Annual report 2013 Organisation Contact Protecting people...Annual report 2013 Organisation Sectors...

Protecting peopleIn transit

Royal Ten Cate

Annual report 2013 OrganisationSectors and market groups

PROTECTING PEOPLEPROTECTING PEOPLE

IN TRANSITIN HABITATS

AT WORKDURING LEISURE

Royal Ten Cate

Annual report 2013

TenCate would like to hear from you. Please let us know your views

by e-mailing [email protected], stating the market group or offi cer

you wish to contact. You can also contact us using the details

shown below.

Drs Pieter Zwinkels, investor relations manager

Royal Ten Cate

Stationsstraat 11

P.O. Box 58

7600 GD Almelo, The Netherlands

Telephone +31 (0)546 544 911

Fax +31 (0)546 814 145

www.tencate.com

This annual report relates to the 2013 calendar year.

The annual report was published on the TenCate website

on Wednesday 17 March 2014 and is also available in printed form

from Tuesday 31 March.

Contact

Royal Ten Cate

ADVANCED TEXTILES & COMPOSITES SECTOR

GEOSYNTHETICS & GRASS SECTOR

OTHER ACTIVITIES SECTOR

PROTECTIVE FABRICS GEOSYNTHETICS INKJET TECHNOLOGY

Protective and safety fabrics and multi-risk solutions for fi refi ghting and defence, industry and services.

Synthetic fabrics, non-wovens, grids and systems for use in infrastructure, civil engineering, water management, the environmental sector, agriculture and horticulture.

Digital inkjet technologies for industrial production processes.

OUTDOOR FABRICS GRASS TECHNICAL COMPONENTS

Protective fabrics for outdoor applications, such as the camping and awning market.

Synthetic turf components and integrated synthetic turf systems for top-fl ight sports, recreation and landscaping.

Technical rollers and components, particularly for printers, copiers, fax machines, postal sorting machines and ATMs.

ADVANCED COMPOSITES HOLDING & SERVICES

Advanced composites, compounds and systems for the space and aerospace industry and industrial applications, including automotive, industrial components and energy generation.

Holding company activities, including fi nance, accounting, patent development and management, investor relations, business development, information technology, human resources management and insurance.

ADVANCED ARMOUR

Advanced composites, ceramics and integrated systems for the active and passive protection of police, army, air force, navy and civilian service personnel, vehicles and vessels.

. A legal overview of operating companies, associated companies and other interests can be found on the inside of the back fl ap.

Royal Ten Cate

PROTECTING PEOPLE VISION

TenCate focuses on the growing demand for protection of people and their living and working environments. The worldwide trends towards ‘safety and protection’ and ‘sustainability and the environment’ serve as the focal points of the protective solutions which TenCate provides. The four market themes are In transit, In habitats, At work and During leisure. The end-markets in which TenCate operates are mobility, infrastructure, water management, defence, personal protection, sport and leisure.

TenCate’s vision is based on the development (‘buy & build’) of a broad, advanced technological base. As a company in the technical textile sector, TenCate occupies a broad and innovative technological position worldwide (including patent positions). That enables the company to develop materials which are an optimum match for individual market requirements in the chosen market themes of safety and protection of man and the environment.

MATERIALS ENGINEERING AND INNOVATION MISSION

TenCate is a multinational company which combines textile technology with chemical process technology in the development and production of functional materials, modules and systems which are an optimum match for specifi c market requirements. It is also increasingly important to reduce the ancillary costs of the chosen solution, since materials and modules form part of a total system. The technological base determines the high-grade applications (product-market-technology combinations) which TenCate supplies in selected niche markets.

TenCate aims to maintain a leading position in the provision of sustainable solutions for personal protection and protection of living and working environments. Developing the right product portfolio, tailored to specifi c market requirements, drawing attention to solutions in an effective way and incorporating the control of safety risks in specifi cations are key parts of the way in which TenCate fulfi ls its mission.

TECHNICAL TEXTILES STRATEGY

TenCate is the world market leader in technical textiles. These materials have specifi c characteristics which are usually defi ned and qualifi ed on the basis of functional specifi cations. TenCate maintains an active portfolio policy and with its advanced technological base is able to offer the widest range of functionalities in materials, modules and systems. It does this independently or in co-operation with third parties.TenCate operates principally in six end-markets refl ecting the global trends of safety and sustainability. TenCate’s materials are used in particular for:

■ Personal safety and protection of living and working environments ■ Modernisation of army, fi refi ghting and police equipment ■ Aerospace ■ Water management, infrastructure and environmental solutions ■ Industrial applications

TenCate’s strategy is based on value-chain management. This business model determines how TenCate – based on its position in the value chain – creates value, establishes value in products and systems and adds value to customer-focused system solutions. The end-user is central in this process. The cornerstones of this policy are end-user marketing, technological innovation, cost leadership and product differentiation. The creation of network structures with partners in the value chain adds a market-focused dimension to this business model. The aim is to improve access to markets and strengthen the competitive position, thereby giving fresh impetus to the growth of the company.

FocusFrom trends to solutions

Profi leMaterial technology group

WORLDWIDE TRENDS

SAFETY SUSTAINABILITY

PROTECTING PEOPLE

IN TRANSIT IN HABITATS AT WORK DURING LEISURE

Mobility continues to grow apace. Increasing prosperity is

making people worldwide more mobile and giving rise to

increased transportation of goods and raw materials

within and between continents, and even to

extraterrestrial destinations. Making those transport movements increasingly

effi cient, safe and sustainable is a challenge in itself.

Urbanisation is increasing steadily across all continents. Urban areas are growing ever

larger and more complex. Societies are changing into compact networks of cities.

That requires a high degree of organisation and logistics with

safe and sustainable infrastructure.

The working environment of personnel in industry and

services may be risky, hazardous or even hostile. Personal protection in the workplace, on the road,

on-site or during the mission is essential in order to work professionally and safely.

Leisure time increases as prosperity grows. In addition

to tourism and recreation, people are enjoying sports as amateurs or top-fl ight

performers. Leisure activities and sports must above all be pursued responsibly.

That requires safe, sustainable facilities.

END-MARKETS

MOBILITY INFRASTRUCTUREWATER

MANAGEMENTDEFENCE

PERSONAL PROTECTION

SPORT AND LEISURE

Composites for vehicles, vessels,

aircraft, helicopters and

mobility concepts

Geotextiles for infrastructure

works; composites

for structures; synthetic turf for

landscaping

Geotextiles and systems for water

management, maritime projects and dewatering

Materials for protection of military personnel;

vehicle, vessel, aircraft and

helicopter armour

Materials for protection of

persons in their working and living

environments

Synthetic turf for sport; outdoor

fabrics; composites for

sport applications


Ten Cate Advanced Textiles bv Nijverdal, NetherlandsActivities of the TenCate Advanced Textiles group in the Netherlands

Ten Cate Protect bv Nijverdal, NetherlandsTen Cate Protective Fabrics USA inc Union City (Georgia), USATen Cate Protective Fabrics Canada inc Montreal (Quebec), CanadaFabrics for professional wear and safety clothing as well as outdoor applications

Ten Cate - Union Protective Fabrics Asia ltd (50.65)% Bangkok, ThailandFabrics for protective clothing

Ten Cate Advanced Composites bv Nijverdal, NetherlandsAdvanced composites for the aviation industry and antiballistic applications

Ten Cate Advanced Composites USA inc Morgan Hill (California), USAPhoenixx TPC inc Taunton (Massachusetts), USAYLA inc Benicia (California), USAAdvanced composites for aerospace, aviation and industrial applications

Performance Materials Corporation Camarillo (California), USAPMC Holding Corporation Camarillo (California), USABaycomp Company Burlington (Ontario), CanadaPMC Guangzhou Guangzhou, ChinaT3 (51%) Taichung, TaiwanThermoplastic composites and components for the automotive industry, oil & gas extraction and consumer electronics

Ten Cate Advanced Composites ltd Nottingham, UKAdvanced composites for industrial and automotive applications

Ten Cate Advanced Armour UK (AML) Swindon, UKTen Cate Advanced Armour sas Primarette, FranceTen Cate Advanced Armour Danmark a/s Vissenbjerg, DenmarkAdvanced ceramics and composites for antiballistic applications

Ten Cate Advanced Armor USA inc Newark (Ohio), USAAdvanced composites for vehicle armour

Ten Cate Active Protection ApS (ABDS) Vissenbjerg, DenmarkActive protection systems for army vehicles

AML India Private ltd (90%) Noida, IndiaTen Cate Protective India Private ltd Gurgaon, IndiaDesign and production of vehicle armour materials and fabrics for professional wear and safety clothing as well as outdoor applications


Nicolon Corp. (Ten Cate Geosynthetics North America) inc Atlanta (Georgia), USATen Cate Geosynthetics Austria GmbH Linz, AustriaTen Cate Geosynthetics France sas Bezons, FranceTen Cate Geosynthetics Netherlands bv Nijverdal, NetherlandsTen Cate Geosynthetics Asia sdn bhd Kuala Lumpur, MalaysiaTenCate Industrial Zhuhai co ltd Zhuhai, ChinaGeosynthetics and industrial fabrics

Ten Cate Geosynthetics sdn bhd (Malaysia) Kuala Lumpur, MalaysiaTen Cate Geosynthetics (Thailand) ltd Bangkok, ThailandTen Cate Geosynthetics pte ltd SingaporeTen Cate Geosynthetics Italy srl Meda, Italy Ten Cate Geosynthetics (UK) ltd Telford, UKTen Cate Geosynthetics Iberia sl Madrid, SpainTen Cate Geosynthetics Deutschland GmbH Dietzenbach, GermanyTen Cate Geosynthetics Poland Sp zoo Kraków, PolandTen Cate Geosynthetics CZ sro Prague, Czech RepublicTen Cate Geosynthetics Romania srl Bucharest, RomaniaSales offi ces

Ten Cate Thiolon bv Nijverdal, NetherlandsPolyloom Corp. (Ten Cate Thiolon USA) inc Dayton (Tennessee), USATen Cate Thiolon Middle East (49%) 1) Dubai, United Arab EmiratesSynthetic turf components and systems

Ten Cate Thiobac bv Nijverdal, NetherlandsBacking for synthetic turf systems

GreenFields Holding BV (90%) Genemuiden, NetherlandsGreenFields BV Genemuiden, Netherlands(subsidiary of GreenFields Holding BV)Xtra Grass BV *) Kampen, NetherlandsBresco AS *) Molde, NorwayGreenFields Swiss AG *) Schaffhausen, SwitzerlandGreenFields Sports Turf Systems (ME) Ltd (80%) *) Nicosia, CyprusGreenFields West Africa SARL (65%) *) Cotonou, BeninGreenFields Sports Surfaces UK Ltd *) Bolton, UKGreenFields India FZC (51%) *) Sharjah, United Arab EmiratesMarketing and installation of synthetic turf systems

TigerTurf NZ, ltd Auckland, New ZealandTigerTurf Australia pty ltd Campbellfi eld, AustraliaTigerTurf (UK) ltd Hartlebury, UKTiger Sports Americas inc Austin (Texas), USA Marketing and production organisations for synthetic turf systems

Edel Grass bv (50%) Genemuiden, NetherlandsMarketing and installation of synthetic turf systems


Xennia Technology ltd (90.88%) Letchworth, UK Xennia Holland bv Nijverdal, NetherlandsSpecialist inkjet technology for industrial applications

Ten Cate Enbi International bv Brunssum, NetherlandsTenCate Enbi group holding company

Ten Cate Enbi GmbH Leverkusen, GermanyTen Cate Enbi kft Rétság, HungaryTen Cate Enbi inc Shelbyville (Indiana), USATen Cate Enbi inc Rochester (New York), USATen Cate Enbi pte ltd SingaporeTen Cate Enbi Zhuhai co ltd Zhuhai, ChinaTechnical rollers and components for printers, copiers, fax machines, postal sorting machines, ATMs, insulation and heating systems

Ten Cate Assurantiën bv Almelo, NetherlandsInsurance

Ten Cate Nederland bv Almelo, NetherlandsRoyal Ten Cate (USA) inc Washington D.C., USATen Cate UK ltd London, UKTen Cate France sas Paris, FranceTen Cate Deutschland GmbH Opladen, GermanyTen Cate Danmark a/s Copenhagen, DenmarkRoyal Ten Cate Pacifi c ltd Hong Kong, ChinaRoyal Ten Cate China Holding ltd Hong Kong, ChinaCountry holding companies

Ten Cate Finance AG Schaffhausen, SwitzerlandFinancing company

NON-CONSOLIDATED COMPANIES

Landscape Solutions bv (25%) Goirle, NetherlandsMarketing and production organisation for synthetic turf for landscaping use

Hellas Construction Inc (30%) Austin (Texas), USAProduction and construction of sports pitches

The operating companies listed here are consolidated in the fi nancial statements, with the exception of the companies shown as non-consolidated. Some interests of minor relevance to the overall picture have been omitted from the list, in accordance with article 379, paragraph 3, Book 2 of the Netherlands Civil Code. The companies are wholly owned unless stated otherwise.

*) Subsidiary of GreenFields BV.1) Due to legislation in Dubai, 51% is held by a local partner.

Royal Ten Cate has 100% economic ownership.

Subsidiaries, associated companies and other interests as at 31 December 2013

Organisation, Focus and Profile Inside coverKey developments in 2013 2

Assessment of 2013 action plans 3Key data 2013 4

Key figures 2013 6The TenCate share 7

Foreword by the Chairman of the Executive Board 10Protecting people in transit 14

Business overview 15Vision, mission and strategy 16

Strategic objectives 17Business model and value creation 18Strategic objectives and progress 23

Indicators 24Sectors 32

Corporate information 41

Business context 47Business environment 48

Stakeholders 50Materiality matrix 52

SWOT analysis 54Risk management 56

Governance 59Executive Board 60

Supervisory Board 61Report of the Supervisory Board 62

Corporate governance 65

Performance 67Report of the Executive Board 68

Sector revenues and results 72

Outlook 93Outlook for 2014 94

Action plans for 2014 95Corporate initiatives for 2014 96

Statement by the Executive Board 97

Financial statements 99Financial statements 2013 100

Other information 151Ten-year summary 154

Glossary 156Means of communication 158

Colophon 160

List of subsidiaries, associated companies and other interests Inside coverContact Outside cover

Royal Ten Cate

Annual Report 2013

. A summary of this annual report is

available as a printed Annual Review

through [email protected]

. An interactive digital version

of this report is available at

www.tencateannualreports.com

A legal overview of operating

companies, associated companies

and other interests can be found on

the inside of the back flap.

2 | TenCate annual report 2013 | KEy dEVElOpMEnTS In 2013

Decrease in results of Geosynthetics & Grass sector■■ EBITA of the Geosynthetics & Grass sector declined by 11% to

€ 27.9 million, mainly due to a weak performance in the TenCate

Geosynthetics market group in Asia and high initial marketing costs

and volatile raw material costs in the Grass group.

Strong improvement in profitability of Other Activities■■ EBITA of Other Activities (Xennia Technology, TenCate Enbi and

Holding & Services) improved to –€ 0.5 million (2012: –€ 4.9 million).

The improved profitability was mainly attributable to lower costs at

Xennia Technology combined with a higher gross margin as a result

of the strategic reorientation.

Revenues declined by 4% to € 1,012 million■■ The decline in revenues was once again concentrated in the

American and European defence markets. This was mainly due to

the tightening of defence policy in the United States, with US

troops being withdrawn from foreign war zones at an accelerated

pace. ■■ Revenues outside government-related markets grew positively.

The proportion of revenues generated in the private market

increased to 53% (2012: 47%).

Operating result before amortisation (EBITA) € 48.7 million

(2012: € 50.1 million); net profit € 19.0 million (2012: € 20.9 million)■■ The decrease in revenues in the defence market had a major effect

on the operating result before amortisation (EBITA). Cost control

measures mitigated the decline in profit somewhat, as a result of

which the organic decline in EBITA compared to 2012 was limited

to 3%.■■ non-recurring costs had less impact than in the previous year.

non-recurring costs amounted to € 5.9 million (2012: € 8.0 million),

mainly due to writedowns of inventories in TenCate protective

Fabrics, which took place predominantly in the second half of the

year. ■■ The normalised operating result (EBITA) in 2013 amounted to € 54.6

million (–6% compared to 2012).■■ EBIT remained unchanged compared to 2012 at € 35.6 million.■■ The 2013 net profit amounted to € 19.0 million (2012: € 20.9 million).■■ net interest-bearing debt decreased by € 41 million in 2013 to

€ 189 million, with a debt ratio of 2.27 (2012: 2.55).

Lower revenues in defence market affect profitability of

Advanced Textiles & Composites sector■■ EBITA of the Advanced Textiles & Composites sector declined by

9% to € 21.3 million due to the sharp fall (–40%) in defence-related

revenues.

Key developments in 2013

3TenCate annual report 2013 | ASSESSMEnT OF 2013 ACTIOn plAnS |

Developments in emerging geographic markets■■ Revenue growth in new geographic markets slowed, partly due to

declining economic growth in the markets concerned. TenCate

continues to see opportunities in markets such as South America

and China.■■ TenCate critically assesses partnerships in emerging markets.

particular care is exercised in the protection of patents and process

knowledge. ■■ Further steps were taken in China in collaboration with aviation

industry research establishments for the promising development of

thermoplastic composites in the new aircraft by Caiga and Comac.

However, this is a long-term development. At the beginning of 2014

a marketing and development agreement was signed with

Shanghai leadgo-tech to support the market for composites for the

Chinese aviation industry.

Further revenue growth in composites■■ Amber Composites (UK) was acquired at the beginning of 2013,

giving TenCate accelerated access to the market for automotive

composites (thermoset). ■■ Although revenues in the automotive market are still not

significant, a number of interesting development projects

(demonstrators) were initiated. The first revenues were generated

in the Formula 1 and sports car market segment. Some of the

developments are of a long-term nature.■■ Outside the space and aerospace market, materials were

developed with partners, including for the electronics and oil and

gas industries (pipelines).

Start of production based on digital inkjet technology at TenCate Protective & Outdoor Fabrics

■■ The first production printer came off the line in mid-2013. This

process was developed specifically for the outdoor market. The

first production trials took place successfully. Customer-specific

products are being launched at the beginning of 2014. The primary

advantage of this new process technology is that customer-specific

production runs can be offered with very short lead times. It also

allows the manufacture of products which cannot be produced

industrially using analogue technology.

Assessment of 2013 action plans

Increased importance of marketing■■ TenCate intensified its activities in the field of marketing and sales.

This was particularly the case in TenCate Grass. new synthetic turf

systems were successfully introduced. The creation of new

standards for quality and sustainability in global market

developments is immensely important. There was also increased

marketing and sales activity in the worldwide Water & Environment

business unit of the Geosynthetics group, which led to revenue

growth in this segment.■■ Attention was devoted to upgrades of websites and the rollout of

digital media in various market groups.

Focus on successful market niches and partnerships■■ Growth was achieved in the leading brands operated by TenCate

(TenCate Geotube®, TenCate Tecasafe™ plus, TenCate Cetex® etc.).

TenCate gave greater focus to the product portfolio and adjusted

its marketing efforts accordingly.■■ partnerships, most of which are still in the initial phase, developed

positively. This had a strong impact on the desired positioning in

various markets, providing a positive basis for future revenue

growth.■■ In September a long-term agreement was concluded with US Army

Research, development and Engineering Command (RdECOM) for

collaboration and development of the TenCate ABdS™ active blast

countermeasure system.

Continuing profit recovery at TenCate Grass■■ The ambitions in the Grass group were only partly fulfilled.

Component production (upstream) recorded growth in results,

while the downstream activities recorded a decrease, partly due to

a steep rise in marketing and promotion costs. The integration of

the downstream activities had a positive effect on the cost level.■■ The market climate, with a continuing deterioration of profit

margins, provided no support for ambitions in this area. profitability

is under continuing pressure across the entire sector, particularly in

geographic markets with low quality awareness.

Continuing focus on sustainable cost savings■■ Control of costs and working capital proved effective. The number

of FTEs was reduced by 198 in 2013 in order to adapt the cost base

– of TenCate protective Fabrics among others – to the decrease in

(defence-related) revenues. TenCate intends to keep the cost base

at a structurally low level. Cost control therefore remains high on

the agenda.

4 | TenCate annual report 2013 | KEy dATA 2013

Key data 2013

1,200

900

600

300

02008 2009 2010 2011 2012 2013

– 4% € 1,012.0 mln

REVEnUES

120

90

60

30

02008 2009 2010 2011 2012 2013

– 3% € 48.7 mln

EBITA

60

45

30

15

02008 2009 2010 2011 2012 2013

– 9% € 19.0 mln

nET RESUlT

1.2

0.9

0.6

0.3

02008 2009 2010 2011 2012 2013

0% 0.50

dIVIdEnd pER SHARE (In € )

2.4

1.8

1.2

0.6

02008 2009 2010 2011 2012 2013

– 11% 0.72

nET EARnInGS pER SHARE (In € )

– 7%

€ 517.8 mln

€ 66.4 mln

€ 427.8 mln

0%

– 5%

42%

51%

7%

Advanced Textiles& Composites

Geosynthetics & Grass

Other activities

22%

3,320

936

78%

22%

78%Female

MaleBREAKdOWn OF EMplOyEES

4,800

3,600

2,400

1,200

02008 2009 2010 2011 2012 2013

– 4% 4,256

EMplOyEES

REVEnUE BREAKdOWn By SECTOR

– 9%

€ 27.9 mln

– € 0.5 mln

€ 21.3 mln

– 11%

44%

57%

–1%

Advanced Textiles& Composites

Geosynthetics & Grass

Other activities

EBITA By SECTOR

5TenCate annual report 2013 | KEy dATA 2013 |

TenCate has its own production sites (■) and sales offices (■) in the following countries:

Americas

NORTH AMERICAUnited StatesCanada

SOUTH AMERICABrazil

EMEA

EUROPEAustria Belgium Czech Republic DenmarkFrance GermanyHongary IrelandItaly NetherlandsPoland RomaniaSpain SwitzerlandUnited Kingdom

AFRICA BeninSouth-Africa

MIDDLE EASTDubai

AsiaPacific

ASIAChina IndiaMalaysia SingaporeThailand South Korea

OCEANIAAustraliaNew Zealand

Production and SalesSales

Geographic spread of revenues in 2013

41% 44% 1,595

By destination

By origin

Employees

43% 47% 1,726

11% 7% 859

NORTH AMERICA

SOUTH AMERICA PACIFIC

EMEA ASIA

3% 0% 0

2% 2% 76

6 | TenCate annual report 2013 | KEy dATA 2013

PROFIT AND LOSS ACCOUNT 2012* 2013

Revenues 1,049.0 1,012.0

Operating result before depreciation and amortisation (EBITdA) 87.2 83.5

Operating result before amortisation (EBITA) 50.1 48.7

normalised operating result before amortisation (EBITA) 58.1 54.6

Operating result before amortisation as % of revenues 4.8% 4.8%

Operating result (EBIT) 35.6 35.6

net result 20.9 19.0

normalised net result 26.2 23.2

CONSOLIDATED BALANCE SHEET AND RETURN

net invested capital (year-end) 750.5 708.4

Return (EBITA) on average net invested capital 6.2% 6.4%

net interest-bearing debt (year-end) 229.9 189.2

CONSOLIDATED CASH FLOW

Cash flow from operating activities 101.8 75.1

Cash flow from investing activities – 33.4 – 32.5

Cash flow from operating and investing activities 68.4 42.6

DEBT RATIO

net debt / EBITdA ratio 2.55 2.27

SHARES IN ISSUE (X 1,000)

number of shares in issue at year-end 26,498 26,791

Weighted average number of shares in issue (before dilution) 25,895 26,225

Weighted average number of shares in issue (after dilution) 26,040 26,366

PER-SHARE DATA

net result 0.81 0.72

diluted net result 0.80 0.72

dividend 0.50 0.50

Equity 17.25 17.70

EMPLOYEES

number of staff years at year-end ** 4,454 4,256

– of which in the netherlands 795 774

* Adjusted for accounting policy change pensions.

** Excluding temporary personnel.

(in millions of euros unless stated otherwise)

Key figures 2013

7TenCate annual report 2013 | THE TEnCATE SHARE |

The decrease in the debt position and a rise in the results in the third

quarter of 2013 also had a positive effect on the share price.

The highest share price was recorded in november 2013, at € 23.95.

The TenCate share ended the year at a price of € 22.90, representing a

rise of 15% compared to the starting price of € 19.87. With the

inclusion of dividends, TenCate shareholders earned a return of 18% in

2013.

The total volume of trading in the share on nySE Euronext Amsterdam

in 2013 was 8% lower than in 2012.

GENERAL INFORMATIONThe TenCate share is listed on nySE Euronext Amsterdam and forms

part of the Amsterdam AMX index. The weighting of the share in the

AMX index on 31 december 2013 amounted to 2.04%. TenCate has

been listed as an option fund on nySE life in Amsterdam since 2011.

The TenCate share is also traded on the Chi-X, Equiduct, Turqoise and

BATS alternative exchanges. In 2013 over 80% of the shares were

traded on nySE Euronext Amsterdam. The share is followed by

analysts in leading banks and securities houses in the netherlands and

Belgium.

SHARE PRICE PERFORMANCE IN 2013The equity markets in Europe staged a recovery in 2013 due to an

easing of tensions in the eurozone. The TenCate share initially

underperformed the AMX and MSCI Europe indices due to TenCate’s

high proportion of government-related revenues and continuing cuts

by the US Ministry of defence.

The recovery in the TenCate share price began in September after the

publication of a number of positive reports concerning, among other

things, the long-term CRAdA contract with the US Army RdECOM for

the TenCate ABdS™ active blast countermeasure system and the

collaboration with various parties of strategic/commercial relevance.

The positive price performance was coupled with relatively high

trading volumes, with over two million shares traded in September,

equivalent to 9% of the total number of shares in issue.

The TenCate share

VOlUME OF TRAdInG In TEnCATE SHARES

0

650

1,300

1,950

2,600

January2013

June December

number of shares x 1,000

AMX

MSCI Europe

KTC

30.0

22.5

15.0

7.5

0.0

–7.5

–15.0January February March April May June July August September October November December

2013AMXKTC MSCI Europe

DATA PER SHARE; IN %

Source: nySE Euronext ISIn code: NL 0000375731 Reuters code: NTCN.AS Bloomberg code: KTC.NA

8 | TenCate annual report 2013 | THE TEnCATE SHARE

. The TenCate share

The majority of the institutional shareholders are based in the

netherlands. The proportion of shares held in the United States and

the United Kingdom decreased compared to 2012.

COMMUNICATION POLICYTenCate participated actively in roadshows and investor conferences

in Europe in 2013. Having regard to its transparency objective, TenCate

sets great store by intensive dialogue with analysts, shareholders and

potential shareholders. A Capital Markets day was held in november

at the production site in primarette, France. Analysts and shareholders

were informed in particular about the activities of TenCate Advanced

Armour EMEA and TenCate Grass EMEA.

Background information and details of the various strategic themes

are provided in TenCate’s txtures magazine, on the company’s website

and in the updated IR app.

DIVIDEND POLICY AND PROPOSED DIVIDENDTenCate pursues a balanced dividend policy in which a decrease in

profit, such as that which occurred in 2013, is reflected to a somewhat

muted extent in the change in dividend. The dividend policy is based

on a distribution rate of 40%. An optional dividend is usually offered.

In 2013, 60% of shareholders opted to receive a cash dividend.

Having regard to the current results, a dividend pay-out ratio of 69% is

proposed. The dividend would therefore amount to € 0.50 per € 2.50

par value share, payable at shareholders’ discretion in shares as a

charge to the share premium reserve or in cash.

NUMBER OF SHARES IN ISSUE

number of shares in issue on 31 december 2012 26,497,666

Increase in share capital as a result of

stock dividend 293,701

number of shares in issue on 31 december 2013 26,791,367

CHANGES IN THE NUMBER OF SHARES

IN ISSUE 2012 2013

par value € 2.50 € 2.50

lowest price € 16.66 € 17.15

Highest price € 26.30 € 23.95

Average price € 20.81 € 19.74

Closing price € 19.87 € 22.90

Earnings per share € 0.81 € 0.72

dividend per share € 0.50 € 0.50

DISCLOSURE OF MAJOR HOLDINGS IN LISTED COMPANIES ACTThe register maintained by the netherlands Authority for the Financial

Markets (AFM) in connection with the disclosure of major holdings in

listed companies contains details of the following investors with

interests of over 3%. There are no known holdings in the AFM register

of short positions.

name Date of disclosure Percentage

norges Bank 31 december 2013 3.07%

Allianz Global Investors Europe

GmbH 15 november 2013 4.99%

delta lloyd n.V. 6 May 2011 5.67%

delta lloyd deelnemingen

Fonds n.V. 22 June 2010 10.16%

Kempen Oranje participaties n.V. 1 January 2010 6.34%

GEOGRApHIC SpREAd OF InSTITUTIOnAl SHAREHOldInGS

(Source: lionShare, 31 december 2013)

The Netherlands

Germany

United States

United Kingdom

Norway

Belgium

Switzerland

Other

1%3%

61%

7%

7%

11%

7%

3%

2013

9TenCate annual report 2013 | THE TEnCATE SHARE |

OPTION PLAN, SHAREHOLDINGS OF PERSONNEL AND EXECUTIVE BOARDdetails of the option plan and the shareholdings of managers and

members of the Executive Board can be found on page 146 of this

report. The shares repurchased by the company relate to the hedging

of granted options.

IMPORTANT DATES IN 2014

publication of 2013 full-year figures 27 February

publication of 2013 annual report 5 March

Annual General Meeting of Shareholders 17 April

Ex-dividend date 23 April

Record date: determination of dividend

entitlements 25 April

Option period for cash or stock dividend 28 April to 9 May

publication of trading update for first

quarter of 2014 28 April

Announcement of conversion ratio 12 May

payment of dividend / delivery of shares (stock) 14 May

publication of 2014 half-year figures 24 July

publication of trading update for third

quarter of 2014 24 October

Capital Markets Day

TenCate held a Capital Markets day at its production

site in primarette, France, on 20 november.

Analysts and shareholders were informed in

particular about the activities of TenCate Advanced

Armour EMEA and TenCate Grass EMEA.

presentations were given by loek de Vries

(president and CEO of TenCate), Steen Tanderup

(Managing director of TenCate Advanced Armour

EMEA and ApAC) and Ton Raaphorst (Managing

director of TenCate Grass EMEA). Visitors were

also given a tour of the production site, in which

composites and ceramics are produced for aerospace

armour applications and personal ballistic protection.

10 | TenCate annual report 2013 | FOREWORd By THE CHAIRMAn OF THE EXECUTIVE BOARd

dear stakeholders,

As expected, 2013 was a challenging year for TenCate. Revenues and

results were under pressure throughout the year. The 2013 financial

year was marked by sluggish government markets due to tight budget

policies. This led to a decrease in market potential and uncertainty

surrounding government orders which were already in the pipeline.

This made it difficult to plan production and financing adequately. It

was inevitable that some revenue generation was postponed and

certain developments took longer than expected to materialise.

For many years, government-related markets such as defence and

infrastructure had developed in a reliable and fairly predictable way

for TenCate. That has changed in recent times. Situations widely

viewed as impossible, including a complete freeze and reduction of all

government spending, as occurred in the United States, had a major

impact on TenCate’s financial development in 2013.

In response to events in the markets in which TenCate operates, the

company maintained a restrained financial policy. This was

characterised by low investments in tangible fixed assets, cost control

and debt reduction aimed at keeping the risk profile as low as possible.

The intensification of internal and external collaboration announced in

2012 was further developed. Companies must adapt ever more rapidly

to market dynamics: not only to the new reality, but also to fast-

changing demands of markets and technological and other

developments which offer new opportunities. By working together it is

possible to share costs and mobilise knowledge faster.

DEVELOPMENTS IN THE DEFENCE MARKETMeasured over the last ten years, defence spending in Europe reached

a low point. discussions in the United States on the government

budget had a paralysing effect on expenditure. The decline in

TenCate’s revenues was caused predominantly by the drop-off in

defence orders in the TenCate protective Fabrics (TenCate defender™

M) and TenCate Advanced Armour (vehicle armour) market groups.

Vehicle armour remains an attractive market for TenCate, in view of

the many specialisations which have been brought together within the

company. The development of the TenCate ABdS™ active blast

countermeasure system is also expected to give further impetus to

these and other activities of TenCate in the armour market in the

future.

NON-GOVERNMENT MARKETSOne of the most successful markets for TenCate is the aerospace

market. The synthetic turf businesses and other activities focused on

industrial end-markets also developed positively. TenCate is actively

pursuing the development of new markets, such as automotive

composites.

TenCate also endeavoured to develop the ‘protecting people’ theme

outside the defence market. This aim is reflected in new concepts for

the police and other emergency services (law enforcement). Success

in these new markets, usually involving new materials, nevertheless

requires time.

SUSTAINABLE INNOVATIONTenCate’s innovation policy is focused on ground-breaking

technological developments which can create new standards. This

process usually takes a number of years. The intended result is that

TenCate develops a tenable technology position, usually supported by

patents, allowing long-term revenue growth.

The focal points in the development of new product-market-technology

combinations are:■■ digital printing and finishing technologies■■ Innovative synthetic turf systems■■ Automotive composites■■ TenCate ABdS™ active blast countermeasure system

Major strides were made in all these developments in 2013. TenCate is

therefore developing dynamically, even amid less favourable market

conditions. Innovation is nevertheless a long-term process that is

focused on long-term growth.

Foreword by the Chairman of the Executive Board

11TenCate annual report 2013 | FOREWORd By THE CHAIRMAn OF THE EXECUTIVE BOARd |

REPORTINGFor reporting and positioning purposes, a sharper focus was applied

both to the company’s identity (around the theme of protecting people)

and to the market approach. The market is increasingly being

approached on the basis of geographic regions (continent-based

management). Continuing integration is also taking place in the

Advanced Textiles & Composites and Geosynthetics & Grass sectors.

The theme of sustainability is high on the agenda in TenCate’s

development, positioning and reporting. new materials often have

favourable environmental effects, such as a reduction in the CO2

footprint. In practice, this can be a key driver in demand for high-

quality functional materials. Good examples are automotive

composites and various geotextiles.

ORGANISATION AND EMPLOYEESThe current market dynamics and changing organisational approach

also require the necessary flexibility from employees. The more

market-oriented approach was also a factor in the demand for high-

calibre employees capable of thinking in terms of solutions and

prepared to collaborate both internally and externally and work in

teams.

I would like to thank all employees for the additional commitment they

have demonstrated in less favourable circumstances.

l. de Vries, president and CEO

12 | TenCate annual report 2013 | pEOplE plAnET pROFIT

People Planet Profit

25% more training hours for

TenCate employees

100% recyclable GreenFields® MX woven synthetic turf system

53%composites in the Airbus A350,

including thousands of TenCate Cetex® clips

TenCate focuses on the sustainable protection of people and their working and living environments

13TenCate annual report 2013 | pEOplE plAnET pROFIT |

14%less CO2 emitted by

TenCate than a year ago

9 Highly Protected Risk

Awards from FM Global for TenCate

15% weight reduction in

helicopter tailplane using TenCate Cetex® technology

TenCate focuses on the sustainable protection of people and their working and living environments

14 | TenCate annual report 2013 | pEOplE plAnET pROFIT

Protecting people in transit

As a textile technology group, TenCate focuses on ‘protecting people’:

creating sustainable solutions to protect people in their working and

living environments. On the basis of the six end-markets in which

TenCate operates, four areas of application have been defined:

In Transit (mobility), In Habitats (infrastructure, water management),

At Work (personal protection, defence) and during leisure (sport and

leisure). TenCate focuses particularly on the production of materials

intended to fulfil specific characteristics based on industry standards,

laws and regulations, safety standards and the requirements of

particular target groups. TenCate’s materials usually form an essential

part of an end-product or overall solution.

We live in a society that involves risk. The world has a growing need

for better and sustainable protection against numerous threats,

regardless of whether they have a natural or human origin. TenCate

aims to occupy a leading position in the development, production and

supply of sustainable protective solutions, for which the company has

a broad technological base. TenCate employees around the world

make the difference in the development and production of protective

solutions.

In addition to the core theme of personal safety and physical

protection, the features incorporated in the production of materials

are weight reduction, fuel conservation, noise reduction,

environmental protection, reuse and recyclability. TenCate’s

knowledge of material technology enables it to provide solutions

jointly with end-users and industry partners.

MOBILITYIn the field of mobility, the areas of application lie particularly in the

aerospace market. With its wide portfolio of composites, TenCate has

gained a strong position particularly in the aviation and space

industries. Composites are increasingly used in components of the

secondary structure and interiors of aircraft and helicopters. Safety is

essential in aerospace materials.

On the basis of the expertise and experience gained with composites,

TenCate has continued to develop this material. This has resulted in

composites for other applications, particularly armour, based on bullet-

and fragment-resistant plate material in army vehicles, aircraft,

helicopters and ships. This development has led to the establishment

of TenCate Advanced Armour as an independent market group within

the Advanced Textiles & Composites sector.

Within automotive composites TenCate focuses mainly on vehicle

components which affect the safety and structure. High demands are

made on these materials.

For applications in mobility (automotive industry), TenCate operates in

a number of innovation networks in which it contributes its own

specific knowledge, know-how and experience. The company also

collaborates with numerous universities, colleges and institutions. In

open innovation, TenCate works on primary structural components of

thermoplastic composites. Examples of knowledge networks are the

Thermoplastic Affordable primary Aircraft Structures consortium

(TApAS), the Thermoplastic composite Research Centre (TpRC), the

Advanced Manufacturing Research Centre (AMRC) and the

Aachener Zentrum für Integrativen leichtbau (AZl).

pROTECTInG pEOplE In TRAnSIT



increased transportation of goods and raw materials within and

between continents, and even to extraterrestrial destinations.

Making those transport movements increasingly efficient,

safe and sustainable is a challenge in itself.

The use of advanced materials in areas such as aerospace,

the automotive industry, transport and infrastructure works

and structures offers protective and environmentally

conscious solutions for the long term.

15TenCate annual report 2013 | BUSInESS OVERVIEW |

Business overview provides a detailed explanation of why TenCate does what it does, how it does it and what it does

Business overview 16

Strategic objectives 17

Business model and value creation 18

Strategic objectives and progress 23

Indicators 24

Sectors 32

Corporate information 41

BUSINESS OVERVIEW

16 | TenCate annual report 2013 | BUSInESS OVERVIEW

TenCate is a multinational company that combines textile technology

with chemical process technology in the development and production

of high-quality materials, modules and systems. TenCate specialises in

materials engineering and is a world market leader in the field of

technical textiles. TenCate increasingly offers total solutions,

independently or in co-operation with partners. The company is

subdivided into two main sectors: Advanced Textiles & Composites

and Geosynthetics & Grass.

VISIONTenCate’s vision is based on the development (‘buy & build’) of an

extensive and progressive technological base. As a company in the

technical textile sector, TenCate’s worldwide technology position

(including patents) has unparalleled breadth and innovative capacity.

That enables the company to develop materials that cater optimally to

the individual market requirements in the chosen market themes of

safety and protection of man and the environment.

MISSION TenCate strives for leadership in solutions for personal protection and

protection of working and living environments: protecting people with

textile technology-based materials which make the difference. Safety

and protection of people and their working and living environments are

worldwide growth markets. developing the right product portfolio,

tailored to specific market requirements, drawing attention to

solutions in an effective way and incorporating the control of safety

risks in specifications are key parts of the way in which TenCate fulfils

its mission.

TenCate operates principally within six end-markets which have been

derived from the worldwide trends of safety and sustainability. These

end-markets are personal protection, defence, mobility, infrastructure,

water management and sport & leisure. The materials, modules and

systems developed on the basis of these end-markets have specific

characteristics. These characteristics are usually defined and qualified

on the basis of functional specifications.

STRATEGYTenCate’s strategy is based on value chain management. The

cornerstones of this business model are end-user marketing,

technological innovation, cost leadership and product differentiation

(see page 20). This model determines how TenCate – based on its

position in the value chain – creates value, establishes value in

products and systems and adds value to customer-focused system

solutions. The end-user is central in this process. TenCate focuses

primarily on markets requiring products that meet high functional

demands.

The use of network structures with partners in the value chain adds a

new dimension to the business model. The aim is to improve access to

markets and strengthen the competitive position.

Business overview

DURING LEISURE IN TRANSIT

AT WORK

IN HABITATS

PROTECTING PEOPLE


Strategic objectives

Quantitative strategic objectives are:■■ The net invested capital must generate a sufficient return. The

operating result before amortisation as a percentage of average

net invested capital must be at least 15%.■■ The financial position must be sufficiently solid. The ratio of net

interest-bearing debt to the operating result before depreciation

and amortisation (EBITdA) must be structurally lower than 2.5. ■■ The target of 10% annual profit growth is based on EBITA

(operating result before amortisation). This target has not been met

in the last few years. The objective nevertheless remains to

achieve long-term profit growth averaging 10% per year. To this

end, the buy & build strategy will be pursued. An increase in added

value and efficiency is also necessary, since the organic growth of

the current core activities is expected to average less than 10% in

the years ahead. ■■ An adequate profit margin must be generated. The consolidated

EBITA margin must rise to at least 10%.

TenCate works to maintain its position as a developer and producer of

materials within the chain. Forward or backward integration has a

direct impact on the company’s positioning and immediately influences

the competitive position and relationships with direct customers.

STRATEGIC OBJECTIVESQualitative strategic objectives are:

■■ Creation of value for stakeholders through profitable growth based

on knowledge, expertise and internal synergy. ■■ Achievement of critical mass in product-market-technology

combinations by occupying leading positions in worldwide market

niches. ■■ Achievement of a healthy financial position with sufficient strength

for acquisitions.■■ Management of a balanced portfolio of activities, in which product-

market-technology combinations differ in terms of growth

opportunities and risk profile. ■■ Stimulation of an open, creative and enterprising culture for change

and progress.■■ Management of a global commercial organisation which thinks in

terms of customer-centric (system) solutions within the overall

value chain.■■ Acceleration of growth of the company through partnerships.


HIGH END SPECIFICATIONS

TEXTILE TECHNOLOGYBASED MATERIALS

INPUT


Business model and value creation

Customer specifi c solutions

Cost-effi c

ient pro

duct

ion

End-

user

experience

Disruptive and sustaining technologies

HUMAN4,500 employees10% management1% corporate

FINANCIALAssetsliabilities

PRODUCTIONSolutionsServices

DIGITALdata

SOCIALCustomers End-users Suppliers Joint ventures

TECHNICALTechniques Technologies processes Qualification

INTELLECTUALIntellectual propertyBrandingCorporate identity

NATUREnatural sources Synthetic sources Other sources

CAPITAL VALUE DRIVERS

END-USER MARKETING■■ Reduction in total cost of ownership of

end-users■■ problem-solving capability ■■ System approach■■ Best in class: price-performance ratio■■ Co-creation: development with customers■■ Reliability: TenCate brand stands for

quality

PRODUCT DIFFERENTIATION■■ product portfolio: linked to specific

customer requirements■■ Time to market■■ Best in class: price-performance-

quality-service■■ Flexibility: fast adaptation to changing

demands

TECHNOLOGICAL INNOVATION■■ Broad technological base■■ Open innovation networks Knowledge

networks■■ patents and intellectual property Market-

driven innovation and■■ problem-solving capability

COST LEADERSHIP■■ Economies of scale■■ purchasing advantages■■ Availability of raw materials■■ Geographic spread of production■■ logistical advantages: close to customers■■ Recyclability

OUTPUT


IN TRANSITAerospace Automotive TransportnavalEtc.

IN HABITATSInfrastructure Water management Agriculture/Horticulture StructuresEtc.

AT WORKpersonal protection ArmourMedical Etc.

DURING LEISURESport RecreationHolidays Etc.

MATERIALS THAT MAKE A DIFFERENCE PROTECTING PEOPLE

SUSTAINABILITY AND ENVIRONMENT

Characteristics:

lightweightlong life100% recyclable ReusableEtc.

SAFETY AND PROTECTION

Characteristics:

Fire-resistantFlame-retardant Bullet-proof Fragment-proofEtc.

PROTECTIVE FABRICS

THERMOPLASTIC COMPOSITES

ANTIBALLISTIC PROTECTION MATERIALS

GEOTEXTILES

OUTDOOR FABRIC

THERMOSET COMPOSITES

SURVIVAL SYSTEMS

SYNTHETIC TURF


. Business model and value creation

TECHNOLOGICAL INNOVATIONInnovations at TenCate usually have a technological background, as in

the development of thermoplastic composite technology (TenCate

Cetex®) or process innovation through the use of digital inkjet

technology. Innovations also result from combinations of existing

technologies, as in the case of TenCate defender™ M and TenCate

Geodetect®. Technological innovations are necessary to secure the

future. It is also important to develop existing products by

incorporating new technologies. TenCate strives for continuous

progress in order to accommodate or initiate new regulations and

standards.

Innovation also gives rise to development costs associated with

specifications and qualifications of materials. These costs are not

usually reported separately. Acquisitions with a technological

background also form part of the innovation process. TenCate conducts

an active intellectual property policy and now has more than 670

patents. An up-to-date list of patents can be found on the corporate

website under Company profile.

The main value drivers for innovation are: ■■ Broad technological base■■ links to universities, colleges and knowledge networks■■ Membership of open innovation networks■■ Internal co-operation and exchanges of knowledge between

market groups (social innovation)■■ Knowledge positions and intellectual property■■ Market-driven (applied) innovation aimed at problem-solving.

COST LEADERSHIPAlthough products must have the right technical and functional

specifications, the cost aspect remains very important. In the current

economic climate in particular, with declining government budgets,

there is also high cost-awareness on the demand side.

