TIDMCKN
RNS Number : 0386X
Clarkson PLC
14 November 2014
THIS ANNOUNCEMENT AND THE INFORMATION HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN OR INTO AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF
SOUTH AFRICA OR THE UNITED STATES OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
Clarkson PLC
Possible acquisition of RS Platou ASA
Clarkson PLC ("Clarksons" or the "Company" and together with its
subsidiaries, the "Group") announces that it is in discussions with
the board of RS Platou ASA ("Platou" and together with its
subsidiaries, the "Platou Group") regarding the possible
acquisition of all of the issued share capital of Platou.
Given the complementary activities, in terms of geographic
locations, operations and industry specialisation, the boards of
both Clarksons and Platou believe the enhanced offering of the
combined business positions the enlarged group as a leading
integrated global shipping and offshore group. Whilst discussions
regarding the combination of these two businesses continue, there
can be no certainty that any transaction will occur.
Under Listing Rule 5, Clarksons is required to provide certain
information regarding Platou to ensure that there is sufficient
information available to the public with regard to the proposed
transaction in order to avoid a suspension of the Company's shares.
As Platou is not subject to a public disclosure regime, the
information required under LR 5.6.15G is set out below.
Information on the Platou Group
Introduction
The Platou Group is a leading international broker and
investment bank focused on the offshore and shipping markets,
providing high value brokerage, financial and advisory services to
shipping and offshore companies globally. Established in Oslo,
Norway in 1936, Platou now operates from 18 offices located in key
global shipping and financial centres with approximately 370
employees.
Business overview
The Platou Group's business comprises four divisions: Offshore,
Shipbroking, Investment Banking and Project Finance. These core
services are complemented by a variety of research capabilities
including market reports and company specific research prepared by
the respective economic research groups within the Offshore,
Shipbroking and Investment Banking divisions.
Offshore
The Offshore division advises clients in the offshore oil and
gas industry on the chartering, sale and purchase and newbuild
construction of all major types of offshore vessels including
offshore support vessels, drilling units, sub-sea/construction
vessels and field development vessels. The Offshore division also
provides advisory and valuation services, market intelligence and
analysis, working closely with vessel owners, oil and gas
companies, shipyards, designers and maritime architects, class
authorities, investors and financial institutions.
For the year ended 31 December 2013, the Offshore division
generated total revenues of approximately NOK 355.6 million
(representing approximately 27.6% of the Platou Group's total
revenue for the year) and operating profit after bonuses of NOK
79.6 million (representing approximately 25.0% of the Platou
Group's total operating profit for the year).
Shipbroking
The Shipbroking division serves clients in the shipping industry
by providing broking services in connection with the chartering,
sale and purchase and newbuild construction of dry cargo,
container, tanker and more specialised vessels, as well as
providing research regarding the shipping industry through its
Economic Research department.
On 5 November 2014, the members of RS Platou LLP and RS Platou
Energy LLP (the "LLPs"), in both of which Platou holds a 51 per
cent. interest, resolved, among other things, to wind-up the LLPs
from 31 December 2014. The LLPs have agreed to transfer
substantially all of their assets to a new entity, established by
their respective existing members (other than Platou) (the "RS
Platou LLP Transaction"). In connection with the RS Platou LLP
Transaction, Platou has acquired the shares in Platou held by
certain of the existing members of the LLPs. Completion of the RS
Platou LLP Transaction is expected to occur on 31 December 2014,
subject to certain conditions. If completion of the RS Platou LLP
Transaction does not occur on 31 December 2014, the LLPs will
nonetheless be wound up in accordance with the resolutions above.
Consequently, in accordance with LR 5.6.15G, additional information
on the assets being transferred pursuant to the RS Platou LLP
Transaction has also been included below. The LLPs are based in
London and form part of the Platou Group's Shipbroking division
with a focus on specific sub-sectors of the shipping market.
