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On courseAnnual Report 2010

2 Gamma Holding Annual Report 2010 Contents

Contents

Annual Report 2010

Gamma Holding N.V.Panovenweg 12

P.O. Box 805700 AB Helmond

The NetherlandsPhone: +31 492 56 66 00

Fax: +31 492 56 67 00

[email protected]

This Annual Report is also available in the original Dutch version, which is the

authentic text.

Our activitiesProfile

Businesses

Position in the chain

Global presence

Mission, vision, strategy and objectives

Our managementThe Boards

Corporate governance

Report of the Supervisory Board

5

6

7

8

9

11

15

20

3Gamma Holding Annual Report 2010 Contents

Our performanceForeword

Key figures

Information about the share

Report of the Executive Board

On course to recovery

Disposal of Vlisco Group

Improved financing

Public offer

The year in figures

Risk management

Human resource management

Corporate social responsibility

Environment

Ammeraal Beltech

Clear Edge Filtration

Dimension-Polyant

Bekaert Textiles

Corporate Holdings

Discontinued operations

Statements by the Executive Board

Outlook

Financial statementsConsolidated balance sheet

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Accounting policies

Financial risk management, estimates and segment information

Notes to the consolidated balance sheet

Notes to the consolidated income statement

Company balance sheet

Company income statement

Notes to the company financial statements

Other informationSubsequent events

Profit appropriation

Stichting Preferente Aandelen Gamma Holding

Independent auditor’s report

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30

32

34

34

34

34

34

36

38

40

42

42

43

46

49

52

55

56

57

58

60

62

63

64

65

66

66

74

82

108

118

120

121

127

128

130

131

Our activities

Gamma Holding Annual Report 2010 5

Profile

Our activities

Gamma Holding is active in 34 countries with some 4,500 employees and consists of four business units: Ammeraal Beltech, Clear Edge Filtration, Dimension-Polyant and Bekaert Textiles. These units, which operate separately from each other, develop, manufacture and sell innovative, high-quality products throughout the world, varying from process and conveyor belts and filtration products to sailcloth and mattress ticking. With these activities, the business units of Gamma Holding hold prominent market positions worldwide. The Company’s headquarters are located in Helmond (Netherlands) and its shares are listed on Euronext Amsterdam.

On 7 September 2010, Gamma Holding sold Vlisco Group to Actis, a UK-based private equity investor in emerging markets, including Africa. In this Annual Report, this business unit is reported upon in the chapter Discontinued operations.

The figures quoted in this Annual Report relate to continuing activities. The comparative figures have been restated to reflect the sale of Vlisco Group.

6 Gamma Holding Annual Report 2010

Businesses

Our activities

Business unit Markets Products Customers

Ammeraal Beltech One of the global market leaders in process and conveyor beltswww.ammeraalbeltech.com

Food and beverage industry, logistics sector and mail sorting companies, airports, tobacco industry, automotive industry, paper and print industry, textile industry, electronics industry, woodworking industry and construction sector

Process and conveyor belts, high-performance flat belts, modular belts, endless woven belts, engineered belts and timing belts

End usersOEMsDistributors

Clear Edge FiltrationA leading player in the field of advanced filtration products for industrial applicationswww.clear-edge.com

Mining, chemical industry, paper and print industry, water and air purification, food and beverage industry, power stations, pharmaceutical industry, construction sector and automotive industry

Products for industrial wet and dry filtration processes, filter processing belts, special cartridge filters and filter fabrics for screening applications

End usersOEMsDistributors

Dimension-PolyantThe global market leader in sailclothwww.dimension-polyant.com

Sailmaking, sailing Sailcloth, over three hundred different types, for almost all kinds of boats, ranging from super-yachts to recreational sailing boats, wind and kite surfers

SailmakersBoat builders

Bekaert TextilesThe global market leader in mattress tickingwww.bekaerttextiles.com

Bedding market Woven and knitted mattress fabrics, mattress covers and tape, and fabrics for bed coverings such as bed boards

Mattress manufacturersDistributors

7Gamma Holding Annual Report 2010

Position in the chain

Our activities


Global presence

Our activities

9Gamma Holding Annual Report 2010 Our activities

Mission, vision, strategy and objectives

MissionGamma Holding consists of Ammeraal Beltech, Clear Edge Filtration, Dimension-Polyant and Bekaert Textiles. These four business units, which operate separately from each other, develop, manufacture and sell innovative, high-quality products throughout the world, varying from process and conveyor belts and filtration products to sailcloth and mattress ticking. In each of these fields, the business units hold strong market positions, create value and solutions for customers, constantly improve performance and drive profitable growth. In this respect, it is essential to provide an inspiring working environment and develop good business practices.

VisionGamma Holding wants to be an attractive and reliable investment for shareholders. Businesses belonging to the group must hold a leading position in attractive markets, and must be healthy and profitable. Activities that structurally fail to meet these criteria will be sold off. New acquisitions can improve the business units’ strategic position. Additional growth must also be achieved by expanding in emerging markets. The risks are mitigated by spreading activities across various regions and market segments.

Business unit strategyThe business units’ strategy is based on two pillars: optimising business processes and strengthening market positions.

Optimising business processesIn uncertain economic times it is all the more important that processes are flexible, fast and cost-efficient. There is therefore a strong focus on optimising the business processes in the value chain. Flexibility, good service provision and efficiently organised production and fabrication are the most important aspects of this. In order to achieve the best possible competitive position, the business units produce close to the market and where possible in countries where costs are low.

Strengthening market positionsThe second strategic pillar is aimed at improving market positions. This will be achieved not only by means of organic growth, but also by acquiring businesses in order to expand the product portfolio and strengthen positions in emerging markets. In order to do this, innovative capacity, geared to both products and processes, will have to be increased and marketing & sales will have to be further professionalised.

Financial targetsIn 2011 the focus will again be on further recovery of the company’s financial position. In this respect, Gamma Holding is aiming for a solvency ratio in excess of 30%. The ratio of net interest-bearing liabilities to EBITDA agreed with the syndicate of banks had been set at a maximum of 3.0 at year-end 2011. The company aims to reduce this ratio structurally to below 2.5.

Our management

11Gamma Holding Annual Report 2010 Our management

Organogram

The Boards (as of the date of the report)

Uwe Stein, Rick Von Drehle, Paul De Meulemeester and Michael Vogel

12 Gamma Holding Annual Report 2010 Our management

Supervisory Board1

Fokko van Duyne, chairman (69)2,3

Appointed on 3 May 2001, term of office ends in 2013 (re-appointed 2009), Dutch nationality• Former chairman (joint) Board of Directors Corus

Group Plc• Chairman Supervisory Board De Nederlandsche Bank

N.V. and Koninklijke Verkade N.V. • Member Supervisory Board TenneT N.V.

René van der Bruggen (63)Appointed on 24 April 2008, terms of office ends in 2012, Dutch nationality• Chairman Board of Management Imtech N.V.• Member Supervisory Board Grontmij N.V.• Member Supervisory Board Gelderse Vallei Ziekenhuis• Member Advisory Council Cisco Systems• Member Advisory Council Uitgevende Instellingen NYSE

Euronext

Hessel Lindenbergh (67)3

Appointed on 6 May 2003, term of office ends in 2011 (re-appointed 2007), Dutch nationality• Former member Board of Management ING Groep N.V.• Chairman Supervisory Board ABN AMRO Group N.V. and

ABN AMRO Bank N.V.• Member Supervisory Board DHV Holding N.V. • Member Supervisory Board University of Amsterdam

Jan Zuidam, vice-chairman (62)2

Appointed on 6 May 2002, term of office ends in 2014(re-appointed 2010), Dutch nationality• Former vice-chairman Board of Management DSM N.V. • Member Supervisory Board Broadview Holding B.V.

and Shell Nederland B.V.• Chairman Limburg Employers Association (LWV)• Chairman Brainport 2020 round table

1 Relevant additional positions are listed.2 Member of the Selection, Appointments and Remuneration Committee3 Member of the Audit Committee


Executive Board1

Jan Albers (58)CEOAdditional positionsChairman Supervisory Board UVA Holding B.V.Chairman Royal Dutch Hockey Association

Leendert van Reeuwijk (45)CFO

Staff

Michiel Dams (49)Company secretary, legal affairs, human resource management and communication

Guus Groote Schaarsberg (44)Treasury, investor relations and insurance

1 Relevant additional positions are listed.


Business unit management

Michael Vogel (46)Ammeraal Beltech

Rick Von Drehle (57)Clear Edge Filtration

Uwe Stein (48)Dimension-Polyant

Paul De Meulemeester (62)Bekaert Textiles


On 10 December 2008 the Corporate Governance Code Monitoring Committee presented the revised Dutch Corporate Governance Code (the ‛Code’), which was published in the Netherlands Government Gazette no. 18499 on 3 December 2009.

Gamma Holding almost fully subscribes to the principles and best practices contained in the (revised) Code for fair, honourable and transparent business conduct within Dutch listed companies. On 12 June 2009 and 7 September 2009, Gamma Holding already amended its articles of association in line with new statutory provisions and the Code. In the reporting period the amended rules and regulations for the Executive Board and the Supervisory Board and the Company’s policy on bilateral contacts with shareholders, investors, analysts and the press were adopted and published on Gamma Holding’s website. In addition, Gamma Holding monitors developments regarding the deployment of and compliance with the Code, as evidenced by the reports of the Corporate Governance Code Monitoring Committee.

This chapter will first of all consider the main outlines of the corporate governance structure of Gamma Holding and the points of non-compliance with the Code.

Main outlines of corporate governance structureGamma Holding is a public limited company listed on the Dutch stock exchange, and has opted voluntarily to adopt the full statutory two-tier rules. As a result, its subsidiary Gamma Holding Nederland N.V. is exempted from applying the statutory two-tier rules. The day-to-day management of the Company is entrusted to the Executive Board, which is supervised by an independent Supervisory Board.

Executive BoardRole and procedureThe role of the Executive Board is to manage Gamma Holding. The Executive Board is collectively responsible for the management of the Company, its business performance and the business performance of the enterprise affiliated with the Company. Furthermore, the Executive Board is responsible, together with the Supervisory Board, for the corporate governance structure of Gamma Holding and compliance with the Code.

In discharging its role the Executive Board is guided by the interests of the Company and its affiliated enterprise, taking into consideration the interests of the Company’s stakeholders (including the shareholders).

The Executive Board is accountable to the Supervisory Board and the General Meeting of Shareholders for the performance of its duties. The Executive Board acts in accordance with its own rules and regulations, which are published on the Company’s website. The rules and regulations of the Supervisory Board contain rules for resolving (potential) conflicts of interest among, for instance, directors and supervisory directors in relation to the Company, which rules are in line with the principles and best-practice provisions contained in the Code. In the reporting period there were no transactions involving a conflict of interest between Gamma Holding and the members of the Executive Board as referred to in principle II.3 of the Code.

Appointment and compositionThe members of the Executive Board are appointed by the Supervisory Board. The Executive Board is composed of at least two members. On the reporting date the Executive Board consists of Messrs Jan Albers (chairman and CEO) and Leendert van Reeuwijk (member and CFO).

RemunerationThe Supervisory Board determines, in accordance with the remuneration policy adopted by the General Meeting of Shareholders, the remuneration and other terms and conditions of employment of every member of the Executive Board. Details of the remuneration of the individual members of the Executive Board are contained in the remuneration report, which is likewise published on Gamma Holding’s website. The main outlines of the remuneration report and the remuneration policy are given in the Report of the Supervisory Board.

Corporate governance


RemunerationThe remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders. The remuneration of the members of the Supervisory Board was most recently determined on 24 April 2008.

CommitteesSince 2002 the Supervisory Board has also included an Audit Committee and a combined Selection, Appointments and Remuneration Committee. The committees are charged with preparing the decision-making of the Supervisory Board. Both committees have rules and regulations, which are published on the Company’s website. On the reporting date the Audit Committee consists of Messrs Lindenbergh (chairman) and Van Duyne. The Selection, Appointments and Remuneration Committee consists of Messrs Zuidam (chairman) and Van Duyne.

ShareholdersThe financial statements are prepared each year within four months after the end of the financial year. The annual General Meeting of Shareholders is held within six months after the end of the financial year. Extraordinary General Meetings of Shareholders may be held, if necessary, at the request of the Supervisory Board or the Executive Board.

The agenda for the annual General Meeting of Shareholders is adopted by the Executive Board and the Supervisory Board. Among the items placed on the agenda for this meeting are the discussion of the annual report, the adoption of the financial statements and the profit appropriation, any notification of proposed appointments of members of the Executive Board and the Supervisory Board, and any other proposals placed on the agenda by the Supervisory Board and the Executive Board or the shareholders. As a separate item on the agenda, the General Meeting of Shareholders discusses the discharging of the members of the Executive Board from liability for the performance of their management duties and the discharging of the members of the Supervisory Board from liability for their supervision of the management. A proposal to adopt or alter the reservation and dividend policy is also dealt with and accounted for as a separate item on the agenda at the General Meeting of Shareholders. The record date for exercising voting and meeting rights is the 28th day before the day of the meeting.

Amendment of articles of associationA resolution to amend the articles of association requires the prior approval of the Supervisory Board. If such a resolution has not been adopted on the proposal of the Executive Board, it requires a majority of at least 2/3 of the votes cast at a meeting at which at least 3/4 of the issued capital is represented.

Supervisory BoardRole and procedureThe role of the Supervisory Board is to supervise the policies of the Executive Board and the general business performance of the Company and its affiliated enterprise, as well as to assist the Executive Board by providing advice. In discharging its role the Supervisory Board is guided by the interests of the Company and its affiliated enterprise, taking into account the relevant interests of the Company’s stakeholders (including the shareholders). The Supervisory Board acts in accordance with its own rules and regulations, which are published on the Company’s website. These rules and regulations contain rules for resolving (potential) conflicts of interest among, for instance, directors and supervisory directors in relation to the Company, which rules are in line with the principles and best-practice provisions contained in the Code. The Report of the Supervisory Board deals with these (potential) conflicts of interest.

Appointment and compositionGamma Holding has a Supervisory Board composed of at least three persons. On the reporting date the Supervisory Board consisted of Messrs Fokko van Duyne (chairman), René van der Bruggen, Hessel Lindenbergh and Jan Zuidam (vice-chairman).

The supervisory directors are appointed by the General Meeting of Shareholders on the basis of nominations by the Supervisory Board. Both the General Meeting of Shareholders and the Works Council of Ammeraal Beltech Nederland Beheer have a right of recommendation with regard to nominations. Members of the Supervisory Board can be appointed for a maximum of three terms of four years.


this right. This conversion right lapsed in the year under review as a result of the financing agreement, which was extended on 24 November 2010.

On 29 April 2010 the General Meeting of Shareholders designated the Executive Board as the corporate body that, up to 29 October 2011, is authorised to decide, subject to the approval of the Supervisory Board, (l) to issue ordinary shares and (ll) to grant rights to take ordinary shares. This authority is restricted to 10% of the issued capital at the moment of the decision to issue. The Executive Board was also designated as the corporate body that is authorised to restrict or exclude the pre-emption right upon the issue of ordinary shares, including the granting of rights to take ordinary shares which may be issued or granted.

Granting of shares and options rights; acquisition and cancellation of sharesIn the reporting period, 30,350 ordinary shares were (conditionally) granted to the Executive Board under the share plan approved by the General Meeting of Shareholders on 24 April 2008. In addition, the Company (conditionally) granted 37,759 ordinary shares to the top-level management.

Internal risk management and control systemsThe main characteristics of the internal risk management and control systems of Gamma Holding, together with the process of financial reporting of the Company and the group for which the financial information is included in the financial statements, are outlined in the Report of the Executive Board, under Risk management, in this Annual Report.

If the required 3/4 of the issued capital is not represented, a new meeting must be convened – to be held within four weeks after the previous one – at which the resolution to amend the articles of association must be adopted by a majority of at least 2/3 of the votes cast, irrespective of the capital represented.

If an amendment of the articles of associates relates to the rights vested in the holders of preference shares, such an amendment also requires the prior approval of a meeting of shareholders of preference shares, which may adopt resolutions by 2/3 of the votes cast, irrespective of the number of preference shares represented.

Capital structureThe authorised capital of Gamma Holding is € 95 million, divided into: • 9,347,015 ordinary shares• 133,985 ordinary participating preference shares • 9,481,000 four per cent (4%) cumulative preference

shares• 19,038,000 twelve per cent (12%) cumulative preference

shares, each with a value of € 2.50.

Of these shares, 7,518,535 ordinary shares and 133,985 ordinary participating preference shares were issued on the reporting date.

Notifications of substantial holdingsAs of 24 February 2011 the Company was aware of the following substantial holdings of 5% or more in the share capital of Gamma Holding:

Go Acquisition B.V.: 96.6% (98.2% excluding the shares held by Gamma Holding itself).

Powers of the Executive Board to issue shares in the Company and the acquisition by the Company of its shares (treasury shares)Shares are issued pursuant to a resolution of the Executive Board, which resolution is subject to the approval of the Supervisory Board. This power of the Executive Board can relate to all shares in the authorised capital not yet issued, as this capital is or will be at any time. The duration of this power is determined by a resolution of the General Meeting of Shareholders, subject to a maximum of five years. Such a designation may not be extended for more than five years.

At the Extraordinary Meeting of Shareholders held on 29 July 2009 a conversion right was granted to the existing syndicate of banks (‛the banks’) of Gamma Holding. This conversion right entitled the banks to obtain 12% cumulative preference shares through payment in the form of offsetting the amount of € 30 million in such a number that they represent 50.1% of the issued share capital of Gamma Holding after the exercising of


Non-compliance with the CodeBy virtue of the provisions of article 2:391 subsection 4 of the Netherlands Civil Code and the Order in Council referred to therein, Gamma Holding is obliged to report on compliance with the Dutch Corporate Governance Code and any points of non-compliance. These instances of non-compliance are addressed in the following table.

Non-compliance with the Dutch Corporate Governance Code

Provision/Principle Point of non-compliance and explanation

Best-practice provision II.2.5Shares granted to management board members without financial consideration shall be retained for a period of at least five years or until at least the end of the employment, if this period is shorter.

The present share plan for the Executive Board states that the number of shares granted conditionally vest unconditionally three years after they have been granted, if and insofar as pre-set performance criteria are met at that time. The shares have to be retained for two more years after vesting unconditionally, on the understanding that after acquiring the shares unconditionally the members of the Executive Board are permitted to cash as many shares as necessary for payment of the wage tax payable at that time in connection with the acquisition of the shares. This provision was previously made with the approval of the General Meeting of Shareholders. In this way the person concerned avoids having to enter into separate financing for the required tax payment.

Principle III.5Composition and role of three key committees of the supervisory board. If the supervisory board consists of more than four members, it shall appoint from among its members an audit committee, a remuneration committee and a selection and appointment committee. The function of the committees is to prepare the decision-making of the supervisory board.

In view of the small size of the Supervisory Board, it has been decided to combine the Remuneration Committee with the Selection and Appointments Committee.


Non-compliance with the Dutch Corporate Governance Code (continued)

Provision/Principle Point of non-compliance and explanation

Principle IV.1Good corporate governance requires the fully-fledged participation of shareholders in the decision-making in the general meeting of shareholders. It is in the interests of the company that as many shareholders as possible take part in the decision-making in the general meeting of shareholders. The company shall, insofar as possible, give shareholders the opportunity to vote by proxy and to communicate with all (other) shareholders (…).

Gamma Holding recognises the importance of a fully-fledged participation of shareholders in the decision-making in the General Meeting of Shareholders. It therefore considers itself fortunate that its shareholders’ meetings are, on the whole, well attended. With regard to voting by proxy, Gamma Holding prefers to await the relevant European legislation.

Best-practice provision IV.3.1Meetings with analysts, presentations to analysts, presentations to investors and institutional investors and press conferences shall be announced in advance on the company’s website and by means of press releases. Provision shall be made for all shareholders to follow these meetings and presentations in real time, for example by means of webcasting or telephone lines. After the meetings, the presentations shall be posted on the company’s website.

