PROVIDING THE
VITAL CONNECTION
ANNUAL
REPORT
2013
ANNUAL REPORT FOR THE YEAR
ENDED 31 DECEMBER 2013
JDR CABLE SYSTEMS (HOLDINGS) LIMITED
Financials
Order Intake
Revenue
EBITDA
Summary
£97m
£88m
£12m
History
120
0
0
13
CY
12
CY
11
CY
10
09
-4
CY
13
09
(£’M)
6
CY
13
CY
12
CY
11
CY
10
CY
CY
12
10
CY
0
54
12
0
51
10
30
(£’M)
30
CY
60
20
88
83
CY
70
62
09
(£’M)
60
26
90
97
94
CY
90
30
130
11
113
CY
120
Financial Highlights
Operational Highlights
• Revenues £88m, down 32% on
• Strong product demand,
• Entered new markets, importantly
• EBITDA £12.3m, with EBITDA
• Increased capacity due to
• Investment in new strategic
• Continued to grow full-service
• Performance impacted by
2012, a record breaking year
for JDR
margin at 14%
• Operating cash inflow of £6.3m,
ensuring revolving facility
fully repaid
• Performance impacted by oil and
gas project delays and uncertainty
in offshore wind
• Invested in infrastructure and
especially for Installation
Workover Control Systems
on-going benefit of long-term
investment in manufacturing
facilities, business processes
and people
capability: from design services,
to product solutions, and
offshore services
Brazil, and strengthened
relationships with EPIC partners
initiatives for long-term growth;
targeting technology evolution,
geographic expansion and people
development
some oil & gas project delays
and uncertainty in offshore
wind markets
people for future growth
The group changed its accounting year-end date in the prior period from 31 March to 31 December to bring the group into line with industry practice.
To compare similar periods in this report, the directors are reporting with unaudited pro forma calendar year comparatives for 2012. The directors believe
this gives a more transparent and comparable presentation for the reader.
PROVIDING THE
VITAL CONNECTION
Specialising in
connecting
subsea
infrastructures
Oil & Gas
JDR’s subsea production umbilicals
and power cables maximise the
efficient delivery of power, control
and communications. The team
creates custom built systems
for subsea installations at ever
increasing water depths for many of
the globe’s major energy companies
and offshore service providers.
Renewables
JDR has led the development
of inter-array cable design and
manufacture, creating product
systems for some of the world’s
largest offshore wind projects.
Embracing the future of renewable
energy, JDR is committed to
enabling the next generation of more
cost-efficient wind power projects.
Global Services
The JDR team provides global
aftermarket, installation and
maintenance services for oil & gas
and renewables clients. Through its
network of experienced and certified
technicians and service support
facilities JDR can manage customer
projects, for JDR and non-JDR
products, on or offshore.
JDR is a leading
provider of
technology
connecting the
global energy
industry.
In this report...
Chairman’s Statement 4
CFO Statement
8
Health, Safety and the Environment
12
JDR Board of Directors
14
JDR Executive Management Team
16
Directors’ Report
18
Strategic Report
20
Corporate Governance
21
Risk Management Report
26
Independent Auditor’s Report
28
Financial Statements and
Notes to the Financial Statements
29
Advisors and Registered Head Office
60
1
JDR is a leading provider of technology
connecting the global offshore energy
industry. Our products and services
enable vital control and power delivery
to offshore oil, gas and renewable
energy systems.
Aberdeen
Hartlepool
Littleport
Hamburg,
Germany
The world’s major energy companies
and subsea service providers depend on high
performance subsea control umbilicals and subsea
power cables that operate in the world’s harshest
offshore environments. JDR invests in state-of-theart manufacturing facilities, technology and people
to deliver these world-class subsea products.
Houston,
USA
We have a proven track record of delivering
client expectations and are totally committed to
lifecycle customer service. We achieve this through
our specialist engineering teams, experienced
project management, integrated safety systems
and a global service network that ensures 24/7
aftermarket support.
Rio de Janiero,
Macaé
Brazil
The Americas
JDR’s Americas base is Houston, Texas. From the Houston sales office
JDR manages relationships with its worldwide customer base. The team is
an integral part of the local, and globally important, oil & gas community.
Houston is a hub for JDR’s Global Services operation, with a facility
dedicated to IWOCs and reeler support and maintenance. Projects from
this facility are primarily for clients involved in oil & gas exploration in the
Gulf of Mexico.
From Houston JDR is spearheading its development in the world’s most
important market for subsea production umbilicals: Brazil. In addition to a
sales office in Rio de Janeiro, JDR has now established a service centre in
Macaé. From this centre JDR will support existing customers, building up
operations over the next two years.
Europe, Middle East and Africa
(EMEA)
The UK is the centre of JDR’s global network,
with the Group’s HQ in Cambridgeshire.
JDR has made significant investment in its UK
design and manufacturing operations – in Littleport
and Hartlepool – creating world-class facilities
for the creation of subsea production umbilicals,
subsea power cables, inter-array cables and an ever
increasing range of accessories and support services.
JDR has continued to invest in Aberdeen and is now
ideally positioned to grow its North Sea business,
alongside its markets in Africa and Middle East.
JDR 2007 TO 2013
2007
£30m
2
Total revenue
2008
2009
2010
£44m
£51m
£54m
September
March
May
JDR acquired by
Vision Capital &
Goldman Sachs
Hartlepool Phase 1
Investment approved
by shareholders
Awarded Greater
Gabbard offshore
wind contract
July
H2
Hartlepool Completion of
officially inter-array cable
opened
and SPU lines at
Hartlepool
January
Hartlepool
Phase 2
Investment
approved
JDR Strategy
Our strategy is based on growth, funded by productivity and
technology investment, delivered by a flexible customerfocussed organisation.
Bangkok & Sattahip,
Thailand
Products and Technology
Kuala Lumpur, Malaysia
Singapore
•New product launches: bringing new products to market, such as steel
tube umbilicals and aluminium core inter-array and power cables that utilise
JDR’s core design and manufacturing skills
•Evolve existing product capability: developing current product ranges in
response to developing customer and market needs
•Develop new differentiating technologies: led by JDR’s new Technology
Centre in Cambridge
Markets
•Establish JDR in Brazil: the world’s largest market for subsea
production umbilicals
•Expand Asia Pacific: building on JDR’s long-term success in this region
Asia Pacific
•Grow North Sea presence: targeting subsea production
umbilical opportunities
The centre of JDR’s
Asia Pacific operations is
Thailand where JDR has a
design and sales office in
Bangkok and manufacturing
facility in Sattahip. JDR is
growing its customer base in
this region with further sales
offices in Kuala Lumpur
and Singapore, working on
projects from offshore China
to offshore Australia.
January /
February
Launch of
Project New
Vista (PNV)
Capability
The JDR team is at the heart of the Group’s long-term success. Our people
development programme will continue to enhance skillsets across the business
to better serve our customers. At the same time we are investing in systems
that will streamline our internal development processes and improve quality
management systems.
2011
2012
2013
£83m
£130m
£88m
April
Q3
December
Autumn
Sale of Marine
Cables;
all senior
debt repaid
New senior
management
team appointed
Record performance year and large
projects completed for oil & gas
customers in Asia Pacific and JDR’s
first renewable project in Germany
Completion of
upgrade to Littleport
manufacturing facility
3
JDR operates in
a fast-growing
market, where oil
& gas production
is moving further
and deeper
offshore.
Aberdeen
Hartlepool
Littleport
Bangkok & Sattahip,
Thailand
Hamburg,
Germany
Kuala Lumpur, Malaysia
Singapore
uston,
A
Rio de Janiero,
Macaé
Brazil
2013
JDR established its Brazilian
operations, the world’s largest
subsea umbilical market
4
JDR ANNUAL REPORT 2013
Chairman’s Statement
During 2013 we continued to increase our global business,
fulfilling projects of increasing scope and complexity for oil,
gas and renewable energy customers.
Our ability to achieve this is due to long-term
investments in our manufacturing infrastructure,
project management, engineering design and
a host of new technologies that connect the
infrastructure of the offshore energy industry.
JDR operates in a fast-growing market, where
oil & gas production is moving further and
deeper offshore. Our expertise in the design and
manufacture of products that thrive in these
environments, combined with our lifecycle
customer support, has delivered ongoing
long-term growth in revenue and profitability.
In 2012 this approach enabled us to outperform
expectations. 2013 was another strong year, and
although while not at the same level as 2012 we
have continued to invest in new technologies and
internal capabilities to support our clearly defined
strategy for long-term growth.
JDR is now performing significantly ahead of what
was possible three or four years ago. 2013 saw
revenues of £88m and EBITDA of £12.3m for the
twelve months to 31 December 2013. Our financial
performance was impacted by some project
delays in oil and gas markets and uncertainty
in offshore wind markets, both of which slowed
order intake. So, while I am disappointed that the
2013 outcome did not match our record 2012
performance, I am delighted to see how JDR
continues to benefit from the growth platform we
have built since 2009.
CNOOC for the Enping project. We have also
deepened relationships with some of our major
EPIC customers, establishing frame agreements
that form the basis of long-term strategic
partnerships. Our performance was recognised
by the Engineering Employers Federation (EEF),
where JDR was runner-up in their national
business growth awards.
Our strategy is supporting a transition; from
supplying many products to a small group
of customers, to a strategic partner on larger
projects to a growing international customer
base. Increasingly we are delivering a full service
package from front end engineering and design
to project execution and aftermarket service and
installation support. The infrastructure we have
created since 2011 has made it possible to evolve
our business to this new scope. This change has
brought with it a steep learning curve, as we move
from a revenue model with quick turnaround and
more predictable outcomes in any given year, to
a growth platform with a wider range of major
projects that have longer lead-times.
Building on this strategy, 2013 saw us
make further investments that will drive our
technical and regional growth and strengthen
our internal capabilities.
We have won new business and shipped customer
projects across the JDR product range. Wins
included work with ConocoPhillips for umbilicals
in Phase 3 of the Bayu-Undan Field, three IWOCS
projects for Chevron and a follow-up award with
5
Technical Growth
Our engineering team has a
deep understanding of subsea
engineering, built through extensive
experience in project delivery. We
are ideally positioned to identify
and develop new products and
technologies to support our
customers’ evolving requirements.
Our technology leadership was
established with the launch of
self-supporting open water IWOC
umbilical technology, an innovative
approach to IWOCS deployment
that significantly reduces offshore
operating costs.
6
In 2013 we continued to invest
in expanding our product scope.
Importantly we commenced work
on our first steel tube umbilical and
also on aluminium conductors as an
alternative to copper in subsea power
cables. As oil & gas projects move
further offshore and into deeper
waters and the renewables industry
works to deliver cost-effective
alternative energy, our ability to
innovate will create further new
opportunities for JDR. We intend to
continue to invest in the talent and
technology that will ensure we thrive
in these environments.
Our developments in inter-array
cable technology was boosted by
funding from by the Department of
Energy and Climate Change (DECC)
in the second call of the Offshore
Wind Components Scheme. These
contributions are supporting further
JDR research into high voltage
inter-array cabling and power
cable technologies and materials.
These initiatives will help drive
down the cost of each megawatt
of power produced by an offshore
wind farm, helping make offshore
wind a more cost-effective and
competitive source of power. The
initial beneficiaries are expected to
be offshore wind developers as they
look to use inter-array cabling at higher
voltages in a number of Round 3 UK
wind farm installations.
Regional Growth
We operate in a global industry
and have won business in all major
offshore markets for our products
and services.
Our IWOCS business has flourished.
2013 was our best year yet for order
intake, with orders of major scale and
scope for customer projects in the North
Sea, West Africa and the South China
Sea. JDR has been at the forefront of
this industry segment for over a decade,
testament to our technical ability to
deliver for top-tier oil and gas operators.
