annual report - jdr cables, providing the vital connection · aftermarket, installation and...
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ANNUAL REPORTANNUAL REPORT fOR ThE yEAR
ENdEd 31 dEcEmbER 2012(iNcORPORATiNg ThE fiNANciAL sTATEmENTs
fOR ThE NiNE mONThs ENdEd 31 dEcEmbER 2012)
JdR cAbLE sysTEms (hOLdiNgs) LimiTEd
JdR is a leading provider of technology connecting the global energy industry. Our products and services enable vital control and power delivery to offshore oil, gas and renewable energy systems.
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-the-art manufacturing facilities, technology and people to deliver these world-class subsea products.
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.
INTRODUCTION
The JdR team is focussed on being• A world leading supplier of
IWOCS (Intervention Workover Control Systems), subsea production umbilicals and subsea power cables for global oil, gas and renewable energy markets
• A global supplier with regional, sales, engineering, operations, project management and service capabilities
• Customer focussed, driven by strategic customer relationships, product management, technology leadership, performance measurement and delivery of solutions
• An industry leader in quality, on-time performance, environmental, health and safety compliance and cost effectiveness
• Recognised as one of the best places to work in the oil and gas and renewables industries
Our values drive us to • Develop and work in world class
facilities where we innovate, adapt and embrace change to produce products that we are proud of
• Work together within a safe, communicative and transparent organisation
• Invest in our team to encourage personal responsibility, development, leadership and equality
cONTENTsThE JdR missiON sTATEmENT ANd VALUEs
Our business and strategy 3
JdR’s Oil & gas Products 7
chairman’s Report 9
chief Executive Officer’s Report 11
health, safety and the Environment 14
chief financial Officer’s Report 15
JdR board and Executive management Team 19
directors’ Report 21
corporate governance Report 23
Risk management Report 27
independent Auditor’s Report 29
financial statements 30
Notes to the financial statements 36
Appendix – 57 Unaudited Pro forma summary financial statements
Advisers 60
having delivered a record performance in 2012, we are continuing the momentum into 2013 and beyond.
Pat Herbert | Executive chairman
ANNUAL REPORT 31 December 2012 4highLighTs
sATTAhiP, ThAiLANd, bANgkOk, ThAiLANd
siNgAPORE
hAmbURg, gERmANy
hOUsTON, UsA
AbERdEEN,NEWcAsTLE,
hARTLEPOOL,LiTTLEPORT,
Uk
bUsiNEss highLighTs fiNANciAL hisTORy
OUR gLObAL PREsENcE
• Significantrevenuegrowthacrossallmarketsegmentsinoil&gas,renewablesandaftermarketservices
• Recordorderintake,withexpectationoffurthergrowthin2013
• Recordrevenuesof£130m(2011:£83m),anincreaseof56%
• Recordoperatingcashinflowof£20mandenhancedfinancialflexibilityfollowingrepaymentofallseniorbankdebtin2011
• Strongcashflowgenerationandenhancedfinancialflexibilityfollowingrepaymentofallseniorbankdebtin2011
• Achangeinfinancialyear-endto31December,fromDecember2012
OPERATiONAL highLighTs
• Strongproductdemandcontinued,inparticulardemandforlongerandlargersubseaumbilicalandpowercables
• Improvedproductivityacrossthebusinessduetoon-goingbenefitsoflong-terminvestmentinmanufacturingfacilities,businessprocessesandpeople
• ImportantnewsupplydealsannouncedwithSwiberOffshoreConstructionPteLtdfortheBruneiShellPetroleumChampionField,GermanoffshorewindenergycompanyWindMWGmbHandthecompletionofmajoroilandgasprojectsforSantosinAustraliaandChinaNationalOffshoreOilCorporation(CNOOC)
• Continuetogrowfull-servicecapabilitywithdiverseproductportfoliofromdesignservices,toproductsolutionstoaftermarketsupport
• Favourablemarketconditionsasoffshoremarketscontinuedtogrow
Order INTAKe reVeNUe
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4451
83
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’M)
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-5
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The JDR Group of companies has changed its financial year end from 31 March to 31 December. The performance figures included within this report are unaudited 12 month pro forma figures, which include three months of profit and loss account and cash flow data from the final quarter of the year ended 31 March 2012. The financial statements on pages 31 to 56 show the financial period of nine months to 31 December 2012 (with comparative figures for the year ended 31 March 2012).
JdR’s sTRATEgy
Ourbusinessmodelisdesignedtosupportcustomersinachievingtheirbusinessgoalsanddeliverlong-termsustainablegrowthforJDR.Weserveabroad-basedandglobalbluechipcustomerbaseandourproductsandservicesplayafundamentalroleinoffshoreenergydelivery.Weareattheforefrontoffutureenergysupplytechnologiesfortheoilandgasandrenewableenergyindustries.
Majorenergycompaniesandsubseaserviceprovidersrelyonourproductsandservicestosupportprojectsinsomeoftheworld’sharshestoffshoreenvironments.TheJDRteamisfocussedonthedesignanddevelopmentofproductsolutionsthatmeettherequirementsofindividualcustomerprojects,high-qualitymanufactureandlong-termcustomersupportthroughouttheproductlife-cycle.
bUsiNEss mOdEL
Oil & Gas
JDRisaleadingsupplierofengineeredproductsfortheoffshoreoilandgasindustry.Wehavedevelopedtechnologiesthatmaximisetheefficientdeliveryofpower,controlandcommunicationsthroughumbilicalsandpowercables.Usingourstate-of-the-artengineeringandmanufacturingcapabilities,wedevelopanddelivercustombuiltsystemsforsubseainstallationsateverincreasingwaterdepths.
renewables
Wehaveembracedthegrowinginternationalmarketforalternativeandsustainableenergydelivery.TheGroup’sUKeastcoastlocationmakesitideallylocatedtoprovide,engineering,manufacturingandinstallationservicesfortheevolvingrenewablesmarket,whichisparticularlystronginEurope.
Aftermarket, Installation and Maintenance Services (AIMS)
Globalaftermarket,installationandmaintenanceservicesareprovidedbyourAIMServicesgroup.AIMShasanetworkofexperiencedandcertifiedtechniciansandservicesupportfacilities,available24/7tomanagecustomerprojects,forJDRandnon-JDRproducts,onoroffshore.Theteamhascreatedperiodicmaintenanceandinspectionroutinesthatincludeproductlifecyclepreventativemaintenanceandassuranceprogrammes.
OUR mARkETs
A LEAdiNg PROVidER Of TEchNOLOgy cONNEcTiNg ThE gLObAL OffshORE ENERgy iNdUsTRy
ANNUAL REPORT 31 December 2012 6JdR’s sTRATEgy
Ourstrategyisbasedongrowth,fundedbyproductivityanddeliveredbyaflexibleorganisationthatactsresponsiblyatalltimes.JDRiscommittedtoprovidingalifecyclecustomerserviceincludingthedesign,buildandmaintenanceofourproducts.Ourstrategyisfocussedonsixkeyareas:
1. Providing a world-class, full-service offering:Ourreputationisfoundedonourup-frontdesignskills,thetechnicalperformanceofourproducts,aworld-classfocusonsafety,qualityandreliableexecution.Weworkcloselywithcustomerstosolvecomplextechnologicalchallengesandincreasinglyoffercompleteturnkeysystempackages.Ourexperiencedengineering,projectmanagement,manufacturingandserviceteamsprovidecustomerswithafulllife-cycleproductandserviceoffering.Ourtechnologyfocusensuresproductsarereliableinharsh,deepwaterenvironmentsandcomplywithinternationalstandards.
2. Investment in innovation: JDRcontinuestoinvestinworld-classtechnologytosupportnewdevelopmentsinoffshoreenergyexploration;fromproductiontechniquesandnewequipmentdesigntoimprovementsincost-efficiency.Forexample,ourself-supportingopenwaterIWOCumbilicalsignificantlyreducesoffshoreoperatingcostsasthedesignpushestheboundariesofconventionalapplicationanddeploymenttechniques.
3. excellence in manufacturing:Ourglobalmanufacturingoperationsareledbythestate-of-the-artfacilityinHartlepool,whichhasbeenakeyenablerofJDR’sgrowth.
4. Growing global Aftermarket services: JDR’sAftermarketInstallationandMaintenanceServices(AIMS)supportsourcustomersfromprojectinstallationtopre-commissioningwithfullproductlifecyclesupport.OurapproachenhancesinvestmentinaJDRproductandsupportsclientsinloweringthetotallifetimecostofequipmentownership.
5. Commitment to Health and Safety: JDRiscommittedtoraisingthebarinoperationalsafetyandminimisingadverseenvironmentalimpactsbycontinuallyreviewingproductdesignandmanufacturingmethodologies.
6. Financial growth:2012wasasuccessfulyearforJDRandthecompanyisabletoreportanincreaseinrevenue,operatingprofitandorderintake.Weexpectadditionalgrowthin2013andremainconfidentinourproductdeliveringcapabilities.
OUR sTRATEgy
JDRhasachievedanimpressivelevelofgrowthoverthelastdecade,drivenbyitsdeepknowledgeofoffshoretechnologyandservices,anditsapproachtoformingclosepartnershipswithitscustomers.
SincetheacquisitionofJDRin2007byVisionCapital,GoldmanSachsandManagement,JDRhasbeendrivenbyrecognitionofthesignificantpotentialinoffshoreenergyservices.Tocapitaliseonthestrengthofitsoffering,JDRestablishedastrategyfocussedonitsdeepknowledgeofoffshoretechnologyandservices.JDRdevelopedcapabilityandcapacitytodeliverlong-length,customengineeredsubseaproductionumbilicals,subseapowercables(foroil&gasoperators)and
bUiLdiNg A gROWTh PLATfORm
Overthelastyear,JDRhasdeliverednumeroushighprofileprojectsforcustomersglobally,workingcloselywiththemtosolvecomplextechnologicalchallenges.Asdemandinitsoffshoreenergymarketscontinuestoexpand,JDRiswell-positionedtomaintainitsstronggrowthandachievesustainableprofitability.
RecentprojectawardsincludetheLondonArrayoffshorewindproject,theMeerwindoffshorewindprojectforWindMW,SwiberOffshoreConstructionfortheBruneiShellPetroleumChampionField,theFletcherFinucaneprojectforSantos,theLiuhua4-1projectforChinaNationalOffshoreOilCorporation(CNOOC)andtheOfonprojectforTotalinNigeria.
sUccEssfUL PROJEcT dELiVERy
JDRisoperatingfromanadvantageouspositioninamarketwithsignificantgrowthopportunity.InitsnextstageofgrowthJDRwillseekto:
• Outperformthehigh-growthmarketforsubseaproductsandtechnology
• Developasasupplierofchoice;continuingtobuildstrongcustomerrelationshipsandongoinginvestmentinnewproductsandoperationalefficiency.
• Achieveleadershipinindustrybestpracticefromproductdeliverytohealthandsafetyperformance
ThE NExT dEVELOPmENT PhAsE
Thesuccessofourstrategyhasbeensupportedbyimportantinvestmentdecisions.TheopeningoftheHartlepool(UK)andSattahip(Thailand)plantsmarkedatremendousstepchangeinJDR‘scapabilities.Thishasbeencomplementedbyanumberoftargetedinvestmentsinfactorythroughputandcapacity,withadditionalcapitalinvestmentinplantlayoutandequipment.Wealsooverhauledourbusinesssystemsandprocesses,whichdrasticallyimprovedproductivity,businessplanningandcostvisibility.
JDRhasalsoinvestedinitspeopleandleadershiptosupportitsgrowth.Anewexecutivemanagementteamwasappointedin2011,includingChiefExecutiveOfficer,AndrewNorman,ChiefOperationsOfficer,PeterSayles,andChiefFinancialOfficer,MartinBoden,supportedbyanewexecutiveteamwhichcontinuestostrengthenJDR‘sabilitytodeliveritsstrategictargets.Thiswassupportedbytheadditionofnewemployeesacrossanumberofkeyroles,andcomprehensiveemployeetraininganddevelopmentprogrammestobringskillstotherequisitelevelfortheup-scalingofthebusiness.
imPORTANT iNVEsTmENT iN mANUfAcTURiNg, sysTEms ANd skiLLs
inter-arraycables(fortheoffshoreRenewablesmarket).Wesubsequentlyexpandedourofferingwithdevelopmentsthatextendedtheproductportfolioandwidenedsupportservicesfromstabilitytestingtolifecycleproductsupport.
OffsHOre Oil & Gas PlatfOrm
[23] Electric and hydraulic Junction boxes
[19 & 20] hang-off and Pull in head
[8] hydraulic flying Leads
[17] J-Tube
[9] Electrical flying Leads manifold
[13] Vertebrae bend Restrictor (VbR)
[25] subsea distribution Unit (sdU)
[18] J-Tube seals
[14] Tie-back clamp and anchor base
[10] gas lift jumper
subsea Tree
JdR’s OiL & gAs sUbsEA cAPAbiLiTy
1. DynamicsubseacableDesignedtooperatewithindynamicsubseaenvironments.
2. StaticsubseacableAcabledesigntypicallyusedforcablesrestingorburiedontheseabed.
3. DynamictodynamicsubseacableAcabledesignedforoperationbetweenfloatingstructures.
4. SubseaUmbilicalTermination(SUT)Enablesmultiplewellstobecontrolledviaoneumbilicalorconnectsanddistributesumbilicalfunctionallinestoothersubseaequipment,manifoldsandtrees.
5. StabplatesConnectorplateattheendofaflyingleadwithmountedhydrauliccouplersand/orelectricalconnectorsandintendedforROVplug-intoengagethehydraulicandelectricalfunctions.
6. MudmatSubseastructureprovidingstabilitytoanSUTwhereseabedconditionsrequiretheloadtobespreadacrossalargeareatoensureseabedstability.
7. UmbilicalTerminationHead(UTH)orCobraheadARemotelyOperatedVehicle(ROV)operatedstabplateattachedtoanumbilicalorHFL.
8. HydraulicFlyingLeads(HFL)ConnectsanSUTwithothersubseaequipmenttoprovidehydrauliccontrolandchemicalinjectiondistribution.
9. ElectricalFlyingLeads(EFL)ConnectsanSUTwithothersubseaequipmenttoprovideelectricalsignalandpowerdistribution.
10. GasliftjumperAsinglelineROVmono-coupler.
11. ExtendedinfieldjumpersAnadditionallongerlengthjumperorumbilicalthatties-backtotheoriginalinfrastructure.
12. BuoyancymoduleAnumbilicalattachmentthatprovidespositivebuoyancyandminimisesmovementofadynamicumbilicalinstalledbetweenafloatingfacilityandtheseabed.