Partly in view of the size of the company, Gamma Holding considers it would be going too far to make provision for all shareholders to follow in real time the meetings and presentations referred to in the best-practice provision. The Company does, however, ensure that the presentations are posted on the Company‘s website immediately after the meetings in question.


Report of the Supervisory Board

The financial statements have been examined and approved by PricewaterhouseCoopers Accountants N.V. The auditor’s report can be found in the section of this Annual Report entitled Other information.

We endorse these accounts and ask you to adopt the financial statements for 2010.

On account of the company’s financial position, together with the obligations under the renewed financing agreement, the Supervisory Board believes there is no scope to pay a dividend with respect to 2010.

SupervisionIn the year under review the Supervisory Board held regular discussions with the Executive Board about the developments at Gamma Holding. The Supervisory Board met with the Executive Board a total of six times in the year under review, one of which at an extraordinary meeting. At all meetings the plenary Supervisory Board was present. Intensive consultation also took place among various groups of members outside the meetings and there were a large number of conference calls, especially towards the end of the year under review. These discussions were reported to the plenary meeting of the Supervisory Board.

In the year under review the Supervisory Board was closely involved in the divestment of Vlisco Group. The transaction was finally completed after the Board had given its approval on 7 September 2010. This divestment was not only important for Gamma Holding’s further recovery, but also offered the business unit the possibility to achieve accelerated growth with the help of a new, financially strong shareholder, which in particular could help Vlisco Group to pursue its strategy of further developing its activities. On 24 November 2010, the Board also approved the renewal of the existing financing agreement, the terms of which could be improved thanks to the company’s stronger financial position as a result of the disposal of Vlisco Group.

In addition, the general state of affairs within the company and the business units, the financial results, the progress of restructuring measures and investments were discussed. Gamma Holding’s strategy was discussed at an extraordinary meeting in June.

To the shareholders of Gamma Holding N.V.

The Annual Report 2010 provides an insight into a year in which Gamma Holding clearly turned the corner towards recovery. Contributing factors included improved market conditions and tight control of costs. The company’s financial position was also strengthened as a result of the divestment of Vlisco Group, and agreement was reached with the banks on improved terms for the company’s loan facilities. Partly as a result of these developments, the net group result came to € 73.8 million. The net group result excluding restructuring expenses and impairment amounted to € 79.2 million.

At the end of the year under review, Go Acquisition, a special-purpose vehicle incorporated by Gilde Buy Out Partners to which Gilde and Parcom Capital Management have both transferred their shareholdings in Gamma Holding, announced that it would be making a mandatory public offer for all the outstanding shares in Gamma Holding. This offer of € 29.00 per ordinary share and € 3.50 per ordinary participating preference share, which was supported by the Executive Board and the Supervisory Board of Gamma Holding, was then published on 13 January 2011. When this Annual Report went to press, the acceptance period and post-acceptance period attached to the offer had expired and Go Acquisition held 96.8% of the ordinary shares and 86.4% of the ordinary participating preference shares in Gamma Holding. Following payment and delivery, Go Acquisition will own 96.6% of the shares in Gamma Holding (98.2% excluding the shares held by Gamma Holding itself). Go Acquisition and Gamma Holding will enter into talks with NYSE Euronext Amsterdam with a view to delisting Gamma Holding. Go Acquisition will initiate compulsory squeeze-out proceedings in order to acquire all the remaining ordinary shares and ordinary preference shares.

We hereby present to you the financial statements for 2010 drawn up by the Executive Board. These financial statements comprise:

• the consolidated balance sheet as of 31 December 2010• the consolidated income statement for 2010• the consolidated statement of comprehensive income for

2010• the consolidated statement of changes in equity for 2010• the consolidated statement of cash flows for 2010• the company balance sheet as of 31 December 2010• the company income statement for 2010• the explanatory notes thereto.


was also present at that meeting. Intensive talks were held with Gilde and Parcom in the ensuing days. In light of the movement in the price of the ordinary shares, a press release on the progress of the talks was issued on 3 December 2010. The discussions were completed on 5 December 2010.

During the discussions Gilde and Parcom indicated that they intended to transfer their combined shareholdings to Go Acquisition, a special-purpose vehicle incorporated by Gilde, which would then make a public offer, supported by the Executive Board and Supervisory Board, of € 29.00 per ordinary share and € 3.50 per ordinary participating preference share in Gamma Holding. During these discussions, Gilde and Parcom expressed their support for the company’s existing strategy, in which focus on the long-term growth of the core business units is key. Gilde and Parcom also said that as a loyal and financially strong shareholder they intended to support the management in unlocking the company’s commercial and financial opportunities.

Considerations in the Supervisory Board’s decision on the offer were that the current financial structure only provided limited scope to achieve the envisaged growth of the business units and that in practice Gamma Holding had no access to the capital market.

There was also the usual discussion of Gamma Holding’s corporate governance structure, strategy and the main risks facing the company, as well as the outcome and assessment of the structure and functioning of the internal risk control and monitoring systems. The annual budget was approved at the Board’s meeting in December.

Public offerAfter Gilde had acquired the share packages of three major shareholders on 19 June 2010, Gamma Holding anticipated the possibility that Gilde could make a public offer at any moment. Following the sale of Vlisco Group, two meetings were held in September at Gilde’s initiative. The chairman of the Supervisory Board attended both meetings and reported to the other members of the Board on the content of the discussions. On the basis of the views voiced on that occasion, Gilde was informed that continuing the talks was not regarded as opportune at that time.

From September, the necessary preparations were made in anticipation of the possibility that Gilde could still approach the Executive Board and Supervisory Board with specific plans for a public offer at any time.

Specifically, the Executive Board, with the approval of the Supervisory Board, hired Lazard to advise the company. Lazard had also advised Gamma Holding on the sale of Vlisco Group and had assessed Gamma Holding’s business plan in anticipation of the talks with the banks. The Supervisory Board also asked ABN AMRO Bank N.V. to issue an opinion on the value of Gamma Holding.

Gilde once again approached Gamma Holding after the talks on the renewal of Gamma Holding’s financing arrangements had been completed on 24 November 2010, whereupon the first substantive talks between the parties took place on 30 November 2010. The chairman of the Supervisory Board

Jan Zuidam, Fokko van Duyne, Hessel Lindenbergh and René van der Bruggen


make a nomination to fill the vacancy created by the departure of Mr Wateler in 2009 to the General Meeting of Shareholders.

In light of the agreements that were made in anticipation of the offer by Gilde and Parcom, the composition of the Supervisory Board will change. It has been agreed that Mr Van der Bruggen will stand down at the end of the forthcoming meeting, that Mr Lindenbergh will be nominated for re-appointment and that Mr B.T. (Boudewijn) Molenaar and Mr E. (Erik) Westerink will be proposed by Gilde and Parcom respectively for nomination as members of the Supervisory Board. Accordingly, the existing vacancy will be filled.

Independence and conflicts of interestThe Supervisory Board believes that as regards the composition of the Board, best-practice provision III.2.1 of the Dutch Corporate Governance Code (‛the Code’) has been fulfilled. Each of the members of the Supervisory Board is considered to be independent.

In the year under review there were no transactions involving a conflict of interest between Gamma Holding and members of the Executive Board as referred to in principle II.3 of the Code. In view of Mr Lindenbergh’s position as chairman of the Supervisory Board of ABN AMRO Bank N.V., one of the three parties in the syndicate of banks, Mr Lindenbergh did not take part in the Supervisory Board’s consultations on changes to the loan agreement with the existing syndicate of banks. Because the final decision on the Supervisory Board’s acceptance of the loan proposals had to be taken outside the meeting, Mr Lindenbergh, at the request of the other members of the Supervisory Board, contributed to the decision-making process. The Supervisory Board believes that in this way it acted in accordance with best-practice provisions III.6.1 to III 6.3 of the Code.

The Board also assured itself that Go Acquisition’s financial structure would be sound. It was agreed with Go Acquisition that there would be no debt pushdown without the consent of the Supervisory Board and that the interest and repayment of principal on the loan of € 64 million raised by Go Acquisition to finance the offer would not be charged against Gamma Holding or its subsidiaries. Gilde and Parcom confirmed that they would preserve Go Acquisition B.V.’s healthy financial structure.

There were also extensive talks on the company’s governance structure after the offer took effect. For the time being, a majority of the members of the Supervisory Board will continue to be independent of Gilde and Parcom.

Finally, Gilde and Parcom confirmed that the offer was not expected to have any consequences for the employees of the Gamma Holding group, their employment conditions or the location of their place of work.

In light of these considerations, the Supervisory Board and the Executive Board decided to support the offer and unanimously recommend it to the shareholders of Gamma Holding. The fairness opinion issued by ABN Amro Bank N.V. for the Supervisory Board of Gamma Holding supported this recommendation from a financial perspective.

On 6 December 2010, the offer for all the outstanding shares in Gamma Holding was announced in a joint press release. Go Acquisition’s offer memorandum was published on 13 January 2011. At the same time, Gamma Holding published a separation position paper with an explanation of why the Supervisory Board and the Executive Board supported the offer. The acceptance period for the offer expired on 11 February 2011. This was followed by a post-acceptance period, which ended on 22 February 2011. Following settlement of the acquisition of the shares tendered under the offer, on the publication date of this report Go Acquisition owned 96.8% of the ordinary shares and 86.4% of the ordinary participating preference shares in Gamma Holding. Following payment and delivery, Go Acquisition will own 96.6% of the shares in Gamma Holding (98.2% excluding the shares owned by Gamma Holding itself). Go Acquisition will initiate compulsory squeeze-out proceedings in order to acquire all the remaining shares.

Composition of the Supervisory BoardMr Zuidam retired by rotation after the General Meeting of Shareholders on 24 April 2010. Nominated by the Supervisory Board, Mr Zuidam was re-appointed as a member of the Supervisory Board for a period of four years, extended to the first General Meeting of Shareholders after that period. The Supervisory Board comprised four members in the year under review, because the Supervisory Board had decided not to


Board of Gamma Holding was adopted by the Supervisory Board. In the coming year the Audit Committee will continue to keep a critical eye on the situation and if necessary make further recommendations.

The Selection, Appointments and Remuneration Committee, chaired by Mr Zuidam, met twice, discussing, among other things, the remuneration policy, as well as the remuneration, performance and composition of the Executive Board and the composition of the Supervisory Board. In addition, during the extraordinary meeting there was discussion of the premature settlement of the existing option and share plans as a result of the announced public offer. The committee also prepared the remuneration report for 2010. The complete report is published on the company’s website.

The Supervisory Board evaluated its own performance at its meeting in February.

Summary of the remuneration policyThe remuneration policy must be such that it enables the recruitment and retention of qualified managers on market terms. The remuneration policy reflects Gamma Holding’s culture and strategy through the choice of remuneration levels and the proportionality of remuneration and through the selection of short-term and long-term performance criteria.

The policy is also aimed at preventing Executive Board members from acting in their own interests at the expense of the interests of the company and its shareholders and is designed to avoid challenging Executive Board members to take risks that are inappropriate in terms of the existing strategy. To this end, the variable component of the remuneration is restrained in relation to the fixed income.

When fixing the total remuneration, proportionality of remuneration within the company is taken into consideration. In order to ensure that the employment conditions are on market terms, Board-level positions are weighted using the same method (Hay job evaluation system) as is used for the entire management, enabling consistent market comparison of salary levels. This uniform method contributes significantly to the establishment and monitoring of proportionate remuneration within the company.

Assuming that the General Meeting of Shareholders approves the nominations of the Supervisory Board for the appointment and reappointment of members of the Board, Gamma Holding will no longer comply with best practice-provision III.2.1. The Board will then have two members who are not independent within the meaning of the Code. Given the size of Go Acquisition’s shareholding in Gamma Holding and the fact that the majority of the members of the Board will still be independent, in the opinion of the Supervisory Board this non-conformity during the period that shares in Gamma Holding are still being traded on Euronext Amsterdam is justified.

One of the participants in the renewed loan facility is ING Bank N.V., part of ING Groep N.V., of which Parcom, which at that time directly owned 26.49% of the shares in Gamma Holding, is also a wholly-owned subsidiary. The Supervisory Board therefore made particular efforts to make certain that this transaction was entered into on terms and conditions that are customary in this sector. Also in view of the broad composition of the syndicate of banks, the Supervisory Board believes that this is the case and states that best practice-provision III.6.4 of the Code has been fulfilled.

CommitteesIn line with the recommendations of the Code, two separate committees were active: an Audit Committee and a combined Selection, Appointments and Remuneration Committee. Both committees reported to the plenary Supervisory Board.

In the year under review the Audit Committee, chaired by Mr Lindenbergh, met prior to the publication of both the annual results and the half-yearly results. The auditor was present at both meetings. Within the Audit Committee, Mr Lindenbergh has broad financial expertise. As well as assessing the functioning of the internal risk control and monitoring systems and the provision of financial information, the Audit Committee devoted particular attention in the year under review to the company’s tax burden. The Audit Committee also evaluated the operation of the ICT systems in the group, an area in which implementation projects were launched at Bekaert Textiles and Ammeraal Beltech during the year under review. Moreover, the Audit Committee advised the plenary Supervisory Board on the recommendation to appoint the auditor. The Audit Committee also met once with the auditor, a meeting at which none of the members of the Executive Board were present.

Gamma Holding does not have an internal audit function. In the year under review, the Audit Committee evaluated whether there is a need for an internal auditor. It came to the conclusion that the current situation can be maintained, provided the external auditor expressly continues to test and report on the functioning of the internal monitoring systems and the accuracy and completeness of the financial accounting processes. The above recommendation to the Executive


equivalent seniority in the Netherlands (which is established by surveying a broad reference market of listed companies with international operations of a similar size, with a similar turnover and whose head offices are in the Netherlands), and also taking into account the proportionality of remuneration within the company. The level of the fixed salary is assessed annually against the market level and adjusted where necessary. Salary adjustments are fixed in December each year and take effect on 1 January of the following year.

Variable remuneration – short termThe variable remuneration for a member of the Executive Board shall amount to a maximum of 60% of the fixed gross annual salary applicable for the year for which the variable salary is being set. Every year the Supervisory Board adopts the performance criteria and targets in advance and compiles a table showing the relationship between the level of performance and level of payment. The variable component of the remuneration is determined for 75% by financial performance criteria and for 25% by personal performance criteria that are set each year.

The degree to which the financial targets have been achieved, is determined on the basis of the company’s financial statements drawn up by the Executive Board and examined by the auditor, as submitted for adoption by the General Meeting of Shareholders. The degree to which the personal performance criteria have been achieved is determined at the discretion of the Supervisory Board. In special circumstances, the Supervisory Board can, at its discretion, set the variable remuneration higher or lower than would follow from the application of the criteria and targets set beforehand.

For the financial criteria, key figures are adopted that are the most relevant for assessing the company’s performance in relation to its strategic objectives. The personal criteria relate to the contribution to the continuity of the company.

The variable remuneration is paid after the General Meeting of Shareholders has adopted the annual financial statements for the relevant year.

Procedure for fixing remunerationThe remuneration policy for the Executive Board of Gamma Holding is adopted by the General Meeting of Shareholders on a proposal from the Supervisory Board. The Supervisory Board fixes the remuneration of the individual Executive Board members on a proposal from the Remuneration Committee, subject to the terms of the remuneration policy.

Before drafting the proposed remuneration policy and fixing the remuneration of the individual Executive Board members, the Supervisory Board analyses the possible outcomes for the variable components of remuneration, their consequences for the remuneration of the Executive Board members and the relative remuneration within the company.

In the remuneration report the Supervisory Board reports on the practical implementation of the remuneration policy in the preceding financial year and its expectations for the remuneration policy in the coming financial year and in subsequent years. The report provides insight into the relationship between the extent to which Gamma Holding’s objectives have been achieved and the remuneration of the members of the Executive Board.

Remuneration packageIn order to safeguard the short and long-term interests of the company as effectively as possible, the remuneration package for the members of the Executive Board at Gamma Holding is made up of four components, i.e. the fixed salary, variable remuneration on short-term results, variable remuneration on long-term results (share plan) and secondary employment conditions, including a pension plan.

The short-term variable component amounts to a maximum of 60% of the fixed gross annual salary (over the year of performance). The long-term variable component consists of conditionally granted shares representing a value of at most 50% of the fixed gross annual salary (over the year of performance). On the date on which the shares vest unconditionally – three years after the grant – they may represent a value of at most 75% of the fixed gross annual salary at that moment.

With this distribution, the Supervisory Board strives for a healthy balance between a short-term and a long-term focus in the variable income, with – given the maximum pay-out on both elements – the long term being predominant. The Supervisory Board considers the total level of the variable components to be appropriate to the role, company profile and risk profile.

Fixed salaryThe fixed salary of members of the Executive Board is related to the salary levels of board members in positions of

25Gamma Holding Annual Report 2010 Our managementAnnual Report 2010

Period of appointment and contracts of employment of members of the Executive BoardMr Van Reeuwijk was appointed on 23 April 2009 for four years (extended until the first General Meeting of Shareholders after this period). This is in accordance with the Code. Mr Van Reeuwijk has a contract of employment with Gamma Holding of unlimited duration; that was the case before his appointment as a member of the Executive Board.

Mr Albers was appointed on 29 July 2009 for a period of three years (extended until the first General Meeting of Shareholders after this period). This is in accordance with the Code. Mr Albers has a contract of employment with Gamma Holding of limited duration, which is equal to the duration of his term of office.

The period of notice to be observed by Gamma Holding and both members of the Executive Board in the event of premature termination of the contract of employment is four months if the contract of employment is terminated by Gamma Holding and two months if the contract of employment is terminated by the respective member of the Executive Board.

The company does not provide personal loans to the members of its Executive Board.

Newly appointed members of the Executive Board shall, in principle, be subject to a similar arrangement, except in special circumstances.

Compensation for dismissalThe contracts of employment with Messrs Albers and Van Reeuwijk include agreed compensation in the event of (premature) dismissal of a maximum of one time the annual salary, comprising the fixed salary. When calculating the above-mentioned compensation, this is also understood to include a situation whereby, due to a change in the control of Gamma Holding, as a result of which the current Executive Board no longer has actual control to determine policy under the supervision of the Supervisory Board, one of the parties terminates the contract of employment.

When issuing new contracts of employment, Gamma Holding shall decide in each individual case, according to the circumstances, whether a severance payment is to be agreed upon and how much this shall amount to. In so doing, the company shall comply with the standards set out in the Code.

OtherThe discussion of the annual report and the financial statements took place in the presence of the auditor.

Share plan (Variable remuneration – long term)As a long-term component of the variable remuneration, every year Gamma Holding awards ordinary shares to the members of the Executive Board subject to conditions relating to their performance. The number of shares to be granted on a conditional basis is equal to 50% of the fixed gross annual salary divided by the current closing price of the share on the date of granting. The shares are granted immediately after the annual General Meeting of Shareholders at which the financial statements are adopted.

A conditional grant vests unconditionally after a period of three years, if and insofar as the performance criteria set beforehand have been met. The performance criteria are established by the Supervisory Board prior to the shares being granted and are set out in the remuneration report.

On the date on which these shares vest unconditionally their value must not exceed 75% of the individual’s fixed gross annual salary at the time. If it does, the number of shares vesting unconditionally will be reduced accordingly. This provision is designed to prevent members of the Executive Board taking risks that are inconsistent with the company’s adopted strategy in order to boost the value of the share.

Unless the Supervisory Board decides otherwise in individual cases, all shares granted on a conditional basis lapse if the contract of employment with the member of the Executive Board is terminated prior to the date on which these shares were to vest unconditionally.

Shares that are acquired must be held for at least five years, including the conditional period, or at least until the end of the contract of employment, if this period is shorter, with the exception of the component that has to be disposed of to pay the taxes due on their acquisition.

‘Claw Back’The company is authorised to claw back all or part of the variable remuneration insofar as it was paid on the basis of incorrect information about the achievement of the targets underlying the variable remuneration or about the conditions on which the variable remuneration depended.

Pension planThe retirement age for members of the Executive Board has been determined in accordance with the current pension plan, with 65 years as the recommended age of retirement. It is an index-linked, contributory average-pay plan. The member’s contribution to the pension plan currently amounts to 8% of the pensionable salary derived from the fixed annual income.


