Clarkson PLC · LSE:CKN
Clarkson — H1 2015 Earnings Presentation
39 slides from Clarkson's earnings presentation, Aug 17, 2015
Slide 1: Interim Results
Interim Results Clarkson PLC 30 June 2015
Slide 2: Agenda
Agenda Headline results Divisional performance The Markets Outlook
Slide 3: Results Summary
Results Summary June 2015 June 2014 £m £m Revenue 145.3 111.7 +30% Profit before taxation (Before exceptional items and acquisition costs) 23.6 15.8 +49% Exceptional items (3.7) - Acquisition costs (9.1) (1.7) Profit before taxation (After exceptional items and acquisition costs) 10.8 14.1 Earnings
Slide 4: Revenue
Revenue £145.3m £5.0m Research +£0.3m (+6.4%) £12.9m £111.7m £17.3m Support -£1.2m (-8.5%) £4.7m £14.1m Financial +£12.2m (+239.2%) £5.1m Broking +£22.3m (+25.4%) £110.1m £87.8m H1 2015 H1 2014 Including 5 months of Platou 17 August 2015 Interim Results www.clarksons.com 4
Slide 5: Divisional Performance - Profit
Divisional Performance - Profit 2015 2014 H1 H1 £m £m Broking 22.0 15.1 Financial 2.2 0.1 Support 2.0 2.5 Research 1.5 1.4 17 August 2015 Interim Results www.clarksons.com 5
Slide 6: Forward Order Book
Forward Order Book** Clarksons Platou Total US$m US$m US$m Opening FOB for invoicing in 2015 110 60 170 Billed in the first half (46) (27) (73) Remaining opening FOB due second half 64 33 97 % remaining excluding new 2015 business 57% **Directors best estimates 17 August 2015 Interim Results www.cla
Slide 7: Exceptional Items
Exceptional Items 2015 2014 £m £m Double rent and service charge (CQ)** 1.9 - Onerous lease (Singapore)** 0.3 - Reorganisation costs** 1.5 - ** Non recurring items 3.7 - 17 August 2015 Interim Results www.clarksons.com 7
Slide 8: Integration
Integration • Rebranding of Broking and Financial as ‘Clarksons Platou’ • Repaid bank loans • Integrated teams in new offices in Oslo and London • Singapore and Dubai to be fully integrated in 2nd half • Annualised £4m of synergies achieved • Revenue synergies already proven in integrated business p
Slide 9: Acquisition Costs
Acquisition Costs 2015 2014 £m £m Cash & share-based payment charges 1.3 1.5 Legal & professional fees** 3.0 0.1 Loan note interest 0.4 - Amortisation: Platou 4.4 - Amortisation: Boxton** - 0.1 ** Non recurring items 9.1 1.7 17 August 2015 Interim Results www.clarksons.com 9
Slide 10: Platou Acquisition Consideration
Platou Acquisition Consideration £m Consideration per circular (£22.15 per share) 281.2 Fair value adjustment: shares (31.0) Fair value adjustment: loan notes (0.3) Consideration on acquisition (£18.90 per share) 249.9 Cash 23.5 Loan notes 46.5 Shares 179.9 249.9 17 August 2015 Interim Results www.c
Slide 11: Platou Acquisition Intangibles
Platou Acquisition Intangibles £m £m Consideration on acquisition 249.9 Intangible assets 21.9 Amortised: Year to 31 Dec 15 9.6 Year to 31 Dec 16 6.4 Intangible assets 21.9 Year to 31 Dec 17 3.3 Goodwill 231.1 Year to 31 Dec 18 1.6 Fair value of net liabilities (3.1) Year to 31 Dec 19 1.0 249.9 21.9
Slide 12: Net Funds
Net Funds Jun 2015 Dec 2014 £m £m Cash and cash equivalents* 130.3 152.9 Current investments 5.3 25.3 Overdraft (7.7) - Net cash equivalents 127.9 178.2 Reserved for bonus (full cost) (41.2) (62.5) Net available funds* 86.7 115.7 Cash consideration on acquisition - (23.4) Net available funds 86.7 92
Slide 13: Movement in Net Funds
Movement in Net Funds 24.0 (11.7) 30.6 115.7 (23.5) (8.6) (7.3) 4.3 96.5 (5.0) (1.2) 86.7 85.1 Net Funds Placing Net Funds Cash paid Net funds Net funds Profit Dividend Capex Tax paid Debtors / Pension Net Funds pre-placing proceeds post- on acquired post- creditors Jun 15 Dec 14 placing acquisition
Slide 14: Balance Sheet
