2009 - Jaarverslag

Royal Ten CateAnnual Report 2009Connected with technological innovation

MATERIALS THAT MAKE A DIFFERENCEOur materials are at the cutting edge oftextile technology, chemical technologyand material technology.Our systems and materials generateadded-value solutions.Our customers make a difference with ourmaterials and systems. This generatesgrowth and continuity.Our clear vision, mission and strategy give direction tothe company. The strategy is focused on value chainmanagement. The TenCate business model underpinsthe day-to-day structuring, implementation andoperationalisation of the business. Our challenge liesin striking the ultimate balance between the fourcornerstones.Xennia Technology ltd (79%) of the UK is one of the fewcompanies in the world specialising in the development ofproduction processes based on inkjet technology. Xennia’sspeciality lies in combining the technology (hardware) withoperating systems (software) based on its own chemicalformulations for inks, coatings etc. Xennia has a range ofink formulations for applications in areas such as circuits(printed electronics), infrared reflection, coatings with selfcleaningeffects and special inks for applications in theprinting sector (such as personalised label printers).Commercial overview and profile

COMMERCIAL OVERVIEWas at 1 January 2010The TenCate sectors are subdivided into market groups. Each market group is a cluster of operating companies which co-operate intensivelyin research & development, production, marketing and sales.An overview of the legal entities which make up the company can be found on the inside back cover.ADVANCED TEXTILES & COMPOSITES SECTORPROTECTIVE FABRICSProtective and safety fabrics for industry,services, firefighting and defence.OUTDOOR FABRICSProtective fabrics for outdoor applications.SPACE & AEROSPACE COMPOSITESAdvanced composites for aerospaceand industrial applications.◾◾◾TenCate Protective Fabrics AmericasTenCate Protective Fabrics EMEATenCate Protective Fabrics Asia◾TenCate Outdoor Fabrics Europe◾◾TenCate Advanced Composites AmericasTenCate Advanced Composites EuropeGEOSYNTHETICS & GRASS SECTORGEOSYNTHETICSSynthetic fabrics, non-wovens and gridsfor infrastructure and civil engineering.INDUSTRIAL FABRICSSynthetic fabrics, non-wovens and grids foragriculture and horticulture, the environmentalsector, the construction industry, watermanagement and recreation.GRASSSynthetic turf components and systems fortop-flight sports, recreation and landscapeprojects.◾◾◾TenCate Geosynthetics AmericasTenCate Geosynthetics EMEATenCate Geosynthetics Asia◾◾◾TenCate Industrial Fabrics AmericasTenCate Industrial Fabrics EMEATenCate Industrial Fabrics Asia◾◾◾◾◾◾TenCate Grass AmericasTenCate Grass EMEATenCate Grass AsiaEdel Grass, Netherlands (joint venture)GreenFields, Netherlands (participating interest)TigerTurf, New Zealand (participating interest)OTHER ACTIVITIES SECTORTenCate has its own production sites and sales officeINKJET TECHNOLOGYSpecialist inkjet technology for industrialapplications.TECHNICAL COMPONENTSTechnical rollers and components, particularlyfor printers, copiers, fax machines, postal sortingmachines and ATMs.◾Xennia Technology, United Kingdom◾◾◾TenCate Enbi North AmericaTenCate Enbi EuropeTenCate Enbi AsiaHOLDING & SERVICESHolding company activitiesRoyal Ten Cate Annual Report 2009

PROFILEADVANCED ARMOURAdvanced composite and ceramic materials forthe protection of police, army, air force, navy andcivilian service personnel, vehicles and vessels.◾ TenCate Advanced Armour Americas◾ TenCate Advanced Armour EMEARoyal Ten Cate (TenCate) is a multinationalcompany which combines textile technologywith chemical processes in the developmentand production of functional materials.Various market applications have beencreated around this technological basis.TenCate occupies leading positionsworldwide in its core markets.Within its strategic core activities, TenCatepresents itself as a developer and producerof materials with distinctive characteristics.The company structures product andprocess development and stimulatestechnological innovation in order to maintainleading market positions. TenCate developscustomer-specific solutions jointly withpartners and end-users. The systemapproach plays a key role.TenCate’s growth is based mainly on globaltrends, specifically in the safety/protectionand sustainability/environmental fields.TenCate materials are mainly used for:◾ personal safety and protection ofthe living and working environment;◾ modernisation of equipment usedby the armed forces and police;◾ aerospace (lower fuel costs dueto lighter materials);◾ water management and care forthe environment.TenCate employs around 3,940 peopleworldwide and strives to operate in anethically and socially responsible way.TenCate encourages its employees to beenterprising, flexible and creative, therebydemonstrating its aim of achieving progressand sustainability for all stakeholders.Geographic breakdown of sales in 2009in per cent◾◾By destinationBy origin50s in the following countries (◾):454035302520151050REST OF THE WORLDASIACENTRAL ANDSOUTH AMERICAUSA + CANADAMIDDLE EASTOTHER EUROPEOTHER EUSPAINITALYAUSTRIAFRANCEUKGERMANYBELGIUMNETHERLANDS

Annual Report 2009Royal Ten CateProfile Inside coverCommercial overview Inside coverGeographic presence Inside coverFinancial highlights 3Key developments in 2009 4Evaluation of 2009 action plans 5Actions for 2010 7Vision, mission, strategy and objectives 8TenCate technology overview 10The TenCate share 12Connected 14Report of the Supervisory Board 16Foreword by the Chairman of the Executive Board 19The Boards 22Report of the Executive Board 25General 25Financial performance 27Post balance sheet events 30Performance and outlook 30Activities by sector 33Corporate information 56Corporate governance 56SWOT analysis 58Risk management 61Human resources management 67Information technology 70Corporate intellectual property 71Socially responsible enterprise 72Statement from the Executive Board 77Financial statements 2009 79Other information 127Ten-year summary 150Operating companies, associated companies and other interests Inside coverColophon Outside cover

EBITA AND NET RESULTin millions of euros◾ Operating result before amortisation◾ Net resultREVENUES BY SECTORin millions of euros◾ Advanced Textiles & Composites◾ Geosynthetics & Grass◾ Other activities10896847260483624125404804203603002401801206002005 2006 2007 2008 200902005 2006 2007 2008 2009EBITA BY SECTORin millions of euros◾ Advanced Textiles & Composites◾ Geosynthetics & Grass◾ Other activitiesPER-SHARE DATAin millions of euros◾ Net result◾ Dividend72635445362718902.72.42.11.81.51.20.90.60.3– 92005 2006 2007 2008 20090.02005 2006 2007 2008 20092Royal Ten Cate

Financial highlights inmillions of euros unless stated otherwisePROFIT AND LOSS ACCOUNT 2009 2008Revenues 842.1 1,032.6Operating income before depreciation and amortisation (EBITDA) 75.4 126.1Operating result before amortisation (EBITA) 41.5 95.4Operating income before amortisation as % of revenues (EBITA margin) 4.9% 9.2%Operating result (EBIT) 32.7 83.8Net result 23.9 51.1Net result before divested operations and impairment 19.3 51.1CONSOLIDATED BALANCE SHEET AND RETURNNet capital employed (year-end) 620.9 746.6Return on average net capital employed 5.7% 13.4%Net interest bearing debt (year-end) 195.5 331.1CONSOLIDATED CASH FLOWCash flow from operating activities 144.8 48.7Investments less divestments of fixed assets – 12.9 – 35.2Free cash flow 131.9 13.5Balance of acquisition / disposal of operating companies and participating interests 3.3 – 88.1OUTSTANDING SHARES (X 1,000)Number of outstanding shares at year-end 25,068 23,967Weighted average number of shares (before dilution) 24,544 23,426Weighted average number of outstanding shares (after dilution) 24,616 23,495PER-SHARE DATANet result 0.97 2.18Net result before divested operations and impairment 0.79 2.18Diluted net result 0.97 2.17Diluted net result before divested operations and impairment 0.79 2.17Dividend per share 0.60 0.85Equity 15.19 15.31EMPLOYEESNumber of staff years at year-end 3,805 4,437– of which in the Netherlands 862 931* 2009: excluding income from the sale of Geofabrics, Permess Hong Kong and impairment.Annual Report 2009 3

Evaluation of 2009 action plansEvaluation of action plans announced in 2009.◾ Reduction in debt positionWith regard to its financial policy, TenCate took the necessarymeasures at an early stage. The actions were concentrated on costcontrol and the reduction of investments. In April 2009, the policywas further refined and focused almost exclusively on optimisingcash flow. Although this policy was at the expense of profit, thecompany remained within the covenants agreed with the banks.The financial objectives were met in this regard.◾ Development of the geographic market for TenCate Defender MNew military orders for the TenCate Defender M product portfoliooutside America failed to materialise. The defence marketinternationally is not an open market. In some cases preferencewas given to local manufacturers. A more structural approach isbeing taken to the institutional defence markets outside the USas a result of the formation of the TenCate Defense & Tacticalbusiness unit in 2009 – as part of the TenCate Protective Fabricsmarket group. Sales in America showed unexpectedly stronggrowth.◾ Technological developmentTenCate established the corporate technology department in 2009.This department co-ordinates technological developments andco-operation with external parties. The initiatives led to a largenumber of interesting development projects, such as in the fieldof biopolymers, filtration and intelligent geotextiles (TenCateGeoDetect ® ). The IJkdijk project has now given rise to a follow-upproject.◾ Sensor technologyThe business development project relating to TenCate Geodetect ®has been established internationally and embedded within a newmarket activity in the TenCate Geosynthetics market group.◾ New generation of synthetic turfThe development of the weaving technology for synthetic turf aspart of the production of fourth-generation synthetic turf systemswas successfully completed. The first pilot pitch was laid at theend of 2009. This process is being followed up with a marketlaunch in 2010.◾ Strategic alliancesThe strategy of the TenCate Grass group of entering into allianceswith strategic market players was successfully continued with theacquisition of an interest in TigerTurf International ltd (Auckland,New Zealand).◾ Further expansion of market positions in AsiaThe expansion of the market position in protective fabrics in Asiawas to some extent delayed by the decline in market demand.The joint venture in Bangkok (Thailand) consequently showedslower growth. The new production site for the Geosyntheticsgroup in Zhuhai (China) took advantage of the strong demand inthe Asian market. There is also strong interest in composites.Attention remains focused on the further expansion of theportfolio. This process will take place gradually.◾ Value creation at Xennia TechnologyXennia made good progress in achieving its objectives. Xenniaoperates in markets that are set to grow substantially in the yearsahead as a result of the fast growth in inkjet technology forindustrial processes. Xennia develops solutions for a range ofapplications, such as the food and textile industry, the packagingindustry and the medical and electronics sectors.◾ Further development of the Global TenCate NetworkThe Global TenCate Network was rolled out further in the fieldof information technology. This network provides an easy andsecure way to co-operate digitally and conduct audio and videoconferences on the internal network. A substantial cost reductionwas also achieved by centralising and standardising hardware andsoftware. With the introduction of this Global TenCate Network,new techniques have been embraced such as Office Communicator,Voice-over IP and the replacement of analogue by digitaltelephony.Annual Report 2009 5

Corporate technology3D weavingThe TenCate corporate technologydepartment is currently working on aseries of pioneering concepts that areunderpinned by the TenCate technologyroad map. These concepts are intendedto produce major technologicalinnovation for the company, thusenabling one of the most importantcornerstones in the TenCate businessmodel to be realized.Work is being carried out on newtechnologies that integrate all thecomponents with sports-relatedcharacteristics in the productionprocess, in order to develop a vision offuture synthetic turf systems for sportspitches. A breakthrough based ondifferent TenCate patents was achievedin 2009.The integrated components are beingassembled to produce a synthetic turfsystem on a prototype machine. Thisnew technique – also called 3D weaving– is based on TenCate’s extensiveexpertise in high-grade textilematerials. It combines numerous ideasfor improved playing characteristics,stability, shock absorption, rapidinstallation and recyclability. Thisapproach also reduces the consumptionof both energy and water.Connected to technological innovation

Actions for 2010◾ Good progress was made in 2009 in product development andstrategic positioning, helping to build a good basis in an improvingmarket. Although control of working capital remains a focus ofattention, greater priority will be given to profit growth than in2009. The implemented financial policy has created space in whichto achieve this.◾ TenCate will focus increasingly on emerging markets and wherenecessary expand its sales structure. New markets will also bedeveloped by means of partnerships. An example is theco-operation with Ashland in the filtration of industrial wastewater. In this connection, an order was received in October 2009from Huntsman Tioxide for an environmental project in Malaysia.◾ The pursuit of co-operation with adjacent technologies andknowledge areas contributes to a solution-focused approach to themarket. Various business development projects have already beeninitiated, with the aim of generating new revenues. An example ofthis is the co-operation within TAPAS and TPRC. The aim of thisco-operation is to extend the use of thermoplastic composites inthe aircraft industry and broaden their deployment in other areas,such as the automotive industry and wind energy.◾ The efficiency of production in the Netherlands will be furtherincreased in various units. A substantial improvement in resultsis required in order to bring these into line with the rest of theorganisation. Since specific environmental factors must be takeninto account, these sites will focus particularly on knowledgeintensive,high-grade, customer-specific production.The developments in inkjet technology (Xennia) are an importantmeans of raising the quality of finishing processes at substantiallylower cost. This process must prove itself in the productionenvironment in the years ahead.◾ In view of the tight financial policy conducted over the past year,some restraint was exercised in the implementation of the buy& build strategy. Growth through acquisition will be an importantmeans of achieving the specified growth target. The climate foracquisitions has improved.Annual Report 2009 7

Vision, mission, strategy and objectivesVISIONTenCate develops and produces functional materials which aredistinctive in terms of their characteristics. TenCate focuses onworldwide trends in the field of safety / protection and sustainability /environment, as well as derivative themes, which promote the growthof the company.Markets demand specific critical functionalities to meet specific needs,which are usually determined by standardisation or legislation andregulations. Safety / protection and sustainability / environment aretrends that are tightly regulated worldwide.TenCate operates in the field of material science. Technologicaldevelopment is an important means of complying with standardsand meeting requirements or adjusting standards in such a waythat progress can be made in terms of functionalities.TenCate’s products are used in systems. TenCate increasingly providesthe overall solution, either independently or in co-operation withpartners.MISSIONProgress is one of TenCate’s principal motives. TenCate aims to bea leader in providing solutions for complex requirements relating topersonal protection and protection of the personal environment.TenCate has secured a leading position in its markets worldwide andcan fulfil that leading role, partly as a result of its broad technologicalcompetence.STRATEGYTenCate’s strategy is based on the concept of global value chainmanagement. The four cornerstones of this policy are:1. End-user marketing and an industrial intellectual property policy;2. Product differentiation, targeted at specific applications andcustomer requirements;3. Cost leadership;4. Technological innovation.The acquisition policy over the past few years has resulted in a leadingtechnological and market position, enabling critical mass to beachieved.The global presence in submarkets and the wide product portfolioin combination with TenCate’s leading technological position andinnovative character represent important competitive advantages.8Royal Ten Cate

OBJECTIVESQUALITATIVE STRATEGIC OBJECTIVES◾ Creation of shareholder value through profitable growth based onour knowledge, skill and internal synergy. In this way we can takeaccount of our social responsibilities;◾ Achievement of critical mass in product-market-technologycombinations by securing leading positions in worldwide marketniches;◾ Achievement of a healthy financial position with sufficientstrength for acquisitions;◾ Management of a balanced portfolio of activities, in whichproduct-market-technology combinations differ in terms of growthopportunities and risk profile;◾ Stimulation of an open, creative and enterprising culture forprogress, change and renewal;◾ Management of a global commercial organisation which thinksin terms of (system) solutions within the overall value chain.FINANCIAL OBJECTIVES◾ The net capital employed must generate a sufficient return.The operating income before amortisation as a percentage ofaverage net capital employed must be at least 15%;◾ The financial position must be sufficiently solid. The ratio of netinterest-bearing debt to operating income before depreciationand amortisation (EBITDA) must be structurally lower than 2.5;◾ The target of 10% profit growth is based on EBITA (operatingresult before amortisation). The sharp decline in profit for 2009 hasinterrupted the trend. This financial year should be seen as anexceptional year. In the long term, the ambition remains togenerate annual profit growth of 10%. To this end, the buy & buildstrategy will be pursued. Higher added value and efficiency arealso necessary, since the organic growth of the core activities willbe below 10% on average;◾ An appropriate profit margin must be achieved. The consolidatedEBITA margin should rise to at least 10%.TenCate Business ModelOur clear vision, mission and strategy set the course for the corporation. The strategy focuses on value chain management.END-USER MARKETINGbusinessdevelopmentINNOVATIONIn day-to-day practice, the TenCate business model is used as the basis for structuring, implementing and operationalising thebusiness. Our challenge resides in finding the ultimate balance between the four cornerstones.marketmarketEXTERNALmanagementproductDIFFERENTIATIONtechnologyprocessVALUE CHAIN MANAGEMENTINTERNALmanagementprocessportfolioCOST LEADERmanagement© Business Model Royal TenCateAnnual Report 2009 9

TenCate technology overviewEND-USERGLOBAL TRENDSSafety and protection, sustainability and environmentEND-USERMARKETINGMARKETSmarketmanagementDIFFERENTIATIONPRODUCTS (materials, modules, systems)protective fabrics outdoor fabrics space composites aerospace compositesVALUE CHAIN MANAGEMENTportfoliomanagementCOST LEADERMATERIAL TECHNOLOGYFiber technologyTextile technologyprocessmanagementChemical technologyINNOVATIONBio degradablesPolymer technologyInk formulasCoating fluidsResinsEt cetera10Royal Ten Cate

TenCate business model© TenCateEND-USER MARKETINGbusinessdevelopmentINNOVATIONmarketmanagementEXTERNALmarketVALUE CHAIN MANAGEMENTtechnologyINTERNALprocessmanagementproductprocessDIFFERENTIATIONportfoliomanagementCOST LEADERarmour composites geosynthetics industrial fabrics grassbusinessdevelopmentFinish technology© TenCateAnnual Report 2009 11

The TenCate shareLISTINGThe TenCate share is listed on NYSE Euronext Amsterdam and hasformed part of the AMX (midcap) index since 2008. The share isfollowed by around ten analysts from leading Dutch banks andsecurities houses.visitors to both the corporate website and the operating companies’websites. There is increasing brand perception in the market. Recentresearch has shown that TenCate has relatively high corporate brandvalue as an industrial company, in terms of its nature and size,compared to Dutch listed companies as a whole.Trading in the TenCate share rose by an annualised rate of 6%.The average number of shares traded per day in 2009 was 102,106.As at 31 December 2009, 25,067,580 ordinary TenCate shares were inissue, each of a par value of € 2.50. The closing price of the share was€ 18.43.INVESTOR RELATIONS POLICY AND COMMUNICATIONTenCate has a broad base of international institutional investors.There is growing interest among American investors and a loyal baseof private shareholders. Sustainable investment funds are alsoshowing great interest in the TenCate share.TenCate regularly organises roadshows and takes part in investorconferences held by banks and securities houses in order to discussthe strategy and performance directly with investors.In 2009, TenCate began issuing trading updates for the first and thirdquarters instead of detailed quantitative reports. TenCate primarilyanticipates long-term trends, and public-sector projects are liable tohave a major impact on quarterly figures.The corporate communication policy is framed and defined by theholding company, in order to properly reflect TenCate’s image andreputation.Close co-operation takes place with the market groups, ensuring activesupport for the marketing communication. Following the overhaul ofthe corporate website, an increase has been seen in the number ofDIVIDEND POLICY AND PROPOSED DIVIDENDTenCate operates in sustainable growth markets. The specific growthtrends for TenCate remain intact, despite lower budgets in the publicand private sectors. The aim is to finance growth internally as far aspossible, while maintaining healthy financial ratios.A consistent dividend policy is pursued on the basis of a payout ratio of40% and payment of dividends to shareholders optionally in cash or asshares charged to the share premium reserve. In view of the slowdownin growth as a result of the worldwide economic situation, TenCate isnevertheless endeavouring to restrict the growth in the number ofshares in issue, in order to maximise growth in earnings per share.Any share issue is directly linked to the acquisition policy and takesplace only if growth in earnings per share is not jeopardised.In view of the exceptional nature of developments in 2009 and therelated focus on cash management, which resulted in a strongimprovement in the financial position, it is proposed on a one-off basisto raise the distribution rate and to set the dividend at € 0.60 per€ 2.50 par value share, payable at shareholders’ discretion either fullyin cash or in shares charged to the share premium reserve.Source: NYSE EuronextISIN code: NL 0000375731Reuters code: NTCN.ASBloomberg code: KTC.NA◾ Royal Ten Cate◾ AEX◾ AMX1501401301201101009080706012Royal Ten Cate50JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC

Number of shares in issueNumber of shares in issue on 31 December 2008 23,966,901Issue of shares –Increase in share capital as a result of stock dividend 1,100,679Total number of outstanding shareson 31 December 2009 25,067,580Changes in the number of outstanding shares 2009 2008Par value € 2.50 € 2.50Highest price € 18.50 € 27.19Lowest price € 10.31 € 11.60Closing price € 18.43 € 16.05Earnings per share € 0.97 € 2.18Dividend per share € 0.60 € 0.85DISCLOSURE OF MAJOR HOLDINGS IN LISTEDCOMPANIES ACTThe register maintained by the Netherlands Authority for theFinancial Markets (AFM) in connection with the disclosure of majorholdings in listed companies contains details of the following investors(percentages based on the latest AFM return).Name Date of disclosure PercentageDelta Deelnemingen Fonds N.V. 15 January 2010 5.09%Kempen Oranje Participaties N.V. 1 January 2010 6.34%Schroders plc 27 October 2009 8.25%Allianz Global Investors mbH 28 October 2008 4.99%WAM Acquisitions GP. Inc. 1 November 2006 8.99%Delta Lloyd N.V. plc 1 November 2006 5.08%Current holdings vary and may differ from the information providedabove. There is a geographically diversified group of institutional andother investors who have long been shareholders in TenCate withsubstantial holdings below the 5% level. As can be seen from theaccompanying geographic breakdown of institutional shareholders,the Netherlands, Germany, the United Kingdom and the United Statesremain the most prominent regions.OPTION PLAN, SHAREHOLDINGS OF PERSONNELAND EXECUTIVE BOARDDetails of the option plan for managers and members of the ExecutiveBoard can be found on page 142 of this annual report. The sharesrepurchased by the company relate to the hedging of granted optionswhich have become fully vested.Details of the company’s shares and options held by members of theExecutive and Supervisory Boards can be found on page 142 of thisreport.Important dates in 2010Publication of 2009 full-year figures4 MarchAnnual General Meeting of Shareholders8 AprilEx-dividend date12 AprilRecord date: determination of dividend entitlements 14 AprilOption period for cash or stock dividend15 April to3 May inclusivePublication of trading update for first quarter4 MayPayment of dividend / delivery of shares (stock)6 MayPublication of half-year figures 201026 AugustPublication of trading update for third quarter4 NovemberGeographic spread of institutional shareholders in per cent21%5%6%22%22%◾ Netherlands◾ United Kingdom◾ United States◾ Germany/Switzerland◾ Belgium◾ Scandinavia24%Annual Report 2009 13

ConnectedTenCate is a producer of materials for a wide range of applications.A common feature of these materials is that the guiding trends aresafety / protection and sustainability / environment. They also sharea common core technology: textile technology combined with chemicalprocesses.TenCate comprises a coherent set of complementary knowledgeareas, technologies, a close-knit corporate culture and – of course –a common strategic framework. This strategic framework is our valuechain management, in which four cornerstones of policy are embedded.Being connected is pursued not only internally – hence becoming thebinding agent within the company – but primarily externally on thebasis of product-market-technology combinations. That ensures thatthe customer always remains central.The growth of a company entails a risk of compartmentalisation.It often means that the company responds more slowly to changes inits environment and operates less cost effectively, and that knowledgeis no longer shared, etc. During the reporting year, TenCate stroveintensively to make the internal and external context even more visible.Market groups are directed on the basis of the value chain. This isachieved specifically through the use of the internal context (coretechnologies and competences) and the context on both the input side(commodity markets) and the output side (markets and customers).CONNECTED IN THE STRATEGIC CONTEXTIn the context of the strategic model, the connection of the companycan also be approached on the basis of the four cornerstones:◾ Market – co-operation aimed at positioning TenCate more stronglyin end-markets. The global branding of all TenCate units in thevarious markets strengthens the corporate image.◾ Products and product knowledge – introducing new products innew geographic markets by exchanging product ideas, mostly onthe basis of specific technological and other expertise. An exampleof such development is the introduction of TenCate Tecasafe Plusin the American market. At the same time various originallyAmerican products have been modified for the European market.◾ Costs – joint pursuit of cost reduction, economies of scale andoptimum allocation of production resources. An example of thisis the rationalisation of manufacturing in the Netherlands.◾ Technology – the exchange of technologies, patents, formulas,etc. between market groups. This gives rise to new products andimproved production processes. An example is the use ofknowledge of weaving technology for the integrated productionof synthetic turf systems.A good example is the formation of the TenCate Defense & Tacticalbusiness unit in 2009, as part of the TenCate Protective Fabrics marketgroup. TenCate Defense & Tactical will further develop the worldwideinstitutional defence markets on the basis of shared corporate vision.Various TenCate market groups are involved.14Royal Ten Cate

CONNECTED EXTERNALLYAnother important fact is that TenCate is a company focused on theoutside world. Social trends and resulting market themes largelydetermine the growth of the company. TenCate’s versatility is theresult of successful technologies and product development inmaterials, in which end-users demand critical functionalities. End-usermarketing (one of the cornerstones of TenCate’s business model) givessignificance to a cohesive market approach. TenCate strives to providesolutions in co-operation with end-users.The market makes inevitable demands on the company’s versatility,as the materials increasingly form part of integrated systems whichalso include other technologies. Co-operation increasingly takesplace with other companies and with knowledge-based and otherinstitutions. This has resulted in cohesive relationships withinternational knowledge networks, in some cases through openinnovation. These processes were co-ordinated centrally during thereporting year. The TenCate technology roadmap was also rolled out.TenCate has its finger on the pulse of technological developments thatare liable to impact material science. To that end the company takespart in numerous network structures.As a company with global operations, TenCate is part of the globalisingsociety. An important factor in being connected externally lies in theorganisation’s social relevance, having regard to the solutions whichare developed and produced on the basis of global trends in safety /protection and sustainability / environment. Personal safety andprotection of our living and working environment are important forevery individual.Green geosynthetics in the USAIn the American road design and construction industry, there is also increasing demand for sustainable roads and structureswhose construction generates less waste, consumes fewer natural resources and requires less energy. TenCate Mirafi ®MiraGreen is a series of non-woven geotextiles that contain 30% recycled material. The product offers the same quality asmaterials based on 100% polypropylene or polyester. TenCate Mirafi ® MiraGreen D is easy to install: it smoothly conforms tothe contours of the supporting surface and is resistant to impact. Sustainable ‘green’ geotextile responds to new Americanenvironmental legislation and regulations for building projects and the construction of roads and motorways.© Coffy MotiondesignAnnual Report 2009 15

Report of the Supervisory BoardANNUAL REPORTWe hereby present the 2009 annual report as prepared by theExecutive Board, incorporating the financial statements. The financialstatements have been audited by KPMG Accountants NV and werediscussed with the Executive Board on 3 March 2010, in the presenceof the auditor.We are therefore of the opinion that the annual report fulfils thetransparency requirements and forms a good basis on which theSupervisory Board can account for its supervision.We propose that you accordingly adopt the financial statements,approve the dividend proposal and grant discharge to the ExecutiveBoard in respect of its policy and to the Supervisory Board in respectof its supervision.SUPERVISIONThe Supervisory Board held plenary meetings with the Executive Boardon six occasions in 2009, on the basis of a fixed schedule. It also metindependently on several occasions. The meetings discussed theperformance of both the Executive Board and the individual directors.The Supervisory Board also assessed its own performance, as wellas that of the committees and the individual supervisory directors.All members attended the meetings.During the joint meetings, the Supervisory Board dealt with subjectssuch as the consequences for TenCate of the rapidly deepeningrecession, the financial results, the budget, current acquisition projectsand the company’s strategy. Particular attention was devoted to theinadequate profitability of the Dutch businesses, the strategicpositioning of the TenCate Grass group and the minority holdings inthis group in particular.Other subjects included the situation with regard to digital finishingand printing at Xennia, the divestment process at TenCate Enbi, therole and qualifications of the group management and the managementlayer below it.The April meeting discussed the situation that had arisen followingthe departure of the CFO, J. Wegstapel. The vacancy was filled on aninterim basis by reappointing J. Lock, the former Corporate Directorof Finance.In August it was decided to appoint Mr Lock as CFO for a period of twoyears and to nominate him for appointment to the Executive Board bythe next meeting of shareholders.The financial results were discussed at the end of each quarter.The external auditor reported on his findings during the discussion onthe 2008 full-year figures and first-half year figures for 2009. Theboard deliberated independently of the Executive Board on thecomposition and performance of the Supervisory Board and theperformance of the Executive Board, as well as on the associatedremuneration.A representative of the Board also took part in five consultativemeetings of the Central Works Council. He participated in thediscussions and took note of the activities and events within thecompany.INDEPENDENCEAll members of the Supervisory Board are independent within themeaning of the best-practice provisions of the Corporate GovernanceCode.No TenCate shares or options are held by the members of theSupervisory Board.16Royal Ten Cate

COMPOSITIONIn April 2010, Mr P.P.A.I. Deiters will have been associated withcompany for three terms of four years. The best-practice provisions ofthe Dutch Corporate Governance Code recommend a maximum of threeterms. Nevertheless, the Supervisory Board, with the backing of theExecutive Board, believes that Mr Deiters’ profile is perfectly suited tothe role of the supervisory directors and is unique having regard to hisknowledge and experience as a former entrepreneur in the textileindustry. Mr Deiters’ contribution of is of great value to TenCate.In order to ensure a continued balanced composition of the ExecutiveBoard, the Supervisory Board intends exceptionally to nominateMr Deiters for reappointment for a fourth term of four years.FINANCIAL COMMITTEEThe Financial Committee met in plenary sessions on four occasions in2009 to prepare for the discussion of the 2008 annual figures, the 2009quarterly and half-yearly figures and a number of specific subjects.In-depth consideration was given to matters such as the internalcontrol and reporting system, the tax position, particularly in theNetherlands, the group financing company in Switzerland, theimpairment calculations, the policy with regard to audit services,aspects of financial risk management and the management letterfrom the external auditor, and to the follow-up of the latter’srecommendations.The Supervisory Board also intends to nominate Mr R. van Gelderas a supervisory director. Mr Van Gelder has extensive internationalexperience in business in the field of high-quality engineering andcontracting projects, which makes him particularly suitable as asupervisory director for Royal Ten Cate. His curriculum vitae has beenappended to the agenda for the meeting of shareholders.SUPERVISORY BOARD COMMITTEESThe Supervisory Board has two committees: the financial committeechaired by Mr E. ten Cate and the combined Remuneration, Selectionand Appointments Committee chaired by Mr F.A. van Vught. Their taskis to analyse subjects within their specific knowledge areas andto prepare decisions to be taken in the plenary meetings of theSupervisory Board.COMBINED REMUNERATION, SELECTION AND APPOINTMENTSCOMMITTEEIn February and March 2009, particular attention was devoted to fillingthe vacancy resulting from the departure of the then CFO. Followinghis departure at the end of March an appropriate successor wasappointed, initially on a temporary basis and subsequently on a morepermanent basis.REMUNERATION REPORTThe remuneration policy for directors of Royal Ten Cate was presentedto the general meeting of shareholders of Royal Ten Cate for approvalon 24 March and was accordingly adopted by the meeting.PRINCIPLES OF THE REMUNERATION POLICYRoyal Ten Cate’s Supervisory Board applies a remuneration policy inrespect of the company’s management, based on the followingprinciples:◾ Remuneration of the management is aimed at attracting andretaining senior managers;Annual Report 2009 17

REPORT OF THE SUPERVISORY BOARD◾ The remuneration policy must conform to the company’s corporategovernance policy;◾ The remuneration must reflect the strategic and financialobjectives and be to a large extent performance-oriented, with agood balance between short and long-term results and objectives;◾ The remuneration must not include any incentives which give riseto behaviour directed towards personal interests that conflictswith the company’s interests;◾ It includes an annual scenario analysis with regard to the possibleoutcomes of the remuneration policy.Since the end of 2006, the posts of CEO and CFO of Royal Ten Catehave been based on Hay-level medians.In the case of the CEO, the median of Hay level 30 is applied.This level corresponds to an organisation of the size, complexity andinternational character of Royal Ten Cate. In view of the difference inremuneration between the salary then being paid and the median ofHay level 30, it was decided to make up the difference on a phasedbasis. The salary of Mr L. de Vries reached the intended level in 2009.An important consideration was ensuring the continuity of thecompany by, among other things, reinforced solvency, strong cashmanagement and an enormous reduction in the debt position.The variable remuneration component is a maximum of 50% of thefixed annual salary.In 2009, Mr de Vries received a variable salary component in respectof 2008 amounting to 50% of the fixed annual salary. He was alsogranted 60,000 options with an exercise price of € 11.70.For Mr J. Lock, the current CFO, the fixed annual salary is set atmedian of Hay level 26. The variable salary component is a maximumof 40% of the fixed salary.Mr J. Wegstapel, the CFO who departed during the 2009 financial year,received payment in respect of his notice period and compensationamounting to a full year of income, comprising his fixed annual salaryplus 25% as a variable pay component.The full report can be found on the website under CorporateGovernance/documents.The remuneration of the Executive Board is stated in note 56.2 onpage 136 of this report.Almelo, 3 March 2010Supervisory BoardJ.C.M. Hovers, ChairmanP.P.A.I. Deiters, Vice-ChairmanF.A. van VughtE. ten CateNew synthetic turf system with warranty conceptFC Breukelen is the first football club in the Netherlands with a new synthetic turf system with the TenCate PerformanceWarranty Concept . This guarantees that as far as its characteristics are concerned the pitch will satisfy FIFA 2 Star requirementsfor five years. The Breukelen field is based on the TenCate XQ technology. It allows us to construct fields that comply with theFIFA 2 Star requirements for a long time, the performance level FIFA defined for competitive football at the highest level. TenCatemarkets the five-year TenCate Performance Warranty Concept in collaboration with ALLIANZ, an insurance company.18Royal Ten Cate

