Converteam Annual Report 2010

annual report 2010

Customizing power conversion solutions

Annual report 2010

key figuresorder backlog:

1,183(in euro millions)

Headcount:

5,396

SaleS in

80different countries

converteam iS preSent in

17countrieS

new orderS:

+36 %

Free caSH Flow:

136.4(in euro millions)

SaleS:


ebitda:


Converteam Group SAS30 avenue Carnot

91345 Massy Cedex (France)

www.converteam.com

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Annual report 2010

AustriAVienna

BrAzilBelo Horizonte

BetimMaca

ParauapebasRio de Janeiro

Vitria

CAnAdA BurlingtonVancouver

ChinAShanghai

BeijingYantaiWuhan

denmArkKolding

egyptAlexandria

FrAnCeMassyBelfortIstresLille

LudresNancyNantes

Saint Julien les MetzVilleurbanne

germAnyBerlinEssen

FrankfurtHamburgStuttgart

indiAChennai

DelhiKolkataMumbai

itAlyMilan

koreABusanGeoje

norwAyOslo

russiAMoscow

St Petersburg

singAporeSingapore

united kingdom

RugbyGillingham

GlasgowKidsgrove

MiddlesbroughSheffieldSwansea

usAPittsburgh

HoumaHouston

MiamiMinneapolis

Seattle

united ArAB emirAtesAbu Dhabi

A WORLDWIDE COMPANYCLOSE tO ItS CuStOMERS, CONVERtEAM COMBINES AN INDuStRIAL APPROACH BASED ON A GLOBAL FOOtPRINt FOR DRIVES, ROtAtING MACHINES, AutOMAtION AND CONtROLS ON EACH CONtINENt WHERE WE OPERAtE, AND A LOCAL PRESENCE IN SALES AND SERVICE.

annual report 2010

Customizing power conversion solutions

Annual report 2010

key figuresorder backlog:


Headcount:

5,396

SaleS in

80different countries

converteam iS preSent in

17countrieS

new orderS:

+36 %

Free caSH Flow:


SaleS:


ebitda:


Converteam Group SAS30 avenue Carnot

91345 Massy Cedex (France)

www.converteam.com

an

nu

al

repo

rt 2

010

3contentsChairmans message ...................................... 4Management Committee .............................. 6

our core business ............ 8What is power conversion? .......................... 12Converteams innovative solutions ............. 13Curbing CO2 emissions ................................. 14

our markets ............................. 16Diversified markets .......................................20

Renewables .................................................... 22- Wind Energy ............................................ 24- Solar Energy ............................................26- Wet Renewables ..................................... 27

Power Generation .........................................28- Hydro Power Plants ............................... 30- Fossil Energy ........................................... 31- Nuclear Applications ..............................32- Special Power Supplies ..........................33

Oil & Gas and Offshore .................................34- Oil & Gas ..................................................36- Offshore ................................................... 37

Marine ............................................................38- Merchant Marine ....................................40- Navy ......................................................... 41

Industry ..........................................................42- Metals ......................................................44- Mining ......................................................45- Material Handling ...................................46- Test Benches........................................... 47

Services..........................................................48

our worldwide footprint ....................................... 52Asia .................................................................56Central & South America .............................59North America .............................................. 60Northern Europe ............................................ 61Southern Europe, Middle East & Africa ......62Central, Eastern Europe & Russia ................63

our assets ...................................64Technology and R&D .....................................68Human Resources ......................................... 72Corporate Social Responsibility .................. 75Operational Performance ............................. 76

corporate governance ............................... 78

management report ....88

CHAiRMANS MESSAGEpierre bastid, Ceo of Converteam

T hanks to the recovery of our markets with Orders Received up 36% in 2010, our company is back on the high growth mode. However, the 2008-2009 crisis has accelerated changes in our environment, creating major challenges to our company.

more demanding markets Our customers, under increased competitive pressure themselves, demand more value from our solutions. For Converteam, the answer is through ever more R&D and innovation.

more risks Our customers demand that we bear an increasing share of the financial risks associated with the performance of their process. Our response is through improved Operational Performance thanks to our Excellence in Execution program.

increased predominance of emerging economies China and Brazil today, india tomorrow are creating Converteams competitors, first in their domestic markets, and then in all markets. The only strategy for us is to become a national champion in each of these emerging markets: becoming global is the objective of our third transformation.

restructuring of the wind industry it is our view that the world of the wind turbine manufacturers will drastically change over the next three to five years, with only three kinds of players remaining: A few large specialists Some of the large multinational engineering companies like General Electric or Siemens

Chinese companies.

This rationalization will put a huge competitive pressure on all suppliers, including us. it therefore becomes a matter of survival for almost one third of our business to speed up the development of a volume manufacturing culture, specific to this industry.

in order to address all these challenges and also to speed up our expansion, i have decided it was time to look for an industrial home for our Company. As i write this message, we have just signed an agreement with General Electric, the largest engineering company in the world, where they will buy 90% of Converteam equity, Florent Battistella our vice-CEO and myself keeping 10% of the capital.

I am very confident this is the best way for Converteam to go into its next development stage. Together building the best of both worlds, i.e. our entrepreneurial culture and our agility on the one hand, and the strength and the global organization of General Electric on the other hand, lets be sure that the sky will become our limit!

Annual report 2010

4 our mission /

Thanks to the recovery of our markets with Orders Received up 36% in 2010, our company is back on the high growth mode.

5

THE MANAGEMENTCOMMiTTEEthe ManaGeMent COMMIttee deCIdeS On OPeRatIOnal and StRateGIC MatteRS InvOlvInG all unItS Of the COnveRteaM GROuP.

6 our mission /

1. Alex MArtAyAnSenior Vice PresidentChief Marketing Officer

2. Alfred PerMuySenior Vice PresidentChief Technology Officer

3. Steve rAynorSenior Vice PresidentConverteam UK Ltd, UK

4. WAlter CegliASenior Vice PresidentChief Operating Officer

5. Herv BorenSztejnExecutive Vice PresidentHR & Communications

6. Pierre BAStidPresident and CEO

7. niColAS lWoffExecutive Vice PresidentFinance, Controlling & Legal

8. florent BAttiStellAVice CEOSenior Vice President (Acting) Emerging units

9. Mike ArCHiBAldSenior Vice PresidentConverteam Holdings USA inc.

10. PHiliPPe leCoiSSenior Vice PresidentConverteam SAS, France

11. Alfred StoBBeSenior Vice PresidentConverteam GmbH, Germany

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Annual report 2010

8 our core business /

our core businessat the CuttInG edGe Of teChnOlOGy and InnOvatIOn, OuR CuStOMIzed POweR COnveRSIOn

SOlutIOnS helP OuR CuStOMeRS IMPROve the PeRfORManCe Of theIR PROCeSSeS.

Annual report 2010

converteams activity is power conversion, which means transforming one form of energy into another. it may be mechanical energy into electricity as when we work with wind power for example; or electrical energy into motion when we provide electrical propulsion systems for ships. we also transform one form of electrical energy into a different form of electrical energy. moreover, when the electricity produced is collected, then transported to the utility grid to be used, different components are involved, which may generate

electricity losses. our mission is to try and minimize these losses, and maximize the yield and the return on investment.many sectors and applications have a need to convert energy like our traditional markets, such as oil & gas, mining, etc. we offer big advantages in energy-saving and environmental protection, even in very traditional sectors that are seen as big polluters. we are also involved in new forms of energy, like wind or solar energies.power conversion is achieved by systems we build in-house,

comprising of electrical machines, variable speed drives to control the speed of the machines, and process automation & controls. These systems are at the heart of the customers processes and are thus mission-critical with a value far greater than their place in the customers overall investment. as a key player in this field, Converteam addresses all steps in the power conversion chain, from power generation and static power conversion to power quality and energy storage.

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Annual report 2010

our core business /

Annual report 2010

our core business /

WHAT iS POWER CONVERSiON?

Mechanical energy is transformed into electrical power by a generator.Electricity is produced through the mechanical action of the wind which rotates the generator housed in a wind turbine or through the action of

water released through turbines which actuate generators in a dam. Likewise, subsea generators are activated by ocean currents.The electricity produced by the generators is then transported to the utility grid.

mechanical to electrical

Electrical energy is transformed into mechanical power by a motor.The electricity generated aboard a ship powers electric motors which drive the propulsion system. As another example, electrical power

drives variable speed systems and motors which actuate the rolls in a rolling mill to produce sheet metal from metal slabs.

Electrical energy is transformed into electrical energy of a different frequency or current through a static frequency converter (railway substations, pulsed power supplies or soft starters) or through an inverter in solar energy applications.

