Analysis Of Clarkson PLC: A Multinational Public Shipping Company

Company Overview

Discuss about the Conceptual Framework For Financials Accounting.

The chosen company for the analysis has been taken Clarkson PLC or Clarkson which is a multinational public company is Britain. The company was established in the year1852 and deals ship broking service as the “undisputed heavyweight of the ship broking market All of its shares are tradable on the London Stock Exchange and other markets. The headquarters are in London and is constituent of FTSE 250 index (Sapozhnikova & Mohammed, 2014). The operations of Clarkson are divided into four areas: broking, financial, support and research. The company brokers vessels for some of the world’s largest producers and traders of natural resources.

The Clarkson operates at the forefront of a dynamic shipping market, where their complete dedication to innovation ensures we set new industry standards and continue to provide our clients with an unrivalled service. The market of the company is changing continuously. Being the one of the leaders in the industry of the shipping services the Clarkson sets the benchmark for best practice standards (Ijiri, 2018). They continue to grow the business profitably in line with the strategy, whilst ensuring that quality, evolution, innovation and expansion (Öker & Ad?güzel, 2016). The strategy and objectives of the company. The major operations of the company can be identified in four major segments:

• Broking: The Clarkson’s broking services are incomparable due to the number of efficient brokers, the breadth of market coverage, geographical spread and depth of intelligence resources.
• Financial: The Clarkson provides investment banking services to provide arrangement of financial solutions for shipping. They also provides the customers funds for transactions for ultimate consumer satisfaction.
• Support: The support team of the company provides maximum level of support to its customers with full time service facilities at wide range of ports that includes UK and Egypt. These post services provides tools for marine and offshore industries (Warren, & Jones, 2018).
• Research: Clarkson’s research is the market leader in providing timely and authoritative information on all aspects of shipping. They provide data on over 140,000 vessels, 7,000 offshore fields, 40,000 companies and 700 shipyards as well as extensive trade and commercial data and over 100,000 time series.

• Business Expansion: With an industry-leading range of products and services that span the maritime and financial markets, Clarkson are uniquely positioned to deliver custom-made commercial solutions to the consumers.
• Extending the global reach: The global presence enables Clarkson to meet client needs wherever and whenever they arise. With 48 offices in 22 countries, and growing, Clarkson share understanding, culture, IT systems and high standards of corporate governance across the business (Henderson et al., 2015).
• Proper understanding of Clients: The client base ranges from oil majors, raw material producers, and other multinationals and long established ship owning families. The company have worked with the clients for generations, building a deep understanding of their businesses and providing the services that have helped them to prosper.
• Growth along with trust: As the industry’s leading provider of data and market intelligence on the shipping and offshore industries, the research team off Clarkson is the largest commercially-led unit in the maritime world. The database tracks over 140,000 ships and 7,000 offshore fields. Shipping Intelligence Network is viewed more than five million times per year. Consistently profitable and cash generative, our financial performance bears comparison with any business, not only in the shipping sector but across the FTSE. The total shareholder return has been consistently strong and includes a progressive dividend policy that has been maintained for the last 15 years.

• Ultimate consumer satisfaction by providing technologies that would deliver safest and the most efficient products and grow value for its shareholders.
• The main purpose is to maintain and extend the industry leadership..
• To build a strong financial performance and support the progressive dividend policy
• Maintain and develop the position as the world’s leading shipping services group.

 The company has planned to introduce new KPIs to measure the performance and ensure a long-term benefit. The focus is on the cash flow and improved discipline on capital allocation. The KPIs would provide a greater financial transparency and strengthen the finance function. The Key performance indicators (KPI) like the various profitability, liquidity and the solvency ratios would help in cost reduction and proper capital allocation. In order to measure the performance the company calculates the revenues, underlying profit before tax, and the earning per share.

 The below table shows the comparison of the Rolls Royce with one of its competitor named Pratt & Whitney for both the years 2017 and 2016:

From the above table it can be analyzed that the company has a consistent or rather maintained stable performance in terms or profitability, liquidity and solvency. The company has improved in the performance since the last financial year of 2016 and also maintained a better performance than Frontline Ltd. It can be said from the performance analysis that the company has been able to meets its objectives of attaining a stable profitability and cash flow generation.The Clarkson PLC ranks a position in the in the FTSE 250 index. The financial statement are formatted as per the requirement of GAAP by preparing the Income statement, changes in equity, balance sheet and cash flow statement. The company has been successful in meeting up the obligations and is developing continuously.

