Smarter decisions.
Powered by intelligence.
2020 Annual Report
Contents
Financial highlights
Overview
Our purpose at Clarksons
At a glance
Purpose in action
Strategic report
Chair’s review
Chief Executive Officer’s review
Financial review
Business review, including:
– Broking
– Financial
– Support
– Research
Our markets
Our strategy
Our stakeholders
Our business model
Our impact
Key performance indicators
Risk management
Compliance statements, including:
– Section 172(1) statement
Corporate governance
Chair’s introduction to corporate governance
Code compliance
Board of Directors
Governance, including:
– Nomination Committee report
– Audit and Risk Committee report
Directors’ remuneration report
Directors’ report
Directors’ responsibilities statement
Independent auditors’ report
Financial statements
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
Parent Company balance sheet
Parent Company statement of changes in equity
Parent Company cash flow statement
Notes to the Parent Company financial statements
Other information
Glossary
Five-year financial summary
Principal trading offices
1
GF
2
14
16
18
20
32
36
40
44
52
54
56
58
69
70
79
79
80
81
82
86
92
100
106
122
126
127
134
134
135
136
137
138
172
173
174
175
192
195
196
Revenue*
2019: £49.3m
Reported loss before taxation
2019: £363.0m
Underlying profit before taxation*^
£358.2m
£44.7m
£16.4m
79p2019: 78p
2019: £0.2m profit
Dividend per share
* Classed as a key performance indicator. Refer to page 69 for further detail.
^ Classed as an Alternative Performance Measure. See below for further detail.
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.
Alternative performance measures (APMs)
Clarksons uses APMs as key financial indicators to assess the underlying
performance of the Group. Management considers the APMs used by the
Group to better reflect business performance and provide useful information.
Our APMs include underlying profit before taxation and underlying earnings
per share.
An explanation and reconciliation of the term ‘underlying’ and related
calculations are included within the Financial review on page 18.
Employees, offices and countries
Information related to employees, offices and countries where we operate
is at 31 December 2020 unless otherwise stated.
People imagery in this report has been taken by the Clarksons team during
these unprecedented times.
For more information please visit
www.clarksons.com
Our purpose at Clarksons
We enable smarter, cleaner
global trade by empowering
our clients and our people
to make better informed
decisions using our
market-leading technology
and intelligence; and in
doing so, meet the demands
of the world’s rapidly
evolving maritime, offshore,
trade and energy markets.
Clarkson PLC | 2020 Annual Report
1
OverviewCorporate governanceFinancial statementsOther informationStrategic report
At a glance
Broking
Our 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.
Share of revenue
Share of revenue
9%
Number of employees
1,191
Services
– Securities
– Project finance
– Structured asset finance
Number of employees
95
79%
Services
– Dry cargo
– Containers
– Tankers
– Specialised products
– Gas
– LNG
– Sale and purchase
– Offshore
– Renewables
– Futures
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 intelligence on all aspects of shipping. We provide
data on over 160,000 vessels, 30,000 machinery models,
47,000 companies and 900 shipyards, as well as extensive
trade and commercial data and around 200,000 time series.
Share of revenue
Share of revenue
7%
Services
– Agency
– Gibb Group
– Stevedoring
Number of employees
261
5%
Services
– Digital
– Services
– Reports
Number of employees
126
offices
culture
countries
1
23
53
169
1,673
year history
employees
Purpose
in action
To those of us that work here, Clarksons is more
than just a job. Our culture is something that
continues to attract new talent, retain existing
employees and set us apart from others in the
industry. Teamwork and collaboration are at
the heart of our culture, driving close working
relationships that enable us to pull together
and continue to deliver for our clients.
2
Clarkson PLC | 2020 Annual Report
Delivering for our clients,
no matter what, is a
fundamental ingredient
of earning their trust.
Regardless of the
challenges in 2020, the
global Clarksons team
worked seamlessly together
to support our clients.
#oneclarksons
Clarkson PLC | 2020 Annual Report
3
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Purpose in action
continued
We kept
our clients
informed
4
Clarkson PLC | 2020 Annual Report
Our teams created regular and bespoke
reports, hosted interactive webinars and
kept in close virtual contact 24/7
throughout 2020, ensuring our clients
were up-to-date with fast-moving global
changes and the impact of these on
shipping markets, thus enabling them to
make the right decisions at the right time.
#smarterdecisions
Clarkson PLC | 2020 Annual Report
5
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Purpose in action
continued
We enabled
business to
keep moving
6
Clarkson PLC | 2020 Annual Report
Sea/contracts enables digitised
production, management and approval
of charter party agreements, together
with electronic signatures and access
anywhere anytime. Our clients no longer
need to physically print and courier
documents around the world for
agreement and signatures to be captured.
#poweredbyintelligence
Clarkson PLC | 2020 Annual Report
7
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Purpose in action
continued
We focused
on helping the
industry meet
sustainability
targets
8
Clarkson PLC | 2020 Annual Report
We expanded our services to help clients
navigate the decarbonisation of their
business. Our technology offering helps
clients to calculate their carbon output,
allowing them to make cleaner voyage
decisions. We established a carbon
emissions broking desk to enable clients
to offset their CO2 footprint.
#smarterdecisions
Clarkson PLC | 2020 Annual Report
9
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Purpose in action
continued
We supported
growth in
renewable
energy
10
Clarkson PLC | 2020 Annual Report
Our global teams support clients
through our specialist knowledge and
consultancy regarding the construction,
installation and maintenance of offshore
wind farms and renewables projects.
We provide market intelligence and
analytics, broking of newbuildings,
conversions and chartering for offshore
renewables assets, port services,
logistics and supplies, and financing
for offshore energy developers.
#smarterdecisions
Clarkson PLC | 2020 Annual Report
11
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Purpose in action
continued
We supported
our people
to help our
communities
globally
12
Clarkson PLC | 2020 Annual Report
More than ever, 2020 was the year
in which the Clarksons team pulled
together. We enabled our staff to take
decisions that would help to keep our
business moving, keep staff connected
and motivated, and, where possible,
to donate our time and resources to
those in need. In these exceptional times,
our extraordinary people have achieved
extraordinary things.
#smarterdecisions
Clarkson PLC | 2020 Annual Report
13
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Chair’s review
Exceptional performance
in the most challenging
conditions.
Sir Bill Thomas
Chair
14
Clarkson PLC | 2020 Annual Report
Overview
In what has been, without doubt, the most globally disruptive
and challenging time in living memory, I have been deeply
impressed with the exceptional response of the entire
Clarksons team. Colleagues have risen to the challenge of
providing each other and their clients with excellent support
and service throughout the COVID-19 pandemic. Clarksons
works hard to remain the market leader, with the best teams,
technology, research, insights and information flows. However,
in the face of the huge challenges we have faced in 2020,
our major focus has been on keeping our people safe and
the global delivery of a first-class service across all our offices
by every member of the Clarksons team.
Given the circumstances, to have delivered a strong set
of underlying results that were both cash-generative and
exceeded market consensus, is a testament to our robust
business model and the quality of our team.
Whilst the most pressing issue for the business has been
the impact of COVID-19, the accelerating importance of
sustainability and the green transition has also been a major
area of focus. Clarksons continues to play a key role as an
agent of change in the environmental agenda. This year we
have again expanded our capabilities in execution, financing,
data and support of the renewables industry. Within shipping
we are working with charterers and owners, service providers
and industry bodies to drive change through lower emissions
of greenhouse gases powered by cleaner energy.
The rapid transition to remote working has expedited the
rollout of our Sea/ products to clients as it became apparent
that the pandemic was going to impact working practices
globally. Sea/ provides a highly efficient and compliant platform
to enable our clients to manage their risk, monitor their fleet
performance and transact globally, regardless of their location.
Results
Underlying profit before taxation was £44.7m (2019: £49.3m).
Maritime capital markets and energy demand have been
severely affected by events during this challenging time and
consequently, in keeping with many businesses, the Board
determined that it would be appropriate to take a goodwill
impairment charge relating to securities and offshore of
£60.6m (2019: £47.5m). I should however stress that this is
a consequence of exceptional market change, is a non-cash
item, and will have no impact on distributable reserves or the
Company’s capacity to pay dividends.
Consequently, reported loss before taxation was £16.4m
(2019: £0.2m profit before taxation). Underlying basic earnings
per share was 106.0p (2019: 118.8p). The reported basic loss
per share was 95.2p (2019: 42.4p).
Free cash resources as at 31 December 2020 were £81.1m
(2019: £68.7m).
On behalf of the Clarksons team, I would like to thank
Marie-Louise for her valuable contribution during her four years
on the Board and wish her continued success in the future.
Outlook
Until the worst of the COVID-19 pandemic has passed, its
longer-term impact on the global economy remains uncertain.
However, we are confident that government stimulus, the
energy transition, the widespread desire for the world to return
to normality, and the pent-up demand for travel will ensure that
when a sustained recovery begins, the effects will be positively
felt in the world of shipping.
We start 2021 with a stronger forward order book and
firmer freight rates in a number of verticals, but sterling has
strengthened against the US dollar creating an additional
headwind, particularly within Broking, and the global COVID-19
pandemic, whilst improving, remains unresolved. The expected
recovery in demand is now unlikely to gather momentum until
later in the year and thus in 2021 we believe our results will
revert to being second half weighted.
As such, the Board remains confident in both the outlook
for the shipping, offshore and renewables markets and, indeed,
in the Group itself.
Sir Bill Thomas
Chair
5 March 2021
Dividend
In March 2020, the Board announced that it had deferred its
decision on the amount and timing of the 2019 final dividend
to give the business the time it needed to assess the financial
impact of COVID-19. The Company has clearly risen to the
challenges presented and its robust cash position gave the
Board confidence to announce in August that the Company
would pay the equivalent of the 2019 final dividend of
53p per share as an interim dividend on 21 September 2020
and a further interim dividend for 2020 of 25p per share
(2019: 25p per share) on 11 December 2020.
In recognition of the importance of Clarksons’ progressive
dividend policy, the Company is increasing its dividend for
the 18th consecutive year. The Board is recommending a
final dividend of 54p (2019: 53p). Combined with the interim
dividend in respect of 2020 results of 25p (2019: 25p), the
resulting full year dividend in respect of 2020 results is 79p
(2019: 78p). The dividend will be payable on 28 May 2021
to shareholders on the register on 14 May 2021, subject
to shareholder approval.
People
It has become even clearer over the past year that a business
like Clarksons relies wholly on the quality of its people, and
how they come together as a team. In 2020 the Clarksons team
performed at the highest level and found new strengths by
working even closer together across the Group. At a time when
we have all had our own personal challenges, our global offices
have continued to provide remote support at the very highest
levels to our clients when they have needed us the most.
Not only have we supported our clients, but the team has
ensured that we supported each other, the shipping community
and the local communities that are home to Clarksons’ offices
around the world. Our CSR Committee has organised a wide
range of fundraising and community-focused activities helping
those in need and has established a registered charity,
The Clarkson Foundation.
I thank all our colleagues in the Clarksons team for their
exceptional efforts through this challenging period.
Board
We were delighted to welcome Laurence Hollingworth as
an independent Non-Executive Director during this period.
Laurence joined the Board in July as a member of the
Remuneration Committee and Audit and Risk Committee, and
brings extensive experience in the capital markets and a strong
understanding of the broking environment following a 37-year
career in stockbroking. The Board and management of
Clarksons have already benefited from the strategic
perspectives and insights that he has brought to the business.
In October we welcomed Sue Harris to the Board as an
independent Non-Executive Director. Sue serves as a member
of the Remuneration Committee and is Chair of the Audit and
Risk Committee, succeeding Marie-Louise Clayton, who retired
from the Board on 31 January 2021. Sue has held a number
of senior executive positions at FTSE 100 businesses and
non-executive roles across a broad range of sectors, and
brings significant financial, risk management and listed
company experience to the Board.
Clarkson PLC | 2020 Annual Report
15
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Chief Executive Officer’s review
An astounding commitment
to ‘business as usual’.
Andi Case
Chief Executive Officer
16
Clarkson PLC | 2020 Annual Report
This year has presented very challenging circumstances for
everyone at Clarksons, with volatile markets and the COVID-19
pandemic causing severe disruption to both the way business
is done and everyday lives. Despite this disruption, I am
pleased to report that the business has continued to perform
well, characterised by the delivery of a strong underlying
performance for the full year and a forward order book going
into 2021 which is larger than at the same time last year.
A review of 2020
During 2020, our teams have had to adapt to unfamiliar
working practices, but our investment in tools for trade has
helped us deliver a market-leading service and diverse offering,
demonstrating how robust the Clarksons business model is,
even against the harshest of market backdrops.
Undoubtedly, one of the key reasons for this strong financial
and operational performance has been the outstanding
response to the COVID-19 pandemic from all our employees,
who have continued to deliver a first-class service to our clients
during these troubling times. I would like to thank everyone at
Clarksons, across every facet of the business, for their
contribution during this difficult period and for stepping up to
meet the challenge. Our people are our core asset, and this
year above all has demonstrated the importance to our clients
of their unique market insight, advice and execution in the most
critical of times.
2020 has been a truly unprecedented year full of new
challenges and, whilst in many ways productive for the
Company, it has been extremely hard on colleagues and
their families, especially those who have suffered from illness
and from the premature loss of our colleagues and friends
Peter Richards, Patrick Curry, Rob Byrne, John Milner, Hossam
El Sayed Abdo Ibrahim and Essam Bella. We once again send
our condolences to their families. I am also sad to report that
we lost an ex-Chairman, Tony Klima, who passed away in
January and is fondly remembered by many at Clarksons
and the shipping industry at large.
It is against this backdrop that we are particularly proud of the
outstanding advance in sustainable community engagement
led by our CSR Committee. During 2020, the Group was
involved in a range of initiatives which gave rise to donations
being made to charity from staff, their families and the
Company. Overall, these initiatives raised more than £350,000.
Our catering team, whilst providing meals for the few staff that
have used the London office, have also produced 19,000 meals
for the homeless in London, and we have established
The Clarkson Foundation, a charitable foundation which
will be the fulcrum for future giving.
Throughout 2020, we supported our staff and their families
through the challenges of the pandemic, ensured that all our
offices were COVID-19 safe, and facilitated staff working from
home for a significant proportion of the year, ensuring that all
had the requisite technology to be able to continue with as little
disruption as possible. The Company took no government
loans, no staff were furloughed, all suppliers were paid in good
time and the 2019 final dividend, while initially deferred, was
paid as an interim dividend in September 2020, maintaining
our 18-year progressive dividend policy.
Once again, thank you to all our colleagues.
This change in the underlying economics comes at a time when
both increased regulation and corporate desire is very focused
on reducing carbon and other greenhouse gases (GHG). There
are no immediate solutions to the eradication of GHGs but
clear targets have been set by the IMO and the industry itself,
some by 2030 and more still by 2050, and there are very
significant steps that will be made towards this green transition.
The green transition is now one of the Group’s key areas
of strategic focus and Clarksons has made sure to invest into
its market-leading teams to support this growing area of the
business. As clients target a reduced carbon footprint,
Clarksons has established a carbon emissions broking desk;
strengthened our position in gas markets; expanded our
renewables broking teams around the world; continued to lead
in consultancy and execution of alternate fuelled newbuilding
of vessels; arranged finance across many exciting renewables
projects; initiated a research database of analytics covering the
green transition; extended our already strong support teams to
service offshore wind projects; and developed Sea/ solutions
for the capture and analysis of emissions data. As the industry
takes material steps to reduce GHGs, our growing involvement
in this space at all levels of the business shows that Clarksons
seeks to play its part at the forefront of shipping’s green transition.
Whilst the shipping industry has had to face several stiff tests
over this past year, Clarksons has continued to perform well
as a business. We expect the Broking division to continue to
perform well in 2021, whilst the new opportunities arising as
a result of the green transition, an insatiable appetite by clients
for data and analysis, and the increased awareness of
digitisation and technology mean the fundamental medium-
term business outlook for the Group remains strong.
We remain confident that with the strength of our revenue
generation, the depth of our balance sheet, our first-rate
employees and our best-in-class client service, Clarksons
is well positioned to benefit from the expected economic
and global trade recovery post COVID-19.
Andi Case
Chief Executive Officer
5 March 2021
The performance of the Broking division during 2020 has
been excellent, despite the backdrop of a global pandemic
and severe disruption to energy demand throughout the year.
The teams adapted very quickly to the new working conditions,
reporting profits before taxation of £55.4m (2019: £55.5m),
driven by excellent performances across most market
segments but stand-out performances from the tanker,
gas, sale and purchase and futures divisions.
Elsewhere, the Financial division had a mixed year. Our project
finance teams, principally transacting within Norwegian real
estate, had another successful year increasing profits
compared to 2019. Clarksons Platou Securities, however,
had a very challenging year, due to the pandemic and negative
investor sentiment towards global trade and the impact on the
shipping and oil services capital markets. As announced at the
interim results, we undertook a strategic review at the end of
2019 to identify areas within the division where we could
improve efficiencies and reduce costs, which we implemented
during the first half of the year.
Our Research capabilities have been in high demand this
year, positively impacted by the pandemic as clients sought
out Clarksons’ unparalleled insights to help guide them in their
decision-making, albeit this was in part offset by a reduction in
income from valuations due to a fall in asset and capital market
transactions by our clients. With an expanding portfolio of
products, and a significant broadening into data around the
green transition, we are confident that 2021 should see
resurgent growth in this business.
Our innovative Sea/ suite of technology modules has seen
heightened interest from clients throughout the year, with
disrupted working practices providing many opportunities for
new business. The offering of enhanced analytics combined
with an increased level of execution, risk control, audit,
compliance, efficiency, communication and data integrity has
led to the Maritech team winning several new large corporate
clients during the year. The rollout to these clients gained
significant pace in the final quarter of 2020 and early 2021,
and the value proposition in pre-trade and at-trade decisions,
execution and communication is now becoming evident to
the industry.
The performance of the Support division was impacted heavily
by the wider macro environment and the negative impact on
oil price and energy demand from the pandemic in the first half.
However, I am pleased to report a significant recovery across
all areas of this business in the second half, led by our increasingly
strong position servicing the offshore renewables industry.
2021 and beyond
We have for some time talked about the multi-cyclical nature
of the maritime markets. Whilst overall, these markets have
been oversupplied, there has more recently been an increased
shortening of the supply of ships. The shock to demand from
the pandemic has meant the impact of this shortening has not
yet been properly reflected in the markets. In 2021, we have
already seen stronger rates in a number of sectors, and even
if not sustained in the short term, we are clearly no longer
in markets saturated by excess tonnage.
Clarkson PLC | 2020 Annual Report
17
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Financial review
Our robust business
model enabled us to deliver
underlying profit, generate
cash, increase our forward
order book and continue
our 18-year progressive
dividend policy.
Jeff Woyda
Chief Financial Officer &
Chief Operating Officer
Revenue
£358.2m
2019: £363.0m
Underlying profit before taxation
£44.7m
2019: £49.3m
Reported loss before taxation
£16.4m
2019: £0.2m profit
Dividend per share
79p
2019: 78p
18
Clarkson PLC | 2020 Annual Report
Segmental summary
Broking
Revenue
Underlying profit
Financial
Revenue
Underlying profit
Support
Revenue
Underlying profit
Research
Revenue
Underlying profit
2020
£m
282.6
55.4
2019
£m
283.0
55.5
2018
£m
251.7
44.0
2020
£m
33.9
2.5
2020
£m
24.9
1.7
2020
£m
16.8
5.6
2019
£m
35.5
3.3
2019
£m
27.7
3.1
2019
£m
16.8
5.4
2018
£m
46.1
8.0
2018
£m
23.9
2.3
2018
£m
15.9
5.0
Results
The Group generated revenue of £358.2m (2019: £363.0m) and
incurred underlying administrative expenses of £298.5m (2019:
£298.2m). The majority of revenue and a significant proportion
of expenses are denominated in currencies other than sterling.
Underlying profit before taxation was £44.7m (2019: £49.3m).
The term ‘underlying’ excludes the impact of exceptional items
and acquisition related costs, which are shown separately
on the face of the income statement. Management separates
these items due to their nature and size and believes this
provides further useful information, in addition to statutory
measures, to assist readers of the annual report to understand
the results for the year.
Underlying profit before taxation
Exceptional items
Acquisition related costs
Reported (loss)/profit before taxation
2020
£m
44.7
(60.6)
(0.5)
(16.4)
2019
£m
49.3
(47.5)
(1.6)
0.2
Exceptional items
The Board reviewed the need for a non-cash impairment
relating to the acquisition of RS Platou ASA. The Board
determined that an impairment charge, relating to goodwill
attributable to securities and offshore broking following
continued challenging trading conditions in these markets,
amounting to £60.6m (2019: £47.5m) was required.
Acquisition related costs
Acquisition related costs include £0.3m of amortisation of
intangibles and £0.2m of cash and share-based payments
spread over employee service periods. We estimate acquisition
related costs for 2021 to be £0.5m, assuming no further
acquisitions are made.
Taxation
The Group’s underlying effective tax rate was 21.3%
(2019: 23.1%), reflecting the broad international operations
of the Group and lower disallowable costs in 2020 due
to the pandemic.
Earnings per share
Underlying basic earnings per share was 106.0p (2019: 118.8p),
calculated as underlying profit after taxation divided by the
weighted average number of ordinary shares in issue during the
year. The reported basic loss per share was 95.2p (2019: 42.4p).
Together with the interim dividend in respect of 2020 of 25p
(2019: 25p), this would give a total dividend of 79p for 2020,
an increase of 1% on 2019 (2019: 78p). In taking its decision,
the Board took into consideration the Group’s 2020 performance,
balance sheet strength, ability to generate cash and FOB.
Forward order book (FOB)
The Group earns some of its commissions on contracts where
the duration extends beyond the current year. Where this is
the case, amounts that are able to be invoiced during the
current financial year are recognised as revenue accordingly.
Those amounts which are not yet invoiced, and therefore not
recognised as revenue, are held in the FOB. In challenging
markets, such amounts may be cancelled or deferred into
later periods.
The Directors review the FOB at the year-end and only publish
the FOB items which will, in their view, be invoiced in the
following 12 months. At 31 December 2020, this estimate was
3% higher than the prior year at US$116m (31 December 2019:
US$113m).
Dividend
As announced on 27 March 2020, the Board deferred the
decision on the amount and timing of the 2019 final dividend
to protect the Company until the impact of COVID-19 on the
business became clearer. The robust performance and cash
position of the Company meant that the Board decided to pay
the equivalent of the 2019 final dividend of 53p per share as an
interim dividend on 21 September 2020 to shareholders on the
register on 4 September 2020.
The Board is recommending a final dividend in respect of 2020
of 54p (2019: 53p) which, subject to shareholder approval, will
be paid on 28 May 2021 to shareholders on the register at the
close of business on 14 May 2021.
Dividend per share
Pence
80
70
60
50
40
30
20
10
0
18
11
7
3
0
0
2
36
24
32
22
25
16
14
12
9 10
78 79
53 54
75
51
73
50
65
43
62
40
60
39
56
37
50 51
32 33
47
30
42 43
40
26 26 27
16 16 17 18 18 19 21 22 22 23 24
25
25
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
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Final
Interim
Deferred 2019 final dividend paid as 2020 interim dividend
Read more
Key performance indicators
on page 69.
This increased dividend represents the 18th consecutive year
that the Board has raised the dividend.
Foreign exchange
The average sterling exchange rate during 2020 was US$1.29
(2019: US$1.28). At 31 December 2020, the spot rate was
US$1.37 (2019: US$1.32).
Cash and borrowings
The Group ended the year with cash balances of £173.4m
(2019: £175.7m) and a further £22.8m (2019: £2.5m) held in
short-term deposit accounts, classified as current investments
on the balance sheet.
Net cash and available funds, being cash balances after the
deduction of accrued bonuses, at 31 December 2020 were
£95.4m (2019: £84.7m). The Board uses this figure as a better
representation of the net cash available to the business, since
bonuses are typically paid after the year-end, hence an element
of the year-end cash balance is earmarked for this purpose.
It should be noted that accrued bonuses include amounts
relating to the current year and amounts held back from
previous years which will be payable in the future.
A further measure used by the Board in taking decisions over
capital allocation is free cash resources, which deducts monies
held by regulated entities from the net cash and available funds
figure. Free cash resources at 31 December 2020 were £81.1m
(2019: £68.7m).
In addition to the free cash resources above, the Group has
a strong balance sheet and has consistently generated an
underlying operating profit and good cash inflow. Management
has stress tested a range of scenarios, modelling different
assumptions with respect to the Group’s cash resources,
and as a result continues to adopt the going concern basis
in preparing the financial statements. See pages 77 and 78
for further details.
Balance sheet
Net assets at 31 December 2020 were £328.4m (2019:
£380.6m). The reduction in net assets arises principally as a
consequence of the non-cash impairment identified on page
18; this impairment has had no effect on distributable reserves
as it is offset against the merger reserve which arose on the
initial acquisition. The balance sheet remains strong, with
net current assets and investments exceeding non-current
liabilities (excluding pension provisions and lease liabilities
as accounted for under IFRS 16) by £95.0m (2019: £93.7m).
The overall loss allowance for trade receivables was £12.3m
(2019: £14.2m).
The Group’s pension schemes have a combined surplus before
deferred tax of £12.0m (2019: £11.0m).
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
5 March 2021
Clarkson PLC | 2020 Annual Report
19
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
Dry cargo
The Baltic Dry Index (BDI) suffered a 21% year-on-year decline
in 2020.
COVID-19 and its impact on trade and industries dominated
the year with dry cargo witnessing the largest ever downturn
in coal seaborne trade. China’s V-shaped economic recovery,
however, led to the restocking of many commodities which
stimulated bulker seaborne demand and supported freight
rates which recovered strongly by mid-year. Heightened
political tension between Beijing and Canberra, together with
Chinese import quota limitations, impacted Australian coal
cargoes, causing extraordinary waiting times at Chinese coal
ports and deviation from traditional trade routes.
Although seaborne trade by weight declined by 2.1%,
tonne-mile demand continued to grow, albeit at a slow 0.5%,
as many Atlantic-originated cargoes normally intended for
the Atlantic market deviated to China.
Capesize rates suffered the biggest decline, falling by 27%,
with underperforming volumes during the first five months
alongside reduced iron ore supplies and COVID-19-induced
coal demand destruction. For vessels smaller than capesizes,
markets also declined with rates down for kamsarmaxes by
20%, supramaxes by 18% and handysizes by 16%. However,
sub-cape vessels were supported by a buoyant grain and
oilseeds sector, driven by plentiful supply and the rapid
recovery in China’s animal feed market, which cushioned
the gap that was left by the severe downturn in coal demand.
Many newbuild ships entered the fleet, although tonnage
growth was countered by accelerated recycling of obsolete ore
carriers and heightened fleet inefficiencies caused by COVID-
19-related requirements, such as quarantine periods for crew
changes, minimum sailing days between ports, newbuilding
and repair yard delays and increased port waiting times.
Looking ahead, dry cargo seaborne trade is forecast to
rebound by 4.3% along with a 5% increase in tonne-miles in
2021. The demand for most dry cargo commodities is expected
to grow, particularly with infrastructure-based economic
stimuli, continued grain demand and any recovery in coal
consumption. While the growth is not expected to be uniform
across all commodities and all countries, each sector of the dry
cargo fleet should see solid demand-side support compared
with the unprecedented disruption of 2020. Fleet growth is
expected to reduce to less than 3%.
Broking
The performance of the
Broking segment during 2020
has been excellent.
Share of revenue: 79%
Services
– Dry cargo
– Containers
– Tankers
– Specialised products
– Gas
Revenue
– LNG
– Sale and purchase
– Offshore
– Renewables
– Futures
£282.6m
2019: £283.0m
Segment underlying profit
£55.4m
2019: £55.5m
Forward order book for 2021
US$116m
2019: US$113m
Employees
1,191
2019: 1,122
20
Clarkson PLC | 2020 Annual Report
The drive towards decarbonisation will be debated as
regulatory and market-led initiatives gain traction, while many
older vessels could head for early recycling as it becomes too
costly under such new green regimes.
Containers
Containership market conditions in 2020 saw dramatic trends,
in both directions, with COVID-19 dominating the dynamics.
Despite the effects of COVID-19 on consumer activity and
supply chains, which significantly reduced container trade
flows and the box shipping markets overall, 2020 ended with
container markets looking extremely positive.
The initial COVID-19 ‘shock’ placed box trade volumes and
container shipping markets under severe stress; the SCFI box
freight index was 20% down in April relative to the start of the
year. The boxship charter market saw acute downward
pressure on earnings with the rate index down 33% from the
start of the year by the end of the first half. Idle capacity hit 12%
of the fleet in May. In the second half, with volumes returning
ahead of expectations, the markets bounced back firmly and
the SCFI index increased by 178%, with box spot freight rates
surging globally in the final quarter. Charter rates tightened
from June and saw major improvements by the end of the year,
with the index up 129% relative to that at the end of June. The
one-year time charter rate for a 4,400 TEU ‘old panamax’ unit,
for example, increased more than threefold in the second half
to US$25,000 per day at the end of the year. At the year-end,
the Clarksons Containership Charter Rate Index stood at a
12-year high, with the average across the year up 3% on 2019.
On the container freight market, the SCFI index reached the
highest level on record of 2,783 at the end of 2020, an average
annual increase of 56% compared to 2019, with liner companies
reporting operating margins not seen for a decade.
Secondhand prices, which fell in the first half, increased
significantly in the second half, with the overall index up by
14%; for example, the price of a ten-year old 6,600 TEU unit
increased by 62% to US$34m, with transaction volumes also
picking up (125 vessels in the second six months compared
to just 49 in the first). Idle capacity fell to 4% of the fleet
during December.
Whilst robust capacity management by operators provided the
initial support to alleviate pressure on freight rates, the primary
driver of the dramatic swings was the major recovery in trade
volumes. Global box trade fell by an estimated 1.1% (in TEU)
in 2020, a better result than initially feared. However, the annual
trend did not capture the full magnitude of the variation in
volumes within the year. Seaborne box trade volumes dropped
10% year-on-year in the second quarter alone. In the second
half of the year, returning volumes were driven by a range of
factors, including firmer than expected improvements in some
economies unlocking ‘pent up’ demand, inventory restocking
and frontloading in key regions, shifts in consumer spending
patterns away from services towards goods and shipments
of PPE. Global volumes were up by 6% year-on-year in the last
quarter and 16% on the levels in May, led by rapid Transpacific
growth. A shortage of box availability in Asia (with inland moves
disrupted in key import regions) combined with regional port
congestion provided significant disruption, which amplified
the market impact of returning trade volumes.
These trends took place against the backdrop of a supply
side providing underlying support. Containership fleet growth
remained manageable at 2.9%. The order book fell to a new
low of 8% of the fleet in October, though a pick-up in orders
(1.0m TEU in the full year) took it to 10% by the end of the year.
Operating speeds, though increasing towards the end of the
year, were on average 1.3% down on 2019. Scrubber
retrofitting absorbed on average over 2% of fleet capacity
across the year.
Meanwhile the container sector greenhouse gas footprint,
arguably closer to consumer consciousness than in bulk
shipping, remains firmly in focus. Over the last decade slower
service speeds and the introduction of ‘eco’ ships have helped
reduce boxship emissions, which are now 40% below 2008
levels. Alternative fuels, which make up 25% of TEU capacity
on order, are also now gaining traction, and a range of units
have been fitted with energy saving technology equipment.
The green transition and technology will be key themes in
post-COVID-19 planning for boxship operators and owners.
Heading into 2021, fundamental expectations suggest
continued support for positive market conditions in the near
term. However, with such acute impetus seen in the second
half of 2020, some easing back of rate gains is probable at
some stage, and significant COVID-19-related uncertainty
clearly remains.
Clarkson PLC | 2020 Annual Report
21
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Tankers
2020 was a mixed year for tankers, both in terms of the
contrast between the first and second halves of the year and
the changes in the earnings for different sectors compared to
2019. The first half of the year was characterised by generally
very strong and extremely volatile earnings, while the second
half saw weaker earnings.
Clarksons’ published annual average earnings for VLCCs
on the main Middle East to Far East route increased by 16%
compared with the 2019 average, however Clarksons’ published
annual average earnings for suezmaxes and aframaxes
decreased by 4% and 15% respectively when compared with
2019. VLCC earnings were well above the long-run average
levels, whilst suezmax earnings matched long-run averages
and aframax earnings fell marginally below the long-run
average level.
Crude tankers
In the early part of the year, crude tanker earnings continued
to be supported by sanctions that restricted the trading activity
of a significant number of VLCCs. The lifting of these sanctions,
combined with simultaneous COVID-19-related oil demand
destruction, led to a short period of weaker earnings in
February before the market moved upwards very sharply in
early March following the decision by the key OPEC+ group of
oil producers to increase production in spite of falling demand.
This led not only to a sharp increase in the volume of crude
oil cargoes to be lifted, but also a surge in time charter enquiry
and floating storage, as oil prices collapsed, and crude oil
forward price curves moved into steep contango. These
developments all contributed to very strong crude tanker
earnings from mid-March until early May, further supported
by recovering demand in China and crude pricing that was
attractive to buyers, which culminated in new record levels
of Chinese crude imports and additional vessel congestion
along the Chinese coast.
Crude tanker earnings started to fall back to lower levels from
early May, after major oil producers regrouped in mid-April to
agree steep crude production cuts that led to a sharp reduction
in cargo liftings and hence reduced demand for tankers and
lower earnings. Although these oil production cuts began to be
eased from August, crude tanker earnings remained generally
low throughout the third and fourth quarters as a combination
of compensatory production cuts from countries that had
previously over-produced and unwinding of floating storage
employment kept cargo shipments low and added tonnage
back to the trading fleet. By the end of the year the number of
suezmaxes and aframaxes employed in floating storage had
fallen back towards levels seen in 2018 and 2019. VLCC floating
storage remained at elevated levels, albeit substantially below
the peak levels.
22
Clarkson PLC | 2020 Annual Report
The crude tanker fleet grew by a modest 3.3% in 2020,
while the size of the trading fleet throughout the year was
restricted by a combination of floating storage, sanctions
and fluctuations in the number of vessels in dry docks. Crude
tanker newbuilding deliveries are expected to remain modest
in 2021, however fleet growth may decline if demolition of older
tonnage, which was low in 2020, starts to increase once again.
The early part of 2021 has seen a mixed reaction from the
OPEC+ group of oil producers, with an agreement to increase
production in January followed by a commitment from Saudi
Arabia to reduce production once again in February and
March, while other producers in the group are due to either
hold production steady or slightly increase volumes. Looking
ahead, we anticipate further tapering of oil production cuts as
oil demand recovers throughout 2021 and crude oil inventories
are drawn down. This is expected to lead to increased crude oil
shipments and rebounding levels of crude tanker demand.
Products
The products tanker market also witnessed similar strength
and volatility in earnings in the first half of the year followed by
generally weaker earnings in the second half, albeit punctuated
by some volatility particularly on the larger sizes of vessels.
Clarksons’ assessed average earnings for LR2s on the
benchmark Middle East to Far East route increased by 30%
year-on-year in 2020, while assessed average earnings for
LR1s on the same route increased by 31% year-on-year.
Meanwhile, assessed average clean MR earnings increased
by 11% in 2020 compared to 2019.
A sharp increase in floating storage, time charter enquiry and
vessel delays as well as long-haul shipments from West to
East, all contributed to the very strong earnings that were seen
across the products tanker markets in the first half of the year.
However, by mid-year, products tanker earnings had also fallen
back to lower levels as the reduced level of underlying products
demand and refinery run cuts took their toll, despite many
vessels remaining in floating storage employment.
The second half of the year saw low earnings across the
products tanker sector as a result of the low levels of demand
and refinery output. However, the LR2s and LR1s did see
some increases to healthier levels based on some periods
of greater activity.
Products tanker fleet growth was modest at 2.4%, while
the trading fleet size was also restricted by floating storage,
particularly in the second quarter. By the fourth quarter, the
vast majority of products tanker floating storage had unwound.
Products tanker deliveries are expected to increase slightly in
2021, while remaining at modest levels overall. Fleet growth
may decline from 2020 levels due to an increase in products
tanker demolition. Meanwhile, the anticipated restoration of
higher oil demand and refinery runs throughout 2021 and
depletion of excess product inventories is expected to lead
to increasing levels of products tanker demand.
Looking further ahead, in both the crude and products tanker
sectors, the requirement for significant fleet renewal in the
next few years, together with measures to reduce existing
vessels’ CO2 emissions and dilemmas regarding the
specification of newbuilding tankers that will reduce emissions,
may all act to restrain fleet capacity growth and create tighter
market conditions.
Tankers
The first half of the year was
characterised by generally very strong
and extremely volatile earnings, while
the second half saw weaker earnings.
Specialised products
Despite the impact of COVID-19,
the specialised products market
performed much better than
expected in 2020.
Specialised products
Despite the impact of COVID-19, the specialised products
market performed much better than expected in 2020. The
freight environment in the first quarter was strong, driven in part
by a buoyant products tanker sector. The start of the second
quarter saw the customary slowdown. The crude oil price crash
in April/May led to a huge increase in edible oil and bulk
chemical freight rates, as swing tonnage exited the edibles
sector to take advantage of the higher CPP earnings that were
available as a result of the oil price contango-driven floating
storage boom. We also saw a small number of IMO2 MRs leave
the chemicals sector for the first time for the same reason.
The second half of the year was difficult with performance
below 2019 levels. Second waves of COVID-19 and lockdowns
across the globe severely hampered spot market sentiment.
However, Chinese demand for bulk chemical feedstock
volumes was largely flat year-on-year, a factor that was
reflected in the performance of CoA nominations. As the year
ended, demand for ‘Made in China’ plastic goods seemed to
perform well with containerised exports from the region holding
up in the face of the pandemic. Chemical inventory levels were
also decreasing, suggesting that manufacturing supply chains
had recovered to some extent. Spot chemical freight rates
closed at 7% up for the year compared to 2019. This relates
more to the influence of the petroleum products market rather
than increased chemical tonnage demand. Meanwhile, edible
oil freight rates finished the year 2% lower than 2019 as this
sector is much more closely aligned to the volatility of the
petroleum products market, and so it will exhibit any adverse
effects with a higher degree of severity than in chemicals.
Deal liquidity in the time charter market was limited for much
of the year due to the uncertainty caused by COVID-19.
At the beginning of the COVID-19 pandemic, it was expected
that specialised seaborne trade levels would contract by as
much as 5%. However, it appears that the CoA volumes driven
by encouraging PMI and IP data, particularly in the Chinese
markets, led to a slightly improved picture. Seaborne trade
is now expected to have contracted by approximately 2%
in 2020, to around 365m tonnes. The key end-user markets
of China and India remain pivotal to the future performance
of seaborne trade, and tonnage demand for imports held up
for much of the year. We do expect some delays to US shale
gas liquid chemical projects because of financing, legal and
environmental issues in some cases. Whilst project delays
in the Middle East are also likely, no major cancellations have
been announced and as such, in our view, the outlook for bulk
chemical export growth remains strong.
On the supply side, the chemical tanker fleet was recorded at
55.5m dwt at the start of 2020. 3.5m dwt was added to the fleet
during the year, whilst 0.9m dwt was removed. The order book
still remains at the lowest level in 20 years and is recorded at
just over 6% of the in-service tonnage as at the end of 2020.
We do not expect much change in the order book considering
the lack of finance that is available and thus we expect the fleet
to contract through 2021 and into 2022.
Clarkson PLC | 2020 Annual Report
23
OverviewCorporate governanceFinancial statementsOther informationStrategic report
A healthier VLGC carrier market also affected the fortunes
of the sizes below, with both LGC and midsize freights firming.
The Clarksons’ assessed 12-month time charter rate for a
59,000 cbm LGC rose from US$0.8m per month in 2019 to
US$0.9m per month in 2020. Similarly the midsizes market also
strengthened, with assessed time charter rates on 38,000 cbm
units rising by 20% to US$0.8m per month as the LPG tonne-
miles rose and as seaborne trade contracted much less than
anticipated earlier in the year. The midsizes also received
support from the handysize carriers which benefited from the
addition of new ethylene volumes with the start-up of the new
Enterprise/Navigator terminal in the US Gulf. As a result of this,
and the rising market share of petrochemical trades generally,
assessed 12-month time charter rates on the 20,500 semi-ref
units rose by the same magnitude as the midsizes.
Looking ahead, whilst newbuildings are expected to deliver
into each of the size categories, the challenges of fleet supply
growth are expected to be mitigated somewhat by continued
market inefficiencies, dry-docking schedules and
petrochemical feedstock demand growth in Asia. Additionally,
both LPG and ammonia seaborne trade volumes are expected
to register growth of over 3%. LPG volumes will be affected by
the level of export flow from the US and the proportion of which
is destined for Asia to fill the continued shortfall in supply East
of Suez. Further growth is also expected in ethylene exports
from the US, even if the new terminal does not run at full
capacity on a continual basis.
The smaller sized vessels, in contrast, have continued to fare
less well than the larger units. Support for the larger handysize
units from the increased ethylene volumes relieved some of the
downward pressure they had exerted on the smaller sizes.
Despite this, idle time remained an unwelcome feature of the
market and the assessed 12-month time charter on the
benchmark 8,000 cbm ethylene vessels fell 2.1% year-on-year,
although the term market was virtually non-existent, and the
3,200 semi-refs fell by 6.5%. The decline in assessed pressure
rates was more dramatic with the average falling 5.7% in the
East and over 20% in the West. The fall in spot levels, however,
was far more severe across the sectors. Despite this, the age
profile of the fleet continues to deteriorate, most notably in the
smaller sizes sub 6,000 cbm, where there are also limited
newbuilding orders. The prospects of the smaller size sectors
overall will be very much dictated by operating levels at
crackers and PDH facilities run in 2021.
Business review
continued
The green transition is very much at the forefront of all
stakeholders’ minds. The breadth and depth of the business
means that we are uniquely positioned to utilise our
unparalleled market knowledge to advise and support
charterers and shipowners alike in their green agendas.
Throughout 2020, our market share of the biofuels sector
remained strong, supported by an improved analysis and
strategy provision. This is a key area of growth for the sector
and the business continues to expand.
Overall market sentiment was downbeat as we approached
the end of the year. Spot market tonnage demand was
depressed and chemical tanker earnings were under
considerable pressure at a time when bunker prices were
rising amid geo-political and macro-economic uncertainty.
The speed with which global manufacturing supply chains
return to pre-COVID-19 levels will be crucial to a recovery in
tonnage demand and fleet utilisation levels. However, the very
low order book will provide a floor, with any sustained recovery
in the products sector likely to lead to a more bullish edible
and chemical freight rate environment.
Gas
The larger LPG carrier market proved surprisingly healthy
in 2020 despite an influx of newbuildings, a lack of removals
and some demand destruction as a result of COVID-19 from
the petrochemical and autogas sector. It was only the second
quarter that was characterised by a steep dip in VLGC freights.
In the West, demand faced some headwinds from cheaper
naphtha, when oil prices collapsed. Meanwhile, although
demand in Asia dipped in the first quarter, most notably in
China, it started to rebound as the year progressed, supported
by a recovery in PDH utilisation levels and the start of new
petrochemical capacity in the second half of the year. Demand
growth from the domestic sector in India was also aided by the
introduction of a free LPG programme for the poorer segments
of the population. A combination of a contraction of Middle
Eastern and other export regions’ volumes largely due to OPEC
cuts, and a 5m mt increase in exports from North America,
meant more longer-haul exports were required to cover this
deficit in the East, in addition to the incremental demand
growth. Overall seaborne LPG trade has risen only marginally
compared with 2019, but it has been the changes in flows
which have been of greater importance.
With West-East flows on the ascendency, this placed growing
pressure on the NeoPanama canal which, in combination with
growing demand from other sectors of the shipping market,
resulted in an increase in waiting time for the LPG carriers.
Additionally, delays at key discharge ports added to the already
extended voyage times. Although there were no delays in
newbuilding deliveries, with an additional 21 vessels added into
the VLGC fleet in 2020, and no units sold for recycling, a heavy
and postponed dry dock schedule served to also remove
supply side pressure, further underpinning the recovery in
freights during the fourth quarter in particular. Reflecting this,
average annual VLGC time charter equivalent earnings rose
by 8% year-on-year, with levels breaching US$3m per month
in December. Despite a strong start to the year, with a heavy
export schedule from the US and increased seasonal domestic
demand, rising prices started to place margins into the East
under pressure and by the end of January 2021, time charter
equivalent earnings had fallen to just below US$1.4m per month.
24
Clarkson PLC | 2020 Annual Report
+1.7%
Global LNG trade volumes were
up 1.7% to 363m mt in 2020, pushed
primarily by new supplies from the
US and to a lesser extent by higher
exports from Papua New Guinea
and Qatar.
LNG
Near-term LNG freight rates dropped on an annual basis in
2020, principally as a result of weak demand for LNG in the first
half of the year which was eventually balanced by LNG exports
cuts, reducing tonnage demand for spot cargoes in the process.
The spot headline rates for conventional 160km3 Tri-Fuel Diesel
Electric tonnage fell 12.1% year-on-year, averaging US$60,900
per day in 2020. However, the trading environment was
particularly volatile through 2020, with spot rates bottoming
in July at US$27,000 per day, before rebounding in the second
half of 2020 to US$145,500 per day, on the back of wide open
Atlantic-Pacific arbitrage.
The spread between the Northeast Asia LNG price and the
US Henry Hub natural gas price fell 25% year-on-year to
US$2.24 per million British Thermal Unit (BTU) in 2020, from
US$2.99 per million BTU in 2019. The narrower price spread
resulted in the US Gulf Coast export plants operating well
below their nameplate capacity, especially in the second and
third quarters of 2020, reducing tonnage demand eventually.
However, the spread recovered in the second half of 2020
to US$3.44 per million BTU, driven by cold weather-related
demand from Asia, unplanned outages at several export plants
in the Pacific, Middle East and Africa and delays in the transit
of LNG carriers through the Panama Canal.
The spread between the Northeast Asia LNG price and the
European Title Transfer Facility natural gas price rose 12%
year-on-year to US$1.19 per million BTU in 2020, with the
spread trading above US$3.00 per million BTU in the fourth
quarter of 2020, which helped incentivise LNG cargo
re-exports to Asia.
Global LNG trade volumes were up 1.7% to 363m mt in 2020,
pushed primarily by new supplies from the US and to a lesser
extent by higher exports from Papua New Guinea and Qatar.
US LNG exports rose by around 32% to 48.2m mt with the
commissioning of Cameron T2-3 and Freeport T2-3, and the
ramp-up of projects commissioned in 2019. However, in the
second and third quarters of 2020, US LNG exports plunged
as much as 60% compared to the first quarter due to a
price-sensitive reduction in output of some 150-180 LNG
cargoes. Exports from Papua New Guinea and Angola rose
by a combined 14.1% to 12.8m mt, driven by increased spot
tender activity. Qatar retained its position as the world’s biggest
exporter with exports rising by 1.0% to 77.6m mt in 2020.
Australia’s LNG exports were up 0.6% to 77.3m mt, as higher
exports from Pluto LNG and projects in the Northern Territory
were partially offset by lower exports at Prelude FLNG and
Gorgon LNG, both impacted by unplanned outages.
Elsewhere, Egypt’s LNG exports plummeted 64% to 1.2m mt
in 2020, Malaysia’s exports were down 7% to 23.8m mt and
exports from Indonesia fell 8% to 13.9m mt; all were largely
attributed to the low LNG price environment of the first half
of 2020. Exports from Trinidad and Tobago were down 19%
to 10.9m mt in 2020 and Norway’s exports were down 28%
to 3.4m mt, driven by long-lasting unplanned outages at their
export terminals. LNG re-export increased by 240% to
7.0m mt, driven by surging activity in the Northwest European
terminals, used to tranship Russian’s Yamal LNG cargoes to
other destinations in Europe and Asia.
Clarkson PLC | 2020 Annual Report
25
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
On the demand side, Japan-Korea-Taiwan remained the largest
demand area, while the biggest rise in imports were recorded
in China, India and Turkey. LNG imports into China rebounded
from the drop in the first quarter and increased by 11.3% to
67.1m mt on the back of industrial demand, natural gas grid
expansion and the debottleneck of the Zhoushan terminal and
residential demand induced by the colder winter weather in the
fourth quarter. Imports into India rose by 12.9% to 25.2m mt,
driven by price-sensitive industrial demand and declining
domestic gas production, while imports into Turkey rose 21%
to 11.0m mts, offsetting a decline in gas pipeline imports from
Russia and Iran. Japan remained the largest importer at 74.6m
mt, but its imports slipped 2.1% on the back of lower power
demand and high inventories in the first half of 2020. Imports
into Europe, including Turkey, dropped by 0.8% or 0.7m mt
to 87.2m mt, with the fall in the second half of 2020 more than
offsetting rather strong growth in the first half of the year.
LNG tonnage demand continued to grow in 2020 by 7.9% to
1,543 trillion tonne-miles driven by growth in LNG trade flows
on a long-haul voyage, on the back of a 16.4% growth to
46.5m mt in West to East trade, in particular LNG exports from
the US towards Asia. The average laden distance sailed by
LNG carriers was up 6.1% to 4,250 nm in 2020, compared to
4,006 nm a year ago, driven by LNG cargoes shipments from
the US to the Far East Asia and India.
32 conventional LNG carriers and three FSRUs were delivered
in 2020, a drop of eight LNG vessels from 2019, with several
deliveries delayed to early 2021 for commercial reasons.
49 conventional LNG carriers were ordered in 2020, in line
with 2019 levels, with a total of 16 LNG conventional carriers
ordered from the Arctic LNG 2 project in Russia alone. In
addition, two medium-size LNG carriers and two large FSUs
were ordered for projects in Malaysia and in Russia respectively.
Traded volumes are expected to increase again in 2021,
led by US project Corpus Christi T3, Indonesia’s Tangguh T3
and Russia’s Yamal LNG T4 which are set to bring online some
9.2m tonnes per annum and stronger utilisation of those plants
whose output was reduced due to the low-price environment in
the first half of the year. The majority of developers who were
anticipated to reach final investment decisions in 2020 for
export projects in the US, Qatar, Canada, Australia and Africa
have delayed the announcement to 2021-2022, on the basis
of market uncertainties and the low oil and LNG price
environment of 2020. The only LNG export project reaching
final investment decision in 2020 was the 3.5MTPA Energia
Costa Azul in Mexico.
Newbuild ordering is expected to continue into 2021, supported
by several liquefaction projects which anticipate reaching final
investment decision, by portfolio players holding long-term
supply contracts on a FOB basis from projects under
construction and by players looking at renewing existing
tonnage with more efficient LNG carriers.
26
Clarkson PLC | 2020 Annual Report
+7.9%
LNG tonnage demand continued to
grow in 2020 by 7.9% to 1,543 trillion
tonne-miles driven by growth in
LNG trade flows on a long-haul
voyage, on the back of a 16.4%
growth to 46.5m mt in West to East
trade, in particular LNG exports
from the US towards Asia.
Sale and purchase
Secondhand
In March, sale and purchase business was challenging as
crew changes became almost impossible to organise at short
notice, resulting in some vessels ballasting in circles around the
Far East looking for a port where changes of ownership could
be arranged. Shipowners had so many logistical problems
with their own fleets that they had little interest in buying
more vessels and with the recycling beaches of the Indian
sub-continent closed down, transaction levels for new business
pretty much ground to a halt. In March and April we also
struggled to maintain existing business which had already been
concluded, with effectively deals failing exceeding the ships we
managed to sell in this period. We made real efforts to maintain
morale during those challenging times. With clients reluctant to
talk about new business and our existing business falling away,
the early months of lockdown were difficult for sale and
purchase and the year at that point looked bleak.
However, as things settled into the new normal and it became
clear that fundamentals were not going to change quickly,
shipping as always started to find ways around the new
obstacles. For example, buyers agreed to take over sellers’
existing crews or sellers found specific jurisdictions that started
specialising in allowing vessel deliveries and crew changes.
Globally across sale and purchase, the team worked hard at
sharing this sort of information with each other. New business
started to move again during the summer months with a certain
amount of pent-up demand accelerating that process to the
extent that the second half of the year more than made up
for that initial market paralysis.
On a global basis, year-on-year against 2019, there was a
significant increase in the volume of transactions concluded
for 2020.
Newbuilding
The newbuilding market remained challenging for the large part
of 2020.
Overall, output fell to 29.0m CGT, according to Clarksons
Research, down 15% year-on-year to its lowest level since
2005 and to 50% of the 2010 production peak. New orders fell
by a third to 20.2m CGT, representing the second lowest level
since 2009, despite increased activity in the final quarter.
Macro-economic volatility and the ongoing debate around
the green transition also had a major part to play in inhibiting
investment decision. However, despite these challenges,
several markets showed resilience and overall meaningful
levels of contracting and activity remained, albeit at historically
diminished levels.
Whilst the speculative end of the market was stifled by
the more macro variables, project demand and the industrial
sector remained relatively active. The dry cargo market was
also heavily buoyed by Asian interests, namely domestic
buyers in China, and Japanese owners who accounted for
broadly over 80% of contracting activity across the major
segments. Gas and container business also remained active
and we saw a material increase in activity in the fourth quarter
of the year as competitively priced deals across the large asset
classes were motivated by yards seeking to compensate for a
quiet year and soak up opportunity prior to year-end.
31% of new orders placed in 2020 incorporated alternative
fuels and there remains an increasing attention to transition to
green as the market adjusts in preparation for the approaching
IMO 2030 measures. Going forward, we fully expect this trend
to be a pivotal driver of new demand.
As a Group, we continue to leverage our strengths and offering
into the industrial markets, which accounted for a large part
of our activity in 2020. In parallel, we continue service to our
historical and heritage relationships and invest into being at
the forefront of this meaningfully transitional phase in the
market. Our market share continues to grow and we remain
a major tonnage provider to the key global shipbuilding players.
We remain well placed to capitalise on this next phase of
shipbuilding as we progress into 2021.
Offshore
General
2020 was a year of significant contrasts within offshore and
offshore renewables. The traditional offshore market, focused
on the oil and gas business, saw a lacklustre year with a
significant decline in activity, utilisation levels and day rates.
However, the offshore renewables (wind) business has seen
continued strong growth, healthy earnings and a record volume
of new projects sanctioned.
The significant decline in the traditional offshore business
was induced by COVID-19 and the fall in the price of oil.
This decline, combined with an uncertain outlook for near- and
mid-term oil demand, forced Exploration and Production (E&P)
companies to rapidly and significantly reduce investment levels
and operating expenses. Global E&P spending dropped 30% in
2020 compared to 2019 and the latest indications suggest flat
spending or moderate further reductions in 2021. Additionally,
most operators also paused, deferred or cancelled already
initiated projects due to operational and logistical challenges
induced by COVID-19. This has also had an adverse effect on
offshore services in general. Finally, most owners faced
significant increases in their own operating expenses due to
COVID-19, which have been far from compensated by operators.
Consequently, we saw another significant round of refinancing,
restructuring and Chapter 11 processes in the sector.
The continued strong growth for offshore renewables (wind)
is underpinned by solid, long-term drivers; the green transition
and the world’s desire to decarbonise primary energy supply.
As the pandemic escalated, market participants discussed
whether it could derail the strong growth for renewables in
general, due to the risk of countries and regions reverting
to fossil fuels as these became cheaper. If anything, it seems
to have accelerated the pace of growth for renewables. Many
of the fiscal stimuli packages that have been launched have
a solid ‘green component’, based on the ‘build back better’
rationale. Several countries have launched very significant
programmes, hoping to stimulate and cultivate domestic
industry and, to some extent, establish market-leading
positions. Several stakeholders have also highlighted the risk
of relying too heavily on imported energy in potential future
pandemic situations and have thus pushed to develop local or
regional energy supply, which, in many cases, implies wind and
solar. Finally, the capacity freed up in the oil and gas business
(and other industries) has made it easier for companies in the
renewables sector to recruit and retain highly capable
professionals and rapidly build and grow their organisations.
Clarkson PLC | 2020 Annual Report
27
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
The continued strong growth
for offshore renewables (wind)
is underpinned by solid, long-term
drivers; the green transition and the
world’s desire to decarbonise primary
energy supply. As the pandemic
escalated, market participants
discussed whether it could derail
the strong growth for renewables
in general, due to the risk of countries
and regions reverting to fossil fuels
as these became cheaper.
28
Clarkson PLC | 2020 Annual Report
This contrasting backdrop has also affected Clarksons Platou
Offshore and Renewables, with a significant drop in sale and
purchase and newbuilding activity in the traditional offshore
business, while the renewables team has continued to see
strong growth both in chartering, newbuilding and sale and
purchase activities.
Drilling rig market
Whilst total offshore rig demand saw some improvement in
the first quarter of 2020, overall rig demand saw a significant
drop following the oil price crash in March/April. Total rig
demand at the year-end was down 10% year-on-year with
significant differences between the jackup (shallow water) and
floater (mid-/deep-/ultradeep-water) segments. The demand for
jackups declined by about 5% through 2020, whereas floater
demand came down as much as 22%. The global offshore rig
demand was at 462 units at the end of 2020, down from 506
units in December 2019, based on data from Clarksons
Research. The demand for floaters was at 110 units in
December 2020, down from 135 in December 2019. The
current contracted level for floaters is the lowest we have
observed for more than a decade. In line with the significant
decline in demand, utilisation and day rate levels also came
under pressure. At the year-end, global jackup utilisation was
at around 74%, down from 76% a year earlier, whereas floater
utilisation was as low as 61%, down from 68% at the end of
2019. While drillers have been faced with declining utilisation
and day rate levels, they have at the same time faced
significantly increasing operating expenses due to COVID-19.
Crew change costs and other logistical costs associated with
keeping contracted rigs active have generally escalated and
operators have only to a highly limited extent been inclined
to compensate for this. Consequently, most of the world’s
large drillers have been, or are, in some form of financial
restructuring. Several of these processes are approaching
a conclusion and we expect to see numerous companies
emerge from restructuring during the first half of 2021. Further
consolidation in the drilling market is a likely consequence once
the companies have completed these processes, and we
expect to see this materialise throughout 2021 and 2022.
Subsea and field development market
Sanctioning of new offshore field developments largely came
to a halt following the oil price decline in early 2020. However,
despite this, the major subsea contractors continued to see
a decent order intake through the year with combined book-to-
bill level around 100% through the third quarter. This was driven
by a combination of awards related to already sanctioned
projects, the sum of smaller contracts and, importantly,
some major contracts for renewable projects (offshore wind).
Despite sustained backlogs, major contractors continued
to face declining fleet utilisation, revenues and earnings.
Consequently, most of the contractors have released chartered
vessels back to the market and announced significant cost
reduction efforts. This had an adverse impact on subsea vessel
owners who have continued to struggle to secure employment
for their vessels. There has been no meaningful improvement
in the market for subsea inspections, maintenance and repairs
(IMR), which has further contributed to depressed fleet
utilisation. Continued strong activity in the offshore wind
segment compensated somewhat, but this was not enough
to cover the shortfall in subsea EPC/project work and IMR.
Offshore Support Vessels (OSVs), Platform Supply Vessels
(PSVs) and Anchor Handling Tug and Supply Vessels (AHTSs)
The market for OSVs also generally remains challenging and
was characterised by significant vessel overcapacity. Current
day rates were generally in line with or barely above vessel
operating expenditure levels. All regions saw rock-bottom rates
and low utilisation, which led to significant financial stress for
owners. Many owners have been or are still going through
financial restructuring and the sale and purchase market was
particularly challenging with exceptionally few industrial owners
left with capacity to transact. Chartering volumes are currently
indicating a marginal pick up in some selected markets at the
beginning of 2021, but higher activity levels, particularly in the
drilling market, are needed to see a more meaningful recovery
for the OSV segment.
Renewables (wind)
The offshore renewables market continued its strong growth
throughout 2020 and was, to a great deal, shielded from the
global shocks witnessed in the traditional oil service industry
and other commodity markets following the outbreak of
COVID-19. 2020 was a year of record investments into the
sector, seeing a total of 7.0 GW of new field developments
being sanctioned for Europe, around 9.0 GW in China and
another 1.3 GW in the rest of the world, according to Clarksons
Research. This level of investment eclipsed all earlier years.
There is a continued upward trajectory when it comes to
planning for, sanctioning and construction of offshore wind
farms, but 2020 also marked the year in which many deep
water shipping and oil service companies initiated their
‘pivot’ strategy, shifting resources and funding away from
hydrocarbon and natural resources and allocating it towards
offshore wind. More than US$2bn of investments in key
offshore wind vessel segments were made in 2020 (firm
orders); including letters of intent and options, that number
could be more than twice as high.
We are witnessing the beginning of an infrastructure
supercycle, driven by three key parameters. Firstly, an
unprecedented acceleration in national climate pledges,
with the EU, China and Japan, among others, setting very
ambitious targets. With a new US President, the renewables
industry is eagerly awaiting the implications on US climate
strategy as well, including ambitions in offshore wind.
Secondly, a supply and demand squeeze; with the upsizing
trend of key equipment needed to build and operate a wind
farm, such as the wind turbine, the current vessel fleet is not
capable of building and supporting the planned industry
growth in the years after 2024. More vessels are required,
which, if not met by increased supply, could drive up day rates.
Finally, the financial ESG factor, where investor sentiment has
led to increased demand for securities that meet those
requirements, which in turn has led to strong share price
performance for the listed companies and record IPO activity.
More capital has entered the space – inflows into ESG funds
in 2020 were 118% higher than in 2019.
Futures
Dry FFAs
COVID-19 proved to have a mixed impact on the freight market
in 2020. Trader appetite increased and volumes year-on-year
were up by nearly 15%. However, rates dropped significantly.
Total dry FFA volumes in 2020 were up 14% to 1,562,653 lots.
The panamax market was again the largest sector by volume
with 744,237 lots, up 11% year-on-year. Capesizes saw a
similar 11% rise (592,519 lots), whilst supramaxes had a more
significant 32% jump (225,897 lots).
The underlying rates however were not so encouraging.
Capesizes averaged US$12,855 per day for 2020 after a dismal
first and second quarter, down from US$18,025 per day in
2019. Panamaxes averaged US$8,563 per day, down from
US$11,112 per day. Supramaxes averaged US$8,173 per day,
down from US$9,948 per day in 2019.
The introduction of the panamax 5TC index has still not gained
traction despite attempts by clients to push the market that
way. Others followed the open interest. When there is a
substantial move to 5TC, the critical mass will follow and the
4TC index will die out.
FFA options, similar to swaps, saw a good a volume push
to 327,183 lots in 2020 from 244,866 lots in 2019. Capesizes
remained dominant with 54% share but the panamax market
saw growth with 44% of the market.
