Annual Report Atlas Services Group Holding B.V.

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4 Annual Report Atlas Services Group Holding B.V.

5 Table of contents Performance highlights Message from the Supervisory Board Message from the Board of Directors Our company Financial statements Consolidated balance sheet as at 31 December Consolidated profit-and-loss account for the year ended 31 December Consolidated cash flow statement for the year ended 31 December Consolidated statement of recognised income and expense for the year ended 31 December Notes to the 2013 consolidated financial statements Company balance sheet as at 31 December Company profit-and-loss account for the year ended 31 December Notes to the 2013 company financial statements Other information Independent auditor s report Provisions in the Articles of Association governing the appropriation of profit Proposal for profit appropriation... 59

6 Atlas Professionals Annual Report 2013 // Perfomance highlights Performance highlights Turnover in x , , % Group equity * in x ,097 12, % Number of offices (year-end) in numbers Gross margin in x ,699 26, % Net debt/(net cash) in x ,643 3, % Average number of field staff (FTE) in numbers ,703 1, % EBITDA in x ,983 8, % DSO trade debtors in numbers % Net income in x ,995 6, % Solvency ratio * in % Conversion ratio (EBITDA/ Gross margin) in % Quick ratio % * After goodwill deduction of EUR 11 million in to

7 Atlas Professionals Annual Report 2013 // Perfomance highlights Turnover in x 1000 Gross margin in x 1000 EBITDA in x ,000 30,000 12, , , ,000 90,000 60,000 80, , , , ,225 25,000 20,000 15,000 10,000 16,803 23,568 25,369 26,841 27,699 10,000 8,000 6,000 4,000 6,265 10,993 8,539 8,298 9,983 30,000 5,000 2, Net income in x 1000 Solvency ratio in % Quick ratio 7,000 60% 2.2 6,000 5,000 4,000 3,000 2,000 4,757 6,362 4,927 6,182 5,995 50% 40% 30% 20% 40.5% 43.9% 45.4% 25.9% , % %

8 Atlas Professionals Annual Report 2013 // Message from the Supervisory Board Message from the Supervisory Board Composition of the Board Three members of the current Supervisory Board of Atlas Services Group Holding B.V. were appointed on 30 March Mr. J.N. van Wiechen has been reappointed for a period of four years as at 30 March As at 1 July 2013, Mr. P.E. Wit has been appointed as a fourth member of the Supervisory Board for a period of four years. General The Supervisory Board convened six times in The Board of Directors prepared detailed supporting documents and attended the formal meeting with the Supervisory Board. On two occasions the Supervisory Board met without the presence of the Board of Directors: once to discuss the audit findings with the external auditor and once to evaluate the effectiveness of the Board of Directors and the Supervisory Board itself. Major topics reviewed in 2013 The main subjects discussed and or approved in this year were: Management and financial reports Operating plan and budget Implementation of new IT platform Vision and strategy Mergers and acquisitions Group s governance Remuneration of the Board of Directors Senior management appointments Evaluation of the external auditor Financial structure and bank relationships Culture and checks and balances within the Group The strategy of the company was discussed and reviewed with the Board of Directors and approved by the Supervisory Board. The focus on autonomous growth and strengthening of the balance sheet were fully endorsed. The remuneration of the Board of Directors was reviewed and no changes in remuneration were made in The effectiveness of the Board of Directors and the Supervisory Board itself has been evaluated. The outcome was satisfactory and discussed with the members of the Board of Directors. Communication is open, transparent and constructive. Lessons learned were addressed. In respect of culture and checks and balances, the Supervisory Board fully endorses the steps taken by the Board of Directors to ensure effective risk management and proper ethical behaviour. In 2013 the Supervisory Board met twice with the Group s external auditor to discuss the outcome of the audit of the 2012 financial statements, the 2012 management letter, and the proposed planning and risk analysis for the audit of the 2013 financial statements. Quarterly financial results were discussed with the Board of Directors, with a particular focus on the development of existing businesses and new business initiatives. The latter included the discussion of potential acquisition candidates. In addition to the regular meetings, the Supervisory Board received monthly business updates from the Board of Directors throughout the year primarily concerning, topics regarding overall strategy, organizational changes and compliance focussed on the future of the company. In order to become more acquainted with senior management, the Supervisory Board dedicated its December 2013 meeting to presentations from senior management outlining their businesses and 2014 budgets financial statements The financial statements for the year ending 31 December 2013 were prepared by the Board of Directors and examined by our auditors KPMG Accountants N.V. These statements were discussed by the Supervisory 8

