Financial reporting principles

General information
Batenburg Beheer N.V. ('the Company') has its statutory seat in Rotterdam, the Netherlands and comprises service companies in the fields of installation engineering and technical trading. For a further description of the profile of the company will be referred to the paragraph General in this annual report. In the paragraph Miscellaneous an overview of the addresses of the company and all operations is included.
On 25 March 2010 the Supervisory Board and Executive Board approved the annual report 2009. The financial statements are subject to adoption by the Annual General Meeting of Shareholders on 27 April 2010.

Accounting principles for financial reporting
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards, as adopted by the European Union (EU-IFRS). In 2009 IFRIC 12, 15, 16, 17 and 18 were adopted by the EU. Excepted IFRIC 15 these interpretations have no relevance for Batenburg Beheer N.V. IFRIC 15 describes the classification of contracts and the methods of recognising revenues. This interpretation did not have impact on the recognition of revenues for the Company. Also changes in IFRS 1, 2, 7, 8 and IAS 1, 23, 27, 32 and 39 and IFRIC 9 were adopted by EU. These changes had little relevance for the annual report 2009. However, it results in additional information being presented.
As a result of changes in IAS 1 a consolidated statement of recognised and unrecognised income and expenses has been presented. From 1 January 2009 the segment information has been revised in conformity with IFRS 8. Previously, in accordance with IAS 14, a distinction was made between business and geographical segments. The segmentation required by IFRS 8 is based on internal reporting per cluster to the Executive board and the information previously externally published.
IFRS 3 (revised) concerning Business Combinations has been adopted from 1 July 2009. The changes will be applied prospectively and therefore will affect future business combinations and loss of control over subsidiaries.
Some changes in IFRS which still are not adopted by EU are expected to have a minor impact on the financial reporting of the Company.

Regarding IAS 18, revenues of Batenburg Beheer N.V. can be divided in two categories. Revenues of the Installation group are revenues from the rendering of services. Revenues of the Trade group are revenues from the sale of goods.

The consolidated financial statements are presented in euro’s and rounded to the nearest thousand. The consolidated financial statements have been prepared under the historical cost convention.

Principles for consolidation
The consolidated financial statements include the accounts of Batenburg Beheer N.V. and all operations in which Batenburg Beheer N.V. has a controlling interest. Consolidation takes place for 100%. Intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no indication for impairment. The financial statements of acquired or sold subsidiaries are consolidated or deconsolidated as from the moment a controlling interest has been acquired or lost. In the paragraph "Other information" an overview of all consolidated operations is included.

Foreign currencies
Assets and liabilities in foreign operations are converted in euro at the exchange rates at the end of the year. Revenues and expenses in foreign operations are converted into euro at the exchange rate prevailing on the date of transaction. Foreign exchange differences are recognised directly in the translation reserve.
Transactions in foreign currencies are converted into euro at the exchange rate on the date of transaction. Assets and liabilities are converted in euro at the exchange rate at balance sheet date.

Financial instruments
Subsidiaries use at a limited scale forward contracts (currency swaps) to mitigate currency risks on trade payables and trade receivables in especially US dollars and English pounds. When these forwards contracts are used they do not qualify as hedge accounting instruments as defined in IAS 39. The gain or loss on re-measurement at fair value is recognised as a profit or loss in the income statement. Because of the limited scale of derivative financial instruments no quantitative disclosure is included in the annual report.

Balance sheet
    
Property, plant and equipment
Property, plant and equipment are stated at historical costs less accumulated depreciation based on the expected useful life of the asset. Each year the assets with a significant value are tested on impairment. Assets acquired by business combinations are stated at fair value upon consolidation. Assets held for sale are no longer depreciated, unless they are impaired. These assets are stated at the lower of the carrying amount and the fair value less costs to sell. Within the group no financial lease contracts have been concluded. Operating lease payments have been recognised as an expense on a straight-line basis over the lease term. In the notes to the Consolidated balance sheet ("Commitments and contingent liabilities") an overview is given of the operating lease obligations.

Intangible assets
All business combinations are accounted for by applying the purchase method. Goodwill is stated at the total cost of the acquisition minus the fair value of the net acquired assets, and if necessary after impairments. Goodwill acquired before 1 January 2004 is stated at the initial value less depreciation (based on an economic lifetime of 20 years) until 1 January 2004. Goodwill is allocated to cash-generating units and no longer amortised but tested on impairment at least once a year. At least once a year goodwill will be tested for impairment. Negative adjustments are recognised directly in the income statement.

Inventories
Inventories (trade goods and raw materials) are stated at the lower of costs and net realisable value. Net realisable value is the estimated selling price in the course of normal business less the estimated costs of completion an selling expenses. There is a provision for obsolete goods and materials.

Work in progress
Work in progress is stated at cost, overhead costs attributable to the contract operations, less progress billing, less a provision for foreseeable losses and including profit recognised to date. Work in progress is separated in amounts due from customers and due to customers, depending on the state of progress billing related to the costs incurred on the project.

Trade receivables
Trade receivables are stated at amortised costs (including provisions considered necessary for doubtful debtors). Trade  receivables with a term longer than one year will be presented as non-current assets. Trade receivables with a term shorter than one year are not amortised.

Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances and deposits that can be withdrawn on demand. They are stated at amortised costs. Cash and cash equivalents with a term shorter than one year are not amortised.

Equity
Net income of the current year is added to equity as unattributed profit. Dividends will be booked as a liability in the period of declaration. Foreign exchange differences from converting assets and liabilities in foreign operations in euro are recognised in the translation reserve under equity.

Non-current liabilities
For the accounting principles used for deferred tax we refer to the accounting principles of "Income taxes".
Other provisions include obligations with a probable outflow of resources, which can be reliably estimated.

