Annual Report and Financial Statements 2023
5YEARS
Strategic Report
Governance
Financial Statements
Additional
Who we are
TClarke remains at the forefront of the Building Services industry. Our innovation and
expertise are employed in the design, installation, integration and maintenance of the
mechanical and electrical systems and technologies that a 21st century building needs
for control, performance and sustainability. We currently operate from nineteen
locations serving the whole of the UK.
We are a proud employer of local people in the towns and cities that we serve. Our
reputation for high quality and the successful application of new technologies has been
built over 135 years.
Strategic Report
Chairman’s Statement
Purpose, Strategy and Values
Chief Executive’s Report
Business Model
Key Performance Indicators
Market Sectors
Group Financial Review
Section 172 Statement
Environmental, Social and
Governance Report
Non-Financial and Sustainability
Information Statement
Climate Strategy
Principal Risks
Long-term Viability Statement
01
02
03
06
07
10
11
15
Governance
Board of Directors
Corporate Governance Report
Statement of Compliance
Audit Committee Report
Nomination Committee Report
Remuneration Committee Report
Directors’ Remuneration Policy
Annual Report on Remuneration
Directors‘ Report
17
Statement of Directors‘ Responsibilities
Independent Auditor‘s Report
38
39
40
44
47
48
50
57
64
67
68
29
30
33
37
Financial Statements
Independent Auditor‘s Report
Consolidated Financial Statements
Company Financial Statements
Additional
Shareholder Information
68
75
103
107
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Strategic Report
Governance
Financial Statements
Additional
2023 Highlights
Strong operating
performance
Financial strength and
shareholder returns
Social and
environmental value
£491. 0m
Group Revenue
2022: £426.0m
£19. 3 m
Net Cash
2022: £7.5m
2 47
Apprentices
2022: 210
£9. 4 m
Operating Profit
2022: £11.5m
1.9 %
Operating Margin
2022: 2.7%
£ 943 m
Forward Order Book
2022: £555m
-£ 0.6 m
Average month end net cash
2022: £2.6m
4.4
Emissions (tC02e) per £m revenue
2022: 4.8
13.75p
Earnings per share
2022: 19.60p
5.9 p
Dividends per share
2022: 5.35p
0.33
Lost time incident rate as a result
of accidents
2022: 0.32
54
Average supplier payment days
2022: 58
For further information and for a
definition of dividend per share,
see page 11 of the Group Financial
Review. See page 12 for definition
and calculation of net cash. KPI
performance is described within
the Strategic Report.
Strategic Report
Governance
Financial Statements
Additional
Chairman’s Statement
2023 has been another year of significant
achievement for TClarke. In a very
challenging marketplace revenue increased
by 15% to £491m (2022: £426m). The
composition of this revenue number and
order book reflects the successful
implementation and delivery of our strategy
in our chosen markets.
Our strategy is to pursue organic growth
by focusing on our five core market sectors
as set out on page 10, whilst building our
market presence in data centres, large
projects outside of London, smart buildings
and healthcare. Whilst revenues from these
areas reduced to £189m in 2023 (2022:
£220m) they form a substantial part of our
Forward Order Book. With data centres
alone accounting for £346m.
Our forward order book now stands at
£943m, an increase of 70% (2022: £555m)
which again demonstrates the successful
implementation and delivery of our strategic
development plans.
In common with the wider market, we have
faced significant economic and political
upheavals and uncertainties throughout 2023,
and this has perhaps been particularly the case
in our Engineering Services sector. Despite
this, we have achieved an operating profit of
£9.4m in 2023 (2022: £11.5m), which is a very
creditable result given the uncontrollable
external pressures we have had to manage this
year. This performance results not just from the
successful implementation of our strategy, but
also from the effective and continuous
strategic and operational management and
focus on delivery and performance.
During the year we completed a successful
share placing which raised additional net
proceeds of £10.1m. The rationale behind the
placing was to increase our working capital
levels to support our increased levels of
activity and the changing nature of our
working capital requirements given the
increased size and complexity of current
and future projects. The placing was
oversubscribed, and new shares were taken
up by both existing major shareholders and
several new institutional investors. The support
and increased investment by both existing and
new shareholders through this placing is further
evidence of the recognised success of our
chosen strategies and investor confidence in
our forward growth and performance.
We remain committed to a progressive
dividend policy while at the same time
balancing the interest and needs of all
stakeholders. We are proposing a 2023 final
dividend of 4.525p per share (2022:4.1p)
which together with the interim dividend
of 1.375p paid in October 2023 brings the
full 2023 dividend to 5.9p per share (2022:
5.35p), an increase of 10%.
We have continued to invest in our
responsible business activities, and I’m
extremely proud of the enormous amount
of work and innovation by our teams in
enabling us to address climate change and
deliver social value to the communities
where we work.
Our manufacturing facilities in Stansted
and Coatbridge have enabled TClarke to
significantly reduce its carbon footprint. In
addition, investment has been made into
01
TClarke Annual Report and Financial Statements 2023
our carbon calculator for calculating Scope 3
emissions; information from which has been
used on several tenders.
our performance and prospects. Our
management, delivery focus and
capabilities give TClarke the ability to
continue to grow and prosper.
As ever, however, it is the collective and
outstanding effort and output of our people
which delivers the distinctive TClarke brand
- a brand which is very strong, built upon
our reputation for high quality engineering,
reliability and on time delivery. It is our
people and our brand that enable us to
grow and perform and to face the future and
its challenges with confidence.
Iain McCusker
Chairman
26th March 2024
During the year our offices switched to
100% renewable energy, and we have
introduced our first wave of electric
vans within the Group’s fleet.
Our teams have continued to build
partnerships with schools, charities, and
social organisations to provide work
and training opportunities for local
communities and introduce young people
to careers in construction. This will help
promote diversity while building a talent
pipeline for the industry. We have been
decarbonising schools, making them more
energy efficient.
We continue to be the leading provider
of apprenticeships in our sector, with 247
apprentices currently in place across the
Group. This represents 18% of the total
workforce (2022: 16%) - significantly more
than the industry norm of 5%. This is a
positive and substantial investment
made with our confidence in TClarke and
the future.
As we look forward to 2024 and beyond it
seems unlikely that the current significant
external economic and national and
geopolitical challenges will lessen. Despite
this, I look to the future with confidence for
TClarke. We have a significant and growing
order book at record levels. Our strategy is
delivering and the successful share placing
in 2023 demonstrates the confidence and
support of the investment community in
Strategic Report
Governance
Financial Statements
Additional
Purpose, Strategy and Values
Our purpose is inspiring
talent to deliver excellence
in our chosen markets
Our strategy is to pursue organic growth by focusing
on our five-core market sectors; Engineering Services,
Technology, Infrastructure, Residential & Hotels and
Facilities Management.
Our core values drive
our culture
We believe we can
make a difference
• Recruiting people with diverse
perspectives, who are passionate
about what they do
• Delivering projects of exceptional
quality
• Pursuing our strategy to reach net
zero carbon emissions by 2026
• Adding value to the communities
where we work by procuring locally,
providing job and training
opportunities, and supporting
local charities
• Being guided by our Core Values in
everything we do
• Pursuing our target of having women
taking 25% of our apprenticeships and
training positions by 2028
Our strategic priorities
The following priorities are essential to
achieving our purpose and strategy:
Increase our quality of earnings
Through project selectivity, operational
efficiency and investment
Maintain a strong balance sheet and
significant levels of available funds
at all times
The customer comes first
Secure long-term workstreams
Through customer and partner relationships,
generating repeat business
Being a responsible business
• Protecting people
• Developing people
• Improving the environment
• Working together with our supply chain
• Enhancing communities
Talented people are key to our success
We must adopt new technology and
drive change
Consistent achievement is key to
our future
Excel in project delivery for our
customers
02
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Chief Executive’s Report
An effective model and a fresh target
for growth
In March 2021, we began a journey to
double our revenues. As we approach and
pass this goal, the Company will continue
to deliver organic growth, delivered with
our consistent commitment to strong
engineering with good values - and achieved
without the costs or risks of acquisition.
We are able to increase our growth target
significantly only because we can rely on
the steadfast support we receive from our
partners, customers, shareholders, and most
importantly, our dedicated TClarke team,
even amidst ongoing market challenges. I
extend my heartfelt thanks to each of you
for your invaluable contribution to our
ongoing achievements.
This business model outputs
sustainable growth
The challenges of inflation and supply that
persisted throughout the year appear likely
to persist further due to conflicts around
the world. These factors continue to affect
our markets, yet our robust business model
and risk management practices enable us
to mitigate risks, minimise disruptions, and
capitalise on opportunities to keep on track
with growth.
Once again in 2023, this business has
succeeded in winning high-quality work,
delivering it to our clients’ satisfaction, and
building our resource of people, skills, and
capabilities to enable further headroom
for growth.
Organic growth of this kind is sustainable.
It allows us to broaden our client base,
diversifying our risks and increasing both the
scope and scale of opportunities available
to us. This growth increases our resilience,
while also increasing the value delivered to
our stakeholders.
Together we operate a consistent and
straightforward strategy
We operate in competitive, commercially
driven markets, delivering complex
engineering services. But our strategy is
simple, fully understood by our people, and
executed with precision across our business.
We maintain a disciplined and selective
approach to tendering. We do not tender for
projects where the margin is unacceptable.
We focus on workstream opportunities within
five market sectors which we understand
well, where our brand is known, where
opportunities for growth exists and where we
have market-leading expertise and skills.
We build and invest in our resource to
maximise operational flexibility, adopting
and pioneering new services like MMC
(Modern Methods of Construction) which
significantly expand our resource
capabilities. We also balance and flex our
growth across and between these sectors
to take advantage of market
opportunities and cycles and manage our
risks effectively.
This approach has been followed
consistently and fine-tuned, year by year.
Our investments in systems, processes and
skills have been focused on improving our
ability to deliver this strategy.
Our goal in each of our five core markets is
to be ‘contractor of choice’ in the
marketplace, recognised for the quality and
value of our work.
Every team in the business understands the
strategy and what it requires from us. I am
very proud of the performance levels which
our people have achieved throughout the
year. We can always do better - but their
focus has been excellent and should be
recognised.
Delivering record revenues
2023’s record revenues of £491m are
headlined by our performance in the
Engineering Services market sector, but
fully supported by strong revenues across
all markets.
Large projects outside London achieved
notable growth from £37m in 2022 to £88m
in 2023. This reflected a step change across
our regional operations - for example,
during the year we were able to report the
doubling of the average Engineering
Services tender size in Scotland and a total
of 19 projects of £5m + being delivered
across our regions.
Delivering record forward orders
Our success in 2023 can be measured in
the exceptional growth in our forward order
book. In competitive markets, clients have
actively sought to lock in TClarke teams to
deliver their projects. Our order book has
grown 70% in the last year, from £555m
in 2022 to £943m in 2023. This delivers a
major strategic advantage - allowing us to
manage efficiently, invest for value and
select future projects from a position of
greater strength.
Although 2023’s order book growth has
been led by Technologies, which has more
than trebled from 2022, that should not
mask the exceptional growth enjoyed in
Engineering Services and Infrastructure.
The Infrastructure order book has grown
47% compared to last year to £178m -
reflecting both our long-term play in the
healthcare sector and pleasing growth in
other sectors including defence.
Engineering Services orders are up 39% -
reflecting both our ongoing strength in major
London markets and our growing presence
and relationships across the country.
The order book growth for Technologies
of 223% is in large part due to our
growing reputation and leadership in the
data centres market. Appetite and demand
for TClarke teams and services, matched
by our expanding resource base and skills,
make this a strong area for our business.
As the data centre industry approaches an
03
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Chief Executive’s Report continued
‘iPhone moment’, with the adoption of AI
accelerating demand and need for data
centre services, we see substantial
opportunities in the years ahead.
80% Data Centre
capacity forecast
to be AI over
next 15yrs
80%
Delivering the same unique brand
experience
We are now entering our 135th
Anniversary year.
as a significant commercial asset alongside
our financial strength - allowing people to
place their trust in TClarke.
I am very pleased to report that in 2023 our
ability to retain clients remains central to our
success. During the year, 92% of projects
have been with repeat clients and/or
principal contractors. At the same time,
particularly in the field of data centres, we
are also building a broad new portfolio of
long-term partners, operating frequently as
the General Contractor (GC) in these
projects, where the building services
dominate.
The continued strength of our business is
due in no small part to the long-term
relationships we enjoy - with major
developers in London, housebuilders in
Scotland and the NHS and defence sectors
nationwide to name just a few. Our retention
rate and the depth and length of
relationships we build with our clients and
supply chain is testament to the strong
culture at all levels within our business.
In 1889, it was TClarke’s ‘wires encased
in fire-proof materials’ that enabled
electrification for Royal Palaces including
Windsor Castle and St James’ Palace. Modern
Methods of Construction (MMC), Smart
Buildings and Alternative Energy Solutions
are just three of the technologies where our
leadership is enabling progress today.
Our brand reputation has been built one
project at a time during this year, just as it
has every year since 1889. Today it operates
Everything starts with our Resource
Culture depends on people. Once again,
this year we have invested in excess of £6m
in our apprentices across the UK and had
247 apprentices within the business
(compared with 210 in 2022). Moreover,
in 2023 we also reported a record 900
applications for our apprenticeships. This
substantial commitment and interest creates
a pipeline of future talent, designed to
deliver both skilled operatives and future
04
TClarke Annual Report and Financial Statements 2023
leaders in the volume and quality we require
to meet our needs for growth. It also means
that TClarke has deep roots in our local
communities.
Offsite manufacture allows us to prefabricate
major components of a building’s
engineering services in safe, factory
conditions - and vastly improve efficiency
and onsite logistics and environmental
performance. During 2023 our two
prefabrication facilities in Stansted, Essex
and Coatbridge, Central Scotland
completed a number of successful projects
for our clients. Our confidence in resetting
growth targets is only possible because of
this exceptional resource of people, skills
and facilities in-house. We keep investing
and innovating to create further headroom
for growth. Our competitors, whose models
are overly dependent upon the use of
sub-contractors, cannot achieve this level
of confidence.
Our people build and retain Engineering
Expertise
In 2023 our Bankside Yards project delivered a
new industry benchmark for integrated offsite
manufacture, helping achieve the UK’s first
fossil-fuel free major mixed-use
development. This was one of several major
London Engineering Services projects in
2023 where TClarke teams advanced the
industry standard - in everything from smart
buildings to upgraded energy performance.
During 2023, TClarke London was also highly
successful in quietly delivering some extremely
complex major projects - including our largest
Engineering Services project ever. These
performance highlights in London were
fully matched nationwide by the delivery of
high profile, complex projects ranging from
laboratory suites at Sawston Unity Campus in
Cambridge, to numerous scanning facilities for
hospitals across Britain to The Bristol Beacon -
the year’s largest arts project outside London.
Within the world of data centre engineering,
TClarke progressed at pace in 2023, not only
delivering £100m of revenue but securing a
pipeline of £346m. These project wins are far
more than figures in a financial report - they
directly reflect the fact that we have made
ourselves acknowledged leaders in the
engineering of data centres. Our engineering
expertise - in particular the scale and number
of high-quality in-house teams we can
offer - has been the single most important
factor in driving the growth of our data
centre business.
Overall, our depth of engineering
experience and talent, our passion and pride
to complete projects successfully for our
partners and track record of complex
landmark projects is one that no other team
in the market can match. Crucially, due to our
commitment to in-house careers, our
engineering expertise stays within our
business and builds over time. This body
of knowledge has grown yet again in 2023,
allowing us to hand pick the right team for our
clients’ project needs - from our own people.
Strategic Report
Governance
Financial Statements
Additional
Chief Executive’s Report continued
A Responsible and progressive business
As well as being a high-quality engineering
services business, TClarke has played a
progressive role in society throughout 2023,
in directly tangible ways that impact our
local communities.
Our nationwide apprenticeship scheme sets
the industry Gold Standard for quality -
measured by its scale within our business and
our consistently high percentages of
successful completions. We need it because
of our longstanding belief in high quality
in-house careers, career development and
employment for our people. During 2023 our
directly employed workforce increased by 9%.
Our number of training days also increased
by 62%. The significant investments we make
every year in local people are at the heart of
our difference and the substantial social value
which TClarke delivers to our communities.
We work hard to offer our teams the best
environments to collaborate, share knowl-
edge, work safely and build careers. We are
also proud to support many local community
projects, charities and sporting teams for boys
and girls of all ages nationwide.
At the start of 2023, we launched 25 by 28 -
our five-year plan to fill 25% of our
apprenticeship and training positions with
women by 2028. During our 2023
apprenticeship intake we took our first small
steps to make that a reality. Over the next
five years we will continue to work at what is
a deliberately ambitious target.
We have set the bar at this level because
a fully diverse workforce, fit for the future,
accessing the greatest range of talent, is a
prize we want to win.
By collaborating with partners across our
industry and taking the lead on such a
major issue, we also recognise that what
we achieve here will create far wider value
and our successes will help reset everyone’s
standards and expectations.
have continued strong prospects, fueled by
the emergence of AI, driving ongoing growth
in data centre markets. At the same time,
the advance towards Net Zero is driving the
adoption of new alternative energy and smart
buildings technologies, transforming needs
across our Engineering Services markets. Our
continued leadership in London engineering
services and our growth in infrastructure and
large regional projects adds further
confidence.
That fact is not determined by our board
but by the customers who choose and the
TClarke teams who deliver. It is a matter
of great pride that we have been able to
immediately revise our target upward. There
is great optimism in our business - based on
the ongoing potential for organic growth we
see in the immediate years ahead.
Most importantly of all, TClarke is
committed first and last to the safety and
wellbeing of all our people and those with
whom we work. During 2023 these
commitments were expressed in a
wide-ranging series of safety events,
training, services and metrics for our staff to
improve safety performance in every way we
can. The increase in usage of our You Say
You See reporting tool of 45% has been one
of many highlights achieved during the year.
Outlook
The strength of our £943m forward order
book is matched by a robust pipeline of
current opportunities and a strong balance
sheet with net assets of £53.4m. We have
clarity in our strategy, balance across our
sectors and a depth of available resource
and capabilities across our business for
further growth.
These strengths have allowed the board to
approve our next medium term growth target
of £650m. Within that medium term outlook,
we see that our Technologies businesses
While we expect and plan for challenges
on every scale, we are looking forward to
continued growth for all our stakeholders,
achieving optimum revenues and margins.
We are also focused on doing things the
right way - the TClarke Way.
Mark Lawrence
Group Chief Executive Officer
26th March 2024
5YEARS
Our brand has been around for one hundred
and thirty-five years; right now, our leadership
in critical new engineering services
technologies is more assured than ever.
05
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Business Model
Our strategic advantages give us market leadership. Our service mix allows us to deliver value at each
stage of the project. Our delivery is underpinned by our core values, known as The TClarke Way.
Our strategic advantages
Our People
• We directly employ professional engineering staff
Market Opportunities
• The UK Government has published a pipeline of
Integrated Services and Technology
• We offer a broad range of engineering services.
Nationwide Coverage
• We cover the whole of the UK with 19 offices.
and operatives and run industry leading
apprenticeship and future leader schemes to
sustain our talent pipeline.
£650bn infrastructure projects focusing on
schools, hospitals, power networks, roads and
railways. TClarke has a strong market presence
in a number of these market sectors.
• Net Zero - We offer a wide range of energy
efficient smart building solutions.
• Data Centres – significant number of data centres
are being built in the UK and Europe over the
next five years.
What we do
We are a high-technology business and leaders in
the delivery of complex installations utilising Modern
Methods of Construction (MMC) that deploy
prefabrication, pre-assembly, design standardisation
and the use digital technologies.
Reputation
• Our performance maintains our brand reputation
for total reliability, safety, delivery and quality.
Attractive Market
Positions
Sustainability
Performance
Excellence
Client
Relationships
Design and
Engineering
Capability
Project
Management
The value we create for our stakeholders
Shareholders
• Shareholder returns – we aim to generate
long-term sustainable shareholder returns
through the execution of our strategy.
• Dividend – we have a progressive dividend
policy increasing dividends by 34% over the
last five years.
Clients
• We aim to deliver projects safely on time and to
budget using our workforce, design and project
management skills. We adopt a collaborative
and open approach to work which maximises
value, efficiency and productivity.
• ESG activities support our customers on their
path to achieving net zero emissions.
Our People
• Industry leading career paths and project work to take
pride in. Currently 46 participants in Future Leaders
Programme and 247 apprentices in training.
Supply Chain Partners
• We work to build strong, collaborative relationships
with our suppliers including co-operative design and
development activities.
• We support our suppliers to meet high standards of
compliance expected by us and our customers.
Environmental
• Support our customers through implementing
energy efficient smart building solutions.
• Building of solar farms and installation of heat
pumps for customers.
• Type 1 and type 2 emissions per £1m of
turnover have dropped to 4.4 tco²e/£m.
06
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Key Performance indicators
Delivering our strategic priorities
Strategic priorities
Key performance
indicators
Performance
Medium-term
targets
Performance
commentary
Priorities going
forward
£491m
£426m
£327m
£100m
£129m
£39m
£46m
£47m
£31m
£88m*
£37m
£31m
£4m
£7m
£4m
£943m
£555m
£534m
Grow the
business
Deliver £500m annual
revenues by end 2023
Deliver growth
through expanding:
Data Centres
Healthcare projects
Large projects outside
London
Smart buildings
Workload secured
Secure sufficient
workload to
support growth
strategy
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
* includes £49m Healthcare and Data Centres
07
TClarke Annual Report and Financial Statements 2023
£500m annual revenues
now reset to be £650m
£200m additional revenue
in total from 2021 levels
for these four markets
£491m annual revenues
achieved for the first
time in 2023. Particularly
strong growth in Data
Centres, Healthcare, and
large projects outside of
London when compared
with 2021 levels.
Data Centre revenue
fell as expected as next
batch are starting in 2024
TClarke to remain on
a growth strategy with
short and medium-term
growth being delivered
by the London
operational team.
2024 revenue target
£600m; 2025 revenue
target £650m. Data
Centre orders have
trebled to £346m
Order book to be
maintained at £100m
or more in excess of
annual turnover
Order book has doubled
in the year and supports
the medium-term
growth plan. Data Centre
orders have trebled to
£346m
Replenish the order
book
Strategic Report
Governance
Financial Statements
Additional
Key Performance indicators continued
Strategic priorities
Key performance
indicators
Performance
Medium-term
targets
Performance
commentary
Priorities going
forward
Achieve quality
of earnings
Deliver a 3% operating
margin
Maintain and
grow financial
strength
Year-end net cash
Average month-end
net cash
Total net assets
Dividends paid each
year
Lost time incident rate
(see page 18 for definition)
‘You See, You Say’
reports
Provide a
dependable
dividend to
shareholders
Protecting
people
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
08
TClarke Annual Report and Financial Statements 2023
1.9%
2.7%
2.7%
£19.3m
£7.5m
£5.3m
£-0.6m
£2.6m
£-2.9m
£53.4m
£38.7m
£26.5m
5.90p
5.35p
4.85p
0.33
0.32
0.31
10,730
7,382
6,632
3% operating margin
Margin reduced due to
inflation pressures and
replacing supply chain
on a major project
Increase London
turnover so as to
enhance margin through
economies of scale
Maintain £15m net cash
Year-end target achieved
Average month-end
cash to be positive
Reflects working capital
requirement of large
projects
Ensure always have
sufficient working capital
to support rapidly
growing business
Remain within our
bank facilities
Grow net assets by
£5 - £10m per year
Target achieved
Maintain growth
Maintain or increase
dividends each year
In line with strategy
Progressive dividend
policy
Lost time incident rate
to be 0.3 to 0.35
Target achieved
Target achieved
‘’You See, You Say’
reports increasing each
year as we see this as
key to accident
prevention
Reduce number of
accidents when no work
task being undertaken.
Currently accounts for
one third of accidents
Strategic Report
Governance
Financial Statements
Additional
Key Performance indicators continued
Strategic priorities
Key performance
indicators
Performance
Medium-term
targets
Performance
commentary
Priorities going
forward
Developing
people
Number of apprentices
Number of training
days
Increasing % of women
in apprenticeships and
training
Improving the
environment
Reduction in scope 1
and scope 2 emissions
Reduction in carbon
intensity
Working with a
supply chain
Average supplier
payment days
Enhancing
Communities
Directly employ
people locally
Provide local
apprenticeships
23
22
21
23
22
21
23
22
23
22
21
23
22
21
23
22
21
23
22
21
23
22
21
09
TClarke Annual Report and Financial Statements 2023
Maintain Gold Standard
Apprenticeship Scheme
attracting large number
of applicants
18% of workforce
apprentices
Aim to increase % of
women apprentices over
5 years to 25%
5 year target of 25%
Several school visits
undertaken aiming to
increase proportion of
women entering industry
Carbon neutral by
end 2026
Driven by van usage.
Behind plan in
converting to electric
Incorporate Scope 3
emissions into carbon
reduction plan
Carbon neutral by
end 2026
All offices now on
renewable energy
Decarbonisation of fleet
currently not practicable
Pay all suppliers within
terms. Current terms
normally 60 days
Target achieved
Achieve medium-term
target
15% of workforce
2023 18%
15% of workforce
247
210
195
34,391
21,206
19,645
6%
2%
2,176 tco ²e
2,062 tco ²e
1,892 tco ²e
4.4 tco²e/£m
4.8 tco²e/£m
5.8 tco²e/£m
54 days
58 days
60 days
1,412
1,294
1,236
247
210
195
Strategic Report
Governance
Financial Statements
Additional
Market Sectors
Our order book has increased rapidly, particularly in
technologies and now totals £943m (2022: £555m)
Engineering
Services
Technologies
Infrastructure
Residential
& Hotels
Facilities
Management
£313m
Forward order book
2022: £225m
£359m
Forward order book
2022: £111m
£178m
Forward order book
2022: £121m
£ 66m
Forward order book
2022: £73m
£27m
Forward order book
2022: £25m
No. of 2023 Projects in
Order Book
Projects
No. of 2023 Projects in
Order Book
Projects
No. of 2023 Projects in
Order Book
Projects
No. of 2023 Projects in
Order Book
Projects
2023
Revenue Book
Order
Commercial
Offices
Leisure
Retail
Other
62
11
8
20
39
5
1
16
Manufacturing
and
Prefabrication
Data Centres
Smart
Buildings
Other
6
13
28
10
3
12
12
13
Defence
Education
Healthcare
Prisons
Other
Government
11
90
74
9
7
9
61
52
7
5
Hotels
New Build
4
129
Refurbishment
7
5
60
4
Long Term
Frameworks
Planned and
Reactive
Maintenance
£9m
£4m
£28m £23m
Totals
101
61
Totals
57
40
Totals
191
134
Totals
140
69
Totals
£37m
£27m
10
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Group Financial Review
Key Highlights
Progress against strategic objectives:
Strategic Objective:
Deliver £500m revenue by end 2023
Grow organically
Progress
• 2023 Revenue: £491m
• Increase of £65m
• Order book £943m
• Technology orders £359m
• Major project wins across the UK
Sustain a 3% operating margin
• 2023: 1.9% margin achieved
• Order book replenished and increased
• Technology now 38% of Order book
• 92% of turnover from repeat clients
We have seen revenue growth across all
of our market sectors in 2023, with the
exception of Technologies, where the
phasing of our data centre work has seen
a number of large projects complete
during the year, with the next batch of large
projects featuring heavily in our secured
work for 2024.
Maintain premium position in core markets
The Group has continued to grow strongly
recording revenues of £491m (2022 £426m).
2023 marks the end of the 3 year growth plan
to grow revenues organically from £300m pa
to £500m pa. This plan has substantially been
achieved. In addition through the
opportunities and orders TClarke has
generated we are confident that our growth
will continue throughout the next period.
Our order book has grown to £943m (2022
£555m) as shown below:
Market
Sector
Engineering
Technologies
Infrastructure
Residential
FM
Grand Total
2023 Forward
Order Book
£m
2022 Forward
Order Book
£m
313
359
178
66
27
943
225
111
121
73
25
555
11
TClarke Annual Report and Financial Statements 2023
Summary of Financial Performance
Revenue
Operating profit
Net finance costs
Profit before tax
Taxation
Profit after tax
Earnings per share - basic
Dividend per share
Net assets
2023 £m
491.0
2022 £m
426.0
9.4
(1.8)
7.6
(1.1)
6.5
13.75p
5.90p
53.4
11.5
(1.2)
10.3
(1.9)
8.4
19.60p
5.35p
38.7
Dividend per share represents the interim and final dividend proposed or paid for the year in question.
2023 Revenue
by Business Sector
Technologies as
percentage of total revenue
(2020 - 2023)
Engineering Services
Technologies
Infrastructure
Residential and Hotels
Facilities Management
Total
£m
193.5
110.5
101.8
48.1
37.1
491.0
40%
35%
30%
25%
20%
15%
10%
5%
0%
2020
2021
2022
2023
2024*
* 2024 reflects the percentage of secured work for 2024 in
the forward Order Book relating to technologies
Strategic Report
Governance
Financial Statements
Additional
Group Financial Review continued
In line with our strategic objective of
targeting large jobs outside London, 2023
revenue for the year for such jobs (project
size >£5m and based outside the M25) is
now £88.2m (2022: £37m). We have also
seen continued strong performance in our
healthcare and smart buildings offerings.
protect project completion dates. On one
large contract in particular it was necessary
to replace a key part of our supply chain
and re-procure the work across a number
of smaller packages. It is anticipated that
these projects will continue to be delivered
to their project programmes albeit at
reduced margin.
Net finance costs were £1.8m (2022: £1.2m),
comprising: a £0.4m increase in bank interest
and facility fees to £1.0m (2022: £0.6m); the
Group’s defined benefit pension scheme
interest charge of £0.6m (2022: £0.4m) and
an interest charge of £0.3m arising from
leases (2022: £0.2m), offset by £0.1m of
interest received on cash balances.
Large projects
outside London
greater than £5m
The Group took a number of actions during the
year to strengthen its balance sheet, including
the raising of net proceeds of £10.1m by way
of an oversubscribed placing of new ordinary
shares in the Company. The issue price was
122p per share representing a 14% discount to
the closing price of 141.5p on 5 July 2023. The
placing was for 8,749,337 ordinary shares with
a nominal value of 10p. The proceeds provide
additional resources with which to capture and
deliver attractive contract opportunities in the
London business and in doing so drive further
growth and margin expansion. The placing
attracted a number of new institutional
investors and in doing so has broadened our
shareholder base.
The tax charge for the year was £1.1m (2022:
£1.9m). TClarke maintains an open and
collaborative working relationship in all
interactions with HMRC, and there are no
uncertain tax positions at present.
The Group paid its 2022 final dividend in
full in June 2023 and an increased interim
dividend in September 2023 of 1.375p (2022:
1.25p). The Board is proposing a final
dividend of 4.525p (2022: 4.1p). The total
proposed dividend therefore rises to 5.9p
(2022: 5.35p), an increase of 10%. The
dividend is covered two times by earnings.
TClarke recognises that many of its
shareholders invest for dividends.
Operating profit for 2023 was £9.4m (2022:
£11.5m). Earnings per share were 13.75p for
the year (2022: 19.60p) on an operating
margin of 1.9% (2022: 2.7%). This was below
our 3% target, reflecting several strategic
decisions taken by management to preserve
the business’s strong market and financial
position in view of the construction sector’s
turbulent trading conditions. These
decisions have included early settlement of
final contract amounts and the changing of
some supply chain partners mid-contract to
Our growth has not been driven by
acquisitions and this will remain our policy
going forward. TClarke remains financially
secure, ending the year with net cash of
£19.3m (2022: £7.5m) with £30m of bank
facilities at its disposal. Despite the tough
prevailing market conditions and the high
level of insolvencies amongst our supply
chain, competitors, and potential customers,
we are pleased to report that our robust
credit control processes have limited our bad
debt expense for the year to £0.3m (against
total revenue of £491.0m), and in line with
our historical average.
Progressive Dividend Policy
2020-2023 (pence per share)
4.40
4.85
5.35
5.90
2020
2021
2022
2023
12
TClarke Annual Report and Financial Statements 2023
Cash Flow and Funding
Cash balances totaled £29.3m at 31
December 2023 (2022: £22.5m). £10m was
drawn down under the Group’s Revolving
Credit Facility (“RCF”) at 31 December 2023
(2022: £15m), resulting in net cash of £19.3m
at the 2023 balance sheet date, an
improvement of £11.8m on the prior year
(£7.5m).
