Midroc Europe Annual Review

Transcription

1 2014 Midroc Europe Annual Review ANNUAL REVIEW 2014 MIDROC EUROPE 1

2 ANNUAL REVIEW Contents MIDROC EUROPE 1 Midroc in brief in brief 2 Business areas 3 Executive Committee Comments 4 Together to get there 6 BUSINESS AREAS 10 Business Area Services 10 Business Area Investments 22 FINANCIAL STATEMENTS 28 Midroc Europe 28 Midroc Europe AB 30 Granitor Invest AB 31 OWNERSHIP 32 8 BOARD OF DIRECTORS 33 Photography: Hans Berggren, Ulf Berglund, Heliospectra, Adam Ihse, Midroc, Anette Norén, Niklas Olsson, SolarWave, Nicklas Thegerström, My Vestlund 2 MIDROC EUROPE ANNUAL REVIE W 2014

3 MIDROC EUROPE MIDROC IN BRIEF Our shared vision Contributing to a better future is part of our everyday business with our employees, clients and partners and also very evident in our investments in sustainable technologies. Midroc Europe is the shared marketing brand under which all European-based Midroc companies operate. Financial strength and sustainability combined with highly competent human resources, shared values and culture form the basis for the operations. Midroc Europe s business operations are organized in two major business areas: services offered to the industry, construction and infrastructure market and our own investments in property development and innovating development companies. Whilst the greater part of the operational activities are undertaken in Sweden, the group is also through its subsidiaries locally represented in France, Germany, India, Indonesia, Norway, Poland, Saudi Arabia, South Africa, the United Arab Emirates and the United Kingdom. Legal structure Business activities are conducted through a number of companies, each offering their specific services. The Midroc Europe brand consists primarily of two groups of companies headed by Midroc Europe AB and Granitor Invest AB respectively, which account for the bulk of sales. Sustainability Midroc takes a broad view of sustainability, spanning from safe working environments for our employees to investments in the development of new technology based on environmental concern and social responsibility. Our challenge We have taken on the challenge to make our employees, customers and suppliers proud of our focus on sustainability in both our daily operations and long-term vision to contribute to a better future. ANNUAL REVIEW 2014 MIDROC EUROPE 1

4 MIDROC EUROPE 2014 IN BRIEF Key figures* (including Granitor Invest AB, SEK) Net sales 5.3 billion Income before tax 128 million Total equity 2.8 billion Total assets 7.8 billion Owner s financing 4.1 billion 3,200 employees Sales MSEK 5,300 Assets MSEK 7,800 80% Services 20% Investments 35% Services 65% Investments Income before taxes MSEK Employees BY REGION 87,5% Sweden 12,5% Outside Sweden * Key figures constitute the sum of Midroc Europe AB and 100% of the Granitor Invest AB operations as well as surplus value of property. 2 MIDROC EUROPE ANNUAL REVIE W 2014

5 MIDROC EUROPE BUSINESS AREAS Midroc Europe s business operations are organized in two major business areas: Services offered to the industry, construction and infrastructure market and our own Investments in property development and innovating development companies. In the business area Services Midroc Europe is a fullservice partner providing services and solutions to customers operating in the fields of property, construction, infrastructure and industry. In business area Investment Midroc Europe invests, develops and manages commercial and residential properties as well as sustainable new technologies in development companies. By offering sustainable and innovative solutions our goal is to strengthen our customers competitive edge, while simultaneously contributing to a better future. Access to the Midroc companies wide range of expertise enables us to offer tailor-made solutions to each customer s specific need. Our portfolio of services offered to major industrial clients includes assistance with surveys and other material for the early stages in their decision-making process, as well as full partnerships to carry through investment and maintenance projects from start to finish. In addition, we offer project management, engineering expertise and project capability for planning and performing service maintenance. Our wide scope of services offered to the construction sector is based on our competence and vast experience of creating sustainable urban environments. We provide services from early development to construction and property management. Midroc Europe AB 49,7% Granitor Invest AB Services Midroc Contracting AB Granitor Contracting AB VästraHamnen Corporate Finance AB Midroc AB Industry, building and infrastructure Industry, building and infrastructure Corporate finance Group management, conference and charter Together to get there Our best results are achieved when we have the opportunity to work with our customers and partners already at an early stage in a project. By making sure we understand our customers challenges and needs, we take on the challenge to exceed our customers expectations. This is the foundation of Midroc s success and competitive edge. Working together with all parties involved to create a common goal and an understanding of how to reach it, is what motivates us. We constantly strive to be a positive contribution to both our customers and society at large. One of our key success factors is our employees systematic and committed approach to continuous training and culture development. Our own in-house training concept Midroc Business School, as well as our continuous dialogue with both customers and suppliers, is instrumental in maintaining our competitive edge. Investments Granitor Fastigheter AB Midroc Properties AB Midroc Invest AB Property development and management Property development and management Asset development and manage ment ANNUAL REVIEW 2014 MIDROC EUROPE 3

