overview 2011 final

Overview 2011Overview 2011 Text Page A4 2012 06 14

2007 2008 2009 2010 2011

Results, in millions of eurosNet sales 15,245 11,293 11,921 16,008 17,362Income from operations 776 809 912 977 911Net income 569 1,382 541 603 782 Amortisation, depreciationand depletion 368 364 421 517 493Income taxes 246 252 267 305 327Dividend 183 205 216 227 238 Cash flows, in millions ofeuros

Operational cash flow 1,034 1,053 1,179 1,149 1,354Investment cash flow ( 488) 192 ( 1,686) ( 1,010) ( 1,666)Financing cash flow ( 244) ( 63) ( 310) ( 574) 370 Financial position, in millions of eurosShareholders’ equity 2,153 3,299 3,169 3,530 3,513Equity of the Group 2,367 3,516 3,473 3,895 3,784Total assets 7,085 7,851 8,583 9,273 10,174 Ratio informationNet income as a percentage ofshareholders’ equity

26% 42% 17% 17% 22%

Equity of the Group as apercentage of total assets

33% 45% 40% 42% 37%

Current assets in relation toshort-term liabilities

1.19 1.82 1.34 1.17 1.01

Employees, at December 31Nominal number 40,000 38,100 45,800 50,300 54,700 Amounts per shareNet income 78.51 190.65 74.51 83.10 107.76Dividend 25.25 28.25 29.75 31.25 32.75

Overview 2011 Text Page A4 2012 06 14

Five year summary

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In a year full of economic uncertainty, SHV continued its focus on attracting and retaininggood people whilst optimising and growing its existing activities. Optimisation of thebusinesses is done to improve long-term profitability and cash generation, with the objectiveof creating a robust basis for difficult economic times ahead. Growth is pursued organically byattracting new customers, and through acquisitions. With the acquisition of the remaining 25%of shares in Mammoet from the Van Seumeren family, SHV became the sole owner ofMammoet.

During 2011, the Supervisory Board of Directors held five meetings and was in regularcontact with the Executive Board. The Supervisory Board reviewed the progress in talentdevelopment and the compensation and benefits policies as part of human resourcesmanagement. Attention was given to succession management in order to ensure continuity inthe human skills and values that make SHV a good company. The Supervisory Board alsodiscussed sustainability and the health and safety performance of SHV's businesses.

The Supervisory Board regularly reviews the strategy of each of SHV's activities. During thecourse of the year, the Executive Board submitted specific proposals for investments to theSupervisory Board for its approval, such as the acquisition of North American companiesLewisGoetz and Industrial Controls by ERIKS; the investments in the development of theGolden Eagle and Stella oil fields by Dyas; the investments of NPM Capital in Kiwa, BelgischeDistributiedienst and healthcare and the divestment of Independer by NPM. At each meeting,the Executive Board informed the Supervisory Board about the financial situation of SHV andits businesses, the performance of each business and the main developments in theirmarkets. The Supervisory Board is informed in writing of the financial performance of thecompany on a monthly basis as well as immediately in the case of any special mattersconcerning the company.

The 2011 financial statements, drawn up by the Executive Board of Directors at and for theyear ended December 31, 2011, have been examined by the auditors and have been found tobe in order. The Supervisory Board of Directors proposes that:

– the financial statements be adopted as presented herewith;– the Executive Board of Directors be discharged of further responsibility in respect of the

management of the company during 2011, and the Supervisory Board of Directors inrespect of the supervision thereof;

– the distribution of income and the manner of dividend distribution, as proposed by theExecutive Board of Directors and approved by the Supervisory Board of Directors, beaccepted.

At a meeting in which the auditors were present, the Supervisory Board discussed thefindings of the annual audit and risk management review as well as compliance and controls.The Supervisory Board also evaluated its own functioning. No material issues were raised. InSeptember, the Supervisory Board visited Ipragaz and cylinder manufacturer Evas in Turkey.Management presentations gave deeper insight into the strategy and business of SHV Energyabout business opportunities and challenges.


Message from the Supervisory Board ofDirectors

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At the end of the General Meeting of Shareholders to be held on April 20, 2012, the term ofMr H.H.F. Wijffels will expire. He is available for re-election for a period of two years.

The Supervisory Board proposes to appoint Mrs P. Mars-Wright to the Supervisory Board.Mrs Mars-Wright has a sound international business background in the Mars company as wellas considerable experience as Chairman of the Mars Board of Directors. In addition, as sheherself comes from a renowned family company, Mrs Mars-Wright has a keen eye for thespecial elements of a family-owned company.

Mr F.E. Bruneau resigned from the Executive Board of Directors for personal reasons in April2011. Mr J.P.H. Broeders, who was appointed on April 8, 2011 to become a member of theSHV Executive Board of Directors, sadly passed away in May 2011. It was envisaged thatMr Broeders would succeed Mr P.J. Kennedy as Chairman of the Executive Board ofDirectors in due course. His personality and enthusiasm to be part of SHV will remain withus.

The Executive Board of Directors of SHV will continue as is, comprising ofMessrs P.J. Kennedy, S.R. Nanninga and J.J. de Rooij. Mr Kennedy will continue asChairman, for which SHV is very grateful.

The Supervisory Board would like to sincerely thank the SHV Executive Board and theemployees in all of the SHV activities for their dedication and achievements in thischallenging year just passed.

March 2012

A.M. Fentener van Vlissingen

Chairman

GeneralSHV is a privately owned company with a long-term perspective on business. Sustainableperformance and good growth prospects are the key drivers in the company’s investmentstrategy. Great emphasis is placed on people, safety, customer satisfaction, innovation andsustainability.

The overall result for SHV for 2011 was good. While most of SHV's businesses performedeither ahead of or in line with expectations, there remains nevertheless a number ofbusinesses where improvement in performance continues to be a challenge. Sales grew by8% in 2011 compared with 2010, while operating income declined by just over 7% in the sameperiod. Net income increased year-on-year by 30%. At constant exchange rates, sales grewby 11% and income from operations declined by 5% year-on-year respectively, while underthe same assumption, net income increased by 31% year-on-year. The overall result for theyear benefited from a very good performance at NPM Capital.

In 2011, trust and confidence were once again severely tested in global financial markets.Liquidity in the financial system is under much strain. This is creating a vicious circle in whichthe ultimate casualty is the prospect for economic growth. In many instances, banks are notconfident to even lend to each other. The survival of the euro is being openly questioned.Sovereign debt is a major issue not only in Europe but also, importantly, in the USA. Theability of nation-states to raise credit has come into question. Yet, although the world isincreasingly interlinked economically, there is, broadly speaking, a two-speed world economicorder at present. The newly emerged economies, especially in Asia and in South America,have been delivering rates of growth which the traditional economic powerhouses -the USAand Europe have no hope of matching in the short to medium term. Even in these new high-performing economies, however, legitimate fears are being expressed about the sustainabilityof recent growth trends and the dangers of inflation. It is also pertinent to note that some ofthe better performing economies have been heavily dependent on demand from China for allsorts of commodities. A slowdown in Chinese economic growth would have a devastatingimpact on several commodities-dependent exporting countries across the world.

A cornerstone of SHV's investment strategy has been diversification in both activities andgeographical regions. This strategy has served the company well and acts as a safeguardagainst overexposure to any single activity or market. There are factors other than the levelsof economic activity that also impact SHV's performance. Amongst others, these includeweather conditions, competitive pressures, the political and social environment, and currencyand commodity price volatility. Again, being diversified is a big advantage in balancing out thepositive and negative impacts arising from these variables. SHV is committed to thesustainable growth of those activities in which it is presently active. This is to be achievedthrough both organic growth and the pursuit of acquisitions that improve economies of scale.In addition to safeguarding the future of the company in the long term, the ultimate goal of thisstrategy is to enable the company to provide value-enhancing products and services to agrowing and satisfied customer base. Not surprisingly, consumers in today's economiccircumstances are both worried and confused, as they fear for their jobs, their savings andtheir pensions. These fears are not necessarily evenly spread throughout all economies atpresent, but they are prevalent in many of SHV's most important markets and thus do have animpact on the company's performance. SHV is committed both as a matter of principle and


Year overview

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through its actions to be close to its customers and to serve their needs as well aspossible.

In the context of the current economic environment, it would be stating the obvious to say thateach of SHV's business activities is operating in a highly competitive environment. Theclassic laws of supply and demand apply in all cases. Management creativity is called for toimprove productivity and efficiency even further. New challenges and opportunities that needattention are also emerging from developments in areas such as e-commerce and socialmedia. Cost control is a focal point in all businesses. During the year, a number of majorreorganisation programmes were in progress. These reorganisations take on many forms,ranging from changes and improvements to management structures to the application of cost-saving technologies and outsourcing or bringing back in-house various functions andprocesses. All such measures are designed to offer a better deal to the company's customerswhile also enhancing business performance.

