
11.0
0.1
2.9
(0.6)
(0.1)
2.2
2.3
(0.1)
–
–
–
(1.3)
(1.4)
0.2
12.1
1.2
(0.1)
(4.2)
(4.8)
0.2
(0.1)
(1.1)
(1.0)
18.9
0.1
2.9
(0.6)
(0.1)
2.2
2.3
(0.1)
0.5
(0.7)
–
(1.3)
(1.6)
–
19.6
84
Annual Report & financial statements 2015
Financial statements for the year ended 31st December 2015
Company statement of changes in equity
for the year ended 31st December 2015
Attributable to owners of the parent
At 1st January 2014
Comprehensive income:
Loss for the year
Other comprehensive income
Actuarial loss on retirement benefit obligation
Deferred income tax credit on actuarial loss
on retirement benefit obligation
Effect of change in tax rate
Total other comprehensive expense
Total comprehensive expense
Transactions with owners
Share based payment credit
Shares acquired by ESOT
Dividends paid
Total transactions with owners
At 31st December 2014
Comprehensive income:
Profit for the year
Other comprehensive income
Actuarial gain on retirement benefit obligation
Deferred income tax charge on actuarial gain
on retirement benefit obligation
Effect of change in tax rate
Total other comprehensive income
Total comprehensive income
Transactions with owners
Share based payment debit
Share distributed by ESOT
Shares acquired by ESOT
Shares issued to ESOT
Dividends paid
Total transactions with owners
At 31st December 2015
Share
capital
£m
4.1
Share
premium
£m
3.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.1
3.1
–
–
–
–
–
–
–
–
–
0.1
–
0.1
4.2
–
–
–
–
–
–
–
–
–
–
–
–
ESOT
share
reserve
£m
–
–
–
–
–
–
–
–
(0.1)
–
(0.1)
(0.1)
–
–
–
–
–
–
–
0.5
(0.4)
(0.1)
–
–
Retained
earnings
£m
13.8
Total
£m
21.0
(0.8)
(0.8)
(5.3)
(5.3)
1.2
(0.1)
(4.2)
(5.0)
0.2
–
(1.1)
(0.9)
7.9
2.5
2.9
(0.6)
(0.1)
2.2
4.9
(0.1)
–
–
–
(1.3)
(1.4)
11.2
1.2
(0.1)
(4.2)
(5.0)
0.2
(0.1)
(1.1)
(1.0)
15.0
2.5
2.9
(0.6)
(0.1)
2.2
4.9
(0.1)
0.5
(0.4)
–
(1.3)
(1.3)
18.4
3.1
(0.1)
85
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Notes to the financial statements
for the year ended 31st December 2015
Note 1 – General information
TClarke plc is a public limited company listed on The London Stock Exchange, incorporated and domiciled in the United
Kingdom. The address of its registered office and principal place of business is disclosed in the Directors’ report on page
69. The nature of the Group’s operations and its principal activities are described in Note 5 and in the Strategic report
on pages 2 to 41.
Note 2 – Application of new and revised IFRSs
A. New standards, interpretations and amended
standards adopted by the Group
The following standards, interpretations and amended
standards have been applied for the first time for the
financial year beginning 1st January 2015.
Annual Improvements 2011-2013 Cycle
Amendments to various standards and interpretations
under the Annual Improvements 2011-2013 Cycle are
applicable for the first time for the year ending 31st
December 2015, but none of these amendments has
had a significant effect on the financial statements.
B. New standards, interpretations and amended
standards in issue but not yet adopted by the
Group
IFRS9 ‘Financial Instruments’
IFRS 9 introduced new requirements for the classification
and measurement of financial instruments, including
impairment requirements for financial assets. The key
requirements of IFRS 9 are:
• All financial assets are required to be classified and
measured, on initial recognition and subsequently, at
either fair value or amortised cost. The classification
depends on the entity’s business model for managing
its financial instruments and the contractual cash flow
characteristics of the instrument.
• In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model, as opposed
to an incurred credit loss model under IAS 39. The
expected credit loss model requires an entity to account
for expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition.
• For financial liabilities, IFRS 9 retains most of IAS39’s
requirements. The main change is that where the fair
value option is taken for financial liabilities, the part of
a fair value change due to an entity’s own credit risk is
recorded in other comprehensive income rather than
the income statement, unless this creates an
accounting mismatch.
The Group is yet to assess the full impact of IFRS9
and intends to adopt the standard no later than the
accounting period beginning 1st January 2018.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2015 and will become
mandatory with effect from accounting periods beginning
on or after 1st January 2018, with early adoption
permitted. IFRS 15 establishes a single comprehensive
model for entities to use in accounting for revenue arising
from contracts with customers. IFRS 15 will supercede the
current revenue recognition guidance including IAS 18
‘Revenue’, IAS11 ‘Construction contracts’ and the related
interpretations when it becomes effective. The core
principle of IFRS15 is that an entity should recognise
revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. Under IFRS 15 an
entity recognises revenue when, or as, a performance
obligation is satisfied, that is when ‘control’ of the goods
or services underlying the particular performance
obligation is transferred to the customer.
The Group is still assessing the impact of IFRS 15, which
as a minimum is likely to have significant disclosure
86
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 2 – Application of new and revised IFRSs continued
reduction in the service cost in the period in which the
related service is rendered, or attribute them to the
employee’s periods of service using the projected unit
credit method; whereas for contributions that are
dependent on the number of years of service, the entity
is required to attribute them to the employee’s periods of
service. The amendments are mandatory for accounting
periods beginning on or after 1st February 2016. The
directors do not anticipate the application of these
amendments will have a significant impact on the Group’s
consolidated financial statements.
Annual improvements
The annual improvements programme undertaken by the
International Accounting Standards Board covers a number
of amendments to various IFRS’s, including:
• Amendments to various definitions in IFRS 2 ‘Share
based payments’;
• Amendments to IFRS 3 ‘Business combinations’
regarding the measurement of contingent consideration;
• Amendments to IFRS 8 ‘Operating segments’ regarding
the aggregation criteria for operating segments, none of
which are expected to have a significant impact on the
Group’s consolidated financial statements;
• Clarification that issuing IFRS 13 and amending IFRS 9
and IAS 39 did not remove the ability to measure
certain short-term receivables and payables on an
undiscounted basis;
• Clarification that under IAS 16 ‘Property, plant and
equipment’ and IAS 38 ‘Intangible assets’, the gross
amount of property, plant and equipment is adjusted in
a manner consistent with a revaluation of the carrying
amount.
There are no others IFRSs or IFRS IC
interpretations that are not yet effective that would
be expected to have a material impact on the
Group’s consolidated financial statements.
implications, and intends to adopt the new standard no
later than the accounting period beginning 1st January
2018.
IFRS 16 Leases
IFRS 16 was issued on 13th January 2016 and will become
mandatory for accounting periods beginning on or after
1st January 2019, with early adoption permitted. IFRS 16
will replace the current guidance under IAS 17. The main
feature of IFRS 16 is that lessees will have to recognise a
lease liability reflecting future lease payments and a 'right-
of-use asset' for almost all lease contracts, whereas at
present a distinction is drawn between finance leases and
operating leases depending on whether substantially all
the risk and reward of ownership have been transferred to
the lessee. The Group is yet to assess the full impact of
IFRS 16, and intend to adopt the new standard no later
than the accounting period beginning 1st January 2019.
Amendments to IAS16 and IAS38 ‘Clarification
of Acceptable Methods of Depreciation and
Amortisation’
The amendments to IAS 16 prohibit entities from using a
revenue based depreciation method for items of property,
plant and equipment. The amendments to IAS 38
introduce a rebuttable presumption that revenue is not an
appropriate basis for amortisation of an intangible asset.
The amendments apply prospectively for accounting
periods beginning on or after 1st January 2016. Currently
the Group uses the straight line method of depreciation
or amortisation for its property, plant and equipment and
intangible assets, respectively. The directors believe that
the straight-line method is the most appropriate method
to reflect the consumption of economic benefits inherent
in the respective assets and, accordingly, the directors do
not anticipate the application of these amendments will
have a significant impact on the Group’s consolidated
financial statements.
Amendments to IAS 19 ‘Defined Benefit Plans:
Employee Contributions’
The amendments to IAS 19 clarify how an entity should
account for contributions made by employees or third
parties to defined benefit plans, based on whether those
contributions are dependent on the number of years of
service provided by the employee. For contributions that
are independent of the number of years of service, the
entity may either recognise the contributions as a
87
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies
The principal accounting policies applied in the preparation
of these consolidated and parent company financial
statements are set out below. These policies have been
consistently applied to all the years presented, unless
otherwise stated.
A. Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union (EU),
IFRS IC Interpretations and the Companies Act 2006
applicable to companies reporting under IFRS 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 parent company financial
statements of TClarke plc and the consolidated financial
statements of TClarke plc and all its subsidiaries made up
to 31st December 2015 and have been presented in £m.
The preparation of financial statements in conformity
with IFRS as adopted by the EU requires the use of certain
critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 4.
Going concern
The Group had positive net cash balances at the year
end and has in place a three year £5 million committed
Revolving Credit Facility, which was fully drawn down, and
an £8 million overdraft facility. At 31st December 2015 the
Group had an additional £3million short-term overdraft
facility which had not been used and expired in January
2016. For details of the covenants in place refer to Note 22
on page 121. The Group draws on the overdraft facility as
and when required to meet working capital requirements.
As with all such facilities the overdraft is subject to annual
review and is repayable on demand. The overdraft facility
was last reviewed in October 2015. The directors have
received confirmation from the bank that they know of no
reason why the overdraft facility will not be renewed when
it next falls due for review. There is no other external debt
apart from finance lease and hire purchase contracts.
After making appropriate enquiries the directors are
satisfied that the Company and Group have adequate
resources to continue their operations for at least the next
twelve months following the date of this report.
Accordingly the Directors continue to adopt the going
concern basis in preparing the financial statements.
B. Basis of consolidation
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 intra-group transactions, balances, income and
expenses are eliminated on consolidation.
C. Employee Share Ownership Trust (ESOT)
As the Company is deemed to have control of its ESOT
trust, 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.
D. Segmental reporting
Operating divisions are reported in a manner consistent
with internal reporting provided to the Group Chief
Executive, who is the chief operating decision maker
responsible for allocating resources to and assessing the
performance of operating divisions.
E. Revenue recognition
Sales revenue is measured at the fair value of work
performed and goods and services provided in the normal
course of business, net of discounts and VAT. Revenue
from construction contracts is recognised in accordance
88
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies continued
with the Group’s policy on construction contracts (see Note
3F). Revenue from the rendering of services that do not
fall to be accounted for as construction contracts is
accounted for by reference to the stage of completion
of the relevant contract, determined by reference to the
proportion of costs incurred. Revenue from the sale of
materials and finished goods is recognised when the
Group has transferred the significant risks and rewards of
ownership to the buyer and it is probable that the Group
will receive payment. These criteria are considered to be
met when the materials or goods have been delivered to
and accepted by the buyer.
Rental income from operating leases is recognised as other
operating income on a straight-line basis over the term of
the relevant lease.
Interest revenue is accrued on a time basis, by reference
to the principal outstanding and at the effective interest
rate applicable.
Dividend revenue from investments is recognised
when the Company’s right to receive payment has been
established.
F. Construction contracts
Where the outcome of a construction contract can be
estimated reliably, revenue and costs are recognised
by reference to the stage of completion of the contract
activity at the reporting date, measured based on the
proportion of contract costs (prime costs and overheads)
incurred for the work performed to date relative to the
estimated total contract costs, except where this would
not be representative of the stage of completion.
The earliest point at which profit is taken is that at which
the outcome of the contract, based on an assessment
by officials of the Company, can be reliably foreseen,
taking into account the circumstances of each contract.
Variations are included to the extent that the amount can
be measured reliably and receipt is considered probable,
but no account is taken of claims receivable until agreed.
Full provision is made for any foreseeable losses to
completion. Where the outcome of a construction
contract cannot be estimated reliably, contract revenue is
recognised to the extent of contract costs incurred that
it is probable will be recoverable.
G. Acquisitions and goodwill
Acquisitions of subsidiaries and businesses are accounted
for using the acquisition method. The consideration
transferred in a business 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 acquiree. Acquisition related expenses are recognised
directly in the income statement.
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 business combination.
Changes in the fair value of the contingent consideration
that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments
against goodwill.
Measurement period adjustments are adjustments that
arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from
the acquisition date) about facts and circumstances that
existed at the acquisition date. The subsequent accounting
for changes in the fair value of the contingent
consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration
is classified. Contingent consideration that is classified as
equity is not remeasured at subsequent reporting dates
and its subsequent settlement is accounted for within
equity. Contingent consideration that is classified as an
asset or a liability is remeasured at subsequent reporting
89
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies continued
dates in accordance with IAS 39, or IAS 37 Provisions,
Contingent Liabilities and Contingent Assets, as
appropriate, with the corresponding gain or loss being
recognised in profit or loss.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts
for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement
period, or additional assets or liabilities are recognised, to
reflect new information obtained about facts and
circumstances that existed at the acquisition date that, if
known, would have affected the amounts recognised at
that date.
Goodwill arising on acquisitions before the date of
transition to IFRS has been retained at the previous UK
GAAP amount subject to being tested for impairment.
Goodwill is reviewed for impairment on an annual basis.
When the directors consider the initial value of the
acquisition to be negligible the goodwill is written off
to the income statement immediately.
H. Impairment of goodwill and other
non-financial assets
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 cash-generating
units that are expected to benefit from the synergies of the
combination giving rise to the goodwill.
Impairment charges are included in non-recurring costs
in the consolidated income statement, except to the
extent they reverse gains previously recognised in the
consolidated statement of comprehensive income. An
impairment loss recognised for goodwill is not reversed.
I. Intangible assets
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised
at cost, being their fair value at the acquisition date.
Subsequent to initial recognition intangible assets are
reported at cost less accumulated amortisation and
impairment losses. Amortisation is recognised on a straight
line basis over the estimated useful lives of the relevant
assets, determined on an individual basis and ranging from
1 to 10 years.
J. Property, plant and equipment
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.
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 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
90
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies continued
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.
Each year the difference between depreciation based on
the revalued carrying amount of the asset 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%-25%
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets
or, where shorter, the term of the relevant lease.
K. Investments
Investments in subsidiaries are recorded at cost, being the
fair value of consideration paid. 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.
L. Inventories
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 bringing the asset to
its present location and condition.
M. Leasing and hire purchase commitments
Leases (including similar hire purchase arrangements)
are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum
lease payments. The corresponding liability to the lessor is
included in the statement of financial position as a finance
lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged
directly to the income statement except where they relate
to qualifying assets in which case they are capitalised in
accordance with the Group’s borrowing costs policy (see
Note 3P).
Operating lease payments are recognised as an expense on
a straight-line basis over the lease term. In the event that
lease incentives are received to enter into operating leases,
such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental
expense on a straight-line basis over the lease term.
N. Financial instruments
The Group’s financial instruments comprise trade and other
receivables (excluding prepayments), trade and other
payables (excluding deferred income), finance leases and
similar hire purchase contracts, bank deposits, bank loans
and cash and cash equivalents net of overdrafts. The
Group does not trade in any financial derivatives. Financial
assets and liabilities are offset at the net amount reported
in the balance sheet 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
Trade and other receivables, which are non-interest
bearing, are measured on initial recognition at fair
value and subsequently at amortised cost. Appropriate
allowances for estimated irrecoverable amounts are
recognised in the income statement when there is
objective evidence that the asset is impaired, measured as
the difference between the asset’s carrying value and the
fair value of the estimated recoverable amount, if any.
Insolvency or significant financial difficulties of the debtor,
late payments and disputes are considered indicators that
a receivable may be impaired. The carrying amount of a
trade receivable is reduced to its estimated recoverable
amount through the use of an allowance account and
91
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies continued
the expense recognised in the income statement in
administrative expenses. When a trade receivable is
uncollectible it is written off against the allowance account
for trade receivables.
Bank deposits
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 asset as it arises.
Cash and cash equivalents
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 the effective interest method and are
added to the carrying value of the asset or liability as
they arise.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the 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 intention to settle
current tax assets and liabilities on a net basis.
Bank loans
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 the instrument to
the effect that they are not settled in the period in which
they arise.
P. Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently
carried at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the
period of the borrowings using the effective interest
method.
Trade and other payables
Trade and other payables are initially measured at fair
value and subsequently at amortised cost. Trade and other
payables are non-interest bearing.
O. Taxation
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.
Q. Borrowing costs
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.
Borrowing costs that are directly attributable to qualifying
assets are added to the cost of the asset. All other
borrowing costs are recognised in the income statement in
the period in which they are incurred.
92
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 3 – Accounting policies continued
R. Dividends
Dividends are recognised when they become legally
payable. In the case of interim dividends to equity
shareholders, this is when they are paid. In the case
of final dividends, this is when approved by the
shareholders at the AGM.
