results presentation - clarksons...2010 2012 2014 2016 2018* 2020* 2022* t) us lpg export growth...
TRANSCRIPT
1 3 T H A U G U S T 2 0 1 8
Results Presentation
Agenda
Financial Results
Markets
Outlook
Andi Case
CEO
Jeff Woyda
COO/CFO
13th August 2018 2018 Interim Results 2
Results summary
June 2018
£m
June 2017
£m
Increase
%
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(Before acquisition related costs) 45.8p 57.5p +x.x%
Earnings per share(After acquisition related costs) 43.2p 50.8p
313th August 2018 2018 Interim Results
Results summary
June 2018
£m
June 2017
£m
Increase
%
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(Before acquisition related costs) 45.8p 57.5p +x.x%
Earnings per share(After acquisition related costs) 42.5p 50.8p
413th August 2018 2018 Interim Results
Segmental margin
Revenue
June 2018
Revenue
June 2017
Profit
June 2018
Profit
June 2017
Margin
June 2018
Margin
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%
513th August 2018 2018 Interim Results
13th August 2018 2018 Interim Results 6
GBP v USD
Net impact on Profit (£ 2.2m)
Benefit from Hedge £ 0.5m
Acquisition related costs
Acquisition related costs June 2018
£m
June 2017
£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
713th August 2018 2018 Interim Results
Balance sheet
Dec 2013
£m
Dec 2014
£m
Dec 2015
£m
Dec 2016
£m
Dec 2017
£m
Jun 2018
£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 60.2
78.1 113.9 84.5 83.3 78.7 74.8
Pensions (1.8) (10.3) (4.1) 2.3 12.3 19.9
Deferred tax 10.0 13.0 8.4 7.1 4.6 0.8
86.3 116.6 88.8 92.7 95.6 95.5
Net assets before loan notes and intangibles 97.5 126.9 123.8 129.8 133.8 131.3
Loan notes - - (46.1) (23.6) - -
Net assets before intangibles 97.5 126.9 77.7 106.2 133.8 131.3
Intangibles 40.2 40.4 263.2 300.5 289.6 296.8
Net assets 137.7 167.3 340.9 406.7 423.4 428.1
813th August 2018 2018 Interim Results
Net available funds and free cash resources
June 2018
£m
December 2017
£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)
Free cash resources 44.1 54.1
913th August 2018 2018 Interim Results
Movement in net available funds and free cash resources
(15.2)
(12.2)
(4.8)(0.9)
(4.0)
79.1
18.8
60.2 (16.1)
44.1
Net availablefunds
Dec 17
Operating profit Dividends Working capital Taxation Capex Capitaliseddevelopment
costs
Purchase ofinvestments
Other Net availablefundsJun 18
Cash held byregulatedentities
Free cashresources
Jun 18
(2.0)1.4
1013th August 2018 2018 Interim Results
13th August 2018 2018 Interim Results 11
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 (15.8) - (1.1) (3.7)
Year Actual 49.5 (18.2) (13.1) 18.2 (24.5) - (2.3) (8.6)
2016 H1 Actual 21.4 (11.9) (4.9) 4.6 (1.0) - (1.1) 2.5
H2 Actual 22.8 (6.6) (2.5) 13.7 (2.1) - (0.8) 10.8
Year Actual 44.2 (18.5) (7.4) 18.3 (3.1) - (1.9) 13.3
2017 H1 Actual 24.1 (13.1) (3.2) 7.8 (1.6) - (0.6) 5.6
H2 Actual 25.4 (7.0) (3.7) 14.7 (3.7) (1.5) (0.3) 9.2
Year Actual 49.5 (20.1) (6.9) 22.5 (5.3) (1.5) (0.9) 14.8
2018 H1 Actual 18.8 (15.2) (4.8) (1.2) (0.9) (2.0) (0.2) (4.3)
H2 (7.3) (3.6) (0.9) (2.0) (0.2)
Year (22.5) (8.4) (1.8) (4.0) (0.4)
Dividend history
6 7 9 10 12 14 16 16 17 18 18 19 21 22 22 23 249 1116
2224
26 26 2730 32 33
3739 40 43
50
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
Interim Final
73
12
15 18 25 32 36 40 42 43 47 50 51 56 60 62 65
13th August 2018 2018 Interim Results
Market Analysis
Where were we in freight/earnings shipping cycles in 1st Half 2018?
14
Tankers
Str
on
g m
ark
et
Reco
ve
rin
g m
ark
et
Wea
ken
ing
ma
rke
tW
ea
k m
ark
et
Timeline of each cycle not defined and varies
LNG
Dry Bulk
Chemical/Specialised tankers
LPG
Offshore
13th August 2018 2018 Interim Results
Containers
15
Year-on-year VLCC MEG-Far East spot market earnings
Data Source: Clarksons.
• Weak first half of the year mainly due to over
compliance with OPEC production cuts.
• Increased volumes of crude oil exports
expected in 2nd half of the year from Saudi
Arabia, UAE, Kuwait, Russia, the U.S. and
Brazil. Likely to be partially offset by reduced
exports from Iran and Venezuela. Q4
traditionally sees a stronger market, and this
seasonality is expected to resume this year.
