Interim Results Presentation 30 June 2019 Andi Case and Jeff … · 2019-08-12 · Balance sheet...
Transcript of Interim Results Presentation 30 June 2019 Andi Case and Jeff … · 2019-08-12 · Balance sheet...
Interim Results Presentation
30 June 2019
Andi Case and Jeff Woyda
12 August 2019
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20192
Agenda
1Financial results
2Markets
3Outlook
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20193
Financial results
Jeff WoydaChief Financial Officer &
Chief Operating Officer
to 30 JuneResults summary
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20194
2019
£m
2018
£m
Revenue 167.8 152.6 +10.0%
Underlying profit before taxation(Before acquisition related costs)
20.1 19.2 +4.7%
Underlying earnings per share(Before acquisition related costs)
48.5p 45.8p +5.9%
to 30 JuneResults summary
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20195
2019
£m
2018
£m
Revenue 167.8 152.6 +10.0%
Underlying profit before taxation(Before acquisition related costs)
20.1 19.2 +4.7%
Acquisition related costs (0.9) (1.2)
Profit before taxation(After acquisition related costs)
19.2 18.0 +6.7%
Underlying earnings per share(Before acquisition related costs)
48.5p 45.8p +5.9%
Earnings per share(After acquisition related costs)
46.2p 42.5p +8.7%
Revenue, profit and marginSegmental performance
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20196
Revenue
2019
£m
Revenue
2018
£m
Profit
2019
£m
Profit
2018
£m
Margin
2019
Margin
2018
Broking 130.1 111.5 21.8 15.9 16.8% 14.3%
Financial 16.1 22.7 1.1 4.7 6.8% 20.7%
Support 13.3 10.6 1.3 0.9 9.8% 8.5%
Research 8.3 7.8 2.8 2.4 33.7% 30.8%
to 30 June
to 30 JuneAcquisition related costs
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20197
2019
£m
2018
£m
Cash and share-based payment charges 0.4 0.4
Amortisation – Platou 0.5 0.8
Total 0.9 1.2
Balance sheet
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20198
Dec 2015
£m
Dec 2016
£m
Dec 2017
£m
Dec 2018
£m
June 2019
£m
Tangible fixed assets 33.1 33.0 33.3 29.3 28.3
Intangible fixed assets (software only) – – 1.5 5.4 7.5
Investments (relating to convertible bonds) – – – 6.7 21.5
Investments (other) 1.9 4.1 4.9 4.8 4.7
35.0 37.1 39.7 46.2 62.0
Working capital (2.1) (7.4) 8.8 18.9 13.9
Net available funds 91.6 98.4 79.1 73.4 60.3
89.5 91.0 87.9 92.3 74.2
Pensions (4.1) 2.3 12.3 14.0 15.0
Deferred tax 8.4 7.1 4.6 2.2 2.0
Loan notes (46.1) (23.6) – – –
Leases (5.0) (7.7) (9.2) (8.1) (10.6)
Net assets before intangibles 77.7 106.2 135.3 146.6 142.6
Intangibles (excluding software above) 263.2 300.5 288.1 288.0 291.1
Net assets 340.9 406.7 423.4 434.6 433.7
Impact on Balance SheetIFRS 16
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 20199
Under
IFRS 16
£m
Right of Use Assets
Cost recognised as at 1 Jan 2019 53.4
Depreciation (3.9)
Value at 30 June 2019 49.5
Lease Commitments
Current Liabilities (8.6)
Non-Current Liabilities (51.5)
Impact from above under new treatment on Net Assets (10.6)
Provision for rent free period at 31 Dec 2018 no longer required 8.1
Net impact of change on Net Assets (2.5)
Impact on Income StatementIFRS 16
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201910
Under
IFRS 16
£m
Depreciation (3.9)
Financing Charge (1.1)
Impact on Profit before taxation (5.0)
Previously
Rent paid under operating lease (5.2)