POweR COnveRSIOn MeanS COnveRtInG eleCtRICal eneRGy IntO MeChanICal PeRfORManCe and vICe veRSa, OR ChanGInG eleCtRICal eneRGy ChaRaCteRIStICS, whIle tRyInG tO ReduCe eleCtRICIty COnSuMPtIOn.

electrical to mechanical

electrical to electrical

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CONVERTEAMS iNNOVATiVE SOLUTiONSOuR SOlutIOnS aRe buIlt aROund thRee CORe COMPOnentS that aRe eItheR ManufaCtuRed OR aSSeMbled In-hOuSe.

motors and generatorsConverteam has developed a full range of electrical machines, including both induc-tion and synchronous motors. We are cur-rently the only supplier of high speed elec-tric direct drive systems spanning the full range from 100kW to 100MW. We have pioneered this market, where our technol-ogy is an alternative to gas turbines and geared electric drive systems. We have also engineered, exclusively for the off-shore wind industry, a new class of gen-erator, the Direct Drive Permanent Magnet Generator (DD-PMG).

Variable speed driVesThe power electronics equipment control the speed of motors by varying current voltage and frequency. Our systems offer clear advantages for customers on the markets we serve. They are perfectly suited to processes requiring control and automation of production flows, as for example in met-als. They enable energy consumption to be optimized in step with mechanical requirements, in particular for applica-tions using pumps and compressors (oil & gas, marine and offshore).

automation & controlsConverteam offers competencies in auto-mation and process control for applications that include plant automation, ship auto-mation and SCADA (Supervisory Control And Data Acquisition) systems. Technology centred on HPCi (High Performance Con-troller) engineering tools and network sys-tems has benefited from ongoing commit-ment to development, enabling us to offer complete automation systems integrating the latest breakthroughs and standards at all levels - from process control to produc-tion and enterprise management. n

CURBiNG CO2 EMiSSiONSConverteam offers solutions for clean energy production and commits to improving the energy efficiency of industrial plants while reducing CO2 emissions.

Despite the financial crisis, sustainable development and reduction of environ-mental impact remained high on the agenda of most governments and com-panies. The latter are committed more than ever to communicating on their environmental footprint while the former combine economic support and sustain-able development targets by integrating green initiatives in their economy stimu-lus packages.

supporting the deVelopment of renewable energiesConverteam is a global supplier to the renewable energy industry providing wind (onshore and offshore), solar, wet (tidal &

currents) as well as hydro units including generators, motors and converters.Converteam is a market leader in the wind sector with close to 20GW installed world-wide at the end of 2010. Leading-edge technology is constantly being developed with major turbine OEMs to manufacture their full electrical systems (generators and converters). Converteam has been the first company to develop a medium speed Permanent Magnet Generator (PMG) in wind. Permanent Magnet Gen-erators are now recognized for their higher reliability level and have become a major request of wind turbine OEMs. Several of these engaged with Converteam to devel-oping a series of Direct Drive Permanent Magnet Generators (DD-PMG) sized to fit the needs of their onshore and offshore wind turbines.With the entry of utility players and the development of large PV farms (20 to 80MW and up to several hundred MW) the solar business has entered the field of medium voltage installations. Converteam took this opportunity to step into the solar market in late 2009 bring-ing cost-efficient technologies to address those large industrial installations. The first installations developed in 2010 are already in operation and more than 70MW worth of inverters have been ordered from Converteam by customers.Converteam has been active in wet renewables for more than a decade with prototypes demonstrating our technology capabilities in power conversion, power quality and transmission.Converteam is a key technology partner for hydro projects with offerings including generators for small hydro and variable speed drives for Pumped Hydro Power Plants (PHPP). These plants are seen as the most efficient renewable energy sources and the largest energy storage solutions. This storage capability has become essential for the grid to balance the growing size of intermittent power sources (wind and solar).

Annual report 2010

14 our core business /

helping customers improVe energy efficiencyMore than 300 million industrial electric motor systems in operation worldwide (pumps, fans, compressors, traction) account for a total electricity consump-tion of 7400 TWh per year, 40% of the world electricity demand. The environ-mental impact of those industrial elec-tric motor systems represents more than 4,300 million tons of CO2 emission per year and, according to the European Com-mission led Motor Challenge Program, the shift from fixed speed to variable speed motors could reduce their energy con-sumption by 30% on average.in metals, the aging of rolling mills deeply impacts their efficiency. Converteam brings to revamping and greenfield projects the best electromechanical (motors and drives) and automation technologies enabling Metals plants to increase their productivity, improve their energy efficiency, thus reduce their energy consumption.Merchant marine customers and Navies increasingly consider for their newbuild vessels the option of hybrid propulsion (diesel engines combined with electric motors) or even full electric propulsion. Electric systems bring an increased flexibility allowing, at any given operat-ing point, a reduction in the number of running generators and to run them at their most efficient design point, which means burning less fuel. Ships can then be built with fewer prime movers thus also reducing the ships manufacturing carbon footprint. in the Navy, another energy efficiency collateral effect is that it requires less tanker ship support as it gives the ships longer operation range. Converteam has also developed a new dimension to electric propulsion offerings with the option to transform the vessels inertia energy captured by the propeller while reducing speed into electricity back-fed into the vessels power network.

improVing enVironmental performanceChoosing to drive a gas pipeline compres-sor with an electric motor and electric variable speed system instead of a gas turbine proves to be a sound economical choice but also provides enormous envi-ronmental advantages. Converteam pro-poses an enhanced solution combining a high speed induction motor integrated with the compressor itself and manu-factured with magnetic bearings and no

gearbox. The motor/compressor integra-tion ensures a completely greenhouse gas emission-free solution and the magnetic bearing/no gearbox options ensure lubri-cating oil-free equipment.Converteam also deploys worldwide tech-nologies that support the substitution of heavy hydrocarbons with cleaner gases like methane/LNG. A key environmental achievement in LNG relates to the flar-ing of methane vapors (boil-off gases). Converteam supplies electromechanical solutions to power the collection and recycling of the boil-off gas instead of flaring it.in Marine, electric propulsion systems allow operations in environmentally sensitive areas such as harbors. in such cases, the on-board power systems could be brought on line whilst more polluting diesels can be shut down. For small ships like tugs and ferries electric propulsion would also allow the incorporation of a battery which is used to supply the pro-pulsion motor when in the harbor. The bat-tery could be charged up from the ships generators when outside environmental limits or could be charged up from the national grid when the ship is alongside.

looking into the futurein 2010 Converteam was selected to supply electrical equipment to KSTAR, the leading nuclear fusion project devel-oped by the National Fusion Research Institute in Daejeon (South Korea). The project aims at creating the conditions of long-term commercial viability for nuclear fusion, a very low cost electricity production. To push the limits in energy efficiency Converteam started a few years ago to investigate the High Temperature Superconductivity (HTS) technology. HTS technology aims at creating means to transport electricity without any loss. An electric current flowing in a loop of superconducting wire can persist indefi-nitely with no power source. Converteam invested in a new cryogenic test labora-tory, filed six HTS dedicated patents and manufactured the first HTS coil for a 1.7MW hydroelectric generator. in June 2010 the system reached the supercon-ducting level (virtually zero resistivity at -230C). This is a major engineering achievement of worldwide significance and in 2011 the hydrogenerator will be the first machine of its type to enter full service. n

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Annual report 2010

our markets /16

our markets

OveR the yeaRS, COnveRteaM haS develOPed State-Of-the-aRt teChnOlOGIeS tO SeRve the MedIuM vOltaGe POweR COnveRSIOn MaRket.

2010 Saw SuCCeSSful uPtuRn fROM the CRISIS wIth 36.3% InCReaSe In ORdeRS vS. 2009, MaInly

dRIven by the eneRGy MaRket.

Annual report 2010

converteams continuous efforts to bring to the market innovative solutions to power conversion technological challenges have allowed the group to quickly recover from the crisis. featuring 48% growth in 2010, the renewables sector continued to expand and became our first market.The power generation market was remarkably active with an increased focus on clean energy sources such as hydro, nuclear and natural gas. our cutting-edge solutions backed by our extensive experience in special

power supply applications enabled us to record significant successes.a strong rebound was observed in oil & gas investments caused by soaring crude oil prices, at their highest level in two years. in this context, Converteam confirmed its position as a partner of choice offering unique power conversion technologies and solutions for midstream and upstream activities both onshore and offshore.converteam performed relatively well in the marine business despite a very slow recovery in merchant

shipping and government cutbacks in defense affecting most of the navies around the world.The industry market benefited from the global recovery with a specific drive from the metals sector.2010 was a record-breaking year in terms of order intake for converteams service business. This strong performance resulted from the permanent enlargement of our installed base and the priority given to the development of our service capabilities worldwide.

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CONVERTEAMS DIVERSIFIEDMARKETS

1 renewablesour playground: onshore and offshore wind turbines, photovoltaic plants and wet renewables (wave and tidal). our offering: systems providing a complete range of low and medium voltage generators, converters and inverters, power quality and grid con-nection solutions, comprehensive farm power architecture.

