RIBER S.A. GROUP. 31 rue Casimir Perier BEZONS, FRANCE R.C.S. Pontoise

Transcription

1 RIBER S.A. GROUP 31 rue Casimir Perier BEZONS, FRANCE R.C.S. Pontoise CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2007

2 Page 2 of 24 CONTENTS Pages CONSOLIDATED BALANCE SHEET 3-4 CONSOLIDATED INCOME STATEMENT.5 CONSOLIDATED CASH FLOW STATEMENT. 6 CONSOLIDATED STATEMENT OF CHANGE IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 Page 3 of 24 BALANCE SHEET - ASSETS ( thousands) Note Dec. 31, 2007 Dec. 31, 2006 Goodwill (4.1) 820 1,670 Intangible assets (4.2) Land 2,335 2,335 Buildings Machinery and industrial equipment 576 1,643 Motor vehicles 7 12 Office equipment and furniture Other non-current assets 5,177 4,942 Assets under construction Property, plant and equipment (4.3) 8,932 9,972 Investments (4.4) 57 3,098 Other non-current assets (4.5) 3, Deferred tax assets (4.14) TOTAL NON-CURRENT ASSETS 13,916 15,448 Inventories (4.6) 7,370 10,025 Advances and payments on orders (4.8) Trade receivables (4.7) 8,696 7,864 Other receivables (4.8) 151 8,817 Tax receivables (4.8) Other financial assets (4.8) 3,007 Cash and marketable securities (4.9) 2,545 5,245 TOTAL CURRENT ASSETS 21,975 32,094 ASSETS HELD FOR DISPOSAL 0 0 TOTAL ASSETS 35,891 47,542 3

4 Page 4 of 24 BALANCE SHEET SHAREHOLDERS EQUITY AND LIABILITIES ( thousands) Note Dec. 31, 2007 Dec. 31, 2006 SHAREHOLDERS EQUITY Share capital (4.17) 3,036 3,036 Additional paid-in capital 25,560 33,560 Reserves 3,334 (14,334) Translation adjustments profit (loss) (9,734) 10,414 GROUP SHAREHOLDERS EQUITY 22,380 32,725 Minority interests 0 0 TOTAL SHAREHOLDERS EQUITY 22,380 32,725 Bank borrowings (4.10) 903 3,336 Provisions: non-current portion (4.11) 1, Non-current liabilities 0 0 TOTAL NON-CURRENT LIABILITIES 2,168 3,766 Current portion of long-term debt (4.10) 3, Provisions (4.11) 1, Advances and payments on orders 1,180 1,226 Trade payables (4.12) 2,677 3,455 Payables to non-current assets suppliers: (4.12) current portion Other payables and accruals (4.13) 2,556 4,954 TOTAL CURRENT LIABILITIES 11,343 11,051 LIABILITIES HELD FOR DISPOSAL 0 0 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 35,891 47,542 4

5 Page 5 of 24 CONSOLIDATED INCOME STATEMENT ( thousands) Note Dec. 31, 2007 Dec. 31, 2006 Sales (5.1) 16,992 20,013 Cost of goods sold (13,582) (16,977) Release of provision for inventory (2,240) 3,445 Total cost of sales (15,822) (13,533) GROSS INCOME 1,170 6,481 Selling expenses (3,147) (3,467) Research and development expenses (5.2) (2,272) (1,932) Administrative expenses (1,873) (1,620) Other operating expenses and revenue income from property transactions (5.7) (5.3) (3,420) (160) ,602 OPERATING INCOME/(LOSS) (9,703) 10,726 interest expense (5.8) 35 (279) Other financial income and expenses (5.8) (27) 2 PRETAX INCOME/(LOSS) (9,694) 10,449 Income tax (5.9) (39) (36) NET INCOME/(LOSS) BEFORE MINORITY INTERESTS (9,734) 10,414 Minority interests 0 0 NET INCOME (LOSS) GROUP SHARE (9,734) 10,414 Basic earnings/(loss) per share (2) (0.51) 0.56 Diluted earnings/(loss) per share (2) (0.52)

