REG - Clarkson PLC - Interim results
07/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230807:nRSG4228Ia&default-theme=true
RNS Number : 4228I Clarkson PLC 07 August 2023
7 August 2023
Clarkson PLC ('Clarksons') is the world's leading provider of integrated
shipping services. From offices in 24 countries on six continents, we play a
vital intermediary role in the movement of the majority of commodities around
the world.
Interim results
Clarkson PLC today announces unaudited Interim results for the six months
ended 30 June 2023.
Summary
· Underlying profit before taxation* of £53.1m (2022: £42.2m), an
increase of 25.8%
· Underlying earnings per share* increased by 35.0% to 133.5p (2022:
98.9p)
· Particularly strong performance in Broking segment
· Robust balance sheet, with £128.2m of free cash resources* (31
December 2022: £130.9m)
· Increased interim dividend of 30p per share (2022: 29p per share)
· Board's expectations for the year unchanged with continued
confidence in the medium-term outlook
Six months ended Six months ended
30 June 2023 30 June 2022
Revenue £321.1m £266.7m
Underlying profit before taxation* £53.1m £42.2m
Reported profit before taxation £52.2m £42.0m
Underlying earnings per share* 133.5p 98.9p
Reported earnings per share 130.5p 98.5p
Interim dividend per share 30p 29p
* Classed as an Alternative Performance Measure ('APM'). See 'Other
information' on pages 31-32 of this announcement for further information.
Andi Case, Chief Executive Officer, commented:
"I am pleased to report an outstanding result for Clarksons in the first half
of 2023, which reflects the continued momentum in the business and effective
execution of our strategy as we help clients navigate the changing markets.
"I have great confidence in the outlook for Clarksons, which has been built to
maximise value from the global mega-trends of the green transition,
digitalisation and ever more complex global trade dynamics."
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
Forward-looking statements
Certain statements in this interim report 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.
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 on pages
31-32 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 1,800 people in 63 different offices across its four
divisions and is number one or two in all its market segments.
The Company has delivered 20 years of consecutive dividend growth. The highly
cash-generative nature of the business, supported by a strong balance sheet,
has enabled Clarksons to continue to invest to position the business to
capitalise on opportunities in its markets.
Clarksons is listed on the main market of the London Stock Exchange under the
ticker CKN and is a member of the FTSE 250 Index.
For more information, visit www.clarksons.com (http://www.clarksons.com)
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended (together,
'MAR'). Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
Chair's review
Following a record year in 2022, Clarksons entered 2023 in a strong position,
and I am pleased to report that the business has maintained momentum through
the first half of 2023, delivering another outstanding performance in terms of
revenue and profits.
In an uncertain geo-political and global macroeconomic environment, we are now
starting to see the softening of rates in some sectors, much of which was
anticipated post-COVID-19. Nevertheless, the strategy set out by the Board,
and implemented over many years, has put Clarksons in a strong position, with
the breadth and depth of the business proving its effectiveness. Clarksons'
market-leading position and continued investment in tools for trade, market
intelligence, outstanding people and global presence means that we are now
positioned with scale in all the key areas for growth and are actively helping
our clients navigate the changing markets and take advantage of opportunities
wherever they arise.
Our Broking team remains the biggest driver to profit, and we remain keen to
hire and develop good people across all areas of this business. Our global
training programme has produced some of the best talent in the industry, many
rising through the ranks of Clarksons, and others taking leadership positions
within clients across the globe. I am delighted that we have now started to
roll out an enhanced programme across all offices to ensure that talent
continues to come through over the next few years.
The Board remains dedicated to our progressive dividend policy, which is now
in its 21(st) year, and I am delighted that due to the continued strength of
the business, the Board has declared an increased interim dividend of 30p per
share (2022: 29p per share).
I would like to extend my sincere thanks to the teams throughout Clarksons who
have made this result possible through their commitment, drive and significant
achievements. We also thank our shareholders for their continued support,
which is much appreciated.
Laurence Hollingworth
Chair
4 August 2023
Chief Executive Officer's review
I am pleased to report an outstanding result for Clarksons in the first half
of 2023, where we have benefited from the strategy and investment of the last
decade, which established our extensive global footprint across 24 countries,
a market-leading position across marine, both shipping and offshore, and a
platform for growth across broking, research and analysis, support services,
finance and technology.
Our customer-focused integrated business model has served us well in the
recent past, dealing with the pandemic, geo-political tensions, changes in
trade patterns, congestion and its impact on the supply chain, increased
regulation and compliance. In addition, it has positioned us well to benefit
from the significant evolution within both the green transition in shipping
and the change in energy mix impacting both offshore oil and renewables.
Against this backdrop, our teams have sought to meet the extensive needs of
our clients in market intelligence, expertise, global presence and
high-quality service.
I am immensely proud to work with the best teams in every sector and, together
with the whole Board, thank each and every member of Clarksons for their
continued hard work and diligence.
Market backdrop
Conditions during the first half of 2023 were generally positive, with vessel
freight earnings in most segments exceeding the 10-year average.
Energy-related markets have been the key performers as complexity,
geo-politics and energy security remain the major trade themes, whilst softer
conditions have become prevalent within both the container market, where rates
have again normalised, and the dry bulk market, where headwinds have been felt
from the unwinding of congestion and lower demand, particularly in the smaller
ship sizes.
After contracting marginally in 2022, overall global trade during the year to
date has reverted to growth, with help from China's reopening, although the
macroeconomic backdrop remains fragile. Nevertheless, 2023 should see
annualised growth in trade volumes with further support for demand and freight
rates coming from the increased tonne-mile impact of changing trade patterns
arising from geo-political tension.
Fleet supply growth remains relatively constrained, with the newbuilding
orderbook focused on containers and gas carriers, leaving the tanker and dry
bulk orderbooks at historically low levels. The green transition remains a
central underlying driver for the shipping markets, accentuated by the
introduction of the IMO's EEXI and CII measures and evidenced by 44% of
newbuild tonnage in the first half being alternate-fuelled vessels.
Broking
The Broking teams delivered a very strong first half, with standout
performances from the tanker, specialised product, gas, offshore and sale and
purchase sectors.
Tankers had a very strong start to 2023 as strength in tanker earnings
reflected the changed trading patterns from the Russia-Ukraine conflict and a
rebound in crude imports to China. Supply/demand fundamentals continue to look
encouraging for the coming years irrespective of current seasonality and OPEC
cuts. The offshore markets have improved significantly, incorporating an
increase in rates within the offshore energy market and increased investment
in offshore renewables, where we continue to build our team. Our gas teams
have also experienced a very strong start to 2023, driven by increased
tonne-mile demand, congestion around the Panama Canal and slower vessel speeds
due to environmental regulations. The sale and purchase team has been very
active, concluding a strong flow of business in a market that saw a
continuation of momentum built in 2022, and the newbuilding team was also very
busy working on major fleet renewal programmes. The strength across all of
these areas was in part offset by easing of results in the container and dry
bulk markets, as highlighted above, and consequently, margin has remained very
similar to the same period last year.
Divisional profit from Broking in the first six months of the year amounted to
£58.2m (2022: £47.0m), reflecting a margin of 22.6% (2022: 22.3%).
Financial
Our Financial division performed broadly in line with the same period in 2022.
However, within the division we saw an increase in profits from banking and
shipping project finance, reflecting an increase in transaction flow and value
from our core markets, and a reduction in profits from real estate project
finance as the changing economic backdrop and increase in interest rates
reduced activity. Despite volatile capital markets, our banking team executed
transactions in the first half in all verticals, with particularly strong
activity in the energy services space, underpinned by a supportive M&A
environment, where the pipeline remains strong.
The Financial division reported a profit of £5.0m on revenue of £26.5m in
the first half compared with a profit of £5.7m on revenue of £27.6m in the
same period last year.
Support
Our Support division performed particularly well, with excellent results both
from the Gibb Group, which has grown its product offering in particular within
the safety and survival business, and other Clarksons Port Services ('CPS')
activities comprising agency, project forwarding and stevedoring in both the
dry bulk and offshore energy and renewables sectors. During the period, we
also completed the acquisition of DHSS, a renewables-focused port services
business based in mainland Europe. With a presence across a number of ports in
the Netherlands, DHSS acts as a gateway to offshore wind farms, with services
spanning the lifecycle of turbine installation, day-to-day operation and
ongoing maintenance with sector-specialist coordination of port logistics,
warehousing and helicopter movements from strategically located marshalling
ports. Bringing together the client bases and spread of activity of DHSS and
CPS in the renewables sector gives a significant knowledge base from which to
grow, and we are excited by the opportunities this brings.
The Support division reported £3.4m profit and a 12.5% margin in the first
half of 2023 (2022: £2.0m and 10.9% margin).
Research
Our Research division, which provides trusted and insightful intelligence to
support the workflows and decision-making of thousands of organisations across
the increasingly complex and dynamic maritime industry, continued to perform
well with increased revenues and profits in the first half of 2023. Our
continually evolving intelligence and analysis of the green transition,
changes in trade patterns, fleet productivity and offshore renewables, makes
us a market-leading provider of independent data, intelligence and analysis
across shipping, trade, offshore and energy. The team is actively enhancing
all products and services to meet the changing needs of our customers.
