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DAMEN SHIPYARDS GROUP

SUSTAINABILITY REPORT 2015

2 SUSTAINABILITY REPORT 2015

1 1 From our CEO

2 2 Summary of key figures

3 3 The World of Damen 3.1 Approach to sustainability within Damen 3.2 Our stakeholders and their information needs

11 4 Financial performance

15 5 Investing in innovation 5.1 Innovation through cooperation 5.2 Innovation in action

20 6 Responsible production 6.1 Health and safety at our yards 6.2 Emissions, energy and waste 6.3 Improving procurement and local sourcing 6.4 Excellerate

24 7 Stakeholder relationships 7.1 Keeping our customers close 7.2 Sustaining our Human Capital

27 8 Contributing to communities worldwide 8.1 Disaster Relief Containers – Bahama’s 8.2 Water Barge – Morocco 8.3 Damen in Gorinchem, The Netherlands

29 9 Appendices 9.1 About this report 9.2 GRI G4index 9.3 Glossary

37 Contact

1SUSTAINABILITY REPORT 2015

With this second report we continue our efforts to make sustainability a more visible part of Damen’s strategy. We are seeing growing interest in the topic of sustainability among all our stakeholders. During the past year we once again worked hard on improving our sustainability performance and made progress in a range of areas.

Improving our performanceIn 2015 new measures have been taken at the production sites, both in the Netherlands and abroad, to minimise the risk of health and safety incidents. Incidents will be evaluated and discussed periodically, from which relevant measures to prevent future incidents will be designed and implement accordingly. In addition Damen has a proactive approach by which employees can submit their ideas on improvements.

Good progress was made with the further implementation of the Code of Conduct for Damen Shipyards Group. The code has been published and ensures the consistent propagation of the standard Group policy regarding the most important business principles and values. A Supplier Code of Conduct sees to it that subcontractors and temporary employment agencies comply with the legal requirements regarding remuneration and working conditions. In 2015, this code was sent to more than 600 of our suppliers.

To continue to be successful in hiring and retaining talented staff, Damen Shipyards Group aims to distinguish itself as an attractive employer of first choice. The possibilities for training and education play an important role in this, as do our brand image and corporate culture. Our internal Damen Academy helps meet the development needs of our employees. A further roll out of Damen Academy in The Netherlands has been completed in 2015 and in 2017 we expect all employees worldwide to have access to this platform.

Innovation is key Reducing the environmental and safety risks in our production is important, but we can contribute even more positively through innovative, sustainable designs. R&D and innovation are also important ways for Damen to distinguish itself from its competitors.

WELCOME TO OUR 2015 SUSTAINABILITY REPORT

1

RENÉ H. BERKVENS – CEO DAMEN SHIPYARDS GROUP

The company is identifying and developing new ways to address growing challenges, such as pioneering the world’s first mobile ballast water treatment system (InvaSave) to operate in ports and support ship deballasting operations.

Damen launched the first fully LNG powered Damen EcoLiner inland shipping tanker. The design combines conventional, proven engineering with sustainable innovations. The EcoLiner is developed to deliver fuel savings for inland shipping operators, while at the same time reducing emissions.

Damen plays an active role in the Dutch government’s policy on key economic sectors. In the Netherlands we are a member of the sector team for the Maritime Industry. Damen is also a partner of the European eco-friendly initiative “Vessels for the Future” for research, development and innovation on vessels and waterborne operations.

Looking forwardIn the coming year further improvements are necessary, especially in setting clear targets, quantifying our performance as well as the process of collecting reliable data throughout the entire group.

Any suggestions you may have on what sustainability at Damen should entail and the way we report on it are greatly appreciated and we are happy to engage with you on this subject.

RENÉ H. BERKVENS – CHIEF EXECUTIVE OFFICER

2SUMMARY OF KEY FIGURES

FINANCIAL/MARKET/CLIENTS Production Value (in € billion) 2015 nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn 2.1 2014 nnnnnnnnnnnnnnnnnnnnnnnnnnnnnn 2.0 2013 nnnnnnnnnnnnnnnnnnnnnnnnn 1.7

Net result (in € million) 2015 nnnnnnnnnnnnnnnnnnnnnnnn 73 2014 nnnnnnnnnnnnnnnnnnnn 58 2013 nnnnnnnnnnnnnnn 44

Deliveries (# vessels) 2015 nnnnnnnnnnnnnnnnnn > 180 2014 nnnnnnnnnnnnnnnn > 160 2013 nnnnnnnnnnnnnnnnn > 170

Repair & Maintenance Jobs 2015 nnnnnnnnnnnnnnn > 1,500 2014 nnnnnnnnnnnnnnn > 1,500 2013 nnnnnnnnnnnnnnn > 1,500

Global Presence (Shipyards) 2015 nnnnnnnnnnnnnnnn 32 2014 nnnnnnnnnnnnnnnn 32 2013 nnnnnnnnnnnnnnnn 32 Shipyards in Holland 2015 nnnnnn14 2014 nnnnnnn 15 2013 nnnnnnn 15 Shipyards in rest of the World 2015 nnnnnnnnnn 18 2014 nnnnnnnnn 17 2013 nnnnnnnnn 17

SOCIAL Average FTE* 2015 n nnnnnnnnn n nnnnnnnnnn nnnnnnnnnn nnnnnnnnnnnn 9,700 2014 n nnnnnnnnn n nnnnnnnnn n nnnnnnnnn n nnnnnnnnn 9,000 2013 n nnnnnnnnn n nnnnnnnnn n nnnnnnnnnn nnnn8,000 The Netherlands 2015 n nnnnnnnnnn nnn3,140 2014 n nnnnnnnnn n nn2,990 2013 n nnnnnnnnn n nn2,950 Rest of Europe 2013 n n n n n n n n n n n n n n n n n3,710 2012 n n n n n n n n n n n n n n n n3,540 2013 n n n n n n n n n n n n n n n3,240 Rest of the World 2015 n nnnnnnnnnn nn2,850 2014 n nnnnnnnnnn2,470 2013 n nnnnnnn1,810

Absenteeism (in %) ** 2015 n nnnnnnnnn n nnnnnnnnnnnnnnnn2.7% 2014 n nnnnnnnnn n nnnnnnnnnnnn2.3% 2013 n nnnnnnnnn n nnnnnnnnn n nnn2.4%

ENVIRONMENTAL CO² Emissions own operations per yard *** Damen Shipyards Galati 2015 n nnnnnnnnnn nnnnnnnnnnnnnnnnnnnnnnnnnnnnn27,120 tonnes CO² 2014 n nnnnnnnnn n nnnnnnnnn n nnnnnnnnnnnnnnnn24,710 tonnes CO² 2013 n nnnnnnnnn n nnnnnnnnnnnnnnnnnn19,407 tonnes CO² Damen Shipyards Singapore 2015 n n n1,666 tonnes CO² 2014 n n923 tonnes CO² 2013 n n1,053 tonnes CO² Damen Shipyards Gorinchem 2015 n nnnnnnnnnn nn8,254 tonnes CO² 2014 n nnnnnn4,768 tonnes CO² 2013 n nnnnnn4,810 tonnes CO² Damen Shipyards Changde 2015 n n1,086 tonnes CO² 2014 n n n1,804 tonnes CO² 2013 n nnn2,326 tonnes CO²

* Full Time Equivalent ** Damen Shipyards Gorinchem *** increase CO² emissions in the period 2013-2015 due to the increase of production activity


Our marketsShipbuilding is a global industry, with a scope covering a diverse sectoral range. Damen focuses its efforts on a number of niche market segments, as follows: n Harbour & Terminaln Seagoing Transport n Inland Shipping n Public Transportn Defence & Securityn Offshore Oil & Gas n Offshore Windn Dredging n Fishingn Yachtingn Sea & River Cruisingn Environmental Safety & Controln Shipbuilding & Maritime Construction

3THE WORLD OF DAMEN

The Damen Shipyards Group operates around the world with 32 ship and shiprepair & conversion yards. Damen Shipyards Group employs over 8,500 personnel. If one also proportianetly includes the employees of the joint ventures, than Damen Shipyards Group employs more than 9,700 employees. These employees are involved in the delivery of 180 vessels and the undertaking of more than 1,500 maintenance and repair projects per year, as well as provision of a diverse range of maritime services and products.

What we doDamen’s product and service offering is not only geographically far-reaching, it is also diverse in its scope. Included is the newbuilding of a wide range of vessels for niche markets across the maritime sectors, including tugs and workboats, defence and security, renewable and non-renewable offshore industries, ferries and public transport, dredgers, pontoons and barges and superyachts. At the same time, Damen Trading offers a platform by which clients can buy or sell a used Damen vessel. With 40 drydocks strategically located in North- & West-Europe, Middle-East and Asia, Damen also undertakes ship repair and conversion projects. Additionally, repair projects can be carried out on vessels at sea. Damen’s offering extends to the delivery of a comprehensive service package, covering maintenance, spare parts delivery, training and transfer of shipbuilding know-how. The transfer of knowledge is also a key part of the work undertaken by Damen Civil, including in projects such as the construction and extension of shipyards. In these cases, Damen not only provides the engineering, materials and equipment, but also trains local personnel, furthering skills development in a region far beyond the execution of an individual project. Damen also provides a wide range of marine components, with a particular focus on nozzles, rudders, anchor chains, winches and steel works..