Foreword by the Chairmanof the Executive BoardGENERALThe difficult economic conditions and the situation in the financialmarkets were unfavourable for TenCate and its customers during thereporting year. Under these circumstances, it was logical to abandonour profit target, partly in view of the emphasis placed on the cashposition and the management of the company’s balance sheet at thebeginning of the year. TenCate nevertheless strengthened its focus onthe future in 2009, despite the lower net profit. In strategic terms,considerable progress was made on various fronts. The global trendsthat have determined the TenCate’s growth over the past few yearsremain fully intact. All our stakeholders should continue to have faithin TenCate’s potential. We will benefit fully as soon as there is anupturn in the market.OPERATIONAL DEVELOPMENTS IN 2009In operational terms, 2009 was characterised by an increased focus oncontrol of working capital and costs. The weaker performance, whichhad already been anticipated in 2008, turned out to be more seriousthan was first expected, particularly because governments also had tocontend with tight budgetary conditions. TenCate therefore maintainedits restrained investment policy.Developments resulted in the total number of employees (FTEs) beingreduced by 15%. With regard to cost reduction, the emphasis wasinitially on countries outside the Netherlands, where it was possibleto respond more flexibly to lower revenues, particularly in the UnitedStates. The operating results in the first three quarters of 2009accordingly began to rise again. In the fourth quarter, structuralmeasures were implemented in the Dutch companies, involving one-offcosts. We also adjusted our credit policy in the seasonal synthetic turfmarket, as a result of which revenues were shifted substantially into2010. These measures put pressure on results in the fourth quarter, butgive us a better starting point in the current year. The objective ofmaintaining a healthy financial position based on our own resourceswas achieved, although profit came under considerable pressure.I would also like to mention a number of positive developments.Sales of TenCate Defender M grew spectacularly. The U.S. Armypublicly praised TenCate for this innovative product. It has become thestandard for flame-resistant protection. In the field of composites,various solutions were qualified for attractive new markets, includingsustainable energy generation. New relationships were established inthe environmental market for the processing of industrial waste water(TenCate Geotube ® ). That played a part in our winning the largestorder in this field in Asia. Finally, we made good progress withalliances in the synthetic turf market through the interest TenCateacquired in TigerTurf at the beginning of 2009.BUSINESS MODELTenCate’s business model proved to be valid and valuable also in timesof weaker economic conditions. This model offers a framework inwhich to focus on complete, worldwide value chains. The fourcornerstones – end-user marketing, product differentiation, costleadership and technological innovation – remained as fundamentalas ever. The emphasis during the reporting year, however, was onthe third cornerstone. That does not mean no progress was madewith regard to the other policy areas. On a technological level, theinnovative weaving technology for integrated synthetic turf systemswas introduced. Xennia Technology presented a process demonstrationmodel of the digital textile finishing process.Annual Report 2009 19

ADVANCED ARMOURIn Europe demand has increased forcustomized anti-ballistic protectiveplates, specially designed againstspecific threats. The first supplies forthe French military’s FELIN programmestarted in November 2009. TenCateAdvanced Armour supplies the Frenchwith integrated solutions based onTenCate Multi-light protective plates.These interchangeable plates can befreely produced as regards form, weightand colour.In June 2009 the first TenCate Cerategocomposite armouring panels weredelivered to the Dutch military for theprotection of the Patria XA-188 vehicles,which are deployed by The Netherlandsin Afghanistan. This anti-ballistic productis also made of lightweight compositematerial. Thanks to new technology, itis extremely suitable as backing behindexisting armouring panels. Comparedwith conventional protective solutions,it saves fuel, thus increasing the actionradius of the vehicles.Now that TenCate Advanced Armourstarted operations in the United Kingdomin mid-2009, British soldiers will also beable to benefit from the wide range ofcomposite armour solutions.Connected to end-user marketing

FOREWORD BY THE CHAIRMAN OF THE EXECUTIVE BOARDFUTURE GROWTHTenCate continues to work constantly on the achievement of futuregrowth. A characteristic feature of this work is ‘casting the anchorforward’. In line with our buy & build strategy, companies are acquiredwhich fit within the TenCate business model. Strong product-markettechnologycombinations are expanded. Activities with little prospectof future success are divested, while TenCate pursues its geographicexpansion. The core theme is technological innovation: thedevelopment of leading and trendsetting market positions withpioneering technologies. In this regard TenCate focuses on worldwidesustainable growth markets, such as safety and protection, lowerenergy consumption, water management and environmental protection.These are also social and ecological themes.Xennia Technology is currently a small but profitable part of TenCate.The company produces advanced technical solutions for various marketoperators. Xennia has developed a number of applications – includingtextile applications through TenCate – which represent attractivegrowth markets for solutions based on industrial inkjet technology.TenCate expects to achieve a breakthrough in digital finishing (surfacecoating) of textiles based on nanotechnology. Xennia is workingintensively in this area in co-operation with TenCate. This innovativetechnology has strong spin-off potential for many of TenCate’s existingproduct-market combinations. Our inkjet technology, which is protectedby various patents, can also be applied to non-textile materials, forexample in packaging and product decoration such as ceramics, glassand furniture.innovations. There will also be a continued focus on control of workingcapital and costs in 2010. Some expansion is planned here, partlyhaving regard to the positive effects of the cost measures taken.The priority is the generation of a strong cash flow. The investmentlevel will therefore be around the depreciation level (€ 35 million).The rationalisation and concentration process initiated in 2009 amongthe Dutch businesses is intended to open up new prospects for thefuture.Expectations with regard to a general economic recovery are not highfor 2010. We nevertheless see positive signals in submarkets, such asprotective fabrics for safety clothing. TenCate also has potential invarious emerging markets, such as in Asia and South America. This willbe exploited intensively in 2010.CO-OPERATIONCo-operation with our customers, with our strategic partners intechnology and other fields and among our employees and businessunits is essential in order to maintain a strong position as a globalplayer in the market. New value is created on the basis of openinnovation and our shared knowledge and skills. All parties ultimatelybenefit from optimum results. The way in which we co-operatedsuccessfully once again in 2009 gives me great hope and gives usconfidence in the future. I would also like to express my gratitudefor the efforts made by our employees over the past year.DEVELOPMENTS IN 2010Although we are continuing to pursue growth, attention on theoperational level in 2010 will be focused first on consolidating andwhere possible expanding our existing market positions, second onfinancial solidity and third on continuing development in technologicalL. de Vries, Chairman of the Executive BoardAnnual Report 2009 21

The Boards (as at 1 January 2010)EXECUTIVE BOARDL. de Vries (58), Chairman and Chief Executive Officer J. Lock (63), Chief Financial Officer22Royal Ten Cate

SUPERVISORY BOARDJ.C.M. Hovers (66) Chairman 1) 2)Commenced in office: 2008End of current term: 2012Former Chairman of the Executive Board of Océ nv and Stork nvSupervisory director of Randstad Holding, Chairman of the Supervisory Boardof Schuitema, Chairman of the Supervisory Board of Inter Access, Chairmanof the Supervisory Board of Gemeentelijk Vervoersbedrijf AmsterdamP.P.A.I. Deiters (66) Deputy Chairman 1)Commenced in office: 1998End of current term: 2010Former director of Berghaus International FashionSupervisory director of G-III Apparel Group Ltd *) , Supervisory director ofBandolera B.V., Supervisory director of Tootal B.V., Consultant to the EuropeanBank for Reconstruction and Development EBRD, Supervisory directorof HVEG Investments B.V.From left to right: E. ten Cate, F.A. van Vught, J.C.M. Hoversand P.P.A.I. DeitersF.A. van Vught (59) 2**)Commenced in office: 2000End of current term: 2012Member of the Group of Policy Advisors, Chairman of the European CommitteeMember of the Executive Board of the European University Association, Memberof the University Grants Committee of Hong Kong, Supervisory director of RovaN.V., Chairman of the Board of Nether (Netherlands House for Education andResearch, Brussels), Chairman of the Board of ESMU (European Centre forStrategic Management of Universities, Brussels), Chairman of the SupervisoryBoard of Medisch Spectrum TwenteMr E. ten Cate (64) 1**)Commenced in office: 2004End of current term: 2012Director of Bank ten Cate & Cie N.V.Chairman of the Supervisory Board of Nyloplast N.V. Supervisory director ofNesbic Investment Fund, Supervisory director of Pas Reform B.V., Supervisorydirector of Medisch Spectrum Twente1) Member of the Financial Committee.2) Member of the combined Remuneration, Selectionand Appointments Committee.*) Term of office ending on 1 April 2010.**) Chairman.Annual Report 2009 23

PROTECTIVE FABRICSIn 2009 TenCate Protective Fabricsrecorded new orders for the Americanmilitary. In May this involved a newprogram for TenCate Defender Min the Flame Resistant OrganizationalGear (FROG) contract concerning theUS Marine Corps.TenCate Defender M has been thestandard fabric for the uniforms ofthe ground forces of the AmericanArmy and the US Marine Corps since2007. The TenCate Defense & Tacticalbusiness unit also manufacturesinherently flame-resistant fabricsfor army aircrew combat uniforms,improved combat vehicle overalls, navyshipboard jackets and army balaclavas.TenCate Protective Fabrics receivedpraise from both the American militaryand members of the American Senatefor the development and supply ofTenCate Defender M fabric. Thefabric is made of a fibre mix thatincludes FR rayon fibre from Lenzing AGin Austria.Such orders contribute greatly tothe survival of the American textileindustry, supporting companies wheremore than 10,000 people are employed.Connected to end-user marketing

Report of the Executive BoardGENERALThe fall in demand in many of the markets in which TenCate operateswas on an unprecedented scale. The decline was aggravated by sharpinventory cuts in production chains. The fall in demand was mainlydue to tight financial conditions among public-sector and industrialcustomers. The structural market outlook remained favourable.After all, TenCate’s products and systems are produced in anticipationof global market trends which offer healthy prospects in the longerterm. TenCate’s positioning in these markets has not been affectedand has even been strengthened in some individual fields.The trend in sales of composites for the aviation industry wasdisappointing. A long-term development project for Airbus A380components conducted jointly with various partners was intendedto deliver strong revenue growth in 2009. Large sums were investedin order to meet the expected strong growth in demand. Althoughexpectations were not fulfilled, the project has only been deferredand the outlook remains positive.The performances of the various market groups are detailed in theoverview of activities in this report (page 33).The commercial performance in 2009 can be characterised by theabsence of large orders in the project market, both in the defence fieldand in the infrastructure market. Annual revenues and results in thelast few years have to a large extent been determined by orders frompublic-sector bodies.The international synthetic turf market had to contend with a seriouslack of financing facilities. Moreover, a number of geographic marketsshowed substantially lower demand as governments exercised greaterrestraint. TenCate was cautious about accepting orders in the finalquarter (traditionally at reduced off-season prices), partly due to thetight financial policy. This put additional pressure on revenues.In 2008 it was announced that plans had been developed to achieve asubstantial improvement in the results of activities in the Netherlands.These plans were accelerated in the second half of 2009. This wasdue to the sharp drop in European market demand and the growingdiscrepancy as compared to the financial results of the rest of thecompany.At the beginning of 2009, an interest was acquired in TigerTurf,a leading supplier of synthetic turf systems mainly in Australia,New Zealand, the United Kingdom and the United States. The buy& build strategy was nevertheless deferred. Priority was given tomaintaining healthy balance sheet ratios and cash management.The most striking positive development was the continuing growthin sales of the TenCate Defender M product range. AlthoughTenCate is continuing to expand the range, to meet specific customerrequirements, there is a need for further broadening, in terms ofboth end-users and the product portfolio. This need was met duringthe year.Important milestones were achieved in the technological field.The weaving of high-grade synthetic turf structures was successfullyimplemented and Xennia made important advances in surface finishingfor the application of ultra-thin coatings with specific characteristics.Annual Report 2009 25

REPORT OF THE EXECUTIVE BOARDAnalysis of 2009 results by sector 2009 2008 Difference OrganicOf whichcurrencyAcquisition/divestmentin millions of eurosNet salesAdvanced Textiles & Composites 397.3 481.0 – 17% – 20% + 3% –Geosynthetics & Grass 392.1 497.8 – 21% – 19% + 1% – 3%Other activities 52.7 53.8 – 2% – 2% – –842.1 1.032.6 – 18% – 18% + 2% – 2%Operating result before amortisation(EBITA)Advanced Textiles & Composites 31.7 61.5 – 48% – 52% + 4% -Geosynthetics & Grass 16.8 37.8 – 55% – 51% – – 4%Other activities – 7.0 – 3.9 – 79% – 80% + 1% –41.5 95.4 – 57% – 58% + 2% – 1%Amortisation – 8.8 – 11.6Operating result (EBIT) 32.7 83.8 – 61%Impairment of financial fixed assets – 4.9 –Net financial expenses – 7.8 – 13.7Pre-tax result 20.0 70.1 – 71%Profit tax – 5.6 – 19.1Results from ordinary operations after tax 14.4 51.0 – 72%Result from divested operations 9.5 –Net result from associated companies – 0.8 –Minority interest 0.8 0.1Net result 23.9 51.1 – 53%EBITA margins 2009 2008Advanced Textiles & Composites 8.0% 12.8%Geosynthetics & Grass 4.3% 7.6%Consolidated 4.9% 9.2%High visibility and flame-retarding capabilities in oneTenCate Protective Fabrics North America introduced TenCate Tecasafe Plus at the end of September. This is a high-visibilitywoven fabric for industrial use. The introduction of this new fabric was partly a response to stricter safety standards forprofessional wear. TenCate Tecasafe Plus not only offers more than adequate visibility, it is also the only commercially availablefire-retardant solution that complies with the standards in terms of safety and protection. The material is very durable and doesnot reduce wearer comfort. The commercial applications of TenCate Tecasafe Plus are numerous: it is suitable for electricitycompanies, the oil and petrochemical industry, national security services and for firemen when fighting forest fires.26Royal Ten Cate

Various TenCate initiatives to promote technological developments andinnovations were fulfilled. A number of interesting projects werelaunched, the highlights being the formation of the ThermoplasticAffordable Primary Aircraft Structure (TAPAS) consortium and theThermoplastic Composites Research Centre (TPRC). Despite the pooreconomic climate and the disappointing trend in sales, TenCate iscontinuing to invest in the future.FINANCIAL PERFORMANCENET RESULTThe net result decreased to € 23.9 million in 2009 (2008: € 51.1 million).This result includes a € 4.9 million impairment of a participatinginterest and a € 9.5 million book profit on the sale of the Australianjoint venture Geofabrics Australasia and Permess Hong Kong.The decrease in profit occurred across a broad front and was the resultof the financial crisis, which led to a sharp deterioration in the salesmarkets.Ten Cate gave priority to the monitoring of the bank covenants anddebt reduction in 2009 in order to maintain a strong balance sheet.Relatively little was invested (€ 17.3 million). The working capital wasreduced by € 105 million and debt by € 136 million.This setting of priorities was partly at the expense of the net profittrend.COMPOSITION OF THE COMPANYIn view of the emphasis on cash management, acquisitions were highlyrestrained and two companies were sold in 2009.◾ On 31 March 2009, a 49% interest was acquired in TigerTurf(Auckland, New Zealand). This marketing organisation andproducer of synthetic turf pitches also has sites in Australia,the United Kingdom and the United States.The following were sold:◾ The 50% interest in Geofabrics Australasia. It was not possible toacquire a controlling interest in this joint venture, which generatedover € 30 million of revenues (50%) and was profitable in 2008.The sale took place on 26 June 2009.◾ The Permess Hong Kong sales office on 15 December 2009 to themanagement. Sales amounted to just under € 5 million in 2008.REVENUESNet revenues declined by 18% in 2009, both in total and in organicterms. The currency effect (+ 2% due to the stronger dollar) anddivestments (– 2%) cancelled each other out.Revenues in the Advanced Textiles & Composites sector declined by17%. The biggest decrease occurred in the Advanced Armour USAgroup where, in contrast to 2008, no major projects were secured.In Europe, sales of work and safety wear fell, partly due to a lackof investments in industry. In the United States, there was a furtherincrease in sales of fire-resistant TenCate Defender M for militarypersonnel.In the Geosynthetics & Grass sector the decline in revenues amountedto 21%. The geosynthetics market in the United States reached a lowpoint, partly because investments by business and the public sectorfailed to materialise sufficiently. Sales of synthetic turf declinedworldwide due to tight limits on financing facilities for our customers.Annual Report 2009 27

REPORT OF THE EXECUTIVE BOARDOPERATING INCOME BEFORE AMORTISATIONOperating income before amortisation (EBITA) declined by 57%to € 41.5 million.In the Advanced Textiles & Composites sector (– 48%), the biggest fallwas recorded in the results of the TenCate Advanced Armour NA andProtective Fabrics Europe groups.In the Geosynthetics & Grass sector (– 55%), the decreases in salesat TenCate Geosynthetics North America and TenCate Grass ledto a substantial reduction in EBITA.The EBITA of the other activities amounted to – € 7.0 million and wasattributable to the holding company, which derives its incomeprincipally from interest on loans. This interest is not visible at EBITAlevel. Xennia Technology and TenCate Enbi contributed positively tothe result.RAW MATERIAL COSTSAs a percentage of revenues, raw material costs, including the changein inventories, decreased from 53% to 50%. This favourabledevelopment was caused by:◾ a large reduction in inventories, particularly of finished products;◾ a steep fall in polyethylene and polypropylene prices.As 2009 progressed and the markets came under further pressure,an ever larger part of the purchasing advantage had to be passedon to customers.PERSONNEL COSTSPersonnel costs as a percentage of sales increased from 18% to 20%.It was not possible to respond rapidly enough to the sharp decreasein revenues by cutting personnel costs. This lack of flexibility appliesparticularly in the Netherlands and a number of other Europeancountries.Labour flexibility is much greater in the United States and Asia.The number of employees, including temporary personnel, decreasedas follows:Year-end 2009 2008Netherlands and rest of Europe 1,468 1,621 – 9%United States 1,413 1,700 – 17%Middle East and Asia 1,061 1,327 – 20%3,942 4,648 – 15%TAXESThe tax rate increased slightly from 27.3% to 28.0%. A large part ofthe profit is generated in the United States, where there is a high rate:34% + state tax (5-8%). On the other hand, the tax charge decreasedbecause it was possible to use losses available for set-off in variouscountries.PE price development in €/kg1.81.61.41.21.00.80.6PP price development in $/lb0.90.80.70.60.50.40.30.4JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC0.2JAN FEB MA APR MAY JUN JUL AUG SEP OCT NOV DEC28Royal Ten Cate◾ 2009 ◾ 2008

WORKING CAPITALDue to the tight cash management, working capital decreased by€ 105 million to € 157 million in 2009.in millions of eurosBalance at end of 2008 262.0 (90 days)Divestments – 6.2Organic decrease in 2009 – 96.0Exchange-rate differences – 2.8Total at end of 2009 157.0 (67 days)INVESTMENTSThe tight cash management also had consequences for investments.Investment activity was very restrained in 2009.in millions of eurosIn tangible fixed assets, mainly plant and machinery 13.1In development costs and other intangible fixed assetswhich were capitalised, mainly at Xennia Technology 4.217.3The corresponding depreciation and amortisation charges amountedto € 33.9 million and € 8.8 million respectively.CASH FLOWS AND FINANCINGThe positive cash flow of € 134 million from operating and investingactivities made it possible to reduce the interest-bearing debt by€ 136 million. The working capital reduction made a particularlysignificant contribution.in millions of euros 2009 2008Result after tax 23.1 51.0Depreciation 33.9 30.7Amortisation 8.8 11.6Other items, mainly tax accrual 7.5 29.3Cash flow before reduction in working capital 73.3 122.6Decreases/increase in working capital 95.5 – 35.8Interest paid/taxes – 24.0 – 38.1Cash flow from operating activities 144.8 48.7Investments – 17.3 – 48.0Divestments 26.4 12.8Acquisitions/participating interests – 18.7 – 88.1Other items – 0.9 0.0Cash flow from operatingand investing activities 134.3 – 74.6The ratio of net interest bearing debt to EBITDA (bank definition)amounted to 2.36 at the end of 2009 (covenant = 3.0 maximum).Group equity amounted to € 384.9 million with a solvency of 51.4%.Protective clothing for German power giantAnother 5,000 employees of power giant Energie Baden-Württemberg AG (EnBW) have also been doing their work in protectiveclothing based on TenCate Tecasafe ® for several years now. The inherently flame-retardant material was selected after thoroughresearch. The project was accelerated thanks to the good contacts with fabric manufacturer TenCate Protective Fabrics.The company delivered a total of 150,000 pieces of clothing, ranging from coats to coveralls and from jackets to trousers.The order is a good example of end-user marketing: the development of specifications in collaboration with the end user.While the clothing has been laundered countless times, the excellent fabric properties have not suffered a bit.Annual Report 2009 29

REPORT OF THE EXECUTIVE BOARDPOST BALANCE SHEET EVENTSOn 9 February 2010 TenCate acquired 51% of the shares of the Britisharmour company AML UK Ltd, based in Swindon (UK). This interest willbe increased to 100% at the end of 2010.This acquisition gives TenCate complete access to the British marketfor lightweight composite armour solutions. These are used in vehicles,aircraft and ships. AML UK has annual revenues of approximately£ 10 million.AML UK will be included in the European segment of the TenCateAdvanced Armour group.PERFORMANCE AND OUTLOOKThere has been an increase in the order intake for protective fabrics.A number of orders were also recently received for vehicle armourand personal protection in the US market amounting to US$ 25 million,with an option to increase the order to US$ 35 million.The geosynthetics market in North America is still showing no signof recovery. The fast-growing Asian market presents opportunitiesfor infrastructure and environmental projects.The adjustment to the sales policy in the synthetic turf activities inthe fourth quarter resulted in a sharp decrease in off-season advancesales but will improve the starting position for sales and results inthe current financial year. The policy in the TenCate Grass group willfocus on margin improvement.The outlook for aerospace activities has improved slightly. The militaryaviation market is developing favourably.With regard to the order book, the year appears to have got off toa promising start for the TenCate Advanced Armour market group.The recent acquisition of the armour company AML UK representsa strengthening of these activities. The transaction has now beencompleted.As announced earlier, a large defence contract (at least € 40 million)was won in January 2010. It relates to the armour concept forhelicopters produced by Eurocopter, a subsidiary of EADS.This contract is of strategic value because TenCate is directly involvedin the design phase and in the integration of the safety conceptin the aircraft. This increases the likelihood of follow-up orders.TenCate’s financial position has strengthened considerably comparedto the start of the previous year. The company is therefore better ableto make optimum use of its production capacity and to respond toseasonal and project-based fluctuations in demand.Despite the lower net profit in 2009, good strategic progress wasmade in various fields. The basis has been strengthened, having regardto the strongly improved financial position and the lower cost level.As a result – barring unforeseen circumstances – a higher result isexpected in 2010, despite the fact that most core markets are stillshowing no clear signs of economic recovery.30Royal Ten Cate

AEROSPACE COMPOSITESThe Dutch research centre forthermoplastic composite technology,called TPRC, was established at theUniversity of Twente in Enschede in June2009. TenCate Aerospace Compositeswas one of the four founding partners –alongside the renowned company Boeing– and thanks to its leading position inthe field of composite materials, had aninaugural role in its development.Existing material, design and productiontechnology can also be applied in othersectors, such as defence, wind energyand the automotive industry. Thanksto the TPRC, The Netherlands – andin particular the East Netherlands – istaking an innovative step forward inthe international sector of compositetechnology for advanced applications,such as aircraft. Thermoplasticcomposites enable aircraft manufacturerslike Boeing to achieve significant costadvantages and gain environmentalbenefits.TPRC is supported by the developmentcompany Oost nv, the Province ofOverijssel, the city of Enschede, theregion of Twente and Innovation PlatformTwente. The primary concept in thisgoal-oriented form of collaboration isopen innovation.Connected to open innovation

PROTECTIVE FABRICSProtective clothing is intended to provideemployees with not only protection butalso comfort. In November 2009 TenCateProtective Fabrics introduced intoEurope new durable, protective fabricsand integrated, multilayer systems forprotection against numerous hazards andunsafe working conditions.A new fabric has been developed in theTenCate Tecasafe ® collection whichincorporates a special cellulose fibre. Thisfabric provides multi-risk protection forindustrial safety. The material is inherentlyflame-resistant and these fabrics haveexcellent durability. Its natural fibresmake the fabric cool and breathable andguarantee a high degree of comfort. Inaddition, its colourfastness is excellent,even after multiple industrial laundering.Thanks to its policy of ensuring that theend-user plays a central role and throughactive participation in various standardscommittees (CEN and NEN), TenCateProtective Fabrics is again and againable to produce system solutions thatcontribute to maximum safety. With anoptimal combination of textile technologyand chemical processes, includingexceptional fibre mixes and sustainablefinishes, it produces optimal protectivefabrics.Connected to end-user marketing

ADVANCED TEXTILES & COMPOSITESKey figuresAdvanced Textiles & Composites 2009 2008 2007 2006 2005in millions of euros unless stated otherwiseRevenues 397.3 481.0 350.3 279.7 285.6Operating result before amortisation (EBITA) 31.7 61.5 40.2 21.3 16.8EBITA margin (%) 8.0 12.8 11.5 7.6 5.9Operating result (EBIT) 27.0 52.9 38.7 20.9 16.5Investments 4.2 11.7 17.0 11.7 13.2Depreciation and amortisation 14.2 17.6 10.8 6.1 6.2Net assets 234.0 286.4 197.6 124.9 124.2Staff years at year-end 1,340 1,651 1,238 1,203 1,171EBITA as percentage of average net capital employed 12.0 22.9 22.6 17.1 13.5ACTIVITIESThe Advanced Textiles & Composites sector consists of the followingmarket groups◾ TenCate Protective Fabrics and TenCate Outdoor FabricsHigh-grade protective and safety fabrics for the defence andprofessional wear market, and for the high-grade segmentof the outdoor market.◾ TenCate Advanced Armour andTenCate Space & Aerospace CompositesComposites for the (aero)space industry (Space & Aerospacemarket group) and special industrial applications and for personalprotection and vehicle armour (Armour market group), includingcomposite materials with bullet-, fragment-, knife- and needleproofcharacteristics.REVENUES AND RESULTSThe Advanced Textiles & Composites sector showed an organicdecrease of 20% in revenues in 2009 (currency effect + 3%) to€ 397.3 million (2008: € 481.0 million).The decline in revenues was due primarily to developments inthe TenCate Advanced Armour and TenCate Space & AerospaceComposites market groups and related to inventory reductions inthe aviation sector, delays in the introduction of new aircraft andthe absence of major projects in the US armour market. In this regard,2008 was an exceptionally good year, characterised by very large USdefence projects. The project-based nature of sales is an inherentfeature of this market.BUSINESS MODEL PROTECTIVE FABRICSBUSINESS MODEL COMPOSITESEND-USER MARKETINGINNOVATIONEND-USER MARKETINGINNOVATION▪ End user marketing through business unitDefense & Tactical▪ Importance of brand awareness▪ More focus on industrial sectors(oil and gas extraction, utilities)▪ I mplement inkjet technology in the(future) business▪ Effective use of internal and external IP▪ Design capabilities; solutions▪ Alignment with OEM’s▪ Global footprint▪ Open innovation centers▪ New qualifications supportfuture revenue growth▪ Create new product champions besidesTenCate Defender M▪ Product development by means of inkjettechnology▪ Rationalize Dutch operation▪ Improve operational performance▪ Outsourcing (make or buy)▪ UD technology creates newPMT-combinations▪ Increased applications for thermoplasticsthrough business developmentand TPRC▪ Rationalize Dutch production▪ Outsourcing (make or buy)▪ Create economies of scaleDIFFERENTIATIONCOST LEADERDIFFERENTIATIONCOST LEADERAnnual Report 2009 33

REPORT OF THE EXECUTIVE BOARD > Advanced Textiles & CompositesThe industrial market for safety fabrics was under pressure,particularly in the case of European production, which is the dominantsource of supply in this submarket. Sales of flame-retardant fabrics forUS Army uniforms (TenCate Defender M) grew substantially, largelyoffsetting the decline in sales in the Protective Fabrics market group.defence markets. As part of TenCate Protective Fabrics, the TenCateDefense & Tactical business unit on the one hand responds to theprinciple of end-user marketing (the development of specifications inclose cooperation with the end-user) and on the other hand serves asa vehicle for the development of a worldwide sales strategy.The operating result before amortisation of intangible fixed assetsdeclined on organic basis by 52% to € 31.7 million (2008: € 61.5million). The currency effect was + 4%. The EBITA margin amountedto 8.0%.TENCATE PROTECTIVE FABRICSAND TENCATE OUTDOOR FABRICSMARKET POSITION AND STRATEGYTenCate Protective Fabrics is the market leader in America and Europein the field of protective fabrics. The products offer protection againstrisks in the workplace, for example from chemicals, fire and staticelectricity. TenCate has acquired a strong position in the US defencemarket, for which specific concepts have been developed (such asTenCate Defender M).The market for professional wear and work wear is tightly regulated,with governments enacting legislation specifying safety standards incertain risk areas. TenCate’s customers are ready-to-wear clothingproducers and industrial clothing laundries offering a total range forend-users. TenCate focuses traditionally on industrial markets,firefighting and emergency services as well as the healthcare sector.Defence applications are a relatively young and highly successfuldevelopment.TenCate Defender M was selected in 2008 as the US standard foruniforms with flame-resistant protection. As a result, this product isone of the major pillars underpinning TenCate’s strong growth in theTenCate’s strategy is focused on the use of end-user marketing tomake target groups aware of protection concepts, thereby increasingTenCate’s involvement in defining specifications in tenders. That isbeing achieved successfully among customers in areas such as thepetrochemical industry. TenCate’s positioning is supported by anindustrial brand policy based mainly on quality and functionalityin the field of high-grade protection. TenCate supplies unique solutionfocusedconcepts (systems). These have proved successful in use withthe US Army.TenCate has a broad technological basis and access to the worldwidecommodities market. This is the result of its long-term focus on thisniche market its scale as a global player. In addition to activities andstrong market positions in the US and Europe, TenCate formed a jointventure in 2008 (TenCate – Union Protective Fabrics Asia) for theproduction of safety fabrics for the Asian market. Although theeconomic conditions in 2009 were not optimum in this market, this wasan important strategic step in the market development of the Asianregion.After the focus was placed on cost control particularly in Europe in2009, growth will increasingly result from product developmentworldwide. TenCate has laid an excellent foundation for this.34Royal Ten Cate

GENERAL PERFORMANCEThe positive trend in activities in the US to a large extent offset theless good performance in protective and outdoor fabrics in Europe in2009. New products were developed as a result of internationalco-operation and knowledge exchanges within the group.In the United States, activities in the field of flame-retardant fabricsfor US Army uniforms (particularly TenCate Defender M) grewstrongly. TenCate has developed a product portfolio with a wide rangeof applications for land and air forces as well as naval forces. TenCatewas qualified for new projects with TenCate Defender M variants in2009. Independent tests have shown that the TenCate Defender Mproduct portfolio offers the best price-performance ratio. This materialis currently used in various components of the standard personalequipment for the US Army.The choice is based primarily on aspects such as wearing comfort,optimum protection and value for money. Protection of militarypersonnel remains an important spearhead of innovation and growth.This was one of the reasons why TenCate created the TenCate Defense& Tactical business unit as part of the TenCate Protective Fabricsmarket group in 2009.Over half of the revenues generated in the US in this market segmentwere related to defence applications, of which TenCate Defender Maccounted for to the majority. As a result of the additional rayon fibrecapacity at the Austrian company Lenzing AG, which supplies one ofthe components for TenCate Defender M, TenCate was able to supplya structurally higher volume in the market in 2009.The strategy with regard to TenCate Defender M is aimed at anexpansion both geographically and with regard to other defenceapplications (product differentiation). For example, TenCate receivedan additional order from the US clothing manufacturer PropperInternational in 2009 for $ 13 million for the supply of TenCateDefender M fabric for the Flame Resistant Organizational Gear (FROG)programme of the year at US Marine Corps. It is the largest individualorder for TenCate Defender M for this programme. Sales outside theUS were still insignificant in 2009.The firefighting market in the US is the second most important market.As a result of budget savings there was a slight decrease in revenuesin this segment. TenCate is nevertheless in an excellent position toanticipate market demand, given the increasing need for cheapersolutions.As a result of the economic conditions and the weaker performance inbusiness, TenCate recorded disappointing revenues in the industrialmarket in 2009. This effect was mostly evident in Europe, where it isthe most important market segment. In the industrial market in the US,TenCate is gaining market share with fire-resistant protection based ona version of TenCate Tecasafe ® developed for this market, namelyTenCate Tecasafe ® Plus. After a brief introduction period, this productachieved strong sales growth. It is an example of successfulcombination of US and European product knowledge. TenCate achievedsuccess with this product among large companies in the oil industry inboth the US and Asian markets. These market positions will be furtherexpanded in 2010.Steel workers comfortably protected against dangerMore than 4,000 employees at steel company Corus’ IJmuiden site now go about their work wearing jackets made from TenCateTecasafe ® . The material possesses antistatic and fire-resistant properties, protects against the cold, rain and heat and resistschemical spatter. Employees in Corus’ technical department have to work in close proximity to the ore stack, power shovels, blastfurnaces,casting rollers and in the packaging steel department and are consequently exposed to unusually high risks. The jackets arecomfortable and tear-resistant. The fabric does not burn when exposed to welding or grinding spatter, is free-breathing and extremelysuitable for use in professional wear. The ‘winter fleece’ that was used in the lining of the old jacket was no longer required.Annual Report 2009 35

REPORT OF THE EXECUTIVE BOARD > Advanced Textiles & CompositesThe European market for both safety and work clothing andprofessional wear came under pressure across the board during thereporting year. This had a negative impact on growth in production ofprotective fabrics in Thailand. There was a consequent decrease inrevenues as a result of the poor economic performance. TenCate firstfocused on cost control and streamlining of production. Attention wasalso devoted to logistics and the reduction of quality costs and thereject rate. After this improvement process, both the efficiency andquality of the product portfolio will rise. The strategy is focusedparticularly on growth in market share based on the high-qualityconcepts which have been developed. The new products and systemswere well received at the industrial European industrial trade fairs heldat the end of 2009. The commercial approach will be further developedin 2010. The Xennia technology can generate new impetus in the longterm.In view of the success of flame-retardant fabrics in neighbouringmarkets, TenCate Outdoor Fabrics adapted them for products for theoutdoor market. At the end of 2009, TenCate Outdoor Fabricsintroduced tent cloth fabric with inherent flame-retardantcharacteristics. As a result, it is resistant to scorching, annealing andsparking. There is interest in this product particularly in the marketfor group tents. In addition to scouting, international aid organisationsand tour operators are interested in TenCate Campshield cloth.TECHNOLOGICAL DEVELOPMENTSXennia Technology (see description on page 51), in which TenCateacquired a majority interest in 2008, developed a machine for digitaltextile finishing in 2009. This provides an innovative means of efficientand high-quality finishing or printing of textiles. The project has beenrunning for a number of years, enabling technical bottlenecks to beovercome. The first trial products will be produced in the course of2010. On the one hand, this will enable new products to be producedwith new functionalities. On the other hand, substantial savings can bemade in water, energy and chemicals. This digital inkjet technologyprovides an important basis for future – sustainable – production.The European Commission considers this technology to be a veryvaluable development, having regard to its considerable environmentaladvantages. A subsidy was granted for this development in theframework of the European promotion of innovation.OUTLOOKHealthy growth is expected in the US defence market once again in2010. No rapid recovery is being assumed in the market for industrialapplications, in view of the economic developments. There isnevertheless some optimism in view of the good reception for newlydeveloped products.Good growth in protective fabrics is expected In Asia and SouthAmerica. These attractive markets are expected to develop further.TENCATE ARMOUR COMPOSITES ANDTENCATE SPACE & AEROSPACE COMPOSITESMARKET POSITION AND STRATEGYTenCate is one of the leading companies in the field of armourmaterials (armour composites) and space and aerospace composites.These can replace traditional materials such as steel and aluminiumand make a major contribution to weight saving and better functionalcharacteristics. The strategy is focused mainly on securing a leadingtechnological position, developing material science, knowledge ofproduction processes in the industrial chain and direct access to endmarketsand OEMs. Qualifications are of crucial importance in order tobe able to operate in future programmes in this market.36Royal Ten Cate

