Green Earth Group NV — Earnings Release 2013

Mar 18, 2014

Press release on 2013 full-year figures

Roto Smeets Group shows improvement in results

• • Positive net income before exceptional items
• • Increased solvency
• • Bank covenants met
• • Further debt reduction
• • Strong improvement in productivity and cost control

Deventer, 18 March 2014

Roto Smeets Group (RSG) has further strengthened its market and debt position in the very challenging market in which it operates. Although the market fell faster than expected in 2013, the savings we have achieved through the 'Faster, Better, Higher' programme enabled RSG to remain competitive and thereby maintain volumes at the 2012 level.

Radical measures were taken in 2013 particularly by customers in the market segments in which RSG operates. These had a direct impact on the revenues of the RSG companies. The Dutch magazine market alone fell by around 15% in volume terms. An identical trend can be seen in foreign markets. The volume of printing paper in Western Europe has been declining by around 4- 5% annually for many years. RSG succeeded in keeping its sales volume at the same level and thus substantially increased its market share. Nevertheless – partly due to the achievement of productivity increases – most printing businesses had to contend with overcapacity in 2013. At the end of the year it was therefore decided, in order to support improved returns over the long term, to reduce the basic workforce in a number of printing businesses (while maintaining the available production capacity). This measure – which had already been announced at the end of October – will result in the loss of around 170 jobs in 2014 and will reduce fixed costs further while maintaining the scope for upscaling.

Financial developments in 2013

Despite the challenging market developments, RSG's results show a number of improvements compared to 2012. The final net income figure was impacted particularly by the write-down of the real estate, a provision for the previously announced reorganisation and a write-down of deferred tax assets. Without exceptional items, net income would have amounted to € 0.7 million. The interest bearing debt was reduced by over €10 million in 2013.

In millions of euros		2013			2012
	Before exc. items	Exceptional items	Total	Before exc. items	Exceptional items	Total
Revenues Added value	291.6 150.9	0.0	291.6 150.9	316.4 161.6	0.0	316.4 161.6

EBITDA	17.2	-2.6	14.6	19.5	1.8	21.3
EBIT	3.9	-4.0	-0.1	-3.0	-26.6	-29.6
Net income	0.7	-4.8	-4.1	-5.0	-24.2	-29.2

Joost de Haas, CEO: "We have made great strides in improving productivity and controlling costs. As a result of the savings programmes implemented under the name 'Faster, Better, Higher', we have seen production costs fall by around 6% and productivity rise by around 4%. We are also actively engaged in developing initiatives to achieve a further increase in added value. In this regard we are looking particularly at possible ways of playing a greater role in the value chain by integrating further with our customers and playing a bigger part in distribution, for example."

Revenues from operating activities decreased to €291.6 million (2012: €316.4 million), mainly as a result of lower print runs, smaller magazine sizes and withdrawals of titles from the market by customers. The added value amounted to €150.9 million (2012: €161.6 million) due to lower selling prices. Personnel costs fell sharply as a result of the reorganisations carried out in the beginning of 2013 in the Print Productions businesses.

The average number of employees, based on FTEs, decreased from 1,586 in 2012 to 1,516 in 2013. The restructuring programme led to the recognition of a €2.9 million reorganisation charge. The remainder of the reorganisation is being implemented in 2014, taking the reduction in FTEs in the reorganisation as a whole to approximately 170.

The EBITDA, after restructuring costs, decreased to €14.6 million (2012: €21.3 million). Operating income (EBIT) in 2013 amounted to -€0.1 million (2012: -€29.6 million). The cash flow from operating activities rose to €17.5 million (2012: €12.5 million). Net investments in fixed assets amounted to €7.1 million (2012: €5.7 million).

Financing and covenants

With a ratio of 30.1% according to the definition used by ING Bank, RSG was in compliance with the 25% solvency requirement at the end of 2013. The solvency ratio according to the definition used in ABN AMRO Bank's was 24.6% at the end of 2013 and thus complied with the 23.5% solvency requirement. The other covenants agreed with the banks (the debt service coverage ratio and the debt/EBITDA ratio) were also met.