2021 will inevitably be dominated by the direction the dry
product consumer countries take to stabilise and restore
their economies.
Wet FFAs
It was another strong year for the tanker-focused wet FFA team
with a very busy first half of the year. Volumes increased again
on both clean and dirty from 2019. In 2020, clean volumes were
up 39% to a total of 225,929 lots and dirty volumes up 52% to
a total of 375,067 lots which is a record high. This was mainly
due to oil storage plays in the first half of the year and new
market participants.
LNG and LPG FFAs
Having arranged the first LNG FFA trade in December 2019, we
maintained our market-leading position in this market for 2020.
Volumes remain low but we hope to see them improve in 2021,
especially if the product is listed on ICE.
LPG FFA volumes increased to over 13,000 lots in 2020 from
7,114 lots in 2019. We increased our market share in 2020 and
aim to do the same in 2021.
Clarkson PLC | 2020 Annual Report
29
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Delivering for our clients
Leveraging our
cross-divisional
capabilities
to support the
sustainability
agenda
US$57bn
Investment sanctioned for offshore
renewables in 2020, a record and higher
than offshore oil and gas for the first time
30
Clarkson PLC | 2020 Annual Report
Assisting OHT with the ordering of a new wind turbine
installation vessel and their listing on the Euronext
Growth Oslo
The breadth of services offered by the Group gives our clients
unique access to market intelligence, industry know-how
and solutions to various aspects of their projects in one place.
During 2020, we assisted OHT, a specialist transport and
installation contractor and vessel owner-operator, with the
ordering of a new wind turbine installation vessel (WTIV)
and the listing of the company on the Euronext Growth Oslo.
OHT is a good example of the ‘pivot’ strategy described
on page 29, having routinely transported large and heavy
structures for markets dominated by oil and gas clients, but
recently entering the rapidly growing offshore wind market.
The project demonstrates the cross-divisional collaboration
that underpins the Group’s role as a trusted advisor in providing
solutions for our global client base. The newbuilding broker
activities were managed by our offshore/renewables team in
Houston, whilst the IPO was handled by Clarksons Platou
Securities AS in Oslo. In anticipation of the capital raise and
given the increasing interest in the offshore wind sector, the
offshore and securities teams jointly held a ‘Global WTIV call’
with over 500 participants. Whilst similar calls had occasionally
been held on a smaller scale prior to the COVID-19 pandemic,
this has proved to be an efficient and cost-effective means of
engaging with potential clients and the broader shipping
community and again reflects the strong growth in the offshore
renewables market and the new way of doing business in 2020.
Clarkson PLC | 2020 Annual Report
31
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Financial
The Financial segment
had a mixed year.
Share of revenue: 9%
Services
– Securities
– Project finance
– Structured asset finance
Revenue
£33.9m
2019: £35.5m
Segment underlying profit
£2.5m
2019: £3.3m
Employees
95
2019: 124
32
Clarkson PLC | 2020 Annual Report
Securities
2020 was an extremely challenging year due to COVID-19.
To an extent unseen in most of our lifetimes and unexpected
12 months ago, it has caused one of the largest and sharpest
economic contractions in recent history. Not only has the year
been challenging due to the volatile oil price and collapse
in freight markets, but also due to fears of global recession.
Despite periods of optimism during the summer when it
appeared that the virus was under control, and the end of
the year with the arrival of vaccines, the year has been very
volatile with new highs and new lows in all markets. 2020
can be summed up as a Bull-Bear-Bull market, as the majority
of indices have gained between 5% and 15% from the start
of the year to the end.
As news unfolded of the spread of the virus, global financial
markets responded with sell-offs, volatility and a sharp
increase in borrowing costs, which rivalled, and at times
exceeded, those seen during the 2008 global financial crisis.
March 2020 will surely go down as one of the most turbulent
months as COVID-19 spread worldwide.
April saw global equities rebound as investors began to focus
on expectations that economic lockdowns could soon ease
and economies start to recover. The S&P 500 Index saw its
strongest monthly rally in 30 years, shrugging off negative
data which indicated sharply rising unemployment. Eurozone
equities advanced as some countries began to allow some
parts of their economies to reopen. The healthcare and
information technology sectors were among the top gainers.
UK and Norwegian equities recovered over the period as the
governments declared they had passed the peak of COVID-19
and began preparations to ease lockdown measures.
The price of Brent crude oil plummeted in March due to
various lockdowns in countries and travel bans. Coming from
an average price at US$64 per bbl in January and US$56 per
bbl in February, by the end of April the Brent crude price had
plummeted to below US$20 per bbl. Optimism over tighter
supply also pushed oil prices up in May and June. Iraq and
Kazakhstan pledged to comply better with oil cuts and data
showed the number of oil and gas rigs in the US and Canada
fell to a record low in June. In the second half of the year, the
Brent crude oil price remained volatile and ended at US$52,
down 15% from the start of the year.
The offshore oil and gas industry began 2020 on a cautiously
optimistic note. That optimism was quickly shattered with the
onset of COVID-19 and the equally rapid collapse in crude
oil prices. Having initially projected offshore Final Investment
Decisions (FID) would total over US$100bn in 2020, Clarksons
Research reported only US$41bn across the year.
In shipping, regulatory uncertainty is holding back newbuilding
investments. The IMO has established long-term decarbonisation
targets but has yet to decide on how to regulate emissions
from vessels. Many shipowners and investors alike have
refrained from building new vessels due to uncertain regulatory
requirements, so the order books in most shipping sectors
currently are at decades-low levels. With the lack of active
shipbuilding activity, there is also less need for financing and
consequently less ECM activity in the shipping capital market
segment. The current low vessel ordering environment will,
however, lead to reduced vessel supply and less competition
in the coming years, boosting existing players’ profitability so
they can better prepare for low-emission shipping in the future.
The escalated focus on climate change has during 2020, and
2019, contributed to the energy sector being less favourable
and investors have a focus on going green, boosted by the
new US President’s announcement of a US$2tn investment
plan focused on developing clean energy, lowering emissions
and rebuilding infrastructure. Our new investment banking
renewables team has, despite the challenging year, arranged
a total of four transactions with a total value of NOK 900m
within solar, cleantech and wind, with more mandates secured
to be performed in 2021.
In the fourth quarter, stock prices powered higher and
emboldened investors thanks to a series of positive news
events, including the announcement of three COVID-19
vaccines which drove a risk-on mood in the financial markets
with the added fuel of the post-US elections. The stock market
rebounded so quickly because investors were encouraged that
COVID-19 would not trigger a more severe financial crisis.
During 2020, the S&P 500 Index increased 14%, the Dow Jones
Industrial Average, which lagged throughout much of the year,
jumped 10%, while the Nasdaq Composite rose a staggering
30%. In Norway, the Oslo Stock Exchange Benchmark Index
increased by more than 5%.
Despite the volatile year, we completed 20 transactions with a
total value of US$1.1bn. The majority of completed transactions
were within the shipping (seven transactions) and metals and
minerals (four transactions) sectors with a total value of NOK
8bn. There were a further five within the offshore/oil services
sector and four within the renewables sector. Over 70% of all
transactions were equity capital market transactions.
April saw global equities rebound
as investors began to focus on
expectations that economic
lockdowns could soon ease and
economies start to recover. The S&P
500 Index saw its strongest monthly
rally in 30 years, shrugging off
negative data which indicated sharply
rising unemployment.
Clarkson PLC | 2020 Annual Report
33
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Project finance
Shipping
Given the overall conditions of the shipping markets in 2020,
most shipowners shifted their focus and resources from growth
opportunities and refinancing to operational issues and crew
changes. This also had an effect on the project finance market,
with lower activity in the first three quarters of the year. We
started to see a gradual recovery in shipping market activity
during the second and third quarters. The year ended on a
positive note with most segments at profitable levels and with
transaction activity returning.
Overall, the first part of the year became a real-life stress-test
of the project portfolio we have arranged, and we were happy
to see that all projects have sailed through the crisis relatively
well due to good charter coverage and low loan to values.
The team arranged three sale and leaseback deals, sold three
vessels from existing projects and arranged a strategic share
deal in an existing project.
Real estate
Clarksons Platou Project Sales (CPPS), which now incorporates
Clarksons Platou Real Estate (CPRE), started 2020 with a
fundamental optimism for the year and strong investor demand
for new investment opportunities. When COVID-19 hit in March
all transaction activity was frozen immediately. The period from
March to June was primarily focused on securing cash flow
from existing projects and reassuring banks and bond-lenders
that the assets they financed remained ‘in the money’.
However, activity significantly improved towards the summer.
Total transaction volume for 2020 is estimated to have
exceeded NOK 100bn and might even surpass 2019’s all-time
high of NOK 105bn. The market activity ended strongly, fuelled
by appealing yield spreads due to reduced financing costs, as
Norway was one of the few countries in Europe that had room
for further interest rate reductions. 2020 was characterised by
large deals: at least 24 deals above NOK 1bn were observed
compared with 19 in 2019; five deals were above NOK 2.5bn.
CPPS also had an all-time-high year, passing more than
NOK 100m in new business transaction fees and together
with Property Management, Sales and Investment Management
we passed NOK 160m. CPRE concluded 24 projects, eight
of which were sales of existing projects delivering solid returns
to our investors. We have now sold 34 projects since 2011,
paid out more than NOK 3.5bn in equity to our investors and
delivered an annual return (IRR) of almost 40% based on the
sold projects.
Clarksons Platou Real Estate Investment Management
(CPREIM) was focused on maintaining, securing and executing
on the business plans of the existing portfolio of its main fund
(Oslo Opportunity), but also on new investments. In the spring
we focused on finding potential assets for acquisition (as Oslo
Opportunity had available investment capacity), but most
sellers sat firmly ‘on the fence’ awaiting visibility. Despite limited
transaction activity in the second quarter, CPREIM secured
three new acquisitions for Oslo Opportunity from June to
November. Oslo Opportunity’s investment period ended in
December 2020 and CPREIM is already planning the successor
fund (Oslo Opportunity II) which has received significant
interest from both new and existing investors. CPREIM plans
to place the new fund during first quarter of 2021 with potential
investments for the new fund already identified.
The real estate sector has, in recent years, made a significant
leap towards the technological and environmental trends
driven by authorities, entities, tenants and ultimately investors.
The demands for technologically advanced, energy efficient
and sustainable buildings are ever increasing, along with the
ability to create engaging buildings and neighbourhood
environments in which to live, work and socialise. Clarksons
Platou Project Development (CPPD) was established in 2020
to bring the professional expertise and capacity of this
ever-increasing complex development environment in-house.
During the first six months of business, CPPD has secured
development projects with building costs totalling NOK 370m
in the first phases and with the potential of further fees in the
following phases. Several major development projects are
in the pipeline, with the expectation of growing the project
portfolio to NOK 635m during 2021. CPPD’s development fees
are expected to grow significantly towards the completion of
ongoing projects, which are expected to be during 2021 and
2022, as the development fee structure is skewed towards
projects’ completions.
Structured asset finance
2020 began on a positive note with a few significant and
innovative transactions closed by the team. By March 2020
however, sentiment had changed completely with the onset
of COVID-19. Margin spreads widened significantly for all deals
as the immediate fight to preserve liquidity commenced in
earnest, albeit the effect of this margin increase was somewhat
mitigated by the general reduction in the overall cost of LIBOR.
Thankfully, towards the end of 2020, there were signs that
margin spreads had returned to pre-COVID-19 levels for
most deals.
Likewise, the onset of COVID-19 saw credit committees seek
detailed ‘deep dive’ reviews of existing lending portfolios and
tightened credit criteria for new deals as the primary measures
to identify and avoid future losses. Over the course of 2020,
whilst initial pessimism did not materialise into significant loan
defaults and shipping lending performed relatively well, we still
have not, even in early 2021, seen any significant relaxation in
the credit requirements and do not expect to see much during
the next 12 months.
34
Clarkson PLC | 2020 Annual Report
Generally, the biggest drivers for many credit approvals now
are debt service visibility and the ‘green credentials’ of the
borrower, the project and the asset. Where once lenders could
look to the vessels for ultimate recourse and security (and to
help reduce capital allocation costs), now with ESG firmly on
the forefront and with Basel IV getting ever closer, one could
argue that taking security over the current vessel fleet is
becoming more and more of a hindrance, certainly for
traditional shipping banks.
Overall, 2020 was a continuance of prior years’ trends, albeit
at reduced overall transaction levels compared to 2019. For the
most part, transactions remain private and confidential with few
confirmed details being made public, but early indicators are
that we move ever closer to a balanced funding market, split
evenly between traditional shipping banks and ECAs,
alternative direct lenders and leasing companies.
2021 has started on a positive note with a lot of asset financing
activity. We see plenty of availability of senior debt facilities
from the traditional shipping banks and export credit agencies
for the right ‘green’ transactions sponsored by blue chip
names, as long as debt service is clear. We are also seeing
increased enthusiasm from pension funds and insurance
companies for these same types of deals, so expect margin
spreads here to remain under pressure. Outside these deals,
the clear two-tier market in terms of pricing continues and this
in itself is seeing increased interest from private equity and
private wealth investors who are attracted by the higher yields
on offer for vanilla senior debt refinancing opportunities for
slightly older vessels. Structures and platforms are also being
developed to allow for increased ‘tokenisation’ and ‘trading’
of loan participations which itself will open up more liquidity
from this type of capital.
From our perspective, interest from our target clients, typically
those in control of the cargo, continues to grow for arranging
and execution of bespoke structured facilities and for financial
advice and validation services. The major corporates of the
world seem to have largely digested the balance sheet impacts
of IFRS 16 and now seem more willing to consider how to put
their balance sheets to work efficiently.
NOK 370m
During the first six months of
business, Clarksons Platou Property
Development has secured
development projects with building
costs totalling NOK 370m in the first
phases and with the potential of
further fees in the following phases.
Several major development projects
are in the pipeline, with the
expectation of growing the project
portfolio to NOK 635m during 2021.
Clarkson PLC | 2020 Annual Report
35
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Agency
The year began very strongly with good demand for agency
and shipbroking services across our grain, animal feedstuff,
offshore energy and wider product customer base. However,
the arrival of COVID-19 and the governmental restrictions saw
certain sectors of our business go into either a short decline
whilst customers adjusted to the new business environment or,
as with offshore oil and gas, a much more prolonged reduction
in activity levels.
The UK recorded one of its weakest wheat harvests for many
years. Whilst grain exports in the first half were good, the lack
of UK wheat for export in the second half meant reduced
agency income. This fall in income was offset through strong
barley export volumes and imported wheat volumes which
grew markedly. Other bulk product volumes held up reasonably
well despite some COVID-19-induced volume losses where
activity levels fell for a period, particularly in the first half of the
year when the UK was in a strict lockdown.
Our offshore energy business enjoyed a very strong second
half of the year, representing a range of installation and cabling
clients for offshore wind projects off the English and Scottish
coasts. These projects continue with different phases into 2021
and our agency business is extremely well placed to meet the
needs of this expanding sector with the planned wind farm
developments off both the Scottish and English coasts for
many years to come. Income from offshore oil and gas was
much reduced with customer activity levels dropping to a
minimum because of the fall in the price in oil and gas.
As we neared the end of the year, we invested heavily in our
Customs Clearance capabilities to meet our customers’ needs
to clear all products in and out of the UK following the end of
the transition period as the UK finally left the EU. 2021 onwards
will see a marked increase in activity levels in this area both for
all bulks leaving and arriving in the UK as well as the offshore
energy sector requirements to meet the new regulations now
the UK is not part of the EU.
Support
There was a significant recovery
across all areas in the second
half, led by our increasingly
strong position servicing the
offshore renewables industry.
Share of revenue: 7%
Services
– Agency
– Gibb Group
– Stevedoring
Revenue
£24.9m
2019: £27.7m
Segment underlying profit
£1.7m
2019: £3.1m
Employees
261
2019: 237
36
Clarkson PLC | 2020 Annual Report
For all vessels under our agency, from the very beginning of
the COVID-19 restrictions we implemented protocols to ensure
vessels and their crew members could continue to pass
through ports safely and without interruption.
In Egypt, we arranged 103 vessel port calls in 2020 compared
with 138 vessels in 2019. The reduced numbers were due to
COVID-19 and local market conditions. By the end of 2020 we
had started to provide more services to our customers. We
arranged the transit of 582 vessels in 2020 compared with 589
vessels in 2019. Our liner division has achieved a 15% increase
in revenues in 2020 compared with 2019. In 2021 we expect a
rebound in port calls and are targeting new clients to diversify
our portfolio of vessel types.
Gibb Group
2020 has been one of the most exciting, yet challenging, years
for Gibb despite having to navigate a path through continual
change and new ways of working.
It was a year of transition: in March 2020 we relocated the
Great Yarmouth business to a new purpose-built facility where
we managed to get the move completed just ahead of lockdown.
We have gone from being Gibb Tools for more than 70 years
– predominantly a tool and associated equipment supplier –
to Gibb Group Ltd, a new name to coincide with the launch of
Gibb Safety and Survival. The new division is true to our roots
of servicing the marine and energy sector with all things safety
and survival.
2021 will see more changes with the rollout of our fully digitised
business operationally and a full e-commerce client experience
website from the second quarter of 2021, which will offer no
less than 20,000 different stock items to our clients, enabling
Gibb to offer a true global reach.
In the space of two years, our business has successfully
transitioned from a business which relied on oil and gas for
90% of its revenues, to one which is now 50% renewable
activities and 50% oil and gas. We continue to make great
progress as we actively pursue work in the renewable sector
and gain the trust and custom of many tier 1 wind farm
operators.
With the new Safety and Survival division, we have welcomed
some of the industry’s best individuals into the business to
assist our plans to grow the brand. We have committed to
a new recruitment process to bring apprenticeships into the
business and use this model as the pathway to our future talent
in the business.
The new name of Gibb Group Ltd will better reflect the
business offering with both the tools and safety division placed
under the Gibb Group brand. We already have plans which
could lead to more divisions on our journey.
Stevedoring
Our Ipswich-based business had a strong year investing in
additional space to meet customer demand, particularly in the
second half. Export volumes held up very well despite the poor
UK wheat harvest and import volumes exceeded our
expectations. We began a new venture in Portsmouth to meet
client demand and we hope that this grows in future periods.
Our offshore energy business enjoyed
a very strong second half of the year,
representing a range of installation
and cabling clients for offshore wind
projects off the English and Scottish
coasts. These projects continue with
different phases into 2021 and our
agency business is extremely well
placed to meet the needs of this
expanding sector with the planned
wind farm developments off both the
Scottish and English coasts for many
years to come.
Clarkson PLC | 2020 Annual Report
37
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Delivering for our clients
Contributing
to the world’s
demands
for cleaner
energy for
the future
7,500
Active offshore wind turbines globally,
975 of which were installed in 2020
38
Clarkson PLC | 2020 Annual Report
Supporting the Moray East offshore wind farm
As the energy transition continues to gather pace, our Support
division’s specialist knowledge and wide range of services
means that we are well placed to contribute to the world’s
demands for cleaner energy for the future.
Over the last few years Clarksons Port Services (CPS) has
been supporting the installation of the Moray East offshore
wind farm, a sizeable renewable energy project located off the
Scottish coast which will be able to power approximately one
million UK homes. The project comprises 100 wind turbines
and three offshore substations, from where electricity is
exported onshore.
Our support for the project has been varied and far-reaching
and has included:
– Providing the local vessel agency services required to
support the transportation of structures for securing the
foundations of the turbines and substations, as well as crew
change co-ordination, procurement, customs and freight
forwarding expertise. We are meeting the needs of our clients
through both an office in Invergordon opened specifically
to support the project, and our Aberdeen office.
– Representing many partners and vessel owners on the
installation of the steel structures that form the foundation
of the wind turbines. This includes the provision of vessel
agency, customs clearance advice and services, crewing
guidance in relation to COVID-19 restrictions, product and
machinery forwarding, landside services, bunkering and
co-ordination services involving the wider port community
service providers.
– The procurement of tools, consumables, PPE and other
specialist equipment from our fellow Group company,
Gibb Group Ltd.
– Overseeing 260 vessel calls in 2020 and co-ordinating
the services needed to complete each call.
– Looking ahead to 2021, supporting vessels specifically
designed for the transportation of wind turbine componentry
and representing the company laying the subsea cabling.
Clarkson PLC | 2020 Annual Report
39
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Research
Our Research capabilities have
been in high demand this year.
Share of revenue: 5%
Services
– Digital
– Services
– Reports
Revenue
£16.8m
2019: £16.8m
Segment underlying profit
£5.6m
2019: £5.4m
Employees
126
2019: 115
40
Clarkson PLC | 2020 Annual Report
Despite the difficult trading conditions, Research revenues
remained steady at £16.8m (2019: £16.8m), with profits
increasing to £5.6m (2019: £5.4m). Across the challenges
of 2020, Research has maintained full research output while
continuing to invest in its offering, including new initiatives
to profile the complex impact of COVID-19 on the shipping
markets and to track trends across the accelerating green
transition. Our trusted intelligence and well received new
coverage strengthened, in a period of uncertainty and change,
our position as global market leaders in the provision of data
and intelligence around shipping, trade, offshore and energy.
Research significantly expanded its support of the Sea/ suite
technology platform during 2020 while continuing its role as a
core data provider to the Broking, Financial and Support teams
of Clarksons. Research has also helped maintain and enhance
the profile for the Clarksons Group through our provision of
highly respected research to a wide client base.
Our long-term strategy to focus on data, intelligence and
insights around the green transition continued across 2020.
This is a hugely important area for the shipping industry and
one that has, along with technology, arguably been ‘amplified’
as stakeholders across maritime look to embed ‘green’ and
‘tech’ initiatives into their post COVID-19 planning. The shipping
industry produces 810mt of CO2 each year, which represents
2.4% of global CO2 emissions. There are ambitious reduction
targets set by governmental bodies, such as the IMO and EU,
and key industry stakeholders including financiers and cargo.
Our initiatives to explain emissions regulation and policies to
commercial decision makers, track technology uptake
including alternative fuels, analyse the economic impact on
markets, earnings and asset value and project scenarios for
fleet renewal investment have been integrated into our research
offering as part of our fuelling transition series and are receiving
excellent client feedback. This data and intelligence is being
utilised across the shipping industry, including by governments
and policy makers. During 2020, we also launched an energy
transition model, providing integrated long-term scenarios for
the energy mix specific to the maritime ‘universe’ including
seaborne energy trade trends and the split of energy
production by onshore and offshore locations. These scenarios
show exciting long-term prospects for the offshore renewables
industry and we have significantly expanded our data coverage
around projects, farms, turbines and the wind fleet to support
our clients and the Clarksons Platou Renewables broking team.
Research collects, validates, manages, processes and
analyses data around the shipping and offshore markets,
helping support our clients with their strategy and general
decision-making processes. Our global Research team, with
a headcount of over 120 and a strong Asia Pacific presence,
showed excellent flexibility during the year. Expansions to our
proprietary database are increasingly supported by our data
analytics team, utilising innovative techniques to produce
near-term and high frequency data series. Despite some
subscription deferrals, our expanded sales operation has
ensured good client renewal and a flow of new business,
helping annuity revenue reach over 80% of overall sales.
Digital
Sales across our digital platform grew by 5% in 2020. Specific
development plans for each of our digital products continue
to be executed, to ensure that all systems remain content
relevant, capture the benefits of our expanded database and
utilise the latest technology including new data visualisation
and customisation tools. Our investment into underlying digital
architecture, including Application Programming Interface (API),
is providing wide-ranging benefits. Users of our single access
integrated platform have reached over 8,000.
Major digital products include:
Shipping Intelligence Network (SIN)
SIN is the market-leading commercial shipping database,
providing wide-ranging data and analysis tracking and
projecting market supply/demand, vessel earnings, vessel
values and macro-economic data around trade flows and
global economic developments. Our early launch of a
dedicated COVID-19 market impact intelligence series provided
a framework around the huge uncertainties and complexities
facing the shipping industry and was very well received by our
clients. This profiled huge ‘swings’ in trade volumes, elements
of ‘disruption upside’, stresses in markets such as cruise and
ferry and the shortening order book to historic lows. Other new
content included a port call activity tracker and a monthly trade
index that helped monitor trends such as the early recovery in
China and rebounding container volumes in the second half of
2020. We also launched a floating storage tracker (for example,
12% of tanker fleet was utilised as storage in the second
quarter) and issued regular briefings on topical issues such
as the impact of Brexit on seaborne trade.
World Fleet Register (WFR)
There was strong sales growth of the WFR, supported by
client interest around the green transition. The WFR focuses
on providing intelligence around the world shipping fleet and
companies, environmental regulation and policy, the tracking
of new technology on-board ships including scrubbers and
alternative fuels and market trends in the shipbuilding market.
New time series, ‘eco’ profiles, emissions tracking reports and
dashboards monitoring ‘green’ technology were added in 2020;
by the end of 2020, 29% of the newbuilding order book was
alternative fuelled, up from 21% a year earlier.
World Offshore Register (WOR)
Our comprehensive offshore register provides detailed
intelligence on offshore oil and gas fields, oil company
investment projects, offshore rigs and support vessels.
Offshore oil and gas represent 17% of global energy supply
with offshore renewables at 0.2% of the energy mix, although
this could rise to 7% by the middle of the century. We made
significant investments into our renewables database during
2020 and a new module is planned for launch in 2021.
Clarksons Research remained the market leader in data
provision to the insurance market, where our data is used
as the core reference in identifying rigs and platforms.
Offshore Intelligence Network (OIN)
Despite significant economic stress across the oil service
sector, our digital offshore-related sales remained steady.
Our COVID-19 Market Impact Assessment series for the
offshore market, documenting the huge swings in oil market
supply and demand and the associated impacts across the
offshore supply chain, was well received by clients.
Sea/net
Developed in conjunction with Maritech (a wholly owned
subsidiary of Clarksons), our vessel movement system Sea/net
blends satellite and land-based AIS data with our proprietary
database of vessels, ports and berths. Research continues
to improve the depth of our underlying movement and
deployment data.
Services
Our specialist services team focuses on developing and
managing retainers that provide bespoke data, consultancy
and tailored intelligence to a range of corporate clients. Good
progress was made in further expanding our client base during
the year, with a number of successful contracts incorporating
API delivery concluded. Our long-standing ‘Shipping and
Shipbuilding to 2030’ forum, where analysis and modelling
of the market outlook, earnings projections, long-term trade
development, energy transition, technology scenarios to meet
reduced emissions, ship finance requirements and newbuilding
demand are presented to key retainer clients, was successfully
hosted as a webinar, with record attendance and excellent
feedback received. Our ‘Offshore and Energy to 2030’ forum
was also held virtually and included the launch of a detailed
report around the rapidly growing offshore renewables market.
Our bespoke services typically become embedded within our
clients’ workflows, supporting good client retention. Important
client groups include banks, leasing companies, shipyards,
fabricators, engineering companies, insurers, governments,
asset owners and other corporates.
Clarksons Valuations is the largest provider of valuation
services to the shipowning and financial community and is
recognised as the leading provider of authoritative valuations
to the industry, combining leading broker expertise, research
and technology. Reflecting the softer transactional environment
of 2020, and long-term changing financial landscape, there was
a small reduction in valuation volumes for the team. Clarksons
Valuations maintained good relationships with all major ship
finance banks, leasing companies and asset owners during
2020, providing regular updates on the impact of COVID-19
on asset values and transaction volumes. Previous investments
into the team’s operating platform, and in digitalising workflows,
proved highly effective during periods of remote working.
Reports
Benefiting from over 50 years of heritage, our comprehensive
market intelligence report series, including flagships such as
Shipping Intelligence Weekly, continues to generate important
provenance and profile. Although some of these reports can
be accessed individually in digital format, they are largely
accessed via our web offerings and we plan to accelerate
this consolidation in 2021.
Clarkson PLC | 2020 Annual Report
41
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Business review
continued
Sea/trade live
Securing the RFP for a major mining group gave a clear target
for our development team to have the first version of Sea/trade
ready to go live by the end of the year. Delivering a product that
optimises the creation, distribution and negotiation of a freight
transaction or just the deal-capture, whilst still preserving the
essential roles that charterers, owners and brokers all play
in the process, has been a substantial task but an essential
one in an industry that is built on relationships. The fact that,
through capturing the details of the transaction at this initial
stage, charterparties are created without the need to re-key
data, and fixture details can flow into other products, is a
significant step for the industry.
Large scale implementations
2020 saw the adoption of Sea/contracts and Recap Manager,
the Maritech contract manager licenced to the London Tanker
Broker Panel, by some of the largest chartering and owning
groups, bringing their extended network of counterparties
and brokers onto the platform. These products ensure tighter
governance around terms allowing for the flagging of risky
clauses and the seamless creation, distribution and approval
of documents. Onboarding, training and supporting these
large-scale implementations has necessitated growing our
teams in Singapore, London and Houston but the pipeline
of new customers in all market sectors from oil majors to the
largest dry cargo operating groups and mining companies now
positions these products as clear market leaders.
Carbon reporting
The essential need to promote international shipping’s
decarbonisation has resulted in several initiatives to record
carbon consumption after each voyage is completed and,
in some instances, to report these results on an annual basis.
Technology plays a part in providing an efficient and simple
method to request and receive data from owners and calculate
the resultant emissions, hence Maritech has developed a tool
to capture, display and report this information which is now live.
Delivering for our clients
Making digital
solutions part
of the everyday
for our clients
The clear aims in 2020 were to drive adoption of the core
modules, deliver the Sea/trade platform and roll out
enhancements across all products to satisfy customer
feedback. Whilst COVID-19 impacted collaborative working
in an office environment, the technology teams adapted to
online collaboration with unsurprising ease. Given the foreign
travel restrictions, the sales team were similarly quick to move
to online demonstrations which reduced time in transit and
yielded strong results.
The demand for digital solutions in the maritime sector
remains at an all-time high, but it is equally clear that quality
and security are essential factors in selecting a new technology
product. Our data security team were, once again, awarded
ISO 27001 certification in 2020, demonstrating our commitment
to information security across the design, development,
provision and hosting of our applications and services.
Powerful insights
Sea/net has enjoyed a year of significant enhancements
resulting in ever-greater adoption by customers. This product
is an AIS module that leverages the Clarksons Research vessel
database and provides a single view displaying vessel, port,
cargo and commodity data, and has proved a popular tool for
those requiring powerful and clear insights amidst the noise
of information overload.
42
Clarkson PLC | 2020 Annual Report
Bots boost user numbers
The introduction of Bots in Sea/chat resulted in the growth of
both user numbers and instances of utilisation of these features.
The ability to enter a vessel name or IMO number and receive
vessel specifications from the Clarksons Research Vessel
Register, together with an AIS position and historical data, has
proved popular. So, too, has been the ability to enter the name
of any port and receive a map view together with data on the
restrictions and other essential information on the port.
Mitigating risk and delivery efficiency
In the offshore industry, Sea/response provides an essential
service in providing critical information on the location and
equipment on board vessels in the proximity of an emergency.
Providing Sea/calc to a charterer so that they receive uniform
and consistent calculations from all their service providers
highlights the efficiencies that are being found using Maritech
products. Whether it is scheduling the optimum vessel for a
cargo pre-fixture or analysing the performance of a voyage
post-fixture, our consistent aim of allowing data to flow
seamlessly from one module to another, minimising the re-keying
of information and reducing errors, is delivering efficiency.
Clarkson PLC | 2020 Annual Report
43
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our markets
Global trends
Green transition
Context
The green transition will deeply impact the maritime sector,
requiring huge investment, technology change and innovation.
The shipping industry must play its role in reducing global
greenhouse gas emissions generally, and CO2 specifically.
We estimate that the world shipping fleet produced around
810mt of CO2 in 2020, some 2.4% of global output, and while
shipping remains the most carbon efficient means of transport,
further acceleration of decarbonisation strategies will be needed
in the coming decades. There are already ambitious emissions
reduction targets set by governmental bodies, such as the IMO
and the European Union, and by key maritime stakeholders,
including financiers and charterers. In post COVID-19 planning,
policies to moderate climate change have become a priority
for many stakeholders across the shipping industry.
What this means for Clarksons
We are actively supporting our clients to develop, validate,
execute and monitor their strategies around emissions
reductions. We have invested in data, intelligence, expertise
and technology to support cargo interests and shipowners
to execute freight, carbon and asset owning decisions that
combine commercial opportunities and the meeting of
environmental targets. Our finance teams are already active
in green financing initiatives and our technology team has
developed emissions reporting and monitoring tools. Our
research provides data and intelligence to governments,
regulators, trade associations and academic institutions around
eco technology uptake across the world shipping fleet and the
economic impact of regulation, helping frame debate and
policy decisions.
Shipping’s share of global CO2 emissions (2020e)
Shipping
Other
Source: Clarksons Research
2.4%
97.6%
Shipping’s share of global CO2 emissions
2.4%
810mt
Estimated amount of CO2 produced by the
world shipping fleet in 2020
44
Clarkson PLC | 2020 Annual Report
Technology
Context
Like many industries, digital technology change is introducing
opportunities to radically improve efficiency, regulatory
compliance and transparency across shipping. As they have
been across society, these trends within the shipping industry
have been amplified during the COVID-19 pandemic, with
growing demand for digital services and solutions that leverage
these opportunities around the freight transaction process and
the monitoring and management of risk and emissions. While
a range of new technology entrants are also looking to exploit
these opportunities, industry participants are increasingly keen
to work with established partners with critical mass and
industry understanding.
What this means for Clarksons
Our investments into the innovative Sea/ suite of technology
products have created a transformative end-to-end digital
freight platform for the shipping industry. Delivering efficiencies,
productivity and risk mitigation, the Sea/ suite has already
become embedded within the workflows of many of the world’s
largest cargo interests as our excellent profile, proprietary data,
deep understanding of freight and our long client relationships
encourage increasing uptake. Managed by our technology
business, Maritech, the Sea/ suite also complements our
traditional broking offering while creating exciting opportunities
for growth. Our broader investments into the digitalisation of
our workflows and the evolution of digital support systems are
long-standing and provide a competitive edge for our broking
and banking teams. Our Research business continues to utilise
innovative technology to generate and deliver its data and
intelligence, with growing demand across industry to integrate
data into client internal digital systems.
Global growth in internet access
%
70
60
50
40
30
20
10
0
4
9
9
1
6
9
9
1
8
9
9
1
0
0
0
2
2
0
0
2
4
0
0
2
6
0
0
2
8
0
0
2
0
1
0
2
2
1
0
2
4
1
0
2
6
1
0
2
8
1
0
2
0
2
0
2
% global population using the internet
Source: Clarksons Research
Growth in e-commerce
%
25
20
15
10
5
0
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
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
E-commerce as a % of US retail sales
Source: US Department of Commerce
150%
Growth in internet access over the last
ten years
35%
Growth in US retail e-commerce in 2020
Clarkson PLC | 2020 Annual Report
45
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our markets
continued
Global trends continued
COVID-19 disruption
Context
Even for an industry with a track record of disruption
management and dealing with increasing trade complexity and
freight rate volatility, the impact of COVID-19 on global shipping
has been unprecedented. Shipping plays a vital role in
facilitating global trade, with 85% of all trade moved by sea,
and in 2020 there were huge swings in trade volumes and deep
complexities across geography and commodity. Generally, the
shipping industry activity has experienced significantly smaller
contractions in activity, and a quicker recovery, than across
other transportation modes. While some shipping segments
have suffered deep economic stress, others, such as the
containership and tanker segments, have also benefited from
elements of the disruption and volatility. Understanding and
managing these recent trends, besides the long-term
complexities around the business cycle, commodity flow and
shipping supply, is vital for our clients. Global trends around
technology and sustainability have also become increasingly
important during the COVID-19 pandemic.
What this means for Clarksons
Our ability to maintain and enhance our offering to clients
across the COVID-19 pandemic disruption and uncertainty has
strengthened our role as an essential part of the freight supply
chain. Our technology investments, flexible approach, scale,
global critical mass and deep understanding of the rapidly
evolving market situation have allowed us to deepen our
support to clients as they respond to the challenges and
opportunities created. This has included helping our clients
execute strategies involving tanker ‘floating storage’, additional
capacity for rebounding container volumes and managing the
spike in LNG and LPG freight rates at year end. We have
produced leading data, intelligence and insights to allow our
clients an understanding of the deep and complex economic
impacts from COVID-19-related disruption and to support post
COVID-19 recovery planning, including the focus on technology
and sustainability.
Monthly trade
% year-on-year
4
2
0
-2
-4
-6
-8
-10
Jan
2019
Apr
2019
Jul
2019
Oct
2019
Jan
2020
Apr
2020
Jul
2020
Oct
2020
Jan
2021
Deep sea cargo vessel port calls
Seaborne trade indicator, 3mma
Source: Clarksons Research
Tankers in floating storage
% dwt
12
10
8
6
4
2
0
Jan
2019
Apr
2019
Jul
2019
Oct
2019
Jan
2020
Apr
2020
Jul
2020
Oct
2020
Jan
2021
Source: Clarksons Research
10%
Increase in trade from peak COVID-19
disruption (May 2020 to December 2020)
46
Clarkson PLC | 2020 Annual Report
Shipping trends
Energy transition
Context
The energy transition is gathering pace as policies and
strategies towards decarbonisation become an increasing
priority. Offshore renewables, which saw record investment
and start-up capacity in 2020, is expected to play a vital role in
this transition. Some 40% of seaborne trade, equivalent to over
4.2bn tonnes, is energy transportation and despite underlying
growth in energy demand over recent decades, the mix of
energy sources and growth rates is changing as environmental
pressures build. With strong growth trends in gas and more
mature trends in coal, shipping requirements and investment
needs are also changing. From an energy production perspective,
a significant 17% of global energy still continues to be met by
offshore oil and gas production.
What this means for Clarksons
Our dedicated renewables broking team, focused on the
offshore wind industry, works closely with clients in this rapidly
expanding sector and executed a significantly increased level
of business in 2020. Our port services and banking businesses,
leveraging our heritage expertise in offshore oil and gas, have
also built dedicated renewables teams that are increasingly
active, whilst we have developed research intelligence on all
wind farms globally. Our understanding of energy markets and
our deep relationships with energy producers and traders allow
us to provide an unrivalled service to support our clients in their
ship chartering, asset and financing strategies as they deal
with energy transition. We are well positioned as market leaders
in the growing gas transportation markets of LNG and LPG.
Through our research, we provide intelligence that allows
understanding of the potential impact of long-term energy
mix changes on underlying shipping requirements.
Offshore renewables scenarios 2000-2050
TWh
5,000
4,000
3,000
2,000
1,000
0
0
0
0
2
5
0
0
2
0
1
0
2
5
1
0
2
0
2
0
2
5
2
0
2
0
3
0
2
5
3
0
2
0
4
0
2
5
4
0
2
0
5
0
2
Gradual transition
Rapid decarbonisation
Source: Clarksons Research
Energy transportation share 2020
Steam coal
Crude oil
Oil products
LPG
LNG
Source: Clarksons Research
Bn tonnes
0.9
1.9
0.9
0.1
0.4
22%
Growth in global offshore wind GW capacity
in 2020
Clarkson PLC | 2020 Annual Report
47
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our markets
continued
Shipping trends continued
Broadening markets
Context
Over the past 20 years, seaborne trade and shipping capacity
have expanded significantly, creating a materially broader and
more complex industry by geography and cargo. Seaborne
trade volumes by tonnes have increased by nearly 90% over
this period and today remain 40% larger than at the financial
crisis, despite recent COVID-19 disruption. Emerging markets,
supported by population growth, have been central to growth
with Asian imports growing from 2.6 billion tonnes to 6.9 billion
tonnes since 2000. Individual shipping segments, such as
specialised products and LPG, have also evolved into more
significant markets. Shipping companies, traders and cargo
interests have also become more consolidated, global and
mature in their approach with increasing demands for highly
professional support.
What this means for Clarksons
As an essential part of the freight supply chain and market
leaders across all major cargo sectors, our broking teams
benefit from growing global volumes of cargo traded and
ships chartered. Our diversified position, while maintaining
specialised market-leading positions and expertise in all cargo
segments, has been increasingly important as the global trade
matrix has evolved. Our global network of offices, expanded
in recent years, allows us to combine global reach with local
relationships, knowledge and expertise. Our deep
understanding of increasingly complex trade flows, and the
range of economic, geo-political and seasonal factors that
impact both positively and negatively on growth trends, make
us a trusted advisor and provider of market insights and
intelligence to cargo interests and shipowners. Our offering and
scale are increasingly attractive to clients looking for solutions
that increase productivity, efficiency and transparency,
leveraging off our innovative technology and trusted data
solutions that help differentiate our service offering and add
value to our clients.
48
Clarkson PLC | 2020 Annual Report
Global trade 1991-2021(f)
Bn tonnes
15
tonnes per capita
1.8
10
5
0
1.2
0.6
1
9
9
1
3
9
9
1
5
9
9
1
7
9
9
1
9
9
9
1
1
0
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
3
1
0
2
5
1
0
2
7
1
0
2
9
1
0
2
1
2
0
2
0.0
Global seaborne trade (left axis)
Seaborne trade per capita (right axis)
Source: Clarksons Research
Asia seaborne imports 2000-2021(f)
Bn tonnes
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
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
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Source: Clarksons Research
85%
Global trade carried on ships
Fleet evolution
Context
Over the past 20 years, the capacity of the world’s shipping
fleet has grown by over 150% to over 2.1bn dwt as the shipping
industry has expanded to meet its crucial role in servicing
global trade. Although fleet growth has begun to moderate
in recent years, helping markets recalibrate, the world fleet is
still 70% larger than at the start of the financial crisis, providing
greater potential volumes for our asset broking teams. The
dynamics across the shipping fleet are also becoming
increasingly complex, with trends towards slower speeds,
increasing length of haul, storage plays, shipyard consolidation
and congestion.
Opportunities for Clarksons
Our understanding of the world’s shipping fleet, both at
an aggregate trend level and on an individual asset basis, is
unrivalled. This understanding builds on the synergies between
our broking, banking and research teams and supports our
clients in their decision-making through our complex and
multi-cyclical markets. Our broking teams are market leaders
through the full lifecycle of the asset and across every ship type
operating in the world fleet, benefiting from the greater volumes
of vessels bought and sold in recent years. Our understanding
of the number of active shipyards and capacity reductions is
a key insight that Clarksons provides to our clients, as is the
tracking of trends in the recycling of ships. As the global order
book reaches a 31-year low at 7% of fleet capacity, and
pressures for fleet renewal build, our understanding of the
world’s shipping supply is vital to our clients’ decision-making.
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
World fleet growth 2000-2020
Bn GT, end year
% year-on-year growth
10.0
7.5
5.0
2.5
0.0
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
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Year-on-year growth
World fleet (GT)
Source: Clarksons Research
Average vessel speed index 2008-2020
2008 = 100
105
100
95
90
85
80
75
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
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Source: Clarksons Research
150%
Growth in shipping fleet capacity over the
past 20 years
Clarkson PLC | 2020 Annual Report
49
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our markets
continued
Shipping trends continued
Fuel transition
Context
The transition away from conventional fuel use is central to
a reduction in emissions across the shipping fleet. New and
complex environmental regulations and policies are being
introduced across the shipping industry, many of them directly
impacting fuel type and fuel economics. These regulations and
policies are also increasingly impacting supply and demand
trends and commercial decisions across the shipping markets.
Strategies to manage the introduction of global sulphur limits
at the start of 2020 required deep understanding of fuel costs,
scrubber technologies, retro-fitting timetables, vessel speeds
and oil product trade flows. With the focus having turned to
CO2 reduction, there are challenging strategic decisions for
shipowners and cargo charterers given uncertainties around
propulsion technology and timing of investment decisions. At
the start of 2020, 29% of the global order book by tonnage was
capable of using alternative fuels, up from 21% a year earlier.
What this means for Clarksons
Clarksons is uniquely placed to understand and explain
the economic impact of new regulations and policies.
This understanding involves the impact on market supply and
demand, on individual vessel asset value and earning potential,
on chartering decisions and on decisions around fleet renewal
and newbuildings. This allows us to guide clients on how
markets may respond and to support clients on how their
chartering and asset owning strategies should be adapted,
including the execution of fleet renewal programmes. Our
wide-ranging research data and intelligence, including
coverage of eco equipment and technology on board ships,
alternative fuels and Energy Saving Technologies (ESTs), CO2
emission benchmarking, vessel speeds and bunkering facilities,
is widely used by the shipping industry and policymakers as
an authoritative source.
50
Clarkson PLC | 2020 Annual Report
Scrubber count
Number of vessels
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jan
2018
Jan
2019
Jan
2020
Jan
2021
Fitted
Pending retrofit
Order book
Source: Clarksons Research
Environmental uptake
% of fleet/order book in GT terms
35
30
25
20
15
10
5
0
Scrubber fleet
(including pending)
Scrubber
order book
Alternative fuel
capable fleet
Alternative fuel
capable order book
Source: Clarksons Research
29%
Share of order book tonnage capable of using
alternative fuels
Value of the world fleet (including order book)
Tankers
Bulkers
Boxships
Gas
Other vessels
Offshore
Source: Clarksons Research
US$bn
196
192
145
128
298
232
Ship finance
Context
The financial landscape for the shipping industry has changed
significantly since the financial crisis, impacting the number
of financial institutions participating and the scale of finance
available. The aggregate debt portfolios of the top 20 ship
finance banks in 2008 compared to those of the top 20 today
is around 30% smaller, with many ship finance banks in Europe
having restructured or divested elements of their shipping
exposure following challenging market conditions and
increasing regulation. Many shipowners and cargo interests
have looked to diversify their funding sources and investigate
new and more complex financing solutions, with changes in
accounting standards also impacting. Green issues specifically,
and ESG more broadly, are increasingly impacting the policies
of ship finance institutions and access to finance for cargo
and vessel owners. Despite these trends and complexities,
financing the world shipping fleet and its renewal to meet
decarbonisation targets, remains hugely capital intensive,
with today’s shipping and offshore fleet valued at US$1.2tn
and the world order book at record lows.
What this means for Clarksons
The guidance and execution that Clarksons’ market-leading
financial teams can provide across this more complex ship
finance landscape, at a time of increasing investment needs
around the green transition, is unique in the market. Our deep
expertise, combined with an innovative approach, allows us
to support our clients to raise finance across capital markets,
project finance, debt markets and through leasing structures.
Our ability to offer innovative solutions to our clients was again
demonstrated in 2020, including regularly leveraging synergies
between our broking and banking teams and their relationships
with cargo, shipowners and financiers, including around fleet
renewal newbuild projects. Our offer also includes an
integrated service to support ship finance banks and investors
divesting of assets or engaged in restructuring and bankruptcy
cases and supporting clients acquiring loan books. We are
well positioned to understand and support green financing
initiatives and our finance team grew its presence and activity
across the renewables market in 2020. Our research and
valuations continue to be trusted as the market-leading
source across the finance sector.
7%
Lowest order book as a share of the fleet
for 31 years
US$1.2tn
Shipping and offshore fleet value
Clarkson PLC | 2020 Annual Report
51
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our strategy
Our strategy is to create long-term
sustainable value for all of our
stakeholders.
We do this by building on our strong
performance, which allows us to
maintain and develop our position
as the global market leader in
shipping services.
52
Clarkson PLC | 2020 Annual Report
Breadth
Reach
Understanding
People
Trust
Growth
Strategic
objective:
Extending our
reach to support
clients globally
Our global presence enables
us to meet client needs
wherever and whenever
they arise. With 53 offices
in 23 countries on six
continents, and growing,
we share understanding,
culture, IT systems and
high standards of corporate
governance across our
business, as we use our
local knowledge to provide
our clients with truly global,
cross-border advice.
What we achieved in 2020
The Copenhagen and
Madrid offices (opened
in late 2019 and early 2020
respectively) have been
embedded. We also opened
an office in Birmingham
during the year, providing
increased capacity for us
to continue to develop the
Sea/ platform.
Strategic
objective:
Expanding
our breadth to
better tailor our
integrated offer
With an expanding and
industry-leading range of
products and services that
span the maritime, offshore,
trade and energy markets,
we are uniquely positioned
to deliver bespoke
commercial solutions to
our clients and enable them
to make smarter and better
informed decisions. As the
market makes increasing
strides towards a more
sustainable future, Clarksons’
investment in renewables
and sustainability expertise
positions us to lead this vital
change from the front.
What we achieved in 2020
As clients target zero carbon
emissions, Clarksons has
established a carbon
emissions broking desk;
strengthened our position
in LNG; expanded our
renewables broking teams
around the world; continued
to lead in alternate fuelled
newbuilding of vessels;
arranged finance across
many exciting renewables
projects; initiated a research
database of analytics
covering the green
transition; extended our
already strong support
teams to service offshore
wind projects; and developed
Sea/ solutions for the
capture of emissions data.
Strategic
objective:
Stronger
understanding
of clients’ needs
Strategic
objective:
Empowering
people to fulfil
their potential
Strategic
objective:
Maintaining
trust in shipping
intelligence
Our client base ranges from
oil majors to raw material
We are committed to
attracting and retaining
the best people, providing
them with the tools and
training that empower them
to fulfil their potential. Our
employees have access to
our leading technology and
authoritative intelligence,
enabling them to support our
clients to make smarter and
better informed decisions.
As a globally-respected
market leader in the
provision of data and
intelligence, our research
is widely trusted across the
shipping industry to inform
effective decision-making.
Our database tracks over
160,000 vessels and 8,000
offshore oil and gas fields.
producers 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. We have
more touch points across
the industry than anyone
else and use our leading
technology and authoritative
intelligence to offer unique
and tailored solutions to
meet our clients’ needs.
What we achieved in 2020
Our clients have indicated a
desire to increase the use of
technology within elements
of their shipping business.
We have continued to invest
in our Sea/ suite of products
(designed specifically to
address these
requirements), launching
a further six modules during
with the design of a
the year.
of COVID-19 on the shipping
and increasing our free cash
markets and to track trends
resources.
What we achieved in 2020
During 2020 we have
What we achieved in 2020
Research has continued to
developed and implemented
enhance its offering,
a new promotions process
and particularly focused
on the promotion of new
Managing Directors to
strengthen and further grow
our succession pool. Further
progress has been made
competency framework
to support leadership and
employee development
based on consistent criteria
of performance requirements.
including new initiatives to
profile the complex impact
across the accelerating
green transition. Research
expanded its support of
the Sea/ suite technology
platform while continuing its
role as a core data provider
to the Broking, Financial and
Support teams. Data
coverage has been
significantly expanded
around offshore renewable
projects, farms, turbines and
the wind fleet to support our
clients and the renewables
broking team.
Strategic
objective:
Growing our
business to
improve
performance
We are a consistently
profitable and cash-
generative business that
is focused on creating
long-term value for our
shareholders. We do not
rest on our laurels as the
market leader across our
core sectors, but strive to
build on our position through
the provision of ‘best in
class’ advice and service
to our clients.
What we achieved in 2020
We have increased our
dividend for the 18th
consecutive year, whilst
remaining cash-generative
We were able to maintain
our progressive dividend
policy due to the strong
cash flow produced by the
Company in the first half of
2020. Whilst the decision on
the amount and timing of the
final dividend in respect of
the 2019 financial year was
initially deferred until the
financial impact of COVID-19
could be assessed, the
Company’s robust
performance allowed the
payment of the equivalent
of the 2019 final dividend
as an interim dividend later
in 2020, as well as a further
interim dividend for 2020.
Breadth
Reach
Understanding
People
Trust
Growth
Strategic
objective:
Extending our
reach to support
clients globally
Our global presence enables
us to meet client needs
wherever and whenever
they arise. With 53 offices
in 23 countries on six
continents, and growing,
we share understanding,
culture, IT systems and
high standards of corporate
governance across our
business, as we use our
local knowledge to provide
our clients with truly global,
Madrid offices (opened
in late 2019 and early 2020
respectively) have been
embedded. We also opened
an office in Birmingham
during the year, providing
increased capacity for us
to continue to develop the
Sea/ platform.
Strategic
objective:
Expanding
our breadth to
better tailor our
integrated offer
With an expanding and
industry-leading range of
products and services that
span the maritime, offshore,
trade and energy markets,
we are uniquely positioned
to deliver bespoke
commercial solutions to
our clients and enable them
to make smarter and better
informed decisions. As the
market makes increasing
strides towards a more
investment in renewables
and sustainability expertise
positions us to lead this vital
change from the front.
emissions, Clarksons has
established a carbon
emissions broking desk;
strengthened our position
in LNG; expanded our
renewables broking teams
around the world; continued
to lead in alternate fuelled
newbuilding of vessels;
arranged finance across
many exciting renewables
projects; initiated a research
database of analytics
covering the green
transition; extended our
already strong support
teams to service offshore
wind projects; and developed
Sea/ solutions for the
capture of emissions data.
sustainable future, Clarksons’
cross-border advice.
What we achieved in 2020
What we achieved in 2020
As clients target zero carbon
The Copenhagen and
Strategic
objective:
Stronger
understanding
of clients’ needs
Strategic
objective:
Empowering
people to fulfil
their potential
Strategic
objective:
Maintaining
trust in shipping
intelligence
Our client base ranges from
oil majors to raw material
producers 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. We have
more touch points across
the industry than anyone
else and use our leading
technology and authoritative
intelligence to offer unique
and tailored solutions to
meet our clients’ needs.
What we achieved in 2020
Our clients have indicated a
desire to increase the use of
technology within elements
of their shipping business.
We have continued to invest
in our Sea/ suite of products
(designed specifically to
address these
requirements), launching
a further six modules during
the year.
We are committed to
attracting and retaining
the best people, providing
them with the tools and
training that empower them
to fulfil their potential. Our
employees have access to
our leading technology and
authoritative intelligence,
enabling them to support our
clients to make smarter and
better informed decisions.
As a globally-respected
market leader in the
provision of data and
intelligence, our research
is widely trusted across the
shipping industry to inform
effective decision-making.
Our database tracks over
160,000 vessels and 8,000
offshore oil and gas fields.
What we achieved in 2020
During 2020 we have
developed and implemented
a new promotions process
and particularly focused
on the promotion of new
Managing Directors to
strengthen and further grow
our succession pool. Further
progress has been made
with the design of a
competency framework
to support leadership and
employee development
based on consistent criteria
of performance requirements.
What we achieved in 2020
Research has continued to
enhance its offering,
including new initiatives to
profile the complex impact
of COVID-19 on the shipping
markets and to track trends
across the accelerating
green transition. Research
expanded its support of
the Sea/ suite technology
platform while continuing its
role as a core data provider
to the Broking, Financial and
Support teams. Data
coverage has been
significantly expanded
around offshore renewable
projects, farms, turbines and
the wind fleet to support our
clients and the renewables
broking team.
Strategic
objective:
Growing our
business to
improve
performance
We are a consistently
profitable and cash-
generative business that
is focused on creating
long-term value for our
shareholders. We do not
rest on our laurels as the
market leader across our
core sectors, but strive to
build on our position through
the provision of ‘best in
class’ advice and service
to our clients.
What we achieved in 2020
We have increased our
dividend for the 18th
consecutive year, whilst
remaining cash-generative
and increasing our free cash
resources.
We were able to maintain
our progressive dividend
policy due to the strong
cash flow produced by the
Company in the first half of
2020. Whilst the decision on
the amount and timing of the
final dividend in respect of
the 2019 financial year was
initially deferred until the
financial impact of COVID-19
could be assessed, the
Company’s robust
performance allowed the
payment of the equivalent
of the 2019 final dividend
as an interim dividend later
in 2020, as well as a further
interim dividend for 2020.
Clarkson PLC | 2020 Annual Report
53
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our stakeholders
Our clients
Our people
Who they are
We have over 5,000 clients globally
which includes charterers, vessel
owners, trust funds, investors and
ship agents.
Who they are
We currently have over 1,600
employees across 53 offices
in 23 countries.
What they care about
– Integrity
– Quality of service
– Expertise
– Trusted advisor
– Innovation and technology
– Market leadership
– Sustainable products and solutions
– Business conduct
What they care about
– Culture and values
– Reward and benefits
– Training and development
– Employer brand
– Market position
Why they are important to us
As the world’s leading provider of integrated shipping
services, our market-leading technology and intelligence set
us apart. This allows us to influence client decisions at every
step of the shipping lifecycle and form the trusted partnerships
with our clients that continue to drive our business.
Why they are important to us
As a service-driven business based on authoritative
intelligence, our people are our biggest asset. We strive
to employ and train the best people.
How we engage with them
Adopting a bespoke approach is key to how we engage
with our clients. This will include:
– Client meetings and presentations
– Client forums
– Client feedback and input into product development
– Social media
– Website
How we engage with them
– Employee engagement initiatives
– Leadership and divisional management forums
– Global conferences
– Active management
– Employee newsletter
– Social media
– Digital platforms
Issues raised during the year
– Ability to continue to service the business while working
within COVID-19 guidance on working practices
– The green transition, in particular fuelling transition
(decarbonisation of the industry), energy transition
(impact on trade flows of changes in energy usage)
and growth of the offshore renewables market
Actions and outcomes
– Smooth and efficient transition to working from home,
with no impact on client service
– Continued investment in and development of technological
solutions (e.g. to facilitate decision-making to support
decarbonisation of the industry, and to enable electronic
signature of charter party agreements)
– Digitisation of reports to make data more accessible
– Expansion of our offshore renewables team to cover the
expertise required in constructing offshore wind farms
– Establishment of a carbon emissions broking desk
Issues raised during the year
– Impact of COVID-19
– Remote working and impact on well-being
Actions and outcomes
– Seamless transition of employees to remote working whilst
maintaining excellent and uninterrupted levels of service
to our clients
– Enhancement of the range of mental health-focused
benefits provided to employees
– Establishment of new ways of working and bringing the Group
together: new channels of communication, new networks
of collaboration and a consistency of knowledge sharing
– Renewed focus on leading with compassion and empathy;
understanding the fine balance between work and home;
and respecting our staff more than ever in the need to work
in ways that ensure they feel supported
54
Clarkson PLC | 2020 Annual Report
Our communities
Who they are
Our shareholders
Who they are
The shipping community, industry-
related partnerships and the wider
communities in which we operate.
Our shareholders range from
small private investors to large
institutional investors.
What they care about
– Authoritative data and intelligence
– Sustainability
– Clarksons as a responsible company
– Employment opportunities
– Charities and community causes
What they care about
– Operating and financial performance
– Strategy and outlook
– Shareholder value creation
– Dividend policy
– ESG performance
– Remuneration
Why they are important to us
Why they are important to us
All participants in the wider shipping community play an
Our shareholders own our business and provide us with
important role in shaping the industry in which we operate,
the capital that enables us to continue to grow the business.
as well as being potentially both our current and future clients.
Furthermore, we want to have a positive and lasting impact
on communities, and fundamentally believe that behaving
in a socially responsible way is the right thing to do.
How we engage with them
– Publications and our database
– Sharing of expertise and knowledge through participation
in industry forums and employee directorships of shipping-
related boards
– Industry partnerships
– Volunteering
– Charitable donations
– Social media
How we engage with them
– One-to-one meetings
– Investor roadshows
– Capital markets days
– Analyst briefings
and annual report
– AGM
– Website
– Half year and full year results presentations,
Issues raised during the year
– The impact of COVID-19 on all aspects of shipping
– The green transition, in particular fuelling transition
(decarbonisation of the industry), energy transition
(impact on trade flows of changes in energy usage)
and growth of the offshore renewables market
Issues raised during the year
– Impact of COVID-19 on world trade, and the
Company’s results and outlook as a consequence
– Payment of dividends
– ESG factors, with social aspects becoming
increasingly important
Actions and outcomes
– Creation of regular reports on COVID-19 impacts
– Education of our stakeholders and partners in the
development of strategies to shape growth and
opportunities in the offshore wind sector
– Provision of Sea/ technology modules to maritime
universities at a heavily reduced price
Actions and outcomes
– Continued strong financial performance
– Adoption of a prudent approach to the payment of
dividends in 2020, resulting in the deferral of payment of the
full year 2019 dividend from May 2020 to September 2020
– Maintenance of the Company’s progressive dividend policy
through the payment of a second interim dividend in
– Continued support of already established industry
December 2020
partnerships
– Establishment of The Clarkson Foundation
– Focus on our local communities through charity
giving and employee volunteering
– Refreshing of the Board: enhancement of the shipping
and capital markets experience of the Board as a whole,
as well as succession planning for the Audit and Risk
Committee Chair
Our clients
Who they are
Our people
Who they are
We have over 5,000 clients globally
which includes charterers, vessel
owners, trust funds, investors and
We currently have over 1,600
employees across 53 offices
in 23 countries.
Our communities
Our shareholders
Who they are
The shipping community, industry-
related partnerships and the wider
communities in which we operate.
Who they are
Our shareholders range from
small private investors to large
institutional investors.
ship agents.
What they care about
– Integrity
– Quality of service
– Expertise
– Trusted advisor
– Innovation and technology
– Market leadership
– Sustainable products and solutions
– Business conduct
What they care about
– Culture and values
– Reward and benefits
– Training and development
– Employer brand
– Market position
Why they are important to us
Why they are important to us
As the world’s leading provider of integrated shipping
As a service-driven business based on authoritative
services, our market-leading technology and intelligence set
intelligence, our people are our biggest asset. We strive
us apart. This allows us to influence client decisions at every
to employ and train the best people.
step of the shipping lifecycle and form the trusted partnerships
with our clients that continue to drive our business.
How we engage with them
Adopting a bespoke approach is key to how we engage
How we engage with them
– Employee engagement initiatives
with our clients. This will include:
– Client meetings and presentations
– Client forums
– Social media
– Website
– Client feedback and input into product development
– Global conferences
– Active management
– Employee newsletter
– Social media
– Digital platforms
– Leadership and divisional management forums
Issues raised during the year
Issues raised during the year
– Ability to continue to service the business while working
– Impact of COVID-19
– Remote working and impact on well-being
within COVID-19 guidance on working practices
– The green transition, in particular fuelling transition
(decarbonisation of the industry), energy transition
(impact on trade flows of changes in energy usage)
and growth of the offshore renewables market
Actions and outcomes
Actions and outcomes
– Smooth and efficient transition to working from home,
– Seamless transition of employees to remote working whilst
with no impact on client service
maintaining excellent and uninterrupted levels of service
– Continued investment in and development of technological
to our clients
solutions (e.g. to facilitate decision-making to support
decarbonisation of the industry, and to enable electronic
signature of charter party agreements)
– Digitisation of reports to make data more accessible
– Expansion of our offshore renewables team to cover the
– Enhancement of the range of mental health-focused
benefits provided to employees
– Establishment of new ways of working and bringing the Group
together: new channels of communication, new networks
of collaboration and a consistency of knowledge sharing
expertise required in constructing offshore wind farms
– Renewed focus on leading with compassion and empathy;
– Establishment of a carbon emissions broking desk
understanding the fine balance between work and home;
and respecting our staff more than ever in the need to work
in ways that ensure they feel supported
What they care about
– Authoritative data and intelligence
– Sustainability
– Clarksons as a responsible company
– Employment opportunities
– Charities and community causes
What they care about
– Operating and financial performance
– Strategy and outlook
– Shareholder value creation
– Dividend policy
– ESG performance
– Remuneration
Why they are important to us
All participants in the wider shipping community play an
important role in shaping the industry in which we operate,
as well as being potentially both our current and future clients.