Given both the cultural heritage and the widespread nature of SHV's activities and markets,there has been a long-established preference that the company employs a decentralisedmanagement structure. It is based on shared values, trust and accountability. SHV'sCorporate Philosophy, which is actively promoted and is well known throughout the company,is very clear in the definition of these terms. SHV Holdings is close to the individualbusinesses and takes responsibility for staying abreast of market developments and trends aswell as ensuring adherence to corporate governance policies and guidelines. Management atthe holdings level also participates in discussions with local management regarding thechoice of strategic directions for the individual businesses. This contributes to ensuring thedelivery of a sustainable performance consistent with the long-term interests of thecompany.

A particularly important role of the holdings operation is to ensure that current and futuretalent is sufficient to meet the requirements of the business. For some time already, SHV hasbeen significantly increasing its focus on the recruitment and development of people who canlead the company towards continuing growth into the future. Clear divisions of responsibilityfor the delivery of talent have been established and communicated throughout all levels of thecompany. The ultimate goal is to fill four out of five managerial positions arising in thebusinesses with homegrown talent. This is considered critical to preserving the values andculture of the company which, when combined with the desired managerial competences, isbelieved to be at the heart of securing the long-term prosperity of the company in anincreasingly transparent and demanding competitive environment.

The variables affecting SHV's businesses are many. While dominated, of course, by theaforementioned ongoing economic fears, many other factors also play an important role inperformance. The impact of political decisions, which recently in many cases are theconsequence of sovereign debt concerns, is growing. New and additional taxation measuresare arising in many markets, especially throughout Europe. These have affected a number ofSHV's businesses in 2011. Of particular note in this regard was the unexpected 12% increasein the UK's supplementary tax charge on oil and gas production, which obviously had animpact on the performance of Dyas. Nevertheless, Dyas still delivered a good result in theyear. Also, populist-driven governmental involvement in business is a growing feature evident

particularly in South America and in some Asian countries. A constant concern for SHV is thatall laws and regulations are equitably enforced so as to maintain a level playing field in whichto compete. Unfortunately, this is often not the case, putting added pressure on businessessuch as SHV that rigorously comply with local legislation. These realities of political behaviourand intervention also have an impact on the investment strategy, including plans forgeographic expansion. There are several major markets that, while appearing to be attractivefor investment, are nevertheless upon detailed investigation shown to possess characteristicsthat do not meet reasonably acceptable risk criteria. This is true for many businesses. Inthese markets, price controls, complex subsidy and permitting arrangements, and non-conforming competitive practices are found in varying degrees of prevalence.

An issue with which SHV has been dealing for some time, and which has been described inprevious annual reports, is that of compliance with competition law. As a matter of goodcorporate governance and social responsibility, SHV is unreservedly committed to fullcompliance -at a minimum -with all international and local legislation in all spheres of itsbusiness. Policies and guidelines are developed at the corporate level in respect of all suchissues. The necessary time and investment are committed in communicating with and trainingmanagement and employees at the business unit level on such matters.

Volatility in commodity prices and weather conditions are recurring features affecting manybusinesses in the world, not only those of SHV. As an example, raw material pricing in thefood chain has become severely unstable in recent times. In the case of SHV, this hassignificant consequences for businesses such as Makro and also for some participations inNPM Capital's portfolio. The market does not quickly or easily absorb sudden price increases.While astute buying can benefit margins, SHV strictly resists the temptation to speculate insuch circumstances. LPG cost prices have also been at near-record highs during 2011 andwere 7% higher on an annual average basis than in the previous year. Extremely mildweather in the winter in Western and Central Europe as well as Turkey adversely affectedvolumes in a business that is significantly dependent on space heating. Of course, coldweather has the opposite effect when it occurs.

As mentioned, NPM Capital enjoyed a very good year with a number of successful exits. Atthe same time, SHV is more inclined to judge NPM on the quality and success of itsacquisition strategy and in this respect, too, the company is judged to have had a goodperformance in 2011.

Mammoet and ERIKS are the two most recent operational activities to become part of theSHV family of long-term business activities. Mammoet performed satisfactorily in 2011.Mammoet, a projects business that operates globally, continues to be a market leader in itssector, securing a major share of new and maintenance work. It has performed well in amarket cycle in which new, more price-sensitive projects are replacing a number of completedprojects or older pre-crisis projects nearing completion. ERIKS had a good year with salesand profitibility significantly ahead of last year, driven by organic growth and aquisition.

Overall, SHV continued to invest heavily in its businesses in 2011. The focus remains, ofcourse, on the quality and timing of investments. In the current economic climate, cash hasbecome even more important. As part of normal business activity, all of the company's


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businesses are reviewing their management of working capital and investment cash flow inthe light of clearly defined cash-generating objectives. As can be seen, the companymaintains a strong, well-financed balance sheet. This is also a key corporate governanceprinciple at the individual business level.

Total investment cash flow in 2011 amounted to € 1,666 million, compared with € 1,010million in the previous year. This sum is allocated among the different activities of thecompany in accordance with established criteria, and is split between both replacement andgrowth investments. Investment strategy also takes account of risk mitigation, with attentionbeing paid not only to allocation among activities but also to geographical and currencydiversification.

Health, safety and sustainabilityAchieving economies of scale is a key criterion for growth investments. Obviously, SHV isalso pursuing the strategy of entering new markets with existing activities as well as investingin businesses adjacent to existing activities, as will be outlined later in this report.

Not inconsistent with the strategy of being an investor for the long term are decisions tooccasionally divest individual segments or businesses belonging to an overall activity. SHV isalways cautious in taking such decisions and only does so after thorough analysis and whensuch actions are deemed to be self-evidently warranted by those directly involved and by theorganisation as a whole.

One of SHV's guiding principles, embodied in the Corporate Philosophy for over two decades,is the wish to grow further for the benefit of all its stakeholders, including its shareholders, thepeople in the company and the well-being of the society in which the company operates. SHVregards it as its primary role in society to perform its own activities in a responsible, safe andprofessional way, whilst properly interacting with the society of which the company is a part.SHV strives to live up to its values and to conduct its business within a strict code of ethicalpractices and guidelines.

All of SHV's businesses are continuously striving to improve the health, safety andenvironment culture in their respective organisations. This is a fundamental issue, reflectingthe fact that safety is the company's number one priority. Policies and guidelines exist forthese areas in each business. These policies and guidelines comply at a minimum with therelevant laws in each jurisdiction in which SHV operates and, in fact, often do exceed localrequirements. Sufficient resources, in terms of people, equipment and installations, areensured and made available for the work in hand. Particular focus is placed on training anddevelopment, and on health and safety education in general, for all relevant personnel. Inmany cases educational programmes are accompanied by both written and oral examinationsat appropriate intervals to ensure that recipients have understood the principles andtechniques being taught. Full reporting and recording are present in each business and areavailable for inspection at all times by the appropriate authorities and partner clients. Healthand safety performance is evaluated against set targets, lessons learned are shared acrossdivisions, and actions to improve performance are agreed and monitored by seniormanagement.

The focus on the safety culture is best illustrated by management's efforts to create a positiveenvironment for the reporting of near miss incidents. These are closely monitored in allbusinesses to expose activities and areas that are most likely to have the potential toincrease risks to the health and safety of employees, customers and others with whom thereis contact of any nature, or to cause environmental damage. The reporting of near misses,and the potential consequences should they have materialised into an incident, lay thefoundation for further detailed reporting of actual incidents. This reporting includes lost timeinjuries and their frequency, incidents requiring medical treatment, and so on. In some casesthe businesses also calculate and record the standard cost of different categories ofincidents.

The greatest care possible is taken to limit incidents and to protect the environment from anyharmful consequences from the company's business activities.

Many initiatives are taken by SHV's businesses that are aligned with the concept ofsustainable development: meeting the needs of the present without compromising the abilityof future generations to meet their own needs. In 2011, SHV took steps to promote thesharing of these initiatives among its businesses. These initiatives focus on deliveringinnovative products and services that enable customers to fulfil their environmentalobjectives, reduce energy and water consumption, and recycle waste better. Many of theseactions are integral to improving the efficiency of the businesses and are not necessarilysustainability actions alone.

ERIKS supplies products that help to reduce energy consumption, generate lower emissionand contribute to greater safety for customers. SHV Energy offers hybrid energy solutions toits customers. In addition, it has installed equipment that reduces power consumption in fillingplants and introduced customer telemetry to minimise the kilometres driven per ton of LPGdelivered. Makro has taken energy-saving measures through investment in lighting andefficient refrigeration equipment and also gives practical advice and assistance to smallretailers. Fuel efficiency is a key factor in the investment of equipment in Mammoet. NPMCapital has defined sustainability as one of the key business drivers for its participations,which is actively being pursued. In addition, the companies of SHV support communitiesclosely related to their activities -often with the direct involvement of the company's ownpeople -with the aim of improving the quality of life for underprivileged children and adults.More details on SHV's initiatives in this regard, which are part of the "Start from the Heart"project, can be found in SHV's publication "The Heart of SHV" and on the global websitewww.shv.nl.

