EUROPE, AFRICA, MIDDLE-EAST EVS HEADQUARTERS€¦ · Letter to shareholders 2 Corporate governance...

EUROPE, AFRICA, MIDDLE-EASTEVS HEADQUARTERSLiege Science ParkRue Bois Saint-Jean, 16 BE-4102 Ougrée - Belgium Tel. : +32 (4) 361 70 00 Fax : +32 (4) 361 70 99 [email protected]@evs-cinema.com [email protected]

AMERICAS (EVS & NETIA)9 Law Drive, suite 200Fairfield, NJ 07004 - USATel. : +1 (973) 575 7811Fax : +1 (973) 575 [email protected]@netia.net

ASIA – PACIFIC (EVS & NETIA)Room 430, Block D, D.B. Plaza, Discovery Bay, Lantau IslandHong Kong Tel. : +852 (2914) 25 01Fax : +852 (2914) 25 [email protected]@netia.net

FRANCE - PARIS (EVS & NETIA)Parc d’affaires EMGP - Bat 26945 Avenue Victor HugoFR-93534 Aubervilliers - France Tel. : +33 (1) 49 37 97 57 Fax : +33 (1) 49 37 97 58 [email protected]

FRANCE - MONTPELLIERNETIA HEADQUARTERSHalle industrielle de Farjou FR-34270 Claret - FranceTel. : +33 (4) 67 59 08 07Fax : +33 (4) 67 59 08 20 [email protected]

ITALYVia Cipro, 102 IT-25124 Brescia - ItalyTel. : +39 (030) 242 71 34 Fax : +39 (030) 247 81 [email protected]

UNITED KINGDOM400, Capability GreenGB-Luton LU1 3LUUnited KingdomTel./fax : +44 (208) 464 4244 [email protected]

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11. 010001100101111100011010010 0110100 EVS [ Table of contents ] 1.

Key figures, consolidated and audited (In million EUR) 2001 2002 2003 %03/02

Operating income 35.4 37.3 40.4 +8%Operating result (EBITA)(2) 9.0 7.8 14.2 +82%

EBITA margin % 25% 21% 35% n.c.

Net profit (group share) 2.1 2.0 6.3 +215%

Net profit from operations(3) 5.1 4.7 9.1 +93%Net profit margin(4) 15% 13% 22% +73%

Per share in EUR Number of shares excluding own shares 2 784 857 2 727 016 2 707 342

Net profit from operations per share(5) 1.85 1.74 3.35 +93%

Dividend / Capital reimbursement per share 0.50 0.48 3.00

Pay-out ratio 27% 28% 90%

Average stock price 28.52 19.20 24.21 Highest stock price 39.50 26.78 34.54

Lowest stock price 14.00 13.92 17.80

Stock price at closing date 19.65 19.80 32.00

Average volume exchanged daily 1 432 2 017 4 600

Capital as of 31/12, before dividends allocation 23 931 24 715 27 809

Market capitalisation as of 31/12(1) 56.0 57.0 89.6

Price earning ratio (excluding net cash)(6) 11.6 12.1 9.0

Key figures

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Operating income(In million EUR)

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Net profit from operations(In million EUR)

EVS stock price evolution(1) Including own shares value.(2) EBITA means “ Earnings Before Interest

Tax and Amortization ” and corresponds to the operating result before amortiza-tion of the goodwill. The EBITA margin is the EBITA divided by the operating income.

(3) The net profit from operations is the net profit (group share) excluding goodwill amortization and extraordinary income taking tax items into account.

(4) The net profit margin is the net profit from operations divided by the operating income.

(5) Calculated on basis on the number of stock options except own shares, and excluding warrants.

(6) “ Excluding net cash ” means that the company’s market capitalisation (stock price) has been reduced by the cash of the company less its short and long term debts, net cash being 13 million EUR.

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11. 010001100101111100011010010 0110100 EVS [ Table of contents ] 1.

Information to shareholders 2Letter to shareholders 2

Corporate governance 4

Historical background 5

EVS in a nutshell 6

2003 key facts 8

Management report 2003 9

Shareholding as of 25 March 2004 15

Profit allocation policy 16

Stock market report 17

Products and markets 20 TV integrated production systems 21

TV production and broadcast solutions 24

Management solutions for Radios 27

Solutions for Digital cinema 29

EVS worldwide 30

General information 34


Consolidated financial statements 40 Auditor's report 40

Consolidated income statement 41

Consolidated balance sheet 42

Appendices and comments 44

Reconciliation of the 2003 accounts between the Belgian standards and the IFRS 53

Consolidated cash flow statement 54

Parent company financial statements 57Statutory management report 58

Statutory income statement 59

Statutory balance sheet 60

Appendix 62

Glossary 63

Table of contents

On 31 March 2004, the Commission for Banking, Finance and Insurance has authorised EVS Broadcast Equipment S.A. to use this 2003 annual report as a reference document for any public share offer it makes under the law of 22 April 2003 on public share offers, within the context of the dissociated information procedure, and this until the publication of the next annual report. In the context of this procedure, a transaction note must be attached to the annual report. The annual report accompanied by the transaction note together form the issue prospectus as referred to in Section IV of the law of 22 April 2003. Under article 14 of the law of 22 April 2003, this prospectus must be submitted for approval to the Commission for Banking, Finance and Insurance.

2. 010001100101111100011010010 0110100 EVS [ Information to shareholders ] 3.

Dear shareholders,

On the eve of EVS tenth birthday, we are marking an excellent 2003 year in terms of both sales and profitability, despite a beginning of the year which was characterised by a weak economic context and little visibility across our reference markets. The slow upturn in advertising expen-ditures and the rationalisation measures taken at the end of 2002 mean that EVS has been able to exceed the profitability objectives set at the beginning of the year. Our development potential remains intact and we would like to thank all EVS members of staff for their essential contribution to the group’s results.

The 2003 turnover reached 39.1 million EUR, which is 8% more than in 2002, and the net cur-rent result was 9.1 million EUR, namely 3.35 EUR per share, which is a record at the dawn of our 10th birthday. The net profitability of the group is 22% taking into account the R&D expenses which represent 15% of the operating income (5.9 million EUR). These results allow EVS to dis-tribute a super-dividend in the form of a capital repayment of 3 EUR per share. In this way, EVS wish to thank its loyal shareholders and celebrate its 10th anniversary in fitting style.

In a stock market context which has been clearly more favourable than in 2002, the EVS share price has outperformed the market by marking an increase of around 60%, moving from20 EUR at the end of 2002 to 32 EUR as of 31 December 2003. Over the same period, the financial markets have increased by 14% for the Bel20 and by 34% for the DJ EuroStoxx Technology™ index. This means EVS share value went back to its stock market introduction level at the end of 1998, while its fundamentals almost trebled during that period. Following the various opera-tions concerning the company capital during 2003, EVS currently holds almost 3% of its own capital.

Despite the global recession across the broadcast equipment market, EVS TV systems show a decent increase of 13%. The 2003 sales of our leading product, the slow motion recorder, have among other things benefited from the significant penetration of High Definition (HD) TV in the United States and Asia. The XT production platforms developed by our teams are key ele-ments in the HD production flows, especially for sport but also for entertainment shows. This means we can predict a significant growth in the sales of these products across the existing markets in anticipation of the craze for this format in the European market in the future. EVS thus confirms the strong position of the group across its niche markets such as “Live produc-tion” and “Mobile TV”.

The radio management software developed by Netia has followed the negative trend in its market segment. However, the improved health of the advertising market should allow the radio stations to resume their investments and this makes us hopeful that our subsidiary will return to break-even in 2004.

Letter to shareholdersEVS, strong on its niche markets “ Live “ and “ Mobile TV ”


EVS Digital Cinema has continued the deployment of its servers throughout the world. Today, around 200 theaters have all-digital equipment, including 70 with EVS servers. At the end of 2003, we collaborated with Kinepolis and Barco to provide digital projection of the cartoon “Finding Nemo” in several Belgian theaters. This demonstrates that the digital cinema technology is ready, from today, to be deployed for the 100 000 or so screens all over the world.

Our main priority for 2004 is to extend the presence of EVS in the television production studios thanks to rapid and easy-to-use editing systems, based on the XT technology and the new HD distribution format. While still being dependent on the general economic climate and the US dollar rate, EVS should continue its growth in 2004.

Laurent MINGUET, Pierre L’HOEST, Michel COUNSON, Managing Director Managing Director Chairman


Board Members as of December 31, 2003.

Michel COUNSON, Chairman & Executive Director

Laurent MINGUET, Managing Director & CEO

Pierre L’HOEST, Managing Director & CEO

S.A. CYTINDUS, represented by Michel Delloye

Francis BODSON, Independent Director

Christophe CARNIEL, Executive Director

Jean DUMBRUCH, Executive Director

Laurent LEVAUX, Independent Director

Jacques GALLOY, Executive Director & CFO

Pierre RION, Independent Director

Audit Committee

Laurent LEVAUX, Chairman

S.A. CYTINDUS, represented by Michel DELLOYE


Compensation Committee

Francis BODSON, Chairman

Laurent LEVAUX, Independent Director


Executive Committee

Michel COUNSON, Chairman & Executive Director

Laurent MINGUET, Managing Director & CEO



Statutory Auditor

Ernst & Young, Reviseurs d’Entreprises S.C.C. (B160)represented by Philippe PIREBoulevard d’Avroy 38BE-4000 Liège (Belgium)

EVS Broadcast Equipment S.A.Liege Science ParkRue Bois Saint-Jean, 16 . BE-4102 OugréeBelgiumTel. : +32 (4) 361 70 00 Fax : +32 (4) 361 70 99 [email protected]

For more details on EVS Corporate governance,

please refer to page 37.

Corporate governance


EVS Broadcast Equipment S.A. was founded in February 1994 by Laurent MINGUET, Pierre L’HOEST and Michel COUNSON. The founders of EVS aimed at developing equipment for the digital recording of pictures on hard disks (disk recorders) for professionals within the television industry : the Broadcasters.

In September 1995, EVS signed a contract with PANASONIC, the exclusive supplier of broadcast equipment for the Atlanta Olym-pic Games, to develop a slow motion system. This partnership allowed PANASONIC to re-lease their first Super Motion camera (3 times more pictures than a classical camera) and EVS to develop the corresponding hard disk recorder, which was successfully deployed at those Olympic Games.

In 1997, EVS opened two subsidiaries, EVS Inc. in the United States and EVS Ltd in Hong Kong, to market its equipments on the Ameri-can and Asian continents.

In April 1998, EVS acquired the Liège based Company VSE, known worldwide for its range of picture mosaics. Founded in 1986 by Michel COUNSON, VSE had worked alongside EVS for many years in design and electronic production work.

In July 1998, EVS opened a subsidiary in France in order to follow up the important developments of this market.

In October 1998, EVS listed on the first market of the Brussels Stock Exchange and collected 7 436 806 EUR. This amount has been used to guarantee the expansion of the company, increase its reputation and attract top quality employees.

In 1999, EVS set up a subsidiary in Italy and one in United Kingdom.

On September 7th, 1999, EVS acquired the French Company NETIA, well known in the digital radio world, TV and Internet Broad-cast.

In 2000, EVS has launched new initiatives to pursue its growth : digital video broadcast, play-out systems and digital cinema. That year, EVS did also contribute to the Soccer Eurocup, to the Sydney Olympics and to the Universal Exhibition of Hannover (D).

In 2001, EVS signed two prestigious agree-ments for equipment rentals for the broad-cast of Winter Olympics of Salt Lake City and the Soccer World Cup in 2002.

Since 2002, Latin America sales are managed from the New York office while a new office was opened in Los Angeles for the digital cinema needs.

In the spring of 2003, EVS inaugurated a new building with a total area of 3 200 m², a superb combination of glass, wood and concrete erected in a leafy bower. The colours adorn-ing the building both inside and outside are the work of the local artist Leonardi. The building also contains a multimedia theater which is fully fitted out for board meetings, gatherings and demonstrations of HDTV and digital cinema products. The acoustics, the screening, the choice of dark colours and the meticulous fitting of the sound system were done by our subsidiary FAR.

2003 marked the true take-off of High Definition television in the USA, South Korea, Australia and Japan. At the same time, at the IBC 2003 exhibition in Amsterdam, EVS was approached by giants such as Sony, Thomson and Panasonic for the creation of techno-logical partnerships and for interoperability initiatives.

In January 2004, our USA teams and 20 net-worked EVS XT servers took care of the pro-duction and broadcasting, notably in High Definition, of the USA Super Bowl by CBS to more than 160 million television viewers.

2004 will be marked, among other things, by the celebration of the 10th anniversary of the founding of EVS.

Historical background


Television systemsTV Integrated production systems and TV production and broadcast solutions

EVS in a nutshell

EVS is the leader in digital image-processing systems for live mobile production. After 10 years, EVS is a recognised and highly appreciated brand. The new XT production platform allows the exchange of video fi les, which represents a robust server for the migration to HDTV. EVS has developed broad expertise in compressed video signal processing. This is illustrated by the installation of the fi rst digital TV newsroom in Belgium, and by a Video On Demand (VOD) system for a cruise ship. EVS intends to continue its pioneer role in the migration from analogue to digital within television processes. Today, 20% of the cameras in the mobile production vans are still controlled by tape recorders and the EVS technologies are increasingly being adapted to studio production environments. EVS still has many challenges to take up !

Sales(In million EUR)

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TV staff : 105

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The Radio-Assist 7.1™ digital audio software developed by NETIA covers the entire work and data fl ow process in a radio station. From acquisition to distribution, through planning and production, each activity is digitised and automated, allowing simultaneous access to several products. Modular in structure, Radio-Assist 7.1™ adapts perfectly to the various jobs in the radio station and rapidly becomes integrated into the existing environment. In a period of recession, NETIA has experienced the same trend as the market which seems to have been picking up since the end of 2003.

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Since 2000, EVS has been convinced that the cinema will be the fi nal medium to be digi-tised. This involves offering a digital solution to replace the 35 mm reels. The CineStore® solution meets the needs of theater opera-tors, fi lm distributors and producers. The digi-tal conversion is underway. Out of a potential market of 100 000 screens, 200 are currently digital, including around 70 with EVS systems. The potential is equal to the calculated risk taken by EVS. It is expected that it will truly take off in 2005 - 2006.

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Netia staff : 51


Digital cinema staff : 20

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Management solutions for Radios

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Solutions for Digital cinema

screening, blockbusters

8. 010001100101111100011010010 0110100 EVS [ Information to shareholders ] 9.1 9 9 4

-2004

10YEARS

2003 key facts

EVS • United States • February 2003 In the context of the launch of ESPN HD, the leading sports channel in the USA, EVS delivers a dozen XT HD digital servers in order to equip 3 mobile production vans with High Definition.

EVS DC • 08/04/2003 Marina Studios, one of the major players in the Italian digital post-production market, invests in an EVS CineStore® Alfa digital encoding station.

EVS • Seoul • 22/04/2003 SBS, a leading television channel in South Korea, invests in 5 XT HD Airbox in order to equip its production studios with state-of-the-art High Definition equipment.

NETIA • Paris • 15/05/2003 In order to set up its digitisation project, France Inter, the generalist channel of the Radio France group, chooses the Radio-Assist 7™ solution, the leader in the French market for radio automation.

EVS • Copenhagen • 07/06/2003 First live broadcast of a soccer game (Norway-Denmark) produced in High Definition and distributed into digital cinemas thanks to the collaboration of EVS, Alfacam/Euro 1080, Barco and SES ASTRA.

EVS • Abuja • 10/06/2003 NTA, the Nigerian television channel, invests in new XT equipment in order to broadcast the All-African Games in October.

NETIA • Kuala Lumpur • 30/06/2003 RTM, the national channel of Malaysia, completes its Radio-Assist™ digital installation with the Music-All, Feder-All and Air-DDO software trio.

EVS • France • 10/07/2003 EVS is on the Tour de France. A SportServer linked to the CleanEdit solution is used by France Télévision in collaboration with VCF for the editing and distribution of the daily magazine “Vélo Club”.

EVS • Hong Kong • 15/07/2003 PCCW, one of the Asian leaders in telecommunications, launches a new pay channel service and acquires a complete MPEG2 DVB solution accompanied by the EVS Playlist Manager software.

EVS DC • London • 08/08/2003 EVS supplies Arts Alliance Media, the leading English operator of art-house cinemas, with a dozen CineStore® Solo servers within the context of developing the first digital cinema network in the United Kingdom.

EVS • Paris • 13/08/2003 Canal Satellite adopts the SuperSplit solution for its new generation of interactive mosaics which allow a suite of programmes to be browsed in the form of vignettes with the associated audio channel.

EVS • Madrid • 13/08/2003 Mediapro Group, one of the European leaders in television sports production, acquires two XT HD systems in order to distribute certain matches of the Spanish League to American television viewers equipped with HD screens.

NETIA • Toulouse • 30/10/2003 Le Mouv’, a music radio station which is part of the Radio France group, equips its studios and production rooms with the Radio-Assist 7.1™ range.

EVS DC • Brussels • 15/11/2003 Kinepolis announces the launch of its first digital cinema channel and equips 7 theaters with EVS CineStore® servers and BARCO projectors for the digital projec-tion of “Finding Nemo”.

EVS • Liège • December 2003 End of the discussions about a friendly takeover bid of EVS by the British group Vitec plc. This partnership could have strengthened the sales structure in the USA and integrated EVS into a larger group but an agreement was not reached for valuation and financing purposes.

EVS • New York • 12/12/2003 Keslow TV acquires 2 XT HD LSM systems in order to meet the needs of the CBS channel for the broadcasting of the NFL matches and the Super Bowl.


Management report 2003

Consolidated figures(1), audited (in million EUR) 2001 2002 2003 % 03/02

Operating income 35.4 37.3 40.4 +8%Turnover 34.8 36.4 39.1 +7%

R&D expenditures -5.0 -6.2 -5.9 -8%

Operating result (EBITA)(5) 9.0 7.8 14.2 +82%

EBITA margin % 25% 21% 35% n.c.

Goodwill amortization(2) (with exceptional items) -2.3 -2.3 -2.8 n.c.Financial result (including goodwill amortization)(2) -2.7 -2.3 -1.8 n.c.

Profit from operations before taxes 6.3 5.5 12.4 +125%

Extraordinary items -0.7 -0.7 -1.0 n.c.