6 MIDROC EUROPE EXECUTIVE COMMITTEE COMMENTS A CLEAR BUSINESS FOCUS MAKES FOR A BRIGHT FUTURE 2014 will go down in Midroc history as a year in which several of our companies managed to achieve their best performance ever, while others experienced one of their worst years ever. Despite challenging market conditions, Midroc Europe has delivered satisfactory results, and as we look ahead the future is very encouraging. At a group level, we are continuously working to improve our support to enable each subsidiary an optimal development and growth, fully respecting each unique market requirement as well as Midroc group synergies. In 2014 we have implemented a new four-month reporting and monitoring process, allowing all profit centres to analyze their business, setting up and monitoring short-term actions as well as long-term strategies compiled into a business scenario covering the next coming two years of annual accounts. Successful property developments and IPOs Within business area Investments we take pride in a very successful Our philosophy of integrating sustainable, ecological and social considerations into our construction and property development has proven successful, rendering higher market values and returns. The foundation for an even better 2015 has been laid, where we expect to double sales within property development. We are closely monitoring market conditions and conclude that the future development of residential and office buildings in the right locations looks favourable. Midroc s property development has access to an impressive portfolio of strategic land assets and is well positioned in strategically important and attractive locations in the Malmö region. The company is also looking to expand in Stockholm during The positive trend for our investments in development companies provides important added value for us, as this activity embodies Midroc s overall vision of contributing to a better future. Our venture capital company Midroc New Technology invests exclusively in potentially world-improving, pioneering technologies. During the year, important milestones were reached when two of Midroc New Technology s portfolio companies, Heliospectra (lighting solutions for plant science and horticulture applications) and PowerCell (environmentally friendly power systems), were listed on the stock exchange in Stockholm. Stable but competitive market conditions Our companies within the business area Services, primarily providing services for the industrial, infrastructure and construction sectors experienced a year of stable demand but fierce competition. This has become our new reality, which is why we have to work hard to ensure that we have the right customers, right contracts and right ability to deliver according to contract and expectations. Our soil remediation company EkoTec has had a challenging year with diminishing markets and the postponement of a major project. BAC Corrosion Control performed well with regard to their current market situation. Midroc Alucrom faces exciting plans for expansion in Poland, and the Metalock Group is continuing its expansion outside of Sweden, with a new establishment in the United Arab Emirates. Scaffolding experts Midroc Ställningar achieved a positive result in 2014 and is now heading in the right direction after completing a successful merger. Midroc Electro Gruppen AB performed very well, and its business area Automation has reported its best results ever. Midroc Automation has conducted several large and very success ful projects in the Steel and Mining industry in recent years and has taken a strong position in the automation field. In 2014 we initiated the work of separating the Installation and Automation division within Midroc Electro Gruppen AB, spinning off Automation into a separate company. We believe that a clearer distinction between our operations for electrical installation and industrial automation will further strengthen both companies in their prominent positions. It is also very gratifying to see that Västra Hamnen Corporate Finance is being impressively managed to further develop its recognition on the market. Despite the relatively small size of the company, it offers top skills and high-quality financial advice. Important lessons learnt from a year of adversity within contracting The companies Midroc Rodoverken and Midroc Project Management had a very challenging year and reported substantial losses for The disappointing results can be attributed to two individual projects, both completed during the year. By their nature, the projects are completely different from each other, but the common denominator that caused the losses are similar. Both projects were acquired with very tight profit margins, while at the same time the scope and complexity of the projects were underestimated. Our intended delivery had significant gaps to 4 MIDROC EUROPE ANNUAL REVIE W 2014

7 MIDROC EUROPE Roger Wikström, Christer Wikström and Thomas Mårtensson. the customers expectations and contract whereas both Midroc Rodoverken and Midroc Project Management spent too much effort and time trying to close the gap before asking for group assistance. Capitalizing on our shared group culture Together to get there, massive assistance from sister companies and group management finally led to a successful completion and satisfied customers, although at a very high cost for Midroc. As a consequence Midroc Rodoverken is now working to improve the process of contract and project management within the piping department to ensure the right delivery capabilities for future projects. Meanwhile the maintenance department and the tank and pressure vessel department continue to develop their unique and profitable range of services in Sweden and internationally. Midroc Project Management has phased out its contracting business and will now focus solely on its historically profitable and successful consulting activities. We are happy to conclude that the company s extensive expertise is in great demand on the market, and represents an important complement of skills to our other contracting companies ability to offer turnkey commitments. In the beginning of 2015 the construction management business previously belonging to Midroc Project Management was transferred to a separate company, Midroc Construction, within the Midroc Property Development group. Promising opportunities ahead Looking ahead, we can see an encouraging future. Many of our most important markets and clients face extensive investments programs over the coming years. There are major investment plans in place for the energy sector, as well as in the petroleum and process industry. There are also large-scale maintenance and turnaround plans for the next coming years. In these industries we have extensive expertise and long experience from a wide range of undertakings and the unique potential of offering customized solutions. These solutions involve strategic partnerships and early stage discussions with our customers to define how we will work together to find innovative ways of supporting their business and investment plans. We are entering 2015 with a strategy for balanced growth including a strategy of organic expansion in our domestic markets as well as following our customers to other geographical markets. Also for the coming year our major investments will be dominated by property development. We are also continuously looking at complementary acquisitions to strengthen our local presence and services in the industrial, infrastructure and construction sectors. Strong values form the core of the group One of Midroc s key success factors is our focus on developing a value-based corporate culture. Our continuous program to develop and sharpen skills and business practices is important in the long-term development of our employees. By highlighting the value propositions within the wide range of services offered by Midroc Europe we will strengthen the understanding and customer perception of what Midroc can offer them. This work together with our Employers Value Proposition will also improve our ability to continuously attract the right employees. We are constantly striving to make a difference, aiming to always be the first choice among our employees, customers and partners, or as we name it to be best in class. Christer Wikström Roger Wikström Thomas Mårtensson ANNUAL REVIEW 2014 MIDROC EUROPE 5

