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Annual report

2009/2010HOLLAND COLOURS NV

Our emplOyees (as of march 31, 2010)

The Netherlands: Ria van Aartrijk, Salad Abdullaahi, Kwassi Aidam, Marcel Albers, Joan Alfring,

Stijn van Asselt, Tom Bandsma, Dick Beekman, Dennis Beekman, Nico Beekman, Marco

Berentsen, Jocintha van den Berg, Aladin Berkovic, Thérèse Besselink, Peter Bleumink, Wendy

Bonestroo, Gerard Boom, Mariet Bos, Patrick Bos, Gert Bosgoed, Gerrit Bredenhoff, Matijs

Brouwer, Niels Bruggeman, Lieva van Bussel, Wim van Bussel, Pascal Buthod-Girard, Tunghai

Chiang, Agnes Csajbok, Tomica Cutunic, Maris Delhaas, Peter Docter, Sophie Durand, Mark

Edwards, Astrid Eikelenboom, Walter Elderink, Wilfred van Essen, Hennie Evers, Tim Gaasbeek,

Alex Gallas, Jan Gerritse, Eelco Gerritsen, Ernst Goedhart, Dick Goudappel, Arnold de Groot,

Debby van den Handel, Lex van der Heide, Tink Hendriks, René Hoetink, Rob Holsgens, Rob

Horstman, Marcel Huisman, Miranda Hulsteijn, John Hurenkamp, Henri Jacobs, Hans Jager,

Belinda Jansen, Raymond Jongman, Marcel Jonker, Jovo Jovic, Paul Karrenbeld, Gerrie

Keetman, Martijn Kersten, John Kleiboer, Maroesja Klomp, Linda van ’t Klooster, Michelle

Kok, Wouter Koldenhof, Zivko Kolev, Maarten Kool, Paul Koopmans, Ineke Lammerse, Ming

Sang Lau, Monique Laurens, Ferdinand Leito, Chris Lesilolo, Sjaak Leurein, John van Lohuizen,

Danoes Luhukaij, Gert-Jan Luiten, Jeroen Marissen, Ruud Memelink, Urving Morales, Manon

Mos, Johan Neuteboom Spijker, Melinda Niederer, André van Nieuwkoop, Marijke van Norel,

Edsard Nusz, Thijs Oussoren, Eric Ouwerkerk, Martijn Paape, Felix Pam, Marga Platje, Sara

Popping, Marcello Riveros, Jules Roelofs, Margriet Rutgers, Bernard van Schaik, Erik Scheper,

Martijn Schinkel, Jeroen Schiphorst, Paul Scholten, Robin Schoorlemmer, Jan Schrauwen, Daniël

Siek, Jolande Steenwoerd, Jolien Stevels, Jeroen Stoop, Jeroen Straathof, Mabel Termaat, Harry

Tiemens, Sylvie Tirmarche, Herman Treels, Lesley Tromp, Marten Ubbink, Daniël Ursepuny,

Maarten Vegelin, Gert van Vemde, Piet Vermolen, Sija Vlot, Sacha Vos, Theo Voskamp, Roelie

Vreeburg, Pascal de Vries, Jan Willem Wassink, Hans Werink, Pascal Weulen Kranenbarg, Henk

Wilbrink, Annemarie Winterman, Arnold Zegers, Mladen Zivkovic, Jan Zomer, Erika van Zuiden

United Kingdom: Mark Burch, Damen Brazier, Paul Clinch, Diane Collins, Jamie Gilfillan, Steven

Large Hungary: Károly Agócs, Zoltán Antal, Flórián Balogh, János Barta, József Bárány, Sándor

Bárdos, Zoltán Berkó, László Boros, Jószef Borsos, Gábor Bozsó, János Bugyi, László Bugyi,

Lászlóné Csapó, Tamás Csapó, Tünde Csák, Enikö Csányi – Molnár, Zsigmond Debreczeni,

Istvánné Dudás, Kálmán Falusi, Nándor Farkas, Lívia Férhezly, József Gazsó, László Gereben,

András Gólya, Istvánné Gulcsik, Judit Ilona Hajbin, Ildikó Hegedüs, László Janó, Mihály Jándi,

Cornelis Pieter Janse, Tibor Kajtár, Gábor Kállay, Zoltán Kelemen, Zoltán Kerekes, Krisztina

Király, Ágnes Kissné Kovacsics, István Koleszár, Szilvia Földiné Korga, Bálint László, Zsolt László,

Attila Lendvai, Szvetlana Majorszki, Katalin Maródi-Horváth, Zoltán Márkus, Zoltán Mérész,

Péter Mihályi, Csilla Molnár, Ágnes Nádasné Szikszai, László Oláh, Mihály Pusztai, Máté Samu,

Jenõ Olivér Scheftsik, Erika Sipos, Ferenc Sipos, Csaba Subicz, Imre Szalai, Zoltán Szanyi, Béla

Szentmártoni, Imre Széles, György Szondi, Béla Sztrunga, Anita Tamasi, Attila Timpfel, Gábor

Tóth, István Tóth-Fekete, Zsuzsanna Veréb, Tibor Volter, György Zsemlye, Miklós Zsuppán United

States: Valerie Arnold, James Atkinson, William Austerman, Christina Baker, Brian Barker, Joyce

Bitner, Sharon Bowen, Yvon Carudel, Ron Casey, Kimberly Chaplin, Mark Collins, Kathy Daniels,

Johan de Jong, Charles Depew, William Drook, Lola Feaselman, Emily Fisher, Edward Fitzgerald,

Charles Frye, George Fudge, William Gabbard, Julie Gibbons, Joseph Gleeson, Annette Goble,

Kevin Harvey, Richard Hetisimer, Richard Hoke, Craig Hopkins, Gene Jackson, Matthew Johnson,

Nick Jones, Kimberly Lawrence, Robert Leversedge, Michael Manley, Dwight Marshall, Michael

Mayberry, Brian Mays, Michelle McAllister, John McGuire, Mark Mikesell, Anthony Miller, Michael

Muldoon, Tamara Musser, Dennis Nicholson, Antony Obrien, Jason Owens, Pamela Parker,

Stephen Parry, Primsam Patalinghug, Chad Pennington, Luke Peters, Marty Peters, Lora Phillips,

Anthony Rump, Brian Schwab, Connie Smith, Michele Smith, Tracy Snyder, Jennifer Spencer,

Hope Townsend, Mercie Townsend, Angela Tracy, Chris Tully, Keith Ulm, Tineke Veldhuis, Carlo

Walker, Lynn Ward, Gary Welsh, Aida Wesseldine, Michael Whirley, Lee Williams Canada: Glen

Ewing, Wendy Janoki, Pamella McWhinnie, Anne Wagner Mexico: Erika Carranco Paulino,

Juan Carlos Morales Martinez, Juan Jimenez Moreno, Juan Penagos Vargas, Juan Villar Cortes,

Humberto Juarez Saucedo, Magnolia Guzman Peña, Indonesia: Hafid Sustantyo Bima Abineri,

Dadang Abdurrachman, Achmad Afandi, Mohammad Naim Ahmad, Muhammad Arifin, David

Candra, Edy Chandra, Vincent Chua, Venny Astrid Coenraad, Johny da Costa, Darmadji,

Achmad Efendi, Satrio Effendi, Andi Satria Go, Endik Harijanto, Hariyanto, Sukmono Dadang

Hartanto, Mei Herawati Hertanto, Wendy Willsemyn Hetharia, Tjoen Hok (Roy) Hoo, Amanda

Atma Hudojo, Turmudzi Imam, Eko Wahyudi Ispoernomo, Jarwanto, Andre Kandiawan, Inneke

Indriati Kardianto, Roland Andreas Hauw Beng Kho, Tiong Lae Kho, Licke Boedy Koesuma, Mat

Kojin, Andri Gugus Kusdardjanto, Indra Lestyowati, Maisaroh, Fransiska Dusapto Marhaenti,

Muhammad Nasir, Kiat Kiep Njoo, Nurkholifah, Fredy Pangestu, Sylvia Pangkey, Gisan Priyanto,

As’ad Qodri, Joko Rianto, Rihantono, Erfin Ainur Rochim, Magdalena Paulina Sahulata, Andre

Setiawan, Feri Setiawan, Linda Ivonne Setiawan, Deni Setyaningsih, Nono Adrianto Soetedjo,

Karjani Solikin, Untung Subakri, Ribut Sueb, Sugianto, Pontianus Sugianto, Sugiyono, Franky

Suhartono, Sumarno, Senen Suparman, Suprayitno, Maman Surahman, Joko Surono, Suryadi,

Suryono, Hadi Susanto, Santoso Sutedjo, Marjuki Sutono, Harry Christian Tai, Daswari Budi

Trikaryanti, Veronica, Endang Sri Wahyuni, Ike Wahyuningsari, Putu Ngurah Raditya Kusuma

Wardana, Justina Lily Widjasena, Wiyono, Ibenu Yahya, Danti Yudharini China: Bin Xu, Feng

Gu, Xufei Tan, Jia Xi, Jinfeng Shen, Hongjiang Guo, Lianhong Zhang, Qing Mei, Shumai Li, Yi

Li, Yu Han, Zhihua Yan

HOlland COlOurs enlivens:

Building & COnstruCtiOn materialsWood Plastics Composite, Roofing sheets, Sheeting, Drain pipes, Electrical conduit, Fittings,

Siding, Rain gutters, PVC-window profiles, Sewerage pipes

paCkagingPET-containers for Beer, Carbonated Soft Drinks, Water, Dairy products, Liquor, Wine, Edible oil,

Sauses, Pharmaceuticals, Cosmetics, Personal and Household care

siliCOnes & elastOmersSealants, Sealing rings, Flexible baking trays, Cables, Sanitary silicone sealants

using tHe prOduCts:Holcobatch, Holcoflex, Holcolan, Holcolest, Holcolex, Holcolex A, Holcolor, Holcomax, Holcomer,

Holcomer UHT, Holcomix, HolcoPET, Holcoplast, Holcopol, Holcopox, Holcoprill, Holcoride,

Holcosil, Holcosil HTV, Holcosil LSR, Holcosil NS, Holcovinyl LQ

FOr Our CustOmers in:Algeria, Argentina, Australia, Bahrain, Bangladesh, Belgium, Bosnia-Herzegovina, Brazil, Bulgaria,

Canada, Chile, China, Columbia, Costa Rica, Denmark, Dominican Republic, Germany, Ecuador,

Egypt, Estonia, Fiji, The Philippines, Finland, France, Greece, Guatemala, Hong Kong, Hungary,

Ireland, India, Indonesia, Iran, Israel, Italy, Japan, Yemen, Jordan, Kazakhstan, Kuwait, Croatia,

Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Mexico, Morocco, The Netherlands, New

Zealand, Nigeria, Norway, Ukraine, Oman, Austria, Pakistan, Panama, Peru, Poland, Portugal,

Romania, Russia, Saudi Arabia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, Spain,

Sudan, Suriname, Syria, Taiwan, Thailand, Czech Republic, Trinidad and Tobago, Tunisia, Turkey,

Venezuela, United Arab Emirates, United Kingdom, United States of America, Vietnam, Belarus,

South Africa, Sweden, Switzerland

• Approximately380employees;• 2,000customersin80countries;• 10locations;• Worldwidenetworkofagents;• Eachemployeeisshareholder.

HollandColoursNVisanindependentDutchcompanywithofficesintheUnitedStates,EuropeandAsia.Thecompanywasfoundedin1979andislistedontheNYSEEuronextAmsterdamStockExchangesince1989.HollandColoursmakesproductsforcolouringsyntheticmaterials,themainproductsbeingHolcobatchandHolcoprill.Boththeseproductshavetheadvantageofbeingfreeflowingdust-freeandthuseasytodose.Furthermore,HollandColoursmakespastesforcolouringsilicones,elastomers,PET-packagingandotherapplications.

HollandColoursconcentratesworldwideonthreefocusmarkets:

• Building&Construction(especiallyPVC-applications);• Packaging(especiallyPET-applications);• Silicones&Elastomers.

Morethan80%ofturnoverisrealisedinthesethreemarkets.

VirtuallytheentireproductionisgeneratedbyourfourprincipalplantsintheNetherlands,Hungary,theUnitedStatesandIndonesia.ThenewproductionsiteinChinaisgrowingfast.

HollandColoursisorganisedinthreeregionaldivisionsthatoperateasprofitcentresineachspecificregion:Europe(includingtheMiddleEastandAfrica),NorthandSouthAmericaandAsia.TurnoverisdistributedbetweenEurope(60%),NorthandSouthAmerica(30%)andAsia(10%).

Profile

The Annual Report of Holland Colours is also available in Dutch on our website www.hollandcolours.com

Contents

ProfileKey figuresWe are back on the way upVision, mission, strategy and objectivesProgress of business in 2009/2010 Turnover New products / Research & Development Results Capital expenditure Cash flow and financing Developments per Division Personnel Corporate social responsibility Risk management Profit appropriation Outlook for 2010/2011Corporate GovernanceManagement informationReport of the Supervisory Board The Holland Colours shareFinancial Statements

2 3 4 5 7 7 8 8 9 9 9 11 13 13 16 16 17 1921 2325

Annual Report 2009/2010

holland colours 09/10 1

ProfileHolland Colours was founded in 1979 and has been listed on the NYSE Euronext Amsterdam Stock Exchange since 1989. It is an independent Dutch corporation with offices in North America and Mexico, Europe and Asia. About 47% of the shares are held by the Holland Pigments BV investment company, in which all 376 employees of Holland Colours participate, among others. The employees together hold approximately 20% of the shares in Holland Pigments BV. The company's corporate culture revolves around entrepreneurship, respect and responsibility towards society and staff.

ProductsHolland Colours makes products for colouring synthetic materials, the main products being Holcobatch and Holcoprill. Both these products have the advantage of being free flowing, dust-free, and very easy to dose, allowing the colour to be absorbed quickly by the required material. Holland Colours preparations are particularly suitable for PVC and PET. Furthermore, Holland Colours makes pastes for colouring Silicones & Elastomers, PET packaging and other applications.

MarketsHolland Colours concentrates worldwide on three focus markets:

• Building & Construction (especially PVC applications);• Packaging (especially PET applications);• Silicones & Elastomers.

Around 85% of turnover is realised in these three markets. Its substantial global market share means Holland Colours is a key player in each of these markets. Holland Colours' worldwide presence means it is never far away, and is able to supply national and international companies with solutions both promptly and efficiently.

Building & ConstructionHolland Colours has been a specialist in colouring PVC ever since its foundation. Its colouring systems are used in:

• Pipes and fittings;• Cladding/siding;• Window profiles;• (Foam) sheeting / roofing materials;• Fencing and decking.

Manufacturers of the above products are Holland Colours' customers. The Building & Construction market is well established, follows construction cycles and is subject to large regional variations.

PackagingHolland Colours' colour preparations are well suited to PET applications. The market for PET bottles and packaging is expanding fast, much faster than for glass and tin. This is a global market with sharp competition, and it is driven by specifiers, the major soft-drink, foodstuffs and cosmetics brands. Holland Colours’ customers are the manufactures of these bottles and packaging materials.

In addition to water and soft drinks, PET is increasingly being used to package beer, wine and milk. Holland Colours' colour preparations play a key role in these new market segments.

Silicones & ElastomersThe market for Silicones & Elastomers comprises a number of different segments. Sealants are used in the building & construction industry in particular. Silicone rubber products (elastomers) are mainly used in the automobile and electronics industry, but also increasingly in the textile industry (prints on shirts). The big silicone manufacturers operate across the globe and play a key role as both suppliers and customers. End users increasingly require coloured products, and Holland Colours is well-placed to meet this need.

Organisation and sitesHolland Colours is organised in three regional divisions that operate as profit centres in each specific region: Europe (including the Middle East and Africa), Americas and Asia. Distribution of turnover: Europe 60%, Americas 30% and Asia 10%.Virtually the entire production is generated by the four principal plants in the Netherlands, Hungary, the United States and Indonesia (Surabaya). Furthermore, Holland Colours has sites in Mexico, Canada, England, Indonesia (Jakarta), China and Japan. Local agents are used in many countries to ensure closer relations with customers. The functions organised at the corporate level are Purchasing, Research & Technology, Business Processes & ICT and Legal Affairs.

2 holland colours 09/10

Key figures

Financial year at March 31 2009/10 2008/09 2007/08 2006/07 2005/06

RESULTS (€ million)Turnover from continuing operations 1 51.0 53.3 60.2 58.9 57.7 Operating result from continuing operations 2.7 (0.6) 3.0 3.8 Net result from continuing operations 1.2 (0.6) 1.4 2.0

Turnover 51.0 53.3 64.7 63.9 62.6 Operating result 2.7 (0.6) 2.4 3.8 3.9Net result 1.2 (0.6) 0.8 1.9 2.0

CASH FLOW (€ million)Cash flow 2 3.7 2.5 4.0 5.1 5.1Investments 3 0.5 1.2 3.4 3.6 3.0Depreciations 3 2.6 3.1 2.9 3.0 3.1

GROWTH (%)Turnover from continuing operations (4.3) (11.4) 2.2 2.0 8.6

BALANCE SHEET (€ million)Working capital4 10.4 9.7 12.2 11.9 13.2Invested capital 30.1 30.8 34.8 35.5 37.5Shareholders' equity 19.9 18.6 19.6 22.4 22.5Balance-sheet total 39.2 40.3 44.3 46.4 47.5

RATIOSTotal debt 5/ EBITDA 2.0 5.1 2.4 1.9 2.2Operating result/ turnover 3 (%) 5.3 (1.2) 5.0 6.5 6.2Solvency 6 (%) 50.8 46.1 44.2 48.1 47.4Return on average shareholders' equity 3 (%) 6.1 (3.1) 6.5 8.9 9.2Interest coverage ratio 3 3.0 (0.7) 3.3 4.8 5.4Return on average invested capital 3, 7 (ROI) (%) 8.8 (1.9) 8.4 10.3 9.8Current assets / current liabilities (current ratio) 1.4 1.0 1.4 1.4 1.7

FIGURES PER SHARE (€)Net result from continuing operations 1.34 (0.72) 1.57 2.31 Total net result 1.34 (0.72) 0.92 2.23 2.32Cash flow 4.35 2.88 4.64 5.90 5.89Equity (excl. third-party interests) 23.17 21.60 22.74 25.93 26.10Dividend 0.50 8 - 1.00 1.40 1.60Highest price 21.79 36.92 46.70 52.00 36.00Lowest price 12.25 14.30 34.48 33.15 28.66Closing price 20.50 14.99 35.50 45.99 33.50

OTHER DATANumber of outstanding shares 860,351 860,351 860,351 860,351 860,351Average number of employees (FTEs) 393 433 445 441 435

1) The discontinued operations concern the activities of Holland Colours Pigment Kft, which were discontinued as of 31 December 2007.

2) Cash flow: net result + depreciations

3) The figures reported for the 2006/2007 financial year have been adjusted in accordance with IFRS in terms of continuing and discontinued operations

4) Working capital: inventories + amounts receivable -/- non-interest bearing liabilities

5) Total debt: sum of the interest-bearing liabilities

6) Solvency: shareholders’ equity /balance-sheet total

7) Return on invested capital: operating profit / (equity + provisions + interest-bearing liabilities -/- cash)

8) Dividend proposal


Turnover and results recoverThe first six months were characterised by the effects of the global crisis. Turnover remained low and it was difficult to predict developments. There was much uncertainty on the market, and everyone around us acted with caution. The cost-cutting measures we implemented at the end of the last financial year have steered Holland Colours back into a profitable situation for the first half year. Turnovers in Asia and America in particular rose from November 2009. Thanks to the lower cost level, this immediately led to better financial results for those Divisions. Europe too saw some recovery in terms of turnover and result, but to a lesser extent. Ultimately, the financial year ended with a net result of € 1.2 million, considerably better than we had anticipated in November 2009.

A turbulent year for all stakeholdersIt was a turbulent year for all stakeholders. First, at the end of March 2009, we said goodbye to a large number of fine colleagues. Fortunately, most of them have already found new jobs, and the remaining staff adjusted well to the post-reorganisation situation.As we no longer complied with all bank covenants towards the end of the previous financial year, the first quarter of the financial year saw some intensive negotiations with the banks. Finally, in July 2009, we made new agreements. During the course of the financial year we continued to comply with the new ratios agreed on.It was a special year for shareholders too. By cancelling the priority share, Holland Colours' structure will fit in better with the current corporate governance climate in the Netherlands. This will bring the shareholders' controlling interest more into line with the capital contribution. The new Articles of Association that lay down this change were adopted at an Extraordinary Shareholders' Meeting on 1 April 2010.

StrategyAt the start of the economic crisis, we put customers, cash, costs and innovation first. So far, this policy has steered us through the recession well. Thanks to our presence on the market and by showing loyalty towards our customers, we now benefit from a larger market share of the recovering Building & Construction market in America. Cost levels have fallen further, thanks to the continuing Lean improvement program. And following the success-ful implementation of the Ross ERP system in the Netherlands, the road to further efficiency improvements in Europe is wide open again. Strict cash management means that our financing costs did not rise, despite the higher rates. And against the flow, we continued to invest in innovation.

After the necessary short-term measures had been taken, we started updating the strategic plan, creating a solid starting point from which to take further steps. We will put even more emphasis on innovation, based on the existing core competence, whereby the results may well be achieved outside of the three focus markets. Other element of the adapted strategy is that we want to increase our market share in the focus markets without jeopardizing the gross margin. In addition, the operating expenses and investments will increase less than proportional to the turnover growth. Turnover growth and greater yield from existing means of production will lead to an increase in profitability.

The past period has boldly highlighted our strengths and weaknesses. It has intensified the contacts with all stakeholders and has led to better relationships with everyone. Internally, everything is well-organised and the mentality of continuous improvements is thoroughly embedded. Our next focus is continued growth. Growth that is very much visible in America an Asia and that is directly translated in good financial results. The economic growth has not yet returned to Europe, and we do not want to be too dependent on that anyway. Developing new products and building up new markets will also lead to growth for Holland Colours. Based on the reviewed strategy, we are confident that we can realise the formulated corporate objectives. However, the feasibility of the corporate objectives remains highly dependent on the economic recovery in the different regions.

