14 ANNUAL REPORT - Proviron · is a lengthy process. ... phthalic anhydride production, this piece...

2014/ANNUAL REPORT

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Content3 Address of the Chairman

4 Objectives 2015

6 Proviron Basic Chemicals:

Phthalic Anhydride

7 Markets

7 Polymer Additives

8 De-icing Solutions

9 Bio-energy

10 Functional Chemicals

11 Contract manufacturing

12 Research and Development

12 Feed Additives

14 PVC plasticizers

15 Biopolymer Applications

16 Microalgae

19 Safety

20 Quality

21 Care for the environment

22 Human Resources

24 Finance

25 Key Figures

26 Consolidated Balance

28 Income Statement

34 Management

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ADDRESS OF THE CHAIRMAN

2014 saw excellent safety performance, and that is something to be really happy about. As far as business was concerned, 2014 was a rather in-between year: not excellent, but definitely not bad either. And it is striking how this time, it was mainly those activities which rely on the company’s own capabilities that did well.

GOOD SAFETY PERFORMANCE

Economically, the European chemical industry remains shaky. In the case of Proviron, this was most noticeable in the low demand for our contract manufacturing activities. De-icer sales too were not very strong, but that had more to do with the rather gentle winters, and with the price war between some of our competitors.

Businesses

Our biodiesel unit was able to produce at full capacity in the first couple of months, thanks to the Belgian quotum system, and produced enough in the second half to make 2014 a good year. The phthalic anhy-dride business can be proud of winning over a significant number of new custom-ers, which more than compensated for the important volume decrease of one large tolling client. Other businesses performed at levels between satisfactory and very good, all of them in activities in which we are less dependent on external elements such as the weather or the government. Our American capacity increase in 2013 turned out to be a great move. Asia grew strongly, as we had anticipated.

Figures

With an EBITDA of 8.8 million, 2014 wasn’t a top year, but the net result was positive. We are pleased to have succeeded in fun-damentally lowering our debt rate. We have also obtained much more favourable credit conditions for both current and future loans. This provides financial comfort, capa-bility and flexibility, which are necessary to a company that is geared to research and innovation, and has products in (very) early life cycle phases.

Safety

In general, one has to be prudent not to be too positive about safety results. And yet, despite two lost time accidents, I dare to say that 2014 was a good year with regards to safety. After all, only one of the two lost time accidents was an industrial accident, and even more importantly, the company can boast very low accident frequency and severity rates. Safety doesn’t just happen, and that is why I would like to express my gratitude to all concerned!

“We are pleased to have succeeded in fundamentally lowering our debt rate, as well as obtaining much more favourable credit conditions.”

Leo Michiels / Chairman

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OBJECTIVES 2015

Since the 5th of January 2015, ‘Chemistry between us’ has been Proviron’s new baseline. The development of the new logo, baseline and house style was thoroughly prepared in 2014. It was time for the form to suit the content, as Proviron had changed dramatically in previous years. We have shifted our focus to the customer, as well as to our own future-oriented developments. And although we are, and remain a chemical company, we do not necessarily wish to present ourselves as such to all of our (future) customers.

COHERENT DIVERSIFICATION

In 2008, Proviron was still looked upon as a somewhat anonymous chemical com-pany, primarily known as a contract man-ufacturer. This wasn’t true anymore even then, but enhancing one’s brand awareness is a lengthy process. At the outset of 2014, we thought it was time to shift up a gear: our own products needed more exposure, and Proviron’s look deserved a serious make-over to enhance this strategy.

Targeted communication

The underlying reason for the new house style is the desire to adopt a diversified approach to our customer communication. Customers are different and do not nec-essarily feel comfortable in dealing with a

chemical company. After all, our Provifeed™ products are bought by feed producers; de-icer customers feel more at home in airports; and even plasticizer customers are more accustomed to plastics, rather than chemicals. Only companies buying paints, brake fluids, pharmaceuticals etc. are used to a ‘chemical context’. In the short term, we intend to ensure that these diverse customer groups end up in an environment which is Provifeed™, Provifrost®, Provi-plast®, or Provichem®. That can be done through a dedicated website, tailor-made fair furnishing, proper folder design, etc. Consequently, Proviron’s new logo, baseline and house style are the umbrella, guaranteeing coherence, promoting our extensive tolling capabilities, and uniting us as employees and as a production entity.

“The underlying purpose of the new house style is a diversified approach to our customer communication.”

Wim Michiels / Managing Director

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COHERENT DIVERSIFICATION Passionate people

We attracted quite a lot of passionate people in 2014. We needed to replace retirees, and we also strengthened our four

development teams. This means that we have welcomed a lot of new people, and they have brought a breath of fresh air. The same thing can be said about the arrival of the board members who joined Proviron

in 2013. I am pleased to note that they too support the move towards new products, believe in research and development, and prefer to think in the long term. In brief, there is chemistry between us.

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2014 was an economically stable year. Volumes were good, in part because one of our major competitors ceased production at the outset of 2014. Furthermore, our installations are now completely top-notch, thanks to additional investments.

INVESTMENTS PAY OFF

There were quite a few peaks in the demand for our services in 2014, requiring us to react flexibly. We succeeded in doing so, proving that our production flexibility is not an empty concept.

Heat

Our process is exothermic by nature, meaning that, apart from creating products, we also generate a lot of heat. We have succeeded in improving the energy balance and advancing the profitability of the extra – marketable – heat by additional invest-ments in the production installations.

Switch condenser

Last year, we started the gradual replace-ment of the switch condensers. In our

phthalic anhydride production, this piece of equipment separates side products from the main end product. We have ten of these switch condensers and we are replacing them year after year, thus further optimising our production and improving our flexibility to respond to demand peaks.

Sales team

At the end of 2014, we decided to expand our sales team. By doing this, we enhance our service capabilities and further expand our customer portfolio. Some of our customers have been with us for over forty years, which is proof of the confidence they have in us and in the quality we deliver. We owe this to the team that has operated our installations without problems, and has succeeded in delivering products of top quality, combined with a flawless service.

“There were quite a few peaks in the demand for our services in 2014, to which our production team reacted with a lot of flexibility.”

