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5 August
2024
Clarkson PLC ('Clarksons') is
the world's leading provider of integrated shipping services. From
offices in 24 countries on six continents, we play a vital
intermediary role in the movement of the majority of commodities
around the world.
Interim
results
Clarkson PLC today announces
unaudited Interim results for the six months ended 30 June
2024.
Summary
· Underlying profit before taxation* of £51.5m (2023:
£53.1m)
· Underlying earnings per share* of 129.1p (2023:
133.5p)
· Both
spot and forward business transacted in H1 ahead of the same period
last year in the Broking division
· Robust
balance sheet, with £178.4m of free cash resources* (31 December
2023: £175.4m)
· Interim dividend of 32p per share (2023: 30p per share) -
22nd consecutive year of dividend increases
· As
previously announced, second half weighting expected given
invoicing profile of the forward order book ('FOB')
· Board's expectations for the year unchanged with continued
confidence in the outlook
|
Six months
ended
|
Six months
ended
|
|
30 June
2024
|
30 June
2023
|
Revenue
|
£310.1m
|
£321.1m
|
Underlying profit before
taxation*
|
£51.5m
|
£53.1m
|
Reported profit before
taxation
|
£50.1m
|
£52.2m
|
Underlying earnings per
share*
|
129.1p
|
133.5p
|
Reported earnings per
share
|
124.6p
|
130.5p
|
Interim dividend per
share
|
32p
|
30p
|
|
|
|
* Classed as an Alternative
Performance Measure ('APM'). See 'Other information' at the end of
this announcement for further information.
Andi Case, Chief Executive
Officer, commented:
"I
am immensely proud of everyone within the Clarksons team for
delivering this strong set of results for the first half of 2024.
The profile and further development of the forward order book,
level of new business being transacted and pipeline for the second
half, means that we have confidence that we will be second half
weighted and deliver full year results in line with the Board's
expectations. This confidence has enabled the Board to increase the
interim dividend by 2p to 32p, continuing the progressive dividend
policy into the 22nd year."
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 these interim results 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 at the end of this announcement for further
information. All APMs used within this announcement are denoted by
an asterisk (*).
About Clarkson PLC
Clarkson PLC is the world's leading provider of
integrated services and investment banking capabilities to the
shipping and offshore markets, facilitating global
trade.
Founded in 1852, Clarksons offers its diverse
and growing client base an unrivalled range of shipbroking
services, sector research, on-hand logistical support and full
investment banking capabilities in all key shipping and offshore
sectors. Clarksons continues to drive innovation across its
business, developing digital solutions which underpin the Group's
unrivalled expertise and knowledge with leading
technology.
The Group employs over 2,000 people in over 60
different offices across its four divisions and is number one or
two in all its market segments.
The Company has delivered 21 years of
consecutive dividend growth. The highly cash-generative nature of
the business, supported by a strong balance sheet, has enabled
Clarksons to continue to invest to position the business to
capitalise on opportunities in its markets.
Clarksons is listed on the main market of the
London Stock Exchange under the ticker CKN and is a member of the
FTSE 250 Index.
For more information, visit
www.clarksons.com
This announcement contains inside information
for the purposes of Article 7 of EU Regulation 596/2014 as it forms
part of domestic law of the United Kingdom by virtue of the
European Union (Withdrawal) Act 2018, as amended (together, 'MAR').
Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
Chair's review
2024 has started strongly with
momentum building in the business. We are benefiting from the
strategic decisions made over the last 20 years which have created
a broad and deep market-leading business with a global footprint.
The Group continues to invest in the best people, technology and
market intelligence to provide all of our teams with best-in-class
tools for trade to service our clients' needs.
Against a complex geo-political and
economic backdrop in the first half of the year, the encouraging
fundamentals of shipping markets have endured. Seaborne trade
continues to grow, driven by both economic consumption and an
increase in tonne-miles caused by disruption to key shipping
routes. At the same time, the supply side of the industry is not
keeping pace with this demand dynamic.
The green transition continues to
be a long-term trend which drives the business as our clients look
to us for insight and advice to navigate the complex regulatory
changes ahead. We continue to leverage our expertise in this area
and are proud to be playing a proactive role in the decarbonisation
of the industry.
The Board is committed to the
Group's long-term progressive dividend policy, which is now in its
22nd year. I am pleased to announce that the Group's strong
financial position, and view on the outlook for the business, has
enabled the Board to declare an increased interim dividend of 32p
per share (2023: 30p per share).
We are delighted to announce the
appointment of Constantin Cotzias as an independent Non-Executive
Director. Constantin is European Director at Bloomberg LP where he
is the Global Head of External Affairs, the Chair of Bloomberg
Tradebook and a Director of Bloomberg Multilateral Trading
Facility. I would like to again take this opportunity to thank
Birger Nergaard, who stepped down from the Board earlier this year
following the Company's Annual General Meeting, for his nine years
of contribution to the Group.
Clarksons is a unique UK success
story. Over the past 20 years, our strategy has propelled us to
become a global market leader in our industry. I would like to
thank everyone throughout the Clarksons Group for their hard work
and dedication, which has enabled our business to thrive and
positioned us well for the future.
With favourable supply/demand
dynamics and Clarksons' strong market position, the Board looks
ahead with confidence.
Laurence Hollingworth
Chair
2 August 2024
Chief Executive Officer's review
I am pleased to report a strong set
of results for Clarksons in the first half of 2024. Underpinned by
the breadth of talent in our teams, the depth of our innovation and
the power of our market-leading data, analysis and insights,
Clarksons remains best placed to help our clients navigate the
ever-increasing complexities of the global shipping
market.
During the last 12 months we have
made significant investment in new hires to further enhance our
market-leading teams, expand the products that we broker and
strengthen our global presence. Key hires include both
revenue-generating staff and operational and support roles, all of
which will enable us to further scale the business and better
service our clients. The impact of these hires will evolve in the
coming months as many join from senior positions following long
periods of notice and garden leave.
The green transition remains a key
focus for our business as we support the industry across all
verticals in its drive towards decarbonisation, providing clients
with the support, services and information required to make the
best decisions for their business.
I am extremely proud to work
alongside the best people in our industry and, on behalf of the
Board, I would like to thank every member of the team for their
dedication, contribution, unstinting hard work and commitment to
Clarksons' success.
Market
backdrop
Against a challenging geo-political
backdrop and global economic uncertainty, the encouraging
fundamentals of the shipping markets continue with global supply
and demand dynamics remaining positive. Supply-side constraints
have resulted in relatively low order books in many sectors, most
notably bulkers and tankers. Limited berth
availability at shipyards creating long lead times for new orders,
high newbuild prices from increased commodity and labour costs and
uncertainty around fuelling technologies, all
continue to constrain the building of new
vessels.
On the demand side, growth in trade
and economic consumption has led to a projected 2.3% underlying
increase in seaborne trade compared to 2023. Disruptions to
shipping routes and other complexities mean that the tonne-mile
impact of this enhanced demand is forecast to increase by 5.4% as
ships travel further to avoid challenges such as the disruption in
the Red Sea and lower water levels in the Panama Canal.
Against this backdrop,
freight rates have exceeded the 10-year
average during the first half of the year across many segments,
which in turn has limited the recycling of older
vessels despite an ageing global fleet.
Broking
The Broking division has had another
successful first half, with strong performances across all major
segments. Both spot and forward business transacted is ahead of the
same period last year. Whilst reported divisional profit is
slightly lower compared to the first half of 2023, performance is
expected to be second half weighted owing to the invoicing profile
of the forward order book ('FOB').
Energy-related markets, including
tankers, gases and specialised products, continued to perform well,
supported by both concerns around energy security and an increase
in tonne-miles caused by disruption through key shipping routes.
This disruption also supported freight rates in the dry bulk and
container segments, as market conditions continued to tighten,
despite ongoing fleet supply growth in containers. The sale and
purchase team also saw good activity in both newbuilding and
secondhand transactions as clients reviewed their fleet
requirements. Offshore markets strengthened in the first half of
2024 with both drilling and field development activities increasing
further from levels seen during 2023.
Throughout the period, we continued
to invest in our people, making significant hires to broaden our
teams' coverage across all areas of the market. Within the
financial derivatives segment, we established a new desk focused on
broking base and battery metals in the futures and physical
markets.
Divisional profit from Broking in
the first six months of the year amounted to £53.4m (2023: £58.2m),
reflecting a margin of 21.6% (2023: 22.6%).
Financial
Our Financial division continues to
face a challenging market backdrop.
Despite these conditions, the
investment banking team was busy with enquiries and mandates, and
executed a number of deals over the period. Revenue from both
commissions on secondary trading and corporate finance, was lower
than in the first half of last year, driven mainly by weaker
activity in the equity capital markets. There was however strength
in the debt capital markets, where revenues on transactions
executed increased, and some consistency in the M&A markets. We
go into the second half with a solid and encouraging pipeline,
which as ever is subject to market conditions.
Within the project finance segment,
shipping and offshore activities performed well, although our real
estate project finance activities continue to be significantly
impacted by the higher interest rate environment.
The Financial division reported a
profit of £1.2m on revenue of £18.3m in the first half compared
with a profit of £5.0m on revenue of £26.5m in the same period last
year.