For the year ended 31 December 2013, the Shipbroking division
generated total revenues of approximately NOK 295.3 million
(representing approximately 22.9% of the Platou Group's total
revenue for the year) and operating profit after bonuses of NOK
21.5 million (representing approximately 6.7% of the Platou Group's
total operating profit for the year). For the year ended 31
December 2013, the Shipbroking division included the trading
results of the businesses to be disposed of pursuant to the RS
Platou LLP Transaction. These businesses contributed total revenues
of approximately NOK 74.7 million (representing approximately 5.8%
of the Platou Group's total revenue for the year) and operating
profit after bonuses of NOK 20.8 million (representing
approximately 6.5% of the Platou Group's total operating profit for
the year), which in relation to the revenue figure includes
contracts which are remaining within RS Platou LLP in the amount of
US$2.0 million.
Investment Banking
The Investment Banking division offers a range of financial
advisory services to its global clients under licences in both
Norway and the USA. Specialising in the energy, shipping and oil
service sectors, the Investment Banking division offers services
including equity and fixed income sales and trading, equity and
credit research and corporate finance services focusing on the
Platou Group's core maritime sectors. The Investment Banking
division advises clients on a range of equity and debt capital
market and M&A transactions, and for the year ended 31 December
2013, the Investment Banking division participated in 31 equity and
debt capital market transactions and five M&A transactions with
a combined value of US$7.4 billion.
For the year ended 31 December 2013, the Investment Banking
division generated total revenues of approximately NOK 564.3
million (representing approximately 43.9% of the Platou Group's
total revenue for the year) and operating profit after bonuses of
NOK 200.6 million (representing approximately 62.9% of the Platou
Group's total operating profit for the year).
Project Finance
The Project Finance division specialises in the shipping,
offshore and real estate sectors. The Project Finance division
offers assistance to clients in the project development stage and
investor services through the life of the project by identifying
investment opportunities involving the purchase of shipping,
offshore or real estate assets and executing project financing
solutions on behalf of asset owners and financial investors. In
addition, the division provides ongoing corporate and management
services for its completed projects through its corporate
management department.
For the year ended 31 December 2013, the Project Finance
division generated total revenues of approximately NOK 71.5 million
(representing approximately 5.6% of the Platou Group's total
revenue for the year) and operating profit after bonuses of NOK
17.2 million (representing approximately 5.4% of the Platou Group's
total operating profit for the year).
Historical financial information relating to the Platou
Group
In accordance with Listing Rule 5.6.15G(1) set out below is the
relevant historical financial information on the Platou Group for
the years ended 31 December 2011, 31 December 2012 and 31 December
2013.
The following sections of the audited financial statements of
the Platou Group, as set out in the Platou Group's Annual Reports
for the years ended 31 December 2011, 31 December 2012 and 31
December 2013, which are available on Platou's website are hereby
incorporated by reference into this document.
http://www.platou.com/dnn_site/InvestorRelations/FinancialReportsandPresentations/Annualreports.aspx
Consolidated financial statements for the Platou Group for the
financial year ended 31 December 2013
The page numbers below refer to the relevant pages of the Platou
Group's Annual Report 2013:
Consolidated income statement page 42
Consolidated statement of financial page 44
position
Consolidated statement of cash page 46
flow
Consolidated financial statements for the Platou Group for the
financial year ended 31 December 2012
The page numbers below refer to the relevant pages of the Platou
Group's Annual Report 2012:
Consolidated income statement page 44
Consolidated statement of financial page 46
position
Consolidated statement of cash page 48
flow
Consolidated financial statements for the Platou Group for the
financial year ended 31 December 2011
The page numbers below refer to the relevant pages of the Platou
Group's Annual Report 2011:
Consolidated income statement page 42
Consolidated statement of financial page 44
position
Consolidated statement of cash page 46
flow
RS Platou LLP Transaction
For the year ended 31 December 2013, the business to be disposed
of pursuant to the RS Platou LLP Transaction contributed to the
Platou Group:
-- Total revenues of approximately NOK 74.7 million (2012: NOK
52.4 million and 2011: NOK 35.0 million);
-- Operating profit after bonuses of NOK 20.8 million (2012: NOK
12.4 million and 2011: NOK 3.9 million);
-- Operating cash flows of NOK 25.1 million (2012: NOK 4.0
million and 2011: NOK (23.3) million); and
-- A net movement in cash and cash equivalents of NOK 16.1
million (2012: NOK (10.0) million and 2011: NOK (27.3)
million).