13. VertebraeBendRestrictor(VBR)Acableprotectiondeviceofinter-lockingsectionswhich,whensubjectedtocertainbendradius,willlockandpreventfurtherbendingofthecableorumbilicalinsideit.
14. Tie-backclampandanchorbaseAclampontheseabedtoholdanumbilicalorcableinpositionandpreventexcessivemovementatthetouch-downpoint.
15. TouchdownprotectorPreventsabrasionofacableatapointofdynamicmovement.
16. TransitionalorrepairjointConnectstwoumbilicalsorrepairsadamagedumbilical.
17. J-TubeProtectsacableduringthetransitionfromsubseatotopside.
JdR’s OiL & gAs PROdUcTs iN sUbsEA fiELd dEVELOPmENTs
ANNUAL REPORT 31 December 2012 8
flOatinG PrOductiOn, stOraGe and OfflOadinG
vessel (fPsO)
fPsO
[21] bend strain Reliever (bsR)
[22] bsR latching mechanism
[19] hang-off
[24] mid-Water arch clamps
[16] Transitional or repair joint
[4] subsea Umbilical Termination (sUT)
[4] subsea Umbilical Termination (sUT)
[12] buoyancy module[1] dynamic
subsea cabling
[14] Tie-back clamp and anchor base[2] static subsea cabling
[3] dynamic to dynamic subsea cable
[7] Umbilical Termination head (UTh) or cobra head
[11] Extended infield jumpers
[5] stab plates
Pipeline
subsea isolation valve (ssiV)
[15] Touchdown protector
[15] Touchdown protector [6] mud mat
JdR’s OiL & gAs sUbsEA cAPAbiLiTy
18. J-TubesealAsealtopreventlossofacorrosioninhibitor.
19. Hang-offThemechanicalconnectionpointforaterminatedumbilicalontothehostplatformorvessel.
20. PullinheadUsedduringinstallationtohandle,liftandpositionanumbilicalthroughaJ-tubetothetopsideplatform.
21. BendStrainReliever(BSR)Controlsbendingstrainintheumbilicalbyprovidingalocalisedincreaseinstiffness.
22. BSRlatchingmechanismConnectsaDynamicBendStrainRelievertothebaseofanIorJ-tubeorFPSO.
23. ElectricandhydraulicjunctionboxesTopsideconnectioninterfacecabinets.
24. Mid-waterarchclampAclamptolocatetheumbilicalbetweenupperandlowercatenaries.
25. SubseaDistributionUnit(SDU)Receiveselectricalpowerandcommunications,fibreopticcommunicationsandhydraulicandchemicalservicesfromtheUTAanddistributestomultipleuserssuchastrees,manifolds,pumpingandboostingstationsandinfieldtieins.
chAiRmAN’s REPORT
chAiRmAN’s REPORT
Iamproudtosaythat2012wastheyearinwhichJDRshoweditstruepotential.Iamalsoproudofthefactthatwehavedevelopedamodelthatgivesusversatilityandoptionstotakeadvantageofthepipelineoftheopportunitiesaheadofus.
ANNUAL REPORT 31 December 2012 10chAiRmAN’s REPORT
Wehavelongbelievedinourabilitytobecomealeadingprovideroftechnologyconnectingtheoffshoreenergyindustry.Thisisafast-growingglobalmarketthatneedsincreasinglyexpertsolutionsasmajorenergyfirmsfurtherdeveloptheirdeepwaterresourcesandoffshorewindandwaveprojectsmature.
Overthelastfiveyearsinparticular,wehaveinvestedindevelopingtechnologiesandmanufacturinginfrastructure.Ourresultsin2012areaculminationofimprovementsinourdeliveryperformanceanddrasticallyloweredcostofqualityacrossouroperations.Theseimprovementsaredirectlyreflectedinthenatureofthecontractswehavebeenawardedbymajorglobalcompanies,allofwhomrecognisethehighstandardsofreliabilityandlong-termqualityweofferourcustomers.
Ourinvestmentinworld-classfacilitieshasbeensupplementedbytheintroductionofanewleadershipteamwhobringawealthofexperienceofrunninglargerbusinesses.Ourbenchstrengthissecondtonone,withtheadditionofseniordirectorsandmanagersalongwithourhighlyexperiencedemploymentcorewhohavebenefittedfromoursignificantgrowth.
Havingdeliveredarecordperformancein2012,wearecontinuingthemomentuminto2013andbeyond.We’vedonethelearning,thegrowingandarenowinprimeshapetotakeJDRontogreaterheights.Ourfuturecouldnotbebetter.
Noneofthiswouldhavebeenpossiblewithoutthecommitment,enthusiasmandhardworkofourcolleaguesthroughoutwhathasbeenaremarkableyearinthedevelopmentofourbusiness.Iwouldalsoliketothankourshareholdersfortheirunwaveringsupportandwisecounseloverthecourseoftheyear.AndtoourcustomersweowethelargestdebtofgratitudeforthetrustandconvictionthatJDRdoesindeedprovidetheirVitalConnections.
Pat HerbertExecutiveChairman,JDR
5April2013
A LEAdiNg PROVidER Of TEchNOLOgy
cEO’s REPORT
chiEf ExEcUTiVE OfficER’s REPORT
IamdelightedtoreportthatJDRhasdeliveredarecordperformancein2012,layingaplatformthatIfirmlybelievewillenablethecompanytoachieveevengreatersuccessinthefuture.
Ourrecordrevenuesof£129.9mandrecordEBITDAof£25.8mforthetwelvemonthsto31December2012clearlydemonstratehowthetargetedinvestmentswemadeinrecentyearsarenowcontributingtoJDR’soutstandingperformance.
Ourexecutioncapabilities,combinedwithagrowing‘full-service’installationsupportandaftermarketoffering,placesusinapowerfulpositionfromwhichtodrivesustainableandprofitablefuturegrowth.
ANNUAL REPORT 31 December 2012 12cEO’s REPORT
AtJDR,wearefirmlycommittedtoworkingcloselywithourcustomersinordertounderstandhowwecanbestcontributetotheirsuccessbydeliveringthehighestqualityproductsandserviceson-timeandtotheexactingtechnicalspecificationstheyrequire.
Weachievedarecordorderintakeoverthecourseoftheyear,includingimportantnewbusinesswinsinallofourtargetmarketsectors.Asaresult,wehavedevelopedanddeliveredawiderangeofproductsformajoroffshoreenergyprojectsaroundtheworld.ThishasincludedtheChinaNationalOffshoreOilCorporation’sLiuhua4-1fieldtiebackproject,SwiberOffshoreConstructionintheShellBrunei’sChampionFieldandacomplexscopeofworkfortheAustralianoilandgasoperatorSantostonameafew.Inaddition,wearealsoveryproudtohavebeenselectedbyWindMWastheirpartnerfortheMeerwindSud/OstOffshoreWindfarm–ourfirstwindenergyprojectinGermanwaters.
Oursuccessfulworkontheseprojectsshowcasesoursubseadesign,engineeringanddeliverycapabilities.Furthermore,ourcustomisedtechnologiesinumbilicals,powercablesandsubseaequipmenthaveallowedustodeliveroptimalpower,controlandcommunicationsinsomeoftheharshestandmostdemandingoffshoreenvironments.
Wehaveimplementedclearandrobustplanningsystemsthatgiveusexcellentvisibilityintoourmanufacturingprocesses,resultinginreducedleadtimesandincreasedproductivity.Thisfocusonefficiencyandflexibilityhasenabledustoachieverecordlevelsofcustomerdeliveryperformance.
Lookingahead,wehavesetourselvesclearchallengesfor2013,andweareconfidentthatourfocusonhighgrowthglobalmarkets–offshoreoil,gasandrenewables–willenableustocontinuetodriveorderintakegrowth.Asia’sthrivingoilandgasmarketsareparticularlyappealingprospectsforus,asaretheMiddleEastandEuropeanrenewablessector,notablyGermanyandtheNorthSea.
Wewillcontinuetoextendthebreadthofourproductrangebeyondourcoreumbilicalbusiness.Aspartofthisstrategy,weplantoexpandtherangeofourthermoplasticumbilicalproductsanddevelopsubseapowercableofferingswithincreasedvoltagecapability,applyingnewmaterialsandtechnologiestoreduceinstallationandhandlingtimeaswellascostforbothsubseaoilandgasandoffshorerenewablepowergeneration.
Wearealsotransitioningourselling,engineering,projectmanagementandaftermarketservicestobeclosertoourend-customers.Thisisintendedtohelpstrengthenourpositionasapreferredinternationalsuppliertothemajoroilandgasproducersandrenewableenergyoperatorsaroundtheworld.
Buildingontheinvestmentsinourworld-classmanufacturingfacilitiesinHartlepool,LittleportandSattahip,wearenow
workingtowardsdeliveringreturnsonthesecommitmentsandmaximisingcapacityutilisation.Theproductcomponentstandardisationwehaveimplementedthusfarsupportsautomationand‘configurationtoorder’whilstmaintainingflexibility.WealsoseeadditionalopportunitieswithenhancedITcapability,andhaveinitiatedprojectstofurtherincreaseproductivityandperformancetosupportengineering,planninganddocumentationautomation.
Wewillalsocontinuetodevelopour‘one-stop-shop’offeringofanalysis,projectexecution,installationsupportandaftermarketservices.Whilstwehavemadesignificantprogress,werecognisethatwestillhavefurthertogoandareworkinghardondeliveringtheseimprovements.
Mostimportantly,werecognisethatourpeopleareourcoreassets.Wehavedonemuchtostrengthenourmanagementteamandhavesignificantlyupgradedourcapabilityinengineering,technologydevelopment,manufacturing,humanresources,ITandcommunications.Withagreatteamofpeoplenowonboard,wecontinuetoinvestintraininganddevelopmenttomaximisetheiropportunitiesandpotential.
Wehavesetourselvesaninternalobjectiveofbecomingapreferredemployerinthesector.Inordertoachievethis,wehaveincreasedourinvestmentintrainingandpeopledevelopment,movedtobestinclasshealthandsafetyperformancethroughourSTOPprogramme,andmadesignificantprogresstowardsimprovingemployeecommunicationsandincentiveandrewardprogrammes.
2012hasseentheinvestmentsmadeinrecentyearsstarttodeliver.
Wenowhaveworld-classfacilitiesandastrongteamdeterminedtotakeadvantageofagrowingglobalmarketforoffshoreenergy.ThiscreatesastrongoutlookforJDRandIamconfidentinourabilitytodeliverrenewedgrowthin2013andbeyond.
andrew normanChiefExecutiveOfficer,JDR
5April2013
This focus on efficiency and flexibility enabled us to achieve record customer delivery last year.
INTRODUCTION
fULLy iNTEgRATEd
sysTEms & PROcEdUREs
ANNUAL REPORT 31 December 2012 14hEALTh, sAfETy ANd ThE ENViRONmENT
hEALTh, sAfETy ANd ThE ENViRONmENTJDRistotallycommittedtoensuringallemployees,visitorsandcontractors,wherevertheymaybeinourglobalorganisation,returnfromworkuninjured.Wearefocussedonminimisinganyadverseenvironmentalimpactsofourbusinessactivitiesbycontinuallyreviewingproductdesignandmanufacturingmethodologies.
ApreventativehealthandsafetystrategyisatopprioritywithintheJDRbusiness,workingfromtheprinciplethatallincidents–bothlargeandsmall–canbeprevented.Ourapproachisintegratedintoourculture,managementsystemsandpractices.Asaresult,allemployees‘own’HSEandareempoweredtopreventunsafeactivity.
SincetheintroductionofourSafetyManagementSystemin2008,thenumberofaccidentshasdeclineddramaticallyandhascontinuedtodoso.InourworktoimproveourSafetyManagementSystem,weareinvolvingouremployees,clientsandsupplierstoidentifyandimplementindustrybestpractice.Wehavealsocontinuedtoinvestinstructuredemployeetrainingprogrammes.RecentinitiativesincludeworktoidentifyandaddressgapsinaccidenttrainingandintroductionoftheIOSHManagingSafelycourseforourmanagersandsupervisors.
Weensurethatourpracticesareindependentlyverified.Forexample,ourSafetyManagementSystemisregularly
verifiedbyLloyd’sRegisterQualityAssurance(LRQA),aUKAS-accreditedproviderofmanagementsystemcertification,verificationandtraining.
AllourglobalfacilitieshavetheirmanagementsystemscertifiedtoOHSAS18001(healthandsafetymanagementsystemstandard).WehaverolledoutISO14001(environmentalmanagementsystemstandard)followingsuccessfulverificationofourLittleportfacilityandarepreparingforrolloutsatourotherglobalsites.WealsoparticipateinindustryorganisationssuchastheUmbilicalManufacturersFederation(UMF)wherewehavechairedtheHealthandSafetyCommitteeforthelastthreeyears.
sAfETy mANAgEmENT
In2012,JDRcarriedoutanenvironmentalandkeyhealthandsafetyassessmentatallofitsmainmanufacturingsites:LittleportandHartlepoolintheUK,SattahipinThailandandtheHoustonServiceCenter.TheprojectwasdesignedtoreviewJDR’scompliancewiththekeyenvironmental,healthandsafety(EHS)legislationateachlocation,identifyanymaterialbreachesandwherenecessarymakerecommendationsforfurtheractiontoclarifyanyliabilities.
Fullreportswereprovidedforeachsitevisitedandactionplansareinplacetoaddressanumberofminorrecommendations.AlltheJDRsitesvisitedrepresentedalowtomediumriskofcontaminatedlandliabilities.Inaddition,nomaterialEHSissueswereidentifiedandmanagementatallofJDR’sfacilitieswereawareofallEHSaspectsandimpactsaffectingthesite,andareproactivelymanagingthese.
ENViRONmENTAL AssEssmENT
cfO’s REPORT
chiEf fiNANciAL OfficER’s REPORT
JDRdeliveredarecord-breakingfinancialperformanceoverthecourseoftheyear,witha56%increaseinrevenuehelpingtheGrouptoachievearecordEBITDAof£25.8minthe12monthsto31December2012.ThiswasdrivenbyanincreasinglybuoyantmarketandtheresultinggrowthindemandforJDR’sproducts,withtheGroupbenefittingfromthesubstantialinvestmentsithasmadeinitspeople,processes,systemsandfacilitiesinrecentyears.
ANNUAL REPORT 31 December 2012 16cfO’s REPORT
TheGroupchangeditsaccountingyear-enddateintheperiodfrom31Marchto31DecembertobringtheGroupintolinewithindustrypractice.Thefinancialstatementsattachedarethereforefortheninemonthsto31December2012(comparativesareforthe12monthsto31March2012).Tocomparesimilarperiodsinthisannualreport,thedirectorsarereportingonanunauditedproformacalendaryearbasisforboth2012and2011.Thedirectorsbelievethatthisgivesamoretransparentandcomparablepresentationforthereader.
