Clarkson Regulatory News (CKN)

31 Aug 2005 07:00

Clarkson PLC31 August 2005 CLARKSONS Interim results for the six months ended 30 June 2005 Clarkson PLC ('Clarksons'), the world's leading shipping services group, todayannounces interim results for the six months ended 30 June 2005. * Revenue £57.7 million (2004: £41.7 million). * Underlying profit before tax (excluding the profit on the sale of fleet interests) £12.0 million (2004: £10.1 million). * Underlying earnings per share (excluding the earnings attributable to the sale of fleet interests) 46.2p (2004: 42.2p). * Interim dividend increased to 10.0p (2004: 9.0p). Tim Harris, Chairman of Clarkson PLC, commented: "I am delighted to announce a record interim result. "The result reflects the significant growth of our businesses worldwide." 31 August 2005 For further information please contact:Richard Fulford-Smith, Chief Executive, Clarkson PLC: 0774 704 3139Rob Ward, Finance Director, Clarkson PLC: 020 7334 0000 Overview Clarksons has generated a record interim pre-tax profit of £23.0 million.Included within this figure is 100% of the £11.0 million profit on the sale ofthe two combination carriers in which it had a 58% interest. Clarksons'underlying pre-tax profit excluding the ship sales still comfortably exceeds thecorresponding period of last year. Earnings per share, which include 31.3 penceper share attributable to the sale of fleet interests, were a record 77.5 penceper share compared with 42.2 pence for the first half of 2004. Revenue, which isunaffected by the vessel sales, has increased to £57.7 million from £41.7million during the comparable period last year. The result reflects the significant growth of our businesses worldwide. Thecompany has grown both organically and through acquisition. The company's successful strategy of growing its shipbroking activitiesglobally, following our customers to where the business is best served andbroadening our product range is, and will continue to be, instrumental inbuilding market share and maintaining our ability to generate good results forour shareholders. Review of operations Shipbroking The ClarkSea Index (which tracks average earnings across the shipping market)averaged US$28,100 during the first half of 2005 which compares to US$29,800 forthe whole of 2004. Despite the falling dry bulk markets, our increasingly international spread hasmeant that it has been a good half year for our dry cargo teams. Our acquisitionof Ferrobulk in Genoa in March 2005 has been successfully integrated and isperforming ahead of expectations. The expanding offices in Greece and China arealso generating excellent results. Our deep sea, product, chemicals and gas teams, operating from Houston, Londonand Singapore have performed well, increasing their overall presence in thismarket. In May 2005 we strengthened our liquid petroleum gas team. With thebenefit of the support of Clarkson Research division, we continue to offer anunrivalled service to all our energy sector clients. Sale and purchase had an excellent first six months of 2005 with notable successin a number of major corporate transactions. The new sale and purchase teams inGreece and China are doing well. Whilst newbuilding capacity in shipyards isreported to be limited before the end of 2008 we continuously benefit fromexcellent relationships with key shipyards and owners which have assisted us incompleting a number of transactions for relatively early deliveries. Futures 2005 is proving to be a more challenging year for the futures broking market.The futures broking team is considering other ways of distinguishing fromcompetitors the services it offers clients in the FFA market including theinitiation of alternative clearing facilities to key players in the dry bulk FFAmarket. Research Research has had a strong first half of 2005. The group continues to work onleveraging the information it has available on a global basis with a view toimproving communications between the Clarkson offices worldwide. Research hassuccessfully integrated the Oilfield Publications Limited operation which itacquired in December 2004. Shipping Intelligence Network (SIN 2005) was launchedin June 2005 representing a substantial upgrade to the previous version. Logistics Logistics has a 58% equity stake in Pasir Bulk Carriers (Pasir) in Singapore.During the first half of 2005, Pasir sold its two 75,000 dwt combinationcarriers. Pasir's profit on sale arising on these two vessels was £11.0 million;£3.4 million after tax is due to the minority shareholders in Pasir. Following this successful transaction, Clarkson Logistics continues to identifyinvestment projects which provide innovative marine transport solutions toindustry and commerce, with particular focus on the growing economy of Hong Kongand the Pearl River Delta. The company has recently entered into a long termagreement to transport jet fuel to Hong Kong International Airport, for which amodern specialised tanker will be required, commencing employment in October. Acombination of the group's financial strength and global presence makes us wellplaced to take advantage of such opportunities as they arise. Its other principal