HAL Trust

Annual Report 2010

The history of HAL dates back to April 18, 1873, when the Nederlandsch-Amerikaansche Stoomvaart-Maatschappij (N.A.S.M.) was founded in Rotterdam, the Netherlands. The Company continued its activities under various names and is now operating as HAL Holding N.V., a Curaçao company. All the shares of HAL Holding N.V. are held by HAL Trust and form the Trust's entire assets. HAL Trust was formed on October 19, 1977, by a Trust Deed which was last amended on May 28, 2001. The shares of the Trust are listed and traded on NYSE Euronext in Amsterdam.

HAL Holding N.V.'s annual report is included herein. A translation of this report is published in the Dutch language. Only the report in the English language is submitted to the General Meeting of Shareholders for approval.

HAL Holding N.V.
Johan van Walbeeckplein 11A
Willemstad
Curaçao
Telephone: (599) 9 4615 002
Telefax: (599) 9 4615 003

Postal address:
HAL Holding N.V.
5, Avenue des Citronniers
MC 98000 Monaco
Telephone: (377) 92 16 75 79
Telefax: (377) 93 25 54 34
www.halholding.com

Contents

4 Corporate Administration
5 Highlights and Financial Calendar
6 Report of the Trust Committee
7 Report of the Board of Supervisory Directors HAL Holding N.V.
8 Report of the Executive Board HAL Holding N.V.
19 Financial Statements HAL Trust
Consolidated Statement of Financial Position, 20
Consolidated Statement of Income, 21
Consolidated Statement of Comprehensive Income, 22
Consolidated Statement of Changes in Equity, 23
Consolidated Statement of Cash Flows, 25
Accounting Policies, 26
Notes to the Consolidated Financial Statements, 42
List of Principal Investments as of December 31, 2010, 62
Information relating to estimated value of the investment portfolio of HAL Holding N.V., 63
Financial Statements HAL Trust, 65
66 Distribution of Dividends
67 Independent Auditors' Report
68 Five-year Summaries
70 Financial Statements HAL Holding N.V.
72 Distribution of Profits
73 HAL Trust Organization
74 Description Corporate Governance HAL Holding N.V.
77 Information in respect of members of the Board of Supervisory Directors
78 Notice to Trust Shareholders

Corporate Administration

HAL Holding N.V.

Board of Supervisory Directors:
S.E. Eisma, Chairman
T. Hagen
P.J. Kalff
A.H. Land
M.P.M. de Raad

Executive Board:
M. van der Vorm, Chairman
M.F. Groot

Chief Financial Officer:
A.A. van 't Hof

Highlights

and Financial Calendar

In euro	2010	2009
Income (in millions)
Revenues	3,768.9	3,447.8
Income from marketable securities and deposits	25.5	22.9
Income from associates	283.4	199.0
Income from other financial assets	4.4	0.7
Income from real estate activities	14.6	7.7
Net income	432.1	347.2
Statement of Financial Position
Total assets (in millions)	5,778.4	4,957.2
Equity attributable to the owners of the parent (in millions)	3,595.1	3,132.4
Equity attributable to the owners of the parent (as a percentage of total assets)	62.2	63.2
Numbers of Shares (in thousands)	65,388*	63,571*
Average number of shares outstanding (in thousands)	64,548*	63,554*
Per Share
Net income	6.69	5.46
Shareholders' Equity	54.98	49.27
Net asset value at market value of quoted associates	89.91**	74.14**
Closing price Shares HAL Trust	94.00	71.50
Volume weighted average December share price HAL Trust	92.81	70.53
Dividend per share	3.75***	2.85
Exchange rates – December 31
U.S. dollar per euro	1.34	1.43

Financial calendar

Shareholders' meeting HAL Trust and interim statement May 18, 2011

Ex-dividend date May 20, 2011

Election period cash/stock (stock being default) May 20 – June 9, 2011 (3:00 p.m.CET)

Dividend record date May 24, 2011

Determination and publication dividend conversion ratio June 9, 2011 (after close of trading)

Delivery of shares and payment of cash dividend June 17, 2011

Publication of 2011 half year results August 30, 2011

Interim statement November 15, 2011

Publication of preliminary net asset value January 24, 2012

Publication of 2011 annual results March 27, 2012

Shareholders' meeting HAL Trust and interim statement May 16, 2012

Net of treasury shares
** Based on the market value of the quoted companies and the liquid portfolio and on the book value of the non-quoted investments
*** Proposed

Report of the Trust Committee

HAL Trust

HAL Trust was formed in 1977 and holds all the outstanding shares of HAL Holding N.V.

For further details of the organization see page 73.

In accordance with the instructions issued on May 19, 2010 the Trust distributed a dividend of € 2.85 per share on June 18, 2010. This dividend was payable in shares HAL Trust unless a shareholder expressly requested for payment in cash.

Accordingly, a cash dividend was paid on 14,360,039 shares for a total of € 40.9 million and 1,793,702 HAL Trust shares were issued as stock dividend.

On December 31, 2010, 65,480,552 HAL Trust shares were issued (2009: 63,686,850).

On December 31, 2010, HAL Holding N.V. owned 92,210 HAL Trust shares (2009:116,295).

The Trust Committee
HAL Trust Committee Ltd.

March 24, 2011

Report of the Board of Supervisory Directors of HAL Holding N.V.

The Board of Supervisory Directors supervises the Executive Board and provides advice to the general meeting of shareholders. In discharging its role, the Board of Supervisory Directors is guided by the interest of HAL Holding N.V. and its business. The composition of the Board was unchanged in 2010 and consisted of five members. Their names, nationality and other relevant information are mentioned on page 77 of this report. The general meeting of shareholders reappointed Mr. T. Hagen, who had resigned in accordance with the rotation schedule, as a member of the Board on May 27, 2010.

The Board exercised its supervisory task by having in-depth discussions with the Executive Board during seven meetings, of which two by telephone, which were attended by all Supervisory Board members with one exception due to illness.

Based on written and verbal information provided by the Executive Board, the status of the Company was discussed and evaluated. More specifically, the following subjects, among others, were addressed during these meetings: the strategy, the budget, the development of the results, the quarterly, semi-annual and annual reports, the remuneration policy, potential investments, the dividend policy and the risks associated with the Company and the design and implementation of the systems of internal control. In this respect, the Board was provided with the results of the risk management review in relation to the financial reporting of the Company, which was conducted during 2010. The results of this review were discussed with the Executive Board. For further information relating to this subject, we refer to the relevant paragraph in the report of the Executive Board on page 16.

The Board had discussions with the external auditor during three meetings. Subjects for discussion were the financial statements, the report on the first half of 2010, impairment testing and the systems of administrative and internal controls.

The Board of Supervisory Directors also met in the absence of the Executive Board to discuss, among other matters, the functioning and composition of the Board as well as the functioning of the Executive Board. All members of the Board of Supervisory Directors were present during the Shareholders' meeting of HAL Trust on May 19, 2010 in Rotterdam.

The Board did not form any committees. Between the meetings of the Board of Supervisory Directors the Chairman of the Board maintained more intensive contacts with the Chairman of the Executive Board. Individual members of the Board provided their views with respect to specific matters relevant to the Company.

The financial statements for 2010 were prepared by the Executive Board and discussed by the Board in the presence of the external auditor during its meeting on March 24, 2011. After the review of the unqualified opinion provided by PwC Bermuda, and the findings of the external auditor as summarized in a report to the Board of Supervisory Directors and the Executive Board, the financial statements were signed by all members of the Board of Supervisory Directors. The Board approved the amounts reserved as proposed by the Executive Board.

The Board recommends that the Shareholders of HAL Trust instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V., to be held on May 26, 2011, for the approval of the financial statements for 2010 as per the documents submitted and the proposed distribution of profits.

It should be noted that the Dutch Corporate Governance Code is not applicable to HAL Holding N.V. in view of the fact that HAL Holding N.V. is not a Dutch company. Neither are other Corporate Governance Codes applicable to HAL Holding N.V. Pages 74 through 76 of this report provide a description of HAL Holding N.V.'s corporate governance structure.

In accordance with the rotation schedule, Mr. S.E. Eisma will resign this year. He is available for a new term. We propose that the Shareholders instruct the Trustee to vote at the Annual Meeting of HAL Holding N.V., to be held on May 26, 2011, for the re-election of Mr. S.E. Eisma.

On behalf of the Board of Supervisory Directors, S.E. Eisma, Chairman

March 24, 2011

Report of the Executive Board HAL Holding N.V.

Introduction

Net income of HAL Holding N.V. for 2010 amounted to € 432.1 million (€ 6.69 per share) compared with € 347.2 million (€ 5.46 per share) for 2009. This increase was primarily due to higher income from associates.

In 2010 the Company's net asset value increased by 26% or € 1,205 million (€ 18.66 per share) compared with an increase of € 1,497 million (€ 23.56 per share) in 2009.

After deducting the cash portion of the dividend over 2009 (€ 41 million) and taking into account the sale of treasury shares (€ 2 million), the net asset value increased from € 4,713 million (€ 74.14 per share) on December 31, 2009, to € 5,879 million (€ 89.91 per share) on December 31, 2010. Increases in share prices and dividends of the quoted companies had a positive effect on the net asset value of € 940 million in 2010. The net asset value is based on the market value of the quoted companies and the liquid portfolio and on the book value of the unquoted companies.

On December 31, 2010, estimated value of the unquoted companies, based on the principles and assumptions set out on pages 63 and 64 of this report, exceeded the book value by € 863 million (€ 13.19 per share) compared to € 761 million (€ 11.96 per share) on December 31, 2009.

Dividend

The dividend policy is, barring unforeseen circumstances and provided sufficient liquid assets, to base the dividend on 4% of the volume weighted average share price of HAL Trust during December of the year prior to the year in which the dividend will be paid. Accordingly, the proposed dividend per share over 2010 amounts to € 3.75 (2009: € 2.85), payable in shares unless a shareholder expressly requests payment in cash.

Prospects

During the period from December 31, 2010, to March 18, 2011, the value of the ownership interests in quoted companies and the liquid portfolio decreased by € 240 million (€ 3.67 per share).

In view of the fact that a significant part of the Company's net income is determined by the results of the quoted companies and potential capital gains and losses, we do not express an expectation as to the net income for 2011.

Strategy

The Company's strategy is focused on acquiring and holding significant shareholdings in companies, with the objective of increasing long-term shareholders' value. When selecting investment candidates the Company emphasizes, in addition to investment and return criteria, the potential of playing an active role as a shareholder and/or board member. Given the emphasis on the longer term, the Company does not have a pre-determined investment horizon.

HAL also owns real estate. The real estate investment activities are concentrated in the greater Seattle metropolitan area with an emphasis on the development and rental of multi-family properties and office buildings.

Risks

There are a number of risks associated with this strategy and with its implementation. Financial risks are further described in the financial statements on pages 39 through 41. Besides risks which are specific to individual companies (these risks are not managed by HAL Holding N.V., see page 16), important risk factors are summarized below.

Concentration risk

Concentration risk exists with respect to both the unquoted companies and the quoted companies.

Unquoted companies

Revenues of the consolidated subsidiaries for 2010 amounted to € 3,769 million. Optical retail activities represented 58% of this amount. At the end of 2010 the book value of the investments in unquoted companies amounted to € 1,816 million. An estimate of value of these assets, based on the principles and assumptions set out on pages 63 and 64 of this annual report,

amounted to € 2,678 million. Estimates of value can fluctuate significantly from year to year. In addition, values realized may be materially different from these estimates. The optical retail activities represented 65% of this amount. Accordingly, there is concentration risk with respect to the optical retail industry. A decrease in revenues of the optical retail activities, for example due to an economic recession, may have a significant impact on the profitability of HAL. A 10% decrease in revenue could, everything else being equal, affect the profit before tax by approximately € 100 million.

Quoted companies

At the end of 2010 the stock market value of HAL's interests in quoted companies amounted to € 3.7 billion. This includes Koninklijke Vopak N.V. (€ 2,192 million, 2009: € 1,723 million), Koninklijke Boskalis Westminster N.V. (€ 1,187 million, 2009: € 867 million), Safilo Group S.p.A. (€ 282 million, 2009: € 3 million) and Dockwise Ltd. (€ 88 million, 2009: € 78 million). In addition, HAL owns Senior 9⁵/₅% Notes issued by Safilo Group S.p.A. (€ 102 million). Accordingly, HAL is exposed to concentration risk, also with respect to these assets. Changes in stock prices of these companies may have a significant effect on the net asset value of HAL.

Market value risk

In addition to the interests in quoted companies described above, HAL owns, at the end of 2010, equities which are part of the liquid portfolio for an amount of € 90 million. The value of these assets can be subject to significant fluctuations as a result of the volatility of the stock markets. In 2010 the interests in quoted companies and the equities in the liquid portfolio contributed € 960 million to the increase in net asset value (2009: € 1,310 million). The change in market value (based on stock exchange prices) of the quoted companies where HAL's interest exceeds 20% does not have an impact on the valuation in the financial statements as these assets are accounted for using the equity method.

Interest rate risk

Investments in fixed income instruments are exposed to fluctuations in interest rates. As of December 31, 2010 this risk mainly relates to the Company's interest in Safilo Senior 9⁵/₅% Notes which mature in May 2013

(€ 102 million). In addition, the risk of an increase in interest rates exists with respect to the Company's consolidated debt position. This debt position is primarily at the level of the consolidated subsidiaries. The potential impact is detailed in the financial statements on page 41. Of the € 1,036 million bank debt outstanding at the end of 2010, 61% was at fixed rates for an average period of 3.8 years.

Currency risk

Currency translation risk exists as a result of the translation of (net) balance sheet positions from a foreign currency to Euro. At the end of 2010 the currency translation risk, excluding the translation risk of associates, amounted to € 784 million. The exposure with respect to the net assets in U.S. Dollar, British Pound and Japanese Yen (€ 437 million) was hedged for 91% by forward exchange contracts. The investment in Dockwise Ltd. is hedged against fluctuations of the U.S. Dollar as this company uses the U.S. Dollar as its functional currency. The hedge of the net assets in British Pound relates to the unhedged currency translation exposure of GrandVision S.A. The use of forward exchange contracts has an impact on the size of the liquid portfolio when the exchange rates of the hedged currencies change. Results relating to the hedge of the investment in Dockwise Ltd. are (in accordance with IFRS) recognized in the statement of income. Currency translation risks with respect to other currencies are not hedged. At the end of 2010 the currency translation risk with respect to these currencies amounted to € 347 million. The maximum exposure in an individual country at year-end exchange rates was € 75 million. The potential impact is further detailed on page 40 of the financial statements.

Credit risk

HAL is subject to credit risk with respect to financial instruments and liquid assets. This risk relates to the possibility that a counterparty is unable to comply with its contractual obligations. To reduce the Company's exposure to credit risk, transactions are generally only entered into with counterparties that have a strong credit rating (S&P credit rating varying from A/A-1 to AAA/A-1+). At the end of 2010 the liquid assets (excluding equities) amounted to € 267 million of which € 35 million was part of the 'corporate' liquid portfolio. HAL also has counterparty risk as a result of derivative

financial instruments (page 56). In addition, there is credit risk with respect to the investment in Senior 9³/s% Notes issued by Safilo Group S.p.A. maturing in May 2013 (€ 102 million).

Liquidity risk

Liquidity risk relates to situations where a company is unable to comply with its financial obligations. The financial liabilities mainly relate to the consolidated subsidiaries. The liquidity risk of the consolidated subsidiaries is detailed on page 39 of the financial statements. HAL Holding N.V. had bank debt amounting to € 77 million outstanding as of December 31, 2010. This bank debt was drawn under committed facilities of € 365 million, maturing in 2012 and 2013.

Acquisition risk

In the process of acquisitions, the Company makes hypotheses, assumptions and judgements about possible future events. Actual developments may turn out to be significantly different. In addition, errors of judgement in due diligence and contract negotiations as well as non compliance with laws and regulations in the context of acquisitions, could result in (opportunity) losses and/or reputational damage for the Company.

Other

In addition to the above mentioned risk factors, it should be noted that the profitability and the net asset value of the Company are susceptible to economic downturns. Demand for the products and services of the subsidiaries and minority owned affiliates or their profitability may decline as a direct result of an economic recession, inflation, changes in the prices of raw materials, consumer confidence, interest rates or governmental (including fiscal) policies, legislation as well as geopolitical developments.

Investments

Optical retail subsidiaries

In May, Pearle Europe acquired a 25% interest in the Mexican optical retail chain Grupo Óptico Lux including an option for an additional 45% which can be exercised after two years. Grupo Óptico Lux is located in Mexico City and operates approximately 70 stores, mainly in Mexico City and a number of other larger cities

in Mexico. The company has approximately 800 employees and reported revenue of approximately MXN 719 million (€ 44 million) for 2010.

In December, Pearle Europe acquired 100% of the shares of Tide Ti, a sunglass and optical retailer in Mexico. Tide Ti is located in Cancún, Mexico, and operated 60 stores under the Sunglass Island and Optical Island brands at the end of 2010. The company has approximately 370 employees and reported revenue of MXN 339 million (€ 21 million) for 2010.

Other unquoted subsidiaries

In January, the Company's interest in FD Mediagroep B.V. was increased from 49.1% to 98.25%. Further information on FD Mediagroep is provided on page 13.

In March 2010, HAL's hearing aid retail subsidiary AudioNova International B.V. acquired a 75% stake in GEERS Hörakustik, a Dortmund (Germany) based hearing aid retailer. As a result of a put/call agreement HAL has the obligation to acquire, during 2014-2016, the remaining 25%. GEERS operated 471 company owned stores at the end of 2010, mainly in Germany, Switzerland and Poland. As part of the transaction, AudioNova's existing German operations will be combined with the German operations of GEERS. The combination operated 600 company owned stores at the end of 2010, with annual revenues of approximately € 135 million.

In July, HAL's office furniture subsidiary Koninklijke Ahrend N.V. acquired, via a bankruptcy sale, the office furniture activities of ASPA in the Benelux. This acquisition contributed € 6 million to the revenue of Ahrend during 2010. HAL's interest in Ahrend increased from 79% to 99% in November. Further information on Ahrend is provided on page 12.

In September, a minority interest (49%) was acquired in Gispen Group B.V. Gispen is also active in the office furniture industry and has annual revenues of approximately € 60 million. Ahrend and Gispen will continue to operate separately as independent competitors.

In February 2011 an agreement was reached for the acquisition of a 45% interest in Atlas Services Group Holding B.V. Atlas specializes in supplying professionals to the energy and marine industry worldwide. Revenues for 2010 amounted to approximately € 110 million. The transaction is subject to conditions customary for transactions of this nature such as approval by the relevant antitrust authorities. The transaction is expected to close in the second quarter of 2011.

Publicly traded minority interests

In February, the Company’s interest in Safilo Group S.p.A. was increased from 2.08% to 37.2% for € 148 million. Further information on Safilo is provided on page 14.

In December, HAL participated for € 15 million in a rights issue by Dockwise Ltd. Following this issue, HAL’s interest increased from 17.5% to 17.87%. Further information on Dockwise is provided on page 15.

Optical retail subsidiaries

HAL’s optical retail subsidiaries at the end of 2010 consisted of Pearle Europe B.V., GrandVision S.A., Atasun Optik and Shanghai Red Star Optical Co. In July it was announced that the activities of Pearle Europe and GrandVision will be combined in 2011. At the end of 2010 the optical retail companies were active in 40 countries and operated approximately 4,400 optical stores (2009: 4,300), including 1,200 franchise and partner stores (2009: 1,300). The companies employed approximately 19,850 people at the end of 2010. The total system wide sales (defined as sales including sales of franchise and partner stores) amounted to approximately € 2.7 billion in 2010.

Revenues from the optical retail companies, as reported in the financial statements, amounted to € 2,194 million which represents an 8% increase compared with 2009 (€ 2,032 million). Excluding the effects of acquisitions and changes in currency exchange rates, revenues of the optical retail companies increased by € 74 million (3.7%). The 2010 same store sales (defined as the sales at constant currency exchange rates of those stores, excluding franchised stores, which were both on January 1, 2009 and on December 31, 2010 part of the store network), increased by 0.3% compared with a 2009 decrease of 1.6%. Revenues also increased due to the opening of new stores in 2009 and 2010. The 2010 operating income (earnings before interest, exceptional and non-recurring items, taxes and amortization of intangible assets but including amortization of software) of the optical retail companies amounted to € 258 million (2009: € 250 million). Operating income was negatively affected by losses totalling € 20 million (2009: € 12 million) in South-America, Spain and Turkey.

Pearle Europe B.V. (98.5%) owns and operates optical retail chains in 28 countries consisting of 3,017 stores at the end of 2010 (2009: 2,784), of which 697 operated under franchise agreements (2009: 687). The total system wide revenues for 2010 amounted to approximately € 1.6 billion. At the end of 2010, Pearle Europe employed approximately 11,900 people. Its head office is located at Amsterdam Airport Schiphol, the Netherlands. Revenues for 2010 amounted to € 1,271 million (2009: € 1,168 million), representing an increase of 9%. Excluding the effects of acquisitions and changes in currency exchange rates, revenues increased by € 47 million (4%). The 2010 same store sales increased by 0.9% compared with a 2% decrease in 2009. Revenues also increased due to the opening of new stores in 2009 and 2010. Operating income amounted to € 178 million (2009: € 174 million).