Furthermore, we want to have a positive and lasting impact
on communities, and fundamentally believe that behaving
in a socially responsible way is the right thing to do.
How we engage with them
– Publications and our database
– Sharing of expertise and knowledge through participation
in industry forums and employee directorships of shipping-
related boards
– Industry partnerships
– Volunteering
– Charitable donations
– Social media
Why they are important to us
Our shareholders own our business and provide us with
the capital that enables us to continue to grow the business.
How we engage with them
– One-to-one meetings
– Investor roadshows
– Capital markets days
– Analyst briefings
– Half year and full year results presentations,
and annual report
– AGM
– Website
Issues raised during the year
– The impact of COVID-19 on all aspects of shipping
– The green transition, in particular fuelling transition
(decarbonisation of the industry), energy transition
(impact on trade flows of changes in energy usage)
and growth of the offshore renewables market
Issues raised during the year
– Impact of COVID-19 on world trade, and the
Company’s results and outlook as a consequence
– Payment of dividends
– ESG factors, with social aspects becoming
increasingly important
Actions and outcomes
– Creation of regular reports on COVID-19 impacts
– Education of our stakeholders and partners in the
development of strategies to shape growth and
opportunities in the offshore wind sector
– Provision of Sea/ technology modules to maritime
universities at a heavily reduced price
– Continued support of already established industry
partnerships
– Establishment of The Clarkson Foundation
– Focus on our local communities through charity
giving and employee volunteering
Actions and outcomes
– Continued strong financial performance
– Adoption of a prudent approach to the payment of
dividends in 2020, resulting in the deferral of payment of the
full year 2019 dividend from May 2020 to September 2020
– Maintenance of the Company’s progressive dividend policy
through the payment of a second interim dividend in
December 2020
– Refreshing of the Board: enhancement of the shipping
and capital markets experience of the Board as a whole,
as well as succession planning for the Audit and Risk
Committee Chair
Clarkson PLC | 2020 Annual Report
55
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our business model
Our purpose
What we do
Broking
Share of revenue: 79%
We earn a broking commission based on the value of the
freight, the hire or the asset. On our derivative broking services
we earn commission based either on the underlying contract
value or as a fixed fee per contract.
Financial
Share of revenue: 9%
We earn commissions and fees from these financial
services activities.
Support
Share of revenue: 7%
We earn fixed agency fees and revenue from the sales
of supplies.
Research
Share of revenue: 5%
We earn revenue from digital products, including Shipping
Intelligence Network, Offshore Intelligence Network, World
Fleet Register, World Offshore Register and Sea/net, besides
specialist services, including data feeds, consultancy and
valuations, and market reports.
56
Clarkson PLC | 2020 Annual Report
Our purpose is to enable smarter,
cleaner global trade by empowering
our clients and our people to make
better informed decisions using our
market-leading technology and
intelligence; and in doing so, meet
the demands of the world’s rapidly
evolving maritime, offshore, trade
and energy markets.
We are the world’s leading provider
of integrated shipping services.
Our brokers act as intermediaries between shipping
principals. Our teams have the expertise, experience
and support structure to enable these deals to happen.
We bring together charterers who have cargoes to move,
and owners of vessels capable of transporting those cargoes.
We help the principals negotiate the terms of a voyage,
a timecharter hire or a contract of affreightment, including
the freight or hire rate. Our specialist broking teams deal
in all major markets in the world’s major shipping centres.
We also help clients contract newbuildings, buy and sell
secondhand vessels, and arrange the scrapping of older
tonnage. Additionally, we provide derivative broking services
to enable principals to manage and mitigate their risks.
The Financial division provides full investment banking
services, project finance and bespoke asset finance solutions
to the shipping, offshore and natural resources markets. We
help clients to manage risk, fund transactions and conclude
deals which are not available through more traditional routes.
The Financial team liaises with a range of potential investors
in order to raise funding for clients’ projects.
The Support division provides the highest standards of
support with 24/7 attendance to vessel owners, operators
and charterers at a wide range of strategically located ports.
We provide vessel agency, project logistics, vessel
chartering, freight forwarding, warehousing, crew travel
and industrial supplies.
The Research division provides and sells data covering every
aspect of our market. We are a leading provider of intelligence
and data across maritime, trade, offshore and energy, giving
clients access to the information they need to operate their
businesses more effectively. We provide information on fleets
and technology, holding data on 160,000 vessels, across
more than 900 shipyards and with over 30,000 data points
on machinery and ‘eco’ models. This information is available
via various subscription models and is relied on by shipping
professionals to inform strategies and decision-making.
In addition, we are the world’s leading provider of valuation
services to shipowners and the financial community.
How it works
We have a deep heritage and
market-leading reputation
Our position at the heart of the shipping
industry has been built over 169 years.
We offer an end-to-end global service
and our clients remain loyal to us due
to our unrivalled service, breadth of
knowledge and industry-leading range
of products that span the maritime and
financial markets.
We have the best people
in the business
The quality of our people has always
been our biggest differentiating factor,
and our people are our most important
asset. We focus on attracting, retaining
and developing the best talent in the
market, and our people have a track
record of delivering for our global
client base.
Read more
Our impact is detailed
on pages 58 to 68.
We take time to understand
our clients’ needs
We tailor our approach to each
and every client, building long-term
relationships as their trusted advisors.
We work closely alongside our clients
to understand the challenges they face
in a rapidly evolving world, providing
them with tailored solutions and services
and the intelligence and tools they need
to make smarter decisions.
e
d
a
r
t
l
a
b
o
l
G
Carg o
ort
p
p
u
S
F
r
eig
ht
Technology
Research
Smarter
decisions.
Powered by
intelligence.
Financ i a l
Technolo g y
A
s
s
e
t
s
B
B
r
r
o
o
k
k
i
i
n
n
g
g
w ners
O
G
l
o
b
a
l
t
r
a
d
e
We provide clients with
authoritative intelligence
Research sits at the heart of everything
we do, allowing us to produce and
validate data, supply analysis and
insight, and provide valuations across
all sectors of the shipping and offshore
markets. It enables us to provide
bespoke solutions for our clients and
support them in making fully informed
business decisions across their freight
and asset owning strategies.
We provide clients with robust
technology platforms and tools
Our investment in technology
complements the expertise of our
people and provides our clients with
real-time intelligence for decision-
making and innovative tools for trade.
Our cutting-edge technology
continuously drives innovation across
our industry and enables us to provide
bespoke solutions for our clients.
We facilitate smarter,
cleaner, global trade
Pressure is growing globally to find
solutions to moderate climate change.
The green transition will result in
fundamental change to shipping, trade,
offshore, energy and renewables, and
we are committed to providing data
and intelligence to help frame the critical
decisions that stakeholders across our
industry will need to make to facilitate
these changes. Furthermore, we are
playing a significant role in initiatives
to move towards a cleaner future for
global trade.
Clarkson PLC | 2020 Annual Report
57
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our impact
Environmental
Greenhouse gas emissions (GHG)
We recognise that our UK operations have an environmental
impact, and we are committed to monitoring and reducing our
emissions year-on-year. We are reporting our GHG emissions
and associated energy use as required by the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018 (the 2018 Regulations)
for our global operations. We have prepared this report in
accordance with the requirements for quoted companies under
this new regulation, having also complied with it for the 2019
reporting year.
We have reported the emission sources for which we have
operational control for our global estate for the reporting period
1 January 2020 to 31 December 2020.
2020 performance summary
Our carbon footprint for the 2020 reporting year was calculated
from activity data for scope 1 emission sources and electricity
consumption in scope 2. This disclosure builds on the minimum
requirements for compliance with the 2018 Regulations to
include additional material scope 3 emissions from business
travel and office operation (waste, water, paper). Our emissions
are presented on both a location and market basis. On a
location basis our emissions are 3,343 tCO2e, which is an
average impact of 2.1 tCO2e per employee (1.4 tCO2e per
employee for scope 1 and scope 2 emissions only), and
on a market basis our emissions are 3,889 tCO2e. We have
calculated emission intensity metrics on an employee basis,
which we will monitor to track performance in our subsequent
environmental disclosures. Further details of our GHG
emissions are provided below.
As a consequence of the COVID-19 pandemic and the advised
restricted travel, Clarksons’ total emissions have decreased
substantially from 2019. Our emissions associated with both
rail and business flights have decreased by 89%. While some
of our offices remained fully open, other offices closed for
periods of the year, with our employees working remotely
instead. This is reflected in a decrease in electricity (12%) and
natural gas consumption (31%). Other emissions associated
with office operations such as waste and water have also
decreased by 40% and 23% respectively.
Energy efficiency initiatives
In the period covered by the report the Company has undertaken
the following emissions and energy reduction initiatives:
– Installation of motion-controlled lamps – we have installed
motion-controlled lamps in our Hamburg office to optimise
efficiency and prevent energy wastage.
– Implementation of LED lighting – we continue to roll out LED
lighting wherever possible across our Port Services business.
– Recycling – the Port Services business is investing in
a commercial standard cardboard and paper shredder
to convert used boxes into packing material for items
we distribute.
– Increased remote meeting attendance – we have utilised
technologies such as Microsoft Teams to attend meetings
remotely and avoid the need to travel.
In addition, a number of local initiatives which were
implemented previously remain in place. These include
cycle-to-work schemes and recycling of food waste.
Clarksons’ GHG emissions (tCO2e) and associated energy consumption (MWh) for 2020
Scope 1
Natural gas
Other fuels
Company cars
Fleet
Refrigerants
Scope 2 location-based (electricity)
Scope 3
Total Scope 1 + 2 (location-based)
Total Scope 1 + 2 + 3 (location-based)
Total Scope 1 + 2 + 3 (market-based)1
Total Energy Usage (MWh)
Total global (including UK) Scope 1 + 2 emissions/FTE
Total global (including UK) emissions/FTE
UK
2019
(tCO2e)
753
220
264
204
64
–
1,005
352
1,758
2,110
Global
(excluding UK)
2019
(tCO2e)
424
95
–
265
–
65
674
6,828
1,098
7,296
1.9
6.5
UK
2020
(tCO2e)
588
174
222
100
47
45
900
171
1,488
1,659
2,042
6,382
Global
(excluding UK)
2020
(tCO2e)
206
44
–
159
–
3
574
904
780
1,684
1,847
2,656
1.4
2.1
% change
in total
emissions
(vs 2019)
-33
-31
-16
-45
-27
-26
-12
-85
-21
-67
N/A
N/A
1 Location-based factors have been applied where there are no residual mix factors available.
58
Clarkson PLC | 2020 Annual Report
The HydroCat, the world’s first hydrogen-driven CTV.
Clarksons is committed to working
with our clients to enable smarter,
cleaner global trade.
Methodology
Our GHG emissions were calculated in accordance with the
requirements of the WRI ‘GHG Protocol Corporate Standard
(revised version)’ and Defra’s ‘Environmental Reporting
Guidelines: Including Streamlined Energy and Carbon
Reporting’ requirements (March 2019). We have applied the
appropriate greenhouse gas conversion factors from the UK
Department for Business, Energy & Industrial Strategy (BEIS)
2020 and International Energy Agency (2020)1.
We have included in scope all the properties where we are
directly responsible for the consumption of energy, including
our tenanted offices.
Whilst we have endeavoured to obtain accurate and complete
data wherever possible, where there were data gaps, we have
used reasonable estimations such as annualisation of actual
data, use of expenditure data as a proxy and typical office
consumption benchmarks where data was not available for
the preparation of this report.
1 This work is partially based on the country-specific CO2 emission factors
developed by the International Energy Agency, © OECD/IEA 2020, but the
resulting work has been prepared by Clarksons and Avieco and does not
necessarily reflect the views of the International Energy Agency.
Supporting our clients
In addition to our commitment to reduce our own GHG
emissions, Clarksons is also committed to working with our
clients to enable smarter, cleaner global trade. We operate in
and alongside industries which are embarking on significant
change to combat environmental challenges. The shipping
industry has set ambitious targets for decarbonisation of the
industry itself, whilst decarbonisation of energy sources in
wider society is becoming a higher priority. You can read more
about the global and shipping trends within which we are
working on pages 44 to 51.
During the year, the offshore renewables (wind) team in the
Broking division collaborated with the Financial division in the
sale of Windcat Workboats (Windcat) by Seacor Marine to
Compagnie Maritime Belge (CMB). Whilst CMB has been
historically focused on tanker, dry bulk and container shipping,
its strategy is to diversify its business portfolio into the fast-
growing offshore wind market and scale up the deployment
of hydrogen ships, engines and infrastructure. Windcat already
operates 46 crew transfer vessels (CTVs) supporting the
European offshore wind industry and, prior to this transaction,
CMB had been working with Windcat for two years to develop
the HydroCat, the world’s first hydrogen-driven CTV. Once
operational, this will allow a reduction of up to 1.5 tonnes
of CO2 emissions per day.
This transaction is a prime example of the ways in which
Clarksons is working with its clients to support the energy
transition, illustrating both the growing demand for renewable
energy sources and the initiatives being developed to meet
the decarbonisation targets within the industry.
Clarkson PLC | 2020 Annual Report
59
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our impact
continued
Social
Our people
At Clarksons we believe that everything centres on our people.
They are at the heart of both the way we engage with each
other and our clients, and the products and services we provide.
Our exceptional people remain the biggest differentiating factor
for us, and the diverse range of backgrounds, nationalities,
skills and experience within our global teams is representative
of the international markets we operate in. This, together with
our commitment to continually develop our people and support
them in a role and environment where they can thrive and
perform at their best, underpins our culture, supported by our
four values: integrity, excellence, fairness and transparency.
COVID-19
While the COVID-19 pandemic continues to have a huge impact
on the world and will not be limited to being a 2020 event, any
report of the year will inevitably be dominated by the effect
it has had on our business and people.
Our top priority throughout the pandemic has been, and
remains, the physical and mental well-being of our people and
their families, and all our decisions have been made with them
at the centre of our thinking.
Like most businesses, the immediate practical requirement
was to transition all our employees to remote working set-up
to ensure we maintained excellent and uninterrupted levels
of service to our clients. Our track record of investment in
IT infrastructure and support meant that we were able to
achieve this seamlessly with all employees having the
appropriate equipment.
Tragically, we have lost several colleagues during 2020 which
has been heartbreaking for our community. To support our
employees we provide a range of mental health-focused
benefits and are constantly looking to augment what we
offer in new and enhanced ways.
We have found that this global crisis has led us to finding
new ways of working with each other and in many ways has
brought the Group together. New channels of communication,
new networks of collaboration and a consistency of knowledge
sharing have been a positive outcome of the working
environment over the last year, and we will look to sustain
these once the pandemic is over.
Health and well-being
The COVID-19 pandemic brought fast-moving and unexpected
variables to the way we work. As a company we quickly and
successfully developed management plans to ensure the
health and well-being of our staff was our number one priority.
At one point in the year, 90% of our global workforce were
working from home at the same time which required us to
ensure their mental and physical well-being needs were being
met. We launched a new well-being page on our intranet which
provided support for working from home, physical and mental
health guidance and resources, mindfulness practice and
access to additional virtual training modules to develop skills
for maintaining good physical and mental health.
We have focused on leading with compassion and empathy;
understanding the fine balance between work and home; and
respecting our staff more than ever in the need to work in ways
that ensure they feel supported.
It was already a signature of our culture for our managers to
be closely engaged with their teams, but a huge focus has been
placed on prioritising time to consistently contact all our people
on video and phone calls rather than relying on messaging
systems and email.
Our top priority throughout the
pandemic has, and remains, the
physical and mental well-being of our
people and their families, and all our
decisions have been made with them
at the centre of our thinking.
60
Clarkson PLC | 2020 Annual Report
Engagement
We are a relationship business and, as such, the relationships
that we build and maintain with our stakeholders are integral
to our success. A huge part of that comes from engaging fully
and meaningfully with them.
Our employees are key stakeholders in our business and,
as our most important asset, we invest in our people and take
employee engagement seriously. This year has seen some real
changes to the way we have approached engagement with
our employees.
The management style of our organisation is to engage directly
and personally with our people and our management structures
and hierarchies support this. Every line manager maintains
open lines of communication with their teams and this remains
the most effective way of ensuring consistent engagement in
both directions.
However, other specific and targeted forms of engagement
with employees have come from:
– Global executive and divisional management forums
that meet monthly.
– Employee pulse surveys for certain divisions.
– The Employee Voice Forum with Non-Executive Directors,
which is attended by employees from various divisions
across the business and provides for and encourages
two-way communication between our employees and
Non-Executive Directors. The forum is chaired by
Dr Tim Miller, our designated Non-Executive Director
for employee engagement.
– The Communication and Innovation Forum which takes
place quarterly and is attended by a mix of employees
depending on the topics for discussion.
– Increased use of our new intranet (Voyage), updated
constantly with news from our 53 offices; education on
topics of interest to the industry; information regarding the
evolution of products and services provided by the Group;
and ‘Focus on’ and ‘Clarksons meet’ content to get to know
global colleagues.
– Regular communications from senior management
updating employees on key matters, and in particular video
updates from our CEO and CFO & COO presenting publicly
released financial results and updates on the work of the
CSR Committee.
– Without the office supporting informal social and
engagement activities this year, we have encouraged
interaction between colleagues globally through participation
in a programme of events including team quizzes, fitness
challenges, cooking education, photography competitions
and sponsorship.
– Monthly CSR Committee meetings attended by a cross-section
of employee Committee members and visiting attendees
focusing on the work of The Clarkson Foundation and
charitable causes that are important to our global community.
We also recognise the benefits of encouraging employee
engagement through share ownership. Further detail on the
participation of our employees in share plans can be found
on page 90.
The management style of our
organisation is to engage directly
and personally with our people and
our management structures and
hierarchies support this.
Clarkson PLC | 2020 Annual Report
61
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our impact
continued
Talent
Management, promotion, recognition and reward
We have continued to cultivate the best talent in the world.
Our objective and focus is always to retain and develop our key
talent, to ensure that they become our future leaders. Part of
that longer-term plan has involved us creating an environment
in which they participate in the running of their respective
business divisions and gain exposure to leadership
responsibilities. We have sought to achieve this by:
– Embedding monthly executive meetings with the senior
leaders of each business division attending.
– Implementing a new global promotions process that is
conducted bi-annually based on consistent assessment
criteria, levelling the playing field.
– Involving the emerging leaders of each business division
in the development of a Clarksons-specific competency
and behaviours framework that we will use to attract, retain,
develop and promote our people based on consistent criteria
and which is designed to be transparent about expectations.
– Introducing a Communication & Innovation Forum that takes
place quarterly. These sessions are attended by various
members of mid-senior level leadership teams to engage
in lively discussion about market/industry topics.
– Designing a development programme called ‘What you get/
What you give’ which will be undertaken by emerging leaders.
– Key talent holding regular sessions with Maritime Masters
in which they present and lead seminars.
– Widening the scope of our development programmes to help
employees at all stages of their career take control of their
personal development, support retention of our early and
mid-level management and facilitate succession planning.
The attraction and development of early careers talent remains
a priority for our business as we seek to increasingly diversify
our workforce and prepare to meet the needs of the continually
evolving global markets that we operate in.
Recruitment
We remain focused on attracting, engaging and hiring the
best talent. Our in-house recruiting model is evolving with
direct search capabilities which enable us to hire the best talent
and reduce our reliance and spend with recruitment agencies.
The model enables a consistent candidate experience, whilst
leveraging our employer brand. We are developing our
recruiting channels for greater access to, and engagement
with, a diverse and broad spectrum of both active and passive
talent, and are building talent pipelines for future hiring needs.
We are also developing our recruitment platform to meet the
demands of a competitive talent marketplace. Furthermore,
we continue to monitor our inclusive recruitment practices
on an ongoing basis.
We are also increasingly adopting the use of social media
channels to reach a broad section of talent and have seen
an increase in direct hires entering the business.
Learning and development
As with every other aspect of our business, social distancing
needs and the transition to home working necessitated a rapid
switch from our traditional approach to learning and development
to the provision of training activities via online delivery.
While the transition forced us to postpone several events,
including our popular Tanker Week and Jon Marshall Lectures
which traditionally take place in October each year, as well as
our regular ship visits, presentation and pitching skills
workshops and student visits, we ran a series of webinars and
online workshops on topics of relevance during the year. These
included legal aspects of shipbroking, ship finance, the impact
of digitisation and the challenge of decarbonisation. These
open invite events proved popular among staff and provided
the added advantage of being available either live or on
demand to all staff across the Group.
Our growing commitment to online learning was reinforced
in May with the start of an online learning programme with
a leading provider, Goodhabitz. This enabled all our staff to
access a broad range of courses to support ongoing personal
as well as professional development. The courses which have
proved to be popular include topics such as cultural diversity,
strategic thinking and change management.
Our learning and development strategy was also closely
aligned with our increasing efforts to recruit new talent into
the Group. This was demonstrated by our continuing support
for Maritime UK’s Maritime Masters programme (read more
on page 64).
We launched a learning and development section as part of the
Clarksons Voyage hub which provides easy access to selected
third-party webinars and workshops to complement our own
portfolio. We also continued to support employees wishing to
study for membership of the Institute of Chartered Shipbrokers.
Diversity and inclusion
This year has brought a change to the way we think about
and seek to evolve the diversity and inclusion agenda. We have
made a commitment to ensure that we use a diversity and
inclusion lens at every opportunity. Examples of us putting this
into practice include the examination of our global recruitment
processes; the terms and conditions we have in place with the
recruitment agencies that we use; the way we hire and engage
with potential candidates across the various locations and
jurisdictions that we operate in; the language we use in our role
vacancies and postings; the language we use in all our internal
policies; and materials and marketing that we use to interact
with potential talent. Further detail is set out to the left in the
descriptions of our new direct sourcing model, competency
framework and promotion process.
We are confident that this practical approach will deliver
more tangible outcomes for the business and our diversity
and inclusion objectives, and ensure we are constantly
striving to improve.
62
Clarkson PLC | 2020 Annual Report
Gender diversity (as at 31 December 2020)
Board
Executive Committee
Male
Female
7 (70%)
3 (30%)
Male
Female
15 (83%)
3 (17%)
Senior managers*
Executive Committee and direct reports
Male
Female
162 (93%)
13 (7%)
Male
Female
182 (80%)
46 (20%)
All employees
New hires
Male
Female
1,220 (73%)
453 (27%)
Male
Female
208 (74%)
72 (26%)
*
Employees who have responsibility for planning, directing or controlling the activities of the Group, including all directors of subsidiary companies.
Clarkson PLC | 2020 Annual Report
63
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our impact
continued
Health and safety
We believe that it is vital to look after the health, safety and
well-being of our staff, and endeavour to provide a safe and
secure workplace for all. Our policies and procedures are
designed to minimise the risk of injury and ill health of our
workforce as well as any other parties involved in the conduct
of our business operations.
The Board has approved a global health and safety policy
statement and has appointed the CFO & COO to oversee
health and safety as sponsor on behalf of the Board.
Health and safety is managed on a global basis through a
decentralised model, where each local 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 some higher risk activities within our
Support division such as port agency and freight forwarding,
all locations conduct office-based activities only and are
therefore considered relatively low risk. To satisfy ourselves
that the standards being applied locally meet the necessary
requirements whilst ensuring a common standard, we are
working to further develop our decentralised framework by
the setting of minimum standards. Whilst this work has been
necessarily impacted by COVID-19 and the remote working
of our employees during the year, it continues to be progressed.
In the UK, health and safety is overseen by a committee
structure, with a committee dedicated to some of our highest
risk locations in the Support division. The Board receives
regular updates on health and safety activities (including KPIs
such as RIDDOR incidents).
In order to keep our people safe, the COVID-19 pandemic
has required us to implement a number of measures over and
above our business as usual model for the management of
health and safety. The measures we have taken include:
– The establishment of a COVID-19 executive response team.
– The commencement of COVID-19 management calls with
representatives of each our global offices for support and
sharing of best practices across each region.
– Comprehensive risk assessments.
– Strict adherence to all applicable government guidance
and rules in each of our global locations.
– Rigorous cleaning regimes with market-leading products, for
example provision of an anti-viral mist machine to deep clean
and provide anti-viral long-lasting protection in the office.
– Implementation of temperature checking technology
in our largest sites, and mandatory temperature checking
in all sites.
– At-home desk risk assessments for remote working.
– Provision of top quality Clarksons personalised PPE kits
for all staff.
– Partnership with a third-party testing company to ensure quick
and ready access to COVID-19 testing and antibody testing.
Communities
Industry partners
Throughout 2020, we partnered with a number of maritime
associations which are paving the way for the future of maritime.
This was demonstrated by our continuing support for Maritime
UK’s Maritime Masters (MM) programme. We ran a series
of webinars for postgraduate students studying for Master’s
qualifications at nine leading UK universities and business
schools, culminating in the hosting of a virtual finalists reception
in October. These webinars proved to be very popular and
will be provided again in support of the 2021 MM programme.
Clarksons’ ongoing involvement with this event supports
the significant role we play in encouraging and developing
young talent in shipping, and this year we wanted to support
students further by increasing their connectivity to the industry.
We hosted a webinar series over the course of three months,
geared specifically to aid students’ learning and understanding
of the challenges and trends currently faced in maritime.
The series culminated in a recruitment masterclass which
would help the students to take proactive steps in improving
their employability within a competitive marketplace.
Clarksons Research provides over 50 maritime university
courses across the world with access to research and data,
helping important academic research and supporting the
learnings of our clients and colleagues of the future.
Many of these relationships are long-standing, involve both
undergraduate and postgraduate research and extend to
universities based in key maritime centres around the world,
including Asia, Europe and the Americas. We also provide
data and intelligence to inter-governmental organisations,
governments, regulators and various industry and trade
bodies, helping frame debate and policy decisions around
the development of the shipping industry, including climate
change and safety at sea.
Charitable donations
As a Group, we are committed to giving back to society
through our corporate social responsibility programme.
Our aim is to bring about positive social change and have
a lasting impact on people and communities. 2020 brought
a close to a decade of charitable giving throughout the Group
and we are proud to have raised over £1.6m over the last
ten years, as well as provided support to chosen charities
through the volunteering of our staff.
64
Clarkson PLC | 2020 Annual Report
Staff from the Singapore office take part in a beach clean-up
as part of Clarksons Gives Back Week.
To help create
meaningful
and lasting
change
around the
world, we have
established
The Clarkson
Foundation.
In order to build on our commitment to help create meaningful,
lasting change around the world and to amplify our charitable
giving, The Clarkson Foundation was established as a
registered charity in late 2020. This will enable us to give
in an effective and focused way. Activities will be governed
in accordance with The Clarkson Foundation’s charitable
status and running costs will be minimal, thereby allowing
it to contribute as much as possible to its selected causes.
The Clarkson Foundation will utilise our people’s experience,
expertise and time to make a tangible difference and a positive
impact around the world.
Clarkson PLC | 2020 Annual Report
65
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Our impact
continued
1
2
£350,000
Our employees generously gave both
their time and money and, together
with additional contributions from
Clarksons, the Group raised well
over £350,000 during the year.
Activities within our corporate social responsibility programme
are overseen by our CSR Committee which supports chosen
charities every year. In 2020, we selected four key charities
to donate to, as well as a range of individual causes. While
remaining committed to our general principle of supporting
a maritime, children’s and an overseas charity every year, this
year we wanted to tailor our giving to the specific issues arising
from the pandemic and therefore chose to support charities
covering help for carers, mental illness, food banks and
seafarers in need.
At a corporate level, we set up Payroll Giving in the UK to allow
employees to make regular, tax-free donations straight from
their gross pay. In addition, whilst the London office remained
open on an exceptional basis only, we redirected the efforts of
our catering team to donate 700 lunches a week (19,000 meals
in total) to the Whitechapel Mission, a charity ensuring that
those less fortunate or homeless have something to eat.
Our employees generously gave both their time and money
and, together with additional contributions from Clarksons,
the Group raised well over £350,000 despite most fundraising
activities taking place in employees’ own homes and gardens.
Employees threw themselves into charitable quizzes, ice
bucket challenges and handstands, and we gave back to our
global community through a Group-wide initiative that saw
employees engaging in a range of activities from cleaning
beaches and rivers to helping at food banks around the world.
Some individuals went even further, transporting patients as
an ambulance driver, distributing food parcels and art and
craft bags to the local communities, or collecting clothing
for children who love to play sports but are unable to afford
the right kit to wear.
This year we also joined the Growth Project, a collaborative
project between business leaders and their equivalent charity
leaders, as a business leader. It is a year-long scheme
designed to help both sides understand their role as leaders in
their respective organisations. This was combined with training
and close mentoring in monthly meet-ups (via Zoom). Clarksons
was paired with ‘Circle Collective’, which is a great small charity
based in London that helps young people gain work experience
and mentors them to find jobs. They have skate shops in East
London and provide training for youngsters whilst trying to help
them find a path towards financial independence. The project
so far has been very successful and next year’s cohort will see
two leaders join from Clarksons.
3
66
Clarkson PLC | 2020 Annual Report
1. A team from the London office picks up litter in the local area
during Clarksons Gives Back Week.
2. Staff from all over the world joined our handstand challenge
from home.
3. Staff in the Oslo office take part in an ice bucket challenge
as part of a fundraising initiative.
Whistleblowing arrangements and reports arising from its
operation are overseen by the Board in line with the UK
Corporate Governance Code (having previously fallen within
the remit of the Audit and Risk Committee). The whistleblowing
arrangements are formalised into an overarching Whistleblowing
Policy. Where relevant, local mandatory whistleblowing policies
also exist.
Anti-bribery and corruption
To prevent bribery and corruption, the Group has an approved
policy which all employees and contractors must follow. It also
applies to any third party who is undertaking business for or
on behalf of the Group. Under the policy, all employees,
contractors and other parties must not:
– Give, promise to give, or offer a payment, gift or hospitality
with the expectation or hope that an improper business
advantage will be received, or to reward an improper
advantage already given.
– Accept a payment, gift or hospitality from a third party that
they know or suspect is offered with the expectation that it
will provide a business advantage for them or anyone else
in return.
– Give or accept a gift or hospitality during any commercial
negotiations or tender process if this could be perceived
as intended or likely to influence the outcome.
– Offer or accept a gift to or from government officials
or representatives, politicians or political parties.
– Offer or accept gifts or hospitality which are unduly lavish
or go beyond the normal standards in the industry.
All employees have been trained in person and/or completed
online training modules in anti-bribery and corruption to ensure
awareness of their obligations in this area.
Anti-money laundering
The Group has continued to build and establish effective
and proportionate mechanisms and controls to prevent money
laundering. These include anti-money laundering (AML) policies
and procedures for all businesses. During the year, we have
continued to enhance AML procedures and specifically
‘Know your Client’ processes for our unregulated businesses,
resulting in additional headcount and modified procedures.
Governance
How we do business
Business conduct
Clarksons is founded on a commitment to provide the highest
quality of service for our clients whilst maintaining the highest
level of integrity. Our staff share our common values of integrity,
excellence, fairness and transparency. We aspire to conduct
our business in an ethical, honest and professional manner
wherever we operate, and in particular we undertake to:
– Act fairly, honestly and with integrity at all times and in
everything we do, and to comply with all applicable laws.
– To treat our employees, clients, contractors, suppliers
and other stakeholders fairly and with respect.
– To create a high-quality, equal opportunity working
environment for all our employees, based on merit
and free from discrimination, bullying and harassment.
– To respect human rights.
Compliance Code
In order to support our employees’ understanding of the
standards of conduct and ethics expected of them, the Board
has approved a Compliance Code. This contains a suite of
policies that mitigate ethics and compliance risks, and covers
areas including insider dealing, sanctions, anti-bribery and
corruption and market abuse. In addition, the Group’s regulated
businesses are subject to further compliance requirements
which are set out in local compliance manuals.
All employees and contractors must comply with the Compliance
Code. It is reissued to all employees and contractors on an
annual basis, and they are required to confirm that they have
read and will comply with it. The Compliance Code is kept
under regular review, and was updated during the year.
Mandatory online training modules are issued regularly to all
relevant employees covering inter alia anti-bribery and corruption,
sanctions and cyber security.
Embedding of policies and processes is supported by a global
compliance team who have the necessary skills and experience
to fulfil their duties.
Whistleblowing
We have created an environment in which our workforce can
speak up and highlight concerns on any matters through our
whistleblowing arrangements. This includes a helpline through
which concerns can be raised in confidence (and anonymously),
which is operated by an independent third-party provider.
Clarkson PLC | 2020 Annual Report
67
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our impact
continued
Sanctions
The Group has deployed significant resources to manage
sanctions risk and build an effective and proportionate system
to prevent sanctions breaches. These include sanctions
policies and procedures for all businesses; sanctions screening
of prospective clients (including vessels) using our proprietary
online sanctions checking tool; and monitoring existing
clients against sanctions lists. The Group also provides annual
custom-built online and in-person sanctions training to all
relevant staff; maintains sanctions screening records for audit
purposes; and has established clear internal audit and
escalation mechanisms.
In the UK, our IT supplier onboarding process has been
strengthened, requiring key IT suppliers to provide details of
their modern slavery arrangements as part of both onboarding
and ongoing due diligence exercises and to confirm that
appropriate arrangements are in place in relation to their own
supply chain. Key IT suppliers which do not meet the standards
we expect are not engaged to provide goods or services.
In other material supplier contracts in the UK, we endeavour
to request that our suppliers commit to ensuring that they and
their own supply chain comply with legislation with regard to
modern slavery.
Human rights
We believe that the respect of human rights is integral to being
a responsible company and we are committed to treating
individuals with respect and dignity.
We have also amended our General Terms and Conditions
to include client obligations to comply with modern slavery
legislation.
Clarksons places value on difference and believes that diversity
of people, skills and abilities is a strength that helps us to achieve
our best. Any discrimination based on race, religion, nationality,
gender, age, marital status, disability, sexual orientation or
political affiliation is prohibited within the business.
Clarksons remains committed to building and strengthening
our existing policies and practices to eliminate modern slavery
and human rights violations in our supply chain. We therefore
aim to continue to review the effectiveness of our current
arrangements and, where necessary, implement additional
safeguards and procedures.
We have introduced a new Supplier Charter in which we ask
our suppliers, amongst other things, to commit to respecting
human rights, diversity, inclusion and the environment.
In line with the Modern Slavery Act 2015, we publish a Modern
Slavery and Human Trafficking Statement on our website on
an annual basis.
Suppliers
Whilst we do not consider suppliers to be a significant
stakeholder in our business, we are committed to treating
our suppliers fairly. You can read more about how the Board
reviews our engagement with suppliers on page 91.
We are committed to providing a workplace free of any form
of harassment or discrimination and expect our suppliers to
do the same. Read more about our approach to diversity and
inclusion on page 62.
Modern slavery
We recognise that slavery, servitude, forced labour and human
trafficking (modern slavery) is a global and growing issue, and
no sector or industry can be considered immune. We are
committed to ensuring that there is no modern slavery of any
kind within our operations or supply chains.
The supply chain to our business comprises worldwide
suppliers providing a wide range of support functions and
products including catering, maintenance, information
technology, cleaning and security.
Work has continued to enhance our procurement procedures
so as to ensure that our suppliers, contractors and service
providers act ethically and with integrity, and have in place
effective systems and controls so that modern slavery is not
taking place within their own businesses.
68
Clarkson PLC | 2020 Annual Report
Read more
www.clarksons.com/modern-slavery-act/
Key performance indicators
We use financial indicators to monitor our progress in delivering against
our strategy to create long-term sustainable value for all of our stakeholders.
Revenue
£m
Underlying profit
before taxation*
£m
Underlying
earnings
per share*
pence
Broking forward
order book (FOB)
at 31 December
for following year
US$m
363.0 358.2
337.6
400
300
200
100
60
120
118.8
120
113
116
105.2
106.0
107
49.3
45
45.3
44.7
90
30
15
60
30
90
60
30
0
2018
2019
2020
0
2018
2019
2020
0
2018
2019
2020
0
2018
2019
2020
Definition
Revenue in sterling
equivalent, translated
at the rate of exchange
prevailing on the date of
the transaction. We have
four revenue segments:
broking, financial, support
and research.
Why it is important
for Clarksons
Revenue drives the
business, resulting in cash
generation and rewards
to stakeholders.
Definition
Profit before taxation,
exceptional items and
acquisition related costs as
shown in the consolidated
income statement.
Why it is important
for Clarksons
The Board considers
that this measurement
of profitability provides
stakeholders with
information on trends and
performance, before the
effect of exceptional items,
acquisition related costs
and different tax regimes
around the world.
Definition
Profit after taxation and
before exceptional items
and acquisition related
costs divided by the
weighted average number
of ordinary shares in issue
during the year.
Why it is important
for Clarksons
This measure shows how
much money the Group
is generating for its
shareholders, taking into
consideration changes
in profit and the effects
of issuance of new shares.
It is an important variable in
determining our share price.
Definition
Directors’ best estimate
of commissions invoiceable
over the following 12 months
as principal payments
fall due.
Why it is important
for Clarksons
The FOB gives a degree of
forward visibility of income.
Read more
Note 3 of the consolidated financial
statements on page 146.
Read more
Financial review
on pages 18 and 19.
Read more
Note 8 of the consolidated financial
statements on page 151.
Read more
Financial review
on pages 18 and 19.
*
Underlying profit before taxation and underlying earnings per share are classed as APMs.
Non-financial KPIs
Whilst we use non-financial metrics within the business, such as in relation to employment matters (see Our impact
on pages 60 to 63), we do not use non-financial KPIs to measure the strategic performance of the Group.
Clarkson PLC | 2020 Annual Report
69
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Risk management
As the world’s leading provider
of integrated shipping services,
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.
Balancing this with taking advantage of all potential
opportunities enables us to deliver our strategic objective
of enhancing shareholder value by maintaining and extending
our industry leadership.
Our risk profile continues to adapt as a result of changing
market conditions and regulations, increasing global political
uncertainty with associated market volatility and increasing
cyber criminality. We also recognise that a number of our
principal risks, such as changes in the broking industry,
also create opportunities for us, as we develop the tools
to future-proof our business.
Though COVID-19 has not significantly impacted our business,
it has affected many of our key risks, heightening the identified
inherent threats and opportunities. Our priority remains the
safety and well-being of our global teams whilst ensuring that
our clients are best supported to respond and adapt effectively
to the challenges that COVID-19 present. The Audit and Risk
Committee also considered the potential impact of Brexit and
climate change on the principal risks to the business, and it
was concluded that neither have yet had a material impact
on these key risks.
Risk environment
Inherent risk attributes of our business include the following
principles:
– We act as agents in the provision of services for and
on behalf of our clients
As agents, we are bound by the scope and authority
determined by our General Terms and Conditions, which are
communicated to our clients on commencement of business
with them. We do not take principal trading positions, other
than in the convertible bonds business and in exceptional
circumstances in the financial segment should there be
a failure of a client to meet its obligations during the
settlement period.
– We do not own physical assets of material value
The strength of our balance sheet comes from cash and
other current working capital which strengthen with our
consistently profitable business. Our profit and cash flows
are not exposed to asset valuations or the risk of loss or
damage to physical assets of material value integral to our
day-to-day business.
– Capital commitments
Aside from regulatory capital commitments in our regulated
entities, we are not required to commit material amounts
of capital in the conduct of our day-to-day business.
– Borrowings
The Group has no borrowings, except for interest-bearing
loans and borrowings in the Financial segment.
Risk culture
Risk management is an integral part of all of our activities.
Risks are considered in conjunction with opportunities in all
business decisions. We focus on the principal risks which could
affect our business performance and therefore the
achievement of our strategic objectives.
Our flat management structure and culture of open
communication across all areas of the business enables
employees to identify, assess, manage and report current,
potential or emerging risks to senior management in a timely
manner. Employees are also encouraged to suggest
improvements to processes and controls.
Risk appetite
Risk appetite reflects the overall level of risk we are willing
to seek or accept in order to achieve our strategic objectives
and is therefore at the heart of our risk management processes.
Determining the nature and extent of the risks we are willing to
take is the responsibility of the Board. Our aim is to manage
each of our principal risks and mitigate them to within our
agreed individual risk appetite levels.
The Board approves the Group’s policies, procedures and
controls. This process enables, where possible, a reduction
in risks to the tolerance levels set by the Board. In determining
its risk appetite, the Board recognises that a prudent and
robust approach to risk mitigation must be carefully balanced
with a degree of flexibility so that the entrepreneurial spirit
which has greatly contributed to the success of the Group
is not inhibited.
Controls environment
Our internal control system is embedded into our culture and
encompasses the policies, processes and behaviours that,
taken together:
– facilitate its effective and efficient operation by enabling us
to respond appropriately to significant risks that prevent us
from achieving our objectives. This includes the safeguarding
of assets from inappropriate use or from loss or fraud and
ensuring that liabilities are identified and managed;
– help ensure the quality of internal and external reporting.
This requires the maintenance of proper records and
processes that generate a flow of timely, relevant and
reliable information; and
– help ensure compliance with applicable laws and regulations.
Our internal control 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.
The Group continually seeks to improve and update existing
procedures to introduce new controls where necessary and
to evaluate emerging risks.
It is clearly communicated to all staff that they are responsible
for ensuring compliance with Group policies, identifying risks
within their business and ensuring these risks are controlled
and monitored in the appropriate way.
Read more
Our strategy on pages 52 and 53.
Our markets on pages 44 to 51.
Principal risks on pages 73 to 77.
70
Clarkson PLC | 2020 Annual Report
Risk governance
We have an established risk management structure in place to enable us to identify, assess, control, evaluate, monitor and report
the risks facing our business.
The Board
is responsible for:
The Audit and
Risk Committee
is responsible for:
– Managing risk to deliver opportunities;
– Setting the Group’s strategic objectives and
determining the nature and extent of the risks
it is willing to take (the risk appetite) in achieving
these strategic objectives;
– Establishing risk management policies, key
controls and procedures to ensure that they
continue to be effective and protect the Group’s
stakeholders; and
– Maintaining the Group’s system of internal
controls and risk management and reviewing
the effectiveness of these systems annually.
– Undertaking an annual review of the Group’s
internal controls and procedures;
– Reviewing the external auditor’s report in relation
to internal control observations;
– Reviewing the adequacy and effectiveness
of the Group’s risk management systems
and processes;
– Overseeing the development of internal control
procedures which provide assurance that the
controls which are operating in the Group are
effective and sufficient to counteract the risks
to which the Group is exposed; and
– Considering all internal audit reports.
Operational
management
is responsible for:
– Risk management processes and internal
controls embedded across divisions and
functional areas;
– Risk identification, assessment and mitigation
performed across the business; and
– Risk awareness and safety culture embedded
across the business.
Top down
Risk oversight and assessment
Bottom up
Assessment at operational level
Clarkson PLC | 2020 Annual Report
71
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Risk management
continued
Approach and framework
I dentify
ort
p
d re
n
a
r
o
t
i
n
o
M
Our approach is
to maintain and
strengthen our risk
management and
internal control
framework.
e
t
a
Evalu
o
ntrol
A
s
s
e
s
s
C
Approach and framework
Our approach is to maintain and strengthen our risk
management and internal control framework of identifying,
assessing, controlling, evaluating, monitoring and reporting
the principal risks facing our business.
Our risk assessment is formed in stages:
1.
Identify current and emerging risks facing the Group;
2. Document risks on a centrally managed risk register;
3.
Identify the level of appetite associated with each risk;
4. Assess the likelihood of occurrence of each risk over
a 36-month period;
5. Evaluate the potential impact of each risk on the Group
using a quantified scale;
6. Determine the strength and adequacy of the controls
operating over each risk;
7. Assess the effect of any mitigating factors on both
the likelihood and impact;
8. Compare the residual risk against the identified risk
appetite;
9. For each of the key risk factors, after considering the
10.
relevant risk appetite, identify a target residual risk;
Identify the plan of action for the next 12 months
to achieve the above targets;
11. Consider the level of additional assurance derived from
the Three Lines of Defence model, including internal
audit; and
12. Monitor and report all key risks, any emerging risks,
any changes to the level of risk appetite and the status
of the plan of action 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 monitors
key risks at each meeting.
Priority for 2021
In addition to our regular risk management activities, our
priority is to continue promoting an environment of identifying,
assessing, controlling, evaluating, monitoring and reporting the
effectiveness of our existing controls in order to support the
Board in its responsibilities.
Every year, through an integration of culture, compliance
and training, we make further progress in embedding our risk
management approach with all employees. This is, of course,
an ongoing process and we continue to work hard to improve
risk awareness and enhance controls and procedures to further
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.
72
Clarkson PLC | 2020 Annual Report
Principal risks
Loss of key personnel –
Board members
The principal risks which may impact
the Group’s ability to execute its
strategic objectives have not changed
since 2019.
Change in risk factor since 2019
No change
Link to strategic objective
People
The risks that follow, whilst not
exhaustive, are those principal risks
which we believe could have the
greatest impact on our business
and have been discussed at meetings
of the Board and the Audit and Risk
Committee. The Board reviews these
risks in the knowledge that currently
unknown, non-existent or immaterial
risks could turn out to be significant in
the future and confirms that a robust
assessment has been performed.
Description
At the Annual General Meeting in May 2021, the Company
will seek approval of its Directors’ remuneration report (DRR).
Whilst this shareholder vote on the DRR is not binding,
votes on the re-election of all Directors are binding.
Should the existing contractual arrangements of the
Executive Directors result in major shareholders voting
against the DRR at the AGM, there remains a risk that they
may also not support the resolution to re-elect individual
Non-Executive Directors.
Controls/mitigating factors
As explained in the Directors’ remuneration report,
considerable work has been undertaken to mitigate this risk.
Activities in 2020
Engagement with major shareholders and the proxy advisory
agents to emphasise and state our future commitments:
– to the existing contractual arrangements of the Executive
Directors, which remain appropriate; and
– that the management team continues to lead the Company,
driving forward the transformational strategy it has laid out.
Read more
Directors’ remuneration report on pages 106 and 107.
Clarkson PLC | 2020 Annual Report
73
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Risk management
continued
Economic factors
Cyber risk and data security
Change in risk factor since 2019
Increase
Link to strategic objective
Growth
Change in risk factor since 2019
Increase
Link to strategic objective
Trust
Description
Financial loss, reputational damage or operational disruption
resulting from a major breach in the confidentiality, integrity
or availability of our IT systems and data.
A breach could be caused by an insider, an external party,
inadequate physical security, insecure software development
or inadequate supply chain management.
With the safety of employees being a priority, COVID-19 led
to our business predominantly working remotely over 2020,
as did many other companies in the locations from which we
operate, including our customers and suppliers. As a result,
there has been an increased volume of spam and phishing
type email attacks.
Controls/mitigating factors
– IT processes include regular penetration testing, anti-virus
and firewall software, quarterly network vulnerability scans,
frequent password changes including complexity
requirements, email authentication and strict procedures
on granting and removing access.
– Operational processes include segregation of duties,
business continuity planning and regular training.
Activities in 2020
– We continued to invest significantly in enhanced security
policies and measures, people, resources and training
dedicated to the prevention of cyber crime, both in an office
and remote working environment.
– Employee awareness communications and security
monitoring have increased to combat the increased threat.
Description
Changes in world trade, global GDP and other general
economic fluctuations impact the demand for ships.
The actions of owners and financiers have a direct impact
on the supply side of our business.
Supply/demand imbalances cause fluctuations in freight
rates. If freight rates, volumes or asset prices fall, the
commission that we receive on any deal would also fall.
The erratic nature of the US approach to international trade
and the departure of the UK from the EU have been creating
uncertainties surrounding global economics and world trade
in recent months.
COVID-19 has affected world trade, and it remains unclear
how long the economic effects will continue. The potential
impact on globalisation of the world economy and
consequential impact on world trade is expected to impact
the business further, though it is recognised that there will
continue to be a need to move raw materials from their point
of origin to where they are needed.
The speed at which trade rebounds will determine when
our markets see proper recovery.
Every overseas office has been affected by COVID-19,
and the speed of local recoveries will remain variable.
Controls/mitigating factors
– We are not dependent on any one country’s economy
as our operations and clients are located in all major
maritime and trade centres globally.
– Our business model is built on the ability to deal with
downturns and remain profitable. Our variable remuneration
schemes, being profit-related, mean that overheads react
to swings in asset values and freight rates.
– We have the resources and support available to open
offices in new locations, mitigating the reliance on regional
performance.
– Our broad product offering, led by 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
at least monthly.
Activities in 2020
– Our results and actions taken during the year show the
robustness of our strategy and business model against
volatility in our markets, particularly those affected by
falling commodity prices.
Read more
Our markets on pages 44 to 51.
74
Clarkson PLC | 2020 Annual Report
Increase
People
Description
the Group.
Loss of key personnel –
normal course of business
Adverse movements in foreign
Change in risk factor since 2019
Change in risk factor since 2019
Link to strategic objective
Link to strategic objective
exchange
No change
Growth
Description
Losing key personnel may impair our coverage of a particular
The Group can be exposed to adverse movements in foreign
line of business as our success depends on the experience,
exchange as our revenue is mainly denominated in US dollars
reputation and performance of our specialist teams across
and the majority of expenses are denominated in local
currencies, whilst we continue to report in sterling.
Stringent restrictions put in place to protect physical health
After seeing a low point of US$1.15/£1 in March 2020,
against COVID-19 have increased the risk of an adverse
impact on employees’ mental well-being.
Controls/mitigating factors
sterling has strengthened throughout the remainder of the
year, ending on US$1.37/£1. The average exchange rate in
2020 of US$1.29/£1 was similar to that in 2019 of US$1.28/£1,
however, in 2021, the new level of sterling, if maintained,
– We offer competitive remuneration and an excellent
will affect our reported results.
working environment to help us to retain staff.
– Employment contracts include restrictive covenants,
Controls/mitigating factors
appropriate notice periods and gardening leave provisions
– The Group hedges currency exposure through forward
to prevent the loss of key information.
– Teamwork is actively encouraged across the Group.
– The Group seeks to create a working culture that is
sales of US dollar revenues.
– We also sell US dollars on the spot market to meet local
currency expenditure requirements.
inclusive for all, thereby maintaining high standards and
– We continually assess rates of exchange, non-sterling
good employee relations.
balances and asset exposures by currency.
– We invest in our teams through training and promote further
learning through lectures and encouraging personal study.
Activities in 2020
– Succession planning and documentation of key procedures
– We continued to apply our hedging strategy consistently
and, as at 31 December 2020, the Group had hedges in
place for 2021 and 2022 of US$55m and US$45m
respectively.
help minimise any impact of losing personnel.
Activities in 2020
– We continued to make strategic hires.
– We developed and implemented a new promotions
process, combined with the promotion of 11 new Managing
Directors, 14 new Directors and 17 new Divisional Directors
to continue to grow the cohort of future leaders.
– We developed a competency framework to support
leadership and employee development, based on
consistent criteria of performance requirements.
– We continued to monitor staff turnover and staff
absenteeism in order to understand the reasons behind
such activity.
– A number of employees transferred locations within the
Clarksons Group, accommodating both the employees’
and the Group’s needs.
– Increased management and support of employees to keep
morale high among teams whilst working remotely.
– Processes implemented to deal with positive COVID-19
cases identified in offices, with appropriate guidance and
communication provided.
– Online seminars and personal development modules have
been promoted to encourage continued career progression.
Read more
Our people on pages 60 to 63.
Our financial risk management objectives and policies in note 28 on page
Read more
169.
Economic factors
Cyber risk and data security
Change in risk factor since 2019
Change in risk factor since 2019
Link to strategic objective
Link to strategic objective
Increase
Trust
Description
Increase
Growth
Description
Changes in world trade, global GDP and other general
economic fluctuations impact the demand for ships.
Financial loss, reputational damage or operational disruption
resulting from a major breach in the confidentiality, integrity
The actions of owners and financiers have a direct impact
or availability of our IT systems and data.
The erratic nature of the US approach to international trade
and the departure of the UK from the EU have been creating
as did many other companies in the locations from which we
uncertainties surrounding global economics and world trade
operate, including our customers and suppliers. As a result,
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.
in recent months.
COVID-19 has affected world trade, and it remains unclear
how long the economic effects will continue. The potential
impact on globalisation of the world economy and
consequential impact on world trade is expected to impact
the business further, though it is recognised that there will
A breach could be caused by an insider, an external party,
inadequate physical security, insecure software development
or inadequate supply chain management.
With the safety of employees being a priority, COVID-19 led
to our business predominantly working remotely over 2020,
there has been an increased volume of spam and phishing
type email attacks.
Controls/mitigating factors
– IT processes include regular penetration testing, anti-virus
and firewall software, quarterly network vulnerability scans,
frequent password changes including complexity
on granting and removing access.
– Operational processes include segregation of duties,
continue to be a need to move raw materials from their point
requirements, email authentication and strict procedures
of origin to where they are needed.
our markets see proper recovery.
The speed at which trade rebounds will determine when
business continuity planning and regular training.
Every overseas office has been affected by COVID-19,
and the speed of local recoveries will remain variable.
Controls/mitigating factors
Activities in 2020
– We continued to invest significantly in enhanced security
policies and measures, people, resources and training
dedicated to the prevention of cyber crime, both in an office
and remote working environment.
– We are not dependent on any one country’s economy
as our operations and clients are located in all major
– Employee awareness communications and security
monitoring have increased to combat the increased threat.
maritime and trade centres globally.
– Our business model is built on the ability to deal with
downturns and remain profitable. Our variable remuneration
schemes, being profit-related, mean that overheads react
to swings in asset values and freight rates.
– We have the resources and support available to open
offices in new locations, mitigating the reliance on regional
performance.
– Our broad product offering, led by 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
at least monthly.
Activities in 2020
– Our results and actions taken during the year show the
robustness of our strategy and business model against
volatility in our markets, particularly those affected by
falling commodity prices.
Read more
Our markets on pages 44 to 51.
Loss of key personnel –
normal course of business
Adverse movements in foreign
exchange
Change in risk factor since 2019
Increase
Link to strategic objective
People
Change in risk factor since 2019
No change
Link to strategic objective
Growth
Description
Losing key personnel may impair our coverage of a particular
line of business as our success depends on the experience,
reputation and performance of our specialist teams across
the Group.
Description
The Group can be exposed to adverse movements in foreign
exchange as our revenue is mainly denominated in US dollars
and the majority of expenses are denominated in local
currencies, whilst we continue to report in sterling.
Stringent restrictions put in place to protect physical health
against COVID-19 have increased the risk of an adverse
impact on employees’ mental well-being.
Controls/mitigating factors
– We offer competitive remuneration and an excellent
working environment to help us to retain staff.
– Employment contracts include restrictive covenants,
appropriate notice periods and gardening leave provisions
to prevent the loss of key information.
– Teamwork is actively encouraged across the Group.
– The Group seeks to create a working culture that is
After seeing a low point of US$1.15/£1 in March 2020,
sterling has strengthened throughout the remainder of the
year, ending on US$1.37/£1. The average exchange rate in
2020 of US$1.29/£1 was similar to that in 2019 of US$1.28/£1,
however, in 2021, the new level of sterling, if maintained,
will affect our reported results.
Controls/mitigating factors
– The Group hedges currency exposure through forward
sales of US dollar revenues.
– We also sell US dollars on the spot market to meet local
currency expenditure requirements.
inclusive for all, thereby maintaining high standards and
good employee relations.
– We continually assess rates of exchange, non-sterling
balances and asset exposures by currency.
Activities in 2020
– We continued to apply our hedging strategy consistently
and, as at 31 December 2020, the Group had hedges in
place for 2021 and 2022 of US$55m and US$45m
respectively.
– We invest in our teams through training and promote further
learning through lectures and encouraging personal study.
– Succession planning and documentation of key procedures
help minimise any impact of losing personnel.
Activities in 2020
– We continued to make strategic hires.
– We developed and implemented a new promotions
process, combined with the promotion of 11 new Managing
Directors, 14 new Directors and 17 new Divisional Directors
to continue to grow the cohort of future leaders.
– We developed a competency framework to support
leadership and employee development, based on
consistent criteria of performance requirements.
– We continued to monitor staff turnover and staff
absenteeism in order to understand the reasons behind
such activity.
– A number of employees transferred locations within the
Clarksons Group, accommodating both the employees’
and the Group’s needs.
– Increased management and support of employees to keep
morale high among teams whilst working remotely.
– Processes implemented to deal with positive COVID-19
cases identified in offices, with appropriate guidance and
communication provided.
– Online seminars and personal development modules have
been promoted to encourage continued career progression.
Read more
Our people on pages 60 to 63.
Read more
Our financial risk management objectives and policies in note 28 on page
169.
Clarkson PLC | 2020 Annual Report
75
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Risk management
continued
Financial loss arising from failure
of a client to meet its obligations
Change in risk factor since 2019
Increase
Link to strategic objective
Understanding, Growth
Breaches in rules and regulations
Changes in the broking industry
Change in risk factor since 2019
Increase
Link to strategic objective
Trust
Description
Uncertainty in our markets continues to affect the amount of
debt that may be recoverable. Furthermore, any forward order
book values may have to be written off, thereby impacting
future income as well as existing booked income.
Description
Breaches of regulations, intentional or unintentional,
could have a significant financial and reputational impact
on the Group. In regulated entities, this could result in
the loss of licences required to operate.
The severe and continuing impact of COVID-19 makes it more
difficult to assess clients’ abilities to meet their obligations.
Controls/mitigating factors
– We maintain good relationships and communication
with our clients.
This includes breaches of laws governing sanctions,
anti-bribery and corruption, market abuse (including insider
dealing and market manipulation), money laundering,
facilitation of tax evasion, General Data Protection Regulation
and Health and Safety controls.
– 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.
Specific Health and Safety regulations and guidance
surrounding the ongoing pandemic have been introduced,
which continue to change and vary between countries
from which we operate.
Activities in 2020
– We continued to provide for doubtful debts
on a conservative basis.
– In April 2020 one of our clients entered court proceedings,
to which we were able to quickly respond to minimise the
impact on the business. There were no other unexpected
losses arising from a client failure in 2020.
– Increased monitoring of cash collections.
Controls/mitigating factors
– Investment in compliance, quality assurance and legal
functions to ensure best practice is consistently applied
throughout the Group.
– Internal compliance tools help ensure the Group’s teams
have access to information that can assist them when
negotiating transactions.
Activities in 2020
– We continued to develop our internal compliance
tools for use by all our staff to reflect changes in rules
and regulations.
– Our annual compliance training pack was updated during
the year and subsequently released in February 2021.
This includes modules on sanctions and anti-bribery and
corruption, as well as circulation of the latest Compliance
Code. Every member of staff is required to pass their
compliance training modules and confirm that they have
read, understood and accept the contents of the
Compliance Code.
– A market abuse training module was released during
the year.
– We enabled employees to work from home and those
who were unable to do so, principally in the support
segment, were provided with PPE. Before employees
returned to any office, care was taken to ensure that
these were COVID-19-safe environments.
Change in risk factor since 2019
No change
Link to strategic objective
Understanding, Breadth, Reach, Trust, Growth
Description
There is a risk that we do not take advantage of, or are
overtaken by, changes in our industry.
Clients are using technology as a source of increasing
efficiency. They are also considering environmental factors
when making their strategic decisions.
These changes create business opportunities for the Group,
however failure to take these changes into account could
lead to a loss of market share, loss of revenue and
reputational damage.
COVID-19 has led to a reduced level of demand from
lower GDP and lower consumption of raw materials, for
example aviation fuel. Additionally, uncertainty, restrictions
on yards and vessels, as well as on travel and face-to-face
meetings, have led to the industry becoming more flexible
and adaptable.
Controls/mitigating factors
– We monitor and develop technological applications
which will impact the broking industry.
– We monitor competitors’ activities in terms of
product offerings to ensure we can react accordingly.
– We review our clients’ broking requirements.
– The Sea/ suite of sophisticated technological tools
enhances our service offering to our clients and
future-proofs our business.
Activities in 2020
– We continued to develop and invest in the Sea/ suite tools
to ensure that it continues to meet the evolving needs of
our clients.
– We continued to ensure we are well placed to take
advantage of opportunities that arise, regardless of working
in the office or remotely.
Read more
Our trade receivables in note 15 on pages 156 and 157.
Read more
How we do business on pages 67 and 68.
Read more
Our strategy on pages 52 and 53.
76
Clarkson PLC | 2020 Annual Report
Financial loss arising from failure
of a client to meet its obligations
Change in risk factor since 2019
Change in risk factor since 2019
Increase
Link to strategic objective
Understanding, Growth
Description
Link to strategic objective
Increase
Trust
Description
Uncertainty in our markets continues to affect the amount of
Breaches of regulations, intentional or unintentional,
debt that may be recoverable. Furthermore, any forward order
could have a significant financial and reputational impact
book values may have to be written off, thereby impacting
on the Group. In regulated entities, this could result in
future income as well as existing booked income.
the loss of licences required to operate.
The severe and continuing impact of COVID-19 makes it more
This includes breaches of laws governing sanctions,
difficult to assess clients’ abilities to meet their obligations.
anti-bribery and corruption, market abuse (including insider
– We maintain good relationships and communication
and Health and Safety controls.
Controls/mitigating factors
with our clients.
– 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.
Specific Health and Safety regulations and guidance
surrounding the ongoing pandemic have been introduced,
which continue to change and vary between countries
from which we operate.
dealing and market manipulation), money laundering,
facilitation of tax evasion, General Data Protection Regulation
Activities in 2020
– We continued to provide for doubtful debts
on a conservative basis.
Controls/mitigating factors
– Investment in compliance, quality assurance and legal
functions to ensure best practice is consistently applied
– In April 2020 one of our clients entered court proceedings,
throughout the Group.
to which we were able to quickly respond to minimise the
impact on the business. There were no other unexpected
– Internal compliance tools help ensure the Group’s teams
have access to information that can assist them when
losses arising from a client failure in 2020.
– Increased monitoring of cash collections.
negotiating transactions.
Activities in 2020
– We continued to develop our internal compliance
tools for use by all our staff to reflect changes in rules
and regulations.
– Our annual compliance training pack was updated during
the year and subsequently released in February 2021.
This includes modules on sanctions and anti-bribery and
corruption, as well as circulation of the latest Compliance
Code. Every member of staff is required to pass their
compliance training modules and confirm that they have
read, understood and accept the contents of the
– A market abuse training module was released during
Compliance Code.
the year.
