Lights . . . and action from historic firm electrifying Britain
The investment column that makes the most of your money
IN 1881, Tommy Clarke fitted out the world’s first electrically lit public building, the Savoy Theatre in Central London. Eight years later, the young entrepreneur opened a shop, T Clarke, in Knightsbridge and the firm has been operating under the same name ever since.
Not only has the name remained the same, but the company is still a pioneer in the electrical sector, with a reputation for innovation and reliability.
Over the past 128 years, T Clarke has electrified the Tower of London, the Royal Palaces, the Cabinet War Rooms, the first buildings in Canary Wharf, the Shard and both London Olympic Games, immediately after the Second World War and five years ago.
Even today, the company’s customers include some of the best known buildings and businesses in the UK, such as Selfridges on Oxford Street, where the firm is involved in an extensive upgrade of the store’s ageing electrics.
Despite the company’s illustrious history and longstanding reputation for high quality work, the shares are undervalued compared with their listed peers. Priced at 76½p, they deserve to go higher over the coming months and years.
The firm is run by Mark Lawrence. Now 48, he joined 31 years ago as an electrical apprentice and has been there ever since.
The group prides itself on the longevity of its workforce, recruiting young people, training them and promoting them through the ranks. Today there are 1,400 staff, including more than 150 apprentices, most of whom are expected to stay for many years.
The approach was once typical of British companies. Today, it is a rarity, but it does make a difference. Staff feel loyal, they work hard and the longer they are there, the more knowledgeable they become. There is a strong culture within the company and people feel proud of what they do and where they work. Staff and managers also develop relationships with key customers, encouraging repeat orders. Today, around 90 per cent of business comes from existing relationships with either the end customer or big contractors. This gives the company a certain resilience and helps to cement its reputation as a solid and trustworthy operator.
Recent results underline the benefits of the T Clarke way. In the six months to June 30, revenues rose 17 per cent to £143million, profits were 8 per cent ahead at £2.5million and the interim dividend was 20 per cent higher at 0.6p. Importantly, the forward order book rose by 23 per cent to £392million. This is the highest recorded amount in T Clarke’s history and presages well for the future.
This month the company also bought Eton Associates, which specialises in sophisticated building control systems for large offices.
The businesses have known each other for a while and the deal is expected to boost T Clarke’s profits from 2018.
Analysts forecast profits of £6.5million for this year, rising to £7million in 2018. A dividend of 3.5p is pencilled in for 2017, moving to 3.7p next year, so the shares are on an attractive yield of more than 4.5 per cent.
T Clarke divides its business into four regions – Scotland, the North, Central and South West, and London and the South East, the largest contributor to the business.
In the first six months of this year, London and the South East did particularly well, with strong growth and a large order book including work associated with the £600million extension of the Westfield shopping mall in West London. Scotland and the North made decent progress but Central and the South West was hit by projects being delayed and customers taking too long to pay bills.
Looking ahead, however, the group is opening a new site in Birmingham to support growth and is hopeful that prospects will improve across the region.
Some large investors have expressed concerns about the impact of Brexit-related uncertainty on T Clarke. The company itself, however, remains optimistic. Not only is the order book stronger than ever, but conversations with clients have been encouraging.
Electrical work plays an increasing role in almost every commercial building and retail outlet. There are more computers, mobile phones and other electronic devices than ever before and electronic systems are used for everything from security to temperature control.
T Clarke is also involved in cutting-edge technology, such as systems that use facial recognition to let employees enter a building and move around it and can even predict where staff are likely to go once they arrive at work.
Midas verdict: T Clarke has been in business since Queen Victoria was on the throne. The group was innovative back then and it remains so to this day.
At 76½p, the shares seem too cheap and the dividend is a further attraction. Buy.
Traded on: Main market Ticker: CTO Contact: tclarke.co.uk or 020 7997 7400