6 Page 6 of 24 CONSOLIDATED CASH FLOW STATEMENT ( thousands) CASH FLOW FROM OPERATING ACTIVITIES December 31, 2007 December 31, 2006 Consolidated net income (loss) (9,734) 10,414 Adjustments to reconcile income (loss) to net cash provided by operating activities +/- depreciation, amortization and provisions (1) 3,219 1,172 +/- Unrealized gains (losses) from changes in fair value (10) 47 + Fair value losses /- Other calculated income and expenses /- Gains/(losses) from disposals 1 (10,566) Cash flow from/(used in) after net interest expense and tax (5,341) 1,588 + interest expense (35) 279 +/-Tax expense (including deferred tax) (168) 36 = Cash flow from/(used in) before net interest expense and tax (A) (5,544) 1,903 - Tax payments (B) (15) (24) +/-Change in working capital requirements from operations Inventories 3,810 (1,364) Receivables (3,571) (2,841) Payables (69) (1,351) Sub-total (C) 170 (5,556) = cash from operating activities (D) = (A + B + C) (5,389) (3,678) CASH FLOWS FROM INVESTING ACTIVITIES Disbursements for the acquisition of: Intangible assets (125) (206) Property, plant and equipment (1,300) (5,829) Investments (4) (201) + Proceeds from the disposal of non-current assets 2 19,704 Receivable on the disposal of non-current assets 8,050 (8,050) +/- Change in loans and advances granted / - Payables to non-current assets suppliers (3,681) 23 Decrease in payables to non-current assets suppliers (120) Impact of changes in the consolidation scope 0 0 = cash used in investing activities (E) 2,961 5,488 CASH FLOWS FROM FINANCING ACTIVITIES +/- Purchase and sale of treasury shares (310) 0 + Receipts from new borrowings 662 3,070 - Repayment of borrowings (36) (8,200) - interest expense paid 35 (279) +/- Other cash flows provided by financing activities (759) 6 = cash provided by financing activities (F) (408) (5,403) +/- Effect of exchange rate changes on cash (G) NET CHANGE IN CASH AND CASH EQUIVALENTS (D + E + F + G) (2,700) (3,488) Cash and cash equivalents at beginning of period 5,245 8,733 Cash and cash equivalents at end of period 2,545 5,245 change in cash and cash equivalents (2,700) (3,489) 6

7 Page 7 of 24 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY ( thousands) Share capital Additional paid-in capital Group reserves income (loss) Translation adjustments Other Treasury shares Currency hedges Total shareholders equity As at December 31, ,036 33,555 (1,301) (11,202) 35 (1,093) 21 23,050 Allocation of net income (11,202) 11,202 Consolidated income from 2004 (942) (942) Capital increase Purchase or disposal of treasury shares Cash flow hedges (68) (68) Translation adjustments (89) (89) Others As at December 31, ,036 33,555 (12,503) (942) (54) (885) (47) 22,161 Allocation of net income (942) 942 Consolidated income from ,414 10,414 Capital increase Purchase or disposal of treasury shares (15) (15) Cash flow hedges Translation adjustments Others As at December 31, ,036 33,560 (13,434) 10, (900) 0 32,725 Allocation of net income (8,000) 18,414 (10,414) Consolidated income from 2006 (9,734) (9,734) Capital increase Purchase or disposal of treasury shares (310) (310) Cash flow hedges (10) (10) Translation adjustments Payment of dividends (759) (759) Others 333 (333) As at December 31, ,036 25,560 4,554 (9,734) 184 (1,210) (10) 22,380 7

