REG - Clarkson PLC - Final Results
07/03/2022 07:00
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RNS Number : 7756D Clarkson PLC 07 March 2022
CLARKSON PLC
7 March 2022
Clarkson PLC ('Clarksons') is the world's leading provider of integrated
shipping services. From offices in 23 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 2021.
Summary
· Record underlying profit before taxation(*) of £69.4m (2020:
£44.7m), an increase of 55.3%
· Underlying earnings per share increased 56.2% to 165.6p (2020:
106.0p)
· Particularly strong performance in Broking and Financial
segments
· 19(th) consecutive year of dividend growth
· Forward order book for invoicing in 2022 was US$165m (2021:
US$116m), an increase of 42.2%
· Robust balance sheet with free cash resources(*) of £92.3m
(2020: £81.1m)
Year ended Year ended
31 December 2021 31 December 2020
Revenue £443.3m £358.2m
Underlying profit before taxation* £69.4m £44.7m
Reported profit/(loss) before taxation £69.1m (£16.4m)
Underlying basic earnings per share* 165.6p 106.0p
Reported basic earnings/(loss) per share 164.6p (95.2p)
Dividend per share 84p 79p
* 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:
"Our record 2021 results are testament to the strategy which we have followed
and communicated to stakeholders over recent years.
It is with great pride that I reflect on the strength of our people in all
sectors, roles and geographies, together comprising the best team in the world
of shipping, offshore and renewables.
We are positive about the future of the shipping industry. The outlook for
Clarksons remains strong and we believe the business will continue to benefit
from its market-leading position."
Enquiries:
Clarkson PLC: 020 7334 0000
Andi Case, Chief Executive Officer
Jeff Woyda, Chief Financial Officer & Chief Operating Officer
Camarco: 020 3757 4983 / 4994
Billy Clegg
Jennifer Renwick
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 for further information. All APMs used within this
announcement are denoted by an asterisk (*).
About Clarkson PLC
Clarkson PLC is the world's leading provider of integrated services and
investment banking capabilities to the shipping and offshore markets,
facilitating global trade.
Founded in 1852, Clarksons offers its diverse and growing client base an
unrivalled range of shipbroking services, sector research, on-hand logistical
support and full investment banking capabilities in all key shipping and
offshore sectors. Clarksons continues to drive innovation across its business,
developing digital solutions which underpin the Group's unrivalled expertise
and knowledge with leading technology.
The Group employs over 1,600 people in 52 different offices across its four
divisions and is number one or two in all its market segments.
The Company has delivered 19 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 the upturn 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 as defined in Article 7 of the
retained EU law version of the Market Abuse Regulation No 596/2014 ("UK MAR")
and has been announced in accordance with the Company's obligations under
Article 17 of UK MAR.
Chair's review
Overview
I am delighted and privileged to have been appointed Chair of Clarksons after
what has been a record year for the Group. The Group's strategy, combined with
vision, quality and determination across the entire business, has enabled us
to successfully navigate the global pandemic, maintain our excellent service
for our clients, maximise the opportunities of improving markets and once
again deliver shareholder value.
2021 saw the start of a recovery in the shipping markets, with improved rates
and increasing asset values in many verticals, resulting from a better
supply/demand balance, low market order book and congestion arising from
COVID-19 and supply chain challenges. Clarksons has emerged from the pandemic
in better shape than ever. We enter 2022 from a position of strength and are
very well placed to capitalise on favourable market dynamics.
The green transition is a global megatrend which is underpinning change in
shipping. As shipowners and charterers drive to meet their net zero
commitments, all are looking closely at supply chains for a lower emissions
option. Over the past year, Clarksons has made significant progress in scaling
up its offering to advise our clients on the changing industry and the
importance of becoming a more responsible business.
It is in our ethos to continue to adapt to the market and our clients'
demands, and we will continue to do this into 2022 and beyond.
Results
Underlying profit before taxation* was £69.4m (2020: £44.7m) with underlying
basic earnings per share* of 165.6p (2020: 106.0p). Reported profit before
taxation was £69.1m (2020: £16.4m loss) with reported basic earnings per
share of 164.6p (2020: 95.2p loss).
Free cash resources(*) as at 31 December 2021 were £92.3m (2020: £81.1m).
Dividend
Clarksons is increasing its dividend for the 19th consecutive year, continuing
its progressive dividend policy to reflect the cash-generative nature of the
business, the strong balance sheet and record forward order book. In addition,
the Board has retained resources to enable it to maximise shareholder value by
maintaining flexibility to act swiftly, particularly to opportunities arising
from the green transition, technology and other areas of our business.
The Board is recommending a final dividend for 2021 of 57p (2020: 54p).
Combined with the interim dividend in respect of 2021 of 27p (2020: 25p), the
resulting full year dividend in respect of 2021 results is 84p (2020: 79p).
The dividend will be payable on 27 May 2022 to shareholders on the register on
13 May 2022, subject to shareholder approval.
People
The people throughout Clarksons are of the highest quality, and through
dedication, hard work and expertise they have continued to overcome the
challenges thrown at them over this past year from the pandemic and changing
economic backdrop. We are hugely grateful to all our colleagues for their
contribution and commitment.
At Clarksons we take pride in helping others. There has never been a more
important time to give back to the community, and during the past year The
Clarkson Foundation has focused on projects covering mental health,
homelessness, opportunities for employment and global poverty. The Foundation
aims to make meaningful positive change around the world and has exciting
initiatives planned for 2022.
Board
Clarksons was pleased to welcome Martine Bond to the Board and as a member of
the Audit and Risk Committee in March 2021. Martine brings extensive
technology expertise to the Board, as well as more than 20 years' experience
in the financial services industry. She has significant board experience
across legal entities in Europe, North America and Asia, further adding to the
Board's international expertise.
On behalf of the Clarksons team, I would like to thank Sir Bill Thomas for his
valuable contribution during his tenure as Chair and wish him every success in
his future endeavours.
Outlook
In 2022, we expect the favourable supply/demand dynamics to continue. The
supply of new ships continues to be affected by the structural reduction in
shipbuilding capacity compared to 2008 whilst the economic recovery from the
COVID-19-induced pandemic has strengthened the demand side. We have a very
strong forward order book and the outlook for freight rates remains positive.
We remain conscious of the current geopolitical uncertainty, which could
impact sanctions, exchange rates and commodity supply, alongside the global
backdrop of inflationary pressures and rising interest rates. The team is
therefore extremely focused on intelligence, analysis and relationships to
ensure that we are well placed to support our clients as the market continues
to evolve.
We will always evaluate opportunities to invest in the business. We will
continue to hire the best emerging talent available to further consolidate our
position in the industry. The green transition and technology will continue to
be at the forefront of change in the maritime industry, and we will continue
to invest significantly to help our clients reduce the environmental impact of
the shipping industry.
We are positive about the future of the business, and believe we are in a
strong position to continue to deliver for our clients across all verticals
and thus increase shareholder value over the long term.
Laurence Hollingworth
Chair
4 March 2022
Chief Executive Officer's review
I am delighted to report that the 2021 results represent a record performance
for Clarksons. They are testament to the strategy which we have followed and
communicated to stakeholders over recent years.
For some years we have highlighted that tightening of shipping capacity
against increased demand and the requirement for decarbonising the trade would
be key drivers for our business. But it is important to remember that our
performance in 2021 was delivered against the background of COVID-19-induced
congestion and supply chain issues which added further complexity to market
dynamics. Of course, COVID-19 did not just have an impact on ports and
logistics, but impacted everyone in all parts of the world. Indeed, even
today, there are still many of our teams who are unable to travel, restricted
in their access to meet clients and colleagues in person and suffering from
the impact of illness and changed working conditions both for themselves and
their families.
It is therefore with great pride that I reflect on the strength of our people
in all sectors, roles and geographies, together comprising the best team in
the world of shipping, offshore and renewables. I thank every member of staff
for their hard work and dedication throughout 2021. It has been a challenging
year, but the team has again shown its quality in successfully navigating the
business through this period and positioning it to thrive as more favourable
market conditions return.
2021 was a year when we saw our cargo clients, driven by consumer demand and
regulatory requirements, increasingly focus on the actions needed to reduce
harmful emissions. We have therefore created a dedicated Green Transition team
to coordinate, focus on and deliver Clarksons' expert services to our clients.
Analysis, research, data, advice, execution expertise, support services,
technology and finance are essential ingredients in all our clients'
decisions, and the breadth and depth developed throughout Clarksons in recent
years is now proving its worth and providing real added value to the industry.
Broking
The shipping markets performed well in 2021, with the average ClarkSea Index**
being 93% higher than that of 2020. However, the strategy to be best in class
across all verticals within shipping and offshore has never been more
important. 2021 saw the most challenging period for the tanker markets, offset
by strength in other markets, particularly the dry cargo and container
chartering markets and in asset business within sale and purchase and
newbuilding where each of these teams performed particularly well. The
investment we have made in people, geographic expansion and the tools for
trade of our brokers has certainly improved efficiency and increased our
footprint globally. This has meant that we are better placed to benefit from
improving markets.
The container chartering market performed very strongly driven by a
combination of factors, including a strong rebound in global container volumes
and major logistical disruption caused by the pandemic. Port congestion
significantly reduced available capacity, which is expected to continue
throughout 2022.
Dry bulk rates were at their highest levels for over a decade, helped by good
growth in minor bulks and grains, and the Baltic Dry Index reached a 12-year
high in the fourth quarter.
The LNG market showed strength in 2021, with tonnage demand and LNG trade
volumes both increasing. The importance of this market is growing, and the
expertise within the Group is developing alongside our LPG, ammonia and
petrochemical gas teams.
After many years of recession, the offshore oil and gas market also improved,
spurred on by the increased oil price and the longer-term outlook for greater
demand. Increasing strategic energy needs and a drive to expand beyond fossil
fuels has driven an increase in the offshore renewables market, where our
market-leading teams around the world have increased their transaction
revenues and volumes. Our expertise, market analysis and insight are helping
our clients in their push for expansion in this area.
The tanker market, as already highlighted, was the weakest it has been for
some 30 years, with demand for oil remaining low, impacted particularly by
reduced travel and consumption. This was accentuated year on year, due to the
extremely high rates in the first half of 2020 arising from the contango in
the oil price.
Finally, the sale and purchase team has had a very high volume year, as
increasing numbers of people want to buy into the upward trend in rates. Our
newbuilding team has also been incredibly busy, particularly in LNG and
containers tonnage, with berth space, as anticipated due to reduced overall
capacity amongst shipyards, now full for the foreseeable future.
A key focus for growth in the last few years within Broking has been our
projects and period business, comprising both longer-term charters and
newbuilding business, which made material profit in 2021 and has enabled us to
significantly build the forward order book. Unlike many of our competitors, we
disclose only that element of the forward order book we believe to be secure
and due to be invoiced in the following year. At the year-end, the forward
order book for 2022 was $165m, 42.2% higher than the $116m brought forward in
2021.
Overall, segmental profit before taxation from Broking was £73.6m, up £18.2m
over the year, with a margin of 21.6%.
Financial
Our Financial division has had an exceptional year, reporting £13.3m of
profit (2020: £2.5m). Within Clarksons Platou Securities, a total of 40 large
corporate finance deals have been executed in the year, raising in excess of
$3.5bn across metals and minerals, shipping, offshore energy and renewables.
In addition, our real estate team launched 24 new projects and sold 11
existing projects and our shipping and offshore team placed a total of 27
vessels and sold a further 14.