9 Atlas Professionals Annual Report 2013 // Message from the Supervisory Board Board in the presence of the Board of Directors and the external auditor. KPMG issued an unqualified opinion on the 2013 financial statements. We recommend the General Meeting of Shareholders to adopt the 2013 financial statements and to discharge the Board of Directors and the Supervisory Board from all responsibilities for managing the company and all supervisory responsibilities, respectively, for the year Hoofddorp, 11 March 2014 The Supervisory Board R. van Gelder (Chairman) A.P.P.M. van Beurden J.N. van Wiechen P.E. Wit 9

10 Atlas Professionals Annual Report 2013 // Message from the Board of Directors R.G.H.A.M. Neelissen - Managing Director, M.J.M. Burghouwt - Managing Director 10

11 Atlas Professionals Annual Report 2013 // Message from the Board of Directors Message from the Board of Directors Dear Stakeholder, The Atlas Services Group Holding B.V. ( Atlas Professionals or Group ) is a successful company with a strong track record in serving our clients and professionals. We have a growth story we can be proud of. For Atlas Professionals, 2013 was an exciting year in which significant strategic and operational progress was made in a challenging environment. The world is changing for many reasons: the ongoing development of the Internet, the aging of professionals in our traditional markets, and increasing attention being paid to compliance. This puts pressure on margins, squeezing out smaller companies in our industry. The result is an environment with threats, but also with many opportunities. To remain successful and to create a platform for future growth we must renew ourselves. We go beyond recruitment. Every day, our clients entrust us with complex HR-tasks that cross oceans and borders. With over 30 years of experience, we meet client demands by offering a full suite of recruitment, taxation, administration, logistics and legal services including up-to-date compliance advice. Our power lies with recognising the importance of matching the right people to the right positions. By combining the appropriate skills, knowledge and experience, we are able to provide our professionals with the best opportunities and our clients with the best professionals. Atlas Professionals offer a complete range of specialist recruitment and HR services in the Energy and Marine industries. We are here for an Energy and Marine industry that always looks towards the next frontier, and for the professional with the talent and determination to get there. Acquisitions 2013 In January 2013 Atlas Services Group Marine Holding B.V. acquired the remaining 25% of the shares in International Crew Services (ICS) B.V., which is specialised in providing professionals to the dredging, offshore, merchant and renewable industry worldwide. The acquired activities were integrated in 2013 and are currently trading under the name of Atlas Services Group Marine. On March 8, 2013 Atlas Services Group Energy Ltd acquired 100% of the shares of JAL Marine Holdings Ltd, which (in) directly has 100% of the shares of its subsidiary G.O.S.S. Consultants Ltd and G.O.S.S. North Sea Ltd in the United Kingdom. The G.O.S.S. Group has been a provider of specialist consultancy services for the hydrographic, telecommunications and offshore wind farm industries since March These activities were integrated during 2013 into the acquiring entity under the trade name Atlas Services Group. The office has moved to Newquay. The company realised a turnover of EUR 9.3 million in In June 2013 Atlas Services Group B.V. acquired the remaining 12.5% of the shares in South West Surveys (UK) Ltd, which is specialized in supplying highly experienced professionals to the offshore energy and telecommunication industries worldwide, primarily as offshore client representatives and marine project managers. In July 2013 Atlas Services Group Geophysics B.V. acquired the trade, assets and liabilities of the Geomotive Group, with offices in Spain and Cyprus. Geomotive is the world leader for seismic and electromagnetic survey personnel. The newly established Spanish entity responsible for the operational side of the business is based in Vic. The company realised a turnover of EUR 11.1 million in

