corporate finance strategy

The Fabulous 40 draw hope from innovation

‘Growing against the tide ’

BlueMind Fabulous 40 - Industrial MarketsTranslation of survey published in PT Industrial Management (2012)

second edition

It seems to have become a mantra. In-novation is essential to entrepreneursin the Dutch manufacturing industryto hold on to their excellent position.The most important theme where thefocus of innovation should be placedin the future is sustainability. Accord-ing to various reports, articles andeven television documentaries, themanufacturing industry plays a piv-otal role in the chain between raw ma-terials on the one hand and semifinished or finished end products onthe other hand.

Several recent reports support thistheory. Within a few years Coca-Colaintends to use a Coke bottle produced

entirely out of biomass. The cola giantis currently developing one of the pos-sible production routes via Avantium,a Dutch based company.Another Dutch company, Dyecoo,signed a similar mega-contract withNike. Dyecoo has developed a tech-nology for dyeing textile, based onCO2 instead of water, resulting inhuge watersavings. It is quite possible that these kinds ofcompanies will fill the future editionsof the Fabulous 40. The questionarises, however: are these just precur-sors, or is this trend already visible inthe Dutch manufacturing industry inthe period 2008-2010? The period inwhich the economy was at its worst.

Were innovation and corporate socialresponsibility pushed into the back-ground or are they typically a newpath to recovery?

DistinguishingPerhaps the new Fabulous 40 offers ananswer. The second edition of the listwas again composed by BlueMindCorporate Finance, and appears to bea good indicator for identifying newtrends among the most successfulcompanies. The Fabulous 40 is a list ofthe forty fastest growing industrialcompanies during the period 2008-2010. Managing partner BartJonkman of BlueMind, who wasclosely involved in the composition ofthe list: ‘The years 2008-2010 were adifficult economic period, and yetthese companies have still managed toachieve growth. Notwithstanding, theeffect of the crisis is also clearly visiblein this version of the Fabulous 40. Theaverage growth in this list fell from16,5% to 10,9% compared to previousyear´s list, which covers the period2007-2009. The unpredictability isalso noticeable. There are no less thantwenty new mentions in the list. Andthe twenty survivors have changedtheir ranking significantly. We believethat this is also a result of the crisis, itis a time during which companies areable to distinguish themselves fromtheir competitors.’

Increased comfortMergers and acquisitions are usuallyimportant causes of growth. Yet, in thelist, there are only twelve companieswhich were engaged in M&A activity.

Growing in the most difficult years of the crisis. That is exactly what the forty companies in

the new Fabulous 40 did. The average growth slowed down somewhat, several companies

dropped out of the top forty and manufacturers of medical systems are strongly represented.

Societal and global developments seem to characterize the composition of the list.

Can innovation and sustainability pull the industry out of the crisis?

Text Wim Raaijen Photos Peter Venema, Siemens, Kaak Group

This number is almost equal to lastyears’ edition of the list. It is remark-able that, in the top three, acquisitionhas resulted in an enormous increasein turnover in two of the cases. And number 1 would have been anentirely different company if themerger between Daalderop and Ithohad not led to an entirely new legalentity. BlueMind advisor MarleenVermeer: ‘From 2010, the newly cre-ated group, Tree House Group, pub-lishes its figures under a new entitywhich makes it impossible to compareit to the figures in the period 2007-

2009, thereforee it is impossible to in-clude this company in the list. I feelthat it is important to mention thismerger, so that the list can be placedin the right perspective. The list onlyincludes companies that have contin-ued to operate in the same financialentity.’ Tree House Group deserves evenmore attention, because the growth ofthis company is also largely fuelled byinnovation and sustainability. Thecompany provides central heating sys-

tems, equipment for warm water andventilation systems and is charac-terised by providing a wide range ofproducts, which are aimed at improv-ing comfort and reducing energy con-sumption. And success is foundprecisely in this combination: more ef-ficient and therefore sustainable prod-ucts that don’t just provide lowerenergy costs, but also increased com-fort.

Micro cogenerationWould Tree House Group have beenincluded, the number 1 and number 2

of the Fabulous 40 wouldhave come from the samesegment: climate technol-ogy. The official and newnumber 1, the Remehagroup, also operating underthe name BDR Thermea, isan internationally leadingmanufacturer and distribu-

tor of innovative heating systems andhot water systems. Market leader insix important European countries:Great-Britain, France, Spain, theNetherlands and Italy and with an im-portant position on the emergingmarkets in Eastern Europe, Turkey,Russia, North America and China.BDR Thermea has branches in morethan seven countries.

