TIDMCKN
RNS Number : 9223R
Clarkson PLC
06 March 2023
6 March 2023
Clarkson PLC ('Clarksons') is the world's leading provider of
integrated shipping services. From offices in 24 countries on six
continents, we play a vital intermediary role in the movement of
the majority of commodities around the world.
Preliminary results
Clarkson PLC today announces preliminary results for the 12
months ended 31 December 2022.
Summary
-- Record underlying profit before taxation(*) of GBP100.9m
(2021: GBP69.4m), an increase of 45.4%
-- Underlying earnings per share* increased 51.1% to 250.3p (2021: 165.6p)
-- Particularly strong performance in the Broking segment
-- Full year dividend of 93p, giving rise to a 20(th) consecutive year of dividend growth
-- Forward order book for invoicing in 2023 was US$216m (2022: US$165m), an increase of 30.9%
-- Strong balance sheet with free cash resources(*) of GBP130.9m
(2021: GBP92.3m) available for future investment
Year ended Year ended
31 December 31 December
2022 2021
Revenue GBP603.8m GBP443.3m
Underlying profit before taxation* GBP100.9m GBP69.4m
Reported profit before taxation GBP100.1m GBP69.1m
Underlying basic earnings per share* 250.3p 165.6p
Reported basic earnings per share 247.9p 164.6p
Dividend per share 93p 84p
* Classed as an Alternative Performance Measure ('APM'). See
'Other information' at the end of this announcement for further
information.
Andi Case, Chief Executive Officer, commented:
"2022 was a record year for Clarksons, and I thank all my
colleagues across every area of the business for their hard work,
dedication and commitment. This performance, driven by our
client-focused culture and consistent strategy of investing in the
best teams across all global segments, data, intelligence,
analytics, and the best tools for trade, has enabled us to deliver
a 20(th) consecutive year of dividend growth for our
shareholders.
"Whilst the global geo-political outlook for 2023 and beyond
remains uncertain, the green transition is driving significant
activity in our industry. This, coupled with a supply and demand
balance that will create meaningful supply-side constraints
supporting the market, and our strong forward order book, gives us
confidence in the outlook for Clarksons."
Enquiries:
Clarkson PLC:
Andi Case, Chief Executive Officer
Jeff Woyda, Chief Financial Officer & Chief Operating
Officer 020 7334 0000
Camarco:
Billy Clegg 020 3757 4983
Jennifer Renwick / 4994
Alternative performance measures ('APMs')
Clarksons uses APMs as key financial indicators to assess the
underlying performance of the Group. Management considers the APMs
used by the Group to better reflect business performance and
provide useful information. Our APMs include underlying profit
before taxation and underlying earnings per share. An explanation
and reconciliation of the term 'underlying' and related
calculations are included within the 'Other information' section at
the end of this announcement. All APMs used within this
announcement are denoted by an asterisk (*).
About Clarkson PLC
Clarkson PLC is the world's leading provider of integrated
services and investment banking capabilities to the shipping and
offshore markets, facilitating global trade.
Founded in 1852, Clarksons offers its diverse and growing client
base an unrivalled range of shipbroking services, sector research,
on-hand logistical support and full investment banking capabilities
in all key shipping and offshore sectors. Clarksons continues to
drive innovation across its business, developing digital solutions
which underpin the Group's unrivalled expertise and knowledge with
leading technology.
The Group employs over 1,800 people in 56 different offices
across its four divisions and is number one or two in all its
market segments.
The Company has delivered 20 years of consecutive dividend
growth. The highly cash-generative nature of the business,
supported by a strong balance sheet, has enabled Clarksons to
continue to invest to position the business to capitalise on
opportunities in its markets.
Clarksons is listed on the main market of the London Stock
Exchange under the ticker CKN and is a member of the FTSE 250
Index.
For more information, visit www.clarksons.com
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as it forms part of domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018, as amended (together, 'MAR'). Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
Chair's review
Overview
As I reflect at the end of my first year as Chair, various
observations spring to mind as to what makes Clarksons such an
exceptional business. First is the quality, energy and focus of all
of our employees worldwide, without whom the record results for
2022 we have delivered would not have been possible. Second is our
culture and values, which underpin the way we operate and behave
and which are reflected in our many strong and enduring client
relationships. Finally, and crucially, is our relentless focus on
investing in the future of our Company, be that through, for
example, the green transition, our continued investment in Sea/ and
the training of our people to ensure best-in-class service to our
clients.
2022 was a remarkable year for the shipping industry driven by a
number of significant "x" factors. As countries were at differing
stages of recovery from COVID-19 and China experienced a second
lockdown, congestion and disruption were already the key issues in
shipping. Then Russia's invasion of Ukraine caused another wave of
wide-reaching consequences, including sanctions and significant
changes in both commodity flow and availability, issues not just
for shipping but for the wider economy as well. The energy and cost
of living crises, combined with inflation and higher interest
rates, added further challenges to the global economy, and to the
asset-heavy shipping industry.
Against this backdrop, the Group continued to thrive, a
testament to both the strategy and the teams within Clarksons. The
decarbonisation journey, which is both complex and important for
shipping, is now well underway but will take time to complete.
Transition will require a number of different solutions,
significant investment and the provision of finance to the
industry. Clarksons is focused on ensuring we can add value within
this process.
We believe our long-term strategic commitment to continuing to
invest in our teams, products and services will continue to reap
dividends as the market evolves. In addition to extending the depth
and breadth of our broking teams, we continue to invest in
high-quality data within Clarksons Research, Sea/ - our maritime
technology platform, Support covering ports services and supplies,
and the Financial division sourcing financing across shipping,
offshore, renewables and real estate.
Results
I am delighted to report that underlying profit before taxation*
was GBP100.9m (2021: GBP69.4m) with underlying basic earnings per
share* of 250.3p (2021: 165.6p). Reported profit before taxation
was GBP100.1m (2021: GBP69.1m) with reported basic earnings per
share of 247.9p (2021: 164.6p).
Free cash resources* as at 31 December 2022 were GBP130.9m
(2021: GBP92.3m).
Dividend
We are extremely proud to confirm that this will be our 20th
consecutive year of dividend increases. The Board is recommending a
final dividend for 2022 of 64p (2021: 57p). Combined with the
interim dividend in respect of 2022 of 29p (2021: 27p), the
resulting full year dividend in respect of 2022 results is 93p
(2021: 84p). The dividend will be payable on 26 May 2023 to
shareholders on the register on 12 May 2023, subject to shareholder
approval.
People
I was delighted to take up the role of Chair on 2 March 2022 and
I greatly appreciate the generosity of my colleagues, who have
committed significant time and energy to immerse me in all aspects
of Clarksons' business. I have been hugely impressed by the energy,
agility and future-focused strategic activity across all
departments.
The enthusiasm and commitment to co-ordinated support of our
clients across all sectors and at all levels is what I believe
makes Clarksons so highly regarded by clients looking for
market-leading intelligence and insights across the industry. Our
continued focus is on expanding our global footprint and service
offering, and adding to what is the very best talent in the sector
across all divisions. I thank all our colleagues for their
exceptional efforts this year.
Giving back
It is of the utmost importance to us that Clarksons is a force
for good across our global community, and we ensure that both our
colleagues and the communities we are part of around the world are
valued, respected and supported. To that end, this year we have
extended the activities of our Green Transition team in every area
of the business, helping our clients to reduce the impact of
shipping on the environment, and reinforced our commitment to the
activities of The Clarkson Foundation to create positive change for
those in need around the world. The Clarkson Foundation has, for
example, made a tangible difference by donating to charities that
provided clean water facilities and hygiene education to five
schools in Kenya and funded hot meals over the Christmas period to
some experiencing homelessness in London.
Board
Peter Backhouse retired from the Board this year following the
completion of his nine-year tenure as an independent Non-Executive
Director. I would like to thank Peter for his outstanding service
to Clarksons. His perspective, insights and counsel have been
greatly valued as Clarksons has steered a successful course through
a period of considerable volatility, and we wish him the very best
for the future.
Outlook
We start 2023 confident in the outlook for Clarksons. The
successful execution of our long-term strategy to be best-in-class
across all segments of shipping, offshore and renewables means that
we are optimally positioned for what we believe will be a sustained
period of growth in the industry.
Whilst there are considerable uncertainties in the geo-political
landscape, we are confident that supply-side constraints brought
about by years of underinvestment and the pressure on shipowners
and charterers to decarbonise, will provide significant
opportunities for Clarksons long into the future.
We will continue our strategy of investing in the best people
and opportunities across the globe to ensure that we remain at the
very forefront of the industry, delivering growth for all
stakeholders.
Finally, I would like to thank every employee in every office of
the Group for their commitment and hard work during the past year.
It is truly appreciated.
Laurence Hollingworth
Chair
3 March 2023
Chief Executive Officer's review
2022 was a record year for Clarksons, and I thank all my
colleagues across every area of the business for their hard work,
dedication and commitment. Our performance this year is the result
of our consistent strategy, (i) to be best-in-class across each and
every vertical within shipping and offshore, (ii) to be
best-in-class in each geographic region globally, (iii) to have the
best data, intelligence and analysis, (iv) to invest in our teams
and the best tools for trade, (v) to have an integrated business
model meeting all the needs of our extensive client base, and most
importantly (vi) to add value to our clients and put their needs at
the heart of all that we do. This strategy has of course been
underpinned by our growing team of professionals and experts, and I
am proud to work alongside the very best in the industry.
We have for some time been signalling the evolution in maritime,
which we are now seeing and benefiting from. Demand and supply are
in constant motion; there is uncertainty of technology for the
green transition; fleet profiles are the oldest for over a decade;
the order book of new ships is historically low compared to the
overall fleet in most of the larger commodity verticals; financing
availability is tight; and interest rate rises together with
inflation are impacting on the cost of building. It is clear to see
there are still significant constraints on the scale of ship
building.
But without question, the green transition is the biggest change
in shipping and the drivers for change in our industry are
significant. Regulators, charterers, industry lobby groups and the
consumers of products shipped are demanding change in the
greenhouse gas emissions of shipping. The needs of participants to
predict, record and analyse emissions data in order to reduce their
footprint on an ongoing basis has never been higher, which means
that the services offered by our broking, research and technology
teams are in high demand. Importantly, our Green Transition
consultancy, linked with the intelligence offered by our execution
capability in newbuildings, is helping our clients drive change.
This activity will significantly alter the specifications of
vessels on the water and the value drivers in vessel chartering,
where emissions are becoming a key metric as to which vessel to
select.
The order book is increasingly comprised of alternate-fuelled
ships with evolving designs. A full understanding of all elements
of this transition is a key component of our service in helping
clients meet the needs of the industry. Nevertheless, overall the
newbuild order book is flat, with most of the activity in 2022 in
containerships, car carriers and gas carriers. Elevated newbuilding
prices, limited berth availability and uncertainty around fuelling
technology contributed to relatively lower order volumes,
increasing the likelihood of meaningful supply side constraints
over the coming years in many verticals. Further constraints arise
from environmental pressures, which are creating more scrutiny and
control over the existing fleet, impacting and constraining speed
and emissions.
Over the last few years there has been an increased need to
focus on Know Your Client ('KYC') and compliance with global
sanctions. We have invested in this area and we believe that this
has become increasingly important to clients following the onset of
the Russia-Ukraine conflict, which has created complex challenges
as businesses need to protect their reputations while complying
with sanctions. Our clients want to understand the implications of
dealing with all parties within their entire network, and their
recognition that wilful ignorance is not acceptable means that they
value Clarksons' market-leading systems and commitment to
transparency.
