TIDMCKN
RNS Number : 9267Y
Clarkson PLC
08 March 2012
8 MARCH 2012
PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER
2011
Clarkson PLC ('Clarksons') is the world's leading shipping
services group. From offices in 15 countries on five continents, we
play a vital intermediary role in the movement of the majority of
commodities around the world.
Preliminary results
Clarkson PLC ('Clarksons') today announces preliminary results
for the twelve months ended 31 December 2011.
Results for 2011 Year ended Year ended
31 December 31 December
2011 2010
Revenue GBP194.6m GBP202.6m
Profit before taxation and exceptional GBP32.2m GBP32.4m
item
Profit before taxation* GBP35.4m GBP32.4m
Earnings per share* 134.1p 125.4p
Dividend per share 50p 47p
*After exceptional item
Summary
-- Client focus has enabled the group to exceed financial
expectations over the course of 2011 despite challenging
markets
-- Maintained or increased market share in all core broking businesses
-- Team Clarksons further enhanced by significant new hires and corporate acquisitions
-- Strong balance sheet, with GBP71.1m of net funds
-- Dividend increased for the ninth consecutive year to 50p, a rise of 6.4%
Andi Case, Chief Executive, commented:
"2011 saw an even more difficult and challenging rate
environment than 2010 in most shipping markets. Not only did the
demand/supply imbalance of the past few years continue, but the
market also had to contend with a worsening debt market. Against
this backdrop the company performed well, increasing market share
in most markets, and benefiting from the breadth of its offering to
take advantage of those markets which performed relatively
well.
Whilst the prevalence of spot business continued, the company
took opportunities as they arose to fix forward business enabling
us to start 2012 with a forward order book not dissimilar to the
level brought forward in 2011. These results clearly reflect the
commitment and hard work of the team, and I would like to thank
them all for their efforts.
While the macroeconomic picture will inevitably continue to set
the tone for the year ahead, we are confident we have the strategy
and balance sheet in place to meet challenges and seize
opportunities as they present themselves."
Enquiries:
Clarkson PLC:
Andi Case, Chief Executive
Jeff Woyda, Finance Director 020 7334 0000
Hudson Sandler:
Andrew Leach
Kate Hough 020 7796 4133
Chairman's review
2011 has seen some of the most turbulent trading conditions
witnessed in the shipping markets for some time. Natural disasters
in Japan and Australia in the first half of the year were followed
by the European financial crisis and deepening macroeconomic
uncertainty.
In these challenging trading conditions the group has delivered
an excellent performance, firmly reflecting the strength of
Clarksons' strategy. We have continued to leverage our unrivalled
breadth and expertise which gives us the capability to offer
clients the services and support they require.
This powerful service offer combined with our broad geographic
reach has not only enabled us to maintain and grow market share
across our broking business wherever possible but has also
positioned us to take important steps forward in other areas, such
as investment services, where we advised on some of the most
significant deals in the sector during the course of the year.
Supported by a strong balance sheet and the cash generative
nature of our business, we have taken advantage of organic and
acquisitive opportunities to further strengthen our teams and
broaden the services offered to our clients. During 2011 these have
included significant personnel hires, the acquisitions of Boxton
Holding and Bridge Maritime expanding our presence in Scandinavia,
and the acquisition of EnShip which further develops our port and
agency services to cover Scotland and the offshore market.
Results
Underlying profit before tax of GBP32.2m was broadly the same as
the previous year (2010: GBP32.4m). After a small increase in the
level of taxation incurred by the group, this profit resulted in an
underlying earnings per share of 121.5p (2010: 125.4p).
The anticipated fall in operating profit, due to the weaker US
dollar and challenging market conditions has been offset by the
effects of management decisions over the previous 12 months to
reduce financing costs and exit unprofitable business lines.
The settlement of the costs element of litigation previously
announced, gave rise to an exceptional credit of GBP3.2m (2010:
GBPnil).
Dividend
The board is recommending a final dividend of 32p (2010: 30p).
The interim dividend was 18p (2010: 17p) giving a total dividend of
50p (2010: 47p). The dividend is covered 2.7 times.
The dividend will be payable on 8 June 2012 to shareholders on
the register as at 25 May 2012, subject to shareholder
approval.
Board
After more than seven years on the board, Martin Stopford will
be standing down from the board with effect from today. On behalf
of the board I would like to thank Martin for his unceasing hard
work and commitment and his role in building Clarkson Research into
a highly successful and strategically important division. We are
delighted that Martin will continue as consultant in maritime
economics to the group and as president of Clarkson Research
Services. There are currently no plans to replace him on the PLC
board.
On 10 February 2012, Paul Wogan, non-executive director,
resigned from the board of Clarksons. Paul has taken a senior
executive position at GasLog, a company in the gas shipping and
maritime sector and therefore stepped down immediately to avoid any
potential conflict of interest and dedicate himself to his new,
full time, executive role. Paul's experience and guidance has been
invaluable and on behalf of the board I would like to thank him for
his significant contribution to the company.
The board is currently conducting a search for a new
non-executive director and an announcement will be made in due
course.
Future
We enter 2012 encouraged that the strategy which we have evolved
during the last few years is proving itself through the delivery of
these results. We have maintained or grown market share in
challenging conditions and this, combined with the investments made
over the course of the year, position the business well in a still
uncertain maritime economic environment.
Bob Benton
Chairman
Chief executive's review
Strategic positioning
In the last year Clarksons has risen to the challenges of both
an extremely tough macroeconomic environment and depressed maritime
markets, represented by falling freight rates and reduced asset
values in most sectors. Nevertheless, even against a harsh backdrop
of difficult trading conditions, opportunities do arise and in 2011
seizing these opportunities became the priority. We believe our
ability to optimise our market position lies in the experience
provided by our proud heritage and the strategy we have evolved,
which puts unbeatable client service at the centre of our offer.
Clarksons' strategy to meet the needs of our clients is underpinned
by our people, our global reach, the breadth of our business,
market leading technology and an unrivalled research capability.
These elements have helped us secure growth in transaction volumes
in the last year and take market share, bolstering our already
leading position in most of the markets in which we operate. 2011
was characterised by volatility, a weak economic picture,
fluctuating exchange rates and the continued imbalance between
supply and demand. That Clarksons emerged with broadly similar
trading performance is testament to the commitment to and integrity
of our strategy.