In 2010 Pearle Europe acquired a 25% interest in the Mexican optical retail chain Grupo Óptico Lux and a 100% interest in Tide Ti, a sunglass and optical retailer in Mexico.

HAL has had an ownership interest in Pearle Europe since 1996.

GrandVision S.A. (99.7%), based in Paris (France), owns and operates optical retail chains in France, the United Kingdom and 17 other countries. At the end of 2010 the company had a total of 1,278 stores (2009: 1,298), including 450 franchise and partner stores (2009: 580). GrandVision also owns a 30.2% interest in the Swiss optical retail chain Visilab. The decrease in the number of franchise and partner stores was due to the termination of contracts with partners in Spain. In 2010 GrandVision acquired HAL’s 81% interest in the Russian optical retailer Lensmaster (84 stores by the end of

2010). GrandVision employed approximately 7,400 people at the end of 2010. The total system wide revenues for 2010 (including franchise and partner stores) amounted to approximately € 1 billion.

Revenues for 2010, including revenues of Lensmaster for the full twelve months, amounted to € 895 million (2009: € 843 million, restated for the acquisition of Lensmaster). This represented a 6% increase. Excluding the effects of acquisitions and changes in currency exchange rates, revenues increased by € 23 million (2.7%). The 2010 same store sales decreased by 1.4% compared with a 2009 decrease of 0.8%. Revenues increased however due to the opening of new stores in 2009 and 2010. Operating income amounted to € 82 million (2009: € 81 million, restated for the acquisition of Lensmaster). HAL has had an ownership interest in GrandVision since 2001.

Atasun Optik (100%) is an Istanbul (Turkey) based optical retail company. At the end of 2010 it operated 43 stores (2009: 41). The company employs approximately 300 people. Revenues for 2010 amounted to TRY 40 million (€ 19 million) compared with TRY 27 million (€ 13 million) for 2009. Same store sales increased by 35.8% (2009: 2%). Operating income for 2010 was negative.

HAL has had an ownership interest in Atasun since 2007.

Shanghai Red Star Optical Co. Ltd (78%) operates a chain of optical retail stores in Shanghai (China). At the end of 2010 the company operated 63 stores (2009: 68) of which 37 under franchise contracts. Red Star employs approximately 250 people. Revenues for 2010 amounted to RMB 86 million (€ 10 million) compared with RMB 77 million (€ 8 million) for 2009. Same store sales increased by 16.5% (2009: decrease 12.2%). Operating income for 2010 was almost break-even.

HAL has had an ownership interest in Red Star since 2006.

Other unquoted subsidiaries

PontMeyer N.V. (56.7%) located in Zaandam (the Netherlands), is one of the leading suppliers of timber products and building materials in the Netherlands with 50 outlets and approximately 800 employees. Revenues for 2010 decreased by € 26 million (8%) to € 304 million. This decrease was primarily due to lower volumes as a result of reduced activity in the Dutch construction industry. The operating income amounted to € 1 million negative (2009: negative € 3 million).

HAL has had an ownership interest in PontMeyer since 1999.

AudioNova International B.V. (96.1%) is a Rotterdam (the Netherlands) based retail company that sells hearing aids via its European subsidiaries. At the end of 2010 the company employed approximately 2,800 people and operated 989 stores in 12 European countries. Revenues for 2010 increased by € 99 million to € 280 million, primarily due to the acquisition of GEERS in Germany. Excluding acquisitions, revenues increased by € 14 million (8%) due to the opening of new stores and an increase in 2010 of same store sales by 4.3% (2009: decrease in same store sales of 5.9%). Operating income increased by € 15 million to € 33 million.

HAL has had an ownership interest in AudioNova since 2001.

Broadview Holding B.V. (97.4%) is located in 's-Hertogenbosch (the Netherlands) and owns Trespa International B.V. and Arpa Industriale S.p.A. Trespa is located in Weert (the Netherlands) and produces High-Pressure Laminate (HPL) products, mainly for exterior applications. Arpa also produces HPL-products, mainly for interior applications, and is located in Bra (Italy). Broadview employs approximately 1,100 people. Revenues for 2010 increased by € 21 million to € 273 million. This increase was mainly due to higher sales in France and Germany. The operating income increased by € 6 million to € 35 million.

HAL has had an ownership interest in Broadview/Trespa since 1996.

Koninklijke Ahrend N.V. (99%) is based in Amsterdam (the Netherlands) and employs approximately 1,200 people. The company is active in the office furniture industry in the Benelux, Central and Eastern Europe, Germany, the United Kingdom, Spain, Russia, the United States and the United Arab Emirates. Revenues for 2010 increased by € 5 million to € 190 million. This increase was the result of acquisitions in 2010 (primarily ASPA).

Operating income was negative € 6 million (2009: negative € 9 million).
HAL has had an ownership interest in Ahrend since 2001.

Intersafe Trust B.V. (95.5%) is a distributor of personal protection equipment such as safety clothing for factory workers and is located in Dordrecht (the Netherlands). The company employs approximately 400 people. Revenues for 2010 amounted to € 113 million (2009: € 119 million). This decrease was almost fully attributable to lower revenues in France. Operating income was at the same level as in 2009 (break-even).
HAL has had an ownership interest in Intersafe since 2001.

Delta Wines B.V. (65%), an importer and distributor of wine, is located in Waddinxveen (the Netherlands) and employs approximately 50 people. Revenues for 2010 amounted to € 96 million (2009: € 85 million). Acquisitions contributed € 3 million to 2010 revenues. Operating income for 2010 also increased. HAL has had an interest in Delta Wines since 2007.

Mercurius Groep B.V. (98%) is a publisher and communication specialist based in Wormerveer (the Netherlands) and employs approximately 600 people throughout Europe. The communication activities consist of services to the financial industry such as printing of prospectuses and providing virtual data rooms. The other activities mainly consist of the production and distribution of plant labels, announcement cards and calendars. In 2010, the financial communication activities were segregated from the other businesses. Revenues for 2010 amounted to € 94 million (2009: € 111 million). The decrease in revenues was mainly due to lower sales with respect to traditional financial communication (prospectuses). As a result of the decrease in revenues, operating income for 2010 became negative.
HAL has had an ownership interest in Mercurius since 1999.

Anthony Veder Group N.V. (64.2%) is a Rotterdam (the Netherlands) based shipping company which, at the end of 2010, operated 21 gas tankers of which 13 in (partial) ownership. The company employs approximately 350 people. Revenues for 2010 increased by $ 6 million (€ 4 million) to $ 117 million (€ 87 million). Operating income decreased by $ 3 million (€ 2 million) to $ 10 million (€ 7 million). This decrease was mainly due to higher costs.
HAL has had an ownership interest in Anthony Veder since 1991.

FD Mediagroep B.V. (98.3%) is located in Amsterdam (the Netherlands) and publishes the Dutch financial newspaper "Het Financieele Dagblad". FD Mediagroep also operates the radio station "BNR Nieuwsradio" and internet sites (fd.nl and fondsnieuws.nl). The company employs approximately 250 people. Revenues for 2010 amounted to € 56 million (2009: € 55 million). Operating income also increased. HAL has had an ownership interest in FD Mediagroep since 1997.

Orthopedie Investments Europe B.V. (89%) manufactures and sells orthopaedic devices and is located in Haarlem (the Netherlands). The company operates in the Netherlands under the name Livit B.V. and employs approximately 500 people. Livit operates a network of approximately 40 specialised care centres and over 200 fitting locations throughout the country. Revenues for 2010 amounted to € 51 million (2009: € 49 million). Operating income also increased.
In 2010 the company acquired a 46% interest in Lutterman GmbH in Essen (Germany). Lutterman sells medical aids in Germany and reported 2010 sales of approximately € 45 million.
HAL has had an ownership interest in Orthopedie Investments Europe since 2007.

Sports Timing Holding B.V. (95%), located in Haarlem (the Netherlands), is the result of the merger between AMB i.t. Holding B.V. and the ChampionChip Group. The company operates under the MYLAPS brand and is active in the development and production of identification and timing equipment for sports events. The company employs approximately 100 people. Revenues for 2010 amounted to € 22 million (2009: € 21 million). Operating income for 2010 was lower than the year before.
HAL has had an ownership interest in Sports Timing Holding/AMB since 1998.

Flight Simulation Company B.V. (70%) is based at Amsterdam Airport Schiphol (the

Netherlands) and provides training for pilots using full flight simulators. The company employs approximately 40 people and, at the end of 2010, operated 14 simulators. Revenues for 2010 amounted to approximately € 13 million (2009: € 12 million). Operating income for 2010 was negative. HAL has had an ownership interest in Flight Simulation Company since 2006.

Unquoted minority interests

N.V. Nationale Borgmaatschappij (46.7%) is an Amsterdam (the Netherlands) based insurance company that specializes in bank guarantees, the reinsurance of bank guarantees and in credit insurance. The company operates in the Netherlands and Belgium and has an A-/stable rating from Standard & Poor's (January 2011). Total net premium revenue for 2010 amounted to € 65 million (2009: € 60 million). Net income for 2010 increased by € 10 million to € 18 million primarily as a result of improved insurance and investment results. HAL has had an ownership interest in Nationale Borgmaatschappij since 2007.

InVesting B.V. (11.7%) is a Hilversum (the Netherlands) based company with a focus on the purchase of bad debt portfolios for its own account and risk and debt collection activities. HAL has an option to increase its ownership interest to 58.7%. In March 2011 HAL gave notice of its decision to exercise the option. Completion of the transaction is subject to approval by the relevant anti-trust authorities. Revenues for 2010 increased to € 59 million (2009: € 44 million). Operating income increased by € 2 million to € 13 million. HAL has had an ownership interest in InVesting since 2006.

Private equity partnerships

At the end of 2010 HAL had investments in six private equity partnerships. The total book value of the investments amounted to € 41 million (2009: € 36 million). These partnerships are managed by Navis Capital Partners Ltd. ("Navis"), in which HAL has a 25% ownership interest. At the end of 2010 the partnerships managed by Navis had approximately € 1,250 million invested in a portfolio of companies, located in South-East Asia, China, India and Australia.

HAL has had an ownership interest in Navis since 1999.

Publicly traded minority interests

HAL has minority ownership interests in the following publicly traded companies:

Koninklijke Vopak N.V. (48.15%) is the world's largest independent tank terminal operator specializing in the storage and handling of liquid chemicals, gasses and oil products. The company operates 80 terminals in 30 countries with a storage capacity of more than 25 million cbm and had 3,763 employees at the end of 2010. The company is listed on NYSE Euronext in Amsterdam and had a market value at the end of 2010 of approximately € 4.5 billion. On December 31, 2010, HAL owned 48.15% of the common shares and 13.64% of the preferred shares. Revenues for 2010 increased by 11% to € 1,106 million. Net income for holders of ordinary shares amounted to € 261.9 million (2009: € 247.6 million). HAL has had an ownership interest in Vopak since 1999.

For additional information on Vopak please refer to the company's annual report and its website www.vopak.com.

Safilo Group S.p.A. (37.23%) is a Padua (Italy) based manufacturer and distributor of optical frames and sunglasses. The company is listed on the Milan stock exchange and had a market value of € 750 million at the end of 2010. Safilo had 8,148 employees at the end of 2010. Revenues for 2010 increased by 7% to € 1,080 million. Net income amounted to € 0.7 million (2009: loss of € 351.4 million). HAL also owns Senior 95/8% Notes issued by Safilo maturing in 2013. The market value of these notes amounted to € 102 million as of December 31, 2010 (par value of € 99 million). HAL has had an ownership interest in Safilo since 2005.

For additional information on Safilo please refer to the company's annual report and its website www.safilo.com.

Koninklijke Boskalis Westminster N.V. (32.93%) is a global services provider operating in the dredging, maritime infrastructure and maritime

service sectors. Boskalis has a fleet of over 1,000 units, operates in 65 countries across six continents and has approximately 14,000 employees (including its share in partnerships). The company is listed on NYSE Euronext in Amsterdam and had a market value at the end of 2010 of approximately € 3.6 billion. Revenues for 2010 increased by 23% to € 2,674 million. Net income for 2010 amounted to € 310.5 million (2009: € 227.9 million). The order book of the company at the end of 2010 amounted to € 3,248 million compared to € 2,875 million at the end of 2009. HAL has had an ownership interest in Boskalis since 1989.

For additional information on Boskalis please refer to the company's annual report and its website www.boskalis.com.

Dockwise Ltd. (17.87%) provides transport services to the offshore, onshore and yachting industries as well as installation services of extremely heavy offshore platforms. The company owns a fleet of 19 vessels and employed more than 1,200 people at the end of 2010. Dockwise is listed on the stock exchanges of Oslo and NYSE Euronext in Amsterdam and, at the end of 2010, had a market value of approximately € 500 million. Revenues for 2010 amounted to $ 439 million (€ 328 million) compared to $ 478 million (€ 334 million) for 2009. Net income for 2010 amounted to $ 17 million (€ 13 million) compared to $ 37 million (€ 26 million) for 2009. HAL has had an ownership interest in Dockwise since 2009.

For additional information on Dockwise please refer to the company's annual report and its website www.dockwise.com.

Real estate

At year end 2010 the Company's real estate assets, all located in the Seattle area, consisted of three office properties, with a total of 878,000 square feet of rentable space, and five development parcels, totalling 215,000 square feet of land. The book value of the real estate portfolio amounted to € 96 million at the end of 2010. In July, an office building with 103,000 square feet, of which 6% was occupied, was sold for

$ 16 million (€ 12 million) resulting in a pre-tax capital gain of $ 8 million (€ 6 million). In November, a nine story office building with 205,000 square feet of rentable space was purchased for $ 31 million (€ 23 million). The building is currently vacant. It is expected that the property will be fully leased in 2012. The other two office buildings were, in aggregate, 88% leased during 2010 (2009: 98%). On December 31, 2010 the buildings were 86% leased (2009: 97%). The average rent per rented square foot as of December 31, 2010 increased by 3.9% compared with the end of 2009.

With respect to estimated value of the real estate portfolio, reference is made to page 42 of the financial statements.

Liquid portfolio

The corporate liquid portfolio decreased in 2010 by € 109 million to € 125 million. This decrease was primarily due to acquisitions in 2010 and the payment of the cash part of the dividend over 2009. On December 31, 2010, the liquid portfolio consisted for 28% (2009: 52%) of fixed income instruments, amounting to € 35 million (2009: € 123 million), and for 72% (2009: 48%) of equities, for an amount of € 90 million (2009: € 111 million). The fixed income portfolio provided a return of 0.2% (2009: 0.7%). The duration of this portfolio at the end of 2010 was less than one month. The equity portfolio provided a return of 18.9% (2009: 43.1%).

Results

Revenues for 2010 amounted to € 3,769 million (2009: € 3,448 million). This represented an increase of € 321 million (9.3%). Excluding the effect of currency exchange rates and acquisitions, revenues increased by € 69 million (2%). This autonomous growth was mainly due to an increase in revenues of the optical retail subsidiaries.

Income from associates increased by € 84 million to € 283 million primarily as a result of higher earnings of the quoted associates (€ 37 million), the revaluation of the option to acquire 46.9% of the shares in InVesting B.V. (€ 33

million) and the revaluation of the minority interest in FD Mediagroep B.V. following the acquisition of a controlling interest in this company (€ 11 million).

Amortization and impairment of intangibles increased by € 24 million to € 74 million as a result of higher impairment charges on intangible assets and the acquisitions in 2010.

Financial expense increased by € 8 million to € 56 million primarily due to currency hedge transactions which, by their nature, did not qualify for hedge accounting.

The results for 2010 include exceptional and non recurring costs of € 36 million (2009: € 28 million). These mainly relate to restructuring- and acquisition costs (as of January 1, 2010 acquisition costs can no longer be capitalized).

Administrative organization, risk management systems and financial reporting

The administrative procedures, the risk management and internal control systems associated with the Company's strategy and its implementation, the financial reporting and compliance are all designed to provide a reasonable degree of assurance that significant risk factors are identified, their development is monitored and, where appropriate, action is taken on a timely basis. (See also the paragraph Risks on page 8.) The Board of Supervisory Directors is regularly informed about these matters.

The companies in which HAL has invested differ in industry, size, culture, geographical diversity and stage of development. Each company is subject to specific risks relating to strategy, operations, finance and (fiscal) legislation. HAL has therefore chosen not to institute a centralized management approach and not to develop a central risk management system. Each investee company has its own financial structure and is responsible for evaluating and managing its own risks. The companies generally have a supervisory board of which the majority of members are not affiliated with HAL. This corporate governance structure allows the operating companies to fully concentrate on developments which are relevant to them and to assess which risks to

accept and which risks to avoid. Accordingly, in addition to risks associated with HAL's investment strategy and its implementation as described above, there are specific risk factors associated with each individual investee company. It is the responsibility of each investee company to evaluate these risks. These risks are therefore not managed by HAL.

HAL has a management reporting system to monitor its performance as well as that of its unquoted investee companies on a monthly basis. This system comprises a set of tools including portfolio analysis, budgeting and the reporting of actual as well as projected results, balance sheet and cash flow information and operational performance indices. In addition, management of the individual investee companies provide internal letters of representation with respect to the half-year and year-end financial statements.

HAL's objective is, in the context of the inherent limitations of the decentralized management approach described above, that its internal and external financial reporting is complete, accurate, valid and timely. Financial reporting risk can be defined as any event that impedes HAL to achieve its financial reporting objectives. Although HAL is aware that no risk management and internal control system can provide absolute assurance that its objectives will be achieved or that errors, losses, fraud or the violation of laws and regulations, human errors and mistakes will be prevented, the Company aims to further improve its risk management and internal control systems. In this context the risk management and internal control systems with respect to financial reporting were again reviewed during 2010. For the most important financial processes (financial reporting and consolidation, information technology, treasury, taxation and entity level controls), risks were identified as well as the control measures designed to mitigate these risks. These controls were also tested in order to conclude on their operating effectiveness during the year. Several improvements to the risk management systems were implemented during 2010. The risk management review did not cover the key financial processes of HAL's investee companies for the reasons described above. The risk management and internal control systems, as well as plans for further improvements, were discussed with the Board of Supervisory Directors.

Accordingly, based on the above and taking into account the inherent limitations referred to above, we are of the opinion that the risk management and internal control systems with respect to financial reporting of HAL Holding N.V. provide reasonable assurance that the financial reporting does not contain material inaccuracies and that these systems operated properly during 2010 and we declare that, to the best of our knowledge:

the financial statements give a true and fair view of the assets, liabilities, financial position and profit for the year of the consolidated entities taken as a whole;
the report of the Executive Board gives a true and fair view of the situation as of the statement of financial position date and the developments during the year of the entities included in the financial statements taken as a whole, and
that this report includes a description of the principal risks HAL Holding N.V. is facing.

Executive Board HAL Holding N.V.

