Clarkson Plc · LSE:CKN
Clarkson — FY2019 Earnings Presentation
35 slides from Clarkson's earnings presentation, Mar 9, 2020
Slide 1: Results Presentation 31 December 2019
Results Presentation 31 December 2019 Andi Case and Jeff Woyda 9 March 2020
Slide 2: Agenda
Agenda 1 Financial results 2 Markets 3 Outlook 2 Results Presentation | 31 December 2019 Andi Case and Jeff Woyda | 9 March 2020
Slide 3: Financial results
Financial results Jeff Woyda Chief Financial Officer and Chief Operating Officer 3 Results Presentation | 31 December 2019 Andi Case and Jeff Woyda | 9 March 2020
Slide 4: Results summary to 31 December 2019
Results summary to 31 December 2019 2018 £m £m Revenue 363.0 337.6 +7.5% Underlying profit before taxation 49.3 45.3 +8.8% (Before exceptional item and acquisition related costs) Underlying earnings per share 118.8p 105.2p +12.9% (Before exceptional item and acquisition related costs) 4 Results Pres
Slide 5: Results summary to 31 December 2019
Results summary to 31 December 2019 2018 £m £m Revenue 363.0 337.6 +7.5% Underlying profit before taxation 49.3 45.3 +8.8% (Before exceptional item and acquisition related costs) Exceptional item (47.5) - Acquisition related costs (1.6) (2.4) Profit before taxation 0.2 42.9 (After exceptional item a
Slide 6: Segmental performance
Segmental performance Revenue, profit and margin Revenue Revenue Profit Profit Margin Margin 2019 2018 2019 2018 2019 2018 £m £m £m £m Broking 283.0 251.7 55.5 44.0 19.6% 17.5% Financial 35.5 46.1 3.3 8.0 9.3% 17.4% Support 27.7 23.9 3.1 2.3 11.2% 9.6% Research 16.8 15.9 5.4 5.0 32.1% 31.4% 6 Result
Slide 7: Balance sheet at 31 December 2019
Balance sheet at 31 December 2016 2017 2018 2019 £m £m £m £m Tangible fixed assets 33.0 33.3 29.3 28.9 Intangible fixed assets (Software only) - 1.5 5.4 9.9 Investments (relating to convertible bonds) - - 6.7 6.7 Investments (other) 4.1 4.9 4.8 4.8 37.1 39.7 46.2 50.3 Working capital (7.4) 8.8 18.9
Slide 8: Sea/ related IT costs
Sea/ related IT costs to 31 December 2019 2018 £m £m Items taken to Income Statement Non capitalised items (Sea/ only) (4.3) (2.4) Amortisation (0.3) - 2019 2018 £m £m Software related Intangible Asset b/d 1 January 5.4 1.5 Additions 4.7 3.9 Amortisation (0.3) - Software related Intangible Asset c/d
Slide 9: Goodwill – Offshore & Securities CGU’s
Goodwill – Offshore & Securities CGU’s Recoverable Goodwill on FX Goodwill at Other amount Acquisition Gain Impairment 31 Dec 2019 Assets (value in use) £m £m £m £m £m £m Offshore 73.8 4.5 (13.0) 65.3 5.8 71.1 Securities 105.1 - (34.5) 70.6 7.9 78.5 178.9 4.5 (47.5) 135.9 13.7 149.6 9 Results Presen
Slide 10: IFRS 16 Balance Sheet
IFRS 16 Balance Sheet Under IFRS 16 £m Right of Use Assets Cost recognised as at 1 January 2019 53.7 Additions 9.5 Depreciation charged during the year (8.3) Foreign exchange differences (1.5) Net book value at 31 December 2019 53.4 Lease Commitments Current Liabilities (8.7) Non-Current Liabilities
Slide 11: IFRS 16 Income Statement
IFRS 16 Income Statement Under IFRS 16 £m Depreciation (8.3) Interest on lease liabilities (2.1) Impact on Profit before taxation (10.4) Previously Rent paid under operating lease (10.7) No net impact on Cash Flow. Rent paid is outgoing and depreciation is added back as non cash item – £10.7m Cash o
Slide 12: Trade Debtors
Trade Debtors at 31 December 2019 2018 Increase/ £m £m (Decrease) 0-3 months 52.9 53.5 (0.6) 3-12 months 9.4 8.2 1.2 Over 12 months - - - 62.3 61.7 0.6 12 Results Presentation | 31 December 2019 Andi Case and Jeff Woyda | 9 March 2020
