HOPE FOR 2012

web: www.tclarke.co.uk
Company was preferred bidder on the London Olympic Stadium

It appears CTO was "tipped" by Glen Arnold around 11/11/15 in his subscribers newsletter

Paul Scott is doing an interview with CTO on 25/11/15 and has a write up here:

http://www.stockopedia.com/content/small-cap-value-report-20-nov-2015-idea-cto-hal-cog-112515/

I'm holding for the long term as I don't think the share price is going to move dramatically until the improved margins as promised by the directors actually appear and that won't be confirmed until final results published in March or April.

Interview with directors here http://qualitysmallcaps.co.uk/

Good interview if you are not familiar with the sector.

Interim statement on the 16th January and stock has been rising slowly all week. It's even up today.

Given all the bargains on FTSE right now, I interpret the rise as someone in the know has knowledge of what the statement is likely to say.

And up it goes again today. Some trades going through at 90.0 and not that many sellers around. Someone clearly wants in before the interim statement. I hope it does not disappoint

CTO 87.25p ahead 3.25%

TClarke trading in line
TClarke's trading for the year to date is in line with the board's expectations, with revenues to the 30 April up at GBP78 million from GBP72 million a year ago

An update issued ahead of the annual general meeting says: "The targeted tender process that we have implemented across our businesses has been successful. This has meant that the value of our replenished forward order book remains strong and it has now reached a new record level, increasing 10% to £330 million compared to £300 million at the same time last year.

"The board believes that our expectations for the Group's annual revenues will be met for the current year. The majority of the Group's businesses have secured revenues in excess of 85% of their targets. Looking forward, 45% of forecast revenues have been secured for 2017 and a further £38 million for 2018 and beyond.

"We remain confident about the progress we are making. We are seeing margin improvements across the Group and we will continue to target opportunities to match our planned capacity and resources with a focus on projects which will further improve the margin profile of the business."

Looking ahead, the group says: "Overall the trading environment continues to improve and the Board remains confident for future prospects."
The next update is scheduled for 2 August with the release of the group's interim results.



edit - I have asked to fix the chart data

I am still in this in a big way and picked a few up over the last couple of days as it fell prior to the trading update.

I'm assuming it fell in line with the "leaked" IRV situation although that's just a guess.

Very low volume today, with SNGR and WNTS slowly moving up on L2 as if they are searching for sellers. I will be interested to see if it continues up to resistance at recent resistance at 90 as the day goes by.

I guess price has pulled back as Robson offloads his stock. I've added a few.

CC - you appear to believe in this Stock, LT, - so can you explain most-recentRNS re funds recovery - Is this still the Co.Acquisition that went wrong....or something else.
In May16 you bought more, yet sp is lower now...could there be more bad news?...e.g Not just "like losing this Cash-Recovery", I'm guessing the sp is depressed for other reasons: despite Order Book looking healthy....
BTW, did you attend their "site-tour-plus" yesterday? regardsH (+EDIT-) ThanksCC

The most recent RNS refers to a £2.8m fraud against the company from one of the companies that was acquired.

According to company statements the fraud will have no impact on this years profit so it seems reasonable to assume this is invoice fraud and accounted for in the books. (fake invoices with no supply of goods)

The sales price is depressed due to:
1. General construction sector Brexit
2. No evidence of margin improvements (although I believe this is happening but the wider market await firm evidence through the P&L)
2. Pension deficit due to low interest rates. (This isn't a long term problem but the size of the pension deficit is annoying rather than uncomfortably large. Scheme is closed to new entrants and would look very different if interest rates went up a couple of percent).

I am a little frustrated with this trade at the moment. We will see what happens after the budget statement but I expect the whole sector is stuck where it is until we have more clarity around the long term future of the UK post Brexit.

In the meantime I'll collect my dividends as I am on PSN and TW. and wait things out a bit.

Interim statement today. Shares currently up 20%. Getting there...