M. van der Vorm (Chairman)
M.F. Groot

March 24, 2011

Financial Statements
HAL Trust

Consolidated Statement of Financial Position

As of December 31

In millions of euro before proposed distribution of income	Notes	2010	2009
Assets
Non-current assets:
Property, plant and equipment	1	747.7	678.1
Investment properties	2	96.0	65.7
Intangible assets	3	1,825.8	1,521.1
Investments in associates	4	1,527.0	1,122.0
Other financial assets	5	278.6	256.7
Deferred tax assets	15	46.0	50.4
Total non-current assets		4,521.1	3,694.0
Current assets:
Marketable securities and deposits	6	212.7	326.0
Receivables	7	309.0	266.3
Inventories	8	371.7	343.7
Other current assets	10	219.2	165.5
Cash and cash equivalents		144.7	139.9
Assets held for sale	9	-	21.8
Total current assets		1,257.3	1,263.2
Total assets		5,778.4	4,957.2
Equity and liabilities
Share capital	11	1.3	1.3
Other reserves		149.4	79.7
Retained earnings		3,444.4	3,051.4
Equity attributable to the owners of the parent		3,595.1	3,132.4
Non-controlling interest		30.1	72.2
Total equity		3,625.2	3,204.6
Non-current liabilities:
Provisions	12	15.2	14.0
Long-term debt and other financial liabilities	14	657.1	388.4
Deferred tax liabilities	15	132.4	115.3
Total non-current liabilities		804.7	517.7
Current liabilities:
Short-term debt and other financial liabilities	16	575.2	513.3
Income tax payable		26.7	35.6
Accounts payable		264.7	229.0
Accrued expenses		456.4	394.5
Liabilities held for sale	9	-	7.2
Provisions		25.5	55.3
Total current liabilities		1,348.5	1,234.9
Total equity and liabilities		5,778.4	4,957.2

Consolidated Statement of Income

For the year ended December 31

In millions of euro	Notes	2010	2009
Revenues	17	3,768.9	3,447.8
Income from marketable securities and deposits	18	25.5	22.9
Capital gains on sale of assets		-	2.8
Income from associates	19	283.4	199.0
Income from other financial assets	20	4.4	0.7
Income from real estate activities	21	14.6	7.7
Total income		4,096.8	3,680.9
Raw materials, consumables used and changes in inventories		1,278.8	1,227.8
Employee expenses	22	1,097.5	978.7
Depreciation and impairments of property, plant, equipment and investment properties	1,2	134.2	130.4
Amortization and impairments of intangible assets	3	73.8	49.3
Other operating expenses	23	965.9	853.7
Total expenses		3,550.2	3,239.9
Operating profit		546.6	441.0
Financial expense	24	(55.9)	(47.5)
Profit before income tax		490.7	393.5
Income tax expense	25	(62.6)	(51.4)
Net profit		428.1	342.1
Attributable to:
Equity holders of the Company		432.1	347.2
Non-controlling interest		(4.0)	(5.1)
		428.1	342.1
Average number of outstanding Shares (in thousands)		64,548	63,554
Earnings per Share for profit attributable to the equity holders during the year (in euros per share)
- basic and diluted		6.69	5.46
Dividend per share (in euro)		3.75*	2.85

Proposed

Consolidated Statement of Comprehensive Income

For the year ended December 31

In millions of euro	2010	2009
Profit for the period	428.1	342.1
Other comprehensive income, net of tax:
Change in fair value of available-for-sale financial assets	12.8	94.0
Effective portion of hedging instruments	(15.1)	(9.7)
Translation of foreign subsidiaries including share associates	73.8	17.9
Other comprehensive income for the period, net of tax	71.5	102.2
Total comprehensive income for the period, net of tax	499.6	444.3
Total comprehensive income attributable to:
- Equity holders of the Company	502.3	450.2
- Non-controlling interest	(2.7)	(5.9)
	499.6	444.3

Consolidated Statement of Changes in Equity

In millions of euro	Attributable to equity holders of the Company
	Share capital	Retained earnings	Other reserves	Non-controlling interest	Total equity
Balance on January 1, 2009	1.3	2,829.5	(23.3)	94.2	2,901.7
Change in fair value of available-for-sale financial assets
- marketable securities	-	-	48.9	-	48.9
- other financial assets and associates	-	-	45.1	-	45.1
Interest rate derivatives	-	-	(4.0)	-	(4.0)
Translation of foreign subsidiaries including share associates	-	-	18.7	(0.8)	17.9
Effective portion of hedging instruments	-	-	(5.7)	-	(5.7)
Net profit 2009	-	347.2	-	(5.1)	342.1
Total comprehensive income for the period	-	347.2	103.0	(5.9)	444.3
Acquisitions and disposals	-	-	-	(16.1)	(16.1)
Treasury shares (footnote 1)	-	2.1	-	-	2.1
Dividend paid	-	(127.1)	-	-	(127.1)
Other	-	(0.3)	-	-	(0.3)
Transactions with owners of the Company recognized directly in equity	-	(125.3)	-	(16.1)	(141.4)
Balance on December 31, 2009	1.3	3,051.4	79.7	72.2	3,204.6
Balance on January 1, 2010	1.3	3,051.4	79.7	72.2	3,204.6
Change in fair value of available-for-sale financial assets
- marketable securities	-	-	1.2	-	1.2
- other financial assets and associates	-	-	11.6	-	11.6
Interest rate derivatives	-	-	(2.4)	-	(2.4)
Translation of foreign subsidiaries including share associates	-	-	72.5	1.3	73.8
Effective portion of hedging instruments	-	-	(12.7)	-	(12.7)
Net profit 2010	-	432.1	-	(4.0)	428.1
Total comprehensive income for the period	-	432.1	70.2	(2.7)	499.6
Acquisitions, disposals and reclassifications	-	-	-	(39.4)	(39.4)
Acquisition of non-controlling interest without change in control	-	-	2.3	-	2.3
Treasury shares (footnote 1)	-	2.1	-	-	2.1
Dividend paid	-	(40.9)	-	-	(40.9)
Share change in other reserves associates	-	-	(2.8)	-	(2.8)
Other	-	(0.3)	-	-	(0.3)
Transactions with owners of the Company recognized directly in equity	-	(39.1)	(0.5)	(39.4)	(79.0)
Balance on December 31, 2010	1.3	3,444.4	149.4	30.1	3,625.2

Footnote 1: Issued capital is detailed in note 11.
Footnote 2: The 'other reserves' relate to unrealized appreciations and diminutions of other financial assets, certain associates and marketable securities and deposits, interest rate swaps, currency differences from the translation of the net investments in foreign entities and of borrowings and other currency instruments designated as hedges of such instruments.

Other reserves

In millions of euro	Cumulative valuation reserve	Cash flow hedge reserve	Cumulative currency translation reserve	Other	Total other reserves
Balance on January 1, 2009	(27.9)	(20.8)	25.4	-	(23.3)
Change in fair value of available-for-sale financial assets
- marketable securities	48.9	-	-	-	48.9
- other financial assets and associates	45.1	-	-	-	45.1
Interest rate derivatives	-	(4.0)	-	-	(4.0)
Translation of foreign subsidiaries including share associates	-	-	18.7	-	18.7
Effective portion of hedging instruments	-	-	(5.7)	-	(5.7)
Balance on December 31, 2009	66.1	(24.8)	38.4	-	79.7
Balance on January 1, 2010	66.1	(24.8)	38.4	-	79.7
Change in fair value of available-for-sale financial assets
- marketable securities	1.2	-	-	-	1.2
- other financial assets and associates	11.6	-	-	-	11.6
Interest rate derivatives	-	(2.4)	-	-	(2.4)
Translation of foreign subsidiaries including share associates	-	-	72.5	-	72.5
Effective portion of hedging instruments	-	-	(12.7)	-	(12.7)
Acquisition of non-controlling interest without change in control	-	-	-	2.3	2.3
Share change in other reserves associates	-	-	-	(2.8)	(2.8)
Balance on December 31, 2010	78.9	(27.2)	98.2	(0.5)	149.4

Footnote 1: The "acquisition of non-controlling interest without change in control" relates to the purchase of a non-controlling interest below its book value.

Consolidated Statement of Cash Flows

In millions of euro	Notes	2010	2009
Cash flows from operating activities:
Profit before taxes		490.7	393.5
Depreciation and impairments	1, 2	134.2	130.4
Amortization and impairments	3	73.8	49.3
Profit on sale of property, plant, equipment and investment properties	21	(6.8)	(2.8)
Profit on sale of other financial assets and marketable securities	18, 19, 20	(17.9)	(13.9)
Income from associates	4, 19	(283.4)	(199.0)
Financial expense	24	55.9	47.5
		446.5	405.0
Dividend from associates	4	49.9	8.0
Changes in working capital	26	(40.5)	31.1
Other movements in provisions		(9.3)	(1.0)
Cash generated from operations		446.6	443.1
Finance costs paid		(44.6)	(40.9)
Income taxes paid		(70.7)	(24.7)
Net cash from operating activities		331.3	377.5
Cash flows from investing activities:
Acquisition of associates and subsidiaries, net of cash acquired	3	(333.4)	(131.3)
Acquisition of other intangibles		(30.2)	(20.9)
Purchase of property, plant, equipment and investment properties	1, 2	(218.3)	(137.2)
Divestiture of associates	4	14.4	1.5
Changes in other financial assets		(10.2)	(141.5)
Proceeds from sale of property, plant, equipment and investment properties		26.0	7.2
Change in assets and liabilities held for sale	9	11.7	(13.7)
Change in marketable securities and deposits, net		137.4	302.7
Change in non-controlling interest		(5.8)	(16.1)
Effect of hedging instruments		(18.9)	(0.2)
Net cash from (used in) investing activities		(427.3)	(149.5)
Cash flows from financing activities:
Change in short-term debt and other financial liabilities		21.5	90.8
Change in long-term debt and other financial liabilities		116.3	(214.9)
Sale of treasury shares		2.1	2.1
Dividend paid		(40.9)	(127.1)
Net cash from (used in) financing activities		99.0	(249.1)
Increase (decrease) in cash and cash equivalents		3.0	(21.1)
Cash and cash equivalents at beginning of year		139.9	160.4
Effects of exchange rate changes on opening balance		1.8	0.6
Cash and cash equivalents retranslated at beginning of year		141.7	161.0
Net increase (decrease) in cash and cash equivalents		3.0	(21.1)
Cash and cash equivalents at end of year		144.7	139.9

Accounting Policies

Reporting entity

The consolidated financial statements presented are those of HAL Trust ('the Trust'), a Bermuda trust formed in 1977. HAL Trust shares are listed and traded on NYSE Euronext in Amsterdam.

For the years presented, the Trust's only asset was all outstanding shares of HAL Holding N.V. ('the Company'), a Curaçao corporation. The financial statements of the Company are part of the consolidated financial statements.

The principal accounting policies adopted by the Company in the preparation of its consolidated financial statements, which are unchanged compared to last year except for the implementation of IFRS 3R, are set out below:

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and were authorized for issue on March 24, 2011.

Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention except for the following items in the Statement of financial position, which are measured at fair value:

marketable securities and deposits;
certain associates and other financial assets and
derivative financial instruments.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge, actual results ultimately may differ from those estimates. Accordingly, it is reasonably possible that outcomes within the next financial year that are different from the assumptions could have an impact on the carrying amount of the asset or liability affected.

This applies more specifically to pensions, purchase price allocations, deferred taxation, impairment of equity securities, goodwill and other intangibles. The Company tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use and fair value calculations. These calculations require the use of estimates.

Change in accounting principles

1. Business combinations

On January 1, 2010, the revised IFRS3 (2008) governing business combinations became effective.

For acquisitions on or after January 1, 2010, goodwill is measured at the acquisition date as:

the fair value of the consideration transferred; plus
the recognized amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that are incurred in connection with a business combination are expensed.

Any contingent consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognized in profit or loss.

The change in accounting policy has been applied prospectively. The revised standard impacted the Company as it resulted in a

revaluation of a previously held minority interest (see note 19) and the recognition of acquisition expenses in the consolidated statement of income (€ 6.7 million).

Accounting for acquisition of non-controlling interests

From January 1, 2010 the Company has applied IAS 27 Consolidated and Company Financial Statements (2008) in accounting for acquisitions of non-controlling interests. The change in accounting policy has been applied prospectively and has had no impact on earnings per share.

Under the new accounting policy, acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognized as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Previously, goodwill was recognized on the acquisition of non-controlling interests in a subsidiary, which represented the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of the transaction.

New standards and interpretations not yet effective and not yet adopted and exposure drafts

Exposure Draft 9 (ED9), if it became effective, would supersede IAS31 "Interests in Joint Ventures". It would require an entity with joint arrangements to recognize its shared interests using equity accounting instead of having a choice of partial consolidation or equity accounting. Had this exposure draft been applied in these financial statements, revenues of € 139 million (2009: € 129 million) would have been derecognized. The effect on operating profit would not have been material for 2010 and 2009.

Exposure Draft 2010/9 (ED2010/9), if it became effective, would supersede IAS17 "Leases". It would require bringing all assets currently leased under operating leases onto the balance sheet, removing the distinction between finance and operating leases. If the draft became effective, it would have a material impact on the consolidated financial statements of the Company. Reference is made to the note on Financial commitments (page 59).

Exposure Draft 2010/3 (ED2010/3), if it became effective, would amend IAS19 "Employee benefits" by removing the option of deferring actuarial gains and losses when they occur in defined benefit plans. Instead they would have to be recognized in their entirety through other comprehensive income. Unrecognized actuarial results amounted to (€ 0.6 million) as of December 31, 2010 (2009: € 3.1 million).

Other new standards, amendments and interpretations of existing standards effective as from January 1, 2010 did not have a material impact on the Company. All other standards, amendments and interpretations of existing standards that were in issue but not yet effective for reporting periods beginning after January 1, 2010 have not yet been adopted.

Consolidation

Subsidiaries, which are those companies in which the Company, directly or indirectly, has an interest of more than 50% of the (potential) voting rights and/or otherwise has power (i.e. by shareholders agreement) to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Company and are no longer consolidated as from the date the effective control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of the acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of the exchange. Identifiable assets and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling interest in the acquiree are measured either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. The excess of the cost of acquisition over the fair value of the Company's share of the identifiable net assets is recorded as goodwill.

Intercompany transactions, balances and unrealized results on transactions between group companies have been eliminated. Where necessary, the financial statements of

subsidiaries have been amended to ensure consistency with the policies adopted by the Company. Non-controlling interests are disclosed separately.

The Company’s interest in jointly controlled entities are accounted for by proportionate consolidation.

A list of the Company’s principal subsidiaries is set out on page 62.

Foreign currencies

(a) Functional and presentation currency: items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in euros, which is the Company’s functional and presentation currency.

(b) Transactions and balances: foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

(c) Company’s subsidiaries: the results and financial position of all the Company’s subsidiaries (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:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position;

(ii) income and expenses for each consolidated statement of income 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 expenses are translated at the dates of the transaction);

(iii) all resulting exchange differences are recognized as a separate component of shareholders’ equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is sold, such exchange differences are recognized in the consolidated statement of income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Non-derivative financial assets

The Company classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired.

Investments are initially recognized at fair value plus transaction costs directly attributable to the acquisition. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method.

Purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase or sell the asset.

Changes in the fair value of investments classified as available-for-sale are recognized in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognized in other comprehensive income are included in the consolidated statement of income.

The Company determines the classification of its financial assets at initial recognition.

Loans and receivables:

These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

(a) those that the Company intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss;
(b) those that the Company upon initial recognition designates as available-for-sale; or
(c) those for which the holder may not recover substantially all of its initial investment and which shall be classified as available-for-sale.

Loans and receivables are measured at amortized cost using the effective interest method. A provision for impairment of loans and receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments are considered indicators that the loan/ receivable may be impaired. 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 original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.

Available-for-sale financial assets:

These are those non-derivative financial assets that are designated as available-for-sale or are not classified as loans and receivables.

Fair value of financial assets and liabilities approximates their carrying amount, unless otherwise disclosed. All available-for-sale financial assets are measured at fair value based on quoted market prices in active markets.

Derivative financial instruments

A derivative is a financial instrument or other contract with all three of the following characteristics:

(a) its value changes in response to the change in other variables such as a specified interest rate or a foreign exchange rate;
(b) it requires no initial net investment or an initial net investment that is significantly smaller than the value of the underlying notional amount; and
(c) it is settled at a future date.

Derivatives are initially recognized at fair value (external valuation performed by financial institutions or other valuation techniques) on the date a derivative contract is entered into, and are subsequently re-measured at their fair value based on external valuations performed by financial institutions. The method of recognizing 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. The Company designates certain derivatives as either: (1) hedges of highly probable forecast transactions (cash flow hedges); (2) hedges of net investment in foreign operations (net investment hedge) or (3) hedges of the fair value of recognized assets and liabilities or a firm commitment (fair value hedges). The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.

(a) Cash flow hedge: the highly effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of income.

Amounts accumulated in equity are recycled in the consolidated statement of income in the periods when the hedged item affects profit or

loss. However, when the projected transaction that is hedged results in the recognition of a non-financial asset (for example inventory) or a liability, the gains and losses previously deferred in shareholders' equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the projected transaction is ultimately recognized in the consolidated statement of income. When a projected transaction is no longer expected to occur, the cumulative gain or loss that was reported in shareholders' equity is immediately transferred to the consolidated statement of income.

(b) Net investment hedge: hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity; the gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of income.

Gains and losses accumulated in equity are included in the consolidated statement of income proportionally when the foreign operation is (completely or partially) disposed of.

(c) Fair value hedge: changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the consolidated statement of income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each statement of financial position date.

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognized immediately in the consolidated statement of income.

The fair value of various derivative instruments used for hedging purposes are disclosed in the notes of these financial statements. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

Property, plant and equipment and investment properties

Land and buildings comprise mainly factories, warehouses, retail and wholesale outlets and office buildings. All property, plant and equipment and investment properties are shown at historical cost less accumulated depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred. Market valuations are performed internally for the Company's real estate operation and are subject as well to a valuation every three years by independent external valuation experts.

Depreciation is calculated using the straight line method to write off the cost of each asset to their residual values over their estimated useful life as follows:

Buildings	20-50 years
Vessels	25 years
Equipment	2-12 years

Useful lives and residual values are reviewed and, if required, changed annually.

Land is not depreciated as it is deemed to have an indefinite life.

Whenever the carrying amount of an asset is greater than its estimated recoverable amount it is subject to an impairment charge immediately so that the value of the asset does not exceed its recoverable amount.

The company recognizes in profit or loss any difference between the carrying amount and proceeds from disposing of property, plant and equipment and investment properties.

Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company's share of the net identifiable assets and liabilities of the acquired investment in an associate or consolidated subsidiary at the date of obtaining control.

In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment.

Goodwill is subject to an annual impairment test. It is carried at cost less accumulated impairment losses and accumulated amortization. If an impairment is recognized, it is not reversed in subsequent periods. Goodwill is allocated to groups of cash-generating units (CGU's) for the purpose of impairment testing. A CGU is in no event larger than the segment identified under IFRS8.

Negative goodwill (badwill or bargain purchase) arises as a result of fair-valuing non-monetary assets is included in the consolidated statement of income.

Rights of use and key money

Rights of use and key money are considered identified intangible assets when they are separable and arise from contractual and legal rights. Such intangible asset is generally assumed to have an indefinite life as right of use can be renewed and resold. Therefore it is subject to an annual impairment test. Rights of use and key money in other situations are considered prepaid rent and recognized over the period of rental.

Trademarks

The valuation of trademarks acquired in a business combination is based on the relief from royalty approach and is being amortized over its useful life on a straight line basis with no residual value.

Franchise contracts

The valuation of franchise contracts acquired in a business combination is based on the present value of estimated discounted future cash flows and is being amortized on a straight line basis over its useful life.

Computer software

Acquired computer software licences are capitalized on the basis of the costs incurred to acquire and to bring to use the specific software. These costs are amortized over their estimated useful lives (3 to 5 years).

Costs associated with developing and maintaining computer software are recognized as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognized as assets are amortized over their estimated useful lives (not exceeding 3 years).

Waived rentals

Waived rental payments are capitalized on the basis of a discounted present value cash flow analysis and amortized over the related contract period on a straight line basis with no residual value.

Customer relationships

The valuation of customer relationships acquired in a business combination is based on the present value of estimated discounted future cash flows and is being amortized on a straight line basis over its useful life.

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized 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 and value in use. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Investments in associates

Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20 and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognized at cost. For quoted associates, the Company has made use of publicly available information.

The Company's investment in associates includes goodwill (net of any accumulated impairment loss and accumulated amortization) identified on acquisition. The Company's share of its associates' post-acquisition profits or losses is recognized in the consolidated statement of income and its share of post-acquisition movement in comprehensive income is recognized in comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the associate. When the Company's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Significant unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company's interest in the associates. Significant unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

When the Company ceases to have significant influence over an associate it measures at fair value any investment the investor retains in the former associate. The Company recognizes in profit or loss any difference between the fair value of any retained investment plus any proceeds from the partial disposal of the associate and the carrying amount of the associate at the date when significant influence is lost.

When an associate is disposed of, the gain/ loss on disposal also includes any unrealized foreign exchange difference deferred in equity which becomes realized.

When the Company gains control over an associate it measures at fair value its formerly held interest. The Company recognizes in profit or loss any difference between the fair value and the carrying amount of the associate at the date of obtaining control.

When a cash dividend is received from an associate, the carrying value of the investment is decreased by the same amount.

A list of the Company's principal associates is set out on page 62.

Other financial assets and marketable securities

Other financial assets and marketable securities are non-derivatives. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date. They include time deposits, fixed income securities, equity interests up to 20% and equity interests in excess of 20% over which the Company has no significant influence and are initially recorded

at fair value plus transaction costs directly attributable to the acquisition.

Purchases and sales of investments are recognized on trade date – the date on which the Company commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs. They are derecognized when the rights to receive cash flows from them have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Other financial assets and marketable securities are subsequently carried at fair value or amortized cost with respect to loans and receivables. Quoted equity and fixed income instruments are accounted for at market value based upon stock exchange quoted selling prices at the close of business on the statement of financial position date. Unrealized appreciation and diminution in value are recorded in other reserves in equity. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are reported at cost. These financial statements do not include any equity instruments measured at cost.

The Company assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities or fixed income securities, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists, the cumulative loss – measured as the difference between the acquisition cost and the current fair value – is removed from equity and recognized in the consolidated statement of income. Impairment losses recognized in the consolidated statement of income on equity instruments are not reversed through the consolidated statement of income. Impairment losses, if any, are charged to the consolidated statement of income. On disposal of an investment, the difference between the net disposal proceeds and its cost (less any impairment losses) is charged or credited to net income.

Receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments are considered indicators that the trade receivable may be impaired. 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 original effective interest rate. Additions to and releases from the provision are recognized in the consolidated statement of income.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in first-out (FIFO) method or the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads, but excludes interest expense. Net realizable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. A provision is established when the net realizable value of any inventory is lower than the value calculated above.

Assets and liabilities held for sale

Assets and liabilities are classified as held for sale if they are to be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the assets and liabilities must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and liabilities and its sale must be highly probable. Assets and liabilities that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Financial assets and liabilities held for sale are classified separately in current assets and current liabilities.