Support
Our strategy to expand our port
services capabilities has maintained positive momentum in the first
half of the year. Recent acquisitions have contributed to the
positive performance as we evolve our offering and increase our
coverage across this segment, maintaining our focus on the offshore
renewables sector. In February, we completed the acquisition of
Trauma & Resuscitation Services Limited, which expanded the
division's offering to the oil and gas, marine and renewable energy
sectors through the provision of market-leading advanced first aid
training. The division also reached an agreement with Norway-based
Peak Group to combine expertise in port agency logistics, expanding
our reach across the expanse of the North Sea.
The Support division reported £4.0m
profit and a 12.4% margin in the first half of 2024 (2023: £3.4m
and 12.5% margin).
Research
The Research division performed
strongly in the first half of 2024. We are constantly innovating
and investing in the capabilities of our team, our products and the
data and insights we provide. Demand for this expertise continues
to grow as clients turn to us for our best-in-class insights to
stay informed across the industry, accessing our extensive and
market-leading databases across shipping, seaborne trade, offshore
oil and gas and offshore renewables, and our high-quality valuation
services. 89% of our total sales in Research represents recurring
revenue.
The Research division reported a
profit of £4.6m on revenue of £11.8m in the first half compared
with a profit of £3.7m on revenue of £10.2m in the same period last
year.
Green
Transition
Shipping has a crucial role to play
in the global energy transition. Responsible for transporting over
80% of goods globally, the shipping industry's ability to adapt is
pivotal to the transition. The industry aims to reduce its share of
global CO2 emissions by adopting cleaner fuels,
improving vessel efficiency and investing in innovative
technologies.
In this context, the Green
Transition team at Clarksons has had a very active first half of
the year, working together with our other divisions to lead
positive change, through insights and guidance on decarbonisation
strategies, operational emissions reduction, fleet renewal and
policy coherence at the heart of our clients' ability to evaluate
and execute strategies to meet their obligations.
Following a significant increase in
demand for specialised green offshore vessels, particularly in the
offshore wind and renewables sector interest is also increasing in
the oil and gas sector. As a result, the team is actively engaging
with clients regarding technical green solutions and
initiatives.
Digitalisation
Sea's end-to-end digital solution
for sustainable, data-driven decision-making continues to grow. Sea
Trade 2.0, our upgraded pre-fixture platform, was delivered to
enable us to ensure future developments can be rapid, fully
structured, cross multiple markets and delivered as a truly SaaS
solution. It is now being rolled out across our existing client
base and our focus for the remainder of this year is on the
expansion of our markets and the regular and continuous evolution
of our 'at-trade' and 'pre-trade' product sets. We are continuing
to see increased adoption of the Sea platform among our clients,
and we expect this to continue as we expand our offering and roll
out Sea across new products and markets.
Results
Total revenue in the first half was
£310.1m (2023: £321.1m) with underlying administrative expenses* of
£248.2m (2023: £256.7m). Underlying profit before taxation* was
£51.5m (2023: £53.1m), resulting in reported profit before taxation
of £50.1m (2023: £52.2m). Underlying earnings per share* were
129.1p (2023: 133.5p). Reported earnings per share were 124.6p
(2023: 130.5p).
While our underlying performance
remains extremely robust, a stronger pound in the first half of
2024, with an average GBP/USD rate of US$1.26 compared to US$1.24
for the same period last year, has proven a headwind, which is
likely to continue into the second half of the year.
Cash and
dividends
Clarksons has reported cash balances
at 30 June 2024 of £276.3m (31 December 2023: £398.9m). Net cash
and available funds*, after deducting amounts accrued for
performance-related bonuses but including short-term investments,
amounted to £201.5m (31 December 2023: £201.1m). Free cash
resources*, after deducting monies held by regulated entities,
amounted to £178.4m (31 December 2023: £175.4m).
I am pleased to confirm that,
following another very strong first half performance, the Board has
declared an increased interim dividend, continuing the progressive
dividend policy into the 22nd year. An interim dividend
of 32p per share (2023: 30p per share) will be paid on 13 September
2024 to shareholders on the register at the close of business on 30
August 2024.
Outlook
We are confident in the outlook for
the second half, which has already started well, and our
expectations for the full year are unchanged. Supply and demand
dynamics both remain favourable, and we expect to start seeing a
positive impact from our recent hires in the second half of the
year and into 2025. The geo-political landscape is highly complex,
with elections, conflicts, sanctions and climate-related change all
causing uncertainty and increasing client demand for advice, data
and experience to help them negotiate these challenges.
The breadth and diversity of
Clarksons' ecosystem enables us to take a truly client-centric
approach, tailoring solutions to address specific client
requirements and offering complete solutions to their needs. In
times of highly complex global trade dynamics, our integrated,
full-service offering sets us apart.
Andi
Case
Chief Executive
Officer
2 August 2024
Business Review
Broking
Revenue: £247.7m (2023:
£257.2m)
Segmental split of underlying profit
before taxation*: £53.4m (2023: £58.2m)
Dry
cargo
The dry cargo sector supports a
range of important industrial sectors including construction,
energy and agriculture. The sector is expected to move over 5.6
billion tonnes of cargo in 2024, and our chartering teams have a
leading broking position across much of this cargo base.
Dry bulk markets improved
significantly in the first half of 2024, with the Clarksons
Weighted Average Bulk Carrier Earnings series averaging US$15,828
per day, up 47% year on year and standing 25% above the 10-year
average. The Capesize sector experienced the most notable gains,
with the Clarksons Capesize spot earnings series up 166% year on
year.
Firm volume and tonne-mile growth
was seen in the first six months of the year, with iron ore and
coal shipments again reaching record levels supported by Chinese
demand. Drier than expected weather also allowed for a period of
uninterrupted iron ore loadings in Brazil, while strong exports of
bauxite from Guinea were also supportive. Coal import demand in the
Pacific was also firm, fuelled by both economic growth and strong
cooling demand from hot weather conditions. Chinese imports
remained strong amid plentiful seaborne supply, attractive pricing
and some disruption to domestic output.
While newbuilding deliveries and
vessel demolition levels generally developed as expected, rates
were also supported by two major areas of disruption in the first
half of 2024. Low water levels led to restricted transit slots on
the Panama Canal, with bulker transits down by circa 70% year on
year in the first half of 2024. In addition, attacks on vessels in
the Red Sea led to a dramatic drop in Suez Canal transits, which
were down by about 50% from 'normal' levels by the end of the
second quarter of 2024. These two disruption factors led to more
ships rerouting via the Cape of Good Hope for voyages between the
Atlantic and Indian/Pacific Oceans, boosting tonne-mile
demand.
Across the second half of the year,
the dry bulk demand outlook appears generally supportive with
volumes expected to improve seasonally after a summer dip and the
rerouting of vessels away from the Red Sea for now continuing to
add to vessel demand despite a steady normalisation of Panama Canal
transits. Overall fleet growth looks set to remain moderate into
2025 and especially limited in the Capesize sector, although there
is uncertainty around the outlook for Chinese demand after the
recent record pace of imports, while any unwinding of Red Sea
disruption could impact tonne-mile demand.
Containers
The container sector facilitates
transportation of a wide range of typically manufactured goods,
including consumer and industrial goods, foodstuffs, chemicals and
other products.
Container shipping markets
experienced an unexpectedly strong first half in 2024, with a
significant tightening of market conditions following rerouting
away from the Red Sea and underlying volume increases. Against this
backdrop, container freight markets and charter earnings ended the
first half at their highest levels outside of the COVID-19 period
with the SCFI Spot Box Freight Index standing at 3,714 points, 267%
higher than at the start of December 2023, while the Clarksons
Containership Timecharter Rate Index stood at 172 points, up 156%
versus the end of 2023.
Additional vessel capacity
requirements from the rerouting of containerships have been
significant, outweighing impacts from strong fleet growth. By
mid-year, around 700 vessels (33% of overall fleet capacity) were
being rerouted, increasing vessel demand by approximately 12%.
Underlying global trade has also been increasing, with volumes up
7% year on year across January to May and with May 2024
representing a record month amid an early peak season as shippers
frontloaded volumes to mitigate against supply chain
delays.
Strong exports from Asia to a range
of developing economies have also been a notable demand driver. Red
Sea diversions have sparked areas of 'hub' port congestion as some
ports came under pressure from additional transhipment moves and
strong underlying trade volumes, constraining vessel supply and
amplifying impacts. Overall, an additional 2-4% of containership
capacity has been tied up in areas of congestion globally at points
during the first half of the year.
The development of Red Sea
disruption is central to the outlook. Continued diversions through
the second half of 2024 would keep markets tight, though strong
supply growth (10% forecast for 2024) could erode some of the
freight market spike once the peak season is passed. An eventual
return to normal Red Sea sailings would see trading distances
reduced and potential pressure emerge as underlying supply/demand
fundamentals come into play. Initial projections for 2025 suggest a
further year of strong fleet growth and moderate increases in trade
volumes but with uncertainty around the duration of Red Sea
disruption.
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. Our market-leading chartering teams performed
exceptionally well across this market in the first half of the
year.
