Report of the Executive Board

Review of 2009
In 2009, the Dutch economy shrank by an unprecedented 4%. The recession had a major impact on Batenburg Beheer N.V.'s results. The net profit amounted to EUR 3.1 million, trailing the result of 2008 by 49%. Revenue amounted to EUR 141 million, which was 10% lower than in the preceding year.
The industrially-oriented trading companies and installation companies had a particularly difficult year. In early-cyclic sales markets such as the automotive, electronics, machine-building and appliances industries, diminutions in output of 50% at our industrial clients were sadly no exception. This resulted directly in lower demand for the products and services of the Batenburg companies, and lower margins. The Executive Board set priorities for 2009 in order to absorb the negative impact of the recession, involving tight cost control, good management of working capital and continual attention to quality and execution. At various companies in the Batenburg Group, measures were taken to keep costs in line with the lower level of activities. Partly through steering for working capital, cash assets increased sharply during the year. Together with healthy capital adequacy ratios, this offers a good starting position for 2010, when clients and suppliers are expected to consider the continuity of their contract partners more critically than ever.

In March 2009, Van Dalen in the Installation group acquired the shares of Installatie Bureau Meurs of Apeldoorn. Van Dalen then took over the activities of the vanPanhuis and Onderhoud and Service Partners (OSP) companies of Putten, which were compulsorily wound up. These acquisitions strengthened the knowledge in the mechanical engineering field and the national network for service and maintenance. The acquired activities contributed EUR 1.8 million to revenue in 2009 following the acquisition dates. Meurs's contribution to results was as expected. At vanPanhuis and OSP, the necessary start-up costs were incurred in order to increase the revenues from these activities.

Technical installation
The vast majority of the companies in the Installation group are active in the Netherlands. Only Hoogendoorn Growth Management also exports IT products for horticulture. Installation projects are performed for both regional and national clients, using the knowledge and capacities of other affiliates in the Batenburg Group. The activities of OSP acquired in 2009 give us an opportunity to further develop a national service organisation offering technical management and maintenance for technical installations. In 2009, a start was made in connecting the existing service and maintenance activities of the other companies in the Installation group to this service network.
The installation companies are active in non-residential construction, industry and the infrastructure market. The large number of providers makes these sales markets exceptionally competitive, with frequent price competition, regardless of the complexity of the services offered. Public clients continue to tender frequently on the basis of the lowest bid price. Increasing the returns must therefore be achieved primarily by forming permanent relationships with clients and partners in the construction column. This will enable better returns on investments for clients (total cost of ownership). Failure costs in the construction process are also reduced, coupled with better-than-average manning of the implementing organisation.

The revenue of the technical installation segment in 2009 was 8% lower, at EUR 94 million compared with EUR 103 million in 2008. Excluding the acquisitions, the revenue of the installation companies was 10% lower. The revenue of the Installation group was spread evenly over the year. Revenue was under particular pressure in the Industry and Horticulture sales markets in 2009, as a result of the recession. From the end of 2008, clients in industry faced a loss of demand. In the less recession-sensitive food industry, many companies were confronted with a sharp reduction in exports. Products such as coffee and cheese, regarded as daily staples in the Netherlands, are often seen as luxury products in other countries, which are more likely to be cut to save costs. Industrial companies in the oil and chemical sector also faced sharply lower revenues, which, in turn, led to pressure on revenues in the packaging industry. Many of these clients were consequently forced to postpone or cancel planned investments. In 2009, they performed only the essential maintenance.
The greenhouse horticulture sector had a bad year, with growers of cut flowers and vegetables particularly hard hit. Exports were under severe pressure in this sector too. The reason for the drop in exports to countries such as the UK, Poland and Russia lay in the strong euro and/or new import restrictions. Other important clients such as the major supermarket chains in Europe tightened their procurement processes in order to win customer loyalty with lower consumer prices. Partly through overcapacity in certain product categories, market gardeners proved unable to find adequate solutions for the purchasing power of the major retailers. As a result of these developments, many horticultural companies faced financial problems and invested only piecemeal.
The non-residential construction looked forward to the start of 2009 with a fair amount of optimism. Many installers based these expectations on the work in hand at the time however. Even before the summer it became clear that the order portfolios of project developers and construction companies in the non-residential construction sector were falling sharply. Grim expectations regarding construction production in 2010 and later placed severe pressure on price levels in this market sector towards the end of the year.

Technical Trading
The companies of the Trading group are established in the Netherlands and Belgium. They represent the products of renowned international suppliers in the Benelux, or are logistical partners for the supply to industrial customers of complete customised packages of brand-independent products. They also produce medium-sized series of products and semi-finished products for their customers. The trading companies of Batenburg Beheer N.V. are primarily active as suppliers of the production industry and the energy and rail infrastructure market in the Benelux region.

The revenue of the Trading group fell more sharply than that of the Installation group, by13%, down from EUR 53 million to EUR 46 million. Revenue in the second half of the year was still lower than in the first half, as the companies relied on existing order portfolios in the first half of 2009. The trading companies focusing on the industrial sector had a difficult year. Diminutions in revenue from regular clients of more than 50% were noted for electrical engineering and fixing products in sales markets such as the automotive and plate processing industries. The first cautious signs of recovery in the early-cyclic chip sector, however, offer some hope that the worst period is over. Revenue from energy technology-related products for energy network operators proved reasonably stable in comparison with 2008, although fewer energy projects were realised for industrial clients in 2009.

Overview
The total revenue segmentation of the Batenburg Group in the various market segments in 2008 and 2009 is shown below.





The sharp relative fall in the share of revenue in the Industry segment is clearly visible. Installation revenue was 30% lower here, while trading revenue shrank 15% in comparison with 2008. Total revenue in the Infrastructure sales market was 28% higher, however, primarily through higher revenues of the installation companies in this sector. The share of revenue in the non-residential construction segment diminished slightly, mainly because fewer installation assignments were carried out in the office market.

The operating income of Batenburg Beheer N.V. amounted to EUR 3.6 million, which was 51% lower than in 2008 (EUR 7.3 million). Particularly the trading companies that keep stocks have relatively high overhead costs, which mean that a fall in revenue has a high impact on the operating result. In the first instance, installation companies are more flexible in this field, through the reduction in temporary employees and outsourced work. In order to adjust the costs to the reduced business activities and to respond to the altered market circumstances, various operating companies in both segments took drastic measures in 2009.
The primary guiding principles here were: (1) jobs before income, (2) emerging qualitatively stronger from the reorganisation and the recession, and (3) no excessive slimming down but preparing for economic recovery with the expected labour shortages when this occurs. The operating result for 2009 includes a sum of about EUR 0.8 million relating to redundancy costs. In relation to the employee number in the two segments, about 80% of these concerns the Installation group and the remainder the Trading group. Ultimately, the installation companies realised an EBIT margin of 1.9% (2008: 2.5%) and the trading companies an EBIT margin of 5.0% (2008: 10.1%).
Interest income was higher in 2009 than in the preceding year, due to improved average liquidity. Ultimately the net profit turned out at EUR 3.1 million (2008: EUR 6.0 million). Earnings per share for 2009 as a whole amounted to EUR 1.27 (2008: EUR 2.50).

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