Profit before taxes 5.6 4.8 11.4 +138%

Income taxes 3.5 2.8 5.1 +82%

Net profit 2.1 2.0 6.3 +215%

Net profit (group share) 2.2 2.0 6.3 +215%

Net profit from operations(3) 5.1 4.7 9.1 +93%

Net profit margin(4) 15% 13% 22% +73%

Per share data, in EUR Number of shares as of 31 December 2 863 952 2 863 952 2 800 000

Basic net profit from operations per share(6) 1.78 1.64 3.25 +98%

Number of shares excluding own shares 2 784 857 2 727 016 2 707 342

Net profit from operations per share(7) 1.85 1.74 3.35 +93%(1) Consolidation scope : EVS S.A., EVS France, EVS Hong Kong, EVS USA, EVS Italy, EVS UK, NETIA.(2) Goodwill amortization for VSE and NETIA has been entirely amortized by 31/12/2003. Exceptional amortization amounts

0.9 million EUR.(3) The net profit from operations is the net profit (group share) excluding goodwill amortization and extraordinary income

taking tax items into account.(4) The net profit margin is the net profit from operations divided by the operating income.(5) EBITA means “ Earnings Before Interest Tax and Amortization ” and corresponds to the operating result before amortization

of the goodwill. The EBITA margin is the EBITA divided by the operating income.(6) Calculated on basis on the number of shares, and excluding warrants.(7) Calculated on basis on the number of shares excluding own shares and warrants.

Operating incomeThe group’s turnover has reached a record level of 39.1 million EUR thanks to the TV systems and more particularly the HDTV servers for live production and High Definition edition. The second part of 2003 has been as favourable as the first half year with sales reaching 19.5 million EUR even if the US dollar was decreasing.

EVS group’s turnover(1) is divided up by segments as follows :

Products (In million EUR) 2001 2002 2003 % 2003 % 03/02TV systems(1) 28,5 30,6 34,6 89 % + 13 %

Radio management systems 6,3 4,9 4,0 10 % - 18 %

Digital cinema servers - 0,9 0,5 1 % - 45 %

TOTAL 34,8 36,4 39,1 100 % + 7 % (1) TV systems segment gathers the Live Slow Motion and Broadcast Solutions former segments.

Consolidated operating income (In million EUR)

Despite the overall recession in the broadcast equipment market, EVS TV systems grew by 13%. Equipment sales of EVS star product, the Live Slow Motion recorder, enjoyed an organic 20% growth as a combined result of HDTV market take-off in the USA and in Asia. Product diversification has been successful

in 2003 as well since non-sport related solutions have doubled over the period, with non-linear digital newsroom applications and Video On Demand systems. This is also due to the launch of the XT technology mid-2002. It allows broadcasters to produce their TV content on a networked and tape-less

TV SYSTEMS

RADIO MANAGEMENT SYSTEMS

DIGITAL CINEMA SERVERS

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based platform which combines LSM-XTs and other XT applications dedicated for live and near-live productions. HDTV sales represent however only 25% of TV systems sales in 2003. EVS main growth area is studio production for which EVS teams, skills and products have a strong potential over the coming years. EVS teams will attend the Athens’ Olympics and Portugal’s Soccer EuroCup.

Radio management systems followed the market trend, decreasing by 18%. Radio broadcasters have been hurt by the advertis-ing downturn since their cost base was rather fix. Most of large public stations had slowed down their digitization process. NETIA could maintain and even increase its market share. NETIA's workforce has been reduced from 63 to 51 over 2003, while Radio-Assist™ has been further developed to meet customers needs. The order book as of January 1 ex-ceeds 2 million EUR. Proper operational and commercial actions will be taken to let NETIA contribute positively to the group results.

EVS Digital Cinema has pursued the deploy-

ment of its servers. Today, there are around 200 high-end DLP cinema systems installed all over the world, out of which 70 are EVS. EVS has also contributed to the emergence of alternative business models like the roll-out of 10 systems in Belgium in partnership with Kinepolis Group, Barco and mobile production company Alfacam/Euro1080. Besides the digital projection of animated feature “Finding Nemo” on the systems, Belgian popular TV series “KabouterPlop” has been shot in HDTV and very successfully projected on those screens. One interesting illustration of promising development is the UK Film Council plan to roll-out and subsidize 250 digital screens in the UK in 2004 through a public tender bid. The need is for an integrated solution from encoding, transmission to cinemas and local projection with high-end DLP projectors and quality control. However, a massive roll-out is not expected in the near future. HDTV productions will help digital cinema to further roll-out.

EVS group’s turnover(1) is divided up by geographical segment as follows :

Regions (In million EUR) 2001 2002 2003 % 2003 % 03/02Europe, Africa and Middle-East 19,9 21,4 22,6 58 % + 6 %

Americas 9,1 6,6 10,6 27 % + 60 %

Asia - Pacific 5,8 8,4 5,9 15 % - 30 %

TOTAL 34,8 36,4 39,1 100 % + 7 %(1) The turnover corresponds to the operating income excluding the stock variations of finished products and other operating

income.

The group confirms Europe as its first market (58%) while international expansion has still a strong growth potential. Indeed, the overall broadcast equipment market is usually split 40% Americas, 35% EMEA and 25% Asia. Eu-rope increased by 6% but suffered from weak German, Italian and Middle-East markets. European radio sales have remained stable as well. Expressed in USD, America equipment sales have more than doubled thanks to the group successes on the growing HDTV mar-ket. More and more broadcasters are trans-mitting HDTV signals and 9% of US homes are equipped with an HDTV capable screen,

up from 4% one year ago (source : Consumer Electronics Association, www.ce.org). The launch of ESPN HD in April has been the starting point for the design of new mobile production trucks with increasing tape-less environments. EVS networked XT technology is a strong driver for this conversion to mobile tape-less environments. The Asia-Pacific sales were 30% higher last year thanks to non-recurring revenues from Soccer World Cup rentals in 2002 for more than 3 million EUR. One should note that significant Asian sales relate to studio production, especially for HDTV purposes, for instance in Korea.

EUROPE, AFRICA AND MIDDLE-EAST

AMERICAS

ASIA - PACIFIC


Research & DevelopmentThe group maintained 5.9 million EUR of R&D expenses, which represent 15% of its sales, compared to 17% in 2002. In accordance with the group accounting rules, these costs are not activated but are prudently and completely expensed over the period. Today, more than 55 high level engineers help broadcasters to migrate from tape-based capturing and production processes to non-linear, tape-less and digital based solutions : 40 for TV systems, 13 for radio software and 13 for digital cinema. The future of broadcast will be mostly driven by digital technology changes which allow the viewers more choice, better quality and interactivity. EVS first focus remains customer satisfaction. The strong group vertical integration between local sales/support and centralized R&D allows a quick and reactive product adaptation. EVS R&D priority is to continue the development of a tape-less, high bandwidth and modular production platform which allows editors much more flexibility and quality in delivering the content to the viewers : “Speed-To-Air”. R&D efforts have been pursued on the editing tools which allows our customers to leverage the value of content rights they acquire for instance by creating clips during an event and preparing highlights packages for the following weekly sport magazines. EVS migrates from stand-alone disk recorders LSMs to an integrated production platform.

NETIA prepares the launch of the new version of its Radio-Assist™ software and replaces audio hardware components by software which allows more competitive solutions.

Digital cinema has pursued amongst other the development of the encoding platform which allows more digital content to feed the installed CineStore® server base.

WorkforceIn a tough market, EVS group has wisely stabilised its workforce to an average of 175 persons over the year compared to 183 in 2002. Indeed, in order to adapt the group’s re-sources to existing market realities, the Radio teams have been reduced by 15% while R&D for TV systems has been reinforced with 12 people. The total remuneration cost reaches 10.1 million EUR, which represents 50% of the fix cost base of the group, which employed 177 persons as of 31 December 2003.

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R&D expenses (In million EUR)

Staff (As of 31/12)

Staff breakdown per subsidiary and per department (in full time equivalents) :

Breakdown as General Research & Sales & Production & TOTALof 31 December 2003 Services Development Marketing OperationsEVS Belgium 17 45 14 30 106

EVS European offices 7 7

NETIA 6 21 10 14 51

EVS USA 7 1 8

EVS Hong Kong 5 5

TOTAL 23 66 43 45 177�

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Costs control and resultAs announced, the group has reduced its fix cost base from 20.1 million EUR down to 19.4 million EUR in 2003.

The group’s stocks reach 4.7 million EUR as of 31 December 2003 compared with 6.1 million EUR as of the 1st January 2003. This decrease is partly explained by the additional write-offs on the technically obsolete stock items for roughly 0.8 million EUR.

The operational margin (EBITA) reaches 35% of the operating income in comparison with 21% in 2002, mainly thanks to the improved product mix (more equipments sold, less rentals with lower margins) and to cost control. However, the EBITA margin has reached 33% without taking into account the repayable loan of 1 million EUR granted and paid by the Walloon Region, which compensates R&D expenses and has been recorded in operating income. The group has suffered the negative effect of the weakening of the USD. A quarter of the sales are in USD and half of this total is offset by expenses in USD, which results in a net balance of around 5 to 6 million USD. The group’s coverage policy is to sell 6 or 12 months forward, according to the opportunities in the market, around half of this net balance in USD. Thus, at the end of December 2003, the group was seller of 2.5 million USD for EUR at an average rate of 1.1158 USD/EUR with an average maturity date of June 2004. Net operating profit - net result excluding goodwill amortization and extraordinary items (taking into account tax elements) – amounted to 9.1 million EUR against 4.7 in 2002, i.e. a progress of 93%. The costs relating the friendly takeover bid have amounted to 120 000 EUR. The group’s net profitability, excluding goodwill amortization and extraordinary items, is 22%.

As of 31 December 2003, the residual amortization on the NETIA goodwill (0.9 million EUR) and the balance of the intangible assets of Audio-Follow (0.5 million EUR) have been fully written-off as exceptional amortization.

LitigationAs of 31 December 2003, provisions of 0.4 million EUR reasonably cover various commercial and social ongoing claims or disputes.

Investments

EVS business does not require heavy equipment investments. The total net book value of equipment, machines and vehicles amount 1.12 million EUR as of 31 December 2003.

The group's policy is to own its buildings and to finance them through long term loans. A new 3 200 m² building has been inaugurated in April 2003 in Liège for a gross cumulative investment of 4.8 million EUR, partly financed on net equity. As of 31 December 2003, the net book value of lands and buildings is 7.4 million EUR in Liège and Montpellier. Buildings are financed by mortgage loans and regional or European subsidies. Investments in tangible assets were 2.4 million EUR in 2001, 3.0 in 2002 and 1.7 in 2003 mainly in the context of several new buildings and offices. For 2004 however, no new building investment is planned and regular equipment investment should not exceed 1 million EUR.

The remaining balance of goodwill relating to the NETIA acquisition in 1999, that is the Netia goodwill and the intangible assets acquired by NETIA, have been fully written-off as of 31 Decembre 2003.

EVS has reorganised its stakeholding in FAR, its subsidiary active in acoustic panels and sound speakers, and has been diluted from 49.95% to 39.0% thanks to a third party refinancing.

Cash flow and own shares

The net cash position as of 31 December 2003 reaches 11.6 million EUR which is made of 14.6 million EUR cash at banks and 2.3 million EUR of own shares (92 658 own shares valued at their historical acquisition price of 24.76 EUR) after deduction of 5.3 million EUR of long term debt. Valuing own shares at current share price of 39 EUR, the net position would have been 12.9 million EUR. The net cash flow from operations has been approximately 11 million EUR partly offset by investment made early 2003 in the new building (2 million EUR) with own cash.

The General Shareholders Meeting of 20 May 2003 has cancelled 63 952 own shares, or 2.2% of its share capital.

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Net profit from operations (In million EUR)


The Board of Directors has convoked an Extraordinary General Meeting of Shareholders next Tuesday 24 February 2004 in order to decide on a share capital reimbursement of 3 EUR per share, i.e. 8.4 million EUR, or 8.1 million taking into account the non-reimbursement to the own shares. Since its launch, 10 years ago, EVS has self-financed its growth and has paid-out a dividend representing 30% of its yearly net current result. As of 31 December 2003, net equity before result allocation amounts some 27.8 million EUR, including 16 million

EUR of share capital, and total assets exceeds 41 million EUR. The bank debt / equity ratio is rather low at 0.18. This proposal optimizes significantly the return on invested capital and allows the continuation of the profitable growth path. Effective payment date will be not earlier than mid-May with coupon # 6. The Board may take a decision on a further dividend relating to 2003 before the end of April. As of 31 December 2003, the group held 3.3% of its own capital (92 658 shares).

Own shares buy-back and annual dividend (In million EUR)

OWN SHARES BUY-BACK

DIVIDEND/REIMBURSEMENT

IFRS EVS group anticipates the obligatory conversion of its consolidated accounts to IFRS/IAS standards and publishes the reconciliation of 2003 net current result from operations, in million EUR :

Belgian GAAP 9.1Government repayable loans (taxable) -0.9

Direct and indirect production costs capitalisation in inventories -0.4

Capitalisation and amortization of R&D costs +0.3

Exchange result on balance sheet and forward contracts revaluation -0.7

Deferred taxes +0.5

Miscellaneous -0.1

IFRS 7.8

What leads to a fully diluted earning per share IFRS of 2.9 EUR, based on 2 800 000 shares less 92 658 own shares, which are compensated in the net equity. Based on the same IFRS principles of reclassifying own shares by offsetting them against the net equity and offsetting the tangible assets against the related investment grants, the IFRS consolidated net equity amounts 24.6 million EUR compared to 27.8 million EUR under the Belgian GAAP. These reconciling items are detailed in the appendices to the consolidated annual accounts.

Outlook 2004The recent advertising market upturn is a positive sign for the overall 3 billion EUR broadcast equipment market in 2004, after 2 years of rather poor investment levels. That should directly benefit to the 3 business segments of the group : TV, Radio and Cinema. However, each segment deals with different market positioning and challenges. TV systems are expending in mobile production trucks and into studio environments. More and more High Definition content will be produced and proposed to viewers for an affordable price. A recent US consumers survey highlights the

viewers preference for movies and sports to be available in HD format. EVS will directly or indirectly benefit from the large 2004 sport events : Athens’ Olympics, Soccer EuroCup in Portugal. Radio softwares should benefit from the market upturn after its 40% decrease over 2 years, what led to tough pricing competition. EVS will take proper action to bring this business unit back to profitability or minimize its impact.

For digital cinema in 2004, EVS will work out value creating business models which fit the combined needs of theater owners, distributors, producers and advertising sales agencies.

The order book as of 1 January 2004 amounted to 6.4 million EUR and orders for 3.7 million EUR have already been received during January. The global order book by the end of January 2004, at the 2003 results annoucement date, was 14% below last year but that one included nearly 2 million EUR for some large projects with very long delivery periods.

For the year 2004, dependent on the overall economic climate and the USD currency evolution, EVS will pursue its profitable growth.

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Conflict of interest proceduresThe Board Meeting of 4 September 2003 approved the management contracts and the fees for the 3 founders of EVS in compliance with article 523 of the “Code des Sociétés” (law for commercial companies). “In the absence of the interested parties, the Board has taken note of the unanimity of the recommendations of the Remunerations Committee which met on 14 March 2003. The Board considers that the remunerations agreed with effect from 1 January 2003 are reasonable and in keeping with market practice in comparable listed companies, and for the type of functions exercised. Finally, in accordance with article 523 of the “Code des Sociétés”, the auditor has been informed of the conflict of interest”. The total of the remunerations and emoluments given in 2003 by the EVS group to the members of the Board of Directors totals 928 thousand EUR compared with 806 thousand EUR in 2002.

The Board Meeting of 28 October 2003 ratified the agreement reached between Cytindus S.A. and the Executive Committee, aimed at assigning to Cytindus S.A. the mission of “Investment Banker” for pursuing and successfully concluding the negotiations with Vitec plc based on a price of 35 EUR per share. “The payment to Cytindus S.A. does not include any fixed element, but solely a lump sum in the event of the operation being a success. Under the terms of the power of proxy given by Cytindus, Cytindus has instructed its representative not to vote on this resolution. Jacques GALLOY, its representative for that meeting, is not therefore taking part in the vote on this specific resolution. In accordance with article 523 of the “Code des Sociétés”, the auditor of the company is being informed of the conflict of interest”.

MiscellaneousDuring the last financial year, the auditor of the parent company, ERNST & YOUNG, Reviseurs d’Entreprises S.C.C. (B160), represented by Philippe PIRE, and the companies with which it has a professional collaboration connection carried out consultancy services totalling 49 760 EUR for the following services : assistance within the context of drawing up the consolidated accounts, tax advice, diagnostic mission for the switch to IFRS/IAS accounting standards, assistance in a due diligence within the context of a takeover bid and various other services. Moreover, the remuneration received by ERNST & YOUNG S.C.C. for its mandate as auditor for the 2003 financial years totals 23 155 EUR.

The Extraordinary General Meeting of 20 May 2003 has renewed the authorization of own shares buy-back, according to specific timing and conditions, that is for 18 months. This buy-back policy is intended to smoothen and sustain the stock trades, to improve its liquidity but also to illustrate its truth in the company’s future. Most buy-backs have been performed in the framework of the liquidity provider agreement which has been initiated with the brokerage firm Delta Lloyd Securities since 1 February 2003. The same General Meeting has cancelled 63 952 own shares. As of 31 December 2003, EVS held 3.3% of its own capital, that is 92 658 shares valued at the closing date price (32.00 EUR) to 3.0 million EUR. The Board of Directors will propose to the upcoming 18 May 2004 General Meeting to renew this authorization for a period of 18 months.

The same General Meeting has decided, in the context of the company stock option plan, to delegate to the Board Members the choice between issuance of new shares or grant of own shares in the case of option ex-ercise. As of 31 December 2003, 81 000 out of 150 000 issued warrants in favour of staff had been granted.