That compels the company to remain very alert to costs, but also to

cost-efficient production, margin policy, process optimisation,

organisation of logistics flows, reduced environmental costs, etc., and

to the use of scarce resources and raw materials. TenCate also

conducts an active portfolio policy whereby the portfolio is kept

constantly under review and the product life cycle is assessed against

market requirements. By manufacturing globally and accessing

commodity markets worldwide, TenCate in principle has a good cost

VALUE CHAIN MANAGEMENT TenCate operates a business model based on value chain management.

TenCate’s business model determines how the company creates value,

establishes value in products and systems and adds value to customer-

focused system solutions. The end-user is central in this process. The

cornerstones of the business model are end-user marketing,

technological innovation, cost leadership and product differentiation.

END-USER MARKETINGEvery new product which TenCate develops must be linked with

prevailing customer demand or new national or international standards

and laws and regulations. The specifications are agreed or developed

with the customer and/or end-user at an early stage. Specific customer

demand and changing specifications can be accommodated thanks to

the acquired expertise and technological base. This is an important

competitive advantage. Higher standards can be set and progress

made by flexibly adapting decision-making units to end-markets to

take account of new technological possibilities, which can then be

included in new standards. TenCate’s products and solutions provide

functional added value in almost all cases. In some cases they can be

life-saving.

In some cases, for example in tenders, TenCate operates through its

customers. In some end-markets, therefore, its image and brand

awareness can only be assessed indirectly.

The main value drivers for end-user marketing are:■■ problem-solving capability: responding to functional requirements

of the end-user■■ System approach: components/materials form part of an integrated

system■■ differentiation of the product portfolio to meet local needs,

standards and rules■■ Best in class: price-performance ratio■■ Innovation: co-creation; developing specifications jointly with

customers■■ Reliability: the TenCate brand stands for quality and functionality■■ Creation of standards: with its positioning as a specialist in its core

markets and its very broad technological base, TenCate aims to be

a foremost solution provider, partly on the strength of leading

market positions.


VALUE PROPOSITION TenCate operates in markets in which it is important to draw attention

to the distinctive features of the product range on the basis of the

value proposition. An important target group comprises institutions

such as purchasing organisations which play a decisive role in drawing

up standards and specifications which materials must fulfil. In addition

to functionality, requirements may be specified in areas such as

sustainability, CO2 footprint, costs during economic service life and

warranties. It is also important to be able to respond rapidly to new

market requirements.

The setting of specifications and standards is generally a dynamic

process to which TenCate must respond appropriately. That requires a

flexible and innovative organisation.

base and operates in close proximity to most end-markets. The

company also benefits from economies of scale because it occupies

leading positions in most core markets.

Technological innovation involving new production methods can have

a positive impact on the cost structure.

The main value drivers for cost leadership are:■■ Constant focus on process innovation■■ Market leadership and associated economies of scale■■ purchasing advantages due to global coverage of commodity

markets■■ Availability of raw materials (TenCate is a key customer)■■ Geographic spread of production■■ proximity of end-users; logistical advantages.

PRODUCT DIFFERENTIATIONTenCate aims to develop an appropriate product portfolio offering

dependable solutions tailored to specific market and/or customer

requirements.

Because product life cycles are becoming shorter, TenCate has to bring

a steady flow of new products and solutions to the market. TenCate is

guided by evolving markets in which demands are ever higher, laws

change and standards become more exacting. The company adapts

characteristics or incorporates them in materials in order to create

customer-specific products and specialties.

product differentiation must increasingly be linked to end-user

marketing in order to position the overall value proposition correctly.

Greater significance is therefore being attributed to marketing. The

sustainability aspect is of growing importance, partly because public-

sector bodies, which constitute TenCate’s principal customer groups,

usually set greater store by sustainability.

The main value drivers for product differentiation are:■■ Broad product portfolio: a good fit for specific customer

requirements■■ Relatively large number of recently developed products ■■ Best in class: price / performance■■ Relatively short time to market: ability to respond rapidly to market

demands■■ long-term experience: material specifications, databases,

qualifications, etc.

VAlUE pROpOSITIOn FOR dIGITAl TECHnOlOGy

Individualisation is a characteristic of contemporary market

requirements. Manufacturers are increasingly facing declining

production runs, make-to-order products, etc. This will lead to

an increase in the product range and will pose fresh logistical

challenges for market participants throughout the value chain.

The rise of digital media, with individual customers buying their

products on demand, will increasingly be seen as the standard.

digitisation of production processes is on the rise in many

industries. This is also a new challenge for TenCate, which

is a leader in this regard as a producer of technical textiles.

The advantages for TenCate’s direct (business-to-business)

customers is that reaction times to market trends can be

shortened considerably and inventory levels can be reduced

throughout the value chain. On this basis market participants

can anticipate individual customer requirements with much

greater immediacy. new characteristics can also be added

to materials, opening up new markets.


. Business model and value creation

CORPORATE VALUESTenCate has a royal hallmark, recognising not only the company’s

exceptional history as one of the oldest enterprises in the netherlands,

but also the way in which it does business around the world. TenCate

is assiduous in imparting its ten principal corporate values to its

employees:■■ The customer is central: protecting people■■ Effective: doing the right things■■ Efficient: doing things well■■ Creative: seeking solutions and creating systems■■ Flexible: the ‘living organisation’, adapting to external developments,

new demands and trends■■ Enterprising: identifying and optimising opportunities■■ Innovative: thinking ‘outside the box’ ■■ Reliable: doing business on the basis of trust; ensuring that

TenCate is seen as a reliable partner■■ Commitment: dedication to the work which the company stands for■■ Co-operation: working with colleagues and in teams.

Employees are TenCate’s human capital and are selected, rewarded

and appraised partly on the basis of the above values. They are

expected to be proactive, dedicated and open to change.


Strategic objectives and progress

0 Strategic objectives 2013 target 2013 progress 2014 target Priorities

PEO

PLE

TenCate aims for a male-female ratio at management level (and in management bodies) that is comparable to that of the rest of the workforce (75%-25%), as an indicator of equal opportunities.

The target for the male-female ratio at management level in 2013 was 80%-20% (2012: 80%-20%).

The male-female ratio at management level in 2013 was 82%-18%.

The target for the male-female ratio at management level in 2014 is 80%-20% (2013: 82%-18%).

Where equally suitable, female candidates will be proposed for appointment to management bodies, management posts and the rest of the workforce.

TenCate aims to increase the number of training hours.

The target in 2013 was for the number of training hours to rise to 16 (2012: 14 hours).

The number of training hours in 2013 was 16.

The target in 2014 is for the number of training hours to rise to 17 (2013: 16 hours).

Achieving more training hours, partly through executive policies of training experts and HR departments.

TenCate aims for optimum occupational health and safety targeted at permanent prevention of fatal and non-fatal industrial accidents and safety incidents.

The target for the number of fatal industrial accidents in 2013 was zero. The aim was for the ratio of days of absence due to non-fatal industrial accidents to fall to 35.0 per 100 FTEs in 2013 (2012: 48.9 per 100 FTEs).

The number of fatal industrial accidents in 2013 was zero. There were 33.0 days of absence due to non-fatal industrial accidents per hundred FTEs in 2013.

The target for the number of fatal industrial accidents in 2014 is zero. The aim is for the ratio of days of absence due to non-fatal industrial accidents to fall to 25.0 per 100 FTEs in 2014 (2013: 33.0 per 100 FTEs).

Increase of at least 3 in the number of TenCate production facilities having received the Highly protected Risk Award from FM Global (2013: 9 sites).

PLA

NET

TenCate aims to increase the proportion of renewable electricity worldwide.

The target in 2013 was to raise the proportion of renewable electricity by 3% (2012: 2.6%).

The proportion of renewable electricity rose by 15.2% in 2013.

The target in 2014 is to raise the proportion of renewable electricity by 3% (2013: 15.2%).

Increased use of renewable electricity at production sites worldwide.

TenCate aims to increase energy efficiency worldwide, leading to a steady fall in CO2 emissions.

The target in 2013 was to increase the energy efficiency of production sites by 1% (2012: 1%).

Energy efficiency worldwide rose by 1% in 2013. In the netherlands, the rise in energy efficiency in 2013 was 2%.

The target in 2014 is to increase the energy efficiency of production sites by 1% (2013: 1%).

pursuit of energy-saving measures at production sites worldwide. Buying more energy- efficient plant and equipment at times of replacement.

TenCate aims to reduce or at least maintain the existing level of total water consumption (on like-for-like revenues).

The target in 2013 was to reduce water consumption at production sites to 2.9 million m3 (2012: 3.5 million m3).

Water consumption worldwide in 2013 was 2.9 million m3.

The target in 2014 is for water consumption at production sites to be at or below 3.0 million m3 (2013: 2.9 million m3).

Increase in digital finishing and printing of outdoor fabrics (UV curing) and any other substrates. Implementation of existing water conservation programmes.

TenCate aims for a worldwide reduction in the amount of waste released during production processes (on like-for-like revenues).

The target in 2013 was for the amount of waste from production processes to fall to 13 kilotons (2012: 14 kilotons).

The amount of waste in 2013 was 13 kilotons.

The target in 2014 is an amount of waste from production processes of 13 kilotons or less (2013: 13 kilotons).

Introduction of the 5S methodology at a number of production sites worldwide. More internal recycling of scrap.

PRO

FIT

TenCate aims to maintain a sufficiently solid financial position.

TenCate aims for a ratio of net interest-bearing debt to EBITdA of less than 2.5 over the long term (2012: 2.55).

The debt ratio at the end of 2013 was 2.27.

TenCate aims for a ratio of net interest-bearing debt to EBITdA of less than 2.5 over the long term (2013: 2.27).

TenCate will control the risk profile by pursuing a restrained financial policy.

TenCate aims for a sufficient return on net invested capital.

TenCate aims for EBITA as a percentage of average net invested capital of at least 15% over the long term (2012: 6.2%).

EBITA as a percentage of average net invested capital was 6.4% in 2013.

TenCate aims for EBITA as a percentage of average net invested capital of at least 15% over the long term (2013: 6.4%).

High-quality / innovative technological development and internal synergy.

Management of a balanced portfolio of activities with product-market-technology combinations in different phases of the production life cycle.

Acceleration of growth of the company through partnerships.

Attaining critical mass in product-market-technology combinations by occupying leading positions in global market niches.

TenCate aims for sustainable profit growth.

TenCate aims for average EBITA growth of 10% per year over the long term.

Reported EBITA declined by 3% in 2013.

TenCate aims for average EBITA growth of 10% per year over the long term.

TenCate aims for an adequate profit margin.

TenCate aims for an EBITA margin of at least 10% over the long term (2012: 4.8%).

The consolidated EBITA margin in 2013 was 4.8%.

TenCate aims for an EBITA margin of at least 10% over the long term (2013: 4.8%).


Indicators

COST LEADERSHIPThe principal indicators include:

■■ production■■ Costs per unit/hour■■ Turnaround time in days■■ First-time-right percentage■■ Use of raw materials, water and energy■■ number of defects■■ downtime■■ Rejects and waste■■ CO2 emissions

■■ Storage-inventory-delivery■■ Inventory level■■ Inventory turnover rate■■ percentage of products delivered on time■■ percentage of products delivered correctly

■■ Human resources■■ personnel costs■■ Turnover■■ Absenteeism

PRODUCT DIFFERENTIATIONThe principal indicators include:

■■ number of new product-market-technology combinations■■ Quantitative and qualitative portfolio growth■■ net present value of the product portfolio■■ number of extensions of product life cycles

Key performance indicators (KpIs) are the factors and aspects of

business operations that affect the performance and hence the value

of the company.

TenCate draws a distinction between general and specific indicators.

A number of general indicators are periodically assessed against the

cornerstones of TenCate’s business model. Specific corporate social

responsibility indicators have been defined at corporate level on the

basis of the guidelines of the Global Reporting Initiative (GRI). These

KpIs indicate TenCate’s worldwide position with regard to social,

ecological and economic aspects of corporate social responsibility.

Brief details of a number of key indicators are provided below. The

indicators collectively contribute to the company’s value chain

management.

GENERAL INDICATORS

END-USER MARKETINGImportant indicators include:

■■ Customer satisfaction■■ Market share■■ Sale volume■■ Customer retention (share of wallet)■■ number of complaints and complaint handling■■ Brand recognition and image

TECHNOLOGICAL INNOVATIONThe principal indicators include:

■■ number of patents■■ number of trademark registrations and countries of registration■■ Completion of process innovation projects■■ Creation of new standards in niche markets■■ number of innovation networks in which TenCate operates

TenCate business model © TenCate

VALUE CHAIN MANAGEMENT INTERNALEXTERNAL

portfoliomanagement

processmanagement

marketmanagement

END-USER MARKETING

market

product

technology

process

DIFFERENTIATION

INNOVATION

COST LEADER

businessdevelopment


TARGETSCorporate social responsibility is implemented by the line management

within the stated policy frameworks. This is actively co-ordinated and

supported at corporate level through the provision of tools that enable

these activities to be maintained, measured and presented as

transparently as possible.

Once again in 2013, all market groups within TenCate received detailed

feedback on reporting business units worldwide by means of CSR fact

sheets, for both full-year 2012 and the first half of 2013. This combined

information indicates the performance relative to comparable business

units within the Group and provides a basis on which the local

management can formulate CSR improvement plans and any corporate

and other targets for the current financial year.

Since 2012, the market group units which were certified in accordance

with the CSR performance ladder (level 3) have already formulated

their own, similar or related targets, including for the nine reported

KpIs.

TenCate took major steps in 2013 aimed at the further development

and measurability of corporate social responsibility. This process will

continue in the years ahead, partly through the definition and

adjustment of new and existing CSR targets.

SPECIFIC INDICATORS (CSR)The principal and most material CSR themes were determined and key

performance indicators (KpIs) were defined at corporate level at the

beginning of 2012, on the basis of the guidelines of Global Reporting

Initiative 3. These KpIs reflect TenCate’s performance with regard to

social, ecological and economic aspects of corporate social

responsibility. Worldwide CSR data have been gathered, validated,

aggregated and analysed at corporate level every six months since

2012. The CSR data for 2011 are included here as a baseline. This

section reports on the specific indicators relating to the 2013 reporting

year. As in the case of the 2012 data, these comply with TenCate’s

accuracy criteria. The data quality and relevant processes were further

improved in 2013. A corporate CSR controller has joined the corporate

CSR team in order to continue the gathering, analysis, aggregation and

validation of the CSR data and deepen or broaden the data as

necessary. The business units in the downstream activities of TenCate

Grass (very limited in-house production) and the activities of TenCate

Enbi and Xennia Technology have not been included in the

measurements. data for the Thailand business unit also ceased to be

included in the CSR figures for 2013, because it was closed during the

reporting year. The CSR information for Amber Composites, which was

acquired at the beginning of 2013, was also excluded from the CSR

analyses for the past year, with the exception of employee data.

2012 2013

North and South AmericaEMEA

Asia Pacific

39%

20%

41%

38%

24%

38%

1 · AnAlySIS OF EMplOyEES By REGIOn In 2012 And 2013

2012 2013

90%

2% 8%

89%

2%9%

Permanent contractTemporary contractAgencycontract

2 · AnAlySIS OF EMplOyEES By COnTRACT TypE In 2012 And 2013

Male

Female

78%

22%

76%

24%

2012 2013

3 · AnAlySIS OF EMplOyEES By GEndER In 2012 And 2013

Male

Female

82%

18%

80%

20%

2012 2013

4 · AnAlySIS OF MAnAGEMEnT By GEndER In 2012 And 2013


. Indicators

PERSONNEL BREAKDOWNAs a multinational company, TenCate has a worldwide presence.

production sites are located on various continents. Figure 1 shows the

geographic breakdown of TenCate employees (headcount) by continent

at the end of 2013. Figure 2 shows the breakdown of employees by

contract type at the end of 2013, i.e. between permanent, temporary

and agency contracts. The breakdown of employees by region has

changed somewhat compared to 2012 as a result of the integration of

the TenCate protective Fabrics activities in Thailand into the dutch

production site. The workforces on the continents of America and

EMEA are now of equal number, partly as a result of the acquisition of

Amber Composites. The proportion of employees with agency

contracts has decreased by 1% compared to 2012 due to more cost-

effective use of production organisations.

despite its technical character, TenCate is committed to being a

company that offers sufficient scope for diversity among employees.

Figure 3 shows the composition of the workforce by gender. Almost

78% of the total number of employees are male and over 22% female.

Figure 4 shows the composition of the management of TenCate. Eight

out of 10 management personnel are male and two out of ten are

female. Both sets of percentages have changed fractionally compared

to 2012. TenCate aims to achieve a comparable male-female ratio in its

management as in the rest of its workforce, as an indicator of equal

opportunities. In the years ahead, TenCate will aim to achieve a

75%-25% male-female ratio for both its management and overall

workforce.

OCCUPATIONAL SAFETY AND WELFAREThe safety and protection of employees and their working environment

at TenCate’s production sites are a central focus of the company’s

policy. Table 5 provides an overview of occupational safety and

welfare, expressed in ratios of industrial accidents, fatal industrial

accidents, absence due to industrial accidents in days/working days,

occupational diseases and sickness absence. There were no notable

incidents in 2013.

SOCIAL ASPECTSTenCate believes that the conduct of a sustainable personnel policy

focused on the interests of the people which make up TenCate is the

most important aspect of the social dimension of enterprise. Within

this policy the following themes are the most material:

■■ personnel diversity and equal opportunities■■ Occupational safety and welfare■■ Education and training

SUSTAINABLE PERSONNEL POLICYAs a technology group, TenCate is a knowledge-intensive company.

The safety, health and knowledge of the employees are paramount.

Social innovation through investments in this human capital benefits

the company. The safety policy is implemented at production and

operating sites worldwide to promote optimum occupational health

and safety and keep safety incidents and industrial accidents to an

absolute minimum. protecting people right through to the shop floor.

GreenSource™

The Sustainable Water Fund of the Ministry of

Economic Affairs commissioned pentair, TenCate and

Wavin jointly to produce 20 sustainable drinking

water systems in South Africa. TenCate is supplying

the high-quality synthetic turf and geotextiles for this

project. This innovation is being supported by the

Advanced Materials Manufacturing Oost-nederland

(AMMOn) foundation.


TenCate aims to continue deepening and broadening its package of

technical and management training courses. The company intends to

increase the number of training hours by at least 5% annually in the

years ahead.

ECOLOGICAL ASPECTSTenCate considers the conduct of an integrated sustainability policy

focused on biodiversity and the company’s natural environment to be

the most important aspect of the ecological dimension of enterprise.

Within this policy the following themes are the most material:■■ Energy consumption and CO2 emissions■■ Water consumption and wastewater■■ Rejects and waste

SUSTAINABLE ENERGY POLICYEnergy consumption is an issue that demands greater attention

worldwide. TenCate has a sense of responsibility in this regard and

sees it as an opportunity for cost reduction and process optimisation.

Through its actions, investments and technological innovations, it

contributes to the reduction and maximum efficiency of energy

consumption. In the process, the CO2 footprint of the company is

reduced. An increase in the share of ‘green energy’ is part of the

prevailing energy policy.

ENERGY CONSUMPTIONTotal energy consumption in 2013 amounted to approximately 1,752

terajoules (TJ). This represents a decrease of 11% compared to 2012,

which was due in part to the closure of the TenCate protective Fabrics

site in Thailand. Among TenCate’s production processes, it is

particularly fabric production and the extrusion of synthetic fibres that

are the most energy-intensive. Since the beginning of 2013, over 15%

of energy consumed has come from sustainable sources, such as green

electricity. Biogas is produced at the company’s own wastewater

5 · OCCUpATIOnAl SAFETy

And WElFARE 2011 2012 2013

Industrial accidents* 1.8 2.4 1.9

Fatal industrial accidents* 0 0 0

Absence due to industrial

accidents in days/working days* 22.1 48.9 33.0

Occupational diseases* 0.03 0.00 0.15

Sickness absence* 2.1% 2.7% 3.0%* Ratio per hundred FTEs.

These figures show that industrial accidents and days of absence

decreased in 2013, returning almost to a level comparable to 2011. The

temporary rise in these figures in 2012 resulted from the setting up of

a new production process during that year at the TenCate Advanced

Armour site in newark in the United States, where a number of minor

safety incidents occurred. Immediate remedial action was taken,

which is reflected in the 2013 figures. The slightly higher sickness

absence in 2013 was due in particular to the TenCate protective

Fabrics production site in nijverdal. Measures were taken to counter

this incidental rise in sickness absence.

TenCate has focused its occupational safety and welfare policy on the

structural prevention of safety incidents and fatal or non-fatal

industrial accidents. It aims to reduce the ratio of days/working days

of absence due to industrial accidents to 20.0 in the years ahead.

EDUCATION AND TRAININGTenCate invests in the quality and skills of its employees. Education

and training are crucial for the optimum development and maintenance

of the company’s knowledge resources – and hence its competitive

strength. The company uses both external and internal on-the-job

training. In 2013, 860 employees took part in technical training courses

while 265 attended management training. Both figures represent a rise

compared to the previous year. The number of training hours per

employee has also risen by two. Figure 6 shows the ratio of internal to

external training hours. The total number of training hours increased

by 22% in 2013 compared to 2012. A training expert was appointed for

the four market groups in nijverdal at the beginning of 2013 and is

making a substantial contribution to the knowledge qualification

process.

Internal training hoursExternal training hours

79%

21%

81%

19%

2012 2013

6 · InTERnAl And EXTERnAl TRAInInG HOURS In 2012 And 2013


. Indicators

treatment plant and is used to produce steam for processes. Figure 7

shows the percentage breakdown of energy consumption into the

main energy sources for 2011, 2012 and 2013.

7 · ENERGY CONSUMPTION

BY ENERGY SOURCE 2011 2012 2013

Renewable electricity 2.7% 2.6% 15.2%

non-renewable electricity 51.0% 51.1% 45.2%

Biogas 0.0% 0.1% 0.1%

natural gas 33.0% 33.3% 25.8%

Steam 12.6% 12.1% 13.0%

Other sources 0.7% 0.8% 0.7%

The increase in the consumption of sustainably generated electricity

was achieved by switching the nijverdal production sites to green

electricity from 2013. TenCate Geosynthetics in linz, Austria, also

proactively increased the proportion of green electricity consumed in

2013. TenCate is aims to bring about a further increase the proportion

of renewable electricity consumed worldwide. It intends to raise this

proportion by 3% per year over the next three years.

TenCate production sites worldwide have also set a target of

improving energy efficiency by 1% per year by taking numerous

energy-saving measures. TenCate’s dutch production sites even have

an energy efficiency improvement target of approximately 2% per

year, in line with the Multi-year Energy Efficiency Agreement of the

Ministry of Economic Affairs and the Modint industry organisation on

the more effective and efficient use of energy and processes in the

textile and technical textile industry.

CO2 FOOTPRINT POLICYCO2 emissions are coupled with energy consumption. The increase in

CO2 in the atmosphere increases the greenhouse effect on earth and

contributes to climate change. TenCate is mindful of this and directs

its policy towards reducing CO2 emissions. By determining its level of

CO2 emissions, TenCate gains insight into the total greenhouse gas

emissions caused by its operations. A better understanding of CO2

footprints and how to reduce them can be obtained by identifying and

then categorising emissions. At the same time, energy conservation

helps to increase energy efficiency and reduce both fossil fuel

consumption and CO2 footprints in order to cut process costs.

TenCate’s CO2 footprint is made up of the various emission sources,

such as electricity, natural gas and steam. TenCate’s climate policy is

aimed primarily at reducing energy consumption through efficiency

measures, based on process management and cost leadership as part

of the TenCate business model. This is supported by the objective of a

gradual switch to renewable, sustainable energy.

CO2 EMISSIONSIn 2013 TenCate’s total CO2 emissions worldwide amounted to

approximately 152 kilotonnes. That represents a reduction of almost

22% compared to 2012. This decrease is due partly to the closure of

the TenCate protective Fabrics production site in Thailand and partly

to the substantial rise in the proportion of green electricity in the

netherlands in particular. Figure 8 shows a breakdown of CO2

emissions by energy source in 2011, 2012 and 2013. The data show

that approximately 73% of TenCate’s CO2 footprint is due to electricity

consumption. Sustainable sources, such as wind power,

hydroelectricity or solar energy now account for over 15% of electricity

consumption. This portion is therefore CO2-neutral. The bulk of CO2

emissions are attributable to the energy-intensive market groups,

namely TenCate protective & Outdoor Fabrics and TenCate Grass.

8 · CO2 EMISSIONS BY

ENERGY SOURCE 2011 2012 2013

Electricity 70.3% 71.0% 73.3%

natural gas 19.1% 18.4% 16.6%

Steam 8.4% 7.9% 6.9%

Flights 0.4% 0.6% 0.8%

Car travel 0.7% 0.8% 1.2%

Other Activities 1.1% 1.3% 1.2%

SUSTAINABLE WATER AND WASTEWATER POLICYWater consumption is a growing issue worldwide. TenCate is mindful

of this and implements measures, investments and technical

innovations aimed at reducing and optimising the efficiency of water

consumption. Water consumption is broken down by water source.

Waste processing is broken down by destination. TenCate’s water

treatment plants are an integral part of the water and wastewater

policies of the respective sites worldwide.


WATER CONSUMPTIONTotal water consumption in 2013 amounted to approximately 2.9

million cubic metres. This represents a 15.1% reduction overall

compared to 2012. This decrease is largely due to the closure of the

TenCate protective Fabrics production site in Thailand. As in 2012,

groundwater and drinking water consumption decreased in 2013, while

surface water consumption rose slightly. Figure 9 shows the

consumption of water by source.

The underlying data show that the dominant consumer of water is the

TenCate protective & Outdoor Fabrics market group, with a combined

share of water consumption of around 42%. This percentage can be

explained by the current analogue finishing process used for technical

textiles in the water-intensive processes in this market group. As a

result of the introduction of digital printing and finishing for TenCate

outdoor fabrics in mid-2013, a decrease in water consumption can be

expected for this market group.

TenCate is aiming for a further reduction in water consumed in

production processes worldwide. For the next three years, TenCate

aims to stabilise water consumption at less than 3 million cubic metres

with a comparable level of revenues.

WASTEWATERThe total volume of waste water was 2.6 million cubic metres in 2013.

This represents a decrease of 15.7% compared to 2012. This decrease

is largely due to the closure of the TenCate protective Fabrics

production site in Thailand. Figure 10 provides an overview of total

waste water by destination. Since part of the water drawn evaporates

during production or is absorbed by products, the volume of discharged

water is by definition lower than the volume of water drawn.

Groundwater

Drinking water

Surface water

37.1%

19.7%

43.2%

28.9%

18.3%

52.8%2012 2013

9 · WATER COnSUMpTIOn By SOURCE In 2012 And 2013

Synthetic turf system for Kyocera Stadium

In the space of two weeks the synthetic turf supplier

GreenFields, the synthetic turf manufacturer TenCate

and the construction company Heijmans completed

a brand-new synthetic turf system at the Kyocera

Stadium, the home venue of dutch premier league

side AdO den Haag. The synthetic turf system based

on TenCate Evolution™ fibre was laid in just two

weeks. The installation was completed swiftly and

efficiently thanks to excellent collaboration between

the three companies, the municipality of The Hague

and AdO den Haag. The construction of a roof over

the pitch means that games can also be played at

night and in poor weather. The synthetic turf system

was approved by the KnVB (Royal netherlands

Football Association) on Monday 21 October and

delivered on Wednesday 23 October. After the

2013-2014 football season GreenFields, TenCate and

Heijmans will install a GreenFields® TX synthetic turf

system in the Kyocera Stadium and in the adjacent

temporary GreenFields Stadium for the 2014 Hockey

World Cup.

Surface water

Sewage

Other

50.4%

31.8%

17.8%

40.3%

38.0%

21.7%

2012 2013

10 · WASTEWATER By dESTInATIOn In 2012 And 2013


. Indicators

Since 2013 TenCate has also added the volume of textile waste to the

waste separation categories. The resulting figures will appear for the

first time in the reporting for 2014.

TenCate is endeavouring to reduce the volume of waste released

during production processes worldwide. In the next three years,

TenCate aims to stabilise the volume of waste from production

processes at less than 13 kilotonnes per year with a comparable level

of revenues.

ECONOMIC ASPECTSThe economic indicators relating to TenCate’s financial performance

can be found in the other parts of the annual report and in the financial

statements for 2013. In this section TenCate reports on the critical

performance indicators with regard to sponsorship and donations

during the reporting year.

SUSTAINABLE SOCIAL POLICYTenCate has a strong commitment to society through sponsorship and

donations. Employees worldwide are actively involved in numerous

initiatives and projects. TenCate feels closely involved in the local

communities in which it operates. Every year, TenCate sponsors

various initiatives, both financially and in kind by providing materials

which the company produces. Market groups and employees also

make time or resources available for local or regional social activities.

The sponsorship and donations policy and activities in 2013 are

detailed at www.tencateannualreports.com.

SPONSORSHIP AND DONATIONSIn 2013 the contribution to social projects totalled approximately

0.15% of revenues, which represents a considerable increase

compared to 2012. This was achieved in particular through the greatly

increased involvement of TenCate Grass in the Coöperatie Eerste

divisie for professional football in the netherlands and the partnership

with the Royal netherlands Hockey Association in preparation for the

2014 Hockey World Cup. Material sponsorship also increased strongly.

Among other beneficiaries, TenCate Advanced Composites sponsored

Solar Team Twente of the University of Twente and Saxion University

of Applied Sciences. This team secured third place in the World Solar

Challenge 2013, the highest place in its history, with its REd Engine

weighing just 139 kilograms. Figure 14 provides an overview of

investments through sponsorship or donations in 2012 and 2013.

The main sponsorship in 2013 was once again Heracles Almelo.

SUSTAINABLE WASTE POLICYTenCate uses raw materials as efficiently as possible. A lower volume

of waste materials by definition means better utilisation of scarce raw

materials. Unavoidable waste materials are separated in an

environmentally conscious way and processed by recognised waste-

processing organisations.

WASTE FLOWSAlmost 13 kilotonnes of waste were released in TenCate’s production

processes in 2013, representing a decrease of nearly 8% compared to

2012. Over 10 kilotonnes were recycled during the reporting year and

over 2.9 kilotonnes were processed externally (a decrease of 5%

compared to 2012), 830 tonnes were incinerated by the waste

processor and the remainder was sent to landfill. Figures 11, 12 and 13

provide an overview of waste by waste stream, type of waste

separation, type of recycling and method of waste processing.

Non-hazardous wasteHazardous waste

97.5%

2.5%

97.6%

2.4%

2012 2013

11 · WASTE By TypE In 2012 And 2013

Paper waste

Plastic waste

Wood waste

Organic waste

13.4%

66.5%

12.4%

7.7%15.0%

74.9%

9.9% 0.2%

2012 2013

12 · WASTE SEpARATIOn By TypE In 2012 And 2013

External recycling

Landfill

Incineration

Internal recycling

49.3%

17.9%

5.0%

27.8%

35.3%

6.4%

16.2%

42.1%

2012 2013

13 · WASTE RECyClInG And WASTE pROCESSInG In 2012 And 2013


TRANSPARENCY BENCHMARKTenCate is assessed annually as part of the transparency benchmark

of the netherlands Ministry of Economic Affairs. The aim of this

annual examination is to assess and improve the content and quality of

social reporting by dutch companies. For the 2013 Annual Report,

TenCate intends to consolidate the position it achieved that year in the

top 100, in the knowledge that the criteria have been tightened.

TenCate’s long-term aim is to secure a position in the top 50.

Transparency Benchmark of the Ministry of Economic Affairs

Year Annual Report Participants TenCate’s position TenCate’s points

2013 2012 460 82 149

2012 2011 472 141 89

2011 2010 468 150 61

2010 2009 462 146 41

2009 2008 172 78 26

In past years the company has achieved the following scores and positions in the transparency benchmark:

Sponsorship in cashSponsorship in kindDonations

85.3%

9.8%4.9%

85.6%

11%3.4%

2012 2013

14 · SpOnSORSHIp And dOnATIOnS In 2012 And 2013

(VALUE ADDED)RESELLERS

PROTECTIVE FABRICS

• R&D• Spinning• Weaving• Knitting• Pre-treatment• Dyeing• Finishing• Laminating• Quality control• Packaging & Logistics• Marketing & Sales

PROTECTIVE FABRICS

• Garment makers• Distributors

PROTECTIVE FABRICS

• Industrial safety• Emergency response• Military & Police• Services & Industries

PROTECTIVE FABRICS

• Chemical suppliers• Polymer suppliers• Fibre suppliers

PROTECTIVE FABRICS

• Chemicals• Polymers

OUTDOOR FABRICS

• R&D• Spinning• Weaving• Pre-treatment• Dyeing• Finishing• Quality control• Packaging & Logistics• Marketing & Sales

OUTDOOR FABRICS

• Confectioners

OUTDOOR FABRICS

• Distributors• Dealers

OUTDOOR FABRICS

• Leisure• Home & Terrace• Emergency response• Refugee response• Military

ISO

900

1

FM H

PR (G

, USA

)

ISO

140

01 (N

L) /

MVO

PL

(NL)

OUTDOOR FABRICS

• Chemical suppliers• Polymer suppliers• Fibre suppliers• Fabric suppliers

OUTDOOR FABRICS


END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS

ISO

900

1

ISO

140

01 (N

L) /

MVO

PL

(NL)

PROTECTIVE FABRICS

• Distributors• PPE-dealers• Laundries

MVO

PL

(NL)


AEROSPACE COMPOSITES

• R&D• Weaving• Pre-treatment• Chemical finishing• Calandering• Impregnation• Consolidation• Moulding• Quality control• Packaging & Logistics• Marketing & Sales


• Original Equipment Manufacturers (OEM) - Prime contractors• Tier 1 & Tier 2 - Suppliers of integrated structures and assemblies• Tier 3 - Subcontracted part manufacturers


• Aviation - Interior - Exterior• Radomes & Antennas• Space• Military




• Chemicals• Polymers• Glass

ISO

900

1 | A

S / E

N 9

100

INDUSTRIAL COMPOSITES

• R&D• Weaving• Pre-treatment• Chemical finishing• Calandering• Impregnation• Consolidation• Moulding• Quality control• Packaging & Logistics• Marketing & Sales


• Original Equipment Manufacturers (OEM)


• Automotive• Oil & Gas• Commercial & Industrial• Sports & Leisure• Medical




• Chemicals• Polymers• Glass

ISO

900

1

ADVANCED ARMOUR

• R&D• Designing & Testing• Production & Construction - Spall-liners - Add-on-Armour - Structural composites - Body armour inserts - Ready to fit solutions - Survivability packages• Quality control• Packaging & Logistics• Marketing & Sales

ADVANCED ARMOUR

• Original Equipment Manufacturers (OEM) - Vehicle manufacturers - Shipyards - Aircraft manufacturers - Body armour manufacturers - Helmet manufacturers - Cash-in-transit vehicle converters

ADVANCED ARMOUR

• Military - Land forces - Naval forces - Air forces - Special forces• Law enforcement• Personal protection• Cash-in-transit

ADVANCED ARMOUR

• Chemical suppliers• Polymer suppliers• Fibre suppliers• Fabric suppliers• Ceramic suppliers• Ballistic metal supplliers

ADVANCED ARMOUR

• Chemicals• Polymers• Ceramics• Metals• Glass

ISO

900

1 | A

S / E

N /

JISQ

910

0 (F

R)

ISO

140

01 (D

K) /

MVO

PL

(NL)

FM H

PR (F

R)

MVO

PL

(NL)

FM H

PR (C

, USA

)


Sectors


ADVANCED TEXTILES & COMPOSITESThe principal end-markets for the Advanced Textiles & Composites

sector are:■■ personal protection■■ defence■■ Mobility■■ Sport and leisure

The products’ main areas of application are the protection of military

personnel, police and process workers (heat- and flame-resistant

protection and ballistic protection), protection of personnel in industry

(process industry, oil and gas extraction) and protection of fire

brigades and police forces. TenCate is also the European market leader

in high-quality outdoor fabrics for the outdoor market.

TenCate is the market leader in the field of protective fabrics and one

of the pre-eminent suppliers of aerospace composites. Applications in

the automotive sector and other industrial sectors are also expected

to emerge over time. In both markets the strong growth in demand is

being driven mainly by the need to save fuel costs (lower emissions)

and reduce weight.

The armouring of army and other vehicles concerns land, sea and air

vehicles. The armouring of helicopters is a growing activity. TenCate

operates in this field in the European market as a supplier of the

end-product: an entirely customised, ready-to-install set of armour

components, including fixing materials. In 2013 TenCate expanded its

portfolio to include products for personal protection for the law

enforcement market.

Materials are increasingly required to meet specific demands. TenCate

usually benefits when markets specify higher standards and demand is

differentiated on the basis of specific customer requirements.

TECHNOLOGY The Advanced Textiles & Composites sector is concentrated around

impregnation and coating technologies for the application and

processing of functional characteristics in and on textiles. The

products in this sector mainly comprise protective fabrics and

composite materials. TenCate occupies a unique position in the

composites market because it has both thermoset and thermoplastic

composites in its portfolio. TenCate has a leading position in

thermoplastic composites technology in the aircraft industry.

The automotive industry is also increasingly discovering the

advantages of thermoplastic composites. Broad application on an

industrial scale will nevertheless be a long-term development.

The raw materials used in the Advanced Textiles & Composites sector

are mainly synthetic fibres such as para- and meta-aramids, glass fibre

fabrics and carbon and aramid fibres.

MARKET GROUPSThe Advanced Textiles & Composites sector consists of four market

groups and one business unit:

■■ TenCate Protective Fabrics ■■ TenCate Outdoor Fabrics

protective and safety fabrics for a wide range of professional groups

and protective fabrics for outdoor applications.

The activities in the TenCate protective Fabrics market group are

concentrated around the production sites in the netherlands and the

United States. In the netherlands, safety fabrics are produced using

finished substrates (cotton blends as well as synthetic products). In

the United States products are manufactured with a combination of

inherently protective (artificial) fibres. TenCate therefore has a wide

range of product types for highly varied applications, each with

specific product characteristics.

■■ TenCate Advanced Composites■■ TenCate Industrial Composites ■■ TenCate Advanced Armour

Composites for aerospace and industrial applications; antiballistic

materials for personal protection, survivability solutions and vehicle

armour.

The TenCate Advanced Composites market group and the TenCate

Industrial Composites business unit are concentrated around

production sites in the United States, the United Kingdom and China

(mainly thermosets) and in the netherlands (mainly thermoplastics).

The company has a strong qualification base with a complementary

product range, as a result of close internal co-operation. For larger

customers, TenCate can be a dependable partner in the value chain by

providing a one-stop shop service.


. Sectors

TenCate Advanced Armour has European manufacturing sites in

France, the United Kingdom and denmark and operates as a

manufacturer in the United States. TenCate has both strong design

TENCATE PROTECTIVE & OUTDOOR FABRICS BUSINESS MODEL

END-USER MARKETING■■ Value proposition focused on specific target groups and standards■■ Increased market awareness■■ Risk awareness / safe society■■ partnerships

TECHNOLOGICAL INNOVATION■■ digital inkjet technology / ‘sustainable factory of the future’■■ Smart textiles■■ Effective use of internal knowledge (social innovation)■■ patents

PRODUCT DIFFERENTIATION■■ Global market position, with local product adaptations for local

specifications■■ Fabrics based on fibre blends and coated / finished fabrics (product

champions: distinctive in quality-performance ratio and costs)■■ Co-makership, products tailored to specific needs

COST LEADERSHIP■■ Internal production combined with outsourcing delivers flexibility■■ Economies of scale■■ process innovation■■ Cost control

TENCATE ADVANCED COMPOSITES, TENCATE INDUSTRIAL COMPOSITES AND TENCATE ADVANCED ARMOUR BUSINESS MODEL

END-USER MARKETING■■ Access to market participants and partnerships with

OEM relationships in market phase of the TenCate ABdS™

active blast countermeasure system■■ Solution-focused approach due to independence from fibre

suppliers ■■ Reputation and qualifications of renowned market participants

TECHNOLOGICAL INNOVATION■■ TenCate ABdS™ active blast countermeasure system■■ Innovation via networks and partnerships (TApAS, TpRC,

AMRC, eTAC)■■ Qualifications for future programmes■■ Industrialisation of processes, focused on volume production

PRODUCT DIFFERENTIATION■■ development of new areas of application ■■ developments in unidirectional (Ud) tape technology■■ development of the non-aerospace product portfolio■■ development of the value chain particularly in automotive

applications for thermoplastic composites

COST LEADERSHIP■■ Increased efficiency in production ■■ Economies of scale■■ Outsourcing and partnerships■■ development of low-cost solutions (industrial markets)

capabilities and a wide range of protective (fibre-reinforced)

composites. The market group supplies complete solutions for vehicle

programmes.


STRATEGY The strategy of the sector is derived from the group strategy, which is

based on TenCate’s business model for value chain management. This

strategy continued to be implemented in 2013. In all activities, growth

can be achieved by broadening the geographic spread (new markets)

and further developing the product portfolio (new applications). This

can be implemented in individual areas as follows.

PROTECTIVE FABRICSTenCate operates particularly in the upper segment of the safety

clothing market. As a global player, TenCate has access to the

worldwide commodity markets. Optimum functional characteristics

can be achieved in materials through intelligent combinations of

characteristics of fibres from different providers. A good example of

this strategy is the success of the TenCate defender™ M and the

TenCate Tecasafe® portfolio. By effectively mobilising internal

knowledge and collaborating with third parties, the aim is to

accelerate access to new geographic and other markets.

In all end-markets TenCate seeks to maintain direct contact with

end-users and industry organisations so as to respond effectively to

customer requirements and ensure that TenCate products are well-

positioned among end-customers. TenCate applies an own-brand

strategy based on the specific functional aspects and qualities which

end-users demand. TenCate works closely with market operators,

suppliers of the complete range of industrial clothing and professional

wear, which occupy leading positions in certain markets. This

collaboration usually results in co-development, joint branding and

marketing support.

COMPOSITESThe focus of the Group-wide growth strategy is on composite

activities, where TenCate currently occupies a unique technology

position. After an initial focus on aerospace applications, further

growth is being pursued in industrial markets, such as tooling (die

construction), the automotive industry, the electronics industry and oil

and gas extraction (transport pipes). The combination of thermoset

and thermoplastic composite technology offers TenCate good growth

opportunities in these markets.

The strategy is also focused on good collaboration with operators

along the entire value chain. TenCate has close relationships with fibre

producers, the processing industry and end-customers (OEMs). In the

case of both TenCate protective Fabrics and the two market groups in

the composites segment, it is essential to maintain good relationships

with raw material suppliers, particularly fibre producers and chemical

companies. Many orders are project-driven. delivery reliability along

the entire chain is vital. As a result of its leading market positions,

TenCate is usually one of the largest buyers of fibres in the specific

market segment. long-term co-operation agreements have been

entered into with a number of fibre producers.

VALUE PROPOSITIONTenCate is the global market leader in the field of protective fabrics

and one of the pre-eminent suppliers of composites. Good internal

collaboration is also essential with regard to the value proposition.

The aerospace background of the subsidiary TenCate Advanced

Composites also gives TenCate a strong base in aerospace armour.

The operation of different business units in, for example, the defence

market strengthens the overall value proposition in the market.

TenCate positions itself as a specialist in the field of personal

protection. The various activities in the market are mutually

reinforcing.

With its broad technological background, TenCate is well able to

anticipate specific market requirements. These usually result from

laws or regulations, industrial and safety standards which specify the

technical characteristics of materials. In the markets in which TenCate

operates, supplier reliability and commitment with regard to the

performance of materials and operation as a development partner are

essential. The requirements in terms of functional aspects of materials

evolve constantly and TenCate has the necessary knowledge and

flexibility to respond effectively.


GEOSYNTHETICS

• R&D• Weaving• Non-woven• Knitting• Grids• Pre-treatment• Finishing• Quality control• Packaging & Logistics• Marketing & Sales

GEOSYNTHETICS

• Distributors• Contractors• Retailers

GEOSYNTHETICS

• Dealers• Subcontractors

GEOSYNTHETICS

• Civil work• Water & Environment• Industrial• Oil & Gas• Renewable energy

GEOSYNTHETICS

• Chemical suppliers• Polymer suppliers• Fabric suppliers• Yarn suppliers

GEOSYNTHETICS



ISO

900

1

FM H

PR (G

, USA

)

ISO

140

01 (F

, AU

, NL)

/ M

VO P

L (N

L)


GRASS

• R&D• Spinning yarns• Weaving backing• Finishing yarns• Finishing backing• Quality control• Packaging & Logistics• Marketing & Sales

GRASS

• Tufters• Weavers

GRASS

• Installers• Marketing organisations

GRASS

• Soccer• American Football• Hockey• Tennis• Golf• Padel• Multisport• Landscaping

GRASS

• Chemical suppliers• Polymer suppliers

GRASS



ISO

900

1

ISO

140

01 (N

L) /

MVO

PL

(NL)

FM H

PR (T

, USA

)


. Sectors

SAFETY

SUSTAINABILITY

QUALITY

Safety guarantee refers to:■■ Highly Protected Risk (HPR) status determined by FM Global

Sustainability guarantee refers to:■■ ISO 14001 environmental management systems■■ CSR Performance Ladder (CSR PL), CSR management system for corporate social responsibility

Quality guarantee refers to: ■■ ISO 9001 general quality management systems■■ AS 9001 (US), EN 9100 (Europe), JISQ (Asia) aviation quality management systems


MARKET GROUPSThe Geosynthetics & Grass sector comprises two market groups:

■■ TenCate Geosynthetics

Fabrics, grids and non-wovens for solutions and applications for

infrastructure projects and the environmental market, as well as

industrial fabrics for a range of applications, such as agribusiness,

sport and recreation.