Raf Jacxsens / CEO Proviron Basic Chemicals

Phthalic Anhydride

PROVIRON BASIC CHEMICALS


Polymer Additives

MARKETS

The business unit Polymer Additives can look back on a year in which both volume and the number of customers increased again. That was largely owing to our development of the international markets with our business in full expansion. On the other hand, the European economical context and the weaker than expected market recovery worked against us.

NICHE APPROACH PAYS OFF

In terms of volume and contribution, the business unit Polymer Additives depends heavily on plasticizers for polyamide (nylon). As the market leader in that sector, we managed to continue to grow in Europe, partially at the expense of the quality of the business. In Asia, Proviron succeeded in strengthening its position in the polyamide plasticizers market. We were able to do that by being better in terms of product quality, in-depth market expertise, and technical support. In the USA too, our market share increased slightly, largely owing to the exchange rate.

Made to the customer’s measure

In contrast to the polyamide plasticizers, of which the volume only increased slightly and without reaching pre-crisis levels, we managed to make strong progress in the

PVC market with our bio-based plasticizers. The green plasticizers market has been evolving more slowly because of the strong price sensitivity of the very cost-conscious PVC market. Apart from our standard product portfolio, we also offer custom-ers tailor-made plasticizer solutions. And through niche products we differentiate ourselves from our competitors, as well as gaining greater profits.

Commercial network

We are steadily building a commercial network of distributors in Italy, Spain and Portugal, as well as in Eastern Europe (Poland, Hungary and Rumania). As regards our presence in shows, we have continued our policy of the last couple of years and attended important plastics exhibitions in France, Germany and the UK.

“The business unit Polymer Additives can look back on a year in which both volume and the number of customers increased again.”

Peter Van Elslander / Business Manager Polymer Additives

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2014 was a year of mixed fortunes for De-icing Solutions. On the one hand, Proviron was able to increase its customer portfolio and add new products to its range. On the other hand, mild European winters were kill-joys and prevented commercial expansion pairing with bigger sales.

CONTINUED GROWTH, BUT NO WINTRY CONDITIONS

Provifrost®, the De-icing Solutions business unit, is receiving increasing recognition in the European market and continues to grow. Only one other company in Europe produces and supplies de-icers for both airplanes and runways. On top of that Pro-viron, offers niche de-icers for applications on sensitive surfaces such as industrial outside concrete floors or sports grounds with artificial grass.

Mild winters

In 2014, there were very few snowy days in Belgium. The 2013-2014 winter was the second warmest since 1833, and saw snow on only one day. The first wintry episode of the 2014-2015 winter came only at the end of December. Even in traditional snowy areas in Europe, snow took a very long time to make an appearance.

New products

In 2014, the Provifrost® team introduced several new products, including aircraft anti-icing and de-icing fluids (preventive

and curative action). Dozens of potential customers from 35 countries investigated, tested and approved our new products. The feedback was very positive, customers were interested, but sales were slow because of the weather. On top of that, mild winters squeeze prices. After the summer, produc-ers want to sell their surplus stock as soon as possible, making our market entry even more difficult.

Future

Even though the European weather was not to our advantage, we still managed to sell our de-icers in over twenty countries. There is a lot of growth potential in the business and for 2015 we are keeping to the strategy of geographical expansion. That way, we intend to turn even more airports, air carriers, handling agents, industrial customers etc. into Provifrost® customers. In short, 2015 will be another year of opportunities and challenges, and hopefully more chemistry between Proviron and Jack Frost.

“Even though the European weather was not to our advantage, we still managed to sell our de-icers in over twenty countries.”

Frederic Versavel / Business Manager De-icing Solutions

De-icing Solutions

MARKETS


Bio-energy

We were able to stretch the biodiesel top year 2013 until May 2014. We owe this good result to the Belgian quotum system on adding biofuels. However, when that stopped we were again confronted with the harsh market reality. On the bright side, our additives for the production of biogas sold very well.

NOT A CLEAR-CUT YEAR

Being one of four biodiesel producers accredited by the Belgian government, we highly depend on Belgian and European legislation for our sales. Up until May 2014, there was a quotum for low sulphur gasoline tax reduction, meaning that diesel producers were able to save quite a lot of money if they added biodiesel. When that incentive ended, so did the demand, which meant that we had to enter the regular market again with our biodiesel, including competing with producers from all over the world who were often better positioned than us. Despite that handicap, we did rela-tively well, but sales after May amounted to only a quarter of our annual volume.

What about 2015?

In April 2014, the Belgian government voted a law on a new quotum, but this needs to be approved by Europe, which will take time. We are monitoring that closely. Meanwhile, we are investigating alternative markets, such as the possibility to use biodiesel as a raw material for other applications.

Biogas

In 2014, production and sales of the Provigrow® range saw great success. Products are used as additives for the fermentation of waste material into biogas. Provigrow® has obtained a sound repu-tation in the sector thanks to the trans-parency of its origin. It is a success story in our strategy of high value side stream valorisation.

“In 2014, production and sales of the Provigrow® range saw great success.”

Stefaan Depecker / Commercial Director

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In 2014, the business unit Functional Chemicals did better than budgeted. That was not evident as its objectives had been increased after an already challenging 2013. There were many success stories as well as some setbacks, but that hasn’t stopped us raising the budget for 2015 again.

AMBITIOUS TARGETS MET

2014 was a transitional year for the business unit Functional Chemicals after the 2013 reorganisation which saw the former BUs Functional Fluids and Waterborne Sys-tems being joined, albeit without De-icing Solutions. The new structure is much more logical and market-oriented, but the changes needed to be processed.

Which products did well in 2014?

The Provichem® 220X range for waterborne applications remains our champion and represents about fifty percent of our budget. We continue to be the market leader, despite a worldwide overcapacity. A newcomer and a real sales winner was Provichem® 0321, which rose well above the proposed budget. A number of customers ordered this additive for the pharmaceutical industry in significantly greater quantities than expected. Provichem® 1611 and 1622 did well too. We have developed possibilities in new markets with these products. Despite increasing competition from countries such as India, we continue to see growth opportunities, possibly helped by the cheap euro.

Setbacks

There was less good news too. We lost an important Provichem® 2511 Eco customer to Asian competitors. Another setback was Provichem® 1223, a drilling additive for the oil and gas industry. Because of low oil prices, the industry needed to cut back, and that was fatal. Hence, we decided to stop sales of that product temporarily.