RSG was able to reduce its debt position further. At the end of 2013, debt amounted to €58.9 million, compared to €69.7 million as at 31 December 2012.

Total interest-bearing debt at the end of 2013 was made up as follows:

• – 25.5% (€15.0 million) from financial leases for presses and peripheral equipment;
• – 12.3% (€7.3 million) from a mortgage loan;
• – 62.2% from other bank debts (€36.6 million).

RSG conducted consultations with ABN AMRO Commercial Finance and ING Bank on renewals of the credit facilities. This led to the renewal of the agreement with ABN AMRO Commercial Finance based on the same collateral and with additional covenants to July 2016. The mortgage loan from ING Bank was also extended by one year on the existing terms.

Performance in 2013

Steps were taken in 2012 towards greater responsibility and transparency at operating level. To that end the businesses were clustered into four 'divisions', resulting in a further concentration of responsibilities, particularly in the Roto Smeets cluster. The underlying reason for this is the principle that additional returns can only be generated in graphics businesses through

entrepreneurship, cost awareness and tight cash management. All divisions had to contend with a very sluggish market and increasing competition in 2013.

Roto Smeets

The markets served by Roto Smeets' rotary printing businesses are still trending negatively. The paper volume in Western Europe contracted by around 5% in the first three quarters of 2013 compared to the same period in 2012. This contraction is mainly due to the discontinuation of publications, reduced publication frequencies, fewer pages, smaller formats and lower print runs. This is leading in turn to increased competition among printing businesses, the ultimate result being not only lower volumes but also lower prices. In this environment Roto Smeets was able to process the same volume of paper in 2013, but at lower selling prices. In order to absorb this price reduction, projects are constantly being deployed within the Group to cut costs, deliver greater added value and shorten turnaround times. As a result, Roto Smeets was able to reduce production costs by an average of 6% in 2013. Productivity per FTE rose by 4% and maintenance cost savings of ±€2 million were achieved.

Senefelder Misset

Senefelder Misset (SMD) serves a wide customer base, mainly comprising the not-for-profit sector (associations and foundations) and publishers of magazines and specialist journals, providing a wide range of support services. This broad service offering enabled Senefelder Misset to keep its earnings relatively stable. The market trend towards declining print runs, lower average order sizes and organically lower potential print volumes continued in 2013. The number of orders therefore had to grow further in order to maintain the required volumes. SMD was largely successful in that objective.

Status of restructuring

At the end of October 2013 the management submitted an opinion request to the Central Works Council detailing a number of intended decisions aimed at further improving the cost structure but also making the businesses more enterprising. This request relates particularly to the Roto Smeets and Senefelder Misset divisions. It concerns the introduction of efficiency measures and a restructuring of the divisions. The Central Works Council has now issued a positive opinion on the efficiency measures in the indirect area and the change to the operating structures in a number of businesses, involving the loss of 170 jobs in total at the Deventer, Etten-Leur, Weert and Doetinchem sites. This is expected to be completed by mid-2014.

Roto Smeets GrafiServices

Roto Smeets GrafiServices (RSGS) started 2013 well – and even better than in 2012 – but encountered a drop in demand in the market in the second half of the year. Marketing and communication budgets in the business-to-business segment served by RSGS fell sharply again in 2013. As a result of ever shorter contract award periods, prices are increasingly being dictated by supply and demand at the particular time. This is reflected in reductions of publication size and frequency by a large proportion of customers. Turnaround times are becoming ever shorter, but this is a key part of the RSGS proposition thanks to investments in past years. RSGS expects this to be one of the areas providing opportunities in 2014.

MediaPartners Group

MediaPartners Group (MPG) has strengthened its market position and grown substantially in the last few years, but the advance stagnated somewhat in 2013. MPG's market segment also saw customers postponing, reducing or changing the form of their communication. For example, Karwei, Randstad and Post NL ended their collaboration. In addition, margins on online projects remain lower than those on print productions. MPG nevertheless achieved 85% of its most

ambitious new business target ever in 2013.