2023
£m
2022
£m
Change
£m
Cash
Amounts drawn
under RCF
29.3
22.5
(10.0)
(15.0)
6.8
5.0
Net cash
19.3
7.5
11.8
The increase in net cash has been largely
driven by the share placement in July
together with the Group’s operating profit
for the year once allowances have been
made for other cash outflows such as
dividend payments and the Group’s
commitment to the pension deficit reduction
plan. Furthermore, the Group’s continued
focus on strong credit control processes
has ensured that the growth in revenue
has been achieved without any significant
increase in working capital balances.
Strategic Report
Governance
Financial Statements
Additional
Group Financial Review continued
Cash Performance (£m)
(1.0)
(0.5)
(1.3)
0.3
0.2
10.1
(2.9)
19.3
(2.5)
25
20
15
10
5
0
7.5
9.4
31 Dec 2022
Net cash
Operating
profit
Interest paid
Corporation
tax paid
Pension
deficit
reduction
Non-cash
items /
movement
in working
capital
PPE disposal
proceeds
(net of
purchases)
New shares
issued
Repayment
of lease
obligation
Dividends
paid
31 Dec 2023
Net cash
The Group’s banking facilities comprise a
£5.0m overdraft facility and a £25.0m
revolving credit facility (‘RCF’), both with
National Westminster Bank plc, with the level
of usage available dependent on covenant
compliance. The RCF charges commitment
fees at market rates and drawings bear interest
at a margin of 1.9% above SONIA. Interest is
charged on the overdraft at 2.00% above base
rate. The RCF includes financial covenants
in respect of interest cover and net leverage
ratios which are tested quarterly. The RCF is
available until 31 August 2026 and the
overdraft facility is subject to annual review.
The Group was compliant with its
obligations under the RCF and the overdraft
facility throughout the year and the Board’s
detailed projections demonstrate that the
Group will continue to meet its obligations in
the future and is expected to operate well
within its existing facilities throughout the next
three-year period. The Group also has in place
£70.1m of bonding facilities (2022: £65.1m),
of which £37.7m were unutilised at 31st
December 2023 (2022: £34.3m).
Defined Benefit Pension Scheme Obligations
A formal actuarial valuation of the Group’s
defined benefit pension scheme was
conducted at 31st December 2021 showing a
deficit of £19.8m, representing a funding level
of 71%. The pension scheme’s actuary also
looked at the position at 31 December 2022
in view of the worsening macroeconomic
conditions. At that date the funding level
remained at 71% but the deficit was
estimated to be approximately £11m.
Following the valuation, the Group has
committed to a deficit reduction plan to
eliminate the deficit over an 8 year period,
13
TClarke Annual Report and Financial Statements 2023
through additional contributions of £1.3m
per annum.
The deficit on the pension scheme, as meas-
ured on an IAS 19 valuation basis for inclusion
in these financial statements, has now reduced
to £11.8m (2022: £12.9m). The reduction of
£1.1m over the year has been largely driven by
the £1.3m additional contributions made by the
Group as part of the deficit reduction plan.
Net Assets and Capital Structure
The Group is funded by equity capital,
retained reserves and bank facilities, and there
are no plans to change this structure. We have
built on our existing strong balance sheet and
net assets are now £53.4m (2022: £38.7m), an
increase of 38%. The increase largely reflects
the combined impact of the Group’s profit
after tax for the year, the proceeds of the share
placement, dividends paid, and the reduction
in the defined benefit pension deficit.
Increase in net assets (£m)
60
55
50
45
40
35
30
(2.5)
0.6
53.4
(1.8)
(1.1)
10.1
38.7
9.4
31 Dec 2022
Net assets
Operating
profit
Net finance
costs
Tax expense
New shares
issued
Dividends
paid
31 Dec 2023
Net assets
Share based
payment
expense /
property
revaluation
Strategic Report
Governance
Financial Statements
Additional
reviewed as contracts progress where there
are indications that a counterparty may be
experiencing financial difficulty. Procedures
include the use of credit agencies to check the
creditworthiness of existing and new clients
and the use of approved suppliers’ lists and
Group-wide framework agreements with key
suppliers.
Accounting Policies
The Group’s consolidated financial statements
are prepared in accordance with the
requirements of the Companies Act 2006 and
in accordance with UK-adopted international
standards. There have been no new
accounting policies adopted in the year.
Trevor Mitchell
Group Finance Director
26th March 2024
Group Financial Review continued
Goodwill stood at £25.3m at the year-end
(2022: £25.3m). The Board has undertaken an
impairment review in respect of goodwill and
has concluded that no impairment is
necessary.
Net Assets £m
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2019
2020
2021
2022
2023
Financial Risk Management
The Group’s main financial assets are contract
and other trade receivables, and bank
balances. These assets represent the Group’s
main exposure to credit risk, which is the risk
that a counterparty will fail to discharge its
obligations, resulting in financial loss to the
Group. The Group may also be exposed to
financial and reputational risk through the
failure of a subcontractor or supplier.
The financial strength of counterparties is
considered prior to signing contracts and
14
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Section 172 Statement
Making informed decisions for the
benefit of all our stakeholders
The objective of the Board and Group Management Team, when taking strategic,
financial and operational decisions, is to promote the success of the Company for the
benefit of all stakeholders, acting in good faith, in line with their duties under section 172
of the Companies Act 2006. In promoting the success of the Company each Director
must have regard, amongst other matters to:
• The Company’s purpose, values and behaviours on pages 3 and 4.
• A description of key stakeholder groups and how the Company has engaged with
these stakeholders is on the page following and forms the Directors’ statement
required under section 414CZA of the Companies Act 2006.
• The range of activities undertaken across the Group relating to sustainability matters
on pages 23 to 32.
• The proactive and pragmatic approach of the Group toward risk on pages 33 to 36.
• Details of the Company’s governance processes and practice on pages 39 to 43.
• The interests of the Company’s employees;
• The need to foster the Company’s business relationships with suppliers, customers
and others;
• The impact of the Company’s operations on the community and the environment;
• The reputation for high standards of business conduct;
• The need to act fairly between members of the Company; and
• The likely consequences of any decision in the long term.
The Board of Directors have complied with the requirements of section 172.
As a Board we have always taken decisions for the long term, and collectively and individually
our aim is always to uphold the highest standards of conduct. Similarly, we understand that our
business can only grow and prosper over the long term if we understand and respect the views
and needs of our customers, colleagues and the communities in which we operate, as well as
our suppliers, the environment and the shareholders to whom we are accountable.
Through the Board and its Committees, Directors have taken action to promote and
support these objectives across the Group, details of which can be found throughout this
Annual Report and set out here:
Iain McCusker
Chairman
26th March 2024
Stakeholder Group
Why we engage
What we have done in 2023
What matters to this Group
Shareholders and
potential shareholders
• Continued access to capital is important for the long-term
success of our business
• We work to ensure that our shareholders and their
representatives have a good understanding of our business
• Communicate regularly through our website, annual
reports, trading statements and site visits
• Held two webinars, two investor roadshows, 23 investor
meetings related to the share placing
• AGM and GM provided Board opportunity to meet with
shareholders
• Board received quarterly reports on shares bought
and sold
• £10.1m raised via a share placing in July 2024.
• Long term value creation
• Growth opportunity
• Financial stability
• Culture
• Transparency
• Dividend policy
15
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Section 172 Statement continued
Stakeholder Group
Why we engage
What we have done in 2023
What matters to this Group
Our employees
• The Group’s long-term success is predicated on the commitment
of our workforce to the values embodied in The TClarke Way
• We engage with our workforce to ensure that we are fostering
an environment that they are happy to work in and that best
supports their well-being
• The Board received regular reports from the Chief
Executive on progress against key people strategy
initiatives
• The Nomination Committee received and discussed a
comprehensive succession planning document presented
by the Chief Executive
• Additional cost of living support was provided to our
weekly paid operatives
• ‘Tommy’ remained our key communication/training tool
• Health and safety
• Fair employment
• Fair pay and benefits
• Diversity and inclusion
• Training, development and
career opportunities
• Ethics and sustainability
Pension Trustees
Customers
Suppliers and
subcontractors
• Our pensioners continue to feel part of TClarke through
retirement so they feel part of the business that they helped to
develop and grow
• Continued to make agreed deficit reduction payments and
maintained regular meetings with Trustees
• Agreed latest triennial valuation to 31 December 2021
• Safety of pension
• Financial stability
• Engagement
• Our purpose is to design, install, integrate and maintain the full
range of technology-enabled mechanical and electrical services
and the digital infrastructure to create a 21st century building
• We aim to build long-term lasting relationships with principal
contractors and clients and remain the contractor of choice for
landmark projects and developments
• Our supply chain partners are fundamental to the quality of our
product and services and to ensuring we maintain the high
standard of work we set ourselves
• Suppliers and subcontractors must demonstrate that they
operate in accordance with recognised standards that uphold
human rights and safety, prohibit modern slavery and promote
sustainable sourcing
• Maintained good relationships with all customers
consistently meeting customers expectations on project
delivery
• 92% repeat customers
• Total reliability in project delivery
• Quality of product
• Health and safety
• Responsible use of personal data
• Environment
• Ethics and sustainability
• Focused on two priorities:
• Health and Safety inducting into TClarke processes and
providing continuous training
• Prompt payment with agreed terms. Average payment
days improved to 54 from 58 in 2022
• Fair trading and payment terms
• Anti-bribery
• Ethics and modern slavery
• Environment and sustainable sourcing
Banks and Sureties
• To ensure the Group has the banking and bonding facilities it
needs
• Group had regular meetings with our financial partners to
ensure they have confidence in our financial performance
and strategy
• Throughout 2023 we maintained effective cash
management and have been in full compliance with
covenants
• Commitment to generate cash
• Meet our covenant obligations
16
TClarke Annual Report and Financial Statements 2023
For Community and Environment see pages 17 to 28.
Our people are highly engaged in our
commitment to achieving net zero carbon
emissions by 2026.
Using Targets to Drive Performance
We have set clear targets that are regularly
reviewed to ensure they remain sufficiently
challenging and fit for the future. These are
detailed on pages 7 to 9.
Strategic Report
Governance
Financial Statements
Additional
Being A Responsible Business
The TClarke Way
Quality
World-class skills,
experience and
motivation to deliver
high quality work
Value
Market leader in
value engineering:
focused on client and
end-user goals
Safety
We invest to remain
an industry leader:
safety is our number
one priority
The
TClarke
Way
Our values
and how we work
every level
Relationships
A modern, open and
highly proactive
approach, taking
responsibility
to collaborate at
every level
Innovation
Embracing new
technologies and
techniques: expert in
buildability and
integrated thinking
Resource
A market-leading
resource of directly
employed, high-quality
professionals
Our Purpose, Strategy and Values on
page 2 provide the framework for our
responsible business strategy. As a
responsible business it’s about delivering
social value and environmental protection
and improvement that will remain long after
we have completed our work.
Social Value
Social value is about supporting our people,
our supply chain and the communities in
which we work. We create social value by
keeping everyone we come into contact
with safe and well, developing our
employees and subcontractors through
17
TClarke Annual Report and Financial Statements 2023
education and training, building long-term
supplier relationships and enhancing local
communities by providing training and work
opportunities and supporting local
community projects. The promotion of
diversity and inclusion is important to us,
both within our own organisation and
through the creation of opportunities for
people who live locally to our projects,
including young people and those who have
been out of work for a long time.
TClarke is very proud of its apprenticeship
programmes. Currently the Group employs
247 apprentices representing 18% of its to-
tal work force of 1,400 people. We are also
very proud of our direct delivery model that
means projects are delivered by TClarke
employees living in their local community.
TClarke does much to support the local
communities in which the Group works. For
example, TClarke is one of the lead partners
for the Stanhope Foundation which helps
London’s most vulnerable people.
Further information on the Stanhope
Foundation can be found on page 28.
Improving The Environment
We are focused on addressing climate
change, committed to minimising the
impact our business operations have on
the environment. In 2022 TClarke became
a Build UK Business Champion within the
Construction Leadership Council’s
Co2nstruct Zero programme specifically
focusing on fleet management, modern
methods of construction and implementing
carbon measurement. See page 23.
Strategic Report
Governance
Financial Statements
Additional
Being a Responsible Business
Protecting Our People
0.33
Lost time incident rate1
2022: 0.32
1. Number of lost time incidents x
100,000 divided by the number of hours
worked. Lost time incidents are defined
as absence from work for a minimum of
one working day, excluding the day the
incident occurred.
10, 730
You See, You Say! Reports2
2022: 7,382
2. You See, You Say! is our reporting
system of potentially hazardous
situations that encourages
engagement and accident prevention.
Health, Safety and Wellbeing
The health, safety and wellbeing of all our
employees and suppliers is of paramount
importance. TClarke has an ‘absolute’
accident reporting regime which ensures
that each accident, no matter how
apparently small or insignificant, is reported
and included in our statistics. We are proud
of the culture that we have created and
maintained. Our goal is that everyone who
comes into contact with our activities, on or
off site, goes home safe and well.
In 2023, the lost time incident rate in the
Group was very similar to 2022 at 0.33 (2022
0.32). The number of incidents reported
through our absolute reporting system
reduced from 75 in 2022 to 73 in 2023. A third
of these incidents were when no work activity
was being performed.
An awareness campaign has been launched
particularly relating to the hazards of using
mobile phones whilst doing other activities and
ignoring potential trip hazards. The number
of RIDDOR (reporting of injuries, diseases and
dangerous occurrences regulations 2013)
accidents fell to 4 in 2023 (2022: 6) as our hours
worked on site increased by 4%.
Action Taken to Prevent Accidents
You See, You Say!
Our unique ‘You See, You Say! reporting app,
which has been built inhouse, is fundamental
to employee and subcontractor engagement
with potential hazards and corrective action
being reported as it happens.
The greater the number of reports submitted,
the greater the level of engagement of our
people in accident prevention.
Senior Management Site Visits
All senior managers are required to
undertake regular Health & Safety site visits,
which provide an opportunity to engage with
our people to reinforce the importance of
Health and Safety. Results from the visit and
any corrective action required are recorded
via our Health and Safety Tour app and shared
with the teams.
Annual Breakdown
75
2022
23
6
ACCIDENTS
73
LOST TIME INJURIES
23
RIDDOR INJURIES
4
7,382
YOU SEE, YOU SAY REPORTS
2023
10,730
2023
2022
2021
2020
2019
10,730
7,382
6,632
3,304
6,124
18
TClarke Annual Report and Financial Statements 2023
Anti-Bribery and Corruption
TClarke values its reputation for lawful and
ethical behaviour and has zero tolerance of
any form of bribery or inappropriate
inducement to ensure that business can be
conducted in a free and fair market. Our
anti-bribery and corruption policy has been
communicated to all staff and is published on
TOMMY, the TClarke employee hub. Every
individual and organisation that acts on the
Group’s behalf or represents the Group is
responsible for ensuring that this principle is
upheld and the policy is implemented so that
the Group conducts all business in an honest
and professional manner in line with the
Bribery Act 2010.
Modern Slavery
TClarke is committed to compliance with
the Modern Slavery Act 2015, go to
www.tclarke.co.uk/downloads for our
full policy.
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Protecting Our People continued
Safety Culture
We have streamlined our internal process by
moving to a software platform called ‘Safety
Culture’. This has enabled us to accelerate
the time required for our documentation/
inspections whilst ensuring they remain a
robust and comprehensive document. The
software also links directly to other existing
platforms such as SharePoint ensuring that
the documents are always under our
control. It has also allowed us to
significantly reduce our carbon footprint by
reducing and in some cases eliminating the
need for paper.
Health and Wellbeing
TClarke has a Mindful Worker initiative,
supported by a mindful worker campaign.
We are proud to have introduced Mental
Health First Aid training sessions across the
Group and currently have 17 qualified Mental
Health First Aiders.
Elvin Box, an international speaker and
facilitator, was invited by TClarke to give an
inspirational talk about prostate cancer,
testicular cancer, and men’s mental health.
Elvin toured our site offices, raising awareness
among both male and female personnel.
Twenty-three talks were delivered. Elvin is the
chairman of London Constructing Excellence,
where he has been active from its start.
Elvin also serves as a Community
Ambassador for the Movember Foundation,
which raises awareness and finances for men’s
health issues worldwide.
Mental Health awareness has been further
enhanced by activities around Mental Health
Awareness Day and toolbox talks and
information cards and newsletters provided
to all employees. In addition, we proactively
encourage activities such as promoting
lunchtime walks, participating in sports
competitions. We also participate in national
health campaigns such as prostate and breast
cancer awareness.
19
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Being a Responsible Business
Developing Our People
34, 391
Training days completed in 2023
2022: 21,206
247
Number of apprentices in 2023
2022: 210
46
Future Leaders enrolled on our
training programme
2022: 43
5
Former apprentices on Group
Management Board
2022: 5
20
TClarke Annual Report and Financial Statements 2023
Positive culture, local employment and
one of the industry’s premier training
schemes producing a pipeline of world
class engineers.
Our apprenticeship scheme drives our
talent pipeline - it’s business critical and
must deliver, regardless of systemic skills
shortages.
TClarke aims to provide an inclusive work
environment where everyone has access to
the knowledge, technology and services
they need to achieve their personal
ambitions whilst delivering the best
possible outcomes for our customers.
We invest fully in a complete apprenticeship
programme with dedicated skills training
facilities across the UK from our 19 offices.
Our apprenticeship scheme exceeds internal
targets for quality intake, output of
successful completions and career progress.
TClarke recognises that as a specialist
engineering business, we can play our role
by rooting ourselves in local
communities and providing high-quality,
long-term career paths and opportunities
for people. Equally we can promote and
deliver the highest possible standards of
health, safety, wellbeing and respect for
people – our own employees and those
with whom we work.
Our Apprentice of the Year competition is
fundamental to our culture and rewards all
finalists with automatic enrolment on our
Future Leaders programme.
Industry targets a gold standard of 5% of
apprenticeships; TClarke has consistently
achieved 16%. Overall, TClarke
apprenticeship completion rates achieved
are 95-98% year on year.
TClarke apprentices win major regional
and national apprenticeship awards in our
industry and beyond, every year, decade by
decade and is regarded as one of the very
best in UK Engineering.
Our apprenticeships, advanced Future
Leaders training programme and our
health, safety and wellbeing programmes
are by accepted metrics, absolute industry
leaders and deliver far beyond the
benchmark norms.
High-quality apprenticeships have been
central to our culture since the 1900s. Today,
two of our three Executive Board members
were TClarke apprentices, as were three of
the other six members of the Group
Management Board.
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Developing Our People continued
CONSTRUCTION
YOUTH TRUST
Prince’s Trust
Our frontline engineering operatives and
site teams, of which an overwhelming
majority will have been TClarke apprentices
themselves, take real pride in bringing the
next generation through ‘The TClarke Way’.
Our apprenticeships lead to permanent
long-term employment and the opportunity
to work on some of the most iconic
buildings in the country.
We are active in seeking to increase
diversity and inclusion across our business
and we will continue to expand outreach
across communities nationwide. This
includes an active role in encouraging more
women in construction.
TClarke Academy
TClarke operates a Career Pathway and
Training Academy designed to provide
employees with a clear career pathway with
training and opportunities for personal and
professional growth to achieve their goals.
We have successfully rolled out an
eLearning platform to ensure all staff are
trained in TClarke’s procedures and kept up
to date with new systems and technologies.
Future Leaders
The Future Leaders Programme identifies
strong leadership candidates at various
stages of their careers within our
business and provides them with continuous
additional professional training, networking,
and personal development.
We currently have 46 employees enrolled
on the Future Leaders Programme.
All Future Leaders gain opportunities for
growth and career progression, and many
have moved into management positions
across the TClarke Group, some are currently
project managing some of the biggest
projects TClarke has in London.
Diversity and Inclusion
We cultivate an inclusive work environment
where everyone has access to the relevant
knowledge, technology and services they
need to achieve their personal ambitions
and drive the business forward. We want
to encourage greater diversity within our
sector and ensure that no discrimination
occurs, however unintentional it may be.
TClarke recognises the need to actively foster
and create an environment where everyone
is respected and fully empowered to be their
best. As an organisation which relies heavily
on the qualities its people display daily when
working in collaboration with our partners,
this idea has strong practical value and
application and is embedded within our
working culture.
We are a traditional industry with a
long-standing skills shortage. In order for
us to address this, we have to be able
to attract a much more diverse range of
talented people to come and work for us -
which means we need a better
understanding of diversity and inclusion,
what it means to us as a business and how
it can help us to become better.
Women in Construction
In 2023 TClarke launched an initiative to
attract more women into our industry,
aiming for 25% of our apprentices to be
women within 5 years.
We have called it 25 by 28 because we
want to express both urgency and the
clarity of our vision. Within the next five
years, we fully intend to do everything it
take to achieve this goal - and that means
working within our business, with
industry patterns and out in society, talking
to female students in schools, colleges
and across media platforms.
Our objective is to increase the proportion
of female employees.
To support this measure, we will utilise
industry relationships such as JTL
(Apprentice Training Body) as well as
industry initiatives which will include
participation in visits to schools and
colleges as part of STEM Ambassador role
and where possible encouraging existing
apprentices to participate.
In order to achieve the target a
programme/plan of school and college visits
has been put on place and is updated
continuously. 15 schools were visited in
2023. In addition, in collaboration with
Construction Youth Trust (CYT), interactive
models have been formed for use on
careers demonstration days which have
been held at Stanhope and in the TClarke
London office.
21
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Developing Our People continued
We aim for fairness, respect, equality,
diversity, inclusion and engagement in the
workplace, and we commend the
dedication of businesses, individuals and
teams that continue to make a significant
contribution to improving the culture and
practices of our organisation.
Gender Pay
Gender is just one aspect of diversity, we
remain steadfast in our commitment to
create a diverse, inclusive culture, one which
supports and encourages everyone to give
their best, and bring their whole selves to work.
The tables below show the percentage by
which women’s average hourly pay and
bonus pay is lower compared to men.
In the construction sector, there is a
long-standing lack of women in the
industry. For those women who are
employed in the industry they are usually in
non-delivery or non-client facing roles and
often in more junior positions. This means
that across construction a significant pay
and bonus gap exists between men and
women. The small proportion of women
employed means that the measures above,
particularly the bonus measure, can be
volatile from one year to the next.
In 2023 TClarke announced an initiative to
significantly increase the number of new
female apprentices and trainees. See page
21 for further details.
Human Rights
Whilst TClarke does not have a separate
human rights policy, a respect for human
rights is implicit in all our employment
policies, corporate values and policies on
data protection, privacy, modern slavery,
anti-bribery and corruption.
Disability
We are committed to an open and inclusive
culture, including the fair treatment of
disabled people. We give full and fair
consideration to job applications made by
disabled people. Our procedures include
making reasonable adjustments to roles
and responsibilities and providing training
and support to ensure they have the same
opportunities for career development and
promotion as other employees.
Our Pensioners
Our pensioners like to keep abreast of
developments in TClarke. We produce a
yearly newsletter to keep our pensioners
informed of any matters of interest
concerning their pension in addition to
news stories on our website.
Board
Senior management
(Group Management Team) 1
Group Management Team direct reports
Apprentices
All employees
2023
Men Women
2022
Men Women
6
6
49
231
1
0
19
16
6
6
1
0
40
15
205
5
Hourly pay
2023
31%
31%
2022
34%
30%
Mean pay differential (average)
Median pay differential (mid-point)
1,273 139
1,176 118
Bonus pay
Number of UK employees at 31 December
on which data is based
1,412
1,294
2023
100%
2022
88%
100%
71%
excludes executive directors 1
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Being a Responsible Business
Improving the Environment
2,176
tCO2e
Scope 1 and scope 2 emissions
2022: 2,062
4.4
tCO2e
Emissions per £1m revenue
2022: 4.8
in adopting new technology and working
practices for resource management. The
TClarke collaborative approach will be for
all disciplines to operate as an integrated
part of the overall project team, in a
partnering environment, and carry this
philosophy through the design stages
and the delivery phase. This will deliver a
healthier and more sustainable
environment, as well as associated cost
efficiencies, to the benefit of our people,
customers, and the communities in which
we operate.
Our Net Zero Carbon Roadmap is our first
step in identifying key steps forward in our
carbon reduction journey. The sector is
responsible for around 43% of UK
emissions, and 36% globally. Without our
collective engagement and participation,
we will not meet the UK’s Net Zero
targets. For our sector, there are three key
over-arching areas: Transport, Buildings
and Construction Activity. Based on these
areas, the Construction Leadership Council
(“CLC”) has determined nine priorities to
focus our efforts both as an industry and
as individual businesses to maximise the
impact we can make.
TClarke is acting to combat climate
change by working towards Scope 1 and
Scope 2 net zero carbon emissions by 2026
and reducing the level of carbon in the
projects and buildings we deliver.
We consider Scope 3 to include all
embodied carbon in our supply chain
products; this is a mammoth challenge for
our industry in terms of quantification.
By way of illustration a recent tender
contained 800,000 products. We intend to
incorporate scope 3 into our carbon
reduction plan in 2024.
In 2023 we moved our Group electricity
contracts such that TClarke’s offices are
now supplied by 100% renewable energy.
In key areas of environmental sustainability,
the nature of our work as specialist
engineers means that our strongest impacts
can be generally achieved by collaborating
with progressive clients and principal
contractors nationwide upon whose
programmes we work. By doing so, our
teams not only adhere to and help deliver
benchmark standards for sustainable
performance; we also support the
achievement of ground-breaking
sustainability targets and the highest
standards of environmental performance.
We are committed to leading our industry
in the efficient consumption and
preservation of critical resources. Through
creative design and implementation,
programmatic inclusion of renewable
resources, and operational excellence,
we have and will continue to take strides
23
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Improving the Environment continued
Our Roadmap to Net Zero Carbon
Emissions Based on Science
As part of our commitment to sustainable
development, TClarke successfully maintain
an Environmental Management System to
BS EN ISO 14001:2015 to provide its
clients and other stakeholders with
verifiable evidence that environmental
performance is integral to business
management.
Net Zero Carbon Roadmap
to 2026
In December 2020 we committed to
achieving net zero emissions for Scope 1
and Scope 2 across our business
operations by 2030.
TClarke, in partnership with businesses within
our sector have decided to incorporate
Scope 3 into our carbon reduction strategy.
TClarke aims to be carbon neutral for Scope
1 and Scope 2 now by 2026 and then push
the boundaries and expedite the process
to hit relevant criteria and achieve net zero
status by 2030.
2,309*
tonnes CO2e
Scope 2
Emissions
Definitions:
1. Scope 1 emissions: Combustion
of fuel and operation of facilities.
2. Scope 2 emissions: Electricity
purchased from the national grid.
3. tCO2e: Tonnes carbon
dioxide equivalent.
Electrification
of fleet
and plant
Scope 1
Emissions
Reduce
energy
intensity
Increase
renewable
energy supply
Scope 2 Emissions
Scope 1 Emissions
*2019 starting point
DECARBONISATION ACTIONS
24
TClarke Annual Report and Financial Statements 2023
Offset residual
emissions
to net zero
tonnes CO2e
0
Key Actions to Achieve Net Zero Emissions
2023 Energy energy intensity fell by 8%
from 2022 levels.
Electrification of Fleet and Plant
By far our biggest contribution to Scope
1 and Scope 2 emissions is our van fleet.
TClarke currently has approximately 250
vans, 19 of which are fully electric. These
electric vans have proved problematic in
terms of range when loaded and/or in cold
temperatures. It is unlikely that numbers of
electric vans will increase significantly until
there is a step change in range.
Ford Motor Company have now brought
out a hybrid transit which could be an
option with electric ranges improved.
TClarke will examine the viability of these
vehicles during the front half of 2024.
TClarke also has approximately 100
company cars 70% of which are electric or
low emissions. All new cars must be
electric or low emission.
Increase Renewable Energy Supply
All offices now 100% renewable energy.
Offset Residual Emissions to Net Zero
By 2026 any emissions from our business
operations will be offset through Gold
Standard programmes.
Scope
3
Scope 3
By 2024 TClarke will have incorporated
Scope 3 into this action plan.
TClarke are part of the Construction
Leadership Council’s campaign to help
drive carbon out of the industry focusing
our efforts and are a ‘Business Champion’
focusing on the priorities below:
Reduce Energy Intensity
By 2024 TClarke will utilise their smart
buildings knowledge to understand its
energy usage within all aspects of the
business and where possible, gather data
and review this to enable suitable
suggestions to be made on how energy
intensity can be reduced.
Fleet Management - Accelerating the
shift of the construction workforce to zero
emission vehicles and onsite plant. Our
Stansted Manufacturing Facility is now
using fully electric vans and has installed 11
electric charging points that are individually
fob-operated and allow team members to
charge their vehicles while at work.
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Improving the Environment continued
Modern Methods of Construction (MMC)
- Maximising use of MMC and improved
onsite logistics, reducing waste and transport
to sites. TClarke’s Advanced Manufacturing
Facility in Stansted is one of the largest
dedicated MMC facilities in the UK, with the
latest development and investments at the
facility improving the organisation’s carbon
footprint and digital capabilities. MMC is a
core function at TClarke. We employ a MMC
approach to every build which utilises offsite
manufacture and lean manufacturing. We will
encourage our clients, partners and suppliers
to embrace low carbon solutions and
investigate value engineering and innovative
solutions at every opportunity.
Greenhouse Gas Emissions (CO2e)
Energy consumption was measured across
the Group by recording data on the
combustion of fuel and the use of electricity
within our offices and premises, and we have
collated Scope 1 and Scope 2 emissions data
for the year ended 31st December 2023.
Our total energy consumption used to
calculate our 2023 UK emissions was 794,379
kwh (2022: 781,829 kwh).
Greenhouse Gas Emissions 2023 2022
Scope 1 emissions (tCO2e) 2,023 1,911
Scope 2 emissions (tCO2e) 153
151
Total Scope 1 & 2
(emissions tCO2e)
Revenue (£m)
2,176 2,062
491.0 426.0
Emissions / £m revenue
(£1m) (tCO2e/£m)
4.4
4.8
Definitions:
1. Scope 1 emissions: Combustion of fuel
and operation of facilities.
2. Scope 2 emissions: Electricity purchased
from the national grid.
3. tCO2e: Tonnes carbon dioxide
equivalent.
Approach to Carbon Reduction
Strategy
Our strategy will focus on TClarke’s direct
responsibility and our scope of influence.
The common goal of governments and
society is to combat climate change by
2050. It’s about striking a balance between
the carbon emissions going into the
atmosphere - and being taken out.
So how can we start to tackle this challenge?
Our vision of net zero incorporates three
areas for action.
Data Collection
Our CO2e emissions have been calculated
using UK Government guidelines for
conversion of fuels and electricity. Data was
collected across the group as follows:
Utility Data: This was collected from
energy suppliers in the form of Half
Hourly Data or Non-Half Hourly (Monthly/
Quarterly Tariffs) consumption summary
reports.
Transport: This was collected from
reports provided by the business fuel card
providers.
Other Fuels: These were collected from
delivery invoices during the financial year.
Carbon Conversion
To perform the carbon conversion, we
utilised the Government conversion factors
for company reporting of greenhouse gas
emissions: https://www.gov.uk/government/
collections/government-conversion-
factors-for-company-reporting
Sustainable
Procurement
Our supply chain
strives for CO2
reduction through
recycled materials,
low-carbon
options, and
local products,
equipment, and
labour.
Sustainable Design
Our design input at an early stage,
advising on solutions to reduce
carbon/energy-intensive designs,
favouring passive solutions with a
fabric-first approach.
Reducing
Our Carbon
Footprint
Sustainable Delivery
Our objective is to reduce the carbon
footprint by using local supply chain,
recycling on-site, decreasing waste,
and moving to electric vehicles.
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Being a Responsible Business
Working Together with Our Suppliers
54 days
Average supplier payment days
2022: 58 days
We have built longstanding relationships
with our supply chain. Together we are
always looking for innovative ways to
achieve quality for our clients and fulfil our
responsible business goals. When needed,
we work with our supply chain partners to
help them succeed.
Our supply chain partners play a fundamental
role in our resilience and success.
Working Together on Sourcing Supplies
Our strong supplier relationships have
continued to help us manage the reduced
availability of certain materials. We share
our project delivery requirements early
enough to allow advanced planning,
sufficient lead-in periods, and for suppliers
to build their capacity.
