Accounting principles

Introduction
Roto Smeets Group NV is a Dutch company with its registered office in Deventer the ordinary shares of which are listed on Euronext Amsterdam.
The activities of Roto Smeets Group are described in the Company Profile.
The consolidated annual accounts as at December 31, 2011 of Roto Smeets Group were drawn up by the Management Board in March, 2012. The consolidated annual accounts of Roto Smeets Group will be adopted by the General Meeting of Shareholders to be held at 9 May 2012. In accordance with article 2:402 of the Netherlands Civil Code the company profit and loss account only states the result from associated companies after taxes as well as other results after participations.

General
Statement of compliance
The consolidated annual accounts of Roto Smeets Group were drawn up in accordance with the standards and interpretations drawn up by the International Accounting Standards Board and approved by the European Commission, hereafter to be called International Financial Reporting Standards (IFRS).

The consolidated annual accounts were drawn up on the basis of historic costs, with the exception of financial instruments and investment properties valued at market value and assets held for sale which are valued at the lowest of the book value and the market value less sales costs. The consolidated annual accounts are stated in Euros and all amounts have been rounded off to thousands (€ 000), unless stated otherwise.

Continuity principal
Prospects for 2012 are characterized by insecurity in the general climate regarding (and possible reactions to) the economic crisis. After a slight recovery in 2011, the market has worsened recently. It is the Management Board's opinion that the Group has sufficient financial means available to maintain its business operations. This is based on the 2012 budget, the 2012 liquidity prognosis and the Medium Term Plan up to and including 2016 in which the difficult market conditions are processed by taking into account continued margin erosion, which is offset by cost reduction measures.

Roto Smeets Group fulfills at 31 december 2011 and is expected to fulfill at the reporting moments in 2012, the minimum solvency requirement of 30% (solvability as defined in the bank covenants ultimo 2011 34.4%).

The annual financial statement has been drafted based on the assumption of continuity.

Consolidation principles
The consolidated annual accounts comprise the annual accounts of Roto Smeets Group and its subsidiaries.
Subsidiaries are those companies in which Roto Smeets Group has a controlling interest, meaning that it has the power to control the financial and operating policies of these companies in order to gain advantage from their activities.
The annual accounts of the subsidiaries have been drawn up as at the same reporting date as those of the parent company, applying uniform valuation principles.
All balances and transactions, income and expenses within the group and profits and losses from transactions within the group included in the assets, are fully eliminated.
Subsidiaries are consolidated as from the acquisition date, being the date on which actual control was gained over the acquired party. This consolidation is continued until the moment that the actual control ceases to exist.
The minority interest of third parties in group equity and group result is stated under minority interest.

Assets and liabilities classified as held for sale and discontinued activities
Assets, liabilities and/or operating companies are designated as being held for sale if their book value will subsequently mainly be realised by way of a sales transaction which is planned to take place within twelve months and not by its continued use. Assets held for sale are valued at their book value or lower market value less sales costs.
The results of the fixed assets maintained for divestment and terminated activities have been presented separately in the profit and loss account.

Change in accounting policy and disclosure
The accounting policies adopted are consistent with those of the previous financial year except as follows:

IFRS standards and IFRIC interpretations
The IASB and IFRIC have issued new standards, amendments to existing standards and interpretations, some of which have not yet gone into effect or have not been endorsed by the European Union. Roto Smeets Group has introduced the following standards and interpretations, effective as of 1 January 2011. The application of these standards did not have a significant effect on the financial statements 2010.

IAS 24 Related Party Disclosures (Revised)
The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government related entities. Roto Smeets Group does not expect any impact on its financial position or performance.

IAS 32 Financial Instruments: Presentation – Classification of Rights Issues (Amendment)
The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, or to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. This amendment did not have any impact on Roto Smeets Group after initial application.

IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)
The amendment to IFRIC 14 provides further guidance on assessing the recoverable amount of a net pension asset and is effective for annual periods beginning on or after 1 January 2011. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. This interpretation has no effect on the financial statements of Roto Smeets Group.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit or loss. The adoption of this interpretation did not have effect on the financial statements of Roto Smeets Group.

Improvements to the IFRS standards (published October 2011), relate to a collection of minor changes to a number of IFRS standards which have no material consequence for Roto Smeets Group. Improvements are only employed after ratification by the EU.