Bernard van SchaikPresident

We are back on the way up


The company's success is based on its unique products for colouring PVC. As these products are free flowing, dust-free, and very easy to dose, they offer customers big advantages. These products were introduced around the globe at an early stage, a magnificent achievement for such a small company. Partly due to the fact that the products of Holland Colours cannot be applied in all types of PVC, the challenge lies in increasing applicability.

Vision

Technology has a major impact on the business of Holland Colours, whether this relates to the knowledge or processing of pigments, chemical technology or knowledge of materials. Our customer-specific products have to comply with all the relevant functional, aesthetic and processing requirements. These requirements are continuously changing, and are influenced by social themes such as recycling, fashion trends and product- and production innovations of our customers. This demands close contact with the market, from supplier to customer and from regulator to brand owner, in combination with the internal resources to reflect all developments in Holland Colour's products and processes quickly and adequately.

Mission

The mission of Holland Colours is to be preferred global partner of our focus customers. This requires an internal culture based on entrepreneurship, respect and commitment. Employee share ownership is an important binding element.

Strategy

The strategy of Holland Colours to achieve this mission is based on five elements:

1. Concentration on three focus markets;2. International presence;3. Innovation based on core competence;4. Providing a good service;5. Working efficiently.

Concentration on three focus marketsHolland Colours concentrates on three plastics markets for which its unique products are highly suitable: Building & Construction (especially PVC applications), Packaging (especially PET applications) and Silicones & Elastomers. The company is striving to achieve market leadership in these markets.

International presenceHolland Colours has many multinational customers that are serviced worldwide. An international network has been constructed that consists of four components. Principal production locations (the Netherlands, Hungary, the USA and Indonesia), small production locations (Japan and China), sales offices (United Kingdom, Canada, Mexico and Indonesia), and agents and distributors in many countries.

Innovation based on core competenceOur knowledge, often in open partnership with suppliers and customers, is focused on dispersion technology, pigments, colouring systems, carrier materials and customers' processing technology. This combination of knowledge areas and collaboration in the chain guarantees a continuous flow of new products and solutions. The core competence of Holland Colours is packing dusty materials, as a result of which the customers can easily and safely process them in synthetic materials. Innovation is aimed at using this core competence, even though the results thereof may go beyond the three focus markets.

Providing a good serviceCustomers are a key element at Holland Colours. The majority of turnover comprises customer-specific products that are often developed in cooperation with the customer. Delivering the right products in time forms a vital part of the company's policy. Working efficientlySelling customer-specific products that are also often still subject to change, makes a special demand on the ability to be efficient in terms of delivery reliability, cost control and working capital. Holland Colours has initiated various projects, including the Lean project, to achieve continuous improvements in this area.

Vision, mission, strategy and objectives


SWOT analysis

Strengths of Holland Colours • Strong focus and good positions in the three

focus markets• Global presence with own locations in nine countries,

plus agents and distributors• Unique technology and customer-specific products • Customer-oriented corporate culture

Opportunities• Growth through innovations on the basis of existing

core competence (e.g. additive dispersions)• Growth of PET packaging market (3-6% turnover per

year) and Silicones market (3-6% turnover per year)• Emerging markets such as Eastern Europe, South

America and Asia• New products such as Holcomer UHT, Wood

Plastic Composites and Holcosil HTV

Points for improvement• Reducing the time-to-market for innovations• Expanding the applicability of products outside the

current plastics market combinations PVC, PET and Silicons

• Optimising and capitalising on the standard ERP system

• Further improving efficiency and cost control

Threats• Cyclical Building & Construction market • Availability of raw materials• Tender nature of certain markets• Liquid and masterbatch alternatives to

Holland Colours products

Balanced innovation programmeTaking advantage of innovations in the focus markets with the right partners fast and on a timely basis is the foundation for the future of Holland Colours. At the same time, it is essential to make the preparation methods for existing products more price-efficient and to strengthen the production processes on a continuous basis.

Perfect serviceCustomers can expect Holland Colours to develop innovative products and deliver existing products in an effective and reliable manner.

Efficient business operationsContinuing the improvement processes in the fields of delivery reliability, working capital and cost management remains important to Holland Colours. The challenge is to make this happen while retaining our customer

Corporate objectives

The mission and strategy of Holland Colours are aimed at achieving the following objectives in the next three years:

• Turnover growth of 8 - 12% per year;• ROI growth to a level of at least 15%; • Growth in earnings per share, greater than

proportional to the turnover growth.

The turnover growth target has been increased from last year’s 5-10% to 8-12%. The main reason for this lies in the fact that the economic recession has pushed turnover down to a relatively low level. In combination with the fruits of innovation, a growth of 8-12% per annum from this level on is believed possible. The realization of the corporate goals remains dependent on the economic recovery in the various regions.

The strategy of the company is subject to changes driven by other economic and social developments. Hence this strategy needs continuous adjusting.

Challenges facing Holland Coloursorientation. Making the best possible use of the possibilities offered by the standard ERP system play an important role therein.

Management of the organisationHolland Colours operates with relatively small offices on a global market with a clear growth objective. An effective degree of autonomy of the operating companies, an efficient central management and actively looking for mutual collaboration are vital in realising the objectives. Having or retaining the right person in the right position in the organisation is therefore essential for Holland Colours.

PackagingThe results of the Packaging focus market have not been as good during the past few years. The economic recession gave rise to a number of structural changes which Holland Colours is responding to.


Progress of business in 2009/2010

Turnover

Falling turnover as a result of economic crisis

(€ million) 2009/2010 2008/2009 2007/2008 2006/2007 2005/2006

Focus markets 42.6 44.3 50.0 49.4 48.6

Specialties 8.4 9.0 10.2 9.5 9.1

Turnover from continuing operations 51.0 53.3 60.2 58.9 57.7

Pigments 0.0 0.0 4.5 5.0 4.9

Europe lags

(€ million) 2009/2010 2008/2009 2007/2008 2006/2007 2005/2006

Europe 29.8 33.0 37.8 35.4 31.5

Americas 15.7 15.0 17.6 19.8 22.5

Asia 5.6 5.3 4.8 3.6 3.7

Turnover from continuing operations 51.0 53.3 60.2 58.9 57.7

Only Silicones & Elastomers business increases

Increase in turnover 2009/2010 2008/2009 2007/2008 2006/2007 2005/2006

Building & Construction -5% -13% 0% +6% +5%

Packaging -3% -10% 0% -11% +22%

Silicones & Elastomers +1% -6% +9% +14% +1%

Total focus markets -4% -11% +1% +2% +9%

Specialties -7% -12% +8% +4% +6%

Total turnover -4% -11% +2% +2% +9%

Exchange-rate effect -1% -2% -3% -3% +1%

Turnover dropped by 4% to € 51.0 million in this financial year, due to the recession (2008/2009: € 53.3 million). Excluding the exchange-rate effects, the decrease amounts to 3%. An important cause of this drop in the first half-year was lack of demand in many of the markets in which Holland Colours operates, among other things due to reduced inventory in production chains. The situation gradually improved over the course of the financial year. In the first and second quarters, turnover dropped by 26% and 9% respectively, and grew again in the third and fourth quarters, by 5% and 26% respectively. It should be noted however that the basis for comparison was more favourable in these quarters. When compared with two years ago, turnover is still 16% and 7%, respectively, lower in these last two quarters.

Turnover development has varied in the different regions. The recession is still clearly noticeable. In Europe, where the crisis mainly took effect from the second half of the 2008/2009 financial year, turnover dropped by 10% when compared with last year's drop of 13%. America, which had been affected by the economic crisis for longer, showed increased turnover for the first time in years. Turnover there grew by 5%, compared with a 15% drop in the previous financial year. The American dollar, with a slightly lower price on average during the financial year, caused a drop of 1%. Turnover was also on the rise in Asia this year. A drop in trade turnover was amply compensated by an increase in sales of proprietary products. The effects of the economic crisis on developments in this region have remained limited.

Due to the global crisis, a drop in turnover in the Building & Construction market had already been taken into account. The 5% decline was mainly caused by waning demand in Europe. The decline in volume was pretty much the same as the fall in sales. Contrary to expectations, in America turnover in this focus market actually increased for the first time in years. In contrast to expectations at the beginning of the financial year, sales in the Packaging market fell. This drop amounted to 3%, while sales volumes rose by 8%. Although this market is traditionally less sensitive to economic fluctuation, the crisis has had a greater effect than had been anticipated last year. As a result of lack of demand in other


During the past financial year, research into process improvements was mainly aimed at improving the Holcoprill production process. R&D activities have led to a process improvement that has been implemented in Surabaya and Richmond, with Apeldoorn being next on the short-term agenda. These pilots show that the process completion time is considerably shortened and, moreover, product quality has improved. Next year's focus will be on the continued development of a number of additives concentrates, aimed at market introduction. Apart from that, the development of new products for the focus markets continues and work will be done on products for bioplastics.

Results

Net profit despite falling salesNet result rose to plus € 1.2 million in 2009/2010 versus a loss of € 0.6 million last year. It should be noted however that last year's results included on the one hand reorganisation costs of € 0.9 million (before taxes) and an incidental tax saving of € 0.7 million on the other. The cost-saving measures implemented at the end of the previous financial year have brought Holland Colours back to a profitable situation. Despite the drop in turnover, operating results rose from minus € 0.6 million to plus € 2.7 million. The improvement versus last year is entirely due to the second half-year. Despite the somewhat lower turnover in the second half-year compared to that of last year, caused by seasonal fluctuations, this period was concluded with a net profit of € 1.4 million (2008/2009: minus € 2.5 million, including € 0.9 million reorganisation costs). Return on investment increased over the year as a whole to 8.8% (2008/2009: minus 1.9%). Improved gross marginThe ratio between the gross operating results and the net turnover was 47.4% in 2009/2010, which is higher than last year (46.1%). Early in the financial year in particular, raw material prices dropped as a result of the crisis. This trend was reversed in the second half-year with a return to previous price levels and an added problem of availability of raw materials. Due to rigid working capital control among suppliers, raw materials were not always received on time. A change in the product mix, as a result of a relative increase in sales of proprietary quality products, had a favourable effect on margin development. Finally, improvements in the product process have led to less waste, increased re-use, higher production yields and therefore a better gross margin. These improvements are a consequence of the Lean improvement program initiated a number of years ago.

markets, producers of master batches have become more active in the market for Packaging. The increased competition has put pressure on sales prices in this market. In some segments of the market, this development was at the expense of the Holland Colours’ market share. Moreover, for cost reasons PET packaging is being coloured less or by means of cheaper methods. Demand for cheaper products has therefore increased, while demand for more expensive products has simultaniously declined. Finally, customers have reduced their inventory where possible over the course of the financial year. Despite the crisis, Silicones & Elastomers enjoyed a sales growth of 1%, mainly from Europe. Although this market is also sensitive to the recession, the decline in turnover remained limited among existing customers. At the same time, efforts made to attract new customers were rewarded with extra turnover. In terms of sales volumes, this market remained at the same level.

New products / Research & Development

Innovation continues to play an important role for Holland Colours. Products developed previously made a good contribution to the turnover during the past year. Sales of Holcomer UHT have risen. This product, which protects milk in PET bottles against light, is now sold in both Europe and America. The latest application of Holcosil LSR in high-quality heat-resistant silicon print on textile is also doing well, and further growth is expected for the next few years. In Asia, the application of Holcoprill in spunbond (a fabric of polypropylene or polyester fibres, used in durable carrier bags for instance) has expanded considerably. The Holcosil HTV preparation methods have improved, which means this product can now be sold on a wider basis.

On the Building & Construction market, the economic decline made it possible for us and our customers to study new recipes which will lead to a cost-saving or quality improvement for customers. We have developed colour formulas that provide better protection against degradation, or improve the lustre in the finished product.

The development activities for new products recently led to three patent applications. The patents relate to additive concentrates and products for the packaging market. Developing and protecting unique products forms a solid basis for growth through innovation. These new products are currently being developed further together with partners or customers. During the past financial year, the patent application for Holcomer has led to patents in a number of countries.


Lower operating costs thanks to reorganisation and cost controlThe economic crisis led to a drop in orders, which in March 2009 forced us to adjust the costs in accordance with a lower level of activities. As a result, the number of jobs is reduced by 60, leading to a cost-saving of € 1.8 million. In addition, cost control was a focus throughout the financial year. Depreciation dropped by € 0.5 million versus the previous financial year, mainly because investments have remained well below the level of depreciation in the past two years. Cost control has also resulted in lower travel and accommodation costs, lower communication costs and lower consumption of auxiliary materials. Operating expenses dropped by € 2.8 million in total to € 21.5 million (2008/2009: € 24.3 million, excluding € 0.9 million reorganisation costs).

Capital expenditure

Holland Colours has modern production facilities, which in general enable us to meet market demand. This made it possible to keep capital expenditure limited to € 0.5 million during the past year (2008/2009: € 1.2 million). Like last year, they remained far below the depreciation level of € 2.6 million (2008/2009: € 3.1 million). The most important investment relates to the construction of a new plant on the Surabaya site in Indonesia. This investment has opened the way to continued future growth. The other investments relate to regular replacements of production resources, as well as a number of smaller expansions.

All of the investments were entirely funded from the cash flow from operating activities.

Cash flow and financing

Despite the improved operating result, the cash flow from operational activities decreased to € 2.6 million in 2009/2010 (2008/2009: € 5.7 million). Whereas the working capital decreased by € 2.6 million in the previous financial year, it now increased by € 0.6 million from an exceptionally low level early in the financial year to € 10.4 million. This increase is due to a € 1.7 million increase in trade receivables as the result of a higher level of activities in relation to the final quarter of the previous financial year. On the other hand, inventories declined by € 0.4 million, particularly by reduction of the temporarily high inventory of raw materials at the beginning of the financial year. The remainder is explained by an increase in trade debts of € 1.0 million, a decrease in other debts of € 1.1 million, mainly thanks to settlement of the reorganisation at the start of the financial year, and a decrease in other receivables of € 0.8 million.

The positive cash flow of € 2.0 million from operating and investment activities (2008/2009: € 4.5 million) was allocated to reduce the interest-bearing debt to € 10.4 million (2008/2009: € 12.5 million).

An agreement was reached with the banks in July 2009 regarding the conditions under which the financing could be continued. Additional collateral was required in the Netherlands, Hungary and the United States. Moreover, a number of new covenants and higher interest rates were applied. The key ratio relates to the relationship between debts to credit providers and earnings before interest, taxes, depreciation and amortisation (Total Debt / EBITDA ratio). This ratio was 2.0 at the end of the financial year (2008/2009: 5.1) and therefore remained under the agreed 3.0 limit. The other ratios agreed with the bank, the Debt Service Coverage ratio and the Solvency ratio, were also met. No further tightening of the ratios has been incorporated in the existing finance agreements. Despite a rise in interest rates, the finance costs remained the same at about € 0.9 million (2008/2009: € 0.9 million) due to a reduction in the interest-bearing debt burden. The corporation’s solvency ratio has increased to 50.9% compared with 46.1% at the beginning of the financial year. This increase can mainly be explained by the increased equity as a result of the net profit. The positive exchange rate results remained limited to € 0.1 million (2008/2009: € 0.7 million), mainly due to the American dollar rate being roughly the same at the beginning and end of the financial year. The exchange rate results are a result of the stockholders’ equity at subsidiary corporations reporting in foreign currencies.

Developments per Division

Europe

Key figures (€ million) 09/10 08/09 Difference

Turnover 29.8 33.0 - 10 %

Operating result - 0.1 - 1.0

Capital expenditure 0.2 0.7 - 76 %

Depreciations 1.2 1.5 - 21 %

No. of employees (FTEs) 189 203 - 7 %

Despite lower operating costs, mainly due to the reorganisation, the operating result in Europe remained level at minus € 0.1 million (2008/2009: minus € 1.0 million). Following a 13% drop in turnover during the last financial year - due to the recession- it fell by another 10% this financial year. The main cause for this drop can be found on the Building & Construction market.


entire Holland Colours Group. This create options to optimise the order flows within the Division.

Lean continues to bear fruitThis financial year too, the current Lean improvement projects contributed to shorter delivery times, improved delivery reliability, fewer complaints, improved production output, a reduction in waste, a more logical process flow, a more transparent definition of service levels, method and order, a reduction in costs, a relatively lower working capital investment and a reduction of the number of accidents at work.

Americas


Turnover 15.7 15.0 + 5 %

Operating result 1.3 - 0.2


Depreciations 0.6 0.6 - 8 %


Turnover in the Americas Division rose by 3%, from USD 21.4 million to USD 22.0 million. Due to currency effects, turnover in euros rose by 5%, from € 15.0 million to € 15.7 million. Positive developments, which include an increase of the market share in the Building & Construction market in North America and a rising turnover of Packaging in Central and South America, are the main causes for that. The rising turnover, combined with an improved gross margin and lower operating costs, have led to an increase of the operating result, from minus € 0.2 million in 2008/2009 to plus € 1.3 million in 2009/2010.

Positive developments in Building & ConstructionFollowing years of decline, the US housing market stabilised to an extent, but structural recovery is still a long way off. Nevertheless, Holland Colours identified a clearly growing turnover on the Building & Construction market. Both existing and new customers contributed to this growth.

2200200018001600140012001000800600400

1989 1992 1995 1998 2001 2004 2007 2010

Number of newly built houses in the United States, in thousands

per year

No recovery for Building & ConstructionThe situation on the Building & Construction market in Europe has not yet improved. Turnover fell further this financial year. The ongoing slump on the housing markets in various European countries has had a negative effect on the sales developments, while the harsh winter in many parts of Europe also caused delays in construction. The fall in turnover could be minimised to an extent by securing a number of new customers.

Packaging is not growingDue to a combination of factors, packaging sales unexpectedly fell. The sales volume did rise, but sales prices were under pressure from increased competition, leading to a fall in turnover after all. For PET packaging manufacturers, the economic crisis was a reason to save costs where possible. A reduced use of colours was one of the consequences, a rise in demand for cheaper products another. Also, sales on some markets, such as the Russian beer market, fell, leading to a falling demand for bottles. Finally, the PET packaging market - which is less sensitive to economic fluctuations - attracts competition from markets that suffer badly from the recession.

Holcomer UHT, which was introduced last year and is a concentrate for colouring (dairy) packaging that protects its contents against harmful UV radiation, showed a considerable growth in sales even though it started from a modest level.

Rising sales for Silicones & Elastomers despite economic crisis Despite the fact that some of the sales in Silicones & Elastomers are related to the Building & Construction market, turnover in this segment rose by securing a number of new customers. During the past financial year, the commercial activities for the promising Holcosil HTV product intensified, and various offers were made to our customers. So far, this has led to few sales, but the expectations for the next financial year are positive.

Optimisation of production capacityDue to the economic crisis it was necessary to adjust the production capacity in accordance with the lower level of activities. In order to achieve the most efficient situation possible, the production of specific products has been concentrated to one of the production sites in the Netherlands or Hungary, where possible.

Implementation of ERP system in the NetherlandsIn November 2009, the standard Ross ERP system was taken into operation at the production site in the Netherlands. The implementation was a success, without any major disruptions. The last branch of the European Division, Holland Colours UK, will soon also switch to this information system that is a standard system for the

holland colours 09/1010

Rising turnover in PackagingTurnover in Packaging rose thanks to an increase in sales in Central and South America. Turnover in the United States remained virtually the same. Like Europe, this market is experiencing strong competition and cutbacks on the use of colours in PET packaging.

Turnover Silicones & Elastomers stableThe total turnover in Silicones & Elastomers was virtually equal to that of the previous financial year. The effects of the economic crisis in the Building & Construction sector still reverberated in the Silicones Sealants segment, where turnover fell slightly. However, this fall was compensated for by a rise in turnover for the Liquid Silicone Rubber product line and other Elastomers applications.

Production capacity and efficiency in the United StatesIn March 2009, the production capacity in the United States was adjusted in accordance with the lower level of activities, a result of the recession. In order to be able to continue to produce efficiently, it was necessary to change the shift system. During the course of the financial year, the production capacity was gradually increased in order to be able to meet the rising demand for products. This increase was realised without any major problems, also thanks to increased efficiency. As a result of the defined Lean improvement projects, production returns have risen, the amount of waste has fallen and the recycling of waste has increased. The increase in efficiency partly explains the improvement of the gross margin.

Asia


Turnover 5.6 5.3 + 6 %

Operating result 1.0 0.8 + 25 %


Depreciations 0.2 0.1 + 43 %


The Asia division has suffered relatively little from the global recession. Turnover rose by 4%, from USD 7.5 million to USD 7.8 million. Due to currency effects, turnover in euros rose by 6%, from € 5.3 million to € 5.6 million. Although the percentage rise in USD was slightly less than last year (11%), the underlying developments were favourable. The lower trading turnover was more than compensated for by a higher turnover for own products with a higher gross margin. The higher turnover and higher gross margin, together with good cost control, have led to an increase of the operating result, from € 0.8 million to € 1.0 million.

Turnover grows in virtually all segmentsTurnover rose in both the focus markets and Specialties. As usual in Asia, the Specialties segment accounts for a high proportion of turnover. This mainly concerns pastes and trading turnover. Despite the falling trading turnover, the turnover in Specialties remained more or less the same. Turnover on the Building & Construction market was at a traditionally very low level, but it rose considerably nevertheless. Turnover in Packaging experienced a strong growth thanks to positive developments in Indonesia, Vietnam and China. Turnover in Silicones & Elastomers lagged the previous financial year, especially due to falling sales of Silicone Sealants in China.

Expansion of production site in IndonesiaThe newly built plant was opened and taken into use in September 2009. This expansion makes it possible to install a number of new production lines. This will form the basis for continued turnover growth in this region for the near future.

Production site in China is profitableThis year, the production site in China, which opened in 2007, grew further and as such has become profitable. Local production was expanded this year, making it possible to respond to market demand quicker. Thanks to an expansion of the sales team, the market scope also increased. Whereas the rise in turnover during past years was mainly generated by the market for Silicones & Elastomers, this year the Packaging market was the driving force behind growth. As a result of that, the gross margin improved, both in absolute and relative terms. China too is steering towards continued growth.