Green transition
The green transition is becoming increasingly important and we believe it will
be one of the key drivers of the demand and supply dynamics in shipping for
the foreseeable future, as regulation becomes an ever-increasing priority. Our
Green Transition team, launched in 2021, has seen very strong client demand
and is playing a hugely important role in assisting clients in reducing
emissions and pushing forward the agenda of positive change.
Research
The Research division continued to perform strongly during the period with
sales of digital products across both shipping and offshore growing in excess
of expectations. The impact of exchange rate movement dampened the results
from valuation income year on year as this revenue is charged in US dollars,
but we are now seeing a resurgence in this income stream and, together with
digital sales, the future is looking strong as clients have an increasing need
for data to assess and benchmark decisions.
Support
The Support division performed strongly over the course of the year, with our
agency, supplies, customs clearance and freight forwarding businesses
contributing to a return to profit levels last seen before the pandemic. We
see growth opportunities in the future, from both hiring good people and
corporate activity, across all areas of Support including those particularly
focused on renewables.
Sea/
The Sea/ platform continues to make progress and we have made real strides
over the year in commercialising the technology that we believe will become so
vital to the shipping industry. The launch of Sea/fix in January 2021 to the
mining community, for negotiation and execution of business, has been a
success with a significant number of major players now signed-up users and
putting all their business through the platform. In the second half of 2021 we
also launched SeaCarbon/, a complete CO(2) shipping toolkit for the maritime
industry which has now tracked more than 1,400 voyages, equating to 9.9m
nautical miles, and resulting in the saving of 4.2m tonnes of CO(2).
Brand update
Since the acquisition of RS Platou ASA in 2015, our Broking and Financial
divisions have used the combined brand Clarksons Platou. Now that all teams
are fully integrated, we have decided to align the branding of all businesses
within the Group by referring to just Clarksons.
Looking forward to 2022
The supply/demand dynamics in the industry continue to be positive as the
supply of new ships lags behind the ever-increasing demand for vessels driven
by the green transition, increasing demand for commodities and a recovery in
the global economy. This means that we start 2022 with a positive backdrop for
our markets.
As the impact from COVID-19 reduces, we are anticipating increased business
costs as we see a return to business travel and corporate hospitality, which
has been virtually non-existent during the pandemic. Nevertheless, our
increased forward order book, combined with the strength of spot markets, a
positive pipeline in Financial and continued growth across Research, Support
and Sea/, means that we approach 2022 from a position of strength.
The outlook for Clarksons remains strong and we believe the business will
continue to benefit from its market-leading position.
Andi Case
Chief Executive Officer
4 March 2022
** Whilst this index is a good high-level guide to shipping, it only
represents spot freight rates during the year in certain key segments,
weighted by the number of vessels in that fleet. It specifically does not
include period rates, asset transactions, specialist sectors in shipping and
offshore. The weightings of the index also do not reflect the weightings of
Clarksons' earnings.
Financial review
Revenue: £443.3m (2020: £358.2m)
Underlying profit before taxation*: £69.4m (2020: £44.7m)
Reported profit before taxation: £69.1m (2020: £16.4m loss)
Dividend per share: 84p (2020: 79p)
Financial performance
2021 was a record year for the Group. Revenue increased 23.8%, including
increases in all segments of the business, and underlying profit before
taxation(*) increased by 55.3%.
The Broking division benefitted from the longer-term strategy implemented in
recent years, to increase our global footprint and be best in class across
every segment of shipping and offshore. As we went into 2021, the shortening
in supply of ships, highlighted in last year's outlook, created the backdrop
for stronger freight rates and asset prices in several but not all verticals.
Overall, Broking generated a profit of £73.6m in the year (2020: £55.4m),
with an increased margin of 21.6% (2020: 19.6%) driven by strong performances
in dry bulk, containers and sale and purchase, offset in part by weakness in
tanker markets.
The Financial division performed exceptionally well, generating a profit of
£13.3m and margin of 23.8% (2020: £2.5m and 7.4%), reflecting active capital
markets across shipping, metals and minerals and renewables, and strong deal
flow in shipping, offshore and real estate project finance. The Support and
Research divisions also experienced good revenue and profit growth, with our
port services business returning to pre-pandemic levels.
The Group incurred underlying administrative expenses(*) of £355.7m (2020:
£298.5m) in the year, an increase of 19.2%, largely from an increase in
variable compensation due to the improved business performance. Within these
expenses, central costs unallocated to business segments increased to £25.2m
(2020: £18.8m), again reflecting an increase in variable remuneration due to
increased profits, as well as higher PLC costs, investment into central IT
systems and people, and increased Sea/ technology costs. Sea/ costs on a cash
basis were similar to 2020, but less were capitalised in 2021 than in previous
years and there was an increase to amortisation reflecting the successful
roll-out to a broad base of clients.
Exceptional items
The Board reviewed the need for a non-cash impairment relating to goodwill on
the balance sheet and determined that, following improved trading conditions
in the Offshore and Securities cash-generating units ('CGUs') compared to
those seen in 2020, no impairment charge was required in 2021 (2020: £60.6m).
Acquisition-related costs
Acquisition-related costs include £0.2m (2020: £0.3m) relating to
amortisation of intangibles and £0.1m (2020: £0.2m) of cash and share-based
payments spread over employee service periods. We estimate acquisition-related
costs for 2022 to be £0.2m, assuming no further acquisitions are made.
Taxation
The Group's underlying effective tax rate* was 21.2% (2020: 21.3%), reflecting
the broad international operations of the Group, which remain consistent with
the prior year.
Earnings per share
Underlying basic earnings per share* increased by 56.2% to 165.6p (2020:
106.0p) and is calculated as underlying profit after taxation* attributable to
equity holders of the Parent Company divided by the weighted average number of
ordinary shares in issue during the year. The reported basic earnings per
share was 164.6p (2020: 95.2p loss).
Forward order book ('FOB')
The Group earns some of its commissions on contracts where the duration
extends beyond the current year. Where this is the case, amounts that are able
to be invoiced during the current financial year are recognised as revenue
accordingly. Those amounts which are not yet invoiced, and therefore not
recognised as revenue, are held in the FOB. In challenging markets, such
amounts may be cancelled or deferred into later periods.
The Directors review the FOB at the year-end and only publish the FOB items
which will, in their view, be invoiced in the following 12 months. At 31
December 2021, this estimate was 42.2% higher than the prior year at US$165m
(31 December 2020: US$116m).
Dividend
The Board is recommending a final dividend in respect of 2021 of 57p (2020:
54p) which, subject to shareholder approval, will be paid on 27 May 2022 to
shareholders on the register at the close of business on 13 May 2022.
Together with the interim dividend in respect of 2021 of 27p (2020: 25p), this
would give a total dividend of 84p for 2021, an increase of 6% on 2020 (2020:
79p). In taking its decision, the Board took into consideration the Group's
2021 performance, balance sheet strength, ability to generate cash and FOB.
This increased dividend represents the 19th consecutive year that the Board
has raised the dividend.
Foreign exchange
The average sterling exchange rate during 2021 was US$1.38 (2020: US$1.29). At
31 December 2021, the spot rate was US$1.35 (2020: US$1.37).
Cash and borrowings
The Group ended the year with cash balances of £261.6m (2020: £173.4m) and a
further £9.6m (2020: £22.8m) 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
accrued bonuses, at 31 December 2021 were £122.3m (2020: £95.4m). 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 2021 were £92.3m (2020: £81.1m).
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 2021 were £361.6m (2020: £328.4m). The balance
sheet remains strong, with net current assets and investments exceeding
non-current liabilities (excluding pension provisions and lease liabilities as
accounted for under IFRS 16) by £120.2m (2020: £95.0m).
The overall loss allowance for trade receivables was £12.9m (2020: £12.3m).
The Group's pension schemes had a combined surplus before deferred tax of
£22.0m (2020: £12.0m).
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
4 March 2022
Business review
Broking
Revenue: £340.0m (2020: £282.6m)
Segmental split of underlying profit before taxation: £73.6m (2020: £55.4m)
Forward order book for 2022: US$165m^ (At 31 December 2020 for 2021: US$116m^)
^ Directors' best estimate of deliverable forward order book ('FOB')
Shipping markets performed well, with long-term charters and newbuilding
business allowing us to significantly build the forward order book
Dry cargo
It was a year of recovery for dry bulk markets with returning confidence, a
rebound in trade volumes, moderate fleet growth and more logistical
inefficiencies. This led to soaring rates, with the Clarksons average bulker
earnings index reaching a 13-year high in the fourth quarter.
The year started with a rare first quarter rise in freight rates, led by an
increase in trade within the Asia-Pacific region. China's early economic
rebound gave strength to the market at a time when many charterers
traditionally wait for a seasonal lull to the market before taking freight
cover. As overall trade improved, a record number of ships were waiting at
Chinese ports and delays intensified with strict quarantine rules and
restrictions on crew changes.
During the second quarter rates were firmer with a robust start to China's
construction and East Coast South America's soybean seasons. Iron ore
shipments improved while coal trade continued to rise, sending seaborne dry
bulk trade in excess of 1.2bn tonnes for the first time in a single quarter.
Building on the sound seaborne trade foundation and with Europe and the US's
exit from lockdown, pent-up demand and optimism resulted in rates reaching
12-year highs in October, as did many commodity prices.
In Asia, however, a second wave of COVID-19 sent many Southeast Asian nations
into renewed temporary lockdowns and heightened quarantine requirements in
ports in the third quarter. Adding to the already high waiting times in ports,
a super typhoon in the Pacific and a hurricane in the US Gulf caused further
disruptions. Fleet inefficiencies increased to levels similar to those seen at
the start of the year, with significant additional capacity tied up at ports
in China.
China's intervention to cool commodity prices from record levels led to severe
steel production cuts and lower output in other industrials. Additionally, the
fall-out from a high-profile real estate debt default added to the weaker
sentiment and led to a steep decline in iron ore prices which resulted in a
downward correction in Cape rates followed by the smaller ship sizes in the
fourth quarter. Freight rates founded a temporary floor with additional coal
demand and seasonal year-end iron ore supply growth before heading for the
seasonal slowdown.
The annual average year-on-year seaborne trade growth is estimated at 3.8% in
2021, the highest in four years, following a 1.6% contraction in 2020. The
fleet expanded by 3.6% although additional capacity was added with ships
re-entering the fleet following lengthy waiting times at Chinese ports during
2020 when Australian coal cargoes were banned from discharging. This resulted
in a net fleet growth nearer to 5% over the year. Nevertheless, the rebound in
trade was enough to absorb that fleet growth and send average freight rates to
12-year highs.
Looking forward, on an average basis we expect rates to match the average
annual levels we have seen in 2021 given limited fleet growth, solid base-case
demand expectation and continued COVID-19-related fleet inefficiencies.
However heightened geopolitical tensions and a broader economic slowdown in
China are expected to lead to reduced seaborne demand in 2022.
Decarbonisation efforts in the shipping industry ahead of the forthcoming IMO
and EU carbon mandates of 2023 will gain more traction during 2022 as owners,
operators and charterers prepare for the changing regulatory environment
ahead. Net fleet growth might be lower than anticipated with high carbon
emitting vessels forced into early retirement.
We remain well represented around the globe in the three main dry cargo
markets: capesize, panamax and supra/handymax.
Containers
The container shipping sector experienced extraordinary market conditions
throughout 2021. These were driven by the combination of a strong rebound in
global container trade volumes and major COVID-19-related logistical
disruption, including port congestion, which significantly reduced available
capacity.
