INVESTOR PACK INTERIM RESULTS FOR THE 6 MONTHS ENDING 30TH JUNE 2018 INVESTOR PACK Introduction to your presenters Mark Lawrence Group Chief Executive Officer Appointed to Board, 2nd May 2003 | Age 50 Mark has had 31 years with the company and started his career here by completing an electrical apprenticeship in 1987. He progressed through the company, becoming Technical Director in 1997, Executive Director in 2003 and Managing Director, London Operations in 2007. As Group Chief Executive Officer since January 2010, Mark has led strategic changes across the group and remains a hands-on leader, taking personal accountability and pride in Clarke's performance and, ultimately our shareholders’ and clients’ satisfaction. He regularly walks project sites and gets involved personally with many of our clients, contractors and our supply chain. Trevor Mitchell Group Finance Director Appointed to the Board on 1st February 2018 | Age 58 Trevor is a Chartered Accountant and accomplished finance professional with extensive experience across many sectors, including financial services, construction and maintenance, education and retail, working with organisations such as Balfour Beatty plc, Kier Group plc, Rok plc, Clerical Medical Group and Halifax plc. 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. 2 INVESTOR PACK M&E Contracting Every Picture tells a TClarke Story Secured Battersea Power Station Phase 2 Electrical Basement Package Value: £18m Current Bid Office Electrical Shell & Core Package Technologies Secured Battersea Power Station Phase 2 BMS Basement Package Value £4.0m Current Bid Office BMS Shell & Core Package Residential Current Bid Phase 3 Electrical Residential Shell & Core Technologies Phase 2 Apple HQ Current Bid Phase 3 Phase 3 BMS Residential Shell & Core 3 Strategy INVESTOR PACK Our Five Target Markets Infrastructure > Rail > Prisons > Airports > Healthcare > Hospitals > Defence > Education Residential & Accommodation > New build > Refurbishment > Hotels > Student Accommodation Facilities Management & Frameworks > Planned and Reactive Maintenance > On Site Facilities Management > Long Term Frameworks > Term Contracts Technologies > Data Centres > IT Infrastructure and Networks > Audio Visual > Fire and Security > Smart Buildings > Manufacturing and Prefabrication M&E Contracting > Commercial Offices > Retail > Leisure and Stadiums > Museums and Galleries > Design and Build 5 INVESTOR PACK Our Target Sectors 2017: £311m . 2017 Investments in technologies funded from internal resources creating substantial new 2018 H1: £153.5m capabilities Forward Order Book: £370m . Strong core of M&E and Residential work with order book visibility £173m £165m £79m £78m £78m £60m £55m £33m £25m £16m £14m £12m £12m £10m £12.5m Infrastructure Residential/Accommodation FM & Frameworks Technologies M&E Contracting H1 2018 FY 2017 FOB 6 INVESTOR PACK Financial Review Financial Highlights Change H1 2018 Margin H1 2017 Margin Revenue from continuing operations +7% £153.5m £142.8m Operating profit - underlying1 +38% £4.0m 2.60% £2.9m 2.00% Operating profit - reported1 +83% £4.4m £2.4m Profit before tax - underlying 1 +48% £3.7m 2.40% £2.5m 1.75% Profit before tax - reported +105% £4.1m £2.0m Earnings per share - underlying 2 +47% 7.06p 4.8p Earnings per share - diluted +47% 6.91p 4.71p Earnings per share - basic +101% 7.83p 3.89p Interim dividend +10% 0.66p 0.6p Net cash +96% £4.7m £2.4m Order book -6% £370m £392m 1. Underlying profit is profit from continuing operations Earnings per Share before 2. amortisation of intangible assets and non-underlying items. Underlying earnings is calculated by dividing 10.00p underlying profit after tax by the weighted average number of shares in issue. 8.00p 6.00p Diluted 4.00p Basic Underlying 2.00p - H1 2016 H1 2017 H1 2018 8 Income Statement Revenues H1 2018 H1 2018 (£m) H1 2017 (£m) Revenue Profit Margin Revenue Profit Margin London and South East 2 92.5 3.7 4.00% 81.1 3.5 4.40% Central and South West 35.8 0.8 2.20% 23.9 -2.2 -9.30% £11.2m Scotland North 16.9 0.8 4.70% 27.5 1.1 3.80% Scotland 11.2 0.3 2.70% 13 0.5 3.90% Elimination -2.9 -2.7 - £16.9m North group costs -1.6 Total Revenue 153.5 142.8 Underlying operating 4 2.60% 2.9 2.00% profit Net interest -0.3 -0.4 Underlying PBT 3.7 2.5 £92.5m Non-recurring items 0.5 -0.4 £35.8m London & South East Amortisation -0.1 -0.1 Profit before tax 4.1 2.0 Central & South West 9 INVESTOR PACK Cash Flow H1 2018 (£m) H1 2017 (£m) Operating cash flow before working capital 4.5 3 movements Net Cash Working capital movement -8.3 -7.5 Operating cash flow -3.8 -4.5 £4.7m Net interest -0.1 -0.1 -1.5 -0.2 Corporation tax £2.4m -0.4 -1.1 Fixed asset additions net of disposals -5.8 -5.9 £1.3m Cash outflow before financing - - Bank loans -1.2 -1.1 Dividends paid 0.1 H1 2016 H1 2017 H1 2018 Other movements -7 -6.9 Net cash inflow 16.7 12.3 Opening Cash 9.7 5.4 Closing Cash 10 INVESTOR PACK Balance Sheet H1 2018(£m) H1 2018(£m) H1 2017 (£m) H1 2017 (£m) Intangible assets 25.8 22.7 Property plant and equipment 4.8 4.8 Non Current Assets 30.6 27.5 Inventories and construction contracts 19.8 23.7 Debtors 59 44.7 Creditors -75.1 -65.1 Working capital excluding cash 3.7 3.3 Net Cash 4.7 2.4 Pension Scheme -18.9 -22.3 Tax - current and deferred 2.3 3.1 Finance lease obligations -0.1 -0.1 Net assets 22.3 13.9 Net current assets 12.5 8.1 11 INVESTOR PACK Investment Case 1 2 3 4 5 6 Cash Management Financial Forward Balanced Improving Discipline & Strength Revenue Business Margin Profile Strong Risk Visibility & Profitability Control Environment > The Group’s cash > Targeted approach > Substantial and > 100% of 2018 > Increasing exposure > Focus on growing generation remains to contract growing cash target revenues to long-term profits ahead of robust with the year tendering process balances. secured infrastructure work. revenues. end 2017 net cash and assessment and > Planned investment > 50% of revenues > Investing in new > Differentiated improving by 26% strength of potential for future growth for 2019 secured technologies and service offering to £11.7 million, the customers. funded entirely from secular growth commands higher strongest closing > £213 million of > Prudent profit internal resources. revenues booked for markets. margins. balance recorded recognition. since 2009. > Commitment to 2019 and beyond > Five Target Markets > Medium term target progressive dividend – M&E Contracting, to increase the > Half year (June policy. Residential & underlying operating 2018) cash up 96% Accommodation, margin to 3%. > Interim dividend up Year on year from Technologies, FM £2.4m to £4.7m 10% > & Frameworks and Infrastructure. 12 INVESTOR PACK Investment Case - Journey so far Revenue Operating Profit • Medium term target to increase the underlying operating margin to 3%. Full Year Dec 2017 £311m Full Year Dec 2017 £7.3m = 2.3% H1 2018 £4.0m = 2.6% £193.8m £2.9m 2012 2013 2014 2015 2016 2017 2018 13 INVESTOR PACK Operational Review INVESTOR PACK What we do Our competitive What we do The value we create advantage for our stakeholders Design Procure Install Maintain People For shareholders We employ highly qualified and The ability to identify and take experienced professional engineering opportunities to grow the business staff and operatives and run an and deliver progressive returns extensive, industry-leading apprenticeship scheme, which provides For customers a source of high-quality new recruits. Total reliability in project delivery, quality and safety alongside high technical skills Partnerships For employees We focus on building long-term Industry-leading career paths within partnerships nationwide with principal a world-class organisation and project contractors and clients, enabling us to work to take pride in. collaborate on key projects. For partners A collaborative and open approach to We design and value We add value through We employ highly qualified Our in-house teams work which maximises value, efficiency engineer systems, drawing expert procurement of the and experienced in-house provide a suite of Nationwide coverage and productivity We cover the whole of mainland UK on our innovative approach necessary materials, engineering teams of specialist mechanical, with 17 offices organised in four and technological expertise services and expertise professionals and operatives electrical and ICT For society regional operations that mirror our to provide intelligent across the life of a project. to install and deliver our maintenance services to The high-quality built environment, clients’ organisation and serve their building solutions. solutions and services. support the ongoing high-quality engineering jobs and needs effectively. functioning of a building highly responsible approaches we all throughout its lifecycle, want across the UK. Technology We are a high-technology business and leaders in the delivery of complex How we do it Delivers value for all our stakeholders installations and new technologies. We are investing to ensure we remain at The TClarke Way the forefront of technological advances. 1 2 3 4 5 6 Safety Quality Innovation Value People Relationships Reputation Safety is our High-quality Expert in Delivering against Directly Taking As a market leader, we have built a number one work that’s right buildability and innovative end- employed, high- responsibility at reputation for delivery and quality. daily priority first time