FUTURE CHANGES IN ACCOUNTING POLICY
The following standards and interpretations that are not in force or not yet ratified by the European Union are not yet implemented in Roto Smeets Group:

IFRS 7 Financial Instruments: Disclosures
The amendments to IFRS 7 are effective for annual periods beginning on or after 1 July 2011 and will improve the understanding of transfer transactions of financial assets including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. Roto Smeets Group does not expect any impact on its financial position or performance.

IFRS 9 Financial Instruments
IFRS 9 as issued reflects the first and second phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address hedge accounting, derecognising and asset and liability offsetting. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of Roto Smeets Group's financial assets. Roto Smeets Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRS 10 Consolidated Financial Statements
IFRS 10 The consolidated financial statements replaces IAS 27 – Separate Financial Statements and will be effective for annual periods beginning on or after 1 January 2013. IFRS 10 does not change consolidation procedures (i.e., how to consolidate an entity). Rather, IFRS 10 changes whether an entity is consolidated by revising the definition of control. Control exists when an investor has:

• Power over the investee;
• Exposure, or rights, to variable returns from its involvement with the investee; And
• The ability to use its power over the investee to affect the amount of the investor's returns

IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 - Interests in Joint Ventures. Joint control under IFRS 11 is defined as the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control.
IFRS 11 also changes the accounting for joint arrangements in two categories: joint operations and joint ventures. Joint operations are arrangements in which the parties with joint control have rights to the assets and obligations for the liabilities relating to that arrangement. Joint operations are accounted for by showing the party's interest in the assets, liabilities, revenues and expenses, and/or its relative share of jointly controlled assets, liabilities, revenues and expenses, if any. Joint ventures are arrangement in which the parties with joint control have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity accounting method. The option to account for joint ventures using proportionate consolidation has been removed.
IFRS 11 will be effective for annual periods beginning on or after 1 January 2013. Roto Smeets Group does not expect any impact on its financial position or performance.

IFRS 12 Disclosure of interest in other entities
IFRS 12 applies to an entity that has an interest in subsidiaries, joint arrangements, associates and/or structured entities. The objective of the new disclosure requirements is to help the users of financial statements to understand the effects of an entity's interest in other entities on its financial position, financial performance and cash flows. And to understand the nature of, and the risks associated with, the entity's interest in other entities. This standard will be effective for annual periods beginning on or after 1 January 2013.

IFRS 13 Fair Value Measurement
The standard describes how to measure fair value where fair value is required or permitted by IFRS. Fair value under IFRS 13 is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". New disclosures related to fair value measurements are also required to help users understand the valuation techniques and inputs used to develop fair value measurements and the effect of fair value measurements on profit or loss.
IFRS 13 is applied prospectively. Early application is permitted and must be disclosed.

IAS 1 Presentation of items of other comprehensive income (revised)
This standard is effective for annual periods beginning on or after 1 July 2012. Earlier application is permitted and must be disclosed. The amendments to IAS 1 change the grouping of items presented in other comprehensive income. Items that would be reclassified to profit or loss at a future point in time would be presented separately from items that will never be reclassified. The amendments do not change the nature of the items that are currently recognised in other comprehensive income, nor do they impact the determination of whether items in other comprehensive income are reclassified through profit or loss in future periods. Roto Smeets Group does not expect any impact on its financial position or performance.

IAS 12 Income taxes (Amendment) – Deferred taxes: Recovery of underlying assets
The amendment to IAS 12 is effective for annual periods beginning on or after 1 January 2012. The amendment introduce a rebuttable presumption that deferred tax on investment properties measured at fair value will be recognised on a sale basis, unless an entity has a business model that would indicate the investment property will be consumed in the business. If consumed, an own use basis must be adopted. The amendment also introduces the requirement that deferred tax on non-depreciable assets measured using the revaluation model should always be measured on a sale basis. In certain jurisdictions entities have noted difficulties in applying the principles of IAS 12 to certain investment properties. This amendment is intended to give guidance on the tax rate that should be applied.

