4 March
2024
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
2023.
Summary
· Record underlying profit before taxation* of
£109.2m (2022: £100.9m), an increase of 8.2%
· Underlying earnings per share* increased 9.9% to 275.0p (2022:
250.3p)
· Full year dividend of 102p, giving rise to a 21st
consecutive year of dividend growth
· Forward order book for invoicing in 2024 was US$217m (2022:
US$216m)
· Strong balance sheet with free cash resources* of
£175.4m (2022: £130.9m) available for future investment
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Year ended
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Year
ended
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31 December
2023
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31
December 2022
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Revenue
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£639.4m
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£603.8m
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Underlying profit
before taxation*
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£109.2m
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£100.9m
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Reported profit before
taxation
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£108.8m
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£100.1m
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Underlying basic
earnings per share*
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275.0p
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250.3p
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Reported basic earnings
per share
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275.2p
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247.9p
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Dividend per
share
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102p
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93p
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* 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:
"2023 was a year of disruption in the maritime markets and I
am enormously proud we have achieved another record
year.
"The business today is a reflection of two decades' investment
in our strategy, and we are confident in our outstanding team, our
breadth of market-leading services, our technologies and our
geographic reach to meet the growing needs of our clients in a
world which is ever more complex.
"We are optimistic for Clarksons in the near, medium and
long-term future."
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Enquiries:
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Clarkson PLC:
Andi Case, Chief Executive
Officer
Jeff Woyda, Chief Financial Officer
& Chief Operating Officer
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020
7334 0000
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Camarco:
Billy Clegg
Jennifer Renwick
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020
3757 4983 / 4994
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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 2,000 people
in over 60 different offices across its four divisions and is
number one or two in all its market segments.
The Company has delivered 21 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 the Chair of Clarkson PLC, I am
privileged to report another set of record results. As I reflect on
the drivers of this performance, despite all the disruptions to
shipping faced throughout the year, I believe it comes down to a
number of key factors, the seeds of which were planted many years
ago. For a number of years, Clarksons has consistently invested in
line with its strategy to build breadth and depth of services to
its clients with leading positions in each segment. As a result, it
has created a truly global company with local teams across all the
key shipping geographies which are intrinsically connected to those
localities.
Over this time, Clarksons has also
built a large market data and intelligence capability and a
technology platform, providing best-in-sector tools for trade so
our outstanding colleagues can offer clients the best, most
informed advice. We have strategically invested in the trends which
drive our industry, whether it be the financing of the industry or,
more recently, in shipping's green transition. With global trade
continuing to grow in both volume and complexity, these strategic
pillars of Clarksons are providing our clients with sector-leading
advice, market intelligence and capabilities.
Results
The results for 2023 reflect the
strength and diversity of our business model, as well as our
ability to adapt to changing market conditions. Revenue increased
by 5.9% to £639.4m, driven by strong growth in our Broking, Support
and Research divisions, as well as responsible treasury management.
Underlying profit before taxation* increased by 8.2% to £109.2m. We
have maintained a strong balance sheet, with net assets of £456.6m
(2022: £413.2m) and free cash resources* of £175.4m as at 31
December 2023 (2022: £130.9m).
Dividend
In line with our progressive
dividend policy, the Board has recommended a final dividend of 72p
per share, bringing the total dividend for 2023 to 102p per share,
an increase of 10% compared to 2022. This reflects our confidence
in the future prospects of the Group and our commitment to
continued delivery of shareholder returns. We are proud of our
dividend growth track record, 2023 being our 21st year of
consecutive dividend increases.
People
Our people are unquestionably our
most important and valuable asset and the key to our success. We
have a talented, diverse and dedicated team of over 2,000 employees
across more than 60 offices in 24 countries, who share our vision
and values. We continue to invest in their development, wellbeing
and engagement, as well as in attracting and retaining the best
talent in the industry. Our specialist teams are deeply embedded in
their markets, enabling us to retain our market-leading positions
across each market segment. I would like to take this opportunity
to thank all my colleagues for their hard work, commitment and
dedication to both Clarksons and to our clients.
Giving back
We are proud of our long-standing
tradition of contributing to the communities where we operate and
the causes we care about. In 2023, through The Clarkson Foundation,
we made donations to various charitable initiatives, both at home
and around the world. We have also supported many of our employees'
volunteering efforts throughout the year.
We are also leading positive change
by continuing to invest in the growth of our Green Transition team,
which is importantly helping our clients to reduce the impact of
shipping on the environment.
Board
I am grateful to my fellow Board
members, whose strengths and diversity of experience bring a range
of skills and perspectives to the boardroom table. In February
2024, Birger Nergaard had served nine years on the Clarksons Board.
He has agreed to stay on the Board until our AGM in May 2024 where
he will not be standing for re-election. A search for a new
non-executive director has commenced and we will make a further
announcement when appropriate. We thank Birger for his important
contribution to the development and governance of the Group and
wish him well for the future.
Outlook
We are optimistic about the route
ahead of us. Sector trends remain favourable, global trade
continues to grow in both scale and complexity, and the green
transition in shipping is moving ahead apace. We believe that
Clarksons is well-positioned to capitalise on these trends and
opportunities, with a consistent and clear strategy, and a strong
market position serving a loyal client base which is having to
navigate more challenges. Sustained investment in our strategy has
given us a competitive edge. With a record forward order book of
secured 2024 revenues of US$217m, the Board looks to the future
with confidence. I would like to take this opportunity to thank my
colleagues, our clients and our shareholders for their support as
Clarksons continues to play a critical role in powering, feeding
and connecting the world, regardless of the unexpected challenges
the trading world presents. Clarksons is an outstanding
business.
Laurence Hollingworth
Chair
1 March 2024
Chief Executive Officer's review
2023 was a year of disruption in the
maritime markets and I am enormously proud of, and grateful to, my
colleagues across the business, who have together achieved another
record year. Seaborne trade has continued to grow, and the increase
in shipping demand has been exacerbated by tonne-mile impact
arising from a variety of disruptions, be they climate or
geo-political-related. Our results reflect our resilience, agility,
and market leadership as we provide integrated advice, intelligence
and services to clients, helping them make better decisions in
increasingly complex times.
We have highlighted the impact of
supply and demand dynamics in the shipping industry for the past
few years, and the supply side remains tight in most sectors.
Shipbuilding capacity is limited, the cost of building new vessels
has risen with increased input costs, and financing is expensive.
The green transition and the need for alternate-fuelled ships has
exacerbated the squeeze, with owners being hesitant to commit to
newbuilds while uncertainty remains about which fuelling technology
to move forward with. As a result, the average age of the global
fleet is increasing. The global fleet grew by just 3% during the
year, and the global orderbook, which is still only 12% of the
fleet, is highly skewed towards container and gas in the near term,
which is likely to result in constraints for other
markets.
Demand-supply dynamics have
supported various growth drivers including global seaborne trade,
increased complexity in the energy supply chain, global economic
growth and rising global energy consumption. Climate, environmental
issues and the green transition have played a part here too.
Vessels are being run at reduced speeds to lower emissions as
corporates and consumers intensify their scrutiny on carbon
emissions, and reduced water levels in the Panama Canal have slowed
the passage of ships through the waterway and forced many to take
alternative, longer routes. The inclusion of shipping in the EU's
Emissions Trading System has created even greater demand for
vessels, both now and for the future, which meet the requirements
of both customers, who are demanding more carbon-efficient
journeys, and the regulators.
The shipping markets have also had
little respite from geo-political challenges since the turn of the
decade. Disruptions to trade routes in any form pose challenges
that reach far beyond the world of shipping. The need for the
movement and surety of food, energy and goods is paramount to
keeping both businesses and countries moving globally. It is in
times such as these that the shipping industry has to adapt to meet
new challenges. Clarksons' data and intelligence, market coverage,
flexibility and depth of connectivity ensures that our clients have
the tools and information to make the best decisions and maintain
trade flows as efficiently as possible.
Broking
The Broking division had another
successful year. Energy shipping led the way, with gas, tankers,
specialised products, offshore and car carriers all experiencing
strong conditions and dry bulk and containers freight rates
rallying later in the year.
As global trends evolve, Clarksons'
strategy to invest in all areas of shipbroking has ensured that we
are able to support our clients across both mainstream and more
niche markets, in every vertical. Within the car carrier market,
electric vehicle manufacturers and their customers are increasingly
requiring carbon-neutral delivery of both components and end
products, and Clarksons' expertise in the green transition has
enabled us to assist our clients' investment into this important
market.
The offshore sector has seen a
recovery this year as global disruption to energy supplies has
created a buoyant market in which increased utilisation rates have
led to a supportive rate environment. When Clarksons acquired RS
Platou in 2015, we became the world's largest offshore broker with
a team of unrivalled scale and expertise in the marketplace. This
market-leading position now optimally positions us to capitalise on
the sector recovery in 2024 and beyond as long-term targets for
energy security, offshore supply and renewable energy are becoming
increasingly important.
The sale and purchase team had
another very successful year as demand for secondhand vessels was
high, and we delivered strong newbuilding activity within the
Group. Clarksons' market-leading global teams and analysts have
again assisted our clients with their strategy and
execution.
Segmental profit before taxation
from Broking was £121.2m, up £3.6m over the year, with a margin of
23.5%.
Financial
The Financial division had a more
challenging year as the real estate sector and global capital
markets remained quiet. Many clients in shipping have taken
advantage of the markets to pay down debt, however the team has
been involved in most of the sizeable transactions in the shipping
industry and continues to develop and evolve its offering to meet
clients' needs. The Financial division plays a critical role in
Clarksons' integrated offering for clients and secures Clarksons'
position as the only full service provider in the sector. The
Financial division produced a segmental profit before taxation of
£6.6m in 2023 compared, with £7.8m in 2022.
Support
The Support division in the UK, EU
and Egypt had an excellent 12 months as its agency, customs
clearance, canal transit and Gibb Group, its PPE and safety &
survival supplier, all performed very well. Clarksons Port Services
acquired DHSS early in 2023. This business is now fully integrated
and has exceeded management's expectations at the time of the
acquisition. Investment in office and warehouse facilities in
Aberdeen has introduced new technology and capacity, enabling us to
serve more clients and work more efficiently.
The Support division produced a
segmental profit before taxation of £6.4m and a 11.3% margin in
2023 (2022: £5.0m and 12.8%).
Research
Clarksons Research is renowned as
the standard bearer across the industry, with the division
delivering proprietary data to both our teams and our clients to
enable better decision-making. The quality of the team's
unparalleled analysis and understanding of global megatrends and
trade complexities, including the green transition, energy
transition and fleet evolution, has resulted in recurring revenues
in excess of 85% as clients seek consistently high-quality data and
commentary to manage their business decisions.
The division increased segmental
profit before taxation by 20.0% to £8.4m (2022: £7.0m).