The largest proportion of sales and composites is related to ballisticprotection (armour composites). TenCate Advanced Armour is theglobal market leader in concepts for ballistic protection of personneland vehicles. The US market is by far the largest. In Europe, the UKis the dominant market. Customers are mainly the large industrialconglomerates in the defence industry, manufacturers of trucks,aircraft, helicopters etc. and the related suppliers. The specificationsare determined by government bodies (defence ministries).developed. The start-up of production for aerospace has requiredsubstantial investments in the last few years, particularly in theNetherlands. The TenCate Cetex ® material now occupies a strongposition. Among other products, the leading edge of the wing (J-nose)and the engine intakes are manufactured from this material. TenCateCetex ® is also being used in the Boeing 787. In many cases it is notpossible to provide specific information on these componentsmanufactured with TenCate materials, for reasons of confidentiality.Where permitted by the defence authorities, TenCate operates as asingle group for the exchange of knowledge and solutions. TenCateoccupies an important position as a (fibre-) independent producer ofcomposites. The company processes a range of fibres including aramid,glass, carbon and HPPE for third parties. TenCate offers a wide rangeof products in this market. It is nevertheless an advantage to havedesign capacities, which enable specific solutions to be developedfor certain projects.In the aviation market, the material is used in interior and structuralcomponents. The scope of application of aerospace composites is stillfairly limited overall. The new generations of aircraft, however, will beable to provide a substantial impetus for growth. As a result of theeconomic situation and delays in programmes, the current productionlevel is lower than planned. This was mostly related to deliveries forthe Airbus A380 and the Boeing 787. This market has enormouspotential for TenCate.In the United States, TenCate Space Composites has a leading role incomposites for satellite programmes. In the aviation industry, TenCateAerospace Composites operates in the field of civil aviation andbusiness jets, as well as in military aviation. The main civil aviationcustomers are Airbus and Boeing and their direct suppliers. These twoproducers have defined the basis on which the market is being furtherTenCate was involved as a technology partner in the development ofmaterials and their application in the design of new aircraft. TenCatehas taken an important step with the development of unidirectional(UD) tape technology for the aerospace sector. This UD technology iscomplementary to existing production processes for composites.This has further strengthened the position as a development partnerand supplier for the entire aviation sector.GENERAL PERFORMANCE OF TENCATE ADVANCED ARMOUR2008 was an exceptionally good year, dominated by substantial ‘urgentrequirement’ orders. Developments for armour composites in the USmarket fell short of expectations in 2009. Large orders which hadbeen expected failed to materialise. One of the reasons was thepostponement or delay in projects, in both the US and Europe.The European armour market developed well in 2009 in general.Expectations for the US market remain positive, partly due to majorprojects that are planned. TenCate is maintaining close relationshipswith various OEMs (original equipment manufacturers) of militaryvehicles. The company is involved in protection solutions for highprofilevehicle programmes, such as the Humvee, the Stryker,the Mine Resistant Ambush Protected Vehicle (MRAP), the MediumTactical Vehicle (FMTV) series and the Joint Light Tactical VehicleFourth dimension in professional wearClothing company Bierbaum-Proenen (BP) in Cologne (Germany) has developed a new collection of professional wear on the basisof the Denim Look weave, which is part of the TenCate Tecastyle ® range. The name Workfashion4 stands for a combination ofrobust quality, comfort and trendy style. With the brand-new Workfashion4, BP is presenting a ‘fresh outfit’ that targets fashionawareworkers in particular. The clothes can be combined according to one’s taste, work location and purpose. The TenCateTecastyle ® Denim Look is an innovative dyeing treatment. Its structure and appearance differ tangibly from traditional fabrics.Annual Report 2009 37

AEROSPACE COMPOSITESIn March 2009 Airbus expanded itsexisting Memorandum of Understandingwith the Dutch aircraft industry,including TenCate AerospaceComposites. In the ThermoplasticAffordable Primary Aircraft Structure(TAPAS) consortium, Dutch industrialcompanies and research instituteswork with Airbus in the field of material,production and connection technology.These will be further developed forfuture Airbus applications, includingprimary construction parts such as thefuselage and wings. The partners willthus make a contribution to the Airbusambition of eco-efficiency.Because TenCate Cetex ® is beingincorporated into an ever greater rangeof applications in aircraft interiorsand secondary construction parts,the moment is approaching that large,primary construction parts of aircraftwill also be made of thermoplasticcomposite. TenCate’s unidirectionaltape technology will also enable a lightfuselage to be built in the near future.Thanks to their weight reduction,composites are already providingsignificant sustainable advantages,such as fuel savings and reductions innoise and emissions.Connected to open innovation

REPORT OF THE EXECUTIVE BOARD > Advanced Textiles & Composites(JLTV). In the US, a large vehicle order was placed with OshkoshDefense, which was unexpected in that market. A large part of therelated order for armour, which was expected in 2009, has still notbeen finally placed.building rates, accompanied by a reduction in inventories across theentire value chain. In previous years, TenCate has invested substantialsums in order to meet the expected growth. Where possible, costreductions were achieved in 2009, whilst retaining growth potential.At the end of June, TenCate Advanced Armour received a contract fromthe Dutch Ministry of Defence to supply TenCate Ceratego compositearmour panels for the Dutch Patria XA-188 vehicles being used inAfghanistan. TenCate Ceratego is a lightweight composite vehiclearmour which minimises the weight added to the vehicle. Delivery wascompleted in October 2009.The project-oriented character is an important aspect of TenCate’soperational management, which means that companies must have aflexible cost structure. The worldwide market presence, the breadth ofthe product portfolio and the conceptual approach are importantstrengths in the organisation. These are increasingly used both withinthe group and with other TenCate market groups. This represents afurther implementation of the system approach and enables marketsynergy to be achieved. For example, increasing numbers of jointpresentations are being given at trade fairs and joint marketing isbeing conducted which strengthens the TenCate proposition for thedefence market. This involves general protection of personnel andmateriel based on fabrics (including TenCate Defender M) and armourcomposites. A conceptual approach to theme of protection is moreeffective than a more product-oriented individual approach.PERFORMANCE OF TENCATE SPACE & AEROSPACE COMPOSITESThe expected growth in Aerospace composites in 2009 failed tomaterialise, due to delays in the production of the Airbus A380 and theBoeing 787 as a result of technical problems in the development ofthese aircraft types. There was also a downward adjustment in theDuring the reporting year, TenCate Cetex ® composites were included inboth the new Boeing 747-8 and the Airbus A350-XWB. Good growthwas achieved in the United States with composites for the militaryaviation industry and communication and navigation satellites.In the longer term, the market trend for lightweight compositesremains positive, having regard to the superior characteristics.This reflects the development co-operation announced in the secondquarter of 2009 between the Dutch aviation cluster and both Airbus(TAPAS consortium) and Boeing (TPRC). These co-operativerelationships underline the importance of joint efforts to achievestrong growth in the use of composites in aviation. In addition,TAPAS received a subsidy from the Ministry of Economic Affairsamounting to € 6.6 million. This covers half of the total researchbudget (€ 13.2 million).TenCate was granted qualification in a number of interesting areasfor the use of composites, such as the aircraft industry, satellitesconstruction and the energy sector. TenCate has been selected as asupplier of composites in the United States by Alliant Techsystems inMinneapolis (Minnesota, US) for the production of composites rotortubes for the American Centrifuge Plant, the ultracentrifuge plantof USEC Inc. in Piketon (Ohio, US). If USEC receives the requestedgovernment guarantees for the financing of the project, sales can begenerated to finance the project on the basis of this supply agreementfrom 2010. In the Netherlands, TenCate has a strategic co-operationwith Airborne Composite Tubulars for oil and gas extraction.Annual Report 2009 39

ADVANCED ARMOURPeace operations are becoming evermore dangerous for soldiers. This ispartly the result of a change in militarydeployment, although another cause isthe change in the levels and forms ofthreats.In 2009 too TenCate Advanced Armourwas focused on a systematic andintegrated approach to protection.The very best configuration forthe protection of vehicle and crewcan be achieved for customersthrough collaboration with vehiclemanufacturers. The weight of theanti-ballistic protection must remain aslow as possible, while at the same timeproviding the highest possible level ofprotection.In February 2009 TenCate AdvancedArmour presented its complete rangeof protective solutions at the Abu Dhabitrade fair. Taking pride of place waseffective protection against improvisedexplosive devices (IED) and explosivelyformed projectiles (EFP). TenCateArmourtex BM is an importantexample of lightweight protection thatis able to reduce the extra weight of thevehicle to a minimum.Connected to end-user marketing

REPORT OF THE EXECUTIVE BOARD > Advanced Textiles & CompositesObtaining the above qualifications is important for future sales.TenCate is therefore continuing to invest even in the current economicconditions. Applications for TenCate composites in military aviationand the satellite industry have grown strongly. An important growthmarket is unmanned vehicles (UAVs) for military applications andthe satellite industry. These market positions were considerablystrengthened in 2009. As a result, the number of applications ofTenCate composites will increase further in the near future.OUTLOOK FOR TENCATE ADVANCED ARMOUR ANDTENCATE SPACE & AEROSPACE COMPOSITESTenCate participates directly and indirectly in tenders which can havean important influence on sales, both in the short and long term.There is constant uncertainty about the timing of the placing of theseoften large defence orders. Annual sales are therefore highlydependent on the number and size of projects and fluctuate as a result.No major programmes are scheduled in the short term of the kind seenin 2008, with the exception of the MATV programme (MTAP All TerrainVehicle). The timing of these potential sales is uncertain.the current year. The Boeing 787 Dreamliner completed its firstsuccessful test flight in December 2009. Sales in the second half of2010 could therefore receive a boost. On the other hand, uncertaintyremains with regard to the economic trend and the potential financingproblems of aviation companies in the acquisition of new aircraft.As a result of the cost measures already taken, TenCate will be ableto benefit as soon as the markets pick up. The expectations for themilitary aviation market remain positive, as do those for satelliteprogrammes.In Europe, where revenues are spread over several projects, the orderposition is strong. The market is expected to show a continued goodlevel of sales. This expectation is due to the fact that governmentbudgets for security are not decreasing as a result of the economicsituation and due the previously announced defence programmes forarmour and modernisation.The structural demand for TenCate composites in the aviation industryhas remained positive. That is partly a consequence of thequalifications secured by the company. However, it remains uncertainwhether and to what extent a recovery will be seen in the market inAnnual Report 2009 41

GEOSYNTHETICSIn 2009 TenCate Geosynthetics wasalso involved in numerous projectsworldwide for sustainable watermanagement, often in collaborationwith government agencies. TheTenCate Geotube ® system consistsof very large tubular textile systemsthat are hydraulically filled with sandor sludge that is available locally.This makes it a more sustainablesolution than traditional materials forbank protection. The system is moreeffective than the dredging up of sand,which may be carried away again by theflowing water. In addition, it can be wellintegrated into the landscape and isthus also of ecological value.In 2009 a start was made on reinforcingand protecting river banks in theNiger delta in Nigeria using TenCateGeotube ® . In the United States workwas carried out on the recovery andprotection of the coastal strip of GrandIsle in New Orleans (Louisiana) togetherwith the US Corps of Engineers. InMalaysia a large number of systemswere supplied for the ecologicaldewatering and storage of calciumsulfate. China too now uses thesesystems for large-scale applications.Connected to end-user marketing

GEOSYNTHETICS & GRASSKey figuresGeosynthetics & Grass 2009 2008 2007 2006 2005in millions of euros unless stated otherwiseRevenues 392.1 497.8 468.3 397.5 273.9Operating result before amortisation (EBITA) 16.8 37.8 30.4 25.6 23.8EBITA margin (%) 4.3 7.6 6.5 6.4 8.7Operating result (EBIT) 13.8 34.8 28.3 25.5 23.8Investments 9.0 29.0 44.9 28.9 10.5Depreciation and amortisation 25.3 23.0 20.0 13.7 7.9Net assets 332.7 427.4 354.8 215.8 206.4Staff years at year-end 1,795 2,129 2,053 1,633 1,544EBITA as percentage of net average capital employed 4.1 8.8 8.9 12.9 22.6ACTIVITIESThe Geosynthetics & Grass sector consists of the following marketgroups:◾ TenCate Geosynthetics and TenCate Industrial FabricsFabrics, grids and nonwovens for use in civil engineering, theconstruction industry and the environmental market, as well asindustrial fabrics for various applications, such as fish farms,agribusiness, sport and recreation.◾ TenCate GrassSynthetic turf components, including synthetic grass fibres andbacking, for applications such as football, hockey and other sportspitches, as well as landscaping.REVENUES AND RESULTSThe revenues of the Geosynthetics & Grass sector declined on anorganic basis by 19% to € 392.1 million (2008: € 497.8 million).The currency effect was 1%. This decrease occurred to the sameextent in both markets.The market for geosynthetics was mainly under pressure due to thesituation in the United States, which is one of the main geographicmarkets. The promised stimulation of the US economy by means ofinfrastructure works did not translate into a revival of the projectmarket. Throughout the year, TenCate exercised restraint in the use ofsupplier credits to provide finance in the synthetic turf market. This isa seasonal market, and supplier credit is an inseparable part of it.In view of the limitation on working capital – unlike the situation inBUSINESS MODEL GEOSYNTHETICSBUSINESS MODEL GRASSEND-USER MARKETINGINNOVATIONEND-USER MARKETINGINNOVATION▪ Upgrade sales organization towardsproject market and high added valueproducts (new dimensions)▪ Alignments with other solution providers(water management)▪ Position geosynthetics as durable,ecological friendly▪ Emerging markets▪ I n t e l l i g e n t g e o s y n t h e t i c s▪ Polymer technology (biopolymers)▪ Filtration technology▪ Integrate strategic alliances into theTenCate strategy▪ System approach▪ Quality matters. Cost of ownership▪ Implement system approach withpartners▪ Finalization 4th generation systems▪ Limit (other) technological developments(focus)▪ Rationalisation of product portfolio▪ Focus on infrastructure and environment▪ Military market▪ Cost reduction / higher efficiencyDutch production▪ Lean and mean (EU) sales organization▪ Get own systems certified and specified(system ownership)▪ Performance guarantees▪ Cradle to cradle▪ Cost-effective / more flexibleDutch production▪ Margin growth through better utilizationDIFFERENTIATIONCOST LEADERDIFFERENTIATIONCOST LEADERAnnual Report 2009 43

REPORT OF THE EXECUTIVE BOARD > Geosynthetics & Grassprevious years – the aim in the fourth quarter was to achieve a lowersales volume. This provides a better starting point for demand in thenew season.The operating result before amortisation of intangible fixed assetsdeclined by 55% to € 16.8 million (2008: € 37.8 million). EBITA declinedto a relatively greater extent and there was considerableunderutilisation of capacity. Active control of working capital andslowing of production also contributed to this decline. The EBITAmargin decreased to 4.3%.The market is devoting increasing attention to the positiveenvironmental aspects of geosynthetics. The use of environmentalarguments and the reduction of environmental effects are thereforereceiving greater emphasis in the promotion, design and specifications.Alternatives to our geosynthetics are usually concrete, stone and steel,which often have to be transported over long distances. In the case ofgeosynthetics, by contrast, locally available materials (sand, sludge)are used. In the case of land reclamation (hydraulic filling with sand)there is usually considerably less need for dredging, which producesenvironmental effects.TENCATE GEOSYNTHETICS ANDTENCATE INDUSTRIAL FABRICSMARKET POSITION AND STRATEGYTenCate is the largest producer worldwide of (high strength) fabricsand nonwovens for infrastructure, construction and the environment(geosynthetics), as well as industrial fabrics for applications such asagriculture, horticulture and the recreation sector (industrial fabrics).With manufacturing sites in Europe, the US and Asia, TenCate alwaysoperates on the basis of market proximity which also gives rise tologistical and price advantages. Geosynthetics by far contributed thelargest proportion of revenues in this group. A distinction must bedrawn between wovens and nonwovens (fleeces). In general, wovenproducts are stronger and withstand greater forces.The nonwoven market is a volume market. The important factor forTenCate is that the company is strongly represented in both marketsegments and provides extensive technical advice on the use ofgeosynthetics for civil engineers, construction managers andcontractors. Here too, the aim is to achieve a system approach focusedon solutions. Geosynthetics form part of the overall structure anddeliver functional added value.GENERAL PERFORMANCEIn the US, where the economic decline has already been a factor since2007, the Geosynthetics group has gradually adjusted the cost level tothe market situation. As a result, the negative effect on the result wasrelatively more limited than in the Grass group.Worldwide, TenCate Geosynthetics got off to a hesitant start in 2009.Particularly in the US, the volume was low, as a result of the almosttotal absence of the usual infrastructure projects. The US market stillshowed no recovery at the end of 2009, although the US Governmenthas announced stimulus measures for the infrastructure market.However, the stimulus funds have not yet shown any positive effectsin the public geosynthetics market.In Europe there was a limited decline in sales compared to 2008.Asia continued to show growth due to infrastructure projects in civilengineering. Geographic markets such as Africa are also showinggrowth. Since there is a worldwide trend in the sector and amongmarket players such as TenCate, which have responded promptly andappropriately to developments, TenCate’s market share increasedfurther.44Royal Ten Cate

Commodity prices were lower on average in 2009 than in 2008. Thiswas due particularly to the economic downturn and the slump indemand. Overall, this was a positive development for TenCate.TenCate Geosynthetics is contributing to a range of attractive projectsworldwide. At the beginning of June, TenCate Geotube ® technologywas selected for projects in Nigeria and the United States. In Nigeria,TenCate Geotube ® is being used to strengthen and protect river banksin the Niger Delta. In the US, TenCate Geosynthetics is working withthe US Corps of Engineers on the restoration and protection of theGrand Isle coastal strip in New Orleans (Louisiana). On Langkawi islandoff the coast of Malaysia, both TenCate Geotube ® and TenCatePolyfelt ® solutions are being used to improve the infrastructure.In Asia too, geosynthetics are frequently used in the constructionof roads and railway lines on less stable ground. These are oftenlarge-scale projects.TenCate’s 50% interest in the Geofabrics Australasia pty ltd jointventure based in Cheltenham (Australia) was sold to Noel P. HuntInternational Limited in mid-2009. TenCate had acquired the interest in2005 as a result of the acquisition of Polyfelt. Agreements have beenentered into with a view to continued commercial co-operation.A reorientation is under way throughout the TenCate GeosyntheticsGroup, with priorities being reset and attention being focused on theoverall product portfolio (business simplification process). Internalco-operation was further boosted in 2009 by improved co-ordination,exchanges of product knowledge and identification of worldwidegrowth opportunities.TECHNOLOGICAL DEVELOPMENTSWith a globally operating market group, TenCate is meeting thefast-growing demand for intelligent geotextiles, such as TenCateGeoDetect ® . This system, based on geosynthetics and optical fibres,is used to monitor infrastructure works such as dyke bodies, roads andrailways. The combination of sensor technology and geotextiles isopening up new markets. To this end, TenCate started a new businessdevelopment group in 2009, which is systematically assessing thesepossibilities.TenCate is working in this field with a partner in high-grade opticalfibres. TenCate also participated with partners in the Dutch IJkdijkproject (www.ijkdijk.nl) to conduct trials of the intelligent dykeconstruction system of the future. The first series of trials wassuccessfully completed in 2009 and has now led to follow-up activity.Co-operation is also taking place in the field of water treatment.The first large waste water project has been completed in Asia througha partnership. This development will be continued in a structured way,because it has great market potential worldwide.OUTLOOKTenCate is not expecting the traditional markets for geosyntheticsand industrial fabrics to show any structural recovery in 2010.Some growth is expected in environmental and infrastructure projects.In future, the growth must be achieved above all on the basis of newapplications, water management and the environmental market.The cost measures and the aforementioned business simplificationprocess will have a positive impact on profitability. A stabilisation orslight rise in revenues may therefore lead to higher operating margins.In geographic terms, the growth will be in traditional market segments,particularly in Asia and South America.Forever greenTenCate Miramesh ® SG is an open-mesh geotextile in which synthetic turf fibres are integrated. It was designed specificallyto reinforce artificial slopes and provide a lasting green appearance immediately. The product was developed by TenCateGeosynthetics North America in collaboration with TenCate Grass on the basis of TenCate Miramesh ® GR, which was used toexpand Yeager Airport near Charleston in West Virgina, USA (photo). The artificial grass fibres provide UV protection, resultingin additional protection against erosion and a longer service life of the slope. The slope also looks good immediately and it isa cost-effective solution. Over time, the top of the construction is covered by natural vegetation.Annual Report 2009 45

REPORT OF THE EXECUTIVE BOARD > Geosynthetics & GrassTENCATE GRASSMARKET POSITION AND STRATEGYThe TenCate Grass group has a leading market position worldwide incomponents for synthetic turf systems. TenCate is almost at thebeginning of the supply chain. The strategy has been reinforced in allcornerstones of the strategic framework (value chain management).The demand and supply side of the market are developing strongly.In order to have a leading role in terms of both market share andtechnology, an active strategic policy is crucial. With production sitesin the Netherlands, Dubai and the US, TenCate has set up itsproduction in a cost-effective way and logistical lines to the market areshort.The technology component has also been strongly developed withinthe TenCate Grass group. TenCate has a large number of valuablepatents. Formulations are developed in-house which give fibres highwear resistance and make them flexible and resilient.Technologies available within TenCate as a whole are drawn upon todevise new methods for the production of synthetic turf carpet withincreasing functionalities. TenCate has for many years been in the leadin new developments. It sets itself the task of developing a secureproduct which makes a positive contribution to the prevention of sportsinjuries. In that way end-users can have synthetic turf for a safe andsustainable sporting experience.TenCate is in the lead when it comes to entering into partnerships withleading suppliers of synthetic turf systems. TenCate is increasinglyengaged with the overall system development in order to maintainsport performance over the long term. The first generations ofsynthetic turf sports pitches are losing their important playingcharacteristics after a relatively short period. Close co-operation istherefore necessary in the supply chain (production and processing ofcomponents, installation and maintenance). In this context, there arestrategic alliances and TenCate Grass has interests in various syntheticturf companies, such as Edel Grass (50%), GreenFields (32%) andTigerTurf (49%). In this way TenCate contributes among other things toincreased quality awareness among end-users and the companies inthe value chain. FIFA is very interested in the sustainable improvementof the quality of the aspects of football pitches in particular. The sametrend is evident in other sports federations.An important milestone in 2009 was the completion of the first trialpitches with a synthetic turf structure developed in-house. By meansof weaving, TenCate has for the first time produced a complete toplayer for synthetic turf sports pitches in place of the individualcomponents (synthetic turf fibres and carpet backing).The sports market is currently the main market in synthetic turf.The market for landscaping is nevertheless growing strongly andultimately has equivalent if not greater potential. Both reducedmaintenance and environmental factors (savings in consumption ofwater, artificial fertiliser and pesticides) are important reasons for theacceptance of synthetic turf in gardens and public green spaces.46Royal Ten Cate

GRASSWarranted turfEnhancing the lifespan of sportspitches is a key objective of marketleader TenCate Grass. In October 2009TenCate was the first in the internationalsynthetic turf industry to introducea warranty on the performance anddurability of synthetic turf pitchesmade from TenCate components.These warranties are related to theFIFA criteria; FIFA 1 Star standard forcommunity fields and the FIFA 2 Starstandard for premier league football.The TenCate Performance WarrantyConcept is aimed at professionallevel football pitches with FIFA 2 Starcertification and is offered throughselected business partners andinsurance company Allianz Global RisksNederland. TenCate XQ technologymakes it possible to warrant five yearsof FIFA 2 Star performance. The firstwarranted pitch was installed atFC Breukelen, The Netherlands.For high-use fields TenCate Grassalso introduced the XP warranty ondurability. This is an extended warrantythat guarantees that pitches willwithstand unlimited hours of play forfive years. This unprecedented warrantyis offered through selected businesspartners.Connected to performance warranty

REPORT OF THE EXECUTIVE BOARD > Geosynthetics & GrassGENERAL PERFORMANCEThe economic and financial situation led to a slight decrease in marketdemand in a number of geographic areas, mainly because projects areusually funded by the public sector. TenCate focused on control ofworking capital during the year. A restrained policy was conductedwith regard to the credit risk on debtors. Traditionally, this market hasa highly seasonal pattern, with TenCate bearing the main financingpressure. The seasonal pattern was therefore not followed optimally.Production was partly shut down in 2009. There was also pricepressure due to the forced reduction in inventories. As a result,margins were under pressure. A redeployment consequently took placein production and the focus was shifted more to the production site inDubai. The logistics process in Dutch production was adjusted in thefourth quarter, with greater co-operation among the plants.As a result, the number of jobs decreased.Football is the main growth market. The improvement in theperformance of synthetic turf sports pitches, particularly for football,is one of the prime challenges in this market. The market penetrationof synthetic turf in sport has risen in the last few years but is still ata fairly low level worldwide. It is a relatively young market, with stilla great deal of ignorance of the qualitative characteristics of syntheticturf.Better co-operation, the exclusive use of environmentally friendlycomponents, reduction in the cost of purchasing and replacementas well as providing a greater degree of certainty with regard toperformance will have a positive effect on acceptance. As a basis forsport, synthetic turf offers potentially unprecedented advantagescompared to natural grass over the year, such as playability duringthe entire year, predictable playing characteristics, lower waterconsumption and maintenance. The initial investment is higher, but theoperating costs are much lower. In the general positioning of TenCateGrass in the market, quality aspects played a strong role in theco-operation with partners and sports federations. Good progress wasmade in this area. TenCate Grass is also placing greater emphasis onthe provision of guarantees with regard to important qualitativeaspects.TECHNOLOGICAL DEVELOPMENTSThe fibre technology was further developed in 2009. Good results weremade with regard to the improved resilience and wear resistance offibres. As a result, fibres in sports pitches remain upright longer,producing a lasting improvement in the playing characteristics.At the end of 2009, TenCate Grass also developed a concept for fourthgenerationsynthetic turf: Concept G4 . The aim of this conceptualsystem development is the optimum combination of functionalities inthe various components. New test pitches will be laid in 2010.By developing a comprehensive synthetic turf system and launching itin the market (with strategic partners), TenCate ultimately has greaterinfluence over the end product.An important aspect of technological development is sustainability:sports pitches are entirely recyclable or are only produced from asingle type of (sustainable) raw material.48Royal Ten Cate

OUTLOOKThe demand side of the synthetic turf market for sport and landscapeapplications remains structurally healthy.As in the US, the market in Europe is strongly influenced by publicsector budgets. Sports complexes are often owned by local authorities.Delays in the availability of these budgets the sport was evidentparticularly in the US. This trend is expected to continue in 2010.It remains to be seen how suppliers will perform as a result of therestrained credit policy. The planning of production for the high seasonis the greatest challenge with regard to financing. The policyconducted in 2009 provides a good starting point for 2010.The redeployment of production provides a good basis for therestoration of margins.Triple T System hockey field in Ede and BloemendaalHockey clubs MHC Ede and HC Bloemendaal (the latter the European and national champion) play their field hockey games on aTriple T System hockey field. The Triple T System fully water-based field is named after top hockey player Taeke Taekema.The system was developed by TenCate Grass, Edel Grass, and Oranjewoud Sport. A Triple T turf is made from a fibre systemfeaturing over one million filaments per square metre. Combined with a special, durable dampening under layer, the constructionoffers perfect playing properties. A fully automatic spray irrigation system ensures that those playing properties are optimised,making it a fully water-based pitch that will lift top hockey to an even higher level.Annual Report 2009 49

innovative inkjet solutionsAs global market leader, Xenniaproduces fully customized inkjetsystems, including hardware, fluids,print systems and software. What isunusual about this is to be found not onlyin the highly technological characterof each module, but specifically intheir mutual coordination and specialcombinations.Thanks to its customer-orientedproduction processes, Xennia is able tosupply ‘high performance’ printers andpatented inks in a short time. In addition,it has an extensive portfolio of chemicalformulae for the use of numerous otherfluids. The inkjet systems can providesubstrates with fluids by means of tensof millions of drops a second.The company focuses primarily on threecore markets: the product decorationindustry (ceramic tiles, furniture, etc),the textile industry and the packagingindustry (glass, plastic, cardboard, etc).The industrial inkjet sector is goingfrom strength to strength. As a largeshareholder and producer of hightechmaterials, TenCate is interestedin applications for smart textiles andadvanced composites.Connected to technological innovation

OTHER ACTIVITIESKey figures 2009 2008 2007 2006 2005in millions of euros unless stated otherwiseRevenues 52.7 53.8 67.4 93.3 127.0Operating result before amortisation (EBITA) – 7.0 – 3.9 2.4***4.2 – 1.5Operating result (EBIT) – 8.1 – 3.9 2.4 3.7 – 1.8Investments 4.1 7.3 1.0 2.4 2.5Depreciation and amortisation 3.2 1.7 1.9 3.3 5.2Staff years at year-end 670 657 729 696 863*Including exceptional items.ACTIVITIESThe Other Activities sector comprises Xennia Technology, TenCate Enbiand Holding & Services.◾ Xennia TechnologySpecialist inkjet technology for industrial applications, such as themedical sector and the food and textile industry.◾ TenCate EnbiTechnical rollers and components particularly for printers, copiers,fax machines, postal sorting machines and automated tellermachines.REVENUES AND RESULTSThe revenues of the Technologies, Technical Components and Holding& Services sector amounted to € 52.7 million (2008: € 53.8 million).EBITA amounted to – € 7.0 million (2008: – € 3.9 million). This resultwas attributable entirely to the Holding company, which derives itsincome principally from interest on loans. This interest is not visible atEBITA level. Clearly positive developments took place at TenCate Enbiand Xennia.XENNIA TECHNOLOGYMARKET POSITION AND STRATEGYXennia Technology ltd of the UK (79%) is one of the few companies inthe world specialising in the development of production processesbased on inkjet technology. Xennia’s speciality lies in combining thetechnology (hardware) with operating systems (software) based on itsown chemical formulations for inks, coatings etc. Xennia has a rangeof ink formulations for applications in areas such as circuits (printedelectronics), infrared reflection, coatings with self-cleaning effects andspecial inks for applications in the printing sector (such as personalisedlabel printers).Annual Report 2009 51

REPORT OF THE EXECUTIVE BOARD > Other activitiesThe use of inkjet technology in industrial processes is still in itsinfancy, but the growth potential is enormous. The advantages ofinkjet technology are:◾ Rapid reaction time to changing market demand (reductionof inventories);◾ Mass customisation;◾ Cost benefits (production costs, environmental costs, labourcosts);◾ Product innovations through new possibilities offered by thetechnology;◾ Accuracy and controllability.Due to the complexity of the technology and the relatively high price ofinks, there has as yet been no exponential growth, but considerabletechnological progress was made throughout the market in the pastyear. With the increase in applications, as a result of the largervolumes, the price of special inks and coatings will fall, which willlower the barriers to entry for a wide market introduction. Xenniafocuses primarily on applications to which the price of ink is lessrelevant and, as a developer and problem solver, plays an importantrole in this process. New co-operation requests were received fordevelopment projects in 2009. The company is working exclusivelywith TenCate on developments in the field of technical textiles, whichoffers promising potential. Work has also taken place intensively inthe European DigiTex project, in which TenCate is developing exclusiveapplications for innovative digital finishing processes (Digifin).Production methods and processes are being developed jointly withpartners for this technological innovation.Xennia also has a number of hardware components which have beendeveloped within the company. The sale of these components alsoprovides an initial contribution to revenues and results. Xennia hasgood relationships with a number of producers of printheads, includingthe British company Xaar.Xennia’s revenues will in future consist principally of the sale ofcomponents and (royalties on) inks and coatings and other royaltyincome.GENERAL PERFORMANCEIn 2009 there was already a positive contribution to TenCate’s results.Xennia Technology made good progress during the reporting year andexpanded its geographic market area for industrial applications(medical sector and food and textile industry) for inkjet technology.The first significant revenues in Asia were achieved through a strategicpartner.In addition to the existing European scheme, subsidies were receivedfrom both the Province of Overijssel and the Regional InnovationPlatform for the further development and market introduction ofinnovative digital printing and textile finishing processes, inco-operation with TenCate. The intention is that the inkjet technologywill also be a spearhead for the eastern region of the Netherlands.At the end of 2009, an initial version of an industrial productionprocess was completed for the finishing and printing of textiles. It isbeing used to run trials for products for TenCate Protective Fabrics.OUTLOOKThere are positive prospects for Xennia’s inkjet technology, whichTenCate uses primarily as a finishing technology. Xennia has beenselected as a partner in a new European innovation project in the fieldof flexible large area electronics. Xennia’s contribution lies in surfacecoating or printing by means of inkjet technology. For TenCate, theprime aim is innovation in textile technology. This will open up newXennia introduces innovation in process technologyXennia Technology presented its process-demonstration model for printing on textile materials. This new nano-process technologyis based on inkjet engineering and involves applying ink or coating particles with enormous precision at high production speeds.This technology represents a break-through in industrial processes that until recently were used in the textile industry. Inkjettechnology has not just led to innovative printing technology but also to a new nano-process technology that allows complexfunctionalities to be applied to the surface of (textile) substrates. This technology opens up new avenues for technicaladvancement, is extremely environmentally friendly and makes substantial cost savings possible.52Royal Ten Cate

prospects for the Dutch production of protective fabrics. Xennia isexpected to open a site in Twente (the Netherlands) and to investigateco-operation with local partners in the course of 2010.TENCATE ENBIMARKET POSITION AND STRATEGYTenCate Enbi develops and produces technical rollers and componentsbased on rubber and foam technology for paper transport and imagetransfer in printers, copiers and fax machines, as well as for postalsorting machines and automated teller machines. The products have tomeet strict qualification requirements with regard to technicalcharacteristics.TenCate Enbi occupies an important position as a leading supplier ofmajor European, American and Asian printer and copier producers.TenCate Enbi is one of few suppliers to operate on three continents:Europe, North America and Asia. Competitors operate mainly locally.As an industrial supplier it is important as a partner in the logisticschain to deliver added value on competitive terms and to serve as asounding board for technological development processes.GENERAL PERFORMANCEThe markets for printers and copiers worldwide came under pressureagain in 2009. The streamlining of activities announced in 2008 led tocosts being reduced in 2009, in line with the (uncertain) marketsituation. The sites in Hungary and Germany are being increasinglyintegrated. The head office in Beek has been closed. The holdingcompany activities have been placed within the individual operations.TenCate Enbi’s breakeven level was lowered further in this way.The associated costs resulted in a one-off charge on results duringthe financial year.A positive development remains the diversification in Europe, whichis necessary due to the loss of a large part of traditional sales in theprinter and copier market. TenCate Enbi is focusing among other thingson boiler insulation for heating systems and noise insulation forengines. Although the situation in the automotive sector was poor, thismarket segment provided a new area for sales. The company continuesto generate attractive replacement sales in markets other than theprinter and copier market.In addition to the office market, TenCate Enbi serves niche markets,such as postal sorting machines, ATMs, photo printers and insulation(foam-based products).A strong development capacity is an important precondition forsuccess in this market, which increasingly has shorter productioncycles.Annual Report 2009 53