Personnel

Streamlining of the organisation As a result of the special global market circumstances, in March 2009 Holland Colours was forced to adjust the organisations in the Netherlands, Hungary, the United Kingdom and the Unites States in accordance with the lower level of activities. It meant 60 jobs had to go. From the start of the financial year, activities have been reallocated in order to realise a smaller yet efficient organisation. The development of skills and improving staff performances continued to be important points for attention.


LTIR Result Action required

0-5 Outstanding No

5-10 Good No

10-15 Fair Yes

> 15 Poor Yes

Terms of employment and trainingEmployees play an extremely important role in the successful execution of the company's strategy. The staff policy is aimed at developing talent and retaining critical knowledge and skills. The policy is structured by drawing up and teaching work instructions and by providing targeted training. Holland Colours operates in various countries, each with their own laws and cultures. For that reason, the operating companies pursue their own staff policy that is geared to the local situation. The terms of employment are complete and competitive. All employees are subject to a profit share scheme that is based on the Group's result and the result of the particular operating company which the employee forms part of. The Group's results for the 2009/2010 financial year are not good enough for a profit distribution.

Employee share ownershipAll the employees in Holland Colours participate in Holland Pigments BV, the investment company that holds 46.49% of the shares of Holland Colours NV. The employees are able to buy or sell shares in Holland Pigments shortly after the publication of the yearly and the half-yearly figures of Holland Colours NV. Insofar profit can be distributed, part of it is paid out in Holland Pigments BV shares. At the moment, employees hold more than 20% of the shares in Holland Pigments BV.

Organisation At the end of the financial year, Holland Colours employed 376 members of staff (FTE) compared to 409 members of staff (FTE) a year ago. During the course of the financial year, the average number of staff fell from 433 (FTE) to 393 (FTE). The staff are distributed geographically as follows:

Own employeesyear-end

09/10

year-end

08/09The Netherlands 125 139

Hungary 75 75

United Kingdom 6 10

United States 71 82

Canada 4 4

Mexico 7 8

Indonesia 76 81

China 12 10

Total 376 409

The average age of staff rose, from 39.1 to 39.2. Sick leave levels fell from 2.3% to 1.4%.

Men/women breakdown women men

Employees in management functions 7 17

Other employees 95 257 SafetyHolland Colours staff around the world are professionals with a result-oriented entrepreneurial spirit, who are actually prepared to take on challenges. A safe and high-quality working environment is vital in that respect and has great priority. Holland Colours' policy is aimed at executing or structuring all work and processes in such a way that each form of personal injury and harm to a person's health can be prevented. This ambition forms the basic principle for the health and safety policy that is implemented at all companies.

Despite the extensive attention to safe working methods, the number of accidents at work came to three, compared to seven in the previous year. The incidents included a light burn, a sprain and a cut, In order to prevent such accidents in the future, various railings have been installed and work instructions have been adjusted. These incidents led to 10 days lost (2008/2009: 120).

Holland Colours uses the Lost Time Injury Rate (LTIR) method to measure its safety performance. This internationally utilised method gives a ratio between the number of accidents and the number of hours worked. The LTIR for 2009/2010 was four (outstanding) compared with eight (good) last year. The table provides the interpretation of these data.


Corporate social responsibility

Sustainability is one of the key elements of the Holland Colours corporate model. This is expressed in the quality of the business operations, production processes and product properties. Attention is paid to these aspects at the earliest possible stage of product development. It is also expressed in how we treat the environment, and for the rest this policy relates to various aspects of corporate social responsibility.

Care for the environmentHolland Colours continuously strives to minimise any detrimental effects of production processes on the environment. Treating raw materials in a responsible manner, reducing breakdowns, reducing and recycling waste contribute to that. The production sites pay a lotof attention to managing the waste streams. Apart from consistently separating waste, a mass balance is maintained. Where the available technologies and techniques make this possible in an economically responsible manner, Holland Colours will not limit its environmental care to the bare legal norms. Moreover: clean production, re-use of materials and energy savings have a positive environmental impact as well as a direct economic value. Quality, Health & Safety and Environmental (QSHE) managers operate at the large production sites. They monitor the course of events at these sites and continuously work on improvements.

Social involvementHolland Colours feels responsible for more than simply being a good employer and behaving responsibly as regards the environment. In all the countries where it is economically active, Holland Colours takes part in projects in the field of health care, the disabled, supervision of studies and well-being.

Risk management

The company's strategy is subject to risks. External economic factors, erratic market developments, calamities and human factors may obstruct the realisation of the corporate objectives. Holland Colours has implemented risk management and control measures, aimed at recognising and - with a reasonable degree of certainty - managing significant risks the company is exposed to. Risk management, geared to the size and the entrepreneurial nature of Holland Colours, is an integral management task.

The following overview of the most important specific risks is not necessarily exhaustive. It is possible that risks currently not being recognised or not regarded as substantial may at a later stage negatively affect the ability of Holland Colours to achieve its corporate objectives. The risk management and control measures are aimed at identifying these risks in time.

Principal strategic risks: marketThe market risks differ for each focus market and market area. Some markets, such as the one for Packaging, are subject to intensive competition and high price elasticity. In other market areas, such as that for Building & Construction, Holland Colours enjoys a technical lead coupled to a unique market position. However, this does not offer any guarantees for the future. Products at the end of their life cycle must be replaced by new, improved and distinctive versions in time.

innovationInnovation is an important pillar under the company's strategy. Good cooperation between the different Divisions, the central Research & Technology department and the various disciplines (marketing, sales, production) is essential. Through projectcontrol by divisional management and a joint agenda and progress monitoring, Holland Colours ensures that the innovation process is managed as well as possible.

global diversificationGlobal diversification makes Holland Colours less sensitive to the trends in any individual geographic market. International presence is therefore one of Holland Colours’ strengths, but also a risk, given the company’s size. Control is carried out via a stringent process of budgeting and financial reporting, emphasis on performance management, and by – where necessary – making use of external expertise.


the environmentHolland Colours tries to reduce environmental risks to a minimum. Environmental coordinators have been appointed on a local level. They know the specific situation and as such they implement local legislation.

Principal financial risks: financing and interestMost of the company's financing has been centralised. Financing is subject to a number of conditions, with the total debt / EBITDA ratio being the most important. As emerged in 2009, there is a major risk that the conditions are breached during a recession. Such a situation may lead to costly refinancing, possibly linked to reinforcement of shareholders' equity. In order to reduce this threat, Holland Colours attaches great importance to the agreed ratios and it explicitly aims to reduce the overdraft. Interest percentages on long-term loans are generally fixed for the entire term of a loan. Current account facilities are generally based on a base interest rate set by the bank, plus an agreed surcharge.

exchange ratesHolland Colours distinguishes between transaction risks and translation risks. When relevant, transaction risks are hedged by means of futures transactions or options. In addition, it is custom to hedge future currency flows for a period of six to twelve months, during which the hedging percentage falls as uncertainty about these flows increases. A translation risk arises when operating companies outside the eurozone make a substantial contribution to profits or form a considerable part of the equity, while their currency weakens in relation to the euro. These translation risks are partially hedged by applying hedge accounting. In addition, on 1 April 2009, the functional currency of the Hungary branch changed from the local currency to the euro.

credit riskThe risk that debtors are unable to fulfil their obligations is not insured. The majority of Holland Colour’s business is conducted with low-risk large multinational customers. In addition, debtors are monitored on a basis of credit limits, while clear-cut procedures are applied in the case of overdue payments. The creditworthiness of customers is checked on a regular basis.

financial reportingThe internal financial reporting and the budgeting process are structured to ensure clarity as to the achievable results as well as to the timely, reliable and sufficiently complete reporting on the course of business. The standard accounting procedures have been laid down in the Holland Colours Accounting Manual. Self-reflection, by conducting internal business evaluations for instance, is a primary monitoring tool to check these procedures. The evaluations

macroeconomicsThe 2009 recession year clearly demonstrated that macroeconomic developments exert great influence on the level of demand for Holland Colours products. The geographical spread and the spread across various focus markets cushion the effects of this risk.

Principal operational risks: raw materialsRaw materials form an important part of the cost price of the products of Holland Colours. The prices of these raw materials may fluctuate considerably due to fluctuating availability. Price increases can be passed on to customers with a delay of a couple of months. This risk is reduced by coordinating strategic purchases centrally and by making price and delivery agreements at group level. Our order-driven production reduces the inventory risks.

product liability and safetyHolland Colours has different production processes on a small to medium-size scale. Whenever production control has low levels of automation, the risk of human error increases. Incidents during the production process can never be eliminated. They may lead to a loss of quality, complaints from customers and disruptions to the production process. Holland Colours subjects its products to preventive checks and virtually all companies are ISO certified. Other instruments used by Holland Colours to improve its production processes include improvement measures from the Lean approach, a targeted production reporting process and clear standard work instructions. Product liability risks are also covered by agreements made with customers and suppliers, as well as by insurance contracts. Health and safety are also major risk areas and we therefore place great emphasis on working conditions, sick leave and accident prevention.

management and personnelHolland Colours has a decentralised organisation structure. Within the Group's strategy, the Division directors and operating company boards to a great extent determine the corporate policy and take business decisions themselves. Not having the right person in the right place forms a risk for the company. Another risk is the dependence of key officials, often with an R&D or commercial background. Managing this risk is an important focus area for group management.

continuity of information provisionWith a view to costs and risk management, information systems such as the ERP system are managed centrally on an increasing basis. Disruptions to these systems may lead to an infringement of the business processes. The risks are limited to the greatest possible extent by means of information protection procedures and contingency.


are made on the basis of a structured questionnaire and conducted by controllers from different operating companies of the Group.

Risk managementRisk management is a responsibility of management on all levels. During the reporting year a start was made with a risk register, a system in which risks and control measures are recorded in a structural manner. During the past year, business evaluations were conducted at the branches in the United States, the Netherlands and Hungary. The results were discussed with local management and procedures have been adjusted where necessary. The programme of internal business evaluations will be further extended during the next year. Twice a year, all boards and controllers of operating companies sign a compliance declaration with regard to financial reporting / internal control.

All financial regulations have been laid down in the Holland Colours Accounting Manual. In a letter of representation, the boards and controllers of the operating companies declare that the results were prepared in accordance with this manual. Each year, the external auditor assess the setup and functioning of the accounting organisation and the internal audit, insofar as relevant for the audit on the financial statements. They report to local management, the Board of Management and the Supervisory Board. Any risks that are insurable, as in the case of fire and business interuption, third-party liability and product liability, are placed with insurers. The company regularly weighs up insurance cover, premium and policy excess.

Evaluation of risk management and control systemsThe Board of Management is of the opinion that:• The risk management and control systems offer a

reasonable degree of certainty that the financial report does not contain any substantial inaccuracies;

• The risk management and control systems performed well during the reporting year;

• There are no indications that the risk management and control systems will not perform properly during the current reporting year.

Good risk management is no guarantyRisk management is a dynamic process. Risks currently assessed as minimal may change with regard to profile and impact at a later stage. New risks, which may possibly result in mistakes or losses, cannot be excluded either. Risk management can never provide an absolute guarantee for achieving the corporate objectives.

Board statementReferring to section 5:25c, paragraph 2c of the Financial Supervision Act, the Board of Management confirms that, as far as they know:• the financial statements give a true and fair view of

the assets, liabilities, the financial position and the result; and

• the financial statements give a true and fair view of the situation as at the balance sheet date, the course of events during the financial year; and

• the financial report describes the material risks the company is confronted with.



Profit appropriation

Dividend policy: annual assessmentThe dividend policy of Holland Colours is not based on the distribution of a fixed percentage of the profit. It is rather assessed each year on the basis of the company’s financial position and prospects. The following factors are considered:

• Capital structure: As an internationally operating industrial company, Holland Colours aims at a solvency of between 45 and 50%.

• Future finance requirements: The dividend proposal is partly determined by the future finance requirements. Contributive factors may include additional working capital for growth, investments above the level of the depreciations and acquisitions of a limited size, if relevant.

• Total Debt / EBITDA ratio: In order to maintain access to external financing sources, the ratio between interest-bearing debts and the operating result before depreciation and amortisation is taken into account.

Until last year, as part of the dividend policy, the target was an interest coverage ratio of at least three. As banks no longer apply the interest coverage ratio but the Total Debt / EBITDA ratio when assessing the financing options, Holland Colours has decided to let this ratio, instead of the interest coverage ratio, form part of the dividend policy.

Dividend proposalThe net result per share is plus € 1.34, compared with minus € 0.72 last year. On the basis of the corporation’s dividend policy, it will be proposed to the General Meeting of Shareholders that a dividend of € 0.50 per share be distributed in cash (2008/2009: € 0.00). The proposed dividend takes account of the uncertain economic prospects and the cautious attitude taken by banks.

Outlook for 2010/2011

The economic climate is expected to remain uncertain in 2010/2011, especially with regard to developments in the European and American housing markets. Although the order portfolio at the start of the financial year is higher than the relatively low level of a year ago, it is still too early to draw conclusions for the entire financial year.

The housing markets in Europe and the United States are expected to show little or no structural recovery. Nevertheless, Holland Colours anticipates higher sales for Building & Construction when compared with the low level of 2009/2010, thanks to good market positioning.

Holland Colours also expects higher turnover for Packaging and Silicones & Elastomers. This growth is derived from market expansion, improved market positions and increased turnover in new products, including Holcomer UHT and Holcosil HTV.

Activities aimed at more efficient management will be continued unabated, with great attention for turnover development.

The number of (full-time) employees as of 1 April 2010 is 376. This number is expected to increase slightly over the course of the financial year, due to a higher activity level. Depreciation is likely to exceed investment once again in 2010/2011, allowing the latter to be fully financed from the cash flow. Corporate policy is aimed at remaining well within the bank covenants in the coming financial year, and improving the conditions of the financing agreements. Barring unforeseen circumstances, a marked increase in turnover and a more than proportional increase of the net result is foreseen for the first half-year of 2010/2011. Due to the uncertain economic developments, however, Holland Colours does not make any statements for the financial year 2010/2011 as a whole. Holland Colours NV. June 1, 2010

Board of Management

Bernard van SchaikJeroen StraathofTineke Veldhuis - Hagedoorn

Accountability Holland Colours promotes responsible conduct in relation to society and the environment, while taking account of the interests of the various stakeholders: staff, shareholders, other providers of capital and customers. The Board of Management and Supervisory Board share the responsibility for giving due consideration to the interests of all those involved, focusing on the continuity of the company and the creation of shareholder value, both now and in the longer term. The internal risk management and control systems play an important role therein. For a description of these systems, reference is made to the Risk Management section on page 13.

The Supervisory and Management Boards endorse the main Corporate Governance principles laid down in the principles and best-practice provisions of the code updated by the Corporate Governance Code Monitoring Committee as published in the Government Gazette of 3 December 2009. Holland Colours generally adheres to the recommendations by the Dutch Corporate Governance Code. Where necessary, measures have been taken to implement the changes. In addition, the Extraordinary Shareholders' Meeting of April 2010 adopted an amendment to the Articles of Association, dividing the powers of Stichting Prioriteit between the Management Board, Supervisory Board and shareholders and thus bringing the structure more in line with the Dutch Corporate Governance Code. The regulations for the Management Board and the Supervisory Board have been brought into line with this amendment of the Articles of Associations and the aforesaid code.

The full version of Corporate Governance rules of Holland Colours, together with explanatory notes, can be found on the website of the company. A few recommendations from the Dutch Corporate Governance Code have not been adopted. This concerns the following points:

Board of Management: Previously existing employment contracts of members of the Board of Management will be respected. The term of appointment of the Board members is indefinite therein. In the event of dismissal, existing terms of service and regulations are taken into account. A contractual redundancy payment has been agreed with the current President in line with the recommendation of the Dutch Corporate Governance Code. The remuneration policy for the Board of Management is set by the Supervisory Board as a whole and is further explained in the explanatory notes to the financial statements, under point 27. Holland Colours does not offer remuneration in the form of options.

Provisions with respect to options are therefore not applicable. Within the framework of expatriation, a director has been granted a loan for home financing, which loan is linked to the duration of the expatriation. Private investments need not be disclosed, but investments may not be made in competitor companies.

Members of the Supervisory Board: For as long as Holland Pigments BV retains an interest of at least one third in the issued capital, they are entitled to appoint one Supervisory Board Member. The General Meeting of Shareholders can cancel this binding nature of a nomination for appointment with a majority of at least two thirds of the votes cast, which votes must represent more than half of the issued capital. In view of the size of the Supervisory Board, no separate committees have been constituted. The duties of the remuneration, audit, selection and appointment committees are performed by the full Supervisory Board. In addition to this, one of the Supervisory Board Members conducts regular consultations with representatives of the financial discipline. The General Meeting of Shareholders determines the remuneration policy of the Supervisory Board. The policy strives to remunerate a fixed amount which is market conform in relation with the size of the company. The chairman of the Supervisory Board is also a member of the Management Board of a listed company. This is a temporary situation awaiting the appointment of a succeeding chairman of the Supervisory Board. Private investments need not be disclosed, but investments may not be made in competitor companies.

Company Secretary: The size of Holland Colours is not such as to justify allocation of duties and appointment of a Company Secretary as formulated in the Code.

Conflict of interests: These provisions are observed and implemented in spirit, given the special position of Holland Pigments BV as investment company in which participation includes all employees of the Holland Colours Group worldwide. In line with the Dutch Corporate Governance Code, transactions between Holland Pigments and the Company that are of material significance are subject to approval by the Supervisory Board.

Shareholders' powers: For practical reasons and with a view to the costs to be incurred, the provision stipulating the simultaneous attendance of shareholders in meetings with investors, analysts, presentations and press conferences is not observed. All relevant information is of course immediately published on the website of the company.

17

Corporate Governance

holland colours 09/10


Shareholdings of Supervisory Board, Management Board and Via Finis Invest BVHolland Colours encourages employee participation to increase involvement and to balance the interests of employees and shareholders. Mr H.H. van der Lof (member of the Supervisory Board) is a director at Via Finis Invest BV. Via Finis Invest BV is a shareholder of Holland Colours NV; during the past financial year, its share position in Holland Pigments BV has been reduced to nil.

As of March 31, 2010, the Supervisory Board and the Board of Management own the following shareholdings, which are held as long-term investments:

In Holland Colours NV 31 March 2010 31 March 2009Supervisory Board 0.00 % 0.00 %Via Finis Invest BV 8.14 % 6.28 %Management Board 0.00 % 0.00 %

In Holland Pigments BV 31 March 2010 31 March 2009Supervisory Board 2.38 % 0.00 %Via Finis Invest BV 0.00 % 8.07 %Management Board 11.70 % 10.94 %

With regard to the Dutch Corporate Governance Code, it is noted that substantial changes in the policy thereof will be submitted to the General Meeting of Shareholders.

The shareholders' meeting of July 2009 granted permission to the Management Board to resolve to issue ordinary shares for a period of 18 months. i.e. until 6 January 2011, subject to approval from the Supervisory Board and the holder of the Priority share and to resolve to limit or exclude the pre-emptive right of holders of ordinary shares and/or grant rights to acquire ordinary shares, on the understanding that this entitlement is limited to a nominal share amount equal to 10% of the issued share capital of the Company at the time of issuance and an additional 10% of the issued share capital at the time of issuance, if issued within the framework of a merger or takeover.

The General Meeting of Shareholders further authorised the Management Board to acquire own shares, other than for no consideration and subject to the approval of the Supervisory Board and the holder of the Priority share. The acquisition price must range between the amount equal to the nominal value of the shares and the amount equal to 110% of the share price, in which the share price will be: the highest average share price of each of the five trading days prior to the acquisition date in accordance with the Daily Official List of NYSE Euronext Amsterdam.

All documents related to the implementation of the Dutch Corporate Governance Code can be found under Corporate Governance on the website www.hollandcolours.com. Here you will find further information, including the profile, regulation and schedule of retirement by rotation for the Supervisory Board, the Articles of Association of the Company, the whistleblowers’ regulation, the regulation on ownership and transactions in shares and other financial instruments and the minutes of the General Meeting of Shareholders.

Preventing the misuse of insider informationIn compliance with the Dutch Financial Supervision Act, Holland Colours has instituted a regulation relating to investment in own shares, share ownership and preventing the misuse of insider information. Moreover, the duty of disclosure and the relevant best practice provisions of the Corporate Governance Code have been incorporated in this regulation in as far as applicable. This regulation is applicable to the Supervisory Board, the Management Board, a wide circle of personnel as well as to a number of advisors.The Central Officer supervises compliance with the regulation and maintains contact with the Netherlands Authority for the Financial Markets (AFM).


Management information Supervisory Board

N.H. Gerardu (1951) Chairman DutchMember of Royal DSM NV Management BoardMember since 2006; current term until 2010Additional functions:Member of Polynorm NV Supervisory Board

J.W. de Heer (1961)DutchManaging Director of Victron ThailandMember since 2010; current term until 2014Appointed by nomination of Holland Pigments BVAdditional functions:Chairman of Stichting Administratiekantoor Aandelen Holland Pigments BV

H.H. van der Lof (1962)DutchDirector of Via Finis Invest BVMember since 2007; current term until 2011Additional functions:Member of Koninklijke Grolsch NV Supervisory BoardMember of TIIN Buy Out and Growth Fund BV Supervisory BoardMember of TIIN Techfund 2 BV Supervisory Board

M.H. Zegger (1957)DutchDirector of Pemco International BVMember since 2005; current term until 2013Additional functions:Member of Antea Participaties BV Supervisory Board


From the left:Jeroen StraathofTineke VeldhuisBernard van Schaik

Board of Management

B.P.M. van Schaik (1951) President

J.J.G. Straathof (1965)Director Finance

A.J. Veldhuis-Hagedoorn (1953) Director Division Americas

Group ManagementGroup Management is formed by the Board of Management, plus the Division Directors, the Research & Technology Director and the Manager Business Processes & ICT.