Our relationships are critical to ensure that
we can maintain the supply of key materials
for our projects. Our supply chain
performance during 2023 has been
exceptional in sourcing materials in the
face of global shortages. Our supply chain
enabled TClarke to deliver record revenues
in 2023.
payment practices and performance
requirements. This reporting was based on
volume of invoices received. TClarke invoice
volumes are 90% material items, 10%
subcontractors. Our standard agreed material
supplier terms are 60 days month end and
therefore, our payment days normally
average 60 days.
Procuring Locally, From Smaller Suppliers
Our nationwide network of offices use
smaller, local suppliers and subcontractors
where they can.
Paying Promptly
We aim to pay our suppliers fairly and have
worked hard to reduce our average days to
pay invoices, in line with the Prompt
Payment Code. Payment days are calculated
in accordance with statutory reporting on
Working Together to Improve Safety
All our subcontractors follow TClarke Health
& Safety practices including using the ‘You
See, You Say!’ App. to report potentially
hazardous situations. They all receive full site
inductions and regular Toolbox talks.
The establishment
of long-term
relationships
with suppliers
Sourcing and
Securing Supply
Procuring
Locally
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Being a Responsible Business
Enhancing Communities
1, 412
Local employees
2022: 1,294
247
Apprentices
2021: 210
We want to leave a positive legacy by
improving the built environment and
creating social and economic value for the
communities where we work.
Through our core activities of
engineering services, we deliver new,
improved and more efficient housing,
workplaces, education facilities and
hospitals. In addition, we contribute to
local communities by employing locally,
providing training and work opportunities
and supporting community projects
and charities.
Delivering For Our Community
TClarke recognises that as a specialist
engineering business, we can play our role
by rooting ourselves in local communities
and providing high-quality, long-term career
paths and opportunities for people.
TClarke is one of the lead partners for the
Stanhope Foundation to help London’s
most vulnerable people. The Stanhope
Foundation is focused on increasing
employability among vulnerable and young
people in London, so they can find hope
and pride through meaningful employment.
TClarke has always made significant efforts
to offer the best pathways into
meaningful and high-quality employment
within the construction and engineering
sectors. Whenever we look to extend the
opportunities we offer, we aim to ensure that
they are meaningful and well supported.
The Stanhope Foundation was set up to
partner with charities that have existing
employment focused programmes in place.
These include helping people getting into
work for the first time, or after a prolonged
break, or tackling work-related issues due to
ill health. Funds raised by The Foundation
go directly towards the employment focused
areas of the Foundations chosen charities
which are: Maggie’s on their ‘Back to Work
Scheme’ for people living with cancer; The
Prince’s Trust on their ‘Skills Development
and Employability’ programmes;
Construction Youth Trust on their ‘Transitions
Coaching’ programme which supports
students aged 16-18 who are interested in
exploring higher-level apprenticeship
pathways in the Built Environment; St
Mungo’s on the charity’s ‘Recovery College
Initiative’ and also the support charities
Mencap helping people with learning
disability find paid employment and the
Mayor’s Fund for London creating
opportunities for young Londoners from low
socio-economic backgrounds.
Since its launch the Stanhope Foundation
has raised over £1m and been able to
help thousands of people on their journey
into work.
TClarke and its people value the
contribution we can make through
supporting charitable organisations and
sponsored events and employees are
encouraged to become involved in
community projects and programmes.
We are proud to support a number of
charities directly as well as indirectly
through supporting events organised by
our clients.
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Additional
Enhancing Communities continued
Prince’s Trust
CONSTRUCTION
YOUTH TRUST
workforce. In addition, we employ local
people through our direct delivery model.
TClarke’s projects often enhance the local
community.
Decarbonising Communities
TClarke is passionate about leaving the
right sort of social, environmental, and
economic legacy and creating whole life
value for the local and wider community in
which we work.
TClarke continues their working relationship
with Hertfordshire County Council with their
continued work to strive to carbon net zero
within the education sector. TClarke has
successfully over the past 12 -18 months
delivered two carbon net zero projects for
Hertfordshire County Council. Hobletts
School, Hemel Hempstead, and How Wood
Primary School, St Albans.
Both projects involved the complete
removal of existing gas-fired heating boilers
and the removal of all heating pipework,
heat emitters, and domestic pipework.
Four Air Source Heat Pumps were installed
in each school with a combined KW output
of 180KW to produce heat and hot water
for the school’s needs along with photo
voltaic (PV) panels installed on the roof of
both buildings.
Working With Schools and Colleges
We work closely with schools, colleges and
universities to encourage young people to
consider careers in construction, to help
increase diversity and address potential
skills shortages in the industry. Our
activities range from mentoring, STEM
(science, technology, engineering and
mathematics) activities and workshops to
career talks, site visits and work experience.
Working with the Construction Youth Trust
and the Stanhope Foundation at their
Insight Day, TClarke introduced groups of
young people to some of the latest Smart
Buildings technology.
The Stanhope Foundation’s Insight Day
brought 18 young people from year 12
(16-17 years old) to their offices to learn
about some of the benefits of a career in
construction. They were all participants in
the Construction Youth Trust’s programme
which supports young people into Level
4 – 6 apprenticeships into construction (this
programme is funded through the
Stanhope Foundation).
The aim of the day was simple: to inspire
young people with the range of
opportunities within the industry and help
them develop skills for the apprenticeship
recruitment process. To this end, the
participants engaged in activities with
TClarke, Savills and Granger Reiss.
We offer an industry leading
Apprenticeship scheme. We currently have
247 apprentices representing 18% of our
28
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Additional
Non Financial and Sustainability Information Statement
Task Force on Climate-Related Financial Disclosures (TCFD)
Improving the environment is one of our five core elements of being a responsible
business. In this section we provide our comprehensive TCFD disclosure including details
on climate change scenarios and how they may impact our business in the short, medium
and long term.
The Board believe that TClarke complies fully with the TCFD recommendations and
recommended disclosures. By this we mean the four TCFD recommendations and the 11
recommended disclosures set out in figure 4 of section C of the report entitled
‘Recommendations of The Task Force on Climate-related Financial Disclosures’ published
in June 2017 by the TCFD. Our processes will continue to evolve and we will incorporate
any information arising from our ongoing engagement with our supply chain, including
identification of, and response to, any new emerging risks. We will also continue to
develop our reporting of our metrics and targets as our scope 3 mapping project is
completed and more information becomes available.
Climate Governance
Top
down
Group Board
Responsible for:
• Setting the environmental strategy and monitoring overall performance against targets
• Reviewing on a bi-annual basis, key climate-related risks and opportunities, and overseeing mitigation strategies as part of the bi-annual review of principal and emerging risks
• Considering climate change as part of stakeholder engagement
• Consider climate change issues when setting strategy and approving business plans
Group Management Board
Responsible for:
• Reviewing and monitoring climate-related risks at least bi-annually, as part of the
principal and emerging risks reviews and establishing effective mitigation and controls
to manage risks
• Ensuring appropriate action is being taken to meet our environmental targets,
through review of quarterly reporting on climate change issues, including proposed
metrics and KPIs
Audit Committee
Responsible for:
• Supporting the Board in its responsibilities with respect to climate change, including:
• Considering climate change risks as part of the bi-annual review of principal and
emerging risks
• Overseeing compliance with, and progress on, climate change reporting
Climate Change Delivery Group
The group meets quarterly and comprises senior business leaders from across the group, who also lead working groups in their respective business.
Responsible for:
• Identifying all climate-related risks and opportunities, including and developing appropriate mitigation strategies
• Establishing action plans to deliver our environmental targets, tracking progress against the targets and reporting
• Embedding accountability in each business area for delivery of the targets and monitoring progress and actions
Working Groups
Working groups are led by senior business leaders from across TClarke supported by colleagues within their area.
Bottom
up
Responsible for:
• Delivering the relevant actions related to their area to meet our environmental targets
• Day-to-day management of climate-related risks
• Embedding the climate change culture and mindset within their business area
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TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Climate Strategy
Our Strategy for Responding to Climate Change
Overview of our climate-related risks and opportunities
The scale of ambition and speed of change required to meet net zero emission targets, along
with the changes in temperature and weather patterns present both risks and opportunities to
our business. These risks and opportunities, along with a summary of the work we are
doing to address them, are presented in the table below. Short-, medium- and long-term
timeframes are defined in our risk methodology as one year or less, one to three years and
three or more years respectively, and this is reflected in the table below.
Risk/opportunity type
and description
Our response
Opportunities
Commercial opportunities from
the transition towards net zero
will continue to shape our
portfolio and strategy.
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
Risks
We have a strategy of reaching net
carbon zero by 2026. Given current
electric van performance it is likely full
electrification of fleet will be after 2026
so carbon offsetting will be used.
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
The decarbonisation of heat presents significant opportunities for our technology businesses as electric heating solutions are
sought for homes, offices and buildings. We are currently installing heat pumps across the UK and are building solar farms.
We believe our smart building offering affords significant opportunities for our business as our customers seek to reduce their
carbon footprints. We are on the NHS Smart building framework.
Our prefabrication facility at Stansted enables us to have far less labour onsite, minimising journeys and reducing our carbon
footprint which is attractive to our customers.
We are a Build UK business champion within the Construction Leadership Council’s Co2nstruct Zero programme which is the
industry’s response to the climate challenge.
Whilst decarbonisation creates significant market opportunities across all time frames we continue to focus on our five market
sectors in order that TClarke doesn’t become dependent on the rate of take up of technologies such as air source heat pumps.
Our key actions in reducing our carbon footprint are described on pages 23 and 25.
One of the key actions involves decarbonisation of our fleet. There are risks to the timing of this due to:
1 Availability of electric vehicles
2. Charging network across the UK
3. Ranges of vehicles before a charge
4. Costs associated with moving to an electric fleet
We have not identified any material financial risks as a result of climate change, or associated regulatory requirements. We also
plan to use fully renewable electricity by 2026. In addition, decarbonisation of the economy may raise costs of other items across
the cost base. In a low margin industry any material cost increases may occur due to increases in transportation costs for example.
These will need to be able to be passed on to customers. There is a risk that this may not be possible. The likely impact would be
to extend the time frame for TClarke becoming net carbon zero. Our plan is to offset any residual Type 1 and 2 emissions through a
Gold Standard scheme in 2026.
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TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Climate Strategy continued
Risk/opportunity type
and description
Our response
Risks
There is an emerging requirement to
provide carbon data on components
within a tender.
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
Our key action has been to develop a carbon calculator that can access any carbon information available within our supply chain.
Where this information is not available it allows estimates to be used.
Population of the calculation will evolve in the medium term but is currently being used on certain tenders within the
London business.
Impacts
Timeframe:
Short, medium and long-term
Impacted businesses:
Group-wide
Overall, we believe the market opportunities available to TClarke significantly outweigh potential cost risks. It is the Board’s
expectation that costs risks will be mitigated through market price changes and or lengthening of the decarbonisation timeframe.
Our net zero roadmap is on page 24 along with a detailed plan. The market opportunities for TClarke in an economy transitioning
to net zero are significant. Technologies now is our largest market sector in our order book. In the short and medium term. The
Board expect factors other than climate change to have a greater impact on supply chain. These are detailed on pages 33 to 36.
31
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Climate Strategy continued
Our Climate Change Scenario Analysis
Transition Risk Analysis
To further understand the risk that climate change could have on our business, we
undertook a high-level scenario analysis, where we considered scenarios out to 2030.
We used two scenarios:
Scenario
Impact
Risk Management
The first assumed that the global
response to the threat of climate change
is enough to limit global average
temperature increases to no more than
1.5ºC above pre-industrial levels (as set
out in the Paris Agreement) by 2100 (the
1.5ºC scenario). In this scenario, rapid
changes are made to progress
decarbonisation goals: coordinated
policy, regulation and customer
behaviour favours bans on
polluting technologies, and support
for low-carbon solutions.
The second scenario assumed
that the 1.5ºC target is missed by
some margin, comparable to a
4ºC global average temperature
increase (the 4ºC scenario). In this
scenario, changes are less rapid and
less comprehensive, and emissions
remain high, so that the physical
ramifications of climate change are
more apparent by 2030.
Under this scenario significant
market opportunities are available to
TClarke as building owners seek to
substantially reduce their carbon
footprint. These opportunities are
forecast to significantly outweigh the
cost risks faced by the Group.
The process for identifying, assessing and managing climate related risks are
identified in the Governance section above on pages 30 to 31.
The Board has overall responsibility for determining the Group’s risk appetite
ensuring that risk is managed appropriately and that there is an effective risk
management framework in place. Climate risks are fully integrated into the Group’s
risk identification and framework described on page 33.
Metrics
Metrics are described on pages 23 to 25.
The main impacts of this scenario
were increased weather events of
escalating severity and frequency,
which could increase disruption to our
sites and to our customers, market
opportunities are likely to be less and
risks significantly higher than the 1.5ºC
scenario due to extreme weather
events. The Directors have considered
these risks and feel that the industry
will adapt working practices and do
not consider temperature risks to be a
significant risk to the Group’s viability.
Non-financial Information Statement
This section provides information as required by regulation in relation to:
• Environmental matters (pages 23 - 26)
• Our employees (pages 18 - 22)
• Social matters (pages 27 - 28)
• Human rights (page 22)
• Anti-bribery and corruption (page 19)
Other related information
• Our business model (page 6)
• Principal risks (pages 33 to 36)
32
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Principal Risks
The Group’s risk profile continues to be supported by a strong balance sheet and
secured workload, and a continued focus on contract selectivity.
Risk Governance
Our Approach
Risk is inherent in our business and cannot be eliminated. Our risk governance model
ensures that our principal risks and the controls implemented throughout the Group are
under regular review at all levels.
Group Board
The Board is responsible for setting the Group’s risk appetite and for ongoing risk
management, including assessing the principal risks that threaten our strategy and
performance. The principal risks faced by the Group and the mitigating actions were formally
received by the Audit Committee and Board in September 2023 and February 2024.
Audit Committee
The audit committee assists the Board in monitoring risk management and internal control,
and formally reviews the Group risk register on behalf of the Board.
Group Management Board
The Board ensures that inherent and emerging risks across the Group are identified
and managed appropriately.
Risk Reviews
Strategy Planning
Delegated Authorities
Divisional Reporting
Twice a year each operational team
carries out a detailed risk review,
recording significant matters in its risk
register. Each risk is evaluated, both
before and after mitigation, as to its
likelihood of occurrence and severity
of impact on strategy. This is then
reviewed by the Group Finance
Director conferring with the Group
Management Board.
Risk management is part of our
business planning process. Each year
objectives and strategies are set that
align with the risk appetite defined by
the Board.
The Group has produced a schedule
of delegated authorities that assigns
approval of material decisions to
appropriate levels of management.
Such decisions include project
selection, tender pricing, and capital
requirements. Certain matters are
reserved for Board approval.
The divisional risk registers record the
activities needed to manage each risk,
with mitigating activities embedded in
day-to-day operations for which every
employee has some responsibility.
Rigorous reporting procedures are in
place to monitor significant risks
throughout the divisions and ensure
they are communicated to the Group’s
Board reporting and delegated
authorities process.
Quality Assurance Function
The Quality Assurance Team reviews the divisional risk registers to check that they have
been reviewed, maintained, and updated. The Group Finance Director draws from the
divisional risk registers when compiling the Group risk register.
33
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Principal Risks continued
Risk and potential impact
Update on Risk Status
Mitigation and Action
Health & Safety (H&S)
H&S will always feature significantly in
the risk profile of a construction
business. Accidents could result in legal
action, fines, costs and insurance claims
as well as project delays and damage
to reputation.
No Change
Greater use of Modern Methods of
Construction and prefabrication have
reduced the number of hours worked
on site. Our Lost Time Incident Rate
(LTIR) is 0.33.
1. The Group Health & Safety Director monitors and responds to legal and regulatory
developments.
2. Industry leading health and safety policies and procedures are maintained.
3. All employees receive regular training and updates to ensure they are aware of their
responsibilities.
4. We are very focused on reducing our days lost as a result of accidents (LTIR).
5. Continued focus on ‘You See You Say’.
Changes in the Economy
There could be fewer or less profitable
opportunities in our chosen markets.
Allocating resources and capital to
declining markets or less attractive
opportunities would reduce our
profitability and cash generation.
Reduced
Challenging economic conditions
remain but inflation is falling rapidly and
component availability increasing.
We have navigated recent economic
uncertainties well and are supported by
a strengthened balance sheet.
1. The Board regularly reviews the economic environment in which we operate to as sess
whether any changes to the outlook justify a reassessment of our business model.
2. We balance our business by strategic management of our order book with a blend
of existing markets of Infrastructure, Residential and Hotels, Engineering Services,
renewing Facilities Management contracts and new markets such as Technologies.
3. The Group monitors its order book to ensure an appropriate balance of work
between London and the regions across the various sectors in which it operates.
Insolvency of a Key Client,
Subcontractor or Supplier
An insolvency of a key client could
impact cash flow and profitability. An
insolvency of a subcontractor or supplier
could disrupt projects, cause delays and
incur costs of finding a replacement.
Elevated
Repayment of government backed Covid
Loans by our supply chains to their
lenders and general tightening of credit
result in increased risk of insolvency,
both with customers and the supply chain.
1. We work for a number of large well-funded clients.
2. We have a rigorous due diligence regime both for existing and new clients.
3. Working with preferred suppliers where possible, which aids visibility of both financial
and workload commitments.
4. Regular monitoring of work in progress (uninvoiced income) debts and retentions.
5. Ability to substitute supply chain in the event of insolvency.
Inadequate Funding and Cash Flow
Management
A lack of liquidity could impact our
ability to continue to trade or restrict
our ability to achieve market growth or
invest in regeneration schemes.
Reduced
Successful funding of £10.1m in July 2023.
Our balance sheet continues to provide
assurance for our employees, clients,
supply chain and counterparties in an
increasingly uncertain market.
1. The Group has a Revolving Credit Facility of £25m committed to 31st
August 2026 and an overdraft facility of £5m.
2. Daily monitoring of cash levels and regular forecasting of future cash
balances and facility headroom.
3. Regular stress-testing of long-term cash forecasts.
4. Funding of significant projects signed off by Group Finance.
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TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Principal Risks continued
Risk and potential impact
Update on Risk Status
Mitigation and Action
Contract Selection
In a market where competition is high a
region might accept a contract with a
main contractor that is poor in managing
projects. The impact to us is the risk of
increasing our costs and causing delays.
No Change
The quality of our order book in terms
of projects and repeat clients enables
us to remain highly selective when
bidding for future work. Over 92% of
contracts are with repeat clients.
1. Clear selectivity, strategy and business plan to target optimal markets, sectors, clients
and projects which have proven to have delivered favourable outcomes.
2. Weekly calls with all our business leaders are held to discuss new opportunities and
customers.
Mispricing a Contract
If a contract is under priced this could
lead to contract losses and an overall
reduction in gross margin. If it is over
priced the Group will not secure sufficient
tenders to secure the order book and
grow the business.
Project Delivery
Failure to meet client expectations
could incur costs that erode profit
margins, lead to the withholding of
cash payments and impact working
capital. It may also result in reduction
of repeat business and client referrals.
No Change
Almost all contracts are profitable at
a time when the order book is at a
record high.
1. A well-established bidding process with experienced estimating teams.
2. Our estimating teams are office based and continue to take off physical drawing
measurements rather than using standard measurement rates.
3. All tenders have directors sign off.
No Change
TClarke’s processes and controls
continue to ensure that projects are
delivered in accordance with their
agreed programs.
1. Contracts of significant size or risk are regularly reviewed by Regional Managing
Directors and the Executive Directors.
2. Regular performance reviews of all key suppliers and subcontractors.
3. Ongoing assessment and management of operational risk throughout the
project lifecycle.
4. Train and maintain industry-leading teams of directly employed engineers, surveyors,
supervisors and skilled tradespeople.
Contract Variations and Disputes
Changes to contracts and contract
disputes could lead to costs being
incurred that are not recovered, loss
of profitability and delayed receipt
of cash.
No Change
We continue to monitor the agreement
of variations on a monthly basis. It is the
Group’s policy to recognise variations
when it is highly probable that they
won’t reverse.
Projects Undertaken
Being a General Contractor (GC)
potentially exposes the Group to new
risks as a result of being responsible for
completing all aspects of a project.
New
Overall the GC jobs are progressing well
and delivering our strategic amount of
margin at a portfolio level. This includes
one contract which has been adversely
affected by supply-chain issues.
35
TClarke Annual Report and Financial Statements 2023
1. Review contract terms at tender stage and ensuring any variations are approved
by the appropriate level of management.
2. Well established systems of measuring and reporting project progress and estimated
out turns that include contract variations and impact on programme, cost and quality.
3. Use and development of electronic dashboards for project management and change
control, and commercial metrics designed to highlight areas of focus and provide
early warnings.
1. Only undertake GC role where M&E represents the majority of project.
2. Employ skilled people to manage construction as part of projects.
3. We continue to seek to learn and improve the robustness of our supply chain.
Strategic Report
Governance
Financial Statements
Additional
Principal Risks continued
Risk and potential impact
Update on Risk Status
Mitigation and Action
Attracting and Retaining Talented
People
Attracting and retaining appropriately
qualified staff to deliver our ambitious
growth plan.
No Change
We have an industry leading
apprenticeship scheme with on average
247 apprentices accounting for 18%
of our workforce. Our Future Leaders
Programmes identifies strong
leadership and currently has 46 people.
Research and Development
(Innovation)
A failure to produce or embrace new
products and techniques could
diminish our delivery to clients and
reduce our competitive advantage.
It could also make us less attractive to
existing or prospective employees.
No Change
Continued development of TClarke
Smart Building Solutions,
implementation of business dashboards
and development of apps for
procurement, timesheets, health and
safety and expenses.
Cyber Security
Investment in IT is necessary to meet
the future needs of the business in
terms of expected growth, security and
innovation, and enables its long-term
success. It is also essential in order to
avoid reputational and operational
impacts of data that could result in
significant fines and /or prosecution.
No Change
In order to protect against increasing
levels of UK cyber attacks, we continue
to invest in established security controls
and external security partners who actively
advise on strategy. Security awareness
training was provided to all our
employees during 2023. Cyber
essentials plus accreditation achieved.
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.
Our employees enjoy working on high-profile, innovative projects that provide them
with the opportunity to enhance their knowledge and experience. Business and IT
come together to promote new innovations across the business.
A dedicated team focused on providing a stable and resilient IT environment, and
continued investment in core infrastructure and applications. The Group maintains
robust cyber security policies to guard against third party access and malicious
attacks. The Group’s core systems are outsourced to a third party with robust processes
and procedures.
36
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Long-term 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 33 to 36.
The UK construction market in which the Group operates is subject to considerable peaks and
troughs. The Directors consider a three-year period as appropriate for assessing the ongoing
viability of the Group as most of the projects undertaken by the Group are completed within a
three year time horizon from initial tender and the Group uses a three year time frame for the
preparation of its strategic business plans and financial projection models.
The Group’s prospects are assessed primarily through its strategic business planning process
and the ongoing monitoring of the principal risks and mitigating actions. The process is led by
the Chief Executive and involves senior management throughout the Group.
The Group formally updates its strategic plan on an annual basis. This process, which takes
place in the fourth quarter each year, includes:
• an assessment of the Group’s current position taking into account its operating
environment and the threats and opportunities it faces;
• the Group’s achievements over the previous twelve months measured against its
strategic objectives;
• a detailed review of the risks faced by the Group 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 three-year projections demonstrate that taking into account reasonable sensitivities around
revenue and profitability, the Group will be able to operate within its existing facilities over the
three year projection period, and the Directors are confident that the Group’s business model
allows sufficient flexibility to meet any significant change in demand for its services. The Group
ended 2023 with a forward order book of £943m, as we target revenue of £600m in 2024. The
Group is in a strong position both operationally and financially and is well placed to respond
quickly to any changes in market conditions whilst remaining profitable.
The Group takes a conservative approach to strategic risk. The business case for all significant
investments and entry into or exit from specific markets is reviewed and signed off by the Board.
Risk registers are maintained and reviewed regularly throughout the year to identify potential
threats to the Group’s business, to assess the financial, operational and strategic impact of
these threats, and to determine appropriate mitigating actions.
Based on their assessment of prospects and viability above, the Directors confirm that they
have a reasonable expectation that the Group will be able to continue in operation and meet
its liabilities as they fall due over the three-year period ending 31st December 2026.
Strategic Report Approval
The Board confirms that, to the best of its knowledge, the Strategic report on pages 1 to 37
includes a fair review of the development and performance of the business and the position of
the Company, and the undertakings included on the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
The business unit strategic plans are formally reviewed and challenged by the Executive
Directors prior to presentation to the full Board.
Approved by the Directors and signed on behalf of the Board on 26th March 2024
Based on the financial models prepared, the Group’s financial projections are updated and
tested using a range of sensitivities to identify potential threats to the financial viability of the
Group over the three-year projection period. These sensitivities included reductions of up to
50% to forecast profitability including the insolvency of a key customer/subcontractor. The key
assumptions underlying the financial model include delivery of the Group’s business plan,
the continuing availability of appropriate banking facilities, (currently a £5m overdraft facility
repayable on demand and a committed £25m revolving credit facility expiring on 31 August
2026), and the ability to flex the cost base sufficiently to address any significant change in
workload. See note 2 on page 79 for further discussion of the key assumptions underpinning
the going concern basis of preparation and the financial viability of the Group.
Mark Lawrence
Group Chief Executive Officer
26th March 2024
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TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Board of Directors
Executive Directors
Mark Lawrence
Group Chief Executive Officer
Appointed to the Board on 2nd May 2003. Mark has been with the Company for 38 years
and started at TClarke as an electrical apprentice in 1985. As Group Chief Executive Officer
since January 2010, Mark has led strategic change across the Group.
Mike Crowder
Group Managing Director
Appointed to the Board on 1st January 2007. Mike has over 38 years of significant
experience in the Construction industry and started at TClarke as an apprentice. Mike has
overall responsibility for Operations and is responsible for Group Health and Safety.
Trevor Mitchell
Group Finance Director and Company Secretary
Appointed to the Board on 1st February 2018. Trevor is a Chartered Accountant with
extensive experience across many sectors. Prior to his appointment, Trevor had been
working with TClarke since October 2016, assisting with simplifying the structure and
improving the Group’s financial controls and procedures.
Non-Executive Directors
Iain McCusker
Chairman
Chair of the Nomination Committee
Appointed to the Board on 1st January 2009 and appointed Chairman on 1st October 2015.
Iain is a Chartered Accountant and has significant international financial and management
experience, Iain is a former member of the Qualifications Board of the Institute of Chartered
Accountants of Scotland. He is Senior Visiting Fellow, City, University of London, and
Chairman of NPA Insurance.
Peter Maskell
Senior Independent Director
Chair of the Remuneration Committee
Non-Executive Director for Employee Engagement
Appointed to the Board on 1st January 2018. Peter worked at Philips Electronics for 37 years
after studying Electrical and Electronic Engineering at Kingston University. For the last 21 years,
he held a number of senior management positions in both the UK and Europe.
Group Management Board
The Group Management Board comprises the Executive Directors and:
Jonathan Hook
Independent Director
Chair of the Audit Committee
Chris Harris
Operations Director
Rob Faro
Operations Director
Garry Julyan1
Group Commercial Director
Appointed to the Board on 1st July 2021. Jonathan was formerly a partner at PwC where he
was the global leader of the Engineering & Construction practice.
Kevin Mullen2
Operations Director
Anton Malia
Operations Director
Andy Griffiths2
Group Systems Director
Aysegul Sabanci
Independent Director
1 Statutory director of TClarke Contracting Limited
2 Statutory director of TClarke Services Limited and TClarke Contracting Limited
Associate Members of the Group Management Board
Sally Higgins
Group Procurement
Director
Josh Bourne
Group Health &
Safety Director
38
TClarke Annual Report and Financial Statements 2023
Appointed to the Board on 1st May 2022. Aysegul has considerable international experience
at executive level in the Construction and Services sectors.
Committees
Audit Committee
Nomination Committee
Remuneration Committee
Chair
Strategic Report
Governance
Financial Statements
Additional
Corporate Governance Report
Chairman’s Introduction
The Board is committed to high standards of corporate governance and complies with
the principles contained in the UK Corporate Governance Code 2018 (‘the Code’), which
took effect for accounting periods starting on or after 1st January 2019. The Code sets out
principles to which the Listing Rules require all listed companies to adhere, supported by
more detailed provisions. This governance section describes the principal activities of the
Board and its committees and how the Group has applied the principles contained within
the Code. Our statement of compliance with section 172 of the Companies Act 2006 is set
out on pages 15 to 16.
The Board recognises that a high standard of corporate governance is essential to support
the growth of our business and to protect and enhance shareholder value. The Directors,
whose names and details are set out on page 38, are collectively responsible to
shareholders for the long-term success of the Group. The Board does this by supporting
entrepreneurial leadership from the Group’s executive team whilst ensuring effective
controls are established that enable the proper assessment and management of risk. The
Board is ultimately responsible for the Group’s strategic aims and long-term prosperity; it
seeks to achieve this by ensuring that the right financial resources and human talent are
in place to deliver the Group’s strategy and objectives. Our culture is fundamental to the
successful delivery of our strategic objectives.
The day-to-day management and leadership of the Group is delivered by the Group
Management Board, which comprises the Executive Directors and other key members
of the Group’s senior management team, details of whom are provided on page 38.
During 2023, we undertook a formal, internal evaluation of the Board’s and its committees’
effectiveness. The results of this exercise are summarised on page 42. I am pleased to
report that I am satisfied that the Board and each of the Directors are operating effectively.
I am happy to recommend that all Directors standing for election should be re-elected at
the 2024 AGM.
As Chairman, I will continue to evolve our governance framework, being mindful of best
practice and the latest developments surrounding corporate governance.
Iain McCusker
Chairman
26th March 2024
39
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Statement of Compliance
Statement of Compliance
Throughout the year ended 31st December 2023, the Board considers that it has complied with
the principles and provisions of the UK Corporate Governance Code 2018 (‘the Code’), other
than the tenure of the Chairman, which is explained below. The Code is issued by the Financial
Reporting Council (FRC) and is publicly available on the FRC’s website, www.frc.org.uk.
Structure of the Board
The Company is managed by the Board of Directors, which currently consists of four
Non-Executive Directors (including the Chairman) and three Executive Directors. The
Non-Executive Directors who served during the year ended 31st December 2023 were
deemed to be independent, notwithstanding their shareholdings held during the year,
which are not considered significant by the Board. At the time of his appointment as
Chairman, Iain McCusker was considered to be independent, but is now not considered
to be independent by virtue of his appointment as Chairman.
All Directors are subject to annual re-election unless a Director has been newly appointed
during the year, when they will seek election. At the forthcoming AGM on 29th May 2024,
all Directors will be retiring and all are offering themselves for re-election.
All Executive Directors have signed service agreements which take into account best
practice, are fully aligned with the remuneration policy and contain a notice period of 12
months from either party. All Non-Executive Directors have letters of appointment
specifying their roles, responsibilities and required time commitment to the Board.
The Board maintains procedures whereby potential conflicts of interests are reviewed
regularly. The Board has considered the other significant commitments undertaken by the
Directors, details of which are provided in their biographies on page 38, and considers that
the Chairman and each of the Directors are able to devote sufficient time to fulfil the duties
required of them under the terms of their service agreements or letters of appointment.
Iain McCusker was appointed Chairman in October 2015, although he has been a
Non-Executive Director since 2009. The Board notes that the Code states that the Chair
should not remain in the post beyond nine years from the date of first appointment to the
Board, but provides that this period may be extended for a limited time to facilitate the
development of a diverse Board, particularly in those cases where the Chair was an existing
Non-Executive Director on appointment. The Board considers that Iain McCusker’s
experience and leadership throughout the unprecedented macroeconomic challenges in
recent years has been invaluable and outweighs his length of time spent on the Board,
and therefore, Iain McCusker will stand for re-election at the 2024 AGM and his position
as Chairman will be kept under review. The Chairman enjoys considerable shareholder
40
TClarke Annual Report and Financial Statements 2023
support; at the 2023 AGM Iain McCusker was re-elected by 99.19% of shareholders
who voted.
The Chairman is responsible for the leadership and management of the Board and its
governance. By promoting a culture of openness and debate, he facilitates the effective
contribution of all Directors and helps maintain constructive relations between Executive and
Non-Executive Directors. The Chief Executive Officer is responsible for the executive leadership
and day-to-day management of the Company, to ensure the delivery of the strategy agreed by
the Board. Through his leadership of the Group Management Board, he demonstrates his
commitment to health and safety, operational and financial performance.
