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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Clarkson Plc | LSE:CKN | London | Ordinary Share | GB0002018363 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 40.00 | 0.98% | 4,110.00 | 4,100.00 | 4,110.00 | 4,115.00 | 3,985.00 | 4,115.00 | 80,762 | 11:21:30 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trans Eq, Ex Motor Veh-whsl | 639.4M | 83.8M | 2.7270 | 15.07 | 1.26B |
From Apr 2019 to Apr 2024
TIDMCKN
RNS Number : 7516I
Clarkson PLC
03 April 2020
CLARKSON PLC
(the "Company" or "Clarksons")
3 April 2020
Annual Report for the year ended 31 December 2019
and Notice of Annual General Meeting
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
- 2019 Annual Report - Notice of 2020 Annual General Meeting - Form of Proxy
The above documents have been posted or otherwise made available to shareholders and the 2019 Annual Report and the Notice of 2020 AGM is also available to view on the Company's website at: https://www.clarksons.com/investors/
The Company's 2020 AGM will be held electronically by audiocast on Wednesday 6 May 2020 at 12 noon. Details on how to join the AGM can be found in the Notice of Meeting.
The information set out below should be read in conjunction with the Company's full year results announcement issued on 9 March 2020. 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 2019 Annual Report. Page references in the text below refer to page numbers in the 2019 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 16 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
The principal risks which may impact the Group's ability to execute its strategic objectives have evolved since 2018.
The principal risks that follow, whilst not exhaustive, are those which we believe could have the greatest impact on our business and have been the subject of debate at meetings of the Board and the Audit and Risk Committee. 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.
Hot Features
Premium
Loss of key personnel - Board members
Change in risk factor since 2018 ICON - New
============================================================================= ==========================
Link to strategic objective People
============================================================================= ==========================
Description
At the Annual General Meeting in May 2020, the Company will seek approval of its new 2020
Remuneration Policy. This shareholder vote is binding. Accordingly there are two specific
risks arising from existing contractual arrangements:
* The possible loss of Non-Executive Directors should
it become clear that shareholders are not prepared to
vote in favour of either the new proposed Directors'
Remuneration Policy or their individual re-elections;
and
* Seeking to amend unilaterally the terms of the
existing Executive Director contracts will trigger a
fundamental breach of contract rendering the
contracts null and void thereby preventing the
Company from relying on the protections (garden leave
and post-termination restrictions) that it has in the
existing contracts.
=========================================================================================================
Controls/mitigating factors
As documented below, we have undertaken considerable work to mitigate this risk.
=========================================================================================================
Activities in 2019
Since October 2019, Sir Bill Thomas (Chair) and Dr Tim Miller (Remuneration Committee Chair)
have written to, and met with, major shareholders. Peter Backhouse (Senior Independent Director)
also attended these meetings. These communications covered:
* Confirmation that the Board unanimously believes we
have the right management team to continue to lead
the Company and drive the transformational strategy
they have laid out.
* A historical review of the achievements of the
management team since they joined the Group in 2006.
* The improvement in the share price since the low
point in December 2008, following the credit crunch
and collapse of freight rates, of GBP3.20.
* The 79% increase in ordinary dividends since 2006
despite one of the worst ever shipping markets, in
line with the Board's commitment to a progressive
dividend policy which has been unbroken for 17 years.
* The recognition that GBP173.2m has been paid in
dividends to equity shareholders since 2006.
* The binding long-term contracts of the current
management team which reflect that each executive is
performing two roles. Independent legal advice has
confirmed that seeking to impose changes to the
relevant terms of these service contracts without
consent would result in a breach of contract.
* The commitment by the Board on future hires to
splitting the existing dual roles, despite the
additional costs this may incur. New appointees will
be recruited on terms which fall within more normal
market practice by capping the annual bonus
opportunity, deferring a greater proportion of the
annual bonus, compensating only for fixed pay on
severance and no enhancement on change of control.
* Continued engagement with the proxy advisory agents
to explain the rationale above and to restate our
future commitments.
=========================================================================================================
Read more in the Directors' remuneration report on pages 106 to 108.
Economic factors
Change in risk factor since 2018 ICON - Up arrow
================================================================ =============================
Link to strategic objective Growth
================================================================ =============================
Description
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 erratic nature of the US's approach to international trade and the departure of the UK
from the EU have created uncertainties surrounding global economics and world trade.
The outbreak of COVID-19 has contributed significantly to reduced short-term freight rates
in 2020. The extent of its geographical reach and duration will determine by how much global
GDP, and thus seaborne trade, will be challenged.
===============================================================================================
Controls/mitigating factors
* 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.
===============================================================================================
Activities in 2019
* Our results show the robustness of our strategy and
business model against volatility in our markets,
particularly those affected by falling commodity
prices.
===============================================================================================
Read more in Our markets on pages 44 to 49.
Cyber risk and data security
Change in risk factor since 2018 ICON - Up arrow
=================================================================== ===============================
Link to strategic objective Trust
=================================================================== ===============================
Description
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.
Shipping companies are increasingly targets of cyber attacks.
====================================================================================================
Controls/mitigating factors
* 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.
====================================================================================================
Activities in 2019
* We continued to invest significantly in enhanced
security policies and measures, people, resources and
training dedicated to the prevention of cyber crime.
====================================================================================================
Loss of key personnel - normal course of business
Change in risk factor since 2018 ICON - Stable arrow
============================================================= ===================================
Link to strategic objective People
============================================================= ===================================
Description
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.
