CLARKSON PLC

 

     7 March 2022

 

Clarkson PLC ('Clarksons') is the world's leading provider of integrated shipping services.  From offices in 23 countries on six continents, we play a vital intermediary role in the movement of the majority of commodities around the world.

 

Preliminary results

 

Clarkson PLC today announces preliminary results for the 12 months ended 31 December 2021.

 

Summary

 

·       Record underlying profit before taxation^* of £69.4m (2020: £44.7m), an increase of 55.3%

·       Underlying earnings per share increased 56.2% to 165.6p (2020: 106.0p)

·       Particularly strong performance in Broking and Financial segments

·       19^th consecutive year of dividend growth

·       Forward order book for invoicing in 2022 was US$165m (2021: US$116m), an increase of 42.2%

·       Robust balance sheet with free cash resources^* of £92.3m (2020: £81.1m)

 

	Year ended	Year ended
	31 December 2021	31 December 2020
Revenue	£443.3m	£358.2m
Underlying profit before taxation*	£69.4m	£44.7m
Reported profit/(loss) before taxation	£69.1m	(£16.4m)
Underlying basic earnings per share*	165.6p	106.0p
Reported basic earnings/(loss) per share	164.6p	(95.2p)
Dividend per share	84p	79p

 

 

* 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:

 

"Our record 2021 results are testament to the strategy which we have followed and communicated to stakeholders over recent years.

 

It is with great pride that I reflect on the strength of our people in all sectors, roles and geographies, together comprising the best team in the world of shipping, offshore and renewables.

 

We are positive about the future of the shipping industry. The outlook for Clarksons remains strong and we believe the business will continue to benefit from its market-leading position."

 

 

Enquiries:
Clarkson PLC: Andi Case, Chief Executive Officer Jeff Woyda, Chief Financial Officer & Chief Operating Officer	020 7334 0000
Camarco: Billy Clegg Jennifer Renwick	020 3757 4983 / 4994

 

 

 

 

 

 

 

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 1,600 people in 52 different offices across its four divisions and is number one or two in all its market segments.

 

The Company has delivered 19 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 the upturn in its markets.

 

Clarksons is listed on the main market of the London Stock Exchange under the ticker CKN and is a member of the FTSE 250 Index.

 

For more information, visit www.clarksons.com

 

This announcement contains inside information as defined in Article 7 of the retained EU law version of the Market Abuse Regulation No 596/2014 ("UK MAR") and has been announced in accordance with the Company's obligations under Article 17 of UK MAR.

 

 

 

 

Chair's review

 

Overview

 

I am delighted and privileged to have been appointed Chair of Clarksons after what has been a record year for the Group. The Group's strategy, combined with vision, quality and determination across the entire business, has enabled us to successfully navigate the global pandemic, maintain our excellent service for our clients, maximise the opportunities of improving markets and once again deliver shareholder value.

 

2021 saw the start of a recovery in the shipping markets, with improved rates and increasing asset values in many verticals, resulting from a better supply/demand balance, low market order book and congestion arising from COVID-19 and supply chain challenges. Clarksons has emerged from the pandemic in better shape than ever. We enter 2022 from a position of strength and are very well placed to capitalise on favourable market dynamics.

 

The green transition is a global megatrend which is underpinning change in shipping. As shipowners and charterers drive to meet their net zero commitments, all are looking closely at supply chains for a lower emissions option. Over the past year, Clarksons has made significant progress in scaling up its offering to advise our clients on the changing industry and the importance of becoming a more responsible business.

 

It is in our ethos to continue to adapt to the market and our clients' demands, and we will continue to do this into 2022 and beyond.

 

Results

 

Underlying profit before taxation* was £69.4m (2020: £44.7m) with underlying basic earnings per share* of 165.6p (2020: 106.0p). Reported profit before taxation was £69.1m (2020: £16.4m loss) with reported basic earnings per share of 164.6p (2020: 95.2p loss).

 

Free cash resources^* as at 31 December 2021 were £92.3m (2020: £81.1m).

 

Dividend

 

Clarksons is increasing its dividend for the 19th consecutive year, continuing its progressive dividend policy to reflect the cash-generative nature of the business, the strong balance sheet and record forward order book. In addition, the Board has retained resources to enable it to maximise shareholder value by maintaining flexibility to act swiftly, particularly to opportunities arising from the green transition, technology and other areas of our business.

 

The Board is recommending a final dividend for 2021 of 57p (2020: 54p). Combined with the interim dividend in respect of 2021 of 27p (2020: 25p), the resulting full year dividend in respect of 2021 results is 84p (2020: 79p). The dividend will be payable on 27 May 2022 to shareholders on the register on 13 May 2022, subject to shareholder approval.

 

People

 

The people throughout Clarksons are of the highest quality, and through dedication, hard work and expertise they have continued to overcome the challenges thrown at them over this past year from the pandemic and changing economic backdrop. We are hugely grateful to all our colleagues for their contribution and commitment.

 

At Clarksons we take pride in helping others. There has never been a more important time to give back to the community, and during the past year The Clarkson Foundation has focused on projects covering mental health, homelessness, opportunities for employment and global poverty. The Foundation aims to make meaningful positive change around the world and has exciting initiatives planned for 2022.

 

Board

 

Clarksons was pleased to welcome Martine Bond to the Board and as a member of the Audit and Risk Committee in March 2021. Martine brings extensive technology expertise to the Board, as well as more than 20 years' experience in the financial services industry. She has significant board experience across legal entities in Europe, North America and Asia, further adding to the Board's international expertise.

 

On behalf of the Clarksons team, I would like to thank Sir Bill Thomas for his valuable contribution during his tenure as Chair and wish him every success in his future endeavours.

 

Outlook

 

In 2022, we expect the favourable supply/demand dynamics to continue. The supply of new ships continues to be affected by the structural reduction in shipbuilding capacity compared to 2008 whilst the economic recovery from the COVID-19-induced pandemic has strengthened the demand side. We have a very strong forward order book and the outlook for freight rates remains positive.

 

We remain conscious of the current geopolitical uncertainty, which could impact sanctions, exchange rates and commodity supply, alongside the global backdrop of inflationary pressures and rising interest rates. The team is therefore extremely focused on intelligence, analysis and relationships to ensure that we are well placed to support our clients as the market continues to evolve.

 

We will always evaluate opportunities to invest in the business. We will continue to hire the best emerging talent available to further consolidate our position in the industry. The green transition and technology will continue to be at the forefront of change in the maritime industry, and we will continue to invest significantly to help our clients reduce the environmental impact of the shipping industry.

 

We are positive about the future of the business, and believe we are in a strong position to continue to deliver for our clients across all verticals and thus increase shareholder value over the long term.

 

Laurence Hollingworth

Chair

4 March 2022

 

 

Chief Executive Officer's review

 

I am delighted to report that the 2021 results represent a record performance for Clarksons. They are testament to the strategy which we have followed and communicated to stakeholders over recent years.

 

For some years we have highlighted that tightening of shipping capacity against increased demand and the requirement for decarbonising the trade would be key drivers for our business. But it is important to remember that our performance in 2021 was delivered against the background of COVID-19-induced congestion and supply chain issues which added further complexity to market dynamics. Of course, COVID-19 did not just have an impact on ports and logistics, but impacted everyone in all parts of the world. Indeed, even today, there are still many of our teams who are unable to travel, restricted in their access to meet clients and colleagues in person and suffering from the impact of illness and changed working conditions both for themselves and their families.

 

It is therefore with great pride that I reflect on the strength of our people in all sectors, roles and geographies, together comprising the best team in the world of shipping, offshore and renewables. I thank every member of staff for their hard work and dedication throughout 2021. It has been a challenging year, but the team has again shown its quality in successfully navigating the business through this period and positioning it to thrive as more favourable market conditions return.

 

2021 was a year when we saw our cargo clients, driven by consumer demand and regulatory requirements, increasingly focus on the actions needed to reduce harmful emissions. We have therefore created a dedicated Green Transition team to coordinate, focus on and deliver Clarksons' expert services to our clients. Analysis, research, data, advice, execution expertise, support services, technology and finance are essential ingredients in all our clients' decisions, and the breadth and depth developed throughout Clarksons in recent years is now proving its worth and providing real added value to the industry.

 

Broking

 

The shipping markets performed well in 2021, with the average ClarkSea Index** being 93% higher than that of 2020. However, the strategy to be best in class across all verticals within shipping and offshore has never been more important. 2021 saw the most challenging period for the tanker markets, offset by strength in other markets, particularly the dry cargo and container chartering markets and in asset business within sale and purchase and newbuilding where each of these teams performed particularly well. The investment we have made in people, geographic expansion and the tools for trade of our brokers has certainly improved efficiency and increased our footprint globally. This has meant that we are better placed to benefit from improving markets.

 

The container chartering market performed very strongly driven by a combination of factors, including a strong rebound in global container volumes and major logistical disruption caused by the pandemic. Port congestion significantly reduced available capacity, which is expected to continue throughout 2022.

 

Dry bulk rates were at their highest levels for over a decade, helped by good growth in minor bulks and grains, and the Baltic Dry Index reached a 12-year high in the fourth quarter.

 

The LNG market showed strength in 2021, with tonnage demand and LNG trade volumes both increasing. The importance of this market is growing, and the expertise within the Group is developing alongside our LPG, ammonia and petrochemical gas teams.

 

After many years of recession, the offshore oil and gas market also improved, spurred on by the increased oil price and the longer-term outlook for greater demand. Increasing strategic energy needs and a drive to expand beyond fossil fuels has driven an increase in the offshore renewables market, where our market-leading teams around the world have increased their transaction revenues and volumes. Our expertise, market analysis and insight are helping our clients in their push for expansion in this area.

 

The tanker market, as already highlighted, was the weakest it has been for some 30 years, with demand for oil remaining low, impacted particularly by reduced travel and consumption. This was accentuated year on year, due to the extremely high rates in the first half of 2020 arising from the contango in the oil price.

 

Finally, the sale and purchase team has had a very high volume year, as increasing numbers of people want to buy into the upward trend in rates. Our newbuilding team has also been incredibly busy, particularly in LNG and containers tonnage, with berth space, as anticipated due to reduced overall capacity amongst shipyards, now full for the foreseeable future.

 

A key focus for growth in the last few years within Broking has been our projects and period business, comprising both longer-term charters and newbuilding business, which made material profit in 2021 and has enabled us to significantly build the forward order book. Unlike many of our competitors, we disclose only that element of the forward order book we believe to be secure and due to be invoiced in the following year. At the year-end, the forward order book for 2022 was $165m, 42.2% higher than the $116m brought forward in 2021.

 

Overall, segmental profit before taxation from Broking was £73.6m, up £18.2m over the year, with a margin of 21.6%.

 

Financial

 

Our Financial division has had an exceptional year, reporting £13.3m of profit (2020: £2.5m). Within Clarksons Platou Securities, a total of 40 large corporate finance deals have been executed in the year, raising in excess of $3.5bn across metals and minerals, shipping, offshore energy and renewables. In addition, our real estate team launched 24 new projects and sold 11 existing projects and our shipping and offshore team placed a total of 27 vessels and sold a further 14.

 

Green transition

 

The green transition is becoming increasingly important and we believe it will be one of the key drivers of the demand and supply dynamics in shipping for the foreseeable future, as regulation becomes an ever-increasing priority. Our Green Transition team, launched in 2021, has seen very strong client demand and is playing a hugely important role in assisting clients in reducing emissions and pushing forward the agenda of positive change.

 

Research

 

The Research division continued to perform strongly during the period with sales of digital products across both shipping and offshore growing in excess of expectations. The impact of exchange rate movement dampened the results from valuation income year on year as this revenue is charged in US dollars, but we are now seeing a resurgence in this income stream and, together with digital sales, the future is looking strong as clients have an increasing need for data to assess and benchmark decisions.