Balance Sheet 2011 2012 2013 2014 2015 £m £m £m £m £m Tangible fixed assets 9.2 8.8 9.4 8.4 20.7 Investments 1.9 1.9 1.8 1.9 1.9 11.1 10.7 11.2 10.3 22.6 Working capital (2.8) (2.8) 3.1 (1.8) (3.3) Net funds 71.1 75.2 75.0 115.7 86.7 68.3 72.4 78.1 113.9 83.4 Pensions (6.6) (9.4) (1.8) (10.3) (8.9)
Slide 15: Dividends Pence per Share
Dividends 55 50 45 Pence per Share 40 39 37 35 32 33 30 30 26 27 26 25 24 20 22 16 15 11 10 9 21 22 17 18 18 19 14 16 16 5 10 12 7 9 6 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Interim Final 17 August 2015 Interim Results www.clarksons.com 15
Slide 16: The Markets
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Slide 17: World Seaborne Trade
World Seaborne Trade major dry bulk minor dry bulk crude oil oil products chemicals liquefied gas containers other dry cargo World Population 11 11 10 10 9 9 8 8 Billion tonnes 7 7 Billion people 6 6 5 5 4 4 3 3 2 2 1 1 0 - 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2
Slide 18: World Seaborne Trade vs. GDP
World Seaborne Trade vs. GDP 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 1999 2001 2003 2005 2007 2009 20
Slide 19: World Seaborne Trade per Capita
World Seaborne Trade per Capita 1.6 1.4 1.2 1.0 Tonnes per capita 0.8 0.6 0.4 0.2 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Data Source: Clarksons / US Census Bureau 17 August 2015 Interim Results www.clarksons.co
Slide 20: Growing World Population
Growing World Population Impact on Energy, Food & Transportation China India Population Dynamics 2014-2020 Other Asia Pacific Middle East 9 North America Latin America & Caribs 160 16% Europe Africa 15% Population % Growth 8 140 14% +1.1 bn people 7 120 12% 6 Million people Billion people 100 10% 5
Slide 21: World Population Growth
World Population Growth 2030 (Projected) 8.32 billion 2014 (Estimated) 7.2 billion 1990-2010 2010-2030 600 500 400 Million people 300 526 200 368 335 342 288 291 100 182 123 116 145 111 61 17 66 54 0 China India Other Asia Middle East Africa Europe North America Latin America & Existing (1.36 billio
Slide 22: Global Oil Demand / Supply Balances
Global Oil Demand / Supply Balances 98 Demand Supply 96 94 Million bpd 92 90 88 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 Data source: EIA 17 August 2015 Interim Results www.clarksons.com 22
Slide 23: Oil Prices and Tanker Earnings
Oil Prices and Tanker Earnings Brent Crude Oil Price VLCC Earnings MR Products Tanker Earnings 120 120,000 100 100,000 80 80,000 $/barrel $/day 60 60,000 40 40,000 20 20,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ytd Data source: Clarksons. 17 August 2015
Slide 24: Timecharter Rates vs. Prices
$’000/day 10 20 30 40 50 60 70 80 90 0 Jan-00 Jan-01 17 August 2015 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 VLCC Data Source: Clarksons Jan-10 Jan-11 Jan-12 Jan-13 1yr TC rate Jan-14 Jan-15 0 20 40 60 80 100 140 160 10 20 30 120 40 50 180 60 0 Interim Results Jan-00 Jan-01 Jan-02 Jan
Slide 25: Timecharter Rates vs. Prices
$’000/day 10 15 20 25 30 35 40 0 5 Jan-00 Jan-01 17 August 2015 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Data Source: Clarksons Jan-10 Jan-11 Jan-12 Panamax/LR1 Jan-13 1yr TC rate Jan-14 Jan-15 0 10 20 30 40 50 60 70 80 10 15 20 25 30 35 0 5 Interim Results Jan-00 Jan-01 Jan-02 Jan-03
Slide 26: Specialised Products Spot Indices
Specialised Products Spot Indices Robust Freight Markets & Encouraging Trade Brent Crude (LH Axis) Clarksons Spot Chemicals Index (RH Axis) Clarksons Spot Edible Oils Index (RH Axis) 160 160 140 140 120 120 100 100 USD p/barrel Index Value 80 80 60 60 40 40 20 20 0 0 2008-01 2008-07 2009-01 2009-07
Slide 27: Benchmark Propane Prices v Baltic Freight Assessment
Benchmark Propane Prices v Baltic Freight Assessment • US propane prices have been receding since mid April mostly due to increasing inventories Far East Index Propane Price (FEI) Middle East Propane CP Price US Propane Price BALTIC 44kt Rate(Right Hand Axis)* 1,400 140 1,200 120 1,000 100 $/mt - LP