GEOSYNTHETICSTenCate GeoDetect ® is a monitoringsystem based on geotextiles withfibre optics. This system has beenused in Europe for a couple of years,for example in the installation of thehigh-speed rail track through France.In addition a great deal of research hasbeen conducted in the past fewyears. TenCate Geosynthetics inThe Netherlands has been involvedin the ‘IJkdijk’ project since thebeginning of 2005. Participants in thisinternational testing ground for newinspection and monitoring techniquesfor water retaining structures includeindustry, research institutes andgovernment agencies. Experiments areconducted on an actual scale undercontrolled conditions.TenCate GeoDetect ® incorporatesintelligent geotextile with software,instruments and equipment for datatransfer and processing. As a resultof its introduction to civil engineers,consultants and government agencies,TenCate Geosynthetics strengthensits worldwide reputation as a leader ininnovative solutions in geotextiles forcomplex civil engineering problems.Starting in 2010 TenCate Geosyntheticswill be focusing also on the market inNorth America for this product.Connected to a system approach

REPORT OF THE EXECUTIVE BOARD > Other activitiesOUTLOOKThe outlook in the traditional markets remains uncertain, although thecurrent basic volume is reasonably assured. TenCate Enbi’s emphasis ison improving the profitability and strengthening the market position innew sales markets with a profitable product portfolio.TenCate is continuing to secure a strong position for TenCate Enbias a reliable and high-quality supplier. Continuity is a very importantstarting point to be able to offer customers maximum certainty.Especially in difficult economic conditions, it is important for TenCateEnbi to be part of an internationally well-positioned company.Annual Report 2009 55

Corporate informationCORPORATE GOVERNANCECORPORATE GOVERNANCE STRUCTUREThe Supervisory Board and the Executive Board endorse the maincorporate governance principles as set out in the principles and bestpractice provisions of the Corporate Governance Code amended bythe Monitoring Committee in December 2008.No detailed adjustments to the Corporate Governance Policy weremade in 2009 in response to the new code. TenCate already largelycomplied with the Code or intends to comply with the amendedprinciples of the Code. As was the case with the previous Code, forthe amended version there will be a number of exceptions applicablewithin TenCate, relating mainly to the nature and size of the company.They do not affect the basic principles of good corporate managementand integrity. The exceptions to the best practice provisions are statedon TenCate’s corporate website.The main points on which the new Code has been tightened are asfollows:◾ Greater emphasis has been placed on the importance of internalrisk control and supervision systems in the new code.The Supervisory Board is already closely involved in the strategy.The Board supervises the quality of both the internal risk controland responsibility for it. In material terms, the new Code will notgive rise to any major adjustments in the risk control policy asthe current policy is deemed to be sufficient in combination withreporting lines that have been refined over time;◾ The remuneration policy for directors is based on the policy asapproved at the general meeting of shareholders of 24 March2005. No adjustment is being made to the remuneration policyat present;◾ TenCate’s option scheme contributes to a long-term approachin view of its conditionality. The scheme is based partly on(individual) non-financial objectives;◾ Stakeholders have an increasing interest in the current principlesof socially responsible enterprise. In the exercise of thesupervisory role, the Supervisory Board considers the socialaspects of enterprise that are relevant to the company.The Executive Board’s statement on the internal risk and controlsystems can be found on page 61 of this annual report.The corporate governance structure is based on the voluntaryapplication of the two-tier board structure. The main elements of thisare:◾ The financial statements are adopted by the general meeting ofshareholders;◾ Supervisory directors are appointed by the general meeting ofshareholders on the basis of nominations by the SupervisoryBoard. The profile of the members of the Supervisory Board is firstdiscussed at the general meeting of shareholders at the time ofadoption and on each subsequent modification;◾ The general meeting of shareholders and the works council canrecommend persons to the Supervisory Board for nomination assupervisory directors;◾ In the case of one-third of the members of the Supervisory Board,the Supervisory Board will in principle place in nomination thename of a person recommended by the works council (workscouncil’s reinforced right of recommendation);◾ In the event of an outright majority of the votes, the generalmeeting of shareholders representing at least one-third of theissued share capital may reject the nomination by the SupervisoryBoard;56Royal Ten Cate

◾ The members of the Executive Board are appointed by the generalmeeting of shareholders on the basis of a binding nomination bythe Supervisory Board.Corporate governance within TenCate is based on the followingprinciples:◾ Value creation for shareholdersThis means making optimum use of the available resources. In thecontext of internal financial control, financial ratios and metricsare monitored closely. These reflect the performance in terms ofcash flow generating assets, efficiency, margins and the return oncapital employed. Consideration is also given to longer-termcontinuity. TenCate takes account of efficient use of naturalresources and its social responsibilities.◾ Quality of the management and appropriate remunerationThe remuneration policy is intended to attract high-qualitymanagement consistent with the specialist and multinationalcharacter of TenCate. The performance pay structure must betransparent and focused on key performance indicators.The Supervisory Board’s Remuneration Committee is responsiblefor developing the remuneration policy and assessing theperformance criteria for members of the Executive Board.◾ Code of conduct for management and employeesThe company has a code of integrity, a whistleblowers scheme andrules to prevent abuse of inside information. This is a dynamicprocess in which the code of conduct can be refined from timeto time.◾ DisclosureTenCate conducts an open communication policy and providesregular information on its important commercial developments.Information provision must fulfil the criteria of accuracy,completeness and timeliness and comply with transparencyguidelines and IFRS standards, in order to give stakeholders themost transparent and accurate view possible of the performanceand outlook. The main risks must be stated and evaluated.The information on TenCate’s corporate strategy is communicatedclearly. From 2009, only a market-compliant trading update will beprovided for the first and third quarters, in accordance with thelegislation which came into force in December 2008.◾ Financial control and risk monitoringThe Supervisory Board forms a financial committee from among itsmembers to supervise the financial performance, acquisitions,divestments and general risk policy.◾ Avoidance of conflicts of interestTenCate is alert to conflicts of interest. These are addressed andwhere necessary avoided.◾ Social responsibility and sustainable enterpriseTenCate strives to maintain good relations with other parties in itsvicinity and with stakeholders. The company endeavours to limitthe environmental impact as far as possible. This principle isalso included in the code of conduct for employees. Substantialenvironmental investments are made for this purpose.Operating companies have long implemented major elementsof socially responsible enterprise.Environmentally friendly storage of mine tailingJust off the El Mochito mine in Honduras, a dedicated basis is used for tailings. The Guard Shack Slide nearby could becomethe site of a landslide during heavy rainfall, releasing large quantities of sand and rock (up to 400,000 m³) into the basin via a dryriverbed. This would cause the basin to overflow, drenching a nearby, environmentally vulnerable area in contaminated minetailings. The solution was to construct two dams based on TenCate Geotube ® technology. Storing and dewatering mine tailings inthe containers gave the dams their final form and solidity. They have already withstood large quantities of rainwater anddislodged debris.Annual Report 2009 57

CORPORATE INFORMATIONSWOT ANALYSISThe SWOT analysis included in the 2008 annual report remains broadlyapplicable. The set of factors which determine TenCate’s strategicposition forms a dynamic process. A description is provided below ofthe aspects of this dynamic that were of importance during the pastfinancial year and the new aspects to be reported.THE STRENGTH OF TENCATEThe organisation is succeeding increasingly in co-operating internallyand sharing knowledge. Acquisitions over the past few years havebeen effectively integrated into the existing organisation as part ofthis process. The system approach is gaining ground, as can be seen inmany examples. It is a gradual process which makes heavy demands onthe sales organisation. The development of the commercial system isan ongoing process.Although great attention was devoted to the financial positionthroughout the year, it is a strong signal that TenCate was able to copewith the situation independently and did not have to call on the capitalmarket. That has created a solid foundation.POINTS FOR IMPROVEMENTSince there has been a strong emphasis on the short term, long-termobjectives must again be pursued more expressly. Financial scope hasbeen created for this, and there is cautious optimism with regard toimportant market segments. The aim of profit optimisation and growthwill be given greater scope than was the case in the recent past.Although the Asian market is growing strongly, TenCate’s position inthis market must be developed further and across the full breadth ofthe product portfolio. The company continues to apply certainprinciples in order to protect technological know-how.Research and development and technological innovation projects tendto attribute less significance to economic interests. Value creationmust be the principle here too. The resolution of technical issues is ameans and not an end in itself. Reduction of the time to market is oneof the critical success factors for innovation. At the beginning of 2009,the corporate technology department was established within theholding company in order to play a coordinating role in this field.OPPORTUNITIESAs a result of the leading position in niche markets worldwide,opportunities are constantly arising. It is important to developpriorities in this regard. The major opportunities lie in inkjet technology(Xennia), although developments are proceeding more slowly than wasinitially expected, due to the complexity of the subject. Importantprogress is expected in applications in the (technical) textile industryin 2010. Opportunities are also seen in the broader use of lightweightcomposites. In this regard the TPRC open innovation centre has beenestablished and individual projects have been launched.The theme of water management provides opportunities worldwide.TenCate has initiated co-operation in the field of treatment / filtrationof industrial waste water and process water.THREATSOne of the major threats in the recent past was the financial positionof customers and governments as a result of the credit crisis.Governments and public-sector institutions, on which a part ofTenCate’s sales depend, had to contend with tight budget conditions.This also impacted TenCate’s financial position and appropriatemeasures had to be taken.The fairly limited diversification of suppliers and end-users is a riskfactor, although the market participants are solvent and markets are58Royal Ten Cate

showing resilience. Another factor is that TenCate anticipates longtermsocial trends with its products.China can no longer be seen as a low-wage country. Here too, majortechnological development is under way. The developments in Asia canbe viewed as a threat, but also as an opportunity. TenCate believes itis better to be part of these developments and to maintain its ownactivity in the Asian market. TenCate is participating in a globalisationprocess which could result in a shift in the centre of gravity ofeconomic activity. TenCate’s centre of gravity is currently in the US.CHALLENGESThe management of the organisation is a major challenge. In a growingcompany operating in a global market and having to manage globalvalue chains, different demands are made on management. Growthmust not be at the expense of these most important principles.TenCate must devote particular attention to management developmentand the control of the organisation.The challenge for TenCate is to control developments as a marketleader, particularly in the technology and quality area. The company isfinding that important sports federations are beginning to see qualityas crucial for the further development of the market and attachingimportance to greater awareness among end-users in this area.TenCate is endeavouring to raise the quality level by co-operatingintensively within the overall value chain. The aim is an integratedapproach to the market. Improving the performance of synthetic turfactivities is one of the main challenges.In the past few years, the synthetic turf activities have generatedlower results, for various reasons. One of the reasons is that themarket is still in the development phase and the football market hasprovided considerable growth. This has resulted in a large number ofnew entrants to the market, particularly in the commercialorganisations segment. Declining financial results are a trend thatis evident across the entire production chain. This is now leadingto a consolidation in the market. The development of quality andsustainability has lagged behind somewhat due to the price pressure,which can lead to acceptance problems.Superbus: innovation in mobilityDelft University of Technology is working on the first Superbus. Among other things, the concept is based on mobility, low energyconsumption and safety. Everything in the Superbus concept is geared to sustainability. TenCate Advanced Composites is involvedin the project as a materials supplier. In addition to carbon fabric for in-house processing with thermoset resins, the company hasalso supplied TenCate Cetex ® carbon PEI skins for the door interiors. TenCate Cetex ® complies with the demands for interiorapplications in the aviation industry. In case of a disaster, the material has very low smoke gas emission and smoke toxicity.In principle, all thermoplasts are recyclable.Annual Report 2009 59

GRASSThe 100th Cruyff Court was opened inVenlo, The Netherlands in October 2009.TenCate Grass has been involved in thisinitiative by the Johan Cruyff Foundation,which is supported by the KNVB (RoyalNetherlands Football Association) sinceit was established in 2003. The firstCruyff Court is in Lelystad (NL).A Cruyff Court is the modern version ofthe empty grass plots that could be foundin many neighbourhoods in the past.Unfortunately, they have been sacrificedto urban expansion. The reintroductionof these grass plots is restoring thisfunction to the neighbourhood.Cruyff Courts are made of synthetic turfand are situated at strategic locations,so that the enthusiasm for sport amongstDutch – and now also Spanish and British– youngsters is being kindled at an earlystage. At the same time it promotessocial integration. A new generation willthus effortlessly become aware of theadvantages of synthetic turf.TenCate Grass uses the sustainableTenCate Tapeslide XP fibre. Experiencehas taught that the sustainability anddurability of pitches made with thisfibre is extremely high. The pitches arerealized in cooperation with Edel Grass.Connected to society

CORPORATE INFORMATIONRISK MANAGEMENTThere are risks associated with the business strategy. Externaleconomic factors, unpredictability of market developments, calamitiesand human factors can impede the achievement of business objectives.TenCate strives to control the achievement of strategic and operationalobjectives as effectively as possible. To that end, TenCate has accessto appropriate risk management and control measures. As a result ofthese:◾ The main risks are identified in time and remain limited to anacceptable level;◾ There is a reasonable degree of certainty that the financialreporting contains no material misstatements;◾ The applicable regulations and legislation are complied with.The market areas in which TenCate operates – protective fabrics,aerospace, antiballistics, geotextiles, synthetic turf and technicalcomponents – entail specific strategic and commercial risks. In mostcases, TenCate pursues these activities on four continents, each withits own dynamics. TenCate is therefore not part of a monoculture.Consequently, none of the risks detailed below will have a dominantinfluence.A number of specific significant risks applying to TenCate have beenidentified. The summary of the main specific risk areas below is notexhaustive. It is possible that risks which have not currently beenidentified or which are not seen as material will subsequently have asignificant negative effect on TenCate’s ability to achieve its businessobjectives. The risk management and control measures are aimed attimely identification of these risks.MARKET RISKSMarketThe market risks differ depending on the market segment. In somesegments, such as base fabrics for professional wear, there isintensive competition and high price elasticity. In addition, productionof less distinctive products is gradually shifting to Asia.In other market segments, such as safety fabrics, antiballistics,geotextiles and artificial grass, TenCate has a technological lead, inmany cases with associated market leadership. This provides noguarantee for the future. Products which reach the end of their lifecycle must be succeeded in good time by new, improved and distinctiveversions.Protection and patenting of intellectual property strengthens theunique positions of the products.End-user marketing provides pull effects, as a result of which the valuechain is controlled more effectively and distinctive ability is rewardedby the market.There are also markets which feature long-term developmentprogrammes, such as the aerospace market. Growth in revenues isprotected by qualification processes. A precondition is that TenCatecontinues to adhere to the quality guidelines specified by thecustomers.Macroeconomic developmentsMacroeconomic developments have a major impact on the level ofdemand for TenCate products. That was illustrated very clearly duringthe 2009 recession year. Sales in some market groups and productmarket-technologycombinations were directly impacted by the level ofeconomic activity of industrial customers and end-users. An importantfactor is government expenditure in the major countries. The demandfor protective fabrics and antiballistics is controlled by public sectorAnnual Report 2009 61

CORPORATE INFORMATIONbodies, in particular defence forces and fire brigades. Demand forgeotextiles and synthetic turf products is driven by public sectorinvestments in infrastructure and sports facilities.Factors which determine government policy in the above marketsinclude security policy and economic growth. Strong commercialnetworks and the associated information provision make it possibleto anticipate government plans promptly and efficiently.As a result of flexibility in cost structures, it is possible to compensatefor the consequences of a certain degree of reduction in demand.This flexibility is achieved among other things by flexible deploymentof labour and partial outsourcing in some market groups.Raw materialsA limited number of raw materials determine a large part of thematerials consumed by the TenCate companies. This concerns inparticular aramid fibres and differentiating gradations of polyethyleneand polypropylene.Prices in the commodity market may fluctuate widely. The price ofplastics is determined partly by the oil price, but in particular byshortages or surpluses in the market.Price rises can be passed on to customers with a time lag of one to sixmonths. The same applies to price reductions. In some cases anautomatic price adjustment clause is included in customer contracts.In the case of super-strength or fire-resistant armour fibres, regularshortages occur or a strong dependence develops on a single supplier.These entail risks of availability and disproportionate price rises.Active efforts are being made to reduce this dependence by usingalternatives. TenCate operating companies will increasingly take partjointly in negotiations with major suppliers, in order to achieveoptimum conditions in terms of price, quality and delivery reliability.OPERATIONAL RISKSManagement and personnelTenCate’s organisation strategy is based on a decentralised model.The group directors and operating company managements determinethe company policy to a large extent independently and takeentrepreneurial decisions.Not having the right man or woman in the right place can result in anoperating company rapidly losing its lead or even falling behind itscompetitors. For this reason the selection criteria for new managementpersonnel have been tightened up, with an assessment forming part ofthe key management recruitment procedure.Another risk is dependence on key officers, often with an R&D ormarket background. It is necessary to ensure that this expertise isretained and shared across the organisation. This is achieved byguaranteeing knowledge.Production and product liabilityTenCate has various small- to medium-scale production processes,for example involving fewer than 100 employees. Where there is arelatively low degree of production automation there is a higher risk ofhuman error. Incidents in production can never be ruled out. These maylead to a loss of quality in the end-products, claims from customers oreven a temporary halt in the production process. However, TenCatecarries out preventive inspections of its products and almost all plantsare ISO-certified. Control of production processes and qualitymanagement are important priorities in order to avoid product claims.In that context, uniform sales conditions are being introduced as far aspossible.62Royal Ten Cate

Product developmentProduct development is the lifeline for the years ahead. It must bemanaged with care. If products are brought to market too early, thiscan result in teething troubles, recalls and damage. On the other hand,if the time-to-market is too long, TenCate will lose a large part of itscompetitive advantage. The product development process has beenstructured in accordance with strict procedures and criteria.EnvironmentTenCate’s environmental policy is based on limiting any impact on theenvironment as far as possible. Regular checks are carried out both bythe holding company and by the management of operating companiesand measures are taken to avoid environmental risks.Textile finishing in particular may involve the use of chemicals whichmust be covered by guarantees. The waste water from textile finishingin the Netherlands and the United States is treated in the company’sown water treatment plants.TenCate considers that the environmental risks have been limited asfully as possible. Environmental coordinators have been appointed atlocal level who are familiar with the specific situation and implementlocal legislation and regulations accordingly.Continuity of information provisionEach operating company has its own systems for control andtransaction processing in the main operating processes.From the perspective of costs and risk control, systems forcommunication and generic workplace organisation are increasinglyimplemented centrally. Disruptions to these systems can impedeoperating processes. As a result of procedures for information securityand remote storage, the risks are limited as far as possible.The operation of these facilities is tested periodically.LEGAL RISKSTenCate is involved in various legal proceedings resulting from normalbusiness operations. The progress of these proceedings is monitoredcontinuously. A summary is also discussed four times a year in thefinancial committees of the Supervisory Board.FINANCIAL RISKSFinancing and interestThe company’s financing is fairly centralised. The financing must fulfila number of covenants, the most important of which is the debt /EBITDA ratio. In a recession with declining results and rising workingcapital, there is a major risk that these covenants will be breached.Such situations almost always lead to a very expensive refinancing,linked to a share issue, resulting in the dilution of existingshareholdings. This threat was particularly great in 2009. Strongmeasures were therefore taken to reduce the bank debt.The risk of interest rate rises is in principle hedged 90% for thefollowing year and 75% and 50% for the subsequent years, taking intoaccount the expected interest rate trends. The preference is to usecaps for this purpose. The impact of the change in value of financialinstruments on the company’s results is mitigated as far as possible bythe use of hedge accounting.CurrencyApproximately 34% of TenCate’s sales are in euros. The major currencyrisk incurred by TenCate is in respect of the US dollar (48% ofrevenues) and a number of more or less dollar-related currencies suchas the Singapore and Australian dollar, the Chinese yuan renmimbi andthe dirham (Dubai).Geosynthetics to expand lithium extractionTenCate Geosynthetics is supplying well over 30 million square metres of TenCate Mirafi ® non-wovens to SQM. The Chileancompany plans to expand the number of evaporation lagoons for lithium extraction in the Salar de Atacama desert significantly.It wants to satisfy the growing demand for lithium for use in batteries for the next generation of electric cars. TenCate Mirafi ®geogrids and geotextiles are used in applications like civil engineering, water management and pollution control. They are ideallysuited for lining the evaporation lagoons. The materials were developed and are being produced by the TenCate Geosyntheticsfacility in Pendergrass (USA).Annual Report 2009 63

CORPORATE INFORMATIONWith regard to currencies, Ten Cate draws a distinction betweencompetition, transaction and translation risk.The competition risk concerns the changing competitive position vis-àviscompetitors in areas with a different currency. This risk is hedgedover the subsequent six months by means of options. Thereafter apermanent answer must be found to the new situation.Transactions in foreign currencies are immediately hedged by meansof futures or options. These are mainly transactions by Europeanoperating companies denominated in US dollars and British pounds.The translation risk arises when operating companies outside theeurozone make a substantial profit contribution, while their currencyweakens against the euro. This occurs regularly in the case of theAmerican operating companies. These translation risks are hedged bymeans of options. They are also offset by means of opposite positionswith regard to competitive risk. In the latter case, significant savingsare made in premium costs. In such cases any decrease in the dollarhas a very limited impact on the group result.Pension provisionsTenCate has placed the pension provision for Dutch employees withStichting Pensioenfonds Koninklijke TenCate. This average salaryscheme is designated as ‘defined benefit’ in accordance with IFRSreporting rules. A sharp fall in prices on international securitiesexchanges could lead to a decrease in the value of the pension fund’sinvestments. In the event of a decrease in interest rates, the presentvalue of the liabilities increases. In such situations the cover ratio mayfall sharply. That happened in 2008 and 2009, as a result of which thecompany had to pay € 2.3 million in additional pension contributions.The result of this and of interest rate developments may be that theprovision for pension liabilities on the Royal Ten Cate balance sheetincreases under the new IFRS guidelines. The pension fund has takenmeasures itself within its investment policy, partly as a result of theFinancial Assessment Framework (including interest rate riskmanagement), involving a reduction in the risk profile.The company has concluded an implementation contract with StichtingPensioenfonds Koninklijke TenCate, under which the financialcontribution remains limited to an average contribution. This moveswithin an agreed range depending on the financial situation of thefund.In the other countries there are defined contribution schemesin the vast majority of cases.RISK MANAGEMENT AND CONTROL SYSTEMThe overall risk management and control measures are based on anumber of key elements.CultureThe company strives for a culture of openness, integrity,professionalism, enthusiasm, efficiency and respect. Core values areentrepreneurship, innovation and a focus on results. Every employee ismade aware of these cultural elements and the obligation to complywith all applicable legislation and regulations.The Integrity Code and the Confidential Adviser Scheme set out thegeneral rules of conduct with which employees must comply.OrganisationTenCate’s organisational structure is based on providing support fora co-operation structure in which each person’s responsibilities areclearly defined and performances are measurable. This is reflected ina group structure in which groups and operating companies bearresponsibility for results. The group managements determine the groupstrategy, promote consistency and synergy and are responsible forexploiting the market positions in the value chain.64Royal Ten Cate

OUTDOOR FABRICSAn increasing need for protection isone of the worldwide themes to whichTenCate is responding, based on itsbusiness model. By listening carefullyto the requirements of the marketplace,new products can be developed usingexisting or new technologies. In view ofthe success of flame-resistant fabrics inneighbouring markets, TenCate OutdoorFabrics has been able to switch toproducts for the outdoor market.At the end of 2009 TenCate OutdoorFabrics launched an innovativefabric with inherently fire-resistantcharacteristics. The fibres in thistent cloth ensure extra safety andprotection. The fabric is for exampleresistant to scorching, smoulderingand sparks. Textile material that isflame-resistant inhibits flames andfires from starting and delays theirspreading.The market for group tents in particularis showing great interest in this newproduct, which satisfies numerousquality criteria and standards. Inaddition to scouting, internationalaid organizations and tour operatorsare also interested in TenCateCampshield fabric.Connected to product differentiation

CORPORATE INFORMATIONCentral management support departments in the company withfunctional responsibilities contribute to the co-ordination.The above objectives are facilitated by a number of Group procedures,including the TenCate Accounting Manual.Managements of operating companies are controlled on the basisof a formalised planning and control cycle.CommunicationSystems for internal information provision and communication areprimarily aimed at giving employees and managers appropriateinformation for their own areas of responsibility. A whistleblowersscheme and a complaints scheme enable employees to inform thecompany management about undesirable situations.It is important to maintain direct contact between the Executive Board,group managements and operating company directors. Directdiscussion takes place regularly, depending on the matter at hand.More formally, extensive monthly reporting takes place and theperformance, results, outlook and certain facets of risk managementare discussed once each quarter. Risk management also forms part ofthe consultation with the Financial Committee of the SupervisoryBoard.RISK MANAGEMENTRisk management is a responsibility of the management at all levels.All managers and controllers sign a twice-yearly letter ofrepresentation on the financial reporting / internal control.All financial regulations are included in the TenCate AccountingManual. The managements and controllers of the operating companiesdeclare in respect of all their reports that the results have beencompiled in accordance with this manual.Each year the external auditors assess the structure and operation ofthe administrative organisation and internal control, to the extentrelevant to the auditing of the financial statements. They report on thisto the management, the Executive Board and the Supervisory Board.Where risks are insurable, such as for fire and loss of profits and thirdpartyand product liability, they are laid off to insurers. The balancebetween insurance cover, premium levels and own risk is reassessedeach year. Regular inspections and follow-up increase the continuity ofthe business processes, reduce production outages and lead to lowerrisk costs. Damage prevention and preventive investments improve therisk profile.Evaluation of risk management and control systemsThe Executive Board is of the opinion that:◾ The risk management and control systems provide a reasonabledegree of certainty that the financial reporting is free of materialmisstatements;◾ The risk management and control systems have operated correctlyin the reporting year;◾ There are no indications that the risk management and controlsystems will not operate correctly during the current year.66Royal Ten Cate

However well designed our internal risk management and controlsystems are, they can never provide absolute certainty that objectivesin the field of strategy, operation, reporting and compliance with lawsand rules will always be achieved. In taking decisions we are awarethat:◾ Human errors of judgement may arise;◾ Cost-benefit assessments must constantly be made when takingon risks and taking control measures;◾ Human failings and even simple errors or mistakes can have majorconsequences;◾ Conspiracies by officials can lead to circumvention of internalcontrol measures;◾ The management of parts of the company can permanently ortemporarily negate agreements made with the Executive Board.This statement should not be interpreted as being a statement inaccordance with the requirements of section 404 of the SarbanesOxley Act in the United States, which does not apply to Royal Ten Cate.HUMAN RESOURCES MANAGEMENTHUMAN RESOURCES POLICYIn 2009, our human resources activities were concentrated on thestreamlining of the organisation. This included aligning the globalproduction capacity of the various groups with the changed marketdemand. The development of skills and improved employeeperformance remained an important focus of attention in this process.At the end of 2009, TenCate employed 3,805 people in more thanthirteen countries on three continents. Our employees play animportant role in the successful implementation of TenCate’s strategy.The HR policy remains focused on the identification and developmentof talent, the development of leadership qualities and thestrengthening of behaviour that fits in with the core values of ourcorporate culture: innovative capability, a focus on results,entrepreneurship, trust and co-operation.Own employees Year end 2009 Year end 2008(in number of staff years)Netherlands 862 931Rest of Europe 569 612United States 1,314 1,573Asia/Australia 777 936Middle East 283 385Total 3,805 4,437ORGANISATIONAL DEVELOPMENTOur market leadership role requires strong leadership and a clearorganisational structure which can be adjusted rapidly and flexibly tochanging market conditions. During the reporting year we had todevote attention to such flexibility within the organisation. That led toFootball on synthetic turf in Singapore harbourIn Singapore, over 27,000 spectators can watch football matches on a floating platform in Marina Bay. The synthetic pitch ismade from TenCate Tapeslide XT synthetic turf fibres, which are known for their exceptional wear resistance and durability.The floating platform is the biggest of its kind in the world and measures 120 by 83 metres. Until recently, this was the stage forevents like the National Day Parade. The new synthetic turf carpet is 116 metres long and 71 metres wide, in line with FIFA’srequirements. It also means the platform is suitable for international matches.Annual Report 2009 67

CORPORATE INFORMATIONthe reduction of our flexible buffer, resulting in a rapid reduction in ourworkforce by approximately 400 posts. A great deal of care was takento retain critical knowledge and skills, in order to guarantee thecontinuity of the organisation and allow rapid scaling up.The organisation successfully completed this adjustment to marketconditions in most countries.Entrepreneurship is key at all levels in the groups. Efficient centralcontrol from the holding company strengthens the core values of thecorporate culture. An appropriate degree of autonomy in the variousoperating companies and active pursuit on internal and externalco-operation fits in with TenCate’s culture. The organisation’s renewedglobal top structure led to improved co-operation and greater strengthin 2009. It thus provides a solid foundation for further growth anddevelopment.The third tier of our MD programme was implemented during thereporting year: the TenCate Talent programme. All TenCate employeesaged up to 35 with at least a BA level qualification are invited to takepart in meetings held during the year, enabling these talented peopleto increase their visibility in the organisation. Continuous scouting,assessment (of potential), evaluation and development of talent makeup the core of the programme. The local management and the HRMdiscipline play an important role in these programmes, meeting localrequirements as fully as possible.For the Talent target group, a business simulation game wasintroduced, based on a situation comparable to that of TenCate.Eight teams of five to six members drawn from the various companiesand disciplines compete to achieve the highest results. Participation isvoluntary. The competition was still in full swing at the end of thefinancial year.TALENT AND MANAGEMENT DEVELOPMENTFor an enterprising organisation such as TenCate, the earlyidentification and development of in-house talent is an important keyto success. Talent is about more than having sufficient competences.Passion is also a very important motive.The international four-tier management development (MD) programmeis intended to ensure appropriate succession and development of(potential) management.The MD programme was further implemented during the reportingyear. The beginning of 2009 marked the completion of the Europeanand American TenCate Active programme. Thirty talented managerstook part. These programmes were delivered by Twente School ofManagement (TSM) in co-operation with Emory Business School inAtlanta (US).EMPLOYMENT CONDITIONSTenCate offers its employees a comprehensive and competitivepackage of employment conditions. To this end, regular surveysare conducted, in co-operation with Hay Group and local employerorganisations. TenCate operates a uniform remuneration policy forthe management of all businesses. The bonus systems for the seniormanagement are also determined centrally. That takes placeexclusively on the basis of the result of the operating company and insome cases also partly on the basis of the results of the TenCate groupas a whole.TenCate operates in many countries, each of which has its own lawsand cultures. The operating companies therefore conduct their ownpersonnel policies geared to the local situation, although these aregoverned by conditions and general principles specified by the group.68Royal Ten Cate

Corporate communicationThanks to its broad technological base,TenCate is able to create innovativematerials. During the AutoRAI 2009 inAmsterdam, the Dutch Prime MinisterBalkenende, Minister of Transport Eurlingsand Minister of the Environment Cramervisited the Dutch Design Lounge whichhad ‘Green Innovations’ as its theme.The ministers were fascinated by theKG-1 Concept from KesselsGrangerDesignWorks and the opportunitiesfor TenCate to use smart textiles andadvanced composites in existing andfuture functionalities in automotive.The KG-1 Concept Car was designedaround the human body. The driver sitsin an active position, the passenger in apassive one. The semi-integral body andframe of the vehicle can be producedusing carbon fibre-reinforced material.This light yet strong composite offers aconsiderable saving in weight and greatermechanical strength.A mesh of protective fibres is stretchedaround the composite frame like asecond skin. It is sufficiently elasticand yet extremely strong. This materialcan already offer numerous functionalcharacteristics. It can also be providedwith high visibility characteristics or evena luminous capability.Connected to future developments

