Royal Ten Cate MATERIALS THAT MAKE A DIFFERENCE...TenCate focuses on added-value solutions to meet...

TenCate materials are at the cutting

edge of textile, chemical and material

techno logies.

TenCate focuses on added-value solutions

to meet critical end-user requirements.

Our customers make a difference with our

materials and systems.

TenCate addresses market trends

based on the global themes of safety, pro-

tection and sustainability. This generates

long-term growth for the company.

The strategy is characterised by value chain management.

This business model implemented by TenCate is built on

the four cornerstones of end-user marketing, product

differentiation, technological innovation and cost

leadership. The challenge lies in striking an optimum

balance between these four cornerstones.

Thermoplastic composite

The automotive industry is increasingly interested in using

thermoplastic composites from the TenCate Cetex® product

portfolio of TenCate Advanced Composites in cars. TenCate

Cetex® is:

• Strong and impact-resistant: contributes to safety

• Lightweight: saves fuel

• Mouldable: readily processable

• Reusable and recyclable: sustainable

Royal Ten C

ateA

nnual Report 2011

Royal Ten Cate MATERIALS THAT MAKE A DIFFERENCEColophon

business development & investor relations

F.R. Spaan, corporate director

P.O. Box 58

7600 GD Almelo, The Netherlands

Telephone +31 (0)546 544 911

Fax +31 (0)546 814 145

www.tencate.com

Commercial overview and profileOperating companies, associated companies and other interests

Royal Ten Cate

Annual Report 2011

Connected by the value proposition

Text

Royal Ten Cate

Translation

VVH business translations,

Maartensdijk

Concept and realisation

C&F Report Amsterdam B.V.,

Amsterdam

Printing

Lulof Druktechniek B.V.,

Almelo

Photography

Paul Haverkort

Bram Hendriks

Frans Dekker

Joost van Baars

Marjo Baas

Ton Kuper

Roelof Pot

De Jong Luchtfotografie

Stephen Barnett

Norbert Hekkink

Courtesy © Gulfstream

Courtesy © Staff Sgt. Curt Cashour

Vista landschapsarchitectuur en stedenbouw

TenCate would like to hear from you.

Please let u s know your views by e-mailing

[email protected], stating the

market group or officer you wish to contact.

Royal Ten Cate (TenCate) is a multinational

company which combines textile technology

with chemical processes in the development

and production of functional materials.

On this technological basis, TenCate

develops a range of applications (product-

market-technology combinations) aimed

at growth markets.

TenCate materials are mainly used for:

◾ personal safety and protection of the

living and working environment;

◾ modernisation of equipment used by

armed forces, fire brigades and police;

◾ aerospace (lower fuel costs due to

lighter materials);

◾ water management, infrastructure

and environmental care;

◾ industrial applications.

TenCate selects market areas mainly on

the basis of global trends, specifically in

the safety/protection and sustainability/

environmental fields. With regard to

the characteristics of the materials

(specifications), the markets are usually

regulated by governments or agencies on

the basis of legislation and regulations.

TenCate’s direct customers are mainly

public-sector bodies, system integrators,

original equipment manufac turers and their

direct suppliers.

TenCate presents itself as a developer and

producer of materials, modules and systems

with distinctive characteristics.

The company operates a value-chain model

aimed at occupying distinctive positions

by means of technological innovation, cost

leadership, product differentiation and

end-user marketing.

TenCate develops solutions for end-users

by operating in network structures, such

as open innovation centres, partnerships

and co-creation, and by making acquisitions

in complementary fields (product-market-

technology combinations). The solution-

focused system approach plays a key role.

The policy of value-chain control has

enabled TenCate to secure leading

positions in worldwide niche markets.

TenCate employs around 4,350 people

worldwide and strives to operate in an

ethically and socially responsible way.

TenCate encourages its employees to be

enterprising, flexible and creative, thereby

demonstrating its aim of achieving progress

and sustainability for all stakeholders.

ADVANCED TEXTILES & COMPOSITES SECTOR

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

Ten Cate Protect bv Nijverdal, Netherlands

Ten Cate Protective Fabrics USA inc Union City (Georgia), USA

Ten 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 Bangkok, Thailand

(50.65%) Fabrics for protective clothing

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

Ten Cate Advanced Composites USA inc Morgan Hill (California), USA

Phoenixx TPC inc Taunton (Massachusetts), USA

YLA inc Benicia (California), USA

CCS Composites inc Benicia (California), USAAdvanced composites for aerospace and industrial applications

TenCate Advanced Armour UK (AML) Swindon, UKDesign and production of vehicle armour materials

Ten Cate Advanced Armour sas Primarette, France

Ten 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) (51%) Vissenbjerg, DenmarkActive protection systems for army vehicles

AML India Private ltd (90%) Noida, IndiaDesign and production of vehicle armour materials

GEOSYNTHETICS & GRASS SECTOR

Ten Cate Geosynthetics North America inc Atlanta (Georgia), USA

Ten Cate Geosynthetics Austria GmbH Linz, Austria

Ten Cate Geosynthetics France sas Bezons, France

Ten Cate Geosynthetics Netherlands bv Nijverdal, Netherlands

Ten Cate Geosynthetics Asia sdn bhd Kuala Lumpur, Malaysia

TenCate Industrial Zhuhai co ltd Zhuhai, ChinaGeosynthetics and industrial fabrics

Ten Cate Geosynthetics sdn bhd (Malaysia) Kuala Lumpur, Malaysia

Ten Cate Geosynthetics (Thailand) ltd Bangkok, Thailand

Ten Cate Geosynthetics pte ltd Singapore

Ten Cate Geosynthetics Italia srl Lazzata, Italy

Ten Cate Geosynthetics (UK) ltd Telford, UK

Ten Cate Geosynthetics sl Madrid, Spain

Ten Cate Geosynthetics Schweiz AG Zurich, Switzerland

Ten Cate Deutschland GmbH Dietzenbach, Germany

Ten Cate Geosynthetics Polska Spzoo Kraków, Poland

Ten Cate Geosynthetics CZ sro Prague, Czech Republic

Ten Cate Geosynthetics Rumania Bucharest, RomaniaSales offi ces

Ten Cate Thiolon bv Nijverdal, Netherlands

Ten Cate Thiolon USA inc Dayton (Tennessee), USA

Ten Cate Thiolon Middle East (49%) 1) Dubai, UAESynthetic turf components and systems

Ten Cate Thiobac bv Nijverdal, NetherlandsBacking for synthetic turf systems

GreenFields Holding BV (90%) Genemuiden, Netherlands

GreenFields BV (100%)

(subsidiary of GreenFields Holding BV) Genemuiden, Netherlands

Xtra Grass BV 2) Kampen, Netherlands

ProCourt Int BV 2) Zederik, Netherlands

GreenFields Eastern Europe BV (60%) 2) Genemuiden, Netherlands

GreenFields Noo (Bresco) AS (60%) 2) Molde, Norway

GreenFields Swiss AG (60%) 2) Schaffhausen, Switzerland

GreenFields Sports Turf Systems (ME) Ltd (80%) 2) Nicosia, Cyprus

GreenFields West Africa SARL (65%) 2) Cotonou, Benin

GreenFields UK Sports Surfaces Ltd 2) Bolton, UK

GreenFields India FZC (51%) 2) Sharjah, United Arab Emirates

GreenFields Pacifi c Pty Ltd 2) Brisbane, Australia

Southern Greens BV (82%) 2) Kampen, Netherlands

GreenFields Sports & Leisure Pty (55%) 3) Pietermaritzburg,

South AfricaMarketing and installation of synthetic turf systems

TigerTurf NZ, ltd (80%) Auckland, New Zealand

TigerTurf Australia pty ltd (80%) Campbellfi eld, Australia

TigerTurf (UK) ltd (80%) Hartlebury, UK

Tiger Sports Americas inc (80%) Austin (Texas), USA

(all as at 28 April 2010; as at 31 March 2009: 49%)Marketing and production organisations for synthetic turf systems

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

OTHER ACTIVITIES SECTOR

Xennia Technology ltd (78.95%) Letchworth, UK Specialist inkjet technology for industrial applications

Ten Cate Systems bv Nijverdal, NetherlandsDevelopment activities

Ten Cate Enbi International bv Brunssum, Netherlands TenCate Enbi group holding company

Ten Cate Enbi GmbH Opladen, Germany

Ten Cate Enbi kft Rétság, Hungary

Ten Cate Enbi inc Shelbyville (Indiana), USA

Ten Cate Enbi inc Rochester (New York), USA

Ten Cate Enbi pte ltd Singapore

Ten 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, Netherlands

Royal Ten Cate USA inc Atlanta (Georgia), USA

Ten Cate USA inc Washington D.C., USA

Ten Cate UK ltd London, UK

Ten Cate France sas Paris, France

Ten Cate Deutschland GmbH Opladen, Germany

Ten Cate Danmark a/s Copenhagen, Denmark

Royal Ten Cate Pacifi c ltd Hong Kong, China

Royal 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

GreenFields (All Sports) UK Ltd (49%) Stepps, UKMarketing and installation of synthetic turf systems

The operating companies listed here are consolidated in the financial 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.

Royal Ten Cate Annual Report 2011Royal Ten Cate Annual Report 2011

COMMERCIAL OVERVIEWAs at 1 January 2012

PROFILE SUBSIDIARIES, ASSOCIATED COMPANIES AND OTHER INTERESTS as at 31 December 2011


PROTECTIVE FABRICS

Protective and safety fabrics and

multi-risk solutions for industry,

services, firefighting and defence

◾ TenCate Protective Fabrics

Americas

◾ TenCate Protective Fabrics EMEA

◾ TenCate Protective Fabrics Asia

OUTDOOR FABRICS

Protective fabrics for outdoor

applications

◾ TenCate Outdoor Fabrics

Europe

SPACE & AEROSPACE COMPOSITES

Advanced composites, compounds and

systems for the aerospace industry

◾ TenCate Advanced Composites

Americas


EMEA

INDUSTRIAL COMPOSITES

Advanced composites, compounds

and systems for industrial

applications, including automotive,

industrial components and energy

extraction


Americas


EMEA

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

◾ TenCate Advanced Armour Americas

◾ TenCate Advanced Armour EMEA

◾ TenCate Advanced Armour Asia

INKJET TECHNOLOGY

Specialist inkjet technology for

industrial production processes

◾ Xennia Technology

TECHNICAL COMPONENTS

Technical rollers and components,

particularly for printers, copiers, fax

machines, postal sorting machines

and ATMs

◾ TenCate Enbi North America

◾ TenCate Enbi EMEA

◾ TenCate Enbi Asia

GEOSYNTHETICS

Synthetic fabrics, non-wovens and

grids for solutions and applications

in infrastructure, civil engineering,

water management, the environ-

mental sector, agriculture and

horticulture

◾ TenCate Geosynthetics

Americas

◾ TenCate Geosynthetics EMEA

◾ TenCate Geosynthetics Asia

GRASS

Synthetic turf components and inte-

grated synthetic turf systems for

top-flight sports, recreation and

landscape projects

Upstream

◾ TenCate Grass Americas

◾ TenCate Grass EMEA

◾ TenCate Grass Asia

Downstream

◾ Edel Grass (50%)

◾ GreenFields (90%)

◾ TigerTurf (80%)

◾ Hellas Construction (30%)

The TenCate sectors are subdivided into market groups. Each market group is a cluster of subsidiaries which co-operate intensively in research & development,

production, end-user marketing and sales.

An overview of the legal entities which make up the company can be found on the inside back cover.



1 Due to legislation in Dubai, 51% is held by a local partner. Royal Ten Cate has 100% economic ownership.

2) Subsidiary of GreenFields BV

3) Subsidiary of Southern Greens BV

HOLDING & SERVICES

Holding company activities

◾ Koninklijke Ten Cate nv

Annual report 2011 Royal Ten Cate

Commercial overview Inside cover

Profile Inside cover

Financial highlights 2

TenCate in 2011 4

TenCate technology overview 6

Key developments in 2011 9

Evaluation of 2011 action plans 10

Vision, mission, strategy and objectives 12

Foreword by the Chairman of the Executive Board 14

The TenCate share 16

Share listing 16

Investor relations policy and communication 16

Dividend policy and proposed dividend 16

Disclosure of Major Holdings in Listed Companies Act 17

Option plan 17

Spread of shareholdings 17

Theme: Connected by the value proposition 18

Report of the Supervisory Board 20

The Boards 22

Report of the Executive Board 25

Financial performance 28

Activities by sector 33

Post balance sheet events 58

Outlook 59

Actions for 2012 60

Corporate information 61

Corporate governance 61

SWOT analysis 61

Risk management 62

Human resources management 66

Corporate information technology 69

Corporate intellectual property 69

Corporate social responsibility 70

Statement by the Executive Board 75

Financial statements 2011 76

Other information 133

Ten-year summary 135

Operating companies, associated companies

and other interests Inside cover

Colophon Outside cover

Royal Ten Cate2

1,200

960

720

480

240

02007 2008 2009 2010 2011

3.0

2.4

1.8

1.2

0.6

02007 2008 2009 2010 2011

600

480

360

240

120

02007 2008 2009 2010 2011

125

100

75

50

25

02007 2008 2009 2010 2011

1.0

0.8

0.6

0.4

0.2

02007 2008 2009 2010 2011

600

480

360

240

120

02007 2008 2009 2010 2011

75

60

45

30

15

02007 2008 2009 2010 2011

100

80

60

40

20

02007 2008 2009 2010 2011

Financial highlights

Advanced Textiles & Composites

€ 538.4 mln (+ 20%)

REVENUES BY SECTOR

PER-SHARE DATAFINANCIAL HIGHLIGHTS

Revenues

€ 1,138.8 mln(+ 16%)

EBITA

€ 102.5 mln(+ 21%)

Net result

€ 58.7 mln(+ 28%)

75

60

45

30

15

02007 2008 2009 2010 2011

45

36

27

18

9

02007 2008 2009 2010 2011

15

10

5

0

–5

–102007 2008 2009 2010 2011

Advanced Textiles & Composites

€ 70.3 mln(+ 61%)

EBITA BY SECTOR

Geosynthetics & Grass

€ 26.3 mln(– 16%)

Other activities

€ 5.9 mln(– 40%)

Other activities

€ 74.5 mln (+ 12%)

Geosynthetics & Grass

€ 525.9 mln (+ 12%)

Net result*

€ 2.31

* Excluding income from sale of activities and exceptional items

€ 0.95

Annual Report 2011 3

PROFIT AND LOSS ACCOUNT 2011 2010

Revenues 1,138.8 984.5

Operating result before depreciation and amortisation (EBITDA) 137.5 119.5

Operating result before amortisation (EBITA) 102.5 85.0

Operating result before amortisation as % of revenues (EBITA margin) 9.0% 8.6%

Operating result (EBIT) 89.6 74.6

Net result 58.7 46.0

CONSOLIDATED BALANCE SHEET AND RETURN

Net capital employed (year-end) 808.8 715.4

Return (EBITA) on average net capital employed 13.1% 12.1%

Net interest bearing debt (year-end) 288.7 240.7

CONSOLIDATED CASH FLOW

Cash flow from operating activities 49.3 29.1

Investments less divestments of fixed assets – 22.3 – 20.4

Free cash flow 27.0 8.7

Balance of acquisitions/disposals of operating companies and participating interests – 34.8 – 24.7

OUTSTANDING SHARES (X 1,000)

Number of outstanding shares at year-end 25,929 25,502

Weighted average number of shares (before dilution) 25,452 25,026

Weighted average number of shares (after dilution) 25,736 25,216

PER-SHARE DATA

Net result 2.31 1.84

Diluted net result 2.28 1.82

Dividend per share 0.95 0.75

Equity* 17.96 17.19

EMPLOYEES

Number of staff years at year-end 4,353 4,271

– of which in the Netherlands 819 785

* Adjusted for comparison purposes in connection with change of accounting policy for pensions.

Royal Ten Cate4

0

5

10

15

20

25

30

35

40

45

50

NETH

ERLA

ND

S

BELG

IUM

GER

MA

NY

UK

FRA

NC

E

AU

STR

IA

ITALY

SP

AIN

OTH

ER EU

OTH

ER EU

RO

PE

MID

DLE EA

ST

US

A + C

AN

AD

A

CEN

TRA

L AN

DS

OU

TH A

MER

ICA

AS

IA

RES

T OF TH

E WO

RLD

Geographic breakdown of sales in in 2011

in per cent

◾ By destination◾ By origin

TenCate in 2011

In 2011, TenCate maintained the growth trend that began

in 2010, with revenues and profitability rising strongly

again to record levels. TenCate succeeded once again

in strengthening its market positions by means of the

buy & build strategy.

The growth in 2011 resulted mainly from the focus on materials that

enable the Company to anticipate market trends on the basis of the

right value proposition. The global market trends of safety and

sustainability once again generated a positive market climate overall

in 2011.

TenCate is able to project a highly distinctive international profile,

partly due to the Company’s ground-breaking approach based on

technological innovation and product differentiation. That makes

TenCate an attractive partner for innovation and product and market

development. As a connecting factor within TenCate, the technology

position constantly gives rise to new possibilities in the market.

This annual report seeks particularly to highlight the activities that

have been and are being developed in order to gear the technological

lead and product differentiation to the marketplace as far as possible

by adopting an outside-in approach.

AmericasNORTH AMERICAUnited StatesCanada

SOUTH AMERICABrazil

EMEAEUROPEBelgiumDenmarkGermanyUnited KingdomFranceHungaryIrelandItalyNetherlandsAustria

PolandRomaniaSpainCzech RepublicSwitzerland

AFRICABeninSouth Africa

MIDDLE EASTDubai

AsiaPacifi cASIAChinaIndiaMalaysiaSingaporeThailandSouth Korea

OCEANIAAustraliaNew Zealand

TenCate has its own production sites and sales offi ces in the following countries:

Production and sales Sales

◾ Advanced Textiles

& Composites

◾ Geosynthetics & Grass

◾ Other activities

◾ Advanced Textiles

& Composites

◾ Geosynthetics & Grass

◾ Other activities

7%

46%47%

7%

47%46%

Revenues 2011 (€ 1,138.8 million)

in per cent

Revenues 2010 (€ 984.5 million)

in per cent


The Advanced Textiles & Composites sector is concentrated around

impregnation and coating technologies for the application or

incorporation of functional characteristics in and on textiles.

The products in this sector mainly comprise protective fabrics and

composite materials (made particularly of carbon fibres, glass fibres

and aramids). TenCate is the global market leader in protective fabrics

and one of the leading companies in the field of composite materials.

Uses:

◾ Defence

◾ Industry

◾ Firefighting, police

◾ Aerospace industry

◾ Automotive and energy sector

The Geosynthetics & Grass sector is concentrated around extrusion

and non-woven technologies. Geosynthetics products play an

important role in the separation of soil layers and in the stabilisation

of groundworks and dyke bodies. Geosynthetics are increasingly

being used for the filtration and dewatering of polluted sludge.

Synthetic turf is seeing growing use worldwide, driven principally

by climate conditions, water scarcity and lower maintenance costs.

Not least, an important factor is that synthetic turf sports pitches

remain playable 24 hours a day and in less favourable weather

conditions.

Geosynthetics and synthetic turf are global markets. TenCate occupies

the number-one position in these markets.

Uses:

◾ Infrastructure projects and water management

◾ Environmental market

◾ Agriculture sector

◾ Sports pitches market

◾ Landscaping, leisure market

Revenues

€ 538.4 mln

Revenues

+ 20%

Revenues

€ 525.9 mln

Revenues

+ 12%

EBITA

€ 70.3 mln

EBITA

+ 61%

EBITA

€ 26.3 mln

EBITA

– 16%

ADVANCED TEXTILES & COMPOSITES SECTOR GEOSYNTHETICS & GRASS SECTOR

◾ Protective fabrics◾ Armour composites◾ Space/aerospace composites

◾ Geosynthetics◾ Grass Upstream◾ Grass Downstream

Indicative revenue breakdown 2011 Indicative revenue breakdown 2011Indicative revenue breakdown 2010 Indicative revenue breakdown 2010

Royal Ten Cate6

TenCate technology overview

MATERIAL TECHNOLOGY

PRODUCTS (materials, modules, systems)

MARKETS

VALU

E CH

AIN

MA

NA

GEM

ENT

END-USER

END-USERMARKETING

marketmanagement

DIFFERENTIATION

portfoliomanagement

processmanagement

COST LEADER

INNOVATION

GLOBAL TRENDS

Safety and protection, sustainability and environment

protective fabrics outdoor fabrics space composites aerospace composites

Fiber technology Textile technology

Basic technologies

P Physics

C Chemistry / Chemical engineering

PC Nanotechnology / Polymer chemistry

BT Biomedical technology

ME Mechanical engineering

E Electronics


businessdevelopment

VALUE CHAIN MANAGEMENTEXTERNAL INTERNAL

businessdevelopment

portfoliomanagement

processmanagement

marketmanagement

END-USER MARKETING

market

product

technology

process

DIFFERENTIATION

INNOVATION

COST LEADER

industrial composites advanced armour geosynthetics grass

Finish technology

TenCate business model © TenCate

© TenCate

M Mechatronics

IT ICT

B Biosciences

ADVANCED ARMOUR

Connected through the value proposition

Troops in theatre need the best and most advanced protection. Insurgency tactics have not only caused a great many casualties, but also had an impact on military operations and logistics. There is an evident need for enhanced protection, in combination with increased mobility of military vehicles.

The TenCate ABDS™ active blast countermeasure system is an innovative defence solution, against a number of improvised explosive devices. This active protection system effectively mitigates the devastating effects of IEDs, fulfi lling STANAG 4569 at classifi ed levels.

While defeating the acceleration of the vehicle and preserving the vehicle hull, the TenCate ABDS™ active blast countermeasure system delivers a structural and biomechanical response mode for a range of combat and tactical military vehicles.

active blast countermeasure system


Key developments in 2011

◾ 16% Revenue growth

Revenues in 2011 amounted to € 1,138.8 million (2010:

€ 984.5 million). The organic rise in revenues amounted to 12%.

The Protective Fabrics market group made a major contribution

to the revenue growth. In particular, there was strong growth in

TenCate Defender™ M and TenCate Tecasafe™ products.

TenCate successfully created new standards in the world market

for protective fabrics with these brands.

◾ 28% Net profit growth

Net profit in 2011 amounted to € 58.7 million (2010: € 46.0 million).

The profit growth was achieved particularly as a result of higher

profits in the United States and the Netherlands.

◾ Strong growth in the Advanced Textiles & Composites sector

TenCate Protective Fabrics recorded strong growth in revenues

from the TenCate Defender™ M and TenCate Tecasafe™ products.

These two product groups contributed a substantial portion of

this se ctor’s total revenues in 2011. There was also considerable

growth in revenues from aerospace composites. The growth took

place both in Europe and America. The production of composite

materials for the Airbus A380 contributed a substantial share.

◾ Mixed picture for Geosynthetics & Grass sector

The Geosynthetics & Grass sector showed a mixed picture.

TenCate Geosynthetics put in an excellent performance worldwide.

In the Grass group revenues declined compared to 2010 due to the

ending of the supply contract with a major customer following

a strategic reorientation. TenCate was unable to compensate

fully for this loss of revenues during the year. It put pressure on

profits because it was not possible to take full advantage of the

economies of scale within TenCate Grass. Alliances were entered

into with new market participants during the year.

◾ Positive developments in new markets / strengthening

of local presence

Revenues in Asia and South America continue to grow strongly,

particularly in protective fabrics and geosynthetics. The acquisition

of Emas Kiara in Malaysia (geosynthetics) was completed. In India,

the market activities of TenCate Protective Fabrics and TenCate

Advanced Armour were merged to form TenCate Protection

Systems in order to increase their efficiency as a combined

operation. In China, the local management was strengthened

to facilitate a differentiated approach to the Chinese market.

A co-operation agreement was signed with Chinamex to supply

the market for protective fabrics (military uniforms, police,

firefighting).

◾ Start-up of new activities in aerospace armour

TenCate is initiating activities in vehicle and helicopter armour,

for which the production site opened in France in the second

half of 2011. The first major long-term contract was for armour

for Eurocopter (EADS) helicopters.

◾ Start of the market launch phase for the TenCate ABDS™ active

blast countermeasure system

Following the completion of the test phase, TenCate is initiating

the market phase for the TenCate ABDS™ active blast

countermeasure system jointly with military vehicle manufacturers.

A 51% majority holding in ABDS ApS was acquired at the end of

2011 in order to accelerate this process. The acquisition of all the

shares in ABDS ApS was completed at the beginning of 2012.

Royal Ten Cate10

Evaluation of 2011 action plans

◾ Strengthening of the Company profile

TenCate has strengthened its profile, including through advertising

and specialist publications in the US media, partly because a large

proportion of revenues are generated in America. The main thrust

involved raising awareness of the protection characteristics of

TenCate products, TenCate’s relationship with fellow companies in

the US textile industry involved as part of the value chain in the

production process for TenCate Defender™ M. At the beginning

of 2011, the waiver under the US Berry Amendment (import

exemption for non-US goods) was extended until 2015. The U.S.

Congress granted a permanent waiver at the end of 2011.

◾ Reinforcement of sustainability concept and introduction of

measurable performance indicators

In line with previous initiatives, good progress was made in 2011 in

reinforcing the sustainability policy by means of corporate social

responsibility. TenCate is focusing increasingly on making the CSR

policy more measurable and visible. At the same time, customers

are increasingly demanding more sustainable products.

The following are examples of individual projects that have been

started or completed:

◾ The new process ecotool is being used in market groups in

the Netherlands;

◾ The new product ecotool has determined the detailed CO2 footprint

of TenCate Geotube®;

◾ Various sustainability and quality certification processes were

completed or extended in the Netherlands and abroad;

◾ A substantial number of innovation projects have sustainability

as a main or sub-theme;

◾ TenCate’s sponsorship projects in the Netherlands and abroad

are demonstrating the company’s social involvement.

◾ Longer-term profit growth

Various business development projects have been assigned

strategic priority. This has resulted in a particular focus. TenCate

has a number of attractive possibilities, which can contribute

a major share of future growth or give rise to the technological

renewal that will strengthen TenCate’s market position.

The following are examples:

◾ Digital finishing by means of inkjet technology;

◾ Woven synthetic turf systems / integrated synthetic turf systems;

◾ TenCate ABDS™ active blast countermeasure system;

◾ Expansion of the TenCate Cetex® product portfolio (thermoplastic

composites).

◾ Implementation of emerging markets strategy

TenCate is strengthening its market position and presence

in emerging markets. This is a gradual process, preceded by

a thorough analysis of the market structure and the potential

partners operating in it. In view of the risks and turnaround times,

a greenfield operation is usually a good option. The acquisition

of Emas Kiara (geosynthetics, Malaysia) was completed at the

beginning of 2011, considerably increasing TenCate’s market share

in the region. The protective fabrics activities for the Asian market

were strengthened from the Bangkok site (TenCate – Union

Protective Fabrics, Thailand). A co-operation agreement was

signed with Chinamex (China) for the Chinese market.

The management of TenCate Pacific in Hong Kong was

strengthened at the end of 2011.


◾ New uses for TenCate materials

The automotive industry is one of the most important new areas

for the use of TenCate materials. The industry is increasingly

realising that in the near future markets will need light, high-

performance materials which can be incorporated in large volumes

in industrial manufacturing processes. TenCate is one of the few

companies in the composites sector to have many years of

experience in the aircraft industry in both the production and

processing of thermoplastic composites for secondary and primary

structural components as well as interior applications (TenCate

Cetex®). At the end of 2011, TenCate began to form the Industrial

Composites group, the third pillar in the composites group

alongside the existing space and aerospace composites and

armour materials groups.

◾ Profit improvement at Xennia Technology

The positive revenue growth at Xennia Technology has not yet led

to a rising profit trend, because development and patent costs are

still relatively high. Research & development activities for third

parties (contract research) have been considerably reduced as a

result of the policy focused on profit growth. Xennia Technology is

now serving a growing number of international markets jointly with

and through third parties.

◾ Continuation of the buy & build strategy

TenCate has announced an ambitious growth objective for the

years ahead, with a revenue target of approximately € 2 billion.

Value creation is being boosted by acquisitions, the strengthening

of existing activities and their profitability and market

development.

Product, market and technology developments were structured

more efficiently in 2011. There is good internal co-operation and

a stronger involvement and commitment on the part of the market

groups in selecting the strategic growth possibilities. Projects are

being initiated on the basis of a clear market vision and growth

objective.

◾ Leading role in the consolidation of the synthetic turf market

In TenCate’s synthetic turf activities, attention is increasingly

shifting from the product (the components of a synthetic turf

system) to the required results for the user (system solutions).

This approach is increasingly centred on quality, durability,

performance and safety for players. Strategic co-operation with

market participants (knowledge integration) is essential in this

regard. The creation of an international marketing and sales

network linked to the production of synthetic turf fibres and carpet

backing is expected to be completed in 2012.

Royal Ten Cate12

Vision, mission, strategy and objectives

VISION

TenCate develops and produces functional materials which are

distinctive in terms of their characteristics. TenCate focuses on

worldwide trends in the field of safety / protection and sustainability /

environment, as well as derivative themes, which promote the growth

of the company.

Markets demand specific critical functionalities to meet specific needs,

which are usually determined by standardisation or legislation and

regulations. Safety / protection and sustainability / environment are

trends that are tightly regulated worldwide.

TenCate operates in the field of material science. Technological

development is an important means of complying with standards

and meeting requirements or adjusting standards in such a way

that progress can be made in terms of functionalities.

TenCate products are used in systems. TenCate increasingly provides

the overall solution, either independently or in co-operation with

partners.

MISSION

Progress is one of the principal motives of TenCate. The company

aims to be a leader in providing sustainable solutions for complex

requirements relating to personal protection and protection of the

personal environment. TenCate has secured a leading position in

its markets worldwide, partly as a result of its broad technological

competence.

STRATEGY

TenCate’s strategy is based on the concept of global value chain

management. On this basis TenCate works with numerous links in

the chain in sustainable growth markets. The four cornerstones of

this policy are:

1. End-user marketing and an industrial intellectual property policy;

2. Product differentiation, targeted at specific applications and

customer requirements;

3. Technological innovation;

4. Cost leadership.

TenCate USA welcomes members

of US Congress and Dutch ambassador

Members of the United States Congress paid working visits to

TenCate Geosynthetics in Pendergrass (Georgia) and TenCate

Advanced Armour in Hebron (Ohio) in August 2011. In Pendergrass

they discussed the characteristics and applications of geosynthetics

in areas such as infrastructure projects. In Hebron they learned

about armour applications and projects in the field of vehicle

and personal protection. TenCate Protective Fabrics in Union City

(Georgia) also welcomed Renée Jones-Bos, the Netherlands’

ambassador to the United States, in November. This working visit

also served to strengthen the economic and cultural ties between

the Netherlands and Georgia.


FINANCIAL STRATEGIC OBJECTIVES

◾ The net capital employed must generate a sufficient return.

The operating result before amortisation as a percentage of

average net capital employed 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). To this end, the buy & build

strategy will be pursued. Higher added value and efficiency are

also necessary, since the organic growth of the core activities is

expected to be below 10% on average.

◾ An appropriate profit margin must be achieved. The consolidated

EBITA margin must rise to at least 10%.

Achievement of targets:

Target Actual

Return on average net capital employed > 15% 13.1%

Debt ratio (debt / EBITDA) < 2.5 2.12

EBITA growth at least 10% > 10% 20.6%

EBITA margin > 10% 9.0%

OBJECTIVES

QUALITATIVE STRATEGIC OBJECTIVES

◾ Creation of shareholder value through profitable growth based on

our knowledge, skill and internal synergy. In this way we can fulfil

our social responsibilities, from economic, environmental and

social perspectives.

◾ Achievement of critical mass in product-market-technology

combinations by securing 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, renewal and progress.

◾ Management of a global commercial organisation which thinks

in terms of (system) solutions within the overall value chain.

Royal Ten Cate14

SUBSTANTIAL REVENUE AND PROFIT GROWTH

In 2011, TenCate successfully maintained the recovery which had

begun in 2010, with a further strong rise in revenues and profit.

Revenues and net profit amounted to € 1,138.8 million (+ 16%) and

€ 58.7 million (+ 28%) respectively. The growth was achieved despite

continued challenging economic conditions, mainly thanks to TenCate’s

leading product, market and technology positions in the niche markets

in which the company operates worldwide.

Although growth was achieved across a wide base, there was a

substantial contribution from the Protective Fabrics market group.

This was one of the fastest-growing product groups in 2011 as a result

of the successful product differentiation policy (including TenCate

Tecasafe™ Plus and TenCate Defender™ M). Further internationalisation

(Asia and South America) also contributed to the continuing growth.

INTERNATIONAL PROFILE

Looking back, it can be seen that TenCate has succeeded in constantly

strengthening its market position by means of the buy & build strategy.

This was the case again in 2011, mainly as a result of the market focus

on materials that enable the Company to anticipate market trends on

the basis of the right value proposition.

TenCate is able to project a highly distinctive international profile,

partly due to the company’s ground-breaking approach based on

technological innovation and product differentiation. That makes

TenCate an attractive partner for innovation and product and market

development. Examples of this are the technological developments

in Xennia Technology in the field of digital textile finishing and the

developments with regard to the TenCate ABDS™ active blast

countermeasure system. TenCate is also viewed as an attractive

partner in the field of thermoplastic composites (TenCate Cetex®).

TenCate also fulfilled a pioneering role in crucial knowledge areas in

the past, including in developments in the field of synthetic turf and

thermoplastic composites. This has resulted in pre-eminent market

leadership. As a connecting factor within TenCate, the technology

position constantly gives rise to new possibilities in the market.

The worldwide market trends of safety and sustainability once again

generated a positive market climate overall in 2011.

TenCate operates in the international market in general as

a transnational company*. Characteristic features of this role include

a strong internal network structure and mutual exchanges of

information, with the company positioning its products strongly in local

markets. Gearing product specifications to local requirements or

specific market groups is crucial and also leads to fragmentation

of markets or market niches. In this regard, TenCate exhibits strong

features of a global enterprise in the fields of finance, marketing/

branding and end-user marketing. TenCate also has purchasing and

production advantages based on worldwide access to commodities

markets and economies of scale. This international profile, which

combines the best of both worlds, is important in order to achieve

continuing growth, particularly at the present time.