No net impact on Cash Flow rent paid is outgoing and depreciation is added back as non cash item – £5.2m Cash outflow now
shown as financing rather than operating outflow
to 30 JuneSea/ related IT costs
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201911
2019
£m
2018
£m
Items taken to Income Statement
Non capitalised items (3.0) (2.4)
Amortisation (0.1) -
2019
£m
2018
£m
Software related Intangible Asset b/d 1January 5.4 1.5
Additions 2.2 2.0
Amortisation (0.1) -
Software related Intangible Asset c/d 30 June 7.5 3.5
Net available funds and free cash resources
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201912
30 June
2019
£m
31 Dec
2018
£m
30 June
2018
£m
Cash and cash equivalents 109.1 156.5 95.9
Interest-bearing loans and borrowings (6.0) – –
Current investment deposits 1.7 1.7 0.5
Net cash equivalents 104.8 158.2 96.4
Reserved for bonus (full cost) (44.5) (84.8) (36.2)
Net available funds 60.3 73.4 60.2
Held by regulatory businesses (2.0) (16.4) (16.1)
Free cash resources 58.3 57.0 44.1
Movement in free cash resources
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201913
(15.4)
(5.2)
(5.2)
(2.8)
(2.3)(1.1) (0.8)
(13.9)57.0
41.6
20.9
6.4
6.3
14.4 58.3
Free cashresources
Dec 18
Final Dividend Free cashresources after
dividend
Operating profit Depreciation Other Workingcapital
Taxation Lease payments Dividends paidto non-
controllinginterests
Capitaliseddevelopment
costs
Capex Other Net purchase ofinvestments
Movement innet funds ofregulatedentities
Free cashresources
Jun 19
In 17th year of progressive dividendDividend history
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201914
6 79 10
1214
16 16 17 18 18 1921 22 22 23 24 25
911
16
22
24
2626 27
3032 33
37
3940
43
5051
1518
25
32
36
4042 43
4750 51
56
6062
65
7375
0
10
20
30
40
50
60
70
80
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Interim Final
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201915
Markets
Andi CaseChief Executive Officer
Economic growth remains supportive of seaborne tradeGlobal Macroeconomic Indicators
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201916
Global Manufacturing PMIs
Source: IMF, HSBC, Markit, Caixin, Refinitiv
GDP Growth
-6
-4
-2
0
2
4
6
8
10
12
14
16
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19 (
e)
% c
hange (
year
on y
ear)
World GDP US GDP EURO Area China GDP India GDP
44
46
48
50
52
54
56
58
60
62
Jan-1
2
Ma
y-1
2
Sep-1
2
Jan-1
3
Ma
y-1
3
Sep-1
3
Jan-1
4
Ma
y-1
4
Sep-1
4
Jan-1
5
Ma
y-1
5
Sep-1
5
Jan-1
6
Ma
y-1
6
Sep-1
6
Jan-1
7
Ma
y-1
7
Sep-1
7
Jan-1
8
Ma
y-1
8
Sep-1
8
Jan-1
9
Ma
y-1
9
Contr
action | E
xpansio
n
US Japan Eurozone China
Source: Clarksons/IMF
World Seaborne Trade vs. GDP
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201917
0
20
40
60
80
100
120
140
160
0
2
4
6
8
10
12
14
16
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
20
15
20
17
20
19
20
21
20
23
20
25
20
27
20
29
GD
P C
urre
nt P
rices (T
N $
)
Wo
rld
Seab
orn
e T
rad
e (
BN
to
nn
es)
World Seaborne Trade Trade trend volume GDP Current Prices GDP trend volume Linear (World Seaborne Trade) Linear (GDP Current Prices)
Manufacturing activity in emerging economies is expandingEmerging Asian Economies Potential
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201918
Source: HSBC, Markit, Caixin, Refinitiv