Sustainability prioritiesWith newbuilding (including building on site) accounting for the bulk of Damen’s annual turnover at 69%, it forms the main focus of this report. Making up the largest portion of group activity, newbuilding has the largest social, economic and environmental impact.


ANNUAL TURNOVER 2015

n Newbuilding 58%n Repair 20%n Building on site 11%n Components 4%n Services 3%n others 4%

Global presenceOperating from headquarters in Gorinchem, the Netherlands, the Damen Shipyards Group operates 32 ship and shiprepair & conversion yards and also works with various partner yards, providing global distribution of the products and services and business cooperations of the Damen portfolio. www.damen.com/companies

4 SUSTAINABILITY REPORT 20154 SUSTAINABILITY REPORT 2014

Damen yard Business CooperationDTC project

and also provide a broad range of associated maritime services and products. Damen Shipyards Group and its affiliated companies operate a number of wholly owned and joint venture ship building and/or repair and conversion yards worldwide.

Legal structureDamen Shipyards Group is the Dutch holding company of a privately owned group of companies, which from their base in The Netherlands, are active in the field of (I) the design and construction of ships – in particular according to standardised and modular design and building principles – and (II) shiprepair and conversion and (III) ship components

5SUSTAINABILITY REPORT 2015 5SUSTAINABILITY REPORT 2014

EXECUTIVE BOARD

CHAIRMANKOMMER DAMEN

DAMEN SHIPYARDS GROUPONE TIER BOARD

CHIEF COMMERCIAL OFFICERARNOUT DAMEN2010 – CURRENT

n SALESn MARKETINGn COMMUNICATIONSn RESEARCH & DEVELOPMENTn COMMUNICATIONSn HUMAN RESOURCES

CHIEF PRODUCTS OFFICERJAN-WIM DEKKER2014 – CURRENT

n PRODUCT GROUPSn DAMEN SHIPYARDS GORINCHEMn ENGINEERINGn PURCHASING

CHIEF EXECUTIVE OFFICERRENÉ BERKVENS2006 – CURRENT

n DAMEN SHIPREPAIR & CONVERSIONn COMPONENTSn NAVALn YACHTSn LEGALn BUSINESS DEVELOPMENTn HEALTH & SAFETY

CHIEF FINANCIAL OFFICERFRANK EGGINK2013 – CURRENT

n FINANCE n INSURANCEn ITn COMPLIANCEn CUSTOMER FINANCE

CEORENÉ BERKVENS

CCOARNOUT DAMEN

CFOFRANK EGGINK

CPOJAN-WIM DEKKER

Damen’s business approachThe geographically distributed Damen and partner yards work in symbiosis with centralised sales personnel and product groups based at the Damen Shipyards Group headquarters in Gorinchem, the Netherlands. Damen Shipyards Group has a central sales force which is responsible for the sale of the majority of newbuild vessels. In addition the group has a centralised sales force which is responsible for securing shiprepair and conversion projects.

BENELUX N, W & S EUROPE E & SE EUROPE AMERICAS MIDDLE EAST AFRICA ASIA PACIFIC

R & D HSEQ MARKETING COMMUNICATIONS FINANCE HR ICT

ENGINEERING

PURCHASING

LOGISTICS

PRODUCTION

DAMEN TECHNICALCOOPERATION

CLIENTS

PRODUCT GROUPS

SHARED SERVICES

SERVICES

MANAGEMENT

SHIP

PIN

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NAV

AL

DRE

DG

ING

FISH

ING

YACH

TS

COM

PON

ENTS

SHIP

REPA

IR &

CO

NV

ERSI

ON

PON

TOO

NS

&

BARG

ES

FERR

IES

OFF

SHO

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HIG

H S

PEED

CR

AFT

WO

RKBO

ATS

TUG

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Additionally, certain yards have responsibility for sales within a specified region. Once a sale is secured, the subsequent work is carried out at the relevant yard location. This synergic methodology ensures a progressive effect on the development of the Damen portfolio and a cohesive approach to commercial activity, at the same time offering a cost-effective approach to production and distribution globally.


Our value chainThe value chain of our operations differs per category. The value chain of our newbuilding activities is as follows:


PRODUCTION AT A DAMEN SHIPYARD

3RD PARTY SUPPLIER

RAW MATERIALS

CUSTOMER

PRODUCTION AT 3RD PARTY SHIPYARD

3RD PARTY SUPPLIER

RAW MATERIALS

CUSTOMERCONTRACT

CONTRACT

SUPPLY OF COMPONENTSSUPPLY OF BLUEPRINTSBUILDING SUPPORT ACTIVITIESAFTER SALES ACTIVITIES

SUPPLY OF COMPONENTSSUPPLY OF BLUEPRINTSSOMETIMES BUILDING SUPPORT ACTIVITIES

SUBCONTRACTOR

SUBCONTRACTOR

DAMEN CENTRAL MANAGEMENT

DAMEN SHIPYARD

3RD PARTY SHIPYARD

A sustainable future for all our stakeholders is at the heart of Damen’s organisational mission and our vision for the future. Our values balance long-term economic, environmental and social aspects based on the interests of our stakeholders. These values are part of our culture.

Our mission Damen is a client-focused, international and family-owned shipbuilder with Dutch roots. We design and build innovative ships of excellent quality, supported by a worldwide network of sales and services including maintenance and repair & conversion facilities.

Our vision Damen aims to become a global market leader in niche markets of shipbuilding, shiprepair & conversion and related services and components, growing step-by-step and developing quality vessels and services. Damen wants to exceed its clients’ expectations in terms of quality, innovation, and reliability. Damen must attract top customers, employees and partners to be successful in a safe environment.

Management approach to sustainabilityOur board of directors holds the primary responsibility for sustainability at Damen. The board determines the main sustainability issues and is responsible for the group’s sustainability strategy and its performance. The foundation of our approach is in the Damen way of working – intrinsic values that are part of the Damen culture.

As a result of our robust growth, we realised that we needed to embed Damen’s values globally in both our entities and in our contact with stakeholders. Therefore, in 2014 we developed the Damen Code of Conduct to explicitly state our business principles.

In 2015 a second round of engagements was conducted to take stock of and share learnings about living the Code of Conduct. The code has been rolled out at all the Group companies by local management. The set of policy documents was further complemented with a Supplier Code of Conduct (see chapter 6) and a policy document on Competition Law and will be completed in 2016. Additional training will be arranged and the first on-line training module is in an advanced state of readiness and will be published early 2016.

Damen Code of Conduct

1 Obeying the lawDamen companies and their employees must obey the laws and regulations of the countries in which they operate.

2 Community at largeDamen will conduct its activities in a socially responsible manner, respecting its employees and other stakeholders.

3 Employees – work environment – health and safetyDamen is committed to providing an attractive working environment for its employees.

4 CommunicationDamen will assure open and clear communication between employees and management on all aspects of the working environment.

5 Business integrityDamen will not allow bribery and/or any other forms of unethical business practice in its companies or by its employees.

6 CompetitionDamen supports the principles of free enterprise and fair competition.

7 Conflict of interestEmployees should avoid conflicts of interests between their private dealings and their responsibilities towards Damen.

8 Safeguarding information and assetsDamen recognises and respects the importance of protecting personal data.


APPROACH TO SUSTAINABILITY WITHIN DAMEN

3.1


What our stakeholders tell usThrough our day-to-day activities, we have regular contact with all our main stakeholders, and we consulted them to find out their main expectations regarding sustainability at Damen. The following matrix shows the most relevant themes for Damen and its stakeholders and forms the basis of the content of this report.

The results of the stakeholder interviews have been incorporated into the materiality matrix.

Our relationship with our stakeholders is the foundation of our success and ability to grow. We have identified the groups of stakeholders that most affect, or are most affected by, our activities:n Customersn Staffn Financial institutions n Suppliersn Governmentsn Other business partnersn Society

OUR STAKEHOLDERS AND THEIR INFORMATION NEEDS

3.2

MATERIALITY MATRIX DAMEN SHIPYARDS GROUP

n MAIN FOCUS (INCLUDED IN REPORT)n INCLUDED IN THE REPORTn NOT INCLUDED IN THE REPORT

n ECONOMICn ENVIRONMENTn EMPLOYEESn SOCIETY

n HUMAN RIGHTSn PRODUCT RESPONSIBILITYn OTHER

INTERNAL STAKEHOLDERS

EXTE

RNA

L ST

AK

EHO

LDER

S

VERY RELEVANT

VERY

REL

EVAN

T

RELEVANT

RELE

VANT

n FINANCIAL PERFORMANCE

n INNOVATIONn ENERGY

n EMISSIONS

n BALLAST WATER

n MARKET SHARE

n HEALTH AND SAFETY OF CUSTOMERS

TOTAL COST OF OWNERSHIP n

n LABOUR CONDITIONS/RIGHTSn CORRUPTION/FRAUD

n TRAINING AND EDUCATION

n HEALTH AND SAFETY OF EMPLOYEES

n EMPLOYMENT

n LOCAL COMMUNITY

n SUSTAINABLE SUPPLY CHAIN

n RIGHTS OF INDIGENOUS PEOPLE

n TRANSPORT

n LEGAL COMPLIANCE

n GOOD GOVERNANCE

n EMPLOYEE RIGHTS

n INDIRECT ECONOMIC IMPACT

n KNOWLEDGE TRANSFER

n WASTE

n RAW MATERIAL

n (TRUTHFUL) MARKETING & COMMUNICATION

n EFFLUENTS

BUILDINGn INDIRECT ECONOMIC IMPACTn KNOWLEDGE TRANSFERn EMPLOYMENTn HEALTH AND SAFETY OF EMPLOYEESn TRAINING AND EDUCATIONn LABOUR CONDITIONS/RIGHTSn CORRUPTION/FRAUDn LOCAL COMMUNITYn SUSTAINABLE SUPPLY CHAINn WASTE