VALUE PROPOSITION FOR THE MARKET

Value creation is a central theme of this annual report, because it plays

a major role in numerous market propositions. TenCate’s development

processes are characterised by a pragmatic approach, reliability and

thorough knowledge and experience. With its broad knowledge base

in the field of textile technology combined with chemicals (material

science), TenCate is a unique technology company. This annual report

seeks particularly to highlight the activities that have been and are

being developed in order to gear the technological lead and product

differentiation to the marketplace as far as possible by adopting an

outside-in approach.

‘Materials that make a difference’ is a promise to the market.

TenCate’s market increasingly puts the end-user at the centre.

Although the company operates in a business-to-business

environment, end-user marketing is a characteristic success factor.

The aim is to create value for the end-user. In markets dominated

by specifications, standards and product criteria, which are usually

determined by government bodies, this aspect is of great importance.

Particularly when government budgets are being cut, systems which

save costs in the short or long term offer positive results. Against this

backdrop increasing importance is being attributed to sustainability

and social and ethical criteria in end-markets. TenCate therefore also

incorporates these aspects into the overall proposition. Further

information on this can be found in this report.

Foreword by the Chairman of the Executive Board

* Research by the University of Amsterdam (under the supervision of A.H.L. Slangen),

December 2010.


The management in Asia in particular has been strengthened in order

to respond more effectively to developments in the Chinese market.

Operational reinforcements have also been carried out in various

areas, particularly commerce, in order to accelerate international

growth.

I would like to express my thanks to all employees for their

commitment and the growth achieved during the past financial year.

L. de Vries, President and CEO

MARKET THEMES

TenCate’s main market themes are focused on the safety of people and

their surroundings and sustainability/environment. During the past year

a great deal of attention was devoted to the fact that a substantial

part of TenCate’s revenues are linked to government budgets. Although

such budgets have been under pressure for a long time, considerable

growth was nevertheless achieved in 2011. First, safety and protection

worldwide remain a strong focus of attention. Tighter budgets mean

that solutions will be analysed more critically in the future. The market

is becoming increasingly aware of innovative solutions which save

costs and/or are more sustainable than traditional methods. TenCate’s

focus on technology-driven solutions offers added value. In developing

economies in particular, there is a notable trend towards giving

preference to new technologies and/or materials. An acceleration is

taking place in the launch of new products and systems (fast pull).

TenCate is an innovative company. Around one-quarter of TenCate’s

revenues are generated from products introduced within the previous

three years. In the future too, TenCate has great potential in terms

of new or recently developed products and promising opportunities

which can ultimately offset the possible effects of tighter government

budgets. Innovation and the continuous process of renewal are

constantly throwing up new challenges in attractive markets.

That makes TenCate a unique company.

PEOPLE

‘People make a difference’ is the internal version of the TenCate creed

applied in the company’s human resources policy. The management

development and succession policy was closely scrutinised in 2011.

The associated policy implementation will be tightened up during the

coming year, with a greater degree of rotation among organisational

units in order to make optimum use of TenCate’s strength. Good

knowledge of the management of the whole company and of its

internal capabilities will make it possible to react rapidly to market

opportunities and mobilise internal knowledge.

Royal Ten Cate16

SHARE LISTING

The TenCate share is listed on NYSE Euronext Amsterdam and forms

part of the AMX index. The share is actively followed by the leading

banks and securities houses operating in Dutch / European small-

and midcap stocks.

TenCate stock options were reintroduced in 2011 after a number

of years’ absence.

As at 31 December 2011, 25,928,914 ordinary TenCate shares were in

issue, each of a par value of € 2.50. The closing price of the share was

€ 21.26.

The average daily trading volume on NYSE Euronext rose from 58,406

to 74,132 shares. The trading volume on the alternative trading

platforms also increased.

INVESTOR RELATIONS POLICY AND COMMUNICATION

Although TenCate’s performance led to a clear improvement compared

to 2010, the share price fell particularly in the second half of the year.

Apart from the general stock market climate, the TenCate share was

affected by the assumed effect of the expected cuts in US government

budgets in particular. TenCate gave a series of presentations in order

to communicate transparently on this subject and place it in a broader

perspective.

Various roadshows were held in the Netherlands and abroad during the

reporting year (including in the United States of America, the United

Kingdom, France and Germany), strengthening the dialogue with

shareholders, analysts and other parties interested in TenCate.

The annual meeting provided an excellent platform for a lively dialogue

with numerous interest organisations, including the Dutch Investors’

Association (VEB) and the Dutch Association of Investors for

Sustainable Development (VBDO).

The communication with the various stakeholders through TenCate’s

updated txtures magazine is greatly appreciated. The magazine covers

topical subjects, provides background information on TenCate’s

activities around the world and provides links to the various TenCate

websites. The increase in communication aimed at business markets

also attracted a growing number of visitors to the TenCate websites.

DIVIDEND POLICY AND PROPOSED DIVIDEND

TenCate aims to achieve further growth in its core markets and for

many years has been pursuing its buy & build strategy whereby growth

is achieved through complementary acquisitions.

A constant line of conduct is maintained with the distribution

percentage based on approximately 40% of net profit. TenCate applies

the principle of optional dividend.

In respect of the 2011 financial year it is proposed to set the dividend

at € 0.95 per € 2.50 par value share, payable at shareholders’ discretion

in shares as a charge to the share premium reserve or in cash.

The TenCate share

JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC

34

32

30

28

26

24

22

20

18

16

14

Source NYSE Euronext

ISIN code NL 0000375731

Reuters code NTCN.AS

Bloomberg code KTC.NA

◾ KTC

◾ AEX

◾ AMX

◾ AsCX


OPTION PLAN, SHAREHOLDINGS OF PERSONNEL

AND EXECUTIVE BOARD

Details of the option plan and shareholdings of managers and members

of the Executive Board can be found on page 128 of this annual report.

The shares repurchased by the company relate to the hedging of

granted options.

Important dates in 2012

Publication of 2011 full-year figures 29 February

Annual General Meeting of Shareholders 19 April

Ex-dividend date 23 April

Record date: determination of dividend entitlements 25 April

Option period for cash or stock dividend 26 April to 14 May

Publication of trading update for first quarter of 2012 27 April

Payment of dividend / delivery of shares (stock) 16 May

Publication of half-year figures 2012 27 July

Publication of trading update for third-quarter of 2012 26 October

Number of shares in issue

Number of shares in issue on 31 December 2010 25,501,907

Increase in share capital as a result of stock dividend 427,007

Number of shares in issue on 31 December 2011 25,928,914

Changes in the number of shares in issue 2011 2010

Par value € 2.50 € 2.50

Lowest price € 18.75 € 17.30

Highest price € 32.02 € 28.83

Closing price € 21.26 € 28.00

Earnings per share € 2.31 € 1.84

Dividend per share € 0.95 € 0.75

DISCLOSURE OF MAJOR HOLDINGS

IN LISTED COMPANIES ACT

The 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 5% (source: AFM). It is almost unchanged in

comparison with the previous year.

Name Date of disclosure Percentage

Delta Lloyd N.V. 6 May 2011 5.67%

Kempen Oranje Participaties N.V. 1 January 2010 6.34%

Ameriprise Financial Inc 1 May 2010 7.69%

Schroders plc 27 October 2009 8.25%

Delta Lloyd Deelnemingen Fonds N.V. 22 June 2010 10.16%

Approximately two-thirds of the shares in issue are held by

institutional investors who hold substantial shareholdings for relatively

long periods (value/growth investors). In the geographical distribution

a shift can be seen to predominantly Dutch investors. This is not

a deliberate policy, but the result of an overall reduction in interest

among Anglo-Saxon investors in European stocks, partly as a result

of currency developments.

◾ Belgium

◾ France

◾ Germany / Switzerland

◾ Netherlands

◾ Scandinavia

◾ United Kingdom

◾ United States

4%2%

23%

9%

7%50%

5%

Geographic spread of shareholdings in 2011 in per cent

Royal Ten Cate18


VALUE CHAIN MANAGEMENT AND VALUE PROPOSITION

TenCate applies the value chain management business model. This

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. When a product is developed into a system solution,

end-user marketing becomes increasingly important.

It is necessary to offer end-users recognisable added value in order to

occupy a sustained, strong competitive position in the production and

marketing chain. This value proposition is a set of ‘promises’ which the

company must fulfil in order to solve a problem faced by a customer or

group of customers. The added value of a product or system is usually

based on end-users’ existing or evolving requirements resulting from

legislation and/or regulations. The end-user translates the value

proposition into tangible advantages, such as price-performance

ratios, delivery reliability and the ability to meet individual

requirements.

TenCate’s main target groups are government bodies, other authorities

and representatives of customer groups which determine

specifications for protective materials. It is important to have an input

into the setting or amendment of standards and regulations. It is also

possible to anticipate requirements such as recycling, CO2 reduction

and cost limitation in processes within the rest of the production and

marketing chain.

MASS CUSTOMISATION

An important new market trend is mass customisation, i.e. providing

customised products and services to meet the wishes and

requirements of individual users. In the European market in particular

there are non-uniform regulations and standards. Products have to be

adapted to local requirements. There are also significant differences

between, for example, product requirements in the United States and

those of the rest of the world. As a global player, TenCate is ideally

placed to meet this need. There will even be a growing requirement

for individualised products. The developments in the field of inkjet

technology are a response to this trend, while economies of scale are

being maintained. This new technological development is an important

part of TenCate’s future value proposition.

SOLUTION PROVIDER

Major value drivers at present are price/cost reduction, environmental

factors, individualisation, reliability of the solution and the potential

for cost savings. Integrated solutions are increasingly being offered,

involving forms of co-operation or co-creation in the value chain.

The TenCate Defender™ M product concept is a clear example of

co-creation, attractive price-performance ratios and the provision

of a reliable solution.

MARKET TRENDS AND MARKET SELECTION

TenCate develops and produces functional materials which have to

meet specified rules, standards and customer specifications. TenCate

focuses particularly on markets governed by standards on safety and

protection of people and their environment. Sustainability and

environmental standards are becoming increasingly important and

numerous. TenCate is responding expressly to this trend by intensifying

its CSR policy.

The technology component is the connecting factor across the

company that underpins the selection of markets in which TenCate can

occupy distinctive positions.

PRODUCT CHAMPIONS

The structural focus on added value, both within the production and

marketing chain and in customer-focused solutions, will lead to a

gradual rise in margins. The aim of this is to create product champions.

These systems/solutions have the lowest costs in a particular market

segment and offer the highest-quality solution. If the market attributes

a great deal of value to a value proposition and the product also has a

relatively low-cost structure or generates cost advantages for users,

the precondition for a product champion is fulfilled.

> Whereas other suppliers have ideas

for product development, TenCate

Protective Fabrics can actually turn

them into reality. <

TenCate Protective Fabrics, Marketing department


the production processes. By working with parties in the value chain,

TenCate can support and facilitate the required development and

sustainability as a material producer.

INNOVATION AND CO-CREATION

The continuing focus on innovation is part of the value proposition.

Here too, there is a joint approach with customer groups, knowledge

institutions or value chain partners. Co-creation is becoming

increasingly important in order to introduce joint value propositions.

TenCate takes part in various co-operation initiatives, such as TAPAS

and TPRC (composite solutions), OICAM (Open Innovation Centre for

Advanced Materials) and AMMON (Innovation Centre for Advanced

Materials Manufacturing in the East of the Netherlands).

FROM PRODUCT TO SOLUTION

The provision of solutions fits in with the concept of the value

proposition. Using targeted channels in business-to-business and

specialist media, TenCate communicates mainly on solutions created

with TenCate materials. There is increasing co-operation with other

technologies to create multifunctional systems. The solution-focused

approach also leads to a gradual change in the sales organisation, with

co-operation taking place with market participants and specialists

offering various full or partial solutions and operators offering specific

access to international markets.

It is in the synthetic turf market that the most extensive form of

co-operation takes place. This market is witnessing increasing

integration within the production and marketing chain to accelerate

developments and raise the quality of the overall end-product (the

synthetic turf system). Co-operation also takes place in the TenCate

Geosynthetics market group with engineering firms, installers and

specialist companies, particularly in the fields of monitoring and

detection, environment and water management.

A key development is the increasing demand for weight-saving and

environmental awareness in the automotive industry. TenCate

materials (composites) and the technology position contribute to the

required solution. The use of new materials will also lead to changes in

VALUE PROPOSITION

For TenCate, the added value with regard to the distinctive position

in the value chain lies mainly in:

◾ Worldwide access to raw materials, such as fibres;

◾ The extensive technological base;

◾ Breadth of the product portfolio and branding;

◾ The advantages of the various system solutions;

◾ Short supply lines to the market (rapid response time) through

an international network of production and sales locations;

◾ Economies of scale;

◾ Knowledge positions and intellectual property;

◾ Reliability as a partner (track record, financial soundness,

quality image, solution provider);

◾ Dedication to innovation and development (often jointly with

market participants).

TenCate Geosynthetics involved in

decontamination of Volgermeer Polder

The Volgermeer Polder, which was once a landfill site for polluted

domestic and industrial waste, has been cleaned up and turned

into a nature reserve. The waste has been safely covered with foil,

drainage fabric, soil and water. The drainage fabric absorbs the

gas that builds up in the landfill waste. With the aid of TenCate

Geotube®, clean sludge was converted into a natural cap (a layer

of clean soil) on top of the seal. TenCate GeoDetect®, a geotextile

system equipped with sensors, is used to monitor the seal on the

waste in one of the basins that were created on top of the natural

cap. This is the largest soil remediation operation in Dutch history.

Royal Ten Cate20

ANNUAL REPORT

We hereby present the 2011 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 28 February 2012, 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.

COMPOSITION

No changes took place in the composition of the Supervisory Board

in 2011.

SUPERVISION

The Supervisory Board held plenary meetings with the Executive Board

on seven occasions in 2011, on the basis of a fixed schedule. It also

met independently on several occasions. The meetings discussed the

performance of both the Executive Board and the individual directors.

The Supervisory Board also assessed its own performance, as well

as that of the committees and the individual supervisory directors.

All members attended the meetings.

During the joint meetings, the Supervisory Board dealt with subjects

such as the strategy of the sectors within TenCate, the SWOT

analyses, risk management, the various acquisition proposals, the

valuation of TenCate’s balance sheet and the developments in the

recent acquisitions.

Particular attention was devoted to developments in the various parts

of the Grass group and the improved profitability of the TenCate

businesses in the Netherlands.

TenCate’s financial results were discussed each quarter. The first-half

figures for 2011 were discussed in the presence of the independent

auditor, KPMG. Particular attention was devoted each quarter

to TenCate’s debt, investments and working capital.

Other subjects included the budgets for 2012 and developments

in government and defence budgets in the United States.

The Board deliberated independently of the Executive Board on the

composition and performance of the Supervisory Board and the

performance of the Executive Board, as well as on the remuneration

of the Executive Board.

Board representatives also attended all consultative meetings of the

central works council. They participated in the discussions and took

note of the activities and events within the company.

CORPORATE GOVERNANCE

The Supervisory Board and the Executive Board endorse the main

principles of the Corporate Governance Code. The company applies this

code in full. The only variations from the code within Royal Ten Cate

concern primarily the size and nature of the company. These variations

and the associated interpretations better reflect TenCate’s operating

methods. The variations applied by TenCate can be viewed on the

company’s website (www.tencate.com).

INDEPENDENCE

All members of the Supervisory Board are independent within the

meaning of the best-practice provisions of the Corporate Governance

Code. No TenCate shares or options are held by the members of the

Supervisory Board.

COMPOSITION OF THE EXECUTIVE BOARD

At the shareholders’ meeting of 21 April 2011, Mr B. Cornelese was

appointed as CFO and as a member of the Executive Board, succeeding

Mr J. Lock. We are most grateful to Mr Lock for his wide-ranging

services and contribution to TenCate over the past years.

COMMITTEES

The Supervisory Board has two committees: the financial committee

chaired by Mr E. ten Cate and the combined Remuneration, Selection

and Appointments Committee chaired by Mr F. van Vught. Their task is

to analyse subjects within their specific focal areas and to prepare

decisions to be taken in the plenary meetings of the Supervisory Board.

There were no changes in the composition of the committees in 2011.

Report of the Supervisory Board


◾ The remuneration must not include any incentives which give rise

to behaviour directed towards personal interests that conflicts

with the company’s interests;

◾ A scenario analysis is drawn up each year with regard to the

possible outcomes of the remuneration policy.

The posts of CEO and CFO of Royal Ten Cate were based on Hay levels

in 2011. In the case of the CEO, Hay level 30 is applied. The variable

remuneration component is a maximum of 50% of the fixed annual

salary. In 2011, Mr de Vries was awarded a 10% increment in his

periodic remuneration and a variable salary component in respect of

2010 amounting to 50% of his fixed annual salary. He was also granted

60,000 options at an exercise price of € 27.38 and 10,000 shares with

a value of € 26.00 per share.

For the CFO, the fixed annual salary is set at Hay level 26. The variable

salary component is a maximum of 40% of the fixed salary. In 2011,

Mr Lock was awarded a € 20,000 increment in his periodic

remuneration for the period from January to April 2011 inclusive and

a variable salary component of 39% as variable remuneration in

respect of 2010. He was also granted 40,000 options at an exercise

price of € 27.38.

The full report can be found on the website under Corporate

Governance/documents.

The remuneration of the Executive Board is stated in note 55.2 on

page 123 of this report.

The Supervisory Board wishes to express its sincere gratitude to the

management and employees of TenCate for their commitment and

performance during 2011.

Almelo, 28 February 2012

Supervisory Board

J.C.M. Hovers, Chairman

P.P.A.I. Deiters, Vice-Chairman

F.A. van Vught

E. ten Cate

R. van Gelder

FINANCIAL COMMITTEE

The Financial Committee met in plenary sessions on four occasions in

2011 to prepare for the discussion of the 2010 annual figures, the 2011

quarterly and half-yearly figures and a number of specific subjects.

Consideration was given to matters such as TenCate’s results in 2011,

the budget for 2012 and the preparations for implementation of the

functional income statement as of 1 January 2012. The Committee also

discussed the impairment test calculations, debt and working capital,

the tax position particularly in the Netherlands, the policy with regard

to the audit service, the management letter from the external auditor

and the follow-up to his recommendations.

COMBINED REMUNERATION, SELECTION AND APPOINTMENTS

COMMITTEE

The Remuneration Committee met on five occasions in 2011,

considering matters such as the assessment of the current

remuneration policy. A detailed analysis was carried out using external

specialists with the aim of bringing the current remuneration policy

for the Executive Board more into line with the remuneration market

for companies of a similar type and size. In the view of the

Supervisory Board, this would take proper account of the quality

of the performance rendered. On the basis of this analysis a new

remuneration policy will be drawn up, which will be introduced in 2013

after approval by the General Meeting of Shareholders.

REMUNERATION REPORT

The 2011 remuneration report, referring to the plan to draw up a new

remuneration policy, has been posted on the company’s website.

PRINCIPLES 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:

◾ Remuneration of the management is aimed at attracting and

retaining 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

good balance between short and long-term results and objectives;

Royal Ten Cate22

The Boards (as at 1 January 2012)

EXECUTIVE BOARD

L. de Vries (1951), President and Chief Executive Officer B.J.H. Cornelese (1964), Chief Financial Officer


1) Member of the Financial Committee.

2) Member of the combined Remuneration, Selection and Appointments Committee.

*) Chairman.

SUPERVISORY BOARD

J.C.M. Hovers (m, 1943) Chairman 1) 2)

Commenced in office: 2008

End of current term: 2012

Chairman of the Supervisory Board of C1000 B.V.

Chairman of the Supervisory Board of Plieger NV

Chairman of the Supervisory Board of Smeva B.V.

Chairman of the Supervisory Board 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 (m, 1943) Deputy Chairman 2)



Chairman of the Supervisory Board of 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

F.A. van Vught (m, 1950) 2*)



High Level Policy Advisor, European Commission

Chairman of European Center for Strategic Management of Universities, Brussels

Chairman of the Board of Netherlands House for Education and Research,

Brussels

Chairman of the Supervisory Board of Medisch Spectrum Twente

Chairman of the National Review Committee on Higher Education and Research

in the Netherlands

Member of the Supervisory Board of Rova NV

Former Chairman of the Governing Board and Rector of the University of Twente

From left to right: E. ten Cate, F.A. van Vught, J.C.M. Hovers,

R. van Gelder and P.P.A.I. Deiters

E. ten Cate (m, 1945) 1*)



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

R. van Gelder BA (m, 1945) 1)



Chairman of the Supervisory Board of Atlas Services Group NV

Vice-Chairman of the Supervisory Board of SBM Offshore N.V.

Member of the Supervisory Board of Heijmans N.V.

Member of the Supervisory Board of Holcim Western Europe Ltd

Chairman of the Association of Securities-Issuing Companies

Former Chief Executive Officer of Heijmans N.V.

All members of the Supervisory Board are of Dutch nationality.

PROTECTIVE FABRICS


The year 2011 saw a redoubling of strategic efforts to market worldwide the TenCate Tecasafe® Plus product portfolio of inherently fl ame-resistant (FR) fabrics and knit fabrics for industrial protective clothing.

Global demand for FR products has increased as end-users seek the most economical protection in combination with the excellent performance, comfort and quality of the FR fabrics from the TenCate Tecasafe® Plus brand.

The TenCate Tecasafe® Plus product portfolio has been successful in reaching various markets and is continually breaking new ground with new applications, particularly in new geographic markets. Emerging markets are in general open to technological and other innovations, and for this reason TenCate Tecasafe® Plus has been well received in new markets in South America, Asia and Australia.


MARKET TRENDS

The markets in which TenCate operates have shown steady growth

over the successive economic cycles. Even in the current period,

which is characterised by an economic downturn and a tightening of

government budgets, the markets for TenCate’s materials have

overwhelmingly shown positive growth. Revenues grew once again

in 2011, reaching € 1.1 billion (organic + 12%).

SAFETY AND PROTECTION

The increased attention devoted to safety and protection is

contributing to a favourable business climate. Innovation is one of the

key driving forces behind TenCate. The company is able to respond

effectively to the trend towards budget tightening by developing

materials which have the ancillary effect of lowering costs for end-

users. Multi-risk safety fabrics are an example of this. TenCate sets

itself the objective of developing product champions that can set new

standards in terms of cost and performance. TenCate Defender™ M

and TenCate Tecasafe™ Plus are two key examples. They generated

a substantial share of the growth recorded in the 2011 reporting year.

WATER MANAGEMENT AND THE ENVIRONMENT

Water management and the environment are other important global

themes which had a positive effect on developments in the geotextiles

market in 2011. The need to carry out measurements of erosion, soil

deformation, subsidence in infrastructure works and monitoring

of dykes is focusing more consistent attention on the TenCate

GeoDetect® concept. Major projects were once again carried out

in 2011 using the TenCate Geotube® concept. Both are examples

of a solution-focused system approach in the environmental and

infrastructure market.

Another important environmental theme which should be mentioned

in this context is the reduction of fuel consumption and new

environmental standards (reduction in CO2 emissions) in the aviation

and automotive sectors. Demand for composites rose strongly again

in 2011. A revolutionary development also took place in the automotive

sector, where the need for technological innovation was felt strongly

as a result of future government standards on CO2 emissions.

TenCate Cetex®, the thermoplastic composites portfolio, consequently

attracted growing interest from new markets. A market assessment

was initiated in 2011 and preparations were made to position TenCate

in these new markets.

Recyclable synthetic turf was introduced to the sport and landscaping

markets during the reporting period. GreenSource and Sports for Water

opened up the possibility of purifying water – including for human

consumption – by means of synthetic turf systems. Both the Cruyff

Foundation and FIFA reacted enthusiastically.

VALUE CHAIN INTEGRATION IN THE INTERNATIONAL SYNTHETIC

TURF MARKET

In addition to the growth trends outlined above, the synthetic turf

market experienced lagging growth and a consolidation among market

participants. TenCate’s policy of value chain integration, with the

principal aim of drawing attention to the quality and playing

characteristics of synthetic turf pitches, was continued in 2011.

The market is moving into a more mature phase, in which integrated

providers supply a differentiated product portfolio of systems to the

market. TenCate is the global market leader, working with a number

of selected system providers (TenCate subsidiaries and partnerships)

operating in the market on the basis of TenCate components under

their own brand name. Since there is a strong relationship with the

TenCate brand, TenCate Grass is closely involved in guaranteeing the

quality and performance of the supplied systems, so that end-users

can be assured of the required quality level.

TECHNOLOGICAL DEVELOPMENT

INNOVATION

On a European scale, TenCate is actively involved in determining the

policy on the innovation agenda as chair of the European Textiles

Technology Platform. TenCate has also played an active part in the

creation of the top-level high-tech systems and materials sector.

TenCate has also played an active role within a differentiated segment

of this top-level sector in the Dutch aerospace industry. TenCate is

considered to be one of the leading innovative producers of high-grade

materials in the Netherlands. This position is the result of a consistent

focus on innovation as part of the longer-term strategy.

At regional level, TenCate has contributed to regional innovation policy

in close cooperation with the province of Overijssel, local authorities

Report of the Executive Board

Royal Ten Cate26

> REPOR T OF THE E XECUTIVE BOARD

and businesses. Examples of this are the formation of AMMON

(Innovation Centre for Advanced Materials Manufacturing in the East

of the Netherlands) and the opening of OICAM (Open Innovation Centre

for Advanced Materials), which focuses particularly on process

innovations.

TenCate devotes approximately 3% of revenues annually to innovation-

related projects. This percentage also includes development costs for

future revenues, such as in the aircraft industry, which is characterised

by long development times. Certain acquisitions (such as that of Xennia

Technology) can also be seen as innovation-driven.

Subsidies worth approximately € 2.4 million were received during the

reporting year. TenCate’s patent portfolio was again expanded in 2011.

3D WEAVING TECHNOLOGY

An important development in 2011 was the market launch of woven

systems. The weaving technology enables various system functions to

be combined in the top layer, thereby increasing quality without

necessarily raising costs for the end-user. Progress is being made with

the reuse or recycling of the pitch at the end of its economic life,

which also has the effect of reducing costs. The aim is to lower the

cost of ownership over the economic life while improving the playing

characteristics and increasing the durability of the system.

INKJET TECHNOLOGY

The European Digitex project was completed at the end of 2011,

bringing the introduction of very durable digital finishing by means of

inkjet a step closer. New, durable characteristics of technical textiles

are coming within reach. At the same time it will also be possible

to achieve a fundamental reduction in the water footprint of the

Advanced Textiles sector in the next three to five years. TenCate will

also be able to achieve a sharp reduction in water treatment costs.

TenCate believes that the technology positions and market themes of

safety and sustainability will continue to support the company’s

growth in the longer term.

BUY & BUILD STRATEGY

The buy & build strategy involves investing in and thereby

strengthening the existing product-market-technology combinations,

in combination with the complementary acquisitions.

Good progress was made in improving the profitability of the Dutch

operations in 2011. The main factors are a strengthening of the

TenCate Protective Fabrics product portfolio and the implementation of

process improvements and cost control. These have resulted in higher

added value in revenues and in an increase in the production result.

The strongly improved performance in aerospace composites is due

to the attraction of demand in combination with improved process

control.

The geotextiles production site at Almelo (Netherlands) was

transferred to TenCate’s industrial complex at Nijverdal (Netherlands)

in 2011, thereby concentrating all of TenCate’s activities in the

Netherlands at a single site. Process improvements were also

completed.

ACQUISITIONS

The acquisitions which took place in 2011 were predominantly focused

on strengthening the geographic and market positions. The acquisition

of Emas Kiara’s geosynthetics activities has strengthened the market

position in Malaysia and the surrounding countries.

GreenFields (90%) and Hellas Construction (30%), with which TenCate

already had close commercial relationships, were added to the

downstream activities of the Grass group in line with the strategy.

The acquisition of the assets of Difco gave the TenCate Protective

Fabrics market group access to the Canadian market for safety fabrics,

including potential customers in the defence sector.

> TenCate aims to break new ground as a

result of both technological innovation

and product differentiation. <

L. de Vries in ‘Textiles on the Move (publication to mark

150 years of De Maere, 90 years of EHTSV / Textores

Magistrique and 45 years of VOET)


Some assets of Osiris Inkjet Systems were acquired due to the

company’s bankruptcy. Osiris has an inkjet technology and patents that

are complementary to those of Xennia Technology. Another important

factor was that Osiris employees have a combination of knowledge and

experience of both inkjet and textile technology that is of interest to

TenCate. As part of TenCate Protective Fabrics’ ‘factory of the future’,

an analysis will be made of the useful contribution that Osiris

technology can deliver. This process innovation fits in with the aim

of developing a high-tech production facility which is focused on

sustainability and opens up possibilities for the production of smart

textiles.

The acquisition of 51% of the shares of ABDS ApS at the end of 2011

was important in order to achieve a rapid market launch of the TenCate

ABDS™ active blast countermeasure system (active protection of army

vehicles against roadside bombs) in co-operation with army vehicle

manufacturers. Although the system in itself does not fit in with

TenCate’s core business as a provider of high-grade materials, the

technology complements the passive protection afforded by TenCate

armour materials. The acquisition fits in with the system approach

and the solution-based philosophy. A characteristic of this strategic

approach is that through its solution-focused approach to the market

TenCate comes into contact with other/complementary technologies

and companies. The respective business unit consequently takes on

a new identity in the market as a solutions provider.

Acquisitions as part of the growth strategy also remain important in

the longer term. TenCate can then continue to prioritise the composites

market, particularly having regard to recent attention devoted to

carbon fibre-reinforced plastics) in the automotive industry.

Cooperation in protective fabrics

TenCate and Beijing Chinamex International Investment Co. Ltd

(Chinamex) in Beijing (China) have signed a memorandum of

cooperation to develop the Chinese market for protective fabrics.

The partners will market flame-retardant fabrics for military use,

police and emergency services. China too is witnessing growing

demand for personal safety and protection in the workplace and in

hazardous conditions. It is important to work with local authorities

when defining specifications for various risks. TenCate has

developed a protective flame-retardant fabric specifically for the

Chinese market under the name of TenCate Fire Dragon™.

Royal Ten Cate28

NET RESULT

The net result rose to € 58.7 million in 2011 (2010: € 46.0 million). That

marks a record for TenCate, which was due in particular to the strong

growth in the Advanced Textiles & Composites sector and in TenCate

Geosynthetics. The results of the Grass group were under pressure due

to an initial loss of revenues following a reorganisation in the customer

portfolio.

COMPOSITION OF THE COMPANY

The following companies were acquired in 2011:

◾ The interest in GreenFields was increased from 32% to 90% in

February 2011. GreenFields is a worldwide marketing organisation

in the synthetic turf segment.

◾ Emas Kiara Industries Berhad was acquired in March 2011 by

means of an asset deal. The company is a full-line producer of

a wide range of geosynthetic products and solutions focusing

primarily on the Asian market.

◾ In May 2011, a 30% minority interest was acquired in Hellas

Construction, a US synthetic turf production and marketing

organisation.

FINANCIAL PERFORMANCE

Analysis of 2011 results by sectors 2011 2010 Difference Organic

Of which

currency

Acquisition/

divestment

in millions of euros

Net revenues

Advanced Textiles & Composites 538.4 448.4 + 20% + 21% – 4% + 3%

Geosynthetics & Grass 525.9 469.3 + 12% + 2% – 3% + 13%

Other activities 74.5 66.8 + 12% + 13% – 1% –

1,138.8 984.5 + 16% + 12% – 3% + 7%

Operating result before amortisation

(EBITA)

Advanced Textiles & Composites 70.3 43.8 + 61% + 65% – 7% + 3%

Geosynthetics & Grass 26.3 31.4 – 16% – 7% – 7% – 2%

Other activities 5.9 9.8 – 40% – 38% – 2% –

102.5 85.0 + 21% + 27% – 6% 0%

Amortisation – 12.9 – 10.4

Operating result (EBIT) 89.6 74.6 + 20%

Net financial expenses – 11.3 – 10.0

Pre-tax result 78.3 64.6 + 21%

Profit tax – 18.7 – 17.9

Result from ordinary operations after tax 59.6 46.7 + 28%

Net result from associated companies – 1.3 – 1.3

Minority interest 0.4 0.6

Net result 58.7 46.0 + 28%

EBITA margins 2011 2010

Advanced Textiles & Composites 13.1% 9.8%

Geosynthetics & Grass 5.0% 6.7%

Consolidated 9.0% 8.6%

REPOR T OF THE E XECUTIVE BOARD > Financial performance


OPERATING RESULT BEFORE AMORTISATION

The operating result before amortisation (EBITA) increased by 21%

to € 102.5 million.

In the Advanced Textiles & Composites sector, EBITA grew by 61%,

including a 65% organic rise and a – 7% decrease due to currency

effects. There was also a small acquisition effect (+ 3%).

◾ TenCate Protective Fabrics USA strengthened its position with

the US Army and expanded its market share in various industrial

markets;

◾ In June 2011, the activities of Difco, a Canadian technical textile

organisation, were acquired and integrated into the US TenCate

Protective Fabrics organisation.

◾ In November 2011, a 51% majority interest was acquired in

ABDS ApS. The remaining 49% was acquired in January 2012.

REVENUES

Net revenues increased in 2011 by 16%, including an organic rise of

12%. The strengthening of the euro against the US dollar produced a

3% negative currency effect. The aforementioned acquisitions in 2011

and those completed in 2010 led to an acquisition effect of 7% on

revenues.

Revenue growth in the Advanced Textiles & Composites sector

amounted to 20%, including an organic rise of 21%. The currency

effect and the effect of acquisitions / divestments amounted to – 4%

and + 3% respectively. The following activities contributed to this rise:

◾ In the United States, TenCate Protective Fabrics generated record

revenues from TenCate DefenderTM M and developed a new

product champion in TenCate Tecasafe® Plus;

◾ In Europe and Asia, TenCate Protective Fabrics recorded growth

in protective and safety fabrics;

◾ Organic growth in Aerospace & Armour amounted to 14%, driven

by a rise in aerospace revenues in Europe and the United States

and by growth in the armour business in Europe.

