Clarkson

Rethinking  
Our 
Industry

Clarkson PLC Annual Report 2017

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Clarksons is the world’s  
leading provider of integrated  
shipping services

Through our ‘best in class’ offer, we bring unique industry 
connections and expertise to our ever-wider and increasingly 
diverse client base across all sectors of the shipping and offshore 
industries, providing unrivalled professionalism  
and support in the markets in which they operate.

Revenue

Underlying profit 
before taxation

Reported profit  
before taxation

£324.0m
2016: £306.1m

£50.2m
2016: £44.8m

£45.4m
2016: £47.3m

Dividend  
per share

73p
2016: 65p

Contents

Strategic report

Financial statements

Chief Executive Officer’s review

Group at a glance
4 
8 
Chair’s review
12  Our business model
14  Our market context
16 
20  Our strategy
22 
40 
42 
48 

Business review
Financial review
Risk management
Corporate social responsibility

Governance

55 
56 
58 
62 
63 
64 
65 
80 
84 
86 
87 

Introduction to corporate governance
Board of Directors
Corporate governance statement
Board and committees
Nomination committee report
Remuneration committee report
Directors’ remuneration report
Audit committee report
Directors’ report
Directors’ responsibilities statement
Independent Auditors’ report

93 
93 

94 
95 

96 
97 

Consolidated income statement
Consolidated statement  
of comprehensive income
Consolidated balance sheet
Consolidated statement of changes 
in equity
Consolidated cash flow statement
Notes to the consolidated  
financial statements

128  Parent Company balance sheet
129  Parent Company statement  

of changes in equity

130  Parent Company cash  

flow statement

131  Notes to the Parent Company  

financial statements

Other information

145  Glossary
148  Five year financial summary
IBC  Principal trading offices

Please visit www.clarksons.com 
for more information.

 
RETHINKING 
OUR 
INDUSTRY

As economies advance and global trade 
evolves, Clarksons remains at the forefront 
of the industry; committed to innovation, 
driven by ambition and focused on the future.

To be successful is to constantly adapt,  
embrace change, invest in our capabilities and 
innovate new technologies whilst continuing  
to provide an unrivalled service to our clients.

We never stop rethinking our industry.

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www.clarksons.com 
 
Strategic report

ERIK HELBERG
CHIEF EXECUTIVE OFFICER OF 
CLARKSONS PLATOU SECURITIES

We operate at the forefront of a 
dynamic shipping market, where 
our dedication to innovation 
ensures we set new industry 
standards and continue to 
provide our clients with an 
unrivalled service.

2

CLARKSON PLC ANNUAL REPORT 2017

EVOLVING  
OUR  
OFFER

Our marketplace is continually changing.

As industry leaders, it is our responsibility  
to set the benchmark for best practice 
standards. 

We continue to grow the business 
profitably in line with our strategy, whilst 
ensuring that our efforts are centred around 
an ethos of excellence, evolution, innovation 
and expansion.

For more information on our market context see pages 14 to 15.

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www.clarksons.com 
 
Strategic report

Group at a glance

As the world’s leading provider of integrated shipping services,  
we work with our clients to achieve their business objectives across 
all aspects of this complex and dynamic industry.

Our business

Broking
Clarksons’ broking services 
are unrivalled – in terms of  
the number and calibre of  
our brokers, our breadth of 
market coverage, geographical 
spread and depth of 
intelligence resources.

Financial
From full investment banking 
services to project finance 
and the arrangement of 
dedicated finance solutions 
for the shipping, offshore and 
natural resources markets,  
we help our clients fund 
transactions and conclude 
deals that would often be 
impossible via other, more 
traditional routes.

Support
Our teams provide the highest 
levels of support with 24/7 
attendance at a wide range 
of strategically located ports 
in the UK and Egypt, offering 
port services support, agency, 
freight forwarding, supplies 
and tools for the marine and 
offshore industries.

Research
Clarksons Research is the 
market leader in providing 
timely and authoritative 
information on all aspects of 
shipping. We provide data on 
over 140,000 vessels, 7,000 
offshore fields, 40,000 
companies and 700 shipyards 
as well as extensive trade and 
commercial data and over 
100,000 time series.

For more information on 
broking see pages 22 to 32.

For more information on 
financial see pages 33 to 35.

For more information on 
support see pages 36 to 37.

For more information on 
research see pages 38 to 39.

The strategic report on pages 1 to 54 was approved by the Board and signed on its behalf by:

Jeff Woyda
Chief Financial Officer and Chief Operating Officer

9 March 2018

2017 financial highlights 

Revenue

9
.
7
3
2

8
.
1
0
3

1
.
6
0
3

0
.
4
2
3

Underlying profit  
before taxation

Reported profit  
before taxation

Underlying earnings  
per share

8
.
3
3

5
.
0
5

8
.
4
4

2
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2
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£324.0m
6%

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£50.2m
12%

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£45.4m
4%

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116.8p
11%

4

CLARKSON PLC ANNUAL REPORT 2017

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2017 revenue

6%

Port and agency services

Tools and supplies

Stevedoring

Freight forwarding and logistics

16%

Securities

Project finance

Structured asset finance

4%

Digital

Consultancy

Valuations

Reports 

74%

Dry cargo

Containers

Tankers

Specialised products

Gas 

LNG

Sale and purchase

Offshore

Futures

Years

166

Countries

22

Offices

48

Employees

1,546

Reported earnings  
per share

Dividend  
per share

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104.4p
13%

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73p
15 years’ progressive dividend

Final

Interim

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 of the term 
‘underlying’ and related calculations 
are included within the financial 
review on page 40.

For more information  
see the financial review  
on pages 40 to 41.

5

www.clarksons.com 
 
Strategic report

EXPANDING 
OUR  
BUSINESS

We are committed to investing in, 
and developing, our talented 
global workforce.

Our ability to hire and retain the best 
new talents, as well as the industry’s 
most experienced professionals, 
enables us to deliver ‘best in class’ 
service across every sector of the 
market, whilst our growing office 
network offers a valuable  
local service alongside our  
global offering.

For more information on our corporate  
social responsibility see pages 48 to 54.

We are committed to developing 
the best talent to drive forward 
our unique and evolving offering 
across our global network.

BOB KNIGHT
CHIEF OPERATING OFFICER 
OF BROKING

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CLARKSON PLC ANNUAL REPORT 2017

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Strategic report

Chair’s review

As the shipping markets begin 
to show signs of recovery, 
the strength and depth of our 
global expertise has enabled 
us to consolidate our market-
leading position. 

8

CLARKSON PLC ANNUAL REPORT 2017

JAMES HUGHES-HALLETT
CHAIR

Overview
This year the shipping market has displayed some 
early signs of a recovery following a sustained period 
of challenging trading conditions for the industry. 
Despite ongoing headwinds in certain sectors, the 
strengthening of the broader global economy during 
2017 has boosted the shipping market, highlighted 
within dry cargo where the Baltic Dry Index ended 
the year 42% higher than it started. Whilst we remain 
cautious about the near-term direction of the industry, 
we are pleased to report that Clarksons has once 
again delivered a confident performance on the back 
of this wider macro-economic improvement and 
continues to deliver substantial value to our 
shareholders. Improvements across a number of 
divisions over the past year have been particularly 
pleasing, notably in the dry cargo freight market and 
container sector, as well as the strong performance 
in investment banking and project finance. 

Against this backdrop, we have consolidated our 
position as market leader, increasing our market 
activity through a mixture of innovation, investment 
and a continued commitment to providing a ‘best in 
class’ offering. We have made significant investments 
in technology over the past 12 months, ensuring that 
Clarksons not only remains at the forefront of the 
shipping industry, but continues to innovate and 
develop new services for our clients.

Our position at the heart of the shipping industry has 
been built over 166 years, based on a fundamental 
dedication to our clients, and providing them with 
a unique, tailored service that offers an unrivalled 
understanding of the sector. 

As market leaders, we have an opportunity to set 
new benchmarks for best practice in the sector and 
to create and shape the next generation of broking, 
banking, market analysis and technology. This has 
been a key area of focus for Clarksons in 2017 and 
we are very pleased with the progress we have made 
during the year. Clarksons continues to pioneer new 
ways of doing business in the shipping industry and 
is well positioned to capitalise on this investment in 
2018 and beyond. 

Results
Underlying profit before taxation was £50.2m (2016: 
£44.8m). Reported profit before taxation was £45.4m 
(2016: £47.3m).

Underlying earnings per share was 116.8p (2016: 
105.2p). Reported earnings per share was 104.4p 
(2016: 119.7p).

As explained in the financial review on page 41, free 
cash resources at 31 December 2017 were £54.1m 
(2016: £47.3m).

Dividend
Clarksons has maintained its impressive dividend 
record this year, having increased it every year since 
2002. In line with this progressive dividend policy, the 
Board is recommending a final dividend of 50p (2016: 
43p). Coupled with the interim dividend of 23p (2016: 
22p), the resulting full year dividend is up 12% to 73p 
(2016: 65p), making it the 15th consecutive year of 
dividend growth.

The dividend will be payable on 1 June 2018 to 
shareholders on the register at 18 May 2018, subject 
to shareholder approval. 

Clarksons remains a highly cash-generative business 
and, following the repayment of the outstanding loan 
notes during 2017, is now debt-free with a strong 
balance sheet. The current state of our markets 
means that there are a number of exciting 
opportunities for growth and the creation of 
shareholder value, which remains our primary goal. 
The Board intends to capitalise on these opportunities 
as a priority, whilst continuing to hold firm to our 
progressive dividend policy.

People
Our colleagues and their hard work and expertise are 
at the centre of Clarksons’ continued success, and 
underpin our commitment to providing a ‘best in 
class’ global offering. We have continued to invest in 
and develop talent throughout 2017, as seen by the 
opening of new offices in Tokyo and Seoul, the hiring 
of a number of key individuals globally across many 
business lines and the extension of banking activities 
into convertible bonds and broking activities into wet 
FFAs. We take our position as the leading sector 
employer very seriously, and are committed to 
continually setting new industry benchmarks of 
excellence. I would like to thank all our colleagues  
for their hard work and dedication in 2017.

Board
Peter Backhouse, Senior Independent Director, 
and I have been interviewing prospective successors 
for Ed Warner on the Board and as Chair of the 
remuneration committee, and expect to be able to 
announce a new appointment to the Board this year. 
When a suitable candidate is found, Ed will retire 
from the Board and as Chair of the remuneration 
committee, having served nine years as an 
independent Non-Executive Director. 

Outlook
The near-term future for the shipping markets remains 
mixed, but we have seen improvements in a number 
of our markets and are beginning to see the first signs 
of a broader industry turnaround. Clarksons remains 
well positioned for an industry upturn given our strong 
financial position, unrivalled sector expertise and the 
continual development of innovative client offerings 
across the sector.

James Hughes-Hallett
Chair

9 March 2018

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www.clarksons.com 
 
Strategic report

We are raising the bar and 
delivering simplified, 
transparent end-to-end IT 
solutions for the shipping 
market, adding value to 
every freight transaction,  
constantly optimising 
customer experience.

RICHARD WHITE
HEAD OF TECHNOLOGY

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CLARKSON PLC ANNUAL REPORT 2017

PIONEERING  
OUR 
TECHNOLOGY

We recognise the need to embrace and use 
technology to pioneer new ways of doing 
business in the shipping industry.

Through our significant investment into digital 
solutions and the first class teams behind 
them, we are shaping the next generation of 
shipping technology to complement, rather 
than replace, existing business processes.

For more information on our business review see pages 22 to 39.

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Strategic report

Our business model

Resources and relationships

Financial 
We are listed on  
the London Stock 
Exchange. We have  
a strong balance sheet, 
no bank borrowings 
and net cash available 
to fund the growth of 
the business.

Market insight 
Our research and 
analysis teams produce  
and validate data, 
analysis, key insights 
and valuations across 
all sectors of shipping 
and offshore and are 
acknowledged as 
market leaders.

Technology 
Our in-house 
technology team  
allows us to continually 
develop and improve 
our suite of platforms 
and software. It allows 
for more informed 
commercial decisions 
to be made, insight to 
be easily shared and 
interaction between 
brokers and clients 
optimised. In doing so, 
we improve our own 
operational efficiency 
and continue to deliver 
a ‘best in class’ service.

People 
Our people are our 
most important asset 
across all parts of the 
business and we aim 
to recruit and retain 
the best in the industry.

Clients
We work ethically and 
build strong client 
relationships where our 
knowledge builds trust.

Stakeholder value

Shareholders
We continue to provide 
shareholders with increasing 
dividends whilst maintaining  
a good financial standing  
and strong balance sheet.

Clients
By ensuring that our clients 
receive the best information 
through a range of innovative 
technological solutions, we 
provide them with the tools 
they need to make key 
business decisions.

People 
Our skills and knowledge 
ensure that world trade 
continues to flow in the most 
effective manner, that 
countries receive the raw 
materials to build and develop 
and people have the food and 
goods they need.

73p
dividend per share

50,000+
vessel positions updated  
each day

1,546
employees

Commodity/service 
providers and their 
end users 
As an essential part of the 
global supply chain, we have 
the necessary skills and 
information at our fingertips 
to ensure we know what 
commodities need moving to 
where and when, as well as 
the best solutions for this.

145,000+
vessels in the world fleet

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CLARKSON PLC ANNUAL REPORT 2017

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Underpinned by our values, our integrated business model provides 
the platform for an unrivalled level of service and information that 
enables trade and creates long-term value.

What we do

C argo

Support

A

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Broking 
shipping 

R e search

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Broking 
offshore 

Resea r c h

Financial

For more  
information on  
our market context 
see pages 14 and 15.

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O

Our values

Integrity
Clarksons is a business built 
on long-term relationships 
and trust. Our clients and 
other stakeholders have 
always known that we will ‘do 
the right thing’. We say what 
we mean and stand by those 
words, taking responsibility 
for our actions at all times.

Excellence
Second best has no place  
at Clarksons. We aim to excel 
in every way – helping our 
clients achieve their 
objectives, no matter how 
challenging, by applying our 
unrivalled breadth, reach, 
experience and expertise 
to each project. We deliver 
innovative solutions to 
complex problems and our 
challenge is to exceed our 
clients’ expectations at all 
times, on every aspect of 
every project.

Fairness
Every person and business 
we encounter is treated 
equally. We are fair to our 
clients, in the terms we 
propose and the level of 
service each party can expect, 
and fair to our own people. 
As a PLC, we consistently 
reinvest profits in training and 
development, even through 
the downturns, supporting 
every member of Clarksons 
to fulfil their potential.

Transparency
Like many of our clients, we 
are a publicly listed company 
and we share many of the 
same drivers, challenges and 
concerns. Our PLC status 
requires that we adhere to 
high standards of governance 
throughout the Company.

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Strategic report

Our market context

ENABLING GLOBAL TRADE

The complex dynamics and multi-cyclical 
nature of the shipping and offshore 
markets means that Clarksons’ leadership 
position across each and every sector, 
and its integrated model of consultancy 
and execution, linked to financing and 
analytics, provides a unique resilience 
throughout the economic cycles…

Over the past 20 years, the capacity of the world’s 
shipping fleet has grown by over 150% as the 
shipping industry has expanded to meet its crucial 
role in servicing global trade. 

While accelerated fleet growth since the financial 
crisis created surplus and depressed rates, every fleet 
segment within which Clarksons operates has seen 
material expansion, with the bulk carrier fleet more 
than doubling in the past ten years.

Fleet growth has begun to moderate in recent years, 
helping markets begin to recalibrate. Understanding 
the number of active shipyards and capacity 
reductions is a key insight that Clarksons provides 
to our clients. 

In recent years, recycling of ships has increased, 
also helping markets recalibrate. New and complex 
environmental regulations, which Clarksons is 
uniquely placed to understand and explain, may 
put further pressure on the trading of older ships.

Financing this fleet is hugely capital intensive, 
with today’s shipping and offshore fleet valued at 
US$1.2tn. The guidance that Clarksons’ financial 
teams can provide across the rapidly evolving 
financial landscape is unique in the market.

Active shipyard capacity

Number of yards, vessels >20,000 dwt
350

300

250

200

150

100

50

0

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China / Japan / Korea

Rest of World

14

CLARKSON PLC ANNUAL REPORT 2017

Supply

US$1.2tn
value of shipping  
and offshore assets

145,000
vessels and  
offshore assets

Clarksons’ activities

Research
 – World fleet register
 – Shipping intelligence network
 – Offshore intelligence network
 – SeaNet

Financial
 – Securities
 – Project finance
 – Structured asset finance

Broking
 – Newbuilding
 – Sale and purchase
 – Ship recycling

Drilling 
Survey 
Construction 
Production 
Support 
Renewables

Offshore  
sectors

Clarksons’

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Demand

11.6bn mt
of seaborne trade

1.5t
of cargo per  
person globally

Clarksons’ activities

Research
 – Shipping intelligence network
 – World offshore register
 – Seaborne trade monitor

Support
 – Agency services
 – Tools and supplies
 – Forwarding and logistics
 – Stevedoring and warehousing

Broking
 – Shipping
 – Commodities
 – Offshore

services

Dry cargo 
Tankers 
Specialised products 
Gas 
Containers 
Specialist

Shipping  
sectors

Shipping plays a vital role in facilitating 
global trade, with 85% of all trade moved 
by sea. World seaborne trade reached 
11.6bn tonnes in 2017, almost double that 
at the turn of the millennium, and more 
than treble that of the mid-1980s. At the 
same time, the world’s population has 
continued to expand, helping drive 
urbanisation, consumer activity and global 
energy demand.

In addition to these underlying mega-trends,  
seaborne trade per capita is also on the rise. In 1990, 
0.8 tonnes of cargo was shipped for every person  
on the planet; by 2017 this figure stands at more  
than double, at 1.5 tonnes of cargo shipped per 
person. In 2017, seaborne trade grew at its fastest 
rate since 2012.

With population growth momentum expected to 
continue for decades and emerging economies likely 
to increase their requirements for goods and raw 
materials that shipping transports securely and 
efficiently, Clarksons are well placed to take advantage 
of these underlying long-term market fundamentals.

World seaborne trade

Billion people
8

Billion tonnes
12

7

6

5

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

Major dry cargo 
Minor dry cargo 
Crude oil 

Oil products 
Chemicals
Liquefied gas 

Containers 
Other dry cargo 
World population

10

8

6

4

2

0

7
1
0
2

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www.clarksons.com 
 
 
 
Strategic report

Chief Executive Officer’s review

ANDI CASE
CHIEF EXECUTIVE OFFICER

As the shipping industry evolves, 
our commitment to hiring the best 
talent and investing in technology 
continues to drive growth and 
provides our clients with market-
leading intelligence and innovative 
tools for trade. 

16

CLARKSON PLC ANNUAL REPORT 2017

I am pleased to report another strong performance 
from Clarksons in 2017 as the business achieved 
revenue of £324.0m, representing growth of 6%.

Through our commitment to differentiate our 
offering by innovating and constantly developing 
our capabilities, we have reinforced our position at 
the forefront of the shipping industry and delivered 
another year of profitable growth, resulting in a 
15th consecutive year of dividend growth for 
our shareholders.

The continued overall recalibration of the shipping 
markets is a positive sign to the markets. However, 
movement in sectoral demand/supply balances have 
once again shown how reactive the individual markets 
are to such balances. The rising cost of steel and 
currency movements have led to the continued 
slowing of fleet growth through lower levels of 
newbuildings. This, together with reasonable levels  
of end of life recycling enabled by high scrap steel 
prices, are key factors in changing the demand/supply 
imbalance, which in turn supports an improvement in 
rates and asset values in a number of sectors.

The sector showing most improvement was the dry 
cargo market, evidenced by the strong recovery in the 
Baltic Dry Index, although some of these gains were 
tempered by other sectors such as deep sea tankers 
and LPG which saw continued deliveries into already 
fully supplied markets. Overall in 2017, the average  
of the ClarkSea Index, which measures earnings for 
most of the main vessels in bulk shipping, was 14% 
higher than last year.

As shipping represents in the order of 85% of world 
trade, we must always remain cautious of geo-
political and macro-economic factors. We start 2018, 
as we did 2017, with lower forward visibility of 
earnings from a lower forward order book. This 
reflects both the reduced levels of newbuilding orders 
and lower period business done in the market in 
recent times, as highlighted last year. Nevertheless, 
spot volumes and rates have been improving, which 
during 2017 more than offset the lower forward order 
book brought forward, and produced increased 
revenue across the business. 

We continue to place great emphasis on ensuring we 
are the advisors of choice across all of our divisions. 
This strategy of diversification and being ‘best in class’ 
in all verticals has served us well and should be a driver 
for growth as more of our markets see better times. 

Overall, the broking teams enjoyed a successful year 
as, generally, market conditions improved. Dry cargo 
performed significantly better during 2017, with spot 
earnings reaching the highest level in five years, and 
following a protracted downturn, the offshore markets 
started to see some signs of renewed interest 
following the sustained strengthening of the oil price 
during the second half. There were also improvements 
seen in the specialised products and futures markets, 
with the secondhand sale and purchase team having 
a particularly strong year. 

Clarksons Research had another year of strong 
revenue growth as it continues to establish itself as the 
market-leading provider of intelligence and data across 
the shipping, trade, offshore and energy markets. 2017 
was a period of focused investment in new products 
and technologies, which muted profit growth, but will 
provide an improved platform for the future. Our clients 
recognise the invaluable contribution that Clarksons’ 
trusted intelligence can provide in both helping them to 
set strategy and enabling fast and effective short-term 
decision-making.

The financial division performed strongly during the 
year. Clarksons Platou Securities completed an 
increased number of corporate transactions, including 
high profile activity in the equity and debt capital 
markets, continued activity in restructurings and a 
number of M&A transactions. The successful roll out 
of our metals and mining business during 2017 and 
the recent addition of a convertible bond team further 
adds to the extensive services we are able to deliver 
to our clients. The project finance market has also 
seen increased activity, particularly in the real estate 
sector, where our team in Oslo have been both busy 
and effective, and the dry cargo and container 
sectors, where clients are looking to benefit from  
the long awaited upturn. 

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www.clarksons.com 
 
Strategic report Chief Executive Officer’s review continued

I am encouraged by the positive 
momentum in the market, with 
Clarksons well positioned to 
deliver long-term growth and 
returns for our investors. 

The port services team has had another profitable 
year, having benefited as the year unfolded from the 
upturn in activity in the oil and gas industry. The team 
has continued to expand into new markets and has 
made several hires, strengthening its offering.

As global trade evolves, we recognise the need to 
constantly innovate and improve to strengthen further 
our leading position in the sector. During the year, 
Clarksons has focused particularly on driving digital 
change, investing in developing digital solutions and 
pioneering innovative technology to shape the 
shipping industry and complement our existing 
business. Whilst it is early days, I am delighted to 
report increasing adoption of the Clarksons Cloud 
platform, both internally, where our teams are 
benefiting hugely from improved information flows 
and tools to help decision-making and improved 
connectivity to clients, and externally, where a 
number of high profile clients have adopted our tools, 
particularly through our collaboration in launching 
Recap Manager with the London Tanker Brokers’ 
Panel, and more generally through our operations 
platform, Gateway. 

What sets us apart 

We are constantly 
looking at how we can 
increase shareholder 
value by reinvesting in 
our business – whether 
this is in broadening our 
range of services, 
growing our global reach, 
attracting and retaining 
the best staff or the 
unique range of 
technological solutions 
we offer.

In 2017 we welcomed 
over 200 new  
employees 
to Clarksons, globally.

Continuous investment 
in technology which  
is transforming the 
transaction lifecycle.

18

CLARKSON PLC ANNUAL REPORT 2017

Unique research capability, 
providing insights on all 
aspects of shipping, trade and 
commercial trends to inform 
effective decision-making.

Despite industry-leading technology investment,  
in the second half of the year, as announced to the 
market, Clarksons was subject to a cyber security 
incident. The team responded rapidly and decisively 
and whilst the eventual impact on the business was 
minimal, and at no time was the Clarksons Cloud 
impacted, we have put in place extensive additional 
security measures to best prevent a similar incident 
happening in the future. 

A leading edge offering across finance, broking, 
research, support and technology must be delivered 
by a first class team, and we have continued to invest 
in the best talent globally as we strive to deliver ‘best 
in class’ service to all our clients. Our office network 
has grown further to include offices in Japan and 
Korea as we continue to supplement our global 
capabilities with local expert knowledge. In addition, 
we have made a number of key hires in dry cargo, 
securities, structured asset finance, futures, port 
services, IT, data collection and operations. I would 
like to thank all of our employees for their hard work 
and dedication to Clarksons’ success during 2017.

We are encouraged by the rebalancing of supply and 
demand we are seeing across the shipping industry, 
with activity levels picking up across a number of our 
key markets. The strengthening of the oil price in the 
second half of 2017 has been particularly beneficial to 
the offshore markets, whilst our financial teams have 
also profited from an improved economic outlook in 
both shipping and offshore. Increasing levels of 
industrial production and continued infrastructure 
spend in some of the world’s major economies provide 
further momentum for growth in the medium-term. 

Clarksons remains at the forefront of the shipping 
industry and our investment in cutting edge digital 
solutions will enable us to offer our clients a unique 
and innovative platform to support their business 
needs. Our commitment to providing ‘best in class’ 
service, combined with our global reach and 
unrivalled market insights, has enabled us to deliver 
another year of profitable growth and market share 
gains and positions us well for the coming year.

Andi Case
Chief Executive Officer

9 March 2018

Evolving the 
integrated service 
model offering 
bespoke solutions  
to clients.

As well as experienced hires, 
we’re committed to training  
and developing school leavers 
and graduates. We have an 
excellent track record of 
attracting young people.

20% 

of employees across the globe 
have completed more than 

10

years’ service.

52%

of the workforce  
is aged

<35

Skills-based  
training is open to 
clients, junior brokers, 
analysts and operators, 
across a range of  
office locations.

£54.1m 

free cash resources, 
as defined in the financial 
review on page 41.

Strong, debt-free 
balance sheet  
and consistent 
dividend growth.

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Strategic report

Our strategy

Our purpose is to maintain and extend our industry leadership.

Our mission is to grow value for our shareholders, building on our strong 
financial performance and supporting our progressive dividend policy by 
maintaining and developing our position as the world’s leading shipping  
services Group.

Breadth 

Reach 

Expanding  
our breadth to 
better tailor our 
integrated offer

Extending our  
reach to support 
clients globally

Understanding 

Stronger 
understanding  
of clients’ needs

A new team specialising in convertible 
bonds has been formulated and will 
start trading in April 2018.

Our new office in Seoul, South Korea 
officially opened in December 2017. 
Seoul is recognised as a major 
shipping market within Asia.

Continued investment in IT; 
developing and improving our 
portfolio of applications and tools 
to enhance our services to clients. 

Our new office in Tokyo, Japan 
officially opened in April 2017. We 
have a long history, stretching back 
more than 80 years, of working with 
major Japanese shipping companies.

A number of smaller office openings in 
Egypt to better serve the local market. 

New applications are being 
developed and tested with a select 
group of clients, gaining feedback 
and informing future roadmaps.

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CLARKSON PLC ANNUAL REPORT 2017

With an industry-leading range of products and services that span the maritime and financial markets, we are uniquely positioned to deliver bespoke commercial solutions to all our clients. We are the ‘best in class’ intermediary across every sector of maritime trade – and no single company is our lead competitor in more than one market.Our global presence enables us to meet client needs wherever and whenever they arise. With 48 offices in 22 countries, and growing, we share understanding, culture, IT systems and high standards of corporate governance across our business.Our client base ranges from oil majors, raw material producers, other multinationals and long-established shipowning families. We have worked with many of our clients for generations, building a deep understanding of their businesses and providing the services that have helped them to prosper.  
 
 
 
People 

Trust 

Growth 

Empowering  
people to fulfil  
their potential

Maintaining  
trust in shipping 
intelligence

Growing our  
business to improve 
performance

Our commitment to training increased 
in 2017 with more skills-based training 
complementing the regular seminars 
delivered on topical industry issues 
and the annual ‘wet’ and ‘dry’ 
training courses.

Our long-established, London-based 
events are open to client 
representatives as well as junior 
brokers, analysts and operators and 
will be run in different office locations 
in 2018, starting in Dubai.

Significant investment into our 
proprietary database continued 
throughout 2017, further expanding 
our scope and depth.

An expanded data analytics team has 
improved our ability to process and 
generate data.

Enhancements to all of our digital 
products were rolled out, including 
improved customisation and data 
visualisation of our systems. 

Free cash resources, as defined  
in the financial review on page 41, 
were 14% higher than 2016 at 
£54.1m, enabling an increased focus 
on opportunities as they arise.

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We want Clarksons to be recognised as the place where the best people are empowered to do their best work. We hire the brightest talents and give them the tools to shine – including leading-edge IT systems, high quality training and development and financial reward.As the industry’s leading provider of data and market intelligence on the shipping and offshore industries, our research team is the largest commercially-led unit in the maritime world. Our database tracks over 140,000 ships and 7,000 offshore fields. Shipping Intelligence Network is viewed more than five million times per year.Consistently profitable and cash generative, our financial performance bears comparison with any business, not only in the shipping sector but across the FTSE. Our total shareholder return has been consistently strong and includes a progressive dividend policy that has been maintained for the last 15 years.www.clarksons.com 
 
Strategic report

Business review

Broking

Improving market conditions 

In a year when the Baltic Dry Index 
increased by 42% and the container 
sector continued to make gains on 2016, 
our broking division delivered meaningful 
growth in both revenues and margins. 

 Revenue

£238.9m
2016: £233.6m

Segment underlying profit

£43.9m
2016: £40.2m

Forward order book for 2018

US$93m*
2016: US$112m*

*  Directors’ best estimate of deliverable forward order book (FOB)

22

CLARKSON PLC ANNUAL REPORT 2017

Dry cargo
The dry cargo freight market performed significantly 
better in 2017 as seaborne trade continued to absorb 
excess fleet capacity. The average Baltic Dry Index 
was 53% higher in 2017 than in 2016, with spot 
earnings reaching the highest level in five years.  
The capesize sector rates doubled on last year’s 
average, while the panamax sector increased by  
76%, the supramax sector by 52% and the handysize 
sector by 46%. The stronger rates environment led 
the path for an increase in period rates and asset 
prices, particularly in secondhand values.

Newbuild deliveries slowed to a nine-year low, 
following a period of depressed contracting, yet a 
slowdown in demolition resulted in fleet expansion of 
3% year-on-year. The improved earnings and market 
sentiment throughout 2017 led to an increase in new 
orders for delivery from late 2019 onwards; 
nevertheless the order book to fleet ratio remains  
at a 15-year low.

After a ten-year recessionary period following the 
financial crisis, world economic growth exceeded 
expectations in 2017. China was once again a key 
player during a year of economic and supply-side 
reforms. Its industrial production has expanded 
significantly since its about-turn in mid-2016, steered 
by the longest upturn in housing sales in more than 
two years. In addition, dry cargo demand was 
furthered by robust economic growth and strong 
industrial production in the majority of other nations.

Higher economic growth led to increased energy 
demand which outpaced the addition of new greener 
energies and thereby the ongoing reliance on coal. 
Emerging economies also continue to rely on coal as 
the cheapest energy form to propel economic growth. 
Pollution control has been a high priority, particularly 
in China, which focused on quality over quantity in 
industrial production, shifting the raw material 
demand to high quality minerals, which are most 
economical from Australia and Brazil.

The demand for grains grew alongside world GDP 
growth and 2017 witnessed a year of plentiful supply 
with record crops in most exporting countries. 

Metals, minerals and  
mines seaborne trade

3.44bn tonnes

The demand outlook for 2018 is more conservative 
with uncertainties such as China’s housing market, 
geo-politics, adverse weather conditions and stricter 
environmental regulations. At the same time, the 
slowing pace of fleet growth still indicates that the 
supply/demand balance will tighten by a further 1.4%, 
signifying a continued general improvement in rates, 
earnings and asset values.

The Clarksons Platou dry cargo team has expanded its 
global presence in 2017, with our offices strengthening 
on the back of growing young teams and improving 
quality of business concluded. Our Japan office is now 
established with its first full year of trading. We 
continue to look at key strategic hires to grow and 
improve our business, as all markets are giving a 
positive sentiment against the strong fundamentals.

Containers
2017 saw improvements in the container shipping 
sector, following the severely pressurised conditions 
of 2016. Box freight rates made further gains into 
2017, having bottomed out in 2016. Although rates  
on some trade lanes have more recently lost some 
ground, 2017 saw freight rate levels on a global basis 
average around 20% above 2016 full year average 
levels, with the SCFI composite index average up 
27%. Against this backdrop, charter market vessel 
earnings picked up from bottom of the cycle levels  
at the end of the first quarter. Although there has  
been some variation across ship sizes, in the main, 
the charter market held onto its gains or saw further 
gradual upward movements in the remainder of the 
year. The one-year rate for a 2,750 TEU ship stood  
at US$9,350 per day at the end of 2017, 55% above 
the level at the end of 2016, whilst the charter market 
‘basket’ index rose by 35% on the same basis. 

Demand side conditions improved further in 2017, 
with global trade volumes estimated to have 
expanded by around 5% in the full year to 191m TEU. 
The rate of expansion on intra-Asian trades 
accelerated further, growth on North-South trades 
bounced back more quickly than expected, and 
volumes on the key Transpacific and Far East-Europe 
trades also turned in a robust performance. 
Containership fleet capacity growth remained 
moderate, despite ongoing deliveries of ‘mega-ships’, 
with an expansion of 3.7% in 2017. Whilst some 
surplus remains in the sector, it appears to be much 
reduced, with 2% of the fleet standing idle at the end 
of 2017 compared to around 7% a year earlier.

Sector fundamentals look set to continue improving in 
2018 with volume growth levels likely to be sustained 
and supply growth projected in the 4% range. Despite 
the first contracts for very large boxships in two years 
being signed in the autumn, the ordering of newbuild 
capacity remained relatively limited at 0.7m TEU in 
2017; the order book now stands at 13% of fleet 
capacity. Meanwhile, record levels of containership 
sale and purchase activity were seen last year and 
consolidation of the sector remains ongoing with 
further merger and joint operation activity involving 
major operators to be concluded this year. Liner 
companies still face capacity management challenges 
and risks remain on the demand side, but in 2018 
additional fundamental re-balancing could well 
support further market improvements.

The Clarksons Platou containers team has benefited 
from both a rise in sale and purchase and time charter 
rates, whilst at the same time adding to market share 
throughout our global network. Our chartering team is 
busy providing on and off market solutions to the liner 
industry as they navigate through a new and 
consolidated environment. The sale and purchase 
team has concluded significant marquee business 
and has provided strong support to institutional-
backed sales where validation and execution are 
paramount. Our team continues to add to its footprint 
with an operational presence now in Seoul to add to 
our Singapore, Shanghai, Tokyo, London, Hamburg 
and Oslo bases. 

2017 global seaborne trade  
in iron ore 

Global container trade growth in 2017, 
reaching 192m TEU 

1.5bn tonnes 

5%

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Strategic report Business review continued

Tankers
As was anticipated, the tanker market weakened 
further in 2017. Clarksons’ published assessments 
of average earnings for VLCCs, suezmaxes and 
aframaxes fell by 57%, 43% and 40% respectively 
year-on-year, to levels well below long run averages. 
Products tanker earnings also fell further, with 
Clarksons’ earnings assessments for LR2s and LR1s 
on the key Middle East-Far East route falling by 39% 
and 36% respectively year-on-year, to very weak 
levels historically. MRs fared somewhat better; 
nevertheless Clarksons’ published assessment  
of average earnings for 2017 was 16% lower  
year-on-year. 

Crude tanker demand growth was restrained by 
OPEC and non-OPEC production cuts that took effect 
from the start of 2017. However, vessel demand did 
continue to grow, driven by an increase of 0.8m 
barrels per day in Chinese crude imports and rising 
crude exports from the US, Brazil and Kazakhstan,  
as well as Nigeria and Libya which were exempt from 
the cuts. The OPEC cuts meant that growing crude oil 
requirements in Asia were met by increased long-haul 
shipments from West of Suez. Products tanker 
demand also continued to grow, but growth was 
restrained by the high levels of products inventories 
that had built up previously and competition between 
naphtha and LPG in the petrochemicals sector.

Rethinking broking solutions: 
Charter Party Manager

In 2017 we focused on responding to the increasing demands 
from clients. The development team within our independent 
software house, Maritech, a subsidiary of Clarksons Cloud, 
has worked closely with market participants on the 
specification of a charter party manager tool to develop  
a better system to manage recaps and documentation.

The first version of this was delivered in mid-2017 to the 
tanker market and was licensed to the London Tanker 
Brokers’ Panel as Recap Manager.

Both Recap Manager in the tanker market, and Charter  
Party Manager across other sectors, are now being used  
by clients globally to reduce documentation errors and 
increase efficiency.

2017 seaborne  
crude oil trade

2017 seaborne  
oil products trade

2bn tonnes

1.1bn tonnes

24

CLARKSON PLC ANNUAL REPORT 2017

We are now well established in every major tanker 
chartering hub, further proof that our global approach 
has been successful. We remain focused on 
increasing our volumes with Chinese accounts.

Our Clarksons Platou tankers team were successful 
during the year in commencing a working relationship 
with two target accounts, proving that opportunities 
still exist to enhance our client portfolio. Our pioneering 
IT applications, a key part of our overall IT strategy,  
are at the forefront of the tankers industry and provide 
us with confidence that we can further differentiate 
ourselves from our competitors going forward. 

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The crude tanker fleet size increased sharply for a 
second successive year, registering growth of 5.2%, 
following growth of 6.0% in 2016. Deliveries of new 
crude tanker tonnage rose to 27.8m dwt in 2017 
versus 21.0m dwt in 2016, however the weaker freight 
market and higher prices on offer for selling vessels 
for demolition meant that scrapping rose substantially 
to 9.2m dwt, compared to 1.6m dwt in 2016. Products 
tanker net fleet growth fell to 3.9% in 2017, from 
6.2% in 2016 and 5.4% in 2015. However, the 
overhang of tonnage that had built up in the previous 
two years, combined with slightly below average 
growth in trade, meant that the market weakened 
further. Products tanker demolition also increased, 
with 2.1m dwt removed from the market, compared  
to 0.8m dwt in 2016. Deliveries in the MR sector were 
reduced from previous years’ levels, but deliveries  
of LR products tankers rose slightly. 

In 2018, crude tanker fleet growth is projected to fall 
to 3.4% with deliveries declining somewhat and 
removals expected to increase further. OPEC and 
non-OPEC production cuts are due to continue to the 
end of the year, therefore vessel demand growth is 
expected to be driven once again by large increases 
in crude imports into Asia and growth in exports from 
predominantly the US, Brazil and Kazakhstan. The 
crude tanker sector seems likely to remain challenging 
in 2018, with the market expected to recover from 
2019 when production cuts are due to end and fleet 
growth is expected to reduce further. There appears 
to be more upside potential in 2018 for products 
tankers. Fleet growth is projected to fall to 2.2%, 
which is below long-run levels of trade growth. 
Robust growth in global oil demand is projected and  
a further running down of oil products inventories may 
stimulate greater growth in volumes of trade and 
vessel demand.

2017 daily seaborne crude and 
products trade equivalent as a %  
of daily world oil production 

67%

Vessels in the deep sea  
oil tanker fleet in 2017

4,600

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Rethinking broking solutions: 
Clarksons Gateway

In the operations arena, our specialised products team  
were quick to identify a need for a more efficient way 
for their clients to monitor and manage their fixtures both 
on spot liftings and contracts.

Clarksons Gateway was developed in response to this 
need with the added benefit of being able to deliver 
key performance indicators for customers to analyse 
their business.

It is no exaggeration to say that the specialised products 
team interpreted the need very successfully but also 
that they adapted their own business practices to ensure 
that this dynamic product delivers real value to their 
customers. Gateway is now embedded within many clients’ 
working practices and is available across all sectors of the 
chartering markets.

Strategic report Business review continued

Specialised products
Key trade lanes throughout the chemical tanker 
market spent most of 2017 in a state of flux. However, 
in a reversal from the trend in 2016, the second half of 
the year experienced more buoyant spot markets than 
the first half. The Clarksons Platou Specialised Spot 
Chemical Index recorded a 6.7% increase throughout 
the year, whilst the Edible Oils Spot Index posted an 
increase to finish the year 5.3% up compared to 
where it began. Spot chemical freight rates finished 
the year on par with the long-run average; a result that 
was driven once again by a more active ex-US 
transpacific market.

Period charter and asset deal volume for much of 2017 
was lacklustre due to the delta between charterers’ and 
owners’ ideas, however activity increased in the fourth 
quarter. The stainless steel sector has seen a two-tier 
market develop, with the gap between older and more 
modern ‘eco’ tonnage increasing. 

Overall trade volume growth in the specialised 
products market was robust once again in 2017. 
Seaborne trade in 2017 is expected to reach nearly 
300m mts, a year-on-year increase of nearly 5%.  
A combination of vast infrastructure spending, 
urbanisation rates, growing populations and 
increasing social mobility are positive mega-trends 
which continue to drive specialised products trade. 

China and India remain two of the key end-user 
growth countries in our markets. Based on the first 
ten months of 2017, China recorded a 5.4% year-on-
year rise in specialised products imports, while India 
showed import growth of 5.8% year-on-year for the 
first eight months of 2017. Elsewhere, the 
development of liquid shale gas based projects in the 
US and continued Middle East investment are clear 
signals that both of these regions will continue to 
strive to meet the chemical demand of these, and 
other, developing economies. A renewal in palm oil 
volumes seen towards the latter end of the summer, 
as well as a reinvigorated Asian petroleum products 
market, combined with resilient contract of 
affreightment nominations, also helped to push 
volumes upward. 

Anticipated 2018 specialised  
products seaborne trade,  
double that of 15 years ago

Estimated growth in  
global seaborne chemicals  
trade in 2017 

>300m mts 

5%

26

CLARKSON PLC ANNUAL REPORT 2017

Turning to the other part of the tonne-mile factor, 
distance growth, we note that this continued to build 
on gains realised in 2016. Chemical tankers on 
average have travelled 0.5% further per voyage 
in 2017.

As expected, average annual growth for the chemical 
tanker fleet in 2017 decreased. Net fleet growth in 
2017 was approximately 3%, and we believe that in 
the medium-term this will reduce further due to a 
meagre order book and continued scrapping. The 
total chemical tanker order book is now less than 7% 
of the fleet, representing the lowest level for more 
than ten years in the sector and the lowest across all 
major shipping markets.

Overall, set against a backdrop of a global economy 
seemingly firing on most cylinders, continued import 
demand growth driven by China and India, as well as 
positive indications from the US and Middle East in 
terms of new liquid capacity, we believe that seaborne 
volumes will continue to grow on an annual basis. 
Rapidly reducing net fleet growth in the medium-term, 
longer trading distances and continued issues with 
fleet productivity remain key determinants for freight 
rates in the future. Taking this into account, and based 
purely on fundamentals, we believe that the medium to 
long-term outlook for the sector remains encouraging.

The Clarksons Platou specialised products team had 
a busy year and 2017 once again saw us develop the 
breadth and depth of our offer in this market. Despite 
the stagnant market backdrop, we have grown 
volume across both spot, contract of affreightment 
and period charter markets. Our investment in broking 
throughout the supply chain from production to 
end-user has continued, with an approach focused on 
both expertise and scale. Over the course of the year, 
we have also strengthened our service level through 
deeper market insight and investment in technology.

Gas
The second half of 2017 saw little change from  
the first half of the year as freights remained under 
pressure across most segments of the gas carrier 
market. Newbuilding deliveries, in conjunction with a 
slowdown in the pace of seaborne LPG trade growth, 
failed to lift freights and the averages for the year 
slipped below 2016 levels. In the VLGC sector, a total 
of 20 units were delivered following the slippage of 
some units into 2018 and two older units were 
removed from the fleet. 

Tonne-miles continued to hold up as arbitrage 
volumes from the US into Asia grew again on the 
back of strong import demand, mainly in China, 
and as a result of strong growth in US export 
volumes which rose by almost 17%, despite cargo 
cancellations throughout the year and the delayed 
start-up of the Mariner East II terminal on the East 
Coast. However, globally, the annual pace of LPG 
trade growth slowed to 4.7% year-on-year mainly 
owing to a reduction in exports from the Middle East 
due to maintenance and OPEC cuts. 

As a result of this and the expansion of the fleet, we 
saw the benchmark ME Gulf-Japan assessed rate fall 
8% to a time charter equivalent just below US$15,000 
per day. The weakness in the VLGC sector continued 
to weigh on the size sectors below, as did further 
growth in fleet supply in both the mid and handysize 
sectors. In each of these segments, we saw the fleet 
grow by 20% and 4% respectively. Although we saw 
some recovery in ammonia trade, which grew by 
1.9% and accounts for a significant proportion of 
midsize trade, the slowdown in the pace of LPG trade 
growth and increased availability of tonnage saw  
the assessed 12 month time charter rate fall by 37% 
on a 35,000 cbm unit to US$450,000 per calendar 
month. This downward correction was also mirrored 
in the handysize sector, with the time charter rate 
falling 40% to an average of just under US$410,000 
per calendar month on a 20,500 cbm semi-ref unit.

Vessels  
in the chemical  
tanker fleet

3,200 

Seaborne LPG trade  
in 2017, 60% higher  
than 10 years ago

90m mt

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Strategic report Business review continued

Given the growing competition for market share with 
the midsizes, we increasingly saw the handysizes 
competing with the smaller 12,000 and even 8,000 
cbm semi-ref units for petrochemical gas parcels, 
occasionally even fixing part cargoes at lower 
numbers to secure employment. Volume-wise, there 
was little fundamental change last year compared 
with 2016, and with this added competition from the 
larger units, we saw rates for the 12,000 cbm and 
8,250 cbm ethylene carriers drop by 7% and 2% 
respectively, despite a negligible change in fleet 
supply. In the smaller semi-ref and pressure sectors 
sub-6,000 cbm, relatively static fleet supply has seen 
freight levels bottom out and, in combination with 
more positive coastal LPG and shorter haul 
petrochemical gas trade, we have seen average East 
and West trading freight levels for the 3,500 cbm 
pressure units rebound 21% to almost US$210,000 
per calendar month.

Looking ahead, we are expecting continued growth in 
seaborne LPG volumes albeit at a slower pace than 
2017. Much will depend upon the utilisation levels 
through the existing terminals in the US, as there is 
only one new terminal expected to start up, and the 
timing of this remains uncertain. Regarding growth 
from other regions, new volumes from South Pars 
should add to the Middle Eastern balances, although 
last year these were slow to find their way into the 
international market. Ammonia trade is expected to 
contract slightly next year and there is limited 
fundamental growth in petrochemical export volumes, 
although tonne–miles for both should grow. The main 
challenge for the larger vessels remains deliveries and 
the overhang of surplus tonnage which was apparent 
through 2017. In the smallest sectors of the fleet, it 
would appear that freights have started to turn a 
corner and with no tonnage on order and an ageing 
fleet, we may see further upside from this segment. 

On the assets, the number of secondhand 
transactions went up in 2017 but this figure was 
inflated by more financial transactions, like sale and 
leasebacks between private and public companies. 
The total volume of contracting newbuildings was 
relatively steady, although significant interest in 
VLGCs resurfaced from mid-year. Given the age 
profile of the fleet, the expectation is that we will see  
a number of overage VLGCs finally hit the beaches, 
which will have a significant impact on supply/
demand balances.

On the product side, given the increase in production 
over the last few years, 2017 was expected to see  
a noticeable surplus for the whole year. However, 
balances for large parts of the year were tighter than 
expected as lower than predicted exports from the 
Middle East Gulf added to price constricted arbitrage 
flows. The market adapted to the new supply 
capacity, the weaker freight market and the impact  
of neo Panama on timing and, towards the end of the 
year, the surplus had started to kick in, dampening 
the market somewhat. So far, the expected winter 
surge in pricing and demand has been lower than 
many expected and some question the direction the 
market will take in the coming months.

Our growing investment in commodity brokerage, not 
only in terms of volume of trades but also geographical 
areas, has started to show gains. We have made 
inroads into markets which, until now, were the domain 
of other ‘heritage’ brokers who have dominated those 
areas, the Mediterranean Basin for example. We also 
saw growth in the number of commodity trades done 
out of the US and a number of new companies added 
to our client list. During the year, we took our first steps 
towards expanding our activity into China, now the 
major LPG importer in Asia. New hires are under 
training with a view to transferring to our Shanghai 
office within the next one to two years, the first time  
we will have local staff based in China and a move  
we expect to bring positive results. 

LNG
The near-term LNG shipping market recovered through 
2017 with a particular strong finish to the year. The 
spot freight rate assessment for modern dual-fuelled 
vessels averaged US$54,400 per day for the second 
half of the year compared with US$37,700 per day in 
the first half of 2017 and US$33,500 per day for 2016. 
From July, rates more than doubled to US$82,000 per 
day by the end of 2017 basis round trip economics. 