The Senior Independent Director acts as a sounding board for the Chairman and serves as
an intermediary for the other Directors, where necessary. The Senior Independent Director is
also an additional point of contact for shareholders if they have reason for concern and where
contact through the normal channel of the Chairman, Group Chief Executive Officer or other
Executive Directors has failed to resolve the matter or for which such contact is inappropriate.
Independent of management, the Non-Executive Directors bring diverse skills and
experience vital to constructive challenge and debate. The Non-Executive Directors
provide the membership of the Audit, Remuneration and Nomination Committees.
Board Diversity
The Board recognises the benefits of Board diversity, including, but not limited to, the
appropriate mix of skills, experience, gender, age, ethnicity, background and personality.
The Board endorses a balance of diversity and experience to promote Board effectiveness,
whilst taking into account the appropriate financial, managerial and industry skills which are
relevant to the calibre of a Director of TClarke.
Our gender identity and ethnicity data in accordance with Listing Rule 9.8.6R(10) in the
format set out in LR 9 Annex 2.1is provided below.
Sex/gender
representation
Number Percentage
of the
of Board
Board
members
Men
Women
Other/not specified
Prefer not to say
6
1
–
–
86%
14%
–
–
senior positions
on the Board*
4
–
–
–
Number of Number in Group
Percentage of
Management Group Management
Team
Team
9
–
–
–
9
–
–
–
* (Chairman, Group Chief Executive Officer, Group Chief Financial Officer, Senior Independent Director)
Strategic Report
Governance
Financial Statements
Additional
Statement of Compliance continued
Ethnicity
representation
White British or other White
Mixed/Multiple
Ethnic Groups
Asian/Asian British
Black/African/
Caribbean/Black British
Other ethnic group,
including Arab
Not specified/
prefer not to say
Number Percentage
of Board
members
of the senior positions
on the Board*
Board
Percentage of
Management Group Management
Team
Team
Number of Number in Group
Matters Reserved for the Board Include:
• Consideration and approval of the Group’s strategy, budgets, structure and
7
100%
–
–
–
–
–
–
–
–
–
–
4
–
–
–
–
–
9
–
–
–
–
–
100%
financing requirements.
• Consideration and approval of the Group’s annual and half-yearly reports and
financial statements.
• Consideration and approval of interim and final dividends.
• Consideration and approval of the Group’s trading statements.
• Ensuring the maintenance of a sound system of internal controls and risk management.
• Conducting a robust assessment of the principal risks facing the Company and setting
risk appetite.
• Changes to the structure, size and composition of the Board as recommended by
the Nomination Committee.
• Establishing committees of the Board and determining their terms of reference.
–
–
–
–
–
As set out above, the Group has not met the Listing Rules targets of 40% of the Board being
female, at least one of senior Board positions being female, and at least one of the Board
being from a minority ethnic background.
The Board stipulates that new appointments to the Board will be based on merit and
suitability to the role, whilst also giving due consideration to diversity. Non-Executive
Directors should have the ability to fulfil the requisite time commitment.
Board Meetings
The composition of the Board is designed to ensure effective management, control and
direction of the Group.
The Board is collectively responsible for the effective oversight of the Company, its
businesses and its culture. It also determines the strategic direction and governance structure
of the Company to enable it to achieve long-term success and deliver sustainable
shareholder value, whilst taking account of the interests of all stakeholders. The Board takes
the lead in safeguarding the reputation of the Company and ensuring that the Company
maintains a sound system of internal control.
The Board meets regularly to consider and decide on matters specifically reserved for its
attention. Board papers are circulated sufficiently in advance of Board meetings to
enable time for review. The attendance of individual Directors at formal monthly Board and
sub-committee meetings is set out in the table below.
At each Board meeting the Board reviews management accounts in order to provide
effective monitoring of financial performance. At the same time, the Board considers other
significant strategic risk management, operational and compliance issues to ensure that the
Group’s assets are safeguarded and financial information and accounting records can be
relied upon. The Board monitors monthly progress on key contracts on a risk based
approach. Furthermore, the Company’s risk appetite is discussed and considered when
making key decisions.
Board Committees
The Board has delegated certain responsibilities to the Audit Committee, Remuneration
Committee and Nomination Committee, which report directly to the Board. The terms of
reference of each committee are available in the Investor section of the Company’s website.
The Board also established an Administration Committee at its Board meeting in January
2019 to which it delegated items of a routine and administrative nature. The Committee
meets as and when required and is constituted by any two or more Directors. There were no
meetings during 2023 of the Committee.
41
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Statement of Compliance continued
Board
(Maximum 12)
Audit
(Maximum 6)
Nomination Remuneration
(Maximum 7)
(Maximum 1)
The Senior Independent Director, in conjunction with the other independent
Non-Executive Directors, undertakes the annual appraisal of the Chairman.
Iain McCusker
Peter Maskell
Jonathan Hook
Aysegul Sabanci
Mark Lawrence
Trevor Mitchell
Mike Crowder
12
12
12
12
12
12
12
–
5
6
6
–
–
–
1
1
1
1
–
–
–
7
7
7
7
–
–
–
Outside of the normal Board calendar there were two further Board Meetings and a
General Meeting in July in connection with the share placing.
Group Management Board
The Group Management Board comprises the Executive Directors and other key members
of the Group’s senior management team, including representatives of the regional
businesses. The role of the Group Management Board is to co-ordinate and direct the
efforts of the business and of the individual offices to manage risk and deliver value for the
Group as a whole across our target sectors in line with the Group’s strategy. The Group
Management Board considers Group initiatives on matters such as health and safety,
procurement, employee engagement, and the development of new services and areas of
expertise. The Group Management Board also reviews the operational effectiveness of the
business units in matters such as tender submission and success rates, cash generation and
maintenance, and health and safety performance. The Group Management Board is
responsible for the implementation of the Group’s ESG strategy.
Performance Evaluation
The effectiveness of the contribution and level of commitment of each Director to fulfil the
role of a Director of the Company is the subject of continuing evaluation, having regard to
the regularity with which the Board meets, the limited size of the Board and the reporting
structures which are in place within the Company to monitor performance.
The Chairman primarily, but acting in conjunction with the Group Chief Executive Officer,
undertakes the task of annual evaluation of performance and commitment of individual
Board members by conducting individual interviews. The evaluation of the Board as a whole,
and its committees, is also undertaken on an annual basis. New Directors receive a formal
induction, overseen by the Chairman and Group Chief Executive Officer in conjunction with
the Company Secretary. Training is available for all Directors as and when necessary.
During the year, the Board conducted its annual internal appraisal of its own performance,
led by the Chairman in conjunction with the Nomination Committee, covering the
composition, procedures and effectiveness of the Board and its committees. The Board
members are of the opinion that the Board and its committees operate effectively.
Performance is regularly monitored to ensure ongoing obligations are adequately met and
the Board regularly considers methods for continuous improvement.
Company Secretary
All Directors have access to the advice and services of the Company Secretary, who is
responsible for advising the Board on all governance matters and ensures that the Board
receives appropriate and timely information, that Board procedures are followed and that
statutory and regulatory requirements are met.
Relationship with Shareholders
The Company recognises the importance of dialogue with both institutional and private
shareholders in order to understand their views on governance and performance
against strategy.
Presentations are made to brokers, analysts and institutional investors at the time of the
announcement of the year-end and half-year results, and there are regular meetings and
presentations with analysts and investors throughout the year. The aim of the meetings
is to explain the strategy and performance of the Group and to establish and maintain a
dialogue so that the investor community can communicate its views to the executive
management. All such meetings are reported at Board meetings. In addition, the
Chairman is available to meet with major shareholders periodically to discuss Board
governance and strategy.
The Board has always invited communication from shareholders and encouraged their
participation at the Annual General Meeting. All Board members present at the Annual
General Meeting are available to answer questions from shareholders, including the Chairs
of the Audit, Remuneration and Nomination Committees, during the meeting and remain
available after the meeting to talk informally with shareholders. Notice of the Annual
General Meeting is given in accordance with best practice and the business of the meeting
is conducted with separate resolutions, each being voted on initially by a show of hands,
with the results of the proxy voting being provided at the meeting. Further shareholder
information is available in the Investor section of the Company’s website.
42
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Statement of Compliance continued
Internal Control
The Board is responsible for the Group’s system of internal control and for reviewing its
effectiveness. Such a system is designed to manage, rather than eliminate, the risk of
failure to achieve business objectives, and can only provide reasonable and not absolute
assurance against material misstatement or loss.
Risk management and internal control procedures are delegated to Executive Directors
and the Group Management Board. A three-year strategic plan is prepared for the Group
and updated annually, including the identification and consideration of significant risks to
the Group’s strategic objectives. Progress against the strategy and the management of the
risks identified is formally reviewed on a regular basis by the Group Management Board.
The Audit Committee reviews the Company’s risk register and monitors risk management
procedures as a regular agenda item and receives reports thereon from Group
management. The Audit Committee Chairman provides a report on its findings to the
Board. The emphasis is on obtaining the relevant degree of assurance and not merely
reporting by exception.
At its meeting on 21st February 2024, the Board carried out the annual internal controls
and risk management assessment by considering documentation from the Audit
Committee. In accordance with the Code, the Board confirms that, for the year ended 31st
December 2023, 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 33 to 36.
Further details concerning the Audit Committee’s review of internal controls and risk
management processes are included in the Audit Committee report on pages 44 to 46.
Historically, the internal audit function has been covered through regular site visits
conducted by Quality Assurance and Group finance personnel and the role was expanded
in 2018 to include detailed reviews that the Committee felt appropriate. The Audit
Committee reviewed the need for a separate internal audit function during 2023 and
agreed that the current process worked well and should continue.
Share Capital Structures
The statements within the Directors’ report on share capital structures on page 65 are
incorporated by reference into this statement of compliance.
43
TClarke Annual Report and Financial Statements 2023
Fair, Balanced and Understandable Assessment
In relation to compliance with the Code, the Board has given consideration as to whether
or not the Annual Report and Financial Statements, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the
Company’s position, performance, business model and strategy and concluded that this is
the case. A statement to this effect is included in the Directors’ Responsibilities Statement
on page 67. The preparation of this document is coordinated by the Group Finance team
and the Company Secretary with Group-wide input and support from other areas of the
business. Comprehensive reviews have been undertaken at regular intervals throughout
the process by Senior Management and other contributing personnel within the Group.
The Directors’ responsibilities for preparing the financial statements and supporting
assumptions that the Company is a going concern are set out on page 64.
Long-term Viability Statement (‘LTVS’)
In relation to compliance with the Code, the Board has assessed the prospects of the
Group, taking into account the Group’s current position and principal risks. The LTVS and
supporting assumptions are set out on page 37.
Trevor Mitchell
Company Secretary
26th March 2024
Strategic Report
Governance
Financial Statements
Additional
Audit Committee Report
Dear Shareholder
As Chairman of the Audit Committee, I am pleased to present the report of the Audit
Committee for the year ended 31st December 2023.
Matters Considered by the Audit Committee
The Audit Committee met on six occasions during the year. The principal matters
discussed at meetings held since the previous Annual Report are set out below.
The Audit Committee continues to support the Board by providing detailed scrutiny of
the integrity and relevance of the Group’s financial reporting, monitoring the
appropriateness of the Group’s internal control and risk management systems and
overseeing the external audit process.
The Audit Committee has continued to follow a programme of meetings which are
timed to coincide with key events in the financial calendar. As a Committee, we are
committed to discharging our responsibilities effectively and constructively challenge
the information we receive. Over the past year, the regular reports the Audit Committee
has received from management and the external auditors have been timely and well
presented, which has enabled the Committee to discharge its responsibilities effectively.
Where necessary, we request additional detailed information so that we may better
assess certain issues, and the risks and opportunities presented.
Further information concerning the activities of the Audit Committee during the year
are set out on the following pages.
Jonathan Hook
Chair of the Audit Committee
26th March 2024
Principal Matters Considered
July 2023
• Review of the half year results.
• Consideration of the internal audit work undertaken by the Quality Assurance Team.
• Mazars presentation of their draft audit strategy memorandum.
• Consideration of FRC review of PWC 2021 Audit.
• Mazars engagement letter approval.
September 2023
• Governance and independence of the external auditor.
• Consideration of the need for a separate internal audit function.
• Review of policy on non-audit services.
• Management response to external auditor internal control observations.
• Review of risk register and mitigating actions.
November 2023
• Audit plan presented by Mazars LLP.
• Audit fee discussion and agreement.
• Consideration of the internal audit work undertaken by the Quality Assurance Team.
January 2024
• Audit update and initial internal control recommendations.
• Consideration of FRC review of Mazars 2022 audit.
February 2024
• Draft Annual Report and Financial Statements for the year ended 31st December
2023, including significant judgements and disclosures therein.
• Finance Director’s report on going concern and viability statement.
• Finance Director’s report on goodwill impairment.
•
• Review of risk register and mitigating actions.
• Annual assessment of internal controls and risk management, including project specific controls.
Interim report of external auditor detailing their assessment on key risk audit areas.
March 2024
• Draft Annual Report and Financial Statements for the year ended 31st December
2023, including significant judgements and disclosures therein.
• Audit representation letter.
• Report of external auditor on their audit of the 2023 Annual report and
Financial Statements.
• Consideration of the reappointment of external auditor.
• Review of effectiveness and independence of external auditor.
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TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Audit Committee Report continued
Significant Judgements, Key Assumptions and Estimates
The Audit Committee pays particular attention to matters it considers to be important by
virtue of their impact on the Group’s results and remuneration of Senior Management,
or the level of complexity, judgement or estimation involved in their application on the
consolidated financial statements. The main areas of focus during the year are set out below:
Matters Considered and Actions
Matter Considered:
Contract Profit
and Revenue
Recognition
Action: The recognition of revenue and profit on construction contracts involves
significant judgement due to the inherent difficulty in forecasting the final costs to
be incurred on contracts in progress and the process whereby applications are
made during the course of the contract with variations, which can be substantial,
often being agreed as part of the final account negotiation.
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.
Matter Considered:
Carrying Value of
Intangible Assets
and Investments
Action: Intangible assets comprise a significant element of the Group’s net assets.
As required by IFRSs, the Company conducts an impairment review of these assets
every year.
The Committee considered the papers presented by the Group Finance Director
supporting management’s assertion that goodwill is not impaired. This assertion was
supported by detailed cash flow and profit projections covering a three-year period,
including sensitivity analysis and an analysis of secured workload. It also considered the
independent auditor’s comments on the key assumptions and detailed forecasts made.
The issue of impairment involves making significant judgements about the Group’s
future cash flows and the risks the Group faces.
Matter Considered:
Going Concern and
Viability Statement
Action: The Group conducts a review to ensure it has sufficient working capital to support
its 3-year business plan. The review considers impact on working capital requirements of
various sensitivities to ensure that plans are sufficiently robust to cater for reasonable
worst-case scenarios whilst still meeting all bank covenants.
The Committee considered the papers presented by the Group Finance Director
supporting management’s assertion that the Group remains a going concern and has
sufficient working capital to support its business plans.
The Committee considered the consistency and appropriateness of
the Group’s policies and the effect of IFRS 15 in respect of profit and
revenue. Their specific application to a number of large contracts was
considered, including key judgements made by management and the
external audit thereof.
The Committee concurred with management’s assessment of the
contracts and the revenue recognised.
The Committee reviewed the basis of the valuation, including the
assumptions used, and considered the sensitivity of the pension
scheme valuation to changes in those key assumptions. Further details
of the valuation, including the key assumptions used, are disclosed in
note 22 to the financial statements on pages 96 to 99.
The Committee agreed with management’s recommendation that
no impairment charge should be made. Further details concerning
the make-up of intangible assets, the assumptions used and the
sensitivity of the carrying value of intangible assets can be found in
note 11 to the financial statements on page 87.
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.
The Committee agreed with management’s recommendation that the
Group is a going concern. On all scenarios modelled the Group was
able to meet all banking covenants with significant headroom. Further
details can be found in the long-term viability statement on page 37.
Membership of the Audit Committee
The members of the Committee during the year were Jonathan Hook (Chair), Peter Maskell and Aysegul Sabanci. Biographies of the current member of the Audit Committee are included on page 38.
45
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Audit Committee Report continued
Governance
The Committee members are all independent Non-Executive Directors. The Board is
satisfied that Jonathan Hook has the necessary skills and experience to chair the Audit
Committee and the Committee as a whole has the requisite recent and relevant financial
experience to the construction industry. The Committee routinely meets four times a year,
and additionally as required, to review or discuss other significant matters.
During the year the Audit Quality Review team of the Financial Reporting Council issued
reports into both the PwC audit of the Group’s 2021 financial statements and the Mazars
audit of the Group’s 2022 financial statements. In both instances they identified some areas
for improvement around auditing of long term contracts. The Committee discussed these
reports with the respective auditors and with the AQR and received a report from Mazars
as to how they intend to address those observations in future audits.
The Chairman, the Group Finance Director and the Group Chief Executive Officer attend the
meetings; the external auditor also attend parts of the meetings. The terms of reference of the
Committee are available on the Company’s website under the Investor section – Governance.
See page 42 for discussion of the Board’s annual internal appraisal of its own performance
and that of its Committees.
Internal Controls
The Audit Committee receives regular updates on internal controls and has concluded
that our controls are adequate and appropriate to our business.
Internal Audit
The internal audit function is covered through regular site visits conducted by Quality
Assurance and Group finance personnel. The Audit Committee reviewed the need for
a separate internal audit function during the year and agreed that the current practice
worked well and was appropriate to our business.
Risk Management
Assisted by Executive Directors, the Audit Committee has focused on maintaining and
improving the procedures to identify, manage and mitigate the risks facing the business
and to drill down on selected risks on a rolling basis through the year.
External Audit
The Audit Committee is responsible for overseeing relations with the external auditor,
including the approval of fees, and makes recommendations to the Board on their
appointment and reappointment. Details of the auditor’s remuneration can be found
in note 7 to the financial statements on page 85.
The Committee accepts in principle that certain work of a non-audit nature is most
efficiently undertaken by the external auditor. The policy on non-audit services provided
by Mazars LLP is that the Chairman of the Audit Committee reviews and, if appropriate,
approves all non-audit services and fees, and any such approval is put to the Audit
Committee for review and ratification at the next Committee meeting. No non-audit
services were provided during the year (2022: £nil).
46
TClarke Annual Report and Financial Statements 2023
The Company complies with the Competition and Markets Authority’s requirements around
independence. The independence of the external auditor is essential to the provision of an
objective opinion on the true and fair presentation in the financial statements. Auditor
independence and objectivity is safeguarded by limiting the nature and value of non-audit services
performed by the external auditor and ensuring the rotation of the lead engagement partner at
least every five years. The current lead engagement partner has held the position for two years.
The Audit Committee reviews the effectiveness of the audit process through quality service
reviews with the external auditor post-audit. At the end of the review process, the Audit
Committee decides whether, given the results of the review, to recommend to
shareholders that the auditors be reappointed.
Jonathan Hook
Chair of the Audit Committee
26th March 2024
The Roles and Responsibilities of the Audit Committee Include:
• Monitoring the integrity of the financial statements of the Company and any formal
announcements relating to the Company’s financial performance, reviewing significant
financial reporting issues and judgements contained therein.
• Reviewing the Company’s internal controls and risk management systems and reviewing
the need for an internal audit function on an annual basis.
• Making recommendations to the Board, to be put to shareholders, in relation to the
appointment of external auditors and their remuneration and terms of engagement.
• Advising Board on compliance with regulations, prevention of fraud and any
whistleblowing activity.
• Reviewing and approving the audit plan and ensuring it is consistent with the scope of
audit engagement.
• Reviewing the independence of the external auditor and reviewing the effectiveness of
the audit process.
• Reviewing the extent of non-audit services provided by the external auditor.
Strategic Report
Governance
Financial Statements
Additional
Nomination Committee Report
Dear Shareholder
As Chairman of the Nomination Committee, I am pleased to present the report of the
Nomination Committee for the year ended 31st December 2023.
During the year, the Nomination Committee comprised Iain McCusker (Chair), Peter
Maskell, Jonathan Hook and Aysegul Sabanci. Biographies of the current members of the
Nomination Committee are included on page 38.
The Nomination Committee met once during the year to review the structure, size and
composition of the Board and its Committees, undertake a Board evaluation process and
to consider the formal succession plan for Directors and senior management.
The Committee gives due consideration to diversity in the make-up of the Board but, due to
the size of the Company, the most important consideration is to achieve an appropriate mix
of skills, knowledge and experience, taking into account the Company’s Board Diversity
policy. Before any appointment is made by the Board, the Nomination Committee evaluates
the balance of skills, experience, independence and knowledge on the Board and, in the
light of this evaluation, prepares a description of the role and capabilities required for a
particular appointment.
The Committee’s succession planning not only takes into consideration the Company’s
long-term and medium-term needs and natural evolution to the Board, but also short-term
needs such as unforeseen departures and contingency for unexpected Board changes.
The Committee also formulated succession plans for the Group Management Board
taking into account the challenges and opportunities facing the Company, and the skills
and expertise needed on the Board in the future.
The performance of individual Directors, the Board, its committees and the Chairman
is reviewed annually. In 2023, in order to evaluate the performance of the Board, each
member of the Board was asked to complete a detailed questionnaire. The responses to
the questionnaire were summarised and were reviewed and discussed by the Nomination
Committee and subsequently shared with and discussed by the Board. Topics covered
in the review included strategy, risk management and the conduct and effectiveness of
Board meetings. Whilst acknowledging that there are always opportunities for
development and improvement, the Directors have concluded that the Board had
effectively discharged its duties during the year.
As part of the evaluation process, as Chairman of the Nomination Committee and acting
in conjunction with the Chief Executive Officer, I undertook the task of annual evaluation
of performance and commitment of individual Board members by conducting individual
47
TClarke Annual Report and Financial Statements 2023
interviews. The review of my own performance and commitment was undertaken by the
Senior Independent Director.
Based upon the evaluation of the Board, its committees and the continued effective
performance of individual Directors, the Committee recommended to the Board that those
directors wishing to be considered stand for re-election at the Company’s AGM in 2024.
Iain McCusker
Chair of the Nomination Committee
26th March 2024
The Roles and Responsibilities of the Nomination Committee
Include:
• Regularly reviewing the structure, size and composition (including the skills, knowledge,
experience and diversity) of the Board and making recommendations to the Board with
regard to any changes.
• Evaluating the balance of skills, experience, independence and knowledge on the Board
and preparing or approving a description of the role and capabilities required for a
particular appointment.
• Responsibility for identifying and nominating, for the approval of the Board, candidates to
fill Board vacancies as and when they arise.
• Satisfying itself with regard to succession planning for Directors and senior management,
taking into account the challenges and opportunities facing the Company and the
skills and expertise needed on the Board in the future.
• Making recommendations to the Board concerning membership of the Audit and
Remuneration Committees.
• Reviewing annually the time required from Non-Executive Directors.
Strategic Report
Governance
Financial Statements
Additional
Remuneration Committee Report
The Role and Responsibilities of the Remuneration
Committee include:
• Reviewing and determining the appropriateness of the remuneration policy and
consulting with shareholders on proposed changes.
• Determining the service contracts and base salary levels for the Executive Directors and
other senior management.
• Setting the 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, determining the targets and approving the outcome and
payments of all variable pay elements for Executive Directors.
• Approving the design of all share incentive plans for approval by the Board and, where
required, by shareholders.
Dear Shareholder
I am pleased to present the remuneration report for the year to 31st December 2023. This
report aims to set out how the Group pays our Directors, decisions made on their pay and
how much they have received in the last financial year. The report is split into two sections:
• A summary of the Directors’ Remuneration Policy, which was approved at the AGM on
10 May 2023.
• The Annual Report on Remuneration, which includes this letter and will be subject to
an advisory shareholder vote at our AGM on 29th May 2024.
Performance and Reward for 2023
2023 is the final year of our 3-year plan to grow revenues to £500m. 2023 has seen TClarke
deliver a record revenue of £491m in what has been extremely challenging economic
environment. The Remuneration Committee believe this is an excellent result.
Revenue
Operating profit
Earnings per share
Dividend per share
2023
2022
£491.0m
£9.4m
13.75p
5.9p
£426.0m
£11.5m
19.60p
5.35p
In addition, TClarke undertook a successful placing in July 2023 raising a net £10.1m to
provide additional working capital to support further growth of the business in 2024 and
2025. Our order book has grown from the previous year and now stands at £943m.
There is a well-founded confidence of achieving our target of £600m revenue in 2024.
The Executive Directors’ targets were set by the Remuneration Committee at the start
of 2023. Financial performance of TClarke, combined with the performance of the
Executive Directors in executing against the strategic annual bonus objectives set for them
resulted in 86% (of a maximum of 150%) of salary being payable to each of the
Executive Directors. LTIP awards granted in 2021, which vest on three-year performance to
31 December 2023, are expected to vest in full. Further information on the actual targets
set, and performance against them, is provided on page 57.
Remuneration Policy
The Committee expects the 2023 remuneration policy to remain effective until the 2026
AGM. Our remuneration policy is designed to be sustainable and simple, and to
encourage the effective stewardship that is vital to delivering our strategy of creating
long-term value for all stakeholders. It promotes long-term sustainable performance
through significant deferral of remuneration through shares. Executive Directors are
expected to build and maintain substantial personal shareholdings in the business.
Our policy ensures that performance-related components will form a significant
proportion of the overall remuneration package, with maximum rewards earned only
through the achievement of challenging performance targets based on measures aligned
with our long-term strategy.
48
TClarke Annual Report and Financial Statements 2023
Remuneration Committee Report Contents
51 Directors’ Remuneration policy
58 Annual Report on Remuneration
58 Single total figures remuneration (audited) Executive Directors
59 Share awards granted during the year (audited)
59 Outstanding interests under share schemes (audited)
60 Single total figures remuneration (audited) Non-Executive Directors
61 Ratio of Chief Executive’s Remuneration relative to all UK employees
64
Implementation of the remuneration policy for 2024
Strategic Report
Governance
Financial Statements
Additional
Remuneration Committee Report continued
Implementation of the Remuneration Policy for 2024
The key highlights of how we intend to apply the policy for 2024 are:
• Fixed Pay – five percent increase in Executive Directors base salaries on 1 January 2024
is in line with the wider monthly salaried workforce.
• Variable pay – annual bonus maximum will be 150% of salary and a LTIP award of up to
100% of salary will be made in March 2024.
• Performance measures – will continue to be focused on simple and transparent
measures. For the annual bonus, profit before tax and interest will apply for two-thirds
of the bonus and key strategic objectives aligned with the Group’s sustainable
growth strategy applying for the remaining one-third of bonus.
The LTIP performance conditions will be based on stretching earnings per share targets.
Alignment with Shareholders
We are mindful of our shareholders’ interests and are keen to ensure a demonstrable link
between reward and value creation. We are proud of the support we have received in the
past from our shareholders, with over 99% approval of the Directors’ remuneration report
received last year at the 2023 AGM. We hope that we will continue to receive your
support at the forthcoming AGM in 2024.
Evaluation of the Committee
See page 42 for discussion of the Board’s annual internal appraisal of its own performance
and that of its Committees.
Peter Maskell
Chair of Remuneration Committee
26th March 2024
49
TClarke Annual Report and Financial Statements 2023
implementation of the policy. The Committee regularly monitors pay trends across the
workforce and salary increases will ordinarily be (in percentage of salary terms) in line with those
of the wider workforce. Reflecting the UK Corporate Governance Code and investor
guidelines, new external Executive Director appointees will also have company pension
contributions set in line with the level offered to the majority of the salaried workforce (in
percentage of salary terms).
The remuneration policy described here provides an overview of the structure that operates
for the most senior executives in the Company. Employees below executive level have a lower
proportion of their total remuneration made up of incentive-based remuneration, with pay
driven by market comparators and the impact of the role in question. Long-term incentives are
reserved for those judged as having the greatest potential to influence the Group’s strategic
direction, earnings growth and share price performance.
How Shareholders’ Views are Taken into Account
The Committee seeks to engage with its major shareholders when any significant changes to
the remuneration policy are proposed. The Committee also considers shareholder feedback
received in relation to the Directors’ remuneration report and at the AGM each year, and this,
plus any additional feedback received from time to time, is considered as part of the
Committee’s annual review of remuneration policy. The Committee also closely monitors
developments in institutional investors’ best practice expectations.
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy
This part of the Directors’ remuneration report summarises the Directors’ Remuneration Policy
for the Company which was approved by shareholders at the 2023 AGM. The policy came
into effect on the 10 May 2023 and is next due to be put to shareholders for approval at the
2026 AGM.
Policy Overview
The primary objective of the remuneration policy is to promote the long-term success of the
Company. In working towards the fulfilment of this objective, the Committee takes into
account a number of factors when formulating the remuneration policy for the Executive
Directors, including the following:
• the need to provide a remuneration structure that is sufficiently competitive to attract, retain
and motivate Executive Directors of an appropriate calibre to deliver long-term, sustainable
growth of the business;
• the alignment of interests between executives and shareholders through share ownership
and appropriate recovery and withholding provisions;
• internal levels of pay and employment conditions across the Group as a whole;
• the principles and recommendations set out in the UK Corporate Governance Code and
the views of institutional shareholders and their representative bodies; and
• periodic external comparisons of market trends and practices in similar companies taking
into account their size (and in particular their FTSE ranking) and complexity.
Our remuneration structure is intended to be simple and transparent, and to contribute to
the building of a sustainable performance culture. Our policy ensures that performance-related
components will form a significant proportion of the overall remuneration package, with
maximum total potential rewards earned only through the achievement of challenging
performance targets based on measures selected to promote the long-term success of
the Company.
The main elements of the remuneration package for Executive Directors are a base salary,
benefits and pension provision, as well as an annual bonus plan and shares awarded under
a long-term incentive plan (‘LTIP’), both of which are subject to stretching performance
conditions. The Committee has determined that this structure will provide an appropriate
balance between fixed and performance-related pay elements. The Committee will
continue to review the remuneration policy to ensure it takes due account of remuneration
best practice and that it remains aligned with shareholders’ interests.
How the Executive Directors’ Remuneration Policy Relates to the Wider Workforce
The Committee does not directly consult with employees regarding the remuneration of
Directors. However, the pay and conditions elsewhere in the Company are considered when
designing the policy for Executive Directors and continue to be considered in relation to
50
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
Summary Director Policy Table
The table below summarises the remuneration policy for Directors.
Element of Remuneration: Basic Salary
Purpose and Link to Strategy
• To provide competitive fixed remuneration to attract and retain Executive Directors
of superior calibre in order to deliver growth for the business
Operation
• Normally reviewed annually with changes typically effective 1st January
• Paid in cash on a monthly basis
• Comparison against companies with similar characteristics are taken into account as
part of the review
• Internal reference points, the responsibilities of the individual role, progression within
the role and individual performance are also taken into account
• Executive Directors under notice of termination of employment are not eligible for
an annual salary review
Element of Remuneration: Benefits
Purpose and Link to Strategy
• To support recruitment and retention
• To provide a market consistent benefits package
Operation
• Benefits may include a combination of car or car allowance, private medical insurance
and life insurance
• Executive Directors will be eligible for any other benefits which are introduced for the
wider workforce on broadly similar terms
• Travel allowances or time-limited relocation benefits may be offered if considered
appropriate and reasonable by the Committee
• Any reasonable business-related expenses (including tax thereon) can be reimbursed
if determined to be a taxable benefit
• Executive Directors are also eligible to participate in any all-employee share plans
operated by the Company, in line with prevailing HMRC guidelines (where relevant),
on the same basis as for other eligible employees
51
TClarke Annual Report and Financial Statements 2023
Maximum Opportunity
• There is no prescribed maximum annual basic salary or salary increase. Details of the
current salary levels are set out in the Annual Report on Remuneration on page 57
• Any salary increase (in percentage of salary terms) will ordinarily be up to the general
increase for the broader employee population; however, a higher increase may
be awarded to recognise, for example, an increase in the scale, scope or responsibility
of the role and/or to take account of relevant market movements
• Where an Executive Director’s salary is set below market levels at appointment, a
series of increases may be given (in addition to the factors listed above) in order to
achieve the desired salary positioning, subject to satisfactory individual performance
Performance Targets
• None, although the overall performance of the individual and the wider business
context is considered as part of the salary review process
Maximum Opportunity
• There is no maximum limit, but the Committee reviews the cost of the benefits
provision on a regular basis to ensure that it remains appropriate
• Participation in the all-employee share plans is subject to the limits set out by HMRC
Performance Targets
• Not applicable
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
Summary Director Policy Table
The table below summarises the remuneration policy for Directors.