Broking
The maritime industry experienced a diversity of trends across
its major segments during the year. Major global disruption,
including the dislocation of trade brought about by the onset of
the Russia-Ukraine conflict and the continued impact from the
COVID-19 pandemic, tightened markets and impacted, not only
seaborne cargos, but also pipelines. This led the ClarkSea index to
increase 30% to an all-time high, before coming off in Q4 on the
back of a slowing world economy, inflation and an easing of
COVID-19-related port congestion. Indeed, these global economic and
geo-political stresses have put immense pressure on the shipping
industry to rapidly change, to ensure food and energy reach people
in need, irrespective of the changes in supply chains and sanctions
which have massively changed shipping routes and participants able
to transact with each other. Our ability to understand the changing
situation and react quickly has stood us in very good stead during
the period.
Against this backdrop, the Broking division, which has a
market-leading position in all key shipping sectors, had a
particularly strong year as volume and market share gains aligned
with high utilisation rates, driving higher freight rates. Despite
the rate environment not reaching record levels, the broking teams
broke all previous highs, giving us significant confidence for the
sector as supply-side constraints and inflationary pressures
support higher prices going forward.
The offshore oil, gas and renewables market also had a year of
change resulting in a notably stronger year, driven by increased
demand for energy in the short term and the drive towards energy
security. The team is seeing significant opportunities for assets
as nations and businesses seek to reduce their dependence on
Russian natural resources. Moreover, the long-term trend towards
renewable energy and its importance in the energy basket is driving
our continued investment in renewables across all areas of the
business.
Tankers, specialised products and gas markets, covering LNG, LPG
and other petrochemical gases, have had a strong year and continue
to perform well with good market fundamentals for the future. The
dry bulk market was also strong for much of the year, but freight
rates have come off more recently due to short-term factors which
we believe will reverse as the year progresses. The container
sector started off the year at record levels, but faced a sharp
decline in the second half due to a decrease in trade volumes and
congestion unravelling.
The S&P team had a very successful year as demand for
vessels was high, despite there being a significant volume of
transactions with respect to the much talked about shadow fleet
which was off limits to our teams.
Overall, segmental profit before taxation from Broking was
GBP117.6m, up GBP44.0m over the year, with a margin of 23.7%.
Financial
The Financial division faced tougher conditions in 2022 with an
adverse macro-economic and geo-political environment leading to a
pause in capital raising. Several transactions which were due to be
completed in the second half of 2022 are now expected to close in
the first half of 2023, and indeed many have already been
completed, or are close to being completed, at the time of
writing.
Our areas of focus in shipping, metals and mining, offshore oil
services and renewables means that our pipeline remains strong.
Whilst the macro-economic outlook for 2023 remains uncertain, we
expect to benefit as a number of large banks and other competitors
have left these markets and there remains pent-up demand for
capital.
Our project finance teams across shipping, offshore and real
estate have also continued to perform well.
Overall, our Financial division produced a segmental profit
before taxation of GBP7.8m in 2022 compared with GBP13.3m in
2021.
Support
The Support division had a very strong 2022 as our agency,
supplies, customs clearance and freight forwarding businesses all
benefited from the increasing focus on offshore renewables, as well
as increased activity through ports as COVID-19 congestion has
eased. We have, since the year-end, continued our investment in
this growth segment and I was delighted to recently announce
investment in DHSS, a renewables-focused port services business
based in mainland Europe.
The Support division produced a segmental profit before taxation
of GBP5.0m and a 12.8% margin in 2022 (2021: GBP3.3m and
11.1%).
Research
The performance of the Research division is testament to the
depth and quality of Clarksons' research and the high regard in
which it is held by clients. Its products have seen significant
growth from increased breadth and depth, particularly extensive
evolution in data and intelligence relating to the green transition
in shipping and the overall energy transition.
The division increased segmental profit before taxation by 14.8%
to GBP7.0m (2021: GBP6.1m).
Sea/
We welcomed Peter Schrøder as CEO of Maritech in April 2022 and
are delighted with client interest in, and adoption of, Sea/, the
intelligent platform for fixing freight. During the last year we
have evolved the management team, increased sales and client
adoption and acquired two businesses - Setapp, a business expert in
maritime software product development, and Chinsay, a contract
management platform particularly focused on the dry bulk sector
which integrates well into Sea/ and creates scale alongside
Sea/contracts. This business remains a key area of strategic focus
with 2023 being a pivotal year in rolling out Sea/ across all areas
of the dry bulk market and into other sectors as well.
Outlook
Whilst the global geo-political outlook for 2023 and beyond
remains uncertain, the strength of business and balance between
supply and demand, supported by our record level of forward order
book, gives us confidence in the outlook for Clarksons.
The green transition is an area of key importance for Clarksons
as clients recognise the significant steps they need to take
towards decarbonisation. Increased environmental regulation and
societal pressures will create opportunities across all our
divisions for many years to come.
We will continue to invest in our people, technology and
businesses across all segments, to ensure we have the expertise and
insights to provide the best advice, execution, data and technology
in the industry.
Regardless of the challenges of the global markets in recent
years, we have not deviated from our strategy of investing for
growth, ensuring that the breadth, depth and quality of our
ever-expanding offering maintains us at the forefront as we enter
this new phase of shipping.
Andi Case
Chief Executive Officer
3 March 2023
Financial review
Revenue: GBP603.8m (2021: GBP443.3m)
Underlying profit before taxation*: GBP100.9m (2021:
GBP69.4m)
Reported profit before taxation: GBP100.1m (2021: GBP69.1m)
Dividend per share: 93p (2021: 84 p)
Financial performance
2022 was another record year for the Group. Revenue increased
36.2% to GBP603.8m (2021: GBP443.3m) and underlying profit before
taxation* increased by 45.4% to GBP100.9m (2021: GBP69.4m).
The Broking division has been the main driver for this growth,
continuing to benefit from the long-term strategy to increase our
global footprint and be best-in-class across every segment of
shipping and offshore. As we went into 2022, the low level of order
book as a percentage of the world fleet combined with the high
utilisation highlighted last year, created the backdrop for
stronger freight rates and asset prices in many verticals. Overall,
Broking generated a segmental profit before taxation of GBP117.6m
in the year (2021: GBP73.6m), with an increased margin of 23.7%
(2021: 21.6%) driven by strong performances in dry bulk,
specialised and offshore, together with a much-improved performance
in tanker markets.
The Financial division experienced tougher markets compared to
2021, generating a segmental profit before taxation of GBP7.8m and
margin of 15.7% (2021: GBP13.3m and 23.8%), reflecting more muted
activity in capital markets across shipping, metals and minerals
and renewables, and more sporadic deal flow in shipping, offshore
and real estate project finance, particularly in the second half of
the year. The Support and Research divisions experienced good
revenue and profit growth, with our port services business
continuing its steady improvement following the COVID-19 pandemic,
and Clarksons Research benefiting from the investment in enhancing
its digital products.
The Group incurred underlying administrative expenses* of
GBP481.2m (2021: GBP355.7m) in the year, an increase of 35.3%,
largely due to an increase in variable remuneration as a result of
the improved business performance. Within these expenses, central
costs unallocated to business segments increased to GBP36.6m (2021:
GBP25.2m), reflecting an increase in variable remuneration from
higher profits, further investment into central IT systems,
website, branding and people, and increased Sea/ technology
amortisation costs as the platform increases maturity of use. Sea/
costs on a cash basis have also increased slightly from 2021 with
additional investment in management and sales capabilities to
support the growing business and fewer costs being capitalised in
2022 than in previous years.
Acquisitions
During the first half of the year, the Gibb Group acquired PPE
Suppliers Limited for GBP0.2m, broadening the reach of our tools
and supplies offering within the Support segment. The Group
completed two acquisitions under the Maritech brand during the
second half of the year: Chinsay, a business which enhances our
capabilities and client base within the dry cargo contract
management space, and Setapp, a business expert in maritime
software development, with a view to further growing and developing
Sea/. Chinsay was acquired for a total consideration of US$3.2m and
Setapp for EUR3.0m.
Acquisition-related costs include GBP0.2m (2021: GBP0.2m)
relating to amortisation of intangibles and GBP0.3m (2021: GBP0.1m)
of cash and share-based payments spread over employee service
periods. A further GBP0.3m (2021: nil) is included relating to the
Chinsay and Setapp acquisitions. We estimate acquisition-related
costs for 2023 to be GBP0.5m assuming no further acquisitions are
made.
Taxation
The Group's underlying effective tax rate* was 20.4% (2021:
21.2%), slightly lower than the prior year as a result of a one-off
tax credit in the US, though still reflecting the broad
international operations of the Group. The Group's reported
effective tax rate was 20.5% (2021: 21.2%).
Earnings per share
Underlying basic earnings per share* increased by 51.1% to
250.3p (2021: 165.6p) and is calculated as underlying profit after
taxation* attributable to equity holders of the Parent Company
divided by the weighted average number of ordinary shares in issue
during the year. The reported basic earnings per share was 247.9p
(2021: 164.6p).
Forward order book ('FOB')
The Group earns some of its commissions on contracts where the
duration extends beyond the current year. Where this is the case,
amounts that are able to be invoiced during the current financial
year are recognised as revenue accordingly. Those amounts which are
not yet invoiced, and therefore not recognised as revenue, are held
in the FOB. In challenging markets, such amounts may be cancelled
or deferred into later periods.
The Directors review the FOB at the year-end and only publish
the FOB items which will, in their view, be invoiced in the
following 12 months. At 31 December 2022, this estimate was 30.9%
higher than the prior year at US$216m (31 December 2021:
US$165m).
Dividend
The Board is recommending a final dividend in respect of 2022 of
64p (2021: 57p) which, subject to shareholder approval, will be
paid on 26 May 2023 to shareholders on the register at the close of
business on 12 May 2023.
Together with the interim dividend in respect of 2022 of 29p
(2021: 27p), this would give a total dividend of 93p for 2022, an
increase of 10.7% on 2021 (2021: 84p). In taking its decision, the
Board took into consideration the Group's 2022 performance, balance
sheet strength, ability to generate cash and FOB.
This increased dividend represents the 20th consecutive year
that the Board has raised the dividend.
Foreign exchange
The average sterling exchange rate during 2022 was US$1.23
(2021: US$1.38). At 31 December 2022, the spot rate was US$1.21
(2021: US$1.35).
Cash and borrowings
The Group ended the year with cash balances of GBP384.4m (2021:
GBP261.6m) and a further GBP3.1m (2021: GBP9.6m) held in short-term
deposit accounts and government bonds, classified as current
investments on the balance sheet.
Following correspondence this year with the Corporate Reporting
Review Team of the Financial Reporting Council, we agreed to
restate certain cash flows relating to equity-settled liabilities
within the Consolidated Cash Flow Statement both within 'net cash
flow from operating activities' and 'financing activities'. We have
restated the Consolidated Cash Flow Statement for the year ended 31
December 2021 to add back GBP11.3m of equity-settled liabilities as
'operating activities' and deduct GBP11.3m of shares acquired by
our Employee Benefit Trust ('EBT') as 'financing activities'. This
presentation has also been adopted for the year ended 31 December
2022.
Net cash and available funds*, being cash balances after the
deduction of accrued bonuses, at 31 December 2022 were GBP161.7m
(2021: GBP122.3m). The Board uses this figure as a better
representation of the net cash available to the business since
bonuses are typically paid after the year-end, hence an element of
the year-end cash balance is earmarked for this purpose. It should
be noted that accrued bonuses include amounts relating to the
current year and amounts held back from previous years which will
be payable in the future.