Strong Asian LNG demand, particularly in China, 
resulted in a sustained West-East arbitrage and 
consequently firmer rates. Chinese year-on-year 
imports were up by 47% to 38m mts in 2017 and the 
country overtook South Korea as the second largest 
LNG importer. Demand growth was driven by Chinese 
environmental concerns, including a nationwide 
scheme to switch around two million boilers to use 
gas and discard coal. South Korean LNG demand 
was also higher for power generation due to lower 
nuclear power availability.

The fastest rate of growth  
for LNG in 6 years 

New LNG production capacity 
expected to start up in 2018

10%

28m mt 

28

CLARKSON PLC ANNUAL REPORT 2017

Overall, northeast Asian demand was up 11% in the 
year to 174.6m mts. This offset flat to lower imports  
in other regions including the Middle East and South 
America. High northeast Asian LNG spot prices 
towards the latter part of the year were a catalyst for 
an active spot European reload market supplementing 
increased Atlantic basin LNG production which was 
also targeting Asian buyers. US and Angolan LNG 
output both rose over 300% to nearly 13m mts per 
annum and 3.8m mts per annum respectively. New 
Atlantic basin production increased the average 
distance travelled globally by each cargo in 2017 by 
3% to around 3,928 nautical miles, compared with 
last year’s average of 3,809 nautical miles. Overall, 
global LNG exports grew by 9.3% to 292m mts per 
annum in 2017.

Some 26 conventional LNG carriers and FSRUs were 
delivered in 2017 with 52 scheduled to be delivered  
in 2018. However, roughly 28m mts per annum of 
additional supply capacity is expected to come online 
in 2018 and most of the order book is already 
committed to projects. Additional LNG production 
includes the ramp up of Australian, US and Russian 
projects started in the latter half of last year, as well 
as new projects. This includes the US Cove Point and 
Freeport projects, Australia’s Ichthys, Equatorial 
Guinea’s Fortuna FLNG and Russia’s Yamal LNG 
second train, amongst others.

Two other floating liquefaction projects are scheduled 
to start in 2018. Australia’s large-scale Prelude FLNG 
is the largest vessel ever constructed and will have 
3.6m mts per annum liquefaction capacity. 
Cameroon’s Perenco FLNG is a conversion project 
with 1.2m mts per annum capacity. A number of new 
liquefaction projects may also take final investment 
decisions in 2018, including the US Golden Pass, 
Driftwood and Rio Grande projects, and the onshore 
Mozambique facility.

Qatar also indicated it would build more liquefaction 
capacity after lifting the moratorium on North Field, 
which would provide more gas for export. It would 
also debottleneck its existing liquefaction facilities, 
which in total would add roughly 23m mts per annum 
by 2024. Two FSRUs were installed in 2017 in Turkey 
and Pakistan and FSRU import projects in 
Bangladesh, India, Ghana, and the Ivory Coast are 
said to be scheduled to start up in 2018.

The Clarksons Platou LNG team was buoyed by the 
re-establishment of its presence in Singapore and early 
in the year, the team achieved a significant milestone 

by embarking on a successful FSRU newbuilding 
programme. However, it has been another challenging 
year with projects slowly materialising, re-negotiated or 
simply deferred. We remain bullish on the market’s 
fundamentals despite this prolonged lull and we look 
forward to 2018 and beyond. We are engaged in 
interesting projects, pursuing new opportunities and 
strengthening our position in the marketplace. Our 
focus remains on conventional tonnage, FSRU/FSU 
and small scale and we continue to work closely with 
other Clarkson Platou teams to promote our range of 
services and bespoke solutions to clients.

Sale and purchase

Secondhand
The year as a whole was extremely successful for 
the sale and purchase department with every desk 
throughout the Group improving their revenues on  
a like-for-like basis when compared with 2016 – the 
second half of the year was particularly pleasing in 
terms of market share across all sectors. It helped of 
course that positive sentiment was returning to both 
the dry cargo and container markets whilst at the 
same time we had a continued stream of committed 
sales candidates from major banks across the world 
looking to reduce their exposure to bad debt. So, 
with shipowners seeing reasons to be optimistic, 
and lenders committed to disposing of bad assets, 
we had the perfect ingredients with which to transact. 
As such, we were able to conclude a relatively high 
volume of business whilst asset values continued to 
steadily rise.

On the tanker side, activity levels were not so high as 
the freight market weakened in the second half of the 
year and there were not the same levels of distressed 
sellers. Nevertheless, we concluded a number of 
reasonably-sized transactions which gave us a higher 
market share over our competitors than we might 
reasonably expect to be able to achieve. If the freight 
market continues with its current negative trend then 
we would expect increased demolition activity within 
this sector, especially amongst the larger crude 
tonnage, and that in itself should help to turn the 
markets around during 2018.

The challenge is to continue with these increased 
activity levels through 2018 and, whilst this will 
undoubtedly not be easy, we feel reasonably 
confident that there will be a sufficient flow of sales 
candidates from the contraction of the European 
lending market and that we remain well placed to 
be involved.

Chinese LNG imports  
increase year-on-year 

Record sale and purchase  
volumes in 2017

46%

93m dwt

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Strategic report Business review continued

Newbuilding
Whilst 2017 showed an uptick from a notably 
subdued 2016 market, it still remained a challenging 
year for the shipbuilding industry.

than the previous year but well below pre-2015 levels. 
The total world fleet stood at 1,924.0m dwt at the end 
of the year, with fleet growth remaining firm in the gas 
carrier and tanker sectors.

With output set to decline following multiple years of 
weak contracting, shipbuilders will be hoping that the 
moderate upward trend in orders in 2017 accelerates 
in 2018. Capacity reductions remain ongoing, but 
many shipyards are still hungry for new orders. 
Although contracting activity has picked up slightly, 
conditions remain difficult, and shipbuilders will be 
hoping for further signs of market improvement in 
the coming year.

In spite of such challenges, we remained active 
across all key markets. Our market share in Korea 
continues to grow, with the team placing over a third 
of the total number of contracts placed with Korean 
yards in 2017. We also grew value through some 
notable transactions in the passenger/cruise space 
leveraging from our expertise in Sweden and Oslo 
together with the team in Shanghai. Corporate 
transactions that have also delivered large volumes to 
our business activity over the last few years continue 
to develop and we placed significant volume orders 
for such industrial business in Korea again this year.

2018 will again present its own challenges and 
shipbuilders are yet to see the light at the end of the 
tunnel. However, our breadth of service continues to 
ensure that we are well placed to capitalise on all 
opportunities that arise and we are well placed to 
continue to grow and deliver volumes across all  
key markets.

Just 902 orders of 72.8m dwt were reported globally, 
only the third year in the past 20 in which fewer than 
1,000 new orders were reported. Of the major sectors, 
bulk carrier orders saw the biggest uptick, with 286 
vessels contracted last year, although this remained 
subdued compared to historical levels. Driven by 
large crude units, tanker contracting increased to  
271 vessels, but fell well below the level of ordering 
 in 2015. Meanwhile, the boxship newbuilding market 
showed fewer signs of improvement and just 108 
units were ordered. Gas carrier and ‘ship-shaped’ 
offshore ordering was also limited, with just 39 and  
37 contracts reported respectively in 2017.

Chinese builders won the largest share of orders last 
year, picking up the majority of bulker orders and 
taking 9.2m cgt in total. Ordering at Korean yards 
improved on record low 2016 levels, but remained 
limited at 6.4m cgt, while reported contracting 
reached 2.0m cgt at Japanese yards. The strength  
of cruise newbuilding continued to benefit European 
shipbuilders, which accounted for 38% of global 
estimated contract investment in 2017 in value terms, 
though many yards operating outside the cruise 
sector struggled.

Although contracting improved year-on-year, it 
remained a challenging environment for active 
shipbuilders. Input costs continued to appreciate and 
freight market fundamentals presented real challenges 
in owners’ willingness to accommodate any upward 
movement in asset pricing to allow the yards to pass 
this through. It therefore remained speculative 
demand that drove activity and this in turn made for  
a fragile and highly price sensitive environment.

Although contracting remained limited in 2017, 
shipbuilders continued to deliver a steady volume of 
tonnage. Total shipyard output reached 97.0m dwt, 
although ‘non-delivery’ of the scheduled start year 
order book was still significant at 30% in dwt terms. 
However, given the smaller order book, deliveries are 
currently projected to decline by around 20% in 
tonnage terms in 2018. After a strong start to the year, 
total demolition activity in 2017 declined by 21% in 
tonnage terms to total 35.2m dwt. This left overall 
fleet growth relatively steady at 3.3%, slightly faster 

Total ship recycling  
in 2017

35m dwt

Newbuilding deliveries 
in 2017 

98m dwt

30

CLARKSON PLC ANNUAL REPORT 2017

Offshore

General
Oil prices strengthened significantly during the 
second half of 2017, painting a more positive 
backdrop for the offshore oil services sector in 
general. Improving oil prices and significant cost 
reductions amongst most oil companies have 
enabled significant cash flow improvement in the 
upstream E&P sector. Most of the major international 
oil companies have reported significant positive free 
cash flow during 2017, enabling them to gradually 
increase investment levels again, should they 
decide to do so. Activity in most offshore segments 
is thought to have bottomed out during 2017 and 
underlying activity drivers have in general turned 
to the more positive. This is noteworthy both 
within offshore drilling, field development and 
subsea services. 

During the year, the Clarksons Platou offshore team 
grew global OSV chartering volumes, gained proper 
foothold within the offshore renewable/wind sector  
by expanding into Hamburg and won exclusive 
brokerage. We anticipate these factors will increase 
our market share in 2018, notably in the North Sea.

Despite sale and purchase volumes remaining low, 
the Clarksons Platou offshore team managed to 
maintain market share and completed key sales to 
new clients and key important OSV owners.

Our focus and footprint within offshore analysis 
increased in the year, with key hires in Oslo. We now 
have the strongest dedicated offshore analysis team 
in the brokerage business. 

Drilling market
As of December 2017, global jackup fleet utilisation 
stood at around 66%, while floater utilisation was 
around 62%. While these utilisation levels are 
exceptionally low, there were some positive 
developments in the offshore drilling sector during 
2017. Jackup utilisation bottomed and stabilised 
before climbing slightly throughout the year, and both 
rig segments saw a notable increase in rig fixing 
activity. In spite of improving fixing activity, active 
floater utilisation drifted lower as rigs rolling off 
existing contracts still outpaced new rig contracts 
and extensions in terms of rig years. Other positive 
developments included a tightening of the North Sea 
harsh environment market, particularly for floaters, 
with an increased number of contracts entered into 
and future rates climbing slightly. Furthermore, the 

segment saw an increase in both asset and 
corporate transactions. Secondhand asset values 
for certain rig categories (for example stranded 
harsh semi-submersible newbuilds) also showed 
noteworthy increases. 

The subsea and field development market
Lead times in the segments for field development 
and subsea services are significant. 2017, however, 
demonstrated a clear uptick in equipment awards, 
marking a clear turning point, and the oil companies 
increased sanctioning activity compared to 2015 and 
2016. For floating production units, ten new contracts 
were entered into during 2017. This compares to zero 
new awards in 2016 and four awards in 2015. 
Correspondingly, awards for subsea Christmas trees 
(well control units) likely totalled 160-170 in 2017, up 
from 83 in 2016. These equipment awards relate to 
fields planned to come on stream mainly from 2020 
onwards, implying the majority of SURF/subsea 
installation work offshore will take place from 2019 
onwards. As a consequence of low sanctioning 
activity since late 2014, most leading subsea 
contractors currently have substantially reduced order 
backlogs and we witnessed a notable drop in fleet 
utilisation for the leading players during 2017. This will 
likely continue through 2018, until field development 
work should pick up again from 2019/2020. Reduced 
fleet utilisation puts pressure on the leading players, 
which again will provide knock-on effects to smaller 
industry players and vessel owners. An anticipated 
recovery in subsea maintenance work may 
compensate somewhat for reduced field development 
activity in 2018 and into 2019 but, so far, we have not 
observed a meaningful uptick in inspection and 
maintenance-related contracts. 

Offshore support vessels (PSV and AHTS) 
The offshore support vessel (OSV) market generally 
remained highly challenging throughout 2017 both 
for the PSV and AHTS segments. Though there are 
naturally some regional variances, all or most regional 
markets continued to face very low utilisation levels 
and depressed day rates. Currently, we estimate that 
around 32% of the global PSV fleet is in lay-up, while 
the corresponding number for the global AHTS fleet  
is around 34%. The North Sea is the region with best 
data and visibility in this segment, and, as such, is 
usually a good proxy for other regions. Utilisation for 
large PSVs (900+ m2 deck) in the North Sea averaged 
75%, equal to 2016 levels, while utilisation for large 
AHTSs (20,000+ BHP) averaged around 32%, 

Barrels per day of oil  
produced offshore

Daily offshore  
gas production in 2017

25.5m

115.6bn cu ft

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Strategic report Business review continued

Options volumes on dry FFAs were down 27% from 
264,879 lots in 2016 to 192,779 lots in 2017, but the 
value of these was significantly higher. Given our 
strong position in the options market which we 
continue to hold, we have seen a strong performance 
from this area over the year.

The meteoric rise in annual iron ore volumes slowed 
to a trickle last year with growth of 1.5% compared to 
over 50% growth the previous year. This, coupled 
with a drop in the general commission levels in the 
sector and the increased activity of the SGX trading 
screen, made for a difficult year. Despite this, our 
teams in Singapore and London grew market share in 
both futures and options and established a stronger 
position in the market.

With fundamental personnel changes in 2017, our 
Clarksons Platou futures team held their resolve and 
positioned themselves with expertise for 2018 by 
establishing a stronger, leaner desk. We maintained 
our market share in the options and FFA markets in 
2017 and we hope to gain market share in 2018 on 
the back of the strength of the new team.

The outlook for 2018 is positive and the goal is for 
Clarksons Platou futures to lead the futures and 
options space across all commodities.

compared to 35% for 2016. North Sea PSV term rates 
seem to have bottomed out between GBP5,500 – 
6,750 per day for the different categories, slightly up 
from 2016 levels, but nevertheless levels that provide 
no meaningful return for vessel owners. There are no 
representative term rates for AHTSs. Spot rates 
fluctuated substantially throughout the year, as usual, 
but in general, averages were marginally higher in 
2017 compared to 2016, supported by a relatively 
strong summer season. Going forward, we anticipate 
offshore rig activity to increase somewhat in the North 
Sea, in line with improved fixing activity observed 
through 2017. This, combined with increasing field 
development activity post 2018, should support 
gradually higher demand for OSVs in the region. 
Overcapacity, however, still remains a significant 
issue, and we see limited room for substantially higher 
utilisation and rates near-term. Most other regions 
remain somewhat behind the North Sea in terms of 
activity, implying utilisation and day rate levels 
remained very low throughout 2017. We also continue 
to expect recovery for these regions to be slow in 
terms of OSV utilisation and day rates. 

Futures
2017 was a year of improved notional values across 
all ship sizes in the dry market. Capes averaged 
US$15,128 for the year (US$7,388 in 2016) having 
finally made the conversion from the older ship size of 
172,000dwt to the new 180,000dwt 5TC average. 
Panamaxes averaged US$9,766 (US$5,562 in 2016) 
and supramaxes averaged US$9,168 (US$6,235 in 
2016). A shift in the supramax liquidity from the 
52,000dwt 6TC average to the new 58,000dwt 10TC 
average has yet to take place and a change of ship 
type on panamax to the 82,500dwt is some way off.

Whilst volumes for the year were up as a whole, the 
dispersal was more mixed. Capes had a strong start 
in the first quarter before deteriorating over the course 
of the year to come in slightly down; 501,511 lots in 
2017 versus 521,161 in 2016 (a decrease of 3.7%) 
despite the removal of uncertainty over the ship size. 
Panamaxes conversely improved from 460,829 lots in 
2016 to 519,387 lots in 2017 (an increase of 12.7%) 
whilst supramaxes showed the greatest improvement 
from 123,688 lots in 2016 to 150,297 lots in 2017 (an 
increase of 21.5%).

The combined improvement in notional values and 
volumes resulted in a better year for the division with 
stronger revenues. 

Supramax/handymax futures  
volumes increase in 2017

Capes notional values in 2017, 
doubled from US$7,388 in 2016 

21%

US$15,128 

32

CLARKSON PLC ANNUAL REPORT 2017

Financial

Landmark transactions 

2017 was a year of landmark transactions, 
with the financial division involved in 
record levels of activity across the equity 
and M&A markets. 

Revenue

£52.0m
2016: £41.0m

Segment underlying profit

£10.1m
2016: £6.8m

Securities 
2017 has been a tumultuous year marked by natural 
disasters, geo-political tensions and deep political 
divisions in many countries. For Europe in particular, 
the effect of the new and revised regulations like the 
Market Abuse Regulations and Markets in Financial 
Instruments Directives (MiFID II) has undoubtedly left 
the financial community in a state of resignation and 
confusion. Despite this, the markets have looked at 
other positives as growth has increased and equity 
valuations have continued to climb and are near 
record highs due to low interest rates, an improved 
economic outlook and increased risk appetite.

Markets have received a double boost from low 
interest rates and tax cuts this year, stimulating 
demand for shares. Global stock markets have ended 
2017 at record highs and the MSCI all country world 
index gained 22% to finish the year at an all-time high. 
The US market was again the big winner. Investors 
continued to invest in US equities in the wake of the 
presidential election in the hope of getting fiscal 
stimulus on top of monetary stimulus, believing that the 
Federal Reserve has risk assets back-stopped.

The general bond markets were relatively calm in 
2017 and US and European bonds traded horizontally. 
The Norwegian bond market, however, saw increasing 
activity. Last year, several companies took advantage 
of the low yields and strong bond market to issue 
approximately US$2bn of new bonds on Norwegian 
documentation. Many of the new issues have 
been secured debt at similar LTVs to bank financing, 
but without amortisation. Hence, offering reduced 
debt service and thus more cash flow flexibility 
for shipowners.

Metal and fuel prices were supported by stronger 
momentum in global demand as well as supply 
restraints in the energy sector, including hurricane-
related stoppages in the US, financial disruptions in 
Venezuela and security problems in regions of Iraq.

At the same time, rapidly advancing technology 
allows companies and individuals to do business 
in new ways. Technology is redefining the financial 
markets in the EU’s goal of transparency, investor 
protection and reporting obligations, however it 
comes at a steep price.

During 2017, our industry has focused on 
implementing processes and technology in order to 
be at the forefront of all the new regulations. However, 
the financial markets in Norway went into shock when 

Equity capital raised  
for our clients in 2017

US$2.9bn

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www.clarksons.com 
 
Strategic report Business review continued

Project finance

Shipping
2017 has been an active year in the project finance 
market with increased activity from the different project 
houses. The flavour of the year in the Norwegian 
market has been dry cargo and containerships.

The dry cargo market has continued to improve, 
and a more stable charter market now generates 
a healthy cash flow to cover operating expenses, 
debt financing and a decent return on equity for 
secondhand acquisitions. 

In the containership sector, the beginning of the 
year was an interesting period, when German banks 
were selling off assets at very low levels in order to 
clear their books. Many of the investors and funds 
were already in asset play mode from seeing recent 
opportunities in the dry cargo market, and this 
appetite spilled over on containerships which, at the 
time, were priced at scrap value or slightly above. 
Since then, the earnings and market values of the 
vessels have recovered significantly.

The total transaction volume in the Norwegian project 
finance market was approximately US$1.65bn. 
Clarksons Platou Project Finance completed eight 
transactions in 2017 involving five bulk carriers, three 
OSVs, two containerships, a chemical carrier and a 
cruise vessel, with a total project volume of US$164m.

We expect an active 2018 with both asset play and 
structured projects, as cash flows are starting to 
return in the various segments.

the Norwegian authorities, without warning, on 
10 December 2017 announced that the EU 
regulations will come into force on 1 January 2018 
in Norway, instead of late 2018 as earlier announced. 

Clarksons Platou Securities has been very busy 
throughout 2017, however, at times the markets were 
difficult and windows short. Our strong pipeline 
resulted in approximately 35 equity and debt capital 
market transactions raising approximately US$4.3bn 
and the completion of nine M&A transactions/
restructurings during 2017. We are also pleased to 
announce the addition of a convertible bond team 
in Oslo and New York, which will be fully operational 
during the second quarter of 2018, and which we 
expect will make a contribution from day one. 

After a year like 2017, it is hard to predict how 
global equities in general, and US equities in 
particular, will perform during 2018. The backdrop 
for our core sectors (shipping, offshore and metals 
and mining) is however supported by some very 
interesting fundamentals. Since the commodity cycle 
turned negative in 2011, we have seen a continued 
disappointment and downward adjustment to world 
GDP growth forecasts. In 2017, however, we finally 
saw upward revisions. This has come on the back of 
broad and synchronised growth in Asia, the US and 
Europe. We are seeing healthy world GDP growth 
supported by rising commodity prices. Shipping order 
books are touching lows and fleet growth is slowing. 
Asset prices in both shipping and offshore are at very 
low levels from a historical perspective. Banks are 
reducing their exposure to the sector, limiting the 
capital available for more speculative orders, which 
is good for the industry longer-term. Internally, 
we will continue to add resources within support 
functions and front office personnel. We have a strong 
pipeline into 2018, but we need to remember that 
good times are most likely temporary and our priority 
is to remain focused in order to continue successfully 
adding revenue.

Debt capital raised  
for our clients in 2017

US$1.3bn

Shipping/offshore transactions 
concluded by Clarksons Project 
Finance in 2017 

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34

CLARKSON PLC ANNUAL REPORT 2017

Real estate
The Nordic real estate market continued to perform 
strongly in 2017 with growth in all the Nordic 
countries. The final count for the Norwegian market 
is not yet complete, but consensus from the main 
analysts estimate a total transaction market of 
NOK85bn, an increase of 20% from 2016. The growth 
in the number of transactions in 2017 compared to 
2016 is more than 30%. Across the entire Nordic 
market, yields on prime assets and long leases 
compressed as institutional funds, private equity 
funds, family offices and other investors sought 
yielding assets with stable dividends in stable 
macro-economies like the Nordic. At the beginning 
of 2018, prime yields in Stockholm and Oslo are 
almost the same as in major European cities. Foreign 
investors are still present in the Nordic markets, but 
their share of the transaction market in Norway 
dropped to an estimated 19% in 2017 from almost 
40% in 2016. Even though yields on prime assets 
have declined, the yield gap (the difference between 
real estate yield and interest rate level) is still 
attractive. And, as long as the rates stay low, the 
consensus is that 2018 will at least be at the same 
levels as 2017. The vacancy rate in the Oslo office 
market is expected to decline over the coming years 
as a result of conversion and demolition of older office 
buildings to residential properties combined with few 
new office buildings. The growth in rent levels was 
10.5% even though the CPI only reached 1.1% for 
2017. Clarksons Platou Real Estate reached an 
all-time high turnover in 2017 with a growth of 27% 
compared to 2016. The transaction team completed 
27 transactions with a total market value of 
NOK7.8bn. Seven of these were sales of older 
projects, giving our investors a weighted yearly 
internal rate of return of 62% based on all projects 
actually realised from 2010 until today.

Structured asset finance
While we see renewed enthusiasm around the 
shipping markets as a result of an improved supply/
demand balance across many sectors, the asset-
based financing backdrop remains challenging with 
an overall reduction in the number of active debt and 
leasing providers.

Ship finance volumes continue to decline with 2017 
syndicated marine finance volumes, which includes 
shipping and offshore, falling to US$45.9bn in 156 
transactions compared to US$50.3bn a year earlier 
spread over 189 transactions according to statistics 
produced by Dealogic. Credit losses, coupled with 
tighter regulations, have hampered traditional banks’ 
appetite for new business/risk and there is a clear 
focus among remaining active lenders to support 
top-tier, stronger credits while reducing exposure 
to weaker credits.

Activity levels amongst the alternative capital 
providers and leasing houses, particularly those in 
China and Japan, have increased and we have also 
seen increased support from the export credit 
agencies with respect to newbuilding orders and 
to a lesser extent modification costs.

Notwithstanding this, we expect that overall asset-
based financing levels for 2017 will be below 2016, 
which itself was one of the lowest lending years in 
recent times. 

In addition, access to asset-based finance is not 
universal, there is a real flight to quality and a two tier 
market exists. Top tier borrowers continue to enjoy 
attractive terms and pricing, but for others, options 
are far more limited with terms and pricing far more 
lender-friendly. For some, any offer of finance is a 
good offer.

With significant re-financing requirements over the 
next few years, in addition to the capital expenditure 
required to satisfy impending regulatory requirements, 
the outlook for 2018 is a continued lack of asset-
based financing liquidity which we expect to continue 
to increase pressure on borrowers to commit/raise 
equity to fund the gap. Data from the Oslo Stock 
Exchange supports this view with equity issues in 
2017 surpassing those of 2016 and with some large 
high profile new issues in the wings for 2018.

27 real estate transactions  
concluded by Clarksons in 2017

156 transactions of syndicated  
marine finance volume in 2017

US$1.0bn

US$45.9bn

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Strategic report Business review continued

Support

Upturn in activity 

Support has seen an upturn in general 
market activity over the last year, with  
a notable growth in confidence returning 
to the offshore and gas sectors. 

Revenue

£18.5m
2016: £17.8m

Segment underlying profit

£2.1m
2016: £2.1m

36

CLARKSON PLC ANNUAL REPORT 2017

Agency
Following a challenging grain harvest in 2017, both in 
quality and quantity, our agency operations 
experienced reduced export volumes across the UK. 
However, we did start to see some movement 
predominantly in the short sea market driven by 
increased malting barley shipments towards the end 
of 2017. This increase looks to continue into early 
2018, and we anticipate starting to see some wheat 
exports as merchants look to clear storage prior to 
the 2018 harvest.

The flip side to the poor grain export has been an 
increase in milling wheat imports, most noticeably 
from the US and Canada, which has also benefited 
our short sea broking division. We hope this will 
continue in the spring of 2018 when the seasonal 
restrictions for shipping from the US and Canadian 
Great Lakes are past.

In 2017, we experienced a marked upturn in our 
aggregate business with significant contracts being 
awarded on the Thames, Humber, Tyne and Great 
Yarmouth. We anticipate this area of our business will 
grow into 2018 as tonnages are brought into the UK 
to meet the demand of major construction projects.

Throughout 2017, animal feed imports remained 
constant into the UK, with a slight uplift towards the 
end of the year. It is anticipated that this will remain 
one of our core businesses throughout 2018.

The offshore oil and gas industry has shown marked 
improvement during 2017, with increased activity in 
the second half. Although not nearly at the levels we 
were experiencing in 2014, confidence is definitely 
growing, and we expect to see this trend continue 
into 2018. We now have a much larger customer base 
in this sector which will give us the platform to take 
maximum advantage of the improving market. We 
have also been successful in handling major projects 
outside the UK and will continue to target this area 
using our dedicated project team.

Offshore wind became a major activity for us during 
2017, with contracts awarded throughout the UK as 
the renewable energy industry continues to grow. We 
have become the preferred partner for many of the 
offshore installation and maintenance companies. We 
already have projects in place for 2018 and are 
confident that this will continue well into 2019.

Expanded agency  
involvement in offshore wind, 
representing projects in

9 UK ports

Gibb Industrial Supplies
As with agency, our supply businesses in Aberdeen 
and Great Yarmouth are benefiting from a slight 
upturn in the oil and gas industry. The business 
performed better than expected in 2017 and again 
we anticipate this trend continuing into 2018.

Egypt agency
With seven offices in 2017 relative to three offices 
during 2016, Clarksons Shipping Agency is capable 
of providing full agency, husbandry and protective 
agency services around the clock for a fast and 
efficient vessels turnaround at all Egyptian ports.

Despite the decrease in the volume of port calls 
handled by agency all over Egypt due to current 
market conditions, 2017 was a good year in terms 
of Suez Canal transits, as the number of transits 
increased by about 16%, as well as serving new 
market segments such as LPG and LNG.

Clarksons Shipping Agency handled the Suez Canal 
transit of the world’s largest towed crude oil floating 
storage BW Catcher, with no delay and by her own 
tugs for the first time in the history of the Suez Canal.

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We are encouraged to see many of our customers 
renewing agreements into 2018 and beyond, which 
reflects the confidence we are seeing in the offshore 
oil and gas market elsewhere.

We continue to explore markets away from oil and 
gas, with offshore wind being one of our key targets.

Stevedoring
Whilst our stevedoring business has suffered due to 
the reduced grain exports in 2017, we have markedly 
increased our import activity with the stores in 
Ipswich being almost at capacity for the majority of 
the year.

We continue to enjoy a large customer base, and 
remain one of the few operations in the UK not 
controlled by one of the major grain houses.

We have continued to diversify in the products that 
we handle in order to meet customers’ expectations.

Freight forwarding and logistics
In 2017 we recruited a new Head of Forwarding who 
is working to expand this area of our business, both 
by commodity and geographically. His experience in 
this area of our business is enabling us to challenge 
some of our larger competitors whilst still offering a 
bespoke service to our customers. Traditionally, our 
freight forwarding business has been very much 
linked to our agency activity and the business it has 
generated, but we are now able to offer freight 
forwarding as a standalone service, which we intend 
to expand.

Again we see the improvement in the oil and gas 
sector benefiting this area of our business.

Represented the first wind turbine 
installation vessels to be handled  
in Green Port Hull

Expanded agency services  
with new office openings  
across Egypt 

1st

5 new ports 

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Strategic report Business review continued

Research

Investment in growth 

Revenues continued to rise whilst we 
maintained our commitment to investing  
in growth, consolidating Clarksons 
Research’s position as the market-leading 
provider of intelligence and data. 

Revenue

£14.6m
2016: £13.7m

Segment underlying profit

£4.8m
2016: £4.9m

38

CLARKSON PLC ANNUAL REPORT 2017

Research revenues continued their long-term growth 
projectory, with sales up 7% to £14.6m (2016: 
£13.7m). Clarksons Research is respected and 
trusted worldwide as the market-leading provider of 
authoritative intelligence and data across shipping, 
trade, offshore and energy. Research successfully 
enhances the Clarksons’ profile across the global 
shipping and offshore industries and continues to 
be the core data provider to the broking, financial 
and support teams of Clarksons.

Research focuses on the collection, validation, 
management, processing and analysis of data about 
the shipping and offshore markets. Significant 
investments into our proprietary database and 
intelligence management tools have helped support 
the further enhancement of our integrated digital 
platform in 2017. Our fully relational database 
continues to expand in breadth and depth, with our 
shipping and trade database now providing coverage 
on over 140,000 vessels totalling 1.9bn dwt, over 
40,000 companies, over 25,000 machinery models, 
over 600 active shipyards and fabricators, over 
600,000 fixtures and over 100,000 commercial and 
trade time series, including coverage of 11.6bn tonnes 
of seaborne trade. 

Our offshore and energy database provides 
comprehensive coverage of 7,000 offshore fields, over 
2,000 projects, 8,000 production platforms, 8,000 
subsea trees, 1,000 offshore rigs, 5,000 support 
vessels and construction vessels, all integrated within 
a Geographical Information System platform. Further 
data development has focused on the utilisation of 
AIS data, trade and commodity flows, the tracking 
of capital market activity and shipping loan data, 
machinery and environmental packages on board 
ships, offshore renewables, ports and terminals, ship 
repair yards and other shore side infrastructure 
relating to trade and energy, including refineries and 
LNG processing plants. 

Research maintains a regionally broad and diversified 
client base, including good market penetration across 
the financial, shipowning, insurance, supplier, 
governmental, private equity, energy, commodity, 
shipyard, fabrication and oil service sectors. Over 
75% of research sales are annuity-based and there 
is high customer retention. Total research headcount 
is now over 120, with expansion of global operations, 
including Asia Pacific, during 2017. Expansion has 
also focused on our IT development, data analytics 
and business development teams.

Digital
Sales from digital products across shipping and 
offshore grew by an encouraging 16% (2016: 19%). 
Our digital product range, consolidated within a single 
access portal, continues to expand and benefit from 
significant investment, utilising our growing 
proprietary database, in-house developed IT 

technology and our expanded data analytics team 
to remain market-leading. Further new digital 
products and product enhancements are expected 
to come on line in 2018. 

coverage and functionality, including data on 
the renewables sector, dynamic utilisation analysis, 
enhanced data visualisation tools and improved 
mapping functionality. 

Major shipping digital products include: 

Shipping Intelligence Network. Sales from our 
flagship commercial shipping database continued 
to grow, consolidating our market-leading position, 
particularly within the financial sector. The scope of 
data and analysis available has expanded and further 
product enhancements are planned for 2018.

World Fleet Register. Our authoritative online vessel 
register benefited from a significant upgrade that 
focused on comprehensive fleet intelligence, 
environmental regulation, the tracking of new 
technology on board ships and market trends in the 
shipbuilding market. The register now offers a range 
of powerful functionality including owner and yard 
profiles, alert functions, customisation tools and 
interactive data visualisation. 

SeaNet. Following its launch in late 2016, our vessel 
tracking system, SeaNet, successfully expanded its 
user base across 2017. SeaNet blends satellite and 
land-based AIS data with our proprietary database  
of vessels and ports, utilising latest technology 
developed in-house. It tracks global vessel 
movements for over 60,000 ships, with a combined 
fleet tonnage of 1.2bn gt, across over 5,000 ports and 
zones. The completion of a major data project to 
enhance our global port and infrastructure coverage 
will significantly enhance the SeaNet offer besides 
supporting a wide range of broking technology 
platforms. SeaNet is fully complementary to both the 
research digital offer and broader technology strategy 
across broking and financial. Further enhancements 
to SeaNet are planned for 2018.

Major offshore digital products include: 

Offshore Intelligence Network. Significant product 
enhancements have been rolled out. This includes 
database-driven intelligence alerts, rig availability 
charting, enhanced commercial data and life cycle 
project tracking.

World Offshore Register. Our comprehensive 
offshore register provides detailed intelligence 
on all offshore oil and gas fields, the infrastructure 
involved and related support vessels. During 2017, 
the platform benefited from expanded data 

Sales across our combined offshore digital product 
range grew by 25% as we continued to gain traction 
with the client base and the quality and breadth  
of our offering increased. We have retained our  
market-leading position in the insurance market 
while expanding further into the financial and oil 
service sector.

Services
Clarksons Valuations performed well in 2017, 
consolidating its position as the leading provider 
of valuation services to the ship finance sector. 
A project to digitalise workflows, supported by 
significant investment into the team’s operating 
platform, has improved workflow efficiency. The 
valuations team work closely with all major ship 
finance banks, leasing companies and asset owners, 
and are recognised as the market leader in the 
provision of authoritative valuations. 

Our services business continues to grow, with 
underlying sales up 16%. We have added further 
headcount to our specialist team which concentrates 
on managing retainers and providing bespoke data, 
consultancy and seminars for a range of corporate 
clients including banks, shipyards, fabricators, 
engineering companies, insurers, governments, 
asset owners and other corporates. These bespoke 
services often become embedded within our clients’ 
workflows, supporting client retention. 

Reports
Market intelligence reports remain an important 
aspect of the Clarksons Research overall offering, 
generating provenance and profile across the 
industry. Our flagship shipping reports, including 
Shipping Intelligence Weekly and Shipping Review 
and Outlook, are well established across the industry 
while our comprehensive offshore offering, including 
Offshore Review and Outlook, Offshore Drilling Rig 
Monthly and Offshore Support Vessel Monthly, 
continue to expand their footprint. We publish weekly, 
monthly, quarterly and annual reports, registers and 
maps, available individually and embedded within our 
digital offering, continuing a 50-year heritage.

Viewings of Shipping Intelligence 
Network each year

Number of valuations provided  
by Clarksons Valuations in 2017

>5,000,000 

>30,000

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Strategic report

Financial review

Underlying profit before taxation
Exceptional items
Acquisition related costs
Reported profit before taxation

2017
£m
50.2 
–
(4.8)
45.4 

2016 
£m
44.8
11.1
(8.6)
47.3

Exceptional items
There were no exceptional items in 2017. In 2016, both 
the gain on the sale of The Baltic Exchange shares and 
a special final dividend closely linked to that sale were 
included as exceptional items.

Acquisition related costs
Acquisition related costs includes £3.6m of 
amortisation of intangibles, £0.9m of cash and 
share-based payments spread over employee service 
periods and £0.3m of interest on the remaining 
loan notes, which were repaid in full in June 2017. 
Estimated acquisition related costs for 2018, assuming 
no other acquisitions are made, would be £2.5m.

Taxation
The Group’s effective tax rate, before acquisition 
related costs, was 24.0% (2016: 25.0% before 
exceptional items and acquisition related costs), 
reflecting the broad international operations of the 
Group and the disallowable nature of many incurred 
costs, particularly entertaining. After acquisition 
related costs, the rate was 24.3% (2016: 19.8% after 
exceptional items and acquisition related costs).

Earnings per share (EPS)
Underlying basic EPS was 116.8p (2016: 105.2p), 
calculated as underlying profit after taxation divided 
by the weighted average number of ordinary shares 
in issue during the year. The reported basic EPS  
was 104.4p (2016: 119.7p).

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 and collected during the current 
financial year are recognised as revenue accordingly. 

JEFF WOYDA
CHIEF FINANCIAL OFFICER AND  
CHIEF OPERATING OFFICER

Clarksons’ strong balance sheet 
and cash-generative business 
model supports a 15th year of 
consecutive dividend increases, 
with a total proposed dividend 
of 73p.

Results
The Group made revenue of £324.0m (2016: £306.1m) 
and incurred administrative expenses of £264.8m 
(2016: £253.0m). The majority of revenue and a 
significant proportion of expenses are earned in 
foreign currency. 

Underlying profit before taxation was £50.2m (2016: 
£44.8m). 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 believe this provides further 
useful information, in addition to statutory measures, 
to assist users of the annual report to understand the 
results for the year.

Dividend per share

Underlying profit before taxation

5
1

8
1

5
2

2
3

6
3

0
4

2
4

3
4

7
4

0
5

1
5

6
5

0
6

2
6

5
6

3
7

8
.
3
3

5
.
0
5

8
.
4
4

2
.
0
5

Final

Interim

73p

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
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2

6
1
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2

7
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2

£50.2m

Reported profit before taxation 
was £45.4m

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2

6
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2

7
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40

CLARKSON PLC ANNUAL REPORT 2017

 
However, those amounts which are not yet invoiced 
and recognised as revenue are held in the FOB. In 
challenging markets, such amounts may be cancelled 
or deferred into later periods. Consequently, the 
Directors review the FOB at the end of the year, and 
only publish the total of those items that are in the 
FOB which will, in their view, be invoiced in the 
following 12 months. At 31 December 2017, this 
estimate was US$93m (at 31 December 2016: 
US$112m). The reduction in forward visibility of 
earnings reflects the low levels of newbuilding 
contracting for delivery in 2018 and the prevalence  
of spot business arising from the still challenging rate 
environment, as highlighted in the interim statement.

Dividend
The Board is recommending a final dividend of 50p 
(2016: 43p), which, subject to shareholder approval, 
will be paid on 1 June 2018 to shareholders on the 
register at the close of business on 18 May 2018. 
Together with the interim dividend of 23p (2016: 22p), 
this would give a total dividend of 73p (2016: 65p). In 
taking its decision, the Board took into consideration 
the 2017 performance, the repayment of all 
outstanding loan notes during the year, the strength 
of the Group’s balance sheet and its ability to 
generate cash and the FOB. The dividend is covered 
1.4 times by basic EPS (2016: 1.8 times). This 
increased dividend represents the 15th consecutive 
year that the Board has raised the dividend.

Foreign exchange
The average sterling exchange rate during 2017  
was US$1.30 (2016: US$1.35). At 31 December 2017 
the spot rate was US$1.35 (2016: US$1.24).

Cash and borrowings
The Group continues to be cash-generative, ending 
the year with cash balances of £161.7m (2016: 
£154.0m) and a further £5.5m (2016: £29.4m) held in 
short-term deposit accounts, classified as current 
investments on the balance sheet. 

The Board has previously used net cash and available 
funds, being cash balances after the deduction of 
accrued bonuses and all loans outstanding, as a better 
representation of the net cash available to the 

Total shareholder return

Source: Datastream (Thomson Reuters)

business, since bonuses are typically only paid once 
a year after the year-end, and thus an element of 
the cash held at the year-end is earmarked for 
this purpose. On this basis, net cash and available 
funds ended the year at £79.1m (2016: £74.8m).

Given the increasing regulatory nature of our business 
however, an alternative measure used by the Board in 
taking decisions over capital allocation is free cash 
resources, which deducts both monies held by 
regulated entities and Board-approved future capital 
commitments from the net cash and available funds 
figure. Free cash resources, as defined, at 31 
December 2017 were £54.1m (2016: £47.3m).

Following the repayment of the final tranche of loan 
notes amounting to £23.9m in June 2017, the Group 
is now debt-free.

Balance sheet
Net assets at 31 December 2017 were £423.4m 
(2016: £406.7m). The balance sheet remains strong, 
with net current assets and investments exceeding 
non-current liabilities (excluding pension provisions) 
by £77.1m (2016: £58.1m). The overall provision for 
impairment of trade receivables was £13.3m (2016: 
£15.5m). The Group’s pension schemes have a 
combined surplus before deferred tax of £12.3m 
(2016: £2.3m). In light of this surplus, the pension 
trustees have been taking advice on de-risking 
schemes, where appropriate.

Key performance indicators (KPIs)
1. Financial KPIs used in the management of the 

business are included on pages 4, 5 and 22. These 
include revenue, profit before taxation, earnings per 
share and the FOB. 

2. The business also aims to generate long-term 

shareholder value, as reflected by a review of total 
shareholder return.

Jeff Woyda
Chief Financial Officer and Chief Operating Officer

9 March 2018

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Clarkson PLC

FTSE 250

FTSE SmallCap

This graph shows the value, by 31 December 2017, of £100 invested in Clarkson PLC on 
31 December 2008, compared with the value of £100 invested in the FTSE 250 and FTSE 
SmallCap Indices on the same date.
Other points plotted are the values at intervening financial year-ends.

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Strategic report

Risk management

The balance of effective risk management and 
embracing opportunities enables us to deliver our 
strategic objective of enhancing shareholder value by 
maintaining and extending our industry leadership. It 
is imperative that the integrity and reputation of the 
Clarksons brand, which underpins the successful 
delivery of our strategy, is preserved through effective 
risk management. 

The risk profile faced by our business continues to 
adapt as external market conditions and regulations 
change and there is an increasingly uncertain global 
political environment with associated market volatility 
and increasing cyber criminality.

Approach and framework
Our approach is to maintain and strengthen our risk 
management and internal control framework of 
identifying, monitoring and managing the principal 
risks facing our business and assessing them 
regularly. This framework cannot eliminate risk 
entirely, and can only provide reasonable, not 
absolute, assurance against material misstatement 
or loss.

Our risk assessment is formed in stages:

1. Identify the risks facing the Group by business 

sector;

2. Document risks on a centrally-managed risk 

register;

3. Assess the likelihood of occurrence of each risk;
4. Evaluate the potential impact of each risk on the 

Group;

5. Determine the strength and adequacy of the 

controls operating over each risk;

6. Assess the effect of any mitigating procedures 

or processes;

7. Plot the above factors on a risk matrix; and
8. Monitor the above on a regular basis.

The Board recognises that whilst it has limited control 
over many of the external risks it faces, including, for 
example, the macro-economic environment, it 
nevertheless reviews the potential impact of such 
risks on the business and actively considers them in 
its decision-making. The Board actively monitors 
internal risks and ensures that appropriate controls 
are in place to manage them.

Inherent risk attributes of Clarksons’ business include 
the following principles:

 – We act as agents in the provision of services for 

and on behalf of our clients;

 – We do not own physical assets of material value;
 – We do not hold principal positions, other than in 
exceptional circumstances within the financial 
division, should there be a failure of a client to 
meet its obligations during the settlement period;
 – Aside from cash held in regulated entities, we are 

not required to commit material amounts of capital 
in the conduct of our day-to-day business; and

 – We have no debt.

Every year, through an integration of culture and 
compliance, we make further progress embedding 
our risk management approach with all employees. 
Our objectives and values are clearly communicated 
and our training, systems, processes and internal 
controls are developed in accordance with our risk 
management model. This is, of course, an ongoing 
process and we continue to work hard to improve risk 
awareness and embed controls and procedures to 
mitigate risks.

The Board and senior management take a forward-
looking approach to risk to ensure early identification, 
timely assessment and, where necessary, mitigation 
of new and emerging risks, such that they can be 
evaluated alongside known and continuing risks.

In November 2017, the audit committee carried  
out its annual formal assessment of risk which  
was communicated in full to the Board, which 
subsequently agreed the key risks, risk appetite, 
controls and risk management processes in place 
within the Group. 

In addition to our regular risk management activities, 
the priority for 2018 is to continue promoting a 
‘monitoring environment’ which consists of validating, 
monitoring and reviewing the effectiveness of our 
current controls in order to support the Board in  
their responsibilities. 

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Risk governance
For detailed information about the role of the Board 
and the audit committee in the risk management 
process, see pages 60 and 82 respectively.

Board

Overall responsibility for the Group’s 
risk management and internal  
control systems

Sets strategic objectives and defines 
risk appetite

Monitors the nature and extent of risk 
exposure against risk appetite for  
our principal risks

Provides direction on the importance 
of risk management

Audit committee

Supports the Board in monitoring risk 
exposure against risk appetite

Reviews the effectiveness of our  
risk management and internal  
control systems

Operational management

Risk management process and 
internal controls embedded across 
divisions and functional areas

Risk identification, assessment 
and mitigation performed across 
the business

Risk awareness and safety culture 
embedded across the business

Risk appetite
Risk appetite is at the heart of our risk management 
processes, since it is integral to our consideration of 
strategy and medium-term planning process. The 
Board is responsible for the amount and type of risk 
the Group is willing to accept to achieve our strategic 
and operational objectives. It performs this function 
by setting the business strategy and approving the 
Group’s policies and procedures, enabling, where 
possible, a reduction in risks to the tolerance levels 
set by the Board. The Board further considers the 
inherent risk attributes of the business when 
identifying its appetite and tolerances for risk and 
opportunities. The Group’s risk appetite is monitored 
at each Board meeting and formally reviewed and 
approved by the Board annually.

Viability statement
In accordance with provision C.2.2 of the revised 
2016 UK Corporate Governance Code, the Board 
has assessed the prospects of the Group over a 
longer period than the 12 months required by the 
‘going concern’ provision.

In carrying out their assessment, the Directors 
have considered the resilience of the Group (with 
reference to its current position, prospects and 
strategy), the Board’s risk appetite, the Group’s 
principal risks and the effectiveness of mitigating 
actions. This robust assessment considers the 
potential impact of the Group’s principal risks  
on its strategy, business model, future operational 
and financial performance, solvency and liquidity 
over the period.

In determining the period over which to provide  
its viability statement, the Board took into 
consideration revenues, cash flows, funding 
requirements, profits, long-term time charters,  
the average construction period of newbuilding 
contracts, triennial valuations of pension schemes 
and duration of the majority of the forward order 
book. The Board concluded that a period of three 
years was appropriate.

Based on their assessment of prospects and 
viability, the Directors confirm that they have a 
reasonable expectation that the Group will be able 
to continue in operation and meet its liabilities as 
they fall due over the three-year period ending  
31 December 2020. In doing so, it is recognised 
that such future assessments are subject to  
a level of uncertainty that increases with time and, 
therefore, future outcomes cannot be guaranteed 
or predicted with certainty.

Going concern
The Directors also considered it appropriate to 
prepare the financial statements on the going concern 
basis, as explained in note 2.1.

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Strategic report Risk management continued

Summary of principal risks
The principal risks which may impact the Group’s ability to execute its business strategy have not fundamentally changed since 
2016, however, the likelihood of the risk occurring and mitigation in place have evolved. Further, the impact of changes in the 
broking industry has replaced pension risk, as a result of the recent de-risking in two of the three pension schemes.

The principal risks in the following table, whilst not exhaustive, 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.

Risk

Link to strategy
(see pages 20 to 21)

Change in risk  
factor in the year

  See also

Failure to achieve strategic objectives

  Our strategy, pages 20 to 21

Changes in the broking industry

Employee misuse of confidential information

Cyber risk and data security

Economic factors

Loss of key personnel

Adverse movements in  
foreign exchange

Growth

Understanding

People

Trust

Growth

People

Growth

  Chief Executive Officer’s review, 

pages 16 to 19

  Chief Executive Officer’s review, 

pages 16 to 19 
Audit committee report,  
pages 80 to 83

  Our market context,  

pages 14 to 15

  Financial risk management,  

note 26

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

  Trade and other receivables,  

note 14

Understanding

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CLARKSON PLC ANNUAL REPORT 2017

 
 
 
   
 
 
 
   
 
 
Risk description

Mitigation

Activities in 2017

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

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 revenue  
and reputational damage.

