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(08/11/2007) EVS - 3Q07 Sales of 24,4m, +1%, record autumn orderbook of 31,4m, up +79%, interim dividend of 0,80
PRESS RELEASE - 8 NOV 07 - Before market opening
Liège (Belgium), 8 November 2007, EVS Broadcast Equipment S.A. (ISIN BE0003820371, Euronext EVS.BR, Bloomberg EVS BB, Reuters EVSB.BR, OTC Pinksheets EVBEF), the leader in Professional Digital Video applications for Live, Near-Live and Studio TV Production, today reports its results for the third quarter 2007 ("3Q07") and first nine months of 2007 ("9M07"):
Highlights:
- RECORD 3Q07 SALES 24,4 MILLION EUR, +1% vs. 3Q06
- 9M07 SALES OF 67,5 MILLION EUR, +9% EXCL 2006 EVENTS RENTALS
- ASIA & PACIFIC UP 48%, AMERICA'S UP 41%, COMPENSATE EUROPE DOWN 30%
- 3Q07 EBIT OF 15,8 MILLION EUR, OR 65% OF SALES
- 3Q07 EPS OF 0,73 EUR, DOWN 9%
- VERY STRONG AUTUMN ORDERBOOK OF 31,4 MILLION E, OR +79%
- STUDIO REPRESENTS 40% OF THAT ORDERBOOK
- REVISED GUIDANCE: 2007 SALES TO EXCEED 94 MILLION EUR
- 2007 TURNS OUT TO BE A GOOD YEAR THAT ANTICIPATES ON 2008
- INTERIM DIVIDEND OF 0,80 EUR PER SHARE NEXT NOVEMBER 21, 2007.
Group Revenue and Performance
Pierre L'Hoest, CEO of EVS said: "Following a good first half driven by tapeless replacement and HDTV transition inside outside broadcast trucks and TV production studios, the third quarter reaches another record quarter with 24,4 million EUR revenues, up 1% compared to the third quarter of last year. Over the first nine months, this increase represents +2% or even +12% at constant exchange rate and excluding 2006 big events rentals. As of today, we know that 2007 sales should be at least +10% higher than 2006. Our customers, our partners and our teams all over the globe are making an impressive job to deploy EVS solutions for many leading TV productions. This great performance is explained by the overall successes of our key digital products XT[2]® and [IP]Director® in all territories".
Commenting on the results, Jacques Galloy, CFO said: "The group pursues its international expansion with new local partnerships or new offices. EVS does also reinforce future products creation and builds up R&D teams with new skills around systems integration, mass storage, telecom expertise, bandwidth optimisation, high end user applications, low bitrate deliveries like web or 3G interfaces. This translates into 28% growth in operating expenses over the 9M07 to 14,7 million EUR, representing 22% of sales while the EBIT margin over the same period represents 64% of sales".
+--------------------------------------------------------------+------+------+---------------+------+------+---------------+
| Revenues - in million EUR TV Systems (Broadcast) (1) | 3Q06| 3Q07| % 3Q07 / 3Q06| 9M06| 9M07| % 9M07 / 9M06|
+--------------------------------------------------------------+------+------+---------------+------+------+---------------+
| Total reported | 24,1| 24,4| +1%| 66,1| 67,5| +2%|
+--------------------------------------------------------------+------+------+---------------+------+------+---------------+
| Total at constant exchange rate | 24,1| 25,0| +4%| 66,1| 69,6| +5%|
+--------------------------------------------------------------+------+------+---------------+------+------+---------------+
| Total at constant exchange rate excluding big events rentals| 23,2| 24,7| +7%| 61,6| 69,3| +12%|
+--------------------------------------------------------------+------+------+---------------+------+------+---------------+
(1) Refer to the geographical segmentation in annex 2.
EVS Broadcast sales reached 67,5 million EUR over the first nine months, which is a +5% growth at constant exchange rate. Ahead of the new TV season and program grids starting September, EVS delivered record volumes to broadcasters during summer, partly to fixed studio production environments. This evidences EVS equipment lower and lower dependency on large worldwide sporting events.
Geographically, EVS Broadcast sales grew by +48% in Asia & Pacific ("APAC") to 15,9 million EUR. Ahead of the Beijing Olympics, HD systems have been sold to OB (Outside Broadcast) vans that shall first be used for Chinese sports coverage before being used during the summer Olympics 2008.
The major one to TVB in Hong-Kong for about 1,5 million EUR. TVB is the leader of Chinese language dramas production and the TV backstage workflow shall shift from tape to EVS' XT[2]'s, [IP]Directors, Xhubs, and Xstore[2].