CORPORATE INFORMATIONSAFETYOur employees on all continents are professional people who have asense of enterprise focused on results and solutions and are preparedto take on challenges. A safe, high-quality working environment is ofgreat importance in this regard and has the utmost priority. TenCate’spolicy is aimed at implementing or structuring all operations andprocesses in such a way that all forms of personal injury and damageto health can be avoided. This aim forms the basis of the health andsafety policy implemented in all our companies. This results amongother things in a relatively low level of sickness absence.INFORMATION TECHNOLOGYDEVELOPMENTS IN 2009IT organisationWith effect from 1 January 2009, the IT organisation was changedand the Automation Department was brought under the responsibilityof the holding company. The operational ICT costs were reduced by20% through the consolidation of systems, virtualisation of serversand further standardisation of applications. This is a permanent costreduction.CommunicationIn addition to the traditional telephone systems, the use of OfficeCommunicator has grown enormously. It is being used in manycompanies for audio and video communication and the exchange ofdata. It uses the secure Global TenCate Network. Many companieshave also invested in the expansion of videoconferencing, partly tosave time and travel costs.This technology also uses the internal network. For the Dutchbusinesses, all mobile telephone contracts have been brought withina single framework agreement.Projects◾ Global TenCate NetworkFurther implementation of he Global TenCate Network wascompleted successfully, connecting companies worldwide andproviding an easy means of data exchange and communication.The remaining companies will be connected to this networkin 2010.◾ E-mail migrationThe Exchange 2003 central e-mail system was upgradedto Exchange 2007 last year.◾ WebsiteThe layout of the TenCate website has been given a facelift.Measures were taken to guarantee accessibility of the web server.Further training courses are planned in Asia.Cognos ControllerTenCate’s central consolidation system was made available to financialemployees in the operating companies. The intention is to roll thispackage out further to the TenCate systems abroad in 2010.InvestmentsIn addition to the urgently required replacement investments, furtherinvestments in obsolete ERP systems were put on hold due to theemphasis on cash management. These requests will be reassessed assoon as the investment climate improves.PLANS FOR 2010The Global TenCate Network project for the TenCate companies will becompleted in 2010. The operational management will be brought intoline with the expected size of the ICT services by these companies.This all has an impact on operational management. Administrationwill be made easier through the use of Citrix platform compressionTenCate Active 2 completedIn an entrepreneurial organisation like TenCate, identifying and developing in-house talent remains a major success factor.The international four-layer management development programme is intended to ensure an adequate supply of future managersand develop management potential. The MD programme was implemented further in the report year. The European and AmericanTenCate Active programmes came to an end at the beginning of 2009. Thirty potential TenCate managers presented an innovationproject in groups. These programmes were organised by the Twente School of Management (TSM) in collaboration with theEmory Business School in Atlanta.70Royal Ten Cate

technology. Applications no longer have to be installed on each PC, butare provided from a central server. That leads to further cost reduction,consolidation and standardisation of systems. TenCate will use thistechnology in the rollout of Cognos Controller.CORPORATE INTELLECTUAL PROPERTYThe market groups within TenCate conduct an independent brandpolicy and patent management within the framework specified by theholding company.BRANDSTenCate conducts an industrial brand policy within an overall brandarchitecture. This provides the basis for the strategic marketing in thevalue chain. During the rebranding in 2006, structural choices weremade on the global or continental deployment of product brands of theTenCate market groups. The derivative brand portfolio policy is closelyassociated with the product differentiation cornerstone from theTenCate business model.The product logos consist of the TenCate corporate brand with theproduct brand of the respective market group and the corporate Credo‘Materials that make a difference’. Each market group uses families ofbrands as far as possible.A good example of brand awareness and brand loyalty came last yearthrough TenCate Protective Fabrics with the TenCate Defender Mbrand for inherently heat- and flame-retardant fabrics in militaryuniforms. In United States, this product’s reputation was evenmentioned in the Senate and on broadcast stations such as CNN.TenCate’s industrial brand policy was further strengthened in 2009.With the introduction of two corporate labels – TenCate Materializedat product level – and Powered by TenCate at company level – theTenCate materials and solutions used by third parties in the value chainwill be made more visible to end-users. At the end of 2009 the firstagreements were entered into with TigerTurf (supplier of synthetic turfpitches) for the use of the Powered by TenCate business label.In October 2009, it became known that TenCate was among the top 50listed Dutch companies with the most valuable brands. TenCate ranks46th with the value of its brand portfolio reaching € 100 million.The value of the corporate brand is estimated at € 83 million. Thebrand rating has been assessed at A+ (extra strong). (Source: BrandFinance, Dutch Top50, Report on the Netherlands most valuablebrands).A brands overview available digitally on the TenCate internet site.In the years ahead, care will be taken to strengthen of the role of thecorporate brand further in order to promote the identity, transparencyand reputation of the company as a whole and fulfil the brandpromises.PATENTSTenCate conducts an active patent policy to protect technologicalknowledge and skill with regard to growing number of innovations,based on the TenCate business model and the TenCate technologyroadmap.Annual Report 2009 71

CORPORATE INFORMATIONResearch and development (R&D) in TenCate are based on the TenCatebusiness model. This approach determines whether and when newmaterials, modules or integrated solutions enter the market asproducts. With the aid of the TenCate business model, the researchand development process is closely associated with processmanagement, business development (market development), productand market management. Patent applications can arise at all stages.This approach also guarantees that the company remains continuallyconnected with end-users who increasingly prefer standardisation,user-friendliness and sustainability. In this way, TenCate’stechnological knowledge and skill will increasingly be focused on theachievement of material identification and material separation in theyears ahead. The potential for reuse and recycling will grow strongly.New technologies and techniques in the future will also contribute tothe achievement of the intended mass customisation as part of endusermarketing. This will all be strengthened by the interconnectionlinks in the value chain. Technological knowledge plays an importantrole in this value chain management, as part of TenCate’s businessmodel. Optimum benefit will be derived from TenCate’s patent position.In 2009, the corporate technology department made an interestingcontribution to the latest development. Thanks to so-called 3Dweaving – and the associated patents – it has become possible inprinciple to integrate almost all functionalities of a synthetic turfsystem into a single production process. The Dutch Ministry ofEconomic Affairs and the Province of Overijssel have providedsubstantial financial support for this development. The first practicalexperience will be gained with pilot pitches in 2010.The corporate legal affairs department is working closely with theproduct developers of the market groups and R&D departments.By consistently recording all relevant information on innovations,appropriate protection can be achieved in good time. Work is alsocarried out conducted with the market groups’ marketing departmentsof the licensing of specific knowledge or skill.Over the past decade, there has been a sharp increase in the number ofpatents applied for and granted to TenCate. The total in 2009 exceeded650. This figure includes pending applications and issued patents.For competition reasons, no specific announcements are made on thedetails of these patents and their distribution within the company.SOCIALLY RESPONSIBLE ENTERPRISETenCate operating companies implement key elements of sociallyresponsible enterprise in their day-to-day operations. TenCate’ssustainability policy relates in part to the quality of operationalmanagement, production processes and product characteristics.Another part relates to treatment of the environment. The remainderof the policy concerns numerous aspects of social and societalresponsibility.In order to disseminate and implement the overall sustainability policyacross a wide base, specific attention is devoted to this subject.Tangible results are being successfully achieved in both the processand portfolio management, partly due to the connection with theTenCate business model. The same applies increasingly to theimplementation of the integrated approach – TenCate Solutions –within the company. As a result, a growing number of TenCateproducts (materials, modules or systems) have sustainable elementsin their functional characteristics.72Royal Ten Cate

Corporate communicationIn 2009 Heracles Almelo lived up tothe high expectations following thearrival of its new coach. This proud firstdivision club performed at top level.TenCate has been the main sponsorof Heracles Almelo since 2003, whenthe club was designated by UEFA asa pilot to start playing matches onsynthetic turf. In the following yearsa great deal of experience was gainedof synthetic turf for professionalfootball. Cooperation with the footballassociations UEFA, FIFA and KNVBbecame ever closer.In addition to its main sponsorship,TenCate has invested in a newsynthetic turf system every coupleof years. In the past year HeraclesAlmelo has triumphed during homematches on the Two Dimension Prosynthetic turf system that was installedin the summer of 2008 in collaborationwith Edel Grass, Sekisui Alveo andOranjewoud Sport.TenCate Grass incorporated TenCateThiobac Pro ® backing, TenCateMonoslide Pro, TenCate TapeslideXT fibres and TenCate I-Smart Pro ®infill into this system. The stabilizingTenCate Polyfelt ® non-woven wasprovided by TenCate Geosynthetics.Connected to society

CORPORATE INFORMATIONSUSTAINABILITYSustainability is the foundation and reflection of TenCate’s pursuit ofcontinuity. It is an inherent quality of the more than 306-year-oldcompany. Our products and systems make a major contribution to abetter world in which themes such as safety, protection andsustainability have become a matter of course. The associated trendsinclude personal safety, protection of the living environment, limitationof energy consumption and CO2 emissions, water management andenvironmental care. It is an important task for TenCate to formulateanswers to these trends, propose solutions and thereby drivedevelopments. It keeps the company alert in striking an optimumbalance between quality and environmental policy. That is TenCate’ssustainability-based policy.In some cases long processes have to be gone through to achieve theuse of innovative and sustainable – or more sustainable – materials inspecific markets, such as the aviation industry, innovative. Rising fuelcosts have played a positive role in this regards. Increasing noiselimitation imposed by governments are also contributing to this.Thanks to composites, TenCate has a series of sustainable solutionsavailable.Composites are increasingly used in civil aviation. Existing aircraftalready contain approximately 25% composites, such as tail pieces,wing ribs and interior components. New generations of aircraft such asthe A380 and the Boeing 787 comprise more than 50% composites.That makes a growing contribution to fuel reduction, noise abatementand efficiency. Boeing made its maiden flight with the Dreamliner inDecember 2009. This aircraft includes composites made by TenCateAerospace Composites.QUALITY AND THE ENVIRONMENTIn the manufacturing process TenCate devotes specific attention to theresponsible handling of raw materials, reduction of waste and rejectsand recycling.Quality assurance is the guiding principle. That starts with productdevelopment. At the same time, TenCate aims to impact theenvironment as little as possible. This principle is part of the code ofconduct for employees. TenCate gives the utmost priority to a safeworking environment worldwide. Quality, Health & Safety andEnvironment officers have been appointed in most operatingcompanies. They monitor the performance in these areas on theproduction sites.Almost all production sites have been established or certified inaccordance with ISO 9001 and/or ISO 14001 standards. For certainprocesses – such as the production of materials for aviation,antiballistics and protective fabrics, additional standards andrequirements apply. Environmental legislation and environmental careare guaranteed in the quality policy. In the value chain, they form thebasis for dealing with suppliers, but also with customers. That ensuresthat the production process and the chain remain controllable.Due to the confidentiality of quality and environmental data, figuresand details are not disclosed. There is room for improvement incomparability. That can be explained by differences between businessunits around the world due to historical and local factors.TenCate believes that it limited environmental risks to the best of itsability once again in 2009. On the basis of the environmental controlsystems, the company endeavoured to limit the use of raw materials,water and energy consumption and emissions. Local legislation andregulations were implemented by the Quality, Health & Safety andEnvironment officers. The high European standards form the guidingNew outfits for network managerSome 2,000 Enexis employees wear a company uniform based on TenCate Tecasafe ® . The new autonomy of the former Essentnetwork company as per 1 January 2009 meant a new identity, name, corporate style, and European tendering procedure for anew apparel package. The company clothing had to be flame-retardant, antistatic, water and dirt repellent, colourfast, suitable foroutdoor use, and have high visibility and be comfortable. The design had to match the Enexis corporate style and logo. With theexception of the rain gear and undergarments, all outer clothing is based on TenCate Tecasafe ® , a comfortable fabric thatcomplies with all of the safety requirements and wishes.74Royal Ten Cate

principle for production site at other locations around the world.The waste water from textile finishing in the Netherlands and theUnited States is treated in internal installations. Heat and cold storagefacilities are also used to conserve energy. Only chemicals and dyeslisted in the textile environmental database are used in theNetherlands. TenCate purchases most chemicals and artificial fibresfrom multinationals worldwide which conduct a policy focused onsustainability.The TenCate operating companies devote a great deal of attention tothe control of waste flows. In addition to coherent waste separation,various production sites maintain a mass balance sheet. This serves aspreparation for the limitation of waste flows in the entire productionprocess. Specific materials such as glass and bulbs, board and paper,wood, iron and steel are separated as far as possible. Any hazardouswaste is collected separately and removed by recognised processingcompanies. Partly in this regard the corporate risk manager also visitedall production sites worldwide in 2009. Adjustments were made wherenecessary and possible. Initiatives were also taken to increase thecomparability of data among the business units.A number of Dutch operating companies made further reductions inwater and energy consumption during the past reporting year. Thesearrangements had been previously agreed in a covenant at sector level.The aim is to achieve an energy saving of 10% over a 10-year period.The saving of energy across the entire chain is a central objective.In order to make progress within the sector, TenCate Protective Fabricstook part in various standardisation committees in 2009, on botha Dutch (NEN standard) and a European (CEN standard) scale.By exerting targeted influence on standards and requirements whichproducts must fulfil, it is possible simultaneously to achieve themaximum for end-users and the environment. In a European context,TenCate chairs the European Technology Platform (ETP) for the Futureof Textiles and Clothing in order to stimulate renewal and sustainabilityin the sector.The TenCate Protective Fabrics production site in the Netherlandssuccessfully renewed its ISO certifications in December. The sister sitein Thailand – which has been part of TenCate since 2008 – achieved itsfirst ISO certification for quality and the environment in December2009.TenCate Grass worked with national and international footballfederations on the future standardisation and standards for footballon synthetic turf. In October 2009, this market group introduced theTenCate Performance Warranty Concept , the first guaranteecertificate aimed at guaranteeing quality and sustainability. Thanksto a trend-setting systematic and quality approach to synthetic turfpitches, durability and service are also set to increase further.One of the most spectacular innovations in 2009 was the advancein inkjet technology for textile processes. Work started on theconstruction of the first testing machine at the end of the year.In the near future, this technology may represent a breakthrough forthe entire textile sector. In view of its environmental aspects – cleanmanufacturing industry, enormous water savings and local-for-localproduction – this development process in the TenCate subsidiaryXennia Technology forms part of a broad European innovationprogramme.Annual Report 2009 75

SPACE COMPOSITESGalileo is the first civil globalnavigation system and hasapproximately 30 European satellites.It has been commissioned by theEuropean Union. The system isbeing built under the direction of theEuropean Space Agency ESA. It willbe interoperable with the AmericanGPS and the Russian GLONASS.These worldwide satellite navigationsystems have a military origin.Galileo will become partiallyoperational in 2014 and will initiallybe used by European securityservices.TenCate Space Composites hasdeveloped a wide range ofTenCate Thermo-Lite lightweightcomposite materials for aerospace,including those for satellites. Thanksto the excellent characteristics of thisthermoset material, it is eminentlycapable of functioning for manyyears under the extreme conditionsprevailing in space. TenCate materialhas already been incorporated intoseveral Galileo satellites.Connected to research & development

CORPORATE INFORMATIONIDENTITY AND INTEGRITYAll employees within TenCate have access to ‘10Cate’, whichrepresents the identity of the company. These ten core values areuniversal within the worldwide company. 10Cate is centred on thecustomer and is entirely consistent with the TenCate business model.10Cate and the business model provide the guiding principles foreach employee.One of TenCate’s core values is reliability. The integrity code applies toeveryone employed by TenCate or its operating companies. The code ispart of each individual contract of employment. A central complianceofficer and a confidential adviser have been appointed to supportthe code.STATEMENT FROM THE EXECUTIVE BOARDAs the Executive Board of Royal Ten Cate, we have prepared theannual report and the financial statements for 2009.We declare that to the best of our knowledge:◾ The financial statements give a true and fair view of the assets,liabilities and the financial position of the company and itsconsolidated businesses;◾ The annual report gives a true and fair view of the position on thebalance sheet date and the state of affairs of the company and itsassociated companies during the year and that the principal riskshave been stated in the annual report.Almelo, 3 March 2010Executive BoardL. de Vries, Chairman and CEOJ. Lock, CFOAnnual Report 2009 77

Corporate communicationIn October 2009 the Solar Team Twentecompeted for first place in the WorldSolar Challenge through Australia. Thiswas the third time in succession theyhad done so and in this venture theywere sponsored in kind by TenCate. Thestudent team from the Universities ofTwente and Saxion drove from Darwinto Adelaide on solar energy – covering adistance of 3010 kilometres.TenCate Advanced Compositessupplied a number of TenCate Cetex ®composites for the solar car. In additionto thermoplastic glass- and carbonreinforcedlaminates, these werehigh-end thermoplastic honeycombmaterials for parts of the lightweightsandwich structure.TenCate Protective Fabrics equipedthe whole team with heat- and fireresistantoveralls, made of durable andlightweight TenCate Tecashield ®aramid fabric.TenCate Outdoor Fabrics provideda garage tent and canvas for thejourney. Tent manufacturer KarstenTenten equipped the team with fireresistant,inflatable tents to sleep inand a toilet tent, both made of TenCateCampshield canvas.Connected to society

Financial statements 2009Royal Ten CateConsolidated statement of comprehensiveincome 82Consolidated balance sheet 84Consolidated cash flow statement 86Consolidated statement of changesin group equity 88Notes to the consolidated financial statements 901 General information on Royal Ten Cate 902 General principles for financial reporting 903 Principles for the preparationof the financial statements 914 Consolidation principles 915 Foreign currencies 926 Derivatives 937 Hedge accounting 938 Segment reporting 949 Revenues 9410 Government subsidies 9411 Raw materials and manufacturing supplies 9412 Lease payments 9413 Financial income and expenses 9514 Profit tax 9515 Earnings per share 9616 New standards and interpretationsnot yet applied 9617 Principles for the preparationof the cash flow statement 9718 Intangible fixed assets 9719 Tangible fixed assets 9820 Inventories 9921 Trade and other receivables 9922 Cash and cash equivalents 9923 Impairment 100Royal Ten Cate Annual Report 2009 79

24 Share capital 10125 Pension liabilities 10126 Share-based payments 10227 Provisions 10228 Long-term debts 10329 Trade creditors 10330 Determination of fair value 103Notes to the statement of comprehensive income 10431 Segment information 10432 Acquisitions and divestmentof participating interests 10633 Personnel costs 10634 Other operating costs 10735 Net financial expenses 10736 Profit tax 10837 Result from divested operations 108Notes to the consolidated balance sheet 10938 Intangible fixed assets 10939 Tangible fixed assets 11140 Investments in associated companiesand financial fixed assets 11241 Deferred profit tax assets and liabilities 11442 Inventories 11543 Trade debtors 11644 Other receivables 11645 Cash and cash equivalents 11646 Total shareholders’ equity 11647 Earnings per share 11948 Long-term debts 12049 Pension liabilities 12250 Provisions 125Other information 12751 Financial instruments 12752 Liabilities not shown in the balance sheet 13453 Investment liabilities 13554 Contingent liabilities 13555 Subsequent events 13556 Related parties 13557 Estimates and judgments formedby the management 13780Royal Ten Cate Annual Report 2009

Company financial statements 13858 Company profit and loss account 13859 Company balance sheet 138Notes to the company financial statements 13960 Financial fixed assets 13961 Equity 13962 Called and paid-up capital 14063 Ordinary shares 14064 Share premium reserve 14065 Legal reserve 14066 Other reserves 14167 Option plan 14168 Provisions 14469 Long-term liabilities 14470 Short-term liabilities 14571 Auditor’s fees 14572 Liabilities not shown in the balance sheet 145Royal Ten Cate Annual Report 2009 81

Consolidated statement of comprehensive incomein millions of euros note 2009 2008Revenues 31 842.1 1,032.6Changes in inventories of finished products and work in progress 29.8 – 18.0Raw materials and manufacturing supplies 391.6 562.0Work contracted out and other external expenses 63.1 60.7Personnel costs 33 173.0 190.3Depreciation 39 33.9 30.7Amortisation 38 8.8 11.6Other operating costs 34 109.2 111.5Total operating expenses 809.4 948.8OPERATING RESULT 32.7 83.8Impairment of financial fixed assets 35 – 4.9 –Financial income 35 1.2 4.2Financial expenses 35 – 9.0 – 17.9NET FINANCIAL EXPENSES – 12.7 – 13.7RESULT BEFORE PROFIT TAX 20.0 70.1Profit tax 36 – 5.6 – 19.1NET RESULT FROM CONTINUING OPERATIONS 14.4 51.0Result from divested operations after tax 37 9.5 –Net result from associated companies – 0.8 –RESULT AFTER TAX 23.1 51.0Attributable to:Shareholders of parent company 23.9 51.1Minority interests – 0.8 – 0.1Result after tax 23.1 51.0Weighted average number of shares (x 1,000) 47 24,544 23,426Weighted average number of shares after dilution (x 1,000) 47 24,616 23,495Net income per share (euro) 47 0.97 2.18Diluted net income per share (in euros) 47 0.97 2.1782Royal Ten Cate Annual Report 2009

in millions of euros note 2009 2008RESULT AFTER TAX 23.1 51.0Other comprehensive incomeCurrency translation differences for foreign activities 46 – 6.5 11.8Hedging results after tax – 0.2 –OTHER COMPREHENSIVE INCOME AFTER TAX – 6.7 11.8TOTAL COMPREHENSIVE INCOME AFTER TAX 16.4 62.8Attributable to:Shareholders of parent company 17.2 62.9Minority interests – 0.8 – 0.1TOTAL COMPREHENSIVE INCOME AFTER TAX 16.4 62.8The notes in sections 1 to 72 form an integral part of these financial statements.Royal Ten Cate Annual Report 2009 83

Consolidated balance sheetin millions of euros note 31 December 2009 31 December 2008FIXED ASSETSGoodwill 38 161.9 165.1Other intangible fixed assets 38 41.9 47.0Tangible fixed assets 39 214.7 247.4Investments in associated companies 40 18.9 –Financial fixed assets 40 6.6 10.9Deferred profit tax assets 41 19.8 14.2Total fixed assets 463.8 484.6CURRENT ASSETSInventories 42 155.0 211.5Receivables:Trade debtors 43 100.8 168.9Profit tax receivables 3.2 2.5Other receivables 44 12.9 16.3Cash and cash equivalents 45 12.8 5.4Total current assets 284.7 404.6TOTAL ASSETS 748.5 889.284Royal Ten Cate Annual Report 2009

in millions of euros note 31 December 2009 31 December 2008GROUP EQUITYShare capital 62.7 59.9Share premium reserve 46.9 49.7Legal reserve – 11.1 – 5.9Other reserves 258.4 212.1Undistributed result 23.9 51.1Total shareholders’ equity 380.8 366.9Minority interests 4.1 5.1Group equity 384.9 372.0LONG-TERM LIABILITIESLong-term debts 48 192.0 316.2Pension liabilities 49 21.0 24.3Provisions 50 10.4 9.6Deferred profit tax liabilities 41 4.3 5.2Total long-term liabilities 227.7 355.3SHORT-TERM LIABILITIESCash loans, overdrafts 45 14.7 19.4Repayment of long-term debt 48 1.6 0.9Trade creditors and other payables 112.1 132.6Provisions 50 4.8 4.4Profit tax liabilities 2.7 4.6Total short-term liabilities 135.9 161.9Total liabilities 363.6 517.2TOTAL GROUP EQUITY AND LIABILITIES 748.5 889.2The notes in sections 1 to 72 form an integral part of these financial statements.Royal Ten Cate Annual Report 2009 85

Consolidated cash flow statementFor the financial year ending on 31 Decemberin millions of euros note 2009 2008CASH FLOW FROM OPERATING ACTIVITIESResult after tax 23.1 51.0Adjustments for:Depreciation 39 33.9 30.7Amortisation 38 8.8 11.6Net financial expenses excluding exchange rate differences 8.0 17.4Impairment of financial fixed assets 4.9 –Profit tax 36 5.6 19.1Net result from associated companies 0.8 –Result from divested operations, after tax 37 – 9.5 –Result from sale of tangible fixed assets 34 – 1.3 – 6.7Costs of option scheme 1.2 1.7Change in provisions and pension liabilities – 2.2 – 2.2CASH FLOW FROM OPERATING ACTIVITIES BEFORECHANGE IN WORKING CAPITAL 73.3 122.6CHANGES IN WORKING CAPITALInventories 48.1 – 14.6Receivables 62.9 – 0.7Short-term liabilities – 15.5 – 20.595.5 – 35.8CASH FLOW FROM OPERATING ACTIVITIES 168.8 86.8Interest paid – 9.0 – 18.7Profit tax paid – 15.0 – 19.4NET CASH FLOW FROM OPERATING ACTIVITIES 144.8 48.786Royal Ten Cate Annual Report 2009

in millions of euros note 2009 2008CASH FLOW FROM INVESTING ACTIVITIESIncome from sale of tangible fixed assets 34 4.4 12.8Interest received 1.1 –Divested operations less cash 22.0 –Acquisition of operating companies less cash acquired – 0.3 – 88.1Investments in intangible fixed assets 38 – 4.2 – 1.2Investments in tangible fixed assets 39 – 13.1 – 46.8Investments in associated companies 40 – 18.4 –Increase in long-term receivables – 2.0 –NET CASH USED IN INVESTING ACTIVITIES – 10.5 – 123.3NET CASH FLOW FROM OPERATING AND USED IN INVESTING ACTIVITIES 134.3 – 74.6CASH FLOW FROM FINANCING ACTIVITIESIncome from exercise of share options 0.1 0.4Repayment of long-term debt – 117.3 –Drawing of long-term debts – 74.4Dividend payment to shareholders – 4.5 – 8.6NET CASH FROM (USED IN) FINANCING ACTIVITIES – 121.7 66.2CHANGE IN CASH AND CASH EQUIVALENTS 12.6 – 8.4Cash and cash equivalents on 1 January 45 – 14.0 – 7.7Effect of exchange rate fluctuations on cash held – 0.5 2.1CASH AND CASH EQUIVALENTS ON 31 DECEMBER 45 – 1.9 – 14.0The notes in sections 1 to 72 form an integral part of these financial statements.Royal Ten Cate Annual Report 2009 87

Consolidated statement of changes in group equityin millions of eurosSharecapitalSharepremiumReserve fortranslationdifferencesHedgingreserveReserve forown sharesRetainedearningsTotalMinorityinterestGroupequityBALANCE AS AT 1 JANUARY 2008 58.9 50.7 – 20.8 – – 12.2 233.5 310.1 0.3 310.4TOTAL COMPREHENSIVE INCOMEFOR THE PERIODResult after tax 51.1 51.1 – 0.1 51.0OTHER COMPREHENSIVE INCOMECurrency translation differences 12.2 12.2 – 0.4 11.8Total comprehensive income – – 12.2 – – 51.1 63.3 – 0.5 62.8TRANSACTIONS WITH SHAREHOLDERS,RECOGNISED DIRECTLY IN GROUPEQUITYContributions from and distributionsto shareholdersDividend to shareholders 1.0 – 1.0 – 8.6 – 8.6 – 8.6Share-based payment transactions 1.7 1.7 1.7Issue of repurchased shares 0.4 0.4 0.4Total contributions from shareholdersand distributions to shareholders 1.0 – 1.0 – – 0.4 – 6.9 – 6.5 – – 6.5CHANGES IN OWNERSHIP INTERESTSIN SUBSIDIARIES NOT LEADINGTO A LOSS OF CONTROLAcquisition of minority interest 5.3 5.3Total transactions with shareholders 1.0 – 1.0 – – 0.4 – 6.9 – 6.5 5.3 – 1.2BALANCE AS AT 31 DECEMBER 2008 59.9 49.7 – 8.6 – – 11.8 277.7 366.9 5.1 372.088Royal Ten Cate Annual Report 2009

in millions of eurosSharecapitalSharepremiumReserve fortranslationdifferencesHedgingreserveReserve forown sharesRetainedearningsTotalMinorityinterestGroupequityBALANCE AS AT 1 JANUARY 2009 59.9 49.7 – 8.6 – – 11.8 277.7 366.9 5.1 372.0TOTAL COMPREHENSIVE INCOMEFOR THE PERIODResult after tax 23.9 23.9 – 0.8 23.1OTHER COMPREHENSIVE INCOMECurrency translation differences – 6.7 – 6.7 0.2 – 6.5Hedging result, after tax – 0.2 – 0.2 – 0.2Total comprehensive incomefor the reporting period – – – 6.7 – 0.2 – 23.9 17.0 – 0.6 16.4TRANSACTIONS WITH SHAREHOLDERS,RECOGNISED DIRECTLY IN GROUPEQUITYContributions from and distributionsto shareholdersDividend to shareholders 2.8 – 2.8 – 4.5 – 4.5 – 4.5Share-based payment transactions 1.2 1.2 1.2Issue of repurchased shares 0.1 0.1 0.1Total contributions from shareholdersand distributions to shareholders 2.8 – 2.8 – – 0.1 – 3.3 – 3.2 – – 3.2CHANGES IN OWNERSHIP INTERESTSIN SUBSIDIARIES NOT LEADINGTO A LOSS OF CONTROLChange of shares in minority interest – 0.4 – 0.4Total transactions with shareholders 2.8 – 2.8 0.1 – 3.3 – 3.2 – 0.4 – 3.6BALANCE AS AT 31 DECEMBER 2009 62.7 46.9 – 15.3 – 0.2 – 11.7 298.3 380.8 4.1 384.9The notes in sections 1 to 72 form an integral part of these financial statements.Royal Ten Cate Annual Report 2009 89

Notes to the consolidated financial statementsACCOUNTING STANDARDS1 GENERAL INFORMATION ON ROYAL TEN CATEKoninklijke Ten Cate nv (Royal Ten Cate) (the company) is established in Almelo, the Netherlands.The consolidated financial statements of the company comprise the financial statements of the company and itsoperating companies (referred to collectively as the ‘Group’) and the Group’s interests in other (non-consolidated)participating interests, associated companies and proportionally consolidated joint ventures. The financialstatements have been prepared by the Executive Board.The 2009 annual report and accounts were discussed on 3 March 2010 at the meeting of the Supervisory Board.They were released by the Executive Board for publication on 4 March 2010. They will be presented to thegeneral meeting of shareholders for adoption on 8 April 2010.The parent company financial statements form part of the 2009 financial statements of Royal Ten Cate. RoyalTen Cate has made use of the exemption pursuant to article 2:402 of Book 2 of the Netherlands Civil Code withregard to the parent company financial statements.The original financial statements were prepared in the Dutch language. This document is a version translatedinto English. In the event of any differences between the English and the Dutch text, the latter shall prevail.2 GENERAL PRINCIPLES FOR FINANCIAL REPORTINGThe consolidated financial statements have been prepared in accordance with International Financial ReportingStandards, as adopted within the EU (hereinafter EU-IFRS) and with Part 9 of Book 2 of the Netherlands CivilCode.Changes to the principles for financial reportingWith effect from 1 January 2009, the group has amended its principles for financial reporting in the followingareas:◾ Determination and presentation of operating segments;◾ Presentation of the financial statements.Determination and presentation of operating segmentsWith effect from 1 January 2009, the group has defined and presented operating segments on the basis ofinformation reported internally to the Chief Operating Decision Maker (CODM) committees, which take theimportant decisions in the segment. This presentation and change of system results from the application ofIFRS 8 Operating Segments. Previously, operating segments were defined and presented in accordance withIAS 14 Segment Reporting.The operating results of an operating sector are assessed periodically by the CODM committees in order to takedecisions on the allocation of resources to the segment and to assess its performance.The investment expenditure in a segment relates to the total costs incurred during the reporting period for theacquisition of tangible and intangible fixed assets with the exception of goodwill.90Royal Ten Cate Annual Report 2009

The new principle for financial reporting in relation to notes on this subject is explained in further detail innote 31. Since the amended reporting only has consequences for the presentation and notes relating to theresults, the earnings per share remain unchanged. This new principle for financial reporting has not led to anychange in the segments qualifying as reporting segments under IFRS 8.Presentation of the financial statementsThe Group applies the revised standard IAS 1 Presentation of Financial Statements (2007), which has been inforce since 1 January 2009. The Group accordingly presents all changes in equity relating to shareholders intheir capacity as shareholders in the consolidated statement of changes in equity, while all changes inshareholders equity which do not relate to shareholders in their capacity as shareholders are recognised in theconsolidated statement of comprehensive income.Comparative information has been adjusted so that it also conforms to the revised standard. Since this changeof system only affects aspects relating to the presentation and notes to the financial statements, it has noeffect on earnings per share.3 PRINCIPLES FOR THE PREPARATION OF THE FINANCIAL STATEMENTSThe financial statements are presented in millions of euros (the euro being the Company’s functional currency)unless stated otherwise. The financial statements have been prepared on the basis of historical cost, except forthe following material balance sheet items, which are valued at fair value: derivatives and financial instrumentsheld for trading purposes.In preparing the financial statements, the Executive Board has used estimates and assumptions which affectthe amounts stated in the consolidated financial statements (see note 57). Changes in estimates andassumptions may affect amounts reported in future years. The actual results may differ from such estimates.The accounting principles set out below have been applied consistently by the Group’s operating companies andjoint ventures for the periods presented in these consolidated financial statements. Certain comparativeinformation has been adjusted for the sake of comparability.4 CONSOLIDATION PRINCIPLES4.1 Operating companiesOperating companies are undertakings in which the company directly and/or indirectly has a controlling interest.The assessment of whether there is a controlling interest takes account of potential voting rights that areexercisable at the time. The company has a direct or indirect controlling interest if it can determine the financialand operational policy of a company in such a way that it can derive a benefit from the activities of thatcompany. The financial statements of operating companies are included in the consolidated financial statementsfrom the first to the last date on which control is exercised. Minority interests in the Group result and theshareholders equity of the Group are stated separately.Royal Ten Cate Annual Report 2009 91

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS4.2 Associated companies, joint ventures and other participating interestsAssociated companies are undertakings in which the Group can exercise significant influence on the financialand operational policy, but in which it has no controlling interest and which are not therefore included in theconsolidation. Joint ventures are companies over which the Group has joint control and in which such controlhas been set forth in an agreement and in which strategic decisions on the financial and operational policy aretaken on the basis of unanimity.Joint ventures are proportionally consolidated. Associated companies are accounted for using the equity methodand are stated at cost on first inclusion.If the Group’s share in losses exceeds the book value of the associated company, the book value is stated atzero and further losses are no longer stated, unless the Group has entered into a legally enforceable or actualliability on behalf of the associated company.Other participating interests over which no significant influence is exercised are valued at fair value and thedividend is stated in the statement of comprehensive income when it is made payable. If no fair value isavailable and other methods do not result in a reasonable estimate, the investment is valued at cost lessimpairment.4.3 Elimination of transactions on consolidationIntragroup balances and transactions between the operating companies in the Group and unrealised profits andlosses on such transactions are eliminated in the preparation of the consolidated financial statements.Unrealised profits on Group transactions with proportionally consolidated joint ventures and investments statedin accordance with the equity method are eliminated in proportion to the Group’s interest in the investment.Unrealised losses are eliminated in the same way as unrealised profits, but only to the extent that there is noindication of impairment.5 FOREIGN CURRENCIES5.1 Transactions in foreign currenciesReceivables and liabilities denominated in foreign currencies are converted into euros at the rate prevailing onthe reporting date. Transactions in foreign currencies are converted into euros at the exchange rate applying onthe transaction date. Foreign exchange translation differences are stated in the statement of comprehensiveincome.Non-monetary assets and liabilities which are denominated in foreign currencies and valued on the basis ofhistorical cost are converted at the exchange rate on the transaction date.5.2 Operating companies and joint ventures outside the eurozoneThe results of operating companies outside the eurozone are converted into euros at the exchange rate on thetransaction date. Assets and liabilities including goodwill and fair value adjustments in respect of acquisitionsare converted at the rate on the reporting date. The resulting translation differences are carried in equity. If anactivity outside the eurozone is fully or partly divested, the respective amount is transferred from equity to thestatement of comprehensive income. The rates of the main currencies against the euro are as follows:92Royal Ten Cate Annual Report 2009

