SHV in 2014

SHV Holdings N.V.
Head office:
Rijnkade 1
3511 LC Utrecht
The Netherlands
T +31 30 2338833
F +31 30 2338304
www.shv.nl
e-mail info@shv.nl
Statutory seat:
Boulevard Gob. N. Debrot 36
Kralendijk
Bonaire
Chamber of Commerce
Utrecht nr. 30065974
Chamber of Commerce
Bonaire nr. 7111
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SHV in 2014 - Contents
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SHV at a glance
Supervisory Board of Directors
Executive Board of Directors
Staff
Welcome to SHV
Highlights 2014
Financial overview 2014
Vision
Business review 2014
Corporate Philosophy
SHV History
SHV Group Companies
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SHV at a glance
SHV is a privately held family company that aims to maintain its strong position in a number
of operational activities and selected investment activities. We invest for the long-term,
expand and develop businesses, and provide our customers with excellent value services.
We achieve all this thanks to a team of people who are proud to be part of SHV.
The company was founded in the Netherlands in 1896 as a result of the merger between a
number of large coal trading companies. After the decline of coal as the primary source of
energy, halfway through the twentieth century, SHV moved into other business areas.
Today, SHV is present in 51 countries on all continents and employs about 48,500 people.
We are active in energy distribution, cash-and-carry wholesale, heavy lifting and transport
activities, and industrial services. As an investor, we are involved in the exploration,
development and production of oil and gas, primarily in the North Sea, and we provide
private equity to companies in the Benelux.
Energy distribution
SHV Energy is the leading supplier of LPG in the world. Well-known brand names include
Primagaz, Calor Gas, Liquigas, Super Gas, Ipragaz, Supergasbras, Xiweigas and Gaspol.
SHV Energy is also involved in the distribution of LNG and renewable energy.
Cash-and-carry wholesale
Makro is a focused cash-and-carry wholesaler with 161 stores in South America. It
distributes food and non-food products with excellence in price, quality and variety to
professional customers.
Heavy lifting and transport
Mammoet is a leading company specialised in heavy lifting and transport solutions
worldwide. Mammoet provides services to the oil and gas, petrochemical, power generation,
civil and offshore sectors.
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Industrial services
ERIKS is engaged in the supply of high-quality mechanical engineering components and
associated technical and logistics services. ERIKS has a leading position in its markets in
Europe and the USA.
Oil and gas investments
Dyas invests in joint ventures in the exploration, development and production of oil and gas.
Dyas acts as a non-operator, with a primary focus on the North Sea.
Private equity investments
NPM Capital provides private equity to companies with above-average growth opportunities
and focuses mainly on unlisted, medium-sized businesses in the Benelux. As a reliable and
long-term investor, NPM Capital has built up a strong market position over several decades
and has holdings in 28 companies.
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Supervisory Board of Directors
Mrs A.M. Fentener van Vlissingen, Chairman
P.A.F.W. Elverding, Vice-chairman
P.C. Klaver, Vice-chairman
A. Burgmans
R.W.J. Groenink
Ph.C.O.E.A. von Hammerstein-Loxten
Mrs P. Mars Wright
M.L. Mautner Markhof
Mrs M.J. Oudeman
Executive Board of Directors
S.R. Nanninga, Chairman
B.L.J.M. Beerkens
R. Kandelman
W. van der Woerd
Staff
Company Secretary - J. van Klink
Financial and Economic Affairs - C. Dekker
Fiscal Affairs - G.Y.B. Kruisinga
Human Resources - J.M. Alberdingk Thijm
Information Technology - M.J. de Hoop
Internal Audit - Th. Smit
Legal Affairs - Mrs L.E. de Beer
Treasury - W.N. Pals
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Welcome to SHV
SHV is a privately owned company with a strong entrepreneurial spirit and a long-term
perspective. Central to the way SHV does business are its company values, which are
embedded in its Corporate Philosophy. In the process of executing its strategy, SHV values
tradition and always keeps its roots in mind.
To keep up with the dynamic business environment it operates in, SHV relies most
importantly on the strengths of its people. People are essential to the success of SHV and
great trust is put in them. In addition to its focus on people, SHV recognises that it is a part
of society. This means that it not only provides customers with relevant goods and services
but also contributes in various ways to the communities it forms a part of.
The world around us is constantly evolving, and so is SHV. In 2014, sustainability was further
integrated into SHV’s businesses, resulting in a new campaign for sustainability and
innovation. One of the initiatives to strengthen the organisation was the recruitment of
several young talents according to the 2-2-2 principle: two assignments within two operating
companies on two continents. This is regarded as an investment in the future that will benefit
business development and the talents themselves, as well as strengthening intercompany
relations.
The people of SHV dealt with many challenges in 2014, which required their focus and
agility. Many of the SHV businesses further optimised their processes and strengthened their
organisations. After the sale of Makro Thailand in 2013, a strategic plan for SHV was
developed and a variety of industries and potential acquisition targets were reviewed. The
leading criteria in this review were world trends, options for growth, solid management and
a generally sound business. A public offer was made for Nutreco, a global leader in fish feed
and animal nutrition. Meeting all of the above-mentioned criteria, Nutreco is a good fit with
SHV. On 11 March 2015, SHV declared its offer on the Nutreco shares unconditional and
therewith the transaction is almost completed.
The Supervisory Board of Directors held five meetings in 2014 and was in regular contact
with the Executive Board of Directors. At each meeting, the Executive Board informed the
Supervisory Board about the financial position of SHV and its businesses, the main
developments in their markets and the performance of each business and of the Group as
a whole.
Mr Patrick Kennedy retired from the Executive Board of Directors on July 1, 2014. He had
been part of SHV and its businesses for 32 years. We are very grateful for his dedication
and his efforts to make SHV an even better company. His humour and personal touch were
an important asset. Mr Stephan Nanninga took over as Chairman of the Executive Board as
of July 1, 2014, and Mr Ricardo Kandelman started as Executive Board Member as of
January 1, 2015.