Up 9.5% again today. Finally JPM may have finished selling. Maybe they have a few left. They've spent the last year selling nearly 10% of the share capital for what reasons I don't know and don't care.

90p recent top which I trust will be achieved in the next 3-6 months. I'll post a long term chart when I have a few minutes. Share price used to be 300 a few years ago.
Need the pension deficit to improve through through macroeconomic factors ideally

The green line is about to cross the black one. Share price heading back to the recent 90p high where I expect some resistance. After that who knows. Price used to be 300 (without the pension deficit issues) and this sector appears to be heading in the right direction.

CC - it looks bullish - although starting to look a tad over bought.

Thank you Skinny. I am expecting it to pause at 90 which is the pre-Brexit high.

Profits and cash are good but pension deficit remains a considerable issue. Maybe inflation will help fix that

Can it, will it get through 90p and will I get a smooth ride to day 150p?

It's pulled back from 90 to 80 and I'm wondering if that's far enough. Could be PI's taking profits before tax deadline given the rise or could just be someone wanting out.

Whoosh - once again moving up 10%+, this time as a result of the AGM trading statement.

It's had another bash at resistance at 90 but inevitably we still have a few sellers to shift around this area.

Why I like CTO

Financial year end Dec 2016
Cash £12.3m, revolving credit facility drawn £3.0m = Net Cash £9.3m
Interest paid in year £0.1m, in-line with revolving credit facility suggesting debt does not exceed £3.0m at any point in year
Underlying profit £6.2m, Reported £3.7m. Difference due to £2.7m fraud
EPS underlying 11.7p, reported 6.9p

Current dividend 3.2p. Yield 3.7%. In order triple the dividend to 10p, if 30% of pre-tax profits distributed (50% retained, 30% dividends, 20% corporation tax), pre-tax profit of £14m is required.
As company has nearly no debt, pre-tax profits service pension deficit, acquisition and shareholders. Pension deficit is £20m but agreement with pension trustees in place to fix by 2029 and payment profile similar to recovery payment in 2016.
Order book up 22% compared with this time last year. Margins improving driven by market recovery but more importantly by improving product mix and vertical integration.
In February company stated would beat analysts expectations for year and re-affirmed same in May. Not unreasonable to suggest an underlying profit of £9m for 2017.
£9m profit this year = £6.5m free cash flow assuming only minimal rise in dividend in 2017 as strengthening balance sheet and building cash for acquisition more important in short term than dividends. Would give £15.8m net cash by end of year.
By this time next year net cash will be £20m and what are they going to do with it? CTO used to pay dividend of 13p back in 2008. By 2020 if they get to £14m profit by then, if they don’t increase the dividend net cash will be £32.5m or 95p per share (recognizing that pension fund deficit will still exist, although I expect annuity rates to recover in this timeframe)
Downside Brexit apparently. Upside is government get hold of PSBR and are able to fund increased capital spend.

Think within 3 years worst case scenario is 50% upside, best case a multi-bagger.

Half year results will be interesting but we will have to wait until year end until we see the full picture. The management team imho are excessively cautious at half year to give themselves some slack in case the second half does not go well

Still can't get through 90p, possibly because in-house broker target is 100p.

A very frustrating share this. Picked some more up recently. It seems to be under the radar and no-one is interested.

N.G. Bailey - one of the few M&E contractors and competitors who aren't part of a larger group. Results out yesterday. No market reaction in share price on CTO at all.

https://www.constructionnews.co.uk/companies/financial/ng-bailey-doubles-profit-and-grows-revenue/10021372.article?blocktitle=More-news&contentID=7121

Doubles profit to £12m on a turnover of £500m. It's all about the margin.

Which is where I think this stock is going and why not only have I filled my boots but also my wheelbarrow.

I'm hoping it's going to do a NMD

Continuing to hold. Interims next Tuesday. Hoping for it to break over 90. thought it might do it today but construction PMI seems to spoilt that plan.