Clarkson Plc · LSE:CKN
Clarkson — FY2016 Earnings Presentation
37 slides from Clarkson's earnings presentation, Mar 13, 2017
Slide 1: Results Presentation
Results Presentation 1 3 T H M A R C H 2 0 1 7
Slide 2: Agenda
Agenda Financial Results Markets Outlook Andi Case Jeff Woyda CEO COO/CFO 13th March 2017 2016 Financial Results
Slide 3: Results summary
Results summary 2016 2015 £m £m Revenue 306.1 301.8 Profit before taxation (Before exceptional items and acquisition related costs) 44.8 50.5 Exceptional items 11.1 (2.5) Acquisition related costs (8.6) (16.2) Profit before taxation (After exceptional items and acquisition related costs) 47.3 31.8 E
Slide 4: Summary of 2016 results
Summary of 2016 results £301.8m £306.1m Successes £11.1M £13.7M • £17.8M Broking transaction volumes up again Research £22.5M £28.7M £41.0M • Increased market share • Stronger US dollar – benefits £ equivalent revenues Support • Increased Financial deal flow and revenues (+$11.4m or 26%) • Increase
Slide 5: Revenue by half year
Revenue by half year 180.0 £156.5m £158.9m 160.0 £145.3m £147.2m £6.1m £7.0m £9.6m £9.5m £5.0m £6.7m 140.0 £126.2m £12.9m £11.4m £8.3m £24.3m £111.7m £5.7m £16.7m 120.0 £17.3m £14.5m £4.7m £3.6m 100.0 £14.1m £5.1m 80.0 Research £129.4m 60.0 £115.5m £118.1m £110.1m £102.4m Support £87.8m 40.0 Financi
Slide 6: Segmental margin
Segmental margin Revenue Profit Margin Revenue Profit Margin 2016 2016 2016 2015 2015 2015 £m £m £m £m Broking 233.6 40.2 17.21% 239.5 49.1 20.50% Financial 41.0 6.8 16.59% 28.7 1.2 4.18% Support 17.8 2.1 11.80% 22.5 3.3 14.67% Research 13.7 4.9 35.77% 11.1 3.4 30.63% 13th March 2017 2016 Financial
Slide 7: ClarkSea index
ClarkSea index Data source: Clarksons Research 35.0 Average Minimum 30.0 25.0 Average Lowest Lowest (33.4%) average minimum recorded recorded 20.0 15.0 10.0 5.0 - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Average 12,256 13,424 11,336 9,8
Slide 8: Exceptional items & acquisition related costs
Exceptional items & acquisition related costs 2016 2015 Exceptional Items £m £m Double rent & service charge - (2.3) Onerous lease - (0.3) Reorganisation costs - (1.2) Release of dilapidation provision - 1.3 Financial impact from the sale of The Baltic Exchange Shares 11.1 - 11.1 (2.5) 2016 2015 Acq
Slide 9: Balance Sheet
Balance Sheet Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 £m £m £m £m £m £m Tangible fixed assets 9.2 8.8 9.4 8.4 33.1 33.0 Investment in CargoMetrics Investments 1.9 1.9 1.8 1.9 1.9 4.1 Better debt 11.1 10.7 11.2 10.3 35.0 37.1 collection & Working capital (2.8) (2.8) 3.1 (1.8) (7.1) (15.