Slide 13: Net available funds and free cash resources
Net available funds and free cash resources 31 December 31 December 2019 2018 £m £m Cash and cash equivalents 175.7 156.5 Interest-bearing loans and borrowings (1.2) – Current investment deposits 2.4 1.7 Net cash equivalents 176.9 158.2 Reserved for bonus (full cost) (92.2) (84.8) Net available fund
Slide 14: Movement in free cash resources
Movement in free cash resources 4.9 (9.2) 13.3 (10.7) 50.5 (7.6) (2.7) (4.7) (3.9) (2.3) (0.9) 0.4 68.7 57.0 (15.4) 41.6 Free cash Final Dividend Free cash Operating profit Depreciation Other Working Taxation Lease Interim Dividends paid Capitalised Capex Other Net purchase Movement in Free cash res
Slide 15: Forward Order Book (FOB)
Forward Order Book (FOB) for invoicing in the following year 2019 2018 for 2020 for 2019 US$m US$m Directors’ best estimate of deliverable FOB 113 107 15 Results Presentation | 31 December 2019 Andi Case and Jeff Woyda | 9 March 2020
Slide 16: Dividend history
Dividend history 17 years of progressive dividend 90 80 78 75 73 53 51 70 65 50 62 60 43 60 56 40 39 50 51 37 50 47 43 32 33 42 40 30 40 36 26 27 32 26 24 30 25 22 18 16 24 25 20 15 22 22 23 21 11 18 18 19 16 16 17 10 9 14 12 9 10 6 7 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 17: Markets
Markets Andi Case Chief Executive Officer 17 Results Presentation | 31 December 2019 Andi Case and Jeff Woyda | 9 March 2020
Slide 18: The Board
The Board Chair Executive Directors Sir Bill Thomas Andi Case Jeff Woyda Chair Chief Executive Officer Chief Financial Officer (Independent Non-Executive) and Chief Operating Officer Non-Executive Directors Company Secretary Peter Backhouse Marie-Louise Clayton Tim Miller Birger Nergaard Heike Truol
Slide 19: Impact on Chinese and Global Economy
Impact on Chinese and Global Economy…. China is 23% of shipping imports, 33% of newbuilds; China’s manufacturing PMI fell sharply in Feb…deeper than SARS, further downgrades now likely with virus spread China 2020 GDP Forecasts Global 2020 GDP Forecasts China Manufacturing PMI 6.0% 3.5% 60 Pre-coron
Slide 20: Seaborne Trade Trends
Seaborne Trade Trends… ….long term trend; increasing complexities; short-term disruption Global seaborne trade, bn tonnes Daily Chinese port callings 1.8 13 900 2019 Thousands Dry Bulk Oil 12 2020 1.6 Containers 800 Gas 11 1.4 Others 700 Trade per Capita (LHS) 10 9 1.2 600 8 1.0 7 500 Latest date: 1
Slide 21: Cross sector ClarkSea Index
…Cross sector ClarkSea Index… … Improvements 2016-19; Covid-19 disruption early 2020; down 32% but still up y-o-y and on trend Improvements 2016-19…… Major Covid-19 disruption…… SARS in 2003…… 30 $000/day 30 30 $000/day $000/day Year Avg. Index % change WHO issues WHO declares global global alert 25
Slide 22: Risk profile and focus for shipping changing
…Risk profile and focus for shipping changing... …rest of world impact, investor sentiment, stimulus measures… No. New Coronavirus Cases Announced Economic Stimulus Measures Date Country/ 6000 Stimulus Details 4 Mar Region China 17th Feb: 19,461 3 Feb China $21bn Injection of liquidity into financia
Slide 23: Fleet Development
Fleet Development… …fleet growth “manageable”: orderbook at just 10% of fleet Development of World Fleet, million GT Orderbook as % of fleet – lowest for 20 years 1,600 Fleet growth peaked 10% 80% Fleet, end year at c. 9% in 2010 Fleet Growth % 9% 70% 1,400 8% 1,200 60% 7% 1,000 6% 50% 5% 800 40% 4%
Slide 24: Shipyards & Contracting