Other oil and gas contracts included
subsea power and communication
(composite) cables to Petrofac for the
Satah Al Razboot (SARB) package 3
project, offshore Abu Dhabi and subsea
power cables for the Total Ofon Phase
2 project in Nigeria. We also delivered
a major subsea production umbilical
and power cable project for the Santos
Fletcher Finucane development,
offshore Western Australia, and our first
inter-array cables were installed in the
fast-growing German offshore wind
market for Wind MW.
In 2013 we launched initiatives to further
develop JDR’s business in Brazil, the
North Sea and Asia. Brazil in particular
is a major deepwater market, where we
believe there is significant opportunity
for our subsea products and our
service business. First steps include
establishing additional sales offices and
service centres and in 2014 we intend
to further develop capabilities in each of
these markets.
Internal Growth
2013 saw us make further investment
in people and infrastructure to support
our next phase of growth. We are
committed to making JDR one of
the most attractive employers in our
industry. Attracting and retaining human
resources is an ongoing challenge in
our industry and I am proud of our
employees and our ability to attract and
retain great people. New appointments
to our Executive Management Team
in 2014 include Charlie Backhouse as
Global Services Director and Richard
Turner as Chief Operating Officer.
Last year we extended our training
capability and resources for employee
development. We established an
Apprentice Scheme and continued our
Graduate Programme, introducing new
people and talent to our industry. We
intend to continue to invest in these
programmes and our commitment
to provide personal development
opportunities for all our employees.
We also made further investments in
JDR’s manufacturing infrastructure
with a £1 million programme to
upgrade our Littleport factory.
New equipment and improvements to
the factory layout are now enabling us
to produce longer length hoses, a core
component of our subsea production
umbilicals and IWOCS products,
more safely and more efficiently. This
initiative better supports our customers
as they move oil and gas exploration
into increasingly deeper offshore fields,
enabling JDR to deliver even more cost
effective and reliable products.
We also made further investments in
IT systems and business processes in
particular to improve project execution.
This initiative delivered systems to
enhance our engineering and design
capabilities, better manage product data
and streamline our business systems.
All of this work is underpinned by
a culture of rigorous commitment
to health, safety and environmental
standards. Our facilities in Hartlepool,
Sattahip and Houston joined
Littleport with recertification of their
safety management systems to
OHSAS18001:2007. We have continued
to roll out the ISO14001:2004
environmental management system.
Littleport successfully achieved ISO
14001 re-certification and Hartlepool
and Houston passed their first
certification audits in 2014. Underlying
our successful audits is a wide ranging
programme of initiatives from HSE
training to recycling schemes.
Having made significant investments
in world class facilities, we are
now shifting to a long-term growth
programme investing in our people
and capabilities across all aspects of
our operations. I believe this work will
position us as a major player in all of
our key markets, where we will continue
to focus on delivering world-class
products & services.
Evolution
The Board has entered 2014 with some
changes. Andrew Norman has stepped
down as CEO and a recruitment
process to find a successor is
underway. I will continue as Executive
Chairman and, in the interim, take on
the CEO responsibilities. Joining the
Board was Jonathan Guest, from Vision
Capital who has replaced Johan van
de Steen. Peter Sayles, COO, has also
stepped down from the company.
I would like to thank Andrew, Johan
and Peter for their contributions.
I am also delighted to report that JDR
has won a 2014 Queen’s Award for
Enterprise in International Trade. This
prestigious award recognises our
success in international oil, gas and
renewable energy markets and is JDR’s
second Queen’s Award for Enterprise.
This award is testament to the hard
work of the JDR team and the strategy
we established in 2008: to grow JDR by
targeting new global markets through
investment in our products, technology
and infrastructure.
Finally, 2013 was the year JDR kicked
off its establishment of operations in
Brazil, the world’s largest subsea oil
and gas market. We have a service
centre in Macae to support nonPetrobras customers in the country, in
step with many of our existing global
frame agreements. We expect to build
our Brazilian operations significantly
over the next two years. This
development fills out our geographic
portfolio, and JDR now operates in
every offshore market in our industry.
Pat Herbert, Executive Chairman. 30 September 2014
7
JDR ANNUAL REPORT 2013
CFO Statement
IN 2013 WE CONTINUED OUR
INVESTMENT IN PEOPLE,
TECHNOLOGY AND MANUFACTURING
INFRASTRUCTURE TO PREPARE FOR
OUR NEXT GROWTH CYCLE.
In 2013 JDR continued to perform strongly, although not repeating the record
year seen in 2012. 2013 was a year of consolidation and investment, with a
32% reduction in revenues and a 52% reduction in EBITDA in the 12 months to
31 December 2013. This is primarily caused by a temporary slowdown in the
renewables market, which is expected to pick up again in 2014 as the German
wind farm market recovers following the elections in 2013.
The Group changed its accounting
year-end date in the prior period
from 31 March to 31 December
to bring the Group into line with
industry practice. The financial
statements attached therefore have
a comparative period of nine months
to 31 December 2012.
To compare similar periods in this
annual report, the directors are
reporting with unaudited pro forma
calendar year comparatives for 2012.
The directors believe that this gives
a more transparent and comparable
presentation for the reader. The full
8
pro forma calendar year results for
2012 and 2013 are shown on
pages 57 to 59.
Revenue reduced from £129.9m in
the 12 months to 31 December 2012
to £87.8m in the 12 months to
31 December 2013 which, combined
with continued investment in
technology and employees, resulted
in an EBITDA of £12.3m for the year.
Operating cash flow decreased from
a net inflow of £19.6m in the 12
months to 31 December 2012 to
a net inflow of £6.3m in the 12
months to 31 December 2013,
continuing the strengthening of the
balance sheet over the year.
Net assets, at the year end, stood
at £35.0m.
Having reaped the benefits of
its investment in developing
technologies and manufacturing
infrastructure, the Group invested
£4.1m in its capital expenditure
programme for the year, with
£2.3m of this going towards
continued enhancements at
JDR’s Littleport plant.
Financial Key Performance
Indicators*
We measure a range of operational
and financial metrics to help us
manage our performance and achieve
our business plans.
20132012
Movement
Revenue
87.8129.9
EBITDA
12.325.8 -52%
-32%
Order intake 97.2 112.5
-14%
Operating
cash flow
-68%
19.6
Year-on-year revenues decreased
by 32% from £129.9m in 2012 to
£87.8m in 2013. This is primarily
due to a temporary slowdown in the
renewables market.
The revenue mix in the year is shown
in the table below.
20132012
Movement
SPU
28.632.5 -12%
SPC
21.624.7 -13%
IWOCS
21.525.6 -16%
Global
Services 11.910.8 +10%
TOTAL
Operating cash flow amounted to £6.3m
in the calendar year 2013, with £3.5m of
this being used to repay debt, consisting
of short-term bank lending. This has
helped continue the strengthening of the
group balance sheet, so that net assets
totalled £35.0m at 31 December 2013
(2012: £31.6m).
83.6
OPERATING PROFIT
4,165
Goodwill408
Revenue*
Oil & Gas
The table below reconciles operating
profit to EBITDA. The major items are
the depreciation charge and exceptional
items, mainly relating to a strategic review
of the business to consider the timing of a
potential sale. This review concluded that
the shareholders would continue to invest
in the business to realise the opportunities
available to JDR in both the oil and gas
and renewable energy sectors.
Amortisation171
JDR saw demand for its products
reduce in 2013, when compared
to a record year in 2012. However,
JDR has achieved an order intake
CAGR of 10% since 2009. The Group
expects the order intake level to
return to 2012 levels in 2014/15
with strong demand for IWOCS and
a recovery in renewables driving
this growth.
REC
Cash flow and Net Debt*
£’000
6.3
Order Intake
Operating Profit*
93.6
-11%
4.236.3 -88%
87.8129.9
-32%
The Group’s pro forma revenue
Compound Annual Growth Rate
(CAGR) is at 12% over the last five
years, demonstrating a strong track
record of growth.
Depreciation4,708
Exceptional items
2,861
EBITDA12,313
Taxation
Group trading losses carried forward
from prior years have been used to
offset the corporation tax charge for
the year. The Group has fully utilised
these losses and will be liable for the
payment of corporation tax in the
2014 calendar year.
Earnings
As in previous years, the Group continues
to use EBITDA as the primary measure of
its financial performance, particularly in
measuring underlying performance.
The Group delivered an EBITDA of £12.3m
in 2013, with a CAGR of 14% over the past
five years.
Dividends
The directors are not recommending
the payment of a dividend in the year
(2012: nil) as operating cash flow has
largely been used to pay down debt
and strengthen the balance sheet.
Profit Before Taxation (PBT)
Profit before taxation (PBT) for the twelve
months to 31 December 2013 was £3.7m,
an 80% reduction when compared to the
record year ending 31 December 2012.
Reconciliation of EBITDA to net
cashflow :
20132012
EBITDA
12.3
Change in working
capital
(6.0)(6.2)
25.8
Operating cash flow
6.3
19.6
Capital expenditure
(4.1)
(4.3)
Taxation
(0.3)(0.1)
Net interest
(0.4)
(2.4)
Revolving credit facility
loans repaid
(3.5)
(1.5)
Loan from parent
repaid/borrowed
(0.1)(11.8)
Net cash flow
(2.2)(0.5)
Payments to suppliers
The Group is pleased to report that it
continues to pay suppliers promptly.
All creditors are paid to terms.
Capital expenditure
Capital expenditure in the calendar
year amounted to £4.1m, of which
£0.9m related to an reconfiguration
of the layout at the Littleport plant.
A further £1.4m related to new
machinery for the Littleport site.
Exchange rates
The Group operates in a number
of different countries. However, the
impact of foreign exchange rates on
consolidated EBITDA is negligible as a
result of the relatively low amount of
income and costs recognised in the
foreign entities. Where justified, Group
companies seek to cover any foreign
exchange exposure on customer
contracts by use of forward contracts
taken out on contract acceptance.
*All periods are 12 months to year-end 31 December.
9
CFO STATEMENT CONT’D
Bank facilities
At the year-end, the Group had a £10m revolving
credit facility with its bankers, of which none
was drawn at 31 December 2013 (2012: £3.5m).
Two facilities totalling £29m were available for
bonding purposes, of which £16.1m had been
utilised at the year-end.
15
14
15
10
10
7.9
8.2
0
U
BO KE
ND F
IN
G
RC
H
BO SB
ND C
IN
G
0
F
(£’M)
5
Headroom
Drawn
UKEF = UK Export Finance
(the UK’s Export Finance Agency)
Pension obligations
Unlike many UK companies, the Group has
no defined benefit retirement scheme nor any
related significant pension deficit and liability.
The Group has a Group Personal Pension (GPP),
which is a defined contribution scheme. As
the scheme is a GPP, there are no trustees and
the company is not liable for benefits in any
way. The pension is also a commission-based
scheme, so all the company pays is the employer
contribution. 272 employees in the UK are
members of the scheme, contributing
a minimum of 1% of annual base salary into
the scheme.
The company contribution increases in line with
employee contribution to a maximum of 7%.
Martin Boden
Chief Financial & Compliance Officer
30 September 2014
10
11
JDR ANNUAL REPORT 2013
Health, Safety and
the Environment
THE JDR MISSION STATEMENT IS
TO MINIMISE THE ENVIRONMENTAL
IMPACT OF OUR ACTIVITIES
AND PREVENT DEATH, INJURY AND
ILL HEALTH TO THOSE AT WORK
AND THOSE AFFECTED BY
THE WORK ACTIVITIES OF JDR
We have integrated our approach to Health, Safety and the Environment (HSE)
into the JDR culture, management systems and practices; our employees
are empowered to ‘own’ HSE. We also involve our clients and suppliers in the
identification and implementation of industry best practice. Our approach is
driving performance improvements; for example our preventative health and safety
strategy resulted in a 50% reduction in people accidents in 2013.