S. Kho-Pangkey MBA (1949) Director of Asia Division

R.P. Karrenbeld (1973) Director of Europe Division

J.T. Stevels (1971) Director Research & Technology

G.J. Luiten (1962) Manager Business Processes & ICT

Please refer to page 72 for an organisation chart.For more information on Holland Colours NV’s Management, please visit www.hollandcolours.com

Management information


Report of the Supervisory BoardMeetingsDuring the past financial year, the Supervisory Board met six times to discuss the general course of business. The following fixed agenda items were discussed: market developments, social aspects relevant to the company, development of the results and balance sheet, company financing, research and development, safety, the environment and working conditions, implementation of the ERP system and the developments in the field of Corporate Governance. Frequent discussions further included the shareholder structure and the relation between capital contribution and controlling interest in the company. This has ultimately led to a proposed amendment of the Articles of Association in which cancellation of the priority share was focal point. The Supervisory Board believes that a structure without a priority share fits in better with the current Corporate Governance climate in the Netherlands. The strategy of the company has also been subject of multiple discussions. One of the meetings was held at the US branch, in which a company visit and introduction to the members of the management team formed part of the programme.

A turbulent yearThe 2009/2010 financial year was a special and eventful year for several reasons. Due to the poor results following the global economic crisis, the 2008/2009 financial year was closed with a loss, for the first time since long. The first half of the 2009/2010 financial year was therefore dominated by measures required in order to tackle the recession in the short term. In addition to cost savings and management of the working capital, financing of the company was an important point for attention. Many discussions with the external financers were required in order to reach new agreements on continuation of the financing package. Between the various regular meetings, the Supervisory Board conducted multiple telephone consultations with the Management Board about all these important subjects.During the course of the financial year, more attention was paid to the effects of the crisis in the longer term. An assessment was made to verify the extent to which the strategy of the company had to be adjusted to the circumstances changed by the crisis. Accelerating the innovation process plays an important role therein. Risk managementDuring the year under review, as part of the meeting of April 2010, the setup and functioning of the internal risk management and control systems was discussed with the Management Board and the external auditors. In terms of its supervisory role, the Board is of the opinion that

these systems are adequate and effective. At that same meeting the risk register was discussed, a system for the structural recording of risk and control measures. The setup of the internal business evaluations was also discussed therein. Given the size of Holland Colours and the implementation of the tasks of the current controllers, the Supervisory Board deems the appointment of an internal auditor not necessary.

Evaluation of performanceThe Supervisory Board met prior to each meeting with the Board of Management, discussing its own performance and that of the Board of Management, among other things. With regard to the own performance of the Supervisory Board and that of the separate committees, the Supervisory Board concludes that it is sufficiently balanced in its composition and that the necessary expertise is present.

Apart from one meeting, from which one Supervisory Board member was absent, all the members attended all the meetings. In addition to the regular meetings, frequent informal discussions took place between Supervisory and Management Board members, during which specific issues were raised.

Composition and allocation of dutiesAt the General Meeting of Shareholders of 6 July 2009, Mr Zegger was appointed for a second term of four years. Following the amendment of the Articles of Association which was adopted at the Extraordinary Meeting of Shareholders of 1 April 2010, Holland Pigments BV obtained the right to appoint a Supervisory Director at Holland Colours NV. During that same shareholders' meeting, Mr J.W. de Heer was appointed fourth Supervisory Director on behalf of Holland Pigments BV. The first term of Mr N.H. Gerardu ends in 2010. At the next General Meeting of Shareholders of 5 July 2010, Mr Gerardu will be nominated for reappointment.

The Supervisory Board's duties and methods are recorded in a regulation. The profile required of the Board members and a schedule of retirement have also been laid down. These documents can be accessed on the Holland Colours website. The profile stipulates that the Supervisory Board pursues a mixed composition in terms of gender and age. The current Supervisory Board consists of four gentlemen. The future aim is to bring the composition of the Supervisory Board in line with the recommendation of the Dutch Corporate Governance Code, in the event of equal suitability of candidates. In accordance with provision III 2.2 of the Dutch Corporate


Governance Code, all Supervisory Board members are independent, with the exception of Mr J.W. de Heer. Mr De Heer is also chairman of the board of the Stichting Administratiekantoor Aandelen Holland Pigments (AAHP), a foundation that holds approximately three-quarters of the shares in Holland Pigments BV, and which is also a director of this company. Holland Pigments holds a 46.49% interest in Holland Colours NV. In view of the regular size of the Supervisory Board, no separate committees have been constituted: the duties of the Remuneration, Audit and Selection and Appointment committees are performed by the full Supervisory Board.

The remuneration policy for the Board of Management is set by the Supervisory Board as a whole. The remuneration consists of a fixed and a variable part. The variable part exists of a profit share scheme, which is equal for all employees in the Group and, depending on ROI and net profit, could mean a payment of at maximum two months of salary. There is also a bonus scheme in place for the Board of Management, which is applied only if all employees of the Group are paid a share in the profits. The extent of the bonus is determined by achieving the corporate objectives, and amounts to a maximum of two months of salary. No variable remuneration was paid during the past financial year. Details of the remuneration of the Board of Management and the Supervisory Board can be found in the explanatory notes to the financial statements, under point 27.

Financial report and dividend proposalThe company’s financial report, which we now submit to you, contains the financial statements for the financial year 2009/2010. The financial statements have been authorised by Ernst & Young Accountants LLP, registered accountants, who issued an unqualified report. This report has been included on page 70 of this financial report.

At its meeting of 1 June 2010, the Supervisory Board discussed the financial statements as well as the financial reporting and the findings of the external auditor in the presence of the Management Board and the external auditor. Pursuant to this, we are of the opinion that this financial report meets transparency requirements and forms a sound basis for the Supervisory Board's burden of accountability and its regulatory role. We submit the financial statements to the General Meeting of Shareholders and advise you to adopt them as it is. We also ask for approval for the dividend proposal of € 0.50 per share.

We also recommend that you issue your approval for the management pursued by the Board of Management and for the supervision carried out by the Supervisory Board, and to grant discharge to the Board of Management and the Supervisory Board.

The members of the Supervisory Board have signed the financial statements and as such they have fulfilled their statutory obligation by virtue of article 2:101, paragraph 2 of the Netherlands Civil Code.

We would like to thank the Board of Management and all the employees for their efforts and achievements.

ConcludingDuring the 2009/2010 financial year, Holland Colours had to adjust to the changed circumstances on the market, as a result of which we have again been unable to achieve the corporate objectives. With its amended strategy, Holland Colours aims for profitable growth and an improvement on return. By speeding up innovation and by working more efficiently, it will be possible to achieve the objectives.

We wish Management and employees every success in achieving the objectives for the coming financial year and would like to express our complete confidence in the policy pursued by the Management.

Apeldoorn, 1 June 2010

The Supervisory Board

N.H. Gerardu, ChairmanJ.W. de HeerH.H. van der LofM.H. Zegger


Stichting Prioriteit Until recently, Holland Colours had an anti-takeover mechanism in place in the form of a priority share to which certain rights had been assigned. The priority share was held by “Stichting Prioriteit Holland Colours”. As a result of the amendment to the Articles of Association of 1 April 2010, the Stichting Prioriteit will be discontinued. A more detailed explanation is given in the report by Stichting Prioriteit, on page 71.

Substantial interestsAs of 1 June 2010, the following substantial interests (>5%) were disclosed internally or disclosed in the registers of the AFM (Netherlands Authority for the Financial Markets) on the basis of the Decree on the Disclosure of Major Holdings and Capital Interests in Issuing Institutions in accordance with the Act on Financial Supervision.

Disclosures % Source Date

ASZ Holding BV 6.74% Financial Supervision Act 01-11-2006

Janivo Beleggingen BV 5.08% Financial Supervision Act 01-11-2006

Monolith Investment Management BV 8.15% Financial Supervision Act 19-02-2010

OtterBrabant Beheer BV 11.61% Financial Supervision Act 01-11-2006

P. Schoemaker 6.30% Financial Supervision Act 23-03-2007

Via Finis Invest BV 8.14% Internal 19-02-2010

Holland Pigments BV 46.49% Internal 04-02-2010

A list of equity interests that exceed 5% can be found on the AFM website.

Around 75% of shares in Holland Pigments BV are held by Stichting Administratiekantoor Aandelen Holland Pigments (AAHP) and the remainder is owned by (former) Holland Colours Group employees. The Director of Holland Pigments BV is Mrs A.A. Eikelenboom-de Groot.

The Board of Stichting AAHP consists of:

J.W. de Heer, ChairmanJ.M. de HeerS. Kho-PangkeyY.R. Veldhuis

Investor RelationsHolland Colours seeks open communication with its shareholders and other stakeholders. Share price-sensitive information is announced structurally via press releases and published on the website. The realised financial results are published every six months, while an interim statement is issued twice a year, providing information on important developments and events, as well as the company's financial position.

SNS Securities is Liquidity ProviderHolland Colours is a small cap with a small free float and a small number of share transactions. In order to increase the marketability, SNS Securities in Amsterdam has been appointed liquidity provider. It ensures that there is a steady supply and demand in the trading system at all times. SNS Securities also publishes reports on Holland Colours and maintains relationships with existing and potential investors.

Share Price trends since July 2007 = Holland Colours = Ams Small Cap Index

Number of outstanding shares constantThe number of outstanding shares has remained constant during the year.

Shares traded at NYSE Euronext Amsterdam 457.632Holland Pigments BV 400.000Registered shares 2.718Stichting Prioriteit 1Total 860.351

On 1 April 2010, the Extraordinary General Meeting of Shareholders adopted the new Articles of Association of Holland Colours NV. The amendment to the Articles of Association leads to a withdrawal of the priority share.

The Holland Colours share

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2007 2008 2009 2010

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Publications

Since the start of the previous financial year, Holland Colours published the following press releases:

28 May 2009 Holland Colours NV financial report 2008/2009Turnover and result under pressure, poor second half year due to economic crisis

6 July 2009Holland Colours NV reaches agreement about financing

23 July 2009Holland Colours NV trading update

30 October 2009 Holland Colours NV half-yearly report 2009/2010Positive net result with lower turnover

6 January 2010Proposal to cancel priority share

8 February 2010Holland Colours realises higher turnover in third quarter

2 April 2010Shareholders Holland Colours approve proposal to cancel priority share

1 June 2010Holland Colours NV financial report 2009/2010€ 1.2 net million profit thanks to favourable turnover in 2nd half-year


Important dates

5 July 2010 General Meeting of Shareholders at 13.30 hrs, at the Company's offices

7 July 2010Ex-dividend quotation

9 July 2010Record date (after stock exchange)

16 July 2010Dividend available for payment

5 August 2010Trading update (after stock exchange)

4 November 2010 Publication of half-yearly figures 2010/2011 (after stock exchange)

2009/2010 Financial Statements


Holland Colours NV 2009/2010 Financial Statements

Contents

Consolidated income statement 28

Consolidated statement of comprehensive income 29

Consolidated balance sheet 30

Consolidated statement of changes in equity 31

Consolidated cash flow statement 32

Notes to the consolidated financial statements 33

1. Generalinformation 332. Principlesforfinancialreporting 333. Financialriskmanagement 384. Cashflowstatement 415. Segmentinformation 426. Personnelcosts 437. Exceptionalcosts 438. Otheroperatingexpenses 439. Financeincomeandcosts 4310. Incometax 4411. Intangiblefixedassets 4512. Tangiblefixedassets 4613. Deferredtaxassetsandliabilities 4714. Otherlong-termreceivables 4815. Inventories 4816. Tradeandotherreceivables 4817. Cashandcashequivalents 4918. Equity 4919. Namedreserves 5020. Earningspershare 5021. Minorityinterest 5022. Borrowingsandlong-termliabilities 5123. Employeebenefitobligations 5424. Derivativefinancialinstruments 5525. Tradeandotherpayables 55

Other information 56

26. Liabilitiesnotreflectedinthebalancesheet 5627. RemunerationoftheBoardofManagementandtheSupervisoryBoard 5628. Relatedparties 5829. Otherdisclosures 58

FiNaNCial StatemeNtS


Company financial statements 59

Notes to the company financial statements 60

30. Generalinformation 6031. Summaryofthesignificantaccountingprinciples 6032. Financialfixedassets 6033. Intangiblefixedassets 6134. Tangiblefixedassets 6235. Financialfixedassets 6336. Equity 6437. Borrowingsandlong-termliabilities 6538. Employeebenefitobligations 6639. Derivativefinancialinstruments 6740. Personnel 6741. Accountingandauditcosts 6742. Liabilitiesnotreflectedinthebalancesheet 68

Other information 69

auditor's report 70

Report concerning Stichting Prioriteit Holland Colours 71




Consolidated income statementforthefinancialyearended31March2010

Inthousandsofeuros note april 1 ‘09 / march 31 ‘10 April1‘08/March31‘09

Net turnover 51,037 53,337

Costofsalesandrawmaterials 26,750 28,384

Changesininventories 96 362

Grossoperatingprofit 24,191 24,591

Personnelcosts 6 10,944 12,471

Exceptionalcosts 7 - 920

Amortisation 11 352 336

Depreciationandimpairments 12 2,240 2,760

Otheroperatingcosts 8 7,957 8,734

Totaloperatingcosts 21,493 25,221

Operatingprofit 2,698 (630)

Financeincome 11 8

Financecosts (923) (921)

Netfinancecosts 9 (912) (913)

Profitbeforeincometax 1,786 (1,543)

Incometaxexpense 10 (632) 922

Net result 1,154 (621)

attributable to:

Equityholdersofthecompany 1,156 (623)

Minorityinterest 21 (2) 2

1,154 (621)

Net profit per share in euros

Averagenumberofsharesissued 20 860,351 860,351

Totalnetprofitpershareattributabletoshareholders

(ordinaryanddiluted) 1.34 (0.72)

Thenotesonpages33to69areanintegralpartoftheseconsolidatedfinancialstatements.


Consolidated statement of comprehensive income forthefinancialyearended31March2010



Other comprehensive income

Netvalueincreaseonnetinvestmenthedge 25 (106)

Netvalueincreaseoncash-flowhedge 74 (164)

Effectofdeferredtaxonprofits (19) 41

55 (123)

Totalhedgereserves 19 80 (229)

Exchangeratedifferencesforconversionofforeignactivities 19 110 734

Minorityinterest 1 9

Totalexchangeratedifferences 111 743

Other comprehensive income after tax 191 514

Comprehensive income 1,345 (107)

attributable to:

Equityholdersofthecompany 1,346 (118)

Minorityinterest 21 (1) 11

1,345 (107)




Consolidated balance sheet

Inthousandsofeuros note march 31, 2010 March31,2009

Non-current assets

Intangiblefixedassets 11 562 751

Tangiblefixedassets 12 17,318 19,365

Deferredincometaxassets 13 1,927 1,491*

Otherlong-termreceivables 14 185 331

19,992 21,938

Current assets

Inventories 15 7,266 7,661

Tradeandotherreceivables 16 10,321 8,092

Incometaxassets 36 1,014*

Cashandcashequivalents 17 1,614 1,757

19,237 18,524

total assets 39,229 40,462

equity

Sharecapital 18 1,953 1,953

Sharepremiumreserve 1,219 1,219

Namedreserves 19 (2,138) (2,370)

Retainedearnings 18,898 17,784

19,932 18,586

Minorityinterest 21 54 55

Equity 19,986 18,641

Non-current liabilities

Borrowings 22 3,582 784

Employeebenefitobligations 23 1,254 1,311*

Deferredincometaxliabilities 13 50 136

Derivativefinancialinstruments 24 178 273

5,064 2,504

Current liabilities

Creditinstitutions 22 4,899 11,599*

Repaymentobligations 22 1,904 141*

Tradecreditorsandotherpayables 25 6,955 7,156

Incometaxliabilities 300 305*

Employeebenefitobligations 23 121 116*

14,179 19,317

total equity and liabilities 39,229 40,462

*)Asaresultofreclassification,someofthenumberspresentedheredonotcorrespondwiththoseinthefinancialstatementscovering

the2008/2009financialyear(pleaserefertonote2).



Sharepremium

Sharecapital

Hedgereserve

Reserveintangible

assetsRetainedearnings Total

Totalequity

Minorityinterest

Consolidated statement of changes in equityforthefinancialyearended31March2010

Inthousandsofeuros

Balance as at april 1, 2008 1,953 1,219 (3,016) (55) 230 19,233 19,564 44 19,608

Profit2008/2009 - - - - - (623) (623) 2 (621)

Othercomprehensiveincome - - 734 (229) (34) 34 505 9 514

Totalcomprehensive

income - - 734 (229) (34) (589) (118) 11 (107)

Dividend2007/2008 - - - - - (860) (860) - (860)

Balance as at march 31, 2009 1,953 1,219 (2,282) (284) 196 17,784 18,586 55 18,641

BalanceasatApril1,2009 1,953 1,219 (2,282) (284) 196 17,784 18,586 55 18,641

Profitover2009/2010financialyear - - - - - 1,156 1,156 (2) 1,154

Othercomprehensiveincome - - 110 80 42 (42) 190 1 191

Totalcomprehensive

income - - 110 80 42 1,114 1,346 (1) 1,345

Balance as at march 31, 2010 1,953 1,219 (2,172) (204) 238 18,898 19,932 54 19,986


Foreigncurrency

translationreserve



Consolidated cash flow statement forthefinancialyearended31March2010


Operating activities

Operatingresult 2,698 (630)

Adjustmentsfor:

Depreciationintangiblefixedassets 11 352 336

Depreciationtangiblefixedassetsand

impairmentlosses 12 2,240 2,760

Changeinvalueofderivativefinancialinstruments 24 (95) 171

Exchangeratedifferences 275 553

Cashflowfromoperatingactivities

beforechangesinworkingcapital 5,470 3,190

Changeininventory 395 2,357

Changeinreceivables (2,083) 2,555

Changeincurrentliabilities (196) (748)

(excl.creditinstitutionsandrepaymentobligations)

Cash flow from operating activities 3,586 7,354

Paidincometax (181) (686)

Receivedinterest 11 8

Paidinterest (923) (921)

Cash flow from operating activities 2,493 5,755

investing activities

Gainsfromthesaleofproperty,plantandequipment 81 -

Investmentsintangiblefixedassets 11 (162) (143)

Purchaseoftangiblefixedassets 12 (329) (1,080)

Cash flow from investing activities (410) (1,223)

Cash flow from operating and investing activities 2,083 4,532

Financing activities

Dividendpaidtoshareholders - (860)

Proceedsfromborrowingsandlong-termliabilities 1,127 62

Redemptionpayments 22 (3,615) (2,629)

Cash flow from financing activities (2,488) (3,427)

Change in cash (405) 1,105

effect of exchange rate fluctuations on cash held 86 (22)

Net cash flow (319) 1,083

Cash at april 1 (2,966) (4,049)

Cash at march 31 (3,285) (2,966)

Net cash flow (319) 1,083



1.Generalinformation

HollandColoursNV(theCompany)anditssubsidiaries(theGroup),manufacture,distributeandsellcolourconcentrates.TheHollandColoursGroupoperatesthroughtenofitsownfacilitiesandanetworkofagentsanddistributors.

Thecompanyisa‘NaamlozeVennootschap’incorporatedanddomiciledinApeldoorn,theNetherlands.

SharesofthecompanyarelistedatNYSEEuronext,Amsterdam.

TheGroup'sfinancialyearcommenceson1Aprilandcloseson31Marchofthefollowingyear.

TheFinancialStatementswerediscussedandapprovedonJune1,2010,atthemeetingoftheSupervisoryBoardandreleasedforpublication.TheFinancialStatementswillbepresentedtotheGeneralMeetingofShareholdersforadoptiononJuly5,2010.

Underarticle402ofTitle2,Book2oftheDutchCivilCode,itsufficesforthecorporateincomestatementtostatethe‘netresultfromparticipations’,andthe‘otherincomeandexpensesaftertaxation’.ThelatteritemrepresentsthebalanceofincomeandexpensesofHollandColoursNV.TheoriginalfinancialstatementswerepreparedintheDutchlanguage.ThisdocumentisaversiontranslatedintoEnglish.IntheeventofanydifferencesbetweentheEnglishandtheDutchtext,thelattershallprevail.

2.Summaryofsignificantaccountingprinciples

Introduction

TheconsolidatedfinancialstatementsarepreparedinaccordancewiththeInternationalFinancialReportingStandards(IFRS),asadoptedbytheEuropeanUnionandwithTitle9ofBook2oftheDutchCivilCode.

Thefinancialstatementsarepresentedineuros,roundedtothenearestthousand,unlessstatedotherwise.Thefinancialstatementshavebeenpreparedonthebasisofhistoricalcost,exceptforderivativefinancialinstruments,whicharestatedatfairvalue.

Wherenecessary,adjustmentsweremadetothefinancialstatementsofsubsidiariestobringtheiraccounting

principlesinlinewiththoseusedbytheCompany.

InpreparingthefinancialstatementsthemanagementoftheCompanyhavemadesomeestimatesandassumptions,whichinfluencetheamountsincludedintheconsolidatedfinancialstatements.Changesinestimatesandassumptionsmayinfluencetheamountstobereportedinsubsequentyears.Afterall,actualoutcomesmaydifferfromtheseestimates.Themostimportantestimatesarestatedattherelevantpolicies,andchieflyconcernentriesrelatingtotaxesandimpairmentlosses.

Theaccountingpoliciesasdetailedbelowareappliedconsistentlyforallperiodspresentedintheseconsolidatedfinancialstatements.Duetonewideasonthematter,theentryfordeferredincometaxassetshasbeenreclassifiedfortheamountspresentedunderthiscategoryforthe2008/2009financialyearas€442todeferredtaxassetsandliabilities.

Furthermore,commencingthisyear,theshort-termelementofemployeebenefitobligations(March31,2010€121andMarch31,2009€116)shallbepresentedundercurrentliabilities.Thecorrespondingfigureshavebeenadjustedaccordingly.

AsofApril1,2009,theGrouphasamendeditsaccountingprinciplesinrelationtothedefinitionandpresentationofoperationalsegmentsandthepresentationofthefinancialstatements.

AsofApril1,2009,operationalsegmentsshallbedefinedandpresentedbytheGroupinaccordancewithIFRS8OperationalSegments.Formerly,underIAS14SegmentedInformation,adistinctionwasmadebetweengeographicalandclientsegments.ThesegmentationrequiredbyIFRS8relatestotheGroup'smanagementandinternalreportingstructure.Sincethissystemchangeonlyrelatestoaspectsofthepresentationandnotes,ithasnoeffectonearningspershare.

