Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
This report details the consolidated results for Subsea Technology & Rentals Limited, for the year ended 31 December 2022.
STR is a key supplier of subsea technologies, products, and equipment to the offshore renewable and oil and gas industries. The STR group operates from bases in Aberdeen, Great Yarmouth, Houston, Singapore and Perth (Australia).
In January 2022, Baird Capital invested in the STR group and PNC Bank provided a £17m funding facility, providing additional financial resource to support the development of the business. During 2022 the STR Group made record levels of investment in core rental equipment, increased production capacity on the STR developed and manufactured technology and invested in improved operational facilities including a new Centre for Innovation and Technology. The STR Group invested heavily during 2022 in the recruitment of additional personnel to support the growth of the business and continued the development of its core policies and processes including the development of it’s ESG Vision. The business performed well in all its core markets and geographies, with all regions experiencing a growth in business. The offshore renewables and oil and gas were buoyant during 2022. As a result, the STR Group experienced a 23% increase in revenue to £24m and a 270% increase in PBT to £7.5m
The principal risks and uncertainties facing the Company and Group are as follows –
Credit risk - The Company and Group's credit risk is primarily attributable to trade debtors. The amounts presented in the balance sheet are net of any allowances or provisions for doubtful debtors. The majority of the Company and Group's business is undertaken with large companies with strong credit ratings. Management continually reviews the status of outstanding trade debtors to ensure that the trade debtor risk is commensurate with the volume and nature of the business. Liquidity risk - The Company and Group's management review cash flow and funding facilities to ensure there is sufficient working capital in place to support the business.
The financial key performance indicators which the directors use to monitor are revenue, EBITDA, asset utilisation and cash flow generation.
Other key performance indicators include health and safety and quality improvements, CCRs, sales metrics, asset turnaround time and ESG metrics.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The profit for the year, after taxation, amounted to £
There were dividends of £nil paid during the year (2021 - £nil).
The directors who served during the year were:
The offshore renewable and oil and gas markets are expected to expand over the foreseeable future. The limit of the PNC funding facility has been increased to allow STR to continue to invest significant additional funds in core assets and allow STR to take advantage of the anticipated growth in the STR core markets.
There have been no significant events affecting the Group since the year end.
Subsequent to 31 December 2022 Ernest & Young LLP have been appointed as the statutory auditor in accordance with the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SUBSEA TECHNOLOGY & RENTALS LIMITED
We have audited the financial statements of Subsea Technology & Rentals Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SUBSEA TECHNOLOGY & RENTALS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SUBSEA TECHNOLOGY & RENTALS LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the Group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements.
The laws and regulations we considered in this context were the Companies Act 2006 and UK Taxation
legislation.
We considered the opportunities and incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the following areas:
∙timing and completeness of revenue recognition
∙compliance with relevant laws and regulations which may impact on the financial statements and those that the Group needs to comply with for the purpose of trading
∙management judgements applied in calculating provisions
∙management override of controls to manipulate the Group’s key performance indicators to meet targets.
We discussed these risks with client management, designed audit procedures to address these risks including:
∙reviewed internal documentation and correspondence with regulators for evidence or irregularities
∙testing a sample of sales transactions to source documents and review of recognition of income around the year end
∙consideration of the assumptions applied whether the judgements applied in calculation of provisions were appropriate
∙reviewed areas of judgement and tested a sample of journal entries for indicators of management bias
∙performed analytical procedures to identify any unusual or unexpected relationships which may be an indication of material misstatement due to fraud
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SUBSEA TECHNOLOGY & RENTALS LIMITED (CONTINUED)
This report is made solely to the Group's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Group's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Kingshill View
Prime Four Business Park
Kingswells
AB15 8PU
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 35 form part of these financial statements.
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COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 35 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Subsea Technology and Rentals Limited is a private limited company incorporated in the United Kingdom. The registered office is 28 Albyn Place, Aberdeen, United Kingdom, AB10 1YL.
The principal activity of the Company and Group is the provision of subsea technologies, products and equipment to the offshore renewable and oil and gas industries.
2.Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Group has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
Parent Company disclosure exemptions
In preparing the separate financial statements of the parent Company, advantage has been taken of the following disclosure exemptions available in FRS 102:
∙No Statement of cash flows has been presented for the parent Company;
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The directors, having made due and careful enquiry, are of the opinion that the Group has adequate working capital and investment funding to execute its operations over the next 12 months. The directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The business has prepared detailed financial projections for the next 2 years and has funding in place post the year end to deliver and support these projections.
As a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Group contributes to a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
Software costs are written over their estimated useful life of 2-4 years.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
During the current year the depreciation basis for certain plant and machinery assets was changed to 3-7 years and tenant's improvements to the duration of the lease. The impact of the longer useful life has lead to a decrease in the depreciation charge and subsequent increase in fixed asset value at the year end of £2.7m in the current year. As the updated depreciation policy were implimented from 1 January 2022 the brought forward balances have not been affected.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet. Impairment of debtors The Group makes an assessment of the recoverable value of trade debtors and other debtors. When assessing impairment of trade and other debtors, management consider various factors including the ageing profile of debtors and historical experience. See note 17 for the net carrying amount of the debtors and associated provisions. Impairment of stock When calculating the stock provision, management considers the nature, condition and age profile of the stock, as well as applying assumptions around anticipated future usage based on past experience. See note 16. Carrying value of tangible assets Management apply judgement in assessment of the estimated useful life and residual value of fixed assets, particularly the rental fleet owned by the Group. The resultant depreciation charged to the profit and loss account is an estimate of the economic lives of the assets. See note 14.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12.Taxation (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12.Taxation (continued)
Increase in the UK Corporation tax rate from 19% to 25% (19% effective from 1 April 2017, and 25% effective from 1 April 2023) have been substantively enacted. This will impact the company's future tax charge accordingly. The value of the deferred tax liability at the balance sheet date has been caclulated using the applicable rate when the liability is expected to be realised.
Research and development above the tax line tax credit is treated as other income, see note 5. The tax charge for the period which has been caculated on the profits on ordinary activities before tax at the standard rate of corporation tax in the UK of 19% (2021 - 19%) prior to research and development and other adjustments.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
14.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Group contributes to a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in independently administered funds. The pension charge represents contributions payable by the Group to the fund and are detailed in note 8. There were no amounts outstanding at the balance sheet date (2021 - £nil).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Company and Group have taken advantage of the exemption available in FRS 102 Section 33 to not disclose transactions with 100% owned subsidiaries.
There were no related party transactions. There were no dividends paid during the year.
The company's controlling party and largest consolidated financial statements where Subsea Technology & Rentals Limited is included is that of Project Poseidon Topco Limited, a holding company incorporated in the UK. The financial statements can be obtained from Companies House.
The immediate parent is Project Poseidon Bidco Limited, a company incorporated in the UK. The financial statements can be obtained from Companies House.
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