We have achieved this by working
with three guiding principles
Health and safety
Environmental performance
Sub-contractors and suppliers
we ensure all employees, visitors and
contractors, wherever they may be in
our global organisation, return from
work uninjured.
we work to minimise any adverse
environmental impacts of our
business activities by continually
reviewing product design and
manufacturing methodologies.
all sub-contractors and suppliers are
audited against our HSE requirements
before they can be added to the
approved supplier list.
12
JDR has a
well-established
HSE programme,
which in 2013
developed on a
number of fronts
Industry Audits
We ensure that our practices are
independently verified to a number of
important industry standards.
Our Safety Management System is
regularly verified by Lloyd’s Register
Quality Assurance (LRQA), a UKASaccredited provider of management
system certification, verification
and training. In 2013 LRQA
visited our facilities in Hartlepool,
Sattahip (Thailand) and Houston.
All were successfully recertified
to the OHSAS18001:2007 Safety
Management Standard.
Recertification is a rolling programme
and our Littleport facility was
successfully recertified in August 2014.
Training
We have continued to invest in
structured learning and development
programmes to support our HSE
development:
Launch of JDR’s
Golden Rules
JDR devised and launched its
12 golden HSE rules. These rules
were widely publicised throughout our
facilities, with each rule reinforcing an
aspect of JDR’s HSE activity.
• Managing Safely: 42 UK-based
managers and supervisors
participated in the IOSH Managing
Safely course. This nationally
recognised programme is
designed to support managers and
supervisors manage health and
safety within their teams.
• Behavioural Safety: we launched the
DuPont STOP behavioural safety
programme, which increases safety
awareness and helps employees talk
with each other about safety.
In 2013 over 100 JDR employees
took part in the training programme
and over 1000 STOP observation
cards were submitted.
• HSE legal compliance training: we
supported employee training across
forklift, abrasive wheel, first aid,
crane operations, manual handling
and DSE. This accounted for over
5000 training hours in 2013.
For example the Littleport CI Team
introduced Communities of Practice
(CoP) meetings, utilizing lean tools, to
target operational improvements.
The CoP teams 2013 successes
include reducing braid fluff issues
within extrusion, removing sheath
water marks during extrusion,
improving our standard operating
procedures, improving hose
specifications and identifying better
ways of carrying out some of our
daily activities.
In Hartlepool, the team has rolled out
a CI programme, building on Working
Group activity that captures relevant
issues on each element of the
manufacturing process.
For example, the quality system
enabled the CI team to identify
materials over usage, on our
armouring lines. The team, using root
cause analysis, has reduced material
over use; on three recent projects 29%
of RP3 tape used to wrap the final
cable in the armouring process was
returned to stores.
The Suggestion Scheme has also
identified ways to improve our HSE
performance across all sites, from
improvements to manual handling, to
a reduction in potential hazards.
The scheme enables operators to have
a direct input into ideas applied on the
shop floor; an approach that has had
a positive response from all involved. Recycling
We work in partnership with our
authorised waste contractors to
identify waste streams and recycling
options. Waste created during our
manufacturing processes includes
copper, rope, paper, cardboard, plastic,
wood, ferrous metal, nylon chippings
and a range of polymers. Together we
have increased recycling to over 98%
of all waste generated. Looking ahead
we aim to achieve a target of zero
percentage to landfill.
Continuous
Improvement (CI)
JDR has created CI teams at its main
facilities to improve our health, safety
and environmental performance.
13
JDR ANNUAL REPORT 2013
JDR Board
of Directors
PAT HERBERT
Executive Chairman
MARTIN BODEN
Pat joined JDR in 2002 as Group
Chief Executive Officer and drove
the Group’s most dramatic growth
since its founding in 1994.
Appointed Executive Chairman
in 2011 he continues to provide
strategy & sales support to
management. He began his career
in 1976 at Smith International Inc.,
becoming a corporate officer in 1986.
He joined Baker Hughes in 1988
as a division president with global
P&L then appointed as a corporate
executive officer in 1994 responsible
for corporate governance,
oversight of emerging markets,
M&A strategies and leading market
and technology development.
Martin joined JDR from Betty’s &
Taylors where he was Chief Financial
Officer for 18 months. Martin
previously worked as Group Finance
Director at Genus plc, and for Great
Universal Stores, Zurich Financial
Services (UKISA), NatWest UK
and WH Smith.
14
Chief Financial & Compliance Officer
ANDREW RICH
Non-Executive Director
Andrew is a Partner at Vision Capital
having joined in 2007. In addition
to JDR he sits on boards at Nordax
Finans, Park Cake, Pork Farms,
Fletchers Bakeries and the Advisory
Board of Trio LLP (holding company
for ABL, MG and SwissHaus).
Previously he spent three years
at Lazard and five years at Arthur
Anderson/Deloitte where he qualified
as a chartered accountant.
BOB SOLBERG
Non-Executive Director
JONATHAN GUEST
Non-Executive Director
Bob joined JDR as Chairman in 2004,
stepping down to become a
Non-executive director in 2012.
For over 30 years Bob held
increasingly responsible positions
with Texaco, becoming president of
Texaco Inc’s Worldwide Development
division from 1998 until his
retirement in 2002. Since then he
has served on a number of boards
including Pioneer Natural Resources,
helping the company triple its market
capitalization, Scorpion Offshore Ltd
and Hyperdynamics, both of which
he took to successful IPOs.
Jonathan joined the JDR Board
in 2014. He is an Associate at
Vision Capital and has portfolio
responsibilities including
BrightHouse, JDR, CPL Industries
and Elegant Hotels Group.
Previously, Jon was at Nomura in
the UK Financial Institutions Group
investment banking team and
qualified as a Chartered Accountant
with Ernst & Young in 2008.
15
JDR ANNUAL REPORT 2013
JDR Executive
Management Team
CHARLIE BACKHOUSE
Global Services Director
CRAIG EWING
Business Systems Director
JAMES YOUNG
Engineering Director
Charlie joined JDR in 2014 and leads
the global service and support team.
Before JDR he was General Manager
of Heil Farid and Oceanering Multiflex
in the UK. He has over 20 years of
experience in oil, petrochemical,
power and nuclear markets, which
has included roles at the Weir Group
and David Brown Pumps. Charlie has
a degree in Mechanical Engineering
and an MBA.
Craig joined JDR in 2011 from TNT
Post UK where he was IT Director.
Craig’s IT experience spans a
number of world class organisations
in the B2B, logistics and construction
sectors and has included roles with
Parcelforce Worldwide, Wallenius
Wilhelmsen Logistics and the
Miller Group.
James joined JDR in April 2000
as a Senior Design Engineer for
new product development. He was
appointed Engineering Director
in November 2011 after a series
of technical management roles
within the business. Prior to JDR,
James worked for BICC and Dowty.
James has a degree in Mechanical
Engineering, is a Chartered Engineer
and has an MBA from Cranfield.
PAT HERBERT
Executive Chairman
MARTIN BODEN
Chief Financial & Compliance Officer
See Board of Directors on previous pages
16
LOUISE CLIFTON
Head of HR
Louise joined JDR in 2012 and is
responsible for Human Resources
and Health, Safety & Environment.
Louise joined from PPG Industries,
and has also held key HR positions
in Random House, Grampian Foods,
British Steel and Bosch. Louise has
a degree in Sociology with Industrial
Relations and is a Chartered member
of the CIPD.
PAUL GAHM
Executive Vice-President
Sales & Marketing
Paul joined JDR in 2005 with
responsibility for Business
Development, Marketing and
Strategic planning. Formerly with
Oceaneering’s Multiflex Division,
Paul has held various senior
management positions throughout
Europe and the US.
RICHARD TURNER
Chief Operating Officer
Richard joined JDR in 2014 to head
up JDR’s global manufacturing,
product management and supply
chain functions. He joined JDR
from Technip/DUCO, where, as
Vice President Global Manufacturing
& Planning, he led the organisation
through a period of significant
investment and growth.
Previously Richard worked in the
construction equipment industry
with Komatsu and Terex. He has a
Mechanical Engineering degree and
MBA from Durham.
17
JDR ANNUAL REPORT 2013
Directors’ Report
£87,757,000
Group Sales
12 month period to
31December 2013
(nine months to 31 December 2012:
£83,628,000)
£3,308,000
Net Profit
12 month period to
31December 2013
(nine months to 31 December 2012:
£12,236,000)
18
The directors present their report and the
audited financial statements of the Group
and of the company for the 12 months ended
31 December 2013.
Principal Activities
Year End Change
The principal activities of the Group
are the design and manufacture of
umbilical systems and subsea power
cables for the offshore oil and gas and
renewable energy industries and the
provision of offshore support services.
These products are some of the
essential components for the
development and production of
offshore oil and gas and the delivery
of energy derived from offshore wind
farms. The group has an international
manufacturing footprint with facilities
in Littleport (Cambridgeshire) and
Hartlepool in the UK, and Sattahip
in Thailand.
In the previous reporting period, the
Group and company changed the
accounting year end from
31 March to 31 December.
Pro forma calendar results can be
found in the appendix to the financial
statements on pages 57 to 59.
The principal activity of the company
is to act as a holding company.
The subsidiary undertakings
principally affecting the profits or net
assets of the Group in the period
are listed in note 9 to the
financial statements.
Results and Dividends
The Group’s sales for the 12 month
period to 31 December 2013 amounted
to £87,757,000 (nine months to
31 December 2012: £83,628,000).
The company’s net profit for the
12 month period to 31 December 2013
amounted to £3,308,000 (nine months
to 31 December 2012: £12,236,000) and
has been transferred to reserves.
The directors do not recommend the
payment of a dividend (2012:£nil).
Substantial Shareholders
or dishonestly.
The share capital of the ultimate
holding company is owned by
funds advised by Vision Capital LLP,
Goldman Sachs and management
Employment Policy and
Involvement
Directors
The directors who held office during
the period and at the date of this
report were as follows:
• Pat Herbert
Executive Chairman
• Andrew Norman
Chief Executive Officer
(resigned as Director of the
company 30 September 2014)
• Martin Boden
Chief Financial & Compliance Officer
• Peter Sayles
Chief Operations Officer
(resigned as a director of the
company on 15 November 2013)
• Andrew Rich
Investor Director
• Johan Van de Steen
Investor Director
(resigned as a director of the
company on 24 January 2014)
• Jonathan Guest
Investor Director
(appointed to the Board on
24 January 2014)
• Robert Solberg
Non-executive Director
The Board believes that the group’s
success is due to the quality and
commitment of its workforce.
The Group’s employee management
priorities, including its remuneration
strategies, are based on recruiting
and retaining the best people in the
industry and encouraging working
practices that improve productivity,
reduce costs, develop talent and
provide job satisfaction. Further,
the Board recognises the need for
communication with employees
at every level and is committed
to ongoing interaction with all its
employees. This is achieved in a
number of ways, including regular
newsletters from the Chief Executive
Officer, and frequent “all hands”
presentations by the Executive
Management Team to groups of
staff at all company locations.
During the period, JDR employed, on
average, 453 employees, excluding
contractors, who were based in UK,
Houston, Thailand, Germany
and Singapore.
The Group is committed to a policy of
equal opportunity in matters relating
to employment, training and career
development, and is opposed to any
form of less favourable treatment
afforded on the grounds of age,
disability, sex, marital status, sexual
orientation, nationality, race or religion.
Directors’ Indemnity
Disabled Employees
As permitted by the Companies Act
2006, the Company has indemnified
the Directors and officers in respect of
proceedings that may be brought by
third parties and such indemnification
was in place during the year.