The tanker market remained strong in
the first half of 2024, with the Clarksons average tanker earnings
index averaging US$44,431 per day. However, earnings for crude and
products tankers followed diverging paths. In the crude sector,
VLCC earnings softened, down 18% year on year for a non-eco,
non-scrubber fitted unit, amid OPEC+ production cuts and lower
Chinese crude imports despite higher Atlantic exports being a
supportive factor. The Suezmax and Aframax markets remained very
strong, continuing to be influenced by the longer transport
distances for Russian crude oil exports and European crude oil
imports. Earnings did drop back for Suezmax and Aframax, down 19%
and 23% year on year respectively.
The crude tanker sector did not see
clear upside from the disruption in the Gulf of Aden and the Red
Sea, which in some cases curtailed inter-regional shipments.
Nevertheless, earnings in all crude tanker sectors remained above
long-run average levels. Product tanker earnings rose substantially
in the first half of 2024, influenced by large-scale rerouting of
vessels away from the Gulf of Aden and via the Cape of Good Hope.
Clarksons' published earnings for LR2s on the Middle East to Far
East route were up 42% year on year, while average earnings for MRs
were up 21%.
Looking ahead, while there is
uncertainty about the duration of disruption in the Gulf of Aden,
the increases in trade distances that have resulted from the
Russia/Ukraine conflict are expected to persist for the foreseeable
future. Tanker fleet growth is expected to remain limited in the
second half of the year, with relatively few newbuilding deliveries
expected. The strong products tanker market has led to more crude
oil tankers transporting clean products, which may put some
supply-side pressure on clean tanker earnings and tighten the
available supply of tonnage in the crude segments. Seasonal factors
may also support earnings later in the year.
In 2025, tanker deliveries are set
to increase, but remain well below long-run average levels. While
geo-political developments, the economic outlook and other
unpredictable events will continue to influence the markets, the
age profile of the tanker fleet and influence of emissions
regulations look set to create some supply-side constraints to the
market moving through the second half of the decade.
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. The specialised products shipping
market saw very strong conditions again in the first half of 2024,
supported by underlying fundamentals and amplified by geo-political
events leading vessels to deviate away from the Gulf of Aden,
extending voyage distances and tightening supply.
Our global specialised broking team
experienced a successful first half, with the teams in Asia in
particular growing volumes and fixture numbers. Our Dubai team
continues to make good progress, and although Suez disruption has
brought a range of challenges, strong client support has been
maintained. The European veg oil desks had a strong first half,
supported by good volumes and some trade flow shifts, while the
European short sea Clean Petroleum Products market continues to
show firm volumes. In the US, a growing team saw steady volumes
across the Contract of Affreightment base despite trading volumes
being more volatile. Across our network, there has been a focus on
targeted headcount growth and maximising synergies between
teams.
Fallout from Red Sea disruption
seems to have now normalised to an extent in terms of
re-freighting, voyage frequency and charter party discussions.
Charterers that withdrew from the Asia/Europe trade are starting to
reinvestigate volumes, whilst westbound volumes from the Red Sea
have grown at the expense of eastbound. Rerouting has also allowed
some new opportunities to be explored. Although the market has
softened slightly into the summer, a sign that normal seasonal
patterns are returning, the outlook for the second half of the year
remains generally positive. The tight supply-side outlook continues
which, coupled with consistent volume growth and the present
increased tonne-mile demand, points to promising conditions in the
months ahead.
Gas
The gas shipping markets move
liquefied petroleum and other gases, supporting a wide range of
sectors, from plastics and rubber production to industrial and
domestic energy markets. We expect around 135mt of LPG to be moved
in 2024, as well as smaller quantities of ammonia, ethane and
petrochemical gases.
LPG/PCG
While LPG carrier markets normalised
in the first half of the year, following exceptional conditions in
2023, the sector remains in a relatively strong position. Very
Large Gas Carrier ('VLGC') earnings remain healthy, averaging
US$49,985 per day across the first half, slightly above the 10-year
average. While a narrowed US-Asia LPG arbitrage and some signs of
easing disruption at the Panama Canal saw vessel earnings ease back
in the early months of the year, rates then experienced some
improvements and demand-side indicators have remained positive,
with Asian imports of US volumes continuing to grow strongly. The
generally positive market backdrop has continued to support strong
newbuild ordering activity. A total of 76 newbuild LPG carrier
orders were placed in the first half of 2024, including 26 Very
Large Ammonia Carriers ('VLACs').
Looking towards the second half of
the year, the LPG carrier market sentiment remains relatively firm.
Whilst growth in Middle Eastern exports appears likely to slow
against the backdrop of continued OPEC+ cuts, the US is still
expected to export approximately 4m additional tonnes across the
full year. It is likely that, given the expected easing of canal
throughput restrictions across the remainder of 2024, US-Asia trade
via Panama will increase. Therefore, while we expect a further
uplift in LPG tonne-mile trade, the rate of increase may be
shallower than in 2023.
In the petrochemical gas sector,
strong US ethylene export growth has continued to be a key driver
of the market. Disruption at both the Suez and Panama Canals
supported elevated rates across the first half of the year,
although with disruption at the Panama Canal starting to ease and
the US-Asia arbitrage narrowing, markets may now be starting to
normalise. There has been some regional weakness in the European
markets. On the supply side, the order book remains limited which,
combined with an ageing fleet, should lend some underlying support
to freight markets going forward. Meanwhile, the pressurised market
remained steady in the first half of the year with tonnage mostly
held on longer-term contracts, although a limited order book is
also supportive in this segment.
LNG
LNG carrier short-term rates
softened in the first half of 2024, with rates in the spot market
for a 174,000 cbm 2-stroke vessel averaging US$55,000 per day in
the first half of the year, down 35% year on year. Newbuild
deliveries arriving before project expansion, as well as a mild
winter and high gas inventories in Europe which have reduced
regional import demand and softened global gas prices, have
impacted rates. This has been despite an increase in trade volumes
overall and significant disruption at the Panama and Suez Canals.
LNG carrier transits were down 84% and 93% year on year
respectively in the first half, which led to longer voyages and
boosted vessel demand.
Overall, while a period of softer
markets has been experienced as ships were delivered ahead of
projects, the LNG sector is also at the start of a major growth
phase. Vessel demand is expected to see strong gains going forward
as new terminals come online in the coming years. Further ahead,
energy transition dynamics and Asian gas demand are expected to
remain supportive underlying growth drivers in the coming decades.
These trends have been reflected in a continued active period of
newbuild ordering for LNG carriers at shipyards in Asia, with over
60 newbuild orders confirmed in the first half.
Sale and purchase ('S&P')
Secondhand
The first half of the year saw
continued elevated activity in the global secondhand vessel S&P
market, following the very strong volumes across 2021-2023. Over
66m dwt and US$26bn of tonnage was reported transacted in the first
half of 2024. Bulk carrier sales volumes were very strong,
especially in the Capesize sector, with total bulk carrier sales
reaching the highest volumes on record. Meanwhile, sales activity
in the tanker sector remained strong, and containership sales
volumes increased to one of the highest levels outside of the
COVID-19 era. Asset prices remain elevated and generally firmed
further across the major shipping sectors in the first half, with
secondhand prices in the tanker and bulk carriers sectors at a
decade high while containership prices have firmed as shipping
market conditions have tightened significantly. Our S&P team
has remained very active, seeing a strong flow of business through
the first half.
Newbuilding
There was a healthy flow of newbuild
contracts placed during the first half of the year, with global
orders totalling over 24m CGT and US$80bn. Ordering has been
particularly strong in the LNG and LPG carrier sectors, as well as
in the crude and product tanker segments. Containership ordering
also began to pick up around mid-year. Newbuild prices continued to
rise across the first half, with the Clarksons Newbuilding Price
Index increasing to 188 points, only 2% below the 2008 peak in
nominal terms. Shipping's fuelling transition remains in focus; 41%
of tonnage contracted in the first half and around half of tonnage
on order overall is set to be alternative fuel capable. LNG remains
the most popular alternative fuelling choice, followed by methanol,
with some ammonia capable orders now confirmed. Some owners are
pursuing fuel optionality by ordering vessels with 'ready'
notation. Our global newbuilding broking team remained very active
in the first half, utilising market-leading expertise to support
owners and cargo players with fleet renewal programmes, including
orders for vessels with alternative fuel capability and a range of
Energy Saving Technologies.
Offshore and offshore renewables
The offshore oil and gas sector
supports the development, production and support of offshore oil
and gas fields, with over 13,000 mobile vessels and rigs playing a
vital role in supporting operations across the lifecycle of
offshore energy projects. Our offshore broking team remined very
active as the offshore sector continued to strengthen in the first
half of 2024. Global offshore Exploration & Production
('E&P') spending remains strong, with offshore oil and gas
project capex commitments projected to remain close to 2023's
10-year high. Continued strong investment is boosting demand
further for offshore vessels and rigs and this has supported
utilisation and day rates, from already elevated levels. While
demand for offshore assets in general continues to increase, much
of the market improvement seen in recent years has been driven by
the significant reduction in vessel supply seen across 2014-2020.