The Research division reported a profit of £3.7m on revenue of £10.2m in the
first half compared with a profit of £3.4m on revenue of £9.6m in the same
period last year.
Green Transition
The green transition continues to be a major driver for the industry, and
there is increasing demand from our customers for strategic advice to help
them navigate this journey as regulation continues to evolve. The Green
Transition team at Clarksons provides decarbonisation strategies, guidance on
operational emissions reduction, and insight to inform fleet renewal,
collaborating closely with the Broking division.
We were delighted to announce the further strengthening of our Green
Transition team in May with the appointment of industry veteran Johan Tutturen
as a Senior Technical Adviser, increasing the depth of advisory services
offered by Clarksons by providing greater technical insight on the complexity
of transporting CO(2), and the use of alternative fuels such as ammonia and
hydrogen.
Digitalisation
We remain encouraged by the interest in and increasing adoption of the Sea
platform among our clients. This continues to be an area of strategic focus
for Clarksons as we roll out Sea across the dry bulk and other market areas.
The integration of Chinsay, a contract management platform particularly
focused on the dry bulk sector, into the Sea platform has progressed smoothly.
We are pleased to report that sales are progressing and Sea revenues are up.
Results
Total revenue in the first half was £321.1m (2022: £266.7m) with underlying
administrative expenses* of £256.7m (2022: £213.7m). Underlying profit
before taxation* was £53.1m (2022: £42.2m), resulting in reported profit
before taxation of £52.2m (2022: 42.0m). Underlying earnings per share* were
133.5p (2022: 98.9p). Reported earnings per share were 130.5p (2022: 98.5p).
The arithmetic average GBP/USD rate was 1.24 in the first half of 2023
compared to 1.29 for the same period last year. Current comparative strength
in sterling outlook for the second half, compared to a much weaker sterling
performance in the second half of 2022, is likely to be a headwind for the
second half of 2023.
Cash and dividends
Clarksons has reported cash balances at 30 June 2023 of £275.7m (31 December
2022: £384.4m). Net cash and available funds*, after deducting amounts
accrued for performance-related bonuses but including short-term investments,
amounted to £148.9m (31 December 2022: £161.7m). Free cash resources*, after
deducting monies held by regulated entities, amounted to £128.2m (31 December
2022: £130.9m).
Our balance sheet remains strong, alongside our solid business performance,
leaving us well positioned to take advantage of current market conditions to
make accretive acquisitions where opportunities arise and to continue to
maintain our highly skilled teams, building further on our market advantage.
Due to our confidence in the strength of our business and continuing our
20-year progressive dividend policy, the Board has declared an interim
dividend of 30p per share (2022: 29p per share) which will be paid on 15
September 2023 to shareholders on the register at the close of business on 1
September 2023.
Outlook
We have benefited from the breadth of Clarksons' offering through the first
half with demand/supply balance and the impact of other external factors being
very different in each of the verticals within shipping and offshore.
While mindful of the currency headwinds and softening rate environment, which
are expected to result in a more balanced split between the first and second
half, our expectations for the full year are unchanged.
The Board has great confidence in the outlook for Clarksons, which has been
built to maximise value from the global mega-trends of the green transition,
digitalisation and ever more complex global trade dynamics.
Andi Case
Chief Executive Officer
4 August 2023
Business Review
Broking
Revenue: £257.2m (2022: £211.2m)
Segmental split of underlying profit before taxation*: £58.2m (2022: £47.0m)
Dry cargo
Supporting a range of important global industries including construction,
energy and agriculture, the dry cargo sector moves over 5 billion tonnes of
cargo per year across a range of dry bulk commodities, including metals and
minerals, agricultural products and some semi-processed goods.
Despite relatively firm cargo volumes, the bulkcarrier shipping market
experienced softer conditions as 'inefficiencies' (notably port congestion)
unwound, boosting available vessel supply. The overall Clarksons bulkcarrier
earnings index averaged US$10,768 per day, down 56% year on year and 14% below
the 10-year average. Typical seasonal demand weakness impacted earnings in the
first quarter and, despite some gains materialising into the second quarter,
rates generally remained subdued compared to the highs seen in 2021-22.
The Capesize sector (average earnings US$12,390 per day, down 6% year on year)
saw slightly firmer trends than the smaller sectors, with Chinese iron ore and
coal imports exceeding expectations. Iron ore trade is estimated to have
increased by 3% year on year in the first half, with only minor
weather-related disruption, while Chinese seaborne coal imports increased by
circa 80% year on year across the first half of the year. Earnings in the
sub-Cape sectors saw a more pronounced softening compared to 2022 (when
earnings outperformed the Capesize sector) as congestion unwound and economic
headwinds dragged on demand for many of the key minor bulk commodities.
Continuing disruption to Ukrainian seaborne grain exports and drought in
Argentina also impacted sub-Cape vessels, although there was support from firm
Russian and Australian exports and a bumper Brazilian soybean crop. Panamax
spot earnings fell 54% year on year to average US$10,312 per day in the first
half of 2023.
Looking ahead to the second half of the year, macroeconomic headwinds are
expected to continue to place pressure on rates at times. The more positive
demand trends from China should continue to lend some support and the supply
backdrop remains supportive, with the orderbook at close to record lows at
just 7% of fleet capacity. New emissions regulations should continue to limit
operating speeds and could contribute to increased demolition. Across the
segments, earnings premiums for 'eco' and scrubber-fitted vessels remain.
Containers
The container shipping sector facilitates transportation of a wide spectrum of
manufactures, often high-value and including consumer and industrial goods,
foodstuff, chemicals and other goods.
Having seen a normalisation across the second half of 2022, container shipping
markets remained weak amid continued trade headwinds, accelerating vessel
supply growth and pre-COVID-19 port congestion levels. Containership charter
rate levels, although well down from last year's highs, remain above
pre-COVID-19 levels, whilst spot box freight rates, despite some volatility,
continued to soften and have broadly returned to pre-pandemic levels.
Weaker container trade volumes continued in early 2023, with first quarter
volumes down 7% year on year, as macroeconomic headwinds, inflationary
pressures, higher interest rates and excess retail inventories impacted. By
the second quarter, global container trade volumes had begun to see
improvements, though some key trades remained very weak (peak-leg Transpacific
volumes were down 21% year on year across January through to May). The
containership fleet grew by 3.5% across the first half amid a clear pick-up in
deliveries. Slower vessel operating speeds absorbed some excess supply;
average speeds were circa 3% down on 2022. Fleet removals picked up slightly
from the limited levels of 2022.
Continued pressures on container shipping markets are expected in the second
half of the year. Accelerating fleet capacity growth of 7% of the fleet is
forecast for the full year and, whilst another year of declining trade volumes
may be avoided as inventories normalise and the world economy bottoms out,
overall seaborne container trade growth is projected to remain limited.
Despite these pressures, some vessel sizes could experience resilience in the
charter market where immediate liner requirements do not match newbuilding
deliveries. Most shipping companies in the container sector retain strong
balance sheets and fleet renewal investment continues to be a focus in
response to decarbonisation priorities.
Tankers
The tanker sector plays a crucial role in global energy supply chains, moving
crude oil and refined oil products to facilitate their eventual use as
transportation fuels, for heating and electricity generation, and as
industrial feedstocks.
The tanker market saw a very strong start to 2023, with the Clarksons average
tanker earnings index averaging US$46,024 per day in the first half of 2023,
up 79% year on year. Much of the market strength has been driven by changes to
trading patterns resulting from the Russia-Ukraine conflict, although
rebounding crude oil imports into China following the lifting of COVID-19
restrictions have also had a significant impact on the VLCC market.
VLCC earnings, which had been very weak in first half 2022, rose to much
healthier levels, some 34% above the 10-year trend, albeit with considerable
volatility. Monthly fluctuations in the volume of crude oil imported into
China and the volume of liftings in the Atlantic Basin contributed to the
volatility. The Suezmax and Aframax markets remained extremely strong, buoyed
by longer transport distances for European crude oil imports and Russian crude
oil exports. Suezmax earnings in in the first half rose by 165% year on year
and by 1% versus the second half of 2022, while Aframax earnings were up 71%
year on year, though were marginally below the exceptionally high levels seen
in the second half of 2022. Products tanker earnings also remained at
historically high levels, as the longer transport distances for European oil
products imports and Russian oil products exports similarly impacted these
markets. Average earnings for non-eco, non-scrubber fitted MRs in first half
of 2023 were up 23% year on year, more than double the long-term average
level.
Global oil demand and supply are projected to continue to rebound in the
second half of 2023 and increase overall volumes. When combined with an
extremely limited orderbook, and potential seasonal support in the fourth
quarter, this is expected to continue to lend support to the tanker market.
2024 is expected to see further growth in oil demand and supply and refinery
throughput, alongside a further reduction in tanker newbuilding deliveries.
The ongoing impacts of emissions regulations could also further tighten fleet
supply.
Specialised products
The chemical tanker fleet consists of vessels able to transport a wide range
of specialised liquid chemicals, contributing to a diverse range of sectors,
including manufacturing and agriculture.