Container freight rates and containership charter earnings reached all-time
highs in 2021 and ended the year at, or close to, record levels. The SCFI spot
box freight rate index exceeded 5,000 for the first time at the end of 2021,
having repeatedly set new all-time highs throughout the year, and the index
averaged 3,773 during 2021, (2020: 1,234). The Clarksons Containership
Timecharter Rate Index rose to 402 in October 2021, more than double the
previous 2005 high, although some segments saw a slight easing towards the
year-end. Multi-year period charters have become the norm, and near-term
available vessel capacity in most size segments remains extremely limited.
The containership sale and purchase market saw a new record volume of activity
in 2021, with 1.6m TEU of capacity sold across the year. Secondhand asset
prices saw major gains and the Clarksons Containership Secondhand Price Index
stood at 110 at the end of 2021 (end of 2020: 41). The price for a 10-year old
6,600 TEU containership, for example, surged from US$34m at the end of 2020 to
reach US$115m at the end of 2021.
2021 saw an impressive rebound in global container trade volumes, with box
trade estimated to have grown by 6.1% in TEU following the decline of 1.3% in
2020. Surging trade volumes have been driven by a range of factors including
pent-up demand, major stimulus, consumer spending patterns focusing more
heavily on goods than services and in the main an improving macro-economic
backdrop. Port congestion and other logistical disruption (including the
blockage at the Suez Canal in March and an acute shortage of box equipment)
has proved pivotal. The level of containership capacity 'at port' across 2021
averaged 35% of total fleet capacity (37% in late October 2021), materially
higher than the average between 2016 and 2019 of 31%.
Containership fleet capacity grew by 4.5% in 2021 (2020: 2.9%). However, with
sentiment buoyed by market conditions, containership newbuild contracting set
a new annual record in 2021 at 4.3m TEU across 569 units, taking the order
book to 23% of total fleet capacity (end of 2020: 11%); this may generate
supply pressures when new vessels are delivered over 2023-24.
The containership fleet's GHG footprint remains firmly in focus, particularly
against the backdrop of a continued ramp-up in decarbonisation regulation.
Over the last decade, slower operating speeds and an increased share of 'eco'
vessels (33% of fleet capacity was 'eco modern' at the end of 2021) have
helped reduce boxship emissions but there remains much to do. Uptake of
alternative fuels (24% of order book capacity alternative fuel 'capable' at
end 2021) has continued and approximately 700 units in the fleet had at least
one energy saving technology ('EST') fitted at the end of 2021.
Container shipping market conditions appear likely to remain extremely firm in
2022, even if vessel charter earnings and box freight rates see some easing at
some point, with industry expectations of prolonged disruption and continued
firm demand. Global seaborne box trade is projected to grow by approximately
4% in 2022, with fleet capacity growth next year at a moderate 3.6%.
Buoyed by a rising market, our Containers business continued to grow. Despite
not having regular face-to-face contact, our international team assisted
clients to arrange multiyear chartering deals, secondhand sales and newbuild
contracting.
Tankers
2021 was characterised by generally weak earnings for tankers as oil demand,
refinery runs and oil supply declined to below pre-pandemic levels on average.
Global oil supply in the first quarter was 8% lower than in the equivalent
period in 2020, largely due to the steep oil production cuts implemented by
the 'OPEC+' countries and reduced production levels in the US. Oil demand, oil
supply and refinery runs recovered very strongly throughout the year. Both
global oil demand and supply are estimated to have risen by as much as 6% in
the fourth quarter relative to the first quarter of the year, albeit still 2%
below the average level for 2019. Overall, the global oil trade in 2021
remained broadly unchanged year on year and 8% lower than in 2019.
Growth in the deep sea tanker fleet was well below average levels at 1.8%,
with deliveries below long-run average levels and an increase in removals from
the fleet. However, the low levels of demand kept earnings suppressed.
Clarksons' published average earnings for non-eco and non-scrubber fitted
VLCCs fell by 94% when compared with the strong levels seen in 2020.
Clarksons' published average earnings for non-eco and non-scrubber fitted
Suezmaxes and Aframaxes in 2021 fell by 76% and 63% respectively when compared
to 2020. For the same period, in the products tanker sector Clarksons'
published earnings for non-eco and non-scrubber fitted LR2 and LR1 products
tankers trading on the key Middle East to Far East route fell by 73% and 64%
respectively and by 58% for non-eco and non-scrubber fitted MR products
tankers.
Tanker freight markets in 2021 were less volatile than in 2020. Vessel
earnings remained at generally low levels throughout the year although there
were some spikes which were generally caused by various delays to vessels. In
all of the major sectors of the deep sea tanker market, the fourth quarter
showed the strongest vessel earnings, reflecting both the normal seasonal
uplift and the sharp rise in global oil demand and supply.
Global oil demand and supply are expected to continue recovering strongly
throughout 2022. Newbuilding deliveries are expected to remain below average
levels whilst removals from the fleet are expected to remain elevated above
long-run average levels.
Our global deep sea team performed well, assisted by our continued investment
in IT, despite the challenging market conditions and an inability to travel.
The projects desk, which we have strengthened in recent years, was extremely
active and concluded longer-term charters, which is important when freight
rates are depressed.
Specialised products
The specialised products market continues to be driven by the underlying
demand from China and the wider Asian markets. The reliance on 'Made in China'
plastic goods continues to support the bulk chemical shipping markets.
Elsewhere, we continue to see rapid development in the biofuels sector.
Regulation, particularly from the EU, is the key factor in this regard with
the growing global environmental movement helping to contribute to the
transition away from traditional crude oil and natural gas derived vehicle
fuel feedstocks. Biofuels will continue to be crucial to the growth of
seaborne trade in future years and to the specialised products business. We
estimate that seaborne trade grew by 1.3% in 2021 to 371m tonnes following a
1.2% contraction in 2020.
In 2021 the Clarksons' Specialised Products Spot Chemical and Edibles Oils
Index performed below the long-run average of the previous 12 years. During
the second and third quarters, freight rates showed gradual increases, driven
by higher bunker pricing, trade flow disruption caused by severe weather
disruption in Houston, and to a lesser extent the blockage of the Suez Canal.
As we approached the end of the third quarter and the start of the fourth, a
combination of port lockdowns in China caused by COVID-19, and the resulting
lack of pilots, as well as a brief uptick in Asia CPP activity, saw the market
in the Far East become very tight. Benchmark freight rates rose to the highest
point in the last six years and recorded a 22% rise over the year, whilst
edible oil freight rates recorded a similar increase of 23%. The direct impact
of this was a greatly improved earnings environment for owners, especially
those operating in the Far East, which remains the primary driver for these
increases in freight rates.
In 2022, we expect seaborne trade to grow by 4.5%, supported by a continued
increase in exports from the Middle East and US where chemical project
investment is beginning to pick up. Future fleet growth prospects look minimal
with appetite for newbuildings remaining muted due to high prices, lack of
yard space and investment interest focused elsewhere. After less than 1% net
fleet growth in 2021 and around the same level expected in 2022, the fleet is
due to contract year on year from 2023 onward based on the current picture.
The chemical tanker fleet was 60m DWT at the start of 2021. 2m DWT was added
to the fleet through the year and 1.7m removed. The order book stands at just
over 6% of the fleet at the start of 2022. The weak tanker markets led to
tonnage oversupply throughout the year; the ability for owners to triangulate
their voyages around CPP legs was made more challenging due to the lack of
products tonnage demand which weighed heavily on earnings, particularly in the
West.
The green transition is one of the drivers for the fleet replacement. The
looming EU ETS and EEXI/CII regulations in 2023 will no doubt raise questions
over operating costs, tonnage efficiency and alternative fuel choice. The
specialised fleet could see further contraction because of these regulations,
with scrapping a more cost-viable alternative. Conversely, the diverse nature
of the sector from a cargo perspective is complex yet positive. Alternative
fuel developments in the methanol space and growth in the demand for biofuel
have led to greater interest in the sector. The breadth and depth of the
specialised products business is unparalleled and we remain in a unique
position to advise and support all our stakeholders on their green agendas, in
conjunction with our dedicated in-house Green Transition team.
As we enter 2022, sentiment is subdued after the emergence of the Omicron
variant, but the market is in a much improved position compared to January
2021. Although uncertainty remains, the future for our market is optimistic.
This, combined with a petroleum products sector that is showing some early
signs of recovery, as well as a very low order book, will continue to provide
a floor for freight rates and earnings over the coming year.
Gas
The LPG carrier market fared well in 2021.
VLGC freights averaged US$34,019 per day compared with US$34,923 in 2020.
LPG seaborne trade levels continued to rise, growing by approximately 5% year
on year. Tonne-miles also continued to increase, supported by strong import
demand in Asia which pulled a growing North American export slate East in
order to cover the shortfall in Middle Eastern exports as OPEC cuts continued
to take their toll. North American exports were up by 17%, with over 69% of
those volumes going to Asia.
Despite the growth in voyage duration and volumes, the impact of the addition
of 18 newbuildings in 2021 resulted in only a marginal decrease in freight
rates. The LGC market continued to gain support from increased waiting times
for the VLGCs transiting the new Panama Canal; consequently assessed 12-month
time charter rates rose from US$29,059 per day to US$29,202. Midsize sector
freight rates rose from an average of US$26,479 per day to US$27,170 in 2021,
underpinned by flat fleet supply combined with increased LPG trade volumes.
Trade volumes are expected to continue to increase in 2022, supported by a
recovery in Middle Eastern LPG exports and continued growth in North American
supply. The forthcoming influx of newbuilding deliveries in both the VLGC and
Midsize segments remains a challenge, but the ageing profile of the fleet may
see the removal of some older units thereby mitigating some of the impact.
Our shipping and product teams continue to grow and provide multifaceted
solutions (including newbuildings, secondhand sales and longer-term charters)
to our clients, against a backdrop of volatility in the market.
PCG
The market for the smaller LPG carriers in 2021 started to show marked
improvement as the year progressed, most notably in the fourth quarter,
despite a disappointing start to the year.
The Handysizes continued to benefit from healthy US Ethylene and Ethane
exports. Freight rates for benchmark 22,500 cbm Semi Ref carriers rose from
$18,639 to $19,500 per day. The larger ship market supported recovery in the
smaller sizes, underpinned by relatively flat fleet supply. Freight rates were
supported by unplanned outages at refineries and crackers. In the smallest
size categories, freights for 3,500 cbm pressure carriers in the west rose
from $220,000 pcm to $225,000 pcm whilst those for the 3,200 semi-refrigerated
vessels rose from $227,000 pcm to $280,000 pcm. The recovery in freight rates
for the smaller sizes is expected to continue as the age profile of the fleet
deteriorates and there are limited newbuildings.
LNG
The LNG shipping market began 2021 on a strong note for spot LNG freight rates
and term LNG supply contracts agreed. LNG freight rates surged on the back of
strong heating and restocking demand in Asia and Europe; several LNG export
plants outages in the Pacific and Middle East replaced by US LNG export
cargoes; severe delays for LNG carriers through the Panama Canal; and limited
available tonnage.
In 2021 the spot headline rates for conventional 160,000 m(3) Tri-Fuel Diesel
Electric ('TFDE') tonnage climbed 50.5% year on year and averaged US$89,179
per day. LNG freight rates were volatile in 2021. Starting at US$195,000 per
day at the start of the year, rates declined to US$28,500 per day in early
March as a result of changing weather conditions in Asia and a reduction in US
exports. Throughout the summer rates were in the US$50,000-US$70,000 range
before surging to a peak of US$210,000 per day at the start of December. By
the end of the year, rates were back at US$80,750 per day.
The wider spreads between Asia and the US and between Asia and Europe led to a
significant volume of spot tonnage fixed for long-haul voyages from the US
Gulf Coast to Far East Asia, increasing tonnage demand.