Revenuerosefrom£83.2minthe12monthsto31December2011to£129.9minthe12monthsto31December2012which,combinedwithimprovedbusinessprocesses,resultedinarecordEBITDAof£25.8mfortheyear.Thisrepresentedanincreaseof£29.9mcomparedwith2011,whentheGroupdeliverednegativeEBITDAof£4.1m.
Operatingcashflowincreasedfromanetoutflowof£10.5minthe12monthsto31December2011toanetinflowof£19.6minthe12monthsto31December2012,allowingtheGrouptosubstantiallystrengthenitsbalancesheetovertheyear.JDRrenegotiateditsbankingfacilitiesandrepaid£13.3mofshareholderloansandbankdebts.Netassets,attheyearend,stoodat£31.6m.
Havingreapedthebenefitsofitsinvestmentindevelopingtechnologiesandmanufacturinginfrastructure,theGroupinvested£4.3minitscapitalexpenditureprogrammefortheyear,with£2.5mofthisgoingtowardscontinuedenhancementsatJDR’sstate-of-the-artHartlepoolplant.
Wemeasurearangeofoperationalandfinancialmetricstohelpusmanageourperformanceandachieveourbusinessplans:Revenue,EarningsBeforeInterest,Tax,DepreciationandAmortisation(EBITDA),orderintakeandcashflow.
fiNANciAL kEy PERfORmANcE iNdicATORs
Wealsotracknon-financialmetricsacrossthebusiness.Asourpeoplehavebeenattheheartofoursuccessasabusiness,wefocusontrackingthesafetyandsatisfactionofouremployees.
Revenue
EBITDA
Orderintake
Operatingcashflow
129.9
25.8
112.5
19.6
83.2
(4.1)
69.4
(10.5)
56%
£29.9m
62%
£30.1m
iNcREAsE
REVENUE
Year-on-yearrevenuesincreasedby56%from£83.2min2011to£129.9min2012.ThisisprimarilyduetotheGroup’senhancedproductmixandincreasingmarketdemand,whichhasseenJDRwidenitsexistingoilandgasmarketandmakeasuccessfulmoveintotherenewablesmarket.Therevenuemixintheyearisshowninthetablebelow.
While2012hasbeenanexceptionalyear,theGroup’sCompoundAnnualGrowthRateCAGRofproformarevenuehasbeenanimpressive24%overthepastfiveyears,demonstratingastrongtrackrecordofgrowth.
SPU
SPC
IWOCS
AIMS
OiL&GaS
REC
TOTaL
32.5
24.7
25.6
10.8
93.6
36.3
129.9
2012 £’m2012 £’m
16.5
12.1
14.9
6.1
49.6
33.6
83.2
2011 £’m2011 £’m
97
104
72
77
89
8
56
iNcREAsE %
cfO’s REPORT
JDRsawrecorddemandforitsproductsin2012,withaCAGRofapproximately20%since2008.TheGroupexpectsthislevelofgrowthtocontinueandisconfidentabouttheorderintakefor2013andbeyond.
ORdER iNTAkE
Grouptradinglossescarriedforwardfromprioryearsarebeingusedtooffsetthecorporationtaxchargefortheyear.Whiletradinglosseswillcontinuetobeavailableinto2013,thegroupisexpectedtofullyutilisetheseandbecomeliableforthepaymentofcorporationtaxinthe2013calendaryear.
TAxATiON
Asinpreviousyears,theGroupcontinuestouseEBITDAastheprimarymeasureofitsfinancialperformance,particularlyinmeasuringunderlyingperformance.
TheGroupdeliveredatransformationalincreaseinEBITDA,whichrosefromnegative£4.1min2011torecord£25.8min2012,withaCAGRofapproximately47%overthepastfiveyears.
Thissubstantialincreasewasdrivenbytherevenueincrease,productmixandmajorproductivityimprovements.ExamplesofthelatterareevidentinthesignificantreductionsinliquidateddamagestheGrouppaidtocustomers,andinthecostofqualitythatwesometimessufferduetocableshavingtobereworked.
InadditiontotheupsidethesegeneratefortheGroup’sresults,thetwofactorsareareflectionofJDR’sleadingpositionasatechnologyprovidertotheglobaloffshoreenergyindustry.
Overheadshavealsobeentightlycontrolledandwereflatovertheyear.
EARNiNgs
Thedirectorsarenotrecommendingthepaymentofadividendintheyear(2011:nil)astheincreaseinoperatingcashflowhaslargelybeenusedtoreducetheGroup’sdebtandstrengthenthebalancesheet.
diVidENds
Profitbeforetaxation(PBT)forthetwelvemonthsto31December2012was£18.1m,reflectingtheexcellentperformancedeliveredbytheGroupovertheyear.Withinthe2012calendaryear,£13.3mofPBThasbeenrecordedinthefinancialstatementsfortheninemonthperiodended31December2012(seepages30-56).
PROfiT bEfORE TAxATiON (PbT)
Profitbeforetaxationfortheninemonthsto31December2012
Addback:Interestpayable
Depreciation
Amortisationofgoodwill
Amortisationofdevelopmentcosts
Exceptionaladministrativeexpenses
EBiTDafortheninemonthsto31December2012
Add: EBITDAforthethreemonthsto31March2012
EBiTDafortheyear
13.3
0.2
3.4
0.3
0.1
0.3
17.6
8.2
25.8
REcONciLiATiON Of sTATUTORy PbT TO REPORTEd EbiTdA:
£’m
Operatingcashflowamountedto£19.6minthecalendaryear2012,with£13.3mofthisbeingusedtorepaydebt,consistingofbanklendingandshareholderloans.Thishassignificantlystrengthenedthegroupbalancesheet,sothatnetassetstotalled£31.6mat31December2012(2011:£13.5m).Theaccumulateddeficitintheprofitandlossaccounthasbeeneliminated.
cAsh fLOW ANd NET dEbT
25.8
(6.2)
19.6
(4.3)
(0.1)
(2.4)
(1.5)
-
(11.8)
(0.5)
(4.1)
(6.4)
(10.5)
(8.7)
-
(1.2)
(17.7)
27.2
10.2
(0.6)
2011 £’m
EBITDA
Changeinworkingcapital
Operatingcashflow
Capitalexpenditure
Taxation
Netinterest
Revolvingcreditfacilityloansrepaid
Disposalproceeds
Loanfromparent(repaid)/borrowed
Net cash flow
2012 £’m
REcONciLiATiON Of EbiTdA TO NET cAsh fLOW:
ANNUAL REPORT 31 December 2012 18cfO’s REPORT
TheGroupispleasedtoreportthattheconversionofsignificantlygreaterfreecashhasenabledittopaysuppliersmorepromptly,withtheageingprofilesignificantlyimprovedasaresult.Allcreditorsarenowpaidtoterms.
PAymENTs TO sUPPLiERs
Capitalexpenditureinthecalendaryearamountedto£4.3m,ofwhich£2.5mrelatedtocontinuedenhancementstotheHartlepoolplant.
Onecashindicatorisworthparticularcomment.In2012ourcashflowconversion,measuredasoperatingcashflowlesscapitalexpendituredividedbyEBITDA,was60%.Goingforward,whileweexpectEBITDAtoincreasesignificantly,workingcapitalchangesandcapitalexpenditurewillincreaseataslowerrate.Thiswillresultinariseinfreecashflow,andanincreaseincashconversionrates,whichwillbenefitthebusinessandallowtheGroupmoreoptionsastohowitusesthiscash.
cAPiTAL ExPENdiTURE
TheGroupoperatesinanumberofdifferentcountries.However,theimpactofforeignexchangeratesonconsolidatedEBITDAisnegligibleasaresultoftherelativelylowamountofincomeandcostsrecognisedintheforeignentities.Wherejustified,Groupcompaniesseektocoveranyforeignexchangeexposureoncustomercontractsbyuseofforwardcontractstakenoutoncontractacceptance.
ExchANgE RATEs
Duringtheyear,theGrouprenegotiateditsbankingfacilitieswithHSBCtotakeadvantageofthesignificantincreaseingenerationofcashflows.Consentwasobtainedtorepay£12mofshareholderloans,andbondingcostsandcovenantrequirementswerereduced.
Attheyear-end,theGrouphada£15mrevolvingcreditfacilitywithitsbankers,ofwhich£3.5mhadbeenutilised(2011:£5m).Twofacilitiestotalling£26mwereavailableforbondingpurposes,ofwhich£18.3mhadbeenutilisedattheyear-end.From1January2013,£5moftherevolvingcreditfacilitywasre-designatedtothebondingfacility,reflectingthereducedneedfordebtfundingandenhancedneedfortradefinance,asthegroup’sprospectshaveimproved.
bANk fAciLiTiEs
UnlikemanyUKcompaniescurrently,theGrouphasnodefinedbenefitretirementschemenoranyrelatedsignificantpensiondeficitandliability.TheGrouphasaGroupPersonalPension(GPP),whichisadefinedcontributionscheme.AstheschemeisaGPP,therearenotrusteesandthecompanyisnotliableforbenefitsinanyway.Thepensionisalsoacommission-basedscheme,soallthecompanypaysistheemployercontribution.272employeesintheUKaremembersofthescheme,contributingaminimumof4%ofannualbasesalaryintothescheme.Thecompanycontributioniscurrently6%.
PENsiON ObLigATiONs
martin BodenChiefFinancial&ComplianceOfficer
5April2013ECGD=ExportCreditsGuaranteeDepartment(theUK’sExportCreditAgency)
Headroom
Drawn
bANkiNg fAciLiTiEs AT 31 dEcEmbER 2012
0
RCF MAIN BONDING ECGD BONDING
2
4
6
8
10
12
14
16
(£’M
)
bOARd Of diREcTORs
Pat HerbertExEcUTiVE chAiRmAN
JoHan van de SteeniNVEsTOR diREcTOR
andrew normanchiEf ExEcUTiVE OfficER
martin bodenchiEf fiNANciAL & cOmPLiANcE OfficER
Peter SayleSchiEf OPERATiONs OfficER
PatjoinedJDRin2002asChiefExecutiveOfficerandbecameExecutiveChairmanin2011.AsCEO,hehasoverseentheGroup’smostdramaticgrowthperiod.Hiscareerbeganin1976atSmithInternational,becominganOfficerofthecorporationin1986.HejoinedBakerHughesasanExecutiveOfficerin1988withglobalP&Lresponsibility,leadingmarketandtechnologydevelopmentandcorporategovernanceactivity.
JohanisanOperatingPartneratVisionCapital,responsiblefortheglobalportfolio.HejoinedVisionCapitalin2009andalsositsontheboardsofBormioliRoccoandUnitedInitiators.PreviouslyhewasanOperatingPartneratKKRwhereheworkedonanumberofportfoliocompanies,CEOofatechnologycompanyandhasworkedatMcKinsey&CompanyandSiemensCommunications.
AndrewjoinedJDRin2011following15yearsintheenergyindustrywithDresserIncasDivisionPresidentControlValvesandRegionalPresident,Europe.Andrew’scareerhasfocussedoninternationalbusinessdevelopmentintechnology-drivenmanufacturingandengineeringcompanies,withleadershiprolesinMarconiSpaceandDefenceSystems(UK),MARSElectronics(UK),PhilipsElectronics(NL)andSchindlerElevatorCorp,Switzerland.
bob Solberg NON-ExEcUTiVE diREcTOR
andrew ricHiNVEsTOR diREcTOR
BobjoinedJDRasNon-ExecutiveChairmanin2004,steppingdowntobecomeaNon-Executivedirectorin2012.Forover30yearsBobheldincreasinglyresponsiblepositionswithTexaco,becomingpresidentofTexacoInc’sWorldwideDevelopmentdivisionfrom1998untilhisretirementin2002.SincethenhehasservedonanumberofboardsincludingPioneerNaturalResources,helpingthecompanytripleitsmarketcapitalisation,ScorpionOffshoreLtdandHyperdynamics,bothofwhichhetooktosuccessfulIPOs.
AndrewisaPartneratVisionCapitalhavingjoinedin2007.InadditiontoJDRhesitsonboardsatNordaxFinans,EliotManagementServicesLLP(holdingcompanyforParkCake,PorkFarmsandFletchersBakeries)andtheAdvisoryBoardofTrioLLP(holdingcompanyforABL,MGandSwissHaus).PreviouslyhespentthreeyearsatLazardandfiveyearsatArthurAnderson/DeloittewherehequalifiedasaCharteredAccountant.
MartinjoinedJDRin2011fromBetty’s&TaylorswherehewasChiefFinancialOfficerfor18months.MartinpreviouslyworkedasGroupFinanceDirectoratGenusplc,andforGreatUniversalStores,ZurichFinancialServices(UKISA),NatWestUKandWHSmith.
PeterjoinedJDRin2011after12yearsinbusinessturnaroundrolesincludingworkwithOceaneeringinBrazilandassignmentsinChinaandtheUSA.Hewasinstrumentalinthe1992managementbuyoutofSignatureIndustriesLtd,servingasDirectorandGeneralManager,andbeforethishewasManagingDirectorofVBandplcandGroupOperationsManagerforTCCplc.HiscareerbeganintheRoyalNavy.
JdR bOARd Of diREcTORs
ANNUAL REPORT 31 December 2012 20
Pat HerbertExEcUTiVE chAiRmAN
andrew normanchiEf ExEcUTiVE OfficER
martin bodenchiEf fiNANciAL & cOmPLiANcE OfficER
Peter SayleSchiEf OPERATiONs OfficER
ExEcUTiVE mANAgEmENT TEAm
louiSe cliftongROUP hEAd Of hR
Paul gaHmExEcUTiVE VicE-PREsidENT sALEs & mARkETiNg
craig ewing bUsiNEss sysTEms diREcTOR
PauljoinedJDRin2005withresponsibilityforbusinessdevelopment,marketingandstrategicplanning.FormerlywithOceaneering’sMultiflexDivision,PaulhasheldvariousseniormanagementpositionsthroughoutEuropeandtheUS.
CraigjoinedJDRin2011fromTNTPostUKwherehewasITDirector.Craig’sITexperiencespansanumberofworldclassorganisationsintheB2B,logisticsandconstructionsectorsandhasincludedroleswithParcelforceWorldwide,WalleniusWilhelmsenLogisticsandtheMillerGroup.
LouisejoinedJDRfromPPGIndustrieswheresheheldanumberofrolesincludingHRDirector,IndustrialCoatings,EMEAandHROperationsDirector,EMEA.PriortoPPG,LouiseheldkeyHRpositionsinRandomHouse,GrampianFoods,BritishSteelandBosch.
