Supervisory Board Report
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The Supervisory Board of Hertel Holding has reviewed the financial statements of the year 2012, as prepared by the Executive Board, and submits them for approval to the general meeting of shareholders. These financial statements have been audited by Ernst & Young Accountants LLP, whose report is included in the full version of the Annual Report, which has been posted on www.hertel.com. The Supervisory Board advises to the general meeting of shareholders not to distribute any dividend and to charge the loss against the reserves for 2012.
Despite continued volatility in the markets where Hertel operates, the company succeeded in leveraging the international spread of its operations and its long term relationships with key customers. The ongoing uncertainty in the financial markets, and the instability in business cycles, caused Hertel’s clients to be very cautious and selective when investing. Strong competition and sharp cost awareness increased downward pressure on margins. In this harsh climate, Hertel managed to benefit from strong growth rates in regions like the Middle East, Asia and Australia. Autonomous revenue growth was moderate as emphasis was put on sound margin development and limitation of project risks instead of on top line growth.
Hertel’s close relationships with its customers were rewarded with proof of great confidence in Hertel’s capabilities in major maintenance and new build projects. In 2012, Hertel’s staff demonstrated that their great commitment and expertise are the cornerstones of Hertel’s reputation as a reliable and professional business partner. With the financial restructuring in 2012, the shareholders of Hertel created the conditions and the solid foundation that enables a sustainable and healthy future development.
Supervisory Board
From left to right: Wim van Vonno, Jack van de Winkel, Simon Lam Chung Kai, André-Xavier Cooreman, Tom Bamelis
Focus in 2012
The Supervisory Board devoted much of its time and attention to the execution of the strategic reorientation at Group level under the leadership of the Executive Board. An important focal point this year was the embedding of the Group strategy in the operational execution as well as creating awareness of the importance of shifting from a top line growth oriented company to one that is focusing on sustainable profitability and yield. The concentration on a profitable development for our core activities Access Solutions, Insulation, Corrosion Protection and linked Mechanical Services initiated additional restructurings. The decision was taken to terminate loss making activities.
The company also divested Temati and Solutions, the latter with continued support for existing contracts, two businesses that no longer matched Hertel’s core activities. We are confident that, in their new positions, these companies and their employees can build a new future. The Supervisory Board is aware that also in 2013 measures are required following the systematic execution of the strategy. As a result, Hertel will increasingly be able to concentrate on the completion of its healthy order backlog and on the companywide further professionalization of its key competencies, as outlined in the improvement program HEART. The restructurings of 2012 caused non-recurring expenses and impairments to be taken on some businesses, leading to a substantial loss. The Supervisory Board has encouraged and endorsed the Executive Board in taking all decisions and measures that were required to restore the financial health of the company, and to restore the long-term profitability and competitiveness of Hertel.
Strengthening Hertel’s financial structure was another topic high on the agenda of the Supervisory Board. In two tranches, one at the beginning of the year and one towards the end, the shareholders supported Hertel with an equity injection that totalled € 136 million. The first tranche was intended to execute restructuring measures and to return to the financial ratio’s agreed with the banks. The second tranche created healthy financial conditions for Hertel to realize its strategic program towards the future.
Meetings and composition of the Supervisory Board
In 2012, the Supervisory Board had ten meetings, one conference call with the Executive Board, and one extra meeting on location in Antwerp dedicated to the implementation of the strategy. In view of the required refinancing smaller teams of the Supervisory Board paid visits to various regions where Hertel operates.
We had intense meetings with local management to gain a good understanding of the challenges and concerns of local management, progress made and their views for the future. The chairman of the Supervisory Board also attended a meeting of the Works Council in The Netherlands. The audit committee and the remuneration committee reported regularly to the Supervisory Board on their meetings and discussions with management and the auditor. In March 2012 Mr. Jack van de Winkel was appointed as member of the Supervisory Board. He succeeded Mr. Lucas Mes, who resigned from his board position.
Nomination of a new CFO
On 1 March 2013, Mr. Eiko Ris joined Hertel as CFO. Mr. Ris is an experienced CFO with a strong international background in industrial markets. Before joining Hertel, he worked as CFO at Kendrion, a publicly traded company in The Netherlands. The Supervisory Board expresses its gratitude to former CFO, Mr. Jan Bruinenberg, for his contribution to Hertel in 2011 and 2012.
Outlook 2013
The Supervisory Board is convinced that Hertel has taken major steps on its path to regaining its position as a structurally healthy organization. In 2011 and 2012 important decisions were taken with regard to strategy, concentration on core activities in carefully selected regions and a clear focus on sustainable profitability.
The company wide improvement program HEART will receive the required attention in 2013. It provides the foundation for an ongoing and deeper professionalization of processes and competencies within Hertel. It will enable Hertel to develop itself as an excellent company within its markets. Despite the enormous challenges Hertel faced last year the Supervisory Board experienced great confidence expressed by key customers, shareholders, banks and Hertel’s own staff. We see the development that the company is now going through as a steady process, which in the end will lead to an attractive business for all Hertel stakeholders.
The Supervisory Board anticipates that all restructuring measures taken, will lead to a marked improvement of results. We would like to express our sincere gratitude to all Hertel employees for their great contributions in all countries where our company is present.