Other current assets

Other current assets include prepayments relating to the following year and income relating to the current year which will not be received until after the Statement of financial position date. These receivables are expected to be collected within 12 months from the Statement of financial position date.

Cash and cash equivalents

Cash and cash equivalents comprise bank balances which are available on demand. In the statement of financial position, bank overdrafts are included in short-term debt. Short-term time deposits are classified as marketable securities and deposits.

Share capital

When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are deducted from equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is also presented in equity.

Non-controlling interest in consolidated subsidiaries

Third-party interests in consolidated subsidiaries are recorded at their share in the net asset value of the respective subsidiary, calculated in accordance with the accounting policies as specified in these financial statements. They are determined based on the fair values upon acquisition of the acquirees.

Provisions

Provisions are recognized if the Company and its subsidiaries have a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.

Employee benefits

Defined benefit and defined contribution plans

The Company and its subsidiaries operate a number of defined benefit and defined contribution plans, the assets of which are generally held in separately administered funds. The pension plans are generally funded by payments from employers and employees. For defined benefit plans, the pension accounting costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated statement of income so as to spread the regular costs over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plans every year. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of government and corporate securities which have terms to maturity approximating the terms of the related liability.

Actuarial gains and losses are spread forward over the average remaining service lives of employees, only to the extent that their net cumulative amount exceeds 10% of the greater of the present value of the obligation or of the fair value of the plan assets. The Company's and its subsidiaries' contributions to the defined contribution pension plans are charged to the consolidated statement of income in the year to which they relate.

Termination benefits

Termination benefits are recognized as an expense when the Company and its subsidiaries are committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if an offer has been made of voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus plans if there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Other

The change in the fair value of the amount payable to employees in respect of the obligation to acquire non-controlling interests in certain subsidiaries, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as employee expense in profit or loss.

The fair value of the shares payable to a member of the Executive Board in respect of the allotment of free HAL Trust shares is recognized as an expense with a corresponding increase in liabilities, over the period that the member of the Executive Board becomes entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as employee expense in profit or loss.

Non-derivative financial liabilities

Borrowings are recognized initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of income over the period of the borrowings using the effective interest method. Short-term debt is due within a maximum period of one year, unless the Company has an unconditional right to defer settlement until at least 12 months after statement of financial position date. Interest expense related to this debt is reported as Financial expense in the consolidated statement of income.

Non-derivative financial liabilities include contingent considerations and obligations to acquire non-controlling interests. Both are recorded at fair value. The fair value of contingent considerations is calculated based on the expected payment amounts. Since the contingent consideration is of a long-term in nature, it is discounted to present value. Obligations to acquire non-controlling interests are initially recorded based on the value of the equity instruments transferred and subsequently remeasured to fair value. The calculation of fair value is generally based on a multiple of EBITA less debt. Multiples applied are either contractually determined or, generally, in accordance with those applied in calculating estimated value of the investment portfolio (page 63).

Determination of fair values

A number of the accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipment

The fair value of property, plant and equipment recognized as a result of a business combination

is the estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate. Depreciated replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence.

Intangible assets

The fair value of trademarks acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the trademark being owned. The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

Investment property

Valuations of the investment properties are generally performed every three years by independent external valuation experts and updated internally in subsequent years. In view of the market circumstances external valuations were performed in December 2009 (previous valuation was performed in November and December 2007). These valuations were based on the 'Sales Comparison' and 'Income Capitalization' approach. The Sales Comparison approach uses transactions in similar properties as a reference. The Income Capitalization approach uses a discounted cash flow model.

Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of

business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

Equity and debt securities

The fair value of equity and debt securities (including instruments issued by quoted associates) is determined by reference to their quoted closing bid price at the reporting date, or if unquoted, determined using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate.

Trade and other receivables

The fair value of trade and other receivables acquired in a business combination is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date.

Derivatives

The fair value of forward exchange contracts is based on their quoted price, if available. If a quoted price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the counterparty when appropriate.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate

of interest is determined by reference to similar lease agreements.

Revenues

Revenues are recognized at fair value upon delivery of products or performance of services, net of sales taxes and discounts, in the accounting period in which they occurred. If sold with a right of return, accumulated experience is used to estimate and provide for such returns at the time of sale. Intercompany revenues are eliminated.

(a) Sales of goods: sales of goods are recognized when an entity of the Company has delivered the products to the customer, the customer has accepted the products and all significant risks and rewards of ownership of the goods are transferred and collectability of the related receivables is reasonably assured so that it is probable that the economic benefits associated with the transaction will flow to the Company. Retail sales are usually in cash or by credit-card. The recorded revenue is the amount of the sale, including credit card fees payable for the transaction. Retail sales are only recognized when the earnings process is complete. Any prepayments by customers are not considered as revenue yet but are accounted for as deferred income. Revenue is only recognized when the costs associated with the transaction can be measured reliably.

(b) Sales of services: sales of services are recognized in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Revenue is only recognized when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company, the stage of completion of the transaction can be measured reliably as well as the costs associated with the transaction.

(c) Franchise fee income: revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of revenue can be measured reliably. Franchise fees are recognized on an accrual basis in accordance with the terms of the respective agreements.

Income from marketable securities and deposits

Income from marketable securities and deposits includes realized capital gains (losses), impairment losses, interest, dividends and management fees. Realized capital gains (losses) are calculated on an average cost basis. Interest is recorded using the effective interest rate method and on an accrual basis. Dividends are recorded when the right to receive payment is established.

Income from real estate activities

Income from real estate activities include rental income less related operation costs (excluding depreciation). Income also include realized results on the sale of real estate assets. Rental income is recorded on a straight line basis over the lease term.

Deferred income taxes

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates and initial recognition and exemption on assets and liabilities acquired with no impact on accounting or tax profit, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit

will be available against which the temporary difference can be utilized.

Leases

Leases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized 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.

Each financial lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term debt. The interest element of the finance cost is charged to the consolidated statement of income over the lease period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating leases are charged to income on a straight line basis over the lease term.

Research and development

Research and development costs are charged to income in the year in which they are incurred. Costs incurred on development projects (i.e. internally developed software) are recognized as intangible assets when it is probable that the project will be a success considering its commercial and technical feasibility and costs can be measured reliably. Other development expenditures are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Development costs with a finite useful life that have been capitalized are amortized from the commencement of the commercial production of the product on a straight line basis over the period of its expected benefit, not exceeding five years.

Related-party transactions

The related-party transactions concern the compensation of the members of the Executive Board and Board of Supervisory Directors and transactions with associates.

Segmentation

The Company's reportable segments are defined as follows:

Optical retail
Other unquoted
Quoted minority interests
Real estate
Liquid portfolio

Optical retail are majority-owned companies as well as minority interests in companies that derive their revenues from the sale of optical products.

Other unquoted are majority-owned companies as well as minority interests in companies that derive their revenues from various activities such as hearing aid, office furniture, personal protection equipment, construction products, printing, shipping, orthopaedic devices, wine distribution, media and other activities.

The quoted minority interests segment derives its income from its percentage of ownership in publicly traded associates and dividends from publicly quoted companies where the ownership percentage does not exceed 20%.

The real estate activities relate to the development and rental of multi-family properties and office buildings.

The liquid portfolio consists of fixed income and equity securities generating interests, dividends and capital gains.

These reportable segments were defined based on differences in products and services as well as differences in the nature of the respective assets.

Financial risk management

Principles of financial risk management: The Company is exposed to credit risk, liquidity risk and market risk. Market risk is primarily related to movements in exchange rates, interest rates and the market value of investments in equity securities. Financial risk management activities are carried out both on a central level and on the level of individual subsidiaries. For managing these risks the Company uses both derivative and non-derivative financial instruments. Derivatives are exclusively concluded for economic hedging of open positions and not for trading or other speculative purposes.

Credit risk

The Company is exposed to credit risk from its operating and investing activities. Credit risk from operating activities arises from the possibility that customers may not be able to settle their obligations as agreed, which can affect both outstanding receivables and committed transactions. This risk is monitored and managed on the level of each subsidiary and provisions for impairment are recorded when necessary. The Company is not exposed to any significant concentration of credit risk in its revenues or receivables.

In addition, the Company is exposed to credit risk with respect to financial instruments and liquid assets. This risk consists of the loss that would arise should the counterparty fail to meet its contractual obligations. The aim is to mitigate this risk by only concluding transactions with counterparties that have a strong credit rating. At the end of 2010, the liquid assets (excluding equities) amounted to € 267 million (2009: € 355 million) of which € 35 million (2009: € 123 million) was part of the corporate liquid portfolio. This portfolio consisted mainly of short-term time deposits. These deposits were held at banks with an S&P credit rating varying from A/A-1 to AAA/A-1+. The weighted average credit rating was A+/A-1.

In addition, the Company is exposed to credit risk with respect to its € 102 million interest in 9⁵/s% Senior Notes issued by Safilo Group S.p.A., maturing in 2013.

The Company's maximum exposure to credit risk is the carrying value of its financial assets.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated to financial instruments. The approach to manage liquidity is to ensure, as far as possible, that there will always be sufficient liquidity to meet liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The total bank debt as of December 31, 2010 amounted to € 1,036 million (2009: € 861 million). For 100% of the bank debt, the applicable covenants were complied with or waived (2009: 100%).

At the end of 2010, the net debt position, consisting of short-term and long-term bank debt less cash and cash equivalents and marketable securities and deposits, amounted to € 678 million (2009: € 395 million). This net debt position represents a ratio of 1.5 (2009: 1.0) when compared to the operating result before depreciation and amortization and earnings from associates. At the end of 2010, unused credit facilities were available to an amount of € 759 million (2009: € 619 million).

The Company's contractually agreed (undiscounted) repayments of financial liabilities are shown in the table below.

In millions of euro

At Dec. 31, 2010	2011	2012	2013-2015	>2015
Long-term debt	-	61.4	337.9	102.8
Short-term debt	533.4	-	-	-
Other financial liabilities	41.8	8.4	44.8	101.8
Interest on long-term debt	16.9	14.8	30.9	9.1
Finance leases	1.5	1.2	1.4	0.2
Accounts payable	264.7	-	-	-
	858.3	85.8	415.0	213.9

Short-term debt includes € 185 million of bank loans drawn under a facility maturing in February 2012.

In millions of euro

At Dec. 31, 2009	2010	2011	2012-2014	>2014
Long-term debt	-	120.2	145.9	101.8
Short-term debt	492.9	-	-	-
Other financial liabilities	20.4	20.5	-	-
Interest on long-term debt	18.8	14.3	16.0	10.2
Finance leases	1.7	1.2	2.3	0.5
Accounts payable	229.0	-	-	-
	762.8	156.2	164.2	112.5

Short-term debt includes € 190 million of bank loans drawn under a facility maturing in February 2012.

The contractually agreed (undiscounted) cash flows for derivatives that settle on a gross basis and represented a liability as of the end of the year are shown in the table below. At the end of 2010, these derivatives showed positive results.

In millions of euro

At Dec. 31, 2010	2011	2012	2013-2015	>2015
Forward foreign exchange contracts
Outflow	-	-	-	-
Inflow	-	-	-	-

In millions of euro

At Dec. 31, 2009	2010	2011	2012-2014	>2014
Forward foreign exchange contracts
Outflow	326.9	-	-	-
Inflow	324.3	-	-	-

Market risk

Currency risk

The main currency risk for HAL is the translation risk arising from the conversion of the results and statement of financial position items into euro.

Translation risk arising from the conversion of statement of financial position items into euro.

The major currency translation risks are related to changes in value of the U.S. dollar and the British pound. At the end of 2010, the net assets exposed to changes in the U.S. dollar amounted to USD 352 million (€ 269 million) (2009: USD 319 million (€ 223 million)). This risk is hedged for 92% by forward exchange contracts.

Net assets denominated in British pound amounted to GBP 118 million (€ 137 million) as of December 31, 2010 (2009: GBP 126 million (€ 141 million)). This risk is hedged for 87% by forward exchange contracts. Barring unforeseen circumstances, the Company intends to continue this hedging policy.

The Company also has an exposure to Japanese yen of € 30 million (2009: € 24 million). This exposure is hedged at 99% by forward exchange contracts.

Currency translation risk also exists with respect to Northern and Eastern European, South American and Asian currencies as well as the Swiss franc. At the end of 2010, the book value of the net assets denominated in these currencies amounted to € 347 million (2009: € 280 million). This currency risk is not hedged. In 2010, the increase in value of these currencies resulted in an unrealized gain of € 24 million. This gain was recorded in the cumulative currency translation reserve. A further – average – increase in value of these currencies by 10% would result in an additional gain of € 35 million for the year.

Translation risk arising from the conversion of the financial instruments into euro

The financial instruments subject to currency exposure would have been impacted as of December 31, 2010 to exchange rate fluctuations as follows:

Currency pair	Movement	P&L impact	Equity impact
EUR/USD	+10%	8.5	16.1
EUR/USD	-10%	(8.5)	(16.1)
EUR/GBP	+10%	-	12.1
EUR/GBP	-10%	-	(12.1)
EUR/JPY	+10%	3.0	-
EUR/JPY	-10%	(3.0)	-

The impact as of December 31, 2009 was:

Currency pair	Movement	P&L impact	Equity impact
EUR/USD	+10%	7.1	13.9
EUR/USD	-10%	(7.1)	(13.9)
EUR/GBP	+10%	-	11.4
EUR/GBP	-10%	-	(11.4)
EUR/JPY	+10%	2.5	-
EUR/JPY	-10%	(2.5)	-

The associates also have currency risks. These are not managed by the Company.

Interest rate risk

Fixed income investments are subject to interest rate risk. In view of the very short duration of the portfolio (less than one month), the interest rate risk is limited (excluding the € 102 million interest in Safilo Senior Notes which mature in May 2013). If interest rates in 2010 had been 10% higher, the effect on net income for the year would have been approximately € 0.8 million positive and the effect on equity nil. A 10% decrease would have the equal but opposite effect.

In addition, interest rate risk exists with respect to the Company's debt position. Of the € 1,036 million bank debt outstanding at the end of 2010, € 635 million was at fixed rates for an average period of 3.8 years.

As part of interest rate management, increases in floating interest rates are hedged by the use of interest rate swaps. These swaps are generally included in hedge accounting relationships. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates, where the Company agrees with other parties to exchange, at specific intervals, the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amount. These swaps are part of a cash flow hedge relationship. As of year end, interest rates were fixed for 61% (2009: 71%) of the borrowings.

If variable interest rates in 2010 had changed by 10%, the impact on the consolidated statement of income for the year would have been € 0.9 million.

A change of 10% in interest rates underlying the calculation of the valuation of interest rate swaps would have had a pre-tax effect on equity of € 1.5 million.

Price risk

At the end of 2010, the Company had investments in equities (included in the marketable securities and other financial assets) amounting to € 179 million (2009: € 192 million) based on quoted market prices at the statement of financial position date. These investments are classified as available-for-sale. If at December 31, 2010, equity markets had fallen 10% overall, the portfolio value could have decreased by 10%, which would have resulted in a negative impact of € 18 million (2009: € 19 million) in other reserves in equity.

A 10% increase would have the equal but opposite effect. Potentially the whole or a part of the negative impact would have required recognition through the consolidated statement of income as an impairment charge.

Notes to the Consolidated Financial Statements

(All amounts in millions of euro, unless otherwise stated)

1. Property, plant and equipment

Movements for 2009 and 2010 are as follows:

	Land & buildings	Vessels	Equipment	Total
Cost value	419.0	152.9	1,074.1	1,646.0
Accumulated depreciation and impairments	(186.7)	(21.5)	(768.9)	(977.1)
Book value on Dec. 31, 2008	232.3	131.4	305.2	668.9
Investments	40.5	12.9	82.0	135.4
Consolidations	1.6	-	0.4	2.0
Reclassification	4.6	-	(4.6)	-
Disposals	(1.8)	-	(2.6)	(4.4)
Depreciation and impairments	(28.8)	(9.1)	(85.7)	(123.6)
Exchange differences	1.0	(1.9)	0.7	(0.2)
Book value on Dec. 31, 2009	249.4	133.3	295.4	678.1
Cost value	467.5	161.9	1,128.4	1,757.8
Accumulated depreciation and impairments	(218.1)	(28.6)	(833.0)	(1,079.7)
Book value on Dec. 31, 2009	249.4	133.3	295.4	678.1
Investments	49.1	37.1	97.6	183.8
Consolidations	19.3	-	11.3	30.6
Reclassification	0.4	-	(14.5)	(14.1)
Disposals	(6.5)	-	(7.6)	(14.1)
Depreciation and impairments	(34.4)	(10.8)	(84.8)	(130.0)
Exchange differences	3.8	6.7	2.9	13.4
Book value on Dec. 31, 2010	281.1	166.3	300.3	747.7
Cost value	550.4	207.7	1,213.1	1,971.2
Accumulated depreciation and impairments	(269.3)	(41.4)	(912.8)	(1,223.5)
Book value on Dec. 31, 2010	281.1	166.3	300.3	747.7

Notes 14 and 16 detail information on pledges.

2. Investment properties

Investment properties are part of the Company's real estate activities.

Movements for 2009 and 2010 are as follows:

	Land & buildings	Equipment	Total
Cost value	96.6	4.0	100.6
Accumulated depreciation and impairments	(25.5)	(2.5)	(28.0)
Book value on Dec. 31, 2008	71.1	1.5	72.6
Investments	1.6	0.2	1.8
Depreciation and impairments	(6.2)	(0.6)	(6.8)
Exchange differences	(1.8)	(0.1)	(1.9)
Book value on Dec. 31, 2009	64.7	1.0	65.7
Cost value	91.9	3.9	95.8
Accumulated depreciation and impairments	(27.2)	(2.9)	(30.1)
Book value on Dec. 31, 2009	64.7	1.0	65.7
Investments	34.3	0.2	34.5
Disposals	(5.1)	-	(5.1)
Depreciation and impairments	(3.6)	(0.6)	(4.2)
Exchange differences	4.9	0.2	5.1
Book value on Dec. 31, 2010	95.2	0.8	96.0
Cost value	123.9	4.2	128.1
Accumulated depreciation and impairments	(28.7)	(3.4)	(32.1)
Book value on Dec. 31, 2010	95.2	0.8	96.0

The Income Capitalization approach uses a discounted cash flow model.

Based on these 2009 valuations and the internal update in 2010, the estimated value of the investment properties amounts to approximately USD 205 million (€ 153 million) (2009: USD 171 million, € 119 million). On a comparable basis, taking into account 2010 acquisitions and disposals, this represents an increase in estimated market value of 2.5%.

Information on pledges is included in notes 14 and 16.

3. Intangible assets

Intangible assets consist of:

	2010	2009
Goodwill	1,284.5	1,100.8
Other intangibles	541.3	420.3
	1,825.8	1,521.1

Movements for goodwill are as follows:

	2010	2009
Balance on January 1	1,100.8	1,076.2
Acquisitions	196.3	35.4
Purchase price accounting adjustments	9.3	(1.1)
Impairments	(40.0)	(21.5)
Exchange and other adjustments	18.1	11.8
Balance on December 31	1,284.5	1,100.8
Cost value	1,783.0	1,559.3
Amortization and impairments	(498.5)	(458.5)
Book value on December 31	1,284.5	1,100.8

Investment in associates include goodwill for an amount of € 86.6 million as follows:

Cost value	281.8
Amortization	(195.2)
Book value on December 31	86.6

The acquired goodwill during 2010 can be specified as follows:

Purchase price (cash paid and contingent)	243.0
Net asset value acquired	(67.9)
Fair value non-controlling interest	21.2
Total goodwill acquired	196.3

Major acquisitions

In March 2010, a 75% interest in a German hearing aid retailer (GEERS) was acquired as well as hearing aid retailers in France and Denmark.

The acquisition in Germany was treated as a 100% acquisition in view of the characteristics of the transaction (put/call arrangements).

Details are as follows:

Cash paid	96.1
Contingent future consideration	94.7
Net asset value acquired	(43.2)
Goodwill	147.6

The contingent future consideration is based on a multiple of EBITDA. The EBITDA used for the calculation of the contingent future consideration is based on a business plan prepared during the due diligence phase. A change in actual EBITDA by 10% would change the value of the contingent future consideration by approximately € 13 million (undiscounted).

Details of the net asset value acquired:

Property, plant and equipment	18.7
Intangible assets	65.5
Other non-current assets	3.9
Deferred tax assets	4.0
Accounts receivable & others	16.3
Inventories	9.8
Cash	2.9
Long-term debt	(21.2)
Other long-term liabilities	(5.0)
Deferred tax liabilities	(7.6)
Short-term debt	(14.3)
Accounts payable and short-term liabilities	(20.5)
Accrued expenses	(9.3)
Net asset value acquired	43.2

Fair value of the net assets acquired exceeded the pre-acquisition book value by € 64.0 million. This difference mainly relates to the recognition of trademarks.

The above acquisitions contributed € 83 million to 2010 revenues and € 9 million to the operating result. Revenues for 2010 of these acquisitions amounted to € 104 million.

The goodwill paid primarily relates to the acquisition of additional market share which will allow the realization of economies of scale and anticipated synergies.

The Company also acquired optical retail companies mainly in Mexico (Tide Ti in December 2010).