2023 started on a very strong note for chemical tanker markets, albeit with
expectations that levels might weaken against a backdrop of slightly softer
trends in clean oil products markets. Indeed, this did materialise, with
macroeconomic headwinds, lower oil prices and softening chemicals demand
adding to a softening of sentiment. Nonetheless, market conditions remained
historically firm, with a 22% year-on-year decline still leaving the Clarksons
Bulk Chemical Index at levels above those seen in the 2008 boom. Generally,
support continues to be provided by increased 'swing' tonnage trading in the
strong petroleum products markets rather than in the chemicals sector. While
there was a slower feel to the market going into the summer, improvements are
expected to be seen towards the fourth quarter.
Overall, sentiment in the medium term remains optimistic with the
supply/demand outlook favourable. Vessel demand looks set to be supported by
growing volumes from the Middle East and US to Asia, while European import
demand for bulk chemicals and biofuels is also projected to continue to grow.
At the same time, supply-side constraints may also develop with the potential
for the fleet to start to decline in the next few years.
LPG
The LPG carrier fleet ships liquefied petroleum and petrochemical gases,
supporting a wide range of sectors, from plastics and rubber production to
industrial and domestic energy markets. The LPG carrier fleet transports over
120m mt per year of LPG, as well as smaller quantities of ethane, ammonia and
petrochemical gases.
The first half of 2023 saw generally strong LPG carrier market conditions,
with VLGC earnings on the key MEG-Asia route averaging circa US$73,000 per
day, up 92% year on year and 66% above the 10-year average. This strength has
been supported by firm Middle Eastern LPG exports and record exports from the
US, of which an increasing share has been shipped on long-haul routes to Asia.
SE Asian and Indian demand has also been supportive, while Chinese imports in
the second quarter were impacted by the start-up of new petrochemical
capacity.
In the Midsize sector, the assessed one-year timecharter rate for a 38,000 cbm
vessel continued to improve, reaching US$30,750 per day by mid-year, despite a
substantial influx of newbuildings this year. Market gains have been more
gradual than in 2022 though, with the return of some European ammonia
production (after prohibitively high gas prices in 2022) somewhat dampening
long-haul Asia-West ammonia trade volumes. In the petrochemical gas sector,
ethylene exports from the US to Asia have continued to be the key driver of
the market, supporting tonne-mile demand.
Overall, despite ongoing macroeconomic headwinds, it is expected that growth
in LPG tonne-mile demand, slower vessel speeds due to environmental
regulations and other factors including delays at the Panama Canal could
continue to offset the market impacts of a significant newbuilding programme,
particularly in the VLGC sector. Further ahead, the sector's role in the
energy transition may help to drive future trends, including for example
interest in Very Large Ammonia Carriers ('VLACs') to meet new 'green' and
'blue' ammonia trade flows.
LNG
This LNG sector has become increasingly critical to both global energy
transition and energy security, particularly in the wake of the Russia-Ukraine
conflict and the subsequent reduction of Russia-Europe pipeline gas flows, and
market conditions remained strong across the first half.
Term charter rates for LNG carriers remain at very strong levels, with the
one-year timecharter rate for a 160,000 cbm DFDE unit estimated at $130,000
per day in mid-June, having stood above US$100,000 per day throughout the past
12 months as the market enjoys a period of sustained strength. LNG carrier
fixing activity has shifted towards the term market as charterers look to
secure tonnage amid broader energy security concerns and to manage the risk of
a repeat of extremely high spot rates during peak winter demand. The spot
market, which has become dominated by relet tonnage, has been generally weaker
by comparison.
LNG trade volumes are estimated to have risen by circa 2% year on year across
the first half, supported by increased exports from Norway, the US and
Mozambique. Investment in liquefaction projects continues, with four projects
reaching Final Investment Decision ('FID') in the first half, and a
significant pick up in LNG trade is expected from the middle of the decade
when there will be a pick-up in export project start-ups.
Newbuild ordering has slowed from the 2022 record but remains active, with the
orderbook now at a record high to support trade volume growth and fleet
renewal needs.
Sale and purchase
Secondhand
The global secondhand vessel sale and purchase ('S&P') markets remained
active in the first half, following two very strong volume years in 2021 and
2022. Over 64m dwt and US$25bn of tonnage was transacted in the first half of
the year, generally in line with the levels of 2022. Tanker sales volumes
remained at record levels on the back of strong market conditions and a
positive sector outlook: 30m dwt worth US$9.4bn (full year 2022: 66m dwt worth
US$18bn; an annual record). Meanwhile, transaction volumes in the bulker and
containership sector have risen slightly following some easing in 2022 and
remain at historically firm levels. Asset pricing generally remains firm,
despite some softness in bulker pricing and a fall in containership values
amid the correction in container freight and charter shipping markets.
Newbuilding
Steady volumes of newbuild contracting continued across the first half of the
year, with global orders representing over 17m CGT and US$48bn placed (full
year 2022: 47m CGT, US$133bn). Ordering has been concentrated in the product
tanker, containership, LNG carrier and car carrier sectors, segments of
traditional strength for Clarksons' newbuilding teams. Newbuild prices
continued to increase across the first half; our Newbuilding Price Index now
stands at 172 points, its highest level since early 2009. Shipping's fuelling
transition remains a key focus: 44% of tonnage ordered in the first half of
2023 is set to be alternative fuel capable (2022: circa 60% of Gross Tonnage,
an annual record). LNG remains the most popular alternative fuel choice,
though methanol gained significant traction in the first half of the year.
Meanwhile, some owners are pursuing fuel optionality by ordering vessels with
'ready' notation.
Offshore
The offshore sector supports the development, production and support of
offshore oil and gas fields and renewables, with over 10,000 mobile assets
playing a vital role in supporting operations across the lifecycle of offshore
energy projects. Across the first half, offshore markets saw continued
strengthening, amidst a supportive project investment environment and ongoing
supply-side constraints, including limited newbuilding orders and ageing fleet
dynamics. Global offshore Exploration and Production spending has continued to
increase, supporting activity levels, whilst ongoing growth in offshore
renewables (wind), utilising several of the same vessel categories, is also
tightening the market. With demand continuing to strengthen, the market
outlook appears optimistic in the coming years. The Clarksons offshore day
rate index reached 99 by mid-year, its highest level since 2014.
There has also been a clear increase in demand for specialised green offshore
vessels. We are actively engaging in discussions with end-user clients
regarding technical green solutions and initiatives. By leveraging our
expertise and forging partnerships, we are confident in our ability to help
stakeholders navigate the evolving landscape and contribute to the successful
green transition in the offshore sector.
Drilling
Mobile drilling units (comprising jack-ups, semisubmersible units and
drillships) drill wells in the sea floor to locate and facilitate extraction
of oil and gas. The rig market enjoyed a strong first half. The floater
segment, particularly for ultradeepwater/deepwater units, is generally tight,
whilst the jack-up segment has also continued to strengthen, particularly due
to significant activity in the Middle East last year, resulting in active
utilisation rising above 90%. Prospects for the second half of the year and
beyond for the drilling market appear positive, with high offshore activity
levels supporting demand, whilst across both floaters and jack-ups idle
capacity is limited, there are almost no remaining stranded assets at yards,
and stacked pools are largely exhausted.
Subsea
The subsea sector involves the usage of a range of assets, with capabilities
in lifting, pipe lay, cable lay, diving and ROV support, to install and
maintain subsea production infrastructure. The subsea field development market
continued to improve through the first half of 2023, with further increases in
the backlog for the major EPC contractors. The subsea vessel market has also
improved further, with rates and contract durations generally increasing,
reflecting improving subsea oil and gas demand, and competition for many of
the same units from the offshore wind sector. Prospects for the second half of
2023 appear positive.
Offshore support vessels
The OSV sector provides towage and support duties to drilling rigs, mobile
production units and fixed production platforms. The OSV market has
strengthened significantly with improvements across regions, in line with
increasing drilling activity and improvements in the field development market.
Active utilisation levels currently stand around 90% in most segments and
regions, whilst the stacked pool is about to become exhausted and there are
very few newbuilds remaining at shipyards. The rate outlook appears positive
due to a lack of available capacity (ordering has remained extremely limited)
and improved demand. Against this backdrop there has also been a sharp
increase in sale and purchase activity and increased asset values.
Offshore renewables
The offshore renewables industry is continuing its rapid growth phase, and is
expected to account for a growing share of the global energy mix, supported by
the increased focus on decarbonisation and energy security (especially
recently in Europe). The offshore wind market saw strong fixing activity and
rate increases have been notable in most segments, whilst construction
activity has also been firm. Uncertainty related to inflation, supply chain
issues and delays is still prevailing, though the offshore wind sector is not
expected to be negatively affected relative to other renewable energy sources.
After slower FID activity in 2022, it was positive to see projects sanctioned
in the first half of 2023. While some industry stakeholders are concerned
about increasing costs and supply chain disruption, the outlook is generally
positive. Efforts by developers to improve project economics are ongoing. In
the vessel markets, owners are becoming more confident, with developers now
approaching vessel owners in a more proactive manner than previously, whilst
owners who ordered on speculation are finding end-users are fixing earlier and
for longer. In the CSOV sector, a limited number of expected deliveries in
2024 is leading to more interest from charterers, with potential to support
rates in the coming years.