4 marine marineour playground: merchant shipping (cruise liners, LNG tankers, research vessels, ferries, etc), naval ships (air-craft carriers, submarines, frigates, destroyers, etc.) our offering: power generation, electric propulsion either onboard or outboard (podded solu-tions), electric distribution, automa-tion and dynamic positioning sys-tems.

marineour playground: from exploration to pro-duction of oil & gas, transport and storage, refining and petrochemical applications; off-shore vessels (drilling, diving & support ves-sels, cable & pipelayers, FPSOs, wind turbine installation vessels). our offering: electrical solutions to drive pumps and compressors (onshore, topside and subsea), and to gen-erate power; power management systems; integrated electric propulsion, electric distri-bution, dynamic positioning & vessel control systems, drilling electrical packages.

oil & gas and offsHore3

Annual report 2010

20 our markets /

CONVERTEAMS DIVERSIFIEDMARKETS

5 industryour playground: processing of steel, aluminum and other metals (steel-making plants, rolling mills, process-ing lines), mining (winders, crushers, grinding mills, mine ventilation sys-tems, etc), material handling (cranes, conveyor belts, stacker-reclaimers), and test benches. our offering: full electrical and control systems for industrial processes using motors, drives and automation systems.

6 serVicesour playground: all markets. our offering: provision of spare parts, maintenance work, factory repairs, on-demand expertise and technical field support available 24/7 world-wide; renovation, upgrade and train-ing in our dedicated centers or on cus-tomers sites; long-term contractual services to partner with our custom-ers maximizing the availability and reliability of their assets.

power generationour playground: traditional power generation (gas, hydro and nuclear power plants) and special power supplies. our offering: generators, systems covering start-up frequency converters and static excitation systems, variable speed drive solutions, and static power conversion systems.

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key figures

market trends China, US & UK leading growth in wind Rising competition from Chinese

wind players 30% growth in solar in 2010

with the scale-up of farm sizes

orders

converteam (in euro millions)

171 161

253

2009

2010

193

sales

conVerteam highlights in 2010 20GW wind converters installed base First medium speed Permanent Magnet

generators (pmg) for wind 60MW of inverters ordered in Solar Global offer including wind farm electrical

architecture, generator test benches and cranes for turbine installation vessels

wind energy demand forecast (GW)

37

Source: Barclays Capital.

2009 2010

35

2011

41

2012

48

2013

52

2014

58

roweurope chinaamericas

Annual report 2010

22 our markets / renewables / wind energy / solar energy / wet renewables

renewablesIn 2010 the RenewableS MaRket ROSe by 14% fROM the PRevIOuS yeaR, dRIven by GOveRnMentS InCentIveS In a COntext Of deCaRbOnIzatIOn Of eleCtRICIty PROduCtIOn tO fIGht aGaInSt GReenhOuSe effeCt.

This general trend has impacted the various segments of the market in different ways, depending on the maturity of the type of renew-able energy and on the region.

After two years of outstanding growth (+37% and +40% of new turbines installed in 2008 and 2009 respectively, source: BTM Consult), 2010 was a year of consolidation for the wind business, the most mature of all new energy sources with a slight decrease of 6% in new installations with around 35.8GW of new wind turbines added worldwide (source: GWEC). it is to be noted that onshore wind energy is getting closer to fossil energy production (coal and gas) in terms of life time cost, i.e. around 60/MWh.

Solar photovoltaics, the second most mature renewables segment, posted exceptional growth (+120%, source: European Photovoltaic industry Association EPiA), with more than 12GW in new installations. Nevertheless the solar energy production cost is still well above that of fossil energy, and is heavily dependent on government subsidies. in this context, 2010 saw the emergence of large-scale utility farms, which dramatically changed the market outline with the need for larger players and for elec-

trical optimization at solar farm architecture level in order to reduce the cost gap versus other energy sources. While the market was hit at the end of 2010 in a context of budget restrictions with cuts in fiscal incentives in sev-eral Western countries (Germany, Spain and France), other countries such as the USA and Italy confirmed their commitment to this clean source of energy.

Technologies applied to wet renewables cov-ering tidal, ocean current, and wave types of energy are still developing. There is no major commercial activity in this segment and new installations represent less than 600MW per year (source iEA).

Converteam supplies generators and power electronics equipment on a complete system approach basis. in addition to generators and converters designed for the wind industry or inverters for the solar industry, we offer full electrical solutions for offshore wind farms or solar farms. in the wet renewables segment, we provide full power conversion solutions, includ-ing generators, converters, farm architecture designs or grid connection systems. n

23our markets / renewables / wind energy / solar energy / wet renewables

Wind energythe growing need for green alternatives has led to a boom in the renewables industry, a core field for Converteams expertise. With an order intake up 43% to total 236M, it is now the largest market of our group for the first time.

This outstanding performance mainly resulted from orders from both histori-cal customers under framework agree-ments and new customers as well as from the growth of the Permanent Magnet Generator (PMG) business. in 2010 a number of elements shaped the wind business.

preparing for the success of offshore windEven though the offshore wind segment still accounts for less than 3% of the total wind market, many wind turbine manu-facturers are currently developing new offshore turbines, often featuring large power (above 3MW) and increased focus on reliability due to the extremely high maintenance cost in an offshore environ-ment. Although the jury is still out on the most economical drive train over a life time, many turbine manufacturers have chosen the direct drive option with no gearbox, the weakest part of the drive train for off-shore wind farms because of its increased reliability. This trend clearly impacted Converteams addressable market, which rose faster than the underlying wind busi-ness in terms of incremental MW installed. The price of direct drive generators is

indeed considerably different from that of geared generators due to much slower speed (10 to 17 rpm compared to 1500-1600 rpm for traditional geared genera-tors), and therefore a generator torque 100 times as high at the same power.

china, the largest market in 2010For the second consecutive year, China has been taking the lions share of the worldwide newly added capacity (nearly 40%). it should also be noted that very large Chinese wind turbine manufactur-ers entered global competition, while they were mostly addressing their domestic market so far. Converteams solid position in China has helped us capture a fair share of this large Chinese market.

oVercapacity leading to price pressure on wind oemsThe perspective of a profitable market has attracted many players in the past, thus causing some overcapacity in the wind turbine manufacturing market. This resulted in increased competitive pres-sure, which started at turbine level and went through every step of the supply chain. Some European OEMs had to take drastic measures to face this new chal-lenge by closing factories in Europe and transferring their production to Asia.

conVerteam confirms its leading position in the wind market Converteams wind segment rose 43% vs. 2009 as a result of a continued leader-ship in the wind converter market and the acceleration of the high end wind genera-tors business.After emerging as the global leader of all independent converter suppliers in 2009, Converteam confirmed its position in 2010 by booking new orders from its tra-ditional customers namely Siemens Wind Power, DongFang Wind Turbines, REpower, Nordex, Fuhrlnder and Envision.

Converteams DireCt Drive Permanent Generator seleCteD by alstom WinD for offshore WinD aPPliCationsConverteam will equip two alstom wind 6Mw+ offshore turbine prototypes with converters and direct drive Permanent Magnet Generators (dd-PMG). Our design includes no gearbox, which is often considered the most frequent cause of breakdown in a wind turbine. Since generated power is nearly twice that of onshore turbines and as the generator speed decreases due to the absence of a gearbox, direct drive generators are extremely large machines, more than 5 meters in diameter. We will supply our very innovative Advanced High Density (AHD) machine configuration, which is lighter, cheaper and easier to maintain compared to other technologies for high torque applications. featuring the largest torque of all PMGs ever built so far, these highly efficient and reliable generators are perfectly suited to the require-ments of offshore wind farms.

Annual report 2010

24 our markets / renewables /

We were nonetheless able to win sig-nificant orders from new customers, like Guodian United Power and XEMC (Xiang-tan Electric Machines Company), both among the top six Chinese players and the top 20 first players worldwide. We also contributed to the globalization of the Chinese wind manufacturers, sup-porting with our converters a 200MW farm to be built in Texas by a joint venture between the China based A-Power Energy and Shenyang Power Group, together with affiliates of US Renewable Energy Group and Cielo Wind Power LP.

acknowledged leadership in both generator and conVerter technologiesConverteam has deliberately not been playing in the mature sector of Doubly Fed induction Generators (DFiG) but is on the leading edge of the market for the new state-of-the-art of generators, i.e. the most technologically advanced Permanent Magnet Generators (PMG). in 2010 we sold many prototypes or pre-series, in particular of the low speed types (direct drive concept). Among others, we delivered a full system for the 3MW direct drive turbine of Schuler Pressen; Alstom Wind selected Converteam for their 6MW+ offshore turbine and ordered two prototypes of the electrical drive train (generator and converter) of this new direct drive turbine.Converteam also confirmed its strong technological advance in wind convert-ers by becoming, early in 2010, the first company to get Fault Ride Through (FRT) compliance certificates from two loyal customers, REpower and Fuhrlnder in Germany, where grid codes are recog-nized as the worlds most stringent. We supplied Schuler Pressen with our first 900V wind converter, enabling low volt-age boundaries to be pushed to maximum, while getting the benefits of higher volt-age in terms of efficiency and overall cost competitiveness.2010 also saw the emergence of the first 5MW Direct Drive Permanent Magnet Generator (DD-PMG) ever built worldwide, for which Converteam delivered and suc-cessfully commissioned its medium volt-age converter. n

25

Moreover, we positioned ourselves for growth in the USA, where we were granted public funding to localize core solar tech-nologies. The utility scale market reached an installed base of 250MW in 2010 and is expected to grow twice as fast as the wind market. n

with 120% growth (source: epia), the solar energy segment actually took off in 2010 thanks to strong governmental incentives in western countries.