SHV EnergySHV is the world's leading distributor and marketer of LPG. The business is active throughoutEurope and Asia and also has a substantial presence in Brazil. SHV Energy is the operationalmanagement company overseeing the individual LPG business units which collectively reportto it. SHV Energy is the successor to SHV Gas and, while predominantly an LPG business, ithas also taken the first steps in broadening its scope to other energies. The activities of TheClean Energy Company have been integrated in SHV Energy. In almost all cases, eachbusiness unit operates under its own unique brand identity, reflecting the fact that


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SHV Energy is the product of an acquisition strategy conducted over several decades.Acquisitions in individual markets have been gradually consolidated and usually operateunder a single brand name. Many of SHV Energy's brands are household names in theirrespective markets. During 2011, the price that SHV paid for LPG further increased and wasamongst the highest on record. This trend in product price coincided with what have beensubstantially milder-thannormal weather conditions in all of the company's key markets. As aconsequence of this, combined with the difficult economic environment, volumes were quiteseverely negatively affected. Cost curtailments have helped the business but could notcompletely offset the negative impact on performance from the aforementioned setbacks inproduct cost, weather and volumes. Investments remain substantial in the sector, mostly interms of replacement of cylinders and tanks and maintenance commitments but also insupport of organic growth. A number of smaller acquisition investments were made in existingmarkets. Legislation, energy policy and competitive pressures are factors that have also beensignificantly impacting the LPG sector. A number of markets are either quite mature or insome degree of decline owing to a combination of competition -mostly from the extension ofthe natural gas grid -and legislation and consumer sentiment in favour of energyconservation. SHV Energy fully acknowledges and supports the principle of increasingefficiency in energy consumption.

The company supports its customers in this respect through its focus on developing itscompetency in energy advisorship. The company's individual sales and technical supportteams undergo frequent training and development programmes to enable them to proposeenergy solutions that can combine LPG with renewable and other energy and conservationcomponents to existing and prospective customers. The businesses actively promote thesecombinations through their marketing efforts.

SHV Energy is also active in lobbying at both the European Commission and nationalgovernment levels for recognition of LPG as one of the most environmentally friendlyconventional fuels on the market. LPG has the features to contribute positively to solutions toclimate change and to address air quality concerns. When compared with other liquid andsolid fossil fuels, LPG emits lower levels of CO2, NOx and black carbon, and such like.

LPG is a particularly versatile and mobile fuel, with virtually unlimited applications in theresidential, leisure, commercial, industrial, agricultural and automotive sectors. It is to befound at all levels of society and in both rural and urban settings. However, its greatest scopefor growth exists beyond the natural gas grid in rural areas. With this reality as the guidingprinciple, the individual businesses actively lobby to promote LPG as a solution to ruralenergy requirements. LPG is increasingly attractive as an alternative to oil in terms of both itsprice and environmental impact.

The global supply of LPG is increasing and hence product availability is very secure. Thisincrease in supply is, in part, a by-product of the increased LNG production that has sprungup in several parts of the world. It is expected that this increase in supply will eventuallyimprove the price competitiveness of LPG further versus competing fuels.

SHV Energy has one central LPG procurement organisation called SHV Gas Supply & RiskManagement which is based in Paris, with affiliates in Singapore and Vienna. It is responsible


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for global product supply contracts with major traders and producers of LPG as well as all theassociated supply logistics. It performs this function not only on behalf of SHV-owned LPGdistribution businesses but also for a number of third-party LPG companies in different partsof the world. The company also advises on and executes risk management on behalf of SHV'sLPG distribution businesses and manages a number of third-party terminaling contracts. SHVGas Supply & Risk Management is an essential contributor to the overall success of SHVEnergy.

In addition to pursuing operational excellence and organic growth in the existing businesses,the strategy of SHV Energy is to facilitate knowledge exchange among the different businessunits and to remain vigilant for acquisition opportunities. There are many markets that havebeen investigated but which do not meet acceptable investment risk criteria. The typicalconstraining factors relate to illegal practices, government interference in pricing, andnonenforcement of the relevant legislation. The result of this is that, for the most part,investment has been in existing markets.

As mentioned earlier in this report, divestments of parts of activities are also made from timeto time. This follows a careful review of the performance and prospects for both the marketsand businesses concerned. SHV is happy with a mix of both smaller and larger business unitsthat meet with established criteria for ongoing support and development. SHV Energy'sbusiness in Romania has been a victim of both the economic recession and, moresignificantly, the rise in illegal practices in the market. The business has becomeunsustainable and the decision was taken to liquidate it. The impact of the liquidation isincluded in the 2011 accounts.

Supergasbras in Brazil is SHV Energy's single largest entity in terms of volume and is also avery significant contributor to its overall financial performance. Inflationary pressures onpersonnel and other costs, together with a very competitive environment especially in thecylinder segment of the business which makes up 75% of total volume, led to a satisfactorybut lower-than-anticipated performance in 2011. New customer creation continued to besuccessfully pursued in the strongly growing Brazilian economy. Brazil is rapidly becomingself-sufficient in energy, with LPG supply also increasing in the country. A constant concern inBrazil is the quality and consistency of the enforcement of legislation prohibiting illegal outletsfrom distributing cylinder LPG. While the authorities are clearly aware of this illegal practice,existing legislation has not been consistently enforced throughout the country.Notwithstanding some issues that still need to be overcome both in the business itself and inthe market as a whole, Supergasbras is anticipated to contribute significantly to the overallperformance of the company in the future.

Calor Gas in Great Britain had a very good year. The business mix is good and its marketshare is sound, which is testimony to the commercial strategy that has been pursued bymanagement. This has ensured that there is no overdependence on any single marketsegment, thus lessening to some degree the vulnerability of the business to external factors.However, it should still be noted that in some important segments like domestic centralheating, the very mild weather conditions did lead to substantially lower volumes. The pooreconomic situation in Britain, with a sharp rise in business liquidations and insolvencies, hasbeen a concern. Calor also continues to take measures to improve productivity and efficiency.

The company -along with many British businesses -continues to face a pension deficit, whichall the parties involved are committed to resolving through additional funding over the longerterm. This is in line with the nature of the problem itself, which by definition is one thatmatures over an extended time horizon.

Calor Ireland also performed very well in an extremely difficult economic environment.Volumes have, of course, been negatively impacted by both weather and economicconditions. However, the Irish operation continues to perform well in new customer creationand also in the introduction of organisational efficiencies mainly through adopting digitallogistics technologies to reduce distribution costs. The LPG industry in Ireland has beenfacing a growing problem with illegal cylinder filling mainly -but not only -in the border areabetween the Republic and Northern Ireland. This is a serious and dangerous infringement ofproperty rights for which Calor is seeking remedies through the judicial system.

Primagaz in France was in the middle of a major restructuring programme in 2011 aimed atstreamlining the organisation to improve performance in a very mature and complex market.Primagaz has been successful in negotiating private label cylinder gas contracts with severalimportant hypermarket and supermarket chains. Mild weather has had a serious impact onvolumes, the effect of which could not be recovered in margins and cost reductions. Nuclear-generated electricity has been a major competitor for all other energy suppliers in the Frenchmarket. It is hoped that new legislation governing emissions and focusing on mandatoryenergy conservation in new buildings will create a more level playing field between electricityand other fuels. Primagaz, along with most other SHV Energy businesses, is also activelypromoting LPG as a clean and economical substitute for household, commercial andindustrial fuel oil users. Early in 2011, Primagaz acquired Actigaz, a company operating in thenorthwest of France that distributes circa 10,000 metric tonnes per annum in both cylindersand commercial bulk. New taxation measures are being proposed and introduced by theFrench government to alleviate the country's sovereign debt deficit is a further burden for thebusiness.

Also in France, a major restructuring programme was carried out at Liotard, a cylinder andtank manufacturing and maintenance company.

Similar to Primagaz in France and some other business units, Liquigas in Italy also endured aserious decline in volumes owing to high average temperatures and poor economicconditions. The company, which is the largest LPG distributor in the Italian market, also tookstrict credit control measures in the light of increasing difficulties in collecting cash, andwithdrew from supplying a significant number of non-contributing large dealers in the south ofthe country. The Italian market is mature and highly competitive, with over 500 suppliers intotal. There is widespread illegal filling of cylinders and tanks. Liquigas has had success incombating this with the introduction of telemetry and automatic metering systems, whichensures security of supply to the customer. The company, whose performance is underpressure, continues to implement the necessary cost curtailments and reorganisationmeasures to cope with changing market conditions.


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Liquigas acquired API in the first half of 2011, a company in the central region of Italymarketing circa 10,000 metric tonnes per annum. Here too, taxation is increasing as theItalian government introduced a 4% additional corporate income tax on oil and gascompanies.

Management in Italy oversees the development of the business in the Balkans and Malta.Slovenia once again performed well. The other businesses in the Balkans are at an earlystage of development in markets still dominated by state-controlled companies.