In April 2015, Mr A. Burgmans will retire from the Supervisory Board. Mr Burgmans has an
in-depth knowledge of several businesses in the retail and energy-related industries. His
sharp analytical mind contributed to challenge and rethink topics from a different
perspective. SHV is grateful to him for his contribution.
The year 2015 will pose its own challenges given the unrest in the world, the economic
environment, and fluctuations in the oil price. It will be a difficult year.
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The Supervisory Board wishes to thank the Executive Board and all the employees for their
effort to achieve the results in 2014 and for continuing to build SHV's future for the next
generation.
March 13, 2015
On behalf of the Supervisory Board of Directors,
Chairman
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Highlights 2014
Many of the economies in which SHV operates are facing significant challenges. The euro
zone is experiencing a frail recovery. In South America the situation is not much better, with
a stagnant Brazilian economy and volatility in countries such as Argentina and Venezuela.
The US economy is growing, which could have a positive impact on other regions, but this
is by no means certain. Since the summer of 2014, oil prices have fallen sharply, and it is
impossible to predict where the situation will end. Major worldwide threats such as the
spread of the Ebola virus and instability in Eastern Europe and the Middle East have thus
far not directly impacted our colleagues and businesses in 2014.
With only a few of the regions we operate in currently thriving and showing considerable
growth, the present state of the world’s economy is affecting our businesses. This impact
has been somewhat limited by SHV’s strategy of geographic diversification. The fluctuation
in commodity prices is not new to SHV, and all Groups are taking mitigating measures where
possible to deal with this uncertainty. To counter the consequences of lagging economic
growth, SHV continues to decisively and proactively take a wide range of measures,
including deepening and strengthening customer relationships, targeting new customers,
implementing cost reduction measures, improving IT systems, further improving controls
through the Business Support Framework, exchanging knowledge between business units,
and strengthening our organisation and management.
In spite of a challenging year, total net income for SHV in 2014 was € 523 million, a slight
increase compared with 2013 (excluding the gain on the sale of Makro Thailand).
SHV Energy performed satisfactorily, as it managed to offset a decline in sales caused by
record-breaking warm weather. In spite of a volatile economic situation in South America,
Makro posted a result similar to the previous year. Mammoet performed in line with 2013,
notwithstanding slow project markets in the energy sector. ERIKS reported a strong result,
with a good operational performance and improved sales volumes. Dyas’ result was
negatively impacted by the declining oil price. NPM Capital managed to execute a few
transactions, resulting in a limited contribution to SHV's overall result.
Altogether, also in 2014, SHV's 48,500 people were capable and dedicated to deliver a solid
result. As always SHV prioritised its focus on people: leadership development, health and
safety, and global talent management were the cornerstones of our human resources policy
and will remain so in 2015.
In 2014, SHV actively sought out opportunities to reinvest the proceeds of its sale of Makro
Thailand. Various industries and potential opportunities were intensively reviewed and
analysed. From this exercise, it became clear that the food and agricultural sector is one of
the preferred industries for SHV to invest in. After further analysing this industry, SHV
selected Nutreco, a global leader in fish feed and animal nutrition, as its preferred
investment. SHV considers Nutreco a very promising company with good long-term growth
opportunities, solid management and company values similar to those held by SHV. A public
offer for this listed company was announced in October 2014. On 11 March 2015, SHV
declared its offer on the Nutreco shares unconditional and therewith the transaction is almost
completed.
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Being a long-term-oriented family business, SHV also looks beyond the more customary
business improvement measures. Over the last few years, we have embraced the
sustainability concept and engaged our people in our sustainability strategy. In 2014, this led
to a number of concrete measures throughout SHV, such as the opening of a Makro store in
Brazil with many sustainable improvements. To advance the sustainability effort, our
businesses have implemented Key Performance Indicators (KPIs) in the area of sustainability
and improved their reporting. Now, SHV aims to increase its ambition levels for the future.
SHV believes that sustainability needs to be coupled with innovation, which results in
Sustainovation. To firmly put this concept on the agenda throughout SHV, a campaign has
been developed which will be rolled out in the coming year.
March 13, 2015
On behalf of the Executive Board of Directors
Chairman
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Financial overview 2014
In 2014, in spite of an increasingly challenging environment, SHV managed to report an
improved net income of € 523 million, compared with € 521 million in 2013 (excluding the
exceptional gain from the sale of Makro Thailand of € 3.0 billion). The performance of SHV’s
Groups varied in 2014. The fact that Makro Thailand is no longer contributing to SHV’s
earnings is noticeable in the 2014 results. However, net income was positively influenced by
a gain on money held in US dollars and a lower average tax burden.
Total sales in 2014 amounted to € 14.9 billion. Excluding the sales of businesses divested,
namely Makro Thailand and Liquigaz Philippines which amounted to € 1.6 billion, this
represents a decrease of 7% (€ 1.2 billion) compared with 2013. This decline was primarily
caused by the devaluation of a number of currencies against the euro, such as the Brazilian
real, Argentine peso, Venezuelan bolivar and the Turkish lira. The total currency translation
effect on sales amounted to € 0.9 billion. In addition, organic sales declined by € 0.4 billion
(or 3%) due to lower sales volumes at SHV Energy and lower oil and gas prices and
production volumes at Dyas, which was offset to some extent by increased sales at Makro
South America. The decline in organic sales was in turn partly offset by sales from
acquisitions made by ERIKS.
Due to the above-mentioned sales development at SHV Energy, Dyas and ERIKS, income
from operations declined from € 870 million in 2013 (excluding the income from Makro
Thailand's operations) to € 745 million.
In 2014, net income was negatively impacted by exceptional items amounting to € 59 million.
These include additional provisions for pension liabilities in the UK and an addition to the
provision for special risks as well as gains on divestments in SHV Energy and ERIKS.