Sea
We are very pleased with the
progress the Sea platform has made this year as regulation, risk
requirements and increasing trade complexities have led clients to
seek improved governance and efficiencies in their contract
management. Our investment in Sea has created an opportunity from
this market trend. Revenue, both one-off and recurring, has
increased, and the volume of contracts fixed on the platform
continues to rise. We acquired MarDocs and brought Recap Manager
back into the business over the period, further accelerating Sea's
progress in digitising and managing chartering workflows from
pre-fixture negotiation to at-fixture documentation.
Outlook
The business today is a reflection
of two decades' investment in our strategy, and we are confident in
our outstanding team, our breadth of market-leading services, our
technologies and our geographic reach to meet the growing needs of
our clients in a world which is ever-more complex. We nurture
long-term relationships with clients and we have built a business
which helps support them with their decision-making.
These investments have set the
foundations for the business into the future and we are optimistic
in the outlook for Clarksons in the near, medium and long term. We
are unwavering in our commitment to growth and our strong forward
order book for delivery in 2024 only, which stands at US$217m,
together with our much larger forward orderbook which stretches
further into the future, gives us growing forward visibility and
the confidence to continue to invest in our capabilities across the
business. Our strategy of investing in market-leading positions,
pioneering technology, top teams, and continually increasing the
breadth and depth of our advisory capabilities has optimally
positioned us to capture future opportunities in the global
shipping markets. We will continue all elements of this investment
strategy and seek further opportunities for M&A.
Supply and demand dynamics and the
impact of the green transition, which is still in its early stages,
ongoing trade disruptions and other geo-political, economic and
environmental challenges will require more insights, experience,
advice and connectivity than ever before. Clarksons is uniquely
positioned to help guide its clients through this challenging and
ever-evolving environment.
Andi Case
Chief Executive Officer
1 March 2024
Financial review
Revenue: £639.4m (2022:
£603.8m)
Underlying profit before taxation*:
£109.2m (2022: £100.9m)
Reported profit before taxation:
£108.8m (2022: £100.1m)
Dividend per
share: 102p (2022:
93p)
Introduction
The Group delivered another
excellent financial performance in 2023, with revenue of £639.4m
(£2022: £603.8m) and underlying profit before taxation* of £109.2m
(2022: £100.9m), both ahead of the comparative period. Underlying
basic earnings per share* grew 9.9% to 275.0p (2022:
250.3p).
Reported profit before tax and basic
earnings per share were £108.8m (2022: £100.1m) and 275.2p (2022:
247.9p) respectively. In line with the progressive dividend policy,
the recommended full year dividend of 102p, as described in more
detail below, represents the 21st consecutive year of
growth.
Free cash resources* increased to
£175.4m (2022: £130.9m); the Group's strong cash-generative
position enables us to continue investing in the best people,
market intelligence and technology to support and advise our
clients. The Group also actively pursues M&A activity where
this is complementary to the broader strategy.
2023 performance overview
The Broking division performed
strongly, with revenues of £516.8m (2022: £495.5m) representing an
increase of 4.3%. The division enhanced its market-leading position
across every segment of shipping and remains well placed to advise
clients in the face of ongoing trade disruptions, environmental
concerns and geopolitical changes affecting the industry. The
division generated a segmental profit of £121.2m (2022: £117.6m) at
a margin of 23.5% (2022: 23.7%).
Energy-related markets performed
strongly in 2023, including gas, tankers and specialised products.
Offshore markets also performed well, supported by concerns around
energy security and a focus on renewable alternatives. The
environment was more challenging for freight rates in dry cargo and
containers, although these remain above historical levels and saw
improvement into 2024 following disruption to Red Sea trade
routes.
Increased scale and complexity of
global trade, higher asset utilisation and environmental concerns
created the backdrop for strong asset pricing and another
successful year for the sale and purchase team. We continue to
support clients with their asset investment strategies for both new
and secondhand vessels, aligned to the wider industry focus on the
green transition.
The Financial division reported
revenues of £44.1m (2022: £49.8m). A challenging economic backdrop
and increase in interest rates reduced revenue and profitability
from real estate and project finance business. This reduction was
partially offset by growth in banking where, despite more
challenging capital markets, the division increased revenue,
focused in M&A advisory. The offshore energy services team also
had a strong year, executing a range of transactions for clients
following increasing investor confidence. The division generated a
segmental profit of £6.6m (2022: £7.8m) for the year.
In Support, both revenue and
segmental profit increased compared to the previous year at £56.6m
(2022: £39.0m) and £6.4m (2022: £5.0m) respectively. The division's
core agency business performed well in both the UK and Egypt, the
latter benefiting from strategic partnerships with major clients.
Gibb Group also performed very strongly, investing in new
facilities and people to meet strong client demand for specialist
tools and safety equipment for the offshore industry. The division
benefited from new business opportunities following the acquisition
of DHSS, which contributed £10.8m of revenue during the
year.
The Research division reported
revenue of £21.9m (2022: £19.5m) and a segmental profit of £8.4m
(2022: £7.0m) following continued investment in market
intelligence, expanding both the breadth and depth of coverage and
insight into evolving market trends. In particular, the division's
strategy to provide leading data and insights around the green
transition evolved in 2023, meeting strong client appetite to
understand the maritime sector's decarbonisation pathway. As a
market leader in its sector, the division remains well placed to
provide high-quality information and analysis to clients, enabling
them to make the best decisions for their business.
Administrative expenses
The Group incurred underlying
administrative expenses* of £508.8m (2022: £481.2m), representing
an increase of 5.7%. The main driver of this increase was variable
compensation, aligned to the improvement in underlying
profitability. In addition, the Group continued to invest in new
people and teams, in training and developing our existing talent,
in expanding our product footprint and in developing market-leading
tools and intelligence. We remain committed to investing in all
areas of the business to ensure that we can service the growing
needs of our clients globally.
Acquisitions
At the beginning of the year, the
Group completed the acquisition of DHSS, a renewables-focused port
services business based in the Netherlands for an initial
consideration of £4.1m. DHSS (now rebranded to Clarkson Port
Services B.V.) has had a successful year, exceeding management's
first year expectations and making a meaningful contribution to the
Support division's segmental performance. The business increases
the breadth of our offering in the offshore renewables sector, as
part of our wider investment and focus on the green transition
across the business.
The Group also invested in Sea
during the year, adding the MarDocs digital platform for
consideration of £1.2m. In addition, the commercial management of
Recap Manager was brought back into the Group following an
agreement with the London Tanker Broker Panel. Both transactions
complement the Setapp and Chinsay acquisitions made in 2022 and
leave the Group strongly positioned for growth in this
area.
In November 2023, the Group expanded
its global coverage in dry cargo broking with the acquisition of a
new team in Rio de Janeiro to complement the existing offshore and
specialised product expertise locally.
Acquisition-related costs of £2.6m
(2022: £0.8m), which include the above transactions, have been
disclosed separately in the consolidated income statement, and
relate to the amortisation of intangibles and variable remuneration
recognised over the employee service periods. We estimate
acquisition-related costs for 2024 to be £2.1m assuming no further
acquisitions are made.
Dividend
The Board is recommending a final
dividend in respect of 2023 of 72p (2022: 64p) which, subject to
shareholder approval, will be paid on 24 May 2024 to shareholders
on the register at the close of business on 10 May 2024.
Together with the interim dividend
in respect of 2023 of 30p (2022: 29p), this would give a total
dividend of 102p for 2023, an increase of 10% on 2022 (2022: 93p)
and representing the 21st consecutive year the Group has increased
returns to shareholders. In reaching its decision, the Board took
into consideration the Group's 2023 performance, balance sheet
strength, ability to generate cash and forward order
book.
Exceptional items
In December 2023, the Group
completed the sale of an industrial unit that it had owned for
several years. The property's favourable location as part of a
wider site redevelopment meant a sale in excess of market value was
achieved, which resulted in an exceptional gain of £3.5m after
transaction fees and costs. The Group donated £1.3m of the proceeds
to The Clarkson Foundation for use in charitable projects. An
exceptional net gain of £2.5m including tax credits of £0.3m has
been disclosed separately in the consolidated income
statement.
Finance income and costs
The Group reported finance income of
£10.5m (2022: £1.9m), benefiting from active treasury management, a
high interest rate environment and strong underlying cash
generation from the business. Finance costs remained at £2.2m
(2022: £2.2m) and are mainly comprised of interest expenses on
lease liabilities from the Group's application of
IFRS16.
Taxation
The Group reported an underlying
effective tax rate* of 21.4% (2022: 20.4%). The Group's underlying
tax rate remains stable, with the lower rate reported in 2022
including a one-off US tax credit. The effective tax rate is
reflective of the broad international operations of the Group. The
Group's reported effective tax rate was 21.1% (2022:
20.5%).
Foreign exchange
The average sterling exchange rate
during 2023 was US$1.25 (2022: US$1.23). At 31 December 2023, the
spot rate was US$1.27 (2022: US$1.21).
Free cashflow
The Group ended the year with cash
balances of £398.9m (2022: £384.4m) and a further £39.9m (2022:
£3.1m) held in short-term deposit accounts and government bonds,
classified as current investments on the balance sheet.
Net cash and available
funds*, being cash balances after the deduction of the
total cost of accrued bonuses, at 31 December 2023 were £201.1m
(2022: £161.7m). 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 2023 were £175.4m (2022: £130.9m).
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 2023 were
£456.6m (2022: £413.2m). The balance sheet remains strong, with net
current assets and investments exceeding non-current liabilities
(excluding pension assets and lease liabilities as accounted for
under IFRS 16 'Leases') by £206.5m (2022: £163.6m). The Group's
pension schemes had a combined surplus before deferred tax of
£13.4m (2022: £15.4m).
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 can 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 2023, this
estimate was US$217m (31 December 2022: US$216m).
Subsequent Events
In February 2024, the Group
completed the acquisition of Trauma & Resuscitation Services
Limited. The investment increases our service offering to the oil
and gas, marine and renewable energy sectors through the provision
of market-leading advanced first aid training for the offshore wind
sector.
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, underlying earnings per
share, net funds and free cash resources.
Jeff Woyda
Chief Financial Officer & Chief
Operating Officer
1 March 2024
Business review
Broking
Revenue: £516.8m (2022:
£495.5m)
Segmental split of underlying profit
before taxation: £121.2m (2022: £117.6m)
Forward order book for 2024: US$217m
^ (At 31 December 2022 for 2023: US$216m^)
^ Directors' best
estimate of deliverable forward order book ('FOB')
Dry
cargo
Supporting a range of important
industrial sectors including construction, energy and agriculture,
the dry cargo sector moved over 5.5bn tonnes of cargo in 2023
across a range of dry bulk commodities, including metals and
minerals, agricultural products and some semi-processed goods. The
dry bulk market in 2023 was characterised by very firm cargo
volumes despite the macro-economic backdrop, a series of weak
economic data points and headlines in key economies, and higher
interest rates. However, continued fleet growth plus an unwinding
in congestion meant that dry cargo markets were relatively subdued
for much of 2023, with weighted bulkcarrier earnings averaging
US$12,371/day, down 40% year on year and close to the long-term
trend.