A bright future

We expect 2015 to be positive since many of the businesses we deal with are doing well. That is why we have raised the budget yet again. We are looking for growth in Asia, South America, the Middle East and Africa. In Europe, we are focusing on keeping our market share and reacting to opportunities. These opportunities frequently occur so it’s important to remain watchful. Apart from that, we are continuing to expand the existing portfolio.

“The transition towards the business unit Functional Chemicals has been concluded and we have met our budgetary targets.”

Claus Neufeld / Business Manager Functional Chemicals

Functional Chemicals

MARKETS

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Contract manufacturing

Proviron’s contract manufacturing activities involve mainly three products: polyurethane, sulphur derivatives and brake fluids. The results per product group are very diverse, despite the fact that they mostly end up in the same automotive business.

DIVERGENT RESULTS

Polyurethane

Our polyurethane activities have remained fairly stable. Production for our biggest cus-tomer decreased somewhat, but we man-aged to compensate for that by repackaging orders. In 2015, we expect to see a slight growth in Europe, which is good news. On top of that, we finished the expansion of our US site, which now equals the production capacity in Hemiksem. In 2015, the results of that investment will be included for a full year for the first time. And in Europe, negotiations with two new customers are well advanced. The future of PU within the Proviron Group looks promising.

Sulphur derivatives

Sulphur derivatives sales were slow in 2014. Our products are primarily intended for the manufacture of car tyres with low rolling resistance. An important customer has been going through a rough patch, but with new projects ahead, we believe we are on the road to recovery.

Brake fluids

Brake fluids did well in 2014. In that business, Proviron focuses on three things: blending, recycling, and borating glycol ethers. The latter scored especially well with Provichem® 18132, a product which is becoming well-established on the global brake fluid market.

The future

Proviron remains a loyal partner for existing and new customers. We consider every request, especially in the three core areas, and we have quite a few projects in the pipeline. Our biggest asset remains the flexibility of our equipment and the ability to use our acquired knowledge to offer customer-oriented solutions. Moreover, we continue to invest in our three strategic core activities.

“Proviron considers every request, especially in connection with polyurethane, sulphur derivatives and brake fluids, and we have quite a few projects in the pipeline.”Steve Clicteur / International Key Account Manager Tolling

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In 2014, we passed the milestone of two hundred tonnes of sold products. In poultry, Provifeed™ Optigut’s reputation is growing, after receiving positively evaluated field tests with turkeys in Germany. 2014 was also a decisive year for our pig feed ingredients, and NoSpot for shrimp is living up to its promise.

IT IS GOING IN THE RIGHT DIRECTION

Poultry

The support of independent consultants is of great importance for the credibil-ity of our products. For example, after a presentation, Provifeed™ Optigut was picked up by a German vet specialising in turkeys. Following his advice, a dozen German turkey farms tested and approved the product.As to broilers, we are continuing to conduct field tests at the sites of large feed produc-ers as well as others. Meanwhile, we have started selling our product to integrated companies in Belgium and neighbouring countries.

Pigs

2014 was a decisive year for our feed ingredients for piglets and pigs. Field tests have shown that Provifeed™ Porcestin is effective in helping farmers to cut down on the use of antibiotics against streptococci infections. Piglets are very susceptible to diseases in the phase leading up to the fattening-up stage. Adding Porcestin to the feed will make them more resistant, result-ing in a reduced use of antibiotics.

Shrimp

Provifeed™ No-Spot has established its potential during tests with shrimp. We had already proven that No-Spot slows down the White Spot Syndrome Virus. Mean-while, we have also demonstrated that the product actually protects the shrimp: mortality in case of an infection drops by 20 to 25 percent. In 2015, large field tests are scheduled.The use of our dried Isochrysis algae in shrimp farms decreases larvae mortality by 10 to 20 percent. That is largely due to the high purity of our components.

Reputation

The cooperation with Vetworks – an independent team of consultants in the poultry business – on the introduction of Optigut has been going very well, and will be continued in 2015. The Feed Additives team has been increased with two new people, making it better prepared for the tasks ahead: being present at international conventions and fairs to promote our brand name and the reputation of our products.

“The support of independent vets is of great importance for the credibility of our products.”

Tina Rogge / Development Manager Feed Additives

Feed Additives

RESEARCH AND DEVELOPMENT

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In 2014, our PVC plasticizer’s R&D was mainly focused on tailor-made solutions for several customers. We have also intensely kept on looking for alternatives: non-phthalate PVC plasticizers, based on renewables where possible.

TAILOR-MADE SOLUTIONS

Last year, we developed dozens of new plasticizers made-to-measure for several thermoplastic customers. In such cases, we first try to understand what the customer in question produces, as well as what his requirements are. Often there is a difference between what he wants in the first instance, and what we believe he needs. That is our strength: helping the customer by offering solutions he himself hadn’t thought about.

Construction business

The PVC market still has a lot of potential, as was illustrated last year. In the USA, sometimes complete houses are built with PVC materials. In Europe, mainly flooring applications are on the rise. This is owing to material modernisation in terms of aes-thetics, as well as PVC’s inherent qualities such as durability, easy maintenance and recyclability. Applications are endless and so are the number of additives we are developing for those applications.

Renewables

We are increasingly directing our efforts towards finding alternative plasticizers. These include non-phthalate plasticizers as well as plasticizers with additional functionalities. Where possible, or because of a customer’s explicit requirement, we develop renewables-based plasticizers. To that end, we closely work with the cus-tomer in joint development programmes.

Sustainability

Meanwhile, a number of additives based on renewables have proven themselves to be perfectly functioning alternative plas-ticizers, for example for the food industry. Tests have shown that the products main-tain their flexibility at low temperatures, and remain stable at high temperatures or when exposed to ultraviolet radiation. These intrinsic qualities also make these plasticizers fit for use in flooring and elec-tric wiring. These are just a few examples proving that there is a future in develop-ing innovative solutions for the use of PVC in many areas.

“That is our strength: helping the customer by offering solutions he himself hadn’t thought about.”