Overall performance in both Ipragaz and Bizimgaz in Turkey was good in 2011. Autogas salesnow represent 73% of total LPG volumes in the Turkish market. There are 3 million LPG-powered vehicles on the road, supplemented by 25,000 conversions per annum. Ipragaz hasstrengthened greatly its long-term presence in this growing segment of the LPG marketthrough its acquisition of Exengas in 2010. The Exengas network of autogas retail outlets isbeing developed and expanded. Autogas margins, which came under pressure in recentyears due to changes in legislation governing term contracts in fuel retail outlets and newplayers entering the market, showed signs of modest improvement in the course of 2011.Unlike the autogas market, the cylinder and bulk LPG market segments are in decline owingto high taxation and, more importantly, the rapid spread of the natural gas network into thebigger cities. Ipragaz is the second largest distributor active in the 520,000 metric tonnes perannum LNG market segment.

Primagas in Germany, where SHV is in a management partnership with the Aretz group, andGaspol in Poland both performed very well. Primagas is solely focusing on building a well-balanced mix of bulk business segments, having divested its non-performing cylinderbusiness in 2010. Renewable energy has a bigger presence in Germany than in virtually allother markets. Like all of SHV Energy's other operations, Primagas offers hybrid energysolutions combining LPG with renewable energy elements such as solar thermal waterheating. Poland was one of the fastest growing economies in Europe in 2011 with 4% GDPgrowth. The commercial strategy is focused on improving market share, developing a healthymix of market segments and offering full energy solutions through a well-trained salesorganisation.

Scandinavia and the Benelux performed below expectations. Severe competitive pressure oncylinder margins seriously impacted performance in Scandinavia. At the same time, theScandinavian organisation has been making progress in new and innovative bulk businesscreation, as have the Benelux and several of SHV Energy's operations in all parts of theworld. This was not enough, however, to offset lower cylinder volumes, margin erosion andmild weather conditions. Governments throughout Scandinavia are actively promotingrenewable and clean energies. The Scandinavian team is focusing on the potential of LPG asa replacement for oil. This is also being pursued in the Benelux.

The business in Asia performed well as a whole in 2011. The result in China improvedconsiderably over that of the previous year following the withdrawal from poor performingmarket segments and the focus on direct delivery to the commercial sector, amongst others.A new IT system went live, which facilitated a review of the cost base and a corporate andorganisational restructuring of SHV's affiliates in China. The enforcement of legislation


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preventing illegal product blending and the underfilling of cylinders remains limited anduneven. SHV continues to actively lobby for law enforcement that will eliminate suchpractices.

Despite strong competition from the state-owned oil companies, Super Gas in India continuesto perform very well in the industrial and commercial non-subsidised sectors. There isrenewed hope that the subsidy on domestic cylinder gas granted exclusively on LPGdistributed through the state oil companies will be reduced or perhaps even abolished. SuperGas is prepared for such a moment but is also well acquainted with previous disappointmentsin this regard. The Caltex acquisition in 2010 has proven to be very successful.

Liquigaz in the Philippines is primarily an importer and wholesaler of products to thefragmented network of independent cylinder fillers that characterise the local market. Thecompany is doing well in a market that is consolidating though still unorganised, and wherelegislative enforcement is weak. Nevertheless, SHV is hopeful of further growth and greaterorder in the market in the coming years. Liquigaz is focusing on increasing the share of directsales to commercial and industrial bulk customers in its total sales mix.

The business in Pakistan has performed very well in 2011. The good performance isattributable to rigorous cost control, successful selling in the bulk gas sector and also, tosome extent, tight gas supply.

Alongside LPG, SHV Energy is also exploring possibilities in other energy segments, inparticular renewable energies. The renewable energy sector has, to a large extent, beendriven on the back of subsidy programmes which have been seriously reduced or evenwithdrawn in the last year or so. The renewable energy industry, including SHV'sparticipations in Balcas and ECB, therefore had a difficult year.

Balcas, in which SHV has a 45% participation, operates a sawmilling, wood pellet productionand Combined Heat & Power (CHP) plant in Northern Ireland as well as a combined CHP andpellet production plant in Scotland. Management has been successful in overall operationalterms and in getting the Scottish business up and running to capacity. Margins in the pelletsbusiness were below expectations. A considerable proportion of production is sold throughwholesale channels. In order to improve margins, a higher share of the pellets value chainmust be captured. This requires the development of the retail side of the business. ECB inGermany is addressing the same issue. ECB, in which SHV has a 70% participation, is anetwork of energy hubs, producing pellets and green electricity, with also an energycontracting component. Some parts of that business are performing satisfactorily, but overallit is loss making. Start-up costs of the energy hubs are high. There is also oversupply in themarket, which has not been helped by the mild weather conditions. The focus in bothorganisations is on developing and implementing commercial strategies while controllingcosts to the greatest extent possible without compromising on quality or safety. At bothBalcas and ECB, the pipeline of potential projects is developing well, though the lead time forprojects to be executed can be up to 18 months. In Austria, the biomass heat contractingprojects were merged into the LPG activity and performed satisfactorily in 2011.

DyasFor almost 50 years, Dyas has been actively engaged in exploration, development andproduction joint ventures in the oil and gas sector. Dyas acts as a non-operator and has builta solid reputation as a reliable partner. The company is a joint venture partner in more than25 producing oil and gas fields. Nearly all of Dyas's interests, also in exploration licenses, arein onshore and offshore projects in the Netherlands and the UK.

The Dyas strategy is to maintain and, where possible, grow its reserves base through bothacquisitions and an active exploration drilling programme. Acquisitions are usually the resultof negotiated deals and auctions, preferably concluded in the project’s pre-developmentstage.

Oil and gas prices slowly rose from 2009 to early 2011 and were relatively stable in the laterpart of the year. Despite the volatility in equity markets and concerns over deterioratingmacroeconomic fundamentals, Brent oil prices have stayed largely within a range of USD 105and USD 115 per barrel. The average 2011 Brent oil price was USD 111 per barrel. Thecorresponding prices for 2009 were a range of USD 40 to USD 79 with an average of USD 62per barrel. In 2010, the price was between USD 68 and USD 94 per barrel with an average ofUSD 80. Average Dutch gas prices, which are based on a complex formula of energy productprices and currency rates, increased by 35% year-on-year while average UK gas pricesincreased by 41%.

In 2011, results were below expectations, with some of Dyas's key oil and gas fieldsperforming below target. Dyas’s oil and gas production volumes for 2011 were 7.7 millionbarrels of oil equivalent, some 16% below what was originally planned, as a result ofunscheduled maintenance, principally in the Buzzard field. Production volumes in the yearwere equivalent to additional reserves attributable to new field developments.

Lower production volumes were offset by higher prices, leading to pre-tax income beingahead of expectations. Income after tax declined, however, because of an adverse taxmeasure introduced in March 2011 in the UK, whereby the Supplementary Tax Charge on oiland gas production was increased from 20% to 32%. This effectively means an average taxrate of 59. 3% on all of Dyas's UK 2011 earnings, a sharp rise from the 50% in 2010. At thesame time, this increase in the tax rate resulted in a substantial increase in the then existingdeferred tax provision which has been included in the 2011 results.

Dyas made no acquisitions during 2011. However, substantial investments were made indevelopment and drilling programmes. A major part of the 2011 investment programme wasspent on the Athena field, offshore UK, in which Dyas has a 47.5% share and which isexpected to come on stream in 2012. Final investment decisions were taken on the GoldenEagle oil development, the West Franklin gas development and the Stella/Harrier oil and gasdevelopment -all offshore UK. Overall, exploration drilling results have been disappointingwith the exception of the appraisal of the Cladhan field offshore UK, where drilling resultsdemonstrated commercial viability. Dyas sold its 8% participation in the producing UK Broomfield to operator Enquest. Furthermore, Dyas divested its 10% exploration commitment in theDutch F6-4 well to Smart Energy Solutions.


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In 2011, Dyas further strengthened its organisation in the financial and operational areas.

MakroMakro is a cash and carry wholesaler offering food and non-food products to professionalcustomers. The mission of Makro is to be the preferred partner for hotels, restaurants andcatering (horeca) customers and small retailers. In addition, Makro is a proven supplier to awide range of institutions in the service sector, including schools, hospitals and offices. Makroaccomplishes this mission by offering a wide and deep assortment of dry food and fresh foodproducts tailored to the demands of these customers, and a supporting assortment of non-food products, all at competitive prices. Makro stores range from 4,000 m2 to 12,000 m2. Atthe end of 2011, the total number of stores in the Makro organisation amounted to 232compared with 216 at the end of the previous year, of which 206 Makro stores (2010: 196).The business recorded healthy sales growth in euros of 8% year-on-year.

The strategy of Makro is to become an increasingly customer-centric organisation withoperational excellence both in store operations and in logistics supported by state-of-the-artsupply chains and a tailor-made IT infrastructure. Makro also highly values mutually beneficialsupplier relations. The company has been expanding to improve its density in existingmarkets and has been growing rapidly in the newly entered Peruvian market.