Market conditions took a sharp
upward turn in the final quarter of the year, as a surge in
Capesize cargoes from the Atlantic combined with a rise in
congestion at Chinese discharge ports to create an upturn in
Capesize earnings, peaking at approximately US$50,000 per day,
their highest level since October 2021. At the same time, a firm
grain export programme from Brazil plus sustained strength in Asian
coal markets boosted demand for mid-size tonnage against a backdrop
of growing restrictions around Panama Canal transits. Further trade
flow disruption emerged at the end of the year with many owners
choosing to avoid the Suez Canal due to attacks on ships in the Red
Sea. This has led to increasingly significant re-routing of ships,
longer voyages, vessel positioning disruption and some upside
pressure on freight rates.
Looking forward to 2024, another
year of moderate fleet expansion is projected, particularly in the
mid-size sectors, while demand is generally expected to remain
firm, even if growth may moderate from last year's strong rates.
Emerging markets look likely to drive the majority of trade growth,
while the outlook for Chinese seaborne demand (particularly around
coal) is uncertain after record volumes in 2023.
Headline supply-demand fundamentals
in the bulker sector seem fairly balanced, while there is some
potential for gains to materialise through the year, especially
given typical seasonal trends. Port congestion and disruption from
the re-routing of trade flows towards longer distance routes may
also impact vessel demand, while the accelerating environmental and
regulatory agenda (including the EU ETS), alongside volatility and
risks to markets from geo-political and weather events, could add
additional complexity to markets in 2024. These weather events
include the developing El Niño event and its influence on commodity
supply.
Our dry cargo shipbroking team are
market leaders and achieved strong increases in volumes across all
desks in 2023, including significant increases in transactions and
fixtures. We increased headcount, including an expansion into South
America that created the dry cargo team's first footprint in the
region. Following previous investments, we have also significantly
increased our forward orderbook through increased period fixture
activity. Our investments in the green transition supported a
successful tender to become exclusive brokers for a green steel
project in Northern Europe.
Containers
The container sector facilitates
transportation of a wide range of goods, often high-value,
including consumer and industrial goods, foodstuffs, chemicals and
other manufactures. Container shipping markets saw a downward trend
across most of 2023, after a sharp normalisation in the second half
of 2022 from the previously exceptional levels, amid lower levels
of port congestion, an accelerated expansion in fleet capacity and
weak container trade trends. As a result, container freight rates
and containership timecharter earnings faced negative pressure and
declined through large parts of the year with the SCFI spot box
freight index falling to a three-year low by the end of September,
close to the pre-COVID-19 trend. The Clarksons charter rate index
remained marginally above the pre-COVID-19 trend but also slipped
to a three-year low. However, late 2023 saw major disruption to
liner services due to the rapidly evolving events in the Red Sea
region. This tightened the container freight market notably,
including a sharp spike in Far East-Europe spot box freight
rates.
Supply expansion was the key driver
of container market pressure in 2023, with capacity growth of 8%
and record deliveries (2.3m TEU), although some excess supply was
absorbed by slower speeds (decreased by 3% to a record low).
Newbuild ordering remained active in 2023 overall, with 1.6m TEU
contracted, led by liner fleet renewal efforts, while 83% of
capacity ordered was alternative fuel capable (mostly methanol, but
also LNG). Seaborne container trade remained weak in 2023 with
growth estimated at just 0.4% in TEU (1.4% in TEU-miles) amid
macro-economic headwinds on key trades, though more robust volume
trends were seen in exports from Asia to developing economies, and
volumes globally began to stabilise in the second half.
Looking ahead, the positive freight
market impetus from the Red Sea disruption at the outset of the
year adds significant uncertainty. The base case outlook for
container shipping markets through 2024 suggests, once disruption
eases, further softening across freight and charter markets. A
second consecutive year of accelerated supply expansion (7.3%
projected with record deliveries of 2.6m TEU) looks set to impact,
even if global seaborne container trade has the potential to
improve in 2024 (TEU growth of more than 3% forecast) as economic
headwinds moderate. However, the duration of disruption in the Red
Sea remains highly uncertain and the scenario of a prolonged period
of re-routing containerships around the Cape of Good Hope would
have significant demand implications, providing the possibility of
significant upside to the market outlook.
In 2023, our containership broking
teams were able to assist in several long-term charters of new
generation vessels, helping to secure liner companies' access to
cheaper and more fuel-efficient tonnage going forward. Working with
our Green Transition advisory team, we also assisted many
containership investors globally evaluate the various cleaner fuel
types that will be available in the coming years and this is
expected to remain a major theme going forward.
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, 2023 was another very
strong year for tanker markets. There was some divergence in the
trajectory of earnings across the various size ranges, with large
crude tankers performing particularly well relative to 2022 and
Aframax and product tankers easing slightly but remaining at
historically strong levels. The VLCC market benefited from a
rebound in Chinese crude imports from low levels across 2021-22 due
to COVID-19-related disruption. OPEC+ production cuts implemented
from November 2022, and successive additional voluntary cuts,
proved to be headwinds to the market. However, rising production
and exports from Atlantic Basin producers lent support. The net
effect of these developments, and limited newbuilding deliveries,
was that average VLCC earnings* increased by 81% year on year in
2023, bringing earnings back above longrun average levels. The
Suezmax and Aframax sectors continued to be heavily influenced by
the impact of the Russia-Ukraine conflict and the resultant
rearrangement of crude oil trading patterns, including longer
transport distances for European crude oil imports and Russian
crude oil exports. An increase in volumes loaded from the Atlantic
also aided this sector, with average Suezmax earnings rising 21%
year on year, while average Aframax earnings were broadly steady.
Products tanker earnings generally softened marginally from very
strong 2022 levels, though remained historically firm.
* All earnings basis non-eco,
non-scrubber fitted units.
Earnings for LR2s on the Middle
East-Far East route fell 7% year on year in 2023, while earnings
for LR1s on the same route declined by 16% year on year and average
earnings for clean trading MRs fell by a similar extent. Earnings
in all three sectors remained well above long-run averages.
Products tanker markets were also supported by increases in clean
products shipments from the Middle East, as well as disruption at
the Panama Canal.
Looking ahead, the tanker sector is
expected to see a continuation of strong but volatile market
conditions. The supply side remains very supportive with
newbuilding deliveries set to fall to extremely low levels in 2024,
while fleet carrying capacity is also expected to be constrained by
environmental regulations. On the demand side, additional OPEC+
production cuts announced at the end of November 2023 are expected
to be a short-term headwind. However, projections for rising oil
demand and growth in long-haul Atlantic-Asia crude oil trade point
to further growth in vessel demand. In the products tanker markets,
further increases in refinery throughput in the Middle East look
set to provide market support. Ongoing geo-political uncertainties
point to the potential for further volatility in the markets.
Geo-political and weather developments have brought uncertainty to
two key transit areas, namely the Bab al-Mandeb Strait in the Red
Sea and Panama Canal, which have the potential to create a
substantial increase in vessel demand should disruption persist or
worsen.
Supported by our scale, regional
breadth, expert analysis and technology tools, our tanker
shipbroking team performed exceptionally in 2023 as we supported
our clients through disrupted and volatile markets. In the current
volatile geo-political environment, our teams reacted proactively
to changes in key market dynamics, supported in particular by our
expert analyst team. All of our core hub offices benefited from the
power of our global teams working together, driving information
flows and commercial advantage across our key markets, and our
successful strategy to grow our time charter team has resulted in
increased period fixture business and forward orderbook. Growth of
teams in key emerging markets, including India, Dubai, Brazil and
China, is planned for 2024.
Specialised products
The chemical tanker fleet within the
specialised products market transports a wide range of liquid
chemical cargoes, supporting the supply chains of a diverse range
of sectors across global industry, including manufacturing and
agriculture.
The specialised products tanker
market remained healthy in 2023, with a number of factors including
the ongoing Russia-Ukraine conflict and the associated re-routing
of chemical, biofuel and CPP trade flows, as well as the separate
Panama and Suez Canal disruption, supporting the markets despite
some economic and demand headwinds. Bulk chemical freight rates
fell by 14% in 2023, albeit from firm levels in 2022. Freight
increased by 9% in the second half of the year and freight rates
ended the year 30% higher than levels reported in 2008. Elsewhere,
competition for CoA volumes rose with owners looking for
longer-term coverage to ensure cargo cover, rather than purely
relying on the spot market.
Looking at 2024 and beyond, the
ongoing disruption in the Middle East and Panama Canal will
continue to have an impact on fleet productivity and trading
distances, at least in the short term. Demand headwinds look set to
be in place for the next few months, so overall fixture numbers are
likely to remain stable, at least in the first half of the year.
The prevailing medium to long-term picture is however more
optimistic, with supply side constraints from low, or even
negative, fleet growth expected to impact.
With the ongoing geo-political and
macro-economic upheaval taking place around the world, our
specialised products shipbroking team once again proved its
resilience throughout 2023 with a strong trading performance. Our
unmatched knowledge, expertise and global breadth of coverage in
this sector ensured our customer portfolio was maintained and their
requirements exceeded. Our market-leading analysis allowed us to
deepen relationships with the senior management teams of owners,
pools and charterers and we also spent time, supported by the
carbon broking desk at Clarksons, advising our client base on the
impact of the EU ETS. We stand at the forefront of the specialised
products markets, mitigating client freight risk by utilising our
global network of offices and local knowledge to provide an
unmatched breadth of service provision in what is a challenging and
complex marketplace.
Gas
The gas shipping markets move
liquefied petroleum and other gases, supporting a wide range of
sectors, from plastics and rubber production to industrial and
domestic energy markets. Around 130mt of LPG was moved in 2023, as
well as smaller quantities of ammonia, ethane and petrochemical
gases.
2023 was a record-breaking year for
VLGC earnings, as increased vessel demand and market inefficiencies
outweighed the delivery of 42 newbuild units into the trading
fleet. The benchmark Ras Tanura-Chiba spot rate reached a record
US$183/mt in late September 2023 ($5.3m per month on a TCE basis)
and averaged a record US$109/mt across the full year. Market
strength in 2023 came on the back of firm growth in US LPG exports
(+13% year on year), which surprised to the upside, while severe
disruption at the Panama Canal also played a key role, particularly
in the fourth quarter as transit limits came into force amid low
water levels. The resulting switch in most US-Asia trade to much
lengthier alternative routings drove a major uplift in tonne-mile
demand, which has recently been further complicated by ongoing
security issues in the Red Sea.