Neither the Company’s indemnity nor
insurance provides cover in the event
that a Director or officer is proved to
have acted fraudulently
Applications for employment for
disabled persons are always fully
considered, bearing in mind the
abilities of the applicant concerned.
In the event of members of staff
becoming disabled, every effort
is made to ensure that their
employment with the Group
continues and that appropriate
training is arranged. It is the policy
of the Group that the training, career
development and promotion of
disabled persons should, as far as is
possible, be identical to that of
other employees.
Community Involvement
JDR supports a range of initiatives
within its local communities in the UK.
At both the Littleport and Hartlepool
sites, the JDR workforce selects and
supports a local charity each year.
In 2013 the Hartlepool team
supported the Hartlepool and District
Hospice, raising £14,487. In Littleport
JDR employees supported Scotty’s
Little Soldiers, raising £1,100.
JDR also supports the local business
community, sponsoring business
awards in Littleport and Hartlepool.
These awards strengthen JDR’s links
in area, raising awareness of JDR’s
contribution to the local economy.
Auditors
The auditors, Grant Thornton UK LLP,
have indicated their willingness to
continue in office and appropriate
arrangements have been put in place
for them to be deemed reappointed
as auditors in the absence of an
annual general meeting.
Walker Report
This report has been prepared in
the context of the report dated 20
November 2007, Guidelines for
Disclosure and Transparency in
Private Equity.
BY ORDER OF THE BOARD: Martin Boden, Director. 30 September 2014
19
JDR ANNUAL REPORT 2013
Strategic Report
Business Review
A full review of JDR’s business performance
can be found in the Chairman and Chief
Financial Officer’s reports on pages four to 10.
The Group continues to invest in its people and
in research and development, and more details
can be found in the report on page four. The
directors regard investment in its people and in
research and development as a prerequisite for
success in the medium to long-term future.
A review of the business of the Group during
the year ended 31 December 2013, the
position of the Group as at 31 December
and a description of the principal risks and
uncertainties facing the Group can be found
on pages 26 to 27.
Key Performance Indicators
£87,757,000
Revenue
£12,313,000
EBITDA
£97,177,000
Order intake
£6,278,000
Operating
cash flow
We measure a range of operational and
financial metrics to help us manage our
performance and achieve our business
plans: revenue, earnings before interest tax,
depreciation and amortisation (EBITDA),
order intake and cash flow.
2013
£’M £’M£’M
Revenue
87.8
EBITDA
12.3
Order intake
97.2
Operating cash flow6.3
(Decrease)
2012/Increase
9 mths
83.64.2
17.6(5.3)
71.7 25.5
22.0 (15.7)
We also track non-financial metrics across
the business. As our people have been at
the heart of our success as a business, we
focus on tracking the safety and satisfaction
of our employees.
Financial Risk Management
The Group’s activities expose it to a number
of financial risks including credit risk,
cashflow and foreign exchange risk, and
liquidity risk. The use of financial derivatives
is controlled by the Board and finance
function. The Group does not use derivative
financial instruments for speculative purposes.
(a) Cashflow and foreign exchange risk
The Group’s activities expose it primarily
to the financial risks of changes to
foreign currency exchange rates,
although revenues and costs are
matched where possible.
The Group uses foreign exchange
forward contracts where necessary to
hedge residual material exposures.
(b) Credit risk
The Group’s principal financial assets
are bank balances and cash, and trade
and other receivables. The Group’s
credit risk is primarily attributable to
its trade receivables. The amounts
presented in the balance sheet are net
of allowances for doubtful receivables.
The Group has no significant
concentration of credit risk, with
exposure spread over a large number of
counterparties and customers, most of
which have high credit ratings.
(c) Liquidity risk
The Group uses a mixture of long-term
and short-term debt finance to ensure
that sufficient funds are available
for ongoing operations and future
developments.
Future Developments
In 2013 JDR reviewed and updated its
strategy for its oil & gas and renewables
activity. The next stage of JDR’s growth will
focus in three key areas:
•Introduction of new products and
technology: next generation products and
differentiating technologies
•Regional Growth: targeting Brazil,
North Sea and Asia pacific
•Development of Internal Capabilities:
investing in management skills and
infrastructure to support growth plans.
BY ORDER OF THE BOARD: Martin Boden, Director. 30 September 2014
20
JDR ANNUAL REPORT 2013
Corporate Governance
The UK Corporate
Governance Code
As a privately-owned company, JDR is
not required to comply with the Code
but seeks to abide by the spirit of its
principles. The UK Code is being used
to update a range of JDR
policy statements.
Role of the Executive
Chairman
“The Board is firmly
committed to achieving
the highest standards of
corporate governance.
We take seriously
our responsibility in
demonstrating leadership in
good governance practices
that ultimately informs the
decisions and actions of our
employees during their dayto-day work.
“The Board is ambitious
in growing the company
and is actively improving
its governance tools and
training for our people.
This will in turn enable us
to achieve our strategic
objectives, create value for
our shareholders and build a
sustainable business for the
long-term.”
Pat Herbert
Executive Chairman
As Executive Chairman, Pat Herbert is
ultimately responsible for appraising
the Board of all matters affecting the
Group and its performance.
He is also responsible for the effective
operation and chairing of the Board
and ensuring that all directors are
able to play a full part in its activities.
The Chairman ensures effective
communication with shareholders and
that all the Board members are aware
of the views of the shareholders.
The Board also monitors business
performance and reviews risk
controls. The Board has delegated
authority for all day-to-day
management of the Group’s affairs
to the Executive Management Team,
details of which can be found on
page 16.
The Board had a programme of 10
board meetings in the 12-month
period, plus an additional strategy day.
The Board is provided with monthly
and timely information on the financial
performance of the business, together
with reports on operational matters,
market conditions, competitor
environment and other relevant
issues. The directors have equal
voting rights when making decisions,
except the Executive Chairman who
has a casting vote. All directors have
access to the advice and services of
the company secretary and may, if
they wish, take professional advice at
the Group’s expense.
Board of Directors
JDR’s Board consists of an Executive
Chairman, Chief Executive Officer,
Chief Financial & Compliance Officer,
two investor directors and one nonexecutive director. The Board believes
that it has the appropriate balance
of skills, experience, independence
and knowledge of the company to
enable it to discharge its duties and
responsibilities effectively.
The directors update their skills,
knowledge and familiarity with the
company by attending appropriate
external seminars and training
courses, meeting with senior
management and visiting the regional
offices and manufacturing plants.
The Board is responsible to the
shareholders for the success of the
Group and determines the Group’s
long-term direction, business
objectives, key policies and strategy.
21
CORPORATE GOVERNANCE CONT’D
BOARD
COMMITTEE
BUSINESS
UPDATES
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
HSE
10
2
4
4
2
10
2
4
4
-
Martin Boden
Chief Financial & Compliance Officer
10
2
(4)
(1)
(1)
Robert Solberg
Non-Executive Director
10
1
-
4
2
Andrew Rich
Investor Director
10
2
4
4
2
TYPE OF MEETING:
Number of meetings held
in 12 month period
Number of meetings attended by:
Pat Herbert
Executive Chairman
Note: A dash indicates a director is not a member of a board committee. ( ) Brackets mean attendance by invitation, not as a member.
Activities of the Board in 2013
During the year, the Board approved
and endorsed:
• The Annual Report and Accounts
• Group budgets
• Strategic plans and priorities,
including repayment of debt and
investor’s loans
• Capital allocation and investment
priorities
• The acceptance of high-value or
high-risk orders
Committees and their
activities in 2013
The Board delegates certain
governance responsibilities to Board
Committees and these are
detailed below.
Audit Committee
The Audit Committee is chaired by
Andrew Rich, investor director and a
chartered accountant, and includes
Pat Herbert, Executive Chairman, and
the Chief Executive Officer. The Board
remains satisfied that the recent and
22
relevant financial experience of the
Audit Committee Chairman, together
with members Pat Herbert and the
Chief Executive Officer, enables the
Committee to discharge its duties.
The Committee met four times in the
period and reported its conclusions
to the Board after every meeting.
The Chief Financial & Compliance
Officer attended every meeting.
The Committee has fully defined
terms of reference, which are
reviewed annually. The terms of
reference outline the Committee’s
objectives and responsibilities
relating to financial reporting, internal
controls, risk management, and the
application of appropriate accounting
standards and procedures. Specific
responsibilities include reviewing
and recommending for approval
the annual financial statements,
reviewing the Group’s accounting
policies, reviewing the effectiveness
of internal controls, and reviewing
the scope and results of the
external audit.
The Chief Financial and Compliance
Officer has responsibility for
improving the suite of corporate
governance policies and procedures,
including a code of ethics, anti-bribery
and corruption and the confidential
reporting hotline.
The Committee also monitors
the independence and objectivity
of Grant Thornton, the external
auditors, by agreeing the level of their
remuneration and the extent of their
non-audit services.
Remuneration Committee
The remuneration committee
is chaired by Pat Herbert. The
Committee has defined terms
of reference, which are reviewed
annually. The Committee
is responsible for making
recommendations to the Board
concerning the remuneration strategy,
recruitment framework and long-term
incentive plans for the business.
During 2013, the Committee:
• Approved bonuses
• Reviewed the salary levels and
increases for all staff
CORPORATE GOVERNANCE CONT’D
Health, Safety and
Environmental (HSE)
Committee
The Health, Safety and Environmental
Committee is chaired by Robert
Solberg. The Committee has a
mandate to maintain a comprehensive
overview of the policies, practices and
performance of the group in respect
of health, safety and the environment.
Conclusions and recommendations
from the committee are reported
directly to the Board.
During 2013, the Committee reviewed
the accident and incident figures,
encouraged the continued success of
various health and safety initiatives
and considered resourcing.
Executive Management
Team (EMT)
The Executive Management Team
has responsibility for the day-today running of the Group and meets
weekly. At this meeting, all members
of the team give a brief report over
their individual areas of responsibility.
How we communicate with
our shareholders
Funds advised by Vision Capital LLP
are the largest shareholder in the
Group and two investor directors have
non-executive positions on the Board.
The Executive Chairman, Chief
Executive Officer and Chief Financial &
Compliance Officer have a continuing
dialogue with the shareholders.
In addition, Goldman Sachs, as a
minority shareholder, receives all
board documents.
Statement of Directors’
Responsibilities
The directors are responsible for
preparing the annual report and the
financial statements in accordance
with applicable law and regulations.
The Directors’ Report can be found on
pages 18 to 19.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law,
the directors have elected to prepare
financial statements in accordance
with United Kingdom Generally
Accepted Accounting Practice (UK
Accounting Standards and applicable
law). The financial statements are
required by law to 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 these financial
statements, the directors are required to:
The Board takes ultimate
responsibility for the Group’s systems
of risk management and internal
controls and for reviewing their
effectiveness. The Group’s principal
risks and uncertainties and how they
are mitigated are summarised on
pages 26 to 27.
• Make judgements and estimates
The Group’s systems and controls
are designed to manage, rather
than eliminate, the risk of failure to
achieve business objectives, and
can only provide reasonable and not
absolute assurance against material
misstatement or loss.
• State whether applicable UK
The key features of the Group’s
system of internal controls are:
• Select suitable accounting policies
and then apply them consistently
that are reasonable and prudent
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the financial statements, and
• Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group will continue in business.
The directors are responsible for
keeping adequate accounting
records that disclose with reasonable
accuracy at any time the financial
position of the Group and enable them
to ensure that the financial statements
comply with the Companies Act
2006. They are also responsible for
safeguarding the assets of the Group
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities.
In so far as each of the directors
is aware:
• There is no relevant audit
information of which the Group’s
auditors are unaware; and
• The directors have taken all steps
that they ought to have taken to
make themselves aware of any
relevant audit information and to
establish that the auditors are aware
of that information.
The directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Group’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
• An established management
structure operating throughout
the group with defined levels of
responsibility and delegation
of authorities
• Operating guidelines and systems
with authorisation limits set at
appropriate levels
• A comprehensive budgeting and
forecasting system, which is
regularly reviewed and updated
• Monthly management reporting
including regular comparison of
actual results against
latest forecasts
• Regular reporting from project
managers on the performance and
ongoing risks of every project
• Approval of investment and capital
expenditure decisions
• Regular monitoring, review and
reporting of health, safety and
environmental matters.
Going Concern
As described above, the directors
have a reasonable expectation that
the Group has adequate resources to
continue in operational existence for
the foreseeable future. For this reason,
they continue to adopt the going
concern basis in preparing the financial
statements. In forming this view, the
directors have reviewed the Group’s
budgets, plans and cashflow forecasts,
and the existing banking facilities.
23
JDR ANNUAL REPORT 2013
DEFINE
BUSINESS OBJECTIVES
IDENTIFY
OPPORTUNITIES AND
RISKS
ACCESS AND QUANTIFY
BENEFITS AND RISKS
DEVELOP
ACTION PLAN TO
MITIGATE RISK
ONGOING REVIEW
OF RISK
Risk Management Report
Risk Management
is Fundamental to
Sustainable Growth
efforts to improve certain areas, such
as corporate risk reporting, business
continuity and compliance.
Risk management is key to delivering
project success for our customers
and driving sustainable growth for our
stakeholders. Our customers require
us to provide solutions, and we must
overcome a number of risks to do this
safely, on-time and on-budget.
Specific Risk
Management
The diagram to the left shows the
risk management process within
the Group. The Board leads the
discussions relating to risk and
provides direction. This approach is
cascaded down the Group through
the Executive Management Team,
line managers and individual
project teams.
Ongoing Risk
Management
JDR involves our customers and
partners in agreeing risk matters
and how these are best mitigated.
Although risk is managed constantly
on every one of our projects, we also
have risk management discussions
across the Group at the following
key checkpoints when:
• Discussing and agreeing the
business strategy
“The effective management
of risks within the Group
is essential in helping us
achieve our vision of growth
and customer service.”
Martin Boden
Chief Financial &
Compliance Officer
26
• Bidding for new work
• Planning for projects
• Monitoring existing projects
• Reviewing business performance
At JDR, risk management is an
essential part of our business
operations. Risk is not outsourced
to a specialist team but is integrated
into our processes and owned by
everyone. However, the business is
not complacent and we are making
The business has experienced
significant growth over the past
two years, and this brings its own
challenges to ensure we have
the capacity to deliver to our high
standards. We have focused on
developing and standardising our
internal processes and systems, as
well as expanding and streamlining
our production capacity.
The importance of the order book
is key and we have invested in
developing our usage of our customer
relationship management system and
improving communications between
the sales and operations functions.
The increasing size of the business
also requires more focus on corporate
governance and matters such as
training on anti-bribery and corruption
and competition law.
Principal Risks
Risk
Potential Impact
Mitigation
Economic Environment
Our customers may cancel, postpone
or reduce existing or future projects
due to the effects of global economic
conditions and the price of oil.
Significant changes in customer
spending or investment plans may
adversely affect our order book, and
ultimately revenue and profit.
Focus on repeat business and
strategic clients. Broaden product
type. Exploration of new markets.
Strengthen aftercare offer.
Not winning work, or winning work at
low margins, so adversely affecting
order book and margins
Significant attention is given to
bidding to ensure we meet customer
needs and manage the risks. Defined
authority levels for bid approval and
order acceptance.
May affect the profitability and
reputation of the Group and ability to
secure repeat work.
Mitigated by allocating the right people,
operating controlled processes and
rigorous and regular project reviews.
Failure to meet our customers’
expectations and contractual
commitments and limit our capability
to meet future growth plans.
We use vigorous selection techniques
and a bespoke competency framework
to support our hiring decisions.
All employees undertake performance
and development reviews, supported by
robust Learning & Development plans
to ensure that they have the right skills
to meet both current and future needs
and demonstrate desirable behaviours.
We have a market-based compensation
and benefits structure to help us attract
and retain key valued employees.
Reduced growth and expansion
opportunities.
Balance sheet and cash management
is closely controlled by our Finance
team, including frequent reporting,
cash forecasting, working capital, and
investment analysis. Banking facilities
provide headroom should it be needed.
Workflows are inefficient or
are interrupted.
Strong management of function and
control over applications and ERP
system. IT recovery plans. Continued
investment through capital
expenditure plans.
Order intake
We may not be successful at
winning bids for new work, or bid
errors/decisions adversely affect
performance.
Project Delivery
Projects may not be delivered to our
high standards of safety, on time, on
budget and to the required quality.
People
We may not be able to attract or retain
employees with the right qualification,
skills, experience, competence and
values to meet our current and
future needs.
Finance and Liquidity
Cash and longer-term financing may
reduce if cash is not collected, capital
expenditure not managed, and costs
not controlled.
Information Technology
We may not have the right systems to
manage our business in a controlled
and efficient way, or these systems
may fail.
27
JDR ANNUAL REPORT 2013
Independent Auditor’s Report
Independent auditor’s report to the members of
JDR Cable Systems (Holdings) Limited
We have audited the financial
statements of JDR Cable Systems
(Holdings) Limited for the year ended
31 December 2013 which comprise
the group and parent company profit
and loss account, the group and
parent company balance sheets, the
group cash flow statement, and the
related notes on pages 35 to 56. The
financial reporting framework that
has been applied in their preparation
is applicable law and United
Kingdom Accounting Standards
(United Kingdom Generally Accepted
Accounting Practice).
This report is made solely to the
company’s members, as a body, in
accordance with Chapter 3 of Part 16
of the Companies Act 2006.
Our audit work has been undertaken
so that we might state to the
company’s members those matters
we are required to state to them
in an auditor’s report and for no
other purpose. To the fullest extent
permitted by law, we do not accept
or assume responsibility to anyone
other than the company and the
company’s members as a body, for
our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities
of directors and auditor
As explained more fully in the
Directors’ Responsibilities Statement,
the directors are responsible for
the preparation of the financial
statements and for being satisfied
that they give a true and fair view.
Our responsibility is to audit and
express an opinion on the financial
statements in accordance with
applicable law and International
Standards on Auditing (UK and
Ireland). Those standards require us
to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards
for Auditors.
Matters on which we
are required to report by
exception
A description of the scope of an audit
of financial statements is provided
on the Financial Reporting Council’s
website at www.frc.org.uk/apb/
scope/private.cfm.
We have nothing to report in respect
of the following matters where the
Companies Act 2006 requires us to
report to you if, in our opinion:
Opinion on financial
statements
In our opinion 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 2013 and of the
group’s profit for the year
then ended;
• have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting
Practice; and
• have been prepared in accordance
with the requirements of the
Companies Act 2006.
for and on behalf of Grant Thornton UK LLP, Statutory Auditor,
Chartered Accountants, Cambridge
28
In our opinion the information given
in the Strategic Report and Directors’
Report for the financial year for
which the financial statements are
prepared is consistent with the
financial statements.
Scope of the audit of the
financial statements
Paul Naylor, Senior Statutory Auditor
30 September 2014
Opinion on other matter
prescribed by the
Companies Act 2006
• 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
• the parent company financial
statements are not in agreement
with the accounting records and
returns; or
• certain disclosures of directors’
remuneration specified by law are
not made; or
• we have not received all the
information and explanations we
require for our audit.
Financial Statements
and Notes to the
Financial Statements
Profit and Loss Account
30
Balance Sheet
32
Cash Flow Statement 34
Notes to the Financial Statements
35
Appendix – Unaudited Pro Forma Summary
Financial Statements
57
29
FINANCIAL STATEMENTS GROUP P&L
GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2013
Revenue
NOTE
12 MTHS TO
31 DEC 2013
£’000
9 MTHS TO
31 DEC 2012
£’000
2
87,757
83,628
(56,952)
(52,082)
30,805
31,546
(23,371)
(17,410)
Cost of sales
Gross profit
Administrative expenses
Administrative expenses - exceptional
3
(2,861)
(300)
Operating profit before goodwill amortisation
3
4,573
13,836
Goodwill amortisation
7
(408)
(306)
Operating profit
3
4,165
13,530
Interest payable and similar charges
5
(442)
(231)
3,723
13,299
6
(415)
(1,063)
19
3,308
12,236
Profit on ordinary activities before taxation
Tax charge on profit on ordinary activities
Profit for the financial period
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED
31 DECEMBER 2013
Retained profit for the financial period
Exchange rate (loss)/gain
Total gains and losses recognised since the last financial statements
The accompanying accounting policies and notes from an integral part of these financial statements.
30
12MTHS TO
31 DEC 2013
£’000
9 MTHS TO
31 DEC 2012
£’000
3,308
12,236
(2)
11
3,306
12,247
FINANCIAL STATEMENTS COMPANY P&L
COMPANY PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2013
NOTE
Net operating income
Administrative expenses - exceptional
12 MTHS TO
31 DEC 2013
£’000
9 MTHS TO
31 DEC 2012
£’000
99
617
(2,164)
-
Interest receivable and similar charges
5
67
139
Operating (loss) / profit
3
(1,998)
756
(1,998)
756
6
-
-
19
(1,998)
756
(Loss) / Profit on ordinary activities before taxation
Tax credit/(charge) on profit on ordinary activities
(Loss) / Profit for the financial period
All operations are continuing.
The company has no recognised gains and losses other than the profit above and therefore
no separate statement of total recognised gains and losses has been presented.
The accompanying accounting policies and notes form an integral part of these financial statements.
There is no difference between the profit on ordinary activities and retained profit for the financial year stated
above and their historical cost equivalents.
31
FINANCIAL STATEMENTS GROUP BALANCE SHEET
GROUP BALANCE SHEET AS AT 31 DECEMBER 2013
NOTE
31 DEC 2013
£’000
31 DEC 2012
£’000
Intangible assets
7
2,552
2,954
Tangible assets
8
33,143
34,264
35,695
37,218
Fixed assets
Current assets
Stock
10
17,468
15,146
Debtors
11
27,895
33,463
537
2,701
45,900
51,310
(28,813)
(40,531)
Net current assets
17,087
10,779
Total assets less current liabilities
52,782
47,997
Cash at bank and in hand
Creditors – amounts falling due within one year
12
Creditors – amounts falling due after more than one year
13
(13,561)
(13,878)
Provisions for liabilities
16
(4,268)
(2,472)
34,953
31,647
Net assets
Capital and reserves
Called up share capital
17
28,360
28,360
Share premium account
18
904
904
Profit and loss account
19
5,689
2,383
Total equity shareholders’ funds
20
34,953
31,647
The financial statements on pages 30 to 56 were approved by the board of
directors on 30 September 2014 and were signed on its behalf by:
Martin Boden
Director
Registered Number SC186919
The accompanying accounting policies and notes form an integral part of these financial statements.
32
FINANCIAL STATEMENTS COMPANY ONLY BALANCE SHEET
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2013
NOTE
31 DEC 2013
£’000
31 DEC 2012
£’000
Tangible assets
8
-
-
Investments
9
21,140
21,242
21,140
21,242
Fixed assets
Current assets
Debtors – amounts falling due within one year
11
24,050
30,847
Debtors – amounts falling due after one year
11
4,609
4,437
22
10
28,681
35,294
(191)
(4,808)
Net current assets
28,490
30,486
Total assets less current liabilities
49,630
51,728
(11,380)
(11,480)
38,250
40,248
Cash at Bank
Creditors – amounts falling due within one year
Creditors – amounts falling due after more than one year
12
13
Net assets
Capital and reserves
Called up share capital
17
28,360
28,360
Share premium account
18
904
904
Profit and loss account
19
8,986
10,984
Total equity shareholders’ funds
20
38,250
40,248
The financial statements on pages 30 to 56 were approved by the board of
directors on 30 September 2014 and were signed on its behalf by:
Martin Boden
Director
Registered Number SC186919
The accompanying accounting policies and notes form an integral part of these financial statements.