IAS 19 Employee Benefits (revised)
The revised standard includes a number of amendments that range from fundamental changes to simple clarifications and re-wording. The more significant changes include the following:

• For defined benefit plans, the ability to defer recognition of actuarial gains and losses (i.e., the corridor approach) has been removed;
• As revised, actuarial gains and losses are recognised in other comprehensive income when they occur. Amount recorded in profit and loss are limited to current and past service costs, gains or losses on settlements, and net interest income (expense). All other changes in the net defined benefit asset (liability) are recognised in other comprehensive income with no subsequent recycling to profit or loss;
• Objectives for disclosures of defined benefit plans are explicitly stated in the revised standard, along with new or revised disclosure requirements. These new disclosures include quantitative information of the sensitivity of the defined benefit obligation to a reasonable possible change in each significant actuarial assumption;
• Termination benefits will be recognised at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognised;
• The distinction between short-tem and long-term employee benefits will be based on expected timing of settlement rather than the employee's entitlement to the benefits.

The revised standard is effective for annual periods beginning on or after 1 January 2013. De standard applies to certain agreed pension schemes within Roto Smeets group but it is expected that it will have no significant consequences for the consolidated financial statements.

Improvements to IFRS standards (published October 2011), relate to a collection of minor changes to a number of IFRS standards which have no material consequence for Roto Smeets Group. Improvements are only employed after ratification by the EU.

Important assessments and valuation uncertainties
In drawing up the annual accounts, valuations and assumptions are made with regard to the inclusion and valuation of assets and liabilities, off-balance sheets rights and commitments as well as income and expenditure.
The main assumptions regarding the future and other important sources of valuation uncertainties as at the balance sheet date which carry a considerable risk of a substantial adjustment of the book value of assets and obligations in the next financial year, concern the exceptional impairments of assets and the provisions.

Exchange rate foreign currencies
The consolidated annual accounts are stated in euros, which is also the functional and reporting currency of Roto Smeets Group. Each group entity determines its own functional currency, and the items included in the annual accounts of each entity are valued on the basis of this functional currency. Transactions in foreign currencies are at first inclusion stated at the exchange rate of the functional currency as at the date of the transaction. Monetary assets and commitments stated in foreign currencies are translated at the exchange rate of the functional currency as at the balance sheet date. Possible differences will be charged to the profit and loss account, with the exception of differences resulting from borrowed funds in foreign currencies which serve to hedge an investment in a foreign entity. These are incorporated directly in the shareholders' equity up to the moment of divestment of the said entity, after which they are accounted in the consolidated profit and loss account.
Non-monetary assets and liabilities valued at historic costs in a foreign currency are translated at the exchange rates as at the date of the original transactions.
The functional currency of the foreign activities (Antok Nyomdaipari Kft.) is the Hungarian Forint, that of Roto Smeets Denmark A/S is the Danish Kroner, that of Roto Smeets Ltd. is Sterling and that of Roto Smeets Sweden AB is the Swedish Krona. As at the reporting date, the assets and liabilities of these group companies are translated in the reporting currency of Roto Smeets Group (the Euro) at the exchange rate as at the balance sheet date. The profit and loss accounts are translated at the weighted average exchange rate for the year. The exchange rate differences resulting from the translation are directly brought under a separate component of the shareholders' equity, after adjustment for deferred taxes. At divestment of a foreign entity, the deferred accumulated amount included in the shareholders' equity for that foreign activity, is accounted in the profit and loss account.

Valuation principles for the balance sheet

Tangible fixed assets
The tangible fixed assets are valued at cost, less accumulated depreciation and impairment. The cost of the assets, in addition to the acquisition price, if applicable, also comprise the initial estimate of the costs of dismantling and removal of the asset and of the cleaning up of the property where the asset was based.

Depreciation is linear, based on a percentage of the acquisition price and the expected useful life, taking into account possible residual value.
Depreciation starts when the assets are taken into use. Replacement costs are only capitalised if these lead to a longer useful life of the asset.
Tangible fixed assets are tested for exceptional impairment if events or changes in conditions point out that that the book value might not be realisable. Tangible fixed assets on order are only included in the balance sheet as far as advance payments have been made. A tangible fixed asset will no longer be included in the balance sheet after it has been divested or if no future economic advantage is expected from the use or divestment of the asset. Possible proceeds or losses resulting from the elimination of the asset from the balance sheet (which will be stated as the balance of the net proceeds at divestment and the book value of the asset) will be included in the profit and loss account of the year in which the asset was eliminated from the balance sheet.
The residual value and the useful life of the asset are assessed and, if necessary, adjusted at the end of each financial year.

Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:

a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
b) A renewal option is exercised or extension granted,
unless the term of the renewal or extension was initially included in the lease term;
c) There is a change in the determination of whether fulfilment is dependant on a specified asset;
d) There is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b.
For arrangements entered into prior to January 1, 2005, the date of inception is deemed to be January 1, 2005 in accordance with the transitional requirements of IFRIC 4.

Roto Smeets Group as a lessee
Finance leases, which transfer to Roto Smeets Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged reflected in the income statement.
Capitalised leased assets are depreciated over the estimated useful life of the asset and the shorter lease term, if there is no reasonable certainty that Roto Smeets Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.

Investment properties
Real estate is valued at a realistic price, determined by certified external valuers. Investment properties are stated at fair value which is assessed by qualified external valuers.
Investment properties are at first processing measured at fair value. Thereafter, the changes in fair value are processed through the profit and loss account.

Associated participations and joint ventures
Joint ventures are those companies which activities Roto Smeets Group jointly controls with third parties on the basis of a contractual agreement.
Roto Smeets Group values the joint venture on the basis of the 'equity' method. The equity method is a method of processing whereby the investment is initially included at cost and subsequently is adjusted, taking account of the change in the share of the net assets after the takeover.
Associated participations are those companies over which financial and operating policies Roto Smeets Group exercises a material influence, without actually controlling these companies. The participations are valued in accordance with the 'equity' method. In the consolidated annual accounts, the share of Roto Smeets Group in the total of accounted profits and losses on joint ventures and associated participations is stated on the basis of the 'equity' method, from the moment that the material influence is actually exercised to the moment that it actually ceases to exist.

Financial assets

In accordance with IAS 39, financial assets are considered as a financial asset at fair value through profit or loss, as loans and receivables, as held to maturity investments or as available for sale financial assets.

At the initial inclusion of financial assets these are included at fair value, augmented by (in case of a financial asset not included at fair value, with recognition of valuation changes in the profit and loss account) the directly attributable transaction costs.

Roto Smeets Group determines the classification of its financial assets after the first recognition and, if allowed and applicable, the classification is reassessed at the end of each financial year.

All regular acquisitions of financial assets are included as at the transaction date, meaning the date on which Roto Smeets Group takes on the obligation to acquire the asset. Regular acquisitions and divestments are acquisitions and divestments of financial assets for which assets must be delivered within a period generally determined by regulations or custom in the market.

An active financial asset is no longer incorporated into the balance if a transaction leads to all or nearly all rights to economic advantage and all or nearly all risks related to the position are transferred to a third party.

Financial assets at fair value through profit or loss
All derivatives are regarded as being kept for trade purposes unless they are regarded as hedging instrument and are effective. Derivatives are financial instruments requiring no or only a limited net initial investment, settlement of which takes place in the future depending on movements in a certain share price or price (such as interest rate or the price of a financial instrument). The valuation changes are directly recognised in the profit and loss account.

Held to maturity investments
Held to maturity investments are assets with fixed payments and a fixed term whereby Roto Smeets Group is determined and has the possibility to retain these investments until the end of their term. Held to maturity investments are valued at depreciated cost on the basis of the effective interest rate less possible depreciation.

Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments not listed on an active market. Trade and other receivables are included at depreciated value on the basis of the effective interest rate method. Profits and losses are incorporated in the result as soon as the loans and receivables are no longer included in the balance sheet or suffer an exceptional impairment.

A provision will be made for an exceptional impairment of trade and other receivables if such receivables become uncollectible. A receivable becomes uncollectible when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that Roto Smeets Group will not be able to collect all of the amounts due under the original terms of the invoice. Significant financial difficulties of the debtor, the probability of insolvency of the debtor or an expected financial reconstruction, as well a default or delinquency are regarded as indicators for a permanent impairment of the receivable. The amount of the provision is measured as the balance of the asset's carrying amount and the present value of future cash flows, discounted at the financial asset's original effective interest rate. The exceptional impairment will be recognised in the profit and loss account, together with future reversals of earlier exceptional impairments.