As at 31 December 2013, the business to be disposed of pursuant
to the RS Platou LLP Transaction contributed to the Platou
Group:
-- Net assets of approximately NOK 24.1 million (2012: NOK 15.6
million and 2011: NOK 12.5 million); and
-- Total liabilities of approximately NOK 20.0 million (2012:
NOK 12.6 million and 2011: NOK 21.0 million).
The financial information on the business to be disposed of
pursuant to the RS Platou LLP Transaction is stated after the
elimination of inter-company items and is presented on an unaudited
basis.
Included within the figures above are revenues in relation to
contracts which are remaining within RS Platou LLP in the amount of
US$2.0 million for the year ended 31 December 2013 (2012: US$0.8
million and 2011: US$0.3 million).
Accounting policies
Clarksons and Platou both prepare their consolidated financial
statements in accordance with International Financial Reporting
Standards, as adopted by the European Union. In accordance with LR
5.6.15G no material differences in the accounting policies adopted
by Clarksons and Platou in the years presented in this announcement
have been identified, with the exception of the application of
IAS19 "Employee Benefits" ("IAS19") in the years ended 31 December
2011 and 2012.
Until the year ended 31 December 2012, Platou accounted for
actuarial gains and losses arising on its defined benefit pension
plans using the "corridor approach", while Clarksons recognised
them in full in the period in which they occurred. Both approaches
were allowable under IAS19. The treatment resulted in balance sheet
liabilities, amounting to NOK13.7 million as at 31 December 2011
and NOK12.6 million as at 31 December 2012 (amounts stated before
deferred tax), which were not recognised in the respective annual
reports of Platou.
After the introduction of the updated IAS19(Revised) "Employee
Benefits" ("IAS19(R)"), which no longer permits the "corridor
approach", the annual report of Platou for the year ended 31
December 2013 reflected the change in accounting policy, with all
actuarial gains and losses recognised in full in the consolidated
statement of comprehensive income in the period in which they
occurred. Adjusted comparative figures for year 2012 and the
opening balance sheet as at 1 January 2012 are included in the
annual report of Platou for the year ended 31 December 2013. In
Platou's annual report for the year ended 31 December 2011 under
IAS19(R) the profit before tax would have increased by NOK39.9m,
the total comprehensive income for the period would have been
reduced by NOK4.4m and the total equity reduced by NOK9.2m; these
amounts are unaudited.
Clarksons and Platou have historically recorded some
transactions in different financial statement line items in the
income statement. These differences include bad debt expenses and
foreign exchange. There is no difference in the overall profit
before tax other than differences arising from the pension
accounting policy noted above.
Key non-financial operating and performance information on the
Platou Group
In accordance with Listing Rule 5.6.15G(2), set out below is key
non-financial operating and performance information relating to the
Platou Group, as well as trend information for the period from 31
December 2013 to the date of this announcement.
Offshore
Historically, demand within the Offshore sector has been related
to revenues from oil and gas companies' cash flows and capital
investment in exploration and production ("E&P") activities.