33
FINANCIAL STATEMENTS GROUP CASH FLOW
GROUP CASH FLOW STATEMENT FOR YEAR ENDED 31 DECEMBER 2013
NOTE
12 MTHS TO
31 DEC 2013
£’000
9 MTHS TO
31DEC 2012
£’000
21
6,278
22,018
(442)
(231)
-
-
Net cash outflow from returns on investments and servicing of finance
(442)
(231)
Taxation
(261)
(52)
(183)
(446)
-
8
Purchase of tangible fixed assets
(3,956)
(2,702)
Net cash outflow from capital expenditure and financial investments
(4,139)
(3,140)
(3,500)
(18,568)
-
203
(100)
-
Net cash outflow from financing
(3,600)
(18,365)
(Decrease)/Increase in net cash
(2,164)
230
Net cash inflow from operating activities
Returns on investments and servicing of finance
Interest paid
Interest received
Capital expenditure and financial investments
Purchase of intangible assets
Disposal of tangible fixed assets
Financing
Decrease in borrowings
Government grant received
Decrease in loan from parent company
RECONCILIATION TO NET DEBT
NOTE
Net debt at 1 January 2013 and 1 April 2012
31 DEC
2013
£’000
31 DEC
2012
£’000
(12,279)
(31,077)
(Decrease)/Increase in net cash in the period
22
(2,164)
230
Movement in borrowings
22
3,600
18,568
Other non-cash changes
22
-
-
(10,843)
(12,279)
Net debt at 31 December
34
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
JDR ANNUAL REPORT 2013
Notes to the
Financial Statements
for the year ended
31 December 2013
1. ACCOUNTING POLICIES
The financial statements have been prepared under the
historical cost convention and in accordance with the
Companies Act 2006 and in accordance with applicable
accounting standards. The principal accounting
policies are set out below.
Going concern basis
The company’s business activities,
together with the factors likely
to affect its future development,
performance and position are set out
in the Directors’ Report. The financial
position of the company, its cash
flows, liquidity position and borrowing
facilities are described in the Directors’
Report and Strategic Report. In
addition, notes (a) to (c) in the Financial
Risk Management section of the
Strategic Report (page 20) include the
company’s objectives, policies and
processes for managing its capital; its
financial risk management objectives;
details of its financial instruments and
hedging activities; and its exposures to
credit risk and liquidity risk.
The company has considerable
financial resources together with
long-term contracts with a number
of customers and suppliers across
different geographical areas and
industries. The company has also
benefited from the continued support
of both Vision Capital LLP and HSBC
and the directors are confident that
this support will continue in the future.
As a consequence, the directors
believe that the company is well
placed to manage its business
risks successfully.
The directors have a reasonable
expectation that the company has
adequate resources to continue
in operational existence for the
foreseeable future. Thus they continue
to adopt the going concern basis of
accounting in the preparing the annual
financial statements.
35
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
1. ACCOUNTING POLICIES (Cont’d)
Basis of consolidation
The Group financial statements
incorporate the financial statements
of the company and all of its
subsidiary undertakings up to the end
of the financial period. The results of
the subsidiaries acquired or disposed
of in the year are included in the
consolidated profit and loss account
from the date of acquisition or up to
the date of disposal.
Revenue
Revenue is measured at the fair
value of the consideration received or
receivable and represents amounts
receivable for goods and services
provided in the normal course
of business.
Significant cables and umbilicals are
accounted for using the percentageof-completion method. Under the
percentage-of-completion method,
we recognise estimated contract
revenue based on costs incurred
to date as a percentage of total
estimated costs.
When the outcome of a significant
cable order cannot be estimated
reliably, contract revenue is
recognised to the extent of contract
costs incurred that are expected to
be recoverable. Contract costs are
recognised as expenses in the period
in which they are incurred. When it is
probable that the total contract costs
will exceed total contract revenue,
the expected loss is recognised as an
expense immediately.
The preconditions for revenue
recognition for non-significant
umbilicals are:
(i)A complete deliverable product or
service exists and corresponds
with a priced item on the customer
contract or purchase order;
36
(ii)The product has passed
the contractual final factory
acceptance test agreed with the
client or the service deliverable
has been completed to the client’s
satisfaction;
(iii)The product or service is available
for client uplift, or has been
dispatched if this is within JDR’s
scope of supply; and
(iv)Collectability of the revenue is
reasonably assured.
Revenue is stated net of associated
sales tax.
Goodwill
Goodwill is disclosed as an intangible
asset stated at cost less accumulated
amortisation. Amortisation is provided
in equal instalments over 20 years.
Goodwill balances are assessed
for possible impairment whenever
events or changes in circumstances
indicate impairment may have
arisen and are written down to the
directors’ estimates of their fair values
accordingly.
Research and development
Expenditure on new product
development is capitalised where
the cost incurred has resulted in a
product that the directors believe has
a commercially viable future.
Capitalised development costs
are disclosed as intangible assets
stated at cost less accumulated
amortisation. Amortisation is provided
in equal instalments over 5 years, the
expected economic life of the new
products.
Government grants
Government grants are of a capital
nature and are released to the profit
and loss account over the expected
useful life of the related asset in
accordance with SSAP4.
Other intangibles
Investments in key business software
and licenses has been capitalised as
intangible assets and are written off
over their expected economic life
of 5 years.
Tangible assets
Tangible assets are stated at cost
less accumulated depreciation.
Depreciation is provided in equal
instalments over their estimated
useful lives by using the following
rates:
Leasehold Improvements 10-15 years
Plant and equipment
5-15 years
Computer equipment
5 years
Office furniture and
equipment
5 years
Assets in the course
of construction
Not depreciated
The company undertakes a review for
impairment of fixed assets if events
or changes in circumstances indicate
that the carrying amount may not
be recoverable. To the extent that
the carrying amount exceeds the
recoverable amount, that is the higher
of net realisable value and value in
use, the fixed asset is written down to
its recoverable amount.
Stock
Stock is stated at the lower of cost
and net realisable value.
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
1. ACCOUNTING POLICIES (Cont’d)
Financial instruments
Financial liabilities and equity
instruments are classified according
to the substance of the contractual
arrangements entered into. An equity
instrument is any contract that
evidences a residual interest in the
assets of the entity after deducting all
of its financial liabilities.
Where the contractual obligations of
financial instruments (including share
capital) are equivalent to a similar
debt instrument, those financial
instruments are classed as financial
liabilities. Financial liabilities are
presented as such in the balance
sheet. Finance costs and gains or
losses relating to financial liabilities
are included in the profit and loss
account. Finance costs are calculated
so as to produce a constant rate of
return on the outstanding liability.
Where the contractual terms of
share capital do not have any terms
meeting the definition of a financial
liability then this is classified as
an equity instrument. Dividends
and distributions relating to equity
instruments are debited direct
to equity.
Investments
Investments are stated at cost less
provision for impairment where
necessary to reduce book value to
recoverable amount. Cost is purchase
price including acquisition expenses.
Finance leases and hire
purchase agreements
Assets purchased under finance
leases or hire purchase agreements
are capitalised in the balance sheet
and are depreciated over the lesser
of their estimated useful lives and the
period of the agreement. The interest
element of the rental obligations is
charged to the profit and loss account
over the period of the contract on
a straight line basis and the capital
element of future rentals is treated
as a liability.
Operating leases
Expenditure on operating leases
is charged to the profit and loss
account on a basis representative of
the benefit derived from the asset,
normally on a straight-line basis over
the lease period.
Foreign currencies
Assets and liabilities of overseas
subsidiaries and associated
undertakings have been expressed
in sterling at the market rate ruling
at the end of each financial year.
Trading results are translated at the
average rates for the year. Exchange
differences arising on translation of
the financial statements of overseas
subsidiaries are taken to reserves.
Trading activities denominated in
foreign currencies are translated
at the average rate for the period.
Monetary assets and liabilities
denominated in foreign currencies
are translated at the rate of exchange
ruling at the balance sheet date and
differences on exchange are included
in the profit and loss account.
Pension costs
Contributions made to personal
pension schemes, which are
administered independently of the
company, are charged to the profit
and loss account as incurred.
Related party disclosures
The company is exempt under the
terms of Financial Reporting Standard
8 from disclosing related party
transactions with entities that are
part of the Group.
Taxation
Current tax, including UK corporation
tax and foreign tax, is provided on
taxable profits at current rates in the
respective taxation jurisdictions.
Deferred tax is recognised in
respect of all timing differences that
have originated but not reversed
at the balance sheet date where
transactions or events that result in
an obligation to pay more tax in the
future or a right to pay less tax in the
future have occurred at the balance
sheet date. Timing differences are
differences between the company’s
taxable profits and its results as
stated in the financial statements that
arise from the inclusion of gains and
losses in tax assessments in periods
different from those in which they are
recognised in the financial statements.
A deferred tax asset is regarded as
recoverable and therefore recognised
only when, on the basis of all available
evidence, it can be regarded as more
likely than not that there will be
suitable taxable profits from which
the future reversal of the underlying
timing difference can be deducted.
Deferred tax is measured on a nondiscounted basis.
Deferred tax is measured at the tax
rates that are expected to apply
in the periods in which the timing
differences are expected to reverse.
37
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
2
SEGMENTAL REPORTING
12 MTHS TO
31 DEC 2013
£’000
9 MTHS TO
31 DEC 2012
£’000
-
-
82,124
81,703
5,557
1,893
76
32
87,757
83,628
13,389
25,082
5,045
9,546
North America
13,692
6,210
Rest of the World
55,631
42,790
87,757
83,628
GROUP
Revenue by origin
Continental Europe
United Kingdom
North America
Rest of the World
Revenue by destination
Continental Europe
United Kingdom
Additional segmental disclosures have not been provided as the directors consider that the provision
of such information could be prejudicial to the business.
38
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
3
OPERATING PROFIT/(LOSS)
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
Operating profit/(loss) is stated after charging
Goodwill amortisation
408
306
-
-
Amortisation of development costs
171
77
-
-
4,708
3,386
-
-
430
235
-
-
2,705
2,396
-
-
136
8
-
-
2,861
300
2,164
-
22
21
-
-
28
23
-
-
10
8
-
-
115
66
-
-
Depreciation
- owned assets
Operating lease charges
- plant and machinery
- land and buildings
Loss on the sale of fixed assets
Exceptional administrative expenses
1
Auditors’ remuneration
Services to the Group and its subsidiaries
- fees payable to the Company’s auditor for the audit of the
financial statements
- audit of the financial statements of the Company’s subsidiaries
(associates) pursuant to legislation
- other services supplied pursuant to legislation
Foreign exchange gain
During the year to December 2013, various one-off administrative expenses were
incurred by the group, mainly relating to a strategic review of the best timing for the
shareholders to consider a potential sale of the business.
1
In the 9 months to 31 December 2012, the Group’s UK subsidiary incurred exceptional
administration expenses of £300,000 relating to warranty costs.
39
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
4
EMPLOYEE COSTS
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
Wages and salaries
17,804
12,623
779
919
Social security costs
1,845
1,251
77
51
866
562
23
16
20,515
14,436
879
986
Other pension costs (See note 25)
THE AVERAGE NUMBER OF EMPLOYEES (INCLUDING EXECUTIVE DIRECTORS) DURING THE PERIOD WAS
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
By activity
382
373
-
-
Selling and distribution
31
24
-
-
Administration
40
37
6
6
453
434
6
6
Production
DETAILS OF DIRECTORS’ EMOLUMENTS ARE AS FOLLOWS
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
Aggregate emoluments
Compensation for loss of office
Company contributions to defined contribution pension schemes
1,057
764
1,012
645
111
-
111
-
26
22
23
16
1,194
786
1,146
661
348
205
348
205
Highest paid director
Total amount of emoluments and amounts (excluding shares)
receivable under long term incentive schemes
There are retirement benefits accruing to two (31 December 2012: four) directors
under defined contribution personal pension schemes.