Although interest in newbuild ordering has now started to increase,
volumes are expected to remain moderate and, given the ageing fleet
profile, future supply growth may remain limited. While demand
continues to strengthen, the outlook for rates and asset values
remains optimistic.
Drilling
The floater drilling segment remains
tight, with UDW floater rates currently ranging between US$450,000
and US$500,000 per day. The jack-up sector faced some challenges
when Saudi Aramco suspended around 22 rigs in April as a result of
its pull-back in investment. However, some drillers have reported
cautious optimism about their ability to re-fix units, with the
global market still tight at 88% utilisation. The outlook for the
offshore drilling sector remains generally positive, with high
E&P activity expected to boost demand further, while supply
remains constrained.
Subsea
The outlook for the subsea sector
remains positive. The combined backlog of the three leading subsea
Engineering, Procurement and Construction ('EPC') contractors was
above the US$40bn mark in early 2024, close to all-time highs. This
is expected to strengthen demand further for subsea construction
units for both offshore oil and gas and wind work. In turn,
Multipurpose Supply Vessel ('MSV') rates have increased
significantly, driven by strong growth in subsea field development
and offshore wind activity as well as steady underlying growth in
subsea Inspection Maintenance and Repair ('IMR') requirements. With
increasing decommissioning activity also expected to contribute to
further demand growth, the subsea support vessel outlook remains
positive. In turn, newbuild ordering activity has started to pick
up and it is possible that further contracts will be placed going
forward.
Offshore support vessels ('OSV')
The OSV market strengthened further
in the first half of 2024, with the Clarksons OSV Rate Index
closing on prior record levels. Demand increased across most
regions and tonnage availability remains constrained, with the
stacked pool now standing close to exhausted, and with few
newbuilds remaining at shipyards. Rates are expected to continue to
move higher due to the lack of available capacity and further gains
in demand.
Offshore renewables
The offshore renewables industry
continues to expand, and is expected to account for a growing
share of the global energy mix supported by the increased focus on
decarbonisation and energy security. Following a mixed 2023 which
saw cost pressures delay some high-profile projects, the offshore
wind industry gradually began to regain some momentum in the first
half of 2024. Offshore wind project capex is projected to total a
strong US$58bn in 2024, which would be a record in capacity
terms.
In the wind vessel markets, the peak
summer season has seen very high utilisation in key vessel
segments, driven by strong demand from the offshore wind and
offshore oil and gas sectors. This is driving further gains in wind
vessel day rates, with unit availability limited. As a result,
developers are locking units into longer-term charters to secure
contract coverage. Moreover, given the material project pipeline,
it seems that the 2025 peak season will see a further step-up in
vessel demand.
Following a significant increase in
demand for specialised green vessels in the offshore renewables
sector, interest is also increasing in the offshore oil and gas
sector, and the team are actively engaging in discussions with
clients regarding technical green solutions and
initiatives.
Looking ahead, with the energy mix
shifting towards renewables, offshore wind and renewables is
becoming an increasingly larger share of our offshore department.
Nonetheless, we do not expect the transition to be smooth and
barriers surrounding the availability/costs of low-carbon energy
sources will have to be overcome. Despite these challenges, the
team continues to leverage its expertise and forge partnerships,
which will help stakeholders navigate the evolving landscape and
contribute to the successful green transition in the
sector.
Futures
Our Futures business is a 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 a strong
start to 2024, with the disruption in the Red Sea and associated
volatility leading to increased trading and new entrants in the
space, though volumes eased going into summer. In the dry FFA
market, volumes of cleared dry FFAs were lower in the first half
but revenues have improved amid a stronger rate environment. In May
2024, the team established a new desk focused on broking base and
battery metals in both the futures and physical markets. Following
growth in both the production of electric vehicles and green energy
storage, the demand for these metals continues to
increase.
Financial
Revenue: £18.3m (2023:
£26.5m)
Segmental split of underlying profit
before taxation*: £1.2m (2023: £5.0m)
Securities
Clarksons Securities is a
sector-focused investment bank for the shipping, offshore energy,
renewables, exploration and production, and minerals industries,
with deep sector knowledge and global reach driven by research and
relationships.
Financial performance has been
driven by debt capital markets, with all sectors contributing to
the results. There is a good pipeline of opportunities for the
second half of the year.
Secondary trading
Investor appetite and trading
activity in the secondary trading market for both offshore and
shipping has remained high in the first half of the year, with the
flow of contract announcements in the offshore services space and
high day rates in shipping resulting in strong share price
performances. Block trading remains a key focus area amid high
investor risk appetite, whilst the credit market has been very
strong.
Shipping
The conventional shipping sectors
experienced a strong stock performance in the first half of 2024,
with the average shipping stock price gaining 30%. Listed shipping
companies have remained disciplined and focused on returning
capital to shareholders and deleveraging balance sheets. Despite
muted overall capital markets activity, Clarksons has been involved
in various equity and debt block trades. The outlook for shipping
capital markets activity is attractive in the medium to long
term.
Energy services
Capital markets activity within
offshore energy services sustained strong momentum into the first
half of 2024. Investors were eager to allocate capital into oil
services investments, both in equity and debt, enticed by the
sector's promising outlook and attractive pricing. Offshore
drilling has continued to be the key driver of capital markets
activity. The team has been active, including listing and raising
finance for a Brazilian offshore drilling company on the Euronext
Growth Oslo stock exchange, exemplifying a trend towards increased
interest in Brazil's rapidly growing deepwater market. There has
also been more activity across M&A and capital markets within
the OSV/Subsea segments. Looking ahead, high capital markets and
M&A activity is anticipated for the remainder of 2024, with
strong markets for refinancing and growth financing for oil
services companies in both public and private debt
markets.
Metals and minerals
In our metals and mining vertical,
the bulk commodities market saw more positive developments in the
first half of 2024, while battery metals also showed some signs of
recovery after a softer 2023. Clarksons was actively engaged in
several transactions during the first half, particularly within the
strong credit market and M&A segment in the mining industry. We
remain committed to the metals and mineral sectors and, while the
short to mid-term outlook for various minerals remains mixed, the
business is expected to benefit from positive developments in the
industrial minerals segment. The credit market remains
constructive, and there is potential for an uptick in future-facing
commodities.
Renewable energies
Similarly to 2023, the first half of
2024 experienced slower transaction sentiment across the renewable
energy sectors in which the team is active, driven by macro trends
and investor appetite. However, underlying fundamentals are
positive and rapid growth continues. M&A and private equity
markets have remained strong. The renewables coverage team
completed various private M&A and equity transactions in the
first half and there is a healthy pipeline of transactions into the
second half, with potential for increased public capital markets
activity.
Exploration and Production ('E&P')
In the E&P market, oil prices
are still strong, but longer term are expected to moderate as the
market balances, while gas prices have weakened and face a softer
long-term outlook due to increased LNG capacity and strong
renewables growth. Clarksons seeks to work with high-quality assets
and operators to finance oil and gas fields and companies fit for
the future. 2024 has seen the first fruits from our renewed E&P
focus, and the forward pipeline is promising.
Debt capital markets
Positive momentum has continued into
2024 for debt capital markets. Both existing bond issuers and new
entrants have been capitalising on the current window, benefiting
from considerable investor liquidity and risk appetite driven by
substantial fund inflows. Consequently, new deals have experienced
robust investor demand, often pricing at the lower end of their
target ranges. In the secondary market, outstanding bonds have been
well bid, resulting in tightening spreads as investors have
struggled to find supply. Clarksons concluded seven transactions in
the first half and several further transactions are currently in
progress.
Project finance
The 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 2024 has been an
active period in the Norwegian project finance market, with strong
investor interest in both shipping and offshore projects. The team
structured and placed projects across a range of segments, and
there is a good pipeline of projects ahead. There is also growing
interest in project finance structures from shipowners abroad
attracted by the Norwegian partnership model as an interesting way
to co-invest and grow their fleet. There is good availability of
bank finance for non-recourse projects, and teams are becoming more
competitive.
In the commercial real estate market
in Norway, the team increased transaction volumes in the first
quarter of 2024 compared to the previous year, driven by larger
individual transactions. Overall optimism in the transaction market
has been dampened by a persistently volatile bond market and fewer
interest rate cuts than initially expected. Making new construction
projects financially viable has been challenging given current
construction and rental prices, which combined with low office
vacancy rates and a relatively strong labour market, points to
rising rental prices ahead. While interest rates look to be heading
toward a 'higher for longer' scenario, the transaction market
generally appears to be in a better position than in the second
half of 2023, with activity expected to pick up throughout
2024.
Structured asset finance
The 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.
Improved earnings and cash reserves
have seen many companies repaying asset finance leverage and
refinancing existing facilities, generally at lower margins with
competition rife. The market remains tiered, with mainstream banks
preferring newer, more fuel-efficient vessels; top-tier leasing
companies seeing success in refinancing 5-7-year old vessels out of
bank facilities; and second-tier leasing companies, non-mainstream
banks and alternative lenders increasingly active with older
tonnage and more niche sectors.
The industrial companies and cargo
owners who form the main client base continue to evaluate options
and develop financing and procurement strategies. Demand for
financial advisory mandates to assist in this validation process is
growing, and Clarksons Structured Asset Finance has a healthy
pipeline of such projects, though for now most execution is between
mainstream banks and large owners.
