Report of the Supervisory Board

Introduction
In preparation for the Shareholders' Annual General Meeting on 9 May 2012, the Supervisory Board herewith presents the annual accounts prepared by management for the 2011 accounting year. The annual accounts have been audited and approved with a statement to that effect issued by Ernst & Young Accountants LLP. The auditor's statement has been added to the additional information appended to the annual accounts, which can be found on p. AA 66 of this annual report.

The Supervisory Board is in agreement with the report and the 2011 annual accounts and proposes that the General Shareholders' Meeting shall adopt the 2011 accounts without amendment.

In accordance with the Group's dividend policy and in view of the 2011 results, no proposal will be made to pay out a dividend.

Discharge of Management Board for 2010/2011
The General Shareholders' Meeting held on 11 May 2011 did not vote on the grant of discharge to the Management Board for 2010, since the previous CEO, Mr. Caris, had already been granted a discharge ('release') by the Supervisory Board in the termination agreement drawn up with him in the context of his early retirement.
In respect of the COO, Mr. B.J.W. van der Heijden, it was known prior to the General Shareholders' Meeting that an Extraordinary General Shareholders' Meeting was to be called on 25 May 2011, during which the shareholders could be heard on the issue of Mr. Van der Heijden's proposed dismissal. For that reason, it was the view of the shareholders that they should be heard first on the proposed course of action before they could be asked to vote on a grant of discharge. It was therefore recorded that discharge would be placed on the agenda once again at the next shareholders meeting.

At this time, mediation has allowed an agreement to be reached with Mr. Van der Heijden on the termination of his contract of employment. Details can be found on p. AA 54 of this report. The Supervisory Board of Roto Smeets Group would therefore like to advise the shareholders' meeting that it should grant discharge to Mr. Van der Heijden for the policies he pursued in 2010 and pro rata in 2011. This grant of discharge has been placed on the agenda of the General Shareholders' Meeting on 9 May 2012.

The same agenda also contains a grant of discharge to the Management Board for the policies pursued in 2011. In 2011 the post of CEO was temporarily filled by Mr. Huyzer, ex Chair of the Supervisory Board, who as of 30 January 2012, no longer has any connection with the Group after he announced his withdrawal from his post. The Supervisory Board would like to advise the shareholders' meeting to grant discharge to Mr. Huyzer for the policies pursued in 2011.

Roto Smeets Group developments in 2011
For the Roto Smeets Group 2011 was a year in transition in which the interim CEO Mr. Huyzer was delegated by the Supervisory Board to reframe the Group's strategy. The Supervisory Board feared that the previous CEO's strategy, which was primarily concerned to consolidate the graphics industry, was delaying a necessary, internal improvement of efficiency. In view of the results achieved, this fear turned out to be justified. After Mr Caris, the previous CEO, had left the Group at the end of 2010, the initial intention was that Mr. Huyzer would reframe the Group's strategy together with the then COO, Mr. Van der Heijden, and that they would implement it together.

In view of the Group's reduced size after the restructuring in 2010, the Supervisory Board decided however to simplify the management structure, allowing the post of COO to lapse.

In 2011, Mr. Huyzer took on the task on his own until such time as the vacant Group Chairman's position should be filled. His first priority was to collaborate with management in formulating a path leading to the improvement and recovery of the Group's results. This is dealt with further in the Management Board's report on p. 17. Progress along the road to improvement was on the agenda at every meeting. The Supervisory Board was generally satisfied with the progress made, but disappointed that savings, necessary to absorb margin erosion, would only become apparent from 2012.

Nevertheless, the Supervisory Board is not displeased with the improvement in the 2011 results compared with 2010. Our efforts naturally continue to focus on making the Group profitable once again.

Financing
With a solvency ratio of nearly 37.4% at year end 2011, Roto Smeets Group has a solid asset position, despite the losses incurred the last couple of years thanks mainly to two extraordinary debit items: the social provision for the closure of Roto Smeets Utrecht, the downsizing of Roto Smeets Etten and the 2010 impairment. The Supervisory Board requested the Financial Director to give a presentation on the expected financial consequences of the policy, formulated in terms of accounting ratios and agreements made in the context of our covenants with the banks in the years to come. After the presentation, the Supervisory Board determined that the present financial policy remained within the preconditions set down in the bank covenants. One of the main thrusts in the near future will be a continuous effort to reduce the debt position.