Closing rateAverage rate2009 2008 2009 2008US dollar 1.43 1.39 1.39 1.47Hungarian forint (100) 2.72 2.67 2.81 2.52Danish krone 7.44 7.44 7.45 7.46UAE dirham 5.27 5.12 5.12 5.41Singapore dollar 2.01 2.00 2.02 2.08Malaysian ringgit 4.91 4.92 4.92 4.90British pound 0.89 0.96 0.89 0.79Thai bhat (100) 0.48 0.50 0.48 0.49Chinese yuan renminbi 9.79 9.50 9.54 10.27Australian dollar 1.60 2.03 1.78 1.746 DERIVATIVESThe Group uses derivatives in order to hedge exchange rate and interest rate risks resulting from operating,financing and investing activities. Examples are interest rate caps and swaps as well as currency options andforward contracts. In accordance with its treasury policy, the Group does not use derivatives for tradingpurposes. Nor does it issue such derivatives. Any derivatives which do not meet the requirements for hedgeaccounting are stated as trading instruments. Derivatives are valued at fair value. The inclusion of the resultingincome or expense depends on the nature of the item being hedged. The fair value of derivatives is the estimatedamount which the Group would receive or would have to pay in order to terminate the derivative on the reportingdate, taking into account the current exchange rates, the current interest rate and the current creditworthinessof the counterparty/counterparties to the derivative.7 HEDGE ACCOUNTINGWhere specific conditions are met (IAS 39 88), hedge accounting can be applied. Under these specific conditions,there must be a demonstrable relationship between the variability of the future transactions and the hedginginstrument. In such a situation, the change in the fair value of the hedge is stated directly in equity (in thereserve for hedging results) during the term of the hedging relationship. If the hedged future transactions arestated in the statement of comprehensive income, the transfer takes place from equity to the statement ofcomprehensive income or is stated in the cost price on the first-time inclusion of the non-financial asset orliability. If no hedge accounting is applied, profits or losses on the hedge instrument are always stated in thestatement of comprehensive income.Royal Ten Cate Annual Report 2009 93

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS8 SEGMENT REPORTINGFor this see Determination and presentation of operating segments on page 104.9 REVENUESRevenues comprise the revenues from goods and services supplied to third parties, less discounts and any taxesdue.Revenues from sales of goods are recognised in the statement of comprehensive income when the main risksand benefits of ownership have been transferred to the purchaser.Revenues from services supplied are recognised in the statement of comprehensive income in proportion to theextent of performance of the work applying on the reporting date.No revenues are recognised if the extent of the revenues cannot be reliably determined and if significantuncertainties remain with regard to the collection of the remuneration due, the associated costs or the possiblereturn of goods, and also if there is a protracted management involvement with such goods.The Group also carries out projects to manufacture assets under contracts with third parties. The costs relatingto a project recognized when they are incurred. Revenues from projects in progress are recognised in proportionto the degree of completion of the project.10 GOVERNMENT SUBSIDIESSubsidies granted as compensation for expenses incurred by the Group are systematically stated as income inthe statement of comprehensive income in the same period as that in which the subsidisable expenses areincurred and as soon as there is a reasonable certainty that they will be received and that the Group will fulfilthe attached conditions. Subsidies granted to compensate the Group for the cost of an asset are systematicallystated as cost of sales in the statement of comprehensive income during the useful life of the asset.11 RAW MATERIALS AND MANUFACTURING SUPPLIESThe consumption of raw materials and manufacturing supplies is calculated on the basis of historical cost.12 LEASE PAYMENTS12.1 Operational leasingLease payments in respect of operational leasing are stated in the statement of comprehensive income on astraight-line basis over the lease term. Remuneration received as an incentive to effect leases are stated as anintegral part of the total lease costs in the statement of comprehensive income over the lease term.94Royal Ten Cate Annual Report 2009

12.2 Financial leasingLease payments are stated partly as financial expenses and partly as a repayment of the outstanding liability.The financing costs are allocated to each period of the total lease term in such a way that this results in aconstant periodic interest rate on the residual balance of the liability.13 FINANCIAL INCOME AND EXPENSESThe financial income and expenses include the interest income and expenses on invested and borrowed monies,interest charges on financial lease payments, foreign exchange rate differences, results from other participatinginterests and results of derivatives for which no hedge accounting is used. Interest income and expenses arestated in the statement of comprehensive income on the basis of the effective interest method.14 PROFIT TAXThe tax on profit for the financial year includes the taxation that is payable, available for set-off and deferred inrespect of the reporting period. The tax is stated in the statement of comprehensive income, except where itrelates to items which are included directly in equity, in which case the tax is stated in equity. Tax that ispayable and available for set-off in respect of the reporting period is the tax which is expected to be payable onthe taxable result, calculated on the basis of tax rates which have been set on the reporting date, or on which afirm decision has been taken by the reporting date, and corrections to tax payable in respect of previous years.A receivable/provision is recognised for deferred tax differences using the balance sheet liability method fortemporary differences between the book value of assets and liabilities for the financial reporting and the fiscalbook value of the items concerned. No provision is formed in respect of two temporary differences: non-taxdeductiblegoodwill and the difference between the economic and fiscal value of operating companies,associated companies, joint ventures and other participating interests. The amount of the provision for deferredprofit tax liabilities is based on the method by which the book value of the assets and liabilities is expected tobe realised or settled, using tax rates which, on the reporting date, have been specified by law or in respect ofwhich an effective legal decision has been taken. The amount of deferred profit tax assets is reduced to theextent that it is no longer likely that the associated tax benefit will be realised. Additional taxes on the profit inrespect of dividend payments are stated at the same time as the liability to pay the respective dividend.Deferred profit tax assets and liabilities are offset if there is a legally enforceable right to offset the profit taxassets and liabilities and such assets and liabilities relate to profit tax imposed by the same tax authority on thesame taxable entity, or on different taxable entities which intend to offset the profit tax assets and liabilities orwhose profit tax assets and liabilities are realised simultaneously.A deferred profit tax asset is only recognised to the extent that it is likely that future taxable profits will beavailable which can be applied for the realisation of the timing difference. Deferred profit tax assets arereviewed on each reporting date and reduced if it is no longer likely that the associated tax benefit will berealised.Royal Ten Cate Annual Report 2009 95

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS15 EARNINGS PER SHAREThe Group presents ordinary and diluted earnings per share for the ordinary share capital. The net income perordinary share is calculated on the basis of the net result attributable to shareholders divided by the weightedaverage number of ordinary shares in issue during the reporting period. In the calculation of the diluted earnings,the weighted average number of ordinary shares in issue during the reporting period is corrected to take accountof the potential dilutive effect on the ordinary shares arising from the share options granted to employees.16 NEW STANDARDS AND INTERPRETATIONS NOT YET APPLIEDA number of new standards, amendments to standards and interpretations were not in force in 2009 and havetherefore not been applied to these consolidated financial statements:◾ IFRS 3 Business Combinations will be applied prospectively to the consolidated financial statements from2010 and therefore has no impact on prior periods.◾ The revised IFRS 3 Business Combinations (2008) includes the following amendments, which willprobably be relevant to the Group’s activities:◽ the definition of business has been extended; it can therefore be expected that a larger number ofacquisitions will be treated as business combinations;◽ conditional remuneration is valued at fair value; changes after first-time inclusion are stated in thestatement of comprehensive income;◽ except in the case of share and debt issue costs, transaction costs are charged to the result in theperiod in which they are incurred;◽ any interest already held in the acquired party is valued at fair value; the profit or loss is stated in thestatement of comprehensive income;◽ the acquirer can elect, on a transaction-by-transaction basis, to value a minority interest either at fairvalue or at the minority interest’s share of the identifiable assets and liabilities of the acquiree.◾ The amended IAS 27 Consolidated and Separate Financial Statements (2008) states that changes in thegroup’s ownership interest in a subsidiary, where control is retained, must be stated as a share transaction.If the group ceases to have control of a subsidiary, any residual interest in the former subsidiary must bemeasured at fair value, with the resulting profit or loss being stated in the statement of comprehensiveincome. Application of the amendments to IAS 27 will be compulsory in respect of the Group’s consolidatedfinancial statements for 2010.The other new or amended standards are not expected to have any material impact on the Group’s consolidatedfinancial statements.96Royal Ten Cate Annual Report 2009

17 PRINCIPLES FOR THE PREPARATION OF THE CASH FLOW STATEMENTCash flows from operating activities are presented on the basis of the indirect method. Cash flows in foreigncurrencies are converted at the exchange rate on the date of the cash flow or on a cash basis. Changes whichhave not resulted in cash flows, such as exchange rate differences, acquisitions, financial lease liabilities,changes in fair value, recognised share-related transactions and similar transactions are eliminated in thisstatement. Dividends paid to shareholders are included in the cash flow from financing activities. Dividendsreceived are stated in the cash flow from investing activities, and interest paid is stated in the cash flow fromoperating activities. Overdrafts which are immediately repayable and form part of the Group’s cash managementare included in the balance of cash and bank current accounts as part of the consolidated cash flow statement.18 INTANGIBLE FIXED ASSETS18.1 GoodwillAll acquisitions are accounted for using the purchase accounting method. Goodwill results from the acquisitionof operating companies, associated companies and joint ventures and is the difference between the cost of theacquisition and the net fair value of the acquired identifiable assets, liabilities and contingent liabilities.Up until 2000, goodwill was charged to equity. In the years 2001 to 2003 it was stated at cost less amortisation.Since 1 January 2004, goodwill has no longer been amortised but has been valued at cost less accumulatedimpairments. The book value of the goodwill on investments stated in accordance with the equity method isincluded in the book value of the respective investment. An impairment loss on such an investment is notallocated to any asset, including goodwill, that is part of the book value of the investment stated in accordancewith the equity method.Goodwill is allocated to cash generating units.18.2 Other intangible fixed assetsThe other intangible fixed assets consist of:Research and developmentCosts of research activities carried out with a view to acquiring new scientific or technical knowledge andinsights are stated as an expense in the statement of comprehensive income when they are incurred.Costs of development activities, in which research results are used for a plan or design for the production ofnew or substantially improved products and processes, are capitalised if the product or process is technicallyand commercially feasible and the Group has sufficient resources to complete the development and use or sellthe asset. The capitalised costs include material costs, direct labour costs, financing costs and an appropriateportion of directly attributable overheads. Other development costs are stated as an expense in the statementof comprehensive income when they are incurred. The capitalised development costs are valued at cost lessaccumulated amortisation and impairments (see note 23).Royal Ten Cate Annual Report 2009 97

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOther intangible fixed assetsOther intangible fixed assets acquired by the Group relate to customer relationships, trademark rights, patentsand similar rights. These intangible assets are valued at cost less accumulated amortisation and impairments(see note 23). Costs of internally generated goodwill and trademarks are stated as an expense in the statementof comprehensive income when they are incurred.18.3 Expenses after first-time inclusionExpenses after the first-time inclusion of capitalised intangible fixed assets are capitalised only if they lead toan increase in the future economic benefits embodied in the particular asset to which they relate. All otherexpenses are charged to the statement of comprehensive income when they are incurred.18.4 AmortisationAmortisation is calculated on the cost of the asset, or other amount replacing the cost, less the residual value.Amortisation costs are charged on a straight-line basis to the statement of comprehensive income in accordancewith the estimated useful life of intangible fixed assets. Goodwill is tested each year on the reporting date toassess whether any impairment has arisen. The amortisation of other intangible fixed assets begins as soon asthe assets are available for use.The amortisation method, economic life and residual value are assessed periodically.The estimated economic life is as follows:◾ Development costs 5 years◾ Other intangible fixed assets 3 – 14 years19 TANGIBLE FIXED ASSETS19.1 Owned assetsTangible fixed assets are valued at cost less accumulated depreciation (see 19.4) and impairments (seenote 23).The cost of self-manufactured assets comprises material costs, direct labour costs and an appropriate portion ofdirectly attributable overheads. The financing costs relating to the construction or purchase of an asset are alsoincluded in the determination of the cost.Where tangible fixed assets consist of components with differing useful lives, these are stated as separateitems under tangible fixed assets.19.2 Leased assetsLeases in which the Group actually assumes all the risks and benefits of ownership are classified as financialleases. Tangible fixed assets which are required by means of financial leases are valued at the lower of fairvalue and the discounted value of the minimum lease payments at the inception of the lease, less accumulateddepreciation (see note 19.4) and impairments (see note 23). Lease payments are stated as described in note 12.98Royal Ten Cate Annual Report 2009

19.3 Expenses after first-time inclusionExpenses incurred for the replacement of a component of a tangible fixed asset are capitalised provided thefuture economic benefits resulting from the asset accrue to the Group and the costs of such replacementexpenses can be reliably determined. All other expenses are charged to the statement of comprehensive incomewhen they are incurred.19.4 DepreciationDepreciation is calculated on the amount to be written down, i.e. the cost of an asset, or another amountreplacing the cost, less the residual value. Depreciation is charged to the statement of comprehensive incomeon the basis of the straight-line method over the estimated economic life of each component of a tangible fixedasset. Land is not depreciated. The estimated economic life is as follows:◾ buildings 33 years◾ fixtures and installations in buildings 10 years◾ plant and equipment 7 – 10 years◾ inventory 5 years◾ computers and office equipment 3 – 5 yearsThe depreciation method, economic life and residual value are assessed periodically.20 INVENTORIESInventories are stated at the lower of cost or net realisable value. The net realisable value is the estimated saleprice in ordinary operations, less the estimated costs of completion and the sale costs. The cost of inventories isbased on the FIFO (first in, first out) principle and includes the costs incurred for the acquisition of theinventories, their production or conversion and bringing them to the existing location and condition. In the caseof inventories of finished products and work in progress, the cost includes in addition to the direct costs anappropriate portion of the indirect costs based on the normal production capacity.21 TRADE AND OTHER RECEIVABLESTrade and other receivables with a term of less than one year are stated at amortised cost less impairments.22 CASH AND CASH EQUIVALENTSCash and cash equivalents comprise cash balances and immediately claimable credit balances. Overdrafts atbanks which are immediately claimable and form an integral part of the Group’s cash management are includedas part of the cash and cash equivalents for the purposes of the cash flow statement.Royal Ten Cate Annual Report 2009 99

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS23 IMPAIRMENTThe book value of the Group’s assets, except that of inventories (see note 20) and deferred profit tax assets (seenote 14) is examined at each reporting date in order to determine whether there are indications of impairment.If there are such indications, an estimate is made of the realisable value of the asset. In the case of goodwilland intangible assets which are not yet available for use, the realisable value is estimated at each reportingdate. This also applies if there is an indication of impairment.An impairment is recognised when the book value of an asset or the cash generating unit thereof is higher thanthe realisable value. It is first charged to any allocated goodwill and then deducted proportionately from thebook value of the other assets.For the testing of impairments, assets which cannot be tested individually are combined into the smallestdistinguishable group of assets which, as a result of continuous use, generates cash flow that is broadlyindependent of the incoming cash flows from other assets or groups of assets (the cash generating unit). Takinginto account the operating segment ceiling test, cash generating units to which goodwill has been allocated forthe testing of goodwill with regard to impairment are combined in such a way that the level at which suchimpairment is tested reflects the lowest level at which goodwill is monitored in internal reporting. Goodwillacquired in a business combination is allocated to groups of cash generating units which are expected to benefitfrom the synergy advantages of the combination.23.1 Calculation of the realisable valueThe realisable value is the higher of the recoverable amount, less costs to sell, and the value in use.In determining the value in use, the discounted value of the estimated future cash flows is calculated usinga discount rate before tax which reflects both the current market valuations of the time value of money and thespecific risks relating to the asset. In the case of an asset which generates no cash receipts which are to a largedegree independent of other assets, the realisable value is determined for the cash generating unit to which theasset belongs.23.2 Reversal of impairmentsAn impairment relating to goodwill cannot be reversed. In the case of other assets, an assessment is made onthe reporting date as to whether an impairment must be reversed if there is a change in the estimates on whichthe realisable value was based.An impairment is only reversed to the extent that the book value of the asset is no higher than the book valuewhich would have been determined after the deduction of depreciation, if no impairment had been recognised.Goodwill which is part of the book value of an investment in an associated company is not recognised separatelyand therefore not tested separately for impairment. Instead, the total amount of the investment in an associatedcompany is tested for impairment as a single asset if there are objective indications that the investment in anassociated company may be subject to impairment.100Royal Ten Cate Annual Report 2009

24 SHARE CAPITAL24.1 Share capitalThe share capital is classified as equity.24.2 Repurchase of own sharesOn the repurchase of share capital which is stated in the balance sheet as equity, the amount of the paidconsideration, including directly attributable costs, is stated as a change in equity. Repurchased shares areclassified under ‘Other reserves’ and presented as a deduction from total assets.24.3 DividendDividend is stated as a liability in the period in which it is declared.25 PENSION LIABILITIES25.1 Defined contribution schemesLiabilities relating to contributions to defined contribution pension schemes are charged to the statement ofcomprehensive income in the period to which they relate.25.2 Defined benefit schemesThe Group’s net liability in respect of defined benefit pension schemes is calculated separately for each schemeby estimating the amount of the future entitlement which employees have earned in the present and previousreporting periods in exchange for their services. This entitlement is discounted in order to determine the presentday value, with the fair value of the fund investments being deducted. The discount rate is the yield on thereporting date of bonds which have an AA credit rating and a period to maturity which approximates the term ofthe Group’s liabilities and are denominated in the currency in which the entitlements arise. The calculation isperformed by an authorised actuary on the basis of the projected unit credit method. If the entitlements under apension scheme are increased, the proportion of the higher entitlement which relates to employees’ past serviceis stated as an expense in the statement of comprehensive income on a straight-line basis over the averageperiod up to the granting of the rights. If the rights are granted immediately, the expense is stated immediatelyin the statement of comprehensive income.With regard to the actuarial profits and losses that arise in the calculation of the Group’s liability under apension scheme, in so far as any accumulated actuarial profits or losses not yet recognised amount to morethan 10% of the discounted value of the gross liabilities in respect of defined benefit pension rights or of thefair value of the fund investments if this is greater (in other words: remains within the corridor), that element isrecognised in the statement of comprehensive income over the expected average remaining service period ofthe employees participating in the scheme. For the remainder, the actuarial profit or loss is not recognised.When the calculation results in a receivable for the Group, the recognised asset item is limited to the net totalof any unrecognised actuarial losses and back-service costs and the discounted value of the lower of futurerepayments by the fund and future pension contributions.Royal Ten Cate Annual Report 2009 101

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS26 SHARE-BASED PAYMENTSThe option scheme enables the Group’s management to acquire shares in Royal Ten Cate. The fair value of thegranted options is stated under personnel costs, with a corresponding entry in equity. The fair value isdetermined on the grant date and is allocated over the period up to the time at which the management acquiresan unconditional right to the options. The amount stated as costs is adjusted annually to the number of optionswhich will be exercised. The fair value of the granted options is determined on the basis of the binomial model,taking account of the conditions under which the options have been granted. Valuation factors include the shareprice on the valuation date, the exercise price of the instrument, the expected volatility, the weighted averageexpected term of the instruments (based on past experience and the conduct of the instrument holders),the expected dividends and the risk-free interest rate (based on government bonds).27 PROVISIONSA provision is recognised in the balance sheet if there is a legally enforceable or actual obligation as a result ofa past event and it is likely that an outflow of resources will be required to settle such liability and such outflowcan be reliably estimated. If the effect of this is material, the provisions are determined by discounting theexpected future cash flows using a discount rate before tax which reflects the current market valuations of thetime value of money and, if necessary, the specific risks of the liability.27.1 Claims and guaranteesThe provision for claims relates to damages claims and any litigation costs. The provision for guarantees relatesto goods and services supplied and is based on historical guarantee data.27.2 ReorganisationReorganisation provisions are included if the Group has formalised a detailed plan for the reorganisation andhas begun or publicly announced the reorganisation. The reorganisation provision does not include costsincurred in relation to future activities.27.3 Other personnel liabilitiesLong service leave and other allowances such as anniversaries form part of the provisions under other personnelliabilities. These provisions are accumulated over the respective period as in the case of defined benefit pensionschemes, albeit that actuarial profits or losses are included in the statement of comprehensive income in theperiod in which they arise.27.4 EnvironmentIn accordance with the Group’s published environmental policy and the applicable legal obligations, a provisionfor the clearance of environmental pollution is formed when the pollution occurs.102Royal Ten Cate Annual Report 2009

28 LONG-TERM DEBTSWhen included for the first time, interest-bearing loans received are stated at fair value less directly attributabletransaction costs. After firsttime recognition, interest-bearing loans are valued at amortised cost, with thedifference between the cost and the redemption price being stated in the statement of comprehensive incomeon the basis of the effective interest method over the term of the loans.29 TRADE CREDITORSTrade creditors and other payables are stated at amortised cost.30 DETERMINATION OF FAIR VALUEA number of principles and the group’s information provision require the determination of the fair value of bothfinancial and non-financial assets and liabilities. For the purposes of valuation and information provision, thefair value is determined on the basis of the following methods. If applicable, further information on the principlesfor determining the fair value is provided in the section of these notes applying specifically to the respectiveasset or the respective liability.Tangible fixed assetsThe fair value of tangible fixed assets included as a result of a business combination is based on market value.The market value of real estate is the estimated value at which an item of immovable property can be traded onthe valuation date between a well-informed purchaser and a well-informed seller in a transaction on anobjective, business basis, in which both parties have acted carefully and without coercion. The market value ofother tangible fixed assets and inventories is based on the listed market prices of comparable assets and items.Intangible fixed assetsThe fair value of patents and trademarks acquired as part of a business combination is determined on the basisof the discounted estimated royalties which have been avoided as a result of ownership of the patent ortrademark. The fair value of customer relationships acquired in a business combination is determined using theexcess earnings method over several periods, with the respective assets being valued after deduction of a realreturn on all other assets which jointly constitute the associated cash flows. The fair value of other intangibleassets is based on the expected discounted value of the cash flow from the use and ultimate sale of the asset.InventoriesThe fair value of inventories acquired as part of a business combination is determined on the basis of theestimated sale price in normal business operation, less the estimated costs of completion and the sale costs,plus a reasonable profit margin reflecting the completion and sale effort.Trade debtors and other receivablesThe fair value of trade debtors and other receivables, excluding projects in hand on behalf of third parties, isestimated at the discounted value of the future cash flows, which in turn are discounted at the market interestrate applying on the reporting date. This fair value is determined for information purposes.Royal Ten Cate Annual Report 2009 103

Notes to the statement of comprehensive income31 SEGMENT INFORMATIONAs of 1 January 2009 the Group determines and presents operating segments based on the information providedinternally to the Chief Operating Decision Making (CODM) committees, which take the important operatingdecisions in the sector. This presentation results from the application of IFRS 8 Operating Segments.The accounting principles and calculation methods have been applied as stated in section 2.Operating segmentsThe group consists of three segments, as described below. The segments offer a range of products and services,are managed separately and use various technologies. The summary below describes the activities of thevarious segments of the Group.◾ Advanced Textiles & CompositesManufacture and sale of protective and safety fabrics for professional wear, outdoor fabrics, composites forpersonal and vehicle protection and composites for technological applications in aerospace.◾ Geosynthetics & GrassManufacture and sale of fabrics and non-wovens for civil engineering, environmental projects, recreational andindustrial applications and manufacture and sale of synthetic turf fibres and backing for a range of applications.◾ Other activitiesManufacture and sale of rubber and foam rollers for the office equipment industry and related products,development, production and sale of inkjet technology and related components for industrial applications, aswell as country holding companies and service companies.Geographic segmentsThe segments operate on four continents, namely Europe, North America, Australia and Asia. In the presentationof information based on geographic segments, the revenues of the segment are based on the geographiclocation of origin. The assets of the segments are based on the geographic location of the assets.104Royal Ten Cate Annual Report 2009

31.1 Analysis by operating segmentAdvanced Textiles& CompositesGeosynthetics& GrassOther activitiesEliminations betweenthe segmentsConsolidatedin millions of euros 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008EXTERNAL REVENUES 397.3 481.0 392.1 497.8 52.7 53.8 – – 842.1 1,032.6Revenue from transactionsbetween segments 0.7 1.6 0.1 – 1.3 – – 2.1 – 1.6 – –Depreciation and amortisation – 14.2 – 17.6 – 25.3 – 23.0 – 3.2 – 1.7 – – – 42.7 – 42.3OPERATING RESULT 27.0 52.9 13.8 34.8 – 8.1 – 3.9 – – 32.7 83.8Financial income 1) 0.2 0.2 0.5 0.7 19.8 27.6 – 19.4 – 28.0 1.1 0.5Financial expenses – 9.1 – 11.6 – 6.5 – 10.6 – 12.8 – 23.7 19.4 28.0 – 9.0 – 17.9Impairments of financialfixed assets – – – 4.9 – – – – – – 4.9 –Segment profit to be reportedbefore profit tax 18.0 41.5 3.3 31.8 – 1.3 – 3.2 – – 20.0 70.1Profit tax – – – – – – – – – 5.6 – 19.1Result from divested operations,after profit tax – 0.6 – 10.1 – – – – – 9.5 –Share in result of associatedcompanies – – – 0.8 – – – – – – 0.8 –Assets of segments 267.8 343.7 358.5 487.9 67.4 29.3 – – 693.7 860.9Investments in associatedcompanies – – 18.9 – – – – – 18.9 –Investments in otherparticipating interests – – – – – 6.2 – – – 6.2Unallocated assets – – – – – – – – 35.9 22.1Total assets 267.8 343.7 377.4 487.9 67.4 35.5 – – 748.5 889.2Liabilities of segment 2) 48.3 58.3 61.9 63.6 38.3 48.8 – – 148.5 170.7Unallocated liabilities – – – – – – – – 215.1 346.5Total liabilities 48.3 58.3 61.9 63.6 38.3 48.8 – – 363.6 517.2Investment expenditure 4.2 11.7 9.0 29.0 4.1 7.3 – – 17.3 48.01) Excluding € 0.1 million consolidated translation differences (2008: € 3.7 million).2) Excluding intercompany loans.Royal Ten Cate Annual Report 2009 105

NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME31,2 Analysis by geographic location Revenues by origin Assets by origin2009 2008 2009 2008Netherlands 172.8 222.5 57.4 135.4Rest of Europe 149.7 176.1 208.5 185.1North America 400.8 488.0 247.1 295.5Asia / Australia / Middle East 118.8 146.0 235.5 273.2TOTAL 842.1 1,032.6 748.5 889.232 ACQUISITIONS AND DIVESTMENT OF PARTICIPATING INTERESTSDivested operationsThe impact of the CTI/Geofabrics Australasia pty ltd and Ten Cate Permess Interlinings Hong Kong ltd operationsdivested in 2009 on the statement of comprehensive income for 2009 was as follows:2009 2008Revenues 17.3 35.8Costs of raw materials and manufacturing supplies and work contracted out 9.4 21.6Other costs 6.2 11.4Operating result 1.7 2.833 PERSONNEL COSTS 2009 2008Wages and salaries 128.7 138.4Social charges 26.4 28.4Costs of option scheme 1.2 1.7Pension costs 5.8 3.8Temporary personnel 6.8 14.4Other personnel costs 4.1 3.6Personnel costs 173.0 190.3The pension costs comprise € 2.8 million (2008: € 1.9 million) in respect of defined benefit pension schemes(see note 49.3) and € 3.0 million (2008: € 1.9 million) in respect of defined contribution schemes.106Royal Ten Cate Annual Report 2009

34 OTHER OPERATING COSTS34.1 Government subsidiesThe Group’s consolidated statement of comprehensive income includes € 1.5 million of government subsidies in2009 (2008: € 2.1 million).34.2 Research and developmentThe costs associated with research and development amounted to € 9.3 million in 2009 (2008: € 7.9 million), ofwhich €6.8 million (2008: € 4.2 million) has been stated in personnel costs and € 2.5 million (2008: € 3.7 million)under other operating costs.34.3 Book profit on sale of tangible fixed assetsIn 2009 the Group sold land and buildings on which a total book profit of € 1.3 million was recorded(2008: € 6.5 million).2009 2008Land and buildings 1.3 6.5Others – 0.2Result from sale 1.3 6.7Book value of sold assets 3.1 6.1Proceeds of sale 4.4 12.834.4 Operating lease expensesThe Group included € 7.3 million of expenses relating to operating lease agreements in other operating costs In2009 (2008: € 5.5 million).35 NET FINANCIAL EXPENSES 2009 2008Financial income 1.1 0.5Financial expenses – 9.0 – 17.9Impairment of financial fixed assets * – 4.9 –Exchange rate differences 0.1 3.7Net financial expenses – 12.7 – 13.7*See note 40.2.Royal Ten Cate Annual Report 2009 107

NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME36 PROFIT TAX 2009 2008Profit tax payableCurrent financial year – 13.9 – 21.0Use of unused tax losses 1.9 –Overprovision in previous years 0.2 –– 11.8 – 21.0Deferred profit taxChange in unrecognised timing differences 1.1 –Use and valuation of tax losses 5.1 1.96.2 1.9Total tax charge in consolidated statement of comprehensive income – 5.6 – 19.1Reconciliation with applicable tax rate 2009 2008Result before profit tax 20.0 70.1Tax on profit at average weighted local profit tax rate 40.0% 8.0 29.7% 20.8Losses in reporting year for which no deferred tax assetshave been recognised 7.5% 1.5 0.9% 0.6Non-tax deductible costs 9.0% 1.8 1.6% 1.1Tax-exempt income – 10.5% – 2.1 – 4.0% – 2.8Change in unrecognised temporary differences – 6.5% – 1.3Recognition of previously unrecognised losses – 11.0% – 2.2 – 2.7% – 1.9Others – 0.5% – 0.1 1.8% 1.3Tax charge in statement of comprehensive income 28.0% 5.6 27.3% 19.1The increase in the weighted average tax rate from 29.7% to 40.0% results particularly from changes in thevarious countries’ shares in the total pre-tax income. In comparison with 2008, a larger share of the result wasgenerated in countries with a relatively higher tax rate in 2009.37 RESULT FROM DIVESTED OPERATIONS 2009 2008CTI / Geofabrics Australasia pty ltd 10.1 –Ten Cate Permess Interlinings Hong Kong ltd – 0.6 –Result from divested operations after tax 9.5 –108Royal Ten Cate Annual Report 2009

Notes to the consolidated balance sheetin millions of euros38 INTANGIBLE FIXED ASSETS Goodwill DevelopmentOtherintangiblefixed assetsTotalCostBalance as at 1 January 2008 117.3 0.5 25.8 143.6Acquisitions 44.8 – 34.8 79.6Investments – 0.8 0.4 1.2Exchange rate differences 5.2 – 1.5 6.7Balance as at 31 December 2008 167.3 1.3 62.5 231.1Change resulting from divested operations – 0.5 – – – 0.5Investments 0.1 3.8 0.3 4.2Exchange rate differences – 3.0 – – 0.4 – 3.4Balance as at 31 December 2009 163.9 5.1 62.4 231.4AmortisationBalance as at 1 January 2008 2.2 0.1 4.5 6.8Amortisation – 0.2 11.4 11.6Exchange rate differences – – 0.6 0.6Balance as at 31 December 2008 2.2 0.3 16.5 19.0Amortisation – 0.4 8.4 8.8Change resulting from divested operations – 0.2 – – – 0.2Exchange rate differences – – – –Balance as at 31 December 2009 2.0 0.7 24.9 27.6Book valueBalance as at 1 January 2008 115.1 0.4 21.3 136.8Balance as at 31 December 2008 165.1 1.0 46.0 212.1Balance as at 31 December 2009 161.9 4.4 37.5 203.8Royal Ten Cate Annual Report 2009 109

NOTES TO THE CONSOLIDATED BALANCE SHEET38.1 Amortisation/ImpairmentsThe Group recognised no impairment losses on intangible fixed assets in 2009 (2008: € 0).38.2 Testing of impairment for cash generating units which include goodwillThe following cash generating units contain goodwill items:2009 2008TenCate Grass 80.3 82.7TenCate Advanced Armour EU 31.2 32.3TenCate Advanced Composites USA 19.1 19.7TenCate Advanced Armour USA 20.4 21.0Others 10.9 9.4161.9 165.1The Group tested the existing goodwill for impairment in 2009. The value in use has been determined on thebasis of future cash flows over the forthcoming three years, based on historical empirical data, marketexpectations and strategic plans. No growth rate is applied for the period beyond three years. The discountrates used for taxes range from 8.8% to 11.3% (2008: 9.8% to 12.4%).The net realisable value is the fair (market) value less sale costs.On the basis of this test, no goodwill impairment has been recognised. The changes in 2009 related to exchangerate differences.We have investigated the sensitivity of the main assumptions and concluded that limited adjustments to themain assumptions could not reasonably result in the book value exceeding the realisable value.38.3 AmortisationThe amortisation of € 8.8 million (2008: € 11.6 million) has been stated in the ‘Amortisation’ item in thestatement of comprehensive income.110Royal Ten Cate Annual Report 2009

39 TANGIBLE FIXED ASSETSLand andoperating Machines andbuildings installationsOtheroperatingassetsOperatingassets underconstructionTotalAcquisition valueBalance as at 1 January 2008 124.3 336.0 37.8 22.8 520.9Acquisitions 1.3 7.2 1.1 2.3 11.9Investments 7.7 52.6 4.4 – 17.9 46.8Divestments – 6.2 – 8.0 – 0.7 – – 14.9Exchange rate differences 2.5 6.9 0.5 1.4 11.3Balance as at 31 December 2008 129.6 394.7 43.1 8.6 576.0Change as a result of divested operations – 1.6 – 5.8 – 1.3 – – 8.7Investments 2.4 8.9 1.8 – 13.1Divestments – 2.6 – 4.4 – 0.8 – – 7.8Exchange rate differences – 1.2 – 4.2 – 0.2 – 0.6 – 6.2Balance as at 31 December 2009 126.6 389.2 42.6 8.0 566.4DepreciationBalance as at 1 January 2008 51.4 221.3 30.1 – 302.8Depreciation 4.6 23.5 2.6 – 30.7Divestments – 4.1 – 4.2 – 0.5 – – 8.8Exchange rate differences 0.7 2.8 0.4 – 3.9Balance as at 31 December 2008 52.6 243.4 32.6 – 328.6Changes as a result of divested operations – – 2.0 – 0.5 – – 2.5Depreciation 5.0 25.9 3.0 – 33.9Divestments – 0.1 – 4.0 – 0.5 – – 4.6Exchange rate differences – 0.6 – 2.5 – 0.6 – – 3.7Balance as at 31 December 2009 56.9 260.8 34.0 – 351.7Book valueBalance as at 1 January 2008 72.9 114.7 7.7 22.8 218.1Balance as at 31 December 2008 77.0 151.3 10.5 8.6 247.4Balance as at 31 December 2009 69.7 128.4 8.6 8.0 214.7Royal Ten Cate Annual Report 2009 111