 

Support

 

The Support division performed strongly over the course of the year, with our agency, supplies, customs clearance and freight forwarding businesses contributing to a return to profit levels last seen before the pandemic. We see growth opportunities in the future, from both hiring good people and corporate activity, across all areas of Support including those particularly focused on renewables.

 

Sea/

 

The Sea/ platform continues to make progress and we have made real strides over the year in commercialising the technology that we believe will become so vital to the shipping industry. The launch of Sea/fix in January 2021 to the mining community, for negotiation and execution of business, has been a success with a significant number of major players now signed-up users and putting all their business through the platform. In the second half of 2021 we also launched SeaCarbon/, a complete CO₂ shipping toolkit for the maritime industry which has now tracked more than 1,400 voyages, equating to 9.9m nautical miles, and resulting in the saving of 4.2m tonnes of CO₂.

 

Brand update

 

Since the acquisition of RS Platou ASA in 2015, our Broking and Financial divisions have used the combined brand Clarksons Platou. Now that all teams are fully integrated, we have decided to align the branding of all businesses within the Group by referring to just Clarksons.

 

Looking forward to 2022

 

The supply/demand dynamics in the industry continue to be positive as the supply of new ships lags behind the ever-increasing demand for vessels driven by the green transition, increasing demand for commodities and a recovery in the global economy. This means that we start 2022 with a positive backdrop for our markets.

 

As the impact from COVID-19 reduces, we are anticipating increased business costs as we see a return to business travel and corporate hospitality, which has been virtually non-existent during the pandemic. Nevertheless, our increased forward order book, combined with the strength of spot markets, a positive pipeline in Financial and continued growth across Research, Support and Sea/, means that we approach 2022 from a position of strength.

 

The outlook for Clarksons remains strong and we believe the business will continue to benefit from its market-leading position.

 

Andi Case

Chief Executive Officer

4 March 2022

 

** Whilst this index is a good high-level guide to shipping, it only represents spot freight rates during the year in certain key segments, weighted by the number of vessels in that fleet. It specifically does not include period rates, asset transactions, specialist sectors in shipping and offshore. The weightings of the index also do not reflect the weightings of Clarksons' earnings.

 

 

 

 

Financial review

 

Revenue: £443.3m (2020: £358.2m)

Underlying profit before taxation*: £69.4m (2020: £44.7m)

Reported profit before taxation: £69.1m (2020: £16.4m loss)

Dividend per share: 84p (2020: 79p)

 

Financial performance

 

2021 was a record year for the Group. Revenue increased 23.8%, including increases in all segments of the business, and underlying profit before taxation^* increased by 55.3%.

 

The Broking division benefitted from the longer-term strategy implemented in recent years, to increase our global footprint and be best in class across every segment of shipping and offshore. As we went into 2021, the shortening in supply of ships, highlighted in last year's outlook, created the backdrop for stronger freight rates and asset prices in several but not all verticals. Overall, Broking generated a profit of £73.6m in the year (2020: £55.4m), with an increased margin of 21.6% (2020: 19.6%) driven by strong performances in dry bulk, containers and sale and purchase, offset in part by weakness in tanker markets.

 

The Financial division performed exceptionally well, generating a profit of £13.3m and margin of 23.8% (2020: £2.5m and 7.4%), reflecting active capital markets across shipping, metals and minerals and renewables, and strong deal flow in shipping, offshore and real estate project finance. The Support and Research divisions also experienced good revenue and profit growth, with our port services business returning to pre-pandemic levels.

 

The Group incurred underlying administrative expenses^* of £355.7m (2020: £298.5m) in the year, an increase of 19.2%, largely from an increase in variable compensation due to the improved business performance. Within these expenses, central costs unallocated to business segments increased to £25.2m (2020: £18.8m), again reflecting an increase in variable remuneration due to increased profits, as well as higher PLC costs, investment into central IT systems and people, and increased Sea/ technology costs. Sea/ costs on a cash basis were similar to 2020, but less were capitalised in 2021 than in previous years and there was an increase to amortisation reflecting the successful roll-out to a broad base of clients.

 

Exceptional items

 

The Board reviewed the need for a non-cash impairment relating to goodwill on the balance sheet and determined that, following improved trading conditions in the Offshore and Securities cash-generating units ('CGUs') compared to those seen in 2020, no impairment charge was required in 2021 (2020: £60.6m).

 

Acquisition-related costs

 

Acquisition-related costs include £0.2m (2020: £0.3m) relating to amortisation of intangibles and £0.1m (2020: £0.2m) of cash and share-based payments spread over employee service periods. We estimate acquisition-related costs for 2022 to be £0.2m, assuming no further acquisitions are made.

 

Taxation

 

The Group's underlying effective tax rate* was 21.2% (2020: 21.3%), reflecting the broad international operations of the Group, which remain consistent with the prior year.

 

Earnings per share

 

Underlying basic earnings per share* increased by 56.2% to 165.6p (2020: 106.0p) and is calculated as underlying profit after taxation* attributable to equity holders of the Parent Company divided by the weighted average number of ordinary shares in issue during the year. The reported basic earnings per share was 164.6p (2020: 95.2p loss).

 

Forward order book ('FOB')

 

The Group earns some of its commissions on contracts where the duration extends beyond the current year. Where this is the case, amounts that are able to be invoiced during the current financial year are recognised as revenue accordingly. Those amounts which are not yet invoiced, and therefore not recognised as revenue, are held in the FOB. In challenging markets, such amounts may be cancelled or deferred into later periods.

 

The Directors review the FOB at the year-end and only publish the FOB items which will, in their view, be invoiced in the following 12 months. At 31 December 2021, this estimate was 42.2% higher than the prior year at US$165m (31 December 2020: US$116m).

 

Dividend

 

The Board is recommending a final dividend in respect of 2021 of 57p (2020: 54p) which, subject to shareholder approval, will be paid on 27 May 2022 to shareholders on the register at the close of business on 13 May 2022.

 

Together with the interim dividend in respect of 2021 of 27p (2020: 25p), this would give a total dividend of 84p for 2021, an increase of 6% on 2020 (2020: 79p). In taking its decision, the Board took into consideration the Group's 2021 performance, balance sheet strength, ability to generate cash and FOB.

 

This increased dividend represents the 19th consecutive year that the Board has raised the dividend.

 

Foreign exchange

 

The average sterling exchange rate during 2021 was US$1.38 (2020: US$1.29). At 31 December 2021, the spot rate was US$1.35 (2020: US$1.37).

 

Cash and borrowings

 

The Group ended the year with cash balances of £261.6m (2020: £173.4m) and a further £9.6m (2020: £22.8m) held in short-term deposit accounts and government bonds, classified as current investments on the balance sheet.

 

Net cash and available funds*, being cash balances after the deduction of accrued bonuses, at 31 December 2021 were £122.3m (2020: £95.4m). The Board uses this figure 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.

 

A further measure used by the Board in taking decisions over capital allocation is free cash resources*, which deducts monies held by regulated entities from the net cash and available funds figure. Free cash resources at 31 December 2021 were £92.3m (2020: £81.1m).

 

In addition to these free cash resources, the Group has a strong balance sheet and has consistently generated an underlying operating profit and good cash inflow. Management has stress tested a range of scenarios, modelling different assumptions with respect to the Group's cash resources, and as a result continues to adopt the going concern basis in preparing the financial statements.

 

Balance sheet

 

Net assets at 31 December 2021 were £361.6m (2020: £328.4m). The balance sheet remains strong, with net current assets and investments exceeding non-current liabilities (excluding pension provisions and lease liabilities as accounted for under IFRS 16) by £120.2m (2020: £95.0m).

 

The overall loss allowance for trade receivables was £12.9m (2020: £12.3m).

 

The Group's pension schemes had a combined surplus before deferred tax of £22.0m (2020: £12.0m).

 

Jeff Woyda

Chief Financial Officer & Chief Operating Officer

4 March 2022

 

 

 

Business review

 

Broking

 

Revenue: £340.0m (2020: £282.6m)

Segmental split of underlying profit before taxation: £73.6m (2020: £55.4m)

Forward order book for 2022: US$165m^ (At 31 December 2020 for 2021: US$116m^)

    ^ Directors' best estimate of deliverable forward order book ('FOB')

 

Shipping markets performed well, with long-term charters and newbuilding business allowing us to significantly build the forward order book

 

Dry cargo

 

It was a year of recovery for dry bulk markets with returning confidence, a rebound in trade volumes, moderate fleet growth and more logistical inefficiencies. This led to soaring rates, with the Clarksons average bulker earnings index reaching a 13-year high in the fourth quarter.

 

The year started with a rare first quarter rise in freight rates, led by an increase in trade within the Asia-Pacific region. China's early economic rebound gave strength to the market at a time when many charterers traditionally wait for a seasonal lull to the market before taking freight cover. As overall trade improved, a record number of ships were waiting at Chinese ports and delays intensified with strict quarantine rules and restrictions on crew changes.

 

During the second quarter rates were firmer with a robust start to China's construction and East Coast South America's soybean seasons. Iron ore shipments improved while coal trade continued to rise, sending seaborne dry bulk trade in excess of 1.2bn tonnes for the first time in a single quarter.

 

Building on the sound seaborne trade foundation and with Europe and the US's exit from lockdown, pent-up demand and optimism resulted in rates reaching 12-year highs in October, as did many commodity prices.

 

In Asia, however, a second wave of COVID-19 sent many Southeast Asian nations into renewed temporary lockdowns and heightened quarantine requirements in ports in the third quarter. Adding to the already high waiting times in ports, a super typhoon in the Pacific and a hurricane in the US Gulf caused further disruptions. Fleet inefficiencies increased to levels similar to those seen at the start of the year, with significant additional capacity tied up at ports in China.

 

China's intervention to cool commodity prices from record levels led to severe steel production cuts and lower output in other industrials. Additionally, the fall-out from a high-profile real estate debt default added to the weaker sentiment and led to a steep decline in iron ore prices which resulted in a downward correction in Cape rates followed by the smaller ship sizes in the fourth quarter. Freight rates founded a temporary floor with additional coal demand and seasonal year-end iron ore supply growth before heading for the seasonal slowdown.

 

The annual average year-on-year seaborne trade growth is estimated at 3.8% in 2021, the highest in four years, following a 1.6% contraction in 2020. The fleet expanded by 3.6% although additional capacity was added with ships re-entering the fleet following lengthy waiting times at Chinese ports during 2020 when Australian coal cargoes were banned from discharging. This resulted in a net fleet growth nearer to 5% over the year. Nevertheless, the rebound in trade was enough to absorb that fleet growth and send average freight rates to 12-year highs.

 

Looking forward, on an average basis we expect rates to match the average annual levels we have seen in 2021 given limited fleet growth, solid base-case demand expectation and continued COVID-19-related fleet inefficiencies. However heightened geopolitical tensions and a broader economic slowdown in China are expected to lead to reduced seaborne demand in 2022.

 

Decarbonisation efforts in the shipping industry ahead of the forthcoming IMO and EU carbon mandates of 2023 will gain more traction during 2022 as owners, operators and charterers prepare for the changing regulatory environment ahead. Net fleet growth might be lower than anticipated with high carbon emitting vessels forced into early retirement.

 

We remain well represented around the globe in the three main dry cargo markets: capesize, panamax and supra/handymax.

 

Containers

 

The container shipping sector experienced extraordinary market conditions throughout 2021. These were driven by the combination of a strong rebound in global container trade volumes and major COVID-19-related logistical disruption, including port congestion, which significantly reduced available capacity.

 

Container freight rates and containership charter earnings reached all-time highs in 2021 and ended the year at, or close to, record levels. The SCFI spot box freight rate index exceeded 5,000 for the first time at the end of 2021, having repeatedly set new all-time highs throughout the year, and the index averaged 3,773 during 2021, (2020: 1,234). The Clarksons Containership Timecharter Rate Index rose to 402 in October 2021, more than double the previous 2005 high, although some segments saw a slight easing towards the year-end. Multi-year period charters have become the norm, and near-term available vessel capacity in most size segments remains extremely limited.

