TNO Annual Report 2011 · TNO ANNUAL REPORT 2011 2/98 ANNUAL REPORT. ... of Advisory Board of Science and Technology Policy ... Vice-chairman and Chief Financial Officer of NIBC Bank

TNO ANNUAL REPORT 2011

TNO ANNUAL REPORT 2011 2/98

ANNUAL REPORT 2011

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KEY FIGURES

COMPOSITION OF THE BOARDS

TNO PROFILE IN 2011

REPORT OF THE SUPERVISORY BOARD

REPORT OF THE BOARD OF MANAGEMENT

FINANCE AND OPERATIONS

EMPLOYEES MAKE THE DIFFERENCE

CORPORATE SOCIAL RESPONSIBILITY

INDEPENDENT ASSURANCE REPORT

REPORT OF THE COUNCIL FOR DEFENCE RESEARCH

CORPORATE GOVERNANCE 2011

CONSOLIDATED BALANCE SHEET

BALANCE SHEET OF THE TNO ORGANISATION

OTHER INFORMATION

GRI CHART

COLOPHON

WE CONNECT PEOPLE AND KNOWLEDGE


KEY FIGURES TNO: (TNO ORGANISATION INCLUDING GROUP COMPANIES) (in EUR x million)

2011 2010 2009

Knowledge as power

Within the themes 44,8 47,0 51,3

Across the themes (KAVOT) 27,0 27,3 27,7

Policy and application geared knowledge investments 117,1 120,5 123,9

Total income from government funding 188,9 194,8 202,9

Market income 388,1 369,0 364,8

Income 577.0 563,8 567,7

Net income 1) 489.4 484,2 486,8

Added value 2) 403,8 402,3 395,5

Operating result before extraordinary depreciations -0,1 2,8 -12,0

Extraordinary depreciations of tangible fixed assets - - -4,7

Operating result -0,1 2,8 -16,7

Net result 0,4 2,4 -14,2

Net result as % of market income 0.1% 0.7% -3.9%

Number of employees (effective average) 3,932 4,189 4,363

Number of employees (effective year end) 3,828 4,135 4,269

Net income per employee (effective average) in EUR x thousand 124,5 115,6 111,6

Added value per employee (effective average) in EUR x thousand 102,7 96,0 90,7

Personnel expenses per employee (effective average) in EUR x thousand 4) 94,7 87,0 85,5

Personnel expenses 372,3 364,3 373,1

Working capital 41,5 30,5 8,1

Equity 190,0 189,6 187,0

Cash flow 3) 38,0 43,6 26,3

Investments of TNO organisation 12,0 19,8 29,5

Investments of group companies 11,0 9,0 11,7

Current ratio 1,22 1,16 1,04

Solvency 0,42 0,40 0,41

1) Net income = income – direct project costs

2) Added value = net income + other operating income – other operating expenses

3) Cash flow = result + depreciations + disinvestments + mutation in equalisation account for investment funds

4) Increase in 2011 the result of: change in composition of personnel, autonomous salary rises, rise in pension

premium and higher temporary staffing costs


TNO (TNO ORGANISATION INCL. GROUP COMPANIES) (in EUR x million)

TNO ORGANISATION 2011 2010 2009

Knowledge as power

Within the themes 44,8 47,0 51,3

Across the themes (KAVOT) 27,0 27,3 27,7

Policy and application geared knowledge investments 117,1 120,5 123,9

Total income from government funding 188,9 194,8 202,9

Market income 289,2 297,2 291,7

Income 478,1 492,0 494,6

Operating result before extraordinary depreciations -0,2 4,1 -10,1

Extraordinary depreciations of tangible fixed assets - - -4,7

Operating result -0,2 4,1 -14,8

Result (excl. result of group companies) 1.8 5,6 -12,7

Operating result TNO themes/expertise areas 4,5 11,5 -1,8

Net result TNO themes/expertise areas 5,1 11,8 -0,5

Number of employees (effective average) 3,158 3,571 3,743

Number of employees (effective year end) 3,063 3,512 3,660

Term of work in progress and debtors in months (TNO core areas) 1,7 1,3 1,5

Solvency 0,46 0,44 0,44

Group companies

Income 110,7 77,8 77,3

Operating result 0,1 -1,3 -1,9

Net result -1,4 -3,2 -1,5

Number of employees (effective average) 774 618 620

Number of employees (effective year end) 765 623 609

KERNGEGEVENS


Professor J.M. BensingSINCE 01-09-2008Professor of Clinical and Health Psychology at Utrecht, Honorary Research Fellow of the Netherlands Institute for Health Services Research (NIVEL).Various executive and supervisory positions including Member of the Social Sciences Council of the Royal Netherlands Academy of Arts and Sciences (KNAW), Member of the Holland Society of Sciences, Member of the Health Council (Presidium member), Vice-Chairman of the Health Research Council (RGO), Vice-chairman of the Supervisory Board of Erasmus University Rotterdam, Vice-chairman of the Supervisory Board of Jeroen Bosch Hospital, Member of the Supervisory Board of the Consumer Association, Member of the Supervisory Board for the National Initiative Brain & Cognition (NIHC), Member of the broad framework committee ‘Prevention’ ZonMw, Chairman of sub-programme 3, Screening and Preventive interventions (ZonMw Prevention programme), Member of the RAAK Pro assessment committee, Knowledge Development Foundation HBO (SKO), Member of the working group ‘Health Research at Universities of Applied Science’, RGO.

I.G.C. Faber MBASINCE 01-10-2009Director of Faber Halbertsma Group.Various executive and supervisory positions including Member of Advisory Board of Science and Technology Policy (AWT).Chairman of FB Ned (Association of amiliy companies), Member of the Supervisory Board of Utrecht Exhibition Centre, Member of the Supervisory Board of Rova (waste processing), Zwolle, Member of the board of the National Register of Supervisory Directors and Supervisors

H.W. BroedersSINCE 01-07-2006Executive Committee member of Capgemini S.A. Various executive and supervisory positions including Non-executive director Forrester Research, Vice-chairman of Supervisory Board of Utrecht Exhibition Centre N.V.Member of Executive Board of VNO-NCW, Member of AB Stichting Toekomstbeeld der Techniek, Member of SER (Social Economic Council)

Dr. E. VeltkampSINCE 01-05-2002Former Senior Vice President of R&D Unilever N.V. and member of Unilever Foods Executive, delegated supervisory director and board chairman of Enza seeds BV, various executive and supervisory positions.

C. van Dijkhuizen, MASINCE 01-11-2009Vice-chairman and Chief Financial Officer of NIBC Bank N.V.Various executive and supervisory positions including Member of the Supervisory Board of Museum Meermanno, Cairman of the government committee for Export, import and Investment guarantees.

S.J. Vlaar, MA, secretarySINCE 01-09-2008

TNO SUPERVISORY BOARD AS OF 1 APRIL 2011

Dr. C.A. Linse, chairmanSINCE 01-03-2011Chairman of the Supervisory Board of Mn Services NV, Super-visory Director of AKZO Nobel Nederland BV, Supervisory Direc-tor of MRC Global Inc. Houston, Board member of the STW Technology Association.

Lady I.H.J. Vanden BergheSINCE 01-05-2000Administrator general of the National geographical Institute.Various board positions including: President of Eurogreographics, first delegated Belgian representative in EuroSDR-OEEPE, founding member of EuroSDR and member of the Management Board, Chairman of the council of Administrators General of the semi-government organisations, Chairman of the inter semi-governmental internship committee, visiting professor at the KU Leuven, board member of VITO (Flemish Institute for Technological Research).

COMPOSITION OF BOARDS


Vice-Admiral (retired) J.W. Kelder

SINCE 01-01-2009Various executive and supervisory positions, including:Board member of the Indonesian Remembrance Centre Bronbeek, Non-executive director of the Association of the Dutch Historical Ship Museum, Board member of the Netherlands Industries for Defence and Security (NIDV), Board member of the Dutch Maritime Network Foundation (NML), Member of the Life-Saving Council of Clipper Stad Amsterdam, Non-executive Director of the Hague Centre for Strategic Studies (HCSS),Chairman of the Board of Maritime Knowledge Centre Foundation(MKC).

TNO Board of Management AS OF 1 APRIL 2011

J.H.J. Mengelers, MSc, chairman

SINCE 01-04-2008Various executive and supervisory positions, including: Chairman of the Executive Board of EARTO, Supervisory Board member of RAI Holding, Executive Board member of Joanneum Research Forschungsgesellschaft mbH, Innovation Council member (Ministry of I&M), Member of the Executive Board De Maatschappij, Executive Committee member of Point-One, Board member of SIA (Stichting Innovatie Alliantie),Board member of SKO (Stichting Kennisontwikkeling HBO),Board member of STT (Stichting Toekomstbeeld der Techniek).

Dr C.M. Hooymans

SINCE: 1-10-2002Various executive and supervisory positions, including:Deputy Crown-appointed member of the Social Economic Council (SER), Supervisory Board member of Royal KPN N.V.,Non-executive Director of Rabobank Vallei-en-Rijn, Member of the Advisory Council for Science and Technology (AWT) of the ministries of OCW and E,L & I, Supervisory Board member of Catholic University Foundation, Advisory board of Meridian Institute Washington, USA, Member of the Board of the Kind William I Foundation for the selection of the biannual entrepreneur award.


TNO Council for Defence ResearchPER 15 MAART 2012

Retired Vice Admiral J.W. (Jan Willem) Kelder, chairman SINCE 01-01-2009 TNO Board of Management member charged with the Defence portfolio

Mr F.H. (Frits) Herman de GrootSINCE 01-07-2011Ministry of Defence, Deputy Secretary-General

Dr S.J.G. (Sebastian) ReynSINCE 04-05-2010Ministry of Defence, Knowledge and Strategy Policy Advisor

Rear Admiral R.P. (Rob) BauerSINCE 05-03-2011Ministry of Defence, Interim Director of Personnel Policy

Mr. P.J. (Jan) de JongSINCE 10-05-2010Ministry of Defence, Interim Director of Personnel Policy

Ms F. (Frances) Diepstraten, LLMSINCE 01-08-2011Ministry of Defence, Director of Information and Organisation

P.J. (Jelle) Keuning, MScSINCE 01-04-2006Ministry of Defence, Deputy Head of Defence Research and Development

M.J.M. (Rini) Goos, MScSINCE 01-01-2011Ministry of E, L & I, Supervisor director for Military Product


OBSERVER/EXPERT

Ms. R.W.C. Clabbers. MScSINCE 01-09-2010Ministry of Security and Justice, Director of National Security

Dr M.P.I. MandersSINCE 01-03-2009TNO, Defence, Security and Safety Manager Strategy and Planning

Major General (retired) A.C.J. (Lex) Besselink, MScSINCE 01-12-2009Chairman of TNO Strategic Advisory Council for Defence, Safety and Security, Director of Dutch Institute World Class Maintenance, etc.

Major General Marine Corps (retired) F.E. (Frank) van KappenSINCE 01-12-2006Member of the Upper House, NATO advisor, HCSS advisor, etc.

Drs. C. van VlietSINCE 31-05-2011Member of TNO Strategy Advisory Council for the Defence, Safety and Security theme, Director of the Netherlands Industry for Defence and Security Association (NIDV).



In 2011 the total consolidated income rose by 1.3 million euros to 577 million euros (see chart 1), a third of which - 189 million euros - was government funding for the purpose of developing new knowledge. Of this, 27 million euros was available for ‘knowledge as cross-theme capacity’ or knowledge development not directly linked to demand from society or government. The government-wide distribution of knowledge development via demand-driven programmes is shown in chart 2.

Market income of 388 million euros includes 294 million euros from contract assignments in themes and expertise areas: this knowledge application is based on the distinctive position built up by the themes via the aforementioned demand-driven research (knowledge development). Chart 3 reveals the distribution across Dutch industry (38 per cent), International (38 per cent) and Dutch government (24 per cent).

Of the total market income 111 million euros relate to the knowledge exploited by the 45 or so companies within TNO Companies B.V. This is the consolidated income of the group companies in which TNO still has a holding of more than 50 per cent. This knowledge exploitation receives no government funding and is therefore incorporated in a separate private limited liability structure (B.V.).These companies tend to emerge as ‘spin-offs’ or ‘spin-outs’ from the activities within TNO.

The total international income of the themes, expertise areas and TNO Companies B.V. rose in 2011 to 146 million euros.

TNO PROFILE IN 2011

KNOWLEDGE APPLICATION Contract assignments € 277 mAfter internal income

KNOWLEDGE DEVELOPMENT Government funding € 189 m

KNOWLEDGE EXPLOITATION TNO Group companies € 111 m

1. CONSOLIDATED INCOME TNO 2011 [€ 577 million]

incl. income from TNO Group companies Consolidated Group companies [>50% holding] 2011 = € 111 million

€ 577 m

3. CONSOLIDATED MARKET INCOME 2011 [€ million]

0 50 100 150

Dutch Industry

20112010

2010

20112010

DutchGovernment

International

€ 148 m€ 144 m

€ 146 m€ 128 m

€ 94 m€ 97 m

2011

2. TNO GOVERNMENT FUNDING 2011 [€ 189 million]

Knowledge as power within the themes [KAV] Knowledge as power across the themes [KAVOT]Policy and application geared knowledge investments [BTK]

ELI € 106 m

incl. € 27 m KAVOT

I&M € 21 m

incl. € 15 m DINO

BZK € 3 m

VWS € 7 m

SZW € 10 m

DEF € 42 mln

€ 189 m

*Data en Informatie Nederlandse Ondergrond


Innovation clustering in the Netherlands under the Ministry of Economic Affairs, Agriculture and Innovation (EL&I), the inter-mediary for TNO, demanded and received particular attention in 2011. The introduction of the Top Sectors policy and the way in which TNO can contribute to this was a subject of regular discussion in 2011 between the Supervisory Board and the Board of Management. TNO contributes constructively to this development and plays a role in the relevant societal themes. In 2011 we looked closely at how we could optimally align with the Top Sectors to maximise the impact targeted in the TNO strategy. In 2012 this will be translated into tangible research projects. The Board is very pleased with the cooperation between TNO and the Ministry of EL&I in this respect.

The Supervisory Board took great interest in 2011 in seeing how the organisational changes proposed in 2010 turned out. It was a development that certainly had a significant influence on operations and results in the first quarter. The difficult financial start of the year and the measures that had to be taken as a result were discussed in depth by the two boards. These measures bore fruit during the course of the year, with 2011 – despite being below budget – still managing to close with a positive result.

In 2011 the situation concerning TNO Companies BV (TB) required extra attention. The Supervisory Board in its meeting considered the strategy of TB, the governance model and the financial situation of the limited companies. One of the Super-visory Board meetings took place at the premises of the Holland

Metrology company where the Board, in addition to its discus-sions about the direction needed to get the result back on track, witnessed the unicity of the Euroloop facility.

The Supervisory Board was regularly informed about the research being done at TNO and how it was taking place, in part by meeting on site. Holst Centre was an inspiring example of this in 2011. The Board was able to see for itself how this open innovation model, supported by government, research and industry, arrives at practicable innovative solutions. It is quite understandable that Holst Centre is regarded as an example of a successful innovation model, and so the continuity of this cooperation model is an item to attend to in the coming period. Individual members of the board also paid a range of visits to TNO research centres.

The Supervisory Board was unchanged in 2011. The Super-visory Board attaches value to making the acquaintance of new directors who report directly to the Board of Management. This occurred for all new appointments in 2011. Ms Leemhuis-Stout, who had given dedicated service to TNO for ten years as chair of the Supervisory Board, was succeeded by the undersigned. TNO and the Supervisory Board are exceptionally grateful for her administratively keen and steadfast commitment to TNO. The appointment of Mr Broeders was also extended in 2011. The Board is very pleased that he will be committing his knowledge and expertise to TNO for a further five-year period.

In the Supervisory Board in 2011 the committee structure was

ESTABLISHED IN 1932 TO HELP THE NETHERLANDS THROUGH THE CRISIS AT THAT TIME, TNO WAS AN INDEPENDENT ORGANISATION IN WHICH APPLIED RESEARCH WAS CLUSTERED AND IN WHICH INVESTMENTS WERE MADE TO CREATE FUTURE INNOVATION. THE PRINCIPLE THEN IS NO DIFFERENT NOW, AS RECENT ANALYSES OF THE EFFECTS OF PARTICIPATION IN SPECIFIC RESEARCH PROGRAMMES REVEAL – EACH EURO INVESTED IN TNO CAN BE WORTH 7 TO 10 EUROS FOR INDUSTRY.



refined. The appointment of an Audit Committee gives the Super-visory Board the possibility to strengthen its duty to supervise the finance and risk management of TNO. Also the Selection and Appointments Committee merged with the Remuneration Committee to form a new committee within which HR aspects can be elaborated for the Supervisory Board.

In this first year as chairperson, I have been able to see at close quarters the key role played by TNO for government, industry and society. In the intensive introductory talks I met inspired and capable people who are passionate about the field in which they achieve practicable innovations. This provides a nourishing base to continue fulfilling and strengthening this vital role in the coming years in the face of so many changes in the economy, in government and in society.

Delft, 21 March 2012On behalf of the TNO Supervisory Board,Dr. C.A. Linse, chairperson



INSPIRING CONNECTIONSConnecting with partners, stakeholders and employees is essential to being able to innovate with success. Our seven themes cover a particularly wide terrain: from the smallest structures on a computer chip to dike monitoring from space and the health of the Dutch population. TNO is involved in several key partnerships, like the research organisations within the European Association of Research and Technology Organisations (EARTO) and in TO2 – a partnership with ECN, NLR, Deltares, DLO, Marin and the research institutes of Wageningen University. Here the parties work together in research programmes and approaches to the top sectors.

INNOVATIVE POLICY A major connection tool this year was our link with the nine economic top sectors. The government has decided to ask industrial leading lights from the various sectors to take the lead in arriving at market-focused visions. The intrinsic side is covered by the knowledge world. TNO’s role is both intrinsic – as a supplier of knowledge – and procedural as supervisor of the triangular debate between government, research and industry. We expressly took on the role at the beginning of 2011, ensuring short communication lines with the Ministry of Economic Affairs, Agriculture and Innovation. In addition to the nine economic top sectors, TNO also focused on giving a place in the new innovation policy to the five societal themes: ICT, Sustainable Environment, Public Safety, Defence, and Work and Health.

We believe that there are more opportunities in the field of innovation in the Netherlands. External surveys reveal that the Netherlands is only an adequate achiever if you consider innovation practice; too much knowledge lies unused on the shelf. The regulations imposed by the government are a particular hindrance. A better climate for business to locate and operate along with powerful incentives for knowledge and innovation are crucial if the innovation potential that is present is to have a chance to flourish. The Netherlands is a small country whose most important product is knowledge. For TNO, too, we see a key assignment lying here: to constantly forge connections among parties so that relevant solutions are produced that are full of impact and solve the major societal challenges and improve the competitiveness of the Netherlands.

SUCCESSFUL IMPACTAmong the most important contacts made by TNO are relation-ships with customers. Two-thirds of our income is in the competitive arena; the rest comes from government funding for demand-driven programmes. The feedback from customers via independent audits is very important for us – and we are really pleased that TNO scores an average of 4.24 (on a scale of 1 to 5). SMEs are a special area of focus for us. TNO has a facilitating role for SMEs and sometimes even an orchestrating role, as was evident from our successful annual SBIR (small business innovation research) event when very promising innovations were offered to SMEs who would be able to develop them further

TNO: SURE-FOOTED IN A TRANSITIONAL WORLD. 2011 WAS A VERY TURBULENT AND, FOR TNO, AN EXCEPTIONALLY IMPORTANT YEAR: THE FIRST YEAR OF THE NEW STRATEGIC PERIOD 2011-2014, BUT ESPECIALLY THE YEAR IN WHICH WE MANAGED TO CONVERT THE OPPORTUNITY TO SUBSTANTIATE OUR MISSION OF ‘INNOVATION FOR LIFE’. WE DO THIS TOGETHER WITH DIFFERENT PARTIES AND WE DO IT WITH FOCUS. FOCUS THAT COMES FROM SEVEN KEY SOCIETAL THEMES THAT ARE GEARED TO HAVING IMPACT ON SOCIETY. THOSE ARE OUR DRIVERS. WE LOOK BACK TO ILLUSTRATE WHAT TNO, AS A MAJOR INNOVATION ORGANISATION THE IN NETHERLANDS, ACHIEVED IN 2011.