40
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
5
NET INTEREST PAYABLE
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
(124)
(114)
(124)
(114)
-
(5)
-
-
(318)
(46)
-
(9)
-
(66)
(218)
-
(442)
(231)
(342)
(123)
Interest due from Group undertakings
-
-
407
262
Other interest
-
-
2
-
Total interest receivable and similar income
-
-
409
262
(442)
(231)
67
139
Bank loan interest
Bank interest
Other interest & charges
Net exchange difference on foreign currency borrowings
Total interest payable and similar charges
Net interest (payable)/receivable
41
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
6
TAX ON PROFIT ON ORDINARY ACTIVITIES
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
Current tax
-
-
-
-
Foreign tax
10
13
-
-
Total current tax charge
10
13
-
-
Current period
427
1,583
-
-
Prior period
(22)
(533)
-
-
Tax charge for the period
415
1,063
-
-
UK tax
Deferred tax
THE TAX ASSESSED FOR THE PERIOD VARIES FROM THE STANDARD RATE OF CORPORATION TAX
IN THE UK (23%). THE DIFFERENCES ARE EXPLAINED BELOW:
GROUP
COMPANY
12 MTHS TO
9 MTHS TO 12 MTHS TO
9 MTHS TO
31 DEC 2013 31 DEC 2012 31 DEC 2013 31 DEC 2012
£’000
£’000
£’000
£’000
Profit on ordinary activities before taxation
Profit/(loss) on ordinary activities multiplied by standard rate
in the UK 23% (2012: 24%)
3,723
13,299
(1,998)
756
865
3,192
(464)
181
-
(95)
248
131
(1,117)
(1,265)
-
-
394
847
411
3
10
13
-
-
414
(2,771)
(195)
(315)
(556)
92
-
-
10
13
-
-
Effects of:
Transfer pricing adjustments
Group relief claimed
Expenses not deductible for tax purposes
Foreign tax
Utilisation of brought forward losses and other deductions
Accelerated capital allowances
Total current tax charge for the period
42
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
7
INTANGIBLE ASSETS
SOFTWARE
TOTAL
£’000
DEVELOPMENT
COST
£’000
£’000
£’000
9,260
1,178
201
10,639
Additions
-
-
183
183
Foreign exchange revaluation
-
-
-
-
9,260
1,178
384
10,822
(7,005)
(680)
-
(7,685)
(408)
(131)
(40)
(579)
-
(6)
-
(6)
(7,413)
(817)
(40)
(8,270)
At 31 December 2013
1,847
361
344
2,552
At 31 December 2012
2,255
498
201
2,954
GROUP
GOODWILL
Cost
At 1 January 2013
At 31 December 2013
Accumulated amortisation
At 1 January 2013
Charge for the period
Foreign exchange revaluation
At 31 December 2013
Net book value
The company has no intangible fixed assets (31 December 2012: nil).
43
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
8
TANGIBLE FIXED ASSETS
GROUP
LEASEHOLD
IMPROVEMENTS
PLANT AND
EQUIPMENT
COMPUTER
EQUIPMENT
OFFICE
ASSETS
FIXTURES UNDER CONAND FITTINGS STRUCTION
£’000
£’000
TOTAL
£’000
£’000
£’000
7,265
41,760
2,278
331
211
51,845
318
2,761
278
19
580
3,956
-
(241)
(266)
-
-
(507)
Transfers
(6)
649
(436)
4
(211)
-
Foreign exchange
(4)
(502)
(6)
(11)
-
(523)
7,573
44,427
1,848
343
580
54,771
(1,697)
(14,248)
(1,465)
(171)
-
(17,581)
(531)
(3,756)
(398)
(23)
-
(4,708)
Disposal
-
163
208
-
-
371
Transfers
-
(432)
436
(4)
-
-
Foreign exchange revaluation
2
279
4
5
-
290
(2,226)
(17,994)
(1,215)
(193)
-
(21,628)
At 31 December 2013
5,347
26,433
633
150
580
33,143
At 31 December 2012
5,568
27,512
813
160
211
34,264
£’000
Cost
At 1 January 2013
Additions
Disposal
At 31 December 2013
Accumulated depreciation
At 1 January 2013
Charge for the period
At 31 December 2013
Net book value
No assets held under finance leases are included within tangible fixed assets.
44
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
8
TANGIBLE FIXED ASSETS (CONTINUED)
COMPANY
OFFICE
EQUIPMENT
£’000
Cost
At 1 January 2013
Additions
At 31 December 2013
53
53
Accumulated depreciation
At 1 January 2013
Charge for the period
At 31 December 2013
(53)
(53)
Net book value
At 31 December 2013
-
At 31 December 2012
-
45
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
9INVESTMENTS
COMPANY
31 DEC 2013
£’000
COMPANY
31 DEC 2012
£’000
21,242
21,222
Disposals
(102)
-
Additions
-
20
21,140
21,242
At 1 January 2013 and 1 April 2012
-
-
Additions
-
-
At 31 December
-
-
At 1 January 2013 and 1 April 2012
21,242
21,222
At 31 December
21,140
21,242
Shares in subsidiary undertakings
Cost
At 1 January 2013 and 1 April 2012
At 31 December
Provisions for impairment
Net Book Value
THE COMPANY’S PRINCIPAL TRADING SUBSIDIARY OPERATING UNDERTAKINGS AT 31
DECEMBER 2013 WERE AS FOLLOWS
NAME OF SUBSIDIARY
NATURE OF BUSINESS
COUNTRY OF
PERCENTAGE OF
REGISTRATION
/
NOMINAL SHARE
INCORPORATION
CAPITAL
JDR Cable Systems Ltd
Offshore oil & gas services
Scotland
100%
JDR Cable Systems Inc
Offshore oil & gas services
United States
100%
JDR Cable Systems (Thailand) Ltd
Offshore oil & gas services
Thailand
The shares in JDR Cable Systems Inc are held by JDR Cable Systems (Holdings) Inc.
46
100%
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
10STOCK
GROUP
Raw materials
Work in progress
Finished goods
31 DEC 2013
£’000
31 DEC 2012
£’000
10,299
6,493
7,169
8,653
-
-
17,468
15,146
11DEBTORS
AMOUNTS FALLING DUE
WITHIN ONE YEAR
Trade debtors
Prepayments and accrued income
Corporation tax recoverable
Amounts owed by Group undertakings
Other debtors
AMOUNTS FALLING DUE
AFTER ONE YEAR
Prepayments and accrued income
Amounts owed by Group undertakings
GROUP
COMPANY
31 DEC 2013
£’000
31 DEC 2012
£’000
31 DEC 2013
£’000
31 DEC 2012
£’000
24,640
31,190
-
-
1,423
993
20
16
150
-
-
-
-
-
23,290
30,808
1,587
1,177
740
23
27,800
33,360
24,050
30,847
31 DEC 2013
£’000
31 DEC 2012
£’000
31 DEC 2013
£’000
31 DEC 2012
£’000
95
103
-
-
-
-
4,609
4,437
95
103
4,609
4,437
GROUP
COMPANY
Amounts owed by Group undertakings are unsecured and have no fixed date of repayment.
The directors do not intend to demand repayment of these amounts within 12 months of the balance sheet date.
47
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
12
CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR
GROUP
31 DEC 2013
31 DEC 2012
£’000
£’000
COMPANY
31 DEC 2013
31 DEC 2012
£’000
£’000
-
3,500
-
3,500
Trade creditors
8,149
17,280
-
-
Accruals and deferred income
3,523
3,957
191
440
Other tax and social security
514
639
-
-
Other creditors
842
784
-
-
15,785
14,371
-
-
-
-
-
868
28,813
40,531
191
4,808
Revolving Credit Facility (RCF) (note 14)
Payments on account
Amounts due to Group undertakings
Amounts due to Group undertakings are unsecured, and are repayable on demand.
48
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
13
CREDITORS – AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
GROUP
31 DEC 2013
31 DEC 2012
£’000
£’000
-
-
-
-
11,380
11,480
11,380
11,480
2,181
2,398
-
-
-
-
-
-
13,561
13,878
11,380
11,480
Bank loan and accrued interest (note 14)
Amount due to parent company (note 14)
COMPANY
31 DEC 2013
31 DEC 2012
£’000
£’000
Government grant
Other
Amounts due to parent company are not payable until the expiry of bank debt in 2015.
GOVERNMENT GRANTS ARE AS FOLLOWS
£’000
At 1 January 2013
2,835
Received during the period
At 31 December 2013
2,835
Amortisation
At 1 January 2013
437
Charge during the period
217
At 31 December 2013
654
Carrying value
At 31 December 2013
2,181
At 31 December 2012
2,398
49
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
14BORROWINGS
GROUP
31 DEC 2013
31 DEC 2012
£’000
£’000
COMPANY
31 DEC 2013
31 DEC 2012
£’000
£’000
Borrowings are repayable as follows
Within one year
Bank loans and accrued interest (a)
-
3,500
-
3,500
-
3,500
-
3,500
11,380
11,480
11,380
11,480
11,380
11,480
11,380
11,480
11,380
14,980
11,380
14,980
After 5 years
Loan due to parent undertaking (b)
Total borrowings
(a)HSBC is the sole bank lender to JDR. Bank loans comprise of a Revolving Credit Facility
(RCF) (£10.0m). The loans are denominated in Sterling. The RCF expires in June 2015.
HSBC charge a fee for non-utilisation of the RCF and interest is charged at a fixed rate
when the facility is utilised. The Group bank loans at balance sheet date were secured by
a bond and floating charge over the assets of the Group.
(b)The Loans due to parent undertaking are ultimately provided by the shareholders of JDR
Enterprises Ltd. No interest is charged on Loans due to parent undertaking. Payment
of any accrued interest on the parent company loans and repayment of principal is not
permitted under the Term & Revolving Facilities Agreement between JDR Cable Systems
(Holdings) Ltd, JDR Enterprises Ltd, the shareholders of JDR Enterprises and HSBC,
prior to the discharge of the Bank’s debt. The Bank’s debt is not fully discharged until
31 March 2015.
50
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
15
DEFERRED TAXATION
THE DEFERRED TAX LIABILITY THAT HAS BEEN
RECOGNISED IS AS FOLLOWS
Accelerated capital allowances
Other short term timing differences
THE POTENTIAL DEFERRED TAX ASSET WHICH HAS NOT
BEEN RECOGNISED IS AS FOLLOWS
Accelerated capital allowances
Losses
Other short term timing differences
GROUP
31 DEC 2013
31 DEC 2012
£’000
£’000
COMPANY
31 DEC 2013
31 DEC 2012
£’000
£’000
728
387
-
-
(154)
(117)
-
-
574
270
-
-
GROUP
31 DEC 2013
31 DEC 2012
£’000
£’000
COMPANY
31 DEC 2013
31 DEC 2012
£’000
£’000
1
1
1
1
1,208
1,601
1,208
1,601
-
-
-
-
1,209
1,602
1,209
1,602
The deferred tax liability/(asset) is based on a corporation tax rate of 20% (31 December 2012; 23%).