 

The containership sale and purchase market saw a new record volume of activity in 2021, with 1.6m TEU of capacity sold across the year. Secondhand asset prices saw major gains and the Clarksons Containership Secondhand Price Index stood at 110 at the end of 2021 (end of 2020: 41). The price for a 10-year old 6,600 TEU containership, for example, surged from US$34m at the end of 2020 to reach US$115m at the end of 2021.

 

2021 saw an impressive rebound in global container trade volumes, with box trade estimated to have grown by 6.1% in TEU following the decline of 1.3% in 2020. Surging trade volumes have been driven by a range of factors including pent-up demand, major stimulus, consumer spending patterns focusing more heavily on goods than services and in the main an improving macro-economic backdrop. Port congestion and other logistical disruption (including the blockage at the Suez Canal in March and an acute shortage of box equipment) has proved pivotal. The level of containership capacity 'at port' across 2021 averaged 35% of total fleet capacity (37% in late October 2021), materially higher than the average between 2016 and 2019 of 31%.

 

Containership fleet capacity grew by 4.5% in 2021 (2020: 2.9%). However, with sentiment buoyed by market conditions, containership newbuild contracting set a new annual record in 2021 at 4.3m TEU across 569 units, taking the order book to 23% of total fleet capacity (end of 2020: 11%); this may generate supply pressures when new vessels are delivered over 2023-24.

 

The containership fleet's GHG footprint remains firmly in focus, particularly against the backdrop of a continued ramp-up in decarbonisation regulation. Over the last decade, slower operating speeds and an increased share of 'eco' vessels (33% of fleet capacity was 'eco modern' at the end of 2021) have helped reduce boxship emissions but there remains much to do. Uptake of alternative fuels (24% of order book capacity alternative fuel 'capable' at end 2021) has continued and approximately 700 units in the fleet had at least one energy saving technology ('EST') fitted at the end of 2021.

 

Container shipping market conditions appear likely to remain extremely firm in 2022, even if vessel charter earnings and box freight rates see some easing at some point, with industry expectations of prolonged disruption and continued firm demand. Global seaborne box trade is projected to grow by approximately 4% in 2022, with fleet capacity growth next year at a moderate 3.6%.

 

Buoyed by a rising market, our Containers business continued to grow. Despite not having regular face-to-face contact, our international team assisted clients to arrange multiyear chartering deals, secondhand sales and newbuild contracting.

 

Tankers

 

2021 was characterised by generally weak earnings for tankers as oil demand, refinery runs and oil supply declined to below pre-pandemic levels on average.

 

Global oil supply in the first quarter was 8% lower than in the equivalent period in 2020, largely due to the steep oil production cuts implemented by the 'OPEC+' countries and reduced production levels in the US. Oil demand, oil supply and refinery runs recovered very strongly throughout the year. Both global oil demand and supply are estimated to have risen by as much as 6% in the fourth quarter relative to the first quarter of the year, albeit still 2% below the average level for 2019. Overall, the global oil trade in 2021 remained broadly unchanged year on year and 8% lower than in 2019.

 

Growth in the deep sea tanker fleet was well below average levels at 1.8%, with deliveries below long-run average levels and an increase in removals from the fleet. However, the low levels of demand kept earnings suppressed.

 

Clarksons' published average earnings for non-eco and non-scrubber fitted VLCCs fell by 94% when compared with the strong levels seen in 2020. Clarksons' published average earnings for non-eco and non-scrubber fitted Suezmaxes and Aframaxes in 2021 fell by 76% and 63% respectively when compared to 2020. For the same period, in the products tanker sector Clarksons' published earnings for non-eco and non-scrubber fitted LR2 and LR1 products tankers trading on the key Middle East to Far East route fell by 73% and 64% respectively and by 58% for non-eco and non-scrubber fitted MR products tankers.

 

Tanker freight markets in 2021 were less volatile than in 2020. Vessel earnings remained at generally low levels throughout the year although there were some spikes which were generally caused by various delays to vessels. In all of the major sectors of the deep sea tanker market, the fourth quarter showed the strongest vessel earnings, reflecting both the normal seasonal uplift and the sharp rise in global oil demand and supply.

 

Global oil demand and supply are expected to continue recovering strongly throughout 2022. Newbuilding deliveries are expected to remain below average levels whilst removals from the fleet are expected to remain elevated above long-run average levels.

 

Our global deep sea team performed well, assisted by our continued investment in IT, despite the challenging market conditions and an inability to travel. The projects desk, which we have strengthened in recent years, was extremely active and concluded longer-term charters, which is important when freight rates are depressed.

 

 

Specialised products

 

The specialised products market continues to be driven by the underlying demand from China and the wider Asian markets. The reliance on 'Made in China' plastic goods continues to support the bulk chemical shipping markets. Elsewhere, we continue to see rapid development in the biofuels sector. Regulation, particularly from the EU, is the key factor in this regard with the growing global environmental movement helping to contribute to the transition away from traditional crude oil and natural gas derived vehicle fuel feedstocks. Biofuels will continue to be crucial to the growth of seaborne trade in future years and to the specialised products business. We estimate that seaborne trade grew by 1.3% in 2021 to 371m tonnes following a 1.2% contraction in 2020.

 

In 2021 the Clarksons' Specialised Products Spot Chemical and Edibles Oils Index performed below the long-run average of the previous 12 years. During the second and third quarters, freight rates showed gradual increases, driven by higher bunker pricing, trade flow disruption caused by severe weather disruption in Houston, and to a lesser extent the blockage of the Suez Canal. As we approached the end of the third quarter and the start of the fourth, a combination of port lockdowns in China caused by COVID-19, and the resulting lack of pilots, as well as a brief uptick in Asia CPP activity, saw the market in the Far East become very tight. Benchmark freight rates rose to the highest point in the last six years and recorded a 22% rise over the year, whilst edible oil freight rates recorded a similar increase of 23%. The direct impact of this was a greatly improved earnings environment for owners, especially those operating in the Far East, which remains the primary driver for these increases in freight rates.

 

In 2022, we expect seaborne trade to grow by 4.5%, supported by a continued increase in exports from the Middle East and US where chemical project investment is beginning to pick up. Future fleet growth prospects look minimal with appetite for newbuildings remaining muted due to high prices, lack of yard space and investment interest focused elsewhere. After less than 1% net fleet growth in 2021 and around the same level expected in 2022, the fleet is due to contract year on year from 2023 onward based on the current picture.

 

The chemical tanker fleet was 60m DWT at the start of 2021. 2m DWT was added to the fleet through the year and 1.7m removed. The order book stands at just over 6% of the fleet at the start of 2022. The weak tanker markets led to tonnage oversupply throughout the year; the ability for owners to triangulate their voyages around CPP legs was made more challenging due to the lack of products tonnage demand which weighed heavily on earnings, particularly in the West.

 

The green transition is one of the drivers for the fleet replacement. The looming EU ETS and EEXI/CII regulations in 2023 will no doubt raise questions over operating costs, tonnage efficiency and alternative fuel choice. The specialised fleet could see further contraction because of these regulations, with scrapping a more cost-viable alternative. Conversely, the diverse nature of the sector from a cargo perspective is complex yet positive. Alternative fuel developments in the methanol space and growth in the demand for biofuel have led to greater interest in the sector. The breadth and depth of the specialised products business is unparalleled and we remain in a unique position to advise and support all our stakeholders on their green agendas, in conjunction with our dedicated in-house Green Transition team.

 

As we enter 2022, sentiment is subdued after the emergence of the Omicron variant, but the market is in a much improved position compared to January 2021. Although uncertainty remains, the future for our market is optimistic. This, combined with a petroleum products sector that is showing some early signs of recovery, as well as a very low order book, will continue to provide a floor for freight rates and earnings over the coming year.

 

Gas

 

The LPG carrier market fared well in 2021.

 

VLGC freights averaged US$34,019 per day compared with US$34,923 in 2020.

 

LPG seaborne trade levels continued to rise, growing by approximately 5% year on year. Tonne-miles also continued to increase, supported by strong import demand in Asia which pulled a growing North American export slate East in order to cover the shortfall in Middle Eastern exports as OPEC cuts continued to take their toll. North American exports were up by 17%, with over 69% of those volumes going to Asia.

 

Despite the growth in voyage duration and volumes, the impact of the addition of 18 newbuildings in 2021 resulted in only a marginal decrease in freight rates. The LGC market continued to gain support from increased waiting times for the VLGCs transiting the new Panama Canal; consequently assessed 12-month time charter rates rose from US$29,059 per day to US$29,202. Midsize sector freight rates rose from an average of US$26,479 per day to US$27,170 in 2021, underpinned by flat fleet supply combined with increased LPG trade volumes.

 

Trade volumes are expected to continue to increase in 2022, supported by a recovery in Middle Eastern LPG exports and continued growth in North American supply. The forthcoming influx of newbuilding deliveries in both the VLGC and Midsize segments remains a challenge, but the ageing profile of the fleet may see the removal of some older units thereby mitigating some of the impact.

 

Our shipping and product teams continue to grow and provide multifaceted solutions (including newbuildings, secondhand sales and longer-term charters) to our clients, against a backdrop of volatility in the market.

 

 

PCG

 

The market for the smaller LPG carriers in 2021 started to show marked improvement as the year progressed, most notably in the fourth quarter, despite a disappointing start to the year.

 

The Handysizes continued to benefit from healthy US Ethylene and Ethane exports. Freight rates for benchmark 22,500 cbm Semi Ref carriers rose from $18,639 to $19,500 per day. The larger ship market supported recovery in the smaller sizes, underpinned by relatively flat fleet supply. Freight rates were supported by unplanned outages at refineries and crackers. In the smallest size categories, freights for 3,500 cbm pressure carriers in the west rose from $220,000 pcm to $225,000 pcm whilst those for the 3,200 semi-refrigerated vessels rose from $227,000 pcm to $280,000 pcm. The recovery in freight rates for the smaller sizes is expected to continue as the age profile of the fleet deteriorates and there are limited newbuildings.

 

LNG

 

The LNG shipping market began 2021 on a strong note for spot LNG freight rates and term LNG supply contracts agreed. LNG freight rates surged on the back of strong heating and restocking demand in Asia and Europe; several LNG export plants outages in the Pacific and Middle East replaced by US LNG export cargoes; severe delays for LNG carriers through the Panama Canal; and limited available tonnage.

 

In 2021 the spot headline rates for conventional 160,000 m³ Tri-Fuel Diesel Electric ('TFDE') tonnage climbed 50.5% year on year and averaged US$89,179 per day. LNG freight rates were volatile in 2021. Starting at US$195,000 per day at the start of the year, rates declined to US$28,500 per day in early March as a result of changing weather conditions in Asia and a reduction in US exports. Throughout the summer rates were in the US$50,000-US$70,000 range before surging to a peak of US$210,000 per day at the start of December. By the end of the year, rates were back at US$80,750 per day.

 

The wider spreads between Asia and the US and between Asia and Europe led to a significant volume of spot tonnage fixed for long-haul voyages from the US Gulf Coast to Far East Asia, increasing tonnage demand.

 

LNG tonnage demand grew by 13.8% during the year to reach an all-time high of 1,744bn tonne miles, driven by the growth of long-haul voyages. Trade between the Atlantic Basin and the Pacific Basin climbed 38.2% to 64.6m mt. The average laden distance sailed by LNG carriers increased 7.6% to 4,588 nm in 2021, compared to 4,265 nm a year ago.

 

Global LNG trade volumes rose by 5.8% to 381.1m mt in 2021, as higher volumes from the US (whose exports surged 50.2%), Egypt (fivefold increase) and Australia (which replaced Qatar as the largest LNG exporter) were partially offset by losses from Nigeria, Trinidad & Tobago, Norway, Peru and Angola.