The Board of Directors, Liège, 26 April 2004


Shareholding (as of March 25, 2004)

Situation as it appears from the last official ownership statements received by the company and the own shares situation as of 25 March 2004 :

Shareholders Number of shares in % in % diluted (with 81 000 issued warrants)

Linked shares DTV 994 030 35.5 34.5

Pierre L’Hoest and family 4 000 0.1 0.1

Laurent Minguet and family 4 000 0.1 0.1

Michel Counson 809 0.03 0.03

Own shares 92 658 3.3 3.2

SUB-TOTAL linked shares 1 095 497 39.0 37.9

CYTINDUS S.A. 137 200 4.9 4.8

ING Group 106 859 3.8 3.7

BGL Investment Partners S.A. 150 056 5.4 5.2

Deutsche Bank AG 146 274 5.2 5.1

Public and miscellaneous 1 164 114 41.6 40.4

Granted warrants 2.8

TOTAL 2 800 000 100.0 100.0

DEVELOPPEMENT TECHNOLOGIQUE VIDEO S.A. (DTV) is a holding company, which purpose is the management and financing of companies in which it holds a stake. It is owned equally by Pierre L’HOEST, Laurent MINGUET and Michel COUNSON. ING Group (former BBL) is a large international bank which has accompanied EVS during its continued growth since 1997. CYTINDUS S.A. is an investment company essentially owned by Michel DELLOYE and founded in 1997 with the purpose of investing in expanding companies, actively contributing to their long-term management. BGL INVESTMENT

PARNERS (BIP) is an investment company listed on the Luxembourg Stock Market. It is specialised in the development financing of strong growth companies located in the large neighbouring region of Luxembourg. Deutsche Bank is a large German bank.

On 25 March 2004, there are 779 154 registered shares of which 694 029 are owned by DTV, 85 000 by CYTINDUS S.A. and 125 by seven other shareholders. There are 2 020 846 bearer shares and 275 000 physical bearer shares.

EVS Broadcast Equipment S.A.

MinguetFamily

L'HoestFamily

MichelCounson

Public ING/BBL Cytindus BIP DBANK Issuedwarrants

DTV S.A.

Own shares

0.1%

2.8%38.3% 3.7% 4.6% 7.6% 5.1%

0.1% 0.1% 34.5% 3.1%

33.3%

33.3%

33.3%


Profit allocation policy

The Board of Directors examines the results of the last financial year and proposes at its Annual General Meeting to distribute those profits in the best interest of the company and its shareholders. Bearing in mind the legal restrictions on profit distribution, the Board of Directors can propose a dividend policy that will respect the company’s investment and acquisition requirements. In the IPO prospectus of October 1998, EVS announced dividends of around 30% of consolidated net profit from operations. The healthy financial structure has permitted EVS to comply with its commitment as illustrated on the following chart :

The Extraordinary General Meeting of 24 February 2004 has decided to reimburse a portion of the subscribed share capital to the shareholders for 3 EUR per share. This payment corresponds to 90% of the net profit from operations of the year 2003. This decision underlines the company good health and its capacity to generate and distribute yearly profits while investing for the future.

Dividends are payable at following financial institutions :

FORTIS BANK S.A.

Montagne du Parc, 3

1000 Brussels

Belgium

ING Bank S.A.

Cours Saint-Michel, 60

1040 Brussels

Belgium

DELTA LLOYD SECURITIES S.A.

Kipdorp, 10-12

2000 Antwerpen

Belgium

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Dividend or reimbursement per share (EUR)

% of net operating profit from operations


Stock market report

Stock market and listing

EVS shares are quoted continuously on EURONEXT Brussels and are part of the FTSE ™ “253. Electronic Equipment“ sub-sector, which also includes companies such as THOMSON, BARCO or PHILIPS. The company was listed on the first market of the Brussels Stock Exchange in October 1998 at a

price of 37.2 EUR. EVS has been selected to be part of the “Next Economy“ segment, which includes companies such as MOBISTAR, BARCO, or TELINDUS. The company must publish its accounts according to IFRS/IAS standards in 2005 at the latest but EVS is ready yet for this adaptation and publishes its 2003 results according to these accounting standards.

EVS share and indexesAfter the euphoric period of 1998 and 1999 which followed the EVS IPO, the valuation of the company has returned to a more reasonable P/E (Price Earning Ratio) : this has in fact moved from 39 (31/12/98) to 27.5 (31/12/99), to 10.7 (31/12/01) then to 11.0 at the beginning of 2004. Over the 2003 financial year, the maximum value achieved by the price was 34.54 EUR on 30 October 2003 and the minimum value was 17.80 EUR on 27 March 2003. Assessing the stock price evolution since the IPO, it returned to a more reasonable level in 1999. The EVS stock price did not experience the widespread soaring seen by the technology and media companies

during 2000, but, by contrast, suffered the market fall in September 2001, even though its fundamentals were continually increasing. Over the period between 14 October 1998 and 10 March 2004, the BEL20 fell by 18%, the Dow Jones Euro Stoxx Technology™ and Nasdaq indexes gained 6% and 29% of their value respectively, while EVS increased by 7%. EVS did not profit from the soaring markets in 2001 although compared with the highest point of the markets on 10 March 2000, EVS has lost only 6% of its value compared with -73% for the Dow Jones Euro Stoxx Technology™ index and -60% for the American Nasdaq index. EVS is emerging as a small cap with profitable growth.

Stock market price evolution & Earning ratio (P/E)

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— STOCK MARKET PRICE EVOLUTION

— EARNING RATIO (P/E)�

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Velocity and liquidity providing In the course of 2003, around 36% of the company shares have been exchanged. An average of 4 600 shares have been daily traded on Euronext, which represents a 128% improvement compared to 2002. With a free float of 40% at the end of 2003, EVS has a high adjusted velocity of 78%, also in progress compared to 2002.

Annual Average daily Standard Adjusted traded volume volume velocity(1) velocity(2)

1999 630 095 2 864 22 % 63 %

2000 552 939 2 513 19 % 55 %

2001 314 982 1 432 11 % 31 %

2002 443 630 2 017 15 % 44 %

2003 1 014 976 4 600 36 % 78%

1Q 2004 7 600

(1) Standard velocity represents the annual volume traded on the stock market and expressed as a percentage of the total number of shares of the company (2 863 952 until 21 May 2003, 2 800 000 beyond).

(2) Adjusted velocity represents the annual volume traded on the stock market and expressed as a percentage of the unidentified float (around 35 % until 2002, then 46% in 2003 and 41% mid-March 2004).

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Average daily volume The strong growth in the daily liquidity of the share is explained by the combination of the upturn in the financial markets and the extra fame acquired by EVS due to the takeover bid by Vitec plc at the end of 2003. From a daily volume of 2 000 shares before autumn 2003, the stock has been trading, since the announcement of the end of the negotiations, in average volumes of 5 000 to 7 000 shares, which is very positive for the shareholders.

In order to further improve the liquidity of the stock and avoid any overly large fluctuations of the price, a liquidity provider agreement permanently guarantees a maximum spread between the bid price and the offer price of less than 4% and ensures a presence of orders when the market opens. EVS has been collaborating with the broker Delta Lloyd Securities as a new market maker since 1 February 2003 for a renewable one-year period contract. This stockbroker is also responsible for the acquisition and transfer of own shares within the limits fixed by the General Meeting of 20 May 2003.

Compared evolution of stock price since IPO dated 14 October 1998 (base 100) :

— EVS

— DJ STOXX TECHNO

— NASDAQ

— BEL20

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Active financial communication

EVS is relatively active though its financial communication policy. In addition to an “investors area” within the group portal site at www.evs-global.com, the representatives of the company regularly participate in roadshows and company presentations to institutional investors or panels of private investors. In 2003, EVS took part in 12 events or roadshows in Brussels, Antwerp, Amsterdam, Paris, London, Luxemburg and New York.

The “investor relations” part of the group website gives access to general information on the company and its products, and also to the financial information published since the IPO in 1998, the rules of corporate governance and the annual reports. One page is also dedicated to the reports and opinions of the financial analysts who monitor the stock.

Shareholders calendar

- Coupon # 6 ex-date for share capital reimbursement (upon decision by EGM 24/02) : 18 May 2004

- Q1’04 results : Thursday May 6, 2004

- Ordinary and Extraordinary General Meetings : Tuesday May 18, 2004

- 1H’04 results and analyst meeting : early September 2004

- Q3’04 results : November 2004

- 2004 results and analyst meeting : mid-February 2005

All legal documents are available at the company head office or our website. If you wish being informed about the events EVS takes part in or to receive e-mail news, please contact :

EVS Broadcast Equipment S.A. C/o Jacques GALLOY Director & CFO16 rue du Bois Saint Jean, 4102 OugréeBelgiume-mail to : [email protected]

20. 010001100101111100011010010 0110100 EVS [ Products and markets ] 21.

Products and markets

During its first 10 years, the group has experienced significant growth in all its business sectors, particularly in its original business, the hard disk recorder, which has evolved to become the XT production platform. EVS is tapping new markets, such as television production studios, as well as the cinema, which is also “on the way to digitisation”. The products designed by EVS are intended for niche markets – they have high added value and are manufactured in small batches. A particularly dynamic and creative R&D department continues to strengthen EVS position in the forefront of technology. Since its creation, EVS has established itself as an indispensable player in the market for the television broadcasting of sporting events. The Live Slow Motion (LSM) system has revolutionised the broadcasting of sporting events since the beginning of the 1990s and has become a globally recognised professional standard.

Today, in a strong position due to its experience in this sport market and following the successful launch of the XT technology which allows its LSM systems to be networked, EVS has developed a comprehensive range of products aimed at eliminating the final reasons for using video recorders in the production of sporting events : EVS in fact offers an integrated production system which manages the entire work process, from acquiring the video signals from the cameras to distributing these images, including editing them and archiving them. The XT production platform is particularly appropriate for near-live productions.

EVS occupies a choice position in the mobile production market. Thus, the lift-off of High Definition productions in pioneer countries such as the USA and South Korea offers good prospects for EVS. Compared with the usual TV images in Standard Definition (SD), which have between 350 000 (NTSC – USA, Japan) and 400 000 (PAL – Europe, Australia) pixels per image, the HD images have more pixels per image (for example 1 920 x 1 080, namely 2 million pixels). An HD image requires around 6 times more bandwidth than an SD

image but it increases significantly the vision comfort. Currently, 80% of the cameras used in sports broadcasts are still controlled by cassette recorders. In the recent productions in High Definition, this ratio falls to 60%, or even 40%. EVS is consolidating its leadership in mobile HD production facilities thanks to its XT integrated platform and all related applications.

EVS has also extended its video product range to the production and distribution markets for TV programmes – whether direct (Live Broadcast) or differed (Automated Play-out). The CleanEdit software allows the efficient and rapid editing of compressed images within the context of a journalistic news room or a sports broadcast. The DVB servers allow the application of the “MPEG-2, all the way through” concept, which is particularly attractive for “digital bouquets”.

With its NETIA subsidiary, an important player in digital radio and radio automation software, the EVS group is extending its expertise into the contribution network technique, automation and Internet services. The R&D teams exchange their know-how and work in perfect synergy. The NETIA automation software has, moreover, been integrated into the EVS DVB servers, thus offering a global play-out solution.

CineStore® is a family of high definition servers, designed especially for the cinema market. Traditional projectors using the 35 mm film are gradually going to be replaced by more efficient digital servers and projectors. EVS is contributing to this revolution through the development of a range of servers which, when combined with the appropriate control software, are perfectly suited to the demands of cinema professionals, from the producer through to the cinema operator. The international presence of the EVS group and the quality of its products, combined with its after-sales service record, are the principal factors in a constant growth. Thanks to these assets, the company is developing a diversification strategy based on an ambitious R&D programme.

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HD equipment growth in TV equiped households (In thousands units)

ASIA-PACIFIC

AMERICAS

EUROPE, AFRICA AND MIDDLE-EAST

EVS designs, manufactures and markets digital equipment and automation software aimed at radio and television professionals : Broadcasters.

Source: IMR Research


TV integrated production systemsThe XT technology

In 2002, at the launch of the LSM-XT, EVS not only offered the 3rd generation of its slow motion server but it also put on the market a comprehensive range of products aimed at eliminating the final reasons for using tape recorders in the production of sport events.

Today, in fact, EVS offers an integrated production system which manages the entire work process, from acquiring the video signals from the cameras through to distributing these images, including editing them and archiving them. All these products are based on the XT technology which principal characteristic is the networking of the various elements. The XT production platform is a response to the demands of the market and at the same time offers efficiency and flexibility.

Furthermore, thanks to this XT technology and bandwidth expertise, the entire EVS product range is compatible with the High Definition television (HDTV) formats.

This integrated production system, the XT production platform, which was previewed at the International Broadcasting Convention (IBC) in Amsterdam in September 2002, was widely exploited in 2003 at numerous international sporting events, such as Wimbledon, the Tour de France, the Champion’s League and, more recently, at the final of the Super Bowl in the United States.

1. LSM-XT, slow motion and editing server

The LSM-XT (Live Slow Motion XT), linked with the Multicam software, combines unprec-edented speed and flexibility. The LSM-XT operator can configure the system in normal mode (25/30 images per second) or in Super Motion mode (75/90 images per second), or combine the two, since a Super Motion cam-era can be connected at the same as one or two standard cameras on a 5- or 6-channel LSM-XT. The LSM Super Motion is able to fully record this signal and the played-back resolu-tion achieves the highest level. The LSM-XT is a powerful 6-Channel system with the ability to record up to 5 sources simultaneously. In

High Definition, a LSM XT HD records up to 2 cameras. The LSM-XT becomes even more versatile with networking capability in SportNet, becoming a fully integrated production environment. All recorded material from any device on the network can be accessed from anyone on the same network for editing or playback, instantly.

2. maXS, universal production server

Interesting module of the XT platform, maXS is a compact 4-channel production server that can be controlled by all standard broadcast industry protocols (SONY, LOUTH, ODETICS, THOMSON or EVS). It can replace 2 VTRs effortlessly in a mobile unit or in a studio. Yet the SportNet SDTI networking option enables automatic archiving and opens the door to the EVS integrated live production system.

3. AirBox XT

Airbox is a cost effective, user-friendly video server with multi-channel configurations for integrated play-list management - a “play-out studio in a box”. Applications range from simple clip storage to more sophisticated play-out capabilities, including the ability to control an external VTR and switcher. It can be used for news or entertainment productions with the ability to build and roll a play-list for unattended or night broadcast. The AirBox replaces the need of several VTRs at a fraction of the cost with the many added advantages of a non-linear video server. The Airbox XT HD is appreciated for near-live productions and is selected by early adopters of HD equipment.


4. AirEdit XTAirEdit features a continuous recording loop with live editing capabilities which allows the addition or removal of content to/from a live program. Applications for the AirEdit server include time delay, content control (censor-ship) and automated or manual commercial insertion.

5. SpotBox XTSpotBox is identical to the AirBox , without the operator interface. It is designed for integration into an automated play-out architecture, under the control of 3rd party automation systems. The use of a multi-channel disk recorder for such applications allows the replacement of several VTRs to complete the same operation with much more efficiency and ease, especially for record/playback of commercials, news or short sequences.

6. XFile, digital archiving on removable hard drive.

The biggest stumbling block for the transition to a tape-less environment has been the need for a removable media source. Currently, recorded video tape material is transported back to the studio for further editing and/or archival purposes.

In addition, pre-built material such as graphics, commercials and transition effects need to be loaded during preproduction, which again is transported via video tape.

The XFile is a storage system on removable hard drive which is networked on the SportNet SDTI network as LSM XTs or maXS XTs are. Each clip which is created on the network servers with the XFile is automatically stored on the hard drives. As soon as the event is complete, the hard drives can be removed and sent on to the next event and back to the studio. One removable drive can store up to 17 hours of standard definition video. The XFile allows EVS products to open a door of the studios, which is a rather new and promising market for EVS.

Production Workflow


7. XBrowse, Digital browsing station with SDI output

The media that was archived out in the outside production truck (stadium) by the XFile can now be restored in the XBrowse in the studio (broadcast centre). All the archived clips can at this stage be used within the broadcast center for other applications and talkshows. Accordingly, pre-built clips in the studio or in the talkshow can also be archived on the XBrowse and can be exported back to the mobile production truck to be restored in the XFile and then being used by the LSM XTs during a live production.

8. SportServer, digital media server, Non Linear Editing (NLE) and playout

At the end of a sport game, it is usual to display the highlights of the ending game. EVS SportServer is networked to the XT platform and allows these highlights. Installed on site, the SportServer automatically collects all action that are captured on the LSM-XT and maXS servers via SportNet. All actions are indexed in the SportServer internal database. Additional indexing tools leverage the application with additional information like metadata. Thanks to the non-linear editing software CleanEdit-S, the operator starts indexing and editing as the game has just started. This allows a quick availability of highlights as soon as the game ends.


The EVS group offers a wide range of products that has been developed to provide its customers with tailor-made solutions.

1. Production and playout servers

The television industry is facing a real technology revolution in which videotape is being progressively replaced by digital solutions. In some countries, such as the United States and Australia, some legal decrees have been issued forcing broadcasters to digitise their operations within a certain deadline. This forces even the most reluctant TV stations to make the move to digital.

The EVS catalogue contains a family of broadcast servers based on the JPEG technology but also based on MPEG2-DVB® standards, associated with control software which perfectly meets the new digital TV stations (DTV).

Besides the networked XT servers, here is a list of the many applications linked with the EVS servers.

Little Big One : MPEG2 Multi-channel server : The Little Big One server can support up to 64 channels of play-out in a single device, from a shared disk base, in order to create large multi-channel installations. The servers are capable of operation through control of 3rd

party broadcast automation systems, which is specially aimed at Pay-TV operators.

Delay : The EVS Delay application manages programs in their original transport stream format, recording programs for playback with user-programmable delays. A multiplex of several programs is handled as a single feed, resulting in dramatic cost savings. This system is particularly used for TV broadcasting for various time zones (e.g. in Australia).

DTV-Assist : is a multi-channel and multi-operator play-out control system, based on the Netia product, Radio-Assist™. One or more EVS servers, driven by the DTV Assist play-out control software, offers a completely integrated broadcast solution including options for VOD (Video On Demand), NVOD (Near Video On Demand or Pay Per View) and Pay-TV. Additional features such as advanced access rights management and multi-language support ensures maximum flexibility and operator efficiency at low cost.

U-Share : U-Share is a private automated system for data exchange (video, audio, etc.) between remote sites. This network operates independently of all data transmission networks (ATM, satellite, terrestrial network, etc.). The national broadcaster, France 3,

TV production and broadcast solutions

DTV Assist : a full solution for digital broadcast


already uses this product for transmitting video reports and local news between its regional production centres via IP or DVB® network. The entire network now achieves maximum efficiency for a minimal investment thanks to the flexibility and special DVB® functions of the EVS server.

2. CleanEdit – Non-linear editing system for news rooms

Today’s television programming mostly consists of pre-recorded material, for which broadcasters rely heavily on videotape technology. This linear format can be limiting but today’s digital disk technology offers an attractive alternative with its flexible non-linear format. In the last few years, there has been a mass scale move towards these disk-based systems and EVS is riding the wave with a wide range of cost effective solutions.