Net income in 2014 was positively affected by a foreign exchange gain on money held in
US dollars and a lower average tax burden compared with 2013. The average tax burden
decreased from 37.5% to 29.9% due to the recognition and utilisation of tax loss carry
forward positions in Makro South America and ERIKS, tax-exempt currency results on
US dollar cash positions and lower taxable profits of Dyas in the UK. The net negative
translation effect of all currency fluctuations on SHV’s 2014 net income amounted to
€ 11 million.
In 2014, there has been a strong focus on working capital improvement. The working capital
development of SHV Energy, Makro South America and Dyas generated a positive cash flow,
which was only partly offset by the working capital development at Mammoet and ERIKS.
Operational cash flow decreased in line with the decline in income from operations. The
investment cash flow in 2014 amounted to € 1.3 billion. This compares with € 0.9 billion in
2013, excluding the one-time cash proceeds from the sale of Makro Thailand. This increase
is attributable to the purchase of 22.15% share in Nutreco in light of the public offer that
was announced in October 2014. In addition, € 119 million was spent on other acquisitions,
mainly by ERIKS. A total of € 688 million was spent on investments in operational fixed
assets, namely gas cylinders and tanks by SHV Energy, heavy lifting and transport equipment
by Mammoet and investments in oil and gas fields by Dyas. NPM Capital invested in
Iddink Groep and made a number of add-on investments in existing participations.
At the end of 2014, SHV's group equity amounted to € 6.8 billion. The decrease compared
with 2013 is mainly due to the goodwill paid on the aforementioned acquisition of Nutreco
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shares, which is directly charged against equity. A large part of shareholders’ equity is
invested in countries with currencies other than the euro. In 2014, the total positive effect of
converting these currencies into euro amounted to € 40 million. Total liquidity amounted to
€ 3.4 billion, and the net cash position was € 2.2 billion.
The return on shareholders’ equity was 15% (2013: 14%), excluding the effect of the sale of
Makro Thailand.
Results, in millions of euro
Net sales
Income from operations *
Net income
Amortisation, depreciation
and depletion
Income taxes
Dividend
Cash flows, in millions of euro
Changes in working capital
Operational cash flow
Investment cash flow
Financing cash flow
(
(
(
2010
2011
2012 **
2013
2014
16,008
977
603
17,362
911
782
20,010
961
735
17,609
931
3,559
14,906
745
523
517
305
227
493
327
238
632
298
254
542
334
265
508
228
276
89)
1,149
1,010)
574)
10
1,354
1,666)
574)
70)
1,277
597)
474)
82
1,360
2,274
522)
90
1,172
1,256)
520)
Financial position, in millions of euro
Shareholders’ equity
3,530
Equity of the Group
3,895
Total assets
9,273
Ratio information
Net income as a percentage of
shareholders’ equity
Equity of the Group as a
percentage of total assets
Current assets in relation to
short-term liabilities
Employees, at December 31
Nominal number
Amounts per share
Net income
Dividend
* before exceptional items
** restated for changes in
accounting principles
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(
(
(
(
(
(
(
(
3,513
3,784
10,174
3,823
4,068
1,028
6,774
6,930
12,304
6,597
6,763
12,053
17%
22%
19%
53%
8%
42%
37%
40%
56%
56%
1.17
1.01
1.22
2.37
2.31
50,300
54,700
55,800
47,100
48,500
83.10
31.25
107.76
32.75
101.22
35.00
489.82
36.50
69.30
38.00
Vision
SHV’s firm foundations, entrepreneurial spirit and wealth of experience provide a solid base
for continued growth. As our operations expand, we take care to remain close to our
customers. Decentralisation is fundamental to the way we do business.
Over the years, SHV has demonstrated its capacity to change. By establishing ourselves
as a leading player in our individual markets, and striving to stand out from the crowd, we
continue to build a solid company.
Investment for the future
A successful long-term investment strategy is important for our future. We invest to develop
our existing activities. We seek expansion organically and through acquisitions. We invest to
develop new business activities, which bring challenges and opportunities. Our shareholders
accept the risks that come with new ventures. Differentiation in all our businesses is
encouraged, with a specific focus on sustainable innovation.
SHV and sustainability
Sustainability is about meeting today’s needs without compromising the ability of future
generations to meet theirs. Because SHV is a family company, sustainability takes on an
extra, more personal dimension. Not only is this doing what is right from an ethical and
societal point of view, it is also a strategic initiative in general to pursue value-enhancing
innovation and differentiation in what the company has to offer its customers. In essence,
sustainability is a morally, socially and economically enhancing proposition. Sustainable
innovation should not be a buzzword, it must result in concrete achievements. Delivering
these results will continue to be a central challenge for each and every one of SHV’s
activities.
Sustainovation should be integrated into the way we do business. We want to achieve
growth through sustainable innovation with a view to developing new products, services or
business models. By using scarce resources prudently, switching to renewable sources and
recycling and minimising waste, we can reduce our environmental footprint. We can also help
our customers to reduce theirs.
Investing in people
We believe our people make a difference. They embody our values, support our culture and
build our success. We recognise that our long-term commitment to the business requires a
long-term people strategy too. As a result, we prefer to promote from within. We invest in
our people by offering challenging careers with real responsibilities. We complement this with
specific training and development programmes aimed at growing our current and future
leaders.
Shared values and
objectives unite us
Our company is shaped by our people who work with shared values and business objectives.
Our culture is typical for its professionalism, common sense and entrepreneurship. Mutual
respect and trust provide the basis for sound working relationships between our people, who
are encouraged to take responsibility in their work and are stimulated to be entrepreneurial.
Knowing that our people are capable of meeting the challenges of today gives us confidence
in the future.
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Business review 2014
SHV is a privately held company consisting of a number of operational activities and
selected investment activities. The operational activities are in the areas of energy
distribution and marketing; wholesale cash-and-carry; industrial services; and heavy lifting
and transport. The investment companies are active in the exploration, development and
production of oil and gas, and private equity. The private equity company, with its base
in the Benelux, invests in midsized enterprises in a wide range of sectors.