 

On the demand side, Japan-Korea-Taiwan remained the largest demand area with 141.0m mt of imports, but China overtook Japan as the world's largest LNG importer with 81.0m mt against Japan's LNG imports of 75.2m mt.

 

2021 saw 53 conventional LNG carriers (2020: 32) and 4 FSRUs (2020: 4) (also able to operate as LNG carriers) delivered from shipyards, 21 more than the previous year. 84 conventional LNG carriers were ordered in 2021 compared with 32 in 2020. Two medium-size LNG carriers were also ordered for projects in China.

 

Tonnage demand is expected to increase again in 2022, led by growth in LNG export volumes. Demand for LNG cargoes is underpinned by restocking in Asia and Europe and China's gas demand growth, supported by the increased import capacity of 10m tonnes per annum. Trade flows are also expected to be supported by four LNG export projects scheduled for commissioning in 2022: the 5m mt Sabine Pass T6 and 10.0m mt Calcasieu Pass in the USA, the 3.4m mt Coral South FLNG in Mozambique and the 3.8m mt Tangguh T3 in Indonesia. Newbuild ordering is expected to continue into 2022. This is supported by several liquefaction projects which anticipate reaching final investment decision this year, by portfolio players holding long-term FOB supply contracts from projects under construction and by players looking at renewing existing tonnage with more efficient LNG carriers.

 

Sale and purchase

 

Secondhand

The global sale and purchase ('S&P') markets continued to recover in 2021, with sales volumes reaching record levels (over 147m dwt and US$47bn reported). Despite some remaining COVID-19-related disruption (particularly around crew transfer), the S&P markets have been extremely active, supported by highly cash generative and strong charter markets (aside from tankers), a generally improved economic outlook and the potential impact of upcoming regulations. Transaction volumes increased most notably in the containership sector, underpinned by the exceptional global freight markets, with over US$14bn of sales (500 ships) reported, more than triple the previous record level in dollar terms. Activity also increased significantly in the bulkcarrier (961 units of US$16bn reported, more than doubling in value) and tanker (522 units, US$11bn) sectors.

 

Asset values increased most rapidly in the containership sector, with some price levels doubling or even tripling in value during the year, with Clarksons' overall secondhand price index almost doubling from 93 to 183 points. Values also increased in the bulkcarrier sector (our 5-year-old 'eco' capesize index increased from US$36m to US$47m over the year) against the backdrop of improving charter markets, while tanker values still increased slightly (our 5-year-old VLCC index increased from US$63m to US$70m) despite weak charter markets. Escalating newbuild pricing (with many newbuild values up 30-50% in 2021) and scrap prices (up from approximately US$400/ldt at the start of the year to a peak of around US$600/ldt in the fourth quarter) have also provided support to secondhand pricing levels. Recent S&P trends amongst the major shipowning countries continued, with Greek owners still the biggest buyers and sellers of tonnage, whilst Chinese entities were also notably active in 2021.

 

Our Secondhand business benefitted from these market conditions and global sales volumes increased by 40%. This was further enhanced as asset values rose. In tankers, despite an extremely poor freight market throughout the year, the owning community deployed profits generated from the other sectors in a form of counter-cyclical buying activity. We sold more tankers than any other sector, largely thanks to a mandate to handle the sale of a major Asian owning group which had gone into liquidation with in excess of 50 vessels in the fleet. The client recognised the breadth and reach of our offering which is a testament to the hard work and dedication of the team. Whilst such mandates do not come along regularly, we believe our track record in this space will help us win further mandates. All our offices globally contributed to our success with London, Athens, Shanghai, Tokyo and Copenhagen all reporting a significant increase in volumes of concluded transactions. In Shanghai and Tokyo new team members joined and enabled us to access new clients.

 

As we move into 2022 we feel confident that the markets will allow us to continue where 2021 has left off.

 

Newbuilding

 

Activity in the global newbuilding market picked up significantly during the year, with order volumes doubling to 48m CGT and US$110bn. This represents the firmest level of ordering since 2014, supported by strong underlying shipping markets, improving economic outlook and interest in alternative fuels. Investment was dominated by the containership sector, with record orders of 4.3m TEU and US$43bn placed. There was also strong activity in the LNG and LPG sectors, with orders of US$22bn placed. We also saw a strong second half of ordering in the car carriers market and a steadier flow of bulk carrier and tanker newbuilds.

 

Newbuild prices generally rose by around a third over the year, with 50% increases for larger containership pricing, as major shipyards booked up capacity. After a period of decline, the global order book backlog edged up again through 2021 to 90m CGT, although this remains relatively low in historic terms at 9.4% (by dwt) of the current fleet capacity. Shipyard output remained relatively steady year on year, totalling 32m CGT, with Chinese yards (42% market share) and South Korean yards (32% market share) delivering the majority of tonnage.

 

The green transition continues to dominate planning across the maritime industry, including an increasing emissions regulatory framework from the IMO and EU alongside wide-ranging policy announcements from stakeholders across maritime. This is increasing fleet renewal requirements, with clients' focus on decarbonisation intensifying and alternative fuels and ESTs becoming central to newbuilding discussions. The share of the current order book that is alternative fuelled increased to 35% of tonnage by the end of 2021, up from 28% a year ago and 10% five years ago. This includes 31% of order book tonnage set to use LNG as a fuel. Our activity over the period is reflective of this trend, with close to 60% of our contracting activity over 2021 having a capability to utilise alternate fuels/propulsion, and in turn giving us a significant insight into the adoption of these technologies going forward.

 

Our global newbuilding teams performed exceptionally over the period with a record year of contracting activity in both Korea and China. There were notable transactions in containers, LNG carriers, drybulk vessels and tankers driven by speculative demand, as well as significant project business leveraging the breadth of service provision the Group offers to our client base.

 

We remain well placed to take advantage of market developments driven by regulation and our robust contracting experience will continue to provide unparalleled levels of market insight, value and validation to our client base.

 

Offshore

 

General

 

2021 saw improvement in the traditional offshore oil and gas business, while offshore renewables (wind) continued to see growth. Commodity prices strengthened significantly through the year, with oil prices up more than 50%, and Brent and WTI seeing their strongest performance since 2016 and 2009 respectively. Natural gas prices have also generally remained at high levels, across North America, Asia and Europe. Oil and gas companies have seen very strong performance with record-high operating cash flow for many of the companies in the sector. However, despite the very strong cash generation, exploration and production spending continues to be restrained by an increased focus on decarbonisation and prioritising direct shareholder returns and debt. The offshore sector saw increased activity levels in 2021 and we have seen improvements in all the sub-sectors and across most or all geographical regions when compared with 2020, despite these headwinds.

 

We expect 2022 to progress in the same direction, with likely further improvement in activity levels and a corresponding positive impact on fleet utilisation and day-rate levels.

 

The continuing strong growth for offshore wind is underpinned by solid, long-term drivers; the energy transition and the desire to decarbonise energy supply. 2021 was another year of very high authorisation activity for offshore wind farms, following a record level in 2020. This provides a solid backdrop for many years ahead of increasing offshore activity levels.

 

Drilling market

 

Total offshore rig demand measured by active (contracted) rigs saw some improvement through 2021, having bottomed out in the early part of the year. At December 2021, there were 360 jackup rigs on contract (2020: 343). In the floater segment, 119 rigs were on contract (2020: 110). Utilisation also improved through last year, with working utilisation levels in December 2021 at 81% for jackups (2020: 76%) and 74% for floaters (2020: 66%). Average dayrates for floater rigs also started improving in 2021, albeit with significant regional differences. Dayrates for jackups remained largely flat throughout the year as jackup idle capacity was higher. That segment remains more fragmented, with more contractors offering rigs, and contract durations on average shorter. The floater segment has seen more consolidation and retirement of rigs, and the available relevant capacity is currently largely controlled by a limited number of players. Most of the world's large drillers have now been through some form of refinancing, and the current round of restructuring seems to be coming to an end. Following these restructurings, we have also seen several of the larger companies in the segment consolidate, a process we think is likely to continue in 2022.

 

Subsea field development market

 

Authorisations of new offshore field developments saw some improvement in 2021. The major subsea contractors continued to see a strong order intake through the year with combined backlog building slightly more than 10% over the year. 2021 represented the third year in a row that saw backlog growth for the major subsea engineering, procurement and construction ('EPC') contractors. As the average lead-time to execution for these companies is typically 12-24 months, we will see offshore activities ramp up from 2023 onwards. 2021 also saw a significant increase in contract awards for new floating production storage and offloading ('FPSO') units, with seven new contracts awarded globally, up from only four in 2020, illustrating the underlying improvement in the subsea field development market. However, the chartering market for subsea vessels in 2021 remained challenging due to lag-effects. We expect the backlog build witnessed by the larger contractors in 2020 to also lead to improving market conditions for subsea vessel owners. Certain vessel categories started to see increased utilisation and higher rates driven by high activity in the offshore wind sector, with wind farm operators sourcing support vessels from subsea oil and gas. We expect to see continued improvement ahead in the subsea chartering market.

 

Offshore support vessels

 

The market for OSVs also saw meaningful improvement throughout 2021. Overall, activity for PSVs globally has recovered to pre-COVID-19 levels and the number of vessels in layup has come down. We have also seen tightened availability in several regions for specific vessel categories. Average dayrates have strengthened significantly. With overall activity levels likely to continue to improve in 2022, particularly within drilling, we expect to see further market strengthening throughout the year for the OSV sector.

 

Offshore renewables (wind)

 

As expected, all renewables sectors experienced growth through 2021 with the offshore wind sector continuing its vigorous growth trajectory throughout the year. An additional 3,450 wind turbine generators ('WTGs'), representing a capacity of 18.7 GW, were installed globally, driven by a surge in China, pushing total global capacity to 50.6 GW. At the end of the year there were 253 farms and 10,831 turbines in operation.

 

Sanctioned Final Investment Decisions ('FID') amounted to 5.3 GW for Europe and 7.0 GW in total, excluding mainland China. FIDs and project sanctioning amounted to US$25bn and in 2022 is forecast to reach US$36bn. The global energy market is set to grow at a 2.4% compound annual growth rate until 2050; and the global offshore wind market is expected to grow at 15-20% per annum with the UK poised to be the largest market in the European region for the foreseeable future.

 

2021 also saw the first FID for a large-scale offshore wind farm in the US and, when combined with large announced Engineering Production, Construction and Installation contracts, opens up an exciting new market. Other new markets are also showing very interesting development, with Poland awarding 6.0 GW of capacity, and Japan awarding its first large auction, notably 1.7 GW to a Mitsubishi-led consortium. 2021 saw a long list of new pledges for renewable energy, with several countries including Germany, Denmark and the Netherlands upping their offshore wind capacity targets by 2030, a key milestone for the industry. The WTG producers (primarily Siemens Gamesa, Vestas and GE) introduced technological advances including a record breaking 15 MW capable WTG. The introduction of new technology in conjunction with larger projects reinforces the benefits of economies of scale and thus lowers the levelised cost of energy ('LCOE'). Renewable energy from offshore wind will act as a leading energy source to decarbonise power and provides a platform for reducing CO₂ emissions. Renewable energy created by offshore wind is also close to benefitting from advances in Power-to-X ('P2X') storage and offtake solutions using green hydrogen or ammonia.

 

A total of 45 ships (excluding the Chinese domestic market), designed to work with offshore wind farms, were ordered during the year at an aggregate value of US$2.7bn, up 20% from 2020.

 

The outlook for the offshore wind space remains bright, and we expect a very busy year for the industry in 2022.

 

Our renewables business has identified vessel procurement services (chartering) and newbuild services as the key area of expertise but with an increasing attention on advisory and sale and purchase activities. We are the leading advisor to the UK/EU and the nascent US markets. The renewables business also launched a new service, Advisory, Intelligence and Research ('AIR') in the year. We are well positioned to gain from the further expansion of the industry as it matures into a global energy industry.