S. Retirement benefit costs
Payments to defined contribution retirement benefit
schemes are charged as an expense as they fall due.
expense reflects the revised estimate, with a corresponding
adjustment to equity.
V. Non-recurring items
Non-recurring items are disclosed separately in the
financial statements where it is necessary to do so to
provide further understanding of the financial performance
of the Group. They are material items of income or
expense that have been shown separately due to the
significance of their nature or amount.
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.
W. Discontinued operations
A discontinued operation is a component of the Group's
business that represents a separate major line of business
or geographical area of operations or is a subsidiary
acquired exclusively with a view to resale, that has been
disposed of, has been abandoned or that meets the criteria
to be classified as held for sale.
Discontinued operations are presented in the consolidated
statement of comprehensive income as a single line which
comprises the post-tax profit or loss of the discontinued
operation along with the post-tax gain or loss recognised
on the re-measurement to fair value less costs to sell or on
disposal of the assets or disposal groups constituting
discontinued operations.
Past service cost is recognised immediately in the
income statement.
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.
T. 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 where it is due after
more than one year.
U. Share-based payments
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 20.
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
93
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 4 - Significant judgements and sources of estimation uncertainty
Discontinued operations
The judgement as to whether an activity that has
ceased constitutes a discontinued operation requires an
assessment of whether it forms a separate component of
the Group’s business and represents a separate major line
of business or geographical area of operations that has
been disposed of, has been abandoned or that meets the
criteria to be classified as held for sale.
Impairment of goodwill and investments
Determining whether goodwill is impaired requires an
estimation of the value in use of the cash generating unit
giving rise to the goodwill, including the estimation of the
timing and amount of future cash flows generated by the
cash generating unit and a suitable discount rate. Further
details are provided in Note 12. The estimation of the
value in use is also used to assess the carrying value of
investments in the relevant subsidiaries in the Company’s
financial statements.
Retirement benefit obligations
The costs, assets and liabilities of the defined benefit
scheme operated by the Group are determined using
methods relying on actuarial estimates and assumptions,
which are largely dependent on factors outside the control
of the Group. Details of the key assumptions are set out
in Note 24, and include the discount rate, expected return
on assets, rate of inflation and mortality rates. The Group
takes advice from independent actuaries relating to the
appropriateness of the assumptions. Changes in the
assumptions used may have a significant effect on the
income statement, statement of comprehensive income
and the statement of financial position. A sensitivity
analysis is included in Note 24 on page 127.
In the application of the Group’s accounting policies,
which are described above, the directors are required
to make judgements, 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.
Revenue and margin
The recognition of revenue and profit on construction
contracts is a key source of estimation uncertainty
due to the difficulty of forecasting the final costs to
be incurred on a contract in progress and the process
whereby applications are made during the course of
the contract with variations, which can be significant, often
being agreed as part of the final account negotiation. The
Group’s policies for the recognition of revenue and profit
on construction contracts are set out in Note 3F on page
89. The directors also take into account the recoverability
of contract balances and trade receivables and allowances
are made for those balances which are considered to be
impaired.
Non-underlying items
Non-underlying items are items of financial performance
which the Group believes should be separately identified
on the face of the income statement to assist in
understanding the underlying financial performance
achieved by the Group. The quantification, disclosure and
presentation in the financial statements of non-underlying
items requires judgement.
94
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 5 - Segment information
A. Reportable segments
The Group provides electrical and mechanical contracting
and related services to the construction industry and end
users.
For management and internal reporting purposes
the Group is organised geographically into four regional
divisions; London and South East, Central and South West,
the North and Scotland, reporting to the Chief Executive
Officer, who is the chief operating decision maker. The
following changes have been made to reportable segments
this year.
• London and South East, and Central and South West
divisions were previously combined into a single ‘South’
division.
• The operations of the Bristol and Cardiff offices have
been reclassified as discontinued operations and are
no longer included in reportable segments.
The comparative figures have been restated to reflect
these changes.
The measurement basis used to assess the performance
of the divisions is underlying profit from operations, stated
before amortisation of intangible assets and non-recurring
items. Non-recurring items for each segment are disclosed
on pages 96 to 97 and in Note 7. All assets and liabilities
of the Group have been allocated to segments apart from
the retirement benefit obligation and tax assets and
liabilities.
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 location of
customers. The accounting policies for the reportable
segments are the same as the Group’s accounting policies
disclosed in Note 3.
95
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 5 - Segment information continued
B. Segment information - current year
31st December 2015
Total revenue
Inter segment revenue
London &
South East
£m
Central &
South West
£m
129.1
–
56.9
(0.7)
North
£m
41.8
–
Scotland
£m
16.2
(0.9)
Revenue from external operations
129.1
56.2
41.8
15.3
Underlying profit from operations
Amortisation of intangibles
Profit from operations
Finance income
Finance costs
Profit before tax
Taxation expense
Profit for the year from continuing operations
Other segment information:
Depreciation
Bad debt expense
Additions to non-current assets:
Property, plant and equipment
1.5
–
1.5
0.1
(1.0)
0.6
0.3
–
0.2
0.9
–
0.9
–
–
0.9
0.1
–
0.2
1.9
(0.2)
1.7
0.1
–
1.8
0.1
0.2
0.1
0.3
–
0.3
–
(0.1)
0.2
–
–
–
Unallocated
&
elimination
£m
–
–
–
–
–
–
(0.1)
0.1
–
–
–
–
Total
£m
244.0
(1.6)
242.4
4.6
(0.2)
4.4
0.1
(1.0)
3.5
(0.7)
2.8
0.5
0.2
0.5
Assets
Liabilities
Net assets / (liabilities)
55.2
28.6
24.2
(48.5)
(16.2)
(13.9)
6.7
12.4
10.3
9.2
(4.7)
4.5
(7.8)
(6.5)
(14.3)
109.4
(89.8)
19.6
96
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 5 - Segment information continued
C. Segment information - prior year (restated)
31st December 2014
Total revenue
Inter segment revenue
Revenue from external operations
Underlying (loss) / profit from operations
Amortisation of intangibles
Non-recurring costs:
Exceptional claim settlement cost
(Loss) / profit from operations
Finance income
Finance costs
(Loss) / profit before tax
Taxation expense
Loss for the year from continuing operations
Other segment information:
Depreciation
Bad debt expense
Additions to non-current assets:
Property, plant and equipment
London &
South East
£m
Central &
South West
£m
94.5
(0.6)
93.9
(1.4)
–
(1.1)
(2.5)
0.1
(0.9)
(3.3)
55.2
(1.1)
54.1
0.5
–
–
0.5
–
–
0.5
0.4
0.3
0.3
0.1
–
0.1
North
£m
43.4
–
Scotland
£m
18.3
(1.8)
43.4
16.5
1.6
(0.2)
–
1.4
0.1
–
1.5
0.1
0.2
0.1
0.6
–
(0.1)
0.5
–
–
0.5
–
–
–
Unallocated
&
elimination
£m
–
–
–
–
–
–
–
(0.1)
0.1
–
Total
£m
211.4
(3.5)
207.9
1.3
(0.2)
(1.2)
(0.1)
0.1
(0.8)
(0.8)
0.1
(0.7)
–
–
–
0.6
0.5
0.5
Assets
Liabilities
Net assets / (liabilities)
42.4
32.1
22.7
(38.9)
(19.8)
(11.2)
3.5
12.3
11.5
7.9
(4.1)
3.8
(1.9)
103.2
(10.3)
(84.3)
(12.2)
18.9
97
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 5 - Segment information continued
D. Revenue
Total revenue comprises:
Sales revenue
Construction contracts
Other services
Operating income:
Rent
2015
£m
219.0
23.4
242.4
0.1
0.1
2014
Restated
£m
184.1
23.8
207.9
0.1
0.1
E. Information about major customers
No single customer contributed 10% or more of the Group’s revenue for either 2015 or 2014.
Note 6 – Finance income and finance cost
Finance income
Interest on bank deposits
Finance cost
Interest on bank overdrafts and loans
Interest cost in respect of defined benefit pension scheme
Net total of finance income and finance cost
2015
£m
0.1
(0.4)
(0.6)
(1.0)
(0.9)
2014
£m
0.1
(0.3)
(0.5)
(0.8)
(0.7)
98
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 7 – Profit from operations
A. Operating profit is stated after charging / (crediting):
Amortisation of intangible assets
Non-recurring costs (see Note B below)
Depreciation of property, plant and equipment
Profit on disposal of property, plant and equipment
Operating lease charges
– land and buildings
– plant, machinery and vehicles
Raw materials and consumables
Rent receivable
Bad debt expense
Fees payable to the Company’s auditors for the audit of:
– the Company and consolidation
– Subsidiary companies
Employee benefit expense (see Note 8)
The Auditors’ fees for non-audit services during the year were £nil (2014: £38,000).