E&P expenditure is estimated to have increased approximately
four-fold in the period from 2000 to 2013 resulting in
significantly increased offshore asset demand. In addition, during
this period, continuous technological development and the expansion
of E&P activities in deeper waters, further from shore and in
more remote areas, has contributed to strong demand for new
offshore assets with improved capabilities (for example ultra
deepwater drilling rigs and larger construction vessels and pipe
layers). Given the historical correlation between oil services
companies' revenues and E&P spending, demand for offshore
assets is expected to grow, albeit at a slower rate than in the
period from 2000 to 2013. This is largely a consequence of oil
prices remaining relatively stable since 2011, whereas E&P
costs have continued to rise. This has resulted in a change in the
mix and dynamics of revenues within the different sub-sectors of
the oil service sector as attention has shifted from exploration to
production activities. A clearer distinction between vintage and
modern offshore drilling assets is emerging as a result of
weakening markets. Modern jackup and floaters are currently
commanding utilizations of close to 93%, while vintage units have
seen utilizations drop to 87% and 83% respectively for jackups and
floaters. As the offshore rig market has softened, supply dynamics
in the offshore rig market has increased, including more cold
stacking and the removal of tonnage (both conversions and
scrapping). This is helping an eventual restoration of the supply
and demand balance of the offshore rig market. Whilst management
consider the longer term outlook to be positive, given the
continued increase in global energy demand, hire rates and values
are expected to be constrained in the short term as asset
under-utilisation is corrected.
Shipbroking
The general activity in the shipping industry, as well as
shipping freight rates, vary over time based on, among other
things, development in global and regional economic conditions,
fluctuations in energy and commodity prices, fluctuations in global
production, weather conditions, government laws and regulations and
political developments. The rate environment is typically
determined by the demand/supply balance that exists in each
individual sector. Historically, there has been a relatively close
relationship between the levels of international economic activity
and world shipping with the growth in global tonnage demand linked
to expectations with regard to global GDP growth. Following a sharp
decline in economic activity as a consequence of the global
financial crisis of 2008, there was an initial downturn in demand
and charter rates in the overall shipping industry weakened. Demand
for seaborne trade has recently returned, with the IMF forecasting
a return to global GDP growth of approximately 4 per cent. per
annum for 2015, which should support continued year-on-year growth
in seaborne trade.
On the supply side, many vessels ordered prior to 2008 were
delivered during the global financial crisis creating a significant
oversupply of available freight capacity, leading to today's
freight rate environment. Subsequently, the rate of global fleet
growth has slowed as a consequence of weaker freight markets, lower
asset values and tightness in the debt markets. In order to
mitigate the effects of reduced newbuild prices, effective shipyard
capacity has been significantly reduced since 2008 through
deploying fewer man-hours and outright facility closures. At
present, newbuild capacity remains constrained and this is expected
to limit the level of global fleet growth in the near term.
Meanwhile, growth in demand for tonnage and seaborne trade is
forecast to exceed global GDP growth and this is, in turn, expected
to result in a further improvement in fleet capacity utilisation
and a consequent rise in freight rates and asset values.
Whilst these cyclical factors provide a positive backdrop for
the broader shipping industry, rates and asset values within
different sub-sectors will vary depending on the supply and demand
factors specific to them. Despite positive momentum in the second
half of 2013, rates have remained volatile and a number of
sub-sectors were adversely impacted by macroeconomic and
geo-political concerns during the first half of 2014, resulting in
a decrease in newbuild orders. However, rates have experienced some
sharp volatility, which has historically coincided with markets
approaching a demand/supply balance. This backdrop, combined with
improved debt financing conditions, has meant that second hand
vessel prices and transaction volumes have remained ahead of prior
year levels. Management expects this positive trend to continue for
the remainder of 2014 and into 2015.