REPORT OF THE BOARDOF MANAGEMENT


passionate about their work and come up with brilliant innovations, who make the difference through cooperation with other parties and form the core of our organisation. To boost the content of our breeding pond we have refined our recruitment policy. In addition to intrinsic qualities we select candidates explicitly in terms of personal effectiveness, commitment, leadership, project management and communicative skills. This enables TNO to apply the best mix of talent per project. And that is something we are proud of!

In 2011 we also decided to give our Principal and Senior Scientists a more central role in shaping knowledge programmes, involving Principal Scientists more in drafting priorities for applied knowledge development in collaboration with Senior Scientists, intermediate and junior colleagues.

GLOBAL PLAYING FIELDInternationally TNO has spread its wings. The opening of an office on Aruba saw us take a first step to exploiting the Latin-American market. From this office TNO is contributing to making Aruba sustainable by establishing a living lab and undertaking R&D projects with local companies. We are also connecting with business partners in Brazil whose economy is surging forward; in a short time the country has become a key player in biofuels, a knowledge domain in which there is much to gain for both of us from each other. The office opened in Qatar in 2011 will act as a link between the expertise of TNO in the Netherlands and cooperation partners in the Middle East. This initially concerns cooperation in themes like Energy, Transport and Mobility, Industrial Innovation and Information Technology. Our positive experiences in Qatar reveal that there is a demand for TNO services in the Middle East. It is because we are able to respond to local market needs that markets for TNO emerge. In 2012 we will be directing our vizier to China because we are convinced of the opportunities that lie there. TNO is developing a strategy to assess these opportunities so that our innovations can be successful there, too, and that we can develop knowledge domains further with the Chinese.

PRIDEIt is with a due sense of pride that we look back on what TNO achieved in 2011. The new strategy put in place at the beginning of 2011 is bearing fruit: successful impact for and with partners. Financially speaking, there is also a sense of satisfaction. Despite the poor global economic situation and drastic organisational change, we posted a positive result of € 0.4 million and incre-ased income by € 13.2 million.

We are most grateful to everyone who has contributed, from both inside and outside the organisation. Four people are worthy of special mention: Marijn Vlaming, Paul Poodt, Gertjan Burghouts and Edsger Smits, four young researchers that competed for the title ‘Excellent researcher of TNO’. The drive, skill and passion they showed when highlighting their research during ‘The World of TNO Keeps Turning’ in November 2011 filled us and the other TNO employees present with a feeling of immense pride. If they represent the future of TNO, then we are well placed.

If we look to 2012, the eightieth year of TNO, then it is a year in which the proof of our competence must materialise in terms of adaptability, positioning, a strong offensive, and national and international excellence. Because that is how we will achieve innovations that

into a market-ripe proposition with help from TNO. Each TNO theme has an SME manager who is responsible for converting innovation opportunities for SMEs. In this way we actively lay connections between innovation and SMEs, which leads to market successes.

EXCELLENT KNOWLEDGE BASETNO has a particularly broad technology and knowledge portfolio, whether this concerns healthy food or space research calibration. TNO is constantly updating its portfolio and keeps it pioneering. What knowledge do we need to achieve impact and what activities can we wind down? One knowledge domain where we expect a lot is solar energy. The combination of energy generation and utilisation will become more commonplace when this enables the devices to become smaller and more energy-efficient. But once work in a specific knowledge domain becomes routine, we ask ourselves whether its might be better to continue such an activity as a business. This has happened in recent years with success via the private limited liability company, TNO Companies BV.

TALENTED EMPLOYEESTNO is a breeding pond of talent. The are many people with a TNO background that play a significant role in innovation in the Netherlands. Exceptionally inspiring for us are the TNO employees who are


TNO ANNUAL REPORT 2011 13/9813/98

have impact on the major societal and economic challenges!

Results achieved by TNO in the past are very much a guarantee of success in the future.

TNO | Innovation for Life

TNO Board of Management

Jan MengelersTini HooymansJan Willem Kelder



INCOMEThe income of TNO – the Organisation TNO including Group companies – was 13.2 million euros higher than in 2010 at 577.0 million euros. The income of the Organisation TNO fell by 13.9 million euros to 478.1 million euros, with net income down by 24.2 million euros to 394.7 million euros on 2010. Income from group companies within the 100% holding TNO Companies rose from 77.8 million euros in 2010 to 110.7 million euros in 2011, a rise largely attributable to the new group companies Triskelion, Homologations and Proquares.The income from government funding was 188.9 million euros, 5.9 million lower than in 2010 (194.8 million euros). This fall came about by budget reductions implemented by the government.TNO’s market income rose by 19.1 million euros to 388.1 million (2010: 369.0 million) and thus represented 67% of the total income.Income from home (industry and government) rose slightly on 2010 by 0.5 million euros to 242.0 million while income from abroad, including TNO Group companies, rose by 14.6% to 146.1 million euros.

OPERATING COSTSPersonnel costs rose by 8.0 million euros, chiefly due to higher costs of pensions of 4.3 million euros caused by an increased contribution from 17% to 20%, higher costs of temporary staffing of 3.8 million euros and higher personnel provisions of 1.3 million euros. The other operating costs increased by 4.7

million euros, largely because of higher miscellaneous costs of 5.0 million euros.Depreciations fell by 3.6 million euros on 2010.

LIQUID ASSETS At the end of 2011 the balance of liquid assets stood at 140.1 million euros, an increase of 7.4 million euros on year end 2010. This rise can be attributed to an incoming cash flow from operational activities of 25.3 million euros against an outgoing cash flow of 11.8 million euro along with a cash flow from financing activities of 6.1 million euros.

THE RESULT WAS 0.4 MILLION EUROS AND THUS 1.7 MILLION EUROS BELOW TARGET FOR 2011 AND DOWN ON 2010 (2.4 MILLION EUROS). THIS IS ATTRIBUTABLE IN PART TO HIGHER PERSONNEL COSTS OF 8.0 MILLION AND HIGHER MISCELLANEOUS OPERATIONAL COSTS OF 4.7 MILLION EUROS. AGAINST THIS WAS HIGHER NET INCOME OF 5.2 MILLION EUROS AND HIGHER MISCELLANEOUS OPERATING INCOME OF 1.0 MILLION EUROS.THE BUSINESS PLAN FOR 2012 TARGETS A SLIGHTLY HIGHER RESULT OF 2.2 MILLION.

FINANCE AND OPERATIONS


OCCUPATIONAL HEALTH AND SAFETY (ARBO)

2011 saw the introduction of TNO’s own management model principle whereby the manager and the employee are jointly responsible for preventing absence from work where possible so as to deal as effectively as possible with such absence. Where necessary or preferred, the company doctor or other arbo expert can provide assistance. HR staff (the HR business partners and the absence team) also support the managers. During 2011 and throughout 2012 these own management models are being evaluated. In 2011 a digital program to support the manager in exercising the absence policy was developed. A simple program on the PC can enable the manager to register absence within his department, select a particular action and record it in the

digital dossier once performed. The program will be introduced in 2012. These measures are aimed at reducing or stabilising as much as possible absence due to illness, the length and frequency of the absence. The rate of absence due to illness in 2011 was 3.79%.In 2011 negotiations took place for a new collective health insurance contract with Zilveren Kruis Achmea (ZKA), with it due to be signed in 2012. By participating in this contract, TNO employees profit from the collective discount on basic and supplementary health insurance. This agreement means that employees insured by ZKA and who have a work-related disorder or where there is a threat of protracted absence due to sickness, can make use of a number of selected (health)care providers without the employee or TNO being liable for costs. The employee is referred in consultation with the company doctor.

TNO IS AN ORGANISATION OF PROFESSIONALS. TO ACHIEVE THE NECESSARY IMPACT, TNO MAKES HIGH DEMANDS OF ITS EMPLOYEES IN TERMS OF THEIR EXPERTISE, CREATIVITY AND CUSTOMER FOCUS, AMONG OTHER THINGS. THE ENVIRONMENT TNO OFFERS IS FULL OF PROJECT CHALLENGES AND POSSIBILITIES TO COMBINE QUALITIES AND DISCIPLINES. A PERIODIC EMPLOYEE COMMITMENT SURVEY (ECS) MEASURES THE EXTENT TO WHICH TNO HAS SUCCEEDED IN CONNECTING THE AMBITIONS OF THE ORGANISATION AND THOSE OF THE EMPLOYEES. IN PREPARING FOR THE THEMATICALLY-DRIVEN PROJECT ORGANISATION THAT TOOK EFFECT AT THE BEGINNING OF 2011, AN ECS WAS CARRIED OUT. TNO EMPLOYEES INDICATED THEIR SATISFACTION ABOUT THEIR OWN WORK AND IMMEDIATE WORKING ENVIRONMENT. POINTS OF IMPROVEMENT INCLUDED TRANSPARENCY IN PROCESSES AND SOLVING THE TEETHING PROBLEMS THAT ARE PART OF WORKING IN A NEW KIND OF ORGANISATION. THE RESULTS WERE EXTENSIVELY DISCUSSED AT ALL LEVELS OF THE ORGANISATION AND LED TO IMPROVEMENT ITEMS FOR ALL TNO ENTITIES. THE ECS WILL BE HELD AGAIN IN MID 2012 IN ORDER TO GAIN MORE INSIGHT INTO THE EFFECTS OF THE ORGANISATIONAL CHANGE.

Number of employees 31-12-2011 31-12-2010 31-12-2009

Existing 3,403 3,776 4,061

Long-term 3,063 3,379 3,590

Fixed-term 340 397 471



TERMS AND CONDITIONS OF EMPLOYMENT

In 2011 TNO and the Central Works Council had still not reached agreement on the terms and conditions of employment for 2012 and beyond. Talks are ongoing. The intention and expectation is to reach agreement in the first quarter of 2012.The possibility for additional pension contributions takes effect from 1 January 2012. This enables employees to more easily save for extra pension and thus be more flexible in choosing when to retire.In 2011 a new extensive a-la-carte terms and conditions of employment programme was established and it allows employees to make a choice throughout the year rather than once a year, which was the case with the old programme. The choices are also sent to HR Services digitally, which saves on a lot in terms of paper, signatures and time.

EDUCATION AND DEVELOPMENT

To realise the TNO strategy, the ongoing and specific development of TNO employees is a vital instrument, certainlywhere it concerns the aim of being a breeding pond and springboard for talent. Innovation, strategic cooperation and an

increasing emphasis on customer and market focus – to name but a couple of examples – require the knowledge, skills and competencies of TNO employees to be up to date. TNO aims to have a distinctive level of knowledge; it’s an ambitious target. The basis for this is an excellent technology position and excellence in the way every TNO employee acts. The education and development of personnel is part of the solution to realising excellence and thus impact.A focal point of the TNO strategy 2011-2014 is to be a breeding pond and springboard for talent. It is not about quick-fix excellent performance but more about ensuring that that excellence is made available to society in the longer term. The education and development needed for this concerns not only intrinsic and job-related training but development interventions geared to employability, career development and mobility. This is evident in what TNO offers in the form of career-related interventions whereby the internal Career Development Centre plays a central role. In 2011 there were around 160 career interviews, half of which led to a referral to an external party for supplementary career services (e.g., supervision or training). There is also considerable attention for Personal Effectiveness (PE), a standard component of the introduction programme for new employees and of the Talent Development Programme (93 participants in 2011). In

addition, corporate development has various specific PE training or courses where PE is an important component.Personnel development within TNO gains real tangibility during the interview between employee and manager. In these RDC (Result, Development and Coaching) interviews agreements are made specifically for the employee in line with the individual, team and organisation targets. Development interviews may, for example, focus on extending the qualities and talents, of the further development of competencies that are still lacking or are poorly developed (like communication or customer focus) or professional know-ledge.An important aid in making development agreements is the TNO development lines that provide a practicable tool for all TNO employees to be able to identify the development possibilities that exist for them at TNO, the specific aspects and the requirements in terms of behaviour, person, professional competence, results and experience. The suitability, level and growth of individual employees are set against these aspects. The development lines are expressed in terms of core pro-files and associated competencies, professional competence and contribution to the result. Each employee knows his or her core profile; this is a recurring element in assessment, target-setting and development interviews.The development lines were updated and

adjusted to the new TNO organisation in 2011. Education and development activities within TNO are geared to be able to manoeuvre within and between the development lines. Examples of development programmes include: Quality in the Spotlight for the development of intermediate scientists (applied technologies) in terms of visibility, profiling and presentation; Advising with Impact geared to the effective role performance of intermediate consultants; and IPMA training aimed at boosting the level of project management within TNO. This is just a small cross-section of the education. In addition, there is a corporate development range that offers even more internal possibilities for TNO employees. It can roughly be categorised as:

— Training for special target groups (new employees, starters (Talent Development Programme), impats, potentials, etc.)

— Competence and technical training/education (like time management, interview techniques, creativity, etc.)

— Personal effectiveness — Career-related training

Training is, however, just a limited part of the development options. In the development programmes referred to earlier in almost every case there is a mix of development types whereby training – with a view to effectiveness – is supplemented with intervision, master-



the Board of Management led a workshop and participated in the main debate. In 2012 genSET2 is implementing the recommendations at universities and institutes. TNO will again be making a contribution to this.TNO also cooperated in the annual Women Matter survey by McKinsey. The results will be published in 2012.

FEMALE NETWORKThe Diversity steering group has encouraged the establishment of a female network within TNO. Initial steps taken in 2011 elaborate on the Female Network that already existed within the former core areas. A stimulating morning organised with a group of around 30 graduate women clearly revealed a sense of usefulness, need and pleasure of having a female network. In 2012 this energy will be translated into a recommendation to the steering group about the Diversity priorities, and activities will be organised.

ACTIONS IN 2012On the basis of the recommendations of the Talent to the Top charter, genSET and TNO’s own observations, a plan of action was detailed for Q3/4 of 2011 and for 2012. This plan was developed from the defined by the Talent to the Top charter as prerequisites for diversity policy and these serve as a foundation for further elaboration at TNO.

and 2nd echelons. At the end of 2011 our percentage was 31% (+2.5% against 2010) women in the top and 16% (+1.4% against 2010) in the sub-top, comprising research managers and business line managers. Developments in the area of diversity within TNO focus on this sub-top. Throughout TNO the share of women is 30% (-3% against 2010), and within the potentials 36%.

GENSETIn 2010 a European project, genSET, began. genSET, a project subsidised by the European Commission’s 7th Framework Programme under Science & Society, comprises a consortium of partners with support from a network of scientific institutes and organisations. genSET creates a forum for dialogue between science leaders, gender experts, stakeholders and other scientific decision-makers. Its aim is to break down the barriers faced by women in partici-pating in science and to make scientific issues, options and vale system more gender sensitive. TNO is taking part in the de Science Leaders Panel project and is the project’s patron. The European Science Foundation (ESF), which is funding genSET, organised a major European symposium in the autumn of 2011 to highlight the recommendations. TNO actively contributed to the recommendations and to the symposium. One member of

terms of gender, country of origin, etc. Various studies reveal that mixed teams are, for instance, more innovative and create more ‘value’ for the customer, and they also suggest that a diversity policy and specific action are needed to get female talent to the top. In view of the current lop-sidedness in this respect, TNO has decided to invest in actions that will boost this female share.In recent years various initiatives have been taken to boost the female share and cultural diversity within TNO. In the autumn of 2010 a Diversity steering group was established, led by the Board of Management, to promote and monitor diversity within TNO. In 2011 the focus was laid on boosting the share of women in (the top of) the organisation and to ac-tively draft a plan that contains details of this ambition. TNO has committed to two (external) initiatives in the field of diversity to support the diversity policy.

TALENT TO THE TOP CHARTERIn 2008 TNO signed the ‘Talent to the Top’ charter. Talent to the Top was founded in May 2007 to prompt the government, industry and women themselves to structurally encourage more female talent to get to the top. TNO has committed itself to its own target of having 25% women in the top and sub-top of TNO. The Talent to the Top Committee considers the top to be: the Supervisory Board, Board of Management and Directors of the 1st

apprentice learning, learning on-the-job (practical assignments) and/or action learning.Coaching as a form of development is worth a separate mention. This form of development is in demand within TNO; it makes an impression at individual level and offers customisation to the coachee. In 2010 and 2011 a selection programme provided the basis for a pool of 25 high quality coaches to be assembled. These coaches can be deployed across TNO to coach the competencies and personal development of colleagues. In the second half of 2011 the first internal coaching programmes were completed and initial results reveal a high degree of satisfaction among the coachees. We see a rising number of coaching applications and a good matching of coaches and coachees. The coach pool meets several times a year in the framework of professionalisation with a view to safeguarding and ensuring continuity of the quality of the coaching. In addition to the internal coaching pool within TNO, external coaches are also used. A carefully selected pool of eight external coaches is active at executive level. We are currently undergoing our first experiences of this.

DIVERSITY

TNO remains convinced of the added value of diversity in teams – diversity in



YOUNG PEOPLE ARE THE FUTURE

In 2011 TNO encouraged youngsters to take an interest in research and technology. These are all potential future TNO employees and TNO people generally like to pass on their knowledge to youngsters. An example is the Summer Camp for youngsters with behavioural problems, where passion for work was central and where TNO gave workshops on passion for food research. One school in Delft spend an afternoon exploring sound in the TNO sound lab. TNO also made a number of contributions to children´s TV shows like Klokhuis and news programmes for children.Since 2010 TNO has been involved in The Eerst De Klas (First The Class) trainee programme that aims to produce better teachers and leaders. It offers participants the chance to gain experience in education and industry. In 2011 the trainees followed a master-class and project management training at TNO. In addition, two trainees, under the supervision of TNO, began on the development of an intervention to retain enthusiasm and combat burn-out at a high-school establishment. In 2012 a second business case will be carried out at TNO along with a masterclass. The Eerst de Klas program is an initiative of the Ministry of Education, Culture and Science.

CODES OF CONDUCT

TNO has long applied a code of conduct that is the guideline for the behaviour of TNO employees. In addition, TNO also has a whistle-blower regulation. Seven core values are contained in the code of conduct – they are aligned with the strategy and desired organisational development. These seven core values are: honest, independent, professional, socially committed, customer and impact driven, innovative, connecting and inspiring. In 2012 the TNO code of conduct will be brought into line with the renewed core values and updated where appropriate in the context of modified internal and external policy and/or regulations. The core values are discussed during the introduction course for new TNO employees. 196 employees followed such a course in 2011.



The strategic plan 2011-2014 focuses on ‘innovating with impact’ in society. Issues such as sustainability, health and scarcity are vital elements. Sustainability is not a separate theme but acts as an important driver through all the themes. A discussion held with stakeholders on the basis of the materiality principle led to the major research areas undertaken by TNO being placed in a materiality matrix. Several aspects of TNO’s research are therefore detailed further below.

For instance, defence research within the Defence, Safety and Security theme is specifically geared to the safety and protection of the Dutch armed forces as well as to issues of public safety. The research programme for the Ministry of Defence is the result of close collaboration between the Ministry and TNO (see the Council for Defence Research section for more details).

As for research on nanotechnology, TNO focuses on the development of new materials and technologies at nanoscale, which generates innovations like stronger materials and new separation technologies (based on nanotags) that promote the reuse of materials. Given the potential health hazards, though, TNO also concentrates on the safety of innovative substances and technologies in the working situation through the development of methods to detect risks early and quickly.

Activities relating to the search for new fossil energy sources tend to be subject to much debate, in contrast to the energy-saving issue. Discussions centring on the production of shale gas illustrate that TNO is keen to facilitate dialogue with society and support arguments with facts so that there is a good foundation for a discussion between supporters and opponents.

Policy regarding research that involves animal testing is specifically geared to reduction and research into alternative methods (see later in this section for more details).

In order to develop agenda-making visions of key societal issues, TNO has entered into a partnership, Strategy & Change, with The Hague Centre for Strategic Studies (HCSS).