People are the drivers behind this strategy and, once again,
Team Clarksons has delivered superior performance across the board.
Hard work and enthusiasm aligned with professionalism have been
essential qualities to move our business forward. Market
understanding, local and global knowledge combined with a 'can do'
attitude help service and secure customer relationships.
Our teams achieve best in class performance and Clarksons is
committed to maintaining those high standards through training and
education. Although we already have the most extensive training
programme in the sector, we are committed to continually improve
and extend training and education for all levels of the company. We
are confident this will continue to raise the bar and deliver the
highest standards. I am also delighted to welcome new members to
the Clarksons team as we have seized the opportunity in the last
year to strengthen our core with a number of key hires
complementing both our offer and our geographical reach.
But as well as helping develop skills it is important to give
people the right tools to implement them. Our commitment to IT
means each department now has the ability to create their own
bespoke platform from which to deliver best in class information
and service to clients. Research remains core to everything we do
and investment has helped drive success, with very good growth in
digital sales and a successful launch of offshore products.
Clarksons is a truly international business. Our global
footprint, with teams in all major shipping hubs, enables us to be
close to our client base and gives us unparalleled insight into
markets. During the year we took a major step in expanding our
presence in Scandinavia with the acquisitions of Boxton Holding and
Bridge Maritime, both Oslo-based shipbroking businesses.
Integrating these businesses with our existing Norwegian operation
has enabled the enlarged team to significantly expand the offering
to clients. Our geographical reach was also enhanced with the
acquisition of EnShip, the Aberdeen-based shipping agency and
marine industry logistics specialist. That deal also enabled us to
broaden our port and agency services to existing and new customers
in bulk shipping, offshore and renewable industries.
Not only did these acquisitions improve our offer, they brought
with them talented individuals to further bolster Team Clarksons.
Our status elsewhere in the world was underlined when we were
honoured with the Best Maritime Service Provider accolade at the
biennial Singapore International Maritime Awards ceremony. It
recognised the efforts made by Clarksons in Singapore to support
and improve the local shipping environment, contributing to
Singapore's development as a major port and international maritime
centre. It was especially fitting because last year marked the 30th
anniversary of Clarksons serving locally the dynamic Asian
market.
While the depth and severity of the downturn cannot be
predicted, our long experience in these markets has given us the
ability to anticipate and respond to change. The actions we took in
managing our cost base, exiting non-profitable and non-core
businesses and reducing financing costs were done with appropriate
timing. Our balance sheet has strengthened considerably in recent
years, which gives us both security and the flexibility to seize
opportunities as they arise. Our cash generation and the
stewardship of that money saw us end the year in a strong
position.
We are well aware of the constraints many of our clients are
under with the tightening of the financial markets. As part of our
continuous push to offer clients better and wider services Clarkson
Capital Markets (CCM) is helping our clients find new sources of
equity and debt. Indeed the CCM team has closed a number of
significant transactions and has continued to secure a number of
mandates both alone and in cooperation with our heritage broking
business, reinforcing the unity of our strategy.
Current trading and outlook
Our commitment to world class client service, supporting a range
of needs with a truly global reach, offers our clients a real
market edge and we have benefited from a flight to quality in these
difficult times. We believe our unceasing efforts to serve and
deliver the right solutions, backed by validation, in depth
research and analysis combined with the best teams in our industry,
mean we remain the number one choice for clients.
The demand/supply imbalance that I have spoken about
consistently for the past three years is still with us in many
markets. Consequently the spot markets remain weak reflecting the
uncertain short-term outlook. Nevertheless, we have started the
year with a similar forward order book to a year ago which again
demonstrates our ability to execute opportunities as they arise.
Tight shipping finance is likely to continue to constrain clients,
but gives us opportunities within our financial division to work
with them to meet their needs.
While the macroeconomic picture will inevitably continue to set
the tone for the year ahead, we are confident we have the strategy
and balance sheet in place to meet challenges and seize the growth
opportunities as they present themselves.
Andi Case
Chief executive
Business review
Divisional performance
Strength in depth across our divisions has served us well in a
difficult year for the shipping industry. The breadth of our
operations not only supports us through volatile conditions, but
enables us to provide a fully comprehensive service to clients. In
addition, our market leadership position has proved appealing to
clients, whose flight to quality in difficult times has helped us
grow market share.
Against a backdrop of macroeconomic uncertainty and natural
disasters, the demand/supply imbalance of recent years continued
and, as a result, the prevalence of spot market trading remained
and freight rates were under pressure. However the scale and
expertise of Clarksons' broking business meant there were real
areas of progress. We were also able to increase our global
footprint to better serve clients and make key hires to further
enhance our world class team. The skills of our people and the
ability to deliver that expertise to clients when and where they
want it are major strengths of the company.
Our financial offer is gaining momentum with a range of services
and expertise appealing to clients faced with difficult banking
markets. The support division has expanded its service with
acquisitive and organic growth. Finally, our world leading research
and analysis teams not only give us a dynamic business stream but
also provide us with an unrivalled depth of knowledge and
understanding to underpin the services we offer clients.
Broking
Revenue: US$263.4m (2010: US$261.7m)
Segment result: GBP35.9m (2010: GBP41.3m)
Forward order book for 2012: US$91m*(At 31 December 2010 for
2011: US$92m*)
* Directors' best estimates of deliverable FOB
Dry bulk
The dry bulk market experienced contrasting fortunes during
2011.
The capesize sector suffered from both natural disasters and
extreme weather conditions in the first half of the year, which
combined to disrupt iron ore and coal demand during the period.
Average earnings for the sector were further hit by a record number
of newbuild deliveries in January. However, during the second half
of the year the market recovered dramatically as fleet growth was
countered by a return to trade flow.
In contrast the panamax, supramax and handysize market sectors
performed relatively strongly, although earnings were at a
significant discount to 2010.
For Clarksons, regional consolidation remains an important
strategy in the growth of our dry cargo business. We placed
particular focus on the Australian and South East Asian markets
over the course of the year, significantly strengthening our teams
in these regions. Overall, the pleasing growth in our market share
achieved by our team continues to mitigate the fall in average
earnings within the dry cargo market.