Arnaud Verraes / Development Manager PVC plasticizers

PVC plasticizers



Biopolymer Applications

2014 was a changeover year: we moved from the development of plasticizers to the marketing of Ready-To-Use compounds (RTU). RTU compounds are products made from diverse chemical building blocks, and geared towards the application area of the customer. 2014 was also a year of continued extension of the Business Development Team Biopolymer Applications.

READY TO USE

The mission of the Business Development Team Biopolymer Applications is the devel-opment and marketing of Proviron’s plasti-cizers for biopolymers, in the first instance focused on PLA (Polymerized Lactic Acid). This is done through our Ready-to-Use compounds (RTU). An important part of the development and evaluation happens in cooperation with research centres and knowledge institutions. We have set up programmes with these partners in which exchanged information and expertise lead to improved product qualities, in line with diverse applications.

Product portfolio

At the moment, there are four people in Proviron’s biopolymer team who take care of research and development, as well as marketing. In 2014, we started with the conversion of development results into saleable products. To that end, we have also developed a specific branding. “Flexibility made Flexible” is the slogan and products are marketed under the

brand name ProviplastiX. We differentiate between two product series: ’injeX’ and ‘Xtrude’, depending on the manner in which the compounds are converted into their final form: by injection moulding or by extrusion. For injection we have developed a GP grade (General Purpose); for extrusion, there are five applications: FBR (fibre), FLM (film), BLF (blown film), THS (thermoformed sheet) and 3D (3D printing).

From RTT to RTU

Last year, we began with the regulatory registration of the principal parts of our compounds, as well as with the start-up preparation of the RTU production. At the outset of 2015, we had entered the RTT phase (Ready-To-Trial), meaning that potential strategic customers in Europe could start to evaluate the compounds on an industrial scale. Thanks to this cooper-ation, product specifications of future RTU compounds can be established. In 2015, the first generation of commercial products will be introduced onto the market.

“2014 was a changeover year: we moved from the development of plasticizers to the marketing of Ready-To-Use compounds.”

Luc Vervynck / Development Manager Biopolymer

Applications

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The story of Proviron’s microalgae is one of steady development. Our technology has evolved steadily and the reactor park has been expanded. On a commercial level, we were able to deliver the promised volumes. Underlying all these and other developments, is the continually improving scientific basis of our algae production.

ORGANIC GROWTH

In 2014, we took new steps to improve our algae production. For example, we continued upgrading the plastic and adjusted the con-struction of the reactor such that cleaning is better and faster. Process control too was enhanced significantly: the process control units which operate up to thirty reactors have shrunk to the format of a small elec-trical cabinet, and can now be transported without a fork-lift truck. Two compact units, each controlling one reactor, and one unit

operating twenty reactors are proving their value in our test project in Spain.

Focus on aquaculture

Presently, all our production is sold for aquaculture. A study has shown that we should indeed focus on that market. In light of that, we sold our first volumes of Isochrysis in 2014, beside our traditional


algae species Nannochloropsis. Growing Isochrysis, especially for shrimp culture, is very complex and something we have only succeeded in because of our scientific knowledge on the matter.

Future

Our prime ambition is to continue expand-ing our reactor park to meet the demand.

Microalgae


“Our knowledge about microalgae is increasingly based on a better scientific understanding.”

We are doing this in the first place at the Hooge Maey site, but we are also investigating other locations. Furthermore, we intend to increase production of the Isochrysis species to about half of the overall volume, a matter of healthy risk spreading. We have also been investigat-ing other species; after all we are able to create tailor-made microalgae thanks to our flexibility and expertise.

Mark Michiels / Managing Director

Jorien Fret - André Ielegems - Luc Roef - Michel Jacqmain - Koen Van de Velde - Mark Michiels - Tom De Baerdemaeker

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Katleen Vanacker - Petra Haezebrouck - Ronny Dumarey - Bart Van de Geuchte - Luc Schacht - Rudy De Doncker


Proviron keeps promoting safety. With only two lost time accidents, we maintained the level of the previous year in 2014, and there were significantly fewer first-aid incidents. Even more relevant were the low frequency and severity rates. In short, it was a good safety year, but (and there should always be a ‘but’ here) there is still room for improvement, and we keep on striving for zero lost time accidents.

POSITIVE TREND CONTINUED

The positive trend of 2013 was contin-ued in 2014. The lost time accident (LTA) frequency rate went down from 5.39 to 5.31. The first-aid incident frequency rate decreased even more: from 105 to 88. The injury severity rate remained low too, and only one of the two LTAs was industrial in nature.

Year action plan

The 2014 year action plan was quite jam-packed: lots of work space inspections as well as attention to personal protection and to near accidents and incident report-ing. After all, safety requires constant vigilance. Last year, we re-organised the Second Intervention Team training into blocks of four hours instead of one hour. This has enabled more complex and more realistic simulations: sessions have become more intense and include both theory and prac-tical exercises. The reactions of employees were positive. Twice a year, every team member participates in a four-hour train-ing session.

The Special Intervention Team (SIP) needed fresh blood. Twenty new volun-teers took part in an intense five-day-long basic course at a specialised centre. The new team members responded enthusi-astically. For Proviron, this investment has had a double positive effect: the team is better prepared to handle interventions, but also the young SIP members can play their part preventatively as they can recognise and assess risks faster.

Thematic approach

In 2015, we will deal with one safety theme per quarter, focusing on the involvement of the work floor. Depart-ments will work around a theme for three months using a toolbox or a checklist, with employees giving feedback to the department’s line management. Finally, we are planning a safety train-ing program for all employees, bringing together a number of safety training sessions.

“2014 was a good safety year, but we keep striving for improvement.”

SAFETY

Katleen Vanacker / Prevention Advisor

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Proviron continues to get high marks from customers: we are reliable, our products are good, and we supply supporting services. In 2014, there were many customer audits, often related to new products such as Provifeed™. Moreover, all follow-up audits, relating to several systems went smoothly.

CUSTOMERS ARE HAPPY

Last year, successful follow-up audits included ISO, GMP (Good Manufacturing Practice) and ISCC (International Sustain-ability Carbon Certification). At the end of the year, we spent a lot of time preparing the recertification audits for both com-panies in Ostend. We also performed two supplier audits in 2014.