TNO has appointed a CSR officer to be responsible for the internal CSR policy. The CSR officer is guided by a steering committee comprising the director of Finance and Facilities (portfolio holder for CSR) and two directors. At least once a year the TNO Board of Management discusses the results achieved and CSR policy adjustments with the steering committee. In October the Board of Management signed the Corporate Social Responsibility policy statement that describes how TNO deals with people, planet and profit in the areas of ethics, working conditions, health and safety, and the environment. As in previous annual reviews, we have opted to use the GRI framework for sustainability reporting (explained towards the end of this annual review).

THE TNO ENVIRONMENTAL FOOTPRINT

To gain insight into our environmental impact, an environmental footprint was established for the first time at the beginning of 2008. The environmental policy is geared to improving this footprint for which there are four focal spearheads: energy and buildings, mobility, sustainable purchasing, and energy and ICT. Each spearhead has a significant influence of the environmental footprint of TNO. Moreover, the measures to

SUSTAINABILITY PLAYS A KEY ROLE IN THE CORE BUSINESS OF TNO. INTERNALLY, TOO, WITH A VIEW TO MAN AND THE ENVIRONMENT. SEVERAL ASPECTS OF RESEARCH PERFORMED BY TNO ARE EXAMINED IN MORE DETAIL AS WELL AS THE ENVIRONMENTAL FOOTPRINT, THE INTERNAL CSR POLICY AND THE DEVELOPMENT COOPERATION PROGRAMME ‘INNOVATION FOR DEVELOPMENT’.



boost the environmental performance of TNO can be embedded in the organisation by spearhead as much as possible. Sustainable purchasing, for instance, is used by the purchasing organisation while energy saving through ICT is employed by the ICT services of TNO. Within these spearheads TNO allows plenty of scope for initiatives from within the organisation. This has created considerable support for CSR within the organisation. Attracting employees to CSR is important since together we can make the difference. In 2011 we continued to take initiatives to improve TNO’s environmental footprint in such areas and so, due in part to this, the TNO annual review, including the CSR report, is digital.

The internal spearheads are often linked to research performed by TNO. This is described per topic.

ENVIRONMENTAL FOOTPRINT 2011In 2011 an environmental footprint of TNO was made for the entire production chain of energy, transport and purchased products and services. The method used for this is similar to that used to deter-mine ‘embodied energy’ or a scope 3 CO

2

footprint, but is broader since several environmental effects are incorporated such as the greenhouse gas effect, acidification, overfertilisation and toxicity. The environmental impact of energy,

commuting and business travel is determined according to the ‘physical’ consumption: traveller kilometres, kWh electricity, m3 natural gas, etc. The environmental impact of the other categories is determined by the purchase value and mean environmental impact per euro. The approach and method for determining the environmental footprint is described in the background document ‘Notes to the Environmental Footprint 2011’, at www.tno.nl/mvo.

The footprint is divided into a number of categories. For instance, the category ‘Lab and desk research’ contains all the environmental impact caused by the production of paper, computers, copiers, printers as well as the use of internet and telephony. Different environmental ef-fects that occur due to emissions in pro-duction, travel or energy generation are added up using shadow prices (based on emission reduction costs). Shadow prices are avoidance costs: costs of measures to ensure that emissions do not exceed the (statutory) threshold value. By calculating the shadow costs for these different environmental effects, the component fields can be compared and added up to a sum.

Energy use in the TNO buildings contributes around a fifth of the total environmental footprint of TNO. The environmental impact of the production of goods and

services purchased by TNO is about three-quarters of the environmental footprint. The residual share is due to business travel and commuting. The uncertainty in the calculation of the en-vironmental profiles has an influence on the relative contribution of the categories1.

EEN OVERZICHT: MILIEUKENTALLEN— Energy: In 2011 TNO used around 44

million kWh of electricity and 5.1 million

m3 gas, an increase of 1.6 million kWh of electricity and fall of 0.1 million m3 gas than the previous year. The gas

consumption of TNO resulted in 13.4 kiloton of direct CO2 emission in

2011. Since 2010 TNO has purchased green energy that has a lower

environmental footprint compared to energy generated from fossil fuels.

The environmental benefit of green energy is not incorporated in the TNO environmental footprint to prevent any

FIGURE 1 ENVIRONMENTAL FOOTPRINT 2011

1

3

2

4

1 Energy and buildings2 Mobility3 Purchased products4 ICT and energy

OTHER

LAB- AND DESKRESEARCH

ENERGY

TRANSPORT

Electricity

Gas

Heating

Business travel (car)

Business travel (public transport)

Business travel (aviation)

Commuting

Transport services

Office equipment and ICT

Water and waste

Lab equipment

Hiring research and other personnel

Training

Printing and relations

Hiring auxiliary services

Buildings

1 The uncertainty in the environmental profiles for energy and travel is about a factor of 1.5. The uncertainty in the environmental profiles for goods and services purchased is more and is estimated at a factor of 2.5. To ensure that changes over time are properly monitored, the environmental profiles per unit of product or service is the same for all years.



is on the agenda for the coming years along with key performance indicators (KPI’s) designed to reduce energy use. Also in 2011 a start was made on TNO-wide energy monitoring, due to become available real-time at the start of 2012 via a webportal for all TNO buildings. The energy consumption at each TNO site will thus become visible and this will boost awareness of the need to save energy. In commencing the lease of office buildings particular attention is focused on energy consumption, with a minimum C label target. The use of geothermal heat pump (WKO) installations is part of the redevelopment vision of the premises.The Real Estate Management department participated with representatives from HR and ICT in the Streaming Impact programme concerning the New Way of

air from the labs in Zeist, research into broad application of LED lighting and better roof insulation). Following on from the pilot begun in 2010 at the Soesterberg site, 2011 saw the start of a pilot at the Zeist site to use LED light fittings in the offices and labs. The results of these pilots will be evaluated in 2012 so that a plan can be drawn up to replace the light fittings in the relevant TNO buildings in the coming years. In major maintenance and overhaul at the sites, replacement of the fixed technical installations makes as much use as possible of energy-efficient systems.

The Real Estate Management department brought daily maintenance of buildings throughout the country within a perfor-mance contract as of 1 December 2011. As part of the contract energy saving

environmental impact, hence the relative rise.

WORKING ON A SMALLER FOOTPRINTNaturally we want to reduce our environmental footprint, which is why we have established improvement measures for the different spearheads. Below is a review of measures taken within the four spearheads. We also relate the sustainability activities to the core business of TNO. For the coming year it will be important to define more tangible goals so that we can more specifically monitor the effect of the measures we have taken.

One of the new areas that has received more attention during the past year at TNO is the New Way of Working and a working group has been established to come up with a policy on this. The New Way of Working has a direct influence on three of the four spearheads, namely our buildings, mobility and ICT.

ENERGY AND BUILDINGSIn 2010 an improvement plan was drafter to boost the energy performance of TNO’s (owned) premises. In 2011 part of that improvement programme was implemented (use of smart meters, start of research/advice on heat recapture from ventilation

(hasty) interpretation that TNO uses no electricity.

— Transport: business travel in 2011 amounted to 13.5 million car

kilometres (2010: 14 million kilometres) and around 23 million air kilometres 2) (2010: 22 million kilometres), with car commuting 20.4 million kilometres. In

total the transport of goods and employees in 2011 amounted to 9 per

cent of the TNO environmental footprint.— Paper: in 2011 TNO used 76 tonnes of

paper, a fall of 24% on 2010. — The energy use, transport and purchased

products and services in 2011 represent an ‘embodied’ energy use of 3.2 PJ and 189,000 tonnes of greenhouse gas emissions measured in CO

2 equivalents.

These quantities are in line with 2010 quantities.

— The environmental footprint of TNO rose only slightly in 2011 compared with 2010, namely 0.5 per cent. In addition to the changes in transport and energy use stated earlier, in 2011 some 1% more was spent on lab and desk research requirements and on auxiliary services.

— The environmental impact of depends in part on our activities. Relatively speaking, per euro of income, the environmental impact of TNO in 2011

rose compared with 2010. The fall in income was not compensated by a lower

0

5

10

15

20

25

2010 2009 2011

ENERGY TRANSPORT LAB- AND DESKRESEARCH OTHER TOTAL

0,00

0,01

0,02

0,03

0,04

0,05

SHADOW COSTS PER EURO INCOMESHADOW COSTS [EURO m.]

FIGURE 2 THE ABSOLUTE AND RELATIVE ENVIRONMENTAL FOOTPRINT

2011 2010 2009

2 To calculate air kilometres use is made of the mean flight kilometres from the Netherlands to every continent.



made of the ICT trends that can make a tangible contribution to the MYA (multi-year agreement) of the ICT sector (NB: an MYA is a contract/covenant agreed in a sector whereby the sector undertakes to become 2% more energy-efficient each year). TNO is also studying (for AgentschapNL and SURF) when a cloud solution can be considered green: what features does the architecture of such a system have, what requirements have to be set?

SUSTAINABLE MOBILITYTNO wants to reduce the environmental impact of transport and mobility by favourably influencing the amount and type of travel of its employees. Employees can use the service bicycles to shuttle between TNO sites and NS business cards to use public transport for business travel. Different sites participated in the summer in the bicycle initiatives ‘2 on 5’ (cyclists association) or ‘by bike works better’ (Haaglanden region). At several sites electric bicycles were made available to give TNO employees the opportunity to become acquainted with them. It is expected that the new IT workplace will help reduce business travel kilometres.

TNO is party to the mobility covenant ‘Accessible Haaglanden, Accessible Utrecht’ and the ‘Smart Work, Smart Travel’ platform. The aim of the platform

measures that have led to energy savings. The number of servers has been reduced and where possible physical servers replaced by virtual servers. Also the new data-storage systems are much more energy-efficient than the old ones, with the effect that electricity consumption in the MER has fallen from 500 Ampere to 360 Ampere, a saving of 28%. Because less cooling capacity is needed at the same time, actual savings are even higher. Partly as a result of the consolidation to the MER, the number of servers and data-storage systems at various sites has been reduced as has electricity con-sumption locally, though there are no figures available for the latter.

The introduction of the new IT workplace within TNO enables every employee to access the TNO network irrespective of time and place. It is therefore expected that people will more often and more easily work from home or at a TNO site closer to home. Moreover, data can be accessed from everywhere so there is no longer a need to print documents for meetings. Also the increasing use of tablets reduces the need for paper. In 2012 use of tablets will be further facilitated.

TNO contributes to sustainable ICT in the outside worldTNO’s day-to-day research also focuses on this theme, with an inventory being

climate-resistant urban and infrastructure design.

ENERGY AND ICTIn 2011 movable cupboards were located at almost every TNO site for the purpose of videoconferencing. These are highly-accessible low-end systems that use the Microsoft Livemeeting protocol. In 2012 we will be working to extend videoconferencing possibilities.In the autumn of 2011 Information Services (IS) began to introduce the new IT workplace for all employees, an operation due to be completed in the spring of 2012. This will reduce the number of computers, more energy-efficient models will be introduced, the computer set-ups will ensure lower consumption and many people will switch from a desktop to a laptop computer, which consume less energy. We now have a contract with Viafrica to dispose of outdated PCs and other hardware. TNO will make the hardware that TNO no longer uses available to Viafrica after the data-carriers (hard disks) have been removed. Viafrica will then cash in on this hardware and invest the income in societal knowledge-development projects in Africa. More information about the allocation of the funds can be found at www.viafrica.org.

In the Main Equipment Room (MER) Information Services has also taken

Working that has an impact not only on how we work but also on buildings. If the New Way of Working is introduced at TNO, the buildings can in the future be used more efficiently and flexibly (less susceptible to the dynamics of the TNO organisation) and thus more sustainably.

TNO is committed to energy saving externally in the built environment Energy in the Built Environment is not only an issue in internal TNO operations but it also plays an important role in the research performed by TNO, especially research in the themes Built Environ-ment, Energy and Industrial Innovation (see strategic plan 2011-2014). This concerns both technological as well as policy and social innovation. TNO also develops energy-efficient buildings and installations at building and neighbour-hood level. Another focal area is efficient, affordable solar cells.In terms of chain innovation, in 2011 TNO took part in projects whereby chains in the building and construction industry ‘lighten the burden’ of customers in the area of energy saving (housing and the small business market). SMEs are thus supported in the areas of knowledge, concept development, business strategy and chain cooperation. Furthermore, it involves developing concepts in cooperation with external parties such as major municipalities and the state for



agro and industrial infrastructures will see regions in developing countries especially being hit by scarcity of income, food and other basic necessities of life. The challenge we are posed in the 21st century is to strengthen strategies for sustainable growth and livelihood.Sustainable innovation geared to development is the key to rising to this challenge. The TNO ‘Innovation for Development’ programme develops solutions that are in tune with the market and promote the economy and social prosperity of 4 billion people with the lowest incomes (less than $ 2 per day) – always in cooperation with local and European public and private partners. This approach enables the utilisation of the enormous economic and social potential of these 4 million people. It may be a high-tech development such as the biogas socket in Bangladesh or the low-tech innovation like the hand tool in Ghana; solutions that are affordable, adequate and encourage enterprise.The programme comprises more than 20 projects, mainly in Africa and Asia, with a focus on four areas— Food and agriculture— Renewable energy and climate— ICT— HealthTNO contributes its expertise in technical and social innovations, the development of business models and transition management. Our projects are listed at

hard disks recycled)— Natural gas (sustainability programme

incorporated, execution during 2012)— Leadership Development programme

(accommodations with active CSR policy, Greenkey hallmark)

— Christmas hampers (sustainable/- biological contents, donation per hamper to “ICCO” organisation)In 2011 the sustainable purchasing measures were evaluated. This revealed that after the successful integration of sustainable purchasing in the procedures and processes, quantification of the results in the longer term still require attention. This will gain further shape in 2012, with sustainability results structurally incorporated in the utilisation and perpetuation of purchasing results in the longer term.

INNOVATION FOR DEVELOPMENT (I4D)How can you run a household on less than 2 dollars a day? How are we going to deal with an increasing demand of 70% for food in the next forty years? These are questions that concern the populations of Madagascar, Ghana and many other developing nations every day. TNO’s response is to develop sustainable innovations. These are relevant because by 2040 our world population will have risen to nine billion people, which will increase consumption and results in the scarcity of natural materials. Climate change, wastage of material and a lack of

In 2010 TNO began the ‘Dashboard New Way of Working’ research project with partners KPN, Philips, Rabobank, Telewerkforum and Veldhoen + Company. The aim of this project is to develop a measuring instrument to ascertain the integral effects of the New Way of Working. In the Dashboard a relationship is laid between specific HNW measures like working at home, the use of smart-phones and management through trust on the one hand, and corporate targets like productivity, work-home balance and CO

2 emissions on the other. By making

the effects of the New Way of Working evident, TNO wants to bring the success-ful propagation of the New Way of Working in the Netherlands that bit closer.

SUSTAINABLE PURCHASINGSustainable purchasing is fully integrated in all TNO-wide purchase procedures and processes. Sustainability criteria (established on the basis of the recommendation criteria of Agentschap.NL) are an important aspect in drafting functional and technical specifications. In the selection and allocation criteria sustainability is prominent in many cases.A few examples of contracts realised in 2011:— Workplaces (energy label EPEAT Gold /

Energy Star 5, more than 50% recyclable, income from depreciated

IT workplace hardware to the Viafrica foundation, with more than 80% of

is to reduce traffic jams by organising work and travelling differently. The goal of this platform is for 1 million people to work and travel smartly in 2012 (doubling to 2 million by 2015). TNO plays an active role in the B50 (the 50 figurehead companies involved in this platform). TNO provides its knowledge and expertise, applying the New Way of Working and videoconferencing options to achieve this goal. We participate in the ‘Working En Route’ initiative in which participants make use of each other’s office facilities.

In the coming year we will actively inform employees about what they can do and the impact of their choice as well as structurally investigate and encourage use of bicycles at two sites. TNO is thereby a pilot in a research project with the NISB (Netherlands Institute for Sport and Exercise).

TNO invests in a sustainable mobile NetherlandsIn its research and consultancy, TNO investigates the possibilities of making traffic more reliable, clean, safe and quiet. In the strategic plan 2011-2014 commitment was expressed to help halve emissions in the next 15 years by performing research in the field of clean vehicle technology and intelligent transport systems, supporting the implementation of new technology and advice on legislation and policy.



better prediction for humans in respect of the safety and efficacy of food, medicines and other chemicals. For some research questions (such as food quality and the safety of medicines and drugs) animal testing is necessary but at the same time TNO is committed to refining, reducing and replacing (3Rs) animal testing, making this a strategic priority in the strategic period 2011-2014. TNO also wants to respond to the demand from society for more transparency and openness about animal testing in dialogue with stakehol¬ders and through participation in the public debate on animal testing.TNO’s contribution to reducing the number and distress of animal testing is evident in our goal of having developed at least 10 new innovative 3R methods by 2014, with at least six being used by third parties and one accepted by the regulatory bodies. To achieve this target we invest in the development of better prediction for humans that can be broadly implemented and accepted. In 2011 the development of some 10 alternatives were started and a number, such as the TNO Intestinal Model (TIM), is also being used by third parties. In addition to our goals concerning the development of alternatives for animal testing, our animal testing policy covers the execution of animal testing and care for the lab animals as well as communication about animal testing in general. In order to make these points visible and verifiable,

daily work of the employee. The art is to appeal to people in such a way that awareness is translated into action. CSR is therefore a fixed component of the Net-werken@TNO programme for new employees to stimulate awareness and discussion about the subject. The CSR ambassadors (the CSR network) met twice to help shape the direction and to contribute internally to tangible action. On the Sustainability Day breakfast sessions were organised to inspire TNO employees to consciously think about what he or she can contribute. Among other things, this led to choosing to use the Treemagotchi@work tool to involve TNO employees more widely in CSR. In 2011 a start was made on implementing this online tool to prompt, in a nice easy way, to undertake major and minor deeds that contribute to making TNO more sustainable. During 2012 the tool will be rolled out within TNO.There will also be more focus in 2012 on using the knowledge of TNO employees for the organisation itself in such a way that we also learn from it and develop that knowledge further. Some of this knowledge development will involve sustainable building, encouraging the use of bicycles, sustainable mobility, influencing behaviour via ICT and healthy food.

ANIMAL TESTING AND ALTERNATIVESTNO wants to contribute to the societal, scientific and economic need for the

minerals. In the Netherlands insects are bred but not eaten. In Africa they are eaten but not yet bred. TNO merges these worlds in order to accelerate the innovation in both worlds. Smallholders become producers, distributors and consumers in a new value chain. Breeding insects encourages local enterprise and improves access to nutritious food.

ICT business models for the Base of the Pyramid Information and communication technology (ICT) has great potential to offer the very poorest essential services like education, healthcare, agro or financial services. Together with partners TNO has studied almost 300 existing ICT initiatives in developing countries. A success factor appears to be a strong customer focus, entrepreneurship and good cooperation capacities. The 15 most innovative market-oriented business models proved that it is possible to scale up and revealed that ICT can leverage improvements in the living standard of the Base of the Pyramid. The results of this inspiring study were launched on 14 September in the Nieuwspoort international press centre in The Hague.

INVOLVING EMPLOYEES IN CSREveryone at TNO can contribute to CSR; this is joint effort by all. The aspect must be negotiable and fit in with the

www.tno.nl/I4D.

All of our projects are embedded in the core business since boosting the economy and the quality of society as a whole is one of the driving forces behind TNO. For industrialised or developing countries. In 2011 the budget was some 2.5 million euros, 1 million of which TNO invested, and the rest by market partners. The coming year will see TNO invest the same amount and the total budget is expected to be 3 million euros. Eighty TNO employees are involved (part-time) in the Innovation for Development pro-gramme. They are all inspired by being able to help alleviate global problems such as poverty, they learn about complex system innovations and are well positioned in the international arena. The 25 project managers have been specially trained to innovate in developing countries with a view to the culture, ethics and safety. If they travel to developing countries, they are first trained in acting safely and ethically. Below two projects are described in brief.