Demand growth remains healthy for raw materials and we expect
volatility to remain whilst the market struggles with the continued
demand/supply imbalance.
Containers
Despite a healthy 8% growth in global trade volumes in 2011,
consistent with the long-term average, revenue growth in the
container sector was held back by several factors. These included
downward freight rate trends on mainline East-West trades and
oversupply, following a large order book delivery, as well as a
rapid acceleration in the number of newbuildings in the second half
of the year.
Faced with this uncertain picture, the container shipping lines
took a more conservative approach in terms of assets with
consolidation, rather than expansion, becoming the focus, including
the redelivery of timecharter tonnage or reletting surplus owned
tonnage.
Against this difficult backdrop the Clarkson team managed a very
credible performance. We strengthened our teams in London,
Singapore and Shanghai with further hires in these regions expected
this year which assisted the division in winning significant new
clients in 2011. As and when the rates and values recover we are
well placed to participate in any renewed activity. With a sector
averaging long-term growth of around 8% the container industry is
well able to recover faster than might be expected, and whilst
today we still see the effects of the 2008 crash and the tail end
of the building spree which still needs financing in many cases,
this hangover will not last forever.
Deep sea
The deep sea tanker market in 2011 continued to be extremely
challenging. Nearly all market sector earnings for owners were
appreciably down. The VLCCs, the largest crude oil carrying
vessels, were hit particularly hard with a 55% collapse in their
average daily earnings with VLCC rates giving returns of less than
US$20,000 per day in 2011. The suezmax and aframax markets also
came under immense pressure with rates down 39% and 27%
respectively.
Crude freight rates continue to suffer the perfect storm of
tonnage oversupply and a weak global economy. However, Clarksons'
deep sea business has proved very robust and has maintained its
pre-eminent position across the whole crude market sector and grown
market share wherever possible.
The market for ships carrying refined oil products has been
equally challenging with the exception of the medium range market
which showed a small 3% increase in earnings.
The tanker market has also had to contend with the impact of the
Arab Spring which saw disruption to oil supplies, affecting Libya
in particular. The market has also been impacted with ongoing
sanctions against Iran which seem set to be strengthened further.
The Clarksons deep sea team has continued to expand globally, with
all five centres, London, Singapore, Houston, Geneva and India,
able to offer an unparalleled service and market coverage. We
believe our teams are well placed to take advantage of any market
improvement.
2012 may prove to be a challenging year, with heightened Middle
East tensions, however, the outlook is more positive in some of the
Far Eastern economies, with China very much at the forefront with
ever greater energy requirements. Although India is a less
industrial economy, potential for growth there remains strong.
Significant changes in refining capacity and location will have an
impact on trade flows within the deep sea market in 2012 and
beyond. In difficult market conditions many of our clients are
demanding ever more added value service and, following the
investments made in this area of our business, we are well placed
to meet the greater demands of the deep sea tanker client base.
Specialised products
The Clarksons specialised products team entered 2011 in a strong
position, but aware the year ahead would be challenging for all
market participants. General global uncertainty had created a
widespread pessimism within the shipping industry and specialised
products felt these effects during the year, despite some respite
created by the long-term contractual nature of the business.
Set against this challenging backdrop, an overcapacity of
tonnage remained throughout 2011 preventing any sustained recovery
in freight markets. As we enter 2012 we are finally seeing a
dwindling in the impact upon freight rates of oversupply,
encouraged by a further reduction in the newbuilding programme due
to high cost barriers and continued scrapping of vessels.
With the backdrop of tapering demand, some emerging markets did
contradict the trend by increasing global and regional demand
within the specialised sector. Some important highlights in the
final quarter of 2011 were quarter-on-quarter spot rate increases
on the Houston-Far East and Rotterdam-Far East routes seemingly
driven by China's desire to boost inventory levels prior to their
New Year celebrations and US exporters' requirement to ship volumes
by year-end for tax purposes.
Clarksons' specialised products team work closely together
across seven key international locations. Over the course of the
year the team increased market share by continuing with a strategy
of regional growth and further developing our relationships with
existing and potential clients through our extensive and high value
service offer.
Petrochemical gases and small LPG
The market witnessed strong trading conditions across the
petrochemical sector in the first half of the year, before starting
to soften from Q3 through to the year end, as margins came under
pressure and cracker utilisation levels were reduced. Volumes of
seaborne petrochemical gases were down year-on-year, as expected,
although to a lesser extent than predicted. However, the market was
supported by fairly static fleet supply and longer haul movements
generated by the stoppage of Libyan exports and maintenance at the
Targa terminal in Houston, which lowered US ethylene exports. This,
in turn, gave support to additional sea tonne-miles and
consequently helped to underpin freight levels.
With demand for polymers tapering off, producers have reduced
cracker production levels taking liquidity out of the market. This
has resulted in more challenging trading conditions. Seaborne
petrochemical gases are expected to reduce yet again this year as
downstream plants come online. This is combined with additional
shipping capacity entering the market and the potential return of
production from regional plants which will impact tonne-miles.
By nature the market is characterised by a high level of term
coverage, giving protection to both owners and charterers during
respective market challenges.
The petrochemical gas and coastal desk expanded their team in
2011 enabling them to increase their client base despite
deteriorating market conditions as the year lapsed.
Gas
As we predicted a year ago, gas shipping markets showed general
improvement in 2011 having endured several difficult years,
particularly for the VLGC sector, which had a vigorous upturn in
the second half of the year after an uninspiring start. Rates made
a strong recovery following the Japan disaster which, in turn,
created a spike in LNG demand and an increase in associated LPG
volumes available for export from Qatar. Similarly, Saudi Arabia
boosted crude exports in response to the Libyan crisis and this,
together with some domestic technical issues, caused them to
increase associated LPG exports. Tonne-mile demand was then further
enhanced by a wave of longer haul movements from the Middle East
into the West as a result of which owners were able push rates
upwards. Rates, however, weakened considerably again towards the
end of the year.
Smaller sectors (LGC, MGC, handysize) also fared well thanks to
growth in ammonia volumes moved by sea, augmented by additional
tonne-mile trading patterns and the improved LPG and petrochemical
gas trades across the various size ranges. The Clarksons teams
gained market share, particularly in our LPG commodity and
derivative brokerages where trading was particularly
challenging.