Customers

2014 saw a remarkably high number of customer audits, including one concerning Optigut, and thus the first Provifeed™ audit. Our administration too was very busy, working on what in admin-speak is called ‘regulatory’. Everything has increased: dec-larations, specifications, technical sheets, safety data sheets, questionnaires …It is striking how complaints with an inter-nal cause decreased in 2014, notwithstand-ing the increase in customer complaints. Our new approach that focuses on preven-tive measures appears to be successful.

New products, new requirements

GMP follow-up has become more intensive as Provifeed™ production volumes have increased. We have organised extra recalls and fine-tuned the procedures in question. After all, traceability is of crucial impor-tance. And in 2014, we started creating technical sheets with the same software we use for safety data sheets, saving us a lot of work and time.

Customer awareness

We have put a lot of effort into enhancing customer awareness on the shop floor. For example, we recently started presenting an overview of customer complaints to operational logistics personnel. The results of our customer survey are positive. Customers perceive Proviron as reliable, our products are considered on spec, and we are seen to offer excellent service and support. We deduced six cor-rective actions from the report, allowing us to keep improving.

“There were quite a few customer audits, often related to new products such as Provifeed™.”

Petra Haezebrouck / Quality Manager

QUALITY


CARE FOR THE ENVIRONMENT

There are a lot of good things to say about Proviron’s environmental care in 2014. For example, the number of environmental incidents went down considerably and organic discharge decreased, compared to the previous year. And even though there was a small increase in waste production, it was not enough to represent a break in the current trend. However, the major environmental news of 2014 may very well be the start of operations to remove historically polluted soil in Oostende.

SOIL REMEDIATION STARTED

The number of environmental incidents went down considerably: from 22 in 2013 to 16 in 2014. However, we need to continue paying attention to the prevention of unin-tentionally opened purges.

Low discharge

In 2014, we measured a discharged organic load of 8.45 kg COD/tonne end product, the lowest figure since 2007. However, we have to consider that we may have reached a plateau, making it difficult to improve more in the future. On the other hand, we moni-

tored a small increase in waste production at the Ostend site: 4.74 kg chemical waste per tonne end product, compared to 4.05 kg in 2013. However, this increase doesn’t contradict the decreasing trend of the past couple of years. Moreover, production of other types of waste, such as domestic waste, remained stable, and that is positive.

First plot dug up

In 2014, Proviron started the removal of historically polluted soil at our Ostend site. A couple of years ago, we started cleaning the

“In 2014, the number of environmental incidents went down considerably.”

Rudy De Doncker / Environmental Coordinator

equally historically polluted groundwater in Ostend, with positive results in 2014. In the first stage of the soil remediation, we dug up a layer of one meter, which turned out to be hardly or not polluted. This stroke of luck has allowed us to re-use more soil than we had anticipated. In 2015, we will continue digging up the soil down to the clay layer, which is 2.5 to 3 metres deep. The polluted soil will subsequently be cleaned externally at a thermic desorption installation.

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External Internal

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HUMAN RESOURCES

The major challenge in 2014 was the reinforcement of our four research teams, as well as the replacement of our soon-to-be-retired production personnel. Therefore, Proviron welcomed many new employees, which led to a new dynamism. However, it is equally important to stimulate the commitment of the already present personnel.

NEW RESEARCH TEAMS REINFORCED

After the redefinition of the four research domains, HR had to find the necessary new employees, and we were able to recruit dynamic researchers and marketing specialists. Meanwhile, the renewed teams have successfully started work. We also proactively hired new production personnel to replace employees who will soon reach retirement age.

Healthy working climate

Another important objective for 2014 and beyond was the creation of a good working climate for all employees. We have noticed positive signs, such as young employees asking for additional technical schooling, spontaneously enlisting for emergency training, or fixing up their working place.

Katrien De Zutter / HR Manager

At the same time, it is a challenge to get everyone on board.

Training and automation

Yet another goal was making sure that all hourly paid employees would get on average two days of training over a period of two years. Already at the end of 2014, after one year, this objective had been amply met. We intend to use this momentum and do the same for monthly paid employees. HR automation has had a positive effect on our wages administration. Thanks to the introduction of UNIWEB Time, monthly paid employees can manage their holidays themselves. It would be nice to also intro-duce this for hourly paid employees.

“Another important objective was the creation of a good working climate.”


Number of employees

Future

In 2015, there are many measures scheduled with regard to the new law on psychosocial risks. A first step entails a survey by Provikmo, a legally recog-nised organisation, which will gauge the personnel’s wellbeing. 2015 will also see new collective agreement negotiations, as well as the planning of the 2016 social elections. Another action for 2015 is the writing of new company labour rules, applicable to hourly and monthly paid employees alike, which should be finished by the end of 2015.

0

100

200

300

400

2010 2011 2012 2013 2014

Ostend

Hemiksem

USA and China

Nadine Crivits

2 4

Looking at the core figures, we haven’t been able to match the record year 2013, but 2014 still outperformed 2011 and 2012. But more importantly, we continued to strengthen our underlying financial basis, demonstrated by a liquid asset ratio of 1.2.

FINANCIAL POSITION STRENGTHENED

2013 was a record year and we did not expect 2014 to improve on it: the winter was less harsh, and legislative measures which were positive for our biodiesel ended in May. On the other hand, new products such as our feed additives showed a nice growth, and the capacity expansions in the USA and China turned out to be hits. Together, this resulted in a 170 million turnover, an 8.8 million EBITDA, and a 1.4 million net current result, which proves that we used our resources intelligently.

Loans

As known, Proviron attracted new inves-tors in 2013. With the new capital, we continued improving our position in 2014. Until recently, we tended to work with short-term loans, which were expensive. We have transformed these loans into long-term solutions, solidifying signifi-cantly our permanent capital. That was possible thanks to our sound financial

structure. After all, the quality of our working capital is high because of good stock rotation and smooth payments by our customers. On top of the lower interest rates, which benefit everyone, we managed to cut our financing costs substantially. This has increased our liquid asset ratio to a very healthy 1.2, which creates trust with the financers.