MPG thus largely offset these losses with new orders from new and existing customers. For example, it recently welcomed Aegon International, Kips and FNV as customers and for Albert Heijn it expanded the Allerhande platform to include video (recipes supported by instruction videos).

2014

The early months of 2014 were marked by sluggish demand in the market. News of the bankruptcy of a major rotogravure competitor in the Netherlands enabled RSG to win a large three-year contract with TMG for the production of the Privé and Vrouw magazines. RSG will also fulfil a number of substantial retail orders from 2014.

Richard de Booij was appointed as the new CEO of MediaPartners Group in January. In addition to his entrepreneurial experience, Richard brings knowledge of the video and online space. These services are set to become increasingly important in the content marketing area.

The continued restructuring of the Roto Smeets and Senefelder Misset divisions referred to above reduces the 'span of control' of the current CEO of the Roto Smeets division. Since this does not accord with Maarten Coerman's level of ambition, he has decided to focus on a future outside the Group. Subject to a positive opinion from the Central Works Council, RSG intends to appoint Frans Boelens, the current Plant Manager of Roto Smeets Weert, and Ronald van Rossum, the CEO of Senefelder Misset, as the officers with ultimate responsibility for the Commercial Print and Publishing divisions respectively.

Outlook

RSG is aware that print volumes are set to decline in the years ahead. But acceptable returns can also be achieved in declining and consolidating sectors. RSG has demonstrated its ability to adapt rapidly to changing market conditions over the years.

Margins on printing will remain under pressure in the years ahead. Combined with the limited credit facilities this means there will be less scope to absorb any setbacks and investments must be assessed even more critically. Sharp cost-cutting, tight financial management and optimum capacity utilisation have so far made it possible to keep pace with the decline of the market. .

However, continued productivity improvements and shorter turnaround times are no longer sufficient. An increase in scale from joint ventures, co-operation agreements or take-over must result in more competitive cost prices. But in particular greater added value must be delivered through cost savings on the customer side and the development of new services to maintain continuous improvements in results. RSG thereby expects to create a sustainable position in the years ahead.

Joost de Haas, CEO: "Our balance sheet remains relatively strong compared to those of other graphics businesses. We are increasingly seeing weaker competitors disappear from the market, further reducing the overcapacity. The restructuring we have implemented has prepared us for the next phase in the rationalisation of the graphics market. RSG has relatively good prospects and has demonstrated its ability to adapt to difficult market conditions. We have a strong group of businesses occupying leading positions in the segments in which they operate. We will continue to develop this lead in the years ahead."

Key financial dates in 2014 Notice of AGM 2 April 2014 Registration date 16 April 2014

AGM	14 May 2014
First-quarter business update	14 May 2014
First-half figures	21 August 2014
Third-quarter business update	6 November 2014

About Roto Smeets Group

Roto Smeets Group NV is listed on NYSE Euronext Amsterdam and is one of the leading graphics media companies in Western Europe. Roto Smeets Group specialises in the production of printed and multimedia communications by companies clustered into two business lines: Print Productions – focused on the efficient production of full-service graphic and related services; and Marketing Communications – focused on the production of content-rich media and resources based on solid communication strategies.

Annexes: 2013 full-year figures

Additional information: The figures in this press release are based on the 2013 financial statements which will be presented for adoption at the Annual General Meeting of Shareholders (AGM). The figures in this press release are unaudited.

The annual report containing the complete full-year figures and the notice of the AGM will be available on the company's website on 2 April and will be sent to recipients who have requested it. This year's AGM will be held at 3pm on Wednesday 14 May at the company's offices in Deventer.

Note to editors, not for publication

For further information:

Joust de Haas, CEO Tel.: 0570 69 49 01

AGM press conference on 14 May

The usual press conference will take place immediately after the AGM on 14 May. Members of the press can register via emily.knegtel@rotosmeetsgroup.com.

