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Royal IHC

P.O. Box 204, 3360 AE SliedrechtMolendijk 94, 3361 EP SliedrechtThe Netherlands

T +31 184 41 15 55

[email protected]

CSR Annual Report2014

3 Preface4 About IHC10 A changing playing field12 Priorities and motivations20 Results and key figures for 201431 Objectives for 201532 Annual Report of the Works Council34 Reporting parameters36 GRI index table37 List of terms

Contents

© 2015, IHC Merwede Holding B.V.

The days that corporate social responsibility (CSR) and sustainability were hype are behind us now. In recent years, concerns such as climate change and the scarcity of resources have resulted in the further development of national and international standards regarding CSR and sustainability. Worldwide, companies increasingly include CSR standards in their day-to-day management strategies, which means that the gap between the concrete elaboration of sustainability themes and the actual business is starting to decrease.

This trend can also be observed through the sectors in which Royal IHC operates. Limiting emission levels during dredging and mining operations, stricter safety standards in the offshore industry in particular, the increased demand for different and smarter use of materials, and stronger cooperation within the value chain are the order of the day. Increasingly prescriptive and ambitious laws and regulations also require flexibility from these sectors in order to execute processes and operations more efficiently. It is IHC’s responsibility to incorporate these requirements into high-quality innovative products with a low cost of ownership and environmental impact. This will also assure a ‘licence to operate’ for IHC products in the future.

To further consolidate this way of thinking within the organisation, sustainability themes relevant to IHC were addressed not only internally, but also by way of deliberate dialogue with stakeholders to identify expectations regarding CSR policies. The results can be used to better address IHC stakeholders’ wishes, and also to prioritise the subjects. In this way, IHC also continued the transition towards identifying and managing material subjects. Sustainability is also one of the core values in the modified organisational structure, ensuring the prominent role of sustainable solutions that take into account the entire life cycle of IHC products.

Over the past year, in addition to the continuing focus on product development that IHC – as a high-end supplier for the dredging, offshore and wet mining industries – uses to respond to the sustainability trends in these sectors, the company has worked on the further development and standardisation of its anti-corruption policy. Also, safety in the workplace is another theme that is high on the agenda, and the number of training courses related to safety certification has increased considerably. Steps taken to improve supply chain responsibility have been expanded, and IHC is an active participant in the Maritime Sector Programme of MVO Nederland (Sectorprogramma Maritiem van MVO Nederland). Finally, in 2014 the IHC Foundation supported several national and international social projects, both financially and with the knowledge and passion of its employees.

In the coming year, IHC will focus strongly on the further consolidation of the material issues within the organisation, and will clearly identify its own boundaries and possibilities. One important aspect is the formulation of measurable objectives for each production facility. The international developments in the dredging, offshore and wet mining industries – as well as developments regarding global sustainability trends – will serve as starting points in this respect. IHC will also aim to increasingly involve its stakeholders in determining and executing the social policy in order to make a joint contribution to increasing the sustainability of the maritime sector.

On behalf of the Board of Management,

Dave Vander HeydeCFO, President CSR steering group

CSR Report 2014 | Royal IHC 3

Preface

4 Royal IHC | CSR Report 2014 CSR Report 2014 | Royal IHC 5

Royal IHC focuses on the continuous development of its engineering and construction activities for the specialist maritime sector. Based on decades of experience, IHC is the global market leader in terms of supplying efficient vessels and equipment for dredging and wet mining activities. The company is also recognised as a reliable supplier of innovative vessels and equipment for the offshore market.

IHC has extensive in-house expertise for engineering and building integrated standard and custom-built vessels, advanced equipment, and providing the accompanying life-cycle support. This integrated systematic approach has resulted in the development of optimal product performance and long-term partnerships. The company’s broad customer base includes dredging operators, mining companies, oil and gas corporations, offshore contractors and government authorities.

IHC has over 3,000 employees based at various locations in The Netherlands, Brazil, China, Croatia, France, India, Malaysia, the Middle East, Nigeria, Singapore, Slovakia, South Africa, the United Kingdom and the United States. The head office is located in Sliedrecht.

Thanks to sustained investments in research and development, technological innovation provides a solid basis for the company. In this way IHC also contributes to a sustainable environment.

Strategy

IHC designs, builds and maintains advanced equipment and vessels for maritime service providers in the offshore, dredging and mining industries. IHC’s ambition is to maintain and strengthen its position as the innovative supplier of total solutions by providing efficient and reliable products that respect people, planet and profit (the three Ps).

By means of an innovation-oriented strategy of development and optimisation of products and processes, IHC aims to expand its market leadership in the fields of technology, supply chain management and full services. The company’s goal is to achieve this through the further development of

life-cycle support, integrated maritime solutions, vessels and components that are more efficient, with lower environmental impact and a reduced cost of ownership. Each year, approximately 3% of its revenue is made available for research, development and innovation (RD&I) activities, in which a group of 350-400 employees actively participate.

In addition, IHC continues to work on supplying the best service to customers worldwide in terms of cost effectiveness and quality, and on the internationalisation of its policy regarding supply chain management. Standard vessels and components are increasingly built at international shipyards and production facilities, while the number of international IHC employees also continues to grow steadily.

In 2014, IHC recalibrated its strategy. This revised structure is based on five pillars: customer-driven; operational efficiency; employer of choice; innovation; and internationalisation. The key values here are performance, innovation, sustainability and commitment.

Organisationalstructure

The revisions to the strategy are reflected in the new organisational structure. In order to improve the link between commercial and operational processes, the divisional system has been replaced with one based on the logical clustering of types of activities. In this renewed organisational structure, the activities are carried out based on the disciplines of marketing and sales, shipbuilding, mission equipment, life-cycle support, offshore tools and mining.

Board structureWith 62% of the shares, investment company Indofin Group owns the majority share. The other shareholders are Rabo Capital with 10% of the shares, and the management and employees of IHC, with 28%.

The Supervisory Board and the Board of Management are responsible for the company’s policy and general operations, while protecting the interests of the stakeholders. The Board of Management is responsible for the day-to-day running of the company, formulating long-term strategy and company

results. The Supervisory Board monitors the policy and functioning of the Board of Management and also offers management advice to the latter. The Board of Management is accountable to the Supervisory Board.

The Supervisory Board consists of the following five members:- Mr JC ten Cate (president)- Mrs BHC de Bruin- Mr CJ de Bruin- Mr J van de Horst- Mr C Korevaar

The Board of Management consists of:- Mr A Roelse (CEO)- Mr DAAJAG Vander Heyde (CFO)- Vacant position (COO)

Works CouncilAs regulated by the Dutch Works Council Act, the IHC Works Council has a say in company policy and safeguarding the interests of the employees. The IHC Works Council is made up of three sub-commissions, consisting not only of elected members, but also one or more additional members who focus exclusively on the sub-commission’s work. The sub-commissions are authorised to consult with the person in charge of the unit in question. They are not assigned rights, such as the right of approval and advisory right, as these belong to the Works Council.

Embedding of CSR The implementation of the CSR policy throughout visible in

the different levels of the organisation, and a steering group was created to manage the process. This group consists of representatives from SHEQ, Human Resources, Corporate Communication, Public Affairs, Supply Chain Management, Facility Services, Research and Development, and Product Development. Through this group the various departments are involved in the specification of the material subjects, as each representative is responsible for the progress of one or more issues. The steering group is chaired by the CFO, who represents the Board of Management and bears final responsibility for the activities within the CSR policy.

The steering group provides the main link between the Board of Management and the relevant IHC department, and is responsible for: preparing the CSR policy; formulating company-wide objectives; facilitating implementation within IHC; monitoring implementation progress; evaluating results; and internal and external communication. Where necessary, the steering group will modify or strengthen objectives based on achieved results, as well as feedback from the organisation, external stakeholders, the Board of Management and the Supervisory Board. Progress and achieved results will be reported to the Supervisory Board every quarter.

In line with the revised strategic focus and the company’s renewed structure, from 2015 the CSR policy will be structurally embedded within SHEQ, and the CSR steering group will be transformed into a CSR advisory group in support of the CSR policy. The company will be more broadly represented in this CSR advisory group than it is in the current CSR steering group, and in this way CSR will take centre stage within IHC. As a

AboutIHC

locationSliedrecht


result, the company will move from the CSR awareness phase to CSR being an integral element of IHC policy. The advisory group will be chaired by the director of SHEQ/CSR, who will report directly to the CEO.

CSR policy

The CSR policy of IHC is based on three pillars: “sustainable entrepreneurship”; “social responsibility”; and “environmental accountability”. By identifying these pillars, the CSR policy contributes to the specification of the three Ps referred to in the corporate strategy. This enables IHC to respond to worldwide and sector-specific trends and developments, such as: the reduction of emission levels and the consumption of energy and raw materials; improved sustainability of processes and operations; and sustainable deployment of personnel. It is IHC’s view that safety, economic stability, the supply of raw materials, environmental policies, logistic opportunities and stakeholder communication will determine the future and the working environment of the markets in which IHC operates.

The successful implementation and execution of a strong CSR policy requires the awareness and support of the entire organisation. The initiatives and activities that have been undertaken within the company to date have created a solid basis for a fully fledged CSR policy. Results achieved in this area to date provide a starting point for more uniformity within IHC regarding CSR-related activities and the consolidation of the CSR policy in the organisation’s corporate strategy. However, despite the progress that has been made, the decision to implement CSR exclusively in Dutch locations will be upheld for now. In the longer term, international locations will become more involved and active with regard to the CSR policy.

