T Clarke sees margins improve

by John Leitch



M&E contractor T Clarke plans to boost the turnover of its subsidiary Meggitt Marsh, which is bought a few months ago, by 50 per cent, to £3 million.

Robin Wyborn, a director of T Clarke, the UK's largest independently quoted specialist M&E contractor, said last week: "We are turning Meggitt Marsh round. It was being managed on its cash-flow and had no capital. It couldn't keep that up forever: it was trading on a lot of goodwill."

John Hiscock, ex-proprietor of Meggitt Marsh, sold his Bournemouth-based business to Headel Heathrow in November 1997. "Headel ripped the money out, leaving it with no working capital," said Wyborn. "Then early this year, Headel went into liquidation. Headel boasted that it would be the biggest M&E contractor in the UK in two years time, but turned out to be an example of how not to do it.

"We bought Meggitt because we saw it as an asset. A lot of its clients had remained loyal. We bought a good team at Meggitt: they had faith that they would be eventually bought by someone who would save them."

Wyborn was speaking as T Clarke announced a pre-tax profit of £1.4 million (£1.1 million) for the six months to 30 June, with turnover little changed at £25 million. The latest profit includes an exceptional figure of £400,000 arising from the Meggitt purchase.

In the last full year (to 31 December 1997), T Clarke made a pre-tax profit of £2.7 million from turnover of £53 million.

The Swiss group Electrowatt's 53 per cent investment holding in T Clarke was sold in May, the result being that 95 per cent of the company's shares are now trading on the Stock Exchange.

T Clarke's business plan is "to stay in business and make it pay." said Wyborn. He hopes to see turnover grow to £55 million this year, thanks to organic growth.

"Margins are up, though it is still a very competitive market," he said. "1995 was tough for us, a joint venture at Heathrow cost us dear and we had to recover from that.

"Then the market in 1996 was so competitive. However, that forced us to tighten our financial controls and to change the culture of the workforce. The recession has forced us to make improvements.

"Currently, our margins are up - more selective tendering is behind that. Our strike rate has improved, though you seem to go through a bad patch and then win a lot on the trot.

"The margins we are making are better thanks to our improved management of projects. We're not putting more on the tender, though prices in the market are not as cut-throat as they were."

London and the south east represent the group's main working area. Regional coverage comes from T Clarke (Midlands), which is based in Peterborough, while the subsidiary Veale-Nixon operates on Tyneside. "It is very successful and profitable, with a £3 million-a-year turnover," said Wyborn. "Veale-Nixon is a model for Meggitt Marsh."

There is a push to turn T Clarke's Bristol branch into a profit centre in its own right. "It's our base for large turnkey projects," said Wyborn. "We now want a mixed bag of work, a large range of projects to give continuity of turnover."

Looking ahead, Wyborn said: "The outlook is good for the rest of 1998, and 1999 looks to be the same again. We've already got projects running to the latter part of 1999. There is a feeling of stability that's not been in the industry for a while."