USEn ENERGYn EMISSIONSn TOTAL COST OF OWNERSHIPn BALLAST WATERn HEALTH AND SAFETY OF

CUSTOMERS

DEMOLITIONn NO MATERIAL ISSUES IDENTIFIED

DESIGNn INNOVATIONn MARKET SHAREn FINANCIAL PERFORMANCE

Reducing energy consumption significantly lowers the Total Cost of Ownership. Moreover, reducing fuel consumption is the best way to reduce a vessel’s environmental impact during its life cycle, especially during a ship’s usage phase. These two factors are the reason we focus on innovations in energy efficiency. This is gaining particular importance with stricter rules and regulations on atmospheric emissions, such as IMO Tier III that will become effective ultimately in 2021.

In the following chapters we explain Damen’s approach to the most relevant issues identified by our stakeholders. We show how we add value and mitigate negative effects.

Sustainability prioritiesThe impact of Damen-built vessels during their complete life cycle is important to our stakeholders. Currently, the focus of our sustainability reporting is on the first three stages as this is where our main impact lies and where we can most influence the sustainability context in the Total Cost of Ownership.


TYPICAL TOTAL COST OF OWNERSHIP OF A HARBOUR TUGn CREWING & MANAGEMENT 43%n INVESTMENT & DEPRECIATION 33%n ENERGY COSTS 15%n REGULAR MAINTENANCE 7%n CYCLICAL MAINTENANCE 3%

ASD TUG 2810 ASD TUG 2810 HYBRID E3 42% 42% n CREWING & MANAGEMENT 36% 29% n INVESTMENT & DEPRECIATION 12% 18% n ENERGY COSTS 5% 17% n REGULAR MAINTENANCE 3% 14% n CYCLICAL MAINTENANCE

100 %

90 %

80 %

70 %

60 %

50 %

40 %

30 %

20 %

10 %

ASD TUG 2810 ASD TUG 2810 HYBRID E3

TOTAL COST OF OWNERSHIP OF AN ASD TUG 2810


FINANCIAL PERFORMANCE

4 Production Value (in € billion) 2015 nnnnnnnnnnnnnnnnnnnnnnnnnnnnn 2.1 2014 nnnnnnnnnnnnnnnnnnnnnnnnnnnn 2.0 2013 nnnnnnnnnnnnnnnnnnnnnnnn 1.7

Net result (in € million) 2015 nnnnnnnnnnnnnnnnnnnnnnnnn 73 2014 nnnnnnnnnnnnnnn 59 2013 nnnnnnnnnnn 44

Solvency ratio (in %) 2015 nnnnnnnnnnnnnnnnnnnnnnnnnn 51 2014 nnnnnnnnnnnnnnnnnnnnnnnnnnn 55 2013 nnnnnnnnnnnnnnnnnnnnnnnn 48

Deliveries (# vessels) 2015 nnnnnnnnnnnnnnnnnn > 180 2014 nnnnnnnnnnnnnnnn > 160 2013 nnnnnnnnnnnnnnnnn > 170

Repair & Maintenance Jobs 2015 nnnnnnnnnnnnnnn > 1,500 2014 nnnnnnnnnnnnnnn > 1,500 2013 nnnnnnnnnnnnnnn > 1,500

Global Presence (Shipyards) 2015 nnnnnnnnnnnnnnnn 32 2014 nnnnnnnnnnnnnnnn 32 2013 nnnnnnnnnnnnnnnn 32 Shipyards in the Netherlands 2015 nnnnnnn 14 2014 nnnnnnnn 15 2013 nnnnnnnn 15 Shipyards in rest of the world 2015 nnnnnnnnnn 18 2014 nnnnnnnnn 17 2013 nnnnnnnnn 17

Global Presence (Companies)* 2015 nnnnnnnnnnnnnnnnnnnnnnnnn 50 2014 nnnnnnnnnnnnnnnnnnnnnnnn 48 2013 nnnnnnnnnnnnnnnnnnnnnnnn 48 Companies in the Netherlands 2015 nnnnnnnnnnnn 23 2014 nnnnnnnnnnn 22 2013 nnnnnnnnnnn 22 Companies in rest of the world 2015 nnnnnnnnnnnnnn 27 2014 nnnnnnnnnnnnn 26 2013 nnnnnnnnnnnnn 26

Newbuilding yards 2015 nnnnnnnn 16 2014 nnnnnnnn 16 2013 nnnnnnnn 15

Newbuilding & repair yards 2015 nnn 5 2014 nnn 5 2013 nnn 5

Repair & conversion yards 2015 nnnnnn 11 2014 nnnnnn 11 2013 nnnnnn 12 * excl. small sales offices and service hubs

Following the 2014 record high, in 2015 the sliding oil and gas prices adversely affected Damen Shipyards Group’s order intake. Overall Group profit continued to improve albeit from a limited number of projects, a windfall profit from the favorable EUR/USD exchange rate movement and improved control of business processes in general and those for higher risk projects in particular.


Growth and expansionThe total production value came to € 2.1 billion and increased by 8% compared to 2014 (2014: € 2.0 billion).The pre-tax result (including the result from shareholdings) came to € 95 million in 2015 (2014: € 83 million).The order intake reduced to some € 1.6 billion (2014: € 2.3 billion). At the end of 2015 the contract value of the order portfolio came to € 2.8 billion.

Solid basis for our futureTo further support our future development, we are:n Improving our local presence close to our customers to

ensure faster response times to provide warranty, handle repairs, deliver parts, and in conjunction with a local shipyard is able to facilitate berthing and provide a direct point of contact.

n Improving R&D and innovation activities, collaboration with research institutions and product development.

n Continuously improving our risk management system.

A centralized organization without red tapeDamen has the ambition to restructure part of our shipbuilding organization into customer-oriented business units as a necessary step for our organization to cope with the increased competition, an increasing complexity of our business environment, a need for enhanced accountability and achieve more organizational effectiveness.Furthermore in response to technological developments, such as digitisation, it is essential we enhance the company’s agility.

Sustainability prioritiesThe Group’s policy remains unchanged in essence; controlled growth is pursued through a robust portfolio of Product Market Combinations.As part of the Policy Plan 2016 a wide-ranging improvement programme is ongoing. The programme consists of initiatives focusing on governance risk management, efficiency, streamlining of business processes, reduction of cycle times, financial control, working capital, compliance, and standardised IT environment, systems and applications.

Market positionShipbuilding is a competitive global market. A robust portfolio of Product Market Combinations sets Damen apart and helps cushion the impact of adverse market conditions, as the Product Market Combinations are not all correlated.

In 2015 we have made further progress towards our vision to become a global market leader in niche markets of shipbuilding, as indicated in the following table.

MARKET SEGMENT

Harbour & TerminalSeagoing Transport Inland ShippingPublic TransportDefence & SecurityOffshore Oil & GasOffshore WindDredging FishingYachtingSea & River CruisingEnvironmental Safety & ControlShipbuilding & Maritime Construction


Operational risksThe main operational risk concerns the execution of complex shipbuilding and shiprepair & conversion projects. Measures have been taken for each phase of a project to mitigate or manage these risks. A risk analysis is carried out during the quotation phase, and major quotations require approval by the Board. Large purchasing elements are secured with quotes from suppliers and relevant currency risks are hedged. In the contracting phase, standard contracts are used as far as possible. The legal department is involved if there are any deviations and to record any supplementary arrangements that are made. During implementation of the project, attention focuses on procedures and effective project management and project control. Relevant suppliers and subcontractors are brought in at an early stage of the project. The taken measures mitigate the risks at an accepted level in accordance to the relevant project risks.

Financial risksThe financing risk is the risk of the continuity of the business no longer being guaranteed due to the lack of sufficient funding. During 2015 Damen Shipyards Group entered into a new Senior Facility Agreement (SFA), amounting to e 1,375 billion, which have been made available by a consortium of banks consisting of ABN AMRO Bank, Rabobank, ING Bank, BNP Paribas, Deutsche Bank and Credit Agricole. In addition, the Group has a number of financing facilities for diversification of Groups funding. It is considered that Damen Shipyards Group has solidified funding for its normative activities.

The liquidity risk concerns the availability of financial resources and depends, in part, on fluctuations in working capital. Periodical liquidity forecasts, for both the short and long term, ensure that any problems are identified timely to allow for the necessary mitigating actions to be taken. Attention is also paid to the management of working capital at all levels of the organisation.