Details are as follows:

Cash paid	20.1
Contingent future consideration	0.5
Net asset value acquired	(10.9)
Goodwill	9.7

Details of the net asset value acquired:

Property, plant and equipment	6.3
Intangible assets	7.5
Other non-current assets	1.7
Accounts receivable & others	3.2
Inventories	8.2
Cash	1.3
Other long-term liabilities	(4.6)
Deferred tax liabilities	(3.3)
Accounts payable and short-term liabilities	(5.2)
Accrued expenses	(4.2)
Net asset value acquired	10.9

Fair value of the net assets acquired exceeded the pre-acquisition book value by € 0.7 million. The effect of these acquisitions on the 2010 financial statements was not material.

Revenues for 2010 of Tide Ti amounted to € 21 million.

The Company also increased its interest in FD Mediagroep, a newspaper publisher and radio operator located in the Netherlands, from 49.1% to 98.3% in January 2010.

Details are as follows:

Cash paid	25.9
Fair value non-controlling interest	21.2
Net asset value acquired	(11.7)
Goodwill	35.4

The transaction was accounted as a 100% acquisition as the Company has an obligation to acquire the non-controlling interest.

Details of the net asset value acquired:

Property, plant and equipment	1.4
Intangible assets	35.4
Other long-term assets	0.4
Accounts receivable & others	10.6
Long-term debt	(2.2)
Deferred tax liabilities	(8.1)
Short-term debt	(2.2)
Accounts payable and short-term liabilities	(4.0)
Accrued expenses	(19.6)
Net asset value acquired	11.7

Fair value of the net assets acquired exceeded the pre-acquisition book value by € 33.2 million. This difference mainly relates to the recognition of trademarks, customer relationships and broadcasting rights. The goodwill paid is attributable to the unique market position of the company.

The acquisition contributed € 56 million to 2010 revenues and € 6 million to the operating result.

The initial accounting for these acquisitions is provisional.

Impairment test

Goodwill has been tested for impairment losses at a level that reflects the way the operations are managed and with which the goodwill would naturally be associated.

The recoverable amount of cash-generating units is generally determined based on value-in-use calculations. These calculations use cash flow projections covering a five-year period. Cash flows beyond the five-year period were extrapolated using an estimated growth rate of nil. In certain circumstances, representing 8% of the goodwill (2009: 5%), if the economic reality of a specific cash-generating unit justified it and led to more realistic estimates, the recoverable amount was based on the cash-generating unit's fair value less costs to sell, based on market multiples of revenues. Fair value calculations were mainly performed for optical retail operations in South-America, Turkey, China and Scandinavia, using multiples of revenues ranging from 0.8-1.4.

Key assumptions used for value-in-use calculations are as follows:

	Optical retail		Other
	2010	2009	2010	2009
Weighted average incr. in revenues	5.9%	5.2%	5.9%	5.7%
Weighted average gross margin	73.4%	71.6%	56.2%	56.1%
Weighted average after tax discount rate	10.9%	9.2%	11.3%	10.4%

Goodwill is comprised of the following:

	2010	2009
Pearle Europe B.V.	561.8	541.6
GrandVision S.A.	276.9	257.3
Other optical retail	4.6	19.6
	843.3	818.5
AudioNova International B.V.	253.7	105.5
Other unquoted investments	185.8	176.8
Total	1,282.8	1,100.8

The result of this process was that the carrying value of goodwill relating to three cash-generating units was impaired for a total of € 40.0 million, which is recorded under "amortization and impairments of intangible assets" in the statement of income.

The impairment charge can be detailed as follows:

	2010	2009
Optical retail	10.0	8.5
Other unquoted	30.0	13.0
Total	40.0	21.5

The impairment relates to activities relating to a publishing and communication company and a manufacturer and distributor of orthopaedic devices, both located in the Netherlands, and a division of an optical retail company located in Spain. These impairments are due to a decrease in profitability compared to the expectations when the investments were acquired as well as termination of optical retail partner contracts post acquisition.

The valuation models include certain assumptions with respect to revenue growth. If the models included a 2% lower increase in revenues, and assuming an unchanged cost structure and unchanged capital expenditures, the calculations would result in a potential impairment charge of € 27 million.

A 2% increase in the discount rate would potentially result in an impairment charge of € 36 million.

If the cash flows beyond the five-year period were extrapolated using an estimated growth rate of 2%, the value in use of the cash-generating units that were included in the sensitivity analysis for sales and discount rate and potentially revealed an impairment would increase by € 60 million.

Movements for other intangibles are as follows:

	Rights of use & key money	Trade- marks	Franchise contracts & other	Total
Book value on Jan. 1, 2009	182.8	176.8	58.0	417.6
Investments	13.5	0.2	7.2	20.9
Purchase price accounting adjustments	-	0.8	-	0.8
Amortization and impairments	(4.3)	(11.4)	(12.1)	(27.8)
Exchange adjustments	2.2	7.1	(0.5)	8.8
Book value on Dec. 31, 2009	194.2	173.5	52.6	420.3
At Jan. 1, 2010
Cost value	225.5	223.8	125.5	574.8
Accumulated amortization and impairments	(31.3)	(50.3)	(72.9)	(154.5)
Book value on Jan. 1, 2010	194.2	173.5	52.6	420.3
Investments	17.0	0.5	12.7	30.2
Consolidation	-	89.8	18.6	108.4
Reclassification	2.2	-	8.1	10.3
Amortization and impairments	(2.4)	(15.0)	(16.4)	(33.8)
Exchange adjustments	0.6	5.7	(0.4)	5.9
Book value on Dec. 31, 2010	211.6	254.5	75.2	541.3
At Dec. 31, 2010
Cost value	245.3	319.8	164.5	729.6
Accumulated amortization and impairments	(33.7)	(65.3)	(89.3)	(188.3)
Book value on Dec. 31, 2010	211.6	254.5	75.2	541.3

Trademarks are valued using a 3% royalty rate and are amortized over 15-25 years on a straight line basis with no residual value.

Franchise contracts are discounted at 12.5% and amortized over 15 years on a straight line basis with no residual value.

Waived rental payments are capitalized on the basis of a present value cash flow analysis discounted at 15%. They are amortized over the average lease term, on a straight line basis with no residual value.

Customer relationships are discounted at 10.7% and amortized over 6-14 years on a straight line basis with no residual value.

4. Investments in associates

The composition of the investments in associates is as follows:

	2010	2009
Publicly traded	1,376.3	1,009.4
Other	150.7	112.6
Total	1,527.0	1,122.0

Movements are as follows:

	2010	2009
Book value on Jan. 1	1,122.0	828.0
Investments	198.8	96.4
Disposals	(14.4)	(1.5)
Income	283.4	199.0
Dividends	(49.9)	(8.0)
Share change in other reserves	(2.8)	-
Movement valuation difference	5.5	4.5
Reclassification	(52.0)	1.2
Exchange adjustments and effect of financial instruments	36.4	2.4
Book value on Dec. 31	1,527.0	1,122.0

Investments primarily consist of the acquisition of an interest in Safilo Group S.p.A. (37.23% as of December 31, 2010) and a 25% interest in Grupo Óptico Lux in Mexico.

The reclassification is a result of the acquisition of a controlling interest in FD Mediagroep B.V. and the classification under current assets of the option to acquire additional shares in

InVesting B.V. FD Mediagroep B.V. is consolidated as of January 1, 2010.

The difference between the market value of the Company's share in its publicly traded associates and the book value is as follows:

	2010	2009
Market value	3,660.6	2,590.1
Book value	(1,376.3)	(1,009.4)
	2,284.3	1,580.7

At December 31, 2010, goodwill of € 86.6 million (2009: € 37.0 million) was included in the book value above.

The Company's financial summary of Safilo Group S.p.A., Koninklijke Vopak N.V. and Koninklijke Boskalis Westminster N.V. is as follows:

	Safilo	Vopak	Boskalis	Total
2010
Assets	1,486.3	3,831.0	4,315.2	9,632.5
Liabilities	719.3	2,280.9	2,715.9	5,716.1
Revenues	1,079.9	1,106.3	2,674.4	4,860.6
Profit	0.7	261.9	310.5	573.1
% interest held	37.23%	48.15%	32.93%
2009
Assets	1,390.6	3,136.0	2,803.6	7,330.2
Liabilities	944.6	1,803.2	1,498.7	4,246.5
Revenues	1,011.2	1,001.1	2,175.2	4,187.5
Profit	(351.4)	247.6	227.9	124.1
% interest held	2.08%	48.15%	32.48%

Koninklijke Vopak N.V. and Koninklijke Boskalis Westminster N.V. are incorporated in the Netherlands. Safilo Group S.p.A. is incorporated in Italy.

A list of the Company's principal associates is included on page 62.

The interest in Dockwise Ltd. is included under "other financial assets".

Investments in associates include interests in six private equity partnerships for a total amount of € 41 million (2009: € 36 million).

5. Other financial assets

The specification is as follows:

	2010	2009
Investment in quoted securities	190.4	171.9
Loans to associates	11.0	16.4
Other loans	43.2	43.1
Other	34.0	25.3
	278.6	256.7

Investment in quoted securities include:

	2010	2009
95/8% Senior Notes issued by Safilo Group maturing in 2013 par value € 99 million	102.1	90.8
2.08% equity interest in Safilo Group S.p.A.	-	3.4
17.87% equity interest in Dockwise Ltd.	88.3	77.7
	190.4	171.9

Investment in quoted securities are recorded at fair value based on stock exchange quoted prices including accrued interest if applicable. If securities are not actively traded, market prices are obtained from independent market vendors. The loans to associates bears interest ranging from 6% to 8% with a remaining duration of two to five years. The category other mostly includes long-term deposits.

6. Marketable securities and deposits

The specification is as follows:

	2010	2009
Time deposits and other receivables	122.3	214.3
Other fixed income securities	0.1	0.4
Equity securities	90.3	111.3
	212.7	326.0

The summary by currency of the 'time deposits and other receivables' is as follows:

	2010	2009
Euro	102.2	179.4
U.S. dollar	18.1	32.0
Other currencies	2.0	2.9
	122.3	214.3

On December 31, 2010, the average current yield of the time deposits and bonds denominated in U.S. dollars was 0.2% (2009: 0.3%) and those denominated in euros 1.5% (2009: 0.9%). All deposits are highly liquid.

The geographical allocation in percentages of the 'equity securities' is as follows:

	2010	2009
Europe	-	46
North-America	34	17
Other	66	37
	100	100

Realized gains (losses), impairment losses, interests, dividends and management fees are included in the line 'earnings from marketable securities and deposits' in the consolidated statement of income.

7. Receivables

	2010	2009
Trade receivables	328.6	287.0
Allowance for doubtful accounts	(19.6)	(20.7)
	309.0	266.3

The ageing of these receivables is as follows:

	2010	2009
Up to 3 months	288.3	242.1
Between 3 and 6 months	17.6	16.0
Between 6 and 9 months	7.8	10.1
Over 9 months	14.9	18.8
	328.6	287.0

With respect to the trade receivables that are neither impaired nor past due, there are no indications as of the reporting date that the debtors will not meet their payment obligations.

The ageing analysis of the trade receivables that are past due but not impaired is as follows:

	2010	2009
Up to 3 months	58.1	44.0
Between 3 and 6 months	11.7	7.4
Between 6 and 9 months	3.9	3.7
Over 9 months	7.2	8.1
	80.9	63.2

The carrying amounts of the Company's trade receivables are denominated in the following currencies:

	2010	2009
Euro	261.9	225.6
British pound	16.5	16.2
U.S. dollar	10.0	7.0
Other	40.2	38.2
	328.6	287.0

Movements on the provision for impairment of trade receivables are as follows:

	2010	2009
Book value on Jan. 1	(20.7)	(18.6)
Additions	(6.4)	(5.4)
Current year write-off	7.1	3.0
Releases	0.4	0.3
Book value on Dec. 31	(19.6)	(20.7)

Information on pledges is included in notes 14 and 16.

8. Inventories

The composition of the inventories is as follows:

	2010	2009
Raw materials	32.1	30.5
Work in progress	18.3	18.8
Finished goods	362.3	332.5
Provisions	(41.0)	(38.1)
	371.7	343.7

The cost of inventory recognized as expense amounts to € 1,263.6 million (2009: € 1,220.0 million). The total write-down of inventories recognized as expense amounts to € 15.2 million (2009: € 7.8 million).

Information on pledges is included in notes 14 and 16.

9. Assets and liabilities held for sale

	2010	2009
Balance on January 1	14.6	-
Reclassification to assets	-	21.8
Reclassification to liabilities	-	(7.2)
Disposal	(14.6)	-
Balance on Dec. 31	-	14.6

Assets and liabilities held for sale include the followings:

	2010	2009
Optical retail	-	13.7
Property, plant & equipment	-	0.9
Total	-	14.6

10. Other current assets

The composition of the other current assets is as follows:

	2010	2009
Prepaid vendors	49.3	43.6
Other receivables	75.5	78.8
Value added tax	20.7	15.0
Derivative financial instruments	39.2	1.3
Receivables from franchisees	24.4	23.3
Income tax receivable	10.1	3.5
	219.2	165.5

Other receivables include prepaid rent, key money and all other current assets not included in the other categories above.

Derivative financial instrument include an option to acquire additional shares in InVesting B.V. See note 4.

Information on pledges is included in notes 14 and 16.

11. Issued capital

The issued share capital at December 31, 2010 consists of 65,480,552 shares of which 92,210 are held as treasury stock by the Company. Movements in the number of shares were as follows:

x 1,000	Issued shares	Treasury shares
January 1, 2009	63,686.9	156.0
Sale of treasury shares	-	(39.7)
December 31, 2009	63,686.9	116.3
Sale of treasury shares	-	(28.3)
Dividend paid in stock	1,793.7	4.2
December 31, 2010	65,480.6	92.2
Outstanding shares		65,388.4
Par value (HAL Holding N.V.)		0.02
Share capital		1.3

A 2009 related dividend of € 181.2 million (excluding dividend on treasury shares) or € 2.85 per share was paid on June 18, 2010 (2009: € 127.1 million or € 2.00 per share), of which € 40.9 million in cash and € 140.3 million in shares. Shareholders representing 77.5% of the issued shares had their dividend distributed in stock. These shareholders received 1 new share for 27.5 existing shares.

This conversion ratio was determined based on the volume weighted average share price of HAL Trust shares traded on NYSE Euronext in Amsterdam during the period May 21, 2010 through June 10, 2010.

Accordingly, 1,793,702 shares were issued on June 18, 2010.

12. Provisions

Provisions consist of:

	2010	2009
Pension obligations	3.1	8.6
Other	12.1	5.4
Total	15.2	14.0

The movement in the pension provision is disclosed in note 13.

Other provisions refer to warranties, fiscal and regulatory risks, restructuring, onerous contracts and other risks.

13. Pension obligations

The Company and its subsidiaries have established a number of pension and early retirement schemes, which are either funded or unfunded. The assets of the funded plans are held independently of the Company's and its subsidiaries' assets in separately administered funds. These schemes are valued by independent actuaries every year, using the 'projected unit credit' method.

The latest actuarial valuation was carried out as of December 31, 2010.

The amounts recognized in the statement of financial position are as follows:

	2010	2009
Present value of funded obligations	329.9	292.8
Fair value of plan assets	363.2	323.4
	(33.3)	(30.6)
Unrecognized actuarial results	(0.6)	3.1
Present value of unfunded obligations	37.0	36.1
Net liability in the statement of financial position	3.1	8.6

The net liability consists of net defined benefit assets of € 70 million (2009: € 64 million) and net defined benefit liabilities of € 73 million (2009: € 73 million).

The amounts recognized in the consolidated statement of income are as follows:

	2010	2009
Current service costs	6.7	6.3
Interest costs	17.2	16.8
Expected return on plan assets	(19.8)	(18.2)
Actuarial results	0.3	-
Plan amendments	-	(0.1)
Other costs	13.3	11.5
Total, included in employee costs	17.7	16.3

Movements in the defined benefit obligations are as follows:

	2010	2009
Balance on January 1	328.9	302.5
Service cost	6.7	6.3
Interest cost	17.2	16.8
Employee contributions	4.4	4.5
Actuarial results	24.9	14.1
Plan amendments	-	0.9
Benefits paid	(15.2)	(14.7)
Reclassification	(0.3)	(2.2)
Exchange effect	0.3	0.7
Balance on Dec. 31	366.9	328.9

Movements in the plan assets are as follows:

	2010	2009
Balance on January 1	323.4	298.0
Expected return on plan assets	19.8	18.2
Employer contributions	9.5	8.2
Employee contributions	4.4	4.5
Actuarial results	21.0	7.9
Plan amendments	-	1.0
Benefits paid	(15.2)	(14.7)
Exchange effect	0.3	0.3
Balance on Dec. 31	363.2	323.4

The actual return on plan assets was € 41.0 million (2009: € 26.1 million).

The Company expects to contribute € 12.6 million to defined benefit plans in 2011.

The principal weighted average assumptions used were:

	2010	2009
Discount rate	5.08%	5.31%
Inflation rate	2.03%	2.08%
Expected return on plan assets	5.12%	5.27%
Future salary increases	3.75%	3.88%
Future benefits increases	1.76%	1.87%

The latest available mortality tables were used.

Plan assets include the following:

As of December 31, 2010:

Equities	106.9	29.5%
Debt instruments	201.7	55.5%
Other	54.6	15.0%
	363.2	100.0%

As of December 31 2009:

Equities	91.9	28.4%
Debt instruments	185.7	57.4%
Other	45.8	14.2%
	323.4	100.0%

Other assets mainly include short-term deposits.

The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as of the statement of financial position date. Expected returns on equity reflect expected long-term rates of return.

Experience adjustments for the current and previous four periods are as follows:

	2010	2009	2008	2007	2006
Present value of defined benefit obligations	366.9	328.9	302.5	291.5	328.5
Fair value of plan assets	363.2	323.4	298.0	289.1	275.2
Deficit	(3.7)	(5.5)	(4.5)	(2.4)	(53.3)
Actuarial gains (losses) on pension obligations	(24.9)	(14.1)	2.4	36.2	31.4
Actuarial gains (losses) on plan assets	21.0	7.9	(10.8)	(6.3)	(1.0)

14. Long-term debt and other financial liabilities

	2010	2009
Long-term bank debt	502.1	367.9
Other financial liabilities	155.0	20.5
	657.1	388.4
	2010	2009
---	---	---
Mortgage loans	176.0	121.7
Other loans	326.1	246.2
	502.1	367.9

The summary per currency is as follows:

	2010	2009
Euro	354.6	261.3
U.S. dollar	77.8	62.0
Other currencies	69.7	44.6
	502.1	367.9

The maturity of long-term debt is as follows:

	2010	2009
Between 1 and 2 years	61.4	120.2
Between 2 and 5 years	337.9	145.9
Over 5 years	102.8	101.8
	502.1	367.9

Mortgage loans are secured by mortgages and pledges on vessels, real estate, inventory and receivables with a corresponding book value of € 287 million. The other loans are secured to an amount of € 76 million by pledges on machinery and equipment, receivables, inventories and other current assets.

These are non-possessory pledges where, in case of default under the mortgage loan agreements, the lender would have the right to resell the vessels or real estate and receive the cash flows from the receivables.

Included in other financial liabilities is the non-current portion of obligations to acquire equity instruments in certain subsidiaries from the management of these subsidiaries (€ 43.9 million). Reference is made to the note on financial commitments. Also included are financial commitments due to previous owners of companies acquired, that are payable in future years (earn-out and deferred/ contingent payments) for € 111.1 million.

The weighted average interest rate as of December 31, 2010 on the long-term loans was 3.8% (2009: 4.5%).

After taking into account interest rate swaps, the interest rate exposure relating to the long-term bank debt of the Company and its subsidiaries is as follows:

	2010	2009
Loans at fixed rates	398.4	270.9
Loans at floating rates	103.7	97.0
	502.1	367.9

15. Deferred taxes

The movement in deferred tax assets and liabilities (prior to offsetting of balances within the same tax entity) during the period is as follows:

Deferred tax liabilities:

	Property, plant and equipment	Intangibles	Other	Total
As of Jan. 1, 2009	(5.5)	(91.4)	(43.5)	(140.4)
Credit/(charged) to net income	0.5	(3.5)	(1.7)	(4.7)
Other movements	(1.3)	(6.9)	8.7	0.5
Reclassifications	(11.2)	-	11.2	-
As of Dec. 31, 2009	(17.5)	(101.8)	(25.3)	(144.6)
Credit/(charged) to net income	(0.5)	0.4	(4.9)	(5.0)
Other movements	(0.2)	(19.5)	(5.0)	(24.7)
As of Dec. 31, 2010	(18.2)	(120.9)	(35.2)	(174.3)

The current portion of the deferred tax liabilities amounts to € 2.6 million and the non-current to € 171.7 million.