Shipyards & Contracting…. ….newbuild contracting historically low; shipyard capacity consolidating No. Of Yards To Take at Least One Order No. Of Global Newbuilding Orders 350 3,500 Rest of World 2009: 323 yards China - Japan - Korea 2,927 300 3,000 250 2,500 Feb 2020: 2,000 200 122 yards 150 1,500
Slide 25: Environmental Pressures building
Environmental Pressures building… …regulatory timeline accelerating; potential market disruption Lower EEDI Ratification of Ballast BWMC Lower EEDI Baltic Sea 1.0% ECA 3.5% Global reference line Water Management implementation for ref. line ECA in effect Sulphur Limit Sulphur Limit (Phase 1) Convent
Slide 26: Shipping’s Carbon Footprint
Shipping’s Carbon Footprint shipping 2.4% of global CO2 but still carbon efficient Average CO2 intensity for different modes of freight transport Carbon footprint per annum of VLCCs, Tankers and Shipping as a share (tonnes CO2 per million tonne-miles) of global CO2 emissions %Global Air (Freight) 1
Slide 27: Reductions in CO2
Reductions in CO2… …despite moving 35% more cargo and driven by speed reductions Est. World Shipping Fleet CO2 Output, m. tonnes Average Vessel Speed Indices 2008-2019: down ~17% 1,200 100 1,100 CO2 Output down 14% 2008-2019 2019 Speed Trends: while moving ~35% more cargo; 95 Bulkers -0.9% 1,000 Con
Slide 28: Fleet Renewal & Fuel Transition
Fleet Renewal & Fuel Transition… …demolition ages reducing and retro-fit potential… World Fleet by Year of Delivery 120 1. 13% of fleet tonnage built between 1999 and 2004, 12% i.e. 15-20 years old. 100 2. 32% of fleet tonnage built 2009-13. Retrofit potential 10% – Energy Saving Technologies / Fuel
Slide 29: LNG Fuel gaining traction
…LNG Fuel gaining traction… …but no clear winner as the “solution” fuel… Existing Vessels (2,000+ GT) already burning Alternative Fuels Orderbook (2,000+ GT) to be burning Alternative Fuels 22% of orderbook tonnage 3% of fleet tonnage alternative fuel alternative fuel Source: Clarksons Research, Dat
Slide 30: Financing requirements
Financing requirements... …but significant changes in financial landscape… Portfolio Size Estimates as of 1H 2019 (US$ billion) Value of The World Fleet & Orderbook Bank of China BNP Paribas Offshore $273bn China Exim KfW IPEX-Bank ABN AMRO Sumitomo Mitsui Trust Bank Credit Agricole CIB K-Sure Tanke
Slide 31: Offshore Wind Industry Growth Accelerating
Offshore Wind Industry Growth Accelerating… …10 year growth in MW capacity averages 23%... Internationalisation Of The Offshore Wind Industry Deeper And Further From Shore Distance to Shore (km) 0 20 40 60 80 100 120 140 No. 160Farms180 0 50 100 150 200 250 0 China P.R. United Kingdom United States
Slide 32: Technology: Key advances
Technology Key advances Launched Sea/ platform with 8 initial modules Established Maritech as independent & ring fenced Offices in London, Singapore, Houston, Birmingham Clients include Charterers, Owners, Traders, Brokers Tankers, Dry Cargo, Containers, Gases, Specialised Products, Offshore, Sale &
Slide 33: Financial Outlook: Tailwinds vs Headwinds
Financial Outlook Tailwinds vs Headwinds Headwinds…? Exchange Black Swan Sentiment rate Covid - 19 volatility Uncertainty Brexit & US Election Tailwinds Markets Company Supply side Regulation Demand Forward Cash Progressive challenged growth order book generative dividend • Lack of • IMO 2020 2019 $
Slide 34: Thank You
Thank You Clarksons Commodity Quay St. Katharine Docks London United Kingdom E1W 1BF www.clarksons.com
Slide 35: Disclaimer
Disclaimer Clarkson PLC 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 guide. The Information is provided on ‘as is’ and ‘as avai