Future

We expect 2015 to be similar to 2014. The focus is on contribution enhancement of our new products: feed additives, microal-gae, PVC plasticizers and PLA plasticizers. That is the essence of our strategy: offer-ing sustainable solutions to the challenges of the future. That way, we can also move away from cyclical sectors. I expect our other activities to show stable growth. The USA may be an outperformer: the results of recent investments there will only be fully noticeable in 2015.

“Thanks to our sound financial structure we managed to cut our financing costs substantially.”

Serge Maes / Financial Director

FINANCE


Sales, Operating Profit & Operational Cash flow

Investments

Net working capital

Liquidity

KEY FIGURES 2010 - 2014

in ‘000 €uro 2010 2011 2012 2013 2014

Sales 125,675 145,335 161,093 191,704 169,238Raw Materials 71,486 95,236 108,504 133,868 114,265Margin 54,189 50,100 52,589 57,837 54,973Services and other goods 22,217 21,656 22,152 24,146 24,226Remuneration 19,646 20,154 21,614 20,033 20,970Other operating charges 1,453 1,734 516 1,943 1,189Provisions -196 -458 349 -540 -324Write offs 232 -17 -111 -100 83Ebitda 10,837 7,030 8,070 12,355 8,829

Depreciation 7,577 7,261 7,171 7,550 7,522Operating profit 3,259 -231 899 4,805 1,307Interest and debt charges (net) -1,392 -1,470 -1,631 -1,722 -1,175Other financial results 61 -19 -211 -209 185Extraordinary result 748 -2 -337 -764 1,170Result before taxes 2,677 -1,722 -1,280 2,110 1,487Taxes -45 4 13 54 31Net current result 2,722 -1,726 -1,294 2,056 1,456Net result 1,006 -3,442 -3,009 340 -260 in ‘000 €uro 2010 2011 2012 2013 2014

Fixed assets 57,276 56,175 58,257 57,103 54,306Goodwill (2) 15,604 14,085 12,567 11,049 9,530Stocks 9,460 12,102 13,550 18,848 17,529Trade debtors 14,847 12,824 15,971 16,302 16,764Other amounts receivable 6,450 1,667 2,916 3,514 3,743Cash at bank and in hand 675 696 758 5,508 1,743Deferred charges and 1,037 550 443 257 468 accrued income Total assets 105,349 98,099 104,462 112,580 104,082 Capital and reserves 42,333 38,960 35,924 46,201 45,356Minority interests 8 7 7 10 11Provisions 12,204 11,660 11,877 12,031 11,529Financial debt 25,872 26,031 30,550 28,898 25,605Trade payables 16,930 15,358 18,802 18,913 16,763Amounts payable reg. taxes, 6,590 5,552 6,664 5,794 4,463 remun. & soc. sec Other amounts payable 903 1 1 1 1Accued charges and deferred 509 530 639 733 354 incomeTotaal passief 105,349 98,099 104,462 112,580 104,082

(1) After depreciation consolidation goodwill (2) On 31-12-2000, the consolidation difference was determined and since then

the amortisations have been booked according to the valuation rules

-2000

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Ebit

Net result before goodwill

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PROVIRON HOLDING NV 1. CONSOLIDATED BALANCE

Codes 31.12.2014 31.12.2013ASSETS in ‘000 Euro in ‘000 EuroFIXED ASSETS 20/28 63,836 68,151

I. Formation Expenses 20 411 869II. Intangible Assets 21 6,945 6,536III. Positive Consolidation Differences 9920 9,530 11,049IV. Tangible Assets 22/27 46,810 49,550

A. Land and buildings 22 26,900 27,770B. Plant, machinery and equipment 23 14,704 16,188C. Furniture and vehicles 24 193 193D. Leasing and other similar rights 25 3 1,038E. Other tangible asset 26 F. Assets under construction and advance payments 27 5,009 4,361

V. Financial Assets 28 140 148A. Companies accounted for using

the equity method 9921 0 01. Participating interests 99211 2. Amounts receivable 99212

B. Other enterprises 284/8 140 1481. Participating interests and shares 284 136 1362. Amounts receivable 285/8 4 12

CURRENT ASSETS 29/58 40,246 44,428

VI. Amounts Receivable After One Year 29 2,135 2,327A. Trade debtors 290 B. Other amounts receivable 291 2,135 2,327C. Deferred taxation 292

VII. Stocks And Contracts In Progress 3 17,529 18,848A. Stocks 30/36 17,529 18,848

1. Raw materials and consumables 30/31 6,510 7,8842. Work in progress 32 3. Finished goods 33 9,582 10,0254. Goods purchased for resale 34 1,436 9385. Immovable property acquired

or constructed for resale 356. Advance payments 36

B. Contracts in progress 37VIII. Amounts Receivable Within One Year 40/41 18,372 17,488

A. Trade debtors 40 16,764 16,302B. Other amounts receivable 41 1,608 1,186

IX. Investments 50/53 0 0A. Own shares 50 B. Other investments and deposits 51/53 0 0

X. Cash At Bank And In Hand 54/58 1,742 5,507XI. Deferred Charges And Accrued Income 490/1 468 257

TOTAL ASSETS 20/58 104,082 112,580


Codes 31.12.2014 31.12.2013LIABILITIES in ‘000 Euro in ‘000 EuroCAPITAL AND RESERVES 10/15 45,356 46,201

I. Capital 10 49,170 49,170A. Issued capital 100 49,170 49,170B. Uncalled capital (-) 101

II. Share Premium Account 11III. Revaluation Surpluses 12 17,225 18,015IV. Consolidated Reserves (+)(-) 9910 -20,891 -20,630V. Negative Consolidation Differences 9911 26 26Vbis. To Charge Positive Consolidation Differences 99201VI. Translation Differences (+)(-) 9912 -174 -381VII. Investment Grants 15

MINORITY INTERESTS 11 10

VIII. Minority Interests 9913 11 10PROVISIONS, DEFERRED TAX AND LATENT TAXATION LIABILITIES 16 11,529 12,031

IX. A. Provisions for liabilities and charges 160/5 8,643 9,0321. Pensions and similar obligations 160 959 1,1012. Taxation 1613. Major repairs and maintenance 162 4. Other liabilities and charges 163/5 7,684 7,931