(International)valuechainIHC focuses on the continuous development of its design and construction activities for the specialist maritime sector in the dredging, mining, offshore and renewable energy markets. The company’s strength lies in providing complex total solutions, specific equipment, and life-cycle support for these industries, while its ongoing R&D activities concentrate on marketing innovative products that

respond to challenges within society. Using its knowledge and experience of total solutions and complex systems, the company can assess the impact of its products on people and the environment and, where necessary, introduce mitigation measures or indicate through training courses how best to reduce the cost and increase the safety of projects.

Customers, suppliers and collaboration parties IHC’s broad customer base includes dredging operators, oil and gas corporations, offshore contractors and government authorities. These include important players in the global market as well as small local contractors and authorities.

In 2014, IHC utilised more than 4,700 suppliers worldwide for the supply of resources, raw materials, products and services. The external supply chain accounts for approximately 70% of the total costs. Approximately 4% of the suppliers are responsible for 70% of the total expenditure.

In the development of its products, services and production methods, IHC collaborates with, among others, universities, knowledge institutions, authorities, trade associations and other industrial partners. For example, IHC is active in trade association working groups and participates in a number of European subsidy projects.

Products, services and markets IHC’s main products are hi-tech, integrated vessels and equipment – both custom-built and standard products – for a global customer base.

The wide product range for the dredging market varies from cost-efficient standard stationary dredgers to the world’s largest custom-built trailing suction hopper dredgers. IHC

supplies integrated mining solutions, including mineral processing for onshore and nearshore mining projects. In addition, the company is an active player in the field of deep-sea mining developments. IHC also supplies high-quality offshore products for the oil and gas industry, such as installation and maintenance vessels for the wind, tidal and wave energy markets. The company also provides a wide range of components and complete systems to the maritime market.

IHC provides life-cycle support to its customers for existing vessels and equipment. The company is committed to its products and customers’ projects, and offers a comprehensive service in the form of total logistical support, training, technical availability and help, and on-board assistance. This worldwide support for the duration of IHC products’ life cycle aims to optimise their performance and usability, maintain

correct and safe operation, and guarantee a maximum return on investment by reducing operating costs.

The IHC Training Institute for Dredging (TID) offers training courses around the world to companies active in the dredging, offshore and mining industries, as well as government and port authorities. These courses focus on the development of skills required to optimise the operation of IHC vessels and products, and to successfully prepare and execute projects. The training courses and methods offered by the TID are extremely varied. For example, classroom-based instruction is employed, but customers can also opt for training with simulators, programmes at a specific location or project, web-based training and education via video conferencing. All the courses can be adapted to meet the specific requirements of the customer.

Finally, IHC engages increasingly in providing operational advice to customers. IHC Dredging Consultants serves the dredging market, while IHC Mining Advisory Services focuses on supporting customers in the mining industry.

Societal aspectsSafety is a major subject, particularly in the offshore industry, but also increasingly in the dredging and mining sectors. As a result of societal pressure and the related development of legislation, the offshore industry has developed high safety standards. Suppliers to offshore companies also face stringent standards, which their production environments and processes must comply with.

Due to the supply of capital-intensive equipment, the sector in which IHC operates is sensitive to corruption. Therefore, IHC has implemented an anti-corruption policy – all employees involved have been trained and certified, which means that potential risks are highlighted, recognised and avoided.

As a result of the number of suppliers IHC utilises and the large volume of business, the company has the opportunity to improve situations regarding human rights violations and child labour in the production chain. IHC endorses the Universal Declaration of Human Rights and is implementing a step-by-step method to ensure that compliance with various rules and regulations is as transparent as possible.

Relevant environmental aspects of the dredging, offshore and (deep-sea) mining activities include emissions as a result of fuel consumption, turbidity and the settlement of fine sediment in fragile ecosystems, and underwater noise. IHC responds to these challenges with new innovations and designs, thereby creating an improved value proposition for the customer and at the same time reducing pressure on the environment.

AboutIHC

SustainableentrepeneurshipWith the sustainable entrepreneurship pillar, IHC wants to maintain its healthy financial and profitable position, providing its stakeholders with the certainty that it can live up to its CSR ambitions, now and in the future.

Social responsibilityThe key factor in the social responsibility CSR pillar is IHC’s position in and commitment to society in the broadest sense. This is not only inside the gates of the IHC Merwede organisation, but also for society in general and the company’s suppliers, subcontractors and overseas shipyards that it collaborates with in particular.

Environmental responsibilityAll relevant environmental aspects and related developments regarding products and production processes belong to the third pillar of environmental accountability. By being mindful of the environmental impact of the products and services it supplies, as well as its production processes, IHC takes responsibility for reducing the total environmental impact of its activities as much as possible.

ThreepillarsofCSR

locationKrimpenaandenIJssel


AboutIHC Box 1

StakeholderdialogueIn 2014, IHC decided, based on the CSR reporting, to engage in a dialogue with a number of external stakeholders in order to obtain an insight into their expectations and requirements. The results are used to verify the internal CSR policy and, when necessary, adjust it.

For the first time, IHC invited seven stakeholders to specific interviews regarding the social aspect of the policy. In consultation with the CSR steering group, under the responsibility of the CFO, the decision was made to conduct the interviews among a select group. A broad representation of external stakeholders was approached, which included government agencies, banks, insurance companies, NGOs, customers and suppliers.

Stakeholders were selected in consultation with the relevant departments within IHC, taking into account an affinity with CSR and sustainability in order to obtain the most reliable input possible. The stakeholder interviews will continue to be held annually, and the select group will be expanded each year.

A single questionnaire was used for the different stakeholders. Along with a number of general questions, it addresses the

material subjects, pillars and objectives of IHC’s CSR policy, as well as reporting standards and appropriate communications on these topics. The goal of the interviews is to obtain an insight into stakeholders’ expectations regarding IHC’s CSR policy, including the identified material subjects and reporting standard.

The interviews were favourably received by the selected stakeholders and have proved to be a good medium for initiating dialogue and exchanging thoughts on the usefulness and necessity of CSR/sustainability policies, along with the possibility of reinforcing each other’s commitment to these subjects.

Critical feedback from the interviewed stakeholders focuses mainly on improving the presentation of IHC’s CSR ambitions and objectives, and the depth of several material themes. Also frequently highlighted is the limited communication via the corporate website. The stakeholders’ feedback has been passed on to the CSR steering group and will be taken into account in the development and external communication of the policies.

Molendijk,Sliedrecht

Together for Zambia is a partnership initiated by 5xbeter. The goal of this project is to give young people in Zambia a better future by means of training for the metals sector. In line with the IHC Technical Training Centre, where young people are trained to be metalworkers, welders or machining workers, the IHC Foundation warmly supports this initiative. Together with the directors and teachers at the St. Ambrose Trade Centre, it is working on achieving the following goals:

- to supply machines and personal protection equipment to students and employees, so they can safely produce quality products for the Zambian market

- to help improve knowledge and skills, and learn the safe use and maintenance of the machines.

In 2013, the collaboration between the IHC Foundation and 5xbeter started with a financial contribution for the purchase of some basic equipment for the Chikupi Vocational School in Chikupi. In 2014, this initiative continued when an IHC employee travelled to Zambia to put their metal working machines into service, with the help of the students, as well as carry out maintenance work and offer advice on how to use the machines.

Over the course of five days, so much was accomplished for both the Zambian teachers and students, and for the Swiss couple who run the school. The planned activities did not go off without a hitch, with such issues as cars breaking down, chaos on the roads, flooding due to heavy rainfall and power failures being common occurrences in the area. Yet despite these setbacks, and the short period of time available, the team jointly managed to set up the classroom and prepare several machines for use.

For both parties this has proved to be an extremely instructive period – technically as well as culturally. The IHC Foundation intends to stay involved with the school in Chikupi until they are ready to operate independently. In 2015, the initiative will be followed up, and a number of teachers from Zambia will visit the IHC Technical Training Centre to gain more theoretical and practical knowledge.

IHC Foundation:Together for Zambia

“We are again expressing our gratefulness to IHC Company foryour support and collaboration.Your solidarity with our young people of Chikupi area cannot easily be measured with our lips but hearts”

Chikupi Vocational Training Centre – Anna and Ueli Schali

locationKinderdijk

10Royal IHC | CSR Report 2014 CSR Report 2014 | Royal IHC 11

In recent years, corporate social responsibility (CSR) has developed from a trend into a serious subject that is receiving more and more attention from a growing number of organisations, even becoming part of their strategic core values. The issue is now closer to the businesses’ actual priorities, and is therefore increasingly reflected in day-to-day practices.

The equipment and vessels that IHC designs, builds and maintains have an impact on the environment. This is not only during the construction process at the company’s own premises, but especially during operation and finally at the end of the life cycle.

The use of increasingly scarce resources and energy, emissions and other environmental influences impose requirements on all parties in IHC’s international value chains. The company’s licence to operate is based on making deliberate decisions regarding a product’s final impact on people and the environment. IHC is working towards measurable data to make it possible to translate sustainable entrepreneurship into a higher sustainability standard for equipment and vessels.

