interim results presentation 30 june 2019 andi case and jeff … · 2019-08-12 · balance sheet...

Interim Results Presentation

30 June 2019

Andi Case and Jeff Woyda

12 August 2019

Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20192

Agenda

1Financial results

2Markets

3Outlook


Financial results

Jeff WoydaChief Financial Officer &

Chief Operating Officer

to 30 JuneResults summary


2019

£m

2018

£m

Revenue 167.8 152.6 +10.0%

Underlying profit before taxation(Before acquisition related costs)

20.1 19.2 +4.7%

Underlying earnings per share(Before acquisition related costs)

48.5p 45.8p +5.9%

to 30 JuneResults summary


2019

£m

2018

£m

Revenue 167.8 152.6 +10.0%

Underlying profit before taxation(Before acquisition related costs)

20.1 19.2 +4.7%

Acquisition related costs (0.9) (1.2)

Profit before taxation(After acquisition related costs)

19.2 18.0 +6.7%

Underlying earnings per share(Before acquisition related costs)

48.5p 45.8p +5.9%

Earnings per share(After acquisition related costs)

46.2p 42.5p +8.7%

Revenue, profit and marginSegmental performance


Revenue

2019

£m

Revenue

2018

£m

Profit

2019

£m

Profit

2018

£m

Margin

2019

Margin

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%

to 30 June

to 30 JuneAcquisition related costs


2019

£m

2018

£m

Cash and share-based payment charges 0.4 0.4

Amortisation – Platou 0.5 0.8

Total 0.9 1.2

Balance sheet


Dec 2015

£m

Dec 2016

£m

Dec 2017

£m

Dec 2018

£m

June 2019

£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 62.0

Working capital (2.1) (7.4) 8.8 18.9 13.9

Net available funds 91.6 98.4 79.1 73.4 60.3

89.5 91.0 87.9 92.3 74.2

Pensions (4.1) 2.3 12.3 14.0 15.0

Deferred tax 8.4 7.1 4.6 2.2 2.0

Loan notes (46.1) (23.6) – – –

Leases (5.0) (7.7) (9.2) (8.1) (10.6)

Net assets before intangibles 77.7 106.2 135.3 146.6 142.6

Intangibles (excluding software above) 263.2 300.5 288.1 288.0 291.1

Net assets 340.9 406.7 423.4 434.6 433.7

Impact on Balance SheetIFRS 16


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 rent free period at 31 Dec 2018 no longer required 8.1

Net impact of change on Net Assets (2.5)

Impact on Income StatementIFRS 16


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 now

shown as financing rather than operating outflow

to 30 JuneSea/ related IT costs


2019

£m

2018

£m

Items taken to Income Statement

Non capitalised items (3.0) (2.4)

Amortisation (0.1) -

2019

£m

2018

£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

Net available funds and free cash resources


30 June

2019

£m

31 Dec

2018

£m

30 June

2018

£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) (84.8) (36.2)

Net available funds 60.3 73.4 60.2

Held by regulatory businesses (2.0) (16.4) (16.1)

Free cash resources 58.3 57.0 44.1

Movement in free cash resources


(15.4)

(5.2)

(5.2)

(2.8)

(2.3)(1.1) (0.8)

(13.9)57.0

41.6

20.9

6.4

6.3

14.4 58.3

Free cashresources

Dec 18

Final Dividend Free cashresources after

dividend

Operating profit Depreciation Other Workingcapital

Taxation Lease payments Dividends paidto non-

controllinginterests

Capitaliseddevelopment

costs

Capex Other Net purchase ofinvestments

Movement innet funds ofregulatedentities

Free cashresources

Jun 19

In 17th year of progressive dividendDividend history


6 79 10

1214

16 16 17 18 18 1921 22 22 23 24 25

911

16

22

24

2626 27

3032 33

37

3940

43

5051

1518

25

32

36

4042 43

4750 51

56

6062

65

7375

0

10

20

30

40

50

60

70

80

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Interim Final


Markets

Andi CaseChief Executive Officer

Economic growth remains supportive of seaborne tradeGlobal Macroeconomic Indicators


Global Manufacturing PMIs

Source: IMF, HSBC, Markit, Caixin, Refinitiv

GDP Growth

-6

-4

-2

0

2

4

6

8

10

12

14

16

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19 (

e)

% c

hange (

year

on y

ear)