– We enabled employees to work from home and those
who were unable to do so, principally in the support
segment, were provided with PPE. Before employees
returned to any office, care was taken to ensure that
these were COVID-19-safe environments.
Breaches in rules and regulations
Changes in the broking industry
Change in risk factor since 2019
No change
Link to strategic objective
Understanding, Breadth, Reach, Trust, Growth
Description
There is a risk that we do not take advantage of, or are
overtaken by, changes in our industry.
Clients are using technology as a source of increasing
efficiency. They are also considering environmental factors
when making their strategic decisions.
These changes create business opportunities for the Group,
however failure to take these changes into account could
lead to a loss of market share, loss of revenue and
reputational damage.
COVID-19 has led to a reduced level of demand from
lower GDP and lower consumption of raw materials, for
example aviation fuel. Additionally, uncertainty, restrictions
on yards and vessels, as well as on travel and face-to-face
meetings, have led to the industry becoming more flexible
and adaptable.
Controls/mitigating factors
– We monitor and develop technological applications
which will impact the broking industry.
– We monitor competitors’ activities in terms of
product offerings to ensure we can react accordingly.
– We review our clients’ broking requirements.
– The Sea/ suite of sophisticated technological tools
enhances our service offering to our clients and
future-proofs our business.
Activities in 2020
– We continued to develop and invest in the Sea/ suite tools
to ensure that it continues to meet the evolving needs of
our clients.
– We continued to ensure we are well placed to take
advantage of opportunities that arise, regardless of working
in the office or remotely.
Read more
Read more
Our trade receivables in note 15 on pages 156 and 157.
How we do business on pages 67 and 68.
Read more
Our strategy on pages 52 and 53.
Viability statement
The Board has assessed the prospects of the Group over
a longer period than the 12 months required by the UK
Corporate Governance Code’s going concern provision.
In carrying out their robust assessment, the Directors have
considered the resilience of the Group with reference to:
– the risk appetite set by the Board;
– the Group’s principal risks and their impact on the strategic
objectives;
– the effectiveness of mitigating actions;
– the business model;
– future operational performance; and
– financial performance, solvency and liquidity over the period.
The Board conducted this review for the three-year period to
31 December 2023, which is appropriate for the following reasons:
– in Broking, over 73% of the forward order book is due to be
invoiced within the next three years;
– cash flow projections are carried out for a three-year period;
– historical average newbuilding process from inception to
delivery is two to three years;
– existing hedging activities can extend to 2023;
– pension scheme funding is subject to triennial valuations; and
– our external investment analysts provide estimates and
forecasts for three years of market expectations for revenue
and profit before taxation.
The Board has identified the principal risks that could impact
the Group. See pages 73 to 77 for more information on these
risks, together with mitigating factors and controls. The Board
does not consider that any single event detailed on page 78
would give rise to a viability event for the Group. Failure to
monitor and take the appropriate mitigating action could
result in a combination of smaller events or circumstances
accumulating to create conditions in which the longer-term
viability is brought into question. The compounding of events
will only occur if no action is taken to mitigate each of the
smaller events which arise, therefore the probability of such
a compound viability event is considered to be extremely low.
The Group has considerable financial resources available to it,
a strong balance sheet and has consistently generated an
underlying operating profit and good cash inflow. As a result
of this, the Directors believe that the Group is well placed to
manage its business risks successfully, despite the challenging
market backdrop created by COVID-19. Management has
stress tested a range of scenarios, modelling different
assumptions with respect to the Group’s cash resources. Areas
considered include varying levels of profit and cash generation
to reflect a significant impact on world seaborne trade similar
to that experienced in the global financial crisis in 2008 and
the period thereafter. Under all these scenarios, the Group is
able to generate profits and cash, and has positive net funds
available to it. Given the net funds and free cash resources of
the Group, the probability of a compound series of events
collectively resulting in the Group becoming unviable is low.
Based on their assessment of prospects and viability and the
outcome of the sensitivity analyses, 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 2023. 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.
The Group’s viability and going concern status is reviewed by
the Audit and Risk Committee at each meeting. The viability
assessment is reviewed annually by the Board.
Clarkson PLC | 2020 Annual Report
77
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Risk management
continued
Viability analysis
The analysis below seeks to identify viability events which are considered so material and which arise so suddenly as to bring
into question the viability of the Group.
Risk
Analysis
Loss of key personnel –
Board members
The loss of one or more Non-Executive Directors will not have a direct impact on the trading
performance or financial position of the Group.
Economic factors
Cyber risk and data
security
Our markets are multi-cyclical and volatile. Our industry has not seen a two-year period of
volume decline since 1990. The Group is consistently profitable, assisted by the forward order
book. Sustained declines in world trade rarely occur overnight, so the business will be able
to respond with appropriate measures.
We utilise state-of-the-art training and internal processes to prevent any cyber attack breaching
our defences. A successful attack could occur without warning and could affect the Group’s
ability to conduct business for a period of time. Emails can be quickly rerouted or run on other,
unaffected parts of our network. In the event of an attack which causes the loss of the network,
it is possible to reconstruct it using backups. Assuming suitable hardware is available, key
services can be restored within hours and all other services within days. Whilst this might result
in errors, omissions and possible claims, key business decisions can still occur using other
forms of communication.
Loss of key personnel –
normal course of
business
No one global divisional team accounts for more than 27% of revenue or 38% of profit before
taxation. No individual has generated more than 3% of new business for the Group in 2020
or 2019.
Adverse movements
in foreign exchange
The majority of the Group’s revenues are in US dollars. Over the last three years, the USD/GBP
rate has reached lows of 1.15 and highs of 1.43. The Group has hedges in place for 2021 and
2022, reducing the effect of any changes in the cross rate.
Financial loss arising
from failure of a client
to meet its obligations
The Group benefits from having thousands of clients spread around the world in a wide range
of sectors. The largest client balance accounts for less than 5% of the total outstanding trade
receivables balance at 31 December 2020.
Breaches in rules
and regulations
Changes in the
broking industry
The Group has extensive and adequate tools and procedures ensuring compliance with rules
and regulations. The Group continues to develop and invest in these tools to improve further
the effectiveness of these procedures.
Broking contributes a considerable proportion to the Group’s results. We closely monitor
technological changes which will impact the industry and are developing our own applications
based on our reviews of clients’ broking requirements.
Going concern
The Group’s business activities, strategic objectives, business performance and financial position, together with the factors
likely to affect its future development are set out in the Strategic report on pages 14 to 79.
A full explanation of the work undertaken by management and considered by the Directors is set out in the viability statement
on page 77.
The Group has considerable financial resources available to it, a strong balance sheet and has consistently generated an
underlying operating profit and good cash inflow. There are no material uncertainties related to events or conditions that cast
doubt on the Group’s ability to continue as a going concern. Accordingly, the Directors have a reasonable expectation that the
Group has sufficient resources to continue in operation for at least the next 12 months. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
78
Clarkson PLC | 2020 Annual Report
Compliance statements
Non-financial information statement
The table below constitutes the Company’s non-financial information statement, in compliance with sections 414CA and 414CB
of the Companies Act 2006.
Reporting requirement
Key policies and standards, and more information
Environmental matters
Our employees
Read more:
Environment – pages 58 and 59
Global Staff Handbook
Global Diversity and Equality Policy
Compliance Code
Global Privacy Statement and Policy
Health and Safety Policy Statement
Whistleblowing Policy
Read more:
Our people – pages 60 to 64
How we do business – pages 67 and 68
Social matters
CSR Committee
Human rights
Anti-corruption and
anti-bribery
Business model
Principal risks
Read more:
Communities – pages 64 to 66
Ethics Policy Statement
Modern Slavery and Human Trafficking Statement
Global Privacy Statement and Policy
Read more:
Our people – pages 60 to 64
How we do business – page 68
Anti-Bribery and Corruption Policy
Read more:
How we do business – page 67
Read more:
Our business model – pages 56 and 57
Read more:
Risk management – pages 70 to 78
Non-financial key
performance indicators
Read more:
Key performance indicators – page 69
Section 172(1) statement
The Company’s Directors have had regard to the factors set out in section 172(1) in discharging their duties, taking account of,
not only our key stakeholders, but any wider impacts that may arise. We are mindful of the need to balance the broad range of
interests and perspectives of our stakeholders, whilst acknowledging that not every decision that we make will deliver everyone’s
desired outcome. We recognise that building strong relationships with our stakeholders will help to inform the Board’s decision-
making, deliver our strategy in a sustainable way and meet our stated purpose. Read more about the Board’s engagement with
stakeholders and how that has influenced our decision-making on pages 90 and 91.
The Strategic report on pages 14 to 79 was approved by the Board and signed on its behalf by:
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
5 March 2021
Clarkson PLC | 2020 Annual Report
79
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our strong governance framework
is our starting point for meeting our
purpose and overseeing our strategy.
COVID-19 has pushed us all to make difficult choices, and the
decision that we took in March 2020 to defer payment of the
final dividend in respect of the 2019 financial year is a good
example of this. You can read more about how we took
account of stakeholder views and our duties under section 172
in making that decision (and the subsequent decision to pay
the dividend later in the year) on page 91.
Our internal Board evaluation confirmed that the Board
continued to operate effectively throughout the year. In line
with other corporates, we moved our Board and Committee
meetings to an online format. Whilst not as satisfactory as
meeting in person, and despite the challenges raised by the
COVID-19 pandemic, I am delighted that my fellow Directors
have approached these challenges with positivity, focus and
professionalism, echoing the exceptional way in which the
whole of Clarksons has risen to the challenge of continuing
to deliver. It is not surprising, however, that Directors did signal
through the evaluation a wish to spend more informal time
together. This will be particularly key for the embedding of
the three new Directors we welcomed to the Board this year,
and we will be acting on this, both through thinking more
innovatively about the online format and, when it is safe
to do so, through in-person sessions.
I would also like to take this opportunity to thank Marie-Louise
Clayton, who stepped down from the Board in January 2021,
for her valuable contribution to the Board and the Group since
2017 as both a Director and the Audit and Risk Committee Chair.
Lastly, I would like to thank all of our shareholders for their
continued support, and I look forward to welcoming you to
our AGM on 5 May 2021 which we will, as in 2020, be holding
electronically by audiocast in order to ensure the continuing
safety of all concerned. The Board will be available to answer
any questions you may have about the business of the meeting.
Sir Bill Thomas
Chair
5 March 2021
Chair’s introduction to
corporate governance
Dear Shareholder
On behalf of the Board, I am pleased to introduce the Corporate
governance report for 2020.
Our purpose, in essence, is to enable global trade, and this
is the driving force behind everything Clarksons does. The
importance of fulfilling our purpose and continuing to make a
contribution to wider society has been brought to the fore more
than ever during 2020. Our priority has been to keep our people
safe, whilst continuing to provide exceptional service to our
clients. This, in turn, has allowed us to play our part in keeping
shipping, which is so vital to world trade, operating as close
to business as usual as possible, despite the upheaval of the
COVID-19 pandemic.
Our strong governance framework, which underpins how
the Board fulfils its responsibilities, is our starting point for
meeting our purpose and overseeing our strategy. Our Board
Committees have each continued to play a key role this year
in this regard. The composition of the Board, and ensuring that
it comprises the collective skills, knowledge and experience
to drive the strategy and both support and challenge
management, underpins how the Board operates. The
Nomination Committee has devoted a substantial amount
of time this year to search processes for new non-executive
directors, resulting in the appointment of Laurence
Hollingworth in July 2020 and Sue Harris in October 2020.
These appointments followed that of Heike Truol in January
2020, which was reported in the 2019 annual report. The Audit
and Risk Committee has continued to provide assurance to the
Board and shareholders on the integrity of the Group’s financial
reporting and systems of internal control and risk management,
evolving the strong foundations built in previous years to further
strengthen our risk and control environment. In turn, this allows
us to undertake our commercial operations safely and effectively,
and evolve our strategy. The Remuneration Committee has
been focused on the link between pay and performance,
enabling us to both retain and reward the executive
management team who are key to delivering the strategy.
The Board is mindful of its duties under section 172 of the
Companies Act to act in the way that we consider, in good
faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. Of course,
this can be difficult to do at times as not every decision that
we make will deliver the desired outcome of all stakeholders.
We recognise that the engagement that we have had with
our stakeholders, and the views that they have shared with
us, become even more important at times such as these.
80
Clarkson PLC | 2020 Annual Report
Code compliance
Statement of compliance with the UK Corporate Governance Code,
published in July 2018 (the Code)
The Company complied with the principles and provisions of the Code
during the year ended 31 December 2020.
Read more
The Code is available at www.frc.org.uk.
Section of Code
Board leadership and
company purpose
How we comply
Page number
– Board of Directors
– Governance framework
– An effective Board
– Purpose, values and culture
– Board resources
– Board oversight and decision-making
– Conflicts of interest
– Key topics discussed at Board meetings
– Stakeholder engagement including how the Board has
taken its section 172 responsibilities into consideration
Division of responsibilities
– The roles of individual directors
Composition, succession
and evaluation
Audit, risk and internal control
Remuneration
– Nomination Committee report
– Succession planning and Board appointments
– Election and re-election of Directors
– Board and Committee effectiveness
– Diversity
– Induction and development
– Audit and Risk Committee report
– Financial reporting, including fair, balanced
and understandable assessment
– External audit
– Internal controls and risk management
– Going concern
– Viability statement
– Compliance
– Internal audit
– Annual statement – Remuneration Committee Chair
– Remuneration Committee report
– Annual report on remuneration
– Appendix: Directors’ Remuneration Policy
82
86
87
87
88
88
88
89
90
86
92
94
95
96
98
98
100
102
103
104
105
105
105
105
106
108
109
119
–
Clarkson PLC | 2020 Annual Report
81
Other informationOverviewCorporate governanceFinancial statementsStrategic report
Board of Directors
A refreshed Board to lead Clarksons, bringing
together an effective balance of skills, knowledge
and experience.
Chair
Board structure
As at 5 March 2021
Board gender split
As at 5 March 2021
Sir Bill Thomas
Chair
N R
Appointed: February 2019
Skills and expertise
Sir Bill brings to the Board extensive
experience of non-executive roles in
listed companies, including significant
experience of chairing and membership
of board committees. Through his
executive career within international
technology organisations, Sir Bill has
developed a wealth of expertise in global
people-intensive organisations,
customer-focused service industries
and relationship-based transactions
with major clients, all of which provides
valuable insight for his role on the
Clarksons Board.
Chair
Executive Directors
Independent Non-Executive
Directors
1 (11%)
2 (22%)
6 (67%)
Female
Male
2 (22%)
7 (78%)
Committee membership
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair
Changes in Board membership
during the year and to the date
of this report:
– Heike Truol was appointed
as a Non-Executive Director
on 31 January 2020.
– Laurence Hollingworth was
appointed as a Non-Executive
Director on 23 July 2020.
– Sue Harris was appointed
as a Non-Executive Director
on 7 October 2020.
– Marie-Louise Clayton resigned
as a Non-Executive Director
on 31 January 2021.
82
Clarkson PLC | 2020 Annual Report
A
N
R
Career experience
Sir Bill spent most of his executive career
in technology services providers where
he had a strong track record in delivering
strategy and major change. He is a
former Senior Vice President at Hewlett
Packard and was on the executive
committee of EDS plc as Executive Vice
President. Sir Bill has also served as a
Non-Executive Director on the boards of
GFI SARL, XChanging plc, Balfour Beatty
plc and VFS Global.
Sir Bill received a Knighthood in the 2020
New Year Honours List.
Principal external appointments
– Chair of Spirent Communications plc
– Chair of Node4 Limited
– Non-Executive Director and Chair
of the Remuneration Committee
of The Co-operative Bank p.l.c.
– Non-Executive Director of The
Co-operative Bank Finance p.l.c.
– Non-Executive Director of The
Co-operative Bank Holdings Limited
– Member of the International Advisory
Board of FireEye, Inc.
– Chair of the Board of Trustees of the
Royal Navy & Royal Marines Charity
Chief Financial Officer & Chief Operating
Senior Independent Non-Executive
Peter Backhouse
A N
Jeff Woyda
Officer
Director
Appointed: November 2006
Appointed: September 2013
Skills and expertise
Jeff‘s broad-based experience across
a number of disciplines complements
his role at Clarksons. In addition to his
strong background in finance, Jeff has
Skills and expertise
Peter has over 40 years of experience in
the international energy business, gained
both through his executive career and
as a non-executive director. He brings
an impressive track record in managing
valuable experience to Clarksons
industry leader. His detailed knowledge
and delivering across broking, corporate
through his involvement in offshore oil
of Clarksons’ operations, combined with
finance, IT implementation and software
and gas activity, liquefied gas and oil
transportation, finance and mergers and
acquisitions, as well as extensive listed
company expertise.
Andi Case
Chief Executive Officer
Appointed: June 2008
Skills and expertise
Having worked in shipbroking his
entire career, Andi brings to the Board
extensive knowledge and experience
of global integrated shipping services.
He is recognised in the market as an
his commitment to drive the growth
strategy, make him ideally placed
to inspire and lead the Group.
development, HR and regulatory
compliance. His career has spanned
both publicly listed and private
companies, as well as regulated
industries. Jeff’s position at Clarksons
includes that of the Chief Operating
Officer which covers IT, Legal, HR,
Company Secretariat, Marketing and
Property Services, and he is the Board
member responsible for ESG matters.
He is also the Chairman of Maritech,
the Saas provider of the Sea/ platform.
Career experience
Andi joined Clarksons in 2006 as
Managing Director of the Group’s
Career experience
Career experience
Before joining Clarksons, Jeff spent
13 years at the Gerrard Group PLC,
Most of Peter’s executive career was
spent at British Petroleum (BP), where
shipbroking services. His shipbroking
where he was a member of the executive
he was Chairman and Chief Executive
career began with C W Kellock & Co
and later the Eggar Forrester Group.
committee and Chief Operating Officer
of European refining, marketing and
of GNI. Jeff began his career with
shipping, and head of both North Sea
Prior to Clarksons, he was with Braemar
KPMG LLP and is a Fellow of the Institute
oil development and global mergers and
Seascope for 17 years.
of Chartered Accountants.
acquisitions. He served 14 years as a
Non-Executive Director of BG Group
p.l.c., the international energy company,
as well as a member of the Advisory
Board of private equity firm Riverstone
Energy Partners. Peter was also Chairman
and Supervisory Board Director of HES
International B.V., a major operator of
European bulk port storage and handling
facilities, from 2014 to 2019.
Principal external appointments
Principal external appointments
None
Principal external appointments
– Non-Executive Director of the
International Transport Intermediaries
None
– Non-Executive Director of Lok’nStore
Club Limited
Group plc
Executive Directors
Non-Executive Directors
Sir Bill Thomas
Chair
N R
Andi Case
Chief Executive Officer
Jeff Woyda
Chief Financial Officer & Chief Operating
Officer
Peter Backhouse
Senior Independent Non-Executive
Director
A N
Appointed: June 2008
Appointed: November 2006
Appointed: September 2013
Skills and expertise
Having worked in shipbroking his
entire career, Andi brings to the Board
extensive knowledge and experience
of global integrated shipping services.
He is recognised in the market as an
industry leader. His detailed knowledge
of Clarksons’ operations, combined with
his commitment to drive the growth
strategy, make him ideally placed
to inspire and lead the Group.
Skills and expertise
Jeff‘s broad-based experience across
a number of disciplines complements
his role at Clarksons. In addition to his
strong background in finance, Jeff has
an impressive track record in managing
and delivering across broking, corporate
finance, IT implementation and software
development, HR and regulatory
compliance. His career has spanned
both publicly listed and private
companies, as well as regulated
industries. Jeff’s position at Clarksons
includes that of the Chief Operating
Officer which covers IT, Legal, HR,
Company Secretariat, Marketing and
Property Services, and he is the Board
member responsible for ESG matters.
He is also the Chairman of Maritech,
the Saas provider of the Sea/ platform.
Career experience
Andi joined Clarksons in 2006 as
Managing Director of the Group’s
shipbroking services. His shipbroking
career began with C W Kellock & Co
and later the Eggar Forrester Group.
Prior to Clarksons, he was with Braemar
Seascope for 17 years.
Career experience
Before joining Clarksons, Jeff spent
13 years at the Gerrard Group PLC,
where he was a member of the executive
committee and Chief Operating Officer
of GNI. Jeff began his career with
KPMG LLP and is a Fellow of the Institute
of Chartered Accountants.
Principal external appointments
None
Principal external appointments
– Non-Executive Director of the
International Transport Intermediaries
Club Limited
– Non-Executive Director of Lok’nStore
Group plc
Skills and expertise
Peter has over 40 years of experience in
the international energy business, gained
both through his executive career and
as a non-executive director. He brings
valuable experience to Clarksons
through his involvement in offshore oil
and gas activity, liquefied gas and oil
transportation, finance and mergers and
acquisitions, as well as extensive listed
company expertise.
Career experience
Most of Peter’s executive career was
spent at British Petroleum (BP), where
he was Chairman and Chief Executive
of European refining, marketing and
shipping, and head of both North Sea
oil development and global mergers and
acquisitions. He served 14 years as a
Non-Executive Director of BG Group
p.l.c., the international energy company,
as well as a member of the Advisory
Board of private equity firm Riverstone
Energy Partners. Peter was also Chairman
and Supervisory Board Director of HES
International B.V., a major operator of
European bulk port storage and handling
facilities, from 2014 to 2019.
Principal external appointments
None
Clarkson PLC | 2020 Annual Report
83
Appointed: February 2019
Skills and expertise
Sir Bill brings to the Board extensive
experience of non-executive roles in
listed companies, including significant
experience of chairing and membership
of board committees. Through his
executive career within international
technology organisations, Sir Bill has
developed a wealth of expertise in global
people-intensive organisations,
customer-focused service industries
and relationship-based transactions
with major clients, all of which provides
valuable insight for his role on the
Clarksons Board.
Career experience
Sir Bill spent most of his executive career
in technology services providers where
he had a strong track record in delivering
strategy and major change. He is a
former Senior Vice President at Hewlett
Packard and was on the executive
committee of EDS plc as Executive Vice
President. Sir Bill has also served as a
Non-Executive Director on the boards of
GFI SARL, XChanging plc, Balfour Beatty
plc and VFS Global.
Sir Bill received a Knighthood in the 2020
New Year Honours List.
Principal external appointments
– Chair of Spirent Communications plc
– Chair of Node4 Limited
– Non-Executive Director and Chair
of the Remuneration Committee
of The Co-operative Bank p.l.c.
– Non-Executive Director of The
Co-operative Bank Finance p.l.c.
– Non-Executive Director of The
Co-operative Bank Holdings Limited
– Member of the International Advisory
Board of FireEye, Inc.
– Chair of the Board of Trustees of the
Royal Navy & Royal Marines Charity
Other informationOverviewCorporate governanceFinancial statementsStrategic report
Board of Directors
continued
Non-Executive Directors
Sue Harris
Independent Non-Executive Director
A R
Laurence Hollingworth
Independent Non-Executive Director
A R
Dr Tim Miller
Independent Non-Executive Director
N R
Birger Nergaard
R
Heike Truol
A N
Independent Non-Executive Director
Independent Non-Executive Director
Appointed: October 2020
Appointed: July 2020
Appointed: May 2018
Appointed: February 2015
Appointed: January 2020
Skills and expertise
Previously a senior leader in investment
banking, Laurence brings significant
capital markets experience to Clarksons
which positions him well to guide the
development of the Financial business
and wider strategy. Laurence has a
strong understanding of broking and
the relationship-led environment in
which Clarksons operates, having
been responsible for client relationship
management with some of JP Morgan’s
most high-profile clients. This experience
gave him broad exposure to different
leadership styles and board dynamics,
developing the ideal skillset to provide
oversight and constructive challenge
in the boardroom.
Career experience
Laurence’s 37-year career in
stockbroking with Cazenove and latterly
JP Morgan saw him hold several senior
leadership roles including Head of
UK Investment Banking, Head of
EMEA Industry Coverage and finally
as Vice Chairman for Equity Capital
Markets EMEA.
Skills and expertise
Dr Tim Miller has over 30 years’
experience working in large-scale people
businesses with significant international
operations. Whilst Tim has extensive
experience of HR and remuneration
matters gained in his executive and
non-executive career, his executive roles
also gave him exposure across a broad
remit including compliance, audit,
assurance, financial crime, property and
legal. Tim has a proven track record
serving as a non-executive director and
remuneration committee chair in listed
companies which, together with his HR
background, make his experience
relevant to his role at Clarksons.
Career experience
The majority of Tim’s executive career
was within regulated industries, including
roles at Glaxo Wellcome and latterly
Standard Chartered, with global
responsibility for a wide variety of
business services. He was previously
a Non-Executive Director and Chair
of the Remuneration Committee
at Michael Page Group, and more
recently a Non-Executive Director
at Otis Gold Corp.
Principal external appointments
– Non-Executive Chairman of ABM
Communications Limited
– Non-Executive Director of Recycling
Technologies Limited
Principal external appointments
– Non-Executive Director and Chair
of the Remuneration Committee
of Equiniti Group plc
– Non-Executive Director of Equiniti
Financial Services Limited
– Non-Executive Director and Chair
of the Remuneration Committee
of Scapa Group plc
Skills and expertise
Sue brings to Clarksons significant
financial, risk management and
corporate development experience,
gained through senior roles across listed
companies in financial services and
retail. She brings a wealth of leadership
and boardroom experience to her role
at Clarksons, having held a number of
senior executive and non-executive
roles across a broad range of sectors,
and is a seasoned audit committee
chair. Sue is a qualified chartered
management accountant.
Career experience
In addition to Sue’s current non-executive
roles, she was also previously a Non-
Executive Director of Abcam plc. Sue
previously chaired the Audit and Assurance
Council at the Financial Reporting
Council and was a member of the Codes
and Standards Committee. She has held
a number of senior executive positions
at FTSE 100 businesses, including as
Divisional Finance Director and Group Audit
Director for Lloyds Banking Group. Prior
to this, Sue held roles including Managing
Director for Finance at Standard Life and
Group Treasurer and Head of Corporate
Development for Marks & Spencer.
Principal external appointments
– Non-Executive Director and Chair
of the Values and Ethics Committee
of The Co-operative Bank p.l.c.
– Non-Executive Director of The
Co-operative Bank Finance p.l.c.
– Non-Executive Director of The
Co-operative Bank Holdings Limited
– Non-Executive Director and Chair of the
Audit Committee of Wates Group Limited
– Non-Executive Director and Chair of
the Audit Committee of FNZ (UK) Limited
– Non-Executive Director of Schroder
& Co. Limited and Chair of the Audit
and Risk Committee of the Wealth
Management Division
– Independent Director of Barclays
Pension Funds Trustees Limited
84
Clarkson PLC | 2020 Annual Report
Skills and expertise
Skills and expertise
Birger’s in-depth knowledge of capital
Heike has an in-depth client knowledge
markets and investment banking brings
of the dry bulk market and is well
valuable expertise to Clarksons,
positioned to bring valuable customer
particularly in developing and overseeing
perspectives. With a 20-year track
our banking strategy. He has extensive
knowledge of investing in Nordic
technology companies, and is
experienced in taking an active role
on the boards of these companies to
record of both advising large global
organisations from the outside as a
management consultant as well as
driving performance from within, Heike
brings significant experience of strategy
help position them for long-term growth.
development and delivery to the Board.
Birger is therefore well positioned to
provide unique insight into initiatives
to innovate and develop new services
for clients.
Career experience
Career experience
After establishing Four Seasons Venture
Heike gained 11 years’ experience at
(today Verdane Capital) in 1985, Birger
was the CEO until 2008. He joined the
board of Clarksons Platou AS (formerly
RS Platou ASA) as Deputy Chairman
in 2008 and the board of Clarksons
Platou Securities AS in 2010. Birger
has remained as a Director of these
companies since their acquisition
by Clarksons.
In 2006, Birger was awarded King
Harald’s gold medal for pioneering
Anglo American PLC (Anglo American)
where she was Executive Head,
Commercial Services until April 2020.
On joining in 2009 as Group Head,
Strategy she helped evolve the strategy
function working closely with the CEO
and executive committee. Heike later
helped establish the Marketing business
and had P&L responsibility for Anglo
American’s global shipping activity. Prior
to her time at Anglo American, Heike was
a management consultant and held roles
the Norwegian venture capital industry.
at Marakon Associates and Deloitte.
Principal external appointments
Principal external appointments
– Director of Verdane Capital Funds V,
None
– Director of Nergaard Investment
VI, VII and VIII
Partners AS
– Advisor to the P/E fund Advent
International (Norway)
– Director of Union Real Estate
Fund I and II
Non-Executive Directors
Appointed: October 2020
Skills and expertise
Sue brings to Clarksons significant
financial, risk management and
corporate development experience,
Appointed: July 2020
Skills and expertise
Appointed: May 2018
Skills and expertise
Previously a senior leader in investment
Dr Tim Miller has over 30 years’
banking, Laurence brings significant
experience working in large-scale people
capital markets experience to Clarksons
businesses with significant international
gained through senior roles across listed
which positions him well to guide the
companies in financial services and
retail. She brings a wealth of leadership
and boardroom experience to her role
at Clarksons, having held a number of
senior executive and non-executive
roles across a broad range of sectors,
and is a seasoned audit committee
chair. Sue is a qualified chartered
management accountant.
development of the Financial business
and wider strategy. Laurence has a
strong understanding of broking and
the relationship-led environment in
which Clarksons operates, having
operations. Whilst Tim has extensive
experience of HR and remuneration
matters gained in his executive and
non-executive career, his executive roles
also gave him exposure across a broad
remit including compliance, audit,
been responsible for client relationship
assurance, financial crime, property and
management with some of JP Morgan’s
legal. Tim has a proven track record
most high-profile clients. This experience
serving as a non-executive director and
gave him broad exposure to different
leadership styles and board dynamics,
developing the ideal skillset to provide
oversight and constructive challenge
remuneration committee chair in listed
companies which, together with his HR
background, make his experience
relevant to his role at Clarksons.
Career experience
Career experience
In addition to Sue’s current non-executive
Laurence’s 37-year career in
The majority of Tim’s executive career
roles, she was also previously a Non-
Executive Director of Abcam plc. Sue
stockbroking with Cazenove and latterly
was within regulated industries, including
JP Morgan saw him hold several senior
roles at Glaxo Wellcome and latterly
in the boardroom.
Career experience
previously chaired the Audit and Assurance
leadership roles including Head of
Council at the Financial Reporting
UK Investment Banking, Head of
Council and was a member of the Codes
EMEA Industry Coverage and finally
and Standards Committee. She has held
as Vice Chairman for Equity Capital
Markets EMEA.
Standard Chartered, with global
responsibility for a wide variety of
business services. He was previously
a Non-Executive Director and Chair
of the Remuneration Committee
at Michael Page Group, and more
recently a Non-Executive Director
at Otis Gold Corp.
Principal external appointments
– Non-Executive Director and Chair
Principal external appointments
– Non-Executive Chairman of ABM
of the Values and Ethics Committee
Communications Limited
Principal external appointments
– Non-Executive Director and Chair
of the Remuneration Committee
– Non-Executive Director of Recycling
of Equiniti Group plc
Technologies Limited
a number of senior executive positions
at FTSE 100 businesses, including as
Divisional Finance Director and Group Audit
Director for Lloyds Banking Group. Prior
to this, Sue held roles including Managing
Director for Finance at Standard Life and
Group Treasurer and Head of Corporate
Development for Marks & Spencer.
of The Co-operative Bank p.l.c.
– Non-Executive Director of The
Co-operative Bank Finance p.l.c.
– Non-Executive Director of The
Co-operative Bank Holdings Limited
– Non-Executive Director and Chair of the
Audit Committee of Wates Group Limited
– Non-Executive Director and Chair of
the Audit Committee of FNZ (UK) Limited
– Non-Executive Director of Schroder
& Co. Limited and Chair of the Audit
and Risk Committee of the Wealth
Management Division
– Independent Director of Barclays
Pension Funds Trustees Limited
Sue Harris
A R
Laurence Hollingworth
A R
Dr Tim Miller
N R
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Birger Nergaard
Independent Non-Executive Director
R
Heike Truol
Independent Non-Executive Director
A N
Appointed: February 2015
Appointed: January 2020
Skills and expertise
Birger’s in-depth knowledge of capital
markets and investment banking brings
valuable expertise to Clarksons,
particularly in developing and overseeing
our banking strategy. He has extensive
knowledge of investing in Nordic
technology companies, and is
experienced in taking an active role
on the boards of these companies to
help position them for long-term growth.
Birger is therefore well positioned to
provide unique insight into initiatives
to innovate and develop new services
for clients.
Skills and expertise
Heike has an in-depth client knowledge
of the dry bulk market and is well
positioned to bring valuable customer
perspectives. With a 20-year track
record of both advising large global
organisations from the outside as a
management consultant as well as
driving performance from within, Heike
brings significant experience of strategy
development and delivery to the Board.
Career experience
After establishing Four Seasons Venture
(today Verdane Capital) in 1985, Birger
was the CEO until 2008. He joined the
board of Clarksons Platou AS (formerly
RS Platou ASA) as Deputy Chairman
in 2008 and the board of Clarksons
Platou Securities AS in 2010. Birger
has remained as a Director of these
companies since their acquisition
by Clarksons.
In 2006, Birger was awarded King
Harald’s gold medal for pioneering
the Norwegian venture capital industry.
Career experience
Heike gained 11 years’ experience at
Anglo American PLC (Anglo American)
where she was Executive Head,
Commercial Services until April 2020.
On joining in 2009 as Group Head,
Strategy she helped evolve the strategy
function working closely with the CEO
and executive committee. Heike later
helped establish the Marketing business
and had P&L responsibility for Anglo
American’s global shipping activity. Prior
to her time at Anglo American, Heike was
a management consultant and held roles
at Marakon Associates and Deloitte.
Principal external appointments
– Director of Verdane Capital Funds V,
Principal external appointments
None
– Non-Executive Director of Equiniti
Financial Services Limited
– Non-Executive Director and Chair
of the Remuneration Committee
of Scapa Group plc
VI, VII and VIII
– Director of Nergaard Investment
Partners AS
– Advisor to the P/E fund Advent
International (Norway)
– Director of Union Real Estate
Fund I and II
Committee membership
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair
A
N
R
Clarkson PLC | 2020 Annual Report
85
Other informationOverviewCorporate governanceFinancial statementsStrategic report
Governance
Governance framework
Board
Nomination
Committee
Audit and Risk
Committee
Remuneration
Committee
Group Company Secretary
Executive Team
Board
Key matters reserved for the Board:
– Purpose
– Strategy
– Setting the Group’s culture, standards and values
– Internal controls and risk management
– Financial reporting and viability
– Capital and liquidity
– Board and Committee appointments
– Corporate governance matters
– Stakeholder obligations
– Material contracts
Individual roles and activities
Chair
– Leads the Board, facilitating the contribution of all Directors
and promoting an open and constructive relationship
between the Executive and Non-Executive Directors
– Ensures the effectiveness of the Board
– Oversees the development of the Group’s purpose,
values and culture
– Promotes high standards of corporate governance
– Available to shareholders and fosters dialogue with other
key stakeholders
Senior Independent Director
– Acts as a sounding board for the Chair and leads
the evaluation of his performance
– Serves as a trusted intermediary for other
Non-Executive Directors
– Available to shareholders, particularly when their concerns
have not been resolved through other channels
Non-Executive Directors
– Contribute to the development of the strategy and scrutinise
its execution by management
– Provide both objective and constructive challenge, and
support, to the development of Board proposals and the
performance of management
– Monitor executive management’s progress against agreed
performance objectives
86
Clarkson PLC | 2020 Annual Report
Chief Executive Officer
– Responsible for the day-to-day management of the Group
– Develops the strategy and commercial objectives for
approval by the Board, and leads the executive
management in delivering them within the risk appetite
approved by the Board
– Promotes the embedding of the Group’s culture throughout
the organisation
– Leads the relationship with institutional investors and other
stakeholders
Chief Financial Officer & Chief Operating Officer
– Manages the Group’s financial and operational affairs
and supports the CEO in the management of the Group
– Alongside the CEO, represents the Group in meetings
with institutional shareholders and other stakeholders
Employee Engagement Director
– Facilitates two-way communication between the Board
and the workforce through a programme of engagement
initiatives
– Enhances the voice of the workforce by feeding their views
into the Board decision-making process
Nomination Committee
– Reviews the effectiveness of the Board, and its structure,
size, composition and diversity
– Leads succession planning for the Board and oversees
succession plans for senior management
Audit and Risk Committee
– Monitors the integrity of the financial reporting for the Group
and manages the relationship with the external auditor
– Oversees the effectiveness of the risk management and
internal control systems
Remuneration Committee
– Sets the remuneration policy and packages for the Executive
Directors and other members of the senior management
team, whilst having regard to pay across the Group
– Approves the remuneration of the Chair
Group Company Secretary
– Acts as first point of contact for the Chair and
Non-Executive Directors, and facilitates the induction
of new Non-Executive Directors
– Facilitates information flows between the Board and
its Committees, and between executive management
and the Board
– Advises the Board on all governance matters and ensures
good governance practices throughout the Group
Executive Team
– Assists the CEO in running the business
– Develops and implements strategy and goals, operational
plans, procedures and budgets, and monitors business
performance (including competitive pressures)
– Oversees the assessment and control of risk
The schedule of Matters Reserved for the Board; the Terms of Reference of
the Board Committees; and the roles of the Chair, CEO, Senior Independent
Director and Employee Engagement Director are available on our website at
www.clarksons.com/about-us/board-of-directors.
Read more
How we assess the independence of our Non-Executive Directors on page 96.
An effective Board
The Board is collectively responsible for promoting the
long-term success of the Group and is accountable to
shareholders for the creation of sustainable value and to other
stakeholders for the wider impact that we have. We have
overall responsibility for leading the Group and are the
decision-making body for matters which are significant to the
Group as a whole (in particular strategic and financial matters,
and those which could have a material reputational impact).
Our ability to meet our responsibilities is underpinned by
having in place a balanced and effective Board which brings
together a wide range of skills and expertise, and our
governance framework which enables effective decision-
making within a structure of clear accountabilities.
The key elements of our culture
Leading by example
Employee voice
Policies, pay, diversity and inclusion
Risk management
The way we do business
Health and safety
Purpose, values and culture
Our purpose underpins everything that we do and to ensure
the continued growth of a sustainable business, our purpose
must remain at the heart of the way we behave and be true
to our values. This is the foundation of the Clarksons’ culture.
Clarksons has always championed its people, who are
our most valuable asset. We are a people business and our
greatest strength is the spirit of teamwork and collaboration
that lies at the heart of our culture. Our people processes
are designed to retain and empower our employees to drive
success, keep our clients at the core of our activities and align
our interests with those of our main stakeholders, including
shareholders. During 2020, we launched a new global
promotions framework to assist the business divisions in
identifying emerging leaders and key employees of the future.
The Board reviews performance metrics that support the culture
that the Group needs, including global turnover by business
sector and location, annual promotions to early, middle and
senior level management positions and key remuneration
frameworks around employee equity participation.
The Board sets the tone from the top, and the Directors,
Executive Team and senior management lead by example
through all actions.
Employees are invited to a number of communication forums
throughout the year, including the Employee Voice Forum, and
are encouraged to share their views on a variety of priorities
and matters. Themes and discussion points are then reported
to the Executive Team and Board, providing key insights.
There are also independent whistleblowing processes in place
which allow reporting of wrongdoing on an anonymous basis.
Any reports are reviewed by the Board and/or the Audit and
Risk Committee.
We pay for performance and seek to ensure that the financial
and non-financial reward(s) we give our employees are
competitive and support attraction, engagement and retention
by addressing the total reward agenda.
We are also committed to equal opportunities, including a
commitment to Equal Pay. Our priority has always been to be
inclusive of all diverse groups of people and to strive to achieve
an inclusive culture every day. Our policies and procedures are
designed to support this, but we endeavour to embed them
through expected behaviours and rewarding accordingly.
The Audit and Risk Committee reviews internal controls
and risk management systems, including risk appetite,
as well as internal audit reports that include an evaluation
of management approach.
Our Compliance Code is reissued to employees annually – it
sets out the policies and standards we expect them to uphold
to meet our objective of conducting our business in an ethical,
honest and professional manner wherever we operate.
Whilst we do not view the majority of our activities as high risk,
the Board monitors the health and safety culture through
regular reporting.
Clarkson PLC | 2020 Annual Report
87
Other informationOverviewCorporate governanceFinancial statementsStrategic report
Governance
continued
Governance framework
An overview of our governance framework is set out on page 86.
We discharge some of our responsibilities through delegation
to Board Committees. The Board Committees bring an
increased focus on key areas and explore them more deeply,
thereby gaining a greater understanding of the detail.
Any delegation of authorities to Board Committees is formally
documented in writing through Terms of Reference, while the
Board maintains a schedule of key matters which are reserved
for our decision. Furthermore, there is a clear division of
responsibilities between the Chair and the CEO. The execution
of the strategy and the day-to-day management of the Group
and operational matters are delegated to the CEO.
The Group’s executive governance structure continues
to evolve with a consistent framework being embedded and
the further development of roles participating in the Executive
Team. This structure maximises the opportunity for all parts
of the business to have clarity on their goals and successfully
execute on divisional and Group strategic plans.
Board resources
Board and Committee papers are delivered securely to the
Directors in advance of meetings using an electronic portal.
Should any urgent matters arise between scheduled meetings,
Directors are briefed either individually or through a Board call.
Directors are able to seek additional information from
management at any time, whether in relation to papers
submitted for discussion at a formal meeting or any other
matters. This allows them to explore significant items in more
depth and signal areas where more detail will be required when
the matters are discussed formally. These sessions provide the
Non-Executive Directors with an opportunity to engage with
management in a more informal way.
All Directors have access to the advice of the Group Company
Secretary and, in appropriate circumstances, may obtain
independent advice at the Company’s expense.
Board oversight and decision-making
The main forums through which the Board exercises its
responsibilities are Board strategy sessions and the regular
Board and Committee meetings.
A Board strategy session is held annually, at which the CEO
and members of the senior management team present their
views of the market and forward view of the coming year.
In developing the strategy, the Board takes account of, not
only our obligations to shareholders, but also the considerable
impact that the Group has on other stakeholders including
employees, clients, the wider shipping community and
communities who are the ‘end users’ of the world trade
that we play a key role in supporting.
88
Clarkson PLC | 2020 Annual Report
The Non-Executive Directors collectively have a range of
experience and expertise, and the challenge and independent
oversight that they bring to strategic debates supports the
building of a sustainable strategy. The need to deliver the
strategy within the Group’s risk appetite, and ensuring that the
Group has the appropriate resources, skills and competencies
to achieve the strategy responsibly, are also key areas of focus.
The Board monitors the implementation of the strategy through
regular updates at Board meetings on key initiatives as they
progress. This also enables us to regularly review whether
the strategy remains appropriate.
The Board typically meets six times a year, but ad hoc
meetings may be convened to discuss matters which are time
sensitive. In 2020, two additional meetings were held in order to
review the impact of the COVID-19 pandemic on the Group and
agree appropriate updates to the market, whilst the trading
update released to the market in January 2020 was discussed
at a further meeting.
In line with most UK corporates, the attendance at the majority
of our Board meetings in 2020 was online in order to ensure
compliance with governance guidance regarding the
pandemic. Attendance at scheduled Board meetings is set
out on page 89. If a Director is unable to join a meeting, they
are encouraged to provide comments to the Chair in advance
on the business of the meeting so that their views can be taken
into account as part of the debate at the meeting.
Board agendas are driven by key strategic priorities, the
schedule of Matters Reserved for the Board and the financial
calendar. The programme is flexed as necessary to take
account of changes in priorities and external developments.
The process for agreeing the agendas is managed by the
Group Company Secretary in consultation with the Chair,
and a similar process is followed with the Chair of each
Board Committee.
Conflicts of interest
Directors are required to disclose any interests that could give
rise to a conflict of interest either prior to appointment or as and
when they arise. Potential conflicts may be approved by the
Board if it is satisfied that it is appropriate to do so, but the
Director who has the potential conflict cannot be counted in the
quorum when the conflict is discussed. The Board may impose
conditions on the authorisation of a conflict, for example that
the Director should leave the boardroom when certain matters
are discussed. Once authorised, a conflict is recorded in the
Register of Directors’ Conflicts. The Nomination Committee
is responsible for providing the Board with guidance on the
treatment of Directors’ conflicts and for conducting an annual
review of the Register of Directors’ Conflicts.
During the year, the CFO & COO requested approval to take up
an external directorship at Lok’nStore Group plc. Any potential
conflict of interest arising from the proposed directorship,
as well as the time that Jeff would need to commit to the role,
were considered by the Board. It was concluded that the
proposal did not give rise to any concerns. Furthermore,
the Remuneration Committee reviewed whether Jeff should
be permitted to retain the fees relating to the role, which
was approved.
Key topics discussed at Board meetings in 2020
Business performance and operations
– Regular updates from the CEO and CFO & COO including key commercial developments, financial performance,
people matters, health and safety, emerging external developments and the competitive environment
– Ongoing updates on the impact of COVID-19 on the business and its stakeholders
– Annual insurance programme
– Draft budget
– Banking facilities
Financial matters
– Publicly released financial results and the annual report, including going concern and viability statements
– Closed period trading update ahead of the release of the full year results, and two further trading updates released
to the market in light of the uncertainty arising from COVID-19
– Impact of COVID-19 on the amount and timing of the final dividend (in respect of 2019) and consideration of dividend
capacity ahead of the decision to pay both the equivalent of that dividend and a further interim dividend later in the year
Strategy
– Update on the Group’s Sea/ proposition
– Agenda for the Board strategy session in September
– Analysis of the impact on the shipping market of COVID-19
Risk management
– Regular reports on the risk environment, the top risks facing the Group and associated risk appetite
– Annual review of the systems of risk management and internal control, including the Group’s risk profile, the internal control
environment, the risk register and mitigating factors and controls to risks included therein
– Principal risks to be included in the annual report
Governance
– Succession planning, including the initiation of a search for two new non-executive directors and approval of a framework
for managing succession to the Chair role
– Changes to the Board and composition of Board Committees
– Outcome of the annual effectiveness review of the Board, the action plan implemented as a result and progress against it
– Governance disclosures in the annual report, including related matters such as the annual re-election of the Directors
and the external auditor, and the recommendation of the Directors’ Remuneration Policy for shareholder approval
– AGM Notice of Meeting and ancillaries
– Change of corporate broker
Stakeholder engagement
– Employee engagement
– Annual review of the Modern Slavery Act statement
– Annual ShareSave invitation, including the extension of the plan to two new countries (Greece and Switzerland)
– Market feedback on results and insights into movements in the shareholder register
– Actions taken in response to the significant votes against the Directors’ remuneration report and the Directors’ Remuneration
Policy at the 2020 AGM and publication of an update statement
Scheduled meeting attendance
Current Directors
Sir Bill Thomas
Andi Case
Jeff Woyda
Peter Backhouse
Sue Harris1
Current Directors
Laurence Hollingworth2
Dr Tim Miller3
Birger Nergaard
Heike Truol4
6/6
6/6
6/6
6/6
1/1
2/2
5/6
6/6
5/5
Former Director
Marie-Louise Clayton
6/6
1 Appointed on 7 October 2020.
2 Appointed on 23 July 2020.
3 Unable to attend one meeting due to a conflict
with an unexpected appointment. Dr Miller
reviewed the meeting papers ahead of the
meeting and provided comments to the Chair.
4 Appointed on 31 January 2020.
Clarkson PLC | 2020 Annual Report
89
Other informationOverviewCorporate governanceFinancial statementsStrategic report
Governance
continued
Stakeholder engagement
We are committed to effective engagement with our
stakeholders, and gather feedback and input from them
through a variety of approaches. The Board engages directly
with our people and our shareholders. In the case of
engagement with clients and communities (who we have
also identified as key stakeholders), management engagement
is used to form proposals at a business level, with the Board
being kept updated in various ways. Where relevant,
stakeholder considerations are also set out in Board papers.
Our people
This was the second year of our Employee Voice Forum, which
encourages two-way communication between our employees
and our Non-Executive Directors. The forum brings together
Non-Executive Directors and employees from various divisions
across the business, and is chaired by Dr Tim Miller, our
designated Non-Executive Director for employee engagement.
We recognise this as a positive step towards strengthening the
voice of the employee and as a way to maintain regular
dialogue with the workforce. This forum is augmented by other
communication forums that report key insights to our Executive
Team and the Board.
Our shareholders
The Board is cognisant of its responsibility to manage the
Company on behalf of our shareholders, and understands that
maintaining strong relationships and an open dialogue with
investors underpins the long-term success of the Company.
The impact of COVID-19 on performance in 2020 was, as
expected, a key area of focus for our shareholders during the
year, and two additional trading updates were released to the
market in March and April as a result.
Institutional investors
Whilst the Chair is responsible for ensuring effective
communication with shareholders, the CEO and CFO & COO
act as the primary contact for institutional investors and engage
actively with both current and potential investors. The Chair,
Senior Independent Director and all Non-Executive Directors
are available to attend meetings if requested by shareholders.
During the year, the CEO and CFO & COO held 49 meetings
with both potential and current investors (holding over 50% of
the issued share capital) to gain an understanding of their views
and concerns. Whilst the majority of these meetings would
ordinarily be held in person, these meetings have primarily
been held electronically during 2020 due to COVID-19
lockdowns. We also had to delay plans to hold a capital
markets day during the year to showcase the Sea/ product
and our investments in shipping technology.
Retail shareholders
Retail shareholders (excluding employee shareholders)
hold around 11% of our issued share capital, and the Board
recognises the value of maintaining a good level of engagement
with these investors. This is achieved principally through our
website and the AGM. Full year and half year results
announcements, the annual report and results presentations
are all available on our website, as well as information regarding
financial performance and governance matters. Further detail
regarding our AGM can be found to the right. Our Company
Secretariat team and our registrar (Computershare) are also
available to help retail shareholders with any queries they
may have.
90
Clarkson PLC | 2020 Annual Report
Employee shareholders
The Board recognises the benefits of encouraging employee
share ownership, and Group employees hold around 9% of the
Company’s issued share capital, either through direct interests
or through restricted shares granted under employee share
plans. Furthermore, the Company issues an annual invitation
to employees in the UK and our largest overseas locations to
join a ShareSave plan (or similar local equivalent), which gives
employees the opportunity to purchase shares in the Company
at a discounted price, subject to certain conditions. As a Board,
we are extremely supportive of widening global participation in
the plan, which has been offered in six overseas countries to
date (two of which were new to the plan in 2020). Around 80%
of our global employees have been invited to join ShareSave
or the local equivalent, and over 53% of eligible employees
have taken up an invitation to participate.
Employee shareholders (and the workforce as a whole) are kept
informed by the Group Company Secretary and the Executive
Directors of publicly available financial updates and governance
changes such as new Director appointments.
Information flow to Board
The Chair takes responsibility for ensuring that the views
of shareholders are communicated to the Board as a whole.
The CEO and CFO & COO regularly update the Board on
shareholders’ views, which reflects both their own direct
engagement with investors and feedback from the Company’s
joint corporate brokers and financial public relations advisor.
An analysis of movements in the shareholder register and
trading volumes, along with any broker feedback, is provided
to each Board meeting. Analyst reports on the Company are
made available to all Directors through the Board portal in order
to enhance their understanding of how the Company is
perceived in the market.
Annual General Meeting
We view the AGM as an opportunity to engage directly with
all shareholders (but particularly retail shareholders) on the
key issues facing the Group and to respond to any questions
shareholders may have on the business of the meeting.
The Notice of Meeting is circulated to shareholders at least
20 working days prior to the meeting. All resolutions proposed
to the meeting are voted on by way of a poll. This allows all votes
cast to be counted, rather than just those of the shareholders
attending the meeting, which we believe is the most
representative means of gauging the views of our shareholder
base. The number of proxies received is disclosed to
shareholders in attendance at the meeting, and the voting
results are announced to the London Stock Exchange and
made available on the Company’s website as soon as
practicable after the meeting.
The 2020 AGM was held on 6 May 2020. In light of the
COVID-19 pandemic and UK government guidance regarding
social distancing, we took the decision to hold the meeting
electronically by audiocast, as was permitted under the
Company’s Articles of Association. The Board agreed that, in
these exceptional circumstances, this approach would provide
all shareholders with the opportunity to join the meeting. Votes
were cast in relation to circa 77% of the issued share capital
and, although all resolutions were passed by the required
majority, the Board noted a significant vote against resolution 2
to approve the Directors’ remuneration report and resolution 3
to approve the Directors’ Remuneration Policy. Further detail
regarding the renewal of our Directors’ Remuneration Policy
can be found in the Directors’ remuneration report on
pages 106 and 107.
Given continued uncertainty surrounding the COVID-19
pandemic, this year’s AGM will again be held electronically by
audiocast at 12 noon on Wednesday 5 May 2021. Full details of
the resolutions to be proposed at the meeting are set out in the
Notice of Meeting. The Chair, as well as the Chairs of the Board
Committees, will be in attendance at the meeting to answer
questions on the business of the meeting.
Understanding the views of other stakeholders
and fostering of business relationships
Our clients
Our client base is diverse in terms of both size and needs, and
the approach to engagement taken by our brokers to engaging
with our clients is bespoke to and driven by each client’s needs.
The most meaningful way for the Board to receive feedback
gathered through this engagement is therefore through updates
from management, including through the CEO’s regular update
to the Board and business presentations made by senior
management. Trends in the marketplace and client feedback
on products are also key elements that the Board takes into
account in evolving the Group’s strategy, in particular our
strategic objectives relating to Breadth, Reach and
Understanding as set out on pages 52 and 53.
Communities
Similar to our clients above, our stakeholders in the shipping
community are diverse and management takes an appropriately
tailored approach to engaging with them. The Executive
Directors and senior management report back to the Board
on key issues raised by our stakeholders, and updates are also
provided by the Research division on the salient trends in the
shipping community that frame our strategy.
The Board also receives regular updates on charitable activities
and initiatives, which have become even more crucial in 2020
both as a means of bringing employees together when much
of our workforce was working from home, and of giving back
to those less fortunate.
Suppliers
Whilst we do not consider our suppliers to be a significant
stakeholder in our business, we are committed to treating our
suppliers fairly. In particular, we recognise the importance of
prompt payment of invoices for our smaller suppliers, and that
this has become increasingly important for some suppliers in
light of the COVID-19 pandemic. The Board receives regular
updates on supplier payment practices. Our largest operating
subsidiary in the UK complies with payment practices
reporting, with circa 93% of all invoices being paid within
60 days and circa 77% being paid within 30 days.
Business conduct
As a business we aspire to provide the highest quality of
service for our clients whilst maintaining the highest level of
integrity. Our Executive Directors and the senior management
team oversee the Group’s day-to-day policies and procedures
and report back to the Audit and Risk Committee and/or Board
on these matters as appropriate. You can read more about the
policies and procedures that underpin how we do business
on pages 67 and 68.
Decision-making
The views that we form as a result of our stakeholder
engagement, as well as other factors set out in section 172(1)
of the Companies Act 2006, are taken into account as relevant
in making Board decisions and formulating strategy. We have
set out two examples of how we have considered these
matters in Board discussions and decisions.
Dividend payments
The Company has in place a progressive dividend policy and
announced in March 2020 that strong results had enabled the
Board to increase the dividend for the 17th consecutive year.
However, later that month, it was announced that, in light of the
increased uncertainty caused by the COVID-19 outbreak, the
Board had decided to withdraw the resolution regarding the
final dividend from the AGM and defer the decision on the
amount and timing of the dividend until later in the year once
the impact of COVID-19 on maritime markets and the Group’s
business had become clearer.
In taking this decision, the Board considered the potential
impact on key stakeholders, in particular on shareholders,
employees, clients and communities. Whilst the Board did not
have any concerns regarding cash reserves, the Directors were
cognisant of the Group’s long-term strength given its role in
facilitating global trade (thereby impacting on customers and
communities more generally) and as a global employer. The
Board therefore elected to take a conservative and prudent
approach and withdrew the proposed dividend to enable the
Company to conserve cash reserves, address any potential
short-term disruptions in the maritime industry and protect
shareholder value and other stakeholder interests.
In August 2020, the Board decided to pay the equivalent
of the 2019 final dividend as an interim dividend payable in
September 2020 and also declared a further interim dividend
for 2020 payable in December 2020. Prior to the Board
reaching this decision, the Audit and Risk Committee reviewed
the Group’s going concern status and an extensive range of
scenarios and modelling assumptions with regard to the
Group’s cash resources. Whilst remaining conscious of the
stakeholder considerations which had resulted in the
withdrawal of the 2019 final dividend, the assessment
undertaken by the Audit and Risk Committee and the Group’s
continued strong performance despite the COVID-19 pandemic
satisfied the Board that the payment of the interim dividends
described above would be in the best interests of shareholders
and would not have an adverse impact on the other key
stakeholders identified.
2020 AGM
In March 2020, the Board reviewed the arrangements for
the 2020 AGM, which was due to be held at the Company’s
head office in May 2020. In light of the uncertainty at that time
surrounding the COVID-19 pandemic and the UK government
guidance regarding social distancing, the Board agreed that an
alternative arrangement would be required in order to protect
the well-being of both shareholders and local communities,
whilst also allowing shareholders to participate in the meeting.
The Company’s Articles of Association allowed the Company
to hold its AGM electronically, and the Board considered a
recommendation that an investment be made in technology
that would enable the business of the meeting to run as close
to normal as possible. The Board noted that the solution would
allow all shareholders to participate in the meeting online, as
well as to hear the Directors speak, engage in the Q&A session
and vote during the meeting. The Board agreed that the
solution met its objectives and the meeting was successfully
held electronically.
Clarkson PLC | 2020 Annual Report
91
Other informationOverviewCorporate governanceFinancial statementsStrategic report
The Committee has continued to
focus on the combined capabilities
of the Board to be able to drive our
strategy forward.
Succession planning for senior management has also remained
high on the Board’s agenda, and was considered by the Board
at its annual strategy session. We recognise that developing
our global talent is crucial if we are to ensure that we have a
diverse pipeline of potential leaders at all levels of the
organisation, and our HR team launched a number of new
initiatives in 2020 to support this (see pages 62 and 94 for
further information).
The Board recognises the importance of a diverse Board
and workforce to provide different perspectives to support
the development and delivery of our strategy. Whilst our policy
remains not to set gender diversity targets for the Board,
we acknowledge that we do not currently meet the Hampton-
Alexander target of 33% representation of women on the
Board, which reflects the challenges in our wider sector with
regard to access to a strong pipeline of female talent. We are
aware of the need to tackle this at all levels of the organisation
in order to drive change for the future, and during the year we
received an update from our Group HR Director on diversity
and inclusion initiatives across the Group as a whole. These
recognise the benefits of broader diversity characteristics
such as age, ethnicity, core skills and experience, as well as
gender. Furthermore, whilst the Board does not currently have
any directors from an ethnic minority background, we are
supportive of the Parker Review and remain mindful of
its recommendations for boards of FTSE 250 companies
to have at least one director from an ethnic minority
background by 2024.
Finally, I would like to thank Marie-Louise Clayton, who stepped
down as a member of this Committee in October 2020, for her
contribution to our work over the last few years.
Sir Bill Thomas
Nomination Committee Chair
5 March 2021
Nomination Committee report
Dear Shareholder
I am pleased to present this report on the work of the Nomination
Committee during 2020.
The Committee has continued to focus on the combined
capabilities of the Board to be able to drive our strategy
forward. Having agreed in 2019 that the securing of capital
markets experience would be beneficial to the Board, we
continued the search initiated that year and were pleased to
announce in July 2020 that Laurence Hollingworth had been
appointed as a Non-Executive Director. We also identified the
broadening of financial experience on the Board (as succession
planning for the key role of Audit and Risk Committee Chair)
as an area of focus, and following a search process, Sue Harris
joined the Board in October 2020. We reported last year that
we had welcomed Heike Truol to the Board in January 2020
and, as Marie-Louise Clayton had confirmed her intention to
step down from the Board in early 2021, the Committee agreed
that the changes to the Board over the year represented an
ideal moment to consider carefully the skills and experience of
each Non-Executive Director and ensure that these were being
utilised to the extent possible through the memberships of the
Board Committees. In relation to our new Non-Executive
Directors in particular:
– The shipping experience of Heike Truol made her ideally
placed to enhance the sector experience on the Audit and
Risk Committee, whilst her previous senior strategy roles
would provide her with insights to support discussions
on the strategic needs of the business as a member
of the Nomination Committee;
– Through Laurence Hollingworth’s career in investment
banking he had gained financial experience which would
benefit the Audit and Risk Committee, and his knowledge
of the capital markets made him well placed to consider
shareholder views of remuneration structures as a member
of the Remuneration Committee; and
– Alongside Sue Harris’ significant financial expertise
(which would be utilised through her appointment as Chair
of the Audit and Risk Committee), she had previously served
as a member of remuneration committees (in both a listed
and private environment) and would therefore make a
valuable contribution to the Remuneration Committee.
Whilst we are cognisant of the need to embed these new
appointments, the Committee has agreed that, given the
development of our Sea/ suite of products and its growing
importance to our overall strategy, the strengthening of
technology experience on the Board would be extremely
beneficial. We have therefore initiated an independent search
for a Non-Executive Director who has experience of data
platforms, industrial index, trading or exchange platforms.
92
Clarkson PLC | 2020 Annual Report
Nomination Committee – at a glance
Comprises a majority of independent Non-Executive Directors:
– Sir Bill Thomas, Chair
– Peter Backhouse, Senior Independent Director
– Dr Tim Miller, independent Non-Executive Director
– Heike Truol, independent Non-Executive Director1
Heike Truol was appointed as a member with effect from
31 January 2020, whilst Marie-Louise Clayton stepped down
as a member on 6 October 2020.
Regular attendees at meetings include the CEO, CFO & COO,
Group HR Director and Group Company Secretary.
The Nomination Committee’s key role is to oversee the Board
composition and effectiveness of the Board to support
planning for its progressive refreshing.
Three scheduled and five unscheduled meetings were
held during 2020. Attendance at the scheduled meetings
is set out below.
Unscheduled meetings were convened principally
to oversee the searches for, and appointments of, new
Non-Executive Directors.
Scheduled meeting attendance
Current Directors
Sir Bill Thomas
Peter Backhouse
Dr Tim Miller
Heike Truol1
Former Director
Marie-Louise Clayton2
1 Appointed on 31 January 2020.
2 Stepped down on 6 October 2020.
3/3
3/3
3/3
3/3
2/2
Read more
Annual review of the Nomination Committee’s effectiveness
on page 96.