CleanEdit is a fully customisable software application for non-linear audio / video editing of news items or sport content. Installed on standard PC workstations, users can be editing live feeds or using archived material. All sources and jobs can be shared between multiple operators.

CleanEdit has been designed through the combined efforts of engineers and computer programmers specializing in audiovisual techniques and professional video editors and journalists alike. This team has taken into account the working methods as applied in different services and departments handling information in a television station. The CleanEdit application illustrates EVS know-how in the compressed digital video streaming process : the non-linear editing of MPEG2 long GOP format.

The CleanEdit environment therefore consists of different types of machines connected via a network : CleanEdit editing stations enable browsing and viewing of all available media and the creation of edits in either high or low resolution. Media servers store the audio, video and still sources used by the editing stations. Database server permanently records and manages the work of all users as well as the functional parameters of the system. Playout server reproduces, in high resolution and in real time, the edits finished on the editing workstations and declared ready to go “to air”. Encoders digitise both the high and low resolution video simultaneously using common time code reference for the video feeds coming in from press agencies, tapes or from any other available video source.


3. Mosaics Mosaics allow several video signals to be displayed simultaneously on a single display with layouts that are selectable by the user. Applications for mosaics include barker channels for cable and satellite providers as well as monitor walls in control rooms.

SuperSplit : The EVS SuperSplit can display up to 64 non-synchronized video sources, in real time, on a single video monitor. The SuperSplit uses customized layout patterns and advanced graphic tools to create attractive and functional multi-channel displays.

Digiquad : The Digiquad displays 4 non-synchronized video signals, in real time, on a single video monitor. It is the perfect add-on piece of equipment for the EVS LSM disk recorder for displaying video sources and program and preview channels on a single monitor.


NETIAThe increasing number of thematic radio programmes requires a new organisation of the workflow. Digital technology offers valuable services in terms of productivity and flexibility in using the equipment and software : unlimited editing from an original document, immediate access to a bank of sound data from a studio, secure digital storage, etc. The process is simplified and the functionalities are easily updated in line with the technological advances. There is also demand for automated global solutions in the market. Satellites, communication data, “on-air” systems, advertising systems, administrative systems – the demand keeps on growing. New requirements are appearing. Whereas the distribution used to be exclusively FM/AM, the radio broadcasters, and even the public authorities, are now envisaging terrestrial, satellite or internet digital radio projects. The requirements are evolving in line with the technological advances.

Radio-Assist 7.5™, the new generationSince 1994, the Radio-Assist™ digital product range has been developed under Windows. It covers all the requirements : from recording to storage, through processing, scheduling and distribution. The latest version, Radio-Assist 7.5™, from now on under Windows 2000, Windows 2003 and Windows XP, will be launched in April 2004 in Las Vegas, at the important NAB (National Association of Broadcasters) international exhibition.

Radio-Assist 7.5™ exhaustively covers all the activity of the radio station, with the arrival of significant products such as Script for processing dispatches and the

new “Multipiste” (Multitrack) whose design fits perfectly with the sound creation and production work. Another fundamental software innovation is that Radio-Assist 7.5™ leaves the choice of audio card up to the radio station.

ScriptNETIA is launching Script, the new dispatch-processing tool from the Radio-Assist 7.5™ range. Script respects the operating principle of newsroom. The acquisition of the dispatches from various sources (satellite, modem or any other method) is based on a protocol defined by the various suppliers. Script is compatible with the standard protocols on the market (AFP, REUTERS, AP, BLOOMBERG, IRN, etc.). Script can simultaneously receive several news services in both Arabic and Latin characters. The system offers a high level of integration between the text processing and the associated sounds, such as the insertion, with a simple “Drag & Drop” into the texts, of one or more sounds to be broadcast.

MultitrackNETIA offers a new Multitrack tab for production. The major success of this product is that it has combined the multitude of facilities provided by digital audio today in order efficiently to meet the specific needs of the generalist radio stations in production matters. The Multitrack function facilitates the construction of a mixing from several tracks. Each track independently has all the editing and mixing tools (recording, independent fade and panning curves for the clips and for the tracks, stretching a sequence, mastering a sequence, Mute or Solo function, etc.). Following demand from users, NETIA has integrated numerous quality

Management solutions for Radios

Today, any decision-maker in a generalist or musical radio station is aware of the strategic and economic challenge of digitising his company. Video tapes, like cinema films, deteriorate over time. They entail either additional financial costs for the radio stations or, eventually, the inevitable loss of the sound elements.


sound effects : equaliser, compressor, reverb, breath reducer, etc. Based on the highly regarded ergonomics of the Info Editing tool, Multitrack from Radio-Assist 7.5™ provides a fully generalised “Drag & Drop” function, and the movements from one track to another and the sequence alterations are done with a simple mouse click. Likewise, the user selects the sequences directly on the fly. To facilitate the user’s work, NETIA has designed the Multitrack interface by integrating an automatic enlargement of the work area, scroll function from the screen, left and right mouse click, and keyboard shortcuts.

The NETIA R&D department is launching a very fast and very reliable sound conversion and compression software version. Radio-Assist 7.5™ no longer requires the presence of professional Digigram cards; the range operates today with all Direct X compatible audio cards. With this software development, NETIA is giving its customers a major financial advantage. From now on, each radio station will be able to equip itself with the audio cards of its choice, according to its technical and financial constraints.

FAR OBS loudspeaker

Studio designed and manufactured by FAR

FAR digital audioFAR, a 39% subsidiary of EVS, designs, manufactures and distributes active loudspeakers to sound professionals in around twenty countries. FAR also designs audio studios, acoustic panels and prefabricated studios. Applications range from radio and television channels to post-production, dubbing and recording studios.


Solutions for Digital cinemaCineStore®, from post-production to screen

The quality remains identical everywhere, even when projecting the same film indefinitely. Since the film has become a data file, it can be transported across any digital medium. The hard disk or the digital cassette which weighs around 300 g is an advantageous replacement for the film reels weighing more than 30 kg. The satellite becomes the perfect and instantaneous means of distributing the films to the cinemas where the content is automatically recorded by the server. The film can then be played many times over before being replaced by the next one.

Since 1999, EVS has developed a range of products called CineStore® which offers much more than distribution only : data encryption following the example of pay TV broadcasts, digital subtitling of films, conditional management of content, and encoding and quality control of films. The operator no longer suffers from the lack of availability of 35 mm copies. He can also count on additional revenues by broadcasting major events live, such as concerts and sporting events. In a word, digital technology will bring outstanding flexibility to the entire industry. The CineStore® Alfa meets the specific needs of the post-production studios for the preparation of the original digital copies, while the CineStore® Solo is configured for projection in a single-screen cinema.

Today, there are just over 200 theaters equipped worldwide with a total potential of more than 100 000 to be equipped. With around 30% of the servers installed, from Brazil to China, and including Europe and the United States, EVS Digital Cinema is asserting itself as one of the key players in server technology and continues to consolidate its presence on the world market. The Kinepolis

group, which is well known for its innovative spirit and its state-of-the-art technology, has adopted EVS servers to equip the first European network operational in 2K DLP Cinema™ format. For the deployment of its digital network, the English leader in art-house cinemas, Arts Alliance, has also selected EVS.

In order to supply its cinema servers, EVS has sold and deployed a series of encoding stations : in the Hua Long studio in China, at Filmteknik in Sweden, at TeleImage in Brazil, which is one of the five most important post-production houses in the world, and many other reputable companies.

The advent of digital cinema is inescapable and EVS is already acknowledged by the cinema industry as one of the key players. EVS is in permanent contact with the DCI (Digital Cinema Initiative), a consortium of the 7 majors which generate 70% of the world box office. The DCI confirms its willingness, moreover, to reach a definition of the recommendations and specifications for digital cinema. This study is in progress and it is aimed not only at standardising the tools but also at establishing a viable economic model for all the players in the digital cinema chain. The true lift-off of digital cinema will be in 2005-2006, but even today certain initiatives by 250 to 500 cinemas illustrate the progress being made by the players in this market.

Sit back… Relax… And enjoy the show !

By digitising at high resolution films which are reproduced with a hard disk recorder or server and a digital projector, notably using DLP Cinema™ technology developed by Texas Instruments, we today achieve an image whose quality surpasses 35 mm film in many respects : no more scratches, dust or even image flickering.

Digital cinema server

30. 010001100101111100011010010 0110100 EVS [ EVS worldwide ] 31.

EVS worldwide

. 010001100101111100011010010

Subsidiaries and branches

EVS FRANCE S.A.France • Paris 99.76 %

EVS ITALIA SRLItaly • Milan 95 %

EVS BROADCAST UK LTDUK • London 100 %

EVS BROADCAST EQUIPMENT LTDHong Kong 99.99 %

EVS ASIA – PACIFIC BRANCHHong Kong

EVS BROADCAST EQUIPMENT INC.USA • New York & Los Angeles 100 %

FAR S.P.R.L.Belgium • Liège/Huy 39.00 %

MECALEC SMD S.A.Belgium • Liège 49.50 %

NETIA S.A. France • Montpellier 99.99 %

NETIA BENELUX BRANCHBelgium • Liège

NETIA INC.USA • New York 100 %

Professional tradefairs 2003

AES Berlin, Germany

AV Kontact Dagen Hilversum, The Netherlands

BIRTV Beijing, China

CineAsia Bangkok, Thailand

Cinema Expo Amsterdam, The Netherlands

Cannes' Festival Cannes, France

GEMEX Dubai, UAE

IBC Amsterdam, The Netherlands

I-DIFF Monaco, France

Interbee Tokyo, Japan

Le Radio! Paris, France

NAB Las Vegas, USA

NAB Digital Cinema Summit Las Vegas, USA

TRBE 2002 Moscow, Russia

Satis Paris Paris, France

ShowEast Orlando, USA

ShoWest Las Vegas, USA

Subsidiaries and branches

EVS FRANCE S.A.

Las Vegas

Orlando

Rio de Janeiro

New York

Los Angeles

30. 010001100101111100011010010 0110100 EVS [ EVS worldwide ] 31[ EVS worldwide ] 31.0110100 EVS [ EVS worldwide ] 31[ EVS worldwide ] 31

199

4-200

4

10YEARS

Paris

Cannes

Monaco

Berlin

AmsterdamMoscow

Beijing

Tokyo

Bangkok

Sydney

Dubai

Johannesburg

Milan

London

Montpellier

Hong Kong

Liège

32. 010001100101111100011010010

0110100 EVS [ General information ] 33.

General information 34


Consolidated financial statements 40

Auditor’s report 40

Consolidated income statement 41

Consolidated balance sheet 42

Appendices and comments 44

Reconciliation of the 2003 accounts between the Belgian standards and the IFRS 53

Consolidated cash flow statement 54

Parent company financial statements 57

Statutory management report 58

Statutory income statement 59

Statutory balance sheet 60

Appendix 62

Glossary 63

www.evs-global.com

34. 0110100 EVS [ General information ] 35.

1. Identity and object of the company

1. 1. Incorporation

EVS Broadcast Equipment S.A.Liege Science ParkRue Bois St-Jean, 16B-4102 Ougrée-LiègeLiège Trade Register n° 186.341 VAT : BE 452.080.178.

EVS Broadcast Equipment S.A. was incorporated for an unlimited term on 17 February 1994, in the form of a joint-stock company governed by Belgian law. EVS is a company which does or has made public calls for sav-ings. The financial year begins on 1st January and ends on 31st December of each year.

1.2. Public information The company’s financial statements are filed with the “Banque Nationale de Belgique”. Statutes and special reports required by the “Code des Sociétés” may be

obtained from the Commercial Court Registry in Liège. These documents, as well as annual statements and any written information to shareholders are also available at the company’s registered office. Financial information is available on the web site www.evs-global.com.

1.3. Object of the company The object of the company is : “development, market-ing and exploitation of audiovisual equipment as well as, more generally, any operations of a general, com-mercial, industrial, financial, fixed or movable property nature, in Belgium or elsewhere, directly or indirectly relating to the processing of pictures and sound, in whatever possible form. The company may have inter-ests in any sort of way in any sort of businesses, firms or companies having identical, analogous, similar or con-nected aims or which could further the development of its activities, supply it with raw materials or facilitate outlets for the company’s services.”

2. Common stock and own shares

2.1. Issued capital, number and types of shares

On 31 December 2003, EVS share capital amounted to

16 000 000 EUR, consisting of 2 800 000 fully paid shares

without nominal value.

Moreover, on 7 September 1999 and 16 May 2000,

80 000 warrants were issued to staff members of the

EVS group. The Extraordinary General Meeting of

21 May 2002 issued 70 000 additional warrants to reach

a total number of 150 000. On 31 December 2003,

81 000 of these warrants were granted, none has been

exercised yet.

The Annual General Meeting of 24 February 2004

decided on a repayment to shareholders of EUR 3 per

share, namely a total of 8.4 million EUR or 8.1 million

EUR excluding own shares for which no repayment will

be made.

2.2. Authorized capital In accordance with decisions of Extraordinary General

Meetings of 25 September 1998 and 7 September 1999,

the Board of Directors is authorized to increase the

share capital in one or more instalments up to a maxi-

mum of 15 000 000 EUR, including share premium. This

authorization is valid for a period of 5 years, on and after

the date of official publishing of the proceedings on 7

September 1999. These increases in capital will be able

to be realised through cash subscriptions, contributions

in kind or incorporation of reserves. Within the limits of

this authorisation, the Board of Directors will be able

to issue bonds convertible into shares or application

rights, in observance of the provisions of articles 489

and 496 and following of the “Code des Sociétés” (law

for commercial companies) and the Board will be able

to limit or withdraw the preferential application right of

shareholders, including in favour of one or more given

persons, according to the procedures which will be fixed

by the Board and, if need be, subject to observance of

the provisions of articles 595 and following of the “Code

des Sociétés”. The Board of Directors is expressly entitled

to use the authorised capital under the conditions set

down in article 607 of the “Code des Sociétés” in the

event of a takeover bid after receipt of the communica-

tion made by the Commission for Banking, Finance and

Insurance according to which a notice of a takeover bid

concerning the company has been referred to it, in so far

as this receipt occurs within three years of the holding of

the Extraordinary General Meeting of the twenty-fifth of

September nineteen hundred and ninety-eight.

2.3. Staff incentive programme As mentioned under 2.1., a warrants allotment policy

has been established in order to develop staff loyalty

and to allow them to participate in the company’s prof-

it. During 1999, 2000, 2001, 2002 and 2003, 81 000 war-

rants have been allotted at the underlying share value

corresponding to the market price of the day before

the allotment. Their average exercise price is 19.83 EUR.

Their average maturity date is 2 January 2006 and the

maximum maturity date is 20 December 2008.

As of 31 December 2003, 15 000 warrants with a strike

price of 32 EUR were exercisable but since the value on

31 December 2003 was 32 EUR they were logically not

General information

34. 0110100 EVS [ General information ] 35.

exercised. The “in-the-money” warrants, in other words those which strike is lower than 32 EUR, are exercis-able in October 2004 at the earliest and in later years according to the legislation of the countries involved. The shares thus issued will have the same rights as the existing shares. At the time of the NETIA buyout in 1999, EVS had undertaken to continue the staff incentive scheme in force at NETIA at the time. This means that EVS had undertaken to exchange one EVS share for one

NETIA share subscribed for by the employees valued at 15.24 EUR. Overall, this involved 24 750 EVS shares exchanged at the rate of 15.24 EUR between 1 Octo-ber 2002 and 30 June 2003. As of 31 December 2002, 4 960 EVS own shares had already been exchanged for the benefit of some NETIA employees in return for them subscribing for NETIA capital and the remaining, namely 19 790 shares, were exchanged during the first half of 2003.

The 81 000 allotted warrants are represented as follows as of 31 December 2003 :

Date of Number of Grant Exercise Exercise Granted # Grant

issue issued warrants date price (EUR) period Warrants(1)

07/09/1999 40 000 Sept 99 32 Aug 03 – Nov 06 8 900 1 Dec 99 32 Aug 03 – Nov 06 1 950 2 Dec 99 32 Oct 02 – Dec 05 15 000 3 Dec 01 14 Dec 05 – Nov 07 3 400 416/05/2000 40 000 Dec 01 14 Dec 05 – Nov 07 17 750 5 Oct 01 14 Oct 04 – Nov 07 10 000 6 Dec 01 14 Nov 04 – Nov 07 13 000 721/05/2002 70 000 Dec 02 14 Nov 05 – Nov 08 10 000 8 Juil 03 21 Dec 07 – Dec 08 1 000 9

Total 150 000 81 000

(1) 6 350 warrants were granted to people who left the group in the meantime (at the end of December 2003) and have therefore lost their warrants – The deduction of these warrants is included in the total of 81 000 warrants.

Given that no warrant had been exercised as at the day of the Extraordinary General Meeting of 20 May 2003, this meeting decided a slight alteration to the condi-tions of exercise of the warrants in order to make them more flexible but without altering their value. Thus “the Board of Directors will be able to choose between the issuing of new shares and the allotment of own shares previously acquired by the company”. EVS intends to pursue this policy of staff participation to its capital.

2.4. Own shares buy back Following the Extraordinary General Meeting of 20 May 2003, article 8bis, paragraph 2, first dash of the statutes has been modified as follows: “The Board of Directors is authorized (…) during 18 months as from the date of publication of the appendices to the “ Moniteur Belge” of the decision of the Extraordinary General Meeting dated 20 May 2003, to buy and sell on the stock market maximum 10% of the total number of fully paid shares of the company in exchange for the market price ac-cording to the conditions of article 620 of the “Code des Sociétés”.

The Board of Directors initiated this policy of own shares buy back in order to support the market price and to show its confidence in the future of the company. The Board considers this buy back a good investment due to the undervaluation of shares.

The Extraordinary General Meeting of 20 May 2003 can-celled some of the own shares issued by the company: “In the context of the buy-back of own shares initiated in 2000, cancellation of 63 952 own shares with no face value to bring the total number to 2 800 000”. Thus, as of 31 December 2003, the company owned 92 658 own shares (3.3%) for a value of 2 294 267 EUR, based on the historical average purchase price of 24.76 EUR at the closure date.

2.5. Movements in share capital The company was founded on 17 February 1994, with a capital of 30 986.7 EUR, consisting of 1 000 shares, and has developed as follows :

36. 0110100 EVS [ Corporate governance ] 37.