Support
Revenue: £32.3m (2023: £27.2m)
Segmental split of underlying profit
before taxation*: £4.0m (2023: £3.4m)
Our port services team is active
across stevedoring, agency, supplies, logistics services and
shortsea shipbroking, principally in the UK but also in Northern
Europe and Egypt.
Agency - UK
Through exceptional port agency and
first-class logistics services, our business provides a range of
agency and customs clearance solutions for clients in the marine
and energy sectors. Results in the first half of 2024 reached a
record, with some notable new business concluded. Although grain
export income was down, the team continued to win and retain
offshore energy project incomes.
Clarkson Port Services B.V. ('CPS BV')
Our business unit offering
integrated logistics services to the offshore energy sector, CPS BV
(formerly DHSS), completed the building of new terminal facilities
in Eemshaven. A new office is also being opened in Vlissingen,
expanding the team's geographical reach and ability to service
clients. Whilst customer demand was down slightly on last year,
2025 is expected to be busier on the back of new projects as the
division continues to actively support the offshore energy
sector.
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 the year saw continued investment for
the future in the UK, Netherlands and US, and a new office and
warehouse opened in Immingham. However, overall performance was
held back somewhat by lower activity in the local offshore energy
market.
The recently acquired Trauma &
Resuscitation Services, which provides first aid equipment,
training, compliance and emergency response services in the
renewable energy sector, has been performing ahead of expectations
since acquisition. The business will be incorporated into Gibb
Group in the second half of the year.
Stevedoring
The stevedoring business, highly
experienced in loading and discharging bulk cargoes, saw a
profitable first half, although results were impacted by lower UK
grain exports following a weak 2023 harvest. The outlook is for
another weak UK harvest this year due to wet weather, and high
import volumes across grain and animal feeds in the coming 12
months.
Shortsea broking
The shortsea shipbroking business
saw a very busy first half with freight rates a little below 2023
levels but still above long-term averages. Currency rates and
higher UK import volumes were supportive, and the current outlook
is for more of the same.
Agency - Egypt
The Egypt agency business provides a
range of market-leading services including local consultancy,
navigational information updates, rebate handling, tariff advice
and port call support. While transits through the Suez Canal have
been significantly reduced by the Houthi attacks, the business has
seen some diversification. Support has been provided to more
Egyptian port calls than last year, with grain cargoes driving much
of the increase. Strategic partnerships and projects offered more
opportunities, and chartering volumes increased.
Research
Revenue: £11.8m (2023:
£10.2m)
Segmental split of underlying profit
before taxation*: £4.6m (2023: £3.7m)
Clarksons Research, the data and
analytics arm of Clarksons, has a market-leading position as a
trusted provider of maritime data and intelligence while also
providing differentiating research and profile to the Broking,
Financial, Support and Technology business units of Clarksons.
Research performed robustly across the first half of the year,
maintaining its long-term track record of growing recurring
revenues while continuing to make significant investments across
its offering.
Growth across the platform was very
encouraging in the first half, with increases in sales and user
numbers across all major products. The team has invested to ensure
a constant flow of high-quality and market-relevant analysis
alongside an expansion of the depth and breadth of the wide-ranging
proprietary database. This supports individual product development
programmes for each of the intelligence platforms. The Shipping
Intelligence Network ('SIN') platform has monitored the growth,
complexity and disruption that is building across the 12.6bn tonnes
of global seaborne trade we project this year. Utilising work from
both the data analytics and market analysis teams, this has
included a widely respected impact assessment and tracker around
Red Sea rerouting and disruption. Our intelligence flow has also
tracked many of the major themes in the shipping markets today:
cross-market strength in day rates, an energy security and energy
transition focus, growth in the gases, additional tonne-mile demand
from geo-political disruption, active S&P markets, a good flow
of newbuild orders and continued supply-side constraints despite
some reactivation of shipyard capacity.
The division's strategy to provide
leading data, intelligence and insights around the energy
transition and green transition remains a focus. Sales of our World
Fleet Register ('WFR') platform, which covers intelligence around
emissions, decarbonisation regulation and green technology uptake
across the world fleet, grew by 16% in the first half. The offshore
transition strategy, investing in both our offshore oil and gas
research and our offshore wind research, is being realised in
strong sales. Following an investment programme, we have also
released new data on green investments at ports, improved our
vessel activity analytics dashboards and published new data on
liner services.
The division's dedicated services
and consultancy activities had a successful first half, including a
focus on multi-year data API contracts that become embedded in the
workflows of our clients. Clarksons Valuations, our market-leading
provider of valuation services to shipowners and financiers, has
started to gain traction with its analysis and technology tools
developed to support financial institutions, including analytics to
meet new European Banking Authority ('EBA') guidelines, data to
support understanding of the emissions profile of debt portfolios
and data needed specifically by Asian leasing
institutions.
Recurring revenue represented 89% of
total sales in the first half, with consistently high renewal rates
and an expanding global client base across all aspects of the
maritime ecosystem, particularly in Asian markets. There has been
headcount growth within our key teams and global network during the
first half, including a strong build-out of our India presence. Our
teams now process and analyse millions of data points each day to
provide the trusted and insightful intelligence that supports the
workflows and decision-making of thousands of organisations across
the increasingly complex and dynamic maritime industry.
Sea
Enhancing the way shipping professionals
work
During the first half of 2024, the
Group's technology business unit, Sea, delivered significant client
adoption and revenue growth across all three of our business units:
(i) The Intelligent Marketplace for Fixing Freight, (ii) ICP
Commodities and (iii) Custom Software Development. Sea is becoming
an integral part of the pre- and at-fixture workflow of fixing
freight, with more than 100 charterers and 700 broker entities now
onboarded to our platform.
By June 2024, Sea achieved fixture
volume growth in both the dry and wet markets. This was achieved
through notable growth of new customers joining the Sea platform,
while the migration of the remaining MarDocs customer base also
contributed to continued growth. With all clients having migrated
over to Recap Manager, the tanker market now has a single,
significant contract management platform, benefiting all
users.
Our new freight trading platform,
launched in the first half of the year, serves as the foundation
for our future development roadmap and allows for greater
flexibility and adaptability to client needs, with daily releases
and a mobile friendly experience now included. Significant efforts
have gone into launching the solution and the second half will
focus on migrating all existing customers, as well as acquiring and
onboarding new customers across iron ore and other commodity
classes.
An integral part of what Sea now
delivers to our customers is the ability to include compliance
management throughout their workflow. During the first half, Sea
launched Compliance Manager which enables customers to undertake
sanctions checking quickly, allowing them to streamline internal
processes and ensure compliance is at the centre of their fixture
workflow.
During the second half of 2024, the
team will focus on launching functionalities to support additional
commodities on the new freight trading platform while also
delivering structured contracts data through APIs and expanding the
ecosystems of participants on the platform.
Risk management
Full details of our principal risks
and how we manage them are included in the risk management section
of the 2023 Annual Report, together with our viability and going
concern statements.
Our principal risks are:
· Macro-economic and geo-political factors
· Changes in the broking industry
· Adverse movements in foreign exchange
· Financial loss arising from failure of a client to meet its
obligations
· Cyber
risk and data security
· Breaches in rules and regulations
· Loss
of key personnel - normal course of business
· Loss
of key personnel - Board members
Since the year end, the risk factor
associated with macro-economic and geo-political factors has
increased.