Financial assets available for sale financial assets
Financial assets available for sale financial assets are financial assets not classified in one of the above Financial assets available for sale financials assets mentioned categories. After the initial recognition the financial assets available for investment are valued at realisable value. The profit or loss is recognised as a separate component of the shareholders' equity until the asset is no longer included in the balance sheet or until it is determined that the asset has suffered an exceptional impairment. At such a moment the accumulated profit or the loss that was previously accounted for in the shareholders' equity, is included in the profit and loss account.

Determination of the fair value
The fair value of the financial assets which are actively traded on organised financial markets is determined on the basis of the share price. The fair value of financial assets for which there is no active market, is determined using valuation techniques. The basis for such methods may include the most recent business market transactions or the present market value or another instrument, which is practically similar, or a cash value determination and option models.

Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount is stated in the balance sheet at the moment there is a legally enforceable right to offset and the intention exists to settle on a net basis or to realise the asset at the same time that the obligation is settled.

Hedge-accounting
Roto Smeets Group uses derivative financial instruments such as currency futures contracts and interest rate swaps to hedge risks regarding currency and interest rate movements. Such derivative financial instruments are recognised when first included at the realisable value as at the date on which the contract was entered into, and the realisable value is subsequently determined again. Possible profits or losses resulting from changes in the realisable value of the derivative instruments which do not form part of a hedging relation are directly recognised in the result.

At the closing of a hedging transaction, the hedging relation is formally designated and documented by Roto Smeets Group, as is the objective and the policy of Roto Smeets Group regarding management of financial risks in entering into a hedging relation.

Cash flow hedging which meets the strict conditions of hedge accounting, are recognised as follows.
The part of the profit or the loss on the hedging instrument of which it is determined that it is an effective form of hedging, is directly incorporated in the shareholders' equity, taking account of this tax effect, while the non-effective part is recognised in the profit and loss account. The amounts included in the shareholders' equity are transferred to the profit and loss account in the same period in which the hedged income or expenses were included or the expected divestment or acquisition is performed. This is accounted for as revenue. If the expected transaction is no longer expected to take place, the amounts initially included in the shareholders' equity will be transferred to the result.
If the hedging instrument expires, is sold, terminated, exercised (without replacement or rollover) or if the designation as hedging is taken away, the amounts that were initially included in the capital will remain in the shareholders' equity until the expected transaction takes place. If the transaction concerned is not expected to take place, the amount will be charged to the profit and loss account.

Impairment of financial assets
Roto Smeets Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss shall be recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Financial assets available for sale
If a disposable asset has suffered an exceptional devaluation, an amount equivalent to the gap between the acquisition value (less any redemptions on the principal amount and depreciation) and the realisable value, after deduction of any additional impairments already taken in prior years through the company's accounts, will be charged against shareholders' equity through the profit and loss account.
A reversal of an impairment on equity instruments available for divestment is not included in the profit and loss account.

A reversal of impairments on loan certificates occurs through the profit and loss account, if the increase in the realisable value of these instruments has objectively been caused by an event that occurred after this impairment charge was taken through the profit and loss account.

Impairment of non-financial assets
As at the reporting date, Roto Smeets Group assesses whether there are indications that an asset has suffered an exceptional impairment. If there is such a indication or if the annual assessment on exceptional impairment of an asset is required, Roto Smeets Group estimates the realisable value of the asset. The realisable value of an asset is the highest of the realisable value of an asset after deduction of sales costs or the cash flow generating unit after deduction of sales costs or the value in use, unless the asset does not generate incoming cash flows which are largely independent of the flows of other assets or groups of assets. If the book value of an asset exceeds the realisable value, the asset is deemed to have suffered an exceptional impairment and will be marked down to the realisable value.
On each reporting date an assessment is made whether there are indications that a previously recognised exceptional impairment does not longer exist or is diminished. If there is such a indication, the realisable value is estimated. A previously recognised loss due to exceptional impairment will only be reversed when a change has occurred in the estimation used to determine the realisable value of the asset since the inclusion of the last loss due to exceptional impairment.
If this is the case, the book value of the asset is raised to the realisable value. This raised amount can not exceed the book value that would have been determined (after deduction of depreciation) if no exceptional impairment had been included for the asset in previous years. Such a reversal is recognised in the profit or the loss account. After such a reversal the depreciation is adjusted to systematically attribute the revised book value of the asset (after deduction of possible residual value) for the remaining useful life to future periods.