Credit risks are covered as far as possible by credit insurance, advanced payments and by settlement of outstanding claims on delivery of the vessel or completion of the assignment.

Damen Shipyards Group does not deal in financial derivates (other than foreign currency hedging) and has procedures and policies to limit the exposure. Currency risks are hedged at the time when obligations are entered into.

Our risk frameworkDoing business necessarily involves taking risks. It is essential that the relevant risks are identified, so that Damen Shipyards Group can take appropriate and timely action to manage these risks and uncertainties.Important measures have been taken to enable improved risk management. These include the Executive Board regulations and instructions for management of the Group companies, setting out the authorities and the governance framework. The Board is informed of relevant trends by means of periodic reports. Major projects, investments, and acquisitions require the approval of the Board. Where possible, insurance has been taken out for the relevant risks.

Market risksDamen Shipyards Group has reduced the exposure to the economic cycle by pursuing a portfolio approach to its activities. In addition to the spread of activities in the construction of new vessels, repair and conversion, component production and services, there is also a spread across private and public/semi public customers, geographical distribution, and different product/market combinations. Potential volatility in the order intake is absorbed by flexibility in production capacity by making use to a significant extent of hired workers and subcontracting (including third party yards). Damen Shipyards Group devotes a great deal of attention to relations with its customers and to customer satisfaction.

The low oil price has a negative impact on Offshore activities and investment decisions in this sector. Precautionary measures are taken to be able to respond flexibly to the consequences. Another uncertainty involves the (increasing) instability in the Middle East and the geopolitical tensions between Ukraine and Russia. These may also have a relevant impact on the volume and timing of sales in these areas.

Damen’s customers of oil and gas related ships are suffering the consequences of the adverse market conditions with associated liquidity and solvency consequences for our customers. With more High Speed Craft and Platform Supply Vessels under construction, Damen should keep a watchful eye on these developments and maintain close contact with those customers to stave off the uncontrolled availability in the market place of like ships at depressed prices. This would complicate our commercial efforts to continue to sell these particular vessels in the market place.


Compliance risksCompliance involves complying with the applicable legislation and regulations and applying an appropriate framework of standards and values. Non–compliance and changes in the local political climate, as well as tax and other legislation and regulations applying to our operations and those of our customers' markets may have a relevant impact on our business.

In addition to the Executive Board regulations (already referred to), good progress was made with the further implementation of the Code of Conduct for Damen Shipyards Group. The code has been published and ensures the consistent propagation of the standard Group policy regarding the most important business principles and values. Awareness training was completed in 2014 and in 2015 a second round of engagements was conducted to take stock of and share learnings about living the Code of Conduct. The code has been rolled out at all the Group companies by local management. The set of policy documents was further complemented with a Supplier Code of Conduct and a policy document on Competition Law and will be completed in 2016. Additional training will be arranged and the first on-line training module is in an advanced state of readiness and will be published early 2016.

The Supplier Code of Conduct sees to it that subcontractors and temporary employment agencies comply with the legal requirements regarding i.a. remuneration and working conditions. This code was sent to more than 600 suppliers, in 2015.

Changes in the local political climate, as well as tax and other legislation and regulations applying to our operations and those of our customers’ markets may have a relevant impact on our business.

In 2015 further discussions with the World Bank were conducted concerning the incomplete tender documentation for a Fishery Inspection Vessel for Sierra Leone. It is anticipated that a settlement will be reached early 2016.

Safety riskWe are actively managing on Health, Safety and Environment standards in all countries where we operate. The local legislation and regulations are observed, and the local management is responsible for compliance. With the aim of sharing knowledge and experience, a steering committee on Health and Safety, chaired by the CEO, has been set up,

comprising representatives of a number of Group companies. Ensuring a safe working environment for our employees and subcontractors enjoys high priority. Measures have been taken at the production sites, both in the Netherlands and abroad, to minimise the risk of incidents which are registered centrally. Incidents will be evaluated and discussed periodically, from which relevant measures to prevent future incidents will be designed and implement accordingly. In addition Damen Shipyards Group has a pro-active policy to report improvements by employees to HSEQ.

Our continuous efforts to improve HSEQ reporting have resulted in an increasing number of reported health and safety cases, both on the level of incidents as well as on the pro-active safety observations.

OutlookStrong Group financials and balance sheet represent a good foundation for Damen’s sustained growth and development. All the business activities are budgeted to make a positive contribution to 2016 results, to shorten the balance sheet, and to generating a healthy cash flow.


5INVESTING IN INNOVATION

R&D and innovation are important ways for Damen Shipyards Group to distinguish itself from competitors. The research departments in Gorinchem, Vlissingen and Nijkerk create new designs and product improvements for existing models. Policy development in this area is the responsibility of a central steering committee.

The strong order intake over the years is also leading to an increase in project support by Research. To ensure that there are no delays in the research projects of the different Product Groups or in Damen’s Group Research programme, this long-term research is carried out by a separate part of the research department in Gorinchem.

Our sustainability prioritiesOur stakeholders, in particular our customers, drive our R&D programme. Sustainability is high on our customers’ agenda. For that reason, we focus on the use phase of the ship, where innovation has the most potential to reduce environmental and safety risks while also delivering economic benefits.

We are continuously improving and investigating new technologies. We believe that standardisation is one of the answers in keeping investment costs low, which is why we invest considerable time and money to get the standard right.

The Damen StandardWith Damen’s standardised shipbuilding concept, we offer our customers well-proven, innovative vessels for competitive prices. The standard hulls, which all have proven designs, can be modified to meet customer wishes and equipped with various options to suit specific jobs and regulations.

Advantages of The Damen Standard modular construction:n Fast response to customer requestsn Competitive pricingn Short delivery times by keeping up to 150 vessels in stockn Reliability through proven and tested technologyn Continuous product developmentn Interchangeability of vessels, crew, spares, equipmentn Low maintenance costsn Low Total Cost of Ownershipn Guaranteed performancen Benchmark for the industryn High resale value


Stimulating local shipbuildingWe have a long history of collaborating and sharing knowledge with shipyards around the world. We supply vessels ex-yard from one of our own shipyards or if customers prefer, we can build at a yard of their choice via Damen Technical Cooperation (DTC). This construction offers both economic and social benefits for Damen and its customers. For example, customers can use Damen’s knowledge and experience with proven designs (not just design concepts) together with Damen quality guarantees. Also local shipbuilding and engineering knowledge is stimulated through Damen’s assistance during projects and in training of local personnel and management. DTC is another example of how economic, commercial and social benefits go hand in hand.

Integrating supplier innovation When our suppliers improve their products with innovative solutions, this can impact ship designs. Therefore, we work together with our suppliers in developing new and innovative products to ensure we offer a fully integrated, compatible solution.

Sharing knowledge stimulates the development of the best possible products. This is why Damen works nationally and internationally with customers such as the US Coastguard, independent research organisations and universities, including Delft University of Technology, TNO, MARIN, suppliers and classification societies. Furthermore, Damen plays an active role in ‘TKI Maritiem’, a consortium of government, knowledge institutes and the private sector working on innovation in joint industry projects (JIP). Damen is also a member of the Innovation Council of the Netherlands Maritime Technology Association.

A joint research programme is being undertaken with Delft University of Technology. Projects focus on basic knowledge and tool development, but also on the development of new concepts. Damen Shipyards Group plays an active role in the Dutch government’s policy on key economic sectors. In the Netherlands Damen is a member of the sector team for the Maritime Industry and in Europe for “Horizon 2020”. European research is coordinated by the industry’s “Vessels for the Future” organisation. Ongoing and recently commenced projects within the EU’s Seventh Framework Programme for research and within “Horizon 2020” focus in particular on sustainability and underwater mining.

Our customers’ changing requirementsOur customers’ feedback underpins our innovation programmes. We work together not only to improve existing products, we also continuously develop new innovative solutions to meet new and changing requirements. The main innovation drivers from our customers’ perspective are safety and energy reduction. Serving our customers’ needs also means offering (green) solutions to respond to developments in rules and regulation.

INNOVATION THROUGH COOPERATION

5.1

DAMEN SEARCH AND RESQUE VESSEL 1906 ‘NH 1816’ The development of the Nh 1816 has been a process of true cooperation in ‘The Golden Triangle’. A perfect example of innovation by user, knowledge institute and manufacturing industry together – something the Dutch maritime industry continues to invest in. Also unique is the fact that the vessel has been fully built under Class by Lloyd´s! Together, and with a strong sense of community involvement and social commitment, we helped each other with knowledge, both theoretical and practical, and skill to develop this innovative Search & Rescue vessel. Winning the KNVTS Ship of the Year Award is a welcome recognition of these efforts and we are very, very proud of that.ROEMER BOOGAARD, DIRECTOR SEA RESCUE INSTITUTIONS


ECOLINER

ASD TUG HYBRID

The company is identifying and developing new ways to address growing ocean challenges, such as pioneering the world’s first mobile ballast water treatment vessel (InvaSave) to operate in ports and support ship deballasting operations.