Geographically, EVS Broadcast sales grew by +48% in Asia & Pacific ("APAC") to 15,9 million EUR. HD systems have been sold to several Chinese TV stations and OB (Outside Broadcast) vans have been constructed ahead of Beijing Olympics 2008. Major steps have been done to enter the studio production market. EVS sold studio systems in various countries: Japan, China, Korea, Hong Kong, etc. TVB in Hong-Kong was a major milestone with the implementation of the first complete HD tapeless production and post-production environment in Asia Pacific. TVB is the leader of Chinese language dramas production." Second, America's revenues ("NALA") increased by +41% but by +52% at constant exchange rate thanks to the replacement cycle of outside broadcast trucks migrating to HDTV but also to major studio projects wins within premium customers. The seamless video and audio files transfer between EVS products and leading post-production applications helps improving our customers' efficiency, thus allowing more valuable time for the creative process. CBC/Radio-Canada, Canada's national public broadcaster, chose to install EVS equipment in its Canadian Broadcasting Centre to ensure successful and easy recording and playback of this year's NHL Playoff Games in HD. America's represent 38% of group sales for 9M07. As expected, Europe, Middle-East and Africa ("EMEA") sales over 9M07 are 30% lower than last year but the strong order intake of September and October over that region shall boost its 4Q level. In October, leading HDTV outside production group Alfacam NV has ordered more than 30 XT[2]® HD's in order to equip more than 8 new trucks for about 5,6 million EUR and RTBF has placed a 3 million EUR order to migrate its studio production towards a cutting edge tapeless and HD compatible system. EMEA is also confirming good penetration inside studio infrastructure with major customers wins like for instance Telecinco in Spain or BBC Post Production, part of BBC Resources Ltd. that produces for example "Match of the Day". Many HDTV initiatives are being announced by many broadcasters, IPTV, cable or satellite players accross Europe, what means the real take-off of HD in EMEA, for which Beijing 2008 shall be an attraction point.
40% of 3Q07 or 30% of 9M07's sales relate to studio networked systems designed for talk shows, entertainment shows, news or automated play-out, for which "speed to air" is a key success factor. Sales for near-live studio solutions amount to 19,9 million EUR, +15% compared to 2006 but the strong order intake of September and October shall translate into studio sales growth of more than 25% year-on-year. EVS presented successfully its latest line up of products at IBC2007 Tradeshow in Amsterdam last September. Customers warmly welcomed EVS integrated tapeless solutions for the critical near-live environment and much appreciated the demonstrations in the new Partners' Village area to interchange seamlessly high-end video content between EVS servers and the most popular post production solutions like AVID, Apple, Vizrt/Ardendo, Dalet etc. EVS favours an open architecture policy.
Operations, margins and result
Consolidated gross profit margin reached 87% for 3Q07 and 88% for 9M07, up from 86% over 9M06 where margins were lower due to the contribution of less profitable big event rentals. Thanks to higher sales combined with operating expenses increase of 28%, the 3Q07 EBIT margin reached 65% while 9M07 EBIT margin has been 64%, compared to 68% in 9M06 and 60% for 9M05, excl. XDC. As explained earlier, the group currently invests for future opportunities and strenghtens its organisation. The Amsterdam IBC trade fair in September has also been slightly less expensive than the USA NAB trade fair in April. The weakening USD had a 2 million EUR impact on the revenues but thanks to natural hedging and the group hedging policy, the EBIT margin decreased by only 1 percent point. The group's staffing as of 30 September 2007 was 184 (excluding XDC), averaging 174 over 9M07, up 21% versus 9M06.
The 47,2% affiliate XDC (pioneer in Digital Cinema) is deploying the 3rd generation of dedicated Digital Cinema Advanced servers and negotiating with distributors and exhibitors for the massive roll-out of digital screens. XDC contributed an operating loss of 0,7 million EUR at equity to EVS for 3Q07 and 1,5 million EUR for 9M07. In order to speed up its deployment, XDC is currently preparing the raising of around 10 million EUR of which most funds shall come from existing shareholders.
Net profit for 3Q07 amounts 9,9 million EUR, or 9% lower than 3Q06, while net profit from operations is 10,0 million EUR. Basic net profit from operations per share reaches 0,73 EUR over 3Q07, down 9% compared to 0,81 EUR for 3Q06. Excluding the negative contribution from affiliate XDC, the basic net earnings per share is 0,78 EUR for 3Q07 and 2,18 EUR for 9M07.
Net Cash and Capital
The net current cash-flow from TV operations reaches 44 million EUR over 9M07. On September 30, 2007, the group balance sheet shows 38,8 million EUR in cash at the bank and 2,5 million EUR in bank debts. At the end of the quarter, there is 13.583.129 EVS outstanding shares, i.e. 13.875.000 subscribed shares out of which 291.871 are owned by the company. At the same date, 171.650 warrants are outstanding.