Own-brand and private label development is a priority. New initiatives are being undertaken,including trials with e-commerce and other customer-related services, to strengthen thebusiness in a rapidly changing competitive environment.

The market environment in Argentina continues to be challenging, with high inflation andstrong competition. Governmental involvement is increasing with respect to price controls andimport restrictions. New foreign exchange control measures were introduced towards the endof 2011, which limit the possibility of obtaining foreign currency. Import restrictions aredamaging non-food sales. The official inflation rate is 10%, while unofficial inflation isestimated to be well above 20%. Personnel costs continued to increase rapidly. Thegovernment has been very supportive of union demands for wage increases, which are morethan double the official inflation rate. All of these developments remain a point of deepconcern. Despite the increasingly difficult business environment and inflationary impact oncosts, Makro Argentina performed reasonably well in 2011. Like-for-like sales growth wasabove estimated inflation and in line with the average growth in the market. A new concept ofrecruiting and branding a network of small retailers under Makro's M&K own-brand label waslaunched. This is similar to a concept already introduced by Tarquino, a two-store operation inCordoba that Makro acquired in 2009. The idea of this concept is that retailers will comecloser to Makro and sell Makro’s own-brand products in their stores. A new Makro store wasopened in Posadas in December 2011. The majority of newly opened Makro stores in recentyears are performing ahead of expectations.

Due to a changing market environment, including price controls and unhealthy competitivepractices, the results of Basualdo, a wholesaler of cleaning and perfumery products, weredisappointing. Tarquino continued to perform in accordance with expectations. At the end of2011, SHV's presence in Argentina included 20 Makro stores, 2 Tarquino and 4 Basualdostores. Further expansion will be executed in 2012.


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The Brazilian food and non-food market continued to grow, supported by continuing thoughslowing economic growth and a favourable change in demographics with an increase in thepercentage of the middle class in the country’s total population. Competition remains strong,with all players continuing to invest in new stores, logistics and technology. In a continuationof the measures initiated in 2009 and 2010, Makro Brazil's commercial strategy continued toevolve. The focus on assortment review, pricing strategy and strengthening supplier relationsis aimed at profitable sales growth. Some large volume sales have been sacrificed. Despitethis change, like-for-like sales growth was in line with inflation. Many organisational andpersonnel changes have been made, and a substantially new, experienced and stable team isin place in the business. The structure of the commercial department has also been reviewedand greatly strengthened. New partnerships were set up with main suppliers, and commercialconditions were renegotiated. In July, the new cross-dock facility with DHL went intooperation. It is showing good results, with more and more suppliers entering the facility. Manyactions continue to take place to improve working capital. It is understood that the results ofall of these initiatives will take some time. This extends to the performance of many recentlyopened stores, which had gotten off to a slow start. The total number of stores at the end of2011 was 76.

In Colombia, competition is increasing with the arrival of new players and formats. MakroColombia continued its strategy of attracting bigger numbers of horeca and food retailercustomers. It extended its marketing activities and customer development programme. Creditcard payments have begun to be accepted. Helped by these initiatives, like-for-like salesgrowth continued to be higher than inflation and above the market average for the retailsector. The overall results of Makro Colombia were in line with expectations once allowanceis made for the effect of higher bank taxes introduced at the beginning of 2011. In 2011, astore was opened in Tunja, bringing the total number of stores to 16. Makro Colombia willfocus on growing in the key cities of Bogota and Medellin.

The environment in Venezuela is characterised by increased political uncertainty, furtherscarcity of basic products, price controls and limited availability of foreign currency. Despitethese deteriorating circumstances, Makro Venezuela continued to deliver an exceptionalperformance. During the year, the enforcement of price controls was strengthened by theauthorities. A new law on price control was introduced in November, which will furtherincrease official intervention in business. The lack of availability of foreign currency restrictedimports, affecting performance. In 2011, a new store was opened, bringing the total number ofstores to 35. Mikro, the new format of small retail stores, continued to perform belowexpectations. Five new Mikro stores were opened to test a new operational model, bringingthe number of Mikro stores to 18. The focus is on improving the operations and logistics ofthese stores, and new stores will be closer to high-density residential areas. Makro Perucontinued its expansion according to plan and performed well. The results continue todevelop ahead of expectations. The organisation is strengthening as it grows, with a well-structured operation, improved conditions with suppliers and focused customer development.Three new stores were opened during 2011, bringing the total at the end of the year to seven,of which five are located in Lima. Several sites have been identified, and further storeopenings will follow in 2012.


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In 2011, Makro Thailand successfully continued its strategy of striving to become the first-choice supplier of registered food professionals. The year started off with a number ofpositively contributing external factors including the recovery of the economy and favourableagricultural product prices. Internally, major projects that have recently been developed havecontributed to an excellent result in the year despite the flooding disaster in the last quarter.The main focus is on continuously improving customer service, for which a customer intimacyproject was launched. Customer loyalty is also being strengthened by having a full horecaassortment and addressing customers' needs with specific offers based on an analysis oftheir buying pattern.

Makro Thailand was one of the few distributors able to continue operating during the floodingdisaster -said to be the worst in 50 years -that hit the country in the last quarter of the year.This is mainly attributable to having had a business continuity plan in place that was executedin a timely manner. The flooding caused much suffering and immense damage to property.Makro Thailand's major distribution centre was flooded. Supply shortages occurred in keycommodities such as rice, eggs, drinking water, canned food and dairy products. Themanagement team of Makro Thailand took proactive action by temporarily moving the headoffice and using back-up distribution centres, thus successfully managing to keep all storesopen with a normal level of stocks. It was a major achievement for the team. Health andsafety procedures were fully embedded in the Makro Thailand operation.

Talent management, succession planning and training continued to be focus points in humanresources development. In 2011, four new stores were opened, bringing the total number to52. The first Food Services store, a new format that will be fully dedicated to serving horecacustomers, was opened in January 2012. A second Siam Frozen store, exclusively devoted tooffering a frozen food assortment, was opened in December.

2011 was a positive year for Siam Food Services in Thailand. The company achieved itshighest sales result since the foundation of the business. Despite a declining trend in the lastquarter due to the flooding, the result for 2011 showed significant growth. An increasingnumber of full-service restaurants, catering and institutional customers were serviced. SiamFood Services is ready to handle larger volumes of transactions in an efficient mannerfollowing the full implementation of the Warehouse Management and Electronic OrderingSystem.

MammoetFor Mammoet, 2011 was an eventful year. The 45th anniversary of the company was markedby the completion and demonstration of its new super-size cranes, the capacity and agility ofwhich underscore the leading position of Mammoet in the heavy lifting and transport industry.Mammoet's own staff was responsible for the concept, design, engineering and managementof the construction of these cranes. This exemplifies the entrepreneurial and innovative spiritof the company. It is this spirit, combined with the experience in the company and the breadthand depth of its asset base, that allows Mammoet to provide effective, innovative and high-quality solutions to its customers. Mammoet has grown rapidly in recent years, mainlyorganically but also through a number of strategic acquisitions.


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The company has the resources and skills to continue building solid working relations withmany of the best known companies in the petrochemical, power, offshore, civil engineering,mining and marine sectors.

All shares of Mammoet are now held by SHV following the decision of the Van Seumerenfamily to discontinue their involvement with the company at the end of the second quarter.This marks the end of an era in which different members of the Van Seumeren family played acrucial role in the impressive development of the company over the past 45 years. SHV isthankful to the Van Seumeren family for their tremendous contribution to and activeinvolvement in leading the business over many decades. The change in shareholder structuresubsequently resulted in a new composition of the board of management. All new boardmembers have been appointed from within Mammoet's own ranks, which demonstrates thestrength of the organisation and the importance of robust succession planning. Theorganisational structure of the company has been adjusted, with more responsibility beingdelegated to the regions in order to increase transprency and accountability.

Mammoet operates in a cyclical industry. The faltering recovery of the economy, aggravatedby the uncertainty surrounding the euro and the impact of the Fukushima nuclear disaster,have led to volatility in industrial investments across all of the industry segments in whichMammoet operates. Pressure on margins was experienced in all activities, owing to tighteningdemand and increased competition. Cost reviews and changes in the organisational structurewere able to offset part of this pressure.

Despite the difficult market circumstances, Mammoet was able to deliver a satisfactoryperformance in the year and, as importantly, was able to commence work on some sizeableprojects in Europe, Australia and Canada. In addition, several large maintenance projectscontributed to the result, as did a range of important smaller projects across the differentregions. The result was negatively affected by losses incurred on some projects. Mammoetcontinues to sustain a well-filled order book. During 2011, the company managed to secureseveral large projects, has tapped into new markets and was able to sign long-termframework agreements with some of its major customers. One exceptional project was asalvage operation on the river Rhine, where Mammoet Maritime successfully removed thesunken tanker "Waldorf".