The Nomination Committee’s Terms of Reference
are reviewed annually and are available at
www.clarksons.com/about-us/board-of-directors.
Key topics discussed at Nomination Committee meetings
in 2020
Annual effectiveness review
Output of the 2019 annual effectiveness review of the Board
and the Nomination Committee, including progress against
action plans
Agreement of the proposed approach and timescales
for the 2020 annual effectiveness review of the Board
and its Committees
Succession planning
Annual review of succession planning for Non-Executive
Directors
Initiation of the search for two new Non-Executive Directors,
including agreement of the role specifications, the approach
to the search, selection of the search agency, and review
of candidate profiles (which culminated in the appointments
of Laurence Hollingworth and Sue Harris during the year)
Board composition
Annual review of the structure, size and composition of the
Board and its Committees, including the balance of skills,
knowledge, experience and diversity of the Directors
Review of the composition of the Board Committees following
the appointment of new non-executive directors, and taking
account of the resignation of Marie-Louise Clayton as a
Non-Executive Director
Appointment/reappointment of Directors
Recommendation to the Board of the appointments of Heike
Truol, Laurence Hollingworth and Sue Harris (including Board
Committee memberships), having considered their
independence, other time commitments and the proposed
terms of their appointments
Annual review of the continued independence of each
Non-Executive Director
Recommendation to the Board (for onward recommendation
to shareholders) of the election or re-election of each of the
Directors, having considered performance evaluation, time
commitments, meeting attendance and, where relevant,
their independence
Diversity
Annual review of the Board Diversity Policy
Update on diversity and inclusion initiatives for the Group
as a whole
Governance
Annual review of the Committee’s Terms of Reference,
including how the Committee had discharged its
responsibilities during the year
Review of the report of the Committee, to be included
in the 2019 annual report
Clarkson PLC | 2020 Annual Report
93
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Nomination Committee report
continued
Succession planning
Non-Executive Directors
The Nomination Committee reviews succession planning for
the Non-Executive Directors. Whilst the tenure of the Directors
is an important factor, the Nomination Committee is cognisant
that this cannot be reviewed in isolation. Non-Executive Director
succession planning is therefore considered within a wider
context which includes the size, structure and composition
of the Board; provisions under the UK Corporate Governance
Code regarding Board Committee composition; the benefits
of refreshing the membership of the Board Committees;
and the current balance of skills, knowledge, experience and
diversity on the Board and whether it is appropriate to continue
to challenge management and support the delivery of the
Group’s strategy.
Having reviewed the factors listed above, and taking account
of feedback from the effectiveness evaluation of the Board
undertaken in late 2019, the Nomination Committee drew
the following conclusions during 2020:
– The tenure of the Directors (which is set out below) does
not give rise to any immediate concerns as five of the seven
Non-Executive Directors in office as at the date of this report
are in their first three-year term, driven in part by the
appointment of three Non-Executive Directors during
the year.
– The size of the Board is conducive to an effective debate,
being large enough to bring a broad and diverse range
of backgrounds, perspectives and experiences, but not
so large as to be unwieldy. The structure of the Board
remains appropriate.
– The appointment of Heike Truol during the year has brought
to the Board shipping experience from the customer
perspective, whilst Laurence Hollingworth’s appointment
has strengthened capital markets experience, which had
been previously identified as beneficial to secure within the
short to medium term. The appointment of Sue Harris has
provided succession planning for the key role of Audit and
Risk Committee Chair.
– Following this refreshing of the Board, and in assessing
whether the composition of the Board is appropriate to
deliver our strategy (and in particular the development
of our Sea/ suite of products), we concluded that the
strengthening of the technology experience on the Board
would be beneficial. We have since initiated a search
for a Non-Executive Director who is experienced in data
platforms, industrial index, trading or exchange platforms.
– Whilst the gender diversity of the Board would not meet
the 33% target set out in the Hampton-Alexander Review
following the resignation of Marie-Louise Clayton, any search
for a new non-executive director would be conducted in part
using open advertising with the aim of widening the pool
of female candidates for the role.
– The Company complies with all provisions under the Code
in relation to Board Committee memberships.
Board tenure (as at 31 December 2020)
In addition to this longer-term succession planning activity,
the Nomination Committee has also considered succession
planning across a short-term horizon. It is satisfied that,
in the event that one of the Board Committee Chairs was
unexpectedly unable to fulfil their duties, the current Board
composition would allow contingency cover to be identified
and the Board Committee to continue to operate effectively
whilst still meeting any specific Code requirements.
Read more about the appointments of Laurence Hollingworth
and Sue Harris on page 95. Further detail on the appointment
of Heike Truol was provided on page 92 of the 2019 annual report.
Chair
To ensure that an effective Chair is in place at all times to lead
the Board, and that the Board will be able to act quickly when
a search for a new Chair needs to be undertaken in the future,
the Nomination Committee has established a framework for
Chair succession. This outlines the process to be followed,
as well as confirming any arrangements to be implemented in
the event of the Chair being temporarily absent at short notice.
Executive positions and senior management
Recognising the importance of executive and senior
management succession planning, the Board and executive
management are highly focused on succession planning on
an ongoing basis. This year we launched a new promotions
process that ensures we have a framework to assess, promote
and develop our future leaders on a consistent basis and
secure the pipeline of key talent for succession to more senior
roles. The opportunity to develop as senior leaders is further
enhanced by the participation in divisional management forums
and attendance at our global MDs week at the start of each year.
During the year, we have promoted 11 new Managing Directors,
14 new Directors and 17 new Divisional Directors to continue
to grow the cohort of future leaders and to invest in their ability
to assume a broader role when the need or opportunity arises.
In addition to this, two new global leadership roles were created
focusing on the cross-cutting agenda and opportunities across
the Group.
Additionally, efforts continue to provide opportunities for more
senior employees to engage with the Board through both
informal occasions (although impacted by COVID-19 this year)
and formal presentations at Board and Committee meetings.
The Board remains satisfied that this approach is appropriate
to continue to develop the right skills and capabilities in the
levels below the Board, retain and develop key talent, and to
mitigate risk. Emergency succession plans are in place for the
executive leadership team.
Unexpired tenure
2025
2026
2024
2027
2028
2029
2013
2014
2015
Expired tenure
2016
2017
2018
2019
2020
2021
2022
2023
Sir Bill Thomas
Peter Backhouse
Sue Harris
Laurence Hollingworth
Dr Tim Miller
Birger Nergaard
Heike Truol
94
Clarkson PLC | 2020 Annual Report
Board appointments
The Nomination Committee is responsible for making
recommendations to the Board regarding appointments of
new Directors and membership of Board Committees, as well
as reviewing the reappointment of Directors at the end of their
three-year terms. During the year, the Nomination Committee
made recommendations to the Board to appoint three new
Non-Executive Directors. The process by which Heike Truol
was appointed was set out on page 92 of the 2019 annual
report, whilst further detail on the search process which
resulted in the appointments of Laurence Hollingworth and
Sue Harris is set out to the right. No Director reached the end
of their term during the year.
Election and re-election of Directors
The Code sets out that all Directors should offer themselves
for election by shareholders at the first AGM following their
appointment, and for re-election on an annual basis thereafter.
The Nomination Committee leads the process for evaluating
whether the Board should recommend the election/re-election
of Directors to shareholders, and takes account of the
contribution to the Group’s strategy, performance, time
commitment and independence of each Non-Executive Director
in forming a recommendation to the Board. The appraisals of
the Executive Directors are also considered by the Board prior
to their re-election being recommended.
Contribution to strategy
The contribution that each Director makes to the Group’s
strategy is set out in their biographies on pages 82 to 85.
Director performance evaluations
The process by which the performance of the Directors is
evaluated is set out on page 98. The evaluations concluded
that each of the Directors continues to perform effectively
and to demonstrate commitment to their role.
Time commitment
Although the letter of appointment of each Non-Executive
Director includes an anticipated time commitment, the letter
also states that Directors are expected to commit sufficient
time to their directorship to discharge their obligations to the
Company. The Nomination Committee reviewed the time that
each Non-Executive Director commits to the Company and
was satisfied that this was sufficient to discharge their duties
fully and effectively in each case.
The Nomination Committee also considered the external
directorships and other commitments of each Director,
and noted in particular that:
– Sir Bill Thomas’ membership of the International Advisory
Board of FireEye, Inc. was in an advisory capacity only.
– The time commitment made by Sue Harris to other
directorships had been evaluated closely at the time of her
appointment, and the Nomination Committee had satisfied
itself that Sue would be able to devote sufficient time to
her directorship at the Company. There had not been any
changes in Sue’s time commitments since her appointment
which would require the Nomination Committee to revisit
that assessment.
Following this review, the Nomination Committee confirmed
that the external directorships and time commitments of the
Directors did not give rise to any concerns that each Director
would not be able to commit sufficient time to their directorship
in the future.
Appointments of Laurence Hollingworth and Sue Harris
As part of its regular review of the skills and experience
on the Board, the Nomination Committee identified that the
strengthening of the capital markets experience on the Board
in the short to medium term could be beneficial, as would
the broadening of financial experience on the Board as
succession planning for the role of Audit and Risk Committee
Chair. It was agreed that a search for at least one new
Non-Executive Director would be initiated, with these
attributes forming the basis of the role specification provided
to potential search firms, alongside experience of working
at a senior executive level.
The Nomination Committee considered a number of search
firms, taking account of the commitment in the Board
Diversity Policy to only engage firms who were signatories
to the Voluntary Code of Conduct for Executive Search Firms,
and selected Heidrick & Struggles to lead the search. Heidrick
& Struggles do not have any other connection with the Group
or its Directors. The roles were also advertised via ‘Women
on Boards’, with any candidates being routed through
Heidrick & Struggles.
The Nomination Committee debated a longlist of candidates
and, based on suitability against the role specification, drew
up a shortlist of candidates who were met and interviewed
by the Chair of the Board, other members of the Nomination
Committee and the Executive Directors. Having considered
feedback from the interviews (encompassing cultural fit with
the Group), potential conflicts of interest and ability to commit
sufficient time to the role, the Nomination Committee
recommended the appointments of Laurence Hollingworth
and Sue Harris to the Board noting the following points:
– In addition to Laurence’s deep knowledge of capital
markets, he had gained extensive senior executive
experience through relationship-led roles in a broking
environment. He therefore had a strong appreciation of the
role of the broker and the environment in which Clarksons
operates. Furthermore, his executive roles had given him
broad exposure to boardroom dynamics.
– Sue would bring extensive financial experience to the
Board gained through a number of senior executive roles
in FTSE 100 businesses. She was also an experienced
non-executive director and audit committee chair, with
significant boardroom experience in the listed environment.
– Both Sue and Sir Bill Thomas were directors of The
Co-operative Bank p.l.c. A cross-directorship is noted in
the Code as a circumstance which could appear to impact
a non-executive director’s independence. The Nomination
Committee considered the character of both Directors and
satisfied itself that this would not impair the independence
of either Director.
– Sue’s other time commitments were evaluated closely.
The Nomination Committee noted that none of Sue’s
other directorships were of listed companies and, having
considered fully the time that Sue had committed to those
directorships, concluded that she would be able to devote
sufficient time to her directorship at the Company.
Clarkson PLC | 2020 Annual Report
95
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Nomination Committee report
continued
Independence
The Nomination Committee assesses the independence of
the Non-Executive Directors against the criteria set out in the
Code, which highlights that to be classed as independent,
non-executive directors should be independent in character
and judgement and free from any relationships or circumstances
which may affect that judgement. This assessment is made on
an annual basis prior to recommending the election/re-election
of the Directors. However, the Nomination Committee also
revisits its assessment as and when there are any changes in
circumstances and prior to recommending any reappointments
for a further term to the Board.
During its annual assessment, the Nomination Committee
satisfied itself that there had not been any changes in
circumstances which would impact on the previous assessment
that all Non-Executive Directors were independent.
Conclusion
The Board approved the Nomination Committee’s
recommendation that each Director should be proposed
for election/re-election at the 2021 AGM. Further information
about the Directors, which highlights their skills and areas
of expertise, is set out on pages 82 to 85.
Board and Committee effectiveness
The Board is cognisant that changes in strategy, personnel
and the external environment may need to drive changes in
the way that we operate in order to maximise our effectiveness.
We therefore recognise the benefits of regularly evaluating our
own effectiveness and that of our Committees (at least annually)
so that we can take any actions necessary to ensure that we
continue to perform effectively. In line with the Code, an
external evaluation is undertaken at least once every three
years. The last external review was completed in 2019.
2020 review
Following the comprehensive external review that was
completed in 2019, the 2020 review, which was led by the
Nomination Committee, was internally facilitated. Although
it was slightly less broad than the previous year, the review
covered a number of specific areas in more depth. An overview
of the process and timetable is provided to the right.
Board
Given the changes in Board composition during the year,
the review focused on Board dynamics and information flow
to the Board. The review concluded that the Board continued
to operate effectively, and some of the key strengths
highlighted included:
– Directors feel able to actively participate in discussions.
Whilst it was acknowledged that the online format of
meetings during the year naturally made it more difficult
to stimulate an active debate, this had been managed well.
– Board members have an open relationship and feel able
and supported if offering differing opinions.
– Directors are receiving the information needed to undertake
their role, with the new Directors noting the comprehensive
induction that had been planned and undertaken.
As would be expected at every evaluation, there were
some opportunities to enhance effectiveness. Reflecting the
challenges faced in 2020, as well as the changes to the Board
composition during the year, the Directors were unanimous
in wishing to spend more informal time together.
Committees
The Board Committees were confirmed to be operating
effectively. The key outcomes of the reviews were again
reflective of the changes in Board composition during the year.
Points highlighted included a need to embed new members
and to ensure that an ongoing training programme is
maintained. Nomination Committee members noted the
progress made during the year on succession planning for the
layer of senior management below Board, but agreed that this
should remain high on the agenda in 2021. The Audit and Risk
Committee review acknowledged that the internal audit
programme had been impacted to some extent by COVID-19,
and the programme would continue to be a focus for the Audit
and Risk Committee in 2021. The Remuneration Committee
review noted the need to continue to focus on engagement
with shareholders on remuneration matters.
Stages of the Board and Committee effectiveness review
November 2020
Approach and areas of focus agreed by Nomination
Committee.
December 2020 to January 2021
Questionnaires completed and output analysed.
January to February 2021
– Outputs discussed with Chair, Senior Independent Director
and Committee Chairs and areas of focus for 2021 agreed.
– One-to-one meetings between Chair and Directors.
March 2021
Action plans approved by the Board and its Committees
(where required).
96
Clarkson PLC | 2020 Annual Report
2019 review
The key actions arising from the 2019 review, along with an update on progress against the actions, is provided below:
Evaluation recommendation
Actions taken in 2020
Schedule in more opportunities for
Directors to interact in a more informal
environment with their fellow Directors.
Look at ways to refresh the Board’s
approach to strategic planning to enable
it to develop the strategy further. KPIs
to be revisited as part of the refreshed
strategic approach to ensure that they
are aligned with the Company’s purpose
and support the strategy.
Reporting to the Board to be enhanced by
highlighting more clearly in papers the key
issues and implications for stakeholders.
Maintain the focus on succession
planning for senior management.
Increase the focus on stakeholder
views through:
– Business MD presentations
at Board meetings.
– Regular reporting on prompt
payment of suppliers.
– Strengthening the voice
of the employee.
Continue to focus on the Group
diversity and inclusion agenda.
Opportunities for Board members and senior management
to meet informally during the year were curtailed by the
COVID-19 pandemic. In addition, the September Board
strategy session was to be held in Oslo which would have
provided an opportunity to meet members of the local senior
team. Given the continued uncertainty regarding face-to-face
meetings and travel, Board dinners and overseas travel have
not been added to the 2021 Board calendar at the current
time, but this will be kept under consideration and revisited
once it is considered safe to do so.
The agenda for the Board strategy session was refreshed,
and the frequency of updates to the Board on strategic
objectives has been increased. KPIs have been revisited and
it has been agreed that the current KPIs remain appropriate.
This was incorporated into the standard Board paper
template and will encourage the Board to consider and probe
any implications for stakeholders.
The Board strategy session included an update on the
evolution of management roles in the Broking division,
new management team in Broking and the approach
for other key hires.
Work is continuing on the development of a competency
framework and development plans which will further support
the executive succession planning process.
The focus on succession planning for senior management
will continue to be maintained through the meeting calendar.
Some Business MD presentations have been made
to the Board during the year. The frequency of these will
be increased once COVID-19 restrictions lift, as the Board
would welcome the opportunity to meet senior management
in person.
Updates on payment practices (time taken to pay invoices)
are being provided to the Board on a half-yearly basis.
Employee engagement initiatives (driven by both the
designated NED for employee engagement and management)
have continued to evolve. These have included the launch of
a new internal communication platform (Voyage) and several
CSR initiatives to promote connectivity between all offices.
The Nomination Committee received an update at
its August meeting on diversity and inclusion initiatives
in the Group across the short, medium and longer terms.
Updates will continue to be provided to the Nomination
Committee regularly.
Clarkson PLC | 2020 Annual Report
97
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Nomination Committee report
continued
Director performance evaluations
The performance of the Non-Executive Directors is reviewed
annually in tandem with the Board and Committee effectiveness
reviews, and the Nomination Committee agrees the approach
to be taken.
The Chair’s performance evaluation was led by the Senior
Independent Director (with input from the other Non-Executive
Directors) whilst the Chair conducted the performance
evaluations of the Non-Executive Directors. The evaluations
focused on the contribution made by the Director over the year;
how that contribution was made; and their commitment to the
role. Feedback is being discussed on a one-to-one basis and
where appropriate, development plans and ongoing training
needs will be agreed.
The performances of the CEO and the CFO & COO were also
appraised separately by the Chair and the CEO respectively.
Feedback was presented to the Remuneration Committee
as part of the annual remuneration review.
The evaluations concluded that each Director had performed
effectively and demonstrated commitment to their role.
Diversity
The Board recognises that diversity, in its broadest sense, is a
key driver of an effective board, being a board which comprises
individuals with a broad range of backgrounds, skills,
experience, expertise and perspectives, and which utilises
these qualities in order to generate effective debate, challenge
and decision-making.
We have adopted a Board Diversity Policy which confirms
that the Board strongly supports the principle of boardroom
diversity, of which gender is one important aspect. However,
it does not include a measurable target for gender representation
on the Board and explains that all appointments are subject to
formal, rigorous and transparent procedures and should be
made on merit against a defined job specification and criteria.
The Company does not therefore consider it appropriate to set
a measurable target for female representation on the Board.
Female representation on the Board currently stands at 22%.
The Board is committed to supporting the work of the Group
to look for new and innovative ways to ensure a diverse and
inclusive workforce at every level of the organisation. As a
Group, we are committed to using our diversity and inclusion
lens at all opportunities and asking ourselves the right
questions in everything we do, and importantly, whether
we can do more. We are confident that this practical approach
will deliver more tangible outcomes for the business and our
diversity and inclusion objectives and ensure we are constantly
striving to improve.
The appointment of a new Group HR Director in late 2019
supported a refreshed focus on diversity and inclusion
initiatives during the year, and the Nomination Committee
received an update which set out the areas which were
currently being prioritised, as well as work to be undertaken
in the medium and longer terms. Work in progress and/or
completed during the year includes:
– Review of key policies, including the Group Diversity and
Inclusion Policy, UK Shared Parental Leave Policy and Flexible
Working Policy (the UK Maternity and Adoption Policy having
already been reviewed and changed in late 2019).
– Assessment of training to be built in to mandatory training
programmes.
– Review of our global recruitment processes; the terms and
conditions we have in place with the recruitment agencies
that we use; the way we hire and engage with potential
candidates across the various locations and jurisdictions
that we operate in; the language we use in our role vacancies
and postings, the language we use in all our internal policies
and materials; and marketing that we use to interact with
potential talent.
– Development of our direct sourcing model and capabilities
to reach a much broader pool of candidates and improve our
brand outside the traditional network we are known in.
Induction and development
All newly appointed Directors receive a comprehensive induction
programme which is tailored to their needs. The Chair and the
Group Company Secretary are responsible for designing an
effective induction programme, with the objectives of:
– Facilitating the Director’s understanding of the Group from
both an internal and an external perspective: its culture,
stakeholders, key businesses and markets, and operations
on the ground;
– Providing them with any key insights into Committee-specific
matters, as relevant; and
– Enabling their effective contribution to the Board as early
as possible.
A typical induction programme, which will be flexed to reflect
experience and responsibilities, is set out to the right. The
programme is supplemented by access through the electronic
Board portal to a file of reference material, which covers areas
including corporate governance matters and procedures, past
financial performance, shareholder analysis and risk
management systems.
The induction programmes for Laurence Hollingworth and
Sue Harris were agreed during the year and are in progress.
Their inductions have been tailored to their responsibilities
and experience:
– Laurence Hollingworth: This is Laurence’s first non-executive
directorship of a listed company, and ensuring that he has
a good understanding of his responsibilities and the listed
company environment has therefore been an area of focus.
He has received a briefing from the Group’s corporate legal
partner and has attended an externally facilitated training
course on these topics. As a member of the Remuneration
Committee, Laurence has met with the Remuneration
Committee’s external consultant and the Group HR Director
to deepen his understanding of both the key external
developments facing remuneration committees and how the
remuneration framework at Clarksons fits within this context.
Meetings with the external auditor and the Group Financial
Controller have also been crucial for him to gain an overview
of the financial operations and audit process, and the risk
management framework.
– Sue Harris: Sue is an experienced non-executive director
who already has a deep understanding of this role in a listed
company context. The focus of Sue’s induction programme
has therefore been on familiarising herself with Clarksons
and its industry and on matters specific to her roles as a
member of the Remuneration Committee and the Chair
of the Audit and Risk Committee. With regard to the latter,
Sue has met regularly with the Lead Audit Partner to review
the key issues and judgements in relation to the external
audit. She is also deepening her understanding of the key
control and risk management structures and issues facing
the Group through meetings with functional heads such
as with the Chief Security Officer on cyber security,
and with the internal auditor (Grant Thornton).
98
Clarkson PLC | 2020 Annual Report
Whilst meetings would ordinarily be held face-to-face,
these have been held online in 2020 due to COVID-19. Given
restrictions on overseas travel, any planned site visits will
be deferred until such time as it is safe to travel.
The programme for Heike Truol (as set out on page 98
of the 2019 annual report) has been substantially completed.
A typical induction
Purpose
To provide an insight into
the key issues facing the
Group from the Board’s
perspective.
To provide an overview of
corporate governance at
the Company.
Who with?
Board Directors
Areas for discussion
– Purpose, strategy and priorities
– Financial position and performance
– Key stakeholders
– ESG matters
Group Company Secretary
– Listed company governance and best
To build an understanding
of the context within
which the Group operates.
To provide an overview of
the business and establish
links with key personnel.
Principal advisors (as appropriate):
– External auditor
– Corporate brokers
– Financial public relations advisor
– Remuneration consultant
– Corporate legal partner
Business MDs and senior leaders
across all four divisions
practice
– Key Board procedures (including the
governance framework and Board
calendar)
– Board resources
– Audit plan and approach
– Major shareholders and perceptions
of the Company
– Remuneration framework
– Directors’ duties in a listed company
– Challenges and opportunities
– Competitive environment
– Key risks
– Client matters
– History
To discuss the principal
focus areas of the
functions and how they
support the strategy,
whilst building
relationships with key
leaders.
Site visits, to build a
deeper understanding of
the business from an
on-the-ground
perspective.
Functional leaders:
– Group HR Director
– Group Financial Controller (and
Compliance Officer)
– General Counsel
– MD, Group IT
– Values and culture
– Employee engagement initiatives
– Reward framework
– Financial operations
– Risk management and compliance
– Legal matters
– IT development
– Cyber security
Local MDs and employees as
appropriate
– Business operations
– Local matters relating to the business
and functions as above
As part of our ongoing development, the Board receives
briefings on legal, regulatory and governance matters as they
arise. To ensure our ongoing awareness of Group policies
and procedures, we also complete the online training modules
that are mandatory for employees. During 2020, the Group’s
corporate lawyer led a session to refresh the Board’s
knowledge of its responsibilities under Market Abuse
Regulation and the Company’s share dealing policies. Senior
managers also make presentations to the Board on strategic
matters and key industry and business developments, which
provides us with an opportunity to engage with employees
who may be considered as part of succession planning.
Clarkson PLC | 2020 Annual Report
99
OverviewCorporate governanceFinancial statementsOther informationStrategic report
We have continued to enhance
our risk and control environment
to robustly underpin our commercial
activities for the longer term, whilst
also responding to the COVID-19
pandemic.
These processes also supported the Committee’s review
of whether the Company had sufficient capacity to pay the
equivalent of the 2019 final dividend as an interim dividend
in September 2020 and to declare a further interim dividend
for 2020 payable in December 2020. Having reviewed the
extensive range of scenarios and modelling assumptions
with regard to the Group’s cash resources presented by
management, we were satisfied that we could advise the
Board that sufficient cash and distributable reserves capacity
were available to make these payments.
The risk management framework is essential to continue
to undertake our commercial operations safely and effectively,
and evolve our strategy. I am pleased to report that we have
continued to strengthen our risk and control environment in
2020. The embedding of risk management within the business
has remained an area of focus, as has investment in our IT
estate and the controls around it. We have also continued to
leverage the outputs from the internal audits performed by
Grant Thornton as our outsourced internal audit partner, and
we have a robust programme of activity planned for the coming
year which we will flex if needed to respond to any changes in
the operating environment.
I will be attending our AGM on 5 May 2021 and I look forward
to answering any questions about the work of the Audit and
Risk Committee.
Sue Harris
Audit and Risk Committee Chair
5 March 2021
Audit and Risk Committee report
Dear Shareholder
I am pleased to present our Audit and Risk Committee
report for the year ended 31 December 2020, the first since
I took up the role of Chair of the Committee in November 2020.
I would like to begin by thanking Marie-Louise Clayton for her
support in ensuring a smooth transition of responsibility for the
Committee Chair role, and for her invaluable contribution in
steering the work of the Committee as its Chair since May 2017.
Dr Tim Miller also stepped down as a member as part of the
refreshing of Committee memberships following the
appointment of new Non-Executive Directors to the Board.
I would also like to thank Tim for his important contribution.
During the year, the Committee welcomed Heike Truol and
Laurence Hollingworth as members.
The Audit and Risk Committee plays a crucial role in providing
oversight for the Board and shareholders on the integrity of
the Group’s processes and procedures in relation to financial
reporting, internal controls and risk management. Whilst our
core duties have remained unchanged in 2020, COVID-19 has
resulted in our activities being necessarily enhanced to ensure
that we can continue to carry out our role effectively.
We have applied additional focus to assess the impact of
remote working on our control framework, as the majority
of our global workforce has worked from home, and we have
been especially cognisant of the increased threats during the
pandemic from cyber crime to IT systems and data security.
Our IT Security team has continued to assess emerging threats
and to strengthen controls to mitigate these threats, and the
Committee received a detailed update on this work during
the year.
We have held regular meetings with our external auditor (PwC)
to discuss the audit plan, approach and their findings in respect
of the audit of the 2020 financial statements. By necessity,
much of PwC’s work has been carried out remotely.
Nevertheless, we are satisfied that a high quality audit has
again been completed this year. Management undertook
enhanced sensitivity analysis in relation to the going concern
and viability statements, and the Committee was satisfied with
the robustness of this approach, allowing us to recommend the
financial statements to the Board.
100 Clarkson PLC | 2020 Annual Report
Audit and Risk Committee – at a glance
Composed of independent Non-Executive Directors:
– Sue Harris (Chair), independent Non-Executive Director1
– Peter Backhouse, Senior Independent Director
– Laurence Hollingworth, independent Non-Executive Director2
– Heike Truol, independent Non-Executive Director3
Marie-Louise Clayton stepped down as Chair on 31 October
2020 and as a member on 31 January 2021. Dr Tim Miller
stepped down as a member on 6 October 2020.
Sue Harris is a chartered management accountant and has
a broad range of experience in senior finance roles. She is
therefore considered by the Board to meet the requirement
under the Code that at least one member of the Audit and
Risk Committee has recent and relevant financial experience.
Prior to Sue’s appointment, Marie-Louise Clayton met this
requirement. The Committee as a whole has competence
relevant to the sector in which the Company operates.
Regular attendees at meetings include the CFO & COO, Group
Financial Controller, Group Company Secretary, the external
auditor (PwC) and the internal auditor (Grant Thornton).
Representatives of the Norwegian businesses are regularly
invited to meetings to provide insight on matters relating
to those businesses.
The key roles of the Audit and Risk Committee are to review
the integrity of the financial reporting for the Group (including
managing the relationship with the external auditor) and to
oversee the effectiveness of the risk management and internal
control systems.
At least once per year, the Audit and Risk Committee meets
privately with the external auditor without management present
in order to discuss their remit and any issue they may wish
to raise.
The Audit and Risk Committee held three scheduled meetings
during 2020. Attendance is set out below.
Scheduled meeting attendance
Current Directors
Sue Harris1
Peter Backhouse
Laurence Hollingworth2
Dr Tim Miller4
Heike Truol3
Former Director
Marie-Louise Clayton
1/1
3/3
2/2
2/2
3/3
3/3
1 Appointed as a member on 7 October 2020, and as Chair with effect
from 1 November 2020.
2 Appointed on 23 July 2020.
3 Appointed on 31 January 2020.
4 Ceased to be a member from 6 October 2020.
Read more
Annual review of the Audit and Risk Committee’s effectiveness
on page 96.
The Audit and Risk Committee’s Terms of Reference
are reviewed annually and are available at
www.clarksons.com/about-us/board-of-directors.
Key topics discussed at Audit and Risk Committee
meetings in 2020
External audit
External audit reports on the principal audit and accounting
issues arising during the half year review and full year audit
and observations on the control environment
Review of non-audit services being provided by PwC, including
the nature of the services, fees, threats to independence and
safeguards in place
Recommendation to the Board to reappoint PwC, having
reviewed the effectiveness and quality of the external audit
process and reassessed PwC’s independence
Letters of representation in connection with the full year audit
and half year review
PwC’s terms of engagement
Plan for the 2020 full year audit, including objectives, approach,
timing and fee proposal
Financial reporting
Financial results comprising the 2019 full year results
announcement, the 2019 annual report (including statements
regarding going concern and viability, and confirmation that the
annual report was fair, balanced and understandable) and the
2020 half year results announcement
Accounting policies and key judgements and estimates for the
half year and full year results
Interim and final dividend payment capacity
Governance
Consideration of any financial matters to be brought to the
attention of the Remuneration Committee in respect of 2019
bonus awards and the bonus provision
Governance processes regarding the implementation of the
European Single Electronic Format regulations
Annual review of the Audit and Risk Committee’s effectiveness
Annual review of the Audit and Risk Committee’s Terms
of Reference, including how the Committee had discharged
its responsibilities during the year
Review of the policy on the employment of former employees
of the auditor
Internal audit
2021 internal audit plan for the wider Group
Regular updates on internal audit activities, report findings
and recommendations
Annual review of the effectiveness of the internal audit
providers for Clarksons Platou Securities and the wider Group
Risk management and internal controls
Regular reports on the risk management and internal control
systems, including the annual review of the effectiveness
of those systems
Regular review of the risk register and annual assessment
of the emerging and principal risks and the appropriateness
of risk appetite
IT security update
Regular compliance updates
Regular litigation updates
Clarkson PLC | 2020 Annual Report
101
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Audit and Risk Committee report
continued
Significant issues considered in relation to the financial statements
Issue
Area of focus
Audit and Risk Committee review and conclusion
Risk of impairment
of trade receivables
Carrying value
of goodwill
A number of judgements are made
in the calculation of the provision,
primarily the age of the balance,
location and known financial
condition of certain customers,
existence of any disputes, recent
historical payment patterns and
any other available information
concerning the creditworthiness
of the counterparty.
The Audit and Risk Committee discussed with
management the results of its review, the internal
controls and the composition of the related
financial information.
The Audit and Risk Committee also discussed
with the external auditor their audit procedures
over the provision and their findings.
The Audit and Risk Committee is satisfied with
management’s judgements and that the level
of provisioning of £12.3m is consistent with the
evidence obtained.
Determining whether an
impairment charge is required
for goodwill involves significant
judgements about forecast future
performance and cash flows of
cash-generating units (CGUs),
including growth in revenues
and operating profit margins.
It also involves determining an
appropriate discount rate and
long-term growth rate.
The Audit and Risk Committee discussed with
management the results of its testing and evaluated
the appropriateness of the assumptions used within
its impairment test model. This model indicated that
the carrying value of the offshore broking and
updated securities CGUs exceeded the estimated
recoverable amount, resulting in the need for an
impairment charge to goodwill. For all other CGUs
there was sufficient headroom, after considering the
impact of sensitivity analysis from changes in key
assumptions, not to record an impairment charge.
The results of the Audit and Risk Committee’s review
of management’s testing were subsequently
discussed with the external auditor.
The Audit and Risk Committee is satisfied with
management’s assumptions and judgement, and
with the conclusion to take an impairment charge in
the offshore broking and securities CGUs amounting
to £60.6m but not in any of the other CGUs, and that
appropriate sensitivity disclosures have been
included in the financial statements.
Carrying value
of investments
(Parent Company)
Determining whether a
corresponding impairment charge
is required in the balance sheet of
the Parent Company in relation to
the original investment in Clarksons
Platou AS (formerly RS Platou ASA)
involves significant judgements
about forecast future performance
and cash flows of the investment,
including growth in revenues
and operating profit margins.
It also involves determining
an appropriate discount rate
and long-term growth rate.
The Audit and Risk Committee discussed with
management the results of its testing and evaluated
the appropriateness of the assumptions used within
its impairment test model. This model indicated that
the carrying value of the investment exceeded the
estimated recoverable amount, resulting in the need
for an impairment charge on the investment.
The results of the Audit and Risk Committee’s review
of management’s testing were subsequently
discussed with the external auditor.
The Audit and Risk Committee is satisfied with
management’s assumptions and judgement, and
with the conclusion to take an impairment charge
on the investment amounting to £54.7m.
102 Clarkson PLC | 2020 Annual Report
External audit
The Audit and Risk Committee manages the relationship
with the external auditor on behalf of the Board. This includes
recommending the appointment of the external auditor to
the Board and approving their remuneration and terms
of engagement.
PwC has been the external auditor to the Group since 2009
and was reappointed as external auditor in 2018 following a
competitive tender process. PwC will be subject to mandatory
rotation in 2029. In accordance with PwC’s rotation rules and
UK Ethical Standards, Chris Burns assumed the role of Lead
Audit Partner from the 2019 audit cycle.
The Audit and Risk Committee has an open relationship with
the external auditor, and effective and timely communication
is key to this. The Audit and Risk Committee Chair meets the
external auditor on a regular basis during the year, whilst the
Audit and Risk Committee meets privately with the external
auditor without management present at least annually in order
to allow both Committee members and the auditor to raise
any issues directly and to discuss the auditor’s remit. The Lead
Audit Partner and the Senior Manager are invited to attend all
meetings of the Audit and Risk Committee, and at appropriate
points in the audit cycle, PwC presents reports to the
Committee on the plan and approach for the full year audit and
half year review (including how audit quality will be addressed),
and the outcome of their audit work. Prior to these meetings,
PwC engages extensively with management in order to ensure
that planning is aligned appropriately with the key judgement
areas and to challenge management’s assumptions,
judgements and estimates. The detailed reports that PwC
presents to the Audit and Risk Committee at the full year
and the half year allow the Audit and Risk Committee to assess
the consistency of the work undertaken with the audit plan;
and the quality of the audit, taking note of the level of
professional scepticism employed and the degree of challenge
of management.
The significant issues considered in relation to the 2020
financial statements are set out on page 102. These areas were
agreed as part of the audit planning process. The Audit and
Risk Committee has not requested that PwC review any further
areas falling outside of the scope agreed at the start of the audit.
Independence
Processes have been implemented by both the Group and the
external auditor to safeguard the latter’s independence from
the Company. This is a key element in creating an environment
in which the external auditor can carry out their responsibilities
to shareholders and other stakeholders free of influences which
might affect their professional judgement.
The Audit and Risk Committee has developed a Non-Audit
Services Policy in order to ensure that appropriate controls
are in place around the use of the external auditor for non-audit
services. Details of the Non-Audit Services Policy are set out
on page 104.
Financial reporting
The Audit and Risk Committee has assessed whether
suitable accounting policies have been adopted and whether
management has made appropriate judgements and estimates.
In respect of the Company’s half year and annual financial
statements, the Audit and Risk Committee considered the
significant issues set out in the table on page 102 to ensure that
appropriate rigour was applied. These areas were agreed as
part of the audit planning process and were discussed in detail
with management and the external auditor throughout the year.
Particular attention was paid at the year-end to the carrying
value of goodwill held at a Group level and for the carrying
value of the investment held by the Parent Company in
Clarksons Platou AS.
All accounting policies can be found in note 2 on pages 138
to 145 of the consolidated financial statements.
Fair, balanced and understandable
The Audit and Risk Committee reviewed whether the 2020
annual report, taken as a whole, was fair, balanced and
understandable and provided the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.
In making its assessment, the Audit and Risk Committee took
into account the process which management had put in place
to provide assurance, as detailed below:
– Overall co-ordination of the production of the annual report
was overseen by the CFO & COO and Group Company
Secretary to ensure consistency across the document, with
overall governance and co-ordination provided by a cross-
functional team of senior management.
– Each section of the annual report was prepared by a member
of management with appropriate knowledge, seniority and
experience.
– An extensive verification process was undertaken to ensure
factual accuracy.
– A review of the minutes of all Board and Board Committee
meetings was completed by the Group Company Secretary
to ensure that all significant matters were appropriately
reflected and given due prominence in narrative reporting.
– Comprehensive reviews of drafts of the annual report were
undertaken by members of senior management and the
external auditor.
– The Audit and Risk Committee discussed management’s
views on each of the key judgements and estimates
considered in the period.
– Board members received drafts of the annual report for their
review and input which provided an opportunity to ensure
that the key messages in the report were aligned with the
Company’s position, performance and strategy; to discuss
the drafts with both management and the external auditor;
and to challenge the disclosures where appropriate.
The final draft of the annual report was reviewed by the Audit
and Risk Committee, and particular attention was paid to the
information and disclosure provided in the report in relation to
COVID-19, key risks, financial review and strategy. On the basis
of the process put in place by management and its own review
of whether the information necessary for shareholders to
assess the Group’s position and performance, business
model and strategy was appropriately disclosed, the Audit
and Risk Committee concluded that the 2020 annual report
was fair, balanced and understandable and advised the Board
accordingly. The Board concurred with this view and the
statement confirming it can be found on page 126.
Clarkson PLC | 2020 Annual Report
103
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Audit and Risk Committee report
continued
In assessing the external auditor’s independence, the Audit and
Risk Committee also reviews PwC’s annual independence letter
which provides the Audit and Risk Committee with assurances
over the internal control procedures PwC has in place to
safeguard its independence and objectivity. This includes:
– Confirmation that there are no relationships between PwC
and the Group or investments in the Company held by
individuals that could impact on PwC’s integrity,
independence and objectivity;
– Compliance with the Group’s Non-Audit Services Policy, the
nature of any non-audit services provided and the safeguards
in place to mitigate any threats to independence; and
– Confirmation of PwC’s rotation rules and that these have
been adhered to – in accordance with PwC’s rotation rules
and UK Ethical Standards, the lead audit partner must
change every five years and other senior members of the
audit team rotate at regular intervals.
No areas of concern were raised over 2020, and the Audit and
Risk Committee remains satisfied that the independence and
objectivity of PwC have been maintained.
Non-Audit Services Policy
To ensure that the external auditor maintains its independence
and objectivity, the Audit and Risk Committee has agreed that
the external auditor and their associated audit network firms
will not be used for any non-audit services, other than legacy
non-audit services already approved by the Audit and Risk
Committee and certain prescribed exceptions. The exceptions
relate to where services are required by statute; or exceptionally,
the local statute law permits the provision of such services, and
the external auditor is best placed to preserve the quality of the
non-audit service and there are limited feasible alternatives.
Auditor effectiveness
The Audit and Risk Committee conducts an annual
assessment of the effectiveness of the external auditor and
the external audit process and reports its findings to the Board.
It does this through:
– Reviewing the approach, plan, scope and level of fees
for the audit;
– Evaluating delivery and performance against the audit plan,
including feedback from the CFO & COO;
– Assessing the qualifications, experience and expertise
Following its annual review of effectiveness of the external
auditor, the Audit and Risk Committee concluded that PwC
remained effective and had delivered a high quality audit.
Auditor reappointment
Taking into account the review of independence and
performance of the external auditor, the Audit and Risk
Committee has recommended to the Board the reappointment
of PwC. Resolutions reappointing PwC as external auditor and
authorising the Directors to set the auditor’s remuneration will
be proposed at the 2021 AGM.
Statutory Audit Services Order
The Audit and Risk Committee confirms compliance with the
Competition and Markets Authority’s Statutory Audit Services
for Large Companies Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014.
Internal controls and risk management
The Audit and Risk Committee is responsible for reviewing the
adequacy and effectiveness of the Group’s systems of internal
control and the risk management framework. Details of the risk
management structures in place to enable the risks facing the
business to be identified, documented, assessed and
monitored are provided within the Risk management section
on pages 70 to 72.
The annual review of risk, controls and risk management
processes which the Audit and Risk Committee oversees
was enhanced in a number of areas in 2019. This progress
continued to be built on in 2020, with a particular focus on
broadening discussions with management to further embed
risk management in the business.
The Audit and Risk Committee regularly reviews the principal
risks and actions to mitigate them. In 2020 particular attention
was paid to the impact of Brexit, climate change and the
COVID-19 pandemic on our principal and emerging risks.
Following this review, we increased the risk factor of the
following key risks:
– Economic factors, reflecting the impact of the pandemic
on world trade and the ongoing uncertainty as to how long
the pandemic and its effects will last.
of the audit team assigned to conduct the audit, and their
availability to conduct a comprehensive, timely and effective
audit, as well as their knowledge of the Company and the
environment in which the Group operates;
– Cyber risk and data security, due to the increased volume
of spam and phishing type email attacks to which employees
are subject whilst predominantly working remotely.
– Loss of key personnel – normal course of business,
– Considering the processes implemented by PwC to ensure
quality controls, for example the design of testing procedures
and whether they are appropriately focused on the most
significant risk areas, and the effectiveness of review
processes and partner oversight;
– Seeking feedback on the communication and engagement
between management and PwC, management’s
responsiveness to requests from PwC for information,
and the extent to which PwC challenges management;
– Reviewing the content and quality of PwC’s written reports
and contributions to the Audit and Risk Committee’s
discussions;
– Considering the confidence of the Audit and Risk
Committee in PwC’s judgements and their transparency
with the Committee;
– Reviewing compliance with the Non-Audit Services Policy
and other procedures designed to safeguard PwC’s
independence and objectivity; and
exacerbated by the potential adverse impact of remote
working on employees’ mental well-being.
– Financial loss arising from failure of a client to meet its
obligations, which has become more difficult to assess
as a result of the pandemic.
– Breaches in rules and regulations, driven principally by
the differing and constantly changing health and safety
regulations and guidance introduced globally.
Further detail on all of our principal risks, the controls in place
and actions taken during the year to mitigate them can be
found in the Risk management section on pages 73 to 77.
On the recommendation of the Audit and Risk Committee,
the Board concluded that:
– The Group’s systems of internal control and risk
management were appropriately designed and operated
effectively during the year;
– Discussing the latest FRC Audit Quality Inspection report
– No significant control deficiencies had been identified during
on PwC and actions being taken by PwC to address
the findings raised.
the year;
– The residual risks fall within the risk appetite for the Group; and
104 Clarkson PLC | 2020 Annual Report
– Given the comprehensive nature of the annual formal
assessment of risks and the regular monitoring throughout
the year, it was satisfied that there were no significant
known emerging risks which could materially impact on
the achievement of the Group’s strategic objectives in the
near term.
Going concern
The Audit and Risk Committee assesses whether it can
recommend to the Board that the going concern basis can
continue to be adopted in preparing the financial statements.
Management presents an assessment of the Group’s
prospects and risks, assumptions and sensitivities to support
the Audit and Risk Committee in making its recommendation.
In light of COVID-19, management prepared enhanced
sensitivity testing which modelled different assumptions with
respect to the Group’s cash resources. Areas considered
included varying levels of downturn in profit and cash
generation to reflect a significant impact on world seaborne
trade, drawing on that experienced in the global financial crisis
in 2008 and the period thereafter. On the basis of the
information reviewed, the Audit and Risk Committee concluded
that it was satisfied that it could recommend to the Board that
the preparation of the financial statements on a going concern
basis remained appropriate. Further information about the
going concern assessment is set out on page 78.
Viability statement
The Audit and Risk Committee recommended to the Board the
approval of the viability statement (which is set out on page 77).
Cognisant that changes in both the internal and external
operating environment could impact on the Group’s viability,
the Audit and Risk Committee receives six-monthly updates
from management as to the prospects of the Group which
includes key financial indicators (including profitability, liquidity
and the forward order book), business factors and the principal
risks. Ahead of recommending the approval of the statement
to the Board, a more detailed report was presented by
management which considered the impact on viability of
scenarios which are linked to the Group’s principal risks, as well
as the compounding impact of certain scenarios. This report
took account of the enhanced sensitivity analysis used to
support the going concern assessment, which was extended
to enable assessment over a longer timeframe. The Audit and
Risk Committee also revisited the period over which previous
assessments of the Group’s viability have been made and
confirmed that a three-year timeframe remained appropriate.
Compliance
The Audit and Risk Committee receives an annual compliance
update which assesses compliance with current and evolving
regulatory requirements, best practice and areas of focus by
the compliance team. In addition, interim updates on key areas
of focus are presented to each meeting. These reports provide
assurance to the Audit and Risk Committee in respect of the
appropriateness of controls of a compliance nature.
In order to support employees’ understanding of the standards
of conduct and ethics expected of them, the Board has
approved a Compliance Code. This contains a suite of policies
that mitigate ethics and compliance risks, which all employees
and contractors must comply with. Annual training is provided
which all employees must complete. In addition, the Group’s
regulated businesses are subject to further compliance
requirements which are set out in local compliance manuals.
Embedding of policies and processes is supported by a global
compliance team, who the Audit and Risk Committee is satisfied
have the necessary skills and experience to fulfil their duties.
Further details regarding our policies and procedures in relation
to anti-bribery and corruption, anti-money laundering and
sanctions can be found on pages 67 and 68.
Internal audit
Internal audit is one of the principal elements of the Group’s
internal control system and provides the Audit and Risk
Committee with independent assurance over, and insight into,
the effectiveness of risk management systems, governance
processes and business controls. Recommendations are made
to address any key findings and improve processes.
Clarksons Platou Securities AS (Securities)
Due to its regulated status, an internal audit arrangement is
in place for our banking and finance operations headquartered
in Norway. During 2020, Deloitte performed this function on
an outsourced basis. Deloitte was appointed by the Securities
board, which approves Deloitte’s annual plan and reviews the
results of audits. An update on activities was provided regularly
to the Audit and Risk Committee. There were no significant
issues identified during the year. The Securities management
team provided the Audit and Risk Committee with assurance
that it had considered the effectiveness of Deloitte during the
year, and that it had no concerns to raise.
Other activities
Grant Thornton was appointed by the Audit and Risk
Committee as an outsourced partner to support internal audit
activities in the wider Group in late 2018. A three-year risk-
based plan has been developed with Grant Thornton to ensure
appropriate coverage of key internal controls, and the plan is
approved annually. Progress against the plan is monitored by
the Audit and Risk Committee through regular updates on
activities and updates on actions arising from previous audits.
The Audit and Risk Committee maintains a view of upcoming
audit activity and the plan may be flexed in order to prioritise
new areas of focus arising from changes in the risk profile,
strategic priorities, and business and regulatory change.
The 2020 plan was revisited in response to the COVID-19
pandemic, and those audits which would require site visits
or which would have been largely paper-based were deferred
until such time as they could be safely carried out. Audits
were carried out on HR System and Workflows, Contracting –
Business Commission and Group Compliance – Unregulated
Business. No high-risk issues were identified through the
course of the audits and audit actions are being tracked
through regular updates to the Audit and Risk Committee.
In its final meeting of 2020, the Audit and Risk Committee
revisited the rolling three-year plan and confirmed its
agreement with the audits proposed for the coming year.
The Audit and Risk Committee reviewed the effectiveness
of the internal audit services provided by Grant Thornton during
the year. The Committee acknowledged that it was still early
in Grant Thornton’s engagement (with delivery of the first year
of their three-year plan having been impacted by COVID-19)
and it was therefore too soon to fully assess their effectiveness.
However, the review did not highlight any areas of concern.
Clarkson PLC | 2020 Annual Report
105
OverviewCorporate governanceFinancial statementsOther informationStrategic report
We will continue to engage with our
shareholders and hope that we can
again count on their support.
These discussions were constructive, led to increased support
for the remuneration-related resolutions at the 2020 AGM, for
which we were grateful, and avoided the risk of destabilising
the Company. We will continue to engage with our shareholders
and hope that we can again count on their support. The Board
continues to believe that the current approach to pay remains
appropriate for our incumbent Executive Directors but
committed last year to change the approach for all future
appointments. As a Board, we are clear that we have the right
management team to continue to lead the Company and drive
the transformational strategy which they have laid out.
The current model has served the Company and its
shareholders well for many years and remains necessary to
retain our current highly performing executives who fulfil dual
roles as both conventional Executive Directors, but also key
operational executives in the business. While we hope that
our current Executive Directors will continue to add value to
the Company for a number of years, changes to remuneration
for successors to their roles thereafter will be implemented and
the current arrangements are, therefore, legacy.
Performance and reward for 2020
Our full year performance bonuses were, as in previous years,
based on a bonus pool linked to stretching Group underlying
profit before tax targets. The Remuneration Committee
assessed the threshold levels in an entirely pre-COVID-19
context at the beginning of 2020 and increased them by 2.5%
on those of 2019 in order to make them more stretching for
the year ahead, which was budgeted to be higher than 2019.
The actual underlying profit before tax, following the impact
of COVID-19, was £44.7m, 9.3% lower than 2019.
Whilst this was considered a strong performance, beating
market consensus, the Remuneration Committee applied the
rules of the executive bonus scheme without any exercise of
discretion, leaving the thresholds at the levels set pre-COVID-19,
thus producing a lower calculated bonus pot for Executive
Directors. On assessing the outturn, the Remuneration
Committee was satisfied that this was appropriate.
Directors’ remuneration report
Annual statement – Remuneration
Committee Chair
Dear Shareholder
On behalf of the Board, I am pleased to introduce the Directors’
remuneration report for the year ended 31 December 2020.
Wider context
COVID-19 has clearly impacted all aspects of life and the
economy. Despite the huge impact on shipping markets,
Clarksons reported underlying profits before tax of £44.7m
– exceeding market expectations. This is in no small part due
to the commitment of management and the wider workforce
who have stepped up to deliver those results in such
unprecedented times.
In terms of how we responded to COVID-19, the Company took
no government loans, no staff were furloughed, all suppliers
were paid in good time and the 2019 final dividend, while
initially deferred, was paid in September 2020 as an interim
dividend maintaining our 18-year progressive dividend policy.
Though the recovery from the impact of the COVID-19
pandemic is still uncertain, we are confident that we shall
return to payment of our dividends at the normal time in 2021
in respect of 2020 performance.
At the end of 2020, the Board considered the fair value of
goodwill held on the balance sheet relating to the offshore and
securities cash-generating units (CGUs) which arose following
the acquisition of RS Platou ASA in early 2015. Due to
exceptional market changes outside the control of the
Executive Directors, and in keeping with many businesses
in similar verticals to Clarksons, it was determined that a
non-cash impairment charge of £60.6m, which has no impact
on distributable reserves or the Company’s capacity to pay
dividends, should be taken.
2020 Directors’ Remuneration Policy (Policy) renewal
As explained in last year’s report, as part of the process
for the Policy renewal, Sir Bill Thomas led an engagement
programme with shareholders, which I supported as Chair
of the Remuneration Committee, along with Peter Backhouse,
our Senior Independent Director. As part of this engagement
programme, we met with shareholders covering 49% of the
share register and each of the leading proxy agencies to
ensure that they understood how our remuneration model
benefits our owners.
106 Clarkson PLC | 2020 Annual Report
This report includes the annual report on remuneration (pages
109 to 121) which describes how the shareholder-approved
Policy was implemented for the year ended 31 December 2020
and how we intend for the Policy to apply for the year ending
31 December 2021.
All-employee remuneration matters
The Board remains committed to giving as many employees
as possible the opportunity to share in the Group’s success
through all-employee share plans, and I am delighted that,
over the last few years, we have been able to extend invitations
to participate in our ShareSave plans (or plans which operate
in a similar way) to around 80% of our global employees.
We extended such plans to colleagues in Greece and
Switzerland in 2020 for the first time, reflecting our intention
to give as many colleagues as possible the opportunity to
become shareholders in the Company.
Conclusion
We trust that you will support and vote in favour of the
Directors’ remuneration report at the 2021 AGM.
Should you have any questions or comments, please contact
me through the Group Company Secretary.
Dr Tim Miller
Remuneration Committee Chair
5 March 2021
The Executive Directors, as in recent years, again determined
that a proportion of their entitlement should be waived to
enable the Company to reward other senior members of staff
throughout the Group. In 2020, they sacrificed 20% of the
bonuses they were eligible to receive (2019: 30%). As the waiver
was less than in 2019, this resulted in the actual bonuses
earned by the two Executive Directors being similar to those for
2019. In addition, the Executive Directors donated 20% of their
base salaries for the second quarter of 2020 in favour of charity,
anchoring the initial contribution to The Clarkson Foundation.
As in previous years, on a voluntary basis, 10% of the bonus
will be deferred into shares which will vest after four years.
The awards which were granted to Executive Directors
under the Long Term Incentive Plan (LTIP) on 14 May 2018
were subject to challenging absolute EPS and relative TSR
performance targets. Whilst the 2020 EPS did not exceed
target, the Company’s relative TSR was between the median
and upper quartile companies and thus achieved a 35.4%
vesting of that component of the LTIP (2019: 60.6%). The
vesting outcome overall was therefore 17.7% (2019: 30.3%).
In keeping with the treatment considered with respect to the
executive bonus scheme, the Remuneration Committee also
applied the rules of the LTIP without any exercise of discretion,
leaving the challenging targets unchanged at the levels set
pre-COVID-19. On assessing the outturn, the Remuneration
Committee was satisfied that this was appropriate.
Implementation of Policy in 2021
The Policy will be implemented in 2021 as follows:
– Salary: There will be no change to Executive Directors’
salaries. This means that the CEO’s salary is unchanged
since his appointment as CEO in 2008, and the CFO & COO’s
remains unchanged since 2015.
– Annual bonus: Performance bonuses continue to be linked
to the Group’s underlying adjusted pre-tax profits for the
year. No bonuses are payable to Executive Directors below
a threshold level of profit.
– LTIP: The Executive Directors will receive LTIP awards
equivalent to 150% of base salary in 2021. The performance
targets will be, as in prior years, 50% based on EPS in the
year of vesting and 50% based on relative TSR measured
independently over a three-year period. The EPS
performance target has been set at a threshold of 122p to
a stretch target of 150p in 2023. The relative TSR targets will
continue to be measured relative to the performance of the
constituents of the FTSE 250 Index (excluding investment
trusts). Any vested shares from the performance-related
LTIP are subject to a two-year post-vesting holding period.
– Share ownership guidelines: A guideline of two times
salary will continue to apply for Executive Directors.
Applying a consistent approach to our pay arrangements
over many years has both provided a clear incentive for the
executives to deliver for our shareholders over time and has
led to the build-up of significant shareholdings (approximately
25 times and six times salary for the CEO and CFO & COO
respectively) which is significantly higher than typical FTSE 250
levels and which, in turn, reaffirms alignment with shareholders.
This alignment is further reinforced by the existence of
clawback provisions, four-year bullet vesting of deferred shares
and a two-year post-vesting holding period on LTIP awards,
as well as contributing to an appropriate level of risk mitigation.
Clarkson PLC | 2020 Annual Report
107
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Key topics discussed at Remuneration Committee
meetings in 2020
Individual remuneration arrangements
Fixed pay, bonus outturn and awards to be made for all
employees falling within the Remuneration Committee’s remit
Non-financial objectives for the CFO & COO
Performance-related incentive schemes
2019 bonus outturn, and performance measures and targets
for the 2020 performance year
Report from the Audit and Risk Committee regarding the 2019
bonus outturn
Parameters and quantum of awards to be made under the LTIP
in 2020
Vesting of 2017 LTIP awards (in relation to performance
to 31 December 2019)
Remuneration in wider Group
Annual review of workforce remuneration
Gender pay gap report
Strategy (including shareholder engagement)
Market update: consideration of the Company’s remuneration
arrangements in the context of themes in the wider market
Shareholder engagement strategy (ahead of submission
of the new Directors’ Remuneration Policy to the 2020 AGM
and approach ahead of the 2021 AGM)
Governance
Directors’ remuneration report, including proposed Directors’
Remuneration Policy
Adoption of new ShareSave plan rules (for approval at the
2020 AGM)
Annual review of the effectiveness of the remuneration advisor
Corporate governance matters including Terms of Reference
and agenda items for 2021
Read more
Annual review of the Remuneration Committee’s effectiveness
on page 96.
Directors’ remuneration report
continued
Remuneration Committee – at a glance
Composed of independent Non-Executive Directors:
– Dr Tim Miller (Chair), independent Non-Executive Director
– Sue Harris, independent Non-Executive Director1
– Laurence Hollingworth, independent Non-Executive Director2
– Birger Nergaard, independent Non-Executive Director
– Sir Bill Thomas, Chair
Sue Harris and Laurence Hollingworth were appointed as
members of the Committee with effect from 7 October 2020
and 23 July 2020 respectively. Heike Truol was a member of
the Committee with effect from 31 January 2020 until 6 October
2020, whilst Peter Backhouse and Marie-Louise Clayton also
served as members of the Committee until 6 October 2020.
Dr Tim Miller has extensive HR and remuneration knowledge
from his executive career. He currently serves on (and chairs)
the remuneration committee of other organisations and therefore
has recent and relevant experience of remuneration matters.
Regular attendees at meetings include the CEO, CFO & COO,
Group Company Secretary, Group HR Director and the
Remuneration Committee’s independent remuneration advisor
(FIT Remuneration Consultants LLP).
The Remuneration Committee’s key role is to set the
remuneration arrangements for the Chair, Executive Directors
and other members of the senior management team.
Remuneration for the Non-Executive Directors is determined by
the Board. Its Terms of Reference are reviewed annually and are
available at www.clarksons.com/about-us/board-of-directors.
In order to avoid any conflict of interest, remuneration is
managed through well-defined processes ensuring no individual
is involved in the decision-making process related to their own
remuneration. In particular, the remuneration of all Executive
Directors is set and approved by the Committee; and none of
the Executive Directors are involved in the determination of their
own remuneration arrangements. The Committee also receives
support from external advisors and evaluates the support
provided by those advisors annually to ensure that advice is
independent, appropriate and cost-effective. The Committee
exercises its own judgment in considering such advice.
The Remuneration Committee held two scheduled meetings
during 2020. Attendance at the scheduled meetings is set
out below.
Scheduled meeting attendance
Current Directors
Dr Tim Miller
Peter Backhouse3
Sue Harris1
Laurence Hollingworth2
Birger Nergaard4
Sir Bill Thomas
Heike Truol5
Former Director
Marie-Louise Clayton3
2/2
1/1
1/1
1/1
1/2
2/2
1/1
1/1
1 Appointed on 7 October 2020.
2 Appointed on 23 July 2020.
3 Served as a member until 6 October 2020.
4 Unable to attend one meeting due to a prior commitment. Mr Nergaard
reviewed the meeting papers ahead of the meeting and provided comments
to the Committee Chair.
5 Served as a member from 31 January 2020 until 6 October 2020.
108 Clarkson PLC | 2020 Annual Report
Annual report on remuneration
Implementation of the Directors’ Remuneration Policy for 2021
Base salary
No changes have been made to the base salaries of the Executive Directors for 2021, and salaries therefore remain as set out below:
Andi Case
Jeff Woyda
1 January 2021
GBP 550,000
GBP 350,000
1 January 2020
GBP 550,000
GBP 350,000
% change
0%
0%
Taxable benefits
The taxable benefits received by the Executive Directors in 2020 included a car allowance, private medical insurance and club
memberships. No material changes to taxable benefits are proposed for 2021.
Annual bonus for 2021
The annual bonus opportunity for 2021 will be calculated on the same basis as in previous years and will continue to be based
on a bonus pool derived from Group profit before tax as follows:
– below a ‘profit floor’ set by the Remuneration Committee: no bonus is triggered; and
– above the profit floor: an escalating percentage of profits is payable into a bonus pool for progressively higher profit before
tax performance.
As in 2020, the share of the executive bonus pool allocated to the CFO & COO will, in part, be determined by performance against
a series of non-financial, strategic and operational objectives.
The profit floor and thresholds for 2021 have not been disclosed on a prospective basis as these are considered to be commercially
sensitive, although disclosure will be provided retrospectively.
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 which vest four years after grant. The 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.
Long-term incentive awards to be granted in 2021
Consistent with past practice, it is envisaged that:
– Executive Directors will receive LTIP awards over shares worth up to 150% of salary in 2021;
– The vesting of 50% of the awards will be determined by the Company’s Earnings Per Share (EPS) for 31 December 2023,
as shown in chart (i) below. The EPS for 2020 is shown (grey line) for reference; and
– The vesting of the remaining 50% will be determined by the Company’s Total Shareholder Return (TSR) performance from
1 January 2021 to 31 December 2023 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.
(i) EPS target range for 2021 award (50% of award)
(ii) TSR target range for 2021 award (50% of award)
% of EPS
award vesting
(50% of award)
100%
75%
50%
25%
0%
106p
122p
150p
% of TSR
award vesting
(50% of award)
100%
75%
50%
25%
0%
Median
Upper quartile
1st place
Vesting schedule for 2021 award
2020 EPS
TSR performance range
Actual result in last three-year TSR cycle
EPS target (pence) for FY ended 31 December 2023 for the 2021 award
TSR ranking at end of three-year performance period
The Remuneration Committee has considered carefully the EPS range for the 2021 award and believes the 122p to 150p range
is stretching against market consensus and the actual 2020 EPS delivered.
Clarkson PLC | 2020 Annual Report
109
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Fees for the Non-Executive Directors
Non-Executive Director fee levels for 2021 are as set out below. Supplementary fees are paid in respect of certain additional duties.
No changes to fees for 2021 have been proposed.