Stocks
Stocks of finished products, trade goods and raw materials and consumables to be used in the production process, are valued at cost or the lower market value.
The cost of stocks comprise all acquisition costs, conversion costs and other costs to bring the stocks at their present location and in their present state.

Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term investments which can be immediately cashed. Deposits and other fixed interest instruments with an initial term of less than three months are regarded as cash equivalent.

Provisions
A provision is created when:

• Roto Smeets Group has a current (in straight enforceable or factual) obligation as a result of a past event;
• It is probable that an outflow of means which harbours economic advantages, will be required to settle the obligation;
• A reliable estimate can be made of the amount of the obligation.

If Roto Smeets Group expects that (part of) a provision will be compensated, the compensation will only be included as a separate asset, if it is as good as certain. The expense connected with a provision will be included in the profit and loss account after deduction of possible compensation. The amount included as provision is the most accurate estimate of the expenses required to settle the existing obligation on the balance sheet date. Provisions are assessed on each balance sheet date and adjusted to reflect the most accurate estimate. If it is no longer probable that an outflow of means shall be required to settle the obligation, the provision will be retransferred.

If the effect of the time value of money is material, the provisions are discounted at a pre-tax discount factor which, if necessary, takes into account the specific risks of the obligation. If the provisions are discounted, the increase of the provision will be recognised as financing costs because of the passing of time.

Interest bearing loans
The first valuation of interest bearing loans takes place at realisable value of the received consideration less transaction costs. After the first incorporation, the interest bearing loans are valued at depreciated cost on the basis of the effective interest rate method. The depreciated value is determined incorporating possible discounts or premiums.

Pensions
Defined contribution schemes
Contributions to defined contribution schemes are recognised in the profit and loss account as costs in the year to which they relate.

Defined benefit schemes
Roto Smeets Group has a defined benefit scheme, the fund Grafische Bedrijfsfondsen (GBF). With regard to the GBF, which has a collective scheme of several employers, up to now insufficient information was available to use the settlement methods for defined benefit schemes. This scheme is settled as if it was a defined contribution scheme.

When the claims from a scheme change the part of the higher claims connected with the employment record of employees is incorporated in the profit and loss account as costs in accordance with the linear method, over the average period until the claims become irrevocable. As far as these claims immediately become irrevocable, they are directly incorporated in the profit and loss account.
The net commitment from the defined benefit scheme is the total of the cash value of the gross commitment and the not incorporated actuarial profits and losses less the not yet incorporated pension costs of the past employment ('back service') and the realisable value of the funds' investment from which the obligations must be directly settled. If such a total amount is negative, the asset is valued at the lowest of the total amount or the total amount of accumulated not incorporated actuarial losses, back service costs and the cash value of possible economic advantages available in the form of repayments from the scheme or reductions of future contributions to the scheme.

Share-based remunerations
Roto Smeets Group directors receive remunerations in the form of share-based payments. These share-based payments are settled by way of cash payment ('cash settled'). The costs of share-based remunerations are determined on the basis of the market value of the shares on the date the shares were allocated. The costs of these shares are included in the profit and loss account (personnel costs) in the period before it becomes inconditional, offset by other long-term debts. The market value of the debt is re-determined at the end of each reporting period. Changes are included in the result.

Taxation
Tax obligations and receivables
Tax obligations and receivables for the current and previous years are valued at the amount that is expected to be payable to or to be received from the tax authorities. The taxation amount is calculated on the basis of the legally determined tax rates and prevailing tax laws.
Tax obligations and receivables for the period under review are included in the shareholders' equity as far as these relate to items directly included in the shareholders' equity in the period.

Deferred taxation
A provision is created for deferred taxation on the basis of the temporary discrepancies as at the balance sheet date between the fiscal value of assets and liabilities and their book value as stated in these annual accounts.