First sold in December 2009, our solar inverters were chosen by many custom-ers for their multi-MW plants, for a total of more than 60MW by the end of 2010 in Germany, France, italy, the UK and Africa.

Converteam has entered this promising segment leveraging the development of a new market the utility scale PV segment that requires players used to handling high MW drive systems in cost-effective and reliable manner. in France Converteam commissioned what was at the time of start-up the largest roof top solar PV farm, covering a surface of 9,300 sq.m which will supply the regional grid with 1.4 million kWh a year.

solar energy

Converteam to equiP a solar farm in esParron, franCeThe photovoltaic (PV) panel manufacturer and plant operator Solairedirect has selected Converteam as electrical partner for its solar farm located in esparron-de-verdon in the South of france. we will sup-ply the electrical package comprised of inverters and monitoring systems. The project will consist of a 13MW solar park, which will produce enough energy to power 4,300 homes annually. Construction work has already begun and the park is expected to be operational by mid 2011.

Annual report 2010

26 our markets / renewables /

in 2010 the wet renewables segment, covering energies derived from waves, tidal and ocean currents, remained a relatively small, although fast growing segment.

Converteam secured an important order with Hammerfest Strm UK Ltd. for the full electrical system of a tidal turbine. in 2010, we continued our engineering

work for the Paimpol Brehat tidal farm developed by EDF Energies Nouvelles off the coast of Brittany, France. This project includes not only the subsea transmis-sion, onshore conversion and power qual-ity systems, but also a state-of-the-art Medium Voltage, Direct Current (MVDC) equipment helping reduce electrical losses. n

Wet renewables

hammerfest: Converteam to suPPly key eleCtriCal systems for PioneerinG tiDal enerGy Generatorhammerfest Strm uk ltd. has selected Converteam for the provision of electrical equipment for a 1MW tidal turbine known as HS1000. We will supply the subsea generator and related shore based systems. after an initial test period, hammerfest Strm will work with ScottishPower Renewables who plan to install the device as part of a ten turbine,10MW, tidal power array by 2012. This worlds largest demonstra-tion tidal power project will be situated in deep waters (greater than 48 meters) off Scotlands west coast. Converteam has many decades of experience in designing electrical equipment and systems for hostile environments, such as those found in our offshore and oil & gas markets, so we know how to mitigate those challenges particularly with respect to reliability and maintenance which are exceptionally critical in a subsea installation.

HS300 (HS1000 prototype) tidal installation - Kvalsund, Northern Norway - Hammerfest Strm

27

key figures

market trends Acceleration of nuclear and natural gas

power generation as low carbon emission power sources

Very active newbuild market for coal fired plants in China

Renewable sources taking a larger share in 2010 additional power capacity

conVerteam highlights in 2010 Two large pump storage power plant

orders (1.6gw) 120MW order to connect Deutsche Bahn

network to the german grid 11 orders for nuclear power plants


power generation capacity increase (GW, 2007-2015)

121

orders

72

99

2009

2010

72

sales

Source : iEA.

7%

23%

7%

63%

roweurope asiaamericas

Annual report 2010

28 our markets / power generation / Hydro power plants / fossil energy / nuclear applications / special power supplies

power GENERATiON the SuPPly Of eleCtRICal eneRGy tO SuPPORt COntInuOuS develOPMent, whIle PROteCtInG the envIROnMent, IS One Of the MOSt ChallenGInG taSkS Of MankInd tOday. aS a ReSult Of COnSIdeRable effORtS undeRtaken thROuGhOut the wORld In 2010, the POweR GeneRatIOn MaRket COntInued tO ShOw ReMaRkable aCtIvIty bOth In weSteRn and eMeRGInG COuntRIeS.

Whereas the development of renewable energy sources has further accelerated, signifi-cant investments have been made in order to improve the efficiency and enviromental bal-ance of conventional power generation and to increase energy grid stability.Converteam has a long experience in the design and manufacturing of electrical machines, drives and power electronics solutions for power generation.

We offer a broad range of generators, from slow speed claw pole machines required in hydro plants to 2-pole turbo generators used in gas and steam processes. Our optimized generator designs feature high efficiency, high availability and reduced maintenance.Our line of motors to drive process equipment such as feed pumps, fans and draughts covers all modern power generation needs. Special

solutions for gearless drives are available and in commercial operation.

Power electronics equipment, including static excitation systems and start-up converters, is widely used in power generation applications and Converteam developed redundancy con-cepts aiming at maximizing plant availability. Likewise, variable speed drives are used to help reduce losses, therefore improving system per-formance.

in addition to providing for classical applica-tions, Converteam has developed modern state-of-the-art solutions such as AC excita-tion devices used in hydro and special power supply systems in order to enhance power plant efficiency and flexibility. n

29our markets / power generation / Hydro power plants / fossil energy / nuclear applications / special power supplies

Hydro Power Plants

special attention was paid to the renew-able source of hydro energy over the past recent years.

in 2010 Converteam managed to extend its partnership not only with Western plant builders such as Alstom, Voith and Andritz, but also with OEMs in China. We pursued our activity in the traditional business of start-up converters for pump storage plants and static excitation. Major orders were secured in Europe and in China.The demand for energy storage has increased, pushed by the fast develop-

ment of wind power generation. An effi-cient way to achieve this goal consists of upgrading pump storage plants with variable speed machines.

The advanced FACT technology of AC excitation systems, based on high perfor-mance variable speed drives developed by Converteam, is key to achieving higher efficiency and flexibility. Converteam introduced the AC excitation technology to the European market in 2002, when we installed our largest drives at the Goldisthal plant in Germany (1,060MW). n

linthal-nant De DranCeIn 2010 Converteam was contracted by alstom Schweiz aG for the supply of systems based on this technology, including eight generators for the turbines at the linthal and nant de drance hydro plants in Switzerland (1,000Mw and 600Mw respectively). Power plants with variable speed turbines offer the most effective green energy storage solu-tions, pumping water to a higher elevation during low-cost off-peak times and releasing power through the same pump-turbines during periods of high demand. Our enhanced design perfectly matches the advanced needs for grid stability and response time. both plants are expected to be completed between 2015 and 2017.

Linthal pumped storage project, Switzerland

Annual report 2010

30 our markets / power generation /

Fossil energyThe worldwide demand for high efficient combined-cycle power plants continued last year.

Converteam further developed its co-op-eration with key OEMs such as Siemens and Alstom. The compact unit designed by Converteam integrating the start-up converter together with the static excita-tion system into the generator was still the leading technology in the market.increased demand for refurbishment could be observed in addition to many newbuild projects all over the world.

There was a strong demand for Converteam s generator that can supply up to 45MW, namely from industrial power plant build-ers for both gas-fired and steam-based processes. Several orders were booked, destined for the UK, Mexico , Venezuela, Oman, india

in 2010 there was still a demand for new-build coal-fired power plants in China whereas Western Europe focused on refurbishment. Converteam won major contracts to upgrade variable speed drive

equipment in order to increase the effi-ciency of power plants. We offer attrac-tive capabilities for this market with our wide range of motors and drives, static and rotating excitation systems. n

evonikConverteam was awarded the refurbish-ment of the 15MW boiler feed pump drives at an Evonik power station in Ger-many. Our high performance converters will drive a high speed motor at 6000rpm, enabling enhanced availability, reduced losses, and increased power plant output while reducing CO2 emissions. The sys-tem will be fitted with remote service capability, thus providing continuous system optimization and short service response time. The system is expected to be commissioned in June 2011.

Vertical synchronous motors installed for Hydro-Quebec dam facility at Chute Allard, Canada

31

32

Annual report 2010

our markets / power generation /

the nuclear industry continued to strongly develop as a result of the need to fight against greenhouse effects and to substitute fossil fuel.

