REG - Clarkson PLC - Interim results
05/08/2024 07:00
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RNS Number : 0676Z Clarkson PLC 05 August 2024
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) - 22(nd)
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
22(nd) 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 (http://www.clarksons.com)
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended (together,
'MAR'). Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
Chair's review
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 CO(2) 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 22(nd) 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 Acquisition- related costs After acquisition- related costs Before acquisition- related costs Acquisition- related costs After acquisition- related costs
£m(+) (note 4) £m(+) £m(+) (note 4) £m(+)
£m(+) £m(+)
Revenue 3 310.1 - 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 2023
£m(+) £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 (5.8) (23.3)
operations
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 31 December 2023
£m(#)
2024 2023
£m(+) £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 Other reserves Retained earnings Total Non-controlling interests £m(+) Total
£m(+) £m(+) £m(+) £m(+) 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 Other reserves Retained earnings Total Non-controlling interests Total
£m(+) £m(+) £m(+) £m(+) £m(+) equity
£m(+)
Balance at 1 January 2023 7.7 114.8 287.2 409.7 3.5 413.2
Profit for the period - - 39.7 39.7 1.1 40.8
Other comprehensive loss - (19.1) (1.5) (20.6) (0.4) (21.0)
Total comprehensive (loss)/income for the period - (19.1) 38.2 19.1 0.7 19.8
Transactions with owners:
Share issues - 0.7 - 0.7 - 0.7
Employee share schemes - (3.1) (1.5) (4.6) - (4.6)
Tax on other employee benefits - - (0.5) (0.5) - (0.5)
Dividend paid 7 - - (19.4) (19.4) (0.7) (20.1)
Total transactions with owners - (2.4) (21.4) (23.8) (0.7) (24.5)
Balance at 30 June 2023 7.7 93.3 304.0 405.0 3.5 408.5
(+) Unaudited
Consolidated cash flow statement
for the half year to 30 June
Notes 2024 2023
£m(+) £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 0.4 0.3
amount recognised in the income statement
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 2023 2024 2023
£m(+) £m(+) £m(+) £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 2023
£m £m
Underlying profit for the period attributable to equity holders of the Parent 39.5 40.6
Company*
Reported profit for the period attributable to equity holders of the Parent 38.2 39.7
Company
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 2023
£m £m
Declared and paid during the period:
Final dividend for 2023 of 72p per share (Final dividend for 2022 of 64p per 21.8 19.4
share)
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 Development costs Other intangible assets Total
£m(+) £m(+) £m(+) £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 Development costs Other intangible assets Total
£m(#) £m(#) £m(#) £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 Trauma & Resuscitation Services Limited Independent Shipping Agencies Limited Total
liabilities assumed: £m £m £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 30 June 31 December 2023
2024 2023 £m
£m £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 2023
£m £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 30 June 31 December 2023
2024 2023 £m(#)
£m(+) £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 30 June 2023 31 December 2023 30 June 2024 30 June 2023 31 December
Million Million Million £m £m 2023
£m
Ordinary shares of 25p each, 30.8 30.7 30.7 7.7 7.7 7.7
issued and fully paid
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 Assets £m Liabilities Assets £m Liabilities
£m £m £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.
31
30 June 2024 30 June 2023 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 (120.1) (136.7) (237.7)
payables
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.
31
30 June 2024 30 June 2023 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 (120.1) (136.7) (237.7)
payables
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
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