Report of the Supervisory Board

Introduction
As preparation for the General Meeting of Shareholders, the Supervisory Board hereby submits the annual accounts for the 2009 financial year, as drawn up by the Management Board, to the shareholders. The annual accounts have been audited and approved by Ernst & Young Accountants LLP. The auditor’s report has been incorporated in the annual report under ‘other information’.

The Supervisory Board advises the General Meeting of Shareholders to adopt the annual accounts. Separate from this, the General Meeting of Shareholders is requested to discharge the Management Board and the Supervisory Board. In view of the results for 2009, no payment of dividend will be proposed.

Composition
In view of the fact that until 2009 the Supervisory Board consisted of 4 members, all of the members sat on the Key Committees. This however resulted in such a workload that it was decided to return to a 5-member Supervisory Board. To fill the ensuing vacancy,
Mr. R. Blom was proposed and appointed at the General Meeting of Shareholders of 15 April 2009. In addition, the re-appointment of Mr. H.C.P. Noten was also discussed at that meeting. Mr. Noten was first appointed for a 4-year period in 2005 after a submission of the Works Council. The Works Council has proposed the re-appointment of Mr. Noten for another 4-year period. Both the Supervisory Board and the shareholders have agreed to this appointment.

At that same meeting the then chairman, Mr. D. Montgomery, announced that he would be leaving the Supervisory Board. Mr. Montgomery stated as reason for his leaving that he was no longer able to combine the busy schedule of his work as CEO of Mecom Group Plc with being Chairman of the Supervisory Board of Roto Smeets Group.

To fill the ensuing vacancy, Mr. R.A.J. Huyzer was proposed and unanimously appointed during an Extraordinary General Meeting of Shareholders on 18 June 2009.

In order to have a good look at the new composition of the Supervisory Board, it was internally decided to appoint Mr. A.P. Lugt as interim chairman.

With no Management Board members present, the Supervisory Board discussed the functioning of the individual members of the Management Board and the Supervisory Board and that of the individual members of the Supervisory Board. Also in this new composition, the members may adopt a critical and independent posture in these committees in respect of each other, the management and any other such factional interest as may be represented.

The Supervisory Board thanks Mr. Montgomery for his contribution to the development of the company. Since his appointment in 2006, he fully supported the strategy of consolidation as well as the maintaining of a strong balance sheet and a focus on cash flow. The Supervisory Board has gratefully made use of the knowledge and specific experience of Mr. Montgomery.

On December 17, 2009, it was decided to appoint Mr. R.A.J. Huyzer as the new chairman of the Supervisory Board as from January 1, 2010.

As the Supervisory Board now consists of 5 persons, the key committees have also been separately installed and the duties have been divided as follows:

Audit and risk management committee: Messrs. H.C.A. Groenen (chair) and A.P. Lugt. Appointment and remuneration committee: Messrs. R. Blom (chair), H.C.P. Noten and R.A.J. Huyzer.

Meetings in 2009
In view of the fact that in 2009 all members sat on all key committees, no separate meetings were organised. The subjects which must be treated in the key committees have been put on the agenda of the regular meetings.

In 2009, the Supervisory Board met 4 times in its old composition, and 3 times in its new composition. The Board had 3 extra meetings in connection with preparations for the AGM, the restructuring of the organisation and the introduction of new members. With the exception of one meeting (whereby one member was absent due to illness), all members of the Board attended all meetings.

The members of the Supervisory Board took turns attending the five consultative meetings between the Management Board and the Central Works Council.

Early in 2009 the Board discussed the 2008 annual accounts and the principal risks to which the company is exposed. The Board also discussed with management its assessment of the internal risk management and control systems and their further possible development. An update of the ICT infrastructure, which is currently under construction, may further optimise the system. These subjects were also discussed with the external accountant, both in the presence as in the absence of members of the management.

With regard to the strategy of the company, there were extensive discussions on the market developments and their effect on the organisation; on the necessity of taking measures and their consequences and on the stand-alone option which looks to be unavoidable for the moment as a result of the total lack of short-term consolidation possibilities. The reorganisation which should lead to a recovery of the result of the company is a drastic one. The investment proposals and divestment proposals forming part of these plans were also discussed. The Supervisory Board believes that these are necessary to improve the current market position. For that matter, it remains the view of the Supervisory Board that a general consolidation in the printing industry is needed, and the Board fully supports the activities of the Management Board in this regard. The subject is regularly discussed at the meetings of the Supervisory Board and even a special Supervisory Board meeting was dedicated to the consolidation options.

The process regarding a possible divestment of the MediaPartners Group was closely monitored by the Board. Because of the positive developments at this company and the potential the company has in the current market, the Supervisory Board agrees with maintaining the business line Marketing Communications, of which the MediaPartners Group is a part. The development of this business will be further looked at in 2010.

On the basis of the periodic and quarterly reports, the Supervisory Board had regular meetings with management and the CFO regarding the financial situation, developments regarding the reorganisation and the financing agreements.

In one of the meetings, attention was given to the Corporate Governance Code as amended by the Frijns Committee, the new guideline regarding the rights of shareholders and the transparency guideline. The update of these guidelines has led to some amendments of the regulations for the Supervisory Board. You can find this amended version on the website of the company. The company policy with regard to the Corporate Governance Code can be found in a separate part of this annual report.

On the basis of the annual Corporate accountability report of the company, discussions were held about developments in the field of safety, environment, working conditions and the social contributions the company makes to society on the basis of its key processes. For a more detailed description of Roto Smeets Group CSR policies, we refer to the Corporate accountability report for 2009.
Consultative meetings were held with the Management Board and the HRM director about the execution of the social plan, about the consultations with the unions regarding possible wage restraint measures and about the proposal to postpone the CAO wage increase of July 2009 to 2010 and 2011. The Board believes the fact that 98% of the employees have voted in favour of such a postponement to be highly commendable and encouraging.

Composition of the Management Board
Halfway through the year Mr. Bouwman, the CFO of the company, announced his intention to leave the company. At the time of his arrival in 2007, his experience and ambitions matched the company’s international expansion plans of those days. He left the company on September 1 to work for an internationally operating listed company, outside the printing sector.

As the execution of the strategic development plans demands much attention from the CEO and the ongoing reorganisation requires strict control of the operation, it was decided to appoint a Chief Operations Officer instead of a Chief Financial Officer. The Board believes that there is sufficient financial know-how and expertise available within the company, so that no additional requirements exist in this field. The management duties of the CFO will be taken over by the CEO.

After carefully reviewing several candidates, the Supervisory Board members in B.J.W. van der Heijden believe to have found a good successor for Mr. Bouwman.

Remuneration
The remuneration of Mr. van der Heijden is fully in accordance with the remuneration policy of the company, as lastly discussed at the General Meeting of Shareholders on April 15, 2009. You will find the remuneration policy in a separate part of this annual report. The details of the remuneration in 2009 of the Management Board can be found in the annual accounts on page 104.

As from January 1, 2009, the salaries of the top management levels have been frozen and it has been decided that the incentive (bonus) as agreed for the year 2009 will not be paid.

Conclusion
The Supervisory Board is very much aware that 2009 has asked many sacrifices from all stakeholders, especially from those approximately 550 employees that will leave the company. The Board would like to express its appreciation to the management for keeping the company on course in difficult conditions, and would like to thank all those concerned for their efforts. We trust that the measures that have been taken will make an important contribution to the recovery of the result and the continuity of the company.

Deventer, March 17, 2010

Supervisory Board