B. Non-recurring costs comprise:
Exceptional claim settlement costs
2015
£m
0.2
–
0.5
(0.1)
0.5
0.4
64.7
(0.1)
0.2
0.2
0.1
59.6
2014
£m
0.2
1.2
0.6
(0.2)
0.4
0.5
62.1
(0.1)
0.5
0.1
0.1
56.3
–
–
1.2
1.2
Exceptional claims settlement costs relate to damages and sub-contractor claims in respect of work carried out in
previous years. These claims have been settled and no further costs are expected to arise. Further details are given
in the 2014 annual report and financial statements.
99
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 8 – Employees
Employee benefit expense
Staff costs during the year were as follows:
Wages and salaries
Share awards and options granted to directors and employees (see Note 20)
Termination costs
Social security costs
Other pension costs
2015
£m
52.2
(0.1)
0.5
5.5
1.7
59.8
2014
£m
49.4
0.2
0.1
5.3
1.3
56.3
Of the above employee costs, £58.1m (2014: £54.8m) relates to continuing operations and £1.7m (2014: £1.5m) to
discontinued operations.
Average number of employees:
– staff (including directors)
– operatives
2015
Number
2014
Number
424
823
1,247
365
872
1,237
Average number of employees comprises 1,217 (2014: 1,202) in continuing operations and 64 (2014: 35) in
discontinued operations.
100
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 9 – Taxation
Taxation expense
Current tax expense / (credit)
UK corporation tax payable on profits for the year
Deferred tax expense
Arising on:
Origination and reversal of temporary differences
Total income tax expense / (credit)
Reconciliation of tax charge
Profit / (loss) before taxation for the year from continuing operations
Tax at standard UK tax rate of 20.25% (2014: 21.5%)
Tax effect of:
Permanently disallowable items
2015
£m
0.8
0.8
(0.1)
(0.1)
0.7
3.5
0.7
–
0.7
2014
£m
(0.1)
(0.1)
–
–
(0.1)
(0.8)
(0.2)
0.1
(0.1)
The main rate of corporation tax was reduced from 23% to 21% on 1st April 2014 and to 20% on 1st April 2015.
Further reductions in the main rate of corporation tax to 19% from 1st April 2017 and 18% from 1st April 2020 had
been substantially enacted at 31st December 2015 for the purposes of IAS12 ‘Income Taxes’. Deferred tax balances
have been reassessed using an income tax rate of 19%, taking into account the period over which temporary
differences are expected to reverse. The impact of the change in tax rate has been recognised in profit or loss,
except to the extent that it relates to items previously recognised outside profit or loss. The effect of these changes
was to reduce the UK deferred tax asset at the balance sheet date by £0.1m.
101
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 10 - Discontinued operations
A. Description
On 19th November 2015 the Group announced its intention to discontinue its operations in the Cardiff and Bristol
areas. The Group’s activities in these areas ceased and the closure of Cardiff and Bristol offices was successfully
completed by 31st December 2015, with the remaining employees and any outstanding contractual commitments
transferring to our expanded TClarke South West operation. The Bristol and Cardiff operations have been reported
as discontinued operations for the year ended 31st December 2015, and the previous year’s results have been
represented accordingly.
B. Financial performance
Revenue
Cost of sales
Gross (loss) / profit
Administrative expenses1
(Loss) / profit from operations
Finance income
Finance costs
(Loss) / profit before taxation
Taxation
(Loss) / profit for the financial year
1. Administration expenses incudes £0.3m (2014: £nil) directly related to the closure.
C. Cash flow information
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
2015
£m
5.0
(6.8)
(1.8)
(1.6)
(3.4)
–
–
(3.4)
0.7
(2.7)
2015
£m
(3.5)
–
–
2014
£m
19.6
(18.3)
1.3
(1.2)
0.1
–
–
0.1
–
0.1
2014
£m
(0.3)
–
–
Net cash outflow from discontinued operations
(3.5)
(0.3)
102
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 11 – Earnings / (loss) per share
A. Basic earnings / (loss) per share
Basic earnings / (loss) per share is calculated by dividing the profit / (loss) attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the year.
Earnings / (loss):
Profit / (loss) attributable to owners of the Company:
Continuing operations
Discontinued operations
2015
£m
2014
£m
2.8
(2.7)
0.1
(0.7)
0.1
(0.6)
Weighted average number of ordinary shares in issue (000s)
41,670
41,402
B. Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. The Company has three categories of dilutive
potential ordinary shares: share options granted under the Savings Related Share Option Scheme and conditional
share awards and options granted under the Equity Incentive Plan. Further details of these schemes are given in
Note 20.
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.
The potential ordinary shares are considered to be non-dilutive for the year ended 31st December 2014 as the
Group incurred a loss.
Earnings / (loss):
Profit / (loss) attributable to owners of the Company:
Continuing operations
Discontinued operations
2015
£m
2014
£m
2.8
(2.7)
0.1
(0.7)
0.1
(0.6)
Weighted average number of ordinary shares in issue (000s)
41,670
41,402
Adjustments:
- Savings Related Share Option Schemes (000s)
- Equity Incentive Plan
Conditional share awards (000s)
Options (000s)
465
957
72
–
–
–
Weighted average number of ordinary shares for diluted earnings per share (000s)
43,164
41,402
103
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 11 – Earnings / (loss) per share continued
C. Underlying earnings per share
Underlying earnings per share represents profit for the year from continuing operations adjusted for amortisation
of intangible assets and non-recurring items and the tax effect of these items, divided by the weighted average
number of shares in issue. Underlying earnings is the basis on which the performance of the operating divisions of
the business is measured.
Profit / (loss) from continuing operations attributable to owners of the Company
Adjustments:
Amortisation of intangible assets
Non-recurring costs:
Exceptional claim settlement costs
Tax effect of adjustments
Underlying earnings from continuing operations
2015
£m
2.8
0.2
–
–
3.0
2014
Restated
£m
(0.7)
0.2
1.2
(0.3)
0.4
Weighted average number of ordinary shares in issue (000s)
41,670
41,402
Adjustments:
- Savings Related Share Option Schemes (000s)
- Equity Incentive Plan:
Conditional share awards (000s)
Options (000s)
465
957
72
825
968
71
Weighted average number of ordinary shares for diluted earnings per share (000s)
43,164
43,266
Underlying earnings per share
Diluted underlying earnings per share
7.11p
6.86p
0.85p
0.81p
104
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 12 – Intangible assets
Goodwill
£m
Other
intangible
assets
£m
Cost:
At 1st January 2014, 31st December 2014 and 31st December 2015
24.2
Impairment and amortisation:
At 1st January 2014
Amortisation
At 31st December 2014
Amortisation
At 31st December 2015
Net book value:
1st January 2014
31st December 2014
31st December 2015
2.2
–
2.2
–
2.2
22.0
22.0
22.0
2.9
1.5
0.2
1.7
0.2
1.9
1.4
1.2
1.0
Total
£m
27.1
3.7
0.2
3.9
0.2
4.1
23.4
23.2
23.0
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. Amortisation of other intangible assets is included in administrative
expenses in the income statement.
The allocation of goodwill to individual cash generating units has been reassessed based on the Group’s revised
internal management and reporting structure. The significant elements of goodwill at 31st December 2015 are as
follows:
TClarke London
TClarke Midlands and East
TClarke Scotland
TClarke North West
TClarke South West
TClarke Leeds
Veale-Nixon
Operating segment
London & South East
Central & South West
Scotland
North
Central & South West
North
North
£m
8.1
4.8
3.0
2.7
1.3
1.2
0.9
22.0
There was no goodwill attached to the discontinued Bristol and Cardiff operations.
105
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 12 – Intangible assets continued
Value in use
The carrying value of goodwill has been compared to its recoverable amount based on the value in use of the cash
generating units (‘CGU’s) to which the goodwill has been allocated. Each operating company within the Group has
been assessed as a separate CGU, being the smallest identifiable group of assets that generates cash inflows that
are largely independent of the cash inflows from other groups of assets.
Value in use has been calculated using budgets and forecasts approved by the Board covering the period 2016 to
2018, which take into account secured orders, business plans and management actions. The results of period
subsequent to 2018 have been projected using 2018 forecasts with no growth assumed. The extrapolated cash
flow projections have been discounted using a pre-tax discount rate derived from the Company’s cost of capital.