Element of Remuneration: Pension
Purpose and Link to Strategy
• Provide competitive retirement benefits
Operation
• Defined benefit or defined contribution scheme (or cash alternative)
• Where the promised levels of benefits cannot be provided through an appropriate
pension scheme, the Group may provide benefits through the provision of salary
supplements
Element of Remuneration: Bonus
Purpose and Link to Strategy
• Incentivise annual achievement of performance targets relating to the Company’s KPIs
• Maximum bonus only payable for achieving demanding targets
Operation
• Normally payable in cash
• Levels of award are determined by the Committee after the year end based on
performance against the targets set at the start of the year
• All bonus payments are at the ultimate discretion of the Committee and the Committee
retains an overriding discretion (within the limits of the scheme) to ensure that overall
bonus payments reflect its view of corporate performance during the year
• Payments in relation to the annual bonus are subject to withholding and recovery provisions
52
TClarke Annual Report and Financial Statements 2023
Maximum Opportunity
• For Executive Directors appointed externally from 1 January 2020, defined
contribution pension contributions (or cash equivalents in lieu) will be aligned with the
wider salaried staff
• Current employees who are existing members of the Company’s defined benefit
scheme, and who become Executive Directors, may be entitled to continue to accrue
benefits under these arrangements rather than participating in the defined contribution
(or cash equivalent) arrangements. The maximum pension per year on retirement at
age 65 is 1/60th of final pensionable salary for service before March 2010, and 1/80th
of revalued pensionable salary for service thereafter and these rates are consistent for
all participants. A salary supplement may be provided in order to compensate the
individual up to the value of benefits lost as a results of HMRC limits or if the
individual opts-out of the plan.
• None of the current Executive Directors participate in any defined benefit pension
schemes or arrangements.
Performance Targets
• Not applicable
Maximum Opportunity
• Maximum of 150% of salary per annum
• Target performance would normally result in 60% of maximum becoming payable
Performance Targets
• Group financial measures (e.g. profit-related measures) will apply for the majority of
the bonus
• If used, personal or strategic objectives will be applied for the minority of the bonus
• Measures and objectives will be determined over a one-year performance period
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
Summary Director Policy Table
The table below summarises the remuneration policy for Directors.
Element of Remuneration: Long-Term Incentive Plan
Purpose and Link to Strategy
• Aligned to delivery of strategy and long-term value creation
• Align Executive Directors’ interests with those of shareholders
• To promote retention
Operation
• LTIP awards take the form of conditional rights or nil, nominal cost or market value
options and are normally granted annually
• Awards vest after three years’ subject to the achievement of pre-set performance criteria
and continued employment. Awards made from 2020 onwards are subject to a
mandatory two-year holding period following the end of the vesting period, other than
those sold to cover tax and NI liabilities and dealing costs
• The Committee reviews the quantum of awards annually and monitors the continuing
suitability of the performance measures
• The Committee may determine at grant that an amount (in cash or shares) equivalent to
the dividends paid or payable on vested shares up to the release date may become
payable; any amount payable may assume the reinvestment of dividends over the period
• Awards under the LTIP are subject to withholding and recovery provisions.
Maximum Opportunity
• Annual awards of no more than 100% of salary (with this level generally reserved for
exceptional circumstances).
Performance Targets
• Performance is measured over three years
• Awards currently vest based on performance against stretching earnings per share
(‘EPS’) targets set and assessed by the Committee. However, different financial,
strategic or share price-based measures may be set for future award cycles as
appropriate to reflect the strategic priorities of the business at that time
• Notwithstanding the performance outcome, the Remuneration Committee retains the
discretion to adjust the vesting outcome upwards or downwards (within the scheme
limits) to reflect the underlying performance of the Company over the three-year period
• A maximum of 25% vests at threshold, increasing to 100% vesting at maximum on a
straight-line basis
Element of Remuneration: Share Ownership Guidelines
Purpose and Link to Strategy
• To increase alignment between Executives and shareholders
Operation
• Executive Directors are required to build and maintain a shareholding of 100,000 shares
through the retention of vested share awards or through open market purchases
• Wholly owned shares and vested LTIP shares in the mandatory holding period (net of
tax) will count towards the guideline
Maximum Opportunity
• Not applicable
Performance Targets
• Not applicable
53
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
Summary Director Policy Table
The table below summarises the remuneration policy for Directors.
Element of Remuneration: Post-employment Share
Ownership Guidelines
Purpose and Link to Strategy
• To provide further long-term alignment between Executives and shareholders
• To ensure a focus on successful succession planning
Operation
• Executive Directors will normally be expected to maintain a holding of TClarke shares
for two years after their employment as a Director has ceased
• The post-employment guideline will be equal to the lower of: the actual shareholding
at the time of ceasing to be a Director and 100,000 shares
• The guideline will apply only to shares acquired from LTIP awards made from 2020
onwards; open market purchases are excluded from the post-employment guidelines
• The specific application of the shareholding guideline will be at the Committee’s discretion
Maximum Opportunity
• Not applicable
Performance Targets
• Not applicable
Element of Remuneration: Non-Executive Director
Purpose and Link to Strategy
• To provide competitive fees to attract and retain high-calibre Non-Executive Directors
• To reflect the time commitment and responsibilities of the role
Maximum Opportunity
• There is no prescribed maximum fee or fee increase
• Any increase will be guided by changes in market rates, time commitments and
responsibility levels as well as by increases for the broader employee population
Performance Targets
• Not applicable
Operation
• The Chairman’s fee is set by the Board on the recommendation of the Remuneration
Committee. The Non-Executive Directors’ fees are set by the Board on the
recommendation of the Executive Directors. No Director takes part in discussions
relating to their own remuneration
• Non-Executives may be paid additional fees for chairing one of the major Board
Committees or for holding the Senior Independent Director position
• The fees are set taking into account the time commitment and responsibilities of the role
• In exceptional circumstances, if there is a temporary yet material increase in the time
commitments for Non-Executive Directors, the Board may pay extra fees to recognise
the additional workload
• Fees are normally paid monthly in cash and are normally reviewed annually
• Directors can be reimbursed for any reasonable business-related expenses (including the
tax thereon if determined to be a taxable benefit)
54
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
Pay for Performance Scenarios
The charts below provide an illustration of the potential future reward opportunities for
the Executive Directors, and the potential split between the different elements of
remuneration under four different performance scenarios: ‘Minimum’, ‘Target’, ‘Maximum’
In addition a maximum has been calculated and detailed in the last paragraph of this
section, including the impact of a 50% share price appreciation on LTIP awards.
The ‘minimum’ scenario reflects base salary, pension and benefits (i.e. fixed remuneration)
which are the main elements of the Executive Director remuneration packages not linked
to performance.
The ‘target’ scenario reflects fixed remuneration as above, plus a bonus payout of 60% of
maximum and LTIP threshold vesting at 25% of maximum award.
Potential reward opportunities are based on TClarke’s remuneration policy, applied to the
base salaries effective 1 January 2024. The annual bonus and LTIP are based on the
maximum opportunities set out under the remuneration policy for normal circumstances;
being 150% of salary and 100% of salary respectively. Note that the LTIP awards granted in
a year do not normally vest until the third anniversary of the date of grant, and the projected
value is based on the face value at award rather than vesting (i.e. the scenarios exclude the
impact of any share price movement over the period).
The ‘maximum’ scenario includes fixed remuneration and full payout of all incentives
(150% of salary under the annual bonus and 100% of salary under the LTIP) but no
movement in share price over the three-year period. Under the ‘maximum’ scenario, if
TClarke share price increased by 50% over the three-year performance period ( in effect
valuing this element of pay at 150% of salary) the indicative total remuneration value would
be £1,972,279 for the Group Chief Executive, £1,686,759 for the Group Managing Director
and £1,477,271 for the Group Finance Director.
Mark Lawrence
Fixed pay
Annual
bonus
Long-term
incentives
Minimum
Target
Maximum
100%
48%
30%
Mike Crowder
41%
42%
11%
28%
Fixed pay
Annual
bonus
Long-term
incentives
Minimum
Target
Maximum
100%
48%
30%
Trevor Mitchell
41%
42%
11%
28%
Fixed pay
Annual
bonus
Long-term
incentives
Minimum
Target
Maximum
100%
48%
30%
41%
42%
11%
28%
55
TClarke Annual Report and Financial Statements 2023
Approach to Recruitment and Promotions
The remuneration package for a new Executive Director would be set in accordance with the
terms of the prevailing approved remuneration policy at the time of appointment and take into
account the skills and experience of the individual, the market rate for a candidate of that
experience and the importance of securing the relevant individual.
Salary would be provided at such a level as required to attract the most appropriate candidate
and may be set initially at a below mid-market level on the basis that it may progress towards
the mid-market level over a period of two to three years once expertise and performance has
been proven and sustained.
New appointees would receive company pension contributions or an equivalent cash
supplement aligned to that offered to the wider salaried workforce at the time of appointment,
and would be eligible to receive benefits of the same type and at similar levels as other
Executive Directors. If the new appointee were promoted from within the business and was
already a member of the defined benefit scheme, they would remain eligible for benefits from
it in the same way as other members of the workforce who are members.
The maximum level of variable pay which may be awarded to new Executive Directors will be
in line with the policy set above. In addition to this, the Committee may make buyout awards in
the form of additional cash and/or share-based elements to replace remuneration forfeited by
an executive as a result of leaving his or her previous employer. It will, where possible, ensure
that these awards are consistent with awards forfeited in terms of vesting periods, expected
value and performance tests.
2024
£‘000 Total
517
1,075
1,730
2024
£‘000 Total
446
922
1,480
2024
£‘000 Total
385
804
1,295
Strategic Report
Governance
Financial Statements
Additional
Directors’ Remuneration Policy continued
The Committee may apply different performance measures, performance periods and/or
vesting periods for initial awards made following appointment under the annual bonus and/or
long-term incentive arrangements, subject to the rules of the scheme, if it determines that the
circumstances of the recruitment merit such alteration. LTIP awards can be made shortly
following an appointment (assuming the Company is not in a close period), whilst the
maximum annual bonus in the year of appointment would generally be pro-rated to reflect the
period of service during the year.
For an internal Executive Director appointment, any variable pay element awarded in respect
of the prior role may be allowed to pay out according to its original terms.
Remuneration Committee has overarching discretion to determine that awards vest at
cessation of employment and/or to disapply the time pro-rating requirement if it considers it
appropriate to do so.
In relation to a termination of employment, the Committee may make payments in relation
to any statutory entitlements or payments to settle compromise claims as necessary. The
Committee also retains the discretion to reimburse reasonable legal expenses incurred in
relation to a termination of employment and to meet any transitional costs if deemed
necessary. Payment may also be made in respect of accrued benefits, including untaken
holiday entitlement.
There is no provision for additional compensation on a change of control. In the event of a
change of control, the LTIP awards will normally vest on (or shortly before) the change of
control and the Committee shall determine the extent to which outstanding awards shall vest.
Awards may alternatively be exchanged for new equivalent awards in the acquirer where
appropriate. Outstanding awards under any/all employee share plans will vest in accordance
with the relevant scheme rules. Bonuses will become payable on the change of control and
in full.
External Appointments
The Board allows Executive Directors to accept external Non-Executive Director positions
provided the appointment is compatible with their duties as Executive Directors. The Executive
Directors may retain fees paid for these services. Any appointment will be subject to approval
by the Board.
Non-Executive Directors
The Chairman and Non-Executive Directors’ terms are set out in letters of appointment. The
letters of appointment of the Non-Executive Directors are available for inspection at the
Company’s registered office during normal business hours.
For external and internal appointments, the Committee may agree that the Company will meet
certain relocation and/or incidental expenses as appropriate.
The fee structure for Non-Executive Director appointments will be based on the Non-Executive
Director fee policy as set out in the policy table.
Service Contracts and Approach to Leavers
The Company’s policy is for Executive Directors to have service contracts which may be
terminated with no more than 12 months’ notice from either party. The Executive Directors’
service contracts are available for inspection by shareholders at the Company’s registered office.
No Executive Director has the benefit of provisions in their service contract for the payment
of pre-determined compensation in the event of termination of employment. It is the
Committee’s policy that the service contracts of Executive Directors will provide for termination
of employment by giving notice or by making a payment of an amount equal to basic
salary in lieu of the notice period. It is the Committee’s policy that no Executive Director
should be entitled to a notice period or payment on termination of employment in excess
of the levels set out in his or her service contract. Incidental expenses may also be payable,
if appropriate.
Annual bonus may be payable with respect to the period of the financial year served, although
it will be pro-rated for time and paid at the normal payout date. Any share-based entitlements
granted to an Executive Director under the Company’s share plans will be determined based
on the relevant plan rules. In certain circumstances, such as death, ill health, disability,
retirement or other circumstances at the discretion of the Committee, ‘good leaver’ status may
be applied. For good leavers, awards will normally vest at the normal vesting date, subject to
the satisfaction of the relevant performance conditions at that time and reduced pro-rata to
reflect the proportion of the vesting period actually served. Awards subject to a holding period
will normally be released following completion of the holding period. Under the plan rules, the
56
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration
This section provides details of how the remuneration policy was implemented during the
financial year ended 31 December 2023 and how the policy will be implemented in 2024. The
information provided in this section of the report which is audited has been highlighted.
Annual bonus
The 2023 annual bonus was subject to operating profit targets (two-thirds of bonus) alongside a
scorecard of strategic objectives closely aligned with the KPIs of the business (one-third of bonus).
Single Total Figure Remuneration (Audited)
The table below reports the total remuneration receivable in respect of qualifying services by
each Director during the year:
Year ended 31st December 2023
Executive Directors
Salary
£000
Taxable
benefits
£000
Fixed
pay
£000
Annual
bonus
£000
Long-term
incentives
£000
Variable
pay
£000
Total
£000
Executive:
Mark Lawrence
2023
2022
Mike Crowder
2023
2022
Trevor Mitchell
2023
2022
462
440
394
375
347
330
30
29
31
30
22
22
492
469
425
405
369
352
397
660
338
563
298
495
396
652
338
556
295
485
793 1,285
1,781
1,312
676 1,101
1,524
1,119
593
980
962
1,332
The figures in the single total figure remuneration table are derived from the following:
Total salary and fees
The amount of salary and fees received in the year.
The actual performance of £9.4m operating profit resulted in 36% of maximum for this element
being payable. The stretch target for operating profit was £12m.
The measures selected for strategic objectives reflect a range of key financial and operational goals
which support the Company’s strategic objectives. The respective targets have not been disclosed
as they are considered by the Board to be commercially sensitive. Objectives were set across four
strategic imperatives; delivering the growth strategy (up to 20% of strategic bonus), delivering
strategic ESG goals aligned with strategy (up to 40%), delivering Health and Safety systems (up
to 20%) and attracting more women into construction (up to 20%). Performance against strategic
objectives resulted in 100% of the maximum for this element being payable.
Overall, this resulted in a bonus of 86% of salary (maximum 150%) for Mark Lawrence, Mike Crowder
and Trevor Mitchell being payable.
Long-term incentives
The value of LTIP awards that vest in respect of a performance period that is completed by the end
of the relevant financial year. For 2023 this includes the 2021 Conditional shares awards. There are 2
LTIPs that could potentially vest on 28th April 2024. Both relate to outperformance of earnings per
share growth (EPS) over inflation. The Committee has considered the performance of the Company
over the period 1 January 2021 to 31 December 2023. During this period revenue has more than
doubled, profit and cash significantly improved, and we have a forward order book approaching
£1 billion which has underpinned the board’s expectations for 2024 and 2025. The Committee has
decided to use CPI as the inflation measure rather than RPI in line with subsequent awards made. The
Group no longer reports underlying and non-underlying earnings and therefore all EPS calculations
are based on total basic EPS. Furthermore the impact of the share placing in July 2023 has been
disregarded from the calculation as that was to raise additional working capital for 2024 and beyond.
On this basis EPS has increased by 38% above CPI and therefore the LTIPs are expected to vest in full.
The value is based on the three month average share price ending 31st December 2023 of 126.87p.
The performance conditions are detailed on page 59. The 2022 numbers have been updated to
reflect the actual exercise price on 13th July 2023.
Taxable benefits
The taxable value of benefits received in the year. These are a car or car allowance, private
medical insurance, fuel and train allowance.
Pension-related benefits
The Directors received no pension benefits in 2023 (2022: nil)
57
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
Share awards granted during the year (audited)
2021 LTIP
Mark Lawrence
Mike Crowder
Trevor Mitchell
Date of
grant
27/03/2023
27/03/2023
27/03/2023
%
Salary
100%
100%
100%
Price1
(pence)
137.85
137.85
137.85
Number
of Shares
337,843
287,934
253,382
Face value
of award
465,717
396,917
349,287
% of awards vesting
at threshold
Performance
Period
12.5% EPS element
12.5% TSR element
3 years to
31/12/2025
1 The share price used to calculate the awards at the date of grant was based on the average share price for the five dealing days preceding the date of grant. The closing share price on 27 March 2023 was 134.75p
Outstanding interests under share schemes (audited)
Details of the executive directors’ in long-term incentive awards at 31 December 2023 and movements in the year are as follows:
Mark Lawrence
Total
Mike Crowder
Total
Trevor Mitchell
Total
Date of
award
1st January
Numbers
01/05/2020
28/04/2021
16/03/2022
27/03/2023
01/05/2020
28/04/2021
16/03/2022
27/03/2023
01/05/2020
28/04/2021
16/03/2022
27/03/2023
439,601
311,152
301,370
–
1,052,123
375,000
265,427
256,849
–
897,276
327,025
231,505
226,027
–
784,557
Granted
–
–
–
337,843
337,843
–
–
–
287,934
287,934
–
–
–
253,382
253,382
Dividend
Equivalent Shares
Exercised
Lapsed
31st December
Numbers
Earliest date
of exercise
49,030
–
–
–
(488,631)
–
–
–
49,030
(488,631)
41,825
–
–
–
(416,825)
–
–
–
41,825
(416,825)
36,474
–
–
–
(363,499)
–
–
–
36,474
(363,499)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
311,152
301,370
337,843
950,365
–
265,427
256,849
287,934
810,210
–
231,505
226,027
253,382
710,914
28/04/2024
16/03/2025
27/03/2026
28/04/2024
16/03/2025
27/03/2026
28/04/2024
16/03/2025
27/03/2026
The 2020 award vested in full as detailed in the previous year’s annual report. The 2021 awards performance conditions relate to EPS growth over RPI. These awards are not expected to vest.
2022 and 2023 awards are subject to EPS growth targets in excess of inflation and TSR growth targets.
58
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
The conditional share awards and options will vest subject to continued employment with the
Group and satisfaction of the following performance conditions over a three-year period ending
31 December preceding the earliest vesting date. For 50% of the 2021 to 2023 awards
Annual growth rate in underlying EPS above RPI1 Proportion of award vesting
Less than 3%
3%
Between 3% and 10%
Above 10%
Nil
25%
Between 25% and 100% straight-line base
100%
1 2022 and 2023 CPI rather than RPI is used
The remaining 50% of the 2021 award performance conditions are as follows:
Annual growth rate in underlying EPS above RPI1 Proportion of award vesting
Less than 20%
Between 20% and 30%
Above 30%
Nil
Between nil and 100% on a sliding scale
100%
The remaining 50% of the 2022 and 2023 awards will be subject to satisfaction of the Total
Shareholder Return (TSR) performance condition as set out below:
TSR
Less than 35%
35%
Between 35% and 50%
Above 50%
Proportion of award vesting
Nil
25%
Between 25% and 100% on a straight-line basis
100%
The Directors had no interest in the TClarke Savings Related Share Option Scheme
(‘SAYE Scheme’) during 2023.
External Appointments
Mark Lawrence and Mike Crowder do not hold any external appointments. Trevor Mitchell is
an Executive Director of It’s Purely Financial Limited.
Pensions
At 31 December 2023 none of the Directors were members of the Company pension
scheme (2022: None).
59
TClarke Annual Report and Financial Statements 2023
Single Total Figures Remuneration (Audited)
Year ended 31st December 2023
Non-Executive Directors
Fees
£000
Taxable benefits
£000
Total
£000
2023
2022
2023
2022
2023
2022
107
61
–
61
56
102
59
24
57
36
–
–
–
–
–
–
–
–
–
–
107
61
–
61
56
102
59
24
57
36
Non-Executive:
Iain McCusker
Peter Maskell
Louise Dier 1
Jonathan Hook
Aysegul Sabanci 2
1 Louise Dier retired from the Board on 30 April 2022
2 Aysegul Sabanci joined the Board on 1st May 2022
The aggregate remuneration for executive and non-executive directors in 2023 was £2.6m
(2022: £4.6m) Aggregate remuneration comprises salary, fees, benefits pension contributions
and bonus payments.
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
Total Remuneration (Audited)
The tables below provide greater analysis relating to the 2023 remuneration comparison:
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Salary
Mark Lawrence
Total remuneration £000
300
436
567
875 1,056 1,137
922 1,016 1,781 1,285
Mark Lawrence
Basic salary, £k
Total annual pay £k
Total pay £k
462
889
1,285
P25
24
26
26
P25
19:1
34:1
50:1
P50
44
46
46
P50
11:1
19:1
28:1
P75
61
63
63
P75
8:1
14:1
20:1
Ratio
Basic salary
Total annual pay 1
Total pay 2
1 Total annual pay includes basic salary, taxable benefits, and annual bonus.
2 Total pay includes total annual pay plus the cash value of any long-term incentives received.
Relative importance of spend on pay (audited)
The table below shows pay for all employees compared to other key financial indicators
Employee remuneration
Basic earning per share
Dividends paid during the year
Employee headcount 1
2023
2022
change
£97.0m
13.79p
£2.5m
1,352
£88.0m
19.6p
£2.3m
1,294
10.2%
-34.4%
8.7%
4.5%
1 Employee headcount is the monthly average number of employees on a full-time equivalent basis. More detail is set out
in note 8 to the consolidated financial statements.
Annual bonus percentage
of maximum
Long-term incentive
award investing percentage
of maximum share awards
0%
24%
32% 69% 100% 78%
30% 61% 100%
57%
0%
0%
0% 100% 100% 100% 100% 100% 100% 100%
Ratio of Chief Executive’s Remuneration Relative to all UK Employees
The table below shows the ratio of the Group Chief Executive Officer’s single total figure of
remuneration compared to all UK employees at the 25th percentile, median and 75th percentile.
The method used for the calculation is Option C. Three employees were identified at each
percentile from the list of all full time employees in the UK. The report will build up over time to
show a ten year period.
Financial year
P25
(lower quartile)
P50
(median)
P75
(upper quartile)
Mark Lawrence
2023
2022
2021
2020
2019
50:1
48:1
32:1
30:1
26:1
28:1
35:1
22:1
22:1
19:1
20:1
26:1
17:1
16:1
14:1
60
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
Percentage change in remuneration levels
The table below shows details of the percentage change in base salary, benefits, and annual
bonus for the chair, the executive and non-executive directors over the current year and three
previous financial years, compared to the average percentage change for other employees of
the Group over the same periods.
Percentage change
in base salary 1
Percentage change
in benefits
Percentage change
in bonus
2022-23
2021-22
2020-21
2019-20
2022-23
2021-22
2020-21
2019-20
2022-23
2021-22
2020-21
2019-20
Mark Lawrence
Mike Crowder
Trevor Mitchell
Iain McCusker
Peter Maskell
Jonathan Hook 2
Louise Dier 3
Aysegul Sabanci
UK employee average
5%
5%
5%
5%
3%
3%
N/A
5%
5%
5%
5%
5%
5%
5%
11%
5%
N/A
3%
0%
0%
0%
0%
0%
N/A
6%
N/A
7%
33%
33%
6%
47%
15%
N/A
5%
N/A
(11%)
3%
3%
0%
N/A
N/A
N/A
N/A
N/A
0%
11%
(3%)
4%
N/A
N/A
N/A
N/A
N/A
0%
1%
(1%)
0%
N/A
N/A
N/A
N/A
N/A
10%
24%
(47%)
0%
N/A
N/A
N/A
N/A
N/A
67%
(40)%
(40)%
(40)%
N/A
N/A
N/A
N/A
N/A
35%
73%
73%
73%
N/A
N/A
N/A
N/A
N/A
67%
102%
102%
102%
N/A
N/A
N/A
N/A
N/A
22%
(51%)
(51%)
(51%)
N/A
N/A
N/A
N/A
N/A
(13%)
1 When Directors are appointed or retired the percentage change figures have been calculated on a full year equivalent to give a meaningful comparison.
2 Jonathan Hook was appointed chair of the Audit Committee on 22nd June 2022 and received an additional fee as a result.
3 Louise Dier was appointed chair of Audit Committee on 1st June 2021 and received an additional fee as a result.
Service Contracts and Letters of Appointment
All Executive Directors have 12-month notice periods from the Company (and 12 months from
the Executive Director) in accordance with their service agreements.
Biographical information on the Committee members and details of attendance at the
Remuneration Committee’s meetings during the year are set out on pages 39 and 42 respectively.
Non-Executive Directors have letters of appointment which include initial terms of three years.
Consideration by the Directors of Matters Relating to Directors’ Remuneration
The Company’s approach to the Chairman’s and Executive Directors’ remuneration is determined
by the Board on the advice of the Remuneration Committee.
During the year, the Remuneration Committee comprised Peter Maskell (Chair), Iain McCusker,
Jonathan Hook and Aysegul Sabanci.
The Remuneration Committee has access to independent advice where appropriate. The
Committee appointed Pinsent Mason LLP in August 2022 to provide independent advice on
Directors service contracts and remuneration policy. The Committee is satisfied that the advice
provided by Pinsent Mason was objective and independent. No advice was sought during 2023.
The Committee also receives input from the Group Chief Executive Officer and advice from the
Company Secretary. No individuals are present when their own remuneration is being discussed.
61
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
Statement of Voting at Annual General Meeting
The Company remains committed to ongoing shareholder dialogue and takes a keen interest in
voting outcomes. The following table sets out voting outcomes in respect of the resolutions
relating to approving Directors’ remuneration matters at the Company’s AGM on 10th May 2023:
Resolution
discretionary % of vote against % of vote withheld
Votes for
Votes
Votes
Performance Graph
The graph below shows the total shareholder return that would have been obtained over the
past ten years by investing £100 in shares of TClarke plc on 31st December 2013 and £100 in a
notional investment in the FTSE All-Share Index and the FTSE All-Share Construction & Materials
Index on the same date. In all cases it has been assumed that all income has been reinvested. The
FTSE All-Share Index and the FTSE All-Share Construction & Materials Index are considered to be
the most appropriate broad equity indices to use as a comparison because the Company is a
constituent of both.
Approval of Directors’ remuneration report 13,266,519
Approval of Directors’ remuneration policy 13,263,712
99.23% 103,222
99.21% 106,029
0.77%
0.79%
11,035
11,035
Shareholder Return 2014-2023
300
250
200
150
100
50
Directors’ interest and minimum shareholding requirement (audited)
The figures below set out the shareholdings beneficially owned by directors and their family
interests at 31 December 2023. The current minimum shareholding requirement is 2,000 shares
for non-executive directors and executive directors are required to build and maintain a minimum
shareholding of 100,000 shares.
Mark Lawrence
Mike Crowder
Trevor Mitchell
Iain McCusker
Peter Maskell
Jonathan Hook
Aysegul Sabanci
31st December 2023
Number of shares
31st December 2022
Number of shares
661,882
580,707
473,560
2,000
41,500
20,000
2,000
402,908
359,790
280,906
2,000
41,500
20,000
2,000
There have been no changes to directors’ interests since 31 December 2023.
Pension Arrangements
None of the current Executive Directors receive any pension benefit from the Company.
62
TClarke Annual Report and Financial Statements 2023
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
TClarke plc
FTSE All-Share
FTSE AIM All-Share / Construction and Materials – SS
FTSE All-Share / Construction and Materials – SEC
Strategic Report
Governance
Financial Statements
Additional
Annual Report on Remuneration continued
Implementation of the remuneration policy for 2024
Base Salaries
In setting the 2024 base salaries, the committee considered the budgeted level of increases in
base salary for senior executives below Board level and the wider salaried employee population of
the Group, which averaged 5%. The committee determined that the base salaries for Mark
Lawrence, Mike Crowder and Trevor Mitchell should increase by 5% with effect from 1 January
2024. In confirming the salary increases, the committee took account of the performance of each
executive director and their respective responsibilities and the positioning of their current salaries
relative to market competitors, as detailed in the chair’s statement above.
From 1 January 2024 £‘000
From 1 January 2023 £‘000
Increase %
Mark Lawrence
Mike Crowder
Trevor Mitchell
485
414
364
462
394
347
5
5
5
Annual Bonus
The maximum bonus potential for the year ending 31st December 2023 is 150% of salary for all
the Executive Directors.
Awards are determined based on a combination of both the Group’s financial results, being
growth in Group profit before tax (two-thirds of overall bonus) and strategic targets (one-third of
overall bonus) being met.
Maximum bonus will only be payable when both the financial results of the Group have
significantly exceeded expectations and all strategic targets have been met.
The measures have been selected to reflect a range of key financial and operational goals
which support the Company’s Growth Plan and ESG initiative. ESG accounts for 50% of the
strategic target bonus opportunity. The respective targets have not been disclosed as they are
considered by the Board to be commercially sensitive.
The Executive Directors’ performance will be assessed individually by the Committee against
the measures and targets, relying on audited information where appropriate, and having regard
to the value which has been created for shareholders.
63
TClarke Annual Report and Financial Statements 2023
Non-Executive Directors
The Company’s approach to Non-Executive Directors’ remuneration is set by the Board with
account taken of the time and responsibility involved in each role. Fees are shown below:
Fees for the non-executive directors
£000
2024
112
59
5
5
£000
2023
107
56
5
5
%
Increase
5%
5%
0%
0%
Chair
Non-executive directors
Base fee
Additional fees:
Audit committee chair
Remuneration committee chair
On behalf of the Board
Peter Maskell
Chair of the Remuneration Committee
26th March 2024
Strategic Report
Governance
Financial Statements
Additional
Directors‘ Report
The Directors’ report should be read in conjunction with the Strategic report on pages 01 to 37 and
the Corporate Governance report on pages 39 to 43. The Directors’ report comprises sections of the
Annual Report incorporated by reference as set out below which, taken together, contain the
information to be included in the Annual Report, where applicable, under Listing Rule 9.8.4.
Board membership
Page 38
Dividends
Page 94
Pages 48 to 63
Directors’ long-term incentives
Pages 39 to 43
Corporate Governance report
Engagement with employees
Pages 18 to 22
Pages 15 to 16
Engagement with stakeholders
Future developments of the business of the Group
Pages 2 to 6
Pages 18 to 22
Employee equality, diversity and involvement
Pages 23 to 32
Carbon emissions
Disabled persons
Page 22
Statement of Directors’ responsibilities in respect of the financial statements Page 67
Financial risk management
Subsidiaries
KPIs
Pages 101 to 102
Page 106
Pages 7 to 9
Directors
The directors who held office during the year and up to the date of signing these financial
statements were as follows:
Name
Iain McCusker
Peter Maskell
Jonathan Hook
Aysegul Sabanci
Mark Lawrence
Mike Crowder
Trevor Mitchell
Appointment
Chairman
Senior Independent Director
Independent Director
Independent Director
Group Chief Executive Officer
Group Managing Director
Group Finance Director
Brief biographies of current serving Directors, indicating their experience and qualifications, can
be found on page 38.
In line with the UK Corporate Governance Code, all the Directors shall be subject to annual
election or re-election at the forthcoming Annual General Meeting (‘AGM’) on 29th May 2024.
64
TClarke Annual Report and Financial Statements 2023
Powers of Directors
The powers of the Directors are determined by the Company’s Articles of Association, the
Companies Act 2006 and the directions given by the Company by resolutions passed in general
meetings. The Directors are authorised by the Articles of Association to issue and allot Ordinary
shares, to disapply statutory pre-emption rights and to make market purchases of the
Company’s shares. The Directors currently have shareholder approval for the issue of Ordinary
share capital up to an aggregate nominal amount of £1,464,901 and for the buyback of
Ordinary shares up to a maximum aggregate of 10% of the issued Ordinary share capital.
The Directors will be seeking to renew their authorities at the forthcoming AGM.
Going Concern
In determining the appropriate basis of preparation of the financial statements, the directors are
required to consider whether the Group and Company can continue in operational existence for
the foreseeable future.