LNG tonnage demand grew by 13.8% during the year to reach an all-time high of
1,744bn tonne miles, driven by the growth of long-haul voyages. Trade between
the Atlantic Basin and the Pacific Basin climbed 38.2% to 64.6m mt. The
average laden distance sailed by LNG carriers increased 7.6% to 4,588 nm in
2021, compared to 4,265 nm a year ago.
Global LNG trade volumes rose by 5.8% to 381.1m mt in 2021, as higher volumes
from the US (whose exports surged 50.2%), Egypt (fivefold increase) and
Australia (which replaced Qatar as the largest LNG exporter) were partially
offset by losses from Nigeria, Trinidad & Tobago, Norway, Peru and Angola.
On the demand side, Japan-Korea-Taiwan remained the largest demand area with
141.0m mt of imports, but China overtook Japan as the world's largest LNG
importer with 81.0m mt against Japan's LNG imports of 75.2m mt.
2021 saw 53 conventional LNG carriers (2020: 32) and 4 FSRUs (2020: 4) (also
able to operate as LNG carriers) delivered from shipyards, 21 more than the
previous year. 84 conventional LNG carriers were ordered in 2021 compared with
32 in 2020. Two medium-size LNG carriers were also ordered for projects in
China.
Tonnage demand is expected to increase again in 2022, led by growth in LNG
export volumes. Demand for LNG cargoes is underpinned by restocking in Asia
and Europe and China's gas demand growth, supported by the increased import
capacity of 10m tonnes per annum. Trade flows are also expected to be
supported by four LNG export projects scheduled for commissioning in 2022: the
5m mt Sabine Pass T6 and 10.0m mt Calcasieu Pass in the USA, the 3.4m mt Coral
South FLNG in Mozambique and the 3.8m mt Tangguh T3 in Indonesia. Newbuild
ordering is expected to continue into 2022. This is supported by several
liquefaction projects which anticipate reaching final investment decision this
year, by portfolio players holding long-term FOB supply contracts from
projects under construction and by players looking at renewing existing
tonnage with more efficient LNG carriers.
Sale and purchase
Secondhand
The global sale and purchase ('S&P') markets continued to recover in 2021,
with sales volumes reaching record levels (over 147m dwt and US$47bn
reported). Despite some remaining COVID-19-related disruption (particularly
around crew transfer), the S&P markets have been extremely active,
supported by highly cash generative and strong charter markets (aside from
tankers), a generally improved economic outlook and the potential impact of
upcoming regulations. Transaction volumes increased most notably in the
containership sector, underpinned by the exceptional global freight markets,
with over US$14bn of sales (500 ships) reported, more than triple the previous
record level in dollar terms. Activity also increased significantly in the
bulkcarrier (961 units of US$16bn reported, more than doubling in value) and
tanker (522 units, US$11bn) sectors.
Asset values increased most rapidly in the containership sector, with some
price levels doubling or even tripling in value during the year, with
Clarksons' overall secondhand price index almost doubling from 93 to 183
points. Values also increased in the bulkcarrier sector (our 5-year-old 'eco'
capesize index increased from US$36m to US$47m over the year) against the
backdrop of improving charter markets, while tanker values still increased
slightly (our 5-year-old VLCC index increased from US$63m to US$70m) despite
weak charter markets. Escalating newbuild pricing (with many newbuild values
up 30-50% in 2021) and scrap prices (up from approximately US$400/ldt at the
start of the year to a peak of around US$600/ldt in the fourth quarter) have
also provided support to secondhand pricing levels. Recent S&P trends
amongst the major shipowning countries continued, with Greek owners still the
biggest buyers and sellers of tonnage, whilst Chinese entities were also
notably active in 2021.
Our Secondhand business benefitted from these market conditions and global
sales volumes increased by 40%. This was further enhanced as asset values
rose. In tankers, despite an extremely poor freight market throughout the
year, the owning community deployed profits generated from the other sectors
in a form of counter-cyclical buying activity. We sold more tankers than any
other sector, largely thanks to a mandate to handle the sale of a major Asian
owning group which had gone into liquidation with in excess of 50 vessels in
the fleet. The client recognised the breadth and reach of our offering which
is a testament to the hard work and dedication of the team. Whilst such
mandates do not come along regularly, we believe our track record in this
space will help us win further mandates. All our offices globally contributed
to our success with London, Athens, Shanghai, Tokyo and Copenhagen all
reporting a significant increase in volumes of concluded transactions. In
Shanghai and Tokyo new team members joined and enabled us to access new
clients.
As we move into 2022 we feel confident that the markets will allow us to
continue where 2021 has left off.
Newbuilding
Activity in the global newbuilding market picked up significantly during the
year, with order volumes doubling to 48m CGT and US$110bn. This represents the
firmest level of ordering since 2014, supported by strong underlying shipping
markets, improving economic outlook and interest in alternative fuels.
Investment was dominated by the containership sector, with record orders of
4.3m TEU and US$43bn placed. There was also strong activity in the LNG and LPG
sectors, with orders of US$22bn placed. We also saw a strong second half of
ordering in the car carriers market and a steadier flow of bulk carrier and
tanker newbuilds.
Newbuild prices generally rose by around a third over the year, with 50%
increases for larger containership pricing, as major shipyards booked up
capacity. After a period of decline, the global order book backlog edged up
again through 2021 to 90m CGT, although this remains relatively low in
historic terms at 9.4% (by dwt) of the current fleet capacity. Shipyard output
remained relatively steady year on year, totalling 32m CGT, with Chinese yards
(42% market share) and South Korean yards (32% market share) delivering the
majority of tonnage.
The green transition continues to dominate planning across the maritime
industry, including an increasing emissions regulatory framework from the IMO
and EU alongside wide-ranging policy announcements from stakeholders across
maritime. This is increasing fleet renewal requirements, with clients' focus
on decarbonisation intensifying and alternative fuels and ESTs becoming
central to newbuilding discussions. The share of the current order book that
is alternative fuelled increased to 35% of tonnage by the end of 2021, up from
28% a year ago and 10% five years ago. This includes 31% of order book tonnage
set to use LNG as a fuel. Our activity over the period is reflective of this
trend, with close to 60% of our contracting activity over 2021 having a
capability to utilise alternate fuels/propulsion, and in turn giving us a
significant insight into the adoption of these technologies going forward.
Our global newbuilding teams performed exceptionally over the period with a
record year of contracting activity in both Korea and China. There were
notable transactions in containers, LNG carriers, drybulk vessels and tankers
driven by speculative demand, as well as significant project business
leveraging the breadth of service provision the Group offers to our client
base.
We remain well placed to take advantage of market developments driven by
regulation and our robust contracting experience will continue to provide
unparalleled levels of market insight, value and validation to our client
base.
Offshore
General
2021 saw improvement in the traditional offshore oil and gas business, while
offshore renewables (wind) continued to see growth. Commodity prices
strengthened significantly through the year, with oil prices up more than 50%,
and Brent and WTI seeing their strongest performance since 2016 and 2009
respectively. Natural gas prices have also generally remained at high levels,
across North America, Asia and Europe. Oil and gas companies have seen very
strong performance with record-high operating cash flow for many of the
companies in the sector. However, despite the very strong cash generation,
exploration and production spending continues to be restrained by an increased
focus on decarbonisation and prioritising direct shareholder returns and debt.
The offshore sector saw increased activity levels in 2021 and we have seen
improvements in all the sub-sectors and across most or all geographical
regions when compared with 2020, despite these headwinds.
We expect 2022 to progress in the same direction, with likely further
improvement in activity levels and a corresponding positive impact on fleet
utilisation and day-rate levels.
The continuing strong growth for offshore wind is underpinned by solid,
long-term drivers; the energy transition and the desire to decarbonise energy
supply. 2021 was another year of very high authorisation activity for offshore
wind farms, following a record level in 2020. This provides a solid backdrop
for many years ahead of increasing offshore activity levels.
Drilling market
Total offshore rig demand measured by active (contracted) rigs saw some
improvement through 2021, having bottomed out in the early part of the year.
At December 2021, there were 360 jackup rigs on contract (2020: 343). In the
floater segment, 119 rigs were on contract (2020: 110). Utilisation also
improved through last year, with working utilisation levels in December 2021
at 81% for jackups (2020: 76%) and 74% for floaters (2020: 66%). Average
dayrates for floater rigs also started improving in 2021, albeit with
significant regional differences. Dayrates for jackups remained largely flat
throughout the year as jackup idle capacity was higher. That segment remains
more fragmented, with more contractors offering rigs, and contract durations
on average shorter. The floater segment has seen more consolidation and
retirement of rigs, and the available relevant capacity is currently largely
controlled by a limited number of players. Most of the world's large drillers
have now been through some form of refinancing, and the current round of
restructuring seems to be coming to an end. Following these restructurings, we
have also seen several of the larger companies in the segment consolidate, a
process we think is likely to continue in 2022.
Subsea field development market
Authorisations of new offshore field developments saw some improvement in
2021. The major subsea contractors continued to see a strong order intake
through the year with combined backlog building slightly more than 10% over
the year. 2021 represented the third year in a row that saw backlog growth for
the major subsea engineering, procurement and construction ('EPC')
contractors. As the average lead-time to execution for these companies is
typically 12-24 months, we will see offshore activities ramp up from 2023
onwards. 2021 also saw a significant increase in contract awards for new
floating production storage and offloading ('FPSO') units, with seven new
contracts awarded globally, up from only four in 2020, illustrating the
underlying improvement in the subsea field development market. However, the
chartering market for subsea vessels in 2021 remained challenging due to
lag-effects. We expect the backlog build witnessed by the larger contractors
in 2020 to also lead to improving market conditions for subsea vessel owners.
Certain vessel categories started to see increased utilisation and higher
rates driven by high activity in the offshore wind sector, with wind farm
operators sourcing support vessels from subsea oil and gas. We expect to see
continued improvement ahead in the subsea chartering market.
Offshore support vessels
The market for OSVs also saw meaningful improvement throughout 2021. Overall,
activity for PSVs globally has recovered to pre-COVID-19 levels and the number
of vessels in layup has come down. We have also seen tightened availability in
several regions for specific vessel categories. Average dayrates have
strengthened significantly. With overall activity levels likely to continue to
improve in 2022, particularly within drilling, we expect to see further market
strengthening throughout the year for the OSV sector.
Offshore renewables (wind)
As expected, all renewables sectors experienced growth through 2021 with the
offshore wind sector continuing its vigorous growth trajectory throughout the
year. An additional 3,450 wind turbine generators ('WTGs'), representing a
capacity of 18.7 GW, were installed globally, driven by a surge in China,
pushing total global capacity to 50.6 GW. At the end of the year there were
253 farms and 10,831 turbines in operation.
Sanctioned Final Investment Decisions ('FID') amounted to 5.3 GW for Europe
and 7.0 GW in total, excluding mainland China. FIDs and project sanctioning
amounted to US$25bn and in 2022 is forecast to reach US$36bn. The global
energy market is set to grow at a 2.4% compound annual growth rate until 2050;
and the global offshore wind market is expected to grow at 15-20% per annum
with the UK poised to be the largest market in the European region for the
foreseeable future.
2021 also saw the first FID for a large-scale offshore wind farm in the US
and, when combined with large announced Engineering Production, Construction
and Installation contracts, opens up an exciting new market. Other new markets
are also showing very interesting development, with Poland awarding 6.0 GW of
capacity, and Japan awarding its first large auction, notably 1.7 GW to a
Mitsubishi-led consortium. 2021 saw a long list of new pledges for renewable
energy, with several countries including Germany, Denmark and the Netherlands
upping their offshore wind capacity targets by 2030, a key milestone for the
industry. The WTG producers (primarily Siemens Gamesa, Vestas and GE)
introduced technological advances including a record breaking 15 MW capable
WTG. The introduction of new technology in conjunction with larger projects
reinforces the benefits of economies of scale and thus lowers the levelised
cost of energy ('LCOE'). Renewable energy from offshore wind will act as a
leading energy source to decarbonise power and provides a platform for
reducing CO(2) emissions. Renewable energy created by offshore wind is also
close to benefitting from advances in Power-to-X ('P2X') storage and offtake
solutions using green hydrogen or ammonia.