investment, Channel Freight Ferries (CFF), continues tooperate a regular daily service between Southampton and Radicatel. In May 2005we acquired the 'CFF Seine' for €4.7 million, thereby guaranteeing thecontinuity of service for CFF. Over the coming months there are likely to besubstantial changes to the provision of freight services in and around theWestern Channel. We will watch these developments closely. Financial These interim statements have been prepared in accordance with accountingpolicies which are consistent with International Financial Reporting Standards(IFRS). Details of the effects of the transition to IFRS were released on 25August 2005 and are available on the Clarkson PLC website (www.clarksons.com).IFRS continue to evolve and may require further adjustments when the groupissues its first complete set of IFRS financial statements. We estimate that the overall effective tax rate for the whole of 2005 will be30% (2004: 32%) and we have applied this rate for the first half of the year.The tax rate reflects the impact of disallowable trading expenses offset bylower rates arising on the sale of the Pasir vessels. As at 30 June 2005 the pension scheme deficit after tax had been reduced to £1.1million representing approximately 1% of the scheme's assets, following a £10.0million special contribution in January 2005. Cash generation remains strong. This has enabled us to finance the payment of£21.9 million in staff bonuses relating to 2004 and the £10.0 million specialcontribution to the pension scheme referred to above. The London office successfully moved in May 2005 to new offices on the RiverThames at St Magnus House. Dividend In light of the company's results the board has decided to increase the interimdividend by 1.0p per share from 9.0p to 10.0p per share. The interim dividendwill be paid on Friday 23 September 2005 to shareholders on the register atclose of business on Friday 9 September 2005. This illustrates the board'sconfidence in the company's ability to maintain a progressive dividend policy. Directors In May 2005 Bob Benton was appointed a non-executive director of the company.Bob Benton is the group chief executive of Bridgewell Group Limited. Prior tojoining Bridgewell, Bob was chairman and chief executive of CharterhouseSecurities, global head of sales at ABN AMRO and was managing director of HSBCJames Capel. Outlook Historically high freight rates which peaked at the end of 2004 enabled us toconclude business that will benefit the group during the remainder of 2005 andbeyond. Although historically high, freight markets are currently weaker thanthey were in the first half of the year. While the demand for shipping serviceswill continue to grow strongly, it is not possible to forecast the timing orexact balance between demand and supply which has such an immediate effect onfreight rates. Nor is it realistic to predict the relative strength of the USdollar, the currency of international shipping, which has a significant effecton our profitability. Our recent strong results confirm our ability to grow globally, both organicallywith new locations, new services and increased market share and by acquisition.This international strength should enable us to continue to prosper as abusiness whatever the short-term state of the market or currency. Our mostvaluable asset is our staff. New offices in Athens, Dubai, London, Shanghai andSingapore reflect the importance we place on continuing to service our customerswhere their business is. We wish to ensure our employees achieve their businesspotential in the best working environment. Our main overhead, being staffremuneration, remains variable due to profit linked bonuses. We also enjoy asubstantial forward order book which underpins earnings from year to year. It remains our aim to exploit the strong Clarkson brand through organic growthand acquisition of related maritime service activities thereby ensuring that wecan continue to generate increased returns for our shareholders. Your company is well placed to produce another excellent result in 2005. Whilst2006 is unlikely to benefit from one-off asset sales, we are focussed onenhancing the sustainable level of profitability of the group over the shippingcycle. Tim Harris, Chairman Richard Fulford-Smith, Chief Executive 31 August 2005 Consolidated income statementCONDENSED Half year Half year Year to to 30 June to 30 June 31 December 2005 2004 2004 £m £m £mRevenue 57.7 41.7 87.4Operating profit 10.8 8.7 17.5Disposal of fleet interests 11.0 - -Share of profits of associates 0.2 0.3 0.6Finance income 3.6 3.6 7.3Finance costs (2.6) (2.5) (5.0)Profit before taxation 23.0 10.1 20.4Taxation (6.9) (3.2) (6.4)Profit after taxation 16.1 6.9 14.0Attributable to:Equity holders of the parent 12.7 6.7 13.7Minority interests 3.4 0.2 0.3 16.1 6.9 14.0Earnings per share 77.5p 42.2p 85.7p Comparatives have been restated where necessary to reflect the requirements ofInternational Financial Reporting Standards. Consolidated balance sheetCONDENSED 30 June 30 June 31 December 2005 2004 2004 £m £m £mNon-current assets 30.6 13.6 17.1Current assetsOther current assets 22.5 14.3 17.0Cash and cash equivalents 