Futures
Our Futures business remains the leading provider of freight derivative
products, helping shipping companies, banks, investment houses and other
institutions seeking to manage freight exposure by increasing or reducing
risk.
The tanker FFA desk saw an increase in volumes and revenue in the first half
compared to last year, as overall market volumes were up and we maintained a
strong market share. Volumes were helped by a number of new entrants, and a
substantial increase in volumes on the Aframax USG route, gaining interest
from a number of oil players globally. The swaps market was extremely busy. In
dry FFA, it was a solid start to the year in the swaps business despite
significantly lower underlying rates, with increased participation from
financial players adding liquidity to the market and supporting firm volume
growth. Meanwhile, the options business also saw a significant increase in
volume.
Financial
Revenue: £26.5m (2022: £27.6m)
Segmental split of underlying profit before taxation*: £5.0m (2022: £5.7m)
Securities
Clarksons Securities is a sector-focused investment bank for the shipping,
offshore energy, renewables and minerals industries, with deep sector
knowledge and global reach driven by research and relationships. In the first
half of 2023, despite wider financial market volatility and uncertainty,
Clarksons Securities experienced a high level of activity in its core sectors,
successfully executing transactions across all sectors and products. In
particular, there was increased investor interest in the offshore energy
services sector amidst ongoing concerns around energy security.
Secondary trading
Against the backdrop of volatile financial markets, secondary trading activity
has been volatile and slowed into the second quarter. However, investor
interest remains strong within the core segments of shipping and oil services
due to appealing underlying fundamentals, supporting healthy overall levels of
secondary revenue. We also remain focused on higher margin activity around
special situations and block trading.
Shipping
Stocks in the shipping industry experienced a modest performance in the first
half. In terms of capital market activity, listed shipping companies have
remained disciplined and focused on returning capital to shareholders and
deleveraging their balance sheets. Clarksons Securities has participated in
the initial public offerings of Stainless Tankers and Himalaya Shipping as
well as a primary and secondary offering in Klaveness Combination Carriers.
For shipping bonds, primary issuance activity remained muted, though Clarksons
Securities acted as financial advisor in a leasing transaction.
Energy services
Capital markets activity within the energy services space was high, especially
for oil services and drilling, as equity and credit investors continue to seek
exposure to the sector. Clarksons Securities has been highly active in the
capital markets, executing several transactions including bonds for Borr
Drilling, Vantage Drilling and Tidewater, and equity raises for Integrated
Wind Solutions and Shelf Drilling. From an M&A perspective, consolidation
is still a key theme, and there are several ongoing processes in the market,
with Clarksons Securities actively involved as an advisor in such activity.
Metals and minerals
The first half started strongly for the metals and minerals transaction
market, though most companies postponed financings after the announcement of
the US Inflation Reduction Act until impacts became clearer. Clarksons
Securities was active in the restructuring of Copper Mountain bond, equity and
debt financing for Nordic Mining and ongoing M&A projects.
Renewable energies
The first half saw some challenges for renewable energy-related stocks in the
capital markets, in part reflecting cost pressures. While underlying markets
continue to grow rapidly, renewables capital markets activity has been slow so
far this year. In June 2023, Clarksons Securities led a capital increase and
transfer of listing to Euronext Growth Paris of heat pump company Groupe
Airwell - a testament to our global reach and sector-focused approach. Private
markets are seeing increased activity, and Clarksons Securities has been
active in transactions across solar, wind, hydrogen and electric vehicle
charging.
Debt capital markets
Investors have exhibited improved risk appetite, supported by the availability
of ample cash positions among investors, aided by a light primary issuance in
the previous year, fund inflows, coupon payments and several bonds being
tendered or called. As a result, there was increased activity in the high
yield primary market in early 2023. The transactions carried out attracted
strong interest, especially towards quality issuers, whilst investor appetite
for offshore investments returned. Market sentiment was negatively impacted in
March 2023 by broader banking sector turmoil, but later settled as wider risks
appeared more limited. The first half of the year saw Clarksons Securities
complete several notable transactions in the offshore sector.
Project finance
Our project finance business is a leading Nordic player within shipping and
real estate project finance, which has in recent years offered investment
opportunities in modern fuel (and carbon) efficient shipping and offshore
assets, with an overall focus on assisting the shipping and offshore industry
in transitioning to more sustainable and less carbon-intensive transportation.
The first half of the year was an active period in the Norwegian project
finance market, with deal activity across the key sectors. A two-tier market
is apparent between eco and non-eco ship values, especially in dry bulk.
Feeder containership values have returned to more investable levels, whilst in
the tanker market, amid historically high values, we have assisted in selling
a number of tankers in existing projects. There is a good pipeline of
projects, although given higher interest rates and market volatility,
investors have been more selective in their approach to the market. There is a
growing interest for project finance structures from shipowners abroad who
find the Norwegian partnership model an interesting way to renew their fleet.
We also see good availability of bank finance for non-recourse projects, and
terms are becoming more competitive.
Market sentiment in the commercial real estate market in Norway remained cool,
continuing the downward trend seen since last summer with sellers and buyers
struggling to agree prices amid increasing interest rates and volatile
economic sentiment. While other investment assets may offer significant
competition to real estate in the short term, development projects remain
popular, perhaps an indication that investors feel confident about real estate
in the medium- to long-term. Market activity may pick up to more moderate
levels in the second half if interest rates peak and uncertainty begins to
fade. Despite the slow market, Clarksons Project Finance completed several
deals, and we continue to establish a leading position in sustainability with
funds committed to invest in greener real estate and environmental
improvements to existing properties.
Structured asset finance
Our structured asset finance business maintains relationships with asset
financiers globally including around their activities and headline terms, with
a view to helping our broking clients understand the sources of finance
available to them and providing introductions where relevant. It acts as an
exclusive mandated financial advisor, structurer and arranger working closely
with the newbuilding, strategy and structuring teams on large long-term
strategic procurement projects for end-users and cargo interests.
Overall market activity picked up in the second quarter after a more subdued
first quarter. For the large traditional shipping banks, the transition from
LIBOR to SOFR has largely been completed. USD funding costs have continued to
rise, and European banks with more limited availability of USD are facing
reduced margin income from increased liquidity costs, in some instances
significantly limiting new business. Whilst this is putting upwards pressure
on margins, shipping companies have tended to counter by reducing leverage
(making deals more attractive to a wider range of banks) and maintaining
margins rather than increasing them. Earlier re-financing of existing deals is
also a noticeable trend. Outside of the major shipping banks, deals are being
done by the Greek and Cypriot shipping banks, some of the Chinese leasing
companies and some of the alternative credit funds, but generally these are
lower leverage re-financings of older tonnage. Recent changes to the JOLCO
legislation have seen less aggressive marketing by some of the arrangers for
now, likely as they focus on closing as many 'grandfathered' deals as
possible.
Clarksons Structured Asset Finance had a very successful first half, closing a
significant mandate and finalising deliveries for a number of vessels. The
pipeline is building with a number of significant projects underway.
Support
Revenue: £27.2m (2022: £18.3m)
Segmental split of underlying profit before taxation*: £3.4m (2022: £2.0m)
Stevedoring
Our stevedoring business, highly experienced in loading and discharging bulk
cargoes, saw a strong first half. Expectations are that the 2023 UK grain
harvest will be at least as good as 2022 with a similar exportable surplus.
Given Ipswich's location and our wide customer base, we are well placed to see
a significant market share over the next 12 months. The outlook for imports
appears quiet for now.
Short sea broking
The short sea shipbroking business has seen lower income, largely on the back
of softer freight rates compared to the record highs last year. Benefits are
being seen from the greater synergies with London-based deep sea dry broking
desks for shared client business where our expertise in the short sea segment
is relevant.
Gibb Group
Gibb Group is the industry's leading provider of PPE, MRO products and
services as well as one of the offshore renewable energy sector's most
experienced, qualified suppliers. The first half of 2023 has been a positive
period for the business, with support from some very large one-off orders.
Product development has been in focus, as well as plans to expand the team and
volume of business in Middlesbrough.
Agency - UK
Through exceptional port agency and first-class logistics services, our
business provides a range of solutions for clients in the marine and energy
sectors. Pure agency revenue increased markedly. Our customs clearance
business supports clients globally with our comprehensive compliance
capabilities and performed in line with expectations. We have generated
consultancy income, with good potential for further growth in this area.
Bunker commissions have been lower than expected amid fewer larger stems,
whilst fuel prices are now markedly off their 2022 highs. Results for DHSS,
acquired in February 2023, were in line with the Board's expectations and we
are pleased with how it is integrating with the Group.
Agency - Egypt
The Suez Canal provides a vital trade route between Europe and Asia, and our
regional experts in Egypt deliver on-the-ground expertise around transit. Our
Egypt agency business performed strongly, improving our market position among
other agencies. Transit agency business also saw a robust performance amid
increased overall transit volumes, particularly by crude tankers and
bulkcarriers, while the liner business saw steady performance with some
impacts from the Egyptian pound devaluation. The Egypt agency business
continues to explore opportunities in Egypt and the Suez Canal region related
to green energy.
