Source - RNS
RNS Number : 0594V
Clarkson PLC
03 April 2019
 

 

 

 

 

CLARKSON PLC

(the "Company" or "Clarksons")

 

3 April 2019

 

Annual Report for the year ended 31 December 2018

and Notice of AGM

 

The Company announces that, pursuant to Listing Rule 9.6.1, the documents listed below have been submitted to the UK Listing Authority and will shortly be available for inspection through the National Storage Mechanism at: http://www.morningstar.co.uk/uk/NSM

 

-     2018 Annual Report

-     Notice of 2019 Annual General Meeting

-     Form of Proxy

-     Form of Direction

 

The mailing to shareholders of the documents mentioned above has commenced and the 2018 Annual Report and the Notice of 2019 Annual General Meeting will shortly be available to view on the Company's website at: https://www.clarksons.com/investors/

 

The Company's 2019 Annual General Meeting will be held at 12pm on Thursday 9 May 2019 at Commodity Quay, St. Katharine Docks, London E1W 1BF.

 

The information set out below should be read in conjunction with the Company's full year results announcement issued on 11 March 2019. Together these constitute the material required by DTR 6.3 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the Company's 2018 Annual Report. Page references in the text below refer to page numbers in the 2018 Annual Report.

 

For further details contact:

 

Clarkson PLC

Rachel Spencer, Group Company Secretary

 

Tel: +44(0) 20 7334 0000

 

Camarco

Billy Clegg

Jennifer Renwick

 

Tel: +44(0) 20 3757 4983 / 4994

 

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.

 

The Company has delivered 15 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.

 

Principal risks and uncertainties

 

The principal risks which may impact the Group's ability to execute its strategic objectives have not changed since 2017.

 

The principal risks that follow, whilst not exhaustive nor in any order of priority, are those which we believe could have the greatest impact on our business and have been the subject of debate at Board and Audit Committee meetings. The Board regularly reviews these risks in the knowledge that currently unknown, non-existent or immaterial risks could turn out to be significant in the future, and confirms that a robust assessment has been performed.

 

Principal risk

Description

Controls/

mitigating factors

Activities in 2018


Link to strategic objective


Failure to achieve strategic objectives

Due to the size and international coverage of the Group, there is a risk that our objectives are not communicated effectively throughout the organisation. We risk entering into business areas in which we have no expertise, compromising our strategy, draining our resources from the rest of the business for what could potentially be an unsuccessful venture.

 

There is also the risk that our strategy does not deliver the required and expected outcomes for stakeholders.

 

Frequent communication between Executive Directors, global Managing Directors and staff means we can react swiftly to changes in the market which could impact our strategic objectives.

Quarterly divisional reviews of risks, operating and financial performance with Managing Directors.

Daily review of real-time financial information.

We have continued to focus on delivery of our strategy through 'best in class' service in challenged markets.

We have closely and continuously monitored developments in our industry.

We engaged with our clients to ensure we understand their needs and priorities and deliver beyond their expectations.

ICON

Stable arrow

Growth

See more on our strategic objectives on pages 28 to 29.

Changes in the broking industry

There is a risk that we do not take advantage of, or are overtaken by, changes in our industry. This could lead to loss of market share, loss of revenue and reputational damage.

 

We monitor and develop technological applications which will impact the broking industry.

We regularly review our clients' broking requirements.

 

We continued to invest in developing sophisticated technological tools to enhance our service offering to our clients and to future proof our business.

ICON

Stable arrow

Understanding


Economic factors

Changes in world trade, global GDP and other general economic fluctuations impact the demand for ships. The actions of owners and financiers have a direct impact on the supply side of our business.

 

Supply/demand imbalances cause fluctuations in freight rates. If freight rates, volumes or asset prices fall, the commission that we receive on any deal would also fall.

 

The scheduled departure of the UK from the EU in March 2019 is creating uncertainties surrounding global economic impacts.

We are not dependent on any one country's economy as our operations and clients are located in all major maritime and trade centres globally.

Our business model is built on the ability to deal with downturns and remain profitable. Our variable remuneration schemes, being profit-related, mean that overheads react to swings in asset values and freight rates.

We have the resources and support available to open offices in new locations, mitigating the reliance on regional performance.

Our broad product offering, manned with experts in their fields, means we are in the best position to find new opportunities in volatile market conditions and able to take advantage of market turnarounds.

We review the performance of each office and product line on a monthly basis.

We do not believe that our businesses will be materially affected by Brexit, other than any impact arising from movements in the foreign exchange rates.

 

Our results show the robustness of our strategy and business model against volatility in our markets, particularly those affected by falling commodity prices.

We continue to monitor Brexit developments closely.

 

ICON

Stable arrow

Growth

See more on our markets on pages 18 to 23.

Cyber risk and data security

Financial loss, reputational damage or operational disruption resulting from a major breach in the confidentiality, integrity or availability of our IT systems and data.

 

A breach could be caused by an insider, an external party, inadequate physical security, insecure software development or inadequate supply chain management.

IT processes include regular penetration testing, anti-virus and firewall software, quarterly network vulnerability scans, frequent password changes including complexity requirements, email authentication and strict procedures on granting and removing access.