8 MIDROC EUROPE TOGETHER TO GET THERE A SHARED AMBITION TO MAKE A DIFFERENCE Midroc Europe consists of a variety of companies operating in a wide range of industries. Albeit diverse, the group companies share a distinct culture and mentality that we are proud of. Regard less of business activity, company or project, we always strive to be our customers, partners and employees first choice. We focus on continuous improvements in all our projects, striving to deliver beyond expectations. In order to achieve this, the Midroc companies have a common organizational structure that can be symbolized as an arrow. At the head of the arrow is our staff that interacts with our customers on a daily basis, and at the rear is our management in a supportive function. The inspiration is derived from team sports and our employees work together for the team, the project and the customer. The foundation of the Midroc way of doing business is our in-depth understanding of our customers and their needs. Furthermore, we are strong believers in decentralized responsibility. The working environment in any of our Midroc companies is therefore characterized by short lead time between suggestion to decision as well as motivated employees committed to addressing and solving our customers challenges. That s how we make a difference for our customers. Mutual benefits of continuous improvements Conny Gustafsson is one of many Midroc employees that have daily contact with a client representative. He is a supervisor in the Midroc Alucrom team stationed at the Preemraff refinery in Gothenburg, which performs maintenance work such as blasting and painting of pipes and cisterns. The size of the team varies from year to year, but for 2015 there are 16 Alucrom employees involved in the project. In addition to his project manager, Gustafsson is the one who works closest to the customer. Together with the Preemraff crew, we jointly discuss what is to be delivered, how this should be achieved and when. We have a very good dialogue and we meet every morning to agree on how far we have come with the delivery. Frequent status meetings are incredibly important in large-scale, ongoing projects of this type where conditions often change over time, he says. To Conny and his colleagues, always doing the best possible job you can is a given. Those of us who are out working in the field have great potential to identify and work with continuous improvements. We can see what is needed and then receive assistance and support from our Midroc Alucrom service department to influence the improvement process, both for the benefit of customers and our own safety and working environment. Conny has been working at Midroc Alucrom since 2010, and this is his third year with the Preemraff team. I have been working with painting and blasting since Unfortunately, based on previous experiences I know that the standard of equipment and safety levels are not always the best in this profession. But here at Midroc Alucrom, you always get the equipment you need, and safety procedures and protocols are meticulously followed up on. By always using modern and reliable equipment you improve safety and save both time and money. Another important aspect of the improvement process is continuous professional development. We employ highly trained staff. There are many and high certification requirements in the petrochemical industry and the Midroc staff is constantly undergoing new training programs, says Gustafsson. 6 MIDROC EUROPE ANNUAL REVIE W 2014

9 Conny Gustafsson, to the left, and 15 of his colleagues are part of the Alucrom team stationed at the Preemraff refinery in Gothenburg. ANNUAL REVIEW 2014 MIDROC EUROPE 7

10 MIDROC EUROPE Working as close to our customers as we do, I believe an open and honest communication is vital. Ida Hegge Project manager Midroc Project Management Our horizontal organizational structure without hierarchies means that we can work as close as possible to our customers. I think this is most evident in our everyday working lives. We are a relatively small company in the consulting industry, which means that we enjoy a high level of autonomy and freedom with responsibility. Working as close to our customers as we do, I believe an open and honest communication is vital. I work with HSEQ matters, where constant improvement is a core aspect as demands on all businesses continuously increase. We often follow our customers over time, and I think this is the most enjoyable part of the job, i.e. being able to meet customers and build long-term relationships, and to help simplify their everyday life. All consultants enjoy challenges. Personally, I want to constantly develop my skills and enjoy performing a variety of work tasks, which you have ample opportunity to do here at Midroc Project Management. When my manager went on parental leave, I applied for the position and got the opportunity to be acting manager for a year. To me, this year was an important learning experience and very beneficial. I had great support in my new work duties, including the opportunity to take a high-calibre leadership training course at Midroc Business School. The course focused largely on human relationships giving me useful tools to handle my new work duties. 8 MIDROC EUROPE ANNUAL REVIE W 2014