Employee misuse of  
confidential information

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

 – Frequent communication between 

Executive Directors, global Managing 
Directors and staff.

 – The Chief Executive Officer hosts  
an annual week-long meeting with  
all global Managing Directors where 
attendees consider controls, strategy 
and general management.

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

 – We have continued to focus on 
delivery of our strategy through  
‘best in class’ service in extremely 
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.

 – Daily review of real-time  
financial information.

 – Monitoring and developing 

 – We have made significant investment 

technological applications which 
will impact the broking industry.

 – Reviewing our clients’  
broking requirements.

and resource into developing 
technological applications to enhance 
our service offering and future-proof 
our business.

 – 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 reinforced our commitment  

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

 – We introduced a new cyber training 

package for all employees.

 – We strengthened contractor 

confidentiality terms.

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Strategic report Risk management continued

Risk description

Mitigation

Activities in 2017

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 phishing, 
ransomware, malware and virus attacks, 
stealing and utilising confidential 
information or IP, malicious sabotage/
deletion/corruption of data, breach of 
firewall, social media misuse, defacing 
company website/applications and 
unauthorised access to offices.

Economic factors

World trade, global GDP and other 
general economic fluctuations impact 
the demand for ships. 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.

 – IT processes include regular 

penetration testing, anti-virus and 
firewall software, frequent password 
changes and requirements for 
complexity, email authentication  
and strict procedures on granting  
and removing access.

 – Operational processes  

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

 – As announced on 29 November  
2017, the Group was subjected  
to a cyber security incident. 

 – The Group continues to invest 

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

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

 – 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.

 – 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.

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CLARKSON PLC ANNUAL REPORT 2017

 
 
Risk description

Mitigation

Activities in 2017

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.

 – We offer competitive remuneration 

 – We continued to make  

significant hires.

 – We monitored staff turnover and 
absenteeism in order to strive 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.

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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.

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 continued to apply our hedging 
policy consistently and we have 
forward sold a proportion of US dollar 
anticipated revenues into 2019.

 – We continually assess rates of 

exchange, non-sterling balances  
and asset exposures by currency.

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

 – 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.

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Strategic report

Corporate social responsibility

JEFF WOYDA
CORPORATE SOCIAL 
RESPONSIBILITY  
COMMITTEE CHAIR

As a business, and as employees, 
we are committed to supporting 
worthwhile causes and projects 
worldwide as we strive to give 
back to communities in need. 

At Clarksons, our approach to corporate social responsibility (CSR) 
 is a natural extension of our vision and values – integrity, excellence, 
fairness and transparency. We are committed to both providing a great 
place to work for our employees, with market-leading facilities, 
technologies and working practices, and giving back to the community, 
by supporting new entrants to the world of shipping and more generally 
by helping those where team Clarksons can make a real difference. 

As our business evolves so does our commitment to CSR. During 2017 
we have again contributed to some incredible charities and continued  
to monitor and support those that we have supported in the past.  
We have watched with pride as projects supported by the Group have 
flourished during the year, making a positive difference to the lives of 
many people. Our endeavours to support these causes, both financially 
and through the volunteering of our staff, has many benefits, but 
ultimately we aim to bring about positive social change and provide  
a lasting impact on the people and communities that we help.

We are always conscious to give back to the maritime sector. One of  
our more significant CSR projects for 2017 involved partnering with  
the Sailors Society to deliver a mobile medical unit to retired and active 
seafarers and their families living in the Chennai and Pondicherry  
areas in Tamil Nadu state, India. This is a project that we scoped and 
committed to in the latter part of the year and we are excited to see  
it evolve over the coming months. 

Another cause new to the Group in 2017 is a project inspired by a 
community leader local to our head office, Mick Carney MBE. Mick uses 
sport, specifically boxing, to engage disadvantaged young people and 
then mentors them to become ‘the best they can be’ in all areas of life. 
This is an ethos that is reflected within our own business and our support 
of this charity allows us to offer not only badly needed funding for the 
day-to-day running of the centre but also social mentoring for young 
people involved in Carney’s Community. This is not the first time that  
we have supported a scheme which uses sport to enrich people’s lives 
and form a basis for helping them through their challenges, as in the past 
we donated to School of Hard Knocks, a rugby charity. Sport forms an 

Corporate social responsibility in pictures

Clarksons’ employees 
have volunteered, 
donated and contributed 
to a selection of 
charitable causes  
across the globe:

Houston was awarded 
the trophy for highest 
fundraiser for the 
Wounded Warrior 
Project and Hurricane  
Harvey Relief. 

The 2nd annual 
Clarksons Charity 
Giving Day held across

8 

of our global offices

£1m 

raised for charities 
across the world  
since 2013

Clarksons’ Hong Kong 
team took to the trails  
on Hong Kong Island  
for the 3rd Annual  
Hong Kong Sailors 
Society Trek. 

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CLARKSON PLC ANNUAL REPORT 2017

important part in many of our staff’s lives, and 
teamwork is such a positive contributor to the ethos 
of Clarksons, that we strongly believe in these 
charities, and have been delighted to see the positive 
impact they are making to so many they help.

We have also provided support to Friends of 
Chernobyl’s Children, a charity aiding disadvantaged 
children in and around the city of Mogilev, one of the 
areas affected worst by the Chernobyl nuclear 
disaster of 1986, and to the Hurricane Harvey Relief 
Fund, especially poignant given the location of our 
office in Houston which suffered from the ensuing 
floods. In Norway, we donated to Sykehus Klovene, 
specialists in providing positive respite for children 
who are currently undergoing challenging, life-saving 
treatment, and in the UK we have volunteered and 
contributed to homeless charities in London and 
continue to work with them as they look to help the 
unacceptably high number of people currently 
sleeping on the streets in the capital.

Together with the phenomenal fundraising which 
takes place every year by our remarkable employees, 
team Clarksons continues to make a real difference to 
charities across the world through countless acts of 
strength and endurance, be it marathons, triathlons, 
conquering base camps or even sailing around the 
world. Helen Trundle, an application support manager 
in the London office, recently competed in the Clipper 
Round the World Race which sees international crew 
members race 40,000 nautical miles around the 
globe. It is the longest ocean race in the world and 
one of the planet’s toughest endurance challenges.

Through our charity and mentoring work, we do not 
lose sight that our reputation is key to our long-term 
success and we endeavour to use our experience to 
provide knowledge to others both in and outside of 
the business.

We have hosted lectures with the UK Chamber of 
Shipping, Institute of Shipbrokers, ITIC, Women’s 
International Shipping and Trading Association 
(WISTA) and the London Shipping Law Centre and 
have welcomed many well-known leaders in the 
shipping cluster to share their experiences and 
knowledge with team Clarksons. All staff are 
encouraged to invest time into professional 
development, including many different forms of 
mandatory training, such as anti-bribery and 
corruption and cyber security awareness programs. 
We also offer work experience to students from the 
UK and overseas and keep close relationships with 
universities and business schools around the world 
specialising in maritime and international trade.

As market leaders, we know that it is our 
responsibility to lead the way and be at the forefront 
of new ideas. In order to do that, we need to stay 
up-to-date with the market and encourage and invest 
in our employees providing qualifications with CIMA, 
CIPD, ICS, MBA, PHD or many other forms of study 
which can help their personal development.

We are conscious that we are always learning, 
regardless of age and experience and, in order to 
provide the ‘best in class’ to our employees, clients 
and communities, we must continue to evolve what 
we offer and pioneer new technology to support our 
industry. As we rethink the industry we know we need 
to be ready for the future by investing in our 
community, investing in our people and ensuring 
we are ready to shape the future of shipping. 

Jeff Woyda
Corporate social responsibility committee Chair

9 March 2018

Focusing on three  
main causes:
Maritime,  
children  
and health

Congratulations to Gosia 
Kwapinska who won our 
first Clarksons Bake off. 
The proceeds went to 
The Luminary Bakery.

116 
charities 

across 
5 years

Eat, sleep, sail, repeat. 
Helen Trundle competing 
in the Clipper Round the 
World Race, the longest 
ocean race in the world. 

Carney’s Community  
and Clarksons coming 
together to engage 
disadvantaged young 
people in sport.

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Strategic report Corporate social responsibility continued

Our people are our business
Without enthusiastic and engaged employees we 
simply could not do our job delivering the highest 
quality service to our clients. Employees are expected 
to use good judgement and act in the best interests of 
both the Clarksons Group and our clients at all times. 
Each and every member of the Clarksons team shares 
our common values and aspirations to conduct our 
business in an ethical, honest and professional 
manner wherever we operate.

Clarksons is an equal opportunities employer which 
entrusts its reputation and market lead to the best 
global workforce in shipping. Our business is 
meritocratic. We seek to appoint the best candidate 
for each and every vacancy. Candidates are 
considered against fair and objective criteria which 
enable all employees, irrespective of gender, race or 
disability, to advance in their career.

Shipping is an industry that people enter into because 
they are enthusiastic about world trade. This industry 
remains an attractive employment option as it offers 
career opportunities, flexibility and incentives for 
those who commit themselves.

Of the 1,512 staff within the Group at 31 December 
2017, 388 or 26% were female (27% in 2016). There 
were 273 managers within the Group, of which 45 or 
16% were female. From total new hires made in 2017, 
27% were female.

We are aware that there is much to be done to 
encourage more women into the shipping industry 
and to progress into senior roles. With this in mind, 
we endeavour to ensure that regardless of gender, 
Clarksons feels inclusive and focused on developing 
all employees within the business, across the world.

Please visit www.clarksons.com/gender-pay-gap-report/  
to view our gender pay gap report.

Clarksons has undergone significant growth over the 
last decade, including the acquisition of Platou in 
2015, which means that many employees have been 
employed for less than ten years. Nevertheless, we 
are proud that 23% of Clarksons employees have 
been with the organisation for more than ten years, 
and 3.5% have been employed with the business for 
25 years or more. This commitment to the Company 
and its values ensures that there is continuity of 
practice throughout the organisation and a 
sophisticated understanding of how the Clarksons 
business model is maintained.

Engaging with our people
Employees are key stakeholders in our business 
and we take our engagement of employees seriously. 
Our flat management structure means that employees 
have access to the senior management team and 
Managing Directors work alongside their trainees.

Our people 

51 

number of years 
employed by our 
longest serving 
employee.

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CLARKSON PLC ANNUAL REPORT 2017

We pride ourselves on our 
employee retention. Clarksons 
is more than just a job to many 
and our ‘family culture’ is 
something that sets us apart 
from our competitors.

We are confident that through 
regular training and educational 
opportunities and continuing to 
build a strong international 
workforce reflecting diversity 
and cultural richness, we will 
continue to pave the way 
forward in our industry.

53 

employees with 25 
years or more 
continuous service.

We regularly communicate with our employees on 
matters relating to both our Company and the wider 
maritime industry using a variety of methods such as 
our monthly Clarksons Voyage online magazine and 
iQ video updates by in-house experts. Global MDs 
week takes place each January when divisional 
Managing Directors from around the world meet at 
our headquarters in London for a week-long series 
of seminars, workshops and meetings.

Employees are able to participate in the Company’s 
share schemes (including Long-Term Incentive Plans 
and the ShareSave scheme), which give eligible 
employees the opportunity to become shareholders 
in the Company and to share in its continued growth 
and success. As shareholders, employees have an 
opportunity to engage with the Board, in particular 
at the AGM each year.

We are a global business with an international 
workforce and the combination of languages, cultures 
and ideas brings a level of diversity and cultural 
richness that is the envy of our competitors. Clarksons’ 
employees represent over 60 nationalities globally 
reflecting our cultural diversity. Clarksons continues to 
operate a prominent trainee broker recruitment process 
which attracts in excess of 2,500 applications annually. 
Our global presence means that we can attract 
employees with the opportunity to work for the biggest 
shipbroking company in the world and are able to offer 
international mobility within the Group to ensure both 
personal and professional development.

Investing in our people
At Clarksons employees are empowered to do their 
best work. We hire the brightest talents, give them the 
tools to shine, including IT systems and high quality 
training, and ensure they are suitably rewarded. 
Clarksons is committed to investing in talent retention 
and staff development, ensuring that as we grow 
(both organically and through acquisition) the right 
people are identified and developed.

In terms of employee benefits, the Company offers  
a range of immediate and post-probation benefits 
including private health insurance, discounted  
gym memberships, childcare plus vouchers, cycle  
to work scheme, season ticket loans, eye tests, 
pension scheme, life assurance policy and an 
employee assistance helpline. In some locations, 
there are canteen facilities offering free lunches  
and subsidised breakfasts.

For employee shareholders, we offer an in-house 
share dealing service, enabling employees around 
the world to take advantage of special rates with our 
preferred brokers. In 2017, we were pleased to launch 
an International ShareSave scheme for our Norwegian 
employees. In the future, we hope to offer this in other 
locations around the globe.

Furthermore, Clarksons offers a number of 
opportunities to employees to develop in their careers 
and learn more about the shipping industry as a 
whole. Employees are encouraged to broaden their 
knowledge of the business and industry where 
possible. For example, in London, the training 
development team run lunchtime seminars with 
industry experts and specialists. Employees across 
the Company are encouraged to attend these 
seminars in order to increase their understanding 
of our business and to build relationships with 
colleagues who they may not encounter in their 
day-to-day roles.

Our training schemes remain unique in our industry, 
blending the collective skilled advice and guidance 
from our experienced employees along with the 
tutelage of external experts from all areas of the 
shipping, trading and commodity markets. These 
training schemes take the form of an intense five-day 
programme and are very popular amongst employees 
as well as the employees of our clients who recognise 
the strength and credibility of the training that we offer.

During 2017, we were pleased to begin building 
a relationship with a global woman’s shipping and 
trading association. It is hoped that by working with 
organisations such as this, Clarksons can increase the 
visibility of shipbroking and related services to women 
as a career.

Our Trainee Broker Scheme is open to school, college 
and university graduates as Clarksons believes that 
the qualities of commitment, talent and passion we 
seek in a trainee require a more diverse approach 
to recruitment. Trainees can expect a fully-rounded 
education where their individual talents are nurtured 
and developed into what we hope will enable them to 
become the future leaders of our business. In addition 
to the Trainee Broker Scheme, we offer a small 
number of paid internships to students each year 
and through long-standing relationships with 
schools and academies we are able to offer regular 
work experience opportunities in our broking and 
research divisions.

Please visit www.clarksons.com/modern-slavery-act/ to view 
our latest statement on modern slavery and human trafficking 
under the Modern Slavery Act 2015.

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Strategic report Corporate social responsibility continued

Health and safety
We believe that it is vital to look after the health, safety 
and wellbeing of our staff. Clarksons endeavours to 
create a working culture that is inclusive for all and to 
maintain our high standards across all sites. Providing 
a safe and secure workplace is central to this ethos. 
Our policies and procedures are designed to minimise 
the risk of injury and ill health of all employees as well 
as any other parties involved in the conduct of our 
business operations.

Looking after our employees around the world
In February 2017, the Clarkson PLC Board approved 
a revised Group health and safety policy statement. 
This outlines the Company’s commitment to health 
and safety globally and appoints the Chief Financial 
Officer and Chief Operating Officer, Jeff Woyda, to 
oversee health and safety as a sponsor on behalf of 
the Board. This policy statement will be kept under 
review to ensure that it remains fit-for-purpose as 
the Group grows and evolves. 

Each global site is responsible for managing its 
own health and safety to a good local standard in 
compliance with relevant legislation and regulations. 
With the exception of port-side activities in Egypt, 
all Group locations outside UK conduct office-based 
activities only and therefore considered relatively 
low risk. 

Health and safety in the UK
In the UK, we have the largest concentration of 
employees in a single location (Commodity Quay), 
plus some of our highest risk locations such as port 
agency and freight forwarding. Following a thorough 
review of our health and safety management systems 
in the UK, 2017 was the first full year of operation for 
our new health and safety committees (HSCs) and 
policies.

We are pleased to report that all HSCs have met their 
required number of meetings for the year under the 
terms of reference:

Committee
Office HSC
CPSL HSC
UK HSC

Required
4
6
2

Meetings held
4
6
2

Locations represented by the Office HSC include 
London (Commodity Quay and Empson Street), 
Ledbury and Aberdeen (Shiprow). All other UK 
locations are covered by CPSL HSC.

Office HSC
As reported in 2016, all the employees responsible 
for day-to-day health and safety management in office 
locations have received refresher training and any 
with new health and safety responsibilities in 2017 
were trained for the first time. Each office location 
now has appropriate numbers of employees with 
IOSH Managing Safely certification. 

Projects undertaken by the office HSC in  
2017 include: 

 – Implementation of a new contractor approval 

process;

 – Review of first aid requirements at each location 

and refreshing training where appropriate;

 – Increased reporting and communication to PLC 

Board on health and safety matters;

 – Monitoring relevant legislative compliance at 

each location;

 – Legal responsibilities training for key Directors 

and the Company Secretary; and

 – Working on development of a bespoke health 
and safety e-learning package for employees.

For 2018, the office HSC plans to build on progress 
made and increase awareness of safety in the 
workplace amongst office employees. This is 
expected to include training.

CPSL HSC
There have been a number of positive improvements 
for CPSL during 2017 including expanding their safety 
management system and achieving internationally 
recognised occupational safety accreditation of 
OHSAS 18001 for all CPSL sites. 

CPSL demonstrated further commitment to the 
health, safety and wellbeing of their employees in 
2017 by employing a dedicated health and safety 
manager in July. Following his appointment, the 
health and safety manager has led a review of existing 
risk assessments, safe working procedures and 
operating systems. In addition, he has overseen 
the implementation assessments, processes and 
procedures where appropriate as part of the 
Company’s commitment to continual improvement. 

CPSL HSC has focused on a number of projects 
during the year:

 – Empowering employees to report near misses; 
 – COSHH training for employees;
 – Training a certified Dangerous Goods Safety 

Advisor;

 – Improved visibility at CPSL Board level; and
 – Increased involvement at all levels in the business 

from operations to Directors. 

52

CLARKSON PLC ANNUAL REPORT 2017

Looking ahead to 2018, the CPSL HSC is pleased to 
report that there is further training planned including 
a roll-out of a new bespoke port safety awareness 
e-learning course. In addition, investment has been 
confirmed for operational improvements at key sites. 

The focus for the upcoming year is to improve 
reporting, drive forward the prevention of 
accidents and utilise technological advances 
in safety where possible.

UK HSC
The UK HSC includes representatives from the office 
and CPSL HSCs as well as the Company Secretary 
on behalf of senior management. Each UK HSC 
meeting is an opportunity for both HSCs to share best 
practice and discuss ways to improve the combined 
UK approach. These meetings help set the agenda 
for safety management across the UK as a whole. 
A report prepared by the UK HSC is provided to the 
Chief Financial Officer and Chief Operating Officer 
following each meeting and provided to the Board 
at their next meeting. This has improved visibility 
at Board level of health and safety management 
in the UK. 

The following chart illustrates the information flow 
between the PLC Board and the HSCs:

UK HSC structure

Clarkson PLC Board
Oversight led by Chief Financial Officer  
and Chief Operating Officer

UK HSC
Representatives from CPSL and UK HSCs  
plus senior management

CPSL HSC

Office HSC

Regular representation from each UK site along 
with key health and safety personnel

Environment 
Clarksons recognises that its global operations have  
an environmental impact and we are committed to 
monitoring and reducing our emissions over time.  
This is the fifth year that Clarksons is reporting its 
greenhouse gas (GHG) emissions as required by the 
Companies Act 2006 (Strategic and Directors’ 
Reports) Regulations 2013. 

Clarksons reports all material emission sources for 
which we have operational control1 across 21 
countries. Our Tokyo office, which opened in 2016, 
has been included in this year’s reporting for the 
first time2.

This year we have adopted a longer-term approach 
to environmental reporting through active data 
management. We are pleased to see that data quality 
and coverage continues to improve across our sites. 
Increased engagement with our offices in 2017 has 
captured additional data across key business 
activities. To provide a more accurate representation 
and comparison of our environmental impact over 
time, we have restated our 2016 emissions.

Emissions performance
As an expanding business we have increased our 
estate footprint and, whilst we have consumed more 
energy this year, our carbon footprint has decreased 
by 6% from 3,476 tCO2e in 2016 to 3,255 tCO2e in 
2017, due to a number of external influences.

Global emissions by scope

Scope 1 – Direct control 
Natural gas, company cars, 
refrigerants 
Scope 2 – Indirect control 
Purchased electricity, heat, steam 
and cooling
Scope 3 – Clarksons influences 
Transmission and distribution only
Sub-total
Emissions intensity 
(tCO2e per FTE)

Tonnes CO2e
2016

2017

1,178.6

1,213.5

1,930.13

2,083.9

146.6
3,255.3

179.0
3,476.4

2.00

2.64

Our scope 1 emissions have decreased by 3% 
compared to 2016. This can largely be attributed 
to reduced consumption of on-site fuels at Ipswich 
Sentinel, plus we have had no fugitive emissions 
to report for 2017.

Reported electricity emissions decreased by 7% in 
2017, with Clarksons’ European offices responsible 
for 65% of our scope 2 impact. UK offices continue 
to account for the majority of this (93%), with a 15% 
decrease in the UK’s electricity conversion factor 
contributing a 98 tCO2e reduction in these emissions.

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Strategic report Corporate social responsibility continued

Other building emissions (water, waste and paper) 
account for 2% of our 2017 carbon footprint, with 
other business travel (rail, taxis and non-company 
cars) contributing a further 1%.

Additional scope 3  
Business travel, water, waste, 
paper
Total all scopes
Emissions intensity  
(tCO2e per FTE)

Tonnes CO2e
2016

2017

7,458.9
10,714.2

7,015.5
10,491.9

6.59

7.97

Methodology
Clarksons’ GHG emissions were calculated in 
accordance with the requirements of the World 
Resources Institute ‘Greenhouse Gas Protocol 
(revised version)’, ‘Environmental Reporting 
Guidelines: including mandatory greenhouse gas 
emissions reporting guidance’ (Defra, 2013) and ISO 
14064 – part 1.

Additional notes on methodology: 
1.  As we take an operational approach to defining our boundary, 
building emissions from employees working from home are 
excluded from our reporting. 

2.  Clarksons’ new Seoul office, which opened in December 
2017, is excluded from this year’s reporting but will be 
included in future years.

3.  Clarksons’ scope 2 emissions using location-based emissions 
factors. In line with WRI best practice, our scope 2 market-
based emissions for 2017 are calculated at 2,278 tCO2e and 
calculated using residual mix factors by country and 
location-based factors.

Our London head office at Commodity Quay is 
responsible for 80% of our UK consumption. We have 
taken steps to increase the accuracy of our reporting 
at this site and identify energy saving opportunities 
to improve performance.

Emissions breakdown by region (tCO2e)

3
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3
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2016

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Comparison of emissions by region (tCO2e) scope 1, 2 
and scope 3 transmission and distribution.

Additional scope 3 emissions
This is the second year that we are disclosing our 
extended scope 3 emissions in line with reporting 
best practice, to cover additional business travel 
(flights, rail, non-company cars and taxis) and 
buildings related emissions (water, waste and paper). 

In line with the restatement of our scope 1 and 2 
emissions, we have also captured new business travel 
data. As such, we have restated our scope 3 
emissions in 2016 to allow for a more robust 
comparison between 2017 and 2016. 

Given the global nature of our business, flights 
represent our most material emission source and are 
responsible for 67% of our total scope 1, 2 and 3 
carbon footprint. 

54

CLARKSON PLC ANNUAL REPORT 2017

 
 
 
 
 
Governance

Introduction to 
corporate governance

JAMES HUGHES-HALLETT
CHAIR

Effective corporate governance  
is essential in ensuring both  
good decision-making and the 
sustainability of the business. 

I am pleased to present to you the Board’s corporate 
governance report. In this section you will find our 
review of corporate governance at Clarkson PLC 
together with reports from the nomination, 
remuneration and audit committees on pages 63, 64 
and 80 respectively.

Board and committee changes
As previously reported, we welcomed Marie-Louise 
Clayton as an independent Non-Executive Director 
to the Board on 1 January 2017 and James Morley 
retired on 12 May 2017. On 21 December 2017, our 
Company Secretary, Penny Watson, resigned from 
the Company. We wish James and Penny every 
success for the future. Penny has been succeeded by 
Mike Cahill as Interim Company Secretary. Mike is a 
Chartered Accountant with over 26 years’ experience 
at Clarksons. 

Governance activity during the year 
During 2017, the nomination committee began the 
process to replace Ed Warner as Non-Executive 
Director as he reaches his nine-year tenure on the 
Board. For more information about this search,  
see the nomination committee report on page 63.

In 2017 we have continued to build on the health  
and safety processes and procedures for the office 
locations. In our port services division, a further 
commitment to health and safety was shown by  
the appointment of a dedicated health and safety 
manager in July 2017. 

For more information about health and safety 
activities during the year, please see pages 52 to 53.

Shareholder engagement
The Board believes that regular shareholder 
engagement forms a key aspect of good corporate 
governance. Following a significant number of votes 
against the remuneration report and remuneration 
policy at the 2017 AGM, the Chair of the remuneration 
committee engaged in consultation with major 
shareholders and proxy agencies. The remuneration 
committee has carefully considered all shareholder 
feedback received and the Directors endeavour to 
operate the 2017 remuneration policy within additional 
parameters. For more details, please see page 65.

Board evaluation
Following the external Board evaluation undertaken  
in 2016, the Company Secretary conducted an 
internal Board review in 2017 as per our evaluation 
schedule. For more information on the Board 
evaluation, please go to page 60.

Compliance with the UK Corporate 
Governance Code 
As the financial year began after 17 June 2016, the 
2016 UK Corporate Governance Code (the Code) 
was effective for the Company’s current reporting 
period. We discuss how we comply with the Code 
on page 58.

I look forward to meeting you at our AGM on  
10 May 2018 and addressing any questions you  
may have.

Yours faithfully

James Hughes-Hallett
Chair

9 March 2018

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Governance

Board of Directors

JAMES HUGHES-HALLETT, CMG
CHAIR 
(INDEPENDENT NON-EXECUTIVE)

Appointed to the Board: 
20 August 2014 (Non-Executive Director), became Chair on 
1 January 2015

Current external appointments:
 – Non-Executive Director of John Swire & Sons Limited.
 – Chair of the Esmée Fairbairn Foundation. 
 – Governor of the Courtauld Institute of Art.

RN

ANDI CASE
CHIEF EXECUTIVE OFFICER

Appointed to the Board: 
17 June 2008

Andi joined Clarksons in 2006 as Managing Director of the Group’s 
shipbroking arm, H Clarkson & Company Limited. Prior to that he was 
with Braemar Seascope for 17 years, latterly as head of sale and 
purchase and newbuildings. He began his shipbroking career with 
C W Kellock & Co and later the Eggar Forrester Group. 

Previous appointments:
 – Chair of John Swire & Sons Limited in London from 2005 to 2014.
 – Chair of Cathay Pacific Airways Limited and Swire Pacific Limited 

in Hong Kong. 

 – Managing Director and Chair of the China Navigation Company and 

of Swire Pacific Offshore. 

 – Chair of the Hong Kong Shipowners Association. 
 – Non-Executive Director of HSBC Holdings PLC from 2005 to 2014.

James is a fellow of the Institute of Chartered Accountants in England 
and Wales and an honorary fellow of the University of Hong Kong and 
of Merton College, Oxford. He was made a CMG in the 2012 Queen’s 
Birthday Honours.

JEFF WOYDA
CHIEF FINANCIAL OFFICER AND 
CHIEF OPERATING OFFICER

Appointed to the Board: 
1 November 2006

PETER M. ANKER
PRESIDENT OF BROKING AND 
INVESTMENT BANKING

Appointed to the Board: 
2 February 2015

Current external appointments:
 – Non-Executive Director of the International Transport Intermediaries 

Club Limited (ITIC).

Jeff qualified as a chartered accountant with KPMG and, before joining 
Clarksons, was a member of the executive committee of Gerrard Group 
PLC. He also spent 13 years at GNI Group where he was Chief 
Operating Officer.

Peter started his career in RS Platou’s Houston office in 1982 as an 
offshore broker, after completing his studies at the NHH Norwegian 
School of Economics. After returning to Norway in 1986, Peter became 
Chief Executive Officer and Managing Partner of the RS Platou Group in 
1987, a position he held until joining the Board of Clarkson PLC in 
February 2015.

56

CLARKSON PLC ANNUAL REPORT 2017

Committee membership

A

N

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Audit committee

Nomination committee

Remuneration committee

Chair

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PETER BACKHOUSE
SENIOR INDEPENDENT DIRECTOR   
(INDEPENDENT NON-EXECUTIVE)

A

N

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Appointed to the Board: 
16 September 2013 (Non-Executive Director), became Senior 
Independent Director on 5 November 2013

Current external appointments:
 – Chair of the Supervisory Board of HES International B.V., a leading 

provider of port services in dry and liquid bulk handling. 

 – Member of the Advisory Board of US private equity firm Riverstone 

Energy Partners. 

Previous appointments:
 – Chair and Chief Executive Officer of BP Europe.
 – Executive Vice-President of global refining and marketing, and head 

of both North Sea oil development and global mergers and 
acquisitions. 

 – Non-Executive Director of BG Group PLC between 2000 and 2014. 

MARIE-LOUISE CLAYTON
DIRECTOR 
(INDEPENDENT NON-EXECUTIVE) 

Appointed to the Board: 
1 January 2017

A

N

R

Previous appointments:
 – Finance Director of Venture Production PLC.
 – Chief Financial Officer and IT Director of the Primary Food Group 

division of Associated British Foods PLC.

 – Chief Financial Officer of Lincoln Gas Turbines at GEC Alstom.
 – Roles at Advent Venture Capital, Exxon Chemicals, Inland Revenue 

and Guest, Keen and Nettlefold. 

 – Chair of the audit committee of Zotefoams PLC, Diploma PLC and 

Forth Ports PLC. 

 – Non-Executive Director of Independent Oil & Gas Limited and Ocean 

Rig ASA.

 – Non-Executive Director of GCHO Holdings Limited, the holding 

Peter has over 40 years’ experience in the international energy business.

company for Geoffrey Osborne Limited.

 – Trustee of Street League, a youth employment charity. 

Marie-Louise is a fellow of the Association of Certified Accountants.

BIRGER NERGAARD
DIRECTOR 
(INDEPENDENT NON-EXECUTIVE) 

Appointed to the Board: 
2 February 2015 

R

ED WARNER, OBE
DIRECTOR 
(INDEPENDENT NON-EXECUTIVE)

Appointed to the Board: 
27 June 2008

A

N

R

Current external appointments:
 – Deputy Chair of the Board of Clarksons Platou AS since 2008.
 – Board member of Clarksons Platou Securities AS and Maritime & 

Merchant Bank AS. 

 – Director of Verdane Capital’s funds V, VI, VII and VIII and Nergaard 

Investment Partners AS. 

 – Advisor to the P/E fund Advent International in Norway. 

Previous appointments:
 – Established Verdane Capital in 1985 and was Chief Executive Officer 

until 2006. 

Birger was awarded King Harald’s gold medal in 2006 for pioneering  
the Norwegian venture capital industry. He holds a law degree from the 
University of Oslo.

Current external appointments:
 – Chair of LMAX Exchange Group, Standard Life Private Equity Trust 
PLC, Blackrock Commodities Income Investment Trust PLC, Grant 
Thornton UK LLP and the Palace for Life Foundation.

Previous appointments:
 – Chair of Panmure Gordon and UK Athletics.
 – Chief Executive of IFX Group PLC and Old Mutual Financial Services 

(UK) Limited.

 – Head of Pan European Equities at BT Alex Brown and of global 

research at Dresdner Kleinwort Benson. 

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Governance

Corporate governance statement

During 2017 and early 2018, the nomination 
committee have led the search for a replacement 
Non-Executive Director. 

The Board, supported by its committees, is 
responsible for ensuring leadership and setting 
strategic direction with the aim of delivering 
sustainable shareholder value. It is imperative that  
the combined experience and knowledge represented 
by the Board is appropriate to lead the Company in 
maintaining its market-leading position and achieving 
its strategic objectives. On appointment, the Chair 
and the Non-Executive Directors met the 
independence criteria set out under the Code and 
confirmed that they have sufficient time available  
to discharge their responsibilities effectively.  
Non-Executive Directors are appointed for an  
initial three-year term, subject to re-election by 
shareholders at each AGM, after which their 
appointment may be extended, subject to mutual 
agreement. All members of the Board will retire and 
seek re-election by shareholders at the 2018 AGM. 

There is a clear division of responsibilities between 
the Chair and the Chief Executive Officer which is set 
out in writing and has been approved by the Board:

Chair
 – Leading the Board

 – Ensuring Board 
effectiveness

 – Promoting high standards 
of corporate governance

Chief Executive Officer
 – Running the 

day-to-day business

 – Implementing 
Board strategy

The Non-Executive Directors have a vital role in 
ensuring that the strategies proposed by the 
Executive Directors are appropriately discussed and 
constructively challenged. They help scrutinise the 
performance of management against the agreed goals 
and strategic objectives of the Board and monitor the 
integrity of the Company’s financial information and 
systems of risk control and management. For more 
information, see page 60. In addition, Non-Executive 
Directors are responsible for considering and 
approving executive remuneration. For more 
information, see pages 64 to 79. The Chair maintains 
direct communication with each of the Non-Executive 
Directors without the Executive Directors present 
where necessary.

Principles statement 
Good corporate governance underpins the 
Company’s objectives, strategy and business model, 
as set out in the strategic report on pages 1 to 54. 

The Board is committed to maintaining a high 
standard of corporate governance, which is critical  
to retaining investor and stakeholder trust in the 
Company and in the Board as custodian of the 
Company’s assets and values.

Statement of compliance
The statement of corporate governance practices set 
out on pages 55 to 92, and information incorporated 
by reference, constitutes the Clarkson PLC corporate 
governance report setting out how the Company has 
applied the principles of the 2016 UK Corporate 
Governance Code (the Code), which was applicable 
to the Company for the financial year ended 31 
December 2017. We are compliant with the Code.  
We are aware of the proposed new version of the 
Code which is expected to be in place for the 
reporting year ending 31 December 2019. During 
2018 – 2019, the Board and committees will be 
considering how Clarksons already comply with 
the revised provisions so that we can make any 
necessary changes ahead of implementation.

The September 2014 and April 2016 editions of 
the Code can be viewed on the Financial Reporting 
Council website at https://frc.org.uk/Our-Work/Corporate-
Governance-Reporting/Corporate-governance.aspx.

Leadership
The Board comprises James Hughes-Hallett (Chair), 
Andi Case, Peter M. Anker, Jeff Woyda, Peter 
Backhouse (Senior Independent Director), Birger 
Nergaard, Ed Warner and Marie-Louise Clayton. 
Marie-Louise Clayton joined the Board on 1 January 
2017 and James Morley retired on 12 May 2017.  
On 21 December 2017, Penny Watson resigned as 
Company Secretary and Mike Cahill was appointed  
as Interim Company Secretary. The Board is working 
to identify a suitable replacement Company Secretary 
on a permanent basis.

Biographies of the Directors in office at the date of signing 
the financial statements are set out on pages 56 to 57.

Ed Warner reached nine-year tenure on the Board  
in June 2017. Ed was re-appointed for a 12-month 
period to aid the stability of the Board during a period 
of change. The Board and nomination committee 
recognised the need for stability and acknowledged 
the contribution, continuity and experience that Ed, as 
a long-serving Non-Executive Director, brought to the 
Board overall and the support he provided. It was 
determined that this was appropriate as Ed continues 
to demonstrate qualities of independence of character 
and judgement in carrying out his role.

58

CLARKSON PLC ANNUAL REPORT 2017

 
Powers of the Board
The Board meets regularly with at least four 
scheduled meetings each year plus additional 
meetings where required to address matters arising 
outside the normal course of business. The Non-
Executive Directors serve on a number of committees 
established by the Board. Details of committee 
activities are shown on pages 63, 64 and 80.

The Board has powers and duties as set out in all 
relevant laws and the Company’s articles of 
association (the articles). Amendments to the articles 
may be made in accordance with the provisions of the 
Companies Act 2006, requiring any amendment to be 
approved by special resolution of the shareholders.

The Board has adopted a formal schedule of matters 
it reserves for its own decision-making. This includes 
decisions relating to:

 – strategy and management;
 – financial reporting and controls;
 – shareholder communications;
 – executive remuneration;
 – the Group’s corporate and capital structure;
 – material contracts;
 – Board and other senior management appointments 

and membership of Board committees; and
 – corporate governance procedures and other 

Group policies.

For more information on the Board’s focus during 2017, 
please see page 62.

Procedure to deal with Directors’ 
conflicts of interest
A Director has a duty to avoid a situation in which he 
or she has a direct or indirect interest that conflicts, or 
may conflict, with the interests of the Company. The 
Board may authorise any potential conflicts, where 
appropriate, in accordance with the articles. The 
Company has established comprehensive procedures 
for the disclosure of any such conflicts by Directors, 
and for the consideration and authorisation of these 
by the Board. The Board considers each conflict on 
its particular facts and in the context of the other 
duties owed by the Director to the Company. The 
Board regularly reviews and monitors potential 
conflicts of interest. These checks are done for all 
Directors of subsidiary companies as well as the 
PLC Board.

Where a potential or possible conflict of interest 
arises, a Director will declare their interest and not 
participate in the decision-making process in respect 
of the relevant business.

Jeff Woyda, Chief Financial Officer and Chief Operating 
Officer, is a Non-Executive Director of the International 
Transport Intermediaries Club (ITIC). During the year, 
Jeff Woyda received £16,600 remuneration for serving 
as a Non-Executive Director of ITIC.

Effectiveness

Succession planning
There are currently eight Directors on the Board of 
Clarkson PLC. The structure of the Board is regularly 
reviewed and we seek to appoint the best candidate 
for each vacancy ensuring the correct balance of 
skills, experience and independence.

The Board oversees the Group’s senior management 
succession plan to ensure that there are appropriate 
skills and experience within the Company and on 
the Board.

The process for Board appointments is led by the 
nomination committee which, in accordance with its 
terms of reference, evaluates the balance of skills, 
experience, independence and knowledge on the 
Board and makes recommendations for appointments 
to the Board.

Non-Executive Directors are appointed for a specific 
term. Details of their service contracts can be found 
on page 77.

A report on the work carried out by the nomination 
committee during the year is set out on page 63.

Director induction, training and support
A careful assessment is made of the time commitment 
required from the Chair and the Non-Executive 
Directors to discharge their roles properly and,  
on appointment, new Directors are provided with  
a tailored induction programme relating to the 
Company’s business.

All Directors are encouraged to regularly update  
and refresh their skills and knowledge by attending 
seminars and training sessions. During the annual 
Board and committee evaluation processes the 
Directors have opportunities to highlight any areas in 
which they feel professional development would be 
beneficial, either individually or as a unit. The Board 
has access to the Company Secretary for advice on 
corporate governance matters.

The Company Secretary is responsible for ensuring 
that the Board has access to the information it 
requires and that such information is supplied in  
a timely manner and is of appropriate quality to 
enable Directors to discharge their duties effectively.  
In addition, Directors may take independent 
professional advice at the Company’s expense in  
the course of discharging their duties. 

The Senior Independent Director provides a sounding 
board for the Chair and serves as an intermediary for 
other Directors when required. 

The Company purchased and maintained directors’ and 
officers’ liability insurance throughout 2017 and it has 
been renewed for 2018. Cover is reviewed annually, with 
the assistance of the Company’s insurance brokers, to 
ensure that it remains appropriate and fit-for-purpose.

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Governance Corporate governance statement continued

Performance evaluation
As reported last year, an external Board evaluation 
was facilitated by Boardroom Review Limited in 2016. 
As per our evaluation schedule, the 2017 evaluation 
was conducted internally by the Company Secretary. 
The next external review is anticipated to take place in 
2020. The review involved completion of 
questionnaires provided by our external Auditors, 
PricewaterhouseCoopers.

The evaluation process is as follows:

Questionnaires

Company Secretary co-ordinates the completion of 
confidential questionnaires by each Director, and in the case 
of the audit committee evaluation by the external Auditor 
and the Group Financial Controller.

Appointment of Directors
In accordance with the articles, all Directors 
shall retire from office and, subject to continued 
satisfactory performance, are put forward for 
re-election at each AGM. This is compliant with the 
Code requirement that Directors are submitted for 
re-election at regular intervals. The Company has 
maintained this cycle of re-election since 2015.

Accountability
The Board is responsible for promoting the long-term 
success of the Company for the benefit of 
shareholders, assessing the Company’s position 
and prospects, and for ensuring that the information 
presented to shareholders is fair, balanced and 
understandable. Further details of Directors’ 
responsibilities for preparing the Company’s financial 
statements are set out in the Directors’ responsibilities 
statement on page 86.

The audit committee members also complete a 
questionnaire on the effectiveness of the external Auditor.

The Board is responsible for:

Separately, the Senior Independent Director leads the 
Non-Executive Directors in a performance evaluation 
of the Chair, taking into account the views of the 
Executive Directors.

Evaluation

The Chair reviews the responses by the Directors for the 
main Board evaluation questionnaire.

Each committee Chair reviews the anonymous responses 
to their respective committee questionnaires.

Discussion

Results of the Board and committee evaluation 
questionnaires are discussed at the next meeting.

For the Board, this is usually at the first meeting of the year.

Any issues raised are addressed between the Directors and 
external parties as appropriate.

 – determining the nature and extent of the risks it is 
willing to take in achieving its strategic objectives;

 – maintaining the Company’s system of internal 

controls and risk management; and
 – reviewing the effectiveness of these 

systems annually.

For information on the responsibilities of the audit committee, 
see its report on page 80.

Risk management and internal control 
Managing risk to deliver opportunities is a key 
element of the Company’s business activities,  
which is undertaken using a practical and flexible 
framework, providing a consistent and sustained 
approach to risk evaluation. The Board has 
established policies and risk management procedures 
together with key controls, which are reviewed in 
accordance with applicable regulations and best 
practice guidelines, to ensure that they continue to be 
effective and protect the Company’s stakeholders.

Planning for year ahead

Please refer to pages 42 to 47 for more information on risk 
management, including the principal risks.

Any actions arising from the evaluations are scheduled to be 
reviewed during the year. This could include, for example, 
areas for Board training and development.

Following the evaluation, the Board, its committees 
and individual Directors were determined to be 
functioning effectively. 

In 2017, the Non-Executive Directors, led by the 
Senior Independent Director, concluded that the 
Chair continues to be effective in his role.

The Company’s internal control system includes 
financial reporting, operations, compliance and risk 
management procedures. Such a system is designed 
to evaluate and manage, rather than eliminate, risk 
and can only provide reasonable, and not absolute, 
assurance against material misstatement or loss. 

There is a comprehensive budgetary process in place 
with both annual and regular forecasts being 
considered and approved by the Board and monthly 
monitoring of trading results taking place in order to 
mitigate risks associated with financial reporting and 
the preparation of consolidated financial statements. 
An established compliance, legal and governance 

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CLARKSON PLC ANNUAL REPORT 2017

Board engagement with investors and  
relations with shareholders 
The AGM gives all shareholders the opportunity to 
communicate directly with the Board. Participation  
of all shareholders is encouraged.

The Company’s AGM will be held on 10 May 2018  
at the Company’s office in Commodity Quay, St. 
Katharine Docks, London E1W 1BF. Further details  
of the business to be addressed at the meeting can 
be found in the notice of meeting which will be 
available online at https://www.clarksons.com/news/.

The Executive Directors meet regularly with the 
Company’s major shareholders and make 
presentations to analysts, institutional investors and 
investment managers following the announcement  
of the interim and full year results. The Senior 
Independent Director is available to meet with 
shareholders and institutional investors as required. 
We primarily communicate with shareholders via the 
Company’s annual and interim reports and the 
Company’s website on which the Company publishes 
its trading updates and other news released to the 
London Stock Exchange. 

All reports and results for the year can be found at: 
https://www.clarksons.com/investors/results-presentations/.

In 2018, the Company plans to publish the interim 
report online only. This is a change from previous 
years where a paper copy has also been produced. 
The Board is pleased to be moving towards 
environmentally-friendly methods of communications. 

For shareholder information see pages 84 to 85 or visit 
www.clarksons.com/investors and for more information on 
how the Board has engaged with shareholders during 2017, 
see page 65.

process is in place to monitor regulatory 
developments and to ensure that all existing and 
forthcoming regulations are complied with.

In addition to compliance with the Code, as required 
for all listed entities, the regulated entities in the 
Group are all governed by the respective regulators  
in their jurisdictions.

Regulated entities in the Group are:

Company
Clarksons Platou 
  Securities AS
Clarksons Platou 
  Project Sales AS
Clarksons Platou 
  Project Finance AS
Clarksons Platou 
  Property Management AS
Clarksons Platou 
  Securities Inc
Clarksons Platou
  Commodities USA LLC
Clarksons Platou 
  Futures Limited

Regulated by
Regulated by the 
  Norwegian FSA
Regulated by the 
  Norwegian FSA
Regulated by the 
  Norwegian FSA
Regulated by the 
  Norwegian FSA
Regulated by FINRA 

in the US

Regulated by the NFA 

in the US

Regulated by the FCA 

in the UK, the NFA in the 
  US and MAS in Singapore

All entities comply with the applicable regulations as 
required by their regulated entity status. 

For information on internal audit of regulated entities, 
please see page 82.

In 2018, the Board has approved the issuance of  
a new compliance manual to replace the Code of 
Business Conduct and Ethics. All employees are 
expected to adhere to the compliance manual, in 
order to maintain Clarksons’ status as a responsible 
and trustworthy business. All employees are 
responsible for ensuring compliance with Group 
policies and for identifying risks within their business 
areas and to ensure that these risks are controlled 
and monitored in the appropriate way. Training is 
provided where necessary. 

The Board has established arrangements by which 
employees of the Company may, in confidence, raise 
concerns about possible improprieties or wrongdoing 
in financial reporting or other matters. The audit 
committee regularly reviews this arrangement. 

The Board, with advice from the audit committee, has 
carried out an annual review of the effectiveness of 
the system of internal control and risk management 
and confirms that the ongoing process for identifying, 
evaluating and managing the Group’s principal risks 
has operated throughout the year and up to the date 
of the approval of this annual report. 

For more information about the audit committee’s role 
in risk management, go to page 82.

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Governance

Board and committees

Board meetings
Board meetings took place at the London and Oslo offices during 2017, giving the Board members an opportunity to engage 
with employees based in the Oslo office, which is the second largest office in the Group after London. In addition to the meetings 
in the table below, a number of additional meetings and conference calls have been held during the year, including those regarding 
the cyber security incident.

Total number of meetings held in 2017
James Hughes-Hallett (Chair)
Peter M. Anker
Peter Backhouse 
Andi Case 
Marie-Louise Clayton1
James Morley2 
Birger Nergaard 
Ed Warner
Jeff Woyda 

Independent Non-Executive Director
Executive Director
Independent Non-Executive Director/Senior Independent Director
Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Director

6
6
6
6
6 
5 
4 
6 
6
6

1.  Appointed to the Board on 1 January 2017. 
Board focus in 2017
Throughout the year, the Board concentrated on business development and strategic goals, whilst also more formally analysing 
business trends and ensuring the execution of the business plan meets goals and targets. Specific agenda items throughout the 
year also included the following:

  2. Retired from the Board on 12 May 2017.

Fixed agenda items

Q1

Q2

Q3

Q4

Business updates
Chief Executive 
  Officer’s report
Finance report
Treasury report
Shareholder matters  
  and analysis
Stockbroker reports
Legal update
Presentations from 
  business units

Budget
Insurance renewals
Board update on global 
  MD’s week
Review of Board  
  appraisals
Anti-bribery training
Annual report
Preliminary statement
Final dividend
Audit committee report
Risk management

Shareholder  
  engagement
Investor reports
Annual General  
  Meeting, including  
  agenda and  

trading update

Interim report
Interim dividend
Investor roadshow
Risk management
Audit committee report

Board evaluation  
  planning
Audit committee report
Succession planning

For more information on the Board’s responsibilities and activities in the year, please see the corporate governance statement on pages 58 to 61. 

Committees

Peter Backhouse
Marie-Louise Clayton

Clarkson PLC Board

James Hughes-Hallett (Chair)
Birger Nergaard
Ed Warner

Andi Case
Jeff Woyda 
Peter M. Anker

Audit committee

Nomination committee

Remuneration committee

Marie-Louise Clayton (Chair)
Peter Backhouse
Ed Warner

James Hughes-Hallett (Chair)
Peter Backhouse 
Marie-Louise Clayton
Ed Warner

Ed Warner (Chair)
Peter Backhouse
Marie-Louise Clayton
James Hughes-Hallett
Birger Nergaard

See pages 80 to 83 for the  
audit committee report.

