Royal Ten Cate
Annual report 2013
PROTECTING PEOPLE
Organisation
Sectors and market groups
Royal Ten Cate
ADVANCED TEXTILES
& COMPOSITES SECTOR
GEOSYNTHETICS
& GRASS SECTOR
O...
Focus
From trends to solutions
WORLDWIDE TRENDS
SAFETY SUSTAINABILITY
PROTECTING PEOPLE
IN TRANSIT IN HABITATS AT WORK DUR...
Royal Ten Cate
PROTECTING PEOPLE VISION
TenCate focuses on the growing demand for protection of people and
their living an...
Organisation, Focus and Profile Inside cover
Key developments in 2013 2
Assessment of 2013 action plans 3
Key data 2013 4
...
2 |  TenCate annual report 2013  |  Key developments in 2013
Decrease in results of Geosynthetics & Grass sector
■■ EBITA ...
3TenCate annual report 2013  |  Assessment of 2013 action plans |
Developments in emerging geographic markets
■■ Revenue g...
4 |  TenCate annual report 2013  |  Key data 2013
Key data 2013
1,200
900
600
300
0
2008 2009 2010 2011 2012 2013
– 4% € 1...
5TenCate annual report 2013  |  Key data 2013 |
TenCate has its own production sites (■)
and sales offices (■) in the foll...
6 |  TenCate annual report 2013  |  Key data 2013
PROFIT AND LOSS ACCOUNT 2012*
2013
Revenues 1,049.0 1,012.0
Operating re...
7TenCate annual report 2013  |  The TenCate share |
The decrease in the debt position and a rise in the results in the thi...
8 |  TenCate annual report 2013  |  The TenCate share
.. The TenCate share
The majority of the institutional shareholders ...
9TenCate annual report 2013  |  The TenCate share |
OPTION PLAN, SHAREHOLDINGS OF PERSONNEL
AND EXECUTIVE BOARD
Details of...
10 |  TenCate annual report 2013  |  Foreword by the Chairman of the Executive Board
Dear stakeholders,
As expected, 2013 ...
11TenCate annual report 2013  |  Foreword by the Chairman of the Executive Board |
REPORTING
For reporting and positioning...
12 |  TenCate annual report 2013  |  People Planet Profit
People Planet Profit
25%more training hours for
TenCate employee...
13TenCate annual report 2013  |  People Planet Profit |
14%less CO2
emitted by
TenCate than a year ago
9Highly Protected R...
14 |  TenCate annual report 2013  |  People Planet Profit
Protecting people in transit
As a textile technology group, TenC...
15TenCate annual report 2013  |  Business overview |
Business overview provides a detailed explanation of why TenCate does...
16 |  TenCate annual report 2013  |  Business overview
TenCate is a multinational company that combines textile technology...
17TenCate annual report 2013  |  Business overview |
Strategic objectives
Quantitative strategic objectives are:
■■ The ne...
INPUT
18 |  TenCate annual report 2013  |  Business overview
Business model and value creation
Customerspeci
fic solutions...
OUTPUT
19TenCate annual report 2013  |  Business overview |
IN TRANSIT
Aerospace
Automotive
Transport
Naval
Etc.
IN HABITA...
20 |  TenCate annual report 2013  |  Business overview
.. Business model and value creation
TECHNOLOGICAL INNOVATION
Innov...
21TenCate annual report 2013  |  Business overview |
VALUE PROPOSITION
TenCate operates in markets in which it is importan...
22 |  TenCate annual report 2013  |  Business overview
.. Business model and value creation
CORPORATE VALUES
TenCate has a...
23TenCate annual report 2013  |  Business overview |
Strategic objectives and progress
0 Strategic objectives 2013 target ...
24 |  TenCate annual report 2013  |  Business overview
Indicators
COST LEADERSHIP
The principal indicators include:
■■ Pro...
25TenCate annual report 2013  |  Business overview |
TARGETS
Corporate social responsibility is implemented by the line ma...
26 |  TenCate annual report 2013  |  Business overview
.. Indicators
PERSONNEL BREAKDOWN
As a multinational company, TenCa...
27TenCate annual report 2013  |  Business overview |
TenCate aims to continue deepening and broadening its package of
tech...
28 |  TenCate annual report 2013  |  Business overview
.. Indicators
treatment plant and is used to produce steam for proc...
29TenCate annual report 2013  |  Business overview |
WATER CONSUMPTION
Total water consumption in 2013 amounted to approxi...
30 |  TenCate annual report 2013  |  Business overview
.. Indicators
Since 2013 TenCate has also added the volume of texti...
31TenCate annual report 2013  |  Business overview |
TRANSPARENCY BENCHMARK
TenCate is assessed annually as part of the tr...
(VALUE ADDED)
RESELLERS
PROTECTIVE FABRICS
• RD
• Spinning
• Weaving
• Knitting
• Pre-treatment
• Dyeing
• Finishing
• Lam...
33TenCate annual report 2013  |  Business overview |
ADVANCED TEXTILES  COMPOSITES
The principal end-markets for the Advan...
34 |  TenCate annual report 2013  |  Business overview
.. Sectors
TenCate Advanced Armour has European manufacturing sites...
35TenCate annual report 2013  |  Business overview |
STRATEGY
The strategy of the sector is derived from the group strateg...
(VALUE ADDED)
RESELLERS
GEOSYNTHETICS
• RD
• Weaving
• Non-woven
• Knitting
• Grids
• Pre-treatment
• Finishing
• Quality ...
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Annual Report 2013 of TenCate. Royal TenCate is listed on the NYSE Euronext (AMX)

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TenCate Annual Report 2013

  1. 1. Royal Ten Cate Annual report 2013 PROTECTING PEOPLE
  2. 2. Organisation Sectors and market groups Royal Ten Cate ADVANCED TEXTILES & COMPOSITES SECTOR GEOSYNTHETICS & GRASS SECTOR OTHER ACTIVITIES SECTOR PROTECTIVE FABRICS GEOSYNTHETICS INKJET TECHNOLOGY Protective and safety fabrics and multi-risk solutions for firefighting and defence, industry and services. Synthetic fabrics, non-wovens, grids and systems for use in infrastructure, civil engineering, water management, the environmental sector, agriculture and horticulture. Digital inkjet technologies for industrial production processes. OUTDOOR FABRICS GRASS TECHNICAL COMPONENTS Protective fabrics for outdoor applications, such as the camping and awning market. Synthetic turf components and integrated synthetic turf systems for top-flight sports, recreation and landscaping. Technical rollers and components, particularly for printers, copiers, fax machines, postal sorting machines and ATMs. ADVANCED COMPOSITES HOLDING & SERVICES Advanced composites, compounds and systems for the space and aerospace industry and industrial applications, including automotive, industrial components and energy generation. Holding company activities, including finance, accounting, patent development and management, investor relations, business development, information technology, human resources management and insurance. ADVANCED ARMOUR Advanced composites, ceramics and integrated systems for the active and passive protection of police, army, air force, navy and civilian service personnel, vehicles and vessels. . A legal overview of operating companies, associated companies and other interests can be found on the inside of the back flap.
  3. 3. Focus From trends to solutions WORLDWIDE TRENDS SAFETY SUSTAINABILITY PROTECTING PEOPLE IN TRANSIT IN HABITATS AT WORK DURING LEISURE Mobility continues to grow apace. Increasing prosperity is making people worldwide more mobile and giving rise to increased transportation of goods and raw materials within and between continents, and even to extraterrestrial destinations. Making those transport movements increasingly efficient, safe and sustainable is a challenge in itself. Urbanisation is increasing steadily across all continents. Urban areas are growing ever larger and more complex. Societies are changing into compact networks of cities. That requires a high degree of organisation and logistics with safe and sustainable infrastructure. The working environment of personnel in industry and services may be risky, hazardous or even hostile. Personal protection in the workplace, on the road, on-site or during the mission is essential in order to work professionally and safely. Leisure time increases as prosperity grows. In addition to tourism and recreation, people are enjoying sports as amateurs or top-flight performers. Leisure activities and sports must above all be pursued responsibly. That requires safe, sustainable facilities. END-MARKETS MOBILITY INFRASTRUCTURE WATER MANAGEMENT DEFENCE PERSONAL PROTECTION SPORT AND LEISURE Composites for vehicles, vessels, aircraft, helicopters and mobility concepts Geotextiles for infrastructure works; composites for structures; synthetic turf for landscaping Geotextiles and systems for water management, maritime projects and dewatering Materials for protection of military personnel; vehicle, vessel, aircraft and helicopter armour Materials for protection of persons in their working and living environments Synthetic turf for sport; outdoor fabrics; composites for sport applications
  4. 4. Royal Ten Cate PROTECTING PEOPLE VISION TenCate focuses on the growing demand for protection of people and their living and working environments. The worldwide trends towards ‘safety and protection’ and ‘sustainability and the environment’ serve as the focal points of the protective solutions which TenCate provides. The four market themes are In transit, In habitats, At work and During leisure. The end-markets in which TenCate operates are mobility, infrastructure, water management, defence, personal protection, sport and leisure. TenCate’s vision is based on the development (‘buy & build’) of a broad, advanced technological base. As a company in the technical textile sector, TenCate occupies a broad and innovative technological position worldwide (including patent positions). That enables the company to develop materials which are an optimum match for individual market requirements in the chosen market themes of safety and protection of man and the environment. MATERIALS ENGINEERING AND INNOVATION MISSION TenCate is a multinational company which combines textile technology with chemical process technology in the development and production of functional materials, modules and systems which are an optimum match for specific market requirements. It is also increasingly important to reduce the ancillary costs of the chosen solution, since materials and modules form part of a total system. The technological base determines the high-grade applications (product-market-technology combinations) which TenCate supplies in selected niche markets. TenCate aims to maintain a leading position in the provision of sustainable solutions for personal protection and protection of living and working environments. Developing the right product portfolio, tailored to specific market requirements, drawing attention to solutions in an effective way and incorporating the control of safety risks in specifications are key parts of the way in which TenCate fulfils its mission. TECHNICAL TEXTILES STRATEGY TenCate is the world market leader in technical textiles. These materials have specific characteristics which are usually defined and qualified on the basis of functional specifications. TenCate maintains an active portfolio policy and with its advanced technological base is able to offer the widest range of functionalities in materials, modules and systems. It does this independently or in co-operation with third parties. TenCate operates principally in six end-markets reflecting the global trends of safety and sustainability. TenCate’s materials are used in particular for: ■ Personal safety and protection of living and working environments ■ Modernisation of army, firefighting and police equipment ■ Aerospace ■ Water management, infrastructure and environmental solutions ■ Industrial applications TenCate’s strategy is based on value-chain management. This business model determines how TenCate – based on its position in the value chain – creates value, establishes value in products and systems and adds value to customer-focused system solutions. The end-user is central in this process. The cornerstones of this policy are end-user marketing, technological innovation, cost leadership and product differentiation. The creation of network structures with partners in the value chain adds a market-focused dimension to this business model. The aim is to improve access to markets and strengthen the competitive position, thereby giving fresh impetus to the growth of the company. Profile Material technology group
  5. 5. Organisation, Focus and Profile Inside cover Key developments in 2013 2 Assessment of 2013 action plans 3 Key data 2013 4 Key figures 2013 6 The TenCate share 7 Foreword by the Chairman of the Executive Board 10 Protecting people in transit 14 Business overview 15 Vision, mission and strategy 16 Strategic objectives 17 Business model and value creation 18 Strategic objectives and progress 23 Indicators 24 Sectors 32 Corporate information 41 Business context 47 Business environment 48 Stakeholders 50 Materiality matrix 52 SWOT analysis 54 Risk management 56 Governance 59 Executive Board 60 Supervisory Board 61 Report of the Supervisory Board 62 Corporate governance 65 Performance 67 Report of the Executive Board 68 Sector revenues and results 72 Outlook 93 Outlook for 2014 94 Action plans for 2014 95 Corporate initiatives for 2014 96 Statement by the Executive Board 97 Financial statements 99 Financial statements 2013 100 Other information 151 Ten-year summary 154 Glossary 156 Means of communication 158 Colophon 160 List of subsidiaries, associated companies and other interests Inside cover Contact Outside cover Royal Ten Cate Annual Report 2013 .. A summary of this annual report is available as a printed Annual Review through royal@tencate.com .. An interactive digital version of this report is available at www.tencateannualreports.com A legal overview of operating companies, associated companies and other interests can be found on the inside of the back flap.