 

The chartering and newbuild teams managed and closed several milestone deals, concluding a record number of years of timecharter, They also brokered a number of specialised newbuilds with an aggregate value of nearly US$1bn which will be needed to install the massive pipeline of 200 GW of offshore wind production projected to be installed by 2030.

 

The start of 2021 saw a high level of capital markets activity in the segment, with IPOs and M&A across many segments and there remains a high ESG focus, although investors are becoming more selective, requiring a firmer outlook and a clearer path to profitability from companies. The renewables business has assisted in various commercial and financial transactions, including several IPOs, supporting the wider Financial division.

 

Futures

 

The links between the Futures desks has been effective in 2021. We have had very good cross-over of clients meaning that we have traded with more clients this year than in any previous year.

 

Dry FFA

 

2021 was the best year in the last decade for the dry FFA market.

 

The year saw relatively low dry bulk rates in the first quarter, but the futures market saw much bigger volumes. As the year progressed volumes remained high as rates increased in the third quarter, seeing the highest rates since the financial crisis. Rates slipped more than expected during the fourth quarter but remained well up on last year.

 

Swaps

 

Capesize rates in 2021 averaged US$33,333 per day, over US$20,000 higher than in 2020; daily traded volume increased to 3,187 lots (2020: 2,015 lots). Similarly, the panamax market saw rates nearly triple relative to 2020 to average US$25,562 per day; daily traded volume increased to 4,628 lots (2020: 2,957). The supramax market saw the biggest growth with rates more than tripling at $26,770per day and daily volume doubling to 1,686 lots.

 

Options

 

The panamax options market became the big story of the year with volumes up 67% to 238,140 lots. The capesize option volumes shrank by 34,788 lots to 141,925 lots. Supramax volumes, similar to swaps, more than doubled to 16,775 in the year.

 

Currently, full year 2022 contracts are trading above US$24,000 per day on capesizes and US$22,000 per day on panamax.

 

Wet FFA

 

In 2021 tanker FFA market volumes were down on the previous year reflecting challenging market conditions as mentioned in the tankers section. Our volumes increased, despite the fall in market volumes.

 

Carbon

 

Prices of EU Allowances in the EU ETS reached a 15-year and a then all-time high of €88.88 on the back of broad-based economic recovery and firmer energy markets. The highly liquid market on which European industrial installations hedge their carbon price exposure saw high volatility and firm trading volumes throughout the year.

 

Awareness of the world's largest carbon market gained traction in 2021 and more interest was generated by COP 26 in Glasgow. Knowing that shipping will be adopted into the EU ETS from 2023 helped drive further enquiries to the Carbon desk from owners, operators and charterers with European exposure.

 

As well as the regulated carbon market, we have seen considerable interest from shipping-related clients for voluntary offsets as part of their internal strategy and investment into new projects.

 

As the industry adjusts to the green transition, we are well placed to meet client demand for information and to enable access to the market. We see the year ahead as being one of continual development and expansion of our client base for the daily transactions of both regulated and voluntary environmental products.

 

 

 

Financial

 

Revenue: £56.0m (2020: £33.9m)

Segmental split of underlying profit before taxation: £13.3m (2020: £2.5m)

 

An exceptional year for our Financial division as investor confidence in the underlying markets improved

 

Securities

 

2021 marked a year of strong economic recovery supported by US$16tn of global stimulus, the roll-out of vaccines and pent-up demand. Against this backdrop, 2021 was the best shipping year since 2013 and shipping equities had a solid year, with an average gain of 41% based on 66 listed companies. Container equities were the best performing sector with a gain of 244% whilst dry bulk equities increased by 130%. LNG carrier equities ended the year 52% higher. The shipping banking team completed 11 capital market and M&A/advisory transactions and raised a total of US$0.8bn in capital, maintaining a leading position in capital markets for shipping.

 

'Green and Tech' are dominating post-COVID-19 planning, with the focus intensifying on reducing the shipping industry's emissions. Carbon regulations will continue to be increasingly important in 2022, with a forward-looking stock market likely to price in the positive effects of emissions savings technologies. Companies with eco-vessels are likely to benefit from upcoming carbon regulations due to lower fuel consumption and emissions, with carbon taxes in the EU also expected to have an impact. Consequently, companies with a young eco-fleet, or the ability to invest/renew, could see a multiple expansion. With the recovery from COVID-19 continuing and disruption likely to take time to unwind, market sentiment remains positive. While risks remain and progress may be uneven, the improving economy, limited order book in many sectors and the green transition are all supportive tailwinds for the moment.

 

Global energy markets continued to rebalance in 2021 and helped oil prices improve through the year with an average US$71 per barrel, up 72% compared to 2020. The total capital commitments for new offshore oil and gas projects amounted to US$85bn, also up 72%. These factors have positively impacted the offshore drilling space where utilisation has developed positively throughout the year. Dayrates have also seen a positive impact, particularly for high specification floaters where dayrates above US$300k per day in the US Gulf of Mexico have been seen. In terms of market dynamics, several drillers have emerged with sustainable balance sheets after completing their chapter 11 processes, which have laid the ground for further consolidation in the sector. Asset transactions are taking place at a higher pace. On the capital markets side, we assisted Borr Drilling in completing two equity raises in 2021, whilst newly established Deep Value Driller financed the acquisition of the drillship Bolette Dolphin through a private placement, and Shelf Drilling raised a senior secured bond. The OSV market conditions have also improved during 2021 and activity levels are currently above pre-COVID-19 levels. However, the sector is still too fragmented and companies are struggling with stretched balance sheets. We expect to see more ongoing restructurings in the OSV segment in 2022 which will eventually trigger more M&A and capital markets activity. We assisted Tidewater in raising a US$175m senior secured bond to repay existing debt in 2021.

 

The outlook for global installed offshore wind capacity continues to look strong with installed capacity for 2030 expected to reach more than 250 GW, translating to a circa six times increase from today's levels. This market backdrop made 2021 an active year for owners of offshore wind service vessels, a segment which has experienced increased focus and attention due to strong demand outlooks combined with limited availability of specialised offshore wind tonnage. Key players in this segment have focused on increasing their market position through newbuild orders and consolidation ahead of the vessel supply deficit expected to materialise going forward. With a strong ESG profile and attractive market fundamentals, the capital markets have remained open for high-quality offshore wind service vessel companies, and 2021 was an active year for capital markets transactions within this segment. Over the year we advised companies such as IWS and Edda Wind on their IPO in Norway, and assisted Eneti Inc. with raising equity on NYSE. There were two notable M&A transactions in the WTIV segment during 2021, with Eneti Inc. merging with Seajacks and OHT merging with Seaway 7. From a capital markets perspective, the outlook for 2022 remains positive, largely driven by solid market fundamentals combined with continued newbuild ordering activity. We see large equity needs across the offshore wind service vessel segments to fund capex programmes for both listed and private players. Given the availability of attractive bank financing for offshore wind vessel projects, the key focus is expected to remain on private and public equity offerings as opposed to high yield bond issues.

 

In 2021 the metals and minerals team completed 11 transactions and raised a total of US$1.9bn in capital with US$0.9bn in bonds and US$1.0bn in equity. This resulted in total revenue of NOK142m. Equity accounted for NOK42m of total revenue, whilst debt and advisory accounted for NOK94m and NOK6m respectively. The year-on-year revenue growth was an extraordinary 351% as the number of completed transactions and revenues per transaction both increased, driven by the strong tailwinds in commodities and the strength of our long-term relationships. Going forward, we expect mining majors to have strong balance sheets and liquidity and thus will focus on M&A and potential investments in juniors. Furthermore, we expect to see a significant demand for construction financing for battery minerals and projects within the battery value chain supported by the general demand for electrification.

 

Renewable energy continued to break ground and most subsectors exhibited strong growth rates. The IEA expects renewables as a share of the electricity generation mix to have reached an all-time high of 30% globally in 2021. Key technologies such as wind and solar continue to see falling cost levels and improved competitiveness, and new projects are being announced, backed up by continued commitments to fast track the energy transition. In capital markets, renewable energy and cleantech saw a particularly strong interest in the beginning of the year and, in Oslo, almost half of all listings were related to ESG or the energy transition. With increasing interest rates and concerns about inflation, ESG stocks saw more headwinds during the second half of the year. One sector that stands out is the carbon capture industry, which has experienced a breakthrough year with a 150% increase in European carbon prices. Stocks have surged and the market is recognising that carbon capture will be an important element in reaching the Paris Agreement goals. 2021 was another year with extraordinary numbers in terms of megawatts announced and capital employed and invested in renewables. It was a good year for our renewables team with multiple transactions completed across hydropower, carbon capture, biocarbon and cleantech. For 2022 we expect to continue to see robust investor demand for ESG projects and companies and, as we expect increased interest for more mature companies, we anticipate a higher level of M&A across technologies.

 

In 2021, the fixed income group team completed eight transactions with total capital of US$1.1bn raised. Straight bonds accounted for most of this, but we also placed several sale and leaseback transactions and convertible debt. Our primary deals were aided by historically low interest rates and issuers took advantage of the favourable terms available. The outlook for 2022 is somewhat mixed as interest rates have already started to increase, and we expect this to continue, although this does create opportunities, with many companies keen to utilise the credit markets before terms deteriorate. Equities are still exhibiting record levels of volatility and with rising interest rates and inflation fears we expect this trend to persist, benefitting the convertible bond primary market. There is currently a market rotation from IT and healthcare into energy, materials and financials, which should give a tailwind to our core sectors going forward.

 

Currently, worries about rising inflation, monetary policies and the Ukraine situation continue to dominate the world's financial markets. With the conflict in Ukraine, and the extensive economic sanctions from the US and the EU, the already high energy prices could rise further. With high energy prices, companies will see rising costs, increasing the cost of manufactured goods, which would decrease household purchasing power and have a negative effect on growth. As in 2021, proper planning and solid execution will continue to be important ingredients for our continued success.

 

Project finance

 

Shipping

 

In 2021 there was a welcome increase in rates for container ships and dry bulk vessels, with multipurpose ('MPP')/heavylift carriers leading the way.

 

The strong momentum on the earnings side and lagging ship values created interesting opportunities to acquire vessels at historically low asset prices with good time charters and historically low residual value risk that generate a strong cash yield to investors.

 

2021 has been our most active year since 2008, structuring and placing a total of 27 vessels with a transaction volume of US$0.4bn through asset plays, joint ventures and leasing structures. Transactions comprised 15 drybulk vessels, six MPP/heavylift vessels, three container ships, two emergency rescue and response vessels and one exploration cruise ship. During the year, we also successfully sold 14 vessels from existing projects, returning capital and profits to our investors.

 

In 2022 we are optimistic that our projects will continue to perform well backed by strong market fundamentals including record low order books, high newbuilding prices, limited global yard capacity and a healthy demand outlook.

 

Real estate

 

2021 was an extraordinary year for the Norwegian property market which reached an all-time high with a total transaction volume of more than NOK155bn, 54% higher than in 2020 and by far the highest volume recorded for a single year in Norway. December's volume of NOK45bn comprising 71 transactions ended the record year. The previous all-time high for the Norwegian property market was NOK105bn in 2019.

 

We also had record total transactions for the year. This comprised both acquisitions and divestments, amounting to NOK13bn. During 2021 we arranged for 24 new real estate projects totalling NOK8bn, whilst in the same period securing solid returns for our investors by selling 11 projects totalling NOK5bn. Our dedicated sales desk facilitated secondhand trading in our projects worth NOK1bn.

 

We expect high activity to continue into 2022 with an attractive transaction market in Norwegian property.

 

Our investment management operation continues its positive development. Our first fund Oslo Opportunity 1 is in the process of realising its last investments, while our second fund Oslo Opportunity 2 was fully subscribed with NOK0.8bn in equity in the first quarter of 2021. Approximately one third of this capital has now been deployed. We plan to raise further capital and establish new funds in the coming year.