JameS youngENgiNEERiNg diREcTOR
martin cHarleSdiREcTOR, Aims sERVicEs
JamesjoinedJDRinApril2000asaseniordesignengineerfornewproductdevelopment.HewasappointedEngineeringDirectorinNovember2011afteraseriesoftechnicalmanagementroleswithinthebusiness.PriortoJDR,JamesworkedforBICCandDowty.Jameshasadegreeinmechanicalengineering,isacharteredengineerandhasanMBAfromCranfield.
MartinjoinedJDRin2008astheGroup’sfirstaftermarketservicesdirector,leadingaglobalserviceandsupportteam.BeforeJDRhewasAftermarketDirectorfortheSubseaControlsgroupofGEOil&Gas.Martinhasbeenactiveintheoilandgasindustryforover28years,includingroleswithABBandBakerHughes.
JdR ExEcUTiVE mANAgEmENTTEAm
sEE bOARdOf diREcTORs
OPPOsiTE
diREcTORs’ REPORT
diREcTORs’ REPORT
ThedirectorspresenttheirreportandtheauditedfinancialstatementsoftheGroupandofthecompanyfortheninemonthsended31December2012.
TheprincipalactivityoftheGroupisthedesignandmanufactureofumbilicalsystemsandsubseapowercablesfortheoffshoreoilandgasandrenewableenergyindustries.Theseproductsaresomeoftheessentialcomponentsforthedevelopmentandproductionofoffshoreoilandgasandthedeliveryofenergyderivedfromoffshorewindfarms.ThegrouphasaninternationalmanufacturingfootprintwithfacilitiesinLittleport(Cambridgeshire)andHartlepoolintheUK,andSattahipinThailand.
Theprincipalactivityofthecompanyistoactasaholdingcompany.ThesubsidiaryundertakingsprincipallyaffectingtheprofitsornetassetsoftheGroupintheperiodarelistedinnote10tothefinancialstatements.
PRiNciPAL AcTiViTiEs
TheGroup’sprofitfortheninemonthperiodto31December2012amountedto£12,236,000(yearto31March2012:£17,480,000)andhasbeentransferredtoreserves.Thecompany’sprofitforthetheninemonthperiodto31December2012amountedto£756,000(yearto31March2012:£15,621,000)andhasbeentransferredtoreserves.Thedirectorsdonotrecommendthepaymentofadividend(2011/2012:£nil).Theproformacalendarresultsfor2012and2011areshownintheChiefFinancialOfficer’sreportandonpages57to59.
REsULTs ANd diVidENds
AreviewofthebusinessoftheGroupduringtheyearended31December2012(incorporatingtheninemonthsofthestatutoryaccountspresentedonpages31to56),thepositionoftheGroupasat31DecemberandadescriptionoftheprincipalrisksanduncertaintiesfacingtheGroupcanbefoundonpages27to28.
TheGroupcontinuestoinvestinresearchanddevelopment,andmoredetailscanbefoundintheChiefExecutiveOfficer’sreportonpages11to12.Thedirectorsregardinvestmentinthisareaasaprerequisiteforsuccessinthemediumtolong-termfuture.
bUsiNEss REViEW
TheGroup’sactivitiesexposeittoanumberoffinancialrisksincludingcreditrisk,cashflowandforeignexchangerisk,andliquidityrisk.TheuseoffinancialderivativesiscontrolledbytheBoardandfinancefunction.TheGroupdoesnotusederivativefinancialinstrumentsforspeculativepurposes.
(a) Cashflow and foreign exchange riskTheGroup’sactivitiesexposeitprimarilytothefinancialrisksofchangestoforeigncurrencyexchangerates,althoughrevenuesandcostsarematchedwherepossible.TheGroupusesforeignexchangeforwardcontractswherenecessarytohedgeresidualmaterialexposures.
(b) Credit risk TheGroup’sprincipalfinancialassetsarebankbalancesandcash,
andtradeandotherreceivables.TheGroup’screditriskisprimarilyattributabletoitstradereceivables.Theamountspresentedinthebalancesheetarenetofallowancesfordoubtfulreceivables.TheGrouphasnosignificantconcentrationofcreditrisk,withexposurespreadoveralargenumberofcounterpartiesandcustomers,mostofwhichhavehighcreditratings.
(c) Liquidity risk TheGroupusesamixtureoflong-termandshort-termdebtfinance
toensurethatsufficientfundsareavailableforongoingoperationsandfuturedevelopments.
fiNANciAL Risk mANAgEmENT
Intheperiod,theGroupandcompanychangedtheaccountingyearendfrom31Marchto31Decembertobringthecompanyinlinewithindustrypractice.
yEAR ENd chANgE
ANNUAL REPORT 31 December 2012 22diREcTORs’ REPORT
ThesharecapitaloftheultimateholdingcompanyisownedbyfundsadvisedbyVisionCapitalLLP,GoldmanSachsandmanagement.sUbsTANTiAL
shAREhOLdERs
TheBoardbelievesthatthegroup’ssuccessisduetothequalityandcommitmentofitsworkforce.TheGroup’semployeemanagementpriorities,includingitsremunerationstrategies,arebasedonrecruitingandretainingthebestpeopleintheindustryandencouragingworkingpracticesthatimproveproductivity,reducecosts,developtalentandprovidejobsatisfaction.Further,theBoardrecognisestheneedforcommunicationwithemployeesateverylevelandiscommittedtoongoinginteractionwithallitsemployees.Thisisachievedinanumberofways,includingregularnewslettersfromtheChiefExecutiveOfficer,andfrequent“allhands”presentationsbytheExecutiveManagementTeamtogroupsofstaffatallcompanylocations.Duringtheperiod,JDRemployed,onaverage,434employees,excludingcontractors,whowerebasedinUK,Houston,Thailand,GermanyandSingapore.
TheGroupiscommittedtoapolicyofequalopportunityinmattersrelatingtoemployment,trainingandcareerdevelopment,andisopposedtoanyformoflessfavourabletreatmentaffordedonthegroundsofage,disability,sex,maritalstatus,sexualorientation,nationality,raceorreligion.
EmPLOymENT POLicy ANd iNVOLVEmENT
Applicationsforemploymentfordisabledpersonsarealwaysfullyconsidered,bearinginmindtheabilitiesoftheapplicantconcerned.Intheeventofmembersofstaffbecomingdisabled,everyeffortismadetoensurethattheiremploymentwiththeGroupcontinuesandthatappropriatetrainingisarranged.ItisthepolicyoftheGroupthatthetraining,careerdevelopmentandpromotionofdisabledpersonsshould,asfarasispossible,beidenticaltothatofotheremployees.
disAbLEd EmPLOyEEs
Theauditors,GrantThorntonUKLLP,haveindicatedtheirwillingnesstocontinueinofficeandappropriatearrangementshavebeenputinplaceforthemtobedeemedreappointedasauditorsintheabsenceofanannualgeneralmeeting.
AUdiTORs
Thisreporthasbeenpreparedinthecontextofthereportdated20November2007,GuidelinesforDisclosureandTransparencyinPrivateEquity.WALkER REPORT
Thedirectorswhoheldofficeduringtheperiodandatthedateofthisreportwereasfollows:
Pat Herbert ExecutiveChairman
robert Solberg Non-executiveDirector
Johan Van de Steen InvestorDirector
Andrew rich InvestorDirector
Andrew Norman ChiefExecutiveOfficer(appointedtotheboardOctober2012)
Peter Sayles ChiefOperationsOfficer
Martin Boden ChiefFinancial&ComplianceOfficer
Alistair Mackie CompanySecretaryAlistairMackieresignedasadirectorofthecompanyon3April2013
diREcTORs
ByorderoftheBoard
martin BodenDirector
5April2013
cORPORATE gOVERNANcE REPORT
cORPORATE gOVERNANcE REPORT
“TheBoardisfirmlycommittedtoachievingthehigheststandardsofcorporategovernance.Wetakeseriouslyourresponsibilityindemonstratingleadershipingoodgovernancepracticesthatultimatelyinformsthedecisionsandactionsofourstaffduringtheirday-to-daywork.TheBoardisambitiousingrowingthecompanyandisactivelyimprovingitsgovernancetoolsandtrainingforourpeople.Thiswillinturnenableustoachieveourstrategicobjectives,createvalueforourshareholdersandbuildasustainablebusinessforthelong-term.”PatHerbert,ExecutiveChairman
Asaprivately-ownedcompany,JDRisnotrequiredtocomplywiththeCodebutseekstoabidebythespiritofitsprinciples.Inthesecondhalfof2012weappointedaHeadofInternalAudittosupportthegroupinimprovingitsgovernanceandthiswillcontinueinto2013.TheUKCodeisbeingusedtoguidetheseimprovements.
ThE Uk cORPORATE gOVERNANcE cOdE
AsExecutiveChairman,PatHerbertisultimatelyresponsibleforappraisingtheBoardofallmattersaffectingtheGroupanditsperformance.HeisalsoresponsiblefortheeffectiveoperationandchairingoftheBoardandensuringthatalldirectorsareabletoplayafullpartinitsactivities.TheChairmanensureseffectivecommunicationwithshareholdersandthatalltheBoardmembersareawareoftheviewsoftheshareholders.
ROLE Of ThE ExEcUTiVE chAiRmAN
AsChiefExecutiveOfficer,AndrewNormanisresponsibleforleadingtheExecutiveManagementTeaminrunningtheGroup’sbusiness,includingformulatingstrategyproposalsforBoardapprovalandensuringthattheagreedstrategyisimplementedinatimelyandeffectivemanner.
ROLE Of ThE chiEf ExEcUTiVE OfficER
ANNUAL REPORT 31 December 2012 24cORPORATE gOVERNANcE REPORT
JDR’sBoardconsistsofanExecutiveChairman,ChiefExecutiveOfficer,ChiefFinancial&ComplianceOfficer,ChiefOperationsOfficer,onenon-executivedirectorandtwoinvestordirectors.TheBoardbelievesthatithastheappropriatebalanceofskills,experience,independenceandknowledgeofthecompanytoenableittodischargeitsdutiesandresponsibilitieseffectively.
Thedirectorsupdatetheirskills,knowledgeandfamiliaritywiththecompanybyattendingappropriateexternalseminarsandtrainingcourses,meetingwithseniormanagementandvisitingtheregionalofficesandmanufacturingplants.
TheBoardisresponsibletotheshareholdersforthesuccessoftheGroupanddeterminestheGroup’slong-termdirection,businessobjectives,keypoliciesandstrategy.TheBoardalsomonitorsbusinessperformanceandreviewsriskcontrols.TheBoardhasdelegatedauthorityforallday-to-daymanagementoftheGroup’saffairstotheExecutiveManagementTeam,detailsofwhichcanbefoundonpage20.
TheBoardhadaprogrammeofnineboardmeetingsinthenine-monthperiod,plusanadditionalstrategyday.TheBoardisprovidedwithmonthlyandtimelyinformationonthefinancialperformanceofthebusiness,togetherwithreportsonoperationalmatters,marketconditions,competitorenvironmentandotherrelevantissues.Thedirectorshaveequalvotingrightswhenmakingdecisions,excepttheExecutiveChairmanwhohasacastingvote.Alldirectorshaveaccesstotheadviceandservicesofthecompanysecretaryandmay,iftheywish,takeprofessionaladviceattheGroup’sexpense.
bOARd Of diREcTORs
during the year, the Board approved and endorsed:• TheAnnualReportandAccounts
• Groupbudgets
• Strategicplansandpriorities,includingrepaymentofdebtandinvestor’sloans
• Capitalallocationandinvestmentpriorities
• Theacceptanceofhigh-valueorhigh-riskorders
AcTiViTiEs Of ThE bOARd iN 2012
Note:Adashindicatesadirectorisnotamemberofaboardcommittee.()Bracketsmeanattendancebyinvitation,notasamember.
Numberofmeetingsheldin9monthperiod
Numberofmeetingsattendedby:
Pat HerbertExecutive Chairman
Andrew NormanChief Executive Officer
Martin BodenChief Financial & Compliance Officer
Peter SaylesChief Operations Officer
robert SolbergNon-Executive Director
Johan Van de SteenInvestor Director
Andrew richInvestor Director
9
9
8
9
8
9
8
9
1
1
0
(1)
-
1
1
1
2
2
2
(2)
-
-
-
2
1
-
-
(1)
1
1
1
1
TyPE Of mEETiNg bOARd AUdiT cOmmiTTEE
REmUNERATiON cOmmiTTEE
hsE cOmmiTTEE
cORPORATE gOVERNANcE REPORT
“TheglobaleconomicenvironmentcontinuestoremainuncertainwhiletheGroup’saspirationforgrowthremainshigh.The Audit Committeemustthereforemonitor,interrogateandchallengemanagementonitsriskmitigation,financialperformanceandtheeffectivenessofitsinternalcontrols.TheCommitteelookstoitsauditorstoensurethattheiractivitiesremainfocusedintherightareasandthatManagementrespondtotheauditors’keyfindingsinatimelymanner.”andrewRich,ChairmanoftheauditCommittee
“The remuneration Committee’s objectiveistoprovidearemunerationpolicywhichenablesthebusinesstoattract,retainandmotivatethequalityofseniormanagementrequiredtodelivertheGroup’sstrategicambitionandcreatesustainableshareholdervalue.”PatHerbert,ExecutiveChairman
“The HSe Committeehasitsprimefocusonthewelfareofourpeopleandthecommunitiesinwhichweoperate.Ouraimistodeliversaferworkingforallbychangingbehaviour,embeddingexistingbestpracticesandinvestingfurtherinprogrammesandprocessesthatwillencouragesafeworkingineveryJDRfacilityandincustomerlocationswhereourpeoplemaywork.”RobertSolberg,Non-ExecutiveDirector
“The eMTisaccountableforexecutingtheGroup’sstrategyandforrunningthebusinessday-to-dayinawaythatisrightforallourstakeholders.”andrewNorman,ChiefExecutiveOfficer
TheBoarddelegatescertaingovernanceresponsibilitiestoBoardCommitteesandthesearedetailedbelow.
Audit Committee
TheAuditCommitteeischairedbyAndrewRich,investordirectorandacharteredaccountant,andincludesPatHerbert,ExecutiveChairman,andAndrewNorman,ChiefExecutiveOfficer.TheBoardremainssatisfiedthattherecentandrelevantfinancialexperienceoftheAuditCommitteeChairman,togetherwithmembersPatHerbertandAndrewNorman,enablestheCommitteetodischargeitsduties.
TheCommitteemettwiceintheperiodandreporteditsconclusionstotheBoardaftereverymeeting.TheChiefFinancial&ComplianceOfficerattendedeverymeeting.TheCommitteehasfullydefinedtermsofreference,whicharereviewedannually.ThetermsofreferenceoutlinetheCommittee’sobjectivesandresponsibilitiesrelatingtofinancialreporting,internalcontrols,riskmanagement,andtheapplicationofappropriateaccountingstandardsandprocedures.Specificresponsibilitiesincludereviewingandrecommendingforapprovaltheannualfinancialstatements,reviewingtheGroup’saccountingpolicies,reviewingtheeffectivenessofinternalcontrols,andreviewingthescopeandresultsoftheexternalaudit.