12 Atlas Professionals Annual Report 2013 // Message from the Board of Directors The financial results The comparison of 2013 and 2012 results, as per internal Group management reporting, is as follows: Financial information EUR x 1, Net turnover 180, % 156, % Cost of sales 152, % 129, % Gross margin 27, % 26, % Wages and salaries 11, % 12, % Depreciation and amortisation % % Other operating costs Total operating expenses Operating profit (EBIT) 6, % 6, % 18, % 19, % 9, % 7, % Net financial result -1, % % Result from ordinairy activities before taxation 8, % 7, % Taxation 1, % 1, % Result on ordinairy activities after taxation Share in results from participating interest 6, % 5, % % 1, % Minority interest % % Net income 5, % 6, % Profit-and-loss account Revenues increased by 15.2% when compared with the previous year. The acquisitions in 2013 were the main drivers for this growth of EUR 23.7 million. In 2013 the Energy business increased for the second year in a row, with revenues of EUR million, an increase of 50.6%. In addition to the newly acquired Geomotive Group and G.O.S.S. Group businesses, the Hydrographic and Engineering businesses were largely responsible for organic growth this year. In certain markets the development of activities was not in line with the expectations due to various reasons, ranging from the filing for bankruptcy of a major client in Brazil, to social unrest in specific regions. Further the growth slowed down due an increasing need to comply with local legislation. This had also a dampening effect on the realised gross margin. In the Marine business, with revenue of EUR 49.5 million, we recorded a decrease of 29% when compared with last year. The continuing uncertainty related to the debt crisis and the consequent recession led to a decline in demand for Merchant and Dredging activities. We saw a decrease in our gross margin percentage in 2013 compared to 2012 primarily due to the increase in the number of consultants working in specific niches. However, the gross margin was also negatively impacted by the costs associated with compliance, which we were not able to charge to customers. Also, customers used more tender procedures for hiring additional staff. Operating costs decreased by EUR 0.6 million (minus 3.1%), leading to an increase in the Group s conversion ratio from 30.9% to 35.6%. This decrease in operating costs is a combination of the started streamlining of our organisation started in 2012 and the newly acquired activities in Mainly due to the additional funding needs of the Group related to the new acquisitions during 2013 combined with a negative exchange rate difference, this led to the Group s 2013 net financial result of EUR 1.2 million. The Group s result from ordinary activities before taxation increased by EUR 0.6 million, reflecting a higher level of turnover combined with a lower gross margin percentage and lower operational costs, but higher funding expenses. In 2013 the Group made a loss of EUR 0.2 million on the sale of one of its activities, whereas in 2012 a profit of EUR 1.0 million was realised. Net income attributable to minority interests represents the share of third party shareholders in the 2013 result of Atlas Services Group Australia Pty Ltd, Cerno AS, South West Surveys (UK) Ltd, and Atlas Services Group Russia B.V. The 2012 result included also the share of third party shareholders of International Crew Services (ICS) B.V. and 7Seas Renewable Energy B.V. whose shares were acquired by Atlas Professionals in As a result of all of the above, the Group s overall 2013 net income decreased by EUR 0.2 million to EUR 6.0 million, equivalent to 3.3% of net turnover (2012: 3.9%). Balance sheet and cash flow statement The Group s solvency ratio decreased from 25.9% in 2012 to 10.2% at year-end 2013 caused by goodwill write-offs or releases related to acquisitions of EUR 11.0 million including deferred payments against equity. 12