Damen launched the first fully LNG-powered Damen EcoLiner inland shipping tanker. The EcoLiner is developed to deliver fuel savings for inland shipping operators, while at the same time cutting emissions. The design combines conventional, proven engineering with sustainable innovations, including the world’s first installations of the ACES Air-Lubricated Hull, a gas-electrical shaft propulsion system and one of the first Van der Velden Flex Tunnels installations.

DAMEN INVASAVE

INNOVATION IN ACTION

5.2

FLOATING TIDAL PLATFORMWe are very pleased that we have reached this exciting milestone for our first floating tidal demonstration platform. It is wonderful to see the Texel tidal energy project come to reality. Today’s ceremony puts us a step closer to our goal of putting an all-in-one tidal energy platform on the market and delivering clean, local and endless energy to the world.ALLARD VAN HOEKEN, BLUEWATER’S HEAD OF NEW ENERGY

SEARCH AND RESQUE VESSEL

Following the deployment of Damen’s first Hybrid ASD, 4 more are delivered or under construction. Three of these have been ordered by the Netherlands Ministery of Defence. While the emission reduction is up to 35% in comparison with a conventional tug, and the total cost of ownership 3% lower, market uptake of these new technologies would benefit From stringent rules and regulations or alternatively additional incentives for the adoption of such innovations.

Other examples include the development of the ‘Nh 1816’ Damen Search and Rescue vessel and the Floating Tidal Platform project in partnership with Bluewater. The platform generates clean electricity from the tides in the Wadden Sea of The Netherlands. It is of an innovative modular design.

FLOATING TIDAL PLATFORM



The main areas of impact during productionShipbuilding is a complex process, with risk to the health and safety and the environment. From steel cutting until delivery, Damen identifies and addresses most relevant risks: energy consumption, working at height, hot work, working in confined spaces, release to the air or water, oil spillage, lifting, waste management, sea trials etc.

Monitoring our processesWe have established a Policy Plan to certify all yards and companies in the group with the three main industry standards – ISO 9001, 14001 and 18001. We have largely carried out this plan and once completed, we will move on to implementing the principles from ISO 14064 & ISO 26000. The ISO 14064 standard will provide for a complimentary set of tools to quantify, monitor, report and verify greenhouse gas emissions. ISO 26000 will provide guidance on how to operate in an ethical and transparent way that contributes to the health and welfare of society.

Every year we perform internal audits of our main production sites to support our yards in meeting certification requirements and improving their production processes. Sharing experiences between the different yards is key to continuously improving our performance.

Although the impact of our production processes is small compared to the operation phase of a vessel, we put a lot of effort in managing health, safety and environmental risks as well as improving efficiency at our shipyards.

In 2015 Health, Safety, Security, Environment and Quality Policies have been developed which will be released in the beginning of 2016. All Damen companies and all personnel working for or on behalf of Damen Shipyards are obliged to meet these policies to the best of their abilities suitably to their business. Effective implementation and monitoring measures are currently in progress.

We see a clear trend among customers, especially in Offshore Oil & Gas, of specifying HSEQ performance measurements. Plus, local rules and regulations regarding health, safety and the environment are becoming stricter. These developments and the feedback from our other stakeholders increase the internal awareness of HSEQ-related issues and the importance of good leadership.

Sustainability prioritiesWe can influence Damen’s total impact most through the 14 production yards that generate around 50% of our revenue and employ around 3,500 of our staff. These yards are our primary focus for the roll-out of HSEQ policies and performance improvements during the coming period.n The Netherlands: Damen Shipyards Gorinchem and

all our eight Dutch repair yards n Romania: Damen Shipyards Galatin Singapore: Damen Shipyards Singapore n China: Damen Shipyards Changde n Vietnam: Damen Shipyards Song Camn South Africa: Damen Shipyards Cape Town

6RESPONSIBLE PRODUCTION


Our performance in health and safetyWe monitor health and safety performance to supports continuous improvement of working conditions at our shipyards.

In our previous report we published the performance in health and safety for Damen Shipyards Gorinchem. An important development in 2015 is that we implemented a uniform system for monitoring health and safety results for all Damen group companies . Therefore, 2015 will be our base year for further monitoring.

Regrettable we suffered a fatality at our shiprepair yard in Brest, France. Full investigation of the accident is in the progress of being completed by the local authorities. The lessons learned will be communicated and appropriate actions taken immediately.

Being a responsible employer means that the health and safety of our employees is our main priority. At Damen, we are committed to working responsibly and protecting people wherever we operate in the world and we actively promote a culture in which safety, health and welfare are considered top priorities.

The collaboration between the divisions on health and safety management led by Damen’s CEO has intensified.

Most of our yards have now been certified against the Occupational Health and Safety Assessment Series (OHSAS) 18001 Certification. A company-wide Safety Code of Conduct has also been put in place.

Health and safety initiatives in 2015n Standardization procedures for investigation and high

risk activitiesn Development template Incident Registration to make

benchmarking possiblen Health, Safety and Environment audits n JH143 Shipyard Risk Assessment audits

Our performance in health and safetyThe number of incidents remains high and strong focus is on implementing preventive measures. High risk activities that relate to these incidents are:n Working at heightn Slips, Trips and fallsn Working with hand tools

HEALTH AND SAFETY AT OUR YARDS

6.1

5,877

1,112

109

106

1

PERFORMANCE IN HEALTH & SAFETY DAMEN SHIPYARDS GROUP – 2015

n FATALITIES 1n LOST TIME ACCIDENTS (LTA) 106n LOST TIME INCIDENTS (LTI) 109n FIRST AID CASES 1,112n NEAR MISSES/DANGEROUS SITUATIONS 5,877


BELLONA FOUNDATION, NORWAY One of Bellona’s goals is to make the ships of the future independent of fossil fuels. The partnership with Damen will provide us with new knowledge on innovative shipping construction that will contribute towards achieving that objective. Today the global shipping industry emits large amounts of CO², sulphur dioxide, nitrogen oxide and other gases harmful to the climate, environment and people’s health. The European fleet is large and in need of renewal. The next three years of partnership with Damen will make us better equipped to handle the challenges, both domestically and internationally. FREDERIC HAUGE, FOUNDER AND PRESIDENT OF THE BELLONA FOUNDATION

EMISSIONS, ENERGY AND WASTE

6.2

Damen Shipyards Gorinchem. This reduction was the result of the purchase of renewable (wind) energy on site. In 2015 the amount of the purchase of renewable (wind) energy increased from 3,500 MWh to 5,000 Mwh.

In addition, we have taken progressive actions to reduce the environmental impacts of our facilities and bring awareness to our employees in relation to every day’ activities. We’re improving our energy monitoring systems at our yards to reduce dissipation of our energy consumption of facilities, buildings and in the production process. To save energy consumption we invested for example in savings by changing conventional lights into LED energy-saving lights. At our production site and headquarter in Gorinchem since 2016 our purchased energy is 100% generated by wind and

Environment

Carbon FootprintDamen has started measuring the carbon footprint including the CO² emissions of several of our yards to gain more insight in the environmental impact of our production processes. The carbon footprint is the total set of greenhouse gas emissions caused by the organization expressed as CO². Over the coming years we aim to improve data monitoring, and continue developing measures for improvement.

The total CO² emissions of the yards are highly dependent on the order intake and production on site. For Damen Shipyards Gorinchem and Damen Shipyards Galati an annual increase in CO² emissions is notable for the period 2011-2013. This is entirely explained by the increase of activity level from a higher order intake. From 2014 a strong reduction of the total CO² emissions was established for

CO² EMISSIONS OWN OPERATIONS Damen Shipyards Gorinchem 2015 n n n n n n 4,810 tonnes CO² 2014 n nnnnn 4,768 tonnes CO² 2013 n nnnnnnnnnn 8,254 tonnes CO² 2012 n nnnnnnnn 7,021 tonnes CO² 2011 n nnnnnnn 6,147 tonnes CO² Damen Shipyards Galati 2015 n nnnnnnnnn n nnnnnnnnnnnnnnnnnnnnnnnnn 27,120 tonnes CO² 2014 n nnnnnnnnn n nnnnnnnnnnnnnnnnnnnnnn 24,710 tonnes CO² 2013 n nnnnnnnnn n nnnnnnnnnnnnnnn 19,407 tonnes CO² 2012 n nnnnnnnnn n nnnnnnnnnnn 16,765 tonnes CO² 2011 n nnnnnnnnnn nnnnnnn 13,763 tonnes CO² Damen Shipyards Singapore 2015 nn 1,666 tonnes CO² 2014 n 923 tonnes CO² 2013 n 1,053 tonnes CO² 2012 – 2011 –

Damen Shipyards Changde 2015 n 1,086 tonnes CO² 2014 nn 1,804 tonnes CO² 2013 nnn 2,326 tonnes CO² 2012 – 2011 –

Our recent growth and international expansion provides us with opportunities to improve our supply chain. Together with our suppliers we minimise costs and environmental impact, for example by sourcing locally as much as possible. Next to the trading hub in China , we also want to create a similar hub in Vietnam .

This will improve our local footprint. Sourcing locally creates mutual gains for both Damen and our suppliers: we minimise transport costs and risks, we improve delivery times and we lower the environmental impact due to less fuel consumption for transport.