The personnel numbers have grown over the past year in order to meet the staffingrequirements of large projects in Canada and Australia and as a result of two acquisitionsmade in 2011. One acquisition was that of Barthel Schwimmkrane GmbH, which is fullyintegrated into Mammoet Maritime and is performing satisfactorily. The other acquisition wasthe purchase of the remaining 50% of the shares in KR Wind. This company had adisappointing performance in 2011, mainly due to unanticipated structural market changes inthe wind energy sector. The company will be fully integrated and will continue under the nameMammoet Wind, operating a business model adapted to current market requirements.

Many clients see Mammoet as the preferred contractor, given its safety and quality record.Although the company’s safety performance further improved in 2011, management at alllevels in the organisation is paying undiminished attention to safety and environmental


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awareness. Mammoet intends to further develop a proactive safety culture to meet itsobjective

of securing the well-being of all persons working at or with Mammoet. The development ofemployees will continue to take a prominent place on the agenda. For the future success ofthe company, the availability of an international pool of well-trained and experienced people isdeemed essential. Management is committed to ensuring the development of talent in thecompany and to optimising performance through a combination of selective growth,innovative solutions and cost control.

ERIKSERIKS is an international industrial service provider offering a wide range of high-qualitymechanical engineering components and associated technical and logistics services. Thecompany's passion for technology enables it to contribute positively to its customers'operations. The activities are concentrated around flow technology (valves, instrumentation,industrial hoses and gaskets), sealing technology, machined industrial plastics, powertransmission (hydraulics, pneumatics, bearings and electro-mechanical power transmission)and a selection of tools and maintenance products.

ERIKS is a supplier to two industrial segments: Original Equipment Manufacturers (OEM) andMaintenance Repair and Overhaul (MRO). The focus in the OEM market is on co-engineeringand the sharing of product and application know-how with customers. Econosto is animportant part of the ERIKS Group and is active in providing technical solutions for projects insectors for selective markets such as oil and gas, chemicals, petrochemicals, powergeneration and shipbuilding and repair.

2011 was a successful year for ERIKS, is which the company further strengthened its positionin its key existing markets in Europe and also expanded geographically as part of its growthstrategy. ERIKS has taken major steps in strengthening its position in the USA in the latterpart of 2011. The company acquired Industrial Controls and LewisGoetz.

Industrial Controls, with its head office in New Jersey, is a leading US aftermarket distributorof process controls and automated industrial valves. Industrial Controls serves as a "one-stopshop" for customers in 22 states in the (mid)eastern part of the USA, adjacent to the area thatRawson, acquired by ERIKS in 2010, already serves. With over 150,000 items available fromstock, Industrial Controls is well advanced in centralised marketing initiatives with saleschannels (including e-business), catalogues and call centres. LewisGoetz is a North Americanmarket leader in high-quality hoses, gaskets and a range of belting products with 70 branchesthroughout the USA and 16 in Canada. LewisGoetz, headquartered in Pittsburgh, hascustomising facilities in place for the three product groups in all key regional branches.LewisGoetz also has its own factory for the production of hoses near Toronto, Canada. BothIndustrial Controls and LewisGoetz have a record of solid organic growth in combination witha proven buy-and-build strategy, in line with the overall strategy of ERIKS.

Smaller add-on acquisitions were also made by the existing activities in the USA during 2011.California Seal and Fastener was acquired by the ERIKS Seals and Plastics business.Quantum Supply in Edmonton, Canada, a distributor of high-quality valves, was acquired by


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the Houston-based Newdell company, a valve manufacturing and distribution company whichERIKS had acquired in 2010.

During the year, ERIKS also continued to build its market position in the Netherlands,Belgium, Germany and Denmark. Hertel Industrial Sealings was acquired in November andoffers a complete range of gasket services, including engineering, production and assistancein installation. The company will be integrated into ERIKS' activities in Belgium, theNetherlands and Germany. The ERIKS business in Germany made a number of smalleracquisitions, including some assets and commercial activities of AMG Pesch in Cologne.AMG is a manufacturer of valve actuators whilst Pesch distributes valves, fittings andmeasuring devices to a broad range of industries. AMG Pesch in turn acquired the activitiesof Sodeco Armaturen. ERIKS Germany also added the company Erich Haagen nearHamburg, which is active in bearing technology, power transmissions and sealingtechnology.

ERIKS further enhanced its position in Denmark by acquiring Dansk Ventil Center in Vejle,selling low-and high-pressure valves mainly to the OEM market in Denmark. Together withthe earlier acquisition of Valtor Offshore, Dansk Ventil Center is now the second ERIKScompany in Denmark active in the flow technology market.

The overall level of economic activity in individual markets is critical to the performance ofERIKS’ business. Most of the markets served by ERIKS in 2011 were relatively stable.Organic growth, which had resumed in the second half of 2010, continued at a good level in2011. Sales at the project-related business in the maritime, oil and gas and power generationindustries lagged behind. This was anticipated since this business is late cyclical.International sanctions and disturbances in several Middle East countries negatively impactedrevenues in all segments of ERIKS’ business in that region.

While project-business-related revenue declined, this was more than offset by growth in theOEM and MRO sectors. In addition to improvements in revenue, margins were healthy inalmost all segments of the business. This was partly attributable to costs being kept wellunder control. Well-established ERIKS businesses in Belgium, Germany, the Netherlands andthe UK performed particularly well.

NPM CapitalNPM Capital endeavours to be the private equity investment partner of choice for successfulentrepreneurs, specifically among medium-sized companies in the Benelux. NPM is focusedon investing in a number of preferred sectors and in buy-and-build opportunities with existingparticipations. The companies in which NPM Capital invests have an enterprise value of atmost € 500 million. The strategy pursued by most companies in NPM's portfolio remainsfocused on cost-efficient growth delivered both organically and through acquisitions thatfacilitate market consolidation. This strategy fulfils the objective of becoming morecompetitive and improving value creation through enhanced customer loyalty. NPM Capitalhelps its portfolio companies in achieving their strategic objectives by providing knowledge,financing and its network of contacts. NPM's goal is to obtain returns of 15% and higher on itsinvestment portfolio.

NPM Capital has earned a solid reputation as an active shareholder. Its corporategovernance structure allows it to have a flexible investment time horizon. The company istherefore never under pressure to exit, which is a typical feature of conventional private equityfunds. In fact, the interests of all parties are readily aligned to optimise business performancearound the principle of excellence in operations and customer relations. NPM strives to assistthe management of its portfolio companies by sharing its specialist knowledge andexperience in making improvements to operational performance and in market development.NPM Capital also emphasises sustainability and e-business strategies as a fundamental partof business development. This transfer of knowledge in all of these fields helps to createshareholder value.

The market for private equity was quite active in the first half of the year, but it slowed downin the second half as the economic outlook deteriorated. In the early part of the year, dealactivity had been increasing but quality was low. Secondary deals in which private equitycompanies sell their participations to each other were coming to the market as individualbusiness performance showed some improvement after the effects of the crisis in the yearspreceding. The availability of bank financing also picked up, facilitating high leveragepossibilities. NPM approached the market cautiously at that time. The profit projections of thebusinesses being transacted were generally very aggressive. NPM Capital considered themarket to be too fragile to support such profit projections and was also uncertain about thesustainability of economic growth and stability. As it happened, bank financing did becomemore difficult, thus reducing the high activity level in the private equity market. Also, thegeneral economic outlook became more uncertain. In fact, a number of NPM’s participationshave experienced a reversal in value creation. Discussions are taking place with therespective management teams regarding measures to secure performance in this morechallenging environment.

NPM Capital invested selectively in 2011 for a total amount of close to € 200 million. Amajority stake of 57% was acquired in Kiwa, with the remainder of the shares owned bymanagement. Kiwa is active in the testing, inspection and certification of processes, systemsand products, mainly in niche segments such as water, gas and energy, healthcare andhazardous materials. Kiwa employs more than 1,000 people, with offices and laboratoriesthroughout Europe and in China. Kiwa has partnerships with agents in several countriesacross the world, thus increasing its presence to more than 50 countries in all. After theacquisition, Kiwa executed several smaller add-on acquisitions.

Another investment was the buy-out of 90% of the shares in Belgische Distributiedienst. Thiscompany is active in the distribution of unaddressed mail and free media such as leaflets,catalogues and product samples in Belgium and Italy. With 27 regional depots, the companyhas national coverage in Belgium and delivers approximately 5 billion items door-to-doorannually. Belgische Distributiedienst also employs a large team of inspectors who areresponsible for maintaining the integrity and the quality of the distribution network.

The NPM Healthcare team realised two investments in 2011. Zonnestraal, acquired during thefirst half of the year, offers specialised ophthalmic care with a chain of seven specialised eyeclinics. It is a provider of diagnosis, treatments and operations. Almost all of its revenues arecovered by health insurers. NPM Capital owns a majority share in Zonnestraal.


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Also, a majority participation was realised in Samenwerkende Tandartsen Nederland, aleading chain of general dental care practices. This company has executed an acquisitivegrowth strategy and currently operates from 25 locations.