Assumptions
The key assumptions to which the assessment of the recoverable amounts of CGUs are sensitive are the projected
revenue and operating margin to 2018 and beyond, and the discount rate applied. The range of these assumptions
applied to the CGUs within each segment is as follows:
Pre-tax discount rate
Average annual revenue growth 2016 - 2018 (2014: 2015-2017)
London & South East
Central & South West
North
Scotland
Average operating margins 2016 - 2018 (2014: 2015-2017)
London & South East
Central & South West
North
Scotland
Average operating margins beyond 2018 (2014: beyond 2017)
London & South East
Central & South West
North
Scotland
2015
13.31%
2014
13.21%
11.0%
7.7%
13.6%
15.1%
22.0%
5.2%
5.4%
7.6%
3.1%-4.3%
1.0%-3.9%
2.1%-2.3%
2.8%-3.2%
3.1%-4.9%
4.2%-4.5%
2.8%-3.1%
2.9%-3.6%
4.0%-4.4%
2.5%-2.9%
3.2%-5.1%
3.1%
3.9%
3.2%
4.5%
3.6%
106
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 12 – Intangible assets continued
Sensitivities
TClarke Scotland, TClarke South West and TClarke Midlands and East are considered to be the CGUs most
vulnerable to impairment. The key assumptions used in respect of these CGUs are as follows:
Pre-tax discount rate
Annual revenue growth 2016-2018
Average operating margins 2016-2018
Operating margins beyond 2018
TClarke
Scotland
TClarke
South West
13.3%
15.1%
2.9%
3.1%
13.3%
10.0%
2.2%
2.9%
TClarke
Midlands
& East
13.3%
2.3%
2.5%
2.5%
Annual revenue growth and operating margin assumptions are supported by an analysis of the secured order book
and opportunities identified by the CGUs, with TClarke Scotland having secured 90% of its forecast revenue,
TClarke South West 70% of its forecast revenue and TClarke Midlands and East 66% of its forecast revenue for
2016.
Sensitivity analysis has been applied to the cash flow projections for TClarke Scotland, TClarke Midlands & East and
TClarke South West. The two assumptions to which the cash flow projections are most sensitive are the projected
profit (derived from the projected revenue and margins) and the discount rate. The amount by which these
assumptions would be required to change to trigger an impairment in respect of each of these CGUs is as follows:
Percentage point increase in pre-tax discount rate
Decrease in operating profit
TClarke
Scotland
6.6%
34.3%
TClarke
Midlands
& East
7.0%
35.0%
TClarke
South West
20.5%
65.3%
For other CGUs, 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 CGU. This analysis
has indicated that no reasonably possible changes in any individual key assumption would cause the carrying
amount of the CGU to exceed its recoverable amount.
At 31st December 2015, based on these valuations, no increase in the impairment provision was required against
the carrying value of goodwill (2014: £nil).
107
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 13 – Property, plant and equipment
GROUP
Cost or valuation
At 1st January 2014
Additions
Disposals
At 31st December 2014
Additions
Disposals
At 31st December 2015
Accumulated depreciation and impairment
At 1st January 2014
Charge for the year
Disposals
At 31st December 2014
Charge for the year
Disposals
At 31st December 2015
Net book value at 1st January 2014
Net book value at 31st December 2014
Net book value at 31st December 2015
Freehold
properties
£m
Leasehold
improvements
£m
Plant,
machinery
and vehicles
£m
4.4
–
(0.5)
3.9
–
(0.4)
3.5
0.2
0.1
(0.1)
0.2
0.1
–
0.3
4.2
3.7
3.2
0.4
0.2
–
0.6
0.1
–
0.7
0.2
0.1
–
0.3
0.1
–
0.4
0.2
0.3
0.3
4.1
0.3
(1.0)
3.4
0.4
(0.6)
3.2
2.8
0.4
(0.8)
2.4
0.3
(0.6)
2.1
1.3
1.0
1.1
Total
£m
8.9
0.5
(1.5)
7.9
0.5
(1.0)
7.4
3.2
0.6
(0.9)
2.9
0.5
(0.6)
2.8
5.7
5.0
4.6
The Group’s freehold land and buildings were valued at 31st December 2011 based on an external valuation
provided by an independent valuer dated 14th October 2011. 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 arms length terms. The revaluation surplus, net of applicable deferred income taxes, was credited
to other comprehensive income and is shown in the revaluation reserve in shareholders’ equity. A further external
valuation was concluded as at 29th February 2016 which indicated that the market value of the Group’s property
was not significantly different to the book value. The net book value of the freehold properties on a historic cost
basis would have been £2.5m (2014: £2.7m).
The net book value of Group plant, machinery and vehicles includes £0.1m (2014: £0.1m) in respect of assets held
under finance leases and hire purchase contracts. Depreciation of £nil (2014: £0.1m) was charged on these assets
during the year.
The Group has granted a charge in favour of the TClarke Group Retirement and Death Benefits Scheme over a
number of properties occupied by the Group, to secure the future pension obligations of the scheme. The book and
fair value of the properties at 31st December 2015 was £2.9m (2014: £2.9m).
108
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 13 – Property, plant and equipment continued
COMPANY
Cost
At 1st January 2014
Additions
At 31st December 2014
Additions
Disposals
At 31st December 2015
Accumulated depreciation and impairment
At 1st January 2014
Charge for the year
At 31st December 2014
Charge for the year
Disposals
At 31st December 2015
Net book value at 1st January 2014
Net book value at 31st December 2014
Net book value at 31st December 2015
Leasehold
improvements
£m
Plant,
machinery
and vehicles
£m
0.4
–
0.4
–
–
0.4
0.2
–
0.2
0.1
–
0.3
0.2
0.2
0.1
0.6
0.1
0.7
0.2
(0.2)
0.7
0.5
0.1
0.6
0.1
(0.2)
0.5
0.1
0.1
0.2
Total
£m
1.0
0.1
1.1
0.2
(0.2)
1.1
0.7
0.1
0.8
0.2
(0.2)
0.8
0.3
0.3
0.3
109
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 14 – Investments
COMPANY
Investments in subsidiaries comprise:
Cost:
At 1st January and 31st December
Impairment:
At 1st January
Charge for the year
At 31st December
Net book value:
At 1st January
At 31st December
2015
£m
2014
£m
41.4
41.4
9.0
0.3
9.3
32.4
32.1
9.0
–
9.0
32.4
32.4
An annual impairment review is undertaken at 31st December each year in conjunction with the goodwill
impairment review (see Note 12), 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. The provision also includes an amount equivalent to dividends paid out of pre-acquisition reserves in
respect of TClarke North West Limited. The Company’s investment in TClarke (Bristol) Limited was impaired during
the year following the discontinuation of the Bristol and Cardiff operations.
110
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 15 – Inventories
GROUP
Raw materials and consumables
2015
£m
0.4
2014
£m
0.4
Note 16 – Construction contracts
Contract work in progress comprises:
Contract costs incurred plus recognised profits
less recognised losses to date
Less: progress payments
Contracts in progress at the reporting date:
Gross amounts due from customers
Gross amounts due to customers
GROUP
COMPANY
2015
£m
2014
£m
2015
£m
2014
£m
181.6
(154.6)
27.0
31.1
(4.1)
27.0
147.7
(123.9)
23.8
26.7
(2.9)
23.8
102.1
(90.2)
11.9
13.6
(1.7)
11.9
73.5
(60.8)
12.7
13.4
(0.7)
12.7
At 31st December 2015 retentions held by customers of the Group for contract work amounted to £13.1m (2014:
£10.6m) and retentions held by customers of the Company for contract work amounted to £5.4m (2014: £3.7m).
These amounts are included in trade receivables (see Note 17).
Advances received from customers for contract work amounted to £nil (2014: £nil).
111
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 17 – Trade and other receivables
GROUP
COMPANY
Trade receivables - gross
Trade receivables - allowances for credit losses
Net trade receivables
Owed by group companies
Other receivables
Accrued income
Prepayments
Movements in allowances for
credit losses are as follows:
At 1st January
Charged in year
Recovered in year
Written off in year
At 31st December
Trade receivables (including retentions)
are due as follows:
Due within 3 months
Due in 3 to 6 months
Due in 6 to 12 months
Due after more than one year
Overdue
The ageing of trade receivables past due
but not impaired is as follows:
Less than 30 days
31-60 days
61-120 days
Greater than 120 days
2015
£m
25.1
(0.5)
24.6
–
–
8.8
2.9
36.3
(0.9)
(0.2)
0.1
0.5
(0.5)
12.5
1.4
1.4
5.1
4.7
25.1
1.6
0.7
0.3
1.6
4.2
2014
£m
23.8
(0.9)
22.9
_
0.2
9.2
2.4
34.7
(0.7)
(0.6)
0.1
0.3
(0.9)
11.8
1.6
2.4
3.2
4.8
23.8
1.4
0.8
0.6
1.1
3.9
2015
£m
6.9
–
6.9
1.7
0.3
3.8
1.0
2014
£m
6.9
–
6.9
2.3
0.5
2.3
0.7
13.7
12.7
–
–
–
–
–
2.3
0.9
0.4
2.8
0.5
6.9
–
0.1
0.1
0.3
0.5
–
–
–
–
–
3.5
0.9
0.7
1.5
0.3
6.9
–
0.1
–
0.2
0.3
Allowances for credit losses have been assessed against individual debtor balances. Where overdue balances are
still considered to be recoverable in full no allowance has been made. The allowances mostly relates to small
building contractors who have become insolvent or are facing severe financial difficulties at present. Credit risk is
spread across a large number of customers and there are no significant concentrations of credit risk.