TenCate Geosynthetics has production sites in Europe, north America

and Asia. There are also 67 sites worldwide for sales and technical

support, including over 30 in the United States.

■■ TenCate Grass

Synthetic turf components and systems for applications such as

football, hockey and other sports pitches, as well as landscaping. In

addition to the companies producing fibres, woven synthetic turf and

carpet backing (upstream activities), the Grass group includes a

growing number of system development and marketing companies

(downstream activities).

TenCate Grass has production sites (upstream) in north America, the

netherlands and the Middle East. There are three marketing and sales

organisations (downstream) with offices in countries including the

netherlands, norway, Switzerland, new Zealand, Australia, the

United Kingdom and the United States.

GEOSYNTHETICS & GRASSThe main end-markets in the Geosynthetics & Grass sector are:

■■ Infrastructure■■ Water management■■ Sport and leisure.

TenCate Geosynthetics is the world’s largest producer of

geosynthetics (geotextile fabrics, non-wovens, grids and liners,

fabrics) for infrastructure, the construction industry and environmental

applications. The market group has three distinct business units:

infrastructure, water & environment and industrial fabrics.

Geosynthetics products are mainly used to stabilise or separate soil

layers and to support dyke bodies and dam walls. Geosynthetics

(TenCate Geotube®) are also used in the environmental market

(filtration) and for the dewatering of polluted sludge. The portfolio also

comprises industrial fabrics for the agriculture, horticulture and

recreation sectors, among others.

TenCate Grass develops, produces and markets synthetic turf

components (fibres, outdoor backing and infill) and synthetic turf

systems. The areas of application are top-flight and recreational sports

as well as landscape applications (landscaping, infrastructure). The

Grass group has a leading market position worldwide in terms of

technology and market share.

The market for landscaping is growing strongly and ultimately has

equivalent if not greater potential than the sports market.

TECHNOLOGYThe Geosynthetics & Grass sector is concentrated around extrusion

and non-woven technologies. The main raw materials used are

polyethylene and polypropylene, as well as purchased synthetic yarns,

such as nylon and polyester. TenCate Grass has also been producing

synthetic turf based on 3d weaving technology for some time. This

means the entire system is produced in-house under full internal

quality control. This process innovation has also delivered logistical

benefits.


. Sectors

BUSINESS MODEL TENCATE GEOSYNTHETICS

END-USER MARKETING■■ Alliances with market participants■■ local collaboration with partners in emerging markets■■ Geographic spread of distribution■■ positioning in sustainability (water management,

environmental solutions, low CO2 footprint)■■ development of relationships in the Chinese and

South American markets

TECHNOLOGICAL INNOVATION■■ TenCate Geodetect™ solutions■■ dewatering and filtration technology■■ Biopolymers

PRODUCT DIFFERENTIATION ■■ Focus on differentiated, high-quality and functional products■■ Focus on water management, environment and infrastructure

COST LEADERSHIP■■ Economies of scale (volume products)■■ process optimisation ■■ Focus on reduction of purchasing costs and control

of volatility in raw material costs

BUSINESS MODEL TENCATE GRASS

END-USER MARKETING■■ Alliances with market participants (downstream activities)■■ Geographic spread of distribution■■ positioning and advantages of the sustainability aspect

(water management, recycling)■■ Increased quality awareness in end-markets■■ Brand positioning (GreenFields, Edel Grass, TigerTurf)■■ Relationships with sports federations■■ Reduction of total cost of ownership of sports pitches■■ product and system warranties■■ Creation of higher quality standard

TECHNOLOGICAL INNOVATION■■ Fourth-generation developments in synthetic turf for football■■ Weaving technology■■ Biomechanical characteristics (research project with third parties)

PRODUCT DIFFERENTIATION ■■ System components, ‘powered by TenCate’■■ Optimum support of downstream activities for development

of new system concepts

COST LEADERSHIP■■ Economies of scale ■■ process optimisation


STRATEGYThe strategy in the sector is derived from the group strategy, which is

based on TenCate’s business model for value chain management. This

strategy continued to be implemented in 2013. The market policy is

based partly on the principle of ‘local for local’. local standards and

local market demand are factors in both the geosynthetics and

synthetic turf markets. Cost leadership is a key pillar of the business

model. For non-wovens, the geosynthetics market is mainly volume-

driven. The same applies increasingly to the market for synthetic turf

fibres. As a one-stop shop for the project market, TenCate nevertheless

has an important competitive advantage. The company has cost-

effective production sites in Asia (geosynthetics) and dubai (synthetic

turf yarns). The logistical lines to the market are short.

Both market groups work to a large extent with partners in the chain.

The TenCate Geosynthetics market group works closely with specialist

consulting firms, dredging companies and construction firms, in order

to strengthen the focus on end-solutions.

In the synthetic turf market TenCate is almost at the beginning of the

value chain. In the synthetic turf segment, the company has

strengthened its position with regard to end-markets through a

process of chain integration. Market competition is increasingly taking

place in the area of end-solutions (systems). This is necessary on the

one hand to gain greater control of the quality of sport systems in

end-markets and on the other hand to safeguard the sustainability

aspect more fully. This policy also results in growing co-operation with

the TenCate Geosynthetics market group.

VALUE PROPOSITIONThe value proposition for both geosynthetics and synthetic turf

solutions is concentrated largely in the field of sustainability. Water

shortages, or an overabundance of water, are important factors which

determine demand in the global market. Governments are focusing

increasing attention on the sustainability aspects of infrastructure,

civil engineering and sports projects. In many cases geosynthetics

have a demonstrably lower CO2 footprint than the more traditional

construction materials (concrete, rockfill). The market is devoting

increasing attention to the positive environmental aspects of

geosynthetics. The use of environmental arguments and the reduction

of negative environmental effects are therefore receiving greater

emphasis in promotion, design and specifications. The rise of synthetic

turf is mainly due to its greater playability, water savings and lower

maintenance cost compared to natural grass.

TenCate Geotube® Norfolk

TenCate Geotube® technology was used to restore

and strengthen a spit of land in norwich (UK)

between the River Bure and Salhouse Broad.

Salhouse Broad resulted from the cutting of turf.

The spit of land between this peat pool and the Bure

has suffered greatly from erosion over the last sixty

years. If the water separation were to give way, this

landscape, which is an important habitat for wild

animals, would suffer severe damage. It therefore

had to be restored and strengthened. The work was

carried out using TenCate Geotube® containers filled

with local dredged material to form a 170-metre-long

bank. Behind the containers dredge spoil was used to

return 7,000 m² of reedland and the waterline to its

original state. With stability, erosion protection and

fauna in mind, TenCate Geotube® containers are

being sown with reeds and grasses. This is

vegetation which occurs frequently here and should

therefore root quickly. The work itself had a minimal

impact on the environment.


. Sectors

STRATEGYXennia Technology and TenCate Enbi occupy a separate position within

the TenCate Group.

Xennia Technology was acquired some years ago to facilitate

technological development in the field of digital inkjet technology. This

initiated key process innovation in the field of textile finishing. The first

(trial) production based on this technology in TenCate Outdoor Fabrics

began in 2013.

Xennia Technology refined its strategy in 2013, with a focus on

chemicals (ink formulations), software (control of printing systems)

and specific solutions (industrial inkjet processes). Supplies of

components for inkjet printers (print engines) were reduced. Xennia

Technology develops inkjet systems and inks (coating fluids)

particularly for functional additions to materials (smart materials) as

well as the decoration of various substrates (paper, textiles, plastics,

metal, ceramics and glass). Access to the market will be strengthened

through partnerships and efforts will be made to accelerate growth in

ink revenues.

TenCate Enbi has staged a major turnaround in the last few years.

With production sites in Europe, the United States and China, the

company has a unique position in the supply of components to leading

producers of printers and copiers. TenCate Enbi has also focused

successfully on the Asian market, where significant revenue growth

has been achieved in recent years.

In view of the relatively low quality awareness among end-users in the

synthetic turf market, TenCate continues to focus on higher quality

standards and the total cost of ownership. An optimum and safe

playing experience throughout the economic life of the product is of

primary importance.

TenCate has production sites in Europe, north America and Asia,

enabling it to respond flexibly and effectively to demand from local

markets. The collaboration with TenCate, a supplier of a wide portfolio

of materials, provides market participants logistical and purchasing

advantages.

The value proposition is accompanied by extensive technical

consulting on the processing of products in projects and systems.

Quality, dependability and delivery reliability are key elements of the

value proposition. TenCate presents itself as an innovative producer of

high-quality materials.

OTHER ACTIVITIES

The Other Activities sector comprises three entities■■ Xennia Technology

Specialist inkjet technology for industrial applications, such as the

printing, coating and finishing of materials.

■■ TenCate Enbi

Technical rollers and components particularly for printers, copiers, fax

machines, postal sorting machines and ATMs.

■■ Holding & Services

Holding company activities

Xennia Technology combines technology (hardware solutions) with

operating systems (software) and internally developed ink formulations

to create industrial production systems. The company focuses

particularly on textile printing and finishing and on the decoration and

coating of materials.

TenCate Enbi occupies an important position in these markets as a

leading supplier to major European, American and Asian printer and

copier manufacturers. In addition to the office market, TenCate Enbi

serves niche markets, such as postal sorting machines, ATMs, photo

printers and insulation (based on foam).


CORPORATE HUMAN RESOURCESTenCate’s human resources policy is based on:

■■ Ensuring a safe work environment for employees■■ Increasing and maintaining employees’ skills, professional

knowledge and knowhow■■ Qualification, development and mobilisation of employees■■ Retaining and stimulating talent■■ developing leadership and entrepreneurial qualities■■ promoting internal co-operation.

GENERAL INFORMATIONOne of the key aspects of corporate human resources in 2013 was the

refinement of the organisational structure and the development of the

management.

Salaries worldwide rose moderately in 2013. Increments determined

under collective labour agreements, government-set minimum wages

and promotions were respected. A critical assessment was again

made of both the quality and quantity of the manpower factor.

Steps were initiated to make the corporate organisational structure

more market-oriented. The distinction in market dynamics between

the various continents is one of the main motives for structuring the

organisation, as well as the product market-technology combinations,

on a more continental basis.

The number of employees with employment contracts in the existing

companies decreased by 198 FTEs in 2013. Employee numbers rose in

America (48), Europe (as a result of the acquisition of Amber

Composites) and the Middle East. At the end of 2013 TenCate

employed 4,256 people worldwide (including the Edel Grass joint

venture).

ORGANISATIONAL DEVELOPMENTThe absolute priorities are to increase TenCate’s commercial strength

and the marketing and sales of the innovations which the company has

developed in recent years. That requires a further strengthening of the

sales and marketing competences within the existing organisation.

The organisation will act as an enabler in this regard. Entrepreneurship

remains central at all levels in the market groups and in each region/

continent. It is essential to translate and implement the strategy

appropriately.

MANAGEMENT DEVELOPMENTTenCate aims to fill at least 60% of vacant management positions

internally. The continued development of management, including at

senior levels, is essential. At the beginning of 2013 the continental

management teams in north America took part in a concise and

inspiring TenCate Executive programme aimed at strategic

entrepreneurship, strategic marketing and leadership. The European

management teams will take part in the same programme in early

2014.

The annual update of the succession planning at international

management level and the respective key specialists took place in

2013. TenCate has appropriate successors for over 60% of vital posts.

A number of them can occupy the vacant positions immediately. Others

will require around two more years to gain the necessary skills and

experience. One-third of them have the potential and need to develop

for another five years.

The trainee programme was further expanded in 2013. It is currently

being conducted in the dutch businesses. The aim is to extend this

programme further into the other countries/regions of the world in

which TenCate is strongly represented. young, academically trained

Corporate information

OWN EMPLOYEES

(in number of staff years)

year-end

2008

year-end

2009

year-end

2010

year-end

2011

year-end

2012

Year-

end

2013

delta

vs

2012

netherlands 931 862 785 819 795 774 – 21

Other Europe 612 569 724 672 630 659 29

United States 1,573 1,314 1,542 1,604 1,547 1,595 48

Asia / Australia 936 777 878 1,030 1,211 935 – 276

Middle East 385 283 342 228 271 293 22

Total 4,437 3,805 4,271 4,353 4,454 4,256 – 198


. Corporate information

Work began in 2013 on the more integrated deployment of competence

management in HR processes with added value (recruitment,

development, assessment and succession planning).

EMPLOYMENT CONDITIONSTenCate offers its employees a comprehensive and market-compliant

package of employment conditions. Annual benchmark assessments

are carried out for this purpose, in collaboration with parties including

Hay Group and local employer organisations. TenCate operates a

uniform remuneration policy for the management of all businesses.

The incentive system for senior management is also determined

centrally, on the basis of the results of the respective TenCate market

group and/or the Group as a whole.

TenCate operates businesses in 25 countries worldwide, each of

which has its own employment law, legal system and culture. The

operating companies therefore conduct their own personnel policy

geared to the local situation, taking into account both the conditions

specified by the Group as a whole and the market group and the

general principles.

CORE VALUESOne of TenCate’s core values is reliability. The integrity code applies to

everyone employed by TenCate. The code is part of each individual

contract of employment. A corporate compliance officer and a

confidential adviser have been appointed to support the code.

An employee satisfaction survey was conducted in the dutch TenCate

businesses in 2013. The response was positive and representative,

with an overall satisfaction score of 7.5.

OCCUPATIONAL SAFETY AND WELFARE TenCate’s policy is focused on implementing and/or organising all

activities and processes in such a way as to prevent any personal

injury or damage to health. This is the guiding principle for the health

and safety policy which has been or is being implemented in every

company. With annual campaigns focused on promoting safety,

sustainability, quality and welfare, TenCate seeks to offer employees

on all continents a safe and high-quality working environment. The

objective is pursued jointly with the managements of the companies.

and recently graduated people will be recruited for two years over and

above the normal complement to carry our two or three projects in the

field of business development, sales & marketing, R&d and/or

operations. The aim is to acquire specific or updated knowledge,

absorb innovative or refreshing insights and transpose these into

TenCate’s strategy. After two years an assessment will be made as to

whether the former trainees can be deployed within TenCate and, if

so, in which regular posts.

TenCate supplies materials for the Falcon 9

TenCate Advanced Composites supplied composites

to Space Exploration Technologies Corp. (SpaceX) of

the United States for the improved version of its

Falcon 9 transport rocket. This is a two-stage rocket

developed and built by SpaceX to transport satellites

and the dragon space capsule. The rocket was

launched successfully on 29 September 2013 from

Vandenberg Air Force Base in Santa Barbara

(California, USA). The Falcon 9 and the dragon were

contracted by nASA to supply the ISS international

space station. TenCate Advanced Composites USA is

providing SpaceX among other things with more

high-temperature prepregs for the structure of space

craft and bulk moulding compound, a thermoset

composite used for injection moulding processes.


The focal points of the business development policy are:■■ TenCate ABdS™ active blast countermeasure system■■ TenCate automotive composite activities■■ Inkjet technology■■ development of new synthetic turf systems and the associated

market■■ Growth activities in the Water & Environment market group

(TenCate Geosynthetics)■■ development of activities in new geographic markets (China, Japan

and South America)

The buy & build strategy is co-ordinated from the corporate business

development department. This means in particular that acquisition and

divestment processes are controlled and co-ordinated at holding

company level.

CORPORATE BRANDINGTenCate’s brand policy is focused on further strengthening and

expanding its image in the market, relying on the strong TenCate

corporate brand that forms the basis for corporate and market

communication. The brand policy, based on the TenCate brand, is

linked to the end-user marketing strategy pursued by the various

market groups.

The corporate brand is communicated in the same way in the market

groups, in order to emphasise the links between them.

TenCate also conducts an active patent policy. That applies both to the

registration of new inventions and to the protection of existing

intellectual property rights.

The existing portfolio is regularly assessed to ensure that the available

intellectual property is being used appropriately. TenCate innovates

and develops constantly. The resulting intellectual property is

appropriately registered and protected. TenCate also conducts an

active protection policy. That applies to all its intellectual property.

Action is taken if any infringements are identified, both independently

and with the help of external specialists.

CORPORATE INFORMATION TECHNOLOGYWith the completion of the establishment of the three regional IT

shared service centres in the north America, EMEA and Asia/pacific

regions, TenCate focused on the further improvement of information

provision in 2013.

The IT organisation was adapted, with the objective of further

harmonising ERp systems. To this end an ERp competence centre was

established to support local businesses in the implementation and

support of these ERp applications.

INVESTMENTSA number of ERp systems were replaced in 2013, including in the

United States, further reducing the diversity of ERp systems in

operation. Additional investment also took place in IT infrastructure.

The final separate e-mail system is being replaced and brought within

TenCate standard environment.

GREEN ITMeasures were again taken and investments made to develop the

Green IT strategy in 2013:■■ The purchasing of large copiers was brought under a single master

agreement; immediate benefits include lower consumption of

energy and materials by this green equipment ■■ The number of individual printers was further reduced■■ More information is supplied digitally and via the intranet.

CORPORATE BUSINESS DEVELOPMENTCorporate business development supports the development and

implementation of the company’s strategic technology roadmap and

co-ordinates activities relating to innovation grants. It also provides

support for TenCate’s introduction to new geographic and other

markets, in close collaboration with the operating business units.



DEVELOPMENTS IN 2013Further work took place on the positioning of the corporate brand

worldwide in 2013. The market groups are continuing to apply the

co-ordinated brand strategy in a consistent manner.

It was already evident in previous years that this strategy was also

bearing fruit in terms of brand value.

TenCate registered various new patents and thus further expanded its

patent portfolio in 2013. This is appropriate for an innovative

organisation that constantly develops new products incorporating new

techniques or technologies. The brand portfolio can be viewed on the

website. The patent portfolio is not disclosed, due to competition

considerations. TenCate has more than 670 patents.

CORPORATE SOCIAL RESPONSIBILITYTenCate’s sustainability policy forms an integral part of the pursuit of

continuity in the company, which has existed for over 310 years. It is

reflected in the common denominator and the common goal of the

TenCate organisation: to protect people and their working and living

environments – protecting people. It is also based on the forward-

looking vision, mission and strategy of the Executive Board.

As a multinational company, TenCate is aware of the effect its actions

have on the social environment. By maintaining the company on the

basis of sustainable profitability, TenCate aims to play a part in

ensuring that the social, ecological and economic environment remains

available for future generations. TenCate is increasingly integrating

sustainability into its operating processes, products, joint ventures,

marketing and communication on the basis of corporate social

responsibility (CSR). This creates shared awareness among both

internal and external stakeholders, which in turn opens the way to

constructive initiatives with buyers, customers, partners and

institutions and stakeholders aimed at the responsible deployment of

people in production processes and responsible use of commodities

and materials.

Having regard to the worldwide trends in safety and sustainability on

which TenCate focuses, many underlying themes arise in relation to

the protection that TenCate provides. Such sustainability themes

include weight reduction, limitation of energy consumption, noise

reduction, insulation, water management, reuse, recycling, waste

water and sludge processing, wear and tear, resistance, bullet- and

fragment- proofing and heat and flame resistance.

Marsh island with geosynthetics

Trial projects are being conducted in the Markermeer

and IJmeer with the aim of creating a future-proof

ecological system. One of the projects is a marsh

between Trintelhaven and lelystad. This involves an

investigation into the feasibility of a marsh on a

muddy bed. The edges of the marsh island are being

built up with 180 units incorporating TenCate

Geocontainer® technology. On top of the containers a

layer of 60 units is being laid with TenCate Geotube®

technology. TenCate Geocontainer® and TenCate

Geotube® technology was chosen due to the duration,

relatively low costs and environmental friendliness.

The containers and tubes are being filled with sludge.

The water drains out through the pores while the

sand is left behind. As additional protection against

floating ice and wave action, the outer edge is being

covered with rubble. This layer will ultimately be

covered with clay and reeds. That will help purify the

water and give the island the appearance of a marsh.

A measurement period will then begin. The results of

the measurement of the trial marsh will be combined

with the results of other experiments. The intention is

that in 2015 all results will lead to a recommendation

to the Government on possible action in the

Markermeer and IJmeer.


numerous sustainability aspects arise to a greater or lesser extent in

the management of the value chain. This applies to all cornerstones of

TenCate’s business model. The technological innovation cornerstone is

the most obvious. It is only by continuing to deliver (disruptive and

sustaining) innovations in technological and technical fields that

TenCate will be able to guarantee its continuity as a technology group

and maintain sustainable development.

CSR is the means by which TenCate integrates sustainability into its

business operations. TenCate uses numerous management systems to

make corporate social responsibility in particular visible, measureable

and controllable. These range from environmental management

systems (ISO certifications for quality, the environment and corporate

social responsibility) to financial and non-financial accountability on

the receipt of innovation funds and the awarding of sponsorship and

donations.

In the various value chains, TenCate plays an active part as a customer,

producer, supplier and co-operation partner in delivering sustainable

innovations in numerous fields. Open innovation and closed open

innovation are the keywords for the ‘new competition’: sustainable

co-operation. The theme of ‘sustainable procurement’ is also of

growing importance in specific market groups. As market leader,

TenCate aims to be among the front runners in the industry in terms of

both safety and sustainability.

The future availability of essential natural resources (biodiversity)

remains an ever-growing concern for TenCate. The company aims to

keep control of developments by focusing on individual areas such as

an integrated environmental policy, the prevailing energy policy, the

progressive policy on emission allowances, efficient and eco-efficient

production, recycling and the bio-based initiatives currently being

developed.

This approach is in line with the industry’s sector objectives. According

to the roadmap to 2030, by that time the technical textile industry

must be able to fulfil the needs of customers and users in a flexible and

sustainable way. TenCate has a leading position in the pursuit of this

objective. By already working further on ground-breaking technologies

and techniques for the processing of natural, synthetic, bio-based,

biologically degradable, recyclable or secondary raw materials,

TenCate will increasingly be able to manufacture biologically,

chemically or mechanically recyclable products using cleaner and more

efficient production techniques. TenCate’s technology and product

road maps in particular chart the direction of future sustainable

innovations.

The corporate CSR team – which reports to the Executive Board –

specifies the corporate objectives and the CSR programme each year.

The objectives and results are assessed with the management and

group managements as far as possible on a quarterly basis. If

necessary, the group managements make adjustments to the

implementation.

Organisation of corporate social responsibility

Executive Board■■ Vision, mission, strategy, business model, including corporate social responsibility■■ Defining and monitoring critical performance indicators (KPIs), i.e.

■■ General indicators■■ Specific indicators (CSR)

Corporate CSR team

Corporate risk manager

Group HR director

Head of corporate communication

Corporate information manager

Corporate CSR controller

Corporate investor relations manager

■■ Advice for Executive Board concerning corporate social responsibility■■ Practical progress of CSR policy■■ Definition and monitoring of specific indicators (CSR)



All four market groups in nijverdal have been certified in accordance

with the CSR performance ladder at level 3: TenCate protective &

Outdoor Fabrics by Bureau Veritas, TenCate Advanced Composites by

lRQA and TenCate Geosynthetics and TenCate Grass by dEKRA. The

CSR performance ladder is built around three core components based

on the international CSR guidelines (ISO 26000). In the first place the

certificate imposes requirements on the management system of each

market group with regard to the introduction and development of

corporate social responsibility. Stakeholder management and CSR

indicators are guaranteed by procedures and monitoring of changes.

demonstrable co-ordination and dialogue also take place with

stakeholders. Every market group reports to them regularly on CSR

matters. The most relevant of the 33 CSR indicators (subdivided into

seven core CSR themes, the same as in ISO 26000) have also been

incorporated in the CSR management system for each market group.

CSR performance ladder level 3 certification also requires the market

group to involve indirect as well as direct stakeholders in the

company’s activities. This underlines the value chain management

which the group strives for on the basis of the TenCate business

model. The CSR certification is based on at least one of the ISO 14001,

ISO 9001 and AS/En9100 certification standards.

DEVELOPMENTS IN 2013TenCate limited the environmental risks as fully as possible during the

2013 reporting year. The group managements were supported by the

CSR team worldwide with initiatives and projects promoting corporate

social responsibility. TenCate was active worldwide in numerous

projects related to or aimed at corporate social responsibility, involving

sponsorship, donations or participation in events. A full list can be

found on the dynamic annual report website (www.

tencateannualreports.com) and a summary appears on the corporate

website (www.tencate.com) under CSR projects.

TenCate provided sponsorship during the reporting year for a number

of sporting events, for around ten student teams by providing

composites and protective materials, for dozens of organisations,

including veterans’ and firefighters’ support associations, and for a

large number of events in local communities – partly through voluntary

work. TenCate Grass partnered with the Coöperatie Eerste divisie

(Cooperation First division) in 2013 in order to make high-quality

synthetic turf systems more accessible to dutch professional clubs. At

the end of last year many first division clubs were playing on

GreenFields® MX.

In Europe, TenCate played an active part in around 20 innovation

projects centred on sustainability and safety during the reporting year.

A full list can be found on the TenCate website. TenCate was also

active on numerous national and international committees during the

year. The company has been working for decades with a number of

universities in Europe, including, in the netherlands, delft University

of Technology, the University of Twente and Saxion University of

Applied Sciences in Enschede. In Germany, TenCate works with

AZl Aachen, based at RWTH Aachen University in Aachen. In the

United Kingdom, TenCate works with AMRC in Sheffield.

47TenCate annual report 2013 | BUSInESS COnTEXT |

Business environment 48

Stakeholders 50

Materiality matrix 52

SWOT analysis 54

Risk management 56

Business context describes and explains the environment in which TenCate operates

BUSINESS CONTEXT

48 | TenCate annual report 2013 | BUSInESS COnTEXT

Business environment

BUSINESS ENVIRONMENTThe context in which TenCate operates can be described as the ‘risk

society’. Risks to human beings and society are to a large extent the

basis for the development of materials which offer solutions to

specific issues in society. TenCate is closely associated with this

context through the theme of ‘protecting people’. The worldwide

trends on which TenCate focuses are safety and protection as well as

sustainability and the environment.

The company expects these markets to grow over the long term. In the

short term, however, TenCate is dependent on the government as its

end-customer for 47% of revenues (2013). The dependence on

government spending in recent years has increased the uncertainty

surrounding organic developments in markets of relevance to TenCate.

Revenue trends are therefore difficult to assess and volatility has

increased. In the past, the risk profile was reduced by the global

spread of revenues, but pressure on government expenditure is now

evident in many geographic markets. The company has nevertheless

focused successfully on the development of private markets. TenCate

recorded 7% growth in non-government-related revenues in 2013.

In Europe, governments are under increased pressure to comply with

the financial conditions set by the European Commission. In the United

States, there were even automatic budget cuts (sequestration) in

2013. This impacted TenCate’s business environment.

PERSONAL PROTECTIONTenCate has a mission to protect people. This is reflected among other

things in the production of protective fabrics and armour composites

for personnel in wide range of jobs. The personal protection market is

a long-term growth market. In the short term, growth is dependent on

economic growth, which translates into the level of industrial output

and the availability of government resources for emergency and safety

services.

DEFENCEMeasured over the last 10 years, defence expenditure in Europe

reached a low point in 2013. In the United States, the discussions on

the government budget had a paralysing effect on expenditure. The

American market is by far the most important defence market. The

accelerated drawdown of US troops from foreign countries has led to

a considerable fall in demand. TenCate nevertheless occupies a

leading position in protective materials for army uniforms and armour

materials. In a shrinking market, TenCate’s leading position in armour

composites has been strengthened by a consolidation in the market

and by the company’s long-term association with the market.

MOBILITYThe global trend towards weight-saving in aircraft and vehicles

remains an important factor for a sustainable environment. There is a

growing awareness that the availability of fossil fuels is finite. Weight

savings make it possible to achieve a considerable reduction in fuel

consumption. The new market for automotive composites is being

driven by stricter regional legislation on CO2 emissions. TenCate

Advanced Composites operates in the market for composites which

can replace traditional heavy materials. The worldwide composites

market is growing fast. The new markets are expected to accelerate

this growth.

INFRASTRUCTURETenCate serves the infrastructure market through the production of

geotextiles for infrastructure works and synthetic turf for landscaping.

Investments in infrastructure works are largely dependent on

government spending, although recent natural disasters and the

phenomenon of global warming have increased the priority given to

water management and coastal protection. This will be a growth

market in the long term, partly in view of the increasing importance of

infrastructure for economic growth.

PersonalprotectionDefence

Mobility

Infrastructure

Watermanagement

Sport & leisure

Other

21%

8%

12%

30%

2%

21%

6%

2013

BUSInESS EnVIROnMEnT


WATER MANAGEMENTTenCate produces geotextiles and systems for water management,

maritime projects and dewatering. TenCate Geosynthetics has

recorded strong growth in the worldwide Water & Environment

business unit in recent years. For TenCate, the water management

market is driven mainly by the increasing emphasis on protection of

the environment against water and rising water levels. The company

nevertheless also offers solutions for areas suffering from water

shortages.

SPORT AND LEISUREThe business environment in the Sport and leisure end-market

comprises the markets for synthetic turf systems and outdoor fabrics.

The synthetic turf market remains a growth market. The provision of

sports facilities is generally seen as a regional or central government

responsibility. Synthetic turf can also offer a solution where water is

scarce. TenCate has secured a strong position with the new synthetic

turf systems for sports, including at the top level, partly as a result of

the Group’s innovative technology. The brands with which TenCate

operates in local end-markets and the local business partners with

which TenCate has associated are in the top segment of the market.

TenCate has a strong quality image.

SUSTAINABILITYThe sustainability aspect is of constantly growing importance in the

business environment in which TenCate operates. not only are

governments increasingly adopting ‘sustainable procurement’, but

industrial partners are also imposing ever greater requirements. The

automotive composites market, for example, which is relatively new to

TenCate, is driven by the need for a sustainable mobility concept in the

market. Another example is the need for further development of

legislation on the sustainability and recycling of synthetic turf

systems. TenCate is anticipating this with the launch of GreenFields®

MX, the first synthetic turf system that is 100% recyclable. This will

provide benefits not only for the customer, but also for the

environment.

These developments are making high demands in terms of sustainable

production processes, recycling, sustainable energy consumption and

the CO2 footprint. TenCate deliberately seeks out these trends, since

they will lead to higher demands being made on the required materials,

including greater sustainability.

new developments will be necessary in the years ahead, both on the

demand side and in production processes, in order to respond to this

trend. However, this will be a gradual development process. It

demands a global approach in all parts of the company. TenCate keeps

this subject high on its agenda.

TenCate puts first digital inkjet machine into service

digital finishing based on inkjet technology is a new

process technology used to apply high-grade

functionalities to a textile base. That is done by

means of a drop-on-demand technique and pico

droplets. This means that coatings and finishes can

be applied extremely accurately to technical textiles.

This development heralds a revolution in process

technology. A wide variety of designs and

characteristics can now be applied to different

types of fabric at high speed.

Compared to existing technologies, the new

technology offers complete design freedom at low

cost. new functionalities can be introduced rapidly

into the production process. This delivers higher

quality at lower production cost, logistical benefits

and new marketing and sales possibilities. digital

inkjet technology also delivers savings of up to 60%

in energy consumption, up to 80% in water

consumption and up to 90% in dye and pigment

consumption.


Stakeholders

Major industrial partnerships in the value chain in which TenCate

operates were announced in 2013. The collaboration with BASF in

automotive composites, for example, was expanded with the addition

of Owens Corning. The three companies, each with their individual

capabilities, will jointly develop this new, promising market.

Fundamental image and reputation management was pursued through

end-user marketing and an active media policy. Relationships with

governments were strengthened to persuade end-customers of the

quality of TenCate products. presentations were given to members of

Congress in Georgia, in the United States. In the netherlands, regular

contact was maintained with the trade unions and the Central Works

Council.

MATERIALITY ANALYSISOn the basis of its business model, TenCate identified and grouped the

respective stakeholders at corporate level in 2013 for each

cornerstone or element of value chain management. Key stakeholders

were selected in each group for the materiality analysis. In addition to

the regular contacts and discussions, they were invited to take part in

a two-yearly qualitative dialogue focused on discussion and

prioritisation of material subjects. To that end a list of relevant

subjects was drawn up for TenCate, based on the one hand on relevant

standards for sustainable reporting and industrial guidelines (GRI,

SASB, ISO) and on the other hand on material subjects for peers,

suppliers and customers. TenCate applied quantitative and qualitative

criteria to filter this list, arriving at a list of specific subjects of

Stakeholder management within TenCate supports the organisation in

achieving its strategic objectives. By informing and influencing

external and internal stakeholders, TenCate aims to initiate a dialogue

with them and create and maintain constructive relationships. The

company does so by effectively managing the expectations and

experiences of the stakeholders concerned.

DIALOGUETenCate took various initiatives in 2013 to maintain and strengthen

relationships with numerous stakeholders. The company played an

active part in many committees with a view to establishing, exploiting

or intensifying open innovation and partnerships. Examples of

partnerships are the Thermoplastic composites Research Centre

(TpRC), the Thermoplastic Affordable primary Aircraft Structure

consortium (TApAS), the European Thermoplastic Automotive

Composites (eTAC) consortium and the Aachener Zentrum für

Integrativen leichtbau (AZl). A list of the innovation networks in

which TenCate participates can be found at www.annualreports.com.

A Capital Markets day for analysts and shareholders was held in

november at the TenCate Advanced Armour production site in

primarette. Financial stakeholders were informed about developments

in the strategy of the Advanced Armour group and the Grass group.

presentations were given at various financial centres in Europe during

roadshows for financial stakeholders. The Annual General Meeting of

Shareholders was held in the Heracles Almelo Business Club in April

2013.

Shareholders and financial relations

Media, policymakers andbranche organisations

Universities, colleges and institutions

GovernmentsEmployees and representatives

Customers Partners Suppliers

Table of stakeholders of TenCate


relevance to TenCate and its stakeholders. The invited internal and

external key stakeholders were asked during individual discussions to

validate these material subjects and state the degree of importance to

the stakeholders concerned or their organisation on the basis of a

quantitative rating system.

The relevance to TenCate’s strategy was determined by the company

itself. The material subjects were then ranked in order of importance

to TenCate’s strategy. On the basis of this ranking a materiality matrix

was composed, as shown in this annual report. The corporate dialogue

will be repeated internally and externally in 2014 with other groups of

key stakeholders, with whom it will be repeated again two years later.

The market group entities which were certified in accordance with the

CSR performance ladder (level 3) have conducted their own annual

dialogue with stakeholders of relevance to these business units since

2012. A materiality matrix will also be compiled for these units in

2014. This market group dialogue will now also be supported twice a

year by a digital magazine covering all relevant CSR subjects.

FOLLOW-UPThe materiality analysis provides support for the control of TenCate’s

value creation process. The value chain management business model

plays a guiding role in this regard. The results of the corporate

dialogue were discussed in the corporate CSR team, which then drew

up recommendations for the Executive Board. The results of the

market group dialogues were discussed by the CSR teams concerned.

The responsible managements are involved in the continued follow-up

of the results and action points.

As well as setting objectives for social, ecological and economic

aspects of corporate social responsibility, the company’s impact on the

social environment will be made increasingly measurable. The current

stakeholder dialogue, materiality analysis and materiality matrix will

play a central role in this regard. They will provide an increasingly

incisive view over the years, making it easier to identify the internal

and external factors of importance to TenCate and to determine where

the impact is greatest, what to aim for and where to make

adjustments.

The materiality analysis is robust and was devised with the

involvement of many stakeholders. The subjects considered most

material are those which have the greatest impact according to the

analysis. TenCate realises that the insights obtained must be

developed further as part of the value creation process to enable the

ultimate impact to be measured.


Materiality matrix

•Technology innovation

•Economic performance

•Product differentation

•Energy efficient products

•Community involvement

•Procurement

•Product responsibility

•Employee well-being

•Greenhouse gas

reduction

•Water •

Energy efficiencyoperations

Waste

•

Diversity andequal opportunity

• •Employee training and

development

•Life Cycle Analyses

•Materials

•Employee health

& safety

•Corporate governance

• Social

• Ecological

• Economical

• Technological

•Cost leadership

•End-user marketing

Impo

rtan

t to

core

sta

keho

lder

s

Important to TenCate

+++

+++


The materiality matrix comprises material (relevant) subjects which

affect TenCate’s performance. It establishes a connection between

TenCate’s strategic objectives, value proposition and governance

model. The greater the importance of the subject for both society and

business operation, the greater the materiality.

Material factors are plotted on the horizontal axis in respect of their

importance to TenCate’s strategy, such as the approach to

sustainability, innovation policy and value chain management. These

factors are plotted on the vertical axis in respect of their importance

to key and other stakeholders, such as customers, shareholders,

partners and employees.

By associating a relative value with these factors, it is possible to see

which subjects are most relevant and where TenCate is working to

improve performance and intensify the dialogue with all stakeholders.

The matrix is used as a management mechanism in relation to the

chosen critical performance indicators and CSR objectives. This

approach helps in determining the most relevant focal points for

sustainable business operation.

Representatives from almost all groups of core stakeholders were

approached for the corporate dialogue in 2013. The diagram shows the

core stakeholders involved. The only group not included in the

qualitative dialogue on this occasion was that of suppliers. For this

group TenCate relies on the ongoing dialogue of the market groups

covered by the CSR performance ladder.

The corporate dialogue has given rise to a robust materiality matrix

which clearly highlights the relevance of TenCate’s strategy. Both the

external and internal stakeholders consider the company’s economic

performance and – with minor differences of emphasis – the four

cornerstones of TenCate’s business model to be of the greatest

importance. Another striking feature of the matrix is that external and

internal stakeholders focus to some extent on other areas. The

subjects under ‘environmental management’ are deemed important

mainly by the internal stakeholders and less so by the external

stakeholders. This could indicate that external stakeholders are not

yet sufficiently aware, or have not been made sufficiently aware, of

the impact which TenCate’s products and solutions have on matters

such as ‘energy efficiency’ and ‘greenhouse gas reduction’. This

provides opportunities to intensify the existing end-user marketing,

particularly with regard to sustainability aspects. The detailed results

of this qualitative dialogue are analysed by the Executive Board, the

managements concerned and the corporate CSR team. The results are

taken into account in TenCate’s ongoing policy definition and

implementation. The five most material subjects – technological

innovation, economic performance, product differentiation, cost

leadership and end-user marketing – are analysed in detail in this 2013

annual report.


SWOT analysis

Strengths Weaknesses

■■ Innovation: the ability to use internal synergy by combining knowledge

and skills on an extremely broad technological basis. TenCate is also

well positioned to enter into co-operation with external partners

(co-creation), in order to offer new solutions and accelerate time to

market.■■ Cost leadership: TenCate has leading market positions and is able to

control costs through economies of scale. TenCate also has a flexible

organisation and increasingly considers the outsourcing of all or part

of production.■■ product differentiation: TenCate has a strong brand position in

professional markets. products meet the highest functional standards.

Attractive business cases are used to demonstrate that TenCate

materials genuinely make the difference.■■ End-user marketing: TenCate is one of the few players in the technical

textile industry to cover the entire global market. TenCate can respond

to a wide range of functional requirements of user groups in local

niche markets.

■■ TenCate offers its customers highly innovative products and solutions,

but as a result of the fragmentation of markets with specific

end-customer requirements, the sales organisation is still

insufficiently developed to generate rapid revenue growth with new

products.■■ TenCate generates a relatively small proportion of revenues in

emerging markets. 22% of revenues were generated outside Europe

and the United States in 2013.■■ Although government-related sales have declined in recent years as a

proportion of total revenues, the dependence on this market remains

high. These revenues are often project-based, which can result in

shocks in periodic revenue reporting. ■■ As a manufacturing company, TenCate must ensure sufficient

utilisation of production capacity even in the event of disappointing

revenues. This may have consequences for margins in a particular

period. Some volume production remains necessary.

Opportunities Threats

■■ Business development covering a number of key points provides focus

and ensures effective deployment of people and resources.■■ The increasing attention paid to fuel savings and reduction of CO2

emissions in the aviation and automotive industries offers

opportunities.■■ TenCate has maintained its innovation policy under difficult market

conditions and has further developed as a company, with consolidation

taking place in certain market sectors. The consistency of its strategic

policy has strengthened the competitive position.■■ As a result of the extensive damage caused to local infrastructure by

natural disasters, there is a growing awareness of the need for better

protection. ■■ Emerging markets still lag behind in terms of standards and

specifications in some fields. However, these markets are largely

prepared to use modern technologies, enabling them to make up any

lost ground.

■■ Macroeconomic uncertainty. Continuing pressure on European and US

government budgets. Although the proportion of revenues generated

in the defence market has decreased sharply in recent years, this

market still provides an important source of profit, in view of the

high-quality character of the products involved.■■ A large part of TenCate’s revenues are generated by large projects.

Any delay or cancellation of these projects may have a major impact

on the composition of revenues and profitability in the short term.■■ A low cotton price in the world market causes price pressure at the

lower end of the market, which can work through to the higher-quality

market segment on which TenCate concentrates. In some markets the

end-customer may sacrifice functionality in favour of price. ■■ TenCate supplies innovative synthetic turf systems which offer the

best solution for the customer. Buyers in the synthetic turf market

often overlook the specific sporting performance and the associated

sustainability requirements in favour of price.

The SWOT analysis is a permanent part of the strategic planning of

each market group within TenCate. The SWOT analysis included in the

annual report is a translation of this analysis at Group level. The risk

policy of each market group is concentrated primarily on combinations

of organisational weaknesses and external threats (risk box).

The Group’s strengths are concentrated mainly in the unique

characteristics whereby the company can successfully implement its

Vision, Mission and Strategy. These characteristics are summarised

below under Strengths and flow directly from the key value drivers

(see page 20). The improvement points stated here are a summary of

the internal weaker points observed in the organisation.


Challenges

Exploiting opportunities and/or averting threats from a position of strength

■■ TenCate’s strength flows from the business model comprising the four

cornerstones of innovation, cost leadership, product differentiation

and end-user marketing. The exploitation of these four cornerstones

leads to sustainable value creation for stakeholders.

■■ TenCate supplies innovative solutions, such as composites, which can

provide solutions for requirements such as fuel savings and reduced

CO2 emissions in the aviation and automotive industries.

■■ There is increasing demand for high-quality protective fabrics for

personnel. TenCate provides solutions which meet the highest

standards and can limit safety risks.

■■ TenCate is well positioned to collaborate with external partners

(co-creation) in order to offer new solutions and accelerate time to

market.

■■ TenCate’s technological base enables it to initiate ground-breaking

developments.

■■ The dependence on government spending can be reduced by means of

marketing targeted at end-users, with a focus on the development of

private markets.

■■ After a few years, products developed for the aerospace market, for

example, also make their way into other markets which make high

demands on functional materials.

■■ TenCate can respond to a wide range of functional requirements of

user groups in local niche markets.

■■ TenCate products and solutions provide functional added value for the

customer. End-customers can be persuaded to adopt new solutions by

collaboration with bodies representing certain target groups.

Improving weaknesses and averting threats■■ A strengthening of the sales organisation and partnerships in Asia, the

Middle East and South America can lead to a stronger position in new

markets. Emerging markets are prepared to use modern technologies.

■■ A strengthening of marketing and sales activities, particularly for new,

high-quality products with high added value. The aim of this is to

achieve revenue growth in the short term through broad acceptance in

the market by means of targeted end-user marketing.

■■ Reduced dependence on government spending through increased

focus on private markets. The increase in revenues of TenCate

protective Fabrics from TenCate Tecasafe® plus and the private

end-markets of TenCate Geosynthetics are intended to reduce this

dependence.

■■ The threat of constant pressure on government budgets in Europe and

the United States can be limited by further geographic expansion.

■■ TenCate endeavours to maintain flexibility in production, with

consideration increasingly given to partnerships and outsourcing of

production.


Risk management

TenCate operates worldwide in different markets and therefore has to

contend with a variety of risks. TenCate aims to identify and control

these risks as early as possible. Risk control models have been

developed for that purpose, which are regularly updated by and

discussed with the Group management. The main risks and the

applicable risk control models are described briefly below. A full

description of the risk management can be found on the TenCate

website (www.tencate.com/nl/corporate-governance).

STRATEGIC RISKSIn order to assess the strategic risks, TenCate uses its own business

model based on four cornerstones. This enables TenCate to clearly

understand the strategic position of a business unit and adjust its

course accordingly. A second model used is the SWOT analysis (see

page 54). This analysis is used as a basis for agreements with the

management on measures to reduce risks and identify opportunities in

the markets.

MARKET RISKSThe major risk factor in demand for TenCate products is government

expenditure. By building flexibility into cost structures, it is possible to

offset the consequences of any drop in demand to a certain extent.

OPERATIONAL RISKS TenCate’s organisational strategy is based on a decentralised model.

The managements of market groups and operating companies are

controlled on the basis of a regular planning and control cycle.

Each operating company has its own systems for control and

transaction processing in the main operating processes. Information

security and back-up procedures are followed to minimise the risk of

disruption to these systems.

ENVIRONMENTAL RISKSTenCate’s environmental policy is based on limiting any impact on the

environment as far as possible. Both the holding company and the

managements of operating companies carry out regular audits and

take measures to avoid environmental risks. Work also started in 2012

on quantifying the use of fossil raw materials, energy and waste in a

context of corporate social responsibility.

LEGAL AND TAX RISKSTenCate is involved in various legal proceedings resulting from normal

business operations. The progress of these proceedings is monitored

continuously. A summary is discussed in the Financial Committee of

the Supervisory Board twice a year.

FINANCIAL RISKSThe financing of the company is for the most part centralised through

corporate treasury. The main financing source is the syndicated loan.

The original syndicated loan amounted to € 450.0 million and was

reduced to € 400.0 million at the Group’s request. € 190.3 million of

this facility was drawn as at 31 december 2013. This loan is due to

mature on 8 december 2015. The Group’s policy is to arrange

refinancing in good time.

The main covenant concerns the net debt / EBITdA ratio. In view of the

specific seasonal pattern in TenCate’s financing requirement, different

quarterly debt / EBITdA ratios have been agreed, substantially

reducing the risk of a breach of covenant.