A total of 45 ships (excluding the Chinese domestic market), designed to work
with offshore wind farms, were ordered during the year at an aggregate value
of US$2.7bn, up 20% from 2020.
The outlook for the offshore wind space remains bright, and we expect a very
busy year for the industry in 2022.
Our renewables business has identified vessel procurement services
(chartering) and newbuild services as the key area of expertise but with an
increasing attention on advisory and sale and purchase activities. We are the
leading advisor to the UK/EU and the nascent US markets. The renewables
business also launched a new service, Advisory, Intelligence and Research
('AIR') in the year. We are well positioned to gain from the further expansion
of the industry as it matures into a global energy industry.
The chartering and newbuild teams managed and closed several milestone deals,
concluding a record number of years of timecharter, They also brokered a
number of specialised newbuilds with an aggregate value of nearly US$1bn which
will be needed to install the massive pipeline of 200 GW of offshore wind
production projected to be installed by 2030.
The start of 2021 saw a high level of capital markets activity in the segment,
with IPOs and M&A across many segments and there remains a high ESG focus,
although investors are becoming more selective, requiring a firmer outlook and
a clearer path to profitability from companies. The renewables business has
assisted in various commercial and financial transactions, including several
IPOs, supporting the wider Financial division.
Futures
The links between the Futures desks has been effective in 2021. We have had
very good cross-over of clients meaning that we have traded with more clients
this year than in any previous year.
Dry FFA
2021 was the best year in the last decade for the dry FFA market.
The year saw relatively low dry bulk rates in the first quarter, but the
futures market saw much bigger volumes. As the year progressed volumes
remained high as rates increased in the third quarter, seeing the highest
rates since the financial crisis. Rates slipped more than expected during the
fourth quarter but remained well up on last year.
Swaps
Capesize rates in 2021 averaged US$33,333 per day, over US$20,000 higher than
in 2020; daily traded volume increased to 3,187 lots (2020: 2,015 lots).
Similarly, the panamax market saw rates nearly triple relative to 2020 to
average US$25,562 per day; daily traded volume increased to 4,628 lots (2020:
2,957). The supramax market saw the biggest growth with rates more than
tripling at $26,770per day and daily volume doubling to 1,686 lots.
Options
The panamax options market became the big story of the year with volumes up
67% to 238,140 lots. The capesize option volumes shrank by 34,788 lots to
141,925 lots. Supramax volumes, similar to swaps, more than doubled to 16,775
in the year.
Currently, full year 2022 contracts are trading above US$24,000 per day on
capesizes and US$22,000 per day on panamax.
Wet FFA
In 2021 tanker FFA market volumes were down on the previous year reflecting
challenging market conditions as mentioned in the tankers section. Our volumes
increased, despite the fall in market volumes.
Carbon
Prices of EU Allowances in the EU ETS reached a 15-year and a then all-time
high of €88.88 on the back of broad-based economic recovery and firmer
energy markets. The highly liquid market on which European industrial
installations hedge their carbon price exposure saw high volatility and firm
trading volumes throughout the year.
Awareness of the world's largest carbon market gained traction in 2021 and
more interest was generated by COP 26 in Glasgow. Knowing that shipping will
be adopted into the EU ETS from 2023 helped drive further enquiries to the
Carbon desk from owners, operators and charterers with European exposure.
As well as the regulated carbon market, we have seen considerable interest
from shipping-related clients for voluntary offsets as part of their internal
strategy and investment into new projects.
As the industry adjusts to the green transition, we are well placed to meet
client demand for information and to enable access to the market. We see the
year ahead as being one of continual development and expansion of our client
base for the daily transactions of both regulated and voluntary environmental
products.
Financial
Revenue: £56.0m (2020: £33.9m)
Segmental split of underlying profit before taxation: £13.3m (2020: £2.5m)
An exceptional year for our Financial division as investor confidence in the
underlying markets improved
Securities
2021 marked a year of strong economic recovery supported by US$16tn of global
stimulus, the roll-out of vaccines and pent-up demand. Against this backdrop,
2021 was the best shipping year since 2013 and shipping equities had a solid
year, with an average gain of 41% based on 66 listed companies. Container
equities were the best performing sector with a gain of 244% whilst dry bulk
equities increased by 130%. LNG carrier equities ended the year 52% higher.
The shipping banking team completed 11 capital market and M&A/advisory
transactions and raised a total of US$0.8bn in capital, maintaining a leading
position in capital markets for shipping.
'Green and Tech' are dominating post-COVID-19 planning, with the focus
intensifying on reducing the shipping industry's emissions. Carbon regulations
will continue to be increasingly important in 2022, with a forward-looking
stock market likely to price in the positive effects of emissions savings
technologies. Companies with eco-vessels are likely to benefit from upcoming
carbon regulations due to lower fuel consumption and emissions, with carbon
taxes in the EU also expected to have an impact. Consequently, companies with
a young eco-fleet, or the ability to invest/renew, could see a multiple
expansion. With the recovery from COVID-19 continuing and disruption likely to
take time to unwind, market sentiment remains positive. While risks remain and
progress may be uneven, the improving economy, limited order book in many
sectors and the green transition are all supportive tailwinds for the moment.
Global energy markets continued to rebalance in 2021 and helped oil prices
improve through the year with an average US$71 per barrel, up 72% compared to
2020. The total capital commitments for new offshore oil and gas projects
amounted to US$85bn, also up 72%. These factors have positively impacted the
offshore drilling space where utilisation has developed positively throughout
the year. Dayrates have also seen a positive impact, particularly for high
specification floaters where dayrates above US$300k per day in the US Gulf of
Mexico have been seen. In terms of market dynamics, several drillers have
emerged with sustainable balance sheets after completing their chapter 11
processes, which have laid the ground for further consolidation in the sector.
Asset transactions are taking place at a higher pace. On the capital markets
side, we assisted Borr Drilling in completing two equity raises in 2021,
whilst newly established Deep Value Driller financed the acquisition of the
drillship Bolette Dolphin through a private placement, and Shelf Drilling
raised a senior secured bond. The OSV market conditions have also improved
during 2021 and activity levels are currently above pre-COVID-19 levels.
However, the sector is still too fragmented and companies are struggling with
stretched balance sheets. We expect to see more ongoing restructurings in the
OSV segment in 2022 which will eventually trigger more M&A and capital
markets activity. We assisted Tidewater in raising a US$175m senior secured
bond to repay existing debt in 2021.
The outlook for global installed offshore wind capacity continues to look
strong with installed capacity for 2030 expected to reach more than 250 GW,
translating to a circa six times increase from today's levels. This market
backdrop made 2021 an active year for owners of offshore wind service vessels,
a segment which has experienced increased focus and attention due to strong
demand outlooks combined with limited availability of specialised offshore
wind tonnage. Key players in this segment have focused on increasing their
market position through newbuild orders and consolidation ahead of the vessel
supply deficit expected to materialise going forward. With a strong ESG
profile and attractive market fundamentals, the capital markets have remained
open for high-quality offshore wind service vessel companies, and 2021 was an
active year for capital markets transactions within this segment. Over the
year we advised companies such as IWS and Edda Wind on their IPO in Norway,
and assisted Eneti Inc. with raising equity on NYSE. There were two notable
M&A transactions in the WTIV segment during 2021, with Eneti Inc. merging
with Seajacks and OHT merging with Seaway 7. From a capital markets
perspective, the outlook for 2022 remains positive, largely driven by solid
market fundamentals combined with continued newbuild ordering activity. We see
large equity needs across the offshore wind service vessel segments to fund
capex programmes for both listed and private players. Given the availability
of attractive bank financing for offshore wind vessel projects, the key focus
is expected to remain on private and public equity offerings as opposed to
high yield bond issues.
In 2021 the metals and minerals team completed 11 transactions and raised a
total of US$1.9bn in capital with US$0.9bn in bonds and US$1.0bn in equity.
This resulted in total revenue of NOK142m. Equity accounted for NOK42m of
total revenue, whilst debt and advisory accounted for NOK94m and NOK6m
respectively. The year-on-year revenue growth was an extraordinary 351% as the
number of completed transactions and revenues per transaction both increased,
driven by the strong tailwinds in commodities and the strength of our
long-term relationships. Going forward, we expect mining majors to have strong
balance sheets and liquidity and thus will focus on M&A and potential
investments in juniors. Furthermore, we expect to see a significant demand for
construction financing for battery minerals and projects within the battery
value chain supported by the general demand for electrification.
Renewable energy continued to break ground and most subsectors exhibited
strong growth rates. The IEA expects renewables as a share of the electricity
generation mix to have reached an all-time high of 30% globally in 2021. Key
technologies such as wind and solar continue to see falling cost levels and
improved competitiveness, and new projects are being announced, backed up by
continued commitments to fast track the energy transition. In capital markets,
renewable energy and cleantech saw a particularly strong interest in the
beginning of the year and, in Oslo, almost half of all listings were related
to ESG or the energy transition. With increasing interest rates and concerns
about inflation, ESG stocks saw more headwinds during the second half of the
year. One sector that stands out is the carbon capture industry, which has
experienced a breakthrough year with a 150% increase in European carbon
prices. Stocks have surged and the market is recognising that carbon capture
will be an important element in reaching the Paris Agreement goals. 2021 was
another year with extraordinary numbers in terms of megawatts announced and
capital employed and invested in renewables. It was a good year for our
renewables team with multiple transactions completed across hydropower, carbon
capture, biocarbon and cleantech. For 2022 we expect to continue to see robust
investor demand for ESG projects and companies and, as we expect increased
interest for more mature companies, we anticipate a higher level of M&A
across technologies.
In 2021, the fixed income group team completed eight transactions with total
capital of US$1.1bn raised. Straight bonds accounted for most of this, but we
also placed several sale and leaseback transactions and convertible debt. Our
primary deals were aided by historically low interest rates and issuers took
advantage of the favourable terms available. The outlook for 2022 is somewhat
mixed as interest rates have already started to increase, and we expect this
to continue, although this does create opportunities, with many companies keen
to utilise the credit markets before terms deteriorate. Equities are still
exhibiting record levels of volatility and with rising interest rates and
inflation fears we expect this trend to persist, benefitting the convertible
bond primary market. There is currently a market rotation from IT and
healthcare into energy, materials and financials, which should give a tailwind
to our core sectors going forward.
Currently, worries about rising inflation, monetary policies and the Ukraine
situation continue to dominate the world's financial markets. With the
conflict in Ukraine, and the extensive economic sanctions from the US and the
EU, the already high energy prices could rise further. With high energy
prices, companies will see rising costs, increasing the cost of manufactured
goods, which would decrease household purchasing power and have a negative
effect on growth. As in 2021, proper planning and solid execution will
continue to be important ingredients for our continued success.
Project finance
Shipping
In 2021 there was a welcome increase in rates for container ships and dry bulk
vessels, with multipurpose ('MPP')/heavylift carriers leading the way.
The strong momentum on the earnings side and lagging ship values created
interesting opportunities to acquire vessels at historically low asset prices
with good time charters and historically low residual value risk that generate
a strong cash yield to investors.