B. Deferred tax and latent taxation liabilities 168 2.886 2,999

CREDITORS 17/49 47,186 54,337

X. Amounts Payable After One Year 17 14,701 9,383A. Financial debts 170/4 14,701 9,383

1. Subordinated loans 170 6,000 6,0002. Unsubordinated debentures 1713. Leasing and other similar obligations 172 1,4284. Credit institutions 173 6,781 45. Other loans 174 1,920 1,950

B. Trade debts 175 0 01. Suppliers 17502. Bills of exchange payable 1751

C. Advances received on contracts in progress 176 D. Other amounts payable 178/9

XI. Amounts Payable Within One Year 42/48 32,131 44,222A. Current portion of amounts payable after

one year 42 2,084 4,847B. Financial debts 43 8,821 14,668

1. Credit institutions 430/8 8,401 14,2482. Other loans 439 420 420

C. Trade debts 44 16,763 18,9131. Suppliers 440 16,763 18,9132. Bills of exchange payable 441

D. Amounts payable regarding contracts in progress 46

E. Amounts payable regarding taxes, remuneration and social security 45 4,463 5,7941. Taxes 450/3 2,013 3,4472. Remuneration and social security 454/9 2,450 2,347

F. Other amounts payable 47/48 1 1XII. Accrued Charges And Deferred Income 492/3 354 733

TOTAL LIABILITIES 10/49 104.082 112.580

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PROVIRON HOLDING NV 2. INCOME STATEMENT (Analysis of operating results by type)

Codes 2014 2013 in ‘000 Euro in ‘000 Euro

I. Operating Income 70/74 169,238 191,704A. Turnover 70 153,930 191,189B. in stocks of finished goods, work

and contracts in progress (increase +; decrease -) 71 9,935 -3,577

C. Fixed assets - own construction 72 2,510 2,385D. Other operating income 74 2,863 1,707

II. Operating Charges 60/64 -168,128 -187,097A. Raw materials, consumables

and goods for resale 60 114,265 133,8681 Purchases 600/8 120,848 141,7812 Increase (-). Decrease (+) in stocks 609 -6,584 -7,913

B. Services and other goods 61 24,226 24,146C. Remuneration, social security costs and

pensions (notes XIV,B1) 62 20,970 20,033D. Depreciation of and other amounts written

off formation expenses, intangible and tangible fixed assets 630 7,720 7,747

E. Increase (+); Decrease (-) in amounts written off stocks contracts in progress and trade debtors 631/4 83 -100

F. Increase (+). Decrease (-) in provisions for liabilities and charges 635/7 -324 -540

G. Other operating charges 640/8 1,189 1,943H. Operating charges capitalised

as reorganization costs (-) 649

III. Operating Profit (+) Operating Loss (-) 70/64 1,109 4,608

IV. Financial Income 75 606 283A. Income from financial fixed assets 750 8 5B. Income from current assets 751 177 200C. Other financial income 752/9 421 78

V. Financial Charges (-) 65 -3,114 -3,732A. Interest and other debt charges 650 1,351 1,921B. Amounts written on positive

consolidation differences 9961 1,518 1,518C. Increase (+); Decrease (-) in amounts written off current assets other than those

mentioned under II.E 651D. Other financial charges 652/9 244 293

VI. Profit On Ordinary Activities Before Taxation (+) Loss On Ordinary Activities Before Taxation (-) 70/65 -1,399 1,158


Codes 2014 2013 in ‘000 Euro in ‘000 Euro

VII. Extraordinary Income 76 1,170 5A. Adjustments to depreciation of and to other

amounts written off intangible and tangible fixed assets 760

B. Adjustments to amounts written off consolidation differences 9970

C. Adjustments to amounts written off financial fixed assets 761

D. Adjustments to provisions for extraordinary liabilities and charges 762

E. Gain on disposal of fixed assets 763 1,170 5F. Other extraordinary income 764/9

VIII. Extraordinary charges 66 0 -768A. Extraordinary depreciation of and amounts

written off formation expenses, intangible and tangible fixed assets 660

B. Extraordinary amounts written on positive consolidation differences 9962

C. Amounts written off financial fixed assets 661D. Provisions for extraordinary liabilities and

charges (increase +, decrease -) 662 -64 694E. Loss on disposal of fixed assets 663 F. Other extraordinary charges 664/8 64 74G. Extraordinary charges capitalised as

reorganisation costs (-) 669H. Negative consolidation differences (-) 9963

IX. Profit (Loss) for the financial period before taxation (+)(-) 70/66 -229 394

X. A. Transfer from deferred tax and latent taxation liabilities (+) 780 0 0B. Transfer to deferred tax and latent

taxation liabilities (-) 680

XI. Income taxes (+)(-) 67/77 -31 -54A. Income taxes (-) 670/3 -31 -55B. Adjustment of income taxes and write-back

of tax provisions 77 0 0

XII. Profit (Loss) for the financial period (+)(-) 70/67 -260 340

XIII. Share in the result of the companies accounted for using the equity method 9975 0 0A. Profits (+) 99751B. Losses (-) 99651

XIV. Consolidated Profit (Loss) (+)(-) 9976/66 -260 340A. Share of third parties (+)(-) 99761 1 4B. Share of the group (+)(-) 99762 -261 337

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PROVIRON HOLDING NV 3. STATEMENT OF INTANGIBLE ASSETS (in ‘000 Euro)

Costs of research Concessions, Goodwill Advance and development patents, payments licenses, etc ACQUISITION COST

As at the end of the preceding period 9,998 4,935 1,377

Movements during the period:Acquisitions, including fixed assets, own production Sales and disposals (-) -69 -78 Transfers from one heading to another (+) (-) 869 771 Translation differences (+) (-) 45 Other movements

At the end of the period 10,843 5,627 1,377

DEPRECIATION AND AMOUNTS WRITTEN DOWN

As at the end of the previous period 6,267 2,130 1,377

Movements during the period: Recorded 775 414 Written back as superfluous (-) Acquisitions from third parties Written down after sales and disposals (-) -69 -36 Transfers from one heading to another (+) (-) Translation differences (+) (-) 45 Other movements

At the end of the period 7,018 2,508 1.377

NET CARRYING VALUE AT THE 3,825 3,120 0 END OF THE PERIOD


Land Plant, Furniture Leasing and Other Assets under and machinery and other similar tangible construcon buildings and vehicles rights assets and advance equipment paymentsACQUISITION COST

