Clarkson Plc · LSE:CKN
Clarkson — H1 2018 Earnings Presentation
26 slides from Clarkson's earnings presentation, Aug 13, 2018
Slide 1: Results Presentation
Results Presentation 1 3 T H A U G U S T 2 0 1 8
Slide 2: Agenda
Agenda Financial Results Markets Outlook Andi Case Jeff Woyda CEO COO/CFO 13th August 2018 2018 Interim Results 2
Slide 3: Results summary
Results summary June 2018 June 2017 Increase £m £m % Revenue 152.6 156.8 +x.x% Underlying profit before taxation (Before acquisition related costs) 19.2 24.5 +x.x% Acquisition related costs (1.2) (2.6) Profit before taxation (After acquisition related costs) 18.0 21.9 Underlying earnings per share (
Slide 4: Results summary
Results summary June 2018 June 2017 Increase £m £m % Revenue 152.6 156.8 +x.x% Underlying profit before taxation (Before acquisition related costs) 19.2 24.5 +x.x% Acquisition related costs (1.2) (2.6) Profit before taxation (After acquisition related costs) 18.0 21.9 Underlying earnings per share (
Slide 5: Segmental margin
Segmental margin Revenue Revenue Profit Profit Margin Margin June 2018 June 2017 June 2018 June 2017 June 2018 June 2017 £m £m £m £m 111.5 118.0 15.9 21.0 14.3% 17.8% 22.7 23.2 4.7 5.0 20.7% 21.6% 10.6 8.3 0.9 0.7 8.5% 8.4% 7.8 7.3 2.4 2.4 30.8% 32.9% 13th August 2018 2018 Interim Results 5
Slide 6: GBP v USD
GBP v USD Net impact on Profit (£ 2.2m) Benefit from Hedge £ 0.5m 13th August 2018 2018 Interim Results 6
Slide 7: Acquisition related costs
Acquisition related costs Acquisition related costs June 2018 June 2017 £m £m Cash and share-based payment charges 0.4 0.5 Loan note interest - 0.3 Amortisation: Platou 0.8 1.8 1.2 2.6 13th August 2018 2018 Interim Results 7
Slide 8: Balance sheet
Balance sheet Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Jun 2018 £m £m £m £m £m £m Tangible fixed assets 9.4 8.4 33.1 33.0 33.3 30.9 Investments 1.8 1.9 1.9 4.1 4.9 4.9 11.2 10.3 35.0 37.1 38.2 35.8 Working capital 3.1 (1.8) (7.1) (15.1) (0.4) 14.6 Net available funds 75.0 115.7 91.6 98.4 79.1 60
Slide 9: Net available funds and free cash resources
Net available funds and free cash resources June 2018 December 2017 £m £m Cash and cash equivalents 95.9 161.7 Current investment deposits 0.5 5.5 Net cash equivalents 96.4 167.2 Reserved for bonus (full cost) (36.2) (88.1) Net available funds 60.2 79.1 Held by regulatory businesses (16.1) (25.0) Fr
Slide 10: Movement in net available funds and free cash resources
Movement in net available funds and free cash resources 18.8 (15.2) (12.2) 79.1 (4.8) (0.9) (2.0) (4.0) 60.2 1.4 (16.1) 44.1 Net available Operating profit Dividends Working capital Taxation Capex Capitalised Purchase of Other Net available Cash held by Free cash funds development investments funds
Slide 11: Generation of net funds (recurring items only)
Generation of net funds (recurring items only) Shareholder returns & tax Capex & pensions Operating Dividend Tax Inflow/ Capex Capitalised Pensions Inflow/ Profit (Outflow) Development (Outflow) £ £ £ £ £ £ £ £ 2015 H1 Actual 24.0 (11.7) (7.3) 5.0 (8.7) - (1.2) (4.9) H2 Actual 25.5 (6.5) (5.8) 13.2
Slide 12: Dividend history
Dividend history Interim Final 80 15 18 25 32 36 40 42 43 47 50 51 56 60 62 65 73 70 60 50 50 40 43 40 39 37 32 33 30 30 26 27 26 24 20 22 16 10 9 11 21 22 22 23 24 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 2017 2018 13th August 201
Slide 13: Market Analysis
Market Analysis | ¢ Clarkson ai ( ae SS £e ES = ) i) “at
Slide 14: Where were we in freight/earnings shipping cycles in 1st Half 2018?