Investment Banking
Investment Banking activities are driven largely by conditions
in the global financial markets, in particular with respect to the
shipping and offshore sectors. Global financial markets have
experienced significant volatility following 2008, but improving
global economic stability and rising commodity prices have resulted
in strong demand among the shipping and offshore sectors over the
past two years. Within the shipping segment, the cyclical drivers
influencing certain cargo types and vessel uses have led to an
increase in investment in fleet expansion and consolidation, across
several sub-sectors, resulting in increased equity capital market
activity by companies to support this. Within offshore, the greater
complexity of resource extraction at certain fields (for example,
deep water) has resulted in a need for the rejuvenation of existing
fleets as well as new vessel specifications. In addition, high
utilisation levels and day rates have increased the attractiveness
of offshore assets to debt investors with a resultant increase in
debt capital market activity. In 2013 there was an increase in
equity capital issuance by shipping companies (both by volume and
value), compared with the prior year. These positive trends have
continued into 2014 and capital market new issuance levels are
expected to remain high as fleet investment and consolidation,
along with investor demand, broadens across a wider range of
shipping and offshore sub-sectors. However, whilst management
believes that the outlook for shipping and offshore related equity
and debt capital markets remains positive, given their reliance on
transactional revenues,
investment banking businesses within these sectors will
inevitably experience a degree of limited visibility and short term
volatility in revenue and earnings given the nature, timing and
size of specific transactions.
Project Finance
Activity levels within the Project Finance division are
determined by the ability to identify attractive shipping, offshore
and real estate investment opportunities as well as the
availability of private equity and debt funding to finance these
projects. During the downturn in the global shipping industry
between 2008 and 2012, the availability of bank finance for
shipping companies was significantly constrained and private equity
investors tended to focus investments into lower risk sectors,
leading to significantly reduced project finance activity levels
during this period. However, during 2013, market conditions for
both debt and equity financing for projects within the division's
focus areas of shipping, offshore and real estate improved, leading
to a general trend towards increased project finance activity.
Activity levels have continued to improve into 2014 and management
expects this momentum to be sustained, given the changes in the
renewed debt market and the growing demand for alternative
financing structures from asset owners. The real estate market in
Norway responded positively following the financial crisis,
supported by improving availability of debt financing and an
increasing inflow of foreign equity investment. Overall, management
believes the real estate market outlook remains positive and
project finance activity levels are expected to remain high across
commercial, conversion and residential projects.
Platou Group trading since 31 December 2013
In accordance with Listing Rule 5.6.15.G(2), set out below are
the current trading and prospects of the Platou Group for the
period from 31 December 2013 to the date of this announcement.
The overall revenue performance of the Platou Group's divisions
during 2014 discussed below, together with the broadly constant
year-on-year operating costs, is such that to date total Platou
Group revenue and operating profit after bonuses are encouraging
and in line with the expectations of Platou's board of
directors.
Offshore
The Offshore division has experienced a shift in activity levels
and revenue dynamics across its market sub-sectors during 2014.
Within newbuild, orders for offshore rigs have fallen whilst
ordering activity for offshore support vessels is at similar levels
to the previous year. Newbuild prices for both offshore rigs and
offshore support vessels are broadly flat, when compared with the
same period in 2013, whilst second hand market values for rigs and
offshore support vessels have experienced a decline in the current
year as have transaction volumes, driven by lower levels of capital
investment by companies in the oil and gas sector. This reduced
demand has also impacted hire rates and led to a shift in
chartering mix from longer term fixings to spot business. Levels of
business booked within Offshore have been mixed across the
different sub-sectors during 2014 although at a divisional level
this is below the same period in 2013. Whilst business booked in
relation to rig activity has been reduced in the first half of
2014, business booked relating to offshore support vessels has been
higher than in the same period in 2013, benefiting from Platou's
growing international offshore vessel teams. This overall decline
in new business revenues has been mitigated in part by an increased
level of revenue recognised in respect of the forward book.
Shipbroking
Shipbroking newbuild orders placed with yards, in particular in
the dry bulk and tanker markets, have increased in the first
quarter relative to the same period in 2013 but are down from the
peak of the fourth quarter of 2013. Newbuild prices have increased
over the course of 2014 although at a more modest rate than during
the second half of 2013. Within chartering, rates in the dry bulk
and tanker markets both started the year relatively strongly but
fell back during the second quarter. Dry bulk, however, is showing
a firmer trend in the third quarter. In addition the Platou Group
has increased activity levels within chartering with the
consequence that chartering revenues are higher year-on-year.