At a time when climate change is firmly fixed on national and international agendas, IHC’s strength lies in an ability to understand the customer and the market, and to translate this complexity into strong products that take the environment and social standards into account. By using this expertise effectively, progress can also be made regarding international issues, for example by utilising knowledge and equipment in deltas, where the risk of flooding has changed from an uncertainty into a certainty.

Being an important player in the maritime chain, IHC strikes a balance between taking a decisive role in the impact on the environment in a broad sense on the one hand, and being dependent on other players and demands from different markets on the other. A realistic level of ambition requires time to take further steps towards increased sustainability.

IHC is active in many countries and continued internationalisation means it is and will be dealing with other chains. The starting point of operations is the Dutch standard. However, the world is many times larger than The Netherlands,

as is IHC’s span of control. Therefore, IHC is developing an insight into the different chains, and it increasingly enters into dialogues with suppliers and customers regarding CSR principles.

Sustainability trends in and affecting the maritime sector A number of trends are becoming increasingly clear and are expected to have a significant effect on the maritime sector and its development in the coming years:

• reducingemissions the subject of emissions reduction is not new, but stricter

standards are under development, and the available timeframe for realising the necessary reductions is becoming shorter

• differentandsmarteruseofmaterials the awareness that raw materials are of finite availability

is translated more often into product and process designs that consider a different and smarter use of materials. Under the heading of ‘circular economy’, IHC is working on several projects, which link the materials’ origin to their final applications within the maritime chain

• mitigatingunderwaternoise increasing attention is being paid to the impact that the

maritime sector has on life underwater. This attention focuses increasingly on limiting and mitigating underwater noise, which is reflected in the products that are developed

• highersafetystandards safety has never been absent from the agenda, but

standards are becoming stricter (as with emissions) with respect to production processes and product innovations, while the enforcement of these standards is becoming more frequent. In addition, the undeniable influence of the offshore industry on the wider maritime world is becoming more visible

• closerlinkingofvaluechains the connections between vertical and horizontal value

chains are increasing. This is visible in the development of new products, the design of processes and where innovations take place, and also with regard to expectations

surrounding quality and responsibility. Furthermore, IHC also sees a shift in the lower limits of what is deemed ethical, as well as higher standards being introduced

• last but not least: laws and regulations are increasinglyimportantandambitious

degrees of freedom are becoming more restricted, while laws and regulations are becoming more explicit regarding what is required of the industry

It is a challenge to find a balance between maintaining a solid position in the market, while adequately translating trends into products for new and existing markets. New standards and a changing playing field provide opportunities that can be grasped by means of a continuous high level of quality and a strong focus on innovation. For example, IHC’s expertise can be utilised for coastal protection projects and also to mitigate flood risks.

On the other hand, for a company such as IHC, operating on an international level often means dealing with unpredictability. The practical applicability and the choice for criterion of expected legislation and regulations are therefore points of special interest. Often the western standard is used, which compromises a level playing field. Price is usually still decisive, and (enforcement of) standards differ to such a degree that the frontrunning position yields an insufficient competitive advantage. The solution to this is movement in a direction that enables growth and higher standards through gradual, continuous adaptation.

National and international developments There is a clear focus in international politics on greater transparency and uniformity of monitoring. Societal debate addresses relinquishing the voluntary nature of corporate social responsibility. The Dutch export instruments are already CSR tested, but the possibility of quantifying the positive effects of trade and development cooperation is also being investigated.

Sectors are increasingly required to look at themselves critically and translate this into concrete improvements regarding the impact on people and the environment. MVO Nederland has responded with the ICSR programme for the maritime sector, which is also intended to retain the initiative, while also determining the pace.

The financial sector follows, with frameworks that require an insight into the risk management systems of companies, including related CSR risks. A clear trend in both areas is monitoring and enforcement. As financing enables trade and export, initiatives are also seen from government agencies to oblige financial institutions to explain why they do or do not finance particular transactions.

A positive combination of the above developments is the agreement negotiated between the Dutch Government and the World Bank, which explicitly highlights the utilisation of Dutch expertise in global water issues. This is an excellent example of merging commercial opportunities with social challenges.

Achangingplayingfield

When the social policy plan was drawn up in 2012, a number of material subjects important to both the company and the industries in which IHC operates were identified for each pillar. To develop the list of material subjects, the CSR steering group evaluated relevant trends and societal developments, key points from IHC’s policy, and used the results of the stakeholder interviews, along with the company’s strength, to market sustainable solutions with a low cost of ownership.

The materiality matrix is a representation of the internal and external relevance of the material subjects that are significant for IHC. The horizontal axis reflects the internal relevance (from ‘relevant’ to ‘highly relevant’) and on the vertical axis, the subjects are ranked according to relevance for the industry (from ‘relevant’ to ‘highly relevant’).

The current placement of the material subjects in the matrix generally corresponds with stakeholder expectations. As only one interview was conducted in each stakeholder category, the matrix has not changed as yet. The highest priority subjects, namely sustainable product development, chain

responsibility and good governance, also emerged from the interviews as the most important themes.

Chainresponsibility

For several years, IHC has been using the QLIFT methodology to develop a sustainable collaboration with its suppliers, where QLIFT stands for quality, logistics, performance, innovation, flexibility and total cost. These five performance perspectives are described using a total of 26 evaluation criteria, and IHC uses a number of these to enhance the economic performance, social aspects and ecological conditions in the production chain by improving collaboration with its suppliers. Several of the 26 criteria are directly linked to sustainability, for example criteria in the domains of CSR (people and planet), market conformity (profit), health and safety (people), environmental safety (planet) and quality of supplier relationships (profit).

Based on the requirements of the customer, a desired profile is drawn up that IHC and its suppliers must jointly comply with. Subsequently, IHC checks the current profile and determines which steps the chain partners must take in order to improve their processes. IHC and supplier processes must be considered together, and an evaluation of the suppliers using this method enables IHC to work with them to improve the supply chain in a sustainable way.

IHC is also part of the International CSR Maritime Sector Programme of MVO Nederland, in which approximately 15 parties join forces to realise the sector’s sustainability ambitions. This long-term project, carried out for the Dutch Ministry of Foreign Affairs, will focus on better collaboration between chain partners, social innovations and new revenue models that take the entire life cycle of vessels into account.

Good governance

Approximately 80% of revenues are generated by the export of equipment and vessels to emerging markets. Many of these go to non-European territories, such as Asia, Africa and South America, and so IHC has a significant impact on


Support oflocal communities

Carbon footprintof IHC

Educationand training

Health and safety

Supply chainresponsibility

Goodgovernance

Sustainableproduct

development /innovation

In many areas where equipment supplied by IHC is used, the water is severely polluted by plastic waste. While tonnes of these materials have been floating in the oceans for many years, they have also polluted seas, rivers and lakes closer to home.

Under the influence of sunlight and seawater, the non-biodegradable and toxic plastic breaks down into micro-particles that present a danger to the biodiversity of the fauna living in and around the water. For example, an estimated 90% of seagulls around the North Sea have plastic in their stomachs, which can lead to potentially fatal effects. Biodiversity is essential for society, which makes the plastic waste problem a global social issue.

At the same time, society is responsible for causing the plastic waste problem. The entire plastics chain, from production to consumption, contributes to the issue. IHC is also a part of this plastics chain – not only as a consumer, but also as a supplier of equipment to the oil industry. At the same time, IHC wants to use its knowledge and experience in the maritime environment to develop sustainable solutions for removing the plastic from national and international waters.

In this way, IHC contributes to the responsibility of the chain by aiming to remove floating plastic waste from surface water, with a focus on coastal and delta areas. In order to achieve a successful implementation of the equipment required, IHC works closely with other stakeholders in the plastics chain, such as engineering firms, the plastics industry and recycling companies, as well as governments and NGOs.

There are two trajectories within IHC to develop the technology to remove plastic from surface water. The long-term trajectory is focused on developing the best possible technological solution for harvesting floating plastic. In the short term, it is searching for a technological solution for the floating waste problem in the bay of Rio de Janeiro. The waste in this bay not only causes a local environmental issue, but also an urgent matter for the athletes who will be sailing and windsurfing in this bay during the 2016 Olympics – the plastic objects will become obstacles to winning a medal!

Plasticharvesting

Prioritiesandmotivations

Relevance for IHC

Relevancefortheindustry

Box 2


different chains. The code of conduct that describes the way in which IHC does business is the foundation and starting point for all of these chains, and despite cultural differences, the company has strong standards for business activities in its own supply chain and in the countries in which it operates.

These standards have been documented in the anti-corruption regulation, which is based on the code of conduct, and is published on the IHC website. The anti-corruption policy also includes regulations for agents and whistleblowers.

This policy was further specified and formalised in 2014. An important component was the training of all IHC employees who, as a result of their function or position, could be confronted with undesirable practices. This group consists of some 300 people. Furthermore, an online training course was developed so that new employees can easily study the guidelines, risks and appropriate action.

Supportoflocalcommunities

The IHC organisation has a considerable effect on its surrounding communities. In 2012 IHC established the IHC Foundation to use the passion and knowledge of the company for the benefit of children and adults for whom a little attention can make a world of difference. Through the Foundation, IHC contributes to sustainable social, cultural and community supporting activities. Whenever possible, the projects are realised through an intensive collaboration with the local community and through the active involvement of IHC employees.