The company operates globally but is at the same time decentrally organised to ensure that
its diversified businesses maintain close and loyal customer relationships. SHV aims to
achieve growth in each of its activities, whether of an operational or an investment nature,
by growth through performance and acquisitions for the purpose of consolidation. The
company’s strategy is to develop strength in niche markets and to deliver sustainable growth
through a relentless focus on safety, ethical values and investing in its people.
Risks
Risks and uncertainties define all business environments. Risk-taking is an essential part of
business and a precondition for achieving adequate returns. The risk environment in which
SHV companies create value and generate income is determined by both manageable risks
and a number of external risks that are beyond the control of SHV. The manageable risks
include commercial, operational, financial, tax, compliance and regulatory risks, the reliance
on information technology and the ability to recruit and retain employees.
Risks change constantly as the internal and external dynamics of the operating environments
of SHV companies change, especially in the current uncertain and volatile global economic
environment. This can have an impact of an unpredictable nature on SHV’s business. Also
taking into account the competitive environment, it is essential for SHV management to
continue to devote attention, and take a proactive approach, to market developments and
their consequences for the businesses in which SHV operates. Furthermore, an area requiring
constant attention from all the businesses remains the challenge of recruiting, developing
and retaining qualified and talented people to ensure on-going successful performance. The
implementation of the Business Support Framework is instrumental to support the monitoring
of risks.
SHV’s profitability is further influenced by several other external risk factors. Political risks
exist, for instance, where the company owns assets in politically unstable countries, which
are further compounded by potential problems related to terrorism, social unrest and the
scarcity of vital resources. Governmental interference in business, the continuing inequitable
enforcement of regulations, and sudden increases in taxation and levies in several
jurisdictions, which is especially noticeable in Europe, further add to risk and related costs.
Populist government measures bear down on business also. External risk factors also include
economic factors such as inflation, interest rates, the sovereign debt crisis, exchange rate
policies and stock market returns (in so far as they have a negative impact on companies’
pension liabilities).
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SHV Energy
SHV Energy is a leading distributor and marketer of LPG and related energy solutions, active
throughout Europe, in Asia and also with a substantial presence in Brazil. SHV Energy is an
operational management company overseeing individual LPG business units, each operating
under their own unique brand identity. Many of SHV Energy's brands – such as Primagaz,
Calor, Xiweigas, and Supergasbras – are household names in their respective markets.
Together, these companies serve the energy needs of over 30 million customers.
The results of SHV Energy, especially in Europe, tend to be influenced by the weather.
A mild or cold winter will determine heating-related demand. The purchase price of LPG
fluctuates and depends on supply and demand situations in the applicable LPG markets, the
price of oil, and movements in exchange rates, particularly in the US dollar. These influences
are mitigated by SHV Gas Supply & Risk Management, which advises on and executes risk
management and associated hedging on behalf of SHV Energy’s Business Units. Results are
also affected by government policies, for example those related to pricing or technical and
operational regulations. Managing health and safety risks is of paramount importance in the
LPG business.
In the first half of 2014, SHV Energy’s European subsidiaries were severely impacted by the
warm weather, which led to a decrease in LPG sales volumes. Results were also affected by
lower-than-expected growth in many of the economies in which SHV Energy is active.
The main shortfall in sales occurred in Great Britain, France and Italy. SHV Energy China,
together with the BP assets acquired in that country last year, is performing better than
expected. Overall margins improved, particularly in Great Britain and France, and almost all
of SHV Energy’s businesses managed to reduce costs. In Italy and Brazil, preparations were
made for the implementation of new Enterprise Resource Planning (ERP) systems aimed at
improving business processes. The 2014 result was also positively influenced by the sale of
a filling plant in Turkey and the divestments of Probugas in Slovakia and Liquigaz in the
Philippines. The latter two divestments are in line with SHV Energy's strategy to focus on
strengthening its position in markets with growth prospects where it already has a
meaningful presence.
SHV Energy has also been focused on expansion in the small-scale Liquefied Natural Gas
(LNG) market, which is now gradually developing. With new contracts signed in a number of
countries, LNG is now being supplied to a range of businesses as diverse as construction,
cheese production and cereals processing. During the year, SHV Energy has put renewed
effort into finding new approaches to persuade oil users to switch to LPG and LNG, which
are more environmentally friendly. Additionally, SHV Energy finalised a partnership agreement
with Neste Oil to market and sell biopropane, which is made from renewable feedstocks
such as plant and vegetable waste material. In France, the Caloon heating programme was
launched successfully. Caloon provides smart energy metres and billing for collective housing
communities, encouraging customers to consume less energy by monitoring their actual
consumption. During 2014, SHV Energy’s businesses also intensified cooperation in a
number of areas, such as energy services and new customer applications.
Sustainability has increasingly become an integral part of SHV Energy’s strategy. For the
second year in a row, SHV Energy has measured its carbon footprint and published this in
an extensive ‘Carbon Count’ report. In line with the ‘Better, Cleaner, Together’ programme,
a new online innovation platform was successfully trialled and will be available for all SHV
businesses to facilitate and encourage new, innovative ideas.
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In spite of a difficult year with warm weather and challenging economic circumstances,
SHV Energy has performed satisfactorily in 2014. Overall net sales, excluding exchange-rate
effects, were 11% lower than the previous year. Volumes sold were also lower than in 2013.
The decrease in costs compared to the previous year was a result of the many initiatives the
company has implemented over the years to reduce its fixed cost base and to become more
efficient, commercially agile and customer friendly. This resulted in net income in line with
expectations.
Makro
Makro South America is a cash-and-carry wholesaler that sells high volumes of food and
non-food products at low prices to professional customers. Makro wants to become the
number one choice for the professional food retailer and Horeca customer. “We know our
customers better every day to make their everyday better” is the value proposition Makro
has formulated to this end. The strategy emphasises the concepts of one-stop shopping,
assortment solutions, time and money-saving buying experiences, and helping to develop
its customers' businesses.