See page 63 for the  
nomination committee report.

See pages 64 to 79 for the  
remuneration committee report.

The responsibilities of each committee are set out in their respective terms of reference, which are approved by  
the Board and available on the Company’s website at www.clarksons.com/investors/financial-calendar/.

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CLARKSON PLC ANNUAL REPORT 2017

 
 
 
Nomination committee report

Main areas of responsibility
 – Regular reviews of the structure, size and 

composition of the Board taking into consideration 
skills, knowledge and experience; 

 – Leading the process for Board and committee 

appointments; and 

 – Making recommendations on Board appointments 

based on the balance of independence, skills 
and experience. 

Meetings
Total number of meetings held in 2017
James Hughes-Hallett (Chair)
Peter Backhouse
Marie-Louise Clayton¹
James Morley²
Ed Warner

Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director

1.  Joined the committee on 22 June 2017.
2.  Retired from the Board and left the committee on 12 May 2017.

JAMES HUGHES-HALLETT
NOMINATION  
COMMITTEE CHAIR

4
4
4
1
2
4

Terms of reference
The committee’s terms of reference are regularly reviewed to ensure compliance with the requirements  
of the Code.

The committee’s terms of reference can be found at: www.clarksons.com/investors/financial-calendar/.

The committee is chaired by James Hughes-Hallett, 
except when the committee is dealing with the matter 
of succession to the Chair. On these occasions, it is 
chaired by Peter Backhouse as the Senior 
Independent Director.

The committee gives full consideration to planning  
for future succession to the Board, in particular for  
the key roles of Chair and Chief Executive Officer,  
and other senior executives. Clarksons recognises 
and embraces the benefits of a diverse Board. 

The committee will consider suitable candidates for 
Board appointments on the basis of a wide range of 
criteria including personal merit, ability, knowledge, 
experience and independence. This is to ensure that 
we are appointing the best possible candidate for 
each vacancy and to ensure a well-balanced Board.

During 2017 the nomination committee gave due 
consideration to the continued independence of Ed 
Warner as he reached nine years’ tenure on the Board 
in June 2017. The committee determined that Ed 
remained independent in character and judgement 
and, as a key member of the Board, his contract was 
renewed for a further 12 months to June 2018. 

In part, this decision was made to ensure stability  
and continuity on the Board during a period of change 
following the retirement of James Morley.

During 2017 and in 2018, the committee has been 
leading the process for the appointment of a new 
Non-Executive Director. In considering candidates, 
the committee has used the services of external 
search consultants. It is anticipated that a new 
appointment will be made during 2018.

The nomination committee is also leading the search 
for a new Company Secretary following the 
resignation of Penny Watson on 21 December 2017. 
Mike Cahill fulfils the role on an interim basis.

James Hughes-Hallett
Nomination committee Chair

9 March 2018

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Governance

Remuneration committee report

Main areas of responsibility
 – Determining, in conjunction with the Board, 

the framework or broad policy for the remuneration 
of the Executive Directors, 
Chair, Company Secretary and other members 
of executive management that it is designated 
to consider; and

 – Engaging with shareholders on matters relating 

to remuneration. 

Meetings
Total number of meetings held in 2017
Committee members 
Ed Warner (Chair)
Peter Backhouse
Marie-Louise Clayton1
James Hughes-Hallett
James Morley2
Birger Nergaard
Executive Directors attending by invitation 
Andi Case
Jeff Woyda

Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director

Executive Director
Executive Director

ED WARNER
REMUNERATION 
COMMITTEE CHAIR

4

4
3
2
3
2
4

3
3

1.  Joined the committee on 7 March 2017 and was in attendance at the February 2017 meeting prior to this. This has not been 

included above.

2.  Retired from the Board and left the committee on 12 May 2017.

The remuneration committee (the committee) also held informal discussions as required.

Membership
None of the committee members have day-to-day involvement with the business nor do they have any 
personal financial interest in the matters to be recommended. The Company Secretary acts as secretary 
to the committee.

In particular, the Board is satisfied that the committee has the range of skills and relevant business experience 
to reach an independent judgement on the suitability of the remuneration policy. The committee’s remit also 
covers remuneration arrangements for all employees (where the committee reviews bonus payments for all 
employees in the business) and consideration of risk is foremost in the committee’s deliberations.

Terms of reference
The committee’s terms of reference are regularly reviewed to ensure compliance with the requirements 
of the Code.

The committee’s terms of reference can be found at www.clarksons.com/investors/financial-calendar/.

64

CLARKSON PLC ANNUAL REPORT 2017

 
 
Directors’ remuneration report

Chair’s statement
I am pleased to introduce, on behalf of the Board,  
the Directors’ remuneration report for the year ended 
31 December 2017.

2017 AGM vote
Although the resolutions to approve the Directors’ 
remuneration report and the remuneration policy  
were passed with the requisite majority, around 26% 
of votes were cast against both resolutions, which 
clearly needed to be addressed. 

Shareholder feedback
At the time of the 2017 AGM and later in autumn 
2017, we engaged with the Company’s major 
shareholders covering approximately 52% of our 
shareholder register and the major UK proxy voting 
agencies in order to fully understand their concerns. 
In both rounds of engagement, it became clear that 
the principal area of concern related to the Executive 
Directors’ bonus scheme which is structured as a 
profit-sharing arrangement and has been the main 
component in their remuneration packages since it 
was introduced in 2008. 

The scheme has been in operation since 2008 and 
has served the Company well since then by creating  
a direct link between profit, shareholder returns and 
Directors’ reward. The bonus was structured in this 
way for a number of reasons, including: 

 – Market practice – there are few comparable public 
shipping companies and the committee believes 
the most appropriate comparison is with private 
companies in the shipping sector, where annual 
profit-sharing bonus arrangements are common; 
 – Retention imperatives – the current management 

team is highly regarded within the shipping services 
sector, where business is based around client 
relationships, and would be attractive to shipping 
competitors as well as in other wholesale brokerage 
and agency businesses; and 

 – Pay for performance – the proportionate 

breakdown of total remuneration is such that a very 
high proportion of the package is performance-
related, so ensuring strong alignment with 
shareholders’ interests.

In addition, some concerns were raised in relation 
to contractual entitlements for the current Executive 
Directors. In particular, the contractual entitlement 
to annual bonus for the Chief Executive Officer and 
Chief Financial Officer and Chief Operating Officer, 
the inclusion of annual bonus within a payment in lieu 
of notice (PILON) and the additional compensation for 
severance as a result of a change of control. In the 
case of the Chief Executive Officer, Andi Case, the 
contractual terms were negotiated at the time he was 
promoted to the Board in June 2008. Certain terms of 
his contract were vital to secure him into the position 
of Chief Executive Officer, and also to secure the 

stability of the Company. Furthermore, Andi is one  
of the most active fee-generating sale and purchase 
brokers in the industry, and consequently the terms  
of his contract had to reflect his actual role which  
was – and remains – significantly more than that of a 
typical Chief Executive Officer. 

The committee debated whether it would be 
appropriate to amend the Executive Directors’ 
existing contractual terms but felt strongly that it is 
imperative to honour contractual commitments for 
current Executive Directors and concluded that it 
would be counter to the interests of the Company 
and its shareholders to seek a renegotiation with the 
existing Executive Directors who have served, and 
continue to serve, the Company so well.

Undertakings over the life of the 
remuneration policy
The committee takes shareholder views and 
developments in corporate governance seriously and, 
following the feedback received last year and taking 
account of good practice developments, we 
undertake to operate the 2017 remuneration policy 
within the following additional parameters for any 
new Executive Director appointments:

 – a capped annual bonus scheme will apply and, 

furthermore, any bonus would only be payable to 
the extent there is sufficient value to do so in the 
profit-based bonus pool; 

 – bonus measures will depend on the strategic 

priorities at the time but it is expected that profit 
performance and strategic objectives will apply. 
The inclusion of strategic measures will result in  
a more rounded assessment of performance;

 – a greater proportion of any bonus payable will be 

deferred in shares; and

 – any PILON and change of control provisions will 

conform to good practice.

In addition, the committee has made the following 
changes with immediate effect for current and 
future Directors:

 – a 200% of salary share ownership guideline will 

apply (increased from 150% of salary for Executive 
Directors other than the Chief Executive Officer); 
and 

 – a two-year post-vesting holding period will apply 
to long-term incentive plan (LTIP) awards granted 
from 2018.

The committee recognises the current remuneration 
structure does not accord with best market practice 
for existing Directors but has actively taken steps  
to pave the way for a more typical structure as and 
when new Directors join the Board.

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Governance Directors’ remuneration report continued

Performance and reward for 2017
Our 2017 performance bonuses were, as in previous 
years, based on a bonus pool linked to stretching 
Group profit before tax targets. In 2017, allocation  
of the bonus pool to the Chief Financial Officer and 
Chief Operating Officer was in part determined by 
performance against a range of non-financial 
objectives. 10% of the bonus will be deferred in 
shares which will vest after four years. 

The Executive Directors have again made a sacrifice 
of a proportion of the bonuses they were eligible 
to receive, to enable the Company to reward other 
senior members of staff. The amount sacrificed has 
fluctuated over the past five years, and amounted 
to 10% of the entitlement in 2017 (2016: 5%). 

The 2015 LTIP awards which were granted on  
17 April 2015 were subject to challenging absolute 
earnings per share (EPS) and relative total shareholder 
return (TSR) performance targets. Actual EPS for 2017 
was 116.8p compared to the threshold/stretch target 
of 140.0p to 190.0p and, as a result, none of this part 
of the award will vest. Clarksons’ TSR over the 
three-year performance period was 47.9% which was 
between the median and upper quartile of the 
comparator group (constituents of the FTSE SmallCap 
Index, excluding investment trusts) and, as a result, 
61% of this part of the award will vest. In total 30%  
of the 2015 LTIP awards will therefore vest.

The committee believes that the bonus and 
LTIP vesting outcomes are a fair reflection of 
performance over the one and three-year period  
to 31 December 2017.

Implementation of remuneration policy in 2018
The policy for 2018 will be implemented as follows:

 – Salary – there will be no change to Executive 

Directors’ salaries (and no increase was made in 
2017). This compares to the average salary increase 
for employees across the UK workforce 
of 2.65%.

 – Annual bonus – as mentioned above, for the 

current executive team the bonus plan will continue 
to operate and be closely linked to the Company’s 
adjusted pre-tax profits for the year, in line with 
typical practice in the shipping industry. The bonus 
is structured whereby a lower threshold is set below 
which no bonuses are earned, with higher hurdles 
which trigger increased bonus rates. 10% of any 
bonus paid will be deferred in shares for a period 
of four years;

 – LTIP – the Executive Directors will receive LTIP 

awards equivalent to 150% of base salary in 2018. 
The performance targets will be, as in 2017, 50% 
based on EPS growth and 50% based on relative 
TSR, both measured independently over a three-
year period. The EPS performance target has been 
set at a threshold of 145.0p to a stretch target of 
195.0p in 2020. The relative TSR targets will 
continue to be measured relative to the 
performance of the constituents of the FTSE 250 
index (excluding investment trusts). A new 
requirement this year will be the introduction of a 
two-year post-vesting holding period which will 
apply for the 2018 and future awards.

 – Share ownership guidelines – for 2017 we 

increased the guideline level from 100% of salary 
to 200% of salary for the Chief Executive Officer 
and to 150% of salary for other Executive Directors. 
For 2018, the guideline level will be further 
increased to 200% of salary for all Executive 
Directors. All Executive Directors have significant 
shareholdings in the Company and have 
substantially exceeded these guideline levels.

Incentive pay is subject to clawback provisions, part 
of any annual bonus payment is deferred in the 
Company’s shares for a four-year period, a two-year 
post-vesting holding period will apply to LTIP awards 
going forward and significant share ownership 
guidelines apply – all features intended to enhance 
the alignment of interest between Executive Directors 
and shareholders and to contribute to an appropriate 
level of risk mitigation.

This report comprises an annual report on 
remuneration on pages 72 to 79, which describes 
how the shareholder-approved Directors’ remuneration 
policy was implemented for the year ended 31 
December 2017 and how we intend for the policy to 
apply for the year ending 31 December 2018. Our 
remuneration policy was approved by shareholders last 
year and will continue to apply. To ensure clarity and 
transparency, we have republished our Directors’ 
remuneration policy report on pages 72 to 79.

The feedback we receive from you, our shareholders, 
is crucially important to our decision-making process, 
and at all times we strive to set pay structures in the 
best interests of the business and the ongoing 
strategy and values that we hold. Taking account of 
the commitments we have made above, we hope that 
you will be able to support the remuneration-related 
resolution at the 2018 AGM. Should you have any 
questions or comments, please contact me through 
the Company Secretary.

Ed Warner
Remuneration committee Chair

9 March 2018

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CLARKSON PLC ANNUAL REPORT 2017

Directors’ remuneration policy
This part of the Directors’ remuneration report sets 
out the key parts of the remuneration policy which 
was approved by shareholders at the AGM on 12 May 
2017. The policy took formal effect from the date of 
approval and is intended to apply until the 2020 AGM. 
In the interests of clarity, this policy section includes 
some minor annotations to additionally show, 
where appropriate, how the policy will be 
implemented in 2018.

A full version of the original shareholder approved policy  
can be found in the 2016 annual report available on our 
website at www.clarksons.com.

How the committee operates to set the 
remuneration policy
The committee is responsible, on behalf of the  
Board, for:

 – setting the Chief Executive Officer’s, Chair’s and 
senior executives’ remuneration policy and actual 
remuneration;

 – reviewing the design of all share incentive plans  
for approval by the Board and shareholders; and
 – approving the design of, and recommending targets 

for, any performance-related schemes the 
Company operates for senior executives.

The committee encourages dialogue with shareholders 
and takes into account their views when setting  
the policy.

Summary of overall remuneration policy
The objectives of the policy are to ensure that 
executive rewards are linked to performance, to 
provide an incentive to achieve the key business 
aims, deliver an appropriate link between reward 
and performance and to maintain a reasonable 
relationship of rewards to those offered in other 
competitor companies in order to attract, retain and 
motivate executives within a framework of what is 
acceptable to shareholders.

We maintain a strong focus on ensuring that 
executives are incentivised to drive economic profit as 
well as being rewarded for creating sustainable value.

There are few comparable UK public companies 
involved solely in the business of providing shipping 
and related wholesale financial services. Comparisons 
are therefore made with City-based companies and 
private companies in the shipping sector, many of 
which are headquartered overseas. In the highly 
competitive global labour market which operates 
within the shipping services sector where business 
is based around personal client relationships, the 
retention of key talent is critical to continued business 
success. Remuneration levels are set to attract and 
retain the best talent and to ensure that market 
competitive rewards are available for the delivery of 
strong business and personal performance within an 
appropriate risk framework.

It is recognised by the committee that the current 
management team is highly regarded and would be 
attractive to Clarksons’ competitors in the shipping 
industry and, increasingly, wholesale brokerage and 
agency businesses. Retention of key talent in this 
context is critical, whilst recognising the need for 
appropriate succession planning.

The proportionate breakdown of the total 
remuneration is such that, in line with most other 
wholesale brokerage and agency companies, a 
very high proportion of the package is performance-
related. Where an Executive Director’s role includes 
revenue-generating broking responsibilities, the 
bonus may recognise this, in addition to the duties 
and responsibilities incumbent with the role of an 
Executive Director.

Consideration of shareholder views
The Company is committed to maintaining good 
communications with shareholders. The committee 
takes on board shareholders’ views and maintains 
open dialogue, giving shareholders the opportunity 
to raise any issues or concerns they may have. 
In addition, the committee would engage directly 
with major shareholders should any material changes 
be made to the Directors’ remuneration policy or in 
the way in which it is being implemented.

The committee Chair engaged with leading 
shareholders and shareholder bodies around the time 
of the 2017 AGM and later in 2017 to further 
understand shareholders’ views on Clarksons’ 
remuneration policy. Following this dialogue, certain 
additional parameters have been set for new 
Executive Directors.

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Operation

Maximum opportunity

Performance framework

Governance Directors’ remuneration report continued

Remuneration policy report
Key elements of remuneration policy are set out below:

Base salary

Purpose and link 
to strategy

 – To attract and retain high 
performing Executive 
Directors who are critical 
for the business

 – Set at a level to provide 
a core reward for the 
role and cover essential 
living costs

 – Normally reviewed annually
 – Paid monthly
 – Salaries are determined 

taking into account:
 – the experience, 

responsibility, effectiveness 
and market value of the 
executive

 – the pay and conditions in 

the workforce

Benefits

 – To provide a market 

 – Taxable benefits may include:

standard suite of basic 
benefits in kind to ensure 
the Executive Directors’ 
well-being

 – car allowance
 – healthcare insurance
 – club membership
 – Participation in HMRC-

approved (or equivalent) 
schemes

 – Other benefits may be 

payable where appropriate
 – Any reasonable business- 

related expenses (including 
tax thereon) may be 
reimbursed if determined 
to be a taxable benefit

 – There is no prescribed 

 n/a

maximum annual 
increase. The committee 
is guided by the general 
increase for the broader 
workforce but on 
occasion may recognise 
an increase in certain 
circumstances, such as 
assumed additional 
responsibility or an 
increase in the scale or 
scope of the role or in the 
case of a new executive, 
a move towards the 
desired rate over a period 
of time where salary was 
initially set below the 
intended positioning

 n/a

 – A car allowance in line 
with market norm. The 
value of other benefits is 
based on the cost to the 
Company and is not 
predetermined

 – HMRC (or equivalent) 
scheme participation 
up to prevailing 
scheme limits

Annual bonus 
(including 
deferred 
shares)

 – To reward significant 

 – 90% of the bonus is paid in 

 – In line with Clarksons’ 

 – Bonus is determined by Group 

annual profit performance
 – To ensure that the bonus 
plan is competitive with 
our peers. As a result, 
bonus forms a significant 
proportion of the 
remuneration package
 – To ensure that if there 

is a reduction in 
profitability, the level 
of bonus payable falls 
away sharply

peers, the annual bonus 
is not subject to a formal 
individual cap. This policy, 
which is contractual 
for the current Chief 
Executive Officer and 
Chief Financial Officer 
and Chief Operating 
Officer encourages 
the maximisation of  
profit, and ensures that 
Executive Directors 
are aligned with all 
stakeholders in 
the business

cash and, although they have 
no contractual obligation, the 
Directors have agreed that 
10% of annual bonus payable 
is deferred in shares, vesting 
after four years

 – Directors have voting rights 
and receive dividends on 
deferred shares

 – Performance criteria are 

reviewed and re-calibrated 
carefully each year to ensure 
they are linked to strategic 
business goals, take full 
account of economic 
conditions and are sufficiently 
demanding to control the 
total bonus pool and 
individual allocations

 – Clawback provision operates 

for overpayments due to 
misstatement or error

performance measured over one  
year on the following basis:
 – below a ‘profit floor’ set by the 
committee each year no bonus 
is triggered

 – above the floor, an escalating 

percentage of profits is payable  
into a bonus pool for progressively 
higher profit before tax performance
 – profit for bonus calculations may be 
adjusted by the committee where 
appropriate and does not include 
mark-to-market valuations or 
business that has not been invoiced

 – for Executive Directors with 
revenue-generating broking 
responsibilities, a further key 
determinant of the annual bonus 
is the significance of personally-
generated broking revenues

 – a proportion of an individual’s share 
of the bonus pool may be based  
on the achievement of personal 
objectives set by the committee  
at the start of the year 

68

CLARKSON PLC ANNUAL REPORT 2017

 
 
 
 
 
 
 
 
Purpose and link 
to strategy

Operation

Maximum opportunity

Performance framework

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Long-term 
incentives

 – To incentivise and reward 

significant long-term 
financial performance 
and share price 
performance relative to 
the stock market
 – To encourage share 

ownership and provide 
further alignment with 
shareholders

 – Awards are performance-
related and are normally 
structured as nil cost options
 – Awards are granted each year 
following the publication of 
annual results

 – Clawback provision operates 

for overpayments due to 
misstatement or error

 – Annual maximum limit 

of 150% of basic salary 
for awards subject to 
long-term performance 
targets (200% of basic 
salary in exceptional 
circumstances)

 – Dividend equivalents 

(in cash or shares) may 
accrue between grant 
and vesting, to the extent 
that shares under award 
ultimately vest

 – Currently, the awards are subject to 
performance conditions measured 
on a combination of three-year EPS 
growth and relative TSR

 – The committee may introduce new 
measures or reweight the current 
EPS and TSR performance measures 
so that they are directly aligned with 
the Company’s strategic objectives 
for each performance period

 – Normally measured over a three-year 

performance period

 – 25% of an award will vest for 

achieving threshold performance, 
increasing pro-rata to full vesting for 
the achievement of stretch 
performance targets 

 n/a

 n/a

Pension

 – To provide a market 
competitive pension 
arrangement

 – Executive Directors 

participate in a Company 
defined contribution pension 
scheme and/or receive a 
cash allowance in lieu of 
pension contributions

 – Employer contributions 
are up to 15% of basic 
salary or an equivalent 
cash allowance net of 
employer’s NI

Non-Executive 
Directors’ fees

 – To attract and retain high 
calibre Non-Executive 
Directors through the 
provision of market 
competitive fees

 – Reviewed annually
 – Paid monthly
 – Fees are determined taking 

into account:
 – the experience, 

responsibility, effectiveness 
and time commitments of 
the Non-Executive Directors

 – the pay and conditions in 

the workforce

 – Additional fees may be 

payable in relation to extra 
responsibilities undertaken 
such as chairing a Board 
committee and/or a Senior 
Independent Director role 
or being a member of a 
committee

 – Any reasonable business-

related expenses (including 
tax thereon) can be 
reimbursed if determined 
to be a taxable benefit

 – As for the Executive 
Directors, there is no 
prescribed maximum 
annual increase. Fee 
increases are guided by 
the general increase for 
the broader workforce 
but on occasion may 
recognise an increase 
in certain circumstances, 
such as assumed 
additional responsibility 
or an increase in the 
scale or scope of the role

Share 
ownership 
guidelines

 – To provide alignment 

 – Executive Directors are 

 – Chief Executive Officer: 

 n/a

between the longer-term 
interests of Directors and 
shareholders

expected to build up and 
maintain shareholdings in 
the Company

 – Executives are required 
to retain at least half of 
the net of tax vested number 
of shares awarded and 
received until the guideline 
has been achieved

200% of salary
 – Other Executive 

Directors: 
200% of salary

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Governance Directors’ remuneration report continued

1.  A description of how the Company intends to implement the above policy for 2018 is set out in the annual report on remuneration on pages 72 to 73.
2.  The remuneration policy for the Executive Directors is designed with regard to the policy for employees across the Group as a whole and is consistent 

between the Executive Directors and the remainder of the workforce. The annual bonus plan operates on a similar profit-driven basis across the Group and 
there is a relatively high level of employee share ownership. The key differences in policy for Executive Directors relate to participating in the LTIP awards, 
which have strict vesting conditions. This is considered appropriate to provide a link for a proportion of performance pay with the longer-term strategy 
thereby creating stronger alignment of interest with shareholders.

3.  The 2018 annual bonus is focused on profit before taxation (PBT) performance. PBT is a key financial metric and is used to reflect how successful the 

Company has been in managing its operations.
The LTIP performance measures, EPS and TSR reward significant long-term returns to shareholders and long-term financial growth. EPS growth is derived 
from the audited financial statements while TSR performance is monitored on the committee’s behalf by New Bridge Street.
Targets are set on a sliding scale that takes account of internal strategic planning and external market expectations for the Company. Only modest 
rewards are available for achieving threshold performance with maximum rewards requiring substantial out-performance of challenging strategic plans 
approved at the start of each year.

4.  The committee operates the annual bonus and LTIPs according to their respective rules, and in accordance with the Listing Rules and HMRC rules 

where relevant.

  Consistent with market practice, the committee retains flexibility and discretions in a number of key areas. 
5.  For the avoidance of doubt, in approving this Directors’ remuneration policy, authority was given to the Company to honour any commitments entered into 
in the previous remuneration policy or with current or former Directors (such as, the payment of a pension or the vesting or exercise of past share awards) 
that have been disclosed in previous remuneration reports. Details of any payments to former Directors will be set out in the annual report on remuneration 
as they arise.

Directors’ remuneration scenarios
The Company’s remuneration policy results in a proportionate breakdown of total remuneration such that, in line with most other 
wholesale brokerage and agency companies, a very high proportion of the package is performance-related.

The charts below show an estimate of the potential remuneration payable to the Executive Directors in office on 1 January 2018  
at different levels of performance. The charts highlight that the performance-related elements of the package comprise a highly 
significant portion of the Executive Directors’ total remuneration at target and maximum performance.

Chief Executive Officer

Chief Financial Officer and Chief Operating Officer

Fixed pay

Annual bonus

LTIP

Fixed pay

Annual bonus

LTIP

Minimum

100%

On target

13%

79%

Maximum

11%

74%

£000

 640

Minimum

100%

8%

 4,905

On target

26% 58%

16%

15%

 5,606

Maximum

20% 53%

26%

£000

 408

 1,583

 2,003

President of Broking and Investment Banking

Fixed pay

Annual bonus

LTIP

Minimum

100%

On target

38% 35% 26%

Maximum

16% 62%

22%

£000

380

992

 2,404

1.  Basic salary levels applying on 1 January 2018.
2.  The value of taxable benefits is estimated at 2017 values.
3.  The value of the pension receivable is up to 15% of basic salary.
4.  Minimum performance assumes no award is earned under the annual bonus plan and no vesting is achieved under the LTIP.
  On target performance assumes an annual bonus calculated by reference to market expectations at the start of 2018 and 50% being achieved under the LTIP.
  Maximum performance assumes profit before taxation outperforms consensus and full vesting under the LTIP. It should, however, be noted that there is in 

fact no upper limit as explained on page 68 and the above charts are purely for illustrative purposes.

5.  Share price movement has been excluded from the above analysis.

70

CLARKSON PLC ANNUAL REPORT 2017

 
 
Directors’ recruitment and promotions
The committee has the objective to attract and retain the best talent in our markets, while at the same time ensuring executive pay 
is aligned to the corporate plan and business goals as well as supporting the interests of shareholders.

If a new Executive Director was appointed, a capped bonus scheme will apply and any bonus would only be payable to the extent 
there is sufficient value to do so in the profit-based pool. An LTIP award could be made shortly following an appointment 
(assuming the Company is not in a close period).

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Flexibility is retained to offer remuneration on appointment in respect of remuneration arrangements forfeited on leaving a previous 
employer. The committee will look to replicate the arrangements being forfeited as closely as possible and, in doing so, will take 
account of relevant factors including the nature of the deferred remuneration, performance conditions and the time over which 
they would have vested or been paid.

The initial notice period for a service contract may be longer than the policy of one year, provided it reduces to one year within 
a short space of time. For an internal appointment, any ongoing remuneration obligations existing prior to appointment may continue.

The committee may also agree that the Company will meet certain relocation and incidental expenses as appropriate.

Directors’ service contracts and payments for loss of office
The committee reviews the contractual terms for Executive Directors in light of developments in best practice and trends in our 
sector. The remuneration-related elements of the current contracts for Executive Directors are shown in the table below:

Provision

Detailed terms

Notice period

One year by the Company or the Director.

Termination 
payment 

Chief Executive Officer:
The Company may elect to pay in lieu of notice:

 – an amount equivalent to 12 months’ base salary plus the cost of contractual benefits; plus
 – an amount equivalent to 50% of the last bonus received.
In addition:

 – if not already paid, any bonus in respect of the prior year is payable (if not agreed, an amount equal to the last bonus 

received); and

 – a pro-rated bonus for the period of the year worked is payable.

Chief Financial Officer and Chief Operating Officer:
The Company may elect to pay in lieu of notice:

 – an amount equivalent to base salary, benefits and bonus for the relevant period of notice.

President of Broking and Investment Banking:
The Company may elect to pay in lieu of notice:

 – an amount equivalent to base salary and contractual benefits for the relevant period of notice only.

The committee recognises that it is unusual in the context of listed PLCs to pay an amount in lieu of annual bonus for the notice 
period for the Chief Executive Officer and the Chief Financial Officer and Chief Operating Officer but considers that the policy is 
appropriate for the following reasons:

 – salary forms a lower proportion of remuneration than in most other UK companies;
 – typically, in the shipbroking industry, income from business conducted is received over a number of years in arrears;
 – bonuses are only payable if profit thresholds and targets are achieved i.e. there is no automatic entitlement to a bonus; and
 – unvested awards under the LTIP are capable of vesting only subject to performance.
For unvested entitlements to share awards under the 2014 Clarkson LTIP, where a participant ceases to be employed by the Group 
due to ill-health, injury, disability, redundancy, retirement, a sale of his employing company or business or for any other reason at 
the discretion of the committee (good leaver circumstance), then he will be entitled to keep his award as described below:

 – performance-related awards will normally vest at the normal vesting dates (unless the committee determines that they should vest 

upon cessation) subject to the satisfaction of the relevant performance conditions and time pro-rating (unless the committee 
decides to disapply time pro-rating). In the case of death or ill-health, awards will vest at cessation subject to the relevant 
performance conditions; and

 – deferred bonus awards will vest in full.

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Governance Directors’ remuneration report continued

Provision

Detailed terms

Change 
of control

Chief Executive Officer:
If, within 18 months of a change of control, the Company gives the Chief Executive Officer notice (except for reasons of gross 
misconduct or material breach of contract) or the Chief Executive Officer gives notice as a result of a material breach of his 
contract or the Company limits his ability to earn future bonuses, the Chief Executive Officer will, within 30 days of termination, 
receive an amount equivalent to one year’s basic salary, 150% of the last annual bonus received and the gross annual value of 
contractual benefits (pro-rated). In these circumstances, the Chief Executive Officer’s notice period is reduced to four weeks.

Chief Financial Officer and Chief Operating Officer:
Within one year of a change of control, the Chief Financial Officer and Chief Operating Officer or the Company may give notice (of 
not less than four weeks in the case of the former) whereupon he will receive immediately an amount equivalent to one year’s basic 
salary, contractual benefits, employer pension contributions and annual bonus.

President of Broking and Investment Banking:
No change of control provisions exist.

All unvested awards under the 2014 Clarkson LTIP would vest. In respect of performance–related awards, the extent of vesting 
would be subject to any performance conditions having been achieved and any time pro-rating applied at the discretion of the 
committee.

In August 2008 it was contractually agreed with the current Chief Financial Officer and Chief Operating Officer, Jeff Woyda, that no 
time pro-rating will be applied to his LTIP awards.

The committee recognises that it is now unusual, in the context of listed PLCs, for service contracts to contain change of control 
provisions and will therefore seek to avoid such provisions for future executive appointments to the Board.

Annual report on remuneration

Implementation of the remuneration policy for 2018
Base salary

Andi Case
Jeff Woyda
Peter M. Anker*

1 January 2018
GBP 550,000
GBP 350,000
NOK 4,015,000

1 January 2017 % change
0%
GBP 550,000
0%
GBP 350,000
0%
NOK 4,015,000

*  Fixed in NOK as £350,000 at NOK/GBP 11.4723 at 2 February 2015 being the date Peter M. Anker joined the Board.

Annual bonus for 2018
For 2018, the annual bonus opportunity will remain on the same basis as previous years and will continue to be based on a bonus 
pool derived from Group profit before taxation as follows:

 – below a ‘profit floor’ set by the committee no bonus is triggered; and
 – above the floor, an escalating percentage of profits is payable into a bonus pool for progressively higher profit before taxation 

performance.

Profit for bonus calculations may be adjusted by the committee where appropriate and do not include mark-to-market valuations 
or business that has not been invoiced.

As in 2017, the share of the executive bonus pool allocated to the Chief Financial Officer and Chief Operating Officer will, in part, 
be determined by performance against a series of non-financial, strategic and operational objectives.

The profit floor and challenges for 2018 have not been disclosed on a prospective basis as these are considered to be 
commercially sensitive although disclosure will be provided retrospectively. The threshold and maximum targets are higher than 
those that applied for 2017.

Consistent with the policy applied to the majority of senior employees, 90% of the bonus payable will be paid in cash with 10% 
deferred into restricted shares vesting four years after grant. Executive Directors have agreed to this deferral, although they have 
no contractual obligation to defer bonuses. Clawback provisions will continue to apply in circumstances of misstatement or error.

72

CLARKSON PLC ANNUAL REPORT 2017

 
 
Long-term incentive awards to be granted in 2018
Consistent with past practice, it is envisaged that:

 – Executive Directors will receive LTIP awards over shares worth up to 150% of salary in 2018;
 – the vesting of 50% of the awards will be determined by the Company’s EPS for 31 December 2020, as shown in chart (i) below. 

The EPS for 2017 is shown (grey line) for reference; and

 – the vesting of the remaining 50% will be determined by the Company’s TSR performance from 1 January 2018 to 31 December 
2020 against the constituents of the FTSE 250 Index (excluding investment trusts), as shown in chart (ii) below. The level of TSR 
achieved against the FTSE 250 Index over the last three-year cycle is shown (grey line) for reference.

EPS and relative TSR are considered to be the most appropriate measures of long-term performance for the Group, in that they 
ensure executives are incentivised and rewarded for the earnings performance of the Group as well as returning value to 
shareholders.

The awards will be subject to clawback provisions and a two-year post-vesting holding period.

EPS target range for 2018 award (50% of award) 
EPS target range for 2018 award (50% of award) 

TSR target range for 2018 award (50% of award)
TSR target range for 2018 award (50% of award)

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75%

50%

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116.8p

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Median

Upper Quartile

1st Place

Vesting schedule for 2018 awards 

2017 EPS 

TSR performance range

Actual result in last three year TSR cycle

EPS target (pence) for FY ended 31 December 2020 for the 2018 award

TSR ranking at end of 3 year performance period

The committee has carefully considered the EPS range for the 2018 award and believes the 145p to 195p range is stretching 
against market consensus and the actual 2017 EPS delivered.

Fees for the Non-Executive Directors
Non-Executive Director fee levels for 2018 are as follows:

Chair
Non-Executive Director
Chair of committee*
Senior Independent Director*

*  Supplementary fees payable in addition to the base Non-Executive Director fee. 

2018
£000
168
58
19
19

2017
£000
163
56
18
18

% 
change
3%
3%
3%
3%

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Governance Directors’ remuneration report continued

Directors’ remuneration (audited)
Details of emoluments and compensation payable in their capacity as Directors during the year are set out below:

31 December 2017

Executive Directors
Andi Case 
Jeff Woyda 
Peter M. Anker
Non-Executive Directors
James Hughes-Hallett
Peter Backhouse
Ed Warner
James Morley6
Birger Nergaard
Marie-Louise Clayton5

31 December 2016

Executive Directors
Andi Case 
Jeff Woyda 
Peter M. Anker
Non-Executive Directors
James Hughes-Hallett
Peter Backhouse
Ed Warner
James Morley6
Birger Nergaard

Basic salary 
and fees 
£000

Benefits1
£000

Pension2 
£000

Performance- 
related
bonus7
£000

Total 
remuneration 
before LTIP 
£000

 Long-term
incentives8
£000

Total 
remuneration 
£000

550
350
3753

163
74
74
31 
56
67 
1,740 

14 
12 
17 

–
–
–
–
–
–
43 

74 
46 
7 

–
–
–
–
–
–
127 

3,036 
766 
350 

–
–
–
–
–
–
 4,152

3,674 
1,174 
749 

163
74
74
31 
56 
67 
 6,062

325 
148 
–

–
–
–
–
–
–
 473

3,999 
1,322 
749 

163 
74
74
31 
56 
67 
 6,535

Basic salary 
and fees 
£000

Benefits1
£000

Pension2
£000

Performance- 
related 
bonus
£000

Total 
remuneration 
before LTIP 
£000

 Long-term
incentives8
£000

Total 
remuneration 
£000

550
350
3563

160
73
73
73
55
1,690

16
12
22

–
–
–
–
–
50

74
46
7

–
–
–
–
–
 127

 2,938
 633
 633

–
–
–
–
–
 4,204

 3,578
 1,041
 1,018

 160
73
73
73
55
 6,071

 1284
 584
–

–
–
–
–
–
 1864

 3,706
 1,099
 1,018

 160
73
73
73
55
 6,257

We consider key management personnel to be Clarkson PLC Directors.
1.  Benefits include cash allowances in lieu of company cars, healthcare insurance and club memberships.
2.  Pension includes pension contributions and cash supplements where relevant.
3.  Fixed salary of NOK 4,015,000. Translated to GBP at exchange rate of 10.7180 (2016: 11.2840).
4.  The 2016 LTIP values have been restated to reflect the share price on the actual date of vesting and associated rolled-up dividend.
5.  Marie-Louise Clayton joined the Board on 1 January 2017.
6.  James Morley retired on 12 May 2017.

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CLARKSON PLC ANNUAL REPORT 2017

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  Annual bonus for 2017 was based on the allocation of the following pool:

Underlying profit before taxation and bonus
If profit < £27.25m
If profit > £27.25m then £0m – £54.51m
If profit > £54.51m then £54.51m – £63.55m
If profit > £63.55m then on profits > £63.55m
Actual underlying profit before taxation
Actual underlying profit before taxation for bonus calculation after deducting 

the minority interest of pre-tax profit,adding back the cost of bonus

Actual executive bonus pool*
% of executive bonus pool allocated to Executive Directors 

(this is after 10% voluntary sacrifice by Directors)

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0%
11%
16%
18%
£50.2m

£52.9m
£5.8m

71%

*  The executive pool is an incentive scheme for Executive Directors, separate from the bonus schemes paid to staff.

The bonus is paid 90% in cash and, although they have no contractual obligation, the Directors have agreed that 10% of the bonus will be deferred in shares, 
vesting after four years. Both the cash and share element of the bonus are subject to clawback where overpayments may be reclaimed in the event of 
misstatement or error.

8.  Long-term incentives relate to awards granted on 17 April 2015 which vest in April 2018 based on performance over the three-year period to 
31 December 2017. The performance conditions attached to this award and actual performance against these conditions are as follows:

Performance measure 
EPS (out of 50%)

TSR relative to the constituents of the 
FTSE SmallCap Index (excluding 
investment trusts) (out of 50%)
Total vesting (out of 100%)

Performance condition
25% of award vesting at threshold up to 
100% of award vesting at stretch on 
straight-line basis 
25% of award vesting at threshold up to 
100% of award vesting at stretch on 
straight-line basis 

Threshold 
target 

Stretch 
target 

Actual**

% vesting

155p 

190p

Median

Upper 
quartile 

116.8p
Between 
median and 
upper quartile

**  Clarksons’ TSR over the three-year performance period was 47.9% which was between the median (31.1%) and upper quartile (71.5%) of the 

comparator group.

The award details for the Executive Directors are as follows:

Andi Case
Jeff Woyda
Peter M. Anker

Number 
of options 
granted
36,748
16,703
n/a

Number 
of options 
to vest 
11,208 
5,094 
n/a 

Number 
of options 
to lapse
25,540 
11,609 
n/a 

***  The estimated value of the vested shares is based on the average share price during the three-month period from 1 October to 31 December 2017 of 

£28.96. These options will vest on the third anniversary of grant, 16 April 2018, subject to continued employment.

Comparative LTIP values relate to the 2014 awards which vested in 2017 based on performance to 31 December 2016. In the 2016 annual report, these were 
based on the three-month average share price to 31 December 2016 of £20.81. The actual share price at vesting was £24.75. 2016 LTIP amounts in the single 
figure table have been restated to reflect this value.

0%

61%
30%

Estimated 
value of
vested 
shares***
£000
325 
148 
n/a 

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Directors’ outstanding share incentives (audited)
The table below sets out details of outstanding share awards held by the Executive Directors. The share awards have been 
granted as nil cost options under the LTIP, subject to the EPS and TSR performance criteria (50% of the award each) detailed in 
the LTIP section of this report on page 69.

Interests 
under plan 
1 January 
2017
4,8011
36,7482
36,6013
–
2,1821
16,7032
23,2913
–
23,2913
– 

Awards 
granted 
in the 
year
–
–
–
29,8154
–
–
–
18,9734
–
18,9734

Awards 
exercised 
 in the 
year
4,801*
–
–
–
2,182*
–
–
–
–
–

Awards 
lapsed 
 in the 
year
–
25,540 
–
–
–
11,609 
–
–
–
–

Interests 
under 
plan at 31 
December 
2017
– 

Face value 
at 31 
December
20176
£
– 
11,2085  320,660 
36,601 1,047,154 
853,007 
29,815 
–
– 
5,0945  145,739 
666,355 
23,291
542,817 
18,973
666,355 
23,291
542,817 
18,973

Andi Case

Jeff Woyda

Peter M. Anker

% vesting 
at threshold 
performance

Grant 
date
25% 5 Jun 14 
25% 17 Apr 15 
25% 15 Apr 16 
25% 18 Apr 17 
25% 5 Jun 14 
25% 17 Apr 15 
25% 15 Apr 16 
25% 18 Apr 17 
25% 15 Apr 16 
25% 18 Apr 17 

Date 
End of 
exercisable 
Vesting 
performance 
until
date
date
Dec 16 
4 Jun 24 
4 Jun 17
Dec 17  16 Apr 18 16 Apr 25 
Dec 18  14 Apr 19 14 Apr 26 
Dec 19  17 Apr 20 17 Apr 27 
Dec 16 
4 Jun 17  4 Jun 24
Dec 17  16 Apr 18 16 Apr 25 
Dec 18  14 Apr 19 14 Apr 26 
Dec 19  17 Apr 20 17 Apr 27 
Dec 18  14 Apr 19 14 Apr 26 
Dec 19  17 Apr 20 17 Apr 27 

*  Vested during the year.
The share price on the date of the award was 1. £24.99, 2. £22.16, 3. £22.21, 4. £27.95
5. Although the performance period for these awards ended on 31 December 2017, the awards will vest on 16 April 2018.
6. Values calculated using the closing share price at 31 December 2017 of £28.61.
Further details of share-based payments during the year are contained in note 21 to the consolidated financial statements.

Executive Directors’ interests in share options over ordinary shares under the Company’s all-employee share plans are as follows:

Andi Case 
Jeff Woyda
Peter M. Anker 

ShareSave
ShareSave
ShareSave 

Options 
held at 
1 January 
2017
993
993
– 

Options 
granted 
 during 
the year
–
–
799 

Options 
exercised 
 during 
the year
–
–
– 

Options 
lapsed 
 during 
the year
–
–
– 

Options 
held at 
31 
December 
2017
993
993
799 

Date from 
which 
exercisable

Exercise 
Expiry  
price
date
£
1 Jul 18 31 Dec 18
18.12
18.12
1 Jul 18 31 Dec 18
22.50  1 Nov 20  30 Apr 21 

Directors’ interests in shares
The Company requires Executive Directors to build a shareholding equivalent to 200% of salary. Until this is attained they are 
required to retain 50% of any share award that vests (on a net of tax basis).

The beneficial interests of the Directors in the share capital of the Company at 31 December 2017 were as follows:

31 December 2017

James Hughes-Hallett1
Andi Case4
Jeff Woyda4
Peter M. Anker2,5
Peter Backhouse
Ed Warner
Birger Nergaard3
Marie-Louise Clayton1

Number 
of ordinary 
shares
2,163
500,000
75,000
250,000
6,000
15,000
205,869
1,100

% of salary 
required 
to be held 
in shares
n/a
200
200
200
n/a
n/a
n/a
n/a

Unvested 
LTIPs
n/a
77,624
47,358
42,264
n/a
n/a
n/a
n/a

Vested and 
unexercised 
LTIPs
n/a
–
–
–
n/a
n/a
n/a
n/a

Deferred 
bonus 
shares
n/a
51,281
10,995
7,859
n/a
n/a
n/a
n/a

ShareSave 
options
n/a
993
993
799
n/a
n/a
n/a
n/a

There was no change in the beneficial interests of the Directors in the share capital of the Company between 31 December 2017 and 8 March 2018, 
being the last practicable date before the signing of this report.

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31 December 2016

James Hughes-Hallett1
Andi Case
Jeff Woyda
Peter M. Anker2
Peter Backhouse
Ed Warner
James Morley4
Birger Nergaard3
Marie-Louise Clayton1

Number 
of ordinary 
shares
2,163
731,782
109,014
357,477
6,000
15,000
4,500
205,869
1,100

% of salary 
required 
to be held 
in shares
n/a
200
150
150
n/a
n/a
n/a
n/a
n/a

Unvested 
LTIPs
n/a
78,150
42,176
23,291
n/a
n/a
n/a
n/a
n/a

Vested and 
unexercised 
LTIPs
n/a
–
–
–
n/a
n/a
n/a
n/a
n/a

Deferred 
bonus 
shares
n/a
53,766
11,502
5,571
n/a
n/a
n/a
n/a
n/a

ShareSave 
options
n/a
993
993
–
n/a
n/a
n/a
n/a
n/a

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1.  Shares held in part or in full by connected persons.
2.  Including ordinary shares held by Langebru AS on behalf of Peter M. 

4.  James Morley retired on 12 May 2017.
5.  These figures include restricted shares and restricted stock units granted 

Anker and his connected persons.

as part of annual bonus as follows: 

3.  Including ordinary shares held by Acane AS on behalf of Birger Nergaard 

and his connected persons.

Andi Case
Jeff Woyda
Peter M. Anker

Bonus year
Vesting date

Type of award
Restricted shares
Restricted shares
Restricted stock units

2013
June 2018
9,924
2,117
n/a

2014
April 2019
15,233
3,249
2,667

Number of shares
2016 
April 2021
10,618
2,288
2,288

2015
April 2020
15,506
3,341
2,904

Further restricted share and restricted stock unit awards will be made in 2018 in respect of 10% of the Directors’ 2017 bonus.

Pensions (audited)
Pension contributions were £nil (2016: £nil) for Andi Case and £nil (2016: £nil) for Jeff Woyda, with the balance for both Andi Case 
and Jeff Woyda (up to15% of salary) paid as a cash supplement in lieu of pension (net of employer’s NI) and included in the table 
on page 74 as pension. Peter M. Anker’s pension contribution was NOK 73,362 (2016: NOK 77,430).

Payment to former Directors (audited)
No payments were made to past Executive Directors during the year ended 31 December 2017.

Payments for loss of office (audited)
No payments were made in respect of loss of office during the year ended 31 December 2017.

Details of service contracts and letters of appointment
Details of the current Executive Directors’ service contracts are as follows:

Andi Case
Jeff Woyda
Peter M. Anker

Date of contract
17 June 2008
3 October 2006
27 November 2014

Unexpired term
12 months
12 months
12 months

Notice period
12 months
12 months
12 months

Service contracts are available for inspection at the Company’s registered office.

Details of the Non-Executive Directors’ appointment terms are as follows:

James Hughes-Hallett
Peter Backhouse
Ed Warner
Birger Nergaard*
Marie-Louise Clayton

Date of initial 
appointment
20 August 2014
12 September 2013
27 June 2008
2 February 2015
1 January 2017

Date of appointment
20 August 2017
12 September 2016
27 June 2017
2 February 2015
1 January 2017

Unexpired term at 
31 December 2017
32 months
21 months
6 months
2 months
24 months

Notice period
3 months
3 months
3 months
3 months
3 months

*  Birger Nergaard has been re-appointed for a further three years from 2 February 2018.

Non-Executive Directors are appointed by letter of appointment for a fixed term not exceeding three years, renewable on the 
agreement of both the Company and the Director, and are subject to re-election at each AGM. Each appointment can be 
terminated before the end of the three-year period with three months’ notice due.

Fees payable for a new Non-Executive Director appointment will take into account the experience of the individual and the current 
fee structure.

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Governance Directors’ remuneration report continued

Performance graph
This graph shows TSR (that is, share price growth assuming re-investment of any dividends) of the Company over the last nine 
financial years compared to the FTSE 250 Index and the FTSE SmallCap Index, which the committee considers appropriate for 
comparison purposes given the Company has been a member of both of these indices over the period, and compared to the total 
remuneration of the Chief Executive Officer. 

Total shareholder return
Source: Datastream (Thomson Reuters)

1200

1000

)

d
e
s
a
b
e
r
(

)

£

(

e
u
a
V

l

800

600

400

200

0

Dec 08

Dec 09

Dec 10

Dec 11

Dec 12

Dec 13

Dec 14

Dec 15

Dec 16

Dec 17

Clarkson PLC

FTSE 250

FTSE SmallCap

CEO Remuneration

This graph shows the value, by 31 December 2017, of £100 invested in Clarkson PLC on 31 December 2008, compared with the value of £100 invested 
in the FTSE 250 and FTSE SmallCap Indices on the same date.