In 2014, the IHC Foundation made a practical contribution to the Samen voor Zambia (Together for Zambia) project. The goal is to help create a better future for young people in Zambia by means of providing training in the metal industry. This project is in line with the activities of IHC’s own Technical Training Centre, which enables the active transfer of experience and knowledge.

Another project is the Winddrinker, a cost-effective, decentralised and wind-driven desalination system that uses wind energy to produce affordable and clean drinking water. Following the initial exploratory meetings held in 2013 with the organisation behind the Winddrinker, the IHC Foundation contributed a group of enthusiastic engineers to optimise the installation’s design in 2014, in addition to financial support.

Following the Christmas box initiative in 2013, in which employees were given the choice to forego their annual Christmas box and donate the gift’s value to several regional food banks, the IHC Foundation also made donations to the food banks in Alblasserdam, Delft, Krimpen aan den IJssel, Oosterhout and Sliedrecht in 2014. The donations were presented during a meeting at IHC, which provided the opportunity to exchange experiences and ambitions.

In 2014, the IHC Foundation also supported a number of charitable sporting initiatives. For example, several activities were organised in preparation for the Tour for Life, a bike event which runs from Italy to The Netherlands in which 18 IHC employees participated, and money was raised for Doctors Without Borders (MSF). The IHC team, tour4life, raised €107,225, of which €30,000 was donated by the IHC Foundation.

In September, IHC participated in the international Steptember challenge with 48 teams. Participants were asked to take at least 10,000 steps per day for one month to raise funds for people with cerebral palsy, an incurable disease. The IHC Foundation supported this initiative with donations for each

team. Both the Tour for Life and the Steptember challenge are in line with IHC’s health policy, which focuses on IHC employees’ wellbeing.

In addition to these projects, in 2014 the IHC Foundation supported a series of smaller initiatives in the areas surrounding the various IHC locations. This included local activities of which IHC employees are directly or personally involved. In this way, IHC is able to strengthen its connection with its immediate surroundings. In order to ensure this connection, people from the neighbourhood are also invited to ship launches, and consultation meetings are organised with local individuals.

Healthandsafety

IHC is responsible for the safety, health and wellbeing of its employees, regardless of their location or which facility they work at. In the production and supply of all products and services, IHC continuously strives for the highest possible safety and quality levels, complying at the very least with social principles, current rules and legislation, and the requirements of its internal and external stakeholders. In order to safeguard the quality of products and services, a significant proportion of the Dutch business units has obtained ISO-9001 certification.

Throughout the past year, important steps have been taken towards implementing a solid and uniform safety policy. Safety, health and welfare are all addressed by a central policy under the responsibility of the safety, health and welfare (SHW) steering group. After approval from management, the policy is implemented across the entire company. Not only is the policy uniform, it is applicable globally and to every IHC business unit, while also taking into account the current local situation.

The security policy is part of the strategic policy and is propagated by the company’s directors and management, in


Q uality > Perfect delivery and process control L ogisticperformance > Logistic performance, reliability of supplies I nnovation > Technological and process innovation F lexibility > Adaptability of IHC and its suppliers T otal cost > Total costs and cost reduction

QLIFT-METHODOLOGY“I’d first like to thank the directors and all those involved within IHC for their commitment to our work in general and more specifically to the target group we support. I’d like to emphasise that, in this way, the work is supported in a wonderful manner. To us this is corporate social responsibility 2.0”. — Foodbank De Baronie

IHCTourforLife-team


which the objective is to improve safety awareness among all employees. To achieve sustainable employability, continuous attention is given to the improvement of working conditions and the health and vitality of employees. In the past year, important steps were taken regarding uniformity and a tighter safety policy. To be able to monitor the effectiveness of the safety policy and manage it successfully, a number of indicators have been established.

In 2014, IHC was able to further elaborate the policy in the area of health management. In June, the integral vision – developed over several years regarding IHC’s health policy and its management – resulted in the golden iHMQ certificate (International Institute for Health Management and Quality). Furthermore, much attention was paid to investigating the vitality of employees. IHC offers various programmes to raise awareness about healthier and more vital living, which will lead to a healthier lifestyle. The advantage for the company is a more productive and sustainably employable workforce.

Educationandtraining

IHC focuses on the development of its own employees on different levels and in different ways. By means of various training/education and development programmes, employees are given the opportunity to develop and grow professionally.

Internally, much was achieved in 2014 to prepare for the production of training materials in advance of the implementation of ONE IHC processes and systems. Two training developers were hired for this purpose. The ONE project management training course was completed in

2014, and approximately 300 employees have familiarised themselves with this new work method.

Apart from internal training courses, IHC also formulates and organises various guided tours, internship assignments and graduation projects at different levels for various schools and universities. In this context, IHC has entered into a relationship with the two comprehensive schools in Papendrecht. This is part of the national JET-NET initiative, which supports projects for the application of educational content in commercial assignments.

A similar initiative is the innovation platform on the RDM campus in Rotterdam. In collaboration with the Rotterdam University of Applied Sciences, IHC carries out innovation projects with students. This has been evaluated as a very positive initiative by both industry and educational institutions, and the outcome is highly motivated students.

Sustainableproductdevelopment

Reducing the ecological footprint of its products is very important to IHC. Therefore, the company aims to develop and supply the best technological solutions for its customers, with the understanding that a combination of environmentally friendly technology and the best operational techniques can limit the operational impact while protecting the environment.

In order to focus on the development of this technology, IHC conducts much research into the environmental impact of dredging, offshore and mining activities, in collaboration with academic and research institutions. IHC also participates in various working groups, research projects and consortiums. Years of research, combined with recent developments in legislation – within the market sector in which IHC operates – has resulted in the following key points for sustainable product development:

• research into environmental impact• optimisation of fuel consumption and emission reduction • mitigation of underwater noise • reduction of turbidity.

Research into environmental impact In 2014, IHC actively participated in various programmes regarding the environmental impact resulting from mining operations.

Research into the environmental impact of deep-sea mining activities, for example, was continued in collaboration with a number of scientific institutions, social scientists and

In the area of corporate social responsibility, improved results start with insight – into the impact on the environment and insight into the savings that are possible. Metalix have provided a clear, practical example with their considerable reduction of transport movements throughout 2014.

The biggest gain is in maintaining control over the transportation of raw materials. Up until a year ago, a steel supplier would act as an intermediary, which meant that loading could not be sufficiently optimised. By combining transports, the frequency of the truck arriving or leaving empty is reduced considerably.

This not only means savings in terms of fuel and costs (approximately €200,000), but it is also much better for the immediate environment. The number of trucks driving across the dyke at Kinderdijk and Alblasserdam has decreased by some 40% in one year.

This positive downward trend will continue over the coming years by further increasing the load factor, combining scrap transports, and further optimising shipments to customers and when collecting raw materials. By focusing on improved planning, a reduction of the impact on the immediate living environment will also be achieved in 2015, and this in turn will go hand in hand with a reduction in costs.

Reducingtransport movements

Prioritiesandmotivations Box 3


industrial partners in the MIDAS project. This is a European, multi disciplinary research programme that studies the environmental repercussions stemming from the extracti on of minerals and energy sources from the deep sea. The project examines the nature and scope of the potenti al impact, along with the possibly hazardous spread of sediment plumes and chemical substances. The marine ecosystem is also studied in order to bett er understand the potenti al consequences of deep-sea mining. In 2014, IHC also joined the MAREC consorti um to supply instruments and concepts for sustainable mining across the enti re life cycle, from explorati on, design and operati on through to the closing of a mine.

With regard to the environmental impact of dredging operati ons, IHC parti cipated in the EcoShape Building with Nature programme several years ago. A recent spin-off of this programme is the Colombian-Dutch Dialogues, initi ated in 2014, whose goal is the protecti on of the Colombian coast. Together with partners Arcadis, HKV, RHDHV, Deltares, Rijkswaterstaat and Witt eveen & Bos, IHC represents the expert team that investi gates new technology to protect the Colombian coastline in a sustainable manner.

Opti misati on of fuel consumpti on and emissions reducti on The fuel consumpti on of IHC vessels during the operati onal phase is responsible for a signifi cant contributi on to the environmental impact of these products during the enti re life cycle. In the meanti me, increasingly strict requirements are being formulated worldwide regarding emissions standards in the mariti me industry. Therefore, in order to safeguard the licence to operate IHC products in the future, the company pays much att enti on to the opti misati on of fuel consumpti on and the reducti on of emissions. This involves the conti nuous executi on of R&D programmes that also focus on the opti misati on of the drivetrain and the search for alternati ve fuels.

An example of this is the research into the applicati on of liquifi ed natural gas (LNG) as an alternati ve for the diesel engines currently used. Uti lisati on of LNG can reduce the relevant NOX and SOX emissions by 85% and 95% respecti vely.

In-house, IHC has also developed numerical models to opti mise hull shapes, which result in considerable fuel savings. Full-scale validati on tests have been conducted as part of the SHOALS project.

Miti gati on of underwater noise Although underwater noise has not yet resulted in specifi c standards and restricti ons within the dredging and mining industries, the off shore industry is confronted with them. Underwater noise is studied under the Far and Large Off shore Wind (FLOW) project, which aims to increase the reliability of off shore pile-driving acti viti es, while at the same ti me reducing risks and costs.