Slide 28: Offshore Rates
Offshore Rates 120 160 OSV Rate Index (left scale) Oil Price ($/bbl, right scale) 110 140 120 100 100 90 $/bbl Index 80 80 60 70 40 60 Drilling Rig Rate Index 20 (Jack-Ups, left scale) 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 17 August 2015 Interim Results www.clarksons.com 28
Slide 29: Future of Offshore
Future of Offshore… Remaining Reserves Production Costs Breakeven Fiscal Prices Saudi Arabia: $92/bbl Russia : $117/bbl 110 Price for 50% Total Arctic Reserve Extraction 2012 Production Cost per Barrel, USD$ (2013) 100 $103/bbl US GOM : $20 90 Alaskan Arctic : $70 2010 80 $79/bbl 83 70 76 Tight 60 2
Slide 30: China the leading force in the dry bulk market
China the leading force in the dry bulk market China’s slow down in industrial production weighted heavily on the dry bulk market China Purchasing Manufacturing Index vs Baltic Dry Index 56 2,500 China PMI 54 2,000 BDI 52 1,500 China Imp. 35% 1.135bn 50 1,000 Total RoW China 61% China 48 500 Exp. 4%
Slide 31: World energy mix - World energy consumption 2014
World energy mix - World energy consumption 2014 BP statistical review Changes in energy mix will affect different ship asset classes. Coal loose to more greener energies. Coal consumption’s World energy consumption by type market share decline 3,500 30 % 3,000 2005 70 1.1bn % Million tonnes oil equ
Slide 32: Global coal shipments
Global coal shipments China’s decline in coal imports could not be compensated before by increments in other importing countries. India’s imports are set to continue to increase. China RoW China lndia Europe Other Asia 100% 250 90% 80% 200 70% Million tonnes 150 % Share 60% 50% 40% 100 30% 50 20% 10
Slide 33: Global iron ore shipments
Global iron ore shipments Low cost iron ore mines in Australia and Brazil displace high cost Chinese domestic and international supplies. The Two countries seasonally tend to have weaker first halves. Big 2 Others Australia Brazil Others 100% 400 90% 350 80% 300 70% Million tonnes % Share 250 60% 50
Slide 34: Capesize Spot rate vs Asset price
Capesize Spot rate vs Asset price 60,000 60 50,000 55 Asset price in US$ Million 40,000 50 Spot rate in US$ 30,000 45 20,000 40 10,000 35 0 30 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Spot (Aver. 4TC's) Newbuild 5 Yr Old 17 August 2015 Interim Results www.clarkson
Slide 35: World Container Trade
World Container Trade Trade Growth % m TEU growth 200 20% 180 15% 160 140 10% 120 100 5% 80 0% 60 40 -5% 20 0 -10% 2014 (e) 2015 (f) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source : Clarksons Research 17 August 2015 Interim Results www.clarksons.com
Slide 36: Containership Charter Rates & Prices
Containership Charter Rates & Prices 30 $000/day $m 50 4400 teu gls 1 Yr TC 2750 teu gls 1 Yr TC 25 4400 teu 10yo SH Price 40 2750 teu 5yo SH Price 20 30 15 20 10 10 5 0 0 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Source : Clarksons Research 17 August 2015 Interim
Slide 37: Outlook
Outlook 17 August 2015 Interim Results 37
Slide 38: Outlook
• Integration at an advanced stage and completed by year end • Strong client support for Clarksons Platou & the integrated business model • Global seaborne trade growth set to continue despite commodity price volatility • Challenges balanced by opportunities • Second half weighting 17 August 2015 In
Slide 39: Disclaimer
Disclaimer THIS PRESENTATION IS CONFIDENTIAL AND IS SOLELY FOR THE USE OF THE RECIPIENT. NEITHER THE WHOLE NOR ANY PART OF THE INFORMATION CONTAINED IN THE PRESENTATION MAY BE DISCLOSED TO, OR USED OR RELIED UPON BY, ANY OTHER PERSON OR USED FOR ANY OTHER PURPOSE WITHOUT THE PRIOR WRITTEN CONSENT OF