  6. 6. 2 |  TenCate annual report 2013  |  Key developments in 2013 Decrease in results of Geosynthetics & Grass sector ■■ EBITA of the Geosynthetics & Grass sector declined by 11% to € 27.9 million, mainly due to a weak performance in the TenCate Geosynthetics market group in Asia and high initial marketing costs and volatile raw material costs in the Grass group. Strong improvement in profitability of Other Activities ■■ EBITA of Other Activities (Xennia Technology, TenCate Enbi and Holding & Services) improved to –€ 0.5 million (2012: –€ 4.9 million). The improved profitability was mainly attributable to lower costs at Xennia Technology combined with a higher gross margin as a result of the strategic reorientation. Revenues declined by 4% to € 1,012 million ■■ The decline in revenues was once again concentrated in the American and European defence markets. This was mainly due to the tightening of defence policy in the United States, with US troops being withdrawn from foreign war zones at an accelerated pace. ■■ Revenues outside government-related markets grew positively. The proportion of revenues generated in the private market increased to 53% (2012: 47%). Operating result before amortisation (EBITA) € 48.7 million (2012: € 50.1 million); net profit € 19.0 million (2012: € 20.9 million) ■■ The decrease in revenues in the defence market had a major effect on the operating result before amortisation (EBITA). Cost control measures mitigated the decline in profit somewhat, as a result of which the organic decline in EBITA compared to 2012 was limited to 3%. ■■ Non-recurring costs had less impact than in the previous year. Non-recurring costs amounted to € 5.9 million (2012: € 8.0 million), mainly due to writedowns of inventories in TenCate Protective Fabrics, which took place predominantly in the second half of the year. ■■ The normalised operating result (EBITA) in 2013 amounted to € 54.6 million (–6% compared to 2012). ■■ EBIT remained unchanged compared to 2012 at € 35.6 million. ■■ The 2013 net profit amounted to € 19.0 million (2012: € 20.9 million). ■■ Net interest-bearing debt decreased by €  41 million in 2013 to € 189 million, with a debt ratio of 2.27 (2012: 2.55). Lower revenues in defence market affect profitability of Advanced Textiles & Composites sector ■■ EBITA of the Advanced Textiles & Composites sector declined by 9% to € 21.3 million due to the sharp fall (–40%) in defence-related revenues. Key developments in 2013
  7. 7. 3TenCate annual report 2013  |  Assessment of 2013 action plans | Developments in emerging geographic markets ■■ Revenue growth in new geographic markets slowed, partly due to declining economic growth in the markets concerned. TenCate continues to see opportunities in markets such as South America and China. ■■ TenCate critically assesses partnerships in emerging markets. Particular care is exercised in the protection of patents and process knowledge. ■■ Further steps were taken in China in collaboration with aviation industry research establishments for the promising development of thermoplastic composites in the new aircraft by Caiga and Comac. However, this is a long-term development. At the beginning of 2014 a marketing and development agreement was signed with Shanghai Leadgo-tech to support the market for composites for the Chinese aviation industry. Further revenue growth in composites ■■ Amber Composites (UK) was acquired at the beginning of 2013, giving TenCate accelerated access to the market for automotive composites (thermoset). ■■ Although revenues in the automotive market are still not significant, a number of interesting development projects (demonstrators) were initiated. The first revenues were generated in the Formula 1 and sports car market segment. Some of the developments are of a long-term nature. ■■ Outside the space and aerospace market, materials were developed with partners, including for the electronics and oil and gas industries (pipelines). Start of production based on digital inkjet technology at TenCate Protective & Outdoor Fabrics ■■ The first production printer came off the line in mid-2013. This process was developed specifically for the outdoor market. The first production trials took place successfully. Customer-specific products are being launched at the beginning of 2014. The primary advantage of this new process technology is that customer-specific production runs can be offered with very short lead times. It also allows the manufacture of products which cannot be produced industrially using analogue technology. Assessment of 2013 action plans Increased importance of marketing ■■ TenCate intensified its activities in the field of marketing and sales. This was particularly the case in TenCate Grass. New synthetic turf systems were successfully introduced. The creation of new standards for quality and sustainability in global market developments is immensely important. There was also increased marketing and sales activity in the worldwide Water & Environment business unit of the Geosynthetics group, which led to revenue growth in this segment. ■■ Attention was devoted to upgrades of websites and the rollout of digital media in various market groups. Focus on successful market niches and partnerships ■■ Growth was achieved in the leading brands operated by TenCate (TenCate Geotube® , TenCate Tecasafe™ Plus, TenCate Cetex® etc.). TenCate gave greater focus to the product portfolio and adjusted its marketing efforts accordingly. ■■ Partnerships, most of which are still in the initial phase, developed positively. This had a strong impact on the desired positioning in various markets, providing a positive basis for future revenue growth. ■■ In September a long-term agreement was concluded with US Army Research, Development and Engineering Command (RDECOM) for collaboration and development of the TenCate ABDS™ active blast countermeasure system. Continuing profit recovery at TenCate Grass ■■ The ambitions in the Grass group were only partly fulfilled. Component production (upstream) recorded growth in results, while the downstream activities recorded a decrease, partly due to a steep rise in marketing and promotion costs. The integration of the downstream activities had a positive effect on the cost level. ■■ The market climate, with a continuing deterioration of profit margins, provided no support for ambitions in this area. Profitability is under continuing pressure across the entire sector, particularly in geographic markets with low quality awareness. Continuing focus on sustainable cost savings ■■ Control of costs and working capital proved effective. The number of FTEs was reduced by 198 in 2013 in order to adapt the cost base – of TenCate Protective Fabrics among others – to the decrease in (defence-related) revenues. TenCate intends to keep the cost base at a structurally low level. Cost control therefore remains high on the agenda.
  8. 8. 4 |  TenCate annual report 2013  |  Key data 2013 Key data 2013 1,200 900 600 300 0 2008 2009 2010 2011 2012 2013 – 4% € 1,012.0 mln REVENUES 120 90 60 30 0 2008 2009 2010 2011 2012 2013 – 3% € 48.7 mln EBITA 60 45 30 15 0 2008 2009 2010 2011 2012 2013 – 9% € 19.0 mln NET RESULT 1.2 0.9 0.6 0.3 0 2008 2009 2010 2011 2012 2013 0% 0.50 DIVIDEND PER SHARE (IN € ) 2.4 1.8 1.2 0.6 0 2008 2009 2010 2011 2012 2013 – 11% 0.72 NET EARNINGS PER SHARE (IN € ) – 7% € 517.8 mln € 66.4 mln € 427.8 mln 0% – 5% 42% 51% 7% Advanced Textiles & Composites Geosynthetics & Grass Other activities 22% 3,320 936 78% 22% 78%Female Male BREAKDOWN OF EMPLOYEES 4,800 3,600 2,400 1,200 0 2008 2009 2010 2011 2012 2013 – 4% 4,256 EMPLOYEES REVENUE BREAKDOWN BY SECTOR – 9% € 27.9 mln – € 0.5 mln € 21.3 mln – 11% 44% 57% –1% Advanced Textiles & Composites Geosynthetics & Grass Other activities EBITA BY SECTOR
  9. 9. 5TenCate annual report 2013  |  Key data 2013 | TenCate has its own production sites (■) and sales offices (■) in the following countries: Americas NORTH AMERICA United States Canada SOUTH AMERICA Brazil EMEA EUROPE Austria Belgium Czech Republic Denmark France Germany Hongary Ireland Italy Netherlands Poland Romania Spain Switzerland United Kingdom AFRICA Benin South-Africa MIDDLE EAST Dubai AsiaPacific ASIA China India Malaysia Singapore Thailand South Korea OCEANIA Australia New Zealand Production and Sales Sales Geographic spread of revenues in 2013 41% 44% 1,595 By destination By origin Employees 43% 47% 1,726 11% 7% 859 NORTH AMERICA SOUTH AMERICA PACIFIC EMEA ASIA 3% 0% 0 2% 2% 76
  10. 10. 6 |  TenCate annual report 2013  |  Key data 2013 PROFIT AND LOSS ACCOUNT 2012* 2013 Revenues 1,049.0 1,012.0 Operating result before depreciation and amortisation (EBITDA) 87.2 83.5 Operating result before amortisation (EBITA) 50.1 48.7 Normalised operating result before amortisation (EBITA) 58.1 54.6 Operating result before amortisation as % of revenues 4.8% 4.8% Operating result (EBIT) 35.6 35.6 Net result 20.9 19.0 Normalised net result 26.2 23.2 CONSOLIDATED BALANCE SHEET AND RETURN Net invested capital (year-end) 750.5 708.4 Return (EBITA) on average net invested capital 6.2% 6.4% Net interest-bearing debt (year-end) 229.9 189.2 CONSOLIDATED CASH FLOW Cash flow from operating activities 101.8 75.1 Cash flow from investing activities – 33.4 – 32.5 Cash flow from operating and investing activities 68.4 42.6 DEBT RATIO Net debt / EBITDA ratio 2.55 2.27 SHARES IN ISSUE (X 1,000) Number of shares in issue at year-end 26,498 26,791 Weighted average number of shares in issue (before dilution) 25,895 26,225 Weighted average number of shares in issue (after dilution) 26,040 26,366 PER-SHARE DATA Net result 0.81 0.72 Diluted net result 0.80 0.72 Dividend 0.50 0.50 Equity 17.25 17.70 EMPLOYEES Number of staff years at year-end ** 4,454 4,256 –  of which in the Netherlands 795 774 * Adjusted for accounting policy change pensions. ** Excluding temporary personnel. (in millions of euros unless stated otherwise) Key figures 2013
  11. 11. 7TenCate annual report 2013  |  The TenCate share | The decrease in the debt position and a rise in the results in the third quarter of 2013 also had a positive effect on the share price. The highest share price was recorded in November 2013, at € 23.95. The TenCate share ended the year at a price of € 22.90, representing a rise of 15% compared to the starting price of €  19.87. With the inclusion of dividends, TenCate shareholders earned a return of 18% in 2013. The total volume of trading in the share on NYSE Euronext Amsterdam in 2013 was 8% lower than in 2012. GENERAL INFORMATION The TenCate share is listed on NYSE Euronext Amsterdam and forms part of the Amsterdam AMX index. The weighting of the share in the AMX index on 31 December 2013 amounted to 2.04%. TenCate has been listed as an option fund on NYSE Life in Amsterdam since 2011. The TenCate share is also traded on the Chi-X, Equiduct, Turqoise and BATS alternative exchanges. In 2013 over 80% of the shares were traded on NYSE Euronext Amsterdam. The share is followed by analysts in leading banks and securities houses in the Netherlands and Belgium. SHARE PRICE PERFORMANCE IN 2013 The equity markets in Europe staged a recovery in 2013 due to an easing of tensions in the eurozone. The TenCate share initially underperformed the AMX and MSCI Europe indices due to TenCate’s high proportion of government-related revenues and continuing cuts by the US Ministry of Defence. The recovery in the TenCate share price began in September after the publication of a number of positive reports concerning, among other things, the long-term CRADA contract with the US Army RDECOM for the TenCate ABDS™ active blast countermeasure system and the collaboration with various parties of strategic/commercial relevance. The positive price performance was coupled with relatively high trading volumes, with over two million shares traded in September, equivalent to 9% of the total number of shares in issue. The TenCate share VOLUME OF TRADING IN TENCATE SHARES 0 650 1,300 1,950 2,600 January 2013 June December number of shares x 1,000 AMX MSCI Europe KTC 30.0 22.5 15.0 7.5 0.0 –7.5 –15.0 January February March April May June July August September October November December 2013AMXKTC MSCI Europe DATA PER SHARE; IN % Source: NYSE Euronext ISIN code: NL 0000375731 Reuters code: NTCN.AS Bloomberg code: KTC.NA