The revenues of the Geosynthetics & Grass sector grew organically

by 2% to € 525.9 million. The currency effect and the effect of

acquisitions/divestments amounted to – 3% and + 13% respectively.

◾ TenCate Geosynthetics grew by 13% and 14% respectively in the

United States and Europe, driven by infrastructure projects and

growth of market share;

◾ The acquisition of Emas Kiara caused revenues to leap by 31%

in Asia;

◾ The revenue growth of the Geosynthetics & Grass sector was

due entirely to the TenCate Geosynthetics market group and the

acquisition of GreenFields.

In the Other Activities sector (growth 12%, including 13% organic),

TenCate Enbi showed a slight decrease in revenues as a result of lower

sales in the US, while Xennia Technology recorded substantial revenue

growth.

TenCate organises international conference

on protection of military personnel

TenCate Advanced Armour and TenCate Protective Fabrics

organised an international conference in London in May 2011 on

the protection of military personnel in current and future conflicts.

TenCate Protective Fabrics and TenCate Advanced Armour

develop and produce materials for the safety and protection of

personnel and materiel. Defence ministries are the buyers and

end-users of protective equipment. Cooperation with defence

ministries, the defence industry and knowledge institutions is

vital for the development of protection solutions. Former NATO

Secretary General Jaap de Hoop Scheffer, a member of TenCate’s

International Advisory Board, was one of the speakers at the

conference.

Royal Ten Cate30

> REPOR T OF THE E XECUTIVE BOARD > Financial performance

RAW MATERIAL COSTS

Raw material costs as a percentage of revenues including inventory

movements remained constant at 50% of revenues. Higher purchasing

costs for the main raw materials were passed onto the market after a

time lag.

PERSONNEL COSTS

Personnel costs as a percentage of revenues decreased from 19% to

18%. The increase in production and revenues (+ 16%) was absorbed

partly by a moderate increase in in-house personnel (costs + 8%) and

partly by a larger number of temporary personnel (costs + 39%).

The average in-house staff count increased by 8% (+ 310 FTEs).

The increase was caused by higher production volumes at Advanced

Textiles & Composites and the acquisition in Geosynthetics (Emas

Kiara).

The average costs per member of personnel remained unchanged at

€ 43,000. Revenues per member of personnel increased from € 225,400

to € 237,400 (+ 5%).

TAXES

The tax rate decreased from 27.7% to 23.9%. The fiscal position

improved due to the generation of profit in the Netherlands, more

evenly spread profit across the countries and non-recurring tax

benefits, particularly investment benefits in Asia.

◾ TenCate Protective Fabrics Europe achieved a positive result due

to strong cost reduction combined with revenue growth;

◾ At Aerospace & Armour in Europe, the growth in revenues

combined with cost control resulted in a growing contribution

to earnings;

◾ Aerospace & Armour in the United States once again made a

significant contribution to earnings, driven by the aerospace

composite activities.

EBITA in the Geosynthetics & Grass sector declined by – 16%,

including a – 7% organic decrease and a – 7% decrease due to

currency effects. The – 2% acquisition effect was due to the

consolidation of TigerTurf and GreenFields. Substantial growth in the

Geosynthetics division was offset by a decrease in earnings from

TenCate Grass.

◾ TenCate Geosynthetics in the United States took advantage of

government investments in infrastructure and increasing exports

to Central and South America;

◾ At TenCate Geosynthetics in Europe, revenue growth and cost

control led to a doubling of the result;

◾ TenCate Geosynthetics in Asia achieved higher earnings due to the

larger market share following the acquisition of Emas Kiara;

◾ The EBITA of the Grass group fell sharply as a result of

repositioning within the customer base.

The Other Activities sector recorded a positive EBITA of € 5.9 million.

This represents a decrease compared to 2010. TenCate Enbi showed a

slight decrease in its operating result. Xennia Technology also recorded

a lower operating result, on substantially higher revenues, partly due

to development and patent costs.

JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

PE price development in € / kg PP price development in $ / lb

◾ 2010◾ 2011


The corresponding depreciation amounted to € 35.0 million

(2010: € 34.5 million) and amortisation amounted to € 12.9 million

(2010: € 10.4 million).

The main investment projects in 2011 were:

Ten Cate Thiolon bv NL grass texturing machine

Ten Cate Thiolon inc USA grass texturing machine

TenCate Geosynthetics upgrade of non-woven line

Xennia Technology various development projects

CASH FLOWS AND FINANCING

Due to the improvement in the result, the cash flow initially increased

strongly. The detrimental effect of the positive cash flow from

operating activities was used for investments in assets and

acquisitions / divestments.

in millions of euros 2011 2010

Result after tax 58.3 45.4

Depreciation 35.0 34.5

Amortisation 12.9 10.4

Other items, mainly tax accrual 22.2 24.3

Cash flow before increase/reduction

in working capital 128.4 114.6

Increase/reduction in working capital – 46.4 – 59.5

Interest/taxes paid – 32.7 – 26.0

Cash flow from operating activities 49.3 29.1

Investments – 25.7 – 21.3

Divestments 3.4 0.9

Acquisitions/participating interests – 34.8 – 24.7

Other items – 0.7 – 2.0

Cash flow from operating

and investing activities – 8.5 – 18.0

The ratio of net interest-bearing debt to EBITDA (bank definition) was

2.12 at the end of 2011 (covenant = maximum 3.0). Group equity

amounted to € 469.5 million with a solvency ratio of 46.8%.

WORKING CAPITAL

The working capital increased in 2011 compared to 2010 as a result

of further growth in the Advanced Textiles & Composites sector and

the Geosynthetics market group.

in millions of euros 2011 days 2010 days

Balance at end of

previous year 223.9 82 157.0 67

Acquisitions/divestments 2.6 9.3

Organic increase/

decrease 42.1 47.9

Exchange rate

differences 8.5 9.7

Balance at

end of year 277.1 88 223.9 82

INVESTMENTS

Investments were again restrained in 2011.


Tangible fixed assets 21.3 16.2

Development costs and other intangible assets 4.4 5.1

25.7 21.3

> In developing solutions, managers

start with a desired outcome for

a customer – an outcome that could

encompass a range of needs. <

Nathaniel W. Foote, Jay Galbraith, Quentin Hope, Danny

Miller in McKinsey Quarterly # 3, 2001.

Royal Ten Cate32

>

VALUE CHAINS SECTOR ADVANCED TEXTILES & COMPOSITES

(VALUE ADDED)RESELLERS

PROTECTIVE FABRICS

We

PROTECTIVE FABRICS

PROTECTIVE FABRICS

PROTECTIVE FABRICS

e

PROTECTIVE FABRICS PROTECTIVE FABRICS

OUTDOOR FABRICS

We

OUTDOOR FABRICSOUTDOOR FABRICSOUTDOOR FABRICS

e

ISO

900

1

ISO

140

01 (N

L)

OUTDOOR FABRICS OUTDOOR FABRICS

END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS

ISO

900

1

ISO

140

01 (N

L)


AEROSPACE COMPOSITES

Weaving

g

nn

g


2

3


Av

AEROSPACE COMPOSITES AEROSPACE COMPOSITES

ISO

900

1 | A

S / E

N 9

100


Weaving

g

nn

g

INDUSTRIAL COMPOSITESINDUSTRIAL COMPOSITES INDUSTRIAL COMPOSITES INDUSTRIAL COMPOSITES

ISO

900

1

ADVANCED ARMOUR

n

ADVANCED ARMOUR

Ve

e

ADVANCED ARMOUR

n

ADVANCED ARMOUR ADVANCED ARMOUR

ISO

900

1 | A

S / E

N /

JISQ

910

0 (F

R)

ISO

140

01 (D

K)


KEY FIGURES

Advanced Textiles & Composites 2011 2010 2009 2008 2007

in millions of euros unless stated otherwise

Revenues 538.4 448.4 397.3 481.0 350.3

Operating result before amortisation (EBITA) 70.3 43.8 31.7 61.5 40.2

EBITA margin (%) 13.1 9.8 8.0 12.8 11.5

Operating result (EBIT) 64.7 38.6 27.0 52.9 38.7

Investments 8.3 4.5 4.2 11.7 17.0

Depreciation and amortisation 15.3 15.2 14.2 17.6 10.8

Net capital employed 314.3 281.7 234.0 286.4 197.6

Staff years at year-end 1,582 1,519 1,340 1,651 1,238

EBITA as percentage of average net capital employed 23.6 16.7 12.0 22.9 22.6

ACTIVITIES

The Advanced Textiles & Composites sector consists of the following

market groups

◾ TenCate Protective Fabrics and

TenCate Outdoor Fabrics

Safety fabrics for a range of professional groups, as well

as protective fabrics for outdoor applications.

◾ TenCate Space & Aerospace Composites

TenCate Industrial Composites

TenCate Advanced Armour

Composites including lightweight materials for aerospace

and industrial applications; antiballistic materials for personal

protection and vehicle armour.

REVENUES AND RESULTS

The Advanced Textiles & Composites sector recorded a 20% increase

in revenues to € 538.4 million in 2011 (2010: € 448.4 million).

The increase in revenues resulted mainly from the strong developments

in the TenCate Protective Fabrics market group and the TenCate Space

& Aerospace Composites market group.

ADVANCED TEXTILES & COMPOSITES

End-user marketing based on value proposition (cost of ownership)

Brand management

Risk awareness / safe society

Partnerships in emerging markets

Inkjet technology / sustainable factory of the future

Smart textiles Effective use of internal knowledge (social innovation)

Patents

Worldwide market position, with local product adaptations to local specifications

Fabrics based on fibre blends and coated / finished fabrics (product champions: distinctive in cost and quality-performance ratio)

Co-makership, products tailored to specific needs

Internal production combined with outsourcing delivers flexibility

Economies of scale Process innovation Cost control

BUSINESS MODEL OF THE PROTECTIVE FABRICS MARKET GROUP

END-USER MARKETING INNOVATION

PRODUCT DIFFERENTIATION COST LEADERSHIP

Access to market participants and partner-ships with OEM relationships in market phase of the TenCate ABDS™ active blast countermeasure system

Independence of fibre suppliers, solution-focused approach

Reputation and qualifications of renowned Market participants

TenCate ABDS™ active blast counter-measure system

(Open) innovation through partnerships (TAPAS, TPRC, AMRC)

Qualifications for future programmes Process innovations for processing of composites

Development of new application areas, particularly for thermoplastic composites

Developments in unidirectional (UD) tape technology

Development of the value chain particularly in automotive applications for thermoplastic composites

Increased efficiency in production Economies of scale Outsourcing and partnerships Development of low-cost solutions (industrial markets)

BUSINESS MODEL OF THE SPACE & AEROSPACE COMPOSITES AND ADVANCED ARMOUR MARKET GROUPS



Royal Ten Cate34

> REPOR T OF THE E XECUTIVE BOARD > Advanced Textiles & Composites

TenCate’s activities are increasingly moving towards systems that are

integrated into vehicles (‘survivability systems’). The project-linked

nature of revenues is an inherent feature of this market. Demand for

composite materials in sectors other than aerospace and armour

markets increased; the automotive sector in particular is an important

potential growth area.

The operating result before amortisation of intangible fixed assets

rose by 61% to € 70.3 million (2010: € 43.8 million). The currency effect

amounted to – 7%. The EBITA margin rose to 13.1% (2010: 9.8%).

The growth of the aerospace market had a positive impact on the

utilisation rate of Dutch production capacity, contributing to the strong

profit improvement in the sector.

TENCATE PROTECTIVE FABRICS AND TENCATE OUTDOOR

FABRICS

MARKET POSITION AND STRATEGY

TenCate Protective Fabrics is the market leader in America and Europe

in the field of protective fabrics. The constantly widening product

portfolio is now being marketed worldwide. TenCate focuses on

four markets:

◾ defence and police

◾ industrial safety, firefighting and emergency response

◾ services, such as healthcare

◾ industry.

The products offer protection against a range of risks in the workplace,

for example from chemicals, fire and static electricity. TenCate has

acquired leading positions in various segments of this market, for

which specific concepts have been or are being developed. TenCate

Defender™ M materials are the most significant of these.

The market for professional wear and work clothing is highly regulated,

with governments enacting labour legislation specifying safety

standards in certain risk areas. TenCate customers are ready-to-wear

clothing producers and industrial clothing laundries offering a full

range of services for end-users. TenCate focuses on industrial markets,

firefighting, emergency services and the healthcare sector.

New products, such as TenCate Tecasafe™ Plus for the American and

Asian markets in particular, are playing an important role in the

continuing market development, both domestically and internationally.

The concepts developed by TenCate for these markets are very

The TenCate Protective Fabrics market group had an excellent year

with strong growth in both flame-resistant fabrics for US Army

uniforms (TenCate Defender™ M) and safety fabrics (TenCate

TecaSafe™ Plus) in the industrial market. The TenCate Space

& Aerospace Composites market group saw increased demand for

aerospace composites (Airbus, Boeing). There were also positive

developments in relations with other aircraft manufacturers.

The armour composites market in the United States was sluggish.

The Advanced Armour market group achieved slight revenue growth.

The order position in Europe showed a positive trend, leading to an

increase in revenues in the whole vehicle armour business in Europe.

TenCate Tecasafe® Plus advances

strongly in the United States

Since its launch in the United States in 2008, TenCate Tecasafe®

Plus has become the most cost-effective and innovative inherently

flame-retardant solution in the industrial safety market. TenCate

Tecasafe® Plus offers a longer service life at lower cost, greater

comfort and better flame protection than industrial flame-retardant

fabrics from other suppliers. The protection cannot wash out or

wear off. That makes it an excellent value proposition for ready-

to-wear clothing manufacturers, industrial laundries and end-users.

TenCate Protective Fabrics USA has expanded its production

capacity to meet the growing global demand for TenCate Tecasafe®

Plus.


SUSTAINABILITY

TenCate Protective Fabrics endeavours on the one hand to make target

groups aware of protection concepts and multi-risk solutions and on

the other hand to influence standards and specifications in order to

offer end-users the utmost security and protection. The market group

regularly works closely with international customers in the chain

(including in the laundry sector) and with industry organisations, with

the aim of reducing the impact on the chain. This can be achieved

by means of technological innovations and R&D projects, thereby

increasing TenCate’s involvement in the setting of specifications in

tenders. That is being done successfully with customers in sectors

such as the petrochemical industry and the firefighting market. In

defence organisations, a focus is on personal protection of military

personnel to prevent burns and serious fire injuries and high social

costs for rehabilitation and other measures (social interest).

GENERAL PERFORMANCE

The main contribution to the strong revenue growth in 2011 came from

the TenCate Defender™ M and TenCate Tecasafe® Plus products.

The markets developed favourably for both product groups, including

outside the United States and Europe. The foundation for this was

expanded during the reporting year. A positive factor was that the

exemption from import restrictions for the United States (Berry

Amendment) for foreign fibres was extended to 2015 at the beginning

of 2011. This exemption became permanent at the end of 2011.

In the United States and Canada, the market position and production

activities were expanded with the acquisition of the assets of Difco

Performance Fabrics in Montreal (Quebec, Canada) in the second

quarter of the financial year.

TenCate generally witnessed strong interest in new concepts relating

to fire-resistant fabrics in 2011. TenCate Tecasafe™ Plus and TenCate

Defender™ M are based on fibre blends to meet the precise

specifications of customer groups. The value proposition lies primarily

in the combination of unrivalled performance, optimum wearing

comfort and economic prices compared to products based on

100% aramid fibres traditionally used in many markets. Together

with TenCate Defender™ M, the TenCate Tecasafe® and TenCate

Tecashield® ranges make up a complete portfolio of multi-risk

safety fabrics for emergency response and defence applications.

promising, as the products are ideally positioned, with TenCate

combining four essential characteristics: affordability, comfort,

protection and long service life.

Defence applications are a highly successful development. TenCate

Defender™ M is considered to be the US standard for uniforms with

flame-resistant protection. As a result, this product is one of the major

pillars underpinning TenCate’s strong growth in defence markets at

home and abroad. As part of TenCate Protective Fabrics, the TenCate

Defense & Tactical business unit on the one hand responds to the

principle of end-user marketing with the TenCate Defender™ M

platform (the development of specifications in close co-operation with

various end-users) and on the other hand serves as a vehicle for the

development of a worldwide sales strategy. This strategy is focused on

expansion both in geographic terms and with regard to other defence

applications (product differentiation).

TenCate’s positioning is supported by an industrial branding policy

based mainly on the quality and functionality of high-grade protection.

TenCate supplies unique solution-focused concepts (systems). These

have proved successful in use with the US Army.

TenCate has a broad technological base and access to the worldwide

commodities market as a result of its long-term focus as a global

player on this niche market. In addition to activities and strong market

positions in the US and Europe, TenCate has established a joint venture

in Thailand for the production of safety fabrics for the Asian market

and for further development in this region. In 2011, the strategic efforts

were scaled up to market the TenCate Tecasafe® Plus product portfolio

worldwide. Global demand for TenCate Tecasafe® Plus is growing.

Various steps have been taken to respond to this growth, including an

increase number of variants in the collection. End-users want the most

economical protection combined with the excellent performance,

comfort and quality of the fabrics. TenCate Tecasafe® Plus has become

the preferred fabric on many continents. TenCate Tecasafe Plus® has

also been well received in various new markets, such as South

America, Asia and Australia. The increased service level is a key point.

In order to meet the demand for superior flame-retardant fabrics in

South-East Asia, TenCate has built up inventories to ensure that the

product is immediately available. TenCate has also stationed additional

personnel in Asia to guarantee a high level of customer attention.


In addition to composite for the tailpiece and elevator, TenCate Advanced Composites also supplies composite for the fl oor components in the Gulfstream G650. Fokker Aerostructures incorporates the TenCate Cetex® laminate into two fl oor types: non-pressure fl oors that must be able to bear an average shear load of freight, passengers and crew in parts of the cargo hold, the cabin and the cockpit. And pressure fl oors that are subject to high pressure and low temperatures during the fl ight, as part of the primary structure of the aircraft.

The fl oor components provide structural performance and, thanks to the toughness of the laminate, great resistance to damage. Yet this composite material from TenCate is also attractively priced due to cost-effi cient processing, such as thermofolding edges and welding inserts. The non-pressure fl oor components demand both lightweight material and great impact strength against damage. Preservation of the tensile strength of the thermoplastic fl oor panels is much greater than that of traditional metals and even of thermoset composites.



TenCate has also signed a co-operation agreement with Samil Spinning

in Seoul, South Korea. The partners aim to expand the TenCate

Defender™ M product portfolio in the South Korean army and police

market.

At the beginning of the fourth quarter, TenCate Defense & Tactical

received a major order from the US Army for new TenCate Defender™

M fabrics. These have been specifically designed to meet new end-

user requirements for improved performance in military pants. The new

fabrics, including TenCate Defender™ M stretch, are intended to

improve comfort and durability. Two new contracts were also awarded

for the purchase of the Army Combat Pant (ACP).

In North America, TenCate is also supplying flame-resistant fabrics for

two successful tenders in the Canadian military market. The first is

being used by the Canadian Air Force. The second concerns TenCate

Campshield™ FR interior fabric for use in tents for all Canadian army

units.

The firefighting market in the US, the second important market,

remained sluggish in 2011 due to budget cuts among local authorities.

TenCate is nevertheless ideally positioned to respond to changing

market demand, due to the increasing need for cheaper and better

solutions, such as the use of TenCate Defender™ M in firefighters’

protective clothing. This product has patented, inherently flame-

resistant characteristics which will not wash out or wear off and it is

ideal for use as a thermal lining for firefighters’ protective clothing.

There is also an increasing focus on the firefighting market outside

the US.

TenCate Outdoor Fabrics experienced a stable revenue trend in 2011

and thus retained its leading position in a mature market for inherently

flame-resistant fabrics.

TenCate Protective Fabrics and Xennia Technology made joint progress

with digital textile finishing in 2011. Initial production is due to start at

Nijverdal during the current year. This is an innovative way to print

and/or finish technical textiles efficiently and to a very high standard,

allowing improvements to existing products and the development of

new products with new functionalities.

REPOR T OF THE E XECUTIVE BOARD > Advanced Textiles & Composites

TenCate Tecasafe™ Plus has built up such brand awareness that it now

occupies a leading position in the global market for industrial safety

fabrics. In the case of TenCate Defender™ M, at least ten wearing trials

have been conducted among large army units outside the United

States. Decision-making processes in defence markets on the

acquisition of new material also involve the setting of ultimate

specifications and are related to government budgets. Nevertheless,

the United States will remain by far the most important defence

market in the near future, despite expected budget cuts by the

US defence ministry.

The use of TenCate Defender™ M in products for police and firefighters,

as well as industrial applications, will also lead to an increase in

revenues. Although the number of US military personnel deployed in

Iraq and Afghanistan is decreasing, there is gradual growth in other

armies and a wider geographic spread of revenues. This is illustrated

among other things by the developments below in 2011.

One of the orders, in this case in the defence sector, was from the

Italian producer Aero Sekur for the supply of inherently flame-resistant

TenCate Defender™ M fabrics for the Italian Soldier of the Future

programme. The aim of this programme is to modernise the equipment

of Italian infantry soldiers. This order is an important benchmark.

All NATO countries have a Soldier of the Future programme. Flame-

resistant clothing is expected to play a significant role in future

tenders.

Since May 2011, TenCate has been involved in extensive wearing trials

conducted by the Australian Defence Force in Afghanistan. TenCate

Protective Fabrics USA has supplied the TenCate Defender™ M fabric

for this purpose. The uniforms are printed with the Multi Cam®

camouflage pattern. An new order was also received for TenCate

Defender™ M in November for 10,000 additional uniforms as part of an

ongoing wearing trial of army uniforms by the Australian armed forces.

In September, TenCate signed a memorandum of cooperation with

Beijing Chinamex International Investment (Chinamex) to develop the

Chinese market for protective fabrics. The partners aim to market

flame-retardant (FR) products for uniforms for the police and

emergency services.

>

Royal Ten Cate38


TENCATE SPACE & AEROSPACE AND INDUSTRIAL

COMPOSITES AND TENCATE ADVANCED ARMOUR


TenCate is one of the leading companies in the field of armour

materials for vehicle armour (armour composites) and space and

aerospace composites. TenCate also focuses increasingly on special

industrial and other applications for composites, for example in the

automotive industry and the energy sector. These are composite

materials and compounds which replace steel, titanium and aluminium,

make a major contribution to weight saving and have better functional

characteristics.

TenCate’s strategy is aimed mainly at securing a leading technological

position, developing material science, knowledge of production

processes in the industrial chain and direct access to end-markets and

OEMs (original equipment manufacturers), partly on the basis of

integrated concepts and systems. Qualifications are crucially important

in order to operate in future systems programmes in these markets.

At present, the largest proportion of sales of composites is related to

ballistic protection (armour composites), although space and aerospace

applications are increasing in terms of relative importance. TenCate

Advanced Armour provides an integrated solution for protection

against the consequences of roadside bombs and the associated

pressure wave, fragments and flames.

TenCate Advanced Armour is the global market leader in (complex)

concepts for vehicle armour. These increasingly have to be supplied

on an integrated basis. That requires the maintenance of in-house

design and production facilities, including in the local market.

TenCate therefore operates from sites in the United States, the

United Kingdom, France, the Netherlands, Denmark and India.

A wide geographic presence is required, together with an extensive,

innovative and constantly developing portfolio (Active Armour

Systems). The American market is the largest. In Europe, the United

Kingdom and France are important markets.

Customers include particularly large industrial conglomerates in the

defence industry, producers of trucks, aircraft, helicopters etc. and

the related suppliers. They are responding to increasing threat levels.

Governments (defence ministries) determine the specifications.

TenCate operates as a single group worldwide and with a pan-

OUTLOOK FOR TENCATE PROTECTIVE FABRICS

2012 will not be comparable to 2011, because total annual sales to the

US Army are expected to decrease. There will also be a different

breakdown of sales over the quarters in view of the project-based

nature of the markets. Nevertheless, the focus in the US on possible

foreign conflict zones and terrorism remains strong, with a great deal

of attention paid to personal protection. The same applies to other

army units. TenCate will devote full attention to new markets and

geographic areas in which the company has yet to build up any

substantial positions, such as Asia, South America, China and India.

TenCate has an excellent basis for this. Continuing market and product

development is expected to deliver long-term growth in protective

fabrics worldwide.

Protection solutions in 3D video clip

TenCate Protective Fabrics has developed a 3D video clip to

illustrate one of the protection solutions it provides for firefighters.

TenCate Protective Fabrics has developed TenCate Tecasystem™

– Millenia® 450 for the protective clothing worn by firefighters.

This is a multilayered system that provides protection and enables

a firefighter’s suit to be produced with a weight of just 2.5 kilos.

The system is extremely comfortable to wear, with an optimum

composition of the different layers. The clip can be viewed on the

TenCate Protective Fabrics website and on YouTube.


SUSTAINABILITY

TenCate Advanced Composites and TenCate Advanced Armour actively

pursue a policy of persuading customers – such as the aircraft and

automotive industry – and military and civilian authorities of the

sustainability (recyclable, fuel-saving and noise-reducing) and safety

(fire-retardant, bullet- and fragment-resistance) characteristics of

a wide range of thermoplastic composites. The aircraft industry

in particular is currently experiencing a major development by moving

from secondary to primary structural components made of composites

in aircraft.

European armour organisation, to the extent permitted by the defence

authorities, for the exchange of knowledge and solutions. TenCate

occupies an important position as a (fibre-)independent producer of

composites and processes a range of fibres including aramid, glass,

carbon and HPPE supplied by third parties. TenCate offers a wide range

of products, systems and solutions in this market.

An important aspect of these defence and other markets is their

project-based character. The global presence, the breadth of the

product portfolio and the conceptual approach are important strengths

of the organisation. These are increasingly being exploited both within

the group and with other TenCate market groups. This will give further

substance to the system approach and achieve market synergy. In India

there is now a joint marketing and sales organisation for TenCate

Protective Fabrics and TenCate Advanced Armour. There are also

increasingly joint presentations at trade fairs and conferences as

well as joint marketing, strengthening the TenCate proposition in the

defence market. This concerns the general protection of personnel

and materiel based on fabrics and armour composites. A conceptual

approach to the theme of protection is more effective than a more

product-focused, individual approach. In this regard the security

system to protect against the impact of roadside bombs (TenCate

ABDS™ active blast countermeasure system) can be a complementary

system component that strengthens the overall value proposition.

In the aviation market, composite material is used in interior and

structural components. The scope for the use of aerospace composites

is still fairly limited overall, but is growing considerably. New

generations of aircraft are providing a strong impetus for growth.

TenCate Space Composites has a leading role in composite materials

for satellite programmes in the United States. In the aviation industry,

TenCate Aerospace Composites operates in the field of civil aviation

and business jets, as well as in military aviation. The main civil aviation

customers are Airbus and Boeing and their direct suppliers. The market

is being further developed on this basis. The TenCate Cetex® material

now occupies a strong position. Among other products, the leading

edge of the wing (J nose) and the engine intakes of the A380 are

manufactured from this lightweight and strong (noise-reducing)

material. TenCate Cetex® material is also being used in the Boeing 787.

In many cases, for reasons of confidentiality, it is not possible to

provide specific information on the components manufactured with

TenCate materials.

TenCate Outdoor Fabrics presents the tent

of the future

In the Outdoor Living in the Future pavilion at the annual Camping

and Caravanning Show in October 2011, TenCate Outdoor Fabrics

joined forces with the European camping and caravanning industry

and Jaarbeurs Utrecht to demonstrate the potential functionalities

of tents in the future. The demonstration included projections on

five tents made of white TenCate All Season Residential tent fabric.

The new functionalities are self-cleaning, insulation, mosquito

repellence, high visibility and glow-in-the-dark capability using

sunlight absorbed during the day. New manufacturing techniques

will make these functionalities possible in the next five years.

PROTECTIVE FABRICS

The naval protection of sea-lanes, troops, ports and shore installations, and the defensive purpose of the navy to frustrate seaborne projection-of-force by enemies demand that naval forces wear the most fl exible yet protective uniforms. Knowledge and technological innovations from TenCate ensure optimally protective crew garments, for naval personnel on the launching pad to the seamen on the lower decks.

During 2011 TenCate Defender™ M in the colour black has been supplied to the Norwegian Defence Logistic Organisation. This colour is the result of ongoing product development based on specifi c customer needs. Thanks to patented technology and the success of TenCate Defender™ M – developed by TenCate Protective Fabrics in the US – the Research & Development team in the Netherlands, created a new composition in 2010. As a result, this protective fabric is available in the colours dark blue and black. Thanks to this innovation, this protective fabric can also be used for other markets, such as marine corps and police forces, who principally wear the colours black or blue for their operations.



TenCate Advanced Composites in the United States supplies customer-

specific prepreg products. As a leading developer and producer of

thermohardened and thermoplastic prepregs, TenCate supplies high-

tech materials to various markets. These include aerospace, shipping,

infrastructure and oil and gas extraction. Towards the end of the year,

the production sites for prepregs in Morgan Hill and Fairfield were

certified in accordance with the AS9100: 2009 Rev C quality standard.

The certification also relates to CCS Composites. This American

subsidiary of TenCate supplies compression moulding components to

the aviation industry.

As well as volume growth in aerospace composites, TenCate Advanced

Composites in Europe also experienced the positive effect of a

contract to supply TenCate Cetex® carbon laminates for use in the new

Airbus A350 XWB and other EADS applications. Under this contract,

deliveries of TenCate Cetex® began to various Tier 1 and Tier 2

partners of Airbus producing fuselage shells and components for

the A350 XWB. The TenCate Cetex®. material will be used in the

reinforcing structure for the fuselage of the A350 XWB. The

thermoplastic material is already being used in the Airbus A380.

One of the advantages of using thermoplastic composites is the

possibility of large-volume series production, enabling the sector

to obtain the necessary cost benefits.

TenCate Advanced Composites and Toray Industries (Tokyo) have

signed an agreement to supply carbon fibres to TenCate for the

production of thermoplastic TenCate Cetex® RTL composite materials

up to 2015. These fibres are used for the growing number of composite

laminates which TenCate produces for the aviation industry. In the

future, it will also be possible to use strong, lightweight composite

materials derived from TenCate Cetex® technology in applications

in the automotive industry. With this development TenCate will enter

a market with substantial future volume potential.

Slight growth was recorded in the military aviation industry.

The commercial aerospace sector (including communication and

navigation satellites) in the United States and Europe continued to

show steady growth in composite materials. Unmanned aerial vehicles

(UAVs) for army use and the satellite industry remain an important

growth market for TenCate. These market positions were further

strengthened in 2011.

In the longer term, the trend towards lightweight composites

materials remains positive, in view of the superior characteristics.

The development co-operation in the Dutch aviation cluster with both

Airbus (TAPAS consortium) and Boeing (TPRC) anticipates this trend.

These joint ventures underline the importance of the joint aim of

achieving strong growth in the share of composites used in aviation,

partly by improving processing technologies and widening applications.

TenCate is focusing in particular on special industrial and other

applications for composites, for example in the automotive industry,

the oil and gas sector, wind energy, high-grade sport applications,

the medical sector, mechanical engineering and construction.

TenCate Industrial Composites is a new part of the market group

alongside Space & Aerospace Composites and Advanced Armour.

GENERAL PERFORMANCE OF TENCATE SPACE & AEROSPACE

COMPOSITES

The TenCate Aerospace Composites market group achieved solid

revenue growth in 2011 as a result of the increased production volume

for the Airbus A380, the A350 and the Boeing 787. The growth of

volumes in aerospace composites had a positive effect on the capacity

utilisation rate, particularly in the Dutch production facilities.

TenCate Advanced Composites in the United States has transferred its

activities in Morgan Hill (California) to an adjoining site. Consequently

three sites are now concentrated at a single location, allowing more

efficient operation and providing 40% more production space. This

investment was prompted in part by growing demand for durable,

lightweight composite materials in both the traditional composites

markets (aerospace and space) and other industrial sectors. The new

site houses the production of thermoplastic composites, R&D

laboratories and offices. The Morgan Hill location mainly produces

composites for the aerospace industry. The carbon-free production of

radar domes, for example, has been expanded at this site. The Morgan

Hill site was also one of the recipients of a JEC Composite Innovation

Award 2011 for the use of thermoplastic composites in aircraft seats

from Cutting Dynamics. Positive developments arose from the long-

term supply contract with Boeing for components for the Boeing 787

Dreamliner. TenCate is also supplying composite materials – including

TenCate Cetex® – for other features of this aircraft.

REPOR T OF THE E XECUTIVE BOARD > Advanced Textiles & Composites>

Royal Ten Cate42


revenue trend. Expectations for the market as a whole remain

structurally positive. Developments in these markets should be viewed

over a longer period.

At the end of 2011, TenCate reached agreement to acquire the Danish

company ABDS ApS. This acquisition follows the successful testing

and simulations with the TenCate ABDS™ active blast countermeasure

system. These tests were carried out by TenCate Advanced Armour

and ABDS in collaboration with the Danish Defence Acquisition and

Logistics Organisation using improvised explosives on the vulnerable

underside of a 15-tonne armoured personnel transport vehicle with the

fully integrated TenCate ABDS™ active blast countermeasure system.

These targeted vehicle tests are an essential part of the actual

implementation of the system.

This acquisition has now been completed. The company is being

integrated as TenCate Active Protection ApS. TenCate’s full ownership

provides effective support for the market introduction through

manufacturers of army vehicles. The acquisition was completed after

the transaction was approved by the Danish authorities at the

beginning of 2012. The market implementation of the system will take

place in the course of 2012-2013. On the basis of the good results

obtained so far from the testing and simulations, it is clear that the

market has a definite interest in various vehicle programmes.

Innovative integration concepts have also been designed for a series of

combat and tactical military vehicles.