Selected Emerging Economies Manufacturing PMI’s Energy Use Per Capita Vs GDP Per Capita Steel Use Per Capita
44
46
48
50
52
54
56
58
Jan-1
4
Jun-1
4
No
v-1
4
Apr-
15
Sep-1
5
Feb
-16
Jul-1
6
De
c-1
6
Ma
y-1
7
Oct-
17
Ma
r-1
8
Aug-1
8
Jan-1
9
Jun-1
9
Co
ntr
acti
on
| E
xp
an
sio
n
India Indonesia Vietnam
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
South
Kore
a
Japa
n
Ch
ina
Ma
laysia
US
A
Tha
iland
Vie
tnam
India
Indon
esia
Sri L
anka
Myan
ma
r
Pakis
tan
Bang
lad
esh
Kg
fin
ish
ed
ste
el
pro
du
cts
per
year
per
cap
ita
China
India
United States
Vietnam
Philippines
Indonesia
EU
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
- 10 20 30 40 50 60 70
Oil e
qu
ivale
nt
per
cap
ita (
kg
)
GDP per capita (thousand USD)
Trade patterns re-calibrated, but geopolitical uncertainties remainUS-China Trade Dispute
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201919
• Tariffs compromising world
economic growth
• Uncertainty leading to reduced
investment and slower
demand growth
• Risk of escalation and
retaliatory tariffs
• Dislocation of trades creating
inefficiencies and tightening
supply / demand balances
• U.S. energy exports continue to
increase but a resolution
generates additional upside
• Increase in China’s import of
energy products increases
overall tonne-mile demand
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201920
Source: Clarksons Research. Data as of 1st July 2019. Retrospective changes to number of orders may occur due to late reporting and other factors.
Global Newbuilding Orders at Historic Low…
480 546411
550
795
547667
1,378
1,196 1,145
2,257
2,909
1,872
582
1,842
1,042
709
2,057
1,340
1,159
257
820919
228
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD
No. Ships
Orders representative of vessels
over 20,000 dwt
Data Source: Clarksons/TEX/Asiasis/Refinitiv
Upward Pressure on Newbuilding Prices
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201921
• Newbuilding prices have increased
from 2017’s low point
• Cost pressures supporting rise in
prices
• Shipyard consolidation continuing
• Environmental regulations and new
technology likely to add to costs
0
50
100
150
200
250
300
350
0
20
40
60
80
100
120
140
160
180
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
4
Jan-1
5
Jan-1
6
Jan-1
7
Jan-1
8
Jan-1
9
Index
MM
$
VLCC NB Price (LH-axis) 100 Billion Won in US$ (LH-Axis) Korean Steel Price Index (RH-axis)
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201922
Demand Growth
(BN Tonne-Miles*, % Chg 2018–2020)
Sector Fundamentals Outlook Comparison
10%
5%
14%
11%
20%
13%
0% 5% 10% 15% 20%
Containers
Dry Bulk
Crude & Products
Chemical / Specialised
LNG
LPG & Ammonia
Fleet Growth
(% Chg 2018–2020)
8%
7%
7%
6%
18%
8%
0% 5% 10% 15% 20%
Containers
Dry Bulk
Crude & Products
Chemical / Specialised
LNG
LPG & Ammonia
7%
6%
8%
6%
16%
11%
0% 5% 10% 15% 20%
Containers
Dry Bulk
Crude & Products
Chemicals
LNG
LPG & Ammonia
Fleet Growth
(% Chg 2016–2018)
Data Source: Clarksons. *LNG and Oil Tanker Demand Growth account for fleet productivity and floating storage developments as well as tonne-miles, and are measured in cbm/dwt demand respectively. Container Demand Growth basis TEU-
miles, adjusted to account for fleet productivity changes; container utilization adjusted for estimated changes in capacity idle or out of service.