Research
Revenue: £10.2m (2022: £9.6m)
Segmental split of underlying profit before taxation*: £3.7m (2022: £3.4m)
Research performed well across the first half of the year, with sales up 6%
year on year and profits increasing by 9%. Continuing its long-term growth
trajectory, Clarksons Research has strengthened its position as the
market-leading provider of maritime data and intelligence while also providing
key support to Clarksons' Broking, Financial, Support and Technology
businesses with research and profile.
Sales across our digital platform grew by an encouraging 24% in the first
half, supporting increasing levels of recurring revenue and expanding platform
user numbers. Sales are being supported by our strong product investments of
recent years, a constant flow of high-quality and market relevant analysis and
an expansion of the depth and breadth of our wide-ranging proprietary
database. New daily speed indices (generated by our Data Analytics team) have
been released onto Shipping Intelligence Network ('SIN'), helping to track
fleet productivity as market conditions change and emissions policies are
introduced (an all-time slow speed for the container fleet was reported in
February). Our reporting has also profiled the increasing complexity in the
12bn tonnes of trade moved by sea (including the impact of the Russia-Ukraine
conflict and lingering COVID-19 impacts on supply chains) and a shipping
supply-side experiencing low orderbooks and limitations in shipbuilding
capacity.
Our strategy to provide leading data, intelligence and insights around the
energy transition and the green transition continues. A market impact
assessment of new and complex global CO(2) emissions regulations (EEXI/CII)
was released to our World Fleet Register ('WFR') during the first half of the
year followed by an update of our fuelling transition (we project shipping
industry emissions will drop to a 2.2% global contribution this year) and
energy transition insights. Our tracking of green technology uptake across the
shipping fleet continues to be well received by our client base as the most
authoritative data on the vital investments needed to meet decarbonisation
targets. The benefits of our offshore transition strategy, investing in both
our offshore oil and gas research (our Offshore Intelligence Network ('OIN')
is now tracking nine-year high day rates and utilisation while offshore oil
and gas still contributes 16% of global energy supply) and our offshore wind
research (our Renewables Intelligence Network ('RIN') projects growth from
12,000 turbines offshore today to 30,000 by 2030), are being realised in
strong sales and client uptake. Progress continues towards the release of new
modules on green investments at ports and vessel activity analytics
dashboards.
Our dedicated services and consultancy activities concluded multiple new data
API contracts and we worked successfully on several IPO industry sections.
There was strong client attendance at our shipping and offshore forecasting
forum events in late March 2023. Clarksons Valuations, our market-leading
provider of valuation services to shipowners and financiers, is successfully
investing in analysis and technology to support financial institutions,
including additional analytics to meet new European Banking Authority
guidelines and to support understanding of the emissions profile of debt
portfolios.
Recurring revenue has reached 89% of total sales with consistently high
renewal rates and an expanding global client base. Targeted headcount growth
in our key teams and across our global network continues to be executed with
our strong profile and presence in Asian markets strengthened by the expansion
of our new operations in Delhi.
Clarksons Research, the data and analytics arm of Clarksons, is a
market-leading provider of independent data, intelligence and analysis around
shipping, trade, offshore and energy transition in the maritime context.
Millions of data points are processed and analysed each day to provide trusted
and insightful intelligence to support the workflows and decision-making of
thousands of organisations across the increasingly complex and dynamic
maritime industry.
Sea
Enhancing the way shipping professionals work
Throughout the first half of 2023, our technology software business, Maritech,
saw continued strong Annual Recurring Revenue ('ARR') growth. This was driven
by continued fixture volume growth on the Sea platform, strong sales of our
intelligence solutions and a further uplift from existing and new clients to
our carbon solution.
By the end of June 2023, our Sea platform had achieved a 40% year-on-year
fixture volume growth, equating to an annualised volume of 45,000 fixtures.
This was achieved through notable growth of new customers joining the
platform, through the acquisition of MarDocs from Marcura, and with the
termination of the licence agreement for Recap Manager with the London Tanker
Broker Panel (bringing the commercial management of the service back into
Sea).
We have continued the development and expansion of Sea Fix in the iron ore
market, reaching the key milestone of 0.5b mt of cargo and US$7bn of gross
freight negotiated through the platform since its launch in 2021. To support
the digitalisation of workflows for charterers, in the second quarter Sea
launched a new "Freight Planner" tool, enabling the optimisation of management
of cargoes and vessels in one simple user interface. Initial feedback from our
client base has been very positive.
Across the first half of the year, our Sea Carbon module tracked 2,500
fixtures, covering 13m nautical miles, vessels carrying 230m mt of cargo and
equating to 5m mt of carbon. Working with our customers, we support their
decarbonisation strategies and facilitate their internal and external climate
reporting. Sea Carbon enables efficient Sea Cargo Charter reporting, allowing
our customers to build insights on the actual carbon emissions from their
freight. In the second half of the year, Sea will launch Carbon Exposure, to
help enable any charter, broker or owner to estimate and manage freight
decisions from a carbon perspective before the freight decision is made.
The development of the Sea platform is guided by our purpose of powering
better decisions that enable sustainable shipping. Our committed team
understands this broader mission while we develop the intelligent marketplace
for fixing freight.
To support our strategy, we implemented a major redesign of our brand and
website in May (see www.sea.live (http://www.sea.live) ).
Risk management
Full details of our principal risks and how we manage them are included in the
risk management section of the 2022 Annual Report, together with our viability
and going concern statements.
Our principal risks are:
· Loss of key personnel - Board members
· Economic factors
· Cyber risk and data security
· Loss of key personnel - normal course of business
· Adverse movements in foreign exchange
· Financial loss arising from failure of a client to meet its
obligations
· Breaches in rules and regulations
· Changes in the broking industry
The risk factors associated with the above have not changed since the year
end.
Whilst not a principal risk for the Group at this time, we consider climate
change to be a thematic risk which potentially impacts a number of our
principal risks.
There are no significant known emerging risks which could materially impact on
the achievement of the Group's strategic objectives in the near term.
Directors' responsibilities statement
The Directors confirm that:
· these condensed consolidated interim financial statements (the
'interim financial statements') have been prepared in accordance with
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
and give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Group as required by DTR 4.2.4R; and
· the interim financial statements include a fair review of the
information required by:
(a) DTR 4.2.7R, being an indication of important events that have occurred
during the first six months of the financial year ending 31 December 2023, and
their impact on the interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of the
financial year; and
(b) DTR 4.2.8R, being material related party transactions that have taken
place in the first six months of the financial year ending 31 December 2023,
and any material changes in the related party transactions described in the
2022 Annual Report.
A list of the current Directors is maintained on the Clarkson PLC website:
www.clarksons.com.
