Clarkson (Horace) - Final Results
19 Marzo 1999 - 8:31AM
UK Regulatory
RNS No 3527e
HORACE CLARKSON PLC
19th March 1999
Horace Clarkson PLC, which is the holding company for Clarksons, one of the
world's largest shipbrokers, announces preliminary results for the twelve
months ended 31 December 1998.
* Turnover of US$47.0 million (#28.4 million), down from US$54.2 million
(#33.1 million) in 1997.
* Profit before tax of #2.0 million (1997: #3.2 million) including
exceptional gain on asset sales of #0.9 million.
* Effective tax rate down to 34.8% (1997: 40.7%).
* Tender Offer successfully carried out.
* Final dividend maintained at 2.5 pence per share, making a total for
the year of 4.0 pence (1997: 4.0 pence).
Michael Beckett, Chairman, Horace Clarkson PLC, commented:
"Despite the difficult market conditions experienced last year, particularly
in the dry bulk sector, we have maintained our pre-eminent market position in
all the major sectors in which we operate. The tanker division in particular
has maintained its level of commission earnings by increasing its market
share.
"A continuous effort has been made to contain costs, however we believe it is
essential to maintain critical mass in the core areas of our business so that
we are well positioned to take advantage of any economic upturn as and when it
arises."
19 March 1999
Enquiries:
HORACE CLARKSON PLC Tel: 0171 283 8955
Michael Beckett
Robert Ward
CHAIRMAN'S STATEMENT
INTRODUCTION
PROFIT BEFORE TAX for the year ended 31 December 1998 was #2.0 million (1997:
#3.2 million) and includes an exceptional gain on asset sales of #0.9 million.
Turnover was #28.4 million (1997: #33.1 million).
REVIEW OF OPERATIONS
Overview
TURNOVER in US dollars, in which most of our business is transacted, decreased
to US$47.0 million (#28.4 million), from US$54.2 million (#33.1 million),
reflecting lower freight rates.
Despite the difficult market conditions experienced last year, particularly in
the dry bulk sector, we have maintained our pre-eminent market position in all
the major sectors in which we operate.
Dry Cargo
THE YEAR SAW a weakening dry bulk market, following an already difficult 1997.
Average vessel earnings decreased for all size ranges with rates for all
sectors the lowest since the mid 1980's.
Trade in most seaborne dry bulk commodities decreased in 1998, with the Asia
economic crisis the largest single factor in the downturn. The Panamax and
Handymax fleets grew by about 2% and 3% respectively, while the Capesize fleet
decreased by some 2%.
These adverse market conditions had a severe impact on this division's
commission earnings.
Tankers
TANKER MARKET performance varied by sector. The year's average freight rates
for modern VLCC and Suezmax tankers decreased by 6% and 11% from 1997 levels.
A strong first half of 1998 was offset by weakness in the second half, as
agreements to restrict crude oil production took effect.
Lower than expected growth in short haul crude trades and 35 new vessels
delivering in 1998 reduced average Aframax earnings to about US$15,600 per day
from US$21,200 per day in 1997. In the product tanker sector, decreasing
demand and a large number of deliveries contributed to lower vessel earnings.
Chemical tanker rates decreased during 1998 due to reduced Asian demand and
fleet growth, while the stable gas carrier fleet kept 1998 average freight
rates near 1997 levels.
However, the effect of generally lower freight rates was offset by an improved
market share which largely compensated for reduced commission earnings.
Sale and Purchase
ALTHOUGH NEW bulk vessel contracting has fallen significantly between 1997
(50.6 million tonnes) and 1998 (30.4 million tonnes) the division has
maintained a high profile in the newbuilding sector where it has again been
particularly active placing a large number of new orders with Korean
shipbuilders.
Apart from demolition, which performed well, the secondhand market was
extremely disappointing in 1998 with volume almost halved from the previous
year.
The division maintained its position in the market but saw reduced commission
earnings due to the general inactivity in the market.
Futures
FREIGHT DERIVATIVES broking volume has increased by 25% in 1998 despite
deteriorating conditions in the dry bulk market. Our Biffex market share has
risen from 35% to 45%, a direct result of an assertive marketing campaign. We
now offer a futures broking service to clients across the Capesize, Panamax,
Handymax and Handy dry cargo sectors. We also cover tanker market
derivatives, mainly in the VLCC trades. Option volumes have increased during
1998 confirming our position as a dominant force in freight derivatives
broking.