2021 has been our most active year since 2008, structuring and placing a total
of 27 vessels with a transaction volume of US$0.4bn through asset plays, joint
ventures and leasing structures. Transactions comprised 15 drybulk vessels,
six MPP/heavylift vessels, three container ships, two emergency rescue and
response vessels and one exploration cruise ship. During the year, we also
successfully sold 14 vessels from existing projects, returning capital and
profits to our investors.
In 2022 we are optimistic that our projects will continue to perform well
backed by strong market fundamentals including record low order books, high
newbuilding prices, limited global yard capacity and a healthy demand outlook.
Real estate
2021 was an extraordinary year for the Norwegian property market which reached
an all-time high with a total transaction volume of more than NOK155bn, 54%
higher than in 2020 and by far the highest volume recorded for a single year
in Norway. December's volume of NOK45bn comprising 71 transactions ended the
record year. The previous all-time high for the Norwegian property market was
NOK105bn in 2019.
We also had record total transactions for the year. This comprised both
acquisitions and divestments, amounting to NOK13bn. During 2021 we arranged
for 24 new real estate projects totalling NOK8bn, whilst in the same period
securing solid returns for our investors by selling 11 projects totalling
NOK5bn. Our dedicated sales desk facilitated secondhand trading in our
projects worth NOK1bn.
We expect high activity to continue into 2022 with an attractive transaction
market in Norwegian property.
Our investment management operation continues its positive development. Our
first fund Oslo Opportunity 1 is in the process of realising its last
investments, while our second fund Oslo Opportunity 2 was fully subscribed
with NOK0.8bn in equity in the first quarter of 2021. Approximately one third
of this capital has now been deployed. We plan to raise further capital and
establish new funds in the coming year.
In recent years the real estate sector has made a significant leap towards the
technological and environmental trends driven by authorities, entities,
tenants and ultimately investors. The demand for technologically advanced,
energy efficient and sustainable buildings are ever increasing, along with the
ability to create engaging buildings and neighbourhood environments which are
enjoyable places to live, work and socialise. Our project development business
was further strengthened in 2021, bringing in further professional expertise
and capacity to this ever-increasing complex development environment in-house.
Structured asset finance
In the first half of 2021 activity in the asset finance market was high. A
general stabilisation in the financing markets, buoyed by positive demand and
increased vessel earnings, provided the backdrop for a raft of financings
especially for newbuildings as buyers sought to commit orders ahead of the
increased pricing implemented by the shipyards. Mainstream shipping banks and
Export Credit Agencies ('ECAs') continued to provide most of the newbuilding
finance for the blue-chip names that are financing green projects. Leasing
companies, notably some of the larger Chinese leasing companies, secured some
of this financing but had to reduce margins to compete. Their successes in
newbuilding finance were largely limited to the few deals requiring higher
leverage or residual risk transfer.
Outside the newbuilding market, there was plenty of activity in refinancing
existing senior debt with the source of capital spread between the second-tier
shipping banks, leasing companies and the myriad of alternative lenders
including those using green funds.
In the second half of 2021, we saw a decrease in newbuilding finance activity
and a corresponding increase in de-leveraging and refinancing at lower cost,
especially in the container sector. Chinese leasing companies received a large
number of early repurchase option requests as the liner companies sought to
use their substantial cash resources to repay or lock in lower finance rates.
Furthermore, some of the mainstream shipping banks and ECAs began to expand
their customer base as high earnings improved borrower credit ratings and
balance sheets. For the very best financing deals with green credentials,
competition is increasing and margins are reducing.
In 2022 we expect that the general higher earnings environment will result in
fewer highly leveraged deals, with the mainstream shipping banks and ECAs
continuing to be the lenders of choice, especially for green projects. We
believe that leasing companies will generally need to offer lower margins and
take more residual risk if they wish to secure financing for this type of
project. Cheaper refinancing, balance sheet optimisation and de-leveraging is
expected to provide the majority of opportunities for lenders and lessors
alike in the coming months.
We concluded a number of vessel financings for newbuildings and secondhand
acquisitions and are currently closing a number of mandates. We remain
positive for 2022, albeit we anticipate it to be more challenging to find good
newbuilding financing projects.
Support
Revenue: £29.6m (2020: £24.9m)
Segmental split of underlying profit before taxation: £3.3m (2020: £1.7m)
A strong performance in the year
Agency
Gibb Group
Gibb continued to grow quickly. This was mostly due to the expansion of the
new Safety and Survival business which benefitted from the growth of offshore
renewables. Our Mavric in-house product was well received and saw positive
growth and market penetration. We also started to hire out safety and survival
equipment.
The new operation in Ijmuiden, Netherlands opened and has started to find
traction as it acquires stock.
Stevedoring
2021 was a weak year, owing to a poor harvest in 2020 which was compounded by
Brexit-prompted export volumes prior to the end of 2020. The 2021 harvest
proved little better, with UK grain exports remaining weak. Imports have
remained strong and much above prior years levels, but the additional import
volumes are less than the decreased export volumes. We have therefore returned
warehousing capacity to our landlord.
The immediate outlook for 2022 is similar.
Short sea broking
High freight rates have made it tough for short sea charterers to accept.
Despite this, commissions earned set new records.
Agency and freight forwarding/customs clearance
2021 saw the reintroduction of customs borders for European Community origin
and destination cargoes for the first time since 1992. Accordingly, albeit
relatively slowly at first, Belfast saw a huge growth in turnover in this
sector. 2022 will see further tightening of border rules and customs
procedures which will help this operation.
Agri bulks, aggregates and scrap had a good year, with underlying growth in
the construction sector. As with stevedoring, grain exports had a weak year.
This was hindered further by the closure of the Southampton export terminal
for 10 months and the rebuilding of a major part of the Tilbury terminal
following an explosion in 2020 which demolished 40% of the port capacity.
Grain imports were strong throughout the year.
Offshore renewables had a strong year seeing projects finished in Moray East,
Hornsea and Triton Knoll. We had greater than expected support from dredging
vessels preparing the Hinkley Point power station inlet and outlet pipes. We
won Seaway 7's support contract for cabling work on Seagreen, which is
positive for the future.
Egypt agency
Agency business in Egypt performed robustly in 2021.
As the global economy started to recover and bunker prices rose, our agency
business improved particularly for Suez Canal transit volumes, which increased
by 21% year on year.
The liner business continued to provide an excellent service to clients and we
expanded our offering to continue to provide clients with the best possible
service.
Research
Revenue: £17.7m (2020: £16.8m)
Segmental split of underlying profit before taxation: £6.1m (2020: £5.6m)
Our uniquely powerful data and intelligence underpins the workflows and
decision-making of many organisations across the complex and dynamic maritime
industry
Research, the data and analytics arm of Clarksons, performed robustly during
2021, continuing its long-term growth trajectory.
Our unique flow of powerful and highly relevant research and data, during a
period of market complexity and volatility, has been extremely well received
by our clients and achieved an excellent profile for the Group. The use of
innovative technology and algorithms has continued to expand the depth and
quality of our proprietary database, supporting a strong pipeline of product
development and an encouraging flow of sales enquiries. Data and research
synergies supporting the Broking, Financial and Support divisions were also
strengthened during the year, alongside enhanced data provision to the
end-to-end freight Sea/ platform.
We remain market leaders in the provision of independent data, intelligence
and analysis around shipping, trade, offshore and energy. Millions of data
points are processed and analysed each day to provide trusted and insightful
intelligence to a global client base, typically via recurring revenue
agreements. This uniquely powerful data and intelligence underpins the
workflows and decision-making of many organisations across the complex and
dynamic global maritime industry, including shipowners, financiers, shipyards,
suppliers, charterers, class societies, insurers, universities and
governments. Our team in London, Shanghai and Singapore have grown, supporting
a constant flow of data expansion, innovation, digital platform development
and market relevant content. During 2021, specific investments were made in
both our data analytics team, which specialises in developing proprietary
algorithms and expanding the depth and quality of our database and indices,
and our market research team, which provides expert analysis and content. We
also expanded our sales capacity and our investment focus in Asia Pacific
continued, with the region contributing strongly and now responsible for 26%
of headcount.
In 2021, we continued to pursue our long-term strategy to focus on data,
intelligence and insights around the energy transition and green transition.
We released updates to our Energy Transition Model, providing decarbonisation
scenarios with specific maritime relevant segmentation, and successfully
launched Renewables Intelligence Network, our offering focused on the offshore
wind sector. There has also been a very positive reaction from our clients to
the further expansion of our wide-ranging research and data around the
fuelling transition, including the profiling of the 2.4% of global CO(2)
emitted by the shipping industry and the tracking of uptake of alternative
fuels. During the year, Research supported the Group-wide initiatives to
partner clients through their decarbonisation pathways, contributing to
internal awareness initiatives and providing emissions benchmarking data and
vessel intelligence used within the carbon module of the Sea/ suite.
Digital
Research's world-leading digital platform provides immediate access to our
powerful data, analysis, forecasts and insights. In 2021, the number of users
of our single access integrated platform reached 10,000 and there was
encouraging growth in digital sales, up 19% across the year. There are
specific development plans for each of our digital products to ensure data,
research content and functionality remain market-leading.
Major digital products include:
Shipping Intelligence Network ('SIN')
SIN is the market-leading commercial shipping database, providing wide-ranging
data and analysis tracking, and projecting shipping market supply and demand,
freight, vessel earnings, indices, asset values and macro-economic data around
trade flows and global economic developments. Sales of SIN grew strongly in
2021, benefitting from our detailed tracking of freight and earnings recovery
(the cross segment ClarkSea Index averaged a post-2008 high of $28,700 per
day), rebounding trade volumes (already above pre-pandemic levels at 12bn
tonnes) and widespread congestion (our newly launched Container Congestion
Index peaked at 37.5% compared to a pre-COVID-19 average of 31.3%). The
introduction of expanded near-term data, including port calling, congestion
and vessel activity indices, was particularly well received by our clients, as
was our COVID-19 impact assessment insights and reporting. Further
improvements to SIN are planned for the first half of 2022.
World Fleet Register ('WFR')
Sales of our WFR, which provides comprehensive tracking of the world fleet and
shipbuilding industry, grew an encouraging 24%. Growth has benefitted from a
focus on the fuelling transition, supporting stakeholders across maritime with
understanding the market impact of complex emissions regulations and their
tracking of technology uptake across the world fleet (alternative fuelled
order book share is now 35%).
Renewables Intelligence Network ('RIN')
Launched in 2021, RIN provides data, intelligence and analysis around offshore
renewables, including the fast-growing offshore wind market. Offshore wind is
a hugely exciting growth market, expected to play a vital role in energy
transition. Our data suggests that global capacity increased by over 50% in
2021 to 51 GW whilst our modelling suggests it could reach 229 GW by 2030 and
up to 9% of global energy supply by 2050. Whilst this is a competitive
research area, we are already gaining good traction, and feedback from clients
and the other divisions has been very positive.
World Offshore Register ('WOR')
Our comprehensive offshore register provides detailed intelligence on offshore
oil and gas field infrastructure and the offshore fleet. Offshore oil and gas
remain an important element of the energy mix, accounting for 17% of global
energy supply (24.5m bpd of offshore oil production, 123bn cufd of offshore
gas production in 2021). Research is the market leader in data provision to
the insurance industry, where our data is used as the core reference in
identifying rigs and platforms.
Offshore Intelligence Network ('OIN')
Offshore oil and gas markets are showing signs of recovery, with our index of
earnings across the offshore fleet up 23% in 2021 to reach its highest level
since 2015 by year-end. Our data and analysis of utilisation, dayrates and
market supply and demand for the offshore fleet including rigs, OSVs, subsea
and floating production continues to be well received by clients.