13 Atlas Professionals Annual Report 2013 // Message from the Board of Directors The decrease in net income of EUR 0.2 million combined with both an increase in depreciation and in working capital, the Group s cash flow from operations decreased by EUR 0.6 million (to EUR 5.0 million). After taking into account the effect of the acquisitions paid (EUR 11.8 million) and the refinancing of the Group s credit facility (EUR 7.6 million), the net change in cash and cash equivalents amounted to EUR 0.2 million (2012: EUR 1.0 million). Key performance indicators Key performance indicators for the period can be summarised as follows: Market development and outlook Last year we made some strategic choices such as, divesting in sectors where we are not and cannot be first choice for our clients and our professionals. The streamlining of our offices in Holland and Norway and our divestments in non-core activities resulted in lower costs, compared to However, the continuing margin pressure means that we need to further streamline our processes in order to remain competitive. An efficient organisation is a necessary condition to be successful in the long term. Atlas Professionals will be focussing on the disciplines we choose to operate in, the scope of services and the geographies with responsive and efficient delivery teams with the scale and quality to optimally leverage resources. Not only by expanding the services to our Clients, in roles, scope and geography, but also by expanding the services to our professionals. We expect our turnover will continue to grow substantially in 2014 as a result of process standardisation, the optimisation of our processes, and a broadened range of services. Besides this organic growth we expect also a further growth by acquisitions. One important condition will be that the global economic situation does not deteriorate dramatically. EURO x 1, Turnover 180, , , ,071 80,767 % increase 15.2% 25.8% 15.1% 33.8% 83.5% Gross margin 27,699 26,841 25,369 23,568 16,803 % of turnover 15.4% 17.1% 20.4% 21.8% 20.8% EBITDA 9,983 8,298 8,539 10,993 6,265 % of turnover 5.5% 5.3% 6.9% 10.2% 7.8% Net income 5,995 6,182 4,927 6,362 4,757 % of turnover 3.3% 3.9% 4.0% 5.9% 5.9% Conversion ratio % (EBITDA/Gross margin) 36.0% 30.9% 33.7% 46.6% 37.3% Group equity 5,097 12,013 16,277 13,705 9,471 Net cash flow 790 1, ,374 Net debt/ (net cash) 3,643 3,722-3,322-2, DSO trade debtors Solvency ratio % 10.2% 25.9% 45.4% 43.9% 40.5% Number of offices (year-end) Average number of field staff (FTE) 1,703 1,798 1,444 1, Risk management Atlas Professionals aims to ensure that the risks of the Group are identified and managed effectively, and that the operational and financial objectives are met in compliance with local applicable laws and regulations at a reasonable level of assurance. A system of internal controls providing adequate financial reporting is in place. Atlas Professionals is increasingly recognised for its professionalism, consistency and financial discipline. Across the Group we are continuously seeking for opportunities that support growth, while taking controlled risks. A strong balance sheet together with a strong cash flow forms the basis for a healthy business. Our worldwide activities are exposed to varying degrees of risk and uncertainty. Some of these risks may result 13

14 Atlas Professionals Annual Report 2013 // Message from the Board of Directors in material impact at the level of a particular operating company if not identified or effectively managed, but they may not have material impact at Group level. Atlas Professionals is growing worldwide continuously and is becoming less dependent on a limited number of markets. The number of joint ventures was reduced in 2013 by purchasing the outstanding shares in those companies, this in order to reduce the risk that joint ventures may not always act in the best interests of the Group. Taking risks and managing risks is a part of the daily business within our Group. In our endeavour to become first choice in the provision of professionals in specific niche markets, structured risk assessments are integrated in business planning, performance monitoring processes, common processes and system implementations, and acquisitions and integration activities. We are reviewing and adapting these assessments continuously to remain in balance with the growing size of the Group and the accompanying changes in risk profile. The Group s size is increasing through organic growth and through acquisitions. We recognise the need again to express our commitment to maintaining a high quality brand based on entrepreneurship and sound business ethics. Therefore, in December 2013 Atlas Professionals implemented a Code of Conduct ( Code ). This Code includes the Atlas Professionals Values and Principles that apply to all our decisions, thereby ensuring that we make the right ethical choices. The Code will help Atlas Professionals to foster trust within the company among our staff members and other stakeholders. In addition, the Code will help to foster trust in Atlas Professionals from our clients and business partners. Atlas Professionals considers it essential that all our staff employees thoroughly understand and apply the Atlas Professionals Values and Principles as set out in this Code and that they conduct business in accordance with these Values and Principles. This Code will provide staff employees with sufficient guidance so they are able to understand the true meaning of the Values and Principles that define Atlas Professionals, and the underlying philosophy and intention. They must also be able to apply these Values and Principles consistently. At the same time, a Whistleblower Policy has been introduced. We consider it important that its staff members may adequately and safely report any suspected irregularity at Atlas Professionals. We believe, we can only grow and improve as an organisation if we are open and honest with one another. Therefore, staff members are encouraged to report any suspected irregularity. Doing so will help Atlas Professionals to maintain a culture of transparency and integrity. It will also help us to address potential problems before they can negatively affect Atlas Professionals or our valued stakeholders. With the introduction of these policies, we have a company-wide internal governance framework in place to mitigate the risk of fraud. We will address any necessary improvements through an annual assessment of this framework. Should fraud or suspicion of fraud nevertheless occur, we have a procedure in place instructing staff members how to report. We also have procedures in place detailing how we will respond to the report and how we will conduct our investigations. Because of strong growth in many markets, there is an increasing risk of non-compliance to laws and regulations that can lead to fines, claims and reputational damage. The Group aims to reduce this specific risk by working with a set of standards and procedures, and by employing additional tax experts locally, who can train and advise local staff on the job. Atlas Professionals is continuously developing and implementing processes on a Group-wide basis, supported by common IT systems with embedded key control frameworks. This will ensure the integrity of information processing in supporting day-to-day transactions and financial and management reporting. These systems are being rolled out to more operating companies and they are also being implemented within our most recent acquisitions. For financial reporting, the risk management and control systems include clear accounting policies and a preferable standard chart of accounts, all disclosed in an Atlas Professionals accounting manual. Many operating companies have already implemented the common systems and embedded control frameworks, which support common accounting and regular financial reporting in standard forms. Testing of key controls relevant for financial reporting is part of the internal audit approach in operating companies on common 14