Since a substantial part of TenCate’s assets are intangible (principally

goodwill), an impairment test is carried out on these assets at least

once a year. This is shared with the Supervisory Board and the

external auditor. The values of the intangible assets are assessed on

this basis. This did not result in any impairment charge in 2013. Full

details of the impairment test can be found in paragraph 37.2.


The risk of an interest rate rise in the subsequent years is hedged in

principle to various percentages by means of derivative financial

instruments. The effect of changes in the value of these derivative

financial instruments on the company’s result is mitigated as far as

possible by the use of hedge accounting.

With regard to currencies, TenCate draws a distinction between

competition, transaction and translation risk. The basic principle is

that competition risk is hedged for at least the next six months by

means of currency options or is offset internally against the translation

risk. The foreign currency transaction risk is hedged by means of

foreign exchange forward contracts or currency options. The

translation risk on the results of subsidiaries outside the eurozone is

offset where possible internally by euro-denominated revenues of

subsidiaries outside the eurozone, as well as US dollar purchases by

subsidiaries in the eurozone.

TenCate has placed the pension provision for dutch employees with

Stichting pensioenfonds Koninklijke Ten Cate. The pension fund has

taken measures in its investment policy to lower the risk profile.

TenCate uses the OCI method to take account of actuarial gains and

losses, which can lead to substantial changes in Group equity.

RISK MANAGEMENT AND CONTROL SYSTEMSA whistleblower scheme and a complaint scheme enable employees to

inform the company management of any undesirable situations.

It is important to maintain direct contact between the Executive

Board, group managements and directors of operating companies.

Extensive monthly reports are filed and the performance, results,

outlook and certain risk management aspects are discussed once

every quarter. The risk management also forms part of the

consultations with the Financial Committee of the Supervisory Board.

All managers and controllers sign a letter of representation twice

a year declaring their compliance with financial reporting / internal

control requirements.

EVALUATION OF RISK MANAGEMENT AND CONTROL SYSTEMSThe Executive Board is of the opinion that:

■■ The risk management and control systems provide reasonable

assurance that the financial reporting is free of material

misstatements;■■ The risk management and control systems have operated correctly

in the reporting year;■■ There are no indications that the risk management and control

systems will not operate correctly during the current year.

However well designed the internal risk management and control

systems are, they can never provide absolute certainty that objectives

in the field of strategy, operation, reporting and compliance with laws

and regulations will always be achieved. When taking decisions,

TenCate is mindful that:■■ Human errors of judgement may arise;■■ Cost-benefit assessments are constantly made when assuming

risks and taking control measures;■■ Human failings and even simple errors or mistakes can have major

consequences;■■ Conspiracies by officials can lead to circumvention of internal

control measures;■■ The management of parts of the company can permanently or

temporarily negate agreements made with the Executive Board.

This statement should not be interpreted as being a statement in

accordance with the requirements of section 404 of the Sarbanes

Oxley Act in the United States, which does not apply to Royal Ten

Cate.


. Risk management

CORPORATE RISK MANAGEMENTThe aim of TenCate’s corporate risk management is to maintain safe

and secure production sites worldwide, thereby guaranteeing business

continuity and preventing any loss of production capacity. TenCate can

then also safeguard its position as a dependable supplier to its

customers.

Safety aspects concern in particular the risk of fire, explosion and

natural disaster, such as floods, earthquakes, storms and hurricanes.

In co-operation with the insurer FM Global, the corporate risk manager

conducts annual inspections of production sites of all market groups

worldwide. If a location complies with all FM Global guidelines for

damage prevention, the Highly protected Risk status is attained and

the FM Global Highly protected Risk Award is presented.

Other initiatives are also deployed to maintain a high level of safety

culture within TenCate. Examples are refresher courses for the

company emergency service and the handling of chemicals and highly

inflammable materials. The corporate risk manager also deals with

numerous related matters that affect the liabilities of the company,

including product liabilities and other risks, as well as insurance cover.

DEVELOPMENTS IN 2013In the autumn of 2013, the insurer FM Global granted the Highly

protected Risk Award to three businesses. These were the TenCate

Advanced Armour plant in primarette (France) and the TenCate

protective Fabrics spinning and non-woven mill at Senoia (Georgia,

USA). A total of nine TenCate production sites have received this

award.

Various refresher courses were organised in nijverdal in the spring

and autumn of 2013, including for the company emergency service.

International Achievement Award for contribution to sustainable city

Close to Tianjin (China), to the southeast of the

capital Beijing, a new city is emerging: Tianjin

Eco-City. It covers an area of 34 km2 and is based on

sustainability. One of the constituent parts of the city

is Qingjing lake. TenCate Geosynthetics played a key

part in transforming this 30-year-old polluted

wastewater impoundment into a pristine lake using

TenCate Geotube® technology. The tubes were filled

with polluted sediments, dewatered, stacked in four

layers and integrated into the landscape.

This contribution was recognised by the presentation

of the Outstanding Achievement Award to the Water

& Environment business unit of TenCate

Geosynthetics by the Industrial Fabrics Association

International (IFAI). TenCate Geosynthetics has won

an IFAI award every year for the past eight years.

This is the fourth award for the Water & Environment

business unit. The market increasingly appreciates

the sustainability benefits of geotextiles (service life

and low environmental impact).

59TenCate annual report 2013 | GOVERnAnCE |

Executive Board 60

Supervisory Board 61

Report of the Supervisory Board 62

Corporate governance 65

In Governance the company explains how management and supervision are organised within TenCate

GOVERNANCE

60 | TenCate annual report 2013 | GOVERnAnCE

as at 1 January 2014

Executive Board

L. de Vries (1951), president and Chief Executive Officer

Mr de Vries has been a member of the Executive Board since October 1998 and

Chairman of the Executive Board since August 2000.

previous employers:■■ Wilma nederland■■ Wilma Vastgoed■■ Holec nederland

Other activities:■■ Member of Strategy Board Twente■■ Member of Industrial Board Advanced Materials Manufacturing Oost-nederland

D.C. Clarke BBA (1958), Group director of TenCate Advanced Armour and TenCate Advanced Composites nA

Group directors

Corporate management

F.J. Meurs MBA (1967), Group director of TenCate protective Fabrics and TenCate Advanced Composites EMEA

E.J.F. Bos (1961), Corporate director of Finance

J.H.A.J. Gritter (1968), Corporate director of Human Resources

R.P. Janse (1967), director of Corporate legal Affairs, Secretary of the Company

D.M. Olsen MBA (1954), Group director of TenCate protective Fabrics Americas & ApAC

W.L. Moore BSc (1963), Group director of TenCate Geosynthetics

G.J.M. Vliegen (1966), Group director of TenCate Grass

F.R. Spaan (1955), Corporate director of Business development

At the beginning of 2014, the first steps were taken towards a new, continent-based

management of businesses. The new organisational structure is consistent with the

aim of more market-focused operation. Up-to-date details of the Group management

can be found on the Company profile page on our website.


E. ten Cate (1945) 1 *

Commenced in office 2004

End of current term 2016

director of Bank ten Cate & Cie n.V.

Chairman of the Supervisory Board of Hydratec Industries n.V.

Chairman of the Supervisory Board of Rijksmuseum Twenthe

Member of the Supervisory Board of Medisch Spectrum Twente

P.F. Hartman (1949) 2 *



Vice Chairman of Air France KlM

Chairman of the Supervisory Board of Texel Airport n.V.

Member of the Supervisory Board of Air France KlM S.A.

Member of the Supervisory Board of delta lloyd Group n.V.

Member of the Supervisory Board of Fokker Technologies Group B.V.

Member of the Supervisory Board of CAI - Compagnia Aerea

Italiana s.p.A.

Member of the Supervisory Board of Kenya Airways

Chairman of ACARE (Advisory Council for Aviation Research and

Innovation in Europe)

Chairman of the Executive Board of Connekt

Until 1 July 2013, Chairman and director of KlM n.V.

All members of the Supervisory Board are of dutch nationality.

J.C.M. Hovers (1943) Chairman 1, 2



Chairman of the Supervisory Board of plieger nV

non-executive board member of Teleconnect Inc

Member of the Supervisory Board of Randstad Groep nederland bv

Former Chief Executive Officer of Stork nV and OCE nV

P.P.A.I. Deiters (1943) deputy Chairman 2



Member of the Supervisory Board of HVEG-Fashion linq B.V.,

Amersfoort

Member of the Supervisory Board of Tootal B.V.

Consultant to the European Bank for Reconstruction and

development (EBRd)

Former director of Berghaus International Fashion

as at 1 January 2014

Supervisory Board

1 Member of the Financial Committee.

2 Member of the combined Remuneration, Selection and Appointments Committee.

* Chairman.

From left to right: E. ten Cate, p.p.A.I. deiters, J.C.M. Hovers and p.F. Hartman.


ANNUAL REPORTWe hereby present the 2013 annual report as prepared by the

Executive Board, incorporating the financial statements. The financial

statements have been audited by KpMG Accountants nV and were

discussed with the Executive Board on 26 February 2014, in the

presence of the auditor. The unqualified auditor’s report is included in

this report in ‘Other information’.

We are of the opinion that the annual report fulfils the transparency

requirements and forms a good basis on which the Supervisory Board

can account for its supervision.

We propose that you adopt the financial statements, approve the

dividend proposal and grant discharge to the Executive Board in

respect of its policy and to the Supervisory Board in respect of its

supervision.

COMPOSITIONThe current members of the Supervisory Board are Messrs

p.p.A.I. deiters, E. ten Cate, J.C.M. Hovers and p.F. Hartman.

Mr Hartman was appointed as a member of the Supervisory Board at

the last General Meeting of Shareholders, held on 18 April 2013.

At the end of the General Meeting to be held on 17 April 2014,

Mr deiters will retire as a member of the Supervisory Board upon the

expiry of his fourth four-year term of office. We are very grateful to

Mr deiters for his contribution to the development of Royal Ten Cate

into a modern industrial company. We shall miss his wealth of relevant

experience and his unique entrepreneurial personality. The

Supervisory Board is currently endeavouring to find a suitable

candidate to be proposed as a successor to Mr deiters.

A vacancy arose on the Supervisory Board as a result of the departure

of Mr Van Gelder on 4 March 2013. His successor will be proposed at

the General Meeting of Shareholders of 17 April 2014.

The nomination of the candidate followed extensive consultations

within the Supervisory Board. Candidates were sought on the basis of

the profile defined for members of the Supervisory Board. After a long

and intensive process, supported by external experts, the Supervisory

Board resolved to propose the candidate. If the General Meeting

makes no recommendation(s), the Supervisory Board intends to

propose Mrs M.J. Oudeman for appointment as a member of the

Supervisory Board for a term of four years at the General Meeting of

Shareholders of 17 April 2014.

The company aims to conduct a policy under which at least 30% of

members of the Executive Board and the Supervisory Board are female

and at least 30% are male. The company acknowledges the

importance of diversity, including with regard to the composition of its

Executive Board and Supervisory Board. The proposed appointment of

Mrs Oudeman to the Supervisory Board is already a step in the

intended direction. The company will also endeavour to select female

candidates when future vacancies arise. However, in view of the

industry in which the company operates, it is difficult to find suitable

candidates who also sufficiently fulfil the other required profile

characteristics.

SUPERVISIONThe Supervisory Board held plenary meetings with the Executive

Board on seven occasions in 2013. It also met independently on three

occasions. The meetings discussed the composition and performance

of the Executive Board and the individual directors. detailed

consideration was also given to the succession of the CFO, who left

the company on 1 September.

The Supervisory Board also assessed its own performance, as well as

that of the committees and the individual members of the Board.

This assessment took place on the basis of a written survey completed

by the individual supervisory directors and discussed by the full

Supervisory Board. The principal conclusions concerned the

appointment of a new secretary to the Supervisory Board, who would

also serve as secretary to the company, the strengthening of

knowledge in the company and among its senior executives through an

increase in the number of company visits and more direct engagement

of management development efforts. Increased diversity in a number

of areas, such as gender, international experience, technical/

technological knowledge and age, was placed high on the agenda.

Report of the Supervisory Board


COMMITTEES The Supervisory Board has two committees: the Financial Committee

chaired by Mr Ten Cate and the combined nomination, Remuneration,

Selection and Appointments Committee chaired by Mr Hartman. Their

task is to analyse matters within their specific remit and to prepare

resolutions to be adopted in the plenary meetings of the Supervisory

Board. Mr deiters was succeeded by Mr Hartman as chairman of the

combined nomination, Remuneration, Selection and Appointments

Committee in 2013.

Financial Committee

The Financial Committee met with the Executive Board of TenCate on

four occasions in 2013. As preparation for the regular meetings of the

full Supervisory Board, these meetings discussed in detail the 2012

annual figures, the 2013 first-quarter figures, the 2013 half-yearly

figures, the 2013 third-quarter figures and the 2014 budget. A number

of meetings were combined with meetings of the Supervisory Board.

Consideration was also given to a number of specific subjects during

the meetings. particular attention was devoted to the impairment

tests, debt and working capital, the tax position, risk management and

claims, the management letter from the external auditor and the

follow-up to his recommendations.

Combined Nomination, Remuneration, Selection and

Appointments Committee

The Remuneration Committee met on three occasions in 2013,

considering matters such as the current remuneration policy. The aim

was to bring the current Executive Board remuneration policy more

closely into line with pay in companies of similar type and size. In the

view of the Supervisory Board, this would take proper account of the

quality of the performance rendered. It was decided to leave the

Executive Board remuneration policy unchanged pending the results of

a new external evaluation, based partly on an updated peer group. The

remuneration of the Executive Board will be clearly positioned as the

upper end of the pay pyramid of the entire company.

Corporate social responsibility

The Supervisory Board is delighted with the Executive Board’s

development of policy on corporate social responsibility.

The Supervisory Board also held discussions with the external auditor

independently of the Executive Board on two occasions. These

discussions did not give rise to any particular measures.

The Supervisory Board met in full on all occasions.

during the joint meetings, the Supervisory Board considered matters

such as the strategy of the sectors within TenCate, the SWOT

analyses, risk management, proposed acquisitions, the valuation of

TenCate’s balance sheet and the developments concerning recent

acquisitions. The Supervisory Board made visits to operating

companies in denmark, France and the netherlands.

TenCate’s financial results were discussed on a quarterly basis. The

figures for the first half of 2013 were discussed in the presence of

KpMG, the external auditor. particular consideration was given to the

company’s debt, investments and working capital each quarter.

Representatives of the Supervisory Board also attended consultative

meetings of the Central Works Council. They participated in the

discussions and took note of the activities and events within the

company.

CORPORATE GOVERNANCEThe Supervisory Board and the Executive Board endorse the principles

of the Corporate Governance Code. The company applies this code

almost in full. The only variations from the code within Royal Ten Cate

concern primarily the size of the company. These variations and the

associated interpretations better reflect the company’s operating

methods. The variations applied by TenCate can be viewed on the

company’s website.

INDEPENDENCEThe Supervisory Board considers all its members to be independent

within the meaning of best-practice clause III.2.2 of the Corporate

Governance Code.

no shares or options of Royal TenCate are held directly or indirectly by

any members of the Supervisory Board.


. Report of the Supervisory Board

The members of the Executive Board were not granted any salary

increase in 2013, nor any variable salary component (in respect of the

2012 financial year).

The full report can be found on the website under Corporate

Governance documents. The remuneration of the Executive Board

appears in note 54.2 on page 142 of this report.

COMPOSITION OF THE EXECUTIVE BOARDMr Cornelese left the company on 1 September. We are grateful to Mr

Cornelese for his effort and commitment on behalf of TenCate over the

past years.

After extensive deliberations and assessments of various candidates,

the Supervisory Board, in consultation with the Executive Board,

resolved to propose Mr Eef Bos for appointment as a member of the

Executive Board and as CFO for a term of four years at the General

Meeting of 17 April 2014. Mr Bos was appointed as Corporate director

of Finance with effect from 1 July 2013, in which capacity he also

performed the duties of CFO on a temporary basis.

The Supervisory Board wishes to express its sincere gratitude to the

management and employees of TenCate for their commitment and

performance during 2013.

Almelo, 26 February 2014

Supervisory Board

J.C.M. Hovers, Chairman

p.p.A.I. deiters, Vice-Chairman

E. ten Cate

p.F. Hartman

REMUNERATION POLICYPrinciples of the remuneration policy

The Supervisory Board of Royal Ten Cate applies a remuneration policy

in respect of the company’s management based on the following

principles:■■ The remuneration of the management must enable the company to

attract and retain senior managers;■■ The remuneration policy must conform to the company’s corporate

governance policy; ■■ The remuneration must reflect the strategic and financial objectives

and be to a large extent performance-oriented, with a proper

balance between short- and long-term results and objectives; ■■ The remuneration must not include any incentives which give rise

to behaviour promoting personal interests in conflict with the

company’s interests;■■ An annual scenario analysis is drawn up with regard to the possible

outcomes of the remuneration policy.

Remuneration report

The 2013 remuneration report, including the plan to develop a new

remuneration policy, has been published on the company’s website

under Corporate Governance documents.

The posts of CEO and CFO of Royal Ten Cate were based on Hay levels

in 2013. In the case of the CEO, Hay level 30 is applied. The variable

remuneration component payable for target-level performance is 50%

of the fixed salary. This is also the maximum level. Under the prevailing

scheme, Mr de Vries was granted 60,000 options with an exercise

price of € 17.73.

For the CFO in office until 1 September 2013, a fixed annual salary at

Hay level 26 was applied, with a variable salary component up to a

maximum of 40% of the fixed salary. Under the prevailing scheme,

Mr Cornelese was granted 40,000 options with an exercise price of

€ 17.73. The option rights granted to Mr Cornelese lapsed upon his

departure from the company.


Corporate governance

The Supervisory Board and the Executive Board endorse the corporate

governance principles in the form currently applicable to dutch listed

companies operating internationally.

The corporate governance structure is based on the voluntary

application of the two-tier board structure. The main elements of this

are:■■ The financial statements are adopted by the General Meeting of

Shareholders;■■ Supervisory directors are appointed by the General Meeting of

Shareholders on the basis of nominations by the Supervisory

Board. The profile of the members of the Supervisory Board is first

discussed at the General Meeting of Shareholders at the time of

adoption and on each subsequent modification;■■ The General Meeting of Shareholders and the Central Works

Council can recommend persons to the Supervisory Board for

nomination as supervisory directors;■■ With an outright majority of votes, the General Meeting of

Shareholders representing at least one-third of the issued share

capital may reject the nomination by the Supervisory Board;■■ The members of the Executive Board are appointed by the General

Meeting of Shareholders on the basis of a binding nomination by

the Supervisory Board.

Full corporate governance documentation can be found on the TenCate

website.


TenCate rolls out orange carpet for embassies

The embassies of the netherlands in Abu dhabi,

Beijing, london, Oman, paris, Tokyo and Washington

rolled out an orange carpet on Tuesday 30 April 2013.

The dutch embassies in Indonesia, Russia and dubai

and the consulate-general in Hong Kong followed

soon afterwards. The occasion was the coronation

on 30 April of that year. Each carpet was hand-

made by GreenFields using textured polyethylene

monofilament orange and white synthetic turf fibres

from TenCate Grass. The two-by-four-metre carpet

is suitable for outdoor use, as the synthetic turf

fibre is UV-stabilised and colourfast. Each carpet

bears the coat of arms of the dutch government.

These diplomatic representations have taken on an

economic role, so there is increasing contact with the

embassies and consulates general in these countries.

67TenCate annual report 2013 | pERFORMAnCE |

Report of the Executive Board 68

Sector revenues and results 72

PERFORMANCEIn Performance the company provides a commentary on the results achieved during the reporting year

68 | TenCate annual report 2013 | pERFORMAnCE

REVENUESRevenues declined by 4% to € 1,012 million in 2013 (organic decrease

of 3%). The currency effect (particularly the decrease in the value of

the US dollar against the euro) had a negative impact of 2% on

revenues. The effect of acquisitions / divestments amounted to 1%.

The decrease in revenues was almost entirely attributable to the lower

revenues generated in defence markets. The continued decline in

demand from the US Army for TenCate defender™ M products was

largely responsible for this decrease. The focus on growth in private

markets resulted in a 7% increase in these market segments. Growth

was achieved particularly in the TenCate Advanced Composites market

Report of the Executive Board

2013 ANALYSIS BY SECTOR

in millions of euros

2012* 2013 difference organicof which currency

acquisi-tion/

divestment

Net revenues

Advanced Textiles & Composites 460.6 427.8 – 7% – 8% – 2% 3%

Geosynthetics & Grass 518.7 517.8 0% 2% – 2% 0%

Other activities 69.7 66.4 – 5% – 3% – 2% 0%

1,049.0 1,012.0 – 4% – 3% – 2% 1%

Operating result before amortisation (EBITA)

Advanced Textiles & Composites 23.5 21.3 – 9% – 10% – 3% 4%

Geosynthetics & Grass 31.5 27.9 – 11% – 10% – 1% 0%

Other activities – 4.9 – 0.5 90% 91% – 1% 0%

50.1 48.7 – 3% – 3% – 2% 2%

Amortisation – 14.5 – 13.1

Operating result (EBIT) 35.6 35.6 0%

net financial expenses – 12.1 – 10.1

Result before profit tax 23.5 25.5 9%

profit taxes – 8.2 – 8.5

Results from ordinary operations after profit tax 15.3 17.0 11%

net result from associated companies – 0.3 0.1

non-controlling interest – 5.9 – 1.9

Net income 20.9 19.0 – 9%

* Adjusted for accounting policy change in pension system.

EBITA margins 2012 2013

Advanced Textiles & Composites 5.1% 5.0%

Geosynthetics & Grass 6.1% 5.4%

Consolidated 4.8% 4.8%


group. Revenues in the industrial market for protective fabrics also

developed positively.

Revenues in the Advanced Textiles & Composites sector declined by

7% to € 428 million. In organic terms, these revenues declined by 8%.

The currency effect was –2%. Acquisitions and divestments,

particularly the acquisition of Amber Composites at the beginning of

2013, increased revenues by 3%.

Revenues in the Geosynthetics & Grass sector remained almost

unchanged overall. In organic terms, revenues rose by 2%. The

currency effect was –2%. The Grass group recorded slight growth,

whereas revenues in the Geosynthetics group fell short of

expectations. The Asian markets showed the first decrease in demand

for many years. There was also a decline in large public-sector

infrastructure projects in these markets. After an initially mediocre

start to the year due to the persistent winter weather, revenues in the

United States and Europe picked up during the year.

Revenues from other activities declined by 5% (organic –3%; currency

effect –2%). Xennia Technology, under a partly new management

team, reviewed its business portfolio in 2013, switching the focus to

activities generating high added value. This resulted in lower revenues

but a strong improvement in results.

TenCate Enbi’s revenues held steady. The company was successful in

obtaining new qualifications.

OPERATING RESULT BEFORE AMORTISATION AND NET PROFITCost savings were insufficient to compensate fully for the further

decline in defence revenues. The operating result before amortisation

of intangible assets (EBITA) decreased to € 48.7 million. This amount

includes € 5.9 million of non-recurring costs, mainly in TenCate

protective Fabrics.

normalised EBITA, taking into account the aforementioned

non-recurring costs, amounted to € 54.6 million (2012: € 58.1 million

before € 8.0 million of non-recurring costs).

EBITA in the Advanced Textiles & Composites sector declined by 9% to

€ 21.3 million (2012: € 23.5 million). In organic terms, EBITA declined by

10%. The currency effect was –3%. The effect of acquisitions and

divestments amounted to +4%. ■■ The further decline of revenues from TenCate defender™ M had a

considerable impact on the result of the TenCate protective Fabrics

market group.■■ despite the decline in revenues from vehicle armour projects, the

TenCate Advanced Armour market group achieved higher EBITA as

a result of cost measures. ■■ TenCate Advanced Composites achieved a higher result due to a

good performance in the space market.

EBITA in the Geosynthetics & Grass sector declined by 11% to € 27.9

million. In organic terms, EBITA declined by 10%. The currency effect

was –1%.■■ The decrease in EBITA was mainly caused by the TenCate

Geosynthetics market group. The year got off to a difficult start due

to persistent winter weather. In Asia, revenues declined due to a

decrease in the project market (infrastructure). Higher prices in the

commodities market also had a temporary negative effect on

margins.■■ The improvement in results in the Grass group stagnated due to

temporarily high marketing costs associated with the market

launch of new synthetic turf systems and volatile raw material

costs.

EBITA in the Other Activities sector improved considerably to –€ 0.5

million (2012: –€ 4.9 million). This improvement in results was mainly

attributable to the change of strategy at Xennia Technology.

EBIT remained steady at € 35.6 million in 2013.

The Group’s net profit amounted to € 19.0 million in 2013 (2012: € 20.9

million). The decrease in profit was mainly due to the loss of a

considerable part of the defence revenues. These revenues have

above-average margins due to the high-quality nature of these

products.


. Report of the Executive Board

WORKING CAPITALWorking capital decreased by € 7.0 million in 2013 compared to 2012,

as a result of a decrease in revenues. The working capital measured in

days remained unchanged at 93.

in millions of euros 2012 days 2013 days

Balance at end of

previous year 277.1 93 237.4 93

Acquisitions /

(divestments) 0.4 –1.2

Organic increase /

(decrease) –39.3 7.9

Exchange rate differences –0.8 –13.7

Balance at end of year 237.4 93 230.4 93

INVESTMENTSA restrained investment policy was conducted in 2013. Total

investments in 2013 amounted to € 14.4 million (2012: € 16.6 million).

The level of investments rose considerably in the second half of the

year compared to the first half.

in millions of euros 2012 2013

Tangible fixed assets 12.0 9.8

development costs and other intangible assets 4.6 4.6

16.6 14.4

The main investment projects in 2013 were:■■ development costs of TenCate Advanced Armor USA: TenCate

ABdS™ active blast countermeasure system■■ TenCate Grass: texturisation capacity■■ TenCate protective Fabrics USA: replacement of machine■■ ERp systems of TenCate Advanced Composites and TenCate

Advanced Armor USA.

COMPOSITION OF THE COMPANYThe following companies were acquired and interests increased in

2013:■■ TenCate acquired Amber Composites ltd of the United Kingdom in

January 2013. Amber is a British producer of thermoset composites

for industry and the automotive market.■■ The interest in TigerTurf in TenCate Grass was increased from 80%

to 100% in February 2013.■■ The interest in Xennia Technology was increased from 78.95% to

90.88% in May 2013.

PERSONNEL COSTSThe number of staff years (excluding temporary personnel) decreased

from 4,454 to 4,256 at the end of 2013. The largest reduction was in

TenCate protective Fabrics. personnel costs amounted to € 217.6

million (2012: € 215.4 million).

TAXESThe effective tax rate decreased from 34.9% to 33.3% in 2013. The

decrease is due particularly to lower losses in countries in which no

full deferred tax assets are recognized.

The decrease in the weighted average tax rate from 31.1% to 30.6% is

due in particular to changes in the various countries’ share in the

result before profit tax. Compared to 2012, a smaller share of the

result was generated in countries with relatively high tax rates in

2013.


CASH FLOW AND FINANCINGThe cash flow from operating and investing activities decreased to

€ 42.6 million in 2013. This was mainly due to the lower movement in

working capital compared to 2012.

in millions of euros 2012 2013

Result after profit tax and associated companies 15.0 17.1

depreciation 37.1 34.8

Amortisation 14.5 13.1

Other items 13.7 18.7

Cash flow before increase/decrease in working

capital 80.3 83.7

Increase/decrease in working capital 38.3 13.5

Interest paid/taxes paid –16.8 –22.1

Cash flow from operating activities 101.8 75.1

Investments –16.6 –14.4

divestments 0.3 0.8

Acquisitions –15.7 –22.2

deconsolidation – 4.2

Other items –1.4 –0.9

Cash flow from operating and

investing activities 68.4 42.6

TenCate in strategic alliance with BASF and Owens Corning

BASF, Owens Corning and TenCate are jointly

focusing on the large-scale use of thermoplastic

composites in the automotive industry. Collaboration

in the value chain is necessary for two reasons: to

develop and introduce automated process

technologies in this industry and to set standards

in new materials. The aim is to develop optimum

solutions in thermoplastic composites for mass

production in the automotive industry. Auto

manufacturers are increasingly interested in

industrial applications for light, strong, energy-

efficient and cleaner solutions, such as composites.

Composites contribute to weight-saving in vehicles

and hence lower CO2 emissions.


Advanced Textiles & Composites sector

19countries protect army units with

TenCate Defender™ M

4-kilolightweight

aircraft seat withTenCate Cetex® technology

TenCate innovates actively in more than

15 knowledge networks


KEY FIGURES OF ADVANCED TEXTILES & COMPOSITES

in millions of euros unless stated otherwise 2009 2010 2011 2012 2013

Revenues 397.3 448.4 538.4 460.6 427.8

Operating result before amortisation (EBITA) 31.7 43.8 70.3 23.5 21.3

EBITA margin (%) 8.0 9.8 13.1 5.1 5.0

Operating result (EBIT) 27.0 38.6 64.7 18.5 15.0

Investments 4.2 4.5 8.3 9.4 7.8

depreciation and amortisation 14.2 15.2 15.3 15.7 16.6

net invested capital (year-end) 234.0 281.7 314.3 286.5 284.6

number of staff years (year-end) 1,340 1,519 1,582 1,697 1,542

EBITA as percentage of average net invested capital 12.0 16.7 23.6 7.5 7.9

Revenue growth of 12% was recorded in the industrial market for

protective fabrics (TenCate Tecasafe® plus). The strengthening of

marketing and sales in the TenCate protective Fabrics market group,

focused on the end-markets, began to deliver benefits.

The TenCate Advanced Composites market group recorded revenue

growth of 16% in 2013. The market for space composites showed

strong growth and TenCate made good progress with composites for

the latest generation of aircraft.

After the successful acquisition of Amber Composites in January 2013,

the first successes were recorded in the development of composites

for the Formula 1 market and the automotive industry. Important

commercial and strategic alliances were also announced in this

market. TenCate is confident that demand for new material solutions

will increase strongly in the future.

TenCate Advanced Armour recorded increased revenues in the market

for personal ballistic protection (antiballistic vests, inserts, helmets

and screens). The market group developed a new portfolio of

lightweight protection products aimed at the police market (law

enforcement).

Sustainable innovation is one of the pillars underpinning TenCate’s

strategy. Technological progress was made in July on the basis of the

defined technology roadmap with the commissioning of the first

machine based on digital inkjet technology for TenCate protective &

Outdoor Fabrics.

REVENUES AND RESULTS OF THE ADVANCED TEXTILES & COMPOSITES SECTORThe Advanced Textiles & Composites sector recorded a 7% decline in

revenues to € 427.8 million in 2013 (2012: € 460.6 million). The sector’s

operating result before amortisation (EBITA) recorded a larger

decrease in relative terms, declining by 9% to € 21.3 million. The EBITA

margin of the Advanced Textiles & Composites sector amounted to

5.0% (2012: 5.1%). EBITA as a percentage of the average net invested

capital amounted to 7.9% (2012: 7.5%).

The decrease in revenues was mainly due to lower revenues from the

defence market. The revenues of the Advanced Textiles & Composites

sector in this end-market declined by 40% in 2013. The decline was

reflected in the lower revenues from TenCate defender™ M and the

lower revenues from armour composites for vehicles in Europe and the

United States. lower government expenditure had a negative impact

on defence budgets in the countries of importance to TenCate. In the

United States, the defence budget was even subjected to an automatic

cut in 2013 after prolonged uncertainty surrounding the government

budget. This market development was unrelated to the company’s

continued strong market positioning and the positive developments in

the TenCate ABdS™ active blast countermeasure system. demand for

new developments in vehicle protection will ultimately be high, partly

having regard to recent experiences in war zones. TenCate is therefore

well positioned for upgrade and new vehicle programmes.


. Advanced Textiles & Composites sector

Revenues from TenCate Tecasafe® plus rose strongly particularly in

Asia and the EMEA region. The strengthening of the sales

organisation, focused on new markets, led to a strengthening of the

market position and revenue growth.

In Asia, the activities of the TenCate-Union protective Fabrics joint

venture in Thailand were discontinued, with a negative impact on

revenues and results.

The relatively low cotton price in 2013 resulted in a large supply of

competing finished cotton products in markets of relevance to

TenCate. The lower cotton price had a negative impact on the

profitability of the entire TenCate protective & Outdoor Fabrics market

group. Finished cotton products provide less protection and have

shorter service lives. End-users often purchase them purely on the

basis of price.

PERFORMANCE OF THE TENCATE PROTECTIVE FABRICS & OUTDOOR FABRICS MARKET GROUPThe revenues and profitability of the TenCate protective Fabrics &

Outdoor Fabrics market remained under pressure throughout the year,

particularly as a result of lower revenues in the defence market in the

United States and a relatively low cotton price in the world market.

The TenCate protective Fabrics & Outdoor Fabrics market group

generated 63% of its revenues in the Americas. The American defence

market, which is immensely important to TenCate, faced automatic

budget cuts (sequestration) at the beginning of 2013, resulting in a

7.9% cut in the defence budget for that year. The sequestration had a

major negative impact on US Army demand for TenCate defender™ M

after the first quarter. Although a large number of countries have

qualified TenCate defender™ M and placed initial or repeat orders,

sales in these new markets were unable to reverse the overall sharp

decline in volumes.

The TenCate ABdS™ active blast countermeasure system is in the test

phase. In this context, modest revenues were recorded.

Business development activity, particularly in digital printing,

automotive composites and the TenCate ABdS™ active blast

countermeasure system, led to certain costs being incurred in 2013

without any significant countervailing revenues. Some of the business

development costs were not capitalised and therefore depressed the

EBITA of the Advanced Textiles & Composites sector. These

developments are nevertheless expected to make an important

contribution to results in the future.

TENCATE PROTECTIVE FABRICS & OUTDOOR FABRICS

ProtectiveFabricsArmourCompositesSpace /AerospaceComposites

61%17%

22%

56%

16%

28%

2012 2013

IndICATIVE BREAKdOWn OF REVEnUES In THE AdVAnCEd

TEXTIlES & COMpOSITES SECTOR

GEOGRApHIC REVEnUES

REVEnUES By CUSTOMER GROUp

(IndICATIVE)

REVEnUES By End-MARKET

(IndICATIVE)

America

EMEA

Asia Pacific63%

6%

31%2013

Governmental

Non-governmental

39%

61%

2013

Personal protectionDefence

Sport & leisure74%

20%

6%

2013


DEFENSE & TACTICALTenCate’s revenues in the defense & Tactical end-market decreased

sharply in 2013, despite a good first quarter, as a result of contracting

defence expenditure, mainly in the United States and Europe. There

nevertheless remains an important focus on the protection of military

personnel in the defence industry. TenCate defender™ M, TenCate’s

most important protective fabric for the defence industry, has

patented, inherently heat and flame-resistant characteristics which

will not wash out or wear off, combined with cost-efficient pricing.

European defence budgets reached their lowest level in the last 10

years in 2013. In the wake of the financial crisis, European

governments were faced with the need to make sustained spending

cuts. The number of countries which have qualified TenCate

defender™ M rose further in 2013. An important breakthrough was

achieved in South America with the order for the Colombian air force

in collaboration with Complementos Industriales ltda.

The number of armed forces which have included TenCate

defender™ M in their standard personal equipment also increased in

2013. TenCate has supplied TenCate defender™ M to 19 different

countries. The list of wearing trials by different international armed

forces remains long, but growth is expected to be moderate due to the

geographic fragmentation of the market. The US Army nevertheless

remains the largest potential market, in view of its size.

EMERGENCY RESPONSERevenues in the emergency response end-market remained at a level

comparable to those of the previous year in 2013. The firefighting

market in the United States, traditionally the most important market

for TenCate in this market segment, remained sluggish as a result of

savings, mainly by local authorities. With the TenCate Tecasystem™

and TenCate Tecashield®, TenCate supplies all components of

firefighters’ clothing: the outer layer, the moisture-regulating inside

layer, thermal protection fabric, thermal lining and reinforcement

fibres. TenCate is responding to the government cost-cutting trend by

offering cost-effective products with comparable or higher protection

than more expensive traditional products.

TenCate is the market leader in the firefighting market in the United

States. Together with European partners, TenCate is also mobilising

this expertise to raise the level of protection for firefighters in other

geographic markets. For example, in addition to successes elsewhere

in Europe, an order was received at the beginning of 2013 from two

fire brigades in the netherlands involving the use of TenCate Millenia

light™ from the TenCate Tecashield® collection. As part of end-user

marketing, various study days were organised to inform fire brigades

about the possibilities offered by TenCate in this market.

progress was also made in Asia, where an order was won in Thailand

from the Bangkok fire brigade. TenCate maintained its strong position

with the Australian Wildland firefighters. An order was also received

in Kuwait for the supply of protective fabrics for 20,000 new uniforms

for the brigade’s officers and firefighters. The use of TenCate

Tecasafe® plus by firefighters in Kuwait demonstrates the growing

demand for this product outside the industrial market. Wearing

comfort is an important decision factor, particularly in the heat of the

desert.

TenCate’s portfolio of protection products is so broad that it can meet

specific local conditions and market requirements worldwide.

dEplOyMEnT OF MIlITARy pERSOnnEl By THE UnITEd STATES

Afganistan

Iraq

0

50

100

150

200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Iraq Afghanistan

x 1,000

Source: US dept. of defense



Sales activity for TenCate Tecasafe® plus was also intensified in the

Asian markets, where revenues grew mainly in the oil and gas

industry.

OUTDOOR TenCate Outdoor Fabrics develops and produces tent cloth and

awnings and operates particularly in the European leisure and tent

hire market. TenCate focuses particularly on the upper market segment

and the professional market. Thanks to end-user marketing combined

with TenCate’s strong brand position, strong revenue growth was

achieved in 2013.

Innovations based on digital production processes are intended to

introduce a completely new customer-specific business concept

enabling the entire value chain to undertake a major renewal process.

This is reflected not only in new products, but also a new customer

approach, potential for e-commerce and mass customisation.

SUSTAINABILITYThe CSR performance ladder certificate of the TenCate protective

Fabrics market group in the netherlands was extended at level 3 in

2013. A series of stakeholders from the value chain were involved in

an ongoing dialogue at the time of implementation in 2012. discussions

also took place on customer satisfaction and regular contacts were

maintained concerning good practice in 2013. The required actions

were defined by the management. The plan-do-Check-Act cycle is

being implemented for three years in respect of all 33 CSR indicators.

These indicators have been classified under one of the seven key CSR

themes in the ISO 26000 guideline. For many years this market group

has operated a code of conduct to be signed by foreign suppliers in the

value chain, aimed at combating child labour, breaches of human rights

and corruption as well as to ensure compliance with local laws and

regulations. This is fully in line with IlO conventions and Un

declarations. The validity of the signed declarations was confirmed on

site with a number of suppliers in countries such as pakistan. no

breaches of this TenCate protective Fabrics code of conduct were

recorded in 2013.

INDUSTRIAL SAFETY AND WORKWEARThe Industrial Safety market is the most important end-market of the

TenCate protective Fabrics and Outdoor Fabrics market group. The

products provide protection for personnel in industry. TenCate’s

revenues in this end-market declined slightly in 2013, despite a

growing worldwide market share for TenCate Tecasafe® plus in this

market and new product launches.

The strengthening of the sales organisation is one of the factors

underpinning the success of TenCate Tecasafe® plus. product

characteristics such as the wearing comfort, durability and safety of

this protective fabric are usually seen as key advantages by industrial

customers. The main industries in which TenCate Tecasafe® plus is

used for personnel protection are the oil and gas, chemical,

petrochemical and metal industries.

TenCate supplies composites for Airbus A350 XWB

The Airbus A350 XWB made its first official flight on

Friday 14 June 2013. This aircraft comprises 53%

composites. By comparison, the A340 and the A380

comprise 15% and 23% composites respectively.

The fuselage of the Airbus A350 is held together with

thousands of clips made of TenCate thermoplastic

composites. Fokker Aerostructures manufactured the

wing valves. There are five different versions of the

A350 family, ranging in length from 60.5 to

73.8 metres. The wing span is 64.0 metres.


TenCate protective Fabrics in nijverdal started using the 5S lean

management method for optimum quality in processing in 2013. This

will lead to further quality improvements, shorter completion times,

cost reductions and increased safety in this market group. The

‘Excellence performance’ project has led to a new logistical

management concept which will ultimately contribute to lower

inventories. Eco-Tl lighting was also installed, the compressor air was

reduced and the steam traps were optimised.

The first digital inkjet machine for printing and finishing entered

service in June 2013, initially for the awning products of TenCate

outdoor fabrics. This innovative production method delivers a steep

reduction in energy, water and chemical consumption.

The introduction of environmentally responsible fibres has greatly

reduced the antimony content of wastewater. This is beneficial for

wastewater processing within TenCate. These environmentally

responsible fibres were successfully incorporated in numerous

products in the industrial clothing market in 2013 under the TenCate

Tecasafe® plus brand name. A concept was developed with partners

during the past year for the recycling of fibres as part of the ‘closing

the loop’ initiative.

The company emergency personnel in the nijverdal market groups

were trained and given additional instruction where necessary last

year. The combined production sites in nijverdal-noord have been

using green electricity since the beginning of 2013, considerably

reducing the CO2 footprint of these sites. These dutch TenCate

businesses jointly conducted an employee satisfaction survey and an

employee health survey in 2013. Action points were defined on the

basis of the results. An age-aware personnel policy was also jointly

formulated. These business units also jointly played an active part in

the TenCate Talent program, as part of the corporate HR policy in the

TenCate people program. Finally, these market groups in nijverdal

organised wearing trials for the purchase of new industrial clothing for

all these production sites.

Ballistic protection for Daimler Zetros GLF

TenCate Advanced Armour has been selected as a

supplier to daimler AG for the ballistic protection of

the daimler Zetros GlF. Hundreds of these trucks are

being supplied to the German army. TenCate

Advanced Armour developed the kits (a pack of

protective panels) jointly with daimler. This resulted

from the strategic decision to supply to major

customers in the automotive industry. The protective

panels supplied by TenCate Advanced Armour were

fixed to the front and sides of the cab. The market

group also supplied spall-liners for the interior of the

cab to protect the crew against splinters from the

armour caused by projectile strikes. Spall-liners add

only minimal weight to the vehicle and thus have

limited impact on the manoeuvrability, speed and

operating range.



PERFORMANCE OF THE TENCATE ADVANCED COMPOSITES MARKET GROUPThe TenCate Advanced Composites market group recorded revenue

growth of 16% in 2013, coupled with increasing profitability. The

space market was the principal pillar supporting this growth. The

increase in revenues is due partly to the strategic acquisition of the UK

company Amber Composites, which was announced in January 2013.

Amber Composites is a producer of thermoset composites for the

industrial and automotive markets. The acquisition of Amber

Composites led to an acceleration of activities in the European market

in the field of thermoset composites, alongside the existing production

of thermoplastic composites. TenCate had hitherto been active in

thermoset composites predominantly in the United States. The supply

lines to users of these materials have to be short, so TenCate had an

interest in starting production additionally in Europe. The acquisition

of Amber Composites therefore represents an important geographic

expansion and brings greater balance to TenCate’s portfolio, in terms

of geography, technology and product portfolio. The results of Amber

Composites in 2013 were in line with forecasts made at the time of the

acquisition.

A slight decline in revenues was recorded in the market for composites

for the aviation industry. After a delay in the first half of the year as a

result of technical problems surrounding the market launch of aircraft,

revenues improved in the second half.

The market for space composites continued to develop strongly.

TenCate occupies a strong position in this market, particularly in the

United States.

progress was made in the development of the market for automotive

composites with the announcement of various joint ventures. The

development of new materials and new production processes will take

a number of years to generate significant revenues in this market.

Revenues in this segment began to flow in the Formula 1 and sports

car markets in particular in 2013. TenCate can continue to build on

these initial market positions to achieve the intended growth in this

market segment.

AEROSPACE COMPOSITESRevenues from composites for the aviation industry decreased in 2013

as a result of temporary delays in the value chain in the first half of the

year. After lengthy delays in supplies for the Airbus A380 and A350

and the Boeing 787 in 2012 and early 2013, revenues increased in the

second half of the year.

The Airbus A350 is of great importance to TenCate, in view of the

quantity of material used in a single aircraft. TenCate supplies material

for thousands of clips to connect the fuselage sections. The successful

test flights of the Airbus A350 since the summer of 2013 and the

Airbus order book currently comprising more than 800 aircraft

(combined A350 800/900/1000 order book) provide grounds for

confidence in future revenues for this type of aircraft for TenCate.

TENCATE ADVANCED COMPOSITES

GEOGRApHIC REVEnUES


(IndICATIVE)


(IndICATIVE)

America

EMEA

Asia Pacific63%

8%

29% 2013Governmental

Non-governmental

22%

78%

2013PersonalprotectionMobility

99%

1%

2013


Composites were supplied for the Falcon 9 rocket for SpaceX. The

Falcon 9 is a two-stage rocket developed by SpaceX and built for the

safe and reliable transportation of satellites and the dragon space

capsule. SpaceX is the first commercial company to reach the

International Space Station (ISS). A thermoset composite frame was

produced for the heat shield on the Curiosity Mars lander. Composites

were supplied for the Mars Atmosphere and Volatile Evolution

(MAVEn) space probe for lockheed Martin.

AUTOMOTIVE COMPOSITESThe introduction of thermoplastic composites in the automotive

industry is an important business development for the future in the

TenCate Advanced Composites market group. Under pressure from the

European Commission, CO2 emission standards have to be reduced by

40% in 2020 compared to the 2007 level. This legislation compels

automobile manufacturers to seek weight savings. Compared to

traditional materials, composites are 30-50% lighter and therefore

ideal for achieving such savings.