A further measure used by the Board in taking decisions over
capital allocation is free cash resources*, which deducts monies
held by regulated entities from the net cash and available funds*
figure. Free cash resources at 31 December 2022 were GBP130.9m
(2021: GBP92.3m).
In addition to these free cash resources*, the Group has a
strong balance sheet and has consistently generated an underlying
operating profit and good cash inflow. Management has stress tested
a range of scenarios, modelling different assumptions with respect
to the Group's cash resources and, as a result, continues to adopt
the going concern basis in preparing the financial statements.
Balance sheet
Net assets at 31 December 2022 were GBP413.2m (2021: GBP361.6m).
The balance sheet remains strong, with net current assets and
investments exceeding non-current liabilities (excluding pension
provisions and lease liabilities as accounted for under IFRS 16) by
GBP163.6m (2021: GBP120.2m).
The overall loss allowance for trade receivables was GBP19.6m
(2021: GBP12.9m).
The Group's pension schemes had a combined surplus before
deferred tax of GBP15.4m (2021: GBP22.0m).
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
3 March 2023
Business review
Broking
Revenue: GBP495.5m (2021: GBP340.0m)
Segmental split of underlying profit before taxation: GBP117.6m
(2021: GBP73.6m)
Forward order book for 2023: US$216m^ (At 31 December 2021 for
2022: US$165m^)
^ Directors' best estimate of deliverable forward order book
('FOB')
Dry cargo
Supporting a range of important global industries including
construction, energy and agriculture, the dry cargo sector moved
more than five billion tonnes of cargo in 2022 across a range of
dry bulk commodities, including metals and minerals, agricultural
products and some semi-processed goods. The bulkcarrier shipping
market experienced a mixed 2022. Earnings remained strong in the
first half of the year, before easing back in the balance of the
year as trade volumes began to soften with weaker economic trends
globally and in China (where dry bulk imports fell 4% in 2022). The
overall Clarksons bulkcarrier earnings index averaged US$20,478 per
day across the year, 23% down year on year but remaining double the
10-year average. The market experienced a range of complexities and
impacts from global events, including post-COVID-19 demand rebound,
impacts from the Russia-Ukraine conflict, US monetary tightening
and a weaker Chinese economy. The sub-Capesize sectors generally
performed more strongly, with broadly supportive demand trends in
the first half of the year and logistical disruption related to the
Russia-Ukraine conflict and sanctions on Russia. Capesize earnings
of owners (down 58% year on year to US$11,877 per day, below the
long-term trend) were impacted by disruption from heavy rainfall in
key iron ore and coal exporting countries while pressures from
weaker Chinese steel demand due to the structural problems in the
property sector also impacted. The easing of port congestion
improved fleet availability and the easing of COVID-19 quarantine
protocols in China also reduced disruption on the key West
Australia-China route. The UN-led grain corridor facilitated the
restart of Ukraine Black Sea grain exports, although at
lower-than-normal levels.
Bulkcarrier markets are expected to experience some periods of
lower rates in 2023, with impacts from slower world economic growth
continuing. However, improvements are also expected through the
year supported by a range of factors including increases in grain
trade volumes and an anticipated post-COVID-19 rebound in China,
including impacts from stimulus on steel demand. Easing inflation
may also support improved dry bulk demand in Europe as the year
progresses, on top of ongoing longer-haul coal imports into the
region following embargos on Russian cargoes. Port congestion may
increase again as demand improves. On the supply side, deliveries
appear moderate; newbuild orderbooks are close to record lows at 7%
of the fleet; and new emissions regulations could lead to both
limits to vessel speeds and early retirements. Tiering of freight
and charter markets is expected with more efficient ships
commanding a premium. Our market-leading dry cargo team invested in
further headcount across its global team in 2022, supporting our
client base and achieving good growth in transactions.
Tankers
The tanker sector plays a crucial role in global energy supply
chains, moving crude oil and refined oil products to facilitate
their eventual use as transportation fuels, for heating and
electricity generation, and as industrial feedstocks. Overall, the
tanker shipping market saw a significant improvement in 2022 to
historically strong conditions, supported by post-COVID-19
improvements in global oil demand and supply and the impacts from
the Russia-Ukraine conflict, which included disruption of vessel
availability and trading patterns. The Clarksons average tanker
earnings index rose five-fold in 2022 to US$40,766 per day, the
highest level since 2008. The VLCC segment took longer to recover
than other sectors amid COVID-19-related disruption in China in the
first half. However, improved Chinese demand later in the year,
higher OPEC+ oil supply and increased long-haul US exports all
supported gains in the second half. The Suezmax and Aframax
segments were heavily impacted by the Russia-Ukraine conflict due
to shifts in trade patterns, including the supportive impact of
longer transport distances for European crude imports and Russian
exports, with Suezmax earnings rising significantly above long-run
averages and Aframax earnings reaching the highest levels on
record. Product tanker earnings also strengthened considerably
after the start of the conflict due to higher refinery margins and
output, as well as shifts in trade patterns, which exacerbated
longer-term structural changes in the global refining industry.
These changes were already expected to support products' tonne-mile
trade in 2022 (closures of older refineries in established demand
centres, while newer capacity has opened up elsewhere,
predominantly in the Middle East and Asia). LR2 and LR1 earnings
rose to well above long-run averages, while MR earnings increased
to record highs.
The tanker sector is expected to see generally strong market
conditions in 2023 with continued volatility this year, although
the VLCC sector may see some short-term headwinds from OPEC+
production cuts implemented in late 2022 and the ending of
large-scale releases from the US Strategic Petroleum Reserve. There
remain uncertainties around the exact impact of EU and G7 measures
affecting Russian trade. A lengthening of average oil trade
distances appears likely although a decline in Russian export
volumes is also possible. Improved Chinese oil demand seems likely
to support tanker demand in 2023. Meanwhile, the rapidly thinning
tanker orderbook (now only 5% of fleet capacity) points to limited
fleet growth ahead. Active fleet supply is expected to be further
constrained by new emissions regulations which appear likely to
restrain the ability of the fleet to speed up significantly, whilst
the early retirement of some tonnage is possible as the decade
progresses. Considerations around lower emission vessel designs may
also lead to continued restraint in newbuild orders.
Our shipbroking team play a vital role in the freight supply
chain and has deep long-term relationships with all major oil
companies, traders and shipowners. Supported by our scale, regional
breadth, expert analysis and technology tools, our tanker team
performed exceptionally in 2022 as we supported our clients through
disrupted and volatile markets.
Containers
The container shipping sector facilitates transportation of a
wide spectrum of manufactured goods, often high-value, and includes
consumer and industrial goods, foodstuffs and chemicals. 2022 was a
year with two distinctly different phases for the container
shipping markets. The first half saw continued extraordinary market
conditions amid severe port congestion following a robust trade
rebound in 2021. However, a major market softening occurred
throughout the second half as box trade came under increased
pressure alongside easing of congestion, leaving spot box freight
rates and containership time charter earnings back in 'normalised'
territory by the end of 2022 after a sharp correction. Indices of
spot box freight rates closed 2022 down approximately 80% from the
start-year record and close to the start-2020 level, whilst average
containership charter earnings reached around US$27,000 per day by
the end of 2022, down 70% from the April 2022 peak but still almost
double the start of the 2020 level.
Container trade fell by 3% in TEU terms in 2022, amid broad
macro-economic headwinds and impacts on consumer activity from
inflation and a cost of living crisis, as well as pressure from
excess retail inventories. Port congestion remained severe in the
first half, reflecting impacts from labour strikes, COVID-19
lockdowns in China, the Russia-Ukraine conflict and liner network
recalibration to avoid prior disruption hotspots. The level of
containership capacity at port rose to a peak of 38% of the fleet
in July 2022 (2016-19 average: 32%), before falling to
approximately 33% by the end of 2022 as faltering demand allowed
logistical bottlenecks to ease. On the supply side, fleet capacity
growth stood at 4% in 2022, whilst containership speeds began to
trend lower in the second half. Newbuild contracting fell from the
2021 record but remained firm at 2.7m TEU, with a record 69% of
capacity ordered accounted for by alternative fuel capable vessels.
In 2023, container shipping markets look set to see continued
softening from strong supply expansion, continuing pressure on box
trade and reduced port congestion. New emissions regulations may
have some supply side impacts (eg speed adjustments, retrofit time
and support to demolition), although appear unlikely to transform
soft markets alone.
In 2022, our containership broking teams executed major
transactions with a wide range of operators and owners across
chartering, newbuilding and secondhand. Our multi-national global
broking resources have been in strong demand, backed by
unprecedented requirements for analysis and research. We continue
to support our clients in navigating the decarbonisation of our
industry, with these efforts likely to become an increasingly
important feature of our offering.
Gas
The LPG carrier fleet ships liquified petroleum and
petrochemical gases, supporting a wide range of industries, from
plastics and rubber production to industrial and domestic energy
markets. The LPG carrier fleet transported circa 120m tonnes of LPG
in 2022, as well as smaller quantities of ethane, ammonia and
petrochemical gases. 2022 was generally a strong year for the
larger-sized LPG carriers, with spot VLGC earnings on the benchmark
AG-Japan route averaging US$1,649,000 per month across the year,
the highest annual average since 2015. Market strength was due
partly to growth in seaborne trade, which rose by an estimated 5%
year on year globally. Increased market inefficiencies, notably
Panama Canal delays, also supported rates, while a slight reduction
in speed was also noted. Divergent trends emerged in other vessel
sizes. In the Midsizes (25-45,000 cbm), TC earnings started 2023 at
US$890,000 per month, up from US$830,000 per month at the start of
2022. Support was received from an influx of tonnage into ammonia
trades as the market adjusted to the absence of volumes from the
Baltic and Black Sea (amid the Russia-Ukraine conflict).
Additionally, the Handysize (15-25,000 cbm) market continued to
receive support from growth in Ethylene exports out of the US,
which breached the one million tonne mark in 2022. Consequently,
12-month timecharter rates rose from just over US$590,000 per month
over 2021 to US$730,000 per month at the start of 2023. In the
smaller segments, a limited orderbook and ageing fleet continue to
support freight rates, which also rose across 2022.
Looking ahead, 46 VLGCs newbuilds are expected to be delivered
this year, alongside 20 MGCs, which may generate some market
pressure in the larger sizes, although continued trade growth and
an expected slowdown in vessel speeds (following the introduction
of IMO carbon regulations in January 2023) should provide support.
The outlook for the smaller segments appears more positive, with
continued growth in US ethylene exports expected in conjunction
with limited fleet growth.
With the continued drive towards decarbonisation, both on the
shipping and production side, the gas team has been active in
supporting initiatives towards the production and transportation of
green ammonia and CO(2) . This is expected to shape developments in
the market over the next decade.
LNG
The LNG carrier sector shipped over 400m tonnes of liquified
natural gas in 2022, a record high, on a fleet of highly
specialised vessels. This sector is critical to both energy
transition and energy security, particularly in the wake of the
Russia-Ukraine conflict and subsequent diminishing Russia-Europe
gas pipeline trade.