  12. 12. 8 |  TenCate annual report 2013  |  The TenCate share .. The TenCate share The majority of the institutional shareholders are based in the Netherlands. The proportion of shares held in the United States and the United Kingdom decreased compared to 2012. COMMUNICATION POLICY TenCate participated actively in roadshows and investor conferences in Europe in 2013. Having regard to its transparency objective, TenCate sets great store by intensive dialogue with analysts, shareholders and potential shareholders. A Capital Markets Day was held in November at the production site in Primarette, France. Analysts and shareholders were informed in particular about the activities of TenCate Advanced Armour EMEA and TenCate Grass EMEA. Background information and details of the various strategic themes are provided in TenCate’s txtures magazine, on the company’s website and in the updated IR app. DIVIDEND POLICY AND PROPOSED DIVIDEND TenCate pursues a balanced dividend policy in which a decrease in profit, such as that which occurred in 2013, is reflected to a somewhat muted extent in the change in dividend. The dividend policy is based on a distribution rate of 40%. An optional dividend is usually offered. In 2013, 60% of shareholders opted to receive a cash dividend. Having regard to the current results, a dividend pay-out ratio of 69% is proposed. The dividend would therefore amount to € 0.50 per € 2.50 par value share, payable at shareholders’ discretion in shares as a charge to the share premium reserve or in cash. NUMBER OF SHARES IN ISSUE Number of shares in issue on 31 December 2012 26,497,666 Increase in share capital as a result of stock dividend 293,701 Number of shares in issue on 31 December 2013 26,791,367 CHANGES IN THE NUMBER OF SHARES IN ISSUE 2012 2013 Par value € 2.50 € 2.50 Lowest price € 16.66 € 17.15 Highest price € 26.30 € 23.95 Average price € 20.81 € 19.74 Closing price € 19.87 € 22.90 Earnings per share € 0.81 € 0.72 Dividend per share € 0.50 € 0.50 DISCLOSURE OF MAJOR HOLDINGS IN LISTED COMPANIES 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 3%. There are no known holdings in the AFM register of short positions. Name Date of disclosure Percentage Norges Bank 31 December 2013 3.07% Allianz Global Investors Europe GmbH 15 November 2013 4.99% Delta Lloyd N.V. 6 May 2011 5.67% Delta Lloyd Deelnemingen Fonds N.V. 22 June 2010 10.16% Kempen Oranje Participaties N.V. 1 January 2010 6.34% GEOGRAPHIC SPREAD OF INSTITUTIONAL SHAREHOLDINGS (Source: LionShare, 31 December 2013) The Netherlands Germany United States United Kingdom Norway Belgium Switzerland Other 1%3% 61% 7% 7% 11% 7% 3% 2013
  13. 13. 9TenCate annual report 2013  |  The TenCate share | OPTION PLAN, SHAREHOLDINGS OF PERSONNEL AND EXECUTIVE BOARD Details of the option plan and the shareholdings of managers and members of the Executive Board can be found on page 146 of this report. The shares repurchased by the company relate to the hedging of granted options. IMPORTANT DATES IN 2014 Publication of 2013 full-year figures 27 February Publication of 2013 annual report 5 March Annual General Meeting of Shareholders 17 April Ex-dividend date 23 April Record date: determination of dividend entitlements 25 April Option period for cash or stock dividend 28 April to 9 May Publication of trading update for first quarter of 2014 28 April Announcement of conversion ratio 12 May Payment of dividend / delivery of shares (stock) 14 May Publication of 2014 half-year figures 24 July Publication of trading update for third quarter of 2014 24 October Capital Markets Day TenCate held a Capital Markets Day at its production site in Primarette, France, on 20 November. Analysts and shareholders were informed in particular about the activities of TenCate Advanced Armour EMEA and TenCate Grass EMEA. Presentations were given by Loek de Vries (President and CEO of TenCate), Steen Tanderup (Managing Director of TenCate Advanced Armour EMEA and APAC) and Ton Raaphorst (Managing Director of TenCate Grass EMEA). Visitors were also given a tour of the production site, in which composites and ceramics are produced for aerospace armour applications and personal ballistic protection.
  14. 14. 10 |  TenCate annual report 2013  |  Foreword by the Chairman of the Executive Board Dear stakeholders, As expected, 2013 was a challenging year for TenCate. Revenues and results were under pressure throughout the year. The 2013 financial year was marked by sluggish government markets due to tight budget policies. This led to a decrease in market potential and uncertainty surrounding government orders which were already in the pipeline. This made it difficult to plan production and financing adequately. It was inevitable that some revenue generation was postponed and certain developments took longer than expected to materialise. For many years, government-related markets such as defence and infrastructure had developed in a reliable and fairly predictable way for TenCate. That has changed in recent times. Situations widely viewed as impossible, including a complete freeze and reduction of all government spending, as occurred in the United States, had a major impact on TenCate’s financial development in 2013. In response to events in the markets in which TenCate operates, the company maintained a restrained financial policy. This was characterised by low investments in tangible fixed assets, cost control and debt reduction aimed at keeping the risk profile as low as possible. The intensification of internal and external collaboration announced in 2012 was further developed. Companies must adapt ever more rapidly to market dynamics: not only to the new reality, but also to fast- changing demands of markets and technological and other developments which offer new opportunities. By working together it is possible to share costs and mobilise knowledge faster. DEVELOPMENTS IN THE DEFENCE MARKET Measured over the last ten years, defence spending in Europe reached a low point. Discussions in the United States on the government budget had a paralysing effect on expenditure. The decline in TenCate’s revenues was caused predominantly by the drop-off in defence orders in the TenCate Protective Fabrics (TenCate Defender™ M) and TenCate Advanced Armour (vehicle armour) market groups. Vehicle armour remains an attractive market for TenCate, in view of the many specialisations which have been brought together within the company. The development of the TenCate ABDS™ active blast countermeasure system is also expected to give further impetus to these and other activities of TenCate in the armour market in the future. NON-GOVERNMENT MARKETS One of the most successful markets for TenCate is the aerospace market. The synthetic turf businesses and other activities focused on industrial end-markets also developed positively. TenCate is actively pursuing the development of new markets, such as automotive composites. TenCate also endeavoured to develop the ‘Protecting People’ theme outside the defence market. This aim is reflected in new concepts for the police and other emergency services (law enforcement). Success in these new markets, usually involving new materials, nevertheless requires time. SUSTAINABLE INNOVATION TenCate’s innovation policy is focused on ground-breaking technological developments which can create new standards. This process usually takes a number of years. The intended result is that TenCate develops a tenable technology position, usually supported by patents, allowing long-term revenue growth. The focal points in the development of new product-market-technology combinations are: ■■ Digital printing and finishing technologies ■■ Innovative synthetic turf systems ■■ Automotive composites ■■ TenCate ABDS™ active blast countermeasure system Major strides were made in all these developments in 2013. TenCate is therefore developing dynamically, even amid less favourable market conditions. Innovation is nevertheless a long-term process that is focused on long-term growth. Foreword by the Chairman of the Executive Board
  15. 15. 11TenCate annual report 2013  |  Foreword by the Chairman of the Executive Board | REPORTING For reporting and positioning purposes, a sharper focus was applied both to the company’s identity (around the theme of Protecting People) and to the market approach. The market is increasingly being approached on the basis of geographic regions (continent-based management). Continuing integration is also taking place in the Advanced Textiles & Composites and Geosynthetics & Grass sectors. The theme of sustainability is high on the agenda in TenCate’s development, positioning and reporting. New materials often have favourable environmental effects, such as a reduction in the CO2 footprint. In practice, this can be a key driver in demand for high- quality functional materials. Good examples are automotive composites and various geotextiles. ORGANISATION AND EMPLOYEES The current market dynamics and changing organisational approach also require the necessary flexibility from employees. The more market-oriented approach was also a factor in the demand for high- calibre employees capable of thinking in terms of solutions and prepared to collaborate both internally and externally and work in teams. I would like to thank all employees for the additional commitment they have demonstrated in less favourable circumstances. L. de Vries, President and CEO
  16. 16. 12 |  TenCate annual report 2013  |  People Planet Profit People Planet Profit 25%more training hours for TenCate employees 100%recyclable GreenFields®  MX woven synthetic turf system 53%composites in the Airbus A350, including thousands of TenCate Cetex® clips TenCate focuses on the sustainable protection of people and their working and living environments
  17. 17. 13TenCate annual report 2013  |  People Planet Profit | 14%less CO2 emitted by TenCate than a year ago 9Highly Protected Risk Awards from FM Global for TenCate 15%weight reduction in helicopter tailplane using TenCate Cetex® technology
  18. 18. 14 |  TenCate annual report 2013  |  People Planet Profit Protecting people in transit As a textile technology group, TenCate focuses on ‘Protecting People’: creating sustainable solutions to protect people in their working and living environments. On the basis of the six end-markets in which TenCate operates, four areas of application have been defined: In Transit (mobility), In Habitats (infrastructure, water management), At Work (personal protection, defence) and During Leisure (sport and leisure). TenCate focuses particularly on the production of materials intended to fulfil specific characteristics based on industry standards, laws and regulations, safety standards and the requirements of particular target groups. TenCate’s materials usually form an essential part of an end-product or overall solution. We live in a society that involves risk. The world has a growing need for better and sustainable protection against numerous threats, regardless of whether they have a natural or human origin. TenCate aims to occupy a leading position in the development, production and supply of sustainable protective solutions, for which the company has a broad technological base. TenCate employees around the world make the difference in the development and production of protective solutions. In addition to the core theme of personal safety and physical protection, the features incorporated in the production of materials are weight reduction, fuel conservation, noise reduction, environmental protection, reuse and recyclability. TenCate’s knowledge of material technology enables it to provide solutions jointly with end-users and industry partners. MOBILITY In the field of mobility, the areas of application lie particularly in the aerospace market. With its wide portfolio of composites, TenCate has gained a strong position particularly in the aviation and space industries. Composites are increasingly used in components of the secondary structure and interiors of aircraft and helicopters. Safety is essential in aerospace materials. On the basis of the expertise and experience gained with composites, TenCate has continued to develop this material. This has resulted in composites for other applications, particularly armour, based on bullet- and fragment-resistant plate material in army vehicles, aircraft, helicopters and ships. This development has led to the establishment of TenCate Advanced Armour as an independent market group within the Advanced Textiles & Composites sector. Within automotive composites TenCate focuses mainly on vehicle components which affect the safety and structure. High demands are made on these materials. For applications in mobility (automotive industry), TenCate operates in a number of innovation networks in which it contributes its own specific knowledge, know-how and experience. The company also collaborates with numerous universities, colleges and institutions. In open innovation, TenCate works on primary structural components of thermoplastic composites. Examples of knowledge networks are the Thermoplastic Affordable Primary Aircraft Structures consortium (TAPAS), the ThermoPlastic composite Research Centre (TPRC), the Advanced Manufacturing Research Centre (AMRC) and the Aachener Zentrum für Integrativen Leichtbau (AZL). PROTECTING PEOPLE IN TRANSIT Mobility continues to grow apace. Increasing prosperity is making people worldwide more mobile and giving rise to increased transportation of goods and raw materials within and between continents, and even to extraterrestrial destinations. Making those transport movements increasingly efficient, safe and sustainable is a challenge in itself. The use of advanced materials in areas such as aerospace, the automotive industry, transport and infrastructure works and structures offers protective and environmentally conscious solutions for the long term.