 

In recent years the real estate sector has made a significant leap towards the technological and environmental trends driven by authorities, entities, tenants and ultimately investors. The demand for technologically advanced, energy efficient and sustainable buildings are ever increasing, along with the ability to create engaging buildings and neighbourhood environments which are enjoyable places to live, work and socialise. Our project development business was further strengthened in 2021, bringing in further professional expertise and capacity to this ever-increasing complex development environment in-house.

 

Structured asset finance

 

In the first half of 2021 activity in the asset finance market was high. A general stabilisation in the financing markets, buoyed by positive demand and increased vessel earnings, provided the backdrop for a raft of financings especially for newbuildings as buyers sought to commit orders ahead of the increased pricing implemented by the shipyards. Mainstream shipping banks and Export Credit Agencies ('ECAs') continued to provide most of the newbuilding finance for the blue-chip names that are financing green projects. Leasing companies, notably some of the larger Chinese leasing companies, secured some of this financing but had to reduce margins to compete. Their successes in newbuilding finance were largely limited to the few deals requiring higher leverage or residual risk transfer.

 

Outside the newbuilding market, there was plenty of activity in refinancing existing senior debt with the source of capital spread between the second-tier shipping banks, leasing companies and the myriad of alternative lenders including those using green funds.

 

In the second half of 2021, we saw a decrease in newbuilding finance activity and a corresponding increase in de-leveraging and refinancing at lower cost, especially in the container sector. Chinese leasing companies received a large number of early repurchase option requests as the liner companies sought to use their substantial cash resources to repay or lock in lower finance rates. Furthermore, some of the mainstream shipping banks and ECAs began to expand their customer base as high earnings improved borrower credit ratings and balance sheets. For the very best financing deals with green credentials, competition is increasing and margins are reducing.

 

In 2022 we expect that the general higher earnings environment will result in fewer highly leveraged deals, with the mainstream shipping banks and ECAs continuing to be the lenders of choice, especially for green projects. We believe that leasing companies will generally need to offer lower margins and take more residual risk if they wish to secure financing for this type of project. Cheaper refinancing, balance sheet optimisation and de-leveraging is expected to provide the majority of opportunities for lenders and lessors alike in the coming months.

 

We concluded a number of vessel financings for newbuildings and secondhand acquisitions and are currently closing a number of mandates. We remain positive for 2022, albeit we anticipate it to be more challenging to find good newbuilding financing projects.

 

 

Support

 

Revenue: £29.6m (2020: £24.9m)

Segmental split of underlying profit before taxation: £3.3m (2020: £1.7m)

 

A strong performance in the year

 

Agency

 

Gibb Group

 

Gibb continued to grow quickly. This was mostly due to the expansion of the new Safety and Survival business which benefitted from the growth of offshore renewables. Our Mavric in-house product was well received and saw positive growth and market penetration. We also started to hire out safety and survival equipment.

 

The new operation in Ijmuiden, Netherlands opened and has started to find traction as it acquires stock.

 

Stevedoring

 

2021 was a weak year, owing to a poor harvest in 2020 which was compounded by Brexit-prompted export volumes prior to the end of 2020. The 2021 harvest proved little better, with UK grain exports remaining weak. Imports have remained strong and much above prior years levels, but the additional import volumes are less than the decreased export volumes. We have therefore returned warehousing capacity to our landlord.

 

The immediate outlook for 2022 is similar.

 

Short sea broking

 

High freight rates have made it tough for short sea charterers to accept. Despite this, commissions earned set new records.

 

Agency and freight forwarding/customs clearance

 

2021 saw the reintroduction of customs borders for European Community origin and destination cargoes for the first time since 1992. Accordingly, albeit relatively slowly at first, Belfast saw a huge growth in turnover in this sector. 2022 will see further tightening of border rules and customs procedures which will help this operation.

 

Agri bulks, aggregates and scrap had a good year, with underlying growth in the construction sector. As with stevedoring, grain exports had a weak year. This was hindered further by the closure of the Southampton export terminal for 10 months and the rebuilding of a major part of the Tilbury terminal following an explosion in 2020 which demolished 40% of the port capacity. Grain imports were strong throughout the year.

 

Offshore renewables had a strong year seeing projects finished in Moray East, Hornsea and Triton Knoll. We had greater than expected support from dredging vessels preparing the Hinkley Point power station inlet and outlet pipes. We won Seaway 7's support contract for cabling work on Seagreen, which is positive for the future.

 

Egypt agency

 

Agency business in Egypt performed robustly in 2021.

 

As the global economy started to recover and bunker prices rose, our agency business improved particularly for Suez Canal transit volumes, which increased by 21% year on year.

 

The liner business continued to provide an excellent service to clients and we expanded our offering to continue to provide clients with the best possible service.

 

 

 

Research

 

Revenue: £17.7m (2020: £16.8m)

Segmental split of underlying profit before taxation: £6.1m (2020: £5.6m)

 

Our uniquely powerful data and intelligence underpins the workflows and decision-making of many organisations across the complex and dynamic maritime industry

 

Research, the data and analytics arm of Clarksons, performed robustly during 2021, continuing its long-term growth trajectory.

 

Our unique flow of powerful and highly relevant research and data, during a period of market complexity and volatility, has been extremely well received by our clients and achieved an excellent profile for the Group. The use of innovative technology and algorithms has continued to expand the depth and quality of our proprietary database, supporting a strong pipeline of product development and an encouraging flow of sales enquiries. Data and research synergies supporting the Broking, Financial and Support divisions were also strengthened during the year, alongside enhanced data provision to the end-to-end freight Sea/ platform.

 

We remain market leaders in the provision of independent data, intelligence and analysis around shipping, trade, offshore and energy. Millions of data points are processed and analysed each day to provide trusted and insightful intelligence to a global client base, typically via recurring revenue agreements. This uniquely powerful data and intelligence underpins the workflows and decision-making of many organisations across the complex and dynamic global maritime industry, including shipowners, financiers, shipyards, suppliers, charterers, class societies, insurers, universities and governments. Our team in London, Shanghai and Singapore have grown, supporting a constant flow of data expansion, innovation, digital platform development and market relevant content. During 2021, specific investments were made in both our data analytics team, which specialises in developing proprietary algorithms and expanding the depth and quality of our database and indices, and our market research team, which provides expert analysis and content. We also expanded our sales capacity and our investment focus in Asia Pacific continued, with the region contributing strongly and now responsible for 26% of headcount.

 

In 2021, we continued to pursue our long-term strategy to focus on data, intelligence and insights around the energy transition and green transition. We released updates to our Energy Transition Model, providing decarbonisation scenarios with specific maritime relevant segmentation, and successfully launched Renewables Intelligence Network, our offering focused on the offshore wind sector. There has also been a very positive reaction from our clients to the further expansion of our wide-ranging research and data around the fuelling transition, including the profiling of the 2.4% of global CO₂ emitted by the shipping industry and the tracking of uptake of alternative fuels. During the year, Research supported the Group-wide initiatives to partner clients through their decarbonisation pathways, contributing to internal awareness initiatives and providing emissions benchmarking data and vessel intelligence used within the carbon module of the Sea/ suite.

 

Digital

 

Research's world-leading digital platform provides immediate access to our powerful data, analysis, forecasts and insights. In 2021, the number of users of our single access integrated platform reached 10,000 and there was encouraging growth in digital sales, up 19% across the year. There are specific development plans for each of our digital products to ensure data, research content and functionality remain market-leading.

 

Major digital products include:

 

Shipping Intelligence Network ('SIN')

SIN is the market-leading commercial shipping database, providing wide-ranging data and analysis tracking, and projecting shipping market supply and demand, freight, vessel earnings, indices, asset values and macro-economic data around trade flows and global economic developments. Sales of SIN grew strongly in 2021, benefitting from our detailed tracking of freight and earnings recovery (the cross segment ClarkSea Index averaged a post-2008 high of $28,700 per day), rebounding trade volumes (already above pre-pandemic levels at 12bn tonnes) and widespread congestion (our newly launched Container Congestion Index peaked at 37.5% compared to a pre-COVID-19 average of 31.3%). The introduction of expanded near-term data, including port calling, congestion and vessel activity indices, was particularly well received by our clients, as was our COVID-19 impact assessment insights and reporting. Further improvements to SIN are planned for the first half of 2022.

 

World Fleet Register ('WFR')

Sales of our WFR, which provides comprehensive tracking of the world fleet and shipbuilding industry, grew an encouraging 24%. Growth has benefitted from a focus on the fuelling transition, supporting stakeholders across maritime with understanding the market impact of complex emissions regulations and their tracking of technology uptake across the world fleet (alternative fuelled order book share is now 35%).

 

Renewables Intelligence Network ('RIN')

Launched in 2021, RIN provides data, intelligence and analysis around offshore renewables, including the fast-growing offshore wind market. Offshore wind is a hugely exciting growth market, expected to play a vital role in energy transition. Our data suggests that global capacity increased by over 50% in 2021 to 51 GW whilst our modelling suggests it could reach 229 GW by 2030 and up to 9% of global energy supply by 2050. Whilst this is a competitive research area, we are already gaining good traction, and feedback from clients and the other divisions has been very positive.

 

World Offshore Register ('WOR')

Our comprehensive offshore register provides detailed intelligence on offshore oil and gas field infrastructure and the offshore fleet. Offshore oil and gas remain an important element of the energy mix, accounting for 17% of global energy supply (24.5m bpd of offshore oil production, 123bn cufd of offshore gas production in 2021). Research is the market leader in data provision to the insurance industry, where our data is used as the core reference in identifying rigs and platforms.

 

Offshore Intelligence Network ('OIN')

Offshore oil and gas markets are showing signs of recovery, with our index of earnings across the offshore fleet up 23% in 2021 to reach its highest level since 2015 by year-end. Our data and analysis of utilisation, dayrates and market supply and demand for the offshore fleet including rigs, OSVs, subsea and floating production continues to be well received by clients.

 

Sea/net

Developed in conjunction with the Group's technology business (Maritech), our vessel movement system Sea/net blends satellite and land-based AIS data with our leading database of vessels, ports and berths. We continue to improve the depth of our underlying movement and deployment data. Despite strong competition there has been good sales growth across 2021, supported by the roll-out of new features

 

Services

 

Our dedicated services and consultancy activities, including the development and management of important long-term relationships with key corporates across the maritime sector, performed particularly well during the year. Interest in tailored data, which often becomes embedded into client systems and includes API delivery via our platform, remained high while our provision of specialist insights, forecasting and scenario modelling to key partners also expanded. We were actively engaged in consultancy during the year, including industry sections for capital market documents, studies for governments and policymakers and several consultancy projects for owners and financiers that collaborated with the Broking and Financial divisions.

 

As the industry standard source in the provision of authoritative, consistent, independent and well documented valuations delivered through a dedicated team, Clarksons Valuations remain market leaders in providing valuation services to shipowners and financiers. Despite the reducing portfolio size and valuation requirements of some of our long-term European banking clients, there was increased marketing to ship finance and leasing institutions across the year, including in Asia, with several successful multi-year portfolio agreements secured. A review of new European Banking Authority guidelines issued to financiers around property and maritime valuations has been carried out with additional documentation produced and enhancements to the Clarksons Valuations digital technology platform rolled out. A number of valuation clients have been provided with emissions benchmarks and analysis alongside their traditional asset valuations, with the valuation team increasingly analysing the impact of alternative fuels and ESTs on fleet value as the fuelling transition gathers pace. The valuations team has actively supported the sale and purchase broking teams in the active market during the year.

 

 

 

 

Sea/

 

Enhancing the way shipping professionals work

 

Sea/ has performed well in 2021 with continued adoption of the whole product suite. We have launched the industry's first end-to-end freight trade negotiation and management platform, which was well received by clients. Customer satisfaction and product delivery has been at the forefront of our technology offering and this has been strengthened by successive roll-outs of features and enhancements across Seafix/ products.