51
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
16
PROVISIONS FOR LIABILITIES AND CHARGES
DEFERRED
TAXATION
£’000
WARRANTY
OTHER
TOTAL
£’000
£’000
£’000
At 1 January 2013
270
300
1,902
2,472
(Utilised)/provided in the year
304
2,902
(1,410)
1,796
At 31 December 2013
574
3,202
492
4,268
GROUP
The other provision relates to a number of excess contractual costs which
the company believes it may incur on projects which have been delivered
to clients. These costs are not fully known, subject to negotiation and are
unlikely to be offset by additional revenue. It is expected that the majority
17
of expenditures will be incurred in the next financial year and that all
will be incurred within two years. The provision has been estimated in
accordance with the appropriate contract documents.
The company has no provision for liabilities (31 December 2012: nil).
CALLED UP SHARE CAPITAL
GROUP AND COMPANY
31 DEC 2013
£’000
31 DEC 2012
£’000
2,645
2,645
22,600
22,600
4,800
4,800
30,045
30,045
31 DEC 2013
£’000
31 DEC 2012
£’000
960
960
22,600
22,600
4,800
4,800
28,360
28,360
AUTHORISED
Equity
26,450,000 Ordinary shares of £0.10 each
22,600,121,895 Deferred Shares of £0.001 each
4,800,000 Preference Shares of £1.00 each
GROUP AND COMPANY
ALLOTTED, CALLED UP AND FULLY PAID
Equity
9,600,000 Ordinary shares of £0.10 each
22,600,121,895 Deferred Shares of £0.01 each
4,800,000 Preference shares of £1.00
Dividends
The profits of the Company available for distribution shall be applied in
paying to the holders of the Ordinary Shares pro rata, according to the
amounts paid up or credited as paid up on the ordinary shares held by
them respectively, such amount as the directors may decide, subject to
the consent of an Investor Majority and the Company’s bankers.
The Deferred Shares carry no right to a dividend.
Voting Rights
A member has one vote for every ordinary share held.
The deferred shares have no voting rights.
52
Capital
On a return of assets on liquidation or capital reduction or otherwise, the
assets of the company remaining after the payment of its liabilities shall
be distributed to the holders of the ordinary shares. The holders of the
deferred shares are not entitled to any share of the surplus assets until
each of the ordinary shareholders has received £10,000,000 per
ordinary share.
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
18
SHARE PREMIUM ACCOUNT
GROUP
£’000
COMPANY
£’000
904
904
GROUP
£’000
COMPANY
£’000
At 1 January 2013
2,383
10,984
Profit / (loss) for the financial period
3,308
(1,998)
(2)
-
5,689
8,986
At 1 January and 31 December 2013
19
PROFIT AND LOSS ACCOUNT
Exchange adjustments
At 31 December 2013
53
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
20
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
GROUP
12 MTHS TO
9 MTHS TO
31 DEC 2013
31 DEC 2012
£’000
£’000
COMPANY
12 MTHS TO
9 MTHS TO
31 DEC 2013
31 DEC 2012
£’000
£’000
3,308
12,236
(1,998)
756
(2)
11
-
-
3,306
12,247
(1,998)
756
Opening shareholders’ funds
31,647
19,400
40,248
39,492
Closing shareholders’ funds
34,953
31,647
38,250
40,248
Profit/(loss) for the financial period
Exchange adjustments
Net addition to / (reduction in) shareholders’ funds
21
CASH FLOW FROM OPERATING ACTIVITIES
GROUP
12 MTHS TO
9 MTHS TO
31 DEC 2013
31 DEC 2012
£’000
£’000
4,165
13,530
Amortisation of goodwill
408
306
Amortisation of development costs
171
77
Depreciation charge
4,708
3,386
Amortisation of grant
(217)
(152)
137
-
(2,322)
(3,703)
5,718
3,425
(8,218)
5,785
1,492
(634)
236
(2)
6,278
22,018
Operating profit
Loss on sale of fixed assets
Increase in stocks
Decrease in debtors
(Decrease)/increase in creditors
Increase in provisions
Other non-cash movements
Net cash inflow from operating activities
54
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
22
ANALYSIS OF NET DEBT
GROUP
31 DEC 2013
£’000
OTHER
NON-CASH
£’000
2,701
(2,164)
-
537
Debt less than one year
(3,500)
3,500
-
-
Debt more than one year
(11,480)
100
-
(11,380)
Net debt
(12,279)
1,436
-
(10,843)
Cash at bank and in hand
1 JAN 2013
CASH FLOW
£’000
£’000
23OPERATING LEASE COMMITMENTS
At 31 December 2013 the Group has lease agreements in respect of properties, plant and equipment.
GROUP
31 DEC 2013
31 DEC 2012
PROPERTY
£’000
31 DEC 2013
PLANT AND
EQUIPMENT
£’000
PROPERTY
£’000
31 DEC 2012
PLANT AND
EQUIPMENT
£’000
71
22
322
51
478
231
530
240
2,066
-
1,961
-
2,615
253
2,813
291
31 DEC 2013
£’000
31 DEC 2012
£’000
755
1,126
Annual commitments under non-cancellable
operating leases expiring:
Within 1 year
Within 2 to 5 years
After 5 years
24
CAPITAL COMMITMENT
GROUP
Contract placed for future capital expenditure not provided in the financial statements
25
PENSION COMMITMENT
The Group contributes to personal pension schemes on behalf of certain employees. These schemes are administered
independently of the Group. The total pension cost which is charged against profit represents contributions payable by
the Group and amounted to £866,000 (31 December 2012: £562,000).
55
FINANCIAL STATEMENTS NOTES - YEAR ENDED DECEMBER 2013
26ULTIMATE PARENT UNDERTAKING
The ultimate parent company and controlling party is JDR
Enterprises Limited, which is the parent company of the
largest Group to consolidate these financial statements.
Copies of the Group financial statements can be obtained
from the Company Secretary at JDR Cable Systems
(Holdings) Limited, Littleport Innovation Park, Wisbech
Road, Littleport, Ely, Cambridgeshire, CB6 1RA.
27RELATED PARTY TRANSACTIONS
Mr Rich and Mr Van de Steen were representative directors
for Vision Capital LLP, the largest shareholder in JDR
Enterprises Ltd. Vision Capital LLP charged a monitoring
fee of £99,000 in the period.
During the year ended March 2012, loans were advanced to
two directors totalling £171,930.
The outstanding balance at 1 January 2013 was £106,342
which was the highest balance at any point during the
year. The amounts attract interest at 4% p.a. The balance
at 31 December 2013 was £46,699 and was fully repaid in
February 2014.
28CONTINGENT LIABILITIES
During the normal course of business the Group has given
bank guarantees totalling £16,129,000 (31 December 2012:
£18,308,000).
The Group receives government grants to assist in the
funding of capital expenditure. The aggregate amount of
such grants received in the year to 31 December 2013 was
nil (9 months to 31 December 2012: £210,000).
In the event of any breach of grant conditions the full
amount of the grant received would be repayable. The
Group is not aware of any actual, or potential, breach of
conditions, no provision is required for repayment.
JDR Cable Systems (Holdings) Ltd is a guarantor for all
Group borrowing facilities under the agreement between the
company and its bankers. Total sums outstanding under
this agreement at 31 December 2013 were £nil
(31 December 2012: £3,500,000).
56
APPENDIX
Unaudited Pro Forma Summary
Financial Statements
APPENDIXUNAUDITED ANNUALISED GROUP PROFIT AND LOSS ACCOUNT (CONTINUING
GROUP) FOR THE 12 MONTHS ENDED 31 DECEMBER
12 MTHS TO
31 DEC 2013
£’000
12 MTHS TO
31 DEC 2012
£’000
87,757
129,899
(56,952)
(86,014)
30,805
43,885
(23,371)
(22,336)
(2,861)
(607)
Operating profit before goodwill amortisation
4,573
20,942
Goodwill amortisation
(408)
(492)
Operating profit
4,165
20,450
Interest payable and similar charges
(442)
(2,387)
Profit on ordinary activities before taxation
3,723
18,063
Tax charge on profit on ordinary activities
(415)
(45)
Profit for the financial period
3,308
18,018
Revenue
Cost of sales
Gross profit
Administrative expenses
Administrative expenses - exceptional
UNAUDITED ANNUALISED GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR
THE 12 MONTHS ENDED 31 DECEMBER
Retained profit for the financial period
Exchange rate gain
Total gains and losses recognised since the last financial statements
12 MTHS TO
31 DEC 2013
£’000
12 MTHS TO
31 DEC 2012
£’000
3,308
18,018
(2)
150
3,306
18,168
57
APPENDIX
Unaudited Pro Forma Summary
Financial Statements
APPENDIXUNAUDITED ANNUALISED GROUP BALANCE SHEET AS AT 31 DECEMBER
31 DEC 2013
£’000
31 DEC 2012
£’000
2,552
2,954
33,143
34,264
35,695
37,218
Stock
17,468
15,146
Debtors
27,895
33,463
537
2,701
45,900
51,310
(28,813)
(40,531)
Net current assets
17,087
10,779
Total assets less current liabilities
52,782
47,997
(13,561)
(13,878)
Provisions for liabilities
(4,268)
(2,472)
Net assets
34,953
31,647
28,360
28,360
904
904
5,689
2,383
34,953
31,647
Fixed assets
Intangible assets
Tangible assets
Current assets
Cash at bank and in hand
Creditors – amounts falling due within one year
Creditors – amounts falling due after more than one year
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Total equity shareholders’ funds
58
APPENDIX
Unaudited Pro Forma Summary
Financial Statements
APPENDIXUNAUDITED ANNUALISED GROUP CASH FLOW STATEMENT FOR THE 12 MONTHS
ENDED 31 DECEMBER
12 MTHS TO
31 DEC 2013
£’000
12 MTHS TO
31 DEC 2012
£’000
Earnings before interest, tax, depreciation and amortisation (EBITDA)
12,313
25,766
Less: exceptional items
(2,861)
(607)
(2,322)
7,685
5,718
(9,512)
(8,218)
(8,196)
Other
1,648
4,477
Net cash inflow from operating activities
6,278
19,613
(442)
(2,387)
-
-
Net cash outflow from returns on investments and servicing of finance
(442)
(2,387)
Taxation
(261)
(139)
Increase in tangible and intangible fixed assets
(4,139)
(4,288)
Net cash outflow from capital expenditure and financial investments
(4,139)
(4,288)
(3,500)
(1,500)
(100)
(11,840)
Net cash outflow from financing
(3,600)
(13,340)
Decrease in net cash
(2,164)
(541)
Add: movement in working capital
(Increase)/decrease in stock
Decrease/(Increase) in trade debtors
Decrease in trade creditors and customer advances
Returns on investments and servicing of finance
Interest paid
Interest received
Capital expenditure and financial investments
Financing
Decrease in borrowings
Decrease in loan from parent company
59
JDR ANNUAL REPORT 2013
Advisors and Registered
Head Office
REGISTERED HEAD OFFICE
JDR Cable Systems Ltd
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EN
Registered company number: SC 186 919
60
BANKERS
HSBC Bank plc
Home & Eastern Counties Corporate Banking Centre
Level 6
Metropolitan House, CBX3
321 Avebury Boulevard
Milton Keynes
MK9 2GA
LAWYERS
Eversheds LLP
Kett House
Station Road
Cambridge
CB1 2JY
AUDITORS
Grant Thornton UK LLP
101 Cambridge Science Park
Milton Road
Cambridge
CB4 OFY
FINANCIAL ADVISORS
Lazard & Co., Ltd
50 Stratton Street
Mayfair
London
W1J 8LL
COMMUNICATIONS ADVISORS
Brunswick Group LLP
16 Lincoln’s Inn Fields
London
WC2A 3ED
Bird and Bird LLP
Taunusanlage 1
60329
Frankfurt am Main
Germany
Macfarlanes LLP
20 Cursitor Street
London
EC4A 1LT
Littleport Innovation Park
Wisbech Road
Littleport
Cambridgeshire
CB6 1RA
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