Installati on methods are developed, in which a screen can be uti lised to miti gate underwater noise polluti on from a fl oati ng vessel and a jack-up during the pile driving process. A specifi c PhD study will be conducted in parallel using a simulati on of the noise generated during pile driving acti viti es. The study will also assess the eff ecti veness of the miti gati ng measures.

Reducti on of turbidityIn 2014, the development of the Deep Overfl ow project was conti nued with the development of the Airless Overfl ow. Overfl ow turbidity is exacerbated by air bubbles trapped in the stream, but the newly engineered Airless Overfl ow considerably reduces the amount of air, resulti ng in a reducti on of turbidity.

Another product development is the Turbidity Cover for the Lancelot cutt er. This is an adjustable protecti on system that minimises spillage and therefore also the resuspension of sediment from the cutti ng process, as well as turbidity.

Carbon footprint

IHC uti lises diff erent energy sources for the internal producti on process with natural gas, for example, used for heati ng. Carbon footprint analyses are used to gain an insight into the energy performance of the company and to assess the possibiliti es for reducing the environmental impact of these producti on processes. To determine the carbon footprint, IHC uses the ISO 14064-1 guideline and the conversion factors (version 2.2) from the CO2 performance ladder of the Independent Foundati on for Climate Friendly Procurement and Business, SKAO.

For now, the carbon footprint analysis focuses on the Dutch IHC faciliti es, in parti cular on scope one emissions (as a result of direct energy consumpti on) and scope two emissions (as a result of indirect energy consumpti on). IHC aims to further opti mise data collecti on, so it will be possible to determine where the biggest reducti ons can be achieved for each producti on facility.

Energy saving measuresIn additi on to encouraging the use of sustainable resources, IHC has focused its att enti on on increasing the sustainability of its faciliti es and on recycling the materials salvaged during demoliti on or renovati on work. To ensure that sustainable soluti ons are applied – emphasising the enti re life cycle of the (im)movables – IHC has been searching for opportuniti es to integrate energy-saving measures together with the internal users.

In order to improve individual performance, IHC uses the approved saving measures of the FME CMW trade associati on, which is coordinated by the Ministry of Infrastructure and Environment. For example, IHC has replaced central heati ng in various buildings with high-yield boilers, exchanged exhaust systems and refrigerati on dryers in the producti on halls for more energy effi cient models, and replaced insulati on when the roofi ng of various buildings was renewed. Meanwhile, the transiti on from conventi onal to LED work lights on a ship under constructi on has resulted in a 50% energy saving.

IHC is not alone in considering the smarter uti lisati on of materials, and stronger collaborati on in the value chain is also visible in day-to-day operati ons. For example, at the Sliedrecht locati on IHC (in cooperati on with Philips) has initi ated a pilot scheme for the use of LED lighti ng in producti on halls higher than 15 metres. Furthermore, the climate-control systems in various offi ce buildings have been opti mised.

IHC looks further than the sustainability of individual performance. In 2014, IHC carried out a thorough and sustainable renovati on of its MIT laboratory in Kinderdijk. In additi on to recycling salvaged materials and integrati ng LED lighti ng, a new air conditi oning system was installed and the outer walls were shielded with insulated double wall plates.

IHC invests not only in buildings, but also in its equipment. In 2014, IHC replaced several diesel-powered forklift s with propane- and the preferred electric-

powered forklift s. In additi on to emitti ng less noise polluti on into the surroundings, these forklift s also benefi t from lower emission levels. The same is true for electric cars, and IHC has now installed a charging point in Sliedrecht in additi on to the points at the Kinderdijk and Krimpen sites.

Not only does IHC consider taking such energy saving measures as its responsibility, but it also propagates them in the code of conduct, which is included in the procurement trajectories. For example, this joint responsibility can be recognised in the range of sanitary items, which now contain biodegradable materials. The waste processor contributes to the reducti on of the number of transport movements by placing fewer and larger waste containers, and installing compactors on the shipyard locati ons for the disposal of paper and industrial waste.

Packaging waste fund IHC registers the amount of packaging materials delivered to the market. Since it delivers more than 50,000kg of these annually, a contributi on to the Packaging Waste Fund (Afvalfonds Verpakkingen) is mandatory. In 2014, IHC moved a total of 161.82 tonnes of commercial packaging into the market, an increase of more than 99 tonnes when compared to 2013.

The reducti on of packaging materials is on the agenda as part of the objecti ve to reduce the environmental impact of IHC’s producti on faciliti es. Currently, this is limited to the registrati on and monitoring of the number of packages throughout the year. Based on this registrati on, some insight will be gained into the fl uctuati ons linked to the company’s acti viti es. In the long term, this will contribute to the defi niti on of objecti ves to reduce the amount of packaging materials, as well as their preservati on.


LNG Hopper

MTIlaboratoryinKinderdijk


A comprehensive account of IHC’s fi nancial results is available in the Annual Report, which can be found on the corporate website (www.ihcmerwede.com).

An important development progressed in 2014 was the transiti on towards a CSR policy based on the material subjects. An important step was conducti ng interviews in order to identi fy the expectati ons of the relevant stakeholders. The presentati on and explanati on of the CSR aims and objecti ves were also conti nued in 2014 during meeti ngs with, among others, government agencies, trade organisati ons and NGOs.

An important result of this is IHC’s positi on as a consultati on partner on shaping the Dutch mariti me sector into more sustainable one. In 2014, for example, IHC was involved in the MVO Nederland ICSR programme for the mariti me sector, in which objecti ves to increase sustainability in the mariti me

sector are formulated and realised together with chain partners.

IHC acknowledges the importance of transparency when reporti ng on its fi nancial and CSR results. For that reason, the company once again parti cipated in the Ministry of Economic Aff airs’ transparency benchmark in 2014, an annual study in which the quality of CSR reporti ng by Dutch companies is catalogued. IHC achieved 132nd place (of the 244 parti cipati ng companies), with a score of 92 points based on its Annual Report for 2013. In 2013 and 2012, the company ranked 143rd and 174th, with scores of 92 and 50 points respecti vely.

At the end of 2014, IHC’s Dutch sites employed a total of 2,744 people. Of those, 2,283 are on permanent contracts and 461 had temporary contracts. In additi on, at the end of 2014 there were 1,159 domesti c employees and 501 employees working

In early 2014, IHC Holland’s research and development group tested a new ECO automati on package during the test run of the trailing sucti on hopper dredger (TSHD) DCI DREDGE XXI. This package consists of a combinati on of the ECO pump controller and the ECO trailspeed controller. Designed by IHC Systems, it aims to reduce fuel consumpti on, as well as the loading ti me of TSHDs, without aff ecti ng capacity.

The ECO pump controller automati cally fi nds the opti mum working effi ciency for the dredge pump, and so prevents excessive cavitati on, while achieving the opti mum mixture velocity. An additi onal advantage of reducing pump cavitati on is increased effi ciency and reduced wear. If the dredge pump is working at the point of the decisive vacuum, maximum pump producti on is achieved.

The ECO pump controller works in combinati on with the ECO trailspeed controller, which maintains the ship at constant speed, while maintaining opti mal energy consumpti on, and taking into account hydraulic forces and draught. To achieve and maintain constant sucti on producti on, a consistent speed level is essenti al.

The tests on board the DCI DREDGE XXI have shown that the combinati on of the ECO trailspeed controller and the ECO pump controller leads to lower fuel consumpti on and constant producti on during the sucti on process. During the test, a signifi cantly lower loading ti me was achieved and the ECO automati on package has resulted in a 15% reducti on of the operati onal fuel consumpti on, and a similar reducti on in emissions, and it can be used on any modern TSHD.

EcoControllers

Resultsandkeyfiguresfor2014

Box 4


● Fuel consumption of lease cars 1.314 tonnes of CO2 (4,4%)

● Natural gas consumption 3.989 tonnes of CO2 (13,4%)

Business kilometresin private cars

207 tonnes of CO2 (0,7%)

●

Businessair travel

9.514 tonnes of CO2 (31,9%)

●

Waste flows: paper 223 tonnes of CO2 (0,7%)

●●

● Electricity consumption 14.607 tonnes of CO2 (48,9%)

at establishments overseas. As a consequence of the strong order book, the number of domesti c employees rose sharply.

The number of employees at IHC has remained more or less the same when compared to 2013. The number of female employees has been fl uctuati ng at around 11% for several years, and this did not change markedly in 2014. The average age of all employees was 40.3 in 2014. Aft er a slight rise in 2013, the expected fall in average age conti nued in the past year, caused mainly by the infl ow of younger employees.

The anti -corrupti on policy was further developed and formalised in 2014. In order to secure fi rmer integrati on of the regulati ons within the organisati on, a group of approximately 300 IHC employees – based on functi on and positi on – received internal anti -corrupti on training. In additi on, an online training course was made available for current and new employees.

The number of safety certi fi cati on training courses available increased considerably in 2014. The Safety, Health and Environment (VCA) certi fi cate was obtained or renewed by 239 employees, and 224 employees obtained their certi fi cati on for transport acti viti es. In collaborati on with the health and safety service and the SHEQ departments, a training course was

developed for preventi on offi cers. In consultati on with the physiotherapist, a training programme was also developed regarding healthy and safe lift ing.