For inland transports in China we experiment with delivery by train. This reduces the delivery time to 21 days and has a lower environmental impact. We are still evaluating this transportation method.We kicked-off the procurement programme Blue Print Sourcing. This a multi-functional work group that focuses on value engineering. The goal is to reduce the total cost footprint from start to finish. With less complexity we achieve an improved design.

Supplier Code of ConductIn order to have a positive impact on our supply chain we have developed a Supplier Code of Conduct for Damen Shipyards Gorinchem in which we incorporated our business principles and ask our suppliers to comply with these principles. Sustainability criteria in the code includes labour conditions (ILO Guidelines on Occupational Safety and Health; OHSAS 18001), environmental conditions (ISO 14001 and the Kyoto Environmental Standard (KES), Waste Management), ethics and integrity.

Since 2014 we have asked existing suppliers and new suppliers to sign the code. We believe the Supplier Code of Conduct can support our dialogue with our suppliers about our shared responsibilities.

By transferring operational responsibilities to our yards, Damen directly supports the improvement of local skills and competences.

therefore sustainable. But that won’t stop us to invest to generate our own sustainable energy like solar energy in the near future. Another example is we trained our staff during our toolbox meetings in awareness to switch of machines and electrical equipment to decrease the period of standby and save by these simple measurement easily our energy consumption at the yards.

Based on the analysis of our footprints, we have designed specific energy saving plans, fitted to the characteristics of each yard. Each yard has different activities so comparison on specific CO² emissions between yards is not always relevant.

We have installed smart energy meters and purchased green electricity in our production halls in Gorinchem with LED lighting, which gives four times the illumination with a fraction of the energy costs. Currently we are working on better data monitoring in all our CNBD yards.

AmbitionsDamen has green and sustainable ambitions to reduce our environmental impact. Like managing our greenhouse gasses (CO²), our objective is to reduce these with 5% every year. Another objective is to reduce our energy consumption with 5% on a yearly base, based on equivalent (production) activities at the yard.

Waste consciousWe handle our waste with care and separate waste as much as possible even in challenging areas in the world, however it is possible that waste collectors in some of the areas where we operate will not process our waste separately. For these areas, we are developing a plan to collect our waste ourselves and deliver it to trusted waste processors, in order to prevent environmentally unfriendly waste processing.


IMPROVING PROCUREMENT AND LOCAL SOURCING

6.3


With the programme Excellerate, we go back to the roots of Damen; industrialisation. To keep our competitive edge as Damen, we have to continuously improve our quality, lower our costs and shorten our time to market. Our main focus is managing increasing competition and realising Damen’s ambition to become market leader in every niche in which we operate. In so doing, Damen will combine business benefits with social benefits in a smart manner.

The programme Excellerate was established in 2014 within the Damen Commercial New Build Division with a focus to further emphasise industrialisation, standardisation and digitisation. This will allow Damen to take the next step in optimising its production processes, specifically for the fast moving commercial ship types; reducing lead times and setting new standards in quality. Customer requirements serve as foundation for this standardisation. By applying ‘smart customisation’ principles we translate customer requirements in ‘product templates’ which are built up from a standard ‘core’ which meets basic market needs. Next options are pre-defined. Using these options clients can customise a ship according to their specific needs. Damen now has a sales configurator available in which (potential) customers can actually configure their conceptual new ships.

With these pre-configured ships the Damen Shipyards Group will streamline its production processes and supply chain. The yards will be ‘end-to-end’ responsible for the entire shipbuilding process. This entails that detailed engineering, project management and supply chain will be organised at the yard instead of only at Gorinchem. This will provide benefits for local employment and a further improvement of the carbon footprint of the Damen Shipyards Group as a whole because of less need for long-distance transport.

Damen is active in developing countries. By transferring operational responsibilities to our yards, Damen directly supports the improvement of local skills and competences. For instance, Vietnamese engineers and project managers receive training in the Netherlands. Also, Dutch education institutes such as the Scheepvaart & Transport College (STC) now have offices in Vietnam to provide education locally. The improved level of education will contribute to an increased competiveness of local economies.

Next, by applying local sourcing principles Damen tries to optimise its supplier portfolio such that these are located in closer proximity to the yards. This will not only reduce supplier lead times and responsiveness, but also help in improving the carbon footprint of Damen Shipyards.

The Excellerate programme is in the final stages of implementation at the yard in Singapore. In 2016 Excellerate will expand to the yards in Vietnam and China.

EXCELLERATE

6.4

NAMING CEREMONY PSV 3300 ‘WORLD SAPPHIRE’


Improving the sustainability context of our activities has our continuous attention and is only possible due to the strong and long-lasting relationships with all our main stakeholders.

For this report, we focus on the two stakeholder groups that most influence our organisation – our customers and our employees

At Damen the customer comes first. We pay close attention to the needs of our customers and strive to continuously improve our products and services in our wish to exceed those needs. We can only do this by staying close to them during the entire process, from contract signing to after-sales services.

Customer SurveyWe continuously monitor our customer satisfaction at three key moments: contract, delivery and warranty. Periodically we also evaluate the relationship with our clients.

Listening to our customersIn 2015 the results of the customer survey showed that overall we have improved our products and services compared to previous years. Damen proactively engages with customers to learn where and how we can improve and this feedback is consistently taken on board in our continuous improvement plans.

Local presenceTo enhance Damen's customer services the Group is moving close to our customers through the development of a global network of Service Hubs. Each hub consists of a dedicated team of Damen personnel. The hub has access to both equipment and resources of the Damen group to complete the required services, regardless of the scope of work.With eleven hubs now gearing up in North, Central and South America, plus North and Southern Africa, the Middle East and Western Australia, the network has already extended the reach of Damen expertise to new regions. Over time additional hubs will be added in response to customer demand.

KnowledgeDamen is investing in increasing the electrical and automation knowledge of its employees in all disciplines from design to after sales services. This is done to improve our products and reduce the number of electrical and automation related warranty calls.

Quality controlQuality control is a core activity of every Damen employee. To further strengthen our feedback system, and ensure that every single remark our customers and our own employees make is captured, processed and implemented, the system has been re-designed and will be implemented over the course of 2016.

7STAKEHOLDER RELATIONSHIPS KEEPING OUR CUSTOMERS CLOSE

7.1


In 2013 we started with the development of the Damen Academy in Gorinchem and in 2015 the roll out started in the rest of the Netherlands. In 2016 we will continue this and, at the end of 2017, every Damen employee worldwide is expected to have access to this platform.

Damen Leadership and Management Development programmes help future top-level specialists and managers to further develop their leadership skills. These (partly) international programmes have ran since 2012 and allow staff to develop the knowledge and capabilities that will be indispensable to a leader in a global company like Damen. We run various programmes at different levels.

We invest in our people – they are our main asset in achieving our sustainability goals. We have a continuous need for excellent craftmenship and managers who can and will develop our workforce. Moreover, Damen strives to create an organisation where individuals thrive and, very importantly, have fun doing their jobs.

How we develop the most competent employees We want to achieve Damen’s business goals by having the right person in the right job at the right time and provide continuous learning and development for all employees. We call the efforts and tools we use to accomplish this ‘Talent Management’.

Talent Management is the key responsibility of each manager in Damen. It includes:

Performance managementUnderstanding and monitoring employee performance and development and aligning them towards Damen’s strategy. Implementing the full performance cycle that starts with setting targets, then reviewing progress and long-term ambition mid-year and a final meeting at the end of the year.

Talent reviewsReviewing the performance and potential of our employees gives us input for a long-term people plan: what type of skills or people are we missing, who will retire soon, do we need to recruit or develop?

Succession managementBoth performance management and talent reviews give us sustained input for our succession management discussions. It is important to have a clear view of who will be the successors of our current management cadre.

Learning and developmentBased on the information we gain through the performance cycle and talent reviews, we offer our employees development opportunities by setting interesting and challenging targets and by providing a complete set of courses, (team) coaching, training and knowledge sharing sessions. These programmes are part of the Damen Academy. The purpose of the Damen Academy is to organise learning and development centrally within Damen, and to do this is in the most effective and efficient way possible.

SUSTAINING OUR HUMAN CAPITAL

7.2

DAMEN ACADEMY PROGRAMMES TOTAL PARTICIPANTS

Damen Management Development 1 195Damen Management Development 2 45Damen Leadership Development 1 55Damen Leadership Development 2 45Damen Project Manangement Development Int. 32


Our future talentBesides our focus on our existing talent, we also work hard to ensure we create a pipeline with talent for the future. We take part in relevant career events and have close relationships with educational institutes, universities and student associations.

We offer opportunities for internships and graduation projects and we have a traineeship programme. In 2015 we had:n 60 internships n 45 graduate students n 30 trainees (management and functional)

Since 2012, we have run the annual Damen Business Course, primarily intended for technology students who have just begun the last year of course work for their master’s degree. This intensive five-day programme gives the students an excellent insight into working for our company. In 2015 we also organised a business course for Bachelor students, the so called Damen Business Experience.

To support the Government initiatives around “Topsector Water” we provide 5 scholarships to both Bachelor and Master students of Naval Architecture on a yearly basis.