World GDP US GDP EURO Area China GDP India GDP

44

46

48

50

52

54

56

58

60

62

Jan-1

2

Ma

y-1

2

Sep-1

2

Jan-1

3

Ma

y-1

3

Sep-1

3

Jan-1

4

Ma

y-1

4

Sep-1

4

Jan-1

5

Ma

y-1

5

Sep-1

5

Jan-1

6

Ma

y-1

6

Sep-1

6

Jan-1

7

Ma

y-1

7

Sep-1

7

Jan-1

8

Ma

y-1

8

Sep-1

8

Jan-1

9

Ma

y-1

9

Contr

action | E

xpansio

n

US Japan Eurozone China

Source: Clarksons/IMF

World Seaborne Trade vs. GDP


0

20

40

60

80

100

120

140

160

0

2

4

6

8

10

12

14

16

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

GD

P C

urre

nt P

rices (T

N $

)

Wo

rld

Seab

orn

e T

rad

e (

BN

to

nn

es)

World Seaborne Trade Trade trend volume GDP Current Prices GDP trend volume Linear (World Seaborne Trade) Linear (GDP Current Prices)

Manufacturing activity in emerging economies is expandingEmerging Asian Economies Potential


Source: HSBC, Markit, Caixin, Refinitiv

Selected Emerging Economies Manufacturing PMI’s Energy Use Per Capita Vs GDP Per Capita Steel Use Per Capita

44

46

48

50

52

54

56

58

Jan-1

4

Jun-1

4

No

v-1

4

Apr-

15

Sep-1

5

Feb

-16

Jul-1

6

De

c-1

6

Ma

y-1

7

Oct-

17

Ma

r-1

8

Aug-1

8

Jan-1

9

Jun-1

9

Co

ntr

acti

on

| E

xp

an

sio

n

India Indonesia Vietnam

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

South

Kore

a

Japa

n

Ch

ina

Ma

laysia

US

A

Tha

iland

Vie

tnam

India

Indon

esia

Sri L

anka

Myan

ma

r

Pakis

tan

Bang

lad

esh

Kg

fin

ish

ed

ste

el

pro

du

cts

per

year

per

cap

ita

China

India

United States

Vietnam

Philippines

Indonesia

EU

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

- 10 20 30 40 50 60 70

Oil e

qu

ivale

nt

per

cap

ita (

kg

)

GDP per capita (thousand USD)

Trade patterns re-calibrated, but geopolitical uncertainties remainUS-China Trade Dispute


• Tariffs compromising world

economic growth

• Uncertainty leading to reduced

investment and slower

demand growth

• Risk of escalation and

retaliatory tariffs

• Dislocation of trades creating

inefficiencies and tightening

supply / demand balances

• U.S. energy exports continue to

increase but a resolution

generates additional upside

• Increase in China’s import of

energy products increases

overall tonne-mile demand


Source: Clarksons Research. Data as of 1st July 2019. Retrospective changes to number of orders may occur due to late reporting and other factors.

Global Newbuilding Orders at Historic Low…

480 546411

550

795

547667

1,378

1,196 1,145

2,257

2,909

1,872

582

1,842

1,042

709

2,057

1,340

1,159

257

820919

228

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD

No. Ships

Orders representative of vessels

over 20,000 dwt

Data Source: Clarksons/TEX/Asiasis/Refinitiv

Upward Pressure on Newbuilding Prices


• Newbuilding prices have increased

from 2017’s low point

• Cost pressures supporting rise in

prices

• Shipyard consolidation continuing

• Environmental regulations and new

technology likely to add to costs

0

50

100

150

200

250

300

350

0

20

40

60

80

100

120

140

160

180

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

Jan-1

4

Jan-1

5

Jan-1

6

Jan-1

7

Jan-1

8

Jan-1

9

Index

MM

$

VLCC NB Price (LH-axis) 100 Billion Won in US$ (LH-Axis) Korean Steel Price Index (RH-axis)


Demand Growth

(BN Tonne-Miles*, % Chg 2018–2020)

Sector Fundamentals Outlook Comparison

10%

5%

14%

11%

20%

13%

0% 5% 10% 15% 20%

Containers

Dry Bulk

Crude & Products

Chemical / Specialised

LNG

LPG & Ammonia

Fleet Growth

(% Chg 2018–2020)

8%

7%

7%

6%

18%

8%

0% 5% 10% 15% 20%

Containers

Dry Bulk

Crude & Products

Chemical / Specialised

LNG

LPG & Ammonia

7%

6%

8%

6%

16%

11%

0% 5% 10% 15% 20%

Containers

Dry Bulk

Crude & Products

Chemicals

LNG

LPG & Ammonia

Fleet Growth

(% Chg 2016–2018)

Data Source: Clarksons. *LNG and Oil Tanker Demand Growth account for fleet productivity and floating storage developments as well as tonne-miles, and are measured in cbm/dwt demand respectively. Container Demand Growth basis TEU-

miles, adjusted to account for fleet productivity changes; container utilization adjusted for estimated changes in capacity idle or out of service.