In 2014, the Technical Training Centre trained 26 new students to intermediate vocati onal MBO2 level in the subjects of ship metalwork, welding and mechanical engineering. In additi on, guided tours, internship assignments and graduati on projects at diff erent levels were developed and introduced to various schools and universiti es.

IHC’s Fitness Health Centre is used extensively. In additi on to the opportunity for individual fi tness exercise, various group lessons are off ered. Acti viti es organised throughout the year, such as corporate hockey, running, rowing, football, swimming, skati ng, cycling and volleyball, were very popular in 2014. In-house rehabilitati on also received a high level of interest. For example, support was off ered to people with back, neck and arm problems in the form of muscle strengthening exercises designed to restore balance back into the body.

In the area of chain responsibility, further steps were taken to map the performance of suppliers using the QLIFT method. In 2014, the performance profi les of 44 suppliers were drawn up.


Directenergyconsumption 2011 2013 2014

Fuel consumed by lease cars: petrol 830 tonnes of CO2 761 tonnes of CO2 733 tonnes of CO2

Fuel consumed by lease cars: diesel 650 tonnes of CO2 562 tonnes of CO2 579 tonnes of CO2

Fuel consumed by lease cars: LPG 9 tonnes of CO2 3 tonnes of CO2 2 tonnes of CO2

Natural gas consumed 4.360 tonnes of CO2 4.480 tonnes of CO2 3.989 tonnes of CO2

Indirectenergyconsumption* 2011 2013 2014

Electricity consumpti on 15.130 tonnes of CO2 13.868 tonnes of CO2 14.707 tonnes of CO2

Business kilometresdriven in private cars

262 tonnes of CO2 210 tonnes of CO2 207 tonnes of CO2

Business travel 6.556 tonnes of CO2 9.342 tonnes of CO2 9.514 tonnes of CO2

Drinking water consumpti on 10 tonnes of CO2 5 tonnes of CO2 8 tonnes of CO2

Waste fl ows: paper 148 tonnes of CO2 132 tonnes of CO2 223 tonnes of CO2

Location 2012 2013 2014

Kinderdijk 13.761.085 13.474.121 13.820.563

Sliedrecht - Molendijk 3.648.967 4.762.020 4.500.816

Sliedrecht - Industrieweg Not known Not known 857.884

Krimpen aan den IJssel 5.764.722 8.171.133 8.234.406

Hardinxveld - Giessendam 2.459.249 2.473.382 2.933.194

Overige locati es 1.606.659 1.597.747 1.757.502

2011 2012 2013

1.392.064 1.465.195 1.309.156

349.408 477.377 259.571

68.810 94.484 68.769

100.000 206.584 178.544

173.347 Not known 234.776

242.922 211.050 134.790

Electricity [kWh]Energyconsumptionbysite Natural gas [m3]

CO2equivalent (Dutch company sites)

*The CO2 emissions resulti ng from direct and indirect energy use fl uctuate depending on the degree of producti on capacity uti lisati on.

Strategicspearheads

Performance

Performance / Commitment

Commitment

Commitment

Innovati on / Sustainability

Sustainability

Sustainability

Materialsubjects

Good governance and anti -corrupti on

Reporti ng and communicati on

Chain responsibility

Supporti ng local communiti es

Sustainable product development

Health and safety

Carbon Footprint

Objectives2014

• Embedding anti -corrupti on policy including anti -corrupti on, agents and whistleblower’s regulati ons• Good governance and anti -corrupti on training

• Set up and execute stakeholderdialogue• Set up Annual Report according to GRI G4 richtlijnen

• Set up performance profi les for 10 suppliers per unit

• Give meaning to local community support projects within the IHC Merwede Foundati on

• Conti nue R&D programme into sustainable development

• Making health management policies applicable to all units• Increasing safety awareness

• Monitoring CO2 emissions on an annual basis• 2% annual CO2 reducti on

Results2014

• 300 employees are trained• Online training available for all employees

• CSR report according to GRI G3 guidelines (applicati on level C) with a transiti on to G4• 132rd place in the transparency benchmark with 92 points

• 44 performance profi les were drawn up (128 over the period 2011-2014)• 44 outstanding improvement plans

• Long-lasti ng partnerships on several internati onal projects• Sponsored several employees• Expanded IHC ambassador network

• Acti ve parti cipant in European research consorti um MIDAS• Acceded to the MAREC consorti um• Interlocutor in Dutch-Colombian dialogue on coastal protecti on• Research/development in the sphere of emissions/reducing fuel consumpti on• Developing specifi c sustainable applicati ons to reduce spillage and turbidity• Successful test of the ECO automati on package

• 224 employees certi fi ed for various transport jobs• VCA certi fi cate awarded to 293 employees• Training developed for Preventi on Employees• Training developed for safe lift ing

• Carbon footprint for 2014 made clear


Also, at the end of the year, 44 improvement plans to increase supplier performance to the desired IHC levels were still open. Over the period of 2011-14, the performance profiles of 128 suppliers were mapped out. The high operational workload for outlining supplier performances, and following up the improvement plans, was a major cause for not achieving the objective set in 2013 – to summarise the performance profiles of the ten most important suppliers per unit.

In 2014, the number of IHC Foundation project ambassadors was expanded, and in addition to financial donations, projects are increasingly supported by means of knowledge and expertise from the company. Projects that were supported both financially – and with expertise – in 2014 were the Winddrinker (€40,000), Together for Zambia (€11,000) and House of Hope in India (€15,000). With these projects, the IHC Foundation entered into long-term collaborations with the aim of providing relevant contributions until the projects are able to run without support.

In addition, a number of IHC employees participated in the Tour for Life for Doctors Without Borders (MSF), to which the IHC Foundation contributed a sum of €30,000. Regional initiatives, including a number of food banks and a hospice, received €7,500 and €5,000 in financial support, respectively. In addition, various standalone initiatives and smaller projects, in which IHC employees are actively involved, received financial support from the IHC Foundation.

Carbon footprint assessmentBased on the available data, IHC’s CO2 emissions from establishments in The Netherlands have been calculated at 29,862 tonnes throughout 2014. This carbon footprint assessment includes: the use of natural gas; fuel consumption of leased cars; business flights; consumption of electricity; business car travel; water consumption; and paper waste. Other sources of energy used within the production processes and the effects of refrigerants released into the atmosphere have been entirely excluded from this analysis, since the reliability of the data cannot be guaranteed for all IHC establishments.

A management system to collect the relevant data from all IHC locations according to the same standard will be established before incorporating this data into the carbon footprint analysis. This process will be executed in 2015, with the intention of having a complete carbon footprint assessment over the year.

At almost 50%, electricity consumption is the largest contributor to the total carbon footprint. In addition, business air travel is a major contributor at almost 32%. Meanwhile, drinking water consumption (0.03%), paper flows (0.7%), and kilometres driven for business in private cars made the smallest contributions to the total CO2 emissions. Although electricity consumption is appointed as the largest contributor for all locations, the different energy consumers vary for each location. For this reason, an in-depth analysis for each site is recommended as part of the objective to reduce the company’s carbon footprint.

IHC Hytech designs, manufactures and maintains equipment and systems for the professional diving industry. Like many other IHC business units, it has been implementing the company’s corporate CSR policy.

To map the safety of a working environment, IHC Hytech uses RI&E (risk inventory and evaluation). During this analysis, the layout and environment of the workplace, as well as the workload (among other things) are inspected for the relevant health and safety standards. The inventory will result in suggestions for improvement and an action plan to solve bottlenecks. The goal of RI&E is to reduce the workload of employees and the number of injuries as a result of poor working conditions.

By means of a preventative medical examination (PME), IHC aims to improve the sustainable employability of its personnel. The PME assesses the physical as well as the mental burden on employees and suggests possible improvements. This contributes to the responsible employment of staff and the improvement of their personal wellbeing.

In 2014, IHC Hytech contributed to the development of young people at the start of their careers. For example, visits to the company are organised for training institutes to see inside the industry and inspire enthusiasm in young people. In addition, company personnel also act as guest teachers, informing the students how they function within the industry, with special attention paid to people and the environment.

Sustainable product developments within IHC are focused on improving the workability and safety of both product users and operators. This is illustrated by the developments for the medical market. For example, IHC Hytech supplies products for hyperbaric oxygen therapy that result in major improvements in the healing process of complex wounds, helping patients to be as comfortable as possible. Another example is the development of decompression units, which considerably reduce the risk of divers sustaining decompression-related disorders.

IHCHytech

Resultsandkeyfiguresfor2014 Box 5



20120

1250

2500

3750

5000

2013 2014

Temporary

Permanent

Overseas sites

Insourced employees

Numberofstaffemployed(Temporary/permanent)*

The number of insourced employees rose significant. The number of temporary staff and permanent employees remained the same.