Flying FoodThe rising demand for food for a growing world population requires innovation and sustainable solutions. We are working with partners to breed crickets in Kenya for human food. Insects have a high nutritional value and are a source of not only protein but also amino acids and

MAATSCHAPPELIJK VERANTWOORD ONDERNEMEN


that have contributed to acceptance by the OECD in 2011. TNO encourages customers and regulatory authorities to implement this directive.Another example in the field of communication is the online publication of the first TNO animal testing annual review 2010, which offers transparency about the animal testing carried out by TNO and the work we do to develop and use alternatives. The animal testing an-nual review will also be published online.

More information about the content of our animal testing policy, the animal testing annual review and the alternatives we develop can be found at www.dierproeven.tno.nl.

it is important that there is a level of steering, hence the establishment of an internal steering group in 2011.There are several spearheads that TNO wants to give extra attention to in the coming year, and for each spearhead a plan has been drawn up to ensure quality.— Effective and demand-oriented breeding

and use of lab animals— More substantiation of internal and

external communication— Stimulating and professionalising inter-

vision, education and refresher courses— Excelling in the quality of the animal

testing set-up and reporting— Gaining accreditation from the Association for the Assessment and

Accreditation of Laboratory Animal Care (AAALAC)

A tangible example of excelling in the quality of the animal testing set-up, also an example of our aim as described in the 3Rs proposition, is our contribution to a new OECD (Organisation for Economic Cooperation and Development) directive concerning reproduction toxicology, which describes a new study structure for the ‘Extended first generation reproduction toxicity test’ that provides more information about the harmfulness of substances on the progeny and which can enable a 40% reduction in the number of animals needed. Between 2007 and 2010 TNO has undertaken studies with the RIVM



The Board of Management of the Netherlands Organisation for applied scientific research TNO (hereafter: TNO) has asked us to provide Assurance concerning the information in the sections ‘Corporate Social Responsibility’ and ‘Employees make the difference’ (hereafter: the CSR sections) of the Annual Review 2011. The Board of Management is responsible for drafting the SCR sections, including selecting the intrinsic topics covered. Our responsibility is to deliver an assurance report for the CSR sections.

SCOPE OF OUR ASSIGNMENTOur assignment was geared to obtaining a limited measure of assurance that the information contained in the CSR sections, in all those aspects of material import, is correctly represented. The work performed in obtaining a limited measure of assurance focused on establishing the plausibility of information and thus does not have the same degree of depth that obtaining a reasonable measure of assurance would entail. We provide no assurance about the feasibility of the goals, expectations and aims of TNO.

REPORTING CRITERIA USED BY TNO TNO uses the Sustainability Reporting Guidelines (G3) of the Global Reporting Initiative (GRI) as well as its own criteria to draft the CSR sections. These are elaborated in Corporate Social Responsibility and in the GRI table.

THE ASSURANCE STANDARD WE HAVE USEDWe have performed our assignment in accordance with the Standard 3410N “Assurance assignments for social reports” of the Royal Netherlands Institute of Chartered Accountants. One of the requirements of this standard is that the members of the assurance team have the specific knowledge, competencies and professional skills needed to understand the information in the CSR sections, to be able to identify and gather the requisite assurance information and that the members comply with the requirements of the Ethical Code for Professional Accountants of the IFAC, including independence.

WHAT WE HAVE DONE The work we have done has included: — Performing a media and internet analysis of social issues for

TNO to deepen our insight into the relevant sustainability topics and issues during the reporting period.

— Interviewing the management responsible, the CSR officer and employees responsible for supplying the information in the CSR sections.

— Assessing the set-up of systems and processes for information gathering and processing, including the aggregation of data to information in the CSR sections.

— Assessing internal and external documentation on the basis of part observation to determine whether the information in de CSR sections is sufficiently supported.

— Establishing the consistency of the information in the CSR sections with the other information in the ‘TNO Annual Review 2011’.

TO THE READERS OF THE ANNUAL REVIEW 2011 OF THE NETHERLANDS ORGANISATION FOR APPLIED SCIENTIFIC RESEARCH TNO:



During our investigation we discussed the necessary amend-ments in the CSR sections with TNO and have established that these amendments were properly incorporated in the definitive version.

OUR CONCLUSIONOur work reveals no evidence that the information in the CSR sections, in every aspect of material import, is incorrectly represented according to the G3 Guidelines of the Global Reporting Initiative.

COMPARATIVE INFORMATION HAS NOT BEEN EXAMINEDNo assurance assignment has been performed for the comparative CSR information concerning previous years as contained in the CSR sections. Therefore we can give no assurance about this CSR information included for the sake of comparison.

OBSERVATIONSWithout compromising the scope of our assurance report, we would like to draw the reader’s attention to the following finding:TNO has brought tangibility to its CSR policy in the past year by stipulating this in a Corporate Social Responsibility policy statement. We instruct TNO to link goals and KPI’s to this so that the progress of these goals can be monitored. We also instruct an evaluation of the current methodologies (like the environmental footprint model) to provide sufficient insight to enable adjustments to be made.

Rotterdam, 16 mei 2012

KPMG ACCOUNTANTS N.V.T.A. Kalmár RA



Defence is faced with serious cutbacks; April’s policy document was subtitled “Smaller armed forces in a turbulent world”. This document is unchanged in championing the focus on innovation and a high-tech armed force. The new Strategy, Knowledge and Innovation agenda, entitled “Anticipate and innovate in a changeable world”, shows the way. Security and Justice is currently hard at work on its innovation agenda and preparing the introduction of the new National Police. At the same time new opportunities are being offered by the top sectors and industry. Given the alignment with its policy targets, Defence also wants to participate in the top sectors where there is potentially 16 million euros available annually for innovation funds for joint investment projects with industry for the High Tech Systems and Materials and Water top sectors. Defence has a long tradition of cooperation with research organisations and industry (internationally, too) in the so-called Golden Triangle.

With the transition to the new TNO organisation, RDO redefined the management supervision of defence research at the beginning of 2011. This was followed by a second change, which saw the number of employees in the defence component rise by more than 100 (fte) as part of a TNO-wide re-clustering of expertise groups. This now includes activities in the field of cybersecurity. Both the administration and the composition of the defence component of TNO will be evaluated further in 2012.

The Rijswijk and Ypenburg facilities will remain until further notice and a move to Cromstrijen has been definitively scrapped. However, certain laboratory activities in Rijswijk are

scheduled to move to Ypenburg in the long term with the corresponding office activities to The Hague. In good consultation with Defence, the chemical test activities of TNO have been privatised in the new TNO company ProQares BV.

Two major projects in 2011 reveal how cooperation with industry fulfils the needs of Defence. The new LFAS (Low Frequency Active Sonar) system for M-frigates will see the Netherlands leading the world next year in terms of anti-submarine defence. The hardware for the new system is being supplied by Ultra Electronics and Maritime Systems (UEMS) from Canada, TNO is responsible for the signal processing and Defence is the system integrator. This teaming makes the purchase of the LFAS system cheaper – and performance better – than off-the-shelf solutions. In 2013 the first LFAS sonar system was installed on HMS van Amstel. The need for an update was urgent. Submarines are becoming ever quieter and the Netherlands Royal Navy is increasingly operating in coastal waters, which hinders detection. LFAS is able to transmit acoustic signals in every direction and once the echoes are received, the signal processing begins to detect and classify targets, long a world-class knowledge area of TNO. This is vital since LFAS receives so many echoes that it is absolutely crucial for those echoes to be filtered and classified.

Replacement of the F-16 jet fighter is a key project for the Netherlands Royal Air Force. The F-35 JSF equipped with a 25 mm cannon is the primary candidate at the moment but the problem is the lack of munitions available in the market that

THE COUNCIL FOR DEFENCE RESEARCH (RDO) ESTABLISHES POLICY FOR THE DEFENCE COMPONENT OF THE TNO POLICY. THE STRATEGIC PARTNERSHIP, CONCERNING AN AGREED PACKAGE OF DEFENCE-SPECIFIC EXPERTISE AREAS, IS THE CORNERSTONE OF THE RELATIONSHIP BETWEEN DEFENCE AND TNO, WITH EXTERNAL AND INTERNAL SECURITY BECOMING INCREASINGLY INTERWOVEN FOR BOTH THE DEFENCE AND SECURITY RESEARCH AT TNO AND INCREASINGLY FOR THE MINISTRIES OF DEFENCE AND SECURITY AND JUSTICE.



comply with Dutch requirements (including no armed uranium). So Defence asked TNO and Rheinmetall Waffe Munition Schweiz (RWMS) to co-develop suitable munitions. The FAP (Frangible Armour Piercing) projectiles, which are brittle and fracture into smaller pieces within a target, work in a very complex way but accumulated knowledge has given TNO the capacity not only to evaluate such munitions but also to help develop them. TNO and partner RWMS were thus able to come up with entirely new 25 mm FAP munitions. So if the JSF is eventually purchased, the necessary munitions will be ready on time. Not only that but the American air force is currently testing these munitions, and contributing to part of the costs. And should the Americans and other countries decide to actually purchased these munitions in the future, then for every cartridge sold, royalties will flood in to TNO (for reinvestment in defence research) and Defence.



TNO BOARD OF MANAGEMENT (RVB)The RvB is charged with managing the organisation, which includes responsibility for defining and realising the objectives, policy, strategy and results that derive from this. The RvB is collectively accountable.

COMPOSITION OF THE TNO BOARD OF MANAGEMENT There was no change to the three members in 2011.

THE TNO SUPERVISORY BOARD (RVT)The duty of the RvT is to supervise the policy of the RvB. Super-vision in this respect is geared to the realisation of objectives, the strategy, financial reporting and compliance with law and legislation. The RvT also supports the RvB through advice.

The RvT may appoint committees from its midst and charge these with tasks specified by the RvT. At the beginning of 2011 there were two committees in this respect: the Remuneration Committee and the Selection and Appointments Committee. In 2011 these two committees were merged into the Selection and Remuneration Committee. The RvT also appointed an Audit Committee in 2011 to enable more adequate supervision of financial affairs and risk management. For both committees regulations were drawn up and the TNO Supervisory Board Regulations in which these committees are stated were modified accordingly.

The RvT met five times in 2011 and a few members twice attended the Central Works Council meetings. There were also

CORPORATE GOVERNANCE STANDS FOR THE GOOD AND EFFICIENT CORPORATE MANAGEMENT OF AN ORGANISATION THAT, MOREOVER, ACTS HONESTLY, RESPONSIBLY AND TRANSPARENTLY UNDER PROPER SUPERVISION. TNO SUBSCRIBES TO AND APPLIES THESE PRINCIPLES. THIS IS EVIDENT FROM THE PRESENCE AND APPLICATION OF A CODE OF CONDUCT, A COMPLAINTS SCHEME, REGULATIONS AND A WHISTLEBLOWER REGULATION. IN 2011 TNO ALSO STROVE TO OPTIMISE ITS CORPORATE GOVERNANCE.

five special closed sessions of the RvT. Both the remuneration committee and the selection and appointments committee met twice.

In its meeting of 14 December the RvT discussed its own performance and that of the RvB. On 16 March the RvT approved the annual accounts for 2010 and discharged the RvB for the execution of its management and policy in 2010.

COMPOSITION OF THE TNO SUPERVISORY BOARDThe RvT comprises seven members. In March 2011 the second term of office expired for the RvT chairperson, Ms J.M. Leemhuis-Stout. By Royal Decree Dr. C.A. Linse was appointed to chair the RvT as of 1 March 2011 and Mr H.W. Broeders reappointed as member of the RvT following the expiry of his first term, and Lady I.H.J. Vanden Berghe became a member of the RvT on 1 February 2011.

ORGANISATION REGULATIONSTNO regulations concerning the RvB, RvT and strategic advisory councils collectively form the Organisation Regulations of TNO. Since 2011 these have also contained a mandate regulation whereby the RvB has, with a view to the new strategy and structure of TNO by virtue of its statutory authorisation, granted other people in the organisation the authorisation to represent TNO. In 2011 this regulation, the mandate regulation, took effect. The mandate regulation accurately describes the authorisations granted and such that the system of ‘checks and balances’ remains safeguarded. The new regulation also



states that the accountant will each year (starting in 2012) also audit compliance with the mandate.

ACCOUNTABILITYIn respect of government funding, by virtue of the TNO Act accountability is provided in advance through the submission by the RvB of the Strategic Plan, for a four-year period, and the budget for the coming year, to the minister of the intermediating ministry, being the Ministry of Economic Affairs, Agriculture and Innovation (EL&I). Accountability is retrospective by virtue of this Act through the submission by the RvB of the annual review and annual accounts of the previous year to this minister. The RvT has to approve these documents.

The annual accounts are accompanied by a statement from an accountant designated by the RvT concerning the faithfulness of the information. The RvT consulted with the accountant about the accountant’s report also in the absence of the RvB. In 2011 the European tender for the assignment of the accountant was completed, whereby KPMG will be responsible for the audit for five years from 2011, with two options to extend by a year. The accountant also undertakes a separate audit in respect of legitimate collection and expenditure according to the audit protocol agreed in the past between the Ministry of Education, Culture and Science and TNO.

DELFT, 21 MARCH 2012On behalf of the TNO Supervisory Board,Dr. C.A. Linse, chairperson



CONSOLIDATED BALANCE SHEETPER 31 DECEMBER 2011

After appropriation of profit na resultaatbestemming (in EUR x thousand)

31-12-2011 31-12-2010

Fixed assets

Intangible fixed assets 1 1,948 1,674

Tangible fixed assets 2 220,698 244,802

Financial fixed assets 3 6,541 7,917

229,187 254,393

Liquid assets

Stocks 1,152 1,200

Receivables 4 86,787 87,205

Cash 5 140,069 132,646

228,008 221,051

Total 457,195 475,444

Equity:

- General reserve 6 122,979 125,808

- Earmarked reserves 7 67,051 63,756

190,030 189,564

Minority interests 898 1,756

Equalisation account investment funds 8 39,374 47,944

Provisions 9 19,306 23,523

Long-term debt 10 21,047 22,148

Short-term debt 11 186,540 190,509

Total 457,195 475,444


CONSOLIDATED PROFIT-AND-LOSS ACCOUNT 2011

(in EUR x thousand)

2011 2010

Income 12 563,796

Other operating income 13 21,947 20,903

Operating income 598.956 584,699

Direct project costs 14 -79,591

Personnel expenses 15 -364,264

Depreciation intangible fixed assets -444 -1,134

Depreciation tangible fixed assets 16 -34,078

Extraordinary devaluations tangible fixed assets 17 -

Other operating expenses 18 -107,542 -102,844

Operating expenses -599.043 -581,911

Operating result -87 2,788

Interest income 2,187 1,890

Interest charges -1,265 -795

Result from ordinary operations before taxes 835 3,883

Taxes -409 -436

Results financial fixed assets 19 244 -707

Result from ordinary operations after taxesn 670 2,740

Minority interests -239 -318

Net result 431 2,422


CONSOLIDATED PROFIT-AND-LOSS ACCOUNT 2011

(in EUR x duizend)

2011 2010

Appropriation of profit:


Allocation to:

- appropriated reserve operating risks civil - -

- appropriated reserve operating risks Defence - -

- appropriated reserve development cooperation - -

- appropriated reserve building work Defence -4,456 -4,482

-4,456 -4,482

Withdrawal from:

- appropriated reserve operating risks civil - -

- appropriated reserve operating risks Defence - -

- appropriated reserve development cooperation - -

- appropriated reserve building work Defence 1,161 465

1,161 465

Result after transactions earmarked reserves -2,864 -1,595

Transaction general reserve 2,864 1,595

- -


CONSOLIDATED CASH FLOW SUMMARY AND SUMMARY TOTAL RESULT 2011

CONSOLIDATED CASH FLOW SUMMARY (in EUR x thousand)

2011 2010


Minority share in net result 239 318

Group result 670 2,740

Depreciations on intangible and tangible fixed assets 30,949 33,112

Results of participations incorporated in the result 895 -199

Results of disposals of fixed assets 641 3,972

Transaction provisions -4,217 -3,253

Transaction working capital, excluding cash -3,851 9,894

Dividends received 192 215

Cash flow deriving from operational activities 25,279 46,481

Investments in intangible fixed assets -1,402 -939

Investments in tangible fixed assets -21,587 -27,851

Investments in financial fixed assets -964 -1,300

Disinvestments in intangible fixed assets - -

Disinvestments in tangible fixed assets 9,482 213

Sale of participations and redemptions received 2,719 -519

Cash flow deriving from investment activities -11,752 -30,396

Investment contributions received/repaid -5,386 4,763

Loans received 495 12,725

Loan redemptions -1,248 -12,204

Cash flow deriving from funding activities -6,139 5,284

Cash flow for financial year 7.388 21,369

Liquid assets as of 1 January 132,646 111,106

Cash flow for financial year 7,388 21,369

Exchange rate differences 35 171

Liquid assets as of 31 December 140,069 132,646

TOTAL OVERVIEW 2011 2010

Consolidated net result after taxes 431 2,422

Reserve conversion disparities 35 171

Total 466 2,593


PRINCIPLES1.1 GENERALTNO connects people and knowledge to create innovations that sustainably boost industrial competitiveness and the wellbeing of society.The statutory domicile of TNO is Delft.

Reporting periodThese annual accounts have been drafted over the reporting period of a calendar year.

Standards usedTNO uses the guidelines for drafting the annual accounts of TNO as contained in the TNO Guidelines for Financial Reporting of the Minister of Education, Culture and Science.The TNO Guidelines for Financial Reporting adhere to Statute 9, Book 2 of the Dutch Civil Code. In a supplementary amendment made by the minister of Education, Culture and Science the Guideline for Annual Reporting 271 “Personnel remuneration” has been declared not applicable for TNO.The principles used for the valuation of assets and liabilities and determination of the result are based on historical costs. 1.2 PRINCIPLES FOR THE VALUATION OF ASSETS AND LIABILITIES AND THE DETERMINATION OF THE RESULTUnless otherwise stated, assets and liabilities are stated at nominal value.An asset is included in the balance sheet if the probability exists that the future economic benefits will accrue to the company and that its value can be reliably determined. A liability is included in the balance sheet if the probability exists that its settlement will be coupled to an exit of funds and that the size of that amount can be reliably determined.Income is included in the profit-and-loss account if there has been an increase of the economic potential along with an increase

in an asset or a decrease in a liability, whereby the size can be reliably determined. Expenses are processed if there has been a decrease of the economic potential along with a decrease in an asset or an increase in a liability, whereby the size can be reliably determined. If a transaction leads to virtually all future economic benefits or virtually all economic risks concerning an asset or liability being transferred to a third party, the asset or liability will no longer be included in the balance sheet. Furthermore, assets and liabilities will no longer be included in the balance sheet from the moment that they do not comply with the probability conditions of the future economic benefits and reliability of the determination of the value.The costs are calculated for the period to which they pertain.The annual accounts are presented in euros, the functional currency of the company. All financial information in euros is rounded off to the nearest thousand.The drafting of the annual accounts demands from the management that they make assessments, estimates and as-sumptions that affect the application of the principles and the reported value of assets and liabilities, and of the income and expenses. The actual results may vary from these estimates. The estimates and underlying assumptions are constantly assessed. Revised estimates are included in the period in which the estimate is revised and in future periods in which the revision has implications.

1.3 PRINCIPLES FOR CONSOLIDATION The consolidated annual accounts contain the financial data of the TNO organisation and its group companies as well as other legal entities over which full authorisation or centralized management can be exercised. Group companies are participations in which the organisation has a majority holding or exercises a decisive influence on policy in one way or another. In determining whether a decisive influence on policy can be exercised, this concerns financial instruments that bear potential

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS 2011


voting rights and which can be directly exercised. Participations held for the purpose of disposal are not consolidated.Newly acquired participations are incorporated in the consolidation from the moment that a decisive influence on policy can be exercised. Disposed participations are incorporated in the consolidation until the moment that this influence ends.In the consolidated annual accounts the mutual debt, receivables and transactions are eliminated. The group companies are fully consolidated, whereby third party minority holdings are expressed.A summary of the group companies included in the consolidation as well as the non-consolidated participations is contained in the notes to the single annual accounts on pages 41 to 42.For individual (majority) participations (S&D Solutions B.V., BiosparQ B.V., ConsumersVoice B.V., TNO Science & Technology Consultation Co. Ltd., SoLayTec B.V. and ProQares B.V.) there is no consolidation due to the relatively modest scope of the operating activities. 1.4 PRINCIPLES FOR CONVERTING FOREIGN CURRENCYTransactions in foreign currencyTransactions in foreign currencies are converted to the respective functional currency of the group companies at the exchange rate valid on the transaction date. Monetary assets and liabilities in

foreign currencies are converted per balance sheet date to the functional currency at the exchange rate valid on the transaction date. The currency differences are included in the profit-and-loss account as an expense.