Number of shares Capital (in BEF) Capital (in EUR)

17/02/94 Constitution + 1 000 + 1 250 000 + 30 986.7 25/04/96 Incorporation of reserves - + 3 650 000 + 90 481.1

1 000 4 900 000 121 467.8 25/04/96 Issuing of 100 shares + 100 + 490 000 + 12 146.8 at 36 000 BEF per share, + 3 110 000 + 77 094.9 including a share premium of 31 100 BEF

1 100 8 500 000 210 709.5 06/06/97 Incorporation of reserves - + 9 780 000 + 242 439.9

1 100 18 280 000 453 149.4 06/06/97 Issuing of 172 shares + 172 + 2 858 296 + 70 855.3 at 175 000 BEF per share + 27 241 704 + 675 304.2 including a share premium of 158 382 BEF

1 272 48 380 000 1 199 308.9

25/09/98 Stock split in the proportion of 2 000 2 544 000 48 380 000 1 199 308.9 14/10/98 Quotation on stock market + 200 000 + 3 803 400 + 94 283.8 Incorporation of share premium + 296 196 600 + 7 342 521.9

2 744 000 348 380 000 8 636 114.607/09/99 Issuing of 119 952 shares + 119 952 + 290 331 101 + 7 197 120.0 for exchange with NETIA shareholders Incorporation of reserves + 6 727 299 + 166 765.425/05/03 Own shares cancellation - 63.952 - -

Capital on 31 December 2003 2 800 000 645 438 400 16 000 000

As an event after the closing date, it should be pointed out that the Extraordinary General Meeting of share-holders of Tuesday 24 February 2004 decided on a capital repayment of 3 EUR per share, namely around 8.4 million EUR, or 8.1 million EUR excluding own

shares for which no repayment will be made. In ob-servance of the rights of the creditors of the company, the actual payment of coupon number 6 takes place 2 months after the publication of the repayment decision in the “Moniteur Belge”.


The ING SA board member, a shareholder represented by Arnaud Laviolette, appointed on 25 September 1998 for a 6-year term, resigned on 27 June 2003. The Board coopted as a replacement a third independent Board member, Mr Pierre RION, whose appointment will be proposed at the General Meeting of 18 May 2004. Mr. Laurent Levaux resigned at the Board Meeting of 10 February 2004 and LYS Conseil sprl, the company he represents, was coopted at the same Board Meeting.

Board of Directors as of 31/12/03

Francis BODSON (56) (1) Director since September 25, 1998. Francis Bodson is Deputy Managing Director of CANAL+ Benelux and is also the Head Engineering of Canal+ Belgium since its start in 1988. He was Director of Engineering at the RTBF (“Radio Télévision Belge de service de la Communauté Française de Belgique”) for fifteen years (1973-1988). He graduated as a civil engineer in electronics at the Uni-versity of Liège and is specialized in acoustics.

Christophe CARNIEL (37) Director since September 7, 1999, Christophe CARNIEL is currently the Managing Director of NETIA. In 1993, he founded NETIA with Pierre KEIFLIN. He holds an engi-neer degree from the “Ecole des Mines” in Alès (France). Prior to founding NETIA, Christophe Carniel worked for three years as Project Manager for a company respon-sible for the development of interactive record playing terminals, ordered by FNAC stores.

Michel COUNSON (43) (2)

Chairman of the company since it was founded in 1994. He graduated in 1982 from the “Institut Electronique”

in Liège. He started his career as a hardware engineer

in 1983 with TECHNIQUE DIGITAL VIDEO S.A. before

founding his own company in 1986, VIDEO SYSTEM

ENGINEERING S.P.R.L., working in partnership with EVS

on numerous projects. Working beside Pierre L’HOEST

and Laurent MINGUET, he is part of the management

team of the EVS group and is Manager of the hardware

department.

CYTINDUS S.A – Michel DELLOYE (47) (3)

Director of EVS since June 1997, represented by Michel

DELLOYE. Michel DELLOYE runs his own investment

management company. From 1992 to 1996 he was the

Managing Director of the “Compagnie Luxembour-

geoise de Télédiffusion” (CLT-UFA, now RTL Group), the

largest European TV and radio broadcasting company.

He previously worked in various positions (Financial

Manager, General Manager,…) for the Bruxelles Lam-

bert Group (GBL).

Jean DUMBRUCH (52)

Jean Dumbruch graduated as an engineer in electron-

ics. He has been playing an active role in the company

since it was founded. He is Director of several compa-

nies and is now the company’s administrative Director.

Jacques GALLOY (33) (2)

Director since May 21, 2002, Jacques GALLOY is Chief

Financial Officer of EVS. He is a commercial engineer

from HEC Liège and worked for Coopers & Lybrand in

Luxemburg and then for RTL Group as Financial Con-

troller of RTL Netherlands and Business Development

Manager TV & Radio prior to joining EVS.

The Management Committees of EVS group are conti-nuously adjusted to the growth of the company. Thanks to the structures, EVS respects the recommendations of the Commission for Banking, Finance and Insurance as regards the Corporate Governance. The growth of the group required the creation of new group-wide func-tions, strategic and products co-ordination committees by range of products

1. Board of Directors

A Board of Directors, whose members are appointed for a term of 6 years maximum, runs the company. On 31 December 2003, the Board of Directors is made up of 10 members, their mandates expire on the following dates :

Appointment date Term of mandate

Michel COUNSON, shareholder, Chairman 25.09.98 May 04Laurent MINGUET, shareholder, Managing Director & CEO 25.09.98 May 04Pierre L’HOEST, shareholder, Managing Director & CEO 25.09.98 May 04S.A. CYTINDUS, shareholder, represented by Michel Delloye 25.09.98 May 04Francis BODSON, Independent Director 25.09.98 May 04Jean DUMBRUCH, shareholder, Executive Director 07.09.99 May 05Christophe CARNIEL, shareholder, Executive Director 07.09.99 May 05Laurent LEVAUX, Independent Director 27.12.00 May 06Jacques GALLOY, Executive Director & CFO 21.05.02 May 08Pierre RION, Independent Director coopted in June 2003

Corporategovernance Francis BODSON

Christophe CARNIEL

Michel COUNSON

Michel DELLOYE

Jean DUMBRUCH

Jacques GALLOY

Laurent LEVAUX

Pierre L’HOEST

Laurent MINGUET

Pierre RION


Laurent LEVAUX ( 48) (1) (3) Director since December 27, 2000, Laurent LEVAUX is the Managing Director of ABX Logistics Group and lec-turer (Corporate Strategy) at HEC (Hautes Etudes Com-merciales) of Liège. He is also Director in other Belgian companies. He holds a degree in Applied Economics from the University of Louvain (Belgium) and a MBA from the University of Chicago. He occupied different positions in Mc Kinsey & Co and was CEO of CMI Group during 7 years.

Pierre L’HOEST (45) (1) (2) Managing Director of the company since it was founded in 1994. He graduated from the “Académie d’Architecture” (Academy of Architecture) in Liège as an architect specialized in computer processing and 3D modelling. Since 1984, he acquired a broad expertise in video simulation production. He was involved in the foundation of EVS in 1994 following the purchase of the company’s assets and is Head of the Research and Development department together with Michel COUN-SON and is also supervising Production and European Sales.

Laurent MINGUET (44) (2) Managing Director of the company since it was founded in 1994. He graduated in 1982, as a physicist engineer from the University of Liège, specialized in digital analysis. With Pierre L’HOEST he contributed to the creation of EVS in 1994. He is in charge of the D-Cinema department and supervises the Sales outside the European Union.

Pierre RION (44)Pierre Rion is co-founder of IRIS Group of which he is today the Honorary President. Pierre RION is a qualified electronics and computing civil engineer from the Uni-versity of Liège. He is also on the boards of some other Belgian companies, including Parc Paradisio and the Fondation Roi Baudouin.

(1) Member of the Compensation Committee (2) Member of the Executive Committee (3) Member of the Audit Committee

How the Board of Directors worksAccording to the company’s statutes, decisions are taken by a majority vote but, up to now, decisions have been taken on the basis of general agreement between the present Directors. At each Board Meeting, or en-closed with the convocation, the members are provided with various documents: reportings, operating reports, investments memorandum, written information re-garding items on the agenda. In 2003, the Board met 10 times and discussed the following matters: R&D and products developments, follow-up of the subsidiaries, own shares buy back and contract with a liquidity pro-vider, examining acquisition and partnership projects, budget for 2004, preparing press releases, preparation of General Meeting.

The audit of the company and consolidated accounts of

EVS Broadcast Equipment S.A. is carried out by ERNST &

YOUNG, Reviseurs d’Entreprises S.C.C. (B160), represent-

ed by Philippe PIRE, Partner. The remuneration received

by ERNST & YOUNG in 2003 totals 72 915 EUR for all its

services within the context of its mandate (23 155 EUR)

and also outside its mandate (49 760 EUR).

Each Director receives remuneration of 2 500 EUR

per year, plus a fixed amount each time they attend a

Board Meeting : 125 EUR (travelling within Belgium) or

500 EUR (travelling abroad). Besides a total of 17 500

warrants allotted to two of them with executive func-

tions, none of the Directors benefits of any stock op-

tions or any other advantage connected or otherwise

with the company’s performances. The total amount

of remuneration paid in 2003 by the EVS group to the

members of the Board of Directors comes to 928 thou-

sand EUR. It mainly represents the remuneration paid to

the executive Directors. In 2003, there was no unusual

transaction between the Directors and the company.

As of March 31, 2004, as it appears from the last state-

ments received by the company and the last modifica-

tion of the shareholders’ register, the members of the

Board of Directors held, directly or indirectly, 1 140 039

shares out of a total of 2 800 000.

2. Committees set up by the Board of Directors

The Board of Directors of 6 February 2002 created an

Audit Committee and a committee for appointments

and remuneration.

2.1. Audit Committee The chairman of the Audit Committee is Laurent

LEVAUX, Independent Director, and the two other

members are Jacques GALLOY (to replace ING SA, rep-

resented by Arnaud LAVIOLETTE, having resigned) and

Michel DELLOYE. This committee assists the Board of

Directors in his responsibilities as regards integrity of

financial information for the company and in particular

supervising the financial reports, the internal audit, the

external audit and the relations between the company

and its shareholders. The Audit Committee met twice in

2003, in presence of the company’s Auditor.

2.2. Compensation Committee The committee for remuneration is chaired by Francis

BODSON, Independent Director, assisted by Laurent

LEVAUX and Pierre L’HOEST. This committee assists

the Board of Directors in his responsibilities as regards

establishment of remuneration for the leaders and

managers of the company. This committee met once

during 2003.


3. Day-to-day management

The Board of Directors has delegated the day-to-day management to the following committees :

3.1. Executive CommitteeAn Executive Committee coordinates the follow-up and the development of the company and the businesses. It meets once or twice per month, is informed of the financial situation of the group, the sales, the projects and takes operational decisions like the engagement and the disengagement of personnel or the closing deals.This committee is composed of the two Manag-ing Directors Pierre L’HOEST and Laurent MINGUET, of Michel COUNSON, Chairman, also in charge of Hard-ware division and of Jacques GALLOY, in charge of finance and Business Development of the group.

The Executive Committee regularly requires specific competences from the group, in particular with (non-exhaustive list): Fredéric GARROY, General Manager North and South America, Luc DONEUX, General Man-ager Asia & Pacific, Jean DUMBRUCH, group’s Adminis-tration Manager, Christophe CARNIEL General Manager of NETIA, Pierre KEIFLIN, General Manager of NETIA and other members of EVS and NETIA committees.

Two Management Committees follow-up the opera-tional activities of the French and Belgian Companies :

3.2. Management Committee EVS S.A. : Yves ROLUS (Marketing), Henry ALEXANDER (Sales), Jacques GALLOY (Finance and Business Development), Thierry DELBROUCK (Production), Bernard STAS (Prod-ucts), Jean-Noël GOOR (R&D Broadcast Solutions), Lau-rent CHAMPON (R&D XT), Fréderic LEMINEUR (Human Ressources), Pierre L’HOEST (Management) and Laurent MINGUET (Management and D-Cinema).

3.3. Management Committee NETIA S.A. : Xavier DEVYNCK (Export Sales), Véronique PUYAU (Ad-ministration and Finances), Nikolaus SEIDEL (Product Manager Radio), Daniel DEDISSE ( R&D Production Radio), Nicolas MILLE (R&D Broadcasting Radio), Eric COCQUEREZ (R&D Television), Christophe CARNIEL (Management) et Pierre KEIFLIN (Management).

The Management Committees meet once or twice a month and take decisions on matters related to the company’s internal organization. Points already raised include : - standardization and review of salary policy, - finalization of appraisal process and documents for

employees, - improving internal communication (information for

the staff,…), - reorganization, relocation of new premises and coor-

dination of the new buildings.

Excluding the three Directors of these committees : - total gross remuneration paid in 2003 to the mem-

bers of the Management Committees amounted to 965 thousand EUR,

- total number of warrants held by these members amounts to 38 450 as of 31 December 2003.

3.4. Operational management of the subsidiaries and the business units

Three business units of the group (TV, NETIA & Digital Cinema) are managed in an autonomous way and the commercial subsidiaries of the group serve these busi-ness departments. The Board delegates to the subsidi-aries the powers to their operational working.

It should be noted that NETIA, principal operational sub-sidiary and the most important in terms of manpower (51 people) of the group and whose registered office is located in Montpellier in France, is mainly managed by its two founders, Christophe CARNIEL and Pierre KEIF-LIN. The financial functions are integrated at the level of the group and Christophe CARNIEL is also part of the Board of Directors of EVS. The Board of Directors of NETIA, is composed of Pierre L’HOEST (Chairman), Chris-tophe CARNIEL, Pierre KEIFLIN, Laurent MINGUET, Jean DUMBRUCH, Michel COUNSON and Jacques GALLOY. Pierre L’HOEST (Chairman), and Jacques GALLOY follow more specifically the evolution of NETIA subsidiary.

The commercial subsidiaries are easily controlled, because their activity is entirely dependent on EVS Broadcast Equipment S.A. from Liège (Belgium) or from NETIA France (Montpellier) : delivery of promotional material, presence on the fairs, delivery of machines or spare parts, cash management. The members of the Board of Directors of those subsidiaries are composed of the Directors of EVS Broadcast Equipment S.A. Board and possibly the local management of these subsidiar-ies. This choice of organization allows a very effective communication at the level of the group as well as a fast decision-making. The commercial policy of the group is co-ordinated by headquarters. Since 2003, a “TV” man-agement committee, bringing together the managers from the parent company and those in charge of the offices abroad, meets every 5 months to put forward and take operational actions. The same applies to the “Digital Cinema” business unit under the supervision of Laurent MINGUET.

40. 0110100 EVS [ Consolidated financial statements ] 41.

Consolidatedfinancial statementsStatutory auditor’s report on the consolidated financial statements for the year ended De-cember 31, 2003 to the shareholders’ meeting of EVS Broadcast Equipment S.A.

In accordance with legal and regulatory requirements, we are pleased to report to you on the performance of the audit mandate which you have entrusted to us.

We have audited the consolidated financial statements as of and for the year ended December 31, 2003 which have been prepared under the responsibility of the Board of Directors and which show a balance sheet total of (000 EUR) 41 161 and a consolidated profit for the year of (000 EUR) 6 277. We have also examined the consolidated directors’ report.

Unqualified audit opinion on the consolidated financial statements

We conducted our audit in accordance with the standards of the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren”. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, taking into account the legal and regulatory requirements applicable to consolidated financial statements in Belgium.

In accordance with those standards, we considered the group’s administrative and accounting organisation, as well as its internal control procedures. We have obtained explanations and information required for our audit. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing accounting principles used, the basis for consolidation and significant accounting estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion the consolidated financial statements give a true and fair view of the group’s assets, liabilities, con-solidated financial position as of December 31, 2003 and the consolidated results of its operations for the year then ended, in accordance with the legal and regulatory requirements applicable in Belgium and the information given in the notes to the consolidated financial statements is adequate.

Additional certifications and information

Furthermore the consolidated directors’ report contains the information required by law and is consistent with the consolidated financial statements.

By this report and in accordance with article 523 of the Company Law, the Board of Directors informed you of its decisions taken during its meetings dated September 4, 2003 and October 28, 2003.

During the meeting dated September 4, 2003, the Board of Directors approved the management agreements and the remunerations of the 3 founders of EVS in accordance with the article 523 of the Company Law. In the absence of these concerned persons, the Board took unanimously notice of the recommendations of the Remuneration Committee, which took place on March 14, 2003. The Board considered that the agreed remunerations are reason-able and correspond to the market practice in comparable listed companies, and for that kind of functions.

During the meeting dated October 28, 2003, the Board of Directors ratified the agreement concluded between CYTINDUS SA and the Executive Committee, with the aim to entrust the mission of “business banker” to CYTINDUS SA to pursue and to achieve the negotiations with Vitec plc on the basis of a price per share of 35 EUR. The remu-neration of CYTINDUS SA included no fixed part but only a fixed success fee. The contract with CYTINDUS SA was finally not signed, and, the operation having not succeeded, no fee was paid to CYTINDUS SA in this quality of “busi-ness banker”. The decision had consequently no financial effect for the company.