Ballistic protection systems were supplied for the second of three

Danish frigates in the Iver Huitfeldt class at the end of 2011. Thanks to

TenCate’s modular approach to armour production for armour solutions,

this was completed well within the specified time and budget. Here too

there was close collaboration with the Danish DALO. TenCate adopts

a modular approach to armour production and aims for flexible design

solutions. This is possible thanks to the TenCate Ceratego® and

TenCate Liba® ceramic armour systems. Both afford excellent

protection against a wide range of threats in a lightweight, modular

package. Due to the large number of projects for the protection of both

vehicles and naval vessels, the positive collaboration between the

Danish army and TenCate has been strengthened.

GENERAL PERFORMANCE OF TENCATE ADVANCED ARMOUR

The armour composites market in the United States was sluggish in

2011, although the sales volume continued to rise. There was some

price pressure, however, particularly in the field of personal protection,

which is more of a volume market. By contrast, developments in

Europe, where TenCate has been operating for a number of years

as a system integrator for vehicle armour, were positive. The vehicle

armour market is moving increasingly in the direction of new system

programmes. These systems are fully integrated into vehicles

(survivability systems) and the programmes usually have a turnaround

time of several years, as in the case of the major Eurocopter project

(NH90). The contract for this programme contributed positively to the

Innovation award for composite tipper

In March 2011 the Fiby composite tipper won the Innovation Award

in the transport category at the JEC Composites Show in Paris.

The international Innovation Award is considered to be one of the

most prestigious in the world of composites. The loading body will

be used to transport loose materials such as gravel, sludge, sand,

agricultural crops, animal feed, industrial waste and asphalt. The

benefits of synthetic material are its considerably lower weight and

its insulating properties. When the loading body is empty, the user

will save a lot of fuel, and a lighter body means the vehicle can

carry a heavier load.


OUTLOOK FOR TENCATE SPACE & AEROSPACE COMPOSITES

AND TENCATE ADVANCED ARMOUR

TenCate is the market leader in the American and European markets

for vehicle armour based on lightweight composites. The longer-term

market outlook remains consistently positive. Annual sales of armour

products depend greatly on individual projects, for which governments

make budgets available. The armour systems activities for aerospace

are making a growing contribution to revenues.

TenCate Advanced Armour EMEA in Primarette (France) took

occupancy of a new production site in the second half of 2011. The

building has been specifically designed for the production of armour

composites for the aerospace industry, including in consultation with

Eurocopter. The Primarette site develops and manufactures both high-

grade aerospace applications and industrial applications (vehicle and

personal protection). Armour solutions for aerospace increasingly have

to be supplied on an integrated basis as ready-to-install kits

comprising various panels. This means design, storage, production and

service and support facilities have to be at a single site. This has also

led to the alignment of quality management systems within the group

in order to meet the high demands of aircraft manufacturers.

TenCate Advanced Armour and TenCate Protective Fabrics took the

initiative of organising an international conference in London on 23 and

24 May on the protection of military personnel in current and future

conflicts. The aim was to show how TenCate translates its commitment

to the protection of soldiers into protection solutions. TenCate

Advanced Armour presented its lightweight protection solutions in

September at Defence & Security Equipment International, the

international trade fair for defence and safety equipment, in London.

An advanced technology for the production of three-dimensional

armour based on TenCate Liba® was also exhibited, involving

composite-based armour solutions. These enable steel hinge

components in armoured vehicles to be replaced by lighter, stronger

composite materials. TenCate also demonstrated protection solutions

for various threats, such as anti-tank weapons and rocket-propelled

grenades (RPGs) and roadside bombs, lightweight solutions for

personal protection, flexible ballistic protection systems for vehicles,

modular and durable armour solutions for naval vessels and lightweight

ballistic protection solutions for aircraft.

Concentration of activities at

TenCate Advanced Composites USA

At the end of 2011, operations at three TenCate Advanced

Composites USA sites were brought together in a new production

annex office building in Fairfield (California). This concentration has

optimised operational management, allows further improvements in

product quality and cost efficiency and can support the expected

growth in the composites and aerospace market. TenCate Advanced

Composites USA manufactures composites and components for the

military and commercial aviation industry and satellites. One of

the improvements is the possibility of carbon-free production of

radomes (domes to protect radar antennas in ships and aircraft, for

example). The group also has carbon fibre-free production areas at

the Morgan Hill site.

ADVANCED COMPOSITES


In early 2011, a group of companies from the province of Overijssel, the Netherlands, recorded a world fi rst with the development of a lightweight composite tipping body for the transport sector. The new Kipper is lighter, stronger, more energy effi cient and quieter than the current metal tipping bodies.

The trailer will be constructed of different layers of insulating composites from TenCate. Composites are fi bre-reinforced plastics that are four to six times stronger than traditional materials, such as metal. These composite materials allow a signifi cant weight reduction to be achieved, which has a positive impact on the fuel consumption, range and payload of the truck. In addition, the composite laminate can also be used as an insulating layer, for example to maintain the temperature of hot tar in a trailer. This also saves energy.


The armour projects usually form part of programmes to upgrade and

modernise army vehicles, in order to counter new threats and achieve a

greater degree of mobility. These programmes will continue to take

place in the future, partly in view of the trend towards offering a

higher degree of protection for troops in crisis areas and achieving

savings by means of modern, lightweight composites which reduce fuel

and other costs.

TenCate Protective Fabrics and TenCate Advanced Armour are

increasingly collaborating to raise the effectiveness of their

international marketing and sales. Collaboration in personal protection

has already proved effective in a number of cases.

There is also a positive trend in the structural demand for TenCate

composites in the civil aviation industry. This is partly a consequence

of the qualifications which the company has obtained. During the

current year, TenCate should continue to benefit from long-term

contracts with large international aircraft manufacturers. The outlook

for the military aviation market, and for satellite programmes, remains

positive.

REPOR T OF THE E XECUTIVE BOARD > Advanced Textiles & Composites>

> The longer-term market outlook for

vehicle armour based on lightweight

composites remains consistently

positive. <

>VALUE CHAINS SECTOR GEOSYNTHETICS & GRASS


GEOSYNTHETICS

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GEOSYNTHETICS

GEOSYNTHETICS

GEOSYNTHETICS

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GEOSYNTHETICS GEOSYNTHETICS

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ISO

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1

FM H

PR (U

SA)


GRASS

We

GRASS

We

GRASS

GRASS GRASS GRASS


ISO

900

1

ISO

140

01 (N

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FM H

PR (U

SA)

Safety assurance relates to:

Sustainability assurance relates to:

Quality assurance relates to:

SAFETY

SUSTAINABILITY

QUALITY


FIGURES

Geosynthetics & Grass 2011 2010 2009 2008 2007


Revenues 525.9 469.3 392.1 497.8 468.3

Operating result before amortisation (EBITA) 26.3 31.4 16.8 37.8 30.4

EBITA margin (%) 5.0 6.7 4.3 7.6 6.5

Operating result (EBIT) 20.8 27.7 13.8 34.8 28.3

Investments 12.2 9.9 9.0 29.0 44.9


Net capital employed 429.5 380.8 332.7 427.4 354.8

Staff years at year-end 2,160 2,128 1,795 2,129 2,053

EBITA as percentage of average net capital employed 6.2 8.2 4.1 8.8 8.9

ACTIVITIES

The Geosynthetics & Grass sector consists of the following market

groups:


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

infrastructure projects and the environmental market, as well as

industrial fabrics for various applications, such as agribusiness,

sport and recreation.

◾ 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 engaged in the production of fibres

and carpet backing (upstream activities), the Grass group

comprises a growing proportion of system development and

marketing businesses (downstream activities).


The Geosynthetics & Grass sector showed a 12% rise in revenues to

€ 525.9 million (2010: € 469.3 million).

The operating result before amortisation of intangible fixed assets fell

by 16% to € 26.3 million (2010: € 31.4 million). EBITA fell partly as a

result of rising raw material costs in TenCate Geosynthetics in the first

half of the year (Middle East crisis) and the excessively low rate of

capacity utilisation in the upstream activities of the Grass group.

The geosynthetics activities as a whole put in an excellent

GEOSYNTHETICS & GRASS

TenCate GeoDetect™ solutions Dewatering and filtration technology Biopolymers

BUSINESS MODEL OF THE GEOSYNTHETICS MARKET GROUP

Continuing development of new products (innovation awards)

Focus on water management, environment and infrastructure

Economies of scale (volume products) Cost leadership



Alliances with market participants Local collaboration with partners in emerging markets

Geographic spread of distribution Positioning of sustainability (water management, environmental solutions, low carbon footprint).

Development of relationships in the Chinese market

Alliances with market participants (downstream activities)

Geographic spread of distribution Positioning and advantages of the sustaina-bility aspect (water management, recycling)

Increased quality awareness of end-markets Market positioning (GreenFields, Edel Grass, TigerTurf)

Relationships with sports federations

System components ‘Powered by TenCate’ Optimum support from downstream activities for development of new system concepts

Reduction of total cost of ownership of sports pitches

Economies of scale Cost leadership

Fourth-generation developments Weaving technology Biomechanical characteristics (research project with third parties)

Product and system warranties

BUSINESS MODEL OF THE GRASS MARKET GROUP



Royal Ten Cate48

> REPOR T OF THE E XECUTIVE BOARD > Geosynthetics & Grass

This also gives rise to logistical and pricing advantages. The market

group has three business units: infrastructure, water & environment

and industrial fabrics.

TenCate aims for a system approach focused on solutions.

Geosynthetics form part of the overall structure and deliver functional

added value. The marketing of more complicated system solutions can

often be accelerated with strategic partners. For example, TenCate has

been co-operating technically and commercially since the beginning

of 2010 with Roctest, the world’s largest manufacturer of fibre optic

sensors for civil engineering. This enables customers to benefit from

innovative solutions in real-time monitoring with geotextiles. It

provides detailed information on possible deformations: displacements,

soil erosion, settlement and other changes in features such as inclines,

slopes, walls, roadways and railway and dyke bodies.

SUSTAINABILITY

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 the promotion, design and

specifications. TenCate Geosynthetics endeavours to convince civil

engineering and water management customers of the positive impact

of geotextiles on sustainability thanks to their limited CO2 footprint.

Alternatives to TenCate geosynthetics are usually traditional materials

such as concrete, stone and steel, which often have to be transported

over long distances. In the case of geosynthetics, by contrast, locally

available materials (sand, sludge) are used. In the case of land

reclamation (hydraulic filling with sand) there is usually considerably

less need for dredging. That has positive environmental effects. The

R&D department is working on future bio-based products. The first CO2

footprints for TenCate and competing products became available in

2011 following the introduction of a product ecotool. Customers are

responding enthusiastically to this development.

GENERAL PERFORMANCE

TenCate Geosynthetics achieved strong organic revenue growth

worldwide in 2011. This was partly due to the introduction of new

products in markets for soil stabilisation and strengthening and

growing demand for sustainable environmental concepts, water

management and maritime solutions. The market share increased

performance in 2011. The EBITA margin of the Geosynthetics & Grass

sector fell to 5.0% (2010: 6.7%). This margin is well below the required

level (minimum 10%).

TENCATE GEOSYNTHETICS


TenCate is the world’s largest producer of high-strength geosynthetics

(grids, liners, fabrics and non-wovens) for infrastructure, the

construction industry and the environment. The portfolio also

comprises materials (industrial fabrics) for applications in the

agriculture, horticulture and leisure sectors. On the basis of the

business model, TenCate operates close to the market with production

sites in Europe, the United States and Asia.

TenCate Polyslope® system provides

avalanche protection

An avalanche barrier has been built north of Innsbruck (Austria)

made up of five parallel concrete discs flanked on both sides by

reinforced slopes made of TenCate geosynthetics. This structure

breaks the force of avalanches and regulates the large volume of

meltwater in the spring. The avalanche barrier is 23 metres high

and has a 22-metre-wide base. Traditional solutions are not cost-

effective; the costs of such a structure and the transportation

of building materials in this difficult terrain would be too high.

Moreover, a natural look is preferable. TenCate Polyslope® is an

environmentally friendly and attractively priced system that allows

rapid growth of vegetation.


economic developments during the reporting year. Activities are

increasing in the major infrastructure project market (civil engineering)

and the environmental market.

In China the production facilities in Zhuhai became fully operational in

2011, allowing the start-up of exports to the United States and

providing a basis for the further development of the Chinese market.

New initiatives were taken to further develop the market in South

America.

worldwide. Revenues trended positively across all continents, with

increases in the relative share in South America and Asia. The

detrimental impact of rising raw material costs in the first half of the

year was absorbed by price rises.

The Geosynthetics group focuses actively on product development and

a solution driven approach to the market. The TenCate Geotube® and

TenCate GeoDetect™ systems in particular are gaining traction as

end-users are now devoting increasing attention to CO2-friendly,

sustainable environmental solutions and detection systems (leak,

erosion and deformation control). This is a worldwide trend. Another

important part of the strategy is the exchange of products and system

solutions between the various geographic regions.

It was a positive year in many respects for the activities in the United

States. Demand was higher than expected. Earnings therefore rose

relatively strongly, as a result of cost measures in previous years.

On the basis of the strategy, the needs of new and existing markets

were met proactively through an efficient organisation and with new

products, solutions and systems. The market share grew further

as a result.

TenCate Geosynthetics (Georgia, US) has been working on new

materials for a number of years under the TenCate Mirafi® RS580i

label. The geosynthetic material has a new weaving pattern, is even

stronger and has an improved drainage function. The patented material

is multifunctional.

The European market experienced positive growth. The TenCate

Geosynthetics production site at Nijverdal entered service at the

beginning of April, after which TenCate scaled down production at

Almelo. These were important steps forward in terms of production

efficiency and logistics.

As an integral part of the Asia strategy, TenCate’s position in the Asian

markets was considerably strengthened when the acquisition of Emas

Kiara Industries in Malaysia was completed in March 2011. Emas Kiara

Industries is a major producer and supplier of a wide range of

geosynthetic products and solutions. Its primary focus is on the Asian

markets. Although the acquisition involved initial integration and other

costs, the company was able to benefit immediately from the positive

TenCate Polyfelt® provides a solid base

for railways

TenCate Polyfelt®, a geotextile separation material, was used in

the renewal of the rail track near Bodegraven in October 2011. The

rail network operator used the longest railway machine in Europe

for this project. Over a length of one kilometre, the 1,200-metre-

long train lifted the rails and immediately excavated the existing

subsoil in three layers. The removed soil was immediately cleaned,

sifted and deposited on the automatically laid TenCate Polyfelt®.

This separation material has been certified by ProRail for use under

the ballast bed. The result is a structural solution with minimal

impact on the environment.

GEOSYNTHETICS

TenCate Geosynthetics has had a mathematical model developed which enables carbon footprints to be compared. The footprint of TenCate Geotube® systems for sludge dewatering or land reclamation is compared to competitive solutions.

A carbon footprint refl ects the emission of greenhouse gases by a product or system solution at each stage of its life. This includes the extraction and transportation of raw materials. The production and distribution as well as the use and eventual removal or recycling are also included in the calculations. This product eco-tool uses the data from suppliers, production locations of TenCate Geosynthetics worldwide and installers of the products.

The tool offers project owners, architects and developers a specifi c indication of the use of TenCate solution compared to others. Together with the end-users and installers in the area concerned an assessment can be made of how to reduce the carbon footprint of a project already at the design stage by using alternatives. Through the smart combination of two local projects in Zutphen, the Netherlands, a high level of CO2 emissions from transport has been prevented. Connected through the value proposition

SUSTAINABILITY

• Product eco-tool reveals carbon footprint• Project solutions can easily be compared• Complete life cycle analysis helps to reduce carbon footprint • TenCate Geotube® is a highly sustainable solution with a low carbon footprint


Asian markets. Further co-operation is being sought with international

and large (regional) engineering firms and mining companies.

TENCATE GRASS


The Grass group has a leading market position worldwide (fibres and

backing) in synthetic turf systems. TenCate is almost at the beginning

of the value chain. The strategy is being continuously reinforced in all

cornerstones of the strategic framework (value chain management).

The industry is in a phase in which the demand and supply side of

the market are developing strongly. Downstream consolidation is

taking place in the sector as a result of higher quality requirements

among various end-users, the greater importance of research and

development, high certification costs, environmental and sustainability

requirements and tight availability of bank financing.

TenCate conducts an active strategic policy in order to maintain

a leading position in terms of market share and technology. With

production sites in the Netherlands, Dubai and the United States,

TenCate has deployed its production facilities cost-effectively, with the

emphasis on volume production in the Middle East, and the logistical

lines to the market are short. Within this strategic policy, TenCate also

leads the way in entering into partnerships with key providers of

synthetic turf systems. This allows optimum fulfilment of the end-user

marketing cornerstones of TenCate’s business model.

Interests in downstream activities (marketing and installation

companies) are increasingly being integrated and costs shared (chain

integration). TenCate thereby combines expertise in the development

and production of synthetic turf fibres and carpet backing, as well as

research and development in the field of sport characteristics, with the

knowledge of system developers and installation companies. The aim

is to improve the quality, playing characteristics and durability of

synthetic turf pitches. The alliances with market participants are giving

rise to joint technological and other developments and reductions

in the time to market. The acquisitions in 2011 of shareholdings in

GreenFields and Hellas Construction fit in with this policy. In order

to strengthen the quality image, co-branding takes place with the

overarching TenCate® corporate brand.

The proactive exchange of products and system solutions between the

various geographic regions leads to TenCate Geosynthetics being

involved in highly attractive projects worldwide. The following are

examples:

◾ Three types of geosynthetics, from TenCate’s production sites at

Linz (Austria), Bezons (France) and Almelo (Netherlands) have been

used in the extension of the runway at Ain Arnat airport in Sétif

(Algeria). The work involved the delivery of a durable, cost-

effective solution with technical support.

◾ The Volgermeer Polder in the Netherlands, which was once a

landfill site for heavily polluted waste, has been cleaned up and

turned into a nature reserve. This is the largest soil remediation

operation in Dutch history. With the aid of TenCate Geotube®,

clean sludge was converted into a natural cap (a layer of clean soil)

on top of the seal. TenCate GeoDetect® is used to monitor the seal

on the waste in one of the basins that were created on top of the

natural cap.

◾ A large-scale project is being carried out at the former Kai Tak

International Airport in Hong Kong. After two successful trials of

TenCate Geotube®, work began in mid-December to remove and

clear 140,000 m³ of polluted sludge with the aid of this technology.

TenCate is supplying a large volume of TenCate Geotube®

containers for use in this project, which is due to be completed

at the end of June 2012.

TenCate Geosynthetics North America received two IFAI Awards from

the Industrial Fabrics Association International (IFAI) at IFAI Expo

Americas in Baltimore (Maryland, USA) in October. TenCate Mirafi®

H2Ri received the Innovation Award in 2011. A project in China with

a supporting wall based on TenCate Mirafi® PET fabric received the

Award of Excellence. TenCate Geosynthetics has received the

Innovation Award six times in the past seven years.

OUTLOOK FOR TENCATE GEOSYNTHETICS

TenCate Geosynthetics expects further growth in activities in 2012.

At the beginning of January 2012, TenCate Geotube® technology

was selected for the largest dredging project ever carried out in

the United States. Growth is expected on all continents, however,

in infrastructure projects and as a result of new products and

applications for water management and the environmental market.

In particular, there are high expectations for the South American and

REPOR T OF THE E XECUTIVE BOARD > Geosynthetics & Grass>

Royal Ten Cate52

> REPOR T OF THE E XECUTIVE BOARD > Geosynthetics & Grass

The technology component has also been strongly developed within

the Grass group. TenCate has a large number of valuable formulations

and patents in the field of fibre and process technology. Formulations

are developed in-house which give fibres high wear resistance and

make them flexible and resilient. As a result, fibres in sports pitches

remain upright longer, leading to an improvement in both playing

characteristics and appearance.

In 2011 TenCate Grass introduced the 3D weaving technology

developed by TenCate. This opens the way to recyclable and fully

integrated synthetic turf systems, whereby greater functionality can

be introduced into the top layer.

Such concepts also have a positive effect on the costs of installation

and reinstallation. That also contributes to sustainability, since the

whole product is produced from the same type of raw materials,

allowing easier recycling. That means the environmental impact in

particular can be greatly reduced.

Constant attention is devoted to the safety of sportsmen and women.

TenCate is one of the 11 partners in Skin Comfort, a project bringing

together organisations such as Radboud University Nijmegen Medical

Centre, API, Philips Consumer Lifestyle and the University of Twente.

This consortium investigates the interaction between materials and

the skin across a wide range of applications. TenCate is looking

specifically at the interaction between players and synthetic turf

(injury prevention). The results provide a good basis for further product

development.

The use of synthetic turf offers new possibilities in the field of water

management. At the opening of the Open Innovation Center for

Advanced Materials (OICAM) in Nijverdal, TenCate and Pentair X-Flow

introduced GreenSource, the first demonstrator created as a result of

open innovation. This project involves a combination of a TenCate

synthetic turf system and Pentair X-Flow filtration technology. This

makes it possible to generate drinking water worldwide both in sports

complexes and from landscaping with synthetic turf, particularly in

areas dominated by water shortages or having only polluted water

available.

By maintaining partnerships, TenCate Grass aims to achieve optimum

geographic coverage with a broad product portfolio based on a

differentiated brand policy for all sports and landscaping markets, thus

ensuring that a direct relationship is maintained with end-users

(consumers, sports associations, local authorities, etc.).

SUSTAINABILITY

Quality guarantees throughout the chain are of great importance,

because there is growing quality awareness in the market. Close

co-operation also contributes to environmentally friendly and

sustainable concepts, as well as the recycling of sports pitches.

TenCate XQ™ technology for recreational

and top-flight sport

Synthetic turf sports pitches based on TenCate Grass components

are ideal for both recreational and top-flight sport. In 2011 the

Christian Unified School District of San Diego (California, USA)

and the Ralph Wilson Stadium in Orchard Park, Buffalo (New York,

USA) installed synthetic turf pitches based on TenCate XQ™. This

patented technology gives the synthetic turf fibre optimum strength

and wear resistance. The combination of this technology and the

synthetic turf fibres used – TenCate Monoslide Ultra™ and TenCate

XP Blade™ – offers the best of both worlds. The result is a surface

with optimum, durable playing characteristics that looks like a

natural grass pitch in top condition..


The provision of product or system warranties is part of the value

proposition.

In the United States, TenCate substantially increased the production

capacity at Dayton by adding an additional production line for its most

durable synthetic turf product, TenCate XP Blade™. TenCate can now

meet the worldwide structural growth in demand for these wear-

resistant synthetic turf fibres. TenCate XP Blade™ is manufactured

according to a unique process developed by TenCate. TenCate is the

only supplier in the world to offer an optional five-year warranty on the

wear-resistance of TenCate XP Blade™, regardless of the number of

hours of use. This is a logical consequence of the comprehensive chain

integration with system partners and other participants. This enables

the entire process of supplying a synthetic turf system to be carried

out under optimum quality control.

In this connection, the first TenCate Performance Warranty™ certificate

was issued to a Dutch football association through Edel Grass in April.

This certificate was the result of an agreement which TenCate Grass

entered into in 2010 with the certifying body INTRON to issue a

performance warranty (backed by Allianz) for synthetic turf systems at

FIFA 2 Star level. INTRON certifies manufacturers of synthetic turf

systems in respect of their quality control. FIFA 2 Star is the

performance level which the football federation has defined for top-

flight competitive football. Oranjewoud Realisatie is also participating

in this warranty system.

Multifunctionality also provides added value, because it increases the

possible uses. Clubs and schools, etc. therefore have to invest less

money in sports facilities.

At the end of 2011, GreenFields successfully installed its first FIFA- and

IRB-certified dual-use synthetic turf pitch in China at the prestigious

Western Academy of Beijing. A GreenFields dual-use pitch (for football

and hockey) at the Father Agnel School in Mumbai has been selected

by the All India Football Federation (AIFF) and FIFA as the basis for one

of the first national football academies in India.

The US Army has installed a GreenFields synthetic turf pitch at the

former Olympic Stadium in Kabul. The renovated stadium in the Afghan

capital is a symbol of progress now that NATO troops are increasingly

withdrawing from the country, and in particular it serves to encourage

The sports market is currently the main market in synthetic turf. The

landscaping market is nevertheless growing strongly and ultimately

has equivalent if not greater potential. Reduced maintenance and

environmental factors (savings in the consumption of water, artificial

fertiliser and pesticides) are important reasons for the acceptance of

synthetic turf in gardens and public green spaces.

During the reporting year, the sponsorship agreement between

TenCate Grass and the Cruyff Foundation was extended for three

years. One of the foundation’s initiatives is the international rollout

of Cruyff Courts, synthetic turf plots in urban areas. There are now

over 100 such courts in The Netherlands and several dozen in other

countries.

GENERAL PERFORMANCE

The revenues of the Grass group recorded an organic decrease of 16%

during the reporting year compared to 2010. This was partly due to the

general decline in the market volume in synthetic turf, particularly in

the United States and Southern Europe, and the termination of a large

supply contract. Although new market participants joined the

downstream activities in 2011, it was not immediately possible to

absorb the loss of revenues. The downstream activities of TenCate

Grass in the synthetic turf market showed revenue growth partly due

to acquisitions. The decrease in the volume of revenues led to a sharp

fall in earnings.

The synthetic turf activities witnessed a continuing market

consolidation and strategic repositioning in 2011. The focus within

TenCate Grass is shifting from fibre production to the supply of

synthetic turf systems for the sports market and landscaping.

A development process began at the start of 2011, in order to increase

the effectiveness of the integrated distribution activities in the

synthetic turf market. The implementation of the strategy should lead

to an improvement in results.

The situation in the financial markets and the tightening of local

authority budgets in the market as a whole led to restraint in the

awarding of contracts for synthetic turf projects during the reporting

year, particularly in the United States and Southern Europe. The long-

term trend is nevertheless positive. The acceptance of synthetic turf,

partly driven by lower maintenance costs and water scarcity, is an

irreversible process.

GRASS

Since August 2011 the American football team the Buffalo Bills of the NFL has been playing its home games on one of the most technically advanced synthetic turf pitches in the United States of America. The pitch was installed in the Ralph Wilson Stadium in Orchard Park by A-Turf Inc from Buffalo (New York), who opted for TenCate XP Blade™ and TenCate Monoslide™ Ultra synthetic turf fi bres with TenCate XQ™ technology.

The combination of the two fi bres offers unsurpassed durability and playability, while providing a natural appearance that is second to none. This blend is a great leap forward in synthetic turf technology, as it combines the best of both worlds by ensuring a groundbreaking synthetic turf system that not only looks great, but also performs at the highest level in American football.



women’s football. If the pitch is approved by FIFA in the near future, it

will be possible to use it for international competitions from as early as

this year.

Clubs in the English Football League are now also increasingly calling

for the installation of synthetic turf to be permitted. Now that the

GreenFields pitch at the Scottish club Stenhousemuir has received the

FIFA 2 Star certificate for the sixth year running, English clubs are

becoming aware of the major advantages of a synthetic turf pitch, such

as predictable playability and playing characteristics, low water

consumption and maintenance.

In the United States, leading installers such as Hellas Construction and

A-Turf chose TenCate to develop attractive projects such as the first

NFL pitch. The combination of technology and fibres is a leap forward

in synthetic turf technology and offers not only high durability and

playability but also an unrivalled natural appearance.

OUTLOOK FOR TENCATE GRASS

As a result of tighter government budgets, volumes of synthetic turf in

the global market are not set to show any significant rise in the short

term, although there will be regional differences. TenCate’s presence

in the entire world market is an advantage. The main challenge

TenCate Grass faces in the short term is controlling costs and

implementing the differentiated market strategy based on brands and

geographic areas. The Grass group will take further organisational

measures to improve results in the short term.

Further acceptance of synthetic turf as a real alternative to natural

grass in sport, with football as the main growth market, will ensure

steady growth in the market.

REPOR T OF THE E XECUTIVE BOARD > Geosynthetics & Grass>

Since mid-2011 Xennia Technology has had at its disposal a specifi c application of inkjet technology for the textile sector. The Xennia Osiris machine is an addition to the developments within Xennia and is complementary to the digital fi nishing solutions already available.

Inkjet technology for continuous production processes delivers a fast response time, end-user-specifi c products and a reduction in inventory and production costs. The Xennia Osiris machine has been operational at Vishal Fashion in India since early 2011. Large volumes of more than ten kilometres in length are printed on it as fashion fabrics in small, medium and large runs. The company has a business model based on rapidly changing collections that are inspired by the fashions seen in current television fi lms and in movies.

Parent company TenCate is working as launch customer on the development of inkjet coatings on technical textiles.


Xennia Osiris


KEY FIGURES

Other activities 2011 2010 2009 2008 2007


Revenues 74.5 66.8 52.7 53.8 67.4

Operating result before amortisation (EBITA) 5.9 9.8 – 7.0 – 3.9 2.4

Operating result (EBIT) 4.1 8.3 – 8.1 – 3.9 2.4

Investments 5.2 6.9 4.1 7.3 1.0


Staff years at year-end 611 624 670 657 729

* Including exceptional items.

ACTIVITIES

In addition to Holding & Services, the Other Activities sector comprises


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 automated teller

machines.


The revenues of the Other Activities sector (inkjet technology,

technical components and Holding & Services) amounted to

€ 74.5 million (2010: € 66.8 million). EBITA amounted to € 5.9 million

(2010: € 9.8 million). The decrease in EBITA was caused by a slight

decrease in the results from both TenCate Enbi and Xennia Technology,

as well as by lower EBITA at holding company level.

XENNIA TECHNOLOGY


Xennia Technology ltd of the UK (79%) specialises in the development

of industrial production processes based on inkjet technology. Xennia

combines technology (hardware solutions) with operating systems

(software) and its own ink formulations to create industrial production

systems. The company focuses mainly on textile printing and finishing,

decoration and coating of materials, the packaging industry, printed

electronics and medical applications. This represents a revolution for

TenCate in the field of coatings and textile finishing, because

functional characteristics can be applied to materials on a nano scale.

*

This is an entirely new process in the treatment of technical textiles.

This technology is therefore gradually being introduced into TenCate’s

production process, initially in the TenCate Protective Fabrics market

group.

The technology offers major progress in reducing the consumption of

energy and raw materials, as well as in the accuracy of the process

(controllability and quality). Other advantages are the individualisation

of volume products (mass customisation) and product innovation.

With the forthcoming introduction of digital finishing by means of

inkjet technology, a growing number of sustainability features can be

added to technical and other textiles in the next three to five years,

particularly outdoor and protective fabrics, such as active self-cleaning

and energy-generating capabilities.

GENERAL PERFORMANCE

Considerable progress was made in the development of the ceramics

market in 2011. The main sales area is China, where ceramic tiles are

printed for interior use. The ceramics industry is using this technology

both to improve products and to achieve major cost savings by

digitising the process.

Although revenues grew, earnings lagged far behind, partly due

to continued relatively high development costs. Ink sales continued

to lag behind because the necessary installed base of technology

applications has not yet reached the required size. This is a gradual

process. Work has been carried out jointly with TenCate technologists

on new textile printing and finishing processes.

OTHER ACTIVITIES

Royal Ten Cate58

> REPOR T OF THE E XECUTIVE BOARD > Other activities

OUTLOOK FOR TENCATE ENBI

TenCate Enbi has already provided information on the growth

opportunities in the Asian market. Relationships with producers are

developed on the basis of product qualifications. These qualification

processes may be lengthy. The initial results of this are now becoming

evident, and attractive opportunities are emerging in the Asian market.

By contrast, developments relating to end-of-life products will cause

the respective revenues to decrease or come to an end. TenCate Enbi

is factoring in a further reduction in revenues from major US

relationships. The main growth is expected to be achieved at the

Chinese site.

POST BALANCE SHEET EVENTS

There are no event subsequent to the reporting date requiring

commentary.

OUTLOOK

In the years ahead, Xennia Technology will be an important technology

partner that generates solutions with industrial partners in the field of

inkjet technology. Xennia has formulated a growth strategy focusing on

a number of niche markets, including textiles, in which TenCate is one

of the main launch customers. The first tangible results of this are

expected in the current reporting year.

TENCATE ENBI


TenCate Enbi develops and produces technical rollers and components

based on rubber and foam technology for paper transport and image

transfer in printers, copiers and fax machines, as well as for postal

sorting machines and automated teller machines. The products have

to meet strict qualification requirements with regard to technical

characteristics.

TenCate Enbi occupies an important position 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

(foam-based products). A strong development capacity is an important

precondition for success in this market, which increasingly has shorter

production cycles.

GENERAL PERFORMANCE

The market in which TenCate Enbi operates remained fairly stable

overall. TenCate Enbi recorded a decrease of approximately € 4 million

in revenues, mainly due to the reduction in the volumes sold to larger

customers. The site in China (Zhuhai) is obtaining a growing number

of qualifications for components for Asian printer and copier

manufacturers. Following the earthquake in Japan, which forced

Japanese manufactures to locate their production elsewhere,

TenCate Enbi in Zhuhai also received orders from Japanese producers.

Preparations have been made to concentrate all Asian activities

in Zhuhai.

> Inkjet technology offers major

progress in reducing the consumption

of energy and raw materials and

in the accuracy of the process. <


With a more even distribution of sales of TenCate Defender™ M

products, a different picture is expected in 2012 compared to 2011.

The performance in the first half of 2012 will therefore not be

comparable to that of 2011.

Partly in view of a number of multi-year contracts and larger projects

which were initiated or already in the portfolio, TenCate expects its

result for full-year 2012 to be at least in line with that of 2011, barring

unforeseen circumstances.

OUTLOOK

TenCate operates predominantly in growth markets. Although

government spending will remain squeezed in 2012, it is expected that

the positive market trends for TenCate will remain intact and will

continue.

The first half of 2011 was very strong, mainly due to catch-up demand

from the US Army for TenCate Defender™ M products. Sales of TenCate

Defender™ M in 2012 will be lower due to the gradual reduction in the

number of US troops in Afghanistan.

This reduction is expected to be offset by new projects for the US

Army and revenues in markets outside the United States are expected

to show continued growth. A large number of new wearing trials for

armies outside the US were started in 2011.