Furthermore,theGroupappliestherevisedIAS1PresentationofFinancialStatementsstandard,whichcameintoforceonJanuary1,2009.Consequently,theGrouppresentsallchangesinequityrelatingtoshareholdersintheircapacityasshareholder,intheconsolidatedstatementofchangesinequity,whileallchangesinequityareprocessedintheconsolidatedstatementofcomprehensiveincome.Correspondinginformationisamendedtoensureitcomplieswiththerevisedstandard.Sincethesesystemchangesonlyrelatetoaspectsofthepresentationandnotes,theyhavenoeffectonearningspershare.

Notes to the company financial statements

NewandrevisedstandardsandinterpretationsinIFRSthattakeforceduringthe2009/2010financialyearandafterbalancesheetdatebutpriortodraftingofthefinancialstatements,donotaffectthesefinancialstatementsandarenotexpectedtohaveanysignificanteffectonthe2010/2011financialstatements,neitherhavetheybeenappliedinadvance.

Consolidation principlesTheCompany'sconsolidatedannualaccountsforthefinancialyear2009/2010containthefinancialdataoftheCompanyandallofthesubsidiariesinwhichtheCompanydirectlyorindirectlyhasacontrollinginterest.TheCompanyhasacontrollinginterestifitcandirectlyorindirectydeterminethefinancialandoperationalpolicyofacompanyinsuchawaythatitcanderivebenefitsfromtheactivitiesofthatcompany.Theconsolidatedfinancialstatementscontainthefinancialdataofthefollowingcompanies:

inpercentages

HollandColoursApeldoornBV,TheNetherlands 100

HollandColoursUKLtd,UnitedKingdom 100

HollandColoursCanadaInc,Canada 100

HollandColoursAmericasInc,USA 100

P.T.HollandColoursAsia,Indonesia 100

HollandColoursHungariá,Kft,Hungary 100

HollandColoursMexicanaSAdeCV,Mexico 100

HCAJapanCorporation,Japan 60

HollandColoursDeutschlandGmbH,Germany 100

HollandColoursFranceSarl,dormant 100

HollandColoursChinaLtd,China 100

OftheparticipationinIndonesia,anotherpartyholds1%ofthelegalownership.

TheparticipationinJapanisfullyconsolidated,withtheminorityshareofequityandtheGroupresultstatedseparately.

Intheconsolidatedfinancialstatementsallinter-companybalancesandtransactionsaswellasunrealisedprofits,liabilitiesanddividendsonsuchtransactionsareeliminated.Unrealisedlossesareeliminatedinthesamewayasunrealisedprofits,butonlyinsofarasthereisnoindicationofimpairment.

Foreign currencyItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(thefunctionalcurrency).Theconsolidatedfinancialstatementsarepresentedineuros,theCompany'sfunctionalandpresentationcurrency.

Transactionsinforeigncurrencyareconvertedtothefunctionalcurrencyattherateofexchangeonthetradedate.

Allmonetaryassetsandliabilitiesexpressedinforeigncurrencyareconvertedattheexchangeratethatappliesatbalancesheetdate.Foreignexchangedifferencesarisingontransactionarerecognisedintheincomestatement.

AssetsandliabilitiesofGroupcompanieswithafunctionalcurrencyotherthantheeuroareconvertedattheexchangeratethatappliedatbalancesheetdate.TheprofitandlossaccountsfortheseGroupcompaniesareconvertedattheaverageexchangerateduringthefinancialyear.Resultingexchangeratedifferencesaredirectlycreditedtoordeductedfromtheothercomprehensiveincome.Intheeventofthesaleorterminationofanactivityoutsidetheeurozone,theamountconcernedistransferredfromequitytotheprofitandlossaccount.

ForourHungarianoperatingcompany,thefunctionalcurrencywaschangedfromtheforinttotheeuroforthe2009/2010financialyear.Thebalanceasofthatdatewasconvertedonthebasisoftheexchangeraterelativetotheeuroprevailingatthetime.

Theratesofthemaincurrenciesagainsttheeuroareasfollows:

Exchangeratesused

Balancesheet Incomestatement

inEuro march 31 ‘10 March31‘09 2009/2010 2008/2009

PoundSterling 1.12511 1.07411 1.12615 1.20900

USDollar 0.74165 0.74957 0.71187 0.70298

CanadianDollar 0.73153 0.59880 0.64709 0.62967

MexicanPeso 0.06116 0.05376 0.05477 0.06029

ChineseYuan 0.10871 0.10996 0.10413 0.10195

JapaneseYen 0.00795 0.00763 0.00764 0.00706

Derivative financial instrumentsHollandColoursusesderivativefinancialinstrumentstolimitinterestandcurrencyrisksarisingfromoperational,financingandinvestmentactivities.Examplesareinterestrateswapsaswellascurrencyoptionsandforwardcontracts.Ifthesederivativefinancialinstrumentsdonotmeettherequirementsforhedgeaccounting,theprofitsandlossesontheseinstrumentsareincludedintheincomestatementunderotheroperatingcosts.ThemarketvalueofinterestrateswapsistheestimatedamountthattheGroupwouldreceiveorwouldhavetopayinordertoterminatetheswaponthebalancesheetdate,takinginaccountthecurrentinterestrate.Themarketvalueofforeignexchangeforwardcontractsisthequotedmarketprice(forwardrate)onthebalancesheetdate.




Hedge accountingWherespecificconditionsaremet(IAS39),hedgeaccountingcanbeapplied.Thesespecificconditionsentailthattheremustbeademonstrableone-on-onerelationshipbetweentheriskandthehedgeinstrument.Insuchasituation,theprofitorlossisstateddirectlyintheconsolidatedstatementofcomprehensiveincomeduringthetermoftheriskandthehedgeinstrument.Cashflowhedgeaccountingisappliedtointerestswaps.Byapplyinghedgeaccountingacashflowhedgingreserveistakenupintheequity.Thisreserveisreducedwiththetaxonthefairvalueofthisreserve.Ifthehedgeinstrumentexpiresorissold,terminatedorexercised,withoutreplacement,orifitsdesignationasahedgeisrevoked,anyaccumulatedgainorlossinitiallyincludedintheunrealisedresultswillremainintheunrealisedresultsuntiltheexpectedtransactionoragreedcommitmenttakesplace.

Oncurrencycontractsnocashflowhedgeaccountingisapplied.Profitsorlossesonthesehedgeinstrumentsarethereforepresentedintheincomestatementunderotheroperatingexpenses.

Net investment hedgeHedgesofnetinvestmentsinforeignoperationsaretreatedinasimilarwaytocashflowhedges.Againoralossontheeffectiveportionofthehedginginstrumentisrecognisedintheothercomprehensiveincome;thegainorlossontheineffectiveportionisrecognisedimmediatelyintheincomestatementunderotherincomeandexpenses.

TheGrouputilisesaloantohedgethecurrencyrisksofinvestmentsinitsforeignsubsidiaries.Pleaserefertonote24.

Gainsandlossesaccumulatedinthecomprehensiveincomeareincludedintheincomestatementatthetimeofpartialclosureorsaleoftheforeignoperation.

Revenue recognition

Revenueisrecognisedasthedifferencebetweentherevenueofthegoodsandservicesprovidedandthecostsandotherchargesforthefinancialyear.Resultsontransactionsareaccountedforatthetimeofdelivery.Thefollowingpoliciesareused:

Net turnoverNetturnoverisdefinedastheincomegeneratedbythesupplyofgoodstothirdparties,afterdeductionofdiscountsandvalueaddedtaxesandeliminationofallintra-grouptransactions.Salesofgoodsarerecognisedwhenproductshavebeendeliveredtothecustomer,thecustomerhasacceptedtheproducts,andcollectionoftherelatedreceivablesisassuredwithinreason.Revenuefromthesupplyofgoodsisonlyrecognisedifthemainrisks

andrewardsofownershipofthegoodshavebeentransferredtothebuyer.Norevenuesarerecognisedifsignificantuncertaintiesremainwithregardtothecollectionoftheremunerationdue,theassociatedcostsorthepossiblereturnofgoods.Cost of sales and raw materialsCostofsalesrepresentsthedirectandindirectexpensesattributabletoturnover.Italsoincludesmovementsintheprovisionforobsoletestock.

lease paymentsOfoperationalleasePaymentsmadeunderoperationalleasesarechargedtotheperiodtowhichtheyrelate.

OffinanceleaseLeasesoftangiblefixedassetswheretheGrouphasvirtuallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.Financeleasesarecapitalisedatthelease’scommencementatthefairvalueoftheleasedassetsoratthelowercashvalueoftheminimumleasepayments.Eachleasepaymentissplitupinliabilitychargesandfinancechargessoastoachieveaconstantinterestrateonthebalanceoutstanding.Thecorrespondingleaseobligations,netoffinancecharges,areincludedunderlong-termpayables.Theinterestelementoftheleasecostsischargedtotheincomestatementovertheleaseperiod.

Finance income and costs Thefinanceincomeandcostsincludetheinterestchargesonborrowingsandinterestchargesonfinancialleasepayments.Thefinanceincomeandcostsarechargedtotheincomestatementusingtheeffectiveinterestmethod.Thefinanceincomeischargedtotheincomestatementunderfinancinggains.

income taxThetaxonprofitforthefinancialyearincludesthetaxationthatispayable,availableforset-offanddeferredinrespectofthereportingperiod.Thetaxisstatedintheincomestatement,exceptwhereitrelatestoitemswhichareincludeddirectlyinshareholders’equity,inwhichcasethetaxisstatedinboththeshareholders’equityandtheconsolidatedstatementofcomprehensiveincome.

Taxthatispayableandavailableforset-offinrespectofthereportingperiodisthetaxthatisexpectedtobepayableonthetaxableresult,calculatedonthebasisoftaxratesthathavebeensetonthebalancesheetdate,oronwhichafirmdecisionhasbeentakenbythebalancesheetdate,andcorrectionstotaxpayableregardingpreviousyears.FromtimetotimetheManagementreviewsthestandpointstakenintaxreturnsforsituationsinwhichtheapplicablefiscalregulationmightbeconsideredambiguous,anddrawsupprovisionswhereconsiderednecessary.

earnings per shareTheresultperordinaryshareiscalculatedasthenetprofitorlossattributabletoholdersofordinarysharesdividedbytheweightedaveragenumberofoutstandingsharesintheperiodconcerned.

Principles for the valuation of assets and liabilitiesThevaluationmethodsareprincipallybasedonvaluationoftheassetsandliabilitiesatahistoricalcostprice,withtheexceptionofthe(derivative)financialinstruments.Thevaluationmethodsareexplainedbelowinthenotestotheindividualbalancesheetitems.

intangible fixed assetsCostsofdevelopmentactivitiesarecapitalisediftheproductorprocessistechnicallyandcommerciallyfeasibleandtheGrouphassufficientresourcestocompleteitsdevelopment.Thecapitalisedcostsincludedirectlabourcostsandsurchargefordirectlyattributableoverheadcosts.Allotherresearchanddevelopmentcostsarestatedasanexpenseintheincomestatementatthemomentthattheyareincurred.

Theestimatedusefullivesareasfollows: Developmentcosts 5yearsOtherintangiblefixedassets 3–5years

Thecapitaliseddevelopmentcostsarevaluedatcost,lessaccumulateddepreciationand,whenapplicable,impairments.Developmentcostsareamortisedovertheirestimatedusefullife,notexceedingfiveyears.

Intangiblefixedassetsareassessedforimpairmentifthereareindicationsthatanintangibleassetmightbesubjecttoalossinvalue.

Thedepreciationperiodandmethodforanintangibleassetwithacertainusefullifeisassessed,attheveryleast,attheendofeachfinancialyear.Changesintheexpectedusefullifeofanassetorinitsexpectedpatternoffutureeconomicbenefitsareaccountedforbychangingthedepreciationperiodand/ormethodandaretreatedaschangesinaccountingestimate.

Other intangible fixed assetsTheotherintangiblefixedassetsconsistofthecostsofcomputersoftwareandlicenses,aswellastheexternalcostsrelatedtotheirimplementationanduse.Thesecostsareamortisedovertheirestimatedusefullife,notexceedingfiveyears.

tangible fixed assets Thetangiblefixedassetsarevaluedonbasisofthehistoricalcostprice,meaningthepricepaidforobtainingorconstructingtheasset,lessaccumulateddepreciationand,whenapplicable,impairments.Thecostsofassetsproducedin-housecomprisematerialcosts,directlabourcostsandanappropriateportionofthedirectlyattributableoverheadcosts.

Tangiblefixedassetsareassessedforimpairmentifthereareindicationsthatatangibleassetmightbesubjecttoadramaticlossinvalue.Thedepreciationperiodandmethodforatangibleassetwithacertainusefullifeisassessed,attheveryleast,attheendofeachfinancialyear.Changesintheexpectedusefullifeofanassetorinitsexpectedpatternoffutureeconomicbenefitsareaccountedforbychangingthedepreciationperiodormethodandaretreatedaschangesinaccountingestimate.

Financial assetsLoansandreceivablesofwhichthematuritydateisgreaterthan12monthsafterthebalancesheetdatearepresentedasfinancialassetsandareincludedatfirstentryatfairvaluelessdirectlyattributabletransactioncosts.Afterfirstentry,interest-bearingloansarevaluedagainstamortisedcostpriceusingtheeffectiveinterestmethod,lessanyimpairment.Gainsorlossesarisingfromchangesintheamortisedcostpriceareaccountedforintheincomestatementunderfinancecosts.

leased assetsLeaseagreementsinwhichtheGroupassumesallrisksandbenefitsofownership,areclassifiedasfinancialleases.Tangiblefixedassetsthatareacquiredbymeansoffinancialleasesarevaluedatthelowestfairvalueandthecashvalueoftheminimumleasepaymentsattheinceptionoftheirlease,lessaccumulateddepreciationand,whenapplicable,impairments.Leasepaymentsarestatedasdescribedunderdeterminationoftheresults.




DepreciationDepreciationischargedtotheincomestatementaccordingtothestraight-linemethodonthebasisoftheestimatedusefullifeofeachcomponentofatangiblefixedasset.Landisnotdepreciated.Theestimatedusefullifeisasfollows:

Buildings 33years

Fixturesandinstallationsinbuildings 10years

Plantandequipment 10years

Otherfixedassets 3–5years

Theremainingusefullife,residualvalueanddepreciationmethodareassessedonanannualbasis.

impairment of fixed assetsEachyearitisassessedwhetherthereareanyindicationsofimpairmentoffixedassets.Iftherearesuchindications,therealisablevalueoftheseassetsisestimated.Therealisablevalueisthehighestofthenetrealisablevalueandthevaluetothecompany.Assetsarewrittendowniftheirrealisablevalueislessthantheirbookvalue.Animpairmentofassetsisreversedifthereisachangeintheestimatesonwhichtherealisablevaluewasbased.Animpairmentisonlyreversedtotheextentthatthebookvalueoftheassetisnohigherthanthebookvaluethatwouldhavebeendeterminedupondeductionofdepreciationifnoimpairmenthadbeenrecognised.

Deferred income tax Aprovisionisformedfordeferredtaxdifferencesusingthebalancesheetliabilitymethodfortimingdifferencesbetweenthebookvalueofassetsandliabilitiesforthefinancialreportingandthefiscalbookvalueoftheitemsconcerned.

Thebookvalueofthedeferredtaxassetsareassessedatreportingdateandreducedinsofarasitisnotprobablethatsufficienttaxableprofitwillbeavailablewithwhichthesetimingdifferencescanbedeductedfullyorinpart.Deferredtaxassetsnotincludedarereassessedatreportingdateandincludedinsofarasitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthisdeferredassetcanbededucted.

Deferredtaxassetsandliabilitiesarevaluedagainstthetaxratesexpectedtoapplyintheperiodinwhichtheassetisrealisedortheliabilityissettled,basedonthetaxrates(andtaxlaw)inforceatthemomentthereportingprocessisdefinitivelycompleted.

Deferredtaxesrelatingtoitemsenteredelsewherethantheincomestatementarenotprocessedunderprofitandloss.Dependingontheunderlyingtransaction,deferredtaxesareincludedeitherinothercomprehensiveincomeordirectlyunderequity.

Deferredincometaxassetsandliabilitiesarenettedoff

whereitislegallyenforceabletobalancecurrentincome-taxassetswithcurrentincome-taxliabilitiesanddeferredtaxespertainingtothesametaxableentityandthesametaxauthority.

Thereissomeuncertaintyabouttheinterpretationofcomplexfiscalregulationsandtheamountandtimingoffuturetaxableprofits.Giventhehugediversityofinternationalbusinessrelations,discrepanciesbetweentheassumptionsmadeandtheactualoutcomes,orfuturechangesinsuchassumptions,couldleadtofuturechangesinthetaxpaymentsandreturnsalreadyincluded.

inventoriesStocksarevaluedataveragepurchasepricesoratmarketvalue,ifthelatterislower.Finishedgoodsarevaluedatcostsofconversion,inclusiveofthecostsofrawmaterialsandasurchargefordirectandindirectproductioncostsbasedonnormalcapacity,oratmarketvalueifthisislower.Thedirectmarketvaluecomprisestheestimatedsalepriceinstandardspecification,minustheestimatedcostsofcompletionandsettlementofthesale.trade debtors and other receivablesTradedebtorsandotherreceivablesarerecognisedinitiallyatfairvalueandsubsequentlyatamortisedcosts.Aprovisionforimpairmentisestablishedwhenitisforeseenthatcompletecollectionofthesereceivableswillbeimpossible.

Cash and cash equivalentsCashandcashequivalentscomprisecashbalancesanddepositsthatareavailableoncall.

Share capitalSharecapitalisclassifiedasequity.

DividendDividenddistributiontotheshareholdersisrecognisedasaliabilityinthefinancialstatementsatthemomenttheproposalforprofitappropriationisapprovedbytheGeneralMeetingofShareholders.employee benefit obligationsHollandColourshasavarietyofpensionplansinaccordancewithlocalregulationsandconditions.

Thepensionplansoftheforeignsubsidiariescanallbeclassifiedasdefinedcontributionplans.Theseinvolvepaymentofpredeterminedpremiumstoaninsurancecompany.InthesepensionplansHollandColourshasnolegalorfactualobligationtopayadditionalpremiumswhentheinsurancecompanyhasinsufficientmeanstopaycurrentorfuturepensions.

ThepensionplanfortheemployeesintheNetherlandsencompassedbothanold-agepensionaswellasapre-pension.OnthebasisofIAS19bothplanswere

classifiedasdefinedbenefitplans.StartingJanuary1,2006,thepre-pensionplanwasterminatedandtheold-agepensionplanhaschangedsuchthatpertheendofthatfinancialyearitwasclassifiedasadefinedcontributionplan.Thepremiumsofdefinedcontributionplansarerecognisedaspersonnelcostswhenpayable.Prepaidpremiumsarerecognisedasanassetwhentheyleadtorepaymentorreductionoffuturepayments.

Other employee benefitsAsaconsequenceoftheterminationofthepre-pensionplan(includingthetransitionalarrangement)fortheemployeesintheNetherlands,theoriginallyagreed-uponconditionalfinancingofpastserviceyearswasconvertedintoanannualpaymenttothesameamount,whichisalsoconditional.ThechiefconditionsarethatanemployeemuststillbeintheCompany'sserviceatthetimeoftheannualpaymentandthattheGroup'sfinancialresultsarejudgedbythedirectorsasbeingsufficienttocoverthispayment.

Moreover,theGrouphasotherlong-termobligationsregardingemployeebenefits,includingjubileepayments,whichemployeeshaveearnedfortheirservicesinthecurrentandpreviousreportingperiods.

Theobligationsweredeterminedactuarially,basedonaninterestrateof4.8%(2008/20094.0%)andpresentedunderlong-termliabilities.Thecostsarereportedintheincomestatementunderpersonnelcosts.Allassumptionsarereassessedatbalance-sheetdate.

ProvisionsAprovisionisstatedinthebalancesheetwhenthereisalegallyenforceableoractualobligationfortheGroupasaresultofaneventinthepastanditislikelythatanoutflowofresourceswillberequiredtosettlesuchliability.

interest-bearing loansInterest-bearingloansarerecognisedinitiallyatfairvalue,lessattributabletransactioncosts.Subsequenttotheirinitialrecognition,interest-bearingloansarevaluedatamortisedcosts,wherebyadifferencebetweenthecostandtherepaymentvalueisrecognisedintheincomestatementonthebasisoftheeffectiveinterestmethodoverthetermoftheloans.

trade creditors and other payablesTradecreditorsandotherpayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcosts.

3.Financialriskmanagement

WithintheframeworkofitsnormalactivitiestheGroupisexposedtoliquidity,credit,interest-rateandcurrencyrisks.Intermsofrisk-mitigationpolicy,itisrecognisedthatthefinancialmarketsareunpredictableandthattheaimshouldbetolimitasfaraspossiblethepotentialnegativeeffectsofthisontheGroup'sfinancialresults.Therisksoffluctuationsinforeigncurrencyratesandinterestratesarehedgedusingderivativefinancialinstruments.Themanagementdeterminesprinciplesforoverallriskmanagementandprovidespoliciesforspecificareas,suchasforeignexchangerisk,interest-raterisk,creditriskandtheuseofderivativeandnon-derivativefinancialinstruments.Theseprinciplesorworkmethodsmaydifferpergroupcompanyasaresultofdifferentlocalmarketcircumstances.

CURReNCY RiSKTheGroupoperatesinternationallyandisexposedtoforeignexchangerisks,primarilyinconnectionwiththeUSdollarandtheBritishpound.Foreignexchangerisksarisefromfuturecommercialtransactions,recognisedassetsandliabilitiesandnetinvestmentsinforeignoperations.Foreignexchangerisksarisewhenfuturecommercialtransactionsorrecognisedassetsorliabilitiesaredenominatedinacurrencythatisnottheentity’sfunctionalcurrency.TheGroupisresponsibleformanag-ingthenetpositionineachforeigncurrency.Ingeneral,remainingcurrencyrisksarehedgedbyusingcurrencyinstruments.TheGrouphasforeignsubsidiariesofwhichthenetequityissubjecttocurrencyrisks.Theserisksarepartiallyhedged.Inthemanagementofcurrencyrisks,HollandColoursaimstolimittheeffectofexchangeratefluctuationsonthegroupresult.Inthelong-term,however,structuralchanges,especiallyinthevalueoftheUSdollarrelativetotheeuro,andchangesinthedifferencebetweenUSandEuropeaninterestrates,willinfluencetheconsolidatedresultandequity.