11 MIDROC EUROPE Jonas Hallgren Electrician/fitter Midroc Electro I have been working at Midroc Electro since The company offers many different types of areas of expertise and together we can take on a wide array of challenging projects. Recently, I have mostly worked on large-scale projects, involving both steering and high voltage work. Here at Midroc Electro, I have always felt that I can work freely under responsibility, based on a confidence in my skills and knowledge. As I am the one working closest to the customers, I can be responsive to their needs in my role, listening to them and understanding what they want and then make sure it can be arranged. Personally, I think it is important to be committed to your task and always do the best job possible. Our level of excellence should be so high that our customers won t have a shadow of a doubt hiring us to do the next job as well. To me, it is vital that our customers are confident that we can deliver and always do a good job. Ida Mann Assistant project manager Midroc Project Management I hold a Master of Science degree in process technology, and I am currently working on assignments for a large utility company in Uppsala. A good and safe working environment is close to my heart, and it is all about setting the bar high. Together with my colleague, I have thus worked hard to promote health and safety aspects and to lift them high on the agenda in this project. Those of us working with project management need to show right from the start that we take health and safety extremely seriously. We should lead by doing, setting our own behaviour as the standard. Among other things, this includes always having the right safety equipment with us, and showing that we never compromise on this matter. Another important task as project manager is to ensure that there is always accurate, updated and highquality documentation for the project. There are clear advantages, for example efficient and seamless introduction of new crew to the project. Furthermore, should someone identify a security risk, there are clear and concise documentation to ensure that important information is not overlooked. ANNUAL REVIEW 2014 MIDROC EUROPE 9

12 BUSINESS AREAS BUSINESS AREA SERVICES The majority of the Midroc companies in the business area Services operate in the fields of contracting, maintenance and consulting. Services are offered to clients in industry, infrastructure and construction. The group s cutting-edge expertise spans multiple disciplines, which provides opportunities for both intercompany and cross-sector strategic partnerships. The business area comprises 10 companies, and the vast majority of them offer services to the construction and industrial sectors. The companies offer contracting services as well as remedial and preventive services and maintenance to the mining industry, petrochemical industry, building construction and power industries among others. The consulting business focuses on project management, engineering services and design. The business area also includes other services, such as conferencing and corporate finance services. Regardless of type, all services offered by Midroc are based on environmental awareness and consideration as well as a strive to adopt and integrate sustainable and available new technical solutions and methods. Performance in 2014 The business area Services achieved a turnover of SEK 4.2 billion in The construction and industry operations are currently experiencing a relatively stable market but the current low Swedish inflation is holding back the market willingness to enter larger investment projects there. Hence, the Swedish market is subject to intense competition, which puts pressure on price levels and consequently margins. Despite this, many companies have performed well in 2014 and the majority have achieved satisfying results. Midroc Electro Gruppen AB gene rated its best results ever. On the other hand, two unfortunate projects undertaken during the year caused significant losses for two subsidiaries and thus a negative impact on the overall result. 10 MIDROC EUROPE ANNUAL REVIE W 2014

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14 BUSINESS AREAS EMPLOYEES: 1,618 TURNOVER: SEK 2.2 billion OFFICES: 49 Karl-Ivar Jönsson Midroc Electro Gruppen AB Midroc Electro Gruppen AB is one of Sweden s leading electrical power and automation companies, offering services that include electrical installations, industrial automation, building automation, crane systems, lifts, security and mechanical maintenance. In 2014, Midroc Electro AB underwent a reorganization, with a separation of the Automation division into its own company. As of January 1st 2015, Midroc Automation AB and Midroc Electro AB are two separate companies included in the holding company Midroc Electro Gruppen AB, which will ensure continuity and competitiveness in joint projects. The Installation and Automation divisions are two major operations that are so different from each other that we ve concluded they will have more opportunities for development and become more attractive for employees as two separate companies, says Karl-Ivar Jönsson, MD of the new parent company Midroc Electro Gruppen AB. For the group as a whole, 2014 was a very good year, and earnings significantly exceeded expectations. We have an excellent range of operations and a successful concept with shared services that we will continue to market in the realms of the Midroc Electro group. However, the separation will enable greater focus on each company s respective core business, which we believe will positively impact results even further, says Jönsson. Midroc Automation AB 2014 was Midroc Automation s best year ever and resulted in a 0.5 MSEK profit per employee. This brings security and stability to the company, giving us opportunity to invest in developing our skills even further, which in turn will improve both our employees and clients achievements, says Jonas Bergmark, MD of Midroc Automation. Being a fully autonomous company means a lot for Midroc Automation s internal investments opportunities and potential to grow the business as well as being able to attract the right resources. The company has already made substantial investments in training, which also includes a trainee program Midroc Automation School, aimed at newly qualified engineers. The trainee program, which launched in small scale in 2011 and had tremendous increase in applicants in 2013 and 2015, is very important to us and is our way of assuming responsibility for our internal growth as well as contributing to the entire industry s supply of skills. Midroc Automation has enjoyed an extremely favourable order intake in recent years with several large-scale and success ful projects in the mining industry. Together with its partners Siemens and Bombardier Transportation as well as mechanical equipment suppliers, Midroc Automation will deliver systems for process and train control for Freeport McMoRan Copper&Gold Inc s gold and copper mine in Papua, Indonesia. A major project, extending over several years. We hope that being established in Indonesia will be a good base for rendering further large international assignments. But we have also completed some impressive and successful projects, albeit on a smaller scale, in segments such as the automotive industry and the energy sector. Our strategy is to cover as many economic cycles as possible, and we have done well, says Bergmark. In 2015, Midroc Automation will equally concentrate on the important local domestic market and on ensuring the influx of new large-scale projects. As a supplier with many well-established partners, 12 MIDROC EUROPE ANNUAL REVIE W 2014