2012 2013 20140

500

1000

1500

2000

2500

0

5

10

15

20

25

30

2014

2013

2012

Agestructure*

OffshoreDivision

Dredging Division

ClusterMotionControl

ClusterTechnologyServices

ClusterInternationalBuildingSites

ClusterOffshoreTools

ClusterMining

Other

Other/Holding

TotalIHC2014

2013

2012

OffshoreDivision

Dredging Division





ClusterMining

Other

Other/Holding

TotalIHC2014

2013

2012

Temporary

83

47

79

45

3

57

6

12

129

461

470

541

Permanent

431

719

248

357

30

128

16

49

305

2283

2280

2244

Total2014

514

766

327

402

33

185

22

61

434

2744

2750

2785

Insourcedemployees

436

255

102

197

3

48

2

13

103

1159

836

730

Totalin-houseandinsourced

950

1021

429

599

36

233

24

74

537

3903

3586

3515

≥65

0,6%

0,0%

0,3%

0,3%

0,0%

0,5%

0,0%

0,0%

0,0%

0,2%

0,2%

0,3%

55-64

23,7%

25,4%

17,4%

25,1%

18,2%

9,7%

4,5%

23,0%

10,4%

20,0%

19,9%

18,7%

45-54

21,8%

23,2%

26,0%

23,7%

27,3%

22,2%

13,6%

26,2%

19,8%

22,4%

22,8%

22,8%

35-44

22,8%

23,0%

32,4%

19,3%

30,3%

21,1%

27,3%

13,1%

26,7%

23,6%

24,5%

25,0%

25-34

23,9%

20,2%

20,5%

23,3%

24,2%

37,3%

50,1%

18,0%

27,7%

23,8%

23,7%

23,6%

15-24

7,2%

8,2%

3,4%

8,3%

0,0%

9,2%

4,5%

19,7%

15,4%

10,0%

8,9%

9,6%

Averageage

42,1

42,9

42,3

42,4

43,2

37,4

35,7

41,1

36,0

40,3

40,9

40,4

Total number of employees at overseas business units:

2014 501

2013 450

2012 336

15-24 25-34 35-44 45-54 55-64 ≥65



Reasonsfordeparture

A striking feature of the year 2014 is that fewer IHC employees left the company because their contract ended.

0%

10%

20%

30%

40%

Employer’s request

Own request

End of contract

Other

Deceased

Retirement / TOP

Percentage

Levelofeducation*

Lowervocationallevel Intermediatevocationallevel Highervocationallevel Universitylevel

(LBO) (MBO) (HBO) (WO)

Percentage2014 25,0% 41,8% 21,7% 11,5%

Percentage2013 24,9% 44,1% 21,1% 9,9%

Percentage2012 26,6% 44,2% 19,8% 9,4%

Lower vocational level (LBO)

Intermediate vocational level (MBO)

Higher vocational level (HBO)

University level (WO)

0

4,3

4,4

4,5

4,6

4,7

4,8

2012 2013 2014

Absenteeismduetoillness(excluding pregnancy and safety net)

The absenteeism due to illness percentage rose in 2014 compared to the previous year. The most important causes were an increase in long-term absenteeism and an increase in absenteeism as a result of industrial accidents.

The figures show that the average education level at IHC is increasing slightly. This trend is expected to continue.

OffshoreDivision

Dredging Division





ClusterMining

Other

Other/Holding

TotalIHC2014

Percentage2014

Totaal2013

Totaal2012

OffshoreDivision

Dredging Division





ClusterMining

Other

Other/Holding

Average2014

Average2013

Average2012

Total

39

48

30

25

0

14

4

5

52

217

100%

262

254

(Early)retirement

6

15

5

3

0

2

0

0

4

35

16,1%

31

25

Deceased

2

3

0

1

0

0

0

0

0

6

2,8%

3

6

Other

1

5

1

4

0

0

0

3

1

15

6,9%

36

5

End ofcontract

8

2

3

5

0

4

2

1

20

45

20,7%

75

62

Ownrequest

15

13

14

10

0

6

2

1

21

82

37,8%

81

121

Employer’srequest

7

10

7

2

0

2

0

0

6

34

15,7%

36

35

2014

5,08

6,51

3,17

5,39

1,58

3,17

2,32

5,76

2,99

4,78

4,62

4,32

41,8%

21,7%

11,5%

25%

Inflow

20120

25

50

75

100

125

150

175

200

225

250

275

2013 2014

The numbers in this table do not reflect the many internal transfers. Interns are not included, as well. The figures show that the trend of last year has been continued. The number of new employees has risen slightly.


Male

Female11,2%

88,8%

The number of women working at IHC has been around 11% for several years.

Male/femaledistribution*

In 2015, IHC will continue to intensify the chosen approach in the field of sustainability. The objectives for 2015 are in line with the results of the stakeholder interviews, are across the whole company, and focus on both internal processes and external impacts.

Stakeholder dialogueActively bringing the CSR policy and the material subjects identified by means of interviews to the attention of IHC’s stakeholders will be continued in 2015. In order to achieve the broadest possible picture, the stakeholders will be categorised into the following subgroups: government agencies; suppliers; financial institutions; customers; and knowledge institutions/NGOs. At least two stakeholders will be interviewed from each subgroup.

In addition, an action plan will be formulated to incorporate the interviews in the regular stakeholder meetings in the medium term.

Chain responsibilityThe suppliers of IHC will be divided into 11 categories, and the top three suppliers for each category will be determined by spend. Performance profiles and improvement plans will be formulated for these 33 suppliers in 2015 in order to help them meet the profile desired by IHC.

Support of local communitiesIn 2015, IHC will once again support local communities and social projects, within the context formulated by the IHC Foundation. The focus will be not only on financial contributions, but also – and especially – on utilising the passion, knowledge and expertise of IHC employees.

Health and safetyThe changes in the SHEQ-CSR organisation within IHC will also mean more structured safety processes. Formulating quantitative objectives regarding leading and lagging indicators in 2015 is part of this process. Leading indicators comprise, for example, the number of safety and inspection rounds carried out, and the number of implemented safety improvement measures. Lagging indicators are based on lost-time injury and absenteeism percentages.

With regard to health management, efforts will be made in 2015 to determine how stress-related complaints can be reduced. Physical discomfort due to incorrect posture at work is easily remedied by providing personnel with more information about working safely and responsibly, which will also result in increased attendance.

Education and trainingAs in 2014, IHC will continue to focus on ensuring that the core workforce has a robust knowledge-and-expertise balance. The aim is to maintain a healthy overall workforce. To this end, the training department will undergo further development.

As a result of, for example, the implementation of the ONE programme, the need for education significantly increases and the training process will be IT-supported. The increase of SHEQ-related processes will also lead to the continued organisation of the necessary training programmes. This will include a closer look at the effectiveness of the toolboxes. Based on the further development of the HR policy, using GAP analyses, new training needs will emerge for the further development of professionalism – and to aid cooperation.

Sustainable product developmentThe research and development programmes related to sustainable product development will continue in 2015. This will involve continuously seeking a link with market developments and trends regarding rules and regulations.

Carbon footprintIn order to implement a 2% annual reduction of CO2 emissions, quantitative objectives will be formulated – based on location – regarding the reduction of energy consumption, waste flows, consumption of materials and transport in 2015.

Objectivesfor2015


OffshoreDivision

Dredging Division





ClusterMining

Other

Other/Holding

Totalintake2014

Totalintake2013

Totalintake2012

OffshoreDivision

Dredging Division





ClusterMining

Other

Other/Holding

Total2014

Total2013

Total2012

2014

40

23

51

25

2

31

5

6

74

257

212

269

Male

92,5%

91,8%

90,0%

94,3%

72,7%

88,3%

76,0%

95,1%

72,9%

88,8%

88,9%

88,5%

Female

7,5%

8,2%

10,0%

5,7%

27,3%

11,7%

24,0%

4,9%

27,1%

11,2%

11,1%

11,5%

*Benchmark date: 31-12-2014. IHC’s overseas companies were not included in the figures for 2014.


AnnualReportoftheWorksCouncil

The Works Council has kept the internal organisation informed of its developments and activities by means of various newsletters. Below is a summary of the most important matters it was involved in throughout the past year.

Regulation of shift work conditionsIn 2013, the management introduced a modified shift work regulation. This affected the transition from non-structural to structural shift work, but also the related shift work allowance. Together with the trade unions, the Works Council has made every effort to reverse this regulation. The Works Council is content that this was indeed accomplished during the course of 2014, and the original shift work regulation is in force again, with retroactive effect. The employees involved have received compensation.

Anti-corruption regulationThe Works Council has devoted a significant amount of time to the request for approval of the anti-corruption regulation, and an external expert was enlisted to provide extensive information on the subject. An important issue for the Works Council was that employees should be able to report any wrongdoing not only to an internal confidential advisor but also – for reasons of impartiality and objectivity – to an external confidential advisor. This point, as well as some others, was ultimately included in the agreed regulation.

Implementation of new job evaluation system The Works Council was asked for consent to implement a new system (Hay) for the job description system (name and job description) and the salary system (job evaluation). The Works Council thoroughly familiarised itself with this subject matter and spoke to many experts in the field.

The Works Council considers ISF to be the best system for the Metalektro and saw no need to the change this job evaluation system that is currently used for CLA employees. In the opinion of the Works Council, the Hay system can be applied to employees with above-CLA salaries. The Works Council therefore agreed to the implementation of the Hay system for the job evaluation matrix and salary system for employees above CLA only.

Acquisitions and disposals The Works Council gave a positive recommendation for the

acquisition of the Imtech share in IHC Systems, making IHC Systems a wholly owned subsidiary of IHC.

In light of the considerable strategic importance for IHC, the Works Council also gave a positive recommendation for obtaining a majority share in the Brazilian company Brastec and the acquisition of SAS Offshore.

