Clarkson PLC · LSE:CKN
Clarkson — H1 2019 Earnings Presentation
29 slides from Clarkson's earnings presentation, Aug 12, 2019
Slide 1: Interim Results Presentation 30 June 2019
Interim Results Presentation 30 June 2019 Andi Case and Jeff Woyda 12 August 2019
Slide 2: Agenda
Agenda 1 Financial results 2 Markets 3 Outlook 2 Interim Results Presentation | 30 June 2019 Andi Case and Jeff Woyda | 12 August 2019
Slide 3: Financial results
Financial results Jeff Woyda Chief Financial Officer & Chief Operating Officer 3 Interim Results Presentation | 30 June 2019 Andi Case and Jeff Woyda | 12 August 2019
Slide 4: Results summary to 30 June
Results summary to 30 June 2019 2018 £m £m Revenue 167.8 152.6 +10.0% Underlying profit before taxation 20.1 19.2 +4.7% (Before acquisition related costs) Underlying earnings per share 48.5p 45.8p +5.9% (Before acquisition related costs) 4 Interim Results Presentation | 30 June 2019 Andi Case and Je
Slide 5: Results summary to 30 June
Results summary to 30 June 2019 2018 £m £m Revenue 167.8 152.6 +10.0% Underlying profit before taxation 20.1 19.2 +4.7% (Before acquisition related costs) Acquisition related costs (0.9) (1.2) Profit before taxation 19.2 18.0 +6.7% (After acquisition related costs) Underlying earnings per share 48.5
Slide 6: Segmental performance
Segmental performance Revenue, profit and margin to 30 June Revenue Revenue Profit Profit 2019 2018 2019 2018 Margin Margin £m £m £m £m 2019 2018 Broking 130.1 111.5 21.8 15.9 16.8% 14.3% Financial 16.1 22.7 1.1 4.7 6.8% 20.7% Support 13.3 10.6 1.3 0.9 9.8% 8.5% Research 8.3 7.8 2.8 2.4 33.7% 30.8%
Slide 7: Acquisition related costs to 30 June
Acquisition related costs to 30 June 2019 2018 £m £m Cash and share-based payment charges 0.4 0.4 Amortisation – Platou 0.5 0.8 Total 0.9 1.2 7 Interim Results Presentation | 30 June 2019 Andi Case and Jeff Woyda | 12 August 2019
Slide 8: Balance sheet
Balance sheet Dec 2015 Dec 2016 Dec 2017 Dec 2018 June 2019 £m £m £m £m £m Tangible fixed assets 33.1 33.0 33.3 29.3 28.3 Intangible fixed assets (software only) – – 1.5 5.4 7.5 Investments (relating to convertible bonds) – – – 6.7 21.5 Investments (other) 1.9 4.1 4.9 4.8 4.7 35.0 37.1 39.7 46.2 62.
Slide 9: IFRS 16 Impact on Balance Sheet
IFRS 16 Impact on Balance Sheet Under IFRS 16 £m Right of Use Assets Cost recognised as at 1 Jan 2019 53.4 Depreciation (3.9) Value at 30 June 2019 49.5 Lease Commitments Current Liabilities (8.6) Non-Current Liabilities (51.5) Impact from above under new treatment on Net Assets (10.6) Provision for
Slide 10: IFRS 16 Impact on Income Statement
IFRS 16 Impact on Income Statement Under IFRS 16 £m Depreciation (3.9) Financing Charge (1.1) Impact on Profit before taxation (5.0) Previously Rent paid under operating lease (5.2) No net impact on Cash Flow rent paid is outgoing and depreciation is added back as non cash item – £5.2m Cash outflow
Slide 11: Sea/ related IT costs to 30 June
Sea/ related IT costs to 30 June 2019 2018 £m £m Items taken to Income Statement Non capitalised items (3.0) (2.4) Amortisation (0.1) - 2019 2018 £m £m Software related Intangible Asset b/d 1January 5.4 1.5 Additions 2.2 2.0 Amortisation (0.1) - Software related Intangible Asset c/d 30 June 7.5 3.5
Slide 12: Net available funds and free cash resources
Net available funds and free cash resources 30 June 31 Dec 30 June 2019 2018 2018 £m £m £m Cash and cash equivalents 109.1 156.5 95.9 Interest-bearing loans and borrowings (6.0) – – Current investment deposits 1.7 1.7 0.5 Net cash equivalents 104.8 158.2 96.4 Reserved for bonus (full cost) (44.5) (8
Slide 13: Movement in free cash resources
Movement in free cash resources 6.3 (5.2) (5.2) 6.4 (2.8) 20.9 (2.3) 57.0 (15.4) (1.1) (0.8) 14.4 58.3 (13.9) 41.6 Free cash Final Dividend Free cash Operating profit Depreciation Other Working Taxation Lease payments Dividends paid Capitalised Capex Other Net purchase of Movement in Free cash resou
Slide 14: Dividend history
Dividend history In 17th year of progressive dividend 80 75 73 51 70 50 65 62 60 43 60 56 40 39 50 51 37 50 47 32 33 42 43 40 30 40 36 26 27 26 32 24 30 25 22 18 16 24 25 20 22 22 23 15 21 11 18 18 19 16 16 17 9 14 10 12 9 10 6 7 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201
Slide 15: Markets
Markets Andi Case Chief Executive Officer 15 Interim Results Presentation | 30 June 2019 Andi Case and Jeff Woyda | 12 August 2019