Finally, we wish to express our gratitude to the Executive Board, the management of the business units and all of Gamma Holding’s employees for their efforts and loyalty in 2010. Thanks to them the company is clearly on the road to recovery, it was able to reach agreement on better conditions for its loan facilities, and the public offer for the shares in Gamma Holding was ultimately possible.

Helmond, 24 February 2011

Supervisory BoardFokko van Duyne, chairmanRené van der BruggenHessel LindenberghJan Zuidam

27Gamma Holding Annual Report 2010Gamma Holding Annual Report 2010 Our management 27

Our performance


Foreword

Our performance

Partly in view of the fact that, with the support of these loyal and wealthy shareholders we can focus even more effectively on long-term value creation, and that we will be continuing on the strategic course already embarked upon, centred on the separate business units, we, together with the Supervisory Board, unanimously recommended the offer. Meanwhile, Go Acquisition has acquired 96.8% of the ordinary shares and 86.4% of the ordinary participating preference shares. After payment and delivery, Go Acquisition will hold 96.6% of the shares in Gamma Holding (98.2% excluding the shares held by Gamma Holding itself). Together with Go Acquisition, we will enter into talks with NYSE Euronext Amsterdam with a view to delisting Gamma Holding.

With these recent developments we are entering a new phase, one that is all about continued focus on, and growth of, the core parts of Gamma Holding. The way in which, in difficult circumstances, we have again set course toward recovery, gives us hope and confidence for the future. In that process we have asked for considerable effort and flexibility from our employees. We wish to thank them for all their endeavours over the past year.

Jan AlbersChairman of the Executive Board

Dear shareholderFollowing two difficult years, in 2010 Gamma Holding was able to further turn the corner towards recovery. Contributing factors included the improvement in the economic climate, with particularly favourable developments in Asia and America. We also stabilised our cost level, which had been substantially reduced by robust measures taken in preceding years. All business units reported growth of turnover and profits.

The tentative recovery of the economy and the fact that we are active in many different markets have helped us to weather the crisis. In addition, in 2010 there was no slackening of efforts to further optimise business processes and strengthen market positions, with the aim of creating a more flexible cost structure and generating additional turnover. This was successfully accomplished by each individual business unit, in the conviction that the strength of the business lies not in the group but in its four individual operating units. In that context, the business units are consistently promoted with their own brand names and have been organised in such a way that they will be better able to absorb the effects of an economic downturn in the future.

A second key area of focus in 2010 was on increasing the company’s financial strength. Partly for that reason, we sold Vlisco Group to Actis, a UK-based private equity investor in emerging markets, for a sum of € 116 million in September. With its strong local presence in Africa, Actis is in a better position to successfully pursue Vlisco Group’s growth strategy. The transaction yielded a book profit of € 65 million and the proceeds could immediately be used to repay part of the debt.

The divestment of Vlisco Group strengthened our balance sheet. The solvency ratio more than doubled from 13.8% as of 31 December 2009 to 31.1% at the end of 2010. The sale of the business unit also strengthened our position for further negotiations on renewal of the agreement on financing that ran until mid-July 2011. In November, agreement was reached with three banks on improved facilities until March 2014. In addition, the banks also offered the option of extending the financing, with their consent, by up to two periods of one year, to March 2015 and March 2016 respectively.

In June, Gamma Holding was strengthened by the arrival of Gilde Buy Out Partners as a new major shareholder. The private equity company bought the shares of ASR, Delta Lloyd and Allianz and further expanded its stake in the course of 2010. In December, Gilde and Parcom Capital Management announced that they wanted to combine their shareholdings in Gamma Holding, and were accordingly obliged to make a public offer for all of the outstanding shares. The offer was then made in January 2011 by Go Acquisition, a special-purpose vehicle established by Gilde.

30 Gamma Holding Annual Report 2010 Our performance

Key figures

Informatie over het aandeel

31Gamma Holding Annual Report 2010 Our performance

1 The figures over 2009 have been restated to reflect the changed composition of discontinued operations.2 Group result before income tax, interest, depreciation/amortisation and impairment of property, plant and equipment and

intangible assets.3 Group result before income tax, interest and amortisation/impairment of goodwill and acquired intangible assets4 Including discontinued operations5 Total equity plus balance of interest-bearing liabilities6 Adjusted for the accumulated amortisation/impairment of goodwill and acquired intangible assets7 Inventories and trade receivables less trade payables8 Excluding dividend on ordinary participating preference shares9 Excluding ordinary participating preference share capital10 EBITA excluding restructuring and impairment11 Total equity as a % of the balance sheet total12 Group result before income tax, interest, restructuring and impairment divided by financial income and expense13 Ratio of the balance of interest-bearing liabilities to total equity


Investor & public relationsGamma Holding attaches great importance to active and open communication with investors, analysts and the media in order to explain its strategy, financial results and current developments. Instruments it uses to do this include press releases, press conferences, presentations, publications in national and international (specialist) media and road shows in Europe. The annual report, the website and the Annual General Meeting of Shareholders also contribute in this regard. Gamma Holding’s policy on bilateral contacts with shareholders, investors, analysts and the press has been published on the company’s website.

In the benchmark of financial websites 2009 carried out by the Financieele Dagblad and Jungle Minds, Gamma Holding was one of the top 40 listed companies for the fourth year in succession. In the end, the website came in 29th place, a rise of four places compared with 2009. In 2010, Gamma Holding was more successful in meeting stricter criteria for, among other things, navigation levels, availability of personal contact information, online annual reporting and the rendering of financial data directly in HTML.

In order to make the Gamma Holding share more marketable, three liquidity providers – Rabobank, Royal Bank of Scotland and SNS Securities – are active on behalf of the share on the Euronext Amsterdam stock exchange. Analysts who track the Gamma Holding share and issue periodic reports are Kempen & Co, SNS Securities and Theodoor Gillissen.

ListingThe Gamma Holding share is listed on the Official Market of Euronext Amsterdam. With the introduction of the FTSE-classification on Euronext, the Gamma Holding share has been classified in the Industrials economic group.

As of 24 February 2011 the market capitalisation of the shares was € 214 million, compared with € 78 million as of 25 February 2010.

Performance of the Gamma Holding shareThe price of the share fluctuated between a high of € 28.96 on 23 December 2010 and a low of € 10.50 on 25 February 2010. The closing price on 31 December 2010 was € 28.88. With a share price rise of 175.6%, Gamma Holding was the best-performing stock on the AScX in 2010. On 24 February 2011 the closing price was € 29.00.

Dividend policyIn fixing the dividend on ordinary shares, the aim is a long-term average dividend of approximately 40% of the net group result attributable to equity holders, allowing for the strategy and a healthy balance sheet. The statutory dividend on the ordinary participating preference shares is € 0.21, if and insofar as the distributable profit is sufficient to pay the statutory dividend.

Under the renewed financing agreement up to March 2014, the Company can, from 2012 onward, distribute a dividend if it can be paid from the previous year’s net profit and cash flow.

Dividend payment/adoptionIn view of the company’s financial position, together with the obligations under the renewed financing agreement, no dividend will be paid in respect of the financial year 2010.

Our performance

Information about the share


Financial agenda 2011 (subject to change)

25 February Publication of annual figures

16 March Publication of annual report (pdf)

25 March Publication online annual report

27 April Trading update 1st quarter

28 April Annual General Meeting of Shareholders

29 July Publication of half-yearly figures

28 October Trading update 3rd quarter

On 29 September 2010, Jan Albers visited NYSE Euronext Amsterdam for the sounding of the gong.

Procedure governing inside informationGamma Holding has a procedure for the reporting of transactions in Gamma Holding shares. This procedure applies to its Supervisory Board, Executive Board, Corporate staff, the management of the various operating companies and members of various Works Councils. The Company Secretary has been appointed as the Compliance Officer and has been made responsible for supervising compliance with this procedure and for communications with the Netherlands Authority for the Financial Markets.

Further informationFor further financial information about the company, please contact:

Gamma Holding N.V.Guus Groote SchaarsbergHead of Investor RelationsPanovenweg 12P.O. Box 805700 AB HelmondThe NetherlandsPhone +31 492 56 66 12Fax +31 492 56 67 12Email: [email protected]: www.gammaholding.com

Our performance


Improved financingGamma Holding immediately used the proceeds from the sale of Vlisco Group to pay down its debt in the third quarter of 2010. This improved the company´s financial position and strengthened its position with regard to the renewal of the financing agreement which ran until mid-July 2011. On 24 November 2010, agreement was reached with ABN AMRO, ING and Rabobank on improved loan facilities for the company until March 2014. The banks also offered the option of extending the financing, with their consent, by up to two periods of one year, to March 2015 and March 2016 respectively.

The maximum ratio of net interest-bearing debt to EBITDA agreed with the syndicate of banks has been fixed at 3.0 as of the end of 2011. Gamma Holding’s aim is to bring this ratio permanently below 2.5. The renewed loan facilities mean that the right of conversion in the original loan agreement, which ran until mid-July 2011, lapses. Under that arrangement, the banks could, under certain circumstances, convert some of the original loan facilities into newly issued cumulative preference shares. For more details of the improved financing, see the respective section of the financial statements.

Public offerOn 17 June 2010 Gilde Buy Out Partners acquired 1,456,859 shares in Gamma Holding, representing a stake of approximately 19%, at a price of € 18.65 per share. The private equity company bought the shares from the three major investors ASR, Delta Lloyd and Allianz, with the aim of supporting Gamma Holding as a committed shareholder in the long term. Gilde increased its shareholding to roughly 25% in the ensuing months. The Supervisory Board and Executive Board of Gamma Holding were not involved in these transactions.

On 5 December 2010 Gilde and Parcom Capital Management concluded an agreement to combine their stakes in Gamma Holding. For this purpose Gilde had established Go Acquisition, a special-purpose vehicle, to which both Gilde and Parcom would transfer their shareholdings. Gilde also reached agreement with several shareholders, including Kempen Oranje Participaties, to buy their ordinary shares in Gamma Holding at a price of € 29.00 per ordinary share. With this transaction Gilde assured itself of 48.1% of the ordinary shares. The combined shareholding of Gilde and Parcom came to 74.3% of the ordinary shares. Go Acquisition then announced that it would make a public offer for all of the outstanding shares.

On course to recoveryIn 2010 Gamma Holding turned the corner towards recovery. Particularly in Asia and America, the situation improved compared with the difficult economic climate in 2009. The cost level, which had been substantially reduced by robust measures taken in previous years, also stabilised. All business units reported growth of turnover and profits.

Focus on controlling costs and increasing salesIn the conviction that the strength of the business lies not in the group but in its four individual business units, the former plans to create synergy were abandoned. The business units were promoted individually with their own brand names and organised in such a way that they will be better able to absorb the effects of any economic downturn in the future. In that context, the focus was on further optimising business processes and strengthening market positions, with a view to creating a more flexible cost structure and generating additional turnover. You will find a detailed description of the state of affairs at Ammeraal Beltech, Clear Edge Filtration, Dimension-Polyant and Bekaert Textiles in 2010 in the respective chapters of this report.

Disposal of Vlisco GroupBy contrast with the other business units, with their industrial market orientation, Vlisco Group had increasingly concentrated on the consumer market in recent years. Consequently, the business unit, which designs and manufactures dyed and printed fabrics for the West African market, became more singularly positioned. In the process, Vlisco Group successfully transformed itself from a ‘plant with a brand’ to a ‘brand with a plant’, by launching seasonal collections supported by intensive publicity campaigns and promotional materials via channels including a webshop, flagship stores and shops. In time, however, it needed substantial investment in its production processes and commercial organisation if it was to successfully continue and intensify its growth strategy. In view of its weak financial position, Gamma Holding did not have the resources needed for this investment. To reduce the company’s debt and so increase its financial strength, on 7 September 2010 Gamma Holding sold Vlisco Group to Actis, a UK-based private equity investor in emerging markets. The purchase price of € 116 million yielded a book profit of € 65 million. More details about the state of affairs of this discontinued operation can be found in the respective chapter of this report.

Report of the Executive Board

Our performance


EmployeesGo Acquisition and Gamma Holding anticipate no consequences for the employees in the Gamma Holding group, for their terms of employment or the location of their place of work when the offer takes effect. There is also no intention of changing Gamma Holding’s current location in Helmond.

Future composition of the Executive Board and Supervisory BoardThe Executive Board will remain unchanged. Go Acquisition will have appropriate representation in the Supervisory Board. Mr Van der Bruggen will stand down during the General Meeting of Shareholders on 28 April 2011 and Messrs Molenaar (Gilde) and Westerink (Parcom) will be nominated for appointment as new members of the Supervisory Board. Accordingly, the Supervisory Board will have five members, three of whom will be independent.

Analysis of operating environment

Strengths Points for attention

Strong position in niche markets Strong product focus

Global presence Weak balance sheet ratios

Extensive product know-how Flexibility in cost structure

Good service network

Opportunities Threats

Stronger customer focus Currency movements

Professionalise marketing & sales, research & development, purchasing and fabrication

Fluctuations in energy and raw material prices

Expand in emerging markets Unstable economic climate

Optimise value chain

Offer priceIn January 2011 Go Acquisition made a mandatory and unconditional public offer for all the shares in Gamma Holding that had not already been held by Gilde or Parcom on 6 December 2010. Go Acquisition financed the purchase of these shares in the capital of Gamma Holding with a loan of € 64 million from ING and Rabobank. The offer price was € 29.00 per ordinary share and € 3.50 per ordinary participating preference share. In view of the fact that the support of Gilde and Parcom as loyal and financially strong shareholders would allow Gamma Holding to focus more on creating value in the long term and continue pursuing the existing strategy of focusing on the individual business units, the Supervisory Board and the Executive Board unconditionally supported the offer and recommended it unanimously to the shareholders. A fairness opinion issued by ABN AMRO Bank N.V. for the Supervisory Board also supported that recommendation from a financial perspective.

ListingAt the time of publication of this report, Go Acquisition had acquired 96.8% of the ordinary shares and 86.4% of the ordinary participating preference shares. After payment and delivery, Go Acquisition will own 96.6% of the shares in Gamma Holding (98.2% excluding the shares owned by Gamma Holding itself). Go Acquisition and Gamma Holding will enter into talks with NYSE Euronext Amsterdam with a view to delisting Gamma Holding. Go Acquisition will initiate compulsory squeeze-out proceedings in order to acquire all the remaining ordinary shares and ordinary participating preference shares.

Our performance


The year in figuresTurnover and resultsIn 2010 there was an increase in both turnover and income of Gamma Holding. Group turnover came to € 582 million (2009: € 490 million), which includes a positive effect of € 27 million arising from currency movements.

EBITDA1 of the group excluding restructuring expenses rose by 96% to € 68.6 million (2009: € 35.0 million). Currency movements had a positive effect of € 3.8 million. The increase in EBITDA1 was the result of a modest increase in the operating expenses in relation to the higher turnover.

EBITA2 excluding restructuring expenses and impairment came to € 43.3 million (2009: € 7.5 million).

Restructuring expenses in 2010 totalled € 5.1 million (2009: € 18.3 million).

Testing of calculations of value in use resulted in net impairment charges in 2010 for intangible assets and property, plant and equipment of € -0.7 million (2009: € 22.4 million). In 2010 the impairment charges at Dimension-Polyant totalled € 2.7 million and their reversal at Ammeraal Beltech totalled € 3.4 million (2009: € 15.5 million at Clear Edge Filtration, € 8.7 million at Ammeraal Beltech and a reversal of the charges at Bekaert Textiles of € 1.8 million).

The operating result was € 32.9 million (2009: € -31.5 million).

The balance of financial income and expense fell to € -29.8 million (2009: € -36.0 million), mainly due to lower (re)financing expenses of € -6.0 million. The effective tax rate was 30.3% (2009: 2.6%), whereby a negative effect of unrecognised losses was on balance compensated by a positive effect arising from being able to avail of tax facilities (including so-called ‘tax holidays’) in various countries and the reversal of impairments on which no tax charge was applied. In 2009 the group result was negative and only a small tax benefit could be recognised on it.

The net group result excluding restructuring expenses and impairment came to € 79.2 million (2009: € -20.2 million).

The net group result was € 73.8 million (2009: € -69.0 million).

Earnings per share came to € 9.90 (2009: € -9.43).

1 Group result before income tax, interest, depreciation/amortisation and impairment of property, plant and equipment and intangible assets

2 Group result before income tax, interest and amortisation/impairment of goodwill and acquired intangible assets

Our performance


Cash flow and investmentsThe balance of interest-bearing liabilities was reduced from € 259.5 million to € 173.8 million in the year under review. This includes a negative currency effect of € 10.4 million. The net interest-bearing debt in relation to EBITDA came to 2.59 and therefore remains below the level of 3.50 agreed with the syndicate of banks. The other bank covenants have also been complied with.

Purchases of property, plant and equipment totalled € 27.0 million (2009: € 16.9 million) and were made mainly in Bekaert Textiles, Ammeraal Beltech and Clear Edge Filtration. On the other hand, there were divestments of € 9.8 million (2009: € 2.8 million), mainly involving the sale of real estate. Net purchases came to € 17.2 million (2009: € 14.1 million) and remained below the level of depreciation of € 23.5 million (2009: € 25.7 million).

Net working capital declined from € 180.0 million in 2009 to € 175.0 million in 2010. With the sale of Vlisco Group, net working capital declined by € 26.8 million. Currency movements caused net working capital to rise by € 10.3 million. The organic increase in net working capital came to € 11.5 million. As a percentage of turnover, net working capital declined to 30.1% (2009: 31.5%).

Total equity amounted to € 159.6 million (2009: € 73.9 million). At the end of 2010, total equity as a percentage of the balance sheet total was 31.1% (2009: 13.8%).

EmployeesDue to increased volumes, there was a net increase of 5% in the total number of employees, from 4,349 at the end of 2009 to 4,569 at the end of 2010. All business units contributed to the increase.

Of the total workforce, 94% are employed outside the Netherlands and 47% are employed outside Europe. The number of temporary employees rose by 70, from 80 in 2009 to 150 in 2010.

Our performance


Significant risks inventoried and identified within the business units are described below. The risks identified have been evaluated as effectively and thoroughly as possible, though there can always be risks that have not been (properly) identified, or that are considered to be of lesser importance at this time.

Market risksImpact of macro-economic developmentsGamma Holding is sensitive to macro-economic developments. The global recession, which started in the second half of 2008, put considerable pressure on the Company’s turnover. As a result of this, in combination with a relatively high fixed cost structure, Gamma Holding sustained heavy losses in 2008 and 2009. However, turnover picked up again in the year under review. In this respect, the business units benefited not only from favourable economic developments, particularly in Asia and America, but also managed to restrict the increase in fixed costs by making the cost structure more flexible. This will make them better able to cope with a drop in demand, also in the future.

Risk managementProcess of risk managementGamma Holding attaches great importance to risk control. To increase risk awareness within the group, to gain a better understanding of the existing risks and to control identified risks more effectively, Gamma Holding has a structured system for risk management. This system is based on the generally accepted COSO framework and results in an extensive risk profile per business unit. In addition, rules and authorisations have been laid down in several control documents, including a corporate, accounting, treasury and insurance manual.

The management of the business units is responsible for identifying and controlling business risks and is assisted in that regard by Gamma Holding. The management of each business unit reports to the Executive Board on the risks identified, their likelihood and the measures taken to control these risks. These reports also outline the progress and effectiveness of the control measures taken. The Executive Board periodically consults with the business units regarding the effectiveness of the system for risk management and internal control. The Executive Board discusses the identified risks with the Supervisory Board.

Internally, account is rendered four times a year by means of a ‛Letter of Representation’, in which the management of the business units is asked to confirm that risk management is duly carried out and that the figures provided and the application of the control procedures are reliable. Externally, account is rendered via the auditor, who each year assesses the key aspects of the structure and functioning of the accounting organisation and its internal control measures, insofar as that is relevant for an efficient audit of both the company’s financial statements and the local statutory financial statements, and insofar as that ensues from additional assignments. A report is issued to local management, business unit management, the Executive Board and the Supervisory Board.