Exceptional spot market strength in
the largest segment trickled down to smaller vessel sizes, with
one-year TC rates for MGCs ending the year at US$1.25m per month,
also an all-time high. In the petchems sector, a pivotal shift in
the market dynamics saw the balance of power transitioning from
charterers to owners. Rates grew consistently in the smaller
semi-ref and pressure segments that are active in petrochemical
gases, and asset utilisation is reaching high levels across the
fleet. Sentiment remains generally positive in the smaller ship
segments against a limited orderbook as we enter 2024, albeit
against a backdrop of a tricky European petrochemical
climate.
The buoyant chartering environment
supported both newbuild and secondhand sale and purchase
('S&P') activity, with asset prices rising firmly. In terms of
longer-term trends, newbuild activity was focused on Very Large
Ammonia Carriers ('VLACs'), with 21 units ordered. From being a
non-existent segment previously, VLACs accounted for the bulk of
the 40 newbuild VLGC orders placed in 2023. Decarbonisation was
also an evident theme in the smaller sizes, with the first ever
ammonia-fuelled vessels ordered, as well as the first ever
speculative newbuild liquefied CO2 ('LCO2') carriers. Already
involved in these orders, Clarksons further deepened its visible
commitment to the emergent LCO2 segment by joining the UK's Carbon
Capture and Storage Association ('CCSA'), becoming the first
shipbroker to take advantage of the opportunities offered by this
high-profile business and networking platform. The Clarksons gas
chartering teams performed exceptionally across 2023, particularly
in the LPG sector.
LNG
The LNG shipping market moved 400mt
of liquefied natural gas in 2023 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 of Russia-Europe gas pipeline
trade, and is set for a major phase of expansion in the coming
years.
LNG carrier market conditions
remained strong in 2023, though spot rates dropped on an annual
basis from the record levels seen in 2022, largely on the back of a
narrower US LNG export arbitrage and reduced security of gas supply
concerns. The headline spot rate for a conventional 160k cbm TFDE
unit averaged US$97,100 per day in 2023, down 26%
year-on-year.
LNG tonne day demand was up 6.3% to
7,553 million tonne days in 2023, driven by longer voyage duration,
floating storage and higher LNG trade flows. LNG tonne-mile demand
was up 3.3% year on year, driven by higher LNG trade flows on
long-haul voyages. Global LNG trade volumes rose by 2.0% to 413.7m
mt in 2023, as the US became the world's largest exporter.
Meanwhile, project sanctioning continued at a firm pace, with over
40mtpa of liquefaction capacity reaching FID, while a similar
volume could take FID in 2024. Newbuild activity remained healthy
in 2023, with 64 LNG carriers ordered, though this was down from
the record levels seen in 2022. Newbuild ordering has started 2024
on a strong note, with several berths declared for Qatari units in
early January 2024, while the outlook for the rest of 2024 and
further beyond is positive.
Looking ahead, LNG tonnage demand
and freight rates in the first part of 2024 could be impacted by
strong gas inventory levels in Europe, while firm fleet growth may
impact rates later in the year. However, Panama Canal restrictions
and Red Sea re-routing could support freight, depending on the
level of disruption, while IMO and EU ETS carbon regulations could
also impact productivity and tighten the market. Clarksons remains
very active in the expanding LNG market, with leading teams across
spot, period, newbuilding and sale and purchase.
Sale and purchase ('S&P')
Secondhand
2023 was another active year for
secondhand sales activity, with over 2,200 vessels of a combined
130m dwt reported sold across the full year, in line with the 2022
total (which was the second firmest level on record after 2021) and
remaining around 32% above the 10-year trend in tonnage
terms.
Containership sales increased by 19%
year on year in 2023 to circa 800,000 TEU but remained well down
from the remarkable record 1.6m TEU set in 2021, while bulkcarrier
sales also increased by 16% year on year to 55m dwt. Activity in
both sectors remained above the average levels seen in the previous
10 years. Tanker sales slowed marginally in 2023 to 57m dwt, but
this was still the second highest level on record (after 2022) and
remained 41% above the 10-year trend. Both Chinese and Greek owners
were particularly active in S&P markets in 2023. Secondhand
pricing in the tanker sector continued to firm through 2023, with
our Tanker Secondhand Price Index rising by a further 16% to a new
15-year high by the end of the year, on the back of continued firm
market conditions. Our Bulkcarrier Secondhand Price Index also
increased, by 11%, while our Containership Secondhand Price Index
declined by 12% across the full year, taking the total decline
since early 2022's 14-year high to 59% by the end of the
year.
Our global S&P broking teams saw
continued strong volumes in 2023 and a healthy increase in the
total value of transactions, reflecting an increase in tanker asset
values which outweighed weaker containership pricing. There was
also a focus on higher value transactions which yielded notable
success in the larger tanker segments. Our industry-leading
expertise allowed our teams to benefit from the firm markets, with
divisions globally growing their market shares. We made headcount
investments in key regions globally, cementing our market-leading
positions in London, Oslo, Singapore, Tokyo and Athens. This
expansion, alongside a new team in Dubai, helped drive progress
forwards in 2023 and positions the division well to leverage
opportunities in 2024, when volatility and market dynamics relating
to Red Sea disruption and positive tonne-mile growth trends look
likely to remain in focus.
Newbuilding
The newbuilding market saw a good
flow of orders in 2023, with ordering volumes down in CGT and value
from 2022, but up in dwt (by 5% to 109m dwt). Tanker contracting
increased (albeit from a low base), with bulkcarrier ordering up
slightly. Although containership ordering eased back (by 43% in
TEU), this still represents historically high volumes, supported by
liner companies continuing to invest in green fleet renewal
programmes. It was a record year for car carrier orders (80 orders
of US$8.1bn) and there were also good order volumes for gas
carriers. There were also some good volumes (and with innovative
alternative fuel/ESTs) in the smaller ship market (for example
short sea/MPP, offshore wind, ferry) and, with the cruise market
recovering, some big ship project discussions started. Reflecting
the uptick in tanker orders, Greek investors committed 60% more
newbuild investment (and their highest in dwt since 2013), and
European owners committed more investment than Asian owners for the
first time in six years.
Newbuild prices increased further
through 2023, supported by inflationary pressures and increased
forward cover at yards. Our Newbuilding Price Index rose by 10%
across the year, and now stands at the highest level since 2008
(within 7% of the 2008 peak, but still down circa 35% on an
inflation-adjusted basis). Despite the good order flow, the global
orderbook backlog increased only marginally across 2023 (by 4% in
CGT) to remain at historically low levels (12% of fleet capacity).
However, the share of tonnage on order that is alternative fuel
capable moved to nearly 50% by GT. Global shipyard output increased
last year, by 11% to 36.5m CGT, with China delivering 50% of output
by CGT for the first time, with Chinese yards also dominating
ordering (60% by CGT).
Our global newbuilding broking team
retained its market-leading position, working with a wide range of
major cargo and industrial players globally besides leading
shipowners in each sector on their fleet renewal programmes. We
were also very active in placing alternative fuel newbuild orders
for our clients, including dual fuel LNG, methanol and ammonia
projects.
Offshore and Offshore Renewables
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, 2023 saw continued
strengthening in the global offshore market, with drilling and
field development activity increasing, and the offshore renewables
(wind) sector continuing to expand. Global offshore E&P
spending increased, with capex reaching an eight-year high.
Utilisation and dayrates have trended higher across the segments to
elevated levels, driven by a combination of moderate demand gains
and a significant reduction in supply of assets since the cyclical
downturn started in 2014/15. With almost no new capacity coming
into the market, and with demand expected to continue to strengthen
in 2024, the market outlook appears optimistic for the coming
years. We expect our market-leading offshore broking teams to
continue to leverage these market opportunities in 2024, following
a strong performance in 2023 that reflected our global scale and
deep expertise.
Drilling market
Mobile drilling units (comprising
jack-ups, semi-submersible units and drillships) drill wells in the
sea floor to locate and facilitate extraction of oil and gas. The
rig markets strengthened further in 2023, with demand increasing
and supply constrained. Global floater utilisation rose to 90%, the
highest level since 2014, while the jack-up segment also continued
to strengthen, particularly due to significant contracting by Saudi
Aramco. Idle capacity is currently limited, there are almost no
remaining stranded assets at shipyards and stacked pools are
largely exhausted. The market outlook for next year appears
positive, with high offshore activity levels providing more project
opportunities for contractors and supporting demand for
rigs.
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 in 2023, with further increases in the backlog
for the major EPC contractors. The subsea vessel market also
continued the improving trend that started in 2022, with rates and
contract durations generally increasing. The main drivers remain
improving demand in subsea oil and gas, combined with continued
demand for many of the same vessels from the offshore wind sectors.
The outlook for 2024 appears positive, with high offshore activity
levels supporting project opportunities for smaller contractors and
increasing 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
2023. Demand increased across most regions and tonnage availability
remains constrained, with virtually no newbuild orders having been
placed since 2014, the stacked pool now standing close to
exhausted, and with few newbuilds remaining at shipyards. There was
a sharp increase in sale and purchase activity, with values rising.
Rates are expected to continue to move higher due to lack of
available capacity and expected continued high demand.
Offshore renewables
The offshore renewables industry
continues to expand, 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. However, the offshore
wind sector experienced some challenges in 2023 amid pressures from
inflation, supply chain issues and delays. Still, new project
investment increased to reach a new record, and construction
activity continues to run high. While current sentiment amongst
industry stakeholders is mixed, the long-term outlook for growth in
the sector remains very positive, and developers are working to
improve project economics. Increased project investment is expected
in China and the US next year, which could support another new high
in global capex commitments. From a vessel perspective, rate
increases have been notable across segments, and owners are
becoming more confident, with end-users fixing earlier and for
longer. In the CSOV segment, a key sector for Clarksons, limited
deliveries in 2023 have led to more interest from charterers, which
is likely to keep rates elevated in 2024. Following significant
investments in our broking and advisory capacity, Clarksons has
developed a dedicated team focused on the offshore renewables
market that is a market leader and performed well during 2023 while
leveraging synergies with the Financial, Support and Research
divisions of Clarksons. There has been a significant increase in
demand for specialised green offshore vessels, particularly in the
offshore wind and renewables sector, and we are actively engaging
in discussions with end-user clients regarding technical green
solutions and initiatives. As more of the energy mix shifts towards
renewables, offshore wind and renewables is becoming a larger part
of the Clarksons offshore business. While there remains uncertainty
around future technology choices and the overall cost landscape, by
leveraging our expertise and forging partnerships we continue to
help stakeholders navigate the evolving landscape and contribute to
the successful green transition in the offshore sector.