TheCommitteeappointedaHeadofInternalAuditin2012,whoseroletodatehasincludedimprovingthesuiteofcorporategovernancepoliciesandprocedures,includingacodeofethics,anti-briberyandcorruptionandestablishingaconfidentialreportinghotline.
TheCommitteealsomonitorstheindependenceandobjectivityofGrantThornton,theexternalauditors,byagreeingtheleveloftheirremunerationandtheextentoftheirnon-auditservices.
remuneration Committee
TheRemunerationCommitteecomprisesfivedirectors,includingRobertSolberg,JohanVandeSteen,AndrewRichandAndrewNorman,andischairedbyPatHerbert,theExecutiveChairman.TheCommitteehasdefinedtermsofreference,whicharereviewedannually.TheCommitteeisresponsibleformakingrecommendationstotheBoardconcerningtheremunerationstrategy,recruitmentframeworkandlong-termincentiveplansforthebusiness.
during 2012, the Committee:
• Approvedbonuses
• Reviewedthesalarylevelsandincreasesforallstaff
Health, Safety and environmental (HSe) Committee
TheHealth,SafetyandEnvironmentalCommitteeischairedbyRobertSolbergandincludesAndrewNorman,JohanVandeSteenandPeterSayles.TheCommitteehasamandatetomaintainacomprehensiveoverviewofthepolicies,practicesandperformanceofthegroupinrespectofhealth,safetyandtheenvironment.ConclusionsandrecommendationsfromthecommitteearereporteddirectlytotheBoard.
During2012,theCommitteereviewedtheaccidentandincidentfigures,encouragedthecontinuedsuccessofvarioushealthandsafetyinitiatives,consideredresourcingneedsandcommissionedcomprehensiveenvironmentalreportsforeachmajorsiteinDecember2012.
executive Management Team (eMT)
TheExecutiveManagementTeamhasresponsibilityfortheday-to-dayrunningoftheGroupandmeetsweekly.Atthismeeting,allmembersoftheteamgiveabriefreportovertheirindividualareasofresponsibility.
cOmmiTTEEs ANd ThEiR AcTiViTiEs iN 2012
ANNUAL REPORT 31 December 2012 26cORPORATE gOVERNANcE REPORT
FundsadvisedbyVisionCapitalLLParethelargestshareholderintheGroupandtwoinvestordirectorshavenon-executivepositionsontheBoard.TheExecutiveChairman,ChiefExecutiveOfficerandChiefFinancial&ComplianceOfficerhaveacontinuingdialoguewiththeshareholders.Inaddition,GoldmanSachs,asaminorityshareholder,alsohasanobserverwhoattendsboardmeetings.
hOW WE cOmmUNicATE WiTh OUR shAREhOLdERs
Asdescribedabove,thedirectorshaveareasonableexpectationthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.Informingthisview,thedirectorshavereviewedtheGroup’sbudgets,plansandcashflowforecasts,andtheexistingbankingfacilities.
gOiNg cONcERN
TheBoardtakesultimateresponsibilityfortheGroup’ssystemsofriskmanagementandinternalcontrolsandforreviewingtheireffectiveness.TheGroup’sprincipalrisksanduncertaintiesandhowtheyaremitigatedaresummarisedonpages27to28.
TheGroup’ssystemsandcontrolsaredesignedtomanage,ratherthaneliminate,theriskoffailuretoachievebusinessobjectives,andcanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.
ThekeyfeaturesoftheGroup’ssystemofinternalcontrolsare:• Anestablishedmanagementstructureoperatingthroughoutthegroupwithdefinedlevelsof responsibilityanddelegationofauthorities
• Operatingguidelinesandsystemswithauthorisationlimitssetatappropriatelevels
• Acomprehensivebudgetingandforecastingsystem,whichisregularlyreviewedandupdated
• Monthlymanagementreportingincludingregularcomparisonofactualresultsagainst latestforecasts
• Regularreportingfromprojectmanagersontheperformanceandongoingrisksofeveryproject
• Approvalofinvestmentandcapitalexpendituredecisions
• Regularmonitoring,reviewandreportingofhealth,safetyandenvironmentalmatters.
hOW WE mANAgE iNTERNAL cONTROLs
Thedirectorsareresponsibleforpreparingtheannualreportandthefinancialstatementsinaccordancewithapplicablelawandregulations.
Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.Underthatlaw,thedirectorshaveelectedtopreparefinancialstatementsinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UKAccountingStandardsandapplicablelaw).ThefinancialstatementsarerequiredbylawtogiveatrueandfairviewofthestateofaffairsoftheGroupandParentCompanyandoftheprofitorlossoftheGroupforthatperiod.Inpreparingthesefinancialstatements,thedirectorsarerequiredto:
• Selectsuitableaccountingpoliciesandthenapplythemconsistently
• Makejudgementsandestimatesthatarereasonableandprudent
• StatewhetherapplicableUKAccountingStandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements,and
• PreparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheGroupwillcontinueinbusiness.
ThedirectorsareresponsibleforkeepingadequateaccountingrecordsthatdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
Insofaraseachofthedirectorsisaware:• ThereisnorelevantauditinformationofwhichtheGroup’sauditorsareunaware;and
• Thedirectorshavetakenallstepsthattheyoughttohavetakentomakethemselvesawareofanyrelevantauditinformationandtoestablishthattheauditorsareawareofthatinformation.
ThedirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheGroup’swebsite.LegislationintheUKgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.
sTATEmENT Of diREcTORs’ REsPONsibiLiTiEs
Risk mANAgEmENT REPORT
Risk mANAgEmENT REPORT
“TheeffectivemanagementofriskswithintheGroupisessentialinhelpingusachieveourvisionofgrowthandcustomerservice.”MartinBoden,ChiefFinancial&ComplianceOfficer
Riskmanagementiskeytodeliveringprojectsuccessforourcustomersanddrivingsustainablegrowthforourstakeholders.Ourcustomersrequireustoprovidesolutions,andwemustovercomeanumberofriskstodothissafely,on-timeandon-budget.
ThediagramaboveshowstheriskmanagementprocesswithintheGroup.TheBoardleadsthediscussionsrelatingtoriskandprovidesdirection.ThisapproachiscascadeddowntheGroupthroughtheExecutiveManagementTeam,linemanagersandindividualprojectteams.
Risk mANAgEmENT is fUNdAmENTAL TO sUsTAiNAbLE gROWTh
JDRinvolvesourcustomersandpartnersinagreeingriskmattersandhowthesearebestmitigated.Althoughriskismanagedconstantlyoneveryoneofourprojects,wealsohaveriskmanagementdiscussionsacrosstheGroupatthefollowingkeycheckpointswhen:
• Discussingandagreeingthebusinessstrategy
• Biddingfornewwork
• Planningforprojects
• Monitoringexistingprojects
• Reviewingbusinessperformance
AtJDR,riskmanagementisanessentialpartofourbusinessoperations.Riskisnotoutsourcedtoaspecialistteambutisintegratedintoourprocessesandownedbyeveryone.However,thebusinessisnotcomplacentandwearemakingeffortstoimprovecertainareas,suchascorporateriskreporting,businesscontinuityandcompliance.
ONgOiNg Risk mANAgEmENT
define bUsiNEss ObJEcTiVEs
identify OPPORTUNiTiEs ANd Risks
assess and quantify bENEfiTs ANd Risks
develOP AcTiON PLAN TO miTigATE Risk
OnGOinG review Of Risk
ANNUAL REPORT 31 December 2012 28Risk mANAgEmENT REPORT
Thebusinesshasexperiencedsignificantgrowthoverthepasttwoyears,andthisbringsitsownchallengestoensurewehavethecapacitytodelivertoourhighstandards.Wehavefocusedondevelopingandstandardisingourinternalprocessesandsystems,aswellasexpandingandstreamliningourproductioncapacity.
Theimportanceoftheorderbookiskeyandwehaveinvestedindevelopingourusageofourcustomerrelationshipmanagementsystemandimprovingcommunicationsbetweenthesalesandoperationsfunctions.Theincreasingsizeofthebusinessalsorequiresmorefocusoncorporategovernanceandmatterssuchastrainingonanti-briberyandcorruptionandcompetitionlaw.
sPEcific Risk mANAgEmENT
PRiNciPAL Risks
EconomicEnvironment
Ourcustomersmaycancel,postponeorreduceexistingorfutureprojectsduetotheeffectsofglobaleconomicconditionsandthepriceofoil.
Orderintake
Wemaynotbesuccessfulatwinningbidsfornewwork,orbiderrors/decisionsadverselyaffectperformance.
ProjectDelivery
Projectsmaynotbedeliveredtoourhighstandardsofsafety,ontime,onbudgetandtotherequiredquality.
People
Wemaynotbeabletoattractorretainemployeeswiththerightqualification,skills,experience,competenceandvaluestomeetourcurrentandfutureneeds.
FinanceandLiquidity
Cashandlonger-termfinancingmayreduceifcashisnotcollected,capitalexpenditurenotmanaged,andcostsnotcontrolled
informationTechnology
Wemaynothavetherightsystemstomanageourbusinessinacontrolledandefficientway,orthesesystemsmayfail.
Significantchangesincustomerspendingorinvestmentplansmayadverselyaffectourorderbook,andultimatelyrevenueandprofit.
Notwinningwork,orwinningworkatlowmargins,soadverselyaffectingorderbookandmargins.
MayaffecttheprofitabilityandreputationoftheGroupandabilitytosecurerepeatwork.
Failuretomeetourcustomers’expectationsandcontractualcommitmentsandlimitourcapabilitytomeetfuturegrowthplans.
Reducedgrowthandexpansionopportunities.
Workflowsareinefficientorareinterrupted.
Focusonrepeatbusinessandstrategicclients.Broadenproducttype.Explorationofnewmarkets.Strengthenaftercareoffer.
Significantattentionisgiventobiddingtoensurewemeetcustomerneedsandmanagetherisks.Definedauthoritylevelsforbidapprovalandorderacceptance.
Mitigatedbyallocatingtherightpeople,operatingcontrolledprocessesandrigorousandregularprojectreviews.
Weusevigorousselectiontechniquesandabespokecompetencyframeworktosupportourhiringdecisions.Allemployeesundertakeperformanceanddevelopmentreviews,supportedbyrobustLearning&Developmentplanstoensurethattheyhavetherightskillstomeetbothcurrentandfutureneedsanddemonstratedesirablebehaviours.Wehaveamarket-basedcompensationandbenefitsstructuretohelpusattractandretainkeyvaluedemployees.
BalancesheetandcashmanagementiscloselycontrolledbyourFinanceteam,includingweeklyreporting,cashforecasting,andinvestmentanalysis.Bankingfacilitiesprovideheadroomshoulditbeneeded.
StrongmanagementoffunctionandcontroloverapplicationsandERPsystem.ITrecoveryplans.Capitalexpenditureplans.
RISK POTENTIALIMPACT MITIGATION
iNdEPENdENT AUdiTOR’s REPORT
REPORT Of ThE iNdEPENdENT AUdiTOR TO ThE mEmbERs Of JdR cAbLE sysTEms (hOLdiNgs) LimiTEd
WehaveauditedthefinancialstatementsofJDRCableSystems(Holdings)Limitedfortheninemonthsended31December2012whichcomprisetheGroupandcompanyprofitandlossaccount,theGroupandparentcompanybalancesheets,theGroupcashflowstatement,theGroupstatementoftotalrecognisedgainsandlosses,andtherelatednotesonpages31to56.
ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).
Thisreportismadesolelytothecompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.Ourauditworkhasbeenundertakensothatwemightstatetothecompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.
respective responsibilities of directors and auditors
AsexplainedmorefullyintheDirectors’ResponsibilitiesStatementonpage26,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’s(APB’s)EthicalStandardsforAuditors.
Scope of the audit of the financial statements
AdescriptionofthescopeofanauditoffinancialstatementsisprovidedontheAPB’swebsiteatwww.frc.org.uk/apb/scope/UKNP.
Opinion on financial statements
Inouropinionthefinancialstatements:
• giveatrueandfairviewofthestateoftheGroup’sandtheparentcompany’saffairsasat31December2012andoftheGroup’sandCompany’sprofitfortheperiodthenended;
• havebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and
• havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.
Opinion on other matters prescribed by the Companies Act 2006
InouropiniontheinformationgivenintheDirectors’Reportonpages21and22fortheninemonthsended31December2012forwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.
Matters on which we are required to report by exception
WehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:
• adequateaccountingrecordshavenotbeenkeptbytheparentcompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or
• theparentcompanyfinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns;or
• certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or
• wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.
Paul naylorSeniorStatutoryAuditor
for and on behalf of Grant Thornton UK LLP Statutory Auditor Chartered Accountants Cambridge
5April2013
ANNUAL REPORT 31 December 2012 30
Profit and Loss Account 31
balance sheet 33
cash flow statement 35
Notes to the financial statements 36
Appendix – 57 Unaudited Pro forma summary financial statements
fiNANciAL sTATEmENTs ANd NOTEs TO ThE fiNANciAL sTATEmENTs
financial statements gROUP P&L
gROUP PROfiT ANd LOss AccOUNT fOR ThE 9 mONThs ENdEd 31 dEcEmbER 2012
Revenue
Costofsales
Grossprofit
Administrativeexpenses
Administrativeexpenses-exceptional
Operatingprofit/(loss)beforegoodwillamortisation
Goodwillamortisation
Operatingprofit/(loss)
Profitonsaleofsubsidiary
Interestpayableandsimilarcharges
Profitonordinaryactivitiesbeforetaxation
Tax(charge)/creditonprofitonordinaryactivities
Profitforthefinancialperiod
Alloperationsarecontinuing.Theaccompanyingaccountingpoliciesandnotesformanintegralpartofthesefinancialstatements.
2,4
4
4
4
8
4
3
6
7
20
NOTE
83,628
(52,082)
31,546
(17,410)
(300)
13,836
(306)
13,530
-
(231)
13,299
(1,063)
12,236
9MTHSTO31DEC2012
£’000
111,092
(87,963)
23,129
(21,523)
(2,238)
(632)
(364)
(996)
19,865
(2,407)
16,462
1,018
17,480
12MTHSTO31MAR2012
£’000
gROUP sTATEmENT Of TOTAL REcOgNisEd gAiNs ANd LOssEs fOR ThE 9 mONThs ENdEd 31 dEcEmbER 2012
Retainedprofitforthefinancialperiod
Exchangerategain
Totalgainsandlossesrecognisedsincethelastfinancialstatements
12,236
11
12,247
9MTHSTO31DEC2012
£’000
17,480
6
17,486
12MTHSTO31MAR2012
£’000
ANNUAL REPORT 31 December 2012 32financial statements cOmPANy P&L
cOmPANy PROfiT ANd LOss AccOUNT fOR ThE 9 mONThs ENdEd 31 dEcEmbER 2012
Netoperatingincome/(payments)
Administrativeexpenses-exceptional
Interestpayable/(receivable)andsimilarcharges
Operatingprofit/(loss)
Profitonsaleofsubsidiary
Profitonordinaryactivitiesbeforetaxation
Tax(charge)/creditonprofitonordinaryactivities
Profitforthefinancialperiod
Alloperationsarecontinuing.