Due to the system of risk management that has been introduced and the way in which the process is conducted, an internal structure has been created that supports risk management within the company. However, the Executive Board realises that the risk management system can never offer an absolute guarantee that, on the one hand, the goals set by the company will be achieved, or, on the other hand, that material misstatements, losses, fraud or legal or regulatory transgressions will be avoided.

Our performance


hamper business activity and thus impact Gamma Holding’s profitability.

Gamma Holding has made the strategic choice to shift production to low-wage countries. Therefore, each decision to relocate production is preceded by a risk analysis, which identifies not just political risks, but geographical ones too, and weighs them up against the total risk profile of the group.

Operational risksFire and business damageOn behalf of the operating companies, Gamma Holding has drafted a normative set of requirements for the implementation of measures in the field of fire and business damage. A central Technical Risk Manager assesses, on location, the risk profile of the companies and advises the management and the Executive Board on technical and organisational improvements. The policy formulated and the improvements implemented by the operating companies led in the year under review to an improvement in the risk profile and thus to lower premiums for the group.

Increasingly, production and fabrication locations are being combined. This leads to significant efficiency improvements, but at the same time reduces the number of alternatives to transfer similar types of production in an emergency. Accordingly, in order to minimise process disruption, the entire business process has a high level of technical security. Moreover, Gamma Holding is constantly looking for alternative facilities to which it can turn, both inside and outside the group.

Management risksGamma Holding attaches great importance to well-balanced and effective management teams within all its operating companies. A shortage of personnel with the right competences at the right place could lead to a decline in Gamma Holding’s performance and to the company quickly falling behind the competition. Another risk is the dependence on key employees and the safeguarding of know-how. In this respect, human resource management will be strengthened within virtually all business units, and the Executive Board will become more involved in the composition of the respective management teams.

Increasing environmental regulationThroughout the world Gamma Holding is increasingly being confronted with new environmental legislation and regulations. Furthermore, the use of certain raw materials which are essential for the production process, is being questioned as a result of, among other things, REACH, the European regulations governing chemicals. On the basis of this, a number of suppliers are simplifying their product offerings, which can lead to changes in specifications for raw materials. In this context, the business units – in close consultation

Competitive pressureSome of the markets in which the business units operate are characterised by increasing competition from low-wage countries. Gamma Holding is trying to stay ahead of the competition by focusing strongly on optimising its business processes. It is also devoting more attention to strengthening market positions by expanding marketing & sales and intensifying product and process innovations. In the year under review concrete action was taken in this respect, for instance by expanding sales organisations, placing added emphasis on anchoring development activities and launching new products. Particularly in market segments with low margins, the business units must continuously adapt to changing market conditions in order to retain their attractive market positions and to achieve further growth. In recent years they have done this by relocating production and fabrication activities to low-wage countries. These two elements, the optimisation of business processes and the strengthening of market positions, create opportunities to enhance Gamma Holding’s distinctive identity as a niche player vis-à-vis its competitors. The aim is to deliver distinctive quality and service with production capacity that allows a flexible response to the needs and wishes of customers and the market.

Fewer suppliers and fluctuating prices of raw materialsThe business units of Gamma Holding manufacture high-quality products for specific applications, which must meet the stringent requirements of customers and end-users. Consequently, the raw materials that are used for the products must comply with strict specifications. However, the chemicals industry, which supplies such raw materials, is made up of a limited number of players in a market that is in a constant state of flux of consolidation and disposal. In order to retain access to these raw materials with the right specifications, the business units are continually strengthening their ties with their suppliers. They are also constantly on the look-out for new suppliers in emerging markets who, after a thorough testing period, can supply such raw materials. With this strategy, Gamma Holding is striving to reduce its dependence on its suppliers.

In 2010, Gamma Holding again had to contend with fluctuating energy and raw material prices. In order to minimise the effects of this, the company is constantly looking for ways to use these resources more effectively and more efficiently. To this end it has made investments and set up projects to promote energy saving

Political and economical instabilityNew growth markets not only present opportunities, but also involve risks. One of these is the political and economic instability of the countries in which the business units conduct operations. A sudden change of government or a lengthy political crisis can affect the economy of a country. This can

Our performance


Human resource managementAt Gamma Holding, human resource management is increasingly shaped locally, with the focus on quality and continuity. At group level there is also a uniform remuneration policy for the management of all business units. Moreover, the bonus system for the senior executives is defined centrally, based not only on the financial targets of the operating company, but also on personal performance.

Gamma Holding is active in many countries, which each have their own laws and culture. Within parameters and general principles set by the group, the operating companies therefore pursue their own human resource policy, tailored to the local situation. In order to ensure that the personal development of management team members is monitored and guided in a professional manner, and that employees see and get opportunities to grow, the business units also use their own management development system.

Code of conductGamma Holding has its own code of conduct, which is published on the company’s website. Important elements of this code of conduct include employees’ right to organise and the prohibition of any form of discrimination. Gamma Holding applies these business principles not only in Europe, but in all of the countries in which the group is active. In addition, Gamma Holding has a whistleblower scheme, which is also published on the company’s website. No complaints were lodged under the whistleblower scheme in the year under review

The Select Committee of the EWC: Henry Veneman, Dunja Naulin and Jozef De Turck.

with the respective raw-material suppliers – are conducting additional acceptance tests and analyses in order to rule out the possibility of specification changes that could have an adverse effect on its products. In addition, the business units, as responsible corporate citizens, are constantly seeking ways to reduce the amount of environmentally harmful raw materials used in the production process.

Financial risksThe business units’ activities expose them to a variety of financial risks: foreign exchange, interest, credit and liquidity risk. These risks are described in the financial statements of this Annual Report. Gamma Holding’s financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Gamma Holding’s financial performance. Gamma Holding uses derivative financial instruments to hedge certain risk exposures.

Financial risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Executive Board. Group Treasury identifies, evaluates and hedges financial risks in close cooperation with the subsidiaries. The Executive Board provides written principles for financial risk management, containing policies covering specific areas such as foreign exchange and interest risk, use of derivative and non-derivative financial instruments, and investing excess liquidity. The Executive Board reviews the execution of this policy each quarter.

FinancingIn the past two years the balance sheet position of Gamma Holding was weak. The Company had to contend with declining turnover and a high level of debt. As a result, it had to renew its financing under difficult circumstances. In 2010, however, results improved and the debt was greatly reduced thanks to the proceeds from the sale of Vlisco Group. This improved Gamma Holding’s financial position and meant the Company was better placed to negotiate a renewal of the financing agreement which ran to mid-July 2011. On 24 November 2010 agreement was reached with ABN AMRO, ING and Rabobank on improved financing facilities for the Company up to March 2014. In addition, the banks also offered the option of extending the financing, with their consent, by up to two periods of one year, to March 2015 and March 2016 respectively. For more details of the improved financing, please refer to the respective section of the financial statements.

Our performance


Works councilsIn all countries where it is a legal requirement, works councils are active in the various companies and trade unions are consulted on important issues such as reorganisations, working conditions and health & safety. As well as these and other forms of employee participation, Gamma Holding has a European Works Council, which discusses not only the developments and outlook for the company, but also strategic choices and specific plans.

In 2010 the European Works Council was periodically informed about the course of business in the business units and financial developments within the group. Particular attention was devoted to the integration process at Clear Edge Filtration, with the Swedish facility being closed and the respective production activities being transferred to Germany. In addition, the Central Works Council took part, together with the European Works Council, in discussions on the sale of Vlisco Group to UK-based private equity investor Actis. This divestment did not have a negative effect on employment at Vlisco Group and strengthened the financial position of Gamma Holding.

TrainingTraining is an important tool within the field of human resources. Employees have to be able to apply their specialist knowledge to respond increasingly rapidly to customer requirements. Furthermore, it is essential to be innovative and develop new products. In view of the diversity of products within the group, training at Gamma Holding is often organised locally.

SafetyThe safety of the personnel working at the businesses of Gamma Holding is also important. It is essential not only to prevent major incidents, but also to avoid less serious accidents within the company. Most sites, for example, have a health & safety policy with specific targets and action plans. In order to ensure safety risks are identified and addressed, the employees themselves are involved in the activities in this field.

PensionPension provisions are also addressed as part of the human resource policy. Most of the Gamma Holding business units have a pension plan for their employees. In the Netherlands, the employees’ pension benefits are administered by the pension fund for the fashion, interior fittings, carpet and textile industry (Bpf MITT). This is a (conditionally) index-linked average-pay plan.

European Works Council as of 31-12-2010

Henry Veneman Ammeraal Beltech Netherlands

Brian Andersen Ammeraal Beltech Denmark

Dunja Naulin Ammeraal Beltech Germany

Cédric Druart Ammeraal Beltech France

Pavel Beneš Ammeraal Beltech Czech Republic

Susan Farley Ammeraal Beltech United Kingdom

Witold Wieckowski Clear Edge Filtration

Poland

Karl-Gustav Bergström


Sweden

Beatrix Cox Clear Edge Filtration

Germany

Toni Hüpen Dimension-Polyant Germany

Jeroen Kesteloot Bekaert Textiles Belgium

Jozef De Turck Bekaert Textiles Belgium

Our performance


Corporate social responsibility (CSR)Corporate social responsibility forms an important part of the overall conduct of business. Because of the international spread of the group’s activities, the operating companies of Gamma Holding are subject to divergent environmental legislation. The often specific and complex issues in this field are therefore addressed locally. The starting point for our policy on corporate social responsibility is that the companies of Gamma Holding should make a positive contribution to the societies in which they operate. For specific details regarding corporate social responsibility as practiced at Ammeraal Beltech, Clear Edge Filtration, Dimension-Polyant and Bekaert Textiles, please refer to the respective sections of this report.

EnvironmentThe majority of the operating companies now comply with the rules and regulations laid down by the international ISO 14001 environmental standard and REACH, the European regulations governing chemicals. The environmental effects are taken into account in the decision-making process relating to investments in production companies. The environmental policy is implemented through the operating companies, which put the general principles into practice. Areas of particular attention include recycling, air and water purification, energy efficiency and minimising the use of harmful chemicals and CO2 emissions.

In the year under review, various activities were again undertaken within the business units in the field of environmental protection. These include initiatives to make production cleaner and/or more efficient and products to help customers contribute to a more sustainable living environment. For specific details regarding environmental policy as practiced at Ammeraal Beltech, Clear Edge Filtration, Dimension-Polyant and Bekaert Textiles, please refer to the respective sections of this report.

Our performance


PerformanceMarket developmentsIn 2010, Ammeraal Beltech made up for lost ground after the recession-hit year 2009. The business unit benefited from the recovery in America and Asia and, from the second quarter onwards, it also benefited from a slight improvement in the European market as well.

With the exception of the paper and print industry and the agricultural and horticultural sector, there was once again evidence of growth in the main market segments, such as the textile, leather, food and beverage, automotive and metalworking industries. This had a positive effect on the sale of all types of process and conveyor belts. In the Middle East and Asia in particular, attractive orders were placed for airport baggage reclaim systems. There was also growth in modular belts, which shows that Ammeraal Beltech is now managing to successfully market this relatively new product group via its extensive network. In the food and beverage industry in particular, this type of modular belt made of plastic links is increasingly favoured as an alternative to synthetic belts on grounds of lifetime and hygiene. A better-performing automotive industry and the introduction of new products also contributed to the rise in sales of this product group.

Michael Vogel, CEO

Ammeraal Beltech has production facilities in nine countries, fabrication facilities in over 20 countries and an extensive distribution network in 85 countries. The production locations are situated in the Netherlands, Denmark, Spain, Switzerland, United Kingdom, United States, Canada and China. The business unit supplies Original Equipment Manufacturers (OEMs) as well as end users and distributors. Customers are served at or near to the places where they themselves operate. This approach enables Ammeraal Beltech to deliver quickly.

StrategyAmmeraal Beltech aims to become a total supplier of a complete range of process and conveyor belts and related services for customers worldwide. The business unit is focusing on innovative production processes and products as well as on strengthening its position in emerging markets, such as Eastern Europe, Asia, Oceania and Central and South America. In an effort to increase efficiency, it is continuously improving its production and fabrication processes.

‘Customer centricity is in our DNA.

We aim to offer a service that is

second to none in terms of application

knowledge as well as products and

services.’

Ammeraal Beltech

Ammeraal Beltech supplies process and conveyor belts, e.g. for the food and

beverage industry, the woodworking industry, the construction sector, the paper

and print industry, the tobacco industry and for logistics service providers, such

as airports and mail sorting systems. With these activities, the business unit

is one of the global top three in its field. Through its Green Belting Industries,

Biscor and Mapelli businesses, Ammeraal Beltech also supplies PTFE-coated

glass woven fabrics for industrial applications.

Our performance


The business unit managed to grow in the segments on which it is placing extra focus, including the food and beverage, mail processing and packaging industries. In connection with this, the business unit attended the following trade fairs: IFFA in Frankfurt, Post-Expo, Courier and Parcel Logistics Expo in Copenhagen, and FachPack in Nuremberg. Ammeraal Beltech also ran special campaigns in a number of countries simultaneously to promote its products and services for meat processing and the production of corrugated cardboard.

The business unit also managed to raise its profile with new products in the year under review. Especially for the food and beverage industry, Ammeraal Beltech developed Soliflex PRO, a new range of durable, hygienic belts which, thanks to a unique combination of material, plastic and drive lugs on the underside of the belt, are extremely easy to clean and therefore help to reduce costs. The business unit also introduced a new spiral belt with a small radius for cooling and freezing food, amongst other things. Furthermore, the business unit launched onto the market the AmWrap, an endless woven belt developed especially for coil wrapping hot aluminium sheeting, as well as energy-saving belts for mail sorting applications.

EnvironmentAmmeraal Beltech’s environmental policy focuses on the optimisation of primary and secondary processes in order to minimise consumption of raw materials, energy and water. The importance of a ‘cradle to cradle’ approach is also recognised in the manufacture of products, and the business unit aims to promote maximum re-use of product components at the end of each life cycle.

PTFE-coated glass woven fabrics for industrial applications which, together with Green Belting Industries, Biscor and Mapelli, was transferred to Ammeraal Beltech as a result of the sale of the Coating & Composites business units at the end of 2009, also developed favourably. The product group enjoyed rising demand, particularly in the United States, and started to reap the rewards of the cost savings and efficiency improvements implemented in the year under review.

Optimising business processesIn an effort to achieve a higher level of service provision, Ammeraal Beltech continued to optimise its business processes. The business unit now has a local-level distribution network, which in Europe is increasingly being supplied from the fabrication centre in the Czech Republic. In addition to economies of scale, this is also giving rise to lower labour costs for Ammeraal Beltech. The same process was commenced in North America during the year under review. The business unit has expanded its capacity for the production of synthetic belts in China. As a result, Ammeraal Beltech will be able to supply the Asian market more effectively.

Strengthening market positionsIn order to increase the geographic spread of activities and to promote further growth in emerging markets, Ammeraal Beltech made preparations in China to set up a supporting sales organisation. In addition, the business unit commenced sales and fabrication activities in India, Vietnam and Poland. The company is also undergoing a clear shift from a product-oriented to a more market-segment-driven organisation. This transformation process progressed well during the year under review.

In 2010, Ammeraal Beltech supplied conveyor belts for the baggage reclaim system at Dubai airport.

Our performance


Corporate social responsibilityAmmeraal Beltech wants to provide a challenging, open, healthy and safe working environment for its employees, in which they are able to achieve their ambitions. Employees are supported by means of training and coaching to enable them to perform their tasks to the best of their ability. One example of this is the regular schedule of different courses held during the year under review at various levels. The courses serve to give participants a more in-depth knowledge of market segments, applications, new technologies and products.

During the year under review, Ammeraal Beltech played a big part in reducing oil pollution in the Gulf of Mexico. Chemprene, which is a part of Ammeraal Beltech, supplied the material for the floating oil booms used by the US Navy to contain and clean up the oil spillage. With the introduction of the Ammeraal Beltech energy-saving concept, the business unit also helped to reduce customers’ energy consumption by advising them on the most suitable process and conveyor belts for their specific application. This advice not only took into account the type of belt, but also the efficiency of the drive mechanism and the design of the transport system. The concept was first unveiled in the logistics sector in 2010, amongst other things for airports and mail processing companies. Effective application of the concept can enable customers to make between 25 and 40% savings on energy.


2 Group result before income tax, interest, amortisation/impairment of goodwill and acquired intangible assets 3 Adjusted for the accumulated amortisation/impairment of goodwill and acquired intangible assets4 EBITA excluding restructuring and impairment

Ammeraal Beltech

Our performance


PerformanceMarket developmentsCompared with the weak year of 2009, Clear Edge Filtration recovered well in 2010. The extra focus on Original Equipment Manufacturers (OEMs) and targeted end users, as well as lower operating expenses, contributed to the positive result. The business unit also benefited from the improved economic climate. This led to a rise in demand for filtration products in all regions, especially in Asia, Oceania and America. OEMs and end users in mining, waste water purification and the chemical and food and beverage industries accounted for most of the increase in sales. There was a particularly marked increase in sales of filter cloth and products for filter belts − core products within the Clear Edge range.

Rick Von Drehle, CEO

Clear Edge Filtration is organised to fabricate, sell and service locally, providing Original Equipment Manufacturers (OEMs), distributors and end users in over 80 countries with high-quality products that are produced to exacting standards and delivered into local markets with prompt attentive service. The business unit has weaving plants in the US, Germany and Sweden, and fabrication, sales and service locations throughout each of its three regions: the Americas, Europe/Africa and Asia/Pacific.

StrategyClear Edge Filtration aims to be a leading global supplier of industrial process filtration products to a broad base of customers and for an extensive range of applications. Consequently, its marketing & sales network is to be strengthened in all regions. The business unit also intends to focus its research & development activities on market-specific products and technologies in order to ensure enhanced performance and greater value for its customers. Specific acquisitions are intended to ensure positions in emerging markets and further expand the product portfolio. Continuous efforts will also be made to reduce costs, improve quality, further optimise production and improve technical competence.

‘Our ultimate aim is to supply leading-

edge products that give customers the

quality and service they require and

the assurance that their processes will

run as effectively as possible.’


Clear Edge Filtration develops, manufactures and sells an extensive range

of industrial process filtration products on a global scale. The business unit

supplies innovative products to the mining & minerals, chemical, pulp & paper

and food & beverage industries, coal-fired power stations and waste-water

plants, as well as for industrial and environmental dust collection and hot gas

filtration applications, amongst others. Clear Edge Filtration is a market leader in

its niche markets.

Our performance


In this connection, Clear Edge Filtration targeted global OEMs. Within this important market the aim is to boost sales, product development and technical relations through closer cooperation in the field of high-grade filtration products and filtration processes. India is one of the places where this was achieved in 2010, and the business unit experienced considerable growth, mainly in the area of filter presses and belts for mining and agriculture/fertilisers. Further investments were made in the Asian unit in the year under review in order to continue to meet this growing demand.

Clear Edge Filtration also improved its reach to direct end users. The business unit expanded its sales efforts in several important markets in Latin America, Russia, and the Middle East in an effort to realise further growth

In order to strengthen market positions, ongoing process and product development remains essential for Clear Edge Filtration. With this in mind, the business unit launched new and improved products for specific market segments in 2010. Examples include a new high-performance filter cloth for use in the processing of calcium carbonate, a high-temperature belt for use in the manufacture of insulation board, and a fine filter fabric for use in water purification.

Optimising business processesDespite signs of a hesitant economic recovery, Clear Edge Filtration continued throughout the year under review to focus on operational synergies and further improvement of its business processes, bringing the required personnel and operating costs more into line with the volumes. In order to become stronger, more cost-competitive and more market-focused, the business unit decided to close the Swedish facility and to transfer the manufacturing activities to the central weaving plant in Germany. In that context, the activities of the R&D centre in the UK were also transferred to the German site.

The German unit will now function as a centre of excellence within the group in the field of weaving and media development. The closure of the Swedish facility will lead to the loss of approximately 80 jobs. This consolidation process is expected to be completed by early 2011 in Europe. The same applies to the introduction of the new European IT platform, for which Clear Edge Filtration made preparations during the year under review.