Second hand vessel values increased in the first half of 2014,
despite the short term rate fluctuations, and transaction volumes
are also ahead of the same period in 2013. As a result, the
division's Oslo-based operations have performed strongly to date
during 2014, recording an increased level of business booked
relative to the same period in 2013. Levels of business booked
within the division's international operations, which include RS
Platou LLP, are significantly lower than in the same period in
2013, due to the impact of several significant newbuild mandates
that were secured in the first half of 2013, such that business
booked by the division as a whole has been lower in 2014 year to
date than in the same period in 2013. However, in respect of the
forward book, revenues recognised in the current year relating to
historically secured business are expected to be ahead of those
recognised in the same period in 2013 due to the timing impact of
the high level of business booked in prior years.
Investment Banking
In Oslo and New York, capital markets activity, related to the
shipping and offshore industries, has remained strong in 2014 with
overall trading volumes higher than those during the same period in
2013. As a consequence, secondary trading commissions in respect of
debt and equity securities are ahead of the prior year. Within
corporate finance, transaction volumes in the first half of 2014
were lower year-on-year although this is against a very active
comparative period in 2013. Whilst absolute transaction volumes and
values were down on the first six months of 2013, the division has
continued to diversify its investment banking client base. The mix
between equity and debt capital market activities has remained
fairly consistent over the first half of 2014 and management
expects this balance to remain broadly stable for the remainder of
the year.
Project Finance
The Project Finance division has performed well during 2014 and
is slightly ahead of the same period in 2013. Within shipping, the
division successfully closed a number of transactions in the first
half of 2014. In addition, the Project Finance division completed
an increased number of real estate finance transactions in the
first six months of 2014 compared with the same period in 2013.
Revenues from corporate management fees have remained relatively
flat, compared to the same period in the prior year, although it is
expected that these revenues will decline in the short term as a
number of older projects reach conclusion before revenues from new
projects begin. The market conditions for both shipping and real
estate projects, including the improved availability of attractive
debt financing packages, remain supportive and the division has
several transactions in advanced stages of negotiation.
Other
On 1 September 2014, Platou completed the sale of its 50 per
cent. interest in M62 Holding AS, a vehicle established to become
the holding company of the Platou Group's corporate office building
in Oslo which is currently under construction, for a cash
consideration of NOK 22.6 million. As a result, Platou expects to
recognise a gain of approximately NOK 22 million in the current
financial year.
Confirmations
In accordance with Listing Rule 5.6.15G(3), the Directors
consider that this announcement contains sufficient information
about the business to be acquired to provide a properly informed
basis for assessing its financial position.
In accordance with Listing Rule 5.6.15G(4), the Directors
confirm that the Company has made the necessary arrangements with
the vendors of Platou to enable it to keep the market informed
without delay of any developments concerning Platou that would be
required to be released were Platou part of Clarksons.
Enquiries:
Hudson Sandler 020 7796 4133
Andrew Nicolls
IMPORTANT NOTICE:
The information contained in this announcement is not for
release, publication or distribution to persons in Australia,
Canada, Japan, the Republic of South Africa or the United States or
in any jurisdiction where to do so would breach any applicable law.
No public offer of securities is being made by virtue of this
announcement.
This announcement has been prepared for the purposes of
complying with the applicable law and regulation of the United
Kingdom and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any
jurisdiction outside of the United Kingdom.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward
looking statements include all matters that are not historical
facts and involve predictions. Forward-looking statements may and
often do differ materially from actual results. Any forward-looking
statements reflect the Group's current view with respect to future
events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Group's or the
Platou Group's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in
which it operates. Forward-looking statements speak only as of the
date they are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, the Company
disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements in this announcement that may occur due
to any change in its expectations or to reflect events or
circumstances after the date of this announcement.
Certain figures contained in this announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
Except as explicitly stated, neither the content of the Group's
nor Platou Group's website, nor any website accessible by
hyperlinks on the Group's or Platou Group's website is incorporated
in, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
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