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Profit & Loss | 3Q06 Unaudited| 3Q07 Unaudited| 9M06 Unaudited| 9M07 Unaudited| 9M07 / 9M06|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Key Consolidated figures - IFRS in million EUR | | | | | |
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Revenue | 24,1| 24,4| 66,1| 67,5| 2%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Gross Profit % | 88%| 87%| 86%| 88%| +2 pct|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Operating result - EBIT | 17,0| 15,8| 44,6| 43,5| -3%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| EBIT margin % | 71%| 65%| 68%| 64%| -4 pct|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Profit before taxes and exceptional XDC dilution profit | 16,5| 15,0| 40,8| 42,0| 3%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Contribution from 47% XDC affiliate | -0,6| -0,7| 1,0| -1,7| -270%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Exceptional XDC dilution profit (1) | - | - | 3,4| - | n.a.|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Income taxes | -5,6| -5,1| -14,7| -14,0| -5%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Net profit - Group share | 10,9| 9,9| 31,0| 28,0| -10%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Net profit from operations - Group share (2) | 11,0| 10,0| 28,3| 28,9| 2%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Net profit margin % | 46%| 41%| 43%| 43%| 0 pct|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| | | | | | |
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Per share in EUR | 3Q06 Unaudited| 3Q07 Unaudited| 9M06 Unaudited| 9M07 Unaudited| 9M07 / 9M06|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Weighted average number of subscribed shares for the period less treasury shares| 13.581.951| 13.583.129| 13.645.576| 13.590.352| |
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Weighted average number of fully diluted number of shares | 13.779.637| 13.754.779| 13.809.657| 13.761.707| |
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Basic earnings - share of the Group per share | 0,80| 0,73| 2,27| 2,06| -9%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Fully diluted earnings - share of the Group per share | 0,79| 0,72| 2,25| 2,04| -9%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
| Basic net profit from operations - share of the Group per share | 0,81| 0,73| 2,08| 2,13| 2%|
+----------------------------------------------------------------------------------+----------------+----------------+----------------+----------------+-------------+
(1) EVS share in XDC has decreased to 47,20% from 60,17% in June 2006, leading to a dilution profit and a change in the consolidation method of XDC stake in the consolidated accounts of EVS: XDC 47,20% stake is booked at equity method.
(2) The net profit from operations is the net profit (share of the group) excluding non-recurring exceptional results, taking into account tax items.
Outlook 2007
Executing the "Speed to Air" strategy, EVS serves hundreds of TV stations worldwide with its high-end digital video and audio applications, especially in the field of live sports and near-live studio production where the company has developed leadership positions on niche markets. The migration from tape-based operations towards integrated tapeless workflows is underway and will last during the next decade. This process is accelerated by the transition from Standard Television to High Definition Television because new equipment needs to interoperate with digital solutions which shall be High Definition.
Hence, EVS directly benefits from the following long term growth drivers: increasing number video distribution channels like IPTV, transition to tapeless workflows from 70% tapebased penetration today, replacement market due to HD format conversion, launch of new products to address the near-live studio production needs, demand of new "speedclipping" tools to fragment the content to multimedia environments, and an increased focus of broadcasters / IPTV and advertisers on large popular sports to gain new viewers. EVS currently benefits from this strong momentum due to all of these drivers. The Board and the teams believe that the underlying demand for EVS products will continue to be supported by the transition to HDTV which shall impact the business over a long period of time and shall follow usual equipment acquisition wave patterns.
The global autumn book reaches 31,4 million EUR compared to 17,5 million EUR on the same date one year ago, that is +79%. The autumn order book is made first of the open order book as of 1 October 2007 to be invoiced over the current fiscal year amounted to 13,8 million EUR (vs. 9,9 million in 2006, incl. 1,1 million EUR big events rentals) and secondly of (record) 10,2 million EUR orders received in October for sales to be invoiced in 2007 (vs. 4,9 million in 2006). Third, as at the end of October, 7,3 million EUR orders are to be delivered during the next calendar year (vs 2,7 million in 2006). In other words, secured sales for 2007 as at November 1, 2007 amount 91,6 million EUR. Studio sales represents 40% of the orderbook and shall be around 30% of annual sales.
Even if visibility remains limited as usual and the weakening dollar is not a favourable factor, based on current market conditions, the Board expects 2007 to be a new record year with sales growing by slightly more than 10% above 2006, or above 94 million EUR, despite the lack of big sporting events. One should note that some 2007 equipment sales, e.g. HD vans in China, are anticipating on some big events of 2008. Next year should be a new growth year with a stronger first half. The worldwide traction of Beijing Olympics, the launch of HDTV in Europe and the growing presence of EVS inside TV studios are the main growth drivers for 2008.
Interim Dividend
Given the strong performance of the current year and after a limited review of the figures as of 30 September 2007 by the Group auditors, the Board has decided to distribute an interim dividend of 0,80 EUR per share, except for own shares. The declaration date (ex-date) is Wednesday November 21 and payment date is Tuesday November 27, 2007.
Analyst & Press meeting and Conference Call
EVS will hold today an analyst and journalist meeting in Liège at 10:30 CET, with Pierre L'Hoest, CEO EVS Broadcast and Jacques Galloy, Group CFO. A conference call in English will be held at 4:00 PM (CET) to offer another opportunity to discuss the results and recent developments. Please contact corpcom@evs.tv to receive the dial-in number and the presentation.