The acquisition of Amber Composites has given TenCate accelerated

access to the automotive market, particularly for sports cars and

motor racing. Thermoset composites are used almost exclusively in

these markets. In contrast to these materials, thermoplastic

composites, a technology in which TenCate has occupied a leading

position in the aviation market for over 30 years, are ideal for use in

serial production. A major obstacle which must be overcome is the

adaptation of the product chain for structural and other components,

since companies are not yet geared to processing this type of material.

In March 2013, BASF and TenCate welcomed the glass fibre

reinforcement manufacturer Owens Corning as a partner in the

strategic alliance for thermoplastic automotive composites. The aim of

this collaboration is to develop optimum solutions in thermoplastic

composites for mass production in the automotive industry. This

solution-focused approach from different technological perspectives is

necessary in order to support and supervise the introduction of fibre-

reinforced thermoplastics in all parts of the automotive industry.

The Airbus A350 comprises over 50% composites. By comparison,

composites in the A340 and A380 make up 15% and 23% respectively.

The next generation of aircraft is expected to have an even higher

percentage of composites. The further increase in the use of

thermoplastic composites in the aircraft industry, particularly for

Airbus, was emphasised with the extension of the Thermoplastic

Affordable primary Aircraft Structure (TApAS) consortium in June.

This joint venture linking eight dutch companies and institutions in the

aviation industry produced an innovative fuselage panel for Airbus

made of TenCate Cetex® thermoplastic composites.

A long-term agreement was signed with Fokker Aerostructures in June

for the supply of thermoplastic composites. The material is being

supplied to Fokker for use in the production of components for Airbus,

Boeing, Gulfstream, dassault and AgustaWestland. new initiatives

were developed in 2013 outside the long-term contracts for the

construction of the aircraft in which TenCate has been involved since

the design stage. The ice protection panels for the Airbus A400 will be

manufactured using TenCate Cetex®.

The revenues of TenCate’s production facilities in the United States

increased in 2013. The increasing availability of communication

services during passenger flights, particularly in the United States, led

to high demand for radomes manufactured from thermoset composites.

The order book for the Boeing 787 (787-8/9/10), which is important to

TenCate, now exceeds 900 aircraft.

In China, further steps were taken in collaboration with local parties in

the aviation industry in the development of thermoplastic composites

in new Chinese-made aircraft. At the beginning of 2014, a marketing

and development agreement was signed with Shanghai leadgo-tech

to support the market for composites for the Chinese aviation industry.

SPACE COMPOSITESdemand from the space industry increased strongly in 2013. From its

production site at Morgan Hill in the United States, TenCate supplies a

wide range of advanced composites for the space industry, including

high-quality prepregs for space structures to moulding compounds for

use in fibre-reinforced injection-moulded components.



In September 2013 TenCate signed an initial co-operation agreement

with Kringlan Composites to develop solutions for the manufacture of

components based on thermoplastic composite technology. The main

development which Kringlan Composites has initiated at present is the

design and development of a fully carbon-reinforced composite wheel

for vehicles in the upper segment. Such a wheel has a great weight-

saving effect and reduces the unsprung mass of the vehicle.

The co-operation was also entered into to support the market launch.

The product was still in the demonstrator phase at the end of 2013.

Kringlan Composites expects market release in 2014, after completion

of all the necessary safety tests by automobile manufacturers.

According to Kringlan Composites, limited serial production is possible

approximately one year after market release. The solution developed

by Kringlan will be the first series-produced composite wheel. It may

also mark the introduction of TenCate thermoplastic composites in

serial production in the automotive sector. The wheel currently fulfils

standard safety and integrity requirements in terms of material stress.

TenCate is also involved in a number of other projects (demonstrators)

which should make their way into new types of vehicle in the future.

INDUSTRIAL COMPOSITESThe uses of thermoset and thermoplastic composites outside the

above areas of application developed positively in 2013. progress was

made in the use of thermoplastic composites for pipelines in the oil

and gas industry. The first steps were taken in the market for consumer

electronics. Composites were also supplied to the sports market

through pMC Baycomp, which was acquired in 2012.

Tooling is also an attractive market for composites. TenCate focuses

on the production of composites for moulds (tooling) used in a wide

range of manufacturing processes, including in the aircraft and

automotive industries. A joint venture was entered into with a local

partner in China in 2013. An alliance was entered into with 3M in the

United States for the American tooling market.

Growth in the industrial composites market is expected to continue at

a rapid pace from a still modest level in the TenCate portfolio.

JEC 2013 Innovation Award

In March 2013 the prestigious JEC Innovation Award

was presented to the partners Fokker Aerostructures,

AgustaWestland, TenCate Advanced Composites

and Ticona GmbH at the JEC Composites Show

in paris for the first horizontal tailplane made of

thermoplastic composites for the AgustaWestland

AW 169, a new-generation helicopter. The value of

the innovation lies primarily in a 15% weight saving

compared to other composite solutions, resulting

in lower nOx and CO2 emissions and lower fuel

consumption.

The development of the horizontal tail began in

July 2011. Four AW169 helicopters were equipped

with a new horizontal tail towards the end of 2012.

The weight saving was achieved through the rigidity

of the thermoplastic material. Fokker has designed

and developed this integrated solution as a single-

component torsion box. The production time and

costs were reduced by the use of simple preforms.

AgustaWestland expects the new AW169 to be

highly successful in the business market.


TenCate was selected by Embraer for the design of the ballistic

protection for the Embraer A-29 Super Tucano military aircraft.

TENCATE ABDS™ ACTIVE BLAST COUNTERMEASURE SYSTEMA major focus of the development of new product-market-technology

combinations is the TenCate ABdS™ active blast countermeasure

system. This system is a cost-effective solution which can dramatically

reduce the impact of a roadside bomb explosion.

Good progress was made with the development of this system during

the reporting year. In September 2013 a long-term agreement was

signed with the US Army Research, development and Engineering

Command (RdECOM) for collaboration in research and development

(CRAdA).

TenCate presented the TenCate ABdS™ active blast countermeasure

system at the AUSA conference in October.

TenCate is positioning the TenCate ABdS™ active blast

countermeasure system as a survivability solution, potentially in

combination with the existing production of vehicle armour. Orders

being placed with TenCate at present are related to specific testing

programmes. There will be continued demand from armed forces for

improved vehicle protection in the years ahead. new generations of

army vehicles will incorporate lighter solutions than traditional vehicle

armour.

PERFORMANCE OF THE TENCATE ADVANCED ARMOUR MARKET GROUPThe TenCate Advanced Armour market group recorded a 16% decline

in revenues in 2013. Government spending on vehicle armour in

particular was under pressure during the reporting year. This market is

historically the most important market for TenCate Advanced Armour.

TenCate believes in the long-term potential of the market for vehicle

armour, potentially in combination with the TenCate ABdS™ active

blast countermeasure system (survivability solution).

TenCate Advanced Armour was able to offset declining market

demand for vehicle armour in part against increased revenues in the

market for personal protection (law enforcement). The collaboration

with dSM dyneema was intensified for the launch of innovative

products and in the provision of personal protection solutions.

Sales activity was intensified on a geographic level. TenCate Advanced

Armour opened a new marketing and sales office in Singapore to serve

the Asian market more effectively. Since then, new orders have been

received from shipbuilders and vehicle manufacturers in Asia. A three-

year contract was announced with a shipbuilder in Singapore in

September 2013 for the armouring of seagoing vessels for the Middle

East.

The market for aerospace armour solutions developed in line with

expectations. Supplies for Eurocopter recovered somewhat after a

cautious start in 2013.

In the Brazilian market, good progress was made with Embraer.

Aerotron Brazil, the main contractor for the Embraer KC-390 project,

selected TenCate as its technical and industrial partner and as a

supplier of materials and special processes. In november 2013

TENCATE ADVANCED ARMOUR

GEOGRApHIC REVEnUES


(IndICATIVE)


(IndICATIVE)

America

EMEA

Asia Pacific

46%

1%

53%2013

Governmental

Non-governmental

98%

2%

2013PersonalprotectionDefence

50% 50%2013



SUSTAINABILITYThe CSR performance ladder certificate of the TenCate Advanced

Composites market group in the netherlands was continued on level 3

at the end of 2013. Stakeholders in the value chain were involved in

the introduction of this CSR management system and regular

consultations took place on good practice last year. The plan-do-

Check-Act cycle is also being implemented in this market group for

three years in respect of all 33 CSR indicators.

After the previous introduction of lean manufacturing for maximum

value generation for customers with as little waste as possible, the 5S

approach continued to be implemented in 2013. This approach

comprises the complete separation, sorting, standardisation,

systematisation and cleaning of production. The previously installed

clean rooms for laminate production are making a major contribution

to optimum production quality.

Further attention was devoted to the recycling of thermoplastic

composites in 2013. This is important partly because numerous new

composites were qualified during the past year. The collaboration with

knowledge institutions in the netherlands, the United Kingdom and

Germany was also intensified, including with the TpRC innovation

centre in Enschede, the University of Sheffield Advanced

Manufacturing Research Centre (AMRC) in Sheffield (United Kingdom)

and the Aachener Zentrum für Integrativen leichtbau in Aachen

(Germany). In the production process in nijverdal, a larger proportion

of the process cooling water was reused, leading to energy savings.


Sector Geosynthetics & Grass

20sustainable drinking water systems for sanitation and

sport in South Africa

14GreenFields® TX

top-flight hockey pitches for2014 Hockey World Cup in

The Hague, the Netherlands

Water Innovation Award

2013 for vertical sand-tight

geotextile to combat piping


. Sector Geosynthetics & Grass

REVENUES AND RESULTSThe revenues of the Geosynthetics & Grass sector remained almost

unchanged at € 517.8 million in 2013 (2012: € 518.7 million). The

operating result before amortisation (EBITA) declined by 11% to € 27.9

million (2012: € 31.5 million); EBITA as a percentage of the average net

invested capital decreased to 7.0% (2012: 7.3%).

The revenues of the TenCate’s geosynthetics market group declined

slightly, while TenCate Grass showed a slight rise.

Revenues in the infrastructure end-market in the Geosynthetics &

Grass sector declined slightly. Revenues in Asia fell well short of

expectations. The marketing focus on water management and

environmental solutions generated revenue growth, although this

revenue source is still of limited size at present. The Water

Management end-market accounted for 6% of the total revenues of

the TenCate Geosynthetics market group in 2013.

The decrease in the operating result of the Geosynthetics & Grass

sector was mainly attributable to a decrease in profitability of the

TenCate Geosynthetics market group. The unfavourable composition of

revenues and volatile input costs of polyethylene (pE) and

polypropylene (pp) had a negative impact on profitability. The results

in the Grass group were affected by high marketing costs and volatile

raw material costs. The ongoing integration of the downstream

activities had the effect of lowering costs.

KEY FIGURES GEOSYNTHETICS & GRASS

in millions of euros unless stated otherwise 2009 2010 2011 2012 2013

Revenues 392.1 469.3 525.9 518.7 517.8

Operating result before amortisation (EBITA) 16.8 31.4 26.3 31.5 27.9

EBITA margin (%) 4.3 6.7 5.0 6.1 5.4

Operating result (EBIT) 13.8 27.7 20.8 25.1 23.6

Investments 9.0 9.9 12.2 5.3 4.9


net invested capital (year-end) 332.7 380.8 429.5 399.7 369.1

number of staff years (year-end) 1,795 2,128 2,160 2,102 2,034

EBITA as percentage of average net invested capital 4.1 8.2 6.2 7.3 7.0

TREnd In pRICES OF pOlyETHylEnE And pOlypROpylEnE

Polyethy index

Polyprop index

1,000

1,200

1,400

1,600

1,800

13-1-2012 28-6-20134-1-2013

Polyethy index Polyprop index

In US$


The new GreenFields™ MX synthetic turf system had a good

introduction into the market, bringing a clear improvement in terms of

quality and sports characteristics. The market group is supplying

synthetic turf to a growing number of professional clubs in the Jupiler

league in the netherlands. The GreenFields™ MX synthetic turf system

is one of the pillars of the company’s innovation strategy. With the

combination of weaving and extrusion technology within a single

company, a distinctive system has been developed which is fully

recyclable. GreenFields™ MX is being introduced into the United States

in 2014. The production capacity for this unique system is scheduled to

be expanded in 2014, building on this system’s growing revenue

contribution within the total portfolio.

Geosynthetics

Grass upstreamGrass downstream

57%25%

18%

57%25%

18%

2012 2013

IndICATIVE BREAKdOWn OF REVEnUES In

THE GEOSynTHETICS & GRASS SECTOR

TenCate Grass in landscaping project in Riyadh

The world’s largest landscaping project using

synthetic turf was completed in March 2013 close to

the King Khaled international airport in Riyadh (Saudi

Arabia). It involves a two-colour landscape covering

an area of 160,000 m2. The site is a sand-strewn pitch

of two-tone green monofilament yarns. These yarns

have been developed specially for this project by the

TenCate Grass R&d team in dubai to fulfil a 10-year

UV guarantee. Riyadh has the highest solar activity

in the world.

The client was the Arriyadh development Authority

(AdA). The AdA chose TenCate Grass and Hatko

Sports of Turkey as the supplier and installer

respectively. Hatko Sports and TenCate have already

completed a number of projects in recent years.

The project in Riyadh took just 150 days from supply

through to installation.



Revenues over the reporting year as a whole rose slightly in the EMEA

region, despite the slow start. Cost savings in the European companies

were largely negated by rising wage costs at European production

sites and higher input prices.

AMERICASlocal and central governments were the largest customers for the

Geosynthetics group in the United States. After a challenging second

half of 2012 as a result of political uncertainty in the United States,

barely any recovery took place in the market for geotextiles in 2013.

According to the American Road & Transport Builders Association

(ARTBA), expenditure on highways in the United States declined by

7% in 2013 to US$ 43 billion. Expenditure on bridges rose by 6% in the

same period to US$ 30 billion. These markets are of great importance

to TenCate Geosynthetics.

An important milestone was reached in the United States with the

completion of the TenCate Mirafi® RSi series. TenCate Geosynthetics

introduced the TenCate Mirafi® RSi series to the United States in 2010

with strong geotextiles for subsoil reinforcement and stabilisation.

This introduction was followed up in 2011 with the development of

geotextiles for less heavy applications. The TenCate Mirafi® RSi series

was complemented in May 2013 by geotextiles for the reinforcement

of highway and railway projects.

PERFORMANCE OF THE TENCATE GEOSYNTHETICS MARKET GROUP The year got off to a sluggish start in the TenCate Geosynthetics

market group due to prolonged adverse weather in Europe and the

United States. This delay was made up during the reporting year.

declining economic growth in Asia had a negative impact on the

revenues of the Geosynthetics group as a whole.

The sustained pressure on government budgets depressed revenues in

the global market in geotextiles for infrastructure. In the Geosynthetics

group, TenCate is 53% dependent on government markets. The

dependence varies from region to region.

The margins of the TenCate Geosynthetics market group were under

pressure throughout the year, however, as a result of lower revenues

in Asia, delays in major projects and volatility in raw material costs.

EMEAThe winter weather had a negative impact on the market in geotextiles

for infrastructure in Europe, particularly in the first half of the year.

According to the European Association of Geosynthetic product

Manufacturers (EAGM), sales volumes of geotextiles fell by 6% during

this period. TenCate Geosynthetics was able to hold its own in this

challenging market with increased market shares in the United

Kingdom, Scandinavia, Benelux, Russia and Eastern Europe.

Government spending in Europe remained sluggish in the second half

of the year, putting downward pressure on revenues.

TENCATE GEOSYNTHETICS

GEOGRApHIC REVEnUES


(IndICATIVE)


(IndICATIVE)

America

EMEA

Asia Pacific

40%

22%

38%

2013Governmental

Non-governmental53%47% 2013

Infrastructure

Watermanagement

Sport & leisure

89%

6% 5%

2013


The Geosynthetics group is confident of future growth in Asia. The

sales organisation in Asia was strengthened in 2013, with a particular

focus on Indonesia, Thailand, Burma and China. The company made

various changes to the management of the Asian activities in 2013,

which should bear fruit in 2014.

WATER & ENVIRONMENTThe revenues of the worldwide Water & Environment business unit

rose by 17% in 2013. In Europe and Africa in particular, TenCate

Geosynthetics supplies products for attractive projects and achieved

revenue growth. In order to strengthen the Geosynthetics group’s

position in the water and environment market, a worldwide sales and

marketing organisation was established for this market. This structure

allows a faster response to growing demand for water management

and environmental solutions. End-user marketing was strengthened in

2013 through collaboration with engineering firms which can

experience the benefits of TenCate technology for their projects at an

early stage.

The Water & Environment business unit developed the TenCate

Geotube® carbon footprint calculator in 2013 for use in dewatering

and breakwater projects. This calculator determines the CO2 footprint

of water management projects based on actual marketing and

database information, enabling a quantitative assessment to be made

of the sustainability benefits of TenCate Geotube®. TenCate expects

sustainability to become an increasingly important criterion in

projects.

The market group made progress in South America, where the sales

and marketing organisation was strengthened. In Brazil, TenCate

Geosynthetics grew thanks to an increase in investments in

infrastructure related to the football World Cup in 2014 and the

Olympic Games in 2016.

The revenues of the TenCate Geosynthetics market group in the

Americas rose slightly in 2013, despite a negative exchange rate

effect. The input costs of the most important materials, polyethylene

(pE) and polypropylene (pp), were volatile particularly in the first

quarter. This had a negative impact on profitability. The emphasis

during the reporting year was placed on cost savings in order to

compensate for the volatility of raw material costs.

ASIA-PACIFICTenCate Geosynthetics recorded a sharp decline in revenues in Asia in

2013. After a positive start to the year, revenues in Asia slumped in

the second half. TenCate Geosynthetics had to contend with a weak

market, particularly in China. In Southeast Asia, revenues were under

pressure due to decreasing economic growth in the region. This had a

negative impact on local infrastructure investments. Exchange rate

effects associated with the strengthening of the euro also put

downward pressure on revenues.

0

10

20

30

40

201320122011201020092008

26.1 25.127.3 27.4 28.6

30.4

US$ billion

0

20

40

60

80

201320122011201020092008

56.060.8

55.148.5 46.2 43.0

US$ billion

VAlUE OF InFRASTRUCTURE pROJECTS – HIGHWAyS VAlUE OF InFRASTRUCTURE pROJECTS – BRIdGES

Source: ARTBA Analysis of US Census Bureau data Source: ARTBA Analysis of US Census Bureau data



SUSTAINABILITYTenCate Geosynthetics in nijverdal was certified in accordance with

the CSR performance ladder at level 3 at the beginning of 2013.

Stakeholders in the value chain were involved in the introduction of

this CSR management system and regular dialogue took place on good

practice last year. The plan-do-Check-Act cycle is also being

implemented in this market group for three years in respect of all 33

CSR indicators. At the other two TenCate Geosynthetics production

sites in Europe, both ISO 9001 and ISO 14001 have been implemented

and certification took place in 2013.

last year a single haulier was selected, making it possible to increase

the efficiency of transport movements, analyse CO2 emissions per

shipment and reduce the impact where possible. Collaboration with

suppliers has also been intensified in order to reduce waste and

optimise the recycling of residual yarn. The collaboration with the

European industry organisation EAGM and relevant knowledge

institutions has been expanded to facilitate continuing innovation.

A risk inventory and evaluation took place and the company emergency

response plan in this market group in the netherlands was updated in

2013. As part of the age-aware personnel policy, the shift roster was

made flexible on the basis of altered working hours. Tests were

conducted with biodegradable TenCate Geotube® containers for

specific applications in 2013, with a view to the sustainability of the

product portfolio. An initial trial installation was completed in the

Markermeer. This special fabric proved to be reproducible and is

expected to enter production in the year ahead. An analysis of waste

flows will be made in 2014 to reduce the environmental impact.

TenCate Geosynthetics declared joint winner of the Water Innovation Award 2013

The entry ‘Vertical sand-tight geotextile’ submitted by

the Rivierenland Water Board in the netherlands won

the Water Innovation Award for 2013 in the dry Feet

category. piping is a major failure mechanism in dykes, in

which water seeps through an embankment, dyke or other

engineering structure as a result of a huge difference in

the level of the water on either side. The flow of water

under the dyke may be so great that sand boils that carry

along sand particles occur on the polder side of the dyke.

Because sand is carried along with the flow, ‘pipes’

are created under the dyke that may cause it to burst.

Vertical sand-tight geotextile is an innovative preventive

measure used to avert piping. Together with deltares,

the department of Waterways & public Works in the

netherlands, TenCate Geosynthetics and others, the

Rivierenland Water Board has developed and tested this

vertical sand-tight geotextile. The protective principle of

the vertical sand-tight geotextile is based on the fact that

the geotextile filter allows water, but not sand, to pass

through. A pipe which develops on the polder side is

stopped by the geotextile, thus ensuring that the sand

remains trapped under the dyke and that piping cannot

occur. This solid solution is not dependent on a minimum

requirement for seepage length. The innovative technique

was derived from TenCate Geotube® technology.


The growth of the replacement market, particularly in the United

States and Europe, also had a positive impact on revenues in the

market group. TenCate Grass generated approximately 15% to 20% of

revenues from the replacement of synthetic turf pitches. The third

generation of synthetic turf football pitches achieved a breakthrough

at the beginning of this century and the market developed rapidly.

Many of these pitches are now due for replacement. The advantage

for TenCate Grass and the customer is the relatively low installation

costs for the replacement of a pitch. The replacement market is

expected to grow further in the years ahead.

The profitability of the upstream activities improved slightly in 2013.

Higher production volumes resulted in better utilisation of production

sites in dubai, the netherlands and the United States. The capacity for

texturised fibres (fibres with a particular structure) at the production

sites was almost doubled in 2013. The main markets for these fibres

are landscaping and the hockey market. These fibres compact the

surface and give the top layer a more natural look and feel. With the

2014 Hockey World Cup in prospect, TenCate Grass expects growing

demand for these fibres. Matches will be played on the GreenFields®

TX system during the tournament.

TenCate Grass made good progress with the integration of the

downstream activities. These are the GreenFields and TigerTurf

subsidiaries and the 50% holding in Edel Grass. The costs of the

downstream activities were reduced. TenCate Grass will continue to

integrate these activities in 2014. The cost savings in the Grass group

were nevertheless negated by temporarily high marketing costs and

volatile raw material costs.

PERFORMANCE OF THE TENCATE GRASS MARKET GROUP TenCate Grass recorded slight growth in revenues in 2013. This rise

was mainly driven by volume growth in synthetic turf fibre production

(upstream). The improvement in results of the Grass group stagnated

due to temporarily high marketing costs and volatile raw material

costs.

TenCate Grass benefited from a cautious recovery in the synthetic turf

market in 2013. In the United States, the more prosperous states

increased their spending on sport. Market demand for sports pitches

in Europe remained low. The situation in some countries, such as the

netherlands and Scandinavia, was an exception. Synthetic turf is on

the rise particularly in densely populated urban areas and acceptance

is growing. Climate can also be a decisive factor in the choice of

synthetic turf. There is also increasing quality awareness in these

markets. Government spending cuts in the main countries of southern

Europe affected profitability in the synthetic turf industry. A number of

companies in Europe in particular decided to discontinue fibre

production and purchase from third parties. Companies in the

installation market also discontinued their operations, enabling

TenCate to capture a growing market share.

TENCATE GRASS

GEOGRApHIC REVEnUES


(IndICATIVE)

REVEnUES By MARKET THEME

(IndICATIVE)

America

EMEA

Asia Pacific

25%19%

56%

2013Governmental

Non-governmental60%

40%

2013Sport & leisure

Infrastructure

80%

20%

2013



SUSTAINABILITYThe TenCate Grass market group extended the CSR performance

ladder certificate at level 3 in the netherlands during the reporting

year. In this context it applies a code of conduct which aims to exclude

child labour, breaches of human rights and corruption. At the same

time a global mobility policy has been implemented, under which

TenCate Grass customers have been supplied from the nearest

geographic location since the beginning of 2013. deliveries to

customers from the site in nijverdal have been made by trucks

compliant with the Euro 6 exhaust gas standard since 2013.

preparations were also made for the replacement of the industrial

clothing in the nijverdal market group by conducting wearing trials.

The 5S methodology was successfully completed in the course of 2013

for both yarn and backing production in the netherlands. Increased

attention was also devoted to personal protective equipment and

investments were made in this area. Hearing protection at TenCate

Grass in nijverdal has now been standardised. Two themed months

were organised last year, one concerning welfare and the other

concerning sustainability. Adjustments were also made to a number of

machines in order to increase process safety, such as fall protection in

machinery. The inflow of recycled material was increased compared to

2012. Various activities were conducted to reduce rejects and waste.

When machines and components are replaced, low-energy

alternatives are deliberately chosen, such as texturing and

compounding.

The adapted three-shift roster was established in 2013, on the basis of

constructive consultation with employees and the works council.

Efforts were made last year to reduce the physical and mental stress

on employees by using a new type of hyperbola for weight reduction

and by making adjustments to the line planning.

Market demand for synthetic turf products manufactured using the

innovative weaving technology grew strongly during the reporting

year, making the product portfolio sustainable.

TenCate also conducted the skin-comfort innovation project with

Radboud University in nijmegen last year with the aim of further

increasing the sliding friendliness of synthetic turf. preparations also

continued for the development of the next generation of synthetic turf

systems in 2013, with the aim of achieving the ultimate balance in

terms of characteristics and costs.

LANDSCAPING MARKETThe landscaping market accounted for approximately 20% of total

revenues in 2013. These revenues have grown substantially in recent

years due to an increasing focus on the look and feel of the projects.

A number of attractive projects were completed with TenCate

synthetic turf in 2013. The world’s largest landscaping project using

synthetic turf was completed in March close to King Khalid

International Airport in Riyadh (Saudi Arabia). It involved a two-colour

landscape covering an area of 160,000 m2. The clients appreciated the

importance of the high quality of the TenCate synthetic turf for

landscaping. This market is expected to see continued positive growth

in the years ahead.

GREENFIELDS® MX IN PROFESSIONAL FOOTBALLThe acceptance of synthetic turf as a professional playing surface took

off in 2013. GreenFields will supply synthetic turf to a growing number

of Jupiler league clubs. The Grass group is increasingly positioning

itself in high-quality synthetic turf systems. The awarding of this

contract was important for the image of synthetic turf because it is

the first professional football division to switch partly to synthetic turf

pitches. GreenFields began laying the first pitches in the summer of

2013. A decisive factor for the winning of the tender was the natural

playing experience provided by the GreenFields® MX system. This

synthetic turf also looks natural on TV pictures.

The GreenFields® MX system brings together a number of the

company’s manufacturing capabilities. It is the first patented 3d

woven synthetic turf system. This system makes it easy for a

player to get his foot under the ball, as in the case of natural grass.

It also allows unimpeded turning, acceleration and rotation, as on

a natural surface. That prevents excessive stress on muscles.

An important innovation in the GreenFields® MX system is that

it is the first fully recyclable synthetic turf system. TenCate Grass

expects an increasing focus on sustainability and recycling.

The growing replacement market for synthetic turf systems

is expected to strengthen this focus.


Other activities

Xennia Technology’s inks are characterised by high quality, intense

colours and low consumption. TenCate remains important for Xennia

Technology in the development of digital solutions in the field of

technical textiles. This market is still in the start-up phase. According

to market assessments, digital processes are set to account for an

increasingly important share of production processes in the global

textile sector as a whole. Important factors for growth and further

acceptance of this technology are lower ink prices, increased

production speeds and increased reliability of production systems.

These developments are also of importance for TenCate as a user of

such systems. Xennia Technology can play an important role in this

regard.

Xennia Technology also contributed to the digitisation of production

processes in other industries. It is a major challenge for the company

to foster more support for these solutions in the market through a

strengthening of marketing and sales activities, which will lead to

revenue growth.

REVENUES AND RESULTSThe Other Activities sector comprises the companies Xennia

Technology and TenCate Enbi and the Holding & Services activities.

The revenues of the Other Activities sector amounted to € 66.4 million

in 2013 (2012: € 69.7 million). EBITA amounted to – € 0.5 million (2012:

– € 4.9 million). This improvement was mainly attributable to Xennia

Technology.

PERFORMANCE OF XENNIA TECHNOLOGYXennia Technology saw revenues decline in 2013 compared to the

previous year. The company completed its strategic reorganisation

during the year. The business portfolio was given greater focus, with

the emphasis placed on the marketing of developed products,

knowledge and skills. Costs were also lowered. Xennia Technology

consequently recorded an improved result during the year on lower

revenues. Cash flow also improved strongly. Collaboration with

business partners led to an increase in ink revenues in the second half

of the year. An increased focus on ink revenues and partnerships is

expected to sustain the growth in ink revenues.

TenCate protective & Outdoor Fabrics was the launch customer for

Xennia Technology’s UV-curable inks in 2013. Third parties, including

Reggiani Macchine, were also buyers of inks for the textile market.

Xennia Technology has a flexible and high-calibre team of developers,

particularly in the field of chemicals and software. It concentrates

particularly on niche markets, where inks have high added value and

are distinct from commoditised products. Xennia Technology is able to

respond to customer-specific requirements in the market.

KEY FIGURES OTHER ACTIVITIES

in millions of euros unless stated otherwise 2009 2010 2011 2012* 2013

Revenues 52.7 66.8 74.5 69.7 66.4

Operating result before amortisation (EBITA) – 7.0 9.8 5.9 – 4.9 – 0.5

Operating result (EBIT) – 8.1 8.3 4.1 – 8.0 –3.0

Investments 4.1 6.9 5.2 1.9 1.7


number of staff years (year-end) 670 624 611 655 680 * Adjusted for accounting policy change pensions.


. Other activities

PERFORMANCE OF TENCATE ENBIThe revenues of TenCate Enbi remained almost unchanged in 2013

compared to 2012. EBITA rose as a result of more efficient production

and the focus on the growing production printing market. TenCate Enbi

is mostly dependent on the market for rollers used in printers of major

customers (OEMs).

Good progress was made with the diversification strategy in new

markets, such as the heating and insulation market. This strategy led

to a rise in revenues in Europe. Revenues at the Asian production site

rose as a result of successful qualifications among Asian OEMs.

production capacity at this site will have to be expanded in the near

future. lower revenues were recorded at the production sites in the

United States.

TenCate Enbi is well positioned in production printing, a growing

market characterised by high recurrent volumes and margins. The

long-term outlook for TenCate Enbi is positive. The company is

qualified for various new printer platforms of Asian printer

manufacturers.

TenCate selected to design ballistic protection for Embraer A-29 Super Tucano

The Brazilian aircraft builder Embraer selected

TenCate Advanced Armour to design aerospace

armour for the Embraer EMB 314. This military

aircraft, also named the A-29 Super Tucano, is a

turboprop aircraft for light attack, counter insurgency,

air support, air reconnaissance missions and pilot

training. The aircraft is currently being used by the

air forces of Angola, Brazil, Burkina Faso, Chile,

Colombia, dominican Republic, Ecuador, Indonesia

and Mauritania. Orders for the A-29 have been placed

by Senegal and the United States. The US Air Force

has already announced that it has selected the A-29

of Embraer defesa & Segurança for its light Air

Support programme.

93TenCate annual report 2013 | OUTlOOK |

Outlook for 2014 94

Action plans for 2014 95

Corporate initiatives in 2014 96

In Outlook the company provides details of the outlook and action plans for 2014 and subsequent years

OUTLOOK

94 | TenCate annual report 2013 | OUTlOOK

STRATEGY AND OBJECTIVESThe strategy will remain unchanged overall. Having regard to the buy

& build policy, a restrained approach to acquisitions will remain

appropriate in 2014. TenCate aims to strengthen its technology

positions, particularly in the production of composites and related

processes. This appears to be achievable particularly through organic

growth. TenCate expects investments in this area to increase.

The strategic objectives for 2014 are focused particularly on creating a

stable basis for growth in promising geographic markets in which

TenCate remains underrepresented. TenCate aims to make progress in

local partnerships. The policy on the development of private markets

will be vigorously pursued. The markets which hold promise for

TenCate materials are oil and gas extraction, mining, the automotive

industry, the aerospace sector and the electronics industry.

The qualitative and quantitative strengthening of marketing and sales

activities remains a priority in order to exploit opportunities in an

improving market and to raise the quality of revenues. In times of

economic decline, the proportion of volume products increases in

relative terms, because good capacity utilisation is necessary in order

to cover production costs sufficiently.

GENERAL OUTLOOKAccording to the most recent forecasts by the International Monetary

Fund (IMF) of January 2014, global economic growth will accelerate

from 2.9% in 2013 to 3.7% in 2014. The IMF forecasts that mature

markets will show accelerating growth, while emerging market growth

will decrease.

TenCate generates a relatively large proportion of revenues in the

United States and Europe and expects to achieve revenue growth at

least in line with the above growth estimate in most businesses.

Revenue growth in composites as a whole is expected to be

considerably higher. The market for automotive composites is still in

the initial phase.

The defence market is expected to fall short of the above growth

estimate. Revenues within the TenCate defender™ M portfolio will

decline further due to the limiting of foreign deployments of US troops.

This decrease will be only partly offset by growth in revenues outside

the United States.

As a result of the strengthening of the market position, TenCate

believes it will achieve revenue growth in the armour composites

market.

The growth in protective fabrics for the industrial market is expected

to continue.

The revenue growth of TenCate Geosynthetics is expected to be in line

with the above macroeconomic forecasts. The outlook for growth in

the worldwide synthetic turf market is cautiously positive. The

breakthrough by innovative synthetic turf systems in dutch top-flight

football (Jupiler league) has set a new standard.

Outlook for 2014


Action plans for 2014

ADVANCED TEXTILES & COMPOSITES SECTOR■■ Further growth in industrial market for protective fabrics and

international revenues (outside US) from TenCate defender™ M

portfolio.■■ Revision of commercial strategy of TenCate protective Fabrics

EMEA with focus on core customers and brand values.■■ Implementation of digital printing and finishing strategy.■■ Strengthening of internal co-operation in TenCate Advanced

Armour market group.■■ Aim to accelerate market introduction of TenCate ABdS™ active

blast countermeasure system.■■ progress in new business (automotive composites).

GEOSYNTHETICS & GRASS SECTOR■■ Strong growth in Water & Environment solutions with proactive

market approach, focused on prevention and sustainability.■■ Acceleration of growth in revenues from synthetic turf systems

(solution-focused market approach targeted at ease of use, quality

and sustainability).■■ Continuation of profit recovery, particularly in Grass group.

OTHER ACTIVITIES■■ development of organisations focused on independence and

sustainable growth.■■ Continuation of recovery in results at Xennia Technology and

pursuit of co-operation with strong market participants to

accelerate revenue growth.

CORPORATE■■ Organisational changes aimed at continent-based management to

achieve more market-driven and flexible organisation, making use

of local market knowledge.■■ Further development of partnerships.■■ Further increase in financial solidity.■■ Strengthening of TenCate’s position in Asia (contacts with local

operators, key projects, growth in share of revenues).


CORPORATE SOCIAL RESPONSIBILITYThe steps which TenCate took in 2013 to develop its corporate social

responsibility will be continued in 2014.

The integration of CSR data in the financial discipline will be continued

in 2014. As in the previous year, the TenCate entities concerned will

receive full feedback on their collective and individual CSR

performance on two occasions in 2014. A comparison will again be

made over several years and with comparable business entities. These

insights can be used in order to refine the social, ecological and

economic aspects of enterprise. At the same time, market groups will

be requested to supply a plan detailing how they will further improve

their sustainability performance in the years ahead to allow greater

disclosure. The following CSR-related projects and activities are

already planned for 2014:

Industrial clothing The introduction of new protective industrial

clothing for all four market groups in the netherlands is scheduled for

May 2014. The switch to technologically advanced TenCate protection

products will contribute to the optimisation of personal protection.

The organisation of washing and maintenance of clothing on a

collective basis will also have positive environmental effects.

Factory of the future A project is due to be launched in mid-2014

aimed at using technological innovations to introduce production

processes with the lowest possible environmental impact. For that

purpose TenCate is opening a field lab in which pilot production can

take place and tests can be carried out.

Smart factory A project group is being formed in 2014 to further

optimise the product creation process in the netherlands. This project,

which is being promoted by the regional government and is fully in line

with the Factory of the Future project, will involve co-operation with

partners including philips Consumer lifestyle in drachten, Fokker

Aerostructures in Hoogeveen, the University of Groningen and the

University of Twente. The ultimate aim of this project is to create an

automated 24/7 ‘smart factory’. The sustainability aspect will be an

increasingly important part of the design of future production

processes.

Stakeholder dialogue The policy in this field will be continued and,

where possible, intensified further in 2014. The aim will be to establish

a clear dialogue which, right across the organisation, is geared as

closely as possible to the corporate dialogue in terms of content and

practical arrangements. A digital magazine will be used to support the

stakeholder dialogue.

CSR Performance Ladder The certification of all three TenCate

Geosynthetics production sites in Europe in accordance with ISO

14001 in 2013 laid the foundation for obtaining an international

certificate for the CSR performance ladder at level 3. preparations for

this certification of corporate social responsibility covering the

combined European activities of TenCate Geosynthetics are being

made in 2014.

Sponsorship TenCate and its subsidiaries are sponsoring

organisations with a social and/or sporting background in numerous

fields in 2014. TenCate Advanced Composites also aims to sponsor

teams of technical students from universities and colleges in 2014 to

increase their knowledge of these advanced materials and give them

greater experience of the processing of the materials. At corporate

level, TenCate will again support numerous local, regional, national

and international initiatives and events through sponsorship, donations

and practical support in 2014.

Eco-innovation TenCate digital Textiles in nijverdal will continue to

work on the digital printing and finishing of awning and other outdoor

fabrics or substrates as part of the digifin project in 2014 and 2015.

This eco-innovation is being co-financed by the European Union under

the Competitiveness and Innovation Framework programme. This is

being implemented by the Executive Agency for Competitiveness and

Innovation in close collaboration with the Environment directorate-

General of the European Commission. digital finishing by means of

high-speed inkjet technology considerably improves the durability,

flexibility and economic performance of the textile industry, including

technical textiles. For further information see www.digifin.eu.

CORPORATE RISK MANAGEMENTduring the current year, the risk manager will work with the relevant

parties to raise three to five other TenCate production sites to FM

Global’s highest safety level. As preparation, the management of the

production sites concerned will implement the required organisational

and process changes relating to the relevant safety aspects. The risk

manager will once again visit almost all production sites worldwide in

2014 in order to maintain the safety culture in TenCate.

Corporate initiatives in 2014


Statement by the Executive Board

As the Executive Board of Royal Ten Cate, we have prepared the

annual report and the financial statements for 2013.

We declare that to the best of our knowledge:■■ The financial statements give a true and fair view of the assets,

liabilities and the financial position of the company and its

consolidated businesses;■■ The annual report gives a true and fair view of the position on the

balance sheet date and the state of affairs of the company and its

associated companies during the year and that the principal risks

have been stated in the annual report.

Almelo, Wednesday 26 February 2014

Executive Board

l. de Vries, president and CEO

99TenCate annual report 2013 | FInAnCIAl STATEMEnTS |

Financial statements 2013 100

Other information 151

Ten-year summary 154

Financial statements contain TenCate’s annual accounts and the accompanying explanatory notes

FINANCIAL STATEMENTS

100 | TenCate annual report 2013 | FINANCIAL STATEMENTS

Consolidated profit and loss account 102

Consolidated statement of comprehensive income 103

Consolidated balance sheet 104

Consolidated cash flow statement 106

Consolidated statement of changes in group equity 108

Notes to the consolidated financial statements 109

1 General information on royal Ten Cate nv 109

2 General principles for financial reporting 109

3 Principles for the preparation of the

financial statements 109

4 Consolidation principles 109

5 Foreign currencies 110

6 Derivatives 111

7 Hedge accounting 111

8 Segment reporting 111

9 Revenues 111

10 Government subsidies 111

11 Presentation in the profit and loss account 112

12 Lease payments 112

13 Financial income and expenses 112

14 Profit tax 112

15 Earnings per share 113

16 New standards and interpretations not yet applied 113

17 Principles for the preparation of the

cash flow statement 113

18 Intangible assets 113

19 Tangible fixed assets 114

20 Inventories 114

21 Trade debtors and other receivables 114

22 Cash and cash equivalents 115

23 Impairment 115

24 Share capital 115

25 Pension liabilities 116

26 Share-based payments 116

27 Provisions 116

28 Long-term debts 117

29 Trade creditors 117

30 Determination of fair value 117

Notes to the profit and loss account 118

31 Operating segments 118

32 Acquisitions and sale of participating interests 120

33 Personnel costs 120

34 General management costs 120

35 Net financial expenses 120

36 Profit tax 121

Notes to the consolidated balance sheet 122

37 Intangible assets 122

38 Tangible fixed assets 124

39 Investments in associated companies and

financial fixed assets 125

40 Deferred profit tax assets and liabilities 126

41 Inventories 127

42 Trade debtors 127

43 Other receivables 127

44 Cash and cash equivalents 127

45 Total shareholders’ equity 128

46 Earnings per share 129

47 Long-term debts 129

48 Pension liabilities 131

49 Provisions 133


50 Financial instruments 134

51 Liabilities not shown in the balance sheet 141

52 Investment liabilities 141

53 Contingent liabilities 142

54 Related parties 142

55 Estimates and judgments made by the management 143

Financial statements 2013

101TenCate annual report 2013 | FINANCIAL STATEMENTS |

Company financial statements 144

56 Company profit and loss account 144

57 Company balance sheet (before appropriation

of the result) 144

Notes to the company financial statements 145

58 Financial fixed assets 145

59 Equity 146

60 Called and paid-up capital 146

61 Ordinary shares 146

62 Share premium reserve 146

63 Legal reserve 146

64 Other reserves 146

65 Option plan 146

66 Provisions 150

67 Long-term liabilities 150

68 Short-term liabilities 150

69 Auditor’s fees 150

70 Liabilities not shown in the balance sheet 150


Independent auditor’s report 151

Provisions of the articles of association relating to

appropriation of profit 152

Proposed appropriation of profit 152

Ten-year summary 154

Glossary 156

Means of communication 158

Colophon 160


For the financial year ending on 31 December, in millions of euros Note 2012* 2013

Revenues 31 1,049.0 1,012.0

Cost of sales 843.6 809.2

Gross margin 205.4 202.8

Selling costs 67.5 72.2

Research and development costs 23.3 22.4

General management costs 34 79.0 72.6

Operating result (EBIT) 35.6 35.6

Financial income 35 0.4 0.5

Financial expenses 35 – 12.5 – 10.6

Net financial expenses – 12.1 – 10.1

Result before profit tax 23.5 25.5

Profit tax 36 – 8.2 – 8.5

Result after profit tax 15.3 17.0

Net result from associated companies – 0.3 0.1


Result attributable to:

Non-controlling interest – 5.9 – 1.9

Shareholders of the company (net income) 20.9 19.0

Weighted average number of shares x 1,000 46 25,895 26,225

Weighted average number of shares after dilution (x 1,000) 46 26,040 26,366

Net earnings per share (euro) 46 0.81 0.72

Diluted net earnings per share (euro) 46 0.80 0.72


The notes in sections 1 to 70 form an integral part of these financial statements.