37.6 33.8 44.1 60.1 48.1 61.1Current liabilities (45.4) (28.5) (40.9)Net current assets 14.7 19.6 20.2Total assets less currentliabilities 45.3 33.2 37.3Non-current liabilities (3.1) (12.2) (9.2)Net assets 42.2 21.0 28.1Equity attributable to equityholders of the parent 40.0 19.9 26.9Minority interests 2.2 1.1 1.2Total equity 42.2 21.0 28.1 Comparatives have been restated where necessary to reflect the requirements ofInternational Financial Reporting Standards. Consolidated cash flow statementCONDENSED Half year Half year Year to to 30 June to 30 June 31 December 2005 2004 2004 £m £m £mNet cash flow from operatingactivitiesOperating activities 23.5 15.9 32.0Prior year related bonus payments (21.9) (12.4) (12.4)Investing activitiesDividends from associates - - 0.2Returns on investments 0.8 1.1 2.0Capital expenditure and financial investment 3.2 (0.4) (1.5)Special contribution to pension scheme (10.0) - -Acquisitions (2.6) - (3.3)Financing activitiesDividends paid (2.6) (1.6) (3.1)Borrowings 2.5 (0.6) (0.9)(Decrease)/increase in cashand cash equivalents (7.1) 2.0 13.0Cash and cash equivalentsat start of period 44.1 32.0 32.0Foreign exchange differences 0.6 (0.2) (0.9)Cash and cash equivalentsat end of period 37.6 33.8 44.1 Comparatives have been restated where necessary to reflect the requirements ofInternational Financial Reporting Standards. Consolidated statement of recognised income and expenseCONDENSED 30 June 30 June 31 December 2005 2004 2004 £m £m £mProfit for the period 16.1 6.9 14.0Net actuarial (loss)/gain on definedbenefit scheme (2.7) 1.4 2.6Foreign exchange differences 1.0 (0.1) (0.4)Total recognised income andexpense 14.4 8.2 16.2Attributable to:Equity holders of the parent 11.0 8.0 15.9Minority interests 3.4 0.2 0.3 14.4 8.2 16.2Reconciliation of total equityCONDENSEDTotal equity at start of period 28.1 14.4 14.4Remeasurement of financial assets 0.1 - - 28.2 14.4 14.4Total recognised income and expense 14.4 8.2 16.2Issue of shares 6.7 - 0.5Dividend paid (2.6) (1.7) (3.1)ESOP share (purchases)/sales (2.1) 0.1 0.1Monies paid to minorities (2.4) - -Total equity at end of period 42.2 21.0 28.1 IAS 39 'Financial Instruments' was adopted with effect from 1 January 2005. Theopening equity for 2005 is increased by £0.1 million to reflect theremeasurement of financial assets. Comparatives have been restated where necessary to reflect the requirements ofInternational Financial Reporting Standards. Notes to the interim financial report 1 Accounting policies and basis of preparation of interim report The company issued an announcement on 25 August 2005 entitled 'Restatement of2004 Report and Accounts'. A copy of this announcement is available fromwww.clarksons.com. This announcement includes a description of the significantaccounting policies to be adopted under IFRS. These interim accounts have beenprepared using those accounting policies. 2 Taxation The taxation charge is calculated by applying the directors' best estimate ofthe annual effective tax rate to the profit for the period. 3 Earnings per share The earnings per ordinary share is based on earnings of £12.7 million (2004:£6.7 million) and 16,414,998 (2004: 15,969,351) shares being the weightedaverage number of ordinary shares in issue during the period. This is afterexcluding 387,176 (2004: 273,963) weighted average number of shares owned by theExecutive Share Purchase Trust. 4 Segmental information Revenue, group profit before taxation and net assets by class of business areanalysed as follows: Revenue 30 June 30 June 31 December 2005 2004 2004 £m £m £mShipping services 53.7 39.4 82.4Shipping logistics 4.0 2.3 5.0 57.7 41.7 87.4 Profit/(loss) before taxation 30 June 30 June 31 December 2005 2004 2004 £m £m £mShipping services 13.4 10.6 22.7Shipping logistics 9.6 (0.5) (2.3) 23.0 10.1 20.4 Net assets 30 June 30 June 31 December 2005 2004 2004 £m £m £mShipping services 31.4 19.5 27.7Shipping logistics 10.8 1.5 0.4 42.2 21.0 28.1 5 30 June 2004 reconciliations Operating profit of £8.7 million includes £0.1 million arising from thewriteback of goodwill previously written off under UK GAAP and an adjustment of£0.5 million on the difference between the UK GAAP pension charge and currentservice cost under IFRS. Finance income and finance costs include IFRS pensioncharge adjustments of £2.4 million and £2.5 million respectively. Taxationincreased by £0.1 million to reflect these increases in profitability. Total equity of £21.0 million incorporates the net pension obligation of £7.2million, the goodwill writeback of £0.1 million, an increase in the deferred taxliability of £0.2 million and the reversal of the 2004 interim dividend of £1.4million. 6 Accounts The figures for the six months ended 30 June 2005 and 30 June 2004 are unauditedand do not constitute full accounts within the meaning of Section 240(5) of theCompanies Act 1985. The statutory audited accounts (as prepared under UK GAAP)for the year ended 31 December 2004, upon which the auditors have given anunqualified report, have been delivered to the Registrar of Companies in England& Wales. This information is provided by RNS The company news service from the London Stock Exchange