Thecompanyhasnorecognisedgainsandlossesotherthantheprofitaboveandthereforenoseparatestatementoftotalrecognisedgainsandlosseshasbeenpresented.
Theaccompanyingaccountingpoliciesandnotesformanintegralpartofthesefinancialstatements.
4
6
4
3
7
20
NOTE
617
-
139
756
-
756
-
756
9MTHSTO31DEC2012
£’000
(925)
(822)
(1,869)
(3,616)
19,237
15,621
-
15,621
12MTHSTO31MAR2012
£’000
financial statements gROUP bALANcE shEET
gROUP bALANcE shEET AT 31 dEcEmbER 2012
Fixedassets
Intangibleassets
Tangibleassets
Currentassets
Stock
Debtors
Cashatbankandinhand
Creditors–amountsfallingduewithinoneyear
Netcurrentassets
Totalassetslesscurrentliabilities
Creditors–amountsfallingdueaftermorethanoneyear
Provisionsforliabilities
Netassets
Capitalandreserves
Calledupsharecapital
Sharepremiumaccount
Profitandlossaccount
Totalequityshareholders’funds
Thefinancialstatementsonpages31to56wereapprovedbytheboardofdirectorson5April2013andweresignedonitsbehalfby:
martin BodenDirectorRegisteredNumberSC186919
Theaccompanyingaccountingpoliciesandnotesformanintegralpartofthesefinancialstatements.
8
9
11
12
13
14
17
18
19
20
21
NOTE
2,954
34,264
37,218
15,146
33,463
2,701
51,310
(40,531)
10,779
47,997
(13,878)
(2,472)
31,647
28,360
904
2,383
31,647
31DEC2012£’000
2,891
34,943
37,834
11,443
37,755
2,471
51,669
(36,372)
15,297
53,131
(30,895)
(2,836)
19,400
28,360
904
(9,864)
19,400
31MAR2012£’000
ANNUAL REPORT 31 December 2012 34financial statements cOmPANy ONLy bALANcE shEET
cOmPANy bALANcE shEET As AT 31 dEcEmbER 2012
Fixedassets
Tangibleassets
Investments
Currentassets
Debtors–amountsfallingduewithinoneyear
Debtors–amountsfallingdueafteroneyear
CashatBank
Creditors–amountsfallingduewithinoneyear
Netcurrentassets
Totalassetslesscurrentliabilities
Creditors–amountsfallingdueaftermorethanoneyear
Netassets
Capitalandreserves
Calledupsharecapital
Sharepremiumaccount
Profitandlossaccount
Totalequityshareholders’funds
Theaccompanyingaccountingpoliciesandnotesformanintegralpartofthesefinancialstatements.
Thefinancialstatementsonpages31to56wereapprovedbytheboardofdirectorson5April2013andweresignedonitsbehalfby:
martin BodenDirectorRegisteredNumberSC186919
9
10
12
12
13
14
18
19
20
21
NOTE
-
21,242
21,242
30,847
4,437
10
35,294
(4,808)
30,486
51,728
(11,480)
40,248
28,360
904
10,984
40,248
31DEC2012£’000
-
21,222
21,222
8,552
45,537
72
54,161
(7,343)
46,818
68,040
(28,548)
39,492
28,360
904
10,228
39,492
31MAR2012£’000
financial statements gROUP cAsh fLOW
gROUP cAsh fLOW sTATEmENT fOR 9 mONThs ENdEd 31 dEcEmbER 2012
Netcashinflow/(outflow)fromoperatingactivities
Returnsoninvestmentsandservicingoffinance
Interestpaid
Interestreceived
Netcashoutflowfromreturnsoninvestmentsandservicingoffinance
Taxation
Capitalexpenditureandfinancialinvestments
Purchaseofintangibleassets
Disposaloftangiblefixedassets
Purchaseoftangiblefixedassets
Netcash(outflow)/inflowfromcapitalexpenditureandfinancialinvestments
Financing
Decreaseinborrowings
Governmentgrantreceived
Saleofsubsidiary
Repaymentoffinanceleases
Netcash(outflow)/inflowfromfinancing
increase/(decrease)innetcash
22
NOTE
NOTE
22,018
(231)
-
(231)
(52)
(446)
8
(2,702)
(3,140)
(18,568)
203
-
-
(18,365)
230
9MTHSTO31DEC2012
£’000
31DEC2012£’000
(15,164)
(2,407)
-
(2,407)
309
(92)
7,405
(6,616)
697
(11,689)
380
28,424
(3,071)
14,044
(2,521)
REcONciLiATiON TO NET dEbT
Netdebtat1April
Increase/(decrease)innetcashintheperiod
Movementinborrowings
Othernon-cashchanges
Netdebtat31Decemberand31March
23
23
23
(31,077)
230
18,568
-
(12,279)
(43,316)
(2,521)
14,760
-
(31,077)
12MTHSTO31MAR2012
£’000
31MAR2012£’000
ANNUAL REPORT 31 December 2012 36financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
ThefinancialstatementshavebeenpreparedunderthehistoricalcostconventionandinaccordancewiththeCompaniesAct2006andinaccordancewithapplicableaccountingstandards.Theprincipalaccountingpoliciesaresetoutbelow.
Going concern basisThecompany’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandpositionaresetoutintheDirectors’Report.Thefinancialpositionofthecompany,itscashflows,liquiditypositionandborrowingfacilitiesaredescribedintheChiefFinancialOfficer’sReport.Inaddition,notes(a)to(c)oftheFinancialRiskManagementsectionoftheDirectors’Reportincludesthecompany’sobjectives,policiesandprocessesformanagingitscapital;itsfinancialriskmanagementobjectives;detailsofitsfinancialinstrumentsandhedgingactivities;anditsexposurestocreditriskandliquidityrisk.
Thecompanyhasconsiderablefinancialresourcestogetherwithlong-termcontractswithanumberofcustomersandsuppliersacrossdifferentgeographicalareasandindustries.ThecompanyhasalsobenefittedfromthecontinuedsupportofbothVisionCapitalLLPandHSBCandthedirectorsareconfidentthatthissupportwillcontinueinthefuture.Asaconsequence,thedirectorsbelievethatthecompanyiswellplacedtomanageitsbusinessriskssuccessfullydespitethecurrentuncertaineconomicoutlook.
Thedirectorshaveareasonableexpectationthatthecompanyhasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Thustheycontinuetoadoptthegoingconcernbasisofaccountinginthepreparingtheannualfinancialstatements.
Basis of consolidationTheGroupfinancialstatementsincorporatethefinancialstatementsofthecompanyandallofitssubsidiaryundertakingsuptotheendofthefinancialperiod.Theresultsofthesubsidiariesacquiredordisposedofintheperiodareincludedintheconsolidatedprofitandlossaccountfromthedateofacquisitionoruptothedateofdisposal.
revenueRevenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivableandrepresentsamountsreceivableforgoodsandservicesprovidedinthenormalcourseofbusiness.
Significantcablesandumbilicalsareaccountedforusingthepercentage-of-completionmethod.Underthepercentage-of-completionmethod,werecogniseestimatedcontractrevenuebasedoncostsincurredtodateasapercentageoftotalestimatedcosts.
Whentheoutcomeofasignificantcableordercannotbeestimatedreliably,contractrevenueisrecognisedtotheextentofcontractcostsincurredthatareexpectedtoberecoverable.Contractcostsarerecognisedasexpensesintheperiodinwhichtheyareincurred.Whenitisprobablethatthetotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedasanexpenseimmediately.
Thepreconditionsforrevenuerecognitionfornon-significantumbilicalsare:
(i) Acompletedeliverableproductorserviceexistsandcorrespondswithapriceditemonthecustomercontractorpurchaseorder;
(ii) Theproducthaspassedthecontractualfinalfactoryacceptancetestagreedwiththeclientortheservicedeliverablehasbeencompletedtotheclient’ssatisfaction;
(iii) Theproductorserviceisavailableforclientuplift,orhasbeendispatchedifthisiswithinJDR’sscopeofsupply;and
(iv) Collectabilityoftherevenueisreasonablyassured.
Revenueisstatednetofassociatedsalestax.
1 AccOUNTiNg POLiciEs
NOTEs TO ThE fiNANciAL sTATEmENTs fOR ThE 9 mONThs ENdEd 31 dEcEmbER 2012
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
Goodwill
Goodwillisdisclosedasanintangibleassetstatedatcostlessaccumulatedamortisation.Amortisationisprovidedinequalinstalmentsover20years.Goodwillbalancesareassessedforpossibleimpairmentwhenevereventsorchangesincircumstancesindicateimpairmentmayhavearisenandarewrittendowntothedirectors’estimatesoftheirfairvaluesaccordingly.
research and development
Expenditureonnewproductdevelopmentiscapitalisedwherethecostincurredhasresultedinaproductthatthedirectorsbelievehasacommerciallyviablefuture.Capitaliseddevelopmentcostsaredisclosedasintangibleassetsstatedatcostlessaccumulatedamortisation.Amortisationisprovidedinequalinstalmentsover5years,theexpectedeconomiclifeofthenewproducts.
Government grants
GovernmentgrantsareofacapitalnatureandarereleasedtotheprofitandlossaccountovertheexpectedusefullifeoftherelatedassetinaccordancewithSSAP4.
Tangible assets
Tangibleassetsarestatedatcostlessaccumulateddepreciation.Depreciationisprovidedinequalinstalmentsovertheirestimatedusefullivesbyusingthefollowingrates:
Landandbuildings 0-50%
Plantandequipment 5-50%
Computerequipment 5-100%
Officefurnitureandequipment 10-50%
Assetsinthecourseofconstruction 0%
Thecompanyundertakesareviewforimpairmentoffixedassetsifeventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Totheextentthatthecarryingamountexceedstherecoverableamount,thatisthehigherofnetrealisablevalueandvalueinuse,thefixedassetiswrittendowntoitsrecoverableamount.
Stock
Stockisstatedatthelowerofcostandnetrealisablevalue.
Financial instruments
Financialliabilitiesandequityinstrumentsareclassifiedaccordingtothesubstanceofthecontractualarrangementsenteredinto.Anequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheentityafterdeductingallofitsfinancialliabilities.
Wherethecontractualobligationsoffinancialinstruments(includingsharecapital)areequivalenttoasimilardebtinstrument,thosefinancialinstrumentsareclassedasfinancialliabilities.Financialliabilitiesarepresentedassuchinthebalancesheet.Financecostsandgainsorlossesrelatingtofinancialliabilitiesareincludedintheprofitandlossaccount.Financecostsarecalculatedsoastoproduceaconstantrateofreturnontheoutstandingliability.
Wherethecontractualtermsofsharecapitaldonothaveanytermsmeetingthedefinitionofafinancialliabilitythenthisisclassifiedasanequityinstrument.Dividendsanddistributionsrelatingtoequityinstrumentsaredebiteddirecttoequity.
Investments
Investmentsarestatedatcostlessprovisionforimpairmentwherenecessarytoreducebookvaluetorecoverableamount.Costispurchasepriceincludingacquisitionexpenses.
Finance leases and hire purchase agreements
Assetspurchasedunderfinanceleasesorhirepurchaseagreementsarecapitalisedinthebalancesheetandaredepreciatedoverthelesseroftheirestimatedusefullivesandtheperiodoftheagreement.Theinterestelementoftherentalobligationsischargedtotheprofitandlossaccountovertheperiodofthecontractonastraightlinebasisandthecapitalelementoffuturerentalsistreatedasaliability.
Operating leases
Expenditureonoperatingleasesischargedtotheprofitandlossaccountonabasisrepresentativeofthebenefitderivedfromtheasset,normallyonastraight-linebasisovertheleaseperiod.
1 AccOUNTiNg POLiciEs (cONT.)
ANNUAL REPORT 31 December 2012 38financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
Foreign currencies
Assetsandliabilitiesofoverseassubsidiariesandassociatedundertakingshavebeenexpressedinsterlingatthemarketraterulingattheendofeachfinancialyear.Tradingresultsaretranslatedattheaverageratesfortheyear.Exchangedifferencesarisingontranslationofthefinancialstatementsofoverseassubsidiariesaretakentoreserves.
Tradingactivitiesdenominatedinforeigncurrenciesaretranslatedattheaverageratefortheperiod.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedattherateofexchangerulingatthebalancesheetdateanddifferencesonexchangeareincludedintheprofitandlossaccount.
Employee Benefit Trust
AsrequiredinUITF38,thefinancialstatementsincludetheEmployeeBenefitTrustsincethedirectorsconsiderthatthecompanycontrolstheTrustandbearsthebenefitsandrisksassociatedwiththeTrust.SharesheldbytheTrustaredeductedfromshareholders’funds.
Pension costs
Contributionsmadetopersonalpensionschemes,whichareadministeredindependentlyofthecompany,arechargedtotheprofitandlossaccountasincurred.
related party disclosures
ThecompanyisexemptunderthetermsofFinancialReportingStandard8fromdisclosingrelatedpartytransactionswithentitiesthatarepartoftheGroup.
Taxation
Currenttax,includingUKcorporationtaxandforeigntax,isprovidedontaxableprofitsatcurrentratesintherespectivetaxationjurisdictions.
Deferredtaxisrecognisedinrespectofalltimingdifferencesthathaveoriginatedbutnotreversedatthebalancesheetdatewheretransactionsoreventsthatresultinanobligationtopaymoretaxinthefutureorarighttopaylesstaxinthefuturehaveoccurredatthebalancesheetdate.Timingdifferencesaredifferencesbetweenthecompany’staxableprofitsanditsresultsasstatedinthefinancialstatementsthatarisefromtheinclusionofgainsandlossesintaxassessmentsinperiodsdifferentfromthoseinwhichtheyarerecognisedinthefinancialstatements.
Adeferredtaxassetisregardedasrecoverableandthereforerecognisedonlywhen,onthebasisofallavailableevidence,itcanberegardedasmorelikelythannotthattherewillbesuitabletaxableprofitsfromwhichthefuturereversaloftheunderlyingtimingdifferencecanbededucted.Deferredtaxismeasuredonanon-discountedbasis.