Of particular note in 2011 was Clarksons' decision to bring the
gas and LNG activities closer together, benefiting from several
synergies and common customers. Whilst the LNG activity has gone
through considerable structural change much was achieved and the
sector was able to make inroads against our competitors which we
expect to continue in 2012. Both the gas and LNG teams were further
strengthened with new hires and we have expanded our activity with
broking in Singapore where there will be further growth in
2012.
The outlook for gas remains positive in 2012, potentially on a
par or slightly better than 2011 in terms of volumes traded.
Regardless of what transpires, we are well placed to further
increase our market share thanks to the importance we have placed
on covering virtually every gas-related activity, from derivative
to asset, strongly supported by dedicated analysts and operations
staff. Overall the Clarksons gas team can report a very pleasing
year with substantial growth both in number of deals and market
share.
Sale and purchase
Secondhand
Despite a challenging trading backdrop, with lack of industry
finance and sharply falling prices in many markets, Clarksons' sale
and purchase team delivered a strong performance, by producing a
consistent result on the previous year.
Whilst our largest commitment remains in the larger fleets of
the dry and deep sea tanker sectors, the company has expanded the
focus and expertise across the group in order to deliver a highly
focused service to all our clients in the freight markets. This has
begun to bear fruit, most notably in the container, gas, and
offshore markets but also for 2012 we have expanded our team in the
specialised tanker sector.
Whilst overall transactional liquidity is significantly down in
the market, we have increased the number of sales of older tonnage,
including demolition, and this team is due to expand further in
2012. The overall performance of secondhand is in part down to the
team's ability to also close some of the more significant
transactions of the year. Teaming up with our financial division
has added a further piece to the service provided and together the
teams have worked well to close a number of transactions including
a major fleet transaction.
Whilst it is generally accepted that 2012 is going to be tough
for the shipping markets due to the continued oversupply of
vessels, we anticipate the downturn will continue to put downward
pressure on prices which have now returned to more historic levels,
which some clients see an opportunity to buy tonnage at a sensible
level in order to position themselves well for a turnaround on
freight.
We feel well placed to assist such clients and at the same time
feel confident of being able to benefit from the undoubted increase
in the sale of older assets and demolition activity that invariably
accompanies a depressed freight market.
Offshore
2011 saw a steady improvement on the chartering side across all
sectors of the offshore market with utilisation continuing on an
upward trend. This in turn has led to a slow increase in charter
rates and we anticipate 2012 to continue along the same vein.
Clarksons' offshore team has taken advantage of the optimism
that we are at the beginning of an upward cycle for offshore and
have had considerable success in the newbuilding market on both the
drilling and vessel sides driven by our dedicated teams in Houston
and London. This success is in an area where we intend to continue
to strengthen our dominance for 2012. With regards to the sale and
purchase part of the market, we have grown our teams in Singapore
and London and in a very illiquid market have managed to finalise a
significant portion of the competitive business that was available
in 2011. Our dedicated supply vessel chartering teams in Aberdeen
and Singapore have also grown, not just in terms of personnel, but
also revenue and have been successfully fixing vessels on behalf of
a number of major clients. We fully expect revenue to increase in
2012 as we not only increase market share, but also see charter
rates steadily improve.
Newbuilding
Following very low additions to the order book in 2009, 2010 saw
some recovery in orders at lower levels. As 2011 got going, the
onset of a deepening eurozone crisis and the increased stress from
a banking system that was arranging finance for a large order book
still to deliver, created a sudden change in the environment, and
the year ended with the global order book again lower than that of
2010. However, some areas of business were more positive and, where
they were, Clarksons managed to secure some significant
transactions in sectors including the higher value offshore and gas
markets.
2012 will remain challenging for shipyards, and this will lead
to some opportunities. Through our strong client base we believe we
are well placed to take full advantage of these opportunities.
Financial
Revenue: US$19.5m (2010: US$17.3m)
Segment result: GBP2.3m loss (2010: GBP4.3m loss)
Forward order book for 2012: US$1m* (At 31 December 2010 for
2011: US$3m*)
* Directors' best estimates of deliverable FOB
Futures broking
Against a backdrop of lower market values and a 5% reduction in
volumes in the dry bulk FFA business, Clarkson Securities has
continued to perform well, having increased market share and
reduced its costs.
Despite early 2012 market values falling in a very similar
pattern to 2011, we are confident that we have the teams in place
to take advantage of the activity levels that this volatile market
will continue to produce.
We aim to move our Asian team from Hong Kong to Singapore and
Shanghai in Q2 to further grow our share of the iron ore sector and
to service the increasing appetite amongst our Asian dry clients
for trading within the Asian daytime.
Financial services
At the start of 2011 there was a certain amount of optimism in
the banking markets and there appeared to be green shoots of
recovery with a return to increased activity. However, this was
brought to an abrupt halt at the end of summer as the European
banking crisis intensified.
Financing for ship lending is predominantly driven by European
banks. A number of these banks are now exiting shipping or
downsizing their operations and this will again change the
landscape of ship finance. Whilst the latter part of 2011 was
therefore challenging in the banking markets and ship finance
remains tight, this adversity has created a number of opportunities
for those in a position to take advantage.
For Clarksons, the measures taken in 2010 in respect of
reshaping our team has paid dividends, resulting in the closing of
a number of high profile debt transactions during the course of
2011. The team is now integrated into the broader Clarksons
business, supporting many of the activities across our broking
businesses and adding value to our broader client base.
Investment services
2011 was a year of strong momentum for Clarkson Capital Markets
(CCM). With existing offices in Dubai, Houston and London, CCM
recently opened its office in New York and is now a registered
broker dealer with the Financial Services Regulatory Authority
(FINRA) in the United States. The team has worked on a number of
mandates during the course of the year including the appointment as
adviser to CIDO Tanker Holding to advise on the sale of a fleet of
product tankers to Diamond S, as well as primary and secondary
fundraisings.
Although the global equity and debt markets continue to be
challenging for the maritime sector, CCM is cautiously optimistic
that its commitment to the global oil services market will result
in successful financings in 2012, particularly in the high yield
debt market. Moreover, CCM has a strong backlog of advisory
assignments with several sovereign wealth funds and private equity
funds, which, coupled with beneficial integration with other
divisions of Clarksons, should result in several successful
mandates.