NPM Capital has also been active in continuing to support its existing participations. Itincreased its shareholding in Medux, which was the holding company for the previouslyacquired Harting Bank and EmCart in the healthcare sector. NPM also provided growthcapital to Royaan to acquire Willie Dokter, a producer and distributor of artisan meatballs. Atthe end of 2011, NPM was still awaiting approval for the merger of Royaan -known for its VanDobben and Kwekkeboom brand -and the frozen snacks business of Ad van Geloven, knownfor its Mora brand. Also awaiting formal approval was the acquisition of Bolletje byContinental Bakeries.

NPM Capital realised two exits in 2011: Van Oord and Desso. Van Oord is a leadinginternational contractor specialising in dredging, marine engineering and offshore projects(oil, gas and wind). The Van Oord company has grown significantly since NPM Capitalacquired its first interest in the company in 1977. Early 2011, NPM Capital’s 27.5% interest inthe Van Oord company was acquired by MerweOord, the investment company of the VanOord family.

Desso is a European leader in carpet tiles, carpet rolls and artificial turf for sports fields. Withthe active support of NPM Capital Desso’s market share and profitability have developedfavourably in recent years, as the company focused on innovation and introduced thesustainable cradle-to-cradle approach. NPM Capital’s 78% interest in Desso has been sold toBencis Capital Partners, who will support the further development and growth of the Dessobusiness. Both resulted in substantial capital gains, which contributed substantially to theoverall result for 2011.

Financial developmentsSales

Total net sales grew by € 1.4 billion (8%) from € 16.0 billion in 2010 to € 17.4 billion in 2011.This included a negative impact of € 0.5 billion from movements in foreign currencies, inparticular the depreciation of the Argentine peso, the Venezuelan bolivar, and the Turkish lira.At constant exchange rates, sales growth would have been 11%. Growth initiatives, includingacquisitions and the opening of several new Makro stores, had a moderate effect and added€ 0.5 billion of sales. As the more significant acquisitions were completed only in the lastquarter, they did not have much effect on the 2011 sales. On a like-for-like basis, excludingthe impact of currency movements, sales increased by € 1.3 billion (8%) compared with lastyear, driven by improved performance, economic growth in South America, Thailand andTurkey, and increases in the prices of LPG and oil.

Income from operations

Overall net sales of SHV Energy, at constant exchange rates, were 8% above the level of2010. Lower overall volumes due to the warm weather and increased energy efficiency inEurope were offset by higher average sales prices. With some variations during the year,


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LPG supply prices remained at the high level reached at the end of 2010 following asignificant increase in the course of that year. Despite these high LPG supply prices andstrong competition in all markets where SHV Energy is operating, margins per ton could bemaintained or slightly increased in all significant SHV Energy markets. Since this increase inmargins per ton could not fully offset the impact of the shortfall in volumes, total gross marginin 2011 was below the level of 2010. Based on the development in volumes, SHV Energyfurther strengthened its relentless focus on costs, which resulted in an overall reduction inoperating expenses. Total operating costs decreased by 2% compared with 2010. This wasdespite the inflationary cost effects in Brazil and Turkey. Nonetheless, this net reduction inoperating costs was insufficient to offset the shortfall in gross margin. In addition, the resultsof TCEC, which are now included in SHV Energy, contributed negatively to the overall resultas margins in the wood pellets businesses remained under pressure. Overall, SHV Energyreported lower income from operations in 2011 compared with the previous year.

Makro realised a sales increase of 8%. This was the result of healthy economic growth in theregions where Makro is operating, effects from the 12 stores opened in 2010, the opening of10 new stores in 2011, and high inflation in Argentina and Venezuela. Sales in euros wereadversely affected by a negative currency impact, mainly due to the depreciation of theArgentine peso and the Venezuelan bolivar. Overall, Makro continued to improve its grossmargin as a percentage of sales, but its performance varied widely from country to country.Makro Thailand performed exceptionally well in 2011, with a solid trend in like-for-like tradingprofit as a percentage of net sales and a robust performance of its new stores, all achievedamid (and despite) the severe floodings that affected the country in 2011. This can beattributed to the successful execution of Makro Thailand’s operational excellence and growthstrategy. Despite an increase in overall sales in line with inflation, Makro Brazil’s trading profitas a percentage of sales remains in need of improvement. Measures to achieve this includefundamental changes to the company’s organisation structure and commercial strategy.Higher overhead costs in the inflationary Brazilian environment and a slower-than-expecteddevelopment of some of the more recently opened stores also negatively impactedperformance. Despite regulated prices, import restrictions on certain products and increasedprices for imported goods due to the weakening of the Venezuelan bolivar, MakroVenezuela’s trading profit as a percentage of net sales was still at a satisfactory level, albeitslightly below 2010. For Makro Colombia and Makro Argentina like-for-like sales increasedsatisfactorily in 2011, in both cases outstripping best estimates of actual inflation. Overalltrading profit was flat for Makro Colombia. The inflationary effects on costs in Argentinasignificantly increased the cost base, which could not be fully offset by the increase in grossmargin. Makro Peru performed above expectations in both sales and trading results.

Total overall sales at Dyas decreased by 2% compared with 2010. The 2011 production levelof 7.7 million barrels of oil equivalent compares to 9.9 million in 2010. This significant declinein production was mainly the result of unexpected but nevertheless routine maintenance andrepair activities at various fields, with the Buzzard field having the most significant impact.Although total production costs declined significantly as a result of the drop in total volumes,the costs per barrels of oil equivalent increased. This was because oil and gas were producedat fields with increased costs per unit as a result of higher exploration and developmentinvestments. Exploration activities were at a lower level than in 2010, as a result of whichrelated costs were also lower. Despite these developments, income from operations showed

a healthy increase in 2011 backed by higher sales prices. In line with the general trend in themarket, the average oil price was substantially above the level of 2010 (USD 111 per barrel in2011 compared with USD 80 in 2010). In addition, the increase in the average Dutch gasprice from 18 euro cents per m3 in 2010 to 23 euro cents per m3 in 2011 had a positiveimpact. Gross revenues at Mammoet were higher than the levels achieved in 2010, despitethe amount of available work being reduced by reluctance in the market to engage ininvestments in new projects. The increase in revenue can mainly be attributed to a number oflarge longstanding time and materials-based projects in the USA, Canada and Asia and theimpact of the acquisition of KR Wind. Overall, the equipment utilisation rates remained at asatisfactory level, but the overcapacity in most markets is exerting some pressure on margins.Income from operations as a percentage of revenues was significantly lower than in 2010. Inaddition to pressure on margins, this was also due to losses incurred on some projects andthe disappointing results of KR Wind.

ERIKS’ results for 2011 were good, with overall sales up by 24% over 2010 includingacquisitions and by 8% on a like-for-like basis. In most markets, ERIKS continued its recoveryfrom the 2009 economic crisis, which had already started in 2010. With some variationsacross countries, overall gross margins as a percentage of sales were in line with last year.With strict cost control and a related increase in productivity, overall performance showed apositive trend, with EBITA as a percentage of sales approaching pre 2009 levels. The resultof ERIKS was positively affected by the acquisitions that were made in 2010 and 2011. As themore sizeable 2011 acquisitions were finalised only in the last quarter of the year, they had alimited impact on the 2011 results.

Exceptional items

For 2011, exceptional items included the impairment loss on assets at Dyas as well asimpairment losses on some subsidiaries of SHV Energy and the costs associated withrecovery plans for UK pension funds.

Financial results

Net financial income in 2011 increased significantly compared with the year before, thanks tothe capital gain realised by NPM Capital on the exits of Van Oord and Desso. Private equityincome further consisted of interest on loans to participations and dividend income, whichwas partly reduced by some impairments on investments of NPM Capital. Although net debtincreased as a result of spending on acquisitions throughout the course of 2011, net interestexpenses increased only slightly from € 58 million in 2010 to € 61 million in 2011. This wasmainly the result of the low interest rates for the euro and the US dollar.

Taxes

The average tax burden fell from 31% in 2010 to 28% in 2011. This tax rate decrease waslargely the result of the tax-exempted capital gains of NPM Capital and in spite of the above-average tax rate of Dyas for the state profit share tax on oil and gas production in the UK andthe Netherlands. The tax charge for Dyas was significantly impacted by the increase from20% to 32% in the UK supplementary tax rate for oil and gas production in March 2011. This


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resulted in a rise of 9.3% in the effective tax rate on the 2011 profits of Dyas in the UK. Theincrease in the UK supplementary tax rate also resulted in an additional deferred tax liabilityof € 33 million. This tax charge is also included in the 2011 results. Excluding NPM Capitaland Dyas, the effective tax rate for 2011 was 23% versus 25% in 2010.

Net income

Net income in 2011 was € 782 million, which translates into a return on shareholders’ equityof 22% (2010: 17%). Eliminating the effect of goodwill charged against shareholders’ equity,the return on economic equity in 2011 was 11% (2010: 9%).