The maintenance and integrity of the Clarkson PLC website is the
responsibility of the Directors; the work carried out by the Auditors does not
involve consideration of these matters and, accordingly, the Auditors accept
no responsibility for any changes that may have occurred to the interim
financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
Laurence Hollingworth
Chair
4 August 2023
Independent review report to Clarkson PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Clarkson PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim results of
Clarkson PLC for the six-month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Consolidated balance sheet as at 30 June 2023;
• the Consolidated income statement and Consolidated statement of
comprehensive income for the period then ended;
• the Consolidated cash flow statement for the period then ended;
• the Consolidated statement of changes in equity for the period then
ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results of Clarkson
PLC have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the Group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the Directors
The Interim results, including the interim financial statements, is the
responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the Interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim results, including the
interim financial statements, the Directors are responsible for assessing the
Group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 August 2023
Consolidated income statement
for the half year to 30 June
2023 2022
Note Before acquisition- related costs Acquisition- related costs After acquisition- related costs Before acquisition- related costs Acquisition- related costs After acquisition- related costs
£m(+) (note 4) £m(+) £m(+) (note 4) £m(+)
£m(+) £m(+)
Revenue 3 321.1 - 321.1 266.7 - 266.7
Cost of sales (14.8) - (14.8) (10.4) - (10.4)
Trading profit 306.3 - 306.3 256.3 - 256.3
Administrative expenses (256.7) (0.9) (257.6) (213.7) (0.2) (213.9)
Operating profit 3 49.6 (0.9) 48.7 42.6 (0.2) 42.4
Finance income 3.9 - 3.9 0.6 - 0.6
Finance costs (0.8) - (0.8) (1.2) - (1.2)
Other finance income - pensions 9 0.4 - 0.4 0.2 - 0.2
Profit before taxation 53.1 (0.9) 52.2 42.2 (0.2) 42.0
Taxation 5 (11.4) - (11.4) (9.0) - (9.0)
Profit for the period 41.7 (0.9) 40.8 33.2 (0.2) 33.0
Attributable to:
Equity holders of the Parent Company 40.6 (0.9) 39.7 30.2 (0.2) 30.0
Non-controlling interests 1.1 - 1.1 3.0 - 3.0
Profit for the period 41.7 (0.9) 40.8 33.2 (0.2) 33.0
Earnings per share
Basic 6 133.5p 130.5p 98.9p 98.5p
Diluted 6 132.8p 129.8p 98.2p 97.8p
(+) Unaudited
Included in the Consolidated Income Statement are net impairment losses on
financial assets amounting to £3.9m (2022: £4.7m)
Consolidated statement of comprehensive income
for the half year to 30 June
2023 2022
£m(+) £m(+)
Profit for the period 40.8 33.0
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on employee benefit schemes - net of tax (1.5) 2.8
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on retranslation of foreign operations (23.3) 10.6
Foreign currency hedges recycled to profit or loss - net of tax 0.3 0.7
Foreign currency hedge revaluations - net of tax 3.5 (7.0)
Other comprehensive (loss)/income (21.0) 7.1
Total comprehensive income for the period 19.8 40.1
Attributable to:
Equity holders of the Parent Company 19.1 37.1
Non-controlling interests 0.7 3.0
Total comprehensive income for the period 19.8 40.1
(+) Unaudited
Consolidated balance sheet
as at 30 June
Notes 31 December 2022
£m(#)
2023 2022
£m(+) £m(+)
Non-current assets
Property, plant and equipment 26.3 22.2 25.5
Investment properties 1.0 1.0 1.0
Right-of-use assets 37.0 42.6 39.3
Intangible assets 8 177.8 182.3 188.9
Trade and other receivables 2.7 0.9 2.6
Investments 1.1 1.2 1.2
Employee benefits 9 14.1 26.3 15.8
Deferred tax assets 12.6 8.1 14.6
272.6 284.6 288.9
Current assets
Inventories 2.9 2.0 2.4
Trade and other receivables 10 164.1 133.1 150.1
Income tax receivable 1.0 2.8 3.0
Investments 11 10.1 6.1 3.5
Cash and cash equivalents 12 275.7 231.6 384.4
453.8 375.6 543.4
Current liabilities
Trade and other payables (245.9) (196.1) (335.9)
Lease liabilities (9.9) (8.8) (9.9)
Income tax payable (16.0) (15.0) (19.8)
Provisions (0.6) (0.6) (0.6)
(272.4) (220.5) (366.2)
Net current assets 181.4 155.1 177.2
Non-current liabilities
Trade and other payables (2.6) (7.0) (5.8)
Lease liabilities (34.9) (41.2) (37.7)
Provisions (1.8) (1.8) (1.9)
Employee benefits 9 (0.5) (0.8) (0.4)
Deferred tax liabilities (5.7) (10.2) (7.1)
(45.5) (61.0) (52.9)
Net assets 408.5 378.7 413.2
Capital and reserves
Share capital 13 7.7 7.6 7.7
Other reserves 93.3 107.1 114.8
Retained earnings 304.0 259.1 287.2
Equity attributable to shareholders of the Parent Company 405.0 373.8 409.7
Non-controlling interests 3.5 4.9 3.5
Total equity 408.5 378.7 413.2
(+) Unaudited (#) Audited
Consolidated statement of changes in equity
for the half year to 30 June
Attributable to equity holders of the Parent Company
Notes Share capital Other reserves Retained earnings Total Non-controlling interests £m(+) Total
£m(+) £m(+) £m(+) £m(+) equity
£m(+)
Balance at 1 January 2023 7.7 114.8 287.2 409.7 3.5 413.2
Profit for the period - - 39.7 39.7 1.1 40.8
Other comprehensive loss - (19.1) (1.5) (20.6) (0.4) (21.0)
Total comprehensive (loss)/income for the period - (19.1) 38.2 19.1 0.7 19.8
Transactions with owners:
Share issues - 0.7 - 0.7 - 0.7
Employee share schemes - (3.1) (1.5) (4.6) - (4.6)
Tax on other employee benefits - - (0.5) (0.5) - (0.5)
Dividend paid 7 - - (19.4) (19.4) (0.7) (20.1)
Total transactions with owners - (2.4) (21.4) (23.8) (0.7) (24.5)
Balance at 30 June 2023 7.7 93.3 304.0 405.0 3.5 408.5
Attributable to equity holders of the Parent Company
Notes Share capital Other reserves Retained earnings Total Non-controlling interests Total
£m(+) £m(+) £m(+) £m(+) £m(+) equity
£m(+)
Balance at 1 January 2022 7.6 104.0 245.3 356.9 4.7 361.6
Profit for the period - - 30.0 30.0 3.0 33.0
Other comprehensive income - 4.3 2.8 7.1 - 7.1
Total comprehensive income for the period - 4.3 32.8 37.1 3.0 40.1
Transactions with owners:
Share issues - 0.3 - 0.3 - 0.3
Employee share schemes - (1.5) 0.1 (1.4) - (1.4)
Tax on other employee benefits - - (1.6) (1.6) - (1.6)
Tax on other items in equity - - (0.3) (0.3) - (0.3)
Dividend paid 7 - - (17.2) (17.2) (2.8) (20.0)
Total transactions with owners - (1.2) (19.0) (20.2) (2.8) (23.0)
Balance at 30 June 2022 7.6 107.1 259.1 373.8 4.9 378.7
(+) Unaudited
Consolidated cash flow statement
for the half year to 30 June
Notes 2023 2022
£m(+) Restated
£m(+^)
Cash flows from operating activities
Profit before taxation 52.2 42.0
Adjustments for:
Foreign exchange differences 1.2 (5.2)
Depreciation 7.2 6.5
Share-based payment expense 1.0 1.0
Loss on sale of property, plant and equipment - 1.5
Amortisation of intangibles 2.2 2.0
Difference between pension contributions paid and 0.3 0.4
amount recognised in the income statement
Finance income (3.9) (0.6)
Finance costs 0.8 1.2
Other finance income - pensions (0.4) (0.2)
Increase in inventories (0.5) (0.4)
Increase in trade and other receivables (11.9) (8.1)
Decrease in bonus accrual (54.4) (27.0)
Increase/(decrease) in trade and other payables 0.3 (7.6)
Increase in provisions - 0.3
Cash utilised from operations (5.9) 5.8
Income tax paid (14.4) (7.2)
Net cash flow from operating activities (20.3) (1.4)
Cash flows from investing activities
Interest received 3.8 0.2
Purchase of property, plant and equipment (2.5) (1.6)
Purchase of intangible assets (1.1) (1.2)
Proceeds from sale of investments 0.4 0.1
Proceeds from sale of property, plant and equipment - 0.2
Purchase of investments - (0.2)
Transfer from current investments (cash on deposit and government bonds) 1.2 4.7
Transfer to current investments (cash on deposit and government bonds) (8.0) (0.4)
Acquisition of subsidiaries, net of cash acquired 14 (4.8) (0.2)
Dividends received from investments 0.2 0.3
Net cash flow from investing activities (10.8) 1.9
Cash flows from financing activities
Interest paid and other charges (0.9) (1.2)
Dividend paid 7 (19.4) (17.2)
Dividend paid to non-controlling interests (0.7) (2.8)
Repayment of borrowings (0.5) -
Principal elements of lease liabilities (5.1) (6.1)
Proceeds from shares issued 0.7 0.4
ESOP shares acquired (38.5) (16.4)
Net cash flow from financing activities (64.4) (43.3)
Net decrease in cash and cash equivalents (95.5) (42.8)
Cash and cash equivalents at 1 January 384.4 261.6
Net foreign exchange differences (13.2) 12.8
Cash and cash equivalents at 30 June 12 275.7 231.6
(+) Unaudited
^ Restatement in relation to equity-settled liabilities, see note 2.1 for
further details
Notes to the interim financial statements
1 Corporate information
The condensed consolidated interim financial statements (the 'interim
financial statements') of Clarkson PLC for the six months ended 30 June 2023
were authorised for issue in accordance with a resolution of the Directors on
4 August 2023. Clarkson PLC is a public limited company, listed on the London
Stock Exchange, incorporated and registered in England and Wales and domiciled
in the UK.
The term 'Parent Company' refers to Clarkson PLC and 'Group' refers to the
Company, its consolidated subsidiaries and the relevant assets and liabilities
of the share purchase trusts.
The interim financial statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2022 were approved by the Board of Directors on 3 March
2023 and delivered to the Registrar of Companies. The Auditors' report on
those accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of the Companies
Act 2006. The interim financial statements have been reviewed, not audited.
2 Statement of accounting policies
2.1 Basis of preparation
The interim financial statements for the six months ended 30 June 2023 have
been prepared in accordance with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and with
UK-adopted International Accounting Standard 34 'Interim Financial Reporting'
('IAS 34').
The interim financial statements do not include all the information and
disclosures required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements for the year ended 31
December 2022, which were prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
The annual financial statements for the year ending 31 December 2023 will be
prepared in accordance with UK-adopted International Accounting Standards.
The Group has considerable financial resources available to it, a strong
balance sheet and has consistently generated an underlying profit. As a result
of this, the Directors believe that the Group is well placed to manage its
business risks successfully, notwithstanding global macroeconomic challenges
ahead. 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.
· Management assessed the impact of a significant reduction in world
seaborne trade similar to that experienced in the global financial crisis in
2008, the pandemic in 2020 and the Russia-Ukraine conflict in 2022: seaborne
trade recovered in 2009, 2021 and 2023 along with the profitability of the
Group. Since 1990 no two consecutive years have seen reductions in world
seaborne trade.
· Management undertook a reverse stress test over a period of three
years to determine what it might take for the Group to encounter financial
difficulties. This test was based on current levels of overhead, the cash
position at 30 June 2023, 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 throughout the
next 12 months. 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 interim consolidated income statement is shown in columnar format to
assist with understanding the Group's results by presenting profit for the
period before acquisition-related costs; this is referred to as 'underlying
profit'*. The column 'acquisition-related costs' includes amortisation of
acquired intangible assets and the expensing of the cash elements of
consideration linked to ongoing employment obligations on acquisitions.