 

Sea/trade, one of the key products in the Seafix/ suite, was launched in early 2021 and enables clients to collaborate, negotiate and capture the complex world of maritime freight transactions. With the successful signing of four key mining majors, Maritech continued to gain significant traction in the shipping market in the second half of 2021.

 

The Seafix/ product suite has been further enhanced by the delivery of a series of integrations with third-party software solutions including the Veson IMOS Platform, Rightship Safety Score, GHG rating and inspection status, and Windward AI's sanction product. Together, these ensure that information key to a freight transaction is available earlier in the fixture process.

 

Sea/net continues to benefit from expanded product functionality resulting in increased in adoption. Supported by the expansion of our intelligence module Sea/analytics, clients are provided access to key information and data focusing on commodity flow and marine analytics helping, for example, to understand the impact of vessel supply and port congestion. These modules represent a cornerstone of the Sea/ suite with powerful and clear insights amidst the noise of information overload.

 

We continue to see significant market adoption for Sea/ contracts and Recap Manager, the Maritech contract management modules. Sea/contracts has benefitted from enhancements resulting in better change control across clauses, improved access to clause libraries, and simplified linking. In 2021 we achieved a 62% growth in fixture volume and the pipeline of new customers in all market sectors remains strong for 2022.

 

In the offshore industry, Sea/response, which delivers an essential service in providing critical information on the location and equipment onboard vessels in the proximity of an emergency, enjoyed a third-generation release in collaboration with Oil Spill Response. This has further enhanced an already strong product offering.

 

There continues to be industry focus on international shipping's decarbonisation and we are delighted to demonstrate our commitment to this objective by collaborating with our clients and providing the next generation of industry solutions. In the second half of 2021, Maritech launched SeaCarbon/, a complete CO₂ shipping toolkit for the maritime industry. So far, we've tracked more than 1,400 voyages equating to 9.9m nautical miles resulting in the saving of 4.2m tonnes of CO₂. We're excited to continue to innovate and expand our SeaCarbon/ offering in 2022.

 

There remains an increasing demand for digital solutions across maritime sectors. Due to the strong adaptability demonstrated by our sales, customer success and support teams, together with collaboration with clients, our global client base has continued to expand significantly, and we expect this to continue.

 

 

 

Risk management

 

Full details of our principal risks and how we manage them are included in the risk management section of the 2021 Annual Report, together with our viability and going concern statements.

 

Our principal risks are:

·      Loss of key personnel - Board members

·      Economic factors

·      Cyber risk and data security

·      Loss of key personnel - normal course of business

·      Adverse movements in foreign exchange

·      Financial loss arising from failure of a client to meet its obligations

·      Breaches in rules and regulations

·      Changes in the broking industry

 

 

 

 

Directors' responsibilities statement

 

The statement of Directors' responsibilities below has been prepared in connection with the Group's full Annual Report for the year ended 31 December 2021. Certain parts of the Annual Report have not been included in this announcement as set out in note 1 of the financial information.

 

We confirm that:

 

• to the best of our knowledge, the consolidated financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities and financial position of the Group; and

 

• to the best of our knowledge, the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces; and

 

• we consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

 

This responsibilities statement was approved by the Board of Directors on 4 March 2022 and is signed on its behalf by:

 

Laurence Hollingworth

Chair

4 March 2022

 

 

 

 

Consolidated income statement

for the year ended 31 December

			2021				2020
	Before acquisition- related costs £m	Acquisition- related costs £m	After acquisition- related costs £m	Before exceptional items and acquisition- related costs £m	Exceptional items £m	Acquisition- related costs £m	After exceptional  items and acquisition- related costs £m
Revenue	443.3	-	443.3	358.2	-	-	358.2
Cost of sales	(16.5)	-	(16.5)	(13.3)	-	-	(13.3)
Trading profit	426.8	-	426.8	344.9	-	-	344.9
Administrative expenses	(355.7)	(0.3)	(356.0)	(298.5)	(60.6)	(0.5)	(359.6)
Operating profit/(loss)	71.1	(0.3)	70.8	46.4	(60.6)	(0.5)	(14.7)
Finance income	1.3	-	1.3	1.2	-	-	1.2
Finance costs	(3.1)	-	(3.1)	(3.1)	-	-	(3.1)
Other finance income - pensions	0.1	-	0.1	0.2	-	-	0.2
Profit/(loss) before taxation	69.4	(0.3)	69.1	44.7	(60.6)	(0.5)	(16.4)
Taxation	(14.7)	-	(14.7)	(9.5)	-	0.1	(9.4)
Profit/(loss) for the year	54.7	(0.3)	54.4	35.2	(60.6)	(0.4)	(25.8)
Attributable to:
Equity holders of the Parent Company	50.4	(0.3)	50.1	32.1	(60.6)	(0.4)	(28.9)
Non-controlling interests	4.3	-	4.3	3.1	-	-	3.1
Profit/(loss) for the year	54.7	(0.3)	54.4	35.2	(60.6)	(0.4)	(25.8)
Earnings/(loss) per share
Basic	165.6p		164.6p	106.0p			(95.2p)
Diluted	164.2p		163.2p	105.8p			(95.2p)

 

 

 

Consolidated statement of comprehensive income

for the year ended 31 December

		2021 £m	2020 £m
Profit/(loss) for the year		54.4	(25.8)
Other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Actuarial gain on employee benefit schemes - net of tax		7.2	1.0
Changes in the fair value of equity instruments at fair value through other comprehensive income - net of tax		(1.7)	(2.1)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on retranslation of foreign operations		0.5	(2.9)
Foreign currency hedges recycled to profit or loss - net of tax		(2.4)	1.5
Foreign currency hedge revaluations - net of tax		(0.8)	1.6
Other comprehensive income/(loss)		2.8	(0.9)
Total comprehensive income/(loss) for the year		57.2	(26.7)
Attributable to:
Equity holders of the Parent Company		52.9	(29.8)
Non-controlling interests		4.3	3.1
Total comprehensive income/(loss) for the year		57.2	(26.7)

 

 

 

 

 

Consolidated balance sheet

as at 31 December

 

		2021 £m	2020 £m
Non-current assets
Property, plant and equipment		22.5	24.3
Investment properties		1.2	1.2
Right-of-use assets		45.1	47.0
Intangible assets		183.2	182.9
Trade and other receivables		1.0	3.1
Investments		1.0	2.9
Employee benefits		25.8	18.1
Deferred tax assets		10.5	10.6
		290.3	290.1
Current assets
Inventories		1.5	1.3
Trade and other receivables		117.4	76.6
Income tax receivable		1.0	0.2
Investments		10.3	31.1
Cash and cash equivalents		261.6	173.4
		391.8	282.6
Current liabilities
Trade and other payables		(235.4)	(160.6)
Lease liabilities		(9.7)	(8.4)
Income tax payable		(11.6)	(7.9)
Provisions		(0.6)	(0.5)
		(257.3)	(177.4)
Net current assets		134.5	105.2
Non-current liabilities
Interest-bearing loans and borrowings		-	(0.1)
Trade and other payables		(2.7)	(2.7)
Lease liabilities		(44.1)	(47.7)
Provisions		(1.6)	(1.5)
Employee benefits		(3.8)	(6.1)
Deferred tax liabilities		(11.0)	(8.8)
		(63.2)	(66.9)
Net assets		361.6	328.4
Capital and reserves
Share capital		7.6	7.6
Other reserves		104.0	104.6
Retained earnings		245.3	211.9
Equity attributable to shareholders of the Parent Company		356.9	324.1
Non-controlling interests		4.7	4.3
Total equity		361.6	328.4

 

Consolidated statement of changes in equity

for the year ended 31 December

 

	Attributable to equity holders of the Parent Company
	Share capital £m	Other reserves £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 January 2021	7.6	104.6	211.9	324.1	4.3	328.4
Profit for the year	-	-	50.1	50.1	4.3	54.4
Other comprehensive income/(loss)	-	(2.7)	5.5	2.8	-	2.8
Total comprehensive income/(loss) for the year	-	(2.7)	55.6	52.9	4.3	57.2
Transactions with owners:
Share issues	-	1.8	-	1.8	-	1.8
Employee share schemes	-	0.3	(0.1)	0.2	-	0.2
Tax on other employee benefits	-	-	2.3	2.3	-	2.3
Dividend paid	-	-	(24.4)	(24.4)	(3.9)	(28.3)
Total transactions with owners	-	2.1	(22.2)	(20.1)	(3.9)	(24.0)
Balance at 31 December 2021	7.6	104.0	245.3	356.9	4.7	361.6

 

 

	Attributable to equity holders of the Parent Company
	Share  capital £m	Other reserves £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 January 2020	7.6	158.4	211.5	377.5	3.1	380.6
(Loss)/profit for the year	-	-	(28.9)	(28.9)	3.1	(25.8)
Other comprehensive income/(loss)	-	0.2	(1.1)	(0.9)	-	(0.9)
Total comprehensive income/(loss) for the year	-	0.2	(30.0)	(29.8)	3.1	(26.7)
Transfer from merger reserve	-	(54.7)	54.7	-	-	-
Transactions with owners:
Share issues	-	0.6	-	0.6	-	0.6
Employee share schemes	-	0.1	(0.5)	(0.4)	-	(0.4)
Tax on other employee benefits	-	-	(0.2)	(0.2)	-	(0.2)
Tax on other items in equity	-	-	0.1	0.1	-	0.1
Dividend paid	-	-	(23.7)	(23.7)	(1.8)	(25.5)
Contributions to non-controlling      interests	-	-	-	-	(0.1)	(0.1)
Total transactions with owners	-	0.7	(24.3)	(23.6)	(1.9)	(25.5)
Balance at 31 December 2020	7.6	104.6	211.9	324.1	4.3	328.4

 

 

 

 

 

Consolidated cash flow statement

for the year ended 31 December

 

		2021 £m	2020 £m
Cash flows from operating activities
Profit/(loss) before taxation		69.1	(16.4)
Adjustments for:
Foreign exchange differences		(3.2)	2.8
Depreciation		13.3	13.7
Share-based payment expense		1.8	1.4
Gain on sale of property, plant and equipment		(0.6)	-
Loss on sale of investments		-	0.1
Amortisation of intangibles		1.6	0.8
Impairment of intangibles		-	60.6
Difference between pension contributions paid and amount recognised in the income statement		(0.1)	0.3
Finance income		(1.3)	(1.2)
Finance costs		3.1	3.1
Other finance income - pensions		(0.1)	(0.2)
Increase in inventories		(0.2)	(0.2)
(Increase)/decrease in trade and other receivables		(38.7)	0.3
Increase in bonus accrual		49.1	7.9
Increase in trade and other payables		29.1	3.4
Increase in provisions		0.1	0.2
Cash generated from operations		123.0	76.6
Income tax paid		(9.2)	(10.7)
Net cash flow from operating activities		113.8	65.9
Cash flows from investing activities
Interest received		0.2	0.5
Purchase of property, plant and equipment		(3.7)	(3.5)
Purchase of intangible assets		(2.9)	(6.3)
Proceeds from sale of investments		9.4	8.7
Proceeds from sale of property, plant and equipment		1.6	0.4
Purchase of investments		(3.5)	(7.9)
Transfer from current investments (cash on deposit and government bonds)		20.0	-
Transfer to current investments (cash on deposit and government bonds)		(6.8)	(20.3)
Proceeds from sale of investments in associates		-	0.5
Acquisition of subsidiaries, including deferred consideration		-	(1.1)
Cash acquired on acquisitions		-	0.7
Dividends received from investments		-	0.2
Net cash flow from investing activities		14.3	(28.1)
Cash flows from financing activities
Interest paid and other charges		(2.3)	(2.7)
Dividend paid		(24.4)	(23.7)
Dividend paid to non-controlling interests		(3.9)	(1.8)
Repayments of borrowings		(0.1)	(1.2)
Payments of lease liabilities		(9.1)	(8.9)
Proceeds from shares issued		1.8	0.6
Contributions to non-controlling interests		-	(0.1)
ESOP shares acquired		(1.9)	(0.1)
Net cash flow from financing activities		(39.9)	(37.9)
Net increase/(decrease) in cash and cash equivalents		88.2	(0.1)
Cash and cash equivalents at 1 January		173.4	175.7
Net foreign exchange differences		-	(2.2)
Cash and cash equivalents at 31 December		261.6	173.4