As at 31 December 2023 the Group held cash of £29.3m (2022: £22.5m) and had drawn down
short-term borrowings of £10m under a revolving credit facility (2022: £15m). This resulted in net
cash of £19.3m (2022: £7.5m). The Group also has access to a further £15m (2022: £10m) under a
revolving credit facility and £5m overdraft facility. No balances were drawn down under the
overdraft facility at either 31st December 2023 or 2022.
The Group uses the above banking facilities as and when required to meet working capital
requirements. The revolving credit facility expires on 31st August 2026. The overdraft facility is
subject to annual review with any amounts borrowed repayable on demand. The Directors have
received confirmation from the bank that they know of no reason why the overdraft facility will not
be renewed when it falls due for review.
The Directors have reviewed the Group’s forecasts and projections for the next two-year period.
The model assumes delivery of the 2023-25 Group Business Plan, and that the banking facilities
will remain in place throughout the projection period. The projections show that the Group will
remain profitable, with a significant amount of headroom against covenants and borrowing limits.
Management have also produced sensitivity analysis to assess the Group’s resilience to more
adverse outcomes which could arise from one of the principal risks to the business (discussed on
pages 33 to 36), including a scenario whereby profitability drops by 50% and there is an
insolvency of a key customer/subcontractor. In all scenarios, including the reasonable worst case,
the Group is able to comply with its financial covenants, operate within its current facilities, and
meet its liabilities as they fall due. Based on current interest rates the Directors have calculated
that forecast operating profit could fall by 89% and the Group still comply with all covenants
Strategic Report
Governance
Financial Statements
Additional
Directors‘ Report continued
under its current funding arrangements. Any additional drop in operating profit would require
further discussion with our lenders. Based on the strength of our Forward Order Book
management do not consider such a scenario to be at all plausible.
1 Total voting rights attaching to the ordinary shares at the Company at the time of disclosure
to the Company.
2 Percentage of total voting rights at the date of disclosure to the Company.
Accordingly, the directors consider there to be no material uncertainties that may cast significant
doubt on the Group’s ability to continue to operate as a going concern. They have formed a
judgement that there is a reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for the foreseeable future, being at least 12 months
from the date of signing of these financial statements. For this reason, they continue to adopt the
going concern basis in the preparation of these financial statements.
Share Capital
The Company’s share capital consists of Ordinary shares with a nominal value of 10p each. The
issued share capital as at 31 December 2023 was £5,285,078 consisting of 52,850,780 Ordinary
shares of 10p each. The Company’s issued Ordinary shares are fully paid and rank equally in all
respects. There are no restrictions on the size of a holding nor on the transfer of Ordinary shares
in the Company or on the exercise of voting rights attached to them, save that:
• certain restrictions may from time to time be imposed by laws and regulations (for example,
insider trading laws and market requirements relating to close periods); and
• pursuant to the Listing Rules of the Financial Conduct Authority, whereby certain employees
of the Company require the approval of the Company to deal in the Company’s shares.
Further details on share capital are shown in note 18 (ii) to the financial statements.
As at 26th March 2024, the Company had not been notified of any changes to major shareholdings.
Significant Agreements – Change of Control
The Directors are not aware of any significant agreements that take effect, alter or terminate
upon a change of control of the Company following a takeover bid.
The Company has the 2021 Long Term Incentive Plan (‘LTIP’) in place for Directors and senior
management, and a savings Related Share Option Scheme in place which is available to all
employees. The rules of the LTIP provide that awards made under the LTIP may vest on a
change of control of the Company, at the discretion of the Remuneration Committee. The rules
of the Savings Related Share Option Scheme provide that in the event of a change of control,
outstanding options may be exchanged or replaced with similar options on the same terms.
Further details on employee share schemes are disclosed in note 18 to the financial statements.
The rules of the Directors Annual Bonus scheme state that the performance period ends on
change of control and bonuses should be paid as soon as practicable unless the Remuneration
Committee determines otherwise. There are no other known agreements between the
Company and its Directors or employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
Substantial Shareholdings
As at 31 December 2023 the following information has been disclosed to the Company under
the FCA’s Disclosure Guidance and Transparency Rules (’DTR 5’), in respect of notifiable
interests in the voting rights in the Company’s issued share capital:
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.
Name of holder
Regent Gas Holdings Limited
Interactive Investor
Hargreaves Lansdown, stockbrokers
Canaccord Genuity Wealth Management
Total voting
rights 1
11,366,218
4,841,568
4,210,694
3,173,055
% of voting
rights 2
21.51%
9.16%
7.97%
6.00%
Qualifying Third Party Indemnities
The Articles of Association of the Company entitle the Directors, to the extent permitted by the
Companies Act 2006 and other applicable legislation, to be indemnified out of the assets of the
Company in the event that they suffer any expenses in connection with certain proceedings
relating to the execution of their duties as Directors of the Company.
In addition, the Company has in place insurance in favour of its Directors and officers in respect
of certain losses or liabilities to which they may be exposed due to their office up to a limit of
£10m. The insurance was in force throughout the year.
65
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Directors‘ Report continued
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.
Potential qualifying spend will be analysed in due course in the preparation of a Research and
Development expenditure credit claim to HM Revenue and Customs.
Political Contributions
No contributions were made to any political parties during the current or preceding year.
Events After the Balance Sheet Date
There have been no significant events since the balance sheet date which would have a material
effect on the financial statements.
Independent Auditor
A resolution is proposed at the AGM for the appointment of Mazars LLP as independent
auditor of the Company at a rate of remuneration to be determined by the Audit Committee.
Annual General Meeting (‘AGM’)
The AGM of the Company will be held at Canopy by Hilton, 11-15 Minories, London EC3N 1AX
at 10am on Wednesday 29th May 2024.
The Notice convening the AGM, together with details of the special business to be considered
and explanatory notes for each resolution, is contained in a separate circular sent to
shareholders. It is also available to be viewed on the Company’s website.
Approved by the Directors and signed by order of the Board.
Trevor Mitchell
Company Secretary
26th March 2024
TClarke plc is registered in England No. 00119351.
66
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Statement of Directors‘ Responsibilities in Respect of the Financial Statements
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulation.
Each of the Directors, whose names and functions are listed in Directors’ report confirm that,
to the best of their knowledge:
Company law requires the directors to prepare financial statements for each financial year. Under
that law the directors have prepared the Group financial statements in accordance with
UK-adopted international accounting standards and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).
• the Group financial statements, which have been prepared in accordance with UK-adopted
international accounting standards, give a true and fair view of the assets, liabilities, financial
position and profit of the Group;
• the Company financial statements, which have been prepared in accordance with United
Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets,
Under company law, Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Company
and of the profit or loss of the Group for that period. In preparing the financial statements, the
Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting standards have been
followed for the Group financial statements and United Kingdom Accounting Standards,
comprising FRS 101 have been followed for the Company financial statements, subject to
any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
liabilities and financial position of the Company; and
• the Annual Report and Financial Statements includes a fair review of the development and
performance of the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report is approved:
• so far as the Director is aware, there is no relevant audit information of which the Group’s and
Company’s auditor is unaware; and
• they have taken all the steps that they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the Group’s and
Company’s auditor is aware of that information
On behalf of the Board
The Directors are also responsible for keeping adequate accounting records that are sufficient
to show and explain the Group’s and Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and Company and enable them to
ensure that the financial statements and the Directors’ Remuneration Report comply with the
Companies Act 2006.
Iain McCusker
Chairman
The Directors are responsible for the maintenance and integrity of the company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Trevor Mitchell
Group Finance Director
Directors’ confirmations
The Directors consider that the annual report and accounts, taken as a whole, are fair, balanced
and understandable and provides the information necessary for shareholders to assess the
Group’s and Company’s position and performance, business model and strategy.
26th March 2024
TClarke plc
Registered number: 00119351
67
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of TClarke plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise:
Group
• Consolidated Income Statement;
• Consolidated Statement of Comprehensive Income;
• Consolidated Statement of Financial Position;
• Consolidated Statement of Cash Flows;
• Consolidated Statement of Changes in Equity; and
• Notes to the Financial Statements, including material accounting policy information.
Parent company
• Company Statement of Financial Position;
• Company Statement of Changes in Equity; and
• Notes to the Financial Statements, including material accounting policy information.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK-adopted international accounting standards.
The financial reporting framework that has been applied in the preparation of the parent company financial statements is United Kingdom Accounting Standards, comprising FRS 101
“Reduced Disclosure Framework”, and applicable law (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the group financial statements give a true and fair view of the state of the group’s affairs as at 31 December 2023 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the parent company financial statements give a true and fair view of the state of the parent company’s affairs as at 31 December 2023;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• the group’s and the parent company’s financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Our audit opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the “Auditor’s
responsibilities for the audit of the financial statements” section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed and public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in
conducting our audit.
68
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a
guarantee as to the group’s and the parent company’s ability to continue as a going concern.
Our audit procedures to evaluate the directors’ assessment of the group’s and the parent
company’s ability to continue to adopt the going concern basis of accounting included but were
not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or
conditions that may cast significant doubt on the group’s and the parent company’s ability to
continue as a going concern;
• Obtaining an understanding of the relevant controls relating to the directors’ going concern
assessment;
• Assessing the historical accuracy of projections prepared by the directors;
• Assessing the data inputs and the assumptions underlying the base case going concern
model, and the assumptions used in the downside and upside scenarios;
• Reviewing management’s forward order book;
• Testing the forecast model and covenant calculations for mathematical accuracy and logical
integrity;
• Assessing projected liquidity and projected covenant compliance over the going concern
period;
• Performing independent sensitivity analysis to stress test management’s base case model
and assess liquidity headroom and covenant compliance;
• Evaluating the appropriateness of the directors’ disclosures in the financial statements on
going concern; and
• Considering whether the group’s forecasts in the going concern assessment are consistent
with other forecasts used by the group in its accounting estimates, including the goodwill
impairment assessment.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the group’s
and the parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
In relation to the group’s reporting on how it has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it appropriate to adopt the going
concern basis of accounting.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We summarise below the key audit matters in forming our opinion above, together with an
overview of the principal audit procedures performed to address each matter and our key
observations arising from those procedures.
These matters, together with our findings, were communicated to those charged with
governance through our Audit Completion Report.
69
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Key audit matters continued
Key Audit Matter
Long-term contract accounting in relation to construction
revenue and related contract balances (group)
Refer to the Audit Committee Report on page 44 to 46 (Significant
Judgements, Key Assumptions and Estimates), Note 3 (iv) and (v) on page 80
to 81 (Significant accounting policies), Note 4 on page 83 to 84 (Significant
accounting estimates and critical judgments), Note 5 on page 84 (Segment
Information and Revenue Analysis) and Note 15 on page 89 to 90 (Contract
assets / liabilities).
The group recognises revenue for construction contracts over time and
measures the progress using the input method under IFRS 15. Revenue
recognised in the period is calculated based on the percentage of completion of
the project by determining the proportion of contract costs incurred for the work
performed to the reporting date compared with the total expected costs for the
life of the project. Revenue recognition is therefore dependant on:
• recording contract costs (including estimates for unbilled in-progress work
being performed by subcontractors) in the correct period, and on contract
costs being allocated to the appropriate contract;
• management’s measurement of forecast life costs which are based on
estimates where the effects of complexity, subjectivity or other inherent risk
factors affects their susceptibility to misstatement; and
• determination of expected revenue on contracts which includes amounts
relating to variations and claims, which fall under the variable
consideration or contract modification requirements of IFRS 15. These
amounts are recognised on a contract-by-contract basis when evidence
supports that the contract modification is enforceable or when it is
considered highly probable that a significant reversal in the amount of
variable consideration recognised will not occur.
On the basis of the significant estimation uncertainty and judgements involved
in determining the appropriate revenue recognition and associated profit, we
have identified revenue recognised over a period of time on construction
contracts and related contract balances as a key audit matter.
Key figures
£491.0m
Revenue
(2022: £426.0m)
£49.3m
Gross profit
(2022: £47.4m)
£84.2m
Contract assets
(2022: £54.3m)
£7.2m
Contract liabilities
(2022: £7.7m)
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TClarke Annual Report and Financial Statements 2023
How our scope addressed this matter
Our audit procedures included, but were not limited to:
• Understanding the group’s processes over contract accounting, and assessing the design and implementation of the relevant controls;
• Assessing a sample of retentions against certifications and assessing recoverability;
• Performing tests of details on costs incurred in the year for a sample of materials and equipment, including allocation to projects,
through agreement to supporting documentation;
• Performing tests of details on payroll cost allocations to contracts;
• Performing tests of details on contract accruals at year end by evaluating supporting documentations to determine whether they have
been appropriately incurred and are accurately valued;
• Analysing historical margins across the 2023 contract portfolio; and
• Attending certain monthly contract review meetings and performing site visits for certain higher risk or larger value contracts.
Using a variety of quantitative and qualitative criteria, we selected a sample of the most significant and complex contracts for testing.
Our audit procedures were tailored according to the specific risk profile of the contracts selected, and included, but were not limited to the
following procedures:
• Evaluating key contract terms and management’s assessment of performance obligations;
• Assessing key contract staff experience and qualifications;
• Meeting with contract teams to gain an understanding of the contract, including principal opportunities and risks;
• Performing a background media search on certain high risk construction projects;
• Assessing the financial stability of the customer and of the principal subcontractors;
• Comparing the forecast revenue with the signed initial contract value and any contract modifications, including signed contract
amendments and agreed variations;
• Testing a sample of variations to contractual terms, certification, or instructions as appropriate to support management’s judgement
that it is highly probable that no significant reversal of revenue will occur in accordance with the requirements of IFRS 15;
• Obtaining and inspecting the latest customer certification supporting the right to bill and subsequent cash receipts;
• Comparing year end contract assets against subsequent customer certification, billing and cash receipts;
• Assessing the completeness of management’s provisions for onerous contracts by reference to projected outturns;
• Performing tests of details on management’s assessment of estimated costs to complete through inspecting agreed subcontractor,
materials, equipment and labour orders, challenging estimates for unagreed orders, performing look back analysis and applying industry
knowledge and experience;
• Assessing costs incurred to the reporting date through the following tests of details:
• For a sample of subcontractors – inspecting the latest certifications, applications for payment, and purchase invoices, and
comparing these with reconciliations of the year-end recorded costs incurred; and
• For a sample of material, equipment, and labour costs – inspecting purchase invoices or labour reports;
• Assessing the appropriateness of cost allocations across contracts including evaluating whether there has been any manipulation of costs
between profit-making and loss-making contracts;
• Testing the accuracy of the calculation of revenue recognised, contract asset and/or contract liability through reperformance; and
• Comparing the contractual completion date together with any agreed extension-of-time with the group’s anticipated completion
date to assess any exposure to potential liquidated damages.
For the residual population, we have performed targeted risk-based procedures including certain procedures listed above.
Our observations
Based on all the evidence obtained from our audit testing, we concluded that revenue from construction contracts, contract assets and contracts
liabilities are fairly stated.
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain
quantitative thresholds for materiality. These thresholds, 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:
Group financial statements
Parent company financial statements
Overall materiality
£2.44m (2022: £2.13m)
£794k (2022: £673k)
How we determined it
0.5% of revenue (2022: 0.5% of revenue)
1% of total assets (2022: 1% of total assets)
Rationale for
benchmark applied
We used revenue as a basis for determining materiality as revenue is a
principal key performance indicator in the Annual Report and is a focus for both
investors and management.
We used total assets as a benchmark for materiality as the parent company
does not trade and acts as a group holding entity.
Performance
materiality
Performance materiality is set to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements
exceeds materiality for the financial statements as a whole.
We set performance materiality for the group financial statements at £1.47m,
which represents 60% of the group overall materiality (2022: £1.278m: 60% of
the group overall materiality).
We set performance materiality for the parent company financial statements at
£476k, which represents 60% of the parent company overall materiality (2022:
£403k: 60% of the parent company overall materiality).
In determining performance materiality, we considered the following factors:
• The significance of journal adjustments in the financial reporting process;
• The quality of the control environment and the extent to which we were able to rely on controls;
• The nature and volume of transactions;
• The nature, volume and size of uncorrected misstatements arising in the previous audit;
• The directors’ attitude towards correction of misstatements in the previous audit;
• Our expectations relating to misstatements in the current year; and
• In the prior year, that it was Mazars LLP’s first year auditing the group and parent company financial statements.
Component performance materiality allocated across the three significant subsidiaries ranges between £81k and £1.27m (2022: between £90k and £1.27m).
Reporting threshold
We agreed with the audit committee that we would report to them misstatements identified during our audit above £73k (2022: £64k) as well as misstatements below that amount
that, in our view, warranted reporting for qualitative reasons.
71
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Our application of materiality and an overview of the scope of our audit continued
As part of designing our audit, we assessed the risk of material misstatement in the financial
statements, whether due to fraud or error, and then designed and performed audit procedures
responsive to those risks. In particular, we looked at where the directors made subjective
judgements, such as assumptions on significant accounting estimates, including those in relation
to revenue recognition, goodwill impairment, and the defined benefit pension obligation.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give
an opinion on the financial statements as a whole. We used the outputs of our risk assessment,
our understanding of the group and the parent company, their environment, controls, and key
business processes, to consider qualitative factors to ensure that we obtained sufficient coverage
across all financial statement line items.
The group consists of the parent company and three active subsidiaries - being one principal
operating company (TClarke Contracting Limited), one services company (TClarke Services
Limited) and one property holding company (Weylex Properties Limited) - as well as 17 dormant
or non-trading subsidiaries. The parent company and all of its subsidiaries are incorporated within
the United Kingdom and are accounted for by the group finance team in the United Kingdom.
Our group audit scope included an audit of the group and the parent company financial
statements. Based on our risk assessment, we focused on the parent company and the three
active subsidiaries within the group which were all subject to a full scope audit. All audit procedures
were performed by the group audit team in the United Kingdom and the coverage achieved by
this team’s audit procedures was 100% of the group’s revenue and profit before tax.
We performed analytical procedures in respect of the 17 non-trading or dormant companies to
respond to any potential risks of material misstatement to the group financial statements.
At the parent company level, the group audit team also tested the consolidation process and
performed analytical procedures to confirm our conclusion that there were no significant risks of
material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or our knowledge obtained in
the course of audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Annual Report on Remuneration to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements and
those reports have been prepared in accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has
been prepared in accordance with applicable legal requirements; and
• information about the parent company’s corporate governance code and practices and about
its administrative, management and supervisory bodies and their committees complies with
rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements
in the:
• strategic report or the directors’ report; or
• information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate
for our audit have not been received from branches not visited by us; or
72
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Matters on which we are required to report by exception continued
• the parent company financial statements and the part of the Annual Report on Remuneration
to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the parent company.
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the
group’s compliance with the provisions of the UK Corporate Governance Statement specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the
financial statements, or our knowledge obtained during the audit:
• the directors’ statement with regards the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified, set out on page 64 to 65;
• the directors’ explanation as to their assessment of the entity’s prospects, the period this
assessment covers and why the period is appropriate, set out on page 37;
• the directors’ statement on fair, balanced and understandable, set out on page 43 and 67;
• the board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks, set out on page 43;
• the section of the annual report that describes the review of the effectiveness of risk
management and internal control systems, set out on page 41 to 43; and
• the section describing the work of the audit committee, set out on page 44 to 46.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities in Respect of the
Financial Statements set out on page 67, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
Based on our understanding of the group and the parent company and their industry, we
considered that non-compliance with the following laws and regulations might have a material
effect on the financial statements: unethical and prohibited business practices, employment
laws and regulations (including health and safety), The Construction (Design and Management)
Regulations 2015, Fire Precautions Act 1971 and electrical and water supply regulations.
To help us identify instances of non-compliance with these laws and regulations, and in
identifying and assessing the risks of material misstatement in respect to non-compliance, our
procedures included, but were not limited to:
• Gaining an understanding of the legal and regulatory framework applicable to the group
and the parent company, the industry in which they operate, and considering the risk of acts by
the group and the parent company which were contrary to the applicable laws and regulations,
including fraud;
• Inquiring of the directors, management and, where appropriate, those charged with
governance, as to whether the group and the parent company is in compliance with laws and
regulations, and discussing their policies and procedures regarding compliance with laws and
regulations;
• Reviewing minutes of directors’ meetings in the year; and
• Discussing amongst the engagement team the laws and regulations listed above and
remaining alert to any indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the
financial statements, such as financial reporting legislation (including related companies’
73
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors‘ Report to the Members of TClarke plc continued
Report on the Audit of the Financial Statements
Use of the audit report
This report is made solely to the company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body for our
audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule
4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed
on the National Storage Mechanism of the Financial Conduct Authority in accordance with the
ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance
over whether the annual financial report has been prepared using the single electronic format
specified in the ESEF RTS.
William Neale Bussey (Senior Statutory Auditor)
For and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London, EC4M 7AU
26th March 2024
Auditor’s responsibilities for the audit of the financial statements continued
legislation such as the Companies Act 2006), Financial Conduct Authority (FCA) regulations
including the Listing Rules, taxation legislation, and pensions legislation.
In addition, we evaluated the directors’ and management’s incentives and opportunities for
fraudulent manipulation of the financial statements, including the risk of management override
of controls, and determined that the principal risks related posting manual journal entries to
manipulate financial performance, management bias through judgements and assumptions in
significant accounting estimates, in particular in relation to revenue recognition, the goodwill
impairment assessment, the defined benefit pension obligation and significant one-off or
unusual transactions.
Our procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any
actual, suspected or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud;
• Addressing the risks of fraud through management override of controls by performing journal
entry testing; and
• Challenging assumptions and judgments made by management in their significant accounting
estimates, in particular those that involve the assessment of future events, which are inherently
uncertain – the key estimates determined in this respect are those relating to revenue
recognition, the goodwill impairment assessment and the defined benefit pension obligation.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests
with both those charged with governance and management. As with any audit, there remains a
risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omis-
sions, misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect on our audit are discussed in the
“Key audit matters” section of this report.
A further description of our responsibilities is available on the Financial Reporting Council’swebsite
at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the board of
directors on 22 June 2022 to audit the financial statements for the year ending 31 December
2022 and subsequent financial periods. The period of total uninterrupted engagement is 2 years,
covering the years ending 31 December 2022 to 31 December 2023.
74
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Consolidated Income Statement
For the year ended 31st December 2023
Consolidated Statement of Comprehensive Income
For the year ended 31st December 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the financial year
Earnings per share
Attributable to owners of TClarke plc
Basic
Diluted
Note
5
7
6
6
9
2023
£m
491.0
(441.7)
49.3
(39.9)
9.4
0.1
(1.9)
7.6
(1.1)
6.5
2022
£m
426.0
(378.6)
47.4
(35.9)
11.5
–
(1.2)
10.3
(1.9)
8.4
10
10
13.75p
13.73p
19.60p
19.51p
Note
Profit for the year
Other comprehensive (expense)/income
Items that will not be reclassified to the income statement
Remeasurement gain on retirement benefit obligations
Revaluation of freehold property
Deferred tax relating to items that will not be reclassified
1
1
1
Total other comprehensive (expense)/income for the year
(net of tax)
Total comprehensive income for the year
The notes on pages 79 to 102 form part of these financial statements.
2023
£m
6.5
0.2
(0.5)
(0.1)
(0.4)
6.1
2022
£m
8.4
9.2
(0.2)
(2.4)
6.6
15.0
75
TClarke Annual Report and Financial Statements 2023
Equity attributable to owners of the parent
Share capital
Share premium
Revaluation reserve
Retained earnings
Total equity
Note(s)
18
18
2023
£m
5.3
13.6
–
34.5
53.4
2022
£m
4.4
4.4
0.4
29.5
38.7
The notes on pages 79 to 102 form part of these financial statements.
The financial statements on pages 75 to 102 were approved by the Board of Directors on
26th March 2024 and were signed on its behalf by:
Iain McCusker
Director
Mark Lawrence
Director
Strategic Report
Governance
Financial Statements
Additional
Consolidated Statement of Financial Position
As at 31st December 2023
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Trade and other receivables
Total non-current assets
Current assets
Inventories
Contract assets
Trade and other receivables
Current tax receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Bank loans
Contract liabilities
Trade and other payables
Obligations under leases
Total current liabilities
Net current assets
Non-current liabilities
Obligations under leases
Trade and other payables
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Note(s)
11
12
13
16
14
15
16
19
20
15
17
23,25
23,25
17
22
2023
£m
25.3
11.8
3.2
12.0
52.3
0.5
84.2
52.9
0.2
29.3
167.1
219.4
(10.0)
(7.2)
(126.1)
(2.6)
(145.9)
21.2
(5.2)
(3.1)
(11.8)
(20.1)
(166.0)
53.4
2022
£m
25.3
13.5
3.6
6.3
48.7
0.5
54.3
55.3
–
22.5
132.6
181.3
(15.0)
(7.7)
(96.1)
(2.7)
(121.5)
11.1
(5.7)
(2.5)
(12.9)
(21.1)
(142.6)
38.7
76
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Consolidated Statement of Cash Flows
For the year ended 31st December 2023
Net cash generated from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash generated from/(used in) investing activities
Financing activities
New shares issued
Interest paid
Repayment of borrowings
Repayment of lease obligations
Equity dividends paid
Shares allotted in respect of share option schemes
Facility fee paid
Acquisition of shares by ESOT
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
19 i
18 i
6 i
20 i
23 i
18 i
i
18 i
19 i
19 i
The notes on pages 79 to 102 form part of these financial statements.
2023
£m
8.7
(0.5)
0.7
0.2
10.1
(1.0)
(5.0)
(2.9)
(2.5)
–
–
(0.8)
(2.1)
6.8
22.5
29.3
2022
£m
10.6
(1.8)
–
(1.8)
–
(0.5)
–
(2.1)
(2.3)
0.2
(0.3)
(1.6)
(6.6)
2.2
20.3
22.5
77
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Consolidated Statement of Changes in Equity
For the year ended 31st December 2023
Note
At 1st January 2022
Comprehensive income
Profit for the year
22
Other comprehensive income
Remeasurement gain on retirement
benefit obligation
Deferred income tax on
Remeasurement gain on retirement
benefit obligation
13
Revaluation of freehold property
Total other comprehensive
income
Total comprehensive income
Transactions with owners
Transfer on depreciation of
freehold property
Share-based payment expense
Acquisition of shares by ESOT
Shares allotted in respect of
share option schemes
SAYE option cost
Dividends paid
Total transactions with owners
12
18
18
18
18
Share
capital premium
£m
Share Revaluation Retained
reserve earnings
£m
£m
£m
Total
Equity
£m
4.4
4.2
0.7
17.2
26.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
–
–
0.2
4.4
–
–
–
(0.2)
(0.2)
(0.2)
(0.1)
–
–
–
–
–
(0.1)
0.4
8.4
8.4
9.2
9.2
(2.4)
–
6.8
15.2
0.1
0.8
(1.6)
–
0.1
(2.3)
(2.9)
29.5
(2.4)
(0.2)
6.6
15.0
–
0.8
(1.6)
0.2
0.1
(2.3)
(2.8)
38.7
Share
capital premium
£m
Share Revaluation Retained
reserve earnings
£m
£m
£m
Total
Equity
£m
4.4
4.4
0.4
29.5
38.7
Note
At 31st December 2022
Comprehensive income
Profit for the year
22
Other comprehensive income
Remeasurement gain on
retirement benefit obligation
Deferred income tax on
remeasurement gain on
retirement benefit obligation
13
Revaluation of freehold property 12
Total other comprehensive
income
Total comprehensive income
Transactions with owners
New shares issued in the year
Share-based payment expense
Transactions in own shares in
respect of share awards
SAYE option cost
Dividends paid
18
18
18
18
18
–
–
–
–
–
–
0.9
–
–
–
–
–
–
–
–
–
–
9.2
–
–
–
–
–
–
–
(0.4)
(0.4)
(0.4)
–
–
–
–
–
–
–
6.5
6.5
0.2
0.2
(0.1)
(0.1)
–
6.5
–
1.7
(0.8)
0.1
(2.5)
(0.1)
(0.5)
(0.4)
6.1
10.1
1.7
(0.8)
0.1
(2.5)
(1.5)
34.5
8.6
53.4
At 31st December 2022
4.4
Total transactions with owners
At 31st December 2023
0.9
5.3
9.2
13.6
The notes on pages 79 to 102 form part of these financial statements.
78
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements
For the year ended 31st December 2023
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
is 30 St Mary Axe, London EC3A 8BF. The
nature of the Group’s operations and its
principal activities are described in note 5.
The Company is limited by shares.
2 Basis of Preparation
Statement of Compliance
The Group’s consolidated financial statements
are prepared in accordance with the
requirements of the Companies Act 2006 and
in accordance with UK-adopted international
accounting standards; and have been prepared
on a going concern basis under the historic cost
convention as modified by the revaluation of
land and buildings. They comprise the
consolidated financial statements of TClarke plc
and all its subsidiaries made up to
31st December 2023 and have been presented
in pounds sterling, and unless otherwise stated
have been rounded to the nearest £0.1m. There
have been no new accounting policies adopted
in the year.
The preparation of financial statements in
accordance with UK-adopted international
accounting standards requires the use of
certain critical accounting judgements and
estimates. The areas involving a higher degree
of estimation along with critical accounting
judgements are disclosed in note 4.
Going Concern
In determining the appropriate basis of
preparation of the financial statements, the
directors are required to consider whether
the Group and Company can continue
in operational existence for the
foreseeable future.
As at 31 December 2023 the Group held cash
of £29.3m (2022: £22.5m) and had drawn
down short-term borrowings of £10.0m under
a revolving credit facility (2022: £15.0m). This
resulted in net cash of £19.3m (2022: £7.5m).
The Group also has access to a further
£15.0m (2022: £10.0m) of the revolving credit
facility and a £5.0m overdraft facility. No
balances were drawn down under the
overdraft facility at either 31st December
2023 or 2022.
The Group uses the above banking facilities as
and when required to meet working capital
requirements. The revolving credit facility
expires on 31st August 2026. The overdraft
facility is subject to annual review with any
amounts borrowed repayable on demand.
The Directors have received confirmation from
the bank that they know of no reason why the
overdraft facility will not be renewed when it
falls due for review.
The Directors have reviewed the Group’s
forecasts and projections for the next
two-year period. The model assumes delivery
of the 2023-25 Group Business Plan, and that
the banking facilities will remain in place
throughout the projection period. The
projections show that the Group will remain
profitable, with a significant amount of
headroom against covenants and
borrowing limits.
The Directors have also produced sensitivity
analysis to assess the Group’s resilience to more
adverse outcomes which could arise from one
of the principal risks to the business including a
scenario whereby profitability drops by 50%
and there is an insolvency of a key customer/
subcontractor. In all scenarios, including the
reasonable worst case, the Group is able to
comply with its financial covenants, operate
within its current facilities, and meet its liabilities
as they fall due. Based on current interest rates
the Directors have calculated that forecast
operating profit could fall by 89% and the
Group still comply with all covenants under its
current funding arrangements. Any additional
drop in operating profit would require further
discussion with our lenders. Based on the
strength of our Forward Order Book
management do not consider such a scenario
to be at all plausible.
Accordingly, the Directors consider there to
be no material uncertainties that may cast
significant doubt on the Group’s ability to
continue to operate as a going concern. They
have formed a judgement that there is a
reasonable expectation that the Group and
Company have adequate resources to
continue in operational existence for the
foreseeable future, being at least 12 months
from the date of signing of these financial
statements. For this reason, they continue to
adopt the going concern basis in the
preparation of these financial statements.
79
TClarke Annual Report and Financial Statements 2023
Application of New and Revised Standards
The principal accounting policies applied in
the preparation of these consolidated
financial statements are set out in note 3
below. There have been no new standards,
amendments to standards or interpretations
adopted from 1 January 2023 that had a
material effect. Future standards,
amendments to standards, and
interpretations not yet effective are noted
below. None of these are expected to have a
material impact on the Group.
• Amendments to IAS 1 Presentation of
Financial Statements: Classification of
Liabilities as Current or Non-current (Issued
January 2020) and Non-current Liabilities
with Covenants (Issued October 2022)
• Amendments to IFRS 16 Leases: Lease
Liability in a Sale and Leaseback (Issued
September 2022)
• Amendments to IAS 7 Statement of Cash
Flows and IFRS 7 Financial Instruments:
Disclosures: Supplier Finance
Arrangements (Issued in May 2023)
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
3 Significant Accounting Policies
(i) 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.