Futures
Clarksons Futures 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 dynamics 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, Clarksons Futures has, with
support from the wider Clarksons team, positioned itself at the
forefront of the sector.
2023 was a positive year for Tanker
FFAs, with the desk remaining a strong market leader, reaching new
records in terms of volumes, and bringing in new counterparts.
Prospects for 2024 appear positive with a continued stream of new
market participants. In the dry futures business, lower rates led
to a tough start to the year, but as the year progressed volumes
reached new highs, negating the impact of lower rates. In the
fourth quarter, the combination of high volumes and stronger rates
led to a strong close. The swaps business grew, with our market
share increasing significantly late in the year. In the options
market, our market share increased again. Our Dry FFA team
benefited from strategic hires in 2023, developing synergies with
the securities team in Oslo and improved technology
tools.
Financial
Revenue: £44.1m (2022:
£49.8m)
Segmental split of underlying profit
before taxation: £6.6m (2022: £7.8m)
Securities
General
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 2023,
activity in Clarksons Securities' core sectors was positive
relative to a backdrop of continued volatility in commodity prices,
interest rates and credit spreads, but also with underlying markets
generally improving. Investment banking performance was supported
by firmer activity in the debt capital markets which more than
offset slower equity capital markets. Offshore energy services was
the strongest performing sector, with transactions completed across
the product offering, testament to Clarksons Securities'
long-standing relationships and its ability to provide actionable
advice to clients through the market cycle. Revenues from secondary
trading also rose, both in bonds and equities; and a number of
companies within oil services completed refinancings in 2023,
attracting interest from generalist and 'long-only' funds.
Clarksons Securities remains the preferred adviser and speaking
partner for its clients, creating opportunities by connecting
capital and good ideas within its core sectors.
Shipping
In 2023, shipping stocks experienced
a modest performance, with continued good cashflow and upward
pressure on asset pricing in a number of sectors. Capital markets
activity remained muted, with listed shipping companies largely
remaining focused on returning capital to shareholders and
de-leveraging balance sheets. Nonetheless, Clarksons Securities was
active, participating in IPOs in both Oslo and New York, multiple
capital raisings and leasing transactions.
Energy services
Capital markets activity within
offshore energy services continued to strengthen in 2023, driven by
increased investor appetite, despite ongoing macro-economic
uncertainty (although the markets for offshore wind vessel owners
became more challenging with increased uncertainty around project
economics impacting). Clarksons Securities capitalised by executing
a range of transactions for its clients, with refinancing of
existing debt facilities in the high yield bond market contributing
significantly to overall transaction volumes.
Metals and minerals
2023 saw continued volatility in the
metals and minerals sector driven by uncertainty around demand for
industrial/infrastructure-related commodities, and in future-facing
sectors, including battery-related minerals. Clarksons Securities
participated in multiple transactions during the year across
products and, whilst seeing continued support from the industrial
minerals segment, 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 growth. Traditional technologies such
as wind and solar are continuing to expand while emerging
technologies such as hydrogen and carbon capture and storage are
developing significantly and the expansion of the dedicated
offshore wind fleet requires substantial capital funding. However,
as expected, 2023 proved to be a slower year for transactions
across the renewable energy sectors, though M&A and private
equity markets remain firm. Last year, the Clarksons Securities
renewables team completed transactions for public and private
clients within sectors such as solar, hydrogen, e-fuels, charging
infrastructure and heat pumps, and maintains a healthy pipeline of
transactions.
Exploration & Production ('E&P')
Against a backdrop of renewed global
activity in oil and gas E&P in recent years, particularly
offshore, Clarksons Securities aims to work with high quality
assets and operators to develop oil and gas fields fit for the
future. In 2023, following the return to a focus on E&P in the
previous year, the team continued to develop.
Debt capital markets
Following a challenging 2022 in the
credit markets, 2023 saw increased primary activity supported by
improved risk appetite and ample cash positions among investors,
despite an uncertain macro-economic outlook and rising interest
rates. With the oil services sector seeing a resurgence, capital
markets opportunities emerged for international drilling and
offshore companies and Clarksons Securities engaged in a firm
volume of debt capital market transactions. At the end of 2023,
falling corporate capital costs coupled with robust investor
confidence and liquidity looked set to stimulate good volume in the
credit markets.
Project finance
Our project finance business is a
leading Nordic player within shipping and real estate project
finance, which in recent years has offered investment opportunities
in modern fuel (and carbon) efficient shipping and offshore assets,
with a focus on assisting the shipping and offshore industry in
transitioning to be more sustainable and less carbon-intensive.
2023 was an active year in the Norwegian project finance market and
our team structured and placed a number of new projects across the
dry bulk, containership, offshore, tanker and expedition cruise
sectors whilst asset sales across tankers, offshore and dry bulk
generated strong cash returns for investors. The real estate market
in Norway in 2023 was heavily impacted by high inflation, rising
interest rates and macro-economic uncertainty, and market activity
weakened with investor sentiment. These conditions made 2023 the
most challenging year in recent times and impacted our real estate
business. Overall transaction volumes were down on 2022, although
activity was maintained throughout the year. 2023 also saw the
first investment from one of the team's newly established real
estate funds.
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 adviser, structurer and
arranger working closely with newbuilding and strategy teams on
large long-term strategic procurement projects for end-users and
cargo interests.
2023 was characterised by reductions
in leverage and the re-financing of existing facilities on lower
margins, as owners reacted to increased liquidity from improved
earnings. This was partially offset by the higher interest rate
environment, increased liquidity costs and corresponding upward
pressure on margins for some of the mainstream traditional shipping
banks.
The mortgage-backed debt market
appears 'three-tiered'. Firstly, the Poseidon Principles group of
banks, aligning their portfolios to key (now 'net zero' and
'well-to-wake') emissions targets, continues to focus on lending to
top-tier borrowers, linked to 'green' vessels and/or
sustainability-focused projects. Secondly, banks outside this
group, especially in Cyprus, Greece and Scandinavia, remain a
competitive source able to focus on opportunities to finance or
re-finance tonnage, especially for slightly older units and/ or
projects with less 'green' credentials (although new EU reporting
rules may place pressure on these shipping banks to focus on more
fuel-efficient vessels). Thirdly, a growing tier of mortgage-backed
debt lenders includes credit funds and the providers of private
credit facilities, typically seeking higher margins but offering
reasonable leverage and with appetite for a far wider range of
tonnage. Leasing remains the other main asset-backed finance
product in the shipping sector and here the market is also tiered.
The first tier, comprising the larger Chinese leasing companies but
also including (for transactions that qualify) the growing French
tax lease product and to a lesser extent the Japanese tax-based
JOLCO product, is able to compete with the mainstream traditional
shipping banks, and saw portfolios increase during 2023. The second
tier comprises some of the smaller Chinese leasing companies, some
European leasing companies, and some of the credit funds that also
offer leasing products. This sector has seen some of the largest
early re-payments over the last year due to increased borrower
earnings. Overall, although debt service visibility remains a key
criterion for all asset-based financiers, there is capacity
available to be deployed to finance 'good' projects.
The Clarksons structured asset
finance business had a successful 2023, concluding further mandates
with a number also active going into 2024. It continues to fulfil a
specific highly value-adding role, with an excellent reputation and
first-class execution track record. Against a backdrop of
developing sources of asset finance, the emergence of alternative
fuels and propulsion methods and growing ESG considerations, and
with a range of financing choices available to our clients for
longer-term strategic tonnage procurement, we continue to provide
highly valuable expertise and service.
Support
Revenue: £56.6m (2022:
£39.0m)
Segmental split of underlying profit
before taxation: £6.4m (2022: £5.0m)
Stevedoring
In 2023, our stevedoring business,
highly experienced in loading and discharging bulk cargoes,
performed much in line with expectations. Export volumes began the
year strongly, but the second half of the year was adversely
affected by weakened UK grain harvest volumes that reduced both the
harvest quality and the exportable surplus. Nonetheless the year as
a whole saw export tonnage rise by 64,000 tonnes. Import volumes
were in line with expectations and down by 35,000 tonnes, in part
due to the very high stock in store for a leading customer at the
end of 2022.
Shortsea broking
Following exceptional freight rates
in 2022, our shortsea broking business which, with specialist
skills, in-depth knowledge and strong relationships, provides
market-leading brokerage services for shortsea dry cargo shipping,
saw market freight levels down circa 35% in 2023, though still
ahead of long-term averages. This, coupled with lower grain volumes
shipped, saw revenues fall last year. The business has been
planning diversification away from its traditional reliance on
agricultural volumes, working in conjunction with other parts of
the Clarksons Group, and expects to see revenues from the
transportation of scrap markedly improve in the future.
Agency and customs clearance
Through exceptional port agency and
first-class logistics services, our business provides a range of
solutions for clients in the marine and energy sectors. Aside from
an anticipated reduction in trading volumes (related to the
reversion to more normal container freight markets), in 2023 the
business generally met expectations. A market need for customs
advice was recognised, particularly in the offshore renewables
market. Working with windfarm developers and their suppliers offers
consultancy opportunities going forward. The acquisition of DHSS
early in 2023 allowed the UK business to extend its services to
include (from the fourth quarter) helicopter transfer crew changes,
initially from Aberdeen. As windfarms on average are becoming
located further offshore, helicopter transfers become more central
to customer needs.
Clarkson Port Services B.V. ('CPS BV')
DHSS was acquired in February 2023,
and its performance exceeded expectations in the remainder of the
year. The business was rebranded CPS BV and fully integrated into
the Clarksons Group. Its commercial team has dovetailed with the
existing business and this has led to fresh income both in the UK
and in The Netherlands. Meanwhile, we have invested in a new
quayside multi-user office, warehouse and yard facility in
Eemshaven, which will meet considerable customer demand as an
installation and O&M base for offshore energy projects. CPS BV
is very well placed to take advantage of the quickly developing
offshore energy market in the UK, Dutch and German sectors of the
North Sea.
Gibb Group
Gibb Group is the industry's leading
provider of PPE and MRO products and services as well as one of the
offshore renewable energy sector's most experienced, qualified
suppliers. In 2023, the business saw revenue and profits grow as it
continued to respond to customer demand and the growth of offshore
energy by opening a new facility in Rhode Island which will begin
trading from 2024; relocating its Aberdeen facility into a much
larger modern facility and investing in that new facility to allow
its Safety & Survival business to expand markedly; investing in
further staff and facilities in IJmuiden; and developing its
Middlesbrough location to meet rapidly growing customer demand for
locally serviced needs. We expect to open a new facility in
Immingham in 2024 to meet the growing customer needs in the region
as further windfarm development is announced at locations close to
the Humber. We have also recognised changing customer needs for
hire fleet assets, and additional service, inspection and repair,
on site and on customers' premises.