Consolidated profit and loss account


For the financial year ending on 31 December, in millions of euros Note 2012* 2013


Other comprehensive income (after profit tax)

Currency translation differences for foreign activities 45 – 3.8 – 11.4

Effective portion of changes in hedging reserve (hedge accounting) 45 0.6 2.3

Actuarial gains and losses on pensions** – 16.6 13.6

Other comprehensive income after profit tax – 19.8 4.5

Comprehensive income after profit tax – 4.8 21.6

Comprehensive income attributable to:


Shareholders of the company 1.1 23.2


** Items which are never reclassified to the profit and loss account. Other comprehensive income may be reclassified.


Consolidated statement of comprehensive income


In millions of euros Note 31 December 2012 31 December 2013

NON-CURRENT ASSETS

Goodwill 37 214.5 214.6

Other intangible assets 37 54.9 55.6

Tangible fixed assets 38 196.7 165.7

Investments in associated companies 39 4.1 3.9

Financial fixed assets 39 12.9 14.2

Deferred profit tax assets 40 30.0 24.0

Total non-current assets 513.1 478.0

CURRENT ASSETS

Inventories 41 226.4 223.8

Assets

Trade receivables 42 140.0 128.7

Profit tax receivables 3.8 0.1

Other receivables 43 15.9 18.3

Cash and cash equivalents 44 26.7 21.6

Total current assets 412.8 392.5

Total assets 925.9 870.5

Consolidated balance sheet


in millions of euros Note 31 December 2012 31 December 2013

GROUP EQUIT Y 45

Share capital 66.2 67.0

Share premium reserve 43.4 42.6

Translation reserve 3.1 – 8.6

Hedging reserve – 3.9 – 1.6

Reserve for own shares – 15.1 – 14.1

Other reserves and undistributed result 363.5 389.0

Total shareholders’ equity 457.2 474.3


Group equity 455.3 473.3

NON-CURRENT LIABILITIES

Long-term debts 47 220.3 195.1

Pension liabilities 48 42.3 24.1

Provisions 49 11.4 9.9

Deferred profit tax liabilities 40 8.8 7.5

Total non-current liabilities 282.8 236.6

CURRENT LIABILITIES

Cash loans, overdrafts 44 35.4 14.7

Repayment of long-term debts 47 0.9 1.0

Trade creditors and other payables 142.4 139.2


Profit tax liabilities 6.3 1.3

Total short-term debts 187.8 160.6

Total liabilities 470.6 397.2

Total group equity and liabilities 925.9 870.5



For the financial year ending on 31 December, in millions of euros note 2012* 2013

CASH FLOW FROM OPERATING ACTIVITIES

Result after profit tax 15.0 17.1

Adjustments for:

Depreciation 38 37.1 34.8

Amortisation 37 14.5 13.1

Net financial expenses before exchange rate differences 35 12.2 10.1

Profit tax 36 8.2 8.5

Net result from associated companies 0.3 – 0.1

Result from sale of tangible fixed assets 34 – – 0.2

Costs of option scheme 2.0 1.6

Change in provisions and pension liabilities – 9.0 – 1.2

Cash flow from operating activities before movements

in working capital: 80.3 83.7

Movements in working capital:

Inventories 42.3 – 1.9

Receivables 18.7 7.7

Current liabilities – 22.7 7.7

38.3 13.5

CASH FLOW FROM OPERATING ACTIVITIES 118.6 97.2

Interest paid – 12.3 – 9.4

Profit tax paid – 4.5 – 12.7

Net cash flow from operating activities 101.8 75.1


Consolidated cash flow statement


For the financial year ending on 31 December, in millions of euros note 2012* 2013

CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from sale of tangible fixed assets 0.3 0.8

Interest received 0.1 –

Acquisition of subsidiaries less cash acquired 32 – 15.7 – 22.2

Deconsolidation of subsidiary less cash 32 – 4.2

Investments in intangible assets 37 – 4.6 – 4.6

Investments in tangible fixed assets 38 – 12.0 – 9.8

Increase in long-term receivables – 1.5 – 0.9

Net cash flow from investing activities – 33.4 – 32.5

Net cash flow from operating and investing activities 68.4 42.6

CASH FLOW FROM FINANCING ACTIVITIES

Income from exercise of share options 0.5 1.0

Repayment of long-term debts – 51.5 – 27.8

Drawing of long-term debts – 7.6

Dividend paid to shareholders – 12.2 – 7.6

Net cash flow from financing activities – 63.2 – 26.8

Change in cash and cash equivalents 5.2 15.8

Cash and cash equivalents on 1 January 44 – 12.7 – 8.7

Exchange rate and translation differences in cash and cash equivalents – 1.2 – 0.2

Cash and cash equivalents on 31 December 44 – 8.7 6.9




in millions of eurosShare

capitalShare

premium

Reserve for translation

differencesHedging reserve

Reserve for own shares

Other reserves

and undis-tributed

result Total

Non- controlling

interestsGroup equity

Balance as at 1 january 2012 64.8 44.8 7.0 – 4.5 – 15.6 369.3 465.8 3.7 469.5

COMPREHENSIVE INCOME

Result after profit tax *) 20.9 20.9 – 5.9 15.0

Actuarial gains and losses on defined

benefit pension schemes *) – 16.5 – 16.5 – 0.1 – 16.6

Currency translation differences – 3.9 – 3.9 0.1 – 3.8

Hedging result after profit tax 0.6 0.6 0.6

Total – – – 3.9 0.6 – 4.4 1.1 – 5.9 – 4.8

TRANSACTIONS WITH SHAREHOLDERS

Dividend to shareholders 1.4 – 1.4 – 12.2 – 12.2 – 12.2

Share-based payment transactions 2.0 2.0 2.0

Issue of repurchased shares 0.5 0.5 0.5

Changes in non-controlling interest – 0.3 0.3

Total 1.4 – 1.4 – – 0.5 – 10.2 – 9.7 0.3 – 9.4

Balance as at 31 December 2012 /

1 January 2013 66.2 43.4 3.1 – 3.9 – 15.1 363.5 457.2 – 1.9 455.3

COMPREHENSIVE INCOME

Result after profit tax 19.0 19.0 – 1.9 17.1

Actuarial gains and losses on

defined-benefit pension schemes 13.6 13.6 – 13.6

Currency translation differences – 11.7 – 11.7 0.3 – 11.4

Hedging result after profit tax 2.3 2.3 2.3

Total – – – 11.7 2.3 – 32.6 23.2 – 1.6 21.6

TRANSACTIONS WITH SHAREHOLDERS

Dividend to shareholders 0.8 – 0.8 – 7.6 – 7.6 – 7.6

Share-based payment transactions 1.6 1.6 1.6

Issue of repurchased shares 1.0 1.0 1.0

Deconsolidation of non-controlling interest – 1.7 1.7

Acquisition of non-controlling interest – 1.1 – 1.1 0.8 – 0.3

Total 0.8 – 0.8 – – 1.0 – 7.1 – 6.1 2.5 – 3.6

Balance as at 31 December 2013 67.0 42.6 – 8.6 – 1.6 – 14.1 389.0 474.3 – 1.0 473.3



Consolidated statement of changes in group equity


ACCOUNTING STANDARDS

1 GENERAL INFORMATION ON ROYAL TEN CATE

Koninklijke Ten Cate nv (Royal Ten Cate) (the Company) is established

in Almelo, the Netherlands. The consolidated financial statements of

the Company comprise the financial statements of the Company and

its subsidiaries (referred to collectively as the ‘Group’) and the

Group’s interests in other (non-consolidated) participating interests,

associated companies and proportionally consolidated joint ventures.

The financial statements have been prepared by the Executive Board.

The 2013 annual report and accounts were discussed at the meeting

of the Supervisory Board on 26 February 2014. They were released for

publication on 27 February 2014. They will be presented to the

General Meeting of Shareholders for adoption on 17 April 2014.

The parent company financial statements form part of Royal

Ten Cate’s 2013 financial statements. Royal Ten Cate has made use of

the exemption pursuant to article 2:402 of Book 2 of the Netherlands

Civil Code with regard to the parent company financial statements.

The original financial statements were drafted in Dutch. This docu-

ment is an English translation of the original. In the case of any

discrepancies between the English and the Dutch text, the latter will

prevail.

2 GENERAL PRINCIPLES FOR FINANCIAL REPORTING

The consolidated financial statements have been prepared in accord-

ance with International Financial Reporting Standards, as adopted

within the EU (hereinafter EU-IFRS) and with Part 9 of Book 2 of the

Netherlands Civil Code.

Changes to the principles for financial reporting

The new standard IAS 19 (2011) has been applied with effect from

2013. The expected investment return as part of the pension expense

is calculated on the basis of the discount rate used to determine the

pension liability. The change of accounting policy has the following

effect on the results and equity:

2012 2013


Selling costs 0.2 0.2

Research and development costs 0.1 0.1

General management costs 0.3 0.3

Profit tax – 0.5 – 0.5

Total decrease in profit 1.4 1.4

Actuarial gains and losses 1.9 1.9

Taxes on actuarial gains and losses – 0.5 – 0.5

Total increase in other comprehensive income 1.4 1.4

Furthermore, the IFRS7 standard has been applied with effect from

2013.

3 PRINCIPLES FOR THE PREPARATION OF THE FINANCIAL

STATEMENTS

The financial statements are presented in millions of euros (the euro

being the Company’s functional currency) unless stated otherwise.

The financial statements have been prepared on the basis of histor-

ical cost, except for derivative financial instruments (derivatives),

which are carried at fair value.

In preparing the financial statements, the Executive Board has used

estimates and assumptions which affect the application of accounting

standards and reported amounts stated in the consolidated financial

statements (see note 55). The actual results may differ from such

estimates. The estimates and underlying assumptions are continu-

ously assessed. Revised estimates are stated in the period in which

the estimates are revised and in future periods in which the revision

has consequences.

The accounting principles set out below have been applied consist-

ently by the Group’s subsidiaries and joint ventures for the periods

presented in these consolidated financial statements. Certain

comparative information has been adjusted for the sake of compara-

bility.

4 CONSOLIDATION PRINCIPLES

4.1 Business combinations

Business combinations are recognised from the date on which control

passes to the Group. Control means the Group is able to determine an

entity’s financial and operational policy in order to obtain benefits

from the entity’s activities. In assessing control, the Group takes

account of potential voting rights which can be exercised at that time.

Notes to the consolidated financial statements


. Notes to the consolidated financial statements

Joint ventures are companies over which the Group has joint control

and in which such control has been set forth in an agreement and in

which strategic decisions on the financial and operational policy are

taken on the basis of unanimity. Joint ventures are proportionally

consolidated.

Other participating interests over which no significant influence is

exercised are carried at fair value and the dividend is stated in the

profit and loss account when it is made payable. If no fair value is

available and other methods do not result in a reasonable estimate,

the investment is carried at cost less impairment.

4.5 Elimination of transactions on consolidation

Intragroup balances and transactions between the subsidiaries in the

Group and unrealised gains and losses on such transactions are elimi-

nated in the preparation of the consolidated financial statements.

Unrealised gains on Group transactions with proportionally consoli-

dated joint ventures and investments are stated in accordance with

the equity method and eliminated in proportion to the Group’s interest

in the investment. Unrealised losses are eliminated in the same way

as unrealised gains, but only to the extent that there is no indication

of impairment.

5 FOREIGN CURRENCIES

5.1 Transactions in foreign currencies

Receivables and liabilities denominated in foreign currencies are

converted into euros at the rate prevailing on the reporting date.

Transactions in foreign currencies are converted into euros at the

estimated exchange rate on the transaction date. Currency trans-

lation differences are stated in the profit and loss account.

Non-monetary assets and liabilities which are denominated in foreign

currencies and valued on the basis of historical cost are converted at

the exchange rate on the transaction date.

5.2 Subsidiaries and joint ventures outside the eurozone

The revenues and expenses of subsidiaries outside the eurozone are

converted into euros at the exchange rate on the transaction date.

Assets and liabilities including goodwill and fair value adjustments in

respect of acquisitions are converted at the rate on the reporting

date. The resulting translation differences are carried in other

comprehensive income in equity. The proportionate share of the

currency translation difference is allocated to any non-controlling

interests. If an activity outside the eurozone is fully or partly divested,

the accumulated exchange rate difference is transferred from equity

to the profit and loss account as part of the result of the sale.

The Group determines the goodwill on the basis of the fair value of

the consideration paid, the carrying amount of any non-controlling

interest in the acquired undertaking and, if applicable, the fair value

of the prior interest in the acquiree. The net amount of the identified

assets acquired and the accepted liabilities is then deducted. If the

difference is negative, a book profit from an advantageous purchase

is stated directly in the profit and loss account. Any non-controlling

interests are carried at their proportionate share of the carrying

amount of identifiable assets of the acquired undertaking on the

acquisition date. The paid consideration includes no amount for the

settlement of existing relationships. Any such amount is stated in the

profit and loss account.

Transaction costs other than those related to the issue of loans or

equity instruments allocated to the Group as a result of acquisitions

are charged to the result when they arise.

4.2 Acquisition of non-controlling interests

Acquired non-controlling interests are stated as transactions with

shareholders (directly as a charge to equity) and no goodwill is there-

fore included.

4.3 Subsidiaries

Subsidiaries are undertakings in which the Company directly and/or

indirectly has a controlling interest. The financial statements of

subsidiaries are included in the consolidated financial statements

from the first date on which control is exercised to the date on which

such control ends. Non-controlling interests in the Group’s result and

equity are stated separately. Losses in connection with non-con-

trolling interests are allocated to the non-controlling interests, even if

a deficit arises for the non-controlling interests in question.

4.4 Associated companies, joint ventures and other participating

interests

Associated companies are entities in which the Group has significant

influence on the financial and operational policy, but in which it has no

controlling interest. Significant influence is assumed to exist if the

Group holds between 20% and 50% of the voting rights in another

entity. Associated companies are accounted for using the equity

method and are stated at cost including transaction costs on first-time

inclusion. If the Group’s share in losses exceeds the carrying value of

the associated company, the carrying value is stated at zero and

further losses are no longer stated, unless the Group has entered into

a liability or has made payments on behalf of the associated company.


ating Decision Maker (CODM) committees, which take the important

operating decisions in the segment.

The operating results of an operating segment are assessed periodi-

cally by the CODM committees in order to decide on the allocation of

resources to the segment and for performance assessment.

The investment expenses of a segment concern the total expenses

incurred during the reporting period for the acquisition of tangible

fixed assets and intangible assets with the exception of goodwill.

The assets and liabilities of the segment concern items which are or

may reasonably be allocated directly.

Unallocated assets comprise profit tax receivables and cash and cash

equivalents. The unallocated liabilities comprise interest-bearing

loans and profit tax liabilities.

9 REVENUES

Revenues comprise the revenues from goods and services supplied to

third parties. These are stated at the fair value of the consideration

received or to be received, less taxes and any volume, trade or

payment discounts due.

Revenues from sales of goods are recognised in the profit and loss

account when the main risks and benefits of ownership have been

transferred to the purchaser.

Revenues from services supplied are recognised in the profit and loss

account in proportion to the extent of performance of the work

applying on the reporting date.

No revenues are recognised if the extent of the revenues cannot be

reliably determined and if significant uncertainties remain with regard

to the collection of the remuneration due, the associated costs or the

possible return of goods, and also if there is a protracted manage-

ment involvement with such goods.

The Group also carries out projects to manufacture assets under

contracts with third parties. The costs relating to a project are recog-

nised when they are incurred. As soon as the result of a project in

progress can be reliably estimated, revenues from that project are

recognised in proportion to its degree of completion. Expected losses

on projects are stated immediately in the profit and loss account.

10 GOVERNMENT SUBSIDIES

Subsidies granted as compensation for expenses incurred by the

Group are systematically stated as income in the profit and loss

account in the same period as that in which the subsidisable expenses

are incurred and as soon as there is a reasonable certainty that they

will be received and that the Group will fulfil the attached conditions.

Subsidies granted to compensate the Group for the cost of an asset

The rates of the main currencies against the euro are as follows:

Closing rate Average rate

2012 2013 2012 2013

US dollar 1.32 1.38 1.29 1.32

British pound 0.81 0.83 0.81 0.85

Danish krone 7.46 7.46 7.44 7.46

UAE dirham 4.86 5.05 4.73 4.86

Malaysian ringgit 4.04 4.51 3.98 4.15

Singapore dollar 1.61 1.74 1.61 1.65

Chinese yuan 8.22 8.34 8.12 8.15

Australian dollar 1.27 1.54 1.25 1.36

6 DERIVATIVES

The Group uses derivatives in order to hedge exchange rate and

interest rate risks resulting from operating, financing and investing

activities. Examples are currency options and forward contracts as

well as interest rate caps and swaps. In accordance with its treasury

policy, the Group does not use derivatives for trading purposes.

Nor does it issue such derivatives.

Derivatives are valued at fair value on first-time inclusion.

The resulting income or expense is stated directly in the profit and

loss account unless hedge accounting is applied (see section 7).

The fair value of derivatives is the estimated amount which the Group

would receive or would have to pay in order to terminate the deriva-

tive on the reporting date, taking into account the current exchange

rates, the current interest rate and the credit risk.

7 HEDGE ACCOUNTING

The Group applies cash flow hedge accounting to interest rate deriva-

tives. During the hedging relationship, the effective portion of the

changes in the fair value of the derivative is stated directly in other

comprehensive income of the hedging reserve in equity. The ineffec-

tive portion of the changes in the fair value of the derivatives is

stated directly in the profit and loss account. If the hedged future

transactions are stated in the profit and loss account, the transfer

takes place from equity to the profit and loss account.

8 SEGMENT REPORTING

An operating segment is a part of the Group conducting business

activities which can result in revenues and expenses, including reve-

nues and expenses associated with transactions with other parts of

the Group. The Group determines and presents operating segments

on the basis of the information reported internally to the Chief Oper-



ready for use or sale) are capitalised as part of the costs of that

asset.

Dividend income from other participating interests is stated in the

profit and loss account at the time at which the Group’s right to

payment is established.

14 PROFIT TAX

The tax on profit for the financial year includes the profit tax that is

payable, available for set-off and deferred in respect of the reporting

period. The profit tax is stated in the profit and loss account, except

where it relates to items which are included directly in equity or in

other comprehensive income. Profit tax that is payable and available

for set-off in respect of the reporting period is the profit tax which is

expected to be payable on the taxable result, calculated on the basis

of tax rates which have been set on the reporting date, or on which a

firm decision has been taken by the reporting date, and any correc-

tions to profit tax payable in respect of previous years. Additional

taxes on profit from dividend payments are stated at the same time

as the liability to pay the respective dividend.

A receivable / provision is recognised for deferred tax differences

using the balance sheet liability method for temporary differences

between the carrying value of assets and liabilities for the financial

reporting and the fiscal carrying value of the items concerned.

No provision is formed in respect of two temporary differences:

non-tax-deductible goodwill and the difference between the

economic and fiscal value of subsidiaries, associated companies, joint

ventures and other participating interests. The amount of the provi-

sion for deferred profit tax liabilities is based on the method by which

the carrying value of the assets and liabilities is expected to be real-

ised or settled, using tax rates which, on the reporting date, have

been specified by law or in material terms.

Deferred profit tax assets and liabilities are offset if there is a legally

enforceable right to offset the profit tax assets and liabilities and

such assets and liabilities relate to profit tax imposed by the same tax

authority on the same taxable entity, or on different taxable entities

which intend to offset the profit tax assets and liabilities or whose

profit tax assets and liabilities are realised simultaneously.

A deferred profit tax asset is only recognised in respect of unused tax

losses, tax income and deductible temporary differences to the

extent that it is likely that future taxable profits will be available

which can be applied for the realisation of the timing difference.

Deferred profit tax assets are reviewed on each reporting date and

are systematically stated as cost of sales in the profit and loss

account during the useful life of the asset.

11 PRESENTATION IN THE PROFIT AND LOSS ACCOUNT

The allocation of costs to the functional cost accounts can be

specified as follows:

■■ Cost of sales: comprises all production costs (including raw

material and energy costs) related to the recognised revenues.

■■ Selling costs: comprises the costs of marketing and sales of the

products.

■■ Research and development costs: comprises research costs with

the aim of acquiring new technological knowledge and develop-

ment costs associated with the development of new products or

processes for the start of commercial production.

■■ General management costs: comprises the strategic and

management costs. The costs of support departments which do

not relate directly to the other cost accounts are also included

under general management costs.

12 LEASE PAYMENTS

Lease payments in respect of operational leasing are stated in the

profit and loss account on a straight-line basis over the lease term.

Remuneration received as an incentive to effect leases is stated as

an integral part of the total lease costs in the profit and loss account

over the lease term.

Financial lease payments are stated partly as financial expenses and

partly as a repayment of the outstanding liability. The financing costs

are allocated to each period of the total lease term in such a way that

this results in a constant periodic interest rate on the residual balance

of the liability.

13 FINANCIAL INCOME AND EXPENSES

Financial income and expenses include the interest income and

expenses on invested and borrowed monies, interest charges on

financial lease payments, foreign exchange rate differences, divi-

dends from other participating interests and results of derivatives for

which no hedge accounting is used and the realised and ineffective

portion of the change in the fair value of derivatives for which hedge

accounting is used. Interest income and expenses are stated in the

profit and loss account on the basis of the effective interest method.

Material financial expenses in the construction period which are

directly attributable to the acquisition, construction or production of

an eligible asset (which will require a considerable period before it is


18 INTANGIBLE ASSETS

18.1 Goodwill

Details of the valuation of goodwill on first-time inclusion can be

found in note 4.1. Goodwill is valued at cost less accumulated impair-

ments. The carrying value of the goodwill on investments in associ-

ated companies is included in the carrying value of the respective

investment. An impairment loss on an associated company is allo-

cated to the carrying value of the associated company investment.

Goodwill is allocated to cash generating units and is tested each year

on the reporting date to assess whether there is any indication of

impairment.

18.2 Other intangible assets

The other intangible assets consist of:

Research and development

Expenses for research activities carried out with a view to acquiring

new scientific or technical knowledge and insights are stated as an

expense in the profit and loss account when they are incurred.

Expenses for development activities, in which research results are

used for a plan or design for the production of new or substantially

improved products and processes, are capitalised if the development

costs can be reliably determined, the product or process is technically

and commercially feasible and the Group has sufficient resources to

complete the development and use or sell the asset. The capitalised

expenses include material costs, direct labour costs, financing costs

and an appropriate portion of directly attributable overheads. Other

development costs are stated as an expense in the profit and loss

account when they are incurred. The capitalised development costs

are valued at cost less accumulated amortisation and accumulated

impairments (see note 23).

Other intangible assets

Other intangible assets acquired by the Group relate to customer rela-

tionships, trademark rights, patents, software and similar rights.

These intangible assets are valued at cost less accumulated amorti-

sation and accumulated impairments (see note 23). Costs of internally

generated goodwill and trademarks are stated as an expense in the

profit and loss account when they are incurred.

reduced if it is no longer likely that the associated tax benefit will be

realised.

15 EARNINGS PER SHARE

The Group presents ordinary and diluted earnings per share for the

ordinary share capital. The net earnings per ordinary share are calcu-

lated on the basis of the net result attributable to shareholders of the

Group divided by the weighted average number of ordinary shares in

issue during the reporting period (corrected to take account of own

shares). In the calculation of the diluted earnings, the weighted

average number of ordinary shares in issue during the reporting

period is corrected to take account of the potential dilutive effect on

the ordinary shares arising from the share options granted to

employees.

16 NEW STANDARDS AND INTERPRETATIONS NOT YET APPLIED

A number of new standards, amendments to standards and interpre-

tations were not yet in force in 2013 and have therefore not been

applied to these consolidated financial statements:

■■ IFRS 11 – Joint arrangements, which becomes compulsory in

2014 and may give rise to changes in the treatment of joint

ventures and similar agreements. As a result of this standard,

interests in joint ventures will no longer be proportionally

consolidated from 2014. The expected impact is limited.

The other new or amended standards are not expected to have any

material effect on the Group’s consolidated financial statements.

17 PRINCIPLES FOR THE PREPARATION OF THE CASH FLOW

STATEMENT

Cash flows from operating activities are presented on the basis of the

indirect method. Cash flows in foreign currencies are converted at the

exchange rate on the date of the cash flow or on the basis of aver-

ages. Changes which have not resulted in cash flows, such as

exchange rate differences, acquisitions, financial lease liabilities,

changes in fair value, recognised share-related transactions and

similar transactions are eliminated in this statement. Dividends paid

to shareholders are included in the cash flow from financing activities.

Dividends received are stated in the cash flow from investing activi-

ties, and interest paid is stated in the cash flow from operating activi-

ties. Overdrafts which are immediately repayable and form part of

the Group’s cash management are included in the balance of cash

and bank current accounts as part of the consolidated cash flow

statement.



minimum lease payments at the inception of the lease, less accumu-

lated depreciation (see note 19.4) and impairments (see note 23).

Lease payments are stated as described in note 12.

19.3 Expenses after first-time inclusion

Expenses incurred for the replacement of a component of a tangible

fixed asset are capitalised provided the future economic benefits

resulting from the asset accrue to the Group and the cost of such

replacement expenses can be reliably determined. All other expenses

are charged to the profit and loss account when they are incurred.

19.4 Depreciation

Depreciation is calculated on the cost of an asset less the residual

value. Depreciation is charged to the profit and loss account on the

basis of the straight-line method over the estimated economic life of

each component of a tangible fixed asset. Land is not depreciated.

The estimated economic life is as follows:

■■ buildings 33 years

■■ fixtures and installations in buildings 10 years

■■ plant and equipment 7 – 10 years

■■ inventory 5 years

■■ computers and office equipment 3 – 5 years

The depreciation method, economic life and residual value are

assessed periodically and adjusted if necessary.

20 INVENTORIES

Inventories are stated at the lower of cost or net realisable value.

The cost of inventories is based on the FIFO (first in, first out) principle

and includes the costs incurred for the acquisition of the inventories,

their production or conversion and bringing them to the existing loca-

tion and condition. In the case of inventories of finished products and

work in progress, the cost includes in addition to the direct costs an

appropriate portion of the indirect costs based on the normal produc-

tion capacity. The net realisable value is the estimated sale price in

ordinary operations, less the estimated costs of completion and the

sale costs.

21 TRADE DEBTORS AND OTHER RECEIVABLES

Trade and other receivables with a term of less than one year are

stated at amortised cost less impairments.

Projects in progress commissioned by third parties concern the gross

amount yet to be charged that is expected to be collected from

18.3 Expenses after first-time inclusion

Expenses after the first-time inclusion of capitalised intangible assets

are capitalised only if they lead to an increase in the future economic

benefits embodied in the particular asset to which they relate.

All other expenses are charged to the profit and loss account when

they are incurred.

18.4 Amortisation

Amortisation is calculated on the cost of the asset, less the residual

value.

Amortisation costs are charged on a straight-line basis to the profit

and loss account in accordance with the estimated useful life of

intangible assets. Goodwill is tested each year on the reporting date

to assess whether any impairment has arisen. The amortisation of

other intangible assets begins as soon as the assets are available for

use.

The estimated economic life is as follows:

■■ Development costs 5 years

■■ Other intangible assets 3 – 14 years

■■ The amortisation method, economic life and residual value are

assessed periodically and adjusted if necessary.

19 TANGIBLE FIXED ASSETS

19.1 Owned assets

Tangible fixed assets are valued at cost less accumulated deprecia-

tion (see 19.4) and accumulated impairments (see note 23).

The cost of self-manufactured assets comprises material costs, direct

labour costs and any other costs attributable directly to the prepara-

tion of the asset for use, any costs of dismantling and removing the

asset, the costs of restoring the location in which the asset is held

and capitalised financing costs.

Where tangible fixed assets consist of components with differing

useful lives, these are stated as separate items under tangible fixed

assets.

The profit or loss on the sale of a tangible fixed asset is determined by

comparing the sales proceeds with the carrying value of the tangible

fixed asset. The net difference is stated under general management

costs in the profit and loss account.

19.2 Leased assets

Leases in which the Group actually assumes all the risks and benefits

of ownership are classified as financial leases. Tangible fixed assets

which are acquired by means of financial leases are valued on first-

time inclusion at the lower of fair value and the present value of the


ment are combined in such a way that the level at which such impair-

ment is tested reflects the lowest level at which goodwill is moni-

tored in internal reporting. Goodwill acquired in a business

combination is allocated to groups of cash generating units which are

expected to benefit from the synergy advantages of the combination.

23.1 Calculation of the realisable value

The realisable value is the higher of the recoverable amount, less

costs to sell, and the value in use. In determining the value in use,

the present value of the estimated future cash flows is calculated

using a discount rate before tax which reflects both the current

market valuations of the time value of money and the specific risks

relating to the asset or cash generating unit. In the case of an asset

which generates no cash receipts that are largely independent of

other assets, the realisable value is determined for the cash gener-

ating unit to which the asset belongs.

23.2 Reversal of impairments

An impairment relating to goodwill cannot be reversed. In the case of

other assets, an assessment is made on the reporting date as to

whether an impairment must be reversed if there is a change in the

estimates on which the realisable value was based.

An impairment is only reversed to the extent that the carrying value

of the asset is not higher than the carrying value which would have

been determined after the deduction of depreciation, if no impairment

had been recognised.

Goodwill which is part of the carrying value of an investment in an

associated company is not recognised separately and therefore not

tested separately for impairment. Instead, the total amount of the

investment in an associated company is tested for impairment as a

single asset if there are objective indications that the investment in

an associated company may be subject to impairment.

24 SHARE CAPITAL

24.1 Share capital

The share capital is classified as equity.

24.2 Repurchase of own shares

On the repurchase of share capital which is stated in the balance

sheet as equity, the amount of the paid consideration, including

directly attributable costs, is stated as a change in equity. Repur-

chased shares are classified in the reserve for own shares and

presented as a deduction from total equity.

customers for the contract work carried out up to the reporting date.

This item is carried at cost plus the profit recognised up to that time

less invoiced instalments in proportion to the progress of the project

and recognised losses. The cost includes all expenditure directly

related to specific projects and an allocation of the fixed and variable

indirect costs incurred.

Projects in progress commissioned by third parties under contracts in

which the amount of costs incurred plus the recognised profit is

higher than the invoiced instalments are stated in the balance sheet

under other receivables. If the amount of invoiced instalments is

higher than the costs incurred plus recognised profit, the difference is

stated in the balance sheet under trade creditors and other payables.

22 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances and immediately

claimable credit balances with an original term of three months or

less. Overdrafts at banks which are immediately claimable and form

an integral part of the Group’s cash management are included as part

of the cash and cash equivalents for the purposes of the cash flow

statement.

23 IMPAIRMENT

The carrying value of the Group’s assets, except that of inventories

(see note 20) and deferred profit tax assets (see note 14) is examined

at each reporting date in order to determine whether there are indica-

tions of impairment. If there are such indications, an estimate is made

of the realisable value of the asset. In the case of goodwill and intan-

gible assets which are not yet available for use, the realisable value is

estimated at each reporting date. This also applies if there is an indi-

cation of impairment.

An impairment is recognised when the carrying value of an asset or

the cash generating unit thereof is higher than the estimated realis-

able value. It is first charged to any allocated goodwill and then

deducted proportionately from the carrying value of the other assets.

For the testing of impairments, assets which cannot be tested individ-

ually are combined into the smallest distinguishable group of assets

which, as a result of continuous use, generates cash flow that is

broadly independent of the incoming cash flows from other assets or

groups of assets (the cash generating unit). Taking into account the

maximum size of an operating segment before aggregation (the ‘oper-

ating segment ceiling test’), cash generating units to which goodwill

has been allocated for the testing of goodwill with regard to impair-



options which will be exercised. The fair value of the granted options

is determined on the basis of the binomial model, taking account of

the conditions under which the options have been granted. Valuation

factors include the share price on the valuation date, the exercise

price of the instrument, the expected volatility, the weighted average

expected term of the instruments (based on past experience and the

conduct of the instrument holders), the expected dividends and the

risk-free interest rate (based on government bonds).

27 PROVISIONS

A provision is recognised in the balance sheet if there is a legally

enforceable or actual obligation as a result of a past event and it is

likely that an outflow of resources will be required to settle such

liability and such outflow can be reliably estimated. If the effect of

this is material, the provisions are determined by discounting the

expected future cash flows using a discount rate before profit tax

which reflects the current market valuations of the time value of

money and, if necessary, the specific risks of the liability. Interest

accrual is stated as a financial expense.

27.1 Claims and guarantees

The provision for claims relates to damages claims and any litigation

costs. The provision for guarantees relates to goods and services

supplied and is based on historical guarantee data.

27.2 Reorganisation

Reorganisation provisions are included if the Group has formalised a

detailed plan for the reorganisation and has begun or publicly

announced the reorganisation. The reorganisation provision does not

include costs incurred in relation to future activities.

27.3 Other personnel liabilities

Long-service leave and other allowances such as anniversaries form

part of the provisions under other personnel liabilities. These provi-

sions are accumulated over the respective period as in the case of

defined benefit pension schemes, except that actuarial gains or losses

are recognised in the profit and loss account in the period in which

they arise.

27.4 Environment

In accordance with the Group’s published environmental policy and

the applicable legal obligations, a provision for the clearance of envi-

ronmental pollution is recognised when the pollution occurs.

24.3 Dividend

Dividend is stated as a liability in the period in which it is declared.

25 PENSION LIABILITIES

25.1 Defined contribution schemes

Liabilities relating to contributions to defined contribution pension

schemes are charged to the profit and loss account in the period to

which they relate.

25.2 Defined benefit schemes

The Group’s net liability in respect of defined benefit pension schemes

is calculated separately for each scheme by estimating the amount of

the future entitlement which employees have earned in the present

and previous reporting periods in exchange for their services. This

entitlement is discounted in order to determine the present value,

with the fair value of the fund investments being deducted.

The discount rate is the yield on the reporting date of bonds which

have an AA credit rating and a period to maturity which approximates

the term of the Group’s liabilities and are denominated in the currency

in which the entitlements arise. The calculation is performed by an

authorised actuary on the basis of the projected unit credit method.

If the entitlements under a pension scheme are increased, the propor-

tion of the higher entitlement which relates to employees’ past

service is stated as an expense in the profit and loss account on a

straight-line basis over the average period up to the vesting of the

rights. If the rights are vested immediately, the expense is stated

immediately in the profit and loss account.

Actuarial gains and losses in respect of a pension scheme are cred-

ited or charged directly to group equity.

If the calculation results in a receivable for the Group, the recognised

asset item is limited to an amount not exceeding any unrecognised

back-service costs and the present value of economic benefits in the

form of any future repayments by the fund or, if lower, future pension

contributions.

26 SHARE-BASED PAYMENTS

The option scheme enables the Group’s management to acquire

shares in Royal Ten Cate.

The fair value of the granted options is stated under personnel costs,

with a corresponding entry in equity. The fair value is determined on

the grant date and is allocated over the period up to the time at which

the management acquires an unconditional right to the options.

The amount stated as costs is adjusted annually to the number of


■■ Intangible assets

The fair value of patents and trademarks acquired as part of a busi-

ness combination is determined on the basis of the discounted esti-

mated royalties which have been avoided as a result of ownership of

the patent or trademark. The fair value of customer relationships

acquired in a business combination is determined using the excess

earnings method over several periods, with the respective assets

being valued after deduction of a real return on all other assets which

jointly constitute the associated cash flows. The fair value of other

intangible assets is based on the expected present value of the cash

flow from the use and ultimate sale of the asset.

■■ Inventories

The fair value of inventories acquired as part of a business combina-

tion is determined on the basis of the estimated sale price in normal

business operation, less the estimated costs of completion and the

sale costs, plus a reasonable profit margin reflecting the completion

and sale effort.

■■ Trade debtors and other receivables

The fair value of trade debtors and other receivables, excluding

projects in progress commissioned by third parties, is estimated at

the present value of the future cash flows, on the basis of the market

interest rate applying on the reporting date. This fair value is deter-

mined for information purposes or if the trade debtors and other

receivables are acquired by means of a business combination.

27.5 Onerous contracts

A provision is recognised in the balance sheet for onerous contracts if

the benefits which the Group expects to obtain from a contract are

lower than the unavoidable costs of fulfilling the liabilities under the

contract. The provision is valued at the lower of the present value of

the expected costs of terminating the contract and the present value

of the expected net costs of continuing the contract.

28 LONG-TERM DEBTS

When included for the first time, interest-bearing loans received are

stated at fair value less directly attributable transaction costs. After

first-time inclusion, interest-bearing loans are carried at amortised

cost, with the difference between the cost and the redemption price

being stated in the profit and loss account on the basis of the effec-

tive interest method over the term of the loans.

29 TRADE CREDITORS

Trade creditors and other payables are carried at amortised cost.

30 DETERMINATION OF FAIR VALUE

A number of principles and the Group’s information provision require

the determination of the fair value of both financial and non-financial

assets and liabilities. For the purposes of valuation and information

provision, the fair value is determined on the basis of the following

methods. If applicable, further information on the principles for deter-

mining the fair value is provided in the section of these notes applying

specifically to the respective asset or the respective liability.

■■ Tangible fixed assets

The fair value of tangible fixed assets included as a result of a busi-

ness combination is the estimated amount for which an item of

immovable property could be traded on the valuation date between a

willing buyer and a willing seller in an arm’s length transaction after

proper marketing in which the parties have each acted prudently and

knowledgeably. The market value of other tangible fixed assets and

inventories is based on the listed market prices of comparable assets

and items where available, and on replacement costs where appli-

cable.


Notes to the profit and loss account

31 OPERATING SEGMENTS

The Group consists of three segments, as described below. The

segments offer a range of products and services, are managed sepa-

rately and use various technologies. The summary below describes

the activities of the various segments of the Group:

■■ Advanced Textiles & Composites

Manufacture and sale of protective and safety fabrics for profes-

sional wear, outdoor fabrics, composites for personal and vehicle

protection and composites for industrial applications and technolog-

ical applications in aerospace.

■■ Geosynthetics & Grass

Manufacture and sale of fabrics, non-wovens and grids for civil engi-

neering, environmental projects, recreational and industrial applica-

tions and manufacture and sale of synthetic turf fibres, systems and

backing for a range of applications.

■■ Other Activities

Manufacture and sale of rubber and foam rollers for the office equip-

ment industry and related products, development, production and

sale of inkjet technology and related components for industrial appli-

cations, as well as country holding companies and service companies.

Limited transactions take place between the segments. The prices for

these transactions are determined on an objective business basis.

There is no segment in which the Group depends on sales to a single

customer for all its revenues.

Analysis by geographic location

The segments operate on four continents, namely Europe, North

America, Australia and Asia. In the presentation of information based

on geographic segments, the revenues of the segment are based on

the geographic location of origin. The assets of the segments are

based on the geographic location of the assets.

The following page contains an overview of each of the reporting

segments. The performance is determined on the basis of the oper-

ating result, as stated in the internal management report to the

CODM. The CODM is formed by the Executive Board.


31.1. Analysis by operating segment

in millions of eurosAdvanced Textiles &

Composites Geosynthetics & Grass Other activitiesEliminations between

segments Consolidated

2012 2013 2012 2013 2012* 2013 2012 2013 2012* 2013

EXTERNAL REVENUES 460.6 427.8 518.7 517.8 69.7 66.4 – – 1,049.0 1,012.0

Revenue from transactions

between segments – – – – – – – – – –

Depreciation and amortisation – 15.7 – 16.6 – 30.7 – 25.9 – 5.2 – 5.4 – – – 51.6 – 47.9

Operating income 18.5 15.0 25.1 23.6 – 8.0 – 3.0 – – 35.6 35.6

Financial income 1 0.3 0.5

Financial expenses 1 – 12.5 – 10.6

Profit tax – 8.2 – 8.5

Net result of associated

companies – – – 0.3 0.1 – – – – – 0.3 0.1

ASSETS AND LIABILITIES

Assets of segments 341.9 334.7 454.8 426.6 65.0 60.3 – – 861.7 821.6

Investments in associated

companies – – 4.1 3.9 – – – – 4.1 3.9

Unallocated assets – – – – – – – – 60.1 45.0

Total assets 341.9 334.7 458.9 430.5 65.0 60.3 – – 925.9 870.5

Liabilities of segment 2 62.7 67.3 74.8 78.4 61.7 32.7 – – 199.2 178.4

Unallocated liabilities – – – – – – – – 271.4 218.8

Total liabilities 62.7 67.3 74.8 78.4 61.7 32.7 – – 470.6 397.2

Investment expenditure 9.4 7.8 5.3 4.9 1.9 1.7 16.6 14.4

1 2012: excluding € 0.1 million of consolidated exchange rate differences (2013: € 0).2 Excluding intercompany loans.* Adjusted for accounting policy change pensions.

31.2 Analysis by geographic location

Revenues by originNon-current

assets by origin*

2012 2013 2012 2013

Netherlands 209.4 221.0 59.0 54.3

Other Europe 192.0 189.5 97.3 106.0

North America 468.9 449.7 153.2 140.8

Asia / Australia /

Middle East 178.7 151.8 160.7 138.7

Total 1,049.0 1,012.0 470.2 439.8

* Non-current assets exclude financial instruments and deferred profit tax assets


. Notes to the profit and loss account

The pension costs amount to € 10.1 million. This figure includes € 5.1

million (2012: € 1.6 million) in respect of defined benefit schemes (see

note 48.3) and an expense of € 5.0 million (2012: € 4.5 million) in

respect of defined contribution schemes. The income in respect of

defined benefit schemes includes non-recurring income of € 0.1

million (2012: € 3.3 million) (see note 48).

The average number of employees (permanent and temporary) in the

Group in 2013 was 4,735 (2012: 4,941).

34 GENERAL MANAGEMENT COSTS

The general management costs include the following other operating

expenses and income.

Government subsidies amount to € 1.1 million (2012: € 1.7 million) and

relate particularly to subsidised research and development projects.

In 2013 the book profit on the sale of tangible assets amounts to € 0.2

million (2012: € 0).

35 NET FINANCIAL EXPENSES 2012 2013

Interest income 0.3 0.5

Foreign currency exchange rate differences 0.1 –

Financial income 0.4 0.5

Interest expenses – 8.9 – 7.4

Realised change in fair value of derivatives

for which hedge accounting is applied – 3.4 – 3.0

Ineffective portion of change in fair value

of derivatives for which hedge accounting

is applied – 0.1 – 0.1

Result of derivatives for which no hedge

accounting is applied – 0.1 – 0.1

Financial expenses – 12.5 – 10.6

Net financial expenses – 12.1 – 10.1

32 ACQUISITIONS AND SALE OF PARTICIPATING INTERESTS

32.1 Acquisitions

On 15 January 2013 the Group acquired full control of Amber Compos-

ites Ltd of the United Kingdom (100% interest). Amber is a British

manufacturer of thermoset composites for industry and the automo-

tive market. The acquisition will allow an acceleration of activities in

the European thermoset composites market. For reporting purposes,

this acquisition has been included in the Advanced Textiles &

Composites sector.

The acquisitions are being accounted for in accordance with the

acquisition method (IFRS 3). The acquisition amounts have been allo-

cated to the identified acquired assets and liabilities, based on the

fair value. The expected synergy effects for the Group result in an

amount of € 6.9 million of goodwill paid for the acquisition. The acqui-

sition has no material impact on the assets and liabilities.

In 2013 an amount of € 22.2 million was paid in respect of acquisi-

tions, including € 5.0 million relating to acquisitions in prior years. The

effect of the acquisition on 2013 revenues amounts to € 10.7 million.

The effect of the acquisition on the 2013 result after tax is -€ 0.3

million. The revenues and net results would not differ materially if the

acquisition had taken place on 1 January 2013. The Group incurred

expenses of € 0.6 million in connection with the acquisitions,

comprising particularly external legal expenses and due diligence

costs.

32.2 Deconsolidation

TenCate – Union Protective Fabrics Asia Ltd was deconsolidated in

2013 because the Group no longer has control over the company. The

deconsolidation did not generate a result. The cash flow from

investing activities amounts to € 4.2 million as a result of the decon-

solidation of a bank debt.

33 PERSONNEL COSTS 2012 2013

Wages and salaries 154.9 151.5

Social charges 32.3 31.6

Costs of option scheme 2.0 1.6

Pension costs* 6.1 10.1

Temporary personnel 14.5 15.7

Other personnel costs 5.6 7.1

215.4 217.6



36 PROFIT TAX 2012* 2013

Profit tax payable

Current financial year – 10.6 – 12.3

Recognition of previously unrecognised tax

losses 0.1 0.7

Underprovision (overprovision) in previous

years – 10.5 – 11.6

Deferred profit tax

Origination and reversal of temporary

differences – 0.5 2.7

Recognition of previously unrecognised

tax losses 0.1 –

Change in unrecognised temporary

differences 2.7 0.1

Change in tax rates – 0.3

2.3 3.1

Total profit tax charge in profit

and loss account – 8.2 – 8.5


Reconciliation with applicable profit tax rate 2012* 2013

Result before profit tax 23.5 25.5

Tax on profit at average weighted local profit tax rate 31.1% 7.3 30.6% 7.8

Non-tax-deductible costs 5.5% 1.3 3.9% 1.0

Tax-exempt income / deductions – 14.5% – 3.4 – 11.4% – 2.9

Change in tax rates 0.0% – – 1.2% – 0.3

Losses in reporting year for which no deferred tax asset has been recognised 31.6% 7.4 14.1% 3.6

Change in tax losses from previous years for which no deferred tax asset has been recognised – 0.9% – 0.2 – 2.7% – 0.7

Change in unrecognised deferred tax assets in respect of temporary valuation differences – 11.5% – 2.7 – 0.4% – 0.1

Other differences – 6.4% – 1.5 0.4% 0.1

Tax charge in the profit and loss account 34.9% 8.2 33.3% 8.5


The decrease in the weighted average tax rate from 31.1% to 30.6%

was due in particular to changes in the various countries’ shares in

the result before profit tax. In comparison with 2012, a smaller share

of the result was generated in countries with a relatively higher tax

rate in 2013.

The decrease in the effective tax rate from 34.9% to 33.3% is due

particularly to the decrease in losses in countries in which no full

deferred tax assets are recognized.


37 INTANGIBLE ASSETS Goodwill Development

costs

Other intangible

assets Total

Cost

Balance as at 1 January 2012 214.5 13.3 99.5 327.3

Acquired through business combinations 4.6 – 3.6 8.2

Additions – 4.2 0.4 4.6

Exchange rate differences – 2.1 – 0.1 – 0.4 – 2.6

Balance as at 31 December 2012 217.0 17.4 103.1 337.5

Acquired through business combinations 6.9 – 10.6 17.5

Additions – 3.3 1.3 4.6



Amortisation


Amortisation – 2.6 11.9 14.5

Exchange rate differences – – 0.1 – 0.6 – 0.7


Amortisation – 2.1 11.0 13.1



Carrying value




37.1 Amortisation/impairment

The Group recognised no impairment losses on intangible assets in

2013 (2012: € 0).

37.2 Impairment testing for cash generating units which include

goodwill

The following units include goodwill items:

2012 2013

TenCate Grass 118.4 114.4

TenCate Advanced Armour 58.2 57.2

TenCate Advanced Composites 24.3 30.2

Xennia 9.4 9.2

Other activities 4.2 3.6

214.5 214.6

Notes to the consolidated balance sheet

The Group tested the existing goodwill for impairment. The CGU

structure for the Composites & Armour businesses was revised in

2013 as a result of a reorganisation and a change to the reporting

structure due to acquisitions in prior years. As a result of these

changes, the level at which goodwill is tested was brought into line

with the units of TenCate Composites (worldwide) and TenCate

Armour (worldwide). This change has no consequences for the result

of the impairment test.

The realisable value has been determined on the basis of the value in

use. The value in use is based on the future cash flows over the forth-

coming four years, based on historical empirical data, market expec-

tations and strategic plans. No growth rate is applied in the perpetual

cash flow for the period beyond four years. The value in use in 2013


pressure. It is expected that the gross margin will rise in the years

ahead as a result of the expected purchasing advantages and contin-

uing reductions in production costs.

TenCate Advanced Armour

The assumptions used for the discount rate and revenue growth are

9.3% and 43% respectively. In the case of a discount rate of 12.9%

and revenue growth of 28%, the realisable value is close to the

carrying value. If the assumed gross margin growth deviates by less

than 3%, the realisable value still exceeds the carrying value.