Meetings
In 2011 the complete Supervisory Board met ten times. One meeting was devoted in its entirety to a discussion of Group strategy. In view of the continuing tension in the market for printed products, it will be important to continually reframe the basic principles underlying the Group's strategy. Discussions also involved staff presentations, an extensive discussion of the manner in which the strategic reassessment had been arrived at, and operational changes, including their consequences for the personnel.

The Supervisory Board has been closely involved with this process and has been able to discuss its impact with local management during the plant meetings. This also allowed a closer look to be taken at performance, with an analysis of whether the internal risk and control systems were operating effectively. The Supervisory Board's experience in this process was positive.

In mid-2011 an additional meeting was held to discuss the Marketing Communications business line's strategy. Its contribution to Roto Smeets Group's total turnover may be small, but its share in the Group's results may be termed considerable. Developments in the market for this business line's services are rapid, with many opportunities for growth and expansion. The Supervisory Board intends to follow this process closely.

Committees
Since the Supervisory Board comprised four member for a time, thanks to Mr. Huyzer's responsibilities as interim CEO, the responsibilities were not redistributed, so the complete Board attended all committee meetings.

Audit and risk management committee
This committee met twice with auditors Ernst & Young to discuss their findings on the 2010 annual accounts and in respect of the 2011 audit. Discussions were held with the interim CEO in respect of the annual accounts, the annual report, the management letter and the risk management policy, as well as audit topics for 2011.

The first meeting discussed the continuity of Roto Smeets Group, the Group's liquidity and solvency position, and the 2010 impairment analysis. A report on these matters is contained in the 2010 annual report.

In respect of the 2011 audit findings, discussions centred on the correct operation of the risk management systems and internal controls.

The Supervisory Board also assessed the accountant's independence in 2011. In 2012, because of the mandatory partner rotation,
a new partner of Ernst & Young will be allocated.

Appointment and remuneration committee
An additional meeting was called to evaluate the Extraordinary Shareholders' Meeting and to formulate a decision in the matter of terminating the relationship between the Group and Mr. Van der Heijden, signifying at the same time the end of his employment. Both parties succeeded in reaching a mediated agreement at the end of 2011. The details can be found in the remuneration report on p. AA 54 of this annual report.

A regular meeting of the committee was devoted to drawing up the profile required for the new CEO. The important aspects considered included the candidate's capacity as a strong team leader, good at monitoring processes, with a commercial profile and an affinity with technology; an entrepreneur who can rationalize business processes. After a delegation of the Appointment and Remuneration Committee had interviewed a number of candidates, a short-list was finally offered to the other Board members and the CEO. At the end of the year, the final choice fell on Mr. J.A. de Haas (1959). Mr. de Haas is an experienced manager with a good knowledge of the graphics industry, the network, the customers, the business model and the challenges offered by the current communications market. The Supervisory Board feels that his pragmatism, combined with his strategic and conceptual insight, will be of significant value in the further development of Roto Smeets Group. His appointment was announced on 11 January and he started in his new post on 30 January 2012.

Remuneration
The basic principle underlying the appointment of the new CEO was the present remuneration policy, which was settled once again in the 2011 Shareholders' Meeting. Due to the pressure to find a suitable CEO, the Supervisory Board agreed to several amendments at the candidate' request. The remuneration policy will therefore once again be placed on the agenda of the next General Shareholders' Meeting, with a request for ratification. The remuneration policy, with the proposed amendments, can be found on the Group's website. The most significant change from the previous policy involve the incentive policy. A short-term (1 year) variable component is used to reflect the Group's performance. The Supervisory Board shall set annual targets to be met, linking them to the related percentages of the CEO's annual salary, with a maximum of 50%. Since these targets could not be met by the present CEO in a short period, it has been decided to set a guaranteed, short-term incentive over the first six months of 2012, at the level of 20% of the annual income.

In order to strengthen the relationship between the CEO and Roto Smeets Group over the long term, a long-term incentive has been chosen, taking the form of an allocation of phantom shares, the value of which is linked to the development of the Roto Smeets Group share price.

Furthermore, at Mr. De Haas's request it has been established that no compensation for dismissal shall be paid in case of his early departure from the Group except in case of a change of control.

Supervisory Board Membership
Mr. J.H.M. Rijper was appointed as a member of the Supervisory Board at the Shareholders' Meeting on 11 May 2011. This involves a change in the way Roto Smeets Group observes the best practice provision III.2.1. of the Corporate Governance Code, since Mr. Rijper cannot be regarded as an independent external director since is a director of and has a minority interest in the capital of Riva Investments. Riva Investments currently owns 15.27% of the shares of Roto Smeets Group NV.