The LNG shipping market saw very strong rates in 2022 with our
index of spot rates for a 160,000 cbm TFDE unit averaging a record
US$131,500 per day, up 47% year on year. The market became
exceptional as the year developed with spot rates surging through
the third and fourth quarters, supported by tight spot tonnage
availability as European demand for transportation, storage and
regasification escalated. In the fourth quarter, short-term day
rates averaged all-time highs of US$330,300 per day. Global LNG
trade volumes rose by 4.8% to 407.7m tonnes in 2022, largely on the
back of an increase in export volumes from the US. On the importer
side, elevated European demand shaped the market, as the continent
looked to rapidly substitute away from Russian pipeline gas.
Imports into Europe surged by 62% to 130m tonnes in 2022, a record
high. Meanwhile, imports into Asia dropped by 7% to 257m tonnes, on
the back of elevated competition from Europe and a shift in trade
flows. LNG carrier newbuild orders reached a record 182 vessels and
overall fleet capacity grew at 4.3%.
Another generally strong rate environment is expected in 2023,
with support from tight relet tonnage availability, robust trade
growth and reduced average vessel speeds following the
implementation of IMO carbon regulations from January 2023.
Relatively strong newbuild investment is also expected, supported
by project requirements and fleet renewal.
Clarksons has remained central to a number of newbuilding
contracts whilst the chartering team has restructured to provide
solutions on both short and medium-term charters to their expanding
client base.
Specialised products
The chemical tanker fleet consists of vessels able to transport
a wide range of specialised liquid chemicals, contributing to a
diverse range of sectors, including manufacturing and agriculture.
2022 marked an extraordinary year for the chemical tanker sector,
with the freight market breaking through previous records and
posting consistently strong month-on-month highs. A combination of
factors including an exceptional deep sea CPP market, elevated
levels of port congestion in China and increased biofuels trade
were key in supporting the freight environment.
Such was the strength of these drivers, the Clarksons Bulk
Chemical Spot Rate Index recorded an average increase of 67%
compared to 2021, whilst the Clarksons Edible Oils Spot Rate Index
saw an equally impressive 81% average increase over the same
period. Depending on trade lane and tonnage requirements, we have
seen upward revisions to contract of affreightment rates of
anything from 10% to 15% to in excess of 100%.
Looking ahead, limited growth in the chemical tanker fleet is
expected to provide significant support to the freight market.
Across 2022, annual fleet growth stood at around 2%, and there is
potential for the fleet to contract in coming years. A lack of yard
space, high newbuilding prices and softer earnings historically
means that securing financing and support for new projects is
scarce. That said, we do expect volume requirement growth to remain
very modest considering macro-economic pressures in 2023, with
overall seaborne trade expected to grow by 1.8% and by a further
3.3% in 2024.
The extensive capability of our specialised products broking
business has helped our clients navigate through today's complex
and volatile marketplace, supported by a global network of offices.
With the rapidly accelerating decarbonisation agenda, our unique
depth and breadth of knowledge, supported by our carbon broking
desk, Green Transition team and Research division, has allowed us
to partner stakeholders in developing their decarbonisation
pathways.
Sale and purchase
Secondhand
The global secondhand vessel sale and purchase ('S&P')
markets remained very active in 2022, with sales volumes standing
at the second highest level on record after 2021 (over 134m dwt and
US$57bn in 2022). Strong levels of activity were supported by
positive underlying shipping and charter markets, whilst firm asset
prices supported overall sales figures in value terms.
Transaction volumes notably increased in the tanker sector amid
strong underlying markets and firming asset values, with a record
US$18bn of sales (more than 700 ships) reported and over 10% of
fleet capacity changing hands. Activity in the containership
S&P market remained firm in the first half of 2022 following a
very strong 2021. Although activity slowed through the second half
of the year in line with a softening rate environment, total
transaction volumes still reached more than 220 ships selling for
an aggregate of US$8bn. The bulkcarrier S&P market generally
saw continued strong activity, especially in the first half, though
total volumes were down on the 2021 record at more than 740 ships
(US$15bn).
Asset values remained generally firm in 2022, with the
cross-sector Clarksons Secondhand Price Index reaching 213 points
in July, the highest level since 2008, although this has since
eased back with containership and bulkcarrier pricing softening in
the second half. Tanker values rose sharply through 2022 (our
10-year-old Aframax index increased from US$27m to US$50m) as
tanker earnings rose, with ice class tonnage especially in demand.
Recent S&P trends amongst the major shipowning countries
continued, with Greek owners still the biggest buyers and sellers
of tonnage in 2022, although Chinese entities were also active in
acquiring vessels.
Across all offices we were able to benefit from the high volumes
of secondhand vessel transactions with our teams experiencing
another successful year overall.
Newbuilding
The newbuilding market remained active in 2022, with ordering
volumes easing (down 20% from 2021 to 45m CGT) but remaining above
2015-20 levels. Total newbuild investment reached US$128bn, the
highest level since 2013.
Contracting in 2022 was led by the LNG carrier sector amid
record earnings and an increased focus on energy security, with 182
units (US$39.1bn) ordered during the year, more than any other
shipping sector in terms of CGT and newbuild value. There was also
strong activity in the containership sector, especially in the
first half of the year, with 367 orders (US$35bn) placed. We also
saw strong ordering in the car carrier sector amid an exceptional
earnings environment and a focus on fleet renewal. Contracting in
other sectors was limited by high newbuild prices, reduced slot
availability at yards, and continued uncertainty over fuelling
technologies. However, our continued breadth of service to our
industrial client base enabled our participation in a healthy level
of contracting activity and validation across the markets, in spite
of such challenges.
Newbuild prices stood at firm levels in 2022, supported by
global inflationary pressures, rising commodity prices and
increasing forward cover at yards. Our Newbuilding Price Index
ended 2022 at 162 points, up from 154 points at the start of the
year and the highest level since 2008. Despite healthy ordering
volumes, the global orderbook remains relatively low in historic
terms at 10% of fleet capacity in dwt terms. Shipyard output
remained relatively steady year on year, totalling 31m CGT, with
Chinese yards (47% market share) and South Korean yards (25% market
share) delivering the majority of tonnage.
Our global newbuilding team delivered market-leading
performances across multiple asset sectors in 2022 and we remain
well positioned as a service provider and partner to our client
base in a continually evolving macro newbuilding environment. There
were significant market-leading transactions, particularly for the
car carriers team, arranged by our Oslo desk, as well as major
industrial-backed projects in tankers and gas vessels. Our scale
and depth of transactional activity continues to give us real-time
information and insights as the industry evolves against regulatory
pressure and environmental compliance. We remain well positioned
going into 2023 to continue to leverage this knowledge.
Offshore
The offshore sector supports the development, production and
support of offshore oil and gas fields and renewables, with over
13,000 mobile assets playing a vital role in supporting operations
across the lifecycle of offshore energy projects. Overall, 2022 was
a year of positive progress for the offshore markets, with the
offshore oil and gas business recovering strongly amid a backdrop
of generally high oil and gas prices, whilst the offshore
renewables (wind) sector continued to expand rapidly. Although the
increase in underlying E&P spending was relatively moderate,
activity levels increased across all offshore sub-sectors and most
geographical regions, and further improvements in activity, fleet
utilisation and day rates are expected in 2023. Our offshore
broking teams have continued to utilise their extensive industry
relationships and technical expertise to support our client base
through evolving markets.
Drilling market
Mobile drilling units (comprising jack-ups, semisubmersible
units and drillships) drill wells in the sea floor to locate and
facilitate extraction of oil and gas. Rig markets tightened
materially in 2022, with an increasing number of rigs on contract,
higher utilisation and rising day rates. The floater segment,
particularly for ultradeepwater/deepwater high-end units, is now
generally tight, whilst the jack-up segment has continued to
strengthen, particularly in the Middle East, resulting in global
active utilisation closing in on 90%. Prospects for 2023 and beyond
for the drilling market appear positive amid increasing offshore
activity.
Subsea field development market
The subsea sector involves the usage of a range of assets, with
capabilities in lifting, pipelay, cable lay, diving and ROV
support, to install and maintain subsea production infrastructure.
The subsea field development market continued to improve through
2022, with an increasing backlog for the major EPC contractors. The
subsea vessel market also saw significant improvement with rates
and contract durations generally increasing. This has been driven
by both improved subsea oil and gas demand, as well as requirements
for many of the same vessels from the offshore wind sector.
Prospects for 2023 appear positive, with increased activity
generating project opportunities, including for smaller
contractors, and supporting vessel demand.
Offshore support vessels
The OSV sector provides towage and support duties to drilling
rigs, mobile production units and fixed production platforms. The
OSV market strengthened significantly in 2022 amid increasing
drilling and field development activity. Demand increased across
most regions, and with limited availability, vessels are
increasingly likely to start migrating between regions. There has
been virtually no ordering activity since 2014, and rates are
expected to continue to increase with capacity availability limited
and continued firm demand.
Offshore renewables
The offshore renewables industry is continuing its rapid growth
phase, and going forward is expected to account for a growing share
of the global energy mix supported by the increased focus on
decarbonisation and energy security. The offshore wind market
continued to grow in 2022. More projects reached the FID stage and
investment flowed into the sector. Construction activity in key
European markets is firm, and globalisation of the industry
continues to develop, with new markets such as Poland, the US and
South Korea emerging. Several countries strengthened renewables
targets after the onset of the Russia-Ukraine conflict enhanced
focus on energy security, whilst investor focus on ESG and
infrastructure investments continues to increase. The outlook
remains positive with significant growth expected in the coming
years. Although uncertainty remains around cost inflation, supply
chain issues and delays, and FID activity was slower in 2022,
projects will continue to develop through the phases in the coming
years. Offshore wind remains competitive, secured offtake
development is still strong and 2022 was a record year for European
project awards. The pipeline of projects until 2025-26 is starting
to firm up, providing good visibility on future offshore
demand.
Our offshore and renewables team has been at the forefront of
market developments, completing several initiatives during the year
to help the sector support decarbonisation targets. We have been
instrumental in adding wind support vessels to the market and have
been involved in several large-scale wind projects. We continue to
look for ways to improve and innovate, with clients choosing to
work with us for our reputation as a leading player, our commitment
to decarbonisation and our ability to deliver high-quality
solutions. 2022 was a busy year for our specialised renewables
consultancy, AIR, led by experienced industry professionals, and
delivering several projects across a range of clients. It is well
positioned for further growth in 2023.
Futures
Our Futures business is the leading provider of freight
derivative products, helping shipping companies, banks, investment
houses and other institutions seeking to manage freight exposure by
increasing or reducing risk. It leverages the expertise and market
understanding of the wider Group to offer best-in-class execution
services to derivatives markets across freight, iron ore and
carbon. Against the backdrop of increased regulatory requirements,
Futures has, with support from the wider Group, positioned itself
at the forefront of the sector. 2022 was a positive year for the
Futures business. Tanker FFA revenue rose strongly. Efforts
continue to bring new participants to the market as well as service
existing clients to the highest standard. In the dry futures
business, it was another busy year with new offices established in
Dubai, focusing on Far East activity, and in Oslo, providing access
to EU business. The swaps business, in a highly competitive space,
saw revenue down from a particularly strong 2021 but still well
above 2019/20 levels. The options business maintained its
market-leading position and had another excellent year overall,
remaining the lead broker for most of the major accounts. Work
continues in developing wet FFA options.