Foreign operations The assets and liabilities of foreign operations, including goodwill and real value corrections upon consolidation, are converted into euros at the exchange rate valid on the reporting date. The income and costs of foreign activities are converted at the average exchange rate for the reporting period.Currency conversion disparities are processed in the conversion disparities reserve. If a foreign activity sold in full or in part, the respective amount from the conversion disparities reserve is transferred to the profit-and-loss account.

1.5 FINANCIAL INSTRUMENTS Financial instruments are processed at real value upon first incorporation, after which they are incorporated in the manner described below.

Loans extended, (other) receivables, loans taken out, creditors and other payable items These financial instruments are valued at amortised cost price on the basis of the effective interest rate. For short-term receivables and liabilities where no

explicit interest rate is calculated and the term is short, the discount is generally only slight. For these items the nominal value is applied to substantiate the amortised cost price principle.For loans extended and (other) receivables the valuation is adjusted where necessary for extraordinary value reduction losses.

Derivative financial instruments Derivative instruments are valued at cost price or lower market value unless hedge accounting below the cost price hedge model is applied.TNO makes only limited use of forward currency transactions to hedge risks related to purchase and sale transactions. If currency contracts are drafted to cover monetary assets and liabilities, cost price hedge accounting is applied. Hedge accounting is used to ensure that the results accounted in the profit-and-loss account as a consequence of the conversion of monetary items are compensated by value amendments to the currency contracts at the money rate on the reporting date. The difference between the money rate on the date on which the currency forward contracts is agreed and the forward rate is amortised via the profit-and-loss account over the term of the currency forward contracts.One group company of TNO uses interest rate swaps to hedge currency risks deriving from interest rate changes on long-term loans. If interest rate swaps

are agreed to hedge interest rate risks, cost price hedge accounting is applied to ensure that the interest charges accounted in the profit-and-loss account are not subject on balance to changes in the interest rate position. The accounted interest charges thereby comprise the balance of the interest paid to financiers and the income and expenses deriving from the agreed interest rate swaps.If cost price hedge accounting is applied, valuation is first made at real value. So long as the derivative instrument relates to hedging the specific risk of a likely future transaction, no revaluation of this instrument occurs. As soon as the expected future transaction results in accounting in the profit-and-loss account, the profit or loss associated with the derivative instrument is processed in the profit-and-loss account. If the hedged position of an expected future transaction results in the incorporation in the balance sheet of a non-financial asset, the company adjusts the cost price of this asset to the hedging results not yet processed in the profit-and-loss account.A loss of a percentage greater than the size of the derivative instrument against the hedged position is processed directly in the profit-and-loss account on the basis of cost price or lower market value.If derivative instruments expire or are sold, the hedging relationships are terminated. The cumulative profit or cumulative loss not yet processed in the profit-and-loss



account up until that moment is included in as a transitory item post in the balance sheet until the hedged transactions occur. If the transactions doe not as expected occur, the cumulative profit or the cumulative loss is transferred to the profit- and-loss account.TNO documents the hedge relationships in specific hedge documentation and periodically verifies the effectiveness of the hedge relationships by establishing that there is no question of overhedging.

1.6 INTANGIBLE FIXED ASSETS Goodwill is defined as the positive difference between the price acquired for the participations and the interest of the TNO organisation in the net real value of the acquired identifiable assets and liabilities of the acquired party less the cumulative depreciations and extraordinary devaluations. Depreciation of the goodwill occurs over the expected economic life-time of the acquired participation and, in principle, does not exceed five years.The other intangible fixed assets concern knowledge or costs of research and development, licence rights and software programs purchased from third parties. Capitalisation occurs only insofar as it can be reasonably expected that these are covered by future income. Valuation is by acquisition price. Depreciation occurs pro rata of the expected income, but no more than five years.

1.7 TANGIBLE FIXED ASSETSThe tangible fixed assets are valued by acquisition price or, if produced in house, by production price less cumulative depreciations based on the expected economic lifetime and extraordinary value depreciations.The depreciations are calculated as a percentage of the acquisition price according to the linear method on the basis of the economic lifetime. There is no depreciation of company premises and on tangible fixed assets under construction and prepayments on tangible fixed assets. 1.8 FINANCIAL FIXED ASSETS Participations whereby significant influence on business and financial policy can be exercised are valued according to the equity mutation method on the basis of net equity value. In determining the net equity value the valuations principles of the TNO organisation are used. Participations with a negative net equity value are valued at zero. When the company stands surety for the debt of the respective participation a provision is formed primarily charged to the receivables on this participation and secondarily under the provisions equivalent to the share in the losses made by the participation or expected payments by the TNO organisation on behalf of this participation. Participations in which no significant influence can be

exercised are valued at acquisition price or extended lower operating value.The loans to non-consolidated participations are included at amortised cost price on the basis of the effective interest rate method less extraordinary depreciation losses.Dividends are accounted in the period in which they are payable. Interest income is accounted in the period to which they relate, taking account of the effective base rate of the respective asset item. Any profits or losses are accounted under financial income and expenses.

1.9 EXTRAORDINARY DEVALUATIONSFixed assets with an extended lifetime must be assessed by extraordinary devaluations if changes or circumstances occur whereby it appears that the book value of an asset will not be recovered.

The recoverability of assets in use is determined by comparing the book value of an asset with the estimated cash value of the future net cash flows the asset is expected to generate.If the book value of an asset is higher than the estimated cash value of future cash flows, extraordinary devaluations are accounted for the difference between the book value and realisable value.

1.10 STOCKSThe raw and auxiliary materials are valued at acquisition price or lower value of

revenue. In the valuation of the stocks account is taken of any devaluations at balance sheet date.

1.11 WORK IN PROGRESSThe work in progress concerns assignments. The valuation of work in progress comprises the costs directly related to the assignment (such as personnel costs for employees working directly on the assignment and costs for raw and auxiliary materials), the costs attributable to the assignment activities in general and specific to the assignment as well as other costs that are payable contractually by the customer. Expenditure related to the assignment costs that lead to performance to be carried out after the balance sheet date are processed as assets if there is the probability that they will generate income in a subsequent period. A deductible provision is made where necessary in work in progress to cover expected losses. The work in progress is reduced by the invoiced payments in advance.

1.12 RECEIVABLESThe principles for the valuation of receivables are described under the section financial instruments.

1.13 EQUITYFinancial instruments considered in terms of the economic reality to be equity instruments are presented under equity.



Financial instruments considered in terms of the economic reality to be a financial liability are presented under debt. Results in relation to these financial instruments are accounted in the profit-and-loss account as costs or income.

Earmarked reservesOn the basis of article 22 of the TNO Act and articles 4 and 5 of the TNO Guide-lines for Financial Reporting earmarked reserves can be set aside for future spending or expenses or to hedge economic and technical risks. Withdrawals are charged to earmarked reserves in the appropriation of the result and may only take place insofar as these correspond with the purpose of these reserves.The appropriated reserve for operating risks “civil” is to hedge economic and technical risks. In appropriating the result the TNO Board of Management designates a percentage of both government and third-party assignment amounts to the reserve each year until the maximum amount of the reserve is reached.

A maximum of EUR 9.1 million was agreed with the government.The appropriated reserve for operating risks “Defence” is based on specific agreements with the Ministry of Defence and hedges risks related to executing additionally funded defence assignments. A maximum of EUR 2.5 million was

agreed with the Ministry of Defence. The TNO Board of Management consults with the TNO Council for Defence Research on the amount to be added to the reserve each year in appropriating the result of the Defence, Safety and Security core area until the maximum amount of the reserve is reached.The appropriated reserve for Defence building work hedges future investments in renovation and/or new building pro-jects. Additions to and withdrawals from this reserve occur annually in the appropriation of the result on the basis of specific agreements with the Ministry of Defence.

1.14 MINORITY INTERESTS The minority interests are valued at the share of third parties in the net equity value, in correspondence with the valuation principles of the TNO organisation.

1.15 EQUALISATION ACCOUNT INVESTMENT FUNDSFunds provided by the government or third parties to compensate the TNO organisation for investing in an asset are shown as a liability on the balance sheet and systematically credited to the profit-and-loss account during the period in which the asset is used.

1.16 VOORZIENINGENA provision is included in the balance sheet if: — there is a legally enforceable or actual

liability resulting from a past event; and— of which a reliable estimate can be

made; and— an outflow of funds is likely to be needed to settle that liability.

Provisions are valued at either the nominal value of the spending likely to be needed to settle the liabilities and losses or the cash value of the spending.The provision for social liabilities is to hedge past, present and future payments to ex-employees and employees of the TNO organisation resulting from TNO terms and conditions of employment. That part which relates to pensions already taken is based on actuarial calculations, with a discount baseline of 4%.The provision for claims is for any liabilities deriving from existing legal actions.The provision for reorganisations hedges the costs related to existing and imminent (partial) reorganisations.The provision for capital outflows hedges the expected costs of the intended dissolution of employment contracts with employees.The provision for major maintenance is to equalise the costs for major maintenance to real estate that is the property of the TNO organisation and its group companies based on a multi-year maintenance plan.

1.17 PERSONNEL REMUNERATION/PENSIONSTNO has several pension schemes, the main one being incorporated within the TNO Pension Fund Foundation and qualifying as committed pension scheme.The Minister of Education, Culture and Science instructed the Guideline for the Annual Reporting 271 “Personnel remuneration” not to apply to the TNO organisation.As a result of this instruction the liabilities related to pension scheme contributions are charged as an expense in the profit-and-loss account in the period in which the amounts are due.The basis is that the pension expenditure during the reporting period is the same as the pension contributions owed to the pension fund. Insofar as the premiums owed at balance sheet date are not yet paid, a liability is incorporated for this. If upon balance sheet date the contributions already paid exceed the premiums owed, a transitory active entry will be incorporated to the extent to which there will be a repayment by the fund or settlement with future premiums owed.Furthermore, as of balance sheet date there will be a provision included for existing obligations in respect of the fund for employees. If it appears likely that in order to settle those obligations there will be an outflow of funds and a reliable assessment of the size of those obligations can be made. The incidence or otherwise



of additional obligations will be assessed according to the execution agreement with the fund, the pension agreement with employees and other (explicit or implicit) pledges to employees. The provision will be valued at the best estimate of cash value of the amounts needed to settle the obligations at of balance sheet date.In the event of a pension fund surplus existing at balance sheet date, a receivable will be included if the company has authorisation to use this surplus and the likelihood is that this surplus will flow to the company and the receivable be reliably established.

1.18 SHORT-TERM DEBTThe valuation of short-term debt is explained under the section on financial instruments.

1.19 INCOME ACCOUNTING Income is the total of: — assignment income;— government funding.

Assignment income includes invoiced amounts for work performed, after deduction of any value added tax due, and work in progress.Given that there is a regular flow of projects spread evenly throughout the year and that these are completed within a year, profit is taken on work in progress upon delivery.Government funds are split into

knowledge as capital within the themes, knowledge as capital across the themes (KAVOT) and policy and application oriented knowledge investments. These funds are accounted as income pro rate of the work performed.Direct project costs include the tangible costs (including outsourced work) that can be directly attributed to a project.

1.20 GOVERNMENT SUBSIDIES Government subsidies are initially included in the balance sheet as income received in advance as soon as reasonable certainty exists that these will be received and that the TNO organisation will comply with the attached conditions. Subsidies to compensate the costs incurred by the TNO organisation are systematically included as income in the profit-and-loss account in the same period as when the costs are incurred.For subsidies to compensate investment in an asset see ‘Equalisation account investment funds’.

1.21 SHARE IN THE RESULT OF COMPANIES IN WHICH THERE IS A PARTICIPATIONThe share in the result of companies in which there is participation relates to the share of the TNO organisation in the results of these participations.Results for transactions whereby assets and liabilities are transferred between the TNO organisation and the non-

consolidated participations and mutually between non-consolidated participations are not accounted insofar as these cannot be considered realised.The results of participations acquired or disposed of during the financial year are processed in the result van the TNO organisation from the moment of acquisition or disposal.

1.22 TAXESTNO, TNO Companies B.V. and its 100% Dutch subsidiaries are not subject to corporation tax due to article 2, clause 7 of the Corporation Tax Act.TNO Companies B.V. has 99% participation in TNO Holdings B.V. which along with all its Dutch subsidiaries is subject to corporation tax. In addition, the subsidiaries domiciled abroad are subject to the profit tax applicable in the country of domicile. Taxes concern the profit and deferred taxes in the reporting period. The taxes are included in the profit-and-loss account, except where these pertain to items directly included in the equity, in which case the tax is processed in the equity.The tax due and creditable over the financial year is the expected payable tax on taxable profit over the financial year calculated according to the tax rates valid on the reporting date or already tangibly established on the reporting date along with any corrections to the tax owed in previous years.

For deferred taxes a provision is made for temporary differences between the book value of assets and liabilities for the purpose of the financial reporting and the fiscal book value of those items.A deferred tax receivable only is included insofar as it is likely that in the future taxable profit will be available to offset the temporary difference. Deferred tax receivables are revised at each reporting date and reduced insofar as it is not likely that the corresponding tax benefit will be realised.

1.23 CASH FLOW SUMMARYThe cash flow summary is drafted on the basis of the indirect method. Cash flows in foreign currencies are converted to euros using the average conversion rates for the respective periods.

1.24 DETERMINING REAL VALUESeveral principles and notes in the annual accounts of TNO require the determination of the real value of both financial and non-financial assets and liabilities. For valuation and information acquisition purposes the real value is determined by the following methods.

(Other) receivables The real value of trade and other receivables is estimated at the cash value of the future cash flows.



DerivativesThe real value of currency forward contracts and interest rate swaps is based on the quoted market price is available, the real value is estimated by the expected cash flows discounted at going interest rates in which a surcharge is contained to calculate the present value.

Non-derivative financial liabilities The real value of non-derivative financial liabilities (loans) is determined only for the purpose of acquiring information and is calculated on the basis of the cash value of future redemptions and interest payments discounted at the interest rate at reporting date.If applicable further information about the principles for determining the real value is stated in the section of these notes specifically related to the respective asset or liability.



1 INTANGIBLE FIXED ASSETS (in EUR x thousand)

Changes in the intangible fixed assets in 2011

Goodwill Software Totaal

Balance at 31-12-2010

Acquisition price 896 6,027 6,923

Cumulative depreciations and devaluations -314 -4,935 -5,249

Book value 582 1,092 1,674

Transaction book value

Investments 505 897 1,402

Transaction consolidations 39 - 39

Disinvestments -723 - -723

Depreciations 69 -513 -444

-110 384 274


Acquisition price 57 6,754 6,811

Cumulative depreciations and devaluations 415 -5,278 -4,863

Book value 472 1,476 1,948

NOTES TO THECONSOLIDATED BALANCE SHEET

43/98TNO ANNUAL REPORT 2011

2 TANGIBLE FIXED ASSETS

Changes in the tangible fixed assets in 2011

Real estate Fixed Technical Inventory Total

and buildings technical equipment

installations


Acquisition price 219,306 150,255 205,163 19,282 594,006

Cumulative depreciations and devaluations -123,193 -79,540 -162,930 -12,788 -378,451

Assets under construction and development 2,393 25,955 899 - 29,247

Book value 98,506 96,670 43,132 6,494 244,802


Investments 7,103 6,422 34,730 922 49,177

Transaction consolidations - -96 -640 -4 -740

Disinvestments -7,457 -1,103 -2,599 -103 -11,262

Depreciations -4,729 -9,422 -18,080 -1,458 -33,689

Assets under construction and development -2,393 -24,704 -493 - -27,590

-7,476 -28,903 12,918 -643 -24,104




Assets under construction and development - 1,251 406 - 1,657

Book value 91,030 67,767 56,050 5,851 220,698

The “depreciation tangible fixed assets” item in the profit-and-loss account also includes the release from the equalisation account investment funds. The book value of the tangible fixed assets per 31 December 2011 includes real estate, buildings and fixed techni-cal installations at EUR 29.2 million (2010: EUR 41.0 million), of which TNO is exclusive economic owner.

TANGIBLE FIXED ASSETS

Depreciation percentages used 2011 2010

Real estate nihil

Buildings 2½ 2½

Fixed technical installations 6 6

Renovations 6 6

Computer equipment 33 33

Technical equipment 20 20

Inventory 10 10

NOTES TO THE CONSOLIDATED BALANCE SHEET


3 FINANCIAL FIXED ASSETS

Other Total

loans

Equity Loans

share

Balance at 31-12-2010 5,266 2,196 455 7,917

Transactions:

Investments and extended loans 352 612 - 964

Disinvestments and redemptions 62 -961 -300 -1,199

Devaluations -54 - - -54

Result participations -895 - - -895

Dividend -192 - - -192

Balance at 31-12-2011 4,539 1,847 155 6,541

Participations includes the participations of TNO and TNO Companies B.V. Of the loans EUR 1.7 million have a term of longer than one year. Of the other loans none have a term in excess of one year. The list of participations, in which TNO participates indirectly and directly, is contained on pages 67 to 70.


Non-consolidated participations


4 RECEIVABLES

31-12-2011 31-12-2010

Receivables relating to assignments 69,402 64,772

Receivables on participations 639 907

Deferred tax receivables - -

Other receivables 10,704 15,161

Transitory assets 6,042 6,365

Total 86,787 87,205

Of the receivables EUR 2.8 million (2010: EUR 2.9 million) have a term exceeding one year.

5 CASH

Cash includes deposits up to EUR 65.0 million (2010: EUR 10.0 million) that expire in tranches up to December 2012. The other cash is immediately callable.

6 GENERAL RESERVE

2011 2010

Balance at 1 January 125,808 127,232

Reserve conversion disparities 35 171

Appropriation of profit -2,864 -1,595

Balance at 31 December 122,979 125,808

7 EARMARKED RESERVES

Stand per Onttrokken Toegevoegd Stand per

31-12-2010 in 2011 in 2011 31-12-2011

Operating risks civil 9,075 - - 9,075

Operating risks Defence 2,500 - - 2,500

Building work Defence 52,181 1,161 4,456 55,476

Total 63,756 1,161 4,456 67,051



8 EQUALISATION ACCOUNT INVESTMENT FUNDS

2011 2010

Balance at 1 January 47,944 46,302

Funds designated for tangible fixed assets -5,386 4,763

42,558 51,065

Released to the result -3,184 -3,121

Balance at 31 December 39,374 47,944

9 PROVISIONS

Balance per Withdrawn Added Released Balance per

31-12-2010 in 2011 in 2011 in 2011 31-12-2011

Social liabilities 2,204 468 127 - 1,863

Claims 800 - - - 800

Reorganisations 8,772 6,721 4,984 1,435 5,600

Capital outflows 1,637 1,042 1,743 498 1,840

Loan participations 138 - - - 138

Major maintenance 1,962 1,651 1,651 - 1,962

Other 8,010 1,383 1,014 538 7,103

Total 23,523 11,265 9,519 2,471 19.306

Of the provisions circa EUR 9.1 million are long-term (2010: EUR 9.0 million).The provision for social liabilities concerns capital outflow costs, supplements to WAO payments as well as future payments deriving from pension rights to past employment years not financed elsewhere.The provision for claims covers the estimated liabilities deriving from expected submitted unsettled claims and is valued per (potential) claim at the estimated future expenditure including external processing costs.The reorganisation provisions mainly concern agreed departure schemes with ex-employees. The provision for cash outflows relate to the expected costs relating to the proposed dissolution of employment contracts with employees.The provision for major maintenance at the end of 2011 is based on maintenance to be carried out in relation to the multi-year maintenance plan 2010-2013.