Corporate Calendar:
- Wednesday 21 November 2007: Declaration date (ex-date) of coupon # 5
- Tuesday 27 November 2007: Payment date of coupon # 5
- Thursday 21 February 2008: FY07 sales & earnings
- Thursday 15 May 2008: 1Q08 sales & earnings
- Tuesday 20 May 2008: Annual Shareholders Meeting
For more information, please contact:
Jacques GALLOY, Director & CFO, EVS Broadcast Equipment
Liege Science Park, 16 rue du Bois Saint-Jean, B-4102 Liège-Ougree, Belgium
Tel : +32 4 361 7014. E-mail : corpcom@evs.tv; www.evs-global.com
Forward Looking Statements
This press release contains forward-looking statements with respect to the business, financial condition, and results of operations of EVS and its affiliates. These statements are based on the current expectations or beliefs of EVS's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company's concentration on one industry, decline in demand for the company's products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. EVS undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
About EVS Group
EVS Group designs, develops and markets professional digital equipment for Television (EVS Broadcast) and Cinema (XDC). The Group employs over 170 persons for broadcast equipment in 11 countries and sells its products to professionals of the video and audio sectors in more than 80 countries. EVS is a public company traded on Euronext Brussels: EVS, ISIN: BE0003820371. For more information, refer to www.evs-global.com
EVS Broadcast is the world leader for Live TV Production Digital Disk Recorders and Related Software Applications, especially in the field of sports. The company's dedicated hardware and software suite offer a complete production platform: live slow motion (LSM), high speed slow motion, replay only, clips generation, quick clips editing, real-time SD/HD video files transfer, time delay, multi-camera recording, metadata association, graphics storage and play-out, digital transmission, multi-format ingest and play-back, audio record & edit, webcasting, mobile phone clipping. Main software applications like the "IP Director®" are running on the dedicated robust and flexible hardware the "XT[2]® Platform". The world's leading broadcasters, such as NBC, BSkyB, FOX, RTL, NHK, CANAL+, ABC, ESPN, TF1, CCTV, PBS, CBS, BBC, ZDF, TVE and many others use EVS' solutions.
EVS 47,20% affiliate XDC is pioneering Digital Cinema Logistics and Play-out and operates between the movies distributors and exhibitors. XDC has installed more than 250 digital screens in Europe where it is market leader for end-to-end digital cinema solutions.
ANNEX 1: EVS GROUP - IFRS CONSOLIDATED INCOME STATEMENT
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| (in thousands EUR) | Annex| | 3Q06 Unaudited| | 3Q07 Unaudited| | 9M06 Unaudited| | 9M07 Unaudited|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Revenue | 2| | 24.073| | 24.359| | 66.128| | 67.524|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Costs of sales | | | -2.944| | -3.071| | -9.400| | -8.365|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Gross Profit % | | | 88%| | 87%| | 86%| | 88%|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Selling and administrative expenses | | | -2.501| | -3.425| | -7.537| | -9.917|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Research and development expenses | | | -1.461| | -1.783| | -4.011| | -4.780|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Other revenue | | | 84| | 153| | 271| | 336|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Other expenses | | | -98| | -344| | -179| | -397|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Stock based compensation and ESOP plan | | | -76| | -8| | -450| | -622|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Depreciation on Tax Shelter rights assets | | | -58| | -84| | -176| | -252|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| EBITDA | | | 17.494| | 16.171| | 46.036| | 44.970|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Operating Profit (EBIT) | | | 17.019| | 15.797| | 44.647| | 43.527|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Operating Margin % | | | 71%| | 65%| | 68%| | 64%|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Net interest | | | 138| | 245| | 413| | 770|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Other net financial income / (expenses) | | | -51| | -393| | -332| | -749|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Share in the result of the enterp. accounted for using the equity method | 7.7| | -596| | -694| | -526| | -1.548|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Profit before taxes (PBT) | | | 16.509| | 14.954| | 44.202| | 42.000|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Income taxes | 7.6| | -5.615| | -5.065| | -14.748| | -13.990|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Net profit from continuing operations | | | 10.894| | 9.889| | 29.454| | 28.010|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Net gain/(loss) associated with the discontinued operations : (1) | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| XDC operations contribution to cons'd accounts | 7.7| | -| | -| | -2.976| | - |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Dilution profit on XDC refinancing | 7.7| | -| | -| | 3.368| | -|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Net profit | | | 10.894| | 9.889| | 29.846| | 28.010|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Attibutable to : | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Minority interests (XDC) | 7.7| | - | | - | | 1.180| | - |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Equity holders of the parent company | | | 10.894| | 9.889| | 31.025| | 28.010|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Net profit from operations - share of the group (2) | 7.9| | 11.027| | 9.981| | 28.328| | 28.884|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| RESULT PER SHARE | 7.5| | 3Q06 Unaudited| | 3Q07 Unaudited| | 9M06 Unaudited| | 9M07 Unaudited|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| (in number of shares and in EUR) | | | | | | | | | |
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Weighted average number of subscribed shares for the period less treasury shares| | | 13.581.951| | 13.583.129| | 13.645.576| | 13.590.352|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Weighted average number of fully diluted number of shares | | | 13.779.637| | 13.754.779| | 13.809.657| | 13.761.707|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Basic earnings - share of the group per share | | | 0,80| | 0,73| | 2,27| | 2,06|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Fully diluted earnings - share of the group per share | | | 0,79| | 0,72| | 2,25| | 2,04|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
| Basic net profit from operations - share of the group per share | | | 0,81| | 0,73| | 2,08| | 2,13|
+----------------------------------------------------------------------------------+-------+--+----------------+--+----------------+--+----------------+--+----------------+
(1) Until June 27, 2006, XDC was a 60,17% EVS affiliate. From June 27, 2006, XDC has been a 47,20% EVS affiliate and therefore accounted for at equity. 2006 and 2007 accounts are presented accordingly.