Remeha’s top 1 position can especiallybe attributed to the acquisition of its

British rival Baxi. With 4.200 employ-ees and an annual turnover in excessof 1,2 billion Euro, Baxi was the fourthlargest manufacturer of heating sys-tems in Europe. But it was more thanjust this acquisition that made Remeha stronger. The Remeha Groupis constantly focussing on innovationand knows how to firmly maintaintheir success. In 2011, in advance ofnext year’s list, they achieved a com-parable turnover to that of 2010.A strong asset of the company is microcogeneration. This involves heatingboilers not only providing heat, butalso generating electricity. As a resultthe total efficiency of these boilers ismuch higher than that of existing ap-pliances. These boilers are a perfectexample of the trend towards moredecentralised generation of electricityand the emergence of so-called smartgrids. These are electricity networksthat respond actively to electricityproduction of both large power sta-tions and various types of small unitssuch as windmills, solar panels andmicro cogeneration. In addition tobeing electricity consumers, house-holds would now also be able to be-come suppliers.

Number 1 Remeha seesgreat potential for microcogeneration

Number 1 Remeha Group is constantly aimed at innovating andknows how to continue its successes.

Innovation pays offIn the Dutch market, Remeha was thefirst to introduce a so-called HRe(High efficiency boilers) in 2010under the name eVita. The device isequipped with a Stirling engine and alinear generator. The boiler producesone kilowatt of electricity in additionto its thermal power of 24 kilowatt anda hot water production capacity of 28kilowatts. According to boiler manu-facturers, about one million HRe boil-ers will have been installed in Dutchhouseholds alone by 2020. In 2030 thiswill have increased to four million in-stalled units. A similar success is ex-pected in many other countries wherethe Remeha group is operating.Whether this growth will actually berealised, remains conjecture. Thereare a lot of influences to account for,especially in the field of energy sys-tems, for example in combinationwith solar cells and urban wind tur-bines. Nevertheless this sub-industryis certainly optimistic.

With this convincing number 1 of theFabulous 40 list, and the remarkableperformance of the Tree HouseGroup, it can justly be said that inno-

vation pays off, especially in combina-tion with sustainability. Many othercompanies in the Fabulous 40 alsohave innovation and sustainability asone of their highest priorities. Read-ing the mission of most companies onthe internet, words like innovation, re-sponsibility, sustainability and effi-ciency appear numerous times.

‘Energiewende’That is also the case with the fastestclimber, Frames (from spot 29 to 6)and Heerema Fabrication Group,steadfast in the top 10. Suprising at

first sight, since both players havestrong positions as suppliers of the oiland gas industry and offshore. Gener-ally, sustainability is associated withthat we want to get rid of fossil fuels.Yet the expertise of both parties is es-pecially welcome with the productionof sustainable energy. The site of Heerema in Zwijndrechtrecently started the construction of agiant “outlet at sea”. In two years, theoutlet, the size of three buildings,should be erected nearly a hundredkilometres off the German North Seacoast and be ready to connect wind-mills. The 98 by 42 meter giant, with aheight of 27 meter, is designed to con-vert the alternating current producedat sea by the windmills, into directcurrent. Direct current can easier betransfered from the wind parkthrough almost one hundred kilome-tre of submarine cable to land, withthe least power loss. On land, the di-rect current is converted back into al-ternating current. The HelWin-station can transfer 690megawatt of clean energy to land. Thisis the third outlet at sea that Heeremais building for Tennet, in cooperationwith Siemens, providing the necessaryelectrical engineering. The secondoutlet, the DolWin-alpha-station lo-cated on the site in Zwijndrecht is al-most finished already. Soon the largeThialf crane ship will transport the

Heerema is currently constructing a third outlet at sea. In two years it should be finished and installed to connect windmills.

Managing partner Bart Jonkman

Managing partner Jan Willem Jonkman

Advisor Marleen Vermeer

1 9 Remeha / BDR Thermea Klimaattechniek 1,744.9 851.1 629.1 66.54% ✔ Intermediate Capital Group plc

2 - Prodrive Electronics 71.5 41.2 36.8 39.32%

3 5 Wassenburg Medical Devices Medical Devices 26.9 25.7 15.8 30.61% ✔

4 23 Agmi Group Traffic 19.0 14.8 13.7 17.87% ✔ ABN Amro participaties

5 - GL Group Technical components 27.5 14.8 20.1 17.00%

6 29 Frames Oil & Gas systems 113.9 89.3 83.9 16.50% Parcom

7 - Thomassen Compression Pressure equipment 141.7 94.0 105.0 16.18%

8 - MPS Systems Print systems 29.6 21.9 22.9 13.69% PPM Oost

9 7 Heerema Fabrication group Offshore 313.0 327.6 242.6 13.59%

10 - AWL-Techniek Machinery 40.8 22.9 31.9 13.21%

11 33 Solid Semecs Electronics 44.0 32.5 34.4 13.11% JHB Venture Capital/02 Capital