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 2024, 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 2024, and
any material changes in the related party transactions described in
the 2023 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
2 August 2024
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 2024 (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 2024;
· 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
2 August 2024
Consolidated income statement
for the half year to 30
June
|
|
+
|
+
|
+
|
+
|
+
|
+
|
|
|
2024
|
2023
|
|
Note
|
Before acquisition- related
costs
£m+
|
Acquisition- related
costs
(note 4)
£m+
|
After acquisition-
related costs
£m+
|
Before
acquisition- related costs
£m+
|
Acquisition- related costs
(note
4)
£m+
|
After acquisition- related costs
£m+
|
Revenue
|
3
|
310.1
|
-
|
310.1
|
321.1
|
-
|
321.1
|
Cost of sales
|
|
(16.9)
|
-
|
(16.9)
|
(14.8)
|
-
|
(14.8)
|
Trading profit
|
|
293.2
|
-
|
293.2
|
306.3
|
-
|
306.3
|
Administrative expenses
|
|
(248.2)
|
(1.4)
|
(249.6)
|
(256.7)
|
(0.9)
|
(257.6)
|
Operating profit/(loss)
|
3
|
45.0
|
(1.4)
|
43.6
|
49.6
|
(0.9)
|
48.7
|
Finance income
|
|
7.1
|
-
|
7.1
|
3.9
|
-
|
3.9
|
Finance costs
|
|
(0.9)
|
-
|
(0.9)
|
(0.8)
|
-
|
(0.8)
|
Other finance income -
pensions
|
9
|
0.3
|
-
|
0.3
|
0.4
|
-
|
0.4
|
Profit/(loss) before taxation
|
|
51.5
|
(1.4)
|
50.1
|
53.1
|
(0.9)
|
52.2
|
Taxation
|
5
|
(11.6)
|
0.1
|
(11.5)
|
(11.4)
|
-
|
(11.4)
|
Profit/(loss) for the period
|
|
39.9
|
(1.3)
|
38.6
|
41.7
|
(0.9)
|
40.8
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Equity holders of the Parent
Company
|
|
39.5
|
(1.3)
|
38.2
|
40.6
|
(0.9)
|
39.7
|
Non-controlling interests
|
|
0.4
|
-
|
0.4
|
1.1
|
-
|
1.1
|
Profit/(loss) for the period
|
|
39.9
|
(1.3)
|
38.6
|
41.7
|
(0.9)
|
40.8
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
Basic
|
6
|
129.1p
|
|
124.6p
|
133.5p
|
|
130.5p
|
Diluted
|
6
|
128.4p
|
|
124.0p
|
132.8p
|
|
129.8p
|
|
|
|
|
|
|
|
|
|
+
Unaudited
Included in the consolidated income statement are net
impairment losses on financial assets amounting to £5.0m (2023:
£3.9m)
Consolidated statement of comprehensive
income
for the half year to 30
June
|
2024
£m+
|
2023
£m+
|
Profit for the period
|
38.6
|
40.8
|
Other comprehensive loss:
|
|
|
Items that will not be reclassified to profit or
loss:
|
|
|
Actuarial loss on employee benefit schemes - net of tax
|
(1.2)
|
(1.5)
|
Items that may be reclassified subsequently to profit
or loss:
|
|
|
Foreign exchange differences on retranslation of foreign
operations
|
(5.8)
|
(23.3)
|
Foreign currency hedges recycled to profit or loss - net of
tax
|
0.4
|
0.3
|
Foreign currency hedge revaluations - net of tax
|
(2.2)
|
3.5
|
Other comprehensive loss
|
(8.8)
|
(21.0)
|
Total comprehensive income
for the period
|
29.8
|
19.8
|
|
|
|
Attributable to:
|
|
|
Equity holders of the Parent
Company
|
29.4
|
19.1
|
Non-controlling interests
|
0.4
|
0.7
|
Total comprehensive income for
the period
|
29.8
|
19.8
|
+ Unaudited
Consolidated balance sheet
as at 30 June
|
Notes
|
2024
£m+
|
2023
£m+
|
31
December 2023
£m#
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
28.4
|
26.3
|
28.5
|
Investment properties
|
|
1.0
|
1.0
|
1.0
|
Right-of-use assets
|
|
32.7
|
37.0
|
35.9
|
Intangible assets
|
8
|
179.6
|
177.8
|
182.9
|
Trade and other
receivables
|
|
1.8
|
2.7
|
4.4
|
Investments
|
|
1.7
|
1.1
|
1.3
|
Employee benefits
|
9
|
12.2
|
14.1
|
13.8
|
Deferred tax assets
|
|
20.8
|
12.6
|
16.8
|
|
|
278.2
|
272.6
|
284.6
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
|
3.7
|
2.9
|
3.3
|
Trade and other
receivables
|
10
|
202.0
|
164.1
|
147.5
|
Income tax receivable
|
|
3.6
|
1.0
|
1.2
|
Investments
|
11
|
45.5
|
10.1
|
40.1
|
Cash and cash equivalents
|
12
|
276.3
|
275.7
|
398.9
|
|
|
531.1
|
453.8
|
591.0
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(269.9)
|
(245.9)
|
(339.4)
|
Lease liabilities
|
|
(10.3)
|
(9.9)
|
(10.4)
|
Income tax payable
|
|
(15.8)
|
(16.0)
|
(20.9)
|
Provisions
|
|
(0.4)
|
(0.6)
|
(0.6)
|
|
|
(296.4)
|
(272.4)
|
(371.3)
|
Net
current assets
|
|
234.7
|
181.4
|
219.7
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Trade and other payables
|
|
(4.6)
|
(2.6)
|
(3.2)
|
Lease liabilities
|
|
(28.9)
|
(34.9)
|
(32.8)
|
Provisions
|
|
(2.6)
|
(1.8)
|
(1.9)
|
Employee benefits
|
9
|
(0.3)
|
(0.5)
|
(0.4)
|
Deferred tax liabilities
|
|
(9.0)
|
(5.7)
|
(9.4)
|
|
|
(45.4)
|
(45.5)
|
(47.7)
|
Net assets
|
|
467.5
|
408.5
|
456.6
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Share capital
|
13
|
7.7
|
7.7
|
7.7
|
Other reserves
|
|
96.6
|
93.3
|
104.9
|
Retained earnings
|
|
359.8
|
304.0
|
340.0
|
Equity attributable to shareholders of the Parent
Company
|
|
464.1
|
405.0
|
452.6
|
Non-controlling
interests
|
|
3.4
|
3.5
|
4.0
|
Total equity
|
|
467.5
|
408.5
|
456.6
|
+ 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
£m+
|
Other
reserves
£m+
|
Retained
earnings
£m+
|
Total
£m+
|
Non-controlling interests
£m+
|
Total
equity
£m+
|
Balance at 1 January 2024
|
|
7.7
|
104.9
|
340.0
|
452.6
|
4.0
|
456.6
|
Profit for the period
|
|
-
|
-
|
38.2
|
38.2
|
0.4
|
38.6
|
Other comprehensive loss
|
|
-
|
(7.6)
|
(1.2)
|
(8.8)
|
-
|
(8.8)
|
Total comprehensive (loss)/income
for the period
|
|
-
|
(7.6)
|
37.0
|
29.4
|
0.4
|
29.8
|
Transactions with owners:
|
|
|
|
|
|
|
|
Share issues
|
|
-
|
0.6
|
-
|
0.6
|
-
|
0.6
|
Employee share
schemes
|
|
-
|
(1.3)
|
(0.8)
|
(2.1)
|
-
|
(2.1)
|
Tax on other employee
benefits
|
|
-
|
-
|
5.5
|
5.5
|
-
|
5.5
|
Dividend
paid
|
7
|
-
|
-
|
(21.8)
|
(21.8)
|
(1.0)
|
(22.8)
|
Acquisition of
non-controlling interests
|
|
-
|
-
|
(0.1)
|
(0.1)
|
-
|
(0.1)
|
Total transactions with owners
|
|
-
|
(0.7)
|
(17.2)
|
(17.9)
|
(1.0)
|
(18.9)
|
Balance at 30 June 2024
|
|
7.7
|
96.6
|
359.8
|
464.1
|
3.4
|
467.5
|
|
|
Attributable to equity holders of the Parent
Company
|
|
|
|
Notes
|
Share
capital
£m+
|
Other
reserves
£m+
|
Retained
earnings
£m+
|
Total
£m+
|
Non-controlling interests
£m+
|
Total
equity
£m+
|
Balance at 1 January 2023
|
|
7.7
|
114.8
|
287.2
|
409.7
|
3.5
|
413.2
|
Profit for the 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
|
+ Unaudited
Consolidated cash flow statement
for the half year to 30
June
|
Notes
|
2024
£m+
|
2023
£m+
|
Cash
flows from operating activities
|
|
|
|
Profit before taxation
|
|
50.1
|
52.2
|
Adjustments for:
|
|
|
|
Foreign exchange
differences
|
|
(2.5)
|
1.2
|
Depreciation
|
|
7.1
|
7.2
|
Share-based payment
expense
|
|
1.1
|
1.0
|
Gain on sale of property,
plant and equipment
|
|
(0.1)
|
-
|
Amortisation of
intangibles
|
|
2.4
|
2.2
|
Difference between pension
contributions paid and
amount
recognised in the income statement
|
|
0.4
|
0.3
|
Finance income
|
|
(7.1)
|
(3.9)
|
Finance costs
|
|
0.9
|
0.8
|
Other finance income -
pensions
|
|
(0.3)
|
(0.4)
|
Increase in
inventories
|
|
(0.3)
|
(0.5)
|
Increase in trade
and other receivables
|
|
(56.4)
|
(11.9)
|
Decrease in bonus
accrual
|
|
(94.7)
|
(54.4)
|
Increase in trade and other payables
|
|
54.2
|
0.3
|
Increase in
provisions
|
|
0.7
|
-
|
Cash
utilised from operations
|
|
(44.5)
|
(5.9)
|
Income tax paid
|
|
(16.6)
|
(14.4)
|
Net
cash flow from operating activities
|
|
(61.1)
|
(20.3)
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Interest received
|
|
7.0
|
3.8
|
Purchase of property, plant and
equipment
|
|
(2.6)
|
(2.5)
|
Purchase of intangible
assets
|
|
(1.5)
|
(1.1)
|
Purchase of investments
|
|
(0.5)
|
-
|
Proceeds from sale of
investments
|
|
0.1
|
0.4
|
Proceeds from sale of property, plant
and equipment
|
|
0.2
|
-
|
Transfer from current investments
(cash on deposit and government bonds)
|
|
-
|
1.2
|
Transfer to current investments (cash
on deposit and government bonds)
|
|
(5.4)
|
(8.0)
|
Acquisition of subsidiaries, net of
cash acquired
|
8
|
(1.8)
|
(4.8)
|
Dividends received from
investments
|
|
-
|
0.2
|
Net
cash flow from investing activities
|
|
(4.5)
|
(10.8)
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Interest paid and other
charges
|
|
(0.9)
|
(0.9)
|
Dividend paid
|
7
|
(21.8)
|
(19.4)
|
Dividend paid to non-controlling
interests
|
|
(1.0)
|
(0.7)
|
Repayment of borrowings
|
|
-
|
(0.5)
|
Principal elements of lease
liabilities
|
|
(5.3)
|
(5.1)
|
Proceeds from shares
issued
|
|
0.6
|
0.7
|
Acquisition of non-controlling
interests
|
|
(0.1)
|
-
|
ESOP shares acquired
|
|
(26.6)
|
(38.5)
|
Net
cash flow from financing activities
|
|
(55.1)
|
(64.4)
|
|
|
|
|
Net
decrease in cash and cash
equivalents
|
|
(120.7)
|
(95.5)
|
Cash and cash equivalents at 1
January
|
|
398.9
|
384.4
|
Net foreign exchange
differences
|
|
(1.9)
|
(13.2)
|
Cash
and cash equivalents at 30 June
|
12
|
276.3
|
275.7
|
+ Unaudited
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 2024 were authorised
for issue in accordance with a resolution of the Directors on 2
August 2024. Clarkson PLC is a public limited company, listed on
the London Stock Exchange, incorporated and registered in England
and Wales and domiciled in the UK.