Consolidated profit and loss account

	Before
	exceptional	Exceptional
(amounts x € 1.000)	items	items	2013
Total revenue	291,601	-	291,601
Cost of raw materials and consumables	-112,410	-	-112,410
Cost of subcontracted work and other external costs	-28,289	-	-28,289
Value-added	150,902	-	150,902
Other revenue	893	-	893
	151,795	-	151,795
Personnel expenses	-99,539	-2,619	-102,158
Depreciation intangible fixed assets	-250	-	-250
Depreciation tangible fixed assets	-13,014	-	-13,014
Exceptional impairments	0	-664	-664
Unrealised revaluation of investment properties	0	-725	-725
Other operating costs	-35,062	-23	-35,085
Operating result	3,930	-4,031	-101
Financing income	169	-	169
Financing costs	-2,867	-	-2,867
Result before taxation	1,232	-4,031	-2,799
Income tax	-557	-744	-1,301
Result after taxation	675	-4,775	-4,100
Attributed to: Shareholders Roto Smeets Group NV			-4,100
Key Figures
Average number of outstanding ordinary shares			3,290,275
Attributed to shareholders Roto Smeets Group NV: Ordinary and diluted earnings per share (€)			-1.25
Value-added in % of revenue			51.7%

Consolidated profit and loss account

	Before
	exceptional	Exceptional
(amounts x € 1.000)	items	items	2012
Total revenue	316,389	-	316,389
Cost of raw materials and consumables	-124,083	-	-124,083
Cost of subcontracted work and other external costs	-30,706	-	-30,706
Value-added	161,600	-	161,600
Other revenue	1,229	-	1,229
	162,829	-	162,829
Personnel expenses	-105,174	-556	-105,730
Depreciation intangible fixed assets	-115	-	-115
Depreciation tangible fixed assets	-22,284	-	-22,284
Exceptional impairments	0	-26,515	-26,515
Unrealised revaluation of investment properties	0	-1,961	-1,961
Other operating costs	-38,232	2,383	-35,849
Operating result	-2,976	-26,649	-29,625
Financing income	50	-	50
Financing costs	-3,248	-	-3,248
Result before taxation	-6,174	-26,649	-32,823
Income tax	1,215	2,418	3,633
Result after taxation	-4,959	-24,231	-29,190
Attributed to: Shareholders Roto Smeets Group NV			-29,190
Key Figures Average number of outstanding ordinary shares			3,290,275
Attributed to shareholders Roto Smeets Group NV: Ordinary and diluted earnings per share (€)			-8.87
Value-added in % of revenue			51.1%

CONSOLIDATED BALANCE SHEET

ASSETS Fixed assets Intangible fixed assets 1,882 2,099 Tangible fixed assets 76,655 82,547 Investment properties 11,570 12,295 Associated companies / joint ventures - - Deferred tax assets 11,384 13,510 Other financial fixed assets 10 9 101,501 110,460 Current assets Stocks 5,690 5,818 Trade receivables 41,733 49,443 Other receivables / prepayments 8,486 9,930 Cash and cash equivalents 435 628 56,344 65,819 Total assets 157,845 176,279 EQUITY AND LIABILITIES Equity attributed to equity holders of Roto Smeets Group NV
Issued share capital
16,451 16,451 Share premium
12,833 12,833 Revaluation reserve
3,164 3,708
Retained earnings 17,958 21,514 Other reserves
-1,571 -2,182 Total equity 48,835 52,324
Long-term liabilities
Provisions 3,386 3,056
Interest-bearing loans:
Loans 6,250 -
Lease obligations 9,270 4,548
18,906 7,604
Current liabilities
Trade and other liabilities 39,268 43,197
Finance companies 36,646 38,451
Interest bearing loans 6,719 26,696
Income tax payable 5,338 4,784
Financial derivatives 963 2,082
Provisions 1,170 1,141
90,104 116,351
Total liabilities 109,010 123,955
Total equity and liabilities 157,845 176,279

Consolidated overview of realised and unrealised results

(amounts x € 1.000)	2013	2012
Result after tax	-4,100	-29,190
Unrealised results
Value changes forward currency contracts	894	248
Foreign currency translation of foreign subsidairies	-59	-30
Revaluation investment properties	-	-
Taxation on results through equity	-224	-62
Unrealised results after taxes	611	156
Total realised and unrealised results after taxes	-3,489	-29,034
Attributed to:
Shareholders Roto Smeets Group NV	-3,489	-29,034