The LTIP award vesting level as a percentage of the maximum opportunity for the Chief Executive Officer for each of the last nine 
years is as follows:

LTIP vesting %

2017
30%

2016
15%

2015
70%

 2014
69%

2013
50%

2012
47%

2011
98%

2010
44%

2009
50%

Percentage change in remuneration levels
The table below shows the movement in salary, benefits and annual bonus for the Chief Executive Officer between the 2016 and 
2017 financial years, compared to the average for all employees:

Chief Executive Officer
Salary and benefits
Bonus
All employees
Salary and benefits
Bonus

% change

 0%
+3.3%

+2.7%
+6.6%

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CLARKSON PLC ANNUAL REPORT 2017

 
 
 
 
 
Relative importance of spend on pay
The following table sets out the percentage change in profit, dividends and overall spend on pay in 2017 compared to 2016:

Underlying profit for the year
Dividends
Employee remuneration costs, of which:

Executive Directors’ total pay excluding LTIP (continuing)
Executive Directors’ annual bonus (continuing)

2017
£m
38.2 
20.1 
199.2 
5.6 
4.2 

2016

£m  % change 
+13.7%
+8.6%
+4.1%
0%
0%

33.6
18.5
191.3
5.6
4.2

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External appointments
Jeff Woyda, Chief Financial Officer and Chief Operating Officer, is a Non-Executive Director of the International Transport 
Intermediaries Club (ITIC). During the year, Jeff Woyda received £16,600 remuneration for serving as a Non-Executive Director 
of ITIC.

External advisors
New Bridge Street (NBS), part of Aon PLC, are appointed by the committee to provide independent advice and services that 
materially assist the committee. Other than to the committee, NBS also provides some associated advice in relation to, for 
example, legal implementation and the fees of the Non-Executive Directors. Other than the provision of these services, NBS does 
not have any other connection with the Company. The committee is satisfied that the quality of advice received during the year 
was sufficient and that the advice provided by NBS remains objective and independent.

The fees paid by the Company to NBS during the financial year for advice to the committee and in relation to share plans were 
£77,288 (2016: £39,069).

NBS is a signatory to the Remuneration Consultants’ Code of Conduct which requires its advice to be objective and impartial.

Statement of shareholder voting at AGM
At the 2017 AGM, the Directors’ remuneration report and remuneration policy received the following votes from shareholders.

Remuneration report
Remuneration policy

In favour
16,966,872
16,841,377

% cast
Against
72.87% 6,027,724
72.33% 6,106,012

% cast
25.89%
26.22%

Discretion
290,590
336,797

% cast
Total
1.24% 23,285,186
1.45% 23,284,186

% cast
100%
100%

Withheld
2,281
3,281

Details of the actions taken by the Board in response to the votes against the remuneration resolutions registered at the 2017 
AGM are included in the committee Chair’s statement on pages 65 to 66. 

This report was approved by the Board and signed on its behalf by:

Ed Warner
Remuneration committee Chair

9 March 2018

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Governance

Audit committee report

Main areas of responsibility
 – monitoring the integrity of the Group’s financial 

statements and any formal announcements relating 
to financial performance; 

 – reviewing and challenging the adequacy and 

effectiveness of the Group’s systems of internal 
control and risk management;

 – monitoring and reviewing the effectiveness of and 
need for the Company’s internal audit function;

 – monitoring the objectivity, effectiveness and 

performance of the external Auditors;
 – recommendations for appointment,  

re-appointment, removal and remuneration  
of external Auditors;

 – examining the adequacy and security of the 

Company’s arrangements for employees to raise 
concerns, in confidence, about possible 
wrongdoing in financial reporting; 

 – reviewing the Company’s systems and controls for 

the prevention of bribery;

 – assessing reports from the Compliance and Money 

Laundering Reporting Officer; and

 – reporting findings to the Board.

Meetings
Total number of meetings held in 2017
Committee members
Marie-Louise Clayton (Chair)1
Peter Backhouse
James Morley2
Ed Warner
Non-members and Executive Directors attending by invitation
James Hughes-Hallett
Andi Case
Jeff Woyda

Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director

Independent Non-Executive Director
Executive Director
Executive Director

MARIE-LOUISE CLAYTON
AUDIT COMMITTEE CHAIR

3

3
3
1
3

3
1
3

1.  Joined the committee on 2 March 2017 and became Chair on 12 May 2017.
2.  Chair of the committee until 12 May 2017 when he retired from the Board and left the committee.

Generally, both the external Auditors and management are invited to, and attend, committee meetings. 
In addition, the committee ensures that it meets regularly in private with the external Auditors without 
management present.

Membership
James Morley and Marie-Louise Clayton have been deemed by the Board to have recent and relevant 
financial experience. The Board is satisfied that the majority of members are independent Non-Executive 
Directors. The external Auditors are invited to attend committee meetings on a regular basis and attended 
all three meetings held in 2017.

Terms of reference
The committee’s terms of reference are regularly reviewed to ensure compliance with the requirements  
of the Code.

The committee’s terms of reference can be found at: www.clarksons.com/investors/financial-calendar/.

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CLARKSON PLC ANNUAL REPORT 2017

Chair’s statement
I joined the committee in March 2017 and became Chair following James Morley’s retirement in May 2017. During the course of my 
first year as committee Chair, I have focused on gaining a detailed understanding of the Company, its systems and its risks. To that 
end, I have spent considerable time with individual management members, both in the finance team and the broader business. I have 
also met with the external and internal Auditors. The committee works well with the Company and its Auditors and has an open and 
frank relationship with both.

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Activities during the year
During the year, the audit committee (the committee) addressed the following areas:

1. Financial reporting and significant issues;
2. Internal control and risk management;
3. Internal audit;
4. Whistleblowing; 

5. Compliance;
6. Viability statement;
7. External Auditors; and
8. Cyber security.

1. Financial reporting and significant issues
The committee reviewed and considered the robustness and integrity of the Group’s financial reporting, by focusing on the following 
areas in relation to the preparation of the interim and annual financial statements:

 – the appropriateness of accounting policies used;
 – compliance with internal and external financial reporting standards and policies;
 – principal judgemental accounting matters, based on reports from management and external Auditors; and
 – whether or not 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.

The committee also reviews reports by the external Auditors on the full year and half year results which highlight any issues with 
respect to the work undertaken on the audit. The issues and how they were addressed by the committee are set out below:

Issue

Area of focus

How the issue was addressed by the committee

Recoverability of 
trade receivables

A number of judgements are made in the 
calculation of the provision, primarily the age of  
the invoice, the existence of any disputes, recent 
historical payment patterns and the debtor’s 
financial position. 

Revenue 
recognition

In the broking and financial segments, the  
Group’s entitlement to commission revenue  
usually depends on third party obligations being 
fulfilled. Since the Group has no control over this,  
it is important to recognise revenue at the 
appropriate time.

Carrying value  
of goodwill and 
intangible assets

Determining whether goodwill is impaired requires 
an estimation of the value-in-use of the cash-
generating units to which these assets have been 
allocated. The value-in-use calculation requires 
estimation of future cash flows expected to arise 
for each cash-generating unit, the selection of 
suitable discount rates and the estimation of future 
growth rates.

The committee discussed with management the results of its review, the 
internal controls and the composition of the related financial information. 
The committee also discussed with the external Auditors their review of  
the provision. 

The committee is satisfied that the judgements made by management are 
reasonable and that appropriate disclosures have been included in the 
financial statements.

The committee considered the revenue recognition processes in place for 
all four business segments with management and cut-off procedures with 
the external Auditors.

The committee is satisfied with the control environment and that revenue 
has been recognised in the correct periods.

The committee is satisfied that the implementation of IFRS 15 will have no 
significant impact on the revenue recognition for the Group. See note 2.2 
for further details.

The committee discussed with management and reviewed the results of its 
testing and evaluated the appropriateness of the assumptions used within 
its impairment models. The committee also discussed with the external 
Auditors their review of management’s testing. The committee then 
discussed with both management and the external Auditors the headroom 
in each of the cash-generating units and the impact of sensitivity analysis 
from changes in key assumptions.

The committee is satisfied with management’s assumptions, judgement 
and the conclusion not to record impairment in any of the cash-generating 
units and that appropriate disclosures have been included in the 
financial statements.

The work described above, together with a review of the content of the strategic report, provided the assurance to the committee 
and to the Board that the annual report for the year ended 31 December 2017, taken as a whole, is fair, balanced and understandable 
and provides the information necessary for shareholders to assess the Group’s and the Company’s position and performance, 
business model and strategy.

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Governance Audit committee report continued

2. Internal control and risk management
The Company continually seeks to improve and update 
existing procedures and to introduce new controls 
where necessary. The risk management system is 
designed to identify principal risks and to provide 
assurance that these risks are fully understood  
and managed. 

Key functions of the committee are to:

 – review and challenge the Group’s internal control 
and risk management systems and processes to 
ensure that they remain adequate and effective, 
including financial, operational and compliance 
controls and procedures;

 – identify any significant deficiencies or material 
weaknesses in the internal control and risk 
management systems and processes; and
 – review the external Auditors’ report in relation 

to internal control observations.

As an ongoing process, the committee oversees the 
development of the internal control procedures which 
provide assurance to the committee that the controls 
which are operating in the Group are effective and 
sufficient to counteract the risks to which the Company 
is exposed. 

No significant control deficiencies were identified 
during the year. 

Further details of risk management, including the 
Company’s principal risks, are shown on pages 42 to 47.

3. Internal audit
The need for an internal audit function is reviewed 
regularly by the Board and the committee. An internal 
audit function is in place for our banking and finance 
operations headquartered in Norway, given their scale 
and regulatory nature. Ernst & Young perform this 
function on an outsourced basis and the results are 
reported to the committee. There were no significant 
issues identified during the last year.

The committee has reviewed the requirement for an 
internal audit function in respect of the Group’s other 
activities and to date, the committee has concluded 
that there is no current requirement for such a function. 
This will be kept under review in 2018.

4. Whistleblowing
The committee, in conjunction with the Board, has 
established arrangements by which employees of the 
Group may, in confidence, raise concerns about 
possible improprieties or wrongdoing. This has been 
approved by the committee for the year.

5. Compliance
In 2017, the committee has reviewed the processes for 
the prevention, detection and reporting of fraud and the 
Group’s Code of Business Conduct and Ethics. In order 
to further strengthen these processes, the committee 
have overseen the following activities during the year:

 – review of the Company’s compliance manual which 

consolidates all compliance policies and will 
supersede the Code of Business Conduct and 
Ethics when it is launched in 2018;

 – review of the employee handbook;
 – approval of an updated IT acceptable use policy;
 – development of a new cyber training package for  

all employees; and

 – establishment of a global compliance support  

team to help oversee new policies and  
processes globally.

6. Viability statement
The committee considered the form of the viability 
statement. In particular, there was a debate over the 
period of time that it was appropriate to consider and 
it was decided that it was appropriate to limit the 
statement to three years. 

The committee reviewed the analysis supporting the 
viability statement and the processes underpinning the 
assessment of the Group’s longer-term prospects. 
Further assessment of viability and the viability 
statement is set out on page 43.

7. External Auditors
The committee reviews and makes recommendations 
to the Board regarding the re-appointment and 
remuneration of the external Auditors.

The committee considered the following:

 – quality and effectiveness of the audit for the  

prior year;

 – external audit strategy for the current year;
 – overall work plan;
 – terms of engagement;
 – external Auditors’ overall performance and 

independence; 

 – effectiveness of the overall audit process; 
 – level of non-audit and audit fees; and
 – length of appointment as external Auditors (current 

length: nine years).

The Financial Reporting Council (FRC)
During the year, the 2016 external audit of the Group by 
PwC was reviewed by the FRC’s Audit Quality Review 
team (AQR). The AQR routinely monitors the quality of 
audit work of certain UK audit firms through inspections 
of sample audits and related procedures at individual 
audit firms. The committee and PwC have discussed 
the review findings and the committee does not 
consider any of the findings to have had a significant 
impact on PwC’s audit approach.

In November 2017, the Group received a letter from 
the FRC confirming that the annual report for the year 
ended 31 December 2016 had been subject to review 
by its conduct committee, which is responsible for 
reviewing and investigating the annual accounts, 
Directors’ and strategic reports of UK public 
companies. The only area covered by this enquiry was 
a request for the Company to provide further details 
in relation to revenue, trade receivables and related 
impairment. As a result of the FRC’s enquiry, we 
committed to providing additional disclosures in the 
2017 annual report. The FRC’s enquiry closed with 
no further questions.

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The FRC noted that its role was not to verify 
information, but to consider compliance with reporting 
requirements, and it did not take responsibility for 
reliance on its letter by any party.

Effectiveness
During 2017, the committee conducted an effectiveness 
review of the external Auditors. The review included a 
questionnaire, completed by committee members, the 
Chief Financial Officer and Chief Operating Officer, the 
PLC Board Chair and the Group Financial Controller, of 
various key criteria for judging effectiveness and 
feedback from management. Criteria included 
understanding of the business, effective use of audit, 
experience of team and quality of recommendations. 
The committee reviewed the results of the 
questionnaire. No significant issues or areas of concern 
were raised. 

Non-audit services
To ensure that the Auditors maintain their independence 
and objectivity, the committee agreed, with effect from 
November 2016, that the Auditors and their associated 
audit network firms would no longer be used for 
non-audit services. There are two exceptions: where 
services are either required by statute or where, 
exceptionally, the local statute law permits the provision 
of such services, the Auditors are best placed to 
preserve the quality of the non-audit service and there 
are limited feasible alternatives. Legacy non-audit 
services approved by the committee are shown in  
note 3. 

The committee as a whole will be briefed on the legal 
requirements and mechanics of a tender process. 
All committee members will be involved throughout 
the process. The committee Chair is expected to take a 
lead role in overseeing and developing the approach for 
the tender. In setting the approach, the committee will 
consider the key factors which will drive the decision-
making process. These factors are expected to include:

1. Industry expertise of the firm and the audit team; 
2. Experience of the lead audit partner and the firm;
3. Use of technology in the process;
4. Global reach of the firm; and
5. Experience of transitioning this type of account.

The committee will oversee the tender and expect to 
report in full on the process followed, the outcome and, 
if appropriate, the transition, in the 2018 annual report 
which will be published in 2019. 

8. Cyber security
During November 2017, as mentioned in the Chief 
Executive Officer’s review on page 19, the Company 
became aware that it had been subject to a cyber 
security incident. The Chair of the audit committee, 
together with the Board more generally, was closely 
involved in the management of this incident. At no time 
was Clarksons’ ability to do business affected, and the 
incident was contained in early December 2017. The 
implementation of additional enhancements to controls 
has since been accelerated to further reduce risks and 
best prevent a similar incident happening in the future.

In October 2017, the committee and the Board 
reviewed the policy on non-audit services and  
renewed it for 2018. It remains the Company’s position 
that the external Auditor will not be used for any 
non-audit services.

The committee will review all improvements in cyber 
controls and changes in work practices in its 2018 
programme of works. See the cyber risk section of 
our risk management report on pages 42 to 47 for 
further information.

Meetings
The committee meets privately on a regular basis with 
the external Auditors in the absence of management.

Appointment of external Auditor 
The committee does not consider that PwC’s 
independence or effectiveness is impaired and is 
satisfied with the results of the effectiveness review. 
Accordingly, the committee has recommended to the 
Board that PwC be re-appointed as Auditors and that 
shareholder approval be sought at the 2018 AGM. 

Tender
2018 will be the tenth year of PwC’s appointment as the 
Company’s Auditor. The committee has discussed the 
requirements of the Code and the Competition and 
Markets Authority in respect of tendering the Group’s 
external audit. The committee recommended to the 
Board that a tender be carried out in 2018 for external 
audit, with a view to appointing the external Auditor with 
effect from 1 January 2019. The Board has approved 
this recommendation. 

As per the FRC’s guidance, the goal of the tender 
process will be to appoint the external audit firm which 
will provide the highest quality, most effective and 
efficient audit.

Effectiveness of the audit committee
The effectiveness of the audit committee is reviewed 
on an annual basis. Each committee member, the 
Chief Financial Officer and Chief Operating Officer, 
the PLC Board Chair and the external audit lead partner 
complete a questionnaire, provided by PwC, which 
focuses on the committee’s processes and the 
underlying knowledge and behaviour of the committee 
as it carries out those processes.

The results of the 2017 effectiveness review have been 
considered by the committee Chair and anonymous 
responses circulated to the other committee members, 
giving them an opportunity to make further 
observations. This took place in early 2018. 

No significant areas of concern were raised in the 
review for 2017. Committee members are encouraged 
to raise concerns with the committee Chair if they arise 
during the year.

Marie-Louise Clayton
Audit committee Chair

9 March 2018

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Governance

Directors’ report

The Directors’ report required under the Companies 
Act 2006, together with the financial statements for 
the year ended 31 December 2017, comprises 
sections of the annual report incorporated by 
reference as set out below which, taken together, 
contain the information to be included in the annual 
report, where applicable, under Listing Rule 9.8.4.

Corporate information 
Going concern
Dividend
Directors’ long-term incentives
AGM notice 
Directors’ interests in shares 
Waiver of Directors’ emoluments
Corporate governance statement
Future developments of the 
  business of the Group
Employee equality, diversity and 
involvement
Greenhouse gas emissions
Information to the Independent 
  Auditors
Dividend waiver
Financial risk management
Subsidiaries, including branches
Indemnity provision

page 97
page 97
page 41
pages 65 to 79
page 61 
pages 76 to 77 
page 66
pages 58 to 61

pages 16 to 39

pages 50 to 51
pages 53 to 54

page 86
page 122
pages 124 to 126
pages 141 to 144
page 124

Shareholder information 

Share capital and control 
Details of the Company’s share capital are shown  
in note 23 to the financial statements. The rights and 
obligations attaching to the ordinary shares are set 
out in the Company’s articles of association, copies  
of which can be obtained free of charge from 
Companies House at http://www.gov.uk/get-
information-about-a-company. 

In 2017, the Chief Executive Officer was expected to 
maintain a shareholding equivalent to 200% of salary 
and other Executive Directors equivalent to 150%  
of salary. In 2018, all Executive Directors will be 
expected to maintain a shareholding equivalent to 
200% of salary. 

A transfer of shares is only permitted for shares  
which are fully paid up. A transfer form must be  
duly stamped (if required) and made out in favour  
of a single transferee or no more than four joint 
transferees. The transfer form must be delivered  
to the Company’s Registrars, Computershare, 
accompanied by the share certificate to which it 
relates or such other evidence that proves the title 
of the transferor. 

Please contact Computershare on +44 (0) 370 707 1055  
or online at http://www.clarksons.com/investors/. 

The holders of ordinary shares have the right to: 

 – receive dividends when declared; 
 – receive the Company’s annual report and financial 

statements; 

 – attend and speak at general meetings of the 

Company; and 

 – appoint proxies and exercise voting rights at 

general meetings.

There are no restrictions or special conditions 
regarding voting rights and control of the Company. 
Major shareholders have the same voting rights per 
share as all other shareholders. Shareholders who 
wish to appoint a proxy to exercise their voting  
rights at the AGM are required to submit a  
proxy voting form to the Company no later than  
48 hours prior to the time of the meeting online  
at http://www.investorcentre.co.uk/eproxy. 

Shares acquired through Clarksons’ share schemes 
and plans rank equally with other shares in issue and 
have no special rights.

Restrictions on transfer of shares 
There are no restrictions on transfers of ordinary 
shares in the Company other than:

 – certain restrictions which may from time to time  
be imposed by law or regulations such as those 
relating to insider dealing; 

 – pursuant to the Company’s share dealing rules 
where the Directors and designated employees 
require approval to deal in the Company’s shares; 

 – certain restrictions on securities arising from 

company acquisitions; and

 – under the Company’s employee long-term  

incentive plans. 

Change of control 
The Company is not party to any significant 
agreements that would take effect, alter or terminate 
upon a change of control following a takeover bid. 
Details of the Executive Directors’ service contracts, 
including contractual arrangements in connection with 
a change of control of the Company, are set out in the 
Directors’ remuneration report on pages 65 to 79. All 
unvested awards under the 2014 Clarkson PLC LTIP 
shall vest on the date of such event. In the case of 
performance awards, the number of shares to vest 
will be determined by the remuneration committee 
subject to the performance or any other conditions 
and/or pro rata reduction in the case of leavers.

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Notifiable interests in share capital 
The following interests have been disclosed to the 
Company by major shareholders under Rule 5 of the 
Disclosure and Transparency Rules (DTR) as at the 
end of the financial year and at 8 March 2018 (being 
the latest practicable date of this report):

Research and development
The Group has invested in developing digital solutions 
to complement our existing business, as explained in 
the Chief Executive Officer’s review on page 18 and 
the business review on pages 24 and 26. The amount 
expensed in the year is shown in note 3.

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Franklin Templeton Investment  
  Management Limited
RS Platou Holdings AS
Heronbridge Investment
  Management LLP
Legal & General Investment
  Management Limited

8  
March 
2018

31 
December 
2017

13.95% 13.95%
7.10%

7.10%

5.01%

5.01%

<5%

<5%

Political donations
No political donations were made during the year 
(2016: £nil).

By order of the Board

Mike Cahill
Interim Company Secretary

Information provided to the Company pursuant to the 
DTR is published on a Regulatory Information Service 
and on the Company’s website. 

9 March 2018

To view our announcements, please visit  
www.clarksons.com/news. 

In addition, as at 8 March 2018, employees directly 
held 11.85% of the Company’s share capital and 
4.75% was held by employee share trusts for use 
under the Company’s various incentive schemes. 

Interests in the shares of the Company, or derivatives 
or any other financial instrument relating to those 
shares, conducted by the Directors of the Company 
on their own account, notified to the Company 
pursuant to Article 19 of the Market Abuse Regulation, 
are set out in the Directors’ remuneration report on 
pages 65 to 79. 

At the 2017 AGM the Company’s shareholders 
authorised the Company, for the purposes of Section 
701 of the Companies Act 2006, to make market 
purchases of its own shares up to a maximum 
aggregate amount of 3,023,318 shares (representing 
10% of the Company’s share capital as at 30 March 
2017). This authority is due to expire at the end of the 
2018 AGM and a resolution will be put to shareholders 
at that meeting to extend the authority for a further 
period. The Company has not acquired or disposed  
of any interests in its own shares. 

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Governance

Directors’ responsibilities 
statement

Each Director in office at the date the Directors’ report 
is approved, confirms that so far as they are aware, 
there is no relevant audit information of which the 
Group’s and Parent Company’s Auditors are unaware, 
and each Director has 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’s and Parent 
Company’s Auditors are aware of that information.

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

 – to the best of their knowledge, the consolidated 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 Parent Company, respectively; 

 – to the best of their knowledge, 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; and

 – they consider 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 
performance, business model and strategy.

On behalf of the Board

James Hughes-Hallett
Chair

9 March 2018

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

Company law requires the Directors to prepare 
financial statements for each financial year. Under 
that law the Directors have prepared the consolidated 
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 the Parent Company and of the profit 
or loss of the Group and the Parent Company for that 
period. In preparing these financial statements, the 
Directors are required to:

 – select suitable accounting policies and apply them 

consistently;

 – make judgements and accounting estimates that 

are reasonable and prudent; 

 – state whether applicable IFRSs as adopted by the 

European Union have been followed, subject to any 
material departures disclosed and explained in the 
financial statements; 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 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 consolidated financial statements, Article 4 of 
the IAS Regulation. They are also responsible for 
safeguarding the assets of the Group and the 
Parent Company and hence for taking reasonable 
steps for the prevention and detection of fraud and 
other irregularities.

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.

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CLARKSON PLC ANNUAL REPORT 2017

Independent Auditors’ report to 
the members of Clarkson PLC

Report on the audit of the financial statements

Opinion
In our opinion, Clarkson PLC’s consolidated financial statements and Parent Company financial statements  
(the financial statements):

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 – give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2017 and of the 

Group’s profit and the Group’s and the Parent Company’s cash flows for the year then ended;

 – have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the 

European Union and, as regards the Parent Company’s financial statements, as applied in accordance with the provisions  
of the Companies Act 2006; and

 – have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the consolidated financial 

statements, Article 4 of the IAS Regulation.

We have audited the financial statements, included within the annual report, which comprise: the consolidated and Parent 
Company balance sheets as at 31 December 2017; the consolidated income statement and consolidated statement of 
comprehensive income for the year then ended; the consolidated and Parent Company cash flow statements; the consolidated 
and Parent Company statements of changes in equity for the year then ended; and the notes to the financial statements, which 
include a description of the significant accounting policies.

Our opinion is consistent with our reporting to the audit committee.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our 
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements 
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for  
our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial 
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have 
fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not 
provided to the Group or the Parent Company.

Other than those disclosed in the audit committee report, we have provided no other non-audit services to the Group or the Parent 
Company in the period from 1 January 2017 to 31 December 2017.

Our audit approach
Overview

Materiality

Materiality

Audit scope

Key audit
matters

 – Overall Group materiality: £2.5m (2016: £2.2m), based on 5% of profit before taxation, adjusted for acquisition related 

costs (2016: profit before taxation, adjusted for the exceptional item and acquisition related costs).

 – Overall Parent Company materiality: £2.1m (2016: £1.9m), based on 1% of total assets, reduced to an amount less 

than the overall Group materiality.

Audit scope

 – We performed audit work over the complete financial information for reporting units which accounted for 

approximately 90% of the Group’s profit before taxation, adjusted for acquisition related costs (2016: 84% of the 
Group’s profit before taxation, adjusted for the exceptional item and acquisition related costs) and 88% (2016: 89%) 
of Group revenue. These reporting units comprised certain operating businesses and centralised functions.
 – We identified 61 reporting units, two of which were significant due to their size. The reporting units comprised  

certain operating business and centralised functions which required an audit of their complete financial information. 
In addition we have conducted specific audit procedures on certain balances and transactions in respect of a number 
of other reporting units.

Key audit matters

 – Risk of impairment of trade receivables;
 – Revenue recognition; and
 – Carrying value of goodwill.

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Governance Independent Auditors’ report to the members of Clarkson PLC continued

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial 
statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant 
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

We gained an understanding of the legal and regulatory framework applicable to the Group and the industries in which it operates, 
and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. We designed 
audit procedures at Group and significant component level to respond to the risk, recognising that the risk of not detecting a 
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate 
concealment by, for example, forgery or intentional misrepresentations, or through collusion. We designed audit procedures that 
focused on the risk of non-compliance related to compliance with regulatory licences and income taxation. Our tests included 
inspecting correspondence with regulators, tax authorities and meeting with the internal legal counsel. 

We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits, we also addressed the risk 
of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the 
Directors that represented a risk of material misstatement due to fraud.

Key audit matters 
Key audit matters are those matters that, in the Auditors’ professional judgement, were of most significance in the audit of the 
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not 
due to fraud) identified by the Auditors, including those which had the greatest effect on: the overall audit strategy; the allocation 
of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the 
results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in 
forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks 
identified by our audit.

Key audit matter

How our audit addressed the key audit matter

Risk of impairment of trade receivables (Group)
Refer to page 81 (audit committee report), note 14 of the financial 
statements and note 2.3 for the Directors’ disclosures of the related 
accounting policies, judgements and estimates for further information. 

At the year-end, the Group had trade receivables of £57.8m before 
provisions for impairment of £13.3m. As set out in the business review 
section of the strategic report, the shipping industry, whilst improving in 
certain segments, has continued to face challenging market conditions 
resulting from the effect of certain macro-economic factors, such as oil 
prices and freight rates. Accordingly, the Group experienced uncertainty 
over the collectability of trade receivables from specific customers. 

The determination as to whether a trade receivable is collectable involves 
management judgement. Specific factors management considers include 
the age of the balance, location and known financial condition of certain 
customers, existence of disputes, recent historical payment patterns 
and any other available information concerning the creditworthiness  
of the counterparty. 

Management uses this information to determine whether a provision for 
impairment is required either for a specific transaction or for a customer’s 
balance overall. 

For certain customers, there is no recognition of revenue where doubt 
exists as to the ability to collect payment at the time of invoicing.

We focused on this area because it requires a high level of management 
judgement and the materiality of the amounts involved.

We tested balances where no provision was recognised to check that  
there were no indicators of impairment. We selected a sample of the  
larger trade receivable balances where a provision for impairment of  
trade receivables was recognised and understood the rationale for 
management’s judgement that a provision was required. Our testing 
procedures included verifying if payments had been received since the 
year-end, reviewing historical payment patterns and inspecting any 
correspondence with customers on expected settlement dates. 

In order to evaluate the appropriateness of these judgements, we also 
verified whether balances were overdue, the customer’s location and the 
consistency of application of provision policy for specific customers, 
including those where no revenue is recognised at the time of invoicing. 

We also obtained corroborative evidence including correspondence 
supporting any disputes between the parties involved, attempts by 
management to recover the amounts outstanding and on the credit status 
of significant counterparties where available. 

By performing the procedures set out above we also challenged 
management’s rationale where provisions were recognised on transactions 
that were not overdue as at the balance sheet date and verified these were 
appropriately supported. In assessing the appropriateness of the overall 
provision for impairment, we considered: 

i. how much of the previous years’ provision had been utilised for bad debt 

write-offs during the year; and

ii. prior year provision amounts released where a customer had paid. 

Releases of the provision during the year are disclosed in note 14. This 
included some infrequent payments of overdue amounts from customers 
where a provision continues to be recognised for new invoices raised. 
Despite these payments, management continues to provide upfront for 
such customers on the basis there still remains ongoing uncertainty over 
their underlying financial condition as indicated by the ad hoc timing of 
payments beyond dates due. 

From the work we have performed we consider the level of provisioning  
to be consistent with the evidence obtained.

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Key audit matter

How our audit addressed the key audit matter

Revenue recognition (Group)
Refer to page 81 (audit committee report), notes 3 and 4 of the financial 
statements and note 2.3 for the Directors’ disclosures of the related 
accounting policies, judgements and estimates for further information. 

The Group’s entitlement to commission revenue in the broking and 
financial segments is usually dependent upon the fulfilment of certain 
obligations, for example stage completion of a vessel build in broking 
or formal approval of a debt or equity transaction in financial between 
two or more third parties over which the Group has no control. 

Consideration is therefore required as to whether the parties’ obligations 
have been fulfilled and the commission revenue can be recognised. 

Some of these transactions, such as within the sale and purchase, 
offshore or financial revenue streams, are individually significant in value. 
Consistent with the prior year, we therefore focused on these revenue 
streams, particularly transactions surrounding the year-end, where there 
is a risk that large transactions may be recorded in the incorrect period. 

The other revenue streams, such as support and research, were relatively 
less significant. Revenue in respect of these streams is recognised when 
the service is completed or when the products are despatched, as 
explained further in note 2.21 of the financial statements. There is therefore 
less judgement and risk of a material cut-off error in these streams.

Carrying value of goodwill (Group)
Refer to page 81 (audit committee report), notes 12 and 13 of the financial 
statements and note 2.3 for the Directors’ disclosures of the related 
accounting policies, judgements and estimates for further information. 

The goodwill balance of £289.6m is allocated across multiple cash-
generating units (CGUs), and is subject to an annual impairment review.

Management prepared a value-in-use model to estimate the present value 
of forecast future cash flows for each CGU. This was then compared with 
the carrying value of the net assets of each CGU (including goodwill to 
determine if there was an impairment.

Determining if an impairment charge is required for goodwill involves 
significant judgements about forecast future performance and cash flows 
of the CGUs, including growth in revenues and operating profit margins. 
It also involves determining an appropriate discount rate and long-term 
growth rate. 

No charge for impairment of goodwill has been recognised in the 
current financial year. The risk that we focused on during the audit was 
that the goodwill may be overstated and that an impairment charge may  
be required.

In particular, we focused on the goodwill in the offshore broking 
and securities CGUs which have been most affected by the economic 
conditions, as described in the business review section of this 
annual report.

For the sale and purchase, offshore and financial transactions near the 
year-end, we tested that revenue cut-off was appropriately determined.  
We selected a sample of transactions and agreed the details of these 
transactions to underlying contractual information or other supporting 
documents which demonstrated the timing of when obligations had been 
fulfilled by the parties to the transaction.

We also tested a sample of transactions in securities, which included 
an amount accrued as revenue at the year-end. We understood the 
basis for the revenue being recognised, including judgements applied 
in respect of the work completed by the year-end and the likelihood of 
the transaction completing.

From the evidence obtained we found no material instances of revenue 
being recognised in the incorrect period.

We evaluated the Directors’ future cash flow projections for all CGUs  
with a particular focus on the offshore broking and securities CGUs and 
the process by which they were prepared, including comparing them 
with the latest Board approved budget and forecasts, and testing the 
accuracy of the underlying calculations in the model. We concluded that 
the cash flow projections were consistent with the Board approved 
budgets and forecasts.

For the Directors’ key assumptions we:

 – Compared the timing and quantum of short and long-term growth rates 
in the forecasts against economic and industry forecasts and with the 
actual historical results of the Group;

 – Assessed the discount rate by comparing the cost of capital for the 
Group with comparable organisations and consulting with our own 
experts; and

 – Considered the cyclical nature of each CGU and that this had been 

appropriately factored into the long-term forecasts.

We found the Directors’ assumptions to be supportable and the discount 
rate was within our expected range.

We also performed sensitivity analyses on the key drivers of the cash flow 
projections including assumed profits, short and long-term growth rates 
and the discount rate. In performing these sensitivities we considered the 
level of historical budgeting inaccuracies and how the assumptions 
compared with the actual performance achieved in prior years. 

Having ascertained the extent of change in those assumptions that 
either individually or collectively would be required for the goodwill to be 
impaired, we considered the likelihood of such a movement in those key 
assumptions arising.

We determined that the disclosures made in note 13 regarding the 
related assumptions appropriately draw attention to the significant areas 
of judgement.

We determined that there were no key audit matters applicable to the Parent Company to communicate in our report. 

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Governance Independent Auditors’ report to the members of Clarkson PLC continued

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial 
statements as a whole, taking into account the structure of the Group and the Parent Company, the accounting processes  
and controls and the industry in which the Group operates. 

The financial statements are a consolidation of reporting units, comprising the Group’s operating businesses and  
centralised functions.

In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at the 
reporting units by us, as the Group engagement team, or by component Auditors of other PwC network firms and other firms 
operating under our instruction. Where the work was performed by component Auditors, we determined the level of involvement 
we needed to have in the audit work at those reporting units to be able to conclude whether sufficient appropriate audit evidence 
had been obtained as a basis for our opinion on the financial statements as a whole.

We identified 61 reporting units, two of which were significant due to their size. These comprised certain operating business and 
centralised functions which required an audit of their complete financial information. We also conducted specific audit procedures 
on certain balances and transactions in respect of a number of other reporting units. This gave us coverage of 90% of the Group’s 
profit before taxation adjusted for acquisition related costs and 88% of revenue and, together with the additional procedures 
performed at the Group level, including testing the consolidation process, gave us the evidence we needed for our opinion on the 
financial statements as a whole.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. 
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of 
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, 
both individually and in aggregate, on the financial statements as a whole. 

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality
How we determined it

Rationale for benchmark applied

Group financial statements
£2.5m (2016: £2.2m).
5% of profit before taxation, adjusted for 
acquisition related costs.
In arriving at this judgement we have had 
regard to profit before taxation, adjusted for 
acquisition related costs, because, in our view, 
this represents the most appropriate measure 
of underlying performance.

Parent Company financial statements
£2.1m (2016: £1.9m).
1% of total assets reduced to an amount less 
than the overall Group materiality.
As the Parent Company does not have trading 
activities, in our view a balance sheet benchmark 
represents the most appropriate measure. 
However, as it is an in-scope component for our 
Group audit, we have reduced the materiality to 
an amount less than the Group amount.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.  
The range of materiality allocated across components was between £10,000 and £2.1m. Certain components were audited  
to a local statutory audit materiality that was also less than our overall Group materiality. 

We agreed with the audit committee that we would report to them misstatements identified during our audit above £125,000 
(Group audit) (2016: £100,000) and £105,000 (Parent Company audit) (2016: £95,000) as well as misstatements below those 
amounts that, in our view, warranted reporting for qualitative reasons.

Going concern
In accordance with ISAs (UK) we report as follows:

Reporting obligation
We are required to report if we have anything material to add or draw 
attention to in respect of the Directors’ statement in the financial 
statements about whether the Directors considered it appropriate to 
adopt the going concern basis of accounting in preparing the financial 
statements and the Directors’ identification of any material uncertainties 
to the Group’s and the Parent Company’s ability to continue as a going 
concern over a period of at least 12 months from the date of approval 
of the financial statements.
We are required to report if the Directors’ statement relating to going 
concern in accordance with Listing Rule 9.8.6R(3) is materially 
inconsistent with our knowledge obtained in the audit.

Outcome
We have nothing material to add or to draw attention to. As not all 
future events or conditions can be predicted, this statement is not a 
guarantee as to the Group’s and Parent Company’s ability to continue 
as a going concern.

We have nothing to report.

90

CLARKSON PLC ANNUAL REPORT 2017

 
Reporting on other information
The other information comprises all of the information in the annual report other than the financial statements and our Auditors’ 
report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the 
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this 
report, any form of assurance thereon.

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In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, 
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 
audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, 
we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a 
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material 
misstatement of this other information, we are required to report that fact. We have nothing to report based on these 
responsibilities. 

With respect to the strategic report and Directors’ report, we also considered whether the disclosures required by the UK 
Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and 
matters as described below (required by ISAs (UK) unless otherwise stated).

Strategic report and Directors’ report 
In our opinion, based on the work undertaken in the course of the audit, the information given in the strategic report and Directors’ report for the 
year ended 31 December 2017 is consistent with the financial statements and has been prepared in accordance with applicable legal 
requirements (CA06).
In light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the course of the audit, we did 
not identify any material misstatements in the strategic report and the Directors’ report (CA06).

The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or liquidity of the Group
We have nothing material to add or draw attention to regarding:
 – The Directors’ confirmation on page 43 of the annual report that they have carried out a robust assessment of the principal risks facing the 

Group, including those that would threaten its business model, future performance, solvency or liquidity.

 – The disclosures in the annual report that describe those risks and explain how they are being managed or mitigated.
 – The Directors’ explanation on page 43 of the annual report as to how they have assessed the prospects of the Group, over what period they 

have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that 
the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related 
disclosures drawing attention to any necessary qualifications or assumptions.

We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust assessment of the principal 
risks facing the Group and statement in relation to the longer-term viability of the Group. Our review was substantially less in scope than an  
audit and only consisted of making enquiries and considering the Directors’ process supporting their statements; checking that the statements  
are in alignment with the relevant provisions of the UK Corporate Governance Code (the Code); and considering whether the statements are 
consistent with the knowledge and understanding of the Group and Parent Company and their environment obtained in the course of the audit 
(Listing Rules).

Other Code provisions
We have nothing to report in respect of our responsibility to report when:
 – The statement given by the Directors, on page 86, that they consider the annual report taken as a whole to be fair, balanced and 

understandable, and provides the information necessary for the members to assess the Group’s and Parent Company’s position and 
performance, business model and strategy is materially inconsistent with our knowledge of the Group and Parent Company obtained in the 
course of performing our audit.

 – The section of the annual report on pages 80 to 83 describing the work of the audit committee does not appropriately address matters 

communicated by us to the audit committee.

 – The Directors’ statement relating to the Parent Company’s compliance with the Code does not properly disclose a departure from a relevant 

provision of the Code specified, under the Listing Rules, for review by the Auditors.

Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the CA06.

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Governance Independent Auditors’ report to the members of Clarkson PLC continued

Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement set out on page 86, the Directors are responsible for the 
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true 
and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation 
of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability  
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis  
of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have  
no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material 
misstatement, whether due to fraud or error, and to issue an Auditors’ report that includes our opinion. Reasonable assurance  
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a 
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually  
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 
financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:  
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the Parent Company’s members as a body in accordance 
with Chapter 3 of Part 16 of the CA06 and for no other purpose. We do not, in giving these opinions, accept or assume 
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save 
where expressly agreed by our prior consent in writing.

Other required reporting

CA06 exception reporting
Under the CA06 we are required to report to you if, in our opinion:

 – we have not received all the information and explanations we require for our audit; or
 – adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been 

received from branches not visited by us; or

 – certain disclosures of Directors’ remuneration specified by law are not made; or
 – the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement 

with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment
Following the recommendation of the audit committee, we were appointed by the Directors on 9 July 2009 to audit the financial 
statements for the year ended 31 December 2009 and subsequent financial periods. The period of total uninterrupted engagement 
is nine years, covering the years ended 31 December 2009 to 31 December 2017.

John Waters 
Senior Statutory Auditor

for and on behalf of PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
London

9 March 2018

92

CLARKSON PLC ANNUAL REPORT 2017

Financial statements 

Consolidated income statement 

for the year ended 31 December 

Before
acquisition
related
costs
£m

Acquisition
related
costs
(note 6)
£m

2017

After
acquisition
related
costs
£m

Before
exceptional
items and
acquisition
related costs
£m

Exceptional 
items 
(note 5) 
£m 

Acquisition
related
costs
(note 6)
£m

2016
After
exceptional
items and
acquisition
related costs
£m

324.0

(9.7)

314.3

–
(264.8)

49.5

1.0

(0.3)

–

50.2

(12.0)

38.2

35.2

3.0

38.2

–

–

–

–
(4.5)

(4.5)

–

(0.3)

–

(4.8)

1.0

(3.8)

(3.8)

–

(3.8)

324.0

(9.7)

314.3

–
(269.3)

45.0

1.0

(0.6)

–

45.4

(11.0)

34.4

31.4

3.0

34.4

306.1

(8.9)

297.2

–
(253.0)

44.2

0.8

(0.1)

(0.1)

44.8

(11.2)

33.6

31.4

2.2

33.6

– 

– 

– 

9.7 
– 

9.7 

1.4 

– 

– 

11.1 

– 

11.1 

11.1 

– 

11.1 

–

–

–

–
(7.7)

(7.7)

–

(0.9)

–

(8.6)

1.8

(6.8)

(6.8)

–

(6.8)

Notes 

3, 4 

3, 4 

3 

3 

3, 22 

7 

Revenue 

Cost of sales 

Trading profit 

Other income 
Administrative expenses 

Operating profit 

Finance revenue 

Finance costs 

Other finance costs – pensions 

Profit before taxation 

Taxation 

Profit for the year 

Attributable to: 

Equity holders of the Parent Company

Non-controlling interests 

Profit for the year 

Earnings per share 

Basic 

Diluted 

8 

8 

116.8p

116.4p

104.4p

104.0p

105.2p

104.2p

Consolidated statement  
of comprehensive income 

for the year ended 31 December 

Profit for the year 
Other comprehensive (loss)/income: 

Items that will not be reclassified to profit or loss: 
Actuarial gain on employee benefit schemes – net of tax 
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on retranslation of foreign operations 
Foreign currency hedge – net of tax  

Other comprehensive (loss)/income 

Total comprehensive income for the year  

Attributable to: 

Equity holders of the Parent Company
Non-controlling interests 

Total comprehensive income for the year 

www.clarksons.com  

Notes 

22 

24 

2017
£m

34.4

7.6

(14.0)
6.0

(0.4)

34.0

31.1
2.9

34.0

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306.1

(8.9)

297.2

9.7
(260.7)

46.2

2.2

(1.0)

(0.1)

47.3

(9.4)

37.9

35.7

2.2

37.9

119.7p

118.6p

2016
£m

37.9

4.0

50.5
(3.9)

50.6

88.5

85.8
2.7

88.5

93 

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www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements 

Consolidated balance sheet 

as at 31 December 

Non-current assets 

Property, plant and equipment 

Investment property 

Intangible assets  

Trade and other receivables  

Investments  

Employee benefits 

Deferred tax asset  

Current assets 

Inventories  

Trade and other receivables  

Income tax receivable  

Investments  

Cash and cash equivalents  

Current liabilities 

Interest-bearing loans and borrowings 

Trade and other payables 

Income tax payable 

Provisions  

Net current assets  

Non-current liabilities 

Trade and other payables  

Provisions 

Employee benefits  

Deferred tax liability  

Net assets  

Capital and reserves 

Share capital  

Other reserves  

Retained earnings  

Notes 

10 

11 

12 

14 

15 

22 

7 

16 

14 

15 

17 

18 

19 

20 

19 

20 

22 

7 

23 

24 

Equity attributable to shareholders of the Parent Company 

Non-controlling interests 

Total equity  

The financial statements on pages 93 to 127 were approved by the Board on 9 March 2018, and signed on its behalf by: 

James Hughes-Hallett 
Chair 
Registered number: 1190238 

Jeff Woyda 
Chief Financial Officer and Chief Operating Officer 

2017 
£m 

29.7 

1.1 

289.6 

2.5 

4.9 

16.7 

11.1 

355.6 

0.7 

60.2 

1.3 

5.8 

161.7 

229.7 

– 

(132.0) 

(8.2) 

(0.1) 

(140.3) 

89.4 

(10.6) 

(0.1) 

(4.4) 

(6.5) 

(21.6) 

423.4 

7.6 

234.7 

177.4 

419.7 

3.7 

423.4 

2016
£m

30.0

1.2

300.5

1.8

4.1

7.5

12.8

357.9

0.7

56.7

2.3

29.8

154.0

243.5

(23.6)

(142.3)

(6.5)

–

(172.4)

71.1

(11.3)

(0.1)

(5.2)

(5.7)

(22.3)

406.7

7.6

240.1

155.8

403.5

3.2

406.7

94 

94

CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement  
of changes in equity 

for the year ended 31 December 

Attributable to equity holders of the Parent Company 

Balance at 1 January 2017 

Profit for the year 

Other comprehensive (loss)/income: 

Actuarial gain on employee benefit schemes 

– net of tax  

Foreign exchange differences on 

retranslation of foreign operations 

Foreign currency hedge – net of tax 

Total comprehensive (loss)/income  

for the year 

Transactions with owners: 

Employee share schemes 

Tax on other employee benefits  

Tax on other items in equity 

Dividend paid  

22

24

24

24

7

7

9

Share 
capital
£m

Other 
reserves
£m

Retained 
earnings 
£m

Notes

7.6

240.1

155.8

31.4

Non-
controlling 
interests
 £m 

Total equity
£m

3.2

3.0

406.7

34.4

Total  
£m 

403.5 

31.4 

7.6

7.6 

–

7.6

–

–

–

–

–

–

–

–

–

–

–

–

(13.9)

6.0

–

–

(13.9) 

6.0 

(7.9)

39.0

31.1 

2.5

–

–

–

2.5

234.7

1.4

1.0

0.3

(20.1)

(17.4)

177.4

3.9 

1.0 

0.3 

(20.1) 

(14.9) 

419.7 

Balance at 31 December 2017 

7.6

Attributable to equity holders of the Parent Company 

Balance at 1 January 2016 

Profit for the year 

Other comprehensive income: 

Actuarial gain on employee benefit schemes 

– net of tax  

Foreign exchange differences on 

retranslation of foreign operations 

Foreign currency hedge – net of tax 

Total comprehensive income  

for the year 

Transactions with owners: 

Share issues  

Employee share schemes 

Tax on other employee benefits  

Tax on other items in equity 

Dividend paid  

Notes

22

24

24

23,24

24

7

7

9

Share 
capital
£m

7.6

–

–

–

–

–

–

–

–

–

–

–

Balance at 31 December 2016 

7.6

Other 
reserves
£m

194.2

–

–

50.0

(3.9)

Retained 
earnings 
£m

136.2

35.7

Total  
£m 

338.0 

35.7 

4.0

4.0 

–

–

50.0 

(3.9) 

46.1

39.7

85.8 

0.1

(0.3)

–

–

–

(0.2)

240.1

–

(1.8)

0.3

(0.1)

(18.5)

(20.1)

155.8

0.1 

(2.1) 

0.3 

(0.1) 

(18.5) 

(20.3) 

403.5 

(0.1)

–

2.9

–

–

–

(2.4)

(2.4)

3.7

Non-
controlling 
interests
 £m 

2.9

2.2

–

0.5

–

2.7

–

–

–

–

(2.4)

(2.4)

3.2

(14.0)

6.0

34.0

3.9

1.0

0.3

(22.5)

(17.3)

423.4

Total equity
£m

340.9

37.9

4.0

50.5

(3.9)

88.5

0.1

(2.1)

0.3

(0.1)

(20.9)

(22.7)

406.7

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Financial statements 

Consolidated cash flow statement 

for the year ended 31 December 

Cash flows from operating activities  

Profit before taxation 

Adjustments for: 

Foreign exchange differences 

Depreciation of property, plant and equipment  

Share-based payment expense 

Gain on sale of property, plant and equipment  

Gain on sale of investments 

Amortisation of intangibles 

Difference between pension contributions paid and amount recognised in the income statement 

Finance revenue  

Finance costs 

Other finance costs – pensions  

Decrease in inventories 

(Increase)/decrease in trade and other receivables  

Increase/(decrease) in bonus accrual 

Decrease in trade and other payables 

Increase/(decrease) in provisions 

Cash generated from operations 

Income tax paid 

Net cash flow from operating activities 

Cash flows from investing activities 

Interest received 

Purchase of property, plant and equipment 

Purchase of intangible assets 

Proceeds from sale of investments 

Proceeds from sale of property, plant and equipment 

Purchase of investments 

Transfer from/(to) current investments (funds on deposit) 

Acquisition of subsidiaries, including settlement of deferred consideration 

Dividends received from investments 

Net cash flow from investing activities 

Cash flows from financing activities 

Interest paid 

Dividend paid 

Dividend paid to non-controlling interests 

ESOP shares acquired 

Net cash flow from financing activities 

Net increase/(decrease) in cash and cash equivalents 

Cash and cash equivalents at 1 January 

Net foreign exchange differences 

Cash and cash equivalents at 31 December 

Notes 

3 

3, 10 

21 

3, 12 

3 

3 

3 

16 

20 

3 

10 

12 

15 

3 

9 

17 

2017 
£m 

45.4 

7.3 

5.0 

1.4 

(0.1) 

– 

3.6 

(0.9) 

(1.0) 

0.6 

– 

– 

(7.2) 

4.6 

(3.9) 

0.1 

54.9 

(6.9) 

48.0 

0.6 

(5.3) 

(1.5) 

0.1 

0.2 

(0.9) 

24.1 

(24.7) 

0.3 

(7.1) 

(0.3) 

(20.1) 

(2.4) 

(0.5) 

(23.3) 

17.6 

154.0 

(9.9) 

161.7 

2016
£m

47.3

(3.6)

5.0

1.3

(0.1)

(9.6)

6.6

(1.9)

(2.2)

1.0

0.1

0.2

13.9

(3.0)

(1.9)

(0.1)

53.0

(7.4)

45.6

0.6

(3.1)

–

11.3

0.4

(3.8)

(24.0)

(23.7)

1.5

(40.8)

(0.1)

(18.5)

(2.4)

(6.0)

(27.0)

(22.2)

168.4

7.8

154.0

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Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the consolidated  
financial statements 

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1 Corporate information 
The Group and Parent Company financial statements of Clarkson PLC 
for the year ended 31 December 2017 were authorised for issue in 
accordance with a resolution of the Directors on 9 March 2018.  
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 term ‘Company’ refers to Clarkson PLC and ‘Group’ refers to the 
Company, its consolidated subsidiaries and the relevant assets and 
liabilities of the share purchase trusts.  