Chair
Non-Executive Director
Chair of Committee1
Senior Independent Director1
Employee Engagement Director1
2021
£000
185
58
19
19
15
2020
£000
185
58
19
19
15
%
change
0%
0%
0%
0%
0%
1 Supplementary fee payable to the Chairs of the Audit and Risk Committee and the Remuneration Committee, the Senior Independent Director and the
Non-Executive Director who assumes responsibility for workforce engagement.
Single total figure tables (audited)
The following tables set out the total remuneration paid to the Directors for the years ended 31 December 2020 and 31 December
2019. We consider key management personnel to be Clarkson PLC Directors.
Executive Directors
2020
Andi Case
Jeff Woyda
Total
2019
Andi Case
Jeff Woyda
Total
Base salary
£000
550
350
900
Base salary
£000
550
350
900
Taxable
benefits1
£000
16
12
28
Taxable
benefits1
£000
13
12
25
Pension2
£000
74
46
120
Total fixed
remuneration
£000
640
408
1,048
Performance-
related bonus3
£000
2,383
616
2,999
Long-term
incentives4
£000
127
81
208
Total variable
remuneration
£000
2,510
697
3,207
Total
remuneration5
£000
3,150
1,105
4,255
Pension2
£000
74
46
120
Total fixed
remuneration
£’000
637
408
1,045
Performance-
related bonus3
£000
2,390
618
3,008
Long-term
Incentives6
£000
238
151
389
Total variable
remuneration
£000
2,628
769
3,397
Total
remuneration
£000
3,265
1,178
4,442
1 Taxable benefits comprises the gross value of any benefits paid to the Director, whether in cash or in kind, prior to UK income tax being charged. Further
details are provided on page 109.
2 Pension paid as a cash supplement. Further details are included on page 115.
3 Performance-related bonus represents the value of the total bonus, prior to any sums being deferred into shares. See page 111 for further detail on the 2020
bonus outcome. The bonus reflects the 9.3% decrease in underlying profit before tax and is after a waiver of 20% of their entitlement.
4 Further details regarding the vesting outcome are included on page 112.
5 In the year ended 31 December 2020, the aggregate remuneration paid to all Directors who served during the year in respect of qualifying services (comprising
salary/fees, taxable benefits, cash contributions to pension arrangements and performance-related bonus was £4.6m.
6 The vesting outcome has been restated based on the actual share price on the date of vesting (17 April 2020, £24.15), having been estimated in the 2019 annual
report based on the average share price over the period 1 October 2019 to 31 December 2019.
Non-Executive Directors
Current Directors
Sir Bill Thomas
Peter Backhouse
Sue Harris
Laurence Hollingworth
Dr Tim Miller2
Birger Nergaard
Heike Truol
Former Director
Marie-Louise Clayton3
Total
Appointment date
(if later than 1 January 2019)
Resignation date
(if earlier than 31 December 2020)
13 Feb 19
7 Oct 20
23 Jul 20
31 Jan 20
Fees1
£000
2019
162
76
–
–
88
58
–
76
461
2020
185
76
17
25
91
58
53
76
581
1 The fees paid to the Non-Executive Directors relate to the period for which they held office.
2 Includes a supplementary fee payable to the Non-Executive Director who assumes responsibility for workforce engagement. This fee became payable from
7 March 2019.
3 Marie-Louise Clayton stepped down from the Board on 31 January 2021.
110 Clarkson PLC | 2020 Annual Report
Annual bonus targets (audited)
Consistent with the way in which it operated in prior years, the annual bonus for 2020 was based on the allocation of the following pool:
Executive Directors: bonus pool
Underlying profit before taxation and bonus
If profit < £30.21m
If profit > £30.21m then £0m – £60.43m
If profit > £60.43m then £60.43m – £70.45m
If profit > £70.45m then on profits > £70.45m
% of pre-bonus
profit
0%
8%
12%
13%
This formula generates a pool, with the CEO entitled to 79.5% of the pool and the CFO & COO entitled to 17.1%–20.5% of the pool
(dependent on delivery of his personal objectives). The pool has operated in exactly the same way as in prior years. The above
percentages reflect the proportion of the pool payable to the Executive Directors only.
The discretionary element of the CFO & COO’s bonus for 2021 was dependent on personal performance against non-financial
objectives set by the CEO and approved by the Remuneration Committee. The objectives set and a summary of achievements
against those objectives are set out below. The objective relating to COVID-19 was set later in the year but was an increasingly
key area of focus as the year progressed and did not replace any of the original objectives.
Objective
Management of the response to the COVID-19 pandemic
CSR
Evolution of the management structure and capability
Delivery of Sea/ platform modules and focus on user adoption
Risk, compliance and cyber security
Key achievements
Led the Group’s response to COVID-19, including chairing
business continuity and leadership committees for each region;
overseeing global policy-setting in response to changes in law
and guidance; ensuring risk assessment and health and safety
response; and prioritising employee and dependant well-being
at every stage.
Launched The Clarkson Foundation and completed formal
registration with the Charity Commission. Developed the CSR
Committee with representation from full cross-section of the
business and launched a series of charity campaigns aiding
employee engagement and supporting the communities within
which we operate.
Oversaw development of a new promotions process and
capability framework to continue to strengthen the succession
pipeline and leadership development.
Further significant progress in relation to the Sea/ platform with
launch of Sea/fix and Sea/trade offshore, and steady growth
in sales and adoption in Sea/contracts, Recap Manager,
Sea/net and Sea/chat.
Evolution of mandatory compliance training modules including
launch of market abuse module. Development of further tools
to ensure sanctions compliance and continued education and
communication regarding cyber risks.
Following consideration of the recommendation from the CEO with regard to the CFO & COO’s performance against his personal
objectives, the Remuneration Committee decided to award the CFO & COO 20.5% of the bonus pool.
Clarkson PLC | 2020 Annual Report
111
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Bonus waiver
As in each of the last 11 years, the Executive Directors have proposed not to receive their full bonus entitlement and, rather, waive
a proportion of their bonuses to the benefit of the wider staff bonus plans. In 2020, each of the Executive Directors agreed to
waive 20% of their entitlement (£0.75m (2019: £1.3m)). This is shown as follows:
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
Formulaic executive bonus pool (pre-waiver)
Executive bonus pool (post-waiver)
% of executive bonus pool allocated to Executive Directors (after 20% voluntary sacrifice by Directors)
£44.7m
£46.7m
£3.7m
£3.0m
80%
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 to shares which vest 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.
Long-term incentive targets (audited)
Long-term incentives relate to awards granted on 14 May 2018 which vest in May 2021 based on performance over the three-year
period to 31 December 2020. The performance conditions attached to these awards and actual performance against these
conditions are as follows:
Long-term incentive awards: performance outturn
Performance measure
EPS (out of 50%)
TSR relative to the constituents
of the FTSE 250 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
The award details for the Executive Directors are as follows:
Long-term incentive awards: vesting outcome
Executive Directors
Andi Case
Jeff Woyda
Threshold
target
145p
Stretch
target
195p
Actual
106.0p
% vesting
0
Median
Upper
quartile
Between
median
and upper
quartile
17.7
17.7
Number of
options granted
26,978
17,168
Number of
options to vest
4,775
3,038
Number of
options to
lapse
22,203
14,130
Estimated
value of vested
shares1,2
£000
127
81
1 The estimated value of the vested shares is based on the average share price over the three-month period from 1 October 2020 to 31 December 2020 (£24.33).
Cash accrued in respect of dividend equivalents payable on vested shares is also included in the estimated value. The awards will vest on 14 May 2021. The
value of the vested shares will be restated based on the actual share price on the date of vesting and disclosed in the single figure table in the 2021 annual report.
2 None of the estimated value of the vested shares is attributable to share price growth.
112 Clarkson PLC | 2020 Annual Report
Scheme interests (audited)
The table below sets out the scheme interests held by the Executive Directors.
Further details of share-based payments during the year are included in note 23 to the consolidated financial statements.
Executive share plan participation
No of
shares
under
award
(01/01/20)
11,208
15,506
9,033
10,618
26,978
9,928
34,854
8,951
5,094
3,341
5,748
2,288
17,168
2,503
22,179
2,314
Date of grant
Type of award1
Andi Case
Performance
17 Apr 15
Award
Deferred Award 15 Apr 16
Performance
Award
18 Apr 17
Deferred Award 18 Apr 17
Performance
Award
14 May 18
Deferred Award 14 May 18
Performance
Award
18 Apr 19
Deferred Award 18 Apr 19
Performance
7 May 20
Award
Deferred Award 7 May 20
Jeff Woyda
Performance
17 Apr 15
Award
Deferred Award 15 Apr 16
Performance
Award
18 Apr 17
Deferred Award 18 Apr 17
Performance
Award
14 May 18
Deferred Award 14 May 18
Performance
18 Apr 19
Award
Deferred Award 18 Apr 19
Performance
Award
7 May 20
Deferred Award 7 May 20
– 34,351
9,952
–
–
–
–
–
–
–
– 3,341
–
–
–
–
–
–
–
–
Granted
during
2020
Vested
during
20202
Lapsed
during
2020
No of
shares
under
award
(31/12/20)
Face
value3
% vesting
at
threshold4
Performance
period ends
Vesting
date
Holding
period ends
–
–
– 15,506
–
–
–
–
–
–
–
–
11,2085 £251,620
– £349,505
25% 31 Dec 17 16 Apr 18
N/A 15 Apr 20
N/A
9,0335 £249,943
10,618 £293,800
25% 31 Dec 19 17 Apr 20
N/A 18 Apr 21
N/A
N/A
N/A
N/A
N/A
– 4,775 22,203
–
–
–
4,7756 £146,020
9,928 £303,598
25% 31 Dec 20 14 May 21 14 May 23
N/A
N/A 14 May 22
N/A
–
–
–
–
–
–
–
–
34,854 £824,994
8,951 £211,870
25% 31 Dec 21 18 Apr 22 18 Apr 24
N/A
N/A 18 Apr 23
N/A
34,351 £825,111
9,952 £239,047
25% 31 Dec 22 7 May 23 7 May 25
N/A
N/A 7 May 24
N/A
5,0945 £114,360
£75,306
–
25% 31 Dec 17 16 Apr 18
N/A 15 Apr 20
N/A
5,7485 £159,047
£63,309
2,288
25% 31 Dec 19 17 Apr 20
N/A 18 Apr 21
N/A
N/A
N/A
N/A
N/A
– 3,038 14,130
–
–
–
3,0386
2,503
£92,902
£76,542
25% 31 Dec 20 14 May 21 14 May 23
N/A
N/A 14 May 22
N/A
–
–
–
–
–
–
–
–
22,179 £524,977
£54,772
2,314
25% 31 Dec 21 18 Apr 22 18 Apr 24
N/A
N/A 18 Apr 23
N/A
21,859 £525,053
£61,803
2,573
25% 31 Dec 22 7 May 23 7 May 25
N/A
N/A 7 May 24
N/A
– 21,859
2,573
–
1 Performance Awards are granted as nil-cost options, which lapse ten years after the date of grant to the extent not previously exercised. All Performance
Awards are subject to performance measures (50% based on relative TSR measured over a three-year performance period and 50% based on EPS at the end
of the performance period).
Deferred Awards represent deferred bonus and are granted as restricted share awards. Further restricted share awards will be made to Andi Case and Jeff Woyda
in 2021 in respect of the deferral of 10% of their 2020 bonus.
2 Deferred Awards which vested during the year were valued at £457,982 on the date of vesting. None of the Directors exercised share options during the year.
3 Face value calculated using the share price used to determine the number of shares under the award as set out below. This share price was calculated using
the average middle market quotation over the three-day period on the dates specified:
– Awards made on 17 April 2015: £22.45 (14-16 April 2015)
– Awards made on 15 April 2016: £22.54 (12-14 April 2016)
– Awards made on 18 April 2017: £27.67 (11-13 April 2017)
– Awards made on 14 May 2018: £30.58 (13-17 April 2018)
– Awards made on 18 April 2019: £23.67 (15-17 April 2019)
– Awards made on 7 May 2020: £24.02 (4-6 May 2020)
4 Assumes that threshold is met in respect of both the TSR and EPS performance measures.
5 Vested on the date shown above, but option not yet exercised.
6 Although the performance period for these awards ended on 31 December 2020, the awards will formally vest on 14 May 2021.
Clarkson PLC | 2020 Annual Report
113
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Executive Directors’ interests in share options over ordinary shares under the Company’s all-employee share plans are as follows:
ShareSave participation
Type of award
Jeff Woyda
ShareSave
(option)
Options held
at 1 January
2020
Options
granted
during the
year
Options
exercised
during the
year
Options
lapsed during
the year
Date of grant
Options held
at 31
December
2020 Option price
Normal
exercise
period
Face value1
1 Oct 18
813
–
–
–
813
£22.12
1 Nov 21–
30 Apr 22
£17,984
1 Face value calculated using the share price used to determine the number of shares under the award (i.e. the option price). The option price (£22.12) was
calculated using the average middle market quotation over 5-7 September 2019, after the application of a 20% discount.
Directors’ interests in shares
In order to further align the interests of the Executive Directors with those of shareholders, the Company has implemented share
ownership guidelines which require Executive Directors to build a shareholding equivalent to 200% of salary. Until this is met they
are required to retain 50% of any share award that vests (on a net of tax basis). The Executive Directors have both met the
guideline levels.
The beneficial interests of the Executive Directors (and their connected persons) in the Company’s shares are set out below:
Executive Directors’ shareholdings (audited)
No of ordinary shares
% of salary
required to be
held in shares
Unvested LTIPs
(subject to
performance
conditions)
Vested and
unexercised LTIPs
(no longer subject
to performance
conditions)
Deferred
bonus awards1
(subject to
service
conditions)
31 Dec
20
31 Dec
19
514,458 506,241
78,833
80,602
31 Dec
20
200
200
31 Dec
19
200
200
31 Dec
20
31 Dec
19
69,2052 70,865
44,0382 45,095
31 Dec
20
31 Dec
19
25,0162 11,208
13,8802
5,094
31 Dec
20
31 Dec
19
39,449 45,003
9,678 10,446
Andi Case
Jeff Woyda
ShareSave options
(not subject to
performance
conditions)
31 Dec
20
–
813
31 Dec
19
–
813
1 Deferred bonus awards are granted as restricted share awards.
2 The award granted on 14 May 2018, which will formally vest on 14 May 2021, was based on performance over a three-year period to 31 December 2020.
The extent to which performance conditions have been met has already been determined, and this vesting outcome has been reflected in the figures
disclosed. Page 112 provides further detail on the vesting outcome.
The beneficial interests of the Non-Executive Directors (and their connected persons) in the Company’s shares are set out below:
Non-Executive Directors’ shareholdings (audited)
Current Directors
Sir Bill Thomas
Peter Backhouse
Sue Harris
Laurence Hollingworth
Dr Tim Miller
Birger Nergaard2
Heike Truol
Former Director
Marie-Louise Clayton
1 Shareholdings disclosed as at 31 December 2020, or date of resignation if earlier.
2 Ordinary shares held by Acane AS on behalf of Birger Nergaard and his connected persons.
Appointment
date
(if later than
1 January
2019)
Resignation
date
(if earlier than
31 December
2020)
31 December
20201
31 December
2019
13 Feb 19
7 Oct 20
23 Jul 20
31 Jan 20
2,083
10,912
–
5,000
–
30,869
–
2,083
14,000
–
–
–
30,869
–
1,100
1,100
114 Clarkson PLC | 2020 Annual Report
Pensions (audited)
Andi Case and Jeff Woyda receive a cash supplement (up to 15% of base salary) in lieu of pension (net of employer’s NI), which is
included in the single figure table on page 110 as pension. No contributions were paid into Group pension schemes on their behalf.
Payments to past Directors (audited)
No payments were made during the year ended 31 December 2020 to any person who was not a Director of the Company at the
time payment was made, but who had previously been a Director.
Payments for loss of office (audited)
No payments were made in respect of loss of office during the year ended 31 December 2020.
Details of service contracts and letters of appointment
Details of the current Executive Directors’ service contracts are as follows:
Andi Case
Jeff Woyda
Date of contract
23 June 20081
3 October 2006
Unexpired term
12 months
12 months
Notice period
12 months
12 months
1 The effective date of the contract is 17 June 2008.
Service contracts are available for inspection at the Company’s registered office.
Details of the Non-Executive Directors’ appointment terms are as follows:
Sir Bill Thomas
Peter Backhouse
Sue Harris
Laurence Hollingworth
Dr Tim Miller
Birger Nergaard
Heike Truol
Date of initial appointment
13 February 2019
12 September 2013
7 October 2020
23 July 2020
22 May 2018
2 February 2015
31 January 2020
Date current term
commenced
13 February 2019
12 September 2019
7 October 2020
23 July 2020
22 May 2018
2 February 20211
31 January 2020
Unexpired term at
31 December 2020
14 months
21 months
33 months
31 months
5 months
1 month
25 months
1 Birger Nergaard’s reappointment for a further three-year term was approved by the Board in January 2021.
Notice period
3 months
3 months
3 months
3 months
3 months
3 months
3 months
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.
Performance graph
This graph compares the total shareholder return (that is, share price growth assuming reinvestment of any dividends) of £100
invested in the Company’s shares and £100 invested in the FTSE 250 Index, which the Remuneration Committee considers
appropriate for comparison purposes given the Company has been a member of this index over the period. The CEO’s total
remuneration, indexed from the same date, is also added for comparison.
400
300
200
100
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Clarkson PLC
FTSE 250
CEO Remuneration
Clarkson PLC | 2020 Annual Report
115
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Total remuneration table
The table below shows the total remuneration figure for the CEO for each of the last ten financial years:
CEO remuneration
Single total figure of
remuneration (£000)
Vested LTIP
(as a % of maximum)
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
3,150
3,265
2,758
4,043
3,706
4,958
4,970
3,944
3,486
4,523
18%
30%
0%
30%
15%
70%
69%
50%
47%
98%
Annual change in remuneration of Directors and employees
The table below shows the percentage change in the remuneration of each Director (salary/fees, taxable benefits and annual
bonus) between the 2019 and 2020 financial years, compared to the average of those components of pay for all employees.
The Company has chosen to voluntarily disclose this information as Clarkson PLC is not an employing company.
Salary/fee and taxable
benefits increase/decrease
2019/20
% change
Annual bonus
increase/decrease
2019/20
% change
+0.61%
-0.06%
-0.31%
-0.31%
0%
0%
N/A
N/A
0%
0%
N/A
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
+3.83%
+1.97%
Relative pay
Executive Directors
Andi Case
Jeff Woyda
Non-Executive Directors
Sir Bill Thomas
Peter Backhouse
Sue Harris1
Laurence Hollingworth2
Dr Tim Miller
Birger Nergaard
Heike Truol3
Former Director
Marie-Louise Clayton
Employees
Average employee
1 Appointed 7 October 2020.
2 Appointed 23 July 2020.
3 Appointed 31 January 2020.
116 Clarkson PLC | 2020 Annual Report
CEO pay ratio
The table below shows the pay ratio information in relation to the total remuneration of the CEO compared to the pay of the Company’s
UK employees for 2020. Over time, disclosure over a rolling ten-year period will be built up.
Financial year
2020
2019
Method
Option A
Option A
25th percentile pay ratio
72:1
84:1
Median pay ratio
42:1
49:1
75th percentile pay ratio
25:1
27:1
The Remuneration Committee has selected Option A as the method for calculating the CEO pay ratio. Option A calculates a single
figure for every employee in the year to 31 December 2020 and identifies the employees that fall at the 25th, 50th and 75th
percentiles. This method was chosen as it is considered the most accurate way of identifying the relevant employees and aligns
to how the single figure table is calculated.
The Company has included the following elements of pay in its calculation: annual basic salary, allowances, bonuses, commission
payments, share awards, employer’s pension contributions, and p11D benefits. These pay elements were separated into recurring,
bonus and benefit components. The recurring components were scaled relative to the proportion of 2020 worked by each
individual employee. This year, bonus pay elements have been scaled relative to the full-time equivalent of part-time employees.
The scaled recurring pay elements and bonuses were then added to the benefits value. The scaling of bonuses relative to a
full-time equivalent value differs slightly to the methodology used in last years’ disclosure. As such, the above values for 2019
have been adjusted, ensuring consistency of methodology and allowing for a legitimate comparison.
This resulted in a single figure for each employee, from which the individuals at the 25th, 50th and 75th percentiles could be
identified. The Remuneration Committee believes the median pay ratio for 2020 to be consistent with the reward policies for the
Company’s UK employees taken as a whole. UK-based employees have been selected as the most appropriate comparator as
the CEO is a full-time UK-based employee.
The table below sets out the total pay and benefits for individuals at the 25th, 50th and 75th percentiles, and the salary element
within this.
Financial year
2020
Method
Total pay and benefits
Salary element of total pay and benefits
25th percentile
pay ratio
£41,000
£35,000
Median
pay ratio
£70,500
£55,000
75th percentile
pay ratio
£118,041
£100,988
Clarkson PLC | 2020 Annual Report
117
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Relative importance of spend on pay
The following table compares the total remuneration paid in respect of all employees of the Group in 2019 and 2020, underlying
profit, and distributions made to shareholders in the same years:
Underlying profit for the year
Dividends
Employee remuneration costs, of which:
Executive Directors’ total pay excluding LTIP (continuing)
Executive Directors’ annual bonus (continuing)
2020
£m
35.2
23.7
239.0
4.0
3.0
2019
£m
37.9
23.0
222.0
4.2
3.0
%
change
-7%
+3%
+8%
-5%
0%
External advisors
Following an external selection process, the Remuneration Committee appointed FIT Remuneration Consultants LLP (FIT) as
its advisor in October 2018. FIT provides no other services to the Remuneration Committee, has no further connection with the
Company or individual Directors and is a signatory to the Remuneration Consultants Group’s Code of Conduct. The Remuneration
Committee reviews the effectiveness of its advisor on an annual basis and is satisfied that the quality of advice received during the
year was sufficient and that the advice provided by FIT is objective and independent.
The fees paid by the Company to FIT during the financial year for advice to the Remuneration Committee and in relation to share
plans were £44,030 (2019: £64,231). Fees were charged on normal terms.
Statement of shareholder voting at AGM
The following votes were received from shareholders at the last AGM at which the relevant resolutions were proposed:
Remuneration Policy
Remuneration report
Date of meeting
6 May 2020
6 May 2020
In favour
14,637,062
14,517,181
% cast
67.61
67.06
Against
7,011,582
7,131,559
% cast
32.39
32.94
Withheld
1,982,594
1,982,497
Details of the actions taken by the Board in response to the votes against these resolutions registered at the 2020 AGM are included
in the Remuneration Committee Chair’s statement on pages 106 and 107.
This report was approved on behalf of the Board and signed on its behalf by:
Dr Tim Miller
Remuneration Committee Chair
5 March 2021
118 Clarkson PLC | 2020 Annual Report
Appendix: Directors’ Remuneration Policy
We include the main tables from the shareholder-approved Directors’ Remuneration Policy. A full version of the Policy (which was
approved by shareholders on 6 May 2020) can be found in the annual report for the year ended 31 December 2019 (available on
our website at www.clarksons.com).
As indicated in previous reports, the Remuneration Committee recognises that listed company practice as regards their Executive
Directors has changed over the years and that, for any new appointments to the Board, the Policy will be broadly consistent with
current market practice. While there are no current plans to appoint a new Executive Director, the Remuneration Committee
confirms that any new appointments under the proposed Policy will also be subject to the following:
– Capping the annual bonus opportunity;
– Deferring a greater proportion of the annual bonus;
– Compensation for fixed pay only on severance;
– No enhancement on a change of control;
– The rate of any employer pension contributions will be aligned with that available to the majority of the wider workforce in the UK
(or any other country in which the executive is based).
For any new Executive Director appointments, the proposed Policy should be read as incorporating such additional requirements.
In addition, the Committee will consider at the time other developments in market practice when constructing such an offer.
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
Operation
– 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
standard suite of basic
benefits in kind to
ensure the Executive
Directors’ well-being
– Taxable benefits
may include:
– 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
Maximum opportunity
– There is no prescribed
Performance framework
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
– 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
n/a
Clarkson PLC | 2020 Annual Report
119
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ remuneration report
continued
Annual
bonus
(including
deferred
shares)
Purpose and link to strategy
– To reward significant
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
Maximum opportunity
– In line with Clarksons’
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 &
Chief Operating Officer,
encourages the
maximisation of profit,
and ensures that
Executive Directors
are aligned with all
stakeholders in the
business
Operation
– 90% of the bonus is
paid in cash and,
although they have no
contractual obligation,
the Executive Directors
have agreed that 10%
of annual bonus payable
is deferred in shares,
vesting after four years
– Executive Directors
have voting rights and
receive dividends on
deferred shares
– Performance criteria
are reviewed and
recalibrated 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
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 base salary
for awards subject to
long-term performance
targets (200% of base
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
120 Clarkson PLC | 2020 Annual Report
Performance framework
Bonus is determined
by Group 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 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
– 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
Pension
Purpose and link to strategy
– To provide a market
competitive pension
arrangement
Non-
Executive
Directors’
fees
– To attract and retain
high calibre Non-
Executive Directors
through the provision of
market competitive fees
Share
ownership
guidelines
– To provide alignment
between the longer-
term interests of
Directors and
shareholders
Performance framework
n/a
n/a
Maximum opportunity
– Employer contributions
are up to 15% of basic
salary or an equivalent
cash allowance net
of employer’s NI
– 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
– Chief Executive Officer:
n/a
200% of salary
– Other Executive
Directors: 200%
of salary
Operation
– Executive Directors
participate in a
Company defined
contribution pension
scheme and/or receive
a cash allowance in lieu
of pension contributions
– 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
– Executive Directors
are 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
Clarkson PLC | 2020 Annual Report
121
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ report
The Directors present their report and the audited consolidated financial statements for the year ended 31 December 2020.
The Directors’ report and the Strategic report (pages 14 to 125) together constitute the management report for the purpose of
Rule 4.1.8R of the Disclosure Guidance and Transparency Rules. Other information relevant to the report, including information
required pursuant to the Companies Act 2006 and UK Listing Rule 9.8.4R, is incorporated below by reference.
Detail
Section
Location
Information incorporated
by reference
As permitted by the
Companies Act 2006,
the disclosures to the
right, which are included
in the Strategic report,
are incorporated into
the Directors’ report
by reference:
The Company is required
to disclose certain
information under Listing
Rule 9.8.4R in the
Directors’ report or advise
where such information
is set out. The information
can be found in the
sections of the 2020 annual
report set out to the right:
Directors
Directors
An indication of likely future developments in the business
of the Company and its subsidiary undertakings.
An indication of the activities of the Company and its
subsidiary undertakings in the field of research and
development.
Employment of disabled persons.
Employee engagement (including participation in share plans).
Engagement with suppliers, customers and others.
Details of long-term incentive schemes.
Any waiver of emoluments by a Director of the Company
or any subsidiary undertaking.
Strategic
report
Strategic
report
Strategic
report
Strategic
report
Strategic
report
Directors’
remuneration
report
Directors’
remuneration
report
Pages 16, 17
and 20 to 53
Pages 16, 17
and 20 to 43
Page 62
Page 61
Pages 54, 55
and 68
Pages 109
to 121
Page 112
The names and biographical details of the Directors who
served on the Board and Board Committees during the year,
including changes that have occurred during the year and
up to the date of this report, are shown in the Corporate
governance report and incorporated into the Directors’
report by reference.
Corporate
governance
Pages 82 to
85
Appointment and
retirement of Directors
The Company’s Articles of Association, the Code, the
Companies Act 2006 and related legislation govern the
appointment and retirement of Directors.
In accordance with the Code and the Company’s Articles
of Association, all Directors are subject to election by
shareholders at the first AGM following their appointment,
and subject to annual re-election thereafter. The 2021 Notice
of AGM sets out the reasons why the Board believes each
Director should be re-elected (or elected in the case of
Sue Harris and Laurence Hollingworth).
Subject to relevant company law and the Company’s Articles
of Association, the Directors may exercise all powers of the
Company. Further details regarding authorities in relation
to the allotment of shares and the repurchase of shares
are set out on the next page.
Directors’ and officers’ liability insurance was maintained by
the Company throughout 2020 and to the date of this report.
Qualifying indemnity provisions are in place for the benefit
of the Non-Executive Directors.
Directors’ powers
Directors’ insurance and
indemnities
Corporate
governance
Pages 95
and 96
Directors’ interests
The interests of the Directors and their connected persons
in the Company’s shares are set out in the Directors’
remuneration report.
Directors’
remuneration
report
Page 114
122 Clarkson PLC | 2020 Annual Report
Shares
Share capital
Rights attaching to
shares
Authority to allot shares
Purchase of own shares
Employee share
scheme rights
Detail
Section
Location
At 31 December 2020, the Company’s issued share capital
consisted of 30,399,893 ordinary shares of £0.25 each.
Further details on the issued share capital, including any
changes during the year, can be found in the notes to the
financial statements.
Note 25
to the
consolidated
financial
statements
Page 165
All ordinary shares have equal voting rights, including the
right to one vote at a general meeting, to receive an equal
proportion of any dividends declared and paid, and to an equal
amount of any surplus assets distributed in the event of a
winding-up.
There are no restrictions on the transfer of the Company’s
ordinary shares or on the exercise of voting rights attached
to them, other than:
– where the Company has exercised its right to suspend their
voting rights or prohibit their transfer following the omission
by their holders or any person interested in them to provide
the Company with information requested by it in accordance
with Part 22 of the Companies Act 2006;
– where the holder is precluded from exercising voting rights
by the Financial Conduct Authority’s Listing Rules or the
City Code on Takeovers and Mergers; and
– pursuant to the Company’s share dealing rules where the
Directors and designated employees require approval to deal
in the Company’s shares.
The Company is not aware of any further agreements between
shareholders that may result in restrictions on the transfer of
securities and/or voting rights.
The Company requests authority from shareholders for
the Directors to allot shares on an annual basis, and a similar
resolution will be proposed at the 2021 AGM. At the 2020
AGM, the Directors were authorised to allot shares up to an
aggregate nominal amount of £2,530,992 or up to £5,061,985
in connection with a rights issue, and were empowered to allot
equity securities for cash on a non pre-emptive basis up to an
aggregate nominal amount of £379,648.
At the 2020 AGM, the Company obtained shareholder approval
to purchase up to 3,037,191 of its own ordinary shares of £0.25
each (representing 10% of its issued share capital). No shares
were purchased under this authority during the year.
At the 2021 AGM, the Directors will again seek authority
to purchase the Company’s own shares.
The Company has established an Employee Share Trust (EST)
for the purpose of facilitating the operation of the Company’s
share plans. The EST waives any voting rights and dividends
that may be declared in respect of such shares which have not
been allocated for the settlement of awards made under the
Company’s share plans. Employees may direct the EST as
to how to exercise voting rights over shares in which they have
a beneficial interest.
Clarkson PLC | 2020 Annual Report
123
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ report
continued
Detail
Section
Location
Substantial shareholders
As of 31 December 2020, the Company had been notified
under the Disclosure Guidance and Transparency Rules of the
following holdings of voting rights in its issued share capital:
Significant agreements
Dividend
Shareholder
RS Platou Holding AS
Invesco Ltd
Heronbridge Investment Management LLP
Royce & Associates LLC
Franklin Templeton Institutional, LLC
Kames Capital plc
%of total
voting rights
6.63
5.15
4.99
4.93
4.87
3.57
The Company has not received any further notifications
between 31 December 2020 and the date of this report.
The service contracts of the CEO and CFO & COO include
provisions regarding a change of control of the Company.
Further details are included in the current Directors’
Remuneration Policy (which is available on the Company’s
website in the 2019 annual report). There are no further
agreements between any Group company and any of its
employees or any Director of any Group company which
provide for compensation to be paid to an employee or a
Director for termination of employment or for loss of office
as a consequence of a takeover of the Company.
There are no significant agreements to which the Company
is a party that take effect, alter or terminate upon a change
of control following a takeover bid for the Company.
The Directors recommend a final dividend of 54p per ordinary
share for the year ended 31 December 2020. Subject to
shareholder approval at the AGM, the final dividend will be
paid on 28 May 2021 to shareholders on the register at the
close of business on 14 May 2021.
The interim dividend paid during the year was 25p which,
together with the final dividend, will provide a total dividend
of 79p per ordinary share for the year (2019: 78p). In addition,
a further interim dividend of 53p was paid during the year
(in lieu of the 2019 final dividend, approval for which the Board
decided to withdraw from the 2020 AGM and defer due to
the impact of COVID-19).
2019 annual
report
Pages 124
and 125
External auditor
The Board recommend that PricewaterhouseCoopers LLP
(PwC) be reappointed as the Company’s auditor with effect
from the 2021 AGM, at which resolutions regarding PwC’s
reappointment and to authorise the Board to set their
remuneration will be proposed.
Audit and
Risk
Committee
report
Page 104
Articles of Association
The Company’s Articles of Association were adopted at the
2019 AGM. Any amendments to the Articles of Association
can only be made by a special resolution at a general meeting
of shareholders.
Political donations
The Group did not make any political donations or incur
any political expenditure in the UK or the EU during 2020.
Financial instruments
Our risk management objectives and policies in relation
to the use of financial instruments can be found in the notes
to the consolidated financial statements.
124 Clarkson PLC | 2020 Annual Report
Pages 167
to 170
Note 28
to the
consolidated
financial
statements
Detail
Section
Location
Emissions reporting
Details relating to required emissions reporting are set out
within the Our impact section.
Our impact
Pages 58
and 59
Corporate governance
statement
The Corporate governance report is incorporated by reference
into this Directors’ report and includes details of our
compliance with the Code and how the Company has applied
the main Principles. The Corporate governance report also
includes a description of the Board’s Diversity Policy.
Corporate
governance
Pages 80
to 121
Internal control and risk
management systems
A description of the main features of the Group’s internal
control and risk management systems in relation to the
financial reporting process can be found in the Strategic
report.
Strategic
report
Pages 70
to 78
Annual General Meeting
The 2021 AGM will be held electronically by audiocast
at 12 noon on 5 May 2021. Details of the resolutions to be
proposed are set out in a separate Notice of Meeting, which
will be posted to those shareholders who receive hard copy
documents and which will be available on the Group’s website
for those who have elected to receive documents electronically.
Corporate
Governance
Pages 90
and 91
Events since the
balance sheet date
Since 31 December 2020, there have been no material items
to report.
Disclosure of information
to the auditor
Statutory details for
Clarkson PLC
Each of the Directors who held office at the date of approval
of this Directors’ report confirms that, so far as each Director
is aware, there is no relevant audit information of which the
Company’s auditor is unaware; and each Director has taken
all steps that ought to have been taken to make himself/herself
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
The Company is a public company limited by shares,
incorporated in the United Kingdom and registered in England
and Wales with registered number 01190238. Its registered
office is at Commodity Quay, St Katharine Docks,
London E1W 1BF.
The Company’s shares are listed on the London Stock
Exchange under the ticker CKN, and the Company is a
constituent of the FTSE 250. It has no ultimate parent
company, and details of the Company’s substantial
shareholders (as notified to the Company under the Disclosure
Guidance and Transparency Rules) are set out on page 124.
Directors’
report
Page 124
Branches
A number of the Company’s subsidiary undertakings maintain
branches outside of the UK.
Pages 186
to 191
Note W to
the Parent
Company
financial
statements
By order of the Board:
Deborah Abrehart
Group Company Secretary
5 March 2021
Clarkson PLC | 2020 Annual Report
125
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Directors’ confirmations
The Directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group and Parent Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in
this annual report, confirm that, to the best of their knowledge:
– the Group and Parent Company financial statements, which
have been prepared in accordance with IFRSs as adopted by
the European Union, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and profit
of the Parent Company; and
– the Strategic report includes a fair review of the development
and performance of the business and the position of the
Group and Parent Company, together with a description
of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’
report is approved:
– so far as the Director is aware, there is no relevant audit
information of which the Group’s and Parent Company’s
auditors are unaware; and
– they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and
Parent Company’s auditors are aware of that information.
On behalf of the Board:
Sir Bill Thomas
Chair
5 March 2021
Directors’ responsibilities statement
Directors’ responsibilities statement
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group and Parent Company financial
statements in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006. Additionally, the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules
require the Directors to prepare the Group financial statements
in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union.
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Parent Company
and of the profit or loss of the Group for that period. In preparing
the financial statements, the Directors are required to:
– select suitable accounting policies and then apply
them consistently;
– state whether, for the Group and Parent Company,
international accounting standards in conformity with the
requirements of the Companies Act 2006 and, for the Group,
international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
– make judgements and accounting estimates that are
reasonable and prudent; and
– prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Parent Company will continue in business.
The Directors are also responsible for safeguarding the
assets of the Group and Parent Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Parent Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Parent Company and enable them to ensure that the financial
statements and the Directors’ remuneration report comply with
the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
The Directors are responsible for the maintenance and integrity of
the Parent Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
126 Clarkson PLC | 2020 Annual Report
Independent auditors’ report
to the members of Clarkson PLC
Report on the audit of the financial
statements
Opinion
In our opinion, Clarkson PLC’s Group financial statements and
Parent Company financial statements (the “financial statements”):
– give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2020 and of the
Group’s and Parent Company’s loss and the Group’s and
Parent Company’s cash flows for the year then ended;
– have been properly prepared in accordance with international
accounting standards in conformity with the requirements
of the Companies Act 2006; and
– have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report, which comprise: the Consolidated and Parent
Company balance sheets as at 31 December 2020; the
Consolidated income statement and the Consolidated statement
of comprehensive income, the Consolidated and Parent
Company cash flow statements and 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
and Risk Committee.
Separate opinion in relation to international financial
reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union
As explained in note 2 to the Group financial statements,
the Group, in addition to applying international accounting
standards in conformity with the requirements of the
Companies Act 2006, has also applied international financial
reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
In our opinion, the Group financial statements have been
properly prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
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.
Other than those disclosed in note 3 to the financial statements,
we have provided no non-audit services to the Group in the
period under audit.
Our audit approach
Overview
Audit scope
– Our audit included full scope audits of seven components
(two of which are financially significant) and specified
procedures on certain balances and transactions in respect
of two other components. This gave us coverage of 94%
(2019: 84%) of the Group’s underlying profit before taxation
and 91% (2019: 79%) of the Group’s revenue.
Key audit matters
– Risk of impairment of trade receivables (Group)
– Carrying value of goodwill (Group)
– Carrying value of investments in subsidiaries (Parent Company)
– Impact of COVID-19 (Group and Parent Company)
Materiality
– Overall Group materiality: £2,200,000 (2019: £2,350,000)
based on 5% of profit before taxation, adjusted for
exceptional items and acquisition related costs (‘underlying
profit before taxation’).
– Overall Parent Company materiality: £1,980,000
(2019: £2,090,000) based on 1% of total assets, reduced
to an amount less than the Group overall materiality.
– Performance materiality: £1,650,000 (Group) and £1,485,000
(Parent Company).
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.
Capability of the audit in detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined in the Auditors’ responsibilities for
the audit of the financial statements section, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Clarkson PLC | 2020 Annual Report
127
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Independent auditors’ report
to the members of Clarkson PLC
continued
Based on our understanding of the Group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to international trade regulations and
regulatory licence requirements for the Group’s Securities
business, and we considered the extent to which non-
compliance might have a material effect on the financial
statements. We also considered those laws and regulations
that have a direct impact on the preparation of the financial
statements such as the Companies Act 2006. We evaluated
management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks
were related to posting inappropriate journal entries to revenue
and management bias in accounting estimates. The Group
engagement team shared this risk assessment with the
component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit
procedures performed by the Group engagement team and/or
component auditors included:
– Inspecting correspondence with regulators and tax authorities.
– Discussions with management including consideration of
known or suspected instances of non-compliance with laws
and regulation and fraud.
– Evaluating management’s controls designed to prevent
and detect irregularities.
– Identifying and testing journals, in particular journal entries
posted with unusual account combinations, postings by
unusual users or with unusual descriptions.
– Challenging assumptions and judgements made by
management in their critical accounting estimates including
the key audit matters described below.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, 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.
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.
Impact of COVID-19 is a new key audit matter this year.
Otherwise, the key audit matters below are consistent with
last year.
How our audit addressed the key audit matter
Our audit procedures included:
– For specific allowances for expected credit losses, we
selected a sample of items and understood management’s
rationale for why an impairment was required. The
impairments relate to customers in default, administration
or legal disputes or those where no net revenue is recognised
from the outset due to doubt regarding collectability of
consideration at the time of invoicing;
– Verifying whether payments had been received since the
year-end, reviewing historical payment patterns and
inspecting any correspondence with customers on expected
settlement dates;
– The remaining trade receivables which were not specifically
impaired were subject to management’s determined
expected credit loss calculation. We examined and tested
source data and the mathematical accuracy of
management’s supporting calculations; this considered the
amount of prior years’ loss allowance that had been utilised
for bad debt write-offs during the year and also the history
of current receivables reaching default or extended overdue
positions; and
– We tested adjustments made by management to reflect
certain market conditions (both in terms of the Group’s
markets and territories where the receivables are due).
From the work we performed we consider the level of
impairment loss to be consistent with the evidence obtained.
Key audit matter
Risk of impairment of trade receivables (Group)
Refer to note 15 of the financial statements and note 2 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 £72.4m
before a loss allowance for expected credit losses of £12.3m.
The macroeconomic environment means the Group has
experienced continued uncertainty over the collectability
of trade receivables from specific customers.
Management applies the requirements of IFRS 9 ‘Financial
Instruments’ to determine the loss allowance for expected
credit losses. The determination as to whether a trade
receivable is collectable, and the measurement of any
expected credit loss involves judgement. Specific factors
which 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
loss allowance for impairment is required either for expected
credit losses on a specific transaction or for a customer’s
balance overall.
For certain customers there is no net recognition of revenue
where doubt exists as to the ability to collect any consideration
at the time of invoicing.
We focused on this area because it requires a high level
of management judgement and due to the materiality
of the amounts involved.
128 Clarkson PLC | 2020 Annual Report
Key audit matter
Carrying value of goodwill (Group)
Refer to note 14 of the financial statements and note 2 for
the Directors’ disclosures of the related accounting policies,
judgements and estimates for further information.
The goodwill balance is allocated across several cash
generating units (CGUs) and is subject to an annual impairment
test. Management prepared a value-in-use model (‘discounted
cash flow’) 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. It also involves
determining an appropriate discount rate and long-term
growth rate.
The risk that we focused on during the audit was that the
goodwill is overstated and that an impairment charge may be
required. In particular, we focused on the Offshore broking and
Securities CGUs which have been most affected by challenging
economic conditions, as described in the Business review
section of these financial statements.
Following a reorganisation of the Securities business during
the year, this legacy CGU has been split into two new CGUs,
Project Finance and Securities, reflecting the independently
generated cashflows of these two businesses.
The Offshore broking and Securities CGUs had pre-impairment
carrying values of £70.1m and £63.6m respectively and
contained goodwill. Management’s impairment test determined
that the recoverable amount of the CGUs including the goodwill
was lower than the carrying value. As a result, a pre-tax
impairment charge of £60.6m (2019: £47.5m) was recognised
in the Consolidated income statement.
We focused on this matter due to the size of the balance and
the significant judgements and estimation involved to determine
whether the carrying value of goodwill is supportable.
Carrying value of investments in subsidiaries (Parent Company)
Refer to notes A and F of the Parent Company financial
statements for the Directors’ disclosure of the related
accounting policies, judgements and estimates for
further information.
As detailed in the ‘Carrying value of goodwill’ key audit matter
above, an impairment of the Offshore broking and Securities
goodwill arose due to challenging economic conditions.
Accordingly, an impairment charge has been recognised in the
balance sheet of the Parent Company in relation to the original
investment in Clarkson Platou AS. After the impairment charge
of £54.7m (2019: £67.1m), the carrying amount of investments in
UK and overseas subsidiaries in the Parent Company balance
sheet is £168.0m as at 31 December 2020.
We focused on this matter due to the size of the balance
and the significant judgements and estimation involved
to determine whether the carrying value of investments
is appropriate in the Parent Company balance sheet.
How our audit addressed the key audit matter
Our audit procedures included:
– For each CGU, we obtained management’s annual
impairment assessment and verified the mathematical
accuracy of the calculations and that the methodology
used was in line with the requirements of IAS 36
‘Impairment of Assets’;
– We obtained and evaluated corroborative evidence
supporting the future cash flow forecasts of each CGU.
We compared the forecasts used in the impairment model
to the latest Board approved budget and management
forecasts, and compared prior year budget to actual results
in order to assess historical estimation uncertainty and factor
this into our challenge of current year projections. For the
Offshore broking and Securities CGUs, we also considered
available external market data to challenge the profile of
future projections;
– We challenged the rationale for the split of the legacy
Securities CGU in the year as well as the allocation of
goodwill between the two new Securities and Project
Finance CGUs. We confirmed that the reorganisation did
not avoid a larger impairment if the legacy Securities CGU
had remained unchanged;
– We challenged the reasonableness of the discount
rates by comparing the cost of capital for the Group with
comparable organisations and consulting with our own
valuation experts; and
– We considered the long-term cyclical performance of the
Securities and Offshore broking CGUs and verified that this
had been appropriately factored into the long-term forecasts.
We found the Directors’ assumptions to be supportable.
For the Offshore broking and Securities CGUs we performed
sensitivity analysis to ascertain the extent of changes in
assumptions that would impact the amount of goodwill
impairment recognised. Our findings were discussed with the
Audit and Risk Committee and we concluded the impairment
charge recognised was supportable.
We evaluated the disclosures in note 14 regarding the related
assumptions and sensitivities of the impaired Offshore broking
and Securities CGUs and concluded these appropriately draw
attention to the significant areas of estimation uncertainty. We
also evaluated the presentation of the impairment charge as an
exceptional item and concluded this was appropriate given its
nature and material amount.
We obtained management’s impairment of investment in
subsidiaries assessment with supporting computations and:
– Verified that the inputs to the assessment were
mathematically accurate and, where appropriate, consistent
with the goodwill impairment test set out in the key audit
matter above;
– Recalculated the charge based on consistent assumptions
used within the Group’s impairment assessment;
– Compared the carrying value of the investment to the
value-in-use and confirmed that the shortfall agrees to the
impairment recognised; and
– Verified the appropriate treatment of the commensurate
transfer to the merger reserve in the Consolidated and
Parent Company statements of changes in equity.
Based on the work performed, we concur with the amount of
impairment recognised and that the commensurate transfer to
merger reserves is appropriate. We evaluated the disclosures
made in note F and found that sensitivity disclosures
appropriately draw attention to the significant areas
of estimation uncertainty.
Clarkson PLC | 2020 Annual Report
129
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Independent auditors’ report
to the members of Clarkson PLC
continued
Key audit matter
Impact of COVID-19 (Group and Parent Company)
The COVID-19 pandemic has had a significant impact on the
global economy, with the severity of the impact varying across
the shipping markets the Group operates in. The pandemic has
also brought increased estimation uncertainty to certain areas
of the financial statements.
Management has considered a number of macro-economic
factors, together with the effect of COVID-19, on the business
and has determined there was increased risk arising in respect
of the ‘Carrying value of goodwill’ and the ‘Carrying value of
investments in subsidiaries’, as described in the key audit
matters above.
The ongoing uncertainty in the global economy has been
reflected in management’s consideration and incorporation
of forward looking information within the expected credit loss
model, as described in the ‘Risk of impairment of trade
receivables’ key audit matter above.
Management has considered its short and medium-term
forecasts as part of the Group and Parent Company’s going
concern and viability assessment, including modelling the
impact of reduced revenues and underlying profit before
taxation as a result of macro-economic risk factors including
COVID-19. Having considered these scenarios and the range
of possible actions available, management has concluded that
there is no material uncertainty in respect of these conclusions.
Management’s way of working, including the operation
of controls, has changed as a result of a large number of
employees working remotely and using technology enabled
working practices.
How our audit addressed the key audit matter
Our procedures and conclusions in respect of the risk
of impairment of trade receivables and the carrying values
of goodwill (Group) and investments in subsidiaries (Parent
Company) are set out in the key audit matters above.
We considered the appropriateness of management’s
disclosures in the financial statements of the impact of the
COVID-19 pandemic and the increased uncertainty on its
accounting estimates and found these to be adequate.
With respect to management’s going concern and viability
assessment, we evaluated management’s base case and
downside scenarios as described below in the sections
‘Conclusions relating to going concern’ and ‘Corporate
governance statement’.
We considered whether changes to working practices brought
about by COVID-19 had an adverse impact on the effectiveness
of management’s business processes and IT controls. We did
not identify any significant deterioration in the control
environment as a result of remote working.
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 they operate.
The financial statements are a consolidation of components,
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 components 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 components 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. Our audit
included full scope audits of seven components (two of which
are financially significant) and specified procedures on certain
balances and transactions in respect of two other components.
This gave us coverage of 94% of the Group’s underlying profit
before taxation (2019: 84%) and 91% (2019: 79%) of the
Group’s revenue. The financially significant components
were based in the UK and Norway. Our work included directly
auditing the largest UK component and receiving reporting
from our component audit teams. This, together with the
additional procedures performed centrally 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.
130 Clarkson PLC | 2020 Annual Report
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
Financial statements – Group
£2,200,000 (2019: £2,350,000).
5% of profit before taxation, adjusted for exceptional
items and acquisition related costs (‘underlying
profit before taxation’)
In our view, profit before taxation, adjusted for
exceptional items and acquisition related costs
(‘underlying profit before taxation’), represents
the most appropriate measure of underlying
performance.
Financial statements – Parent Company
£1,980,000 (2019: £2,090,000).
1% of total assets, reduced to an amount less than
the Group overall materiality
The Parent Company does not have trading
activities. In our view a balance sheet benchmark
represents an 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 overall materiality.
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 £340,000 and £1,980,000. Certain
components were audited to a local statutory audit materiality
that was also less than our overall Group materiality.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s and the Parent Company’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to
£1,650,000 for the Group financial statements and £1,485,000
for the Parent Company financial statements.
In determining the performance materiality, we considered
a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls – and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would
report to them misstatements identified during our audit above
£110,000 (Group audit) (2019: £117,000) and £99,000 (Parent
Company audit) (2019: £105,000) as well as misstatements
below those amounts that, in our view, warranted reporting
for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s
and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
– evaluating management’s base case and downside
scenarios, challenging and corroborating key assumptions;
– testing the accuracy of cash flow models used to assess
available liquidity during the going concern period;
– ensuring consistency with the key assumptions used in
other areas of our audit such as the assessment of goodwill
impairment; and
– reading management’s disclosures in the financial
statements and relevant “other information” in the
Annual Report and checking consistency with the financial
statements and our knowledge based on our audit.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s
and the Parent Company’s ability to continue as a going concern.
In relation to the Parent Company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.
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.
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.
Clarkson PLC | 2020 Annual Report
131
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Our review of the Directors’ statement regarding the longer-
term viability of the Group was substantially less in scope than
an audit and only consisted of making inquiries and
considering the Directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and
considering whether the statement is consistent with the
financial statements and our knowledge and understanding
of the Group and Parent Company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during
the audit:
– The Directors’ statement that they consider the Annual
Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
the members to assess the Group’s and Parent Company’s
position, performance, business model and strategy;
– The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
– The section of the Annual Report describing the work
of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility
to report when 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.
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, 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.
Independent auditors’ report
to the members of Clarkson PLC
continued
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 our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
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 2020 is
consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
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 Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’ statements
in relation to going concern, longer-term viability and that part
of the corporate governance statement relating to the Parent
Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional
responsibilities with respect to the corporate governance
statement as other information are described in the Reporting
on other information section of this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
– The Directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
– The Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Group’s and
Parent Company’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;
– The Directors’ explanation as to their assessment of the
Group’s and Parent Company’s prospects, the period this
assessment covers and why the period is appropriate; and
– The Directors’ statement as to whether they have a
reasonable expectation that the Parent Company will be able
to continue in operation and meet its liabilities as they fall due
over the period of its assessment, including any related
disclosures drawing attention to any necessary qualifications
or assumptions.
132 Clarkson PLC | 2020 Annual Report
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.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
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 Companies Act
2006 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
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
– we have not obtained 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 and Risk
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 12 years, covering the
years ended 31 December 2009 to 31 December 2020.
Christopher Burns (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
5 March 2021
Clarkson PLC | 2020 Annual Report
133
OverviewCorporate governanceFinancial statementsOther informationStrategic report
Consolidated income statement
for the year ended 31 December
Before
exceptional
items and
acquisition
related
costs
£m
358.2
(13.3)
344.9
(298.5)
46.4
1.2
Exceptional
items
(note 5)
£m
–
–
–
(60.6)
(60.6)
–
Acquisition
related
costs
(note 6)
£m
–
–
–
(0.5)
(0.5)
–
2020
After
exceptional
items and
acquisition
related
costs
£m
358.2
(13.3)
344.9
(359.6)
(14.7)
1.2
Before
exceptional
items and
acquisition
related
costs
£m
363.0
(14.3)
348.7
(298.2)
50.5
1.3
Exceptional
items
(note 5)
£m
–
–
–
(47.5)
(47.5)
–
Acquisition
related
costs
(note 6)
£m
–
–
–
(1.6)
(1.6)
–
2019
After
exceptional
items and
acquisition
related
costs
£m
363.0
(14.3)
348.7
(347.3)
1.4
1.3
–
–
(3.1)
(2.9)
–
–
(2.9)
–
(60.6)
–
(60.6)
(60.6)
–
(60.6)
–
(0.5)
0.1
(0.4)
(0.4)
–
(0.4)
0.2
(16.4)
(9.4)
(25.8)
(28.9)
3.1
(25.8)
0.4
49.3
(11.4)
37.9
36.0
1.9
37.9
–
(47.5)
–
(47.5)
(47.5)
–
(47.5)
–
(1.6)
0.3
(1.3)
(1.3)
–
(1.3)
Notes
3, 4
3, 4
3
3
3
7
Revenue
Cost of sales
Trading profit
Administrative expenses
Operating profit/(loss)
Finance revenue
Finance costs
Other finance revenue –
pensions
Profit/(loss) before taxation
Taxation
Profit/(loss) for the year
Attributable to:
Equity holders of the Parent
Company
Non-controlling interests
Profit/(loss) for the year
(3.1)
0.2
44.7
(9.5)
35.2
32.1
3.1
35.2
Earnings/(loss) per share
Basic
Diluted
8
8
106.0p
105.8p
(95.2p)
(95.2p)
118.8p
118.6p
Consolidated statement of comprehensive income
for the year ended 31 December
Loss for the year
Other comprehensive loss:
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on employee benefit schemes – net of tax
Changes in the fair value of equity instruments at fair value through other
comprehensive income – net of tax
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on retranslation of foreign operations
Foreign currency hedges recycled to profit or loss – net of tax
Foreign currency hedge revaluations – net of tax
Other comprehensive loss
Total comprehensive loss for the year
Attributable to:
Equity holders of the Parent Company
Non-controlling interests
Total comprehensive loss for the year
134 Clarkson PLC | 2020 Annual Report
Notes
24
26
26
2020
£m
(25.8)
1.0
(2.1)
(2.9)
1.5
1.6
(0.9)
(26.7)
(29.8)
3.1
(26.7)
0.4
0.2
(11.1)
(10.9)
(12.8)
1.9
(10.9)
(42.4p)
(42.4p)
2019
£m
(10.9)
(3.1)
–
(16.4)
0.7
0.9
(17.9)
(28.8)
(30.5)
1.7
(28.8)
Consolidated balance sheet
as at 31 December
Non-current assets
Property, plant and equipment
Investment properties
Right-of-use assets
Intangible assets
Trade and other receivables
Investments
Employee benefits
Deferred tax assets
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
Lease liabilities
Income tax payable
Provisions
Net current assets
Non-current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Lease liabilities
Provisions
Employee benefits
Deferred tax liabilities
Net assets
Capital and reserves
Share capital
Other reserves
Retained earnings
Equity attributable to shareholders of the Parent Company
Non-controlling interests
Total equity
Notes
10
11
12
13
15
16
24
7
17
15
16
18
19
20
21
22
19
20
21
22
24
7
25
26
2020
£m
24.3
1.2
47.0
182.9
3.1
2.9
18.1
10.6
290.1
1.3
76.6
0.2
31.1
173.4
282.6
–
(160.6)
(8.4)
(7.9)
(0.5)
(177.4)
105.2
(0.1)
(2.7)
(47.7)
(1.5)
(6.1)
(8.8)
(66.9)
328.4
7.6
104.6
211.9
324.1
4.3
328.4
2019
£m
25.6
1.2
53.4
238.2
2.1
4.8
15.5
9.1
349.9
1.1
77.0
0.1
15.6
175.7
269.5
(1.2)
(151.3)
(8.7)
(9.1)
(0.3)
(170.6)
98.9
(0.1)
(2.4)
(53.7)
(1.5)
(4.5)
(6.0)
(68.2)
380.6
7.6
158.4
211.5
377.5
3.1
380.6
The financial statements on pages 134 to 171 were approved by the Board on 5 March 2021, and signed on its behalf by:
Sir Bill Thomas
Chair
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
Registered number: 1190238
Clarkson PLC | 2020 Annual Report
135
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Consolidated statement of changes in equity
for the year ended 31 December
Attributable to equity holders of the Parent Company
Share
capital
£m
7.6
–
–
–
–
Other
reserves
£m
158.4
–
0.2
0.2
(54.7)
Retained
earnings
£m
211.5
(28.9)
(1.1)
(30.0)
54.7
–
–
–
–
–
–
–
7.6
0.6
0.1
–
–
–
–
0.7
104.6
–
(0.5)
(0.2)
0.1
(23.7)
–
(24.3)
211.9
Total
£m
377.5
(28.9)
(0.9)
(29.8)
–
0.6
(0.4)
(0.2)
0.1
(23.7)
–
(23.6)
324.1
Non-
controlling
interests
£m
3.1
3.1
–
3.1
–
Total equity
£m
380.6
(25.8)
(0.9)
(26.7)
–
–
–
–
–
(1.8)
(0.1)
(1.9)
4.3
Attributable to equity holders of the Parent Company
Share
capital
£m
7.6
–
7.6
–
–
–
–
–
–
–
–
–
–
–
7.6
Other
reserves
£m
237.1
–
237.1
–
(14.6)
(14.6)
(67.1)
0.8
2.2
–
–
–
–
3.0
158.4
Retained
earnings
£m
185.9
(3.9)
182.0
(12.8)
(3.1)
(15.9)
67.1
–
0.3
0.8
0.2
(23.0)
–
(21.7)
211.5
Non-
controlling
interests
£m
4.0
–
4.0
1.9
(0.2)
1.7
–
–
–
–
–
(2.7)
0.1
(2.6)
3.1
Total
£m
430.6
(3.9)
426.7
(12.8)
(17.7)
(30.5)
–
0.8
2.5
0.8
0.2
(23.0)
–
(18.7)
377.5
0.6
(0.4)
(0.2)
0.1
(25.5)
(0.1)
(25.5)
328.4
Total
equity
£m
434.6
(3.9)
430.7
(10.9)
(17.9)
(28.8)
–
0.8
2.5
0.8
0.2
(25.7)
0.1
(21.3)
380.6
Balance at 1 January 2020
(Loss)/profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Transfer from merger reserve
Transactions with owners:
Share issues
Employee share schemes
Tax on other employee benefits
Tax on other items in equity
Dividend paid
Contributions to non-controlling interests
Total transactions with owners
Balance at 31 December 2020
Balance at 1 January 2019
Impact of change in accounting policies
Adjusted balance at 1 January 2019
(Loss)/profit for the year
Other comprehensive loss
Total comprehensive (loss)/income for the year
Transfer from merger reserve
Transactions with owners:
Share issues
Employee share schemes
Tax on other employee benefits
Tax on other items in equity
Dividend paid
Contributions from non-controlling interests
Total transactions with owners
Balance at 31 December 2019
Notes
26
26
7
7
9
Notes
26
26
7
7
9
136 Clarkson PLC | 2020 Annual Report
Consolidated cash flow statement
for the year ended 31 December
Cash flows from operating activities
(Loss)/profit before taxation
Adjustments for:
Foreign exchange differences
Depreciation
Share-based payment expense
Loss on sale of investments
Amortisation of intangibles
Impairment of intangibles
Difference between pension contributions paid and amount recognised
in the income statement
Finance revenue
Finance costs
Other finance revenue – pensions
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase in bonus accrual
Increase in trade and other payables
Increase 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 to current investments (cash on deposit)
Proceeds from sale of investments in associates
Acquisition of subsidiaries, including deferred consideration
Cash acquired on acquisitions
Dividends received from investments
Net cash flow from investing activities
Cash flows from financing activities
Interest paid and other charges
Dividend paid
Dividend paid to non-controlling interests
Proceeds from borrowings
Repayments of borrowings
Payments of lease liabilities
Proceeds from shares issued
Contributions (to)/from non-controlling interests
ESOP shares acquired
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
3
3, 10, 11, 12
23
3, 13
3, 13
3
3
3
17
10
13
16
13
13
3
9
18
2020
£m
(16.4)
2.8
13.7
1.4
0.1
0.8
60.6
0.3
(1.2)
3.1
(0.2)
(0.2)
0.3
7.9
3.4
0.2
76.6
(10.7)
65.9
0.5
(3.5)
(6.3)
8.7
0.4
(7.9)
(20.3)
0.5
(1.1)
0.7
0.2
(28.1)
(2.7)
(23.7)
(1.8)
–
(1.2)
(8.9)
0.6
(0.1)
(0.1)
(37.9)
2019
£m
0.2
0.4
13.3
1.1
–
1.4
47.5
(0.2)
(1.3)
2.9
(0.4)
(0.3)
(2.9)
7.1
8.0
0.2
77.0
(9.2)
67.8
1.2
(3.9)
(5.0)
10.9
0.1
(11.8)
–
–
–
–
0.1
(8.4)
(2.8)
(23.0)
(2.7)
1.2
–
(8.6)
0.8
0.1
–
(35.0)
(0.1)
175.7
(2.2)
173.4
24.4
156.5
(5.2)
175.7
Clarkson PLC | 2020 Annual Report
137
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the consolidated financial statements
1 Corporate information
The Group and Parent Company financial statements of
Clarkson PLC for the year ended 31 December 2020 were
authorised for issue in accordance with a resolution of the
Directors on 5 March 2021. 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 2020. Additional accounting policies for
the Parent Company are set out in note A.
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 year before exceptional items and
acquisition related costs; this is referred to as ‘underlying
profit’. When there are items which are non-recurring in nature
and considered to be material in size, these are shown as
‘exceptional items’. The column ‘acquisition related costs’
includes the amortisation of acquired intangible assets and
the expensing of the cash and share-based elements of
consideration linked to ongoing employment obligations on
acquisitions. These notes form an integral part of the financial
statements on pages 134 to 171.