Deferred tax assets:

	Tax loss carry-forwards	Pensions	Other	Total
As of Jan. 1, 2009	42.2	3.6	27.0	72.8
Credit/(charged)
to net income	8.5	(1.7)	(1.5)	5.3
Other movements	4.2	-	(2.6)	1.6
As of Dec. 31, 2009	54.9	1.9	22.9	79.7
Credit/(charged)
to net income	6.6	(0.5)	(2.8)	3.3
Other movements	(8.8)	2.6	11.1	4.9
As of Dec. 31, 2010	52.7	4.0	31.2	87.9

The current portion of the deferred tax assets amounts to € 1.5 million and the non-current to € 86.4 million.

Unused tax losses which were not valued for the purpose of calculating deferred tax assets amounted to € 334.3 million (2009: € 295.8 million).

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax entity.

The following amounts, determined after appropriate offset, are shown in the Statement of financial position:

	2010	2009
Deferred tax assets	46.0	50.4
Deferred tax liabilities	(132.4)	(115.3)
	(86.4)	(64.9)

Deferred income taxes are shown under note 25 as follows:

	2010	2009
Deferred tax liabilities
debited/credited to
net income	(5.0)	(4.7)
Deferred tax assets
credited to net income	3.3	5.3
	(1.7)	0.6

Short-term debt and other financial liabilities

	2010	2009
Short-term debt	533.4	492.9
Other financial liabilities	41.8	20.4
	575.2	513.3
	2010	2009
Bank overdraft	82.7	59.9
Bank loans	347.4	242.6
Current portion
long-term debt	103.3	190.4
	533.4	492.9

Loans are secured to an amount of € 166 million by pledges on machinery and equipment, receivables, inventories and other current assets. These are non-possessory pledges, where in case the Company defaulted under the loan agreements, the lender would have the right to resell the machinery and equipment or inventories and receive the cash flows from the receivables. Short-term debt includes loans to an amount of € 185 million (2009: € 190 million) which mature in 2011 but are drawn under a facility expiring in February 2012.

Included in other financial liabilities is the current portion of obligations to acquire equity instruments in certain subsidiaries from the management of these subsidiaries (€ 20.1 million). Reference is made to the note on financial commitments. Also included are financial commitments due to previous owners of companies acquired, that are payable in future years (earn-out and deferred/contingent payments) for € 21.7 million.

Revenues

	2010	2009
Sale of goods	3,519.6	3,272.5
Services	177.1	122.3
Franchise fees	72.2	53.0
	3,768.9	3,447.8

Income from marketable securities and deposits

	2010	2009
Capital gains (losses) including impairments	17.9	10.8
Interest income	7.1	9.7
Dividends	1.2	3.0
Management fees	(0.7)	(0.6)
	25.5	22.9

Income from associates

	2010	2009
Share in results	238.6	199.0
Revaluation	44.8	-
	283.4	199.0

The revaluation relates to the non-controlling interest in FD Mediagroep B.V. (€ 11.3 million) upon acquisition of a controlling interest in this company as disclosed in notes 3 and 4. Also included under revaluation is the change in value of an option to acquire additional shares in InVesting B.V. (€ 33.4 million).

Income from other financial assets

	2010	2009
Interest from loans	10.2	1.5
Capital gains (losses)	(5.8)	(0.8)
	4.4	0.7

Income from real estate activities

	2010	2009
Capital gains	6.8	-
Net rental income	13.3	12.5
Operating expenses	(5.5)	(4.8)
	14.6	7.7

Employee expenses

	2010	2009
Wages and salaries	815.6	733.7
Social security costs	165.6	146.7
Pension costs	17.7	16.3
Other	98.6	82.0
	1,097.5	978.7

The average number of persons employed by the Company and its subsidiaries during 2010 was 26,862 (2009: 24,503) on a full time equivalent basis.

Other operating expenses

Other operating expenses include the following:
	2010	2009
Rent	382.0	342.1
Marketing and publicity	168.0	136.9
Other	415.9	374.7
	965.9	853.7

Research and development costs expensed amounted to € 3.3 million (2009: € 4.4 million).

The total amount of exchange differences recognized in the consolidated statement of income (except financial instruments at fair value) amounted to a € 1.8 million loss (2009: € 1.8 million gain).

Financial expense

Financial expense includes the following:

	2010	2009
Interest expense	49.9	47.5
Impact of fair value hedge	6.0	-
	55.9	47.5

25. Income taxes

Income taxes are calculated based on the tax rates in the countries where the Company and its subsidiaries have operations, taking into account tax-exempt income and tax losses carried forward.

	2010	2009
Current income taxes	60.9	52.0
Deferred income taxes	1.7	(0.6)
	62.6	51.4

Income taxes differ from the theoretical amount that would arise using the domestic tax rates applicable to profits of taxable entities in the countries concerned, as follows:

	2010	2009
Tax at the theoretical domestic rates applicable to profits of taxable entities in the countries concerned	136.1	107.5
Recognition of unused tax losses and unrecognized tax losses	7.9	15.2
Tax-effect on non-deductible expenses and on income not subject to tax	(81.4)	(70.5)
Other	-	(0.8)
	62.6	51.4

The weighted average applicable tax rate was 27.7% (2009: 27.0%).

The tax effect on non-deductible expenses and on income not subject to tax mainly relates to the tax effect on income from associates of € 283.4 million (2009: € 199.0 million) which is non-taxable and the impairment of goodwill of € 40 million (2009: € 21.5 million) which is not tax-deductible.

26. Changes in working capital

Changes in working capital in the consolidated statement of cash flows disregard exchange differences and the effect of acquisitions.

	2010	2009
Accounts receivable	(14.9)	51.2
Inventories	(7.1)	40.1
Other current assets	(28.6)	15.6
Accounts payable	(5.8)	(46.8)
Accrued expenses	15.8	(23.7)
Taxes payable	0.1	(5.3)
	(40.5)	31.1

Segmentation

The Company's reportable segments are:

Optical retail
Other unquoted
Quoted minority interests
Real estate
Liquid portfolio

Operating income (for the purpose of this report defined as earnings before interest, exceptional and non-recurring items, taxes and amortization of intangible assets but including amortization software) can be detailed as follows:

	2010	2009
Optical retail	258.0	250.4
Other unquoted	96.9	65.3
Quoted minorities	230.7	193.4
Real estate	8.8	(0.1)
Liquid portfolio	18.8	14.7
	613.2	523.7
Reconciling items:
- Amortization	(73.8)	(49.3)
- Interest income consolidated subsidiaries	6.9	8.1
- Other	0.3	(41.5)
Operating result as per consolidated statement of income	546.6	441.0
Financial expense	(55.9)	(47.5)
Profit before tax as per consolidated statement of income	490.7	393.5

The "other" reconciling items represent mostly corporate overhead and exceptional and non-recurring items and includes the revaluation of the minority interest in FD Mediagroep (€ 11.3 million) and the option to acquire additional shares in InVesting B.V. (€ 33.4 million). Amortization includes impairments of € 40.0 million of which € 10.0 million (2009: € 13.9 million) in the optical retail segment and € 30.0 million (2009: € 13.0 million) in the other unquoted segment.

The composition of depreciation expense by segment is as follows:

	2010	2009
Optical retail	79.5	78.9
Other unquoted	50.0	44.5
Real estate	4.2	6.8
Reconciling items	0.5	0.2
	134.2	130.4

The reconciling items represent corporate depreciation expense.

The composition of revenues by segment is as follows:

	2010	2009
Optical retail	2,194.3	2,032.5
Other unquoted	1,574.6	1,415.3
	3,768.9	3,447.8

The composition of assets by segment is as follows:

	2010	2009
Optical retail	2,200.9	2,111.4
Other unquoted	1,741.8	1,321.0
Quoted minorities	1,566.8	1,181.3
Real estate	109.5	84.1
Liquid portfolio	125.4	233.8
Reconciling items	34.0	25.6
	5,778.4	4,957.2

The reconciling items represent mostly deferred tax and loans.

The increase in the other unquoted segment is due to the acquisitions that were completed in 2010. We refer to note 3 for further details.

The increase in the quoted minorities segment is mostly due to the additional investment in Safilo Group S.p.A. and the share in income of Koninklijke Vopak N.V. and Koninklijke Boskalis Westminster N.V.

The liquid portfolio segment decreased as a result of acquisitions during 2010.

The composition of investments in associates by segment is as follows:

	2010	2009
Optical retail	50.5	22.9
Other unquoted	100.2	89.7
Quoted minorities	1,376.3	1,009.4
	1,527.0	1,122.0

The composition of capital expenditures by segment is as follows:

	2010	2009
Optical retail	148.8	135.2
Other unquoted	261.3	55.9
Real estate	34.5	1.8
Reconciling items	0.2	0.6
	444.8	193.5

Capital expenditure consists of additions of property, plant and equipment, investment properties and intangible assets. The reconciling items represent corporate capital expenditure.

The composition of liabilities by segment is as follows:

	2010	2009
Optical retail	1,086.4	1,012.6
Other unquoted	1,010.8	756.9
Real estate	24.5	22.9
Liquid portfolio	0.3	0.1
Reconciling items	31.2	(39.9)
	2,153.2	1,752.6

The reconciling items represent mostly corporate debt and pension assets that are part of the overall pension liability.

The composition of revenues by geographical area is as follows:

	2010	2009
Europe	3,561.8	3,309.8
North-America	40.1	36.5
Other countries	167.0	101.5
	3,768.9	3,447.8

The composition of non-current assets by geographical area is as follows:

	2010	2009
Europe	3,915.5	3,200.3
North-America	103.4	67.5
Other countries	177.6	119.1
	4,196.5	3,386.9

Non-current assets consist of property, plant and equipment, investment properties, intangible assets and investment in associates.

Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Dec. 31, 2010	Loans and receivables	Available for sale	Derivatives	Total
Assets
Other financial assets	88.2	190.4	-	278.6
Marketable sec. and deposits	-	212.7	-	212.7
Other current assets	110.0	-	39.2	149.2
Receivables	309.0	-	-	309.0
Cash	144.7	-	-	144.7
Total	651.9	403.1	39.2	1,094.2
Dec. 31, 2010		Liabilities	Derivatives	Total
Liabilities
Long-term debt		502.1	-	502.1
Short-term debt		533.4	-	533.4
Other financial liabilities		196.8	-	196.8
Finance leases		4.3	-	4.3
Accounts payable		264.7	13.4	278.1
Total		1,501.3	13.4	1,514.7
Dec. 31, 2009	Loans and receivables	Available for sale	Derivatives	Total
---	---	---	---	---
Assets
Other financial assets	84.8	171.9	-	256.7
Marketable sec. and deposits	-	326.0	-	326.0
Other current assets	105.6	-	1.3	106.9
Receivables	266.3	-	-	266.3
Cash	139.9	-	-	139.9
Total	596.6	497.9	1.3	1,095.8
Dec. 31, 2009	Liabilities	Derivatives	Total
---	---	---	---
Liabilities
Long-term debt	367.9	-	367.9
Short-term debt	492.9	-	492.9
Other financial liabilities	40.9		40.9
Finance leases	5.7	-	5.7
Accounts payable	229.0	13.5	242.5
Total	1,136.4	13.5	1,149.9

Derivative financial instruments

On December 31, 2010 the Company owned open forward exchange contracts to sell U.S. dollars with a fair value of approximately € 4.4 million (2009: € (0.9) million), a nominal amount of € 264.2 million (2009: € 223.0 million) and maturing within the next twelve months. The Company also owned open forward exchange contracts to sell British pounds with a fair value of approximately € 1.2 million (2009: € (1.5) million), a nominal amount of € 122.2 million (2009: € 116.0 million) and maturing within the next twelve months. The Company also owned open forward exchange contracts to sell Japanese yens with a fair value of approximately € 0.2 million (2009: € 0.3 million), a nominal amount of € 30.2 million (2009: € 25.0 million) and maturing within the next twelve months.

The total fair value of the above instruments was € 5.8 million (2009: € (2.4) million). These contracts, except for the Japanese yen contracts and the Dockwise portion of the USD contract which are considered a fair value hedge, are included in net investment hedge relationships and are intended to protect the Company against currency risk on its investments in foreign entities and anticipated future cash flows in foreign currencies. In accordance with the accounting policies in respect of derivative financial instruments, the fair value on the forward exchange contracts is

recognized as a part of the cumulative currency translation reserve within equity.

The fair value hedge (including the hedge of the investment in Dockwise Ltd.) resulted in a € 11.3 million loss on the hedging instrument and a € 5.5 million gain on the hedged item.

As of December 31, 2010, interest on loans to an amount of € 593.8 million (2009: € 535.0 million) are fixed by means of interest rate swaps. These instruments are intended to protect the Company from rising interest payments on its floating rate borrowings. Fair values on these instruments amounted to € (13.4) million on December 31, 2010 (2009: € (10.1) million). This amount is included under accrued expenses in the statement of financial position. On December 31, 2010 the fixed interest rates of the swaps vary from 1.50% to 4.67% (2009: 2.77% to 4.67%). The Company is mainly exposed to changes in Euribor and Libor. The fair value of these interest rate swaps is recognized as part of the cash flow hedge reserve, as far as they are included in a cash flow hedge relationship, within equity and will be released continuously to the consolidated statement of income until the repayment of the debts.

All hedge accounting relationships are highly effective. For amounts recognized in equity and removed from equity we refer to the schedule of movements in other reserves on page 24.

Fair value of financial assets and financial liabilities

The table below summarizes the fair value of financial assets and financial liabilities in comparison with their carrying amounts.

	Fair value 2010	Carrying amount 2010	Fair value 2009	Carrying amount 2009
Financial Assets
Other financial assets	278.6	278.6	256.7	256.7
Marketable sec. and deposits	212.7	212.7	326.0	326.0
Other current assets	149.2	149.2	106.9	106.9
Receivables	309.0	309.0	266.3	266.3
Cash	144.7	144.7	139.9	139.9
Total	1,094.2	1,094.2	1,095.8	1,095.8
	Fair value 2010	Carrying amount 2010	Fair value 2009	Carrying amount 2009
---	---	---	---	---
Financial Liabilities
Debt	1,023.5	1,035.5	842.9	860.8
Other financial liabilities	196.8	196.8	40.9	40.9
Finance leases	3.9	4.3	5.1	5.7
Accounts payable and derivatives	278.1	278.1	242.5	242.5
Total	1,502.3	1,514.7	1,131.4	1,149.9

The fair value of the financial assets and liabilities has been determined using market prices. When these are not available, discounted cash flow techniques have been used to value these instruments. The discounted cash flow techniques use market interest and exchange rates as input.

The fair value of finance leases has been determined by reference to current market rates for comparable leasing agreements.

Summary by level of assets and liabilities measured at fair value

Dec. 31, 2010	Level 1	Level 2	Level 3	Total
Assets
Available-for sale
financial assets
- equity securities	147.5	31.1	-	178.6
- fixed income instruments	102.1	0.1	-	102.2
Derivatives	-	5.8	33.4	39.2
Total	249.6	37.0	33.4	320.0

	Level 1	Level 2	Level 3	Total
Liabilities
Derivatives	-	13.4	-	13.4
Other financial liabilities	-	-	196.8	196.8
Total	-	13.4	196.8	210.2
Dec. 31, 2009	Level 1	Level 2	Level 3	Total
---	---	---	---	---
Assets
Available-for sale financial assets
- equity securities	172.7	19.7	-	192.4
- fixed income instruments	90.8	0.4	-	91.2
Derivatives	-	1.3	-	1.3
Total	263.5	21.4	-	284.9
	Level 1	Level 2	Level 3	Total
---	---	---	---	---
Liabilities
Derivatives	-	13.5	-	13.5
Other financial liabilities	-	-	40.9	40.9
Total	-	13.5	40.9	54.4

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1. The financial instruments traded in active markets through a money manager where the Company does not have the power to control sales and purchases are classified in level 2. In the case of financial instruments that are not traded in an active market such as derivatives, fair value is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Capital risk management

The Company manages its capital to safeguard its ability to continue as a going concern and to provide an adequate return on its invested capital.

The capital structure per December 31 is summarized in the table below.

	2010	2009
Equity	3,595.1	3,132.4
Long-term bank debt	502.1	367.9
Short-term bank debt	533.4	492.9
Cash and deposits	(267.0)	(354.2)
Total capital employed	4,363.6	3,639.0

Related-party transactions

Short-term and post-employment benefits for the Executive Board amounted to € 2.4 million (2009: € 2.3 million) and € 0.4 million (2009: € 0.3 million) respectively.

The Supervisory Board approved in 2006 a one time allotment of 50,000 HAL Trust shares to Mr. M.F. Groot, member of the Executive Board, under the condition precedent that he is still employed with the Company on April 1, 2011. The shares then granted will be restricted for a five year period. In this respect € 0.6 million (2009: € 0.6 million) was charged to the consolidated statement of income and a liability of € 2.6 million (2009: € 2.1 million) has been recognized.

The fixed remuneration for the Supervisory Directors of HAL Holding N.V. paid during 2010 in accordance with Art. 23 (5) of the Articles of Incorporation of HAL Holding N.V. was € 0.1 million (2009: € 0.1 million) in total.

The compensation payable to the Board of Supervisory Directors pursuant to Article 30 (1) of the Articles of Incorporation of HAL Holding N.V. is € 0.5 million (2009: € 0.4 million) which was reduced to € 0.3 million (2009: € 0.3 million) by the Supervisory Board. Accordingly, the total 2010 compensation for the Supervisory Board amounted to € 0.4 million (2009: € 0.4 million).

The Company acquired 100% of the shares of Tide Ti, a sunglass and optical retailer in Mexico. 60% of the shares was acquired from Safilo Group S.p.A. (see below). We refer to note 3 for details.

During 2010, the Company purchased for € 38.2 million goods from companies controlled by Safilo Group S.p.A., a 37.2% associate. At the end of 2010, the Company had € 12.7 million payable to Safilo Group S.p.A. with respect to delivery of goods in the ordinary course of business. In addition, the Company owns 9⁵/₈% Senior Notes issued by Safilo Group S.p.A. with a par value of € 99 million (see Note 5).

Financial Commitments

Capital commitments

On December 31, 2010 the Company and its subsidiaries had capital commitments in respect of buildings or vessels under construction of approximately € 54.8 million (2009: € 1.3 million).

Leases of assets under which all the risks and benefits of ownership are not retained by the lessor but are transferred to the lessee are classified as finance leases. They are capitalized as assets with the corresponding debts as liabilities.

Movements are as follows:

	2010	2009
Cost at beginning of the year	30.1	27.0
Acquisitions	0.9	4.8
Disposals	(12.5)	(1.7)
Subtotal	18.5	30.1
Accumulated depreciation at beginning of the year	(24.2)	(22.6)
Disposals	11.1	0.3
Depreciation	(1.1)	(1.9)
Subtotal	(14.2)	(24.2)
Book value at Dec. 31	4.3	5.9

These assets represent mostly warehouse assets and laboratory equipment.

Minimum lease payments of the finance lease liabilities:

	2010	2009
No later than 1 year	1.5	1.7
Later than 1 year and no later than 2 years	1.2	1.2
Later than 2 year and no later than 5 years	1.4	2.3
Later than 5 years	0.2	0.5
Subtotal	4.3	5.7
Future finance charges	(0.4)	(0.6)
Present value of liability	3.9	5.1

The present value of the finance lease liabilities is as follows:

	2010	2009
No later than 1 year	1.4	1.6
Later than 1 year and no later than 2 years	1.1	1.1
Later than 2 year and no later than 5 years	1.2	1.7
Later than 5 years	0.2	0.7
Total	3.9	5.1

Financial commitments

Leases of assets under which significant risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated statement of income on a straight line basis over the period of the lease.

The future minimum lease payments under non cancellable operating leases and other commitments are as follows:

	2010	2009
No later than 1 year	282.0	265.5
Later than 1 year and no later than 5 years	662.7	656.7
Later than 5 years	231.4	265.3
Total	1,176.1	1,187.5

Operating leases recognized in income amounted to € 311 million (2009: € 258 million).

The Company and its subsidiaries entered into various commitments to acquire minority and majority interests. On December 31, 2010 the total estimated amount of these commitments not included in the balance sheet was € 39 million (2009: € 268 million).

Management of certain subsidiaries (approximately 80 individuals) own non-controlling interests in the capital of these subsidiaries. The Company has, with respect to certain subsidiaries, the conditional obligation to acquire these equity instruments for cash. These obligations are generally included in management participation agreements which include conditions such as vesting criteria, lock up arrangements, non-compete agreements and good leaver/ bad leaver provisions. The nature of the different agreements is similar. Until January 1, 2010 these non-controlling interests were recorded at the pro rata share of the net asset value of the respective subsidiary, calculated in accordance with the accounting policies as specified in these financial statements.

Effective January 1, 2010, these non-controlling interests were derecognized and a liability was recorded for the obligation to purchase the equity instruments for cash. The liabilities are initially recorded based on the value of the equity instruments transferred and subsequently remeasured to fair value. The calculation of fair value is generally based on a multiple of EBITA less debt. Multiples applied are either contractually determined or, generally, in accordance with those applied in calculating estimated value of the investment portfolio (page 63). The liabilities expire during the period 2011-2016. The short-term part of this liability (€ 20.1 million) is included under short-term debt and the long-term part (€ 43.9 million) under long-term debt. Changes in estimated value of the liabilities are recorded in the consolidated statement of income under employee expenses (taking into account cash received).

In 2010 € 13.9 million was recorded in the consolidated statement of income under employee expenses of which € 8.1 million related to changes in value attributable to prior years.