NOTES TO THE CONSOLIDATED BALANCE SHEET39.1 Impairment and reversal of impairmentThe Group recognised no impairment of tangible fixed assets in 2009 (2008: € 0).No impairment losses were reversed during the year.39.2 Leased buildings, plant and equipmentThe Group leases buildings, plant and equipment under a number of financial leases.The net book value of these assets as at 31 December 2009 was € 5.3 million (31 December 2008: € 5.5 million).The leased buildings, plant and equipment serve as collateral for the financial lease liabilities (see note 48).39.3 CollateralAs at 31 December 2009, plant and equipment belonging to Ten Cate – Union Protective Fabrics Asia Ltd worth€ 6.0 million was encumbered as collateral for a credit facility of € 5.8 million (31 December 2008: € 0).€ 0.5 million of this credit facility was drawn as at the end of 2009.39.4 Depreciation chargeThe depreciation charge of € 33.9 million (2008: € 30.7 million) has been stated in depreciation in the statementof comprehensive income.40 INVESTMENTS IN ASSOCIATED COMPANIES AND FINANCIAL FIXED ASSETS40.1 Associated companiesOn 31 March 2009 the Group acquired 49% of the shares of TigerTurf NZ Ltd, Auckland, New Zealand, TigerTurfUK ltd, Hartlebury (United Kingdom), TigerSports Americas Inc, Austin (United States of America) and TigerTurfAustralia Pty Ltd, Campbellfield (Victoria, Australia) (hereinafter TigerTurf Group) for a cash consideration of€ 12.6 million including acquisition costs. The Group has an option to buy the other 51% of the shares in 2010and 2011, while the vendor has the option to sell the 51% of the shares to the Group. This 49% interest isstated in the financial statements as an investment in associated companies.On 29 December 2009 the Group’s interest in GreenFields was increased from 20% to 32% as a result of arestructuring of GreenFields. On the same date the Group received GreenFields preference shares in exchangefor a contribution of receivables due from GreenFields. This interest is stated in the financial statements asinvestments in associated companies.The associated companies have a value of € 18.9 million as at 31 December 2009 (31 December 2008: € 0).The associated companies item relates to the 49% interest in the shares of TigerTurf and the 32% interest inthe shares of GreenFields which the Group held on 31 December 2009.112Royal Ten Cate Annual Report 2009

The share in the net income of associated companies amounted to – € 0.8 million (2008: € 0). In 2009 the Groupreceived no dividend payments from investments accounted for by the equity method (2008: € 0).Associated companies and joint venturesThe summary financial data have not been adjusted in respect of the percentage owned by the Group and canbe analysed as follows on 31 December:2009 2008Fixed assets 49.8 21.2Current assets 50.7 33.4Total assets 100.5 54.6Short-term liabilities 30.9 15.8Long-term liabilities 27.5 8.8Total liabilities 58.4 24.6Revenues 105.7 88.8Costs 105.1 84.7Profit/(loss) 0.6 4.1The changes in the associated companies item were as follows:2009 2008Balance as at 1 January – –Investments 18.4 –Transferred from other participating interests 1.3 –Result – 0.8 –Balance as at 31 December 18.9 –40.2 Financial fixed assetsThe financial fixed assets can be analysed as follows:2009 2008Other participating interests – 6.2Other long-term receivables and investments 6.6 4.7Balance as at 31 December 6.6 10.9Royal Ten Cate Annual Report 2009 113

NOTES TO THE CONSOLIDATED BALANCE SHEETOther participating interestsThe main other participating interests included below concern Landscape Solutions bv (Goirle, 20%) andPerformance Fabrics and Fibers LLC (Andrews, South Carolina, 16%).Under other participating interests the Group recognised an impairment of € 4.9 million in 2009 in the latternon-strategic financial participation within the Geosynthetics & Grass sector.2009 2008Balance as at 1 January 6.2 1.3Investments – 4.6Impairment – 4.9 –Transferred to associated companies – 1.3 –Exchange rate differences – 0.3Balance as at 31 December – 6.2Other long-term receivables and investmentsThe main long-term receivables and investments concern invested pension assets / funds at a number of USoperating companies (€ 4.6 million) and an advance payment in connection with long-term lease rights in Chinaand Malaysia (€ 1.9 million).41 DEFERRED PROFIT TAX ASSETS AND LIABILITIESThe deferred profit tax assets and liabilities recognised in the balance sheet are attributable to the followingitems:Receivables Liabilities Net2009 2008 2009 2008 2009 2008Intangible fixed assets – – – 5.1 – 6.6 – 5.1 – 6.6Tangible fixed assets – – – 2.6 – 4.4 – 2.6 – 4.4Financial fixed assets 0.3 – – – 0.4 0.3 – 0.4Inventories 3.8 3.4 – – 3.8 3.4Other receivables 0.3 0.4 – – 0.3 0.4Pension provisions 3.9 4.6 – – 3.9 4.6Other provisions 5.3 6.1 – – 5.3 6.1Tax value of loss carry-forwards 10.3 5.1 – – 10.3 5.1Others 0.8 – 0.8 – – 0.7 0.8Deferred profit tax asset/liability 24.0 20.4 – 8.5 – 11.4 15.5 9.0Balance of assets and liabilities – 4.2 – 6.2 4.2 6.2 – –Net deferred profit tax asset/liability 19.8 14.2 – 4.3 – 5.2 15.5 9.0114Royal Ten Cate Annual Report 2009

Effects on the result due to changes in deferred profit tax in respect of the aforementioned items are included infull in the statement of comprehensive income.The realisation of the deferred profit tax receivables depends on the future taxable profit turning out to behigher than the profit from the reversal of taxable temporary differences. On the basis of a projection of theestimated taxable profit and the existing fiscal planning possibilities, it is considered probable that sufficienttaxable profit will be generated in future for the realisation of these deferred tax receivables.Deferred profit tax assets not stated in the balance sheetAs at 31 December 2009 there were € 46.4 million (2008: € 21.8 million) of unused losses available for set-off.No deferred profit tax asset has been recognised in respect of this amount because it is currently not probablethat future taxable profit will be available to the Group for the losses to be set off. The amount of profit taxconcerned was € 10.6 million as at 31 December 2009 (2008: € 4.4 million).The expiry periods of the unused losses available for set-off are shown in the table below:2009 2008Within 2-5 years 11.3 5.0After five years 16.6 0.7Unspecified period 18.5 16.1Unused losses available for set-off 46.4 21.842 INVENTORIES 2009 2008Raw materials and manufacturing supplies 45.3 57.4Semi-manufactures 32.5 42.6Finished products 77.2 111.5Inventories 155.0 211.5In 2009 the raw materials and manufacturing supplies and changes in finished products and work in progressincluded as sales amounted to € 421 million (2008: € 544 million). In 2009 the reduction in the inventory valueincluded as an expense amounted to a net recoverable amount of € 6.1 million. The reversal of the reduction inthe inventory value amounted to € 1.5 million. The inventory value included as an expense and the reversal havebeen stated under raw materials and manufacturing supplies.Royal Ten Cate Annual Report 2009 115

NOTES TO THE CONSOLIDATED BALANCE SHEET43 TRADE DEBTORS 2009 2008Due from third parties 94.1 154.2Due from associated companies 6.6 –Due from other participating interests – 13.4Due from joint ventures 0.1 1.3Trade debtors 100.8 168.9Trade and other receivables with a term of less than one year are stated at amortised cost less impairments.Transfers to provisions for doubtful debts are included in the statement of comprehensive income under workcontracted out and other external costs.44 OTHER RECEIVABLES 2009 2008Receivable in respect of other taxes 2.1 3.3Derivatives at fair value 1.4 1.8Other receivables and prepayments 9.4 11.2Other receivables 12.9 16.3Amounts due in respect of other taxes receivable relate mainly to reclaimable VAT.As at 31 December 2009 the prepaid items amounted to € 3.8 million (as at 31 December 2008: € 5.0 million).45 CASH AND CASH EQUIVALENTS 2009 2008Bank balances 12.7 5.3Cash balances 0.1 0.1Cash and cash equivalents 12.8 5.4Cash loans, overdrafts – 14.7 – 19.4Cash in the cash flow statement – 1.9 – 14.0All amounts were freely available at the end of 2009 and 2008.46 TOTAL SHAREHOLDERS’ EQUITYA statement of changes in equity can be found on page 88.116Royal Ten Cate Annual Report 2009

46.1 Ordinary shares 2009 2008number x 1,000Outstanding as at 1 January 23,967 23,556Issue of shares – –Issued stock dividend 1,101 411Outstanding as at 31 December 25,068 23,967The authorised share capital amounts to € 200 million divided into 80 million ordinary shares of a par value of€ 2.50. The issued capital as at 31 December 2009 amounts to 25,067,580 ordinary shares of a par valueof € 2.50 (as at 31 December 2008: 23,966,901 ordinary shares of a par value of € 2.50).The holders of ordinary shares are entitled to dividend as approved periodically by the General Meetingof Shareholders. They are also entitled to cast one vote per share at meetings of the company.Issue of shares and limitation of pre-emptive rightThe general meeting of shareholders has granted the Executive Board the power to issue shares and to excludeor restrict the pre-emptive right for the period ending on 30 September 2010. The power to issue shares concerns10% of the issued share capital plus a further issue up to a maximum of 10% of the issued share capital in theevent that the issue takes place in the context of a merger or acquisition. The same applies to the power of theExecutive Board, with the approval of the Supervisory Board, to restrict or exclude the pre-emptive right.46.2 Repurchased ordinary shares 2009 2008number x 1,000Outstanding as at 1 January 527 556Exercise of options – – 25Issued in connection with share savings plan – 6 – 4Outstanding as at 31 December 521 527The aim of the repurchase of ordinary shares is to avoid the dilution of earnings per share by the granting ofoptions and the issue of shares as part of the share savings plan. No shares in the company were repurchasedin 2009 (2008: 0).Royal Ten Cate Annual Report 2009 117

NOTES TO THE CONSOLIDATED BALANCE SHEETRepurchase of own sharesThe general meeting of shareholders has granted the Executive Board the power to acquire fully paid-up sharesin the company (or certificates thereof) for the period ending on 30 September 2010. The maximum number ofshares which may thus be acquired is 10% of the issued capital at the time of acquisition of the shares (orcertificates thereof).46.3 Share premiumThe share premium reserve is to be considered as paid-up capital.46.4 Retained earnings of associated companiesThe reserve has been formed in respect of operating companies and joint ventures in which the free disposal ofretained earnings is subject to restrictions.46.5 Reserve for translation differencesThe reserve for translation differences comprises all exchange rate differences which arise due to the translationof the financial statements of activities outside the eurozone. These exchange rate differences are carried inequity. The accumulation of the respective amount began on 1 January 2004 and is not available for distributionto shareholders. As a result of the sale of the Group’s 50% share in CTI / Geofabrics Australasia pty ltd and thesale of Ten Cate Permess Interlinings Hong Kong ltd, € 1.0 million of the translation differences was charged tothe result in 2009 (2008: €0).46.6 Reserve for hedging resultsThe reserve for hedging results is not available for distribution to shareholders. A negative reserve reduces theamount which is freely distributable from the reserves.The balance of the reserve for hedging results as at 31 December 2009 was € 0.2 million negative (2008: € 0).The ineffective part of derivatives which form part of a hedge relationship is zero (2008: € 0).46.7 Undistributed resultSubsequent to the reporting date the following dividend has been proposed, which has not yet been included inthe balance sheet. It is proposed to set the dividend in respect of 2009 at € 0.60 per € 2.50 par value share(2008: € 0.85, payable optionally or in the form of stock dividend.2009 2008€ 0.60 per ordinary share (2008: € 0.85) 15.0 20.4118Royal Ten Cate Annual Report 2009

46.8 Objective with regard to equity and financingThe objective with regard to equity and financing, as in 2008, is to guarantee the continuity of the company bymeans of attractive returns for shareholders and by guaranteeing benefits for other stakeholders. The capitalstructure is adjusted if necessary in line with economic developments and the risks relating to assets.With regard to financing, the longer-term objective is a ratio of net debt to EBITDA of a maximum of 2.5.The calculation as at 31 December is as follows:31 December200931 December2008Long-term interest-bearing liabilities 192.0 316.2Short-term portion of long-term liabilities 1.6 0.9Cash loans and overdrafts 14.7 19.4Total debt 208.3 336.5Less: cash and cash equivalents 12.8 5.4Net debt 195.5 331.1EBITDA * 82.9 127.0Net debt / EBITDA 2.36 2.61*In accordance with the covenant relating to the loan facility, the EBITDA for acquired and divested businesses is annualised. The effect ofthis extrapolation is a € 2.1 million decrease in EBITDA (2008: € 0.9 million increase). In addition, in accordance with the financing agreement,the result from divested operations (€9.5 million) and other changes (€0.1 million) is included in EBITDA.47 EARNINGS PER SHARE47.1 Ordinary earnings per shareThe calculation of the ordinary earnings per share as at 31 December 2009 is based on the net income of€ 23.9 million (2008: € 51.1 million) attributable to holders of ordinary shares and a weighted average number ofoutstanding ordinary shares during the 2009 financial year of 24,544,316 (2008: 23,426,397), calculated asfollows:2009 2008Net profit for the financial year attributable to holders of ordinary shares 23.9 51.1Royal Ten Cate Annual Report 2009 119

NOTES TO THE CONSOLIDATED BALANCE SHEETWeighted average number of ordinary shares 2009 2008number x 1,000Outstanding ordinary shares on 1 January 23,967 23,556Effect of ordinary shares held (including repurchased shares) – 527 – 556Effect of shares issued in connection with stock dividend 1,101 411Effect of shares issued as a result of exercised option rights – 13Effect of shares issued as a result of share savings plan 3 2Weighted average number of ordinary shares as at 31 December 24,544 23,42647.2 Diluted earnings per shareThe calculation of the diluted earnings per share as at 31 December 2009 is based on the net income of€ 23.9 million (2008: € 51.1 million) attributable to holders of ordinary shares and the weighted average numberof outstanding ordinary shares during the 2009 financial year of 24,616,148 (2008: 23,494,868), calculated asfollows:2009 2008Net profit for the financial year attributable to holders of ordinary shares 23.9 51.1Weighted average number of ordinary shares 2009 2008number x 1.000Weighted average number of ordinary shares as at 31 December 24,544 23,426Effect of outstanding option rights 72 69Weighted average number of ordinary shares (after dilution)as at 31 December 24,616 23,49548 LONG-TERM DEBTS 2009 2008Syndicated loan 185.1 304.2Financial lease liabilities 4.5 5.3Other loans 4.0 7.6193.6 317.1Less: repayment of loans in forthcoming year – 1.6 – 0.9Long-term debts 192.0 316.2120Royal Ten Cate Annual Report 2009

2009Total2010< 1 year20111 – 2 years2012/20142 – 5 years2015and after> 5 years2008TotalSyndicated loanEUR – variable interest 38.8 – – 38.8 – 122.1USD – variable interest 146.3 – – 146.3 – 150.8DKK – variable interest – – – – – 31.3Financial lease liabilitiesEUR – fixed interest 8.00% 0.7 0.2 0.2 0.3 – 0.9EUR – variable interest 3.7 0.6 0.5 2.6 – 4.3THB – fixed interest 3.45% 0.1 – – 0.1 – 0.1Other loansAUD – variable interest – – – – – 2.6USD – variable interest 2.8 – – – 2.8 2.9EUR – fixed interest 0.5 – 3.0% 0.1 – 0.1 – – 0.1EUR – fixed interest 1.00% 1.1 0.8 0.3 – – 2.0Long-term debts 193.6 1.6 1.1 188.1 2.8 317.1The syndicated loan of € 389 million (2008 € 400 million), which is available for drawing in various currencies,was concluded with a syndicate of 12 banks on 16 February 2007 and was amended on 27 February 2008.€ 185 million of this facility was drawn as at 31 December 2009 (2008: € 306 million). Divestments have led to adecrease in the facility, as a result of which, as at 31 December 2009, a maximum of €389 million can be drawn.The loan has a term of five years (to 16 February 2012). Repayment is due in full on the maturity date.The loan is valued at amortised cost in accordance with the effective interest method.The interest rate payable is linked to the net debt/EBITDA ratio, which is calculated quarterly in respect of thepreceding 12 months. The interest margin above Euribor or Libor will be between 0.40% and 1.00%. At the endof 2009, the margin was 0.625% (2008: 0.725%).The aforementioned syndicated loan is subject to a number of covenants, the principal of which are:◾ total net debt/EBITDA less than 3, with the once-only possibility of an increase to 3.5 for two successivequarters following an acquisition;◾ EBITDA/net interest greater than 4;◾ joint guarantee of operating companies with total assets of at least 60% of the Group total.TenCate fulfilled these conditions as at the reporting date.In the event of a change of control of the Company, the syndicated loan is immediately repayable if a two-thirdsmajority of the lenders so require.Royal Ten Cate Annual Report 2009 121

NOTES TO THE CONSOLIDATED BALANCE SHEETThe € 3.7 million financial lease liability relates to a building in Hungary.The USD loan with variable interest concerns a $ 4.0 million loan from the Development Authority of Pike CountyIndustrial Revenue Bonds. Repayment is due in full in 2018.Of the total of long-term loans, 99% had variable interest in 2009 (2008: 99%). The risk associated with thisvariability has been hedged by means of a number of instruments (caps, swaps). Details of the interest rate riskborne by the Group can be found in note 51.3.49 PENSION LIABILITIES 2009 2008Defined benefit schemesDiscounted value of covered liabilities 295.7 275.1Market value of fund investments 298.5 272.4Discounted value of net liabilities – 2.8 2.7Unrecognised actuarial profits and losses 15.4 15.1Total defined benefit schemes 12.6 17.8Other liabilities in respect of pensions 8.4 6.5Pension liabilities 21.0 24.349.1 Changes in the valuation of liabilities as at the reporting date 2009 2008Balance of liabilities as at 1 January 275.1 298.6Transfers from other pension liabilities 3.0 –Service costs 2.9 3.3Members’ contributions 3.1 3.1Interest costs 15.7 16.3Benefits paid – 15.9 – 15.6Actuarial differences 11.8 – 30.6Balance as at 31 December 295.7 275.1122Royal Ten Cate Annual Report 2009

49.2 Investments 2009 2008Balance as at 1 January 272.4 304.7Transfers from other pension liabilities 2.5 –Expected return 16.6 17.7Employer’s contribution 8.0 4.8Members’ contributions 3.1 3.1Actuarial differences 11.8 – 42.3Benefits paid – 15.9 – 15.6Balance as at 31 December 298.5 272.4Analysis of investments as at 31 December 2009 2008Bonds 158.6 161.4Shares 96.4 69.0Hedge funds 11.5 11.1Real estate 25.2 26.0Cash 3.4 4.9Other 3.4 –Pension fund investments 298.5 272.449.3 Charge stated in statement of comprehensive income 2009 2008Service costs – 2.9 – 3.3Asset ceiling test in accordance with IAS 19.58 – 0.8 –Interest on the liabilities – 15.7 – 16.3Expected return on fund investments 16.6 17.7Pension income/charges – 2.8 – 1.9The pension charges have been stated in the 2009 statement of comprehensive income in an amount of€ 2.8 million (2008: € 1.9 million) under personnel costs. The actual return on fund investments amountsto € 28.4 million (2008: – € 24.6 million).Royal Ten Cate Annual Report 2009 123

NOTES TO THE CONSOLIDATED BALANCE SHEETNetherlandsThe defined pension scheme concerns the pension rights of the Dutch employees which have been placed withStichting Pensioenfonds Koninklijke Ten Cate.The main features of the scheme are:◾ pension accumulation based on average salary;◾ accumulation rate of 2.1%;◾ conditional indexation; the average indexation expectation has been set at 70%.Agreements have been entered into with the pension fund in respect of the contribution payable.The contribution percentage varies within an agreed range, depending on the cover ratio of the pension fund.The current agreements cover the period up to 31 December 2009.OthersThe other liabilities in respect of pensions relate to defined contribution schemes and a number of specific oldageprovisions. The principal defined contribution scheme is a 401K (savings) scheme in the United States.49.4 Principles for defined benefit schemesThe main actuarial assumptions as at the reporting date (in weighted averages):2009 2008Discount rate as at 31 December 5.4% 5.7%Expected return on fund investments as at 31 December 5.8% 6.1%Future wage increases 2.5% 2.5%Future pension increases 1.4% 1.4%Assumptions with regard to future mortality figures are based on published statistical data and mortality tables.The mortality tables used are the 2005 – 2050 generation table with an age reduction of three years for menand zero years for women. The age difference between men and women is set at three years. A loading of 3.5%has been applied for future improvement in life expectancy on the liability and 6.0% on the service cost. Thetotal expected long-term return on the investments is 5.8% (2008: 6.1%). This percentage is based on the sumof the returns in separate investment categories. A 0.1% change in the discount rate will result in no change inthe annual charges (2008: zero). However, a 0.1% change in the discount rate will cause the liability to rise orfall by € 4.0 million (2008: € 3.5 million).124Royal Ten Cate Annual Report 2009

Historical information 2009 2008 2007 2006 2005Discounted value of covered liabilities 295.7 275.1 298.6 316.1 326.5Market value of fund investments 298.5 272.4 304.7 302.8 289.1Discounted value of net liabilities – 2.8 2.7 – 6.1 13.3 37.4Experience adjustments arising on liabilitiesof the scheme * 4.4 0.8 2.7 – 1.6 –Experience adjustments arising on fundinvestments 11.8 – 42.3 – 10.3 5.7 15.7*Figure for 2005 is not available.The Group expects to contribute € 6.8 million of employer’s contributions to defined benefit pension schemesin 2010 (2009: € 8.0 million). The pension expense in respect of 2010 is estimated at € 2.0 million (2009:€ 1.8 million).50 PROVISIONSGuarantee/claimsReorganisationprovisionOtherpersonnelliabilities Environment OthersTotal2009Balance as at 1 January 2009 3.7 1.8 5.8 1.8 0.9 14.0Formed as charge against result 1.6 5.9 0.4 0.1 0.4 8.4Released to result – 0.5 – 0.4 – – – 0.3 – 1.2Expenditure in current year – 1.3 – 4.0 – 0.3 – – 0.3 – 5.9Exchange rate differences – – – – – 0.1 – 0.1Balance as at31 December 2009 3.5 3.3 5.9 1.9 0.6 15.2Of which short-termas at 31 December 2008 2.1 1.8 0.1 – 0.4 4.4as at 31 December 2009 1.1 3.3 0.4 – – 4.8Royal Ten Cate Annual Report 2009 125

NOTES TO THE CONSOLIDATED BALANCE SHEETThe amount released to the result has been included in the statement of comprehensive income as follows:2009 2008Personnel costs 0.4 0.2Other operating costs 0.8 2.8Total 1.2 3.0The guarantee provision relates to goods and services supplied and the provision for claims relates to damageclaims and possible legal costs.Reorganisations at Ten Cate Advanced Composites bv, Ten Cate Thiolon bv and the TenCate Enbi group wereannounced in 2009. These are expected to be fully completed in 2010.The provision for other personnel liabilities has been formed in respect of long-term leave and other allowances,such as anniversaries.The environmental provision has been formed for expected costs of decontamination of industrial sites, on thebasis of functional decontamination (maintenance of business use).126Royal Ten Cate Annual Report 2009

Other information51 FINANCIAL INSTRUMENTSAs part of the normal business operations, the Group incurs liquidity, credit, interest and currency risks.The risk of fluctuations, mainly in exchange rates and interest rates, is hedged using derivatives.51.1 Liquidity riskThe liquidity risk is the risk of the Group being unable to meet its liabilities when they fall due. The Group’spolicy on control of the liquidity risk is to guarantee to the best of its ability that sufficient liquidities areavailable to meet its liabilities on time, in both normal and exceptional situations.The term of the financial liabilities as at 31 December 2009 is as follows:Book valueContractualcash flow(includinginterest)2010< 1 year20111-2 years2012/142-5 years2015and after> 5 yearsFinancial liabilities(excluding derivatives)Long-term debts 193.6 – 198.9 – 3.5 – 5.6 – 187.0 – 2.8Cash loans, overdrafts 14.7 – 14.7 – 14.7 – – –Trade and other creditors,excluding derivatives 111.0 – 111.0 – 111.0 – – –DerivativesInterest rate swaps 0.7 – 11.9 – 3.2 – 3.2 – 5.0 – 0.5Forward foreign exchangecontracts 0.4 – 0.4 – 0.4 – – –Total financial liabilities(including derivatives) 320.4 – 336.9 – 132.8 – 8.8 – 192.0 – 3.3Royal Ten Cate Annual Report 2009 127

OTHER INFORMATIONThe term of the financial liabilities as at 31 December 2008 is as follows:Book valueContractualcash flow(includinginterest)2009< 1 year20101-2 years2011/132-5 years2014and after> 5 yearsFinancial liabilities(excluding derivatives)Long-term debts 317.1 – 349.7 – 10.6 – 13.2 – 322.8 – 3.1Cash loans, overdrafts 19.4 – 19.4 – 19.4 – – –Trade and other creditors,excluding derivatives 130.6 – 130.6 – 130.6 – – –DerivativesInterest rate swaps 0.6 – 2.0 – 0.1 – 0.5 – 1.0 – 0.4Forward foreign exchangecontracts 1.4 – 1.4 – 1.4 – – –Total financial liabilities(including derivatives) 469.1 – 503.1 – 162.1 – 13.7 – 323.8 – 3.551.2 Credit riskCredit risk is the risk of a financial loss for the Group if a customer or counterparty to a financial instrument failsto discharge its contractual obligations. Credit risks result in particular from trade debtors and investments insecurities.The Group’s exposure to credit risk is mainly determined by the specific characteristics of the individualcustomers.Credit risk is limited by in-house investigations into the creditworthiness of new and existing customers basedon sources such as external reports, annual reports and payment history or by insuring the credit risk.The internal credit limits specified on the basis of in-house research are reviewed at least once a year.Customers for which no credit limit has been issued (internally or by the insurer) can only do business with theGroup on the basis of guaranteed payment.Goods are subject to reservation of ownership. In the event of non- payment, the Group has a preferential claimto the extent that the goods are still present. The Group does not demand collateral for trade and otherreceivables.Credit losses are stated as direct sale costs in the consolidated statement of comprehensive income as workcontracted out and other external costs.128Royal Ten Cate Annual Report 2009

The book value of the financial assets reflects the maximum exposure to credit risk. The maximum exposure canbe defined as follows:2009 2008Trade debtors and other (long-term) receivables 118.9 188.1Cash and cash equivalents 12.8 5.4Forward foreign exchange contracts and options 0.5 1.6Interest rate swaps 0.7 -Interest rate caps 0.2 0.2Balance as at 31 December 133.1 195.3The age of the trade debtors and the provision for bad debts can be analysed as follows:2009 2008Gross Provision Gross ProvisionNot due – 60 days overdue 96.5 1.3 152.5 0.660 – 120 days overdue 1.8 0.1 11.0 0.5120 – 360 days overdue 2.1 0.4 6.8 1.1Over 360 days overdue 3.9 1.7 2.8 2.0Balance as at 31 December 104.3 3.5 173.1 4.2The movements in the provision for trade debtors are as follows:2009 2008Balance as at 1 January 4.2 3.5Acquisitions – 0.1Change as a result of divested operations – 0.2 –Formed as charge against result 1.0 1.8Released to result – 1.2 – 1.0Written off during the year – 0.3 – 0.3Exchange rate differences – 0.1Balance as at 31 December 3.5 4.2Royal Ten Cate Annual Report 2009 129

OTHER INFORMATION51.3 Interest rate riskThe policy with regard to interest rate risks is stated in the risk section on page 61 of this report. The conditionsapplying to the interest-bearing debt are set out in note 48.The aim of the interest rate policy is to limit the finance charges as far as possible. Interest rate instrumentscan be used in order to adjust the fixed or variable interest character of finance to the required profile. TheGroup has entered into interest rate swaps and caps in order to fulfil this purpose within the policy of theGroup.The following interest rate instruments were outstanding at the end of 2009:◾ interest rate cap to 30-12-2010: € 40 million, 4.5%◾ interest rate cap to 31-12-2011: € 20 million, 3.5%◾ interest rate cap to 31-12-2010: $ 70 million, 4.5%◾ interest rate cap to 31-12-2011: $ 20 million, 3.5%◾ interest rate cap to 31-12-2011: $ 70 million, 4.5%◾ interest rate swap to 31-12-2012: € 50 million, received variable, payment 1.9825% fixed◾ interest rate swap to 31-12-2013: € 50 million, received variable, payment 2.48% fixed◾ interest rate swap to 31-12-2012: $ 70 million, received variable, payment 2.215% fixed◾ interest rate swap to 31-12-2013: $ 50 million, received variable, payment 2.03% fixed◾ interest rate swap to 02-01-2018: $ 4 million, received variable, payment 4.47% fixedThe Group values the interest rate swaps and interest rate caps at fair value. Of the fair value of the interestrate swaps as at 31 December 2009, € 0.7 million (2008: € 0) is included under Other receivables and€ 0.7 million (2008: € 0.6 million) under trade creditors and other payables. The fair value of the caps of€ 0.2 million (2008: € 0.2 million) has been included under other receivables.51.4 Currency riskThe Group incurs currency risks on sales and purchases denominated in currencies other than the local currencyof the respective Group company. The currencies in which risk is incurred are mainly the euro, the US dollar andthe British pound.Transaction riskThe Group hedges trade receivables and debts denominated in foreign currencies, to the extent that these mayhave a material effect on the result. To that end it uses foreign exchange forward contracts and options.The forward contracts have a term of less than one year after the reporting date. If necessary they are extended.The forward contracts are valued at fair value.The principal amounts of the Group’s foreign currency loans are not hedged because they are drawn by operatingcompanies whose assets are in the same currencies.130Royal Ten Cate Annual Report 2009

Competition riskAs far as possible, the Group also hedges the estimated currency risk of the expected purchases and sales inthe subsequent six months. Currency options are used for this purpose.Translation riskThe translation risk on the result of operating companies outside the eurozone is offset internally against eurodenominatedrevenues of operating companies outside the eurozone.The Group’s exposure to currency risks on the reporting date is as follows:2009 2008USD GBP EUR USD GBP EURTransaction risk 2.1 2.3 15.1 5.2 2.5 23.8Competition risk 8.6 1.5 13.1 2.2 1.4 – 0.9Risk before hedging 10.7 3.8 28.2 7.4 3.9 22.9Forward contracts – 1.5 – 2.3 – 12.1 – 6.5 – 2.2 – 22.5Option contracts – 0.6 – 1.5 – 0.9 0.3 – 0.8 – 4.4Risk after hedging 8.6 0.0 15.2 1.2 0.9 – 4.0The foreign currencies have been converted into euros at the closing rate.The USD risk after hedging relates mainly to the expected revenues in USD of Asian operating companies.Due to restrictions in financial markets, this risk is not hedged. The GBP risk relates mainly to trade receivablesand expected revenues of European operating companies. The EUR risk relates mainly to trade receivables andexpected revenues in EUR from TenCate Thiolon Middle East. The expected revenues form a natural hedge forthe translation risk on the result of operating companies which report in dollars or dollar-linked currencies.The Group values options and forward foreign-exchange contracts at fair value. The fair value of the options tohedge future transactions as at 31 December 2009 amounted to € 0.2 million (2008: € 0.8 million). This amounthas been included in other receivables. The net fair value of the forward foreign-exchange contracts was– € 0.1 million.Royal Ten Cate Annual Report 2009 131

OTHER INFORMATION51.5 Hedge accountingThe table below shows the periods in which the cash flows relating to derivatives serving as cash flow hedgingand to which hedge accounting is applied are expected to take place and in which they will affect the profit orloss.2009 Book valueExpectedcash flow6 monthsor less6-12months 1-2 years 2-5 years > 5 yearsInterest rate swapsAssets – – – – – – –Liabilities – 0.2 – 0.2 – 0.4 – 0.2 – 0.1 0.5 –Interest rate capsAssets 0.1 – – – – – –Liabilities – – – – – – –2008 Book valueExpectedcash flow6 monthsor less6-12months 1-2 years 2-5 years > 5 yearsInterest rate swapsAssets – – – – – – –Liabilities – 0.1 – 0.1 – – – 0.3 0.2 –Interest rate capsAssets 0.2 – – – – – –Liabilities – – – – – – –51.6 Assets and liabilities included in the balance sheetChanges in the fair value of foreign exchange forward contracts and options which are used to hedge, in aneconomic sense, monetary assets and liabilities denominated in foreign currencies are stated in the statementof comprehensive income. Both changes in the fair value of forward contracts and options and the exchangerate differences relating to monetary balance sheet items are included as exchange rate differences under netfinancial expenses.132Royal Ten Cate Annual Report 2009

Fair value versus book valueThe fair value and book value of financial assets and liabilities stated in the balance sheet are as follows:2009 2008Book value Fair value Book value Fair valueAssets valued at fair valueInterest rate derivatives to which hedgeaccounting is applied 0.1 0.1 0.2 0.2Other interest rate derivatives 0.8 0.8 – –Other currency derivatives 0.5 0.5 1.6 1.61.4 1.4 1.8 1.8Assets valued at amortised costTrade and other receivables 112.3 112.3 183.4 183.4Cash and cash equivalents 12.8 12.8 5.4 5.4125.1 125.1 188.8 188.8Liabilities valued at fair valueInterest rate swaps to which hedge accounting is applied – 0.2 – 0.2 – –Other interest rate derivatives – 0.5 – 0.5 – 0.6 – 0.6Other currency derivatives – 0.4 – 0.4 – 1.4 – 1.4– 1.1 – 1.1 – 2.0 – 2.0Liabilities valued at amortised costSyndicated loan – 185.1 – 180.8 – 304.2 – 292.5Financial lease liabilities – 4.5 – 4.5 – 5.3 – 5.3Other loans – 4.0 – 4.0 – 7.6 – 7.6Trade creditors and other payables – 111.0 – 111.0 – 131.2 – 131.2Cash loans and overdrafts – 14.7 – 14.7 – 19.4 – 19.4– 319.3 – 315.0 – 467.7 – 456.051.7 Sensitivity analysesIn managing interest rate and currency risks, the Group’s aim is to limit the effect of short-term fluctuations onthe Group result. In the longer term, however, sustained changes in exchange rates and interest rates will havean effect on the consolidated result.Royal Ten Cate Annual Report 2009 133

OTHER INFORMATIONThe effect of a general rise of one percentage point in the interest rate on the result before profit tax in 2009 isestimated at € 1.1 million (2008: – € 2.1 million).A general rise of one percentage point in the value of the euro against other currencies would have reduced theresult after profit tax by an expected € 0.2 million (2008: € 0.4 million).A general rise of one percentage point in the value of the euro against other currencies would have reduced theequity by approximately € 2.7 million (2008: € 3.1 million). The effect of a general interest rate rise of onepercentage point on the equity is estimated at € 2.7 million (2008: € 1.3 million).51.8 Estimate of fair valueDetails are given below of the main methods and assumptions used in estimating the fair value of financialinstruments.The fair value of foreign exchange forward contracts is estimated by discounting the difference between thecontractual and the current forward price for the residual term on the basis of the market interest rate.Bank statements are used to determine the fair value of interest rate swaps and interest rate caps. Thesestatements are inspected to ensure that they are reasonable with the aid of techniques based on discountedcash flows based on the conditions and terms of the contract and using market interest rates for a comparableinstrument as at the reporting date.The fair value of long-term debts is calculated on the basis of the discounted value of expected future cashflows from repayments and interest payments.The fair value of financial lease liabilities is estimated on the basis of the present value of future cash flows,discounted at the interest rate for similar lease agreements.In the case of trade debtors, other receivables, trade creditors and other short-term debts which fall due withinone year, the nominal value is deemed to reflect the fair value. The financial instruments valued on the basis offair value fall into category 2: no quoted market price in an active market, with the fair value being determinedindirectly.52 LIABILITIES NOT SHOWN IN THE BALANCE SHEETOperational lease as lesseePayments due under non-cancellable operational lease agreements are as follows:2009 2008Less than one year 6.2 5.4Between one and five years 13.8 14.5More than five years 9.3 8.629.3 28.5134Royal Ten Cate Annual Report 2009