AgeneralincreaseinthevalueoftheeuroversustheUSdollarby10%wouldhaveimpactedprofitbeforeincometaxbyminus€129in2009/2010(2008/2009:minus€6)asaresultofchangesintheactualvalueofmonetaryassetsandobligations.Thenetequitywouldhavebeenimpactedbyminus €1,057(2008/2009:minus€1,049),withallothervariablesheldconstant.On31March,2010,iftheBritishpoundhadweakenedagainsttheeuroby10%,alsowithallothervariablesheldconstant,thenetprofitwouldhavebeenimpacted€13(2008/2009:minus€29).Thenetequitywouldhavebeenimpactedbyminus€40(2008/2009:minus€50).




Theexchangedifferencesincludedintheincomestatementunderotheroperatingcostsamountedto€138in2009/2010(2008/2009:minus€183).

Inrelativeterms,thevariousforeigncurrenciesaffectedtheGroup’snetturnoverandcostsasfollows:

Turnover Costs

inpercentages 2009/2010 2008/2009 2009/2010 2008/2009

EUR 51% 42% 62% 52%

USD 32% 30% 32% 33%

GBP 8% 7% 4% 8%

Other 9% 21% 2% 7%

Total 100% 100% 100% 100%

CReDit RiSKSHollandColoursfollowsanactivepolicytominimizecreditrisks.Thewaysinwhichthisisachievedincludestrictinternalguidelinesregardingoverduepayment,theuseofsalesinformationsystems,theconsultationofexternalsourcesand,wherenecessary,requestingsecurityforpayment.Thankstothedistributionoveralargenumberofcustomersandgeographicalareas,thereisnosignificantconcentrationofcreditrisk.Nocredit-riskinsurancehasbeeneffected.Thetotalbookvalueofthefinancialassets,€12,156(31March2009€11,194),indicatesthemaximumexposuretocredit-risk.

liQUiDitY RiSKTheliquidityriskistheriskofHollandColoursbeingunabletomeetitsliabilitieswhentheyfalldue.HollandColours’policyoncontroloftheliquidityrisksistoguaranteetothebestofitsabilitythatsufficientliquiditiesareavailabletomeetitspaymentobligationsontime,inbothnormalandexceptionalsituations.

Asaresultofthedisappointingresultsinthe2008/2009financialyear,HollandColoursdidnotmetsomeoftheagreed-uponcovenantswithexternalcreditprovidersattheendofthatfiscalyear.Thismeansthattheloansformallyhadbecomerepayableatcallandatotalof€6,876inbankloanswaspresentedinthebalancesheetastotalcurrentliabilitiesasat31March2009(pleasealsorefertonote22).AnagreementwasreachedwiththebanksinJuly2009regardingtheconditionsunderwhichthefinancingcouldbecontinued.AdditionalcollateralwasrequiredintheNetherlands,HungaryandtheUnitedStates.Moreover,anumberofnewfinancialconditionsapplyandtheinterestratesarehigher.Themostimportantcovenantisrelatedtoanassessmentoftheratiobetweendebtstocreditprovidersandtwelve-monthearningsbeforeinterest,taxes,depreciationandamortisation,theso-calledTotal Debt / EBITDAratio.

AreductionoftheTotal Debt / EBITDAratiooverthefinancialyearwasanintegralpartoftheagreementsconcludedinJuly.Attheendofthe2009/2010financialyearthiswasnotallowedtoexceed3.0.Thisratioamountedto2.0attheendofthe2009/2010financialyear,meaningthekeyconditionagreedwiththebankswasmet.

Theothercovenantsagreedwiththebanksrelatetosolvencyofatleast40%or€16,000,andaDebt Service Cover Ratio>1.0.HollandColourscompliedwiththeseagreedfinancialcovenantsduringthe2009/2010financialyear.



TheGroupcurrentlyhasaccesstocreditfacilitiesof€10,593(2008/2009€11,563).Thecreditfacilitieswereplacedatvariousinternationalandlocalbanksin2009andhavenoexpirydate.Asofbalancesheetdate€4,899hasbeenutilizedunderthecreditfacility.

Thefeesandcostspaidinrelationtotheextendingoffinancingamountedto€74.Theseareincludedinthefinancecosts.

Onthebasisofthebookvaluestatedinthefinancialstatements,34.7%oftheGroup'slong-termdebtswillexpirewithinoneyearasat31March,2010.Onthebasisofthecurrentsituation,theManagementbelievesthattheriskthatHollandColourscannotmeetitsliabilitiesislow.

iNteReSt Rate RiSKTheGroup'sinterestrateriskarisesmainlyfromnon-currentborrowings,astheGrouphasnosignificantinterest-bearingassets.ItistheGroup'spolicytomaintainthemajorityofitsborrowingsasfixedrateinstruments.TheGroupdoessobyusingfloating-to-fixedinterestrateswaps.

Atthebalance-sheetdate,thefollowinginterestrateinstrumentswereoutstanding:•InterestrateswapthroughJune2010 EUR0.38millionreceivedvariable:payment2.86%fixed

•InterestrateswapthroughOctober2012 EUR1.10millionreceivedvariable:payment4.58%fixed

•InterestrateswapthroughOctober2017 USD1.55millionreceivedvariable:payment5.13%fixed

AtMarch31,2010,iftheinterestlevelsfortheeurowouldhavebeen100basispointshigher,withallothervariablesconstant,thenetresultwouldhavebeen€51lower(2008/2009:€33lower),mainlyasaresultofhigherinterestexpensesonfloatingrateborrowings.Thenetequityatyear-endwouldhavebeenimpactedbythesameamount.Theassumedchangeinbasispointsoftheinterest-ratesensitivityanalysisisbasedoncurrentlyobservablemarketconditions,whichareshowingsignificantlyhighervolatilitythaninpreviousyears.

Thecontractualmaturityofthefinancialliabilitiesasof31March,includingexpectedinterestratepayments,canbespecifiedasfollows:

2009/2010 Contractual

Book value cash flow < 1 year 1 – 2 years 2 – 5 years > 5 years

Financial liabilities excl. derivatives

Borrowings 5,486 6,201 2,162 1,356 1,918 765

Credit institutions 4,899 4,899 4,899 - - -

trade creditors and other payables 6,955 6,955 6,955 - - -

total 17,340 18,055 14,016 1,356 1,918 765

2008/2009 Contractual

Bookvalue cashflow <1year 1–2years 2–5years >5years

Financialliabilitiesexcl.derivatives

Borrowings 925 963 185 778 - -

Creditinstitutions 11,599 11,599 11,599 - - -

Tradecreditorsandotherpayables 7,156 7,156 7,156 - - -

Total 19,680 19,718 18,940 778 - -


Thefairvalueandbookvalueoffinancialassetsandliabilitiesincludedinthebalancesheetareasfollows:

march 31, 2010 March31,2009

Book value Fair value Bookvalue Fairvalue

assets valued against amortised cost price

Tradedebtorsandotherreceivables 10,321 10,321 8,092 8,092

Cashandcashequivalents 1,614 1,614 1,757 1,757

11,935 11,935 9,849 9,849

liabilities valued against fair value

Interestrateswapstowhichhedgeaccountingisapplied (178) (178) (273) (273)

liabilities valued against amortised cost price

Bankloans (4,702) (4,708) - -

Financialleaseobligations (784) (794) (925) (964)

Creditinstitutions (4,899) (4,899) (11,599) (11,599)

Tradecreditorsandotherpayables (6,955) (6,955) (7,156) (7,156)

(17,340) (17,356) (19,680) (19,719) RaW mateRialSPricesofrawmaterials(pigmentsanddyes)haveincreasedstronglyinrecentyears.HollandColoursisthereforeconstantlysearchingforalternativesourcestoensureaconstantsupplyaswellaspreventcostincreasesasmuchaspossible.In2009/2010nofuturecontractsonrawmaterialswereclosed.

CaPital maNaGemeNtThecapitalcomprisesissuedCompanysharesandequityattributabletoholdersofequityinstrumentsoftheparentcompany.

ThechiefaimofcapitalmanagementfortheGroupistoretainthehighlevelofcreditworthinessandhealthysolvencylevelsinsupportoftheGroup'soperationsandtomaximizeshareholdervalue.

4.Cashflowstatement

Thecashflowstatementispresentedusingtheindirectmethod.Cashflowsinforeigncurrenciesareconvertedattheexchangerateonthedateofthecashfloworonabasisofaverages.Adistinctionismadeinthecashflowstatementbetweencashflowsfromoperating,investmentandfinancingactivities.



Segments 2009/2010 North

europe america asia Other total

turnover 29,767 15,700 5,570 - 51,037

intersegmental transactions 601 81 - - 682

Sales including intersegmental

transactions 30,368 15,781 5,570 - 51,719

Depreciation costs and amortisation 1,215 584 181 612 2,592

Operating result (73) 1,342 977 452 2,698

Net finance costs - - - - (912)

income tax expense - - - - (632)

Net result - - - - 1,154

assets 19,087 12,693 4,352 3,097 39,229

liabilities 9,086 3,146 1,453 5,558 19,243

total investments 171 22 120 178 491

average number of employees (in Ftes) 196 88 90 19 393

Segments2008/2009 North

Europe America Asia Other Total

Turnover 33,025 15,048 5,264 - 53,337

Intersegmentaltransactions 512 158 148 - 818

Salesincludingintersegmental

transactions 33,537 15,206 5,412 - 54,155

Depreciationcostsandamortisation 1,537 637 127 601 2,902

Operatingresult (1.039) (212) 779 (158) (630)

Netfinancecosts - - - - (913)

Incometaxexpense - - - - 922

Netresult - - - - (621)

Assets 20,016 11,742 4,324 4,380 40,462

Liabilities 8,898 2,969 1,063 8,762 21,692

Totalinvestments 718 129 149 227 1,223

Averagenumberofemployees(inFTEs) 220 98 94 21 433

5.Segmentinformation

TheGroupisdividedintogeographicalsegmentsformanagementpurposes.TheManagementmonitorstheoperatingresultsofthegeographicsegmentstofacilitatethedecision-makingprocessinrelationtotheallocationofresourcesandtheestimationofresults.Thesegmentresultsareestimatedonthebasisoftheoperatingresult,definedinaccordancewiththeoperatingresultintheconsolidatedfinancialstatements.ManagementofGroupfinancing,whichincludesfinancingcostsandgainsandincometaxes,takesplaceatGrouplevelandisnotchargedtotheoperationalsegments.

Internaltransferpricesbetweentheoperationalsegmentsaredefinedonabusinessbasisinawaythatiscomparabletotransactionswiththirdparties.


6.Personnelcosts

Thetotalofthepersonnelcostscanbespecifiedasfollows:

april 1, 2009 / march 31, 2010 April1,2008/March31,2009

Salariesandwages 9,304 10,400

Socialsecurity 1,238 1,414

Pensioncosts 402 657

Personnel costs 10,944 12,471

Thepensioncostsrelatetodefined-contributionpayments(seenote23).TheremunerationoftheBoardofManagementandtheSupervisoryBoardisenteredunderOtherinformation(seenote27).

Ofthepersonnelcosts,atotalof€122iscapitalised(2008/2009:€118),seealsonotes11and12.

Inthe2009/2010financialyear,theaveragenumberofstaffwas393(2008/2009:433)

7.Exceptionalcosts

Theexceptionalcostsin2008/2009mainlyrelatedtoseverancecostsinrelationtoreductionsintheGroup'sstaffnumbersofthatfinancialyear.ThereserveallottedforthispurposewasincludedundertradecreditorsandotherpayablesasatMarch31,2009.

8.Otheroperatingexpenses

Theexchangedifferencesincludedintheincomestatementunderotheroperatingcostsamountedtominus€ 138in2009/2010(2008/2009:minus€183).Noamountswerebookedwithregardtoineffectivenessofcashflowhedges.

IntheGroup'sconsolidatedincomestatementforthe2009/2010financialyear,€100ingovernmentsubsidieswereaccountedfor.Inthe2008/2009financialyear,thiswas€38.

9.Financeincomeandcosts

April1,2009/March31,2010 April1,2008/March31,2009

Interestreceived 11 8

Interestpaid (849) (921)

Otherfinancecosts (74) -

Net finance costs (912) (913)

Theotherfinancecostsrelatetothefeesandcostspaidduetoextendingthefinancing.



inpercentages april 1, 2009 / march 31, 2010 April1,2008/March31,2009

Weightedaverageofstatutoryratesfortaxresult 59.8% (8.7)%

Changeindeferredtaxcredit (33.6)% 3.9%

Othertaxes 5.9% -

Chargesoverpreviousyears 1.7% (52.5)%

Utilisationofset-offlosses 1.6% -

Total 35.4% (57.3)%

AtthemomentofcompletejuridicalliquidationofthecompanyfacilitiesinBrazilin2005apotentialclaim(maximum€709)ontheDutchtaxauthorityarose,regardingthesacrificedinvestedcapitalinthiscompany.Onthebasisofuncertaintyconcerningthegrantingofthisclaim,itwaschosennottovaluethispotentialreceivableuptoandincludingthe2007/2008financialyear.TheManagementisoftheopinionthatsufficientcertaintyhasariseninthe2008/2009financialyeartojustifyvaluingthisclaiminthatfinancialyear.Thisitemwassettledinitsentiretyinthe2009/2010financialyear.

Theothertaxesitemof€106intheconsolidatedincomestatementrelatestoawithholdingtaxonthedividendpaymenttotheCompanybythesubsidiaryinIndonesia.

10.Incometax

april 1, 2009 / march 31, 2010 April1,2008/March31,2009

Payable income taxes

Incometaxthisyear 1,068 275

Utilizationofset-offlosses 30 -

Othertaxes 106 -

Correctionsofpreviousyears 30 (845)

1,234 (570)

Deferred income tax

Arisingandsettlementoftimingdifferences (602) (352)

(602) (352)

total income tax in the consolidated statement of

comprehensive income 632 (922)

Thecompanytaxpayableiscomputedontheresultbeforetaxation,takingintoaccountuntaxedprofititems.Thedifferencebetweenthetaxationcalculatedinthiswayandthetaxationpayableintheshorttermisreflectedintheprovision‘deferredincometax’.

Thetaxburdenintheyearunderreviewamountedto35.4%.Inthe2008/2009financialyearitwasminus57.3%.Thetaxburdenisaffectedbythesharethatthedifferentcountrieshaveinthetotalpre-taxresult.

AsofMarch31,2010,nodeferredtaxliabilities(March31,2009,nil)havebeenincludedfortaxesthatmightbeliableontheundistributedprofitofcertainGroupsubsidiaries.


11.Intangiblefixedassets

Development Other Total

costs

Situation at 31 march, 2008

Costs 660 1,636 2,296

Cumulativeamortisation (430) (921) (1,351)

Bookvalue 230 715 945

movements in the balance sheet value

Investments 94 49 143

Book-valuedisposals - - -

Amortisation (72) (264) (336)

Exchangeratedifferences - (1) (1)

Balance 22 (216) (194)

Situation at march 31, 2009

Costs 754 1,624 2,378

Cumulativeamortisation (502) (1,125) (1,627)


movements in the balance sheet value




Impairment - (23) (23)

Exchangeratedifferences - 2 2

Balance 69 (257) (188)


Costs 909 1,597 2,506

Cumulative amortisation (588) (1,356) (1,944)

Book value 321 241 562

IntheyearunderreviewthetotalexpensesforresearchanddevelopmentoftheCompanywere€750(2008/2009:€1,072).Ofthisamount,€116(2008/2009:€94)wascapitalised,whereastheremainderisstatedunderpersonnelcosts,depreciation,amortisationandotheroperatingcosts.Asaresultofthereorganisationcarriedoutinthe2008/2009financialyear,therehasbeenashiftinR&Dcoststothedivisions.

Theamortisationcostsandimpairmentofintotal€352(2008/2009:€336)areincludedunderamortisationintheconsolidatedincomestatement.Depreciationof€23wasimplementedduringthefinancialyearduetoanimpairmentfromacquiredlicensingrights.

Theotherintangiblefixedassetsconsistofthecostsofcomputersoftwareandlicenses,aswellastheexternalcostsrelatedtotheirimplementationanduse.Thesecostsareamortisedovertheirestimatedusefullife,whichdoesnotexceedfiveyears.



12.Tangiblefixedassets

Landand Machinery Other Assets Total

buildings and capital under

equipment assets construction


Costs 19,274 22,842 5,688 447 48,251

Cumulativedepreciation (7,457) (15,611) (4,551) (251) (27,870)

Bookvalue 11,817 7,231 1,137 196 20,381

movements in balance sheet value

Investments 211 736 238 (105) 1.080

Bookvaluedisposals

andimpairments (62) (110) (22) - (194)

Depreciation (653) (1,464) (449) - (2,566)

Exchangeratedifferences 627 (13) 51 (1) 664

Balance 123 (851) (182) (106) (1,016)


Costs 20,183 21,779 5,815 301 48,078

Cumulativedepreciation 8,242 15,400 4,860 211 28,713

Bookvalue 11,941 6,379 955 90 19,365


Investments 173 189 21 (54) 329

Bookvaluedisposals

andimpairments (13) (6) (26) - (45)

Depreciation (674) (1,232) (333) (1) (2,240)

Exchangeratedifferences (61) (30) (6) 6 (91)

Balance (575) (1,079) (344) (49) (2,047)


Costs 19,907 21,042 5,454 41 46,444

Cumulative depreciation 8,541 15,742 4,843 - 29,126

Book value 11,366 5,300 611 41 17,318

Buildingsaredepreciatedonastraight-linebasisoveraperiodofamaximumof33years;plantandequipmentandotherassetsinamaximumof10years;andfixtures,computersandofficefurnitureandequipmentinamaximumof5years.

Inthe2008/2009financialyear,thedecreasedlevelofactivityintheUnitedStateshasresultedintheretirementofamachine.Thismachinewaswrittendowntonilprematurely,whichhasresultedinadditionalexpensesofapproximately€65.

Intheinvestments,anamountof€6(2008/2009:€24)isincludedforcapitalizedpersonnelcosts.

RegardingthefinanceleaseagreementoftheheadofficebuildingintheNetherlands,thebookvalueof€735(2008/2009:€856)isincludedunderlandandbuildings.Theleasedbuildingservesascollateralontheleaseliabilities(seenote22).Noadditionalsecurityhasbeengiven.

Thesubsidiarieshavegivensecurityforamaximumof€11.351(2008/2009:€5.760)intheformofmortgagesrightsonbuildingsintheNetherlands,Hungary,theUnitedStatesandIndonesia.Inaddition,rightoflienisgivenonplantandequipmentandotheroperatingresourcesintheNetherlandsandHungary.


13.Deferredtaxassetsandliabilities

Thedeferredtaxassetsandliabilitiesstatedinthebalancesheetcanbeattributedtothefollowingitems:

march 31, 2010 March31,2009

assets liabilities Assets Liabilities

Tangiblefixedassets - - - 28

Financialfixedassets 45 48 41 136

Inventories 102 - 140 -

Otherreceivables 575 - 549 -

Employeebenefits 320 - 121 -

Otherliabilities 77 - 68 -

Set-offlosses 808 - 600 -

Borrowingsandlong-termliabilities - 2 - -

1,927 50 1,519 164

Balanceofreceivablesandliabilities - - (28) (28)

Net deferred tax assets / liabilities 1,927 50 1,491 136

Thedeferredincometaxesresultingfromtemporarydifferencesbetweenthefiscalandcommercialvalueofassetsandliabilitiesareaccountedforattheapplicablenominaltaxrateofthecountryconcerned.

Changeindeferredtaxes april 1, 2009 / march 31, 2010 April1,2008/March31,2009

Openingbalance 1,355 1,072

Added 620 415

Subtracted (106) (144)

Exchangeratedifference 8 12

Closing balance 1,877 1,355

Accountedforintheincomestatement (602) (352)

Accountedforintheunrealisedresults (18) (63)

AtMarch31,2010,nodeferredtaxreceivablewasincludedinrespectofanamountof€62(March31,2009:€103)oflossesavailableforset-off.


16.Tradedebtorsandotherreceivables

march 31, 2010 March31,2009

Tradedebtors 8,805 7,057

Receivablesinrespectofothertaxes 353 214

Otherreceivablesandprepaidexpenses 1,163 821

trade debtors and other receivables 10,321 8,092

Thetradedebtorscanbespecifiedasfollows,accordingtoage:

march 31, 2010 March31,2009

Notpastdue 7,338 5,418

Pastdue 0–30days 973 953

Pastdue 31–60days 345 398

Pastdue 61daysandlonger 316 517

Provisions (167) (229)

total 8,805 7,057

14.Otherlong-termreceivables

Theotherlong-termreceivablesincludesaloangrantedtoMrsVeldhuisinrelationtoherexpatriation.Thisloanisincludedatamortisedcostprice(seealsonote27).

15.Inventories

march 31, 2010 March31,2009

Rawmaterials 3,541 3,970

Finishedgoods 3,725 3,691

inventories 7,266 7,661

Underthecostofsalesandrawmaterials,theincomestatementincludesanamountof€24,401(2008/2009:€25,493)forinventoryusage.

InventoriesofsitesintheNetherlandsandHungary(€3,683)serveassecurityfortheobligationsrequiredbythefinanceagreementswiththebanks.

AtMarch31,2010,theprovisionforobsoletestockamountedto€760(March31,2009:€1,210).

Movementsintheprovisionforobsoletestockwereasfollows:

march 31, 2010 March31,2009

Openingbalance (1,210) (1,282)

Add:Additionstotheprovision (265) (312)

Less:Writeoffchargedtotheprovision 722 352

Exchangeratedifferences (7) 32

Closing balance (760) (1,210)



Tradedebtorsbycurrency

march 31, 2010 March31,2009

Euro 4,351 3,108

Poundsterling 794 647

USdollar 2,944 1,855

Othercurrencies 883 1,676

Provision (167) (229)

total 8,805 7,057

Tradedebtorsandotherreceivablesarerecognisedinitiallyatfairvalueandsubsequentlyatamortisedcosts.Aprovisionforimpairmentisestablishedwhenitisforeseenthatcompletecollectionofthesereceivableswillbeimpossible.