Impact of the IMO 2020 Sulphur Cap on Bunker Fuels
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201923
Fleet Supply
• Reduction in active fleet size due to scrubber retrofitting
• Re-positioning of the fleet in order to prepare for compliance
• Potential early retirement of older vessels due to higher bunker fuel costs
Vessel Demand
• Potential speed restraint due to higher bunker costs, leading to increased
vessel requirements
• Anticipated increase in demand for tankers due to higher refinery runs,
changes to oil trade patterns and floating storage
Market Impact
Expected tightening of supply
/ demand balances across
most market sectors
Source: Clarksons. July 2019. Based on individually identified vessels only. *% of all vessels for Cruise / Passenger, Ro-Ro and ‘Others’.
Installation of Scrubbers
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201924
0
100
200
300
400
500
600
700
800
900
1000
Num
ber
of
vessels
Existing vessels with scrubbers fitted Existing vessels due to be retrofitted Vessels due to be delivered with scrubbers fitted • Heavy investment in scrubbers
predominantly in larger vessels
• $2.5 million – $5.0 million price range for
equipment and installation on larger
vessels (tankers and dry bulk) and $5.0
million - $7.0 million for large
containerships.
• Off-hire time for retrofitting vessels in key
market sectors disrupting fleet utilisation.
5% 9% 2% 2%9%0.1% 2%
% of fleet per sector >20,000 dwt that is retrofitting scrubbers*
4%
The regulatory timeline continues to accelerate
Source: Clarksons Research, January 2019
Environmental Regulation
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201925
2019 2020 2021 2022 2023 2024 2025 - - - - - - 2030 - - - - - - 2050
ECAs SOx NOx GHG / EEDI Green Recycling Ballast Water Current position
EU MRV
certification in
effect
Lower EEDI ref.
line (Phase 3)
Lower EEDI
ref. line
(Phase 2)
North Sea & Baltic
Sea NOx ECAs in
effect
50% GHG
Reduction Target
IMO DCS reporting
period begins
EU SRR
enters into
force
40% CO2 Intensity
Reduction Target
IMO 2020
0.5% Global
Sulphur Limit
IMO BWM
Convention requires
retrofitting of vessels
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201926
100
105
110
115
120
125
130
135
140
145
Jan
Feb
Ma
r
Apr
Ma
y
Jun
Jul
Aug
Sep
Oct
No
v
De
c
Millio
n T
on
nes
2017 2018 2019 2019 (f)
-4% half year-on-half year
Recovery in exports after Vale dam rupture and severe weather related disruptions in Brazil and Australia
Source: GTIS, Clarksons Platou,
Iron Ore Seaborne Volumes
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201927
Year-on-Year VLCC MEG-Far East Spot Market Earnings
0
20
40
60
80
100
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$’0
00/d
ay
2019 2018 2017 2016 2015 2014
Earnings in 1st half of year significantly stronger than in
2018.
Market expected to strengthen further in the 2nd half of
2019.
Key drivers expected to include:
- rising U.S. and Brazilian crude exports;
- increased shipments to new refineries in Asia;
- higher refineries runs ahead of IMO 2020;
- increased floating storage ahead of IMO 2020;
- retrofitting of vessels with scrubbers;
- replacement of Iranian exports with exports from
other countries using spot market tonnage;
- lower fleet growth in the 2nd half of 2019;
- seasonal increases in earnings in Q4.
Thank you
Disclaimer
Andi Case and Jeff Woyda | 12 August 2019Interim Results Presentation | 30 June 201929
The material and the information (including, without limitation, any future rates and/or forward looking predictions) contained herein (together, the "Information") are provided by Clarkson PLC ("Clarksons") for general
guidance and not by way of recommendation. The Information is provided on "as is" and "as available" basis. Clarksons and all its Group companies make no representations or warranties of any kind, express or implied
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any loss or damage howsoever arising. Please note that future rates and/or forward looking predictions are for illustration purposes only and given without guarantee; the ultimate outcome may be different.
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