Copies of the annual report will be circulated to all shareholders and will 
also be available from the registered office of the Company at 
Commodity Quay, St. Katharine Docks, London E1W 1BF. 
2 Statement of accounting policies 
2.1 Basis of preparation 
The accounting policies which follow set out those policies which 
apply in preparing the financial statements for the year ended 31 
December 2017. 

The financial statements are presented in pounds sterling and all values 
are rounded to the nearest one hundred thousand pounds sterling 
(£0.1m) except when otherwise indicated. 

The consolidated income statement is shown in columnar format to 
assist with understanding the Group’s results by presenting profit for 
the period before exceptional items and acquisition related costs; this 
is referred to as underlying profit. Items which are non-recurring in 
nature and considered to be material in size are shown as ‘exceptional 
items’. The column ‘exceptional items’ in 2016 represented the gain 
and special dividend arising on the sale of The Baltic Exchange shares. 
The column ‘acquisition related costs’ includes the amortisation of 
intangible assets, the expensing of the cash and share-based 
elements of consideration linked to ongoing employment obligations 
on acquisitions and interest on the loan note obligations. These notes 
form an integral part of the financial statements on pages 93 to 127. 

Statement of compliance 
The financial statements of Clarkson PLC have been prepared in 
accordance with International Financial Reporting Standards (IFRSs)  
as adopted by the European Union, IFRS IC interpretations and the 
Companies Act 2006 applicable to companies reporting under IFRSs. 

The consolidated financial statements have been prepared on the 
going concern basis, under the historical cost convention, as modified 
by financial assets and financial liabilities (including derivative 
instruments) at fair value through profit or loss. 

The Group has considerable financial resources available and a strong 
balance sheet, as explained in the financial review on pages 40 to 41.  
As a result of this, the Directors believe that the Group is well placed 
to manage its business risks successfully. The Directors have a 
reasonable expectation that the Group has sufficient resources to 
continue in operation for the next 12 months. For this reason, they 
continue to adopt the going concern basis in preparing the 
financial statements. 

The accounting policies set out below have been applied consistently  
to all periods presented in these consolidated financial statements. 

Basis of consolidation 
The Group’s consolidated financial statements incorporate the results 
and net assets of Clarkson PLC and all its subsidiary undertakings 
made up to 31 December each year.  

Subsidiaries are all entities over which the Group has control. The 
Group controls an entity when the Group is exposed to, or has rights 
to, variable returns from its involvement with the entity and has the 
ability to affect those returns through its power over the entity. 
Subsidiaries are fully consolidated from the date on which control is 
transferred to the Group. They are deconsolidated from the date that 
control ceases. 

See note T to the Parent Company financial statements for full details 
on subsidiaries. 

Where necessary, adjustments are made to the financial statements  
of subsidiaries to bring the accounting policies used into line with those 
used by the Group. 

All inter-group transactions, balances, income and expenses are 
eliminated on consolidation, however for the purposes of segmental 
reporting, internal arm’s-length recharges are included within the 
appropriate segments. 

2.2 Changes in accounting policy and disclosures 

New and amended standards adopted by the Group 
There were no new standards, amendments or interpretations, 
effective for the first time for the financial year beginning on or after 
1 January 2017, that have had a material impact on the Group or 
Parent Company. 

New standards, amendments and interpretations issued but not  
yet effective for the financial year beginning 1 January 2017 and 
not early adopted. 
–  Annual improvements (2014 – 2016), effective from 1 January 2018 
–  Annual improvements (2015 – 2017), effective from 1 January 2019 
–  IFRS 17, ‘Insurance contracts’, effective from 1 January 2021 
–  Amendment to IFRS 2, ‘Classification and measurement of share-

based payments’, effective from 1 January 2018 

–  Amendment to IFRS 9, ‘Prepayment features with negative 

compensation’, effective from 1 January 2019 

–  Amendment to IAS 19, ‘Plan amendment, curtailment or settlement’, 

effective from 1 January 2019 

–  Amendment to IAS 28, ‘Long-term interests in associates and joint 

ventures’, effective from 1 January 2019 

–  Amendments to IAS 40, ‘Transfers of investment property’, effective 

from 1 January 2018 

–  IFRIC 22, ‘Foreign currency transactions and advance 

consideration’, effective from 1 January 2018 

–  IFRIC 23, ‘Uncertainty over income tax treatments’, effective from 

1 January 2019 

The above are not expected to have a material impact on the Group’s 
financial statements. 

–  IFRS 9 ‘Financial Instruments’, effective from 1 January 2018 
The standard addresses the classification, measurement and 
derecognition of financial instruments, introduces new rules for 
hedge accounting and a new impairment model for financial assets. 
It replaces IAS 39 ‘Financial Instruments’ guidance and 
comprehensive updates have been made to IFRS 7 ‘Financial 
Instrument: Disclosure’ and IAS 32 ‘Financial Instruments: 
Presentation’. The Group will apply IFRS 9 and the updated IFRS 7 
disclosure requirements from their effective date. 

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Financial statements Notes to the consolidated financial statements continued 

2 Statement of accounting policies continued 
2.2 Changes in accounting policy and disclosures 
continued 

Based on our impact assessment of the implementation of IFRS 9, 
the Group does not believe the forthcoming changes will have a 
material impact on the Group’s financial statements. In reaching this 
initial conclusion, the Group assessed the impact of the new 
standard on its hedging arrangements, investments valuation and 
provisioning for trade receivables. From 1 January 2018 onwards, 
the Group is in the process of amending its accounting policies to 
reflect IFRS 9 terminology and are in the process of preparing the 
appropriate disclosures for the year ending 31 December 2018. 

–  IFRS 15 ‘Revenue from Contracts with Customers’, effective from 

1 January 2018 
The standard establishes a comprehensive framework for 
determining whether, how much and when revenue is recognised. 
It replaces existing revenue recognition guidance, including IAS 18 
‘Revenue’, IAS 11 ‘Construction Contracts’ and IFRIC 13 ‘Customer 
Loyalty Programmes’. The Group will apply IFRS 15 from its 
effective date. 

The impact assessment performed by the Group included a review 
of each of its revenue streams and customer contracts to identify 
distinct performance obligations and the appropriate method for 
recognising revenue upon satisfaction of the performance 
obligations, either at a point in time or over time. For Broking, time 
charters will be satisfied over time with all other revenue streams 
in that segment satisfied at a point in time. For the other business 
segments, the majority of performance obligations will be satisfied 
at a point in time, other than for certain corporate management 
activities, agency fees and subscription-based research income. 
Based on our assessment of the adoption of IFRS 15, the Group 
does not believe there will be a material impact on the Group’s 
financial statements. During 2018, the Group will revise the revenue 
recognition policy to reflect IFRS 15 terminology and prepare the 
additional disclosures for the Group’s financial statements. The 
Group will continue to disaggregate revenue over Broking, 
Financial, Support and Research. 

–  IFRS 16 ‘Leases’, effective from 1 January 2019 

The standard represents a significant change in the accounting 
and reporting of leases for lessees as it provides a single lessee 
accounting model that replaces the current model where leases 
are either recognised as a finance or operating lease. 

Under the single lessee model, a right of use asset and 
corresponding lease liability will be recognised which represent 
future lease payables, with movements through the Income 
Statement representing depreciation, additions or releases on 
the liability and unwinding of the discount for all leases unless the 
underlying asset has a low value or the remaining lease term is 
less than twelve months at the date of transition. 

As the Group has non-cancellable operating lease commitments 
of £93.6m, see note 25, it is expected that the application of 
this standard will have a material impact on the Group’s 
financial statements. 

A full assessment of the impact of the new standard is currently 
being undertaken. 

2.3 Key accounting judgements and estimates 
The preparation of the Group’s 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. 

Trade receivables 
Trade receivables are amounts due from customers in the ordinary 
course of business. Trade receivables are classified as current assets 
if collection is due within one year or less (or in the normal operating 
cycle of the business if longer). If not, they are presented as non-
current assets. 

The provision for impairment of receivables represents management’s 
best estimate at the balance sheet date. A number of judgements are 
made in the calculation of the provision, primarily the age of the invoice, 
the existence of any disputes, recent historical payment patterns and 
the debtor’s financial position. In a limited number of instances, where 
doubt exists as to the ability to collect payment, a provision is made at 
the time of invoicing. 

Revenue recognition 
The Group’s entitlement to commission revenue in the broking and 
financial segments is usually dependent upon the fulfilment of certain 
obligations, for example stage completion of a vessel build in broking or 
formal approval of a debt or equity transaction in finance, between two 
or more third parties over which the Group has no control. 
Consideration is therefore required as to whether the parties’ 
obligations have been fulfilled and the commission revenue can be 
recognised. See note 2.21 for further details. Provisions made at the 
time of invoicing are directly offset against revenue. 

Impairment testing of goodwill 
Determining whether goodwill is impaired requires an estimation of the 
value-in-use of the cash-generating units to which these assets have 
been allocated. The value-in-use calculation requires estimation of 
future cash flows expected to arise for the cash-generating unit, the 
selection of suitable discount rates and the estimation of future 
growth rates. 

Classification and recognition of adjusting items 
The Group excludes adjusting items (exceptional items and acquisition 
related costs) from its ‘underlying’ earnings measure. The Directors 
believe that alternative performance measures can provide the users 
of the financial statements with a better understanding of the Group’s 
underlying financial performance, if properly used. If improperly used 
and presented, these measures could mislead the users of the financial 
statements by obscuring the real profitability and financial position of 
the Group.  

Management judgement is required as to what items qualify for this 
classification. There can also be judgement as to the point at which 
costs should be recognised and the amount to record. 

2.4 Forward-looking statements 
Certain statements in this annual report 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. 

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2.5 Property, plant and equipment 
Land held for use in the production or supply of goods or services, 
or for administrative purposes, is stated on the balance sheet at its 
historic cost. 

2.8 Intangible assets 
Intangible assets acquired separately are measured on initial 
recognition at cost. The cost of intangible assets acquired in a 
business combination is the fair value as at the date of acquisition.  

Freehold and long leasehold properties, leasehold improvements, office 
furniture and equipment and motor vehicles are recorded at cost less 
accumulated depreciation and any recognised impairment loss. Cost 
includes the original purchase price of the asset. 

Land is not depreciated. Depreciation on other assets is charged on 
a straight-line basis over the estimated useful life (after allowing for 
estimated residual value based on current prices) of the asset, and is 
charged from the time an asset becomes available for its intended use. 
Estimated useful lives are as follows: 

Freehold and long leasehold properties  10-60 years 

Leasehold improvements 

Over the period of the lease  

Office furniture and equipment 

Motor vehicles 

2–10 years 

4-5 years 

Estimates of useful lives and residual scrap values are assessed annually. 

At each balance sheet date, the Group reviews the carrying amounts of 
its property, plant and equipment to determine whether there is any 
indication that those assets have suffered an impairment loss. 

2.6 Investment properties 
Land and buildings held for long-term investment and to earn rental 
income are classified as investment properties. Investment properties 
are stated at cost less accumulated depreciation and any recognised 
impairment loss. 

Depreciation is charged on a straight-line basis over the estimated 
useful life of the asset, and is charged from the time an asset becomes 
available for its intended use. Estimated useful lives are as follows: 

Investment properties 

60 years 

In addition to historical cost accounting, the Directors have also 
presented, through additional narrative, the fair value of the investment 
properties in note 11. 

2.7 Business combinations and goodwill 
Business combinations are accounted for using the acquisition method. 

Goodwill is initially measured at cost being the excess of the cost of the 
business combination over the Group’s share in the net fair value of the 
acquiree’s identifiable assets, liabilities and contingent liabilities. 

All transaction costs are expensed in the income statement as incurred. 

Any contingent consideration to be transferred by the Group is 
recognised at fair value at the acquisition date. Subsequent changes to 
the fair value of the contingent consideration that is deemed to be an 
asset or liability is recognised in accordance with IAS 39 either in profit 
or loss or as a change to other comprehensive income. Contingent 
consideration that is classified as equity is not re-measured, and its 
subsequent settlement is accounted for within equity. 

After initial recognition, goodwill is measured at cost less any 
accumulated impairment losses. For the purpose of impairment testing, 
goodwill acquired in a business combination is, from the acquisition 
date, allocated to each of the Group’s cash-generating units identified 
according to operating segment. 

Development costs are recognised as intangible assets when the 
criteria of IAS 38 is met. Directly attributable costs that are capitalised 
include the development employee costs and an appropriate portion 
of relevant overheads. Other development expenditure that does not 
meet the IAS 38 criteria is recognised as an expense when incurred. 

Following initial recognition, intangible assets are carried at cost 
less any accumulated amortisation and any accumulated 
impairment losses. 

Intangible assets with finite lives are amortised over the useful life 
and assessed for impairment whenever there is an indication that 
the intangible asset may be impaired. The amortisation period and the 
amortisation method for an intangible asset with a finite useful life are 
reviewed at least at each financial year-end. Changes in the expected 
useful life or the expected pattern of consumption of future economic 
benefits embodied in the asset are accounted for by changing the 
amortisation period or method, as appropriate, and are treated as 
changes in accounting estimates. The amortisation expense on 
intangible assets with finite lives is recognised in income 
statement within administrative expenses. 

Intangible assets are amortised as follows: 

Trade name and non-contractual commercial relationships 
Amortisation is calculated using estimates of revenues generated by 
each asset over their estimated useful lives of up to five years. 

Forward order book on acquisition 
Amortisation is calculated based on expected future cash flows 
estimated to be up to five years. 

Development costs 
Amortisation is calculated based on estimated useful life, which will not 
exceed five years, when ready for use. 

2.9 Impairment of non-financial assets 
The Group assesses at each reporting date whether there is an 
indication that an asset may be impaired. If any such indication exists, 
or when annual impairment testing for an asset is required, the Group 
estimates the asset’s recoverable amount. An asset’s recoverable 
amount is the higher of an asset’s or cash-generating unit’s fair value 
less costs to sell and its value-in-use and is determined for an individual 
asset, unless the asset does not generate cash inflows that are largely 
independent of those from other assets or groups of assets. Where the 
carrying amount of an asset exceeds its recoverable amount, the asset 
is considered impaired and is written down to its recoverable amount. 
In assessing value-in-use, the estimated future cash flows are 
discounted to their present value using a pre-tax discount rate that 
reflects current market assessments of the time value of money and 
the risks specific to the asset. In determining fair value less costs to 
sell, an appropriate valuation model is used. These calculations 
are corroborated by valuation multiples, or other available fair 
value indicators. 

Impairment losses of continuing operations are recognised in profit or 
loss in those expense categories consistent with the function of the 
impaired asset. 

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Financial statements Notes to the consolidated financial statements continued 

2 Statement of accounting policies continued 
2.9 Impairment of non-financial assets continued 
For assets excluding goodwill, an assessment is made at each 
reporting date as to whether there is any indication that previously 
recognised impairment losses may no longer exist or may have 
decreased. If such indication exists, the Group makes an estimate of 
recoverable amount. A previously recognised impairment loss is 
reversed only if there has been a change in the estimates used to 
determine the asset’s recoverable amount since the last impairment 
loss was recognised. If that is the case the carrying amount of the asset 
is increased to its recoverable amount. That increased amount cannot 
exceed the carrying amount that would have been determined, net of 
depreciation, had no impairment loss been recognised for the asset in 
prior years. 

Goodwill 
The Group assesses whether there are any indicators that 
goodwill is impaired at each reporting date. Goodwill is tested for 
impairment annually. 

Impairment is determined for goodwill by assessing the recoverable 
amount of the cash-generating units to which the goodwill relates. 
Where the recoverable amount of the cash-generating units is 
less than their carrying amount an impairment loss is recognised. 
Impairment losses relating to goodwill cannot be reversed in future 
periods. The Group performs its annual impairment test of goodwill 
as at 31 December. 

2.10 Investments and other financial assets 

Classification 
Financial assets within the scope of IAS 39 are classified as financial 
assets at fair value through profit or loss, loans and receivables, held-
to-maturity investments, or available-for-sale financial assets, as 
appropriate. When financial assets are recognised initially, they are 
measured at fair value, plus, in the case of investments not at fair value 
through profit or loss, directly attributable transaction costs. 

The Group determines the classification of its financial assets on initial 
recognition, taking into account the purpose for which the financial 
assets were acquired. Where allowed and appropriate, the Group re-
evaluates this designation at each financial year-end. 

Financial assets at fair value through profit or loss 
Financial assets at fair value through profit or loss includes financial 
assets held for trading and financial assets designated upon initial 
recognition as at fair value through profit or loss. 

Financial assets are classified as held for trading if they are acquired for 
the purpose of selling in the near term. Gains or losses on investments 
held for trading are recognised in profit or loss. 

Loans and receivables 
Loans and receivables are non-derivative financial assets with fixed or 
determinable payments that are not quoted in an active market. After 
initial measurement loans and receivables are carried at amortised cost 
using the effective interest method less any allowance for impairment. 
Gains and losses are recognised in profit or loss when the loans and 
receivables are derecognised or impaired, as well as through the 
amortisation process. 

Available-for-sale financial investments 
Available-for-sale financial assets are those non-derivative financial 
assets that are designated as available-for-sale or are not classified in 
any of the two preceding categories or held-to-maturity investments. 
They are included in non-current assets unless the investment matures 
within 12 months of the end of the reporting period. Available-for-sale 

financial assets are measured at cost, since they are investments in 
unlisted companies where the fair value cannot be determined. 

Recognition and measurement 

Fair value 
The fair value of investments that are actively traded in organised 
financial markets is determined by reference to quoted market bid 
prices at the close of business on the balance sheet date. For 
investments where there is no active market, fair value is determined 
using valuation techniques, unless these are not reliable in which case 
the investments are shown at cost. Such valuation techniques include 
using recent arm’s-length market transactions; reference to the current 
market value of another instrument which is substantially the same; 
discounted cash flow analysis; or other valuation models. 

Amortised cost 
Loans and receivables are measured at amortised cost. This is 
computed using the effective interest method less any allowance for 
impairment. The calculation takes into account any premium or 
discount on acquisition and includes transaction costs and fees that 
are an integral part of the effective interest rate. 

Trade and other receivables 
Trade and other receivables are recognised initially at fair value and 
subsequently measured at amortised cost using the effective interest 
method less provision for impairment. 

2.11 Impairment of financial assets 
The Group assesses at each balance sheet date whether a financial 
asset or group of financial assets is impaired. 

Assets carried at amortised cost 
If there is objective evidence that an impairment loss on assets carried 
at amortised cost has been incurred, the amount of the loss is 
measured as the difference between the asset’s carrying amount and 
the present value of estimated future cash flows (excluding future 
expected credit losses that have not been incurred) discounted at the 
financial asset’s original effective interest rate (i.e. the effective interest 
rate computed at initial recognition). The carrying amount of the asset is 
reduced through use of an allowance account. The amount of the loss 
is recognised in profit or loss. 

If, in a subsequent period, the amount of the impairment loss 
decreases and the decrease can be related objectively to an event 
occurring after the impairment was recognised, the previously 
recognised impairment loss is reversed, to the extent that the carrying 
value of the asset does not exceed its amortised cost at the reversal 
date. Any subsequent reversal of an impairment loss is recognised in 
profit or loss. 

In relation to trade receivables, a provision for impairment is made 
when there is objective evidence that the Group will not be able to 
collect all of the amounts due. The carrying amount of the receivable is 
reduced through use of an allowance account. Impaired debts are 
derecognised when they are assessed as uncollectable. 

Available-for-sale financial investments 
If an available-for-sale asset is impaired, an amount comprising the 
difference between its cost (net of any principal payment and 
amortisation) and its current fair value, less any impairment loss 
previously recognised in profit or loss, is transferred from equity to 
profit or loss. Reversals in respect of equity instruments classified as 
available-for-sale are not recognised in profit or loss. Reversals of 
impairment losses on debt instruments are reversed through profit or 
loss, if the increase in fair value of the instrument can be objectively 
related to an event occurring after the impairment loss was recognised 
in profit or loss. 

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2.12 Inventories 
Inventories are stated at the lower of cost and net realisable value. 
Cost is determined using the first-in, first-out (FIFO) method. It excludes 
borrowing costs. Net realisable value is the estimated selling price 
in the ordinary course of business, less applicable variable 
selling expenses. 

2.15 Trade and other payables 
Trade payables are obligations to pay for goods or services that have 
been acquired in the ordinary course of business from suppliers. 
Accounts payable are classified as current liabilities if payment is due 
within one year or less (or in the normal operating cycle of the business 
if longer). If not, they are presented as non-current liabilities. 

2.13 Cash and cash equivalents 
Cash and cash equivalents comprise cash balances and call deposits 
with an original maturity of between one day and three months. 

2.14 Derivative financial instruments and hedge accounting 
The Group uses various derivative financial instruments to reduce 
exposure to foreign exchange movements. These can include forward 
foreign exchange contracts and currency options. All derivative 
financial instruments are initially recognised on the balance sheet at 
their fair value adjusted for transaction costs. 

The fair values of financial instrument derivatives are determined by 
reference to quoted prices in an active market. 

The method of recognising the movements in the fair value of the 
derivative depends on whether the instrument has been designated as 
a hedging instrument and, if so, the cash flow being hedged. To qualify 
for hedge accounting, the terms of the hedge must be clearly 
documented at inception and there must be an expectation that the 
derivative will be highly effective in offsetting changes in the cash flow 
of the hedged risk. Hedge effectiveness is tested throughout the life of 
the hedge and if at any point it is concluded that the relationship can no 
longer be expected to remain highly effective in achieving its objective, 
the hedge relationship is terminated. 

Gains and losses on financial instrument derivatives which qualify for 
hedge accounting are recognised according to the nature of the hedge 
relationship and the item being hedged. 

Cash flow hedges: derivative financial instruments are classified as  
cash flow hedges when they hedge the Group’s exposure to changes 
in cash flows attributable to a particular asset or liability or a highly 
probable forecast transaction. Gains or losses on designated cash flow 
hedges are recognised directly in equity, to the extent that they are 
determined to be effective. Any remaining portion of the gain or loss is 
recognised immediately in the income statement. On recognition of the 
hedged asset or liability, any gains or losses that had previously been 
recognised directly in equity are included in the initial measurement of 
the fair value of the asset or liability. When a hedging instrument expires 
or is sold, or when a hedge no longer meets the criteria for hedge 
accounting, any cumulative gain or loss in equity remains there and is 
recognised in the income statement when the forecast transaction is 
ultimately recognised. When a forecast transaction is no longer 
expected to occur, the cumulative gain or loss that was reported in 
equity is immediately transferred to the income statement. 

Where financial instrument derivatives do not qualify for hedge 
accounting, changes in the fair market value are recognised 
immediately in the income statement. 

Trade payables are recognised initially at fair value and subsequently 
measured at amortised cost using the effective interest method. 

2.16 Interest-bearing loans and borrowings 
All loans and borrowings are initially recognised at fair value less 
directly attributable transaction costs and have not been designated as 
‘at fair value through profit and loss’. 

After initial recognition, interest-bearing loans and borrowings  
are subsequently measured at amortised cost using the effective  
interest method. 

2.17 Provisions 
Provisions are recognised when the Group has a present obligation 
(legal or constructive) as a result of a past event, it is probable that an 
outflow of resources embodying economic benefits will be required to 
settle the obligation and a reliable estimate can be made of the amount 
of the obligation. Where the Group expects some or all of a provision to 
be reimbursed, for example under an insurance contract, the 
reimbursement is recognised as a separate asset but only when the 
reimbursement is virtually certain. The expense relating to any provision 
is presented in profit or loss net of any reimbursement. If the effect of 
the time value of money is material, provisions are discounted using a 
current pre-tax rate that reflects, where appropriate, the risks specific to 
the liability. Where discounting is used, the increase in the provision 
due to the passage of time is recognised as a finance cost. 

2.18 Employee benefits 
The Group operates various post-employment schemes, including both 
defined contribution and defined benefit pension plans. 

For defined contribution plans, the Group pays contributions to publicly 
or privately administered pension arrangements on a mandatory, 
contractual or voluntary basis. The Group has no further payment 
obligations once the contributions have been paid. The contributions 
are recognised as employee benefit expense when they are due. 
Prepaid contributions are recognised as an asset to the extent that a 
cash refund or a reduction in the future payments is available. 

Typically defined benefit plans define an amount of pension benefit that 
an employee will receive on retirement, usually dependent on one or 
more factors such as age, years of service and compensation. 

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Financial statements Notes to the consolidated financial statements continued 

2 Statement of accounting policies continued 
2.18 Employee benefits continued 
The asset/liability recognised in the balance sheet in respect of defined 
benefit pension plans is the difference between the present value of the 
defined benefit obligation at the end of the reporting period and the fair 
value of plan assets. Where the Group does not have an unconditional 
right to a scheme’s surplus, this asset is not recognised in the balance 
sheet. The defined benefit obligation is calculated annually by 
independent actuaries using the projected unit credit method. The 
present value of the defined benefit obligation is determined by 
discounting the estimated future cash outflows using interest rates of 
high-quality corporate bonds that have terms to maturity approximating 
to the terms of the related pension obligation. 

Actuarial gains and losses arising from experience adjustments and 
changes in actuarial assumptions are charged or credited to equity in 
other comprehensive income in the period in which they arise. 

Past-service costs are recognised immediately in income. 

The net interest cost is calculated by applying the discount rate to  
the net balance of the defined benefit obligation and the fair value of  
plan assets. This cost is included in employee benefit expense in the 
income statement. 

2.19 Share-based payment transactions 
Employees (including senior executives) of the Group receive 
remuneration in the form of share-based payment transactions,  
whereby employees render services as consideration for equity 
instruments (equity-settled transactions). 

The cost of equity-settled transactions with employees is measured by 
reference to the fair value at the date on which they are granted. The 
fair value of the element of these awards which have a Total 
Shareholder Return performance condition was valued using a 
stochastic model. All other elements of awards were valued using 
a Black-Scholes model. 

The cost of equity-settled transactions is recognised, together with a 
corresponding increase in equity, over the period in which the 
performance and/or service conditions are fulfilled, ending on the date 
on which the relevant employees become fully entitled to the award  
(the vesting date). The cumulative expense recognised for equity-
settled transactions at each reporting date until the vesting date reflects 
the extent to which the vesting period has expired and the Group’s 
best estimate of the number of equity instruments that will ultimately 
vest. The profit or loss charge or credit for a period represents the 
movement in cumulative expense recognised as at the beginning 
and end of that period. 

No expense is recognised for awards that do not ultimately vest, except 
for awards where vesting is conditional upon a market condition, which 
are treated as vesting irrespective of whether or not the market 
condition is satisfied, provided that all other performance and/or service 
conditions are satisfied. 

The dilutive effect of outstanding options is reflected as additional share 
dilution in the computation of earnings per share (further details are 
given in note 21). 

The social security contributions payable in connection with the share 
options is considered an integral part of the grant itself, and the charge 
will be treated as a cash-settled transaction. 

2.20 Share capital 
Ordinary shares are recognised in equity as share capital at their 
nominal value. The difference between consideration received and the 
nominal value is recognised in the share premium account, except 
when applying the merger relief provision of the Companies Act 2006. 

Incremental costs directly attributable to the issue of new 
ordinary shares are shown in equity as a deduction, net of tax, from 
the proceeds. 

Company shares held in trust in connection with the Group’s employee 
share schemes are deducted from consolidated shareholders’ equity. 
Purchases, sales and transfers of the Company’s shares are disclosed 
as changes in consolidated shareholders’ equity. The assets and 
liabilities of the trusts are consolidated in full into the Group’s 
consolidated financial statements. 

2.21 Revenue recognition 
Revenue is recognised to the extent that it is probable that the 
economic benefits will flow to the Group and the revenue can be 
reliably measured. 

Broking 
Shipbroking and offshore revenue consists of commission receivable 
and is recognised by reference to the stage of completion, which is 
measured by reference to the underlying commercial contract, except 
where doubt exists as to the ability to collect payment, as explained in 
note 14. Futures broking commissions are recognised when the 
services have been performed. 

Financial 
Revenue consists of commissions and fees receivable from financial 
services activities. Fees for investment banking activities, syndication 
and other financial solutions are recognised on a success basis when 
certain criteria in applicable agreements have been met. Commission 
from trading activities is recognised at trade date. Fees for advisory and 
accounting services are recognised as earned. 

Support 
Port service income is recognised on vessel load or discharge 
completion date and store rent on a time basis. Agency income is 
recognised when vessels arrive in port. Revenue from the sale of goods 
is recognised when the goods are physically despatched to the 
customer. Rental income arising from operating leases on properties is 
accounted for on a straight-line basis over the lease term. 

Research 
Revenue comprises fees, which are recognised as and when services 
are performed, and sales of shipping publications and other 
information, which is recognised when products are delivered. 
Subscriptions to periodicals and other information are recognised over 
the subscription period. 

Finance income 
Interest income is accrued on a time basis, by reference to the principal 
outstanding and at the effective interest rate applicable. 

2.22 Segment reporting 
Operating segments are reported in a manner consistent with the 
internal reporting provided to the chief operating decision-maker. The 
Group considers the executive members of the Company’s Board to 
be the chief operating decision-maker. 

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2.23 Foreign currencies 
Transactions in currencies other than pounds sterling are recorded at 
the rates of exchange prevailing on the date of the transaction. At each 
balance sheet date, monetary assets and liabilities that are 
denominated in foreign currencies are retranslated at the rates 
prevailing on the balance sheet date. Gains and losses arising on 
retranslation are included in the income statement. 

Non-monetary items that are measured in terms of historical cost in a 
foreign currency are translated using the exchange rates as at the date 
of the initial transactions. Non-monetary items measured at fair value in 
a foreign currency are translated using the exchange rates as at the 
date when the fair value was determined. 

On consolidation, the assets and liabilities of the Group’s overseas 
operations are translated into pounds sterling at exchange rates 
prevailing on the balance sheet date. Income and expense items are 
translated at the average exchange rates for the period as an 
approximation of rates prevailing at the date of the transaction unless 
exchange rates fluctuate significantly. Exchange differences arising, if 
any, are recognised in the consolidated statement of comprehensive 
income and transferred to the Group’s currency translation reserve. 
Such translation differences are recognised as income or expense in 
the period in which an operation is disposed of. Cumulative translation 
differences have been set to zero at the date of transition to IFRSs. 

Goodwill and fair value adjustments arising on the acquisition of a 
foreign operation are treated as assets and liabilities of the foreign 
operation and translated at the closing rate. 

2.24 Taxation 

Current income tax 
Current income tax assets and liabilities for the current and prior 
periods are measured at the amount expected to be recovered from or 
paid to the taxation authorities. The tax rates and tax laws used to 
compute the amount are those that are enacted or substantively 
enacted by the balance sheet date. 

Current income tax is recognised in the income statement, except on 
items relating to equity, in which case the related current income tax is 
recognised directly in equity. 

Deferred income tax 
Deferred income tax is provided using the liability method on 
temporary differences at the balance sheet date between the tax 
bases of assets and liabilities and their carrying amounts for financial 
reporting purposes. 

Deferred income tax liabilities are recognised for all taxable temporary 
differences, except: 

–  where the deferred income tax liability arises from the initial 

recognition of goodwill or of an asset or liability in a transaction that 
is not a business combination and, at the time of the transaction, 
affects neither the accounting profit nor taxable profit or loss; and 

–  in respect of taxable temporary differences associated with 

investments in subsidiaries, where the timing of the reversal of the 
temporary differences can be controlled and it is probable that the 
temporary differences will not reverse in the foreseeable future. 

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Deferred income tax assets are recognised for all deductible temporary 
differences, carry forward of unused tax credits and unused tax losses, 
to the extent that it is probable that taxable profit will be available 
against which the deductible temporary differences and the carry 
forward of unused tax credits and unused tax losses can be 
utilised, except: 

–  where the deferred income tax asset relating to the deductible 

temporary difference arises from the initial recognition of an asset or 
liability in a transaction that is not a business combination and, at the 
time of the transaction, affects neither the accounting profit nor 
taxable profit or loss; and 

–  in respect of deductible temporary differences associated 

with investments in subsidiaries, deferred income tax assets are 
recognised only to the extent that it is probable that the temporary 
differences will reverse in the foreseeable future and taxable 
profit will be available against which the temporary differences 
can be utilised. 

The carrying amount of deferred income tax assets is reviewed at 
each balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profit will be available to allow all or part 
of the deferred income tax asset to be utilised. Unrecognised deferred 
income tax assets are reassessed at each balance sheet date and are 
recognised to the extent that it has become probable that future 
taxable profit will allow the deferred tax asset to be recovered. 

Deferred income tax assets and liabilities are measured at the tax rates 
that are expected to apply to the year when the asset is realised or the 
liability is settled, based on tax rates (and tax laws) that have been 
enacted or substantively enacted at the balance sheet date. 

Deferred income tax relating to items recognised directly in equity is 
recognised in equity and not in profit or loss. 

Deferred income tax assets and deferred income tax liabilities are offset 
if a legally enforceable right exists to set off current tax assets against 
current income tax liabilities and the deferred income taxes relate to the 
same taxable entity and the same taxation authority, where there is an 
intention to settle the balances on a net basis. 

2.25 Leases 
Where the Group is a lessee, operating lease payments are recognised 
as an expense in the income statement on a straight-line basis over 
the lease term. Lease incentive payments are amortised over the 
lease term. 

2.26 Exceptional items 
Exceptional items are significant items of a non-recurring nature 
and considered material in both size and nature. These are 
disclosed separately to enable a full understanding of the Group’s 
financial performance. 

www.clarksons.com  

103 

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www.clarksons.com 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

3 Revenue and expenses  

Revenue 

Rendering of services   

Rental income 

Sale of goods 

Finance revenue 

Bank interest income 

Income from available-for-sale financial assets 

Finance costs 

Loan note interest 

Other finance costs 

Other finance costs – pensions 

Net benefit charge 

Operating profit 
Operating profit from continuing operations is stated after charging/(crediting): 

Depreciation 

Amortisation of intangible assets 

Operating lease expense – land and buildings 

Operating sublease income – land and buildings 

Net foreign exchange losses/(gains) 

Research and development 

2017 
£m 

314.6 

0.4 

9.0 

324.0 

2017 
£m 

0.7 

0.3 

1.0 

2017 
£m 

0.3 

0.3 

0.6 

2017 
£m 

– 

– 

2017 
£m 

5.0 

3.6 

12.4 

(0.4) 

7.3 

5.5 

2016
£m

293.9

0.7

11.5

306.1

2016
£m

0.6

1.6

2.2

2016
£m

0.9

0.1

1.0

2016
£m

0.1

0.1

2016
£m

5.0

6.6

11.3

(0.5)

(3.6)

2.0

104 

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Auditors’ remuneration 

Fees payable to the Company’s Auditors for the audit of the Company’s and Group financial statements 

Fees payable to the Company’s Auditors and their associates for other services: 

The auditing of financial statements of subsidiaries of the Company 

Audit-related assurance services 

Taxation compliance services 

Other services 

2017
£000

235

309

84

–

45

673

2016
£000

233

301

64

40

18

656

Audit-related assurance services consists of £40,000 (2016: £40,000) in relation to the half-year review, £30,000 (2016: £nil) in relation to the 
implementation of new IFRSs and £14,000 (2016: £24,000) of other audit-related services. Other services in 2017 relate to the assistance with the 
liquidation of an entity in Ghana. 

Employee compensation and benefits expense 

Wages and salaries 

Social security costs 

Expense of share-based payments 

Pension costs – defined contribution plans 

2017
£m

177.8

15.9

1.4

4.1

199.2

2016
£m

170.7

15.7

1.3

3.6

191.3

The numbers above include remuneration and pension entitlements for each Director. Details are included in the Directors’ remuneration report in 
the Directors’ emoluments and compensation table on page 74. 

The average monthly number of persons employed by the Group during the year, including Executive Directors, is analysed below: 

Broking 

Financial 

Support 

Research 

2017

1,040

114

175

106

2016

1,021

121

154

96

1,435

1,392

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105 

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www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

4 Segmental information 
The Group considers the executive members of the Company’s Board to be the chief operating decision-maker. The Board receives segmental 
operating and financial information on a regular basis. The segments are determined by the class of business the Company provides and are 
broking, financial, support and research. This is consistent with the way the Group manages itself and with the format of the Group’s internal 
financial reporting. 

Clarksons’ broking division represents services provided to shipowners and charterers in the transportation by sea of a wide range of cargoes. 
It also represents services provided to buyers and sellers/yards relating to sale and purchase transactions. Also included is a futures broking 
operation which arranges principal-to-principal cash-settled contracts for differences based upon standardised freight contracts. 

The financial division represents full-service investment banking, specialising in the maritime, oil services and natural resources sectors. Clarksons 
also provides structured asset finance services and structured projects in the shipping, offshore and real estate sectors. 

Support includes port and agency services representing ship agency services provided throughout the UK. 

Research services encompass the provision of shipping-related information and publications. 

All areas of the business work closely together to provide the best possible service to our clients. Occasionally revenue is shared between different 
segments to reflect relative contributions to a particular transaction. Internal arm’s-length recharges are included within the appropriate segments. 

Business segments 

Broking 

Financial 

Support 

Research 

Segment revenue/underlying profit 

Head office costs 

Operating profit before exceptional items and acquisition related costs 

Exceptional items 

Acquisition related costs 

Operating profit after exceptional items and acquisition related costs 

Finance revenue 

Finance costs 

Other finance costs – pensions 

Profit before taxation 

Taxation 

Profit for the year 

Revenue 

Results

2017
£m

238.9

52.0

18.5

14.6

324.0

2016 
£m 

233.6 

41.0 

17.8 

13.7 

306.1 

2017 
£m 

43.9 

10.1 

2.1 

4.8 

60.9 

(11.4) 

49.5 

– 

(4.5) 

45.0 

1.0 

(0.6) 

– 

45.4 

(11.0) 

34.4 

2016
£m

40.2

6.8

2.1

4.9

54.0

(9.8)

44.2

9.7

(7.7)

46.2

2.2

(1.0)

(0.1)

47.3

(9.4)

37.9

106 

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Business segments 

Broking 

Financial 

Support 

Research 

Segment assets/liabilities 

Unallocated assets/liabilities 

2017
£m

361.0

162.6

6.2

19.2

549.0

36.3

585.3

Assets 

2016 
£m 

355.6 

166.3 

8.7 

17.4 

548.0 

53.4 

601.4 

2017
£m

89.5

19.4

5.9

5.3

120.1

41.8

161.9

Liabilities

2016
£m

98.8

20.9

5.3

4.5

129.5

65.2

194.7

Unallocated assets predominantly relate to head office cash balances, the pension scheme surplus and tax assets. Unallocated liabilities include 
the pension scheme deficit, tax liabilities and loan notes. 

Business segments 

Non-current asset additions

Depreciation 

Amortisation

Property,  
plant and 
equipment  
2017 
£m 

Intangible  
assets  
2017 
£m 

Property, 
plant and 
equipment 
2016
£m

Intangible 
assets 
2016
£m

3.7 

0.3 

1.3 

5.3 

1.5 

– 

– 

1.5 

1.6

0.9

0.6

3.1

–

–

–

–

Broking 

Financial 

Support 

Geographical segments – by origin of invoice 

2017
£m

4.2

0.3

0.5

5.0

2016 
£m 

4.3 

0.2 

0.5 

5.0 

Europe, Middle East and Africa* 

Americas 

Asia Pacific 

Geographical segments – by location of assets 

Europe, Middle East and Africa* 

Americas 

Asia Pacific 

* 

Includes revenue for the UK of £137.7m (2016: £148.4m) and non-current assets for the UK of £88.1m (2016: £87.6m). 

**  Non-current assets exclude deferred tax assets and employee benefits. 

2017
£m

3.5

0.1

–

3.6

2017
£m

248.8

26.6

48.6

324.0

2016
£m

6.4

0.2

–

6.6

Revenue

2016
£m

240.1

26.0

40.0

306.1

Non-current assets**

2017
£m

304.1

2.9

20.8

327.8

2016
£m

312.9

3.3

21.4

337.6

www.clarksons.com  

107 

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www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

5 Exceptional items 
2017 
There are no exceptional items in 2017. 

2016 
Exceptional items included a gain of £9.7m on the sale of shares in The Baltic Exchange to SGX. A special final dividend from The Baltic Exchange 
of £1.4m, which was closely linked to the sale, was also treated as an exceptional item in 2016. 
6 Acquisition related costs 
Included in acquisition related costs are cash and share-based payment charges of £0.3m (2016: £0.4m) relating to previous acquisitions. These 
are contingent on employees remaining in service and are therefore spread over the service period. Also included is £0.6m (2016: £0.7m) relating 
to the acquisition of the remaining non-controlling interest in Clarksons Platou Tankers AS. The charge consists of cash and share-based payment 
charges which are linked to future service of the employees and are therefore spread over a four year period. 

Also included is £3.6m (2016: £6.6m) relating to amortisation of intangibles acquired as part of the Platou and other prior acquisitions. Interest on 
the loan notes issued as part of the Platou acquisition totalled £0.3m (2016: £0.9m). 

7 Taxation 
Tax charged in the consolidated income statement is as follows: 

Current tax 

Tax on profits for the year  

Adjustments in respect of prior years 

Deferred tax 

Origination and reversal of temporary differences  

Impact of change in tax rates 

Total tax charge in the income statement 

Tax relating to items charged/(credited) to equity is as follows: 

Current tax 

Employee benefits 

Other items in equity 

Deferred tax 

Employee benefits 

–  on pension benefits 
–  other employee benefits 

–  on pension benefits 
–  other employee benefits 

Foreign currency contracts 

Total tax charge/(credit) in the statement of changes in equity 

2017 
£m 

10.2 

1.2 

11.4 

(2.4) 

2.0 

(0.4) 

11.0 

2017 
£m 

(0.1) 

(0.5) 

(0.3) 

(0.9) 

1.6 

(0.5) 

1.4 

2.5 

1.6 

2016
£m

9.5

(1.0)

8.5

0.7

0.2

0.9

9.4

2016
£m

(0.4)

(1.5)

0.1

(1.8)

1.0

1.2

(0.9)

1.3

(0.5)

108 

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Reconciliation of tax charge 
The tax charge in the income statement for the year is higher (2016: lower) than the average standard rate of corporation tax in the UK of 19.25%  
(2016: 20.00%). The differences are reconciled below: 

Profit before taxation 

Profit at UK average standard rate of corporation tax of 19.25% (2016: 20.00%) 

Effects of: 

Expenses not deductible for tax purposes 

Non-taxable income 

Lower tax rates on overseas earnings 

Tax losses not recognised 

Adjustments relating to prior year 

Adjustments relating to changes in tax rates 

Other adjustments 

Total tax charge in the income statement 

Deferred tax 
Deferred tax (credited)/charged in the consolidated income statement is as follows: 

Employee benefits 

–  on pension benefits 
–  other employee benefits 

Tax losses recognised/not recognised 

In relation to earnings of overseas subsidiaries 

Intangible assets recognised on acquisition 

Other temporary differences 

Deferred tax (credit)/charge in the income statement 

Deferred tax included in the balance sheet is as follows: 

Deferred tax asset   

Employee benefits 

–  on pension benefit liability 
–  other employee benefits 

Tax losses 

Foreign currency contracts 

Other temporary differences 

Deferred tax liability 

Employee benefits 

–  on pension benefit asset 

In relation to earnings of overseas subsidiaries 

Foreign currency contracts 

Intangible assets recognised on acquisition 

Other temporary differences 

2017
£m

45.4

8.7

1.5

–

(0.5)

0.7

(0.8)

2.0

(0.6)

11.0

2017
£m

–

0.4

0.4

(0.2)

(0.8)

(0.2)

(0.4)

2017
£m

0.8

8.7

0.4

–

1.2

2016
£m

47.3

9.5

1.6

(2.3)

(0.4)

1.3

(0.7)

0.2

0.2

9.4

2016
£m

0.1

1.4

(0.6)

0.2

(1.5)

1.3

0.9

2016
£m

0.8

8.9

1.0

1.2

0.9

11.1

12.8

(2.8)

(1.1)

(0.2)

(0.6)

(1.8)

(6.5)

(1.2)

(1.3)

–

(1.4)

(1.8)

(5.7)

Included in the above are deferred tax assets of £3.6m (2016: £4.4m) and deferred tax liabilities of £0.4m (2016: £0.8m) which are due within one 
year. Deferred tax assets are recognised to the extent that the realisation of the related tax benefit through future taxable profits is probable. 

www.clarksons.com  

109 

109

www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

7 Taxation continued 
Deferred tax continued 
All deferred tax movements arise from the origination and reversal of temporary differences. The Group did not recognise a deferred tax asset of 
£4.7m (2016: £4.4m) in respect of unused tax losses, which have no expiry date. 
8 Earnings per share 
Basic earnings per share amounts are calculated by dividing profit 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 per share amounts are calculated by dividing profit 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 per share computations: 

Profit for the year attributable to ordinary equity holders of the Parent Company 

Weighted average number of ordinary shares (excluding share purchase trusts’ shares) - basic 

Dilutive effect of share options 

Dilutive effect of acquisition related shares 

2017 
£m 

31.4 

2016
£m

35.7

2017 

2016

30,072,387 

29,862,508

69,266 

29,092 

269,262

795

Weighted average number of ordinary shares (excluding share purchase trusts’ shares) - diluted 

30,170,745 

30,132,565

The share awards relating to Directors, where the performance conditions have not yet been met at the balance sheet date, are not included in the 
above numbers. The weighted average number of these shares was 150,944 (2016: 136,634). 