Strengthening market positionsIn addition to streamlining internal processes, in 2010 high priority was also given to fully leveraging the global brand through new commercial opportunities and by winning new and larger customers. The focus here was on improving both sales and service. This led, both on the American continent and in Europe, to the adoption of a list of major accounts and the implementation of new sales strategies and market support.

In 2010, Clear Edge Filtration supplied innovative, high-grade filtration products for the mining and minerals industry, including aluminium, gold, coal, nickel, lead and iron ore.

Our performance


During the year under review Clear Edge Filtration also succeeded in making its own production cleaner and more economical by carrying out regular environmental audits and by investing in maintenance as well as in the recycling of materials and supplies.

Corporate social responsibilityClear Edge Filtration wishes to provide for its employees a challenging, safe and rewarding work environment in which they can develop further and where mutual respect is paramount in all relationships. Training and safety are key aspects here. In 2010 the business started a special apprentice programme in an effort to attract well-trained personnel for the new weaving and R&D centre in Germany.

The business unit was awarded a regional prize for this initiative as ‘Best apprenticeship company 2010’. Clear Edge Filtration also won awards for safety in the United States. Industrial Fabrics Corporation and National Wire Fabric both reached significant milestones by working for over four years without any lost time accidents.

EnvironmentFor years, Clear Edge filtration products have been helping to ensure cleaner air and a more sustainable environment. The rising demand for high-quality products also means a higher level of purity is required. Virtually all industrial processes involve the separation of solids from liquids or of particles from air and gasses. Furthermore, global warming and the growing shortage of raw materials are forcing manufacturers to further reduce industrial waste.

At Clear Edge Filtration the focus is on controlling emissions within industrial waste flows. In cooperation with leading engineers, the business unit has developed an extensive range of filtration products, varying from simple dust-control bags through to innovative compact, high-temperature and dioxin abatement systems. The products satisfy the most stringent environmental standards and help customers to achieve improved productivity, reduce energy consumption and minimise operating and maintenance costs.




Our performance


PerformanceMarket developmentsFor Dimension-Polyant, 2010 was a year that developed cautiously. The business unit was still suffering from the aftermath of the 2009 recession, but as the year progressed it managed to benefit from a slight recovery in the market and enjoyed the positive effects of efficiency improvements already implemented and increased sales efforts. Demand for top-quality sailcloth rose and the OEM market as well as the cruising and windsurfing segments picked up. Sales of D4 Multi Panel membranes, which are designed for racing, also increased. The replacement market remained stable.

Optimising business processesSailcloth production and fabrication operations are spread across Germany, the United States and Australia. In order to operate more efficiently and at lower cost, Dimension-Polyant implemented further efficiency improvements, particularly at the largest production facility in Germany. In addition, a new online pricing system was implemented across the group in order to professionalise the marketing of D4 membranes.

Strengthening market positionsThere is increasing evidence of consolidation in the sailing world. In order to retain sufficient access to this market, Dimension-Polyant intensified its sales efforts, above all in Europe and the United States. With this in mind, the business unit took part in various boat shows, including Kieler Woche, Boot and Hanseboot in Germany, Mets in the Netherlands, Salon Nautique in France and the US Sailboat Show in the United States.

Uwe Stein, CEO

Through its experienced international sales organisation, Dimension-Polyant is constantly in contact with both sailmakers and top sailors throughout the world. Thanks to this dialogue, the business unit is able to respond quickly to new trends in the sailing world. Dimension-Polyant has its own global research & development platform and production centres in Germany, Australia, the United States and Sri Lanka. Its sales offices are spread over Germany, France, the United Kingdom, the United States and Australia.

Strategy Dimension-Polyant wants to continue to raise its profile as a market leader in the world of sailing. To this end the business unit plans to strengthen its leading position in woven and laminated sailcloth and to gain a larger market share in the top segment of membranes and spinnakers. Here the focus is not only on product and process innovation, but also on providing a valuable service to the world of sailing. Through its more prominent brand policy the business unit also aims to promote Dimension-Polyant’s image as a supplier of high quality among sailmakers and consumers. Finally, Dimension-Polyant also plans to make further investments in advanced production technology in order to improve efficiency and quality.

‘Providing sailmakers and sailors with

the best sailcloth, that’s our promise.’

Dimension-Polyant

Dimension-Polyant is the global market leader in sailcloth technology. The

business unit develops and produces high-tech sailcloth for all classes of boat.

The sails are favoured by many yachtsmen and women, and for years they have

formed the basis for the success of numerous champions – including many

Olympic medal-winners.

Our performance


World Championship 18’ Catamaran.

EnvironmentDimension-Polyant is the only sailcloth manufacturer with its own sailcloth weaving mill and finishing plant where the fabrics pass through a 14-stage programme. The business unit weaves, fabricates and laminates, using the latest technology, and each stage of production is controlled and monitored by computer. This ensures that customers are guaranteed a high-quality sailcloth with a long life.

In 2010 Dimension-Polyant developed a pioneering fabric made of 80% recycled fabric. The environmentally friendly sailcloth was developed for the Plastiki, a catamaran vessel made entirely from over 12,500 recycled plastic bottles. The expedition highlights the man-made horror of the Pacific Garbage Patch and aims to raise awareness of how we can use our waste to our advantage.

Furthermore, Dimension-Polyant invested in a new incinerator and completed its registration of chemicals as part of REACH. In the future, the business unit wants to make greater use of renewable energy and to consistently lower its energy consumption by making further investments in this field.

Dimension-Polyant also launched new products onto the market. The business unit demonstrated its leadership in this field, for example by producing environmentally friendly sailcloth. Furthermore, Dimension-Polyant launched substantially lighter and lower-stretch sailcloth for the windsurfing segment and a racing spinnaker line for high-performance applications. These product innovations were well received by the market.

In order to give independent sailmakers in particular easier access to low-wage countries and to improve our ability to meet demand from them for low-cost sails more effectively, in Sri Lanka Dimension-Polyant focused intensively on implementing production standards and training employees in order to meet the necessary quality and service level. As a result, the facility was granted the ISO 9001 certificate. The introduction of an online ordering system for customers is expected to simplify and further professionalise the selling process in the near future.

The business unit also continued its efforts to raise its brand profile. During the year under review an increasing number of sailmakers decided to put the Dimension-Polyant label on their sails. The brand name represents the highest quality, and the sailmakers can then use this as an extra sales argument. As a result, sailors themselves are increasingly asking explicitly for Dimension-Polyant material. Extra promotion at boat shows and in sailing magazines also contributed to this. The best advertisement, however, was the many races that were again won with Dimension-Polyant sailcloth in 2010, including the Trophée des Champions, European Championships, USA-IRC National Championship, World Youth Championships and the

For many years, Dimension-Polyant has been manufacturing sailcloth that has helped many sailors to win important races, such as the 505 World Championships in San Francisco in the United States.

Our performance


To help encourage children and young people to become involved in sailing, in 2010 Dimension-Polyant developed a special pirate logo. The easily recognisable logo was printed on t-shirts and made available at various events aimed specifically at young sailors.

Corporate Social ResponsibilityThe quality of production depends to a very high degree on the safety, health and quality of the employees, particularly in the case of a specialist product like sailcloth. For this reason Dimension-Polyant’s policy is to provide a safe and healthy working environment for its employees. Moreover, in order to be able to recruit skilled employees, the business unit runs a special apprenticeship program, through which apprentices receive practical training from specially qualified mentors and attend a technical college. During their three-year apprenticeship the trainees are gradually involved more and more in the production process and given increasing levels of responsibility. Upon successful completion of the theoretical and practical examinations, the apprentices are then ready to start work at Dimension-Polyant as a machine operator, service engineer, electrical engineer or sales employee. In 2010 four trainees followed the training programme in Germany.



Dimension-Polyant

Our performance


Bekaert Textiles operates globally. The business unit is based in Belgium, but its manufacturing and sales activities are organised on a regional basis. This enables it to use its extensive knowledge of local markets to operate throughout the world more flexibly, faster and without trade barriers. In addition to the head office and development centre in Belgium, there are also production units in seven other countries – the Czech Republic, Turkey, the United States, Mexico, Argentina, Australia and China.

StrategyAs the global market leader in mattress ticking, Bekaert Textiles wants to supply durable solutions for the bedding market. The business unit plans to strengthen its position and expand its market share in Europe, America, Asia and Oceania, not only through organic growth but also by means of acquisitions which will enable it to gain positions in emerging markets. With an active, customer-oriented focus and dedicated product portfolio, the business unit delivers – via its own brands and exclusive licenses – technically advanced, innovative products and (related) services which enable customers to stand out more clearly in the marketplace. Bekaert Textiles also plans to outsource more of its logistics and distribution activities and will continue to focus on reducing costs and improving efficiency.

‘We are committed to developing

stylish and intelligent textile products

that inspire, provide comfort and

protect − throughout the day and

night.’

PerformanceMarket developmentBekaert Textiles performed well in 2010 and benefited from improved economic conditions in North and South America and Australia in particular. The business unit even managed to increase its market share, primarily in Europe and America, despite stronger competition from a rising number of small suppliers in the field of knitted mattress ticking. The business unit also clearly benefited from the stringent cost-cutting measures introduced in recent years. A number of successful new products also contributed to the positive developments.

Optimising business processesThe closure of the last remaining production site in Belgium and the transfer of the remaining machinery to Turkey, Mexico, Argentina and Australia marked the end of the extensive restructuring process commenced by Bekaert Textiles in 2009, which has reduced production costs considerably in Western Europe. During the year under review the former company site in Waregem was sold to a municipal authority and a local project developer. The transaction had only a limited effect on results. The business unit also focused on extensive automation of all of its administrative processes, and has made the necessary preparations to introduce a new, global IT platform.

Paul De Meulemeester, CEO

Bekaert Textiles

Bekaert Textiles is the global market leader in woven and knitted fabrics.

Thanks to its extensive experience, the business unit has in-depth knowledge

of mattress ticking and stands out in the market with its exclusive designs and

product innovations.

Our performance


Following an extensive test phase, the New Business Development Team’s first product innovations were launched towards the end of 2010 at the Medica trade fair. Meditiss® was presented specifically for the healthcare sector.

This is a comfortable and extremely functional range of mattress ticking which offers the choice of a combination of different layers, such as a soft top layer, a highly resilient pressure, temperature and moisture-regulating layer in the middle and a waterproof bottom layer to prevent moisture from reaching the mattress core. The business unit set up a dedicated website: www.meditiss.com to help promote this product range. The possibility for hospitals and care homes to use reusable underpads was also demonstrated. By supplying these innovative sleep solutions Bekaert Textiles is responding to the increasing greying of the population and the corresponding rise in the demand for healthcare.

EnvironmentBekaert Textiles is investigating ways to minimise damage to the environment and to produce in a more environmentally friendly way. The business unit emphasised the importance of reducing, collecting, recycling and reusing waste. Mattresses will also have to be recycled in full in due course. In order to make this possible, Bekaert Textiles is developing more and more mattress ticking components that will be easier to separate and reuse. One example of this is the Second Life™ already mentioned. The use of recycled polyester in the production of the yarn reduces dramatically the consumption of energy and water, as well as emissions of CO2. Other examples include the environmentally-friendly innovation Purotex® , and Cambric®, a mattress ticking which offers

Strengthening of market positionsAs a result of the rising demand from South America, Bekaert took over a new factory in Argentina, thus tripling production capacity. The new site makes it possible to supply customers more rapidly and with higher-quality products. With a view to rising sales in North America, the business unit also increased production capacity in the United States.

In the Czech Republic Bekaert Textiles commenced production of high-quality mattress covers to fulfil the rising need among mattress manufacturers to purchase a total concept.

A substantial part of Bekaert Textiles’ success is based on product innovations. Purotex®, a mattress ticking launched last year which installs a natural, probiotic micro flora that neutralizes bed mite allergens, is now selling very well. In 2010 the business unit launched Second Life™, a new collection of environmentally friendly mattress ticking, in which the yarn used has been made from recycled plastic bottles. The innovations were presented at various trade fairs, including Interzum in China, ISPA Expo in the United States and EVTEKS in Turkey.

Bekaert Textiles set up a New Business Development Team to enable it to develop − on the basis of previous innovations in mattress ticking − new products in specialist areas, and to embed these more effectively within the organisation. In conjunction with the Bekaert Sleep Academy the team focuses on healthcare and care for the elderly, ready-made covers and functional, removable mattress covers (Smart Sleeves®) for sale to consumers through specialist bedding stores.

With its durable and innovative textile products, Bekaert Textiles sets the standard in the bedding market. In 2010 the company once again launched successful, innovative mattress ticking.

Our performance


Corporate Social ResponsibilityAll of Bekaert Textiles’ products are intended to improve the level of comfort in bed for customers. The main focus here lies on delivering added value, flexibility and service, and visionary product development and innovation. Essential key elements are respect and regard for both society and colleagues, as this promotes commitment and work satisfaction. The safety of employees is also a top priority and, in order to ensure this, Bekaert Textiles provides both general and job-specific training for its employees.

excellent ventilation and moisture wicking and is made of the fully reusable material CoprolonTM.

During the year under review Bekaert Textiles itself was also able to produce in a cleaner and more efficient manner. In Turkey, the United States and Australia the business unit implemented hotmelt, an environmentally friendly technology whereby the mattress ticking is coated with a special finishing layer which protects against bacteria, odour, dust mite and mould, amongst other things. The application of this technology ensures that no waste water is produced and that energy consumption is reduced. Furthermore, audits were carried out during the year under review to reduce energy consumption still further in the future.



Bekaert Textiles

Our performance



2 Group result before income tax, interest, amortisation/impairment of goodwill and acquired intangible assets 3 Adjusted for the accumulated amortisation/impairment of goodwill and acquired intangible assets

Corporate Holdings

Corporate Holdings

Corporate Holdings is made up of companies which do not form part of the

business units and do not carry out any operational activities. Corporate

Holdings charges a management fee for the support provided to the business

units.

Our performance


Actis manages $ 4.8 billion for over 100 institutional investors and invests in various emerging markets, including in Africa, where it has been investing for over 60 years. Due to its strong local African presence, Actis is excellently placed to successfully pursue Vlisco Group’s growth strategy.

With the divestment of Vlisco Group, Gamma Holding achieved a book profit of € 65 million after costs and so improved its debt position. As a result of the strengthening of the balance sheet ratios, the Company’s solvency ratio more than doubled from 13.8% at 31 December 2009 to 31.1% at year-end 2010.

The result of discontinued operations includes the book profit on the sale of € 64.6 million (2009: € -2.1 million book loss).

On 7 September 2010, Gamma Holding sold Vlisco to Actis, a UK-based private equity investor in emerging markets, for an amount of € 116 million. The real estate in Helmond, Netherlands, will remain the property of Gamma Holding and will be let out to Vlisco Group. A 10-year lease, with the option to extend by three periods of five years, has been agreed. The annually indexed rent is € 2 million.

In the first eight months of 2010 the turnover of the activities sold amounted to € 120.1 million, while EBITDA excluding restructuring expenses came to € 19.4 million. Vlisco had 2,103 employees. The sale did not have any impact on jobs. The Works Councils concerned issued a positive opinion regarding the takeover.

1 Vlisco Group up to and including 7 September 20102 Coating & Composites including Verseidag Ballistic Protection excluding PTFE up to and including October 2009; Vlisco Group

full year 20093 Group result before income tax, interest, depreciation/amortisation and impairment of property, plant and equipment and

intangible assets4 Group result before income tax, interest, and amortisation/impairment of goodwill and acquired intangible assets5 Adjusted for the accumulated amortisation/impairment of goodwill and acquired intangible assets6 EBITA excluding restructuring and impairment



Our performance


Corporate governanceThe Executive Board states that the announcements and statements which must be issued pursuant to the Decree of 23 December 2004 (most recently altered on 10 December 2009) are included in the Corporate governance chapter.

Internal risk management and control systemsThe Executive Board is of the opinion that the Company complies with the best-practice provisions II.1.3, II.1.4 and II.1.5 of the Dutch Corporate Governance Code and that the internal risk management and control systems provide a reasonable assurance that the financial reporting does not contain any errors of material importance and that the risk management and control systems relating to financial reporting risks worked properly in the reporting period.

Article 5.25c of the Financial Supervision ActThe Executive Board states, in accordance with Article 5.25c of the Financial Supervision Act (Wet op het financieel toezicht), that to the best of its knowledge:• the financial statements give a true and fair view of

Gamma Holding’s assets and liabilities and its financial position on 31 December 2010 and the 2010 results for Gamma Holding and the consolidated companies; and

• the annual report gives a true and fair view of the situation on 31 December 2010 and of the performance of Gamma Holding and its subsidiaries during 2010, details of which are included in its financial statements, and that the fundamental risks facing Gamma Holding are described in the Annual Report 2010.

Statements by the Executive Board

Our performance


Barring unforeseen circumstances, Gamma Holding expects the positive trend to continue in 2011, though ongoing uncertainty surrounding the economic climate and rising energy and raw material prices should be taken into account.


Executive BoardJan Albers, CEOLeendert van Reeuwijk, CFO

Outlook

Jan Albers and Leendert van Reeuwijk

Our performance

Financial statements

60 Gamma Holding Annual Report 2010 Financial statements

Consolidated balance sheet

61Gamma Holding Annual Report 2010 Financial statements


Consolidated income statement


1 The figures for 2009 have been restated to reflect the changed composition of discontinued operations.


Consolidated statement of comprehensive income



Consolidated statement of changes in equity



Consolidated statement of cash flows

1 The figures for 2009 have been restated to reflect the changed composition of discontinued operations.



Notes to the consolidated financial statements

The Company is listed on Euronext Amsterdam.

These consolidated financial statements have been drawn up and undersigned by the Executive Board, were undersigned for issue by the Supervisory Board on 24 February 2011 and will be submitted for adoption by the Annual General Meeting of Shareholders on 28 April 2011.

Gamma Holding is investigating the impact of these amendments.IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their InteractionGamma Holding is investigating the impact of this interpretation.

ConsolidationThe consolidated financial statements incorporate the accounts of Gamma Holding N.V. and its subsidiaries on the basis of consistent accounting policies. Subsidiaries are fully consolidated, unless recognised as discontinued operations. Intercompany transactions, unrealised gains on intercompany transactions and intercompany balances are eliminated. Unrealised losses on intercompany transactions are also eliminated, unless the transaction provides evidence of an impairment of an asset transferred. Minority interests in the equity and net result of subsidiaries are presented separately.

Effective from the date on which all criteria of IFRS 5, Non-current assets held for sale and discontinued operations, were met, discontinued operations are deconsolidated in the balance sheet and recognised under discontinued assets and liabilities from discontinued operations, if applicable with an impairment to the expected net realisable value. They are also deconsolidated in the income statement and statement of cash flows, also for the reported periods prior to the date on which all criteria of IFRS 5 were met.

Gamma Holding N.V. (the Company) and its subsidiaries (together Gamma Holding) develop, manufacture and sell innovative, high-quality products throughout the world, varying from process and conveyor belts and filtration products to sailcloth and mattress ticking. Gamma Holding has some 4,500 employees in 34 countries.

Gamma Holding N.V. is a public limited-liability company, incorporated and domiciled in Helmond, Netherlands.

Basis of preparationThe consolidated financial statements of Gamma Holding N.V. have been drawn up in accordance with the accounting policies set out below. These accounting policies are in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9, Book 2 of the Netherlands Civil Code. The consolidated financial statements have been prepared under the historical cost convention, with the exception of financial assets and interest-bearing liabilities, which are carried at amortised cost or fair value.

In preparing the company financial statements, the facility under section 402, Book 2 of the Netherlands Civil Code of drafting a condensed income statement is used.

Interpretations and amendments to published standards effective in 2010IFRS 2 (amendment), Group cash-settled share-based transactions – Share-based Payment, IFRS 3 (amendment), Business Combinations, IAS 27 (amendment), Consolidated Financial Statements, IAS 32 (amendment), Financial Instruments: Presentation – Classification of rights issues, and IAS 39 (amendment), Reclassification of financial instrumentsThese amendments are not relevant to Gamma Holding.IFRIC 15, Agreements for the Construction of Real Estate and IFRIC 19, Extinguishing Financial Liabilities with Equity InstrumentsThese interpretations are not relevant to Gamma Holding.