Egypt agency
The Suez Canal is a vital trade
route between Europe and Asia, and our regional experts in Egypt
deliver on-the-ground expertise around transit and port agency. Our
Egypt agency business proved successful in 2023 despite regional
geo-political pressures, developing strategic partnerships with
major clients and local authorities. Increased canal transits and
port calls (especially grain volumes) saw the business gain market
share, whilst chartering revenues were down in 2023 and liner
service activity was steady. Significant opportunities in the
Egyptian market remain, although late in the year Suez Canal
transits and activity in the region were disrupted by events around
the Bab al-Mandab Strait, which has led to significant uncertainty
over future trends.
Research
Revenue: £21.9m (2022:
£19.5m)
Segmental split of underlying profit
before taxation: £8.4m (2022: £7.0m)
Clarksons Research, the data and
analytics arm of Clarksons, is a market-leading provider of
independent data, intelligence and analysis around shipping, trade,
offshore and energy transition in the maritime context. Millions of
data points are processed and analysed each day to provide trusted
and insightful intelligence to support the workflows and decision
making of thousands of organisations across the increasingly
complex and dynamic maritime industry.
Research performed strongly across
2023. Continuing a long-term growth trajectory, with high levels of
recurring revenue and client retention, Research provided a unique
flow of market-leading sector research and data across the year,
including a focus on the building complexities in global trade and
developments around maritime energy transition. Our Research output
also continues to support the Broking, Financial, Support and
technology businesses of Clarksons with differentiating data,
intelligence and profile.
Our strategy to provide leading data
and insights around the green transition continues, meeting strong
client appetite to understand the maritime sector's decarbonisation
pathway. This has included tracking of shipping's carbon footprint
and increasingly complex emissions regulation; monitoring green
technology uptake including alternative fuel; and understanding
impacts on shipping's cargo base and activity as energy transition
develops while important global energy security is also managed. We
are also focusing investment into our research and understanding of
global maritime trade flows as they are increasingly impacted, and
disrupted, by geopolitical developments, helping meet growing
client requirements.
Organisationally, we continue to
invest in our people and are implementing headcount growth across
our teams with a specific focus on IT development, data analytics
and sales. Our strong Asian and emerging market position was
cemented by the expansion of our operations in Delhi in 2023.
Following a successful external audit in June, Clarksons Research
has been awarded ISO 27001 information security standard
certification.
Digital
Sales across our digital platform
grew by an encouraging 21% year on year, supported by our product
investment strategy, a constant flow of high-quality and
market-relevant analysis and an expansion of the depth and breadth
of our wide-ranging proprietary database. The benefits of our major
2022 upgrade roll-out, and individual improvements programmes for
each product, continue to be realised. Our platform provides
immediate access to our intelligence for over 4,000 maritime
companies and 12,000 individual users via a single-access
integrated platform.
Principal digital products
include:
Shipping Intelligence Network ('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. Sales of SIN increased
significantly across the year as we closely tracked Chinese
economic trends and growing disruption and complexity in maritime
trade, including Ukraine grain exports, Panama Canal restrictions
and, at the close of the year, Red Sea disruption. Our Red Sea
impact assessments were particularly well received and sourced
across the global business media. Shipping market themes tracked on
SIN across the year included: tanker, gas, car carrier and offshore
markets that experienced strong conditions; soft bulk carrier
markets but an improved fourth quarter; weak container market
conditions but a late rally following Red Sea disruption; building
complexities in global trade as it reached 12.4bn tonnes; a
shipping supply side experiencing low orderbooks and some
limitations in shipbuilding capacity; and growing market impacts
from emissions policies.
World Fleet Register ('WFR') provides data and intelligence around the world fleet, vessel
equipment and technology, companies, shipbuilding, emissions
regulation, fuelling transition and alternative fuels. A focus on
tracking green technology and decarbonisation across the shipping
industry, aligning with the broader Group's investments around the
green transition, helped support a robust increase in sales of WFR.
During the year, impact assessments around new IMO short-term
measures and the EU ETS were released. A new dashboard on ship
repair and green technology retrofits was released in late 2023 and
progress towards the release of a data focused on 'green'
investments at ports and vessel activity analytics dashboards
continues.
Offshore Intelligence Network ('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. Sales of OIN are up
robustly year on year; there has been a positive product upgrade
over 2023; and there is a good pipeline of client enquiry. Market
improvements in the offshore oil and gas vessel markets, alongside
an energy security focus, continued in 2023, with OIN now tracking
14-year high day rates and an offshore oil and gas industry
contributing 16% of global energy supply.
Renewables Intelligence Network ('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. Although the
offshore wind market experienced some weaker sentiment in 2023 due
to inflationary pressures and some project slippage, we still
believe the industry will play a vital role in global energy
transition (we forecast growth from 13,000 turbines offshore today
to 28,000 by 2030) and project it could provide between 7% and 9%
of global energy supply by 2050 (today it is 0.4%). Vessel markets
remained relatively tight with improvements in day rates. Despite
the weaker backdrop, RIN saw good sales growth and we continue to
invest heavily in the platform. We are increasingly working with
the insurance industry to provide reference data on offshore wind
infrastructure and believe this will lead to good sales
opportunities.
Sea
Net has been developed in conjunction with the Clarksons technology
business, Maritech. This vessel movement system 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 team was very active during the year, focusing
increasingly on data contracts to key corporates across maritime
(increasingly via API delivery) and multi-year research agreements.
There was strong client attendance at our shipping and offshore
forecasting forum events in March 2023 and September 2023 while the
team also worked successfully on a number of IPO industry
sections.
The Research client base continues
to expand and diversify, building strong long-term relationships
with leading companies involved in maritime and with good market
penetration across shipowning, charterers, shipbuilding, marine
equipment, oil service, insurance and government.
Clarksons Valuations, the
market-leading provider of authoritative, consistent and
independent valuation services to shipowners and financiers,
continues to successfully invest 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
performed well in 2023, with good volumes and sales, and was active
in supporting the S&P broking teams of Clarksons.
Sea
2023 has been a year of strong
growth and progress for our technology arm, Sea, with good product
development, expansion in client base and the execution of
strategic acquisitions and new partnerships. Sea is now focused
around three business areas. Firstly, the long-term development of
our platform supporting the digitalisation of freight and fixtures
('the intelligent marketplace for fixing freight'), secondly, our
digital platform for soft commodity contracts ('the intelligent
contracts platform for commodities') and thirdly, our custom
software development team. During 2023, Sea has made significant
progress in all three of these areas, resulting in significant
revenue and customer growth. We are strongly committed to 'powering
better decisions to enable sustainable shipping'.
Intelligent marketplace
Over the past year, the positive
development of our single platform connecting charterers, brokers
and owners through streamlined prefixture workflows continued. The
platform enables greater collaboration and stronger governance
across the chartering ecosystem, while also allowing users to
optimise their freight and emissions. In addition to our continued
platform development, we made important strategic moves in 2023,
including the acquisitions of MarDocs and Chinsay (which Sea
acquired in late 2022) and the successful migration of all
customers to a consolidated platform. In addition, Sea took full
control of Recap Manager, the leading online tool for the tanker
sector, thus creating the leading contract management platform for
the shipping industry resulting in over 45,000 charterparties and
recaps being conducted on our platform. During the year we have
significantly expanded the client base, widening the network of
charterers, brokers and owners on our platform and receiving
positive feedback from across the customer base on our development
pathway. We have also expanded our network of industry-leading
partners, allowing us to provide an increasingly seamless user
experience to our client base. We implemented a successful brand
refresh during the year, providing a new visual identity and
website upgrade while showing the direction of our business and our
purpose of 'powering better decisions to enable sustainable
shipping'. During the year we gained new customers, expanded
current engagements and developed new solutions as we cement our
position as 'the intelligent marketplace for fixing
freight.'
ICP
commodities
The ICP commodities platform,
acquired as part of our acquisition of Chinsay, delivers an
industry-leading solution. Whenever a commodity is being transacted
there is a need for a standardised and digitised contract to form
the basis of the transaction. ICP commodities provides this,
enabling data-driven decision-making and insights to commodities
trading. We expanded existing customer relationships and gained new
customers in 2023. We expect continued growth in this business
unit, along with a potential workflow connection between our
commodity contract and freight transaction platforms in the
future.
Custom software development
The development of our custom
software development business unit follows our full integration
with Setapp (acquired in the fourth quarter of 2022). The team's
expertise in maritime software development has been instrumental in
creating bespoke software solutions for our customers, while
allowing Sea to insource all software development and drive down
our cost base.
Risk management
Full details of our principal risks
and how we manage them will be included in the risk management
section of the 2023 Annual Report, together with our viability and
going concern statements.
Our principal risks are:
· Macro-economic and geo-political factors
· Changes in the broking industry
· Adverse movements in foreign exchange
· Financial loss arising from failure of a client to meet its
obligations
· Cyber
risk and data security
· Breaches in rules and regulations
· Loss
of key personnel - normal course of business
· Loss
of key personnel - Board members
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 2023.