Sea/net
Developed in conjunction with the Group's technology business (Maritech), our
vessel movement system Sea/net blends satellite and land-based AIS data with
our leading database of vessels, ports and berths. We continue to improve the
depth of our underlying movement and deployment data. Despite strong
competition there has been good sales growth across 2021, supported by the
roll-out of new features
Services
Our dedicated services and consultancy activities, including the development
and management of important long-term relationships with key corporates across
the maritime sector, performed particularly well during the year. Interest in
tailored data, which often becomes embedded into client systems and includes
API delivery via our platform, remained high while our provision of specialist
insights, forecasting and scenario modelling to key partners also expanded. We
were actively engaged in consultancy during the year, including industry
sections for capital market documents, studies for governments and
policymakers and several consultancy projects for owners and financiers that
collaborated with the Broking and Financial divisions.
As the industry standard source in the provision of authoritative, consistent,
independent and well documented valuations delivered through a dedicated team,
Clarksons Valuations remain market leaders in providing valuation services to
shipowners and financiers. Despite the reducing portfolio size and valuation
requirements of some of our long-term European banking clients, there was
increased marketing to ship finance and leasing institutions across the year,
including in Asia, with several successful multi-year portfolio agreements
secured. A review of new European Banking Authority guidelines issued to
financiers around property and maritime valuations has been carried out with
additional documentation produced and enhancements to the Clarksons Valuations
digital technology platform rolled out. A number of valuation clients have
been provided with emissions benchmarks and analysis alongside their
traditional asset valuations, with the valuation team increasingly analysing
the impact of alternative fuels and ESTs on fleet value as the fuelling
transition gathers pace. The valuations team has actively supported the sale
and purchase broking teams in the active market during the year.
Sea/
Enhancing the way shipping professionals work
Sea/ has performed well in 2021 with continued adoption of the whole product
suite. We have launched the industry's first end-to-end freight trade
negotiation and management platform, which was well received by clients.
Customer satisfaction and product delivery has been at the forefront of our
technology offering and this has been strengthened by successive roll-outs of
features and enhancements across Seafix/ products.
Sea/trade, one of the key products in the Seafix/ suite, was launched in early
2021 and enables clients to collaborate, negotiate and capture the complex
world of maritime freight transactions. With the successful signing of four
key mining majors, Maritech continued to gain significant traction in the
shipping market in the second half of 2021.
The Seafix/ product suite has been further enhanced by the delivery of a
series of integrations with third-party software solutions including the Veson
IMOS Platform, Rightship Safety Score, GHG rating and inspection status, and
Windward AI's sanction product. Together, these ensure that information key to
a freight transaction is available earlier in the fixture process.
Sea/net continues to benefit from expanded product functionality resulting in
increased in adoption. Supported by the expansion of our intelligence module
Sea/analytics, clients are provided access to key information and data
focusing on commodity flow and marine analytics helping, for example, to
understand the impact of vessel supply and port congestion. These modules
represent a cornerstone of the Sea/ suite with powerful and clear insights
amidst the noise of information overload.
We continue to see significant market adoption for Sea/ contracts and Recap
Manager, the Maritech contract management modules. Sea/contracts has
benefitted from enhancements resulting in better change control across
clauses, improved access to clause libraries, and simplified linking. In 2021
we achieved a 62% growth in fixture volume and the pipeline of new customers
in all market sectors remains strong for 2022.
In the offshore industry, Sea/response, which delivers an essential service in
providing critical information on the location and equipment onboard vessels
in the proximity of an emergency, enjoyed a third-generation release in
collaboration with Oil Spill Response. This has further enhanced an already
strong product offering.
There continues to be industry focus on international shipping's
decarbonisation and we are delighted to demonstrate our commitment to this
objective by collaborating with our clients and providing the next generation
of industry solutions. In the second half of 2021, Maritech launched
SeaCarbon/, a complete CO(2) shipping toolkit for the maritime industry. So
far, we've tracked more than 1,400 voyages equating to 9.9m nautical miles
resulting in the saving of 4.2m tonnes of CO(2). We're excited to continue to
innovate and expand our SeaCarbon/ offering in 2022.
There remains an increasing demand for digital solutions across maritime
sectors. Due to the strong adaptability demonstrated by our sales, customer
success and support teams, together with collaboration with clients, our
global client base has continued to expand significantly, and we expect this
to continue.
Risk management
Full details of our principal risks and how we manage them are included in the
risk management section of the 2021 Annual Report, together with our viability
and going concern statements.
Our principal risks are:
· Loss of key personnel - Board members
· Economic factors
· Cyber risk and data security
· Loss of key personnel - normal course of business
· Adverse movements in foreign exchange
· Financial loss arising from failure of a client to meet its
obligations
· Breaches in rules and regulations
· Changes in the broking industry
Directors' responsibilities statement
The statement of Directors' responsibilities below has been prepared in
connection with the Group's full Annual Report for the year ended 31 December
2021. 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 4
March 2022 and is signed on its behalf by:
Laurence Hollingworth
Chair
4 March 2022
Consolidated income statement
for the year ended 31 December
2021 2020
Before After
exceptional exceptional
Before After items and items and
acquisition- Acquisition- acquisition- acquisition- Acquisition- acquisition-
related related related related Exceptional related related
costs costs costs costs items costs costs
£m £m £m £m £m £m £m
Revenue 443.3 - 443.3 358.2 - - 358.2
Cost of sales (16.5) - (16.5) (13.3) - - (13.3)
Trading profit 426.8 - 426.8 344.9 - - 344.9
Administrative expenses (355.7) (0.3) (356.0) (298.5) (60.6) (0.5) (359.6)
Operating profit/(loss) 71.1 (0.3) 70.8 46.4 (60.6) (0.5) (14.7)
Finance income 1.3 - 1.3 1.2 - - 1.2
Finance costs (3.1) - (3.1) (3.1) - - (3.1)
Other finance income - pensions 0.1 - 0.1 0.2 - - 0.2
Profit/(loss) before taxation 69.4 (0.3) 69.1 44.7 (60.6) (0.5) (16.4)
Taxation (14.7) - (14.7) (9.5) - 0.1 (9.4)
Profit/(loss) for the year 54.7 (0.3) 54.4 35.2 (60.6) (0.4) (25.8)
Attributable to:
Equity holders of the Parent Company 50.4 (0.3) 50.1 32.1 (60.6) (0.4) (28.9)
Non-controlling interests 4.3 - 4.3 3.1 - - 3.1
Profit/(loss) for the year 54.7 (0.3) 54.4 35.2 (60.6) (0.4) (25.8)
Earnings/(loss) per share
Basic 165.6p 164.6p 106.0p (95.2p)
Diluted 164.2p 163.2p 105.8p (95.2p)
Consolidated statement of comprehensive income
for the year ended 31 December
2021 2020
£m £m
Profit/(loss) for the year 54.4 (25.8)
Other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Actuarial gain on employee benefit schemes - net of tax 7.2 1.0
Changes in the fair value of equity instruments at fair (1.7) (2.1)
value through other comprehensive income - net of tax
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on retranslation of foreign 0.5 (2.9)
operations
Foreign currency hedges recycled to profit or loss - net of tax (2.4) 1.5
Foreign currency hedge revaluations - net of tax (0.8) 1.6
Other comprehensive income/(loss) 2.8 (0.9)
Total comprehensive income/(loss) for the year 57.2 (26.7)
Attributable to:
Equity holders of the Parent Company 52.9 (29.8)
Non-controlling interests 4.3 3.1
Total comprehensive income/(loss) for the year 57.2 (26.7)
Consolidated balance sheet
as at 31 December
2021 2020
£m £m
Non-current assets
Property, plant and equipment 22.5 24.3
Investment properties 1.2 1.2
Right-of-use assets 45.1 47.0
Intangible assets 183.2 182.9
Trade and other receivables 1.0 3.1
Investments 1.0 2.9
Employee benefits 25.8 18.1
Deferred tax assets 10.5 10.6
290.3 290.1
Current assets
Inventories 1.5 1.3
Trade and other receivables 117.4 76.6
Income tax receivable 1.0 0.2
Investments 10.3 31.1
Cash and cash equivalents 261.6 173.4
391.8 282.6
Current liabilities
Trade and other payables (235.4) (160.6)
Lease liabilities (9.7) (8.4)
Income tax payable (11.6) (7.9)
Provisions (0.6) (0.5)
(257.3) (177.4)
Net current assets 134.5 105.2
Non-current liabilities
Interest-bearing loans and borrowings - (0.1)
Trade and other payables (2.7) (2.7)
Lease liabilities (44.1) (47.7)
Provisions (1.6) (1.5)
Employee benefits (3.8) (6.1)
Deferred tax liabilities (11.0) (8.8)
(63.2) (66.9)
Net assets 361.6 328.4
Capital and reserves
Share capital 7.6 7.6
Other reserves 104.0 104.6
Retained earnings 245.3 211.9
Equity attributable to shareholders of the Parent Company 356.9 324.1
Non-controlling interests 4.7 4.3
Total equity 361.6 328.4
Consolidated statement of changes in equity
for the year ended 31 December
Attributable to equity holders of the Parent Company
Non-controlling interests
Share capital Other reserves Retained earnings £m
£m £m £m Total Total equity
£m £m
Balance at 1 January 2021 7.6 104.6 211.9 324.1 4.3 328.4
Profit for the year - - 50.1 50.1 4.3 54.4
Other comprehensive income/(loss) - (2.7) 5.5 2.8 - 2.8
Total comprehensive income/(loss) for the year - (2.7) 55.6 52.9 4.3 57.2
Transactions with owners:
Share issues - 1.8 - 1.8 - 1.8
Employee share schemes - 0.3 (0.1) 0.2 - 0.2
Tax on other employee benefits - - 2.3 2.3 - 2.3
Dividend paid - - (24.4) (24.4) (3.9) (28.3)
Total transactions with owners - 2.1 (22.2) (20.1) (3.9) (24.0)
Balance at 31 December 2021 7.6 104.0 245.3 356.9 4.7 361.6
Attributable to equity holders of the Parent Company
Non-controlling interests
Share Other reserves Retained earnings £m Total
capital £m £m Total equity
£m £m £m
Balance at 1 January 2020 7.6 158.4 211.5 377.5 3.1 380.6
(Loss)/profit for the year - - (28.9) (28.9) 3.1 (25.8)
Other comprehensive income/(loss) - 0.2 (1.1) (0.9) - (0.9)
Total comprehensive income/(loss) for the year - 0.2 (30.0) (29.8) 3.1 (26.7)
Transfer from merger reserve - (54.7) 54.7 - - -
Transactions with owners:
Share issues - 0.6 - 0.6 - 0.6
Employee share schemes - 0.1 (0.5) (0.4) - (0.4)
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 - - (23.7) (23.7) (1.8) (25.5)
Contributions to non-controlling - - - - (0.1) (0.1)
interests
Total transactions with owners - 0.7 (24.3) (23.6) (1.9) (25.5)
Balance at 31 December 2020 7.6 104.6 211.9 324.1 4.3 328.4
Consolidated cash flow statement
for the year ended 31 December
2021 2020
£m £m
Cash flows from operating activities
Profit/(loss) before taxation 69.1 (16.4)
Adjustments for:
Foreign exchange differences (3.2) 2.8
Depreciation 13.3 13.7
Share-based payment expense 1.8 1.4
Gain on sale of property, plant and equipment (0.6) -
Loss on sale of investments - 0.1
Amortisation of intangibles 1.6 0.8
Impairment of intangibles - 60.6
Difference between pension contributions paid and amount recognised in the (0.1) 0.3
income statement
Finance income (1.3) (1.2)
Finance costs 3.1 3.1
Other finance income - pensions (0.1) (0.2)
Increase in inventories (0.2) (0.2)
(Increase)/decrease in trade and other receivables (38.7) 0.3
Increase in bonus accrual 49.1 7.9
Increase in trade and other payables 29.1 3.4
Increase in provisions 0.1 0.2
Cash generated from operations 123.0 76.6
Income tax paid (9.2) (10.7)
Net cash flow from operating activities 113.8 65.9
Cash flows from investing activities
Interest received 0.2 0.5
Purchase of property, plant and equipment (3.7) (3.5)
Purchase of intangible assets (2.9) (6.3)
Proceeds from sale of investments 9.4 8.7
Proceeds from sale of property, plant and equipment 1.6 0.4
Purchase of investments (3.5) (7.9)
Transfer from current investments (cash on deposit and government bonds) 20.0 -
Transfer to current investments (cash on deposit and government bonds) (6.8) (20.3)
Proceeds from sale of investments in associates - 0.5
Acquisition of subsidiaries, including deferred consideration - (1.1)
Cash acquired on acquisitions - 0.7
Dividends received from investments - 0.2
Net cash flow from investing activities 14.3 (28.1)
Cash flows from financing activities
Interest paid and other charges (2.3) (2.7)
Dividend paid (24.4) (23.7)
Dividend paid to non-controlling interests (3.9) (1.8)
Repayments of borrowings (0.1) (1.2)
Payments of lease liabilities (9.1) (8.9)
Proceeds from shares issued 1.8 0.6
Contributions to non-controlling interests - (0.1)
ESOP shares acquired (1.9) (0.1)
Net cash flow from financing activities (39.9) (37.9)
Net increase/(decrease) in cash and cash equivalents 88.2 (0.1)
Cash and cash equivalents at 1 January 173.4 175.7
Net foreign exchange differences - (2.2)
Cash and cash equivalents at 31 December 261.6 173.4
Notes to the preliminary financial statements
1 Corporate information
The preliminary financial statements of Clarkson PLC for the year ended 31
December 2021 were authorised for issue in accordance with a resolution of the
Directors on 4 March 2022. 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 2020 and 2021, but is derived from
those financial statements. Statutory financial statements for 2020 have
been delivered to the Registrar of Companies and those for 2021 will be
delivered following the Company's Annual General Meeting. External Auditors
have reported on the financial statements for 2020 and 2021; 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
international accounting standards in conformity with the requirements of the
Companies Act 2006 ('IFRS') and the applicable legal requirements of the
Companies Act 2006. The consolidated financial statements also comply with
international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
The Group has considerable financial resources available to it, a strong
balance sheet and has consistently generated an underlying profit and good
cash inflow. As a result of this, the Directors believe that the Group is well
placed to manage its business risks successfully, despite the challenging
market backdrop and emerging geopolitical tension. 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 and the pandemic in 2020: seaborne trade recovered in 2009 and
2021 along with the profitability of the Group. Since 1990 no two consecutive
years have seen reductions in world seaborne trade.