Liège, May 2, 2004Ernst & Young Reviseurs d’Entreprises S.C.C. (B 160)

Statutory auditor represented by Philippe PIRE, Partner


Consolidatedincome statement (In thousands EUR)

Appendix 2001(1) 2002(1) 2003(1)

I. Operating Income 35 417.0 37 271.3 40 411.5 A. Turnover 34 735.9 36 350.5 39 121.7 B. Increase (+)/Decrease (-) in Stocks of Finished Goods, Work and Contracts in progress 183.4 -120.7 48.8 C. Other Operating Income 497.7 1 041.5 1 241.0

II. Operating Charges -26 384.6 -29 518.6 -26 257.4 A. Raw Materials, Consumables and Goods for Resale 7 488.3 9 453.3 6 863.1 1. Purchases 7 889.8 10 320.5 6 170.2 2. Increase (-)/Decrease (-) in Stocks -401.5 -867.2 -692.9 B. Services and other Goods 7 602.8 6 536.4 6 864.6 C. Remuneration, Social Security Costs and Pensions XIV.A. 9 540.0 10 761.4 10 092.5 D. Depreciation of and other amounts written off on Formation Expenses, Intangible and Tangible Fixed Assets 1 430.7 1 378.6 1 406.5 E. Increase (+)/Decrease (-) in Amounts written off on Stocks, Contracts in progress and Trade Debtors 176.8 1 001.4 746.2 F. Increase (+)/Decrease (-) in Provisions for Liabilities and Charges -25.0 150.9 128.5 G. Other Operating Charges 171.0 236.6 156.0

III. Operating Profit 9 032.4 7 752.7 14 154.1

IV. Financial Income 603.7 2 036.4 1 883.1 A. Income from Financial assets - - - B. Income from Current assets 58.0 51.1 158.8 C. Other Financial Income 545.7 1 985.3 1 724.3

V. Financial Charges -3 359.0 -4 315.1 -3 674.5 A. Interests and other Debt Charges 291.4 297.0 298.4 B.1. Amounts written off on positive Consolidation Differences 2 302.3 2 303.0 1 799.6 B.2. Amounts written off on positive Consolidation Differences (Equity Method) 37.4 37.4 13.9 C. Increase (+)/Decrease (-) in Amounts written off on Current Assets - 4.2 -130.7 D. Other Financial Charges 727.9 1 673.5 1 693.3

VI. Profit on Ordinary Activities before Taxation 6 277.1 5 474.1 12 362.7

VII. Extraordinary Income XIV.B. 89.1 180.7 806.2 A. Adjustments to Amounts written off on Consolidation Differences 76.1 - - B. Adjustments to Provision for Extraordinary Liabilities and Charges - - - C. Gain on Disposal of Fixed Assets - 20.0 - D. Other Extraordinary Income 13.0 160.7 806.2

VIII. Extraordinary Charges XIV.B. -749.5 -922.9 -1 779.0 A. Extraordinary Depreciation of and amounts written off on Formation Expenses, Intangible and Tangible Fixed Assets 4.5 17.6 597.0 B. Extraordinary Amounts written off on positive Consolidation - 37.4 952.4 C. Amounts written off on Financial Fixed Assets 631.8 1.3 - D. Other Extraordinary Charges 113.2 866.6 229.6

IX. Profit for the Financial Period before Taxation 5 616.7 4 731.9 11 389.9

X. A. Transfer from deferred Tax and latent Taxation Liabilities(+) 7.8 42.1 23.0 B. Transfer to deferred Tax and latent Taxation Liabilities (-) - - -

XI. Income Taxes -3 503.3 -2 779.3 -5 146.8 A. Income Taxes -3 503.3 -2 813.0 -5 162.3 B. Adjustment of Income Taxes and write-back of Tax Provisions - 33.7 15.5

XII. Profit for the Financial Period 2 121.2 1 994.7 6 266.2

XIII. Share in the Result of the Enterprises accounted for using the Equity Method 21.1 9.9 10.5 A. Profit 21.1 9.9 10.5 B. Loss - - -

XIV. Consolidated Profit 2 142.3 2 004.6 6 276.6 A. Share of Third Parties 0.5 0.0 -0.1 B. Share of the Group 2 141.8 2.004.6 6 276.7

(1) Consolidated income of EVS S.A., EVS USA, EVS Hong Kong, EVS France, EVS Italy, EVS UK and NETIA.


Consolidatedbalance sheet (In thousands EUR)

Assets Appendix 2001 2002 2003

Fixed assets 12 559.9 11 708.8 8 923.0

I. Formation Expenses VII. 3.6 1.7 -

II. Intangible Assets VIII. 925.3 676.6 52.5

III. Positive Consolidation Differences XII.A. 4 999.8 2 696.7 -

III. Positive Consolidation Differences (Equity Method) XII.B. 74.7 - -

IV. Tangible Assets IX. 6 240.4 8 023.9 8 636.6 A. Land and Buildings 4 075.9 4 019.6 7 417.5 B. Plant, Machinery and Equipment 195.4 123.8 140.5 C. Furniture and Vehicles 1 088.0 830.6 983.8 D. Assets under Construction and advance Payments 881.1 3 049.9 94.8

V. Financial Assets X. 316.1 309.9 233.9 A. Companies accounted for using the Equity Method 99.6 109.5 173.3 1. Participating Interests 99.6 109.5 173.3 B. Other Companies - - - 1. Participating Interests and Shares - - - C. Cash guarantees and other amounts receivable 216.5 200.4 60.6

Current assets 24 692.3 24 710.0 32 238.2

VII. Stocks and Contracts in progress 5 713.8 6 092.0 4 658.0 A. Stocks 5 713.8 6 092.0 4 658.0 1. Raw Materials and Consumables 2 742.1 3 275.6 2 767.4 2. Finished Goods 2 971.7 2 816.4 1 890.6

VIII. Amounts receivable within one year 13 059.7 9 001.4 10 287.7 A. Trade Debtors 12 034.1 7 040.8 9 346.7 B. Other amounts receivable 1 025.6 1 960.6 941.0

IX. Investments 2 283.7 7 309.5 13 124.7 A. Own Shares 1 554.2 2 738.7 2 294.3 B. Other Investments and Deposits 729.5 4 570.8 10 830.4

X. Cash at Bank and in Hand 3 317.4 2 158.1 3 758.6

XI. Deferred Charges and accrued Income 317.7 149.0 409.2

TOTAL ASSETS 37 252.2 36 418.8 41 161.1


Liabilities Appendix 2001 2002 2003

Capital and reserves 22 499.0 23 406.4 27 809.1

I. Capital 16 000.0 16 000.0 16 000.0 A. Issued Capital 16 000.0 16 000.0 16 000.0

IV. Consolidated Reserves XI. 5 858.7 6 554.3 11 248.3 (1)

VI. Translation Differences 307.0 -251.8 -679.8

VII. Investment Grants 333.3 1 103.9 1 240.6

Minority interests 4.6 3.5 3.5

VIII. Minority Interests 4.6 3.5 3.5

Provisions, deferred taxation and latent taxation liabilities 332.8 853.4 823.8IX. A. Provisions for Liabilities and Charges 75.0 250.6 350.8 1. Other Liabilities and Charges 75.0 250.6 350.8 B. Deferred Tax and latent Taxation Liabilities 257.8 602.8 473.0

Creditors 14 415.8 12 155.5 12 524.8

X. Amounts payable after one year XIII. 4 333.2 5 367.0 4 968.3 A. Financial Debts 4 217.4 5 287.7 4 894.1 1. Credit Institutions 4 217.4 5 287.7 4 894.1 B. Other amounts payable 115.8 79.3 74.2

XI. Amounts payable within one year 8 676.2 6 471.3 7 064.7 A. Current Portion of Amounts payable after one year XIII. 209.7 394.8 394.8 B. Financial Debts 1 716.7 252.7 - 1. Credit Institutions 1 716.7 252.7 - C. Trade Debts 2 924.3 1 920.2 2 452.4 1. Suppliers 2 924.3 1 920.2 2 452.4 D. Advances received on Contracts in progress - 186.2 6.6 E. Amounts payable regarding Taxes, Remuneration and Social Security 2 183.3 2 244.9 3 980.3 1. Taxes 660.7 451.5 1 810.7 2. Remuneration and Social Security 1 522.6 1 793.4 2 169.6 F. Other Amounts payable 1 642.2 1 472.6 230.6

XII. Accrued Charges and deferred Income 1 406.4 317.2 491.7

TOTAL LIABILITIES 37 252.2 36 418.8 41 161.1

(1) The consolidated profit for the year was transferred to reserves. This appropriation of the result does not take into account a possible dividend which could be approved by the Ordinary General Meeting of 18 May 2004.


Appendices and comments

I. List of the consolidated companies and companies included using the equity method

Name and address Year of foundation Staff as Method Part of Change in % or acquisition of 31.12.03 used (1) capital of capital held (in %) (2) held

EVS Broadcast Equipment Inc. 1997 8 F 100.00 0.009 Law Drive, suite 200, FairfieldNJ 070046USA

EVS France S.A. 1998 4 F 99.76 0.00 Avenue Victor Hugo, 45 FR-93534 AubervilliersFRANCE VAT : FR-21.419.961.503

EVS Italia S.r.l. 1999 2 F 95.00 0.00Via Cipro, 96 IT-25124 BresciaITALYVAT : IT-03482350174

EVS Broadcast UK Ltd 1999 2 F 100.00 0.00400 Capability Green GB-Luton LU1 3LUENGLAND

EVS Broadcast Equipment Ltd 2002 5 F 99.99 0.00Room 430, Block D, DB PlazaDiscovery Bay Lantau Island HONG KONG

NETIA S.A. (3) 1999 51 F 99.99 0.00Halle Industrielle de Farjou FR-34270 ClaretFRANCEVAT : FR-00.391.917.341

FAR S.P.R.L. 1999 6 E 39.00 - 10.95Rue Poissonrue, 43B-4500 HuyBELGIUMVAT : BE-454 521 511

MECALEC SMD S.A. 1999 15 E 49.50 0.00Rue Nicolas Fossoul, 54 B-4100 SeraingBELGIUMVAT : BE-467.121.712

(1) F : Full Consolidation, E : Associated Company accounted for using the Equity Method.(2) Proportion of capital of those companies being held by the companies included in the consolidated accounts and persons acting in their own names

but on behalf of these companies. (3) NETIA integrates in its consolidated financial statements a subsidiary company in the United States, NETIA Inc. which address is as follows : 9 Law Drive,

suite 200, Fairfield, NJ 070046 USA.


VI. Valuation rules

1. Parent company valuation rules

1.1. Assets

General information The financial statements are drawn up in line with the Royal Decree dated 30 January 2001 on company finan-cial statements.

Formation expenses, intangible assets and tangible assets Formation expenses, intangible assets and tangible assets are valued at acquisition or production cost and are amortized on a straight-line basis at the following rates :

Items Depreciation rates

Formation expenses 33 % to 100 % Buildings 5 % Architect and specialist costs 33 % to 100 % Vehicles 20 % to 33 % Software and IT-equipment 25 % to 33 % Office equipment and furniture 10 % to 33 % Plant, machinery and equipment 10 % to 33 % Other tangible assets 25 % to 33 %

Stocks Raw materials and consumables, finished goods and goods purchased for resale are valued at the purchase price using the FIFO method, or at market value as of the balance sheet date, if this latter is lower.

Amounts receivable within one year Receivables are stated in the balance sheet at nominal value. Allowance for doubtful accounts is recorded if receivables are completely or partly uncollectible for their nominal value, and written back when they be-come superfluous.

Investments and cash at bank and in hand Investments and cash at bank and in hand are recorded at nominal value.

1.2. Liabilities

Provisions for liabilities and charges Provisions are stated to cover all foreseeable risks and losses the company is likely to encounter.

Amounts payable after more than one year and within one year Amounts payable are stated in the balance sheet at nominal value. Provisions for taxes and social security are booked; the amount of the provision is determined by using the most probable amount.

1.3. Methods for converting assets and liabilities in foreign currency

Foreign currency receivables, payables, investments and cash at bank and in hand are converted at the exchange rate as of balance sheet date and resulting translation differences are included in income statements.

2. Consolidation valuation rules These valuation rules are identical to those of parent company out of the following points :

2.1. General information The consolidated financial statement is drawn up in line with Royal Decree dated 30 January 2001 (previ-ously R.D. dd. 6 March 1990), on consolidated financial statements.

2.2. Scope of consolidation The consolidating company, EVS Broadcast Equipment S.A. and all the subsidiaries it controls are consolidated.

2.3. Balance sheet date Balance sheet date for consolidated financial state-ments is 31st December.


2.4. Method of consolidation The method of full consolidation is applied to all com-panies under direct or indirect control and the equity method is applied to all companies in which EVS holds between 20.00% and 49.99% of the capital or the vot-ing rights.

2.5. Presentation of financial statements Consolidated financial statements are drawn up after appropriation of net income of the consolidating com-pany. Companies included in the scope of consolidation are integrated into the consolidation before appropria-tion of net income.

2.6. Goodwill The group recognizes in its financial statements a goodwill on its investments rated as the difference between the acquisition cost of the investment and the value of the net assets acquired, measured in line with the group’s standard accounting principles.

If the difference is positive, it is appropriated to assets items having a fair market value higher than their book value and to liabilities items having a fair market value lower than their book value. The positive balance re-maining is reflected under the “Positive Consolidation Difference” heading in the assets. To cover the length of time required to concretise the amount paid in good-will (positive consolidation difference), it is marked for 5 year straight-line amortization.

If the difference is negative, it is appropriated to assets items having a fair market value lower than their book value and to liabilities items having a fair market value higher than their book value. The negative balance re-maining is reflected under the “Negative Consolidation Difference” heading in liabilities.

2.7. Method of conversion of the foreign subsidiaries financial statements

The method used for translating the financial state-ments of foreign subsidiaries into EUR is the balance sheet date rate method. The total amount of assets and liabilities of subsidiaries outside Belgium is expressed in EUR at the exchange rate on balance sheet date. Income statements items are converted at the aver-age exchange rate over the financial year. Since both capital and reserves are converted at the historical exchange rate, a translation difference appears in the shareholders’ equity.

2.8. Provision for deferred taxation and latent taxation liabilities

Provisions for deferred taxes and latent taxation liabili-ties are accounted for the tax effect of the temporary differences between the carrying amounts for financial reporting purposes and the amounts used for income tax purposes, as far as these temporary differences are expected to reverse in the near future and will affect taxation. Only deferred tax liabilities are recognized in consolidated financial statements.

2.9. Investment grants and recoverable advances

In accordance with opinion 138/1 of the C.N.C, EVS books in the operating incomes the recoverable ad-vances granted by the Walloon Region to the activities of R&D, and in the operating charges their refunding.

The investment grants obtained from public authorities in respect of investment in fixed assets, are booked at receipt and reported as income in proportion to de-preciation. The amount to be affected is under heading VII. Investment grants, and under heading IXB. Deferred taxes. In accordance with Belgian Generally Accepted Accounting Principles (GAAP), their posting into the income statement is released by allocation to both the items “financial income” and “transfer from deferred taxes”.

3. Future taxation and deferred taxes (In thousands EUR)

Analysis of heading IX.B. of the liabilities 473.0- Deferred taxes 473.0

Deferred taxes amount is mainly accounted for taxes to be paid on grants booked as income in proportion to the depreciation of the related items. These grants have been received from the Walloon Region and from the European Community (FEDER) for the construction of EVS buildings in Liège (Belgium).


VII. Statement of formation expenses (In thousands EUR)

Net carrying value at the end of the preceding period 1.7 - Depreciation of the period -1.7

Net carrying value at the end of the period -

VIII. Statement of intangible assets (In thousands EUR)

Software Licences Goodwill

A. Acquisition cost As at the end of the preceding period 462.8 974.4 Movements during the period : - Acquisitions 38.3 251.8 - Transfers from one heading to another - - At the end of the period 501.1 1 226.2

B. Depreciation and amounts written down As at the end of the preceding period 370.8 389.8 Movements during the period - Recorded over the period 77.8 836.4 At the end of the period 448.6 1 226.2

C. Net carrying value at the end of the period 52.5 -

The acquisition cost of the goodwill is 1 226.2 thou-sand EUR and corresponds to the acquisition in 2000 by the NETIA subsidiary of the business assets of the company Audio-Follow, which specialises in certain distribution software applications for radio channels. The initial value of 823.0 thousand EUR was raised by an initial price increase of 151.4 thousand EUR in 2001 and a second increase was accelerated in 2003 follow-ing a judgment which occurred on 11 September 2003 sentencing NETIA S.A. to pay a final price increase of 251.8 thousand EUR for which 125.9 thousand EUR had already been included in a bank deposit at the end of 2001. Despite the fact that NETIA lodged an appeal against this decision, EVS did however decide to ac-celerate this price increase and to amortize in full the balance of the Audio-Follow goodwill over the 2003 fi-nancial year, namely an amortization of 836.4 thousand EUR including an extraordinary amortization of 591.3 thousand EUR.

Intellectual property Products developed and marketed by EVS group, as well as technology used, are not covered by patents or licenses. In the future, the company will patent any invention, provided that efficient protection can be ensured and provided that registering of the patent is not likely to assist competitors in using technological data developed by EVS group. The company remains convinced that the best protection lies in the continu-ous technological progress of its products. The speed of development in technology and product ranges in the fields in which EVS operates makes any attempt at copying or imitating a fruitless operation. EVS and NE-TIA, however, registered a patent within the European Community, for some key brand names.


IX. Statement of tangible fixed assets (In thousands EUR)

Land Plant, Furniture Assets and building machinery and vehicles under and equipment construction

A. Acquisition cost As at the end of the preceding 5 249.3 572.4 2.974.2 3 049.9 Movements during the period: - Acquisitions 867.2 118.0 661.5 99.4 - Sales and disposals -55.0 - -311.7 -4.6 - Transfers from one heading to another 3 005.7 - 44.2 -3 049.9 - Translation differences - - - - At the end of the period 9 067.2 690.4 3 368.2 94.8

B. Depreciation and amounts written down As at the end of the preceding period 1 229.7 448.7 2.143.5 - Movements during the period: - Recorded 452.5 101.3 533.9 - - Written down after sales and disposals -32.5 -293.0 - Translation differences - - - - At the end of the period 1 649.7 549.9 2 384.4 -

C. Net carrying value at the end of the period 7 417.5 140.5 983.8 94.8

Production of the equipment manufactured and mar-keted by EVS and NETIA does not require important tangible investment. Whenever possible, specialized work is contracted out (i.e. sheet metalwork and manu-facturing of printed circuits). Nor does R&D require any considerable investment, since engineers and program-mers work directly on the machines to be sold or on PC type equipment for the software development. It should be noted that all R&D costs are charged to op-erations as incurred, be they internal or subcontracted.

The group policy is to own its buildings and to finance them with long-term loans. The net value of the land and buildings as of December 31, 2003 amounts to 7 417.5 thousand EUR, it includes:

EVS Building I(16, rue Bois St Jean, Ougrée-Liège-Belgium) 1 293EVS Building II (ex-VSE, 18, rue Bois St Jean, Ougrée-Liège-Belgium) 468 EVS Building III (6, avenue Pré Aily, Angleur-Liège-Belgium) 800EVS Building IV (16, rue Bois St Jean, Ougrée-Liège-Belgium) 3 716EVS Building V(3, Poissonrue, Huy-Belgium) 152 NETIA (Claret, Montpellier-France) 988

Buildings I, II et III are occupied by EVS at Liege Science Park (Belgium) since September 1998 (I et II) and February 1999 (III). Their gross acquisition value is 3 673.7 thousand EUR. Expenditure on these buildings benefited from a grant allotted by the Walloon Region and the European Community (“Objectif 2”) amounting to 1.1 million EUR.