Financial
Revenue: GBP49.8m (2021: GBP56.0m)
Segmental split of underlying profit before taxation: GBP7.8m
(2021: GBP13.3m)
Securities
Clarksons Securities is a sector-focused investment bank for the
shipping, offshore energy, renewables and minerals industries, with
deep sector knowledge and global reach driven by research and
relationships. In 2022, against a backdrop of a difficult year for
capital markets with volatility resulting from global events and
macro-economic headwinds and deal volume slowing, activity in
Clarksons Securities' core sectors was positive in relative terms,
with risk sentiment and capital markets activity appearing to
improve moving into 2023. Despite volatile and uncertain markets,
secondary trading activity was strong with equities especially
active, private equity realising positions and creditors selling
equity in restructured oil services companies.
Shipping
In 2022, strong cashflow and upward pressure on asset pricing
drove shipping stock performance and trading liquidity in several
equities increased significantly throughout the year. Capital
markets activity remained in line with historical trends in the
first half of 2022, but issuance activity in the second half of
2022 was muted due to equity market volatility. Clarksons
Securities participated in several capital markets transactions,
including initial public offerings of Cool Company and Gram Car
Carriers and follow-on offerings in Hafnia, Cool Company and
American Shipping Company. Although shipping bond issuance activity
remained muted, Clarksons Securities acted as financial advisor in
several bilateral loan and leasing transactions.
Energy
Oil services stocks saw positive trends in 2022 on the back of
increased offshore E&P investments, and improved utilisation
and day rates across most offshore segments. Capital markets
activity within the energy services space picked up during the year
as investors sought exposure to the sector. Clarksons Securities
placed several equity raises, including a private placement for
Borr Drilling.
Metals and minerals
2022 started strongly for metals and mining stocks but the
challenging macro-economic backdrop led to significant pressure by
the end of the year. Clarksons Securities participated in multiple
transactions within the metals and minerals space in 2022, among
them equity raisings in Nordic Mining, Canada Nickel Company and
Piedmont Lithium and a bond issuance for Nordic Mining. Continued
firm activity is anticipated and Clarksons Securities remains well
positioned to assist clients in meeting demand for commodities
driven by the green transition.
Renewables
The renewable energy sector continues to see impressive
expansion across the board with traditional technologies such as
wind and solar continuing to grow while emerging technologies such
as hydrogen and carbon capture and storage have developed
significantly. Market sentiment in the offshore wind sector remains
strong, driven by continued strong growth in installed capacity,
despite some supply chain bottlenecks. The expansion of the
dedicated offshore wind fleet requires substantial capital funding.
Nonetheless, 2022 was a challenging year for stocks related to
renewable energies, against a backdrop of inflationary pressures,
increasing interest rates and geo-political instability. Capital
markets activity slowed, with some companies turning towards
private markets which have shown willingness to support energy
transition-related companies. Clarksons Securities has been
particularly active around hydrogen, carbon capture and various
e-fuels, offering synergies across the Group, including acting as
advisor in the raising of equity by Ocean Geoloop and Liquid
Wind.
Debt capital markets
With markets broadly closed for significant periods of 2022, and
investors demanding considerably higher returns to take on risk,
primary issuance across the Nordics, Europe and the US fell by
70-80% compared to 2021. Despite this, Clarksons saw pockets of
funds available for select public and private debt activity and
completed several transactions.
Project finance
Our project finance business is a leading Nordic player within
shipping and real estate project finance, which has in recent years
offered investment opportunities in modern fuel (and carbon)
efficient shipping and offshore assets, with an overall focus on
assisting the shipping and offshore industry in transitioning to
more sustainable and less carbon-intensive transportation. 2022 was
an active year in the Norwegian project finance market with our
team concluding new projects in the dry bulk, tanker and offshore
sectors, and establishing a good pipeline of projects including
zero emission shipping investments.
The first half of 2022 saw positive trends in the real estate
market in Norway, but with increasing interest rates and general
macro-economic headwinds the second half of 2022 proved turbulent.
Although the decline in commercial property values has so far been
limited, as interest rates increased banks became stricter on
financing terms, contributing to fewer transactions. That said, the
first half of 2022 was one of the busiest ever periods for our real
estate team. Activity included the establishment of a new
industrial real estate company focussing on properties near the
centres of the largest cities in Norway and several exciting
development projects in co-operation with reputable partners. Our
business continues to expand its operational platform by
strengthening the property management and project development
teams.
Our real estate funds continued to expand with the launch of a
new fund with a special focus on environmental improvements to
existing buildings.
Structured asset finance
Our structured asset finance business maintains relationships
with asset financiers globally including around their activities
and headline terms, with a view to helping our broking clients
understand the sources of finance available to them and providing
introductions where relevant. It acts as an exclusive mandated
financial advisor, structurer and arranger working closely with the
newbuilding, strategy and structuring teams on large long-term
strategic procurement projects for end-users and cargo
interests.
The shipping asset finance landscape continues to evolve and by
the close of 2022, there were few signs of any additional stress
amongst lending portfolios, although many lenders exposed to the
container shipping sector are seeing an increased risk profile. The
'Poseidon Principles' group of banks, aligning their portfolios to
key emissions targets, has seen additional signatories, and
appetite from these banks remains almost exclusively focused on new
'green' vessels and/or sustainability-focussed projects. Outside of
this group, other large banks together with the smaller regional
shipping banks, especially those in Cyprus, Greece and Scandinavia,
continue to grow in terms of capital deployed and to see
opportunities to finance or refinance tonnage, especially for
slightly older vessels and/ or for projects with less 'green'
credentials. Chinese leasing remains an additional source of
capital to the industry, though there appears to be a two-tier
market developing. The leading providers are able to reduce margins
for the right projects closer to those being offered by the
shipping banks. The remainder is mostly either inactive
internationally or trying to compete with the smaller shipping
banks and alternative lenders with only limited degrees of success.
Japanese leasing continued to offer an attractive alternative for
those able to access this market, albeit with limited flexibility.
The alternative lender landscape remains largely unchanged. There
is plenty of capital available to be deployed, although there
remains no real emergence of insurance companies and pension funds
at an asset level, with participation generally limited to
investments in alternative funds platforms.
The business concluded further mandates in 2022 and continues to
fulfil a specific highly value-adding role, particularly post-IFRS
16, with an excellent reputation and track record. A strong
commitment to decarbonisation is a central part of our clients'
strategies and their long-term investment in newbuilding projects
is at the forefront of their efforts and respective commitments in
this regard.
Support
Revenue: GBP39.0m (2021: GBP29.6m)
Segmental split of underlying profit before taxation: GBP5.0m
(2021: GBP3.3m)
Stevedoring
In 2022, our stevedoring business, highly experienced in loading
and discharging bulk cargoes, performed strongly. Export volumes
increased by 148,000 tonnes to 284,000 tonnes, and although total
imports were down by 39,000 tonnes, half of this decrease was made
up by low margin biomass imports. This increase in tonnage handled
directly bolstered performance with higher ancillary income as
rental income, handling charges and other revenues expanded in line
with additional volumes. Our grain elevators in Portsmouth also
made a notable contribution. The cost base remained controlled
although fuel costs for machinery increased, caused by a change in
government taxation policy; and property costs were lower than
normal due to the timing of local government COVID-19 relief.
Short sea broking
2022 was a strong year for the short sea broking business which,
with specialist skills, in-depth knowledge and strong
relationships, is market-leading in brokerage services for short
sea dry cargo shipping. The business continued to grow its
chartering base and handle larger parcel sizes than previously.
This performance was supported by exceptional freight rates for
much of the year, in addition to exchange rate trends, although
freight rates are generally expected to ease down going forward.
The business plans to expand further, including leveraging agency
activity to broaden the charterer client base.
Gibb Group
Gibb Group is the industry's leading provider of PPE, MRO
products and services as well as one of the offshore renewable
energy sector's most experienced, qualified suppliers. In 2022, the
business achieved growth in the face of significant headwinds,
including the cost of container freight, exchange rate trends and
supply chain issues hampering the ability to get product in a
timely manner. In recent years the business has been reshaped with
the addition of the Safety and Survival business, first in Great
Yarmouth and subsequently in Aberdeen and Middlesbrough. The
growing hire and service centre business is continuing to meet
evolving client demand patterns. The traditional core oil and gas
business saw a boost in volumes following the onset of the
Russia-Ukraine conflict, which saw countries increase their focus
on security of energy supply and ramp up local oil and gas
production. Supply chain issues have impacted Gibb Netherlands but
a local service centre and new premises should provide the
opportunity for growth from early 2023. Offshore wind activity
through Ijmuiden grew as the port began to support new offshore
wind farms. Further overall expansion is planned for 2023.
Agency
Through exceptional port agency and first-class logistics
services, our business provides a range of solutions for clients in
the marine and energy sectors. Although the UK saw limited
construction traffic in 2022 (expected to return in 2023), the
building of large offshore wind farms is providing growing
opportunities. Our customs clearance business supports clients
globally with our comprehensive compliance capabilities, and
performed strongly in 2022. The year also saw gains from bunker
supply activity. Following a weaker 2021, our bulks business
experienced improvement in 2022, with our Ipswich and Southampton
locations in particular seeing a firm increase in activity, the
latter also expanding its profile across offshore energy, coastline
protection and scrap. Our North East England presence grew markedly
with a new office in Middlesbrough servicing a rapidly expanding
client base in bulk and offshore renewal energy.
In early February 2023, we were delighted to announce the
acquisition of DHSS. DHSS has built an enviable reputation for
world-leading service levels in the Netherlands and further afield
with a particular focus on offshore wind energy. Combined with our
port services business' existing 20-year history in this sector, we
offer best-in-class service to our growing customer base in the UK,
mainland Europe and further afield. 2023 will see strong growth in
this area as there will be considerable investment in offshore wind
in the UK, Dutch and German sectors. We expect to see this
capability expand beyond the current geography.
Egypt agency
The Suez Canal provides a vital trade route between Europe and
Asia, and our regional experts in Egypt deliver on-the-ground
expertise around transit. Our Egypt agency business proved
successful in 2022 in the face of challenges impacting local port
activity from general macro-economic headwinds, disruption to
regional imports from the Russia-Ukraine conflict (grain,
fertilizer volumes), increased commodity prices and exchange rate
trends. Transit agency business saw increased volumes in 2022 and
continues to progress whilst liner business remained positive. The
Egypt agency business continues to explore increasing opportunities
in Egypt and around the Suez Canal region related to green energy
and shipping's green transition.
Research
Revenue: GBP19.5m (2021: GBP17.7m)
Segmental split of underlying profit before taxation: GBP7.0m
(2021: GBP6.1m)
Research provides a unique flow of powerful, highly relevant and
wide-ranging research and data to clients, as well as to the
Broking, Financial, Support and technology businesses in the Group.
Our market-leading content was again extremely well received by
clients across 2022 and achieved excellent profile for the Group.
Furthermore, data provision and synergies were enhanced, including
support to the end-to-end freight Sea/ platform developed by
Maritech, the Clarksons technology business. Continuing its
long-term growth, our Research division performed robustly during
the year.
Clarksons Research, the Group's data and analytics arm, remains
market leader in the provision of independent data, intelligence
and analysis around shipping, trade, offshore and energy. Millions
of data points are processed and analysed each day to provide
trusted and insightful intelligence to a global client base,
typically via recurring revenue agreements. This uniquely powerful
data and intelligence underpins the workflows and decision-making
of thousands of organisations across the complex and dynamic global
maritime industry, including shipowners, financiers, shipyards,
suppliers, charterers, class societies, insurers, universities and
governments. The use of innovative technology and algorithms has
continued to expand the depth and quality of our proprietary
database, supporting a strong pipeline of product development and a
firm flow of sales enquiries. Targeted headcount growth and
internationalisation continues, with the successful start-up of a
data team in New Delhi during 2022, leveraging local maritime
expertise and helping take our Asian share of headcount to 30%.