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 1 March 2024 and is signed on
its behalf by:
Laurence Hollingworth
Chair
1 March 2024
Consolidated income statement
for the year ended 31
December
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
2022
|
|
|
Before exceptional items
and
acquisition-
related
costs
£m
|
Exceptional
items
£m
|
Acquisition-related
costs
£m
|
After exceptional items
and
acquisition-
related
costs
£m
|
Before
acquisition-
related
costs
£m
|
Acquisition-
related
costs
£m
|
After
acquisition-
related
costs
£m
|
|
Revenue
|
639.4
|
-
|
-
|
639.4
|
603.8
|
-
|
603.8
|
|
Cost of sales
|
(30.4)
|
-
|
-
|
(30.4)
|
(21.8)
|
-
|
(21.8)
|
|
Trading profit
|
609.0
|
-
|
-
|
609.0
|
582.0
|
-
|
582.0
|
|
Administrative expenses
|
(508.8)
|
2.2
|
(2.6)
|
(509.2)
|
(481.2)
|
(0.8)
|
(482.0)
|
|
Operating profit/(loss)
|
100.2
|
2.2
|
(2.6)
|
99.8
|
100.8
|
(0.8)
|
100.0
|
|
Finance income
|
10.5
|
-
|
-
|
10.5
|
1.9
|
-
|
1.9
|
|
Finance costs
|
(2.2)
|
-
|
-
|
(2.2)
|
(2.2)
|
-
|
(2.2)
|
|
Other finance income -
pensions
|
0.7
|
-
|
-
|
0.7
|
0.4
|
-
|
0.4
|
|
Profit/(loss) before taxation
|
109.2
|
2.2
|
(2.6)
|
108.8
|
100.9
|
(0.8)
|
100.1
|
|
Taxation
|
(23.4)
|
0.3
|
0.1
|
(23.0)
|
(20.6)
|
0.1
|
(20.5)
|
|
Profit/(loss) for the year
|
85.8
|
2.5
|
(2.5)
|
85.8
|
80.3
|
(0.7)
|
79.6
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
Equity holders of the Parent
Company
|
83.8
|
2.5
|
(2.5)
|
83.8
|
76.3
|
(0.7)
|
75.6
|
|
Non-controlling interests
|
2.0
|
-
|
-
|
2.0
|
4.0
|
-
|
4.0
|
|
Profit/(loss) for the year
|
85.8
|
2.5
|
(2.5)
|
85.8
|
80.3
|
(0.7)
|
79.6
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic
|
275.0p
|
|
|
275.2p
|
250.3p
|
|
247.9p
|
|
Diluted
|
273.5p
|
|
|
273.6p
|
248.5p
|
|
246.1p
|
Included in the consolidated income
statement are net impairment losses on financial assets amounting
to £3.9m (2022: £5.8m)
Consolidated statement of comprehensive
income
for the year ended 31
December
|
|
|
|
|
|
|
|
2023
£m
|
2022
£m
|
|
Profit for the year
|
|
85.8
|
79.6
|
|
Other comprehensive
(loss)/income:
|
|
|
|
|
Items that will not be reclassified to
profit or loss:
|
|
|
|
|
Actuarial loss on employee benefit schemes
- net of tax
|
|
(1.6)
|
(5.5)
|
|
Items that may be reclassified subsequently
to profit or loss:
|
|
|
|
|
Foreign
exchange differences on retranslation of foreign
operations
|
|
(17.5)
|
13.5
|
|
Foreign currency hedges recycled to
profit or loss - net of tax
|
|
2.1
|
3.3
|
|
Foreign currency hedge revaluations
- net of tax
|
|
5.7
|
(8.9)
|
|
Other comprehensive
(loss)/income
|
|
(11.3)
|
2.4
|
|
Total comprehensive income for the year
|
|
74.5
|
82.0
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the Parent
Company
|
|
72.8
|
78.0
|
|
Non-controlling interests
|
|
1.7
|
4.0
|
|
Total comprehensive income for the year
|
|
74.5
|
82.0
|
Consolidated balance sheet
as at 31 December
|
|
|
2023
£m
|
2022
£m
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
28.5
|
25.5
|
|
Investment properties
|
|
1.0
|
1.0
|
|
Right-of-use assets
|
|
35.9
|
39.3
|
|
Intangible assets
|
|
182.9
|
188.9
|
|
Trade and other
receivables
|
|
4.4
|
2.6
|
|
Investments
|
|
1.3
|
1.2
|
|
Employee benefits
|
|
13.8
|
15.8
|
|
Deferred tax assets
|
|
16.8
|
14.6
|
|
|
|
284.6
|
288.9
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
|
3.3
|
2.4
|
|
Trade and other
receivables
|
|
147.5
|
150.1
|
|
Income tax receivable
|
|
1.2
|
3.0
|
|
Investments
|
|
40.1
|
3.5
|
|
Cash and cash equivalents
|
|
398.9
|
384.4
|
|
|
|
591.0
|
543.4
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(339.4)
|
(335.9)
|
|
Lease liabilities
|
|
(10.4)
|
(9.9)
|
|
Income tax payable
|
|
(20.9)
|
(19.8)
|
|
Provisions
|
|
(0.6)
|
(0.6)
|
|
|
|
(371.3)
|
(366.2)
|
|
Net
current assets
|
|
219.7
|
177.2
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Trade and other payables
|
|
(3.2)
|
(5.8)
|
|
Lease liabilities
|
|
(32.8)
|
(37.7)
|
|
Provisions
|
|
(1.9)
|
(1.9)
|
|
Employee benefits
|
|
(0.4)
|
(0.4)
|
|
Deferred tax liabilities
|
|
(9.4)
|
(7.1)
|
|
|
|
(47.7)
|
(52.9)
|
|
Net
assets
|
|
456.6
|
413.2
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Share capital
|
|
7.7
|
7.7
|
|
Other reserves
|
|
104.9
|
114.8
|
|
Retained earnings
|
|
340.0
|
287.2
|
|
Equity attributable to shareholders of the Parent
Company
|
|
452.6
|
409.7
|
|
Non-controlling interests
|
|
4.0
|
3.5
|
|
Total equity
|
|
456.6
|
413.2
|
Consolidated statement of changes in equity
for the year ended 31
December
|
|
Attributable to equity holders of the Parent
Company
|
|
|
|
|
Share
capital
£m
|
Other
reserves
£m
|
Retained
earnings
£m
|
Total
£m
|
Non-controlling
interests
£m
|
Total
equity
£m
|
|
Balance at 1 January 2023
|
7.7
|
114.8
|
287.2
|
409.7
|
3.5
|
413.2
|
|
Profit for the year
|
-
|
-
|
83.8
|
83.8
|
2.0
|
85.8
|
|
Other comprehensive loss
|
-
|
(9.4)
|
(1.6)
|
(11.0)
|
(0.3)
|
(11.3)
|
|
Total comprehensive (loss)/income for the
year
|
-
|
(9.4)
|
82.2
|
72.8
|
1.7
|
74.5
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
Share
issues
|
-
|
1.9
|
-
|
1.9
|
-
|
1.9
|
|
Employee share
schemes
|
-
|
(2.4)
|
(1.1)
|
(3.5)
|
-
|
(3.5)
|
|
Tax on other
employee benefits
|
-
|
-
|
(0.2)
|
(0.2)
|
-
|
(0.2)
|
|
Tax on other items in
equity
|
-
|
-
|
0.1
|
0.1
|
-
|
0.1
|
|
Dividend
paid
|
-
|
-
|
(28.3)
|
(28.3)
|
(1.1)
|
(29.4)
|
|
Other
movements
|
-
|
-
|
0.1
|
0.1
|
(0.1)
|
-
|
|
Total transactions with owners
|
-
|
(0.5)
|
(29.4)
|
(29.9)
|
(1.2)
|
(31.1)
|
|
Balance at 31 December 2023
|
7.7
|
104.9
|
340.0
|
452.6
|
4.0
|
456.6
|
|
|
Attributable to equity holders of
the Parent Company
|
|
|
|
|
Share
capital
£m
|
Other
reserves
£m
|
Retained
earnings
£m
|
Total
£m
|
Non-controlling interests
£m
|
Total
equity
£m
|
|
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
(loss)/income
|
-
|
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)
|
|
Other
movements
|
-
|
-
|
(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
|
Consolidated cash flow statement
for the year ended 31
December
|
|
|
|
|
|
|
|
2023
£m
|
2022
£m
|
|
Cash flows from operating activities
|
|
|
|
|
Profit before taxation
|
|
108.8
|
100.1
|
|
Adjustments for:
|
|
|
|
|
Foreign exchange
differences
|
|
6.8
|
(0.5)
|
|
Depreciation
|
|
14.7
|
13.7
|
|
Share-based payment
expense
|
|
1.9
|
1.8
|
|
(Gain)/loss on sale of property, plant and
equipment
|
|
(3.6)
|
1.5
|
|
Amortisation of
intangibles
|
|
4.8
|
4.1
|
|
Difference between pension
contributions paid and amount recognised in the income
statement
|
|
0.6
|
0.4
|
|
Finance income
|
|
(10.5)
|
(1.9)
|
|
Finance costs
|
|
2.2
|
2.2
|
|
Other finance income -
pensions
|
|
(0.7)
|
(0.4)
|
|
Increase in
inventories
|
|
(0.9)
|
(0.9)
|
|
Decrease/(increase) in trade
and other receivables
|
|
2.0
|
(26.1)
|
|
Increase in bonus
accrual
|
|
58.7
|
88.8
|
|
(Decrease)/increase
in trade and other payables
|
|
(7.2)
|
16.2
|
|
Increase in
provisions
|
|
0.1
|
0.5
|
|
Cash generated from operations
|
|
177.7
|
199.5
|
|
Income tax paid
|
|
(22.4)
|
(20.6)
|
|
Net
cash flow from operating activities
|
|
155.3
|
178.9
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Interest received
|
|
10.3
|
1.3
|
|
Purchase of property, plant and
equipment
|
|
(8.0)
|
(7.6)
|
|
Purchase of intangible
assets
|
|
(2.8)
|
(2.0)
|
|
Purchase of investments
|
|
(0.3)
|
(0.6)
|
|
Proceeds from sale of
investments
|
|
0.3
|
1.0
|
|
Proceeds from sale of property,
plant and equipment
|
|
3.9
|
0.7
|
|
Transfer from current investments
(cash on deposit and government bonds)
|
|
-
|
6.8
|
|
Transfer to current investments
(cash on deposit and government bonds)
|
|
(36.8)
|
(0.3)
|
|
Acquisition of subsidiaries, net of
cash acquired
|
|
(5.3)
|
(4.9)
|
|
Dividends received from
investments
|
|
0.1
|
0.2
|
|
Net
cash flow from investing activities
|
|
(38.6)
|
(5.4)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Interest paid and other
charges
|
|
(2.0)
|
(2.2)
|
|
Dividend paid
|
|
(28.3)
|
(25.9)
|
|
Dividend paid to non-controlling
interests
|
|
(1.1)
|
(4.3)
|
|
Repayment of borrowings
|
|
(0.5)
|
(0.6)
|
|
Principal elements of lease
payments
|
|
(10.5)
|
(11.2)
|
|
Proceeds from shares
issued
|
|
1.9
|
2.7
|
|
Contributions to non-controlling
interests
|
|
-
|
(1.3)
|
|
ESOP shares acquired
|
|
(49.5)
|
(20.4)
|
|
Net
cash flow from financing activities
|
|
(90.0)
|
(63.2)
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
26.7
|
110.3
|
|
Cash and cash equivalents at 1
January
|
|
384.4
|
261.6
|
|
Net foreign exchange
differences
|
|
(12.2)
|
12.5
|
|
Cash and cash equivalents at 31 December
|
|
398.9
|
384.4
|
Notes to the preliminary financial
statements
1
Corporate information
The preliminary financial statements
of Clarkson PLC for the year ended 31 December 2023 were authorised
for issue in accordance with a resolution of the Directors on 1
March 2024. 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 2022 and 2023, but is derived from
those financial statements. Statutory financial statements for 2022
have been delivered to the Registrar of Companies and those for
2023 will be delivered following the Company's Annual General
Meeting. The External Auditor has reported on the financial
statements for 2022 and 2023; 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 inflows.
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 £30m (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, the pandemic in 2020 and the Ukraine conflict in 2022:
seaborne trade recovered in 2009, 2021 and 2023 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 2023, 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'. Items which are non-recurring in nature and considered to
be material in size are shown as 'exceptional items'. 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
5.