CCM also issues investment research on a number of quoted
shipping and oil service companies. This is likely to expand
together with broking research to give the most informed view
available in the sector.
Support
Revenue: GBP10.8m (2010: GBP14.8m)
Segment result: GBP1.7m (2010: GBP0.5m)
Port services
Stevedoring
The performance of the stevedoring business in Ipswich continued
to exceed expectations during 2011. Grain volumes held up better
than initially predicted over the first six months of the year,
followed by a good harvest bolstering the tonnages for the second
half.
The business continues to expand its customer base, with support
from the majority of grain exporters in the UK. Grain volumes look
set to hold up well in the first half of the coming year and,
although harvest volumes are impossible to predict, the store
remains well placed and equipped to take advantage of any
opportunities that arise.
Agency
The agency business suffered from low grain volumes during the
first half of the year and the loss of one client from the offshore
renewables business following their failure at the end of 2010.
However, the grain business picked up significantly in the second
half of the year following a successful harvest, and the
indications are that volumes should continue to hold up into 2012
towards the next harvest.
In the offshore renewables sector, Clarkson Port Services (CPS)
increased market share, representing projects on three of the major
UK wind farm developments. The customer base has increased
markedly, thereby reducing debt exposure to individual
customers.
Over the course of 2011, the group acquired EnShip, which
provides the ability to offer agency services throughout Scotland,
and adds a valuable link between the offshore oil and gas sector
and the offshore renewables sector, which CPS have been working to
develop.
The CPS Tyne office opened at the beginning of December. The
office has enjoyed support from existing customers, and is already
involved in the grain and offshore business in addition to the Drax
coal import business.
Property services
Also included within the support segment are the revenues and
profits derived from property services. Clarkson PLC holds the head
lease of St. Magnus House in Lower Thames Street, London EC3, with
an unexpired term of three years. Clarksons occupies 32% of the
available space, with the remainder sublet on full commercial
rents. Clarkson PLC also owns the freehold of Hamilton Barr House
in Godalming, which is also let on a full commercial rent.
Research
Revenue: GBP8.1m (2010: GBP7.0m)
Segment result: GBP2.0m (2010: GBP1.5m)
Despite the difficult market, research revenues grew briskly
during 2011, reaching GBP8.1m (2010: GBP7.0m). This continued
growth was helped by the successful re-launch of the offshore
research business. During the year a range of new products were
marketed, including Offshore Intelligence Monthly, a series of
offshore structures registers, another series of oilfield
directories, and a range of oilfield maps published digitally from
the Clarkson global offshore geographic information system
database.
Clarkson Research Services (CRSL) focuses primarily on the
collection, validation, analysis and management of data about the
merchant shipping and offshore markets, though in recent years the
provision of customer service contracts to a range of large
corporate and institutional customers in the shipping market has
provided an important source of value-added. With extensive
databases using the latest information management technology, CRSL
is now established as one of a very small number of leading
information providers to the shipping and offshore markets.
CRSL derived its income from the following principal
sources:
Digital sales
Database product sales continued to grow, benefiting from the
expansion of Shipping Intelligence Network sales. This was
supplemented by the World Fleet Register which is now well
established as an authoritative source of information on the world
merchant fleet. During 2011 revenues were up by 17% on the previous
year.
Registers, directories and periodicals
CRSL produces weekly, monthly and quarterly publications,
available both in print and online, plus a range of registers and
directories covering the shipping market. In addition the
investment in the offshore database produced a range of new
offshore registers, directories and maps. Overall hard copy sales,
including advertising, increased by 5.5% and when digital
distribution of these books and periodicals is taken into account,
global distribution continues to grow. Shipping Intelligence
Weekly, our flagship product, marked its 20th anniversary in 2011
and remains as popular as ever.
Customer services
A specialist team concentrates on bespoke research for banks,
shipyards, engineering companies, insurers and other corporates,
including ship valuations. In recent years this has become a
significant growth area, and in 2011 sales, including valuations
and offshore research services, increased by 12%.
Offshore products
The launch was well timed to coincide with an active offshore
oil investment market and offshore sales increased by 29% during
the year.
Financial review
Profit before tax (before exceptional item): GBP32.2m (2010:
GBP32.4m)
Basic EPS (before exceptional item): 121.5p (2010: 125.4p)
Basic EPS (after exceptional item): 134.1p (2010: 125.4p)
Overview
At the beginning of 2011, expectations were that profit before
tax would be lower than 2010, reflecting a reduced forward order
book for invoicing in 2011 and GBP2m of one-off items adding to
profit in 2010. Against this background, to have produced profit
before tax and exceptionals in 2011 of GBP32.2m (2010: GBP32.4m) is
a pleasing result for the business.
The actions taken over the past 18 months including the
reduction of financing costs and exit from certain non-profitable
businesses, turned out to be timely, offsetting in part the fall in
operating profit that came from lower freight rates and a worsening
USD:GBP exchange rate.
During the year, the group recovered GBP3.2m of legal fees
previously expensed (2010: GBPnil). This amount has been treated as
an exceptional item.
It is also important to note that underlying profit before tax
includes the impact from recovery of some long outstanding debts
which had been fully provided for amounting to GBP0.7m, exchange
gains previously recorded in the currency translation reserve of
GBP0.8m and an IAS 19 pension credit of GBP1.2m. All of these items
are one-off in nature, and will therefore not recur in 2012.
Taxation
The group's effective tax rate in 2011 was 29.5%, an increase
from the 27.5% rate incurred in the previous year. This increase
reflects a greater overall proportion of profits being generated in
higher tax rate jurisdictions, and a bigger impact from
non-deductible expenses.
Earnings per share (EPS)
Basic EPS before exceptional was 121.5p (2010: 125.4p). After
the exceptional item the basic EPS was 134.1p (2010: 125.4p).
Dividends
The board is recommending a final dividend of 32p (2010: 30p).
The interim dividend was 18p (2010: 17p) which, subject to
shareholder approval, would give a total dividend of 50p (2010:
47p). In taking its decision, the board took into consideration the
2011 performance, the strength of the group's balance sheet and its
ability to generate cash and the forward order book. The dividend
is covered 2.7 times by basic EPS.