(iii) Segmental Reporting
The Group has one operating segment which
is consistent with internal reporting provided to
the Board who, representing the ‘Chief
Operating Decision-Maker’ as per IFRS 8,
are responsible for allocating resources to, and
assessing the performance of, the Group’s
operations. See note 5 for further information.
(iv) Revenue and profit recognition
Revenue derives from two sources: most
significantly, from long-term contracts
whereby the Group designs, installs and
integrates mechanical and electrical systems
for customers (‘construction contracts’); and
less significantly, from the provision of
maintenance and small works services. In
both instances revenue comprises the fair
value of the consideration received or
receivable, net of value added tax, rebates
and discounts. Further principles for revenue
and profit recognition are as follows:
(a) Construction contracts
(ii) Employee Share Ownership Trust (‘ESOT’)
As the Company is deemed to have control
of its ESOT, it is included in the consolidated
financial statements. The ESOT’s assets (other
than investments in the Company’s shares),
liabilities, income and expenses are included
on a line-by-line basis in the consolidated
financial statements. The ESOT’s investment
in the Company’s shares is deducted from
equity in the consolidated statement of
financial position as if they were treasury
shares. The Trustee of the ESOT has waived
its right to dividends on the shares held in
the ESOT.
These services are provided to customers
across our market sectors. The majority of
contracts are considered to contain only one
performance obligation for the purposes of
recognising revenue. While the scope of
works may include a number of different
components, these are usually highly
interrelated and produce a combined output
for the customer. Contracts are typically
satisfied over time as the benefit is transferred
to the customer.
The Group uses an input method to measure
progress as this is considered to most closely
represent the transfer of goods/services to the
customer on a construction contract. The
percentage of completion is measured using
cost incurred to date as a proportion of the
estimated full costs of completing the contract
and is applied to the total expected contract
revenue to determine the revenue to be
recognised to date. Variations and claims are
only included in the total expected contract
revenue to the extent that it is considered highly
probable that they will not reverse in the future.
Once the outcome of a construction contract
can be estimated reliably, profit is recognised
in the income statement in line with the
corresponding stage of completion. Where a
contract is forecast to be loss-making, the full
loss is recognised immediately in the
consolidated income statement.
Mobilisation costs incurred in respect of a
specific contract that has been won or an
anticipated contract that is expected to be
won (e.g. when the Group has secured
preferred bidder status) are carried forward in
the balance sheet as capitalised mobilisation
costs if: the costs generate or enhance
resources of the Group that will be used in
satisfying (or in continuing to satisfy)
performance obligations in the future; and
the costs are expected to be recovered (i.e.
the contract is expected to be sufficiently
profitable to cover the mobilisation costs).
Capitalised mobilisation costs are amortised
over the expected contract duration in
accordance with the stage of completion.
(b) Maintenance and small works contracts
Revenue and profit from services rendered
under maintenance and small works contracts
is recognised when each of the performance
obligations are satisfied. Unless part of a
longer term package of work, revenue on
such contracts is normally recognised at the
point in time at which the service is provided.
(v) Contract assets and liabilities
When the Group transfers goods or services
to a customer before the customer pays
consideration or before payment is due, the
amount of revenue associated with the
transfer of goods or services is accrued and
presented as a contract asset in the statement
of financial position (excluding any amounts
presented as a receivable). A contract asset
represents the Group’s right to consideration
in exchange for goods or services that the
Group has transferred to a customer.
If a customer pays consideration, or the Group
has a right to an amount of consideration that
is unconditional (i.e. a receivable), before the
Group transfers a good or service to the
customer, the amount is presented as a
contract liability in the statement of financial
position. A contract liability represents the
Group’s obligation to transfer goods or
services to a customer for which the entity has
received consideration (or an amount of
consideration is due) from the customer.
Where a trade receivable that has been
recognised is subsequently determined not
to be recoverable due to the inability of a
customer to meet its payment obligations,
80
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
3 Significant Accounting Policies (continued)
(v) Contract assets and liabilities (continued)
these amounts are charged to administrative
expenses as a credit loss.
(vi) 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.
(vii) 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 near 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.
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.
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).
Impairment charges are included 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.
(viii) Property, Plant and Equipment
Land and buildings comprise mainly offices
occupied by the business units of the Group.
Land and buildings are shown at fair value,
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 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:
Properties: 2%
Leasehold improvements: 10% or life
of lease if shorter
Plant, machinery and motor vehicles:
10%–33%
Right-of-use assets held under leases are
depreciated over their expected useful lives
on the same basis as owned assets or, where
shorter, the term of the relevant lease.
(ix) 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.
81
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
3 Significant Accounting Policies (continued)
(x) Leasing and Hire Purchase
Commitments
The Group assesses whether a contract is or
contains a lease at the start of a contract. The
Group recognises a right-of-use asset and a
corresponding lease liability for all lease
agreements in which it is the lessee (with the
exception of short-term and low value leases
as defined in IFRS 16 (Leases) which are
recognised as an operating expense on a
straight-line basis over the lease term). The
lease liability is initially measured at the present
value of the lease payments that are not paid
at the commencement date discounted by
using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses
its incremental borrowing rate. Generally, the
Group uses its incremental borrowing rate. The
right-of-use asset recognised initially is the
amount of the lease liability, adjusted for any
lease payments and lease incentives made
before the commencement date.
The Group does not materially act as a lessor.
Any lease income rounds to zero and is
recognised on a straight line basis over the
term of the lease.
liabilities are offset and the net amount reported
in the statement of financial position when there
is a legally enforceable right to offset the
recognised amounts and there is an intention to
settle on a net basis or realise the asset and
settle the liability simultaneously.
Trade and Other Receivables
Trade and other receivables are non-interest
bearing and are measured on initial
recognition at fair value and subsequently
at amortised cost. On initial recognition, a
loss allowance is created which reflects the
lifetime expected credit loss on that asset.
This loss allowance is subsequently
reassessed at each reporting period date.
Trade and other receivables are presented
net of the loss allowance.
Bank Deposits/finance income
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.
(xi) Financial Instruments
The Group’s financial instruments comprise
trade and other receivables (excluding
prepayments), trade and other payables
(excluding other taxation and social security),
bank loans, obligations under leases, and cash
and cash equivalents. The Group classifies its
financial assets and liabilities as held at
amortised cost. The Group does not trade in
any financial derivatives. Financial assets and
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.
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 extent that they are
not settled in the period in which they arise.
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.
(xii) 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.
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.
(xiii) Finance 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. Interest expense is
82
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
3 Significant Accounting Policies (continued)
(xiii) Finance Costs (continued)
accrued on a time basis, by reference to the
principal outstanding and at the effective
interest rate applicable.
service in the current year, benefit changes,
curtailments and settlements. Past service cost
is recognised immediately in the income
statement.
(xiv) Dividends
Dividends are recognised when they become
legally payable. In the case of interim
dividends to equity shareholders, these are
recognised when they are paid. In the case of
final dividends, these are recognised when
approved by the shareholders at the AGM.
(xv) Retirement Benefit Costs
Payments to defined contribution retirement
benefit schemes are charged as an expense
as they fall due.
The retirement benefit obligation represents
the fair value of the defined benefit obligation
at each reporting date as reduced by the fair
value of scheme assets. For defined benefit
retirement benefit schemes, the cost of
providing benefits is determined using the
Projected Unit Credit Method, with actuarial
valuations being carried out at each reporting
date. Actuarial gains and losses are recog-
nised in full in the period in which they occur.
They are recognised outside the income
statement and presented as a component of
other comprehensive income.
The current service cost of defined benefit
retirement benefit schemes is recognised in
‘employee benefit expense’ in the income
statement, except where included in the cost
of an asset, and reflects the increase in the
defined benefit obligation resulting from
(xvi) Long-term Employee Benefits
Long-term employee benefits are accrued
when the Group has a legal or constructive
obligation to make payments under
long-term employee benefit arrangements
and the amount of the obligation can be
reliably measured. The liability is discounted
to present value where it is due after more
than one year.
(xvii) 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 18.
The fair value determined at the grant date of
the equity-settled share-based payments is
expensed on a straight-line basis over the
vesting period, based on the Group’s
estimate of equity instruments that will
eventually vest, with a corresponding increase
in equity. At the end of each reporting period,
the Group revises its estimate of the number
of equity instruments expected to vest. The
impact of the revision of the original
estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the
revised estimate with a corresponding
adjustment to equity.
4 Significant accounting estimates and
critical judgements
In the application of the Group’s accounting
policies, which are described above, the
Directors are required to make judgements
and 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 profit recognition for
construction contracts (see note 5 (Revenue
analysis) and note 15 (Contract assets/
liabilities))
In order to determine the revenue and profit
recognition in respect of the Group’s
construction contracts, the Group has to
estimate the total costs to deliver the contract
as well as the final contract value. The Group
has to allocate total expected costs between
the amount incurred on the contract to the
end of the reporting period and the proportion
to complete in a future period. The assessment
of the total costs to be incurred and final
contract value requires a degree of estimation.
The final contract value may include
assessments of the recovery of contractual
variations which have yet to be agreed with
client, as well as additional compensation
claim amounts. The number of variations and
claims are often not fully agreed with the
customer due to timing and requirements of
the normal contractual process. Therefore,
assessments are based on an estimate of the
potential cost impact of the compensation
claims and revenue is constrained to amounts
that the Group believes are highly probable
of being received. The estimation of costs to
complete is based on all available relevant
information and may include estimates of any
potential defect liabilities or liquidated
damages for unagreed scope or timing
variations. Costs incurred in advance of the
contract that are directly attributable to the
contract may also be included as part of the
total costs to complete the contract.
Revenue in 2023 was £491.0m (2022:
£426.0m). As at 31 December 2023 contract
assets were £84.2m (2022: £54.3m) and
contract liabilities £7.2m (2022: £7.7m).
Retirement benefit obligations (see note 22)
The cost of the defined benefit and the
present value of the obligation are
determined using actuarial valuations. An
actuarial valuation involves making various
assumptions that may differ from actual
developments in the future.
83
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
5 Segment Information and
Revenue Analysis
(i) Change in Operating Segments
The Group provides electrical and mechanical
contracting and related services to the
construction industry and end users. At the
beginning of the year the Group changed its
internal management reporting, moving away
from the previous geographic split of segments,
and adopting one operating segment. In
delivering the Board’s growth strategy, including
focusing on winning large projects outside of
London, the previous split ceased to be fully
representative of the way the Group operates,
with contracts often being won through
entity-wide relationships or delivered outside
of a segment’s geographic footprint. As such,
the Board, in its role as ‘chief operating
decision-maker’, now only receives financial
information for the Group as a whole,
representing the Group’s one operating
segment and discrete financial information is no
longer prepared at a more disaggregated level.
This approach has also been reflected in the
preparation of these financial statements which
as a result no longer require separate segmental
analysis, as it is only at a Group level where the
definition of an operating segment is met and
this information is shown in the primary
statements themselves.
4 Significant accounting estimates and
critical judgements (continued)
These include the determination of the
discount rate, future salary increases, mortality
rates and future pension increases. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit
obligation is highly sensitive to changes in
these assumptions. All assumptions are
reviewed at each reporting date, taking
advice from independent actuaries. Details of
the key assumptions are set out in note 22,
together with associated sensitivity analysis.
The valuation is most sensitive to changes in the
discount rate assumption. In determining the
appropriate discount rate, the Group considers
the interest rates of corporate bonds,
extrapolated as needed along the yield curve to
correspond with the expected term of the
defined benefit obligation. The mortality rate is
based on publicly available mortality tables.
These mortality tables tend to change only at
intervals in response to demographic changes.
Future salary increases and pension increases
are based on expected future inflation rates.
The carrying value of the defined benefit
obligation at 31 December 2023 was £11.8m
(2022: 12.9m).
Critical accounting judgements
There are no critical judgements, apart from
those involving estimates, that the Directors
have made in the process of applying the
Group’s accounting policies and that have a
significant effect on the amounts recognised in
the financial statements.
(ii) Revenue Analysis
Business Sector
Facilities Management
Infrastructure
Engineering Services
Residential & Hotels
Technologies
2023
£m
37.1
101.8
193.5
48.1
110.5
2022
£m
31.3
79.5
124.7
45.3
145.2
Total revenue
491.0
426.0
Revenue is wholly attributable to the principal
activity of the Group and arises solely within
the United Kingdom.
Revenue recognised in the year that was
included in the contract liability balance at the
beginning of the year was £7.7m
(2022: £2.9m).
The amount of revenue recognised in the
year from performance obligations satisfied
(or partially satisfied) in previous periods was
£339.3m (2022: £317.2m).
At the end of the year, the aggregate amount
of transaction price allocated to performance
obligations that are unsatisfied (or partially
unsatisfied) was £670.2m (2022: £401.8m).
These will be recognised as revenue in
accordance with the satisfaction of the
performance obligations. At the year end
£492.8m of the £670.2m was expected to be
recognised as revenue within one year and
£177.4m after one year. For 2022 £334.2m
was expected to be recognised as revenue
within one year and £57.6m after one year.
84
TClarke Annual Report and Financial Statements 2023
2023 revenue includes £50.4m which arose
from sales to a single customer (2022: £60.7m
from a single customer).
In the current year, the incremental costs of
obtaining a contract with a customer which
has been recognised as an asset is £nil
(2022: £nil).
In the current year, the costs to fulfil a contract
with a customer which has been recognised
as an asset is £nil (2022: £nil).
Of the £491.0m revenue recognised in 2023
(2022: £426.0m), £453.3m was recognised
over time (2022: £391.2m) and £37.7m was
recognised at a point in time (2022: £34.8m).
The latter relates to maintenance and small
works contracts.
The standard payment method for revenue is
monthly applications and certificates, with
cash typically received between 30 and 45
days afterwards. The amount receivable is
transferred from contract assets to trade and
other receivables on receipt of the certificate.
Revenue is received net of retentions. On
practical completion half the retention is
received, with the remaining retention
received at the end of the warranty period,
which is normally between 12 and 24 months.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
6 Finance Income and Costs
Finance income
Interest on bank balances
Total
Finance costs
Interest on lease liabilities
Interest on bank overdrafts and loans
Interest cost in respect of retirement benefits
Total
7 Operating Profit
Operating Profit is Stated After Charging
Depreciation of property, plant and equipment
Project-related raw materials and consumables
recognised as an expense
Fees payable to the Company’s auditors for the audit of:
The Company and consolidation
Subsidiary companies
Employee benefit expense (see note 8)
8 Employee Benefit Expense
(i) 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 18)
Social security costs
Other Pension costs
Total employee benefit expense
2023
£m
82.7
1.7
8.8
3.8
97.0
2022
£m
76.2
1.0
8.2
2.6
88.0
Details of Director remuneration are included in the Annual Report on Remuneration on
pages 57 to 63.
(ii) Monthly Average Number of Employees
2023
£m
0.1
0.1
(0.3)
(1.0)
(0.6)
(1.9)
2023
£m
3.1
2022
£m
–
–
(0.2)
(0.6)
(0.4)
(1.2)
2022
£m
3.0
2023
Number
550
802
1,352
2022
Number
510
784
1,294
114.5
111.4
Staff (including Directors)
Operatives
0.6
0.1
97.0
0.4
0.1
88.0
Total
No non-audit services were provided by the Company’s auditors during the year (2022: Nil)
85
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
9 Taxation
Current tax expense
UK corporation tax payable on profit for the year
Adjustment in relation to prior years
Deferred tax expense
Arising on:
Adjustment in relation to prior years
Origination and reversal of temporary differences
Total income tax expense
Reconciliation of tax charge
Profit before tax for the year
2023
£m
1.3
(0.5)
0.1
0.2
1.1
7.6
2022
£m
1.7
(0.4)
–
0.6
1.9
10.3
The tax charge for the year is lower than the standard rate of Corporation tax in the
UK of 23.52% (19% for January 2023 to March 2023, and 25% for April 2023 to
December 2023) (2022: 19%). The differences are explained below:
Tax at standard UK tax rate of 23.52% (2022: 19%)
Tax effect of:
Adjustment in relation to prior years
Permanently disallowable/non-taxable items
Total income tax expense
Deferred tax charged to other comprehensive income
1.8
(0.4)
(0.3)
1.1
2023
£m
0.1
1.9
(0.4)
0.4
1.9
2022
£m
2.4
86
TClarke Annual Report and Financial Statements 2023
10 Earnings Per Share
(i) Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to owners of the
Company by the weighted average number of Ordinary shares in issue during the year.
Earnings:
Profit attributable to owners of the Company (£m)
Weighted average number of Ordinary shares in issue (000s)
Basic earnings per share (pence)
2023
2022
6.5
47,119
13.75p
8.4
43,056
19.60p
(ii) Diluted Earnings Per Share
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary
shares outstanding to assume conversion of dilutive potential Ordinary share options granted
under the Save As You Earn schemes (see note 18).
For the share options, a calculation is made to determine the number of shares that could have
been acquired at fair value (determined as the average annual market share price of the
Company’s shares) based on the monetary value of the subscription rights attached to
outstanding share options. The number of shares calculated as above is compared with the
number of shares that would have been issued assuming the exercise of the share options.
Earnings:
Profit attributable to owners of the Company (£m)
Weighted average number of Ordinary shares in issue (000s)
Adjustments:
Savings Related Share Option Schemes
Weighted average number of Ordinary shares for diluted
earnings per share (000s)
Diluted earnings per share (pence)
2023
2022
6.5
47,119
8.4
43,056
88
187
47,207
13.73p
43,243
19.51p
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
11 Intangible assets
Cost
At 1st January 2022, 31st December 2022 and 31st December 2023
Accumulated impairment
At 1st January 2022, 31st December 2022 and 31st December 2023
Net book value
At 1st January 2022, 31st December 2022 and 31st December 2023
Goodwill
£m
Assumptions
The key assumptions, to which the assessment of the recoverable amounts is sensitive, are the
projected revenue and operating margin to 2025 and beyond, and the discount rate applied.
The assumptions applied are as follows:
27.5
(2.2)
25.3
Pre-tax discount rate
Average annual revenue growth
(2023–2025) (2022: 2022–2025)
Operating margins
(2024-2025) (2022: 2023-2025)
2023
13.7%
2022
12.0%
15%
2.3%-11.9%
3.10%
3.30%
Cash generating unit
We test goodwill by comparing the carrying value of goodwill with its recoverable amount based
on the value in use of the cash generating unit to which the goodwill has been allocated. Cash
generating units are defined as the smallest identifiable group of assets that generate cash
inflows that are largely independent of the cash inflows from other groups of assets. In recent
years goodwill has been allocated and assessed at an operating segment level (i.e. London, UK
South, UK North), based on the segment in which the historic acquisition arose. As discussed in
note 5 however, the Group has moved to one operating segment because discrete financial
information is now only provided to the Chief Operating Decision Maker (CODM) at an entity
level, in recognition of how the business operates. So due to this, and a reassessment of how
cash inflows are generated amongst assets of the Group, this level also represents the lowest
level for cash generating unit purposes for testing goodwill.
Value in use has been calculated using budgets and forecasts approved by the Board covering the
period 2024 to 2025, which take into account secured orders, business plans and management
actions. The results of the period subsequent to 2025 have been projected using 2025 forecasts
with 2% per annum growth assumed to perpetuity. The extrapolated cash flow projections have
been discounted using a pre-tax discount rate derived from the Group’s cost of capital.
Sensitivities
Management has considered the level of headroom resulting from the impairment tests, and
performed further sensitivity analysis by changing the base case assumptions applicable. The
sensitivities tested related to changes in profitability and discount rate, including consideration
of how many times the value in use exceeded its carrying value. This analysis has indicated that
no reasonably possible changes in any individual key assumption would cause the carrying
amount to exceed its recoverable amount.
At 31st December 2023, based on these valuations, no increase in the impairment provision
was required against the carrying value of goodwill (2022: £nil).
87
TClarke Annual Report and Financial Statements 2023
The net book values shown adjacent at 31st December 2023 reflect the following right-of-use
assets: Properties £3.5m (2022: £4.4m) and Plant, machinery and vehicles £4.1m (2022: £3.5m).
Additions in the year for right-of-use assets were £0.1m for Properties (2022: £4.4m) and £2.2m
for Plant, machinery and vehicles (2022: £3.0m). The depreciation charge for right-of-use assets
was £1.0m for Properties (2022: £0.8m) and £1.3m for Plant, machinery and vehicles (2022:
£1.2m).
The Group’s freehold land and buildings were last valued at 31 December 2023 based on an
external valuation provided by an independent valuer. The external valuation was conducted on
the basis of market value as defined by the RICS Valuation Standards, and was determined by
reference to recent market transactions on arm’s length terms. The book and fair value of the
properties at 31st December 2023 was £2.0m (2022: £2.8m), with the reduction primarily due to
the sale of a property for £0.7m. The fair value measurement is categorised as level 3 within the
fair value hierarchy.
The net book value of the freehold properties on a historical cost basis would have been £2.0m
(2022: 2.2m). The Group has granted a charge in favour of the TClarke Group Retirement and
Death Benefits Scheme over these properties up to a maximum value of £2.0m, to secure the
future pension obligations of the scheme.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
12 Property, Plant and Equipment
Group
Cost or valuation
At 1st January 2022
Additions
Disposals
Reclassification
Revaluation
At 31st December 2022
Additions
Disposals
Reclassification
Transfer from depreciation
Revaluation*
At 31st December 2023
Accumulated depreciation
and impairment
At 1st January 2022
Charge for the year
Disposals
At 31st December 2022
Charge for the year
Disposals
Transfer to cost
At 31st December 2023
Net book value
At 1st January 2022
At 31st December 2022
At 31st December 2023
Properties
£m
Leasehold
improvements
£m
Plant
machinery
and vehicles
£m
5.7
4.4
–
0.2
(0.2)
10.1
0.2
(0.8)
(0.2)
(0.6)
(0.5)
8.2
(1.4)
(1.0)
–
(2.4)
(1.0)
0.1
0.6
(2.7)
4.3
7.7
5.5
2.0
1.1
–
0.1
–
3.2
0.1
(0.1)
0.2
(0.5)
–
2.9
(1.4)
(0.3)
–
(1.7)
(0.3)
0.1
0.5
(1.4)
0.6
1.5
1.5
5.7
3.7
(0.5)
(0.3)
–
8.6
2.4
(0.6)
–
0.3
–
10.7
(3.1)
(1.7)
0.5
(4.3)
(1.8)
0.5
(0.3)
(5.9)
2.6
4.3
4.8
Total
£m
13.4
9.2
(0.5)
–
(0.2)
21.9
2.7
(1.5)
–
(0.8)
(0.5)
21.8
(5.9)
(3.0)
0.5
(8.4)
(3.1)
0.7
0.8
(10.0)
7.5
13.5
11.8
* The revaluation of £0.5m includes an immaterial adjustment of £0.3m
88
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
13 Deferred Taxation
Group
(Liability)/asset at 1st January 2022
Charged to income statement
Charged to other comprehensive income
(Liability)/asset at 31st December 2022
Credited/(Charged) to income statement
Charged to other comprehensive income
Asset at 31st December 2023
Revaluations
£m
(0.1)
–
–
(0.1)
0.1
–
–
Retirement
benefit
obligation
£m
6.3
(0.4)
(2.4)
3.5
(0.3)
(0.1)
3.1
Other
£m
0.2
–
–
0.2
(0.1)
–
0.1
Total
£m
6.4
(0.4)
(2.4)
3.6
(0.3)
(0.1)
3.2
The amount of deferred tax recoverable within one year is insignificant. The deferred tax asset
arises in respect of the deficit on the retirement benefit obligation. A deficit reduction plan is in
place to reduce this deficit over a number of years (see note 22). The deferred tax asset will be
recovered over time as the deficit is reduced. There were £0.4m unrecognised deferred tax
assets at 31 December 2023 (2022: £0.4m).
89
TClarke Annual Report and Financial Statements 2023
The net deferred tax asset reported on the Statement of Financial Position can be analysed
as follows:
Deferred tax liabilities
Deferred tax assets
Total
2023
£m
–
3.2
3.2
2022
£m
(0.1)
3.7
3.6
The main rate of UK corporation for the period is currently 25%. The deferred taxation balances
have been measured using this rate.
14 Inventories
Raw materials and consumables, net of provision
15 Contract assets/liabilities
Contracts in progress at the reporting date
Contract assets
Contract liabilities
Total
2023
£m
0.5
2023
£m
84.2
(7.2)
77.0
2022
£m
0.5
2022
£m
54.3
(7.7)
46.6
At 31st December 2023, retentions held by customers of the Group for contract work amounted to
£23.9m (2022: £22.2m). These amounts are included in trade and other receivables (see note 16).
Contract asset amounts are shown net of impairment of £nil (2022: £nil).
Onerous contract provisions are made on loss-making contracts the Group is obliged to
complete. As at 31 December 2023 the Group held a provision of £1.1m related primarily to two
long term contracts (2022: £0.2m). Due to the nature of the provisions the timing of any potential
future outflows is uncertain. However they are expected to be utilised within the Group’s normal
operating cycle, and accordingly are classified as current liabilities within contract liabilities.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
15 Contract assets/liabilities (continued)
Significant changes in contract assets/liabilities during the year are as follows:
2023
2022
Contract
assets
£m
54.3
445.6
–
(415.7)
84.2
Contract
liabilities
£m
(7.7)
7.7
(7.2)
–
(7.2)
Contract
assets
£m
51.7
391.2
–
(388.6)
54.3
As at 1 January
Performance obligations
satisfied in year
Cash received for performance
obligations not yet satisfied
Amounts transferred to
trade receivables
At 31 December
16 Trade and Other Receivables
Trade receivables – gross
Trade receivables – allowances for credit losses
Net trade receivables
Other receivables (including retentions) - gross
Other receivables (including retentions) - allowances
for credit losses
Net other receivables (including retentions)
Prepayments
Total
Movements in provision for expected credit losses
At 1st January
Utilised/(Provided) in year
At 31st December
90
TClarke Annual Report and Financial Statements 2023
2023
£m
38.8
(0.2)
38.6
26.2
(0.8)
25.4
0.9
64.9
(1.3)
0.3
(1.0)
Contract
liabilities
£m
(2.9)
2.9
(7.7)
–
(7.7)
2022
£m
36.7
(0.4)
36.3
24.7
(0.9)
23.8
1.5
61.6
(0.2)
(1.1)
(1.3)
Net trade receivables 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
Total
The ageing of trade receivables past
due but not impaired is as follows
30 days or less
31–60 days
60–90 days
Greater than 90 days
Total
2023
£m
29.6
–
–
–
9.0
38.6
8.0
0.8
0.1
0.1
9.0
2022
£m
30.0
–
–
–
6.3
36.3
5.3
1.0
–
–
6.3
The expected credit losses on trade receivables and contract assets are estimated based on
past default experience of the debtor and an analysis of the debtor’s current financial position
adjusted for factors that are specific to the debtors such as the ageing of the debt, together with
any applicable macro-economic factors or emerging trends.
Trade and other receivables are analysed
as follows on the statement of financial position:
Current assets
Non-current assets
Total
2023
£m
52.9
12.0
64.9
2022
£m
55.3
6.3
61.6
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
17 Trade and Other Payables
Current
Trade payables (including retentions)
Other taxation and social security
Accruals
Other payables
Total
Non-current
Trade payables (including retentions)
Total
Trade payables payment terms are as follows:
30 days or less
31 to 60 days
Greater than 60 days
Total
91
TClarke Annual Report and Financial Statements 2023
2023
£m
65.8
3.2
56.3
0.8
126.1
3.1
3.1
38.1
27.6
3.2
68.9
2022
£m
51.5
6.4
37.7
0.5
96.1
2.5
2.5
39.5
13.7
0.8
54.0
18 Capital and Reserves
(i) Components of Owners’ Equity
The nature and purpose of the components of owners’ equity are as follows:
Component of owners’ equity Description and purpose
Share capital
Amount subscribed for share capital at nominal value.
Share premium
Amount subscribed for share capital in excess of nominal
value, net of allowable expenses.
Revaluation reserve
Cumulative gains recognised on revaluation of land and
buildings above depreciated cost.
Retained earnings
Cumulative net gains and losses recognised in the income
statement and the statement of comprehensive income.
Retained earnings include shares in TClarke plc purchased in the market and held by the
TClarke Employee Share Ownership Trust (’the Trust’) to satisfy options under the Company’s
Share incentive schemes. The number of shares held by the trust at 31 December 2023 was
437,831 (2022: 1,110,376) with a cost of £0.6m (2022: £1.4m). All of the shares held by the
Trust were unallocated at the year-end and dividends on these shares have been waived. Based
on the Company’s share price at 31 December 2023 of £1.36 (2022: £1.20), the market value of
the shares was £0.6m (2022: £1.3m).
The cost of shares held in the Trust has moved as follows:
Opening cost of shares
Cost of shares purchased by Trust
Cost of shares distributed by Trust
Closing cost of shares
2023
£m
1.4
0.8
(1.6)
0.6
2022
£m
1.2
1.6
(1.4)
1.4
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
18 Capital and Reserves (continued)
(ii) Share Capital and Premium
Allotted, called up and fully paid
(nominal value 10p per share)
At 31st December 2023
At 31st December 2022
Number of shares
52,850,780
44,101,443
Share
capital
£m
5.3
4.4
Share
premium
£m
13.6
4.5
During the year the Company raised net proceeds of £10.1m by way of an over subscribed
placing of new ordinary shares in the Company (after deducting costs of £0.6m). The issue price
was 122p per share representing a 14% discount to the closing price of 141.5p on 5 July 2023.
The placing was for 8,749,337 ordinary shares with a nominal value of 10p.
All shares rank equally in respect of shareholder rights.
(iii) Save As You Earn Scheme
The following options granted to employees and Directors of the Group under approved
Save As You Earn (‘SAYE’) share option schemes were outstanding at the end of the year:
Number
of options
Grant date
Exercise
period
Exercise
price
Fair value at
date of grant
TClarke plc 2021
Sharesave Scheme
(‘2021 SAYE Scheme)
1,066,130
06/10/2021
01/12/2024
to
31/05/2025
124.2
30.1p
In accordance with the scheme rules, all employees of the Group with at least six months’
continuous service were eligible to participate in the scheme; the only vesting condition being
that the individual remains an employee of the Group over the savings period. The impact of
recognising the fair value of employee share option plan grants as an expense was £0.1m for the
year ended 31st December 2023 (2022: £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, of between £10 to £500 for a period of three years, at the
end of which the employee may use part or all of the proceeds to acquire the shares under
option. Options will be exercisable within a period of six months commencing on the date of
maturity of the participant’s SAYE contract. The fair value at date of grant was calculated using a
Black-Scholes model reflecting a three year option life, an annual risk free rate of 0.3% and
annualised volatility of 9.69%.
92
TClarke Annual Report and Financial Statements 2023
The number of options outstanding during the year were as follows:
2023
Weighted
average
exercise
price (p)
124.20
–
–
124.20
124.20
2022
Number
1,585,821
–
(218,582)
(188,117)
1,179,122
2022
Weighted
average
exercise
price (p)
116.49
–
74.88
124.16
124.20
2023
Number
1,179,122
–
–
(112,992)
1,066,130
At 1st January
Granted
Exercised
Lapsed
At 31st December
The weighted average remaining contractual life of the options at 31 December 2023 was
517 days (2022: 882 days). All options will become exercisable within 2024 (1st December
2024).
(iv) Long-term Incentive Plan
All employees, including Executive Directors, are eligible to participate in the TClarke Long-term
Incentive Plan (‘the Plan’) at the discretion of the Remuneration Committee. Awards may be made
in the form of approved options, unapproved options, conditional awards of shares and matching
awards of shares. Awards may be made in the six-week periods after adoption of the Plan and
after the announcement of the Group’s interim or final results. No award may be made more than
ten years after the date on which the Plan was last approved by shareholders (5th May 2021).
Options and awards of shares are subject to performance conditions as determined by the
Remuneration Committee.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
18 Capital and Reserves (continued)
(iv) Long-term Incentive Plan (continued)
The total number of shares issued pursuant to the Plan, when aggregated with the total number of
shares issued pursuant to any other employee share scheme in the ten years immediately preceding
the date upon which an award is made, shall not exceed 10% of the Company’s issued share capital
at the date of the grant. Our practice is to only issue shares for the Save As You Earn Scheme; shares
for the Long-term Incentive Plan are satisfied through market purchases.
At 31st December 2023, 2,471,489 conditional share awards were outstanding
(2022: 2,733,956 outstanding).