• Further reduction in floating storage has added
to the trading fleet, even though scrapping has
led to a slight reduction in the total crude tanker
fleet size,
• If Iran uses own tonnage for floating storage as
previously, this will reduce the trading fleet size
and may tighten the crude tanker market..
0
20
40
60
80
100
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$’0
00/d
ay
2018 2017 2016 2015 2014
13th August 2018 2018 Interim Results
USA - expansion of production and exports in LPG and LNG
sectors
16
0
5
10
15
20
25
30
35
40
45
2010 2012 2014 2016 2018* 2020* 2022*
Ex
po
rts (
Mil
lio
n M
T)
US LPG Export Growth 2010-2022*
Source: Waterborne, Clarksons Platou. *Projected volumes.
1H18 growth constrained by
Mariner East 2 terminal delays.
Growth pushed into ‘19
13th August 2018 2018 Interim Results
0
20
40
60
80
100
120
140
2010 2012 2014 2016 2018* 2020* 2022*E
xp
ort
s (
Mil
lio
n M
T)
Capacity Forecast Capacity Production
US LNG Export Growth 2010-2022*
Fleet growth across the sectors
17
0%
5%
10%
15%
20%
25%
30%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8f
201
9f
Tankers Specialised Products
0%
5%
10%
15%
20%
25%
30%
35%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8f
201
9f
LNG LPG
Source: Clarksons
0%
5%
10%
15%
20%
25%
30%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8f
201
9f
Ye
ar-
on
-Ye
ar
Fle
et
Gro
wth
Dry Bulk Containers
13th August 2018 2018 Interim Results
Order book as % of existing fleet*
18
0%
10%
20%
30%
40%
50%
60%
70%
80%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
Tankers Specialised Products
0%
10%
20%
30%
40%
50%
60%
70%
80%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
LNG LPG
Source: Clarksons. *Data as at start of each period
0%
10%
20%
30%
40%
50%
60%
70%
80%
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
Ord
erb
oo
ka
s %
of
Ex
isti
ng
Fle
et
Dry Bulk Containers
13th August 2018 2018 Interim Results
Containership sector supply and demand growth
13th August 2018 19
0%
2%
4%
6%
8%
10%2
01
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8f
201
9f
% G
row
th
Supply Demand
Source: Clarksons. Demand basis global container trade, supply basis total containership capacity.
2018 Interim Results
20
Baltic Dry Index performance
Data Source: Clarksons.
The freight market performed 25% better than last year and
ended the 6 months 36% higher than last year.
Supramax and handysize markets consistently
outperformed last year’s levels.
Panamaxes underperformed in March and capes in both
March and April due to trade disruptions caused by labour
related strikes in Guinea affecting bauxite exports and in
Canada affecting iron ore exports. The suspension of Anglo
American iron ore operations in Brazil led to further
declines in iron ore exports.
Period rates and asset values followed the positive market
sentiment and remain resilient during the softer months.
Global manufacturing continues to expand albeit at a
slower rate than second half of last year. China’s new
housing starts continue to grow and reached an 11 month
high in May.
200
400
600
800
1,000
1,200
1,400
1,600
1,800Jan 1
6
Apr
16
Jul 16
Oct 16
Jan 1
7
Apr
17
Jul 17
Oct 17
Jan 1
8
Apr
18
Jul 18
Ind
ex V
alu
e
13th August 2018 2018 Interim Results
Active offshore rig count has stabilized and looks set to increase
forward
13th August 2018 2018 Interim Results 21
100
110
120
130
140
150
160
170
180
190
200 Total number of floaters under contract
270
280
290
300
310
320
330
340Total number of jack-ups under contract
Active offshore rigcount was stable through 2017 and so far in 2018. Tendering activity is currently rising and forward offshore rig count seems set to increase
Source: RigLogix; Clarksons Platou Securities
• The oil market has rebalanced
• Oil companies are reporting very strong cash flow
• E&P capex is set to increase
• Field development costs are substantially reduced
• Field development sanctioning activity is improving
• Active offshore rig count stabilised and set to increase
• Backlog for leading subsea EPC contractors stopped falling and stabilised
• Signals indicating potential increase in exploration in future
IMO 2020 rapidly approaching
22
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
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
20
20
20
21
20
22
20
23
20
24
20
25
Sulp
hur
conte
nt
%
ECA Global • Shipping industry evaluating
suitable methods of compliance
• Potential impact on newbuilding and
demolition activity
• Oil industry evaluating impact on
refining sector, product supply /
demand and trade
Global Sulphur Limit for Bunker Fuels Falling to 0.5% on 1st January 2020
13th August 2018 2018 Interim Results
Clarksons Platou Securities has leading transaction market share
13th August 2018 2018 Interim Results 23
13th August 2018 2018 Interim Results 24
Summary
• Chartering
• Offshore
• Sale & Purchase
• Ongoing investment
• Longer term fundamentals
• Currency
13th August 2018 2018 Interim Results 25
Disclaimer
13th August 2018 2018 Interim Results 26
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 responsibil ity 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