The 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 2023 were approved by the Board of Directors on 1 March
2024 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 2024 have been prepared in accordance
with UK-adopted International Accounting Standard 34 'Interim
Financial Reporting' ('IAS 34') and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
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 2023, 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 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 the
amortisation of acquired intangible assets, the costs of acquiring
new businesses and the expensing of the cash and share-based
elements of consideration linked to ongoing employment obligations
on acquisitions.
Going concern
The Group has considerable financial
resources available to it, a strong balance sheet and has
consistently generated an underlying profit and good cash inflows.
As a result of this, the Directors believe that the Group is well
placed to manage its business risks successfully, despite the
complex market backdrop and geo-political tensions.
Management has stress tested a range
of scenarios using the board approved budget and monthly cash flows
to 31 December 2025, 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
Ukraine conflict in 2023: seaborne trade recovered in 2009, 2021
and 2023 along with the profitability of the Group. Since 1990 no
two consecutive years have seen reductions in world seaborne
trade.
·
Management undertook a reverse stress test over a
period of three years to determine what it might take for the Group
to encounter financial difficulties. This test was based on current
levels of overheads, the net cash and available funds* position at
30 June 2024, the collection of debts and the invoicing and
collection of the forward order book. This determined that, in the
absence of any mitigating action which would be applied in these
circumstances, no new business would be required to remain cash
positive for at least the next 12 months.
Under the first two scenarios, the
Group is able to generate profits and cash, and has positive net
cash and available funds* available to it 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 without any new
business.
Accordingly, the Directors have a
reasonable expectation that the Group has sufficient resources to
continue in operation for at least the next 12 months. For this
reason, they continue to adopt the going concern basis in preparing
the financial statements.
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 2023, 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 are
effective for the current reporting period. The Group did not have
to change its accounting policies or make retrospective adjustments
as a result of adopting these standards.
As at the date of authorisation of
these interim financial statements, a number of amendments to
standards and interpretations were in issue but not yet effective.
The Group has not applied these standards and interpretations in
the preparation of these financial statements and does not expect
these to have a material impact on the Group.
2.3
Accounting judgements and estimates
The preparation of the 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 2023, 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
|
Business segments
|
2024
£m+
|
2023
£m+
|
2024
£m+
|
2023
£m+
|
Broking
|
247.7
|
257.2
|
53.4
|
58.2
|
Financial
|
18.3
|
26.5
|
1.2
|
5.0
|
Support
|
32.3
|
27.2
|
4.0
|
3.4
|
Research
|
11.8
|
10.2
|
4.6
|
3.7
|
Segment revenue/profit
|
310.1
|
321.1
|
63.2
|
70.3
|
Head office costs
|
|
|
(18.2)
|
(20.7)
|
Operating profit before
acquisition-related costs
|
|
|
45.0
|
49.6
|
Acquisition-related costs
|
|
|
(1.4)
|
(0.9)
|
Operating profit after
acquisition-related costs
|
|
|
43.6
|
48.7
|
Finance income
|
|
|
7.1
|
3.9
|
Finance costs
|
|
|
(0.9)
|
(0.8)
|
Other finance income -
pensions
|
|
|
0.3
|
0.4
|
Profit before taxation
|
|
|
50.1
|
52.2
|
Taxation
|
|
|
(11.5)
|
(11.4)
|
Profit for the period
|
|
|
38.6
|
40.8
|
+ Unaudited
All revenue is generated
externally.
4
Acquisition-related costs
Included in acquisition-related costs
is £0.2m (2023: £nil) relating to amortisation of intangibles
acquired and £0.7m (2023: £nil) of cash and share-based payment
charges relating to previous acquisitions.
Also included is £nil (2023: £0.1m)
relating to amortisation of intangibles acquired and £0.4m (2023:
£0.7m) of cash and share-based payment charges relating to current
year acquisitions.
Included in administrative expenses
is £0.1m (2023: £0.1m) of transaction costs relating to
acquisitions in the current year.
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 2024 is 22.5% (the estimated annual tax rate
used for the six months ended 30 June 2023 was 21.5%). The
effective tax rate, after acquisition-related costs, is 23.0%. The
rise in the estimated effective tax rate is a result of increased
statutory tax rates in the countries in which the Group
operates.
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:
|
2024
£m
|
2023
£m
|
Underlying profit for the period
attributable to equity holders of the Parent Company*
|
39.5
|
40.6
|
Reported profit for the period
attributable to equity holders of the Parent Company
|
38.2
|
39.7
|
|
|
|
|
2024
Million
|
2023
Million
|
Weighted average number of ordinary
shares - basic
|
30.6
|
30.4
|
Weighted average number of ordinary
shares - diluted
|
30.8
|
30.5
|
7
Dividends
|
2024
£m
|
2023
£m
|
Declared and paid during the
period:
|
|
|
Final dividend for 2023 of 72p
per share (Final dividend for 2022 of 64p per share)
|
21.8
|
19.4
|
Payable (not recognised as a
liability at 30 June):
|
|
|
Interim dividend for
2024 of 32p per share (2023: 30p per share)
|
9.8
|
9.2
|
8
Intangible assets
The movement in the net book value of
intangible assets is as follows:
|
Goodwill
£m+
|
Development costs
£m+
|
Other
intangible assets
£m+
|
Total
£m+
|
At 1 January 2024
|
164.5
|
14.9
|
3.5
|
182.9
|
Additions
|
-
|
1.5
|
-
|
1.5
|
Arising on acquisitions
|
1.4
|
-
|
-
|
1.4
|
Amortisation charge
|
-
|
(2.2)
|
(0.2)
|
(2.4)
|
Foreign exchange
differences
|
(3.7)
|
-
|
(0.1)
|
(3.8)
|
At 30 June 2024
|
162.2
|
14.2
|
3.2
|
179.6
|
|
|
|
|
|
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
|
|
|
|
|
|
|
Goodwill
£m#
|
Development costs
£m#
|
Other
intangible assets
£m#
|
Total
£m#
|
At 1 January 2023
|
171.6
|
15.1
|
2.2
|
188.9
|
Additions
|
-
|
2.8
|
-
|
2.8
|
Arising on acquisitions
|
1.2
|
-
|
3.1
|
4.3
|
Amortisation charge
|
-
|
(4.2)
|
(0.6)
|
(4.8)
|
Other (reclassification)
|
-
|
1.2
|
(1.2)
|
-
|
Foreign exchange
differences
|
(8.3)
|
-
|
-
|
(8.3)
|
At 31 December 2023
|
164.5
|
14.9
|
3.5
|
182.9
|
+ Unaudited #
Audited
In light of continuing macro-economic
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 2024. 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 14 on page
182 of the 2023 Annual Report for specific sensitivity
disclosures, in particular in relation to
the Offshore broking and Securities CGUs.
Acquisitions
On 5 February 2024, the Group
acquired 100% of the share capital of Trauma & Resuscitation
Services Limited for initial consideration of £2.0m. Additional
consideration of £0.3m was paid in May 2024. Amounts of up to £3.3m
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 investment increases
our service offering to the oil and gas, marine and renewable
energy sectors through the provision of market-leading advanced
first aid training for the offshore wind sector.
On 31 May 2024, the Group completed
an asset purchase agreement with Independent Shipping Agencies
Limited to acquire selected assets for an initial consideration of
£0.1m. Amounts of up to £0.2m 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 investment increases our service offering to the dry cargo
sector through the provision of superintending services.