Rotterdam, 22 March 2013
The Supervisory Board of Hertel Holding B.V.
T. Bamelis, Chairman
A.X.P.L.M. Cooreman
Lam C.K.
W. van Vonno
J.M.M. van de Winkel
Despite continued volatility in the markets where Hertel operates, the company succeeded in leveraging the international spread of its operations and its long term relationships with key customers. The ongoing uncertainty in the financial markets, and the instability in business cycles, caused Hertel’s clients to be very cautious and selective when investing. Strong competition and sharp cost awareness increased downward pressure on margins. In this harsh climate, Hertel managed to benefit from strong growth rates in regions like the Middle East, Asia and Australia. Autonomous revenue growth was moderate as emphasis was put on sound margin development and limitation of project risks instead of on top line growth.
Hertel’s close relationships with its customers were rewarded with proof of great confidence in Hertel’s capabilities in major maintenance and new build projects. In 2012, Hertel’s staff demonstrated that their great commitment and expertise are the cornerstones of Hertel’s reputation as a reliable and professional business partner. With the financial restructuring in 2012, the shareholders of Hertel created the conditions and the solid foundation that enables a sustainable and healthy future development.
Supervisory Board
From left to right: Wim van Vonno, Jack van de Winkel, Simon Lam Chung Kai, André-Xavier Cooreman, Tom Bamelis
Focus in 2012
The Supervisory Board devoted much of its time and attention to the execution of the strategic reorientation at Group level under the leadership of the Executive Board. An important focal point this year was the embedding of the Group strategy in the operational execution as well as creating awareness of the importance of shifting from a top line growth oriented company to one that is focusing on sustainable profitability and yield. The concentration on a profitable development for our core activities Access Solutions, Insulation, Corrosion Protection and linked Mechanical Services initiated additional restructurings. The decision was taken to terminate loss making activities.
The company also divested Temati and Solutions, the latter with continued support for existing contracts, two businesses that no longer matched Hertel’s core activities. We are confident that, in their new positions, these companies and their employees can build a new future. The Supervisory Board is aware that also in 2013 measures are required following the systematic execution of the strategy. As a result, Hertel will increasingly be able to concentrate on the completion of its healthy order backlog and on the companywide further professionalization of its key competencies, as outlined in the improvement program HEART. The restructurings of 2012 caused non-recurring expenses and impairments to be taken on some businesses, leading to a substantial loss. The Supervisory Board has encouraged and endorsed the Executive Board in taking all decisions and measures that were required to restore the financial health of the company, and to restore the long-term profitability and competitiveness of Hertel.
Strengthening Hertel’s financial structure was another topic high on the agenda of the Supervisory Board. In two tranches, one at the beginning of the year and one towards the end, the shareholders supported Hertel with an equity injection that totalled € 136 million. The first tranche was intended to execute restructuring measures and to return to the financial ratio’s agreed with the banks. The second tranche created healthy financial conditions for Hertel to realize its strategic program towards the future.
Meetings and composition of the Supervisory Board
In 2012, the Supervisory Board had ten meetings, one conference call with the Executive Board, and one extra meeting on location in Antwerp dedicated to the implementation of the strategy. In view of the required refinancing smaller teams of the Supervisory Board paid visits to various regions where Hertel operates.
We had intense meetings with local management to gain a good understanding of the challenges and concerns of local management, progress made and their views for the future. The chairman of the Supervisory Board also attended a meeting of the Works Council in The Netherlands. The audit committee and the remuneration committee reported regularly to the Supervisory Board on their meetings and discussions with management and the auditor. In March 2012 Mr. Jack van de Winkel was appointed as member of the Supervisory Board. He succeeded Mr. Lucas Mes, who resigned from his board position.
Nomination of a new CFO
On 1 March 2013, Mr. Eiko Ris joined Hertel as CFO. Mr. Ris is an experienced CFO with a strong international background in industrial markets. Before joining Hertel, he worked as CFO at Kendrion, a publicly traded company in The Netherlands. The Supervisory Board expresses its gratitude to former CFO, Mr. Jan Bruinenberg, for his contribution to Hertel in 2011 and 2012.
Outlook 2013
The Supervisory Board is convinced that Hertel has taken major steps on its path to regaining its position as a structurally healthy organization. In 2011 and 2012 important decisions were taken with regard to strategy, concentration on core activities in carefully selected regions and a clear focus on sustainable profitability.
The company wide improvement program HEART will receive the required attention in 2013. It provides the foundation for an ongoing and deeper professionalization of processes and competencies within Hertel. It will enable Hertel to develop itself as an excellent company within its markets. Despite the enormous challenges Hertel faced last year the Supervisory Board experienced great confidence expressed by key customers, shareholders, banks and Hertel’s own staff. We see the development that the company is now going through as a steady process, which in the end will lead to an attractive business for all Hertel stakeholders.
The Supervisory Board anticipates that all restructuring measures taken, will lead to a marked improvement of results. We would like to express our sincere gratitude to all Hertel employees for their great contributions in all countries where our company is present.
Rotterdam, 22 March 2013
The Supervisory Board of Hertel Holding B.V.
T. Bamelis, Chairman
A.X.P.L.M. Cooreman
Lam C.K.
W. van Vonno
J.M.M. van de Winkel