Statement of compliance
The financial statements of Clarkson PLC have been prepared
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006
(IFRS) and the applicable legal requirements of the Companies
Act 2006. The consolidated financial statements also comply
with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
The 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 and
fair value through other comprehensive income.
The Group has considerable financial resources available to it,
a strong balance sheet and has consistently generated an
underlying operating profit and good cash inflow. As a result
of this, the Directors believe that the Group is well placed to
manage its business risks successfully, despite the challenging
market backdrop created by COVID-19. Management has
stress tested a range of scenarios, modelling different
assumptions with respect to the Group’s cash resources. Areas
considered include varying levels of profit and cash generation
to reflect a significant impact on world seaborne trade similar
to that experienced in the global financial crisis in 2008 and the
period thereafter. Under all these scenarios, the Group is able
to generate profits and cash, and has positive net funds
available to it. Accordingly, the Directors have a reasonable
expectation that the Group has sufficient resources to continue
in operation for at least the next 12 months. For this reason,
they continue to adopt the going concern basis in preparing
the financial statements.
Except where noted, the accounting policies set out in this note
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 unconsolidated from the date that control ceases.
See note W 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 intra-group transactions, balances, income and expenses
are eliminated on consolidation, however for the purposes of
segmental reporting, internal recharges are included within
the appropriate segments.
2.2 Changes in accounting policy and disclosures
New and amended standards adopted by the Group
Further to the specific new standards set out below, there
were no other new standards, amendments or interpretations,
effective for the first time for the financial year beginning on or
after 1 January 2020, that had a material impact on the Group
or Parent Company:
− Definition of material – amendments to IAS 1 and IAS 8;
− Definition of a business – amendments to IFRS 3;
− Interest Rate Benchmark Reform – amendments to IFRS 9,
IAS 39 and IFRS 7; and
− Revised Conceptual Framework for Financial Reporting.
The Group also elected to adopt the following amendments early:
− Annual improvements to IFRS Standards 2018-2020 Cycle;
and
− Where applicable: COVID-19-related Rent Concessions –
amendments to IFRS 16.
138 Clarkson PLC | 2020 Annual Report
2 Statement of accounting policies continued
The amendments listed above did not have any impact on
the amounts recognised in prior periods and are not expected
to significantly affect the current or future periods.
New standards, amendments and interpretations issued
but not yet effective for the financial year beginning 1 January
2020 and not early adopted
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December 2020
reporting periods and have not been early adopted by the
Group. These standards are not expected to have a material
impact on the Group’s financial statements in the current or
future reporting periods.
2.3 Critical accounting judgements and estimates
The following are the critical accounting judgements, apart
from those involving estimations (dealt with separately below),
that the Directors have made in the process of applying the
Group’s accounting policies and that have the most significant
effect on the amounts recognised in the consolidated
financial statements.
Judgements
Revenue recognition
IFRS 15 ‘Revenue from Contracts with Customers’ requires
the Group to assess its revenue streams, including whether
the recognition of revenue should be at a ‘point in time’ or
‘over time’. Where revenue is at a point in time, a judgement is
also required as to at what point this is. The Group has defined
and determined its performance obligations, which continues
to be the successful satisfaction of the negotiated contract
between counterparties and therefore recognises revenue
at this point in time. This is a critical judgement, since if the
performance obligation was deemed to be satisfied at an
earlier point or over time, the revenue recognition would differ.
In addition, for certain clients, the Group considers that there is
uncertainty at the time of invoicing as to whether the clients are
capable of settling their invoices due to Clarksons. The Group
continues to trade with such clients which are deemed to be
key market participants or preferred counterparties for certain
transactions. At the point of revenue recognition, these
amounts are invoiced but provisions are made which directly
offset against revenue, on the basis consideration is not
certain. See note 2.19 for further details.
Alternative performance measures
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 users of the financial statements with
a better understanding of the Group’s underlying financial
performance, if used properly. 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. Directors’ judgement is
required as to what items qualify for this classification.
Recognition of software assets
A judgement is made regarding the decision to capitalise
expenditure on the balance sheet relating to the development
of software assets across the Group per IAS 38. This includes
considering if the future economic benefit from the asset can
be readily identified and estimated and will flow to the relevant
entity in the Group. Once capitalised, a further judgement is
made to determine the point at which the software becomes
fully operational and thus when the asset will begin to be
amortised through the income statement over its useful
economic life.
IFRS 16 ‘Leases’
Key judgements made in calculating the initial measurement
include determining the lease term where extension or
termination options exist. In such instances, all facts and
circumstances that may create an economic incentive to
exercise an extension option, or not exercise a termination
option, have been considered to determine the lease term.
Extension periods (or periods after termination options) are
only included in the lease term if the lease is reasonably certain
to be extended (or not terminated), such as for options with
renewal dates in the next 12 months.
Estimates include calculating the discount rate which is based
on the incremental borrowing rate, using a series of inputs
including government bond yields and adjustments to take
into account entity-specific risk-profiles.
A judgement is made at the commencement of a lease as
to whether elements of the contract are lease components or
non-lease components. If an element doesn’t convey the right
to control the use of an identified asset for a period of time in
exchange for consideration then this is treated as a non-lease
component. The most significant non-lease component
attributable to the Group are service charges.
Estimation uncertainty
The assumptions and estimates at the end of the current
reporting period that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are set out below:
Impairment of 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 of expected credit losses to arise on trade receivables
at the balance sheet date. Determining the amount of the
provision includes analysis of specific customers’
creditworthiness which may be impaired as indicated by
the age of the invoice, the existence of any disputes, recent
historical payment patterns and any known information
regarding the client’s financial position. In a limited number
of circumstances, where doubt exists as to the ability to collect
payment, a provision is made at the time of invoicing (see
Judgements: Revenue recognition above). For clients where
a specific provision is not recognised, management is required
to estimate expected credit losses in accordance with IFRS 9
‘Financial Instruments’. This estimate takes into account the
Group’s history of bad debt write-offs and extended unpaid
invoices for each of its segments and also views on market
conditions both for certain business lines and territories.
Determining the amount of a provision for impairment is
inherently challenging and in a given year there is a risk this
estimate may materially change in the following year, either due
to successful, unforeseen collections or sudden collapses of
clients. This is therefore deemed to be a critical accounting
estimate. See note 15 for further details.
Clarkson PLC | 2020 Annual Report
139
OverviewCorporate governanceFinancial statementsStrategic reportOther information
2 Statement of accounting policies continued
Impairment testing of goodwill
Determining whether goodwill is impaired requires an
estimation of the value-in-use of the cash-generating units
to which assets on the balance sheet 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. As determining such assumptions is inherently
uncertain and subject to future factors, there is the potential
that these may differ in subsequent periods and therefore
materially change the conclusions reached. In light of this,
sensitivity disclosures are given if a reasonably possible change
in assumptions could lead to the recoverable amount being
lower than the carrying amount. See note 14 for further details.
Employee benefits
The determination of the Group’s defined benefit obligation
depends on certain assumptions, such as the selection of
the discount rate, inflation rates and mortality rates. These
assumptions are considered to be a key source of estimation
uncertainty as relatively small changes in the assumptions
used may have a significant effect on the Group’s financial
statements within the next year. See note 24 for further details.
2.4 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.
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:
2.5 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.
2.6 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 the income
statement. 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.
Freehold and long leasehold properties
Leasehold improvements
Office furniture and equipment
Motor vehicles
10–60 years
Over the period
of the lease
2–10 years
4–5 years
2.7 Intangible assets
Separately acquired intangible assets 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.
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.
Costs incurred on development projects, relating to the
introduction or design of new systems or improvement of the
existing systems, are only capitalised as intangible assets if
capitalisation criteria under IAS 38 ‘Intangible Assets’ are met,
that is, where the related expenditure is separately identifiable,
the costs are measurable and management is satisfied as to
the ultimate technical and commercial viability of the project
such that it will generate future economic benefits based on
all relevant available information. Capitalised development
costs are amortised from the date the system is fully
operational over their expected useful lives (not exceeding five
years). Other costs linked to development projects that do not
meet the above criteria such as data population, research
expenditure and staff training costs are recognised within
administrative expenses as incurred.
140 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 2 Statement of accounting policies continued
Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and any accumulated
impairment losses.
Goodwill
The Group assesses whether there are any indicators that
goodwill is impaired at each reporting date. Goodwill is tested
for impairment annually.
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 the 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.
2.8 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 its 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
the income statement in those expense categories consistent
with the function of the impaired asset.
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.
Impairment of goodwill is determined 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.
2.9 Investments and other financial assets
Classification
Financial assets within the scope of IFRS 9 ‘Financial
Instruments’ are classified as financial assets at fair value
through profit or loss (FVPL), financial assets at fair value
through other comprehensive income (FVOCI) and financial
assets at amortised cost.
The Group determines the classification of its financial assets
on initial recognition, taking into account the purpose for which
the financial assets were acquired.
Financial assets at fair value through profit or loss (FVPL)
These assets are measured at fair value. Net gains and losses
are recognised in profit or loss in finance revenue or finance
costs. Any interest or dividend income are recognised in profit
or loss in finance revenue or finance costs. No assets were
designated at initial recognition of IFRS 9.
Financial assets at fair value through other comprehensive
income (FVOCI)
These assets are measured at fair value. The Group has
elected to treat its investment in CargoMetrics Technologies
LLC as a FVOCI asset based on the business model for that
asset and, as it is an equity investment not held for trading,
has made an irrevocable election to present fair value gains
and losses on revaluation in other comprehensive income.
Dividends are recognised when the entity’s right to receive
payment is established, it is probable the economic benefits
will flow to the entity and the amount can be measured reliably.
Dividends are recognised in the income statement unless they
clearly represent recovery of a part of the cost of the
investment. Changes in fair value are recognised in other
comprehensive income and are never recycled to the income
statement, even if the asset is sold or impaired.
Recognition and measurement
Fair value
The fair value of investments in equity instruments 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. 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.
Clarkson PLC | 2020 Annual Report
141
OverviewCorporate governanceFinancial statementsStrategic reportOther information
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 in other comprehensive income, 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.
2.14 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.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.15 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 the income statement 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 Statement of accounting policies continued
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.
2.10 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
Impairment losses for trade receivables are recognised within
revenue. 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 provision is determined with reference
to specific analysis of increased credit loss risk clients and
lifetime expected credit losses applied to all other trade
receivables (the simplified approach). The carrying amount
of the receivable is reduced through use of an allowance
account. Impaired debts are derecognised when they are
assessed as uncollectable.
2.11 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method and excludes borrowing costs. Net realisable value
is the estimated selling price in the ordinary course of business,
less applicable variable selling expenses.
2.12 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.
2.13 Derivative financial instruments and hedge accounting
The Group uses various derivative financial instruments
to reduce exposure to foreign exchange movements.
These can include foreign currency 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 (determined with
reference to IFRS 9 ‘Financial Instruments’) 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.
The Group designates the hedged risk as movements in the
spot rate, with changes in the forward rate recognised in other
comprehensive income.
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.
142 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 2 Statement of accounting policies continued
2.16 Employee benefits
The Group operates various post-employment schemes, including
both defined contribution and defined benefit pension plans.
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.
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.
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.
The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of earnings
per share. See note 8 for further details.
The social security contributions payable in connection with the
share options are considered an integral part of the grant itself,
and the charge will be treated as a cash-settled transaction.
2.18 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.
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.
2.19 Revenue recognition
Revenue is recognised in accordance with satisfaction
of performance obligations of contracts.
Past service costs are recognised immediately in income.
The net interest revenue/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 revenue/cost is included
in other finance revenue – pensions in the income statement.
2.17 Share-based payment transactions
Employees (including senior executives) of the Group receive
remuneration in the form of share-based payment transactions,
whereby consideration is received in the form of equity
instruments for services rendered (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 these awards were valued
using either a Monte Carlo valuation model or a Black-Scholes
model, depending on the type of award being valued. See note
23 for further details.
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.
Broking
Shipbroking and offshore revenue consists of commission
receivable and is predominantly recognised at a point in time.
The point in time is deemed to be when the underlying parties
to the transaction have completed their respective obligations
and successfully fulfilled the contract between them as
brokered and overseen by Clarksons.
The transaction price is fixed and determined with reference
to the contracted commission rate for the broker. Broking
revenue contracts vary, with certain contracts having a single
performance obligation and others, such as newbuilds,
containing multiple performance obligations. In the case
of single performance obligation contracts, the transaction
is allocated wholly against that performance obligation.
In the case of multiple performance obligation contracts,
the transaction price is allocated with reference to the agreed
stages of completion in the underlying contract. The price for
such stages is agreed between the underlying counterparties
and Clarksons’ commission is derived as a percentage of this.
The stage of completion is deemed a reasonable proxy for the
allocation of the total consideration transaction price to
performance obligations in the contract.
Time charter commission revenue is recognised over time
in line with the period of time for which the vessel is being
chartered, which is deemed to be the most faithful
representation of the service provided over the period of the
contract. The transaction price is apportioned evenly over
the life of the charter per the contract.
Futures broking commissions are recognised when the services
have been performed.
Clarkson PLC | 2020 Annual Report
143
OverviewCorporate governanceFinancial statementsStrategic reportOther information
2.21 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. 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.
2.22 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.
2 Statement of accounting policies continued
Financial
Revenue consists of commissions and fees receivable from
financial services activities. Fees from investment banking
activities, syndication and other financial solutions are
recognised at a point in time, on a success basis, when certain
criteria in applicable agreements have been met. Financial
revenue usually involves a single performance obligation (being
successful execution of the relevant financial services activity).
The transaction price is allocated wholly to the point in time
when this performance obligation is satisfied. The transaction
price usually is determined as a fixed percentage of the
underlying financial services transaction.
Support
Agency income is recognised at a point in time when vessels
arrive in port. The transaction price is clearly defined in the
contract as the fee for providing the service and an agreed
charge is made for disbursements, if applicable.
Revenue from the sale of goods is recognised on delivery of
goods to the customer. The transaction price is clearly defined
in the sales order for each product ordered.
Port service income is recognised on the vessel load or
discharge completion date and stores rent on an over time
basis. The transaction price is clearly defined in the contract
as the fee per tonne of product loaded, stored or discharged.
Freight forwarding income is recognised on the date of
despatch of goods or services. The transaction price is clearly
defined as per the quote provided to the customer for the
storage or transportation of goods.
The transaction price is allocated wholly to the performance
obligation.
Research
Revenue comprises both fees for one-off projects, which are
recognised as and when services are performed, and sales of
shipping publications and other information, which is recognised
when the research products are delivered. Subscriptions to
periodicals and other information are recognised over time,
which is determined with reference to the subscription period
and therefore the most faithful representation of how the client
consumes the benefit. The transaction price is agreed in the
contract and is on a per product basis and either recognised
wholly at a point in time, or in the case of subscriptions, it is
spread evenly over the subscription period. The transaction
price is allocated wholly to the performance obligation.
Contract assets/liabilities
Except for Research, which is generally invoiced in advance,
invoicing typically aligns with the timing that performance
obligations are satisfied. Payment terms are set out in note 15.
At the year-end, there may be amounts where invoices have not
been raised but performance obligations are deemed satisfied.
These are recognised as contract assets and mainly arise in
Broking and Financial. In Research, amounts invoiced ahead
of performance obligations being satisfied are included as
contract liabilities.
2.20 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.
Transactions between operating segments are at arm’s length.
144 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 2 Statement of accounting policies continued
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.
2.23 Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease,
at inception of the contract. The Group recognises a right-of-
use asset and a corresponding lease liability with respect to
all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets. For these
leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term
of the lease.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement
date, discounted by using the lessee’s incremental borrowing
rate, as the rate implicit in the lease cannot be readily
determined. The incremental borrowing rate is based on the
rate payable for loans of a similar term and asset value or from
a series of inputs including government bond yields and
adjustments to take into account entity-specific risk-profiles.
Lease payments included in the measurement of the lease
liability comprise fixed lease payments (including in-substance
fixed payments) less any lease incentives receivable; variable
lease payments that depend on an index or rate; amounts
expected to be payable by the lessee under residual value
guarantees; the exercise price of purchase options, if the
lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
if one of the following occur:
− The lease term has changed or there is a significant event
or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
− The lease payments change due to changes in an index or
rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is
remeasured by discounting the revised lease payments
using an unchanged discount rate.
− A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a
revised discount rate at the effective date of the modification.
Non-lease components are charged to the income statement
in line with the services being provided.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability less any lease incentives received
and any initial direct costs. They are subsequently measured
at cost less accumulated depreciation.
Whenever the Group incurs an obligation for costs to restore
the site on which it is located or restore the underlying asset to
the condition required by the terms and conditions of the lease,
a provision is recognised and measured under IAS 37 with a
corresponding entry within the related right-of-use asset.
Right-of-use assets are depreciated over the shorter period
of the lease term and the useful life of the underlying asset and
starts at the commencement date of the lease. See note 2.8
for the policy on impairment.
The Group as lessor
The Group enters into lease agreements as a lessor with
respect to some of its investment properties. Leases for which
the Group is a lessor are classified as finance or operating
leases. Whenever the terms of the lease transfer substantially
all the risks and rewards of ownership to the lessee, the
contract is classified as a finance lease. All other leases
are classified as operating leases.
All of the Group’s leases are classified as operating leases with
rental income from these leases recognised on a straight-line
basis over the term of the relevant lease.
2.24 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.
Clarkson PLC | 2020 Annual Report
145
OverviewCorporate governanceFinancial statementsStrategic reportOther information
3 Revenue and expenses
Revenue
Revenue from contracts with customers
Revenue from other sources: Rental income
2020
£m
357.9
0.3
358.2
2019
£m
362.6
0.4
363.0
Revenue is disaggregated further in note 4, which is the level at which it is analysed within the business. Further information on
the timing of transfer of goods and services for revenue streams is included in note 2. The forward order book comprises contracts
where the Group’s performance obligations are not satisfied and accordingly, no revenue is recognised. The Directors’ best
estimate of the deliverable forward order book for 2021 is US$116m/£85m (2019 for 2020: US$113m/£85m). Revenue is net
of movements in the loss allowance for trade receivables. Included in revenue is £6.2m (2019: £5.3m) that was included in
the contract liability balance at the beginning of the year.
2020
£m
0.5
0.2
0.5
1.2
2020
£m
0.1
2.1
0.9
3.1
2020
£m
0.2
2020
£m
13.7
0.8
60.6
2.8
13.2
0.4
2019
£m
1.1
0.1
0.1
1.3
2019
£m
0.2
2.1
0.6
2.9
2019
£m
0.4
2019
£m
13.3
1.4
47.5
0.4
11.2
0.4
Finance revenue
Bank interest income
Dividend income
Other finance revenue
Finance costs
Bank interest charges
Interest expenses on lease liabilities
Other finance costs
Other finance revenue – pensions
Net benefit income
Operating profit/(loss)
Operating profit/(loss) from continuing operations is stated after charging:
Depreciation
Amortisation of intangible assets
Impairment of intangible assets
Net foreign exchange losses
Research and development
Short-term lease expense
146 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 3 Revenue and expenses continued
Auditor’s remuneration
Fees payable to the Company’s auditor for the audit of the Company’s and
Group financial statements
Fees payable to the Company’s auditor and their associates for other services:
The auditing of financial statements of subsidiaries of the Company
Audit-related assurance services
Other services
2020
£000
265
288
79
12
644
2019
£000
238
307
65
–
610
Audit-related assurance services consists of £40,000 (2019: £40,000) in relation to the half-year review and £39,000 (2019: £25,000)
of other audit-related services. Other services relates to the provision of attestation relating to restructuring in Norway.
Employee compensation and benefits expense
Wages and salaries
Social security costs
Expense of share-based payments
Pension costs – defined contribution plans
2020
£m
211.9
17.7
1.4
8.0
239.0
2019
£m
197.4
17.0
1.1
6.5
222.0
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 110.
The average monthly number of persons employed by the Group during the year, including Executive Directors, is analysed below:
Broking
Financial
Support
Research
2020
1,184
110
238
119
1,651
2019
1,122
121
229
115
1,587
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 and Egypt.
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. Internal recharges are included
within the appropriate segments. Segment revenue represents revenue from external customers.
The Group is not reliant on any major customer that contributes more than 10% of Group revenue.
Clarkson PLC | 2020 Annual Report
147
OverviewCorporate governanceFinancial statementsStrategic reportOther information
4 Segmental information continued
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 (loss)/profit after exceptional items and acquisition related costs
Finance revenue
Finance costs
Other finance revenue – pensions
(Loss)/profit before taxation
Taxation
Loss for the year
Business segments
Broking
Financial
Support
Research
Segment assets/liabilities
Unallocated assets/liabilities
Revenue
Results
2020
£m
282.6
33.9
24.9
16.8
358.2
2019
£m
283.0
35.5
27.7
16.8
363.0
2020
£m
403.2
74.5
33.1
11.5
522.3
50.4
572.7
Assets
2019
£m
424.1
124.5
30.2
14.2
593.0
26.4
619.4
2020
£m
55.4
2.5
1.7
5.6
65.2
(18.8)
46.4
(60.6)
(0.5)
(14.7)
1.2
(3.1)
0.2
(16.4)
(9.4)
(25.8)
2020
£m
163.9
21.9
13.3
10.6
209.7
34.6
244.3
2019
£m
55.5
3.3
3.1
5.4
67.3
(16.8)
50.5
(47.5)
(1.6)
1.4
1.3
(2.9)
0.4
0.2
(11.1)
(10.9)
Liabilities
2019
£m
164.3
23.4
11.2
10.5
209.4
29.4
238.8
Unallocated assets predominantly relate to head office cash balances and cash on deposit, the pension scheme surplus and tax
assets. Unallocated liabilities include the pension scheme deficit, tax liabilities and head office accruals.
Business segments
Non-current asset additions
Depreciation
Amortisation and
impairment
Broking
Financial
Support
Research
Property,
plant and
equipment
2020
£m
5.4
0.3
0.7
–
6.4
Intangible
assets
2020
£m
7.5
–
–
–
7.5
Property,
plant and
equipment
2019
£m
10.8
0.2
2.4
–
13.4
Intangible
assets
2019
£m
4.9
0.1
–
–
5.0
2020
£m
11.4
1.1
1.0
0.2
13.7
2019
£m
11.2
1.0
0.9
0.2
13.3
2020
£m
*18.3
*43.1
–
–
61.4
2019
£m
**14.4
**34.5
–
–
48.9
*
Includes an impairment charge of £17.5m for Broking and £43.1m for Financial.
** Includes an impairment charge of £13.0m for Broking and £34.5m for Financial.
148 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 4 Segmental information continued
Geographical segments – by origin of invoice
Europe, Middle East and Africa*
Americas
Asia Pacific
Geographical segments – by location of assets
Europe, Middle East and Africa*
Americas
Asia Pacific
2020
£m
275.8
19.6
62.8
358.2
Revenue
2019
£m
275.3
23.3
64.4
363.0
Non-current assets**
2020
£m
237.8
8.8
14.8
261.4
2019
£m
282.5
10.9
31.9
325.3
Includes revenue for the UK of £170.4m (2019: £172.8m) and non-current assets for the UK of £118.8m (2019: £114.1m).
*
** Non-current assets exclude deferred tax assets and employee benefits.
5 Exceptional items
As a result of the impairment testing of goodwill, an impairment charge was recognised of £60.6m (2019: £47.5m). See note 14
for further details.
6 Acquisition related costs
Included in acquisition related costs is £0.3m (2019: £nil) relating to amortisation of intangibles acquired as part of the Martankers
acquisition and cash charges of £0.1m (2019: £nil) relating to that acquisition. The cash charges are contingent on employees
remaining in service and are therefore spread over the service period.
Also included is £nil (2019: £1.0m) relating to amortisation of intangibles and £0.1m (2019: £0.6m) of cash and share-based
payment charges in relation to previous acquisitions.
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
Total tax charge in the income statement
2020
£m
11.1
(2.1)
9.0
0.4
0.4
9.4
2019
£m
11.3
(0.4)
10.9
0.2
0.2
11.1
Clarkson PLC | 2020 Annual Report
149
OverviewCorporate governanceFinancial statementsStrategic reportOther information
7 Taxation continued
Tax relating to items (credited)/charged to equity is as follows:
Current tax
Other items in equity
Deferred tax
Employee benefits
Foreign currency contracts
Other items in equity
– on pension benefits
– other employee benefits
Total tax charge/(credit) in the statement of changes in equity
2020
£m
(0.1)
(0.1)
0.1
0.2
0.7
–
1.0
0.9
Reconciliation of tax charge
The tax charge in the consolidated income statement for the year is higher (2019: higher) than the average standard rate
of corporation tax in the UK of 19% (2019: 19%). The differences are reconciled below:
(Loss)/profit before taxation
(Loss)/profit at UK average standard rate of corporation tax of 19% (2019: 19%)
Effects of:
Impairment charge not deductible for tax purposes
Expenses not deductible for tax purposes
Non-taxable income
Lower tax rates on overseas earnings
Tax losses not recognised
Adjustments relating to prior year
Other adjustments
Total tax charge in the income statement
Deferred tax
Deferred tax charged/(credited) in the consolidated income statement is as follows:
Employee benefits
In relation to earnings of overseas subsidiaries
Other temporary differences
Deferred tax charge in the income statement
2020
£m
(16.4)
(3.1)
11.5
1.7
(0.4)
(0.9)
0.9
(0.6)
0.3
9.4
2020
£m
(0.1)
0.3
0.2
0.4
2019
£m
1.1
1.1
(0.5)
(0.8)
0.4
(0.5)
(1.4)
(0.3)
2019
£m
0.2
–
9.0
1.8
0.1
(1.2)
0.8
0.8
(0.2)
11.1
2019
£m
(0.5)
0.2
0.5
0.2
150 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued
7 Taxation continued
Deferred tax included in the balance sheet is as follows:
Deferred tax assets
Employee benefits
Tax losses
Other temporary differences
– on pension benefits
– other employee benefits
Deferred tax liabilities
Employee benefits
In relation to earnings of overseas subsidiaries
Foreign currency contracts
Other temporary differences
– on pension benefits
2020
£m
1.2
7.6
0.5
1.3
10.6
(3.4)
(1.6)
(0.9)
(2.9)
(8.8)
2019
£m
0.7
7.6
0.2
0.6
9.1
(2.6)
(1.3)
(0.1)
(2.0)
(6.0)
Included in the above are deferred tax assets of £2.7m (2019: £2.9m) and deferred tax liabilities of £0.1m (2019: £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. The Group did not recognise
a deferred tax asset of £3.2m (2019: £2.7m) in respect of unused tax losses, which predominantly have either no expiry date
or expiry dates of ten years or more.
Deferred taxes at the balance sheet date have been measured using the appropriate enacted tax rates and are reflected in these
financial statements.
During the year, the planned reversal of the reduction in corporate tax rate from 19% to 17% in the UK was substantively enacted.
In March 2021, the Prime Minister announced that he intended to raise the corporate tax rate from 19% to 25% from 1 April 2023.
This announcement does not constitute substantive enactment and therefore deferred tax rates at the balance sheet date
continue to be measured at the enacted tax rate of 19%.
8 Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by dividing profit/(loss) for the year attributable to ordinary equity holders
of the Parent Company by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share amounts are calculated by dividing profit/(loss) for the year attributable to ordinary equity holders
of the Parent Company by the weighted average number of ordinary shares in issue during the year, plus the weighted average
number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares
that would have an antidilutive effect on earnings/(loss) per share.
The following reflects the income and share data used in the basic and diluted earnings/(loss) per share computations:
Underlying profit for the year attributable to ordinary equity holders of the Parent Company
Reported loss 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
Weighted average number of ordinary shares
(excluding share purchase trusts’ shares) – diluted
2020
£m
32.1
(28.9)
2019
£m
36.0
(12.8)
2020
2019
30,342,678
62,716
–
30,263,972
38,828
19,919
30,405,394
30,322,719
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 113,243 (2019: 118,347).
Clarkson PLC | 2020 Annual Report
151
OverviewCorporate governanceFinancial statementsStrategic reportOther information
9 Dividends
Declared and paid during the year:
Interim dividend for 2020 of 53p per share (final dividend for 2018: 51p per share)
Interim dividend for 2020 of 25p per share (2019: 25p per share)
Dividend paid
Proposed for approval at the AGM (not recognised as a liability at 31 December):
Final dividend for 2020 proposed of 54p per share (2019: 53p per share)
2020
£m
16.1
7.6
23.7
2019
£m
15.4
7.6
23.0
16.4
16.1
Freehold
and long
leasehold
properties
£m
Leasehold
improvements
£m
Office
furniture and
equipment
£m
Motor
vehicles
£m
9.3
–
–
(0.1)
9.2
1.7
0.2
–
–
1.9
7.3
18.5
0.2
–
–
18.7
7.4
1.5
–
–
8.9
9.8
23.3
3.0
(0.5)
(0.2)
25.6
17.0
2.8
(0.3)
(0.5)
19.0
6.6
1.5
0.3
(0.2)
–
1.6
0.9
0.3
(0.2)
–
1.0
0.6
Freehold
and long
leasehold
properties
£m
Leasehold
improvements
£m
Office furniture
and equipment
£m
Motor
vehicles
£m
7.9
1.6
–
(0.2)
9.3
1.6
0.2
–
(0.1)
1.7
7.6
18.3
0.5
(0.1)
(0.2)
18.5
6.1
1.6
(0.1)
(0.2)
7.4
11.1
22.7
1.5
(0.5)
(0.4)
23.3
14.9
2.9
(0.4)
(0.4)
17.0
6.3
1.4
0.3
(0.2)
–
1.5
0.7
0.3
(0.2)
0.1
0.9
0.6
Total
£m
52.6
3.5
(0.7)
(0.3)
55.1
27.0
4.8
(0.5)
(0.5)
30.8
24.3
Total
£m
50.3
3.9
(0.8)
(0.8)
52.6
23.3
5.0
(0.7)
(0.6)
27.0
25.6
10 Property, plant and equipment
31 December 2020
Original cost
At 1 January 2020
Additions
Disposals
Foreign exchange differences
At 31 December 2020
Accumulated depreciation
At 1 January 2020
Charged during the year
Disposals
Foreign exchange differences
At 31 December 2020
Net book value at 31 December 2020
31 December 2019
Original cost
At 1 January 2019
Additions
Disposals
Foreign exchange differences
At 31 December 2019
Accumulated depreciation
At 1 January 2019
Charged during the year
Disposals
Foreign exchange differences
At 31 December 2019
Net book value at 31 December 2019
152 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 11 Investment properties
Cost
At 1 January and 31 December
Accumulated depreciation
At 1 January
Charged during the year
At 31 December
Net book value at 31 December
2020
£m
2.1
0.9
–
0.9
1.2
2019
£m
2.1
0.9
–
0.9
1.2
The fair value of the investment properties at 31 December 2020 was £2.2m (2019: £2.3m). 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 Right-of-use assets
Cost
As at 1 January
Additions
Additions arising from acquisitions
Disposals
Foreign exchange differences
At 31 December
Accumulated depreciation
As at 1 January
Charged during the year
Disposals
Foreign exchange differences
At 31 December
Net book value at 31 December
Leasehold
properties
2020
£m
Leasehold
properties
2019
£m
61.5
2.9
0.1
(0.5)
(0.6)
63.4
8.1
8.9
(0.4)
(0.2)
16.4
47.0
53.7
9.5
–
–
(1.7)
61.5
–
8.3
–
(0.2)
8.1
53.4
Clarkson PLC | 2020 Annual Report
153
OverviewCorporate governanceFinancial statementsStrategic reportOther information
13 Intangible assets
31 December 2020
Cost
At 1 January 2020
Additions
Foreign exchange differences
At 31 December 2020
Accumulated amortisation and impairment
At 1 January 2020
Charged during the year
Impairment
Foreign exchange differences
At 31 December 2020
Net book value at 31 December 2020
31 December 2019
Cost
At 1 January 2019
Additions
Foreign exchange differences
At 31 December 2019
Accumulated amortisation and impairment
At 1 January 2019
Charged during the year
Impairment
Foreign exchange differences
At 31 December 2019
Net book value at 31 December 2019
Goodwill
£m
Development
costs
£m
Other
intangible
assets
£m
288.2
0.5
(1.3)
287.4
59.9
–
60.6
0.1
120.6
166.8
10.1
6.3
–
16.4
0.3
0.5
–
–
0.8
15.6
30.3
0.7
(0.1)
30.9
30.2
0.3
–
(0.1)
30.4
0.5
Goodwill
£m
Development
costs
£m
Other
intangible
assets
£m
299.4
0.3
(11.5)
288.2
12.4
–
47.5
–
59.9
228.3
5.4
4.7
–
10.1
–
0.3
–
–
0.3
9.8
31.1
–
(0.8)
30.3
30.1
1.1
–
(1.0)
30.2
0.1
Total
£m
328.6
7.5
(1.4)
334.7
90.4
0.8
60.6
–
151.8
182.9
Total
£m
335.9
5.0
(12.3)
328.6
42.5
1.4
47.5
(1.0)
90.4
238.2
In 2020 the Group made acquisitions, which are detailed below, resulting in goodwill of £0.5m (2019: £0.3m). The total consideration
was £1.1m (2019: £0.3m), of which £nil (2019: £0.2m) is deferred.
Development costs are amortised based on their estimated useful life, which will not exceed five years, when ready for use.
In 2020, the other intangible asset additions of £0.7m relate to the forward order book and customer relationships in relation
to an acquisition made in the year.
All 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.
Acquisitions
On 1 February 2020, the Group acquired 100% of the share capital of Madrid-based shipbroker Martankers I, S.L.U.,
which subsequently changed its name to Clarksons Martankers, S.L.U.
The acquisition provides an established opening for Clarksons in Spain and will help the Group gain share in the bulk chemicals
and gas markets, strengthening our global market-leading position.
Cash consideration of £1.1m was paid on the acquisition date.
The goodwill of £0.5m is attributable to the acquired team and the synergies that will arise as part of the acquisition.
None of the goodwill recognised is expected to be deductible for income tax purposes.
154 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 13 Intangible assets continued
In addition, a further £0.1m will be payable in cash to key employees contingent on them remaining in employment for four years.
An additional sum up to £1.4m will also be payable in four years subject to the same service conditions and Martankers achieving
certain earnings targets over the four years. For both of the above, the cost will be charged to the income statement over the
service period. For the year ended 31 December 2020, this cost was £0.1m.
The following table summarises the consideration paid, the fair value of the assets acquired and the liabilities assumed relating
to the acquisition:
Recognised amounts of identifiable assets acquired and liabilities assumed:
Intangible assets
Right-of-use assets
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Income tax payable
Lease liability
Deferred tax liability
Total liabilities
Total identifiable net assets
Goodwill
Total consideration paid in cash
Total
£m
0.7
0.1
0.3
0.7
1.8
(0.8)
(0.1)
(0.1)
(0.2)
(1.2)
0.6
0.5
1.1
The revenue included in the consolidated income statement since 1 February 2020 contributed by Martankers was £1.3m.
Martankers contributed profit after taxation of £0.2m over the same period.
Had Martankers been consolidated from 1 January 2020, the consolidated income statement would show revenue of £358.4m
and profit before taxation and exceptional items and acquisition related costs of £44.7m. This information is not necessarily
indicative of the 2020 results of the combined Group had the purchases actually been made at the beginning of the period
presented, or indicative of the future consolidated performance given the nature of the business acquired.
14 Impairment testing of goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to operating division. The project finance
division was split out into a separate CGU from the securities CGU in the second half of the year following a reorganisation of
the securities business.
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*
Project finance*
Port and agency services
Research services
* The 2019 comparatives have been split out as per the CGU change in 2020, referenced above.
The movement in the aggregate carrying value is analysed in more detail in note 13.
2020
£m
12.0
1.8
10.7
12.9
2.7
46.4
47.1
14.1
12.9
2.9
3.3
166.8
2019
£m
12.0
1.8
10.7
12.4
2.7
46.6
65.3
57.7
12.9
2.9
3.3
228.3
Clarkson PLC | 2020 Annual Report
155
OverviewCorporate governanceFinancial statementsStrategic reportOther information
14 Impairment testing of goodwill continued
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 10.5% (2019: 9.8%), port and agency services is 10.5%
(2019: 9.8%), research services is 10.5% (2019: 9.8%) and for securities and project finance is 11.0% (2019: 9.3%). 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 projections are based on financial budgets and strategic plans approved by the Board, extrapolated
over a five-year period. These assume a level of revenue and profits which 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% (2019: 1.7%) across all CGUs.
The results of the Directors’ review of goodwill indicate remaining headroom for all CGUs other than offshore broking and
securities. There are no reasonably possible changes in assumptions for all CGUs other than offshore broking and securities
that could give rise to the recoverable amount of the CGU being lower than the carrying amount.
Recognising the continued challenging trading conditions in the offshore broking and securities markets, the Directors have
revised the estimate of future cash flows expected from these CGUs. Following these revisions, an impairment loss has been
recognised, shown as an exceptional item (note 5), as follows:
Reportable
segment
Broking
Financial
2020
2019
Goodwill
impairment
£m
Recoverable
amount
(value-in-use)
£m
Discount rate
%
Goodwill
impairment
£m
Recoverable
amount
(value-in-use)
£m
Discount rate
%
17.5
43.1
60.6
52.6
20.5
73.1
10.5
11.0
13.0
34.5
47.5
71.1
78.5
149.6
9.8
9.3
CGU
Offshore broking
Securities*
At 31 December
* 2019 includes project finance.
The recoverable amount continues to be subject to sensitivities. An increase in the discount rate of 0.5% would decrease
value-in-use by £3.0m for offshore broking and £0.7m for securities. An increase in long-term growth rate to 2.0% would increase
value-in-use by £2.3m for offshore broking and £0.6m for securities. A decrease in pre-tax cash flows of 5% would decrease
value-in-use by £2.5m for offshore broking and £0.9m for securities.
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.
15 Trade and other receivables
Non-current
Other receivables
Foreign currency contracts
Current
Trade receivables
Other receivables
Foreign currency contracts
Prepayments
Contract assets
156 Clarkson PLC | 2020 Annual Report
2020
£m
1.1
2.0
3.1
60.1
7.8
2.6
4.7
1.4
76.6
2019
£m
1.3
0.8
2.1
62.3
6.1
–
4.7
3.9
77.0
Notes to the consolidated financial statements continued 15 Trade and other receivables continued
Trade receivables are non-interest bearing and are generally on terms payable within 90 days. As at 31 December 2020, the
allowance for impairment of trade receivables was £12.3m (2019: £14.2m). The allowance is based on experience and ongoing
market information about the creditworthiness of specific counterparties and expected credit losses in respect of the
remaining balances.
The Group has unconditional rights to consideration in respect of trade receivables, except for £1.4m (2019: £0.9m) which relates
to amounts invoiced in respect of subscriptions where revenue is recognised over time and the right to payment is conditional on
satisfying this performance obligation. These amounts are deferred as revenue and included within the contract liability balance.
See note 20.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared
credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of invoices over a
period of 36 months before 1 January 2020 and the corresponding historical credit losses experienced within this period. These
are then adjusted, if necessary, to reflect current and forward-looking information, such as the general economic condition of the
market in which the counterparty operates.
The following table shows the exposure to credit risk and expected credit losses of trade receivables as at 31 December:
0 – 3 months
3 – 12 months
Over 12 months
Expected loss
rate
2.5%
30.4%
100.0%
Gross carrying
amount
£m
52.7
12.5
7.2
72.4
2020
Loss
allowance
£m
1.3
3.8
7.2
12.3
Expected loss
rate
2.9%
26.6%
100.0%
Gross carrying
amount
£m
54.5
12.8
9.2
76.5
2019
Loss
allowance
£m
1.6
3.4
9.2
14.2
Movements in the loss allowance for trade receivables were as follows:
At 1 January
Release of loss allowance
Receivables written off during the year as uncollectible
Increase in loss allowance
Foreign exchange differences
At 31 December
2020
£m
14.2
(7.2)
(3.0)
8.7
(0.4)
12.3
2019
£m
14.4
(6.1)
(2.1)
8.6
(0.6)
14.2
Included within the movements in the loss allowance 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. The other classes within trade and
other receivables do not include any impaired items.
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
US dollar
Sterling
Norwegian krone
Other currencies
2020
£m
42.6
11.1
4.7
1.7
60.1
2019
£m
43.9
11.5
4.6
2.3
62.3
Clarkson PLC | 2020 Annual Report
157
OverviewCorporate governanceFinancial statementsStrategic reportOther information
16 Investments
Non-current
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Current
Cash on deposit
Financial assets at fair value through profit or loss
2020
£m
1.2
1.7
2.9
22.8
8.3
31.1
2019
£m
1.0
3.8
4.8
2.5
13.1
15.6
The financial asset at fair value through other comprehensive income represents an investment in CargoMetrics Technologies
LLC. The non-current financial assets at fair value through profit or loss relate to equity and other investments. The Group held
deposits totalling £22.8m (2019: £2.5m) with maturity periods greater than three months. Current financial assets at fair value
through profit or loss relate to convertible bonds in the Financial segment.
17 Inventories
Finished goods
2020
£m
1.3
2019
£m
1.1
The cost of inventories recognised as an expense and included in cost of sales amounted to £8.2m (2019: £8.8m).
18 Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
2020
£m
172.4
1.0
173.4
2019
£m
173.4
2.3
175.7
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 £173.4m (2019: £175.7m).
Included in cash at bank and in hand is £4.1m (2019: £2.0m) of restricted funds relating to employee taxes and other commitments.
19 Interest-bearing loans and borrowings
Current
Bank loans
Non-current
Bank loans
2020
£m
–
2019
£m
1.2
0.1
0.1
The current bank loans were in relation to the funding of the convertible bonds business within the Financial segment with interest
being charged at LIBOR plus 0.4% per annum. These have been repaid during the year.
Non-current bank loans are due for repayment by the end of 2024. Interest is being charged between 3.29% and 4.75% per annum.
158 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 20 Trade and other payables
Current
Trade payables
Other payables
Other tax and social security
Deferred consideration
Foreign currency contracts
Accruals
Deferred income
Contract liabilities
Non-current
Other payables
Included in accruals are bonuses which will be paid out subsequent to the year-end.
Trade payables and other payables are non-interest bearing and are normally settled on demand.
21 Lease liabilities
Current
Lease liabilities
Non-current
Lease liabilities
2020
£m
17.0
10.1
6.8
0.1
–
119.6
0.1
6.9
160.6
2.7
2.7
2020
£m
8.4
2019
£m
17.0
13.9
4.7
0.2
0.1
109.1
0.1
6.2
151.3
2.4
2.4
2019
£m
8.7
47.7
53.7
A maturity analysis of undiscounted lease liability payments is included within note 28.
Included within lease liabilities are £13.6m (2019: £14.2m) of leases where payments are linked to an index. The liabilities in relation
to these leases are only adjusted as and when the change in rental cash flows takes effect.
22 Provisions
Current
At 1 January
Arising during the year
At 31 December
Non-current
At 1 January
Utilised during the year
At 31 December
2020
£m
0.3
0.2
0.5
1.5
–
1.5
2019
£m
0.2
0.1
0.3
1.6
(0.1)
1.5
Provisions have been recognised for the dilapidation of various leasehold premises which will be utilised on cessation of the lease
and for certain employee benefits.
Clarkson PLC | 2020 Annual Report
159
OverviewCorporate governanceFinancial statementsStrategic reportOther information
23 Share-based payment plans
Expense arising from equity-settled share-based payment transactions
2020
£m
1.4
2019
£m
1.1
The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans
during 2020 or 2019.
Share options
Long-term incentive awards
Details of the long-term incentive awards are included in the Directors’ remuneration report on page 120. Awards made to the
Directors are given in the Directors’ remuneration report on page 113. The fair value of these awards was valued using a Monte
Carlo valuation model.
ShareSave scheme
The ShareSave scheme (or local equivalent) enables eligible employees to acquire options to purchase ordinary shares in the
Company at a discount. To participate in the scheme, the employees are required to save a set amount each month, up to a
maximum of £500 per month, for a period of 24–36 months, depending on their jurisdiction. Under the terms of the scheme, at the
end of the savings period the employees are entitled to purchase shares using their savings at a price of 15–20% (depending on
jurisdiction) below the market price at grant date. Only employees that remain in service at the end of the savings period and make
the required savings from their monthly salary for the savings period will become entitled to purchase the shares. Employees who
cease their employment, do not save the required amount from their monthly salary, or elect not to exercise their option to
purchase shares will be refunded their full savings. The fair value of these awards was 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:
Long-term incentive awards1
2016 ShareSave2
2017 ShareSave3
2018 ShareSave4
2019 ShareSave5
2020 ShareSave6
Outstanding at
1 January
2020
154,977
4,413
61,618
77,486
215,066
–
513,560
Granted
in year
56,210
–
–
–
–
131,008
187,218
Lapsed
in year
(50,261)
–
(3,293)
(10,790)
(25,456)
(1,907)
(91,707)
Exercised
in year
(5,748)
(4,413)
(22,687)
(1,422)
(840)
–
(35,110)
Outstanding at
31 December
2020
155,178
–
35,638
65,274
188,770
129,101
573,961
Exercisable at
31 December
2020
31,083
–
35,638
–
–
–
66,721
Weighted
average
contractual
life
Years
8.00
–
0.24
1.33
2.25
3.29
The range of exercise prices for outstanding share options are: 1 £nil, 2 £17.19, 3 £22.50, 4 £22.12, 5 £18.30–£20.74, 6 £19.28–£19.87.
The weighted average exercise price for each movement in share options are as follows:
Long-term incentive awards
ShareSave
Total
Outstanding at
1 January
2020
£
–
19.90
13.90
Granted
in year
£
–
19.29
13.50
Lapsed
in year
£
–
19.75
8.93
Exercised
in year
£
–
21.56
18.03
Outstanding at
31 December
2020
£
–
19.61
14.31
Exercisable at
31 December
2020
£
–
22.50
12.02
The weighted average share price at the date of exercise was £26.01.
160 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 23 Share-based payment plans continued
The following table illustrates the number of, and movements in, share options for the previous year:
Long-term incentive awards1
2016 ShareSave2
2017 ShareSave3
2018 ShareSave4
2019 ShareSave5
Outstanding at
1 January
2019
145,377
50,652
87,054
162,334
–
445,417
Granted
in year
57,033
–
–
–
215,754
272,787
Lapsed
in year
(47,433)
(521)
(25,436)
(84,848)
(688)
(158,926)
Exercised
in year
–
(45,718)
–
–
–
(45,718)
Outstanding at
31 December
2019
154,977
4,413
61,618
77,486
215,066
513,560
Exercisable at
31 December
2019
16,302
–
–
–
–
16,302
Weighted
average
contractual life
Years
8.25
0.33
1.25
2.33
3.33
The range of exercise prices for outstanding share options are: 1 £nil, 2 £17.19, 3 £22.50, 4 £22.12, 5 £18.30–£20.74.
The weighted average exercise price for each movement in share options are as follows:
Long-term incentive awards
ShareSave2
Total
Outstanding at
1 January
2019
£
–
21.40
14.41
Granted
in year
£
–
18.41
14.56
Lapsed
in year
£
–
22.16
15.55
Exercised
in year
£
–
17.19
17.19
Outstanding at
31 December
2019
£
–
19.90
13.90
Exercisable at
31 December
2019
£
–
–
–
The weighted average share price at the date of exercise was £27.77.
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 (%)
2020
23.00–24.00
0.00–19.87
2.0–3.3
-0.1–0.0
0.0–3.4
36.1–36.5
2019
23.70–24.45
0.00–20.74
2.0–3.3
0.3–0.8
0.0–3.1
34.0–34.5
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, 285,941 shares (2019: 316,338 shares) at a weighted average price of £23.57 (2019: £23.67) were awarded
to employees in settlement of 2019 (2018) cash bonuses. There was no expense in 2020 nor 2019 as a result of these awards.
The fair value of these 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 2020 charge in relation to such awards is £nil (2019: £0.3m).
Clarkson PLC | 2020 Annual Report
161
OverviewCorporate governanceFinancial statementsStrategic reportOther information
24 Employee benefits
The Group operates three final salary defined benefit pension schemes, being the Clarkson PLC scheme, the Plowrights scheme
and the Stewarts scheme, all within the UK. The schemes are all registered as occupational pension schemes with HMRC and are
subject to UK legislation and oversight from the Pensions Regulator. These 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. Responsibility
for governance of each scheme lies with the respective board of trustees in accordance with the rules applicable to that scheme.
Currently each board of trustees includes a representative of the relevant principal employer. 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. UK legislation requires that pension schemes are funded prudently and must adhere to the statutory funding
objective. Triennial valuations for all the schemes have been prepared as detailed below.
The valuation of the Clarkson PLC scheme showed a pension surplus on an ongoing basis of £7.3m (106%) as at 31 March 2019.
Following the 2016 valuation, Clarkson PLC and the Trustees had agreed to cease funding with effect from 1 October 2016.
The valuation of the Plowrights scheme showed a pension surplus on an ongoing basis of £2.1m (105%) as at 31 March 2019.
Clarkson PLC and the Trustees agreed to cease funding with effect from 1 December 2019. The expenses for the scheme will
be met from the surplus assets.
The valuation of the Stewarts scheme showed a pension deficit on an ongoing basis of £0.9m as at 1 September 2018.
Clarksons Platou (Offshore) Limited has agreed with the Trustees to pay contributions to remove the deficit over a period ending
31 October 2021 at the rate of £0.39m per annum which will include scheme expenses.
For the Clarkson PLC scheme, an allowance for GMP Equalisation in transfers out has been included in the 2020 disclosures.
The increase in liabilities was treated as a past service cost and recognised immediately in the 2020 defined benefit cost.
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. During 2018, the largest two schemes de-risked by replacing their equity holdings
with less volatile investments.
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.
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 to these schemes.
The Group incurs no material expenses in the provision of post-retirement benefits other than pensions.
162 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 24 Employee benefits continued
The following information relates to the sum of the three separate schemes.
Recognised in the balance sheet
Fair value of schemes’ assets
Present value of funded defined benefit obligations
Effect of asset ceiling in relation to the Plowrights scheme
Net benefit asset recognised in the balance sheet
2020
£m
204.5
(188.6)
15.9
(3.9)
12.0
2019
£m
194.7
(179.9)
14.8
(3.8)
11.0
The net benefit asset disclosed above is the combined total of the three schemes. The Clarkson PLC scheme has a surplus
of £18.1m (2019: £15.5m), the Plowrights scheme has a surplus of £nil (2019: £nil) and the Stewarts scheme has a deficit of £6.1m
(2019: £4.5m). As there is no right of set-off between the schemes, the benefit asset of £18.1m (2019: £15.5m) is disclosed
separately on the balance sheet from the benefit liability of £6.1m (2019: £4.5m).
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 and, in the event of wind up, excess surplus is refundable
to the Group. There are no such future economic benefits in respect of the Plowrights scheme and therefore the surplus of £3.9m
(2019: £3.8m) cannot be recognised.
A deferred tax asset on the benefit liability amounting to £1.2m (2019: £0.7m) and a deferred tax liability on the benefit asset
of £3.4m (2019: £2.6m) is shown in note 7.
Recognised in the income statement
Recognised in other finance revenue – pensions:
Expected return on schemes’ assets
Interest cost on benefit obligation and asset ceiling
Recognised in administrative expenses:
Past service costs
Scheme administrative expenses
Net benefit (charge)/income 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 loss on defined benefit obligations
Actuarial gain/(loss) recognised in the statement of comprehensive income
Tax (charge)/credit on actuarial gain/(loss)
Effect of asset ceiling in relation to the Plowrights scheme
Tax charge on asset ceiling
Net actuarial gain/(loss) on employee benefit obligations
2020
£m
3.9
(3.7)
(0.4)
(0.3)
(0.5)
2020
£m
22.2
(3.9)
18.3
(17.2)
1.1
(0.1)
–
–
1.0
2019
£m
5.2
(4.8)
–
(0.3)
0.1
2019
£m
20.5
(5.2)
15.3
(22.1)
(6.8)
1.1
3.2
(0.6)
(3.1)
Cumulative amount of actuarial losses recognised in the statement of comprehensive income
(1.7)
(2.8)
Schemes’ assets
Equities*
Government bonds*
Corporate bonds*
Investment funds*
Cash and other assets
* Based on quoted market prices.
%
2.8
39.4
32.8
24.2
0.8
100.0
2020
£m
5.7
80.5
67.1
49.5
1.7
204.5
%
2.8
39.7
32.9
23.7
0.9
100.0
2019
£m
5.5
77.3
64.0
46.2
1.7
194.7
Clarkson PLC | 2020 Annual Report
163
OverviewCorporate governanceFinancial statementsStrategic reportOther information
24 Employee benefits continued
Net defined benefit asset
Changes in the fair value of the net defined benefit asset are as follows:
31 December 2020
At 1 January 2020
Expected return on assets
Interest costs
Employer contributions
Administrative expenses
Past service costs
Benefits paid
Actuarial (loss)/gain
At 31 December 2020
31 December 2019
At 1 January 2019
Expected return on assets
Interest costs
Employer contributions
Administrative expenses
Benefits paid
Actuarial (loss)/gain
At 31 December 2019
Present value
of obligation
£m
(179.9)
–
(3.6)
–
–
(0.4)
12.5
(17.2)
(188.6)
Present value
of obligation
£m
(168.0)
–
(4.6)
–
–
14.8
(22.1)
(179.9)
Fair value of
plan assets
£m
194.7
3.9
–
0.4
(0.3)
–
(12.5)
18.3
204.5
Fair value of
plan assets
£m
188.8
5.2
–
0.5
(0.3)
(14.8)
15.3
194.7
Total
£m
14.8
3.9
(3.6)
0.4
(0.3)
(0.4)
–
1.1
15.9
Total
£m
20.8
5.2
(4.6)
0.5
(0.3)
–
(6.8)
14.8
Impact of
asset ceiling
£m
(3.8)
–
(0.1)
–
–
–
–
–
(3.9)
Impact of
asset ceiling
£m
(6.8)
–
(0.2)
–
–
–
3.2
(3.8)
Total
£m
11.0
3.9
(3.7)
0.4
(0.3)
(0.4)
–
1.1
12.0
Total
£m
14.0
5.2
(4.8)
0.5
(0.3)
–
(3.6)
11.0
The Group expects, based on the valuations and funding requirements including expenses, to contribute £0.3m to its defined
benefit pension schemes in 2021 (2019 for 2020: £0.4m).
The principal weighted average valuation assumptions are as follows:
Rate of increase in pensions in payment
Price inflation (RPI)
Price inflation (CPI)
Discount rate for scheme liabilities
2020
%
3.0
3.0
2.0
1.4
2019
%
3.1
3.0
2.2
2.1
The mortality assumptions used to assess the defined benefit obligations at 31 December 2020 and 31 December 2019 are based
on the ‘SAPS’ standard mortality tables (SP3A for the Clarkson PLC scheme with a scheme specific adjustment of 90%, SP3A
Light for the Plowrights scheme and SP2A for the Stewarts scheme). These tables have been adjusted to allow for anticipated
future improvements in life expectancy using the standard projection model published in 2020 (31 December 2019: model
published in 2019). 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
– male
– female
Pensioners retiring in 20 years’ time – male
– female
Additional years
2020
2019
21.8–23.4
23.7–25.1
23.1–24.6
25.3–26.6
21.8–23.4
23.7–25.1
23.2–24.6
25.2–26.5
164 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued
24 Employee benefits continued
Experience adjustments
Experience gain on schemes’ assets
Gain/(loss) on schemes’ liabilities due to changes in demographic assumptions
Loss on schemes’ liabilities due to changes in financial assumptions
Loss on schemes’ liabilities due to experience adjustments
Gain on asset ceiling
Actuarial gain/(loss)
Income tax on actuarial gain/(loss)
Actuarial gain/(loss) – net of tax
2020
£m
18.3
0.4
(17.6)
–
–
1.1
(0.1)
1.0
2019
£m
15.3
(1.6)
(18.5)
(2.1)
3.3
(3.6)
0.5
(3.1)
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 during the current and previous years. The sensitivities have been calculated
using the same methodology as the main calculations. The weighted average duration of the defined obligation is 19 years.
Discount rate for scheme liabilities
Price inflation (RPI)
2020
Change in
defined
benefit
obligation
-4.1%
4.3%
3.4%
-3.2%
Change in
assumption
+0.25%
-0.25%
+0.25%
-0.25%
2019
Change in
defined
benefit
obligation
-3.9%
4.2%
3.2%
-3.0%
Change in
assumption
+0.25%
-0.25%
+0.25%
-0.25%
An increase of one year in the assumed life expectancy for both males and females would increase the benefit obligation by 4.6%
(2019: 4.2%).
25 Share capital
Ordinary shares of 25p each, issued and fully paid:
At 1 January
Additions
At 31 December
Number of
shares
30,370,776
29,117
30,399,893
2020
£m
7.6
–
7.6
Number of
shares
30,325,058
45,718
30,370,776
2019
£m
7.6
–
7.6
During the year, the Company issued 29,117 shares in relation to the ShareSave scheme. The difference between the exercise price
of £22.50 and the nominal value of £0.25 was taken to the share premium account, see note 26.
Shares held by employee trusts
The trustees have waived their right to dividends on the unallocated shares held in the employee share trust.
Clarkson PLC | 2020 Annual Report
165
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Share
premium
£m
31.5
ESOP
reserve
£m
–
Employee
benefits
reserve
£m
3.0
Capital
redemption
reserve
£m
2.0
Hedging
reserve
£m
0.6
Merger
reserve
£m
110.4
Currency
translation
reserve
£m
10.9
Total
£m
158.4
(2.9)
(2.9)
–
–
–
–
–
0.6
–
–
–
–
32.1
–
–
–
–
–
–
–
0.5
(1.2)
(0.7)
(0.7)
–
–
–
–
–
–
1.4
(0.6)
–
0.8
3.8
–
–
–
–
–
–
–
–
–
–
2.0
–
1.5
1.6
3.1
–
–
–
–
–
–
3.7
–
–
–
–
(54.7)
–
–
–
–
–
55.7
–
–
(2.9)
–
–
–
–
–
–
8.0
Share
premium
£m
30.7
ESOP
reserve
£m
(2.8)
Employee
benefits
reserve
£m
3.6
Capital
redemption
reserve
£m
2.0
Hedging
reserve
£m
(1.0)
Merger
reserve
£m
177.5
Currency
translation
reserve
£m
27.1
1.5
1.6
0.2
(54.7)
0.6
1.4
(0.1)
(1.2)
0.1
104.6
Total
£m
237.1
–
–
–
–
–
0.8
–
–
–
–
31.5
–
–
–
–
–
–
–
1.0
1.8
2.8
–
–
–
–
–
–
–
1.1
(1.7)
–
(0.6)
3.0
–
–
–
–
–
–
–
–
–
–
2.0
–
0.7
0.9
1.6
–
–
–
–
–
–
0.6
–
–
–
–
(67.1)
–
–
–
–
–
110.4
(16.2)
(16.2)
–
–
(16.2)
–
–
–
–
–
–
10.9
0.7
0.9
(14.6)
(67.1)
0.8
1.1
(0.7)
1.8
2.2
158.4
26 Other reserves
31 December 2020
At 1 January 2020
Other comprehensive income/(loss):
Foreign exchange differences on
retranslation of foreign operations
Foreign currency hedges recycled
to profit or loss – net of tax
Foreign currency hedge
revaluations – net of tax
Total other comprehensive income/
(loss)
Transfer to profit and loss
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 2020
31 December 2019
At 1 January 2019
Other comprehensive income/(loss):
Foreign exchange differences on
retranslation of foreign operations
Foreign currency hedges recycled
to profit or loss – net of tax
Foreign currency hedge
revaluations – net of tax
Total other comprehensive income/
(loss)
Transfer to profit and loss
Share issues
Employee share schemes:
Share-based payments expense
Transfer to profit and loss
on vesting
Net ESOP shares utilised
Total employee share schemes
At 31 December 2019
166 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 26 Other reserves continued
Nature and purpose of other reserves
ESOP reserve
The ESOP reserve in the Group represents 27,982 shares (2019: 2,228 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
2020 was £0.8m (2019: £0.1m). At 31 December 2020 none of these shares were under option (2019: none). During the year the
share purchase trusts acquired 371,200 shares at a weighted average price of £24.94 (2019: 246,902 shares at £24.08), offset with
shares utilised to settle employee incentives, see note 23 for further details of share incentive schemes. For the purposes of the
cash flow statement, the above are netted within the movements in bonus accrual.
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 23.
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. Realised hedges are recycled to the statement of comprehensive income. Movements are net of tax.
Further details on hedging are shown in note 28.
Merger reserve
This comprises the premium on the share placing in November 2014 and the shares issued in February 2015 as part of the
acquisition of Clarksons Platou AS (formerly RS Platou ASA). No share premium is recorded in the financial statements, through
the operation of the merger relief provisions of the Companies Act 2006. In 2020 and 2019, the Company impaired its investment
in relation to this acquisition. As a result, corresponding transfers were made out of this reserve to retained earnings. The transfer
from merger reserve is different from the impairment charge recognised in the Group due to the relative carrying values recorded
in the Group and Parent Company accounts.
Currency translation reserve
The currency translation reserve represents the currency translation differences arising from the consolidation of foreign operations.
27 Financial commitments and contingencies
Contingencies
The Group has given no financial commitments to suppliers (2019: none).
The Group has given no guarantees (2019: 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.
28 Financial risk management objectives and policies
The Group’s principal financial liabilities comprise trade and other payables and lease liabilities. 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 2020 and 2019, 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
reviews and agrees policies for managing each of these risks which are summarised below.
Clarkson PLC | 2020 Annual Report
167
OverviewCorporate governanceFinancial statementsStrategic reportOther information
28 Financial risk management objectives and policies continued
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 15; 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.
Trade receivables are written off when there is no reasonable expectation of recovery, such as the commencement of legal
proceedings, financial difficulties of the counterparty, or a significant time period has elapsed since the debt was due. Impairment
losses on trade receivables are presented within revenue. Subsequent recoveries of amounts previously written off are credited
against the same line item.
Other financial assets are written off when there is no reasonable expectation of recovery, such as the commencement of
legal proceedings, financial difficulties of the counterparty, or a significant time period has elapsed since the debt was due.
With respect to credit risk arising from cash and cash equivalents and deposits held as current investments, these are considered
low risk as 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.