Presentation of cash flow statement
Following correspondence in 2022 with the Corporate Reporting Review Team of
the Financial Reporting Council ('FRC'), we agreed to restate the cash flows
relating to certain equity-settled liabilities within the Consolidated Cash
Flow Statement both within 'net cash flow from operating activities' and
'financing activities'. We have restated the Consolidated Cash Flow Statement
for the period ended 30 June 2022 to add back £14.4m of equity-settled
liabilities payments as 'operating activities' in the line 'decrease in bonus
accrual' and deduct £14.4m of shares acquired by the ESOP as 'financing
activities'.
Cash flow statement for the period ended 30 June 2022 As previously presented Adjustment Restated
£m £m £m
Net cash flow from operating activities (15.8) 14.4 (1.4)
Net cash flow from financing activities (28.9) (14.4) (43.3)
This presentation was adopted for the year ended 31 December 2022 and the
period ended 30 June 2023 has been restated accordingly. There is no net
impact upon the cash flow statement overall and there is no impact on any
balance sheet or income statement figures. The review conducted by the FRC was
based solely on the Group's published 2021 Annual Report and does not provide
any assurance that the report is correct in all material respects.
2.2 Accounting policies
The accounting policies adopted in the preparation of the interim financial
statements are consistent with those followed in the preparation of the
Group's annual financial statements for the year ended 31 December 2022,
except as described below:
· Taxes on income in the interim period are accrued using the tax rate
that would be applicable to expected total annual profit or loss.
A number of amended standards were in issue or effective for the current
reporting period. 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 interim 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.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December 2022, with
the exception of changes in estimates that are required in determining the
provision for income taxes.
2.4 Seasonality
The Group's activities are not subject to significant seasonal variation.
2.5 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
Revenue Results
2023 2022 2023 2022
£m £m £m £m
Broking 257.2 211.2 58.2 47.0
Financial 26.5 27.6 5.0 5.7
Support 27.2 18.3 3.4 2.0
Research 10.2 9.6 3.7 3.4
Segment revenue / Segment operating profit 321.1 266.7 70.3 58.1
Head office costs (20.7) (15.5)
Underlying operating profit 49.6 42.6
Acquisition-related costs (0.9) (0.2)
Operating profit after acquisition-related costs 48.7 42.4
Finance income 3.9 0.6
Finance costs (0.8) (1.2)
Other finance income - pensions 0.4 0.2
Profit before taxation 52.2 42.0
Taxation (11.4) (9.0)
Profit for the period 40.8 33.0
All revenue is generated externally.
4 Acquisition-related costs
Acquisition-related costs of £0.9m, comprise direct costs of £0.2m incurred
on the acquisition of the DHSS group of companies (see note 14), contingent
considerations of £0.6m and £0.1m relating to the DHSS and previous
acquisitions respectively and a residual amount for the amortisation of
intangibles arising on acquisitions.
5 Taxation
Income tax expense is recognised based on management's best estimate of the
weighted average annual income tax rate expected for the full financial year.
The estimated annual tax rate, excluding acquisition-related costs, used for
the year to 31 December 2023 is 21.5% (the estimated annual tax rate used for
the six months ended 30 June 2022 was 21.5%). The effective tax rate, after
acquisition-related costs, is 21.8%.
6 Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Parent Company by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Parent Company by the
weighted average number of ordinary shares in issue during the period, plus
the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
2023 2022
£m £m
Underlying profit for the period attributable to equity holders of the Parent 40.6 30.2
Company*
Reported profit for the period attributable to equity holders of the Parent 39.7 30.0
Company
2023 Million 2022
Million
Weighted average number of ordinary shares - basic 30.4 30.5
Weighted average number of ordinary shares - diluted 30.5 30.7
7 Dividends
2023 2022
£m £m
Declared and paid during the period:
Final dividend for 2022 of 64p per share (Final dividend for 2021 of 57p per 19.4 17.2
share)
Payable (not recognised as a liability at 30 June):
Interim dividend for 2023 of 30p per share (2022: 29p per share) 9.2 8.8
8 Intangible assets
The movement in the net book value of intangible assets is as follows:
Goodwill Development costs Other intangible assets Total
£m £m £m £m
At 1 January 2023 171.6 15.1 2.2 188.9
Additions - 1.1 - 1.1
Arising on acquisitions 3.3 - - 3.3
Amortisation charge - (2.1) (0.1) (2.2)
Foreign exchange differences (13.2) - (0.1) (13.3)
At 30 June 2023 161.7 14.1 2.0 177.8
At 1 January 2022 165.9 17.1 0.2 183.2
Additions 0.2 1.2 - 1.4
Amortisation charge - (1.9) (0.1) (2.0)
Foreign exchange differences (0.4) - 0.1 (0.3)
At 30 June 2022 165.7 16.4 0.2 182.3
At 1 January 2022 165.9 17.1 0.2 183.2
Additions - 2.0 - 2.0
Arising on acquisitions 5.4 - 2.1 7.5
Amortisation charge - (4.0) (0.1) (4.1)
Other (reclassification) (0.1) - 0.1 -
Foreign exchange differences 0.4 - (0.1) 0.3
At 31 December 2022 171.6 15.1 2.2 188.9
In light of continuing macroeconomic and geo-political uncertainty, the Board
keeps the carrying value of goodwill under constant review. The Board has
considered and not identified any indication of impairment of these assets at
30 June 2023. However, in the event that any of the markets in which we
operate has a sustained downturn, an impairment of the relevant
Cash-Generating Unit's ('CGU') goodwill may be required. See note 13 on page
176 of the 2022 Annual Report for specific sensitivity disclosures, in
particular in relation to the Offshore broking and Securities CGUs.
9 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
30 June 30 June 31 Dec 2022
2023 2022 £m
£m £m
Fair value of schemes' assets 126.5 156.8 134.7
Present value of funded defined benefit obligations (110.3) (124.8) (115.2)
16.2 32.0 19.5
Effect of asset ceiling in relation to the Plowrights scheme (2.6) (6.5) (4.1)
Net benefit asset recognised in the balance sheet 13.6 25.5 15.4
The above is recognised on the balance sheet as an asset of £14.1m (31
December 2022: £15.8m; 30 June 2022: £26.3m) and a liability of £0.5m (31
December 2022: £0.4m; 30 June 2022: £0.8m).
A deferred tax asset on the benefit liability amounting to £0.1m (31 December
2022: £0.1m; 30 June 2022: £0.2m) and a deferred tax liability on the
benefit asset of £3.5m (31 December 2022: £3.9m; 30 June 2022: £6.6m) is
also recognised on the balance sheet. Pension scheme administrative expenses
for the six-month period to 30 June 2023 are £0.5m (31 December 2022: £0.8m;
30 June 2022: £0.6m).
Recognised in the income statement
2023 2022
£m £m
Recognised in other finance income - pensions:
Expected return on schemes' assets 3.3 1.8
Interest cost on benefit obligation and asset ceiling (2.9) (1.6)
Recognised in administrative expenses:
Scheme administrative expenses (0.5) (0.6)
Net pension charge recognised in the income statement (0.1) (0.4)
10 Trade and other receivables
Trade receivables are non-interest bearing and are generally on terms payable
within 90 days. As at 30 June 2023, the allowance for impairment of trade
receivables was £22.2m (31 December 2022: £19.6 m; 30 June 2022: £18.9m).
The allowance is based on experience and ongoing market information about the
creditworthiness of specific counterparties and expected credit losses in
respect of the remaining balances and has increased during the period due to
the increase in trading. Included within the movements in the loss allowance
were amounts which were provided at the time of invoicing for which no revenue
has been recognised, because collectability was not considered probable.
11 Investments
Included within current investments are deposits totalling £1.9m (31 December
2022: £3.1m; 30 June 2022: £3.3m) with maturity periods greater than three
months and United States treasury bonds of £8.0m, maturing in August 2023 (31
December 2022: nil; 30 June 2022 £2.1m).
12 Cash and cash equivalents
30 June 30 June 31 Dec 2022
2023 2022 £m
£m £m
Cash at bank and in hand 242.5 230.8 320.1
Short-term deposits 33.2 0.8 64.3
275.7 231.6 384.4
Net cash and available funds*, after deducting amounts accrued for
performance-related bonuses but including current investments, amounted to
£148.9m (31 December 2022: £161.7m; 30 June 2022: £125.8m). Free cash
resources*, being net available funds less monies held by regulated entities,
at 30 June 2023 were £128.2m (31 December 2022: £130.9m; 30 June 2022:
£102.5m).
13 Share capital
30 June 2023 30 June 2022 31 Dec 2022 30 June 2023 30 June 2022 31 Dec
Million Million Million £m £m 2022
£m
Ordinary shares of 25p each, 30.7 30.5 30.6 7.7 7.6 7.7
issued and fully paid
14 Business Combinations
On 6 February 2023, the Group acquired 100% of the share capital of DHSS
Aviation B.V., DHSS Logistics B.V., DHSS Projects B.V. and DHSS Services B.V
for initial consideration of €4.6m (£4.0m). Additional amounts of up to
€6.3m may also be payable depending on the achievement of earnings targets.