The results of Makro in general depend largely on the generation, retention and spending of
customers, which in turn is influenced by the development and stability of the economies in
which Makro operates. The economic and political environment in South America is known to
be volatile and unpredictable, which in 2014 mainly applied to Argentina, Brazil and
especially Venezuela.
The economic circumstances in South America have generally not improved in 2014, with an
often unstable political landscape adding to the concerns. In this uncertain climate, Makro
South America managed to perform in line with the previous year, partly as a result of the
many customer-focused initiatives undertaken and the tremendous effort and commitment of
all employees in all the countries in which Makro operates.
Makro Brazil reported improved sales in local currency. During the year, it continued with its
extensive measures to enhance its performance both in operational and commercial areas.
There are still plenty of opportunities for further developing the cash-and-carry concept in
Brazil. Makro Argentina reported sales growth above inflation, in spite of a deteriorated
political and economic environment. Strong focus was put on activating the food retailer and
Horeca customer. Closer and more frequent contact with these customer groups enabled
Makro Argentina to gather new knowledge and build more sustainable customer
relationships. Makro Colombia performed well. A new marketing campaign, ‘All in one stop’,
was launched to position Makro as the place to find everything needed to run a business.
With this campaign, it managed to attract new customers and increase brand awareness.
Colombia is an attractive market, even though competition is increasing. With sales
improving compared with 2013, Makro Peru is developing well, in spite of an unfavourable
new fiscal law which increases taxation for high volume sales. Makro Peru enhanced its
marketing activities, for example by improving in-store exhibitions, with the aim of
strengthening its connection with customers. In line with this development, Makro Peru
effectively uses online platforms such as Facebook as a marketing tool and customer
service channel. In Venezuela, the market was affected by political events and the regulatory
environment. Business was impacted by currency devaluation as well as higher inflation
combined with the politically generated control over prices and the lower availability of
products. In spite of these difficult circumstances, Makro Venezuela managed to perform
well.
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During the year, a number of measures were taken to improve Makro’s overall procurement
activities. Good progress was also made in preparing for the installation of new financial and
business process software. When implemented, this new standardised software is expected
to improve efficiency, internal control and data visibility, and to enable strong business
support and decision-making.
In line with SHV’s strategy, Makro has embraced the sustainability concept and aims to
inspire and engage as many of its employees as possible. To support this, a comprehensive
training kit for employees was developed. Additionally, many concrete initiatives were taken,
ranging from energy reduction programmes to waste recycling schemes. As part of the
‘green store’ project, sustainable features have been incorporated in the most recently
opened and remodelled stores, with improvements such as upgraded building insulation and
the installation of sliding glass for frozen food islands. The new store in Sorocaba, Brazil,
has implemented many of the latest sustainable technologies.
In 2014, overall sales at Makro South America improved by 13% against the previous year
in local currency terms (a decline of 5% in euro terms). The net income of Makro South
America was in line with 2013. Makro opened and closed a store in Brazil, leaving the total
number of Makro stores in South America unchanged at 161.
Mammoet
Mammoet helps clients to improve construction efficiency and to optimise the uptime of
plants and installations. To that end, it provides solutions for the lifting, transporting,
installing and decommissioning of large and heavy structures. The services of Mammoet are
focused on the oil and gas, petrochemical and mining industries, civil engineering, power
generation and offshore projects. The logistical challenges in these industries are growing
daily. Factors such as remote locations, harsh climates and a strong emphasis on the
environment are constantly driving Mammoet towards smarter and safer solutions.
Mammoet’s heavy lifting and transport activities generally rely for their profitability on the
overall investment climate and, more specifically, on the dynamics in the oil and gas,
petrochemical, power generation, civil engineering and offshore sectors. Cyclical risks are
mitigated by operating in both the project and rental market and also through Mammoet’s
presence in various market segments and regions. With a global tendency of growing order
size, the profitability of larger projects in particular is increasingly dependent on project
management capabilities. At Mammoet, managing health and safety risks is of crucial
importance.
After a slow start, Mammoet’s business recovered significantly in the second half of the year.
In Europe, Mammoet performed well due to good results on a number of projects in the
Benelux and the UK. In other regions it faced challenging circumstances, for instance in the
USA and Canada, where performance was affected by delayed projects as a result of the
extreme winter weather. Together with generally slow project markets in the energy sector,
this put some pressure on margins. In the current market climate, customers tend to be
somewhat more cautious in awarding contracts well in advance. Nevertheless, Mammoet still
has a very strong position in its market and an order book that provides a solid base load of
work. During the year, Mammoet sold its Maritime division, which provides heavy transport
and lifting services on water and is active in Western Europe.
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When executing its solutions to assist customers in moving deadlines forward, Mammoet
relies on its broad range of equipment used for heavy lifting and transport. As part of its
strategy, Mammoet aims to offer solutions that save time for its clients. A number of projects
in 2014 were exemplary of this, such as the construction of a steel mill in Louisiana (USA)
which was delivered six months earlier than originally planned due to the modular structure
that was designed and built in close cooperation with Mammoet.
In Ukraine, Mammoet is active in the construction and installation of the New Safe
Confinement for the Chernobyl Nuclear Power Reactor. For this project, Mammoet designed
a new, innovative skidding system to position various sections of the new arch, which must
hold in radioactive materials for the next one hundred years. For this skidding system,
Mammoet received an industry innovation award.
During the year, Mammoet continued to develop its decommissioning business. When
onshore or offshore platforms reach the end of their lifetime, they need to be
decommissioned. This must be done safely, cost effectively and with as little environmental
impact as possible. In 2014, for example, Mammoet was awarded a study for the
decommissioning of the Jacky oil platform (located offshore UK), which is partly owned
by Dyas.
In addition to its continuous commitment to safety, Mammoet is increasingly emphasising the
importance of sustainability. During 2014, Mammoet established interdisciplinary
sustainability teams to coordinate and facilitate activities that will create awareness
throughout the entire organisation.