Additionstotheprovisionfordoubtfuldebtorsareincludedintheincomestatementunderotheroperatingcosts.

Movementsintheprovisionfordoubtfuldebtorswereasfollows:

march 31, 2010 March31,2009

Openingbalance (229) (138)

Add:Additionstotheprovision (3) (104)

Less:Write-offoftradedebtors 67 19

Exchangeratedifferences (2) (6)

Closing balance (167) (229)

TradedebtorsofthesitesintheNetherlandsandHungary(€4,257)serveassecurityfortheobligationsrequiredbythefinanceagreementswiththebanks.

17.Cashandcashequivalents

Theliquidassetsarefreelyavailable.

Thecreditriskonliquidassetsislimitedduetothefactthatthecounterpartiesusuallyarebankswithhighcreditratings,asassignedbyinternationalcreditratingsagencies.

18.Equity

issued share capitalTheauthorisedcapitalofHollandColoursNVhasanominalvalueof€6,810,dividedin2,999,999ordinarysharesandaprioritysharewithanominalvalueof€2.27each,ofwhich860,350ordinarysharesandtheonepriorityshareareissuedandpaidup.Thetotalissuedsharecapitalamountsto€1,953.In2009/2010and2008/2009,thetotalnumberofsharesissueddidnotchange.

AtanExtraordinaryMeetingofShareholdersonApril1,2010,theshareholderspresentvotedinfavouroftheproposedamendmenttotheArticlesofAssociationdraftedtoresultintheconversionoftheprioritysharetoanordinaryshareinthe2010/2011financialyear.

Share premium reserveThesharepremiumreserveof€1,219maybedistributedfreeoftaxation.Thisamountdidnotchangewithrespecttothepreviousfinancialyear.



19.Namedreserves

Foreigncurrency Hedge Reserve Total

translationreserve reserve intangibleassets

Balance at april 1, 2008 (3,016) (55) 230 (2,841)

Cashflowhedgeaftertaxation - (229) - (229)

Currencyconversiondifferences 734 - - 734

Withdrawnfromfreereserves - - (34) (34)

Situation at march 31, 2009 (2,282) (284) 196 (2,370)

Cashflowhedgeaftertaxation - 80 - 80

Currencyconversiondifferences 110 - - 110

Withdrawnfromfreereserves - - 42 42


Currency translation reserveThecurrencytranslationreservecomprisesallexchangeratedifferencescreatedbytheconversionoftheannualaccountsoftheGroupcompanieswithafunctionalcurrencyotherthantheeuro.Revaluationsofthisso-calledconversionriskaredirectlydebitedorcreditedtoequityviatheunrealisedresults.ThegenerationofcumulativedifferenceswasstartedatApril1,2004,inaccordancewiththeexceptionallowedinIFRS1.

Hedge reserveHollandColoursappliescashflowhedgeaccountingoninterestcontractsandthenetinvestmenthedge.Thecashflowhedgereservecomprisestheeffectivepartofthechangesinvalueofthefinancialinstrumentsforwhichcashflowhedgeaccountingisappliedandthenetinvestmenthedge.Moreover,thecashflowhedgereserveisalsoreducedbytheinclusionofadeferredtaxposition.

Statutory reserveAstatutoryreservefordevelopmentcostsisformedinthecompanyaccounts.ThisisalsoshownintheunrealisedresultsofequitytomaintainconcurrencewiththeequityintheHollandColoursNVcompanyaccounts.

Theabove-mentionedreservesmaynotbedistributedfreelytoshareholders.Negativeamountsreducedistributabilityandpositiveamountsarenon-distributable.

20.Earningspershare

ThecalculationofthebasicearningspershareatMarch31,2010,isbasedonaprofitattributabletoshareholdersof€1,154(2008/2009:minus€621),andanaveragenumberofoutstandingordinarysharesof860,350aswellasthepriorityshareduringthe2009/2010financialyear.ThetotalnumberofissuedsharesdidnotchangecomparedwithMarch31,2009,sotherehasbeennodilution.

21.Minorityinterest

Thisitemconcernstheminorityinterestinthenet-equityvalueofHCAJapanCorporationatbalancesheetdate.


22.Borrowingsandlong-termliabilities

Thetotaloftheborrowingsandlong-termliabilitiescanbespecifiedasfollows: march 31, 2010 March31,2009

long-term

Bankloans 2,948 -

Financialleaseobligations 634 784

total 3,582 784

Short-term

Bankloans - 6,876

Bankbalances 4,899 4,723

Repaymentobligationsbankloans 1,754 -


total 6,803 11,740

total borrowings and long-term liabilities 10,385 12,524

TheGroupcurrentlyhasaccesstocreditfacilitiesof€10,593(2008/2009€11,563).Thecreditfacilitieswereplacedatvariousinternationalandlocalbanksin2009andhavenoexpirydate.Asofbalancesheetdate,€4,899hasbeenutilisedunderthecreditfacility.Pleasealsorefertonotes12,15and16.

Asaresultofdisappointingresultsinthe2008/2009financialyear,HollandColoursdidnotmetsomeoftheagreed-uponcovenantswithexternalfinanciers.Thismeansthattheloansformallyhadbecomerepayableatcallandtheyarethereforepresentedinthebalancesheetof31March,2009,ascurrentliabilities.AnagreementwasreachedwiththebanksinJuly2009regardingtheconditionsunderwhichthefinancingcouldbecontinued.AdditionalcollateralwasrequiredintheNetherlands,HungaryandtheUnitedStates.Moreover,anumberofnewfinancialconditionsapplyandtheinterestratesarehigher.Themostimportantcovenantisrelatedtoanassessmentoftheratiobetweendebtstocreditprovidersandtwelve-monthearningsbeforeinterest,taxes,depreciationandamortization,theso-calledTotalDebt/EBITDAratio.

TheGroup'stotalrepaymentsin2009/2010amountedto€3,615(2008/2009€2,629).InNovember2009,thelong-termborrowingsofthesiteintheUnitedStateswererepaidandnewfinancingwithmorefavourabletermswasarrangedwithadifferentexternalfinancier.

AreductionoftheTotal Debt / EBITDAratioduringthefinancialyearwaspartoftheagreementsmadeinJuly.Attheendofthe2009/2010financialyearthiswasnotallowedtoexceed3.0.Thisratioamountedto2.0attheendofthe2009/2010financialyear,meaningthekeyconditionagreedwiththebankswasmet.

Theothercovenantsagreedwiththebanksrelatetoasolvencyratioofatleast40%or€16,000andaDebt Service Cover Ratio>1.0.HollandColourscompliedwiththeseagreedfinancialcovenantsduringthe2009/2010financialyear.

TheinterestmarginisdependentontheTotal Debt / EBITDAratio.

Thecompanyhasissuedlettersofguaranteeinanamountof€750(2008/2009€1,198)onbehalfofforeignoperatingcompaniesassecurityforthesecompanies’paymentliability.

Leaseliabilitiesareineffectsecured,becauseundertheleaseagreementtherightstotheleasedassetreverttothelessorintheeventofdefault.



TheGrouphasprovidedsecurityintheformofmortgagerightsonbuildingsintheNetherlands,Hungary,theUnitedStatesandIndonesiaforamaximumamountof€11,351(2008/2009:€5,760).Furthermore,themachinesandplantsandotheroperatingresources,inventoriesandtradedebtorsintheNetherlandsandHungary,aswellasthesharesofHollandColoursApeldoornBV,serveassecurityfortheobligationsrequiredbythefinanceagreementswiththebanks.

Thematurityofthelong-termborrowingscanbedividedasfollows:

march 31, 2010 March31,2009

Betweenoneandtwoyears 1,023 -

Betweentwoandfiveyears 1,517 -

Longerthanfiveyears 408 -

total 2,948 -

Theannualrepaymentobligationfor2010/2011is€1,904(2011/2010:€2,355).Thisamountispresentedundershort-termliabilities.

Thelong-termborrowingsaresubjecttointerestchangesandcontractualinterestrevisionsasfollows:

march 31, 2010 March31,2009

Sixmonthsorshorter 3,000 -

Betweensixandtwelvemonths - -

Betweenoneandfiveyears 1,702 -

Longerthanfiveyears - -

total 4,702 -

Themajorityofalllong-termborrowingshaveavariableinterest.Theriskassociatedwiththisvariabilityishedgedbymeansofanumberofinterestinstruments(swaps).Theweightedaverageinterestrateonthelong-termborrowingswas4.8%asopposedto4.1%inthe2008/2009financialyear.

Theeffectiveinterestratesatbalancesheetdatewereasfollows:

interest rate in % march 31, 2010

eUR USD GBP

Bank loans 3.7% 3.5% -

Interestratein% March31,2009

EUR USD GBP

Bankloans 3.8% 4.4% 7.3%

Theobligationsunderfinanceleasecontractscanbedividedasfollows:

march 31, 2010 March31,2009

Lessthanoneyear 150 141

Betweenoneandfiveyears 395 494

Fiveyearsandover - -

545 635

Lessfutureinterestexpenses (72) (127)

total 473 508


Thebookvaluesandfairvaluesofthelong-termliabilitiesareasfollows:

Bookvalue Fairvalue

march 31, 2010 March31,2009 march 31, 2010 March31,2009

Bankloans 4,702 - 4,708 -

Financialleaseobligations 784 925 794 964

total 5,486 925 5,502 964

Thefairvaluesarebasedoncashflows,discountedataloaninterestrateof4.8%(March31,2009:4.1%).

Thebookvaluesoftheshort-termborrowingsdonotdifferessentiallyfromthefairvalues.

Thebookvaluesofthelong-termborrowingsareinthefollowingcurrencies:

march 31, 2010 March31,2009

Euro 3,124 925

USdollar 2,362 -

total 5,486 925



23.Employeebenefitobligations

Asexplainedinnote2,theoriginalagreed-uponconditionalfinancingofpastserviceyearsinthepre-pensionplanhasbeenconvertedintoanannualpaymenttothesameamount,whichisalsoconditional.Theresultingliabilityamountsto€827asatMarch31,2010(March31,2009:€952).

Theliabilitiesregardingemployeebenefitsalsoincludeaprovisionforfuturejubileepaymentsof€196(March31,2009:€155)andotherfuturepaymentsof€352(March31,2009:€320).

Thetotalpensioncostsinthe2009/2010financialyearamountto€402(2008/2009:€657)andarepresentedunderpersonnelcosts(seealsonote6).

Movementsintheemployeebenefitobligationswereasfollows:

Personnel OtherPersonnel

provisions provisions Total

Situation at march 31, 2008 (1,057) (469) (1,526)

Additions (16) (24) (40)

Withdrawn 121 27 148


Situation at march 31, 2009 (952) (475) (1,427)

Additions - (82) (82)

Withdrawn 125 11 136


Situation at march 31, 2010 (827) (548) (1,375)

Ofthis,short-termequalled

atMarch31,2009 108 8 116

atMarch31,2010 106 15 121

Theseamountsareaccountedforunderotherpayables.

Thepersonnelprovisionrelatestotheobligationtoissueanannualpayment.Theotherpersonnelprovisionsrelatetofuturejubileepaymentsandotherfuturepayments.


24.Derivativefinancialinstruments

AsofMarch31,2010,theGroupheldthefollowingfinancialinstrumentsmeasuredatfairvalue.

TheGroupusesthefollowinghierarchyfordetermininganddisclosingthefairvalueoffinancialinstrumentsbyvaluationtechnique:

Level1:quoted(unadjusted)pricesinactivemarketsforidenticalassetsorIiabilitiesLevel2:othertechniquesforwhichallinputswhichhaveasignificanteffectontherecordedfairvalueareobservable,

eitherdirectlyorindirectlyLevel3:techniqueswhichuseinputswhichhaveasignificanteffectontherecordedfairvaluethatarenotbasedon

observablemarketdata.

march 31, 2010

Liabilitiesincludedatfairvalue Obligations level 1 level 2 level 3

Interestrateswaps-cashflowhedges 178 - 178 -

Therewerenotransfersduringthe2009/2010financialyearbetweenvaluationsatfairvalueinlevels1and2,nortransferstoandfromvaluationsatfairvalueinlevel3.

Thetotalfairvalueofderivativefinancialinstrumentsusedforhedgingisincludedunderlong-termobligations.Thenotionalprincipalamountsoftheoutstandinginterest-rateswapcontractsatMarch31,2010,are€2,625(March31,2009:€3,687).AtMarch31,2010,thefixedinterestratesvaryfrom3.5%to7.4%(March31,2009:3.3%to6.0%);themainfloatingratesareEURIBORandLIBOR.

Theloans(seenote22)includealoanofUSD1,100,whichisintendedtocoverthenetinvestmentsintheUSsubsidiaryandisusedtohedgetheGroup'scurrencyrisksonthisinvestment.Gainsorlossesontherecalculationofthisloanaretransferredtoequitytosettleanyconversiondifferencesofthenetinvestmentinthissubsidiary.Therewasnoineffective-nessasatMarch31,2010,andMarch31,2009.

25.Tradecreditorsandotherpayables march 31, 2010 March31,2009

Tradecreditors 4,279 3,247

Payablesregardingothertaxes 820 549

Otherliabilitiesandaccruals 1,856 3,360

trade creditors and other payables 6,955 7,156Theothertaxpayablesconcernmainlysalestaxpayables.



OtHeR iNFORmatiON

26.Liabilitiesnotreflectedinthebalancesheet

Capital commitmentsAsperbalancesheetdatethecapitalexpenditurecommitmentsfortangiblefixedassetsamountto€0(2008/2009:€100)intotal.Purchase contractsThetotalcommitmentsresultingfromrawmaterialpurchasecontractswere€2,742(March31,2009:€1,697).

Rent and operating lease commitmentsAtbalancesheetdatetheGrouphadoutstandingcommitmentsregardingrentsandoperatingleases,whichfalldueasfollows:

march 31, 2010 March31,2009

Lessthanoneyear 273 289

Betweenoneandfiveyears 343 230


total 623 519

TheGrouprentsbuildings,carsandofficeequipmentintheformofoperationalleases.Thebuildingleaseshaveamaximumtermoffiveyears.Mostofthetermsoftheotherleasecontractsareequallyuptofiveyears.

27.RemunerationoftheBoardofManagementandtheSupervisoryBoard

Reward policyTheremunerationpolicyfortheBoardofManagementofHollandColoursissetbytheSupervisoryBoardinitsentirety.Thereisnoseparateremunerationcommittee.Thecompanystrivesforaremunerationthatismarketconforminrelationtothesizeofthecompany,andisinlinewiththeoverallsalarystructureofHollandColours.Theremunerationconsistsofafixedandvariablepart.ThefixedpartisincreasedannuallybytheamountofinflationprevailingintheNetherlandsatthatpoint.ThevariablepartconsistsofaprofitshareschemethatisthesameforallemployeeswithintheGroupand,dependingonROIandnetprofit,couldmeanamaximumprofitshareoftwomonths'salary.MembersoftheBoardofManagementarepaid75%ofthisamountinHollandPigmentsshares.Onthebasisoftheresultsoverthe2009/2010financialyear,noprofitshareistobepaid.

Inaddition,abonusschemeexistsfortheBoardofManagementoftheGroup,whichonlytakeseffectifaprofitshareispaidtoalloftheGroup'semployees.

Thebonusamountdependsonwhetherornotthefollowingcompanytargetsaremet:

Growthinturnoverof8–12% two-thirdsofgrossmonthlysalaryReturn(EBIT)onaverageinvestedcapital(ROI)>15%. two-thirdsofgrossmonthlysalaryGrowthofearningspersharethatexceedsproportionalturnovergrowth two-thirdsofgrossmonthlysalary

Maximumtotal twomonths'grosssalary

Aswasthecaselastyear,nobonuswaspaidthisyear.

Thereisnooptionplan.


ThecurrentcontractsoftheBoardofManagementdonotstipulateinapredefinedtermoralimitationoftheseverancepayment.Severancepayofoneyear'sgrosssalarywasagreedwithMrVanSchaikatthetimeofhisappointment.

Theremunerationofthe(former)BoardofManagementandtheSupervisoryBoardcanbespecifiedasfollows:

Board of management

B.P.M.vanSchaik A.J.Veldhuis- J.J.G.Straathof**

Hagedoorn

2009/2010 2008/2009 2009/2010 2008/2009 2009/2010 2008/2009

Fixedremuneration 239 235 174* 175* 103 -

Pensioncosts 71 70 31 24 8 -

Variablebonus - - - - -

310 305 205 199 111 -

*) Thisamountincludesanexpatriationallowance

**) MrJ.J.G.StraathofwasappointedStatutoryDirectorattheJuly6,2009,GeneralMeetingofShareholders.

Withintheframeworkofherexpatriationaninterest-freeunsecuredloanofUSD250hasbeenmadetoMrs.Veldhuis-Hagedoornforhomefinancing,onwhichnorepaymentsweremadeyet.Nosecuritieshavebeengiven.

Supervisory BoardUntilApril2010,'StichtingPrioriteit'settheremunerationratesoftheSupervisoryBoardinaccordancewiththetermsapprovedbytheGeneralMeetingofShareholders.FromApril2010on,theGeneralmeetingofShareholderswillsettheserates.Inthisregard,theCompanystrivesforafixedremunerationthatismarketconforminrelationtothesizeofthecompany,andwhichisincreasedannuallybytheamountofinflationprevailingintheNetherlandsatthatpoint.

2009/2010 2008/2009

N.H.Gerardu 27 26

H.H.vanderLof 16 16

M.H.Zegger 16 16

J.F.Ariëns - 4

E.W.G.M.vanThiel - 4

total 59 66

MrAriënsandMrVanThielbothresignedattheGeneralMeetingofShareholdersonJuly7,2008.MrJ.W.deHeerwasappointedmemberoftheSupervisoryBoardattheExtraordinaryGeneralMeetingofShareholdersonApril1,2010.



28.RelatedParties

About47%oftheHollandColourssharesareheldbytheHollandPigmentsBVinvestmentcompany,inwhichall380employeesofHollandColoursparticipate,amongothers.AtbalancesheetdateHollandPigmentsheld400,000(March31,2009:398,100)HollandColoursNVshares.OnMarch31,2010,theGrouphadaclaimof€59onHollandPigments.

29.Otherdisclosures

events after the reporting periodAttheApril1,2010,ExtraordinaryGeneralMeetingofShareholders,theCompany'sshareholdersvotedinfavourofaproposaltoamendtheArticlesofAssociation.ThedeedamendingtheArticlesofAssociationwaspassedonApril9,2010,andhasledtoconversionofthepriorityshareintoanordinarysharethatwillbepurchasedbytheCompanyinJune.'StichtingPrioriteit'willbediscontinuedasofJuly5,2010.

Personnel numbersDuringthe2009/2010financialyear,theCompanyemployedanaverageof393FTEs.In2008/2009thiswas433.


Company income statementforthefinancialyearended31March2010

april 1, 2009 April1,2008

inthousandsofeuros march 31, 2010 March31,2009

Netresultfromparticipations 1,203 (784)

Otherincomeandexpensesaftertaxes (49) 163


Company balance sheetbeforeproposedappropriationofprofits

inthousandsofeuros note march 31, 2010 March31,2009

Fixed assets

Intangiblefixedassets 33 559 741

Tangiblefixedassets 34 2,404 2,656

Financialfixedassets 35 24,081 24,880*

27,044 28,277

Current assets

Amountsreceivablefromgroupcompanies 382 815

Otherreceivablesandaccruedincome 73 351

455 1,166

total assets 27,499 29,443

equity

Sharecapital 36 1,953 1,953

Sharepremiumreserve 36 1,219 1,219

Statutoryreserves 36 (2,138) (2,370)

Resultthisyear 1,154 (621)

Otherreserves 36 17,744 18,405

19,932 18,586

long-term liabilities

Borrowings 37 2,675 784

Employeebenefits 38 433 470

Deferredincometaxliabilities 2 -

Derivativefinancialinstruments 39 178 252

3,288 1,506

Short-term liabilities

Creditinstitutions 1,459 6,833

Repaymentobligationslong-termliabilities 1,223 141

Amountspayabletogroupcompanies 1,278 860

Currentincometaxliabilities 77 152*

Otherliabilitiesandaccruals 242 1,365

4,279 9,351

total equity and liabilities 27,499 29,443

*)Asaresultofreclassification,someofthenumberspresentedheredonotcorrespondwiththoseinthefinancialstatementscovering

the2008/2009financialyear(pleaserefertonote2).



Notes to the company financial statementsStatement of accounting standards

30.Generalinformation

ThecompanyfinancialstatementsarepartofthefinancialstatementsofHollandColoursNVandaredrawnupinaccordancewiththelegalrequirementsofTitle9,Book2oftheDutchCivilCode.Useistherebymadeofthepossibilitygiveninarticle2:362paragraph8oftheDutchCivilCodetoapplythesamestandardsofvaluationandrevenuerecognitiontotheCompanyfinancialstatementsasthoseusedintheconsolidatedfinancialstatements,withtheexceptionofaccountingstandardsrelatingtoparticipationingroupcompanies.Participationingroupcompaniesisaccountedforatnetassetvalue.

Underarticle402ofTitle2,Book2oftheDutchCivilCode,itsufficesforthecorporateincomestatementtostatethe‘netresultfromparticipations’,andthe‘otherincomeandexpensesaftertaxation’.ThelatteritemrepresentsthebalanceofincomeandexpensesofHollandColoursNV.

31.Accountingprinciples

ThestandardsofvaluationandrevenuerecognitionusedfortheCompanyfinancialstatementsarethesameasthoseusedintheconsolidatedfinancialstatements.Unlessotherstandardsarestated,thereaderisreferredtothestandardsstatedintheconsolidatedfinancialstatements.

32.Financialfixedassets

Participation in group companies ParticipationsingroupcompaniesandothercompaniesinwhichtheCompanyhasdominatingcontrolorexercisescentralmanagement,arevaluedatnetequityvalue.Thenetassetvalueismeasuredbyvaluingtheassets,provisionsandliabilitiesandcalculatingthenetprofitinaccordancewiththeaccountingpoliciesusedintheconsolidatedfinancialstatements.