Slide 16: Global Macroeconomic Indicators
Global Macroeconomic Indicators Economic growth remains supportive of seaborne trade GDP Growth Global Manufacturing PMIs 16 62 14 60 12 58 10 8 56 6 54 % change (year on year) Contraction | Expansion 4 52 2 50 0 -2 48 -4 46 -6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20
Slide 17: World Seaborne Trade vs. GDP
World Seaborne Trade vs. GDP 16 160 14 140 World Seaborne Trade (BN tonnes) 12 120 GDP Current Prices (TN $) 10 100 8 80 6 60 4 40 2 20 0 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 World Seaborne Trade Trade trend volume GDP C
Slide 18: Emerging Asian Economies Potential
Emerging Asian Economies Potential Manufacturing activity in emerging economies is expanding Selected Emerging Economies Manufacturing PMI’s Energy Use Per Capita Vs GDP Per Capita Steel Use Per Capita 58 7,000 1,200 1,100 United Kg finished steel products per year per capita 56 6,000 States 1,000 O
Slide 19: US-China Trade Dispute
US-China Trade Dispute Trade patterns re-calibrated, but geopolitical uncertainties remain • Tariffs compromising world • Dislocation of trades creating economic growth inefficiencies and tightening supply / demand balances • Uncertainty leading to reduced investment and slower • U.S. energy exports
Slide 20: Global Newbuilding Orders at Historic Low
Global Newbuilding Orders at Historic Low… No. Ships 3,500 3,000 2,909 2,500 Orders representative of vessels over 20,000 dwt 2,257 2,057 2,000 1,872 1,842 1,500 1,378 1,340 1,196 1,145 1,159 1,042 1,000 919 795 820 667 709 546 550 547 582 480 411 500 257 228 0 1996 1997 1998 1999 2000 2001 2002 200
Slide 21: Upward Pressure on Newbuilding Prices
Upward Pressure on Newbuilding Prices VLCC NB Price (LH-axis) 100 Billion Won in US$ (LH-Axis) Korean Steel Price Index (RH-axis) 180 350 • Newbuilding prices have increased 160 from 2017’s low point 300 140 250 • Cost pressures supporting rise in 120 prices MM $ Index 100 200 80 150 • Shipyard cons
Slide 22: Sector Fundamentals Outlook Comparison
Sector Fundamentals Outlook Comparison Fleet Growth Fleet Growth Demand Growth (% Chg 2016–2018) (% Chg 2018–2020) (BN Tonne-Miles*, % Chg 2018–2020) LPG & Ammonia 11% LPG & Ammonia 8% LPG & Ammonia 13% LNG 16% LNG 18% LNG 20% Chemicals 6% Chemical / Specialised 6% Chemical / Specialised 11% Crude &
Slide 23: Impact of the IMO 2020 Sulphur Cap on Bunker Fuels
Impact of the IMO 2020 Sulphur Cap on Bunker Fuels Fleet Supply • Reduction in active fleet size due to scrubber retrofitting • Re-positioning of the fleet in order to prepare for compliance • Potential early retirement of older vessels due to higher bunker fuel costs Market Impact Expected tighteni
Slide 24: Installation of Scrubbers
Installation of Scrubbers Existing vessels with scrubbers fitted Existing vessels due to be retrofitted Vessels due to be delivered with scrubbers fitted • Heavy investment in scrubbers 5% 0.1% 9% 2% 2% 9% 4% 2% predominantly in larger vessels 1000 % of fleet per sector >20,000 dwt that is retrofitt
Slide 25: Environmental Regulation
Environmental Regulation The regulatory timeline continues to accelerate IMO BWM Lower EEDI ref. Convention requires line (Phase 3) retrofitting of vessels EU MRV Lower EEDI 50% GHG certification in ref. line Reduction Target effect (Phase 2) 2019 2020 2021 2022 2023 2024 2025 ------ 2030 ------ 205
Slide 26: Iron Ore Seaborne Volumes
Iron Ore Seaborne Volumes Recovery in exports after Vale dam rupture and severe weather related disruptions in Brazil and Australia 145 140 -4% half year-on-half year 135 130 Million Tonnes 125 120 115 110 105 100 Oct Nov Dec Mar Apr Jan May Jun Jul Aug Sep Feb 2017 2018 2019 2019 (f) Source: GTIS,
Slide 27: VLCC MEG-Far East Spot Market Earnings
Year-on-Year VLCC MEG-Far East Spot Market Earnings 120 Earnings in 1st half of year significantly stronger than in 2019 2018 2017 2016 2015 2014 2018. Market expected to strengthen further in the 2nd half of 100 2019. Key drivers expected to include: 80 - rising U.S. and Brazilian crude exports; $’
Slide 28: Thank you
Thank you
Slide 29: Disclaimer
Disclaimer The material and the information (including, without limitation, any future rates and/or forward looking predictions) contained herein (together, the "Information") are provided by Clarkson PLC ("Clarksons") for general guidance and not by way of recommendation. The Information is provide