Overall, Mammoet’s sales were lower than last year, affected mainly by slower markets and
severe winter weather. This was somewhat offset by lower operating expenses. Mammoet’s
2014 net income remained unchanged over the previous year.
ERIKS
ERIKS is an international provider of industrial products and services. It offers a wide range
of mechanical engineering components and associated technical and logistics services to
customers in various sectors including the pharmaceutical, shipping, oil and gas,
petrochemical, and machine and equipment construction industries. The products and
services offered by ERIKS can be divided into the following categories: flow technology;
power transmission; industrial plastics; sealing technology; and tools and maintenance
products. Customers of ERIKS are for the most part original equipment manufacturers (OEM)
and maintenance, repair and overhaul (MRO) operators. In the OEM market, ERIKS focuses
on co-engineering and sharing know-how of products and applications with customers. In the
MRO market, ERIKS’ products, services and expertise are used directly for the maintenance
of machinery and factories. ERIKS also offers technical solutions for projects in specific
international markets.
In general, the success of ERIKS’ business depends on the level of industrial production,
especially amongst ERIKS’ OEM customers. The MRO-related market is less cyclical,
although it is still exposed to the general economic climate. The distribution of ERIKS’
activities between OEM and MRO, in combination with a healthy geographical spread,
mitigates these business risks.
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Since 2009, when ERIKS was acquired, SHV has supported the company in executing its
strategy and developing its business both through organic growth – realised from existing
businesses – and through acquisitions. ERIKS has grown significantly since, doubling in size.
In 2014, sales developed well for ERIKS, particularly in the UK, driven by favourable
economic developments especially in the second half of the year. In Denmark, ERIKS
benefited from a significant amount of deliveries for projects in the energy sector. In the
USA, Lewis Goetz, ERIKS Seals & Plastics and C&C (the company that was acquired in
October 2013), all had strong sales performances. Quantum Supply in Canada also reported
strong sales growth. Performance in other regions varied.
In the spring of 2014, ERIKS finalised the acquisition of Switzerland-based Maagtechnic, an
industrial service provider serving both OEM and MRO customers. With operating companies
in Switzerland, France, Germany and the Czech Republic, Maagtechnic offers ERIKS a strong
platform for growth. ERIKS also expanded successfully in the USA, where it acquired
Advanced Sealing, a supplier of fluid sealing and fluid handling products and services. At the
end of the year, ERIKS divested its shareholding in Revolvo, a manufacturer of split roller
bearings which was part of ERIKS’ UK operation for many years. In Germany, ERIKS is in the
preparation phase of building a new Regional Distribution Center which will house logistics,
warehousing, supply chain and distribution activities. In 2014, the production facilities for
Smith Valves in Houston (USA) were upgraded.
In line with SHV’s philosophy, people are key to ERIKS’ success. ERIKS aspires to be a top
employer and to run a business where local differences are valued and where a culture of
cooperation prevails between the different disciplines and across national borders. To
prepare itself for further growth, ERIKS has implemented a new organisational structure in
North America and has strengthened its management structure in the Netherlands, Belgium,
France, Germany and Switzerland.
As a significant supplier to industry in many countries, ERIKS recognises the significance of
its role in the distribution chain and within society. It believes the biggest contribution it can
make to a more effective use of natural resources is to use its specialist know-how and
innovative products to support the sustainability objectives of its customers. Many of ERIKS’
products, services and in-house processes result in energy savings. In 2014, ERIKS
published its first sustainability report, which focused on its activities in Belgium and the
Netherlands.
ERIKS had a good year in 2014. In spite of the impact of a weakening economic situation in
mainland Europe in the second half of the year, organic sales and operational performance
improved over 2013. Overall, ERIKS achieved a much better net result, which was also
positively influenced by healthy organic sales growth, improved productivity, lower interest
costs, capital gains from the divestment of Revolvo and more favourable exchange rates
(especially the US dollar).
Dyas
In 2014, Dyas celebrated its 50 th anniversary. It was among the first to invest alongside oil
and gas operators exploring the Dutch and British sectors of the North Sea. Today, Dyas is
an active, non-operating minority partner and investor in oil and gas exploration and
production projects. With its strong technical and financial capabilities, Dyas aims to grow its
long-term production and developed reserves in a solid portfolio of assets. To achieve this
aim, the company participates in material exploration and development projects. Dyas is an
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investor with a medium to long-term outlook and is a partner in over 25 onshore and
offshore oil and gas fields. While the built-up position in the North Sea remains its core area,
Dyas seeks to geographically diversify and is on the lookout for opportunities in other areas.
The results of Dyas are generally influenced by, besides operational performance, the price
of crude oil, the price of natural gas, and the exchange rates of the US dollar and the British
pound. As a non-operator, Dyas relies significantly on the various operators with whom it
co-operates in oil and gas operations. Safety is a very important topic for Dyas, and the
company uses every opportunity to disseminate good practices and relevant lessons among
its joint venture partners.
During the year, Dyas continued to invest in its four main development projects – Golden
Eagle, West-Franklin, Stella and Mariner. The Golden Eagle field commenced production at
the end of 2014, and West-Franklin in January of 2015. The Mariner project is well under
way to production, which is currently in line with expectations. The Stella project, despite
successfully drilling the planned number of wells, did not fully progress as expected, as
construction of the floating production facility is taking up more time than originally planned.
In addition to investing in development projects, Dyas also aims to invest in the exploration
and appraisal stages of the upstream oil and gas cycle. In 2014, a substantial drilling
programme was completed whose results were disappointing in terms of reserves added.
To strengthen its portfolio, Dyas reached an agreement to acquire a 10% interest in the
Catcher Area oil field project in the UK North Sea. This transaction was closed in January
2015. The development of this field has started and the first of two additional exploration
wells are expected to be drilled in 2015. In 2014, Dyas exchanged part of its interest in the
Mariner South field for a share in Mariner West in order to further align development of the
area surrounding the Mariner field.