The Group leases buildings, plant, vehicles and office equipment under operational leases. The leased buildingshave a term of ten to fifteen years. Lease payments are indexed annually. None of the lease agreements includeconditional lease payments. In principle the Group does not act as a lessor. The term of the other leaseagreements is a maximum of five years.53 INVESTMENT LIABILITIESIn 2009 the Group entered into contractual liabilities for the purchase of tangible fixed assets. The amount ofthe liabilities as at 31 December 2009, after deduction of advance payments already made during the financialyear, is € 5.3 million (2008: € 7.1 million).54 CONTINGENT LIABILITIESThe Group has received claims for damages arising from the conduct of business. With the exception of thosestated below, the claims are not deemed to be substantial and provisions have been recognised to the extentnecessary.A claim for damages has been made against Royal Ten Cate by United Fabrics NV, a company registered in theNetherlands Antilles (majority shareholder in Textielgroep Twenthe NV). The claim is based on an outsourcingand management agreement from 1998 and originally amounted to € 56 million. The claim in respect of theoutsourcing agreement has lapsed permanently as a result of a judgement by the Supreme Court in 2006. Theplaintiff was ordered to demonstrate the damage suffered in respect of the management agreement. TenCate isconfident with regard to the remainder of the proceedings.55 SUBSEQUENT EVENTSA commentary on events subsequent to the reporting date can be found on page 148.56 RELATED PARTIES56.1 Identity of related partiesRelated parties concern relationships between the Group and its operating companies, associated companiesand other participating interests, joint ventures, the TenCate pension fund and the executive and supervisorydirectors.Royal Ten Cate Annual Report 2009 135

OTHER INFORMATION56.2 Directors’ remunerationThe remuneration of the members of the Executive Board was as follows:L. de Vries J. Lock1J. Wegstapel2in thousands of euros 2009 2008 2009 2008 2009 2008Periodic remuneration 576 507 225 – 298 358Results-related pay forthe previous year 279 254 – – 86 85Pension costs 986 281 32 – 59 68Special remuneration – – – – 447 –1,841 1,042 257 – 890 5111 From 1 April 2009. Intended member of executive board.2 Up to and including 31 October 2009.In addition to the above pension costs, costs of € 110,000 were incurred in 2009 for repairs in respect of theEarly Retirement (Pre-pension and Life Course Savings) Act. As at 31 December 2009 Mr De Vries held 136,901shares in the Company (31 December 2008: 129,084 shares) and 330,000 options. Mr Lock held 259 shares inthe Company and 68,000 options. Messrs De Vries and Lock are participating in the Group’s share option plan.See also note 67.The remuneration of the members of the Supervisory Board was as follows:in euros2009 2008J.C.M. Hovers – Chairman 1, 2 (from 3 April 2008) 39,972 39,972P.P.A.I. Deiters – Vice-Chairman 1 30,492 30,492F.A. van Vught 2, * 25,008 25,008E. ten Cate 1, * 25,008 25,008A.W. Veenman – Chairman 1, 2 (to 3 April 2008) – 13,324C.W. Versteeg (to 31 March 2008) – 5,253120,480 139,0571 Member of the Financial Committee.2 Member of the combined Remuneration, Selection and Appointments Committee.*Chairman.The members of the Supervisory Board held no shares or option rights of Royal Ten Cate at the end of 2009.136Royal Ten Cate Annual Report 2009

56.3 Transactions with associated companies, other participating interests and joint venturesDuring the 2009 financial year, associated companies, other (non-consolidated) participating interests and jointventures purchased goods from the Group amounting to € 20.9 million (2008: € 25.7 million). As at 31 December2009 the outstanding trade receivables due to the Group from associated companies amounted to € 6.6 million(2008: € 13.4 million) and from joint ventures € 0.1 million (2008: € 1.3 million). The Group has less than€ 0.1 million of trade accounts payable to associated companies and joint ventures.Transactions with other associated companies and joint ventures take place on an objective, business basis.56.4 Operating companiesA list of (significant) subsidiaries and companies can be found inside the back cover of this report.57 ESTIMATES AND JUDGMENTS FORMED BY THE MANAGEMENTThe Executive Board has conducted discussions with the Financial Committee on the critical principles for thefinancial reporting and estimates, as well as the application of such principles and estimates.With regard to the pensions, the main actuarial assumptions are stated in note 49. With regard to guaranteesand claims, provisions have been formed whenever there is an actual liability or it is likely that an outflow offunds will be necessary. The result of this is stated in note 50.With regard to impairments in the case of loss-making companies, an examination has been carried out todetermine whether the realisable value of any cash generating unit was lower than the book value. This wasnot the case in 2009 and 2008.Royal Ten Cate Annual Report 2009 137

Company financial statements58 COMPANY PROFIT AND LOSS ACCOUNTin millions of euros note 2009 2008Result from participating interests after profit tax 60 29.1 65.6Other results after profit tax – 5.2 – 14.5NET INCOME 23.9 51.159 COMPANY BALANCE SHEETin millions of euros note 2009 2008FINANCIAL FIXED ASSETS 60Interests in operating companies 628.1 641.3Loans to operating companies 49.8 75.4Deferred profit tax assets 12.3 2.3Total fixed assets 690.2 719.0CURRENT ASSETSDue from operating companies 0.2 0.8Profit tax receivable – 1.5Other receivables 1.1 1.7Cash and cash equivalents 2.9 0.8Total current assets 4.2 4.8TOTAL ASSETS 694.4 723.8EQUITYShare capital 62 62.7 59.9Share premium reserve 64 46.9 49.7Legal reserve 65 – 11.1 – 5.9Other reserves 66 258.4 212.1Undistributed result 23.9 51.1380.8 366.9PROVISIONS 68 1.6 1.6LONG-TERM LIABILITIES 69 190.2 305.6SHORT-TERM LIABILITIES 70 121.8 49.7TOTAL EQUITY AND LIABILITIES 694.4 723.8138Royal Ten Cate Annual Report 2009

Notes to the company financial statementsGeneralAccounting principlesIn determining the accounting principles for its parent company financial statements, Royal Ten Cate uses theoption available under article 2.362 paragraph 8 of the Netherlands Civil Code. This means that the accountingprinciples for the parent company financial statements of Royal Ten Cate are the same as those applying to theconsolidated financial statements. Associated companies over which significant influence is exercised arevalued in accordance with the equity method. The consolidated financial statements have been prepared inaccordance with the standards set by the International Accounting Standards Board and adopted by theEuropean Union. A description of these standards can be found in the accounting policies applicable to theconsolidated financial statements.The share in the results of associated companies includes the share of Royal Ten Cate in the results of thesecompanies. Results from transactions involving a transfer of assets and liabilities between Royal Ten Cate andits participating interests and between individual participating interests are not included to the extent that theycan be considered to be unrealised.60 FINANCIAL FIXED ASSETSInterest inoperatingcompaniesLoans tooperatingcompaniesDeferred taxreceivablesTotalBalance as at 1 January 641.3 75.4 2.3 719.0Reclassification – – 3.1 3.1Capital contributions 3.6 – – 3.6Internal restructuring 2.6 – – 2.6Translation differences – 6.5 – 1.1 – – 7.6Loans granted – 17.4 – 17.4Repayment of loans – – 41.9 – – 41.9Result from associated companies 29.1 – – 29.1Dividend of associated companies – 42.0 – – – 42.0Change in deferred tax – – 6.9 6.9Balance as at 31 December 628.1 49.8 12.3 690.2Royal Ten Cate is at the head of the Group and has capital interests in the operating companies stated on thecover.61 EQUITYThe equity in the parent company financial statements corresponds to the equity in the consolidated financialstatements. A statement of changes in equity can be found on page 88.Royal Ten Cate Annual Report 2009 139

NOTES TO THE COMPANY FINANCIAL STATEMENTS62 CALLED AND PAID-UP CAPITAL 2009 2008Authorised share capital 200.0 200.0Of which not issued 137.3 140.162.7 59.963 ORDINARY SHARES 2009 2008The authorised share capital consists of:80,000,000 ordinary shares of € 2.50 200.0 200.0Issued share capitalBalance as at 1 January 2009 2008Ordinary shares 23,966,901 and 23,556,158 59.9 58.9Issued stock dividend 1,100,679 and 410,743 2.8 1.0Balance as at 31 December 62.7 59.964 SHARE PREMIUM RESERVE 2009 2008Balance as at 1 January 49.7 50.7Issued stock dividend – 2.8 – 1.0Balance as at 31 December 46.9 49.7The share premium reserve is available for distribution to shareholders.65 LEGAL RESERVE65.1 Retained earnings of associated companies 2009 2008Balance as at 1 January 2.7 1.3Added from appropriation of profit in respect of 2009 and 2008 – 1.4Transferred to other reserves through sale of joint venture – 2.7 –Balance as at 31 December – 2.7This reserve has been created for associated companies, other participating interests and joint ventures wherefree disposal of retained earnings is subject to restriction.140Royal Ten Cate Annual Report 2009

65,2 Translation differences 2009 2008Balance as at 1 January – 8.6 – 20.8Change – 6.7 12.2Balance as at 31 December – 15.3 – 8.665,3 Other legal reserves 2009 2008Balance as at 1 January – –Transfer from Other reserves 4.4 –Change in hedging reserve – 0.2 –Balance as at 31 December 4.2 –The other legal reserves concerned capitalised development costs, undistributable reserves of operatingcompanies and the hedging reserve.Balance of legal reserve as at 31 December – 11.1 – 5.966 OTHER RESERVES 2009 2008Balance as at 1 January 212.1 173.6Transferred to Other legal reserves – 4.4 –Added from 2008 and 2007 46.9 36.4Transferred from legal reserves through sale of joint venture 2.7 –Share and option schemes 1.2 1.7Issue of repurchased shares for share savings plan/option plan 0.1 0.4Rounding – 0.2 –Balance as at 31 December 258.4 212.167 OPTION PLANRoyal Ten Cate operates a stock option plan for the management, established by the Supervisory Board. Themaximum possible account has been taken of the recommendations of VNO-NCW and the Dutch Investors’Association (VEB). Those eligible for options are members of the Executive Board, the corporate and groupdirectors and a number of managers. The implementation of the share option plan is supervised by thecompliance officer.The options are granted on a conditional basis. During the vesting period, a performance condition must befulfilled. This condition is that the earnings per share over the past three, four or five years must have increasedon average by a percentage equal to inflation plus 3% per year. If this performance condition has been fulfilled,the options become unconditional and may be exercised, unless restrictions have been imposed by theNetherlands Authority for the Financial Markets.Royal Ten Cate Annual Report 2009 141

NOTES TO THE COMPANY FINANCIAL STATEMENTSThe total term of the options was extended from six years to ten years in 2009. In 2008, the exercise period wasextended from three years to five years. In 2009, the vesting period was extended from three years to amaximum of five years.The option exercise price is equivalent to the average price of the Royal Ten Cate share on Euronext Amsterdamnv on the five stock exchange trading days following publication of the annual figures. Each granted option rightlapses on termination of employment.In principle options amounting to approximately 1.5% of the total number of shares outstanding will be grantedin any one year. The exercise of options is subject to the restrictions laid down in the Securities TransactionsSupervision Act.67.1 Granting of options in 2010On 3 March 2010 the intention was to grant 300.000 conditional options at the average market price during thefive stock exchange trading days following publication of the annual results on 4 March 2010. The distribution isas follows:03-03-2010*03-03-2009**Members of the Executive Board 90,000 100,000Management and management support staff 210,000 176,250300,000 276,250*Provisional.**Final.67.2 Statement of movements in options of the Executive Board in 2009Issued onTerm untilNumber ofoptionsExercisepriceExercised/lapsedto 2008Exercisedin 2009Lapsedin 2009Outstanding31-12-2009Exercisable31-12-200925-02-2003 25-02-2011 40,000 6.18 40,000 – – – –25-02-2004 25-02-2012 40,000 10.29 – – – 40,000 40,00022-02-2005 22-02-2013 50,000 15.17 – – – 50,000 50,00001-03-2006 01-03-2014 60,000 23.63 – – – 60,000 60,00028-02-2007 28-02-2017 60,000 25.77 – – – 60,000 –05-03-2008 05-03-2018 92,000 22.50 – – 32,000 60,000 –03-03-2009 03-03-2019 100,000 11.70 – – – 100,000 –442,000 40,000 – 32,000 370,000 150,00003-03-2010 03-03-2020 90,000142Royal Ten Cate Annual Report 2009

The options granted to Mr Wegstapel (72,000) lapsed in 2009. Of these, 40,000 options are reserved foroutstanding performance, a decision on which will be taken in due course. In March 2010 it was intended togrant 60,000 options to Mr De Vries and 30,000 options to Mr Lock. In addition, Mr Lock has 68,000 options,dating from his previous contract of employment. As in previous years, these have been stated in 67.3.67.3 Statement of movements in options of management and management support staff in 2009Issued onTerm untilNumber ofoptionsExercisepriceExercised/lapsedto 2008Exercisedin 2009Lapsedin 2009Outstanding31-12-2009Exercisable31-12-200925-02-2003 25-02-2011 48,200 6.18 44,600 – – 3,600 3,60025-02-2004 25-02-2012 55,600 10.29 42,798 – – 12,802 12,80222-02-2005 22-02-2013 102,400 15.17 31,400 – – 71,000 71,00001-03-2006 01-03-2014 141,200 23.63 25,600 – 600 115,000 115,00028-02-2007 28-02-2017 145,000 25.77 9,000 – 2,000 134,000 –05-03-2008 05-03-2018 175,000 22.50 6,500 – 4,500 164,000 –03-03-2009 03-03-2019 176,250 11.70 – – 2,000 174,250 –843,650 159,898 – 9,100 674,652 202,40203-03-2010 03-03-2020 210,00067.4 Complete statement of movements in options in 2009Issued onTerm untilNumber ofoptionsExercisepriceExercised/lapsedto 2008Exercisedin 2009Lapsedin 2009Outstanding31-12-2009Exercisable31-12-200925-02-2003 25-02-2011 88,200 6.18 84,600 – – 3,600 3,60025-02-2004 25-02-2012 95,600 10.29 42,798 – – 52,802 52,80222-02-2005 22-02-2013 152,400 15.17 31,400 – – 121,000 121,00001-03-2006 01-03-2014 201,200 23.63 25,600 – 600 175,000 175,00028-02-2007 28-02-2017 205,000 25.77 9,000 – 2,000 194,000 –05-03-2008 05-03-2018 267,000 22.50 6,500 – 36,500 224,000 –03-03-2009 03-03-2019 276,250 11.70 – – 2,000 274,250 –1,285,650 199,898 – 41,100 1,044,652 352,40203-03-2010 03-03-2020 300,000No options were exercised in 2009.Royal Ten Cate Annual Report 2009 143

NOTES TO THE COMPANY FINANCIAL STATEMENTS67.5 Share savings planAll employees in the Netherlands have been given the possibility of participating in the share savings plan.The maximum amount per participant in 2009 was € 1,226 (2008: € 1,226).The following savings were accumulated through this plan:In 2009: 5,855 (2008: 3,827) sharesTo 2009 inclusive: 57,910 (2008: 52,055) sharesBalance at end of 2009: 23,853 (2008: 18,077) shares67.6 Repurchased sharesIn principle the company will repurchase shares in order to prevent any dilution of earnings per share caused bythe granting of options.number of shares2009 2008Number as at 1 January 527,247 555,874Issued in respect of options – – 24,800Issued in respect of share savings plan – 5,855 – 3,827Balance as at 31 December 521,392 527,24768 PROVISIONS 2009 2008Guarantees and claims 1.6 1.6Others – –Balance as at 31 December 1.6 1.6The term of the provisions exceeds one year.69 LONG-TERM LIABILITIES 2009 2008Syndicated loan 185.1 303.3Loans from operating companies 5.1 2.3Balance as at 31 December 190.2 305.6The conditions of the syndicated loan can be found in note 48 in the notes to the consolidated balance sheet.144Royal Ten Cate Annual Report 2009

70 SHORT-TERM LIABILITIES 2009 2008Cash loans, overdrafts 112.0 46.9Owed to consolidated operating companies 8.1 0.4Repayment of long-term debt 0.0 0.9Trade creditors and other payables 1.7 1.5Balance as at 31 December 121.8 49.771 AUDITOR’S FEESThe following fees of KPMG Accountants N.V. and the other entities affiliated to the KPMG network have beencharged to the Group, in accordance with article 382a Part 9 of Book 2 of the Netherlands Civil Code.Fees 2009 2008in thousands of eurosExamination of the financial statements 760 801Other audit assignments 286 280Other non-audit services 204 515Total 1,250 1,59672 LIABILITIES NOT SHOWN IN THE BALANCE SHEETThe company has issued a declaration of liability in accordance with article 403 of Book 2 of the NetherlandsCivil Code on behalf of its Dutch operating companies.The company forms a tax group together with the majority of the Dutch operating companies for corporation andsales tax. Each of these operating companies is severally liable for the tax payable by all the companies includedin the tax group.We also refer to the notes in the section 54 concerning contingent liabilities. Guarantees have also been issuedfor a number of foreign operating companies.Almelo, 3 March 2010Executive BoardL. de Vries, ChairmanJ. LockSupervisory BoardJ.C.M. Hovers, ChairmanP.P.A.I. Deiters, Vice-ChairmanF.A. van VughtE. ten CateRoyal Ten Cate Annual Report 2009 145

Other informationTo the General Meeting of Shareholders of Royal Ten CateAUDITOR’S REPORTReport on the financial statementsWe have audited the 2009 financial statements of Royal Ten Cate in Almelo as set out on pages 82 to 145 ofthis report. The financial statements consist of the consolidated financial statements and the company financialstatements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December2009, the consolidated statement of comprehensive income, the consolidated statement of changes in groupequity and the consolidated cash flow statement for 2009 and the notes, comprising a summary of significantaccounting policies and other explanatory notes. The company financial statements comprise the companybalance sheet as at 31 December 2009 and the company profit and loss account for the year then ended andthe notes.Management’s responsibilityManagement is responsible for the preparation and fair presentation of the financial statements in accordancewith International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 ofthe Netherlands Civil Code, and for the preparation of the management board report in accordance with Part 9of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaininginternal control relevant to the preparation and fair presentation of the financial statements that are free frommaterial misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable in the circumstances.Auditor’s responsibilityOur responsibility is to express an opinion on the financial statements based on our audit. We conducted ouraudit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance whether the financial statements are free from materialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by management, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.146Royal Ten Cate Annual Report 2009

Opinion with respect to the consolidated financial statementsIn our opinion, the consolidated financial statements give a true and fair view of the financial position of RoyalTen Cate as at 31 December 2009, and of its result and its cash flows for the year then ended in accordancewith International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 ofthe Netherlands Civil Code.Opinion with respect to the company financial statementsIn our opinion, the company financial statements give a true and fair view of the financial position of RoyalTen Cate as at 31 December 2009, and of its result for the year then ended in accordance with Part 9 of Book 2of the Netherlands Civil Code.Report on other legal requirementsPursuant to the legal requirement under article 2:393 paragraph 5 part f of the Netherlands Civil Code, wereport, to the extent of our competence, that the annual report is consistent with the financial statements asrequired by article 2:391 paragraph 4 of the Netherlands Civil Code.Enschede, 3 March 2010KPMG ACCOUNTANTS N.V.A.J.M. Oude Weernink RARoyal Ten Cate Annual Report 2009 147

OTHER INFORMATIONSUBSEQUENT EVENTSAcquisition of 51% interest in AML UKOn 9 February 2010 TenCate acquired 51% of the shares of the British armour company AML UK Ltd, based inSwindon (UK). This interest will be increased to 100% at the end of 2010. This acquisition gives TenCatecomplete access to the British market for lightweight composite armour solutions. These are used in vehicles,aircraft and ships. AML UK has annual revenues of approximately £ 10 million. AML UK will be included in theEuropean segment of the TenCate Advanced Armour group.PROVISIONS OF THE ARTICLES OF ASSOCIATION RELATING TO APPROPRIATION OF PROFIT(Article 27)GeneralThe authorised capital is divided into ordinary shares.Summary of the provisions of the articles of association1. Profit distributions may only take place to the extent that the equity of the Company exceeds the paid andcalled-up part of the issued capital plus the reserves which must be held by law.2. With the approval of the Supervisory Board, the Executive Board is authorised to determine the part of theprofit that will be reserved.3. The sum remaining from the profit after the reservation in accordance with paragraph 2 is at the disposal ofthe general meeting of shareholders.4. Shares held by the Company in its own capital are not taken into account in calculating the appropriation ofprofit.5. The dividend payable shall be made payable no later than 30 days after adoption of the financial statementsby the general meeting of shareholders. It shall be made payable only to the authorised persons in whosename the shares are held. Such payments shall discharge the Company.6. A shareholder’s claim for payment shall be time-barred after a period of five years has elapsed.148Royal Ten Cate Annual Report 2009

PROPOSED APPROPRIATION OF PROFITin millions of euros 2009 2008Net income 23.9 51.1Added to other reserves in accordance with article 27, paragraph 4 of the articles of association – 4.5 – 29.519.4 21.6Net addition to the legal reserves – 4.2 – 1.415.2 20.2Undistributed dividend balance from previous year 0.0 0.215.2 20.4Payment of € 0.60 and € 0.85 dividend to holders of ordinary shares in accordance with article 27paragraph 3 of the articles of association – 15.0 – 20.4Undistributed dividend balance at year end, which is transferred to the relevant account 0.2 0.0Royal Ten Cate Annual Report 2009 149

Ten-year summaryIn millions of euros, unless stated otherwiseFigures based on IFRS Figures based on Dutch GAAP2009 2008 2007 2006 2005 2004 2003 2002 2001 2000CONSOLIDATED STATEMENTOF COMPREHENSIVE INCOMERevenues 842.1 1,032.6 886.0 770.5 686.5 641.0 569.6 602.1 620.0 620.2Changes in inventories of finished productsand work in progress 29.8 – 18.0 – 11.7 – 4.8 0.5 – 12.6 – 2.6 – 2.4 6.0 – 3.2Raw materials and manufacturing supplies 391.6 562.0 463.6 402.2 353.8 332.1 280.7 289.9 297.2 294.4Work contracted out and other external expenses 63.1 60.7 54.9 34.7 29.3 29.5 28.8 36.4 37.9 36.3Personnel costs 173.0 190.3 178.3 171.2 161.6 159.7 142.9 151.3 159.1 160.2Other operating costs 109.2 111.5 98.8 94.0 83.5 78.5 71.5 79.0 78.9 74.7Depreciation and impairment 33.9 30.7 29.1 22.1 18.6 18.9 18.5 22.9 25.0 25.2EBITA 41.5 95.4 73.0 51.1 39.2 34.9 29.8 25.0 15.9 32.6Amortisation 8.8 11.6 3.6 1.0 0.7 0.3 1.1 1.1 1.0 –OPERATING RESULT (EBIT) 32.7 83.8 69.4 50.1 38.5 34.6 28.7 23.9 14.9 32.6Net financial expenses – 12.7 – 13.7 – 11.3 – 8.0 – 4.6 – 6 . 8 – 7 . 0 – 12.0 – 12.9 – 10.6RESULT BEFORE PROFIT TAX 20.0 70.1 58.1 42.1 33.9 27.8 21.7 11.9 2.0 22.0Profit tax – 5.6 – 19.1 – 11.9 – 11.4 – 11.5 – 9 . 2 – 5.3 1.7 0.7 – 3.3RESULT AFTER TAX BUT BEFORE RESULTFROM PARTICIPATING INTERESTS 14.4 51.0 46.2 30.7 22.4 18.6 16.4 13.6 2.7 18.7Share in net income of associated companies 8.7 – 0.3 45.4 8.1 5 . 1 3 . 9 5.4 3.5 5.5RESULT AFTER TAX 23.1 51.0 46.5 76.1 30.5 23.7 20.3 19.0 6.2 24.2Extraordinary items after tax – – – – – – – 12.3 – 12.0 –RESULT AFTER TAX 23.1 51.0 46.5 76.1 30.5 23.7 20.3 31.3 – 5.8 24.2Minority interests 0.8 0.1 – 0.1 – 0.1 – – 0.1 – – 0.2 0.1 –NET INCOME 23.9 51.1 46.4 76.0 30.5 23.6 20.3 31.1 – 5.7 24.2Dividend 15.0 20.4 18.8 16.2 12.5 10.2 8.5 7.7 2.4 9.8EBITA in % of revenues 4.9% 9.2% 8.2% 6.6% 5.7% 5.4% 5.2% 4.2% 2.6% 5.3%Return on net capital employed * 5.7% 13.4% 13.1% 14.4% 15.3% 13.5% 11.7% 9.7% 5.9% 13.6%* Prior to 2007, based on net capital employed at year-end.150Royal Ten Cate Annual Report 2009

In millions of euros, unless stated otherwiseFigures based on IFRS Figures based on Dutch GAAP2009 2008 2007 2006 2005 2004 2003 2002 2001 2000CONSOLIDATED BALANCE SHEETIntangible fixed assets 203.8 212.1 136.8 12.4 13.8 12.1 10.6 12.8 14.7 –Tangible fixed assets 214.7 247.4 218.1 165.8 161.4 118.8 118.1 130.5 154.3 151.5Financial fixed assets 45.3 25.1 19.8 18.3 35.2 19.9 11.4 9.2 5 . 6 7.5Total fixed assets 463.8 484.6 374.7 196.5 210.4 150.8 140.1 152.5 174.6 159.0Inventories 155.0 211.5 176.2 157.7 157.5 138.6 110.0 117.4 124.6 134.6Receivables 116.9 187.7 166.2 128.2 125.0 98.8 91.7 89.8 109.7 107.0Securities and cash 12.8 5.4 4.8 6.7 4.6 2 . 7 5 . 8 2 . 9 0 . 1 0.4Total current assets 284.7 404.6 347.2 292.6 287.1 240.1 207.5 210.1 234.4 242.0TOTAL ASSETS 748.5 889.2 721.9 489.1 497.5 390.9 347.6 362.6 409.0 401.0Equity * 380.8 366.9 310.1 238.7 181.8 146.5 162.0 152.9 129.5 140.6Minority interests 4.1 5.1 0.3 0.2 – 0 . 1 0 . 1 0 . 2 0 . 1 0.4Group equity 384.9 372.0 310.4 238.9 181.8 146.6 162.1 153.1 129.6 141.0Provisions 40.5 43.5 40.8 43.8 56.1 52.1 15.6 15.1 14.4 11.2Long-term debts 192.0 316.2 222.3 63.5 130.2 74.1 82.9 107.0 77.7 83.1Banks and short term loans 16.3 20.3 12.9 30.4 27.1 24.6 13.9 8.9 99.7 67.4Other short-term debts 114.8 137.2 135.5 112.5 102.3 93.5 73.1 78.5 87.6 98.3TOTAL LIABILITIES 748.5 889.2 721.9 489.1 497.5 390.9 347.6 362.6 409.0 401.0*With effect from 2003 equity before appropriation of profit.Group capital/total capital 51% 42% 43% 49% 37% 38% 47% 42% 32% 35%Acquisitions /(de)consolidations 18.9 88.1 175.1 – 63.0 40.8 29.2 0.3 1.4 23.6 14.8Investments in tangible and intangiblefixed assets 17.3 48.0 62.9 43.0 26.2 12.0 16.9 17.0 28.5 29.5Depreciation and amortisation 42.7 42.3 32.7 23.1 19.3 19.2 19.6 24.0 26.0 25.2Number of staff years at year-end 3,805 4,437 4,020 3,532 3,578 3,634 3,245 3,278 3,625 3,585Number of shares outstandingat year-end (x 1,000) 25,068 23,967 23,556 21,063 20,784 20,472 20,096 19,192 18,872 18,872Net earnings per € 2.50 share 0.97 2.18 2.04 3.66 1.48 1.17 1.03 1.63 – 0.31 1.30Dividend per share in euro 0.60 0.85 0.80 0.70 0.60 0.50 0.43 0.40 0.13 0.52Closing price in euro 18.43 16.05 21.27 23.21 21.50 13.55 9.02 6.25 6.50 8.23Royal Ten Cate Annual Report 2009 151

152 Royal Ten Cate Annual Report 2009

OPERATING COMPANIES, ASSOCIATEDCOMPANIES AND OTHER INTERESTSas at 31 December 2009ADVANCED TEXTILES & COMPOSITESGEOSYNTHETICS & GRASSTen Cate Advanced Textiles bvNijverdal, NetherlandsGroup activities of the TenCate Advanced Textiles group in the NetherlandsTen Cate Protect bvNijverdal, NetherlandsTen Cate Protective Fabrics USA inc Union City, Georgia, USAFabrics for professional wear and safety clothingTen Cate Technical Fabrics bvFabrics for outdoor applicationsNijverdal, NetherlandsTen Cate Advanced Spinning bvNijverdal, NetherlandsSpecialist yarns and fabrics for safety clothing and outdoor applicationsTen Cate – Union Protective Fabrics Asia ltd(50.65%)Fabrics for protective clothingBangkok, ThailandTen Cate Advanced Composites bvNijverdal, NetherlandsAdvanced composites for the aircraft industry and antiballistic applicationsTen Cate Advanced Armour S.A.S.Vienne, FranceTen Cate Advanced Armour Danmark A/S Vissenbjerg, DenmarkAdvanced ceramics and composites for antiballistic applicationsTen Cate Advanced Composites USA inc Morgan Hill, California, USAPhoenixx TPC incTaunton, Massachusetts, USAYLA incBenicia, California, USACCS Composites incBenicia, California, USAAdvanced composites for aerospace and industrial applicationsTen Cate Geosynthetics North America incTen Cate Geosynthetics Austria GmbHTen Cate Geosynthetics France S.A.S.Ten Cate Geosynthetics Netherlands bvTen Cate Geosynthetics Asia sdn bhdGeosynthetics and industrial fabricsTen Cate Geosynthetics sdn bhd (Malaysia)Ten Cate Geosynthetics (Thailand) ltdTen Cate Geosynthetics pte ltdTen Cate Geosynthetics Italia srlTen Cate Geosynthetics (UK) ltdTen Cate Geosynthetics slTen Cate Geosynthetics Schweiz AGTen Cate Deutschland GmbHTen Cate Geosynthetics Polska SpzooTen Cate Geosynthetics CZ sroTen Cate Geosynthetics RumaniaSales officesTen Cate Thiolon bvTen Cate Thiolon North America incTen Cate Thiolon Middle East (49%) 1)Synthetic turf components and systemsAtlanta, Georgia, USALinz, AustriaBezons, FranceAlmelo, NetherlandsKuala Lumpur, MalaysiaKuala Lumpur, MalaysiaBangkok, ThailandSingaporeLazzata, ItalyTelford, UKMadrid, SpainZurich, SwitzerlandDietzenbach, GermanyKrakow, PolandPrague, Czech RepublicBucharest, RomaniaNijverdal, NetherlandsDayton, Tennessee, USADubai, UAETen Cate Advanced Armor USA incAdvanced composites for vehicle armourNewark (Ohio), USATen Cate Thiobac bvBacking for synthetic turf systemsNijverdal, NetherlandsEdel Grass bv (50%)Genemuiden, NetherlandsMarketing and installation of synthetic turf systemsTen Cate Systems bvSynthetic turf systemsNijverdal, Netherlands1) Due to legislation in Dubai, 51% is held by a local partner. Royal Ten Cate has100% economic ownership.

OTHER ACTIVITIESNON-CONSOLIDATED COMPANIESXennia Technology ltd (79%)Letchworth, UKXenia Holland bvNijverdal, Netherlands(from 30 October 2009)Specialist inkjet technology for industrial applicationsTen Cate Enbi International bvTenCate Enbi group holding companyBeek, NetherlandsTen Cate Enbi GmbHOpladen, GermanyTen Cate Enbi KftRétság, HungaryTen Cate Enbi incShelbyville, Indiana, USATen Cate Enbi pte ltdSingaporeTen Cate Enbi Zhuhai co ltdZhuhai, ChinaTechnical rollers and components for printers, copiers, fax machines, postalsorting machines, ATMs, insulation and heating systemsGreenFields bv (32%)Genemuiden, NetherlandsMarketing organisation for synthetic turf systemsLandscape Solutions bv (20%)Synthetic turf for landscapingGoirle, NetherlandsTigerTurf NZ, ltd (49%)Auckland, New ZealandTigerTurf Australia pty ltd (49%)Campbell Field, AustraliaTigerTurf (UK) ltd (49%)Hartlebury, UKTigersports Americas inc (49%)Austin, Texas, USA(all from 31 March 2009)Marketing organisations for synthetic turf systemsTen Cate Assurantiën bvInsuranceTen Cate Nederland bvRoyal Ten Cate USA incTen Cate UK ltdTen Cate France S.A.S.Ten Cate Deutschland GmbHTen Cate Danmark A/SRoyal Ten Cate Pacific ltdRoyal Ten Cate China Holding ltdCountry holding companiesTen Cate Finance AGFinancing companyAlmelo, NetherlandsAlmelo, NetherlandsAtlanta, Georgia, USALondon, UKParis, FranceOpladen, GermanyCopenhagen, DenmarkHong Kong, ChinaHong Kong, ChinaSchaffhausen, SwitzerlandThe operating companies listed here are consolidated in the financial statements, with the exceptionof the companies shown as non-consolidated. Some interests of minor relevance to the overallpicture have been omitted from the list, in accordance with article 379, paragraph 3, Book 2of the Netherlands Civil Code. The companies are wholly owned unless stated otherwise.Royal Ten Cate Annual Report 2009

ColophonTextRoyal Ten CateTranslationVVH business translations,Utrecht, NetherlandsConcept and realisationC&F Report Amsterdam B.V.,Amsterdam, NetherlandsPhotographyHarry BroezeSheila BrooksMicah E. ClareFrans DekkerPaul HaverkortNorbert HekkinkMartin LucasMarcus J. QuartermanLachlan SimondGijs VersteegCourtesy © AirbusCourtesy © Boeing (Timothy Stake)Courtesy © Commando Dienstencentra NLCourtesy © ESA (A. Le Floc’h)Courtesy © KesselsGranger DesignWorksCourtesy © Rolls RoyceCourtesy © Stichting IJkdijkOperating companies, associated companies and other interests

Royal Ten Cateinvestor relations & corporate developmentF.R. Spaan, directorroyal@tencate.comStationsstraat 117607 GX Almelo, The NetherlandsP.O. Box 587600 GD Almelo, The NetherlandsTelephone +31 (0) 546 544 911Telefax +31 (0) 546 814 145www.tencate.com