Converteam complies with the high demands of nuclear standards imposed by governmental authorities.Converteam managed to secure several orders for the supply of emergency diesel generator sets and electrical motors both

via Western OEMs and end-users, namely in the USA, Korea and China. Moreover, we were awarded a number of contracts in Ger-many to upgrade electrical drive systems.

Also in 2010, we were awarded five reactor cooling pump motors for the Changjiang nuclear power plant, to be partially built in our Yantai state-of- the-art rotating machines factory started up in 2009. n

first orDers for Class 1e safety relateD equiPment Converteam strengthened its position in the nuclear market with two very significant projects which are the first orders for Class 1E Safety Related equipment on new nuclear facilities. These two projects include two and six synchronous emergency diesel generators to be installed respectively in a MOX (Mixed Oxide) fuel fabrication facility and a new nuclear power plant both under development in the united States. The units will provide critical service standby power for the two plants. The generators will be manufactured in Converteams rotating machines factory in Minneapolis, uSa, and are scheduled to be delivered between december 2011 and September 2013.

nuclearApplications

Motor-generator set for a nuclear application

33

special power supply systems are often required to connect energy grids of dif-ferent frequencies.

Major areas of investments are the con-nection of the 50Hz utility grid to the Central European railway grid operated at 16Hz and to 60Hz grids in the Gulf region. The connection of offshore wind farms to the grid over long distances is based on the same technology.

Converteam has a long track record in power supplies for the interface to the 16Hz Deutsche Bahn grid. Our power electronics can replace traditional elec-trical machines and generators of that special frequency, thus helping cut operating costs and increase flexibility in the deregulated energy market. The 128MW Lehrte and Aschaffenburg sta-tions started commercial operation in 2010. A new 120MW order for their new Mannheim station was placed in 2010.

The special power supplies include motors, drives and other electrical equipment. in 2010 we were selected by KSTAR, the nuclear fusion program developed by the National Fusion Research institute in Daejeon (South Korea). We will supply a six meter diameter 200MW pulse genera-tor and drive system to power a tokamak, a doughnut-shaped chamber used in fusion research in which plasma is heated and confined by magnetic fields. This is aimed at researching the long-term commercial viability of production of low cost electric-ity from nuclear fusion.

The deployment of our solutions to desal-ination plants was a new achievement in 2010. We secured our first reference for the supply of medium voltage variable speed drives, motors and transformers for the largest Australian desalination plant under construction in Victoria State. n

Converteam to Give neW life to Cerns PartiCle aCCeleratorIn 2010 Converteam delivered the first ever 60Mw static pulsed power supply for one of the accelerators housed by the CeRn (european Organization for nuclear Research). The Proton Synchrotron (PS), will now be equipped with a new power system, called POPS (POwer for PS) which offers an integrated 14 MJ energy capac-ity storage, to avoid drawing all the power from the grid. The power converters sup-plied by Converteam are used to convert the aC power supplied by the grid into dC power, so that it can be stored in the 60-ton capacitor banks.

special Power supplies

in May 2010, Converteam was awarded a prize during the official handover of the system to CERN

key figures

market trends 10% increase of upstream investments

mainly driven by national oil companies Oil price close to US$ 90/bbl at end of 2010,

the highest level in two years Oil & Gas demand on the rise again after

two years of successive decrease

conVerteam highlights in 2010 6x26.3MVA generators (total 158MVA)

for a major oil company in the gulf of mexico First electric LNG plant in China 79 offshore vessels commissioned

in 20different shipyards

orders


149

307

198

2009

2010

252

sales

crude oil price (Usd/bbl)

2009 2010

Source : OPEC.

J f m a m J J a s o n d J f m a m J J a s o n d

100

80

60

40

Annual report 2010

34 our markets / oil & gas and offsHore

oil & gas And oFFsHorethe CaPItal exPendItuRe Of OIl & GaS COMPanIeS Saw SIGnIfICant deCReaSe In 2009 afteR A SuRGE In 2007 AnD 2008. It ROSE by MORE than 10% In 2010, MaInly dRIven by laRGe natIOnal OIl COMPanIeS. the OIl baRRel PRICe ReaChed uS$90 at the end Of 2010, the hIGheSt level SInCe twO yeaRS, ReSultInG fROM bOth hIGh deMand by faSt ReCOveRInG eMeRGInG COuntRIeS and a weak dOllaR.

This oil price level is expected to trigger the exploration of new territories and the progress of new projects to address oil sand, shale gas and new LNG developments, even at a rela-tively high production cost per barrel.

The oil industry is anticipating continuous spending growth in 2011 with a rise forecast above 10% to reach a level close to 400bil-lion. international oil companies are expected to increase exploration and production investments with a continuous shift towards harsher environments, in particular in deep and ultra-deep waters. Such investments will require a new generation of equipment and drilling rigs.

Moreover, the growth of the Asian economies will also continue driving investments in the midstream and downstream sectors to bring energy to industrial customers and con-sumers. n

35our markets / oil & gas and offsHore

2010 saw a 21% rise in order intake com par ed to 2009, thus confirming converteams position as a valued part-ner for power conversion solutions based on our unique technology and offering to drive compressors and pumps.

in Europe, Converteam booked sev-eral orders for the supply of high speed motors and MV7000 technology to drive compressors in gas storage and gas trans-portation applications.

After last years achievements in the UAE with the ADCO Thamana-B oil field con-tract, we renewed the success with Abu Dhabi National Oil Company (ADNOC) and received an order from Elliott for six Vari-able Speed Drive Systems (VSDS) to drive gas compressors at GASCO Asab site.

Our increased presence in the Middle East was key to securing new projects. Kobelco ordered eight 4.8MW low starting cur-rent fixed speed motors for GASCOs HabshanV site. Likewise, we will provide Elliott with a set of VSDS equipment and related motors to drive compressors designed for the Takreer project.

Total contracted us for the refurbishment of large converters at its hydrocrack-ing unit in Gonfreville, France. Replac-ing VSDS units delivered in 1986, the new 22MW and 35MW converters are designed to run for six years without any interruptions. The project includes a new harmonic filter directly connected to the 90kV switchgear. We also won two other orders for the Total CLOV Floating Pro-duction Storage and Offloading (FPSO) project in Angola.

The cutting-edge technology of Converteam s Pulse Width Modulation (PWM) MV7000 converter solution is now acknowledged by customers and accepted for larger size equipment. General Electric awarded us an order for integrated motor-compressors for the EON RuhrGas Etzel iii gas storage project. We also received an order from GE for the Ansai LNG plant in China, sponsored by China National Petroleum Corporation (CNPC), where Converteam is supplying variable speed

electric solutions for a 400,000 cu. m/year LNG plant designed to favor the use of environmentally friendly CNG (Com-pressed Natural Gas) as automotive fuel.MAN Turbo placed several contracts with Converteam in 2010, especially for con-ventional and high speed gas transporta-tion and gas storage projects. Among others, they ordered from us four 17.5MW MV7000 systems to drive induc-tion motors, which will be used at the Fluxys Winksele Gas compression station in Belgium.

oil & Gas

Converteam Chosen to equiP fPso units on oil fielDs off anGola Coast

GE Oil & Gas awarded Converteam the supply of five complete Variable Speed Drive Systems (vSdS), including induction motors, for the main gas compressors of the ClOv fPSOs. we were also contracted by Sulzer to deliver two drives and electric motors for water injection pumps. after successful orders for yemen lnG and Ofon platform, our high performance MV7000 medium voltage drive equipment has again been selected for a project operated by total. In addition to its compact design, our electric solution will help reduce exhaust emissions, hence minimize carbon footprint. Operation is scheduled to start in 2014.

After the disastrous oil spill in the Gulf of Mexico, the quality and reliability of Converteam equipment were a key deci-sion factor for a major oil company to sup-port orders from GE and Dresser Rand for a total of six generators to be all manufac-tured at our rotating machines factory in Minneapolis, USA. These critical genera-tors will supply a total power of 190MVA to two new offshore platforms in the Gulf of Mexico. n

integrated motor-compressor set for storage and boosting applications

Annual report 2010

36 our markets / oil & gas and offsHore /

as a world leader in the manufacture and supply of dynamic positioning (dp), auto-mation, power, propulsion, and drilling drive systems, converteam is the only company that has all of these mission-critical systems in-house and is able to fully integrate these and many other related systems into turnkey projects.

The offshore industry experienced tough times in 2009 and 2010 started in similar fashion. The second half of the year saw some renewed confidence with a number of large Heavy Lift; Offshore Support (OSV), Platform Supply (PSV) and Anchor Handling Tug & Supply (AHTS) vessel projects being placed. The drillship and drilling rig market remained depressed, largely due to continued financial uncer-tainty and Gulf oil spill.