112
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 18 – Trade and other payables
GROUP
COMPANY
----
Current:
Trade payables
Owed to group companies
Other taxation and social security payable
Accruals
Deferred income
Other payables
Non-current:
Other payables
Trade payables payments terms are as follows:
30 days or less
31-60 days
Greater than 60 days
2015
£m
49.7
–
6.3
9.2
1.1
0.8
67.1
0.1
28.1
16.0
5.6
49.7
2014
£m
40.4
–
5.7
12.4
0.8
0.3
59.6
0.3
22.8
13.7
3.9
40.4
2015
£m
22.4
4.2
2.3
8.0
0.5
0.2
37.6
–
13.1
6.6
2.7
22.4
2014
£m
13.5
5.4
1.5
11.5
–
–
31.9
–
6.9
4.5
2.1
13.5
113
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 19 – Deferred taxation
GROUP
Asset at 1st January 2014
Credited to other comprehensive income
Asset at 31st December 2014
Charged to income
Credited to other comprehensive income
Asset at 31st December 2015
Revaluations
£m
Retirement
benefit
obligation
£m
Accelerated
capital
allowances
£m
(0.2)
–
(0.2)
0.1
–
(0.1)
2.2
1.1
3.3
–
(0.7)
2.6
–
–
–
(0.1)
–
(0.1)
Other
£m
(0.2)
–
(0.2)
0.1
–
(0.1)
Total
£m
1.8
1.1
2.9
0.1
(0.7)
2.3
The amount of deferred tax recoverable within one year is insignificant. Certain deferred tax assets and liabilities
have been offset. 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 24). The deferred tax asset
will be recovered over time as the deficit is reduced.
The following is the analysis of the deferred tax balances for financial reporting purposes.
Deferred tax liabilities
Deferred tax assets
COMPANY
Asset at 1st January 2014
Credited to other comprehensive income
Asset at 31st December 2014
Charged to other comprehensive income
Asset at 31st December 2015
2015
£m
(0.3)
2.6
2.3
Retirement
benefit
obligation
£m
2.2
1.1
3.3
(0.7)
2.6
2014
£m
(0.4)
3.3
2.9
Total
£m
2.2
1.1
3.3
(0.7)
2.6
114
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 20 – Capital and reserves
A. 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
Share premium
ESOT share reserve
Revaluation reserve
above depreciated cost
Retained earnings
Amount subscribed for share capital at nominal value.
Amount subscribed for share capital in excess of nominal value,
net of allowable expenses.
Acquires and holds shares in the Company to be issued to employees
in settlement of options exercised and conditional share awards under
the Group’s employee share schemes.
Cumulative gains recognised on revaluation of land and buildings
Cumulative net gains and losses recognised in the income statement
and the statement of comprehensive income to the extent not
distributed by way of dividends.
B. Share capital and premium
Authorised:
Ordinary share of 10p each:
Number
of shares
Ordinary
shares
£m
At 1st January 2014, 31st December 2014 and 31st December 2015
50,000,000
5.0
Allotted, called up and fully paid:
Number
of shares
Ordinary
shares
£m
Share
premium
£m
At 1st January 2014 and 31st December 2014
41,401,670
4.1
3.1
Shares issued to Employee Share Ownership Trust
At 31st December 2015
427,897
41,829,567
0.1
4.2
–
3.1
427,897 ordinary shares of 10p each were issued to the Employee Share Ownership Trust during the year to satisfy
options exercised by employees under the Group’s Save As You Earn Scheme.
All shares rank equally in respect of shareholder rights.
115
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 20 – Capital and reserves continued
C. Employee share option plan of the Company
The following options granted to employees and directors of the Group under the TClarke plc Savings Related
Share Option Scheme (‘the SAYE scheme’), an approved save as you earn (‘SAYE’) share option scheme, were
outstanding at the end of the year.
Scheme
2012 SAYE
2013 SAYE
2015 SAYE
Number
of options
Grant
date
Exercise
date
710,110
12/10/12
01/01/16
Exercise
price
42.00p
Fair value at
date of grant
8.90p
to 30/06/16
442,251
11/10/13
01/01/17
54.00p
18.55p
`
to 30/06/17
1,739,123
09/10/15
01/12/18
69.75p
1.57p
to 31/05/19
The SAYE scheme was approved by HM Revenue and Customs on 14th July 2011. 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 under IFRS2
is £nil m for the year ended 31st December 2015 (2014: £0.1m). 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, between £5 and £150 in respect of the 2012 and 2013 schemes and of between £5 and £200 in
respect of the 2015 scheme 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 participants SAYE contract.
116
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 20 – Capital and reserves continued
C. Employee share option plan of the Company continued
The volatility was measured at the standard deviation of continuously compounded share returns based on
statistical analysis of daily prices over the last year. Each employee share option converts into one ordinary share of
the Company on exercise.
The number of options outstanding during the year were as follows:
At 1st January
Granted
Exercised
Forfeited
At 31st December
2015
Weighted
average
exercise
price (p)
43.32
69.75
40.02
45.99
60.53
2014
Number
2,615,803
–
–
(133,729)
2,482,074
2014
Weighted
average
exercise
price (p)
43.28
–
–
42.45
43.32
2015
Number
2,482,074
1,744,284
(1,206,807)
(128,067)
2,891,484
The weighted average remaining contractual life of the options at 31st December 2015 was 697 days
(2014: 252 days).
No options were exercisable at 31st December 2015 (2014: nil).
On 1st January 2016, 710,110 options granted under the SAYE Scheme became exercisable at an exercise price of
42p per 10p ordinary share. Options exercised to date have been satisfied by shares held in treasury by the
Employee Share Ownership Trust.
117
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 20 – Capital and reserves continued
D. Equity Incentive Plan (‘the Plan’)
All employees, including Executive Directors, are eligible to participate in the TClarke Equity 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 approved by shareholders
(11th May 2011). Options and awards of shares are subject to performance conditions as determined by the
Remuneration Committee.
The total number of shares issued or made available pursuant to the Plan, when aggregated with the total number
of shares issued or made available pursuant to any other employee share scheme in the ten years immediately
preceeding the date upon which an award is made, shall not exceed ten percent of the Company’s issued share
capital at the date of the grant.
945,000 conditional share awards and 354,000 conditional options have been granted under the TClarke Equity
Incentive Plan as follows:
Date of grant
Number of awards
Share price at grant
Exercise price
Option life
Conditional
shares
Conditional
options
Conditional
shares
Conditional
shares
30/04/2013
30/04/2013
29/04/2014
29/04/2015
345,000
52.00p
nil
3 years
177,000
52.00p
52.00p
3 years
255,000
82.00p
nil
360,000
71.50p
nil
3 years
3 years
The conditional share awards and options will vest on the third anniversary of the date of grant, subject to
continued employment with the Company and satisfaction of the following performance conditions:
Awards granted 30th April 2013 and 29th April 2014:
Annual growth in EPS above RPI 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%
Awards granted 29th April 2015:
Annual growth in underlying EPS above RPI* 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%
* Based on average underlying EPS for the three years ended 31st December 2014
118
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 20 – Capital and reserves continued
E. Share based payment expense
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 Equity Incentive Plan grants as an expense under IFRS2 is
£0.1m credit for the year ended 31st December 2015 (2014: £0.1m charge).
F. Company income statement
The Company has taken advantage of the exemption conferred by section 408 of the Companies Act 2006 from
presenting its own income statement. A profit after taxation amounting to £2.5m (2014: loss £0.8m) has been
included in the financial statements of the holding company.
G. Dividends paid
Final dividend of 2.60p (2014: 2.10p) per ordinary share proposed and
paid during the year relating to the previous year’s results
Interim dividend of 0.50p (2014: 0.50p) per ordinary share paid during the year
2015
£m
1.1
0.2
1.3
2014
£m
0.9
0.2
1.1
The Directors are proposing a final dividend of 2.60p (2014: 2.60p) per ordinary share totalling £1.1m (2014:
£1.1m). This dividend has not been accrued at the reporting date.