12 28 Fontijne Grotnes Machinery 39.9 33.1 31.3 12.79%

13 31 Nedcard Semiconductor 23.0 17.7 18.3 12.21% Several investors

14 - DORC* Medical Devices 55.0 21.1 44.3 11.46% Van Lanschot / Friesland Bank

15 19 Harting-Bank Medical Devices 117.4 110.5 96.5 10.34% ✔ NPM Capital

16 36 Medical Measurement Systems Medical Devices 14.6 13.3 12.0 10.18%

17 - Kaak Group F&D machinery 106.0 85.9 87.9 9.80%

18 1 Shipyard De Hoop Scheepsbouw 103.3 121.1 86.4 9.37%

19 - Smeva Klimaattechniek 41.3 39.5 34.5 9.29% ✔

20 24 Intergas Klimaattechniek 74.3 66.1 62.5 9.04%

21 - Inalfa Roof Systems Automotive 413.6 283.7 350.2 8.67%

22 - Gatso Traffic 20.5 20.8 17.4 8.54%

23 - Technivorm-Moccamaster F&D machinery 26.8 22.8 23.2 7.62%

24 37 MPS Meat Processing Systems F&D machinery 97.9 71.9 85.7 6.90% ✔ Barclays Private Equity

25 6 Logisticon Water Treatment Water Treatment 15.1 23.5 13.2 6.71%

26 27 Livit Medical Devices 50.6 48.0 44.5 6.57% ✔ Hal Holding

27 14 Plasticon Storage & transport syst. 90.7 89.7 79.9 6.50% ✔ AAC Capital

28 - Enraf Nonius Medical Devices 32.6 31.5 29.7 4.88%

29 20 Huisman Construction equipment 337.5 284.8 307.4 4.77% ✔ Informal investor

30 - Hyva Construction equipment 485.9 312.0 448.5 4.09% ✔ Unitas Capital

31 - Polyplastic Plastics 33.1 25.8 30.8 3.68%

32 8 Bakker Sliedrecht Electronics 94.4 110.7 87.9 3.62%

33 - Amsterdam Metallized Products Packaging 10.6 9.5 9.9 3.56% Standard Investments

34 - Optelec Medical Devices 37.7 37.4 36.1 2.13% NPM Capital

35 - Trespa Building products 206.3 183.6 200.0 1.55% Hal Holding

36 - Holterman Staal Staalbouw 98.9 76.6 96.1 1.48%

37 - Koninklijke Niestern Sander Scheepsbouw 50.8 56.4 49.3 1.45%

38 10 VeKa Group Scheepsbouw 245.1 250.5 240.9 0.86% ✔

39 30 Heesen yachts Scheepsbouw 122.9 115.9 121.0 0.79% Topaz Investment International

40 - NTS Group Machinery components 90.2 62.5 89.3 0.46% ✔

Rank Rank Company Sector Total Total Total CAGR M&A Private2012 2011 revenues revenues revenues (percent activi- equity

2010 2009 2008 growth) tiesin mln.€ in mln.€ in mln.€

BlueMind Fabulous 40 - Industrial Markets

Selection criteria for compiling the above list:• Headquarters in the Netherlands• Active in the production of "engineered products" (high level of design,

continuous innovation and a high degree of precision required)• At least € 10 million total revenues (including possible changes in work in

progress) in one of the three measured years• Majority stake owned by Dutch shareholders or foreign private equity firms• Not listed• Figures for all three years must be known and registered by June 1, 2012

The companies in this list are active in the production of engineered products.The sector includes manufacturers of components, automation and producersof finished products. What these companies have in common is the businessmodel: using technical engineered products and innovative technology toprovide added value in the supply chain. Should there be confusion, discussionas to inclusion in the list or suggestions for improvement, please contactmarleen.vermeer@bluemind.nl or +31 (0)73 623 87 74.

station over the sea and hoist it on toa 66 meter high platform. ‘To con-struct the new platform, about 450people are necessary in Zwijndrechtand Vlissingen and a substantialamount of engineers and planners‘,Tino Vinkesteijn, commercial directorof Heerema recently stated in Trouw.This is how the Dutch manufacturing

industry gets a boost from the Ger-man Energiewende. Globally, one ofthe biggest movements in the area ofsustainability.

ApproachInnovation is certainly the maindriver of the number two and highestnew entry, Prodrive as well. The com-

pany didn’t need a merger or acquisi-tion for its considerable growth. Pro-drive produces electronics for variousmarkets such as medical systems,media, industry, automotive, energyand more. Especially its approach pro-vides the company lots of credit withclients. Marleen Vermeer from Blue-Mind: ‘Prodrive involves the clientfrom the beginning of the designingprocess, where they are able to keepthe costs well under control and workefficiently. Because clients had to beeven more careful with costs in thecrisis years, Prodrive was able to growwith this approach. And the companycontinued to grow well in 2011. Lastyear it grew to a turnover of 86 millioneuro and the company also anticipatesa strong growth for this year and fu-ture years.’