The positive developments in complementary markets (security

services, industry) for both TenCate Defender™ M and TenCate

Tecasafe™ Plus will also contribute to the further growth.

The growth in sales of composites for the aerospace industry will

continue. This market is largely based on long-term contracts.

The geosynthetics activities are similarly expected to show continued

growth, and further market development is being pursued in emerging

markets (BRIC countries).

The Grass group will take further organisational measures to improve

results in the short term.

The greater commercial focus at Xennia Technology is intended to

accelerate the growth in earnings.

No significant contribution is yet expected during the current year from

the TenCate ABDS™ active blast countermeasure system. A period of

technical and logistical preparation will have to take place before such

a system is used in vehicle programmes. There is nevertheless great

interest in this system in the defence market.

High-speed inkjet technology

TenCate has gained access to a specific inkjet technology

application for the textile sector. The Osiris machine supplements

the developments at Xennia Technology and complements the

solutions Xennia can provide. Inkjet technology for continuous

production processes means fast response times, end-user-specific

products and lower inventory and production costs. The Osiris

machine has been in operation at Vishal Fashion in India since early

2011. It is used to print large volumes of fashion fabrics (over 10

kilometres) on a daily basis. TenCate is currently working on the

development of inkjet coatings on technical textiles as a launch

customer.

Royal Ten Cate60

◾ End-user marketing

Further expansion and intensification of TenCate brand awareness

and brand perception by making greater use of social media and

individualised and interactive provision of information. Clear

communication on sustainable value propositions, making use

of the various media.

◾ TenCate’s positioning as a solutions provider in the automotive

market

As part of the policy of prioritising growth in the composites

businesses, close attention will be devoted to the current

developments in the automotive industry. TenCate occupies a

leading position in thermoplastic composites. The automotive

industry is on the verge of a technological revolution involving the

use of new composite materials. This need has arisen primarily

from government regulations aimed at annual reductions in CO2

emissions from vehicles. The industry therefore has to develop

innovative, lightweight concepts, which require adjustments

to the design and manufacturing process.

A discernible trend is under way in the aerospace and automotive

industries towards project-based co-operation with the aim of

reducing the costs of composites and making materials more

suitable for industrial processes. By participating in various

industrial networks, TenCate aims to become part of the required

solutions with its aerospace background.

◾ Embedding of inkjet technology in the TenCate Protective Fabrics

production process

The first production runs for specific print applications will take

place in 2012 at the production site in Nijverdal (Netherlands).

Work will also start on the establishment of the finishing

department (coatings) for production based on inkjet technology.

Actions for 2012

◾ Using indicators to highlight sustainability aspects

As a follow-up to earlier initiatives in 2011 and previous years,

2012 is expected to see a large number of CSR initiatives centred

on making performances measurable at both process and product

level. A collective approach is being supported by the holding

company. Using selected GRI standards, quality data are being

obtained from market groups worldwide based on key performance

indicators that are mutually comparable. This will provide a more

comprehensive overview at group level.

◾ Organisational embedding of new profit sources and development

of system concepts

The development of new sources of future profit and the

conceptual development of systems and solutions for end-users

require organisational expansion or adjustment in some areas.

This may initially involve costs. The system approach can be

focused on providing a functional solution against the background

of a sustainable concept. An example of this is the GreenSource®

concept which TenCate has developed with partners and which

links sport played on synthetic turf to sustainable water

management. Another example that can be mentioned in this

regard is the TenCate ABDS™ active blast countermeasure system,

which is entering the commercial phase in 2012. This is not

expected to make a significant contribution in the current financial

year.

◾ Continuation and completion of network integration

in the synthetic turf market

This process, which has taken a number of years, is expected

to be completed in 2012, providing a basis for a profit recovery.

The market participants associated with TenCate will work

closely together to provide optimum service for the market with

a segmented offering of systems for a wide range of sports

pplications and landscaping. Based on the quality image of

the TenCate brand, the parties will operate under their own brand

in specific geographic markets.


Corporate information

CORPORATE GOVERNANCE

The Supervisory Board and the Executive Board endorse the main

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 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.

No changes or adjustments were made to corporate governance within

TenCate in 2011. Consequently, for the full corporate governance

documentation we refer to the TenCate website, the report of the

Supervisory Board appearing on page 20 and the 2011 remuneration

report, which can also be found on the TenCate website.

SWOT ANALYSIS

TenCate has for a number of years provided an outline of the SWOT

analysis in its annual report. This analysis is a permanent feature of

the internal strategic framework, in which each market group draws

up a SWOT matrix for each continent. The points included in this apply

to TenCate as a collective group. On the basis of the SWOT matrix,

a confrontation matrix is drawn up for each market group, as shown

on pages 33 and 47.

In addition to the fact that indicated improvement points are tackled on

an ongoing basis and actions are undertaken to address threats, the

SWOT analysis is part of a gradual process of refinement and control.

Since full details of the formulated SWOT analysis can be found in

the 2010 annual report, only a point-by-point summary of the main

components is provided here.

◾ The strength of TenCate

◾ The strength of the TenCate® corporate brand with the following

core values: innovative, solution-focused, high-quality and reliable.

The TenCate corporate brand is a connecting factor linking the

various market activities. The recent media focus on TenCate

Defender™ M and the TenCate ABDS™ active blast countermeasure

system has made a strong positive contribution to the TenCate®

brand.

◾ Competitive position based on economies of scale, technology

development and innovations (IP), the broad technological basis

and global presence in markets and diversified access to the

commodities market.

◾ Market leadership in niche markets.

◾ Improvement points

◾ TenCate is an organically growing company which has gained an

increasingly international character over the years. The process of

transformation from a production-dominated company to a market-

driven solution provider makes additional demands on employees.

An advanced management development programme is required in

order to keep the organisation in step with developments and

anticipate the future.

◾ The growth process has been accelerated by applying a greater

focus and strengthening the local presence in growth markets.

The achievement of the associated revenue growth is a gradual

process.

◾ Value chain integration in the synthetic turf activities is also

a point of attention in 2012. The aim is to increase the return

substantially, partly by further implementation and optimisation

of the downstream activities coupled with an optimisation of

component production (fibres and backing) and the associated

capacity utilisation.

◾ The generation of profitable revenues from previous (capitalised)

developments at Xennia Technology, with the aim of strengthening

the marketing and sales activities.

Royal Ten Cate62

> CORPOR ATE INFORMATION

◾ Challenges

◾ TenCate faces major challenges over the next five years in its aim

of growing to an indicative revenue level of approximately

€ 2 billion. This will entail inevitable organisational challenges.

◾ As a producer of materials, there is a close relationship with

production processes in later links in the value chain and with the

ultimate design of the end-product. The challenge for TenCate is

to choose such a positioning in the value chain that this results in

a sustainable profit model in the longer term. The transformation

to a solution-focused organisation means that operations

increasingly have to take place in network structures, requiring

new skills on the part of the organisation. An organisation which

adopts a market stance based on a new dimension may

substantially change the company’s image.

RISK MANAGEMENT

Enterprise entails risks. Because TenCate operates in different

markets, the company also faces varied risks in each market.

TenCate aims to identify and control these risks as early as possible.

Risk control models have therefore been developed, which are updated

and discussed with the group management at least four times a year.

The risk control and supervision measures are aimed at early

identification of these risks.

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.

STRATEGIC RISKS

In order to assess the strategic risks, TenCate uses a business

model based on four cornerstones: end-user marketing, product

differentiation, technological innovation and cost leadership.

An analysis of this model enables TenCate to carry out a clear and

rapid assessment of the company’s strategic position and to adjust it

accordingly. A second model used is the SWOT analysis. This analysis

is also used as a basis for agreements with the management on

measures to reduce risks.

◾ Opportunities

◾ The continuing attention devoted to technological developments

and product differentiation focused on new and existing market

requirements leads to a constant stream of opportunities. Product

developments such as TenCate Defender™ M and TenCate

Tecasafe™ Plus are good examples of this. Business development

has been embedded more strongly in the organisation since 2010.

◾ The new aerospace armour production plant opened at the end of

2011. After the initial long-term project with Eurocopter, other

producers have also signed up for armour projects. TenCate

combines its capacities as an aerospace company with those in

vehicle armour, generating substantial added value.

◾ Developments in new geographic markets provide opportunities

for TenCate and can offset possible cyclical declines in certain

traditional markets.

◾ Threats

◾ As a result of growing uncertainties in the financial markets, the

supply of credit may come under renewed pressure. TenCate will

maintain an ample safety margin with regard to its maximum debt

ratio, which may put some pressure on the financeability of larger

potential acquisitions. Priority will be given to the reduction of

working capital in order to maintain maximum headroom for

growth.

◾ New synthetic turf fibre producers offering components at

extremely low prices are a potential threat. This threat is

addressed by continuing to focus attention on systems and the

needs of end-users (solutions) and maintaining direct access to

the market (point of sale).

◾ The substantial proportion of revenues from TenCate Defender™ M

dependent on the US Army remains a point of attention.

The reduction in the number of military personnel stationed in

Iraq and Afghanistan should not be viewed as overwhelmingly

negative. TenCate has succeeded in further expanding the overall

portfolio of the TenCate Defender™ M range and has developed

other concepts based on similar technology (such as TenCate

Tecasafe™ Plus). TenCate is also enjoying increasing success in this

field outside America.


FINANCIAL RISKS

The financing of the company is for the most part centralised through

corporate treasury. The main financing source is the € 450 million

syndicated loan arranged in December 2010. The main covenant

concerns the debt / EBITDA-ratio. In view of the specific seasonal

pattern in TenCate’s financing requirement, quarterly debt / EBITDA

ratios have been agreed. That substantially reduces the risk of a

breach of covenant.

The risk of an interest rate rise in the subsequent years is hedged in

principle to various percentages, taking account of expected interest

rate trends. The effect of changes in the value of financial instruments

on the company’s result is mitigated as far as possible by the use of

hedge accounting.

With regard to currencies, Ten Cate draws a distinction between

competition, transaction and translation risk. The competition risk

is hedged over the subsequent six months by means of options.

The foreign currency transaction risk is hedged by means of futures

or 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.

No impairment has been recognised in respect of the intangible fixed

assets. The sensitivity with regard to the main assumptions on this

subject has increased at the TenCate Grass unit. Further details can

be found in note 37.2.

TenCate has placed the pension provision for Dutch employees with

Stichting Pensioenfonds Koninklijke Ten Cate nv. The pension fund

has taken measures to reduce the risk profile as part of its investment

policy. In 2011, Royal TenCate switched from the corridor method to

the OCI method for the valuation of pension liabilities. This change of

system provides greater insight into changes in pension liabilities.

MARKET RISKS

Government expenditure in the main countries is an important factor

in demand for TenCate products. Strong commercial networks and

the associated supply of information enable the company to swiftly

anticipate government plans. By maintaining flexibility in cost

structures, it is possible to compensate for the consequences of

a decrease in demand.

In situations of scarcity or heavy dependence on a single supplier,

there are risks of non-availability or disproportionate price rises.

Active steps are taken to reduce this dependence.

OPERATIONAL RISKS

TenCate’s organisation strategy is based on a decentralised model.

The managements of market groups and operating companies are

controlled on the basis of a formalised planning and control cycle.

TenCate performs preventive inspections of its products and almost

all businesses are ISO-certified.

TenCate’s environmental policy is based on limiting any impact on

the environment as far as possible. Periodic inspections are carried

out both by the holding company and by the operating company

managements and measures are taken to avoid environmental

risks. 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.

LEGAL AND TAX RISKS

TenCate becomes involved in various legal proceedings resulting from

normal business operations. The progress of these proceedings is

monitored continuously. A summary is discussed in the finance

committee of the Supervisory Board twice a year.

> TenCate has developed risk control

models, which are updated and

discussed with the group management

at least four times a year. <

Business development

In July 2011 TenCate and Pentair X-Flow presented the demonstrator developed in open innovation for drinking water management. This GreenSource project combines TenCate synthetic turf systems for sports or landscaping with Pentair X-Flow technology for the treatment of rainwater and sewage. Wavin supplies the drainage systems.

The GreenSource system enables water management to be used worldwide on sports complexes and stadiums as well as on landscaping based on synthetic turf. The treated water can be used for spraying synthetic turf pitches and for irrigation of the natural landscape. Water of this quality can also be made suitable for drinking water.

Worldwide there is a growing demand for sustainable products, in particular for those that save water. The GreenSource system meets this need.


GreenSourcesports for water


◾ 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 AND CONTROL SYSTEMS

A whistleblowers 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 each 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 SYSTEMS

The 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 our 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 rules will always be achieved. In taking decisions we are aware

that:

◾ Human errors of judgement may arise;

◾ Cost-benefit assessments must constantly be 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

CORPOR ATE INFORMATION>

Royal Ten Cate66


TenCate aims to strengthen its leading positions in its core markets as

a result of these acquisitions. Emas Kiara, one of Asia’s main geotextile

producers, has been part of TenCate since 2011.

ORGANISATIONAL DEVELOPMENT

Due to the quickening pace of change in the world markets, the shift

in industrial power relationships and the growth in emerging markets,

TenCate’s continued success depends crucially on being able to

influence end-users, deliver innovations, develop new marketing

strategies and implement these strategies appropriately.

TenCate’s strategy is focused on further growth in its existing world

markets and the securing of substantial positions in a limited number

of adjacent markets. The flat organisational structure means the

emphasis is more on the continuing development of the senior

management. With regard to vital functions, greater priority is given

to internal career development for employees and managers than to

attracting new personnel from outside TenCate.

The company’s continuing growth means greater demand for more

central control mechanisms. TenCate’s core values, corporate culture,

framework conditions, guidelines and procedures are being further

tightened. Entrepreneurship remains central at all levels in the groups.

It is essential to translate and implement the strategy appropriately.

HUMAN RESOURCES MANAGEMENT

HUMAN RESOURCES POLICY

The HR policy is based on the following principles

◾ Identifying and developing talent;

◾ Developing leadership and entrepreneurial qualities;

◾ Retaining talent and guaranteeing knowledge.

In 2011 the HRM efforts were focused on guaranteeing the continuity

of the company, partly by developing skills and improving employees’

performance and tightening the structures of the organisation.

TenCate takes account of effects on the local or regional labour market

in its accommodation policy. During the reporting year this policy was

applied when the Almelo-based production activities of TenCate

Geosynthetics were transferred to Nijverdal (Netherlands) and when

the activities of TenCate Advanced Composites were concentrated in

Fairfield (California, US). Retention of knowledge and skills and

flexibilisation of manpower were the principal objectives.

TenCate Protective Fabrics in the United States once again succeeded

in making a major contribution to the retention of jobs in the State of

Georgia during the reporting year. Fellow operators in the region’s

textile industry were licensed to produce protective fabrics for the

US Army, helping to maintain around 10,000 jobs. During the current

year such an approach will also be adopted by TenCate Protective

Fabrics in South Korea.

At the end of 2011, TenCate had approximately 4,350 employees

worldwide. Overall there was a limited increase in the size of the

workforce. On the one hand the existing organisation was sharpened

and on the other hand a number of acquisitions were completed.

Employees Year-end 2011 Year-end 2010 Year-end 2009 Year-end 2008 Year-end 2007

in number of staff years

Netherlands 819 785 862 931 975

Rest of Europe 672 724 569 612 582

United States 1,604 1,542 1,314 1,573 1,527

Asia/Australia 1,030 878 777 936 641

Middle East 228 342 283 385 295

Total 4,353 4,271 3,805 4,437 4,020


other benefits, this has resulted in a relatively low level of sickness

absence worldwide.

EMPLOYMENT CONDITIONS

TenCate offers its employees a comprehensive and competitive

package of employment conditions. To this end, regular surveys are

conducted, in co-operation with Hay Group and local employer

organisations. TenCate operates a uniform remuneration policy for

the management of all businesses. The bonus systems for the senior

management are also determined centrally. That takes place on the

basis of the result of the operating company and in some cases also

partly on the basis of the results of the TenCate market group as a

whole.

TALENT AND MANAGEMENT DEVELOPMENT

Talent and management development will focus even more on senior

management. A large number of senior management personnel

underwent an assessment in 2011 which provides a starting point for

further development. The continued development of talent at all levels

in TenCate will also remain a major focus of attention.

Greater attention was devoted to securing and developing specialist

knowledge and leadership skills in 2011. The existing development

programmes are increasingly being co-ordinated. Attention will be

directed towards management development. Internal branding

campaigns, focused among other things on CSR and social innovation,

will be supported. More attention will also be devoted to training

courses on end-user marketing and the strengthening of sales skills in

2012. Various IT tools are currently being developed to provide efficient

and effective support, for these processes, such as the introduction of

an MD portal.

SAFETY

Our employees on all continents are professional people with a sense

of enterprise focused on results and solutions, who are genuinely

prepared to take on challenges. A safe and high-quality working

environment is of immense importance in this regard and has high

priority (see also the sustainability policy for the internal CSR

campaign). TenCate’s policy is aimed at implementing or establishing

all activities and processes in such a way that any personal injury or

damage to health can be avoided. This aim is the starting point for the

health and safety policy implemented in all our businesses. Among

10CateAt TenCate we are

1 Effective doing the right things2 Efficient doing things right 3 Creative thinking more flexibly4 Flexible acting more flexibly5 Enterprising recognizing and maximizing opportunities6 Innovative breaking new ground at the cutting edge of technology7 Reliable saying what you do and doing what you say8 Committed dedicated, dependable and proud9 A team we collaborate as individuals and also as teams10 The difference to our clients materials that make a difference

Corporate values TenCate

New site for TenCate Geosynthetics

in Nijverdal

Ten Cate Geosynthetics’ new production site in Nijverdal opened

officially on 14 April. TenCate Geosynthetics develops and

produces geosynthetic materials at Nijverdal for construction, civil

engineering and infrastructure projects. Major advances have been

made in terms of production efficiency and logistics. The office

functions have been located in TenCate’s premises on Hoge Dijkje

in Nijverdal.

Recyclable

Business development

Thanks to ingenious product design, using the innovative, patented weaving technology from TenCate Grass, the fi rst fully recyclable synthetic turf pitches were developed in 2011: fi rst for landscaping, then for sports fi elds. This is a fi rst in this industry.

At the end of the lifespan of the pitch the processed materials can immediately be reused in the TenCate Grass production process. This relates to the synthetic turf fi bres, the woven backing and the adhesive layer. These are all from the same product family, so that there is no impure mixing during recycling. The infi ll is recycled separately after it has been cleaned.

Synthetic turf has a number of sustainability aspects. A synthetic turf pitch requires less maintenance (mowing, fertilizing) than natural grass and can be played on longer and more intensively. Depending on the type of pitch, synthetic turf provides a considerable saving of water. As natural grass pitches cannot be played on continuously, the pressure on space of synthetic turf pitches is considerably less. The fact that it is now possible to recycle certain types of synthetic turf represents fundamental preservation of this product. Connected through the value proposition

SUSTAINABILITY

• Fully recyclable, including the backing and adhesive layer• Savings on materials, water and energy• High use (on average 1,500 hours a year)• Less pressure on space than natural grass• Less maintenance than natural grass• Patented innovative weaving technology


have switched to Microsoft Dynamics AX and TenCate Geosynthetics

Europe has now standardised on SAP. These replacements have

allowed further standardisation within TenCate’s ERP landscape.

PLANS FOR 2012

2012 will see the completion of the IT organisation in regional shared

service centres and the connection of the TenCate companies to the

worldwide TenCate network. TenCate Advanced Armour will begin

implementing MS Dynamics AX in America and the UK. The TenCate

website will be given a makeover and the underlying content

management system will be replaced. Research has now started with

a view to expanding the mobile telephone contract to include all

European sites from 2013.

CORPORATE INTELLECTUAL PROPERTY

TenCate conducts an active branding policy in order to strengthen and

further expand its image in the market. TenCate’s market strategy is

based on its strong corporate brand. This brand forms the basis of both

corporate and market communication. The strategy is linked to the

end-user marketing strategy, which is conducted through the different

market groups. The brand is communicated clearly in the various

market groups, thereby emphasising the coherence of the different

market groups.

TenCate operates businesses in 25 countries around the world, each

of which has its own employment regulations, laws and culture.

The operating companies therefore conduct their own personnel

policies geared to the local situation, although these are governed

by conditions and general principles specified by the group.

In co-operation with the general employers’ association AWVN, a

major job evaluation project was completed in the Netherlands in 2011.

All jobs covered by the collective labour agreement for the fashion,

interior, carpet and textile industry have been redefined

(consolidation), described and rated in accordance with the ORBA-PM

method.

CORPORATE INFORMATION TECHNOLOGY

DEVELOPMENTS IN 2011

Further steps were taken in the merger of the decentralised IT

organisations into three regional shared service centres in 2011.

The shared service centre in the USA entered service in January 2011.

The IT shared service centre in Asia will be operational in the first

quarter of 2012. The regional shared service centres will be connected

to each other in 2012, completing the transformation of the IT

organisation from a decentralised structure to one based on a shared

service centre.

Projects

The Global TenCate Network was rolled out worldwide in 2011. This

network connects almost all companies, which can then communicate

and share information securely. The companies in Asia and Australia/

New Zealand in particular will be connected in 2012.

Cognos Controller, the central financial reporting and consolidation

system, entered service fully at all TenCate operating companies in

2011. The TenCate website has also been adapted for mobile devices.

iNetwork, the TenCate intranet, has been updated and is being rolled

out worldwide.

Investments

In addition to a number of technological investments in IT systems

(SAN, backup, telephony), various ERP implementations have been

completed. For example, the TenCate Advanced Armour companies in

Europe (Denmark and France) and TenCate Protective Fabrics Thailand


> TenCate Protective Fabrics offers the

best protection value for our customers

and profitable growth and shareholder

value for our business. We are

achieving this objective and

demonstrating leadership in the

protective textiles market through our

extensive knowledge of advanced

materials, processes and strong

position in the value chain. <

TenCate Protective Fabrics mission statement

Royal Ten Cate70


As a multinational company, TenCate is aware 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 making

sure that the social, natural and economic environment remains

available for future generations. TenCate is increasingly integrating

sustainability into its operating processes, products and joint ventures

by means 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 aimed at the responsible deployment of

people and the responsible use of commodities and materials.

On the basis of the worldwide trends towards safety and sustainability

on which TenCate focuses, numerous underlying themes arise in

relation to the protection that TenCate provides for people and their

environment. The sustainability themes include weight reduction,

limitation of energy consumption, noise reduction, insulation, water

management, reuse, recycling, waste water and sludge processing,

bullet- and fragment- proofing and heat and flame resistance.

The management of the value chain involves numerous sustainability

aspects to greater or lesser degrees. This applies to all the

cornerstones of the business model. The technological innovation

cornerstone is the most obvious. Only through continued

groundbreaking innovations in technical and technological areas will it

be possible to secure the continuity of TenCate as a technology group

and guarantee sustainable development.

CORPORATE SOCIAL RESPONSIBILITY

CSR is the means by which TenCate integrates sustainability into its

business operations. TenCate uses numerous management systems

particularly to make corporate social responsibility visible and

controllable. These range from environmental management systems

(ISO certifications for quality and the environment and renewal of

certification) through to financial accountability concerning the receipt

of innovation funds and the provision 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 sustainability

innovations in numerous fields.

In addition to the active branding policy, TenCate 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. Action is taken

if any infringements are detected.


Further work took place in 2011 on the positioning of the corporate

brand worldwide. The market groups have consistently implemented

the brand strategy.

The fact that the strategy benefits the value of the brand is also

evident from the increased market value of the brand compared to

2010. According to the top 100 Dutch companies with the most

valuable brands, the TenCate brand represents a value of € 135 million,

almost € 30 million more than in 2010. (Source: Brand Competence,

The Dutch Top 100 corporate brands ranking 2010 and 2011.)

Various new patents were again added to the existing portfolio in 2011,

either by registering new intellectual property developed by TenCate or

by means of acquisitions.

The brand portfolio can be viewed on the website. The patent portfolio

is not disclosed, however, due to competition considerations.

CORPORATE SOCIAL RESPONSIBILITY

SUSTAINABILITY POLICY

TenCate’s sustainability policy forms an integral part of the pursuit of

continuity in the company, which has existed for over 300 years. It is

based on the forward-looking vision, mission and strategy of the

Executive Board. At the same time it reflects the long-term approach

and actions of the group managements and employees of TenCate and

its subsidiaries and associated companies worldwide.


chemically or mechanically recyclable products using cleaner and more

efficient production techniques. TenCate’s technology road maps and

product road maps in particular chart the direction of future

sustainable innovations.

TenCate’s corporate departments support the managements worldwide

with corporate social responsibility initiatives and projects.

The corporate risk management, corporate human resources

management and corporate communications departments co-operate

with these. The managers of these departments are responsible for the

corporate approach to CSR. The CSR team specifies its objectives and

programme each year. The objectives, results and compliance with

legislation and regulations 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

strategy and its implementation.

The corporate risk manager reports directly to the CFO on the progress

of the risk management. In addition to safety aspects, this includes

environmental and social aspects of operational management.

The corporate HR director reports directly to the CEO on social and

economic aspects and on assessment and remuneration systems.

No TenCate officers have an explicit CSR weighting in their

remuneration, as TenCate believes that sustainability is an integral

part of the company’s pursuit of continuity.

One of the TenCate 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.

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 developing bio-based initiatives.

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 groundbreaking technologies

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

biologically degradable, recyclable or secondary raw materials,

TenCate will be increasingly able to manufacture biologically,

TenCate Defender™ M in South Korea

and Australia

TenCate Protective Fabrics has signed an agreement with Samil

Spinning in Seoul (South Korea) for a TenCate Defender™ M

partnership. The aim is to expand the TenCate Defender™ M

product portfolio in the South Korean army and police market.

TenCate Defender™ M fabric has also been supplied for 10,000

additional uniforms for an extensive MultiCam® wearing trial in

war zones by the Australian Defence Force. TenCate Defender™ M

offers an optimum balance between flame retardance, service life,

comfort and cost. It has significantly reduced the number of burn

injuries, thereby saving many lives since 2007.

GRASS

In April 2011 TenCate Grass, together with Edel Grass and Oranjewoud Realisation, presented Flevo Boys football club in Emmeloord, the Netherlands, with the TenCate Performance Warranty™ certifi cate.

This makes TenCate Grass the fi rst company in the international synthetic turf industry to offer insurance on the performance and durability of synthetic turf pitches made of TenCate components.

The insurance policy that Allianz issued for Flevo Boys’ synthetic turf pitch guarantees a FIFA 2 Star performance for fi ve years. FIFA 2 Star is the benchmark for the highest level of league football on synthetic turf. TenCate Monoslide™ synthetic turf fi bres based on TenCate XQ™ technology make it possible to construct pitches that fulfi l FIFA 2 Star requirements over a long period of time.



cornerstone, business units become aware that CSR saves costs or

is at least cost-neutral. At the same time, it offers the opportunity to

make more sustainability aspects visible to customers and end-users

in the end-user marketing cornerstone. A growing number of market

groups in TenCate see CSR as a way of increasing revenues.

The subject of ‘sustainable purchasing’ in particular is of growing

importance to specific market groups. As market leader, TenCate

aims to be among the front runners in the industry, including in terms

of sustainability.

During the 2011 reporting year, TenCate was active worldwide in

numerous projects related to or aimed at corporate social

responsibility. A full list can be found on TenCate’s corporate website

(under CSR projects).

In Europe, North America, Africa and Asia, TenCate provided

sponsorship during the reporting year for around ten sports events,

for around ten student teams by providing composite and protective

materials and for dozens of organisations, including veterans’ and

firefighters’ support associations, and – partly through volunteer work

– for a large number of events in local communities. TenCate has been

the main sponsor of the Heracles Almelo professional football club for

a number of years. This first-division club fulfils an important social

and community role in the Almelo region.

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

projects centred on sustainability and safety during the reporting year.

A full summary can be found on the TenCate website.


CSR essentially involves striking the right balance between People,

Planet and Profit. During the reporting year, TenCate recorded an

impressive economic performance and profitability (Profit) while

respecting – internal and external – social values (People) and

operating within an ecological framework (Planet). TenCate’s product

portfolio is ideally suited to this since many materials, modules and

systems inherently contribute to sustainability.

The personnel policy is also appropriate in this regard. All employees

within TenCate have access to ‘10Cate’, which represents the identity

of the company. These ten core values are universal within the

worldwide company. 10Cate is centred on the customer and together

with the TenCate business model provides the guiding principles for

each employee. The environmental risks were limited as far as possible

during the 2011 reporting year. Only chemicals and dyes listed in the

national textile environmental database are used in the Netherlands.

TenCate’s market groups devote a great deal of attention to the control

of production processes, rejects and (separate) waste flows. Waste

water released during textile finishing is treated or pretreated and

where possible reused (particularly in Georgia, US). To conserve

energy, the Dutch plants use heat/cold exchangers between factory

sites. Waste is processed in collaboration with recognised partners.

TenCate purchases most chemicals and (raw materials for) synthetic

fibres worldwide from multinationals which operate policies based on

sustainability. The flame-retardant fabrics which TenCate purchases

from Lenzing AG in Austria are an interesting example of this. These

viscose fibres are produced from wood pulp sourced from sustainably

managed forests in the mountains of Austria. Sustainable water

management is part of the CSR approach adopted by this supplier to

TenCate. These natural fibres are used among other things as the basis

for heat- and fire-resistant fabrics developed and produced by TenCate

Protective Fabrics.

There was a further increase in the attention devoted by TenCate to

CSR last year. There were various reasons for this, such as growing

CSR awareness in the organisation and increasing customer demand

for sustainable products. The following factors also play a role: cost

savings (such as energy reduction), possible raw material scarcity,

image and reputational benefits. On the basis of the cost leadership


> In 2011, TenCate recorded an

impressive economic performance

and profitability while respecting

social values and operating within

an ecological framework. Many

TenCate naterials, modules and

systems inherently contribute to

sustainability. <

Royal Ten Cate74


INITIATIVES FOR 2012

◾ CSR Performance Ladder. Market groups in the Netherlands will be

the first to implement the CSR Performance Ladder in 2012. Market

groups in other countries are being encouraged to take part in the

near future;

◾ CSR indicators. On the basis of the guidelines of the Global

Reporting Initiative, CSR-related key performance indicators are

being determined at corporate level. These KPIs will show even

more clearly where TenCate stands worldwide on individual

aspects of CSR. These are environmental aspects of the production

process, safety and welfare, human resources, value chain

management and social involvement;

◾ CSR measurements. By applying the principles and indicators from

the GRI framework, it is possible to provide clearer and more

extensive measurements and reports on TenCate’s economic,

sustainability and social performances;

◾ CSR reporting. Depending on the results of CSR measurements,

it will be decided at the beginning of 2013 what quantitative CSR

data can be included in the forthcoming annual report. At the same

time efforts will be made to increase the existing qualitative CSR

reporting. The new TenCate website will become an important

information resource for stakeholders.

◾ Process ecotool. With the aid of the process ecotool, the fullest

and clearest picture possible will be obtained in 2012 of the CO2

footprint caused by the processes within the TenCate market

groups (‘inside the gate’) in the Netherlands (and as far as possible

worldwide). The first interim report will be produced in mid-2012.

An assessment of this worldwide trial measurement will be made

at the beginning of 2013;

◾ Product ecotool. With the aid of specific product ecotools, the CO2

footprint of a growing number of TenCate products (‘outside the

gate) will be determined in 2012.

TenCate was involved in numerous national and international

committees during the year, including the European Technology

Platform, ETP, Euratex, Modint and IAFI. In Europe, TenCate has been

working with a number of universities in the Netherlands and abroad

over the past decades, including Delft University of Technology, the

University of Twente and Saxion University of Applied Sciences in

Enschede.

TenCate – a Partner of the Cruyff Foundation

On Wednesday 14 September 2011, Carole Thate (Director of

the Cruyff Foundation) and Loek de Vries (President and CEO

of TenCate) signed an extension to the partnership agreement

between TenCate and the Cruyff Foundation, under the watchful

eye of Johan Cruijff himself, the legendary ‘number 14’ of Dutch

football. On that day the Cruyff Foundation had been in existence

for 14 years. One of the foundation’s initiatives is the creation of

Cruyff Courts. TenCate has been involved as a partner of the Cruyff

Foundation since the outset. The TenCate XP Blade™ fibre was

specially developed for such intensively used playing areas. This

fibre distinguishes itself from other synthetic turf fibres in terms of

its durability, wear resistance and appearance.


STATEMENT BY THE EXECUTIVE BOARD

As the Executive Board of Royal Ten Cate, we have prepared the

annual report and the financial statements for 2011.

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.