Furthermore, the Works Council agreed to the sale of IHC Sealing Solutions. As nearly all primary and secondary employment conditions were left intact, the Works Council saw no objections to selling this unit.

Safety, health and welfareIn 2014, the Health, Safety, Welfare and Environment (VGWM) commission – apart from risk inventory and evaluation (RI&E) and the resulting action plans for various units – was also involved in: formulating a protocol for the medical examination of crane operators; the external investigation at the Krimpen panel production hall as a result of the RI&E of IHC O&M; and the modifications in regulation 4.37, long-term disability. Furthermore, the VGWM commission dealt with a request for approval to change the health and safety service for IHC Fundex Equipment. Following an investigation, the commission saw no reason to implement this, and the contract with the old/current health and safety service (Arboned) was extended.

Organisational changes As a direct consequence of the revision to IHC’s strategic direction, the Works Council was also asked to advise on a change to IHC’s organisational structure. The Works Council understands that IHC must respond to external developments, and supports the revision of the strategic direction. It also views the intended organisational changes as a logical consequence of this approach.

The Works Council therefore gave a positive recommendation on the intended change to the organisational structure. It has been agreed that the Works Council will receive separate requests for advice and/or approval regarding the consequences and/or follow-up steps to the organisational change (if applicable according to the Works Council Act, articles 25 and 27). The Works Council was still considering a participation structure that is in line with the new organisational structure when this report was being prepared.


Reportingparameters

Purpose of this reportWith this CSR Annual Report for 2014, IHC accounts for its social and environmental performance over the period between 1 January and 31 December 2014, and also sets out its objectives for the coming period. In this way IHC – in addition to financial reporting in the Financial Annual Report – provides a report of the non-financial results of the company and an insight into the degree of sustainability

of internal operations. IHC reports annually on its financial and social results. The previous Social Annual Report was published in May 2014.

Scope of the reportingThe scope of this CSR Annual Report comprises the social and environmental performance resulting from IHC’s CSR policy, and is based on the material subjects that are relevant to the

company. An extensive account of the company’s financial performance can be found in the Annual Report for 2014. The current CSR policy of IHC is applicable to all company sites located in The Netherlands. For this reason, only the activities, performance and objectives related to the material issues of the Dutch business units are included in this report. As soon as the CSR policy is extended to IHC’s overseas sites, the scope of the social reporting will also be extended.

Reporting process and publication date The 2014 Annual CSR Report was created under the responsibility of the CSR steering group. Headed by the CFO, it is responsible for monitoring the reporting process, assuring the quality of the CSR information and approving the end result. In addition, the content is verified with the departments and/or persons directly responsible for checking errors and/or omissions.

The representation from within the company in the CSR steering group provides clear pathways to the various departments for data gathering for reporting purposes. At present this data-gathering exercise takes place once a year, and the process of consolidating these data for use in the CSR Annual Report is in the hands of the ‘one-stop CSR shop’. The carbon footprint is calculated using the ISO 14064-1 guidelines and the CO2 performance ladder of the Climate-Friendly Tendering and Business Foundation (Stichting Klimaat Vriendelijke Aanbesteden en Ondernemen). The supply and validation of the necessary data are the responsibility of the Facility Services department.

Compared to previous reports, there were no changes to the definitions and measuring methods used for the information reported in this CSR Annual Report.

The content of this Report has not been verified by an external party. IHC aims to first allow the CSR objectives to penetrate more deeply into the organisation and make the complete transition to the GRI G4 guidelines with improved quantitative reporting before moving on to external verification. MVO Nederland has been asked to read the report and supply input regarding what is needed to achieve a GRI G4 level of reporting.

In April 2014 this report will be published, together with the Annual Report 2014, on the corporate website of IHC (www.ihcmerwede.com).

GRI guidelinesIn order to conform to the international standard in the field of CSR reporting, the G3.1 guidelines of the Global Reporting Initiative have been used to determine the content of this Annual Report. It complies with the requirements of application level C. The GRI index table shows the indicators that have been reported on.

The transition to reporting in accordance with the new GRI G4 guidelines initiated in 2013 has been continued in 2014 through an increased focus on the subjects that are material to the company.

ContactIHC invites its stakeholders to provide feedback or enter into a dialogue on the CSR policy as well as this Social Annual Report. To do so they can contact:

Mrs MJ HoltkampEmail: [email protected]


GRI Index ChapterStrategy and analysis

1.1 Preface by the CFO Preface by the CFOOrganisationalprofile

2.1 Name of organisation About IHC2.2 Primary products and services About IHC2.3 Operational structure of the organisation About IHC2.4 Location of the organisation's head office About IHC2.5 Internationalisation About IHC2.6 Nature of ownership and legal form About IHC2.7 Markets About IHC2.8 Size of the organisation About IHC, Results 20142.9 Significant changes during the reporting period About IHC2.10 Awards received during the reporting period N/A

Reportingparameters3.1 Reporting period Reporting parameters3.2 Date of most recent report Reporting parameters3.3 Reporting cycle Reporting parameters3.4 Contact person/department Reporting parameters3.5 Process for determining content of the report Reporting parameters3.6 Delineation of the report Reporting parameters3.7 Statement of specific limitations for scope or delineation Reporting parameters3.8 Basis for reporting Reporting parameters3.10 Consequences of reformulations N/A3.11 Significant changes in scope, delineation, measuring method N/A3.12 Table of standard GRI components GRI Index table3.13 Policy and practice with regard to involving external assurance Reporting parameters

Bestuur,verplichtingenenbetrokkenheid4.1 Governance structure of the organisation About IHC4.2 Function of chair of highest governing body About IHC4.3 Number of independent/non-management members of highest governing body About IHC4.4 Co-determination with highest governing body About IHC4.14 List of stakeholders involved About IHC4.15 Selection of stakeholders to involve About IHC

Economic indicatorsEC 1 Direct economic value Results 2014, Annual Report 2014*

Environmental indicatorsEN 3 Direct energy consumption by primary energy source Priorities and motivations, Results 2014EN 4 Indirect energy consumption from primary energy source Priorities and motivations, Results 2014EN 5 Energy saved through savings and efficiency improvements Priorities and motivationsEN 6 Initiatives to reduce direct energy consumption Priorities and motivationsEN 7 Initiatives to reduce indirect energy consumption Priorities and motivationsEN 16 Total direct and indirect emissions of greenhouse gases Priorities and motivationsEN 17 Other relevant indirect emissions of greenhouse gases Priorities and motivationsEN 18 Initiatives to reduce emissions of greenhouse gases Priorities and motivations

Sociale indicatoren

LA 1 Total workforce Results 2014LA 2 Staff outflow Results 2014HR 2 Percentage of suppliers checked for human rights Priorities and motivations, Results 2014SO 3 Percentage of employees trained in anti-corruption policy and procedures Priorities and motivations, Results 2014

* For further explanation of the financial performance of IHC, see the Annual Report 2014 at www.ihcmerwede.com

GRI Index table List of terms

Anti-corruptionregulationPolicy and code of conduct issued by the company in order to combat corruption in daily activities within the company.

Carbon footprintThe carbon footprint provides an insight into the total greenhouse gas emissions created by a company’s products or production processes. Awareness of the carbon footprint gives companies a tool to actively target reductions in the CO2 emissions.

CodeofconductAn explicit description by the company of the standards and values that apply to employees and suppliers regarding compliance with applicable laws, corruption, human rights and environmental aspects etc.

CostofownershipThis refers to the total cost of a product over its entire life cycle. It is also a management tool that enables a comparison between the costs of different product alternatives.

SustainableproductdevelopmentThe development of products and services with a view to their economic, social and ecological impact.

GlobalReportingInitiative(GRI)An international non-profit organisation that draws up guidelines for CSR reporting.

Good governanceEfficient and responsible management of a business, and accountability towards stakeholders regarding the policy followed.

IFC Performance StandardsThe performance standards of the International Financial Corporation describe the responsibilities of the customer with regard to managing the social and environmental risks.

IMO(InternationalMaritimeOrganisation)As a specialised organisation of the United Nations, the IMO is responsible for establishing agreements between participating member states in order to make shipping as safe and environmentally friendly as possible.

ChainresponsibilityIncluding social and environmental aspects in the selection of suppliers and/or improving social and environmental aspects in the supply chain.

ClimateadaptationThe process by which societies, businesses and governments reduce the vulnerability caused by climate change, or are able to profit from the opportunities that a changing climate offers them.

Licence to operateThe permission to perform an operation and/or to produce. In terms of sustainability, it also refers to the value attached by society for what a company does to contribute towards sustainable development, while assuring economic performance in the long term.

Materiality matrixA graphical representation used by an organisation to demonstrate the relative importance of the material subjects for both the company and stakeholders.

MaterialsubjectsThe most relevant (sustainability) subjects for a company, or subjects that meet the information needs and considerations of stakeholders, so that they qualify for inclusion in the CSR reporting.

StakeholderdialogueContact with stakeholders involving checking the relevant themes and interests of the company against the expectations of the stakeholders.

TransparencybenchmarkAn annual study by the Ministry of Economic Affairs into the content and quality of CSR reporting. A research group with a fixed membership monitors the quality and progress of CSR reporting by Dutch companies.

Royal IHC

P.O. Box 204, 3360 AE SliedrechtMolendijk 94, 3361 EP SliedrechtThe Netherlands

T +31 184 41 15 55

[email protected]

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