On average, about 50% of our interns, graduate students, trainees and participants of our business course/experience find a permanent position within Damen.

Our performance in sustaining our talentWe have several indicators that tell us how successfully we are managing our people. In 2012 we started our biennial employee survey as a way of closely monitoring progress toward our aim to be an employer of first choice.

The main indicator is the engagement score. This score is based on three underlying indicators:1 Retention: I would prefer to remain with the company

even if a comparable job was available in another company

2 Satisfaction: Taking everything into account, I am satisfied with my current job.

3 Pride: I am proud of my company and would recommend my company to others as a good place to work.

The total number of respondents in 2014 was 6,342 (a participation rate of 80%). The overall conclusion is that Damen has committed and capable people with a clear ambition and passion. The third survey will take place in 2016.

Each Damen company uses the results of the survey to work on their areas for improvement. Actions taken include more attention to developing leadership skills and improved communication – for example through ‘Damen Insight’, our internal newsletter for all Damen employees worldwide.

In 2015 we invested around €5.1 million in Training & Education (around €566 per FTE).

WASUB VBest we could have done. We had the right ingredients and it all came together at the right moment. With regard to the relationship between the team and Damen: by sharing our team’s innovative knowledge with Damen we can help tackle problems and co-create solutions.RUBEN DE NIE, TEAM MANAGER WASUB V


Damen is a true global player, a fact that contributes considerably to our business success. At the same time, we have a big impact on the areas in the world where we operate. We do our very best to be good guests and respectful to our hosts. We mitigate environmental, health and safety, and other risks with the same amount of effort and dedication as in our hometown Gorinchem in the Netherlands.

Being a global player also means that we have a significant positive impact on our host communities. Damen contributes to generating wealth and jobs around the world, transferring technology, and training and developing people.

Damen respects human rights in line with the United Nations’ Universal Declaration of Human Rights and also accepts the responsibility that human rights are respected when conducting our business.

In addition to the impact of our core business, we also have a group sponsoring policy, which can help Damen with corporate branding and employer branding. As part of our Corporate Social Responsibility programme Damen companies are encouraged to support the community in which they operate and offer their employees to play an active role in society while respecting their responsibilities towards Damen.

Also through our products Damen is contributing to communities worldwide.

In an effort to provide disaster relief assistance after Hurricane Joaquin, the Royal Bahamas Defence Force has engaged and employed Containarized Disaster Relief Equipment bringing relief to local communities in Crooked Island.The mobile relief center is to be used in the event of a natural disaster when there is need for immediate humanitarian aid on one of the many islands in the Bahamian archipelago.

The center can run completely independent on two 450Kva generator sets. It can produce 120m³ of fresh water a day, consists of a small hospital, sanitary facilities as well as field kitchen facilities.The center is designed to be fully transported by the Damen Landing Craft (Damen Stan Lander 5612).

TOP: DISASTER RELIEF CONTAINERSBOTTOM: DAMEN STAN LANDER 5612

CONTRIBUTING TO COMMUNITIES WORLDWIDE

8DISASTER RELIEF CONTAINERS – ROYAL BAHAMAS DEFENCE FORCE

8.1


In response to severe drought a Damen Water Barge (Stan Pontoon 3011) was delivered to the Royal Moroccan Navy which is deployed in the worst affected areas to deliver a water making capacity of 2 x 750 m³/day. The water can then either be stored on board the pontoon or pumped ashore via a pipeline. The high capacity water makers use reverse osmosis technology to produce clean drinking water. The method is particularly attractive as it can produce potable water from virtually any water source. It is also a relatively energy efficient process.

Combining a Damen standard modular pontoon with water making technology is an innovative solution to water shortage in Morocco.

TOP: DAMEN WATER BARGE FOR MOROCCOBOTTOM: DRAUGHT IN MOROCCO

The city of Gorinchem is Damen’s home town. We are very involved in and attached to this city. We have an impact as a large employer in the region and try to work with local suppliers where possible. We invest a lot in the local community of Gorinchem based on our group sponsoring policy. We invest a lot in the local communities around our yards by sponsoring local events such as the annual ‘Lingenhaven Concert’ and ‘The Christmas ice-skating facility’ in Gorinchem city centre or the Damen Open Door Days, where Damen Shipyards Gorinchem can be visited by all persons interested. In 2015 we counted a number of 5,500 visitors.

TOP: LINGEHAVENCONCERT 2015BOTTOM: ICE SCATING FACILITY, CHRISTMAS 2015

WATER BARGE – ROYAL MOROCCAN NAVY

8.2DAMEN IN GORINCHEM, THE NETHERLANDS

8.3


In this chapter we describe the reporting process and how Damen determined the material topics covered in this report.

Reporting process, scope and boundariesThis report covers the year 2015 and is the second annual sustainability report. The report is part of Damen’s annual reporting and contains both financial and non-financial information, and both quantitative and qualitative information. The sustainability report, including its material topics, is the result of qualitative and quantitative data gathered throughout the organisation and its entities. The content of this report has been approved by Damen’s executive board and reflects Damen Shipyards Group and all Group owned companies and joint ventures (partner yards). When information is sourced outside this scope, this is stated explicitly.

Since sustainability reporting is still a new field for Damen we focus with this second report on the activities of our own operations. We realise that the material topics relevant to different phases of Damen ship’s life cycles (as represented in chapter 3.2) also impact stakeholders outside the boundaries of our own operations. We will take these issues and their impact into account in the further development of our approach to sustainability.

Reporting criteria The report follows the Global Reporting Initiative G4 guidelines (GRI G4 Core), one of the world’s most prevalent standards for sustainability reporting. We refer to the GRI index in appendix 8.2 for detailed information and references. Regarding the Disclosures on Management Approach of our material topics, we have provided information on the topics of high importance. For the topics of medium importance we concluded that not all information is available yet. We will continue to develop this in the future.

9APPENDICES ABOUT THIS REPORT

9.1


Social figuresOur FTE figures are obtained from Damen Shipyards Gorinchem HR system for the Netherlands and the separate HR systems from Damen companies in the rest of the world. Entities in scope are all Damen-owned entities. FTEs at joint ventures are included pro rata. All employees are under a collective bargaining agreement. Our absenteeism figure represents Damen Shipyards Gorinchem in the Netherlands.

Health, Safety, Environment & QualityOur health and safety figures for 2014 and 2015 only reflect Damen Shipyards Gorinchem in the Netherlands. For the calculation of CO² emissions the Green House Gas Protocol is used. Our quality standards ISO 9001, 14001, OSHAH 18001 are audited internally every year to support all yards in keeping quality standards and certification up-to-date.

Data collection (limitations, estimations)Since this is our first sustainability report and we are in the process of widening our monitoring scope, not all data from our shipyards regarding HSEQ was available or available in time for this report. We continue to improve our data gathering process in the future.

PublicationThe 2015 sustainability report was published on 17th June 2016 on our corporate website www.damen.com

Materiality process and stakeholder consultationIn order to determine the most material topics for Damen and its we formed a topic-list based on industry specific research and existing guidelines on sustainability and Damen’s activities and unique characteristics. In 2014 we consulted internal and external stakeholders to indicate which of these topics they find most important to Damen and have the most impact on our current and future activities and performance. In total 26 topics were identified and categorised as economy, environment, employee, society, human rights, product responsibility and other. This resulted in a materiality matrix, validated by executive management, with topics of high, medium and low importance to both stakeholders and Damen’s executive management. The topics of high and medium importance form the basis of this report.

Reporting indicatorsIn our report we present different financial, social and HSEQ indicators. The most important indicators are described in more detail below:

Financial figuresOur financial figures are derived from the financial data of Damen Shipyards Group N.V. and its Group companies. The accounting policies and presentation applied to the figures are consistent with those applied in preparing the consolidated financial statements of Damen Shipyards Group N.V. (filed at the Chamber of Commerce in Utrecht, The Netherlands). These consolidated financial statements have been prepared in accordance with Title 9 Book 2 of the Netherlands Civil Code.

Client satisfactionOur client survey is designed to continuously measure the satisfaction of our customers at three key moments Once every two years we also evaluate the relationship with our clients. The survey is executed annually in cooperation with MWM2, an independent research agency.


GRI G4INDEX

9.2None of the information included in this report has been subject to external assurance.

GENERAL STANDARD DISCLOSURES

INDICATOR DESCRIPTION REFERENCE

STRATEGY AND ANALYSIS

G4-1 Statement from the most senior decision-maker of the organisation 1 - Foreword

ORGANIZATIONAL PROFILE

G4-3 Name of the organisation Title Contact

G4-4 Primary brands, products, and/or services 3 - The World of Damen What we do

G4-5 Location of organization’s headquarters Contact

G4-6 Number of countries where the organisation operates, and names 3 - The World of Damen of countries with either major operations or that are specifically Global Presence relevant to the sustainability issues covered in the report

G4-7 Nature of ownership and legal form Contact

G4-8 Markets served (including geographic breakdown, sectors served 3 - The World of Damen and types of customers/beneficiaries) What we do

G4-9 Scale of the reporting organisation 2 - Key Figures

G4-10 Total workforce by employment type, gender, employment 6.2 - Sustaining our Human Capital contract and region

G4-11 Percentage of employees covered by collective bargaining 2 - Key figures agreements 2015: 100% 2014: 100%

G4-12 Describe the organisation’s supply chain (incl. product or service 3 - The World of Damen providers, engaged suppliers in total number, type, and location, Our value chain payments made to suppliers)

G4-13 Significant changes during the reporting period relating to size, 3 - The World of Damen structure, or ownership or its supply chain (incl. changes in location, 4 - Financial performance operations, facilities, capital information and supplier information)

G4-14 Explanation of whether and how the precautionary approach 4 - Sustainable economics or principle is addressed by the organisation Risk Management 5.5 - Sustainability performance of

our own production processes

G4-15 Externally developed economic, environmental, and social 1 - Foreword charters, principles, or other initiatives to which the organisation Damen follows the international subscribes or endorses Shipbuilding rules and standards of the IMO.