  19. 19. 15TenCate annual report 2013  |  Business overview | Business overview provides a detailed explanation of why TenCate does what it does, how it does it and what it does Business overview 16 Strategic objectives 17 Business model and value creation 18 Strategic objectives and progress 23 Indicators 24 Sectors 32 Corporate information 41 BUSINESS OVERVIEW
  20. 20. 16 |  TenCate annual report 2013  |  Business overview TenCate is a multinational company that combines textile technology with chemical process technology in the development and production of high-quality materials, modules and systems. TenCate specialises in materials engineering and is a world market leader in the field of technical textiles. TenCate increasingly offers total solutions, independently or in co-operation with partners. The company is subdivided into two main sectors: Advanced Textiles & Composites and Geosynthetics & Grass. VISION TenCate’s vision is based on the development (‘buy & build’) of an extensive and progressive technological base. As a company in the technical textile sector, TenCate’s worldwide technology position (including patents) has unparalleled breadth and innovative capacity. That enables the company to develop materials that cater optimally to the individual market requirements in the chosen market themes of safety and protection of man and the environment. MISSION TenCate strives for leadership in solutions for personal protection and protection of working and living environments: Protecting People with textile technology-based materials which make the difference. Safety and protection of people and their working and living environments are worldwide growth markets. Developing the right product portfolio, tailored to specific market requirements, drawing attention to solutions in an effective way and incorporating the control of safety risks in specifications are key parts of the way in which TenCate fulfils its mission. TenCate operates principally within six end-markets which have been derived from the worldwide trends of safety and sustainability. These end-markets are personal protection, defence, mobility, infrastructure, water management and sport & leisure. The materials, modules and systems developed on the basis of these end-markets have specific characteristics. These characteristics are usually defined and qualified on the basis of functional specifications. STRATEGY TenCate’s strategy is based on value chain management. The cornerstones of this business model are end-user marketing, technological innovation, cost leadership and product differentiation (see page 20). This model determines how TenCate – based on its position in the value chain – creates value, establishes value in products and systems and adds value to customer-focused system solutions. The end-user is central in this process. TenCate focuses primarily on markets requiring products that meet high functional demands. The use of network structures with partners in the value chain adds a new dimension to the business model. The aim is to improve access to markets and strengthen the competitive position. Business overview DURING LEISURE IN TRANSIT AT WORK IN HABITATS PROTECTING PEOPLE
  21. 21. 17TenCate annual report 2013  |  Business overview | Strategic objectives Quantitative strategic objectives are: ■■ The net invested capital must generate a sufficient return. The operating result before amortisation as a percentage of average net invested capital must be at least 15%. ■■ The financial position must be sufficiently solid. The ratio of net interest-bearing debt to the operating result before depreciation and amortisation (EBITDA) must be structurally lower than 2.5. ■■ The target of 10% annual profit growth is based on EBITA (operating result before amortisation). This target has not been met in the last few years. The objective nevertheless remains to achieve long-term profit growth averaging 10% per year. To this end, the buy & build strategy will be pursued. An increase in added value and efficiency is also necessary, since the organic growth of the current core activities is expected to average less than 10% in the years ahead. ■■ An adequate profit margin must be generated. The consolidated EBITA margin must rise to at least 10%. TenCate works to maintain its position as a developer and producer of materials within the chain. Forward or backward integration has a direct impact on the company’s positioning and immediately influences the competitive position and relationships with direct customers. STRATEGIC OBJECTIVES Qualitative strategic objectives are: ■■ Creation of value for stakeholders through profitable growth based on knowledge, expertise and internal synergy. ■■ Achievement of critical mass in product-market-technology combinations by occupying leading positions in worldwide market niches. ■■ Achievement of a healthy financial position with sufficient strength for acquisitions. ■■ Management of a balanced portfolio of activities, in which product- market-technology combinations differ in terms of growth opportunities and risk profile. ■■ Stimulation of an open, creative and enterprising culture for change and progress. ■■ Management of a global commercial organisation which thinks in terms of customer-centric (system) solutions within the overall value chain. ■■ Acceleration of growth of the company through partnerships. SAFETY SUSTAINABILITY HIGH END SPECIFICATIONS TEXTILE TECHNOLOGY BASED MATERIALS
  22. 22. INPUT 18 |  TenCate annual report 2013  |  Business overview Business model and value creation Customerspeci fic solutions Cost-efficien tproduction End-userex perience Disruptive and su stainingtechnologies HUMAN 4,500 employees 10% management 1% corporate FINANCIAL Assets Liabilities PRODUCTION Solutions Services DIGITAL Data SOCIAL Customers End-users Suppliers Joint ventures TECHNICAL Techniques Technologies Processes Qualification INTELLECTUAL Intellectual property Branding Corporate identity NATURE Natural sources Synthetic sources Other sources CAPITAL VALUE DRIVERS END-USER MARKETING ■■ Reduction in total cost of ownership of end-users ■■ Problem-solving capability ■■ System approach ■■ Best in class: price-performance ratio ■■ Co-creation: development with customers ■■ Reliability: TenCate brand stands for quality PRODUCT DIFFERENTIATION ■■ Product portfolio: linked to specific customer requirements ■■ Time to market ■■ Best in class: price-performance-­ quality-service ■■ Flexibility: fast adaptation to changing demands TECHNOLOGICAL INNOVATION ■■ Broad technological base ■■ Open innovation networks Knowledge networks ■■ Patents and intellectual property Market- driven innovation and ■■ problem-solving capability COST LEADERSHIP ■■ Economies of scale ■■ Purchasing advantages ■■ Availability of raw materials ■■ Geographic spread of production ■■ Logistical advantages: close to customers ■■ Recyclability
  23. 23. OUTPUT 19TenCate annual report 2013  |  Business overview | IN TRANSIT Aerospace Automotive Transport Naval Etc. IN HABITATS Infrastructure Water management Agriculture/Horticulture Structures Etc. AT WORK Personal protection Armour Medical Etc. DURING LEISURE Sport Recreation Holidays Etc. MATERIALS THAT MAKE A DIFFERENCE PROTECTING PEOPLE SUSTAINABILITY AND ENVIRONMENT Characteristics: Lightweight Long life 100% recyclable Reusable Etc. SAFETY AND PROTECTION Characteristics: Fire-resistant Flame-retardant Bullet-proof Fragment-proof Etc. PROTECTIVE FABRICS THERMOPLASTIC COMPOSITES ANTIBALLISTIC PROTECTION MATERIALS GEOTEXTILES OUTDOOR FABRIC THERMOSET COMPOSITES SURVIVAL SYSTEMS SYNTHETIC TURF
  24. 24. 20 |  TenCate annual report 2013  |  Business overview .. Business model and value creation TECHNOLOGICAL INNOVATION Innovations at TenCate usually have a technological background, as in the development of thermoplastic composite technology (TenCate Cetex® ) or process innovation through the use of digital inkjet technology. Innovations also result from combinations of existing technologies, as in the case of TenCate Defender™ M and TenCate GeoDetect® . Technological innovations are necessary to secure the future. It is also important to develop existing products by incorporating new technologies. TenCate strives for continuous progress in order to accommodate or initiate new regulations and standards. Innovation also gives rise to development costs associated with specifications and qualifications of materials. These costs are not usually reported separately. Acquisitions with a technological background also form part of the innovation process. TenCate conducts an active intellectual property policy and now has more than 670 patents. An up-to-date list of patents can be found on the corporate website under Company profile. The main value drivers for innovation are: ■■ Broad technological base ■■ Links to universities, colleges and knowledge networks ■■ Membership of open innovation networks ■■ Internal co-operation and exchanges of knowledge between market groups (social innovation) ■■ Knowledge positions and intellectual property ■■ Market-driven (applied) innovation aimed at problem-solving. COST LEADERSHIP Although products must have the right technical and functional specifications, the cost aspect remains very important. In the current economic climate in particular, with declining government budgets, there is also high cost-awareness on the demand side. That compels the company to remain very alert to costs, but also to cost-efficient production, margin policy, process optimisation, organisation of logistics flows, reduced environmental costs, etc., and to the use of scarce resources and raw materials. TenCate also conducts an active portfolio policy whereby the portfolio is kept constantly under review and the product life cycle is assessed against market requirements. By manufacturing globally and accessing commodity markets worldwide, TenCate in principle has a good cost VALUE CHAIN MANAGEMENT TenCate operates a business model based on value chain management. TenCate’s business model determines how the company creates value, establishes value in products and systems and adds value to customer- focused system solutions. The end-user is central in this process. The cornerstones of the business model are end-user marketing, technological innovation, cost leadership and product differentiation. END-USER MARKETING Every new product which TenCate develops must be linked with prevailing customer demand or new national or international standards and laws and regulations. The specifications are agreed or developed with the customer and/or end-user at an early stage. Specific customer demand and changing specifications can be accommodated thanks to the acquired expertise and technological base. This is an important competitive advantage. Higher standards can be set and progress made by flexibly adapting decision-making units to end-markets to take account of new technological possibilities, which can then be included in new standards. TenCate’s products and solutions provide functional added value in almost all cases. In some cases they can be life-saving. In some cases, for example in tenders, TenCate operates through its customers. In some end-markets, therefore, its image and brand awareness can only be assessed indirectly. The main value drivers for end-user marketing are: ■■ Problem-solving capability: responding to functional requirements of the end-user ■■ System approach: components/materials form part of an integrated system ■■ Differentiation of the product portfolio to meet local needs, standards and rules ■■ Best in class: price-performance ratio ■■ Innovation: co-creation; developing specifications jointly with customers ■■ Reliability: the TenCate brand stands for quality and functionality ■■ Creation of standards: with its positioning as a specialist in its core markets and its very broad technological base, TenCate aims to be a foremost solution provider, partly on the strength of leading market positions.