Liquidity risk
The Group seeks to ensure that sufficient liquidity exists in the right locations to meet the Group’s financial obligations and related
funding requirements in a timely manner, including dividends and taxes, and provide funds for capital expenditure and investment
opportunities as they arise. Cash and cash equivalent balances are held with the primary objective of capital security and
availability, with a secondary objective of generating returns. Funding requirements are monitored by the Group’s Finance function
with cash flow forecasting performed at both an entity and Group level. As a normal part of its operations, the Group could face
liquidity issues if it experienced a sustained reduction in profitability, problems in the collection of debts from clients or unplanned
expenditure.
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December based on contractual
undiscounted payments.
Less than
3 months
£m
–
27.1
–
9.1
(9.7)
2.8
29.3
Less than
3 months
£m
–
30.9
–
9.4
(9.4)
2.8
33.7
3 to 12
months
£m
–
–
0.1
31.1
(33.1)
7.6
5.7
3 to 12
months
£m
1.2
–
0.2
20.7
(20.6)
8.5
10.0
1 to 5
years
£m
0.1
2.7
–
32.8
(34.8)
36.7
37.5
1 to 5
years
£m
0.1
2.4
–
14.9
(15.7)
37.8
39.5
5 to 10
years
£m
–
–
–
–
–
17.5
17.5
5 to 10
years
£m
–
–
–
–
–
24.1
24.1
Total
£m
0.1
29.8
0.1
73.0
(77.6)
64.6
90.0
Total
£m
1.3
33.3
0.2
45.0
(45.7)
73.2
107.3
31 December 2020
Interest-bearing loans and borrowings
Trade and other payables
Deferred consideration
Gross settled foreign currency contracts:
Outflow
Inflow
Lease liabilities
31 December 2019
Interest-bearing loans and borrowings
Trade and other payables
Deferred consideration
Gross settled foreign currency contracts:
Outflow
Inflow
Lease liabilities
168 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 28 Financial risk management objectives and policies continued
The following table shows the total liabilities arising from financing activities.
At 1 January
Cash flows
Other non-cash movements
Foreign exchange adjustment
At 31 December
Interest-
bearing
loans and
borrowings
£m
1.2
(1.2)
–
0.1
0.1
Lease
liabilities
£m
62.3
(8.9)
2.9
(0.2)
56.1
2020
Total
£m
63.5
(10.1)
2.9
(0.1)
56.2
Interest-
bearing
loans and
borrowings
£m
–
1.2
–
0.1
1.3
Lease
liabilities
£m
63.0
(8.6)
9.5
(1.5)
62.4
2019
Total
£m
63.0
(7.4)
9.5
(1.4)
63.7
Other non-cash movements include the net impact of additions, modifications and terminations during the year.
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, or 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. US dollars are also sold on the spot market to meet local currency expenditure requirements.
Rates of exchange, non-sterling balances and asset exposures by currency are continually assessed.
The Group is most sensitive to changes in the US dollar exchange rates. The following table demonstrates the sensitivity to
a reasonably possible change in this rate, with all other variables held constant, of the Group’s profit before taxation and equity.
2020
2019
Strengthening/
(weakening) in
rate
5%
(5%)
5%
(5%)
Effect on
profit before
taxation
£m
1.0
(0.9)
1.2
(1.1)
Effect on
equity
£m
(2.1)
1.9
(0.7)
0.7
Derivative financial instruments
It is the Group’s policy to cover or hedge a proportion of its future transactional US dollar revenues in the UK with foreign currency
contracts. The strategy is to protect the Group against a significant weakening of the US dollar. See note 4 for total revenues
generated in the UK which are predominantly US dollar denominated. The Group considers the hedge to be effective if each
forward contract is settled with the bank and the US dollars sold represent collections from previous months’ invoicing. Should
the hedging ratio be greater than one (that is, contracted sales are greater than US dollar revenues) then the hedge is deemed
to be ineffective. Where these are designated and documented as hedging instruments in the context of IFRS 9 and
are demonstrated to be effective, mark-to-market gains and losses are recognised directly in equity (see note 26). These are
transferred to the income statement, within revenue, upon receipt of cash and conversion to sterling of the underlying item being
hedged. All of the contracts settled during the year were effective. There were no contracts deemed ineffective during the year.
The fair value of foreign currency contracts at 31 December are as follows:
Foreign currency contracts
2020
£m
4.6
Assets
2019
£m
0.8
2020
£m
–
Liabilities
2019
£m
0.1
At 31 December 2020 the Group had forward contracts of US$55m due for settlement in 2021 at an average rate of US$1.28/£1
and US$45m due for settlement in 2022 at an average rate of US$1.29/£1 (2019: US$40m due for settlement in 2020 at an average
rate of US$1.33/£1, US$15m due for settlement in 2021 at an average rate of US$1.27/£1 and US$5m due for settlement in 2022
at an average rate of US$1.27/£1).
Clarkson PLC | 2020 Annual Report
169
OverviewCorporate governanceFinancial statementsStrategic reportOther information
28 Financial risk management objectives and policies continued
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 2020 or 31 December 2019.
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 an 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.
29 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
Investments at fair value through profit or loss
(FVPL)
Investments at fair value through other
comprehensive income (FVOCI)
Foreign currency contracts
Liabilities
Other payables
Foreign currency contracts
2020
£m
0.5
–
–
0.5
2.8
–
2.8
Level 1
2019
£m
0.4
–
–
0.4
6.5
–
6.5
2020
£m
9.0
–
4.6
13.6
–
–
–
Level 2
2019
£m
13.7
–
0.8
14.5
–
0.1
0.1
2020
£m
–
1.7
–
1.7
–
–
–
Level 3
2019
£m
–
3.8
–
3.8
–
–
–
FVPL investments are valued based on quoted prices in an active market (Level 1) or based on quoted prices for similar assets
(Level 2); FVOCI investments are categorised as level 3 as the shares are not listed on an exchange and there were no recent
observable arm’s length transactions in the shares. 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. Other payables relates to short sales of equity investments and are valued using quoted prices in an active market.
170 Clarkson PLC | 2020 Annual Report
Notes to the consolidated financial statements continued 29 Financial instruments continued
The classification of financial assets and financial liabilities at 31 December is as follows:
Financial assets
Hedging
instruments
£m
Fair value
through
profit or
loss
£m
Fair value
through
other
compre-
hensive
income
£m
–
–
–
4.6
–
4.6
–
9.5
–
–
–
9.5
–
1.7
–
–
–
1.7
Other
receivables
Investments
Trade
receivables
Foreign
currency
contracts
Cash
and cash
equivalents
Financial liabilities
Interest-bearing loans and borrowings
Trade payables
Other payables
Foreign currency contracts
Deferred consideration
Lease liabilities
2020
Total
£m
8.9
34.0
60.1
Amortised
cost
£m
8.9
22.8
60.1
–
4.6
173.4
265.2
173.4
281.0
Fair value
through
profit or
loss
£m
–
–
2.8
–
–
–
2.8
Amortised
cost
£m
0.1
17.0
10.0
–
0.1
56.1
83.3
Fair value
through
other
compre-
hensive
income
£m
–
3.8
–
–
–
3.8
Fair value
through
profit or
loss
£m
–
14.1
–
–
–
14.1
2019
Total
£m
7.4
20.4
62.3
Amortised
cost
£m
7.4
2.5
62.3
–
0.8
175.7
247.9
175.7
266.6
Hedging
instruments
£m
–
–
–
0.1
–
–
0.1
Fair value
through
profit or
loss
£m
–
–
6.5
–
–
–
6.5
Amortised
cost
£m
1.3
17.0
9.8
–
0.2
62.4
90.7
2019
Total
£m
1.3
17.0
16.3
0.1
0.2
62.4
97.3
Hedging
instruments
£m
–
–
–
0.8
–
0.8
2020
Total
£m
0.1
17.0
12.8
–
0.1
56.1
86.1
The carrying value of current and non-current financial assets and liabilities is deemed to equate to the fair value at 31 December
2020 and 2019.
Net losses on financial assets at fair value through profit or loss amounted to £0.4m (2019: £0.1m). Net losses on financial assets
at fair value through other comprehensive income were £2.1m (2019: £nil). Net losses on financial liabilities at fair value through profit
or loss amounted to £0.3m (2019: £0.2m). Gains/(losses) on trade receivables (measured at amortised cost) are shown in note 15.
30 Related party transactions
As in 2019, 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
2020
£m
4.5
0.1
0.4
5.0
2019
£m
4.6
0.1
0.3
5.0
Full remuneration details are provided in the Directors’ remuneration report on pages 106 to 121.
As mentioned in the Board of Directors on page 84, Sue Harris is a Non-Executive Director of Schroder & Co. Limited and
Chair of the Audit and Risk Committee of the Wealth Management Division, who are investment managers of the defined
benefit section of the Clarkson PLC pension scheme. During the year, Jeff Woyda was appointed to the Board of Trustees
of The Clarkson Foundation.
Clarkson PLC | 2020 Annual Report
171
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Parent Company balance sheet
as at 31 December
Non-current assets
Property, plant and equipment
Investment properties
Right-of-use assets
Investments in subsidiaries
Employee benefits
Deferred tax assets
Current assets
Trade and other receivables
Income tax receivable
Investments
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Income tax payable
Net current assets
Non-current liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Net assets
Capital and reserves
Share capital
Other reserves
Retained earnings
Total equity
Notes
C
D
E
F
P
G
H
I
J
K
L
L
M
N
Q
R
2020
£m
12.6
0.3
19.9
168.0
18.1
1.6
220.5
18.7
0.6
20.5
0.1
39.9
(13.1)
(2.9)
–
(16.0)
23.9
(24.0)
(1.0)
(4.4)
(29.4)
215.0
7.6
93.6
113.8
215.0
2019
£m
12.9
0.3
21.9
224.2
15.5
1.8
276.6
17.5
–
0.5
0.1
18.1
(11.4)
(2.7)
(0.4)
(14.5)
3.6
(26.6)
(1.0)
(3.3)
(30.9)
249.3
7.6
146.5
95.2
249.3
The Company’s loss for the year was £14.3m (2019: £43.2m loss).
The financial statements on pages 172 to 191 were approved by the Board on 5 March 2021, and signed on its behalf by:
Sir Bill Thomas
Chair
Jeff Woyda
Chief Financial Officer & Chief Operating Officer
Registered number: 1190238
172 Clarkson PLC | 2020 Annual Report
Parent Company statement of changes in equity
for the year ended 31 December
Balance at 1 January 2020
Loss for the year
Other comprehensive income:
Actuarial gain on employee benefit schemes – net of tax
Total comprehensive loss for the year
Transfer from merger reserve
Transactions with owners:
Share issues
Employee share schemes
Dividend paid
Total transactions with owners
Balance at 31 December 2020
Balance at 1 January 2019
Impact of change in accounting policies
Adjusted balance at 1 January 2019
Loss for the year
Other comprehensive loss:
Actuarial loss on employee benefit schemes – net of tax
Total comprehensive loss for the year
Transfer from merger reserve
Transactions with owners:
Share issues
Employee share schemes
Tax on other employee benefits
Dividend paid
Total transactions with owners
Balance at 31 December 2019
Notes
P
R
B
Notes
P
R
B
Attributable to equity holders of the Parent Company
Share
capital
£m
7.6
–
Other
reserves
£m
146.5
–
Retained
earnings
£m
95.2
(14.3)
Total equity
£m
249.3
(14.3)
–
–
–
–
–
–
–
7.6
–
–
(54.7)
0.6
1.2
–
1.8
93.6
2.3
(12.0)
54.7
–
(0.4)
(23.7)
(24.1)
113.8
2.3
(12.0)
–
0.6
0.8
(23.7)
(22.3)
215.0
Attributable to equity holders of the Parent Company
Share
capital
£m
7.6
–
7.6
–
–
–
–
–
–
–
–
–
7.6
Other
reserves
£m
212.4
–
212.4
–
–
–
(67.1)
0.8
0.4
–
–
1.2
146.5
Retained
earnings
£m
99.1
(2.6)
96.5
(43.2)
Total equity
£m
319.1
(2.6)
316.5
(43.2)
(2.5)
(45.7)
67.1
–
–
0.3
(23.0)
(22.7)
95.2
(2.5)
(45.7)
–
0.8
0.4
0.3
(23.0)
(21.5)
249.3
Clarkson PLC | 2020 Annual Report
173
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Parent Company cash flow statement
for the year ended 31 December
Cash flows from operating activities
Loss before taxation
Adjustments for:
Notes
2020
£m
2019
£m
(15.2)
(43.1)
(0.3)
4.3
0.4
56.2
0.6
(48.2)
0.8
(0.3)
(0.4)
1.1
0.6
(0.4)
0.5
0.1
0.1
(1.7)
(20.0)
48.1
26.5
(0.8)
(23.7)
(2.7)
0.6
(26.6)
–
0.1
–
0.1
–
4.3
0.3
67.1
0.1
(30.7)
0.9
(0.5)
0.8
(5.6)
1.8
(4.6)
–
(4.6)
0.2
(0.3)
–
30.5
30.4
(0.9)
(23.0)
(2.7)
0.8
(25.8)
–
0.1
–
0.1
Foreign exchange differences
Depreciation
Share-based payment expense
Impairment of investment in subsidiaries
Difference between pension contributions paid and amount recognised in the income
statement
Finance revenue
Finance costs
Other finance revenue – pensions
(Increase)/decrease in trade and other receivables
Increase/(decrease) in bonus accrual
Increase in trade and other payables
C, D, E
F
C
I
B
J
Cash utilised 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 to current investments (cash on deposit)
Dividends received from investments
Net cash flow from investing activities
Cash flows from financing activities
Interest paid
Dividend paid
Payments of lease liabilities
Proceeds from shares issued
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Net foreign exchange differences
Cash and cash equivalents at 31 December
174 Clarkson PLC | 2020 Annual Report
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.
Statement of compliance
The financial statements of Clarkson PLC have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 (IFRS) and the applicable legal requirements of the Companies Act 2006.
The 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 loss for the Parent Company for the year was £14.3m
(2019: £43.2m loss).
Changes in accounting policy and disclosures
As stated in note 2 to the consolidated financial statements, there were no new standards, amendments or interpretations, effective
for the first time for the financial year beginning on or after 1 January 2020, that had a material impact on the Parent Company.
Critical accounting judgements and estimates
Impairment of investments in subsidiaries
Determining whether investments in subsidiaries are impaired requires an estimation of the value-in-use of the subsidiary.
The value-in-use calculation requires estimation of future cash flows expected to arise for the subsidiary, the selection of suitable
discount rates and the estimation of future growth rates. As determining such assumptions is inherently uncertain and subject to
future factors, there is the potential these may differ in subsequent periods and therefore materially change the conclusions reached.
Impairments of amounts owed by Group companies
The provision for impairment of amounts owed by Group companies represents management’s best estimate of expected credit
losses to arise on the receivable at the balance sheet date. Determining the amount of the provision involves a degree of judgement
and there is a risk this estimate may materially change in the following year due to change in circumstances of the subsidiary.
Investments in subsidiaries
The Parent Company recognises its investments in subsidiaries at cost less provision for impairment. The Parent Company
assesses at each reporting date whether there is an indication that an investment may be impaired. If any such indication exists,
the Parent Company estimates the investment’s recoverable amount. An investment’s recoverable amount is the higher of its fair
value less costs to sell and its value-in-use and is determined for an individual investment. Where the carrying amount of an
investment exceeds its recoverable amount, the investment 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 investment.
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 Parent Company 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 investment’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the
investment 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 investment in prior years.
Share-based payment transactions
The fair value of the compensation given to subsidiaries in respect of share-based payments is recognised as a capital
contribution over the vesting period, reduced by any payments received from subsidiaries.
B Dividends
Declared and paid during the year:
Interim dividend for 2020 of 53p per share (final dividend for 2018: 51p per share)
Interim dividend for 2020 of 25p per share (2019: 25p per share)
Dividend paid
Proposed for approval at the AGM (not recognised as a liability at 31 December):
Final dividend for 2020 proposed of 54p per share (2019: 53p per share)
2020
£m
16.1
7.6
23.7
2019
£m
15.4
7.6
23.0
16.4
16.1
Clarkson PLC | 2020 Annual Report
175
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
C Property, plant and equipment
31 December 2020
Original cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated depreciation
At 1 January 2020
Charged during the year
At 31 December 2020
Net book value at 31 December 2020
31 December 2019
Original cost
At 1 January 2019
Additions
At 31 December 2019
Accumulated depreciation
At 1 January 2019
Charged during the year
At 31 December 2019
Net book value at 31 December 2019
D Investment properties
Cost
At 1 January and 31 December
Accumulated depreciation
At 1 January and 31 December
Net book value at 31 December
Freehold
and long
leasehold
properties
£m
Leasehold
improvements
£m
Office
furniture and
equipment
£m
1.9
–
1.9
0.5
–
0.5
1.4
14.4
–
14.4
4.5
1.0
5.5
8.9
7.3
1.7
9.0
5.7
1.0
6.7
2.3
Freehold
and long
leasehold
properties
£m
Leasehold
improvements
£m
Office
furniture and
equipment
£m
1.9
–
1.9
0.4
0.1
0.5
1.4
14.4
–
14.4
3.5
1.0
4.5
9.9
7.0
0.3
7.3
4.7
1.0
5.7
1.6
2020
£m
0.6
0.3
0.3
Total
£m
23.6
1.7
25.3
10.7
2.0
12.7
12.6
Total
£m
23.3
0.3
23.6
8.6
2.1
10.7
12.9
2019
£m
0.6
0.3
0.3
The fair value of the investment property at 31 December 2020 was £1.0m (2019: £1.0m). 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.
176 Clarkson PLC | 2020 Annual Report
E Right-of-use assets
Cost
At 1 January
Additions
At 31 December
Accumulated depreciation
At 1 January
Charged during the year
At 31 December
Net book value at 31 December
F Investments in subsidiaries
Cost
At 1 January
Additions
Impairment
At 31 December
2020
£m
24.1
0.3
24.4
2.2
2.3
4.5
19.9
2020
£m
2019
£m
24.1
–
24.1
–
2.2
2.2
21.9
2019
£m
224.2
–
(56.2)
168.0
291.1
0.2
(67.1)
224.2
Due to the continued challenging trading conditions in the offshore broking and securities markets, the Company has revised the
recoverable amount of its investment in Clarksons Platou AS, resulting in an impairment of £54.7m (2019: £67.1m). The recoverable
amount is subject to sensitivities. An increase in the pre-tax discount rate of 0.5% would decrease value-in-use by £6.5m and
an increase in long-term growth rate, from 1.7% to 2.0%, would increase value-in-use by £5.2m. A decrease in pre-tax cash flows
of 5% would decrease value-in-use by £6.3m. A further impairment was taken in Clarksons Platou Italia Srl of £1.5m. In 2019,
the addition related to a transfer from a subsidiary.
G Deferred tax assets
Employee benefits
Other temporary differences
– other employee benefits
2020
£m
1.3
0.3
1.6
2019
£m
1.5
0.3
1.8
Included in the above are deferred tax assets of £0.7m (2019: £1.0m) which are expected to be utilised 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.
H Trade and other receivables
Prepayments and accrued income
Owed by Group companies
2020
£m
0.7
18.0
18.7
2019
£m
0.7
16.8
17.5
The Company has no trade receivables (2019: none). In 2019, included in amounts owed by Group companies was a loan of
£3.8m with no fixed maturity date. Interest was being charged at LIBOR plus 3.0% per annum. All other amounts owed by Group
companies are payable on demand with no interest being charged. As at 31 December 2020, the Company calculated the
expected credit loss of amounts owed by Group companies to be £0.1m (2019: £0.1m). Further details of related party receivables
are included in note V.
I Investments
Cash on deposit
2020
£m
20.5
2019
£m
0.5
The Company held £20.5m (2019: £0.5m) in a deposit with a 95-day notice period. This deposit is held with an A-rated financial
institution.
Clarkson PLC | 2020 Annual Report
177
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
J Cash and cash equivalents
Cash at bank and in hand
2020
£m
0.1
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 (2019: £0.1m).
K Trade and other payables
Owed to Group companies
Accruals
Deferred income
2020
£m
1.5
10.6
1.0
13.1
2019
£m
0.1
2019
£m
1.9
8.8
0.7
11.4
All amounts owed to Group companies are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Further details of related party payables are included in note V.
L Lease liabilities
Current
Lease liabilities
Non-current
Lease liabilities
M Provisions
Non-current
At 1 January and 31 December
2020
£m
2.9
2019
£m
2.7
24.0
26.6
2020
£m
1.0
2019
£m
1.0
Provisions have been recognised for the dilapidation of various leasehold premises which will be utilised on cessation of the lease.
A maturity analysis of undiscounted lease liability payments is included within note T. None of the leases contain extension
options and rentals are not linked to any index.
N Deferred tax liabilities
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.
O Share-based payment plans
Expense arising from equity-settled share-based payment transactions
2020
£m
3.4
1.0
4.4
2020
£m
0.4
2019
£m
2.6
0.7
3.3
2019
£m
0.3
For more information on the Parent Company share-based payment plans, see note 23 of the consolidated financial statements.
178 Clarkson PLC | 2020 Annual Report
P Employee benefits
The Group operates two final salary defined benefit pension schemes, being the Clarkson PLC scheme and the Plowrights
scheme, both within the UK. The schemes are all registered as occupational pension schemes with HMRC and are subject to
UK legislation and oversight from the Pensions Regulator. These 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. Responsibility for governance
of each scheme lies with the respective board of trustees in accordance with the rules applicable to that scheme. Currently each
board of trustees includes a representative of the relevant principal employer. 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. UK legislation requires that pension schemes are funded prudently and must adhere to the statutory funding
objective. Triennial valuations for both schemes have been prepared as detailed below.
The valuation of the Clarkson PLC scheme showed a pension surplus on an ongoing basis of £7.3m (106%) as at 31 March 2019.
Following the 2016 valuation, Clarkson PLC and the Trustees had agreed to cease funding with effect from 1 October 2016.
The valuation of the Plowrights scheme showed a pension surplus on an ongoing basis of £2.1m (105%) as at 31 March 2019.
Clarkson PLC and the Trustees agreed to cease funding with effect from 1 December 2019. The expenses for the scheme will
be met from the surplus assets.
For the Clarkson PLC scheme, an allowance for GMP Equalisation in transfers out has been included in the 2020 disclosures.
The increase in liabilities was treated as a past service cost and recognised immediately in the 2020 defined benefit cost.
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. During 2018, the two schemes de-risked by replacing their equity holdings
with less volatile investments.
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.
Other pension arrangements
The Company operates a defined contribution pension scheme. Where required, the Company also makes contributions
to this scheme.
The Company incurs no material expenses in the provision of post-retirement benefits other than pensions.
The following information relates to the sum of the two separate schemes.
Clarkson PLC | 2020 Annual Report
179
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
P Employee benefits continued
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 in relation to the Plowrights scheme
Net benefit asset recognised in the balance sheet
2020
£m
191.6
(169.6)
22.0
(3.9)
18.1
2019
£m
182.4
(163.1)
19.3
(3.8)
15.5
The net benefit asset disclosed above is the combined total of the two schemes. The Clarkson PLC scheme has a surplus
of £18.1m (2019: £15.5m) and the Plowrights scheme has a surplus of £nil (2019: £nil).
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 and, in the event of wind up, excess surplus is refundable
to the Group. There are no such future economic benefits in respect of the Plowrights scheme and therefore the surplus of £3.9m
(2019: £3.8m) cannot be recognised.
A deferred tax liability on the benefit asset of £3.4m (2019: £2.6m) is shown in note N.
Recognised in the income statement
Recognised in other finance revenue – pensions:
Expected return on schemes’ assets
Interest cost on benefit obligation and asset ceiling
Recognised in administrative expenses:
Past service cost
Scheme administrative expenses
Net benefit (charge)/income 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 loss on defined benefit obligations
Actuarial gain/(loss) recognised in the statement of comprehensive income
Tax (charge)/credit on actuarial gains/(losses)
Effect of asset ceiling in relation to the Plowrights scheme
Tax charge on asset ceiling
Net actuarial gain/(loss) on employee benefit obligations
Cumulative amount of actuarial gains/(losses)
recognised in the statement of comprehensive income
Schemes’ assets
Government bonds*
Corporate bonds*
Investment funds*
Cash and other assets
* Based on quoted market prices.
180 Clarkson PLC | 2020 Annual Report
2020
£m
3.6
(3.3)
(0.4)
(0.2)
(0.3)
2020
£m
21.5
(3.6)
17.9
(14.9)
3.0
(0.7)
–
–
2.3
2019
£m
4.9
(4.4)
–
(0.3)
0.2
2019
£m
18.6
(4.9)
13.7
(20.0)
(6.3)
1.1
3.3
(0.6)
(2.5)
%
41.3
33.0
24.8
0.9
100.0
2020
£m
79.1
63.3
47.5
1.7
191.6
1.2
(1.8)
%
41.9
33.0
24.3
0.8
100.0
2019
£m
76.2
60.3
44.4
1.5
182.4
P Employee benefits continued
Net defined benefit asset
Changes in the fair value of the net defined benefit asset are as follows:
31 December 2020
At 1 January 2020
Expected return on assets
Interest costs
Administration expenses
Past service costs
Benefits paid
Actuarial (loss)/gain
At 31 December 2020
31 December 2019
At 1 January 2019
Expected return on assets
Interest costs
Employer contributions
Administration expenses
Benefits paid
Actuarial (loss)/gain
At 31 December 2019
Present value
of obligation
£m
(163.1)
–
Fair value of
plan assets
£m
182.4
3.6
(3.3)
–
(0.4)
12.1
(14.9)
(169.6)
–
(0.2)
–
(12.1)
17.9
191.6
Present value
of obligation
£m
(153.5)
–
Fair value of
plan assets
£m
178.5
4.9
(4.1)
–
–
14.5
(20.0)
(163.1)
–
0.1
(0.3)
(14.5)
13.7
182.4
Total
£m
19.3
3.6
(3.3)
(0.2)
(0.4)
–
3.0
22.0
Total
£m
25.0
4.9
(4.1)
0.1
(0.3)
–
(6.3)
19.3
Impact of
asset ceiling
£m
(3.8)
–
(0.1)
–
–
–
–
(3.9)
Impact of
asset ceiling
£m
(6.8)
–
(0.3)
–
–
–
3.3
(3.8)
Total
£m
15.5
3.6
(3.4)
(0.2)
(0.4)
–
3.0
18.1
Total
£m
18.2
4.9
(4.4)
0.1
(0.3)
–
(3.0)
15.5
The Company expects, based on the valuations and funding requirements including expenses, to contribute £nil to its defined
benefit pension schemes in 2021 (2019 for 2020: £nil).
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
2020
%
2.8
3.0
2.0
1.4
2019
%
3.0
3.0
2.2
2.1
The mortality assumptions used to assess the defined benefit obligations at 31 December 2020 and 31 December 2019 are based
on the ‘SAPS’ standard mortality tables (SP3A for the Clarkson PLC scheme with a scheme specific adjustment of 90% and SP3A
Light for the Plowrights scheme). These tables have been adjusted to allow for anticipated future improvements in life expectancy
using the standard projection model published in 2020 (31 December 2019: model published in 2019). 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
Additional years
2020
2019
22.9–23.4
24.8–25.1
24.2–24.6
26.2–26.6
22.9–23.4
24.8–25.1
24.3–24.6
26.2–26.5
Clarkson PLC | 2020 Annual Report
181
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
P Employee benefits continued
Experience adjustments
Experience gain on schemes’ assets
Gain/(loss) on schemes’ liabilities due to changes in demographic assumptions
Loss on schemes’ liabilities due to changes in financial assumptions
Loss on schemes’ liabilities due to experience adjustments
Gain on asset ceiling
Actuarial gain/(loss)
Income tax on actuarial gain/(loss)
Actuarial gain/(loss) – net of tax
2020
£m
17.9
0.3
(15.2)
–
–
3.0
(0.7)
2.3
2019
£m
13.7
(1.7)
(16.2)
(2.1)
3.3
(3.0)
0.5
(2.5)
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 during the current and previous years. The sensitivities have been calculated
using the same methodology as the main calculations. The weighted average duration of the defined obligation is 19 years.
Discount rate for scheme liabilities
Price inflation (RPI)
2020
Change in
defined
benefit
obligation
-4.0%
+4.3%
+3.8%
-3.6%
Change in
assumption
+0.25%
-0.25%
+0.25%
-0.25%
2019
Change in
defined
benefit
obligation
-3.8%
+4.1%
+3.5%
-3.3%
Change in
assumption
+0.25%
-0.25%
+0.25%
-0.25%
An increase of one year in the assumed life expectancy for both males and females would increase the defined benefit obligation
by 4.5% (2019: 4.2%).
Q Share capital
Ordinary shares of 25p each, issued and fully paid:
At 1 January
Additions
At 31 December
Number of
shares
30,370,776
29,117
30,399,893
2020
£m
7.6
–
7.6
Number of
shares
30,325,058
45,718
30,370,776
2019
£m
7.6
–
7.6
During the year, the Company issued 29,117 shares in relation to the ShareSave scheme. The difference between the exercise
price of £22.50 and the nominal value of £0.25 was taken to the share premium account, see note R.
182 Clarkson PLC | 2020 Annual Report
R Other reserves
31 December 2020
At 1 January 2020
Total other comprehensive loss
Transfer to profit and loss
Share issues
Employee share schemes:
Share-based payments expense
Transfer to profit and loss on vesting
Total employee share schemes
At 31 December 2020
31 December 2019
At 1 January 2019
Total other comprehensive loss
Transfer to profit and loss
Share issues
Employee share schemes:
Share-based payments expense
Transfer to profit and loss on vesting
Total employee share schemes
At 31 December 2019
Share
premium
£m
31.5
–
–
0.6
–
–
–
32.1
Share
premium
£m
30.7
–
–
0.8
–
–
–
31.5
Employee
benefits
reserve
£m
2.6
–
–
–
Capital
redemption
reserve
£m
2.0
–
–
–
1.3
(0.1)
1.2
3.8
–
–
–
2.0
Employee
benefits
reserve
£m
2.2
–
–
–
Capital
redemption
reserve
£m
2.0
–
–
–
0.9
(0.5)
0.4
2.6
–
–
–
2.0
Merger
reserve
£m
110.4
–
(54.7)
–
–
–
–
55.7
Merger
reserve
£m
177.5
–
(67.1)
–
–
–
–
110.4
Total
£m
146.5
–
(54.7)
0.6
1.3
(0.1)
1.2
93.6
Total
£m
212.4
–
(67.1)
0.8
0.9
(0.5)
0.4
146.5
Nature and purpose of other reserves
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
acquisition of Clarksons Platou AS (formerly RS Platou ASA). No share premium is recorded in the financial statements, through
the operation of the merger relief provisions of the Companies Act 2006. In 2020 and 2019, the Company impaired its investment
in this entity. As a result, corresponding transfers were made out of this reserve to retained earnings.
Clarkson PLC | 2020 Annual Report
183
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
S Financial commitments and contingencies
Contingencies
The Company has given no financial commitments to suppliers (2019: none).
The Company has given no guarantees (2019: 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.
T Financial risk management objectives and policies
The Company’s principal financial liabilities comprise loans from Group companies and lease liabilities. The Company has various
financial assets such as current asset investments, loans to Group companies and cash and cash equivalents, 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.
31 December 2020
Lease liabilities
31 December 2019
Lease liabilities
Less than
3 months
£m
0.9
Less than
3 months
£m
0.9
The following table shows the total liabilities arising from financing activities.
At 1 January
Cash flows
Other non-cash movements
At 31 December
3 to 12
months
£m
2.7
3 to 12
months
£m
2.7
2020
Lease
liabilities
£m
29.3
(2.7)
0.3
56.1
1 to 5
years
£m
14.2
1 to 5
years
£m
14.2
2020
Total
£m
29.3
(2.7)
0.3
56.2
5 to 10
years
£m
12.3
5 to 10
years
£m
15.9
2019
Lease
liabilities
£m
32.0
(2.7)
–
62.4
Total
£m
30.1
Total
£m
33.7
2019
Total
£m
32.0
(2.7)
–
63.7
Other non-cash movements include the net impact of additions, modifications and terminations during the year.
Capital management
For information on the Parent Company capital management objectives, policies and processes, see note 28 of the consolidated
financial statements.
184 Clarkson PLC | 2020 Annual Report
U 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
Owed to Group companies
Lease liabilities
Amortised
cost
£m
18.0
20.5
0.1
38.6
Amortised
cost
£m
1.5
26.9
28.4
2020
Total
£m
18.0
20.5
0.1
38.6
2020
Total
£m
1.5
26.9
28.4
Amortised
cost
£m
16.8
0.5
0.1
17.4
Amortised
cost
£m
1.9
29.3
31.2
V Related party transactions
During the year, the Company entered into transactions, in the ordinary course of business, with related parties.
Transactions with subsidiaries during the year were as follows:
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
Deferred income
There were no terms or conditions attached to these balances.
2020
£m
2.7
6.3
48.1
–
2020
£m
18.0
(1.5)
(1.0)
2019
Total
£m
16.8
0.5
0.1
17.4
2019
Total
£m
1.9
29.3
31.2
2019
£m
2.9
5.4
30.5
0.2
2019
£m
16.8
(1.9)
(0.7)
Compensation of key management personnel (including Directors)
There were no key management personnel in the Company apart from the Clarkson PLC Directors. Details of their compensation
are set out in note 30 to the consolidated financial statements.
As mentioned in the Board of Directors on page 84, Sue Harris is a Non-Executive Director of Schroder & Co. Limited and
Chair of the Audit and Risk Committee of the Wealth Management Division, who are investment managers of the defined
benefit section of the Clarkson PLC pension scheme. During the year, Jeff Woyda was appointed to the Board of Trustees
of The Clarkson Foundation.
Clarkson PLC | 2020 Annual Report
185
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
W Subsidiaries
The Parent Company had the following subsidiaries at 31 December 2020. All shares in subsidiary companies are ordinary share
capital, unless otherwise stated.
Country of
incorporation
South Africa 23 Halifax Street, Bryanston,
Registered office address
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
100
Principal activity
Non-trading
Non-trading
Non-trading
Dormant
Holding company
Holding company
Dormant
Dormant
Holding company
Dormant
Non-trading
Dormant
Dormant
Shipbroking
Holding company
Non-trading
Provision of ship agency
and port services
Non-trading
Holding company
Provision of research
services and products
relating to shipping and
offshore
Dormant
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Company name
Afromar Properties
(PTY) Limited
Bonus Plus
Investments Limited
Boxton Holding AS
Calypso Shipping
Investments Limited
Clarkson Australia
Holdings Pty Ltd
Clarkson Capital
Limited
Clarkson Dry Cargo
Limited
Clarkson Ewings
Limited
Clarkson Holdings
Limited
Clarkson iQ Limited
Hong Kong
Norway
United
Kingdom
Australia
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
Hong Kong
Clarkson Logistics (HK)
Limited
United
Clarkson Logistics
Kingdom
Limited
United
Clarkson Market
Analysis Limited
Kingdom
Clarkson Morocco sarl Morocco
Clarkson Overseas
Shipbroking Limited
Clarkson Port Services
Ireland Limited
Clarkson Port Services
Limited
Clarkson Property
Holdings Limited
Clarkson Research
Holdings Limited
Clarkson Research
Services Limited
United
Kingdom
Ireland
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
Johannesburg, 2191, South Africa
3209-14, Sun Hung Kai Centre, 30
Harbour Way, Wanchai, Hong Kong
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Level 9, 16 St Georges Terrace, Perth
WA 6000, Australia
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
27-45 Lincoln Building Ground Floor,
Great Victoria Street, Belfast, Northern
Ireland, BT2 7SL, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
3209-14, Sun Hung Kai Centre, 30
Harbour Way, Wanchai, Hong Kong
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
8, Rue Ali Abderrazzak, 3è étage,
Casablanca, 20000, Morocco
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Paramount Court, Corrig Road, Dublin
18, D18 R9C7, Ireland
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
100
100
100
100
Clarkson Sale and
Purchase Limited
United
Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
186 Clarkson PLC | 2020 Annual Report
W Subsidiaries continued
Country of
incorporation
United
Kingdom
United
Kingdom
Egypt
United
Kingdom
United
States
India
United
Kingdom
United
Kingdom
Spain
United
Kingdom
Australia
Brazil
Denmark
Marshall
Islands
Italy
Korea,
Republic of
Company name
Clarkson Shipbrokers
Limited
Clarkson Shipbroking
Group Limited
Clarkson Shipping
Agency
Clarkson Shipping
Investments Limited
Clarkson Shipping
Services Acquisition
USA LLC
Clarkson Shipping
Services India Private
Limited
Clarkson Tankers
Limited
Clarkson Valuations
Limited
Clarksons Martankers,
S.L.U.
Clarksons Platou
(Africa) Limited
Clarksons Platou
(Australia) Pty Limited
Clarksons Platou
(Brasil) Ltda
Clarksons Platou
(Denmark) ApS
Clarksons Platou
(Hellas) Ltd**
Clarksons Platou (Italia)
Srl In Liquidazione
Clarksons Platou
(Korea) Company
Limited
Clarksons Platou
(Nederland) B.V.
Clarksons Platou
(Offshore) Limited
Clarksons Platou
(South Africa) (Pty)
Limited
Clarksons Platou
(Sweden) AB
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
100
Registered office address
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Tower B, 2nd Floor, 2 El Hegaz Street,
Roxi, Heliopolis, Cairo, Egypt
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
1333 West Loop South, Suite 1525,
Houston TX 77027, United States
100
100
Principal activity
Dormant
Holding company
48*
Shipping and maritime
agency services
Dormant
100
Dormant
507-508 The Address, 1 Golf Course
Road, Sector 56, Gurgaon, 122011, India
100
Shipbroking
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Paseo del Pintor Rosales, 38, 28008
Madrid, Spain
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Level 9, 16 St Georges Terrace, Perth
WA 6000, Australia
Avenida Rio Branco, 89-1601, Centro,
Rio de Janeiro, 20040-004, Brazil
Strandvejen 70, 2., 2900, Hellerup,
Denmark
Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, MH 96960,
Marshall Islands
Piazza Rossetti Raffaele 3A, 16129,
Genoa, Italy
#602, 6F Shin-A, 50, Seosomun-ro
11-gil, Jung-gu, Seoul, Republic of
Korea
100
100
100
100
100
100
100
100
Dormant
Provision of valuation
services to the shipping
industry
Shipbroking
Shipbroking
Shipbroking
Shipbroking
Shipbroking
Shipbroking
100
Shipbroking
100
Shipbroking
100
100
100
Shipbroking
Shipbroking
Shipbroking
Netherlands De Coopvaert, 6th Floor, Blaak 522,
3011 TA, Rotterdam, Netherlands
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
United
Kingdom
South Africa 23 Halifax Street, Bryanston,
Johannesburg, 2191, South Africa
Sweden
Dragarbrunnsgatan 55, 753 20, Uppsala,
Sweden
100
Shipbroking
Although the holding represents <50%, a subsidiary of the Group is the beneficial owner of 100% of the share capital and voting rights.
*
** Has a branch in Greece.
Clarkson PLC | 2020 Annual Report
187
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
W Subsidiaries continued
Company name
Clarksons Platou (USA)
Inc.
Clarksons Platou AS
Clarksons Platou Asia
Limited*
Clarksons Platou Asia
Pte. Limited
Clarksons Platou
Commodities USA LLC
Country of
incorporation
United
States
Norway
Hong Kong
Singapore
United
States
Clarksons Platou
DMCC
United Arab
Emirates
Clarksons Platou Drift
AS
Clarksons Platou
Futures Limited ***
Clarksons Platou
GmbH
Clarksons Platou Japan
K.K.
Norway
United
Kingdom
Germany
Japan
Clarksons Platou Legal
Services Limited
United
Kingdom
Registered office address
251 Little Falls Drive, Wilmington, New
Castle County, DE 19808, United States
Munkedamsveien 62C, 0270 Oslo,
Norway
3209-14, Sun Hung Kai Centre, 30
Harbour Way, Wanchai, Hong Kong
50 Raffles Place, #32-01 Singapore
Land Tower, 048623 Singapore
Delaware: 251 Little Falls Drive,
Wilmington, DE 19808, United States
Texas: 211 East 7th Street, Suite 620,
Austin, TX 78701-3218, United States
Unit No: AU-14-A, Gold Tower (AU),
JLT-PH1-I3A, Jumeirah Lakes Towers,
Dubai, United Arab Emirates
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Johannisbollwerk 20, 5.fl, Hamburg
20459, Germany
Otemachi Financial City South Tower
15th Floor, 1-9-7 Otemachi, Chiyoda-ku,
Tokyo, 100-0004, Japan
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Clarksons Platou
Offshore (Asia) Pte.
Limited
Clarksons Platou
Project Development
AS
Clarksons Platou
Project Finance AS
Clarksons Platou
Project Finance
Shipping AS
Clarksons Platou
Project Sales AS
Singapore
12 Marina View, #29-01 Asia Square,
Tower 2, 018961 Singapore
Norway
Norway
Norway
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
100
100
100
100
100
Principal activity
Holding company
Shipbroking
Shipbroking
Shipbroking
Introducing broker for
LPG swaps
100
Shipbroking
100
24.81**
100
100
100
100
50.01
50.01
50.02
31.01**
24.81**
Provision of property-
related services
Brokerage of shipping-
related derivative
financial instruments
Shipbroking
Shipbroking
Provision of legal
services to the shipping
industry
Shipbroking
Real estate project
management
Shipping and offshore
project syndication
Shipping and offshore
project syndication
Equity placements for
shipping, offshore and
real estate projects and
secondary trading of
project ownership
Property holding
company
Provision of property-
related services
Clarksons Platou
Property Limited
Clarksons Platou
Property Management
AS
Clarksons Platou Real
Estate AS
United
Kingdom
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Munkedamsveien 62C, 0270 Oslo,
Norway
100
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
31.01**
Real estate project
syndication
Has a branch in China.
*
** Although the holding represents <50%, the Parent Company controls the entity through controlling interests in subsidiary companies.
*** Has branches in Singapore and Switzerland.
188 Clarkson PLC | 2020 Annual Report
W Subsidiaries continued
Company name
Clarksons Platou Real
Estate Investment
Management AS
Country of
incorporation
Norway
Registered office address
Munkedamsveien 62C, 0270 Oslo,
Norway
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
50.01
Clarksons Platou
Securities (Canada),
Inc.
Canada
44 Chipman Hill, Suite 1000, Saint John
NB E2L 2A9, Canada
Clarksons Platou
Securities AS
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Clarksons Platou
Securities, Inc.
United
States
280 Park Ave, New York, NY 10017,
United States
Clarkson Shipbroking
(Shanghai) Co. Limited
China
Room 111 Building 3 No.170, Hua Shan
Road, Hongkou District, Shanghai,
200082, China
100
100
100
100
Principal activity
Management of
companies and funds
that invest in private
companies investing in
real estate and
associated businesses
Equity and fixed income
sales and trading,
research and corporate
finance services,
including equity and
debt capital markets
and M&A transactions
Equity and fixed income
sales and trading,
research and corporate
finance services,
including equity and
debt capital markets
and M&A transactions
Equity and fixed income
sales and trading,
research and corporate
finance services,
including equity and
debt capital markets
and M&A transactions
Shipbroking
Clarksons Platou
Shipbroking
(Switzerland) SA
Clarksons Platou
Shipping Services USA
LLC
Clarksons Platou
Structured Asset
Finance Limited
Switzerland Rue de la Fontaine 1, 1204 Geneva,
100
Shipbroking
Switzerland
United
States
211 East 7th Street, Suite 620, Austin,
Texas 78701, United States
100
Shipbroking
United
Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
100
Clarksons Platou
Tankers AS
Coastal Shipping
Limited
Company Event
Management Limited
Diligent Challenger
Limited
Enship Limited
Genchem Holdings
Limited
Norway
United
Kingdom
United
Kingdom
Hong Kong
United
Kingdom
United
Kingdom
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
3209-14, Sun Hung Kai Centre, 30
Harbour Way, Wanchai, Hong Kong
303 King street, Aberdeen, Scotland,
AB24 5AP, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Provision of advice on
finance structuring for
shipping-related
projects
Shipbroking
Dormant
Dormant
Non-trading
Dormant
100
100
100
100
100
100
Holding company
Clarkson PLC | 2020 Annual Report
189
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Notes to the Parent Company financial statements
continued
W Subsidiaries continued
Company name
Gibb Group Ltd
Country of
incorporation
United
Kingdom
Registered office address
271 King Street, Aberdeen, Scotland,
AB24 5AN, United Kingdom
H. Clarkson &
Company Limited
Halcyon Shipping
Limited
J.O. Plowright & Co.
(Holdings) Limited
LevelSeas Limited
LNG Shipping
Solutions Limited
LNG UK Plc
Manfin Consult AS
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
Norway
Marinet (Ship Agencies)
Limited
Maritech Development
Limited
United
Kingdom
United
Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Maritech Holdings
Limited
Maritech Limited
United
Kingdom
United
Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
100
Maritech Services
Limited
United
Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
27-45 Lincoln Building Ground Floor,
Great Victoria Street, Belfast, Northern
Ireland, BT2 7SL, United Kingdom
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
1 Waverley Place, Union Street, St.
Helier, JE4 8SG Jersey
Munkedamsveien 62C, 0270 Oslo,
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Arch. Makarios III, 58, Iris Tower, Floor 8,
Nicosia, 1075, Cyprus
Munkedamsveien 62C, 0270 Oslo,
Norway
Munkedamsveien 62C, 0270 Oslo,
Norway
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Michael F. Ewings
(Shipping) Limited
United
Kingdom
Norwegian Marine
Services AS
Oilfield Publications
Limited
RS Platou Africa
Limited
RS Platou AS
Norway
United
Kingdom
Jersey
Norway
Norway
RS Platou Economic
Research AS
RS Platou Hellas
Limited
RS Platou Offshore AS Norway
Cyprus
RS Platou Shipbrokers
AS
Samuel Stewart & Co.
(London) Limited
Norway
United
Kingdom
190 Clarkson PLC | 2020 Annual Report
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
100
100
100
100
100
100
Principal activity
Supply of MRO, PPE
and safety equipment
for the energy and
industrial sector
Shipbroking
Dormant
Dormant
Dormant
Shipbroking
100
Dormant
50.01
100
100
100
100
100
50.01
100
100
100
100
100
100
100
100
Shipping and offshore
project syndication
Dormant
Development of digital
products for the
shipping industry
Holding company
Support of digital
products and services
for the shipping industry
Sale of digital products
and services to the
shipping industry
Dormant
Shipping and offshore
project syndication
Dormant
Non-trading
Dormant
Dormant
Non-trading
Dormant
Dormant
Dormant
W Subsidiaries continued
Company name
Seafix Limited
Shipvalue.net Limited
Small & Co. (Shipping)
Limited
Stewart Offshore
Ghana Limited
Stewart Offshore
Services (Jersey)
Limited
Stewart Offshore
Services Limited
The Stewart Group
Limited
Tokyo Shipping &
Trading, Limited
VAXA Drift AS
Country of
incorporation
United
Kingdom
United
Kingdom
United
Kingdom
Ghana
Jersey
United
Kingdom
United
Kingdom
Hong Kong
Norway
VAXA Group AS
Norway
VAXA Økonomi AS
Norway
VAXA Property AS
Norway
Waterfront Services
Limited
United
Kingdom
Registered office address
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Wesley House, Liberia Road, PO Box
6274, Accra, North Accra, Ghana
1 Waverley Place, Union Street, St.
Helier, JE4 8SG Jersey
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
Commodity Quay, St Katharine Docks,
London, E1W 1BF, United Kingdom
3209-14, Sun Hung Kai Centre, 30
Harbour Way, Wanchai, Hong Kong
c/o Vaxa Property AS, Philip Pedersens
vei 20, Lysaker, 1366, Norway
c/o Vaxa Property AS, Philip Pedersens
vei 20, Lysaker, 1366, Norway
Philip Pedersens vei 20, Lysaker, 1366,
Norway
Philip Pedersens vei 20, Lysaker, 1366,
Norway
27-45 Lincoln Building Ground Floor,
Great Victoria Street, Belfast, Northern
Ireland, BT2 7SL, United Kingdom
Proportion
of shares
held directly
by the Parent
Company (%)
Proportion
of shares
held
by Group
(%)
100
100
100
75
100
100
100
100
12.43*
12.43*
6.23*
12.43*
100
Principal activity
Sale of digital products
and services to the
shipping industry
Dormant
Dormant
Non-trading
Non-trading
Dormant
Dormant
Dormant
Operation cost
management for
property SPV
Holding company
Provision of accounting
and financial advisory
Property management
services
Dormant
No exemptions have been taken in respect of dormant subsidiaries from preparing and filing individual statutory accounts under
s394A of the Companies Act 2006.
* Although the holding represents <50%, the Parent Company controls the entity through controlling interests in subsidiary companies.
Clarkson PLC | 2020 Annual Report
191
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Glossary
Aframax
AHTS
AIS
Bareboat
charter
Board
Bulk cargo
Bunkers
Capesize
(cape)
Cbm
CEO
CFO & COO
Cgt
Chair
Charterer
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.
Automatic Identification System. A tracking
system using transponders and GPS
information to monitor live ship positions.
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.
The Board of Directors of Clarkson PLC.
Unpackaged cargoes such as coal,
ore and grain.
A ship’s fuel.
Bulk ship size range defined by Clarksons
as 100,000 dwt or larger.
Cubic metres. Used as a measurement of
cargo capacity for ships such as gas carriers.
Chief Executive Officer, Andi Case.
Chief Financial Officer & Chief Operating
Officer, Jeff Woyda.
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.
Sir Bill Thomas.
Cargo owner or another person/company
who hires a ship.
ClarkSea
Index
Charter party Transport contract between shipowner
and shipper of goods.
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.
Refined oil products such as naphtha.
Clean
products
CoA
Company
Contract of Affreightment.
Clarkson PLC as a standalone entity,
registered in England and Wales under
company number 1190238.
Containership A cargo ship specifically equipped with cell
Code
COVID-19
CO2
guides for the carriage of containerised cargo.
The UK Corporate Governance Code
(July 2018).
A global pandemic caused by the
SARS-CoV-2 virus, first identified in late 2019.
Carbon dioxide.
192 Clarkson PLC | 2020 Annual Report
Crude oil
CSR
Disclosure
Guidance and
Transparency
Rules (DTR)
Dry (market)
Dry cargo
carrier
DRR
Regulations
Dwt
Unrefined oil.
Corporate Social Responsibility.
Regulations which apply to most larger
companies on the London Stock Exchange,
which implement a number of EU Directives
on transparency, market abuse, accounting
and audit. The Disclosure Guidance and
Transparency Rules are supplementary
to the Listing Rules.
Generic term for the bulk market.
A ship carrying general cargoes or sometimes
bulk cargo.
Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment)
Regulations 2013.
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.
Export Credit Agencies.
Equity Capital Markets.
Exploration and Production.
Engineering, procurement and construction.
Earnings per share.
Energy Saving Technologies.
Environmental, Social and Governance.
Andi Case (CEO) and Jeff Woyda (CFO & COO).
ECA
ECM
E&P
EPC
EPS
ESTs
ESG
Executive
Directors
External audit An independent opinion of the Group and
Fair value
FFA
Financial
Conduct
Authority
(FCA)
Forward order
book (FOB)
Freight rate
Company’s financial statements by an external
firm. PricewaterhouseCoopers LLP is the
Group’s current external auditor.
Fair value is defined as an amount at which
an asset could be exchanged between
knowledgeable and willing parties in an arm’s
length transaction.
Forward Freight Agreement. A cash contract
for differences requiring no physical delivery
based on freight rates on standardised
trade routes.
The FCA regulates the financial services
industry in the UK.
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.
FSRU
FSU
FTSE 250
GHG
Group
GT
GW
Handysize
Handymax
IFRSs
ICE
IMO
IMO2
Independent
Non-
Executive
Director
IP
Kamsarmax
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 floating unit used
for hydrocarbon storage.
The share index consisting of the 101st
to 350th largest companies listed on the
London Stock Exchange main market.
Clarkson PLC has been a member of
the FTSE 250 since 2015.
Greenhouse gas.
Clarkson PLC and its subsidiary undertakings.
Gross Tonnage. A standardised measure of
a ship’s internal volume as defined by the IMO.
Gigawatts. A unit of power or power capacity
equivalent to 1 billion watts.
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 Financial Reporting Standards.
A set of international accounting standards
stating how particular types of transactions
and other events should be reported in
financial statements.
Intercontinental Exchange. A company that
operates financial, commodity and futures
exchanges around the world.
International Maritime Organization. A United
Nations agency devoted to shipping.
A type 2 ship is a chemical tanker intended
to transport chapter 17 products with
appreciably severe environmental and safety
hazards which require significant preventive
measures to preclude an escape of such cargo.
A Director of the Board, not part of the
executive management of the Company, who
is free from any business or other relationship
that could materially conflict with their ability
to exercise independent judgement.
Industrial Production. A measure of the total
industrial output of a given country or region,
including sectors such as manufacturing,
mining and utilities.
A sub-sector of the wider panamax bulk
carrier fleet, defined as vessels with a
maximum LOA of 229m, so able to load at
the Port of Kamsar in Guinea. Typically refers
to vessels in the 80-89,999 dwt size range.
KPIs
LGC
Listing Rules
Liquidity risk
LNG
LPG
LR1
LR2
LSE
MGC
MR
MT
Nm
OECD
OPEC
OSV
Panamax
Parent
Company
PDH
PMI
PPE
Product
tanker
PSV
Key performance indicators.
Large Gas Carrier. Vessel defined by
Clarksons as 45,000-64,999 cbm.
Set of regulations overseen by the UK Listing
Authority (UKLA), which apply to any company
listed on the London Stock Exchange.
The risk of the Group being unable to meet
its cash and collateral obligations without
incurring large losses.
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.
London Stock Exchange. The stock exchange
in the City of London on which Clarkson PLC’s
shares are listed.
Midsize Gas Carrier. Vessel defined
by Clarksons as 20-45,000 cbm.
Medium Range. A product tanker of around
45-55,000 dwt.
Metric tonne (see tonne). A measure equivalent
to 1,000 kg.
Nautical miles. A unit of distance
measurement defined as exactly 1,852 metres.
Organisation for Economic Co-operation
and Development.
Organization of the Petroleum Exporting
Countries.
Offshore Support Vessels. Such as AHTSs
and PSVs. Ships engaged in providing support
to offshore rigs and oil platforms.
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.
Clarkson PLC as a standalone entity,
registered in England and Wales under
company number 1190238.
Propane DeHydrogenation.
Purchasing Managers’ Index. Leading
economic indicators derived from monthly
surveys of private sector companies.
Personal protective equipment.
Tanker that carries refined oil products.
Platform Supply Vessel. Used in supporting
offshore rigs and platforms by delivering
materials to them from onshore.
Clarkson PLC | 2020 Annual Report
193
OverviewCorporate governanceFinancial statementsStrategic reportOther information
UK Listing
Authority
Ultramax
VLCC
VLGC
Voyage
charter
The Financial Conduct Authority as competent
authority for the purposes of Part IV of the UK
Financial Services and Markets Act 2000.
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.
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.
Glossary
continued
S&P
SCFI
Senior
Independent
Director (SID)
SBP
Shipbroker
Spot market
Suezmax
Supramax
TEU
Time charter
Time Charter
Equivalent
(TCE)
Tonne
TSR
Standard & Poor’s 500 Index. An American
stock market index based on the market
capitalisations of 500 large companies having
common stock listed on the NYSE, NASDAQ
or the Cboe BZX Exchange.
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.
Peter Backhouse.
Share-based payments.
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.
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.
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.
Gross freight income less voyage costs
(bunker, port and canal charges), usually
expressed in US$ per day.
Imperial/Metric tonne of 2,240 lbs/1,000 kg
(2,204 lbs).
Total Shareholder Return.
194 Clarkson PLC | 2020 Annual Report
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.
Changes to IFRS have not been retrospectively adjusted.
2020*
£m
358.2
(13.3)
344.9
(298.5)
46.4
44.7
(9.5)
35.2
2019*
£m
363.0
(14.3)
348.7
(298.2)
50.5
49.3
(11.4)
37.9
2018*
£m
337.6
(12.9)
324.7
(279.7)
45.0
45.3
(10.7)
34.6
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
2020
£m
65.9
2019
£m
67.8
2018
£m
22.7
2017
£m
48.0
2016
£m
45.6
2020
£m
290.1
1.3
76.8
31.1
173.4
(177.4)
(66.9)
328.4
2020
Pence
106.0
79.0
2019
£m
349.9
1.1
77.1
15.6
175.7
(170.6)
(68.2)
380.6
2019
Pence
118.8
78.0
2018
£m
354.3
0.8
78.2
9.7
156.5
(143.6)
(21.3)
434.6
2018
Pence
105.2
75.0
2017
£m
355.6
0.7
61.5
5.8
161.7
(140.3)
(21.6)
423.4
2017
Pence
116.8
73.0
2016
£m
357.9
0.7
59.0
29.8
154.0
(172.4)
(22.3)
406.7
2016
Pence
105.2
65.0
Clarkson PLC | 2020 Annual Report
195
OverviewCorporate governanceFinancial statementsStrategic reportOther information
Principal trading offices
United Kingdom
London
Registered office
Commodity Quay
St Katharine Docks
London
E1W 1BF
Contact: Andi Case
Tel: +44 20 7334 0000
Ipswich
Maritime House
19a St. Helen’s Street
Ipswich
IP4 1HE
Contact: David Rumsey
Tel: +44 1473 297 300
Ledbury
Homend House
15 The Homend
Ledbury
HR8 1BN
Contact: Shaun Barrell
Tel: +44 1531 634 561
Aberdeen
303 King Street
Aberdeen
AB24 5AP
Contact: Innes Cameron
Tel: +44 1224 211 500
271 King Street
Aberdeen
AB24 5AN
Contact: Sean Maclean
Tel: +44 1224 620 940
City Wharf
Shiprow
Aberdeen
AB11 5BY
Contact: Paul Love
Tel: +44 1224 256 600
Belfast
27-45 Lincoln Building
Ground Floor
Great Victoria Street
Belfast
Northern Ireland
BT2 7SL
Contact: Michael Ewings
Tel: +44 2890 242 242
Birmingham
55 Colmore Row
Birmingham
B3 2AA
Sea/ by Maritech contact:
James Spencer
Tel: +44 20 7334 5569
Australia
Melbourne
Level 2
112 Wellington Parade
East Melbourne
VIC 3002
Contact: Matthew Russell
Tel: +61 3 9867 6800
Perth
Level 9
16 St Georges Terrace
Perth
WA 6000
Contact: Mark Rowland
Tel: +61 8 6210 8700
Brazil
16th Floor Manhattan Tower
Avenida Rio Branco 89
Suite 1601
Rio de Janeiro 20.040-004
Contact: Jens Behrendt
Tel: +55 21 3923 8803
China
Room 2203-2204
Shanghai Huadian Tower
839 Guozhan Road
Pudong New Area
Shanghai 200126
Contact: Cheng Yu Wang
Tel: +86 21 6103 0100
Hong Kong
3209-3214 Sun Hung Kai
Centre
30 Harbour Road
Wanchai
Contact: Martin Rowe
Tel: +852 2866 3111
Denmark
Strandvejen 70
2. sal
2900 Hellerup
Contact: Charles Nordsted
Tel: +45 40 40 1812
Contact: Nicolai Kofoed
Tel: +45 32 74 0303
Egypt
Alexandria
2nd Floor
5 Vector Basseli Street
Al Azarita
Alexandria
Contact: Ayman Sharkas
Tel: +20 3 488 9001
Cairo
2nd Floor
2 El Hegaz Street
Roxi
Heliopolis
Cairo
Contact:
Mohamed Refaat Metawei
Tel: +20 2 2454 0509
Germany
5th Floor
Johannisbollwerk 20
20459 Hamburg
Contact: Jan Aldag
Tel: +49 40 3197 66 110
South Africa
PO Box 5890
Rivonia
Johannesburg 2128
Contact: Simon Lester
Tel: +27 11 803 0008
Greece
62 Kifissias Avenue
Marousi 15125
Contact: Savvas Athanasiadis
Tel: +30 210 458 6700
India
507–508 The Address
1 Golf Course Road
Sector 56
Gurgaon
122011 Haryana
Contact: Amit Mehta
Tel: +91 124 420 5000
Japan
15th Floor Otemachi Financial
City South Tower
1-9-7 Otemachi
Chiyoda-ku
Tokyo 100-0004
Contact: Christian Skovhoj
Tel: +81 3 3510 9880
Korea
6F Shin-A Building
50, Seosomun-ro 11-gil
Jung-gu
Seoul
04515
Contact: Jae Sung Choi
Tel: +82 10 2076 9510
The Netherlands
De Coopvaert
6th Floor
Blaak 522
3011 TA Rotterdam
Contact: Hans Brinkhorst
Tel: +31 10 7422 833
Norway
62C Munkedamsveien
0270 Oslo
Securities contact:
Erik Helberg
Broking contact:
Henning Leo Knudsen
Offshore contact:
Christian Brugård
Tel: +47 2311 2000
Singapore
12 Marina View
# 29–01 Asia Square Tower 2
018961
Contact: Rob Hewitson
Tel: +65 6339 0036
Spain
Paseo del Pintor Rosales, 38
28008 Madrid
Contact: José Antonio Leira
Contact: Francisco Pascual
Tel: +34 913 091 335
Sweden
Dragarbrunnsgatan 55
Uppsala
753 20
Contact: Torbjorn Helmfrid
Tel: +46 18 502 075
Switzerland
1 Rue de la Fontaine
1204 Geneva
Contact: Joe Green
Tel: +41 22 308 9900
United Arab Emirates
14th Floor Gold Tower
Jumeirah Lakes Towers
PO Box 102929
Dubai
Specialised products contact:
Remco Hemminga
Dry cargo contact: Pankaj
Malhotra
Tankers contact: Jamie Green
Tel: +971 4 450 9400
USA
Connecticut
160 Shelton Road
Suite 200
Monroe
Connecticut
CT 06468
Contact: Jim Weinberg
Tel: +1 203 459 5151
Houston
Suites 1525 and 1550
1333 West Loop South
Houston
Texas 77027
Contact: Roger Horton
Tel: +1 713 235 7400
New York
21st Floor East
280 Park Avenue
New York
NY 10017
Contact: Omar Nokta
Tel: +1 212 317 7080
Contact: Philipp Bau
Tel: +1 212 314 0980
196 Clarkson PLC | 2020 Annual Report
This Report is printed on materials which
are FSC® certified from well-managed forests.
These materials contain ECF (Elemental
Chlorine Free) pulp and are 100% recyclable.
Designed by Gather
+44 (0)20 7610 6140
www.gather.london
Clarkson PLC
Commodity Quay
St Katharine Docks
London E1W 1BF
United Kingdom
Tel: +44 20 7334 0000
www.clarksons.com