15 BUSINESS AREAS in software, infrastructure and heavy mechanical equipment, Midroc Automation has the ability to identify optimal solutions for its customers automation needs. We employ less than 200 people and are therefore unable to monitor the global market on our own, but with our partners we can cover many aspects and find opportunities. Our main offer is our project capability, combined with technical knowhow and system integration. Customers often request Midroc Automation to front the major projects as this makes us the natural partner with complete turnkey responsibility. Midroc Electro AB Earnings in 2014 were on an acceptable level given the market conditions. But we are far from satisfied. In 2015, our overall focus will be on improving earnings. We are well-positioned to succeed with regard to our order pipeline, and we will be working hard on increasing profitability of the units that are currently underperforming, says Mikael Vestlund, MD of Midroc Electro. The second half of 2014 was also characterized by the major organizational changes brought on by the demerger. The previous Installation division, now operating under the name Midroc Electro AB, underwent a major reorganization, including an increase in the number of geographical divisions from four to seven. This enables us to work more efficiently with improvements and development efforts. Previously, the divisions spanned very large geographical areas, whereas now the distances are shorter also in terms of the decision-making process, says Vestlund. The idea is that more and smaller divisions will lead to a more direct leadership, increased focus and greater profitability. During the year we ve identified how to achieve optimal interaction among the new divisions and we are now well on our way on a very exciting journey, he adds. The core business for Midroc Electro is the local operations in 45 locations all over Sweden. In addition, a number of major projects are conducted each year. By way of example, in 2014 the company carried out a significant amount of work in the Swedish nuclear industry, with more than 150 employees onsite during the peak of the project. In this project we brought along employees from virtually all over the coun try, as well as external staff. This type of largescale project is crucial for us. Mikael Vestlund In addition to the geographical divisions, a brand new division called Major Projects Nordic Region (Stora projekt Norden) was initiated, focusing on large-scale projects throughout the Nordic region. We are now gearing up investments in Norway, where we are already established thanks to a large-scale project. In terms of prioritized business segments, the company will focus its efforts on the Security and the Maintenance & Service sectors, where there is great potential for growth. Internal investments will be directed towards customer care training for all staff. It is of strategic importance to us to be an attractive employer and we are actively working on HSEQ matters throughout the company. The safety aspect is particular ly important, and we always conduct risk analyses for each individual project, Vestlund concludes. Jonas Bergmark ANNUAL REVIEW 2014 MIDROC EUROPE 13

16 BUSINESS AREAS EMPLOYEES: 158 SALES: SEK 700 million OFFICES: 4 Midroc Project Management AB Midroc Project Management develops and undertakes projects for the construction and industrial sectors, specializing in environmental issues and new technical solutions, both in Sweden and internationally. Stefan Kronman During 2014, the industry contracting business was phased out, and at the beginning of 2015 the construction contracting business was moved to a separate subsidiary to Midroc Property Development. This means that Midroc Project Management s focus will continue to be on developing its successful consulting business. In recent years, Midroc Project Management has invested heavily in developing both its consulting and contracting operations. We have continuously developed and trimmed our systems, staff and organization, says Stefan Kronman, MD. At the same time, the company has executed several large-scale projects. On the construction side, Midroc Project Management has undertaken projects of a total of 450 apartments that will be completed during In 2014, the company also delivered two wind power stations to one of Sweden s largest onshore wind farms in northern Sweden, which is being built by Nordisk Vindkraft. All that now remains is the commissioning of the plant. Another important project in 2014 was the utility company E.ON s investment in a new district heating plant in Åkersberga, a suburb of Stockholm. Midroc Project Management was involved already at the planning stage as well as in the procurement of construction and machinery contracts. During the year, a major maintenance shutdown project was also completed at the Preemraff Gothenburg refinery, where Midroc Project Management played a key role in the planning and implementation phases. In terms of earnings, 2014 was a very challenging year. A straining economy along with the cost burden adhering to the development of the contracting operations has led to the decision to sell this business to Midroc Property Development. We have developed the contracting business to the limit of our of our capacity, and it is now appropriate for Midroc s property development company to take over. The contracting business is so vast that it now requires a clear and dedicated core focus on development in order to further evolve. In Midroc Property Development, the contracting business will be a natural and inherent part of its core business. The division will be finalized during the second quarter of Midroc Project Management will then focus solely on consulting, and the company will continue to invest in the construction, infrastructure, industrial and energy markets. Our consulting business has shown very good profitability in recent years, and we have secured several new contracts during 2014, Kronman explains looks promising as well. Several A-framework agreements have been signed with large energy market companies such as Fortum Värme, Vattenfall and E.ON. The company also has an A-framework agreement in place with Preem s refineries. We will also invest in an exciting concept for maintenance shutdown projects. We have extensive experience from shutdown projects at refineries, which is applicable to other heavy industry as well. We have developed a unique approach to planning and implementation of complete maintenance shutdowns of refinery operations and steel and mining industries, where we can assume full responsibility in collaboration with our Midroc sister companies. We believe that this concept has very high potential. During 2014, the company s department for Operations development changed its name to HSEQ. The HSEQ team comprises nine members of staff working with business support, health and safety, the environment and quality issues. We see HSEQ as an integral part of not only our own development, but also our customers. We are pioneers in the area and sell specialized services, but we are also dedicated to our own HSEQ work, says Kronman. 14 MIDROC EUROPE ANNUAL REVIE W 2014