The success of the development of the TenCate ABDS™ active blast

countermeasure system is expected to make an important contribu-

tion to the growth of the TenCate Advanced Armour unit. Whereas

ABDS generated no revenues in 2013, strong growth is expected in

the years ahead.

If the TenCate ABDS™ active blast countermeasure system is

excluded, the realisable value is close to the carrying value. An impor-

tant assumption in this regard concerns the expected 14% revenue

growth with an unchanged gross margin. Revenues in the defence

market have decreased sharply in recent years. As a result of a

strengthening of the market position, TenCate expects to achieve

growth in the armour market in the years ahead.

Xennia Technology


9.4% and 18% respectively. In the case of a discount rate of 12.0%

and revenue growth of 16%, the realisable value is close to the

carrying value. If the assumed gross margin growth deviates by less

than 3%, the realisable value still exceeds the carrying value.

Revenue growth and growth in the gross margin rate are expected in

the future at Xennia Technology as a result of the successful comple-

tion of the review of the business portfolio initiated in 2013 under a

new management team. A sharper focus is being applied to activities

with high added value.

Other units

With regard to the other units it was concluded that an adjustment to

one of these assumptions would not reasonably result in the carrying

value exceeding the realisable value.

has been determined in the same way as in 2012. On the basis of this

test, no goodwill impairment has been recognised. The changes in

2013 related to acquisitions and exchange rate differences.

Principal assumptions made in estimating the present value of cash

flows

The principal assumptions made in calculating the realisable value

concern discount rates, revenue growth and gross margins.

Discount rate

The discount rate is a pre-tax measure based on the risk-free interest

rate on government bonds, adjusted for the risk premium for both the

higher risk of securities investments and the Group’s systemic risk.

The pre-tax discount rates used range from 9.2% to 9.4% (2012: 9.1%

to 9.3%).

Revenue growth

The expected revenue growth is expressed as the compound annual

growth in the first four years of the schedules used to test impairment

and is based on past experience, market expectations and strategic

plans.

Gross margin percentage

The gross margin is the margin based on cost prices (in accordance

with the inventory valuation principles) as a percentage of expected

revenues.

Sensitivity to changes in assumptions

The sensitivity of the principal assumptions has been investigated

and is particularly important with regard to the TenCate Grass,

TenCate Advanced Armour and Xennia Technology units, because in

the event of a relatively small change in the assumptions the carrying

value of these units exceeds the realisable value. The realisable value

exceeds the carrying value of these units by at least 15%.

TenCate Grass


9.4% and 3% respectively. In the case of a discount rate of 10.6% and

revenue growth of 1%, the realisable value is close to the carrying

value. If the assumed gross margin growth deviates by less than 3%,

the realisable value still exceeds the carrying value.

In the TenCate Grass unit there were higher raw material costs during

the reporting year, as a result of which the gross margin came under


. Notes to the consolidated balance sheet

38 TANGIBLE FIXED ASSETS Land and buildings

Plant and equipment

Other operating

assets

Assets under

construction Total

Cost

Balance as at 1 January 2012 143.2 453.6 51.2 2.1 650.1

Acquired through business combinations – 1.1 0.1 0.6 1.8

Additions 0.8 8.5 2.6 0.1 12.0

Disposals – 0.2 – 4.2 – 1.4 – – 5.8

Exchange rate differences – 0.7 – 2.5 – 0.1 – – 3.3

Balance as at 31 December 2012 143.1 455.7 52.4 2.8 654.0

Acquired through business combinations – 1.5 0.3 – 1.8

Additions 0.6 6.1 1.9 1.2 9.8

Disposals – 0.2 – 6.9 – 1.4 – – 8.5

Deconsolidation – 1.7 – 3.2 – 0.4 – – 5.3

Exchange rate differences – 3.4 – 9.4 – 1.3 – 0.1 – 14.2


Depreciation

Balance as at 1 January 2012 67.2 320.1 40.9 – 428.2

Depreciation 5.8 27.7 3.6 – 37.1

Disposals – 0.2 – 4.0 – 1.3 – – 5.5

Deconsolidation – – 0.1 – – – 0.1


Balance as at 31 December 2012 72.4 341.8 43.1 – 457.3

Depreciation 5.9 25.6 3.3 – 34.8

Disposals – 0.2 – 6.5 – 1.2 – – 7.9

Deconsolidation – 0.5 – 2.9 – – 0.3 – 3.7


Balance as at 31 December 2013 76.2 351.4 44.6 – 0.3 471.9

Carrying value

Balance as at 1 January 2012 76.0 133.5 10.3 2.1 221.9



38.1 Impairment and reversal of impairment

The Group recognised no impairment of tangible fixed assets in 2013

(2012: € 0).

No impairment losses were reversed during the year.

38.2 Leased buildings, plant and equipment

The Group leases buildings, plant and equipment under a number of

financial leases.

The net carrying value of these assets as at 31 December 2013 was

€ 5.5 million (31 December 2012: € 4.2 million). The leased buildings,

plant and equipment serve as collateral for the financial lease liabili-

ties (see note 47).


38.3 Collateral

As at 31 December 2013 no plant and equipment (2012: € 7.1 million)

were pledged as collateral.

39 INVESTMENTS IN ASSOCIATED COMPANIES AND FINANCIAL

FIXED ASSETS

39.1 Associated companies

The associated companies item at the end of 2013 relates to the 30%

interest in the shares of Hellas Construction Inc and the 25% interest

in the shares of Landscape Solutions B.V. The 49% interest in Green-

Fields (AllSports) UK ltd was sold at carrying value in 2013. The share

in the net income of associated companies amounted to € 0.1 million

(2012: -€ 0.3 million). The Group has the option from December 2011

of increasing its interest in Hellas by 7% per year at an acquisition

price dependent on the development of the EBITDA of Hellas.

The Group received no dividend payments from associated companies

in 2013 (2012: € 0). The associated companies have a carrying value

of € 3.9 million as at 31 December 2013 (31 December 2012: € 4.1

million).

Associated companies and joint ventures

The summary financial data have not been adjusted in respect of the

percentage owned by the Group and can be analysed as follows as at

31 December:

2012 2013

Non-current assets 26.9 24.6

Current assets 30.7 34.5


Current liabilities 21.4 24.8

Non-current liabilities 8.9 3.9

Total liabilities 30.3 28.7

Revenues 111.0 113.3

Costs 112.3 113.0

Profit/(loss) – 1.3 0.3

The changes in the associated companies were as follows:

2012 2013

Balance as at 1 January 4.6 4.1

Divestment – – 0.1

Result – 0.3 0.1

Exchange rate differences – 0.2 – 0.2

Balance as at 31 December 4.1 3.9

39.2 Financial fixed assets

The financial fixed assets comprise long-term receivables and invest-

ments.

The main long-term receivables and investments concern invested

pension assets at a number of American subsidiaries of € 10.0 million

(2012: € 9.6 million) and an advance payment in connection with long-

term lease rights in China and Malaysia amounting to € 2.0 million

(2012: € 2.1 million).



40 DEFERRED PROFIT TAX ASSETS AND LIABILITIES

The deferred profit tax assets and liabilities recognised in the balance

sheet are attributable to the following items:

Assets Liabilities Net

2012 2013 2012 2013 2012 2013

Intangible assets – – – 7.9 – 10.6 – 7.9 – 10.6

Tangible fixed assets – – – 11.4 – 9.4 – 11.4 – 9.4

Financial fixed assets – 0.1 – – – 0.1

Inventories 6.6 7.3 – – 6.6 7.3

Derivatives 1.3 0.5 – – 1.3 0.5

Other receivables – 0.1 – 0.3 – – 0.3 0.1

Pension provisions 7.5 3.2 – – 7.5 3.2

Other provisions 9.8 9.3 – – 9.8 9.3

Tax value of recognised loss carry-forwards 13.1 12.3 – – 13.1 12.3

Other items 2.5 3.7 – – 2.5 3.7

Deferred profit tax assets/liabilities 40.8 36.5 – 19.6 – 20.0 21.2 16.5

Set-off of assets and liabilities – 10.8 – 12.5 10.8 12.5 – –

Net deferred profit tax assets/liabilities 30.0 24.0 – 8.8 – 7.5 21.2 16.5

The changes in the temporary differences during the financial year

can be analysed as follows:

Balance as at 1 January

2012

Recognised in profit

and loss

Recognised in other

comprehen-sive income

Acquired through

business combinations

Balance as at 31 December

2012

Recognised in profit

and loss

Recognised in other

comprehen-sive income

Acquired through

business combinations

Balance as at 31 December

2013

Intangible assets – 9.1 2.5 – – 1.3 – 7.9 – 0.3 – – 2.4 – 10.6

Tangible fixed assets – 13.1 1.3 – 0.4 – 11.4 2.0 – – – 9.4

Financial fixed assets 0.1 – 0.1 – – – 0.1 – – 0.1

Inventories 5.6 0.8 – 0.2 6.6 0.7 – – 7.3

Derivatives 1.9 – 0.4 – 0.2 – 1.3 – – 0.8 – 0.5

Other receivables 0.7 – 1.0 – – – 0.3 0.4 – – 0.1

Pension provisions 2.2 – 1.1 6.4 – 7.5 0.3 – 4.6 – 3.2

Other provisions 9.6 – 0.1 – 0.3 9.8 – 0.5 – – 9.3

Tax value of recognised loss

carry-forwards 12.9 0.2 – – 13.1 – 0.8 – – 12.3

Other items 2.3 0.2 – – 2.5 1.2 – – 3.7

Deferred profit tax assets/

liabilities 13.1 2.3 6.2 – 0.4 21.2 3.1 – 5.4 – 2.4 16.5

The tax effect of the other comprehensive income in Group equity is

€ 5.4 million (2012: € 6.2 million) and relates to the actuarial results in

respect of pensions and the hedging reserve.


Trade and other receivables with a term of less than one year are

stated at amortised cost less impairments. Transfers to provisions for

doubtful debts are included in the profit and loss account under cost

of sales.

As at 31 December 2013 trade debtors with a value of € 6.5 million

(2012: € 6.5 million) were encumbered as security for credit facilities

amounting to € 6.5 million (2012: € 6.5 million). € 6.5 million of this

credit facility was utilised as at the end of 2013 (2012: € 6.5 million).

43 OTHER RECEIVABLES 2012 2013

Amount receivable in respect of other taxes 4.3 3.8

Derivatives at fair value 0.3 1.1

Construction contracts 2.1 1.7

Other receivables and prepayments 9.2 11.7

15.9 18.3

Amounts receivable in respect of other taxes relate mainly to reclaim-

able VAT.

As at 31 December 2013 the prepayments amounted to € 5.8 million

(2012: € 6.0 million).

As at 31 December 2013 the total costs and recognised profit associ-

ated with projects in progress, less recognised losses, amounted to

€ 16.3 million (2012: € 20.2 million). Trade debtors included no

amounts deducted in respect of projects in progress commissioned by

third parties (2012: € 0)

44 CASH AND CASH EQUIVALENTS 2012 2013

Bank balances 26.6 21.5

Cash balances 0.1 0.1

Cash and cash equivalents 26.7 21.6

Cash loans, overdrafts – 35.4 – 14.7

Cash in cash flow statement – 8.7 6.9

All amounts were freely available at the end of 2012 and 2013.

The realisation of the deferred profit tax assets depends on the future

taxable profit being higher than the profit from the reversal of taxable

temporary differences. On the basis of a projection of the estimated

taxable profit and the existing fiscal planning possibilities, it is

considered likely that sufficient taxable profit will be generated in

future to realise these deferred profit tax assets.

Deferred profit tax assets not recognised in the balance sheet

As at 31 December 2013 there were € 97.6 million (2012: € 89.4

million) of unused losses available for set-off. No deferred profit tax

asset has been recognised in respect of this amount because it is

currently unlikely that future taxable profit will be available to the

Group for the losses to be set off.

The amount of profit tax concerned as at 31 December 2013 is € 23.5

million (2012: € 22.2 million).

The expiry periods of the unused losses available for set-off are

shown in the table below:

2012 2013

Up to 5 years 17.5 19.3

After 5 years 27.7 30.9

Unspecified period 44.2 47.4

Unused losses available for set-off 89.4 97.6

41 INVENTORIES 2012 2013

Raw materials and manufacturing supplies 60.0 64.2

Semi-manufactures 50.3 47.6

Finished products 116.1 112.0

Inventories 226.4 223.8

In 2013 the reduction in the inventory value included as an expense

amounted to a net recoverable amount of € 8.1 million (2012: € 12.6

million). The reversal of the reduction in the inventory value in 2013

amounted to € 1.3 million (2012: € 0.2 million). The inventory value

included as an expense and the reversal have been stated under cost

of sales.

42 TRADE DEBTORS 2012 2013

Due from third parties 136.2 125.1

Due from associated companies 3.2 3.1

Due from joint ventures 0.6 0.5

Trade debtors 140.0 128.7



Repurchase of own shares

The General Meeting of Shareholders has granted the Executive

Board the power to acquire fully paid-up shares in the Company (or

certificates thereof) for the period ending on 17 October 2014.

The maximum number of shares which may thus be acquired is 10%

of the issued capital at the time of acquisition of the shares (or certifi-

cates thereof).

45.3 Share premium

The share premium reserve is to be considered as paid-up capital.

45.4 Translation reserve

The translation reserve comprises all exchange rate differences

which arise due to the translation of amounts relating to activities

outside the eurozone. These exchange rate differences are carried in

equity. The accumulation of the respective amount began on 1

January 2004 and is not available for distribution to shareholders.

45.5 Hedging reserve

The hedging reserve consists of the unrealised effective portion of

the accumulated change in the fair value of the derivatives to which

hedge accounting is applied and which are used to hedge the interest

rate risk. The reserve is not available for distribution to shareholders.

A negative reserve reduces the amount freely available for distribu-

tion from the reserves.

The balance of the hedging reserve after tax on 31 December 2013 is

–€ 1.6 million (2012: -€ 3.9 million). The change in the hedging reserve

before tax amounts to € 3.1 million. € 3.0 million of this change has

been realised and € 0.1 million is the ineffective portion of the fair

value change to which hedge accounting is applied.

45.6 Other reserves and undistributed result

Subsequent to the reporting date the following dividend has been

proposed, which has not yet been included in the balance sheet. It is

proposed to set the dividend in respect of 2013 at € 0.50 per € 2.50

par value share (2012: € 0.50), payable optionally in cash or as stock

dividend.

2012 2013

€ 0.50 per ordinary share (2012: € 0.50) 13.0 13.1

45 TOTAL SHAREHOLDERS’ EQUITY

A statement of changes in equity can be found on page 108.

45.1 Ordinary shares

Number x 1,000 2012 2013

In issue and fully paid as at 1 January 25,929 26,498

Issued stock dividend 569 294

Other – – 1

In issue and fully paid as at 31 December 26,498 26,791

The authorised share capital amounts to € 200 million, divided into 80

million ordinary shares of a par value of € 2.50. The issued capital as

at 31 December 2013 amounts to 26,791,367 ordinary shares of a par

value of € 2.50 (as at 31 December 2012: 26,497,666 ordinary shares

of a par value of € 2.50).

The holders of ordinary shares are entitled to dividend as approved

periodically by the General Meeting of Shareholders. They are also

entitled to cast one vote per share at meetings of the Company.

Issue of shares and limitation of pre-emptive right

The General Meeting of Shareholders has granted the Executive

Board the power to issue shares and to exclude or restrict the

pre-emptive right for the period ending on 17 October 2014.

The power to issue shares concerns 10% of the issued share capital

plus a further issue up to a maximum of 10% of the issued share

capital in the event that the issue takes place in the context of a

merger or acquisition. The same applies to the power of the Executive

Board, with the approval of the Supervisory Board, to restrict or

exclude the pre-emptive right.

45.2 Repurchased ordinary shares

Number x 1,000 2012 2013

In issue and fully paid as at 1 January 620 584

Own shares for conversion of physical

securities 3 –

Exercise of options – 39 – 66

In issue and fully paid as at 31 December 584 518

Ordinary shares are repurchased to prevent earnings per share being

diluted by the granting of options. No own shares were repurchased

in 2012 and 2013.


Weighted average number of ordinary shares

number x 1,000 2012 2013

Ordinary shares in issue on 1 January 25,929 26,498

Effect of ordinary shares held (including

repurchased shares) – 620 – 584

Effect of shares issued in connection with

stock dividend 569 294

Effect of shares issued as result of exercised

option rights 17 17

Weighted average number of ordinary

shares as at 31 December 25,895 26,225

46.2 Diluted earnings per share

The calculation of the diluted earnings per share as at 31 December

2013 is based on the net income of € 19.0 million (2012: € 20.9 million)

attributable to holders of ordinary shares and the weighted average

number of outstanding ordinary shares during the 2013 financial year

of 26,366,474 (2012: 26,040,448), calculated as follows:

2012 2013

Net profit for financial year attributable to

holders of ordinary shares 20.9 19.0


number x 1,000 2012 2013


as at 31 December 25,895 26,225

Effect of outstanding option rights 145 141

Weighted average number of ordinary

shares (after dilution) as at 31 December 26,040 26,366

47 LONG-TERM DEBTS 2012 2013

Syndicated loan 215.0 190.3

Financial lease liabilities 2.2 2.1

Other loans 4.0 3.7

Total 221.2 196.1

Less: repayment of loans in forthcoming

years – 0.9 – 1.0

220.3 195.1

45.7 Objective with regard to equity and financing

The objective with regard to equity and financing, as in 2012, is to

guarantee the continuity of the Company by means of attractive

returns for shareholders and by guaranteeing benefits for other stake-

holders. The capital structure is adjusted if necessary in line with

economic developments and risks relating to assets.

With regard to financing, the longer-term objective is a ratio of net

debt to EBITDA of a maximum of 2.5.

The calculation as at 31 December is as follows:

2012 2013

Long-term debts 220.3 195.1

Short-term portion of long-term debts 0.9 1.0

Cash loans, overdrafts 35.4 14.7

Total debt 256.6 210.8

Less: cash and cash equivalents 26.7 21.6

Net debt 229.9 189.2

EBITDA* 90.3 83.5

Net debt / EBITDA 2.55 2.27

* EBITDA in accordance with agreements with banks adjusted to take account of the effect of acquired and divested businesses, non-recurring items and some compo-nents of the net financial expenses, such as currency translation differences: effect in 2013 € 0 (2012: +€ 1.2 million).

46 EARNINGS PER SHARE

46.1 Ordinary earnings per share

The calculation of the ordinary earnings per share as at 31 December

2013 is based on the net income of € 19.0 million (2012: € 20.9 million)

attributable to holders of ordinary shares and a weighted average

number of outstanding ordinary shares during the 2013 financial year

of 26,224,821 (2012: 25,895,322), calculated as follows:

2012 2013

Net profit for financial year attributable to

holders of ordinary shares 20.9 19.0



The aforementioned syndicated loan is subject to a number of cove-

nants, the principal of which are:

■■ total net debt/EBITDA less than 3.25 at the end of the first

quarter of each year, less than 3.50 at the end of the second

quarter of each year and less than 3.00 at the end of the third

and fourth quarters of each year, with the once-only possibility

of an increase of 0.25 for two successive quarters following an

acquisition, but no higher than 3.50;

■■ EBITDA/net interest greater than 4;

■■ joint guarantee of subsidiaries with total assets of at least 60%

of the Group total.

The Group was meeting these covenants as at the reporting date.

In the event of a change of control of the Company, the syndicated

loan is immediately repayable if a two-thirds majority of the lenders

so require.

The financial lease liability relates to a building in Hungary and

machinery in the United Kingdom.

The USD loan with variable interest concerns a $4.0 million loan

(2012: $4.0 million) from the Development Authority of Pike County

Industrial Revenue Bonds. Repayment is due in full in 2018.

Details of the hedging of the interest rate risk borne by the Group can

be found in note 50.4.

2012 Total

2013 Total

2014 < 1 year

2015 1-2 years

2016/18 2-5 years

2019ff > 5 years

Syndicated loan

EUR variable interest 48.6 41.3 41.3

USD variable interest 166.4 149.0 149.0

Financial lease liabilities

EUR fixed interest 8.0% 0.1 –

EUR variable interest 2.0 1.5 0.5 0.5 0.5

GBP variable interest 0.1 –

GBP fixed interest 5.4% - 7.6% – 0.6 0.2 0.2 0.2

Other loans

USD variable interest 3.0 2.9 2.9

EUR interest-free 1.0 0.8 0.3 0.3 0.2

221.2 196.1 1.0 191.3 3.8 –

The original syndicated loan amounted to € 450.0 million. It was

reduced to € 400.0 million in 2013 at the Group’s request. € 190.3

million of this facility was drawn as at 31 December 2013 (2012:

€ 215.0 million). The loan is due to mature on 8 December 2015.

Repayment is due in full on the maturity date. The loan is valued at

amortised cost in accordance with the effective interest method.

The interest rate payable is linked to the net debt/EBITDA ratio,

which is calculated quarterly in respect of the preceding 12 months.

The EBITDA for acquired and divested businesses is annualised.

In accordance with the agreements entered into with the banks,

the EBITDA is also adjusted to take account of non-recurring items

and a number of components of the net financial expenses, such as

currency translation differences. The interest margin above Euribor or

Libor will be between 0.70% and 1.50%. A utilisation fee of 0.20% is

payable if more than 50% of the facility is drawn. At the end of 2013

the interest margin was 1.20% (2012: 1.20%).


At the end of 2013 the bonds amounting to € 114.1 million comprised

government bonds with a direct market listing. The other investments

predominantly have derived market listings.

48.3 Charge stated in the profit and

loss account 2012* 2013

Service costs – 4.3 – 4.1

Interest on liabilities – 14.2 – 12.5

Expected return on plan assets 13.6 11.4

Income from change to pension scheme 3.3 0.1

Pension (expenses)/income – 1.6 – 5.1


The actual return on fund investments amounts to € 19.7 million

(2012: € 26.4 million).

Netherlands

The defined benefit pension scheme concerns in particular the

pension rights of the Dutch employees which have been placed with

Stichting Pensioenfonds Koninklijke Ten Cate. In 2012 a change in the

pension scheme was agreed whereby the accrual percentage was

reduced from 2.1% to 1.79%. As a result of the reduction in the

accrual percentage, income of € 3.3 million has been recognised as a

credit to the result for 2012.

The main features of the scheme are:

■■ pension accrual based on average salary;

■■ accrual rate of 1.79%;

■■ conditional indexation, the target level being equivalent to 90%

of wage growth for active members (employees) and 90% of

price growth for inactive members (pensioners and members

with paid-up entitlements);

■■ the employer contribution is increased by 50% if the cover ratio

falls below 110%.

The board of the pension fund has specified a 2.6% reduction in

pension rights with effect from 1 April 2014 (2.3% from 1 April 2013).

On the basis of the cover ratio as at 31 December 2013, no additional

reduction is expected in 2015. As the expected reductions are taken

into account in the indexation assumption, the effects have been

stated in Group equity through actuarial gains and losses.

48 PENSION LIABILITIES 2012 2013

Defined-benefit pension schemes

Present value of defined benefit obligations 370.2 363.4

Fair value of plan assets 340.6 353.6

29.6 9.8

Asset ceiling 0.2 0.3

Present value of net liabilities of

defined-benefit pension schemes 29.8 10.1

Other liabilities in respect of pensions 12.5 14.0

42.3 24.1

48.1 Changes in the valuation of the liability

as at the reporting date 2012 2013


Service costs 4.3 4.1

Members' contributions 2.9 2.9

Interest costs 14.2 12.5

Benefits paid – 16.1 – 16.1

Income from change to pension scheme – 3.3 – 0.1

Actuarial differences 35.7 – 10.1


48.2 Investments 2012* 2013


Expected return 13.6 11.4

Employers' contributions 6.4 6.2

Members' contributions 2.9 2.9

Actuarial differences 12.8 8.3

Benefits paid – 16.1 – 15.8



Analysis of plan assets as at 31 December 2012 2013

Bonds 176.9 167.5

Securities 119.2 138.0

Commodities 13.0 11.2

Real estate 24.1 21.7

Cash 0.8 8.3

Other assets 6.6 6.9

Plan assets 340.6 353.6



Agreements have been entered into with the pension fund in respect

of the contribution payable. The contribution percentage varies within

an agreed range, depending on the pension fund’s cover ratio.

The current agreements cover the period up to 31 December 2014.

Other liabilities

The other liabilities in respect of pensions relate to defined contri-

bution schemes and a number of specific old-age provisions. The prin-

cipal defined contribution scheme is a 401K (savings) scheme in the

United States.

48.4 Principles for defined benefit schemes

The main actuarial assumptions as at the reporting date (in weighted

averages) are as follows:

2012 2013

Discount rate as at 31 December 3.4% 3.5%

Expected return on plan assets

as at 31 December 3.4% 3.5%

Future wage increases 2.5% 2.5%

Future pension increases of inactive

participants 0.6% 0.8%

Assumptions with regard to future mortality figures are based on

published statistical data and mortality probabilities. The mortality

tables used are the 2012-2062 forecast table of the Netherlands

Actuarial Association with a correction factor dependent on age and

gender. For the valuation of partner’s pensions the age difference

between men and women has been set at three years. The total

expected long-term return on the investments is 3.5% (2012: 3.4%).

A 0.1% change in the discount rate would result in a change of

approximately € 0.4 million in the annual expenses (2012: € 0.3

million). A 0.1% change in the discount rate would cause the liability

to rise or fall by approximately € 6.0 million (2012: € 6.0 million).

Historical information 2009 2010 2011 2012* 2013

Present value of defined benefit obligations 295.7 295.8 332.5 370.2 363.4

Fair value of plan assets 298.5 316.7 321.0 340.6 353.6

Present value of net liabilities – 2.8 – 20.9 11.5 29.6 9.8

Experience adjustments arising on obligations of the scheme 4.4 9.4 5.3 – 8.9 8.5

Experience adjustments arising on plan assets 11.8 8.1 – 6.0 12.8 8.3

* Adjusted for changes in pension system.


The Group expects to contribute € 6.3 million of employer’s contribu-

tions to defined benefit pension schemes in 2014 (2013: € 6.3 million).

The pension expense in respect of 2014 is estimated at € 5.0 million

(2013: € 5.3 million).

49 PROVISIONSGuarantee /

claims

Reorgani-sation

provision

Other personnel liabilities

Environ-mental Others Total

Balance as at 1 January 2013 5.3 0.5 5.6 2.0 0.8 14.2

Provisions made during the year 5.3 0.7 0.6 – – 6.6

Released to result – 1.2 – – 0.1 – – 0.4 – 1.7

Expenditure in current year – 3.1 – 0.9 – 0.6 – – – 4.6

Exchange rate differences – 0.2 – – – – – 0.2

Balance as at 31 December 2013 6.1 0.3 5.5 2.0 0.4 14.3

Of which short-term

as at 31-12-2012 1.6 0.4 0.3 – 0.5 2.8

as at 31-12-2013 3.9 0.2 0.3 – – 4.4

The amount released to the result has been included in the profit and

loss account as follows:

2012 2013


General management costs 3.3 1.5

Total 5.9 1.7

The guarantee provision relates to goods and services supplied and

the provision for claims relates to claims for damages and possible

legal costs. The release of € 1.7 million relates mainly to the lower-

than-expected figure for guarantee claims.

The provision for reorganisations relates to a number of reorganisa-

tions which were nearly all completed during the financial year.

The provision for other personnel liabilities has been formed for

long-service awards and other benefits, such as anniversaries.

The environmental provision has been formed for expected costs of

decontamination of industrial sites, on the basis of functional decon-

tamination (maintenance of business use).


Other information

50 FINANCIAL INSTRUMENTS

As part of its normal business operations, the Group incurs liquidity,

credit, interest and currency risks. The risk of fluctuations, mainly in

exchange rates and interest rates, is hedged using derivatives.

50.1 Fair value versus carrying value

The fair value and carrying value of financial assets and liabilities

stated in the balance sheet are as follows:

2012 2013

Carrying value

Fair value

Carrying value

Fair value

Assets carried at fair value

Interest rate derivatives for which hedge accounting is used – – 0.1 0.1

Long-term receivables and investments 9.6 9.6 12.9 12.9

Other interest rate derivatives – – 0.1 0.1

Currency derivatives 0.3 0.3 0.9 0.9

9.9 9.9 14.0 14.0

Assets carried at amortised cost

Trade debtors and other receivables 156.8 156.8 145.5 145.5

Cash and cash equivalents 26.7 26.7 21.6 21.6

183.5 183.5 167.1 167.1

Liabilities carried at fair value

Interest rate swaps for which hedge accounting is used 5.2 5.2 2.1 2.1

Other interest rate derivatives 0.6 0.6 0.4 0.4

Currency derivatives 1.0 1.0 0.5 0.5

6.8 6.8 3.0 3.0

Liabilities carried at amortised cost

Syndicated loan 215.0 215.0 190.3 190.3

Financial lease liabilities 2.2 2.2 2.1 2.1

Other loans 4.0 4.0 3.7 3.7

Trade creditors and other payables 135.6 135.6 136.2 136.2

Cash loans and overdrafts 35.4 35.4 14.7 14.7

392.2 392.2 347.0 347.0


The fair value of interest rate caps is divided into intrinsic value and

time value. The intrinsic value is calculated by discounting the differ-

ence between the contractual and the current interest, multiplied by

the principal amount of the interest rate caps, for the residual term at

the market interest rate. The time value of the caps is calculated on

the basis of the Black & Scholes option valuation model with the

intrinsic value requiring adjustment on the basis of the result.

The result is periodically checked against bank statements.

The fair value of long-term debts is calculated on the basis of the

present value of expected future cash flows from repayments and

interest payments.

The fair value of financial lease liabilities is estimated on the basis of

the present value of future cash flows, discounted at the interest rate

for similar lease agreements.

In the case of trade debtors, other receivables, trade creditors and

other short-term debts due within one year, the nominal value is

deemed to reflect the fair value.

The fair value of the syndicated loan is the same as the carrying

value, because it has a variable interest rate and a margin consistent

with market conditions. The changes in the value of the above assets

and liabilities carried at fair value are stated in the profit and loss

account under net financial expenses if no hedge accounting is

applied. The financial instruments valued on the basis of fair value,

and the fair value determination in the above table of financial instru-

ments valued at amortised cost, fall into category 2 as in 2012: no

quoted market price in an active market, with the fair value being

determined indirectly.

Details are given below of the main methods and assumptions used in

estimating the fair value of financial instruments.

The fair value of foreign exchange forward contracts with an under-

lying value below € 5.0 million is based on statements supplied by the

bank; in the case of higher amounts the Group’s own calculation

model is used. In this model the difference between the contractual

and the current forward rate is multiplied by the principal amount of

the contract and discounted at the market interest rate.

The fair value of options is determined on the basis of statements

supplied by banks or on the basis of the Black & Scholes option valua-

tion model.

The fair value of interest rate swaps is calculated by discounting the

difference between the contractual and the current interest, multi-

plied by the principal amount of the interest rate swap, for the

residual term at the market interest rate. The result is periodically

checked against bank statements.


. Other information

50.2 Liquidity risk

The liquidity risk is the risk of the Group being unable to meet its

liabilities when they fall due. The Group’s policy on control of the

liquidity risk is to guarantee to the best of its ability that sufficient

liquidities are available to meet its liabilities on time, in both normal

and exceptional situations. The original syndicated loan amounted to

€ 450.0 million. It was reduced to € 400.0 million at the Group’s

request in 2013. € 209.0 million of this facility was unutilised as at

31 December 2013 (2012: € 233.6 million). The Group’s policy is to refi-

nance on time.

The term of the financial liabilities as at 31 December 2012 is

as follows:

Carrying value

Expected cash flow (including

interest)2013

< 1 year2014

1-2 years2015/17

2-5 years

2018 and later > 5 years

Financial liabilities (excluding derivatives)

Total long-term debts 221.2 – 233.2 – 4.1 – 4.5 – 221.6 – 3.0

Cash loans, overdrafts 35.4 – 35.4 – 35.4 – – –

Trade creditors and other payables 135.6 – 135.6 – 135.6 – – –

Derivatives

Interest rate swaps 5.8 – 5.8 – 3.2 – 1.9 – 0.7 –

FX forward contracts 1.0 – 1.0 – 1.0 – – –

Total 399.0 – 411.0 – 179.3 – 6.4 – 222.3 – 3.0

The term of the financial liabilities as at 31 December 2013 is

as follows:

Carrying value

Expected cash flow (including

interest)2014

< 1 year2015

1-2 years2016/18

2-5 years

2019 and later

> 5 years

Financial liabilities (excluding derivatives)

Total long-term debts 196.1 – 203.3 – 4.0 – 195.3 – 4.0 –

Cash loans, overdrafts 14.7 – 14.7 – 14.7 – – –

Trade creditors and other payables 136.2 – 136.2 – 136.2 – – –

Derivatives

Interest rate swaps 2.5 – 2.5 – 2.0 – 0.3 – 0.2 –

FX forward contracts 0.5 – 0.5 – 0.5 – – –

Total 350.0 – 357.2 – 157.4 – 195.6 – 4.2 –


The age of the trade debtors and the related impairments is as

follows:

2012 2013

Gross Provision Gross Provision

Not due – 60 days

overdue 130.5 0.4 121.3 0.6

60 – 120 days

overdue 6.3 0.1 5.7 0.4

120 – 360 days

overdue 4.5 1.5 2.6 0.7

Over 360 days

overdue 5.1 4.4 6.6 5.8

Balance as at

31 December 146.4 6.4 136.2 7.5

The movements in the provision for trade debtors are as follows:

2012 2013


Charged to profit and loss account 1.4 2.6

Released to result – 0.9 – 0.6

Written off during the year – 1.1 – 0.7

Exchange rate differences – – 0.2


The Group believes that, with the exception of the foregoing,

no provision for impairment is required in respect of trade receivables

which are not yet due or which are up to 60 days overdue.

50.3 Credit risk

Credit risk is the risk of a financial loss for the Group if a customer or

counterparty to a financial instrument fails to meet its contractual

obligations. Credit risks result in particular from trade debtors and,

to a more limited extent, investments in securities and derivatives.

The Group’s exposure to credit risk is mainly determined by the

specific characteristics of the individual customers.

Credit risk is limited by internal research into the creditworthiness of

new and existing customers based on sources such as external

reports, annual reports and payment history or by insuring the credit

risk. The internal credit limits specified on the basis of internal

research are reviewed at least once a year.

Customers for which no credit limit has been issued (internally or by

the insurer) can only do business with the Group on the basis of guar-

anteed payment.

Goods are subject to reservation of ownership. In the event of

non-payment, the Group in most cases has a preferential claim to the

extent that the goods have not been processed and are still present.

The Group does not demand collateral for trade and other receivables.

Impairments are stated in the profit and loss account as cost of sales.

The Group has no particular concentration risks in respect of trade

debtors.

The carrying value of the financial assets reflects the maximum

exposure to credit risk. The maximum exposure is as follows:

2012 2013

Trade debtors 140.0 128.7

Other (long-term) receivables 26.4 29.7


FX forward contracts and options 0.3 0.9

Interest rate caps – 0.2

Total 193.4 181.1


. Other information

50.4 Interest rate risk

99% of the interest-bearing debts have a variable interest rate (2012:

100%). The risk of a rise in interest rates is in principle hedged 90%

for the subsequent year and 75%, 50% and 25% respectively for the

years thereafter. Both interest rate swaps and caps are used for this

purpose. The impact of changes in the value of these derivatives on

the Group’s result is limited as far as possible by the use of hedge

accounting. The conditions applying to the interest-bearing debt are

set out in note 47.

At the end of 2013 the outstanding interest rate instruments are as

follows:

Instrument Maturity Principal Interest rate conditions

Interest rate swap 02-01-18 $ 4 million received variable, payment 4.47% fixed

Interest rate swap 31-12-14 € 30 million received variable, payment 2.81% fixed



Interest rate cap 31-12-16 € 50 million exercise price 3%

Interest rate cap 31-12-16 $ 50 million exercise price 3%

The Group values the interest rate derivatives at fair value (see

section 50.1). Of the fair value of the interest rate derivatives as at

31 December 2013, € 2.5 million has been included in trade creditors

and other payables and € 0.2 million in Other receivables (2012: € 5.8

million in trade creditors and other payables).

The table below shows the periods in which the cash flows relating to

interest rate derivatives that are the subject of cash flow hedge

accounting are expected to take place and in which they will affect

the result.

2012Carrying

valueExpected cash flow < 1 year 1-2 years 2-5 years

Interest rate swaps

Assets – – – – –

Liabilities 5.2 – 5.2 – 3.1 – 1.8 – 0.3

2013Carrying

valueExpected cash flow < 1 year 1-2 years 2-5 years

Interest rate swaps

Assets – – – – –

Liabilities 2.1 – 2.1 – 1.9 – 0.2 –

Interest rate caps

Assets 0.1 – – – –


Competition risk

The Group hedges the estimated currency risk of the expected

purchases and sales for at least the forthcoming six months as far as

possible. The competition risk is offset where possible against the

translation risk on the results of subsidiaries outside the eurozone.

Any remaining risks are hedged using currency options.

Translation risk

The translation risk on the result of subsidiaries outside the eurozone

is offset internally where possible against euro-denominated reve-

nues of subsidiaries outside the eurozone, as well as purchases in

USD by subsidiaries in the eurozone.

50.5 Currency risk

The Group incurs currency risks on sales and purchases denominated

in currencies other than the functional currency of the respective

subsidiary. The currencies in which risk is incurred are mainly the

euro, the US dollar and the British pound.

Transaction risk

The Group hedges orders, trade receivables and payables denomi-

nated in foreign currencies, to the extent that these may have a mate-

rial effect on the result. It uses foreign exchange forward contracts

and currency options for this purpose. The forward contracts have a

term of less than one year after the reporting date. If necessary they

are extended. The forward contracts are carried at fair value.

The principal amounts of the loans drawn in foreign currencies are

used as far as possible to hedge intercompany loans in foreign curren-

cies to subsidiaries which report in the respective currency.

Remaining currency risks on loans to subsidiaries are hedged using

foreign exchange forward contracts.


. Other information

50.6 Sensitivity analyses

In managing interest rate and currency risks, the Group’s aim is to

limit the effect of short-term fluctuations on the Group result. In the

longer term, however, sustained changes in exchange rates and

interest rates will have an effect on the consolidated result.

The effect of a general interest rate rise of one percentage point on

the pre-tax result in 2013 is estimated at -€ 1.0 million (2012: -€ 0.6

million). The effect of a general interest rate rise of one percentage

point on equity is estimated at +€ 1.2 million before tax (2012: € 2.8

million) due to the use of hedge accounting.

The effect of a general rise of one per cent in the value of the euro

against other currencies on the result after profit tax in 2013 is € 0

(2012: € 0). The effect of a general rise of one per cent in the value of

the euro against other currencies on equity at the end of 2013 is esti-

mated at € 2.8 million (2012: € 3.1 million).

Exposure

The exposure to currency risks in respect of trading transactions of

Group entities on the reporting date is as follows:

2012 2013

USD GBP EUR USD GBP EUR

Transaction risk 1.9 1.8 2.7 6.7 0.8 1.1

Competition risk 3.4 2.2 20.6 – 5.1 2.0 29.7

Risk before hedging 5.3 4.0 23.3 1.6 2.8 30.8

Forward contracts 3.3 – 1.1 – 2.2 – 3.4 – 0.8 – 0.9

Option contracts 3.8 – 2.1 – 19.7 10.2 – 1.5 – 28.8

Risk after hedging 12.4 0.8 1.4 8.4 0.5 1.1

The foreign currencies have been converted into euros at the closing

rate.

The USD risk relates mainly to the expected revenues in USD of Asian

subsidiaries and expected purchases and revenues in USD of Euro-

pean subsidiaries.

Due to financial market restrictions, the risk relating to Asian subsidi-

aries is not hedged.

The GBP risk relates mainly to trade receivables and expected reve-

nues of European subsidiaries.

The EUR risk relates mainly to trade receivables and expected reve-

nues in euros of Ten Cate Thiolon Middle East.

The Group carries options and foreign exchange forward contracts at

fair value. The fair value of the options used to hedge future transac-

tions as at 31 December 2013 is € 0 (2012: € 0.1 million). This amount

has been included in other receivables. The net fair value of the

foreign exchange forward contracts is € 0.4 million (2012: -€ 0.8

million). € 0.9 million of this amount has been included in other receiv-

ables and € 0.5 million in other liabilities (2012: € 0.2 and € 1.0 million

respectively).


In 2013 the Group included expenses of € 9.0 million in the profit and

loss account in respect of operating leases (2012: € 8.8 million).

52 INVESTMENT LIABILITIES

In 2013 the Group entered into contractual liabilities for the purchase

of tangible fixed assets. The amount of the liabilities as at

31 December 2013, after deduction of advance payments already

made during the financial year, is € 2.0 million (2012: € 0.6 million).

50.7 ISDA master agreements

The Group has entered into derivatives on the basis of International

Swaps and Derivatives Association (ISDA) master agreements. Under

these agreements, for each derivative and each currency, the net

amount payable by a party to the counterparty on a particular date is

settled. In certain circumstances, such as bankruptcy, all transactions

under the master agreement are cancelled and the net value of all

transactions is settled in a single amount.

The ISDA master agreements do not fulfil the criteria for the netting

of balance sheet positions, because the Group currently has no legally

enforceable right to set off the outstanding amounts. The netting of

the derivatives on the basis of ISDA master agreements is as follows:

2012 2013

Gross Set-off Net Gross Set-off Net

Financial assets

Interest rate caps – – – 0.2 – 0.2

Interest rate swaps – – – – – –

Currency options 0.1 – 0.1 – – –

FX forward contracts 0.2 – 0.2 – 0.9 – 0.3 0.6

0.3 – 0.2 0.1 1.1 – 0.3 0.8

Financial liabilities

Interest rate swaps 5.8 – 5.8 2.5 – 2.5

FX forward contracts 1.0 – 0.2 0.8 0.5 – 0.3 0.2

6.8 – 0.2 6.6 3.0 – 0.3 2.7

51 LIABILITIES NOT SHOWN IN THE BALANCE SHEET

Operating lease as lessee

The expected cash flows under non-cancellable operating leases are

as follows:

2012 2013

Less than one year 7.4 7.6

Between one and five years 17.7 20.0

More than five years 25.4 21.5

Net result 50.5 49.1

The Group leases buildings, plant, vehicles and office equipment

under operating leases. The leased buildings have a term of ten to

fifteen years. Lease payments are indexed annually. None of the

leases include conditional lease payments. In principle the Group

does not act as a lessor. The term of the other leases is a maximum of

five years.


. Other information

54.2 Directors’ remuneration

The remuneration of the members of the Executive Board is as

follows:

in thousands of euros L. de Vries B. Cornelese 1

2012 2013 2012 2013

Periodic

remuneration 675 675 360 240

Results-related pay

in respect of

previous year 337 – 92 –

Pension costs 221 226 105 56

Option costs 455 424 80 –

1,688 1,325 637 296

1 Up to 31 August 2013.

The fixed remuneration paid to Mr De Vries is the same as in 2012.

Mr De Vries has a final-salary pension plan. Mr De Vries’ results-

related pay amounts to a maximum of 50% of the fixed salary.

Mr De Vries received no variable salary component in 2013 in respect

of 2012. The variable component paid to Mr Cornelese is a maximum

of 40% of the fixed salary. Mr Cornelese received no variable salary

component in 2013 in respect of 2012.

As at 31 December 2013 Mr De Vries held 208,726 shares in the

Company (31 December 2012: 203,160 shares) and 480,000 options

(31 December 2012: 420,000 options). In 2013 Mr De Vries was

granted 60,000 options (2012: 60,000) with an exercise price of

€ 17.73.

In 2013 Mr Cornelese was granted 40,000 options (2012: 30,000) with

an exercise price of € 17.73. These options lapsed in 2013 as a result

of Mr Cornelese’s departure from the company.

On 2013 salaries above € 150,000, a once-only crisis levy (employer’s

charge) of 16% is payable to the Dutch Government. The crisis levy

for the executive directors amounts to € 98,000 (2012: € 185,000),

comprising € 84,000 (2012: € 139,000) for the CEO and € 14,000 (2012:

€ 46,000) for the former CFO. The CEO was also provided with

compensation of € 1.2 million in 2012 to resolve a legal dispute

caused by the company in 1995. The total amount in 2013 for the CEO

is € 1.4 million (2012: € 3.1 million) and for the former CFO € 0.3 million

(2012: € 0.7 million).

53 CONTINGENT LIABILITIES

The Group has received claims for damages arising from the conduct

of business. With the exception of those stated below, the claims are

not deemed to be substantial and provisions have been recognised to

the extent necessary.

A claim for damages has been made against Royal Ten Cate by United

Fabrics NV, a company registered in the Netherlands Antilles

(majority shareholder in Textielgroep Twenthe NV). The claim is based

on an outsourcing and management agreement from 1998 and origi-

nally amounted to € 56 million. The claim in respect of the outsourcing

agreement has lapsed permanently as a result of a judgement by the

Supreme Court in 2006. The plaintiff was ordered to demonstrate the

damage suffered in respect of the management agreement. TenCate

is confident with regard to the remainder of the proceedings.

In the spring of 2011, FieldTurf Tarkett (“FieldTurf”) instituted legal

proceedings against TenCate. These concerned alleged deficiencies in

products mostly supplied to FieldTurf by Mattex Leisure Industries in

Dubai, several years before TenCate acquired part of the assets and

businesses of Mattex at the beginning of 2007. TenCate denies the

existence of any legal basis for this claim and therefore rejects it.

TenCate is confident with regard to the outcome of the legal proceed-

ings and expects no material financial damage.

54 RELATED PARTIES

54.1 Identity of related parties

The Group’s related parties are its subsidiaries, associated compa-

nies and other participating interests, joint ventures, Stichting

Pensioenfonds Koninklijke Ten Cate and the members of the Executive

and Supervisory Boards.