15 Atlas Professionals Annual Report 2013 // Message from the Board of Directors systems. The external audit activities provide additional assurance on the financial reporting. Within the scope of the external auditors financial auditing assignment, they also report on internal control issues through their management letters. The internal risk management and control systems provide a reasonable assurance that the financial reporting does not contain any errors of material importance. The Group s main assets are accounts receivable trade and sales to be invoiced. These receivables are spread over hundreds of clients without a high concentration with only a few of them. The Group is continuously monitoring the creditworthiness of these clients and the ageing of amounts outstanding. Despite these internal procedures, relatively significant uncollectible debts cannot be ruled out. If these were to occur, it is not expected that they would have a materially negative impact on the Group s operating result. In 2013 there was one major issue with a client filing for bankruptcy resulting in an impairment of EUR 0.4 million. Atlas Professionals functional and main operating currency is the Euro, but the Group has sizeable parts of its business denominated in British Pounds, US Dollars, Brazilian Reals and Norwegian Kroner. It is Group policy that if turnover is not in Euro, the related cost of sales should be denominated in the same currency in which the turnover is made. In addition to operating foreign exchange risks, there are some translation risks in connection with foreign participations. The company does not hedge (net) foreign currency positions. The Group has hedged its variable (Euribor) interest rate exposure on a specific loan by means of variablefixed interest rate swaps with ING Bank N.V. Financing In 2013 Atlas Professionals made an agreement for a new arrangement with ING Bank N.V. for the funding of its activities. Aside from a revolving credit facility of EUR 10.5 million, the bank has made available a working capital facility of EUR 15.0 million. At the year-end, Atlas had complied with all the ratios and financial covenants as stipulated in the arrangement. In 2013 a new electronic banking system was introduced including a connection to almost all third party banks worldwide. With this connection we have a daily overview of the amounts on those bank accounts, which enables us to run more efficient cash management. Quality, health, safety & environment The Group s QHSE systems are an essential part of day-to-day operations and are key to ensuring consistent quality services to our clients. Atlas aims to prevent accidents and cases of work-related illnesses by providing competent personnel to minimise risk. In order to maintain a safe working environment, employees working at clients sites as well as our own office staff are instructed and required to conduct their duties in a safe and sound manner, in accordance with all applicable rules and regulations. Through our QHSE systems, Atlas Professionals ensures that the workforce are fully trained and competent to carry out all duties as required by its clients, by matching training, experience and competency to the requirements of clients on an individual level. The Group s main operating companies are certified under the following standards: ISO 9001:2008 Quality Management System. Companies have been ISO certified since VCU / SCT Safety Checklist for Temporary and Secondment Agencies. Bureau Veritas Guidance Note NI 563 Standard for Quality Management System of Seafarer Manning Offices. Regulation 1.4 of the Maritime Labour Convention (MLC 2006). In 2013, the Group s, Quality & Health, Safety and Environment Management Systems were improved. We realised compliance with the Consolidated Maritime Labour Convention, recertified to ISO 9001:2008 and VCU/SCT , and achieved Zero lost time accidents. We revitalised our corporate identity, and made good progress with the development and implementation of our new front office system, in which the Quality Assurance Systems will become fully embedded. A start was made in the last quarter of 2013 to review our business processes in depth. The objective of the project was to ensure that we increase our efficiency without losing control. To achieve this, we need a perfect alignment of processes, systems and organisation. Implementation of expected optimisations in processes including the functionality of our new front office system will lead to a full renewal of our existing ISO manual and procedures in