Standards, interpretations and amendments to published standards not yet in effectIFRS 9, Financial Instruments: classification and measurementGamma Holding is investigating the impact of this standard.IFRS 7 (amendment), Financial Instruments: Disclosures, IAS 12 (amendment), Income Taxes, IAS 24 (amendment), Related Party Disclosures and IAS 39 (amendment), Financial Instruments: Recognition and Measurement

Accounting policies

1 General

2 Summary of significant accounting policies


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Unrealised gains on transactions between Gamma Holding and its associates are eliminated proportionate to Gamma Holding’s interest in the associates. The same applies to unrealised losses unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by Gamma Holding.

Joint venturesGamma Holding’s interest in jointly controlled entities is initially recognised at cost and thereafter at net asset value, as in the case of associates. The accounts of joint ventures are not included in the consolidation.

Segment informationThe breakdown into business segments corresponds to the way the internal reporting to the Executive Board is organised. The Executive Board is responsible for allocating resources to the business segments and for assessing the performance and results of the business segments.

Foreign currency translationFunctional and presentation currencyItems included in the financial statements of Gamma Holding’s subsidiaries, associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (i.e. the functional currency). The consolidated financial statements are presented in euros, which is Gamma Holding’s functional and presentation currency.

SubsidiariesSubsidiaries are those companies in which Gamma Holding has control of the financial and operating policies and in which it generally holds more than half of the shares and the related voting rights. As soon as a company joins Gamma Holding, its accounts are included in the consolidated financial statements effective from the date on which Gamma Holding obtained control.

The purchase method of accounting is used to account for the acquisition of subsidiaries by Gamma Holding. From the moment of acquisition the purchased company is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of transfer, up to and including 2009 plus costs directly attributable to the acquisition. Identifiable assets acquired, liabilities incurred and contingent liabilities assumed (identifiable net assets) in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the acquisition price over the fair value of Gamma Holding’s share in the identifiable net assets acquired is recorded as goodwill. If the acquisition price is lower than the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

A company is deconsolidated from the date that control ceases or it is recognised as a discontinued operation. The difference between the selling price, the net asset value including the related goodwill and the currency translation reserve for the company as of the date of sale is included in the income statement.

AssociatesAssociates are all entities in which Gamma Holding exercises significant influence but no control, which generally implies a shareholding of between 20% and 50% and the attached voting rights. Investments in associates are initially recognised at cost and thereafter at net asset value. Gamma Holding’s investments in associates also include goodwill (net of any accumulated impairment loss) identified on acquisition.

Gamma Holding’s share in its associates’ profits or losses after acquisition is recognised in the income statement, and its share in post-acquisition movements in reserves is recognised in the reserves. The accumulated post-acquisition movements are recognised in the carrying amount of the investment. When Gamma Holding’s share in the losses of an associate equals or exceeds its interest in the associate, including any other unsecured receivables, Gamma Holding does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.


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residual values being allocated to their estimated useful lives. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Gamma Holding and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the period in which they are incurred.

Major maintenance is depreciated over the remaining useful life of the related asset or to the date of the next major maintenance activity, whichever is sooner.

An asset’s carrying amount is written off immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

LeasingLeases in which a significant portion of the risks and rewards incidental to ownership is retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Leases where Gamma Holding incurs virtually all the risks and rewards incidental to ownership are classified as finance leases. As a lessee, Gamma Holding capitalises finance leases at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. The corresponding lease obligations, net of finance charges, are recognised as repayments on long-term loans. Non-current assets acquired under a finance lease are depreciated over the assets’ useful life or, if there is no reasonable certainty that the lessee will obtain ownership at the end of the lease term, the lower of the assets’ useful life or the lease term.

Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction date. Foreign exchange gains and losses resulting from the translation of monetary assets and liabilities denominated in foreign currencies into the functional currency at the balance sheet date, are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Exchange rate differences on long-term group loans with equity characteristics are recorded in equity (currency translation reserves).

Currency translation foreign subsidiaries, associates and joint venturesThe results and financial positions of all Gamma Holding’s subsidiaries, associates and joint ventures (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency, are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet. Income and expense for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expense are translated at the dates of the transactions). Potentially resulting and all resulting exchange differences are recognised in equity (currency translation reserve).

On consolidation, exchange differences arising from the translation of the net investment in foreign subsidiaries, associates and joint ventures and of borrowings and other currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is sold or closed, such exchange differences are recognised in the income statement as part of the financial income and expense.

Goodwill and fair value adjustments arising on the acquisition of foreign associates and joint ventures are treated as assets and liabilities of the foreign associates and joint ventures and translated at the closing rate on the balance sheet date.

Property, plant and equipmentAll property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items, including, with effect from 2009, the borrowing costs attributable to non-current investment projects. Land is not depreciated. Depreciation of other assets starts in the month the asset is put into use. Depreciation is calculated using the straight-line method, with the cost of the other assets less their


€ x 1,000,000


Impairment of non-financial assetsGoodwill is not subject to amortisation but is tested at least annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Impairment is recognised as an expense in the income statement. If, at a later stage, the recoverable amount again rises above the carrying amount, the impairment is, insofar as possible, reversed, with the exception of goodwill. Impairment of goodwill is not reversed.

Financial assetsThe classification of financial assets depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market and are originated by Gamma Holding providing goods or money directly to a debtor. Loans and receivables are carried at amortised cost applying the effective interest method.

Intangible assetsGoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of Gamma Holding’s share in the net identifiable assets of the acquired subsidiary, associate or joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates and joint ventures is included in associates and joint ventures. Goodwill is tested at least annually for impairment and carried at cost less cumulative impairment losses. Goodwill is allocated to cash-generating units for the purposes of impairment testing. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

SoftwareAcquired software licences are capitalised on the basis of the costs incurred to acquire the specific software and bring it to use. Costs that are directly associated with the production of identifiable and unique software products which are controlled by Gamma Holding and will probably generate economic benefits for more than one year are recognised as intangible assets, including, with effect from 2009, the borrowing costs attributable to non-current investment projects. Capitalised software is amortised over its estimated useful life using the straight-line method. Costs associated with maintaining software programs are recognised in the income statement.

Research and developmentResearch costs are charged directly to the operating result. Development costs relate to the costs of a new product, design or technological development. These costs are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and if the costs can be determined reliably. Given the uncertain prospects for success of individual pattern developments at Gamma Holding, these development costs are generally charged directly to the operating result.

Acquired intangible assetsTrademarks, customer relationships and licences have a definite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks, customer relationships and licences over their estimated useful lives. Amortisation commences in the month in which the acquired company is included in the consolidation.


€ x 1,000,000


asset or by means of depreciation. When a hedging instrument expires or is sold, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the income statement when the forecast transaction is ultimately recognised in the income statement.

When a forecast transaction is no longer expected to occur, or when a hedging instrument is no longer effective, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

Derivative instruments to which hedge accounting is not appliedChanges in the fair value of derivative instruments to which hedge accounting is not applied are recognised directly in the income statement.

Fair value estimationThe fair value of financial instruments is determined by using valuation techniques. Gamma Holding makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. It is assumed that the fair value of interest-bearing liabilities will approximate to the book value as almost all loans have floating-rate interest, which is fixed at year-end at the prevailing market rate.

The nominal value of trade receivables and payables less estimated credit adjustments is assumed to approximate to their fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to Gamma Holding for similar financial instruments.

Available-for-sale financial assetsFinancial assets are classified as available-for-sale if they are either designated to this category or not classified in any of the other categories. Available-for-sale assets are carried at fair value, with unrealised gains and losses being recognised in equity as long as this equity reserve remains positive. If the financial asset is derecognised, an accumulated gain previously recognised in equity is, if applicable, taken to the income statement.

Derivatives and hedge accountingDerivatives are recorded at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Gamma Holding designates derivatives as hedges of certain or highly probable forecast transactions (cash flow hedges).

For the substantial derivatives, Gamma Holding documents at the inception of the transaction the relationship between hedging instruments and hedged items. Gamma Holding also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are effective in offsetting changes in fair values or cash flows of hedged items.

The fair value of various derivative instruments used for hedging purposes is disclosed in note 9. For an explanation of the hedging reserve in equity please refer to note 16. The full fair value of a derivative is designated as non-current if the remaining term of the derivative is more than one year; otherwise the derivative is designated as current.

Cash flow hedgingChanges in the fair value of effective hedging instruments that are designated and qualify as cash flow hedges are recognised in equity. Changes in the fair value of ineffective hedging instruments are recognised immediately in the income statement.

Amounts accumulated in equity are recognised in the income statement in the periods when the hedged item will affect profit or loss (for instance when the forecast purchase or sale that is hedged takes place). The gain or loss on the effective portion of interest-rate swaps that qualify as cash flow hedges is included in financial income and expense, while the gain or loss on the effective portion of currency instruments that qualify as cash flow hedges is included in cost of raw materials and consumables. However, the gain or loss on currency instruments that qualify as cash flow hedges for non-financial assets (e.g. property, plant and equipment) is capitalised as part of the investment amount of the asset and is ultimately credited/charged to the result upon sale of the


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71Annual Report 2010Gamma Holding

deducted from the issued capital and reserves. If the shares are sold or re-issued, the proceeds, with settlement of directly attributable costs and taxes, are credited to the issued capital and reserves attributable to equity holders.

Interest-bearing liabilitiesInterest-bearing liabilities are recognised initially at fair value, net of transaction costs incurred. They are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Interest-bearing liabilities are classified as non-current liabilities if Gamma Holding has an unconditional right to defer settlement of the liability for at least one year after the balance sheet date.

ProvisionsProvisions for restructuring costs, environmental pollution and legally enforceable obligations are recognised when Gamma Holding has a legal, judicial or constructive obligation as a result of past events, when it is more likely than not that an outflow of resources will be required to settle the obligation, and when the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks inherent to the obligation.

Employee benefitsPension plansGamma Holding operates various pension plans. The plans are funded through payments to insurance companies or trustee-administered funds, which are based on periodic actuarial calculations. Gamma Holding offers both defined-benefit and defined-contribution plans. A defined-benefit plan is a pension plan that defines the pension benefits that an employee will receive on retirement. This is usually dependent on one or more factors such as age, years of service and compensation.

InventoriesInventories are valued at the lower of cost or net realisable value. Cost is determined using the first-in, first-out method. The cost of raw materials and consumables includes the purchase price, freight costs and import duties. The cost of work in progress and finished products comprises the cost of raw materials and consumables, direct personnel costs, other costs that are directly attributable to production and related production overheads, and exclude borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less applicable costs to sell.

ReceivablesReceivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less a provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that Gamma Holding may not be able to collect all amounts due. Significant financial difficulties on the part of the trade receivable, the likelihood that the trade receivable will go bankrupt, or a financial reorganisation and non-payment or arrears in payment, are indications that the trade receivable cannot be collected. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Changes in the provision are included in the income statement as selling expense.

Cash and cash equivalentsCash and cash equivalents include cash at bank and in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within current interest-bearing liabilities on the balance sheet.

Non-current assets held for sale and discontinued operationsNon-current assets held for sale and discontinued operations are presented separately, if their carrying amount is recovered principally through a selling transaction rather than continued use. They are stated at the lower of their carrying amount or fair value less costs to sell.

Share capitalOrdinary shares are part of the issued capital and reserves attributable to equity holders. Preference shares that do not lead to repayment commitments or dividends are designated as part of the issued capital and reserves attributable to equity holders.

If treasury shares are purchased, the sum paid, including directly attributable costs and with settlement of taxes, is


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being provided. Benefits falling due more than a year after the balance sheet date are discounted to present value.

Profit-sharing and bonus plansGamma Holding recognises a liability and an expense for bonuses and profit-sharing arising from contractual obligations and past practices that have created a constructive obligation as of the balance sheet date.

Share-based paymentGamma Holding has a stock option plan and a share plan. The cost of the options granted is calculated by relating the fair value of the options on the date of grant to the minimum vesting period of the options. The net costs of the stock option plan are credited to equity. The fair value of the options is estimated by using an option pricing model.

The costs of granted shares are determined by the fair value at the moment of grant. In the years before the granting of shares, the costs of the share plan are determined on the basis of performance against agreed targets. The net costs of the share plan are credited to equity.

Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Income taxIncome tax is calculated by applying the tax rates prevailing in the respective countries to the result before taxation for the year, taking into account non-temporary differences between income for financial reporting purposes and for tax purposes.

The liability recognised in the balance sheet in respect of defined-benefit pension plans is the present value of the defined-benefit obligation at the balance sheet date, applying the projected unit credit method, less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past-service costs. For yearly valuation purposes, actuarial assumptions are made about demographic variables (such as employee turnover and mortality) and financial variables (such as future increases in salaries). The discount rate is determined by reference to market rates.

Cumulative actuarial gains and losses in excess of the greater of 10% of the value of plan assets or 10% of the defined-benefit obligation are recognised per plan in the income statement over the respective employees’ expected average remaining working lives.

Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (i.e. the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

For the purposes of defined-contribution plans, Gamma Holding pays contributions to administered pension insurance plans. The contributions are recognised as employee benefit expenses when they are due.

Prepaid contributions are recognised as assets to the extent that a cash refund or a reduction in future payments is expected.

Other long-term employee benefitsGamma Holding operates various long-term employee benefits. The expected costs of these benefits are accrued over a period similar to that applicable to defined-benefit pension plans. Actuarial gains and losses are charged or credited to income per plan in the financial year or over the expected average remaining service lives of the respective employees in the case of benefits after employment.

Termination benefitsTermination benefits may be payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.

Gamma Holding recognises termination benefits when it is demonstrably committed to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, communication with the respective employee has already taken place, or termination benefits as a result of an offer made to encourage voluntary redundancy are


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Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the share options a calculation is performed to determine the number of shares that could have been acquired at fair value (determined on the basis of the average annual market share price of the company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued, had the share options been exercised.

Deferred income tax is provided on fiscal compensation of losses and/or temporary differences arising from the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax is determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when the related deferred income-tax asset is realised or the deferred income-tax liability is settled. Deferred income tax is not provided on temporary differences where the timing of their reversal is determined by Gamma Holding and is not expected to be in the near future.

Deferred income-tax assets are recognised to the extent that it is probable that future taxable profit will be available, against which fiscal compensation of losses and/or temporary differences can be offset. Deferred income-tax assets and liabilities with the same terms and conditions and relating to the same fiscal entities are netted.

Net turnoverNet turnover comprises the fair value of the consideration for the sale of goods, net of value added tax, rebates and discounts and after eliminating intercompany sales. Net turnover is recognised if Gamma Holding has transferred to the customer the significant risks and rewards incidental to product ownership, and the collectability of the related receivable is reasonably assured.

InterestInterest income and expense are recognised on a time proportion basis applying the effective interest method.

Statement of cash flowsThe statement of cash flows has been prepared based on the indirect method. Cash flows in foreign currencies have been translated at average exchange rates. Exchange rate differences on cash and cash equivalents are shown separately in the statement of cash flows. The net cash flow relates to the change in cash and cash equivalents. Acquisition of subsidiaries comprises the purchase price paid less cash and cash equivalent balances at these companies at the time of acquisition. Proceeds from disposal of subsidiaries comprise sums received less cash and cash equivalent balances at these companies at the time of disposal.

Earnings per shareEarnings per share are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the company and held as treasury shares.


€ x 1,000,000


All other things being equal, a 10 cent rise in the euro/dollar exchange rate would have had a positive impact on equity of 0.2 (2009: 0.1 negative) as a result of currency translations included in the hedging reserve on the basis of the applied cash flow hedges.

Gamma Holding has many foreign subsidiaries, whose net assets are exposed to foreign exchange risk. Currency exposure arising from the net assets of Gamma Holding’s foreign operations is managed by financing the entities primarily through borrowings denominated in the relevant foreign currencies, within legal and fiscal parameters.

Interest riskBecause Gamma Holding does not have any substantial interest-bearing assets, its operating result and operational cash flow are independent of changes in market interest rates. Gamma Holding’s interest risk arises from borrowings. Borrowings issued at floating rates expose Gamma Holding to cash-flow interest-rate risk. The policy is to maintain 30 - 70% of the balance of interest-bearing liabilities in fixed-rate instruments and thus to reduce the cash flow risk. As of 31 December 2010, 43% (2009: 60%) of the balance of interest-bearing liabilities were at fixed rates. Gamma Holding manages its interest-rate risk by using floating-to-fixed interest-rate swaps. The ratio of floating-rate to fixed-rate liabilities is reviewed each quarter.

If, on the balance sheet date, the market interest rate on borrowings denominated in euros had been 100 base points higher, then, all other things being equal, the net group result would have been 0.4 (2009: 0.6) lower. As a result of an increase in the value of interest derivatives classified as cash-flow hedges, the other reserves would have been 0.6 (2009: 1.9) higher. If, on the balance sheet date, the market interest rate on borrowings denominated in dollars had been 100 base points higher, then, all other things being equal, the net group result would have been 0.4 (2009: 0.1) lower. As a result of an increase in the value of interest derivatives classified as cash-flow hedges, the other reserves would have been 0.9 (2009: 1.0) higher.

Financial riskGamma Holding’s activities expose it to a variety of financial risks: foreign exchange, interest, credit and liquidity risk. Gamma Holding’s financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Gamma Holding’s financial performance. Gamma Holding uses derivative financial instruments to hedge certain risk exposures.

Financial risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Executive Board. Group Treasury identifies, evaluates and hedges financial risks in close cooperation with the subsidiaries. The Executive Board provides written principles for financial risk management, containing policies covering specific areas such as foreign exchange and interest risk, use of derivative and non-derivative financial instruments, and investing excess liquidity. The Executive Board reviews the execution of this policy each quarter.

Foreign exchange risksGamma Holding operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities in foreign currencies and net investments in foreign operations.

Each quarter, the subsidiaries report on their anticipated operational cash flows in foreign currencies for the coming twelve months. On the basis of this, it is decided, in consultation with local management, to what extent these anticipated cash flows should be hedged. It is Gamma Holding’s policy to hedge at least two-thirds of the currency risk of these anticipated transactions in each major currency for the subsequent twelve months, as far as practically possible. It is possible to depart from this policy if the market position gives reason to do so. Group Treasury is responsible for hedging the positions in foreign currencies by using external currency derivatives. Wherever possible, significant currency derivatives are designated as cash flow hedges. External currency derivatives can be used at group level as hedges of foreign exchange risk on specific assets, liabilities or future transactions.

The US dollar is by far the most important foreign currency for Gamma Holding. All other things being equal, a 10 cent rise in the euro/dollar exchange rate as of 31 December 2010 would have had a negative impact on the net group result of 0.2 (2003: 0.3 negative) as a result of currency translation of financial instruments.


3 Financial risk management

Financial risk management, estimates and segment information

€ x 1,000,000


Capital risk managementGamma Holding strives for a capital structure that on the one hand guarantees the continuity of the company and on the other optimises the cost of capital, taking into account the interests of shareholders and other stakeholders.

The capital structure is monitored on the basis of the gearing, which is calculated by dividing the balance of interest-bearing liabilities by total equity. The balance of interest-bearing liabilities is calculated as interest-bearing liabilities less cash and cash equivalents.

In order to achieve the desired capital structure, Gamma Holding can adjust the level of the dividend, issue new shares or repurchase existing shares.

As a substantial gain and book profit was recorded on the sale of Vlisco Group in 2010, the capital structure improved significantly in 2010. The gearing fell sharply from 3.5 at 31 December 2009 to 1.1 at 31 December 2010.

Fair value estimation of financial instrumentsThe fair value of financial instruments that are not traded on active markets (e.g. private derivative financial instruments) is determined by using valuation techniques. These techniques make maximum use of observable market data and are founded as little as possible on company-specific estimates. Financial instruments valued at fair value consist entirely of private derivative financial instruments for which no active-market prices are available and therefore these derivative financial instruments are classified as level 2 within the fair value hierarchy referred to in IFRS 7. The fair value of interest-rate swaps is calculated as the present value of estimated future cash flows based on observable yield curves. The fair value of forward foreign exchange transactions is determined using forward foreign exchange market rates and yield curves prevailing on the balance sheet date.