Retirement benefit costs
Batenburg Beheer has both defined contribution and defined benefit pension plans. The contributions concerning defined contribution plans are recognised as employee benefit expenses when they are due. Some defined benefit plans of subsidiaries in the Netherlands are part of multi-employer plan 'Pensioenfonds Metaal en Techniek' (PMT). These plans are treated as defined contribution plans, because PMT as a result of the structure of her accounting cannot provide reliable information on the individual liabilities and assets of the participants according to IAS 19. Liabilities related to jubilee benefits actuarially have been calculated, including the possibility of leaving.

Warranty provision
The warranty provision represents risks derived from projects for third parties. The provision is stated when contracts are completed. The provision is based on historical warranty information and the likelihood the warranty activities will occur. The warranty term is in general 1 year.

Other assets and liabilities
Other assets and liabilities are stated at amortised value. Other assets and liabilities with a term shorter than one year have not been amortised.

Income Statement

Revenue
This is the total revenue of rendered services and sale of goods to third parties, less discounts and taxes charged on revenue.

Revenues of rendered services contain electrical engineering, mechanical and sanitary installations which the Company builds for third parties and includes service and maintenance related to these installations. These revenues are accounted when the result of the transaction can be estimated reliable. The revenues are recognised in proportion of delivered performance (percentage of completion). In case the result of projects cannot reliably be estimated, revenues will be recognised where costs can be recovered.

Revenues from the sale of goods contain products in the fields of electrical equipment, electronics, energy technology and fastening systems. These revenues are recognised when these goods are transferred to the buyer, the customer has accepted the ownership of the goods and collection of trade receivable is reasonably sure.

The revenues of sale of goods and installation services are determined as the fair value of the reimbursement on a transaction.

Result on construction contracts for third parties
Where the results of construction contracts for third parties can be estimated reliable, turnover and costs are determined in proportion to the stage of completion of the project. Than various aspects will be taken into account, including  costs spend compared with the expected total costs. The outcome of (generally complex) fixed price contracts not always reliably can be estimated. In that case the profit on such projects will be booked upon completion of the project. In the case of cost plus contracts, the percentage of completion method is applied.
Project costs are charged to the income statement for the period in which these are incurred. If it may be assumed that the total contract costs will exceed the turnover, the expected loss is recognised directly to the income statement. If the outcome of projects cannot reliably be estimated, the turnover is considered to be equal to the costs incurred, to the extent costs are likely to be paid.

Raw materials and trade goods
These include the direct costs of goods and services sold. It also includes the movement in provisions for obsolete goods.

Depreciation
The depreciation of assets is calculated taking into account the remaining useful economic life of the asset and the expected residual value of the asset. The annual percentages used for different asset categories are:

   
The expected useful lifetime of adaptations in existing buildings does not exceed the remaining rental period.
 
Financial income and expenses
Financial income and expenses are presented taking into account the effective interest rate method.

Income taxes
Tax expense for the accounting period includes income tax on taxable profit, which is calculated based on tax rates in force, making allowance for tax-exempt profit components and non-deductible amounts, as well as any adjustments for current tax of prior periods.
Deferred tax liabilities arise from the difference in commercial and fiscal valuation of assets and liabilities. The provision is calculated based on the taxes in force.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Earnings per share
The earnings per share are calculated as the net profit payable to shareholders divided by the number of shares outstanding. Earnings per share equal diluted earnings per share.

Cash flow statement
The cash flow statement is drawn up by the indirect method, in which the movements in cash are determined on the basis of operating income as presented in the "Consolidated income statement".

Segment information
For identification of segments in accordance with IFRS 8 the management approach has been applied. Based on the Company and internal reporting set-up the segments Installation group, Trade group and Other activities are presented. Installation revenue relates to the rendering of installation services. Trading revenue relates to selling products to third parties. The Company operates in two principal geographical areas, the Netherlands and Others.
 
Related parties
There is a related party relationship, which includes Batenburg Beheer N.V. and her subsidiaries.

Management of capital
Under the IFRS-definition of capital only the equity of Batenburg Beheer N.V. qualifies. Batenburg Beheer N.V. shares are listed on NYSE Euronext in Amsterdam. To promote the marketability of the shares, SNS Securities acted as liquidity provider during the financial year. Batenburg Beheer N.V.'s dividend policy intendeds to give shareholders an attractive dividend yield and to pay a dividend of at least 40% of net profit each year. The Company supervises her capital with the solvency percentage, adjusted for capitalised goodwill. Based on the strategy and objectives of the Company the target solvency is at least 40%. For a quantitative disclosure of capital will be referred to the 'Consolidated statement of changes in equity'.

Management of cash, foreign exchanges rate differences, interest and credit risk
The holding company has a central role in the Company regarding cash flow optimisation and the financial position of the subsidiaries. The trade companies rarely use short-term derivative financial instruments to hedge currency risks arising from transactions in especially US dollars and English pounds. Foreign exchange differences arising from transactions are recognised in the Income statement.
There are no long term loans, which implies that the sensitivity for interest rate changes is limited. Credit risks within the Company concern especially doubtful debtors. This risk is actively managed and monitored. Information from external sources and credit insurance companies is also used. Furthermore detailed monthly reports are drawn up with reporting items such as age of trade receivables, average days of trade receivables and the necessary provision of doubtful debtors.

Estimates and judgements by the management
Primary sources of uncertainties in the annual accounts are related to assumptions used in impairment calculations for capitalised goodwill and properly, plant and equipment, the need and size of provisions for losses on work in progress, the assumptions concerning credit risks of contractual relationships, the assumptions and availability of information in the calculation of employee benefit obligations, the unsettled tax declarations, the assumptions used for warranty liabilities and the assumptions concerning expected useful life of the assets. The assumptions were made in a consistent manner.

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