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18 BUSINESS AREAS EMPLOYEES: 650 TURNOVER: EUR 63 million ESTABLISHMENTS: 8 MARTYN GREEN Metalock Engineering Group The Metalock Engineering Group provides on-site maintenance and engineering service solutions to a diverse range of industries. With companies present in several countries around the world, Metalock has the ability to respond to both planned and emergency repairs 24/7 all over the world. Metalock Engineering is a mechanical equipment repair group with expertise in maintenance, bespoke modifications and equipment upgrades, with headquarters in Coventry, England. The group provides qualified mechanical installation and maintenance in process and manufacturing industries, as well as on-site machining, repair and thermal spraying. The group is represented in Sweden, England, Germany, France, Saudi Arabia, South Africa, India and the United Arab Emirates. During 2014 the Metalock Engineering Group has been working strategically to boost co-operation between the group companies. Last year companies across the group successfully shared a lot of contracts, leading to an all-time high level of intercompany collaboration kick-started for Metalock UK with a huge steel mill project, which was a major triumph for our intercompany working policy, says Martyn Green, MD Metalock Engineering Group. The project, at Tata Steel s plant in Port Talbot in South Wales, was worth in excess of GBP 1.4 million. With the assistance of engineers from Metalock companies in Sweden and South Africa we managed to complete the job ahead of schedule, while colleagues from Saudi Arabia, the United Arab Emirates and India supported us on other ongoing jobs. Despite tough competition the financial results for the year came in at the expected level for the group as a whole. Green can see a trend where customers are investing in their own on-site machining equipment, looking to manage repair work themselves. Furthermore, a number of smaller competitors have appeared on the market. Metalock Germany and South Africa had a good year in terms of turnover and profitability, which is a strong achievement in the current market. The turnover for both Metalock UK and India was the best ever achieved, with a good profit level. Metalock Sweden made several organizational changes during the year, resulting in a financial loss despite a much improved turnover. These structural organizational changes in Sweden over the past few years have made us more competitive, and moving into 2015 we can start to reap the benefits of that work also saw new premises in Saudi Arabia and a new office in the United Arab Emirates. The Dubai company was set up in early 2015 and is now ready to start doing business after a five month trade stop due to administrational holdbacks in conjunction to the takeover of the joint venture. Overall, these are quite exciting times. The structure of the group is very strong and the outlook for 2015 is very good, Green concludes. 16 MIDROC EUROPE ANNUAL REVIE W 2014