Executive Board

L. de Vries, President and CEO

B.J.H. Cornelese, CFO

> TenCate played an active part in

around 20 innovation projects in

Europe centred on the themes of

sustainability and safety. <

Royal Ten Cate Annual Report 201176

Consolidated profit and loss account 78

Consolidated statement of comprehensive income 79

Consolidated balance sheet 80

Consolidated cash flow statement 82

Consolidated statement of changes in group equity 84

Notes to the consolidated financial statements

1 General Information on Royal Ten Cate 85

2 General principles for fi nancial reporting 85

3 Principles for the preparation of the fi nancial

statements 85

4 Consolidation principles 86

5 Foreign currencies 87

6 Derivatives 87

7 Hedge accounting 87

8 Segment reporting 88

9 Revenues 88

10 Government subsidies 88

11 Raw materials and manufacturing supplies 88

12 Lease payments 88

13 Financial income and expenses 88

14 Profi t tax 89

15 Earnings per share 89

16 New standards and interpretations

not yet applied 89

17 Principles for the preparation of the cash fl ow

statement 90

18 Intangible assets 90

19 Tangible fi xed assets 91

20 Inventories 91

21 Trade debtors and other receivables 92

22 Cash and cash equivalents 92

23 Impairment 92

Financial statements 2011Royal Ten Cate

24 Share capital 93

25 Pension liabilities 93

26 Share-based payments 94

27 Provisions 94

28 Long-term debts 94

29 Trade creditors 95

30 Determination of fair value 95

Notes to the statement of comprehensive income

31 Operating segments 96

32 Acquisitions and sale of participating interests 98

33 Personnel costs 99

34 Other operating costs 99

35 Net fi nancial expenses 100

36 Profi t tax 101

Royal Ten Cate Annual Report 2011 77

Notes to the consolidated balance sheet

37 Intangible assets 102

38 Tangible fi xed assets 104

39 Investments in associated companies and

fi nancial fi xed assets 105

40 Deferred profi t tax assets and liabilities 107

41 Inventories 108

42 Trade debtors 109

43 Other receivables 109

44 Cash and cash equivalents 109

45 Total shareholders’ equity 109

46 Earnings per share 111

47 Long-term debts 112

48 Pension liabilities 113

49 Provisions 115

Other information

50 Financial instruments 116

51 Liabilities not shown in the balance sheet 122

52 Investment liabilities 122

53 Contingent liabilities 122

54 Post balance sheet events 122

55 Related parties 123

56 Estimates and judgments made by

the management 124

Company financial statements

57 Company profi t and loss account 125

58 Company balance sheet (before appropriation

of the result) 125

Notes to the company financial statements

59 Financial fi xed assets 126

60 Equity 126

61 Called and paid-up capital 126

62 Ordinary shares 127

63 Share premium reserve 127

64 Legal reserves 127

65 Other reserves 127

66 Option plan 128

67 Provisions 131

68 Long-term liabilities 131

69 Short-term liabilities 131

70 Auditor’s fees 132

71 Liabilities not shown in the balance sheet 132

Other information 133

Ten-year summary 135


For the financial year ending on 31 December, in millions of euros note 2011 2010

Revenues 31 1,138.8 984.5

Changes in inventories of finished products and work in progress – 17.1 – 17.8

Raw materials and manufacturing supplies 586.3 501.1

Work contracted out and other external expenses 99.5 73.9

Personnel costs 33 205.2 188.0

Depreciation 38 35.0 34.5

Amortisation 37 12.9 10.4

Other operating costs 34 127.4 119.8

Total operating expenses 1,049.2 909.9

OPERATING RESULT 89.6 74.6

Financial income 35 0.2 0.6

Financial expenses 35 – 11.5 – 10.6

NET FINANCIAL EXPENSES – 11.3 – 10.0

RESULT BEFORE PROFIT TAX 78.3 64.6

Profit tax 36 – 18.7 – 17.9

NET RESULT 59.6 46.7

Net result from associated companies – 1.3 – 1.3

RESULT AFTER PROFIT TAX 58.3 45.4

Result attributable to:

Shareholders of the company 58.7 46.0

Non-controlling interest – 0.4 – 0.6

Result after profit tax 58.3 45.4

Weighted average number of shares (x 1,000) 46 25,452 25,026

Weighted average number of shares after dilution (x 1,000) 46 25,736 25,216

Earnings per share (in euros) 46 2.31 1.84

Diluted earnings per share (in euros) 46 2.28 1.82

Consolidated profit and loss account

The notes in sections 1 to 71 form an integral part of these financial statements.


For the financial year ending on 31 December, in millions of euros Note 2011 2010

RESULT AFTER PROFIT TAX 58.3 45.4

Other comprehensive income (after profit tax)

Foreign currency translation differences for foreign activities 45 3.8 19.0

Effective part of changes in the hedging of reserves (hedge accounting) 45 – 0.9 – 3.4

Actuarial gains and losses on pensions * – 14.1 – 3.8

OTHER COMPREHENSIVE INCOME AFTER PROFIT TAX – 11.2 11.8

TOTAL COMPREHENSIVE INCOME AFTER PROFIT TAX 47.1 57.2

Attributable to:

Shareholders of the company 47.4 57.4

Non-controlling interest – 0.3 – 0.2

TOTAL RESULT PROFIT TAX 47.1 57.2

* Adjusted for change of accounting policy for pensions; see note 2.


Consolidated statement of comprehensive income


in millions of euros note 31 December 2011 31 December 2010

NON-CURRENT ASSETS

Goodwill 37 212.0 192.6

Other intangible assets 37 61.0 50.2

Tangible fixed assets 38 221.9 214.2

Investments in associated companies 39 4.6 5.2

Financial fixed assets 39 11.1 10.1

Deferred profit tax assets * 40 21.1 18.9

Total non-current assets 531.7 491.2

CURRENT ASSETS

Inventories 41 267.9 216.9

Receivables

Trade debtors 42 152.4 151.0

Profit tax receivables 6.5 0.7

Other receivables 43 22.2 18.1

Cash and cash equivalents 44 22.7 11.6

Total current assets 471.7 398.3

TOTAL ASSETS 1,003.4 889.5


Consolidated balance sheet


in millions of euros note 31 December 2011 31 December 2010

GROUP EQUITY 45

Share capital 64.8 63.8

Share premium reserve 44.8 45.8

Translation reserve 7.0 3.3

Hedging reserve – 4.5 – 3.6

Reserve for own shares – 15.6 – 10.4

Other reserves and undistributed result * 369.3 339.6

Total shareholders’ equity 465.8 438.5

Non-controlling interest 3.7 3.8

Group equity 469.5 442.3

NON-CURRENT LIABILITIES

Long-term debts 47 275.1 195.2

Pension liabilities * 48 22.6 10.5

Provisions 49 15.0 10.2

Deferred profit tax liabilities 40 8.0 4.2

Total non-current liabilities 320.7 220.1

CURRENT LIABILITIES

Cash loans, overdraft 44 35.4 55.7

Repayment of long-term debt 47 0.9 1.4

Trade creditors and other payables 169.1 159.3

Provisions 49 5.0 7.1

Profit tax liabilities 2.8 3.6

Total current liabilities 213.2 227.1

Total liabilities 533.9 447.2

TOTAL GROUP EQUITY AND LIABILITIES 1,003.4 889.5




For the financial year ending on 31 December, in millions of euros note 2011 2010

CASH FLOW FROM OPERATING ACTIVITIES

Result after profit tax 58.3 45.4

Adjustments for:

Depreciation 38 35.0 34.5

Amortisation 37 12.9 10.4

Net financing expenses before exchange rate differences 35 11.1 10.4

Profit tax 36 18.7 17.9

Net result from associated companies 1.3 1.3

Result from sale of tangible fixed assets 34 – 0.9 – 0.1

Costs of option scheme 1.9 1.4

Other – 2.1 –

Change in provisions and pension liabilities – 7.8 – 6.6

CASH FLOW FROM OPERATING ACTIVITIES

BEFORE CHANGE IN WORKING CAPITAL 128.4 114.6

CHANGES IN WORKING CAPITAL:

Inventories – 37.9 – 43.3

Receivables 9.9 – 36.0

Short-term liabilities – 18.4 19.8

– 46.4 – 59.5

CASH FLOW FROM OPERATING ACTIVITIES 82.0 55.1

Interest paid – 11.2 – 8.3

Profit tax paid – 21.5 – 17.7

NET CASH FLOW FROM OPERATING ACTIVITIES 49.3 29.1

Consolidated cash flow statement


in millions of euros note 2011 2010

CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from sale of tangible fixed assets 34 3.4 0.9

Interest received – 0.1

Acquisition of subsidiaries less cash acquired 32 – 29.3 – 24.0

Investments in intangible assets 37 – 4.4 – 5.1

Investments in tangible fixed assets 38 – 21.3 – 16.2

Investments in associated companies 39 – 5.5 – 0.2

Investments in other participating interests 39 – – 0.5

Increase in long-term receivables – 0.7 – 2.1

NET CASH FLOW FROM INVESTING ACTIVITIES – 57.8 – 47.1

NET CASH FLOW FROM OPERATING AND INVESTING ACTIVITIES – 8.5 – 18.0

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from exercise of share options 2.4 1.3

Paid for repurchase of own shares – 7.6 –

Repayment of long-term debts – 15.0 – 221.6

Drawing of long-term debts 69.5 203.8

Dividend payment to shareholders – 6.3 – 5.9

NET CASH FLOW FROM FINANCING ACTIVITIES 43.0 – 22.4

CHANGE IN CASH AND CASH EQUIVALENTS 34.5 – 40.4

Cash and cash equivalents on 1 January 44 – 44.1 – 1.9

Exchange rate and translation differences in cash and cash equivalents – 3.1 – 1.8

CASH AND CASH EQUIVALENTS ON 31 DECEMBER 44 – 12.7 – 44.1



In millions of euros

Share

capital

Share

premium

Translation

reserve

Hedging

reserve

Reserve

for own

shares

Other

reserves and

undistributed

result Total

Non-

controlling

interests

Group

equity

BALANCE AS AT 1 JANUARY 2010 62.7 46.9 – 15.3 – 0.2 – 11.7 298.4 380.8 4.1 384.9

Effect of change of system 10.4 10.4 10.4

Adjusted balance as at 1 January 2010 62.7 46.9 – 15.3 – 0.2 – 11.7 308.8 391.2 4.1 395.3

TOTAL COMPREHENSIVE INCOME

Result after profit tax 46.0 46.0 – 0.6 45.4

Actuarial gains and losses on defined benefit pension schemes – 3.8 – 3.8 – 3.8

Currency translation differences 18.6 18.6 0.4 19.0

Hedging result after profit tax – 3.4 – 3.4 – 3.4

Total – – 18.6 – 3.4 – 42.2 57.4 – 0.2 57.2

TRANSACTIONS WITH SHAREHOLDERS

Dividend to shareholders 1.1 – 1.1 – 5.9 – 5.9 – 5.9

Share-based payment transactions 1.4 1.4 1.4

Issue of repurchased shares 1.3 1.3 1.3

Acquisition of non-controlling interest not

leading to a change in control – 6.9 – 6.9 – 0.1 – 7.0

Total 1.1 – 1.1 – – 1.3 – 11.4 – 10.1 – 0.1 – 10.2

BALANCE AS AT 31 DECEMBER 2010 /

1 JANUARY 2011 63.8 45.8 3.3 – 3.6 – 10.4 339.6 438.5 3.8 442.3

TOTAL COMPREHENSIVE INCOME

Result after profit tax 58.7 58.7 – 0.4 58.3

Actuarial gains and losses on defined benefit pension schemes – 14.1 – 14.1 – 14.1

Currency translation differences 3.7 3.7 0.1 3.8

Hedging result after profit tax – 0.9 – 0.9 – 0.9

Total – – 3.7 – 0.9 – 44.6 47.4 – 0.3 47.1

TRANSACTIONS WITH SHAREHOLDERS

Dividend to shareholders 1.0 – 1.0 – 6.3 – 6.3 – 6.3

Share-based payment transactions 1.9 1.9 1.9

Repurchase of own shares – 7.6 – 7.6 – 7.6

Issue of repurchased shares 2.4 2.4 2.4

Acquisition of non-controlling interest – – 1.0 – 1.0

Acquisition of non-controlling interest not

leading to a change in control – 10.5 – 10.5 1.2 – 9.3

Total 1.0 – 1.0 – – – 5.2 – 14.9 – 20.1 0.2 – 19.9

BALANCE AS AT 31 DECEMBER 2011 64.8 44.8 7.0 – 4.5 – 15.6 369.3 465.8 3.7 469.5


Consolidated statement of changes in group equity


Notes to the consolidated financial statements

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 2011 annual report and

accounts were discussed at the meeting of the Supervisory Board on 28

February 2012. They were released for publication on 29 February 2012.

They will be presented to the general meeting of shareholders for

adoption on 19 April 2012. The parent company financial statements

form part of Royal Ten Cate’s 2011 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 prepared in the

Dutch language. This document is a version translated into English. In

the event of any differences between the English and the Dutch text, the

latter shall prevail.

2 GENERAL PRINCIPLES FOR FINANCIAL REPORTING

The consolidated financial statements have been prepared in accordance

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.

Change of accounting policy for pensions

With effect from 2011, actuarial gains and losses arising in the

calculation of the Group’s pension commitment are credited or charged

directly to Group equity (OCI method). Previously, these gains and losses

were not recognised if they amounted to less than 10% of the higher of

the present value of the gross commitment in respect of defined benefit

pension rights and the fair value of the fund investments (Corridor

method). This change has been made to better reflect changes in the

pension provisions in the financial statements and anticipates the

change in future IFRS standards. The change has been adopted

retrospectively from 1 January 2010.

The accounting policy change of system has no material effect on the

result in 2010 and 2011 and no effect on earnings per share. The effect

of the change of system on the balance sheet at the end of 2010 and

2011 is shown in the table at the foot of the page.

1 January 2010 31 December 2010 31 December 2011

Before

change

of system

After

change

of system

Before

change

of system

Before

change

of system

After

change

of system

Before

change

of system

Group equity 384.9 395.3 435.7 442.3 477.0 469.5

Pension liabilities 21.0 8.4 18.5 10.5 13.4 22.6

Deferred profit tax receivables 19.8 17.6 20.3 18.9 19.4 21.1

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 historical cost,

except for the following material balance sheet items, which are carried

at fair value: derivatives and financial instruments held for trading

purposes. 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 56). The actual results may differ from

such estimates. The estimates and underlying assumptions are

continuously 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 consistently

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 comparability.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS>

4 CONSOLIDATION PRINCIPLES

4.1 Business combinations

Business combinations are accounted for by the acquisition method as at

the acquisition date, i.e. 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.

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 therefore

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-controlling 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.

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

eliminated in the preparation of the consolidated financial statements.

Unrealised gains on Group transactions with proportionally consolidated

joint ventures and investments stated in accordance with the equity

method are 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

exchange rate applying on the transaction date. Currency translation

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 rates of the main currencies

against the euro are as follows:

Closing rate Average rate

2011 2010 2011 2010

US dollar 1.30 1.34 1.39 1.33

British pound 0.84 0.86 0.87 0.86

Danish krone 7.43 7.45 7.45 7.45

UAE dirham 4.77 4.93 5.11 4.88

Malaysian ringgit 4.11 4.10 4.25 4.29

Singapore dollar 1.68 1.71 1.75 1.81

Chinese yuan 8.16 8.82 8.99 9.00

Australian dollar 1.27 1.31 1.35 1.45

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 treated as trading instruments. 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 derivative

on the reporting date, taking into account the current exchange rates and

the current interest rate.

7 HEDGE ACCOUNTING

Where specific conditions are met, hedge accounting can be applied.

Under these specific conditions, there must be a demonstrable

relationship between the variability of the future cash flows or balance

sheet positions (of the hedged item) and the hedging instrument, the

relationship must be documented and the hedge must be sufficiently

effective. The Group applies cash flow hedge accounting to interest rate

derivatives. In this situation, the effective portion of the changes in the

fair value of the derivative financial instrument is stated directly in other

comprehensive income of the hedging reserve in equity. The ineffective

portion of the changes in the fair value of the derivative financial

instrument 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 or is stated in the

cost price on the first-time inclusion of the non-financial asset or

liability. If no hedge accounting is applied, profits or losses on the

derivative financial instrument are stated directly in 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 revenues

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 Operating

Decision Maker (CODM) committees, which take the important operating

decisions in the segment.

The operating results of an operating segment are assessed periodically

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 management

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

recognised 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 are systematically stated

as cost of sales in the profit and loss account during the useful life of the

asset.

11 RAW MATERIALS AND MANUFACTURING SUPPLIES

The consumption of raw materials and manufacturing supplies is

calculated on the basis of historical cost.

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 F INANCIAL 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, results 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 as

they accrue 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 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 entity’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 corrections 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 provision for deferred profit tax liabilities is based on

the method by which the carrying value of the assets and liabilities is

expected to be realised 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 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 earnings per ordinary share are calculated 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

interpretations were not yet in force in 2011 and have therefore not been

applied to these consolidated financial statements:

■ IAS 19 revised – Employee Benefits, which becomes compulsory in

2013. With effect from 2011 actuarial gains and losses have already

been credited or charged directly to group equity. Annual pension

expenses are also expected to increase as a result of this standard.

This standard is expected to be applied from 2013.

■ IFRS 11 – Joint arrangements, which becomes compulsory in 2013

and may give rise to changes in the treatment of joint ventures and

similar agreements. The effect of this standard on the Group is

currently being examined. The impact is expected to be 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 a cash basis. 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 activities, and interest paid is stated in

the cash flow from operating activities. 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.

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 impairments.

The carrying value of the goodwill on investments in associated

companies is included in the carrying value of the respective investment.

An impairment loss on an associated company is allocated 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

relationships, trademark rights, patents, software and similar rights.

These intangible assets are valued at cost less accumulated amortisation

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.

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 depreciation

(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 preparation

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 other operating income/

expenses 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 minimum

lease payments at the inception of the lease, less accumulated

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 location 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 production 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 debtors 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 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 indications of

impairment.

If there are such indications, an estimate is made of the realisable value

of the asset. In the case of goodwill and intangible assets which are not

yet available for use, the realisable value is estimated at each reporting

date. This also applies if there is an indication of impairment.

An impairment is recognised when the carrying value of an asset or the

cash generating unit thereof is higher than the estimated realisable

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

individually 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

‘operating segment ceiling test’), cash generating units to which

goodwill has been allocated for the testing of goodwill with regard to

impairment are combined in such a way that the level at which such

impairment is tested reflects the lowest level at which goodwill is

monitored 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 generating 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. Repurchased shares

are classified in the reserve for own shares and presented as a deduction

from total equity.

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 proportion 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 credited 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 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 provisions 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

environmental pollution is recognised when the pollution occurs.

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 effective 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 determining 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 business

combination is the estimated amount for which a 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 applicable.

■ Intangible assets

The fair value of patents and trademarks acquired as part of a business

combination is determined on the basis of the discounted estimated

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 combination

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 determined for

information purposes or if the trade debtors and other receivables are

acquired by means of a business combination.


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 separately 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 professional

wear, outdoor fabrics, composites for personal and vehicle protection

and composites for industrial applications and technological applications

in aerospace.

■ Geosynthetics & Grass

Manufacture and sale of fabrics, non-wovens and grids for civil

engineering, environmental projects, recreational and industrial

applications and manufacture and sale of synthetic turf fibres and

backing for a range of applications.

■ Other activities

Manufacture and sale of rubber and foam rollers for the office equipment

industry and related products, development, production and sale of inkjet

technology and related components for industrial applications, 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 operating

result of the sector, as stated in the internal management report to the

CODM committees.


31.1 Analysis by operating segment

Advanced Textiles

& Composites

Geosynthetics

& Grass Other activities

Elimination between

the segments Consolidated

In millions of euros 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

EXTERNAL REVENUES 538.4 448.4 525.9 469.3 74.5 66.8 – – 1,138.8 984.5

Revenue from transactions

between segments 1.2 0.8 0.7 0.4 5.6 14.2 7.5 15.4 – –

Depreciation and amortisation – 15.3 – 15.2 – 28.9 – 26.2 – 3.7 – 3.5 – – – 47.9 – 44.9

OPERATING RESULT 64.7 38.6 20.8 27.7 4.1 8.3 – – 89.6 74.6

Financial income 1 0.2 0.2

Financial expenses 1 –11.3 – 10.6

Profit tax – 18.7 – 17.9

Net result from associated

companies – – – 1.3 – 1.3 – – – – – 1.3 – 1.3

ASSETS AND LIABILITIES

Assets of segments 387.2 352.5 484.7 432.1 76.8 68.0 – – 948.7 852.6

Investments in associated

companies – – 4.6 5.2 – – – – 4.6 5.2

Investments in other

participating interests – 0.5 – – – – – – – 0.5

Unallocated assets * – – – – – – – – 50.1 31.2

Total assets 387.2 353.0 489.3 437.3 76.8 68.0 – – 1,003.4 889.5

Liabilities of segment *,2 82.1 77.7 80.1 72.8 49.6 36.6 – – 211.8 187.1

Unallocated liabilities – – – – – – – – 322.1 260.1

Total liabilities 82.1 77.7 80.1 72.8 49.6 36.6 – – 533.9 447.2

Investment expenditure 8.3 4.5 12.2 9.9 5.2 6.9 25.7 21.3

* Adjusted for change of accounting policy of pensions; see note 2.

1 Excluding € 0.2 million consolidated translation differences (2010: € 0.4 million).

2 Excluding intercompany loans.


NOTES TO THE PROFIT AND LOSS ACCOUNT>

31.2 Analysis by geographic location

Revenues by origin Non-current assets by origin

2011 2010 2011 2010

Netherlands 232.9 178.0 65.9 57.6

Rest of Europe 197.9 170.8 103.5 100.8

North America 544.7 484.8 154.2 141.4

Asia / Australia /

Middle East 163.3 150.9 175.9 162.4

TOTAL 1,138.8 984.5 499.5 462.2 * Non-current assets exclude derivative financial instruments and deferred profit tax

receivables.

32 ACQUISITIONS AND SALE OF PARTICIPATING INTERESTS

32.1 Acquisitions

On 25 February 2011, the Group acquired control of the GreenFields

group (‘GreenFields’). The Group now holds 90% of the shares in

GreenFields, representing an increase of 58% compared to 31 December

2010. The other shareholder in GreenFields has the right to acquire an

additional 5% interest if certain return requirements are met.

GreenFields develops and markets synthetic turf systems mainly for

sports applications, both directly and through partners. Due to its well-

developed international network and high-quality support, GreenFields

has secured a relevant share of the FIFA related market as a FIFA

Preferred Producer. For reporting purposes, this acquisition has been

included in the Geosynthetics & Grass sector.

On 18 March 2011, the Group completed the acquisition of the assets of

Emas Kiara Industries Berhad (Rawang, Malaysia). Emas Kiara Industries

is a full-line producer and supplier of a wide range of geosynthetic

products and solutions, focusing primarily on the Asian markets. The

addition of Emas Kiara’s production facilities, employees and product

brands will strengthen the position of TenCate Geosynthetics in this fast-

growing region of the world. These activities are concentrated on the

fast-growing environmental, infrastructure and water management

applications in the region. For reporting purposes, this acquisition has

been included in the Geosynthetics & Grass sector.

*

On 10 May 2011, TenCate acquired the assets of Difco Performance

Fabrics Inc in Montreal (Quebec, Canada). The assets acquired by

TenCate include all brand names of Difco and other intellectual property

rights relating to Difco’s portfolio of protective fabrics products.

Inventories and trade receivables have also been acquired. This

transaction will expand TenCate’s commercial presence and production

activities in the protective fabrics markets in the United States and

Canada. For reporting purposes, this acquisition has been included in the

Advanced Textiles & Composites sector.

On 7 June 2011, the Group reached an agreement with the receiver to

acquire the tangible and intangible assets of the insolvent company

Osiris Inkjet Systems B.V. of Hengelo.

On 16 November 2011, TenCate acquired a controlling interest in ABDS

ApS. As at 31 December 2011, TenCate held 51% of the shares of ABDS

(end of 2010: 10%). In December 2011, agreement was reached with the

other shareholders on the acquisition of all the shares; this transaction

was completed at the beginning of 2012. ABDS ApS was fully

consolidated at the end of 2011. ABDS ApS is engaged in the

development and market preparation of the TenCate ABDS® active blast

countermeasure system intended to protect army vehicles against

roadside bombs. The system is scheduled to be deployed in the course of

2012-2013. This acquisition has been included in the Advanced Textiles

& Composites sector.

These acquisitions are being accounted for in accordance with the

acquisition method (IFRS 3). The acquisition amounts have been

allocated to the identified acquired assets and liabilities, based on the

fair value. The purchase price allocations for the aforementioned

acquisitions have not yet been completed.


32.2 Effects of the acquisition of subsidiaries

The effect of the above acquisitions on the assets and liabilities was

as follows:

Identifiable acquired assets and liabilities

Tangible fixed assets 18.9

Intangible fixed assets 18.2

Financial fixed assets 0.1

Inventories 4.0

Trade debtors and other receivables 11.4

Cash and cash equivalents 3.0

Other reserves 9.2

Non-controlling interest 1.0

Deferred profit tax liabilities – 2.6

Other provisions – 5.0

Interest-bearing loans – 14.3

Banks, current accounts – 1.5

Trade creditors and other payables – 12.9

Net identifiable assets and liabilities 29.5

Goodwill on acquisition 14.0

Purchase price 43.5

Value of existing interest – 2.6

Outstanding amount payable – 10.1

Acquired cash less short-term bank debts – 1.5

Cash outflow 29.3

The acquisitions have been combined in the above table because none of

the acquired undertakings is material in its own right.

In 2011, an amount of € 9.2 million was charged to other reserves in

connection with transactions with non-controlling shareholders to

acquire the remaining interest in ABDS ApS and the completion of a

purchase price allocation. In 2010, an amount of € 6.9 million was

charged to other reserves in connection with transactions with non-

controlling shareholders to acquire the remaining interests in AML and

TigerTurf.

The expected synergy effects for the Group result in a total of € 9.1

million of goodwill paid for the acquisitions. The goodwill has also risen

by € 4.9 million in connection with the finalisation of a purchase price

allocation. The goodwill is not deductible for tax purposes.

The effect of the acquisitions on 2011 revenues and results after tax

amounts to € 51.5 million and – € 1.3 million respectively. The revenues

and net results would not differ materially if the acquisition had taken

place on 1 January 2011. The Group incurred acquisition-related costs of

€ 1.4 million in respect of external legal advice, due diligence and stamp

duty.

33 PERSONNEL COSTS 2011 2010

Wages and salaries 149.7 139.2

Social charges 29.8 26.8

Costs of option scheme 1.9 1.4

Pension costs 4.3 5.2

Temporary personnel 14.7 10.6

Other personnel costs 4.8 4.8

205.2 188.0

The pension costs comprise € 0.7 million (2010: € 1.7 million) in respect

of defined benefit pension schemes (see note 48.3) and € 3.6 million

(2010: € 3.5 million) in respect of defined contribution schemes. The

average number of employees (permanent and temporary) in the Group in

2011 was 4,797 (2010: 4,376).

34 OTHER OPERATING COSTS

34.1 Government subsidies

The Group’s profit and loss account includes € 2.4 million of government

subsidies in 2011 (2010: € 2.8 million). The subsidies relate particularly

to subsidised research and development projects.


NOTES TO THE PROFIT AND LOSS ACCOUNT>

34.2 Research and development

The costs associated with research and development amounted to

€ 12.2 million in 2011 (2010: € 9.2 million), of which € 7.6 million

(2010: € 6.7 million) has been stated in personnel costs and € 4.6 million

(2010: € 2.5 million) in Other operating costs.

34.3 Book profit on sale of tangible fixed assets

The Group sold land and buildings in 2011 on which a total book profit of

€ 0,9 million was recorded (2010: € 0.1 million).

2011 2010

Land and buildings 0.7 –

Other 0.2 0.1

Result from sale 0.9 0.1

Book value of sold assets 2.5 0.8

Proceeds from sale 3.4 0.9

34.4 Result of acquisition of controlling interests

The Other operating costs include a result of € 2.1 million for the

acquisition of controlling interests in GreenFields and ABDS ApS. This

result is connected to the fair value adjustments to the interests and the

settlement of existing relationships.

34.5 Operating lease expenses

The Group included € 8.5 million of expenses relating to operating leases

in other operating costs in 2011 (2010: € 8.4 million).

35 NET FINANCIAL EXPENSES 2011 2010

Interest income 0.2 0.2

Foreign currency translation differences – 0.4

Financial income 0.2 0.6

Interest expenses – 8.0 – 6.4

Realised change in the fair value of derivatives for which hedge accounting is used – 2.8 – 2.8

Ineffective portion of the change in the fair value of derivatives for which hedge accounting is used – 0.2 – 0.1

Result of derivatives for which no hedge accounting is used – 0.3 – 1.3

Foreign currency translation differences – 0.2 –

Financial expenses and impairment – 11.5 – 10.6

Net financial expenses – 11.3 – 10.0


36 PROFIT TAX 2011 2010

Profit tax payable

Current financial year – 16.9 – 21.3

Recognition of previously unrecognised tax losses 0.2 0.7

Overprovision in previous years 0.7 0.1

– 16.0 – 20.5

Deferred tax profit

Origination and reversal of temporary differences – 4.2 2.5

Recognition of previously unrecognised tax losses 0.1 1.5

Change in unrecognised temporary differences 1.1 – 1.2

Change in tax rates 0.3 – 0.2

– 2.7 2.6

Total profit tax charge in profit and loss account – 18.7 – 17.9

Reconciliation with applicable profit tax rate 2011 2010

Result before profit tax 78.3 64.6

Tax on profit at average weighted local profit tax rate 29.8% 23.3 27.6% 17.8

Non-tax-deductible costs 1.4% 1.1 0.9% 0.6

Tax-exempt income – 6.9% – 5.4 – 4.5% – 2.9

Prior year adjustments – 0.9% – 0.7 – –

Change in tax rates – 0.4% – 0.3 0.3% 0.2

Losses in reporting year for which no tax losses have been recognised 2.4% 1.9 5.1% 3.3

Change in prior year tax losses for which no deferred tax is recognised – 0.4% – 0.3 – 3.4% – 2.2

Change in unrecognised deferred tax assets in respect of valuation differences – 1.4% – 1.1 1.9% 1.2

Other items 0.3% 0.2 – 0.2% – 0.1

Tax charge in the profit and loss account 23.9% 18.7 27.7% 17.9

The rise in the weighted average tax rate from 27.6% to 29.8% results particularly from changes in the various countries’ shares in the result before

profit tax. In comparison with 2010, a larger share of the result was generated in countries with a relatively higher tax rate in 2011.


Notes to the consolidated balance sheet

in million of euros

37 INTANGIBLE ASSETS Goodwill Development

Other

intangible

assets Total

Cost

Balance as at 1 January 2010 163.9 5.1 62.4 231.4

Acquisitions 21.9 – 11.3 33.2

Investments – 4.9 0.2 5.1

Exchange rate differences 9.2 – 3.5 12.7

Balance as at 31 December 2010 195.0 10.0 77.4 282.4

Acquisitions 14.0 – 18.2 32.2

Investments – 3.0 1.4 4.4

Exchange rate differences 5.5 0.3 2.5 8.3


Amortisation


Amortisation – 0.9 9.5 10.4

Exchange rate differences 0.4 – 1.2 1.6


Amortisation – 1.3 11.6 12.9

Exchange rate differences 0.1 0.1 1.6 1.8


Book value





37.1 Amortisation/impairment

The Group recognised no impairment losses on intangible assets in 2011

(2010: € 0).

37.2. Impairment testing for cash generating units which include

goodwill

The following units include goodwill items:

2011 2010

TenCate Grass 120.0 104.9

TenCate Advanced Armour EU 36.0 35.8

TenCate Advanced Composites USA 20.2 19.5

TenCate Advanced Armour USA 22.6 21.8

Others 13.2 10.6

Total 212.0 192.6

The Group tested the existing goodwill for impairment in 2011. 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 forthcoming

four years, based on historical empirical data, market expectations and

strategic plans. No growth rate is applied for the period beyond four

years. The value in use in 2011 has been determined in the same way as

in 2010. On the basis of this test, no goodwill impairment has been

recognised. The changes in 2011 related to acquisitions, the finalisation

of the purchase price allocation for TigerTurf 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 in the government bond market, adjusted for the risk premium for

both the higher risk of securities investments and TenCate’s systemic

risk. The pre-tax discount rates used range from 8.6% to 11.2%

(2010: 7.7% to 9.9%). The discount rates used have risen compared to

2010, particularly due to an increase in the risk-free interest rate.

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

The gross margin is the margin based on cost prices (in accordance with

the inventory valuation principles) as a percentage of expected revenues.

2015 is the final year of the cash flow forecast. The 2015 cash flow

forecast is also used to calculate the perpetual cash flow.

Sensitivity to changes in assumptions

We have examined the sensitivity of the principal assumptions (discount

rate, revenue growth and gross margin) and concluded that an increase

of the discount date or a decrease of the gross margin as a percentage

of revenues by more than a 90-basis-point the book value exceeds the

recoverable amount in the Grass unit. With regard to the other cash-

generating units, it was concluded that on a reasonable basis an

adjustment to one of these assumptions would not cause the carrying

value to exceed the realisable value.

37.3 Amortisation

The amortisation of € 12.9 million (2010: € 10.4 million) has been stated

in ‘Amortisation’ in the profit and loss account.


> NOTES TO THE CONSOLIDATED BALANCE SHEET

38 TANGIBLE FIXED ASSETS

Land and

operating

buildings

Plant

and

equipment

Other

operating

assets

Operating

assets under

construction Total

Acquisition value

Balance as at 1 January 2010 126.6 389.2 42.6 8.0 566.4

Acquisitions 0.8 4.1 1.5 0.3 6.7

Investments 6.2 10.7 2.0 – 2.7 16.2

Divestments – 1.1 – 2.1 – 0.2 – – 3.4

Exchange rate differences 5.3 13.8 1.4 1.1 21.6

Balance as at 31 December 2010 137.8 415.7 47.3 6.7 607.5

Acquisitions 6.9 10.7 1.3 – 18.9

Investments 1.3 22.1 2.8 – 4.9 21.3

Divestments – 5.4 – 2.1 – 0.8 – – 8.3

Exchange rate differences 2.6 7.2 0.6 0.3 10.7


Depreciation

Balance as at 1 January 2010 56.9 260.8 34.0 – 351.7

Depreciation 5.7 25.7 3.1 – 34.5

Divestments – 0.5 – 2.0 – 0.1 – – 2.6

Exchange rate differences 1.8 7.2 0.7 – 9.7

Balance as at 31 December 2010 63.9 291.7 37.7 – 393.3

Depreciation 5.7 25.8 3.5 – 35.0

Divestments – 3.2 – 1.9 – 0.7 – – 5.8

Exchange rate differences 0.8 4.5 0.4 – 5.7

Balance as at 31 December 2011 67.2 320.1 40.9 – 428.2

Book value





38.1 Impairment and reversal of impairment

The Group recognised no impairment of tangible fixed assets in 2011

(2010: € 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 2011 was € 4.8 million (31 December 2010: € 5.4 million).

The leased buildings, plant and equipment serve as collateral for the

financial lease liabilities (see note 47).

38.3 Collateral

As at 31 December 2011, plant and equipment belonging to Ten Cate –

Union Protective Fabrics Asia Ltd worth € 7.0 million (2010: € 7.1 million)

was pledged as collateral for a credit facility of € 9.8 million

(2010: € 10.1 million). € 6.8 million of this credit facility was drawn as at

the end of 2011 (2010: € 6.3 million).