2.2
Accounting policies
The financial information is in
accordance with the accounting policies set out in the 2023
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 2023:
·
Disclosure of Accounting Policies - Amendments to
IAS 1 and IFRS Practice Statement 2;
·
Definition of Accounting Estimates - Amendments to
IAS 8; and
·
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction - Amendment to IAS
12.
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 2023 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
|
|
|
2023
£m
|
2022
£m
|
2023
£m
|
2022
£m
|
|
Broking
|
516.8
|
495.5
|
121.2
|
117.6
|
|
Financial
|
44.1
|
49.8
|
6.6
|
7.8
|
|
Support
|
56.6
|
39.0
|
6.4
|
5.0
|
|
Research
|
21.9
|
19.5
|
8.4
|
7.0
|
|
Segment revenue/profit
|
639.4
|
603.8
|
142.6
|
137.4
|
|
Head office costs
|
|
|
(42.4)
|
(36.6)
|
|
Operating profit before exceptional
items and acquisition-related costs
|
|
|
100.2
|
100.8
|
|
Exceptional items
|
|
|
2.2
|
-
|
|
Acquisition-related costs
|
|
|
(2.6)
|
(0.8)
|
|
Operating profit after exceptional
items and acquisition-related costs
|
|
|
99.8
|
100.0
|
|
Finance income
|
|
|
10.5
|
1.9
|
|
Finance costs
|
|
|
(2.2)
|
(2.2)
|
|
Other finance income -
pensions
|
|
|
0.7
|
0.4
|
|
Profit before taxation
|
|
|
108.8
|
100.1
|
|
Taxation
|
|
|
(23.0)
|
(20.5)
|
|
Profit for the year
|
|
|
85.8
|
79.6
|
4
Exceptional items
In December 2023, the Group
completed the sale of an industrial unit, which resulted in a gain
of £3.5m, after transaction fees and costs. Following the sale, the
Group donated £1.3m of the proceeds to The Clarkson Foundation. The
net gain of £2.2m is shown as an exceptional item.
5
Acquisition-related costs
Included in acquisition-related
costs is £0.2m (2022: £0.2m) relating to amortisation of
intangibles acquired and £0.3m (2022: £0.3m) of cash and
share-based payment charges relating to previous
acquisitions.
Also included is £0.3m (2022: £nil)
relating to amortisation of intangibles acquired and £1.6m (2022:
£nil) of cash and share-based payment charges relating to current
year acquisitions.
Included in administrative expenses
is £0.2m (2022: £0.3m) of transaction costs relating to
acquisitions in the current year.
6
Taxation
The major components of the income
tax charge in the consolidated income statement are:
|
|
2023
£m
|
2022
£m
|
|
Profit at UK average standard rate
of corporation tax of 23.5% (2022: 19%)
|
25.6
|
19.0
|
|
Expenses not deductible for tax
purposes
|
2.4
|
2.3
|
|
Non-taxable income
|
(1.2)
|
-
|
|
(Lower)/higher tax rates on overseas
earnings
|
(3.3)
|
0.4
|
|
Other
|
(0.5)
|
(1.2)
|
|
Total tax charge in the income
statement
|
23.0
|
20.5
|
7
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:
|
|
2023
£m
|
2022
£m
|
|
Underlying profit for the year
attributable to ordinary equity holders of the Parent
Company*
|
83.8
|
76.3
|
|
Reported profit for the year
attributable to ordinary equity holders of the Parent
Company*
|
83.8
|
75.6
|
|
|
2023
Million
|
2022
Million
|
|
Weighted average number of ordinary
shares - basic
|
30.5
|
30.5
|
|
Weighted average number of ordinary
shares - diluted
|
30.7
|
30.7
|
8
Dividends
The Board is recommending a final
dividend of 72p (2022: 64p), giving a total dividend of 102p (2022:
93p).
9
Intangible assets
On 6 February 2023, Clarkson Port
Services B.V. (subsequently Clarkson Port Services Holdings B.V.)
acquired 100% of the share capital of DHSS Service B.V., DHSS
Logistics B.V., DHSS Projects B.V. and DHSS Aviation B.V., located
in The Netherlands. The initial cash consideration was €4.6m
(£4.1m), with a further €6.2m payable depending on the achievement
of post-transaction earnings targets and ongoing
employment.
On 22 December 2023, DHSS Aviation
B.V., DHSS Logistics B.V. and DHSS Projects B.V. were merged into
DHSS Service B.V. and on 29 December 2023, DHSS Service B.V.
changed its name to Clarkson Port Services B.V.
On 28 March 2023, Maritech Services
Limited acquired 100% of the MarDocs digital platform business from
Marcura Platform Solutions Fze. Total consideration was US$1.5m
(£1.2m).
On 31 March 2023, a further
acquisition was completed by Maritech Services Limited. 100% of the
share capital of Recap Manager Limited was acquired from the London
Tanker Brokers' Panel Limited.
On 31 October 2023, Clarksons Brasil
Ltda entered into an Asset Purchase Agreement with a seller group,
comprising Leme Chartering Comercio Maritimo Ltda and four
individuals. Initial consideration was US$0.1m (£0.1m), with a
further maximum amount payable of US$0.7m dependant on earn-out
targets.
The above acquisitions resulted in
goodwill of £1.2m and other intangible assets of £3.1m.
10
Investments
Included within current investments
are deposits totalling £37.8m (2022: £3.1m) with maturity periods
greater than three months, in addition to £2.1m (2022: £nil) of
government bonds.
11
Cash and cash equivalents
|
|
|
|
2023
£m
|
2022
£m
|
|
Cash at bank and in hand
|
|
|
281.2
|
320.1
|
|
Short-term deposits
|
|
|
117.7
|
64.3
|
|
|
|
|
398.9
|
384.4
|
12
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
|
|
|
2023
£m
|
2022
£m
|
|
Fair value of schemes'
assets
|
|
131.3
|
134.7
|
|
Present value of funded defined
benefit obligations
|
|
(115.5)
|
(115.2)
|
|
|
|
15.8
|
19.5
|
|
Effect of asset ceiling in relation
to the Plowrights scheme
|
|
(2.4)
|
(4.1)
|
|
Net benefit asset recognised in the
balance sheet
|
|
13.4
|
15.4
|
The above is recognised on the
balance sheet as an asset of £13.8m (2022: £15.8m) and a liability
of £0.4m (2022: £0.4m).
A deferred tax asset on the benefit
liability amounting to £nil (2022: £0.1m) and a deferred tax
liability on the benefit asset of £3.5m (2022: £3.9m) is also
recognised on the balance sheet.
Recognised in the income
statement
|
|
|
|
|
|
2023
£m
|
2022
£m
|
|
Recognised in other finance income -
pensions:
|
|
|
|
Expected return on
schemes' assets
|
6.5
|
3.6
|
|
Interest cost on
benefit obligation and asset ceiling
|
(5.8)
|
(3.2)
|
|
Recognised in administrative
expenses:
|
|
|
|
Schemes' administrative
expenses
|
(1.0)
|
(0.8)
|
|
Net benefit charge recognised in the
income statement
|
(0.3)
|
(0.4)
|
13
Share capital
|
|
Million
|
2023
£m
|
Million
|
2022
£m
|
|
Ordinary shares of
25p each, issued and fully
paid
|
30.7
|
7.7
|
30.6
|
7.7
|
During the year, the Company issued
103,388 shares (2022: 141,346) in relation to the ShareSave
scheme.
14
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.
15
Related party disclosures
The Group's significant related
parties will be disclosed in the 2023 Annual Report. There were no
material differences in related parties or related party
transactions in the year, from the year ended December
2022.
16
Events occurring after the reporting period
In February 2024, Gibb Group Ltd
acquired 100% of the share capital of Trauma & Resuscitation
Services Limited for a cash consideration of £2.0m and additional
maximum deferred consideration (including earn-out) of
£3.3m.
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 exceptional items and 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.
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
Reported profit before taxation
|
|
108.8
|
100.1
|
|
Less exceptional items
|
|
(2.2)
|
-
|
|
Add back acquisition-related
costs
|
|
2.6
|
0.8
|
|
Underlying profit before taxation
|
|
109.2
|
100.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying effective tax
rate
Reconciliation of reported effective tax rate to underlying
effective tax rate.
|
|
|
2023
|
2022
|
|
|
|
%
|
%
|
|
Reported effective tax rate
|
|
21.1
|
20.5
|
|
Adjustment relating to exceptional
items
|
|
0.7
|
-
|
|
Adjustment relating to
acquisition-related costs
|
|
(0.4)
|
(0.1)
|
|
Underlying effective tax rate
|
|
21.4
|
20.4
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit for the
year 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.
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
Reported profit attributable to equity holders of the Parent
Company
|
|
83.8
|
75.6
|
|
Less exceptional items
|
|
(2.5)
|
-
|
|
Add back acquisition-related
costs
|
|
2.5
|
0.7
|
|
Underlying profit attributable to equity holders of the Parent
Company
|
|
83.8
|
76.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying basic earnings per
share
Reconciliation of reported basic earnings per share to
underlying basic earnings per share.
|
|
|
2023
|
2022
|
|
|
|
Pence
|
Pence
|
|
Reported basic earnings per share
|
|
275.2
|
247.9
|
|
Less exceptional items
|
|
(8.4)
|
-
|
|
Add back acquisition-related
costs
|
|
8.2
|
2.4
|
|
Underlying basic
earnings per share
|
|
275.0
|
250.3
|
|
|
|
|
|
|
Underlying administrative
expenses
Reconciliation of reported administrative expenses to
underlying administrative expenses for the year.
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
Reported administrative expenses
|
|
509.2
|
482.0
|
|
Add back exceptional
items
|
|
2.2
|
-
|
|
Less acquisition-related
costs
|
|
(2.6)
|
(0.8)
|
|
Underlying administrative expenses
|
|
508.8
|
481.2
|
|
|
|
|
|
|
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.
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
Cash and cash equivalents as reported
|
|
398.9
|
384.4
|
|
Add cash on deposit and government
bonds included within current investments
|
|
39.9
|
3.1
|
|
Less amounts reserved for bonuses
included within current trade and other payables
|
|
(237.7)
|
(225.8)
|
|
Net cash and
available funds
|
|
201.1
|
161.7
|
|
|
|
|
|
|
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.
|
|
|
2023
|
2022
|
|
|
|
£m
|
£m
|
|
Cash and cash equivalents as reported
|
|
398.9
|
384.4
|
|
Add cash on deposit and government
bonds included within current investments
|
|
39.9
|
3.1
|
|
Less amounts reserved for bonuses
included within current trade and other payables
|
|
(237.7)
|
(225.8)
|
|
Less net cash and available funds
held in regulated entities
|
|
(25.7)
|
(30.8)
|
|
Free cash resources
|
|
175.4
|
130.9
|
|
|
|
|
|
|