Our long-term strategy to focus and invest in data, intelligence
and insights around the vital maritime energy transition continues.
Firstly, we are focused on the fuelling transition that will be
fundamental to reducing shipping's 2.3% contribution to global
CO(2) emissions. Our offering provides detailed tracking of
emissions policies, alternative fuel adoption, fleet renewal, the
speed of ships and the uptake of Energy Saving Technologies. Across
2022 we also released a series of market impact assessments around
the IMO's new 2030 policy measures to reduce emissions, a hugely
significant milestone in shipping's decarbonisation pathway (as
will be the EU's Emissions Trading Scheme from 2024). New modules
on green investments at ports and vessel activity analytics
dashboards are under development for release in the first half of
2023. Secondly, we continue to analyse the impacts of energy
transition on the cargo base for maritime, and during 2022 we
released a further update of our maritime energy transition model,
providing decarbonisation scenarios with specific maritime relevant
segmentation. Thirdly, we have invested in research around the
offshore transition, including the development of new data and
analysis around the offshore wind industry through our Renewables
Intelligence Network. Much of our energy transition work has also
supported the Group-wide Green Transition initiatives to partner
clients through their decarbonisation pathways, contributed to
internal awareness initiatives and provided emissions benchmarking
data and vessel intelligence used within the carbon module of the
Sea/ suite.
Digital
Our single-access integrated digital platform provides immediate
access to our powerful data, analysis, forecasts and insights to
over 4,000 maritime companies and over 12,000 individual users.
During 2022, we released a successful rebrand and executed several
major product releases aligned with individual product development
investment plans for each of our systems. Our major digital
products include:
Shipping Intelligence Network ('SIN')
Our market-leading commercial shipping database SIN, provides
wide-ranging data and analysis tracking and projects shipping
market supply and demand, freight, vessel earnings, indices, asset
values and macroeconomic data around trade flows and global
economic developments. During the third quarter of 2022, SIN
benefited from a major upgrade in content and visualisation tools
that has been very positively received by clients. Through the
year, the platform tracked an all-time annual high for the cross
segment ClarkSea Index (up 30% to US$37,253 per day), the
disruption impacts of COVID-19 and the Russia-Ukraine conflict,
positive trends in energy shipping including record LNG charter
rates, the correction in the container markets and slowing growth
in China, the global economy and world trade (seaborne trade was
flat year on year at 12 billion tonnes). Our continued investments
in near-term data, were particularly well received by our clients,
as were our Russia-Ukraine conflict market impact assessment
insights and reporting.
World Fleet Register ('WFR')
The WFR provides data and intelligence around the world fleet,
vessel equipment and technology, companies, shipbuilding, emissions
regulation, fuelling transition and alternative fuels. The focus on
emissions regulation and fuelling transition has helped support
encouraging sales growth of 20%. After a record share of newbuild
order volumes in 2022, a total of 44% of the global newbuild
orderbook backlog by tonnage is now alternative fuelled.
Renewables Intelligence Network ('RIN')
Offshore wind contributes 0.4% of global energy supply but our
long-term projections profile huge growth potential, suggesting
that this could reach between 7% and 9% by 2050. RIN provides
comprehensive data, intelligence and analysis around every offshore
wind farm in the world and the fleet of vessels that support
development and maintenance. Since its launch in 2021, RIN has
grown very strongly, gained good traction with market participants
and is widely used across the Group.
Offshore Intelligence Network ('OIN')
Offshore oil and gas markets improved markedly over 2022, with
our index of day rates across the offshore fleet up 32% to reach
its highest level since 2014. OIN provides data and analysis of
utilisation, day rates and market supply and demand of the offshore
fleet including rigs, OSVs, subsea and floating production. A major
upgrade to OIN was released in late 2022 and good sales growth is
expected in 2023.
World Offshore Register ('WOR')
The WOR system provides detailed data and intelligence on all
offshore oil and gas fields, investment projects, production
platforms, offshore support vessels and rigs. Offshore oil and gas
accounts for 16% of total global energy supply with a renewed focus
on energy security supporting investment. Clarksons Research is the
market leader in data provision to the insurance industry, where
our data is used as the core reference in identifying rigs and
platforms.
Sea/net
Developed in conjunction with the Clarksons technology business
Maritech, the vessel movement system Sea/net blends satellite and
land-based AIS data with the Clarksons Research leading database of
vessels, ports and berths. Working with Maritech, Research
continues to improve the depth of our underlying movement and
deployment data.
Services
Our dedicated services and consultancy activities, including the
development and management of long-term and recurring revenue
relationships with key corporates across maritime, has performed
well with several major data API contracts concluded. Interest in
tailored data, that often becomes embedded into client systems and
typically includes API delivery via our platform, remained high
while our provision of specialist insights, forecasting and
scenario modelling to key partners also expanded. During September
2022 we hosted our industry leading Shipping and Shipbuilding
Forecast Forum and Offshore Energy Forecast Forum on an in-person
basis. Our dedicated business development team is performing well,
arranged a successful offsite in December 2022 and has a strong
sales pipeline. Clarksons Valuations is the market-leading provider
of authoritative, consistent and independent valuation services to
shipowners and financiers. It is investing in analysis and
technology to support financial institutions, including to meet new
European Banking Authority guidelines on valuations and to
understand the emissions profile of their debt portfolios and the
impact of technology and emissions policies on value. The
valuations team is also active in supporting the Group's S&P
broking teams.
Sea/
The technology arm of Clarksons, Maritech, has developed the
Sea/ platform to bring transformative digital solutions to the
freight transaction process, enabling the industry to meet the
demands created by growth in complexity, regulation and innovation.
Building on the considerable success enjoyed by Sea/ tools in 2021,
scaling of the business through 2022 has been both dynamic and
significant, with the enhancement of products, growth in clients
and further development of Maritech. A new leadership team with a
wealth of experience was established in 2022. During the year,
important work was undertaken involving the whole business to
define a clear, cogent strategy and ensure that the products being
built and enhanced reflect what the market truly wants and values.
Critically, the description of the business has been more clearly
defined as "The Intelligent Marketplace for Fixing Freight", and
this will be more clearly articulated in a new website and other
materials.
Following success in 2021, particularly in the iron ore sector,
the SeaFix/ solution grew further in 2022 to the point that the
client base now represents over 80% of the world's seaborne iron
ore trade. Sea/ is now looking to replicate this success in other
markets and has been working to enhance the tools to be able to
cope with the greater complexity of other commodities. In 2023,
Sea/ will be targeting coal, grains and other dry bulk commodities
as well as initial steps into the wet market.
Sea/contracts and Recap Manager continue to attract adoption
amongst some of the largest chartering groups in the world with
substantial additional signings in 2022. This was further augmented
by the acquisition of Chinsay in October 2022, such that the
annualised volume has now risen to 37,000 fixtures and is
anticipated to grow further in 2023.
The Sea/intelligence solution, which includes Sea/net and
Sea/analytics, has similarly experienced strong sales growth, with
new features and a significant volume of new clients resulting in
over 120% year-on-year growth. The Russia-Ukraine conflict resulted
in an urgent need from news reporting agencies for factual
information on shipping in the region, with a range of leading
publications regularly using and referencing Sea/net as their
source. The intelligence products have been adopted by a range of
companies and institutions, which has triggered further recognition
of the value that Sea/ is providing with this solution.
Clients have increasingly looked to Sea/ to support them in
their efforts to reduce GHG emissions and achieve decarbonisation
targets. In the crowded digital space of voyage optimisation and
vessel categorisation, the Sea/carbon offering plays a vital role
and has grown incrementally with a number of new clients now using
the carbon accounting tools. In 2022, Sea/ captured 8.5m tonnes of
carbon emissions from 470m tonnes of cargo transported. The service
gathers the essential data at the end of each voyage undertaken to
enable customers to record the carbon emitted, continuously
monitors emissions in a dashboard and generates the necessary
reports for internal and external audiences. The same data can be
used to provide essential insights on optimal vessel selection at
the point of fixture. This tool helps to reduce fuel consumption,
improve energy efficiency and support the adoption of alternative
and clean technologies.
In November 2022, Maritech acquired Setapp in Poznan, Poland - a
technology provider to the maritime sector. Through the acquisition
of Setapp, Sea/ will enable technology experts with a strong
foundation in maritime software to focus on the issues faced by the
industry and further grow their knowledge through the experience of
building high-quality, sustainable teams and solutions. Sea/ is
excited by the prospect of growing this centre of maritime
technology excellence.
Risk management
Full details of our principal risks and how we manage them are
included in the risk management section of the 2022 Annual Report,
together with our viability and going concern statements.
Our principal risks are:
-- Loss of key personnel - Board members
-- Economic factors
-- Cyber risk and data security
-- Loss of key personnel - normal course of business
-- Adverse movements in foreign exchange
-- Financial loss arising from failure of a client to meet its obligations
-- Breaches in rules and regulations
-- Changes in the broking industry
Directors' responsibilities statement
The statement of Directors' responsibilities below has been
prepared in connection with the Group's full Annual Report for the
year ended 31 December 2022. 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 that:
-- to the best of our knowledge, the consolidated financial
statements, which have been prepared in accordance with UK-adopted
international accounting standards, give a true and fair view of
the assets, liabilities and financial position of the Group;
and
-- to the best of our knowledge, the Strategic Report includes 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; and
-- we consider the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's performance, business
model and strategy.