38.4 Depreciation charge

The depreciation charge of € 35.0 million (2010: € 34.5 million) has been

stated in depreciation in the profit and loss account.

39 INVESTMENTS IN ASSOCIATED COMPANIES AND FINAN-

CIAL FIXED ASSETS

39.1 Associated companies

On 25 May 2011, TenCate acquired a 30% interest in the associated

company Hellas Construction Inc in Austin (Texas, United States of

America). Hellas focuses on the construction of synthetic turf pitches

and athletics tracks in North America. From December 2011, TenCate

also has the option to raise its interest by 7% per year over the next

three years at an acquisition price dependent on the EBITDA generated

by Hellas.

The investment in associated companies in 2010 relates to an increase

in the interest in Landscape Solutions B.V. from 20% to 25% due to a

restructuring of Landscape Solutions B.V.

The associated companies item relates to the 30% interest in the shares

of Hellas and the 25% interest in the shares of Landscape Solutions B.V.

at the end of 2011.

The share in the net income of associated companies amounted to

– € 1.3 million (2010: – € 1.3 million).

As a result of the increase in the additional interest in TigerTurf, net

income of € 0.1 million has been stated in the result from associated

companies in 2010, relating to the realisation of currency translation

differences and fair value adjustments to the interest and the operating

income to 28 April 2010 inclusive.

The Group received no dividend payments from associated companies in

2011 (2010: € 0). The associated companies have a carrying value of

€ 4.6 million as at 31 December 2011 (31 December 2010: € 5.2 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:

2011 2010

Non-current assets 26.8 10.9

Current assets 26.8 24.4

Total assets 53.6 35.3

Current liabilities 18.7 21.3

Non-current liabilities 7.7 12.9

Total liabilities 26.4 34.2

Revenues 64.8 78.6

Costs 69.0 88.5

Profit/(loss) – 4.2 – 9.9

The changes in the associated companies item were as follows:

2011 2010

Balance as at 1 January 5.2 18.9

Investments 5.5 0.2

Divestment as a result of acquiring control – 5.2 – 12.6

Result – 1.3 – 1.3

Currency translation differences 0.4 –

Balance as at 31 December 4.6 5.2

39.2 Financial fixed assets

The financial fixed assets can be analysed as follows:

2011 2010

Other participating interests – 0.5

Other long-term receivables and investments 11.1 9.6


Other participating interests

The other participating interest concerns Performance Fabrics and Fibers

LLC (PFF), Andrews (South Carolina) 16%.

On 24 September 2010 the Group acquired a 10% interest in ABDS ApS.

In 2011 a controlling interest was acquired in ABDS (see note 32.1).

2011 2010

Balance as at 1 January 0.5 –

Investments – 0.5

Divestments due to acquisition of control – 0.5 –

Balance as at 31 December – 0.5

Other long-term receivables and investments

The main long-term receivables and investments concern invested

pension assets at a number of American subsidiaries of € 8.2 million

(2010: € 7.2 million) and an advance payment in connection with long-

term lease rights in China and Malaysia amounting to € 2.2 million

(2010: € 2.1 million).

Koninklijke Ten Cate nv Jaarverslag 2011 107

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:

Receivables Liabilities Net

2011 2010 2011 2010 2011 2010

Intangible assets – – – 9.1 – 10.1 – 9.1 – 10.1

Tangible fixed assets – – – 13.1 – 5.1 – 13.1 – 5.1

Financial fixed assets 0.1 – – – 0.1 –

Inventories 5.6 5.3 – – 5.6 5.3

Derivatives 1.9 1.3 – – 1.9 1.3

Other receivables 0.7 1.0 – – 0.7 1.0

Pension provisions 2.2 4.2 – – 2.2 4.2

Other provisions 9.6 4.1 – – 9.6 4.1

Tax value of loss carry-forwards 12.9 13.7 – – 12.9 13.7

Other items 2.3 0.3 – – 2.3 0.3

Deferred profit tax asset/liability 35.3 29.9 – 22.2 – 15.2 13.1 14.7

Set-off assets and liabilities – 14.2 – 11.0 14.2 11.0 – –

Net deferred profit tax asset/liability 21.1 18.9 – 8.0 – 4.2 13.1 14.7

The changes in the temporary differences during the financial year can

be analysed as follows:

As at

1 January 2010

Change

of system

Adjusted

balance as at

1 January 2010

Recognised in

profit and loss

account

Recognised

in other com-

prehensive

income

Acquired

through

business

combinations

As at

31 December

2010

Intangible assets – 5.1 – 5.1 – 1.5 – 3.5 – 10.1

Tangible fixed assets – 2.6 – 2.6 – 2.2 – 0.3 – 5.1

Financial fixed assets 0.3 0.3 – 0.3 –

Inventories 3.8 3.8 1.3 0.2 5.3

Derivatives – – 0.2 1.1 1.3

Other receivables 0.3 0.3 0.7 1.0

Pension provisions 6.4 – 2.2 4.2 – 0.8 0.8 4.2

Other provisions 2.8 2.8 0.5 0.8 4.1

Tax value of loss carry-forwards 10.3 10.3 3.4 13.7

Other items – 0.7 – 0.7 1.0 0.3

Deferred profit tax asset/liability 15.5 – 2.2 13.3 2.3 1.9 – 2.8 14.7



As at

1 January 2011

Recognised

in profit and

loss accounts

Recognised in

other com-

prehensive

income

Acquired

through

business

combinations

As at

31 December

2011

Intangible assets – 10.1 3.6 – – 2.6 – 9.1

Tangible fixed assets – 5.1 – 8.0 – – – 13.1

Financial fixed assets – 0.1 – – 0.1

Inventories 5.3 0.3 – – 5.6

Derivatives 1.3 0.3 0.3 – 1.9

Other receivables 1.0 – 0.3 – – 0.7

Pension provisions 4.2 – 4.0 2.0 – 2.2

Other provisions 4.1 5.5 – – 9.6

Tax value of loss carry-forwards 13.7 – 2.2 1.4 – 12.9

Other items 0.3 2.0 – – 2.3

Deferred profit tax asset/liability 14.7 – 2.7 3.7 – 2.6 13.1

€ 0.3 million of the amount stated in the profit and loss account was

included in the Result from associated companies in 2010.

The tax effect of the other comprehensive income in Group equity is

€ 3.7 million (2010: € 1.9 million) and relates to the actuarial results in

respect of pensions and the hedging reserve.

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 2011 there were € 66.2 million (2010: € 50.6 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 2011

was € 16.1 million (2010: € 11.6 million).

The expiry periods of the unused losses available for set-off are shown

in the table below:

2011 2010

Within 2 to 5 years 11.4 12.3

After 5 years 24.0 18.8

Unspecified period 30.8 19.5

Unused losses available for set-off 66.2 50.6

41 INVENTORIES 2011 2010

Raw materials and manufacturing supplies 90.3 67.5

Semi-manufactures 59.8 51.6

Finished products 117.8 97.8

Inventories 267.9 216.9

In 2011 the raw materials and manufacturing supplies and changes in

finished products and work in progress included as costs of sales

amounted to € 569.2 million (2010: € 483.3 million). In 2011 the reduction

in the inventory value included as an expense amounted to a net

recoverable amount of € 4.2 million (2010: € 3.3 million). The reversal of

the reduction in the inventory value in 2011 amounted to € 3.2 million

(2010: € 2.7 million). The inventory value included as an expense and the

reversal have been stated under raw materials and manufacturing

supplies.


42 TRADE DEBTORS 2011 2010

Due from third parties 150.0 146.9

Due from associated companies 1.3 3.9

Due from joint ventures 1.1 0.2

Trade debtors 152.4 151.0

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 work contracted

out and other external expenses.

As at 31 December 2011 trade debtors with a value of € 6.5 million

(2010: € 14.5 million) were encumbered as security for credit facilities

amounting to € 6.5 million (2010: € 20.2 million). € 6.5 million of this

credit facility was drawn as at the end of 2011 (2010: € 16.4 million).

43 OTHER RECEIVABLES 2011 2010

Receivable in respect of other taxes 3.3 2.8

Derivatives at fair value 1.0 1.0

Projects in progress 3.5 –

Other receivables and prepayments 14.4 14.3

Other receivables 22.2 18.1

Amounts receivable in respect of other taxes relate mainly to reclaimable

VAT. As at 31 December 2011 the prepayments amounted to € 7.7 million

(2010: € 8.6 million).

As at 31 December 2011 the total costs and recognised profit associated

with projects in progress, less recognised losses, amounted to € 12.4

million. Trade debtors included € 0.2 million of amounts deducted in

respect of projects in progress commissioned by third parties.

44 CASH AND CASH EQUIVALENTS 2011 2010

Bank balances 22.6 11.0

Cash balances 0.1 0.6

Cash and cash equivalents 22.7 11.6

Cash loans, overdrafts – 35.4 – 55.7

Cash in the cash flow statement – 12.7 – 44.1

All amounts were freely available at the end of 2011 and 2010.

45 TOTAL SHAREHOLDERS’ EQUITY

A statement of changes in equity can be found on page 84.

45.1 Ordinary shares 2011 2010

x 1,000

In issue and fully paid up as at 1 January 25,502 25,068

Issued stock dividend 427 434

In issue and fully paid up as

at 31 December 25,929 25,502

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 2011 amounts to 25,928,914 ordinary shares with a par

value of € 2.50 (as at 31 December 2010: 25,501,907 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 20 October 2012. 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 2011 2010

x 1,000

In issue and fully paid up as at 1 January 433 521

Repurchase of own shares 309 –

Exercise of options – 110 – 84

Directors’ remuneration – 10 –

Issued in connection with share savings plan – 2 – 4

In issue and fully paid up as at

31 December 620 433

Ordinary shares are repurchased to prevent earnings per share being

diluted by the granting of options and the issue of shares as part of

the share savings plan. 308,820 own shares were repurchased in 2011

(2010: 0).

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 20 October 2012. 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 certificates 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 the financial statements of 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. € 1.3 million of

the currency translation differences was credited to the result in 2010 in

respect of the step acquisition of TigerTurf and the closure of TenCate

Permess Xishan.

45.5 Hedging reserve

The hedging reserve consists of the unrealised effective portion of the

accumulated change in the fair value of the derivatives 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

distribution from the reserves.

The balance of the hedging reserve after tax on 31 December 2011 was

– € 4.5 million (2010: – € 3.6 million).

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 2011 at € 0.95 per € 2.50 par

value share (2010: € 0.75), payable optionally in cash or as stock

dividend.

2011 2010

€ 0.95 per ordinary share (2010: € 0.75) 24.0 18.8

45.7 Objective with regard to equity and financing

The objective with regard to equity and financing, as in 2010, is to

guarantee the continuity of the Company by means of attractive returns

for shareholders and by guaranteeing benefits for other stakeholders.

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:

31 December

2011

31 December

2010

Long-term interest-bearing liabilities 275.1 195.2

Short-term portion of long-term liabilities 0.9 1.4

Cash loans and overdrafts 35.4 55.7

Total debt 311.4 252.3

Less: cash and cash equivalents 22.7 11.6

Net debt 288.7 240.7

EBITDA * 136.0 115.2

Net debt/EBITDA 2.12 2.09

* EBITDA adjusted to take account of the effect of acquired and divested businesses, non-

recurring items and non-cash fair value adjustments: – € 1.5 million (2010: – € 4.3 million).

46 EARNINGS PER SHARE

46.1 Ordinary earnings per share

The calculation of the ordinary earnings per share as at 31 December

2011 is based on the net income of € 58.7 million (2010: € 46.0 million)

attributable to holders of ordinary shares and a weighted average

number of outstanding ordinary shares during the 2011 financial year of

25,452,488 (2010: 25,025,965), calculated as follows:

2011 2010

Net profit for the financial year

attributable to holders of ordinary

shares 58.7 46.0

Weighted average number of ordinary shares 2011 2010

x 1,000

Ordinary shares in issue on 1 January 25,502 25,068

Effect of ordinary shares held (including

repurchased shares) – 433 – 521

Effect of shares held in connection with

stock dividend 427 434

Effect of repurchase of own shares – 133 –

Effect of shares issued as a result of

exercised option rights 79 42

Effect of remuneration of director 9 –

Effect of shares issued as a result of

share savings plan 1 3

Weighted average number of ordinary

shares as at 31 December 25,452 25,026

46.2 Diluted earnings per share

The calculation of the diluted earnings per share as at 31 December

2011 is based on the net income of € 58.7 million (2010: € 46.0 million)

attributable to holders of ordinary shares and the weighted average

number of outstanding ordinary shares during the 2011 financial year of

25,735,802 (2010: 25,216,255), calculated as follows:

2011 2010

Net profit for the financial year

attributable to holders of ordinary

shares 58.7 46.0

Weighted average number of ordinary shares 2011 2010

x 1,000

Weighted number of ordinary shares

as at 31 December 25,452 25,026

Effect of outstanding option rights 284 190

Weighted average number of

ordinary shares (after dilution) as at

31 December 25,736 25,216



47 LONG-TERM DEBTS 2011 2010

Syndicated loan 267.4 188.8

Financial lease liabilities 3.2 4.3

Other loans 5.4 3.5

Total 276.0 196.6

Less: repayment of loans in forthcoming years – 0.9 – 1.4

Long-term debts 275.1 195.2

2011

Total

2012

< 1 year

2013

1 – 2 years

2014/2016

2 – 5 years

2017

and after

> 5 years

2010

Total

Syndicated loan

EUR – variable interest 47.8 – – 47.8 – 47.2

USD – variable interest 219.6 – – 219.6 – 141.6

Financial lease liabilities

EUR fixed interest 8.0% 0.3 0.2 0.1 – – 0.5

EUR variable interest 2.5 – 2.5 – – 3.0

THB fixed interest 3.45% – 3.65% 0.1 – 0.1 – – 0.1

GBP variable interest 0.1 – – 0.1 – 0.2

NZD fixed interest 11% – 14% – – – – – 0.1

AUD variable interest 0.2 – 0.2 – – 0.4

Other loans

USD variable interest 3.1 – – – 3.1 3.0

EUR interest-free 1.3 0.3 0.3 0.7 – –

EUR fixed interest 2.00% – 2.50% – – – – – 0.1

EUR fixed interest 1.50% – – – – – 0.4

EUR variable interest + 3.75% 0.9 0.3 0.3 0.3 – –

EUR variable interest 0.1 0.1 – – – –

Long-term debts 276.0 0.9 3.5 268.5 3.1 196.6

The syndicated loan of € 450.0 million (2010: € 450.0 million), which is

available for drawing in various currencies, was concluded with a

syndicate of 11 banks. € 267.4 million of this facility was drawn as at

31 December 2011 (2010: € 188.8 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 non-cash fair value

adjustments in the interest. 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 2011 the interest margin was 0.95% (2010: 1.20%).


The aforementioned syndicated loan is subject to a number of covenants,

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 € 2.5 million (2010: € 3.0 million) financial lease liability relates to a

building in Hungary.

The USD loan with variable interest concerns a $ 4.0 million loan (2010:

$4.0 million) from the Development Authority of Pike County Industrial

Revenue Bonds. Repayment is due in full in 2018.

Of the total of long-term loans, 99% had variable interest in 2011 (2010:

99%). The risk associated with this variability has been hedged by means

of interest rate swaps. Details of the hedging of the interest rate risk

borne by the Group can be found in note 50.3.

48 PENSION LIABILITIES 2011 2010

Defined benefit schemes

Present value of obligations 332.5 295.8

Fair value of plan assets 321.0 316.7

Present value of net liabilities 11.5 – 20.9

Effect of asset ceiling – 20.9

Total defined benefit schemes 11.5 –

Other liabilities in respect of pensions 11.1 10.5

Pension liabilities 22.6 10.5

48.1 Changes in the valuation of the liability

as at the reporting date 2011 2010


Service costs 2.8 3.2

Members’ contributions 2.7 2.9

Interest costs 15.5 15.8

Benefits paid – 16.7 – 16.2

Actuarial differences 32.4 – 5.6


48.2 Investments 2011 2010


Expected return 17.6 17.1

Employer’s contribution 6.7 6.3

Members’ contribution 2.7 2.9

Actuarial differences – 6.0 8.1

Benefits paid – 16.7 – 16.2


Analysis of plan assets as at 31 December 2011 2010

Bonds 173.3 150.1

Shares 101.3 119.0

Hedge funds 13.9 25.0

Real estate 25.2 15.6

Cash 1.9 3.1

Other items 5.4 3.9

Pension fund investments 321.0 316.7

48.3 Charge stated in the profit and loss

account 2011 2010

Service costs – 2.8 – 3.2

Asset ceiling test in accordance

with IAS 19.58 – 0.2

Interest on liabilities – 15.5 – 15.8

Expected return on fund investments 17.6 17.1

Pension expenses/income – 0.7 – 1.7



The pension charges have been stated in the 2011 profit and loss

account in an amount of € 0.7 million (2010: € 1.7 million) under

personnel costs. The actual return on fund investments amounts to

€ 11.6 million (2010: € 25.2 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.

The main features of the scheme are:

■ pension accrual based on average salary;

■ accrual rate of 2.1%;

■ 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%.

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 contribution

schemes and a number of specific old-age provisions. The principal

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:

2011 2010

Discount rate as at 31 December 4.3% 5.3%

Expected return on plan assets as at 31

December 4.9% 5.7%

Future wage increases 2.5% 2.5%

Future pension increases 0.8% 1.0%

Assumptions with regard to future mortality figures are based on

published statistical data and mortality probabilities. The mortality table

used is the 2010–2060 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 4.9% (2010: 5.7%). This percentage is based on

the sum of the returns in separate investment categories. A 0.1% change

in the discount rate will result in no change in the annual charges

(2010: 0). A 0.1% change in the discount rate will cause the liability to

rise or fall by € 5.0 million (2010: € 4.0 million).


Historical information 2011 2010 2009 2008 2007

Present value of defined benefit obligations 332.5 295.8 295.7 275.1 298.6

Fair value of plan assets 321.0 316.7 298.5 272.4 304.7

Present value of net liabilities 11.5 – 20.9 – 2.8 2.7 – 6.1

Experience adjustments arising on obligations of the scheme 5.3 9.4 4.4 0.8 2.7

Experience adjustments arising on plan assets – 6.0 8.1 11.8 – 42.3 – 10.3

The Group expects to contribute € 6.5 million of employer’s contributions

to defined benefit pension schemes in 2012 (2011: € 6.5 million).

The pension expense in respect of 2012 is estimated at € 3.1 million

(2011: € 0.7 million).

49 PROVISIONSGuarantee/

Claims

Reorgani-

sation

provision

Other

personnel

liabilities Environment Other

Total

2011

Balance as at 1 January 2011 8.0 0.8 5.9 2.0 0.6 17.3

Change due to acquisition 3.9 0.3 – – 0.8 5.0

Provisions made during the year 3.1 0.8 0.7 – 0.1 4.7

Released to result – 0.5 – 0.1 – 0.1 – – 0.1 – 0.8

Expenditure in current year – 3.8 – 1.4 – 0.7 – – 0.5 – 6.4

Exchange rate differences 0.2 – – – – 0.2

Balance as at 31 December 2011 10.9 0.4 5.8 2.0 0.9 20.0

Of which short-term

As at 31 December 2010 5.5 0.8 0.5 – 0.3 7.1

As at 31 December 2011 4.0 0.4 0.3 – 0.3 5.0

The amount released to the result has been included in the profit and

loss account as follows:

2011 2010

Personnel costs 0.1 –

Other operating costs 0.7 1.4

Total 0.8 1.4

The guarantee provision relates to goods and services supplied and the

provision for claims relates to claims for damages and possible legal

costs.

The provision for reorganisations relates to a number of smaller

reorganisations which were nearly all completed during the financial

year.

The provision for other personnel liabilities has been formed in respect

of long-term leave 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

decontamination (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 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. € 180.4 million of the syndicated loan of € 450.0

million (2010: € 450.0 million) was undrawn as at 31 December 2011

(2010: € 258.4 million).

The term of the financial liabilities as at 31 December 2011 was as

follows:

Book value

Expected

cash flow

(including

interest)

2012

< 1 year

2013

1-2 years

2014/16

2-5 years

2017

and after

> 5 years

Financial liabilities (excluding derivatives)

Long-term debts 276.0 – 299.6 – 5.7 – 8.1 – 282.7 – 3.1

Cash loans, overdrafts 35.4 – 35.4 – 35.4 – – –

Trade and other creditors 161.8 – 161.8 – 161.8 – – –

Derivatives

Interest rate swaps 6.9 – 7.1 – 3.4 – 2.3 – 1.3 – 0.1

Forward, FX swap contracts 0.4 – 0.4 – 0.4 – – –

Total 480.5 – 504.3 – 206.7 – 10.4 – 284.0 – 3.2


The term of the financial liabilities as at 31 December 2010 was as

follows:

Book value

Expected

cash flow

(including

interest)

2012

< 1 year

2013

1-2 years

2014/16

2-5 years

2017

and after

> 5 years

Financial liabilities (excluding derivatives)

Long-term debts 196.6 – 231.4 – 5.7 – 7.1 – 215.6 – 3.0

Cash loans, overdrafts 55.7 – 55.7 – 55.7 – – –

Trade and other creditors 152.4 – 152.4 – 152.4 – – –

Derivatives

Interest rate swaps 5.5 – 6.1 – 2.5 – 2.9 – 0.4 – 0.3

Forward, FX swap contracts 1.4 – 1.4 – 1.4 – – –

Total 411.6 – 447.0 – 217.7 – 10.0 – 216.0 – 3.3

50.2 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. 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 guaranteed

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 are still present. The Group does not demand collateral

for trade and other receivables.

Impairments are stated as direct sale costs in the profit and loss account

as work contracted out and other external costs.

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 can be defined as follows:

2011 2010

Trade debtors 152.4 151.0

Other (long-term) receivables 28.8 26.7


Forward foreign exchange contracts

and options 0.8 0.8

Interest rate swaps 0.2 0.2

Total 204.9 190.3


OTHER INFORMATION>

The age of the trade debtors and the related impairments can be

analysed as follows:

2011 2010

Gross Provision Gross Provision

Not due - 60 days overdue 148.6 1.5 147.0 2.1

60 - 120 days overdue 3.8 0.7 3.8 0.5

120 - 360 days overdue 3.3 1.2 2.9 0.7

Over 360 days overdue 3.7 3.6 2.9 2.3

Balance as at 31 December 159.4 7.0 156.6 5.6

The movements in the provision for trade debtors are as follows:

2011 2010


Acquisitions 1.2 1.3

Formed as charge against result 1.2 2.3

Released to result – 0.6 – 0.6

Written off during the year – 0.4 – 1.1

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 Interest rate risk

99% of the interest-bearing debts have a variable interest rate (2010:

99%). 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 can be used for this

purpose. The impact of changes in the value of these financial

instruments 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 2011 the net balances of outstanding interest rate

instruments were as follows:

■ interest rate swap to 31-12-2013: € 50 million, received variable,

payment 2.48% fixed

■ interest rate swap to 31-12-2012: $ 70 million, received variable,

payment 2.215% fixed


payment 1.687% fixed


payment 2.03% fixed


payment 4.47% fixed

■ interest rate swap to 31-12-2014: € 30 million, received variable,

payment 2.805% fixed (commen-

cing 31-12-2013)


payment 2.598% fixed (commen-

cing 31-12-2012)


payment 1.195%

The Group values the interest rate swaps and interest rate caps at fair

value (see section 50.7). Of the fair value of the interest rate swaps as at

31 December 2011, € 0.2 million (2010: € 0.2 million) has been included

in other receivables and € 6.9 million (2010: € 5.5 million) under trade

creditors and other payables.


The table below shows the periods in which the cash flows that are the

subject of cash flow hedge accounting are expected to take place and in

which they will affect the profit or loss.

2011 Book value

Expected

cash flow < 1 year 1-2 years 2-5 years

Interest rate swaps

Assets – – – – –

Liabilities 5.9 – 5.9 – 2.9 – 2.1 – 0.9

2010 Book value

Expected

cash flow < 1 year 1-2 years 2-5 years

Interest rate swaps

Assets – – – – –

Liabilities 4.5 – 4.6 – 2.2 – 2.4 –

Interest rate caps

Assets – – – – –

Liabilities – – – – –

50.4 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 denominated

in foreign currencies, to the extent that these may have a material 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

to hedge intercompany loans in foreign currencies to subsidiaries which

report in the respective currency.

Competition risk

The Group hedges the estimated currency risk of the expected purchases

and sales in the subsequent six months as far as possible. Currency

options are used for this purpose.

Translation risk

The translation risk on the result of subsidiaries outside the eurozone is

offset internally as far as possible against euro-denominated revenues

of subsidiaries outside the eurozone.


OTHER INFORMATION>

Exposure

The exposure to currency risks in respect of trading transactions of Group

entities on the reporting date is as follows:

2011 2010

USD GBP EUR USD GBP EUR

Transaction risk 4.0 1.4 7.9 – 6.2 2.1 3.3

Competition risk – 0.6 1.3 15.0 3.3 1.3 17.2

Risk before hedging 3.4 2.7 22.9 – 2.9 3.4 20.5

Forward contracts – 4.2 – 1.5 – 7.7 5.2 – 1.6 – 5.0

Option contracts – 1.5 – 1.1 – 0.5 1.6 – 0.9 –

Risk after hedging – 2.3 0.1 14.7 3.9 0.9 15.5

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 in USD by European subsidiaries.

The GBP risk relates mainly to trade receivables and expected revenues

of European subsidiaries. The EUR risk relates mainly to trade

receivables and expected revenues in euros of Ten Cate Thiolon Middle

East. The expected revenues form a natural hedge for the translation risk

on the result of subsidiaries which report in dollars or dollar-linked

currencies.

The Group carries options and foreign exchange forward contracts at fair

value. The fair value of options is determined on the basis of statements

supplied by banks. The fair value of foreign exchange forward contracts

with an underlying value below € 5.0 million is determined on the basis

of statements supplied by the bank; in the case of higher amounts the

Group’s own calculation model is used. The fair value of the options to

hedge future transactions as at 31 December 2011 amounted to

€ 0.1 million (2010: € 0.1 million). This amount has been included in other

receivables. The net fair value of the forward foreign exchange contracts

was € 0.3 million (2010: – € 0.7 million). € 0.7 million of this amount has

been included in other receivables and € 0.4 million in other debts

(2010: € 0.7 million).

50.5 Assets and liabilities stated in the balance sheet

Changes in the fair value of foreign exchange forward contracts and

options which are used to hedge, in an economic sense, monetary assets

and liabilities denominated in foreign currencies are stated in the profit

and loss account. Both changes in the fair value of forward contracts and

options and the exchange rate differences relating to monetary balance

sheet items are included as exchange rate differences in net financial

expenses.


Fair value versus carrying value

The fair value and carrying value of financial assets and liabilities stated

in the balance sheet are as follows:

2011 2010

Book value Fair value Book value Fair value

Assets valued at fair value

Interest rate derivatives to which hedge accounting is applied – – – –

Long-term receivables and investments * 8.2 8.2 7.2 7.2

Other interest rate derivatives 0.2 0.2 0.2 0.2

Currency derivatives 0.8 0.8 0.8 0.8

9.2 9.2 8.2 8.2

Assets valued at amortised cost

Trade debtors and other receivables * 173.0 173.0 170.5 170.5

Cash and cash equivalents 22.7 22.7 11.6 11.6

195.7 195.7 182.1 182.1

Liabilities valued at fair value

Interest rate swaps to which hedge accounting is applied – 5.9 – 5.9 – 4.5 – 4.5

Other interest rate derivatives – 1.0 – 1.0 – 1.0 – 1.0

Currency derivatives – 0.4 – 0.4 – 0.4 – 0.4

– 7.3 – 7.3 – 6.9 – 6.9

Liabilities valued at amortised cost

Syndicated loan – 267.4 – 267.4 – 188.8 – 188.8

Financial lease liabilities – 3.2 – 3.2 – 4.3 – 4.3

Other loans – 5.4 – 5.4 – 3.5 – 3.5

Trade creditors and other payables – 161.8 – 161.8 – 152.4 – 152.4

Cash loans and overdrafts – 35.4 – 35.4 – 55.7 – 55.7

– 473.2 – 473.2 – 404.7 – 404.7

* Adjusted for comparison purposes.

The fair value of the syndicated loan is the same as the carrying value,

because it was refinanced in December 2010 and therefore has a margin

consistent with market conditions.

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 per cent on the pre-tax

result in 2011 is estimated at – € 1.1 million (2010: – € 0.9 million).

The effect of a general interest rate rise of one per cent on equity is

estimated at € 5.0 million before tax (2010: € 4.1 million) due to the use

of hedge accounting.


OTHER INFORMATION>

A general rise of one percentage point in the value of the euro against

other currencies would have reduced the result after tax by an expected

€ 0.3 million (2010: € 0.4 million). A general rise of one per cent in the

value of the euro against other currencies would have reduced the equity

by approximately € 2.4 million (2010: € 2.8 million.

50.7 Estimate of fair value

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 is calculated by discounting the

difference between the contractual and the current forward price,

multiplied by the principal amount of the contract, for the residual term

at the market interest rate. The fair value of interest rate swaps is

calculated by discounting the difference between the contractual and the

current interest, multiplied 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. Bank statements are used

to determine the fair value of interest rate caps. These statements are

inspected to ensure that they are reasonable by means of techniques

based on discounted cash flows based on the conditions and terms of

the contract and using market interest rates for a comparable instrument

as at the reporting date. The fair value of long-term debts is calculated

on the basis of the discounted 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 financial

instruments valued on the basis of fair value fall into category 2 as in

2010: no quoted market price in an active market, with the fair value

being determined indirectly.

51 L IABILITIES NOT SHOWN IN THE BALANCE SHEET

Operating lease as lessee

Payments due under non-cancellable operating leases are as follows:

2011 2010

Less than 1 year 7.8 7.2

Between 1 and 5 years 20.2 15.0

More than 5 years 18.9 14.0

46.9 36.2

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.

52 INVESTMENT LIABILITIES

In 2011 the Group entered into contractual liabilities for the purchase of

tangible fixed assets. The amount of the liabilities as at 31 December

2011, after deduction of advance payments already made during the

financial year, is € 3.1 million (2010: € 4.9 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 originally

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 proceedings

and expects no material financial damage. In August 2011, TenCate filed

a counterclaim against FieldTurf relating among other things to damage

to the good name of TenCate and TenCate products, and to breach of

contract in the period prior to TenCate’s termination of the supply

contract.

54 POST BALANCE SHEET EVENTS

There are no events subsequent to the reporting date requiring

commentary.

55 RELATED PARTIES

55.1 Identity of related parties

Related parties concern relationships between the Group and its

subsidiaries, associated companies and other participating interests,

joint ventures, the TenCate pension fund and the members of the

Executive and Supervisory Boards.

55.2 Directors’ remuneration

The remuneration of the members of the Executive Board was as follows:

L. de Vries B. Cornelese J. Lock

in thousands of euros 2011 2010 2009 2011 2011 2010 2009

Periodic remuneration 659 613 576 270 120 300 225

Results-related pay for the previous year 307 230 279 – 117 68 –

Pension costs 698 189 986 63 44 85 32

Early Retirement (Pre-pension and Life Course Savings) Act 140 58 110 – – – –

Jubilee payment – 51 – – – – –

Shares 260 _ _ – – – –

Option costs 375 338 369 – 77 169 85

2,439 1,479 2,320 333 358 622 342

1) From 1 April 2011.

2) 2009: From 1 April 2009.

2011: To 21 April 2011.

1 2

The fixed periodic remuneration paid to Mr De Vries was increased by

10% with effect from 1 April 2011. Mr De Vries has a final-salary

pension plan. The pension costs for Mr De Vries included the sum of

€ 482,000 in respect of a back-service liability in 2011 (2010: 0, 2009:

€ 801,000).

Mr De Vries’ results-related pay amounts to a maximum of 50% of the

fixed annual salary. In 2011, Mr De Vries received a variable salary

component in respect of 2010 amounting to 50% of the fixed annual

salary.

Mr Lock was awarded a € 20,000 increment in his periodic remuneration

for the period from January to April 2011 inclusive. Mr Lock’s variable

salary component is a maximum of 40% of the fixed salary. In 2011,

Mr Lock received 39% as variable remuneration in respect of 2010.

Mr Cornelese’s variable salary component is a maximum of 40% of the

fixed salary.

As at 31 December 2011 Mr De Vries held 203,160 shares in the

Company (31 December 2010: 176,901 shares) and 360,000 options

(31 December 2010: 350,000 options). In 2011 Mr De Vries was granted

60,000 options at an exercise price of € 27.38 and 10,000 shares with a

value of € 26.00 per share. Mr Cornelese held 718 shares of the

Company and no options as at 31 December 2011. In 2011 Mr Lock was

granted 40,000 options at an exercise price of € 27.38. Mr Lock held

4,453 shares in the Company and 94,000 options at the end of 2010.

Mr De Vries is participating in the Group’s share option plan. The costs of


OTHER INFORMATION>

the options are charged to the result in three years. Further information

can be found in note 66.

The remuneration of the members of the Supervisory Board was as

follows:

2011 2010

in euros

J.C.M. Hovers – Chairman 1, 2 50,000 39,972

P.P.A.I. Deiters – Vice-Chairman 2 35,000 30,492

F.A. van Vught 2 * 35,000 25,008

E. ten Cate 1 * 35,000 25,008

R. van Gelder 1,3 32,500 22,869

187,500 143,3491 Member of the Financial Committee.

2 Member of the combined Remuneration, Selection and Appointments Committee.

3 As of 8 April 2010.

* Chairman.

Mr Deiters received additional remuneration amounting to US$ 15,000 in

2010 and 2011 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 2011.

55.3 Transactions with associated companies, other participating

interests and joint ventures

During the 2011 financial year, associated companies, other (non-

consolidated) participating interests and joint ventures purchased goods

from the Group amounting to € 14.8 million (2010: € 19.2 million). As

at 31 December 2011 the outstanding trade receivables due to the

Group from associated companies amounted to € 1.5 million (2010:

€ 3.9 million) and from joint ventures € 2.2 million (2010: € 0.2 million).