55 ESTIMATES AND JUDGMENTS MADE BY THE MANAGEMENT

The Executive Board has conducted discussions with the Financial

Committee of the Supervisory Board on the critical principles for

financial reporting and estimates, as well as the application of such

principles and estimates. Information on assumptions and uncertain-

ties regarding estimates which entail a substantial risk of a material

adjustment in the subsequent financial year is included in the

following notes:

■■ With regard to the pensions, the main actuarial assumptions are

stated in note 48.

■■ With regard to guarantees and claims, provisions have been

formed whenever there is an actual liability or it is likely that an

outflow of funds will be necessary.

The result of this is stated in note 49.

■■ With regard to impairments, an examination has been carried

out to determine whether the realisable value of any cash gener-

ating unit is lower than the carrying value. This is not the case in

2013 and 2012. Future detrimental changes in the estimate as a

result of changed assumptions may lead to the realisable value

being lower than the carrying value. See note 37.2.

■■ Estimates with regard to the use of tax losses are included in

note 40.

Mr De Vries is participating in the Group’s share option plan.

The costs of the options are charged to the result in three years.

Further information can be found in note 65.

The remuneration of the members of the Supervisory Board is as

follows:

in thousands of euros 2012 2013

J.C.M. Hovers – Chairman 1, 2 50 50

P.P.A.I. Deiters – Vice-Chairman 2 35 35

F.A. van Vught 3 9 –

E. ten Cate 1* 35 35

R. van Gelder 1, 4 33 8

P.F. Hartman 2*, 5 – 18

162 146

1 Member of the Financial Committee.2 Member of the combined Remuneration, Selection and Appointments Committee.3 2012: Up to 19 April 2012.4 2013: Up to 31 March 2013.5 2013: From 1 July 2013.* Chairman.

Mr Deiters received additional remuneration amounting to US$15,000

in 2012 and 2013 in respect of his supervisory directorship in Ten Cate

Thiolon Middle East in Dubai. The members of the Supervisory Board

held no shares or option rights of Royal Ten Cate at the end of 2013.

54.3 Transactions with associated companies, other participating

interests and joint ventures

During the 2013 financial year, associated companies, other (non-con-

solidated) participating interests and joint ventures purchased goods

from the Group amounting to € 14.4 million (2012: € 17.5 million). As at

31 December 2013 the outstanding trade receivables due to the Group

from associated companies amounted to € 3.3 million (2012: € 3.2

million) and from joint ventures € 1.0 million (2012: € 1.2 million). As at

31 December 2013 outstanding trade liabilities to associated compa-

nies and joint ventures amounted to € 0.5 million (2012: € 0).

Transactions with associated companies, other participating interests

and joint ventures take place on an objective, business basis.

54.4 Subsidiaries

A list of (significant) subsidiaries and participating interests can be

found inside the back cover of this report.


56 COMPANY PROFIT AND LOSS ACCOUNT

In millions of euros note 2012* 2013

Result from participating interests after profit tax 58 16.4 10.2

Other results after profit tax 4.5 8.8

Net income 20.9 19.0

57 COMPANY BALANCE SHEET (BEFORE APPROPRIATION OF THE RESULT)

In millions of euros note 31 December 2012 31 December 2013

FINANCIAL FIXED ASSETS 58

Participating interests in subsidiaries 692.3 606.1

Loans to subsidiaries 114.7 181.5

Deferred profit tax assets 25.7 18.9

Total non-current assets 832.7 806.5

CURRENT ASSETS

Due from subsidiaries 0.7 1.5

Other receivables 0.8 0.2


Total current assets 2.5 3.1


EQUIT Y

Share capital 60 66.2 67.0

Share premium reserve 62 43.4 42.6

Legal reserve 63 1.9 –5.7

Other reserves 64 324.8 351.4

Undistributed result 20.9 19.0

457.2 474.3


Non-current liabilities 67 219.4 190.3

Current liabilities 68 157.5 144.1

Total equity and liabilities 835.2 809.6

* Adjusted for accounting policy changes in pension system.

Company financial statements


GENERAL INFORMATIONAccounting policies

The parent company financial statements of Royal Ten Cate form an

inseparable whole with the 2013 financial statements of Royal

Ten Cate and have been prepared in accordance with the statutory

requirements of Part 9 of Book 2 of the Netherlands Civil Code.

In determining the accounting policies for its parent company finan-

cial statements, Royal Ten Cate uses the option available under

article 2.362 paragraph 8 of the Netherlands Civil Code. This means

that the accounting principles for the parent company financial state-

ments of Royal Ten Cate are the same as those applying to the

consolidated financial statements. Participating interests over which

significant influence is exercised are valued in accordance with the

equity method. The consolidated financial statements have been

prepared in accordance with the standards set by the International

Accounting Standards Board and adopted by the European Union. A

description of these standards can be found in the accounting policies

applicable to the consolidated financial statements.

The share in the results of associated companies includes the share

of Royal Ten Cate in the results of these companies. Results from

transactions involving a transfer of assets and liabilities between

Royal Ten Cate and its participating interests and between individual

participating interests are not included to the extent that they can be

considered to be unrealised.

58 FINANCIAL FIXED ASSETSInterest in

subsidiariesLoans to

subsidiaries

Deferred profit tax

assets Total

Balance as at 1 January 692.3 114.7 25.7 832.7

Investments/capital contributions 20.4 – – 20.4

Actuarial gains and losses of pensions 18.2 – – 18.2

Translation differences – 11.5 – 4.4 – – 15.9

Loans granted – 114.1 – 114.1

Repayment of loans – – 42.9 – – 42.9

Results of participating interests 10.2 – – 10.2

Dividend of participating interests – 123.5 – – – 123.5

Change in deferred tax – – – 6.8 – 6.8

Balance as at 31 December 606.1 181.5 18.9 806.5

Royal Ten Cate is at the head of the Group and has capital interests in

the subsidiaries stated on the cover.

Notes to the company financial statements


. Notes to the company financial statements

63.3 Other legal reserves 2012 2013


Change – 0.6 1.8


The other legal reserves concern capitalised development costs,

undistributable reserves of subsidiaries and the hedging reserve.

Balance of legal reserves as at 31 December 1.9 – 5.7

64 OTHER RESERVES 2012 2013

Balance as at 1 January * 291.7 324.8

Actuarial gains and losses of pensions * –16.5 13.6

Transferred to Other legal reserves 0.6 –1.8

Added from 2011 / 2012 result 45.6 13.3

Share and option plans 2.0 1.6

Issue of repurchased shares for share savings

plan/option plan 0.5 1.0

Acquisition of non-controlling interest – –1.1



65 OPTION PLAN

Royal Ten Cate operates a stock option plan for the management,

established by the Supervisory Board. Those eligible for options are

members of the Executive Board, the corporate and group directors

and a number of officers of critical importance to the company.

The implementation of the share option plan is supervised by the

compliance officer.

The options are granted on a conditional basis. During the vesting

period of three to five years, a performance condition must be

fulfilled. This condition is that the earnings per share, adjusted to take

account of non-recurring items, over the past three, four or five years

must have increased on average by at least a percentage equal to

inflation plus 3% per year. If this performance condition has been

fulfilled, the options become unconditional and may be exercised,

unless restrictions have been imposed by the Netherlands Authority

for the Financial Markets.

59 EQUITY

The equity in the parent company financial statements corresponds to

the equity in the consolidated financial statements. A statement of

changes in equity can be found on page 108.

60 CALLED AND PAID-UP CAPITAL 2012 2013

Authorised share capital 200.0 200.0

Of which not issued 133.8 133.0

66.2 67.0

61 ORDINARY SHARES 2012 2013

The authorised share capital consists of:

80,000,000 ordinary shares of € 2.50 200.0 200.0

Issued share capital

Balance as at 1 January 2012 2013

Ordinary shares 25,928,914 and 26,497,666 64.8 66.2

Issued stock dividend 568,752 and 293,701 1.4 0.8


62 SHARE PREMIUM RESERVE 2012 2013


Issued stock dividend – 1.4 – 0.8


The share premium reserve is available for distribution to share-

holders.

63 LEGAL RESERVE

63.1 Translation differences 2012 2013


Change – 3.9 – 11.7

Balance as at 31 December 3.1 – 8.6

63.2 Hedging reserve 2012 2013

Balance as at 1 January – 4.5 – 3.9

Change 0.6 2.3

Balance as at 31 December – 3.9 – 1.6


The term of the options totals eight years for the option series to

2007 and ten to twelve years for the option series from 2007 onward.

The exercise period is five years for the option series to 2007 and

seven years for the option series from 2007. The vesting period is

three to a maximum of five years.

The option exercise price is equivalent to the average price of the

Royal Ten Cate share on Euronext Amsterdam nv on the five stock

exchange trading days following publication of the annual figures.

Each granted option right lapses on termination of employment other

than as a result of retirement.

In principle, options amounting to approximately 1.5% of the total

number of shares in issue will be granted in any one year. The exer-

cise of options is subject to the restrictions laid down in the Securi-

ties Transactions Supervision Act.

65.1 Granting of options in 2014

On 26 February 2014 it was intended to grant 300,500 conditional

options at the average market price during the five stock exchange

trading days following publication of the annual results on

27 February 2014. The distribution is as follows:

01-03-2013* 27-02-2014**

Members of the Executive Board 100,000 60,000

Management and management support staff 224,500 240,500

324,500 300,500

* Final.

** Provisional.



65.2 Statement of movements in options of the Executive Board

in 2013

L. de Vries

Issued on Term untilNumber of

optionsExercise

price

Exercised/lapsed to

2012Exercised in

2013Lapsed in

2013Outstanding

31-12-2013Exercisable

31-12-2013

22-02-05 22-02-13 50,000 15.17 50,000 – – – –

01-03-06 01-03-14 60,000 23.63 – – – 60,000 60,000

28-02-07 28-02-17 60,000 25.77 – – – 60,000 60,000

05-03-08 05-03-18 60,000 22.50 – – – 60,000 60,000

03-03-09 03-03-19 60,000 11.70 – – – 60,000 60,000

03-03-10 03-03-20 60,000 18.96 – – – 60,000 60,000

01-03-11 01-03-21 60,000 27.38 – – – 60,000 –

28-02-12 28-02-22 60,000 24.67 – – – 60,000 –

01-03-13 01-03-23 60,000 17.73 – – – 60,000 –

530,000 50,000 – – 480,000 300,000

27-02-14 27-02-24 60,000

B. Cornelese


optionsExercise

price

Exercised/lapsed to

2012Exercised in

2013Lapsed in

2013Outstanding


31-12-2013

28-02-12 28-02-22 30,000 24.67 – – 30,000 – –

01-03-13 01-03-23 40,000 17.73 – – 40,000 – –

70,000 – – 70,000 – –

No options were exercised by the Executive Board in 2012 and 2013.

In February 2014 it was intended to grant 60,000 options. 40,000

options in the 2009 series are reserved for outstanding performance,

a decision on which will be taken in due course. These options are not

included in the above statements.


The fair value of the granted options on the grant date has been

determined on the following basis:

2012 2013

Price on grant date (15-day average) € 24.96 € 17.36

Exercise price € 24.67 € 17.73

Expected volatility 39.7% 40.1%

Expected option term 8 years 10 years

Expected dividend yield 2.35% 3.86%

Risk-free interest rate 1.80% 1.05%

65.3 Statement of movements in options of management and

management support staff in 2013


optionsExercise

price

Exercised/lapsed to

2012Exercised in

2013Lapsed in

2013Outstanding


31-12-2013

22-02-05 22-02-13 102,400 15.17 72,000 17,000 13,400 – –

01-03-06 01-03-14 141,200 23.63 52,400 – – 88,800 88,800

28-02-07 28-02-17 145,000 25.77 52,500 – – 92,500 92,500

05-03-08 05-03-18 207,000 22.50 79,000 2,000 – 126,000 126,000

03-03-09 03-03-19 176,250 11.70 34,500 34,000 – 107,750 107,750

03-03-10 03-03-20 226,500 18.96 16,500 13,500 7,500 189,000 189,000

01-03-11 01-03-21 246,000 27.38 16,500 – 7,500 222,000 –

28-02-12 28-02-22 219,500 24.67 1,000 – 8,000 210,500 –

01-03-13 01-03-23 224,500 17.73 – – – 224,500 –

1,688,350 324,400 66,500 36,400 1,261,050 604,050

27-02-14 27-02-24 240,500

65.4 Complete statement of movements in options in 2013


optionsExercise

price

Exercised/lapsed to

2012Exercised in

2013Lapsed in

2013Outstanding


31-12-2013

22-02-05 22-02-13 152,400 15.17 122,000 17,000 13,400 – –

01-03-06 01-03-14 201,200 23.63 52,400 – – 148,800 148,800

28-02-07 28-02-17 205,000 25.77 52,500 – – 152,500 152,500

05-03-08 05-03-18 267,000 22.50 79,000 2,000 – 186,000 186,000

03-03-09 03-03-19 276,250 11.70 34,500 34,000 – 207,750 207,750

03-03-10 03-03-20 286,500 18.96 16,500 13,500 7,500 249,000 249,000

01-03-11 01-03-21 306,000 27.38 16,500 – 7,500 282,000 –

28-02-12 28-02-22 309,500 24.67 1,000 – 38,000 270,500 –

01-03-13 01-03-23 324,500 17.73 – – 40,000 284,500 –

2,328,350 374,400 66,500 106,400 1,781,050 944,050

27-02-14 27-02-24 300,500

66,500 options were exercised in 2013 (2012: 38,750). The weighted

average share price on the exercise date for share options exercised

in 2013 was € 21.35 (2012: € 21.02).



69 AUDITOR’S FEES

The following fees of KPMG Accountants N.V. and the other entities

affiliated with the KPMG network have been charged to the Group,

in accordance with article 382a Part 9 of Book 2 of the Netherlands

Civil Code.

Fees

in thousands of euros 2012 2013

Examination of the financial statements 820 755

Other audit assignments 210 189

Other non-audit services 190 146

Total 1,220 1,090

70 LIABILITIES NOT SHOWN IN THE BALANCE SHEET

The Company has issued a declaration of liability in accordance with

article 403 of Book 2 of the Netherlands Civil Code on behalf of most

of its Dutch subsidiaries.

The Company forms a tax group together with the majority of the

Dutch subsidiaries for corporation and sales tax. Each of these

subsidiaries is severally liable for the tax payable by all the compa-

nies included in the tax group.

We also refer to the notes in section 53 concerning contingent liabili-

ties. Guarantees have also been issued for a Dutch subsidiary and a

number of foreign subsidiaries.

Almelo, 26 February 2014

Executive Board

L. de Vries, Chairman

Supervisory Board

J.C.M. Hovers, Chairman

P.P.A.I. Deiters, Vice-Chairman

E. ten Cate

P.F. Hartman

65.5 Repurchased shares

In principle the company will repurchase shares in order to prevent

any dilution of earnings per share caused by the granting of options.

number of shares 2012 2013

Balance as at 1 January 620,321 584,287

Own shares for conversion of physical

securities 2,716 –

Exercise of options – 38,750 – 66,500

Outstanding and fully paid

as at 31 December 584,287 517,787

66 PROVISIONS 2012 2013

Guarantee and claims 1.1 0.9

Other items – –


The term of the provisions exceeds one year.

67 LONG-TERM LIABILITIES 2012 2013

Syndicated loan 215.0 190.3

Other items 4.4 –


The conditions of the syndicated loan can be found in note 48 in the

notes to the consolidated balance sheet.

68 SHORT-TERM LIABILITIES 2012 2013

Cash loans, overdrafts 145.6 98.5

Owed to consolidated subsidiaries 4.9 42.3

Trade creditors and other payables 7.0 3.3


The short-term liabilities are due in less than one year.


INDEPENDENT AUDITOR’S REPORT

To the General Meeting of Shareholders of Royal Ten Cate

Report on the financial statements

We have audited the accompanying 2013 financial statements of

Royal Ten Cate, Almelo, as set out on pages 100 to 150 of this report.

The financial statements include the consolidated financial state-

ments and the company financial statements. The consolidated finan-

cial statements comprise the consolidated balance sheet as at

31 December 2013, the consolidated profit and loss account,

the consolidated statement of comprehensive income, the consoli-

dated statement of changes in group equity and the consolidated

cash flow statement for the year then ended, and notes, comprising a

summary of the significant accounting policies and other explanatory

information. The company financial statements comprise the company

balance sheet as at 31 December 2013, the company profit and loss

account for the year then ended and the notes, comprising a summary

of the accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation

of the financial statements in accordance with International Financial

Reporting Standards as adopted by the European Union and with Part

9 of Book 2 of the Netherlands Civil Code, and for the preparation of

the management board report in accordance with Part 9 of Book 2 of

the Netherlands Civil Code. Furthermore, management is responsible

for such internal control as it deems necessary to enable the prepara-

tion of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial state-

ments based on our audit. We conducted our audit in accordance with

Dutch law, including the Dutch Standards on Auditing. This requires

that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgment, including

the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the

entity’s preparation and fair presentation of the financial statements

in order to design audit procedures that are appropriate in the circum-

stances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management,

as well as evaluating the overall presentation of the financial

statements.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Opinion with respect to the consolidated financial statements

In our opinion, the consolidated financial statements give a true and

fair view of the financial position of Royal Ten Cate as at 31 December

2013 and of its result and its cash flows for the year then ended in

accordance with International Financial Reporting Standards as

adopted by the European Union and with Part 9 of Book 2 of the


Opinion with respect to the company financial statements

In our opinion, the company financial statements give a true and fair

view of the financial position of Ten Cate as at 31 December 2013 and

of its result for the year then ended in accordance with Part 9 of

Book 2 of the Netherlands Civil Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirements under Section 2:393 sub 5 at e and

f of the Netherlands Civil Code, we have no deficiencies to report as a

result of our examination as to whether the annual report, to the

extent we can assess, has been prepared in accordance with part 9 of

Book 2 of this Code, and whether the information as required under

Section 2:392 sub 1 at b - h has been annexed. Further, we report that

the annual report, to the extent we can assess, is consistent with

the financial statements as required by Section 2:391 sub 4 of the


Amstelveen, 26 February 2014

KPMG ACCOUNTANTS N.V.

T. van der Heijden RA

Other information


. Other information

PROVISIONS OF THE ARTICLES OF ASSOCIATION RELATING TO

APPROPRIATION OF PROFIT

(Article 30)

Summary of the provisions of the articles of association

1. Distributions on shares may not exceed the amount of the

distributable equity.

2. Subject to the approval of the supervisory board, the executive

board is authorized to determine the part of the profit that will

be reserved.

3. The profit remaining after reservation pursuant to article 30.2 is

at the disposal of the general meeting.

4. Profits will be distributed after adoption of the financial state-

ments showing that this is justified.

5. Subject to the approval of the supervisory board, the executive

board may decide to make interim distributions of dividends on

shares, provided that the requirements of article 30.1 have

been complied with as shown by an interim financial statement

of assets and liabilities in accordance with applicable legal

provisions.

6. Shares held by the company in its own capital shall be

disregarded when calculating the amount of any distribution.

7. Sections 2:104 and 2:105 of the Dutch Civil Code apply to

distributions to shareholders.

PROPOSED APPROPRIATION OF PROFIT

In millions of euros 2012* 2013

Net income 20.9 19.0

Added to other reserves in accordance with

article 30, paragraph 2 of the articles of

association – 8.1 – 4.5

12.8 14.5

Net change in legal reserves 0.6 – 1.8

13.4 12.7

Undistributed dividend balance from

previous year – 0.4

13.4 13.1

Payment of € 0.50 and € 0.50 dividend to

holders of ordinary shares in accordance

with article 30 paragraph 3 of the articles of

association – 13.0 – 13.1

Undistributed dividend balance at

year-end, which is transferred to the

relevant account 0.4 –



Ten-year summary

in millions of euros unless stated otherwise 20041 2005 2006 2007 2008 2009 2010 2011 20123 2013

CONSOLIDATED PROFIT

AND LOSS ACCOUNT

Revenues 641.0 686.5 770.5 886.0 1,032.6 842.1 984.5 1,138.8 1,049.0 1,012.0

EBITDA 53.8 57.8 73.2 102.1 126.1 75.4 119.5 137.5 87.2 83.5

EBITA 34.9 39.2 51.1 73.0 95.4 41.5 85.0 102.5 50.1 48.7

Operating result (EBIT) 34.6 38.5 50.1 69.4 83.8 32.7 74.6 89.6 35.6 35.6

Net financial expenses – 6.8 – 4.6 – 8.0 – 11.3 – 13.7 – 12.7 – 10.0 – 11.3 – 12.1 – 10.1

Profit tax – 9.2 –11.5 – 11.4 – 11.9 – 19.1 – 5.6 – 17.9 – 18.7 – 8.2 – 8.5

Share in net income of associated

companies 5.1 8.1 45.4 0.3 – 8.7 – 1.3 – 1.3 – 0.3 0.1

Result after profit tax 23.7 30.5 76.1 46.5 51.0 23.1 45.4 58.3 15.0 17.1

Non-controlling interest – 0.1 – – 0.1 – 0.1 0.1 0.8 0.6 0.4 5.9 1.9

Net profit 23.6 30.5 76.0 46.4 51.1 23.9 46.0 58.7 20.9 19.0

Dividend 10.2 12.5 16.2 18.8 20.4 15.0 18.8 24.0 13.0 13.1

EBITA in % of revenues 5.4% 5.7% 6.6% 8.2% 9.2% 4.9% 8.6% 9.0% 4.8% 4.8%

Return on average net

invested capital 2 13.5% 15.3% 14.4% 13.1% 13.4% 5.7% 12.1% 13.1% 6.2% 6.4%

1 Figures based on Dutch GAAP.

2 Prior to 2007, based on net invested capital at year-end.

3 Adjusted for accounting policy change pensions.


20041 2005 2006 2007 2008 2009 2010 2011 20122 2013

CONSOLIDATED BAL ANCE SHEET

Intangible assets 12.1 13.8 12.4 136.8 212.1 203.8 242.8 273.0 269.4 270.2

Tangible fixed assets 118.8 161.4 165.8 218.1 247.4 214.7 214.2 221.9 196.7 165.7

Financial fixed assets 19.9 35.2 18.3 19.8 25.1 45.3 34.2 36.8 47.0 42.1

Total non-current assets 150.8 210.4 196.5 374.7 484.6 463.8 491.2 531.7 513.1 478.0

Inventories 138.6 157.5 157.7 176.2 211.5 155.0 216.9 267.9 226.4 223.8

Receivables 98.8 125.0 128.2 166.2 187.7 116.9 169.8 181.1 159.7 147.1

Securities and cash 2.7 4.6 6.7 4.8 5.4 12.8 11.6 22.7 26.7 21.6

Total current assets 240.1 287.1 292.6 347.2 404.6 284.7 398.3 471.7 412.8 392.5

Total assets 390.9 497.5 489.1 721.9 889.2 748.5 889.5 1,003.4 925.9 870.5

Equity 146.5 181.8 238.7 310.1 366.9 380.8 438.5 465.8 457.2 474.3

Non-controlling interest 0.1 – 0.2 0.3 5.1 4.1 3.8 3.7 – 1.9 – 1.0

Group equity 146.6 181.8 238.9 310.4 372.0 384.9 442.3 469.5 455.3 473.3

Provisions 52.1 56.1 43.8 40.8 43.5 40.5 32.0 50.6 65.3 45.9

Long-term debts 74.1 130.2 63.5 222.3 316.2 192.0 195.2 275.1 220.3 195.1

Banks and short-term loans 24.6 27.1 30.4 12.9 20.3 16.3 57.1 36.3 36.3 15.7

Other short-term debts 93.5 102.3 112.5 135.5 137.2 114.8 162.9 171.9 148.7 140.5

Total liabilities 390.9 497.5 489.1 721.9 889.2 748.5 889.5 1,003.4 925.9 870.5

Group equity/total equity 38% 37% 49% 43% 42% 51% 50% 47% 49% 54%

Acquisitions /(de)consolidations 29.2 40.8 – 63.0 175.1 88.1 – 3.3 24.7 34.8 15.7 18.0

Investments in tangible and intan-

gible fixed assets 12.0 26.2 43.0 62.9 48.0 17.3 21.3 25.7 16.6 14.4

Working capital 143.9 180.2 173.4 206.9 262.0 157.1 223.8 277.1 237.4 230.4

Depreciation and amortisation 19.2 19.3 23.1 32.7 42.3 42.7 44.9 47.9 51.6 47.9

Number of staff years at year-end 3,634 3,578 3,532 4,020 4,437 3,805 4,271 4,353 4,454 4,256

Number of shares outstanding at

year-end (x 1,000) 20,472 20,784 21,063 23,556 23,967 25,068 25,502 25,929 26,498 26,791

Net earnings per € 2.50 share 1.17 1.48 3.66 2.04 2.18 0.97 1.84 2.31 0.81 0.72

Dividend per share in euros 0.50 0.60 0.70 0.80 0.85 0.60 0.75 0.95 0.50 0.50

Closing price in euros 13.55 21.50 23.21 21.27 16.05 18.43 28.00 21.26 19.87 22.90

1 Figures based on Dutch GAAP.

2 Adjusted for accounting policy change pensions.


Business model TenCate’s business model focuses on the

business model for value chain management

based on four pillars:

■■ End-user marketing

■■ Technological innovation

■■ Cost leadership

■■ Product differentiation

Buy & build strategy Acquisition and association of businesses

and business units with complementary

product portfolios, technologies and markets

for operational and strategic synergy

resulting in greater market opportunities and

profitability.

Composite A combination of two or more advanced

materials (e.g. based on carbon fibre, glass

fibre and aramid fabrics) which is stronger

than the materials in themselves.

Corporate governance Rules and conduct standards drawn up by

the Tabaksblat Committee, to which compa-

nies must adhere for good governance and

on which they are accountable.

Good, efficient and responsible management

of a company, on which the company

accounts to all its stakeholders.

CSR Performance

Ladder

Certification standard with five levels for

corporate social responsibility.

Earnings per share

(diluted)

Net result divided by the weighted average

number of diluted shares during the year.

Earnings per share

(ordinary)

Net result divided by the weighted average

number of ordinary shares during the year.

EBIT Earnings before net financial expenses and

profit tax.

EBITA Earnings before net financial expenses, profit

tax and amortisation.

EBITDA Earnings before net financial expenses, profit

tax, depreciation and amortisation.

Fix it / exit strategy Making non-core parts of the company

healthy or profitable with a view to sale. The

proceeds are used for new acquisitions.

FM Global Highly

Protected Risk Award

Certificate issued by FM Global to companies

which fulfil all of this insurer’s guidelines for

loss prevention.

Geosynthetics Woven geotextile materials, non-wovens and

grids based on polypropylene and polyeth-

ylene.

Global Reporting

Initiative

The Global Reporting Initiative (GRI) is an

international organisation which draws up

guidelines and definitions for sustainability

reporting.

Joint venture Form of co-operation in which TenCate forms

a new company with one or more organisa-

tions and develops new or existing joint

activities from that company.

Market group Clustering of subsidiaries (operating compa-

nies) which co-operate in research and

development, production, end-user

marketing and sales.

Market window The ideal time to launch a product on the

market. Also: possible market application.

Net debt position Long-term and short-term interest-bearing

loans and other financial liabilities, less cash

and cash equivalents.

Net invested capital The capital made available to the company,

comprising total equity plus loans and provi-

sions made available, less the balance of

cash and cash equivalents.

Glossary


Net result Result after deduction of non-controlling

interests (result attributable to shareholders

of the company).

Patent (pending and

issued)

Exclusive right to the invention in respect of

a product or process.

Prepreg Thin film of a substrate (usually fabric) which

is pre-impregnated with a resin.

Process ecotool A measuring instrument used to determine

the CO2 footprint of the processes in the

TenCate market groups as fully and clearly as

possible (‘inside the gate’).

Product ecotool Using specific parameters to determine the

CO2 footprint of TenCate products (‘outside

the gate’).

Return on net

invested capital

Percentage of profit (before appropriation),

including non-controlling interests and

interest expenses relative to average net

invested capital.

Sector Technology cluster of market groups and

business units in which the purchasing of

raw materials is concentrated on the basis of

distinctive technologies.

Stakeholders Stakeholders of the company, including

employees, suppliers, customers, end-users,

shareholders, analysts, public authorities

and residents in the surrounding area.

Subsidiary (operating

company)

Unit (operating company) which is owned

more than 50% by Royal Ten Cate.

System approach Increasing desire/ability to provide co-ordi-

nated components (e.g. fabrics) as part of a

system.

TenCate base

technologies

Fibre, weaving and finishing technology;

market windows are protective fabrics,

outdoor fabrics and composites for aero-

space, automotive and armour. Non-woven,

grid and extrusion technology; market

windows are geotextiles, industrial fabrics

and synthetic turf.

Texturing Treatment of filament yarns giving them a

permanent crimp and greater stretch and

elasticity.

Thermoplastic

composite

Composite which becomes soft when heated

under pressure for a certain time and can

thus be formed into the desired shape; a

reversible and hence physical process. All

thermoplastics are in principle recyclable.

Thermoset composite Composite which remains hard and disinte-

grates when heated; a chemical and hence

irreversible process.

Weighted average

number of shares

(diluted)

The weighted average number of ordinary

shares issued, including the effect of

outstanding option rights.

Weighted average

number of shares

(ordinary)

The weighted average number of shares

issued, including the weighted average

number of exercised option rights, corrected

for the weighted average of own shares

held.

Working capital The total of inventories and receivables less

trade creditors and other payables and short-

term profit tax liabilities.

Working capital in days Working capital expressed in days of

revenues over the last quarter (calculated on

an annual basis).


This Annual Report concerns the 2013 calendar year.

It was published on the TenCate website in PDF format on Wednesday

5 March 2014 and will also be available in limited quantities in printed

form from Tuesday 25 March. The 2013 Annual Review, a summary

version of the Annual Report, is available from Friday 28 March.

From 2014, the Royal TenCate Annual Review will be sent by post

automatically to stakeholders who had previously registered to

receive what until recently was the printed Annual Report. New

orders for the Annual Review can be sent to: [email protected].

Means of communication

Printed Annual Review 2013Summary of 2013 Annual ReportIncluding summary of 2013 financial statements Concerns 2013 calendar yearPrinted in Dutch and EnglishNumber of pages 56To order: [email protected] of reporting: inclusive (financial and non-financial)TenCate has opted not to publish a separate annual CSR reviewPublication date: 28 March 2014

Dynamic Annual Report 2013Full 2013 Annual ReportExcluding full 2013 financial statements Including CSR activities in 2013Including GRI table 2013Including glossaryConcerns 2013 calendar yearArchive of dynamic TenCate annual reports since 2010Archive of TenCate annual reports in PDF since 1994Dynamic version in Dutch and EnglishSee: www.tencateannualreports.comType of reporting: inclusive (financial and non-financial)Publication date: 1 April 2014

Digital annual report 2013Full 2013 Annual ReportIncluding full 2013 financial statementsIncluding glossaryConcerns 2013 calendar yearPDF version in Dutch and EnglishNumber of pages 160See: www.tencate.com/jaarverslag2013Type of reporting: inclusive (financial and non-financial)TenCate has opted not to publish a separate annual CSR reportPublication date: 5 March 2014

Investor Relations app (IR app)Application for investor relationsFinancial background information Dynamic version in Dutch and EnglishCurrent TenCate share price on NYSE EuronextFinancial calendarInformation on TenCate AGMRelevant IR presentationsRelevant TenCate webcastsArchive of TenCate annual reports in PDF since 1994See: irapp.tencate.com

Press releasesFinancial press releases concerning quarterly and annual figures, acquisitions and major ordersNon-financial press releases concerning news, current events and corporate social responsibilitySee: www.tencate.com/nieuws Subscribe: www.tencate.com/persberichten

txtures stakeholder magazinePrinted publication appearing four times a yearAlso application with additional information and picturesIncluding column by chairman of Executive Board concerning annual and quar-terly figuresNumber of pages: approximately 48Publication dates 13 March, 22 May, 7 August and 6 November 2014See: txturesapp.tencate.comTo order printed version: [email protected]

TENCATE COMMUNICATION CHANNELS FOR REPORTING AND INVESTOR REL ATIONS


Text

Royal Ten Cate

Translation

VVH business translations, Utrecht

Design

Frontwise, Utrecht

Realisation

Domani B.V., Weesp

Printing

Lulof Druktechniek B.V., Almelo

Illustrations

Joost van Baars

Marjo Baas

Doug Bergen

Dennis de Beurs

Sean Clee

Frans Dekker

Mark Evans

Hervé Gousse

Paul Haverkort

Norbert Hekkink

Werner Helmich

Truls Lötvedt

Shaun Lowe

Henrik Morlock

Franz Pfluegl

Roelof Pot

Frank Uijlenbroek

Adrian Waine

Courtesy © Aérospatiale Westland

Courtesy © Airbus

Courtesy © AgustaWestland

Courtesy © Boeing

Courtesy © Cirrus

Courtesy © Gulfstream Aerospace Corporation

Courtesy © Fokker Aerostructures

Courtesy © Mercedes-Benz (Daimler AG)

Courtesy © Royal Danish Navy

Courtesy © SpaceX

Courtesy © Schiebel

Colophon

Royal Ten Cate

PROTECTING PEOPLE VISION

TenCate focuses on the growing demand for protection of people and their living and working environments. The worldwide trends towards ‘safety and protection’ and ‘sustainability and the environment’ serve as the focal points of the protective solutions which TenCate provides. The four market themes are In transit, In habitats, At work and During leisure. The end-markets in which TenCate operates are mobility, infrastructure, water management, defence, personal protection, sport and leisure.

TenCate’s vision is based on the development (‘buy & build’) of a broad, advanced technological base. As a company in the technical textile sector, TenCate occupies a broad and innovative technological position worldwide (including patent positions). That enables the company to develop materials which are an optimum match for individual market requirements in the chosen market themes of safety and protection of man and the environment.

MATERIALS ENGINEERING AND INNOVATION MISSION

TenCate is a multinational company which combines textile technology with chemical process technology in the development and production of functional materials, modules and systems which are an optimum match for specifi c market requirements. It is also increasingly important to reduce the ancillary costs of the chosen solution, since materials and modules form part of a total system. The technological base determines the high-grade applications (product-market-technology combinations) which TenCate supplies in selected niche markets.

TenCate aims to maintain a leading position in the provision of sustainable solutions for personal protection and protection of living and working environments. Developing the right product portfolio, tailored to specifi c market requirements, drawing attention to solutions in an effective way and incorporating the control of safety risks in specifi cations are key parts of the way in which TenCate fulfi ls its mission.

TECHNICAL TEXTILES STRATEGY

TenCate is the world market leader in technical textiles. These materials have specifi c characteristics which are usually defi ned and qualifi ed on the basis of functional specifi cations. TenCate maintains an active portfolio policy and with its advanced technological base is able to offer the widest range of functionalities in materials, modules and systems. It does this independently or in co-operation with third parties.TenCate operates principally in six end-markets refl ecting the global trends of safety and sustainability. TenCate’s materials are used in particular for:

■ Personal safety and protection of living and working environments ■ Modernisation of army, fi refi ghting and police equipment ■ Aerospace ■ Water management, infrastructure and environmental solutions ■ Industrial applications

TenCate’s strategy is based on value-chain management. This business model determines how TenCate – based on its position in the value chain – creates value, establishes value in products and systems and adds value to customer-focused system solutions. The end-user is central in this process. The cornerstones of this policy are end-user marketing, technological innovation, cost leadership and product differentiation. The creation of network structures with partners in the value chain adds a market-focused dimension to this business model. The aim is to improve access to markets and strengthen the competitive position, thereby giving fresh impetus to the growth of the company.

FocusFrom trends to solutions

Profi leMaterial technology group

WORLDWIDE TRENDS


PROTECTING PEOPLE

IN TRANSIT IN HABITATS AT WORK DURING LEISURE



increased transportation of goods and raw materials

within and between continents, and even to

extraterrestrial destinations. Making those transport movements increasingly

effi cient, safe and sustainable is a challenge in itself.

Urbanisation is increasing steadily across all continents. Urban areas are growing ever

larger and more complex. Societies are changing into compact networks of cities.

That requires a high degree of organisation and logistics with

safe and sustainable infrastructure.

The working environment of personnel in industry and

services may be risky, hazardous or even hostile. Personal protection in the workplace, on the road,

on-site or during the mission is essential in order to work professionally and safely.

Leisure time increases as prosperity grows. In addition

to tourism and recreation, people are enjoying sports as amateurs or top-fl ight

performers. Leisure activities and sports must above all be pursued responsibly.

That requires safe, sustainable facilities.

END-MARKETS

MOBILITY INFRASTRUCTUREWATER

MANAGEMENTDEFENCE

PERSONAL PROTECTION

SPORT AND LEISURE

Composites for vehicles, vessels,

aircraft, helicopters and

mobility concepts

Geotextiles for infrastructure

works; composites

for structures; synthetic turf for

landscaping

Geotextiles and systems for water

management, maritime projects and dewatering

Materials for protection of military personnel;

vehicle, vessel, aircraft and

helicopter armour

Materials for protection of

persons in their working and living

environments

Synthetic turf for sport; outdoor

fabrics; composites for

sport applications


Ten Cate Advanced Textiles bv Nijverdal, NetherlandsActivities of the TenCate Advanced Textiles group in the Netherlands

Ten Cate Protect bv Nijverdal, NetherlandsTen Cate Protective Fabrics USA inc Union City (Georgia), USATen Cate Protective Fabrics Canada inc Montreal (Quebec), CanadaFabrics for professional wear and safety clothing as well as outdoor applications

Ten Cate - Union Protective Fabrics Asia ltd (50.65)% Bangkok, ThailandFabrics for protective clothing

Ten Cate Advanced Composites bv Nijverdal, NetherlandsAdvanced composites for the aviation industry and antiballistic applications

Ten Cate Advanced Composites USA inc Morgan Hill (California), USAPhoenixx TPC inc Taunton (Massachusetts), USAYLA inc Benicia (California), USAAdvanced composites for aerospace, aviation and industrial applications

Performance Materials Corporation Camarillo (California), USAPMC Holding Corporation Camarillo (California), USABaycomp Company Burlington (Ontario), CanadaPMC Guangzhou Guangzhou, ChinaT3 (51%) Taichung, TaiwanThermoplastic composites and components for the automotive industry, oil & gas extraction and consumer electronics

Ten Cate Advanced Composites ltd Nottingham, UKAdvanced composites for industrial and automotive applications

Ten Cate Advanced Armour UK (AML) Swindon, UKTen Cate Advanced Armour sas Primarette, FranceTen Cate Advanced Armour Danmark a/s Vissenbjerg, DenmarkAdvanced ceramics and composites for antiballistic applications

Ten Cate Advanced Armor USA inc Newark (Ohio), USAAdvanced composites for vehicle armour

Ten Cate Active Protection ApS (ABDS) Vissenbjerg, DenmarkActive protection systems for army vehicles

AML India Private ltd (90%) Noida, IndiaTen Cate Protective India Private ltd Gurgaon, IndiaDesign and production of vehicle armour materials and fabrics for professional wear and safety clothing as well as outdoor applications


Nicolon Corp. (Ten Cate Geosynthetics North America) inc Atlanta (Georgia), USATen Cate Geosynthetics Austria GmbH Linz, AustriaTen Cate Geosynthetics France sas Bezons, FranceTen Cate Geosynthetics Netherlands bv Nijverdal, NetherlandsTen Cate Geosynthetics Asia sdn bhd Kuala Lumpur, MalaysiaTenCate Industrial Zhuhai co ltd Zhuhai, ChinaGeosynthetics and industrial fabrics

Ten Cate Geosynthetics sdn bhd (Malaysia) Kuala Lumpur, MalaysiaTen Cate Geosynthetics (Thailand) ltd Bangkok, ThailandTen Cate Geosynthetics pte ltd SingaporeTen Cate Geosynthetics Italy srl Meda, Italy Ten Cate Geosynthetics (UK) ltd Telford, UKTen Cate Geosynthetics Iberia sl Madrid, SpainTen Cate Geosynthetics Deutschland GmbH Dietzenbach, GermanyTen Cate Geosynthetics Poland Sp zoo Kraków, PolandTen Cate Geosynthetics CZ sro Prague, Czech RepublicTen Cate Geosynthetics Romania srl Bucharest, RomaniaSales offi ces

Ten Cate Thiolon bv Nijverdal, NetherlandsPolyloom Corp. (Ten Cate Thiolon USA) inc Dayton (Tennessee), USATen Cate Thiolon Middle East (49%) 1) Dubai, United Arab EmiratesSynthetic turf components and systems

Ten Cate Thiobac bv Nijverdal, NetherlandsBacking for synthetic turf systems

GreenFields Holding BV (90%) Genemuiden, NetherlandsGreenFields BV Genemuiden, Netherlands(subsidiary of GreenFields Holding BV)Xtra Grass BV *) Kampen, NetherlandsBresco AS *) Molde, NorwayGreenFields Swiss AG *) Schaffhausen, SwitzerlandGreenFields Sports Turf Systems (ME) Ltd (80%) *) Nicosia, CyprusGreenFields West Africa SARL (65%) *) Cotonou, BeninGreenFields Sports Surfaces UK Ltd *) Bolton, UKGreenFields India FZC (51%) *) Sharjah, United Arab EmiratesMarketing and installation of synthetic turf systems

TigerTurf NZ, ltd Auckland, New ZealandTigerTurf Australia pty ltd Campbellfi eld, AustraliaTigerTurf (UK) ltd Hartlebury, UKTiger Sports Americas inc Austin (Texas), USA Marketing and production organisations for synthetic turf systems

Edel Grass bv (50%) Genemuiden, NetherlandsMarketing and installation of synthetic turf systems


Xennia Technology ltd (90.88%) Letchworth, UK Xennia Holland bv Nijverdal, NetherlandsSpecialist inkjet technology for industrial applications

Ten Cate Enbi International bv Brunssum, NetherlandsTenCate Enbi group holding company

Ten Cate Enbi GmbH Leverkusen, GermanyTen Cate Enbi kft Rétság, HungaryTen Cate Enbi inc Shelbyville (Indiana), USATen Cate Enbi inc Rochester (New York), USATen Cate Enbi pte ltd SingaporeTen Cate Enbi Zhuhai co ltd Zhuhai, ChinaTechnical rollers and components for printers, copiers, fax machines, postal sorting machines, ATMs, insulation and heating systems

Ten Cate Assurantiën bv Almelo, NetherlandsInsurance

Ten Cate Nederland bv Almelo, NetherlandsRoyal Ten Cate (USA) inc Washington D.C., USATen Cate UK ltd London, UKTen Cate France sas Paris, FranceTen Cate Deutschland GmbH Opladen, GermanyTen Cate Danmark a/s Copenhagen, DenmarkRoyal Ten Cate Pacifi c ltd Hong Kong, ChinaRoyal Ten Cate China Holding ltd Hong Kong, ChinaCountry holding companies

Ten Cate Finance AG Schaffhausen, SwitzerlandFinancing company

NON-CONSOLIDATED COMPANIES

Landscape Solutions bv (25%) Goirle, NetherlandsMarketing and production organisation for synthetic turf for landscaping use

Hellas Construction Inc (30%) Austin (Texas), USAProduction and construction of sports pitches

The operating companies listed here are consolidated in the fi nancial statements, with the exception of the companies shown as non-consolidated. Some interests of minor relevance to the overall picture have been omitted from the list, in accordance with article 379, paragraph 3, Book 2 of the Netherlands Civil Code. The companies are wholly owned unless stated otherwise.

*) Subsidiary of GreenFields BV.1) Due to legislation in Dubai, 51% is held by a local partner.

Royal Ten Cate has 100% economic ownership.

Subsidiaries, associated companies and other interests as at 31 December 2013

Protecting peopleIn transit

Royal Ten Cate

Annual report 2013 OrganisationSectors and market groups

PROTECTING PEOPLEPROTECTING PEOPLE

IN TRANSITIN HABITATS

AT WORKDURING LEISURE

Royal Ten Cate

Annual report 2013

TenCate would like to hear from you. Please let us know your views

by e-mailing [email protected], stating the market group or offi cer

you wish to contact. You can also contact us using the details

shown below.

Drs Pieter Zwinkels, investor relations manager

Royal Ten Cate

Stationsstraat 11

P.O. Box 58

7600 GD Almelo, The Netherlands

Telephone +31 (0)546 544 911

Fax +31 (0)546 814 145

www.tencate.com

This annual report relates to the 2013 calendar year.

The annual report was published on the TenCate website

on Wednesday 17 March 2014 and is also available in printed form

from Tuesday 31 March.

Contact

Royal Ten Cate




PROTECTIVE FABRICS GEOSYNTHETICS INKJET TECHNOLOGY

Protective and safety fabrics and multi-risk solutions for fi refi ghting and defence, industry and services.

Synthetic fabrics, non-wovens, grids and systems for use in infrastructure, civil engineering, water management, the environmental sector, agriculture and horticulture.

Digital inkjet technologies for industrial production processes.

OUTDOOR FABRICS GRASS TECHNICAL COMPONENTS

Protective fabrics for outdoor applications, such as the camping and awning market.

Synthetic turf components and integrated synthetic turf systems for top-fl ight sports, recreation and landscaping.

Technical rollers and components, particularly for printers, copiers, fax machines, postal sorting machines and ATMs.

ADVANCED COMPOSITES HOLDING & SERVICES

Advanced composites, compounds and systems for the space and aerospace industry and industrial applications, including automotive, industrial components and energy generation.

Holding company activities, including fi nance, accounting, patent development and management, investor relations, business development, information technology, human resources management and insurance.

ADVANCED ARMOUR

Advanced composites, ceramics and integrated systems for the active and passive protection of police, army, air force, navy and civilian service personnel, vehicles and vessels.

. A legal overview of operating companies, associated companies and other interests can be found on the inside of the back fl ap.

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