List of Principal Investments

As of December 31, 2010

(Interest = 100% unless otherwise stated)

Consolidated:	Interest
HAL Holding N.V., Curaçao
HAL International N.V., Curaçao
HAL International Investments N.V., Curaçao
HAL Investments N.V., Curaçao
HAL Real Estate Investments Inc., Seattle
HAL Investments B.V., Rotterdam
Atasun Optik A.S., Istanbul
GrandVision S.A., Paris	99.7%
Koninklijke Ahrend N.V., Amsterdam	99.0%
Pearle Europe B.V., Schiphol	98.5%
FD Mediagroep B.V., Amsterdam	98.3%
Mercurius Groep B.V., Wormerveer	98.0%
Broadview Holding B.V.,’s-Hertogenbosch	97.4%
AudioNova International B.V., Rotterdam	96.1%
Intersafe Trust B.V., Dordrecht	95.5%
Sports Timing Holding B.V., Haarlem	95.0%
Orthopedie Investments Europe B.V., Haarlem	89.0%
Shanghai Red Star Optical Co. Ltd., Shanghai	78.0%
Flight Simulation Company B.V., Schiphol	70.0%
Delta Wines B.V., Waddinxveen	65.0%
Anthony Veder Group N.V., Curaçao	64.2%
PontMeyer N.V., Zaandam	56.7%

Non-consolidated:

Publicly traded	Interest	Exchange
Koninklijke Vopak N.V. (ordinary shares)	48.15%	Amsterdam
Safilo Group S.p.A.	37.23%	Milan
Koninklijke Boskalis Westminster N.V.	32.93%	Amsterdam
Dockwise Ltd.	17.87%	Oslo/Amsterdam

Other

Gispen Group B.V.	49.00%
N.V. Nationale Borg-Maatschappij	46.68%
Lutterman GmbH	46.20%
Visilab S.A.	30.20%
Navis Capital Partners Ltd.	25.00%
Grupo Optico Lux	25.00%
InVesting B.V.	11.74%

Information relating to estimated value of the investment portfolio of HAL Holding N.V.

As of December 31, 2010

General	Cost
This section provides additional information about the investment portfolio of HAL Holding N.V. ('HAL'). This information relates to the consolidated subsidiaries, the investments in associates and the other investments.	New investments are generally valued at cost during the first 12 months or, if later, until the availability of the first set of audited financial statements post completion of the acquisition. However, provisions against cost will be made if the performance of the investment is significantly below the expectations on which the acquisition was based.
For the purpose of this section, book value includes goodwill and loans to the investee companies. Amounts denominated in foreign currencies have been translated at year-end exchange rates.	After this initial period, investments can also remain valued at cost in the following situations:
We emphasize that, especially with respect to non-quoted investments, the estimated value is based upon a number of assumptions. Values as realized upon sale of an investment can be materially different from these estimates.	• If an investment is loss-making and therefore the use of an earnings multiple does not seem appropriate, an investment is valued at cost less a provision in case of a possible diminution of value.
• If comparable quoted companies are not primarily valued on an earnings basis, an investment is valued at cost including any adjustments deemed appropriate.
Portfolio valuation methodology	Recent transactions in the investee company
The valuation of HAL's portfolio for this section is arrived at using a systematic process. The aim is to value the portfolio as a whole on a prudent and consistent basis.	In case of a recent significant and at arm's length share transaction in an investee company, the share price involved in this transaction is used to value the investment.
Quoted investments	Earnings multiple
Quoted investments are valued at the closing price on the statement of financial position date. In certain circumstances, for example in case of trading restrictions, an appropriate discount may be applied.	In all other circumstances investments are valued on an earnings basis using the following method:
Unquoted common equity investments	The EBITA (Earnings Before Interest, Tax and Amortization) of the current year is used, adjusted for non-recurring items when appropriate. The estimated value of the common equity of the investee company is determined by multiplying the (adjusted) EBITA with a multiple and subtracting the net debt and preferred shares of the investee company. The following factors may, among other things, be considered when selecting multiples:
Unquoted investments are valued subject to overriding requirements of prudence, according to one of the following basis:	• the multiple paid at the time of the investment;
• the multiples HAL generally would be prepared to pay for comparable investments;
• Cost (less any provisions required);
• Recent transactions in the investee company;
• Earnings multiple;
• Other.

multiples of a meaningful sample of comparable quoted companies. When referring to multiples of comparable companies, a discount of at least 25% is taken into account for limited marketability, unless there is a strong possibility of a short-term realization.

Unquoted other investments

Unquoted preferred shares and loans to investee companies are generally valued at cost unless the investee company has failed or is expected to fail its payment obligations within the next 12 months. In these circumstances, these assets are valued at the lower of cost and net realizable value.

Valuation investments

	Book value	Estimated value	Cost price
Quoted investments	1,566.7	3,851.0	600.1
Unquoted investments	1,815.7	2,678.2	846.6
	3,382.4	6,529.2	1,446.7
Unquoted investments
Value based on a multiple of EBITA	1,452.8	2,310.9	376.9
Valued at other methods	362.9	367.3	469.7
	1,815.7	2,678.2	846.6

Estimated value less book value of the unquoted investments amounted to € 863 million at the end of 2010.

Cost price represents the original purchase price less dividends, interest received and return of capital. The EBITA multiples applied vary from 7 to 8. With respect to the optical retail activities, a multiple of 8 was applied to an EBITA amount of € 262 million. This amount includes the negative EBITA of Spanish and Latin American optical retail subsidiaries to an amount of € 18 million. Exclusion of this loss in the calculation of estimated value would result in an increase of estimated value of € 144 million. The 2010 sales of these subsidiaries amounted to € 77 million. The optical retail subsidiaries in China and Turkey were valued based on 1 time annual revenue (approximately € 30 million).

Recent acquisitions were valued at cost. Realized multiples may be materially different.

Quoted investments

	Interest in common shares	Price per share in €	Market value in € x 1,000
Koninklijke Vopak N.V.
- ordinary shares	48.15%	35.35	2,175.7
- preferred shares			16.1*
Koninklijke Boskalis Westminster N.V.	32.93%	35.70	1,187.2
Dockwise Ltd.	17.87%	19.55	88.3
Safilo Group S.p.A.
- shares	37.23%	13.31	281.6
- bonds	50.59%	1,022.92	102.1
Total market value quoted investments			3,851.0

*Non-quoted, at cost

No discount was applied to the above market prices.

Statement of Financial Position

HAL Trust

As of December 31

In millions of euro	2010	2009
Assets
65,480,552 shares in HAL Holding N.V., at historical cost	69.3	69.3
Trust Property	69.3	69.3

Statement of Income

HAL Trust

In millions of euro	2010	2009
Dividend received from HAL Holding N.V.	181.5	127.4
Net income	181.5	127.4

Notes to the statutory financial statements (in millions of euro)

The shares in HAL Holding N.V. are accounted for at historical cost in accordance with IAS27.37. As of December 31, 2010, HAL Trust owned 65,480,552 shares of HAL Holding N.V. (2009: 63,686,850).

Trust Property

The movement for 2010 for the Trust property is as follows:

Balance on January 1, 2010 69.3
Dividend received from HAL Holding N.V. (in cash and in shares) 181.5
Distributed to unit holders (in cash and in shares) (181.5)
Balance on December 31, 2010 69.3

Cash flow statement

In millions of euro	2010	2009
Cash dividend received from HAL Holding N.V.	40.9	127.4
Cash distributed to unit holders	(40.9)	(127.4)
Net change	-	-

Distribution of Dividends

It is proposed to the Meeting of HAL Trust to instruct the Trustee to vote, at the General Meeting of Shareholders of HAL Holding N.V., in favor of the proposals to approve the Financial Statements for 2010 and to pay a dividend of € 3.75 per Share outstanding.

It is proposed to direct the Trustee:

to issue by way of stock dividend distribution to each HAL Trust Shareholder: such number of Shares as shall be based on the Conversion ratio and the number of Shares held by such HAL Trust Shareholder (refer to the explanatory notes to the agenda items 2 and 4 of the Notice to Trust Shareholders);
unless a HAL Trust Shareholder shall have requested (by no later than June 9, 2011 3:00 p.m. CET) that the dividend payment to him be made in cash, in which case the Trustee shall pay such HAL Trust Shareholder the cash dividend of € 3.75 per HAL Trust Share:

and

to convey to HAL Holding N.V. prior to June 17, 2011 for how many HAL Holding N.V. shares the dividend should be paid in cash (on the basis of the number of HAL Trust Shares for which the HAL Trust Shareholders have requested payment of the HAL Trust dividend in cash), and for what amount cash payments are to be made to the Trustee representing the value of fractions of HAL Trust Shares (if any) to which the respective HAL Trust Shareholders will be entitled on the basis of the Conversion ratio, it being understood that the remainder of the HAL Holding N.V. dividend shall be paid in the form of stock dividend.

Holders of conventional Share certificates will be paid upon surrender of dividend coupon number 33 of the Shares. Holders of CF Shares (Centrum voor Fondsenadministratie) will be paid via affiliated banks and security brokers. To registered holders of Shares, for which no Share certificates are issued, payment of the dividend due is made directly, in accordance with the conditions agreed upon with the individual holders.

The text of Article VII, Section 7.1 of the Trust Deed reads:

Profits of the Trust. The profits of the Trust in respect of a Financial Year as they appear in the profit and loss account of the Trust as approved by an Ordinary Resolution as provided in Section 14.3 shall be applied as follows:

(A) FIRST: out of the profits such dividend as may be determined by Ordinary Resolution shall be distributed to the Trust Shareholders in proportion to the number of Units represented by the Shares held by such Trust Shareholders;
(B) SECOND: the remaining part of the profits, if any, shall be retained as Trust Property.

Independent Auditor’s report

To the Trustee of HAL Trust, Bermuda

We have audited the accompanying consolidated and standalone parent entity financial statements (collectively the “financial statements”) of HAL Trust, Bermuda. The consolidated financial statements comprise the consolidated statement of financial position as at December 31, 2010, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. The standalone parent entity financial statements comprise the statement of financial position as at December 31, 2010, the statement of income for the year then ended and the notes.

The Executive Board’s responsibility

The Executive Board of HAL Holding N.V. is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and 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 responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require 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 entity’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 entity’s internal control. 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 that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying consolidated and standalone parent entity financial statements present fairly, in all material respects, the financial position of HAL Trust, Bermuda as at December 31, 2010, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Bermuda, March 24, 2011

PricewaterhouseCoopers

Five-Year Summary

Consolidated Statement of Financial Position

In millions of euro	2010	2009	2008	2007	2006
Assets
Non-current assets:
Property, plant and equipment	747.7	678.1	668.9	501.4	456.4
Investment properties	96.0	65.7	72.6	65.8	70.8
Intangible assets	1,825.8	1,521.1	1,493.8	1,344.2	1,192.2
Investments in associates	1,527.0	1,122.0	828.0	737.3	743.6
Other financial assets	278.6	256.7	74.4	82.2	69.5
Deferred tax assets	46.0	50.4	49.2	32.2	46.3
Total non-current assets	4,521.1	3,694.0	3,186.9	2,763.1	2,578.8
Current assets:
Marketable securities and deposits	212.7	326.0	569.7	698.0	356.1
Receivables	309.0	266.3	312.9	305.0	241.5
Inventories	371.7	343.7	379.6	322.0	285.3
Assets held for sale	-	21.8	-	-	24.3
Other financial assets	-	-	-	-	66.1
Other current assets	219.2	165.5	184.2	131.5	110.5
Cash and cash equivalents	144.7	139.9	160.4	183.8	132.9
Total current assets	1,257.3	1,263.2	1,606.8	1,640.3	1,216.7
Total assets	5,778.4	4,957.2	4,793.7	4,403.4	3,795.5
Equity and liabilities
Equity	3,595.1	3,132.4	2,807.5	2,716.2	2,201.7
Non-controlling interest in consolidated subsidiaries	30.1	72.2	94.2	86.4	51.5
Non-current liabilities:
Provisions	15.2	14.0	23.1	35.7	27.0
Long-term debt and other financial liabilities	657.1	388.4	590.5	453.4	424.9
Deferred tax liabilities	132.4	115.3	116.8	78.8	98.6
Total non-current liabilities	804.7	517.7	730.4	567.9	550.5
Current liabilities:
Short-term debt and other financial liabilities	575.2	513.3	420.1	358.7	384.9
Income tax payable	26.7	35.6	14.0	23.1	36.2
Accounts payable	264.7	229.0	271.9	265.2	236.3
Accrued expenses	456.4	394.5	413.2	358.0	288.5
Liabilities held for sale	-	7.2	-	-	-
Provisions	25.5	55.3	42.4	27.9	45.9
Total current liabilities	1,348.5	1,234.9	1,161.6	1,032.9	991.8
Total equity and liabilities	5,778.4	4,957.2	4,793.7	4,403.4	3,795.5
Equity per Share (in euro)	54.98	49.27	44.19	42.77	34.68

Five-Year Summary

Consolidated Statement of Income

In millions of euro	2010	2009	2008	2007	2006
Revenues	3,768.9	3,447.8	3,562.5	3,186.9	2,778.6
Income from marketable securities and deposits	25.5	22.9	(0.2)	29.7	67.8
Capital gains on sale of assets	-	2.8	11.8	19.8	3.2
Income from associates	283.4	199.0	187.9	426.5	250.3
Income from other financial assets	4.4	0.7	0.7	47.8	2.2
Income from real estate activities	14.6	7.7	7.7	9.7	23.5
Total income	4,096.8	3,680.9	3,770.4	3,720.4	3,125.6
Raw materials, consumables used and changes in inventories	1,278.8	1,227.8	1,317.6	1,180.6	1,050.7
Employee expenses	1,097.5	978.7	956.0	866.3	761.4
Depreciation and impairments of property, plant, equipment and investment properties	134.2	130.4	114.5	103.2	104.2
Amortization and impairments of goodwill	40.0	21.5	22.6	3.7	-
Amortization and impairments of other intangibles	33.8	27.8	22.5	18.7	20.1
Other operating expenses	965.9	853.7	845.1	699.3	596.1
Total expenses	3,550.2	3,239.9	3,278.3	2,871.8	2,532.5
Operating profit	546.6	441.0	492.1	848.6	593.1
Financial expense	(55.9)	(47.5)	(53.8)	(35.8)	(50.4)
Profit before taxes	490.7	393.5	438.3	812.8	542.7
Income taxes	(62.6)	(51.4)	(43.5)	(57.2)	(32.6)
Profit before non-controlling interest in results of consolidated subsidiaries	428.1	342.1	394.8	755.6	510.1
Non-controlling interest in results of consolidated subsidiaries	4.0	5.1	(11.7)	(19.9)	(13.3)
Net income	432.1	347.2	383.1	735.7	496.8
Net income per share (in euro)	6.69	5.46	6.03	11.59	7.80
Dividend per share (in euro)	3.75*	2.85	2.00	3.25	3.15

Proposed

Statement of Financial Position

HAL Holding N.V.

As of December 31

In millions of euro, before proposed distribution of income	2010	2009
Assets
Fixed assets:
Non-current assets	3,664.7	3,059.0
Current assets:
Deposits	8.3	82.1
Other current assets	5.6	-
	3,678.6	3,141.1
Equity and liabilities
Equity	3,595.1	3,132.4
Current liabilities:
Short-term debt	77.2	-
Accrued expenses	6.3	8.7
Total current liabilities	83.5	8.7
	3,678.6	3,141.1

Statement of Income
HAL Holding N.V.

In millions of euro	2010	2009
Income from financial assets	450.4	347.9
Other income (expense)	(1.5)	1.3
Total income	448.9	349.2
Financial expense	(16.8)	(2.0)
Net income	432.1	347.2

Notes to the Company Financial Statements HAL Holding N.V. (in millions of euro)

For details concerning the accounting principles in respect of the statement of financial position and statement of income, reference is made to the consolidated financial statements of HAL Trust except for financial assets (excluding loans) which are carried at net equity values.

Financial assets

Movements for 2010 are as follows:

Balance on January 1, 2010 3,059.0
Income 450.4
Increase (decrease) in loans, net 72.9
Exchange adjustments, valuation differences and equity adjustments 82.4
Balance on December 31, 2010 3,664.7

Equity

The movement for 2010 of Shareholders' equity is included on pages 23 and 24.

On December 31, 2010 and 2009, 65,480,552 and 63,686,850 Shares respectively were outstanding, with a nominal value of € 0.02 each, and all were held by HAL Trust.

The Company may purchase HAL Trust Shares, when deemed appropriate, up to a maximum of 10% per year of the number of Shares outstanding at the beginning of the year. In 2009, 39,728 Shares were sold for € 2.1 million and in 2010, 28,314 Shares were sold for € 2.1 million.

A 2009 related dividend of € 181.2 million (excluding dividend on treasury shares) or € 2.85 per share was distributed on June 18, 2010 (2009: € 127.1 million or € 2.00 per share), of which € 40.9 million in cash and € 140.3 million in stock. The conversion rate of 1:27.5 resulted in 1,793,702 new HAL Trust shares being issued.

The Company owned 92,210 HAL Trust shares as of December 31, 2010. These Shares are to hedge the obligation to allot – under certain conditions – 50,000 Shares HAL Trust to a member of the Executive Board and may also be used in the context of a share participation plan for management (not being members of the Executive Board).

Supervisory Directors

The fixed remuneration for the Supervisory Directors of HAL Holding N.V. paid during 2010 in accordance with Art. 23 (5) of the Articles of Incorporation was € 0.1 million in total. The compensation payable to the Board of Supervisory Directors pursuant to Art. 30 (1) of the Articles of Incorporation is € 0.5 million. The Supervisory Board has reduced this amount to € 0.3 million. Accordingly, the total 2010 compensation for the Supervisory Board amounted to € 0.4 million (2009: € 0.4 million).

Distribution of Profits

The profit to be decided upon by the General Meeting of Shareholders of HAL Holding N.V. for 2010 is as follows:

(In millions of euro)

According to the Statutory Statement of Income, the net income is: € 432.1

In accordance with Article 30 (1) each Supervisory Director will receive 0.025% of total profits determined by the Annual Meeting, reduced or increased by the extraordinary gains and extraordinary liabilities which have been reported in the profit and loss statement. The Supervisory Board has reduced this amount to € 0.3 million. € (0.3)

Available for distribution to Shareholders € 431.8

Proposed distribution:

In accordance with Article 31 (1), 0.03 euro for each of the 65,480,552 shares: € 2.0

Available to the General Meeting of Shareholders in accordance with Article 31 (2): € 429.8

Retained € (186.2)

Available for distribution € 245.6

After approval of the dividend proposal of € 3.75 per Share by the General Meeting of Shareholders of HAL Holding N.V., the dividend shall be distributed to HAL Trust for 65,480,552 shares at € 3.75 per Share: € 245.6

The dividend shall be payable in shares in the share capital of the Company, except and to the extent that prior to June 17, 2011 the Trustee on behalf of HAL Trust expressly requests that payment to the Trustee be made in cash. The conversion ratio for the dividend in shares will be determined on June 9, 2011 after the close of business of NYSE Euronext in Amsterdam.

Article 30 (1) and (2) of the Articles of Incorporation read as follows:

From the profits, reduced or increased by the extraordinary gains or extraordinary liabilities, respectively, all as appearing from the annual statement of account approved by the general meeting of shareholders, each supervisory director shall receive every year an amount equal to one/fortieth percent (0.025%). The amount to be paid to each supervisory director shall be rounded off downwards to a full number of euros. If a supervisory director should not be in office a full year, he shall receive a proportionate share of the amount. The general meeting of shareholders may modify the aforesaid percentage of one/fortieth (0.025%).
With the approval of the Board of Supervisory Directors, the Managing Board shall fix each year the amounts that shall be reserved of the profits remaining after the application of the first paragraph of this article.

HAL Trust Organization

A Trust, which is quite common in Anglo-American law, is a property managed in accordance with a trust deed by a Trustee on behalf of the beneficial owners.

The Trust has the following three components:

The Meeting of Shareholders of HAL Trust

Except for the powers of the Trust Committee described below, control of the Trust rests with the Meeting of Trust Shareholders.

The Meeting of Trust Shareholders approves the annual accounts and decides on the distribution of profits.

Execution of the decisions of the Meeting of Trust Shareholders is the task of the Trustee. The Trustee therefore votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the outcome of the vote taken at the Meeting of Shareholders of HAL Trust.

The Annual Meeting of Trust Shareholders takes place in Rotterdam. The members of the Board of Supervisory Directors and the Executive Board of HAL Holding N.V. shall be present at the meeting in order to explain policies pursued.

The Trustee

The function of Trustee is exercised by HAL Trustee Limited, Hamilton, Bermuda.

The Board consist of Messrs. J.L.F. van Moorsel, Chairman, C. MacIntyre, J.C.R. Collis, H. van Everdingen and A.H. Land, members, A.R. Anderson, alternate member.

The Trustee is the legal owner of the assets of the Trust, which consist of shares in HAL Holding N.V., Curaçao.

The powers of the Trustee are limited to execution of the decisions of the Meeting of Trust Shareholders of HAL Trust and of the Trust Committee.