Research and Publications
THIS YEAR SAW another important step forward for our research and publications
activities. Over the last seven years Clarkson Research Studies has grown
rapidly, extending its activities from the publication of registers to an
extensive range of market reports and electronic products as well as
consultancy.
Clarkson Research Studies now operates as the Research and Publications
division of H Clarkson & Company Limited and as an independent profit centre
of the group. This brings Research and Publications closer to the broking
divisions, whilst at the same time giving the division better access to the
information flowing through the business. It continues to provide shipping
clients with an informed and independent view of the market.
Overseas
OUR OVERSEAS companies made an increased contribution to operating profits. In
particular our Australian subsidiary, Austral Chartering (Pty) Limited,
continues to perform strongly. Seabrokers Inc. and Afromar (Pty) Limited, our
subsidiaries in the United States and South Africa, also made good
contributions.
Our offices in the Far East, which have significant exposure to the bulk cargo
trade, struggled in difficult market circumstances. However our long term
commitment to Clarkson Asia remains undiminished despite the adverse economic
conditions which presently affect these markets.
FINANCIAL
IN THE SECOND HALF of 1998, the group sold various fixed assets comprising a
long leasehold property in Westminster and various quoted investments. These
realised a profit of #861,000 which is shown as an exceptional item.
The overall tax rate for the year is 34.8% (1997: 40.7%), compared to the
current effective UK corporation tax rate of 31.0%. The exceptional profits
on fixed asset sales were offset by brought forward capital losses. The
group, however, continues to suffer a higher than standard rate of tax on
ordinary profits principally as a result of disallowable expenses in the UK
and overseas losses.
In July 1998 the company acquired 6,153,846 shares in a Tender Offer at a
price of 130 pence per share, at a cost of #8.4 million. The cost of the
Tender Offer has resulted in the fall in net cash and deposits at 31 December
1998 to #4.6 million (1997: #14.2 million).
PROSPECTS
CONTINUED LOW vessel earnings are expected for 1999, as the demand outlook
remains sluggish, while high levels of newbuildings will add to the industry
fleet. Asian recovery remains crucial for any demand-led recovery, however we
anticipate some improvement in the dry bulk market towards the end of the
current trading year. On the supply side, if vessel earnings remain low, the
high levels of scrapping seen in 1998 seem likely to continue.
In 1999 it is likely that Japanese shipbuilders will return to the export
market and in anticipation of this our Sale and Purchase division has entered
into an agreement with Sasebo Heavy Industries to market their products. This
new development is part of a more general policy to work with a number of
Japanese shipbuilders which we believe will be beneficial to all concerned and
comes at a time when the company is already placing a significant volume of
business with well established Korean shipyards.
A continuous effort has been made to contain costs, however we believe it is
essential to maintain critical mass in the core areas of our business so that
we are well positioned to take advantage of any economic upturn as and when it
arises.
DIRECTORS AND OFFICERS
IN SEPTEMBER 1998 Rex Harrington retired as a non-executive director. We
thank him for his service and wish him well for the future.
In May 1998 Martin Fairley retired as company secretary. Martin Fairley was
secretary of the company for over 20 years. He retires with our very best
wishes and our appreciation for the tremendous contribution he has made during
that time.
DIVIDEND
THE BOARD will be recommending a final dividend of 2.50 pence per share to be
paid on 25 June 1999 to shareholders on the register at the close of business
on 11 June 1999. This final dividend, together with the interim dividend paid
in October 1998, makes a total of 4.00 pence per share, the same as last year.
STAFF
THE BOARD wishes to place on record its thanks to all members of staff at home
and abroad, who have contributed to the company's continuing success.
Michael Beckett
Chairman
19 March 1999
HORACE CLARKSON PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1998
1998 1997
(Unaudited) (Audited)
#M #M
TURNOVER 28.4 33.1
PROFIT BEFORE TAXATION 2.0 3.2
Taxation (0.7) (1.3)
----- -----
PROFIT AFTER TAXATION 1.3 1.9
Dividend (0.6) (0.8)
----- -----
RETAINED PROFIT 0.7 1.1
----- -----
EARNINGS PER SHARE - basic 7.94p 9.07p
----- -----
DIVIDEND PER SHARE 4.00p 4.00p
----- -----
It is anticipated that full financial results will be posted to shareholders
on 1 April 1999.
The figures for the year ended 31 December 1998 are unaudited and do not
constitute full accounts within the meaning of S.240 of the Companies Act
1985. The figures for the year ended 31 December 1997 have been extracted
from the full accounts for that year which have been delivered to the
Registrar of Companies and on which the auditors have issued an unqualified
audit report.
END
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