Operations and Strategy

External audit is the process when the external auditor performs an audit in accordance with the specific rules or laws of the financial statement of an entity, government or any other organization (Bhasin, 2015). The auditor in this case is independent of the entity being audited.in this case the audit process is unbiased and independent. There is no connection with the auditor and the company. Auditor is a third person or outsider to the company.

The main purpose of the external audits to verify the financials of a company and measure its accuracy and conform that the financial representation is true and fair without any influence of the internal control of the company (Macve, 2015).

In the audit report of Clarkson Plc the structure of the audit report contains the main areas of responsibility. The number of meetings, the membership and the terms of the audit process are discussed in the report. The company has company has conducted both internal and external audit of the community for ensuring the effectiveness and accuracy of the financial statements (Arnold, Harris & Liu, 2016). The effectiveness of the audit committee is reviewed on an annual basis. The results of the 2017 effectiveness review have been considered by the committee Chair and anonymous responses circulated to the other committee members, giving them an opportunity to make further observations. The language of the auditor’s report is simple ad with proper clarity for better understanding of the stakeholders.

The main purpose of the audit committee is to assist the Clarkson company board of directors in order to fulfill their overseeing responsibilities and governance related to the financial reporting, internal control system and risk assessment (Schaltegger, Etxeberria & Ortas, 2017).

The Audit Committee members of the company are shown in the following table along with their qualification:

The below table shows the stock price performance of the Clarkson company of the latest financial year of 2017. The balance sheet stares from 1^st January 2017 to 31st December 2017

 From the above chart two major event that can be identified are:

• November 2017: it is the event as reported by financial times when the Clarkson was hit by a cyber-attack and the various financials data has been revealed. The stock price had fallen as shown in the chat.
• March 2017: It is the event when the stock price of Clarkson reached the maximum for the financial year of 2017.the investors did not miss a chance on at this day to invest on Clarkson anticipating future profits (Reid & Myddelton, 2017).

According the above analysis the company of Clarkson Company has a consistent or rather maintained stable performance in terms or profitability, liquidity and solvency. The company has been consistently profitable for more than 14 years and cash generative, with a progressive dividend policy that has been unbroken for years. Additionally, the company has improved in the performance since the last financial year of 2016. Moreover the stock price of the company appears to be suitable for investment as the trend is upward and a profit can be anticipated. Hence according the consistency of the annual report, financial statements and performance and investor invest in the company and can earn profitable dividends.

References

Arnold, L. W., Harris, P., & Liu, M. (2016, January). CORPORATE ACCOUNTING MALFEASANCE: AN OVERVIEW. In Global Conference on Business & Finance Proceedings (Vol. 11, No. 1, p. 202). Institute for Business & Finance Research.

Balashova, N. N., Melikhov, V. A., Ovchinnikov, M. A., Egorova, E. M., & Tokareva, E. V. (2016). Organizational and methodological approaches to development of accounting policy for formation of integrated accounting of interrelated agricultural companies. European Research Studies, 19(2), 153.

Bhasin, M. L. (2015). Corporate accounting fraud: A case study of Satyam Computers Limited.

Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting. Pearson Higher Education AU.

Ijiri, Y. (2018). An Introduction to Corporate Accounting Standards: A Review. Accounting, Economics, and Law: A Convivium, 8(1).

Macve, R. (2015). A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge.

Öker, F., & Ad?güzel, H. (2016). Time?driven activity?based costing: An implementation in a manufacturing company. Journal of Corporate Accounting & Finance, 27(3), 39-56.

Reid, W., & Myddelton, D. R. (2017). The meaning of company accounts. Routledge.

Sapozhnikova, N. G., & Mohammed, E. B. K. (2014). Informatsiya ob ekologicheskoi deyatel’nosti v korporativnom uchete i otchetnosti [Information on environmental performance in corporate accounting and reporting]. Mezhdunarodnyi bukhgalterskii uchet= International Accounting, (15), 22-29.

Schaltegger, S., Etxeberria, I. Á., & Ortas, E. (2017). Innovating corporate accounting and reporting for sustainability–attributes and challenges. Sustainable Development, 25(2), 113-122.

Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.

Smith, M. (2017). Research methods in accounting. Sage.

Tahat, Y., Omran, M., & Dunne, T. (2017). Development of Accounting Regulations and Practices in Kuwait: An Analytical Review. Journal of Corporate Accounting & Finance, 28(6), 14-28.

Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.

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