Of the long-term debt EUR 6.2 million exceeds one year and is less than 5 years. The rest of the long-term debt of EUR 14.8 million has a term of more than 5 years.Holland Metrology N.V. has a 20-year linear mortgage ofEUR 13 m to fund building work/renovation in Delft. Holland Metrology N.V. had paid off EUR 4.9 m. of this in 2005-2010. The short-term part of the loan is EUR 0.7 m. and is presented under the short-term debt (loans bank). The interest is 4.58 – 5.7%. The mortgage lender has stated that Holland Metrology N.V. (and its subsidiary NMi Nederland B.V.) may pay dividend and the loan provided by TNO (subordinated on behalf of the mortgage lender) may be redeemed at a solvency of at least 35%. The loan provided by TNO is incorporated here as part of the capital base. Agreed securities additional to the aforementioned solvency requirement are:— First mortgage on the real estate Thijsseweg 11 in Delft and

Dordrecht premises;— Right of lien on receivables;— Joint and several liability to the bank of NMi Certin B.V. and

Verispect B.V.

Holland Metrology N.V. has a 2-year linear mortgage of EUR 12 m to fund the building work for Euroloop in Europoort. The interest rate is equivalent to the 3-month Euribor plus a surcharge of 2.4%. Redemption is in two annual instalments, the first of EUR 600,000 has been paid and the second instalment of EUR 600,000 is due on 1 July 2011 and is presen-ted under the short-term debt. Holland Metrology N.V. has the

right to continue the loan for an amount of up to EUR 10,800,000 for a maximum term of 18 years under the terms and conditions valid at that moment.At the end of 2008 APP Beheer B.V. agreed a new 20-year mortgage of EUR 2,300,000 (from Rabobank) to fund land and buildings on the Moerdijk industrial site in Klundert. The interest rate is 3-month Euribor plus 1.3%. Securities provided are: mortgage to premises in Klundert, right of lien to stocks, inventory and receivables. APP had redeemed EUR 326,400 in 2008-2011. The short-term part of the loan is EUR 115,200 and is presented under the short-term debt.In 2010 APP Beheer B.V. agreed a new 20-year mortgage of EUR 725,000 to fund buildings at the Moerdijk industrial site in Klundert. The interest rate is 3-month Euribor plus 1.85%. Securities provided are: mortgage to premises in Klundert, right of lien to stocks, inventory and receivables. APP had redeemed EUR 134,000 in 2010-20111. The short-term part of the loan is EUR 36,000 and is presented under the short-term debt.

In 2011 ABN-AMRO extended surety credit (EUR 496,000 to Batavia Bioservices B.V. at an interest rate equivalent to 3 months Euribor with a 1.75% surcharge. Securities provided are: surety of EUR 125,000 and a right of lien on stocks, inventory and receivables. The loan will be repaid in seventeen successive quarters of EUR 29,117, for the first time on 1 October 2012. The long-term portion was EUR 433,125 on 31-12-2011. EUR 61,875 is presented as short-tem.

10 LONG-TERM DEBT

31-12-2011 31-12-2010

Loans:

Loans from credit institutions 20,614 22,148

Medium-term bank credit 433 -

Other loans - -

Total 21,047 22,148



11 SHORT-TERM DEBT

31-12-2011 31-12-2010

Bank loans 1,982 1,634

Creditors 32,624 41,279

Debt to participations 66 134

Taxes and social insurance premiums 15,220 16,141

Pensions 43 37

Holiday pay liabilities 9,492 9,322

Liabilities for untaken leave 20,898 20,643

Other debt 39,782 37,519

Deferred liabilities 32,100 29,025

Work in progress 34,333 34,775

Total 186,540 190,509

WORK IN PROGRESS

31-12-2011 31-12-2010

Cumulative costs minus provisions for losses and risks 425,667 389,049

Minus cumulative declared instalments -460,000 -423,824

Total for work in progress -34,333 -34,775

Balance of work in progress > 0 80,473 70,412

Balance of work in progress < 0 -114,806 -105,187

Total for work in progress -34,333 -34,775

The deferred liabilities largely concern deferred government funding and prepayments received for specific research projects.



FINANCIAL INSTRUMENTSGeneralIn the normal operations TNO uses a range of financial instruments that TNO exposes to market and/or credit risks. These are financial instruments incorporated in the balance sheet and currency future contracts to hedge future transactions and cash flows. TNO does not trade in these financial derivatives and has procedures and codes of conduct to limit the size of the credit risk for every party or market. For payments owed but not fulfilled by a counterparty to TNO any resultant losses are limited to the market value of the respective instruments. The contract value of the fictive principal amounts of the financial instruments are just an indication of the extent to which such financial instruments are used and not of the amount of the credit or market risks.

Interest rate riskThe interest rate risk is limited to any changes in the market value of loans taken or extended for which there is a preference for a fixed interest rate for the entire term. If a loan has no fixed interest rate, TNO policy is to use derivative financial instruments to manage (interim) interest rate fluctuations. The loans are held until the end of the term.

Credit riskTNO runs a credit risk deriving from transactions and this risk pertains to the loss that can arise if a counterparty defaults. This risk is limited by the many and varied parties on which TNO has receivables. A concentration of credit risks is only present in respect of the geographical spread of the outstanding receivables, which are concentrated in the Netherlands.

Market valueThe market value of most of the financial instruments, including extended loans, (other) receivables, cash and creditors plus other payable items, accounted in the balance sheet approximate their

book value. The market value of the other financial instruments accounted in the balance sheet can be illustrated as follows:The market value of the receivables on participations cannot be determined reliably enough. For further information refer to point 3 of the notes.The long-term loans are valued at nominal value. The real value of the loans may deviate from the nominal value but cannot be determined reliably enough.

Of the outstanding USD and GBP currency forward contracts the market value is EUR 1.4 million and the contract value EUR 1.3 million.

Of the outstanding USD and YEN currency forward contracts the market value is EUR 2.1 million and the contract value EUR 2.0 million.

To hedge the interest rate risk for the long-term mortgage of EUR 19.5 million Holland Metrology NV has engaged in a total of EUR 19.5 million interest rate swaps with a term varying from 1 December 2018 (EUR 2.25 and 5.85 million) to 1 July 2025 (EUR 11.4 million). The interest rate swap of EUR 2.5 million has a fixed coupon rate of 3.73%, the interest rate swap of EUR 5.85 million has a fixed coupon rate of 4.85% and the interest rate swap of EUR 11.4 million has a fixed coupon rate of 4.73%, all at a 3-month Euribor. The principal amount of the interest rate swap contracts runs synchronous with the agreed redemption timetable of the loans to which these contracts relate. The market value of these 3 contracts at the end of 2010 was EUR 3.1 million negative.



Assets and liabilities not contained in the balance sheet Per 31 December 2011 the total “operational lease” liabilities over the period 2012 until 2016 was circa EUR 7.7 million (2010: EUR 7.7 million), EUR 3.5 million of which is due in 2012 (2010: EUR 3.7 million) and EUR 4.3 million due in 1 to 5 years (2010: EUR 4.0 million).

The total rent liabilities is EUR 103.9 million (2010: EUR 121.2 million), of which EUR 18.8 million (2010: EUR 17.3 million) has a term of less than one year, EUR 46.4 million (2010: EUR 55.8 million) is due in 1 to 5 years and EUR 38.7 million (2010: EUR 48.1 million) is due after 5 years.

The total bank guarantees provided is EUR 8.0 million (2010: EUR 9.2 million).

Per 31 December 2011 the het total investment liabilities for tangible fixed assets stood at EUR 5.4 million (2010: EUR 2.7 million).

The total credit facility and bank guarantee facility are EUR 46.4 million (2010: 47.1 million) and EUR 11.0 million (2010: EUR 11.0 million) respectively.

Other securities and stipulations for the total credit facility are:— Negative pledge/pari passu and cross default statement.— Positive/negative mortgage statement in respect of the real

estate in Eindhoven.

At the end of 2011 the total suretyships stood at EUR 2.9 million (2010: EUR 1.8 million).

TNO is involved in a number of disputes and legal actions con-nected to normal operations. TNO does not expect the Total resultant liabilities to have any tangible effect on the financial position.

Provisions have been taken for all the disputes and legal actions on the basis of the nominal value of the expenditure expected to be necessary to settle the liabilities and losses.



12 INCOME (in EUR x thousand)

2011 2010

Income from assignments 388,087 369,035

Knowledge as capital:

Within the themes 44,806 47,028

Across the themes (KAVOT) 26,983 27,261

Policy and application oriented knowledge investments 117,133 120,472

Total 577,009 563,796

The income includes the transaction work in progress of EUR 0.4 million negative (2010: EUR 11.5 million negative)

The income is divided by themes/expertise centres as follows:

2011 2010

Healthy Living 74,790 -

Industrial Innovation 86,480 -

Defence, Safety and Security 96,782 -

Built Environment 48,622 -

Information Society 47,565 -

Energy 53,567 -

Transport and Mobility 40,987 -

Technical Sciences 7,761 -

Behavioural and Societal Sciences 4,260 -

Earth, Environmental and Life Sciences 9,564 -

Core area income - 515,799

Other income TNO 7,727 1,511

Income TNO Companies B.V. and its group companies 110,721 77,821

Internal income -11,817 -31,335

Total 577,009 563,796

NOTES TO THE CONSOLIDATEDPROFIT-AND-LOSS ACCOUNT 2011


ASSIGNMENTS

2011 2010

The specification of assignment income for relevant categories:

naar relevante categorieën luidt:

Domestic

Government 94,400 97,367

Industry 147,615 144,181

Total Domestic 242,015 241,548

Foreign

International organisations 37,663 25,746

Other 108,409 101,741

Total Foreign 146,072 127,487

Total 388,087 369,035

13 OTHER OPERATING INCOME

2011 2010

Result on sale of tangible fixed assets -1,152 -966

Other income 23,099 21,869

Total 21,947 20,903

Other income includes income from licences and patents, non-project related income and externally charged costs.



14 DIRECT PROJECT COSTS

2011 2010

Accommodation and energy 235 115

Materials 13,341 15,472

Use of technical resources 3,926 5,135

General management costs 13,181 14,563

Work outsourced 47,101 40,636

Other expenses 9,866 3,670

Total 87,650 79,591

15 PERSONNEL EXPENSES

2011 2010

Wages and salaries 248,707 247,333

Pension expenses 33,611 29,330

Other social security expenses 29,078 30,397

Other personnel expenses 63,907 62,832

Transaction obligation for leave not taken 334 327

Provisions applied:

– social security obligations -468 -789

– redundancies -1,540 -1,871

– reorganisations -8,156 -8,898

– pensions -53 -

365,420 358,661

Allocation to provisions:

– social security obligations 127 116

– reorganisations 4,984 3,818

– redundancies 1,743 1,669

– pensions - -

Total 372,274 364,264

The number of employees (effective average) for 2011 was 3,982 of whom 58 were outside the Netherlands (2010: 4,189 of whom 61 were outside the Netherlands).Remuneration to the TNO Board of Management amounted to EUR 0.9 million (2010: EUR 0.8 million).Remuneration to the members of the TNO Supervisory Board amounted in total to EUR 0.1 million (2010: 0.1 million).



The provisional coverage of the Stichting Pensioenfonds TNO is 99.6% on the basis of the Dutch Central Bank amended rate of interest structure as of 31-12-2011. TNO employees have a pension scheme that is incorporated within the Stichting Pen-sioenfonds TNO. This pension scheme concerns a conditionally indexed average pay ruling. Indexation (adjusted to price rises) of the claims and rights granted occur exclusively if, and insofar as, the pension fund resources allow and the pension fund has approved this. If the circumstances at the pension fund give cause thereto, the board can decide to reduce the claims.

The pension scheme is characterised as a payment agreement by the Pensions Act. The execution agreement with the pension fund is for an unlimited period and remains in force until termi-nated by one of the parties. The main agreements contained in the execution agreement are:

– Indexation gives no cause to amend the premiums– The board sets the premium annually, its basis being established in a graduated interest calculation linked to the

level of coverage.– The maximum premium is 20% (including 2% extra premium

when the coverage level is less than 110%).

The credit crisis and falling interest rate in the past year saw a shortfall in the coverage of the pension fund at 31-12-2011. The level of coverage (market value of the investments expressed as a percentage of the pension obligations provision according to the Dutch Central Bank principles) of the fund at balance sheet date was 99.6%. The minimum equity require-ment (level of coverage) is 105%, according to the Dutch Central Bank. The required equity, given the current investment mix, is 116.9%. In 2009 the pension fund submitted a recovery plan to

the Dutch Central Bank aimed at recovering the equity within 3 years to the requisite minimum and within 15 years to the requisite equity. The recovery plan observes the principles prescribed by the Dutch Central Bank.



16 DEPRECIATION OF TANGIBLE FIXED ASSETS

2011 2010

Depreciation on:

– buildings 4,729 4,797

– fixed technical installations 9,422 8,740

– technical equipment 18,080 19,786

– inventory 1,458 1,776

33,689 35,099

Book loss on assets 628 2,100

Release from:

– equalisation account for investment funds -3,184 -3,121

Total 31,133 34,078

17 EXTRAORDINARY DEPRECIATION

In 2011 there were no extraordinary depreciations.

18 OTHER OPERATING EXPENSES

2011 2010

Accommodation costs 46,577 46,365

Material costs 3,735 3,711

Use of technical equipment 14,687 13,884

General management costs 30,601 32,252

Outsourced work 7,214 8,657

Transaction provisions -849 -2,771

Other expenses 4,740 -215

Amounts extended 837 961

Total 107,542 102,844

19 RESULTS FINANCIAL FIXED ASSETS

This relates to the result of non-consolidated participations and the result of the sale of participations.



Connected partiesTransactions with connected parties occur when a relationship exists between the company, its participations and their executives and management.In normal operations TNO delivers and receives services to and from various connected parties in which TNO has an interest of 50% or less. These transactions are generally performed according to business principles and conditions that are comparable with transactions with third parties.



BALANCE SHEET OF THE TNO ORGANISATIONPER 31 DECEMBER 2011

after appropriation of profit (in EUR x thousand)

31-12-2011 31-12-2010

Fixed assets

Tangible fixed assets 1 167,688 192,627

Financial fixed assets 2 53,505 53,933

221,193 246,560

Liquid assets

Stocks 317 307

Receivables 3 70,696 67,529

Cash 117,033 115,088

188,046 182,924

Total 409,239 429,484

Equity

- General Reserve 122,979 125,808

- Earmarked reserves 67,051 63,756

190,030 189,564

Equalisation account investment funds 39,374 47,944

Provisions 4 15,313 21,849

Long-term debt 5 26 26

Short-term debt 6 164,496 170,101

Total 409,239 429,484


PROFIT-AND-LOSS ACCOUNT 2011OF THE TNO ORGANISATION

(in EUR x thousand)

2011 2010

Income from domestic and foreign assignments 218,855 223,872

Income from government assignments 70,329 73,357

Market income 289,184 297,229





Income from government funding 188,922 194,761

Income 7 478,106 491,990

Other operating income 22,795 20,031

Operating income 500,901 512,021

Direct project costs -83,406 -73,140

Personnel expenses 8 -302,604 -317,994

Depreciation tangible fixed assets -23,034 -27,837

Extraordinary devaluations tangible fixed assets - -

Other operating expenses -92,074 -88,933

Operating expenses -501,118 -507,904

Operating result -217 4.117

Interest income 2,090 1,555

Interest charges -32 -32

Result from ordinary operations before taxes 1,841 5,640

Taxes - -

Results financial fixed assets -1,410 -3,218



CASH FLOW SUMMARY 2011 OF THE TNO ORGANISATION

(in EUR x thousand)

2011 2010


Share of third parties in result - -

Group result 431 2,422

Depreciations on intangible and tangible fixed assets 22,406 25,737

Results of participations incorporated in the result 1,510 3,218

Results from the disposal of fixed assets 1,780 3,066

Transaction provisions -6,536 -3,370

Transaction working capital, excluding cash -8,782 5,251

Dividends received - -

Cash flow from operational activities 10,809 36,324

Investments in intangible fixed assets - -

Investments in tangible fixed assets -12,023 -19,767

Investments in financial fixed assets -4,000 -2,871

Disinvestments in intangible fixed assets - -

Disinvestments in tangible fixed assets 9,592 -196

Sale of participations and redemptions received 2,953 2,042

Cash flow from investment activities -3,478 -20,792

Investment contributions received/repaid -5,386 4,763

Loans received - -

Loan redemptions - -25

Cash flow from funding activities -5,386 4,738


Cash assets as of 1 January 115,088 94,818


Exchange rate differences - -

Cash assets at 31 December 117,033 115,088


PRINCIPLES

GeneralFor the principles of valuation and determination of result refer to the notes to the consolidated annual accounts. This also applies to the other notes insofar as these are not contained here.


NOTES TO THE BALANCE SHEETPER 31 DECEMBER 2011

1 TANGIBLE FIXED ASSETS

Changes in the tangible fixed assets in 2011

Real estate Fixed Technical Inventory Total

and buildings technical equipment

installations





Book value 78,627 78,500 29,934 5,566 192,627


Investments 2,559 6,265 10,176 542 19,542

Disinvestments -7,093 -1,075 -3,117 -87 -11,372

Depreciations -3,749 -9,347 -11,144 -1,350 -25,590

Assets under construction and development - -7,026 -493 - -7,519

-8,283 -11,183 -4,578 -895 -24,939





Book value 70,344 67,317 2,356 4,671 167,688

In the profit-and-loss account the item “depreciation tangible fixed assets” also includes the release from the equalisation account for investment funds. The book value of the tangible fixed assets per 31 December 2011 includes real estate, buildings and fixed technical installations at EUR 29.2 million (2010: EUR 41.0 million) that are the exclusive property of TNO.


NOTES TO THE BALANCE SHEET 2 FINANCIAL FIXED ASSETS

Particpations Loans Total

Share in equity

Balance at 31-12-2010 41,040 323 12,570 53,933

Transactions:

Investments and extended loans - - 4,000 4,000

Disinvestments and redeemed loans -9 - -2,944 -2,953

Result participations -1,510 - - -1,510

Reserve conversion disparities 35 - - 35

Balance per 31-12-2011 39,556 323 13,626 53,505

Under group companies includes the participation in TNO Companies B.V. (100%). Of the loans EUR 10.5 million have a term exceeding one year.

3 RECEIVABLES

31-12-2011 31-12-2010

Receivables related to assignments 55,207 49,811

Receivables on group companies 5,113 1,610

Receivables on participations 639 907

Receivables on government funding 3,694 8,665

Other receivables 6,043 6,536

Transitory assets

Total 70,696 67,529

Of the receivables EUR 2.8 million have a term exceeding one year.

Group companies

Share in equity


NOTES TO THE BALANCE SHEET 4 PROVISIONS

Balance per Withdrawn Added Released Balance per

31-12-2010 in 2011 in 2011 in 2011 31-12-2011

Social liabilities 2,203 468 127 - 1,862

Claims 800 - - - 800

Reorganisations 8,073 6,185 2,705 1,432 3,161

Capital outflows 1,638 1,043 1,743 498 1,840

Major maintenance 1,956 1,651 1,651 - 1,956

Other 7,179 1,380 376 481 5,694

Total 21,849 10,727 6,602 2,411 15,313

Of the provisions circa EUR 7.7 million are long-term (2010: EUR 8.2 million).The provision for social liabilities concerns capital outflow costs, supplements to WAO payments as well as future payments deriving from pension rights to past employment years not financed elsewhere.The provision for claims covers the estimated liabilities deriving from expected submitted unsettled claims and is valued per (potential) claim at the estimated future expenditure including external processing costs.The reorganisation provisions mainly concern agreed departure schemes with ex-employees. The provision for cash outflows relate to the expected costs relating to the proposed dissolution of employment contracts with employees deriving from normal personnel mainte-nance.The provision for major maintenance at the end of 2011 is based on maintenance to be carried out in relation to the multi-year mainte-nance plan 2010-2013

5 LONG-TERM DEBT

31-12-2011 31-12-2010

Other loans 26 26

Total 26 26


NOTES TO THE BALANCE SHEET 6 SHORT-TERM DEBT

31-12-2011 31-12-2010

Creditors 29,156 37,211

Debt to group companies 5,171 1,099

Debt to participations 66 134

Taxes and social insurance premiums 12,485 14,031

Holiday allowance liabilities 7,853 8,058

Liabilities for untaken leave 18,243 18,891

Other debt 28,259 27,816

Deferred liabilities 32,139 29,102

Work in progress 31,124 33,759

Total 164,496 170,101

WORK IN PROGRESS

31-12-2011 31-12-2010

Cumulative costs less provisions for losses and risks 366,921 349,593

Minus cumulative declared instalments -398,045 -383,352

Total work in progress -31,124 -33,759

Balance of working in progress >0 70,951 63,179

Balance of working in progress <0 -102,075 -96,938

Total work in progress -31,124 -33,759

The deferred liabilities mainly concern deferred government funding, prepayments received in the context of specific research projects.