(2) The net profit from operations is the net profit (share of the group) excluding non-recurring exceptional results, taking into account tax items. Refer to annex 7, note 9.
ANNEX 2: EVS GROUP - SEGMENT REPORTING
The TV activities are split over 3 regions: Asia Pacific ("APAC"), Europe, Middle-East and Africa ("EMEA") and North America and Latin America ("NALA").
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| (in thousands EUR) | APAC | | EMEA | | NALA | | TOTAL 9M07|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| TV sales 9M07 | 15.879| | 26.046| | 25.599| | 67.524|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| Evolution versus 2006 - % | 48%| | -30%| | 41%| | 2%|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| Segment Revenue at constant exchange rate | 15.879| | 26.046| | 27.651| | 69.576|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| Evolution versus 2006 - % at constant exchange rate| 48%| | -30%| | 52%| | 5%|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| | | | | | | | |
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| (in thousands EUR) | APAC| | EMEA| | NALA| | TOTAL 9M06|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
| TV sales 9M06 | 10.707| | 37.280| | 18.141| | 66.128|
+-----------------------------------------------------+--------+--+--------+--+--------+--+------------+
The EVS Group has a strong vertical integration located mainly in Belgium. Foreign subsidiaries are distribution and representation subsidiaries, which explains why most of investments and investment expenditure are concentrated in the parent company EVS Broadcast Equipment S.A..
We should also note that the EVS Group has a centralised cash management within Belgium and that only the subsidiaries based in the USA and in Hong Kong directly invoice the end customers for commercial reasons. All customers are invoiced in EUR except the United States of America, in US Dollar.
Segmenting the operating profit (EBIT) by region would not fundamentally change the understanding of the company. Indeed, according to the strong vertical integration of the group and its worldwide sale policy, that margin is quite similar over the 3 regions.
ANNEX 3: EVS GROUP - IFRS CONSOLIDATED BALANCE SHEET - ASSETS
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| ASSETS (in thousands EUR) | Annex| | 31.12.06 Audited| | 30.09.07 Unaudited|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Non-current assets : | | | | | |
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Intangible assets | | | 715| | 685|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Lands and buildings | | | 5.429| | 5.359|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Other tangible assets | | | 1.099| | 1.818|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Investment accounted for using equity method | 7.7| | 6.174| | 5.959|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Other financial assets | | | 258| | 295|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total non-current assets | | | 13.675| | 14.116|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Current assets : | | | | | |
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Inventories | | | 7.955| | 8.800|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Trade receivables | | | 11.601| | 15.858|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Deferred tax assets | | | 160| | 124|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Other amounts receivable, deferred charges and accrued income| | | 2.149| | 1.775|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Cash and cash equivalents | | | 28.935| | 38.766|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total current assets | | | 50.799| | 65.322|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total assets | | | 64.474| | 79.438|
+---------------------------------------------------------------+-------+--+------------------+--+--------------------+
ANNEX 4: EVS GROUP - IFRS CONSOLIDATED BALANCE SHEET - LIABILITIES
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| EQUITY AND LIABILITIES | Annex| | 31.12.06 Audited| | 30.09.07 Unaudited|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| (in thousands EUR) | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Equity : | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Capital | | | 8.342| | 8.342|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Reserves | | | 54.402| | 59.934|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Interim dividend 2006 | 7.3| | -6.519| | - |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Treasury shares | | | -5.985| | -7.091|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total consolidated reserves | | | 41.898| | 52.842|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Translation differences | | | -112| | -211|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Equity attributable to equity holders of the parent company | | | 50.128| | 60.973|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Minority interests | | | 4| | 5|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total equity | | | 50.133| | 60.978|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Long term provisions | | | 361| | 461|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Deferred taxes | | | 266| | 229|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Financial long term debts | | | 2.323| | 2.086|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Government recoverable loans | | | 834| | 546|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Non-current liabilities | | | 3.784| | 3.323|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| | | | | | |
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Short term portion of long term financial debts | | | 364| | 364|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Trade payables | | | 1.964| | 2.468|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Amounts payable regarding remuneration and social security | | | 2.765| | 2.957|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Income tax payable | | | 2.214| | 5.236|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Other amounts payable, advances received, accrued charges and deferred income| | | 3.250| | 4.111|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Current liabilities | | | 10.558| | 15.137|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
| Total equity and liabilities | | | 64.474| | 79.438|
+-------------------------------------------------------------------------------+-------+--+------------------+--+--------------------+
ANNEX 5: EVS GROUP - IFRS CONSOLIDATED CASH FLOW STATEMENT
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| (in thousands EUR) | | 9M06 Unaudited| | 9M06 Proforma EVS TV (1) Unaudited| | 9M07 Unaudited|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash flows from operating activities | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Profit before taxation | | 44.202| | 44.202| | 42.000|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Adjustment for non cash items : | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Share in the result of the enterp. accounted for using the equity Method| | 526| | 526| | 1.548|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Depreciation on fixed assets | | 905| | 905| | 959|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Foreign exchange result | | -291| | -291| | -713|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Stock based compensation | | 289| | 289| | 347|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Provisions and deferred taxes increase/(decrease) | | 83| | 83| | 100|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | 45.714| | 45.714| | 44.241|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Increase (+)/decrease (-) | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Amounts receivable | | -1.091| | -819| | -3.344|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Accruals | | -292| | -54| | 