  25. 25. 21TenCate annual report 2013  |  Business overview | VALUE PROPOSITION TenCate operates in markets in which it is important to draw attention to the distinctive features of the product range on the basis of the value proposition. An important target group comprises institutions such as purchasing organisations which play a decisive role in drawing up standards and specifications which materials must fulfil. In addition to functionality, requirements may be specified in areas such as sustainability, CO2 footprint, costs during economic service life and warranties. It is also important to be able to respond rapidly to new market requirements. The setting of specifications and standards is generally a dynamic process to which TenCate must respond appropriately. That requires a flexible and innovative organisation. base and operates in close proximity to most end-markets. The company also benefits from economies of scale because it occupies leading positions in most core markets. Technological innovation involving new production methods can have a positive impact on the cost structure. The main value drivers for cost leadership are: ■■ Constant focus on process innovation ■■ Market leadership and associated economies of scale ■■ Purchasing advantages due to global coverage of commodity markets ■■ Availability of raw materials (TenCate is a key customer) ■■ Geographic spread of production ■■ Proximity of end-users; logistical advantages. PRODUCT DIFFERENTIATION TenCate aims to develop an appropriate product portfolio offering dependable solutions tailored to specific market and/or customer requirements. Because product life cycles are becoming shorter, TenCate has to bring a steady flow of new products and solutions to the market. TenCate is guided by evolving markets in which demands are ever higher, laws change and standards become more exacting. The company adapts characteristics or incorporates them in materials in order to create customer-specific products and specialties. Product differentiation must increasingly be linked to end-user marketing in order to position the overall value proposition correctly. Greater significance is therefore being attributed to marketing. The sustainability aspect is of growing importance, partly because public- sector bodies, which constitute TenCate’s principal customer groups, usually set greater store by sustainability. The main value drivers for product differentiation are: ■■ Broad product portfolio: a good fit for specific customer requirements ■■ Relatively large number of recently developed products ■■ Best in class: price / performance ■■ Relatively short time to market: ability to respond rapidly to market demands ■■ Long-term experience: material specifications, databases, qualifications, etc. VALUE PROPOSITION FOR DIGITAL TECHNOLOGY Individualisation is a characteristic of contemporary market requirements. Manufacturers are increasingly facing declining production runs, make-to-order products, etc. This will lead to an increase in the product range and will pose fresh logistical challenges for market participants throughout the value chain. The rise of digital media, with individual customers buying their products on demand, will increasingly be seen as the standard. Digitisation of production processes is on the rise in many industries. This is also a new challenge for TenCate, which is a leader in this regard as a producer of technical textiles. The advantages for TenCate’s direct (business-to-business) customers is that reaction times to market trends can be shortened considerably and inventory levels can be reduced throughout the value chain. On this basis market participants can anticipate individual customer requirements with much greater immediacy. New characteristics can also be added to materials, opening up new markets.
  26. 26. 22 |  TenCate annual report 2013  |  Business overview .. Business model and value creation CORPORATE VALUES TenCate has a royal hallmark, recognising not only the company’s exceptional history as one of the oldest enterprises in the Netherlands, but also the way in which it does business around the world. TenCate is assiduous in imparting its ten principal corporate values to its employees: ■■ The customer is central: Protecting People ■■ Effective: doing the right things ■■ Efficient: doing things well ■■ Creative: seeking solutions and creating systems ■■ Flexible: the ‘living organisation’, adapting to external developments, new demands and trends ■■ Enterprising: identifying and optimising opportunities ■■ Innovative: thinking ‘outside the box’ ■■ Reliable: doing business on the basis of trust; ensuring that TenCate is seen as a reliable partner ■■ Commitment: dedication to the work which the company stands for ■■ Co-operation: working with colleagues and in teams. Employees are TenCate’s human capital and are selected, rewarded and appraised partly on the basis of the above values. They are expected to be proactive, dedicated and open to change.
  27. 27. 23TenCate annual report 2013  |  Business overview | Strategic objectives and progress 0 Strategic objectives 2013 target 2013 progress 2014 target Priorities PEOPLE TenCate aims for a male-female ratio at management level (and in management bodies) that is comparable to that of the rest of the workforce (75%-25%), as an indicator of equal opportunities. The target for the male-female ratio at management level in 2013 was 80%-20% (2012: 80%-20%). The male-female ratio at management level in 2013 was 82%-18%. The target for the male-female ratio at management level in 2014 is 80%-20% (2013: 82%-18%). Where equally suitable, female candidates will be proposed for appointment to management bodies, management posts and the rest of the workforce. TenCate aims to increase the number of training hours. The target in 2013 was for the number of training hours to rise to 16 (2012: 14 hours). The number of training hours in 2013 was 16. The target in 2014 is for the number of training hours to rise to 17 (2013: 16 hours). Achieving more training hours, partly through executive policies of training experts and HR departments. TenCate aims for optimum occupational health and safety targeted at permanent prevention of fatal and non-fatal industrial accidents and safety incidents. The target for the number of fatal industrial accidents in 2013 was zero. The aim was for the ratio of days of absence due to non-fatal industrial accidents to fall to 35.0 per 100 FTEs in 2013 (2012: 48.9 per 100 FTEs). The number of fatal industrial accidents in 2013 was zero. There were 33.0 days of absence due to non-fatal industrial accidents per hundred FTEs in 2013. The target for the number of fatal industrial accidents in 2014 is zero. The aim is for the ratio of days of absence due to non-fatal industrial accidents to fall to 25.0 per 100 FTEs in 2014 (2013: 33.0 per 100 FTEs). Increase of at least 3 in the number of TenCate production facilities having received the Highly Protected Risk Award from FM Global (2013: 9 sites). PLANET TenCate aims to increase the proportion of renewable electricity worldwide. The target in 2013 was to raise the proportion of renewable electricity by 3% (2012: 2.6%). The proportion of renewable electricity rose by 15.2% in 2013. The target in 2014 is to raise the proportion of renewable electricity by 3% (2013: 15.2%). Increased use of renewable electricity at production sites worldwide. TenCate aims to increase energy efficiency worldwide, leading to a steady fall in CO2 emissions. The target in 2013 was to increase the energy efficiency of production sites by 1% (2012: 1%). Energy efficiency worldwide rose by 1% in 2013. In the Netherlands, the rise in energy efficiency in 2013 was 2%. The target in 2014 is to increase the energy efficiency of production sites by 1% (2013: 1%). Pursuit of energy-saving measures at production sites worldwide. Buying more energy- efficient plant and equipment at times of replacement. TenCate aims to reduce or at least maintain the existing level of total water consumption (on like-for-like revenues). The target in 2013 was to reduce water consumption at production sites to 2.9 million m3 (2012: 3.5 million m3 ). Water consumption worldwide in 2013 was 2.9 million m3 . The target in 2014 is for water consumption at production sites to be at or below 3.0 million m3 (2013: 2.9 million m3 ). Increase in digital finishing and printing of outdoor fabrics (UV curing) and any other substrates. Implementation of existing water conservation programmes. TenCate aims for a worldwide reduction in the amount of waste released during production processes (on like-for-like revenues). The target in 2013 was for the amount of waste from production processes to fall to 13 kilotons (2012: 14 kilotons). The amount of waste in 2013 was 13 kilotons. The target in 2014 is an amount of waste from production processes of 13 kilotons or less (2013: 13 kilotons). Introduction of the 5S methodology at a number of production sites worldwide. More internal recycling of scrap. PROFIT TenCate aims to maintain a sufficiently solid financial position. TenCate aims for a ratio of net interest-bearing debt to EBITDA of less than 2.5 over the long term (2012: 2.55). The debt ratio at the end of 2013 was 2.27. TenCate aims for a ratio of net interest-bearing debt to EBITDA of less than 2.5 over the long term (2013: 2.27). TenCate will control the risk profile by pursuing a restrained financial policy. TenCate aims for a sufficient return on net invested capital. TenCate aims for EBITA as a percentage of average net invested capital of at least 15% over the long term (2012: 6.2%). EBITA as a percentage of average net invested capital was 6.4% in 2013. TenCate aims for EBITA as a percentage of average net invested capital of at least 15% over the long term (2013: 6.4%). High-quality / innovative technological development and internal synergy. Management of a balanced portfolio of activities with product-market-technology combinations in different phases of the production life cycle. Acceleration of growth of the company through partnerships. Attaining critical mass in product- market-technology combinations by occupying leading positions in global market niches. TenCate aims for sustainable profit growth. TenCate aims for average EBITA growth of 10% per year over the long term. Reported EBITA declined by 3% in 2013. TenCate aims for average EBITA growth of 10% per year over the long term. TenCate aims for an adequate profit margin. TenCate aims for an EBITA margin of at least 10% over the long term (2012: 4.8%). The consolidated EBITA margin in 2013 was 4.8%. TenCate aims for an EBITA margin of at least 10% over the long term (2013: 4.8%).