Deferredtaxismeasuredatthetaxratesthatareexpectedtoapplyintheperiodsinwhichthetimingdifferencesareexpectedtoreverse.
1 AccOUNTiNg POLiciEs (cONT.)
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
2 sEgmENTAL REPORTiNg
Revenuebyorigin
ContinentalEurope
UnitedKingdom
NorthAmerica
RestoftheWorld
Revenuebydestination
ContinentalEurope
UnitedKingdom
NorthAmerica
RestoftheWorld
-
81,703
1,893
32
83,628
25,082
9,546
6,210
42,790
83,628
GROUP
403
106,191
4,348
150
111,092
15,228
48,066
9,064
38,734
111,092
Additionalsegmentaldisclosureshavenotbeenprovidedasthedirectorsconsiderthattheprovisionofsuchinformationcouldbeprejudicialtothebusiness.
Theprofitonsaleofasubsidiaryintheyearto31March2012relatestothedisposaloftheGroup’sinterestintheordinarysharecapitalofJDRHoldingsBV.
3 ExcEPTiONAL iTEms REPORTEd AfTER OPERATiNg PROfiT
9MTHSTO31DEC2012
£’000
12MTHSTO31MAR2012
£’000
ANNUAL REPORT 31 December 2012 40financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
4 OPERATiNg PROfiT/(LOss)
Operatingprofit/(loss)isstatedaftercharging
Goodwillamortisation
Amortisationofdevelopmentcosts
Depreciation
-ownedassets
Operatingleasecharges
-plantandmachinery
-other
Lossonthesaleoffixedassets
Foreignexchangeloss
auditors’remuneration
ServicestotheGroupanditssubsidiaries
- feespayabletotheCompany’sauditorfortheauditofthefinancialstatements
- auditofthefinancialstatementsoftheCompany’ssubsidiaries(associates)pursuanttolegislation
- otherservicessuppliedpursuanttolegislation
306
77
3,386
235
2,396
8
66
21
23
8
9MTHSTO31DEC2012
£’000
-
-
-
-
-
-
-
-
-
-
12MTHSTO31MAR2012
£’000
COMPANY
364
166
3,690
180
2,270
114
64
18
20
6
12MTHSTO31MAR2012
£’000
GROUP
-
-
-
-
-
-
-
-
-
-
9MTHSTO31DEC2012
£’000
TheGroup’sUKsubsidiaryincurredexceptionaladministrationexpensesof£300,000inthe9monthsto31December2012relatingtoalegalclaim.
TheGroup’sUKsubsidiaryincurredexceptionaladministrationexpensesof£2,238,000(Company£822,000)inthe12monthsto31March2012relatingtothewrite-offofsurplusstocks,consultingcostsassociatedwithare-engineeringoftheERPsystemsandredundancycosts.
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
5 EmPLOyEE cOsTs
Wagesandsalaries
Socialsecuritycosts
Otherpensioncosts(Seenote29)
12,623
1,251
562
14,436
9MTHSTO31DEC2012
£’000
978
48
17
1,043
12MTHSTO31MAR2012
£’000
COMPANY
16,399
1,784
473
18,656
12MTHSTO31MAR2012
£’000
GROUP
919
51
16
986
9MTHSTO31DEC2012
£’000
ThE AVERAgE NUmbER Of EmPLOyEEs (iNcLUdiNg ExEcUTiVE diREcTORs) dURiNg ThE PERiOd WAs
Byactivity
Production
Sellinganddistribution
Administration
373
24
37
434
9MTHSTO31DEC2012
£’000
9MTHSTO31DEC2012
£’000
-
-
6
6
12MTHSTO31MAR2012
£’000
12MTHSTO31MAR2012
£’000
COMPANY
COMPANY
361
15
57
433
12MTHSTO31MAR2012
£’000
12MTHSTO31MAR2012
£’000
GROUP
GROUP
-
-
6
6
9MTHSTO31DEC2012
£’000
9MTHSTO31DEC2012
£’000
764
22
786
205
517
14
531
277
1,176
45
1,221
277
645
16
661
205
dETAiLs Of diREcTORs’ EmOLUmENTs ARE As fOLLOWs
Aggregateemoluments
Companycontributionstodefinedcontributionpensionschemes
Highest paid director
Totalamountofemolumentsandamounts(excludingshares)receivableunderlongtermincentiveschemes
Thereareretirementbenefitsaccruingtofour(31March2012:four)directorsunderdefinedcontributionpersonalpensionschemes.
ANNUAL REPORT 31 December 2012 42financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
6 NET iNTEREsT PAyAbLE
Bankloaninterest
Bankinterest
Otherinterest&charges
Netexchangedifferenceonforeigncurrencyborrowings
Total interest payable and similar charges
InterestduefromGroupundertakings
Otherinterest
Total interest receivable and similar income
Net interest (payable)/receivable
(114)
(5)
(46)
(66)
(231)
-
-
-
(231)
9MTHSTO31DEC2012
£’000
(331)
(146)
(1,850)
(86)
(2,413)
544
-
544
(1,869)
12MTHSTO31MAR2012
£’000
COMPANY
(331)
(9)
(2,067)
-
(2,407)
-
-
-
(2,407)
12MTHSTO31MAR2012
£’000
GROUP
(114)
-
(9)
-
(123)
262
-
262
139
9MTHSTO31DEC2012
£’000
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
7 TAx ON PROfiT ON ORdiNARy AcTiViTiEs
Currenttax
UKtax
Foreigntax
Totalcurrenttaxcharge
Deferredtax
Currentperiod
Priorperiod
Taxcharge/(credit)fortheperiod
-
13
13
1,583
(533)
1,063
9MTHSTO31DEC2012
£’000
-
-
-
-
-
-
12MTHSTO31MAR2012
£’000
COMPANY
-
2
2
(1,020)
-
(1,018)
12MTHSTO31MAR2012
£’000
GROUP
-
-
-
-
-
-
9MTHSTO31DEC2012
£’000
ThE TAx AssEssEd fOR ThE PERiOd VARiEs fROm ThE sTANdARd RATE Of cORPORATiON TAx iN ThE Uk (24%). ThE diffERENcEs ARE ExPLAiNEd bELOW:
Profitonordinaryactivitiesbeforetaxation
Profit/(loss)onordinaryactivitiesmultipliedbystandardrateintheUK24%(2012:26%)
Effectsof:
Transferpricingadjustments
Groupreliefclaimed
(Income)/expensesnotdeductiblefortaxpurposes
Foreigntax
Utilisationofbroughtforwardlosses
Acceleratedcapitalallowances/othertimingdifferences
Totalcurrenttaxchargefortheperiod
13,299
3,192
(95)
(1,265)
847
13
(2,771)
92
13
9MTHSTO31DEC2012
£’000
15,621
4,062
-
-
(4,983)
-
922
(1)
-
12MTHSTO31MAR2012
£’000
COMPANY
16,462
4,280
-
-
(4,618)
2
1,021
(683)
2
12MTHSTO31MAR2012
£’000
GROUP
756
181
131
-
3
-
(315)
-
-
9MTHSTO31DEC2012
£’000
ANNUAL REPORT 31 December 2012 44financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
8 iNTANgibLE AssETs
Cost
At1April2012
Additions
Foreignexchangerevaluation
at31December2012
accumulatedamortisation
At1April2012
Chargefortheperiod
Foreignexchangerevaluation
at31December2012
Netbookvalue
at31December2012
At31March2012
10,193
446
-
10,639
(7,302)
(383)
-
(7,685)
2,954
2,891
TOTAL
£’000
9,260
-
-
9,260
(6,699)
(306)
-
(7,005)
2,255
2,561
GOODWILL
£’000
933
446
-
1,379
(603)
(77)
-
(680)
699
330
DEVELOPMENTCOST£’000
Thecompanyhasnointangiblefixedassets(31March2012:nil).
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
9 TANgibLE fixEd AssETs
Cost
At1April2012
Additions
Disposal
Transfers
Foreignexchangerevaluation
at31December2012
accumulateddepreciation
At1April2012
Chargefortheperiod
Disposal
Foreignexchangerevaluation
at31December2012
Netbookvalue
at31December2012
At31March2012
49,453
2,702
(169)
-
(141)
51,845
(14,510)
(3,386)
161
154
(17,581)
34,264
34,943
TOTAL
£’000
46,049
2,491
(169)
3,214
(141)
51,444
(14,320)
(3,386)
161
154
(17,391)
34,053
31,729
PLANTANDMACHINERY
£’000
3,214
211
-
(3,214)
-
211
-
-
-
-
-
211
3,214
ASSETSINTHECOURSEOFCONSTRUCTION
£’000
GROUP
190
-
-
-
-
190
(190)
-
-
-
(190)
-
-
OFFICEEQUIPMENT
£’000
Noassetsheldunderfinanceleasesareincludedwithintangiblefixedassets.
ANNUAL REPORT 31 December 2012 46financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
9 TANgibLE fixEd AssETs (cONTiNUEd)
Cost
At1April2012
Additions
at31December2012
accumulateddepreciation
At1April2012
Chargefortheperiod
at31December2012
Netbookvalue
at31December2012
At31March2012
COMPANY
53
-
53
(53)
-
(53)
-
-
OFFICEEQUIPMENT
£’000
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
10 iNVEsTmENTs
Sharesinsubsidiaryundertakings
Cost
At1April
Disposals
Additions
At31Decemberand31March
Provisionsforimpairment
At1April
Disposals
At31Decemberand31March
NetBookValue
At1April
At31Decemberand31March
30,893
(9,671)
-
21,222
-
-
-
30,893
21,222
21,222
-
20
21,242
-
-
-
21,222
21,242
COMPANY31MAR2012
£’000
COMPANY31DEC2012
£’000
ThE cOmPANy’s PRiNciPAL TRAdiNg sUbsidiARy OPERATiNg UNdERTAkiNgs AT 31 dEcEmbER 2012 WERE As fOLLOWs
JDRCableSystemsLtd
JDRCableSystemsInc
JDRCableSystems(Thailand)Ltd
JDRCableSystemsAS
JDRCableSystemsGmbH
100%
100%
100%
100%
100%
Scotland
UnitedStates
Thailand
Norway
Germany
Offshoreoil&gasservices
Offshoreoil&gasservices
Offshoreoil&gasservices
Offshoreoil&gasservices
Offshoreoil&gasservices
PERCENTAGEOF NOMINALSHARE CAPITAL
NAMEOFSUBSIDIARY
NATUREOFBUSINESS
COUNTRYOFREGISTRATION/INCORPORATION
ThesharesinJDRCableSystemsIncareheldbyJDRCableSystems(Holdings)Inc.
ANNUAL REPORT 31 December 2012 48financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
11 sTOck
Rawmaterials
Workinprogress
Finishedgoods
4,939
6,504
-
11,443
6,493
8,653
-
15,146
31MAR2012£’000
31DEC2012£’000
GROUP
12 dEbTORs
Tradedebtors
Prepaymentsandaccruedincome
Deferredtaxasset(note16)
AmountsowedbyGroupundertakings
Otherdebtors
-
98
-
8,405
49
8,552
31MAR2012£’000
27,333
8,919
867
-
533
37,652
31MAR2012£’000
-
16
-
38,808
23
30,847
31DEC2012£’000
31,190
993
-
-
1,177
33,360
31DEC2012£’000
GROUP COMPANYAMOUNTSFALLINGDUEWITHINONEYEAR
Prepaymentsandaccruedincome
AmountsowedbyGroupundertakings
-
45,537
45,537
31MAR2012£’000
103
-
103
31MAR2012£’000
-
4,437
4,437
31DEC2012£’000
103
-
103
31DEC2012£’000
GROUP COMPANYAMOUNTSFALLINGDUEAFTERONEYEAR
AmountsowedbyGroupundertakingsareunsecuredandhavenofixeddateofrepayment.Thedirectorsdonotintendtodemandrepaymentoftheseamountswithin12monthsofthebalancesheetdate.
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
13 cREdiTORs – AmOUNTs fALLiNg dUE WiThiN ONE yEAR
RevolvingCreditFacility(RCF)(note15)
Tradecreditors
Accrualsanddeferredincome
Othertaxandsocialsecurity
Paymentsonaccount
AmountsduetoGroupundertakings
5,000
121
1,098
-
-
1,124
7,343
31MAR2012£’000
5,000
14,957
7,373
126
8,916
-
36,372
31MAR2012£’000
3,500
-
440
-
-
868
4,808
31DEC2012£’000
3,500
17,280
4,741
639
14,371
-
40,531
31DEC2012£’000
GROUP COMPANY
AmountsduetoGroupundertakingsareunsecured,andarerepayableondemand.
ANNUAL REPORT 31 December 2012 50financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
14 cREdiTORs – AmOUNTs fALLiNg dUE AfTER mORE ThAN ONE yEAR
Bankloanandaccruedinterest(note15)
Amountduetoparentcompany(note15)
Governmentgrant
Other
5,000
23,548
-
-
28,548
31MAR2012£’000
5,000
23,548
2,340
7
30,895
31MAR2012£’000
-
11,480
-
-
11,480
31DEC2012£’000
-
11,480
2,398
-
13,878
31DEC2012£’000
GROUP COMPANY
Amountsduetoparentcompanyarenotpayableuntiltheexpiryofbankdebtin2015.
2,625
210
2,835
285
152
437
2,398
2,340
gOVERNmENT gRANTs ARE As fOLLOWs
At1April2012
Receivedduringtheperiod
At31December2012
Amortisation
At1April2012
Chargeduringtheperiod
At31December2012
Carryingvalue
at31December2012
At31March2012
£’000
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
15 bORROWiNgs
Borrowingsarerepayableasfollows
Withinoneyear
Bankloansandaccruedinterest(a)
Within2–5years
Bankloan(a)
After5years
Bankloan(a)
Loanduetoparentundertaking(b)
Totalborrowings
5,000
5,000
5,000
5,000
-
23,548
23,548
33,548
31MAR2012£’000
5,000
5,000
5,000
5,000
-
23,548
23,548
33,548
31MAR2012£’000
3,500
3,500
-
-
-
11,480
11,480
14,980
31DEC2012£’000
3,500
3,500
-
-
-
11,480
11,480
14,980
31DEC2012£’000
GROUP COMPANY
(a) HSBCisthesolebanklendertoJDR.BankloanscompriseaRevolvingCreditFacility(RCF)(£15.0m).TheloansaredenominatedinSterling.TheRCFexpireson31March2015.HSBCchargeafeefornon-utilisationoftheRCFandinterestischargedatafixedratewhenthefacilityisutilised.TheGroupbankloansatbalancesheetdateweresecuredbyabondandfloatingchargeovertheassetsoftheGroup.