Deferred tax credits are included for all recoverable temporary discrepancies, unused fiscal facilities and unrecovered fiscal losses, as far as the probability exists that there will be some fiscal profit available from which the recoverable temporary discrepancies can be recovered and the recoverable temporary discrepancies, unused fiscal facilities and unrecovered fiscal losses can be employed.

The book value of the deferred tax credits are assessed as at the balance sheet date and reduced as far as it is not probable that sufficient fiscal profit will be available from which the temporary discrepancy can be completely or partly recovered. Not incorporated deferred tax credits are reassessed as at the balance sheet date and incorporated as far as it is probable that future fiscal profit will be available from which this deferred credit can be recovered.
Deferred tax credits and obligations are valued at taxation rates which are expected to be applicable during the period in which the credit is realised or the obligation is settled, on the basis of the legally determined tax rates and prevailing tax laws.

Deferred tax credits and obligations will be balanced if there is a legally enforceable right to balance tax credits with tax obligations and the deferred taxation relating to the same taxable entity and tax authority.

Trade creditors and other short-term debts.
Trade creditors and other short-term debts are stated after first recognition at the depreciated value on the basis of the effective interest rate method.

No longer incorporating financial assets and liabilities in the balance sheet
Financial assets
A financial asset will no longer be incorporated in the balance sheet if:

• The entity is no longer entitled to cash flow from this asset;
• Roto Smeets Group has retained the right to receive cash flows from this asset, but has entered into an obligation to pay these cash flows to a third party without a substantial delay in accordance with a special agreement or
• Roto Smeets Group has transferred its rights to the cash flows from this asset and either (a) has mostly transferred all risks and advantages of this asset, or (b) has not mostly transferred or retained all risks and advantages of this asset, but has transferred the control over this asset.

Financial liabilities
A financial obligation will no longer be incorporated in the balance sheet as soon as the performance has been delivered in accordance with the obligation, this obligation has been lifted or has expired.
If an existing obligation is replaced by another of the same funds provider at almost identical conditions, or the conditions of the existing obligations are substantially changed, such a replacement or change is treated as no longer incorporating of the original obligation in the balance sheet and the incorporation of a new obligation. The difference in the book values concerned is incorporated in the profit and loss account.

Principles for the determination of result

Revenue is recognised as far as it is probable that the economic advantages will benefit Roto Smeets Group, the income can be determined reliably and the main risks and advantages have been transferred.
Costs are attributed to the year to which they relate.

Revenue
Income from services provided is recognised at the moment of delivery. The income from current orders as at the balance sheet date are included to the amount of the order costs incurred covered by income from the order. The order costs are stated as costs in the period in which they were incurred. Expected losses on current third-party orders are stated as costs immediately.
Interest income and expenses are processed in the financial year to which they relate and accounted for as the interest accumulates via the effective interest rate method.
The interest rate component of financial lease agreements is incorporated in the profit and loss account using the annuity method. Dividends are attributed to the year in which the dividends concerned were made payable.

Government subsidies
Government subsidies are incorporated if there is a reasonable degree of certainty that the subsidy will be received, that all relevant conditions will be met and accounted for systematically in the period in which the costs these subsidies are meant to compensate incurred.

Taxation
Tax payable and recoverable tax during the year under review and deferred taxation are accounted for in the profit and loss account over the period to which they relate, unless these relate to items directly attributed to the shareholders' equity, in which case the taxation is attributed to the shareholders' equity.
The determination takes into account the fiscal facilities available in the countries.

Principles for drawing up the consolidated cash flow statement
The cash flow statement is drawn up according to the indirect method. Income and expenses from interest and corporate income tax, as well as received dividends of non-consolidated participations, are incorporated under cash flow from operating activities. Paid dividends are incorporated under cash flow from financing activities. Transactions whereby no funds are exchanged, are not incorporated in the cash flow statement.

Cash and cash equivalents comprise cash and short-term investments which can be immediately cashed. Deposits and other fixed interest instruments with an initial term of less than three months are regarded as cash equivalent.

Discontinued operations
A discontinued operation is a part of the activities of Roto Smeets Group representing a separate major operating activity or a separate major geographical operating area, or is a subsidiary acquired for the sole purpose of reselling. Classification as discontinued operation is done at divestment or, if earlier, when the operation meets the criteria
for classification as available for divestment (IFRS 5). This may also include a group of assets being discontinued.