In order to face up its growth, EVS undertook in 2002 in Liege the construction of a new building of 3 200 m2 in Liège near buildings I and II. This building was inaugu-rated on April 29, 2003. The amount of the gross acquisi-tion value is 3 978.5 thousand EUR as of December 31, 2003. A mortgage loan of 2.5 million EUR was accepted at end of year 2001 and a grant similar to these received for the other buildings has been allotted for a amount of 0.9 million EUR.

Long-term debts run between 15 and 20 years. The grants are booked at receipt and reported as income in proportion to depreciation. The amount to be affected is under heading VII. Investment grants, and under heading IXB, Deferred taxes.

In March 2002, EVS acquired a building in Huy/Liège (Belgium) which is rented by its subsidiary FAR. The book value of this building amounts to 176 thousand EUR.

The gross value of the buildings of NETIA amounts to 1 186.0 thousand EUR. These buildings were financed mainly by 15 years leasing of 786.2 thousand EUR.


X. Statement of financial fixed assets (In thousands EUR)

Companies accounted for using the equity method (MECALEC, FAR)

A. Acquisition cost As at the end of the preceding period 227.1 - Acquisitions 53.3 - Sales and disposals - At the end of the period 280.4

B. Changes in stockholders’ equity Share in the result of the preceding period -117.6 Share in the result of the period 10.5 Share in the result at the end of the period -107.1

Net carrying value at the end of the period 173.3

Companies accounted for using equity method

FAR SPRLFAR, based in Huy/Liège (Belgium), develops, manu-factures and sells active monitors (loudspeakers with integrated amplifiers) for professional use in the audio industry. FAR also designs and sells acoustic panels and audio studios for Radio and Television companies, films and recording Companies.

FAR benefits from EVS commercial network, reputation and experience in different fields and also from the ad-vantages of the EVS commercial network.

In 1999, EVS acquired a 49.95% stake in FAR for 315.7 thousand EUR. The book value of FAR was 128.9 thou-sand EUR, i.e. a goodwill of 186.8 thousand EUR, and was totally written off as of 31 December 2002. Following the principle of caution, the value of the stake had been totally reduced (by 128.9 thousand EUR) in order to write off the goodwill value by the end of 2002.

In 2003, the reorganization plan of FAR carried out to a significant workforce reduction and to a focus on the core business of the company.

In September 2003, the company “Société d’Investis-sement du Bassin Liégeois” (S.I.B.L.) acquired a stake in FAR, becoming thus a new shareholder, and EVS converted a debt of 123.0 thousand EUR into capital so the EVS participation in FAR was brought back to 39.0% of the capital. An new goodwill of 69.7 thousand EUR was booked and has been totally reduced in 2003 fol-lowing the same principle of caution. EVS share (39%) in the loss of the year 2003 amounts to - 60 thousand EUR. The net booked value of this participation in EVS con-solidated accounts amounts therefore to 53.3 thousand EUR as of December 31, 2003 and corresponds to the EVS share in the shareholders’ equity of FAR.

MECALEC SMD S.A. MECALEC SMD S.A was founded on 21 October 1999 by S.A. MECALEC (50.5%) and EVS (49.5%). Subscribed cap-ital is 200 000 EUR and therefore, the share of EVS in this company amounts to 99 thousand EUR. This company’s main activity is the manufacturing of electronic boards, using SMD technology. The registered office is based in Boncelles, close to Liège (Belgium). EVS acquired this participation in order to benefit from shorter delivery times on orders for electronic boards. Some synergies in R&D and rework of the production process are on the way.

In 2003, the net profit of MECALEC SMD for its fourth fi-nancial year comes to 21.2 thousand EUR, i.e. in line with the net profit of 2001 of 19.8 thousand EUR. The share of EVS in the results of 2003 of MECALEC SMD amounts to 10.5 thousand EUR.

Guarantees and Deposits

Net carrying value as at the end of the preceding period 200.4Movements during the period: - Additions 0- Reimbursements -132.5- Other -7.3

Net carrying value at the end of the period 60.6

A deposit of 125.9 thousand EUR retained for the litiga-tion between Netia and Audio-Follow (refer to exhibit VIII.) has been released in favour of the opposing party.


XI. Statement of consolidated reserves (In thousands EUR)

Consolidated reserves at the end of the previous financial period 6 554.3Movements during the period: - Shares of the group in the consolidated income 6 276.7- Own shares cancellation (1) -1 527.2- Transfer from reserve to capital - 55.5

Consolidated reserves at the end of the financial period 11 248.3

(1) The Extraordinary General Meeting of 20 May 2003 decided to cancel 63 952 own shares .

XII. Statement of consolidation differences and differences resulting from the application of the equity method (In thousands EUR)

A. Positive consolidation differences (VSE and NETIA)

Net carrying value at the end of the preceding period 2 696.7Movements during the period : - Amortization -2 696.7


As stated in the valuation rules, the consolidation dif-ferences and the differences resulting from the applica-tion of the equity method are amortized over 5 years.

VSEThe company was acquired in 1998 and merged with EVS S.A. on the 1st January 2001 after remaining shares were bought in December 2000. The goodwill amount-ed to 2 917 thousand EUR and is totally amortized as of 31 December 2003.

NETIA In 2000, the goodwill of NETIA (acquired on 1st July 1999) increased by 457 thousand EUR. These items have been amortized pro rata temporis as from the date of acquisition. The balance, i.e. 2 691 thousand EUR, has been fully amortized in 2003. On top of the an-nual straight-line amortization of 1 794 thousand EUR, an extraordinary amortization of 897 thousand EUR has been decided in order to fully write off the goodwill as of December 31, 2003.

(In thousands EUR) Goodwill First Amortization Net value consolidation 2003 on 31 December date

VSE 2 917 01/01/98 5 -NETIA 8 971 01/07/99 2 691 -

B. FAR’s differences resulting from the application of the equity method

Net carrying value at the end of the preceding period -Movements during the period : - Variation following the conversion of an amount receivable into capital 69.7- Ordinary amortization -13.9- Extraordinary amortization -55.8


As mentioned in the comment of appendix X., in September 2003, EVS converted its loan of 123.0 thousand EUR to its subsidiary FAR into capital. Therefore, an new goodwill amounting to 69.7 thousand EUR was booked and totally amortized in 2003 with an extraordinary amortization of 55.8 thousand EUR in order to totally write off the goodwill of FAR.


XIII. Statement of amounts payable (In thousands EUR)

A. Analysis of the amounts originally payable after one year Less than Between Over 5 1 year 1 and years 5 years

Financial debts 1. Credit institutions 394.8 2 094.2 2 799.9

Other debts - 74.2 -

TOTAL 394.8 2 168.4 2 799.9

B. The amounts payable, or the portion thereof, which are guaranteed by real guarantee given or irrevocably promised on the assets of the companies included in the consolidation, amounts to à 3 542.0 thousand EUR. These are financial debts towards credit institutions.

XIV. Workforce

Fully consolidated Companies

Period Preceding Period

Average number of persons employed 160.4 175.1- Workers 4.5 4.0- Employees 155.9 171.1

Workforce charges (In thousands EUR) - Remuneration and social charges 10 092.5 10 761.4

Average number of persons employed in Belgium 90.9 94.0

This table does not include Directors and interim workforces.

XIV.B. Extraordinary items

2003

Breakdown of extraordinary revenues, if significant - Recovery of write-downs on own shares (1) 591.9- Triumph dispute (2) 153.2- Miscellaneous extraordinary revenues 61.1

Breakdown of extraordinary costs, if significant - Extraordinary amortization of the balance of the Audio-Follow goodwill - 591.3- Extraordinary amortization of the balance of the Netia consolidation difference - 897.1- Extraordinary amortization of the balance of the FAR equity method difference - 55.8- Netia restructuring (3) - 110.0- Netia staff incentive (4) - 53.7- Miscellaneous extraordinary costs - 71.1

Extraordinary items - 972.8

(1) The 92 658 own shares held by EVS are valued at their historical average price of 24.76 EUR per share. At the end of 2002, a write-down was passed to take into account the fact that the closing price (EUR 20.0) was lower than the historical rate. This was reversed on 31 December 2003.

(2) Compensation obtained following the amicable settlement of the commercial dispute between NETIA Inc. and the U.S. company Triumph.(3) This amount represents the cost of the restructuring of NETIA workforce which was decided at the end of 2002 and which resulted in a reduction in NETIA

staff, which decreased from 63 people in 2002 to 51 people in 2003.(4) This amount corresponds to the cost of the undertaking made by EVS towards the NETIA employees to exchange one EVS share for one NETIA share sub-

scribed for by them and valued at 15.24 EUR: this subscription took place within the context of a NETIA staff incentive scheme granted in 1998 and guar-anteed by EVS at the time of the NETIA takeover in 1999. This is the cost for EVS of the 19 790 shares which were exchanged during the first half of 2003.


XV. Rights and commitments not reflected in the balance sheet

A.1. Amount of personal guarantee, given or irre-vocably promised by the Companies included in the consolidation, as security for third parties’ debt or commitment. Bank guarantees for an amount of 291.0

thousand EUR were mainly asked as part of international

public tenders.

A.2. Amount of actual guarantee, given or irrevo-cably promised by the Companies included in the consolidation on their own assets, as security for debts or commitments to these companies. Mort-

gage proxys amounting 4 287.3 thousand EUR have

been given for the loans financing the buildings.

B. Commitments relating to technical guarantee, in respect of already provided sales or services. EVS

grants a 2 years technical guarantee on the sold prod-

ucts, according to the general conditions of sales. NETIA

S.A. grants a 1 year guarantee on its sold products.

C. Significant litigation and other significant commitments. Following the Extraordinary Gen-

eral Meetings of 7 September 1999, 16 May 2000 and

21 May 2002, 150 000 warrants were issued and in-

tended to the EVS group staff. As of December 31, 2003,

81 000 of these warrants were allotted to members of

personnel of the EVS group and the average exercise

price of these 81 000 warrants is 19.83 EUR. These war-

rants may be converted from October 2002 onwards,

depending on the local laws in the relevant countries.

Shares then issued will have the same rights as existing

shares.

In accordance with opinion 138/1 of the C.N.C, EVS

books in the operating incomes the recoverable ad-

vances granted by the Walloon Region to the activities

of R&D, and in the operating charges their refunding. As

of December 31, 2003, an amount of 2 096 thousand

EUR was already received and will be refunded during

next years, according to the commercial success of the

developed products.

FAR S.A. took advantage also from recoverable advances

amounting to 113 thousand EUR as of 31 December 2002.

EVS S.A. is guarantor of the obligations of FAR according to

the convention signed with the Walloon Region.

On the other hand, as of December 31, 2003, accord-

ing to its policy of foreign currencies hedging, EVS had

2 open forward exchange contracts to : sell 1.5 million

USD, at the rate of exchange of 1.103, maturing May 5,

2004 and sell 1 million USD, at the rate of exchange of

1.136, maturing July 2, 2004.

XVI. Relationships with affiliated companies and companies linked by participating interests but not included in the consolidation (In thousands EUR)

Period Preceding period

Financial fixed assets / Shares 173.3 109.5Amounts receivable / Amounts receivable Within one year 26.1 26.9Amounts payable / Amounts payable Within one year 4.2 12.4

The values correspond to the transactions with Mecalec-SMD and FAR.

XVII. Financial relationships with Directors or managers of the consolidating company (In thousands EUR)

A. Total amount of remuneration granted in respect of their responsibilities in the consolidation company, its subsidiaries and its affiliated companies, including the amounts in respect of retirement pensions granted to former Directors or managers, amounts to 928 thousand EUR.

B. Total amount of advances and credits granted by the consolidating company, by a subsidiary or by an associated company, amounts to nil.


Reconciliation of the 2003 accounts between the Belgian standards and the IFRS

The EVS group is anticipating the requirement to convert its consolidated accounts in accordance with the IFRS/IAS standards as from 2005 and communicates below the reconciliation of the Net Current Result (NCR) for 2003 and the Consolidated Net Equity (CNE) as of 31 December 2003, in millions EUR :

NCR CNE

Belgian standards 9.1 27.8 Recoverable (taxable) loans -0.9 -2.1 Direct and indirect production costs capitalised in inventories -0.4 +0.7 Capitalisation and amortization of R&D expenses +0.3 +1.4 Adjustment of translation differences and revaluation of foreign exchange contracts -0.7 +0.0 Differed taxes +0.5 +0.1 Miscellaneous -0.1 +0.2 Reclassification of investment grants by offsetting them against tangible assets N/A -1.2 Reclassification of own shares by offsetting them against equity capital N/A -2.3

IFRS standards 7.8 24.6

The IFRS 2003 result is calculated as if the accounts as of 31 December 2002 had also been recalculated under the IFRS standards.

Recoverable (taxable) loansThe recoverable loans from the Walloon Region were in-cluded in the result in accordance with notice 138/1 from the “Commission des Normes Comptables” under the Belgian standards. However, assuming the recoverable loans from the Walloon Region will most probably be repaid due to the strong probability that the projects in progress will be successfully completed and mar-keted, these loans must be deducted from the profit (and from the net equity) under the IFRS standards and considered as debts.

Direct and indirect production costs capitalised in inventoriesIn compliance with Belgian accounting principles, di-rect and indirect production costs are not included in the valuation of the inventories of work in progress and finished goods of the EVS group. These costs represent around 39% (mark-up) of the value of the inventories of work in progress and finished goods. Under the IFRS standards, the inventories value decrease in 2003 and the stock variation logically includes the effect of this mark-up.

Capitalisation and amortization of R&D expenses In compliance with Belgian accounting principles, EVS has always expensed its Research & Development (R&D) costs without capitalizing them nor amortizing them. Under the IFRS standards, however, the develop-ment costs of a product before it is marketed must be capitalized then amortized (over 3 years) whereas the fundamental research costs must be expensed. The adjustment in 2003 reflects the offset between the capitalisation of the development costs for 2003 and the amortization of these costs previously capitalised from 1 January 2000 to 31 December 2003.

Adjustment of translation differences Under Belgian accounting standards, EVS applies the closing rate method for the translation of the financial statements of its foreign subsidiaries. It results a transla-tion difference identified in the net equity. Under the IFRS standards, these differences must be included directly in the profit and loss account

Revaluation of foreign exchange contracts In the context of its policy of covering currency flows, the company has taken out some foreign exchange contracts. As these involve cash flow coverage transac-tions, the unrealised exchange loss or gain compared with the closing rate must be reported in the net equity under the IFRS standards and must be included in the income statement only when the operation is realised, in other words at a future date. Under the Belgian standards, EVS includes the underlying unrealised foreign exchange losses and gains in the profit at the closure date of the accounts.

Reclassification of investment grants by offsetting them against tangible assetsAccording to the IFRS, the investment grants received by the company for a specific investment must be offset against the corresponding tangible asset.

Reclassification of own shares by offsetting them against equity capitalAccording to the IFRS, own shares are not identified in the balance sheet assets but are offset against the con-solidated net equity.


Consolidated cash flow statement (In thousands EUR)

This statement has been drawn up using the indirect cash flow method. It highlights the cash flow by type of activity (operating, investing and financing activities) for 2001, 2002 and 2003.

Cash flow provided by operating activitiesThe operational cash flow increases by 47%, namely 3.8 million EUR, reaching 11.9 million EUR.

This good performance is due mainly to the following factors:- the 4.3 million EUR increase in the consolidated net

profit for the year 2003 which amounts to 6.3 mil-lion EUR , linked principally to the 8% increase in the group’s sales and the 21% increase in the gross margin on sales and services;

- the outstanding commercial, taxes and social debts increase to 2.2 million EUR as a result of a more active cash flow management;

- the stocks fall by 1.4 million EUR reaching a value of 4.7 million EUR on account of a more dynamic man-agement of the stock and write-downs of around 0.8 million EUR recorded on some technologically obso-lete items;

- the increase in the operational cash flow is neverthe-less being slowed down, on the one hand by the 1.3 million EUR increase in the outstanding amounts receivable is mainly explained by the increase in the customer collection periods (+ 16 days) compared with the previous financial year, and on the other hand by the reduction in the other debts explained by the fact that EVS has not yet decided on the alloca-tion of a possible dividend for the 2003 financial year whereas in 2002 the company proposed to include in its annual report, in anticipation, a gross dividend of 1.3 million EUR paid in June 2003;

- it should be pointed out that the non-cash charges increase by 1.0 million EUR reaching 4.8 million EUR, including 3.6 million EUR of intangible asset amortizations. This growth is mainly explained by the extraordinary amortizations of intangible assets : 0.9 million EUR of NETIA consolidation difference and 0.6 million EUR of Audio-Follow business asset, bringing these intangible assets to zero.

Cash flow used in investing activities- The investments for the construction of the new

building in Liège, which was inaugurated in April 2003, amounted to 1.1 million EUR during 2003; the group is not planning any other real estate projects in the medium term;

- miscellaneous regular investments in furniture, vehi-cles and R & D material for the group were made up to 0.6 million EUR.

Cash flow used in financing activities- The debts and loans fall by 0.7 million EUR reaching

5.3 million EUR as of 31 December 2003. This reduc-tion is explained mainly by the settlements of the long-term loans contracted to finance the group’s buildings;

- the translation differences show a logical reduction of -0.4 million EUR, going from -0.3 million EUR for the previous financial year to -0.7 million EUR as of 31 December 2003. In fact, the conversion, using the closing rate method, of the financial statements of the two main foreign subsidiaries, which currency accounts are linked to the USD causes this reduction, since the USD/EUR rate fell during 2003;

- the variation in the consolidated net equity includes the cancellation, at a cost of 1.5 million EUR, of own shares held by the company in accordance with the decision of the Extraordinary General Meeting of20 May 2003.

In conclusion, EVS cash flow amounts to 16.9 million EUR as of 31 December 2003, namely + 7.4 million EUR to be compared with December 2002. Part of the availa-ble resources (2.3 million EUR) is invested in own shares representing 3.3% of the capital at the closing date. In the accounts, these own shares are valued at the histori-cal average acquisition price of 24.76 EUR per share.