Despite unfavorable market conditions, Converteams offshore order intake increased by 59.5% over the previous year. Notable integrated projects contributed to this, including a deepwater drillship at STX Korea for Noble Corporation; three PSVs at Eastern Shipyard USA for Harvey Gulf Offshore; two PSVs at Tebma Ship-yard India for Fugro; a heavy lift crane semi submersible for CMCI Raffles China and a heavy lift vessel for China Offshore Oil Engineering Co., Ltd. (COOEC), our first for a Chinese state-owned company.

offshore

Chinese heavy lift Positions itself With Converteam

China Offshore Oil engineering Co., ltd. (COOeC) has awarded Converteam a contract for an integrated package of electrical systems to power two main propellers and five maneuvering thrusters of their newbuild heavy lift vessel for offshore oil & gas exploration and development. This 219m 50,000 DWt semi-submersible self-pro-pelled vessel features an open deck area of over 7,500 sq. m, larger than a standard football pitch. It requires pinpoint positioning and maneuvering as the vessel oper-ates within the jacket itself. Converteam will deliver control systems based on its C-Series range, including a dP2 dynamic Positioning control system, an integrated vessel control and monitoring system.

China, india and the USA were the most buoyant markets yielding the majority of orders. Several smaller projects were taken in Brazil, emphasizing the growing importance of the region.

Our traditional markets of South Korea and Singapore were particularly low in orders but our commissioning teams were hard at work in these territories with a significant number of large vessels being commissioned. More than 79vessels were delivered from 20 shipyards in 14 coun-tries, demonstrating Converteams global effectiveness. n

37

key figures

market trends Signs of recovery from 2009 crisis China and Korea with largest shipbuilding

order book increase Cutbacks in Defense spendings impacting

major navies

conVerteam highlights in 2010 Three electric propulsion orders including

the latest induction motor technology 10MW electric propulsion order in the

very demanding mega-yacht market Successes with the Royal Netherlands

navy and the republic of korea navy

orders


105

203

132

2009

2010

190

sales

2010 vessel deliveries (number)

49

487

290

line vessel lng tanker tanker dry bulk

767

Source : BRS.

Annual report 2010

38 our markets / marine / mercHant marine / navy

marinethe MaRIne aCtIvIty StIll SuffeRed fROM the CRISIS In 2010. afteR a vOId PeRIOd In 2009, the MeRChant MaRIne buSIneSS ReMaIned lOw In 2010 deSPIte SOMe SIGnS Of IMPROveMent, wheReaS the naval SeGMent waS adveRSely affeCted by the COntRaCtIOn In GOveRnMent budGetS. yet, wIthIn thIS dIffICult COntext, COnveRteaM MAnAGED tO InCREASE ItS MARInE ORDERS by 25.9%.

The crisis accelerated the major shift in the ship-building sector, marked by the rise of Chinese shipyards at the expense of Japan and Europe. With a market share rising from 10% to 37% over the past four years, in 2009 China became number one among shipbuilding nations and appeared to keep this position in 2010. South Korea lost its leadership but kept its market share; Japan almost divided its market share by two over four years but seemed to stabilize. Brazil was the only other country featuring good progression of its shipbuilding activity.A slight pick-up in investments was noted in the cruise ship segment. On the technology level, the encouraging move towards electric propulsion was maintained, fostered by a com-bination of economical and environmental driv-ers. Thanks to an extensive and very compre-hensive offering, Converteam recorded several orders in 2010, including a first mega-yacht which establishes the groups leading position in the electric propulsion domain.Despite cuts in defense spending the worlds largest Navies continued to consider full

and hybrid electric propulsion as a premium solution for their ships not only for its eco-nomical and environmental benefits, but also for the warfare tactical advantages it brings. Converteam confirmed its technological edge in its traditional markets (UK, USA and France) with a high level of orders and the award of major propulsion and automation contracts from two new customers, the Royal Netherlands Navy and the Republic of Korea Navy. n

39our markets / marine / mercHant marine / navy

The merchant marine market remained low after the severe downturn in 2009 due to an unprecedented crisis.

Only the cruise sector showed sustained activity with nine newbuilds ordered to the shipyards over the year. The ferry segment was still very low even though changes in the environmental regulation should contribute to the renewal of the old fleet. On the technology side, a promising move to electric propulsion was noted for the few projects initiated. The LNG carri-ers did not open new business opportuni-ties as the capacity of transport remained higher than the liquefaction capacity. The market also saw a geographical shift from the major shipbuilding countries, with the confirmed rise of Chinese leadership.

Despite difficult market conditions, Converteam performed well in 2010 with 30.4M in new orders. Converteam now owns a significant share of the cruise market following contracts for four cruise ships placed by big shipyards such as STX Europe and Fincantieri on behalf of the leading shipowners like Carnival, MSC and Hapag Lloyd Cruises. Two out

Merchant Marine

a first in the meGa-yaCht seGment

a major Italian shipyard opted for Converteams electrical propulsion sys-tem for a mega-yacht. The scope of our offer will include two 5.2MW synchronous motors with a PWM MV7000 converter, the propulsion and distribution trans-formers and one MV switchboard. This reference is key for Converteams growth in this niche and highly confidential segment, as approximately ten ships of this kind are built yearly worldwide. The top-of-the range yacht will feature seven decks, six pools of up to eight meters long and an internal floodable dock for a 14-meter tender.

of these projects are based on a Pulse Width Modulation (PWM) + induction motor solution, thus acknowledging the breakthrough of this technology and Converteam status as a world leader. Received at the very end of 2010, another order highlights the attractiveness of podded solutions in the cruise sector.

Converteam successfully pursued the diversification strategy initiated in 2009 in other segments. Among others, a major European shipyard contracted us for the latest mega-yacht, enabling us to enter this restricted and highly demanding niche market, a new target for Converteam. With a power of approxi-mately 2 x 5MW, the 140-meter ship will be equipped with our PWM drives, MV7000 NPP.

Thanks to the combined efforts of our dedicated operations teams, who met the challenge of good execution, 15 new cruise ships and LNG carriers were deliv-ered in 2010 to five different shipyards worldwide acting on behalf of seven ship-owners, thus opening up opportunities for new service contracts. n

Auxiliary propulsion system for US Navy LHD-8

Annual report 2010

40 our markets / marine /

despite difficult trading conditions brought about by the global financial cri-sis and cutbacks in government defense spending, the naval segment has man-aged to secure orders totaling 101.5m.

Major successes were achieved in Europe, North America and Asia. Following on from its contracts for the successful T-AKE class, Converteam was selected for the power and propulsion package for the first of a class of three Mobile Land-ing Platforms (MLP) for the US Navy. The scope covers a fully integrated package comprising generation, distribution, pro-pulsion and automation. The propulsion system will utilize LCi converters and synchronous motors.

in Europe, Converteam was awarded a key contract for the supply of a diesel electric power and propulsion package for a Joint Support Ship being built for the Royal Netherlands Navy. The integrated pack-age covers generators, switchboards, trans-formers and a twin shaft propulsion system comprising MV7000 converters and High Torque Density induction motors, con trolled by an Energy Management System.

in the UK domestic orders have mainly resulted from variations to existing con-tracts, with limited new business oppor-tunities from the Royal Navy. Our team pursued the efforts to support the design of the Global Combat Ship with the first of

navy

Converteam Continues lonG-stanDinG relationshiPs With the us navy

Converteam was chosen for the supply of power distribution, propulsion, vessel automation, power management and control systems for the uS navys Mobile land-ing Platform (MLP). The award from General Dynamics, nASSCO underscores the value that they place in our execution and in-service support of the t-AKE (14 ves-sels) and bP (3 vessels) Shuttle tanker programs. The uSn and nASSCO plan to build three ships in the class, each of which will benefit from our efficient Global Program Management Project team pulling critical technologies and supply efficiencies from our key units. technologies included on this vessel come from Converteams diverse commercial technology and include our C-Series vessel automation and power man-agement and our variable speed synchronous propulsion motor drive train.

class scheduled to be in service in 2019.Converteam also developed new markets and, leveraging its Korean presence, had key wins with the Republic of Korea Navy (RoKN). This started with an order for pro-pulsion, automation and dynamic posi-tioning systems for a naval support ship built for the Korean Agency of Defence Development (ADD); subsequently we were awarded a material contract for electric propulsion and automation sys-tems for the RoKN which we expect to lead onto systems for future combat-ants. Neither of these successes would have been achieved without our in-house development of damage control systems. Building on our T45 Service Support con-tract, our Naval service teams have been supporting other Royal Navy ships, espe-cially the Duke class frigates, Albion class LPDs and Wave class AOs.

Converteam continued to build a foun-dation for near-term Naval business in Canada where several new projects are forecast. On the service side, we reached an agreement with the Canadian Subma-rine Management Group to provide repair and overhaul services for the Victoria Class submarines.