  28. 28. 24 |  TenCate annual report 2013  |  Business overview Indicators COST LEADERSHIP The principal indicators include: ■■ Production ■■ Costs per unit/hour ■■ Turnaround time in days ■■ First-time-right percentage ■■ Use of raw materials, water and energy ■■ Number of defects ■■ Downtime ■■ Rejects and waste ■■ CO2 emissions ■■ Storage-inventory-delivery ■■ Inventory level ■■ Inventory turnover rate ■■ Percentage of products delivered on time ■■ Percentage of products delivered correctly ■■ Human resources ■■ Personnel costs ■■ Turnover ■■ Absenteeism PRODUCT DIFFERENTIATION The principal indicators include: ■■ Number of new product-market-technology combinations ■■ Quantitative and qualitative portfolio growth ■■ Net present value of the product portfolio ■■ Number of extensions of product life cycles Key performance indicators (KPIs) are the factors and aspects of business operations that affect the performance and hence the value of the company. TenCate draws a distinction between general and specific indicators. A number of general indicators are periodically assessed against the cornerstones of TenCate’s business model. Specific corporate social responsibility indicators have been defined at corporate level on the basis of the guidelines of the Global Reporting Initiative (GRI). These KPIs indicate TenCate’s worldwide position with regard to social, ecological and economic aspects of corporate social responsibility. Brief details of a number of key indicators are provided below. The indicators collectively contribute to the company’s value chain management. GENERAL INDICATORS END-USER MARKETING Important indicators include: ■■ Customer satisfaction ■■ Market share ■■ Sale volume ■■ Customer retention (share of wallet) ■■ Number of complaints and complaint handling ■■ Brand recognition and image TECHNOLOGICAL INNOVATION The principal indicators include: ■■ Number of patents ■■ Number of trademark registrations and countries of registration ■■ Completion of process innovation projects ■■ Creation of new standards in niche markets ■■ Number of innovation networks in which TenCate operates TenCate business model © TenCate VALUE CHAIN MANAGEMENT INTERNALEXTERNAL portfolio management process management market management END-USER MARKETING market product technology process DIFFERENTIATION INNOVATION COST LEADER business development
  29. 29. 25TenCate annual report 2013  |  Business overview | TARGETS Corporate social responsibility is implemented by the line management within the stated policy frameworks. This is actively co-ordinated and supported at corporate level through the provision of tools that enable these activities to be maintained, measured and presented as transparently as possible. Once again in 2013, all market groups within TenCate received detailed feedback on reporting business units worldwide by means of CSR fact sheets, for both full-year 2012 and the first half of 2013. This combined information indicates the performance relative to comparable business units within the Group and provides a basis on which the local management can formulate CSR improvement plans and any corporate and other targets for the current financial year. Since 2012, the market group units which were certified in accordance with the CSR Performance Ladder (level 3) have already formulated their own, similar or related targets, including for the nine reported KPIs. TenCate took major steps in 2013 aimed at the further development and measurability of corporate social responsibility. This process will continue in the years ahead, partly through the definition and adjustment of new and existing CSR targets. SPECIFIC INDICATORS (CSR) The principal and most material CSR themes were determined and key performance indicators (KPIs) were defined at corporate level at the beginning of 2012, on the basis of the guidelines of Global Reporting Initiative 3. These KPIs reflect TenCate’s performance with regard to social, ecological and economic aspects of corporate social responsibility. Worldwide CSR data have been gathered, validated, aggregated and analysed at corporate level every six months since 2012. The CSR data for 2011 are included here as a baseline. This section reports on the specific indicators relating to the 2013 reporting year. As in the case of the 2012 data, these comply with TenCate’s accuracy criteria. The data quality and relevant processes were further improved in 2013. A corporate CSR controller has joined the corporate CSR team in order to continue the gathering, analysis, aggregation and validation of the CSR data and deepen or broaden the data as necessary. The business units in the downstream activities of TenCate Grass (very limited in-house production) and the activities of TenCate Enbi and Xennia Technology have not been included in the measurements. Data for the Thailand business unit also ceased to be included in the CSR figures for 2013, because it was closed during the reporting year. The CSR information for Amber Composites, which was acquired at the beginning of 2013, was also excluded from the CSR analyses for the past year, with the exception of employee data. 2012 2013 North and South America EMEA Asia Pacific 39% 20% 41% 38% 24% 38% 1 · ANALYSIS OF EMPLOYEES BY REGION IN 2012 AND 2013 2012 2013 90% 2% 8% 89% 2% 9% Permanent contract Temporary contract Agency contract 2 · ANALYSIS OF EMPLOYEES BY CONTRACT TYPE IN 2012 AND 2013 Male Female 78% 22% 76% 24% 2012 2013 3 · ANALYSIS OF EMPLOYEES BY GENDER IN 2012 AND 2013 Male Female 82% 18% 80% 20% 2012 2013 4 · ANALYSIS OF MANAGEMENT BY GENDER IN 2012 AND 2013
  30. 30. 26 |  TenCate annual report 2013  |  Business overview .. Indicators PERSONNEL BREAKDOWN As a multinational company, TenCate has a worldwide presence. Production sites are located on various continents. Figure 1 shows the geographic breakdown of TenCate employees (headcount) by continent at the end of 2013. Figure 2 shows the breakdown of employees by contract type at the end of 2013, i.e. between permanent, temporary and agency contracts. The breakdown of employees by region has changed somewhat compared to 2012 as a result of the integration of the TenCate Protective Fabrics activities in Thailand into the Dutch production site. The workforces on the continents of America and EMEA are now of equal number, partly as a result of the acquisition of Amber Composites. The proportion of employees with agency contracts has decreased by 1% compared to 2012 due to more cost- effective use of production organisations. Despite its technical character, TenCate is committed to being a company that offers sufficient scope for diversity among employees. Figure 3 shows the composition of the workforce by gender. Almost 78% of the total number of employees are male and over 22% female. Figure 4 shows the composition of the management of TenCate. Eight out of 10 management personnel are male and two out of ten are female. Both sets of percentages have changed fractionally compared to 2012. TenCate aims to achieve a comparable male-female ratio in its management as in the rest of its workforce, as an indicator of equal opportunities. In the years ahead, TenCate will aim to achieve a 75%-25% male-female ratio for both its management and overall workforce. OCCUPATIONAL SAFETY AND WELFARE The safety and protection of employees and their working environment at TenCate’s production sites are a central focus of the company’s policy. Table 5 provides an overview of occupational safety and welfare, expressed in ratios of industrial accidents, fatal industrial accidents, absence due to industrial accidents in days/working days, occupational diseases and sickness absence. There were no notable incidents in 2013. SOCIAL ASPECTS TenCate believes that the conduct of a sustainable personnel policy focused on the interests of the people which make up TenCate is the most important aspect of the social dimension of enterprise. Within this policy the following themes are the most material: ■■ Personnel diversity and equal opportunities ■■ Occupational safety and welfare ■■ Education and training SUSTAINABLE PERSONNEL POLICY As a technology group, TenCate is a knowledge-intensive company. The safety, health and knowledge of the employees are paramount. Social innovation through investments in this human capital benefits the company. The safety policy is implemented at production and operating sites worldwide to promote optimum occupational health and safety and keep safety incidents and industrial accidents to an absolute minimum. Protecting people right through to the shop floor. GreenSource™ The Sustainable Water Fund of the Ministry of Economic Affairs commissioned Pentair, TenCate and Wavin jointly to produce 20 sustainable drinking water systems in South Africa. TenCate is supplying the high-quality synthetic turf and geotextiles for this project. This innovation is being supported by the Advanced Materials Manufacturing Oost-Nederland (AMMON) foundation.
  31. 31. 27TenCate annual report 2013  |  Business overview | TenCate aims to continue deepening and broadening its package of technical and management training courses. The company intends to increase the number of training hours by at least 5% annually in the years ahead. ECOLOGICAL ASPECTS TenCate considers the conduct of an integrated sustainability policy focused on biodiversity and the company’s natural environment to be the most important aspect of the ecological dimension of enterprise. Within this policy the following themes are the most material: ■■ Energy consumption and CO2 emissions ■■ Water consumption and wastewater ■■ Rejects and waste SUSTAINABLE ENERGY POLICY Energy consumption is an issue that demands greater attention worldwide. TenCate has a sense of responsibility in this regard and sees it as an opportunity for cost reduction and process optimisation. Through its actions, investments and technological innovations, it contributes to the reduction and maximum efficiency of energy consumption. In the process, the CO2 footprint of the company is reduced. An increase in the share of ‘green energy’ is part of the prevailing energy policy. ENERGY CONSUMPTION Total energy consumption in 2013 amounted to approximately 1,752 terajoules (TJ). This represents a decrease of 11% compared to 2012, which was due in part to the closure of the TenCate Protective Fabrics site in Thailand. Among TenCate’s production processes, it is particularly fabric production and the extrusion of synthetic fibres that are the most energy-intensive. Since the beginning of 2013, over 15% of energy consumed has come from sustainable sources, such as green electricity. Biogas is produced at the company’s own wastewater 5 · OCCUPATIONAL SAFETY AND WELFARE 2011 2012 2013 Industrial accidents* 1.8 2.4 1.9 Fatal industrial accidents* 0 0 0 Absence due to industrial accidents in days/working days* 22.1 48.9 33.0 Occupational diseases* 0.03 0.00 0.15 Sickness absence* 2.1% 2.7% 3.0% * Ratio per hundred FTEs. These figures show that industrial accidents and days of absence decreased in 2013, returning almost to a level comparable to 2011. The temporary rise in these figures in 2012 resulted from the setting up of a new production process during that year at the TenCate Advanced Armour site in Newark in the United States, where a number of minor safety incidents occurred. Immediate remedial action was taken, which is reflected in the 2013 figures. The slightly higher sickness absence in 2013 was due in particular to the TenCate Protective Fabrics production site in Nijverdal. Measures were taken to counter this incidental rise in sickness absence. TenCate has focused its occupational safety and welfare policy on the structural prevention of safety incidents and fatal or non-fatal industrial accidents. It aims to reduce the ratio of days/working days of absence due to industrial accidents to 20.0 in the years ahead. EDUCATION AND TRAINING TenCate invests in the quality and skills of its employees. Education and training are crucial for the optimum development and maintenance of the company’s knowledge resources – and hence its competitive strength. The company uses both external and internal on-the-job training. In 2013, 860 employees took part in technical training courses while 265 attended management training. Both figures represent a rise compared to the previous year. The number of training hours per employee has also risen by two. Figure 6 shows the ratio of internal to external training hours. The total number of training hours increased by 22% in 2013 compared to 2012. A training expert was appointed for the four market groups in Nijverdal at the beginning of 2013 and is making a substantial contribution to the knowledge qualification process. Internal training hours External training hours 79% 21% 81% 19% 2012 2013 6 · INTERNAL AND EXTERNAL TRAINING HOURS IN 2012 AND 2013
  32. 32. 28 |  TenCate annual report 2013  |  Business overview .. Indicators treatment plant and is used to produce steam for processes. Figure 7 shows the percentage breakdown of energy consumption into the main energy sources for 2011, 2012 and 2013. 7 · ENERGY CONSUMPTION BY ENERGY SOURCE 2011 2012 2013 Renewable electricity 2.7% 2.6% 15.2% Non-renewable electricity 51.0% 51.1% 45.2% Biogas 0.0% 0.1% 0.1% Natural gas 33.0% 33.3% 25.8% Steam 12.6% 12.1% 13.0% Other sources 0.7% 0.8% 0.7% The increase in the consumption of sustainably generated electricity was achieved by switching the Nijverdal production sites to green electricity from 2013. TenCate Geosynthetics in Linz, Austria, also proactively increased the proportion of green electricity consumed in 2013. TenCate is aims to bring about a further increase the proportion of renewable electricity consumed worldwide. It intends to raise this proportion by 3% per year over the next three years. TenCate production sites worldwide have also set a target of improving energy efficiency by 1% per year by taking numerous energy-saving measures. TenCate’s Dutch production sites even have an energy efficiency improvement target of approximately 2% per year, in line with the Multi-Year Energy Efficiency Agreement of the Ministry of Economic Affairs and the Modint industry organisation on the more effective and efficient use of energy and processes in the textile and technical textile industry. CO2 FOOTPRINT POLICY CO2 emissions are coupled with energy consumption. The increase in CO2 in the atmosphere increases the greenhouse effect on earth and contributes to climate change. TenCate is mindful of this and directs its policy towards reducing CO2 emissions. By determining its level of CO2 emissions, TenCate gains insight into the total greenhouse gas emissions caused by its operations. A better understanding of CO2 footprints and how to reduce them can be obtained by identifying and then categorising emissions. At the same time, energy conservation helps to increase energy efficiency and reduce both fossil fuel consumption and CO2 footprints in order to cut process costs. TenCate’s CO2 footprint is made up of the various emission sources, such as electricity, natural gas and steam. TenCate’s climate policy is aimed primarily at reducing energy consumption through efficiency measures, based on process management and cost leadership as part of the TenCate business model. This is supported by the objective of a gradual switch to renewable, sustainable energy. CO2 EMISSIONS In 2013 TenCate’s total CO2 emissions worldwide amounted to approximately 152 kilotonnes. That represents a reduction of almost 22% compared to 2012. This decrease is due partly to the closure of the TenCate Protective Fabrics production site in Thailand and partly to the substantial rise in the proportion of green electricity in the Netherlands in particular. Figure 8 shows a breakdown of CO2 emissions by energy source in 2011, 2012 and 2013. The data show that approximately 73% of TenCate’s CO2 footprint is due to electricity consumption. Sustainable sources, such as wind power, hydroelectricity or solar energy now account for over 15% of electricity consumption. This portion is therefore CO2 -neutral. The bulk of CO2 emissions are attributable to the energy-intensive market groups, namely TenCate Protective Outdoor Fabrics and TenCate Grass. 8 · CO2 EMISSIONS BY ENERGY SOURCE 2011 2012 2013 Electricity 70.3% 71.0% 73.3% Natural gas 19.1% 18.4% 16.6% Steam 8.4% 7.9% 6.9% Flights 0.4% 0.6% 0.8% Car travel 0.7% 0.8% 1.2% Other Activities 1.1% 1.3% 1.2% SUSTAINABLE WATER AND WASTEWATER POLICY Water consumption is a growing issue worldwide. TenCate is mindful of this and implements measures, investments and technical innovations aimed at reducing and optimising the efficiency of water consumption. Water consumption is broken down by water source. Waste processing is broken down by destination. TenCate’s water treatment plants are an integral part of the water and wastewater policies of the respective sites worldwide.