The topic of sustainability is also increasingly rooted in Dyas’ operations, as it has been
embedded in its acquisition process. Furthermore, Dyas has taken the first steps to measure
its CO 2 footprint, which will be further fine-tuned in the course of 2015.
With 6.7 million barrels of oil equivalent (BOE) in oil and gas equity production, Dyas’ 2014
production was higher than originally expected. This was mainly due to the Buzzard field
sustaining its production longer than envisaged, as well as increased production from the
Dutch A/B fields. Despite this, Dyas' results were lower than the previous year, mainly
because of lower oil and gas prices.
NPM Capital
NPM Capital provides private equity to companies with above-average growth opportunities,
focusing on unlisted mid-sized companies in the Benelux. NPM has built up a strong market
position over the years and has holdings in 28 companies. NPM aims to be a long-term
investment partner that is committed to sustainable value creation. NPM brings to the table
its knowledge, experience, financial strength and network of contacts. With a strong focus
on improving operational performance in its portfolio companies, NPM creates shareholder
value. NPM focuses on investments in a number of selected industry themes. It emphasises
leadership and innovation strategies as fundamental parts of business development.
NPM Capital’s results are mainly determined by the success and subsequent sale of
companies in which it has invested. Exit opportunities and price, as well as possible
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impairments, are influenced by the economic and financial climate in any given period, which
also impact the performance of participations. NPM’s results can therefore fluctuate
considerably over the years. In the longer term, NPM’s success depends on its capacity to
identify profitable investment opportunities, initiate improvement in performance, and ensure
that good corporate governance is in place to monitor the investments adequately until the
moment of divestment.
The Benelux private equity market remains competitive, with private equity firms that
together have more than € 13 billion available to invest and new private equity firms entering
the market. At the same time, the limited economic growth in the Benelux is impacting some
of NPM’s current participations.
During the year, NPM made a number of significant investments in its existing portfolio
companies, which were mainly aimed at strengthening its businesses in the healthcare
sector. These participations are currently managed in NPM’s NL Healthcare division, which
focuses on first-line and second-line healthcare facilities, with the ambition to offer
outstanding patient centred and high-quality care. It is NL Healthcare’s aim to make a
positive contribution to high-quality and affordable care in the Netherlands.
NPM acquired a 70% interest in Iddink Groep, a provider of educational services, active
mainly in the Netherlands. Iddink delivers books and digital learning materials, and with its
Magister software platform it also offers full administrative and digital learning support to
over 800,000 students in secondary schools. Iddink is a company with a strong business
base in a market that is transitioning from print to digital, offering significant opportunities
for growth in the Netherlands and internationally.
Two exits were realised in 2014. NPM sold its interest in Seafox Group, the parent company
of Seafox Contractors and Workfox, active globally in the market for leasing and operating
self-elevating jack-up units and support vessels for the offshore industry. Later in the year,
Prins Autogassystemen, which develops alternative fuel systems, was sold. In addition, NPM
converted its shareholding in Dujardin, a Belgian processor of private-label frozen vegetables
and frozen herbs, into a loan. This was in the context of a merger between Dujardin and its
competitor Ardo.
One of NPM’s more distinguishing features as a private equity firm is its long-term focus.
This enables the company to sell participations at the time it deems right. Due to the nature
of its activity, NPM is expected to show volatile results depending on the materiality, number
and timing of its exits. SHV judges NPM not solely on its exits but, equally important, on the
success of its acquisition strategy, the development of the quality of its investment portfolio
and the subsequent improvement in the value creation of its portfolio. In 2014,
NPM Capital's result was positively influenced by a number of dividends from participations.
However, as only a few exits were realised, this resulted in a limited contribution to SHV's
overall result.
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Corporate Philosophy
SHV is privately-held company and wishes to remain so.
SHV is a decentralised company. Great trust is placed in our people in the field. This
decentralisation provides an excellent opportunity for individual development. Mutual respect
and trust provides the basis for happiness at work.
SHV’s most important values are integrity and loyalty. Integrity means being honest, genuine
and totally open in communications about all matters that concern the company. Good news
may travel slowly, bad news should travel quickly. Loyalty means putting your best effort into
your work for the company and its development.
Based on the integrity and loyalty of our people, SHV wishes to continue to grow both for
the benefit of our shareholders, our employees and for the well-being of the society in which
we live and work.
Growth through
performance
We optimise our business and keep an eye open for opportunities. We work as a team for
better results. We keep hierarchy and bureaucracy to a minimum.
Shareholders are not looking for “puffed up” quarterly or annual results, but for sustainable
profit growth.
Shareholders accept the risks of new endeavours.
“You can only maximise the value of a company if it’s in the best interests of all
stakeholders in the long-term.”
Paul Bisseling, Associate, NPM Capital
Go for niche and market
share
In looking for niche markets, we will not dabble in general trends or fashions.
We will establish ourselves as a leading participant in our markets.
“We are a niche company, a non-operating investor with a lot of in-house technical
knowledge.”
Robbert Hoekstra, Financial Controller, Dyas
Invest in people
Success comes through our people.
Investing in people means:
– trusting our people
– giving our people responsibility
– stimulating creativity and own initiative
– coaching and training our people
– rewarding excellence
Motivate by example, smile and find happiness in your work. It is important not to blame
people. We all make mistakes. To blame is to be negative. If integrity and loyalty are
undisputed, a mistake might be the start of better management.
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“Within Talent Management, my biggest challenge is to promote development options and
opportunities for personal growth to keep people motivated and part of Makro.”
Camilia Fossati, Talent Manager, Makro South America
Manage change
Change is all around us always. Do not be blind or deaf to change. Change creates
opportunities.
Analyse change, discuss it with others, evaluate and challenge your own thoughts. See
change as oxygen for our company and manage it with understanding and wisdom.
“We’re encouraged to work with sparring partners who challenge us. And that type of
nonthreatening interaction really forces you to adjust your plans, be aware of innovations in
the marketplace and keep up with them.”