Gamma Holding makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed hereafter.

Credit riskGamma Holding has no significant concentrations of credit risk. The credit risk of trade receivables has been spread by spreading the activities. Sales to retail customers are paid for in cash or via credit cards. Credit insurance is also used in some situations. The age of trade receivables is reviewed periodically at a local level. Derivative counterparties and cash transactions are limited to financial institutions with strong credit ratings (Standard & Poor’s single A or higher). Gamma Holding has policies that limit the amount of credit exposure to any financial institution. In principle, bank balances and deposits are held by financial institutions with, for the country in question, strong credit ratings. The maximum credit risk amounts to the book value of cash and cash equivalents, derivative instruments and receivables with the exception of prepaid expenses and accrued income and including corresponding items on non-current assets held for sale and discontinued operations, total 141.8 (2009: 136.3).

Liquidity riskGamma Holding’s finance policy stipulates that at least 50% of its credit requirements should be hedged with committed credit lines with a term of more than one year.

On 24 November 2010, Gamma Holding reached agreement with ABN AMRO, ING and Rabobank on changes to the company’s existing loan facilities until March 2014. The financing may, with the consent of the banks, be extended for up to two periods of one year, to March 2015 and March 2016 respectively. Please refer to note 17.

Gamma Holding will continue to focus on optimising its business processes and strengthening the business units’ market positions.

Multi-year cash flow projections are used to determine whether the available credit facilities are sufficient to cover the expected credit requirement. On the basis of this analysis, Gamma Holding believes that, for the coming year, the credit requirement is adequately covered.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.


4 Critical accounting estimates and judgements

€ x 1,000,000


Other provisionsGamma Holding recognises other provisions, in particular for claims and environmental issues. Provisions for claims include estimates and assumed suppositions with regard to the likelihood and scale of claims. Environmental provisions include estimates and assumed suppositions with regard to the likelihood and scale of pollution and the cost of environmental remediation.

Income taxSignificant estimates are required in determining the worldwide provision for income taxes. For some transactions and risks it is uncertain, in the ordinary course of business, what the tax liability will be. Gamma Holding recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Were the actual final outcome (on the judgement areas) to differ – adversely – by 10% from management’s estimates, Gamma Holding would need to increase the income-tax liability by 0.1 and the deferred tax liability by 0.7.

Discontinued operations includes Vlisco Group and Coating & Composites including Verseidag Ballistic Protection excluding PTFE Solutions. Vlisco Group was sold on 7 September 2010. The composition of Discontinued operations, including the comparative figures for 2009, has been adjusted accordingly. Coating & Composites including Verseidag Ballistic Protection excluding PTFE Solutions was sold on 31 October 2009. PTFE Solutions was added to Ammeraal Beltech. Discontinued operations also includes the book profits recorded on the sale.

The Executive Board assesses the performance and results of the business segments primarily on the basis of net turnover, EBITDA excluding restructuring, EBITA excluding restructuring and impairment as a % of turnover, capital employed and return on average capital employed excluding restructuring as a %.

Impairment of goodwill and property, plant and equipmentGamma Holding tests at least annually whether goodwill has suffered any impairment, in accordance with the accounting policies. The realisable value of the cash-generating units is based on calculation of value in use. These calculations require the use of estimates. In addition, Gamma Holding tests property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If the estimated operating result per cash-generating unit had been 10% lower than management’s estimates at 31 December 2010, that would not have led to an additional reduction of the book value of goodwill and would have led to a reduction of the book value of other non-current assets by 3.3.

If the estimated after-tax discount rate applied to calculate the present value of future cash flows had been one percentage point higher than management’s estimates, that would not have led to an additional reduction of the book value of goodwill and would have led to a reduction of the book value of other non-current assets by 3.8.

Provision for restructuringGamma Holding recognises a provision for restructuring. Restructuring provisions include estimates and assumed suppositions with regard to severance payments.

Primary reporting format – business segmentsGamma Holding is organised on a worldwide basis in four business units, as reflected in the segment information. Corporate Holdings is made up of companies which do not form part of the business units and do not carry out any operational activities. Corporate Holdings charges a management fee for the support provided to the business units.

Ammeraal Beltech is one of the world market leaders in process and conveyor belts. Clear Edge Filtration is a leading player and distributor of advanced industrial filtration products. Dimension-Polyant is the global market leader in sailcloth. Bekaert Textiles is the global market leader in mattress ticking.


5 Segment information

€ x 1,000,000


1 Group result before income tax, interest, depreciation/amortisation and impairment of property, plant and equipment and intangible assets. For conversion, please refer to note 32.

€ x 1,000,000


1 Group result before income tax, interest and amortisation/impairment of goodwill and acquired intangible assets. For conversion,please refer to note 32.

€ x 1,000,000


€ x 1,000,000


1 Adjusted for accumulated amortisation/impairment of goodwill and acquired intangible assets2 EBITA excluding restructuring and impairment. For conversion, please refer to note 32.

€ x 1,000,000


Secondary reporting format – geographical segmentsGamma Holding operates in three main geographical areas.


€ x 1,000,000


Notes to the consolidated balance sheet

6 Property, plant and equipment

€ x 1,000,000


Land is not depreciated. The rate of depreciation on buildings is 3%, on most plant and machinery 10% and on other equipment 25% or 33%.

Purchase of property, plant and equipment includes nil (2009: nil) capitalised interest expense.

Property, plant and equipment with a book value of 68.7 (2009: 155.5) are encumbered by a mortgage or pledge.

The book value of property, plant and equipment includes 2.2 (2009: nil) assets obtained by financial lease.

The book value of property, plant and equipment includes 1.8 real estate for which a ten-year lease has been concluded, with the option to extend by three periods of five years. The annually indexed rent is 2.0.


€ x 1,000,000


Intangible assets with a book value of nil (2009: 1.5) are encumbered by a pledge.

Purchase of intangible assets includes nil (2009: nil) capitalised interest expense.

The rate of amortisation on software is 33%. The rate of amortisation on licenses and other intangibles is on average 10%.


7 Intangible assets

€ x 1,000,000


Cash flows beyond this period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the cash-generating unit operates. The discount rates applied are after income tax and reflect specific risks relating to the relevant segments.

The balance of impairment and reversal of impairment is included in the income statement under impairment.

Goodwill is allocated to Gamma Holding’s cash-generating units as follows:

The recoverable amount of a cash-generating unit is determined based on value-in-use calculations.

These calculations use cash-flow projections by management covering a five-year period.

As a result of changed market conditions, the test against the value-in-use calculations led to a net reversal of impairment of intangible assets and property, plant and equipment of 0.7 (2009: a net impairment of intangible assets and property, plant and equipment of 22.4). Of this, a net 2.4 (2009: 18.5) related to intangible assets, and -3.1 (2009: 3.9) to property, plant and equipment.

This relates to associates.

The associates are not listed on the stock exchange. Please refer to note 47.


8 Associates and joint ventures

€ x 1,000,000


The full fair value of a derivative instrument is designated as non-current if the remaining term of the derivative instrument is more than one year; otherwise the derivative instrument is designated as current. If hedge accounting is not applied, derivative financial instruments are presented as current. All derivative instruments are concluded with financial parties with at least a Standard & Poor’s long-term single A rating.

The term of the cash flows of the derivative interest instruments designated as liabilities is shown in the following table. Insofar as these cash flows depend on future floating interest rates, the level of which was unknown on the balance sheet date, these cash flows have been estimated on the basis of the forward rates prevailing on the balance sheet date.

Financial instruments are used to limit interest and foreign exchange risks. Financial instruments are not used for speculative or trading purposes.

Currency instruments are used to limit the foreign exchange risks ensuing from operational activities in foreign currencies. Currency swap contracts have been entered into in order to match the financing currency of Gamma Holding N.V. to the desired currency. The hedged certain and highly likely cash flows in foreign currencies are expected to occur on different dates during the course of the coming year. The intention is for results from the reversal of the hedging reserve for currency instruments to be included in the result at the same time as the hedged operational transaction. This is normally within the coming year unless the cash flow hedge relates to non-financial non-current assets. In that case the result will be recognised in the income statement during the term of amortisation of the non-current asset.

The interest policy is intended to stabilise and limit financing expense. Interest instruments are used to fix the interest rate of floating-interest financing. The fixed interest varies between 3.68% and 4.09% excluding credit surcharge (2009: between 2.92% and 4.32%).

The floating interest is based on 1 month Euribor, 3 months Euribor and 3 months USD Libor. A cash flow hedge has been defined for all interest-rate swaps, which means that any changes in fair value will be recognised in the hedging reserve until the expiry dates of the underlying interest-rate swaps (2010 - 2014).


9 Derivative financial instruments

€ x 1,000,000


The term of the cash flows of the derivative currency instruments is shown in the table below.

Derivative financial instruments with a book value of nil (2009: 1.1) are encumbered by a pledge.


10 Deferred income-tax assets and liabilities

€ x 1,000,000


In particular, the fact that a portion of these losses was not recognised, in combination with the fact that a portion of the losses recognised at the end of 2009 could no longer be utilised, means that, on balance, the recognised portion of the losses decreased. Wherever possible, assets from loss carry-forwards are netted with deferred income-tax liabilities.

Deferred income-tax assets of 10.9 (2009: 7.2) include 4.3 (2009: 4.1) of recognised loss carry-forwards and 6.6 (2009: 3.1) of temporary differences. Of these recognised loss carry-forwards, 0.4 (2009: 0.6) is expected to be recovered within one year. Of the recognised loss carry-forwards, 3.5 (2009: 1.3) relates to companies which suffered a loss in the current or previous financial year, but which are expected to make sufficient profit again in the coming years. Deferred income-tax liabilities are mostly non-current.

The provision for fiscal risks relates to a number of risks, whereby the likelihood of a cash outflow is virtually the same as the likelihood that there will be no cash outflow.

Offsettable losses which are expected to be realised have been recognised at the statutory rates with an average of 32.0% (2009: 28.8%), resulting in a total of 45.6 (2009: 55.8). Total available offsettable losses amount to 96.7 (2009: 105.5).

In particular, the losses in Belgium, the United Kingdom and the Netherlands mean that the total amount of available losses rose in 2010. On the other hand, the amount of available offsettable losses substantially decreased as a result of, among other things, the application of specific German regulations due to the shareholder concentration at the level of Gamma Holding N.V. in the Netherlands and the sale of Vlisco Group.


€ x 1,000,000


An amount of nil (2009: nil) is due after five years. Other non-current receivables with a book value of nil (2009: 0.6) are encumbered by a pledge.

Inventories with a book value of nil (2008: 91.2) are encumbered by a pledge. The book value of the inventories includes 14.5 (2009: 12.6) impaired inventories.


11 Other non-current receivables

12 Inventories

€ x 1,000,000


Cash and cash equivalents with a book value of nil (2009: 7.2) are encumbered by a pledge.

Trade and other receivables with a book value of nil (2009: 68.8) are encumbered by a pledge. The impairment of the trade receivables is included in note 21.

Cash and cash equivalents totalling 12.4 (2009: 5.4) are held by financial institutions with a Standard & Poor’s rating of single A or higher.

The effective interest rate on cash and cash equivalents was 1.5% (2009: 1.5%). The deposits have an average maturity of less than ten days.


13 Trade and other receivables

14 Cash and cash equivalents

€ x 1,000,000


Vlisco Group was sold on 7 September 2010 for 115.8, which resulted in a book profit of 64.6 before taxation (65.4 after taxation) in 2010. Coating & Composites including Verseidag Ballistic Protection excluding PTFE Solutions was sold on 31 October 2009 for 35.5, resulting in 2009 in a book loss of -2.1 before taxation (-1.8 after taxation). These book results are included in the net group result from discontinued operations. The comparative figures for 2009 in the income statement and statement of cash flows have been adjusted to reflect the changed composition of discontinued operations.

Non-current assets held for sale mainly relate to property not employed in the production process. Of these, nil (2009: 8.6) are encumbered by a mortgage or pledge. Discontinued operations relate to Vlisco Group and Coating & Composites including Verseidag Ballistic Protection excluding PTFE Solutions. In the financial statements for 2009, Coating & Composites including Verseidag Ballistic Protection excluding PTFE Solutions were recognised as discontinued operations. With effect from 31 August 2010 the composition of discontinued operations has been changed.


15 Non-current assets held for sale and discontinued operations

€ x 1,000,000


All issued shares are fully paid. Ordinary participating preference shares have regular voting and dividend rights in accordance with the profit appropriation under Other information.

On page 64 the consolidated statement of changes in equity is disclosed. The total authorised share capital on 31 December 2010 consisted of 9,347,015 (2009: 9,347,015) ordinary shares, 133,985 (2009: 133,985) ordinary participating preference shares, 9,481,000 (2009: 9,481,000) four per cent (4%) cumulative preference shares and 19,038,000 (2009: 19,038,000) twelve per cent (12%) cumulative preference shares with a par value of € 2.50 per share. The ordiary shares in treasury are intended for issue to holders of option rights to shares in the company and to the Executive Board and the top management as part of the share plan.


16 Issued capital and reserves attributable to equity holders

€ x 1,000,000


The changes in the value of the hedging reserve consist of 0.3 (2009: 0.2) changes in the value of currency instruments and nil (2009: -0.4) changes in the value of interest instruments. The entire share premium reserve is designated as paid-up capital for tax purposes.

Of the hedging reserve 0.5 (2009: 1.7) lapses within one year.

The hedging reserve includes the surrender of two interest instruments for 1.9, the value of which will be written off over the remainder of the term up to June 2013.


€ x 1,000,000


Gamma Holding has in place a statutory currency translation reserve for currency translation differences on foreign activities processed in equity.

The legal reserve consists of the reserve for non-distributable profits from subsidiaries, joint ventures and associates and unrealised gains/losses on derivative financial instruments.

The financing consists of three separate facilities in which the banks are participating equally:• a facility of $ 125 million• a facility of 70• a multi-currency facility of 100.

The facility of 70 will be reduced by 6.25 per half year, starting on 31 December 2011.

The interest surcharge1 is the same for the three facilities and depends on the ratio of net interest-bearing debt to EBITDA:

This includes nil (2009: nil) ineffectiveness from the hedging reserve. The reversal from the hedging reserve increased the book value of property, plant and equipment by an amount of 0.1 (2009: nil).

Gamma Holding has in place a hedging reserve for changes in the value of financial instruments that qualify as cash flow hedges less deferred taxation.

On 24 November 2010 Gamma Holding reached agreement with ABN AMRO, ING and Rabobank on changes to the company’s existing loan facilities until March 2014. With the consent of the banks, the financing can be extended by up to two periods of one year, to March 2015 and March 2016 respectively. The conversion right from the original financing agreement that ran to July 2011 has lapsed. Under that construction, the banks could, under certain conditions, convert a portion of the original loan facilities into newly issued cumulative preference shares.

The main covenants will be reviewed quarterly:


17 Interest-bearing liabilities

1 Interest surcharge calculated on 1 or 3-month Euribor or Libor2 In the last year before the end of the new financing arrangements the Debt/EBITDA ratio will be reduced step by step to 2.5

€ x 1,000,000


The main subsidiaries are a party to the financing agreement and in that respect have provided security.

It has been agreed with one of the parties exiting the new financing arrangement that two interest instruments will be surrendered at their current value of 2.0. The payment for this was included in the hedging reserve in 2010 and will be written off over the remainder of the term up to June 2013.

Securities have been greatly reduced. Only the pledging of shares of the main subsidiaries, intercompany receivables of these subsidiaries and a number of mortgage registrations have been maintained. Existing securities in respect of such things as inventories, machinery, trade receivables and bank accounts have been released.

The upfront fee is 1% of the principal sum. The costs connected with the new financing (4.0) will be written off over the expected term of the agreement. Of this amount, 0.1 was charged to 2010. The additional fee agreed in 2009 of 8% EBITDA for 2009, as a consequence of the failure to achieve a strengthening of the risk-bearing capital (5.2), was paid when the new loan agreement was entered into. This fee and the other costs of the loan taken out in 2009 are recognised in the result for 2009 (15.0) and the first 9 months of 2010 (8.9).

.


1 Of which 4.4 under syndicated loans ancillaries

€ x 1,000,000


These interest cash flows comprise floating-rate interest, the level of which was still unknown on the balance sheet date. The floating contractual interest cash flows are therefore estimated on the basis of the forward rates on the balance sheet dates.


1 Of which 4.4 under syndicated loans ancillaries can be extended to 2014

€ x 1,000,000


For loans up to an amount of 263.3 (2009: 274.4), a negative pledge clause, a cross-default clause and a pari-passu clause apply. For an amount of 263.3 (2009: 274.4), mortgages and pledges of shares of subsidiaries and intercompany receivables have been provided and the following conditions apply, or the realisation was as follows:

These conditions have been recorded per quarter for the entire term of the loan facilities. If the conditions are exceeded, the financing is payable on demand.

In addition, a positive pledge clause would apply if Gamma Holding failed to fulfil its obligations under the loan agreement.

For 39% (2009: 37%) of the interest-bearing liabilities, the interest has been fixed by means of interest swaps for more than one year at an average of 4.0% (2009: 4.0%). For nil (2009: nil) of the interest-bearing liabilities, the interest has been fixed for more than five years.


€ x 1,000,000


a. Defined-benefit pension plans


18 Employee benefit obligations

€ x 1,000,000


Of the actuarial gains and losses, 1.9 (2009: -0.2) relates to differences between the actual and assumed suppositions and -1.3 (2009: -2.0) is due to a change of base.

The actual return on plan assets was 8.3% (2009: 7.3%).

The expected employer’s premiums payable for the financial year 2011 amount to 2.2. The expected payments for the financial year 2011 amount to 5.3.


€ x 1,000,000


Despite sending a written request for information, Gamma Holding has not received any information on the valuation of Gamma Holding’s share in the Bpf MITT, because Bpf MITT says it does not have an objective cipher for allocating the Gamma Holding share. As a result of this, the pension plan that applies in the Netherlands is recognised as a defined-contribution plan.

The pension liability for defined-benefit plans recognised in the balance sheet mainly relates to self-administered plans in Germany and a plan which is covered by a company pension fund in Switzerland.

In the Netherlands there is a defined-benefit pension plan, which is administered by the pension fund for the fashion, interior fittings, carpet and textile industry (Bpf MITT). The Bpf MITT pension plan is a (conditionally) index-linked average-pay plan.


€ x 1,000,000


The amount recognised in the income statement relates to service cost.

b. Other long-term employee benefits

This relates to long-service allowances. The discount rate applied is 4.7% (2009: 5.1%).

The other provisions mainly relate to claims and the environment.


19 Other provisions

€ x 1,000,000


Current liabilities have a term of less than one year.


20 Trade and other payables

€ x 1,000,000


21 Supplementary disclosure on financial instruments

1 Legend IAS 39 categories:a Financial assets at fair value, with changes in value reflected in the income statementb Borrowings and receivablesc Financial liabilities at fair value, with changes in value reflected in the income statementd Financial obligations valued at amortised cost

2 Including income tax

€ x 1,000,000


1 Legend IAS 39 categories:a Financial assets at fair value, with changes in value reflected in the income statementb Borrowings and receivablesc Financial liabilities at fair value, with changes in value reflected in the income statementd Financial obligations valued at amortised cost

2 Including income tax

€ x 1,000,000


€ x 1,000,000


The trade receivables are hedged for an amount of 8.8 (2009: 9.6) by credit insurance. The other receivables are hedged for an amount of 2.1 (2009 1.9) by a lien against shares.

Gamma Holding leases various machinery and equipment, offices and warehouses under operating lease agreements that cannot be cancelled prematurely. The leases have varying terms, escalation clauses and renewal rights.

Gamma Holding also leases various plant and machinery under cancellable operating lease agreements. Gamma Holding is generally required to give a six-month notice for the termination of these agreements.

There are no indications that the payment obligation for the non-impaired receivables will not be honoured.