16 Atlas Professionals Annual Report 2013 // Message from the Board of Directors Atlas Professionals has a fully dedicated corporate QHSE manager as well as local QHSE co-ordinators and harmonised QHSE procedures and instructions throughout the organisation. Employees are involved in QHSE at all levels, from Senior Management on down involving all employees, office and field based. QHSE procedures and documentation are readily available on the Group s intranet. In the context of the various QHSE certifications, Group companies are subject to regular internal audits and to audits by independent auditors and clients. The outcome of these audits in 2013 was satisfactory in all cases. Research and development In order to create synergy across the group, it is important to facilitate efficient collaboration between and within offices. In April 2013, we therefore introduced Atlas4Sales as the core system to support our process. We gradually rolled out the new system to a number of offices in 2013 and we shall be implementing this system in the remaining offices in the course of As a result, we now have over 170 employees using the system in their day-to-day operations. Parallel to this roll out, we developed our new website on top of the same platform (SalesForce.com), centered on our recruitment process. These two processes are now fully integrated through this shared platform. In addition to collaboration between employees and offices, we also need to facilitate close relationships with candidates and clients. Both candidates and clients can now be given access to our website, and thus become collaborators in our processes as well. As in 2013, Atlas Professionals will continue to invest in Internet technologies to streamline our internal processes. We will roll out Atlas4Sales to the offices that are not yet using it and continue to enhance its functionality to support other processes as well. Since our focus is on process enablement, a significant portion of our effort will focus on training and coaching people to adopt these new processes. We will not only focus on our internal processes; we will also enhance candidate and client access to our website. This should significantly reduce the flow of and documents (paper as well as electronic). The candidate portal will allow professionals to take ownership of their own data and certificates. The client portal will provide clients with information required to assess compliance. This will not only increase speed and efficiency; it will also provide greater flexibility in the allocation of resources across our offices. Professionals Clients One Atlas Staff Gender balance In 2013 a new law in the Netherlands came into effect stipulating that membership on a board of directors must be divided more or less equally between genders. The conditions of the law will be met if at least 30% of the seats are taken by men and at least 30% by women. Pursuant to Art.391 sub 7, we report both the Supervisory Board and the Board of Directors as at December 31, 2013 that their gender composition does not meet the target set in the law. We aim to discuss the possibilities of implementing this law with the Supervisory Board based on the contents of this law, taking into account both the size of the Board of Directors and the Supervisory Board, including the control structure of the holding. Human resources Given the core activity of the Group, human resources are key to the Group s success. Atlas Professionals encourages personal development of both direct and indirect (staff) personnel and offers benefit packages that are attractive for every market in which the Group is active. Continuous training, both external and onthe-job, is considered to be a key element in keeping people motivated and competitive in the marketplace. As a final note, we wish to thank all employees of Atlas Professionals for their dedicated efforts during the past financial year. Hoofddorp, 11 March 2014 M.J.M. Burghouwt, Managing Director R.G.H.A.M. Neelissen, Managing Director 16