This responsibilities statement was approved by the Board of
Directors on 3 March 2023 and is signed on its behalf by:
Laurence Hollingworth
Chair
3 March 2023
Consolidated income statement
for the year ended 31 December
2022 2021
-------------- --------------------- -------------- -------------- -------------- --------------
Before After Before After
acquisition- Acquisition-related acquisition- acquisition- Acquisition- acquisition-
related costs related related related related
costs GBPm costs costs costs costs
GBPm GBPm GBPm GBPm GBPm
-------------- --------------------- -------------- -------------- -------------- --------------
Revenue 603.8 - 603.8 443.3 - 443.3
Cost of sales (21.8) - (21.8) (16.5) - (16.5)
-------------- --------------------- -------------- -------------- -------------- --------------
Trading profit 582.0 - 582.0 426.8 - 426.8
Administrative
expenses (481.2) (0.8) (482.0) (355.7) (0.3) (356.0)
-------------- --------------------- -------------- -------------- -------------- --------------
Operating
profit/(loss) 100.8 (0.8) 100.0 71.1 (0.3) 70.8
Finance income 1.9 - 1.9 1.3 - 1.3
Finance costs (2.2) - (2.2) (3.1) - (3.1)
Other finance
income -
pensions 0.4 - 0.4 0.1 - 0.1
-------------- --------------------- -------------- -------------- -------------- --------------
Profit/(loss)
before taxation 100.9 (0.8) 100.1 69.4 (0.3) 69.1
Taxation (20.6) 0.1 (20.5) (14.7) - (14.7)
-------------- --------------------- -------------- -------------- -------------- --------------
Profit/(loss) for
the year 80.3 (0.7) 79.6 54.7 (0.3) 54.4
-------------- --------------------- -------------- -------------- -------------- --------------
Attributable to:
Equity holders of
the Parent
Company 76.3 (0.7) 75.6 50.4 (0.3) 50.1
Non-controlling
interests 4.0 - 4.0 4.3 - 4.3
-------------- --------------------- -------------- -------------- -------------- --------------
Profit/(loss) for
the year 80.3 (0.7) 79.6 54.7 (0.3) 54.4
-------------- --------------------- -------------- -------------- -------------- --------------
Earnings per
share
Basic 250.3p 247.9p 165.6p 164.6p
Diluted 248.5p 246.1p 164.2p 163.2p
-------------- --------------------- -------------- -------------- -------------- --------------
Included in the Consolidated Income Statement are net impairment
losses on financial assets amounting to GBP5.8m (2021: GBP2.6m)
Consolidated statement of comprehensive income
for the year ended 31 December
2022 2021
GBPm GBPm
====== ------
Profit for the year 79.6 54.4
Other comprehensive income:
Items that will not be reclassified to
profit or loss:
Actuarial (loss)/gain on employee benefit
schemes - net of tax (5.5) 7.2
Changes in the fair value of equity instruments
at fair value through other comprehensive
income - net of tax - (1.7)
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange differences on retranslation
of foreign operations 13.5 0.5
Foreign currency hedges recycled to profit
or loss - net of tax 3.3 (2.4)
Foreign currency hedge revaluations -
net of tax (8.9) (0.8)
Other comprehensive income 2.4 2.8
------ ------
Total comprehensive income for the year 82.0 57.2
====== ------
Attributable to:
Equity holders of the Parent Company 78.0 52.9
Non-controlling interests 4.0 4.3
------ ------
Total comprehensive income for the year 82.0 57.2
------ ------
Consolidated balance sheet
as at 31 December
2022 2021
GBPm GBPm
======== --------
Non-current assets
Property, plant and equipment 25.5 22.5
Investment properties 1.0 1.2
Right-of-use assets 39.3 45.1
Intangible assets 188.9 183.2
Trade and other receivables 2.6 1.0
Investments 1.2 1.0
Employee benefits 15.8 25.8
Deferred tax assets 14.6 10.5
======== --------
288.9 290.3
======== --------
Current assets
Inventories 2.4 1.5
Trade and other receivables 150.1 117.4
Income tax receivable 3.0 1.0
Investments 3.5 10.3
Cash and cash equivalents 384.4 261.6
======== --------
543.4 391.8
======== --------
Current liabilities
Trade and other payables (335.9) (235.4)
Lease liabilities (9.9) (9.7)
Income tax payable (19.8) (11.6)
Provisions (0.6) (0.6)
======== --------
(366.2) (257.3)
======== --------
Net current assets 177.2 134.5
======== --------
Non-current liabilities
Trade and other payables (5.8) (2.7)
Lease liabilities (37.7) (44.1)
Provisions (1.9) (1.6)
Employee benefits (0.4) (3.8)
Deferred tax liabilities (7.1) (11.0)
======== --------
(52.9) (63.2)
======== --------
Net assets 413.2 361.6
======== --------
Capital and reserves
Share capital 7.7 7.6
Other reserves 114.8 104.0
Retained earnings 287.2 245.3
======== --------
Equity attributable to shareholders
of the Parent Company 409.7 356.9
Non-controlling interests 3.5 4.7
-------- --------
Total equity 413.2 361.6
======== --------
Consolidated statement of changes in equity
for the year ended 31 December
Attributable to equity holders
of the Parent Company
----------------------------------------------
Non-controlling
Share Other Retained interests Total
capital reserves earnings Total GBPm equity
GBPm GBPm GBPm GBPm GBPm
---------- ----------- ----------- -------- ---------------- ---------
Balance at 1 January
2022 7.6 104.0 245.3 356.9 4.7 361.6
---------- ----------- ----------- -------- ---------------- ---------
Profit for the year - - 75.6 75.6 4.0 79.6
Other comprehensive income/(loss) - 7.9 (5.5) 2.4 - 2.4
Total comprehensive
income for the year - 7.9 70.1 78.0 4.0 82.0
---------- ----------- ----------- -------- ---------------- ---------
Transactions with owners:
Share issues 0.1 2.6 - 2.7 - 2.7
Employee share schemes - 0.3 (1.3) (1.0) - (1.0)
Tax on other employee
benefits - - (0.2) (0.2) - (0.2)
Tax on other items in
equity - - (0.4) (0.4) - (0.4)
Dividend paid - - (25.9) (25.9) (4.3) (30.2)
Contributions to non-controlling
interests - - (0.4) (0.4) (0.9) (1.3)
---------- ----------- ----------- -------- ---------------- ---------
Total transactions with
owners 0.1 2.9 (28.2) (25.2) (5.2) (30.4)
---------- ----------- ----------- -------- ---------------- ---------
Balance at 31 December
2022 7.7 114.8 287.2 409.7 3.5 413.2
---------- ----------- ----------- -------- ---------------- ---------
Attributable to equity holders
of the Parent Company
----------------------------------------------
Non-controlling
Share Other Retained interests
capital reserves earnings Total GBPm Total
GBPm GBPm GBPm GBPm equity
GBPm
========== =========== =========== ======== ================ =========
Balance at 1 January
2021 7.6 104.6 211.9 324.1 4.3 328.4
========== =========== =========== ======== ================ =========
Profit for the year - - 50.1 50.1 4.3 54.4
Other comprehensive (loss)/income - (2.7) 5.5 2.8 - 2.8
Total comprehensive (loss)/income
for the year - (2.7) 55.6 52.9 4.3 57.2
========== =========== =========== ======== ================ =========
Transactions with owners:
Share issues - 1.8 - 1.8 - 1.8
Employee share schemes - 0.3 (0.1) 0.2 - 0.2
Tax on other employee
benefits - - 2.3 2.3 - 2.3
Dividend paid - - (24.4) (24.4) (3.9) (28.3)
Total transactions with
owners - 2.1 (22.2) (20.1) (3.9) (24.0)
========== =========== =========== ======== ================ =========
Balance at 31 December
2021 7.6 104.0 245.3 356.9 4.7 361.6
========== =========== =========== ======== ================ =========
Consolidated cash flow statement
for the year ended 31 December
2022 Restated*
GBPm 2021
GBPm
======= ----------
Cash flows from operating activities
Profit before taxation 100.1 69.1
Adjustments for:
Foreign exchange differences (0.5) (3.2)
Depreciation 13.7 13.3
Share-based payment expense 1.8 1.8
Loss/(gain) on sale of property, plant
and equipment 1.5 (0.6)
Amortisation of intangibles 4.1 1.6
Difference between pension contributions
paid and amount recognised in the income
statement 0.4 (0.1)
Finance income (1.9) (1.3)
Finance costs 2.2 3.1
Other finance income - pensions (0.4) (0.1)
Increase in inventories (0.9) (0.2)
Increase in trade and other receivables (26.1) (38.7)
Increase in bonus accrual 88.8 60.4
Increase in trade and other payables 16.2 29.1
Increase in provisions 0.5 0.1
======= ----------
Cash generated from operations 199.5 134.3
Income tax paid (20.6) (9.2)
======= ----------
Net cash flow from operating activities 178.9 125.1
======= ----------
Cash flows from investing activities
Interest received 1.3 0.2
Purchase of property, plant and equipment (7.6) (3.7)
Purchase of intangible assets (2.0) (2.9)
Purchase of investments (0.6) (3.5)
Proceeds from sale of investments 1.0 9.4
Proceeds from sale of property, plant and
equipment 0.7 1.6
Transfer from current investments (cash
on deposit and government bonds) 6.8 20.0
Transfer to current investments (cash on
deposit and government bonds) (0.3) (6.8)
Acquisition of subsidiaries, net of cash (4.9) -
acquired
Dividends received from investments 0.2 -
======= ----------
Net cash flow from investing activities (5.4) 14.3
======= ----------
Cash flows from financing activities
Interest paid and other charges (2.2) (2.3)
Dividend paid (25.9) (24.4)
Dividend paid to non-controlling interests (4.3) (3.9)
Repayment of borrowings (0.6) (0.1)
Principal elements of lease payments (11.2) (9.1)
Proceeds from shares issued 2.7 1.8
Contributions to non-controlling interests (1.3) -
ESOP shares acquired (20.4) (13.2)
Net cash flow from financing activities (63.2) (51.2)
======= ----------
Net increase in cash and cash equivalents 110.3 88.2
Cash and cash equivalents at 1 January 261.6 173.4
Net foreign exchange differences 12.5 -
======= ----------
Cash and cash equivalents at 31 December 384.4 261.6
======= ----------
*Restatement in relation to equity-settled liabilities, see note
2.1 for further details.
Notes to the preliminary financial statements
1 Corporate information
The preliminary financial statements of Clarkson PLC for the
year ended 31 December 2022 were authorised for issue in accordance
with a resolution of the Directors on 3 March 2023. Clarkson PLC is
a public limited company, listed on the London Stock Exchange,
incorporated and registered in England and Wales and domiciled in
the UK.
The preliminary financial information ('financial information')
set out in this announcement does not constitute the consolidated
statutory financial statements for the years ended 31 December 2021
and 2022, but is derived from those financial statements. Statutory
financial statements for 2021 have been delivered to the Registrar
of Companies and those for 2022 will be delivered following the
Company's Annual General Meeting. The External Auditor has reported
on the financial statements for 2021 and 2022; 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 Statement of accounting policies
2.1 Basis of preparation
The financial information set out in this announcement is based
on the consolidated financial statements, which are prepared in
accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006 and the
Disclosure Guidance and Transparency Rules Sourcebook of the United
Kingdom's Financial Conduct Authority.
The Group has considerable financial resources available to it,
a strong balance sheet and has consistently generated an underlying
profit and good cash inflow. As a result of this, the Directors
believe that the Group is well placed to manage its business risks
successfully, despite the challenging market backdrop and
geo-political tensions. Management has stress tested a range of
scenarios, modelling different assumptions with respect to the
Group's cash resources. Three different scenarios were
considered:
-- Management modelled the impact of a reduction in
profitability to GBP30m (a level of profit the Group has exceeded
in every year since 2013), whilst taking no mitigating actions: the
Group remained cash generative before dividends.
-- Management assessed the impact of a significant reduction in
world seaborne trade similar to that experienced in the global
financial crisis in 2008 and the pandemic in 2020: seaborne trade
recovered in 2009 and 2021 along with the profitability of the
Group. Since 1990 no two consecutive years have seen reductions in
world seaborne trade.
-- Management undertook a reverse stress test over a period of
three years to determine what it might take for the Group to
encounter financial difficulties. This test was based on current
levels of overheads, the net cash and available funds* position at
31 December 2022, the collection of debts and the invoicing and
collection of the forward order book. This test determined that, in
the absence of any mitigating action which would be applied in
these circumstances, no new business would be required to remain
cash positive for at least the next 12 months.
Under the first two scenarios, the Group is able to generate
profits and cash, and has positive net cash and available funds*
available to it. In the third scenario, current net cash and
available funds* together with the collection of debts and the
forward order book would leave sufficient cash resources to cover
at least the next 12 months without any new business.
Accordingly, the Directors have a reasonable expectation that
the Group has sufficient resources to continue in operation for at
least the next 12 months. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
The consolidated income statement is shown in columnar format to
assist with understanding the Group's results by presenting profit
for the year before acquisition-related costs; this is referred to
as 'underlying profit'. The column 'acquisition-related costs'
includes the amortisation of acquired intangible assets, the costs
of acquiring new businesses and the expensing of the cash and
share-based elements of consideration linked to ongoing employment
obligations on acquisitions, see note 4.