Where were we in freight/earnings shipping cycles in 1st Half 2018? Timeline of each cycle not defined and varies Weakening market Strong market Recovering market Containers LNG Weak market Dry Bulk Offshore Chemical/Specialised tankers LPG Tankers 13th August 2018 2018 Interim Results 14
Slide 15: Year-on-year VLCC MEG-Far East spot market earnings
Year-on-year VLCC MEG-Far East spot market earnings • Weak first half of the year mainly due to over 2018 2017 2016 2015 2014 compliance with OPEC production cuts. 120 • Increased volumes of crude oil exports 100 expected in 2nd half of the year from Saudi Arabia, UAE, Kuwait, Russia, the U.S. and 8
Slide 16: USA - expansion of production and exports in LPG and LNG sectors
USA - expansion of production and exports in LPG and LNG sectors US LPG Export Growth 2010-2022* US LNG Export Growth 2010-2022* Capacity Forecast Capacity Production 45 140 1H18 growth constrained by 40 Mariner East 2 terminal delays. 120 35 Growth pushed into ‘19 Exports (Million MT) Exports (Mill
Slide 17: Fleet growth across the sectors
Year-on-Year Fleet Growth 10% 15% 20% 25% 30% 0% 5% 2005 2006 2007 2008 Source: Clarksons 2009 2010 Dry Bulk 2011 2012 2013 2014 2015 2016 Containers 2017 2018f 13th August 2018 2019f 10% 15% 20% 25% 30% 0% 2005 5% 2006 2007 2008 2009 Tankers Fleet growth across the sectors 2010 2011 2012 2013 2014
Slide 18: Order book as % of existing fleet
Order book as % of existing fleet* Dry Bulk Containers Tankers Specialised Products LNG LPG 80% 80% 80% Orderbook as % of Existing Fleet 70% 70% 70% 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 19: Containership sector supply and demand growth
Containership sector supply and demand growth Supply Demand 10% 8% 6% % Growth 4% 2% 0% 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: Clarksons. Demand basis global container trade, supply basis total containership capacity. 13th August 2018 2018 Interim Results 19
Slide 20: Baltic Dry Index performance
Baltic Dry Index performance 1,800 The freight market performed 25% better than last year and 1,600 ended the 6 months 36% higher than last year. Supramax and handysize markets consistently 1,400 outperformed last year’s levels. 1,200 Panamaxes underperformed in March and capes in both Index V
Slide 21: Active offshore rig count has stabilized and looks set to increase forward
Active offshore rig count has stabilized and looks set to increase forward Total number of floaters under contract 200 190 • The oil market has rebalanced 180 170 160 • Oil companies are reporting very strong cash flow 150 140 130 • E&P capex is set to increase 120 110 • Field development costs are
Slide 22: IMO 2020 rapidly approaching
IMO 2020 rapidly approaching Global Sulphur Limit for Bunker Fuels Falling to 0.5% on 1st January 2020 5.0% 4.5% ECA Global • Shipping industry evaluating suitable methods of compliance 4.0% 3.5% • Potential impact on newbuilding and Sulphur content % 3.0% demolition activity 2.5% • Oil industry eva
Slide 23: Clarksons Platou Securities has leading transaction market share
Clarksons Platou Securities has leading transaction market share 13th August 2018 2018 Interim Results 23
Slide 24: Summary
Summary • Chartering • Offshore • Sale & Purchase • Ongoing investment • Longer term fundamentals • Currency 13th August 2018 2018 Interim Results 24
Slide 25: 13th August 2018 2018 Interim Results
13th August 2018 2018 Interim Results 25
Slide 26: 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