9 Dividends 

Declared and paid during the year: 

Final dividend for 2016 of 43p per share (2015: 40p per share)  

Interim dividend for 2017 of 23p per share (2016: 22p per share) 

Dividend paid 

Proposed for approval at the AGM (not recognised as a liability at 31 December):  
Final dividend for 2017 proposed of 50p per share (2016: 43p per share) 

2017 
£m 

13.1 

7.0 

20.1 

2016
£m

11.9

6.6

18.5

15.1 

13.1

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
10 Property, plant and equipment 
31 December 2017 

Original cost 

At 1 January 2017 

Additions 

Disposals 

Foreign exchange differences 

At 31 December 2017 

Accumulated depreciation 

At 1 January 2017 

Charged during the year 

Disposals 

Foreign exchange differences 

At 31 December 2017 

Net book value at 31 December 2017 

31 December 2016 

Original cost 

At 1 January 2016 

Additions 

Disposals 

Reclassified to investment property 

Foreign exchange differences 

At 31 December 2016 

Accumulated depreciation 

At 1 January 2016 

Charged during the year 

Disposals 

Reclassified to investment property 

Foreign exchange differences 

At 31 December 2016 

Net book value at 31 December 2016 

Freehold and 
long leasehold 
properties
£m

Leasehold 
improvements
£m

Office furniture 
and equipment 
£m 

Motor 
vehicles
£m

7.7

–

–

(0.2)

7.5

1.0

0.2

–

–

1.2

6.3

18.1

1.0

(0.3)

(0.2)

18.6

3.4

1.5

(0.3)

(0.1)

4.5

14.1

18.0 

3.9 

(0.5) 

(0.6) 

20.8 

9.9 

3.0 

(0.5) 

(0.3) 

12.1 

8.7 

1.1

0.4

(0.3)

–

1.2

0.6

0.2

(0.2)

–

0.6

0.6

Freehold and 
long leasehold 
properties
£m

Leasehold 
improvements
£m

Office furniture 
and equipment 
£m 

Motor 
vehicles
£m

7.6

–

–

(0.5)

0.6

7.7

1.1

0.2

–

(0.4)

0.1

1.0

6.7

17.1

0.7

(0.2)

–

0.5

18.1

1.9

1.4

(0.1)

–

0.2

3.4

14.7

15.1 

2.1 

(0.5) 

– 

1.3 

18.0 

6.6 

3.0 

(0.4) 

– 

0.7 

9.9 

8.1 

1.1

0.3

(0.3)

–

–

1.1

0.5

0.3

(0.2)

–

–

0.6

0.5

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Total
£m

44.9

5.3

(1.1)

(1.0)

48.1

14.9

4.9

(1.0)

(0.4)

18.4

29.7

Total
£m

40.9

3.1

(1.0)

(0.5)

2.4

44.9

10.1

4.9

(0.7)

(0.4)

1.0

14.9

30.0

In 2016, a property in Dubai was reclassified as an investment property. 

www.clarksons.com  

111 

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www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

11 Investment property 

Cost 

At 1 January 

Reclassified from property, plant and equipment 

At 31 December 

Accumulated depreciation 

At 1 January 

Charged during the year 

Reclassified from property, plant and equipment 

At 31 December 

Net book value at 31 December 

2.0 

– 

2.0 

0.8 

0.1 

– 

0.9 

1.1 

2017 
£m 

2016
£m

The fair value of the investment properties at 31 December 2017 was £2.3m (2016: £1.9m). This was based on valuations from independent 
valuers who have the appropriate professional qualifications and recent experience of valuing properties in the location and of the type 
being valued. 

12 Intangible assets 
31 December 2017 

Cost 

At 1 January 2017 

Additions 

Foreign exchange differences 

At 31 December 2017 

Accumulated amortisation and impairment 

At 1 January 2017 

Charged during the year 

Foreign exchange differences 

At 31 December 2017 

Net book value at 31 December 2017 

Other 
intangible 
assets 
£m 

Goodwill 
£m 

306.6 

– 

(8.7) 

297.9 

12.4 

– 

– 

12.4 

285.5 

31.5 

1.5 

(0.7) 

32.3 

25.2 

3.6 

(0.6) 

28.2 

4.1 

The additions in the year relate to development costs. Also included within other intangible assets is £2.6m relating to customer relationships, 
forward order book and trade name which were identified as part of a previous acquisition. The intangible assets have a remaining amortisation 
period of two years. 

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. 

112 

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

1.5

0.5

2.0

0.3

0.1

0.4

0.8

1.2

Total
£m

338.1

1.5

(9.4)

330.2

37.6

3.6

(0.6)

40.6

289.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 December 2016 

Cost 

At 1 January 2016 

Foreign exchange differences 

At 31 December 2016 

Accumulated amortisation and impairment 

At 1 January 2016 

Charged during the year 

Foreign exchange differences 

At 31 December 2016 

Net book value at 31 December 2016 

Goodwill 
£m 

Other 
intangible 
assets
£m

264.0 

42.6 

306.6 

12.3 

– 

0.1 

12.4 

294.2 

28.3

3.2

31.5

16.8

6.6

1.8

25.2

6.3

Total
£m

292.3

45.8

338.1

29.1

6.6

1.9

37.6

300.5

None of the above intangible assets are internally generated. Included within other intangible assets is £6.3m relating to customer relationships, 
forward order book and trade name which were identified as part of a previous acquisition. The intangible assets have a remaining amortisation 
period of three years. 

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. 

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113 

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www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the consolidated financial statements continued 

13 Impairment testing of goodwill 
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to operating segment. 

The carrying amount of goodwill acquired through business combinations is as follows: 

Dry cargo chartering 

Container chartering 

Tankers chartering 

Specialised products chartering 

Gas chartering 

Sale and purchase broking 

Offshore broking 

Securities 

Port and agency services 

Research services 

2017 
£m 

12.0 

1.8 

11.3 

12.2 

2.7 

48.9 

79.8 

110.6 

2.9 

3.3 

285.5 

2016
£m

12.0

1.8

11.8

12.2

2.7

50.7

81.8

115.0

2.9

3.3

294.2

The movement in the aggregate carrying value is analysed in more detail in note 12. 

Goodwill is allocated to CGUs which are tested for impairment at least annually. The goodwill arising in each CGU is similar in nature and thus the  
testing for impairment uses the same approach. 

The recoverable amounts of the CGUs are assessed using a value-in-use model. Value-in-use is calculated as the net present value of the 
projected risk-adjusted cash flows of the CGU to which the goodwill is allocated. 

The key assumptions used for value-in-use calculations are as follows: 

–  the pre-tax discount rate for the chartering and broking CGUs is 8.7% (2016: 8.9%), port and agency services is 8.7% (2016: 8.9%), research 
services is 8.7% (2016: 8.9%) and for securities is 8.5% (2016: 9.2%). As all broking and chartering CGUs have operations that are global in 
nature and similar risk profiles, the same discount rate has been used; 

–  these discount rates are based on the Group’s weighted average cost of capital (WACC) and adjusted for CGU-specific risk factors. The 

Group’s WACC is a function of the Group’s cost of equity, derived using a Capital Asset Pricing Model. The cost of equity includes a number of 
variables to reflect the inherent risk of the business being evaluated; and 

–  the cash flow predictions are based on financial budgets and strategic plans approved by the Board, extrapolated over a five year period. These 
are based on both past performance and expectations for future market development and take into account the cyclicality of the business in 
which the CGU operates. Cash flows beyond the five year period are extrapolated in perpetuity using a conservative growth rate of 1.7% (2016: 
1.7%) across all CGUs. 

The results of the Directors’ review of goodwill, including sensitivity analyses for reasonable changes in assumptions, still indicate remaining 
headroom. Accordingly, no reasonably possible change is foreseen which gives rise to an impairment of goodwill.  

In light of global macro-economic and geo-political uncertainty, the Board keeps the carrying value of goodwill under constant review. In the event 
that any of the markets in which we operate has a sustained downturn, an impairment of the relevant CGU’s goodwill may be required. 

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14 Trade and other receivables 

Non-current 

Other receivables 

Foreign currency contracts 

Current 

Trade receivables 

Other receivables 

Foreign currency contracts 

Prepayments and accrued income 

2017
£m

1.6

0.9

2.5

44.5

5.7

0.4

9.6

60.2

2016
£m

1.8

–

1.8

42.7

6.2

–

7.8

56.7

Trade receivables are non-interest bearing and are generally on terms payable within 90 days. 

As at 31 December 2017, Group trade receivables at nominal value of £13.3m (2016: £15.5m) were impaired and fully provided for. The amount of 
the provision equates to the total amount of impaired debt. The provision is based on experience and ongoing market information about the credit-
worthiness of counterparties.  

Movements in the provision for impairment of trade receivables were as follows: 

At 1 January 

Provision release 

Written off 

New provision 

Foreign exchange differences 

At 31 December 

2017
£m

15.5

(6.5)

(1.4)

7.0

(1.3)

13.3

Included within the movements in the provision were amounts which were provided at the time of invoicing for which no revenue has been 
recognised, because collectability was not considered probable. See note 2.3. 

The other classes within trade and other receivables do not include any impaired items. 

As at 31 December, the ageing analysis of trade receivables is as follows: 

Neither past due nor impaired 

Past due not impaired > 90 days 

The carrying amounts of the Group’s trade receivables are denominated in the following currencies: 

US dollar 

Sterling 

Norwegian krone 

Other currencies 

2017
£m

38.4

6.1

44.5

2017
£m

33.3

5.6

4.1

1.5

44.5

2016
£m

12.3

(5.5)

(2.9)

9.2

2.4

15.5

2016
£m

38.1

4.6

42.7

2016
£m

28.2

6.3

7.5

0.7

42.7

www.clarksons.com  

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Financial statements Notes to the consolidated financial statements continued 

15 Investments 

Non-current 

Available-for-sale financial assets 

Current 

Funds on deposit 

Available-for-sale financial assets 

Held for trading investments 

2017 
£m 

4.9 

5.5 

0.3 

– 

5.8 

2016
£m

4.1

29.4

0.3

0.1

29.8

The Group held £5.5m (2016: £19.4m) in a deposit with a 95 day notice period. At 31 December 2016, the Group also held £10.0m in a deposit 
with a maturity of six months. These deposits are held with an A-rated financial institution. 

Available-for-sale financial assets consist of investments in unlisted ordinary shares and are shown at cost. There are no reasonable pricing 
alternatives to be able to give a range of fair value to these assets.  

16 Inventories 

Finished goods 

The cost of inventories recognised as an expense and included in cost of sales amounted to £5.7m (2016: £5.0m). 

17 Cash and cash equivalents 

Cash at bank and in hand 

Short-term deposits 

2017 
£m 

0.7 

2017 
£m 

159.6 

2.1 

161.7 

2016
£m

0.7

2016
£m

147.7

6.3

154.0

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods 
between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term 
deposit rates. The fair value of cash and cash equivalents is £161.7m (2016: £154.0m). 

Included in cash at bank and in hand is £2.3m (2016: £1.3m) of restricted funds relating to employee taxes and other commitments. 

18 Interest-bearing loans and borrowings 

Current 

Loan notes 

2017 
£m 

– 

2016
£m

23.6

Interest-bearing loans and borrowings comprised the vendor loan notes issued as part of the consideration for the Platou acquisition. Interest was 
charged at 12 month sterling LIBOR plus 1.25%. Half the loan notes were repaid on 30 June 2016, the balance was repaid on 30 June 2017. 

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19 Trade and other payables 

Current 

Trade payables 

Other payables 

Other tax and social security 

Deferred consideration 

Foreign currency contracts 

Accruals 

Deferred income 

Non-current 

Other payables 

Foreign currency contracts 

Terms and conditions of the financial liabilities: 

–  trade payables are non-interest bearing and are normally settled on demand; and 
–  other payables are non-interest bearing and are normally settled on demand. 

20 Provisions 

Current 

At 1 January 

Arising during the year 

Utilised during the year 

At 31 December 

Non-current 

At 1 January 

Arising during the year 

At 31 December 

2017
£m

13.7

7.4

3.8

–

–

102.4

4.7

132.0

10.6

–

10.6

2017
£m

–

0.1

–

0.1

0.1

–

0.1

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£m

24.3

6.9

2.7

0.9

4.2

99.1

4.2

142.3

9.3

2.0

11.3

2016
£m

0.2

–

(0.2)

–

–

0.1

0.1

Provisions have been recognised for the dilapidation of various leasehold premises which will be utilised on cessation of the lease between three 
and five years.  

In 2016 an onerous lease provision was utilised. 

www.clarksons.com  

117 

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Financial statements Notes to the consolidated financial statements continued 

21 Share-based payment plans 

Expense arising from equity-settled share-based payment transactions 

2017 
£m 

1.4 

2016
£m

1.3

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2017 or 2016. 

Share options 

Long term incentive awards 
Details of the long term incentive awards are included in the Directors’ remuneration report on page 69. Awards made to the Directors are given in 
the Directors’ remuneration report on page 76. The fair value of the element of these awards, which have a TSR performance condition, was 
valued using a Stochastic model. All other elements of the awards were valued using a Black-Scholes model. 

ShareSave scheme 
The ShareSave scheme is approved by HMRC and enables eligible employees to acquire options over ordinary shares of the Company at a 
discount. The fair value of these awards was valued using the Black-Scholes model. 

Other options 
These options were granted in 2007 to senior executives where the performance conditions have since been met. The fair value of the element of 
these awards, which have a TSR performance condition, was valued using a Stochastic model. All other elements of the awards were valued using 
a Black-Scholes model. 

Movements in the year 
The following table illustrates the number of, and movements in, share options during the year: 

Outstanding at 
1 January  
2017 

143,617 

25,405 

104,164 

63,109 

Granted 
in year

67,761

–

–

–

– 

99,859

Long term incentive awards1 

2014 ShareSave2 

2015 ShareSave3 

2016 ShareSave4 

2017 ShareSave5 

Other options6 

15,000 

351,295 

–

167,620

(51,883)

Lapsed 
in year

(37,149)

(1,175)

(7,588)

(5,571)

(400)

–

Exercised 
in year

Outstanding at 
31 December 
2017 

Exercisable at 
31 December 
2017 

Weighted 
average 
contractual life 
Years

(6,983)

(24,230)

(711)

–

–

(15,000)

(46,924)

167,246 

– 

95,865 

57,538 

99,459 

– 

420,108 

– 

– 

– 

– 

– 

– 

– 

8.12

–

1.00

2.33

3.25

–

The weighted average share price at the date of exercise was £26.12 in relation to the long term incentive awards, £28.05 for the 2014 ShareSave 
options, £27.82 for the 2015 ShareSave options and £29.44 for the other options. 

There is one exercise price for each type of share option award, as follows: 1 £nil, 2 £21.11, 3 £18.12, 4 £17.19, 5 £22.50, 6 £9.91. 

Long term incentive awards 1 

2013 ShareSave2 

2014 ShareSave3 

2015 ShareSave4 

2016 ShareSave5 

Other options6 

Outstanding at  
1 January  
2016 

398,907 

16,135 

36,715 

132,597 

Granted 
in year

83,183

–

–

–

– 

64,888

Lapsed 
in year

(39,099)

(1,380)

(11,310)

(28,433)

(1,779)

Exercised 
in year

(299,374)

(14,755)

–

–

–

40,000 

624,354 

–

–

(25,000)

148,071

(82,001)

(339,129)

351,295 

Outstanding at 
31 December 
2016 

Exercisable at  
31 December 
2016 

Weighted 
average 
contractual life 
Years

143,617 

– 

25,405 

104,164 

63,109 

15,000 

– 

– 

– 

– 

– 

15,000 

15,000 

8.25

–

1.00

2.00

3.33

0.81

The weighted average share price at the date of exercise was £19.89 in relation to the long term incentive awards, £20.56 for the 2013 ShareSave 
options and £19.92 for the other options. 

There is one exercise price for each type of share option award, as follows: 1 £nil, 2 £13.03, 3 £21.11, 4 £18.12, 5 £17.19, 6 £9.91. 

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Significant inputs 
The inputs into the models used to value options granted in the period fell within the following ranges: 

Share price at date of grant (£) 

Exercise price (£) 

Expected term (years) 

Risk-free interest rate (%) 

Expected dividend yield (%) 

Expected volatility (%) 

2017

2016

27.95 – 29.26

19.75 – 22.21

0.00 – 22.50

0.00 – 17.19

3.0 – 3.3

0.1 – 0.6

0.0 – 2.3

3.0 – 3.3

0.3 – 0.4

0.0 – 3.1

34.2 – 36.3

33.4 – 34.6

Expected volatility is calculated using historical data, where available, over the period of time commensurate with the remaining performance 
period for long term incentive awards and the expected award term for the ShareSave scheme, as at the date of grant. 

Other employee incentives 
During the year, 342,909 shares (2016: 284,509 shares) at a weighted average price of £27.91 (2016: £22.53) were awarded to employees in 
settlement of 2016 (2015) cash bonuses. There was no expense in 2017 as a result of these awards. 

The fair value of the above shares was determined based on the market price at the date of grant. 

As part of previous acquisitions, certain elements of consideration are payable in the form of shares in Clarkson PLC. Where these are contingent  
on the employees remaining in service, the cost of these shares are charged to the consolidated income statement over the service period. The 
2017 charge in relation to such awards is £0.4m (2016: £0.4m). 
22 Employee benefits 
The Group’s three defined benefit pension schemes are in the UK and all financial information provided in this note relates to the sum of the three 
separate schemes. 

The Group operates three defined benefit pension schemes, being the Clarkson PLC scheme, the Plowrights scheme and the Stewarts scheme, 
which are funded by the payment of contributions to separate trusts administered by Trustees who are required to act in the best interests of 
the schemes’ beneficiaries. The schemes’ assets are invested in a range of pooled pension investment funds managed by professional 
fund managers. 

Defined benefit pension arrangements give rise to open ended commitments and liabilities for the sponsoring company. As a consequence, the 
Company closed its original defined benefit section of the Clarkson PLC scheme to new entrants on 31 March 2004. This section was closed to 
further accrual for all existing members as from 31 March 2006. The Plowrights scheme was closed to further accrual from 1 January 2006. The 
Stewarts scheme was closed to further accrual on 1 January 2004. 

Every three years, a pension scheme must obtain from an actuary a report containing a valuation and a recommendation on rates of contribution. 
Triennial valuations for all the schemes have been prepared. 

The valuation of the Clarkson PLC scheme showed a pension surplus of £3.6m as at 31 March 2016. Clarkson PLC and the Trustees agreed to 
cease funding with effect from 1 October 2016. 

The valuation of the Plowrights scheme showed a pension deficit of £1.2m as at 31 March 2016. Clarkson PLC and the Trustees agreed to 
continue the funding plan, at the rate of £0.9m per annum, until 30 September 2017. 

The valuation of the Stewarts scheme showed a pension deficit of £2.1m as at 1 September 2015. Clarksons Platou (Offshore) Limited have 
agreed with the Trustees to pay contributions to remove the deficit over a period of seven years from 1 September 2015 at the rate of £0.4m per 
annum until 31 October 2016 and £0.3m per annum thereafter. 

The Group is exposed to a number of risks, the most significant of which are detailed below: 

Asset volatility 
The scheme liabilities are calculated using a discount rate set with reference to corporate bond yields; if scheme assets underperform this yield, 
this will create a deficit. All schemes hold a significant proportion of equities, which are expected to outperform corporate bonds in the long-term 
while providing volatility and risk in the short-term. 

Changes in bond yields 
A decrease in corporate bond yields will increase scheme liabilities, although this will be partially offset by an increase in the value of the schemes’  
bond holdings. 

Inflation risk 
Some of the Group pension obligations are linked to inflation. The majority of the schemes’ assets are either unaffected by (fixed interest bonds) or 
loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit. 

Life expectancy 
The majority of the schemes’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase  
in the schemes’ liabilities. 

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Financial statements Notes to the consolidated financial statements continued 

22 Employee benefits continued 
Other pension arrangements 
Overseas defined contribution arrangements have been determined in accordance with local practice and regulations. 

The Group also operates various other defined contribution pension arrangements. Where required, the Group also makes contributions into  
these schemes. 

The Group incurs no material expenses in the provision of post-retirement benefits other than pensions. 

The following tables summarise amounts recognised in the consolidated balance sheet and the components of net benefit charge recognised in 
the consolidated income statement: 

Recognised in the balance sheet 

Fair value of schemes’ assets 

Present value of funded defined benefit obligations 

Effect of asset ceiling/minimum funding commitment in relation to the Plowrights scheme 

Net benefit asset recognised in the balance sheet 

2017 
£m 

202.7 

(185.1) 

17.6 

(5.3) 

12.3 

2016
£m

200.5

(194.1)

6.4

(4.1)

2.3

The net benefit asset disclosed above is the combined total of the three schemes. The Clarkson PLC scheme has a surplus of £16.7m (2016: 
£7.5m), the Plowrights scheme has a deficit of £nil (2016: £0.6m) and the Stewarts scheme has a deficit of £4.4m (2016: £4.6m). As there is no 
right of set-off between the schemes, the benefit asset of £16.7m (2016: £7.5m) is disclosed separately on the balance sheet from the benefit 
liability of £4.4m (2016: £5.2m). 

The surplus in the Clarkson PLC scheme is recognised, as there are future economic benefits available in the form of a reduction in future 
contributions to the defined contribution section of the scheme. There are no such future economic benefits in respect of the Plowright Scheme 
and therefore the surplus of £5.3m (2016: £3.5m) cannot be recognised. In addition, a minimum funding commitment of £nil (2016: £0.6 m) was 
recognised as arising from agreed future contributions to the Plowright Scheme. This is in accordance with the respective Trust Deed and Rules. 

A deferred tax asset on the benefit liability amounting to £0.8m (2016: £0.8m) and a deferred tax liability on the benefit asset of £2.8m (2016: 
£1.2m) is shown in note 7. 

Recognised in the income statement 

Recognised in other finance costs – pensions: 

Expected return on schemes’ assets 

Interest cost on benefit obligation and minimum funding commitment 

Recognised in administrative expenses: 

Scheme administrative expenses 

Net benefit charge recognised in the income statement 

Recognised in the statement of comprehensive income 

Actual return on schemes’ assets 

Less: expected return on schemes’ assets 

Actuarial gain on schemes’ assets 

Actuarial gain/(loss) on defined benefit obligations 

Actuarial gain recognised in the statement of comprehensive income 

Tax charge on actuarial gain 

Effect of asset ceiling/minimum funding commitment in relation to the Plowrights scheme 

Tax credit on asset ceiling/minimum funding commitment 

Net actuarial gain on employee benefit obligations 

Cumulative amount of actuarial gains/(losses) recognised in the statement of comprehensive income 

2017 
£m 

5.1 

(5.1) 

(0.1) 

(0.1) 

2017 
£m 

14.9 

(5.1) 

9.8 

0.4 

10.2 

(1.7) 

(1.1) 

0.2 

7.6 

1.4 

2016
£m

6.4

(6.5)

(0.2)

(0.3)

2016
£m

36.2

(6.4)

29.8

(22.6)

7.2

(1.6)

(2.6)

1.0

4.0

(8.8)

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Schemes’ assets 

Equities* 

Government bonds* 

Corporate bonds* 

Property 

Investment funds 

Cash and other assets 

*  Based on quoted market prices. 

Net defined benefit asset 
Changes in the fair value of the net defined benefit asset are as follows: 

31 December 2017 

%

12.5

34.3

26.0

0.2

24.1

2.9

2017 
£m 

25.5 

69.5 

52.6 

0.4 

48.8 

5.9 

%

47.5

31.8

13.3

3.5

–

3.9

2016
£m

95.1

63.7

26.8

7.0

–

7.9

100.0

202.7 

100.0

200.5

At 1 January 2017 

Expected return on assets 

Interest costs 

Contributions 

Administrative expenses 

Benefits paid 

Actuarial gain/(loss) 

At 31 December 2017 

31 December 2016 

At 1 January 2016 

Expected return on assets 

Interest costs 

Contributions 

Administrative expenses 

Benefits paid 

Actuarial (loss)/gain 

At 31 December 2016 

Present value 
of obligation
£m

Fair value of 
plan assets
£m

(194.1)

200.5

–

(5.0)

–

–

13.6

0.4

(185.1)

5.1

–

1.0

(0.1)

(13.6)

9.8

202.7

Present value 
of obligation
£m

Fair value of 
plan assets
£m

(172.8)

170.1

–

(6.4)

–

–

7.7

(22.6)

(194.1)

6.4

–

2.1

(0.2)

(7.7)

29.8

200.5

Impact of asset 
ceiling/ 
minimum 
funding 
commitment
£m

(4.1)

–

(0.1)

–

–

–

(1.1)

(5.3)

Impact of asset 
ceiling/minimum 
funding 
requirement
£m

(1.4)

–

(0.1)

–

–

–

(2.6)

(4.1)

Total 
£m 

6.4 

5.1 

(5.0) 

1.0 

(0.1) 

– 

10.2 

17.6 

Total 
£m 

(2.7) 

6.4 

(6.4) 

2.1 

(0.2) 

– 

7.2 

6.4 

Total
£m

2.3

5.1

(5.1)

1.0

(0.1)

–

9.1

12.3

Total
£m

(4.1)

6.4

(6.5)

2.1

(0.2)

–

4.6

2.3

The Group expects, based on the valuations and funding requirements including expenses, to contribute £0.5m to its defined benefit pension 
schemes in 2018 (2017: £1.4m). 

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Financial statements Notes to the consolidated financial statements continued 

22 Employee benefits continued 
The principal valuation assumptions are as follows: 

Rate of increase in pensions in payment 
Price inflation (RPI) 
Price inflation (CPI) 
Discount rate for scheme liabilities 

2017 
% 

3.0 – 7.0 
3.2 
2.2 
2.5 

2016
%

3.2 – 7.0
3.3
2.3
2.7

The mortality assumptions used to assess the defined benefit obligation at 31 December 2017 and 2016 is based on the ‘SAPS Light’ (‘SAPS’ for 
the Stewart scheme) standard mortality tables published by the actuarial profession in 2014. These tables have been adjusted to allow for 
anticipated future improvements in life expectancy using the standard projection model published in 2016 (31 December 2016: model published in 
2015). Examples of the assumed future life expectancy are given in the table below: 

Post-retirement life expectancy on retirement at age 65: 

Pensioners retiring in the year 

Pensioners retiring in 20 years’ time  

Experience adjustments 

–  male 
–  female 
–  male 
–  female 

Experience gain on schemes’ assets 
Gain on schemes’ liabilities due to changes in demographic assumptions 
Gain/(loss) on schemes’ liabilities due to changes in financial assumptions 
Experience gains on schemes’ liabilities 
Loss on asset ceiling/minimum funding commitment 

Total actuarial gain 

Additional years

2017 

2016

22.0 to 23.1 

22.0 to 23.1

24.0 to 24.2 

24.0 to 24.3

23.5 to 24.5 

23.5 to 24.5

25.5 to 25.7 

25.6 to 25.8

2017 
£m 

9.8 
0.3 
0.1 
– 
(1.1) 

9.1 

2016
£m

29.8
14.1
(40.6)
3.9
(2.6)

4.6

Sensitivities 
The table below shows the sensitivity of the defined benefit obligation to changes to the most significant actuarial assumptions. The impact of changes 
to each assumption is shown in isolation although, in practice, changes to assumptions may occur at the same time and can either offset or compound 
the overall impact on the defined benefit obligation. A change of 0.25% is deemed appropriate given the movement in assumptions in the year. The 
sensitivities have been calculated using the same methodology as the main calculations. The weighted average duration of the defined obligation is 
17 years. 

Discount rate for scheme liabilities 

Price inflation (RPI) 

Change in  
assumption 

Change in defined 
benefit obligation

+0.25% 
-0.25% 

+0.25% 
-0.25% 

-4.0%
+4.3%

+3.4%
-3.2%

An increase of one year in the assumed life expectancy for both males and females would increase the benefit obligation by 3.9% (2016: 3.9%). 
23 Share capital 

Ordinary shares of 25p each, issued and fully paid: 

At 1 January  

Additions 

At 31 December 

Number of 
shares

30,233,179

–

30,233,179

2017 
£m 

7.6 

– 

7.6 

Number of 
shares 

30,231,767 

1,412 

30,233,179 

2016
£m

7.6

–

7.6

In 2016, the Company issued 1,412 shares in relation to the 2012 ShareSave scheme. The difference between the exercise price of £10.82 and the 
nominal value of £0.25 was taken to the share premium account, see note 24. 

Shares held by employee trusts 
The trustees have waived their right to dividends on the unallocated shares held in the employee share trust. 

122 

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24 Other reserves 
31 December 2017 

At 1 January 2017 

Total comprehensive 

income/(loss) 

Employee share schemes: 

Share-based payments 

expense 

Transfer to profit and loss 

on vesting 

Net ESOP shares utilised 

Total employee share schemes 

Share  
premium 
£m 

29.1 

ESOP 
reserve 
£m 

(3.0)

Employee 
benefits 
reserve
£m

Capital 
redemption 
reserve
£m

Hedging 
reserve
£m

(5.0)

6.0

–

–

–

–

Merger 
reserve 
£m 

177.5 

Currency 
translation 
reserve
£m

37.0

Total
£m

240.1

– 

– 

– 

– 

– 

(13.9)

(7.9)

–

–

–

–

1.4

0.5

0.6

2.5

2.0

–

–

–

–

–

2.0

1.0

177.5 

23.1

234.7

Capital 
redemption 
reserve
£m

2.0

–

–

–

–

–

–

Hedging 
reserve
£m

(1.1)

(3.9)

–

–

–

–

–

Merger 
reserve 
£m 

177.5 

– 

– 

– 

– 

– 

– 

Currency 
translation 
reserve
£m

(13.0)

50.0

–

–

–

–

–

Total
£m

194.2

46.1

0.1

1.2

3.3

(4.8)

(0.3)

2.0

(5.0)

177.5 

37.0

240.1

2.5

–

1.4

(0.7)

–

0.7

3.2

Employee 
benefits 
reserve
£m

4.1

–

–

1.2

(2.8)

–

(1.6)

2.5

– 

– 

1.2 

0.6 

1.8 

(1.2)

– 

– 

– 

6.1 

(4.8)

1.3 

(3.0)

– 

– 

– 

– 

– 

– 

0.1 

– 

– 

– 

– 

Share  
premium 
£m 

29.0 

ESOP 
reserve 
£m 

(4.3)

At 31 December 2017 

29.1 

31 December 2016 

At 1 January 2016 

Total comprehensive 

(loss)/income 

Share issues 
Employee share schemes: 

Share-based payments 

expense 

Transfer to profit and loss 

on vesting 

Net ESOP shares acquired 

Total employee share schemes 

At 31 December 2016 

29.1 

Nature and purpose of other reserves 

ESOP reserve 
The ESOP reserve in the Group represents 62,796 shares (2016: 159,676 shares) held by the share purchase trusts to meet obligations under 
various incentive schemes. The shares are stated at cost. The market value of these shares at 31 December 2017 was £1.8m (2016: £3.5m). At 
31 December 2017 none of these shares were under option (2016: none). During the year the share purchase trusts acquired 262,000 shares at 
a weighted average price of £27.62 (2016: 535,238 shares at £20.23). 

Employee benefits reserve 
The employee benefits reserve is used to record the value of equity-settled share-based payments provided to employees. Details are included in 
note 21. 

Capital redemption reserve 
The capital redemption reserve arose on previous share buy-backs by Clarkson PLC. 

Hedging reserve 
This reserve comprises the effective portion of the fair value of cash flow hedging instruments relating to hedged transactions that have not yet occurred. 

Merger reserve 
This comprises the premium on the share placing in November 2014 and the shares issued in February 2015 as part of the Platou acquisition. No share 
premium is recorded in the financial statements, through the operation of the merger relief provisions of the Companies Act 2006. 

Currency translation reserve  
The currency translation reserve represents the currency translation differences arising from the consolidation of foreign operations. 

www.clarksons.com  

123 

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Financial statements Notes to the consolidated financial statements continued 

25 Financial commitments and contingencies 
Operating lease commitments 
The Group has entered into commercial leases in relation to land and buildings and other assets on the basis that it is not in the Group’s best 
interests to purchase these assets. The leases expire within one and 11 years and have varying terms, escalation clauses and renewal rights. 
Renewals are at the option of the specific entity that holds the lease. There are no restrictions placed upon the lessee by entering into these leases. 

Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows: 

Within one year 

After one year but not more than five years 

After five years 

2017 
£m 

11.6 

37.1 

44.9 

93.6 

2016
£m

9.1

39.4

53.4

101.9

The Group has sublet space in certain properties. The future minimum sublease payments expected to be received under non-cancellable 
sublease agreements as at 31 December 2017 is £0.6m (2016: £1.2m). 

Contingencies 
The Group has given no financial commitments to suppliers (2016: none). 

The Group has given no guarantees (2016: none). 

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. 

The Group also maintained throughout the financial year directors’ and officers’ liability insurance in respect of its Directors. 

26 Financial risk management objectives and policies 
The Group’s principal financial liabilities comprise trade and other payables and accruals. The Group’s principal financial assets are trade 
receivables, investments and cash and cash equivalents and short-term deposits, which arise directly from its operations. 

The Group has not entered into derivative transactions other than the forward currency contracts explained later in this section. It is, and has been 
throughout 2017 and 2016, the Group’s policy that no trading in derivatives shall be undertaken for speculative purposes. 

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and foreign exchange risk. The Board of Directors reviews  
and agrees policies for managing each of these risks which are summarised below. 

Credit risk 
The Group seeks to trade only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis and any 
potential bad debts identified at an early stage. The maximum exposure is the carrying amounts as disclosed in note 14; based on experience and 
ongoing market information about the creditworthiness of counterparties, we reasonably expect to collect all amounts unimpaired. There are no 
significant concentrations of credit risk within the Group. 

With respect to credit risk arising from cash and cash equivalents and deposits held as current investments, the financial institutions used are  
closely monitored by the Group treasury function to ensure they are held with creditworthy institutions and to ensure there is no over-exposure to 
any one institution. 

For all financial assets held, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal  
to the carrying amount of these instruments. 

124 

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Clarkson PLC Annual Report 2017 

 
 
 
 
 
Liquidity risk 
Cash flow forecasting is performed at an entity level and also consolidated at a Group level. This is to ensure there is sufficient cash to meet 
operational requirements and any regulatory requirements where applicable. 

The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted payments. 

31 December 2017 

Trade and other payables 

Provisions 

31 December 2016 

Interest-bearing loans and borrowings 

Trade and other payables 

Deferred consideration 

Provisions 

On 
demand
£m

Less than 
3 months
£m

21.1

–

21.1

–

–

–

On 
demand
£m

Less than 
3 months
£m

–

31.2

–

–

31.2

–

–

–

–

–

3 to 12  
months 
£m 

– 

0.1 

0.1 

3 to 12  
months 
£m 

23.9 

– 

0.9 

– 

24.8 

1 to 5 
years
£m

10.6

0.1

10.7

1 to 5 
years
£m

–

9.3

–

0.1

9.4

Total
£m

31.7

0.2

31.9

Total
£m

23.9

40.5

0.9

0.1

65.4

Foreign exchange risk 
The Group has transactional currency exposures arising from revenues and expenses in currencies other than its functional currency, which can 
significantly impact results and cash flows. The Group’s revenue is mainly denominated in US dollars and the majority of expenses are 
denominated in local currencies. The Group also has balance sheet exposures, either at the local entity level where monetary assets and liabilities 
are held in currencies other than the functional currency, and at a Group level on the retranslation of non-sterling balances into the Group’s 
functional currency.  

Our aim is to manage this risk by reducing the impact of any fluctuations. 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 also continually assess rates of 
exchange, non-sterling balances and asset exposures by currency.  

The Group is most sensitive to changes in the US dollar and Norwegian krone exchange rates. The following table demonstrates the sensitivity to a 
reasonably possible change in these rates, with all other variables held constant, of the Group’s profit before taxation and equity. 

2017 

2016 

Strengthening/ 
(weakening) in 
rate

Effect on
profit before 
taxation
£m

5%

(5%)

5%

(5%)

2.0

(1.8)

2.6

(2.3)

US$ 

Effect on  
equity 
£m 

0.2 

(0.2) 

0.5 

(0.5) 

Effect on
profit before 
taxation
£m

–

–

1.1

(1.0)

NOK

Effect on 
equity
£m

–

–

1.1

(1.0)

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Financial statements Notes to the consolidated financial statements continued 

26 Financial risk management objectives and policies continued 
Derivative financial instruments 
It is the Group’s policy to cover or hedge a proportion of its transactional US dollar exposures with foreign currency contracts. Where these are 
designated and documented as hedging instruments in the context of IAS 39 and are demonstrated to be effective, mark-to-market gains and 
losses are recognised directly in equity (see note 24) and transferred to the income statement upon receipt of cash and conversion to sterling of 
the underlying item being hedged. 

The fair value of foreign currency contracts at 31 December are as follows: 

Foreign currency contracts  

2017
£m

1.3

Assets 

2016 
£m 

– 

Liabilities

2016
£m

6.2

2017 
£m 

– 

At 31 December 2017 the Group had US$60m outstanding forward contracts due for settlement in 2018 and 2019 (2016: US$60m for settlement 
in 2017, 2018 and 2019). 

Capital management 
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for 
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Total capital is 
calculated as equity as shown in the consolidated balance sheet. 

The Group manages its capital structure, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital 
structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. 

No changes were made in the objectives, policies or processes during the years ended 31 December 2017 and 31 December 2016. These 
financial statements are prepared on the going concern basis and the Group continues to pay dividends. 

A number of the Group’s trading entities are subject to regulation by the Norwegian FSA, the FCA in the UK, the MAS in Singapore and the NFA, 
SEC and FINRA in the US. Regulatory capital at entity level depends on the jurisdiction in which it is incorporated. In each case, the approach is to 
hold an appropriate surplus over the local minimum requirement. Each regulated entity complied with their regulatory capital requirements 
throughout the year. 

27 Financial instruments 
Fair values 
IFRS 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: 

–  quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); 
–  inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly  

(that is, derived from prices) (level 2); and 

–  inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).  

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December. 

Assets 

Foreign currency contracts 

Liabilities 

Foreign currency contracts 

2017 
£m 

1.3 

Level 2

2016
£m

–

– 

6.2

The fair value of the foreign currency contracts are calculated by management based on external valuations received. These valuations are 
calculated based on forward exchange rates at the balance sheet date. 

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The classification of financial assets and financial liabilities at 31 December is as follows: 

Financial assets 

Other receivables 

Investments 

Trade receivables 

Foreign currency contracts 

Cash and cash equivalents 

Financial liabilities 

Loan notes 

Trade payables 

Other payables 

Foreign currency contracts 

Deferred consideration 

Accruals 

Provisions 

Hedging 
instruments 
£m 

Available-
for-sale
£m

Loans and 
receivables
£m

– 

– 

– 

1.3 

– 

1.3 

–

5.2

–

–

–

5.2

7.3

5.5

44.5

–

161.7

219.0

Amortised
cost
£m

–

13.7

18.0

–

–

102.4

0.2

134.3

2017

Total
£m

7.3

10.7

44.5

1.3

161.7

225.5

2017

Total
£m

–

13.7

18.0

–

–

102.4

0.2

134.3

Held for
trading
£m

Available- 
for-sale 
£m 

Loans and 
receivables
£m

–

0.1

–

–

–

– 

4.4 

– 

– 

– 

0.1

4.4 

8.0

29.4

42.7

–

154.0

234.1

Hedging 
instruments 
£m 

Amortised
cost
£m

– 

– 

– 

6.2 

– 

– 

– 

23.6

24.3

16.2

–

0.9

99.1

0.1

2016

Total
£m

8.0

33.9

42.7

–

154.0

238.6

2016

Total
£m

23.6

24.3

16.2

6.2

0.9

99.1

0.1

6.2 

164.2

170.4

Loan notes were initially recognised at fair value and not designated as ‘fair value through profit or loss’. These were subsequently measured at 
amortised cost using the effective interest method. The carrying value of current and non-current financial assets and liabilities is deemed to 
equate to the fair value at 31 December 2017. 

28 Related party transactions 
As in 2016, 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. 

Short-term employee benefits 

Post-employment benefits 

Share-based payments 

Full remuneration details are provided in the Directors’ remuneration report on pages 65 to 79.

2017
£m

5.9

0.1

0.7

6.7

2016
£m

5.9

0.1

0.6

6.6

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Financial statements 

Parent Company balance sheet 

as at 31 December 

Non-current assets 

Property, plant and equipment 

Investment property 

Investments in subsidiaries 

Employee benefits 

Deferred tax asset 

Current assets 

Trade and other receivables 

Income tax receivable 

Investments 

Cash and cash equivalents 

Current liabilities 

Interest-bearing loans and borrowings 

Trade and other payables 

Net current assets 

Non-current liabilities 

Trade and other payables 

Employee benefits 

Deferred tax liability 

Net assets 

Capital and reserves 

Share capital 

Other reserves 

Retained earnings 

Total equity 

Notes 

B 

C 

D 

M 

E 

F 

G 

H 

I 

J 

J 

M 

K 

N 

O 

2017 
£m 

16.5 

0.3 

291.1 

16.7 

2.1 

326.7 

42.1 

3.8 

5.5 

0.1 

51.5 

– 

(21.7) 

(21.7) 

29.8 

(8.3) 

– 

(3.2) 

(11.5) 

345.0 

7.6 

210.9 

126.5 

345.0 

2016
£m

17.8

0.3

296.2

7.5

1.5

323.3

40.7

4.2

29.4

0.7

75.0

(23.6)

(37.1)

(60.7)

14.3

(6.5)

(0.6)

(1.5)

(8.6)

329.0

7.6

210.6

110.8

329.0

The Company’s profit for the year was £26.4m (2016: £11.8m). 

The financial statements on pages 128 to 144 were approved by the Board on 9 March 2018, and signed on its behalf by: 

James Hughes-Hallett 
Chair 
Registered number: 1190238 

Jeff Woyda  
Chief Financial Officer and Chief Operating Officer 

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Parent Company statement  
of changes in equity 

for the year ended 31 December 

Attributable to equity holders of the Parent Company

Balance at 1 January 2017 

Profit for the year 

Other comprehensive income: 

Actuarial gain on employee benefit schemes – net of tax 

M

Total comprehensive income for the year 

Transactions with owners: 

Employee share schemes 

Tax on other employee benefits 

Dividend paid 

Balance at 31 December 2017 

Notes

Share capital
£m

Other reserves 
£m 

7.6

210.6 

Retained 
earnings
£m

Total equity
£m

110.8

26.4

7.5

33.9

1.3

0.6

(20.1)

(18.2)

126.5

329.0

26.4

7.5

33.9

1.6

0.6

(20.1)

(17.9)

345.0

–

–

–

–

–

–

–

7.6

– 

– 

– 

0.3 

– 

– 

0.3 

210.9 

Balance at 1 January 2016 

Profit for the year 

Other comprehensive income: 

Actuarial gain on employee benefit schemes – net of tax 

Total comprehensive income for the year 

Transactions with owners: 

Share issues 

Employee share schemes 

Tax on other employee benefits 

Dividend paid 

Balance at 31 December 2016 

Attributable to equity holders of the Parent Company

Notes

Share capital
£m

Other reserves 
£m 

7.6

212.5 

M

N,O

–

–

–

–

–

–

–

–

7.6

– 

– 

– 

0.1 

(2.0) 

– 

– 

(1.9) 

210.6 

Retained 
earnings
£m

113.6

11.8

5.8

17.6

–

(1.7)

(0.2)

(18.5)

(20.4)

110.8

Total equity
£m

333.7

11.8

5.8

17.6

0.1

(3.7)

(0.2)

(18.5)

(22.3)

329.0

www.clarksons.com  

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Financial statements 

Parent Company cash flow 
statement 

for the year ended 31 December 

Cash flows from operating activities  

Profit before taxation 

Adjustments for: 

Foreign exchange differences 

Depreciation of property, plant and equipment  

Share-based payment expense 

Difference between pension contributions paid and amount recognised in the income statement 

Loss on disposal of investments 

Impairment of investment in subsidiaries 

Finance revenue  

Finance costs 

Other finance revenue – pensions  

(Increase)/decrease in trade and other receivables  

(Decrease)/increase in bonus accrual 

(Decrease)/increase in trade and other payables 

Cash (utilised)/generated from operations 

Income tax received 

Net cash flow from operating activities 

Cash flows from investing activities 

Interest received 

Purchase of property, plant and equipment 

Transfer from/(to) current investments (funds on deposit) 

Disposal of subsidiaries 

Acquisition of subsidiaries, including settlement of deferred consideration 

Dividends received from investments 

Net cash flow from investing activities 

Cash flows from financing activities 

Dividend paid 

Net cash flow from financing activities 

Net (decrease)/increase in cash and cash equivalents 

Cash and cash equivalents at 1 January 

Net foreign exchange differences 

Cash and cash equivalents at 31 December 

Notes 

B 

B 

H 

2017 
£m 

25.5 

0.1 

2.3 

0.7 

(0.6) 

1.0 

4.1 

(35.1) 

0.3 

(0.2) 

(10.1) 

(3.5) 

(0.2) 

(15.7) 

1.0 

(14.7) 

0.2 

(1.0) 

24.0 

– 

(23.9) 

34.9 

34.2 

(20.1) 

(20.1) 

(0.6) 

0.7 

– 

0.1 

2016
£m

8.8

(0.2)

2.2

0.6

(1.5)

–

–

(25.6)

0.9

–

17.9

7.5

21.0

31.6

3.8

35.4

0.1

(0.8)

(24.0)

6.3

(23.4)

25.4

(16.4)

(18.5)

(18.5)

0.5

0.1

0.1

0.7

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Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the Parent Company 
financial statements 

A Statement of accounting policies 
The accounting policies applied in the preparation of the Parent Company financial statements are the same as those set out in note 2 to the 
consolidated financial statements, and have been applied consistently to all periods, with the addition of the following:  

Statement of compliance 
The financial statements of Clarkson PLC have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted 
by the European Union, IFRS IC interpretations and the Companies Act 2006 applicable to companies reporting under IFRSs. 

The Parent Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company income 
statement or statement of comprehensive income. The profit for the Parent Company for the year was £26.4m (2016: £11.8m). 

Investments in subsidiaries 
The Parent Company recognises its investments in subsidiaries at cost less provision for impairment. Income is recognised from these investments 
in relation to distributions received. 
B Property, plant and equipment 
31 December 2017 

Original cost 

At 1 January 2017 

Additions 

At 31 December 2017 

Accumulated depreciation 

At 1 January 2017 

Charged during the year 

At 31 December 2017 

Net book value at 31 December 2017 

31 December 2016 

Original cost 

At 1 January 2016 

Additions 

At 31 December 2016 

Accumulated depreciation 

At 1 January 2016 

Charged during the year 

At 31 December 2016 

Net book value at 31 December 2016 

Freehold and 
long leasehold 
properties 
£m

Leasehold 
improvements  
£m 

Office
 furniture and 
equipment 
£m

1.9

–

1.9

0.4

–

0.4

1.5

14.4 

– 

14.4 

1.5 

1.0 

2.5 

11.9 

5.5

1.0

6.5

2.1

1.3

3.4

3.1

Freehold and 
long leasehold 
properties 
£m

Leasehold 
improvements  
£m 

Office
 furniture and 
equipment 
£m

1.9

–

1.9

0.4

–

0.4

1.5

14.1 

0.3 

14.4 

0.5 

1.0 

1.5 

12.9 

5.0

0.5

5.5

0.9

1.2

2.1

3.4

Total 
£m

21.8

1.0

22.8

4.0

2.3

6.3

16.5

Total 
£m

21.0

0.8

21.8

1.8

2.2

4.0

17.8

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Financial statements Notes to the Parent Company financial statements continued 

C Investment property 

Cost 

At 1 January and 31 December 

Accumulated depreciation 

At 1 January and 31 December 

Net book value at 31 December 

2017 
£m 

0.6 

0.3 

0.3 

2016 
£m

0.6

0.3

0.3

The fair value of the investment property at 31 December 2017 was £0.9m (2016: £0.8m). This was based on valuations from an independent 
valuer who has the appropriate professional qualification and recent experience of valuing properties in the location and of the type being valued. 
D Investments in subsidiaries 

Cost 

At 1 January 

Disposals 

Impairment 

Transfer to subsidiary 

At 31 December 

2017 
£m 

2016 
£m

296.2 

302.5

(1.0) 

(4.1) 

– 

291.1 

–

–

(6.3)

296.2

2017 
During the year, two of the Company’s subsidiaries, Clarkson Paris and Clarksons Platou Securities Limited, were dissolved. In addition, an 
impairment was made in relation to the investment in Clarksons Platou (Italia) Srl to reduce its carrying amount to the value of its net assets. 

2016 
In 2016, an investment of £6.3m was transferred to a subsidiary, Clarkson Shipbroking Group Limited (CSGL). This investment was in relation to a 
previous acquisition where, subsequent to the acquisition, the employees transferred to a subsidiary of CSGL. 
E Deferred tax asset 

Employee benefits 

–  other employee benefits 

2017 
£m 

2.1 

2016 
£m

1.5

Included in the above are deferred tax assets of £0.4m (2016: £0.1m) which are due within one year. Deferred tax assets are recognised to the 
extent that the realisation of the related tax benefit through future taxable profits is probable. 

All deferred tax movements arise from the origination and reversal of temporary differences. 