The Trustee votes at the General Meeting of Shareholders of HAL Holding N.V. in accordance with the instructions of the Meeting of Shareholders of HAL Trust.

The Trust Committee

The Trust Committee is HAL Trust Committee Limited, Hamilton, Bermuda.

The Board of HAL Trust Committee Limited consists of Messrs. P.J. Kalff, Chairman, C. MacIntyre, J.C.R. Collis, T. Hagen and M. van der Vorm, members, A.R. Anderson, alternate member.

This Board is appointed by the Stichting HAL Trust Commissie, shareholder of HAL Trust Committee Limited. The Board of the Stichting is appointed by the shareholders of HAL Trust and consists of Messrs. P.J. Kalff, T. Hagen and M. van der Vorm.

The Trust Committee is empowered to regroup the assets of the enterprise if, in special circumstances such as international political complications, it considers it necessary to do so in the interest of the shareholders and/or the enterprise. The objective of such regrouping is to replace HAL Holding N.V. with a company situated in another jurisdiction. To achieve this, HAL Holding N.V. may transfer its assets to that new company in exchange for a repurchase of shares. The Trust Committee also has the power to appoint another Trustee, if necessary. Finally, the Trust Committee has some duties of an administrative nature.

Description Corporate Governance HAL Holding N.V.

A Curaçao public company

HAL Holding N.V. is a public company with its corporate seat in Curaçao. The Corporate Governance of HAL Holding N.V. is subject to the law of Curaçao as well as the articles of association and regulations adopted in accordance with such law. HAL Holding N.V. reports its financial position in accordance with International Financial Reporting Standards.

HAL Holding N.V. is a holding company and parent company of a number of subsidiaries.

Share capital

HAL Holding N.V. has a share capital that is divided in shares with a nominal value of € 0.02 each. All shares have the same rights. Each share carries the right to exercise one vote in the General Meeting of Shareholders. All shares are in registered form.

HAL Trust

All shares in the capital of HAL Holding N.V. are held by HAL Trust on behalf of the Trust Shareholders. For each share in the capital of HAL Holding N.V. one Trust Share has been issued by HAL Trust. All Trust Shares have the same rights. Each Trust Share carries the right to exercise one vote in the meeting of Trust Shareholders. All distributions made by HAL Holding N.V. in respect of its shares are distributed by HAL Trust to the Trust Shareholders.

HAL Trust is a trust under Bermuda law and is subject to a trust deed, the text whereof has most recently been changed on May 28, 2001. The function of Trustee is exercised by HAL Trustee Limited. In addition, the trust deed grants certain powers to HAL Trust Committee Limited. For further information on HAL Trustee Ltd. and HAL Trust Committee Limited, see page 73. The Trust Shares are listed and traded on NYSE Euronext in Amsterdam.

Meetings of Trust Shareholders

In accordance with the provisions of the trust deed each year a meeting of Trust Shareholders is held in Rotterdam prior to the General Meeting of Shareholders of HAL Holding N.V.

The meeting of Trust Shareholders has, inter alia, the power to direct the Trustee as to the exercise by the Trustee of its voting rights in the General Meeting of Shareholders of HAL Holding N.V. This means that the Trust Shareholders have de facto control in the General Meeting of Shareholders of HAL Holding N.V.

Neither the articles of association of HAL Holding N.V. nor the trust deed contain any protective provisions which limit the control of the Trust Shareholders. All resolutions of the General Meeting of Shareholders of HAL Holding N.V. require a simple majority of the votes cast. The same holds for the decision taking process in the meeting of Trust Shareholders.

Rights of Trust Shareholders

Each Trust Shareholder has the right to attend the meetings of Trust Shareholders, either in person or by written proxy, to speak at such meetings and to exercise his voting rights. In addition, Trust Shareholders who together represent at least 10% of all outstanding Trust Shares are entitled to request the Trustee to convene a meeting of Trust Shareholders.

Powers General Meeting of Shareholders

In accordance with the articles of association of HAL Holding N.V. the General Meeting of Shareholders of HAL Holding N.V. and therefore indirectly the meeting of Trust Shareholders, has the following powers:

appointment and dismissal of the members of the Executive Board and the Board of Supervisory Directors;
approval of the financial statements;
granting discharge to the members of the Executive Board and the Board of Supervisory Directors;
amendment of the articles of association, provided such amendment is proposed by the Executive Board and has been approved by the Board of Supervisory Directors;
remuneration of Supervisory Directors in addition to the profit percentage set by the articles of association;
appointment of the external auditor;
decisions about the distribution of profits following payment of the profit percentages

and the primary dividend on shares, each as set out in the articles of association, and after the taking of certain reserves by the Executive Board subject to the approval of the Board of Supervisory Directors;

all other powers which the articles of association do not grant to another corporate body.

Executive Board

The Executive Board of HAL Holding N.V. is responsible for the management of the Company, which means, among other things, that it is responsible for achieving the company's objectives, strategy and policy. The Executive Board is accountable to the Board of Supervisory Directors and to the General Meeting of Shareholders. In discharging its role, the Executive Board is guided by the interests of the Company and its business, taking into consideration the relevant interests of all those involved in the Company.

The Executive Board is responsible for complying with all relevant legislation and regulations, for managing the risks associated with the Company's activities and for the financing of the Company.

The number of members of the Executive Board is determined by the Board of Supervisory Directors. At present the Executive Board consists of two members. Both members have been appointed by the General Meeting of Shareholders for an indefinite period of time. They can be dismissed by the General Meeting of Shareholders. In addition they can be suspended by the Board of Supervisory Directors.

With the approval of the Board of Supervisory Directors the Executive Board has adopted regulations which, inter alia, provide for additional rules in respect of the decision taking process within the Executive Board, the reporting to the Board of Supervisory Directors, the treatment of possible conflicts of interest and the fulfilment by members of the Executive Board of additional offices.

The Board of Supervisory Directors determines the remuneration of each member of the Executive Board. The remuneration consists of a fixed part and a variable part, the size whereof

is determined by the Board of Supervisory Directors who also decides on additional benefits. The members of the Executive Board do not participate in any option scheme and do not receive any personal loans or guarantees from the Company.

Board of Supervisory Directors

The Board of Supervisory Directors is responsible for the supervision of the policies of the Executive Board and the general affairs of the Company and its business. It also assists the Executive Board by providing advice. In discharging its role the Board of Supervisory Directors is guided by the interests of the Company and its business and shall take into account the relevant interests of all those involved in the Company. The Board of Supervisory Directors is responsible for the quality of its own performance.

The Board of Supervisory Directors consists of at least five members. The Board of Supervisory Directors can determine that the Board consists of more members. At present the Board has five members which have been appointed by the General Meeting of Shareholders for an indefinite period of time. Each year at least one supervisory director resigns in accordance with a retirement schedule set by the Board. A supervisory director resigning in accordance with the retirement schedule is eligible for re-appointment.

The Board of Supervisory Directors has chosen a chairman from among its members.

All tasks and duties of the Board of Supervisory Directors are discharged of on a collegiate and full-board basis. The Board of Supervisory Directors has adopted regulations which, inter alia, provide for rules in respect of the providing of information by the Executive Board, the matters that in any case must be addressed each year, the manner of meeting and decision taking by the Board, the treatment of potential conflicts of interest, the individual investments by supervisory directors and the criteria which may possibly jeopardize the independent exercise of the position of supervisory director.

The Board of Supervisory Directors has prepared a profile for its composition. Each member is capable of assessing the broad

outline of the overall policy. Together the supervisory directors have sufficient expertise to carry out the tasks of the Board of Supervisory Directors taken as a whole.

The General Meeting of Shareholders determines the remuneration of the members of the Board of Supervisory Directors. In addition the supervisory directors receive a profit percentage at a rate prescribed by the articles of the association.

Supply of information/logistics General Meeting of Shareholders

The Executive Board and the Board of Supervisory Directors provide the General Meeting of Shareholders, and the meeting of Trust Shareholders, with all relevant information that they require for the exercise of their powers, unless this would be contrary to an overriding interest of the Company.

The Executive Board and the Board of Supervisory Directors will provide all shareholders and other parties in the financial markets who find themselves in an equal position with equal and simultaneous information about matters that may influence the price of the Trust Shares.

Any possible contacts between the Executive Board on the one hand and the press and financial analysts on the other will be carefully handled and structured, and the Company shall not engage in any acts that compromise the independence of analysts in relation to the Company and vice versa.

Financial reporting

The Executive Board is responsible for the quality and completeness of publicly disclosed financial reports. The Board of Supervisory Directors sees to it that the Executive Board fulfils this responsibility.

The annual accounts of HAL Holding N.V. are prepared in accordance with International Financial Reporting Standards. The annual accounts and the annual reports are available in English as the prevailing language, as well as in a Dutch translation. In addition HAL Holding N.V. publishes interim reports in accordance with the relevant provisions of the law and the listing requirements of NYSE Euronext in Amsterdam. All financial information is also published on the web site www.halholding.com. The annual accounts are signed by the members of the Executive Board and of the Board of Supervisory Directors. The Board of Supervisory Directors discusses the prepared annual accounts with the external auditor prior to signing of the accounts by the supervisory directors.

The General Meeting of Shareholders appoints the external auditor. Following receipt by the Board of Supervisory Directors of advice from the Executive Board, the Board of Supervisory Directors prepares a nomination for the appointment of the external auditor. HAL Holding N.V. has no internal audit function.

The remuneration for any instructions to the external auditor other than for auditing activities requires the approval of the Board of Supervisory Directors in respect of which the Board will consult with the Executive Board.

The external auditor is represented at the meetings of Trust Shareholders.

Information in respect of members of the Board of Supervisory Directors

S.E. Eisma (62) is a Dutch citizen. Mr. Eisma was appointed member/secretary of the Board of Supervisory Directors of HAL Holding N.V. in 1993. In 2006 he was appointed Chairman. His current term is from 2006-2011. Mr. Eisma is a lawyer in Amsterdam and retired from De Brauw Blackstone Westbroek N.V. in April 2010. Mr. Eisma is a member of the Supervisory Boards of Robeco Groep N.V. and Grontmij N.V. and Chairman of the Supervisory Board of the University of the Arts The Hague. It will be proposed to re-elect Mr. Eisma this year.

T. Hagen (68) is a Norwegian citizen. In 1985 he was appointed member of the Board of Supervisory Directors of HAL Holding N.V. His current term is from 2010-2015. Mr. Hagen is Chairman of the Board of MISA Investments Ltd. and Viking River Cruises Ltd.

P.J. Kalff (73) is a Dutch citizen. In 2006 he was appointed member of the Board of Supervisory Directors of HAL Holding N.V. His current term is from 2009-2014. Mr. Kalff was Chairman of the Managing Board of ABN AMRO Bank N.V. from 1994-2000. Mr. Kalff is Chairman of the Supervisory Board of Oyens & Van Eeghen N.V. He is also a member of the Board of Directors of Aon Corporation (Chicago).

A.H. Land (71) is a Canadian citizen. In 1999 he was appointed member of the Board of Supervisory Directors of HAL Holding N.V. His current term is from 2007-2012. Mr. Land was Chairman of the Executive Board of Hagemeyer N.V. from 1985-1999.

M.P.M. de Raad (66) is a Dutch citizen. In 2006 he was appointed member of the Board of Supervisory Directors of HAL Holding N.V. His current term is from 2008-2013. Mr. De Raad was Chief Executive Officer of SHV Makro N.V. and member of the Executive Board of SHV Holdings N.V., Metro AG (Germany) and Royal Ahold N.V. Mr. De Raad is currently Vice Chairman of the Supervisory Board of CSM N.V. and member of the Supervisory Boards of Vion Holding N.V., Metro AG (Germany), Vollenhoven Olie Groep B.V. and TiasNimbas Business School. He is also Chairman of the Supervisory Board of the Jeroen Bosch Hospital.

HAL Trust

established in Bermuda

Notice to Trust Shareholders

We hereby invite you to attend the meeting of Trust Shareholders of HAL Trust, which will be held on Wednesday, May 18, 2011, at 11:00 a.m. in the Le Jardin room of the Hilton Hotel, Weena 10, Rotterdam.

The agenda of the meeting is as follows:

Opening
Instructions for the Trustee to vote at the General Meeting of Shareholders of HAL Holding N.V., to be held on Thursday, May 26, 2011, with regard to the following items on the agenda:
a) Report of the Executive Board of HAL Holding N.V.
b) Report of the Board of Supervisory Directors of HAL Holding N.V.
c) Approval of the financial statements of HAL Holding N.V.
d) Dividend payment against the profits of 2010 in the amount of € 3.75 per share as published in the Annual Report 2010, which dividend shall be payable in shares in the share capital of HAL Holding N.V., except and to the extent that
(i) prior to June 17, 2011 the Trustee expressly requests that payment to the Trustee be made in cash; and
(ii) cash payments will be made to the Trustee representing the value of fractions of HAL Trust Shares (if any) to which the respective HAL Trust Shareholders will be entitled on the basis of the Conversion ratio, and, with the approval of the Board of Supervisory Directors, to direct and authorize the Executive Board to effectuate such share issue and cash payments.
e) Election of Supervisory Directors. It is proposed to re-elect Mr. S.E. Eisma.
f) Discharge of the members of the Executive Board in respect of their duties of management during the financial year 2010.
g) Discharge of the members of the Board of Supervisory Directors in respect of their duties of supervision during the financial year 2010.
h) Amendment articles of association HAL Holding N.V.
i) Remuneration of the Supervisory Directors.
Approval of the financial statements of HAL Trust
(i) Proposal to distribute a dividend against the profits of 2010 of € 3.75 per Share, subject to (ii) below;
(ii) to direct the Trustee:
a. to issue by way of stock dividend distribution to each HAL Trust Shareholder such number of HAL Trust Shares as shall be based on the Conversion ratio and the number of HAL Trust Shares held by such HAL Trust Shareholder;
b. unless a HAL Trust Shareholder shall have requested (by not later than June 9, 2011, 3:00 p.m. CET) that the dividend payment to him be made in cash, in which case the Trustee shall pay such HAL Trust Shareholder the cash dividend of € 3.75 per HAL Trust Share; and
c. to convey to HAL Holding N.V. prior to June 17, 2011 for how many HAL Holding N.V. shares the dividend should be paid in cash (on the basis of the number of HAL Trust Shares for which the HAL Trust Shareholders have requested payment of the HAL Trust dividend in cash), and for what amount cash payments are to be made to the Trustee representing the value of fractions of HAL Trust Shares (if any) to which the respective HAL Trust Shareholders will be entitled on the basis of the Conversion ratio, it being understood that the remainder of the HAL Holding N.V. dividend shall be paid in the form of stock dividend.
Report of the Trust Committee
Amendment trust deed HAL Trust
Other business
Closing

Notes on agenda items 2.d, 2.h, 2.i, 4 and 6 follow hereafter.

Bearer Shareholders who wish to attend the meeting must deposit their bearer Shares, not later than May 11, 2011, at the offices in Amsterdam, Rotterdam or The Hague of The Royal Bank of Scotland N.V. or ABN AMRO Bank N.V.; at the office of Conyers, Dill & Pearman, Clarendon House, 2 Church Street, Hamilton, Bermuda; or at the office of HAL Holding N.V., 5, Avenue des Citronniers, MC 98000 Monaco, against receipt of a certificate of deposit, which will at the same time serve as a permit providing admission to the meeting. Attention is drawn to the fact that Shareholders who will not be able to attend the meeting but wish to be represented at the meeting must provide a written proxy. For the sake of good order it is pointed out that proxy holders will only be admitted to the meeting against surrender of the certificate of deposit (in case of bearer Shares) together with a duly signed proxy statement.

This notice is enclosed with the 2010 Annual Report which is presented to you in accordance with Section 14.4 of the trust deed of HAL Trust.

HAL Trustee Ltd.
Hamilton, Bermuda, April 6, 2011

Explanatory notes to agenda items 2.d and 4

It is proposed to distribute a dividend of € 3.75 per HAL Trust Share against the profits for 2010 and that this dividend will be paid in HAL Trust Shares unless a Shareholder expressly requests payment in cash. The conversion ratio for the dividend in HAL Trust Shares will be determined on the basis of the volume weighted average share price during the period May 20, 2011 through June 9, 2011, representing 15 trading days (the "Conversion ratio"), and will be announced on June 9, 2011 after the close of business of NYSE Euronext in Amsterdam. The value of the stock dividend, at the above volume weighted average share price, will be virtually the same as the value of the cash dividend. Any fraction of a Share will be settled in cash. The newly issued Shares will carry dividend rights for 2011 and subsequent years.

Dividend rights will not be traded on NYSE Euronext in Amsterdam.

The time-table is as follows:

2011
May 20
May 20 through June 9 (3:00 p.m. CET)
May 24
June 9 (after close of trading)
June 17
Ex-dividend date
Election period cash/stock (stock being default)
Dividend record date
Determination and publication Conversion ratio
Delivery of Shares and payment of cash dividend

Shareholders who wish to receive a cash distribution must notify within the election period The Royal Bank of Scotland N.V. accordingly via the bank or agent where their Shares are held in custody.

The distribution of dividend in Shares is free of charge for Shareholders.

Holders of registered Shares will receive separate notification on the dividend due to them.

Explanatory notes to agenda item 2.h

The proposed changes to the articles of association of HAL Holding N.V. include:

(a) the introduction of a provision that allows HAL Holding N.V. to leave Curaçao in the event of an emergency;

(b) the deletion of references to the Netherlands Antilles which ceased to be a separate part of the Kingdom of the Netherlands as of October 10, 2010. HAL Holding N.V. is now a company governed by the laws of Curaçao;

(c) an amendment which prevents that a Supervisory Director ceases to be a Supervisory Director while such Supervisory Director has not yet reached the retirement age of 75 years; and

(d) an amendment as a result of which the profit related portion of the remuneration of the Supervisory Directors will be abolished. The remuneration of the Supervisory Directors will be determined by the General Meeting of Shareholders.

The resolution to amend the articles of association of HAL Holding N.V. includes the authorization of each laywer practising with STvB Advocaten (Curaçao) N.V. to cause the notarial deed required for the amendment of the articles of association to be executed.

The full text of the proposed amendments is available at the offices of HAL Holding N.V. and at www.halholding.com.

Explanatory notes to agenda item 2.i

Please refer to the explanation on item 2.h. and the explanation given on the proposed change of article 23.5 of the articles of association.

Explanatory notes to agenda item 6

The proposed changes to the trust deed of HAL Trust include:

(a) modifications pursuant to the amendment of the Dutch Act on Giro Transfer of Securities (Wet giraal effectenverkeer) as of January 1, 2011. The proposed changes are of a technical nature only and do not affect the voting or financial rights of Shareholders. It should be noted that under the amended Act, Shareholders can no longer obtain their Shares out of the giro system after July 1, 2011. This means that after that date, Shareholders can no longer request physical delivery of bearer Shares or registration of their Shares in the Shareholders' register;

(b) modifications pursuant to the Act on shareholders rights (Wet uitoefening aandeelhoudersrechten) which became effective on July 1, 2010. This category of changes includes that meetings of Trust Shareholders must be convened with observance of a 42 days notice period (currently 15 days) and that the notice must appear on the website; and

(c) other modifications such as modernisation of language, introduction of electronic communication means and the introduction of an express choice of the Bermuda court as the exclusive forum to determine any legal matters relating to HAL Trust.

The full text of the proposed amendments is available at the offices of HAL Holding N.V. and at www.halholding.com.

AI assistant

HAL Trust — Annual Report 2010

9905_10-k_2011-04-06_30083428-9c09-436c-8ee6-c0079b1f9bf5.pdf

Financial calendar

HAL Trust

Report of the Board of Supervisory Directors of HAL Holding N.V.

Introduction

Dividend

Prospects

Strategy

Risks

Concentration risk

Unquoted companies

Quoted companies

Market value risk

Interest rate risk

Currency risk

Credit risk

Liquidity risk

Acquisition risk

Other

Investments

Optical retail subsidiaries

Other unquoted subsidiaries

Publicly traded minority interests

Optical retail subsidiaries

Other unquoted subsidiaries

Unquoted minority interests

Private equity partnerships

Publicly traded minority interests

Real estate

Liquid portfolio

Results

Administrative organization, risk management systems and financial reporting

Consolidated Statement of Financial Position

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Reporting entity

Basis of preparation

Basis of measurement

Use of estimates and judgements

Change in accounting principles

1. Business combinations

Foreign currencies

Non-derivative financial assets

Loans and receivables:

Available-for-sale financial assets:

Derivative financial instruments

Property, plant and equipment and investment properties

Intangible assets

Goodwill

Rights of use and key money

Trademarks

Franchise contracts

Computer software

Waived rentals

Customer relationships

Impairment of non-financial assets

Investments in associates

Other financial assets and marketable securities

Receivables

Inventories

Assets and liabilities held for sale

Other current assets

Cash and cash equivalents

Share capital

Non-controlling interest in consolidated subsidiaries

Provisions

Employee benefits

Defined benefit and defined contribution plans

Termination benefits

Short-term benefits

Other

Non-derivative financial liabilities

Determination of fair values

Property, plant and equipment

Intangible assets

Investment property

HAL Trust Annual Report 2010