Report of the Board of Directors

Business Review 2011:

The Board of Directors of Doco is pleased to report that in 2011 considerable improvements within the Group have been achieved.

As was stated last year, the Company previously had not been in a position to move forward as it should. However, commencing in the second half of 2009 the Company has taken the appropriate actions to correct this and these have led to improvements in management information via improved ICT and staff; improvements in the quality control process by implementing the Doco Quality Control Framework and the strengthening of the sales forces in several foreign markets. In addition improvement of the procurement or sourcing process has taken place and the lines of communication within the Doco Group have been shortened and improved by changing the organisation as well as the responsibilities of employees.

In 2011, based on a strategic review of our United Kingdom business, management has decided to discontinue the manufacture of finished "ready-to-fit' doors and concentrate on our core activity of supplying components. This brings the United Kingdom Company into line with other operating Doco companies within the Doco Group in other European countries.

As mentioned in the report last year, management was positive for the year 2011. Financially 2011 is the best year since 2008. Although results have been impacted by one-off costs, such as loss-making foreign currency forward contracts, the net result is again positive. However, there is still room for improvement and management believes that the turnaround of Doco International is almost completed and that no additional costs will be incurred in 2012.

In 2011 the cost structure of the company has been analysed and improvements have been implemented.


In the beginning of 2011 Doco has employed a Group Finance Director. To strengthen the sales team and to provide more attention to customers Doco has employed several additional sales managers in Europe. Based on the sales results for 2011 this sales strategy pays back rapidly and in all markets we have noted a significant increase in sales and potential business.

Last,  but not least Doco has appointed on 1st July 2011 a manager who is responsible for the Technical Competence Centre, primarily focused on the quality of the goods sourced in several countries of the world.

Capital Expenditure:

The major investments made in 2011 relate to ICT as well as tooling for out sourcing of components. On ICT Doco has invested to improve the logistics process as well as replacing computer hardware. On sourcing Doco has developed tooling for use by suppliers in order to guarantee that the quality of parts meets its stringent requirements.

Research and development:

One of the strengths of Doco is its position and performance in research and development.
The Technical Competence Centre of Doco is linked with the operations sector to ensure their activities have direct relevance to the needs of our customers. The result is a continuing stream of innovations in products, product portfolio and door systems that differentiate Doco from its competitors and enables our customers to enhance their business performance both financially and in sustainability.

Risk management:

Doco’s management acknowledges that managing risk is an essential element of entrepreneurship.
In fact, accepting a certain level of risk is a prerequisite for achieving the Company’s strategic objectives and financial objectives. In general Doco adopts a prudent attitude with respect to the acceptance of significant business risks. A risk’s significance is determined by the likelihood of it occurring and its potential impact on the reputation of the Company, the strategic objectives and financial targets.

In the opinion of the Board credit risk, arising from suppliers to customers is a major risk especially since the start of the global economic crisis. Credit risk is the loss that would occur if third parties failed to perform as contracted. To reduce credit risks Doco carries out ongoing credit analysis of its customers’ financial situation. Doco uses market intelligence and, if required and possible, credit rating agencies to determine the creditworthiness of its customers for doubtful debts adequate provisions are in place. Credit to debtors is closely monitored in business review meetings and specific indicators such as Day Sales Outstanding. Overdue debts are reported and discussed in detail and where appropriate supplies to some customers are temporarily suspended.

The high volatility of the raw material markets in the past year has intensified the Board’s focus on the operational and financial risks resulting from the situation. Price movements in the international markets for raw materials influence revenues and margins. To reduce this volatility fixed price contracts are in place with a lot of suppliers.

A major part of Doco’s foreign currency transactions are in US dollars and relate to the purchase of raw materials. Doco’s foreign currency transaction exposure is determined by foreign currency movements that are not likely to be passed on to customers. The volatility of the US dollar in which Doco carries out transactions stabilised for some time which meant the foreign currency risk did not further increase. The foreign currency exposure is managed by means of financial derivative instruments such as foreign currency forward contracts, as well as short term bank balances in foreign currencies.

Doco continues to invest constantly in improving its quality and safety standards. Besides our successful Quality Control system, which has been in operation for a number of years, we have further strengthened our capacity to execute in-depth supplier analysis and quality control procedure in the early stage of the procurement process. In addition to strengthening the quality review process Doco has employed an experienced manager, who is responsible for the Technical Competence Centre, in 2011.

Next, Doco intends to establish in 2012 an enterprise in China (WFOE). The key advantages of the WFOE for the Doco Group are:

  • Entry barriers / Product protection
  • More and better Quality Control
  • Flexible production / Supply Chain

The primary objective of liquidity management is to ensure that Doco always has sufficient committed credit facilities and cash and cash equivalents to meet its payment obligations. The Finance department monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows. In 2011 Doco successfully amended its existing revolving credit facility by reducing the financial costs.

Expectations for 2012:

In 2012 Doco will continue to strengthen its market positions within the Industrial and Residential sectors through organic growth. The focus will be on geographical regions and markets that have the prospect of structured profitable growth.

The 2011 results and the strong balance sheet give the board confidence to successfully execute our strategy in 2012 and the years beyond. The strategy as formalized in 2009 has proved to be successful in 2010 and 2011.

The Board expects no major changes to its staff or organizational structure.

For 2012 capital expenditure relating to improvement of our Technical Competence Centre equipment and small investments in the warehouse are budgeted. The foundation of the WFOE in China will also result in capital expenditure in 2012.

For 2012 the cost structure for the Doco Group will be further analysed and improvements will be implemented.

Supervisory Board as from March 2012:

The Supervisory Board supervises and advises the Board of Directors in the performance of its management task and supervises the overall development of the Company and its affiliates in doing so, the Supervisory Board is guided by the interest of the Company and its Stakeholders.

As from March 2012 Mr. Pieter Evers has been appointed as Chairman of the Supervisory Board and Mr. Jos Vercammen as Member of the Supervisory Board.

Subsequent events:

In the Netherlands the purchase manager has been promoted to Director Procurement.

Finally the Board wishes to thank all staff for their commitment and dedication which has enabled Doco to take the measures necessary to successfully to get back on track. Our business environment is rapidly changing which creates additional challenges. We are convinced that the commitment and entrepreneurial spirit of Doco’s people will position the Company well for continued success. 


Sittard, March, 2012


The Board of Directors.                                                                   

Doco Holding B.V.