Whendeterminingthenetequityvalue,thetransitionalprovisionsforthemeasurementofthevaluesandtheaccountingpoliciesasappliedtotheconsolidatedfinancialstatementsweretakenintoaccount.


33.Intangiblefixedassets

Development Other Total

costs


Costs 660 1,212 1,872

Cumulativeamortisation (429) (518) (947)






Exchangeratedifferences - - -

Balance 22 (206) (184)


Costs 754 1,258 2,012

Cumulativeamortisation (502) (769) (1,271)






Impairment - (23) (23)

Exchangeratedifferences - - -

Balance 75 (257) (182)


Costs 909 1,265 2,174

Cumulative amortisation (582) (1,033) (1,615)

Book value 327 232 559

Intheyearunderreview,totalR&Dexpenseswere€750(2008/2009:€1,072).Ofthisamount,€116(2008/2009:€94)iscapitalised,whereastheremainderisincludedinthenetotherincomeandexpensesinthecompanyfinancialstatements.Asaresultofthereorganisationcarriedoutinthe2008/2009financialyear,therehasbeenashiftinR&DcostsfromtheCompanytothedivisions.

Theamortisationcostsof€321(2008/2009:€324)areincludedundernetotherincomeandexpensesinthecompanyfinancialstatements.Animpairmentchargeof€23wasrecordedduringthefinancialyearduetoanimpairmentofacquiredlicensingrights.Thisisalsoincludedinthenetincomeandexpensesofthecompanyfinancialstatements.

Theotherintangiblefixedassetsconsistofthecostsofcomputersoftwareandlicenses,aswellastheexternalcostsrelatedtotheirimplementationanduse.Thesecostsareamortisedovertheirestimatedusefullife,whichisfiveyears.



34.Tangiblefixedassets

Landand Machineryand Other Total

buildings equipment capital

assets


Costs 3,711 1,428 335 5,474

Cumulativedepreciation (1,513) (890) (227) (2,630)

Bookvalue 2,198 538 108 2,844


Investments - 78 9 87

Book-valuedisposals - - - -

Depreciation (146) (92) (37) (275)

Exchangeratedifferences - - - -

Balance (146) (14) (28) (188)


Costs 3,710 1,454 331 5,495

Cumulativedepreciation (1,658) (930) (251) (2,839)

Bookvalue 2,052 524 80 2,656


Investments - - 16 16

Book-valuedisposals - - - -

Depreciation (146) (73) (49) (268)

Exchangeratedifferences - - - -

Balance (146) (73) (33) (252)


Costs 3,710 1,098 331 5,139

Cumulative depreciation (1,804) (647) (284) (2,735)

Book value 1,906 451 47 2,404

Buildingsaredepreciatedonastraight-linebasisoveraperiodofamaximumof33years;plantandequipmentandotherassetsinamaximumof10years;andfixtures,computersandofficefurnitureandequipmentinamaximumof5years.Thedepreciationcostsof€268(2008/2009:€275)areaccountedforundernetotherincomeandexpensesinthecompanyfinancialstatements.

TheCompanyrecognisednoimpairmentinthe2009/2010financialyear.

RegardingthefinanceleaseagreementoftheheadofficebuildingintheNetherlands,anetbookvalueof€735(2008/2009:€856)isincludedunderlandandbuildings.Theleasedbuildingservesascollateralontheleaseliabilities.(seenote22).Noadditionalsecurityhasbeengiven.


35.Financialfixedassets

Thefinancialfixedassetscanbespecifiedasfollows:

march 31, 2010 March31,2009

Investmentsingroupcompanies 22,300 22,936

Groupcompanyloans 129 522

Otherfinancialassets 1,652 1,422

24,081 24,880

Movementsinthevalueofthegroupcompanieswereasfollows:

march 31, 2010 March31,2009

Opening balance 22,936 23,325

Movements:

-acquisitionsandcapitalpayments 109 -

-resultfromgroupcompanies 1,203 (784)

-dividendreceived (1,317) (339)

-personnelprovisionallocationtoHCA-BV (741) -

-exchangeratedifferences 110 734

Closing balance 22,300 22,936

Intheyearunderreview,theportionofthepersonnelprovision(seenote38)thatrelatestotheoperatingcompanyintheNetherlandsisaccountedforinthiscompany'sbalancesheet.Thevalueofthegroupcompanyhasbeenadjustedaccordingly.

Movementsintheloanstogroupcompanieswereasfollows:

march 31, 2010 March31,2009

Opening balance 522 1,012

Movements:

-loansgrantedthisyear 248 759

-loansrepaidthisyear (637) (1,064)

-exchangeratedifferences (4) (185)

Closing balance 129 522

Theloanstogroupcompanieshavevaryingterms.Loanswithatermofmorethanoneyeartotal€129(March31,2009:€522).Theinterestratesfortheloanstogroupcompaniesrangefrom4.5%to7.4%(March31,2009:5.0%to7.4%).


Themovementsintheotherfinancialfixedassetscanbespecifiedasfollows:

Deferred Otherlong-term Total

taxes receivables

Situation at march 31, 2008 823 360 1,183

Additions 560 - 560

Repaymentofloans - (56) (56)

Withdrawn (293) - (293)

Currencytranslationdifferences - 28 28

Situation at march 31, 2009 1,090 332 1,422

Additions 724 - 875

Repaymentofloans - (144) (144)

Withdrawn (347) - (498)

Currencytranslationdifferences - (3) (3)

Situation at march 31, 2010 1,467 185 1,652

36.Equity

Fornotesontheordinarysharecapitalandsharepremiumreserveseenote18oftheconsolidatedbalancesheet.

Movementsintheforeigncurrencytranslationreserve,hedgereserveandotherstatutoryreservesareasfollows:

Foreigncurrency Hedge OtherStatutory Total

translationreserve reserve reserve


Cashflowhedge,netoftax - (229) - (229)

Currencytranslationdifferences 734 - - 734

Withdrawnfromfreereserves - - (34) (34)


Cashflowhedge,netoftax - 80 - 80

Currencytranslationdifferences 110 - - 110

Withdrawnfromfreereserves - - 42 42




37.Borrowingsandlong-termliabilities

ThetotaloftheCompany'slong-termborrowingscanbedividedasfollow:

march 31, 2010 march 31, 2009

long-term

Bankloans 2.040 -


2,675 784

Short-term

Bankloans - 4,328

Bankbalances 1,459 2,505

Repaymentobligationsbankloans 1,074 -


2,682 6,974

total borrowings and long-term liabilities 5,357 7,758

TheCompanyhasacreditfacilityintheNetherlandsuptoanamountof€10,000(March31,2009:€11,264)forwhichcollateralhasbeenissued.Pleasealsorefertonotes12,15and16.

Asaresultofdisappointingresultsinthe2008/2009financialyear,HollandColoursdidnotmetsomeoftheagreed-uponcovenantswithexternalfinanciers.Thismeansthattheloansformallyhadbecomerepayableatcallandatotalof€4,328inbankloansarepresentedinthecorporatebalancesheetastotalcurrentliabilitiesasat31March,2009.

AnagreementwasreachedwiththebanksinJuly2009regardingtheconditionsunderwhichthefinancingcouldbecontinued.AdditionalcollateralwasrequiredintheNetherlands,HungaryandtheUnitedStates.Moreover,anumberofnewfinancialconditionsapplyandtheinterestratesarehigher.

Themainconditionsapplyingtotheselong-termliabilitiesare:• Total Debt / EBITDAoftheGroupofnomorethan3atMarch31,2010• AsolvencyratiofortheGroupofatleast40%andnolessthan€16,000• Debt Service Cover RatiooftheGroupof>1.0.

TheinterestmarginisdependentontheTotal Debt / EBITDAratio.

Thetermsofthelong-termborrowingscanbedividedasfollows: march 31, 2010 March31,2009

Betweenoneandtwoyears 1,074 -

Betweentwoandfiveyears 1,336 -


total 3,114 -

Thebookvaluesandfairvaluesofthelong-termliabilitiesareasfollows:

Bookvalue Fairvalue

march 31, 2010 March31,2009 march 31, 2010 March31,2009

Bankloans 3,114 - 3,115 -

Financialleaseobligations 784 925 794 964

total 3,898 925 3,909 964



Thebookvaluesofthelong-termborrowingsareinthefollowingcurrencies:

march 31, 2010 March31,2009

Euro 2,748 925

USdollar 1,150 -

total 3,898 925

Thefairvaluesarebasedoncashflows,discountedataloaninterestrateof4.8%(March31,2009:4.1%).Thebookvaluesoftheshort-termborrowingsdonotdifferessentiallyfromthefairvalues.

38.Employeebenefitobligations

Asexplainedinnote23,theoriginalagreed-uponconditionalfinancingofpastserviceyearsinthepre-pensionplanhasbeenconvertedintoanequallyconditionalannualpaymenttothesameamount.Theresultingliabilityamountsto€216asatMarch31,2010(March31,2009:€254).

Intheyearunderreview,theportionofthepersonnelprovisionthatrelatestotheoperatingcompanyintheNetherlandsisaccountedforinthiscompany'sbalancesheet.Thevalueoftheparticipationhasbeenadjustedaccordingly.Thecorrespondingfigureshavebeenadjustedaccordingly.Pleasealsorefertonote35.

Underliabilitiesrelatedtoemployeebenefits,thereisalsoaprovisionforfuturejubileepaymentsof€29(March31,2009:€22)andotherfuturepaymentsof€227(March31,2009:€234).

Movementsintheemployeebenefitobligationswereasfolows:

Personnel OtherPersonnel

provisions provisions Total

Situation at march 31, 2008 (227) (276) (503)

Additions (67) (5) (72)

Withdrawn 40 25 65


Additions - (8) (8)

Withdrawn 38 8 46


Thefollowingamountshavebeenaccountedforunderotherliabilitiesanddeferredcharges:

atMarch31,2009 33 7 40

atMarch31,2010 32 7 39

Thepersonnelprovisionrelatestotheobligationtoissueanannualpayment.Theotherpersonnelprovisionsrelatetofuturejubileepaymentsandotherfuturepayments.


39.Derivativefinancialinstruments

march 31, 2010 March31,2009

assets liabilities Assets Liabilities

Interestrateswaps-cashflowhedges - 178 - 272

total financial instruments - 178 - 272

Thetotalfairvalueofderivativefinancialinstrumentsusedforhedgingisincludedunderlong-termobligations.Thenotionalprincipalamountoftheoutstandinginterest-rateswapcontractsatMarch31,2010,is€2,625(March31,2009:€3,687).AtMarch31,2010,thefixedinterestratesvaryfrom3.5%to7.4%(March31,2009:3.3%to6.0%);themainfloatingratesareEURIBORandLIBOR.

40.Personnel

IntheyearunderreviewtheaveragenumberofemployeesworkingfortheCompany,expressedinFTEs,was19(in2008/2009thiswas21FTEs).

41.Accountingandauditcosts

Inthe2009/2010financialyear,thefollowingaccountancyfeeswerechargedtotheresultsinaccordancewitharticle382aTitle2Book2oftheDutchCivilCode.

2009/2010 ernst & Young accountants

Financialstatementauditing 126

Othernon-auditservices 52

total 178

2008/2009 PricewaterhouseCoopersAccountants

Financialstatementauditing 188

Othernon-auditservices 59

Total 247



42.Liabilitiesnotreflectedinthebalancesheet

GuaranteesForitssubsidiaryHollandColoursBV,HollandColoursNVhasgivenaguaranteeinaccordancewitharticle403,Title9,Book2oftheDutchCivilCode.

HollandColoursNVhasissuedlettersofguaranteeforanamountof€750onbehalfofforeignoperatingcompaniesassecurityforpaymentobligationsbythesecompanies.

Other informationTheCompanyformsafiscalentitytogetherwithHollandColoursApeldoornBVwithregardtoincometaxandsalestax.BoththeCompanyanditssubsidiaryareseverallyliableforindebtedtaxesfromallcompaniesthatarepartofthefiscalentity.

Apeldoorn,June1,2010

Supervisory Board managementN.H.Gerardu,Chairman B.P.M.vanSchaikJ.W.deHeer J.J.G.StraathofH.H.vanderLof A.J.Veldhuis-HagedoornM.H.Zegger


Other informationStatutoryprovisionsregardingtheappropriationofprofits

Regarding the appropriation of profits, the following is determined in the april 2010 articles of association:

Article21:1. Fromtheprofitsestablishedintheapprovedfinancialstatement,suchreservesareformedaswillbedeterminedby

theBoardofManagementwithapprovaloftheSupervisoryBoard.

2. Thatpartoftheprofitthatremainsaftertransferringtothereservesanddistribution,asstatedinparagraph1,isatthedisposaloftheGeneralMeetingofShareholderswithdueregardforwhatisstipulatedinarticle105,Book2oftheDutchCivilCode.

3. TheBoardofManagement,withtheapprovaloftheSupervisoryBoard,isauthorisedtodecidetoawardaninterimdividendwithdueregardforwhatisstipulatedinarticle105Book2oftheDutchCivilCode.

4. Thedividendismadepayablewithinonemonthafterithasbeenset,inthemannerandattheplacedeterminedbytheBoardofManagement.

5. Claimsforprofitdistributionexpireafteraperiodoffiveyearsasfromthedateonwhichthedividendwasmadepayable.

6. AdecisionregardingthedisposalofanyreservemaybetakenbythegeneralMeetingofShareholderswithdueregardtothelegalprovisions.

Proposal for the appropriation of profits

Withdueregardforarticle21oftheArticlesofAssociation,itisproposedtodistributetheprofitasfollows:

• Cashdividendof€0.50pershareof€2.27,whichcanbeintotalanamountof€430.• Transfertotheotherreserves:€726.

Theproposalforappropriationofprofithasnotbeenincludedinthebalancesheet.


auditor's reportTotheShareholdersofHollandColoursN.V.

Report on the financial statements WehaveauditedthefinancialstatementsfortheyearendedMarch31,2010ofHollandColoursN.V.,Apeldoorn.Thefinancialstatementsconsistoftheconsolidatedfinancialstatementsandthecompanyonlyfinancialstatements.TheconsolidatedIFRSfinancialstatementscomprisetheconsolidatedstatementoffinancialpositionasatMarch31,2010,theconsolidatedstatementofchangesincomprehensiveincome,consolidatedstatementofchangesinequity,consolidatedcashflowfortheyearthenendedandasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.ThecompanyonlyfinancialstatementscomprisethecompanyonlybalancesheetasatMarch31,2010,thecompanyonlyincomestatementfortheyearthenendedandasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.management’s responsibilityManagementisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwithPart9ofBook2oftheNetherlandsCivilCode,andforthepreparationofthemanagementboardreportinaccordancewithPart9ofBook2oftheNetherlandsCivilCode.Thisresponsibilityincludes:designing,implementingandmaintaininginternalcontrolrelevanttothepreparationandfairpresentationofthefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonableinthecircumstances.auditor’s responsibilityOurresponsibilityistoexpressanopiniononthefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithDutchlaw.Thislawrequiresthatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.Opinion with respect to the consolidated iFRS financial statementsInouropinion,theconsolidatedIFRSfinancialstatementsgiveatrueandfairviewofthefinancialpositionofHollandColoursN.V.asatMarch31,2010,andofitsresultanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwithPart9ofBook2oftheNetherlandsCivilCode.Opinion with respect to the company only financial statementsInouropinion,thecompanyonlyfinancialstatementsgiveatrueandfairviewofthefinancialpositionofHollandColoursN.V.asatMarch31,2010,andofitsresultfortheyearthenendedinaccordancewithPart9ofBook2oftheNetherlandsCivilCode.

Report on other legal and regulatory requirements Pursuanttothelegalrequirementunder2:393sub5partfoftheNetherlandsCivilCode,wereport,totheextentofourcompetence,thatthemanagementboardreportisconsistentwiththefinancialstatementsasrequiredby2:391sub4oftheNetherlandsCivilCode.Zwolle,June1,2010

Ernst&YoungAccountantsLLP

SignedbyJ.Hetebrij



ReportStichtingPrioriteitHollandColours

AsregardsthespecialstatutoryrightsconcerningthecontrollinginterestintheCompany,itisstatedthatthePriorityshareisownedby'StichtingPrioriteitHollandColours'.Thespecialrightsinvolve,amongotherthings,therighttodeterminethenumberofmembersontheBoardofManagementandontheSupervisoryBoardandtherighttomakeabindingnominationforManagingDirectorsandSupervisoryBoardmembers,aswellastherighttoelecttheChairmanoftheSupervisoryBoardfromamongthemembersofthatBoard.

ThetasksoftheSelectionandAppointmentCommitteeasstatedintheDutchCorporateGovernanceCodearetheresponsibilityof‘StichtingPrioriteit’,withtheexceptionofthesupervisionoverthepolicyoftheBoardofManagementregardingtheselectionandappointmentproceduresforhighermanagement,whichtaskisexecutedbytheSupervisoryBoard.Moreover,the'Stichting'isauthorizedtodeterminetheremunerationoftheSupervisoryBoard,withinthepolicyapprovedbytheGeneralMeetingofShareholders.

Inaddition,the'Stichting'hastherighttoapprovedecisionsrelatingtothepurchaseandissueofshares,andofpossiblerestrictionsonpriorityrightsforholdersofordinarysharesinthisregard,anddecisionsregardingco-operation,mergesorclosureoftheCompanyoritssubsidiaries.Furthermore,anydecisionleadingtoamendtheArticlesofAssociationorliquidatetheCompanymayonlybetakenafterapprovalbythe'Stichting'.

The'Stichting'metfivetimesintheyearunderreview.

Duringthesemeetings,thegovernancestructureofHollandColourswasalsodiscussed.ThishasresultedinaproposaltoamendtheArticlesofAssociation.ThisproposalwasapprovedattheExtraordinaryMeetingofShareholdersonApril1,2010.Asaresultofthis,thePrioritysharehasbeenconvertedtoanordinarysharetobepurchasedbytheCompany.The'Stichting'istobedisbanded.Thespecialrightsformerlygrantedto'StichtingPrioriteit'havebeendistributedamongtheManagementBoard,theSupervisoryBoardandtheshareholders.

Apeldoorn,June1,2010

TheBoard

J.M.deHeer,ChairmanN.H.GerarduR.E.SelmanA.J.Vermaat



J.t. StevelsDirectorResearch&Technology

a.J. Veldhuis-HagedoornDivisionDirector

R. leversedgeManager,NewMarkets

D.l. marshallSales&MarketingManager

R. HetisimerPlantManager

J.K. GleesonManagerBusinessProcesses

&Compliance

J. BitnerHumanResourceManager

a. WagnerOfficeManagerCanada

a. WesseldineOfficeManagerMexico

S. Kho-PangkeyDivisionDirector

t.l. KhoTechnicalManager

t.H. HooExportManager

H. GuoGeneralManagerChina

R.P. KarrenbeldDivisionDirector

C.P. JanseManufacturingManager

m.K. edwardsSalesmanagerBuilding&Construction

andSpecialties

F. BaloghSalesManagerPackaging

m. albersSalesManagerSilicones&Elastomers

t. ChiangTechnicalManager

D.G. GoudappelDivisionController

J.J.G. StraathofDirectorFinance

ExecutiveBoard

Organisation chart as at 1 april 2010

Business Processes & ICT

Finance

Research&Technology

DivisionAmericas DivisionAsiaDivisionEurope

G.J. luitenManagerBusinessProcesses&ICT

H.m. JacobsCorporateController

W.B.J. elderinkGlobalPurchaseManager

GlobalPurchasing

m.J. Bos-Westenenk ManagerLegalAffairs

LegalAffairs

B.P.m. van SchaikPresident

a.J. Veldhuis-HagedoornDivisionDirectorAmericas

Colophon

Design and realisation: Doorrood concept + creatie BV

Outline and text: Brody Creatieve Communicatie

Photography: Fred Tigelaar Fotografie

© Holland Colours NV, 2010

Contact

HOLLAND COLOURS NVHalvemaanweg 17323 RW ApeldoornP.O. Box 7207300 AS ApeldoornThe NetherlandsT (31) 55-368 0700F (31) 55-366 2981E [email protected]

HOLLAND COLOURS APELDOORN BVHalvemaanweg 17323 RW ApeldoornP.O. Box 7207300 AS ApeldoornThe NetherlandsT (31) 55-368 0700F (31) 55-366 2981E [email protected]

HOLLAND COLOURS UK LTDUnit 16/17/18, Sabre CourtValentine Close, Gillingham Business ParkGillingham, Kent ME8 0RWUnited KingdomT (44) 1634-388 727E [email protected]

HOLLAND COLOURS HUNGARiA KFTTószegi út 51P.O. Box 85007 SzolnokHungaryT (36) 56-420 644E [email protected]

HOLLAND COLOURS AMERiCAS iNC1501 Progress DriveRichmond, indiana, 47374USAT (1) 765-935 0329Toll-free (1) 800-723-0329E [email protected]

HOLLAND COLOURS CANADA iNC1370 Don Mills Rd., Suite 201Don Mills, Ontario, M3B 3N7CanadaT (1) 416-449 4344Toll-free (1) 800-361 3967E [email protected]

HOLLAND COLOURS MExiCANA SA DE CVTezosomoc #4(Bodega 3)Col. Recursos HidráulicosTultitlán, Edo de MéxicoMéxicoCP 54913T 52 (55) 58-94-36-41E [email protected]

P.T. HOLLAND COLOURS ASiAJl. Berbek industri ii/2(Surabaya industrial Estate Rungkut)Sidoarjo 61256-East JavaindonesiaT (62) 31-849 3939E [email protected]

Export department Surabaya:T (62) 31-841 1 801E [email protected]

Jl. industri iii/88 Blok A-3Kompl. industri Facto, JatakeTangerang 15136-West JavaindonesiaT (62) 21-590 5135

HOLLAND COLOURS CHiNA LTDFactory Building 7#No. 65 Baiyun Road, Spark Development Zone, Fengxian District, Shanghai 201206ChinaT (86) 21-57505962, 57505963 E [email protected]

HCA JAPAN CORPORATiONUkima 5-3-33, Kita-KuTokyo 115-0051JapanT (81)-3-5916-2887E [email protected]

WWW.HOLLANDCOLOURS.COM

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