Acquisitions
In November 2011 Clarkson Port Services acquired EnShip Limited,
an Aberdeen-based shipping agency and marine industry logistics
specialist. In December 2011 Clarkson Norway acquired Boxton
Holding AS and Bridge Maritime AS, both Oslo-based shipbroking
businesses with extensive experience in sale and purchase,
newbuilding, leasing and project broking across all shipping
markets. These acquisitions gave rise to an increase in goodwill
and intangibles of GBP7.7m.
Recent amendments to accounting standards under IFRS have meant
that elements of the deferred consideration are to be deducted from
reported profits as an employee cost, on the basis that this is
linked to continued employment within the group. No amount was
charged to the income statement in 2011. It is estimated that the
2012 charge, which will be treated as an exceptional item, will be
GBP1.1m. Additionally, in 2012 there will be a charge for the
amortisation of intangibles acquired amounting to GBP0.5m.
Cash and borrowings
The group remains cash generative, after the increased levels of
tax, dividend and cash required for working capital. During the
year, bank borrowings were repaid in full, the remaining seed
capital previously assigned to our hedge fund activity was realised
and three acquisitions were made. The group ended the year with
cash balances of GBP132.9m (2010: GBP176.3m). During 2012 cash
payments relating to 2011 will be made including
performance-related bonuses. After deducting these items, net cash
and available funds amounted to GBP71.1m (2010: GBP62.5m, after
deducting the borrowings). The group maintains a multicurrency
revolving credit facility of GBP25m; there are no current plans to
draw down on this facility.
Balance sheet
Net assets at 31 December 2011 were GBP123.3m (2010: GBP116.4m).
There has been a further improvement in the quality of the balance
sheet whereby, before pension provisions, the group had GBP68.3m of
net current assets and investments less non-current liabilities as
at the end of 2011 (2010: GBP62.9m).
A detailed review of our businesses has demonstrated no need for
an impairment charge in 2011.
The group's pension schemes have a combined liability before
deferred tax of GBP6.6m (2010: GBP0.8m). Increases in pension
investment returns only partially offset the effects on the
liabilities of reduced discount rates.
Risk management
Credit risk
The group has an extensive client base, across all regions of
the world, and is exposed to credit-related losses from the
non-payment of invoices by these clients. The group mitigates this
risk by closely monitoring outstanding amounts, both locally and
globally, and by adopting a conservative approach to accounting for
bad debt. Uncertainty in freight markets continues to affect the
amount of debt that may be irrecoverable.
Liquidity risk
The group's policy is to maintain facilities at such a level
that they provide access to funds sufficient to meet all of its
foreseeable requirements. The strong generation of cash flow in the
business, combined with the available facilities and cash available
in the balance sheet, means that the group is well placed to fund
future developments of its global business.
Foreign exchange risk
The major trading currency of the group is the US dollar.
Movements in the US dollar relative to other currencies,
particularly sterling, have the potential to impact the results of
the group both in terms of operating results and the revaluation of
the balance sheet.
The group assesses the rate of exchange and non-sterling
balances held continually, and has predominantly sold in the spot
market during 2011, though some forward cover for 2012 and 2013 has
been taken.
Interest rate risk
During the year, all drawn down facilities were repaid and
consequently, there is, at the date of this report, no requirement
to cover interest costs.
Reputational risk
The group has built an enviable reputation in the market over
the past 160 years, and relies upon this to attract business from
all major participants in its markets. Clarksons protects against
reputational risks by promoting an ethical work environment and
providing training programmes where appropriate. The investment in
compliance, quality assurance and legal functions also act to
ensure that best practices are put in place throughout the
group.
Operational risk
Operational risks are where the group may suffer direct or
indirect losses from people, systems, external influences or failed
processes. The group continually reviews the systems in place to
mitigate against operational risk, and puts in place plans to
protect against such risks wherever they are significant and
practicable. Examples include business continuity plans, staff
contracts and IT security arrangements. The group also keeps in
place and under review appropriate levels of insurance cover.
Jeff Woyda
Finance director
Statement of directors' responsibilities
The statement of directors' responsibilities below has been
prepared in connection with the company's full Annual Report for
the year ended 31 December 2011. Certain parts of the Annual Report
have not been included in this announcement as set out in note 1 of
the financial information.
We confirm to the best of our knowledge:
-- the consolidated financial statements, which have been
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit of the group; and
-- the business and financial reviews include a fair review of
the development and performance of the business and the position of
the group, together with a description of the principal risks and
uncertainties that it faces.