G4-16 Memberships in associations (such as industry associations) 5.1 - Innovation through cooperation, research organisations and consortia

5.2 - Safety of our customers



IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 Operational structure of the organization, including main divisions, 9.1 - About this report operating companies, subsidiaries, and joint ventures Reporting indicators (List all entities in the consolidated financial statements) Reporting process, scope and

boundaries

G4-18 Process for defining report content and the Aspect Boundaries 9.1 - About this report and explain how the Reporting Principles have been implemented

G4-19 List all the material Aspects identified 3.1 - Sustainability at Damen Our stakeholders High importance topics - Financial Performance - Training and Education - Health and Safety of our employees - Innovation - Energy - Emissions

G4-20 The Aspect Boundary within the organisation: Whether the Aspect is material within the organisation; The list of entities included in G4-17 for which the Aspect is or is not material; Specific limitation regarding the Aspect Boundary within the 9.1 - About this report organisation

G4-21 The Aspect Boundary outside the organization: Whether the Aspect is material outside the organization; The list of entities for which the Aspect is material, relate to geographical location; Specific limitation regarding the Aspect Boundary outside the 9.1 - About this report organisation

G4-22 Explanation of the effect of any re-statements Not applicable

G4-23 Significant changes from previous reporting periods in the Not applicable Scope and Aspect Boundaries



STAKEHOLDER ENGAGEMENT

G4-24 List of stakeholder groups engaged by the organisation 3.1 - Sustainability at Damen Our stakeholders

G4-25 Basis for identification and selection of stakeholders with 3.1 - Sustainability at Damen whom to engage Our stakeholders 9.1 - About this report

G4-26 Approaches to stakeholder engagement, including frequency of 3.1 - Sustainability at Damen engagement by type and by stakeholder group Our stakeholders

G4-27 Key topics and concerns that have been raised through stakeholder 3.1 - Sustainability at Damen engagement, and how the organisation has responded to those key Our stakeholders topics and concerns, including through its reporting; Report the stakeholder groups that raised each of the key topics and concerns

REPORT PROFILE

G4-28 Reporting period Jan-Dec 2015

G4-29 Date of most recent previous report Jan-Dec 2014

G4-30 Reporting cycle Annual

G4-31 Contact point for questions regarding the report or its contents Contact

G4-32 a. Report the ‘in accordance’ option the organisation has chosen a. ‘Core’ b. Report the GRI Content Index for the chosen option b. 8.2 GRI G4 index (see tables below) c. Report the reference to the External Assurance Report, if the c. Not applicable report has been externally assured

G4-33 Policy and current practice with regard to seeking external We did not seek external assurance assurance for the report for this report

GOVERNANCE

G4-34 Governance structure of organisation 3 - The World of Damen Business approach

ETHICS AND INTEGRITY

G4-56 Internally developed statements of mission or values, codes of 3.1 - Sustainability at Damen conduct, and principles relevant to economic, environmental, and 6 - Sustainability performance of social performance and the status of their implementation our own production processes Improvements in our supply chain


SPECIFIC STANDARD DISCLOSURES

In our Materiality matrix we made the distinction between high and medium importance topics. Our Disclosure on Management Approach focuses on the high importance topics. In the coming period we will determine which medium importance topics need to be addressed in more detail. We refer to the medium importance topics throughout our report: n Indirect economic impact, Knowledge transfer (chapter 4, 5.1, 7) n Employment, Labour conditions/rights (chapter 2, 6)n Corruption/fraud (chapter 3.1)n Local community (chapter 8)n Sustainable supply chain (chapter 4, 6.3, 6.4)n Waste, Total cost of ownership, Ballast water (chapter 3.2, 6.2)n Health and Safety of customers (chapter 6.1)n Market Share (chapter 4)


DMA AND DESCRIPTION REFERENCE INDICATORS

SPECIFIC STANDARD DISCLOSURES

G4-DMA Training and Education 2 - Key Figures 3 - The World of Damen 6.2 - Sustaining our Human Capital

G4-LA11 Employees receiving performance and career development reviews For all employees. 6.2 - Sustaining our Human Capital

G4-DMA Health and Safety of employees 2 - Key Figures 3 - The World of Damen 7.2 - Sustaining our Human Capital

G4-LA6 Rates of injury, occupational disease, lost days, absenteeism, 2 - Key Figures and work-related fatalities 7.2 - Sustaining our Human Capital

G4-DMA Financial Performance 2 - Key Figures 3 - The World of Damen 4 - Sustainable economics

G4-EC1 Direct economic value generated and distributed 2 - Key Figures 4 - Sustainable economics

G4-DMA Innovation 3 - The World of Damen 5 - Sustainable innovation

G4-DMA Energy 2 - Key Figures 3 - The World of Damen 6.2 - Sustainability performance of

our own production processes Our carbon footprint

G4-EN3 Energy consumption within the organisation. 2 - Key Figures 6.2 - Sustainability performance of


G4-DMA Emissions 2 - Key Figures 3 - The World of Damen 6.2 - Sustainability performance of


G4-EN15 GHG Emissions (scope 1, 2) 2 - Key FiguresG4-EN16 6.2 - Sustainability performance of



ISO 9001 ISO 9001 is a certified, internationally accepted, quality management system which is designed for businesses that want to prove their ability to consistently provide products and services that meet the needs of their customers and other relevant stakeholders: www.iso.org

ISO 14001 ISO 14001 is a certified, internationally accepted, environmental management system which is designed to help businesses remain commercially successful without overlooking environmental responsibilities: www.iso.org

ISO 14064 ISO 14064 is a certified, internationally accepted, environmental management system that provides businesses with a complimentary set of tools and programmes to quantify, monitor, report and verify greenhouse gas emissions: www.iso.org

ISO 26000 ISO 26000 provides guidance on how businesses and organizations can operate in a socially responsible way. This means acting in an ethical and transparent way that contributes to the health and welfare of society.

MARIN Maritime Research Institute Netherlands: www.marin.nl

OHSAS 18001 Occupational Health and Safety Management Systems 18001 is an internationally accepted method of assessing and auditing occupational health and safety management systems: www.ohsas-18001-occupational-health-and-safety.com

TCO Total cost of ownership

TNO the Netherlands Organisation of Applied Scientific Research: www.tno.nl

BCG-matrix Boston Consulting Group – matrix

BWM Convention Ballast Water Management Convention is the diminutive term commonly used when referring to the “International Convention for the Control and Management of Ships’ Ballast Water and Sediments”, adopted by the International Maritime Organisation (IMO) in February 2004. The BWM Convention was adopted with the aim of protecting the marine environment from the transfer of harmful aquatic organisms in ballast water carried by ships.

BWT(S) Ballast Water Treatment (Solution)

HSEQ Health, Safety, Environment & Quality

DSGo Damen Shipyard Gorinchem

Greenhouse Gas ProtocolThe Greenhouse Gas (GHG) Protocol, developed by the World Resources Institute (WRI) and the World Business Council on Sustainable Development (WBCSD), sets the global standard for how to measure, manage, and report greenhouse gas emissions: www.ghgprotocol.org

GRI The Global Reporting Initiative (GRI) is a leading organisation in the sustainability field. GRI promotes the use of sustainability reporting as a way for organisations to become more sustainable and contribute to sustainable development: www.globalreporting.org

IMO The International Maritime Organisation (IMO) is the United Nations’ specialised agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships: www.imo.org/

ILO Guidelines on Occupational Safety and Health International Labour Standards Guidelines on Occupational Safety and Health are based on the principle that workers should be protected from sickness, disease and injury arising from their employment. The International Labour Organizsation (ILO) is a United Nations agency dealing with labour issues, particularly international labour standards, social protection, and work opportunities for all: www.ilo.org

GLOSSARY

9.3


CONTACT


HEADQUARTERSAvelingen-West 20 4202 MS Gorinchem

P.O. Box 14200 AA GorinchemThe Netherlands

For more information, feedback or suggestions on this report and its contents please contact us at [email protected]


Avelingen-West 204202 MS Gorinchem

P.O. Box 14200 AA GorinchemThe Netherlands

phone +31 (0)183 63 99 22 fax +31 (0)183 63 21 89

[email protected]


DAMEN SHIPYARDS GROUP SUSTAINABILITY … · a member of the sector team for the Maritime Industry....

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