The provisional assets and
liabilities recognised as a result of the acquisitions are as
follows:
|
22
|
|
|
Provisional fair value of identifiable assets
and
liabilities assumed:
|
Trauma
& Resuscitation Services Limited
£m
|
Independent Shipping Agencies Limited
£m
|
Total
£m
|
Property, plant and
equipment
|
0.1
|
-
|
0.1
|
Trade and other
receivables
|
1.2
|
-
|
1.2
|
Inventories
|
0.1
|
-
|
0.1
|
Cash and cash equivalents
|
0.6
|
-
|
0.6
|
Total assets
|
2.0
|
-
|
2.0
|
Trade and other payables
|
(0.8)
|
-
|
(0.8)
|
Income tax payable
|
(0.2)
|
-
|
(0.2)
|
Total liabilities
|
(1.0)
|
-
|
(1.0)
|
Net identifiable assets
acquired
|
1.0
|
-
|
1.0
|
Goodwill
|
1.3
|
0.1
|
1.4
|
Total consideration paid in cash
|
2.3
|
0.1
|
2.4
|
|
|
2024
|
Outflow of cash to acquire subsidiaries, net of cash
acquired
|
|
£m
|
Trauma & Resuscitation Services
Limited cash consideration
|
|
2.3
|
Independent Shipping Agencies Limited
cash consideration
|
|
0.1
|
|
|
2.4
|
Less: cash acquired
|
|
(0.6)
|
Net
outflow of cash - investing activities
|
|
1.8
|
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 £0.1m
are included in administrative expenses in the income statement and
in operational cash flows in the cash flow statement.
Trauma & Resuscitation Services
Limited contributed revenues of £1.6m and net profit after tax of
£0.4m to the Group for the period from 5 February 2024 to 30 June
2024. If the acquisition had occurred on 1 January 2024,
consolidated revenue and reported profit after tax for the period
ended 30 June 2024 would have been £312.2m and £39.2m respectively.
The contributed revenues and net profit after tax of Independent
Shipping Agencies Limited was not material.
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
2024
£m
|
30
June
2023
£m
|
31
December 2023
£m
|
Fair value of schemes'
assets
|
124.8
|
126.5
|
131.3
|
Present value of funded defined
benefit obligations
|
(111.0)
|
(110.3)
|
(115.5)
|
|
13.8
|
16.2
|
15.8
|
Effect of asset ceiling in relation
to the Plowrights scheme
|
(1.9)
|
(2.6)
|
(2.4)
|
Net benefit asset recognised in the
balance sheet
|
11.9
|
13.6
|
13.4
|
|
|
|
|
The above is recognised on the
balance sheet as an asset of £12.2m (31 December 2023: £13.8m; 30
June 2023: £14.1m) and a liability of £0.3m (31 December 2023:
£0.4m; 30 June 2023: £0.5m).
A deferred tax asset on the benefit
liability amounting to £0.1m (31 December 2023: £nil; 30 June 2023:
£0.1m) and a deferred tax liability on the benefit asset of £3.0m
(31 December 2023: £3.5m; 30 June 2023: £3.5m) is also recognised
on the balance sheet.
Recognised in the income
statement
|
2024
£m
|
2023
£m
|
Recognised in other finance income -
pensions:
|
|
|
Expected return on
schemes' assets
|
3.1
|
3.3
|
Interest cost on benefit
obligation and asset ceiling
|
(2.8)
|
(2.9)
|
Recognised in administrative
expenses:
|
|
|
Scheme administrative
expenses
|
(0.5)
|
(0.5)
|
Net pension charge recognised in the
income statement
|
(0.2)
|
(0.1)
|
10
Trade and other receivables
Trade receivables are non-interest
bearing and are generally on terms payable within 90 days. As at 30
June 2024, the allowance for impairment of trade receivables was
£26.4m (31 December 2023: £21.9m; 30 June 2023: £22.2m). 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. 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 £41.2m (31 December 2023: £37.8m; 30 June
2023: £1.9m) with maturity periods greater than three months and
government bonds of £4.1m (31 December 2023: £2.1m; 30 June 2023
£8.0m).
12
Cash and cash equivalents
|
30 June
2024
£m+
|
30
June
2023
£m+
|
31
December 2023
£m#
|
Cash at bank and in hand
|
205.9
|
242.5
|
281.2
|
Short-term deposits
|
70.4
|
33.2
|
117.7
|
|
276.3
|
275.7
|
398.9
|
+ Unaudited #
Audited
Net cash and available funds*, after
deducting amounts accrued for performance-related bonuses but
including current investments, amounted to £201.5m (31 December
2023: £201.1m; 30 June 2023: £148.9m). Free cash resources*, being
net available funds less monies held by regulated entities, at 30
June 2024 were £178.4m (31 December 2023: £175.4m; 30 June 2023:
£128.2m).
13
Share capital
|
30 June
2024
Million
|
30 June
2023
Million
|
31
December 2023
Million
|
|
30 June
2024
£m
|
30 June
2023
£m
|
31
December
2023
£m
|
Ordinary shares of 25p
each,
issued and fully paid
|
30.8
|
30.7
|
30.7
|
|
7.7
|
7.7
|
7.7
|
14
Contingencies
From time to time, the Group is
engaged in litigation in the ordinary course of business. The Group
carries professional indemnity insurance. There is currently no
litigation expected to have a material adverse financial impact on
the Group's consolidated results or net assets.
15
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 2023 Annual Report on pages 68 to 71 and
noted above in the 'Risk management' section.
16
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 June
2024
|
30 June
2023
|
31
December 2023
|
|
Assets £m
|
Liabilities
£m
|
Assets
£m
|
Liabilities
£m
|
Assets
£m
|
Liabilities
£m
|
Investments at fair value through
profit or loss ('FVPL') - Level 1
|
0.4
|
-
|
0.4
|
-
|
0.3
|
-
|
Investments at fair value through
profit or loss ('FVPL') - Level 2
|
1.5
|
-
|
0.9
|
-
|
1.2
|
-
|
Foreign currency contracts - Level
2
|
1.3
|
0.1
|
0.7
|
2.4
|
3.5
|
-
|
|
3.2
|
0.1
|
2.0
|
2.4
|
5.0
|
-
|
The method for determining the
hierarchy and fair value is consistent with that used at the
year-end (see note 29 on page 197 of the 2023 Annual Report). The
fair values of financial instruments that are held at amortised
cost are not materially different from their carrying
amounts.
17
Related party disclosures
The Group's significant related
parties are as disclosed in the 2023 Annual Report. There were no
material differences in related parties or material related party
transactions in the period ended 30 June 2024.
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.
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Reported profit before taxation
|
|
50.1
|
52.2
|
Add back acquisition-related
costs
|
|
1.4
|
0.9
|
Underlying profit before taxation
|
|
51.5
|
53.1
|
|
|
|
|
|
|
|
|
|
|
|
Underlying effective tax
rate
Reconciliation of reported effective tax rate to underlying
effective tax rate.
|
|
2024
|
2023
|
|
|
%
|
%
|
Reported effective tax rate
|
|
23.0
|
21.8
|
Adjustment relating to
acquisition-related costs
|
|
(0.5)
|
(0.3)
|
Underlying effective tax rate
|
|
22.5
|
21.5
|
|
|
|
|
|
|
|
|
|
|
Underlying profit for the
period 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.
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Reported profit attributable to equity holders of the Parent
Company
|
|
38.2
|
39.7
|
Add back acquisition-related
costs
|
|
1.3
|
0.9
|
Underlying profit attributable to equity holders of the Parent
Company
|
|
39.5
|
40.6
|
|
|
|
|
|
|
|
|
|
|
|
Underlying basic earnings per
share
Reconciliation of reported basic earnings per share to
underlying basic earnings per share.
|
|
2024
|
2023
|
|
|
Pence
|
Pence
|
Reported basic earnings per share
|
|
124.6
|
130.5
|
Add back acquisition-related
costs
|
|
4.5
|
3.0
|
Underlying basic
earnings per share
|
|
129.1
|
133.5
|
|
|
|
|
|
|
Underlying administrative
expenses
Reconciliation of reported administrative expenses to
underlying administrative expenses.
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Reported administrative expenses
|
|
249.6
|
257.6
|
Less acquisition-related
costs
|
|
(1.4)
|
(0.9)
|
Underlying administrative expenses
|
|
248.2
|
256.7
|
|
|
|
|
|
|
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 June
2024
|
30 June
2023
|
31
December
2023
|
|
|
£m
|
£m
|
£m
|
Cash and cash equivalents as reported
|
|
276.3
|
275.7
|
398.9
|
Add cash on deposit and government
bonds included within current investments
|
|
45.3
|
9.9
|
39.9
|
Less amounts reserved for bonuses
included within current trade and other payables
|
|
(120.1)
|
(136.7)
|
(237.7)
|
Net cash and
available funds
|
|
201.5
|
148.9
|
201.1
|
|
|
|
|
|
|
|
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 June
2024
|
30 June
2023
|
31
December
2023
|
|
|
£m
|
£m
|
£m
|
Cash and cash equivalents as reported
|
|
276.3
|
275.7
|
398.9
|
Add cash on deposit and government
bonds included within current investments
|
|
45.3
|
9.9
|
39.9
|
Less amounts reserved for bonuses
included within current trade and other payables
|
|
(120.1)
|
(136.7)
|
(237.7)
|
Less net cash and available funds
held in regulated entities
|
|
(23.1)
|
(20.7)
|
(25.7)
|
Free cash resources
|
|
178.4
|
128.2
|
175.4
|
|
|
|
|
|
|
|