==================================================================================================
Controls/mitigating factors
* 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.
==================================================================================================
Activities in 2019
* 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.
==================================================================================================
Read more about our people on pages 56 to 57.
Adverse movements in foreign exchange
Change in risk factor since 2018 ICON - Stable arrow
========================================================== ==================================
Link to strategic objective Growth
========================================================== ==================================
Description
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 lack of clarity over trade negotiations resulting from the UK's departure from the EU
continues to affect the strength of sterling.
==============================================================================================
Controls/mitigating factors
* 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.
==============================================================================================
Activities in 2019
* We continued to apply our hedging strategy
consistently and, as at 31 December 2019, the Group
had hedges in place for 2020, 2021 and 2022 of US$40m,
US$15m and US$5m respectively, being a proportion of
US dollar anticipated revenues.
==============================================================================================
Read more about our financial risk management objectives and policies in note 28 on page
171.
Financial loss arising from failure of
a client to meet its obligations
Change in risk factor since 2018 ICON - Stable arrow
============================================================= ===================================
Link to strategic objective Understanding
============================================================= ===================================
Description
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.
The longer the COVID-19 outbreak lasts and the more widespread it becomes, the greater the
risk that our clients will be negatively impacted by the consequences on seabourne trade and
are unable to meet their obligations.
==================================================================================================
Controls/mitigating factors
* 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.
==================================================================================================
Activities in 2019
* We continued to provide for doubtful debts on a
conservative basis.
* There were no unexpected losses arising from a client
failure during the year.
==================================================================================================
Read more about our trade receivables in note 15 on pages 160 to 161.
Breaches in rules and regulations
Change in risk factor since 2018 ICON - Up arrow
=================================================================== ==============================
Link to strategic objective Trust
=================================================================== ==============================
Description
Breaches of regulations, intentional or unintentional, could have a significant financial
and reputational impact on the Group. In regulated entities, this could result in the loss
of licences required to operate.
This includes breaches of sanctions, bribery and corruption laws, insider dealing, market
manipulation, money laundering, facilitation of tax evasion, General Data Protection Regulations
and Health and Safety controls.
===================================================================================================
Controls/mitigating factors
* Investment in compliance, quality assurance and legal
functions to ensure best practice is consistently
applied throughout the Group.
* Internal compliance tools help ensure the Group's
teams have access to information that can assist them
when negotiating.
===================================================================================================
Activities in 2019
* We continued to develop our internal compliance tools
for use by all our staff to reflect changes in rules
and regulations.
* The Compliance Code was reissued, including versions
in Mandarin and Arabic. Every member of staff is
required to confirm they have read and understood the
contents of this Code.
* Training modules on sanctions and on anti-bribery and
corruption were released during the year. Modules on
insider dealing, market manipulation and anti-money
laundering were developed and will be released
shortly.
===================================================================================================
Read more about how we do business on pages 63 to 64.
Changes in the broking industry
Change in risk factor since 2018 ICON - Stable arrow
============================================================= ===================================
Link to strategic objective Understanding
Breadth
Reach
Trust
Growth
============================================================= ===================================
Description
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.
==================================================================================================
Controls/mitigating factors
* We monitor and develop technological applications
which will impact the broking industry.
* We monitor competitors' activities in terms of
product offerings to ensure we can react accordingly.
* We regularly review our clients' broking
requirements.
==================================================================================================
Activities in 2019
* We have released the Sea/ suite of sophisticated
technological tools to enhance our service offering
to our clients and to future-proof our business.
* We continue to develop and invest in these tools to
ensure that they continue to meet the evolving needs
of our clients.
==================================================================================================
Read more in Our strategy on pages 50 and 51.
Changes in principal risks
We previously identified the failure to achieve strategic objectives and employee misuse of confidential information as key risks.
The Board considered it more appropriate to identify specific risks to the achievement of the stated strategic objectives and to consider them separately.
Whilst the risk of an employee misusing key confidential information remains relevant, it is no longer considered to be a principal risk given the mitigating factors which are in place.
We continue to monitor the possible impact of climate change on the business.
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 Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union 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 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 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 loss of the Group and loss of the Parent Company;
-- 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 it faces.
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:
Sir Bill Thomas
Chair
6 March 2020
Related party transactions
30 Related party transactions
As in 2018, 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.
2019 2018
GBPm GBPm
============================= ===== =====
Short-term employee benefits 4.6 4.8
----------------------------- ----- -----
Post-employment benefits 0.1 0.1
----------------------------- ----- -----
Share-based payments 0.3 0.5
============================= ===== =====
5.0 5.4
============================= ===== =====
Full remuneration details are provided in the Directors' remuneration report on pages 106 to 125.
V 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:
2019 2018
GBPm GBPm
======================================= ===== =====
Management fees charged 2.9 3.1
--------------------------------------- ----- -----
Rent receivable 5.4 5.1
--------------------------------------- ----- -----
Dividends received 30.5 0.7
--------------------------------------- ----- -----
Transfer of investment in subsidiaries 0.2 -
======================================= ===== =====
Balances with subsidiaries at 31 December were as follows:
2019 2018
GBPm GBPm
================================ ===== =====
Amounts owed by related parties 16.8 17.3
-------------------------------- ----- -----
Amounts owed to related parties (1.9) (1.8)
-------------------------------- ----- -----
Deferred income (0.7) (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 30 to the consolidated financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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