 

Notes to the preliminary financial statements

 

1 Corporate information

 

The preliminary financial statements of Clarkson PLC for the year ended 31 December 2021 were authorised for issue in accordance with a resolution of the Directors on 4 March 2022. 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 preliminary financial information (financial information) set out in this announcement does not constitute the consolidated statutory financial statements for the years ended 31 December 2020 and 2021, but is derived from those financial statements.  Statutory financial statements for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the Company's Annual General Meeting. External Auditors have reported on the financial statements for 2020 and 2021; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

 

2 Statement of accounting policies

 

2.1 Basis of preparation

The financial information set out in this announcement is based on the consolidated financial statements, which are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS') and the applicable legal requirements of the Companies Act 2006. The consolidated financial statements also comply with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

 

The Group has considerable financial resources available to it, a strong balance sheet and has consistently generated an underlying profit and good cash inflow. As a result of this, the Directors believe that the Group is well placed to manage its business risks successfully, despite the challenging market backdrop and emerging geopolitical tension. Management has stress tested a range of scenarios, modelling different assumptions with respect to the Group's cash resources. Three different scenarios were considered: 

 

-       Management modelled the impact of a reduction in profitability to £30m (a level of profit the Group has exceeded in every year since 2013), whilst taking no mitigating actions: the group remained cash generative before dividends.

-       Management assessed the impact of a significant reduction in world seaborne trade similar to that experienced in the global financial crisis in 2008 and the pandemic in 2020: seaborne trade recovered in 2009 and 2021 along with the profitability of the Group. Since 1990 no two consecutive years have seen reductions in world seaborne trade.

-       Management undertook a reverse stress test over a period of three years to determine what it might take for the Group to encounter financial difficulties. This test was based on current levels of overhead, the cash position at 31 December 2021, the collection of debts and the invoicing and collection of the forward order book. This determined that, in the absence of any management action which would be applied in these circumstances, no new business would be required to remain cash positive for at least the next 12 months.

 

Under the first two scenarios, the Group is able to generate profits and cash, and has positive net cash and available funds* available to it. In the third scenario, current net cash and available funds* together with the collection of debts and the forward order book and no new business would leave sufficient cash resources to cover at least the next 12 months.

 

Accordingly, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operation for at least the next 12 months. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

The consolidated income statement is shown in columnar format to assist with understanding the Group's results by presenting profit for the year before exceptional items and acquisition-related costs; this is referred to as 'underlying profit'. When there are items which are non-recurring in nature and considered to be material in size, these are shown as 'exceptional items'. The column 'acquisition-related costs' includes the amortisation of acquired intangible assets and the expensing of the cash and share-based elements of consideration linked to ongoing employment obligations on acquisitions.

 

2.2 Accounting policies

The financial information is in accordance with the accounting policies set out in the 2021 financial statements and have been prepared on a going concern basis.

 

A number of new or amended standards became applicable 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 preliminary 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 preliminary 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.

 

2.4 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

 

Business segments	Revenue		Results
	2021 £m	2020 £m	2021 £m	2020 £m
Broking	340.0	282.6	73.6	55.4
Financial	56.0	33.9	13.3	2.5
Support	29.6	24.9	3.3	1.7
Research	17.7	16.8	6.1	5.6
Segment revenue/profit	443.3	358.2	96.3	65.2
Head office costs			(25.2)	(18.8)
Operating profit before exceptional items and acquisition-related costs			71.1	46.4
Exceptional items			-	(60.6)
Acquisition-related costs			(0.3)	(0.5)
Operating profit/(loss) after exceptional items and acquisition-related costs			70.8	(14.7)
Finance income			1.3	1.2
Finance costs			(3.1)	(3.1)
Other finance income - pensions			0.1	0.2
Profit/(loss) before taxation			69.1	(16.4)
Taxation			(14.7)	(9.4)
Profit/(loss) for the year			54.4	(25.8)

 

4 Exceptional items

 

As a result of the impairment testing of goodwill, no impairment charge was recognised in 2021. An impairment was recognised in 2020 of £60.6m.

 

5 Acquisition-related costs

 

Included in acquisition-related costs is £0.2m (2020: £0.3m) relating to amortisation of intangibles acquired as part of the Martankers acquisition in 2020 and cash charges of £0.1m (2020: £0.1m) relating to that acquisition. The cash charges are contingent on employees remaining in service and are therefore spread over the service period.

 

Also included is £nil (2020: £0.1m) of cash and share-based payment charges in relation to previous acquisitions.

 

6 Taxation

 

The major components of the income tax charge in the consolidated income statement are:

 

	2021 £m	2020 £m
Profit/(loss) at UK average standard rate of corporation tax of 19% (2020: 19%)	13.1	(3.1)
Impairment charge not deductible for tax purposes	-	11.5
Expenses not deductible for tax purposes	2.1	1.7
Other	(0.5)	(0.7)
Total tax charge in the income statement	14.7	9.4

 

7 Earnings/(loss) per share

 

Basic earnings/(loss) per share amounts are calculated by dividing profit/(loss) for the year attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares in issue during the year.

 

Diluted earnings/(loss) per share amounts are calculated by dividing profit/(loss) for the year attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares in issue during the year, 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/(loss) per share computations:

 

	2021 £m	2020 £m
Underlying profit for the year attributable to ordinary equity holders of the Parent Company*	50.4	32.1
Reported profit/(loss) for the year attributable to ordinary equity holders of the Parent Company*	50.1	(28.9)
	2021 Million	2020 Million
Weighted average number of ordinary shares - basic	30.4	30.3
Weighted average number of ordinary shares - diluted	30.7	30.4

 

8 Dividends

 

The Board is recommending a final dividend of 57p (2020: 54p), giving a total dividend of 84p (2020: 79p). This final dividend will be payable on 27 May 2022 to shareholders on the register at the close of business on 13 May 2022, subject to shareholder approval.

 

9 Intangible assets

 

Additions of £2.9m in the year relate in full to development costs. Goodwill and other intangible assets are held in the currency of the businesses acquired and are subject to foreign exchange retranslations to the closing rate at each year-end, amounting to a decrease of £0.9m in the carrying value of goodwill and £0.1m in the carrying value of other intangible assets in the year.

 

In 2020, recognising the challenging trading conditions in the offshore broking and securities markets, the Directors revised the estimate of future cash flows expected from these cash-generating units. Following the revisions, an impairment loss of £60.6m was recognised in 2020.

 

10 Investments

 

Included within current investments are deposits totalling £2.8m (2020: £22.8m) with maturity periods greater than three months, in addition to £6.8m of government bonds (2020: £nil). Also included is £0.7m (2020: £8.3m) relating to the convertible bonds business within the Financial segment. In order to hedge against price movements of the equity portion of these investments, the Group short-sold related equity securities amounting to £nil (31 December 2020: £2.8m). These are shown under trade and other payables.

 

11 Cash and cash equivalents

 

			2021 £m	2020 £m
Cash at bank and in hand			260.7	172.4
Short-term deposits			0.9	1.0
			261.6	173.4

 

 

 

12 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

		2021 £m	2020 £m
Fair value of schemes' assets		201.5	204.5
Present value of funded defined benefit obligations		(174.2)	(188.6)
		27.3	15.9
Effect of asset ceiling in relation to the Plowrights scheme		(5.3)	(3.9)
Net benefit asset recognised in the balance sheet		22.0	12.0

The above is recognised on the balance sheet as an asset of £25.8m (2020: £18.1m) and a liability of £3.8m (2020: £6.1m). A deferred tax asset on the benefit liability amounting to £0.9m (2020: £1.2m) and a deferred tax liability on the benefit asset of £6.5m (2020: £3.4m) is also recognised on the balance sheet.

 

Recognised in the income statement

	2021 £m	2020 £m
Recognised in other finance income - pensions:
Expected return on schemes' assets	2.8	3.9
Interest cost on benefit obligation and asset ceiling	(2.7)	(3.7)
Recognised in administrative expenses:
Past service costs	-	(0.4)
Scheme administrative expenses	(0.3)	(0.3)
Net benefit charge recognised in the income statement	(0.2)	(0.5)

 

13 Share capital

 

	Million	2021 £m	Million	2020 £m
Ordinary shares of 25p each, issued and fully paid	30.5	7.6	30.4	7.6

 

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 that is expected to have a material adverse financial impact on the Group's consolidated results or net assets.

 

15 Related party disclosures

 

The Group's significant related parties are disclosed in the 2020 annual report. There were no material differences in related parties or related party transactions in the year ended 31 December 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Annual Report to understand the results for the year.

 

Underlying profit before taxation

Reconciliation of reported profit/(loss) before taxation to underlying profit before taxation for the year.

 

		2021				2020
		£m				£m
Reported profit/(loss) before taxation				69.1		(16.4)
Add back exceptional items				-		60.6
Add back acquisition-related costs				0.3		0.5
Underlying profit before taxation				69.4		44.7

 

Underlying effective tax rate

Reconciliation of reported effective tax rate to underlying effective tax rate.

 

		2021			2020
Reported effective tax rate				21.3%	(57.3%)
Adjustment relating to exceptional items				-	78.6%
Adjustment relating to acquisition-related costs				(0.1%)	-
Underlying effective tax rate				21.2%	21.3%

 

Underlying profit attributable to equity holders of the Parent Company

Reconciliation of reported profit/(loss) attributable to equity holders of the Parent Company to underlying profit attributable to equity holders of the Parent Company.

		2021				2020
		£m				£m
Reported profit/(loss) attributable to equity holders of the Parent Company				50.1		(28.9)
Add back exceptional items				-		60.6
Add back acquisition-related costs				0.3		0.4
Underlying profit attributable to equity holders of the Parent Company				50.4		32.1

 

Underlying basic earnings per share

Reconciliation of reported basic earnings/(loss) per share to underlying basic earnings per share.

 

		2021			2020
Reported basic earnings/(loss) per share				164.6p	(95.2p)
Add back exceptional item				-	199.9p
Add back acquisition-related costs				1.0p	1.3p
Underlying basic earnings per share				165.6p	106.0p

 

 

Underlying administrative expenses

Reconciliation of reported administrative expenses to underlying administrative expenses for the year.

 

		2021			2020
		£m			£m
Reported administrative expenses				356.0	359.6
Less exceptional items				-	(60.6)
Less acquisition-related costs				(0.3)	(0.5)
Underlying administrative expenses				355.7	298.5

 

 

 

 

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.

 

		2021			2020
		£m			£m
Cash and cash equivalents as reported				261.6	173.4
Less interest-bearing loans and borrowings				-	(0.1)
Add cash on deposit and government bonds included within current investments				9.6	22.8
Less amounts reserved for bonuses included within current trade and other payables				(148.9)	(100.7)
Net cash and available funds				122.3	95.4

 

 

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.

 

		2021			2020
		£m			£m
Cash and cash equivalents as reported				261.6	173.4
Less interest-bearing loans and borrowings				-	(0.1)
Add cash on deposit and government bonds included within current investments				9.6	22.8
Less amounts reserved for bonuses included within current trade and other payables				(148.9)	(100.7)
Less net cash and available funds held in regulated entities				(30.0)	(14.3)
Free cash resources				92.3	81.1