Slide 10: Forward Order Book for invoicing in the following year
Forward Order Book (“FOB”) for invoicing in the following year 2016 2015 2014 For 2017 For 2016 For 2015 US$m US$m US$m Directors’ best estimate of deliverable FOB 112 151 110 13th March 2017 2016 Financial Results 10
Slide 11: Net Funds
Net Funds 2016 2015 £m £m Cash & Cash Equivalents 154.0 168.4 Current Investment deposits 29.4 5.4 Net Cash Equivalents 183.4 173.8 Reserved for Bonus (full cost) (85.0) (82.2) Net available funds 98.4 91.6 Loan notes outstanding (23.6) (46.1) Net available funds after loan notes 74.8 45.5 13th Marc
Slide 12: Movement in Net Funds (after bonus & loan notes)
Movement in Net Funds (after bonus & loan notes) 7.8 0.7 (18.5) 44.2 (7.4) 11.3 (3.8) (3.1) (1.9) 74.7 67.3 45.5 Net Funds Operating FX gain on Other Dividends Taxation Capex Pensions Net Funds from Sale of Purchased Net Funds Dec 15 Profit cash held Operating investments Investments Dec 16 13th Mar
Slide 13: Movement in Net Funds (after bonus but before Loan Notes)
Movement in Net Funds (after bonus BUT before Loan Notes) 44.2 7.8 0.7 (22.5) (18.5) (7.4) (3.1) 11.3 (3.8) (1.9) 98.4 91.6 90.9 90.9 Net Funds Operating FX gain on Other Loan Note Dividends Taxation Capex Pensions Net Funds Sale of Purchased Net Funds Dec 15 Profit cash held repayment from investme
Slide 14: Movement in Net Funds (after bonus but before Loan Notes)
Movement in Net Funds (after bonus BUT before Loan Notes) 44.2 7.8 0.7 (22.5) (18.5) (7.4) (3.1) 11.3 (3.8) (1.9) 98.4 91.6 90.9 90.9 Net Funds Operating FX gain on Other Loan Note Dividends Taxation Capex Pensions Net Funds Sale of Purchased Net Funds Dec 15 Profit cash held repayment from investme
Slide 15: Dividend History
Dividend History Interim Final 70 60 50 40 43 40 39 37 32 33 30 30 26 27 26 24 20 22 16 10 9 11 21 22 22 16 16 17 18 18 19 10 12 14 6 7 9 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 13th March 2017 2016 Financial Results 15
Slide 16: Strategy & the Markets
Strategy & the Markets O S L O
Slide 17: Creating value at the heart of world trade
Creating value at the heart of world trade Underpinned by our values, our integrated business model provides the platform for an unrivalled level of service and information that enables trade and creates long-term value. 13th March 2017 2016 Financial Results 17
Slide 18: World Seaborne Trade & Population Growth
World Seaborne Trade & Population Growth Trade per Sector 2017-2030 Extrapolated Based on Average Absolute Growth Rate in Trade per Capita per Sector 1990-2016 major dry bulk minor dry bulk crude oil oil products chemicals liquefied gas containers other dry cargo World Population Data Source: Clarks
Slide 19: World Seaborne Trade vs. GDP
World Seaborne Trade vs. GDP Data source: Clarksons Research World Seaborne Trade Trade trend volume GDP Current Prices GDP trend volume 16 160 14 140 World Seaborne Trade (Billion tonnes) GDP Current Prices (Trillion Dollars) 12 120 10 100 8 80 6 60 4 40 2 20 0 0 1985 1987 1989 1991 1993 1995 1997
Slide 20: Shipping Fleet Development: 1989-2016
Shipping Fleet Development: 1989-20161 Bulkers Tankers Containers Gas Carriers Other Growth Data source: Clarksons Research, 1 Jan 2017 2,000 10% Fleet as at end year. 10 Year CAGR (2005-2016) 1,800 2016: projection. 9% 5.9% 1,600 Comprises world merchant 8% fleet >100 GT, including 1,400 ship-shape
Slide 21: Newbuilding Orders at Historic Low
Newbuilding Orders at Historic Low… Data source: Clarksons Research, 1 Jan 2017 3,500 3,000 2,910 Orders represent vessels over 20,000 dwt 2,500 2,250 2,043 2,000 1,874 1,835 No. Ships 1,500 1,374 1,353 1,197 1,141 1,126 1,043 1,000 794 666 706 545 547 546 580 480 411 500 173 0 1996 1997 1998 1999 2
Slide 22: Number of Yards with an Orderbook
…Reflected in Number of Yards with an Orderbook of at least one Vessel > 20,000 dwt Data source: Clarksons Research, 1 Jan 2017 350 2009: 304 Yards 300 China - Japan - Korea Rest of World 71 62 54 71 49 250 233 238 Jan 2017: 160 Yards Number of Yards 231 200 221 37 64 205 33 178 29 150 32 56 156 32
Slide 23: Demolition Trends 1996 – 2016
Demolition Trends 1996 – 2016 Number of vessels demolished Annual Volume of dwt demolished (RHS) 1600 80 1,390 1400 70 1200 1,146 1,132 1,161 60 No. of Vessels 975 1000 933 934 50 Million dwt 796 800 40 617 624 598 592 541 572 600 30 487 441 429 400 314 20 268 279 190 200 10 0 0 1996 1997 1998 1999
Slide 24: Offshore & Marine: Total Opportunity Value
Offshore & Marine: Total Opportunity Value1 Data source: Clarksons Research Shipping Fleet (>US$640bn) Offshore Fleet (>US$270bn) Bulkers Construction/ Mobile Offshore Tankers 22% Containerships Subsea Drilling 18% 12% 18% 24% Survey Gas 7% 12% Total Value: Production & Logistics 25% Others (Cruise,
Slide 25: Shipping Lending Overview (By Bank & Geography)
Shipping Lending Overview (By Bank & Geography) Geographical Breakdown of Lenders EUROPE 83.1% 79.3% 75.1% 72.9% 70.5% 62.3% USA 2.1% 1.7% 2.8% 2.7% 2.6% 2.1% ASIA-PAC 14.8% 19.0% 22.0% 24.4% 26.8% 35.6% 2010 2011 2012 2013 2014 2015 30 410 400 25 390 380 20 Total Portfolios (US$ bn) 370 15 360 Tota
Slide 26: Where were we in Freight/Earnings Shipping Cycles in 2016?