Mr. De Haas's appointment brings an end to the work of Mr. Huyzer, ex Chair of the Supervisory Board and interim CEO. After nearly three years of intensive effort, one as Chair of the Supervisory Board during the public bid procedure in 2010 and then as interim CEO, Mr. Huyzer wishes to devote himself to other matters. He has therefore resolved not to return to his previous post as Chair of the Supervisory Board and left the Group on 30 January 2012. While regretting it, the Supervisory Board respects Mr. Huyzer's decision. The Board thanks him for his efforts.

The last meeting in 2011, held in the absence of the interim CEO, was devoted to a self evaluation of the Supervisory Board members' own functioning. As a result of Mr. Huyzer's announcement that he was not to return to his position as Chair of the Supervisory Board both the composition of the Board and its Chair will have to be evaluated anew.

The Supervisory Board has resolved to fill the vacancy left by Mr. Huyzer's departure. The candidate non-executive director will have to match the profile that can be found on the corporate website. In this regard, the Supervisory Board will offer the shareholders the opportunity to recommend candidates to fill the vacancy.

According to the retirement schedule, Mr. H.C.A. Groenen shall be recommended for reappointment to the General Shareholders' Meeting.

Socially Responsible Business Practice
The Supervisory Board subscribes to the socially responsible business practice as set down in Roto Smeets Group's CSR report. The Supervisory Board was delighted that the Roto Smeets GrafiServices plants were the first graphics businesses in the Netherlands to have their business practices certified according to CSR performance scale. Despite the fact that the same policies are followed in other Roto Smeets Group plants, it has been decided, in part for financial reasons, to have the policy warranted by a declaration of the party involved according to ISO 26000. The Group's own Socially Responsible Business Practice Monitoring Committee has met with a delegation from the Supervisory Board to discuss this topic.

Relationship with shareholders
Meetings of the Supervisory Board regularly discuss the way the shareholders' interests are taken into account. In May 2011, at the Extraordinary Shareholders' Meeting, the shareholders were asked for their opinion on the proposal to dismiss Mr. Van der Heijden. The shareholders' principal concern was with the possible financial impact of this dismissal. Damage to the Group was finally limited, thanks to mediation.

In the beginning of 2011 the major shareholders who had signed the irrevocables in connection with the proposed bid for Roto Smeets Group NV shares by Printing Holding, were contacted. These ceased to be effective after the process ended in March 2011. Only the Supervisory Board Chairman was regularly approached by one of the major shareholders in 2011, seeking information on the search for a CEO. Response was given in conformity with the Roto Smeets Group policies on bilateral contacts with shareholders.

The annual plant visit took place on 18 October. All shareholders who were known to Roto Smeets Group at that time received an invitation. They were given a tour of MediaPartners Group in Amstelveen, part of the Marketing Communications business line. Despite the segmentation of the information in the annual report, the examples shown of the communications projects that MediaPartners Group carry out for such clients as Albert Heijn, ABN AMRO and KLM were an eye-opener for many of the visiting shareholders.

In conformity with best practice IV.3.13 of the Corporate Governance Code, Roto Smeets Group has set down the main tenets of its bilateral contacts with shareholders. They have been published on the corporate website.

Contacts with the Central Works Council
A delegation of the Supervisory Board attended seven meetings of the Central Works Council with the interim CEO in 2011. At the final meeting in December 2011 it was resolved to limit the frequency with which an external director attends these meetings in view of the time involved. Starting in 2012, one or two tripartite meetings will be held each year to discuss one or more strategic topics.

Conclusion
The Supervisory Board realises that 2011 was a turbulent year for all Roto Smeets Group employees. After the difficult process in 2009 and 2010, which saw approximately 25% of the employees leave, they were once again confronted in 2011 with new plans for improvement and recovery. The most difficult of these was undoubtedly the cancellation of the jubilee bonus. This was all the more disappointing when it was found that it did not contribute to a recovery in profitability. However, the improvement in the Group's results over the 2010 figure does indicate that the planned improvements have set a sound process in train, which will have to be pursued further by the new CEO.

Finally, we would like to thank not only the employees and their management for their loyalty, effort and persistence, but also Mr. Huyzer for his time as interim CEO, which lasted somewhat longer than expected. He showed true dedication in his approach to the process and used his many years of experience to reshape an organisation that found itself in very difficult market conditions, once gain readying it for growth in the right direction. We are very grateful to him.

Deventer, 14 March 2012
Supervisory Board

Drs. R. Blom, interim Chair
H.C.A. Groenen
Drs. H.C.P. Noten
Drs. J.H.M. Rijper