1.064|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Trade debts and prepayments | | 226| | -414| | 462|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Taxes, remuneration and social security debts | | 8.111| | 8.092| | 3.214|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Other amounts payable | | -363| | -533| | -830|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| - Inventories | | -1.485| | -1.669| | -844|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash generated from operations | | 50.821| | 50.316| | 43.963|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Interest received | | 557| | 557| | 914|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Income taxes | | -14.748| | -14.748| | -13.990|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Net cash from operating activities | | 36.630| | 36.125| | 30.887|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash flows from investing activities | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Purchase/disposal of intangible assets (including Tax Shelter investments)| | -18| | -10| | -260|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Purchase/disposal of property, plant and equipment | | -3.033| | -671| | -1.317|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Purchase/disposal of leasing equipment | | -3.738| | -| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Purchase/disposal of other financial assets | | 229| | -381| | -1.370|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| XDC dilution impact in investing activities | | -7.665| | -| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Net cash used in investing activities | | -14.225| | -1.062| | -2.947|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash flows from financing activities | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Operations with treasury shares | | -1.394| | -1.440| | -1.106|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Other net equity variations | | -364| | -94| | -82|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Interest paid | | -152| | -152| | -143|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Proceeds from long-term borrowings | | 3.050| | -236| | -524|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Dividend paid | | -16.040| | -16.040| | -16.253|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Net cash used in financing activities | | -14.899| | -17.961| | -18.108|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash from XDC operations up to June 27, 2007 | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| EVS contribution to XDC share capital increases as of June 27, 2006 | | -| | -4.097| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Fully consolidated XDC loss as of June 27, 2006 | | -| | 2.977| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Minorities share in XDC loss as of June 27, 2006 | | -| | -1.180| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| EVS 60,17% down to 47,20% dilution profit as of June 27, 2006 | | -| | -3.368| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Net cash from XDC operations up to June 27, 2007 | | -| | -5.668| | -|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Net increase in cash and cash equivalents | | 7.506| | 11.434| | 9.831|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| | | | | | | |
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash and cash equivalents at beginning of period | | 26.227| | 22.299| | 28.935|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
| Cash and cash equivalents at end of period | | 33.733| | 33.733| | 38.766|
+----------------------------------------------------------------------------+--+----------------+--+------------------------------------+--+----------------+
(1) For comparison purposes, assuming that XDC was accounted for using equity method as of December 31, 2005.
ANNEX 6: EVS GROUP - IFRS CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| (in thousands EUR) | Issued capital| | Available reserves | | Treasury shares| | Currency translation differences| | Equity attributable to shareholders of the parent company| | Minority interest| | Total Net Equity|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Balance as per 31 December 2005 | 8.342| | 34.094| | -4.220| | -36| | 38.179| | 2.213| | 40.392|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Increase (decrease) of equity capital resulting from company regrouping | | | -2.908| | | | | | -2.908| | -2.208| | -5.116|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Net profit of the year attributable to the shareholders of the parent company| | | 29.846| | | | | | 29.846| | | | 29.846|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Operations with treasury shares | | | 290| | -1.683| | | | -1.393| | | | -1.393|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Dividends | | | -16.462| | | | | | -16.462| | | | -16.462|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Currency translation differences | | | | | | | -42| | -42| | | | -42|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Net profit of the year attributable to the minority interest | | | 1.180| | | | | | 1.180| | | | 1.180|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Other increase (decrease) | | | -36| | | | | | -36| | | | -36|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Balance as per 30 September 2006 | 8.342| | 46.004| | -5.903| | -78| | 48.364| | 5| | 48.369|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| (in thousands EUR) | Issued capital| | Available reserves | | Treasury shares| | Currency translation differences| | Equity attributable to shareholders of the parent company| | Minority interest| | Total Net Equity|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Balance as per 31 December 2006 | 8.342| | 47.884| | -5.985| | -112| | 50.129| | 4| | 50.133|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Increase (decrease) of equity capital resulting from company regrouping | | | | | | | | | -| | 1| | 1|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Net profit of the year attributable to the shareholders of the parent company| | | 28.010| | | | | | 28.010| | | | 28.010|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Operations with treasury shares | | | 347| | -1.106| | | | -759| | | | -759|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Dividends | | | -16.323| | | | | | -16.323| | | | -16.323|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Currency translation differences | | | | | | | -99| | -99| | | | -99|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Other increase (decrease) | | | 15| | | | | | 15| | | | 15|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
| Balance as per 30 September 2007 | 8.342| | 59.933| | -7.091| | -211| | 60.973| | 5| | 60.978|
+-------------------------------------------------------------------------------+----------------+--+---------------------+--+-----------------+--+----------------------------------+--+-----------------------------------------------------------+--+-------------------+--+------------------+
ANNEX 7: EVS GROUP - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2007
NOTE 1: BASIS OF PREPARATION
The consolidated financial statements of EVS group for the 9 months period ended 30 September 2007 are established under International Financial Reporting Standards (IFRS), as adopted for use in the European Union.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES AND METHODS
The accounting policies and methods adopted for the preparation of the Company's IFRS consolidated financial statements are consistent with those applied in the 31 December 2006 consolidated financial statements. The Company's IFRS accounting policies and methods are available in the annual report 2006 on www.evs-global.com
NOTE 3: DIVIDENDS PROPOSED AND PAID
The Board of Directors of November 6, 2007 has decided to distribute an gross interim dividend of 0,80 EUR per share for the accounting year 2007 which due date is November 21 and pay date is November 27.