Where were we in Freight/Earnings Shipping Cycles in 2016? Timeline of each cycle not defined and varies Weakening market Strong market Crude tankers Recovering market Weak market Chemical/Specialised tankers LPG Product tankers Containers Offshore LNG Dry Bulk 13th March 2017 2016 Financial Results
Slide 27: Clarksons Platou Securities
Clarksons Platou Securities Representative ECM, DCM, M&A and restructuring transactions (2016) 13th March 2017 2016 Financial Results 27
Slide 28: Research, Sales & Trading, Investment Banking
Research Sales & Trading Investment Banking • Equity and credit research • Equity and Debt instruments • Equity and Debt • Company reports • Secondary trading • IPOs and listings • Sector reports • Block trades • Private and Public Offerings • Daily, weekly, monthly, and quarterly • Forward Freight
Slide 29: Outlook Factors
Outlook Factors Urbanisation Agricultural trade growth Infrastructure US Shale & Exports Chinese & Indian Energy growth 13th March 2017 2016 Financial Results 29
Slide 30: Urbanisation potential from new economies
Urbanisation potential from new economies China vs US – Urbanisation Rate Selected Urban Populations - 2015 90% Sri Lanka 18% World avg 53.9% 80% India 33% Vietnam 34% Estimated 2020 Urban population as a % of the total 70% average 66% Bangladesh 34% Sub-Saharan Afr 38% 60% Pakistan 39% 50% Philippi
Slide 31: Infrastructure investment will drive demand for construction materials
Infrastructure investment will drive the demand for construction related materials Construction Related Seaborne Trade Growth 17% • China’s one-belt one-road initiative 18% 15% • US$1.4t –US$21t 15% 11% 13% 10% • 65 countries 10% 9% • 4.4 bn people 8% 4% 5% Trade Growth (%) 6% 7% 3% 3% 1% 1% • Trump
Slide 32: Grain trade continues to grow
Grain trade continues to grow Grain Trade Monthly Volumes Agriculture Related Seaborne Trade Growth 2010-2016 50 avg 5.4% pa 18% 16% 15% 45 2010-2015 avg 14% 5.2% pa 13% 40 11% 11% 10% Million tonnes 2005-2010 avg Trade Growth (%) 35 4.4% pa 8% 8% 6% 2000-2005 avg 5% 5% 30 5% 4% 3.4% pa 3% 4% 3% 2%
Slide 33: Rising U.S Oil & Gas Rig Productivity by Shale Play
Rising U.S Oil & Gas Rig Productivity by Shale Play Bakken Marcellus 1400 1500 80 15000 Oil bbl/day per rig Gas Mcf/day per Rig Gas Mcf/day per Rig 1200 70 Oil bbl/day per rig 1000 60 1000 50 10000 800 40 600 500 30 5000 400 20 200 10 0 0 0 0 1Q15 1Q16 1Q17 1Q15 1Q16 1Q17 1Q15 1Q16 1Q17 1Q15 1Q16 1Q
Slide 34: US Shale – explosion of exports of Oil, LPG and LNG
US Shale – explosion of exports of Oil, LPG and LNG 160 LNG** 140 LPG** Oil* 120 US Exports (million tonnes) 100 Projection assumptions: 80 * Oil exports - assumed at 50% of 60 the EIA projected increase in production for 2017-2018 period and continuing at a similar growth 40 rate in 2019-2020 20 **
Slide 35: Chinese & Indian Seaborne Crude Oil, LNG & LPG Imports
Chinese & Indian Seaborne Crude Oil, LNG & LPG Imports Powerhouses of Crude Oil, LNG & LPG trade growth India China % of world total (RHS) 700 30% 600 28% 500 26% Million MT 400 24% 300 22% 200 20% 100 18% 0 16% 2010 2011 2012 2013 2014 2015 2016 Source: Waterborne, GTIS, Clarksons Platou 13-Mar-17
Slide 36: Corporate Outlook
Corporate Outlook Proven Strategy Integrated business model Breadth & Depth Flow & placing power Investment in tools for trade Strong Balance Sheet Cash generative Progressive dividend policy 13th March 2017 2016 Financial Results 36
Slide 37: Thank you