(b) TheLoansduetoparentundertakingareultimatelyprovidedbytheshareholdersofJDREnterprisesLtd.NointerestischargedonLoansduetoparentundertaking.PaymentofanyaccruedinterestontheparentcompanyloansandrepaymentofprincipalisnotpermittedundertheTerm&RevolvingFacilitiesAgreementbetweenJDRCableSystems(Holdings)Ltd,JDREnterprisesLtd,theshareholdersofJDREnterprisesandHSBC,priortothedischargeoftheBank’sdebt.TheBank’sdebtisnotfullydischargeduntil31March2015.
ANNUAL REPORT 31 December 2012 52financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
16 dEfERREd TAxATiON
Acceleratedcapitalallowances
Losses
Othershorttermtimingdifferences
-
-
-
-
31MAR2012£’000
2,086
(2,942)
(11)
(867)
31MAR2012£’000
-
-
-
-
31DEC2012£’000
387
-
(117)
270
31DEC2012£’000
GROUPTHEDEFERREDTAXLIABILITY/(ASSET)THATHASBEENRECOGNISEDISASFOLLOWS
COMPANY
Acceleratedcapitalallowances
Losses
Othershorttermtimingdifferences
2
2,191
-
2,193
31MAR2012£’000
2
2,191
-
2,193
31MAR2012£’000
1
1,601
-
1,602
31DEC2012£’000
1
1,601
-
1,602
31DEC2012£’000
GROUPTHEPOTENTIALDEFERREDTAXASSETWHICHHASNOTBEENRECOGNISEDISASFOLLOWS
COMPANY
Thedeferredtaxliability/(asset)isbasedonacorporationtaxrateof23%(31March2012:24%).
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
aUTHORiSED
Equity
26,450,000Ordinarysharesof£0.10each
22,600,121,895DeferredSharesof£0.01each
4,800,000PreferenceSharesof£1.00each
aLLOTTED,CaLLEDUPaNDFULLyPaiD
Equity
9,600,000Ordinarysharesof£0.10each
22,600,121,895DeferredSharesof£0.01each
4,800,000Preferencesharesof£1.00
960
22,600
4,800
28,360
31MAR2012£’000
960
22,600
4,800
28,360
31DEC2012£’000
2,645
22,600
4,800
30,045
31MAR2012£’000
2,645
22,600
4,800
30,045
31DEC2012£’000
GROUPANDCOMPANY
18 cALLEd UP shARE cAPiTAL
GROUPANDCOMPANY
dividendsTheprofitsoftheCompanyavailablefordistributionshallbeappliedinpayingtotheholdersoftheOrdinarySharesprorata,accordingtotheamountspaiduporcreditedaspaidupontheordinarysharesheldbythemrespectively,suchamountasthedirectorsmaydecide,subjecttotheconsentofanInvestorMajorityandtheCompany’sbankers.TheDeferredSharescarrynorighttoadividend.
Voting rightsAmemberhasonevoteforeveryordinaryshareheld.Thedeferredshareshavenovotingrights.
CapitalOnareturnofassetsonliquidationorcapitalreductionorotherwise,theassetsofthecompanyremainingafterthepaymentofitsliabilitiesshallbedistributedtotheholdersoftheordinaryshares.Theholdersofthedeferredsharesarenotentitledtoanyshareofthesurplusassetsuntileachoftheordinaryshareholdershasreceived£10,000,000perordinaryshare.
17 PROVisiONs fOR LiAbiLiTiEs ANd chARgEs
At1April2012
(Utilised)/providedintheyear
at31December2012
-
300
300
LEGALCLAIM
£’000
-
270
270
DEFERREDTAXATION
£’000
2,836
(364)
2,472
TOTAL
£’000
2,836
(934)
1,902
OTHER
£’000
Theotherprovisionrelatestoanumberofexcesscontractualcostswhichthecompanybelievesitmayincuronprojectswhichhavebeendeliveredtoclients.Thesecostsarenotfullyknown,subjecttonegotiationandareunlikelytobeoffsetbyadditionalrevenue.Itisexpectedthatthemajorityofexpenditureswillbeincurred
inthenextfinancialyearandthatallwillbeincurredwithintwoyears.Theprovisionhasbeenestimatedinaccordancewiththeappropriatecontractdocuments.
Thecompanyhasnoprovisionforliabilities(31March2012:nil).
ANNUAL REPORT 31 December 2012 54financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
19 shARE PREmiUm AccOUNT
at1april2012and31December2012 904
COMPANY31DEC2012
£’000
904
GROUP31DEC2012
£’000
20 PROfiT ANd LOss AccOUNT
At1April2012–(deficit)/surplus
Profitforthefinancialperiod
Exchangeadjustments
at31December2012
10,228
756
-
10,984
COMPANY31DEC2012
£’000
(9,864)
12,236
11
2,383
GROUP31DEC2012
£’000
21 REcONciLiATiON Of mOVEmENTs iN shAREhOLdERs’ fUNds
Profitforthefinancialperiod
Exchangeadjustments
Netadditiontoshareholders’funds
Openingshareholders’funds
Closingshareholders’funds
15,621
-
15,621
23,871
39,492
12MTHSTO31MAR2012
£’000
17,480
6
17,486
1,914
19,400
12MTHSTO31MAR2012
£’000
756
-
756
39,492
40,248
9MTHSTO31DEC2012
£’000
12,236
11
12,247
19,400
31,647
9MTHSTO31DEC2012
£’000
GROUP COMPANY
financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
22 cAsh fLOW fROm OPERATiNg AcTiViTiEs
Operatingprofit/(loss)
Amortisationofgoodwill
Amortisationofdevelopmentcosts
Depreciationcharge
Amortisationofgrant
Lossonsaleoffixedassets
(Increase)/decreaseinstocks
Decrease/(increase)indebtors
Increase/(decrease)increditors
(Decrease)/increaseinprovisions
Prioryearadjustment
Othernon-cashmovements
Netcashinflow/(outflow)fromoperatingactivities
(996)
364
166
3,690
(196)
114
8,125
(18,711)
(10,378)
2,241
435
(18)
(15,164)
12MTHSTO31MAR2012
£’000
13,530
306
77
3,386
(152)
-
(3,703)
3,425
5,785
(634)
-
(2)
22,018
9MTHSTO31DEC2012
£’000
GROUP
23 ANALysis Of NET dEbT
Cashatbankandinhand
Debtlessthanoneyear
Debtmorethanoneyear
Netdebt
2,701
(3,500)
(11,480)
(12,279)
31DEC2012£’000
230
1,500
17,068
18,798
CASHFLOW£’000
2,471
(5,000)
(28,548)
(31,077)
31MAR2012£’000
ANNUAL REPORT 31 December 2012 56financial statements NOTEs - 9 mONThs ENdEd 31 dEcEmbER 2012
24 OPERATiNg LEAsE cOmmiTmENTs
Annualcommitmentsundernon-cancellableoperatingleasesexpiring:
Within1year
Within2to5years
After5years
81
96
-
177
31MAR2012PLANTANDEQUIPMENT
£’000
51
240
-
291
31DEC2012PLANTANDEQUIPMENT
£’000
77
856
1,922
2,855
31MAR2012
PROPERTY£’000
322
530
1,961
2,813
31DEC2012
PROPERTY£’000
GROUP
25 cAPiTAL cOmmiTmENT
Contractplacedforfuturecapitalexpenditurenotprovidedinthefinancialstatements 531
31MAR2012£’000
1,126
31DEC2012£’000
TheGroupreceivesgovernmentgrantstoassistinthefundingofcapitalexpenditure.Theaggregateamountofsuchgrantsreceivedinthe9monthsto31December2012was£210,000(12monthsto31March2012:£380,000)
Intheeventofanybreachofgrantconditionsthefullamountofthegrantreceivedwouldberepayable.TheGroupisnotawareofanyactual,orpotential,breachofconditions,noprovisionisrequiredforrepayment.
JDRCableSystems(Holdings)LtdisaguarantorforallGroupborrowingfacilitiesundertheagreementbetweenthecompanyanditsbankers.Totalsumsoutstandingunderthisagreementat31December2012were£3,500,000(31March2012:£10,000,000).
TheultimateparentcompanyandcontrollingpartyisJDREnterprisesLimited,whichistheparentcompanyofthelargestGrouptoconsolidatethesefinancialstatements.CopiesoftheGroupfinancialstatementscanbeobtainedfromtheCompanySecretaryatJDRCablesSystems(Holdings)Limited,LittleportInnovationPark,WisbechRoad,Littleport,Ely,Cambridgeshire,CB61RA.
26 ULTimATE PARENT UNdERTAkiNg
DuringthenormalcourseofbusinesstheGrouphasgivenbankguaranteestotalling£18,308,000(31March2012:£15,228,000).
28 cONTiNgENT LiAbiLiTiEs
MrRichandMrVandeSteenwererepresentativedirectorsforVisionCapitalLLP.FundsadvisedbyVisionCapitalLLParethelargestshareholderinJDREnterprisesLtd.VisionCapitalLLPchargedamonitoringfeeof£115,000intheperiod.
27 RELATEd PARTy TRANsAcTiONs
TheGroupcontributestopersonalpensionschemesonbehalfofcertainemployees.TheseschemesareadministeredindependentlyoftheGroup.ThetotalpensioncostwhichischargedagainstprofitrepresentscontributionspayablebytheGroupandamountedto£562,000(31March2012:£473,000).
29 PENsiON
APPENdix
aPPendix gROUP PROfiT ANd LOss AccOUNT (cONTiNUiNg gROUP) fOR ThE 12 mONThs ENdEd 31 dEcEmbER 2012
Revenue
Costofsales
Grossprofit
Administrativeexpenses
Administrativeexpenses-exceptional
Operatingprofit/(loss)beforegoodwillamortisation
Goodwillamortisation
Operatingprofit/(loss)
Interestpayableandsimilarcharges
Profit/(loss)onordinaryactivitiesbeforetaxation
Tax(charge)/creditonprofitonordinaryactivities
Profit/(loss)forthefinancialperiod
Retainedprofit/(loss)forthefinancialperiod
Exchangerategain
Totalgainsandlossesrecognisedsincethelastfinancialstatements
83,246
(69,472)
13,774
(21,723)
(2,229)
(10,178)
(1,810)
(11,988)
(1,158)
(13,146)
1,018
(12,128)
(12,128)
-
(12,128)
129,899
(86,014)
43,885
(22,336)
(607)
20,942
(492)
20,450
(2,387)
18,063
(45)
18,018
18,018
150
18,168
12MTHSTO31DEC2011
£’000
12MTHSTO31DEC2011
£’000
12MTHSTO31DEC2012
£’000
12MTHSTO31DEC2012
£’000
gROUP sTATEmENT Of TOTAL REcOgNisEd gAiNs ANd LOssEs fOR ThE 12 mONThs ENdEd 31 dEcEmbER 2012
UNAUdiTEd PRO fORmA sUmmARy fiNANciAL sTATEmENTs
ANNUAL REPORT 31 December 2012 58APPENdix
aPPendix gROUP bALANcE shEET As AT 31 dEcEmbER 2012
Fixedassets
Intangibleassets
Tangibleassets
Currentassets
Stock
Debtors
Cashatbankandinhand
Creditors–amountsfallingduewithinoneyear
Netcurrentassets
Totalassetslesscurrentliabilities
Creditors–amountsfallingdueaftermorethanoneyear
Provisionsforliabilities
Netassets
Capitalandreserves
Calledupsharecapital
Sharepremiumaccount
Profitandlossaccount
Totalequityshareholders’funds
2,969
34,566
37,535
22,831
24,091
3,242
50,164
(41,697)
8,467
46,002
(30,808)
(1,715)
13,479
28,360
904
(15,785)
13,479
2,954
34,264
37,218
15,146
33,463
2,701
51,310
(40,531)
10,779
47,997
(13,878)
(2,472)
31,647
28,360
904
2,383
31,647
31DEC2011£’000
31DEC2012£’000
UNAUdiTEd PRO fORmA sUmmARy fiNANciAL sTATEmENTs
APPENdix
aPPendix gROUP cAsh fLOW sTATEmENT fOR ThE 12 mONThs ENdEd 31 dEcEmbER 2012
Earnings/(loss)beforeinterest,tax,depreciationandamortisation(EBITDA)
Less:exceptionalitems
Add: movement in working capital
Decrease/(increase)instock
Increaseintradedebtors
(Increase)/decreaseincustomeradvances
(Decrease)/increaseintradecreditors
Other
Netcashinflow/(outflow)fromoperatingactivities
Returnsoninvestmentsandservicingoffinance
Interestpaid
Interestreceived
Netcashoutflowfromreturnsoninvestmentsandservicingoffinance
Taxation
Capitalexpenditureandfinancialinvestments
Increaseinfixedassets
Netcashoutflowfromcapitalexpenditureandfinancialinvestments
Financing
Decreaseinborrowings
(Decrease)/increaseinloanfromparentcompany
Saleofsubsidiary
Netcash(outflow)/inflowfromfinancing
Decreaseinnetcash
(4,111)
(2,229)
(9,555)
(10,240)
6,900
8,672
107
(10,456)
(1,158)
-
(1,158)
-
(8,706)
(8,706)
(17,698)
10,198
27,200
19,700
(620)
25,766
(607)
7,685
(9,512)
(2,956)
(5,240)
4,477
19,613
(2,387)
-
(2,387)
(139)
(4,288)
(4,288)
(1,500)
(11,840)
-
(13,340)
(541)
12MTHSTO31DEC2011
£’000
12MTHSTO31DEC2012
£’000
UNAUdiTEd PRO fORmA sUmmARy fiNANciAL sTATEmENTs
ANNUAL REPORT 31 December 2012 60
Jdr Cable Systems (Holdings) Ltd SaltireCourt20CastleTerraceEdinburghEH12ENRegisteredcompanynumber:SC186919
REgisTEREd hEAd OfficE
HSBC Bank plc Home&EasternCountiesCorporateBankingCentreLevel6MetropolitanHouse,CBX3321AveburyBoulevardMiltonKeynesMK92GA
bANkERs
eversheds LLPKettHouseStationRoadCambridgeCB12JY
Bird and Bird LLPTaunusanlage160329FrankfurtamMainGermany
Macfarlanes LLP20CursitorStreetLondonEC4A1LT
LEgAL AdVisERs
Grant Thornton UK LLP101CambridgeScienceParkMiltonRoadCambridgeCB4OFY
AUdiTORs
Lazard & Co., Limited50StrattonStreetMayfairLondonW1J8LL
fiNANciAL AdVisERs
Brunswick Group LLP16Lincoln’sInnFields,London,WC2A3ED
cOmmUNicATiONs AdVisERs
AdVisERs ANd REgisTEREd hEAd OfficE
Littleport innovation ParkWisbech Road
Littleportcambridgeshire
cb6 1RA
7906 N. sam houston Parkway Westsuite 201houstonTx 77064
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