8 Page 8 of 24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2007 BUSINESS OVERVIEW RIBER SA and its subsidiaries ( the Group ) are engaged in the development, manufacture and sale of epitaxial machines and related components for the compound semi-conductor industry, using molecular beam epitaxy (MBE) technology. Riber SA is a public limited company. Its shares are listed on Compartment C of the Euronext Paris Stock Exchange. Consolidated financial statements were approved on March 27, 2008 by the Executive Board and the Supervisory Board, which authorized their publication on the same day. Consolidated financial statements will only become final after their approval by the shareholders Annual General Meeting called on June 19, Except otherwise indicated, consolidated financial statements are presented in thousands. 1. SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies applied in the preparation of the consolidated financial statements are disclosed thereafter. Except otherwise indicated, these policies were consistently applied to all fiscal years. 1.1 Accounting standards In application of European Regulation n 1606/2002 of July 19, 2002, consolidated financial statements for the 2007 fiscal year were prepared in accordance with IFRS accounting standards, as approved by the European Union at December 31, comparative financial information was prepared in accordance with the same standards and interpretations. The consolidated financial statements were prepared in accordance with the historic cost convention, expect for assets and liabilities measured at fair value and via the Income Statement (including derivative instruments). The preparation of consolidated financial statements in accordance with IFRS requires the use of certain accounting estimates, which may have a critical impact. Management is also called to use its judgment in applying the Group s accounting policies. Areas where the stakes are highest in terms of judgment or complexity and for which assumptions and estimates are significant in the light of the consolidated financial statements are set out in Note The application of the following new standards, amendments of existing standards and interpretations is compulsory for the fiscal year ended December 31, 2007: IFRS 7: Financial instruments: Disclosures and IAS 1: Presentation of financial statements Capital disclosures, the application of which is compulsory for fiscal years open on or after January 1, These standards and amendments list disclosure requirements on financial instruments in order to allow users to assess: the significance of these instruments in the light of the entity s financial position and economic performance, as well as the nature and extent of risks to which the entity is exposed and which are associated with these instruments, and how the entity manages these risks. Their adoption solely affects the format and extent of information disclosed on the financial statements. IFRIC 8, Scope of IFRS 2 (applicable to fiscal years open on or after May 1, 2006). IFRIC 8 specifies that any transaction giving rise to the transfer of equity instruments or to the payment of the value of an equity instrument of the entity comes within the scope of IFRS 2, even when all or part of the counterpart goods or services cannot be identified by the entity and as soon as these goods or services have been received. The Group applies IFRIC 8. 8

9 Page 9 of 24 IFRIC 10, Interim financial reporting and impairment (applicable to fiscal years open on or after November 1, 2006). Under IFRIC 10, impairment recognized at the end of an interim period in respect of goodwill, equity instrument investments and financial asset investments recognized at cost may not be reversed at a subsequent period end. The Group applies IFRIC 10. The following new standards, interpretations and amendments of existing standards whose application is compulsory for fiscal years begun on or after January 1, 2007 do not apply to the Group: IFRIC 7, Applying the restatement approach under IAS 29 Financial reporting in hyperinflationary economies (applicable to fiscal years open on or after March 1, 2006). IFRIC 7 provides comments on how IAS 29 should be applied during a period in which the entity identifies the existence of hyperinflation in the economy of its functional currency, when this economy was not hyper-inflationary in the previous period. The Group is not concerned by the application of IFRIC 7, since no Group entity operates in the currency of a hyper-inflationary economy. IFRIC 9, Reassessment of embedded derivatives (applicable to fiscal years open on or after June 1, 2006). This interpretation specifies the terms and conditions to be applied in reviewing the valuation of embedded derivatives throughout the life of the host contract. The Group does not hold embedded derivative contracts of any significance. The Group did not elect for the early adoption of the following standard interpretations whose application is compulsory for fiscal years begun after January 1, 2007: IFRS 8, Operating segments (applicable to fiscal years open on or after January 1, 2009). An entity must disclose information that will allow users of its financial statements to evaluate the nature and financial effects of operations in which it is engaged and the economic environment in which it operates. IFRS 8 defines operating segments and specifies segment reporting to be disclosed. Group management will apply IFRS 8 from January 2009 and does not expect it to have any significant impact on its financial statements. IFRIC 11, Group and treasury share transactions, Scope of IFRS 2 (applicable to fiscal years open on or after March 1, 2007). IFRIC 11 specifies how to treat agreements, the payment of which is based on equity instruments of the entity or those of its parent company. Management is currently assessing the impact of IFRIC 11 on Group operations. 1.2 Basis of consolidation The two subsidiaries, Riber Inc and Addon, in which Riber SA exercises exclusive control are fully consolidated. Addon has been part of the Riber Group since April 1, There are no associate companies or joint ventures within the Group. The financial statements of consolidated companies were prepared in accordance with accounting principles and regulations applicable in their respective countries. They have been restated to comply with rules and principles selected by the Group. All intra-group balances, transactions, as well as unrealized income resulting from intra-group transactions have been fully eliminated within the framework of the preparation of the consolidated financial statements. Unrealized losses resulting from intra-group transactions are only eliminated when there is no indication of potential impairment. All companies prepared financial statements at December 31, Items included in the financial statements of each Group entity are measured using the currency of the main economic environment in which the entity operates ( functional currency ). Consolidated financial statements are presented in euro, Riber SA s functional presentation currency. The financial statements of the Riber Inc subsidiary, the functional currency of which is different from the reporting currency, are translated according to the following method: - income and expenses are translated into euro at the fiscal year average exchange rate, - assets and liabilities are translated into euro at the year-end exchange rate, 9