Consolidated overview of changes in equity

(amounts x € 1.000)	issued capital	share premium	revaluation reserve	retained earnings	other reserves	total
Balance as at January 1, 2013	16,451	12,833	3,708	21,514	-2,182	52,324
Result after taxes Unrealised results after taxes Total realised and unrealised results after			-544 -	-3,556	611	-4,100 611
taxes	-	-	-544	-3,556	611	-3,489
	-	-	-544	-3,556	611	-3,489
Balance as at December 31, 2013	16,451	12,833	3,164	17,958	-1,571	48,835

(amounts x € 1.000)	issued capital	share premium	revaluation reserve	retained earnings	other reserves	total
Balance as at January 1, 2012	16,451	12,833	3,708	50,704	-2,338	81,358
Result after taxes Unrealised results after taxes			- -	-29,190	156	-29,190 156
Total realised and unrealised results after taxes	-	-	-	-29,190	156	-29,034
	-	-	-	-29,190	156	-29,034
Balance as at December 31, 2012	16,451	12,833	3,708	21,514	-2,182	52,324

Consolidated cash flow statement

(amounts x € 1.000)	2013	2012
Cash flow from operating activities
Net result	-4,100	-29,190
Depreciation and exceptional impairments	13,928	48,914
Profit on sale of tangible fixed assets	-20	-63
(Deferred) taxation	2,126	-3,542
Other non-cash items	3,224	-592
Changes in
Stock	128	1,525
Trade receivables	7,047	3,444
Other receivables / prepayments	1,444	-1,320
Trade and other payables	-5,580	-5,836
Provisions	-698	-859
Cash flow from operating activities	17,499	12,481
Cash flow from investing activities
Investments in tangible fixed assets	-7,246	-5,596
Divestments in tangible fixed assets	143	615
Investments in intangible fixed assets	-33	-696
Net cash inflow acquisition vdbj_	-	626
Repayments on loans	1	2
	-7,135	-5,049
Cash flow from financing activities
Withdrawn risk-bearing loans	-	1,828
Repayments risk-bearing loans	-8,752	-6,800
Finance companies	-1,804	-2,275
	-10,556	-7,247
Effect of changes in exchange rates	-1	-1
Net change in cash and cash equivalents	-193	184
Cash and cash equivalents at beginning of year	628	444
Cash and cash equivalents at end of year	435	628

Segment information

The following summary shows the segment information in 2013

(amounts x € 1.000)	Print	Marketing	eliminations	total
	Productions	Communications
Revenue	271,013	20,588	-	291,601
Intersegment revenue	1,531	-	-1,531	-
Total revenue	272,544	20,588	-1,531	291,601
Net results	-4,454	354	-	-4,100
Assets and liabilities
Intangible fixed assets	527	1,355	-	1,882
Tangible fixed assets	75,302	394	-	75,696
Other assets	50,305	5,010	-	55,315
Investment properties				11,570
Unallocated assets				13,382
Total assets				157,845
Liabilities	61,429	4,266	-	65,695
Unallocated liabilities				43,315
Total liabilities				109,010
Other information
Investments in fixed assets	7,079	200		7,279
Depreciation including exceptional impairments	13,540	388		13,928

The following summary shows the segment information in 2012

(amounts x € 1.000)	Print	Marketing	eliminations	total
	Productions	Communications
Revenue	297,077	19,312	-	316,389
Intersegment revenue	1,068	-	-1,068	-
Total revenue	298,145	19,312	-1,068	316,389
Net results	-30,175	985	-	-29,190
Assets and liabilities
Intangible fixed assets	575	1,524	-	2,099
Tangible fixed assets	82,629	412	-	83,041
Other assets	55,004	6,764	-	61,768
Investment properties				12,295
Unallocated assets				17,076
Total assets				176,279
Liabilities	63,583	12,212	-	75,795
Unallocated liabilities				48,160
Total liabilities				123,955
Other information
Investments in fixed assets	5,956	336	-	6,292
Depreciation including exceptional impairments	48,664	250	-	48,914