+-----------------------------------------------------------------------+--+--------+--+--------+
| (in thousands EUR) | | 2006 | | 2007 |
+-----------------------------------------------------------------------+--+--------+--+--------+
| | | | | |
+-----------------------------------------------------------------------+--+--------+--+--------+
| - Final dividend for 2005 (1,20 EUR per share less treasury shares) | | 16.462| | |
+-----------------------------------------------------------------------+--+--------+--+--------+
| - Interim dividend for 2006 (0,48 EUR per share less treasury shares)| | 6.519| | |
+-----------------------------------------------------------------------+--+--------+--+--------+
| - Final dividend for 2006 (1,20 EUR per share less treasury shares) | | | | 16.323|
+-----------------------------------------------------------------------+--+--------+--+--------+
| - Interim dividend for 2007 (0,80 EUR per share less treasury shares)| | | | 10.867|
+-----------------------------------------------------------------------+--+--------+--+--------+
| | | 22.981| | 27.190|
+-----------------------------------------------------------------------+--+--------+--+--------+
NOTE 4: EQUITY SECURITIES
The number of treasury shares has changed as follows during the period:
+----------------------------------------------------+--+----------+--+---------+
| | | 2006 | | 2007 |
+----------------------------------------------------+--+----------+--+---------+
| Number of own shares at 1 January | | 356.655| | 272.209|
+----------------------------------------------------+--+----------+--+---------+
| Acquisition of own shares on the market | | 144.000| | 24.775|
+----------------------------------------------------+--+----------+--+---------+
| Sale of own shares on the market | | -| | -|
+----------------------------------------------------+--+----------+--+---------+
| Allocation to Employees Profit Sharing Plan | | -7.253| | -5.113|
+----------------------------------------------------+--+----------+--+---------+
| Sales related to Employee Stock Option Plan (ESOP)| | -2.500| | -|
+----------------------------------------------------+--+----------+--+---------+
| Own shares cancellation | | -200.000| | -|
+----------------------------------------------------+--+----------+--+---------+
| Number of own shares at 30 September | | 290.902| | 291.871|
+----------------------------------------------------+--+----------+--+---------+
| | | | | |
+----------------------------------------------------+--+----------+--+---------+
| Outstanding warrants at 30 September | | 199.100| | 171.650|
+----------------------------------------------------+--+----------+--+---------+
Over 2007, the Board has decided to repurchase 24.775 own shares on the stock market for a global value of 1,2 million EUR, representing an average acquisition price of 49,41 EUR per share. The Ordinary General Meeting of Shareholders of May 15, 2007 has decided to allocate between 25 and 50 shares to any EVS Broadcast Equipment S.A. employee under certain conditions, representing 5.113 shares.
As of September 30, 2007, 171.650 warrants are outstanding with an average strike price of 20,68 EUR and an average maturity of 1,6 year.
NOTE 5: EARNINGS PER SHARE (EPS)
The group calculates both the basic earnings per share and the diluted earnings per share in accordance with IAS 33. The basic earnings per share are calculated on the basis of the weighted average number of ordinary shares in circulation during the period less treasury shares. The diluted earnings per share are calculated on the basis of the average number of ordinary shares in circulation during the period plus the potential dilutive effect of the warrants and stock options in circulation during the period less treasury shares.
NOTE 6: INCOME TAX
6.1. Reconciliation of the tax charge
The effective tax charge of the group obtained by applying the effective tax rate to the pre-tax profit of the group, has been reconciled for the nine first months of 2006 and 2007 with the theoretical tax charge obtained by applying the theoretical tax rate:
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| (in thousands EUR) | | 9M06 | | 9M07 |
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| | | | | |
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Reconciliation between the effective tax rate and the theoretical tax rate | | | | |
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Reported profit before taxes | | 44.202| | 42.000|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Reported tax charge based on the effective tax rate | | -14.748| | -13.990|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Effective tax rate | | 33%| | 33%|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| | | | | |
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Reconciliation items for the theoretical tax charge | | | | |
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Tax effect of tax-exempt incomes and capital gains | | -10| | -|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Tax effect of Tax Shelter | | -191| | -191|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Tax effect of deduction for notional interests | | -107| | -130|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Tax effect of non deductible expenditures | | 93| | 136|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Tax effect of overvaluations and undervaluations related to prior years | | 240| | -|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Other increase (decrease) | | 579| | 735|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Total tax charge of the group entities computed on the basis of the respective local nominal rates| | -14.145| | -13.440|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
| Theoretical tax rate (relating to EVS TV) | | 32%| | 32%|
+----------------------------------------------------------------------------------------------------+--+---------+--+---------+
NOTE 7: DISCONTINUED OPERATIONS
On June 27, 2006, EVS diluted in XDC S.A. from 60,17% down to 47,20% following a non proportional share capital increase of 12,5 million EUR to which EVS contributed 2 million EUR. Based on the amended shareholders agreement, EVS lost its majority in the XDC Board of Directors and does not control XDC anymore as such. The share capital subscription has been fully paid. This led to a change in the way XDC is reported in EVS accounts since June 27, 2006. However, for comparison purposes, the 9M06 group accounts present XDC figures that are accounted for according to the net equity method. In 2006, following the 13% dilution, EVS has booked a dilution profit of 3,4 million EUR.