19 BUSINESS AREAS RALPH HALLDIN/TOMASZ GAJEK EMPLOYEES: 220 TURNOVER: SEK 280 million PAINT SHOPS: 19 Alucrom AB Alucrom is Sweden s largest contractor in blasting, anti-corrosion painting and industrial coatings. Operations are conducted from the company s own paint shops in Sweden and Poland, as well as on-site all over Sweden and abroad. Following a few years of recovery from the long recession Alucrom appears headed for good growth, with volumes increasing by 15% in We have enjoyed a high volume of orders and our forecast shows that we will continue to grow by 10% in 2015, which is entirely in line with our strategy, says Ralph Halldin, MD. Over the year, Alucrom has initiated a process that will divide the company s operations into two distinct business areas (contracts and station painting), thereby abandoning the previous regional division. We have now a resource available that will be working exclusively with business development and ensuring that we work in an optimal way in relation to our customers and their specific needs, known as Key Account Management. In 2014, Alucrom also invested heavily in leadership development for project managers and executives. Moreover, the company continuously puts a lot of effort into internal training regarding health and safety issues. This is extremely important work for us particularly when we work on-site, where our staff is often subject to hazardous environments, says Halldin. Alucrom in Poland has had an extremely good year and is in an expansive phase. Two new facilities were opened in At Janów Lubelski, Alucrom has moved from its previous premises and built a brand new paint shop. During the year, the company also opened a brand new fully automated robotic facility with a high capacity for surface treatment of smaller components in Bykow, Wroclaw, in southern Poland. This is where we surface treat smaller components for the automotive industry, which is a completely new business area that we will continue to focus on. It is an important market segment for us as many of our competitors in Poland do not have the size and capacity required for this type of advanced painting, says Tomasz Gajek, MD Alucrom Poland is a year of great opportunities for us, and the plan is to grow sales by an additional 20-30%. We need to fully utilize the capacity of our new paint shops and thus focus on filling our order books. We must also adapt our organizational structure as we move from a small company to a medium-sized one, says Gajek. To fully realize the opportunities in the market segment for the automotive industry, there are already plans to open another paint shop in 2015 that can offer powder coating. Midroc Ställningar AB Scaffolding contractors Midroc Ställningar had a tough start to 2014, but managed to buck the trend and turn a profit. After a comprehensive reorganization program, the company is now equipped to face an exciting 2015 with several major projects under way. EMPLOYEES: 88 TURNOVER: SEK 74 million OFFICES: 3 LEMBIT LAKS In January 2014, Midroc Ställningar was formed after a merger of the contracting company Olofson & Hansson AB and the Midroc company GP Ställningar AB. We had a challenging spring, where the integration of the companies, the reorganization and new recruitments required a lot of time and effort. Furthermore, the merger entailed high non-recurring costs, and the focus on internal affairs resulted in lost sales opportunities. Hence, our mid-year performance was far below our expectations, says Lembit Laks, MD. The scarcity of large industrial projects on the market in 2014 also led to fierce price pressure. However, with the new organization finally in place in the fall, the company managed to reverse the trajectory and turn a profit for the year. We now have a good cost control system in place, and with the new organization fully operational we are well placed to meet The company has two major maintenance projects under way and several large-scale projects in the pipeline. The fact that we are backed by a strong owner and are a trusted partner is critical when it comes to major industrial projects, where it is often difficult to assess the amount of resources required for scaffolding. Health and safety, environmental and quality (HSEQ) issues are high on the agenda for Midroc Ställningar. To further emphasize the company s commitment to these issues, experts have been engaged from Midroc Project Management. We are also looking to recruit a person that will work with HSEQ matters full time for us. ANNUAL REVIEW 2014 MIDROC EUROPE 17

20 BUSINESS AREAS EMPLOYEES: 224 TURNOVER: SEK 387 million OFFICES: 6 Midroc Rodoverken AB Midroc Rodoverken specializes in the design, manufacture and installation of industrial plants, and is the market leader in site-built structures of atmospheric tanks and pressure vessels. The proprietary spiral method is used to build tanks. PÄR HEDENDAHL A tough market combined with an extensive project that required major costs to bring to completion has resulted in a heavy loss for Midroc Rodoverken as a whole in This has affected the entire company, and we have appointed a strategy group that is working hard to prevent similar situations from occurring again. We do have a solid base structure in place to build on, says Pär Hedendahl, Acting MD. Despite the challenging market and substantial development costs, 2014 produced good results on the tank side. During the year the company has proceeded with its international expansion, delivering a number of tanks around Europe. Furthermore, the construction of the Skangass LNG (Liquefied Natural Gas) tank in Lysekil was completed. We see major potential in the LNG tanks segment, which is a very interesting market to which our spiral method is extremely well suited. Over the year, Midroc Rodoverken continued to develop its unique spiral method and has now succeeded in doubling its lifting capacity. This means that we can now con struct tanks of basically any size, enabling us to realize opportunities in the growing market for storage tanks, says Hedendahl also saw the startup of the new subsidiary Midroc Rodoverken AS, based in Tonsberg, Norway. On the piping side Rodoverken delivered a successful maintenance shutdown project at the Preemraff facility in Gothenburg. This was a collaborative venture between the Midroc companies Midroc Rodoverken, Midroc Electro, Midroc Alucrom and Midroc Project Management, in which we all worked together as one company, says Glenn Karlsson, Midroc Rodoverken s maintenance shutdown manager. The company has developed a shutdown concept where the work undertaken by Midroc companies has been integrated into the client Preem s own shutdown organization, with staff on-site already a year ahead of the shutdown to work on preparation and planning. Over a few weeks time, a total of 1,200 work orders were then completed and Midroc Rodoverken had up to 300 employees on-site. We have assumed far greater responsibility for the whole concept, and have been involved from the outset in the budget process for a range of project work, enabling us to make our own decisions concerning limits for time and resources. This is an excellent way of working, as it makes a significant difference if we are involved right from the beginning, says Karlsson. 18 MIDROC EUROPE ANNUAL REVIE W 2014