As at the end of the preceding period 13,926 111,454 2,519 7,249 0 4,361

Movements during the period:Acquisitions, incl. fixed assets, own construction, 5,727Sales and disposals (-) -36 -1,087 0 Transfers from one heading to another (+)(-) 379 3,079 234 -158 -5,174Translation differences (+)(-) 131 178 19 8 94Other movements

At the end of the period 14,401 113,624 2,772 7,099 0 5,009

REVALUATION SURPLUSES

As at the end of the preceding period 21,015

Movements during the period:Recorded Acquisitions from third partiesReversals (-) -904 Transfers from one heading to another (+) (-) Translation differences (+) (-) Other movements

At the end of the period 20,111

DEPRECIATION AND AMOUNTS WRITTEN DOWN

As at the end of the preceding period 7,171 95,266 2,325 6,211 0 0

Movements during the period:Recorded 382 4,578 79 1,035 Written back as superfluous (-) Acquisitions from third parties Written down after sales and disposals -1.087 0 Transfers from one heading to another 158 -158Translation differences (+) (-) 59 163 16 8 Other movements

At the end of the period 7,612 98,920 2,579 7,096 0 0

NET CARRYING VALUE AT THE END OF THE PERIOD 26,900 14,704 193 3 0 5,009

4. STATEMENT OF TANGIBLE FIXED ASSETS (in ‘000 Euro)

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PROVIRON HOLDING NV 5. CASHFLOWS, FROM OPERATIONS, INVESTMENTS AND FINANCING (in ‘000 Euro)

2014

OPERATIONAL GROSS RESULT

Operational gross result before tax 10,055

Operational tax -491

OPERATIONAL GROSS RESULT AFTER TAX 9,564

CHANGES IN OPERATIONAL NET WORKING CAPITAL

Operational current assets 334

Provisions, deferred tax and tax deferrals -113

Operational debts -3,859

Conversion differences arising on items other than fixed assets

TOTAL CHANGES IN OPERATIONAL NET WORKING CAPITAL -3,638

NET CASHFLOW FROM OPERATIONS 5,926

INVESTMENTS IN FIXED ASSETS AND CONSOLIDATED SHAREHOLDINGS

I. Set-up costs 0

II. Intangible fixed assets -1,794

III. Tangible fixed assets -3,720

IV. Financial fixed assets 8

Consolidated shareholdings

Loss on sale of fixed assets

NET CASHFLOW FROM INVESTMENTS -5,507

FREE OPERATIONAL CASHFLOW AFTER INVESTMENTS 419

FINANCING

Financial cost of loan capital after tax -892

Financial debts -3,292

Group’s share of distributable profit (-)

Third parties’ share of distributable profit (-)

External shareholders’ equity excluding negative consolidation differences, conversion differences and capital subsidies

Capital subsidies 0

NET CASHFLOW FROM FINANCING -4,185

NET CASHFLOW FROM OPERATIONS, INVESTMENTS AND FINANCING -3,765

Opening cash (liquid assets + investments) 5,508

Closing cash (liquid assets + investments) 1,743

MOVEMENT OF CASH -3,765


6. CONSOLIDATIEVERSCHILLEN

7. STATEMENT OF AMOUNTS PAYABLE

Statement of consolidation differences and differences Consolidation differences resulting from the application of the equity method Positive NegativeNET CARRYING VALUE AT THE END OF THE PRECEDING PERIOD: 11,049 26

Movements during the period: Arising from an increase of the percentage held Arising from a decrease of the percentage held Write-downs -1,518 Differences transferred to the income statement Other modifications

NET CARRYING VALUE AT THE END OF THE PERIOD: 9,530 26

AMOUNTS PAYABLE WITH A RESIDUAL TERM OF not more between 1 over than 1 year & 5 years 5 years

1. Subordinated loans 6,000

2. Unsubordinated debentures

3. Leasing and other similar obligations 1,418

4. Credit institutions 666 4,905 1,876

5. Other loans 45 1,875

Total financial debt 2,084 10,950 3,751

2014 Consolidation differences Originally already Position Increase Depreciation Position deducted 31.12.2013 31.12.2014n.a.v. oprichting Proviron NV

positive goodwill 12,242 9,444 2,798 487 2,311

negative goodwill -26 -26 -26

Grand goodwill to: Land 2,978 2,978 2,978Buildings 3,948 2,608 1,340 197 1,143

From foundation Proviron Holding

positive goodwill 20,627 12,376 8,251 1,031 7,219

Total 39,770 24,429 15,341 0 1,716 13,625

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ChairmanLeo Michiels

DirectorsMark Michiels gedelegeerd bestuurder Wim Michielsgedelegeerd bestuurderWalter Vissers (tot 27 mei 2015)Raf Jacxsens

External Directors Pierre Klees (tot 27 mei 2015)Jan Brouwers (tot 27 mei 2015)Edouard CrouferJos Verjansnv Econopolis Strategy, represented by Geert Noels

External Auditor CVBA BDO, Auditors, represented by Philip Vervaeck

Management and investors Family

Proviron Holding

Proviron Basic

Chemicals

Proviron Functional Chemicals

Proviron Industries

Proviron Inc.

Zhejiang Pu Wei LunChemicals

28% 72%

De Cluyse

BOARD OF DIRECTORS

PROVIRON SHAREHOLDERS ORGANISATION CHART

Geert Noels (left), Walter Vissers (left back), Jos Verjans (left front), Jan Brouwers (left center), Leo Michiels (center), Mark Michiels (centre back), Edouard Croufer (right back), Wim Michiels (right center), Raf Jacxsens (right front), Pierre Klees (not present)


THE EXECUTIVE COMMITTEEChairmanWim Michiels

OperationalSerge Bekaert

Development José Vanheule

CommercialStefaan Depecker

FinancialSerge Maes

Basic ChemicalsRaf Jacxsens

José Vanheule, Serge Maes, Raf Jacxsens, Serge Bekaert, Wim Michiels and Stefaan Depecker

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[email protected] / www.proviron.com

BELGIUM / USA / CHINA

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14 ANNUAL REPORT - Proviron · is a lengthy process. ... phthalic anhydride production, this piece...

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