119
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 21 – Notes to the statement of cash flows
A. Reconciliation of operating profit to net cash (outflow) / inflow from operating activities
GROUP
Profit / (loss) from operations:
Continuing operations
Discontinued operations
Depreciation charges
Profit on sale of property, plant and equipment
Equity settled share based payment (credit) / expense
Amortisation
Defined benefit pension scheme credit
Operating cash flows before movements in working capital
Increase in contract balances
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Corporation tax paid
Interest paid
Net cash generated from operating activities
COMPANY
Profit / (loss) from operations:
Continuing operations
Equity settled share based payment expense
Depreciation charges
Investment impairment
Defined benefit pension scheme credit
Operating cash flows before movements in working capital
Decrease / (increase) in contract balances
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from / (used in) operations
Corporation tax received
Interest paid
Net cash generated from / (used in) operating activities
2015
£m
4.4
(3.4)
0.5
(0.1)
(0.1)
0.2
(0.5)
1.0
(3.1)
(1.6)
7.1
3.4
(0.3)
(0.4)
2.7
1.6
–
0.2
0.3
(0.5)
1.6
0.8
(1.0)
5.8
7.2
0.6
(0.4)
7.4
2014
£m
(0.1)
0.1
0.6
(0.2)
0.2
0.2
(0.4)
0.4
(0.9)
(3.7)
9.5
5.3
–
(0.3)
5.0
(3.0)
0.2
0.1
–
(0.4)
(3.1)
(2.5)
(4.0)
9.2
(0.4)
0.2
(0.3)
(0.5)
120
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 21 – Notes to the statement of cash flows continued
B. Cash and cash equivalents
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.
Cash and cash equivalents
GROUP
COMPANY
2015
£m
11.7
2014
£m
10.3
2015
£m
14.1
2014
£m
6.2
Note 22 – Bank overdrafts and loans
The Group has an £8m overdraft facility with National Westminster Bank plc, renewable annually. Interest was
charged at 2.75% above base rate on overdraft balances during the year ended 31st December 2015 (2014:
2.75%). All operating companies within the Group are included within the facility, and cross guarantees and
charges have been granted in favour of National Westminster Bank plc. At 31st December 2015 the Group had
unused overdraft facilities of £11m (2014: £8m) including an additional £3m short-term overdraft facility which had
not been used and subsequently expired in January 2016. No value has been attributed to the guarantee contracts
in the Company’s financial statements as the amount is considered to be negligible.
In February 2014 the Group arranged a £5m committed three year Revolving Credit Facility (RCF) with National
Westminster Bank plc (“the bank”). The RCF incurs interest at 3% above LIBOR on drawn balances and the
Company is charged a fee of 1.5% on all undrawn balances. The RCF includes financial covenants around interest
cover and net leverage ratios which are tested quarterly.
The Group was compliant with its obligations under the RCF throughout the year.
121
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 23 – Related party transactions
A. Directors remuneration
Salaries, fees and other short-term employee benefits
Post-employment benefits
Total
2015
£m
1.5
0.2
1.7
2014
£m
0.9
0.1
1.0
Further disclosures, including details of the highest paid Director, are included in the Director’s remuneration report
on pages 55 to 68.
B. Key management remuneration
Compensation payable to key management for employee services is shown below. Key management includes members of
the Group Management Board and Directors of subsidiary companies.
Salaries, fees and other short term employee benefits
Termination benefits
Post-employment benefits
Total
2015
£m
2.9
0.2
0.5
3.6
2014
£m
3.1
0.1
0.4
3.6
C. Sales and purchases of goods and services to / from subsidiaries
The amounts due from and to subsidiaries are disclosed in Notes 17 and 18 respectively. All balances are repayable on
demand.
TClarke plc charged subsidiary companies £0.5m (2014: £0.5m) during the year for insurance services and £0.2m
(2014: £0.2m) for IT services. Sales to other Group companies of £0.2m (2014: £nil) and cost of sales from other group
companies of £19.9m (2014: £15.1m) are included in the financial statements of the Company.
122
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 24 – Pension commitments
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 £1.0m (2014: £0.6m) 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 2012 by Mr J Seed,
Fellow of the Institute of Actuaries, showed a deficit of £11.5m, which represented a funding level of 68%. The
valuation was significantly impacted by the significant fall in bond yields over the period leading up to the date of
the valuation, caused by macro-economic factors beyond the Company’s control. A deficit reduction plan has been
agreed with the Pension Regulator, which includes making additional contributions and providing security in the
form of a contingent asset over the Group’s property portfolio up to a combined value of £3.1m, with the aim of
eliminating the deficit by 31st March 2029.
Employer contribution rates during the year ended 31st December 2015 were 20.7% (2014: 18.0%). Future
employer contributions rates have been agreed as follows:
1st January 2016 to 31st December 2016
1st January 2017 to 31st December 2019
1st January 2020 to 31st March 2029
Current service
contributions
Deficit
reduction
contributions
Total
contributions
7.7%
7.7%
7.7%
13.0%
14.0%
15.0%
20.7%
21.7%
22.7%
Following further adverse movements in bond yields since the date of the triennial actuarial valuation and adverse
legislative charges, the Group closed the defined benefit scheme to new members on 1st January 2015 and is
working with the trustees of the scheme and their advisers to mitigate the impact of the prolonged adverse
economic conditions. The Group continues to meet its ongoing funding obligations to the scheme.
123
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 24 – Pension commitments
The key assumptions used to value the pension scheme liability in the financial statements are set out below:
Rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Inflation assumption
The mortality assumptions used in the IAS 19 valuation were:
Life expectancy at age 65 for current pensioners - Men
- Women
Life expectancy at age 65 for future pensioners (current age 45) - Men
- Women
The amounts recognised in the statement of financial position are as follows:
Present value of funded obligations
Fair value of plan assets
Deficit of funded plans
2015
%
2.85
3.05
4.05
3.35
2015
Years
23.7
25.0
25.0
26.5
2015
£m
43.2
(29.8)
13.4
2014
%
2.70
3.00
3.70
3.20
2014
Years
23.7
24.9
25.0
26.4
2014
£m
44.5
(28.2)
16.3
124
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 24 – Pension commitments continued
The movement in the defined benefit obligation is as follows:
Present value
of obligation
£m
Fair value of
plan assets
£m
At 1st January 2014
Current service cost
Interest expense
Remeasurements:
Return on plan assets excluding amounts included in interest expense
Loss from change in financial assumptions
Contributions:
- Employers
- Employees
Payment from plans:
- Benefit payments
At 31st December 2014
Current service cost
Interest expense
Remeasurements:
Return on plan assets excluding amounts included in interest expense
Gain from change in financial assumptions
Contributions:
- Employers
- Employees
Payment from plans:
- Benefit payments
At 31st December 2015
37.8
0.6
1.7
2.3
–
5.5
5.5
–
0.4
(1.5)
44.5
0.7
1.7
2.4
–
(3.2)
(3.2)
–
0.5
(26.9)
–
(1.2)
(1.2)
(0.2)
–
(0.2)
(1.0)
(0.4)
1.5
(28.2)
–
(1.1)
(1.1)
0.3
–
0.3
(1.3)
(0.5)
(1.0)
43.2
1.0
(29.8)
Current service cost is included in administrative expenses.
Interest expense is included in finance costs.
Remeasurement gains and losses have been included in other comprehensive income/expense.
Total
£m
10.9
0.6
0.5
1.1
(0.2)
5.5
5.3
(1.0)
–
–
16.3
0.7
0.6
1.3
0.3
(3.2)
(2.9)
(1.3)
–
–
13.4
125
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 24 – Pension commitments continued
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:
2015
2014
Quoted
£m
Unquoted
£m
%
Quoted
£m
Unquoted
£m
Equities
19.0
UK quoted
4.1
Overseas quoted
6.2
Hedge funds
8.7
Debt instruments
Fixed interest corporate bonds
5.1
3.8
Inflation-linked bonds
0.6
Government bonds
0.7
Property
Cash
Insurance annuity contracts
–
–
–
Total
24.1
–
–
–
–
–
–
–
–
2.3
1.9
1.5
5.7
Total
£m
19.0
4.1
6.2
8.7
5.1
3.8
0.6
0.7
2.3
1.9
1.5
64%
17.0
4.6
5.1
7.3
5.1
4.2
0.3
0.6
–
–
–
17%
8%
6%
5%
29.8
100%
22.1
Total
£m
17.0
4.6
5.1
7.3
5.1
4.2
0.3
0.6
2.3
2.2
1.6
%
60%
18%
8%
8%
6%
28.2
100%
–
–
–
–
–
–
–
–
2.3
2.2
1.6
6.1
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). 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 significant 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 significant proportion of the assets in equities. The proportion of equities held
was increased following a review of the investment strategy and taking into account expected improvements in
equity markets and the maturity profile of the scheme.