This responsibility statement was approved by the board of
directors on 7 March 2012 and is signed on its behalf by:
Bob Benton
Chairman
Consolidated income statement
For the year ended 31 December
2011 2011 2011 2010
Before exceptional item Exceptional item After exceptional item
GBPm GBPm
GBPm
Continuing operations GBPm
Revenue 194.6 - 194.6 202.6
Cost of sales (3.4) - (3.4) (8.0)
========================= ================== ======================== --------
Trading profit 191.2 - 191.2 194.6
Administrative expenses (161.0) 3.2 (157.8) (160.1)
========================= ================== ========================
Operating profit 30.2 3.2 33.4 34.5
Finance revenue 1.0 - 1.0 0.8
Finance costs (0.2) - (0.2) (3.3)
Other finance revenue - pensions 1.2 - 1.2 0.4
========================= ================== ======================== --------
Profit before taxation 32.2 3.2 35.4 32.4
Taxation (9.5) (0.8) (10.3) (8.9)
========================= ================== ======================== --------
Profit for the year 22.7 2.4 25.1 23.5
========================= ================== ======================== --------
Attributable to:
Equity holders of the parent 22.7 2.4 25.1 23.5
========================= ================== ======================== --------
Earnings per share
Basic 121.5p 134.1p 125.4p
========================= ================== ======================== --------
Diluted 120.3p 132.8p 124.7p
========================= ================== ======================== --------
Consolidated statement of comprehensive income
For the year ended 31 December
2011 2010
GBPm GBPm
Profit for the year 25.1 23.5
Other comprehensive income:
Actuarial (loss)/gain on employee benefits
- net of tax (7.3) 2.9
Foreign exchange differences on retranslation
of foreign operations (0.9) 0.3
Foreign currency hedge - net of tax (0.7) (1.1)
====== ------
Total comprehensive income for the year 16.2 25.6
====== ------
Total comprehensive income attributable
to:
Equity holders of the parent 16.2 25.6
====== ------
Consolidated balance sheet
As at 31 December
2011 2010
GBPm GBPm
Non-current assets
Property, plant and equipment 8.4 8.7
Investment property 0.4 0.4
Intangible assets 40.3 32.7
Trade and other receivables 0.4 0.5
Investments 1.9 1.8
Deferred tax asset 12.1 12.0
======= --------
63.5 56.1
======= --------
Current assets
Trade and other receivables 37.5 28.4
Income tax receivable 0.6 0.5
Investments - 11.4
Cash and cash equivalents 132.9 176.3
======= --------
171.0 216.6
======= --------
Current liabilities
Interest-bearing loans and borrowings - (44.0)
Trade and other payables (95.5) (100.3)
Income tax payable (4.2) (5.3)
Provisions (0.2) (0.3)
======= --------
(99.9) (149.9)
======= --------
Net current assets 71.1 66.7
======= --------
Non-current liabilities
Trade and other payables (1.2) (1.1)
Provisions (1.6) (1.4)
Employee benefits (6.6) (0.8)
Deferred tax liability (1.9) (3.1)
======= --------
(11.3) (6.4)
======= --------
Net assets 123.3 116.4
======= --------
Capital and reserves
Share capital 4.7 4.7
Other reserves 37.5 40.0
Retained earnings 81.1 71.7
======= --------
Clarkson PLC group shareholders' equity 123.3 116.4
======= --------
Consolidated statement of changes in equity
For the year ended 31 December
Share Other Retained Total
capital reserves earnings equity
GBPm GBPm GBPm GBPm
Balance at 1 January 2011 4.7 40.0 71.7 116.4
========= ========== ========== ========
Profit for the year - - 25.1 25.1
Other comprehensive income:
Actuarial loss on employee benefit schemes
- net of tax - - (7.3) (7.3)
Foreign exchange differences on retranslation
of foreign operations - (0.9) - (0.9)
Foreign currency hedge - net of tax - (0.7) - (0.7)
========= ========== ========== ========
Total comprehensive (expense)/income
for the year - (1.6) 17.8 16.2
========= ========== ========== ========
Transactions with owners:
Net ESOP shares acquired - (1.4) - (1.4)
Share-based payments - 0.5 - 0.5
Tax on other employee benefits - - (0.2) (0.2)
Profit on ESOP shares - - 0.8 0.8
Dividend paid - - (9.0) (9.0)
========= ========== ========== ========
- (0.9) (8.4) (9.3)
========= ========== ========== ========
Balance at 31 December 2011 4.7 37.5 81.1 123.3
========= ========== ========== ========
Share Other Retained Total
capital reserves earnings equity
GBPm GBPm GBPm GBPm
Balance at 1 January 2010 4.7 40.6 51.5 96.8
--------- ---------- ---------- --------
Profit for the year - - 23.5 23.5
Other comprehensive income:
Actuarial gain on employee benefit schemes
- net of tax - - 2.9 2.9
Foreign exchange differences on retranslation
of foreign operations - 0.3 - 0.3
Foreign currency hedge - net of tax - (1.1) - (1.1)
--------- ---------- ---------- --------
Total comprehensive (expense)/income
for the year - (0.8) 26.4 25.6
--------- ---------- ---------- --------
Transactions with owners:
Net ESOP shares utilised - 1.4 - 1.4
Share-based payments - (1.2) (0.1) (1.3)
Tax on other employee benefits - - 2.2 2.2
Dividend paid - - (8.3) (8.3)
--------- ---------- ---------- --------
- 0.2 (6.2) (6.0)
--------- ---------- ---------- --------
Balance at 31 December 2010 4.7 40.0 71.7 116.4
--------- ---------- ---------- --------
Consolidated cash flow statement
For the year ended 31 December
2011 2010
GBPm GBPm
Cash flows from operating activities
Profit before tax 35.4 32.4
Adjustments for:
Foreign exchange differences (3.2) (1.5)
Depreciation of property, plant and equipment 2.3 2.9
Share-based payment expense 1.1 1.2
Loss on sale of property, plant and equipment 0.1 -
Impairment of investments - 0.6
Difference between ordinary pension contributions
paid and amount
recognised in the income statement (2.9) (1.6)
Finance revenue (1.0) (0.8)
Finance costs 0.2 3.3
Other finance revenue - pensions (1.2) (0.4)
(Increase)/decrease in trade and other
receivables (3.9) 0.3
(Decrease)/increase in bonus accrual (7.3) 13.6
Decrease in trade and other payables (1.6) (1.9)
Increase in provisions 0.1 0.3
======= -------
Cash generated from operations 18.1 48.4
Income tax paid (10.9) (6.1)
======= -------
Net cash flow from operating activities 7.2 42.3
======= -------
Cash flows from investing activities
Interest received 0.5 0.4
Purchase of property, plant and equipment (2.3) (1.3)
Proceeds from sale of property, plant and
equipment 0.4 4.6
Proceeds from sale of investments 10.7 -
Acquisition of subsidiaries (8.7) -
Cash acquired on acquisitions 1.8 -
Dividends received from associates and
joint ventures - 0.1
Dividends received from investments 0.5 0.4
======= -------
Net cash flow from investing activities 2.9 4.2
======= -------
Cash flows from financing activities
Interest paid (0.2) (1.6)
Dividend paid (9.0) (8.3)
Repayments of borrowings (43.6) (4.7)
ESOP shares acquired (1.5) -
======= -------
Net cash flow from financing activities (54.3) (14.6)
======= -------
Net (decrease)/increase in cash and cash
equivalents (44.2) 31.9
Cash and cash equivalents at 1 January 176.3 143.2
Net foreign exchange differences 0.8 1.2
======= -------
Cash and cash equivalents at 31 December 132.9 176.3
======= -------
Notes to the preliminary financial statements
1 General information
The preliminary financial information (financial information)
set out in this announcement does not constitute the consolidated
statutory accounts for the years ended 31 December 2010 and 2011,
but is derived from those accounts. Statutory accounts for 2010
have been delivered to the Registrar of Companies and those for
2011 will be delivered following the company's Annual General
Meeting. External auditors have reported on the accounts for 2010
and 2011; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under s498(2) or (3) Companies Act
2006.