The Group has € 0.1 million of outstanding trade accounts payable to

associated companies and joint ventures (2010: € 0.1 million).

Transactions with associated companies, other participating interests

and joint ventures take place on an objective, business basis.

55.4 Subsidiaries

A list of (significant) subsidiaries and participating interests can be

found inside the back cover of this report.

56 ESTIMATES AND JUDGMENTS MADE

BY THE MANAGEMENT

The Executive Board has conducted discussions with the Financial

Committee on the critical principles for the financial reporting and

estimates, as well as the application of such principles and estimates.

Information on assumptions and uncertainties 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 in the case of loss-making companies,

an examination has been carried out to determine whether the

realisable value of any cash generating unit was lower than the

carrying value. This was not the case in 2011 and 2010. Future

detrimental changes in the estimate as a result of changed

assumptions may lead to the realisable value falling below the

carrying value. See note 37.2.

◾ Estimates with regard to the use of tax losses are included in note 40.


Company financial statements

57 COMPANY PROFIT AND LOSS ACCOUNT

In millions of euros note 2011 2010

Result from participating interests after profit tax 59 57.4 46.6

Other results after profit tax 1.3 – 0.6

NET INCOME 58.7 46.0

58 COMPANY BALANCE SHEET (BEFORE APPROPRIATION OF THE RESULT)

In millions of euros 31 december

2011

31 december

2010

FINANCIAL FIXED ASSETS 59

Participating interests in subsidiaries 680.0 672.6

Loans to subsidiaries 104.6 83.4

Deferred profit tax assets 14.4 13.5

Total fixed assets 799.0 769.5

CURRENT ASSETS

Due from subsidiaries 1.1 1.5

Other receivables 1.9 0.4


Total current assets 4.2 5.0

TOTAL ASSETS 803.2 774.5

EQUITY

Share capital 61 64.8 63.8

Share premium reserve 63 44.8 45.8

Legal reserve 64 5.8 2.5

Other reserves 65 291.7 273.8

Undistributed result 58.7 46.0

465.8 431.9

PROVISIONS 67 1.1 1.6

LONG-TERM LIABILITIES 68 273.1 192.4

SHORT-TERM LIABILITIES 69 63.2 148.6

TOTAL EQUITY AND LIABILITIES 803.2 774.5


Notes to the company financial statements

General

Accounting policies

The parent company financial statements of Royal Ten Cate form an

inseparable whole with the 2011 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 financial 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 statements 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.

59 FINANCIAL FIXED ASSETSInterest in

subsidiaries

Loans to

subsidiaries

Deferred

profit tax

receivables Total

Balance as at 1 January 672.6 83.4 13.5 769.5

Effect of change of accounting policy 6.6 – – 6.6

Adjusted balance as at 1 January 679.2 83.4 13.5 776.1

Investments/capital contributions – 12.7 – – – 12.7

Actuarial results of pensions – 15.1 – – – 15.1

Translation differences 3.7 1.2 – 4.9

Loans granted – 88.2 – 88.2

Repayment of loans – – 68.2 – – 68.2

Results of participating interests 57.4 – – 57.4

Dividend of participating interests – 32.5 – – – 32.5

Change in deferred tax – – 0.9 0.9

Balance as at 31 December 680.0 104.6 14.4 799.0

Royal Ten Cate is at the head of the Group and has capital interests in

the subsidiaries stated on the cover.

60 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 84.

61 CALLED AND PAID-UP CAPITAL 2011 2010

Authorised share capital 200.0 200.0

Of which not issued 135.2 136.2

64.8 63.8


62 ORDINARY SHARES 2011 2010

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 2011 2010

Ordinary shares 25,501,907 and 25,067,580 63.8 62.7

Issued stock dividend 427,007 and 434,327 1.0 1.1


63 SHARE PREMIUM RESERVE 2011 2010


Issued stock dividend – 1.0 – 1.1


The share premium reserve is available for distribution to shareholders.

64 LEGAL RESERVES

64.1 Translation differences 2011 2010

Balance as at 1 January 3.3 – 15.3

Change 3.7 18.6


64.2 Hedging reserve 2011 2010

Balance as at 1 January – 3.6 – 0.2

Change – 0.9 – 3.4

Balance as at 31 December – 4.5 – 3.6

64.3 Other legal reserves 2011 2010


Transfer from Other reserves 0.5 – 1.6


The Other legal reserves concern capitalised development costs,

undistributable reserves of subsidiaries and the hedging reserve.

Balance of legal reserve

as at 31 December 5.8 2.5

65 OTHER RESERVES 2011 2010

Balance as at 1 January 258.4

Effect of change of accounting policy 10.4

Adjusted balance as at 1 January 280.4 268.8

Actuarial gains and losses on pensions – 14.1 – 3.8

Transfer to Other legal reserves – 0.5 1.6

Added from 2010 / 2009 result 39.7 18.0

Share and option plans 1.9 1.4

Repurchase of own shares – 7.6 –

Issue of repurchased shares for share savings

plan/option plan 2.4 1.3

Acquisition of non-controlling interest – 10.5 – 6.9



NOTES TO THE COMPANY FINANCIAL STATEMENTS >

66 OPTION PLAN

Royal Ten Cate operates a stock option plan for the management,

established by the Supervisory Board. The maximum possible account

has been taken of the recommendations of VNO-NCW and the Dutch

Investors’ Association (VEB). Those eligible for options are members of

the Executive Board, the corporate and group directors and a number of

managers. 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, 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. The

total term of the options is six to ten years. The exercise period is three

to five years. 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 early termination of employment.

In principle options amounting to approximately 1.5% of the total number

of shares outstanding will be granted in any one year. The exercise of

options is subject to the restrictions laid down in the Securities

Transactions Supervision Act.

66.1 Granting of options in 2012

On 28 February 2012 it was intended to grant 309,500 conditional

options at the average market price during the five stock exchange

trading days following publication of the annual results on 29 February

2012. The distribution is as follows:

28-02-2012 01-03-2011

Members of the Executive Board 100,000 100,000

Management and management support staff 209,500 206,000

309,500 306,000* Provisional.

** Final.

* **


66.2 Statement of movements in options of the Executive Board

in 2011

L. de Vries

Issued on Term until

Number

of options

Exercise

price

Exercised/

lapsed

to 2010

Exercised

in 2011

Lapsed

in 2011

Outstanding

31-12-2011

Exercisable

31-12-2011

25-02-2003 25-02-2011 40,000 6.18 40,000 – – – –

25-02-2004 25-02-2012 40,000 10.29 40,000 – – – –

22-02-2005 22-02-2013 50,000 15.17 – 50,000 – – –

01-03-2006 01-03-2014 60,000 23.63 – – – 60,000 60,000

28-02-2007 28-02-2015 60,000 25.77 – – – 60,000 60,000

05-03-2008 05-03-2016 60,000 22.50 – – – 60,000 60,000

03-03-2009 03-03-2019 60,000 11.70 – – – 60,000 –

03-03-2010 03-03-2020 60,000 18.96 – – – 60,000 –

01-03-2011 01-03-2021 60,000 27.38 – – – 60,000 –

490,000 80,000 50,000 – 360,000 180,000

28-02-2012 28-02-2022 60,000

B. Cornelese

Issued on

28-02-2012 28-02-2022 30,000

J. Lock


Number

of options

Exercise

price

Exercised/

lapsed

to 2010

Exercised

in 2011

Lapsed

in 2011

Outstanding

31-12-2011

Exercisable

31-12-2011

25-02-2003 25-02-2011 – 6.18 – – – – –

25-02-2004 25-02-2012 4,000 10.29 4,000 – – – –

22-02-2005 22-02-2013 12,000 15.17 – – – 12,000 12,000

01-03-2006 01-03-2014 16,000 23.63 – – – 16,000 16,000

28-02-2007 28-02-2015 16,000 25.77 – – – 16,000 16,000

05-03-2008 05-03-2016 20,000 22.50 – – – 20,000 20,000

03-03-2009 03-03-2019 – 11.70 – – – – –

03-03-2010 03-03-2020 30,000 18.96 – – – 30,000 –

01-03-2011 01-03-2021 40,000 27.38 – – – 40,000 –

138,000 4,000 – – 134,000 64,000

28-02-2012 28-02-2022 10,000

50,000 options were exercised in 2011 (2010: 44,000). The share price on

the exercise date was € 28.60 (2010: € 17.58).

In February 2012 it was intended to grant 60,000 options to Mr De Vries,

30,000 options to Mr Cornelese and 10,000 options to Mr Lock.

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.



66.3 Statement of movements in options of management and

management support staff in 2011


Number

of options

Exercise

price

Exercised/

lapsed

to 2010

Exercised

in 2011

Lapsed

in 2011

Outstanding

31-12-2011

Exercisable

31-12-2011

25-02-2003 25-02-2011 48,200 6.18 47,000 1,200 – – –

25-02-2004 25-02-2012 51,600 10.29 43,998 3,600 – 4,002 4,002

22-02-2005 22-02-2013 90,400 15.17 51,400 7,600 – 31,400 31,400

01-03-2006 01-03-2014 125,200 23.63 37,800 12,600 – 74,800 74,800

28-02-2007 28-02-2015 129,000 25.77 28,000 23,500 – 77,500 77,500

05-03-2008 05-03-2016 187,000 22.50 63,000 11,000 2,500 110,500 110,500

03-03-2009 03-03-2019 176,250 11.70 12,000 – 2,750 161,500 –

03-03-2010 03-03-2020 196,500 18.96 – – 11,500 185,000 –

01-03-2011 01-03-2021 206,000 27.38 – – 10,000 196,000 –

1,210,150 283,198 59,500 26,750 840,702 298,202

28-02-2012 28-02-2022 209,500

66.4 Complete statement of movements in options in 2011


Number

of options

Exercise

price

Exercised/

lapsed

to 2010

Exercised

in 2011

Lapsed

in 2011

Outstanding

31-12-2011

Exercisable

31-12-2011

25-02-2003 25-02-2011 88,200 6.18 87,000 1,200 – – –

25-02-2004 25-02-2012 95,600 10.29 87,998 3,600 – 4,002 4,002

22-02-2005 22-02-2013 152,400 15.17 51,400 57,600 – 43,400 43,400

01-03-2006 01-03-2014 201,200 23.63 37,800 12,600 – 150,800 150,800

28-02-2007 28-02-2015 205,000 25.77 28,000 23,500 – 153,500 153,500

05-03-2008 05-03-2016 267,000 22.50 63,000 11,000 2,500 190,500 190,500

03-03-2009 03-03-2019 276,250 11.70 12,000 – 2,750 261,500 –

03-03-2010 03-03-2020 286,500 18.96 – – 11,500 275,000 –

01-03-2011 01-03-2021 306,000 27.38 – – 10,000 296,000 –

1,878,150 367,198 109,500 26,750 1,374,702 542,202

28-02-2012 28-02-2022 309,500


109,500 options were exercised in 2011 (2010: 84,200). The weighted

average share price on the exercise date for share options exercised in

2011 was € 28.99 (€ 21.69).

The fair value of the share-based payment plans on the grant date has

been determined on the basis of the following input:

2011 2010

Fair value on grant date

Price on grant date (15-day average) € 27.12 € 18.27

Exercise price € 27.38 € 18.96

Expected volatility 39.3% 36.9%

Option term 8 jaar 8 jaar

Expected dividend yield 3.00% 2.65%

Risk-free interest rate 2.93% 3.13%

66.5 Share savings plan

All employees in the Netherlands have been given the possibility of

participating in the share savings plan. The maximum amount per

participant in 2011 was € 1,226 (2010: € 1,226).

The following savings were accumulated through this plan:

In 2011: 1,855 (2010: 3,936) shares

Up to 2011: 63,701 (2010: 61,846) shares

66.6 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.

2011 2010

(number of shares)

Balance as at 1 January 433,256 521,392

Repurchase of own shares 308,820 –

Issued in respect of options – 109,500 – 84,200

Issued in respect of share savings plan – 1,855 – 3,936

Director’s remuneration – 10,000 –

Exchange of physical securities – 400 –

Balance as at 31 December 620,321 433,256

67 PROVISIONS 2011 2010

Guarantees and claims 1.0 1.6

Other items 0.1 –

Balance of provisions as at 31 December 1.1 1.6

The term of the provisions exceeds one year.

68 LONG-TERM LIABILITIES 2011 2010

Syndicated loan 267.4 188.8

Loans from subsidiaries 5.7 3.6


The conditions of the syndicated loan can be found in note 47 in the

notes to the consolidated balance sheet.

69 SHORT-TERM LIABILITIES 2011 2010

Cash loans, overdrafts 53.6 139.1

Owed to consolidated subsidiaries 2.4 1.1

Trade creditors and other payables 7.2 8.4


The short-term liabilities are due in less than one year.



70 AUDITOR’S FEES

The following fees of KPMG Accountants N.V. and the other entities

affiliated to 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 2011 2010

in thousands of euros

Examination of the financial statements 830 790

Other audit assignments 270 320

Other non-audit services 200 340

Total 1,300 1,450

71 L IABILITIES 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 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 companies included in the

tax group. We also refer to the notes in the section 53 concerning

contingent liabilities. Guarantees have also been issued for a number of

foreign subsidiaries.


Executive Board

L. de Vries, Chairman

B.J.H. Cornelese

Supervisory Board

J.C.M. Hovers, Chairman

P.P.A.I. Deiters, Vice-Chairman

F.A. van Vught

E. ten Cate

R. van Gelder


Other information

INDEPENDENT AUDITOR’S REPORT

To the General Meeting of Shareholders of Royal Ten Cate

Report on the financial statements

We have audited the accompanying financial statements 2011 of Royal

TenCate, Almelo as set out on pages 76 to 132 of this report.

The financial statements include the consolidated financial statements

and the company financial statements. The consolidated financial

statements comprise the consolidated balance sheet as at 31 December

2011, the consolidated profit and loss account, the consolidated

statement of comprehensive income, the consolidated cash flow

statement and the consolidated statement of changes in group equity 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 2011, 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 determines is necessary to enable the

preparation of the 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 statements

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 circumstances, 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 TenCate as at 31 December 2011

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 Netherlands Civil Code.

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 Royal TenCate as at 31 December 2011

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 whether the management board report, to the

extent we can assess, has been prepared in accordance with Part 9 of

Book 2 of this Code, and if the information as required under Section

2:392 sub 1 at b – h has been annexed. Further, we report that the

management board report, to the extent we can assess, is consistent

with the financial statements as required by Section 2:391 sub 4 of the


Amstelveen, 28 February 2012

KPMG ACCOUNTANTS N.V.

T. van der Heijden RA


OTHER INFORMATION>

PROPOSED APPROPRIATION OF PROFIT


Net income 58.7 46.0

Added to other reserves in accordance with article 27, paragraph 2 of the articles of association – 34.5 – 28.5

24.2 17.5

Net change in the legal reserves – 0.5 1.6

23.7 19.1

Undistributed dividend balance from previous year 0.3 0.0

24.0 19.1

Payment of €0.95 and €0.75 dividend to holders of ordinary shares in accordance with article 27 paragraph 3

of the articles of association – 24.0 – 18.8

Undistributed dividend balance at year-end, which is transferred to the relevant account – 0.3

POST BALANCE SHEET EVENTS

There are no events subsequent to the reporting date requiring

commentary.

PROVISIONS OF THE ARTICLES OF ASSOCIATION RELATING TO

APPROPRIATION OF PROFIT

(Article 27)

General

The authorised capital is divided into ordinary shares.

Summary of the provisions of the articles of association

1. Profit distributions may only take place to the extent that the equity

of the Company exceeds the paid and called-up part of the issued

capital plus the reserves which must be held by law.

2. With the approval of the Supervisory Board, the Executive

Board is authorised to determine the part of the profit that

will be reserved.

3. The sum remaining from the profit after the reservation in

accordance with paragraph 2 is at the disposal of the

general meeting of shareholders.

4. Shares held by the Company in its own capital are not taken

into account in calculating the appropriation of profit.

5. The dividend payable shall be made payable no later than 30

days after adoption of the financial statements by the

general meeting of shareholders. It shall be made payable

only to the authorised persons in whose name the shares are

held. Such payments shall discharge the Company.

6. A shareholder’s claim for payment shall be time-barred after

a period of five years has elapsed.


Ten-year summary

In millions of euros, unless stated otherwise

Figures based on IFRS

Figures based on

Dutch GAAP

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

CONSOLIDATED

PROFIT AND LOSS ACCOUNT

Revenues 1,138.8 984.5 842.1 1,032.6 886.0 770.5 686.5 641.0 569.6 602.1

Changes in inventories of finished products and

work in progress – 17.1 – 17.8 29.8 – 18.0 – 11.7 – 4.8 0.5 – 12.6 – 2.6 – 2.4

Raw materials and manufacturing supplies 586.3 501.1 391.6 562.0 463.6 402.2 353.8 332.1 280.7 289.9

Work contracted out and other external expenses 99.5 73.9 63.1 60.7 54.9 34.7 29.3 29.5 28.8 36.4

Personnel costs 205.2 188.0 173.0 190.3 178.3 171.2 161.6 159.7 142.9 151.3

Other operating costs 127.4 119.8 109.2 111.5 98.8 94.0 83.5 78.5 71.5 79.0

Depreciation and impairment 35.0 34.5 33.9 30.7 29.1 22.1 18.6 18.9 18.5 22.9

EBITA 102.5 85.0 41.5 95.4 73.0 51.1 39.2 34.9 29.8 25.0

Amortisation 12.9 10.4 8.8 11.6 3.6 1.0 0.7 0.3 1.1 1.1

OPERATING RESULT (EBIT) 89.6 74.6 32.7 83.8 69.4 50.1 38.5 34.6 28.7 23.9

Net financial expenses – 11.3 – 10.0 – 12.7 – 13.7 – 11.3 – 8.0 – 4.6 – 6.8 – 7.0 – 12.0

PRE-TAX INCOME 78.3 64.6 20.0 70.1 58.1 42.1 33.9 27.8 21.7 11.9

Profit tax – 18.7 – 17.9 – 5.6 – 19.1 – 11.9 – 11.4 – 11.5 – 9.2 – 5.3 1.7

RESULT AFTER TAX BUT BEFORE RESULT

FROM PARTICIPATING INTERESTS 59.6 46.7 14.4 51.0 46.2 30.7 22.4 18.6 16.4 13.6

Share in net income of associated companies – 1.3 – 1.3 8.7 – 0.3 45.4 8.1 5.1 3.9 5.4

RESULT AFTER TAX 58.3 45.4 23.1 51.0 46.5 76.1 30.5 23.7 20.3 19.0

Extraordinary items after tax – – – – – – – – – 12.3

RESULT AFTER TAX 58.3 45.4 23.1 51.0 46.5 76.1 30.5 23.7 20.3 31.3

Non-controlling interests 0.4 0.6 0.8 0.1 – 0.1 – 0.1 – – 0.1 – – 0.2

NET INCOME 58.7 46.0 23.9 51.1 46.4 76.0 30.5 23.6 20.3 31.1

Dividend 24.0 18.8 15.0 20.4 18.8 16.2 12.5 10.2 8.5 7.7

EBITA in % of revenues 9.0% 8.6% 4.9% 9.2% 8.2% 6.6% 5.7% 5.4% 5.2% 4.2%

Return on average net capital employed * 13.1% 12.1% 5.7% 13.4% 13.1% 14.4% 15.3% 13.5% 11.7% 9.7%

* Prior to 2007, based on net capital employed at year-end.

i


TEN-YEAR SUMMARY

In millions of euros, unless stated otherwise

Figures based on IFRS

Figures based on

Dutch GAAP

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

CONSOLIDATED BALANCE SHEET

Intangible assets 273.0 242.8 203.8 212.1 136.8 12.4 13.8 12.1 10.6 12.8

Tangible fixed assets 221.9 214.2 214.7 247.4 218.1 165.8 161.4 118.8 118.1 130.5

Financial fixed assets 36.8 34.2 45.3 25.1 19.8 18.3 35.2 19.9 11.4 9.2

Total fixed assets 531.7 491.2 463.8 484.6 374.7 196.5 210.4 150.8 140.1 152.5

Inventories 267.9 216.9 155.0 211.5 176.2 157.7 157.5 138.6 110.0 117.4

Receivables 181.1 169.8 116.9 187.7 166.2 128.2 125.0 98.8 91.7 89.8

Securities and cash 22.7 11.6 12.8 5.4 4.8 6.7 4.6 2.7 5.8 2.9

Total current assets 471.7 389.3 284.7 404.6 347.2 292.6 287.1 240.1 207.5 210.1

TOTAL ASSETS 1,003.4 889.5 748.5 889.2 721.9 489.1 497.5 390.9 347.6 362.6

Equity * 465.8 438.5 380.8 366.9 310.1 238.7 181.8 146.5 162.0 152.9

Non-controlling interests 3.7 3.8 4.1 5.1 0.3 0.2 – 0.1 0.1 0.2

Group equity 469.5 442.3 384.9 372.0 310.4 238.9 181.8 146.6 162.1 153.1

Provisions 50.6 32.0 40.5 43.5 40.8 43.8 56.1 52.1 15.6 15.1

Long-term debts 275.1 195.2 192.0 316.2 222.3 63.5 130.2 74.1 82.9 107.0

Banks and short term loans 36.3 57.1 16.3 20.3 12.9 30.4 27.1 24.6 13.9 8.9

Other short-term debts 171.9 162.9 114.8 137.2 135.5 112.5 102.3 93.5 73.1 78.5

TOTAL LIABILITIES 1,003.4 889.5 748.5 889.2 721.9 489.1 497.5 390.9 347.6 362.6

* With effect from 2003 equity before appropriation of profit.

Group capital/total capital 47% 50% 51% 42% 43% 49% 37% 38% 47% 42%

Acquisitions /(de)consolidations 34.8 24.7 – 3.3 88.1 175.1 – 63.0 40.8 29.2 0.3 1.4

Investments in tangible and intangible fixed

assets 25.7 21.3 17.3 48.0 62.9 43.0 26.2 12.0 16.9 17.0

Depreciation and amortisation 47.9 44.9 42.7 42.3 32.7 23.1 19.3 19.2 19.6 24.0

Number of staff years at year-end 4,353 4,271 3,805 4,437 4,020 3,532 3,578 3,634 3,245 3,278

Number of shares outstanding at year-end

(x 1,000) 25,929 25,502 25,068 23,967 23,556 21,063 20,784 20,472 20,096 19,192

Net earnings per € 2.50 share 2.31 1.84 0.97 2.18 2.04 3.66 1.48 1.17 1.03 1.63

Dividend per share in euro 0.95 0.75 0.60 0.85 0.80 0.70 0.60 0.50 0.43 0.40

Closing price in euro 21.26 28.00 18.43 16.05 21.27 23.21 21.50 13.55 9.02 6.25

>

Royal Ten Cate (TenCate) is a multinational

company which combines textile technology

with chemical processes in the development

and production of functional materials.

On this technological basis, TenCate

develops a range of applications (product-

market-technology combinations) aimed

at growth markets.

TenCate materials are mainly used for:

◾ personal safety and protection of the

living and working environment;

◾ modernisation of equipment used by

armed forces, fire brigades and police;

◾ aerospace (lower fuel costs due to

lighter materials);

◾ water management, infrastructure

and environmental care;

◾ industrial applications.

TenCate selects market areas mainly on

the basis of global trends, specifically in

the safety/protection and sustainability/

environmental fields. With regard to

the characteristics of the materials

(specifications), the markets are usually

regulated by governments or agencies on

the basis of legislation and regulations.

TenCate’s direct customers are mainly

public-sector bodies, system integrators,

original equipment manufac turers and their

direct suppliers.

TenCate presents itself as a developer and

producer of materials, modules and systems

with distinctive characteristics.

The company operates a value-chain model

aimed at occupying distinctive positions

by means of technological innovation, cost

leadership, product differentiation and

end-user marketing.

TenCate develops solutions for end-users

by operating in network structures, such

as open innovation centres, partnerships

and co-creation, and by making acquisitions

in complementary fields (product-market-

technology combinations). The solution-

focused system approach plays a key role.

The policy of value-chain control has

enabled TenCate to secure leading

positions in worldwide niche markets.

TenCate employs around 4,350 people

worldwide and strives to operate in an

ethically and socially responsible way.

TenCate encourages its employees to be

enterprising, flexible and creative, thereby

demonstrating its aim of achieving progress

and sustainability for all stakeholders.


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

Ten Cate Protect bv Nijverdal, Netherlands

Ten Cate Protective Fabrics USA inc Union City (Georgia), USA

Ten 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 Bangkok, Thailand

(50.65%) Fabrics for protective clothing

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

Ten Cate Advanced Composites USA inc Morgan Hill (California), USA

Phoenixx TPC inc Taunton (Massachusetts), USA

YLA inc Benicia (California), USA

CCS Composites inc Benicia (California), USAAdvanced composites for aerospace and industrial applications

TenCate Advanced Armour UK (AML) Swindon, UKDesign and production of vehicle armour materials

Ten Cate Advanced Armour sas Primarette, France

Ten 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) (51%) Vissenbjerg, DenmarkActive protection systems for army vehicles

AML India Private ltd (90%) Noida, IndiaDesign and production of vehicle armour materials


Ten Cate Geosynthetics North America inc Atlanta (Georgia), USA

Ten Cate Geosynthetics Austria GmbH Linz, Austria

Ten Cate Geosynthetics France sas Bezons, France

Ten Cate Geosynthetics Netherlands bv Nijverdal, Netherlands

Ten Cate Geosynthetics Asia sdn bhd Kuala Lumpur, Malaysia

TenCate Industrial Zhuhai co ltd Zhuhai, ChinaGeosynthetics and industrial fabrics

Ten Cate Geosynthetics sdn bhd (Malaysia) Kuala Lumpur, Malaysia

Ten Cate Geosynthetics (Thailand) ltd Bangkok, Thailand

Ten Cate Geosynthetics pte ltd Singapore

Ten Cate Geosynthetics Italia srl Lazzata, Italy

Ten Cate Geosynthetics (UK) ltd Telford, UK

Ten Cate Geosynthetics sl Madrid, Spain

Ten Cate Geosynthetics Schweiz AG Zurich, Switzerland

Ten Cate Deutschland GmbH Dietzenbach, Germany

Ten Cate Geosynthetics Polska Spzoo Kraków, Poland

Ten Cate Geosynthetics CZ sro Prague, Czech Republic

Ten Cate Geosynthetics Rumania Bucharest, RomaniaSales offi ces

Ten Cate Thiolon bv Nijverdal, Netherlands

Ten Cate Thiolon USA inc Dayton (Tennessee), USA

Ten Cate Thiolon Middle East (49%) 1) Dubai, UAESynthetic turf components and systems

Ten Cate Thiobac bv Nijverdal, NetherlandsBacking for synthetic turf systems

GreenFields Holding BV (90%) Genemuiden, Netherlands

GreenFields BV (100%)

(subsidiary of GreenFields Holding BV) Genemuiden, Netherlands

Xtra Grass BV 2) Kampen, Netherlands

ProCourt Int BV 2) Zederik, Netherlands

GreenFields Eastern Europe BV (60%) 2) Genemuiden, Netherlands

GreenFields Noo (Bresco) AS (60%) 2) Molde, Norway

GreenFields Swiss AG (60%) 2) Schaffhausen, Switzerland

GreenFields Sports Turf Systems (ME) Ltd (80%) 2) Nicosia, Cyprus

GreenFields West Africa SARL (65%) 2) Cotonou, Benin

GreenFields UK Sports Surfaces Ltd 2) Bolton, UK

GreenFields India FZC (51%) 2) Sharjah, United Arab Emirates

GreenFields Pacifi c Pty Ltd 2) Brisbane, Australia

Southern Greens BV (82%) 2) Kampen, Netherlands

GreenFields Sports & Leisure Pty (55%) 3) Pietermaritzburg,

South AfricaMarketing and installation of synthetic turf systems

TigerTurf NZ, ltd (80%) Auckland, New Zealand

TigerTurf Australia pty ltd (80%) Campbellfi eld, Australia

TigerTurf (UK) ltd (80%) Hartlebury, UK

Tiger Sports Americas inc (80%) Austin (Texas), USA

(all as at 28 April 2010; as at 31 March 2009: 49%)Marketing and production organisations for synthetic turf systems

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


Xennia Technology ltd (78.95%) Letchworth, UK Specialist inkjet technology for industrial applications

Ten Cate Systems bv Nijverdal, NetherlandsDevelopment activities

Ten Cate Enbi International bv Brunssum, Netherlands TenCate Enbi group holding company

Ten Cate Enbi GmbH Opladen, Germany

Ten Cate Enbi kft Rétság, Hungary

Ten Cate Enbi inc Shelbyville (Indiana), USA

Ten Cate Enbi inc Rochester (New York), USA

Ten Cate Enbi pte ltd Singapore

Ten 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, Netherlands

Royal Ten Cate USA inc Atlanta (Georgia), USA

Ten Cate USA inc Washington D.C., USA

Ten Cate UK ltd London, UK

Ten Cate France sas Paris, France

Ten Cate Deutschland GmbH Opladen, Germany

Ten Cate Danmark a/s Copenhagen, Denmark

Royal Ten Cate Pacifi c ltd Hong Kong, China

Royal 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

GreenFields (All Sports) UK Ltd (49%) Stepps, UKMarketing and installation of synthetic turf systems

The operating companies listed here are consolidated in the financial 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


The companies are wholly owned unless stated otherwise.

Royal Ten Cate Annual Report 2011Royal Ten Cate Annual Report 2011

COMMERCIAL OVERVIEWAs at 1 January 2012

PROFILE SUBSIDIARIES, ASSOCIATED COMPANIES AND OTHER INTERESTS as at 31 December 2011


PROTECTIVE FABRICS

Protective and safety fabrics and

multi-risk solutions for industry,

services, firefighting and defence

◾ TenCate Protective Fabrics

Americas

◾ TenCate Protective Fabrics EMEA

◾ TenCate Protective Fabrics Asia

OUTDOOR FABRICS

Protective fabrics for outdoor

applications

◾ TenCate Outdoor Fabrics

Europe

SPACE & AEROSPACE COMPOSITES

Advanced composites, compounds and

systems for the aerospace industry


Americas


EMEA


Advanced composites, compounds

and systems for industrial

applications, including automotive,

industrial components and energy

extraction


Americas


EMEA

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

◾ TenCate Advanced Armour Americas

◾ TenCate Advanced Armour EMEA

◾ TenCate Advanced Armour Asia

INKJET TECHNOLOGY

Specialist inkjet technology for

industrial production processes


TECHNICAL COMPONENTS

Technical rollers and components,

particularly for printers, copiers, fax

machines, postal sorting machines

and ATMs

◾ TenCate Enbi North America

◾ TenCate Enbi EMEA

◾ TenCate Enbi Asia

GEOSYNTHETICS

Synthetic fabrics, non-wovens and

grids for solutions and applications

in infrastructure, civil engineering,

water management, the environ-

mental sector, agriculture and

horticulture


Americas

◾ TenCate Geosynthetics EMEA

◾ TenCate Geosynthetics Asia

GRASS

Synthetic turf components and inte-

grated synthetic turf systems for

top-flight sports, recreation and

landscape projects

Upstream

◾ TenCate Grass Americas

◾ TenCate Grass EMEA

◾ TenCate Grass Asia

Downstream

◾ Edel Grass (50%)

◾ GreenFields (90%)

◾ TigerTurf (80%)

◾ Hellas Construction (30%)

The TenCate sectors are subdivided into market groups. Each market group is a cluster of subsidiaries which co-operate intensively in research & development,

production, end-user marketing and sales.

An overview of the legal entities which make up the company can be found on the inside back cover.



1 Due to legislation in Dubai, 51% is held by a local partner. Royal Ten Cate has 100% economic ownership.

2) Subsidiary of GreenFields BV

3) Subsidiary of Southern Greens BV

HOLDING & SERVICES

Holding company activities

◾ Koninklijke Ten Cate nv

TenCate materials are at the cutting

edge of textile, chemical and material

techno logies.

TenCate focuses on added-value solutions

to meet critical end-user requirements.

Our customers make a difference with our

materials and systems.

TenCate addresses market trends

based on the global themes of safety, pro-

tection and sustainability. This generates

long-term growth for the company.

The strategy is characterised by value chain management.

This business model implemented by TenCate is built on

the four cornerstones of end-user marketing, product

differentiation, technological innovation and cost

leadership. The challenge lies in striking an optimum

balance between these four cornerstones.

Thermoplastic composite

The automotive industry is increasingly interested in using

thermoplastic composites from the TenCate Cetex® product

portfolio of TenCate Advanced Composites in cars. TenCate

Cetex® is:

• Strong and impact-resistant: contributes to safety

• Lightweight: saves fuel

• Mouldable: readily processable

• Reusable and recyclable: sustainable

Royal Ten C

ateA

nnual Report 2011

Royal Ten Cate MATERIALS THAT MAKE A DIFFERENCEColophon

business development & investor relations

F.R. Spaan, corporate director

P.O. Box 58

7600 GD Almelo, The Netherlands

Telephone +31 (0)546 544 911

Fax +31 (0)546 814 145

www.tencate.com

Commercial overview and profileOperating companies, associated companies and other interests

Royal Ten Cate

Annual Report 2011


Text

Royal Ten Cate

Translation

VVH business translations,

Maartensdijk

Concept and realisation

C&F Report Amsterdam B.V.,

Amsterdam

Printing

Lulof Druktechniek B.V.,

Almelo

Photography

Paul Haverkort

Bram Hendriks

Frans Dekker

Joost van Baars

Marjo Baas

Ton Kuper

Roelof Pot

De Jong Luchtfotografie

Stephen Barnett

Norbert Hekkink

Courtesy © Gulfstream

Courtesy © Staff Sgt. Curt Cashour

Vista landschapsarchitectuur en stedenbouw

TenCate would like to hear from you.

Please let u s know your views by e-mailing

[email protected], stating the

market group or officer you wish to contact.

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