- Management undertook a reverse stress test over a period of
three years to determine what it might take for the Group to encounter
financial difficulties. This test was based on current levels of overhead, the
cash position at 31 December 2021, the collection of debts and the invoicing
and collection of the forward order book. This determined that, in the absence
of any management 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 and no new business would leave sufficient
cash resources to cover at least the next 12 months.
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
exceptional items and acquisition-related costs; this is referred to as
'underlying profit'. When there are items which are non-recurring in nature
and considered to be material in size, these are shown as 'exceptional items'.
The column 'acquisition-related costs' includes the amortisation of acquired
intangible assets and the expensing of the cash and share-based elements of
consideration linked to ongoing employment obligations on acquisitions.
2.2 Accounting policies
The financial information is in accordance with the accounting policies set
out in the 2021 financial statements and have been prepared on a going concern
basis.
A number of new or amended standards became applicable for the current
reporting period. The Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting these standards.
As at the date of authorisation of these preliminary financial statements, a
number of amendments to standards and interpretations were in issue but not
yet effective. The Group has not applied these standards and interpretations
in the preparation of these financial statements and does not expect these to
have a material impact on the Group.
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
2021 2020 2021 2020
£m £m £m £m
Broking 340.0 282.6 73.6 55.4
Financial 56.0 33.9 13.3 2.5
Support 29.6 24.9 3.3 1.7
Research 17.7 16.8 6.1 5.6
Segment revenue/profit 443.3 358.2 96.3 65.2
Head office costs (25.2) (18.8)
Operating profit before exceptional items and acquisition-related costs 71.1 46.4
Exceptional items - (60.6)
Acquisition-related costs (0.3) (0.5)
Operating profit/(loss) after exceptional items and acquisition-related costs 70.8 (14.7)
Finance income 1.3 1.2
Finance costs (3.1) (3.1)
Other finance income - pensions 0.1 0.2
Profit/(loss) before taxation 69.1 (16.4)
Taxation (14.7) (9.4)
Profit/(loss) for the year 54.4 (25.8)
4 Exceptional items
As a result of the impairment testing of goodwill, no impairment charge was
recognised in 2021. An impairment was recognised in 2020 of £60.6m.
5 Acquisition-related costs
Included in acquisition-related costs is £0.2m (2020: £0.3m) relating to
amortisation of intangibles acquired as part of the Martankers acquisition in
2020 and cash charges of £0.1m (2020: £0.1m) relating to that acquisition.
The cash charges are contingent on employees remaining in service and are
therefore spread over the service period.
Also included is £nil (2020: £0.1m) of cash and share-based payment charges
in relation to previous acquisitions.
6 Taxation
The major components of the income tax charge in the consolidated income
statement are:
2021 2020
£m £m
Profit/(loss) at UK average standard rate of corporation tax of 19% (2020: 13.1 (3.1)
19%)
Impairment charge not deductible for tax purposes - 11.5
Expenses not deductible for tax purposes 2.1 1.7
Other (0.5) (0.7)
Total tax charge in the income statement 14.7 9.4
7 Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by dividing
profit/(loss) 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/(loss) per share amounts are calculated by dividing
profit/(loss) 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/(loss) per share computations:
2021 2020
£m £m
Underlying profit for the year attributable to ordinary equity holders of the 50.4 32.1
Parent Company*
Reported profit/(loss) for the year attributable to ordinary equity holders of 50.1 (28.9)
the Parent Company*
2021 2020
Million
Million
Weighted average number of ordinary shares - basic 30.4 30.3
Weighted average number of ordinary shares - diluted 30.7 30.4
8 Dividends
The Board is recommending a final dividend of 57p (2020: 54p), giving a total
dividend of 84p (2020: 79p). This final dividend will be payable on 27 May
2022 to shareholders on the register at the close of business on 13 May 2022,
subject to shareholder approval.
9 Intangible assets
Additions of £2.9m in the year relate in full to development costs. Goodwill
and other intangible assets are held in the currency of the businesses
acquired and are subject to foreign exchange retranslations to the closing
rate at each year-end, amounting to a decrease of £0.9m in the carrying value
of goodwill and £0.1m in the carrying value of other intangible assets in the
year.
In 2020, recognising the challenging trading conditions in the offshore
broking and securities markets, the Directors revised the estimate of future
cash flows expected from these cash-generating units. Following the revisions,
an impairment loss of £60.6m was recognised in 2020.
10 Investments
Included within current investments are deposits totalling £2.8m (2020:
£22.8m) with maturity periods greater than three months, in addition to
£6.8m of government bonds (2020: £nil). Also included is £0.7m (2020:
£8.3m) relating to the convertible bonds business within the Financial
segment. In order to hedge against price movements of the equity portion of
these investments, the Group short-sold related equity securities amounting to
£nil (31 December 2020: £2.8m). These are shown under trade and other
payables.
11 Cash and cash equivalents
2021 2020
£m £m
Cash at bank and in hand 260.7 172.4
Short-term deposits 0.9 1.0
261.6 173.4
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
2021 2020
£m £m
Fair value of schemes' assets 201.5 204.5
Present value of funded defined benefit obligations (174.2) (188.6)
27.3 15.9
Effect of asset ceiling in relation to the Plowrights scheme (5.3) (3.9)
Net benefit asset recognised in the balance sheet 22.0 12.0
The above is recognised on the balance sheet as an asset of £25.8m (2020:
£18.1m) and a liability of £3.8m (2020: £6.1m). A deferred tax asset on the
benefit liability amounting to £0.9m (2020: £1.2m) and a deferred tax
liability on the benefit asset of £6.5m (2020: £3.4m) is also recognised on
the balance sheet.
Recognised in the income statement
2021 2020
£m £m
Recognised in other finance income - pensions:
Expected return on schemes' assets 2.8 3.9
Interest cost on benefit obligation and asset ceiling (2.7) (3.7)
Recognised in administrative expenses:
Past service costs - (0.4)
Scheme administrative expenses (0.3) (0.3)
Net benefit charge recognised in the income statement (0.2) (0.5)
13 Share capital
2021 2020
Million £m Million £m
Ordinary shares of 25p each, issued and fully paid 30.5 7.6 30.4 7.6
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 are disclosed in the 2020 annual
report. There were no material differences in related parties or related party
transactions in the year ended 31 December 2021.
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/(loss) before taxation to underlying profit
before taxation for the year.
2021 2020
£m £m
Reported profit/(loss) before taxation 69.1 (16.4)
Add back exceptional items - 60.6
Add back acquisition-related costs 0.3 0.5
Underlying profit before taxation 69.4 44.7
Underlying effective tax rate
Reconciliation of reported effective tax rate to underlying effective tax
rate.
2021 2020
Reported effective tax rate 21.3% (57.3%)
Adjustment relating to exceptional items - 78.6%
Adjustment relating to acquisition-related costs (0.1%) -
Underlying effective tax rate 21.2% 21.3%
Underlying profit attributable to equity holders of the Parent Company
Reconciliation of reported profit/(loss) attributable to equity holders of the
Parent Company to underlying profit attributable to equity holders of the
Parent Company.
2021 2020
£m £m
Reported profit/(loss) attributable to equity holders of the Parent Company 50.1 (28.9)
Add back exceptional items - 60.6
Add back acquisition-related costs 0.3 0.4
Underlying profit attributable to equity holders of the Parent Company 50.4 32.1
Underlying basic earnings per share
Reconciliation of reported basic earnings/(loss) per share to underlying basic
earnings per share.
2021 2020
Reported basic earnings/(loss) per share 164.6p (95.2p)
Add back exceptional item - 199.9p
Add back acquisition-related costs 1.0p 1.3p
Underlying basic earnings per share 165.6p 106.0p
Underlying administrative expenses
Reconciliation of reported administrative expenses to underlying
administrative expenses for the year.
2021 2020
£m £m
Reported administrative expenses 356.0 359.6
Less exceptional items - (60.6)
Less acquisition-related costs (0.3) (0.5)
Underlying administrative expenses 355.7 298.5
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.
2021 2020
£m £m
Cash and cash equivalents as reported 261.6 173.4
Less interest-bearing loans and borrowings - (0.1)
Add cash on deposit and government bonds included within current investments 9.6 22.8
Less amounts reserved for bonuses included within current trade and other (148.9) (100.7)
payables
Net cash and available funds 122.3 95.4
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.
2021 2020
£m £m
Cash and cash equivalents as reported 261.6 173.4
Less interest-bearing loans and borrowings - (0.1)
Add cash on deposit and government bonds included within current investments 9.6 22.8
Less amounts reserved for bonuses included within current trade and other (148.9) (100.7)
payables
Less net cash and available funds held in regulated entities (30.0) (14.3)
Free cash resources 92.3 81.1
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