Patient liftsThe number three in the Fabulous 40,Wassenburg, is a characteristic exam-ple of another trend. Companies that

Ranking by IndustryMedical Devices

Shipbuilding

Electronics

F&D Machinery

Climate technology

Other Machinery

Marine/Offshore

Traffic

Construction equipment

Steel construction

Other

Edition 2012

Edition 2011

10 2 3 4 5 6 7 8 9 10

supply medical equipment arestrongly represented in the list. Thisyear there are seven listings comparedto four in the previous edition. BartJonkman from BlueMind: ‘We thinkthis is caused by, amongst others, arapidly growing market which thecompanies operate in, mainly due tothe ageing of the population. In thismarket we also see relatively many ac-quisitions. This is partly due to thecomplexity and high degree of regula-tion of the market. The market is ex-pected to continuously innovate andbring forth the latest technology,therefore obtaining a leading marketposition is quite capital intensive. Theproduction assets and products mustmeet the highest requirements. Tokeep up with this continuous flow ofinnovation and regulation, manycompanies join forces.’ Three of theseven listed companies in this sectorhave grown through a merger or ac-quisition in the period 2008-2010. The same applies for number three ofthe Fabulous 40: Wassenburg MedicalDevices, a family-owned companyfrom Dodewaard. It is a specialisedcompany in the field of innovative dis-infection equipment for endoscopes.Wassenburg has grown rapidly on theinternational market over the pastyears with new branches in Belgium,Ireland, Vietnam and cooperation inamongst others Germany.Another interesting company in themedical systems field, is HartingBank. In this edition of the Fabulous40 the company climbs up from the19th to the 15th position. The com-pany develops and supplies care andrehabilitation equipment, such aswheelchairs, patient lifts, walkers,nursing beds and more. Harting-Bankhas existed for more than 170 yearsand is therefore the oldest supplier ofmedical equipment in the Nether-lands. With the current ageing of so-ciety, a stable traditional company istherefore changing into a significantlygrowing company with variousbranches throughout the world.

ChinaAccording to Vermeer there are a fewthings that stand out in the new Fabu-lous 40. ‘Shipbuilding is represented alittle less and Shipyard De Hoop haslost their number 1 position.’ More-over she remarks, ’the number ofcompanies owned by private equityhas remained stable.’ Seventeen com-panies in the list, including the num-ber 1, Remeha. ‘It is particularly striking that InalfaRoof Systems, the number 18, in themeasured period, was owned by in-vestor ABN AMRO Equity Invest-ments. In April 2011 the manufacturerof sunroof for cars was acquired by theChinese company BHAP.’ In numberthree of PT this year chairman MichelSchabos was very positive about thecooperation. ‘We continued to oper-ate rather independently. However, itrequires substantial investments in so-

cial contacts with the Chinese. But Ican certainly recommend workingwith the Chinese to everyone.’ This acquisition opens the world’slargest automotive market to Inalfa.‘Our biggest challenge is to keep upwith our growth.’ BHAP and Inalfa areworking together in setting up newproduction locations in China. Cur-rently, two new factories are opera-tional. Inalfa already had a productionlocation in Yantai and a R&D centrein Shanghai, which was expanded thisyear. Perhaps a prospective number 1for next year or the year thereafter hasnow risen.

The increase in number of sup-

pliers of machinery for the food

and beverage industry in the list

is remarkable, from a single lis-

ting last year, to three in this edi-

tion. Holland exports many food

products, produced from raw

materials. A strong position in

the food processing machinery is

the result. This market also de-

pends on continuous innovation

in the area of efficiency and hygiene requirements. That strengthens the demand for new equip-

ment or upgrading existing equipment.

One of the leading companies in this sector is the Kaak Group. Taking the 17th position on the list,

Kaak is the highest ranked food processing machinery manufacturer. With over a hundred years of

experience, the Kaak Group offers bakeries around the world the necessary equipment to produce

a wide range of bread products. Kaak Group furnish a complete production line for bakeries, but in-

terested parties can also contact the company for a fully equipped bakery “from silo to crate”.

The company is constantly searching for new opportunities and new technologies to optimally serve

the bakery industry. Early 2009 it founded its subsidiary DrieM Dough Sheeting Technology in

’s-Hertogenbosch. This company focuses on the design, construction and installation of production

lines for sheets of dough. These machines can be built for general bakeries, but also for more artis-

tic bakeries in particular. With special technology, it is possible to produce a wide variety of sheets

of dough, with various types of dough. Thanks to their innovative attitude, the Kaak Group continues

to grow. In 2011 the company also performed great with a comparable turnover to that of 2010.

Artistic bakers

’the number of companiesowned by private equityhas remained stable.’

corporate finance strategy

Fabulous 40 Industrial Markets second edition

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