2 Accounting policies
The financial information set out in this announcement is based
on the consolidated financial statements which are prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted for use by the European Union and complies with the
disclosure requirements of the Listing Rules of the UK Financial
Services Authority. The financial information is in accordance with
the accounting policies set out in the 2010 financial
statements.
3 Segmental information
Segmental information on continuing operations for revenue and
results is as follows:
Business segments Revenue Results
2011 2010 2011 2010
GBPm GBPm GBPm GBPm
Broking 163.6 169.6 35.9 41.3
Financial 12.1 11.2 (2.3) (4.3)
Support 13.9 18.0 1.7 0.5
Research 8.1 7.0 2.0 1.5
====== ------ ======= ------
197.7 205.8
Less property services revenue arising
within the group, included under
Support (3.1) (3.2)
====== ------
Segment revenue/results 194.6 202.6 37.3 39.0
====== ------
Head office costs (7.1) (4.5)
======= ------
Operating profit before exceptional
item 30.2 34.5
Exceptional item 3.2 -
======= ------
Operating profit after exceptional
item 33.4 34.5
Finance revenue 1.0 0.8
Finance costs (0.2) (3.3)
Other finance revenue - pensions 1.2 0.4
======= ------
Profit before taxation 35.4 32.4
Taxation (10.3) (8.9)
======= ------
Profit after taxation 25.1 23.5
======= ------
4 Exceptional item
In November 2011 Clarksons announced that the Court of Appeal in
London had decided to deny the claimant (Yuri Nikitin) leave to
appeal in the cases between Mr Nikitin and H. Clarkson & Co.
Limited (HCL), previously highlighted in the contingencies note in
Clarksons' financial statements.
HCL has been awarded costs relating to the matters appealed, and
has credited its profits with an amount of GBP3.2m that it has
received on account of those legal costs. The discussions related
to the costs of this matter are now concluded.
5 Taxation
The major components of the income tax charge in the
consolidated income statement are:
2011 2010
GBPm GBPm
Continuing operations:
Accounting profit at UK average standard rate of corporation tax of 26.5% (2010: 28%) 9.4 9.1
Expenses not deductible for tax purposes 1.7 1.6
Other adjustments (0.8) (1.8)
------ ------
Total tax charge in the income statement 10.3 8.9
------ ------
6 Earnings per share
Basic earnings per share amounts are calculated by dividing net
profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares in issue
during the year.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares in issue
during the year, plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
2011 2010
GBPm GBPm
Net profit attributable to ordinary
equity holders of the parent 25.1 23.5
========== ----------
2011 2010
Number Number
Millions Millions
Weighted average number of ordinary
shares 18.7 18.7
---------- ----------
Diluted weighted average number
of ordinary shares 18.8 18.8
---------- ----------
7 Dividends
The board is recommending a nal dividend of 32p (2010: 30p),
giving a total dividend of 50p (2010: 47p). This final dividend
will be payable on 8 June 2012 to shareholders on the register at
the close of business on 25 May 2012, subject to shareholder
approval.
8 Intangible assets
On 30 November 2011, the group acquired 100% of the share
capital of Enship Limited. On 16 December 2011 the group acquired
100% of the share capital of Boxton Holding AS and Bridge Maritime
AS. As a result of these acquisitions, an additional GBP6.6m of
goodwill has been recognised together with an additional GBP1.1m of
intangibles.
9 Investments
During the year, the company redeemed its investments in the
Clarkson hedge funds (2010: GBP11.4m).
10 Employee benefits
The company operates two defined benefit schemes: the Clarkson
PLC scheme and the Plowrights scheme.
As at 31 December 2011 the Clarkson PLC scheme had a deficit of
GBP4.1m (2010: GBP0.4m surplus). This amount is included in full on
the balance sheet as a non-current liability; deferred tax of
GBP1.0m (2010: GBP0.1m) has been provided on this amount. The
market value of the assets was GBP107.5m (2010: GBP106.4m) and
independent actuaries have assessed the present value of the funded
obligations at GBP111.6m (2010: GBP106.0m).
As at 31 December 2011 the Plowrights scheme had a surplus of
GBP1.1m (2010: GBP1.2m deficit). The 2011 surplus is not recognised
on the balance sheet as the scheme has no active members and the
principal employer does not have an unconditional right to a
refund. The 2010 deficit was recognised in full on the balance
sheet as a non-current liability. Deferred tax was provided on the
2010 deficit amounting to GBP0.3m. The market value of the assets
was GBP30.5m (2010: GBP25.5m) and independent actuaries have
assessed the present value of the funded obligations at GBP29.4m
(2010: GBP26.7m).
Triennial valuations for both schemes were prepared on the
position as at 31 March 2010. This resulted in a minimum funding
requirement on both schemes. Under IFRIC 14, the minimum funding
requirement on the Plowrights scheme of GBP2.5m has been recognised
as a non-current liability on the balance sheet. Deferred tax of
GBP0.7m has been provided on this liability.
11 Analysis of cash and borrowings
Foreign
31 December exchange 31 December
2010 Cash flow differences 2011
GBPm GBPm GBPm GBPm
Cash and cash equivalents 176.3 (44.2) 0.8 132.9
Current interest-bearing loans and borrowings (44.0) 43.6 0.4 -
============ ========== ============= ============
132.3 (0.6) 1.2 132.9
============ ========== ============= ============
Due to the high level of cash generation in the business, all
outstanding bank borrowings were repaid in full in February 2011.
At the same time, the multicurrency revolving credit facility was
reduced from GBP50m to GBP25m, and renewed for a term of three
years. There are no current plans to draw down on this
facility.
12 Contingencies
From time to time the group may be engaged in litigation in the
ordinary course of business. The group carries professional
indemnity insurance. There are currently no liabilities expected to
have a material adverse financial impact on the group's
consolidated results or net assets.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BDLLBLXFLBBX
Grafico Azioni Clarkson (LSE:CKN)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Clarkson (LSE:CKN)
Storico
Da Lug 2023 a Lug 2024