As of the balance sheet date Gamma Holding has issued guarantees and suretyships amounting to 2.7 (2009: 2.6). Financial institutions have also issued guarantees and sureties on behalf of Gamma Holding amounting to 16.7 (200: 9.2). The contingent liability for recourse arising from bills discounted by Gamma Holding amounts to 0.1 (2009: 0.1). Commitments to purchase property, plant and equipment amounted to 2.1 (2009: 4.6).

Insofar as considered necessary, adequate provision has been made on the balance sheet for claims and disputes.


22 Commitments and contingencies

€ x 1,000,000


The net turnover was 582.0 (2009: 490.2).


Notes to the consolidated income statement

23 Net turnover

24 Contracted work and other external costs

€ x 1,000,000


Due to efficiency measures the number of employees at Corporate Holdings fell by 9. The number of employees rose by 90 at Ammeraal Beltech, by 73 at Bekaert Textiles, by 60 at Clear Edge Filtration and by 6 at Dimension-Polyant.

The options may be exercised during a period of five years after the date on which they are granted and cannot be exercised during the first three years after granting. The exercise price of the options will be the same as the closing price of the date prior to the date on which they are granted. Options were awarded to the members of the Executive Board for the last time in 2005. Options were awarded to the members of the senior management for the last time in 2009.

At the end of the year under review the total number of employees was 4,569 (2009: 4,349), of whom 4,287 (2009: 4,059) outside the Netherlands. During the year under review the average number of employees was 4,494 (2009: 4,488).

In 1997 the Supervisory Board approved a stock option plan for the members of the Executive Board and senior management. Under this plan, options will only be granted after approval by the Supervisory Board up to a maximum of 1% of the number of outstanding shares per year. When exercised, these options will entitle the holder to one ordinary share per option.


25 Personnel costs

26 Stock options and share plan

€ x 1,000,000


In 2010, nil ordinary shares were purchased to cover the outstanding option rights and the share plan (2009: nil). At year-end 2010 the number of treasury shares purchased to cover the outstanding option rights and the share plan totalled 125,944 (2009: 125,944).

For the settlement of the stock options and the share plan in February 2011, please refer to Other information, Subsequent events.

The share plan is a long-term incentive for the Executive Board and the top management. The 2008 share plan came into effect for the Executive Board and the top management as a replacement for the 2005 share plan and the option plan respectively. The 2008 share plan came into effect on 1 January 2008, with 2007 as the first reference year and 2010 as the last. Each year shares are granted on a conditional basis. The share grant becomes unconditional three years after granting if the agreed performance criteria have been fulfilled. As part of the 2008 share plan, 68,109 ordinary shares were granted conditionally in the year under review, of which 30,350 were granted to the Executive Board and 37,759 to the top management. In 2010, 49,586 ordinary shares granted conditionally lapsed. At the end of 2010 the number of ordinary shares granted conditionally was 109,560, of which 38,835 to the Executive Board and 70,725 to the top management (2009: 91,037, of which 38,846 to the Executive Board1 and 52,191 to the top management). The charges arising from the share plan amounted to 1.9 (2009: nil).


1 Including former members of the Executive Board

€ x 1,000,000


Included as remuneration are salary, bonuses, social-security contributions, employer’s pension contributions and charges relating to the share plan recognised in the income statement in the year under review.

At the end of the year under review the number of ordinary shares granted conditionally to J.H.L. Albers and L. van Reeuwijk under the 2008 share plan was 17,510 and 21,325 respectively.

At 31 December 2010 and 31 December 2009, 3,000 options in the name of Executive Board member L. van Reeuwijk were outstanding. At 31 December 2009, 7,000 options in the name of former Executive Board member M. Veninga were outstanding, of which 7,000 lapsed in 2010. At 31 December 2010, he had nil options outstanding. At 31 December 2009, 5,000 options in the name of former Executive Board member M.H. Zegger were outstanding, of which 5,000 lapsed in 2010. At 31 December 2010, he had nil options outstanding.

During the year under review the remuneration of the active members of the Executive Board amounted to 2,185 (2009: 686).

During the year under review the remuneration of the former members amounted to 84 (2009: 2,623).

Other remuneration consists, in the case of M. Veninga, of adjusted severance allowance (2009: 222 salary paid over the period of notice and 1,114 severance allowance paid in February 2010) and, in the case of M.J.A. Frequin, in 2009 43 variable remuneration for 2008, 188 payment in respect of the six-month period of notice and 409 severance allowance.

Former Executive Board member M. Veninga instituted arbitration proceedings against Gamma Holding N.V. in 2010 as he believes his dismissal was manifestly unreasonable. The outcome of these proceedings is not yet known. No provision has been created for these proceedings.

As part of the 2008 share plan, in the year under review 17,510 ordinary shares were granted conditionally to J.H.L. Albers and 12,840 to L. van Reeuwijk. The ordinary shares granted conditionally to M. Veninga in 2008 and 2009 lapsed in 2010.


27 Remuneration of the members of the Executive Board and Supervisory Board

1 With effect from August 20092 With effect from May 20093 Up to and including July 2009 in the Executive Board, employed until January 20104 Up to and including April 2009

€ x 1,000


In 2010 the remuneration of the Supervisory Board members totalled 152 (2009: 161).

The Supervisory Board members’ total shareholding in the company comprises nil ordinary shares (2009: nil). No loans, advances or guarantees have been issued to the members of the Executive Board or Supervisory Board. The key elements of the remuneration policy are outlined in the section headed Corporate governance in the Report of the Executive Board. General expense includes 14.3 (2009: 12.7) in respect of travel and accommodation expense, 7.6 (2009: 7.1) in respect of consultancy and auditing, and 2.3 (2009: 2.6) in respect of insurance.

For the settlement of the stock options and the share plan in February 2011, please refer to Other information, Subsequent events.

This figure was made up of fixed remuneration of 32 per Supervisory Board member and of 38 for the chairman on an annual basis, supplemented by remuneration of 4 for membership of a committee as well as the corresponding social-security charges.

Production expense includes 9.8 (2009: 7.0) for maintenance and 3.3 (2009: 2.8) auxiliary materials. Selling expense includes 2.9 (2009: 2.5) marketing expense and 3.8 (2009: 3.0) in respect of agents’ commissions.


€ x 1,000

28 Other operating expenses

€ x 1,000,000


The fees included in this for PricewaterhouseCoopers Accountants N.V. in the Netherlands amount to 1.2 (2009: 1.3).

The fees quoted above relate to the work carried out at the company and at the consolidated companies by PricewaterhouseCoopers Accountants N.V. and the network of PricewaterhouseCoopers in the Netherlands and abroad, including their tax departments and consultancy departments.

This includes the results on the sale of property, plant and equipment of 1.9 (2009: 0.2).


€ x 1,000,000

29 Other income and expense

30 Operating result


Note 5 shows EBITDA excluding restructuring and EBITA excluding restructuring and impairment as part of the segment information. These can be converted into group result before taxation as follows:


31 Financial income and expense

32 Conversion of EBITDA and EBITA

€ x 1,000,000


The structural disadvantages mainly relate to non-recoverable withholding tax on dividends.

No tax saving could be recognised on the impairment of goodwill.

Other includes effects of adjustments with regard to prior years and uncertainty regarding the deductibility of costs/refunding of income tax.

It should be noted that the group result before taxation was relatively low in 2010 and negative in 2009.

The natural tax rate was 82.6% (2009: 27.4%).

The unrecognised losses mainly relate to Belgium, the United Kingdom and Germany.

The structural benefits are mainly due to the utilisation of ‘tax holidays’ in various countries and other statutory facilities (mainly in Belgium).

The net amounts due from joint ventures amounted to 0.7. (2009: 1.3).


33 Income tax

34 Related-party transactions

1 Weighted average of statutory rates applied in the countries in which Gamma Holding operates, weighted on the basis of theresult before income tax in each of these countries

€ x 1,000,000



35 Earnings per share

€ x 1,000,000


In 2010, no dividend was distributed in respect of 2009. It will be proposed to the General Meeting of Shareholders on 28 April 2011 not to distribute any dividend in respect of 2010.

In 2010 and 2009, Gamma Holding did not acquire any companies.


36 Dividend per share

37 Business combinations

€ x 1,000,000



Company balance sheet


Company income statement


Non-current financial assetsSubsidiariesSubsidiaries are recognised at net asset value on an individual basis. The net asset value is established by valuing assets, provisions and liabilities and calculating the result in accordance with the accounting policies applied in the consolidated financial statements. In establishing the net asset value, account is taken of the transitional provisions for valuation and the first-time adoption of the accounting policies followed in the consolidated financial statements.

GeneraThe company financial statements of Gamma Holding N.V. are prepared in accordance with the statutory provisions of Part 9, Book 2 of the Netherlands Civil Code. In preparing the company financial statements, use is made of the facility under section 362 subsection 8, Book 2 of the Netherlands Civil Code for applying the same accounting policies for valuation and the calculation of result (including the policies for the presentation of financial instruments as equity or debt) as in the consolidated financial statements.

Accounting policiesThe accounting policies for the company financial statements are the same as those for the consolidated financial statements. Unless otherwise stated, please refer to the accounting policies specified in the consolidated financial statements. For the notes to the issued capital and reserves, the remuneration of the members of the Executive Board and Supervisory Board and stock options, please refer to the notes to the consolidated financial statements.

This relates to software.

The rate of amortisation on software is 33%.


Notes to the company financial statements

38 Summary of significant accounting policies

39 Intangible assets

€ x 1,000,000


The rate of depreciation on plant and machinery is 10% and on other equipment 25% or 33%.


40 Property, plant and equipment

€ x 1,000,000


The subsidiaries are not listed on the stock exchange. Please refer to note 47.

The effective interest rate of the loans to subsidiaries was 6.9% (2009: 6.9%). Of the loans to subsidiaries, an amount of nil (2009: nil) matures after five years.


41 Non-current financial assets

€ x 1,000,000

124 Gamma Holding Annual Report 2010 Financial Statements

This relates to current receivables.

The carrying amounts of the receivables from subsidiaries, other receivables and derivative financial instruments approximate the fair value.

This relates to other provisions.

43 Provisions

44 Non-current liabilities

42 Receivables

€ x 1,000,000


Executive BoardJan Albers, CEOLeendert van Reeuwijk, CFO

The average number of employees was 24 (2009: 33), all working in the Netherlands.

In accordance with the provisions of section 379, Book 2 of the Netherlands Civil Code, a list of participating interests is available at the Trade Register Office in Eindhoven, The Netherlands.

For the Dutch subsidiaries, declarations of assumption of liability have been issued as referred to in section 403, Book 2 of the Netherlands Civil Code. Under the terms of credit agreements, the company is severally liable for subsidiaries’ debts to financial institutions. The company is also head of the fiscal entity for corporation tax, in which all Dutch subsidiaries are included.


Supervisory BoardFokko van Duyne, chairmanRené van der BruggenHessel LindenberghJan Zuidam

Financial Statements

46 Employees

47 Participating interests

48 Commitments and contingencies

45 Current liabilities

€ x 1,000,000

Other information


Settlement of stock options and share planIn connection with the mandatory public offer made on 13 January 2011, the Supervisory Board decided, with due observance of the terms and conditions of the share plan, to accelerate the unconditional vesting of the rights to shares granted conditionally to the members of the Executive Board and the top management. The conditional rights to shares that do not vest hereby lapse. For the same reason, the Supervisory Board also decided to reduce the period for exercising the options granted under the stock option plan to one month. Options not exercised within this period lapse. It was agreed that the value of the shares granted unconditionally and the options whose exercise price is higher than € 29.00 shall be settled by Gamma Holding in cash. This involves a sum of 1,914 and 279 respectively (total 2,193), of which 786 relates to members of the Executive Board and nil to former members of the Executive Board. This settlement shall not give rise to any charges in 2011. On the date of publication of this report there are therefore no conditional rights to shares or options outstanding.

Termination of call option agreement Stichting Preferente Aandelen Gamma HoldingOn 7 January 2011, Gamma Holding N.V. and the Stichting Preferente Aandelen Gamma Holding (‘the Foundation’) agreed to terminate the call option agreement with effect from the date on which Go Acquisition B.V. paid the offer price to shareholders who legitimately tendered their shares under the public offer made by Go Acquisition (the ‘Settlement Date’). This payment has since been made and therefore the call option agreement was terminated on the date of publication of this report.

Mandatory public offerOn 13 January 2011 Go Acquisition B.V. (‘Go Acquisition’) announced that it was making a mandatory public offer for all the issued and outstanding shares in the capital of Gamma Holding N.V. (‘Gamma Holding’) not currently owned by Go Acquisition, Gilde and Parcom (the ‘Ordinary Shares’) and all issued and outstanding ordinary participating preference shares in the capital of Gamma Holding not currently owned by Go Acquisition, Gilde and Parcom (the ‘Ordinary Preference Shares’), each with a nominal value of € 2.50 (the ‘Offer’). The Offer was made subject to the terms and restrictions contained in the offer memorandum of 13 January 2011 (the ‘Offer Memorandum’). Go Acquisition offered an offer price of € 29.00 in cash per Ordinary Share and an offer price of € 3.50 in cash per Ordinary Preference Share. The Offer was not subject to any conditions.

Simultaneously with the Offer Memorandum, a letter containing the ‘Position Statement’ of the Supervisory Board of Gamma Holding (the ‘Supervisory Board’) and the Executive Board of Gamma Holding (the ‘Executive Board’) was made available. The Supervisory Board and Executive Board unconditionally supported and unanimously recommended the Offer. A fairness opinion rendered by ABN AMRO Bank N.V. to the Supervisory Board supported this recommendation from a financial point of view. The fairness opinion was included in the Position Statement.

After settling the acquisition of the shares tendered under the public offer, Go Acquisition holds, as of the date of publication of this report, 96.8% of the Ordinary Shares and 86.4% of the Ordinary Participating Preference Shares in Gamma Holding. This corresponds to 96.6% of the shares in Gamma Holding (98.2% excluding the shares held by Gamma Holding itself). Go Acquisition and Gamma Holding will enter into talks with NYSE Euronext Amsterdam with a view to delisting Gamma Holding. Go Acquisition will initiate compulsory squeeze-out proceedings in order to acquire all the remaining Ordinary Shares and Ordinary Preference Shares.

Other information

Subsequent events

Other information

€ x 1,000


Whatever then remains of the profit is paid out in the following order: a dividend of up to 4% of the amount that had to be paid on the four per cent (4%) cumulative preference shares, a dividend of up to 4% on the nominal amount of the ordinary shares, and then a dividend equal to the percentage of the twelve-month Euro Interbank Offered Rates (EURIBOR), plus 2.5% on the four per cent (4%) cumulative preference shares.

Here too, the remaining profit is at the disposal of the General Meeting of Shareholders, to be added to the aforementioned dividend on the ordinary shares or to be used for other purposes that are in the interest of the company.

Pursuant to article 26, section 5 of the articles of association, the General Meeting of Shareholders, acting on a proposal of the Supervisory Board, may decide to make a distribution from a reserve.

Statutory appropriationFor the order of dividend entitlement, the articles of association distinguish between a situation in which no twelve per cent (12%) cumulative preference shares are held by others than the company (article 26, section 3 of the articles of association) and a situation where that is the case (article 26, section 4 of the articles of association).

On the date of the report no twelve per cent (12%) cumulative preference shares are held by others than the company. This means that, under article 26, section 1 of the articles of association, the Supervisory Board may decide that all or part of the profit shown by the financial statements adopted by the General Meeting of Shareholders, up to a specified amount, is to be retained by way of reserve. The Supervisory Board also decides about the appropriation or termination of such a reserve.

Pursuant to article 26, section 2 of the articles of association, the company may only make payments on the distributable profit insofar as equity exceeds the sum of the capital plus the reserves which must, by law, be retained. Of the distributable profit that then remains, up to € 0.12 is paid on the ordinary participating preference shares, then a dividend of up to 4% on the amount that had to be paid for the four per cent (4%) cumulative preference shares, then a dividend of up to 4% on the nominal amount of the ordinary shares, whereafter an extra dividend of maximum € 0.09 is paid on the ordinary participating preference shares. Finally, an additional dividend is paid on the four per cent (4%) cumulative preference shares which is equal to the percentage of the twelve-month Euro Interbank Offered Rates (EURIBOR), plus 2.5%.

The remaining profit is at the disposal of the General Meeting of Shareholders, to be added to the aforementioned dividend on the ordinary shares or to be used for other purposes that are in the interest of the company.

If twelve per cent (12%) cumulative preference shares are held by others than the company, then € 0.21 is first paid to holders of ordinary participating preference shares. Then, holders of twelve per cent (12%) cumulative preference shares receive a payment of 12% on the dividend base, being the total nominal amount of the twelve per cent (12%) cumulative preference shares plus the time-proportionate average balance of the share premium reserve, as referred to in article 23 of the articles of association, during the financial year for which the financial statements have been adopted. The Supervisory Board can then decide that the profit that remains after the above-mentioned payments is to be retained by way of reserve.

Other information

Profit appropriation

€ x 1,000

129Gamma Holding Annual Report 2010 Other information

€ x 1,000

130 Gamma Holding Annual Report 2010 Other information

The Board of the Foundation is made up as follows:Dr. J.V.H. Pennings, chairmanDrs. J. van den BeltDrs. J.L. BrentjensMr. E.P. Heiden

The Executive Board of Gamma Holding N.V. and the Board of the Foundation are jointly of the opinion that the Foundation is a legal entity independent of Gamma Holding as referred to in article 5:71 of the Financial Supervision Act (Wet op het financieel toezicht).

On 18 February 1987 the current Stichting Preferente Aandelen Gamma Holding (‘the Foundation’) was established. The Foundation’s object is to protect the interests of the parent company Gamma Holding N.V. and all its stakeholders. A call option agreement was concluded between the Foundation and Gamma Holding N.V. On the basis of this agreement, the Foundation was entitled to take four per cent (4%) cumulative preference shares (previously named: four per cent (4%) participating preference shares) in the capital of Gamma Holding N.V. up to half the – following the issue, expanded – issued capital. Gamma Holding N.V. also agreed to grant right of inquiry to the Foundation. Gamma Holding N.V. and the Foundation agreed to terminate the call option agreement with effect from the date on which Go Acquisition B.V. paid the offer price to shareholders who had legitimately tendered their shares under the public offer made by Go Acquisition (the ‘Settlement Date’). This payment has since been made and therefore the call option agreement was terminated on the date of publication of this report.

Stichting Preferente Aandelen Gamma Holding

€ x 1,000

131Gamma Holding Annual Report 2010 Other information

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Executive Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion with respect to the consolidated financial statementsIn our opinion, the consolidated financial statements give a true and fair view of the financial position of Gamma Holding N.V. as at 31 December 2010, and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code.

Opinion with respect to the company financial statementsIn our opinion, the company financial statements give a true and fair view of the financial position of Gamma Holding N.V. as at 31 December 2010, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirementsPursuant to the legal requirement under Section 2: 393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the Report of the Executive Board, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2: 392 sub 1 at b-h has been annexed. Further we report that the Report of the Executive Board, to the extent we can assess, is consistent with the financial statements as required by Section 2: 391 sub 4 of the Dutch Civil Code.

Eindhoven, 24 February 2011

PricewaterhouseCoopers Accountants N.V. J.A.M. Stael RA

To the General Meeting of Shareholders of Gamma Holding N.V.Report on the financial statementsWe have audited the accompanying financial statements 2010 of Gamma Holding N.V., Helmond as set out on pages 60 to 125. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2010, the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information. The company financial statements comprise the company balance sheet as at 31 December 2010, the company income statement for the year then ended and the notes, comprising a summary of accounting policies and other explanatory information.

The Executive Board’s responsibilityThe Executive Board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the Report of the Executive Board in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Executive Board is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Independent auditor’s report

€ x 1,000

132 Gamma Holding Annual Report 2010 Colophon

Colophon

PhotographyBank Sails, Bari, ItalyClea Betlem, Maastricht, NetherlandsEllen Hoke, San Francisco, United StatesFotolia, Paris, FranceGamma Holding, Helmond, NetherlandsLuca Babini, New York, United StatesPeter van Agt, Maastricht, Netherlands

TextGamma Holding, Helmond, NetherlandsPhilips Translation Services, Eindhoven, Netherlands

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