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.
126
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 24 – Pension commitments continued
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 22 years.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Discount rate
Inflation rate
Life expectancy
Impact on defined benefit obligation
Change in
assumption
0.5%
0.5%
Increase in
assumption
Decrease in
assumption
Decreased by 10%
Increased by 12%
Increase by 6%
Decrease by 8%
Increase by 1 year
in assumption
Decrease by 1 year
in assumption
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
reporting period) has been applied as when calculating the pension liability recognised within the statement of
financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the
previous period.
127
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 25 – Obligations under finance leases
Amounts payable under finance leases:
Within one year
Less: future finance charges
Present value of lease obligations
Minimum lease payment
Present value of
minimum lease payment
2015
£m
0.1
0.1
–
0.1
2014
£m
0.1
0.1
–
0.1
2015
£m
0.1
0.1
–
0.1
2014
£m
0.1
0.1
–
0.1
The average lease term is three to four years. For the year ended 31st December 2015 the average effective
borrowing rate was 6% (2014: 6%). Interest rates are fixed at the contract dates. All leases are on a fixed
repayment basis and no arrangements have been entered into for contingent rental payments.
Obligations under finance leases are secured by the lessor's charges over the leased assets.
Note 26 – Operating lease obligations
Total outstanding commitments for future minimum lease payments under non-cancellable operating leases
fall due as follows:
GROUP
Within one year
In the second to fifth years inclusive
COMPANY
Within one year
In the second to fifth years inclusive
Land and
buildings
2015
£m
0.5
0.3
0.8
Land and
buildings
2015
£m
0.3
–
0.3
Other
operating
leases
2015
£m
1.0
0.9
1.9
Other
operating
leases
2015
£m
0.3
0.2
0.5
Land and
buildings
2014
£m
0.4
0.4
0.8
Land and
buildings
2014
£m
0.3
0.2
0.5
Other
operating
leases
2014
£m
1.1
1.1
2.2
Other
operating
leases
2014
£m
0.4
0.3
0.7
128
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 27 – Contingent liabilities
Group banking facilities and surety bond facilities 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 and
guarantees under contracting and other arrangements entered into in the normal course of business.
Note 28 – Financial instruments
A. Capital risk management
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 Group’s overall capital strategy remains unchanged from 2014.
The capital structure of the Group consists of net funds, including cash and cash equivalents, bank loans and
overdrafts and finance 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 2015 and 2014 was as follows:
Cash and cash equivalents
Less total borrowings
Net funds
Total equity
2015
£m
11.7
(5.1)
6.6
19.6
2014
£m
10.3
(5.1)
5.2
18.9
129
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 28 – Financial instruments continued
B. Financial assets and liabilities
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 materially different to the carrying value.
Financial assets
The Group’s financial assets comprise loans and receivables at amortised cost, and cash and cash equivalents as
follows:
2015
£m
2014
£m
Cash and cash equivalents
Trade and other receivables excluding prepayments
Amounts due from customers under construction contracts
11.7
33.4
31.1
76.2
Included in the above are £5.1m (2014: £3.2m) trade and other receivables due after more than one year.
Financial liabilities – analysis of maturity dates
At 31st December 2015 the carrying value of the Group’s financial liabilities and the maturity profile of the
associated contractual cash flows were as follows:
31st December 2015
Carrying value
Contractual cash flows:
Less than one year
One to two years
Total
31st December 2014
Carrying value
Contractual cash flows:
Less than one year
One to two years
Two to three years
Total
Amounts due
to customers
under
construction
contracts
£m
Bank loans2
£m
Obligations
under finance
leases
£m
4.1
4.1
–
4.1
2.9
2.9
–
–
2.9
5.0
0.2
5.2
5.4
5.0
0.2
0.2
5.2
5.6
0.1
0.1
–
0.1
0.1
0.1
–
–
0.1
Trade
and other
payables1
£m
59.7
59.6
0.1
59.7
53.4
53.1
0.2
0.1
53.4
1 Trade and other payables exclude deferred income and other taxation and social security payable.
2 Details of the Group’s bank facilities are given in Note 22 on page 121.
130
Annual Report & financial statements 2015
10.3
32.3
26.7
69.3
Total
£m
68.9
64.0
5.3
69.3
61.4
56.3
0.4
5.3
62.0
Notes to the financial statements for the year ended 31st December 2015
Note 28 – Financial instruments continued
C. Financial risk management
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 that a counter party will fail to
discharge its obligations and create a financial loss.
Credit risk exists, amongst other factors, to the extent
that at the reporting date there were significant
balances outstanding. The Group’s policy is to mitigate
this risk by assessing the credit-worthiness of
prospective clients prior to accepting a contract,
requesting progress payments on contract work in
progress and investing surplus cash only with large
highly-regarded UK financial institutions.
The carrying value of construction contracts, trade and
other receivables and cash on deposit represents the
Group’s maximum exposure to credit risk. There were
no significant concentrations of credit risk at 31st
December 2015.
Liquidity risk
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’s 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 had in place throughout the year an
£8 million overdraft facility with National Westminster
Bank plc. This facility was renewed during the year.
The Group also has in place a £5 million Revolving
Credit Facility (‘RCF’) agreed with the same bank in
February 2014. The RCF is a committed facility
available until 31st March 2017, subject to quarterly
financial covenant tests. Management has prepared
projections for the remaining term of the RCF 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 an interest rate of 3.5%, 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 £0.1
million (2014: £0.1 million) 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 £0.1 million (2014: £0.1 million) for
each month of delay / acceleration.
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 2.75% above base rates. The interest rate on
amounts drawn down under the RCF are fixed at
LIBOR plus 3% at the time of drawdown for periods
of up to six months. The Group’s finance 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 floating and short-term fixed rate cash, cash
equivalents and bank overdrafts at the reporting date
would be to increase profits by approximately £0.6
million (2014: £0.5 million) per annum. Details of the
Group’s and the Company’s bank facilities are
disclosed in Note 22.
Details of finance lease commitments are disclosed in
Note 25.
131
Annual Report & financial statements 2015
Notes to the financial statements for the year ended 31st December 2015
Note 29 – Subsidiary companies
The wholly owned trading subsidiaries are all directly held by TClarke plc. The trading subsidiaries are all
incorporated and operate within the United Kingdom.
Electrical and mechanical contractors
Type of shares
DG Robson Mechanical Services Limited
TClarke East Limited
TClarke Leeds Limited
TClarke (Midlands) Limited
TClarke North West Limited
TClarke (Scotland) Limited
TClarke South-East Limited
TClarke South West Limited
Veale-Nixon Limited
Property holding company
Weylex Properties Limited
Non-trading and dormant companies
AG Aylward EMS (Maintenance and Minor Works) Limited
Anglia Electrical Services Limited
D&S (Engineering Facilities) Limited
GDI Electrical Company Limited
JJ Cross Limited
JJ Cross Services Limited
Mitchell and Hewitt Limited
SCS Building Services (Scotland) Limited
Smith Contracting Services Limited
TClarke (Bristol) Limited
Waldon Data Limited
Waldon Electrical Contractors Limited
Waldon Security Limited
WE Manin Limited
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
132
Annual Report & financial statements 2015
Shareholder information
Shareholder information
For further information, please contact:
Alexandra Dent
Company Secretary
info@tclarke.co.uk
Registered office
and company advisors
Registered office
45 Moorfields
London EC2Y 9AE
Registered in England
Number: 119351
Bankers
Royal Bank of Scotland
Corporate Banking
280 Bishopsgate
London EC2M 4RB
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Registrar
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 0871 664 0300
Corporate broker
N+1 Singer
1 Bartholomew Lane
London EC2N 2AX
Tel: 020 7496 3000
Investor relations
Capital Access Group
Sky Light City Tower
50 Basinghall Street
London EC2V 5DE
Tel: 020 3763 3400
Printed on Galerie Art Silk. The paper is independently certified
according to the rules of the Forestry Stewardship Council®
(FSC®). The manufacturing mill holds the ISO 14001
environmental certification and the EU Eco-label (EMAS).
Designed and produced s a l l y b a m b e r
133
Annual Report & Financial Statements 2015
TClarke plc
45 Moorfields
London EC2Y 9AE
020 7997 7400
www.tclarke.co.uk