(In thousands EUR) 2001 2002 2003

Consolidated net profit (share of the group) 2 142.8 2 004.6 6 276.7 Minority share in consolidated profit -0.5 0.0 -0.1

Non-monetary balancing items : Depreciation/write off on fixed assets 1 435.2 1 396.3 2 003.5 Amortization on consolidation and equity method goodwills 2 339.7 2 377.7 2 766.0 Provisions increase, decrease 20.4 520.6 -29.5 Amounts written off on financial fixed assets - - -

Cash provided by changes in Amounts receivable 812.9 4 058.3 -1 286.3 Deferred charges and accrued income 473.8 -920.4 -85.8 Trade debts and advances received 398.2 -818.0 352.7 Taxes, remuneration and social security debts -468.8 61.6 1 735.4 Other amounts payable -364.6 -169.6 -1 242.0 Stocks -584.9 -378.2 1 434.0

Net cash provided by/used in operating activities 6 204.2 8 132.9 11 924.7

Cash flow from investing activities New expenditure - Formation expenses - - - Acquisitions - Intangible Assets 315.1 35.3 290.1 Acquisitions - Tangible Assets 2 424.6 2 988.8 1 746.1 Acquisitions - Financial Assets 188.1 6.5 53.3 Disposals and transfers - Tangible assets -202.2 -94.9 -45.8 Repayments - Financial assets -48.1 -20.7 -132.5 Other changes on assets 320.0 -2.0 -6.8 Equity method - share 21.1 9.9 10.5 Goodwill -265.0 - 69.7

Net cash used in investing activities -2 753.6 -2 922.9 -1 983.5

Cash flow provided by financing activities Impact of loans and advances -7.7 -245.1 -651.4 Translation adjustment 106.5 -558.8 -428.0 Changes in grants -11.7 770.6 136.7 Dividends declared for the year -1 432.0 -1 309.0 - Other equity variations -240.9 -1.1 -1 582.7

Net cash provided by/used in financing activities -1 585.8 -1 343.4 -2 525.4

CHANGE IN CONSOLIDATED NET CASH 1 864.8 3 866.5 7 415.7

Available at the beginning of the financial year 3 736.3 5 601.1 9 467.6 Available at the end of the financial year 5 601.1 9 467.6 16 883.3 Gross Operating Cash Flow (1) 10 614.9 10 283.6 16 435.3 Net Cash Flow (2) 6 625.3 6 833.2 11 198.0 Net Cash Flow per share 2.37 2.44 4.00

(1) Gross Operating Cash Flow corresponds to the operating profit plus non-cash operating charges and minus non-cash operating incomes. (2) Net Cash Flow corresponds to the consolidated profit plus non-cash charges and minus non-cash incomes.

56. 0110100 EVS [ Parent Company financial statements ] 57.

[email protected]


Parent company financial statementsThese financial statements include the figures for the parent com-pany in Liège (Belgium) as well as figures for the Hong Kong Branch. These statements are given in the abridged version, in line with article 105 of the “Code des Sociétés” (laws for commercial companies). They are filed with the “Banque Nationale de Belgique” and are available on request at the company’s head office. They have been uncondition-ally attested by Ernst & Young, Auditors S.C.C. (B160), represented by Philippe PIRE, Partner.


Statutorymanagement report

As foreseen by the Law, the consolidated management

report has been drawn up to be used also as manage-

ment report of the parent company financial state-

ments. The management report of the parent company

financial statements is similar to the consolidated man-

agement report, except the following note :

The parent company financial statements include the fig-

ures for the head office in Liège (Belgium) and the Hong

Kong branch. The operating income, 30 510.8 thousand

EUR, represents 78 % of the consolidated amount.

The profit of 2003 amounts to 5 161.7 thousand EUR,

i.e. a result in increase of 7 978.0 thousand EUR com-

pared to 2002. The total of the balance sheet comes to

37 920.1 thousand EUR.

In September 1999, EVS took over 99.99 % of NETIA

shares. As of December 31, 2003, the net book value of

this participation amounts to 3 677.2 thousand EUR. In

line with the consolidated accounts in which the good-

will is totally amortized at the end of 2003, the Board

of Directors, by caution also, decided to fully write-off

the residual value of its NETIA stake in the statutory

accounts It is finally suitable to remind that EVS Broad-

cast Equipment S.A. and its Hong Kong branch have at

December 31, 2003 a credit on NETIA S.A. of 2.0 million

EUR, with a term of 6 months roll-over, bearing normal

interest.

At the time of merge of VSE and EVS, a goodwill

amounting to 2 908.0 thousand EUR was registered at

1st January 2001. This goodwill has been posted under

intangible assets and is amortized over 5 years, i.e. 581.6

thousand EUR in 2003.

No other event than those reported in the consolidated

management report has affected the parent company

financial statements.


Statutoryincome statement (In thousands EUR)

2001 2002 2003

I. Operating Income 27 029.0 31 009.3 32 024.0 A. Turnover 25 854.9 29 674.9 30 510.8 B. Increase (+)/Decrease (-) in Stocks of Finished Goods, Work and Contracts in progress 797.2 -120.7 48.8 C. Other operating Income 376.9 1 455.1 1 464.4

II. Operating Charges -19 607.3 -22 788.9 -18 956.6 A. Raw Materials, Consumables and Goods for Resale 7 043.4 7 801.4 5 376.5 1. Purchases 6 472.6 8 713.4 4 580.8 2. Increase (-)/Decrease (+) in Stocks 570.8 -912.0 795.6 B. Services and other Goods 5 850.4 5 583.7 5 865.5 C. Remuneration, Social Security Costs and Pensions 4 945.1 6 247.9 5 286.1 D. Depreciation of and other amounts written off on Formation Expenses, Intangible and Tangible Fixed Assets 1 505.1 1 517.1 1 501.9 E. (+)/(-) in amounts written off on Stocks Trade Debtors 173.2 959.1 734.5 F. (+)/(-) in Provisions for Liabilities and Charges -36.2 166.5 100.0 G. Other operating Charges 126.3 513.1 92.1

III. Operating Profit 7 421.7 8 220.4 13 067.4

IV. Financial Income 832.7 2 450.2 1 490.9 A. Income from Financial Fixed Assets 271.5 516.9 64.8 B. Income from Current Assets 39.5 32.8 148.5 C. Other Financial Income 521.7 1 900.5 1 277.6

V. Financial Charges -915.6 -2 186.7 -1 722.5 A. Interest and other Debt Charges 256.1 240.5 241.1 B. (+)/ (-) in amounts written off on current assets - - -124.0 C. Other Financial Charges 659.5 1 946.2 1 605.4

VI. Profit on ordinary Activities before Taxes 7 338.8 8 484.0 12 835.8

VII. Extraordinary Income 1.4 133.9 651.8

VIII. Extraordinary Charges -636.3 -8 735.3 -3 743.0

IX. Result for the period before Taxes (+, -) 6 703.9 -117.5 9 744.6

IX.bis. Transfer from deferred Taxation 7.8 42.1 23.0

X. Income Taxes -3 247.3 -2 740.8 -4 605.9

XI. Result for the period (+, -) 3 464.4 -2 816.3 5 161.7

XIII. Result for the period available for Appropriation (+, -) 3 464.4 -2 816.3 5 161.7

Appropriation account A. Result to be appropriated 3 464.4 -2 816.3 5 161.7 1. Result for the period available for appropriation 3 464.4 -2 816.3 5 161.7 B. Transfers from Capital and Reserves - 4 125.2 - 1. From Reserves - 4 125.2 - C. Transfers to Capital and Reserves (-) -2 032.4 - 5 161.7 1. To other Reserves 2 032.4 - -5 161.7 D. Distribution of Profit -1 432.0 - 1 309.0 - 1. Dividends 1 432.0 1 309.0 -


Statutorybalance sheet (In thousands EUR)

Assets 2001 2002 2003

Fixed assets 21 562.8 14 342.2 11 137.9

I. Formation expenses - - -

II. Intangible Assets 2 454.9 1 820.6 1 202.9

III. Tangible Assets 4 917.4 6 729.0 7 502.5 A. Land and Buildings 2 998.2 2 968.7 6 421.5 B. Plant, Machinery and Equipment 195.4 123.8 140.5 C. Furniture and Vehicles 842.7 586.7 845.7 D. Assets under Construction and advance Payments 881.1 3 049.9 94.8

V. Financial Assets 14 190.5 5 792,6 2 432.5 A. Affiliated Enterprises 13 911.8 5 681.9 2 205.3 1. Participating Interests 11 198.0 3 465.1 163.5 2. Amounts receivable 2 713.8 2 216.8 2 041.7 B. Other Enterprises linked by participating Interests 263.5 99,0 222.0 1. Participating Interests 263.5 99.0 222.0 C. Other Financial Assets 15.2 11.7 5.2 1. Amounts receivable and Cash Guarantees 15.2 11.7 5.2

Current assets 17 924.1 20 682.4 26 782.1

VI. Stocks and Contracts in progress 5 617.1 6 040.1 4 503.3 A. Stocks 5 617.1 6 040.1 4 503.3 1. Raw Materials and Consumables 2 645.4 3 223.7 2 612.8 2. Finished Goods 2 971.7 2 816.4 1 890.6

VII. Amounts receivable within one year 8 187.2 6 034.3 7 046.0 A. Trade Debtors 7 200.6 4 284.6 6 294.3 B. Other Amounts receivable 986.6 1 749.8 751.7

VIII. Investments 1 554.2 7 273.7 13 124.7 A. Own shares 1 554.2 2 738,7 2 294.3 B. Other Investments and Deposits - 4 535.0 10 830.4

IX. Cash at Bank and in Hand 2 247.9 1 190.4 1 711.6

X. Deferred Charges and accrued Income 317.7 143.9 396.6

TOTAL ASSETS 39 486.9 35 024.6 37 920.1


Liabilities 2001 2002 2003

Capital and reserves 27 374.5 24 019.8 27 562.6

I. Capital 16 000.0 16 000.0 16 000.0 A. Issued Capital 16 000.0 16 000.0 16 000.0

IV. Reserves 11 041.2 6 916.0 10 550.4 A. Legal Reserve 1 600.0 1 600.0 1 600.0 B. Reserves not available for distribution 1 554.2 2 738.7 2 294.3 1. In respect of own shares held 1 554.2 2 738.7 2 294.3 C. Reserves available for Distribution 7 887.0 2 577.3 6 656.1

VI. Investment grants 333.3 1 103.9 1 012.1

Provisions and deferred taxation 249.2 760.8 813.8

VII. A. Provisions for Liabilities and Charges 25.8 192.4 292 4 B. Deferred taxation 223.4 568.4 521.4

Creditors 11 863.2 10 244.0 9 543.7

VIII. Amounts payable after one year 3 440.7 4 345.9 3 946.1 A. Financial Debts 3 426.4 4 331.6 3 936.8 1. Credit Institutions 3 426.4 4 331.6 3 936.8 B. Other amounts payable 14.3 14.3 9.3

IX. Amounts payable within one year 7 270.6 5 852.5 5 241.1 A. Current Portion of amounts payable after one year 209.7 394.8 394 8 B. Financial Debts 1 716.7 252.7 - 1. Credit Institutions 1 716.7 252.7 - C. Trade Debts 2 166.6 2 093.9 2 059.5 1. Suppliers 2 166.6 2 093.9 2 059.5 D. Advances received on Contract in progress - 186.2 6.6 E. Taxes, Remuneration and Social Security 1 506.6 1 452.4 2 669.2 1. Taxes 729.4 493.9 1 340.4 2. Remuneration and Social Security 777.2 958.5 1 328.8 F. Other amounts payable 1 671.0 1 472.6 110.9

X. Accrued Charges and deferred Income 1 151.9 45.6 356 6

TOTAL LIABILITIES 39 486.9 35 024.6 37 920.1

62. 0110100 EVS [ Glossary ] 63.

Appendix

Capital as of December 31, 2003

Amounts Number (In thousands EUR) of shares

A. Share Capital 1. Issued capital 16 000.0 2 800 000 2. Structure of capital 2.1. Different categories of shares Shares without face value 16 000.0 2 800 000 2.2. Registered shares and bearer shares Registered shares – as of December 31, 2003 1 131 355 Bearer shares – as of December 31, 2003 1 668 645

B. Own shares held by the company itself 2 294.3 92 658

C. Commitments to issue shares 1. Following the exercise of subscription rights - Number of outstanding subscription rights 81 000 - Amount of capital to be issued 1 606.3 - Maximum number of shares to be issued 81 000

D. Amount of authorized capital, not issued 15 000.0

E. Company shareholding structure

The company shareholding structure at year-end, as it appears from the last statements received by the company and the last modification of the shareholders’ register, excluding subscription rights, is the following :

Not diluted (%) Diluted(%)

DTV 35.5 34.5L. Minguet and family 0.1 0.1P. L’Hoest and family 0.1 0.1M. Counson 0.03 0.03CYTINDUS S.A. 4.9 4.8ING Group (BBL) 5.6 5.4BGL Investment Partners 5.4 5.2Deutsche Bank 3.2 3.2Own shares 3.3 3.2Warrants 2.8Public and misc. : 41.87 40.67

Développement Technologique Vidéo (DTV) is a holding company equally owned by Pierre L’HOEST, Laurent MINGUET and Michel COUNSON.

62. 0110100 EVS [ Glossary ] 63.

GlossaryANALOG : unlike digital or bit based video, analog video is based on a continuous flow of data which can take an infinite number of intermediary values. Stand-ard audio and video signals are traditionnaly analog and can be digitized.

BANDWIDTH : amount of information that can be passed during a given period of time. The larger the bandwith is, the better the quality of recorded or trans-mitted images is.

BROADCAST, BROADCASTING: transmit, put on air; televised programme. By extension, this term desig-nates the television industry. Broadcasters are all the companies in charge with producing and broadcasting programmes.

CHANNEL: access to the internal drives of the server. It could be a record or playback channel. The LSM-XT server can have up to 6 channels.

COMPRESSION: the process of reducing the band-width or data rate of a video stream. Digital compres-sion systems analyse the picture to find and remove redundancy and less critical information both within and between picture frames.

DIGITAL: means using numbers to represent informa-tion data. Digital values, contrarily to analog values, can only have a limited number of intermediate values.

DIGITAL BOUQUETS: a stream of simultaneously broadcast digital television programs.

DIGITALIZATION: conversion of analog signals into digital signals, using a converter.

DLP Technology™: Digital Light Processing technol-ogy is the projection system for theater designed by Texas Instrument. It is a collection of electronic and optical subsystems which enable picture information to be decoded and projected as high-resolution digital colour images.

DVB (Digital Video Broadcasting) : standard selected by the European authorities for the broadcast of digital bouquets. It aims to offer, with a minimum of band-width, a lot of possibilities to broadcast TV programs in a digital format.

EDITING : assembling of filmed pictures to produce a film on television program. Non-linear editing means that the recording medium is not linear tape-based and that editing can be performed in a non-linear way.

HARD DISK : a circular memory support, with a mag-netic outer layer, for the recording of digital data. The storing of information is done by magnetizing the indi-vidual tracks of a variety of superimposed disks, which work by turning round an axis.

HARDWARE : the computer equipment, i.e. all the phys-ical components in a computer or electronic system.

HIGH DEFINITION (HD): new broadcasting TV format which increases significantly the pictures quality. HD images offer a higher amount of pixels per image (about 2 millions) than the traditionnal image in stand-ard definition (about 400 000).

JPEG (Joint Photographic Expert Group) : standard for the compression of digital pictures. Compression is done by reducing very closely related colours to a sin-gle tone. This reduces the resolution loss of the graphi-cal picture. This process is mainly used for programme production.

LSM (Live Slow Motion) : the trade name of EVS disk recorders dedicated to production and replay.

MPEG: standard of data compression for moving pic-tures. The current MPEG-2 standard has the advantage to cover all multimedia applications (telecommunica-tion, audio, fixed or moving pictures) and the corre-sponding format (tape, disk, computer, TV).

OUTSIDE BROADCAST (OB) : a mobile truck, van, or trailer that houses a remote broadcast switching and control center for broadcasting news and sports.

PLAY-LIST : list of video data which will be broadcasted (picture, prerecorded program, “live”,…).

SERVER : IT term; this is a computer used for the man-agement of a network. Correspondingly, in television, it is a hard disk recorder on which pictures are stored for broadcasting either to viewers, or to operators within the TV channel.

SOFTWARE : all the programs required for the work-ings of electronic or IT equipment.

STREAMING : process of broadcasting video and audio data directly and continuously on Internet.

TAPE RECORDER : records pictures on magnetic tapes (=video recorder).

64.

TRANSMISSION : operation of transmitting pro-grammes to television viewers using terrestrial, cable or satellite broadcasting. Transmission may be analog if the data transmitted is analog, or digital if the data transmitted is digital.

UPGRADE : to supply and install hardware and/or soft-ware elements in order to improve the performance of customer’s equipment.

VOD (Video On Demand) : multichannel broadcast-ing system which allows the customer to order and to receive programs (films,…) at the time specified by themselves.

EUROPE, AFRICA, MIDDLE-EASTEVS HEADQUARTERSLiege Science ParkRue Bois Saint-Jean, 16 BE-4102 Ougrée - Belgium Tel. : +32 (4) 361 70 00 Fax : +32 (4) 361 70 99 [email protected]@evs-cinema.com [email protected]

AMERICAS (EVS & NETIA)9 Law Drive, suite 200Fairfield, NJ 07004 - USATel. : +1 (973) 575 7811Fax : +1 (973) 575 [email protected]@netia.net

ASIA – PACIFIC (EVS & NETIA)Room 430, Block D, D.B. Plaza, Discovery Bay, Lantau IslandHong Kong Tel. : +852 (2914) 25 01Fax : +852 (2914) 25 [email protected]@netia.net

FRANCE - PARIS (EVS & NETIA)Parc d’affaires EMGP - Bat 26945 Avenue Victor HugoFR-93534 Aubervilliers - France Tel. : +33 (1) 49 37 97 57 Fax : +33 (1) 49 37 97 58 [email protected]

FRANCE - MONTPELLIERNETIA HEADQUARTERSHalle industrielle de Farjou FR-34270 Claret - FranceTel. : +33 (4) 67 59 08 07Fax : +33 (4) 67 59 08 20 [email protected]

ITALYVia Cipro, 102 IT-25124 Brescia - ItalyTel. : +39 (030) 242 71 34 Fax : +39 (030) 247 81 [email protected]

UNITED KINGDOM400, Capability GreenGB-Luton LU1 3LUUnited KingdomTel./fax : +44 (208) 464 4244 [email protected]

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EUROPE, AFRICA, MIDDLE-EAST EVS HEADQUARTERS€¦ · Letter to shareholders 2 Corporate governance...

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