The XDC contribution breaks down as follows:
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| (in thousands EUR) | | 1st half-year 2006| | 3rd quarter 2006| | 9M06 | | 9M07 |
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Revenue | | 907| | 634| | 1.541| | 1.912|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Gross Profit | | -1.161| | -503| | -1.664| | -1.836|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Operating Profit (EBIT) | | -2.898| | -1.346| | -4.244| | -3.421|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Net profit for the period | | -2.977| | -1.316| | -4.293| | -3.612|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Part of XDC capital held | | 60,17%| | 47,20%| | (1) 47,20%| | 47,20%|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Net profit - share of the Group | | -1.796| | -621| | -2.417| | -1.705|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Dilution profit on XDC refinancing| | 3.368| | - | | 3.368| | - |
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
| Total contribution | | 1.572| | -621| | 951| | -1.705|
+------------------------------------+--+--------------------+--+------------------+--+------------+--+--------+
(1) 60.17% until June 27, 2006 and 47,20% thereafter.
No deferred tax asset relating to these losses has yet been recognised. The cumulated Tax Loss Carry Forward of XDC S.A. amounts to 13,9 million EUR on September 30, 2007.
NOTE 8: SEGMENT REPORTING
The primary reporting format is set by geographical area. Even though the Company is managed on a worldwide basis, it operates in three main geographical areas, as follows: EMEA (Europe, Middle-East and Africa), APAC (Asia and Pacific) and NALA (North America and Latin America). Given the centralisation of main corporate resources (R&D, Production, Marketing, Finance & Administration) in one central location, given the nature of the business, given the strong vertical integration of both group organisation and product design, the EBIT margin by geographical segment does not differ significantly from the consolidated group EBIT margin.
NOTE 9: NET PROFIT FROM OPERATIONS
The reconciliation between the net profit for the period and the net profit from operations is as follows:
+-------------------------------------------------------------------+--+--------+--+--------+
| (in thousands EUR) | | 9M06 | | 9M07 |
+-------------------------------------------------------------------+--+--------+--+--------+
| Net profit for the year | | 31.025| | 28.010|
+-------------------------------------------------------------------+--+--------+--+--------+
| Allocation to Employees Profit Sharing Plan (including XDC Plan) | | 405| | 491|
+-------------------------------------------------------------------+--+--------+--+--------+
| Stock Option Plan (including XDC Plan) | | 90| | 131|
+-------------------------------------------------------------------+--+--------+--+--------+
| Depreciation on Tax Shelter rights assets | | 176| | 252|
+-------------------------------------------------------------------+--+--------+--+--------+
| Dilution profit on XDC refinancing | | -3.368| | -|
+-------------------------------------------------------------------+--+--------+--+--------+
| Net profit from operations | | 28.328| | 28.884|
+-------------------------------------------------------------------+--+--------+--+--------+
NOTE 10: HEADCOUNT
+----------------------------+--+--------+
| (in Full Time Equivalents)| | EVS TV|
+----------------------------+--+--------+
| Average 9M06 | | 144|
+----------------------------+--+--------+
| Average 9M07 | | 174|
+----------------------------+--+--------+
| Variation | | 21%|
+----------------------------+--+--------+
| As at September 30, 2007 | | 184|
+----------------------------+--+--------+
The group has recruited additional staff to reinforce R&D, Sales & Marketing, Training and Field Engineers to pursue its growth.
NOTE 11: EXCHANGE RATES
The main exchange rate that influences the consolidated financial accounts is USD / EUR which has been taken into account as follows:
- Average exchange rate over the first nin, e months of 2006 : 1,2444
- At 30 September 2006 : 1,2660
- Average exchange rate over the first nine months of 2007 : 1,3442
- At 30 September 2007 : 1,4179
NOTE 12: FINANCIAL INSTRUMENTS
Periodically, EVS measures the group's anticipated exposure to transactional exchange risk over one year, mainly relating to the EUR/USD risk. Given the group has a "long" position in USD and based on sales forecasts, EVS hedges future USD net in-flows by forward foreign exchange contracts. The relevant hedging results are booked as financial results.
On September 30, 2007, the group held 6,5 million dollars in forward exchange contracts earmarked to hedge 50% of the net future cash-flows in dollars with an average maturity date of January 29, 2008 and with an average exchange rate EUR/USD of 1,3096.
NOTE 13: SUBSEQUENT EVENTS
There is no significant subsequent event.
Copyright Hugin
[CN#127909]
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