The company’s round the world yacht race is a global success but its shares are struggling to stay afloat.
Getting people to give up their jobs and pay up to £32,000 to spend months on a cramped boat, risking life and limb in force nine winds, is the easy part for William Ward.
Securing sponsors for the Clipper round the world yacht race is also fairly straightforward, such is the kudos and marketing potential associated with the biennial event.
What’s less straightforward for the chief executive of the Gosport-based Aim-listed business, is understanding why the 13-year-old firm’s share price is in a slump.
“When the company was worth minus something a few years back, the share price was 60p. Now we have no debt, forecasted profit for the year of £1.4m, money in the bank and a forward order book yet our share price has gone down to 12p,” said Ward.
With 60pc of the shares owned by five people – the majority by Ward and a major slice by company founder and executive chairman, round the world yachtsman Sir Robin Knox-Johnston – there is little trading. “Why is the share price going down when the company is so robust? I’d love to know. If you ever want to demoralise a business, go on Aim. The share price is stopping us from expanding.”
And expansion is very much onboard at Clipper Ventures. Ward reckons there is potential to increase turnover from £7m to £20m in five years just from the main race alone.
He also wants to add more races and events to its portfolio, but said: “While our share price is languishing where it is, it doesn’t exactly encourage us.”
Having just started to turn a profit, Clipper Ventures is riding on the crest of a wave and Ward wants the 30 staff to benefit. The obvious way is via a share options scheme. “We did try that but then the price dropped. It was a kick in the teeth when people work hard and know the effort they put in to then see their reward reduce. I think we are too small to be on AIM, perhaps we should go private.”
Clipper Ventures is a marine events company. It also runs the Velux Five Oceans single-handed round the world race for serious sailors every four years, ZapCat powerboat races, provides sail training and organises Clipper Events, where for between £3,500 and £5,000 a day it hires out its skippered boats for corporate hospitality regattas. Its flagship event, though, is the round the world race. The current one is due to finish in Liverpool in July.
With ten, 68ft boats and crews totalling 350 amateur and even novice sailors drawn from all walks of life (only 100 go around the world, the majority race for one or two of the seven legs) Clipper’s race income is generated equally between crew fees and sponsorship. “We could charge £45,000 and we would still fill all the berths, such is the demand,” said Ward.
It is while its boats are in port – in Europe, Brazil, South Africa, Western Australia, Singapore, China, Hawaii, Panama, the Caribbean and east and west coast US - that having a boat emblazed with the name of a sponsoring city, plus other corporate branding, counts. The current race has Glasgow, Liverpool and Hull & Humber from the UK.
It costs £750,000 to sponsor a boat but the appeal lies in the access it brings. The race attracts the great and good from business and politics when the boats dock. “For a relatively small amount of money it opens a lot of doors. If you put on a trade show in China you would never get to meet the people you do via the race, and it would cost a lot more. We really do box well above our weight. It’s the media interest – particularly overseas – and the corporate hospitality you can do on the boat while it’s in port that counts. These are floating billboards,” said Ward.
Ward plans to expand Clipper to include other races, using the current crop of round the world boats when they have completed their final gruelling 35,000 mile race. Burgeoning economies in Asia and South America are the firm favourites for future events.
It is all part of a plan for Clipper to build on, and exploit, its brand, something it has to do if Ward is to meet his objective of buying the next fleet from retained profits. “We want to increase the number of boats to 14. That will give us a 40pc increase in turnover. If we do need to borrow it won’t be long term. This is a difficult business to get funding for.”
That languishing share price doesn’t help. “We are doing well, so perhaps it doesn’t really matter what the share price is,” he said. It’s more a feeling of injustice. “Maybe we just need to prove to the market and the world that we can manage our business better.”
Source: www.telegraph.co.uk