Date of grant
Number of awards
Share price at date of grant
Exercise price
Contract life
Conditional
shares
28/04/2021
808,084
135.50p
–
3 years
Conditional
shares
16/03/2022
784,246
150.25p
–
3 years
Conditional
shares
27/03/2023
879,159
134.75p
–
3 years
The conditional share awards and options will vest subject to continued employment with the
Group and satisfaction of the following performance conditions over a three-year period ending
31st December preceding the earliest vesting date.
For 50% of the 2021, 2022 and 2023 awards the following performance conditions apply:
Annual growth rate in
underlying EPS above RPI1
Less than 3%
3%
Between 3% and 10%
Above 10%
Proportion of award vesting
Nil
25%
Between 25% and 100% on a straight-line basis
100%
1 The base point is based on average underlying EPS for the three years ending with the year preceding date of grant.
For 50% of the 2022 and 2023 awards CPI rather than RPI is used.
93
TClarke Annual Report and Financial Statements 2023
The remaining 50% of the 2021 award performance conditions are as follows:
Annual growth rate in underlying EPS above RPI1
Proportion of award vesting
Less than 20%
Between 20% and 30%
Above 30%
Nil
Between nil and 100% on a sliding scale
100%
The remaining 50% of the 2022 and 2023 awards was made to incentivise the achievement of the
Company’s 3 year ambitious organic growth plan, achievement of which should substantially
enhance earnings per share. This element of the award will be subject to satisfaction of the
Total Shareholder Return (TSR) performance condition as set out below:
TSR*
Less than 35%
35%
Between 35% and 50%
Above 50%
Proportion of award vesting
Nil
25%
Between 25% and 100% on a straight-line basis
100%
* * Base point share price for the 2022 award is the 3-month average to 31 December 2021.
The share price at maturity is the 3-month average to 31 December 2024. Base point share
price for the 2023 award is 150p. The share price at maturity is the 3-month average to 31
December 2025.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
18 Capital and Reserves (continued)
(v) 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 Long-term Incentive Plan grants as an
expense is a £1.7m charge for the year ended 31 December 2023 (2022: £0.8m charge).
19 Notes to the Statement of Cash Flows
(i) Reconciliation of operating profit to net cash generated from/(used in) operating activities
(vi) Dividends Paid
Final dividend of 4.1p (2022: 4.1p) per Ordinary share paid
during the year relating to the previous year’s results
Interim dividend of 1.375p (2022: 1.25p) per Ordinary share
paid during the year
Total
2023
£m
1.8
0.7
2.5
2022
£m
1.8
0.5
2.3
The Directors are proposing a final dividend of 4.525p (2022: 4.1p) per Ordinary share totalling
£2.4m (2022: £1.8m).
This dividend has not been accrued at the reporting date.
Operating profit
Depreciation charge
Equity-settled share-based payment expense
Pension deficit reduction contribution
Defined benefit pension scheme credit
Operating cash flows before movement in working capital
(Increase) in inventories
(Increase) / Decrease in Contract assets and liabilities
(Increase) in Trade and Other Receivables
Increase in Trade and Other Payables
Cash generated from operations
Corporation tax paid
Interest received
Net cash generated from operating activities
2023
£m
9.4
3.1
1.8
(1.3)
(0.1)
12.9
–
(30.4)
(3.7)
30.3
9.1
(0.5)
0.1
8.7
2022
£m
11.5
3.0
0.8
(1.5)
(0.7)
13.1
(0.1)
2.2
(3.8)
0.8
12.2
(1.6)
–
10.6
(ii) 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
2023
£m
29.3
2022
£m
22.5
94
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
20 Bank Overdrafts and Bank Loans
The Group’s banking facilities comprise a £5.0m overdraft facility and a £25.0m revolving credit
facility (‘RCF’), both with National Westminster Bank plc, with the level of usage available
dependent on covenant compliance. The RCF charges commitment fees at market rates and
drawings bear interest at a margin of 1.9% above SONIA. Interest is charged on the overdraft at
2.00% above base rate. The RCF includes financial covenants in respect of interest cover and
net leverage ratios which are tested quarterly. The RCF is available until 31 August 2026 and the
overdraft facility is subject to annual review. The Group was compliant with its obligations under
the RCF and the overdraft facility throughout the year.
All operating companies within the Group are included within the Group banking arrangement,
and National Westminster Bank plc has a floating charge over the assets of the Group.
At 31st December 2023 the Group had unused overdraft facilities of £5.0m (2022 £5.0m) and
had drawn down £10.0m of the RCF (2022: £15.0m). Net cash at 31st December 2023 was
£19.3m (2022: £7.5m).
(ii) Transactions with subsidiary companies
Transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note. A full list of subsidiary companies
can be found on page 106. Transactions with the TClarke Employee Share Ownership Trust are
disclosed in note 18 (i).
(iii) Transactions with retirement benefit schemes
Details of transactions between the Group and retirement benefit schemes in which its
employees participate are detailed in note 22.
(iv) Directors’ Material Interests in Contracts with The Company
No director held any material interest in any contract with the Company or any Group company
in the year or in the subsequent period to 26th March 2024.
21 Related Party Transactions
(i) Key management personnel
The key management personnel of the Group comprise members of the TClarke plc Board of
Directors and the Group Management Board. The key management personnel compensation is
as follows:
Short-term benefits
Share-based payments
Post-employment employee benefits
Total
2023
£m
4.2
1.7
0.1
6.0
2022
£m
4.4
1.5
–
5.9
More information on Director remuneration can be found on pages 57 to 63.
95
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
22 Retirement benefit obligations
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 the income statement of £3.6m (2022: £3.1m) represents contributions
payable to these schemes by the Group at rates specified in the rules of the separate plans.
Defined Benefit Scheme
The Group operates a funded defined benefit scheme for qualifying employees. The scheme is
registered with HMRC and is administered by the trustees.
With effect from 1st March 2010, the benefit structure was altered from a final salary scheme
with an accrual rate of 1/60th to a Career Average Revalued Earnings scheme with an accrual
rate of 1/80th. No other post-retirement benefits are provided. The assets of the scheme are
held separately from those of the participating companies.
The most recent triennial actuarial valuation of the scheme, carried out at 31st December 2021
by D. Pettit, Fellow of the Institute of Actuaries, showed a deficit of £19.8m, which represented
a funding level of 71%. Following agreement of the valuation, deficit reduction contributions
were agreed at £1.3m per annum. The Group continues to provide security in the form of a
charge over the Group’s property portfolio up to a combined value of £2.0m.
From 1st April 2020, the service contribution increased from 21.4% to 22.4% of pensionable
payroll (including employee contributions, which, increased from 10% to 12% of pensionable
payroll).
As part of a Group reorganisation, a subsidiary company, TClarke Services Limited, became the
principal employer of the scheme with effect from 23rd December 2016, and the pension
scheme liability and related deferred tax asset were transferred to TClarke Services Limited at
that date. The Company and its subsidiary, TClarke Contracting Limited, have provided a
guarantee to the trustees of the scheme in respect of TClarke Services Limited’s obligations to
the pension scheme.
96
TClarke Annual Report and Financial Statements 2023
The key assumptions used to value the pension scheme liability in the financial statements
are set out below:
Average rate of increase in salaries
Rate of increase of pensions in payment
Discount rate
Inflation assumption (RPI)
Inflation assumption (CPI)
The mortality assumptions used in the 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 consolidated statement of
financial position are as follows:
Present value of funded obligations
Fair value of plan assets
Deficit of funded plans
2023
%
3.07
2.94
4.51
3.00
2.57
2023
Years
21.0
23.0
22.0
24.1
2023
£m
42.3
(30.5)
11.8
2022
%
3.26
3.05
4.77
3.12
2.76
2022
Years
21.2
23.2
22.1
24.3
2022
£m
40.6
(27.7)
12.9
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
22 Retirement benefit obligations (continued)
The movement in the defined benefit obligation is as follows:
At 1st January 2022
Current service cost
Settlement gain
Interest expense/(income)
Total
Remeasurements
Return on plan assets, excluding amounts
included in interest expense
Change in demographic assumptions
Gain from change in financial assumptions
Experience gain
Total
Contributions
Employers
Employees
Payment from plans
Benefit payments
At 31st December 2022
Present value
of obligation
£m
Fair value of
plan assets
£m
73.4
0.3
(0.6)
1.3
1.0
–
(0.3)
(29.6)
(1.6)
(31.5)
–
0.5
(2.8)
40.6
(49.5)
–
–
(0.9)
(0.9)
22.3
–
–
–
22.3
(1.9)
(0.5)
2.8
(27.7)
Total
£m
23.9
0.3
(0.6)
0.4
0.1
22.3
(0.3)
(29.6)
(1.6)
(9.2)
(1.9)
–
–
12.9
At 31st December 2022
Current service cost
Interest expense/(income)
Total
Remeasurements
Return on plan assets, excluding amounts
included in interest expense
Loss from change in financial assumptions
Experience gain
Total
Contributions
Employers
Employees
Payment from plans
Benefit payments
At 31st December 2023
Present value
of obligation
£m
Fair value of
plan assets
£m
40.6
(27.7)
0.3
1.9
2.2
–
1.3
(1.2)
0.1
–
0.5
(1.1)
42.3
–
(1.3)
(1.3)
(0.3)
–
–
(0.3)
(1.8)
(0.5)
1.1
(30.5)
Total
£m
12.9
0.3
0.6
0.9
(0.3)
1.3
(1.2)
(0.2)
(1.8)
–
–
11.8
Current service cost and settlements are included in administrative expenses.
Interest expense is included in finance costs.
Remeasurement gains and losses have been included in other comprehensive income/expense.
97
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
22 Retirement benefit obligations (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:
Change in Corporate Bond Yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially
offset by an increase in the value of the scheme’s bond holdings.
Inflation Risk
Some of the pension obligations are linked to inflation, and higher inflation will lead to higher
liabilities. Caps are in place for inflationary increases which protect the scheme against the
impact of extreme inflation. The majority of the plan’s assets are largely unaffected by inflation,
meaning that any increase in inflation will also increase the deficit.
Life Expectancy
Pension obligations are payable for the life of the member, and where elected by the member,
the member’s spouse.
Increases in life expectancy will result in increases in scheme liabilities.
27.7 100%
Age Profile
The weighted average duration of the unsecured liabilities is approximately 16 years.
2023
2022
£m
£m
Quoted Unquoted
£m
Total
£m
% Quoted
£m
Unquoted
£m
Total
%
Equities
Bonds/Derivatives
Property
Cash
Insurance annuity
contracts
Other
13.2
13.6
0.7
–
–
–
1.3
–
–
0.9
0.8
–
14.5 48%
13.6 45%
2%
3%
0.7
0.9
0.8
–
2%
–
Total
27.5
3.0
30.5 100%
12.2
10.6
1.1
–
–
–
23.9
1.9
14.1
51%
–
10.6
38%
1.1
1.1
0.8
–
4%
4%
3%
–
–
1.1
0.8
–
3.8
Through the defined benefit pension scheme the Group is exposed to a number of risks, the most
significant of which are set out below.
Asset Volatility
The objective of the investment strategy is to have sufficient assets to pay benefits to members
as they fall due. The scheme assets are invested in a diversified portfolio of growth assets (such
as multi-asset funds and equities) and matching assets (such as bonds held in multi-asset funds
and cash). Multi-asset funds include property investments. In addition, the scheme holds a
number of annuity policies which are used to back a number of pensions in payment, reducing
the volatility of the results.
The plan liabilities are calculated using a discount rate set with reference to corporate bond
yields. If plan assets underperform this yield, this will create a deficit. A proportion of scheme
assets are held in equities, which are expected to outperform bond yields in the long term while
providing volatility and risk in the short term.
The Group believes that due to the long-term nature of scheme liabilities and the strength of
the Group, it is appropriate to continue to hold a proportion of the assets in equities.
98
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
22 Retirement benefit obligations (continued)
The sensitivity of the defined benefit obligation to changes in the weighted principal
assumptions is:
Impact on defined benefit obligation
23 Obligations Under Leases
In addition to the recognition of right-of-use-assets in note 12 the impact of the Group’s lease
arrangements on the financial statements is shown below.
Change in assumption
Increase in assumption
Decrease in assumption
31st December 2023
Discount rate
Inflation assumption
Rate of increase in salaries
Life expectancy
0.25%
0.25%
1%
1 year
Decrease by 5%
Increase by 2%
Increase by 1%
Increase by 3%
Increase by 4%
Decrease by 3%
Decrease by 1%
Decrease by 3%
Lease liability
Total value of lease payments
Total payments for short-term and low value leases
Interest expense
The above sensitivity analyses are based on a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the
assumptions may be correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions, the same method (present value of the defined
benefit obligation calculated with the projected unit credit method at the end of the year) has
been applied as when calculating the pension liability recognised within the statement of
financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared to the previous year.
31st December 2022
Lease liability
Total value of lease payments
Total payments for short-term and low value leases
Interest expense
Properties
£m
Plant machinery
and vehicles
£m
4.0
1.4
–
0.2
3.8
1.5
–
0.1
Plant,
Plant machinery
and vehicles
£m
Properties
£m
5.1
1.0
–
0.1
3.3
1.2
–
0.1
Total
£m
7.8
2.9
–
0.3
Total
£m
8.4
2.2
–
0.2
Lease payments on short-term leases and leases of low-value assets are recognised as an
expense on a straight line basis over the lease term.
24 Contingent Liabilities
Group banking facilities of £30m and surety bond facilities of £70m are supported by cross
guarantees given by the Company and participating companies in the Group. All operating
companies within the Group are included within the Group banking arrangement, and National
Westminster Bank plc has a floating charge over the assets of the Group. There are contingent
liabilities in respect of surety bond facilities, guarantees and collateral warranties under
contracting and other arrangements entered into in the normal course of business.
Group’s Defined Benefit Pension
As part of a Group reorganisation, a subsidiary company, TClarke Services Limited, became the
principal employer of the scheme with effect from 23rd December 2016, and the pension scheme
liability and related deferred tax asset were transferred to TClarke Services Limited at that date.
The Company and its subsidiary, TClarke Contracting Limited, have provided a guarantee to the
trustees of the scheme in respect of TClarke Services Limited’s obligations to the pension scheme.
99
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
25 Financial Instruments
(i) 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 capital structure of the Group consists of net funds, including cash and cash equivalents,
bank loans and overdrafts and lease obligations, and equity attributable to equity holders of the
Parent Company, comprising issued capital, reserves and retained earnings. The Group does
not use derivative financial instruments.
The capital structure of the Group at 31st December 2023 and 2022 was as follows:
Cash and cash equivalents
Less borrowings
Net cash
Obligations under leases
Total equity
2023
£m
29.3
(10.0)
19.3
7.8
53.4
2022
£m
22.5
(15.0)
7.5
8.4
38.7
(ii) 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. All financial assets and
liabilities are measured at amortised cost.
100
TClarke Annual Report and Financial Statements 2023
Financial Assets
The Group’s financial assets comprise trade and other receivables held at amortised cost, and
cash and cash equivalents as follows:
31st December 2023
Carrying value
Contractual cash flows
Less than one year
One to two years
Two to three years
More than three years
Total
31st December 2022
Carrying value
Contractual cash flows
Less than one year
One to two years
Two to three years
More than three years
Total
Cash and cash
equivalents
£m
Trade and other
receivables1
£m
29.3
29.3
–
–
–
29.3
22.5
22.5
–
–
–
22.5
64.0
52.0
10.0
1.5
0.5
64.0
60.1
53.5
6.3
0.3
–
60.1
Total
£m
93.3
81.3
10.0
1.5
0.5
93.3
82.6
76.0
6.3
0.3
–
82.6
1 Trade and other receivables exclude prepayments, and are not discounted on grounds of materiality
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
25 Financial Instruments (continued)
Changes in liabilities arising from financing activities
Financial Liabilities – Analysis of Maturity Dates
The carrying values of the Group’s financial liabilities (held at amortised cost) and maturity
profile of the associated contractual cash flows are shown below. As the carrying value of the
Group’s obligations under leases are discounted the contractual cash flows differ from the
carrying values. Trade and other payables are not discounted on grounds of materiality.
31st December 2023
Carrying value
Contractual cash flows
Less than one year
One to two years
Two to three years
More than three years
Total
31st December 2022
Carrying value
Contractual cash flows
Less than one year
One to two years
Two to three years
More than three years
Total
Bank loans
£m
Trade and other
payables1
£m
Obligations
under leases
£m
10.0
10.2
0.2
0.1
–
10.5
15.0
15.2
0.2
0.2
0.1
15.7
126.0
122.9
3.1
–
–
126.0
92.2
89.7
2.4
0.1
–
92.2
7.8
3.1
2.8
1.7
1.1
8.7
8.4
2.7
2.4
2.0
1.9
9.0
Total
£m
143.8
136.2
6.1
1.8
1.1
145.2
115.6
107.6
5.0
2.3
2.0
116.9
1 Trade and other payables exclude other taxation and social security.
Current interest-bearing loans and
borrowing (excluding items listed below)
Current lease liabilities (Note 23)
Non-current lease liabilities (Note 23)
Total liabilities from financing activities
Current interest-bearing loans and
borrowing (excluding items listed below)
Current lease liabilities (Note 23)
Non-current lease liabilities (Note 23)
Total liabilities from financing activities
1 January
2023
£m
15.0
2.7
5.7
23.4
1 January
2022
£m
15.0
1.6
1.3
17.9
Cash
flows
£m
(5.0)
(2.9)
–
(7.9)
Cash
flows
£m
–
(2.2)
–
(2.2)
New
leases Other
£m
£m
31 January
2023
£m
–
0.7
1.6
2.3
–
2.1
(2.1)
–
10.0
2.6
5.2
17.8
New
leases Other
£m
£m
31 January
2022
£m
–
1.6
5.8
7.4
–
1.7
(1.4)
0.3
15.0
2.7
5.7
23.4
(iii) 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 of financial loss to the Group if a client or counterparty to a financial
instrument fails to meet its contractual obligations (i.e defaulting) and arises primarily in respect
of the Group’s trade receivables and contract assets.
101
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
25 Financial Instruments (continued)
The degree to which the Group is exposed to this credit risk depends on the individual
characteristics of the contract counterparty and the nature of the project. The Group’s credit risk
is also influenced by general macroeconomic conditions. The Group does not have any
significant concentration risk in respect of contract assets or trade receivable balances at the
reporting date with receivables spread across a wide range of clients. Due to the nature of the
Group’s operations, it is normal practice for clients to hold retentions in respect of contracts
completed. Retentions held by clients at 31 December 2023 were £23.9m (2022: £22.2m).
These will be collected in the normal operating cycle of the Group.
The Group manages its exposure to credit risk through the application of its credit risk management
policies, including assessing the credit worthiness of prospective clients prior to accepting a contract
and requesting progress payments on contract work in progress.
The Group manages the collection of retentions through its post completion project monitoring
procedures and ongoing contract with clients to ensure that potential issues that could lead to the
non-payment of retentions are identified and addressed promptly. The directors always estimate the
loss allowance on contract assets and trade receivables at the end of the reporting period at an
amount equal to lifetime expected credit losses. Taking into account the historical default experience
and the future prospects in the industry, the loss allowance for contract assets is not material.
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 manages liquidity risk
by maintaining adequate reserves and banking facilities, by monitoring cash flows and by
matching the maturity profiles of financial assets and liabilities within the bounds of its
contractual obligations.
The Group’s facilities comprise a £25.0m RCF and a £5.0m overdraft facility. The RCF is a committed
facility available until 31st August 2026 and is subject to quarterly financial covenant tests. Manage-
ment has prepared three-year cash flow projections that demonstrate that the Group will be able to
meet these financial covenants. There have been no other significant changes to the nature of
financial risks or the Group’s objectives and policies for managing these risks.
Based on a base rate of 5.25%, provided that the Group is utilising its banking facilities, the
effect of a delay/acceleration in the maturity of the Group’s trade receivables at the statement of
financial position date would be to decrease/increase profit by approximately £0.3m (2022:
£0.2m) 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 £0.3m (2022: £0.2m) for each month of delay/acceleration. If the
facilities are unused, there is no impact on profit.
The expected credit losses on trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis of the debtor’s current
financial position, adjusted for factors that are specific to the debtors, general economic
conditions of the industry in which the debtors operate and an assessment of both the current
as well as the forecast direction of conditions at the reporting date. Details of the provision for
expected credit losses are shown in note 16, including a reconciliation of movements in the
year. There has not been any significant change in the gross amounts of trade receivables that
has affected the estimation of the loss allowance.
In determining the recoverability of trade receivables, the Group considers any change in the
credit quality of the trade receivable from the date credit was initially granted up to the
reporting date. The concentration of credit risk is limited due to the customer base being large
and spread across the Group’s operating segments. Accordingly, the directors believe that there
is no further credit provision required in excess of the provision for impairment losses. At the
reporting date, there were no trade and other receivables which have had renegotiated terms
that would otherwise have been past due. Financial assets are written off and derecognised
when the Group has no reasonable expectation of recovering the balance.
102
TClarke Annual Report and Financial Statements 2023
Cash Flow Interest Rate Risk
The Group is exposed to changes in interest rates on its bank deposits and borrowings. Surplus
cash is placed on short-term deposit at fixed rates of interest. Bank overdrafts are at floating
rates, at a fixed margin of 2.00% above base rates. The interest rate on amounts drawn down
under the RCF are set at 1.9% above SONIA. The Group’s lease obligations are at fixed rates of
interest determined at the inception of the lease.
The effect of each 1% increase in interest rates on the Group’s borrowings at the reporting date
would be to reduce profits by approximately £0.1m (2022: £0.1m) per annum. Details of the
Group’s and the Company’s bank facilities are disclosed in note 20.
The Company has taken advantage of section 408 of the Act and consequently the statement
of comprehensive income (including the profit and loss account) of the Parent Company is not
presented as part of these accounts. The profit after tax for the year was £0.9m (2022: £2.2m).
The notes on pages 105 to 106 form part of these financial statements.
The financial statements of the Company were approved by the Board and authorised for issue
on 26th March 2024 and signed on its behalf by:
Iain McCusker
Director
Mark Lawrence
Director
Strategic Report
Governance
Financial Statements
Additional
Company Statement of Financial Position
As at 31st December 2023
TClarke plc Registered number 00119351
Non-current assets
Investments
Total non-current assets
Current assets
Amounts owed by subsidiary undertakings
Trade and other receivables
Current tax receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Bank loans
Amounts owed to subsidiary undertakings
Other tax and social security
Other tax and social security
Trade and other payables
Total current liabilities
Net current assets
Non-current liabilities
Amounts owed to subsidiary undertakings
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Note
1
2023
£m
44.1
44.1
23.6
0.2
1.8
11.2
36.8
80.9
(10.0)
(14.1)
(0.9)
(0.1)
(25.1)
11.7
(29.1)
(29.1)
(54.2)
26.7
5.3
13.6
7.8
26.7
2022
£m
44.1
44.1
12.9
0.1
1.3
8.9
23.2
67.3
(15.0)
(2.3)
(4.3)
(0.2)
(21.8)
1.4
(28.3)
(28.3)
(50.1)
17.2
4.4
4.5
8.3
17.2
103
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Company Statement of Changes in Equity
For the year ended 31st December 2023
Attributable to owners of the parent
At 1st January 2022
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Share-based payment expense
Acquisition of shares by ESOT
Shares allotted in respect of share
option schemes
SAYE option cost
Dividends paid
Total transactions with owners
At 31st December 2022
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
New shares issued in the year
Share-based payment expense
Transactions in own shares in
respect of share awards
SAYE option cost
Dividends paid
Total transactions with owners
At 31st December 2023
Called up
share
capital
£m
4.4
Share
premium
£m
4.2
–
–
–
–
–
–
–
–
–
4.4
–
–
–
0.9
–
–
–
–
0.9
5.3
–
–
–
–
–
0.2
–
–
0.2
4.4
–
–
–
9.2
–
–
–
–
9.2
13.6
Retained
earnings
£m
9.2
2.2
–
2.2
0.8
(0.8)
(0.8)
0.1
(2.3)
(3.0)
8.4
0.9
–
0.9
–
1.7
(0.8)
0.1
(2.5)
(1.5)
7.8
Total
Equity
£m
17.8
2.2
–
2.2
0.8
(0.8)
(0.6)
0.1
(2.3)
(2.8)
17.2
0.9
–
0.9
10.1
1.7
(0.8)
0.1
(2.5)
8.6
26.7
The notes on pages 105 to 106 form part of these financial statements.
104
TClarke Annual Report and Financial Statements 2023
Amounts owed by subsidiary undertakings are initially recorded at their fair value. Subsequent
to their initial recognition, the balances are measured at amortised cost. By virtue of cross
guarantees which exist across the group, and all group companies having access to the Group
banking arrangement, the subsidiaries had access to sufficient facilities to enable them to repay
the balances, if demanded, at the reported date, and as such do not represent a credit risk.
Therefore no adjustment has been made to the value of the balances for any expected credit
loss provisions.
Amounts owed to group undertakings falling due after more than one year comprise 10 year
variable rate unsecured loan notes, earning interest at 2.5% above base rate. All other amounts
owed by/to group undertakings are unsecured, interest free and repayable on demand.
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements
For the year ended 31st December 2023
Basics of Accounting
The separate financial statements of the Company are presented as required by the Companies
Act 2006 (‘the Act’). The Company meets the definition of a qualifying entity under FRS 100
(Financial Reporting Standard 100) issued by the Financial Reporting Council. Accordingly, the
Company has prepared its financial statements in accordance with FRS 101 (Financial Reporting
Standard 101) ‘Reduced Disclosure Framework’ as issued by the Financial Reporting Council.
The Company’s accounting policies are consistent with those described in the consolidated
accounts of TClarke plc, except that, as permitted by FRS 101, the Company has taken
advantage of the disclosure exemptions available under that standard in relation to share-based
payments, financial instruments, capital management, presentation of a cash flow statement
and related party transactions. Where required, equivalent disclosures are given in the
consolidated accounts. In addition, disclosures in relation to share capital (note 18 (ii)) dividends
(note 18 (vi)) and Bank overdrafts and bank loans (note 20) have not been repeated here as
there are no differences to those provided in the consolidated accounts. There are no critical
judgements the directors have made within the Company financial statements.
These financial statements have been prepared on the going concern basis as set out in
note 2 to the Group accounts on page 79, and under the historical cost convention. The
financial statements are presented in pounds sterling, which is the Company’s functional
currency, and unless otherwise stated have been rounded to the nearest £0.1m.
Investments in subsidiaries are recorded at cost, being the fair value of consideration paid, and
subsequently at cost less provisions for impairment. Cost includes the fair value of equity-settled
share-based payment arrangements relating to options to acquire shares in TClarke plc granted
to subsidiary employees under Savings Related Share Option schemes.
An annual impairment review of the carrying value of the Company’s subsidiaries is undertaken at
31st December each year in conjunction with the goodwill impairment review (see note 11 of
consolidated financial statements), using the same underlying cash flow projections and other key
assumptions. The impairment provision comprises the entire cost of subsidiaries where operations
have ceased, or a reduction to recoverable amount where there has been a significant reduction
in underlying trading and significant losses have been incurred, such that the Group is unable to
recover the cost of the investment through its net asset value or future trading.
105
TClarke Annual Report and Financial Statements 2023
Strategic Report
Governance
Financial Statements
Additional
Notes to the Financial Statements continued
For the year ended 31st December 2023
1 Investments
All subsidiaries are wholly and directly owned by TClarke plc unless otherwise stated, and all are
incorporated within the United Kingdom.
Investments comprise:
Principal operating company
TClarke Contracting Limited
Group services company
TClarke Services Limited
Property holding company
Weylex Properties Limited
Non-trading and dormant companies
Eton Associates Limited
TClarke Europe Limited
Anglia Electrical Services Limited
D G Robson Mechanical Services Limited
G.D.I. Electrical Co. Limited
J.J. Cross Limited
J.J. Cross Services Limited*
Mitchell and Hewitt Limited
T. Clarke East Limited
TClarke Leeds Limited
TClarke Newcastle Limited
T Clarke North West Limited
T. Clarke (Scotland) Limited
TClarke South East Limited
TClarke South West Limited
Waldon Security Limited**
Cost
At 1st January
Capital Contributions
At 31st December
Impairment
At 1st January
At 31st December
Net book value
At 31st January
At 31st December
Type of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
* Shares held by J.J. Cross Limited. ** Shares held by TClarke South West Limited.
All subsidiary companies have their registered office at 30 St Mary Axe, London EC3A 8BF apart
from T. Clarke (Scotland) Limited whose registered office is at Eurocentral Parklands Avenue,
Holytown, Motherwell, Scotland ML1 4WQ.
106
TClarke Annual Report and Financial Statements 2023
Subsidiary undertakings
2023
£m
53.7
–
53.7
(9.6)
(9.6)
44.1
44.1
2022
£m
53.7
–
53.7
(9.6)
(9.6)
44.1
44.1
Strategic Report
Governance
Financial Statements
Additional
Shareholder Information
Company Details
Registered office:
30 St Mary Axe
London EC3A 8BF
Telephone: 020 7997 7400
Email: info@tclarke.co.uk
Company registration number: 00119351
The TClarke plc Website
Shareholders are encouraged to visit our website www.tclarke.co.uk for further information
about the Company. The dedicated investor section on the website contains information
specifically for shareholders, including regulatory announcements and copies of the latest and
past financial statements.
Registrar
The Company’s shareholder register is maintained by our Registrar, Link Group. If you have any
queries relating to your TClarke plc shareholding, you should contact Link Group directly by one
of the methods below:
Email: shareholderenquiries@linkgroup.co.uk
Telephone: 0371 664 0300
By post: 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL
Shareholder portal: www.signalshares.com
If you are yet to register, you will need your investor code.
107
TClarke Annual Report and Financial Statements 2023
Analysis of Shareholdings
The tables below show an analysis of Ordinary shareholdings as at 31st December 2023.
Individuals
Banks or nominees
Other corporations
Totals
Number of shares held:
1 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 500,000
500,001 to 1,000,000
1,000,001 +
Totals
Shares
Percentage
Holdings
Percentage
6,200,256
44,687,976
1,962,548
52,850,780
959,187
723,117
3,321,156
12,528,430
4,431,025
30,887,865
52,850,780
11.73%
84.56%
3.71%
100%
1.82%
1.37%
6.28%
23.71%
8.38%
58.44%
100%
673
151
26
850
511
98
153
69
6
13
850
79.18%
17.76%
3.06%
100%
60.12%
11.53%
18%
8.11%
0.71%
1.53%
100%
Substantial Shareholdings
As at 31 December 2023, the following information has been disclosed to the Company under
the FCA’s Disclosure Guidance and Transparency Rules (’DTR 5’), in respect of notifiable interests
in the voting rights in the Company’s issued share capital:
Name of holder
Regent Gas Holdings Limited
Interactive Investor
Hargreaves Lansdown, stockbrokers
Canaccord Genuity Wealth Management
Total voting
rights 1
11,366,218
4,841,568
4,210,694
3,173,055
% of voting
rights 2
21.51%
9.16%
7.97%
6.00%
1 Total voting rights attaching to the ordinary shares at the Company at the time of disclosure
to the Company.
2 Percentage of total voting rights at the date of disclosure to the Company.
As at 26th March 2024, the Company had not been notified of any changes to major
shareholdings.
Strategic Report
Governance
Financial Statements
Additional
Independent Auditors
Mazars LLP
30 Old Bailey
London EC4M 7AU
Financial Calendar
Annual General Meeting
29th May 2024
Corporate Broker
Cavendish Capital Markets Limited
One Bartholomew Close
London EC1A 7BL
Tel: 020 7397 8900
Investor Relations
RMS Partners Limited
160 Fleet Street
London EC4A 2DQ
Tel: 020 3735 6551
Final Dividend for 2023
Ex-dividend
16th May 2024
Record date
17th May 2024
Payment due 14th June 2024
Half Year Results Announcement
12th September 2024
Interim Dividend for 2024
Ex-dividend
Record date
Payment due 25th October 2024
26th September 2024
27th September 2024
Trading Update Release
28th November 2024
These dates are indicative only and may be subject to change.
Dividend Reinvestment Plan
A dividend reinvestment plan (‘DRIP’) is available to shareholders. Those shareholders who have not elected to
participate in the DRIP and who would like to do so, should contact our Registrar, Link Group on 0371 664 0381.
The last day for election for the final dividend for 2023 is 24th May 2024.
108
TClarke Annual Report and Financial Statements 2023
30 St Mary Axe, London EC3A 8BF | 020 7997 7400 | www.tclarke.co.uk