NOTES TO THE PROFIT-AND-LOSS ACCOUNT 2011

7 INCOME (in EUR x thousand)

2011 2010

Industry assignments 119,840 125,358

Assignments for international organisations 34,562 25,518

Other foreign assignments 64,453 72,996

99,015 98,514

Government assignments 70,329 73,357

Market income 289,184 297,229





Government funding income 188,922 194,761

Total 478,106 491,990

8 PERSONNEL EXPENSES

2011 2010

Wages and salaries 198,092 214,714

Pension expenses 27,644 25,619

Other social expenses 23,384 25,429

Other personnel expenses 58,203 58,058

Transaction for liability of untaken leave 332 327

Transactions for provisions -5,051 -6,153

Total 302,604 317,994


The following fees were charged by KPMG Accountants N.V. to the TNO organisation, its subsidiaries and other companies it consolidates as stipulated in article 2:382a of the Dutch Civil Code.

9 ACCOUNTANT FEES (in EUR x thousand)

2011 2010

Audit of the annual accounts 398 504

Other audit assignments 385 429

Fiscal advice 305 47

Total 1,088 980

NOTES TO THE PROFIT-AND-LOSS ACCOUNT 2011


REPORT ACCORDING TO THE ACT ON THE PUBLICATION OF PUBLICLY FUNDEDTOP SALARIES (WOPT)

Employed

from

Departed

on

Hours

per

week

Taxable

salary

2011

(fixed)

Taxable

salary

2011

(variable)

Pension

contribution

2011

Redundancy

payment

2011

Remune-

ration

2011

Taxable

salary

2010

(fixed)

Taxable

salary

2010

(variable)

Pension

contribution

WG 2010

Redundancy

payment

2010

Remune-

ration

2010

1 Chairman Board of Management 7-2003 40 238,951 36,428 25,226 - 300,605 242,856 - 20,621 - 263,477

2 Director 5-1977 40 202,917 18,527 19,252 - 240,696 194,382 - 15,762 - 210,144

3 Member Board of Management 10-2002 40 168,975 38,944 26,743 - 234,662 205,225 - 21,847 - 227,072

4 Member Board of Management 1-2009 40 177,446 28,500 20,446 - 226,392 179,111 - 16,759 - 195,870

5 Corporate dept. Director 9-2009 40 166,379 23,288 17,303 - 206,970 162,614 - 14,079 - 176,693

6 Director 4-1992 40 161,467 24,412 17,980 - 203,859 160,266 - 14,563 - 174,829

1, 2, 3, 4, 5, 6 Salary is based on a 40-hour working week and comes within the salary structure applied by TNO since the beginning of the 1980s.

Employed

from

Departed

on

Hours

per

week

Taxable

salary

2011

(fixed)

Taxable

salary

2011

(variable)

Pension

contribution

2011

Redundancy

payment

2011

Remune-

ration

2011

Taxable

salary

2010

(fixed)

Taxable

salary

2010

(variable)

Pension

contribution

WG 2010

Redundancy

payment

2010

Remune-

ration

2010

1 Manager 10-1979 7-2011 40 108,567 - 7,936 392,519 509,022 129,543 - 11,128 - 140,671

2 Corporate dept. Director 11-1969 8-2011 40 310,784 31,415 13,399 - 355,598 198,139 - 16,277 - 214,416

3 Director 7-1994 6-2011 40 99,541 9,269 7,219 222,310 338,339 132,351 - 11,794 - 144,145

4 Manager 3-1983 3-2011 40 33,446 - 3,187 257,752 294,385 114,066 - 10,446 - 124,512

5 Information expert 5-1979 10-2011 40 66,090 - 7,069 203,371 276,530 67,782 - 7,043 - 74,825

6 Manager 1-1999 3-2011 40 31,809 - 3,111 200,459 235,379 108,133 - 10,202 - 118,335

7 Manager 3-2002 4-2011 40 66,047 7,529 4,113 151,676 229,365 104,924 - 10,101 - 115,025

8 Project Manager 5-1991 5-2011 40 48,004 - 4,415 173,000 225,419 91,801 - 8,727 - 100,528

9 Scientific employee 4-1985 1-2011 40 32,572 - 699 183,049 216,320 53,125 - 6,962 - 60,087

10 Director 1-2003 4-2011 40 189,034 17,970 5,903 - 212,907 150,741 - 14,346 - 165,087

11 Manager 1-1999 11-2010 40 - - - 216,000 216,000 117,447 - 9,070 - 126,517

1, 3, 5, 7, 8, 11 Redundancy is not attributable to own fault. Relocation possibilities are not evident. Respective employee received compensation based on the neutral magistrate formula.

2 Respective employee received a higher taxable income due to the payment of leave.

4, 6, 9 Job is terminated. Redundancy is not attributable to own fault. Relocation possibilities are not evident. Respective employee received compensation based on the neutral magistrate formula.

10 Respective employee received a higher taxable income because of the payment of life-course savings scheme amount due.

ACTIVE

Job title

REDUNDANT/POST-ACTIVE PER 31-12-2011

Job title


PARTICIPATION DATA Name Domicile %

TNO Bedrijven B.V. Delft 100

TNO Real Estate Holding B.V. Delft 100

TNO Deelnemingen B.V. Delft 99

TNO Technostarters B.V. Delft 100

TNO Management Consultants B.V. Apeldoorn 100

– TNO Interim Management B.V. Apeldoorn 100

– TNO MC Customer Management B.V. Apeldoorn 60

Investors in People Nederland B.V. Eindhoven 100

CBO BV Apeldoorn 100

Dutchear B.V. Delft 100

TNO Automotive International B.V. Delft 100

– TNO Automotive Safety Solutions B.V. Delft 100

– TNO Madymo B.V. Delft 100

– TNO Madymo North America Inc. Delaware, VS 100

– TNO Automotive Japan K.K. Yokohama, Japan 100

– TNO Automotive Germany GmbH Stuttgart, Germany 100

– TNO Automotive China Co. Ltd. Shanghai, China 100

– TNO Automotive Korea Ltd. Seoul, Korea 100

– TNO UK Holding Ltd. London, GB 100

– Delft Carshalton Ltd. Carshalton, GB 100

Den Haag Centrum voor Strategische Studies B.V. Den Haag 80

Holland Metrology N.V. Delft 100

– NMi Nederland B.V. Delft 100

– Verispect B.V. Delft 100

– NMi Certin B.V. Delft 100

– VSL B.V. Delft 100

– NMi Italia S.R.L. Padua, Italy 70

TNO Diana B.V. Delft 70

– Femsys Ltd. Leicester, GB 100

– TNO Diana UK Ltd. Leicester, GB 100

– TNO Diana NA Inc. Delaware, VS 100

TNO Heimolen B.V. Bergen op Zoom 100

DUCARES B.V. Zeist 100

SU Biomedicine B.V. Zeist 70

Delft Patents B.V. Delft 90

BATAVIA Bioservices B.V. Leiden 75

– BATAVIA Holdings Inc Delaware, VS 100

– BATAVIA Bioservices Inc Delaware, VS 100

APP Beheer B.V. Bergen op Zoom 100

Aerospace Propulsion Products B.V. Hoogerheide 100

AT THE END OF 2011 TNO PARTICIPATED DIRECTLY OR INDIRECTLY IN THE FOLLOWING COMPANIES


Name Domicile %

APP Onroerend Goed B.V. Klundert 100

– TNO Triskelion B.V. *) Zeist 100

– TNO Homologations B.V. *) Helmond 100

ProQares B.V. *) Rijswijk 100

– ProQares USA Inc. (voorheen BCPS) Wahington, VS 100

PARTICIPATION DATA

Name Domicile %

Mestcorp Inc. Lake Oswego, VS 6

BG Medicine Inc. Waltham, VS 0

Transport & Mobility Leuven N.V. Leuven, Belgium 50

Prime Vision B.V. Delft 40

GnTel B.V. Groningen 34

WTCW N.V. Amsterdam 6

Noord Tech Ventures C.V. Groningen 3

Delbia B.V. Beverwijk 24

Dyadic International Inc. Jupiter, VS 0.1

TNO International Agencies B.V. Delft 100

NMi UK Ltd. Bangor 51

Sino-Euro Biomedicine Co. Ltd. Chengdu Sichuan 50

Delft Sense B.V. Delft 50

ConsumersVoice B.V. Groningen 90

Beijing Building Technology Development Company Ltd. Beijing, China 30

Dariuz B.V. Eindhoven 30

LEGYON B.V. Leeuwarden 40

Cropwatch Holding B.V. Oosterbeek 33

Cropwatch B.V. Oosterbeek 80

TNO Science & Technology Consultation Co. Ltd. Chengdu, China 100

Efectis Holding SAS St.Remy les Chevreuse 50

– Efectis France SAS St.Remy les Chevreuse 100

– Efectis Nederland B.V. Delft 100

– Efectis Investment NL B.V. Rijswijk 100

– Efectis Real Estate Company B.V. Rijswijk 100

– Efectis Ibérica S.L. Madrid, Spain 54

– Efectis Eurasia Istanbul 100

Efectis Era Avrasya Istanbul 66

TÜV Rheinland TNO Automotive International B.V. Helmond 50

SoLayTec B.V. Eindhoven 30

Automotive Facilities Brainport Holding N.V. Helmond 24

European Electric Mobility Center B.V. Helmond 95

THE FOLLOWING COMPANIES ARE NOT CONSOLIDATED:

*) consolidation from 2011


Name Domicile %

AFB Driving Guidance Lab B.V. Helmond 95

CelSian Glass & Solar B.V. Eindhoven 100

DISPOSED/TERMINATED IN 2011

Instituut voor Sportaccomodaties (ISA SPORT) B.V. Arnhem 65

TNO Blgg AgriQ B.V. Wageningen 60

– AgriQ Laben Ltd. Antalya, Turkey 51

TNO Automotive Advanced Engineering B.V. Delft 100

BiosparQ B.V. Delft 80

Twente Inst. for Wireless and Mobile Communications B.V. Enschede 25

S&D Solutions B.V. Delft 100

3D Metal Forming B.V. Rijswijk 45

Inmotio Object Tracking B.V. Delft 45

Brightsight B.V. Delft 1

Verkeersradar B.V. Haarlem 50

PARTICIPATION DATA


STATEMENT OF THE TNO BOARD OF MANAGEMENT

The consolidated and company balance sheet as at 31 December 2011 and the consolidated and company profit and loss account for the year then ended have been derived from the financial statements of TNO for the year 2011.

Our auditors issued an unqualified opinion on these financial statements in their auditor’s report, dated May 16, 2012. This auditor’s report, as a part of the Dutch Annual Audit, can be obtained from TNO.

OTHER INFORMATION



The GRI index chart reveals which GRI ¬indicators are contained in the annual review and where indicated as ‘+’ contain a description of the indicator, ‘±’ a partial description and ‘-‘ no description is contained in the report. ‘NR’ means that the subject is not relevant to TNO.

FOR THIS REPORT WE HAVE USED THE G3 GUIDELINES FOR SUSTAINABILITY REPORTS ISSUED BY THE GLOBAL REPORTING INITIATIVE (GRI). THE GUIDELINES HAVE BEEN APPLIED AT LEVEL B+, SEE THE STATEMENT OF THE GRI. IN ADDITION TO THE COMPULSORY INFORMATION (CATEGORIES 1.1 TO 4.17 AND THE POLICY STATEMENTS) WE HAVE SELECTED AT LEAST TWENTY ECONOMIC, SOCIAL AND ENVIRONMENTAL INDICATORS.

GRI GUIDELINES FOR SUSTAINABILITY REPORTS

StatementGRI Application Level Check

GRI hereby states that TNO has presented the “TNO Annual Review 2011” to GRI’s Report Services which have concluded that the report fulfils the requirement of Application Level B+.GRI Application Levels communicate the extent to which the content of the G3.1 Guidelines has been used in the submitted sustainability reporting. The Check confirms that the required set and number of disclosures for that Application Level have been addressed in the reporting and that the GRI Con-tent Index demonstrates a valid representation of the required disclosures as described in the GRI G3.1 Guidelines.Application Levels do not provide an opinion on the sustainability perfor-mance of the reporter or on the quality of the information in the report.

Amsterdam, 11 April 2012

Nelmara ArbexDeputy Chief ExecutiveGlobal reporting Initiative

The “+” has been added to this Application because TNO has submitted (part of) this report for external assurance. GRI accepts the reporter’s own criteria for choosing the relevant assurance provider.

The Global Reporting initiative (GRI) is a network-based organisation that has pioneered the development of the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. The GRI Guidelines set out the principles and indicators that organisations can use to measure and report their economic, environmental and social performance.www.globalreporting.orgDisclaimer: Where the relevant sustainability reporting includes external links, including to audiovisual material, this statement only concerns material submitted to GRI at the time of the Check on 29 March 2012. GRI explicitly excludes the statement from being applied to any later changes to such material.


GRI TABEL

STRATEGY AND ANALYSIS

1.1 Statement of the CEO + Report Board of Management 10-12

1.2 Consequences, risks and possibilities + Report Board of Management 10,11

Organisation profile

2.1 Name of organisation + The company name TNO stands for

Netherlands Organisation for Applied Scientific

Research.

2.2 Brands, products and/or services + TNO is a Research and Technology

Organisation that realises applied research and

innovations for and with industry and government

customers, nationally and internationally. We work on

the basis of societal themes.

2.3 Operational structure of the

organisation

+ Corporate Governance

Report Board of

Management

29,

10,12

and this

chart

The reorganisation implemented in January 2011

incorporates a new operatio¬nal structure steered

by themes and the safeguarding and development of

knowledge.

2.4 Location of headquarters + The statutory domicile of TNO is Delft.

2.5Countries with a branch + TNO is domiciled in the Netherlands and participates

in several companies in countries stated in the list of

participations.

The complete list is shown on www.tno.nl/locaties.

2.6 Ownership and legal form + Corporate Governance 29 The TNO Act stipulates the structure of the

organisation and its relationship with the government.

In 2011 TNO came under the ministerial responsibility

of the minister of Economic Affairs, Agriculture and

Innovation, but performed its tasks independently.

Government funding is established every four years on

the basis of the Strategic Plan.

2.7 Sales markets + Report Board of Management

Explanation to the

consolidated profit-and-loss

account

10,

50

2011 was a year focused on the structuring by 7

societal themes in which TNO works with stakeholders

in society (including industry and government). These

interrelated themes are: Healthy Living, Industrial

Innovation, Defence, Safety and Security, Energy,

Transport and Mobility, Built Environment, and

Information Society.

The distribution of activities across the different

stakeholders is evident from the annual accounts.

Description of GRI component Included Section Page Explanation


2.8 Size of company + Consolidated profit-and-loss

account and the balance

sheet along with the related

notes

41, 50

57, 64

2.9 Organisational changes during the

reporting period

+ 10, 11,

27

From January 2011 the reorganisation had an impact

on the organisation.

2.10 Distinctions during the reporting

period

+ No specific distinctions

Report parameters

3.1 Reporting period + Consolidated Balance Sheet 56 The reporting period runs from 1-1-2011 to 31-12-2011.

3.2 Previous review + This

chart

The annual review of 2010 appeared in May 2011.

The regular and SCR component were an integral part

of this annual review.

3.3 Reporting cycle + This

chart

This report is published annually.

3.4 Contact(s) + Colophon

GRI TABELDescription of GRI component Included Section Page Explanation


3.5 Process for determining the content of

the report

+ Employees make the

difference; Corporate

social responsibility

This

Chart

The content of the annual report is based on the

interests of the key stakeholders of TNO, namely the

personnel and customers (government and industry).

The business stakeholders must be able to verify the

financial solidity of TNO on the basis of the annual

review; for the government it is essential that external

demand and an address to societal challenges are

expressed in the TNO choices. Discussion on this takes

place internally and externally. All issues are put in a

materialities matrix that sets TNO’s interests against

those of society. Those subjects of major concern for

both TNO and society are included in the reporting:

energy in the built environment and ICT, sustainable

mobility (in respect of own operations and those

for customers); sustainable purchasing; diversity,

education and code of conduct; TNO’s responses to

topics of societal sensitivity like defence research,

nanotechnology, shale gas and animal testing; TNO

contribution to developing countries (Innovation for

Development). The Board of Management is ultimately

responsible for the contents.

3.6 Delineation + This

chart

This annual review concerns TNO, whereby a

distinction is made between the TNO Organisation and

the participations.

3.7 Restrictions to the scope or delineation + This

chart

The chapters ‘Employees make the difference’ and

‘Corporate social responsibility’ are exclusively

applicable to the TNO Organisation, not to the

participations.

3.8 Basis for reporting on partnerships + Notes to the consolidated

annual accounts 2011

41, 49

67, 68

3.9 Calculation principles + Notes to the consolidated

annual accounts

The environmental footprint

of TNO

35, 36,

19 en

This

chart

The principles for the annual accounts are extensively

explained from p.35;

The calculation principle for the environmental

footprint is explained on p.19 and in the background

document ‘Explaining the environmental footprint of

TNO 2011’, which can be found at www.tno.nl/mvo.

3.10 Reformulation + There has been no reformulation.



3.11 Changes in the reporting + No significant changes occurred during the reporting

period that are relevant to this reporting.

3.12 Standard elements of the information

provision

+ This

Chart

3.13 External validation + Accountant statement;

Assurance report

25, 26

Governance, commitment and engagement

4.1 Governance structure + Corporate Governance 29,30

4.2 Chairman of the highest governing body + Composition of Boards 4

4.3 Independence of highest governing

body

+ Report of Supervisory Board

Corporate Governance

8, 29

4.4 Mechanisms for shareholders and

employees for recommendations to highest

governing body


difference

15

4.5 Link between the compensation to

highest governing body and performance of

the organisation

+ Report of Supervisory

Board;

Report according to the act

regarding publication of top

incomes funded by public

funds (WOPT);

Notes to the consolidated

annual accounts

9, 52,

66

4.6 Processes whereby the highest

governing body ensures conflicts of interest

are avoided

+ Corporate Governance 29, 30 The Corporate Governance section describes how

TNO applies the Code for the proper governance of

performance of which conflict prevention is a part.

4.7 Process for determining the

qualifications of the members of the Board

of Management to supervise the strategy in

terms of socio-economic and environmental

topics

+ Corporate social

responsibility

18 Supervising the strategy in respect of ‘sustainability’

related topics is delegated to a CSR steering group.

4.8 Internally developed mission

statements and codes of conduct important

for CSR performance

+ Corporate social

responsibility

18 In October 2011 the Policy Statement on Corporate

Social Responsibility approved by the RvB reveals

how TNO treats the topics people, planet and profit

whereby there is a subdivision into Ethics, Health and

Safety, Labour and Environment.



4.9 Procedures of the Board of

Management for assessing, adjusting and

managing sustainability performance

+ Corporate social

responsibility

18 TNO has an SCR steering Group with the director

of Finance and Facilities, the innovation director

of Buildings and Infrastructure and the director of

Business and Information. They supervise the CSR

officer. This steering group consults at least once a

year with the Board of Management on the results

achieved and adjustment of the CSR policy.

4.10 Processes for evaluating own

performance of the Board of Management

+ Corporate Governance 9, 29 The Remuneration Committee and the Selection and

Recruitment Committee both met twice.

4.11 Explanation of application of the

precaution principle

+ This

Chart

The general terms and conditions of TNO are based on

limited liability in correspondence with the nature of

the work performed by TNO. For that part of the work

which falls under limited liability TNO has insurance

cover.