Shawn Courtney, President, ERIKS Seals and Plastics USA
Look for the unusual
The unusual is interesting. The unusual challenges our intellect and our creative spirit. At all
levels our people are invited to look for the unusual and see how it can help our business.
This is essential to our success. The unusual may be exactly what can differentiate us.
“You’ve got to be entrepreneurial. If you stand still, you stagnate. You have to look for new
ideas, new markets and new challenges.”
Tony Ainsworth, Customer Operation Manager, Calor UK
Listen, learn and react
No one knows everything, we all know something. By listening to other people’s ideas and
thoughts we widen our horizon. To listen before speaking is to learn. The wise man or
woman will benefit from the knowledge of others. After listening and learning we should
decide to react. Never forget that to do nothing is also a decision.
“The ability to respond quickly and efficiently to our customers and employees is a critical
component of our success.”
Kim Oliver, Human Capital Director Americas, Mammoet USA
Keep things simple
Life only seems to be complicated. Technicalities are complicated, good business is not.
Choices and decisions are difficult at times, not complicated. Put your thoughts on any
subject on a single piece of paper – it helps clarify the mind.
“I like the open communication here. People’s doors are open, so you can almost always
walk in and talk to them. It’s typical SHV culture. There’s a no-nonsense mentality here.”
Jan Dirkse, Finance Manager, SHV Holdings
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SHV History
Coal Trading Association
SHV is a family-owned company that was founded in 1896, when eight Dutch coal traders
established the Steenkolen Handels-Vereeniging in Utrecht, the Netherlands. Since then, the
company has grown into a diversified multinational by constantly innovating, and adapting to
the changing business environment.
Innovation in coal
activities
In the early 20th century, SHV was a key player in the Dutch coal distribution market,
a major source of energy at that time. One of SHV’s earliest innovations was an elevator
transporter used in bunkering vessels that could handle 300 tons of coal per hour –
a remarkable capacity in 1907. Furthermore, SHV was the first company to use onshore
bridges for loading and unloading coal.
Trading in oil products
After the Second World War, demand for coal declined as oil became increasingly important.
In response, SHV started to move from trading and distributing coal in the Netherlands to
supplying oil, oil products and Liquefied Petroleum Gas (LPG) throughout Europe under the
brand names PAM and Calpam.
Wide diversification
In the 1960s, the Dutch coal market collapsed after the discovery of huge natural gas
reserves in the northern part of the Netherlands. As a reaction, SHV expanded its operating
base by entering several new markets, among which various formulas in the distribution of
consumer goods, technical installation, construction, shipping and technical equipment
trading. In 1968, SHV opened its first Makro cash-and-carry wholesale store in Amsterdam.
SHV established Dyas as an oil and gas investment company and acquired a metals
recycling company in the USA.
Focus on Energy and
Makro
Diversification came to a halt in the 1980s when SHV refocused on trading in energy and
consumer goods. The LPG distribution activities and Makro stores were consolidated and
expanded internationally. SHV also acquired LPG activities and opened Makro stores in
various countries in Eastern Europe, South America and Asia.
Expanding SHV's base
In recent history, SHV divested the Makro activities in Europe and Asia, as well as the
metals recycling activities. SHV was strengthened by acquiring NPM Capital, a private equity
company, Mammoet, a specialist heavy-lifting and transport company and ERIKS, an
industrial service provider.
Although the face of SHV has changed over time, the entrepreneurial spirit that has shaped
the company throughout the years still flourishes today.
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SHV Group Companies
SHV Holdings N.V.
Rijnkade 1
3511 LC Utrecht
P.O. Box 2065
3500 GB Utrecht
The Netherlands
T +31 30 2338833
F +31 30 2338304
info@shv.nl
www.shv.nl
SHV Energy
Zuidtoren
Taurusavenue 19
2132 LS Hoofddorp
The Netherlands
T +31 23 5555700
F +31 23 5555701
info@shvenergy.com
www.shvenergy.com
Management
J.K. Wilson
J.H. Wakkerman
F.J.C. van Lede
M. Kossack
S. Siper
Makro South America
Rua Carlos Lisdegno Carlucci 519
05536-900 São Paulo - SP
Brazil
T +55 11 37452814
www.makro.com
Management
J.E.Q.M. Boelen
G.K. Agarwal
Mammoet Holding B.V.
Van Deventerlaan 30-40
3528 AE Utrecht
P.O. Box 10000
3505 AA Utrecht
The Netherlands
T +31 88 6502300
F +31 88 6502340
info@mammoet.com
www.mammoet.com
Management
J.A. Kleijn
O.C.J. den Boer
H. Smit
J.W. Henkelman
F.H. Rebel
J.A.A. in ‘t Velt
Dyas B.V.
Rijnkade 1
3511 LC Utrecht
P.O. Box 2065
3500 GB Utrecht
The Netherlands
T +31 30 2338434
F +31 30 2338418
dyas@shv.nl
www.dyas.nl
Management
R.J. Baurdoux
P.J. Waaijer
E.F.G. Zielinski
J.A.B. Hoonhorst
A.C. van der Weijden
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ERIKS N.V.
Robonsbosweg 7D
1816 MK Alkmaar
P.O. Box 1088
1810 KB Alkmaar
The Netherlands
T +31 72 5475888
F +31 72 5475889
www.eriks.com
Management
M.T.A. Beckers
C.G.M. van der Drift
S.M. Franken
I.C. Verlinde
NPM Capital N.V.
Breitnerstraat 1
1077 BL Amsterdam
P.O. Box 7224
1007 JE Amsterdam
The Netherlands
T +31 20 5705555
F +31 20 4706454
mails@npm-capital.com
www.npm-capital.com
Management
J.P. Drost
N.J.M. Kramer
B.P. Coopmans
L.F.M.M. Mes
J.R. Ruigrok
J.K. Terpstra
P.J.P. Ghekiere
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