  33. 33. 29TenCate annual report 2013  |  Business overview | WATER CONSUMPTION Total water consumption in 2013 amounted to approximately 2.9 million cubic metres. This represents a 15.1% reduction overall compared to 2012. This decrease is largely due to the closure of the TenCate Protective Fabrics production site in Thailand. As in 2012, groundwater and drinking water consumption decreased in 2013, while surface water consumption rose slightly. Figure 9 shows the consumption of water by source. The underlying data show that the dominant consumer of water is the TenCate Protective Outdoor Fabrics market group, with a combined share of water consumption of around 42%. This percentage can be explained by the current analogue finishing process used for technical textiles in the water-intensive processes in this market group. As a result of the introduction of digital printing and finishing for TenCate outdoor fabrics in mid-2013, a decrease in water consumption can be expected for this market group. TenCate is aiming for a further reduction in water consumed in production processes worldwide. For the next three years, TenCate aims to stabilise water consumption at less than 3 million cubic metres with a comparable level of revenues. WASTEWATER The total volume of waste water was 2.6 million cubic metres in 2013. This represents a decrease of 15.7% compared to 2012. This decrease is largely due to the closure of the TenCate Protective Fabrics production site in Thailand. Figure 10 provides an overview of total waste water by destination. Since part of the water drawn evaporates during production or is absorbed by products, the volume of discharged water is by definition lower than the volume of water drawn. Groundwater Drinking water Surface water 37.1% 19.7% 43.2% 28.9% 18.3% 52.8% 2012 2013 9 · WATER CONSUMPTION BY SOURCE IN 2012 AND 2013 Synthetic turf system for Kyocera Stadium In the space of two weeks the synthetic turf supplier GreenFields, the synthetic turf manufacturer TenCate and the construction company Heijmans completed a brand-new synthetic turf system at the Kyocera Stadium, the home venue of Dutch Premier League side ADO Den Haag. The synthetic turf system based on TenCate Evolution™ fibre was laid in just two weeks. The installation was completed swiftly and efficiently thanks to excellent collaboration between the three companies, the municipality of The Hague and ADO Den Haag. The construction of a roof over the pitch means that games can also be played at night and in poor weather. The synthetic turf system was approved by the KNVB (Royal Netherlands Football Association) on Monday 21 October and delivered on Wednesday 23 October. After the 2013-2014 football season GreenFields, TenCate and Heijmans will install a GreenFields® TX synthetic turf system in the Kyocera Stadium and in the adjacent temporary GreenFields Stadium for the 2014 Hockey World Cup. Surface water Sewage Other 50.4% 31.8% 17.8% 40.3% 38.0% 21.7% 2012 2013 10 · WASTEWATER BY DESTINATION IN 2012 AND 2013
  34. 34. 30 |  TenCate annual report 2013  |  Business overview .. Indicators Since 2013 TenCate has also added the volume of textile waste to the waste separation categories. The resulting figures will appear for the first time in the reporting for 2014. TenCate is endeavouring to reduce the volume of waste released during production processes worldwide. In the next three years, TenCate aims to stabilise the volume of waste from production processes at less than 13 kilotonnes per year with a comparable level of revenues. ECONOMIC ASPECTS The economic indicators relating to TenCate’s financial performance can be found in the other parts of the annual report and in the financial statements for 2013. In this section TenCate reports on the critical performance indicators with regard to sponsorship and donations during the reporting year. SUSTAINABLE SOCIAL POLICY TenCate has a strong commitment to society through sponsorship and donations. Employees worldwide are actively involved in numerous initiatives and projects. TenCate feels closely involved in the local communities in which it operates. Every year, TenCate sponsors various initiatives, both financially and in kind by providing materials which the company produces. Market groups and employees also make time or resources available for local or regional social activities. The sponsorship and donations policy and activities in 2013 are detailed at www.tencateannualreports.com. SPONSORSHIP AND DONATIONS In 2013 the contribution to social projects totalled approximately 0.15% of revenues, which represents a considerable increase compared to 2012. This was achieved in particular through the greatly increased involvement of TenCate Grass in the Coöperatie Eerste Divisie for professional football in the Netherlands and the partnership with the Royal Netherlands Hockey Association in preparation for the 2014 Hockey World Cup. Material sponsorship also increased strongly. Among other beneficiaries, TenCate Advanced Composites sponsored Solar Team Twente of the University of Twente and Saxion University of Applied Sciences. This team secured third place in the World Solar Challenge 2013, the highest place in its history, with its RED Engine weighing just 139 kilograms. Figure 14 provides an overview of investments through sponsorship or donations in 2012 and 2013. The main sponsorship in 2013 was once again Heracles Almelo. SUSTAINABLE WASTE POLICY TenCate uses raw materials as efficiently as possible. A lower volume of waste materials by definition means better utilisation of scarce raw materials. Unavoidable waste materials are separated in an environmentally conscious way and processed by recognised waste- processing organisations. WASTE FLOWS Almost 13 kilotonnes of waste were released in TenCate’s production processes in 2013, representing a decrease of nearly 8% compared to 2012. Over 10 kilotonnes were recycled during the reporting year and over 2.9 kilotonnes were processed externally (a decrease of 5% compared to 2012), 830 tonnes were incinerated by the waste processor and the remainder was sent to landfill. Figures 11, 12 and 13 provide an overview of waste by waste stream, type of waste separation, type of recycling and method of waste processing. Non-hazardous waste Hazardous waste 97.5% 2.5% 97.6% 2.4% 2012 2013 11 · WASTE BY TYPE IN 2012 AND 2013 Paper waste Plastic waste Wood waste Organic waste 13.4% 66.5% 12.4% 7.7% 15.0% 74.9% 9.9% 0.2% 2012 2013 12 · WASTE SEPARATION BY TYPE IN 2012 AND 2013 External recycling Landfill Incineration Internal recycling 49.3% 17.9% 5.0% 27.8% 35.3% 6.4% 16.2% 42.1% 2012 2013 13 · WASTE RECYCLING AND WASTE PROCESSING IN 2012 AND 2013
  35. 35. 31TenCate annual report 2013  |  Business overview | TRANSPARENCY BENCHMARK TenCate is assessed annually as part of the transparency benchmark of the Netherlands Ministry of Economic Affairs. The aim of this annual examination is to assess and improve the content and quality of social reporting by Dutch companies. For the 2013 Annual Report, TenCate intends to consolidate the position it achieved that year in the top 100, in the knowledge that the criteria have been tightened. TenCate’s long-term aim is to secure a position in the top 50. Transparency Benchmark of the Ministry of Economic Affairs Year Annual Report Participants TenCate’s position TenCate’s points 2013 2012 460 82 149 2012 2011 472 141 89 2011 2010 468 150 61 2010 2009 462 146 41 2009 2008 172 78 26 In past years the company has achieved the following scores and positions in the transparency benchmark: Sponsorship in cash Sponsorship in kind Donations 85.3% 9.8% 4.9% 85.6% 11% 3.4% 2012 2013 14 · SPONSORSHIP AND DONATIONS IN 2012 AND 2013
  36. 36. (VALUE ADDED) RESELLERS PROTECTIVE FABRICS • RD • Spinning • Weaving • Knitting • Pre-treatment • Dyeing • Finishing • Laminating • Quality control • Packaging Logistics • Marketing Sales PROTECTIVE FABRICS • Garment makers • Distributors PROTECTIVE FABRICS • Industrial safety • Emergency response • Military Police • Services Industries PROTECTIVE FABRICS • Chemical suppliers • Polymer suppliers • Fibre suppliers PROTECTIVE FABRICS • Chemicals • Polymers OUTDOOR FABRICS • RD • Spinning • Weaving • Pre-treatment • Dyeing • Finishing • Quality control • Packaging Logistics • Marketing Sales OUTDOOR FABRICS • Confectioners OUTDOOR FABRICS • Distributors • Dealers OUTDOOR FABRICS • Leisure • Home Terrace • Emergency response • Refugee response • Military ISO9001 FMHPR(G,USA) ISO14001(NL)/MVOPL(NL) OUTDOOR FABRICS • Chemical suppliers • Polymer suppliers • Fibre suppliers • Fabric suppliers OUTDOOR FABRICS • Chemicals • Polymers END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS ISO9001 ISO14001(NL)/MVOPL(NL) PROTECTIVE FABRICS • Distributors • PPE-dealers • Laundries MVOPL(NL) END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS AEROSPACE COMPOSITES • RD • Weaving • Pre-treatment • Chemical finishing • Calandering • Impregnation • Consolidation • Moulding • Quality control • Packaging Logistics • Marketing Sales AEROSPACE COMPOSITES • Original Equipment Manufacturers (OEM) - Prime contractors • Tier 1 Tier 2 - Suppliers of integrated structures and assemblies • Tier 3 - Subcontracted part manufacturers AEROSPACE COMPOSITES • Aviation - Interior - Exterior • Radomes Antennas • Space • Military AEROSPACE COMPOSITES • Chemical suppliers • Polymer suppliers • Fibre suppliers • Fabric suppliers AEROSPACE COMPOSITES • Chemicals • Polymers • Glass ISO9001|AS/EN9100 INDUSTRIAL COMPOSITES • RD • Weaving • Pre-treatment • Chemical finishing • Calandering • Impregnation • Consolidation • Moulding • Quality control • Packaging Logistics • Marketing Sales INDUSTRIAL COMPOSITES • Original Equipment Manufacturers (OEM) INDUSTRIAL COMPOSITES • Automotive • Oil Gas • Commercial Industrial • Sports Leisure • Medical INDUSTRIAL COMPOSITES • Chemical suppliers • Polymer suppliers • Fibre suppliers • Fabric suppliers INDUSTRIAL COMPOSITES • Chemicals • Polymers • Glass ISO9001 ADVANCED ARMOUR • RD • Designing Testing • Production Construction - Spall-liners - Add-on-Armour - Structural composites - Body armour inserts - Ready to fit solutions - Survivability packages • Quality control • Packaging Logistics • Marketing Sales ADVANCED ARMOUR • Original Equipment Manufacturers (OEM) - Vehicle manufacturers - Shipyards - Aircraft manufacturers - Body armour manufacturers - Helmet manufacturers - Cash-in-transit vehicle converters ADVANCED ARMOUR • Military - Land forces - Naval forces - Air forces - Special forces • Law enforcement • Personal protection • Cash-in-transit ADVANCED ARMOUR • Chemical suppliers • Polymer suppliers • Fibre suppliers • Fabric suppliers • Ceramic suppliers • Ballistic metal supplliers ADVANCED ARMOUR • Chemicals • Polymers • Ceramics • Metals • Glass ISO9001|AS/EN/JISQ9100(FR) ISO14001(DK)/MVOPL(NL) FMHPR(FR) MVOPL(NL) FMHPR(C,USA) 32 |  TenCate annual report 2013  |  Business overview Sectors