The Consolidated Cash Flow Statement for the year ended 31
December 2021 has been restated to add back GBP11.3m of
equity-settled liabilities as 'operating activities' and deduct
GBP11.3m of shares acquired by the ESOP as 'financing activities'.
This has the effect of increasing the net cash flow from operating
activities in 2021 from GBP113.8m to GBP125.1m with a corresponding
increase in the net cash flow from financing activities from
GBP39.9m to GBP51.2m. This presentation has also been adopted for
the year ended 31 December 2022. There is no net impact upon the
cash flow statement overall and there is no impact on any balance
sheet or income statement figures.
2.2 Accounting policies
The financial information is in accordance with the accounting
policies set out in the 2022 financial statements and has been
prepared on a going concern basis.
The group has applied the following amendments for the first
time for their annual reporting period commencing 1 January
2022:
-- Annual Improvements to IFRS Standards 2018-2020; and
-- Reference to the Conceptual Framework - Amendments to IFRS 3.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2022 reporting periods and have not been
early adopted by the Group. These standards, amendments or
interpretations are not expected to have a material impact on the
entity in the current or future reporting periods and on
foreseeable future transactions.
2.3 Accounting judgements and estimates
The preparation of the preliminary financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that could require a material
adjustment to the carrying amount of the asset or liability
affected in the future.
2.4 Forward-looking statements
Certain statements in this announcement are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements. The Group undertakes no
obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
3 Segmental information
Business segments Revenue Results
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
Broking 495.5 340.0 117.6 73.6
Financial 49.8 56.0 7.8 13.3
Support 39.0 29.6 5.0 3.3
Research 19.5 17.7 7.0 6.1
====== ------ ======= -------
Segment revenue/profit 603.8 443.3 137.4 96.3
====== ------
Head office costs (36.6) (25.2)
======= -------
Operating profit before acquisition-related
costs 100.8 71.1
Acquisition-related costs (0.8) (0.3)
======= -------
Operating profit after acquisition-related
costs 100.0 70.8
Finance income 1.9 1.3
Finance costs (2.2) (3.1)
Other finance income - pensions 0.4 0.1
======= -------
Profit before taxation 100.1 69.1
Taxation (20.5) (14.7)
======= -------
Profit for the year 79.6 54.4
======= -------
4 Acquisition-related costs
Included in acquisition-related costs is GBP0.2m (2021: GBP0.2m)
relating to amortisation of intangibles acquired as part of
previous acquisitions, and cash and share-based payment charges of
GBP0.3m (2021: GBP0.1m). The cash and share-based payment charges
are contingent on employees remaining in service and are therefore
spread over the service period.
Also included is GBP0.3m of transaction costs relating to
acquisitions in the current year.
5 Taxation
The major components of the income tax charge in the
consolidated income statement are:
2022 2021
GBPm GBPm
Profit at UK average standard rate of corporation tax of 19% (2021: 19%) 19.0 13.1
Expenses not deductible for tax purposes 2.3 2.1
Other (0.8) (0.5)
====== ------
Total tax charge in the income statement 20.5 14.7
====== ------
6 Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Parent Company by the weighted average number of ordinary shares in
issue during the year.
Diluted earnings per share amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Parent Company 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:
2022 2021
GBPm GBPm
Underlying profit for the year attributable to ordinary
equity holders of the Parent Company * 76.3 50.4
Reported profit for the year attributable to ordinary
equity holders of the Parent Company* 75.6 50.1
========== ----------
2022 2021
Million Million
Weighted average number of ordinary shares - basic 30.5 30.4
Weighted average number of ordinary shares - diluted 30.7 30.7
---------- ----------
7 Dividends
The Board is recommending a nal dividend of 64 p (2021: 57p),
giving a total dividend of 93 p (2021: 84p).
8 Intangible assets
On 3 October 2022, the Group, through Maritech Holdings Limited,
the legal entity behind Sea/, acquired 100% of the
share capital of Swedish-based technology company Chinsay AB and
its 100% subsidiary Chinsay Pte. Ltd. located in
Singapore (Chinsay). Cash consideration paid was US$3.2m
(GBP2.9m).
On 4 November 2022, a further acquisition was completed by
Maritech Holdings Limited. 100% of the share capital of
Setapp Sp. z.o.o., a Polish technology company, was acquired for
cash consideration of EUR3.0m (GBP2.6m).
In 2022, the Group also acquired 100% of the share capital of
PPE Suppliers Limited (PPE) through Gibb Group Ltd for GBP0.2m.
The above acquisitions resulted in goodwill of GBP5.4m and other
intangible assets of GBP2.1m.
9 Investments
Included within current investments are deposits totalling
GBP3.1m (2021: GBP2.8m) with maturity periods greater than three
months, in addition to GBPnil of government bonds (2021: GBP6.8m).
Also included is GBP0.4m (2021: GBP0.7m) relating to the
convertible bonds business within the Financial segment.
10 Cash and cash equivalents
2022 2021
GBPm GBPm
Cash at bank and in hand 320.1 260.7
Short-term deposits 64.3 0.9
------
384.4 261.6
====== ------
11 Employee benefits
The Group operates three final salary defined benefit pension
schemes, being the Clarkson PLC scheme, the Plowrights scheme and
the Stewarts scheme.
The following tables summarise amounts recognised in the
Consolidated balance sheet and the components of the net benefit
charge recognised in the Consolidated income statement.
Recognised in the balance sheet
2022 2021
GBPm GBPm
-------- --------
Fair value of schemes' assets 134.7 201.5
Present value of funded defined benefit obligations (115.2) (174.2)
-------- --------
19.5 27.3
Effect of asset ceiling in relation to the Plowrights scheme (4.1) (5.3)
-------- --------
Net benefit asset recognised in the balance sheet 15.4 22.0
-------- --------
The above is recognised on the balance sheet as an asset of
GBP15.8m (2021: GBP25.8m) and a liability of GBP0.4m (2021:
GBP3.8m). A deferred tax asset on the benefit liability amounting
to GBP0.1m (2021: GBP0.9m) and a deferred tax liability on the
benefit asset of GBP3.9m (2021: GBP6.5m) is also recognised on the
balance sheet.
Recognised in the income statement
2022 2021
GBPm GBPm
====== ------
Recognised in other finance income - pensions:
Expected return on schemes' assets 3.6 2.8
Interest cost on benefit obligation and asset ceiling (3.2) (2.7)
Recognised in administrative expenses:
Schemes' administrative expenses (0.8) (0.3)
====== ------
Net benefit charge recognised in the income statement (0.4) (0.2)
====== ------
12 Share capital
2022 2021
Million GBPm Million GBPm
Ordinary shares of 25 p each, issued and fully paid 30.6 7.7 30.5 7.6
========== ====== ---------- ------
During the year, the Company issued 141,346 shares (2021:
80,871) in relation to the ShareSave scheme.
13 Contingencies
From time to time, the Group is engaged in litigation in the
ordinary course of business. The Group carries professional
indemnity insurance. There is currently no litigation that is
expected to have a material adverse financial impact on the Group's
consolidated results or net assets.
14 Related party disclosures
The Group's significant related parties are disclosed in the
2022 Annual Report. There were no material differences in related
parties or related party transactions in the year, from the year
ended December 2021.
15 Events occurring after the reporting period
The Group acquired 100% of the share capital of DHSS Aviation
B.V., DHSS Logistics B.V., DHSS Projects B.V. and DHSS Services
B.V. for cash consideration of EUR4.0m and additional maximum
deferred consideration (including earn-out) of EUR6.3m.
Other information
Alternative Performance Measures
The Directors believe that alternative performance measures can
provide users of the financial statements with a better
understanding of the Group's underlying financial performance, if
used properly. Directors' judgement is required as to what items
qualify for this classification.
Adjusting items
The Group excludes adjusting items from its underlying earnings
metrics with the aim of removing the impact of one-offs which may
distort period-on-period comparisons.
The term 'underlying' excludes the impact of acquisition-related
costs, which are shown separately on the face of the income
statement. Management separates these items due to their nature and
size and believes this provides further useful information, in
addition to statutory measures, to assist readers of the Annual
Report to understand the results for the year.
Underlying profit before taxation
Reconciliation of reported profit before taxation to underlying
profit before taxation for the year.
2022 2021
GBPm GBPm
Reported profit before taxation 100.1 69.1
Add back acquisition-related costs 0.8 0.3
-------------------------------------- ------ -----
Underlying profit before taxation 100.9 69.4
-------------------------------------- ------ -----
Underlying effective tax rate
Reconciliation of reported effective tax rate to underlying
effective tax rate.
2022 2021
Reported effective tax rate 20.5% 21.3%
Adjustment relating to acquisition-related
costs (0.1%) (0.1%)
---------------------------------------------- ------- -------
Underlying effective tax rate 20.4% 21.2%
---------------------------------------------- ------- -------
Underlying profit attributable to equity holders of the Parent
Company
Reconciliation of reported profit attributable to equity holders
of the Parent Company to underlying profit attributable to equity
holders of the Parent Company.
2022 2021
GBPm GBPm
Reported profit attributable to equity holders of the Parent Company 75.6 50.1
Add back acquisition-related costs 0.7 0.3
-------------------------------------------------------------------------- ----- -----
Underlying profit attributable to equity holders of the Parent Company 76.3 50.4
-------------------------------------------------------------------------- ----- -----
Underlying basic earnings per share
Reconciliation of reported basic earnings per share to
underlying basic earnings per share.
2022 2021
Reported basic earnings per share 247.9p 164.6p
Add back acquisition-related costs 2.4p 1.0p
--------------------------------------- ------- -------
Underlying basic earnings per share 250.3p 165.6p
--------------------------------------- ------- -------
Underlying administrative expenses
Reconciliation of reported administrative expenses to underlying
administrative expenses for the year.
2022 2021
GBPm GBPm
Reported administrative expenses 482.0 356.0
Less acquisition-related costs (0.8) (0.3)
-------------------------------------- ------ ------
Underlying administrative expenses 481.2 355.7
-------------------------------------- ------ ------
Operational metrics
The Group monitors its cash and liquidity position by adjusting
gross balances to reflect the payment of obligations to staff and
restricted monies held by regulated entities.
Net cash and available funds
The Board uses net cash and available funds as a better
representation of the net cash available to the business, since
bonuses are typically paid after the year-end, hence an element of
the year-end cash balance is earmarked for this purpose. It should
be noted that accrued bonuses include amounts relating to the
current year and amounts held back from previous years which will
be payable in the future.
Reconciliation of reported cash and cash equivalents to net cash
and available funds reported.
2022 2021
GBPm GBPm
Cash and cash equivalents as reported 384.4 261.6
Add cash on deposit and government bonds included within current investments 3.1 9.6
Less amounts reserved for bonuses included within current trade and other payables (225.8) (148.9)
Net cash and available funds 161.7 122.3
-------------------------------------------------------------------------------------- -------- --------
Free cash resources
Free cash resources is a further measure used by the Board in
taking decisions over capital allocation. It deducts monies held by
regulated entities from the net cash and available funds
figure.
Reconciliation of reported cash and cash equivalents to reported
free cash resources.
2022 2021
GBPm GBPm
Cash and cash equivalents as reported 384.4 261.6
Add cash on deposit and government bonds
included within current investments 3.1 9.6
Less amounts reserved for bonuses included
within current trade and other payables (225.8) (148.9)
Less net cash and available funds held
in regulated entities (30.8) (30.0)
Free cash resources 130.9 92.3
---------------------------------------------- -------- --------
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March 06, 2023 02:00 ET (07:00 GMT)
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