As these are linked to employees remaining in service these amounts are spread
in the income statement and shown within the column 'Acquisition-related
costs'. The acquisition is expected to enable the Support division to tender
for larger offshore renewable contracts internationally.
On 28 March 2023, Maritech Services Limited completed an asset purchase
agreement with Marcura Platform Solutions FZE to acquire the MarDocs digital
platform for an initial consideration of US$1m (£0.9). A further US$0.3m
(£0.3m) of consideration may also be payable. The Group assessed and
concluded that, based on the substance of the transaction, it meets the
criteria to be accounted for under IFRS3 as a business combination. The
intention of the acquisition is to further facilitate Maritech's provision of
a rationalised, integrated contracts digitalisation solution to the maritime
industry.
On 31 March 2023, Maritech Services Limited acquired 100% of the share capital
of Recap Manager Limited for £1. The sole activity of Recap Manager Limited
is the provision of the Recap Manager SaaS tool, a digital contracts
management platform, which is licenced exclusively to the entity. Maritech
Services Limited is the owner of that software.
The provisional assets and liabilities recognised as a result of the
acquisitions are as follows:
Provisional fair value of identifiable assets and DHSS Recap Manager Limited MarDocs Total
liabilities assumed: £m £m £m £m
Property, plant and equipment 0.4 - - 0.4
Right-of-use assets 3.5 - - 3.5
Trade and other receivables 5.5 0.1 - 5.6
Cash and cash equivalents - 0.1 - 0.1
Total assets 9.4 0.2 - 9.6
Interest-bearing loans and borrowings (0.5) - - (0.5)
Trade and other payables (3.0) (0.7) - (3.7)
Lease liabilities (3.5) - - (3.5)
Total liabilities (7.0) (0.7) - (7.7)
Net identifiable assets acquired 2.4 (0.5) - 1.9
Goodwill 1.7 0.5 1.1 3.3
Total consideration paid in cash 4.1 -* 1.1 5.2
*Cash consideration for Recap Manager was £1
2023
Outflow of cash to acquire subsidiaries, net of cash acquired £m
DHSS cash consideration 4.0
MarDocs cash consideration 1.2
5.2
Less: cash acquired (0.1)
Less: contingent consideration not yet paid (0.3)
Net outflow of cash - investing activities 4.8
The excess of consideration over the net identifiable assets has provisionally
been attributed to goodwill. Subject to the completion of a purchase price
allocation exercise, some of this value may be attributed to identifiable
intangible assets.
Acquisition-related costs of £0.2m are included in administrative expenses in
the income statement and in operational cash flows in the cash flow statement.
The contingent consideration for MarDocs requires the Group to pay up to a
maximum of US$0.5m (£0.4m) based on the successful migration of key clients
to the Recap Manager platform. In the event there is no migrated customer
revenue, no amount would be payable. The fair value of the contingent
consideration at acquisition was US$0.3m (£0.3m) and will be revalued at the
end of each period.
DHSS contributed revenues of £3.6m and net profit after tax of £0.4m to the
Group for the period from 6 February 2023 to 30 June 2023. If the acquisition
had occurred on 1 January 2023, consolidated pro-forma revenue and reported
profit after tax for the period ended 30 June 2023 would have been £321.9m
and £40.8m respectively.
Recap Manager contributed revenues of £0.2m and net profit after tax of
£0.1m to the Group for the period from 31 March 2023 to 30 June 2023. If the
acquisition had occurred on 1 January 2023 consolidated pro-forma revenue and
reported profit after tax for the period ended 30 June 2023 would have been
£321.1m and £40.8m respectively.
The MarDocs asset purchase agreement entitled the Group to all revenue
generated and transferred liability for regular operating costs of the
acquired business from 1 January 2023.Therefore, the contributed revenue of
£0.2m and net profit after tax of nil to the Group for the period from 28
March 2023 to 30 June 2023, would be no different if the acquisition had
occurred on 1 January 2023.
15 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 expected to have a material adverse financial impact
on the Group's consolidated results or net assets.
16 Principal risks and uncertainties
The Directors consider that the nature of the principal risks and
uncertainties which may have a material effect on the Group's performance in
the second half of the year have not changed from those identified in the risk
management section of the 2022 Annual Report on pages 77 to 81 and noted above
on page 17.
17 Financial instruments
IFRS 13 requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy:
· quoted prices (unadjusted) in active markets for identical assets
or liabilities (level 1);
· inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2); and
· inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
The following table presents the Group's assets and liabilities that are
measured at fair value.
30 Jun 2023 30 Jun 2022 31 Dec 2022
Assets £m Liabilities Assets £m Liabilities Assets £m Liabilities
£m £m £m
Investments at fair value through Profit or loss ('FVPL') - Level 1 0.4 - 0.5 - 0.5 -
Investments at fair value through profit or loss ('FVPL') - Level 2 0.9 - 1.5 - 1.1 -
Foreign currency contracts - Level 2 0.7 2.4 - 7.4 0.1 7.0
2.0 2.4 2.0 7.4 1.7 7.0
The method for determining the hierarchy and fair value is consistent with
that used at the year-end (see note 28 on page 191 of the 2022 Annual Report).
The fair values of financial instruments that are held at amortised cost are
not materially different from their carrying amounts.
18 Related party disclosures
The Group's significant related parties are as disclosed in the 2022 Annual
Report. There were no material differences in related parties or material
related party transactions in the period ended 30 June 2023.
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 interim financial statements to
understand the results for the period.
Underlying profit before taxation
Reconciliation of reported profit before taxation to underlying profit before
taxation for the six-month period to 30 June.
2023 2022
£m £m
Reported profit before taxation 52.2 42.0
Add back acquisition-related costs 0.9 0.2
Underlying profit before taxation 53.1 42.2
Underlying effective tax rate
Reconciliation of reported effective tax rate to underlying effective tax rate
for the six-month period to 30 June.
2023 2022
Reported effective tax rate 21.8% 21.5%
Add back acquisition-related costs (0.3%) -
Underlying effective tax rate 21.5% 21.5%
Underlying profit attributable to equity holders of the Parent Company
Reconciliation of reported profit attributable to equity holders of the Parent
Company to underlying profit attributable to equity holders of the Parent
Company for the six-month period to 30 June.
2023 2022
£m £m
Reported profit attributable to equity holders of the Parent Company 39.7 30.0
Add back acquisition-related costs 0.9 0.2
Underlying profit attributable to equity holders of the Parent Company 40.6 30.2
Underlying basic earnings per share
Reconciliation of reported basic earnings per share to underlying basic
earnings per share for the six-month period to 30 June.
2023 2022
Reported basic earnings per share 130.5p 98.5p
Add back acquisition-related costs 3.0p 0.4p
Underlying basic earnings per share 133.5p 98.9p
Underlying administrative expenses
Reconciliation of reported administrative expenses to underlying
administrative expenses for the six-month period to 30 June.
2023 2022
£m £m
Reported administrative expenses 257.6 213.9
Less acquisition-related costs (0.9) (0.2)
Underlying administrative expenses 256.7 213.7
Operational metrics
The Group monitors its cash and liquidity position by adjusting gross balances
to reflect the payment of obligations to staff and restricted monies held by
regulated entities.
Net cash and available funds
The Board uses net cash and available funds as a better representation of the
net cash available to the business, since bonuses are typically paid after the
year-end, hence an element of the year-end cash balance is earmarked for this
purpose. It should be noted that accrued bonuses include amounts relating to
the current year and amounts held back from previous years which will be
payable in the future.
Reconciliation of reported cash and cash equivalents to net cash and available
funds reported.
30 Jun 2023 30 Jun 2022 31 Dec 2022
£m £m £m
Cash and cash equivalents as reported 275.7 231.6 384.4
Add cash on deposit and government bonds included within current investments 9.9 5.4 3.1
Less amounts reserved for bonuses included within current trade and other (136.7) (111.2) (225.8)
payables
Net cash and available funds 148.9 125.8 161.7
Free cash resources
Free cash resources is a further measure used by the Board in taking decisions
over capital allocation. It deducts monies held by regulated entities from the
net cash and available funds figure.
Reconciliation of reported cash and cash equivalents to reported free cash
resources.
30 Jun 2023 30 Jun 2022 31 Dec 2022
£m £m £m
Cash and cash equivalents as reported 275.7 231.6 384.4
Add cash on deposit and government bonds included within current investments 9.9 5.4 3.1
Less amounts reserved for bonuses included within current trade and other (136.7) (111.2) (225.8)
payables
Less net cash and available funds held in regulated entities (20.7) (23.3) (30.8)
Free cash resources 128.2 102.5 130.9
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR GZGGRRDGGFZMRecent news on Clarkson
See all newsREG - Clarkson PLC - Total Voting Rights
AnnouncementREG - Clarkson PLC - Block listing Interim Review
AnnouncementREG - Clarkson PLC - Holding(s) in Company
AnnouncementREG - Clarkson PLC - Director/PDMR Shareholding
AnnouncementREG - Clarkson PLC - Director/PDMR Shareholding
Announcement