  37. 37. 33TenCate annual report 2013  |  Business overview | ADVANCED TEXTILES COMPOSITES The principal end-markets for the Advanced Textiles Composites sector are: ■■ Personal protection ■■ Defence ■■ Mobility ■■ Sport and leisure The products’ main areas of application are the protection of military personnel, police and process workers (heat- and flame-resistant protection and ballistic protection), protection of personnel in industry (process industry, oil and gas extraction) and protection of fire brigades and police forces. TenCate is also the European market leader in high-quality outdoor fabrics for the outdoor market. TenCate is the market leader in the field of protective fabrics and one of the pre-eminent suppliers of aerospace composites. Applications in the automotive sector and other industrial sectors are also expected to emerge over time. In both markets the strong growth in demand is being driven mainly by the need to save fuel costs (lower emissions) and reduce weight. The armouring of army and other vehicles concerns land, sea and air vehicles. The armouring of helicopters is a growing activity. TenCate operates in this field in the European market as a supplier of the end-product: an entirely customised, ready-to-install set of armour components, including fixing materials. In 2013 TenCate expanded its portfolio to include products for personal protection for the law enforcement market. Materials are increasingly required to meet specific demands. TenCate usually benefits when markets specify higher standards and demand is differentiated on the basis of specific customer requirements. TECHNOLOGY The Advanced Textiles Composites sector is concentrated around impregnation and coating technologies for the application and processing of functional characteristics in and on textiles. The products in this sector mainly comprise protective fabrics and composite materials. TenCate occupies a unique position in the composites market because it has both thermoset and thermoplastic composites in its portfolio. TenCate has a leading position in thermoplastic composites technology in the aircraft industry. The automotive industry is also increasingly discovering the advantages of thermoplastic composites. Broad application on an industrial scale will nevertheless be a long-term development. The raw materials used in the Advanced Textiles Composites sector are mainly synthetic fibres such as para- and meta-aramids, glass fibre fabrics and carbon and aramid fibres. MARKET GROUPS The Advanced Textiles Composites sector consists of four market groups and one business unit: ■■ TenCate Protective Fabrics ■■ TenCate Outdoor Fabrics Protective and safety fabrics for a wide range of professional groups and protective fabrics for outdoor applications. The activities in the TenCate Protective Fabrics market group are concentrated around the production sites in the Netherlands and the United States. In the Netherlands, safety fabrics are produced using finished substrates (cotton blends as well as synthetic products). In the United States products are manufactured with a combination of inherently protective (artificial) fibres. TenCate therefore has a wide range of product types for highly varied applications, each with specific product characteristics. ■■ TenCate Advanced Composites ■■ TenCate Industrial Composites ■■ TenCate Advanced Armour Composites for aerospace and industrial applications; antiballistic materials for personal protection, survivability solutions and vehicle armour. The TenCate Advanced Composites market group and the TenCate Industrial Composites business unit are concentrated around production sites in the United States, the United Kingdom and China (mainly thermosets) and in the Netherlands (mainly thermoplastics). The company has a strong qualification base with a complementary product range, as a result of close internal co-operation. For larger customers, TenCate can be a dependable partner in the value chain by providing a one-stop shop service.
  38. 38. 34 |  TenCate annual report 2013  |  Business overview .. Sectors TenCate Advanced Armour has European manufacturing sites in France, the United Kingdom and Denmark and operates as a manufacturer in the United States. TenCate has both strong design TENCATE PROTECTIVE OUTDOOR FABRICS BUSINESS MODEL END-USER MARKETING ■■ Value proposition focused on specific target groups and standards ■■ Increased market awareness ■■ Risk awareness / safe society ■■ Partnerships TECHNOLOGICAL INNOVATION ■■ Digital inkjet technology / ‘sustainable factory of the future’ ■■ Smart textiles ■■ Effective use of internal knowledge (social innovation) ■■ Patents PRODUCT DIFFERENTIATION ■■ Global market position, with local product adaptations for local specifications ■■ Fabrics based on fibre blends and coated / finished fabrics (product champions: distinctive in quality-performance ratio and costs) ■■ Co-makership, products tailored to specific needs COST LEADERSHIP ■■ Internal production combined with outsourcing delivers flexibility ■■ Economies of scale ■■ Process innovation ■■ Cost control TENCATE ADVANCED COMPOSITES, TENCATE INDUSTRIAL COMPOSITES AND TENCATE ADVANCED ARMOUR BUSINESS MODEL END-USER MARKETING ■■ Access to market participants and partnerships with OEM relationships in market phase of the TenCate ABDS™ active blast countermeasure system ■■ Solution-focused approach due to independence from fibre suppliers ■■ Reputation and qualifications of renowned market participants TECHNOLOGICAL INNOVATION ■■ TenCate ABDS™ active blast countermeasure system ■■ Innovation via networks and partnerships (TAPAS, TPRC, AMRC, eTAC) ■■ Qualifications for future programmes ■■ Industrialisation of processes, focused on volume production PRODUCT DIFFERENTIATION ■■ Development of new areas of application ■■ Developments in unidirectional (UD) tape technology ■■ Development of the non-aerospace product portfolio ■■ Development of the value chain particularly in automotive applications for thermoplastic composites COST LEADERSHIP ■■ Increased efficiency in production ■■ Economies of scale ■■ Outsourcing and partnerships ■■ Development of low-cost solutions (industrial markets) capabilities and a wide range of protective (fibre-reinforced) composites. The market group supplies complete solutions for vehicle programmes.
  39. 39. 35TenCate annual report 2013  |  Business overview | STRATEGY The strategy of the sector is derived from the group strategy, which is based on TenCate’s business model for value chain management. This strategy continued to be implemented in 2013. In all activities, growth can be achieved by broadening the geographic spread (new markets) and further developing the product portfolio (new applications). This can be implemented in individual areas as follows. PROTECTIVE FABRICS TenCate operates particularly in the upper segment of the safety clothing market. As a global player, TenCate has access to the worldwide commodity markets. Optimum functional characteristics can be achieved in materials through intelligent combinations of characteristics of fibres from different providers. A good example of this strategy is the success of the TenCate Defender™ M and the TenCate Tecasafe® portfolio. By effectively mobilising internal knowledge and collaborating with third parties, the aim is to accelerate access to new geographic and other markets. In all end-markets TenCate seeks to maintain direct contact with end-users and industry organisations so as to respond effectively to customer requirements and ensure that TenCate products are well- positioned among end-customers. TenCate applies an own-brand strategy based on the specific functional aspects and qualities which end-users demand. TenCate works closely with market operators, suppliers of the complete range of industrial clothing and professional wear, which occupy leading positions in certain markets. This collaboration usually results in co-development, joint branding and marketing support. COMPOSITES The focus of the Group-wide growth strategy is on composite activities, where TenCate currently occupies a unique technology position. After an initial focus on aerospace applications, further growth is being pursued in industrial markets, such as tooling (die construction), the automotive industry, the electronics industry and oil and gas extraction (transport pipes). The combination of thermoset and thermoplastic composite technology offers TenCate good growth opportunities in these markets. The strategy is also focused on good collaboration with operators along the entire value chain. TenCate has close relationships with fibre producers, the processing industry and end-customers (OEMs). In the case of both TenCate Protective Fabrics and the two market groups in the composites segment, it is essential to maintain good relationships with raw material suppliers, particularly fibre producers and chemical companies. Many orders are project-driven. Delivery reliability along the entire chain is vital. As a result of its leading market positions, TenCate is usually one of the largest buyers of fibres in the specific market segment. Long-term co-operation agreements have been entered into with a number of fibre producers. VALUE PROPOSITION TenCate is the global market leader in the field of protective fabrics and one of the pre-eminent suppliers of composites. Good internal collaboration is also essential with regard to the value proposition. The aerospace background of the subsidiary TenCate Advanced Composites also gives TenCate a strong base in aerospace armour. The operation of different business units in, for example, the defence market strengthens the overall value proposition in the market. TenCate positions itself as a specialist in the field of personal protection. The various activities in the market are mutually reinforcing. With its broad technological background, TenCate is well able to anticipate specific market requirements. These usually result from laws or regulations, industrial and safety standards which specify the technical characteristics of materials. In the markets in which TenCate operates, supplier reliability and commitment with regard to the performance of materials and operation as a development partner are essential. The requirements in terms of functional aspects of materials evolve constantly and TenCate has the necessary knowledge and flexibility to respond effectively.
  40. 40. (VALUE ADDED) RESELLERS GEOSYNTHETICS • RD • Weaving • Non-woven • Knitting • Grids • Pre-treatment • Finishing • Quality control • Packaging Logistics • Marketing Sales GEOSYNTHETICS • Distributors • Contractors • Retailers GEOSYNTHETICS • Dealers • Subcontractors GEOSYNTHETICS • Civil work • Water Environment • Industrial • Oil Gas • Renewable energy GEOSYNTHETICS • Chemical suppliers • Polymer suppliers • Fabric suppliers • Yarn suppliers GEOSYNTHETICS • Chemicals • Polymers END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS ISO9001 FMHPR(G,USA) ISO14001(F,AU,NL)/MVOPL(NL) (VALUE ADDED) RESELLERS GRASS • RD • Spinning yarns • Weaving backing • Finishing yarns • Finishing backing • Quality control • Packaging Logistics • Marketing Sales GRASS • Tufters • Weavers GRASS • Installers • Marketing organisations GRASS • Soccer • American Football • Hockey • Tennis • Golf • Padel • Multisport • Landscaping GRASS • Chemical suppliers • Polymer suppliers GRASS • Chemicals • Polymers END-USER MARKETS CUSTOMERS SUPPLIERS RAW MATERIALS ISO9001 ISO14001(NL)/MVOPL(NL) FMHPR(T,USA) 36 |  TenCate annual report 2013  |  Business overview .. Sectors SAFETY SUSTAINABILITY QUALITY Safety guarantee refers to: ■■ Highly Protected Risk (HPR) status determined by FM Global Sustainability guarantee refers to: ■■ ISO 14001 environmental management systems ■■ CSR Performance Ladder (CSR PL), CSR management system for corporate social responsibility Quality guarantee refers to: ■■ ISO 9001 general quality management systems ■■ AS 9001 (US), EN 9100 (Europe), JISQ (Asia) aviation quality management systems

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