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

Vessel Demand

• Potential speed restraint due to higher bunker costs, leading to increased

vessel requirements

• Anticipated increase in demand for tankers due to higher refinery runs,

changes to oil trade patterns and floating storage

Market Impact

Expected tightening of supply

/ demand balances across

most market sectors

Source: Clarksons. July 2019. Based on individually identified vessels only. *% of all vessels for Cruise / Passenger, Ro-Ro and ‘Others’.

Installation of Scrubbers


0

100

200

300

400

500

600

700

800

900

1000

Num

ber

of

vessels

Existing vessels with scrubbers fitted Existing vessels due to be retrofitted Vessels due to be delivered with scrubbers fitted • Heavy investment in scrubbers

predominantly in larger vessels

• $2.5 million – $5.0 million price range for

equipment and installation on larger

vessels (tankers and dry bulk) and $5.0

million - $7.0 million for large

containerships.

• Off-hire time for retrofitting vessels in key

market sectors disrupting fleet utilisation.

5% 9% 2% 2%9%0.1% 2%

% of fleet per sector >20,000 dwt that is retrofitting scrubbers*

4%

The regulatory timeline continues to accelerate

Source: Clarksons Research, January 2019

Environmental Regulation


2019 2020 2021 2022 2023 2024 2025 - - - - - - 2030 - - - - - - 2050

ECAs SOx NOx GHG / EEDI Green Recycling Ballast Water Current position

EU MRV

certification in

effect

Lower EEDI ref.

line (Phase 3)

Lower EEDI

ref. line

(Phase 2)

North Sea & Baltic

Sea NOx ECAs in

effect

50% GHG

Reduction Target

IMO DCS reporting

period begins

EU SRR

enters into

force

40% CO2 Intensity

Reduction Target

IMO 2020

0.5% Global

Sulphur Limit

IMO BWM

Convention requires

retrofitting of vessels


100

105

110

115

120

125

130

135

140

145

Jan

Feb

Ma

r

Apr

Ma

y

Jun

Jul

Aug

Sep

Oct

No

v

De

c

Millio

n T

on

nes

2017 2018 2019 2019 (f)

-4% half year-on-half year

Recovery in exports after Vale dam rupture and severe weather related disruptions in Brazil and Australia

Source: GTIS, Clarksons Platou,

Iron Ore Seaborne Volumes


Year-on-Year VLCC MEG-Far East Spot Market Earnings

0

20

40

60

80

100

120

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$’0

00/d

ay

2019 2018 2017 2016 2015 2014

Earnings in 1st half of year significantly stronger than in

2018.

Market expected to strengthen further in the 2nd half of

2019.

Key drivers expected to include:

- rising U.S. and Brazilian crude exports;

- increased shipments to new refineries in Asia;

- higher refineries runs ahead of IMO 2020;

- increased floating storage ahead of IMO 2020;

- retrofitting of vessels with scrubbers;

- replacement of Iranian exports with exports from

other countries using spot market tonnage;

- lower fleet growth in the 2nd half of 2019;

- seasonal increases in earnings in Q4.

Thank you

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 provided on "as is" and "as available" basis. Clarksons and all its Group companies make no representations or warranties of any kind, express or implied

about the completeness, accuracy, reliability, suitability or availability with respect to the Information. Any reliance placed on such Information is therefore strictly at the recipient's own risk and no responsibility is accepted for

any loss or damage howsoever arising. Please note that future rates and/or forward looking predictions are for illustration purposes only and given without guarantee; the ultimate outcome may be different.

This Information is not for reproduction or distribution without Clarksons prior written consent. Especially, the Information is not to be used in any document for the purposes of raising finance whether by way of debt or

equity. All intellectual property rights are fully reserved by Clarksons, its Group companies and/or its licensors.

This disclaimer shall be governed by and construed in accordance with English law.

CLARKSON PLC, COMMODITY QUAY, ST. KATHARINE DOCKS, LONDON, E1W 1BF

interim results presentation 30 june 2019 andi case and jeff … · 2019-08-12 · balance sheet...

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