Foreign currency exchange

Many of SHV’s businesses operate in non-euro countries. Converting the results of thesebusinesses from their respective currencies to euro leads to negative or positive currencyeffects. In 2011, SHV’s results were negatively affected by the depreciation of the Turkish liraand the Venezuelan bolivar against the euro. The net negative effect of all currencyfluctuations on SHV’s 2011 net income amounted to € 9 million.

Investments and divestments

In 2011, total spending on investments amounted to € 1.922 million, of which € 760 millionwas spent on acquisitions, € 925 million on investments in operational fixed assets and€ 237 million on investments in financial fixed assets (including € 216 million on private equityparticipations by NPM Capital). Acquisition spending went primarily to acquiring the remaining25% minority shareholding in Mammoet, two acquisitions made by ERIKS in North Americaand the acquisition of KR Wind by Mammoet. SHV Energy invested € 265 million inoperational fixed assets such as filling plants, logistics, autogas stations and IT as well as incylinders and tanks both for replacements for end of life equipment and for the developmentof new businesses. Makro invested € 214 million on operational fixed assets and in newstores. Dyas and Mammoet invested € 427 million between them in operational fixed assets.Dyas invested in exploration and oil and gas field development, while Mammoet investedlargely in conventional cranes, crawler and hydraulic cranes and the construction of threesuper sized cranes. Investment in operational fixed assets by ERIKS was at a moderate level.Investments in financial assets included spending on growth of the private equity portfolio ofNPM Capital, including a participation in Belgische Distributiedienst and Kiwa, and furtherinvestments in existing participations to support their continuing growth. In 2011, totaldivestment amounted to € 256 million. These came mainly from the divestments of theparticipations in Van Oord and Desso by NPM Capital, oil and gas fields by Dyas andoperational equipment in the normal course of business at SHV Energy, Makro andMammoet.

Working capital

The increased focus on working capital management has resulted in a much improvedworking capital position at almost all businesses, with further improvement potential atMammoet and ERIKS. The working capital situation at SHV Energy, Makro and Dyas

generated healthy cash flow. The increased inventory levels at ERIKS and the project-relatedincrease of working capital at Mammoet reduced the overall positive working capital effect onoperational cash flow.

Financing and liquidity

Total liquidity at December 31, 2011 amounted to € 838 million (2010: € 788 million). The netdebt position at December 31, 2011 amounted to € 1,077 million versus € 462 million at theend of 2010. These developments were mainly the result of the acquisition of the 25%minority interest in Mammoet and the companies acquired by ERIKS in North America. Long-term net debt increased, largely due to the acquired debt of KR Wind. SHV has two creditfacilities in place as at December 31, 2011: a facility of € 600 million, which is available toSHV until 2015, and a newly negotiated stand-by facility of € 616 million, which is due toexpire in 2016 with two one-year options for extension. As of the end of 2011, € 605 millionhad been drawn down on these facilities. In addition to the available cash, the undrawnamount of the stand-by facilities gives SHV the necessary flexibility to finance furtherinvestments to grow the business.

Solvency

At December 31, 2011, SHV’s group equity amounted to € 3,784 million, a decrease of€ 112 million. It is SHV’s policy to charge goodwill paid on acquisitions directly to equity. In2011, a goodwill amount of € 528 million was deducted from shareholders’ equity. A large partof shareholders’ equity is invested in countries with currencies other than the euro. In 2011,the total negative effect of converting these currencies into euro amounted to € 31 million.This amount has been debited to shareholders’ equity. The buyout of the 25% minority sharesin Mammoet, together with some smaller buyouts, has reduced the total third party interest inconsolidated companies by € 98 million. The solvency ratio at the end of 2011, defined asgroup equity as a percentage of total assets, was 37% (2010: 42%).

Business riskRisks and uncertainties define all business environments. Risk-taking is an essential part ofbusiness and a precondition for achieving adequate returns. The risk environment in whichSHV companies create value and generate income is determined by both manageable risksand a number of external risks that are beyond the control of SHV. The manageable risks areof different natures and include commercial, operational, financial, tax, compliance andregulatory risks, the reliance on information technology and the ability to recruit and retainemployees. Risks change constantly as the internal and external dynamics of the operatingenvironments of SHV companies change. Most of SHV's activities are currently operating inan uncertain and volatile economic environment. This can have an impact of an unpredictablenature on SHV’s business. It is essential that SHV management continues to devote attentionto market developments and their consequences for the businesses in which SHV operates.In addition, a continuous assessment of the type of risks and the extent to which they can beaccepted and mitigated is an essential management task.


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The main business risks for the various SHV activities that require management attentioninclude the following:

– Management of health and safety risks is of paramount importance in the LPG business.The results of SHV Energy are further influenced by the weather. A mild or cold winter willdetermine heating-related demand. The purchase price of LPG fluctuates and isdependent on supply and demand situations in the applicable LPG supply markets, theprice of oil and movements in exchange rates, particularly in the US dollar. The relatedproduct price risk and currency risk need to be managed actively, including the use ofhedging instruments.Government policies also affect results, for example on pricing orillegal filling of cylinders.

– Next to the price development of fossil energy sources, the success of the initiatives in thefield of renewable energy depends to a large extent on developments in the energymarkets in general, the willingness of governments to promote renewable energy sourcesas an alternative to traditional fuels and the possibilities to obtain financing for renewableenergy projects.

– The results of Dyas are influenced by the price of crude oil, the price of natural gas and bythe US dollar and UK pound exchange rates. To limit these risks, the price of part of the oilproduction as well as a part of the related US dollar income stream is hedged. As a non-operator, Dyas relies for the safety aspects of oil and gas production on the variousoperators with whom it co-operates. Dyas is also vulnerable to decisions taken bygovernments, as illustrated by the UK government’s sudden decision in 2011 to increasethe supplementary tax rate on oil and gas production from 20% to 32%.

– The results of Makro depend largely on customer generation, retention and spending,which is also influenced by the development and stability of the economies in which Makrooperates. Hygiene and product safety are also vital to the success of Makro.

– At Mammoet, managing health and safety risks is of crucial importance. Mammoet's heavylifting and transport activity relies for its profitability on the overall investment climate and,more specifically, on the dynamics in sectors such as civil engineering, power plants andthe oil and chemical industry. Cyclical risks are mitigated by operating in both the projectand rental market and also through Mammoet's presence in various market segments andregions.

– ERIKS’ business depends on the level of industrial production, especially among ERIKS'OEM customers. The MRO-related market is less cyclical, although it is still exposed to thegeneral economic climate. The distribution of ERIKS' activities between OEM and MRO, incombination with a healthy geographical spread, mitigates these business risks. With theexpansion of its business in North America with the acquisition of LewisGoetz andIndustrial Controls, ERIKS has further improved its geographical spread.

– NPM Capital's results are mainly determined by the sale of companies in which it hasinvested and by potential impairments of carried investments. Sales opportunities andprice, as well as impairments, depend largely on the economic and financial climate in anygiven period. Therefore, NPM's results can fluctuate considerably over the years. In thelonger term, NPM's success depends on its capacity to identify profitable investmentopportunities, initiate operational improvements and monitor them adequately until themoment of divestment.

SHV's profitability is further influenced by several other external risk factors. Political risksexist, for instance, where the company owns assets in politically unstable countries which arefurther compounded by potential problems around terrorism, social unrest and scarcity of vitalresources. Governmental interference in business, the continuing inequitable enforcement ofregulations, and the more recent phenomenon of sudden increases in taxation and levies inseveral jurisdictions further add to risk and related costs. Populist government measures alsobear down on business. External risk factors also include economic factors such as inflation,interest rates, the euro, the sovereign debt crisis, global tension on exchange rate policiesand stock market returns in connection with pension liabilities.

The measures taken to mitigate the risks to the extent possible, desired and economicallyfeasible is further described in the risk management paragraph as included in the basis forconsolidation, valuation of assets and liabilities and determination of income.

Special thanksA total of 54,700 people committed themselves as "being part of SHV" at the end of 2011, anincrease of 4,400 when compared with the same time the previous year. SHV's CorporatePhilosophy acknowledges clearly that success comes through the company's people. SHV'scontinuing success and growth in different activities in so many parts of the world isundoubtedly a tribute to each and every person in the company, regardless of his or her raceor culture. SHV strives continuously to be a place in which its people feel both comfortableand appreciated. Mutual respect, trust, integrity and loyalty are the values at the heart ofSHV. It is in living these same values above all else that helps all the people in the companyfind happiness in their work. SHV is deeply grateful to its people -past and present -for whatthey have contributed to the growth of the company. SHV is especially thankful to all whodaily live the values of the company, dedicating their energies to serving as best they cantheir customers and colleagues, and hopes that in each case, the effort made is more thanmatched by the fulfilment gained.

March 2012

P.J. Kennedy

Chairman of the Executive Board of Directors


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Our head office is located at

SHV Holdings N.V.Rijnkade 13511 LC UtrechtThe Netherlandswww.shv.nl

http://www.shv.nl

overview 2011 final

Documents

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cash flows

income taxes

financing cash flow

cash generation

sharenet income