The Naval Systems Inc. Group in the USA continues to expand the opportunities for Converteam with the US Navy by retain-ing a secure site and personnel qualified to perform classified work. n

41

market trends Steel production reached its monthly 2008

peak in early 2010 Significant investments in metals and

mining during the second semester Marginal recovery of container activity

translating into limited loading terminal investments

conVerteam highlights in 2010 Order for 900 thousand-ton Rourkela plate

mill in india Commissioning of TKS multi-line plant

in calvert (usa) Offshore wind turbine installation cranes

for five Gusto jack-up vessels

world crude steel production (million tons)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source : Barclays Capital.


2009

2010

130

239

192211

orders sales

851970

1,0711,144

1,2471,346 1,329

1,220

1,395

904

key figures

Annual report 2010

42 our markets / industry / metals / mining / material Handling / test bencHes

industryIn 2010, Many InduStRIal IndICatORS tuRned baCk tO GReen, thuS RefleCtInG SIGnS Of ReCOveRy. thIS waS ObSeRved In all COuntRIeS wIth StIll lOw, but POSItIve GROwth RateS In euROPe and nORth aMeRICa. ReCOveRy waS StROnGeR In bIC COuntRIeS (bRazIl, IndIa, ChIna). baRely IMPaCted by the GlObal SlOwdOwn, ChIna IS a PaRtICulaR CaSe wIth a GROwth Rate aPPROaChInG twO dIGItS.

However, investment programs did not follow this upturn as quickly as expected. They were put on hold until the middle of 2010 before slowly resuming.Early in 2010, steel production was back to its monthly 2008 peak as steel demand was driven by a strong need for restocking. in the second half of the year, it seemed that steel users were only buying what they actually needed. After a decline in 2009, all commodity prices soared to record levels in 2010.

Most metals greenfield investments were initi-ated in BiC countries whereas Europe and North America focused on revamping projects.In the mining field, the copper segment was first to be back on track, with the other sectors waiting for more favorable market conditions.

Thanks to its worldwide coverage and acknowl-edged expertise in high-end technology, Converteam could benefit from the metals and mining segment revival.Despite some delays, many Converteam cus-

tomers progressed with their industrial invest-ment plans. A significant rise in order intake was seen with traditional customers in the mechanical and automotive industries. The fast developing wind business proved a strong driver for growth in 2010 both in the test bench and offshore crane segments.

The slight rebound in the container shipping sector led harbor authorities to improve the utilization rate of their equipment; hence, very few investments were made. Converteam was nonetheless able to record +138% new orders considering the wide range of material handling applications it serves (container and bulk han-d ling, shipyards, offshore cranes). n

43our markets / industry / metals / mining / material Handling / test bencHes

Metalsconverteams metals business emerged from the crisis with a 123% rise in order intake in 2010, but not yet back to its level of 2007/2008.

The market for new and revamping projects in the metals sector recovered slightly from the middle of 2010, with a significant increase in the total number of inquiries and projects at tendering stage.Converteam benefits from many years of experience in drives and automation sys-tems used for the construction or modern-ization of steel processing plants, such as hot and cold rolling mills for long and flat products, and of all types of strip process-ing and treatment plants. Over the recent years, we mainly engaged in the high-end sector of metals processing plants where, being among the worlds technology lead-ers, we differentiated by highly innovative process know-how based on an advanced automation platform. Major projects in the field of flat hot and cold metals process-ing were commissioned in 2010.The final step of the complex revamping of ThyssenKrupp Rasselsteins 5-stand tandem mill was completed at the end of the year. This mill is now processing tinplate with a 2-digit micron thickness within worldwide leading tolerances.Single-stand cold rolling mills were upgraded at NLMK, Russia and AluNorf, Germany.The grand opening ceremony at Thyssen-Krupp Steel North America in Calvert, Ala-bama (USA) in December 2010 was the highlight of the commissioning of the com-plete multi-line cold rolling and processing plant, equipped with Converteams drives

Converteam Chosen for larGe inDian Plate milldanieli & C Spa contracted Converteam for the supply of major electrical engineer-ing products and services for the new Rourkela plate mill. Designed for Steel Author-ity of India (SaIl), this plant will have an initial annual production capacity of 0.92million tons of steel plate, with a provision for future expansion to 1,674 million tons. Converteams scope includes more than 450 MV and LV motors and associated drives, automation systems, cabling and installation work.

and automation systems.The complex revamping of the automa-tion system of ThyssenKrupp Steels hot strip mill #2 in Beeckerwerth, Germany progressed successfully with key mile-stones being reached.As a partner of world leading suppliers to the metals industry, Converteam also booked new orders in 2010. We will design and engineer a new plate mill for SAILs Rourkela site in India; a new cold rolling mill for Hindalco also in india, as well as energy supply and dynamic compensation systems for steel mills in the Baltic and Middle East regions.Posco, the large Korean steelmaker, selected Fives DMS for the construction of a 64 Sendzimir mill at its new stain-less steel plant in Ho Chi Minh, Vietnam. Converteam will supply all electrical and automation systems, namely three 6MW induction motors powered by MV7000 converters and the full level-one auto-mation system, including sheet thickness control and a mathematical model. n

Annual report 2010

44 our markets / industry /

Miningalthough investments increased globally during 2010, converteam successes were mostly related to large open pit mines. other sectors saw delays mainly due to the lack of visibility in the markets, espe-cially for underground developments, our traditional business in this segment.

The number of new projects started during the year saw a drop due to both financial uncertainty and an increase in mergers and acquisitions within the sector. By the end of the year increased levels of activ-ity showed signs of recovery, driven by a rush to capitalize on the high commodity price levels.The outlook for 2011 and beyond is for a much stronger level of investments to meet the demands for commodity in the market, particularly copper. Expectations are that spending for 2011 will return to 2008 levels.

Successes during the year include two major grinding mill systems, which con-firm the resurgence of our mining busi-ness expansion into applications where we were in the past only a product sup-plier. Converteams motors, variable speed drives and transformers will power the massive expansion of the two new 7million ton capacity copper concentra-tion plants in the Middle East.

Operationally this year, our traditional min-ing business units in the UK and Germany supported the development of our Cana-dian mining business with the successful commissioning of the mine hoist for the Sifto Salt mine in Goderich, Canada.Our presence in the South American mar-ket was strengthened with the supply and commissioning of electrical equipment (power, control and lightening transform-ers, MV and LV switchgears, motor control center and drives, and mobile substation) for a 12 million ton Salobo mine in Brazil.

Converteam also completed the manu-facture and delivery of a large twin motor hoist system for a potash mine in Canada, and a motor and MV7000 drives for a platinum mine in South Africa.in Europe, we supplied our FM2000i winder control system to RAG ibbenbren. in addi-

tion this modernization included a new PA75 based DC drive system, safety circuits, and ATEX certified shaft signaling.The recommissioning of the hoist at BHP Billiton Olympic Dam, in Australia, dem-onstrated our capability and the com-mitment of our personnel to respond to the complex demands of this type of sitework. n

neW hoistinG system suCCessfully CommissioneD at the sifto salt mine in ontario, CanaDa

The project to upgrade the existing #3 shaft sees a key milestone passed in achieving the goal of increased productiv-ity and reliability. The new double drum hoist has a capability to lift substantially heavier skips than previously employed at the mine. The Sifto mine is the largest underground salt mine in the world and following this expansion will increase capacity to approximately 9 million tons annually. Converteams scope included the supply of our innovative MV7000 medium voltage drive and high torque low speed overhung induction motor technol-ogy to increase capacity at the mine. The scope also extends to a comprehensive control and automation package.

45

Material handlingThe material handling segment covers a wide range of applications, from con-tainer, bulk and shipyard to offshore applications. this diversification has been key during the last two years of economic downturn.

in 2010 the number of newbuild container terminals was still far beyond 2008, a record year. After a huge drop in 2009, the market stabilized on a low level in 2010.

Many large projects have again been postponed by the terminal operators, as the slight upturn can be covered by exist-ing infrastructure, like London Gateway (DP World) for example. The few strategic projects intended to develop new areas or container routes are facing strong competition.

GustomsC (netherlanDs) entrusteD Converteam With the suPPly of extensive eleCtriCal PaCkaGe for five jaCk-uP vesselsGustoMSC is one of the leading design and engineering companies involved in all types of units/vessels for offshore applications, namely the installation of large wind turbines. In 2010, they renewed their confidence by contracting Converteam for five 800-ton cranes installed on jack-up vessels to be built at various shipyards throughout the world, i.e. DDWSEA in Singapore, Lamprell in Dubai and COSCO in China. This success is due to our excellent and long-standing relationships with GustoMSC, and to our innovative compact ProCrane solution based on the redundancy concept.