Operational processes include segregation of duties, business continuity planning and regular training.

 

We continued to invest significantly in enhanced security policies and measures, people and resources dedicated to the prevention of cyber crime.

 

 

ICON

Up arrow

Trust


Loss of key personnel

Losing key personnel may impair our coverage of a particular line of business as our success depends on the experience, reputation and performance of our specialist teams across the Group.

We offer competitive remuneration and an excellent working environment to help us to retain staff.

Appraisals enable us to track progress and discuss career development.

Employment contracts include restrictive covenants, appropriate notice periods and gardening leave provisions to prevent the loss of key information.

Teamwork is encouraged across the Group.

We invest in our teams through training and promote further learning through lectures and encouraging personal study.

Succession planning and documentation of key procedures help minimise any impact of losing personnel.

 

We continued to make strategic hires.

We monitor staff turnover and staff absenteeism in order to understand the reasons behind such activity.

A number of employees transferred locations within the Clarksons Group, accommodating both the employees' and the Group's needs.

 

ICON

Stable arrow

People

See more on our people on page 33.

Employee misuse of confidential information

Accidental or deliberate disclosure of confidential information could have a significant reputational and financial impact.

Strict procedures for leavers to ensure no data can be removed from the premises.

Employment contracts include confidentiality and non-compete clauses.

Investment in compliance, quality assurance and legal functions to ensure best practice is consistently applied throughout the Group.

 

We continue to invest in staff training and our commitment to operating an ethical work environment in order to promote high standards, consistency and a unified approach.

 

ICON

Stable arrow

People


Adverse movements in foreign exchange

The Group can be exposed to adverse movements in foreign exchange as our revenue is mainly denominated in US dollars and the majority of expenses are denominated in local currencies.

 

The Group hedges currency exposure through forward sales of US dollar revenues.

We also sell US dollars on the spot market to meet local currency expenditure requirements.

We continually assess rates of exchange, non-sterling balances and asset exposures by currency.

 

We continued to apply our hedging strategy consistently and, as at 31 December 2018, the Group had hedges in place for 2019 and 2020 of US$40m and US$20m respectively, being a proportion of US dollar anticipated revenue.

 

ICON

Stable arrow

Growth

See more on our financial risk management objectives and policies note on page 169.

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

Uncertainty in our markets continues to affect the amount of debt that may be recoverable. Furthermore, any forward order book values may have to be written off, thereby impacting future income as well as existing booked income.

 

We regularly monitor global client debt levels using information from a range of sources.

Provisions are based on ageing of balances, disputes or doubts over recoverability.

We continued to provide for doubtful debts on a prudent basis.

There were no unexpected losses arising from a client failure during the year.

 

ICON

Stable arrow

Understanding

See more on our trade receivables note on pages 159 to 160.

 

 

Directors' responsibilities statement

 

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulation.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the consolidated Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that period. In preparing the financial statements, the Directors are required to:

 

-     select suitable accounting policies and then apply them consistently;

-     state whether applicable IFRSs as adopted by the European Union have been followed for the consolidated Group and Parent Company financial statements, subject to any material departures disclosed and explained in the financial statements;

-     make judgements and accounting estimates that are reasonable and prudent; and

-     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

 

The Directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

 

The Directors are responsible for the maintenance and integrity of the Parent Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Directors' confirmations

The Directors consider that the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company's position and performance, business model and strategy.

 

Each of the Directors, whose names and functions are listed in this annual report confirm that, to the best of their knowledge:

 

-     the consolidated Group and Parent Company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group and loss of the Parent Company; and

-     the strategic report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that they face.

 

In the case of each Director in office at the date the Directors' report is approved:

 

-     so far as the Director is aware, there is no relevant audit information of which the Group's and Parent Company's Auditors are unaware; and

-     they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group and Parent Company's Auditors are aware of that information.

 

On behalf of the Board:

 

Bill Thomas

Chair

8 March 2019

 

Related parties transactions

26 Related party transactions

As in 2017, the Group did not enter into any related party transactions during the year, except as noted below.

 

Compensation of key management personnel (including Directors)

There were no key management personnel in the Group apart from the Clarkson PLC Directors. Details of their compensation are set out below.

 


2018

£m

2017

£m

Short-term employee benefits

4.8

5.9

Post-employment benefits

0.1

0.1

Share-based payments

0.5

0.7


5.4

6.7

 

Full remuneration details are provided in the Directors' remuneration report on pages 108 to 123.

 

S Related party transactions

During the year, the Company entered into transactions, in the ordinary course of business, with related parties.

 

Transactions with subsidiaries during the year were as follows:

 


2018

£m

2017

£m

Management fees charged

3.1

3.1

Rent receivable

5.1

4.3

Dividends received

0.7

34.9

 

Balances with subsidiaries at 31 December were as follows:

 


2018

£m

2017

£m

Amounts owed by related parties

17.3

40.7

Amounts owed to related parties

(1.8)

(7.7)

Deferred income

(1.2)

-

 

There were no terms or conditions attached to these balances.

 

Compensation of key management personnel (including Directors)

There were no key management personnel in the Company apart from the Clarkson PLC Directors. Details of their compensation are set out in note 26 to the consolidated financial statements.

 

 

 


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