21 BUSINESS AREAS BAC Corrosion Control Ltd UK based BAC Corrosion Control Ltd (BAC) is a market leader in cathodic protection, corrosion control and pin brazing. The recently acquired company RCSL Corrosion Monitoring Ltd (RCSL), specializing in chemical injection as well as corrosion monitoring and inhibition in the oil, gas and refining industries, is now fully merged into BAC. EMPLOYEES: 34 TURNOVER: SEK 57 million OFFICES: 2 STEVE GORING BAC specializes in projects within the oil, gas and utilities pipeline sectors, as well as steel in concrete, buried structures and other industrial plant protection. During 2014 RCSL was merged with BAC, and is now a profit center within BAC, although RCSL will maintain its separate identity with its own distinct market and products. One of BAC s core products, pin brazing, which is an electrical bonding system for attaching cables to pipelines and rails, had a record year in 2014 helped by the USA market being up by 40% on 2013 sales. On the other hand, the Libyan market, which had begun to pick up during 2013, regressed back to zero during 2014 due to the political situation deteriorating in the spring. In 2015 we will be looking at entering new markets such as Algeria and other parts of Africa and the Middle East, says Steve Goring, MD. Furthermore, our objective is to increase and develop our engineering department, in order to take on more project based sales covering all our market segments from oil and gas to utilities, marine and civil. We have already employed two graduate engineers and will be looking to strengthen this department with corrosion experts. To ensure compliance with statutory legal regulations BAC employs an external consultant for HSEQ matters, and is accredited according to ISO 9001, ISO14001 and OHSAS All external engineering projects have a risk assessment and method statement prepared prior to execution with all site staff being fully HSE trained. ERIK BÄCKLUND EMPLOYEES: 12 SALES: SEK 30 million OFFICES: 3 Midroc Environment Group Midroc Environment Group is a leading provider of environmental remedial services. The subsidiary EkoTec executes advanced soil remediation, cavern decontamination and biological treatment of contaminated soil. The company Airgrinder develops technologies for defragmenting and energy saving drying of materials by means of artificial tornadoes. The market for remediation of soil decon - ta minated with oil has decreased significantly in Sweden over recent years. The SPIMFAB (SPI Miljösaneringsfond AB) program that investigated and, where necessary, decontaminated soil from closed down petrol stations was phased out over the year. This contributed to a lower turnover for EkoTec. We have never had as few inquiries as we had in the first half of The postponement of a major project also contributed to the low turnover and disappointing result. By the end of the year, however, we started to witness a recovery in the market, says Erik Bäcklund, MD looks much more promising than last year, and EkoTec is planning to employ more staff over the year. Another area of focus will be health, safety, environ mental and quality (HSEQ) issues. Several projects require very strict safety specifications. For us, HSEQ matters are a top priority as they are an integral part of our business and the type of operations we run, says Bäcklund. ANNUAL REVIEW 2014 MIDROC EUROPE 19

22 BUSINESS AREAS EMPLOYEES: 19 TURNOVER: SEK 48 million Hackholmssund Konferens AB Hackholmssund is an exclusive conference venue for both Swedish and international business guests. The concept includes servicing one group exclusively in order for guests to be able to focus fully on the conference. LISE-LOTTE SVENSSON The conference industry has been subject to a long period of challenging market conditions was no exception, for which industry associations had predicted a large drop in conference activities. Hackholmssund, however, bucked the trend and grew by 22% year on year. This is a massive gain for us. We have had a very busy year, especially in the final quarter, says Lotta Svensson, MD. The rise in activity was in part due to Midroc Business School sourcing many of its training programmes to Hackholmssund, and a result of several Midroc companies focusing on internal development activities conducted at the venue. Hackholms sund is also becoming increasingly attractive to clients outside of the Midroc group. Svensson expects continued growth in 2015, but at a slower pace. We are an exclusive facility and our customers have high expectations. Our major challenge for 2015 will be to continue reinventing ourselves by always having something extraordinary to offer. Among other things, Hackholmssund will put further emphasis on environmentally friendly activities, nature experiences and organic, sustainable and, preferably, locally produced food. We have a consistently strong environmental profile and manage to combine luxury with a high level of environmental awareness, says Svensson. Västra Hamnen Corporate Finance AB Västra Hamnen Corporate Finance is a finance company that in 2014 has refined its business and now focuses entirely on qualified advisory services and financial transactions for small and medium-sized companies. The ambition is to work selectively and long-term with a limited number of clients in order to ensure the highest quality in all assignments. EMPLOYEES: 6 TURNOVER: SEK 12 million OFFICES: 1 OSCAR AHLGREN 2014 was a year of change and refocus for us. We previously offered services such as securities trading and fund management, but have now chosen to focus solely on corporate finance, says Oscar Ahlgren, MD. The vast amount of regulation surrounding the financial industry is constantly growing, and for a small organization, it is difficult to stay fully updated. We are subject to the same rules as banks. If you want to be the best in all areas it will be very costly. We have there fore decided to limit our services to our area of expertise, which is providing qualified business advice. The strategy has proved successful, and the conditions for refocusing the business have proven favourable over the year. Corporate finance has been a hot topic in 2014, the stock market has performed well and there has been great interest in doing business. In 2014, Västra Hamnen Corporate Finance has secured more and more advanced assignments and executed increasingly bigger transactions. We have been working with more listed companies than before. They are demanding clients, which to us is very satisfying. In terms of earnings the company reached its goals for 2014 and the outlook for 2015 looks bright. 20 MIDROC EUROPE ANNUAL REVIE W 2014