The bulk market showed good signs of recovery. Converteam won several projects for stacker, reclaimer and car dumper applications in Brazil from Sandvik , Vale and ThyssenKrupp Frdertechnik, expecting to follow the same trend in 2011. There was an increased demand for bulk crane equipment at port side (ship unloader/loader, stacker, reclaimer), espe-cially in india where important opportuni-ties were identified in 2010.

in 2010 the offshore wind turbine mar-ket accelerated tremendously. A huge power capacity is planned to be added in Europe within the next ten years, which represents approximately 8,000 new turbines. This development will result in an increased demand for specialized installation vessels equipped with cranes. Converteam has emerged as one of the two leading global providers in this high-tech crane market. We will supply electri-cal equipment for 800-ton cranes on five new jack-up vessels, one of which will also feature our electric propulsion system. This marks the start of a longer business relationship with GustoMSC as the world-wide demand for such vessels is expected to be around 50 units through 2020. n

Annual report 2010

46 our markets / industry /

test benchesThe need for higher efficiency, and specif-ically for better use of resources by apply-ing electric and hybrid drive concepts, and the rapid growth in the renewables sector requiring improved test facilities have changed the approach to the test bench market.

Test benches are used to check system performance within a relatively short time before the equipment is set to operation, not only to identify the weak parts in a system, but also to find a way to improve them. Therefore, there is a high demand for modular and highly flexible systems for testing rotating parts like combustion engines and geared drive-lines, as well as for electric motors and energy storage systems such as fuel cells and batteries.Converteam has become the technology leader in the renewables market with several patents to offer complete drive-line testing of wind turbines, involving all parts of the system. The trend in this market is expected to be highly competi-tive, innovative and calling for advanced turnkey solutions.The latest boom in solar technology requires similar reliability tests, including sun and shadow testing, and grid compli-ance tests.in 2010, our customers continued their investments, although some of them were delayed. We were nonetheless able to log a number of new orders, which were

Converteam to suPPly a massive WinD turbine test faCilityConverteam was contracted by a major wind manufacturer to deliver a massive test bench (LxWxH = 30x6.5x9m) in order to perform the necessary electrical tests and simulations on its latest wind turbine platform. Once installed, wind turbines are subject to extreme load and stress conditions in harsh environments. Therefore, all components and subsystems must be tested beforehand to their limits, partly beyond their breaking point. This turnkey project will encompass all electrical sup-plies, including MV7308 drive, 12MW motor, LV & MV switchgears, transformers, automation & data acquisition systems. The mechanical supplies will consist of the actual test bed, all drive line components and the wind load Simulator (wlS).

up by about 80 % vs. 2009, yet still below the 2008 level.New test centers are being planned in Europe, in the USA and in China, particularly for the wind industry where several projects are in preparation with public funding.in the UK, Converteam has been awarded a design study contract for a partly gov-ernmentally funded project for a very large test facility in the wind industry, promoted by the National Renewable Energy Centre.Other important orders were closed with wind OEMs, based on a clear market trend calling for turnkey solutions, involving all electrical, automation and control, as well as mechanical equipment.in addition to two test centers that we have equipped over the past four years, we received a third order from Voith Turbo for their large gearbox test center.The automotive industry also showed signs of recovery with several contracts from Horiba, the leading supplier of auto-motive test systems.Following orders for two large test benches booked between 2007 and 2009, we secured a turnkey contract for a 5 million MNm system to provide stress tests for wind turbine gearboxes to be installed at a leading test facility in Northern Europe.The trend of increased added value in the Chinese industry was also confirmed in 2010 with orders for test benches to support the solar photovoltaic and the marine propulsion industries. n

47

market trends Increased demand for tailored service

agreements for preventive maintenance Increase of modernization projects

(metals, cranes, etc.) after 2009 downturn

conVerteam highlights in 2010 Record year in services Expansion of service network in Brazil,

norway, india and abu dhabi 51% increase in services for industry

systems

orders


174

148

196

174

sales

mv7000 installed base

2008 2009 2010

447

2582

551

3320

679

4119

units

mw

key figures

2009

2010

Annual report 2010

48 our markets / services /

servicesIn a StIll unCeRtaIn eCOnOMIC envIROnMent, OuR SeRvICe buSIneSS ReGISteRed a ReCORd ORdeR Intake at 196 MIllIOn. thIS StROnG PeRfORManCe benefIted fROM OuR COntInuOuSly exPandInG InStalled baSe, and the eMPhaSIS and PRIORIty Set On develOPInG COnveRteaM SeRvICe CaPabIlItIeS wORldwIde.

Furthermore, in order to meet the capacity expansion requirements in many sectors such as mining and metals, the activities benefited from the restart of revamping projects in our mature markets driven by the injection of the latest technologies and performance upgrade.

converteam services cover an extensive scope.n Our core services include all support needed to protect our customers assets and keep their critical processes running. We deliver original spare equipment and we provide technical expertise for emergency support, intervention and maintenance. Our global network of training centers offers a comprehensive range of courses on various topics, from marine propulsion and dynamic positioning through industrial drives and automation.n Converteam modernization and upgrade solu-tions enable state-of-the-art technologies to be injected into existing assets. Our large technol-ogy legacy (under brand names such as Alstom, GEC, AEG, Cegelec and Electric Machinery) helps us control the risks involved in migrating ageing systems towards up-to-date solutions. We also deliver high value by tailoring modernization

and upgrade programs to meet customers exact requirements, for example by limiting plant downtime to a strict minimum or by scheduling progressive upgrades of plant segments over several years. in addition, our Rotating Machines (RM) services leverage our legacy of intellectual property in our Nancy (France), Minneapolis (USA) and Rugby (UK) factories so as to be able to refurbish and upgrade our machines with OEM standards of quality.n Contractual services enable an overall and long-term approach to maximizing the value of critical processes. We offer a wide range of cus-tomized contractual service agreements, from hotline, rapid response and remote diagnostic basic packages to multi-year comprehensive contracts, including technical support, preven-tive maintenance, and design and management of modernization and upgrade programs.

Converteam services its customers through a network of 45 Regional Business Centers (RBC) worldwide, backed by expert engineering and development resources from our engineering centers, and by service excellence centers such as the Marine Center in Belfort, France.

49our markets / services /

in 2010, Converteam continued to further develop its service business, a priority target, in order to support the custom-ers through the entire life cycle of their equipment. We strengthened our service network, with the opening or expansion of Regional Business Centers in Brazil, Nor-way, india and Abu Dabi.We increased focus on our RM service businesses and allocated dedicated staff, space and assets in our RM factories to develop refurbishment activities. Finally, despite the continued uncertainty in our markets, we decided to keep on investing and growing our service staff in 2010.

core serVices (spare parts, support & field interVention and training)in 2010 our customers kept on relying on Converteam for advice and replenish-ing their stocks of OEM spare parts for our power conversion solutions. Besides the provision of ad-hoc spares to our installed base, notable orders include spares for the Lafayette frigate shaftline of the the French Navy to help secure operational availability going forward; a significant spares package for Cunards Queen Mary 2 cruise liner; support to right-scope and deliver initial spares packages for the newly commissioned vessels of our offshore customers, includ-ing Noble, Frontier Drilling and Zacia; provision of critical spares for Thyssen-Krupps multiple rolling mills recently started up in Calvert, USA. Our field inter-vention service teams responded to a large number of requests for support and expertise on a daily basis. Converteam Service team were active in the effort

to close the leaking oil well in the Gulf of Mexico. Another typical Converteam service activity is our contribution to dry-dock work on the MSC Sinfonia cruise ship, including comprehensive maintenance of the electric propulsion system in three weeks time. Converteams Service team in Abu Dhabi pre-commissioned 22 sets of VSDS designed for the Abu Dhabi Crude Oil Pipelines (ADCOP). During the year, we opened new train-ing facilities in Brazil, india and Korea, thus expanding our capabilities in this domain.

modernizations and upgradesWhile decisions on modernization pro-grams were delayed in 2009, Converteam customers started to review their invest-ment decisions in 2010, which resulted in a pick-up of orders. We supplied our Nordex, REpower and Fuhrlnder custom-ers with grid code compliance upgrade packages for 100 wind turbines in Ger-many, using Converteams latest DC chop-per technology. We revamped the control systems of two sets of Static Frequency Converters (SFC) of the Tian Huang Ping PSPP station (China) to improve their reli-ability through better diagnostics capabil-ity and easier maintenance.Very active in the marine market, Converteam achieved a first with the comprehensive upgrade of the P&O Australia Pacific Pearl cruise ship. A sig-nificant part of the work was done while at sea and finalized during a scheduled dry-dock in November 2010. Converteam confirmed its position as a leading player for comprehensive upgrades of integrated power, propulsion and Dynamic Position-ing (DP) systems for offshore vessels. We were awarded significant contracts, such as DP, automation and two thruster drive trains on Aban Abraham delivered in record time of 13 weeks; upgrade of the six thruster drives on the Nobles Paul Wolff vessel, achieved thanks to the co-opera-tion between several Converteam units; conversion of the Oceaneering Sapphire to a US flag

Documents

Converteam Annual Report 2010