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Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
 
 
 
F Trade and other receivables 

Prepayments and accrued income 

Owed by Group companies 

The Company has no trade receivables (2016: none). 

2017
£m

1.4

40.7

42.1

2016 
£m

0.4

40.3

40.7

As at 31 December 2017, the Company did not provide for related party receivables (2016: £nil). Further details of related party receivables are 
included in note S. 
G Investments 

Funds on deposit 

2017
£m

5.5

2016 
£m

29.4

The Company held £5.5m (2016: £19.4m) in a deposit with a 95 day notice period. At 31 December 2016, the Company also held £10.0m in a 
deposit with a maturity of six months. These deposits are held with an A-rated financial institution. 
H Cash and cash equivalents 

Cash at bank and in hand 

2017
£m

0.1

2016 
£m

0.7

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash equivalents is £0.1m  
(2016: £0.7m). 
I Interest-bearing loans and borrowings  

Loan notes 

2017
£m

–

2016 
£m

23.6

Interest-bearing loans and borrowings comprised the vendor loan notes issued as part of the consideration for the Platou acquisition. Interest was 
charged at 12 month sterling LIBOR plus 1.25%. Half the loan notes were repaid on 30 June 2016, the balance was repaid on 30 June 2017. 
J Trade and other payables 

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Current 

Owed to Group companies 

Accruals 

Deferred income 

Non-current 

Other payables 

Other payables are non-interest bearing and are normally settled on demand. 

Further details of related party payables are included in note S.  

2017
£m

7.7

14.0

–

21.7

2016 
£m

19.6

17.4

0.1

37.1

8.3

6.5

www.clarksons.com  

133 

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Financial statements Notes to the Parent Company financial statements continued 

K Deferred tax liability 

Employee benefits – on pension benefit asset 

Other temporary differences 

None of the above deferred tax liabilities are due within one year. 

All deferred tax movements arise from the origination and reversal of temporary differences. 
L Share-based payment plans 

Expense arising from equity-settled share-based payment transactions 

2017 
£m 

2.8 

0.4 

3.2 

2017  
£m 

0.7 

2016 
£m

1.2

0.3

1.5

2016 
£m

0.6

For more information on the Parent Company share-based payment plans, see note 21 of the consolidated financial statements. 
M Employee benefits 
The Company operates two defined benefit pension schemes, being the Clarkson PLC scheme and the Plowrights scheme, which are funded by 
the payment of contributions to separate trusts administered by Trustees who are required to act in the best interests of the schemes’ 
beneficiaries. All financial information provided in this note relates to the sum of the two separate schemes. The schemes’ assets are invested in a 
range of pooled pension investment funds managed by professional fund managers. 

Defined benefit pension arrangements give rise to open ended commitments and liabilities for the sponsoring company. As a consequence, the 
Company closed its original defined benefit section of the Clarkson PLC scheme to new entrants on 31 March 2004. This section was closed to 
further accrual for all existing members as from 31 March 2006. The Plowrights scheme was closed to further accrual from 1 January 2006. 

Every three years, a pension scheme must obtain from an actuary a report containing a valuation and a recommendation on rates of contribution. 
Triennial valuations for all the schemes have been prepared. 

The valuation of the Clarkson PLC scheme showed a pension surplus of £3.6m as at 31 March 2016. Clarkson PLC and the Trustees agreed to 
cease funding with effect from 1 October 2016. 

The valuation of the Plowrights scheme showed a pension deficit of £1.2m as at 31 March 2016. Clarkson PLC and the Trustees agreed to 
continue the funding plan, at the rate of £0.9m per annum, until 30 September 2017. 

The Company is exposed to a number of risks, the most significant of which are detailed below: 

Asset volatility 
The scheme liabilities are calculated using a discount rate set with reference to corporate bond yields; if scheme assets underperform this yield, 
this will create a deficit. Both schemes hold a significant proportion of equities, which are expected to outperform corporate bonds in the long-term 
while providing volatility and risk in the short-term. 

Changes in bond yields 
A decrease in corporate bond yields will increase scheme liabilities, although this will be partially offset by an increase in the value of the schemes’ 
bond holdings. 

Inflation risk 
Some of the Group pension obligations are linked to inflation. The majority of the schemes’ assets are either unaffected by (fixed interest bonds) or 
loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit. 

Life expectancy 
The majority of the schemes’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase 
in the schemes’ liabilities. 

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Other pension arrangements 
The Company operates a defined contribution pension scheme. Where required, the Company also makes contributions into this scheme. 

The Company incurs no material expenses in the provision of post-retirement benefits other than pensions. 

The following tables summarise amounts recognised in the balance sheet and the components of net benefit charge recognised in the  
income statement: 

Recognised in the balance sheet 

Fair value of schemes’ assets 

Present value of funded defined benefit obligations 

Effect of asset ceiling/minimum funding commitment in relation to the Plowrights scheme 

Net benefit asset recognised in the balance sheet 

2017
£m

191.1

(169.1)

22.0

(5.3)

16.7

2016 
£m

189.5

(178.5)

11.0

(4.1)

6.9

The net benefit asset disclosed above is the combined total of the two schemes. The Clarkson PLC scheme has a surplus of £16.7m (2016: £7.5m) 
and the Plowrights scheme has a deficit of £nil (2016: £0.6m). As there is no right of set-off between the schemes, the benefit asset of £16.7m 
(2016: £7.5m) is disclosed separately on the balance sheet from the benefit liability of £nil (2016: £0.6m).  

The surplus in the Clarkson PLC scheme is recognised, as there are future economic benefits available in the form of a reduction in future 
contributions to the defined contribution section of the scheme. There are no such future economic benefits in respect of the Plowright Scheme 
and therefore the surplus of £5.3m (2016: £3.5m) cannot be recognised. In addition, a minimum funding commitment of £nil (2016: £0.6 m) was 
recognised as arising from agreed future contributions to the Plowright Scheme. This is in accordance with the respective Trust Deed and Rules. 

A deferred tax liability on the benefit asset of £2.8m (2016: £1.2m) is shown in note K. 

Recognised in the income statement 

Recognised in other finance costs – pensions: 

Expected return on schemes’ assets 

Interest cost on benefit obligation and minimum funding commitment 

Recognised in administrative expenses: 

Scheme administrative expenses 

Net benefit credit/(charge) recognised in the income statement 

Recognised in the statement of comprehensive income 

Actual return on schemes’ assets 

Less: expected return on schemes’ assets 

Actuarial gain on schemes’ assets 

Actuarial gain/(loss) on defined benefit obligations 

Actuarial gain recognised in the statement of comprehensive income 

Tax charge on actuarial gain 

Asset ceiling/minimum funding commitment in relation to the Plowrights scheme 

Tax credit on asset ceiling/minimum funding commitment 

Net actuarial gain on employee benefit obligations 

Cumulative amount of actuarial gains/(losses) recognised in the statement of comprehensive income 

2017
£m

4.9

(4.7)

(0.1)

0.1

2017
£m

14.3

(4.9)

9.4

0.7

10.1

(1.7)

(1.1)

0.2

7.5

1.9

2016 
£m

6.0

(6.0)

(0.2)

(0.2)

2016 
£m

35.2

(6.0)

29.2

(19.7)

9.5

(2.1)

(2.6)

1.0

5.8

(8.2)

www.clarksons.com  

135 

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Financial statements Notes to the Parent Company financial statements continued 

M Employee benefits continued 
Schemes’ assets 

Equities* 

Government bonds* 

Corporate bonds* 

Property 

Investment funds 

Cash and other assets 

*  Based on quoted market prices. 

Net defined benefit asset 

Changes in the fair value of the net defined benefit asset are as follows: 

31 December 2017 

%

10.5

35.9

26.3

–

24.4

2.9

2017 

£m 

20.1 

68.5 

50.3 

– 

46.6 

5.6 

% 

48.0 

33.2 

12.8 

3.5 

– 

2.5 

2016

£m

91.0

62.8

24.3

6.6

–

4.8

100.0

191.1 

100.0 

189.5

At 1 January 2017 

Expected return on assets 

Interest costs 

Contributions 

Administrative expenses 

Benefits paid 

Actuarial gain/(loss) 

At 31 December 2017 

31 December 2016 

At 1 January 2016 

Expected return on assets 

Interest costs 

Contributions 

Administrative expenses 

Benefits paid 

Actuarial (loss)/gain 

At 31 December 2016 

Present value 
of obligation
£m

Fair value of 
plan assets
£m

(178.5)

189.5

–

(4.6)

–

–

13.3

0.7

(169.1)

4.9

–

0.7

(0.1)

(13.3)

9.4

191.1

Present value 
of obligation
£m

Fair value of 
plan assets
£m

(160.2)

160.1

–

(5.9)

–

–

7.3

(19.7)

(178.5)

6.0

–

1.7

(0.2)

(7.3)

29.2

189.5

Impact of 
minimum 
funding 
commitment 
£m 

(4.1) 

– 

(0.1) 

– 

– 

– 

(1.1) 

(5.3) 

Impact of 
minimum  
funding 
requirement 
£m 

(1.4) 

– 

(0.1) 

– 

– 

– 

(2.6) 

(4.1) 

Total 
£m 

11.0 

4.9 

(4.6) 

0.7 

(0.1) 

– 

10.1 

22.0 

Total 
£m 

(0.1) 

6.0 

(5.9) 

1.7 

(0.2) 

– 

9.5 

11.0 

Total
£m

6.9

4.9

(4.7)

0.7

(0.1)

–

9.0

16.7

Total
£m

(1.5)

6.0

(6.0)

1.7

(0.2)

–

6.9

6.9

The Company expects, based on the valuations and funding requirements including expenses, to contribute £0.1m to its defined benefit pension 
schemes in 2018 (2017: £0.9m). 

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The principal valuation assumptions are as follows: 

Rate of increase in pensions in payment 

Price inflation (RPI) 

Price inflation (CPI) 

Discount rate for scheme liabilities 

2017
%

2016 
%

3.0 – 7.0

3.2 – 7.0

3.2

2.2

2.5

3.3

2.3

2.7

The mortality assumptions used to assess the defined benefit obligation at 31 December 2017 and 2016 is based on the ‘SAPS Light’ (‘SAPS’ 
for the Stewart scheme) standard mortality tables published by the actuarial profession in 2014. These tables have been adjusted to allow for 
anticipated future improvements in life expectancy using the standard projection model published in 2016 (31 December 2016: model published 
in 2015). Examples of the assumed future life expectancy are given in the table below: 

Post-retirement life expectancy on retirement at age 65: 

Pensioners retiring in the year 

Pensioners retiring in 20 years’ time 

–  male 
–  female 
–  male 
–  female 

Experience adjustments 

Experience gain on schemes’ assets 

Gain on schemes’ liabilities due to changes in demographic assumptions 

Gain/(loss) on schemes’ liabilities due to changes in financial assumptions 

Experience gains on schemes’ liabilities 

Loss on asset ceiling/minimum funding commitment 

Total actuarial gain 

Additional years

2017

2016

23.1

24.2

24.5

25.7

2017
£m

9.4

0.2

0.5

–

(1.1)

9.0

23.1

24.3

24.5

25.8

2016
£m

29.2

13.9

(37.5)

3.9

(2.6)

6.9

Sensitivities 
The table below shows the sensitivity of the defined benefit obligation to changes to the most significant actuarial assumptions. The impact of changes 
to each assumption is shown in isolation although, in practice, changes to assumptions may occur at the same time and can either offset or compound 
the overall impact on the defined benefit obligation. A change of 0.25% is deemed appropriate given the movement in assumptions in the year. The 
sensitivities have been calculated using the same methodology as the main calculations. The weighted average duration of the defined obligation is 
17 years. 

Discount rate for scheme liabilities 

Price inflation (RPI) 

Change in 
assumption

Change in 
defined benefit 
obligation

+0.25%

-0.25%

+0.25%

-0.25%

-3.9%

+4.2%

+3.7%

-3.5%

An increase of one year in the assumed life expectancy for both males and females would increase the defined benefit obligation by 3.8% 
(2016: 3.8%). 

www.clarksons.com  

137 

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Financial statements Notes to the Parent Company financial statements continued 

N Share capital 

Ordinary shares of 25p each, issued and fully paid: 

At 1 January 

Additions 

At 31 December 

Number

30,233,179

–

30,233,179

2017 
£m 

7.6 

– 

7.6 

Number 

30,231,767 

1,412 

30,233,179 

2016
£m

7.6

–

7.6

In 2016 the Company issued 1,412 shares in relation to the 2012 ShareSave scheme. The difference between the exercise price of £10.82 and the 
nominal value of £0.25 was taken to the share premium account, see note O. 
O Other reserves 
31 December 2017 

At 1 January 2017 

Employee share schemes: 

Share-based payments expense 

Transfer to profit and loss on vesting 

Total employee share schemes 

At 31 December 2017 

31 December 2016 

At 1 January 2016 

Share issues 

Employee share schemes: 

Share-based payments expense 

Transfer to profit and loss on vesting 

Total employee share schemes 

At 31 December 2016 

Nature and purpose of other reserves 

Share 
premium 
£m

29.1

–

–

–

29.1

Share 
premium 
£m

29.0

0.1

–

–

–

29.1

Employee 
benefits 
reserve 
£m

Capital 
redemption 
reserve  
£m 

Merger  
reserve 
£m 

177.5 

– 

– 

– 

Total 
£m

210.6

1.0

(0.7)

0.3

2.0 

– 

– 

– 

2.0 

177.5 

210.9

Capital 
redemption 
reserve  
£m 

2.0 

– 

– 

– 

– 

Merger  
reserve 
£m 

177.5 

– 

– 

– 

– 

Total 
£m

212.5

0.1

0.8

(2.8)

(2.0)

2.0 

177.5 

210.6

2.0

1.0

(0.7)

0.3

2.3

Employee 
benefits 
reserve 
£m

4.0

–

0.8

(2.8)

(2.0)

2.0

Employee benefits reserve 
The employee benefits reserve is used to record the value of equity-settled share-based payments provided to employees.  

Capital redemption reserve 
The capital redemption reserve arose on previous share buy-backs by the Company. 

Merger reserve 
This comprises the premium on the share placing in November 2014 and the shares issued in February 2015 as part of the Platou acquisition. 
No share premium is recorded in the financial statements, through the operation of the merger relief provisions of the Companies Act 2006. 

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Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
 
P Financial commitments and contingencies 
Operating lease commitments 
The Company has entered into a commercial lease in relation to land and buildings on the basis that it is not in the Company’s best interests to 
purchase these assets. The lease has a life of 15 years with renewal terms included in the contract. There are no restrictions placed upon the 
Company by entering into this lease. 

Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows: 

Within one year 

After one year but not more than five years 

After five years 

2017
£m

4.7

18.9

31.9

55.5

2016 
£m

2.1

18.8

36.5

57.4

The Company has sublet space in its property. The future minimum sublease payments expected to be received under non-cancellable sublease 
agreements as at 31 December 2017 is £0.4m (2016: £1.1m). 

Contingencies 
The Company has given no financial commitments to suppliers (2016: none). 

The Company has given no guarantees (2016: none). 

From time to time the Company may be engaged in litigation in the ordinary course of business. The Company carries professional indemnity 
insurance. There are currently no liabilities expected to have a material adverse financial impact on the Company’s results or net assets. 

The Company maintained throughout the year directors’ and officers’ liability insurance in respect of itself and its Directors. 
Q Financial risk management objectives and policies 
The Company’s principal financial liabilities comprise loans from Group companies and accruals. The Company has various financial assets such 
as current asset investments and loans to Group companies, which arise directly from its operations. 

The Company has not entered into any derivative transactions. 

The main risks arising from the Company’s financial instruments are credit risk and liquidity risk. 

Credit risk 
With respect to credit risk arising from cash and cash equivalents and current investments, the Company’s exposure to credit risk arises 
from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. 

Liquidity risk 
The Company monitors its risk to a shortage of funds using projected cash flows from operations. 

The tables below summarise the maturity profile of the Company’s financial liabilities at 31 December based on contractual 
undiscounted payments. 

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31 December 2017 

Trade and other payables 

31 December 2016 

Interest-bearing loans and borrowings 

Trade and other payables 

On 
demand
£m

–

Less than 
3 months
£m

–

On 
demand
£m

Less than 
3 months
£m

–

–

–

–

–

–

3 to 12  
months 
£m 

– 

3 to 12  
months 
£m 

23.9 

– 

23.9 

1 to 5 
years
£m

8.3

1 to 5 
years
£m

–

6.5

6.5

Capital management 
For information on the Parent Company capital management objectives, policies and processes, see note 26 of the consolidated 
financial statements. 

www.clarksons.com  

Total
£m

8.3

Total
£m

23.9

6.5

30.4

139 

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Financial statements Notes to the Parent Company financial statements continued 

R Financial instruments 
The classification of financial assets and liabilities at 31 December is as follows: 

Financial assets 

Owed by Group companies 

Investments 

Cash and cash equivalents 

Financial liabilities 

Loan notes 

Other payables 

Owed to Group companies 

Accruals 

Loans and 
receivables 
£m

40.7

5.5

0.1

46.3

Amortised 
cost 
£m

–

8.3

7.7

14.0

30.0

2017 

Total  
£m 

40.7 

5.5 

0.1 

46.3 

2017 

Total  
£m 

– 

8.3 

7.7 

14.0 

30.0 

Loans and 
receivables  
£m 

40.3 

29.4 

0.7 

70.4 

Amortised  
cost  
£m 

23.6 

6.5 

19.6 

17.4 

67.1 

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: 

Management fees charged 

Rent receivable 

Dividends received 

Transfer of investment in subsidiaries 

Balances with subsidiaries at 31 December were as follows: 

Amounts owed by related parties 

Amounts owed to related parties 

There were no terms or conditions attached to these balances. 

2017 
£m 

3.1 

4.3 

34.9 

– 

2017  
£m 

40.7 

(7.7) 

2016

Total 
£m

40.3

29.4

0.7

70.4

2016

Total 
£m

23.6

6.5

19.6

17.4

67.1

2016 
£m

3.1

4.1

25.4

(6.3)

2016 
£m

40.3

(19.6)

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 28 to the consolidated financial statements. 

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CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
 
 
 
 
T Subsidiaries 
The Parent Company had the following subsidiaries at 31 December 2017: 

Company 
Clarkson Capital Markets LLC 

Registered address 
211 East 7th Street, Suite 620, Austin, 
TX 78701, USA 

Principal activity 
Provision of advice for shipping-related 
projects 

Clarksons Cloud Limited 

* 

Developing and supporting electronic 
products and services for the 
shipping industry 

Clarkson Morocco Sarl 

Clarkson Port Services Limited 

Clarkson Research Services Limited 

92 Boulevard d’Anfa, Cote Boulevard, 
5e étage, Casablanca 20100, Morocco 

Shipbroking 

* 

* 

Provision of ship agency and port 
services 

Provision of research services and 
products relating to shipping and 
offshore 

Clarkson Shipbroking (Shanghai)  
Co Limited 

Room 111, 3# Building, No. 170 Huo 
Shan Road, Shanghai, China 200082 

Shipbroking 

% of 
equity 
shares

Direct or 
indirect 
Indirect  100 

Indirect  100 

Indirect  100 

Indirect  100 

Indirect  100 

Indirect  100 

Clarkson Shipping Agency 

Clarkson Shipping Services India  
Private Limited 

Clarkson Valuations Limited 

Clarksons Platou (Africa) Limited 

Clarksons Platou (Australia) Pty Limited 

Clarksons Platou (Brasil) Ltda 

Clarksons Platou (Hellas) Limited **** 

Tower B, 2nd Floor, 2 El Hegaz Street, 
Roxi, Heliopolis, Cairo, Egypt 

507-508 The Address, 1 Golf Course 
Road, Sector 56, Gurgaon 122011, 
India 

Shipping and maritime agency services 

Indirect 

***48 

Shipbroking 

Indirect  100 

* 

* 

Level 10, 16 St. George's Terrace, 
Perth, WA 6000, Australia 

Avenida Rio Branco, 89 Sala 1601, 
Centro Rio de Janeiro, 20040-004, 
Brazil 

Trust Company Complex, Ajeltake 
Road, Ajeltake Island, Majuro, Marshall 
Islands MH96960 

Provision of valuation services  
to the shipping industry 

Shipbroking 

Shipbroking 

Shipbroking 

Indirect  100 

Indirect  100 

Indirect  100 

Indirect  100 

Shipbroking 

Indirect  100 

Clarksons Platou (Italia) Srl 

Piazza R. Rossetti 3A, 16129 Genoa, 
Italy 

Shipbroking 

Direct 

100 

Clarksons Platou (Korea) Company Limited  44F Three IFC, 10 Gukjegeumyung-ro, 

Shipbroking 

Indirect  100 

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Yeongdeungpo-gu, Seoul, 07326, 
Republic of Korea 

Clarksons Platou (Nederland) BV 

De Coopvaert, 6th Floor, Blaak 522, 
3011 TA, Rotterdam, The Netherlands 

Shipbroking 

Clarksons Platou (Offshore) Limited 

* 

Shipbroking 

Clarksons Platou (South Africa) (Pty) Limited  2 Amadina Road, Douglasdale Ext 68, 

Shipbroking 

Clarksons Platou (Sweden) AB 

Sandton 2146, South Africa 

Uppsala Castle, 75237 Uppsala, 
Sweden 

Clarksons Platou AS 

** 

Clarksons Platou Asia Limited ***** 

Room 3209-14 Sun Hung Kai Centre, 
30 Harbour Road, Wanchai, HK  

Shipbroking 

Shipbroking 

Shipbroking 

Indirect  100 

Indirect  100 

Indirect  100 

Indirect  100 

Direct 

100 

Indirect  100 

* 

   Commodity Quay, St. Katharine Docks, London E1W 1BF, UK 

**    Munkedamsveien 62C, 0270 Oslo, Norway 

***    100% controlled 

***** Also has a branch in China 

141 

**** Also has a branch in Greece 

Clarkson PLC Annual Report 2017 

141

www.clarksons.com 
 
 
 
 
 
 
 
 
 
 
 
Financial statements Notes to the Parent Company financial statements continued 

T Subsidiaries continued 

Company 
Clarksons Platou Asia Pte. Limited 

Registered address 
50 Raffles Place, #32-01 Singapore 
Land Tower, Singapore 048623 

Principal activity 
Shipbroking 

% of 
equity 
shares

Direct or 
indirect 
Indirect  100 

Clarksons Platou Commodities USA LLC 

Clarksons Platou DMCC 

211 East 7th Street, Suite 620, Austin, 
TX 78701, USA 

14th floor Gold Tower, Cluster 1, 
Jumeirah Lakes Towers, PO Box 
102929, Dubai, UAE 

Introducing broker for LPG swaps 

Indirect  100 

Shipbroking 

Indirect  100 

Clarksons Platou Drift AS 

Clarksons Platou Futures Limited *** 

** 

* 

Provision of property-related services 

Indirect  25 

Brokerage of shipping-related derivative 
financial instruments 

Direct 

100 

Clarksons Platou GmbH 

Clarksons Platou Japan K.K. 

Johannisbollwerk 20, 5th Floor, 
Hamburg 20459, Germany 

2nd Floor Azabu KF Building, 1-9-7 
Azabu Juban, Minato-Ku, Tokyo 106-
0045, Japan 

Shipbroking 

Shipbroking 

Indirect  100 

Indirect  100 

Clarksons Platou Legal Services Limited 

* 

Provision of legal services to the 
shipping industry 

Indirect  100 

Clarksons Platou Offshore (Asia) Pte. Limited  12 Marina View, #29-01 Asia Square 

Shipbroking 

Indirect  100 

Tower 2, Singapore 018961 

Clarksons Platou Project Finance AS 

Clarksons Platou Project Sales AS 

** 

** 

Shipping and offshore project 
syndication 

Equity placements for shipping, offshore 
and real estate projects and secondary 
trading of project ownership 

Indirect 

50.02

Indirect 

41 

Clarksons Platou Property Management AS 

** 

Provision of property-related services 

Indirect 

Clarksons Platou Real Estate AS 

Clarksons Platou Securities AS 

** 

** 

Clarksons Platou Securities Inc 

280 Park Avenue, 21st Floor, 
New York, NY 10017, USA 

Real estate project syndication 

Indirect 

Equity and fixed income sales and 
trading, research & corporate finance 
services, including equity and debt 
capital markets and M&A transactions 

Equity and fixed income sales and 
trading, research & corporate finance 
services, including equity and debt 
capital markets and M&A transactions 

Clarksons Platou Shipbroking  
(Switzerland) SA 

Rue de la Fontaine, 1204 Geneva, 
Switzerland 

Shipbroking 

Clarksons Platou Shipping Services  
USA LLC 

211 East 7th Street, Suite 620, Austin, 
TX 78701, USA 

Shipbroking 

Clarksons Platou Structured Asset Finance 
Limited 

Clarksons Platou Tankers AS 

Company Event Management Limited 

* 

** 

* 

Provision of advice on finance 
structuring for shipping-related projects 

Direct 

100 

Shipbroking 

Event management services 

Gibb Tools Limited 

271 King Street, Aberdeen AB24 5AN, 
UK 

Supply of tools for industrial, 
commercial and retail use 

H. Clarkson & Company Limited 

LNG Shipping Solutions Limited 

* 

* 

Shipbroking 

Shipbroking 

*  Commodity Quay, St. Katharine Docks, London E1W 1BF, UK 

**    Munkedamsveien 62C, 0270 Oslo, Norway 

*** Also has a branch in Singapore 

25 

31 

Indirect 

100 

Indirect 

100 

Indirect 

100 

Indirect 

100 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

100 

100 

100 

100 

100 

142 

142

CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
S

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Company 
Manfin Consult AS 

Maritech Limited 

Norwegian Marine Services AS 

Shiplease Management AS 

Registered address 
** 

* 

** 

** 

Principal activity 
Shipping and offshore project 
syndication 

Developing and supporting electronic 
products and services for the 
shipping industry 

Shipping and offshore project 
syndication 

Shipping and offshore project 
syndication 

Tokyo Shipping and Trading Limited 

Room 3209-14 Sun Hung Kai Centre, 
30 Harbour Road, Wanchai, HK 

Shipbroking 

Direct or 
indirect 
Indirect 

% of 
equity 
shares
50.1 

Indirect 

100 

Indirect 

50.02

Indirect 

50.02

Indirect 

100 

Clarkson Australia Holdings Pty Limited 

Level 10, 16 St. George's Terrace, 
Perth, WA 6000, Australia 

Holding company 

Indirect 

100 

Clarkson Capital Limited 

Clarkson Holdings Limited 

Clarkson Overseas Shipbroking Limited 

Clarkson Research Holdings Limited 

Clarkson Shipbroking Group Limited 

Clarkson Shipping Investments Limited 

Clarksons Platou (USA) Inc 

* 

* 

* 

* 

* 

* 

251 Little Falls Drive, Wilmington, DE 
19808, USA 

Genchem Holdings Limited 

* 

Holding company 

Holding company 

Holding company 

Holding company 

Holding company 

Holding company 

Holding company 

Holding company 

Afromar Properties (Pty) Limited 

Bonus Plus Investments Limited 

2 Amadina Road, Douglasdale Ext 68, 
Sandton 2146, South Africa 

Non-trading 

Room 3209-14 Sun Hung Kai Centre, 
30 Harbour Road, Wanchai, HK 

Non-trading 

Boxton Holding AS 

** 

Clarkson Logistics (HK) Limited 

Room 3209-14 Sun Hung Kai Centre, 
30 Harbour Road, Wanchai, HK 

Non-trading 

Non-trading 

Clarksons Platou Futures Pte. Limited 

12 Marina View, #29-01 Asia Square 
Tower 2, Singapore 018961 

Non-trading 

Clarkson Port Services Ireland Limited 

6 Northbrook Road, Ranelagh,  
Dublin 6, Ireland 

Clarkson Property Holdings Limited 

* 

Diligent Challenger Limited 

RS Platou (Hellas) Limited 

RS Platou (USA) Inc 

RS Platou Africa Limited 

RS Platou Geneve (Dry) SA 

RS Platou Houston Inc 

Non-trading 

Non-trading 

Non-trading 

Non-trading 

Room 3209-14 Sun Hung Kai Centre, 
30 Harbour Road, Wanchai, HK 

58 Arch. Makarios III Avenue, Iris 
Tower, Office 602, Nicosia, Cyprus 

701 Brazos Street, Suite 1050, Austin, 
TX 78701, USA 

Non-trading 

First Island House, 19-21 Peter Street, 
St. Helier, Jersey, Channel Islands 

Non-trading 

20 Route de Pré-Bois, CP 1852, 1215 
Geneva 15, Switzerland 

Non-trading 

1999 Bryan Street, Suite 900, Dallas, 
TX 75201, USA 

Non-trading 

Direct 

Indirect 

Indirect 

Direct 

Direct 

Direct 

Indirect 

100 

100 

100 

100 

100 

100 

100 

Direct 

100 

Indirect 

100 

Indirect 

100 

Indirect 

Indirect 

100 

100 

Indirect 

100 

Indirect 

100 

Direct 

Indirect 

100 

100 

Indirect 

100 

Indirect 

100 

Indirect 

100 

Indirect 

100 

Indirect 

100 

*  Commodity Quay, St. Katharine Docks, London E1W 1BF, UK 

**   Munkedamsveien 62C, 0270 Oslo, Norway 

www.clarksons.com  

143 

143

www.clarksons.com 
 
 
 
 
 
 
Financial statements Notes to the Parent Company financial statements continued 

T Subsidiaries continued 

Company 
RS Platou LLP 

Stewart Offshore Ghana Limited 

Stewart Offshore Services (Jersey) Limited 

Calypso Shipping Investments Limited 

Clarkson Dry Cargo Limited 

Clarkson Ewings Limited 

Registered address 
44th Floor The Leadenhall Building, 122 
Leadenhall Street, London  
EC3V 4AB, UK  

Wesley House, Liberia Road, PO Box 6274, 
Accra, Ghana 

First Island House, 19-21 Peter Street, St. 
Helier, Jersey, Channel Islands 

* 

* 

Hurst House, 15-19 Corporation Square, 
Belfast BT1 3AJ, UK 

Principal activity 
Non-trading 

Direct or 
indirect 
Indirect 

% of 
equity 
shares
51 

Non-trading 

Indirect 

75 

Non-trading 

Indirect 

100 

Dormant 

Dormant 

Dormant 

Indirect 

Indirect 

Indirect 

100 

100 

100 

Clarkson Investment Services (DIFC) Limited  Level 6, Liberty House, Dubai International 

Dormant 

Indirect 

100 

Financial Centre, PO Box 283869, Dubai, UAE 

Clarkson IQ Limited 

Clarkson Logistics Limited 

Clarkson Market Analysis Limited 

Clarkson Sale and Purchase Limited 

Clarkson Shipbrokers Limited 

* 

* 

* 

* 

* 

Clarkson Shipping Services Acquisition USA 
LLC 

1333 West Loop South, Suite 1525, Houston, 
TX 77027, USA 

Clarkson Tankers Limited 

Coastal Shipping Limited 

* 

* 

EnShip Limited 

303 King St, Aberdeen AB24 5AP, UK 

Halcyon Shipping Limited 

J. O. Plowright & Co. (Holdings) Limited 

Levelseas Limited 

LNG UK PLC 

Marinet (Ship Agencies) Limited 

Michael F. Ewings (Shipping) Limited 

Oilfield Publications Limited 

RS Platou AS 

RS Platou Economic Research AS 

RS Platou Offshore AS 

RS Platou Shipbrokers AS 

Samuel Stewart & Co (London) Limited 

Shipvalue.net Limited 

Small and Co. (Shipping) Limited 

Stewart Offshore Services Limited 

The Stewart Group Limited 

Waterfront Services Limited 

* 

* 

* 

* 

* 

Hurst House, 15-19 Corporation Square, 
Belfast BT1 3AJ, UK 

* 

** 

** 

** 

** 

* 

* 

* 

* 

* 

Hurst House, 15-19 Corporation Square, 
Belfast BT1 3AJ, UK 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Dormant 

Indirect 

100 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

100 

100 

100 

100 

100 

Indirect 

100 

Indirect 

100 

Indirect 

Indirect 

Direct 

Indirect 

Direct 

Indirect 

Indirect 

100 

100 

100 

100 

100 

100 

100 

Indirect 

100 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

Indirect 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

*  Commodity Quay, St. Katharine Docks, London E1W 1BF, UK 

**   Munkedamsveien 62C, 0270 Oslo, Norway 

144 

144

CLARKSON PLC ANNUAL REPORT 2017

Clarkson PLC Annual Report 2017 

 
 
 
 
Other information

Glossary

Aframax

AHTS

Ballast voyage

Bareboat charter

BHP

Bulk cargo

Bunkers

Cabotage

A tanker size range defined by Clarksons as between 85-125,000 dwt.

Anchor Handling Tug and Supply vessel. Used to tow offshore drilling and production units to location 
and deploy their anchors, and also perform a range of other support roles.

A voyage with no cargo on board to get a ship in position for the next loading port or docking. On voyage 
the ship is said to be in ballast.

A hire or lease of a vessel from one company to another (the charterer), which in turn provides crew, 
bunkers, stores and pays all operating costs.

Brake horse power.

Unpackaged cargoes such as coal, ore and grain.

A ship’s fuel.

Transport of goods between two ports or places located in the same country, often restricted to 
domestic carriers.

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Capesize (cape)

Bulk ship size range defined by Clarksons as 100,000 dwt or larger.

Capesize 5tc

An index derived from an average of five capesize time charter rates, published by the Baltic Exchange.

Cbm

Cgt

Cubic metres. Used as a measurement of cargo capacity for ships such as gas carriers.

Compensated gross tonnage. This unit of measurement was developed for measuring the level of 
shipbuilding output and is calculated by applying a conversion factor, which reflects the amount of work 
required to build a ship, to a vessel’s gross registered tonnage.

Charterer

Cargo owner or another person/company who hires a ship.

Charter-party

Transport contract between shipowner and shipper of goods.

ClarkSea index

A weighted average index of earnings for the main vessel types where the weighting is based on the 
number of vessels in each fleet sector.

Clean products

Refined oil products such as naphtha.

COA

Contract of Affreightment. An agreement to transport a defined amount of cargo at an agreed freight 
rate, with the shipowner choosing the ship.

Combination carrier

Ship capable of carrying oil or dry cargo, thereby increasing the productivity of the vessel. Typically 
termed OBO or Ore/Oiler.

Containership

A cargo ship specifically equipped with cell guides for the carriage of containerised cargo.

Crude oil

CST

Unrefined oil.

Centistokes. A measure of viscosity used to classify marine fuels.

Daily operating costs

The costs of a vessel’s technical operation, crewing, insurance and maintenance, but excluding costs  
of financing, referred to in the industry as opex.

Demurrage

Money paid to shipowner by charterer, shipper or receiver for failing to complete loading/discharging 
within time allowed according to charter-party.

Dirty products

Less refined oil products such as fuel oil.

Dry (market)

Generic term for the bulk market.

Dry cargo carrier

A ship carrying general cargoes or sometimes bulk cargo.

Dry docking

To put a vessel into a dry dock for inspection, repair and maintenance. Normally done on a regular 
basis.

Dwt

E&P 

Deadweight tonne. A measure expressed in metric tonnes (1,000 kg) or long tonnes (1,016 kg)  
of a ship’s carrying capacity, including bunker oil, fresh water, crew and provisions. This is the most 
important commercial measure of the capacity.

Exploration and Production. 

145

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Other information Glossary continued

FFA

FOB

Forward order  
book (FOB)

Freight rate

FSRU

FSU 

Handysize

Handymax

IMO

LGC

LNG

LPG

LR1

LR2

MGC

MR

MT

OBO

Forward Freight Agreement. A cash contract for differences requiring no physical delivery based on 
freight rates on standardised trade routes.

Free on Board. Cost of the delivery of goods is the seller’s responsibility only up to the port of loading.  
The freight is paid for by the buyer of the goods.

Estimated commissions collectable over the duration of the contract as principal payments fall due.  
The forward order book is not discounted.

The agreed charge for the carriage of cargo expressed per tonne of cargo (also Worldscale in the tanker 
market) or as a lump sum.

Floating Storage and Regasification Unit. This vessel type acts as a floating discharge terminal, typically 
shore-side within a port, to allow a discharge solution for LNG carriers in ports which may only have 
seasonal gas import needs, or need a lower-cost solution than a land-based regasification terminal.

Floating Storage Unit. A tanker that typically stores oil associated with an offshore field. 

Bulk carrier size range defined by Clarksons as 10-40,000 dwt or tanker size range defined by 
Clarksons as 10-55,000 dwt.

Bulk carrier size range defined by Clarksons as 40-65,000 dwt. Includes supramax and ultramax 
vessels.

International Maritime Organisation. A United Nations agency devoted to shipping.

Large Gas Carrier. Vessel defined by Clarksons as 45-65,000 cbm.

Liquefied Natural Gas.

Liquefied Petroleum Gas.

Long Range 1. Coated products tanker defined by Clarksons as 55,000-85,000 dwt.

Long Range 2. Coated products tanker defined by Clarksons as 85,000-125,000 dwt.

Mid-sized Gas Carrier. Vessel defined by Clarksons as 25-45,000 cbm.

Medium Range. A product tanker of around 45-55,000 dwt.

Metric tonne (see tonne).

Oil, Bulk, Ore carrier (see combination carrier).

Oil tanker

Tanker carrying crude oil or refined oil products.

OPEC

OSV

OTC

Panamax

Organisation of the Petroleum Exporting Countries.

Offshore Support Vessels. Such as AHTSs and PSVs. Ships engaged in providing support to offshore 
rigs and oil platforms.

Over the counter. Directly between two parties, without any supervision of an exchange.

Bulk carrier size range defined by Clarksons as 65-100,000 dwt or tanker size range defined as 
55-85,000 dwt. Containership size range defined as vessels 3,000+ TEU capable of transiting the old 
locks at the Panama Canal.

146

CLARKSON PLC ANNUAL REPORT 2017

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Parcel tanker

Tanker equipped to carry several types of cargo simultaneously.

Product tanker

Tanker that carries refined oil products.

PSV

Reefer

Ro-Ro

SCFI 

Semi-ref

Shipbroker

Platform Supply Vessel. Used in supporting offshore rigs and platforms by delivering materials to them 
from onshore.

A vessel capable of handling refrigerated cargoes such as meat, fish and fruit.

Ship with roll-on roll-off ramps for wheeled or tracked cargo.

Shanghai Containerised Freight Index. An index produced by the Shanghai Shipping Exchange 
reflecting movements in spot container freight rates from Shanghai to a selection of destinations around 
the world. 

Semi-refrigerated gas carrier. A ship which employs a combination of refrigeration and pressurisation  
to maintain the transported gas in liquid form.

A person/company who on behalf of a shipowner/shipper negotiates a deal for the transportation of 
cargo at an agreed price. Shipbrokers also act on behalf of shipping companies in negotiating the 
purchasing and selling of ships, both secondhand tonnage and newbuilding contracts.

Shuttle tanker

Tanker carrying oil from offshore fields to terminals.

Spot business

Broker commission negotiated and invoiced within the same business year.

Spot market

Suezmax

Supramax

SURF

TEU

Time charter

Short-term contracts for voyage, trip or short-term time charters, normally no longer than three months 
in duration.

A tanker size range defined by Clarksons as 125-200,000 dwt.

A sub-sector of the wider handymax bulk carrier fleet defined by Clarksons as 50-60,000 dwt.

Subsea, Umbilicals, Risers and Flowlines. A term for the type of contract often agreed between an 
offshore construction services company and a field operator for construction work on a field which will 
need subsea production infrastructure.

20-foot Equivalent Units. The unit of measurement of a standard 20 foot long container.

An arrangement whereby a shipowner places a crewed ship at a charterer’s disposal for a certain  
period. Freight is customarily paid periodically in advance. The charterer also pays for bunker, port and  
canal charges.

Time Charter  
Equivalent (TCE)

Gross freight income less voyage costs (bunker, port and canal charges), usually expressed in  
US$ per day.

Tonne

ULCC

Ultramax

VLCC

VLGC

Imperial/Metric tonne of 2,240 lbs/1,000 kilos (2,204 lbs).

Ultra Large Crude Carrier. Tanker of more than 320,000 dwt.

A modern sub-sector of the wider handymax bulk carrier fleet, defined by Clarksons as 60-65,000 dwt, 
including some vessels up to 70,000 dwt.

Very Large Crude Carrier. Tanker over 200,000 dwt.

Very Large Gas Carrier. Vessel defined by Clarksons as 65,000 cbm or larger.

Voyage charter

The transportation of cargo from port(s) of loading to port(s) of discharge. Payment is normally per 
tonne of cargo, and the shipowner pays for bunker, port and canal charges.

Voyage costs

Costs directly related to a specific voyage (e.g. bunker, port and canal charges).

Wet (market) 

Generic term for the tanker market.

147

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Other information

Five year financial summary

Income statement

Revenue
Cost of sales
Trading profit
Administrative expenses
Operating profit

Profit before taxation
Taxation
Profit for the year

*  Before exceptional items and acquisition related costs.

Cash flow

Net cash inflow from operating activities

Balance sheet

Non-current assets
Inventories
Trade and other receivables (including income tax receivable)
Current asset investments
Cash and cash equivalents
Current liabilities
Non-current liabilities
Net assets

Statistics

Earnings per share – basic*
Dividend per share

*  Before exceptional items and acquisition related costs.

2017*
£m
324.0 
(9.7) 
314.3 
(264.8) 
49.5 

50.2 
(12.0) 
38.2 

2016*
£m
306.1
(8.9)
297.2
(253.0)
44.2

44.8
(11.2)
33.6

2015*
£m
301.8
(10.3)
291.5
(242.0)
49.5

50.5
(12.6)
37.9

2014*
£m
237.9
(13.3)
224.6
(191.3)
33.3

33.8
(8.7)
25.1

2017 
£m
48.0 

2016 
£m
45.6

2015 
£m
24.7

2014 
£m
37.8

2017 
£m
355.6 
0.7 
61.5 
5.8 
161.7 
(140.3) 
(21.6) 
423.4 

2016 
£m
357.9
0.7
59.0
29.8
154.0
(172.4)
(22.3)
406.7

2015 
£m
310.7
0.9
63.0
5.7
168.4
(168.5)
(39.3)
340.9

2014 
£m
65.7
1.4
44.2
25.3
152.9
(108.1)
(14.1)
167.3

2017
116.8p 
73p 

2016
105.2p
65p

2015
121.9p
62p

2014
134.2p
60p

2013*
£m
198.0
(6.2)
191.8
(166.9)
24.9

25.1
(6.9)
18.2

2013 
£m
22.8

2013 
£m
63.9
0.9
47.8
25.2
96.9
(89.4)
(7.6)
137.7

2013
98.0p
56p

148

CLARKSON PLC ANNUAL REPORT 2017

 
 
 
 
 
 
 
 
 
 
Principal trading offices

United Kingdom 
London 
Registered office 
Clarkson PLC 
Commodity Quay 
St. Katharine Docks 
London 
E1W 1BF 
United Kingdom 
Registered number: 1190238
Contact: Andi Case 

 +44 20 7334 0000 

www.clarksons.com

Ipswich 
Maritime House 
19a St. Helen’s Street 
Ipswich 
IP4 1HE 
United Kingdom
Contact: David Rumsey 
 +44 1473 297 300

Ledbury 
15 The Homend 
Ledbury 
Herefordshire 
HR8 1BN 
United Kingdom
Contact: Shaun Sturge 
 +44 1531 634 561

Aberdeen 
303 King Street 
Aberdeen 
Aberdeenshire 
AB24 5AP 
United Kingdom
Contact: Innes Cameron 
 +44 1224 211 500

271 King Street 
Aberdeen 
Aberdeenshire 
AB24 5AN 
United Kingdom
Contact: Sean Maclean 
 +44 1224 620 944

City Wharf 
Shiprow 
Aberdeen 
Aberdeenshire 
AB11 5BY 
United Kingdom
Contact: Paul Love 

 +44 1224 256 600

Belfast 
Hurst House 
15-19 Corporation Square 
Belfast 
BT1 3AJ 
United Kingdom
Contact: Michael Ewings 
 +44 2890 242 242

Australia 
Melbourne 
Level 2 
112 Wellington Parade 
East Melbourne 
VIC 3002 
Australia
Contact: Matthew Russell 

 +61 3 9867 6800

Perth 
Level 10 
16 St. Georges Terrace 
Perth 
WA 6000 
Australia
Contact: Mark Rowland 
 +61 8 6210 8700

Brazil 
16th Floor Manhattan Tower 
Avenida Rio Branco 89 
Suite 1601 
Rio de Janeiro 
20.040-004 
Brazil
Contact: Jens Behrendt 
 +55 21 3923 8803

Hong Kong 
3209-3214 Sun Hung Kai Centre 
30 Harbour Road 
Wanchai 
Hong Kong
Contact: Martin Rowe 
 +852 2866 3111

China 
Room 2203-2204 
Shanghai Huadian Tower 
839 Guozhan Road 
Pudong New Area 
Shanghai 
China 200126
Contact: Cheng Yu Wang 

 +86 21 6103 0100

Egypt 
Alexandria 
5 Vector Basseli Street 
Al Azarita 
2nd Floor 
Alexandria 
Egypt
Contact: Mohamed Badreddin 

 +20 3 488 9001

Cairo 
2nd Floor 
2 El Hegaz Street 
Roxi 
Heliopolis 
Cairo 
Egypt
Contact: Mohamed Refaat 
Metawei 

 +20 2 2454 0509

Germany 
Johannisbollwerk 20, 5. fl 
20459 
Hamburg 
Germany
Contact: Jan Aldag 

 +49 40 3197 66 110

Greece 
62 Kifissias Avenue 
15125 Marousi 
Greece
Contact: Savvas Athanasiadis 

 +30 210 458 6700

India 
507–508 The Address 
1 Golf Course Road 
Sector 56 
Gurgaon 
122011 Haryana 
India
Contact: Amit Mehta 
 +91 124 420 5000

Italy 
Piazza R. Rossetti 3A 
16129 Genoa 
Italy
Contact: Massimo Dentice 

 +39 0 10 55401

Japan 
2nd Floor Azabu KF Building 
1-9-7 Azabu Juban 
Minato-Ku 
Tokyo 106-0045 
Japan
Contact: Robert Chie 
 +81 3 5573 8011

Korea 
44F Three IFC 
10 Gukjegeumyung-ro 
Yeongdeungpo-gu 
Seoul 07326 
Republic of Korea
Contact: Jae Sung Choi 
 +82 10 2076 9510

Morocco 
92 Boulevard d’Anfa 
Cote Boulevard 
5e étage 
Casablanca 
Morocco
Contact: Hassan Benjelloun 

 +212 522 493970

The Netherlands 
De Coopvaert 
6th Floor 
Blaak 522 
3011 TA Rotterdam 
The Netherlands
Contact: Hans Brinkhorst 

 +31 10 7422 833

Norway 
Munkedamsveien 62C 
0270 Oslo 
Norway
Contact: Peter M. Anker 

 +47 2311 2000

Singapore 
12 Marina View 
# 29–01 Asia Square Tower 2 
Singapore 018961
Contact: Giles Lane 
 +65 6339 0036

South Africa 
Johannesburg 
PO Box 5890 
Rivonia 
Johannesburg 2128 
South Africa

Contact: Simon Lester 
 +27 11 803 0008

Cape Town 
PO Box 114 
Paarl 7620 
South Africa
Contact: Simon Pethick 
 +27 21 440 3886

Sweden 
Uppsala Castle 
75237 Uppsala 
Sweden
Contact: Torbjorn Helmfrid 

 +46 18 502 075

Switzerland 
Rue de la Fontaine 1 
1204 Geneva 
Switzerland
Contact: Joe Green 
 +41 22 308 9900

United Arab Emirates 
14th Floor Gold Tower 
Jumeirah Lakes Towers 
PO Box 102929 
Dubai 
UAE
Contact: Essam Bella 
 +971 4 450 9400

USA 
Houston 
1333 West Loop South 
Suites 1525 and 1550 
Houston 
Texas 77027 
USA
Contact: Roger Horton 
 +1 713 235 7400

New York 
21st Floor 
280 Park Avenue 
New York 
NY 10017 
USA
Contact: Omar Nokta 
 +1 212 317 7080 
Contact: Philipp Bau 
 +1 212 314 0970

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Clarkson PLC 
Commodity Quay 
St. Katharine Docks 
London E1W 1BF 
United Kingdom 
+44 20 7334 0000 
www.clarksons.com

FSC® – The Forest Stewardship Council® runs  
a global certification system that ensures timber 
produced in certified forests has been traced from 
the tree to the end user. The FSC® certification  
claim can only be used by certified printers.

Thank you.

This report is available at: 
www.clarksons.com