TNO exercises its responsibility in respect of fraud

prevention, making use of the administrative

organisation, internal control measures, the Code of

Conduct and the Whistleblower regulation.

4.12 External developed initiatives to which

the organisation subscribes


difference;

Corporate social

responsibility

17, 21,

22, 23

In 2011 TNO committed to several development

cooperation, mobility and education initiatives.

4.13 Membership of associations and

interest groups

+ Board of Management

Report

10 and

this

chart

TNO participates in countless organisations.

Strategically international cooperation in the context

of EARTO (trade association of Europe’s specialised

research and technology organisations) and nationally

with the TO2 federation. Since 2011 Jan Mengelers

(chairman of the RvB) has been chair of EARTO.

4.14 List of relevant groups of stakeholders

for the organisation


Report

10-12

and this

chart

Key stakeholders for TNO: employees, ministries,

industry (both large companies and SMEs) and society.

A chief role is played by the ministries OC&W, E,L&I

and Defence. For each theme there is an extensive

account for the list of stakeholders available in the

Strategic Plan 2011-2014 (downloadable from: www.

tno.nl/downloads/tno_strategisch_plan_2011_2014.

pdf: pp. 40, 50, 60, 70, 78, 86, 94).



4.15 Basis for selection of shareholders + This

chart

TNO embraces a wide range of stakeholders in the 7

themes. For each theme there is an extensive account

for the ‘long-list’ of stakeholders available in the

Strategic Plan 2011-2014 and on the pages indicated

in the explanation in 4.14.

4.16 Stakeholder approach + Board of Management

Report

10-12

and this

chart

The structure of the strategic plan 2011-2014

incorporates an extensive consultation with

stakeholders.

4.17 Reaction of the organisation to

the topics discussed in contact with

stakeholders


Report

10, 11

and this

chart

Demand is key to TNO’s ‘proposal to society’: the

strategy of TNO is essentially determined by these

stakeholder relationships. In 2011 a key connection

moment occurred in the link with the nine economic

top sectors selected by the government.

Policy statements

DMA EC Policy statement: Economic + Board of Management

Report

10-12

- DMA EC: Economic performance + Board of Management

Report

Consolidated profit-and-loss

account

- DMA EC Presence in the market NR

- DMA EC Indirect economic impact + Board of Management

Report

10, 11

and this

chart

TNO aims for ‘Impact’ (title of the strategic plan 2011-

2014 is: ‘Innovate with impact’) and strives to reach

this in partnership with other parties and through a

focus on seven societal themes.

DMA EN Policy statement: Environment

(Aspects: Materials, Energy, Emissions and

waste, Products and services, Transport,

Overall)

+ Corporate social

responsibility

18

and this

chart

This is described in the CSR Policy Statement. The

relevant aspects are considered in this annual report

in the ‘TNO environmental footprint’ section. There is

a cohesive policy for each of the aspects stated in the

internal operation, with execution in the hands of the

corporate department and Finance and Operations

department.



DMA LA Policy statement: Employees

(Aspects: Employability, employer-employee

relations, health and safety, training and

diversity)


difference;

Corporate social

responsibility

14, 18

and this

chart


section ‘Employees make the

difference’ explores in full TNO policy regarding the

relevant aspects relating to policy for employees:

development of working terms and conditions, training

and diversity. All TNO employees also come within a

collective labour agreement.

DMA HR Policy statement: Human rights

(aspects: investment and purchasing policy,

non-discrimination)

+ Corporate social

responsibility;

Innovation for Development

18, 22,

23 and

this

chart

This is described in the CSR Policy Statement.

Employees working in development cooperation

receive special training in ethics in developing

countries.

DMA SO Policy statement:

Society

- aspect of Corruption

- aspect of Public policy

- aspect of Anti-competitive behaviour

+ Report by Supervisory

Board;

Corporate Governance;

Employees make the

difference

8, 29

30, 18

and this

chart


Supervisory Board ensures correct execution of the

TNO Act, as contained in the Corporate Governance

whereby independence and avoidance of unfair

competition are central. Integrity plays a key role

as contained in the code of conduct discussed and

agreed with all new employees.

DMA PR Policy statement: Product

Responsibility (aspects: Product and

service labelling and Compliance)

+ This

chart

TNO’s mission is to create innovations and generally

complete projects with the delivery of a report. The

quality is improved by the outcome of customer

satisfaction surveys. In the GRI table the outcomes are

considered, see PR 5.

Economic indicators

EC 1 Direct economic value + Consolidated balance sheet

en consolidated annual

accounts including notes

31-55

EC 2 Financial implications as a

consequence of climate change

-

EC 3 Dividend cover plan -

EC 4 Financial support from the

government

+ Consolidated balance sheet

en consolidated annual

accounts including notes

3, 7, 51

EC 5 Ratio of standard staring salary and

local minimum wage

-

EC 6 Local suppliers -

EC 7 Local personnel recruitment -

EC 8 Services and investments geared to

societal importance

+ Corporate social

responsibility; Innovation for

development

22, 23 The investments in Development cooperation are a

clear signal of TNO’s societal investments.



EC 9 Description of indirect economic

impact


Report

10-12 Innovation for Life is key within TNO and specifically

within the Strategic Plan 2011-2014.

Environmental indicators

EN 1 Weight of materials - The weight of the materials is not monitored.

EN 2 Materials used from external sources + Corporate social

responsibility;

Energy and ICT; Sustainable

purchasing

21, 22

and this

chart

In 2011 a start was made on introducing new

workplaces (ICT hardware) for all TNO personnel.

Disposal of old workplaces: contract with Viafrika for

reuse and/or recycling of materials; new workplace

requirement: 50% recyclable.

EN 3 Direct primary energy consumption + Corporate social

responsibility;

A list of environmental

indices

19, 20

EN 4 Indirect energy consumption + Corporate social

responsibility;

A list of environmental

indices

19, 20

EN 5 Energy saving + Corporate social

responsibility

19, 20,

21, 22

The change in energy consumption is part of the

environmental footprint.

EN 6 Initiatives to offer energy-efficient

products or services and the corresponding

fall in energy consumption

± Corporate social

responsibility

20, 21,

22 and

this

chart

Sustainability and scarcity are the central thread

through the themes; consequences for energy

consumption have not yet been calculated.

EN 7 Initiatives to indirectly reduce energy

consumption

+ Corporate social

responsibility

20-22

EN 8 Total water consumption ± Corporate social

responsibility;

Environmental footprint

2011

19

EN 9 Water extraction -

EN 10 Reuse of water -

EN 11 Country location in/near protected

areas

-

EN 12 Significant effects on the biodiversity -

EN 13 Habitat protection -

EN 14 Strategies and policy to manage the

effects on the biodiversity

-

EN 15 Threatened or protected animal

species

-



EN 16 Emission of greenhouse gases + Corporate social

responsibility

19, 20

and this

chart

Background document ‘Explaining the TNO

Environmental Footprint 2011’, at www.tno.nl;

The IPCC method for GWP (Global Warming Potential)

100a is used to calculate greenhouse gas equivalents

for direct emissions and scope 3 level.

EN 17 Other indirect emission of

greenhouse gases

+ Corporate social

responsibility

19, 20

EN 18 Initiatives to reduce indirect

greenhouse gases

+ Corporate social

responsibility

20, 22

EN 19 Emission of ozone degrading

substances

-

EN 20 NO- and SO-airborne emissions -

EN 21 Total water discharge by quality -

EN 22 Total weight of waste -

EN 23 Number and volume of significant

discharges

-

EN 24 Hazardous waste -

EN 25 Bodies of water and related habitats

influenced by discharge of water

-

EN 26 Initiatives to reduce environmental

harm

+ Corporate social

responsibility

18-24

EN 27 Recoverable percentage of weight of

products sold

-

EN 28 Monetary value of significant

penalties

-

EN 29 Environmental impact of the

transport of goods and employees

+ Corporate social

responsibility

22

EN 30 Investments in and spending on

environmental protection

+ Corporate social

responsibility

21-24

Social indicators

LA 1 Profile of personnel base + Employees make the

difference

14 and

this

chart

At the end of 2011 3403 employees had a permanent

contract and and 340 employed had a fixed-term

contract. 971 TNO employees had a part-time contract

on 31 December 2011.

LA 2 Personnel turnover, split by group

(region, gender, age)

-



LA 3 Employee benefits not valid for

part-time or temporary contracts


difference

15 and

this

chart

The TNO terms and conditions of employment apply

to all employees contracted by TNO, regardless of full-

time or part-time employment. Temporary contracts

are customised and sometimes include, restricted or

otherwise, certain compensation for fiscal reasons

given the length of the contract.

LA 4 Percentage of employees that are part

of the collective labour agreement


difference

15 and

this

chart


to all employees contracted by TNO, whereby each

employee has an individual labour contract.

LA 5 Minimum notice in relation to

operational changes

-

LA 6 Percentage of personnel base

represented in health and safety

committees

+ This

chart

In 2011 the RvB approved the document “Health and

safety: the organisation model” in which responsibility

for occupational health and safety is explicitly laid

in the line organisation of Expertise areas, Themes,

Corporate services and TNO Companies. The

introduction of TNO’s own orchestration model means

that employees and their managers are co-responsible

for preventing and tackling absence. A substantial

portion of employees is involved in occupational health

and safety, with 350 relief assistants, 60 prevention

assistants, 4 bio-safety officers, 15 radiation experts

and about 400 room supervisors.

LA 7 Work disability -

LA 8 Risk management programmes in

relation to serious illness

-

LA 9 Health and safety issues agreed with

the union

-

LA 10 Average number of hours for

education and training

- Employees make the

difference

15, 16

and this

chart

Distribution per (type) of employee is not effected

centrally.

LA 11 Programmes for competence

management and lifelong learning


difference

15, 16

LA 12 Percentage of employees with

performance and career development

appraisal interview


difference

15, 16 TNO policy is for each employee to have an annual

performance and development appraisal interview.

LA 13 Diversity of personnel + Employees make the

difference



LA 14 Relationship between basic salaries

of men and women


difference

15, 16

and this

chart


to all employees contracted by TNO, whereby each

employee has an individual labour contract and, of

course, no gender distinction is made in this respect.

HR 1 Investment agreements that contain

human rights clauses

NR

HR 2 Verification of key suppliers complying

with human rights

- TNO adheres to Dutch law and legislation such that

there is no need for supplementary policy in this field.

HR 3 Training in the area of human rights + Corporate social

responsibility; Innovation for

Development

22, 23

and this

chart

The Development Cooperation team is trained in

acting ethically in developing countries.

HR 4 Discrimination + This

chart

No instances of discrimination within TNO were

reported in 2011.

HR 5 Freedom of association -

HR 6 Child labour NR

HR 7 Imposed or compulsory labour NR

HR 8 Safety personnel trained in complying

with organisation policy in respect of

human rights

NR

HR 9 Rights of original population NR

SO 1 Societal activities -

SO 2 Business entities analysed for

corruption related risks

-

SO 3 Training in anti-corruption policy + 17 and

this

chart

Integrity is one of TNO’s core values within the code of

conduct. This aspect is part of the introduction course

that all (196 = 5% employees) new TNO employees

followed in 2010.

SO 4 Measures following corruption + This

chart

Within TNO in 2011 there were no known cases of

corruption.

SO 5 Public policy stance NR

SO 6 Contributions to political parties + This

chart

TNO makes no financial contribution to political

parties.

SO 7 Penalties for anti-competitive

activities

+ This

chart

In 2011 no sanctions were taken related to anti-

competitive or associated activities.

SO 8 Monetary value of significant

penalties

+ This

chart

In 2011 there were no penalties or other measures

imposed as a consequence of non-compliance with law

and legislation.

PR 1 Assessment of health and safety

impact

-

PR 2 Incidents of non-compliance with

health and safety regulations of products

and services

-



PR 3 Compulsory information on products

and services

-

PR 4 Incidents of non-compliance with

compulsory information on products and

services

-

PR 5 Customer satisfaction + Board of Management

Report

10, 11

and this

chart

TNO constantly has its customer satisfaction checked

by an external, independent agency and supplements

this with its own assessments after the completion of

projects. In 2011 some 330 projects were externally

assessed. The overall score (on a 5-point scale) was

4.2 (the same as in 2010). Knowledge/expertise

is regarded as a great strength while delivery time

and price/quality can be improved. This picture is

confirmed by internal assessments. The questionnaire

was adjusted in 2011 to the new strategy and

extended with questions on the economic and societal

impact that the customer had achieved or hoped to

achieve through the project performed by TNO.

PR 6 Legislation concerning marketing

communication

-

PR 7 Incidents of non-compliance

with legislation concerning marketing

communication

-

PR 8 Complaints about customer privacy -

PR 9 Monetary value of significant

penalties

+ This

chart

TNO was not subject to any penalties in 2011.



EDITING AND PRODUCTIONMarketing and Communications

TEXTMarketing and Communications

DESIGNBARLOCK, Den Haag

PHOTOGRAPHY Thijs Wolzak

©TNO, May 2012

COLOPHON


A CONNECTED SOCIETY TNO STUDIES THE IMPACT OF INFORMATION SOCIETIES AND ENCOURAGES THE INTRODUCTION OF NEW SERVICES, APPLICATIONS AND POLICY ON THE BASIS OF THE LATEST ICT, MEDIA AND SPACE TECHNOLOGY.

MANAGING DIRECTORProf. dr. ir. Erik Huizer+31 (0)88 86 670 89 | [email protected]

FUTURE INTERNET USE

Director of Innovation:Prof. Erik Fledderus+31 (0)88 86 670 95 | [email protected]

SOCIETAL IMPACT OF ICT

Director of Innovation:Frank van Aken, MSc+31 (0)88 86 670 17 | [email protected]

VITAL ICT INFRASTRUCTURES

Director of Innovation:

Erik Peeters, MSc

+31 (0)88 86 672 26 |

SPACE


Bas Dunnebier MSc, PDEng.

+31 (0)88 86 663 85 | [email protected]




SUATAINABLE ENERGY SUPPLY TNO CONTRIBUTES TO SUSTAINABLE, EFFICIENT AND A GUARANTEED SUPPLY OF ENERGY THROUGH INNOVATIONS.

MANAGING DIRECTORDr. Mart van Bracht+31 (0)88 86 644 00 | [email protected]

OIL AND GAS


Dr Chris te Stroet

+31 (0)88 86 647 56 | [email protected]

ENERGY EFFICIENCY


Suzanne van Kooten, MSc

+31 (0)88 86 671 67 | [email protected]

NETHERLANDS GEOLOGICAL SURVEY


Tirza van Daalen, MSc

+31 (0)88 86 625 09 | [email protected]



STRUCTURAL INDUSTRY COMPETITIVENESS TNO STRENGTHENS THE INNOVATIVE POWER OF INDUSTRY BY INNOVATING PRODUCTS AND PROCESSES WITH A STRONG FOCUS ON SUSTAINABILITY.

MANAGING DIRECTORMr. Arnold Stokking, MBA+31 (0)88 86 683 14 | [email protected]

HIGHTECH SYSTEMS AND MATERIALS


Dr Egbert-Jan Sol

+31 (0)88 86 654 38 | [email protected]

MARITIME AND OFFSHORE


Jan Hoegee, MSc

+31 (0)88 86 648 04 | [email protected]

CHEMISTRY


Dr Arij van Berkel

+31 (0)88 86 621 57 | [email protected]

INDUSTRIËLEINNOVATIE



A SECURE SOCIETY TNO FOCUSES ON A SECURE SOCIETY BY CREATING INNOVATI-ONS TO ASSIST THE WORK OF PEOPLE IN DEFENCE, THE POLICE, EMERGENCY SERVICES AND INDUSTRY.

MANAGING DIRECTORHenk Geveke, MSc+31 (0)88 86 684 53 | [email protected]

DEFENCE


Henk Jan Vink, MSc

+31 (0)88 86 682 01| [email protected]

PUBLIC SAFETY


Mr Ida Haisma

+31 (0)88 86 638 23 | [email protected]



DYNAMIC URBAN ENVIRONMENT TNO WORKS ON TRANSITIONS AND INNOVATIONSTHAT CONTRIBUTE TO THE MORE SUSTAINABLEBUILDING AND DESIGN OF THE AVAILABLE SPACE TOENABLE COMFORTABLE LIVING IN A DENSELY POPULATED COUNTRY.

MANAGING DIRECTORDick Schmidt, MSc+31 (0)88 86 684 55 | [email protected]

URBAN DEVELOPMENT


Dr Marianne Kuijpers-Linde

+31 (0)88 86 613 94 | [email protected]

SUSTAINABLE BUILDING


Dr Henk Miedema

+31 (0)88 86 683 88 | [email protected]



SMARTER MOBILITY ACCELERATES PROGRESS TNO ACCELERATES PROGRESS BY COMBININGTECHNOLOGICAL INNOVATION, INFLUENCING HUMANBEHAVIOUR AND SMARTER ORGANISATION TO MAKE MOBILITY CLEAN, QUIET AND SAFE.

MANAGING DIRECTORLeo Kusters, MSc+31 (0)88 86 657 47 | [email protected]

ROBUST TRAFFIC SYSTEMS


Dr Michiel Jak

+31 (0)88 86 609 71 | [email protected]

SAFE AND CLEAN MOBILITY


Leo Kusters, MSc

+31 (0)88 86 657 47 | [email protected]



VITALITY FOR LIFE TNO INITIATES TECHNOLOGICAL AND SOCIETALINNOVATION TO ENABLE OUR LIVES TO BE HEALTHYAND CREATE VITALITY FOR LIFE.

MANAGING DIRECTORDr Niek Snoeij+31 (0)88 86 684 43 | [email protected]

HEALTHY FOR LIFE


Dr Nico van Meeteren

+31 (0)88 86 662 60 | [email protected]

FOOD AND NUTRITION


Dr Jan Pieter van der Lugt MBA

+31 (0)88 86 618 81 | [email protected]

BIOMEDICAL INNOVATIONS


Dr Peter van Dijken

+31 (0)88 86 684 63 | [email protected]

WORK AND EMPLOYMENT


Prof. Paulien Bongers



MANAGING DIRECTORProf. Peter Werkhoven+31 (0)88 86 682 25 | [email protected]

Director of Research:

Dr Henri Werij

+31 (0)88 86 611 05 | [email protected]


Hugo Vos, MSc

+31 (0)88 86 664 79 | [email protected]


Dr Machteld de Kroon

+31 (0)88 86 663 63 | [email protected]

TECHNICAL SCIENCES



MANAGING DIRECTORDr. Diederik Zijderveld+31 (0)88 86 684 52 | [email protected]


Dr Tineke Brussaard

+31 (0)88 86 650 42 | [email protected]


Aukje Hassoldt, MSc

+31 (0)88 86 620 90 | [email protected]

EARTH, ENVIRONMENTAL AND LIFE SCIENCES



MANAGING DIRECTORDr Angelien Sanderman

+31 (0)88 86 672 48 | [email protected]

l


Peter Schulein, MSc

+31 (0)88 86 639 96 | [email protected]


Eric Veldkamp, MSc

+31 (0)88 86 673 05 | [email protected]

BEHAVIOURAL AND SOCIETAL SCIENCES



TNO COMPANIES COMMERCIALISES AND EXPLOITS THE KNOWLEDGE THAT IS DEVELOPED BY TNO BUT WHICH IS NOT DIRECT TAKEN ON BOARD BY THE MARKET. WE DO THIS WITH INDUSTRY AND INVESTORS THEREBY ACCELERATING THE PROCESS OF VALORISATION.TNO COMPANIES IS ALSO RESPONSIBLE FOR PRIVATISING TNO ACTIVITIES AND STARTING SPIN-OFFS.

MANAGING DIRECTORVictor Elsendoorn, MSc+31 (0)88 86 698 95 | [email protected]

TNO COMPANIES BV

TNO.NL

99/98

TNO ANNUAL REPORT 2011

Documents

TNO Annual Report 2011 · TNO ANNUAL REPORT 2011 2/98 ANNUAL REPORT. ... of Advisory Board of Science and Technology Policy ... Vice-chairman and Chief Financial Officer of NIBC Bank