10 Page 10 of 24 - resulting translation differences are directly recorded to shareholders equity. 1.3 Revenue recognition Machines sales are recognized upon transfer of risk and ownership to the customer, generally on delivery or on collection of the system by the customer at Riber s facilities. After shipment, the Group bears installation and warranty costs recorded either as accrued expenses or provisions when revenue is recognized. 1.4 Research and development expenditures Development expenditures incurred in connection with the design of new machines are capitalized when the following six criteria defined by IAS 38 are met: 1) the technical feasibility of completing the intangible asset so that it will be available for use or sale, 2) the intention to complete the intangible asset and use or sell it, 3) the ability to use or sell the asset produced, 4) the intangible asset ability to generate future economic benefits, 5) the availability of adequate technical, financial and other resources to successfully complete the project, 6) the ability to reliably measure the expenditures associated with this asset during the development phase. They are amortized over the duration of future economic benefits related to the assets. Development and research expenditures that do not comply with these criteria are expensed. 1.5 Goodwill Goodwill represents the excess of the cost of acquisition over the Group s interest in the fair value of the identifiable net assets of the subsidiary at the acquisition date. Goodwill recognized separately is subject to an annual impairment test and recognized at cost less accumulated impairment. Goodwill impairment may not be reversed. An impairment test is also conducted when events or circumstances indicate the impairment of goodwill is probable. Such events or circumstances are associated to significant and long-lasting unfavorable changes concerning either the economic environment or the assumptions retained on the date of acquisition. The resulting impairment is recorded as an operating expense. 1.6 Intangible assets Other intangible assets relate primarily to acquired software amortized on a 1-year to 5-year basis. 1.7 Property, plant and equipment Property, plant and equipment (PPE) items are carried on the Balance Sheet at their acquisition cost or production cost. Depreciation is calculated using the straight-line or declining balance method, based on the estimated useful life of the asset. Estimated life Method Buildings 10 to 20 years Straight Line Machinery and industrial equipment 3 to 10 years 5 to 10 years Straight Line Declining Balance Fixtures and fittings 10 to 20 years Straight Line Motor vehicles 4 years Straight Line Computer equipment 3 to 5 years Straight Line /Declining Balance Office furniture 5 to 10 years Straight-Line 10

11 Page 11 of 24 PPE recoverable amounts and useful lives are reviewed at each year end and adjusted if required. Depreciated assets are subjected to an impairment test when, due to exceptional events or circumstances, the recoverable amount may have been impaired. The recoverable amount of an asset is the higher of its fair value, after deducting disposal costs or its value in use. 1.8 Finance leases Assets acquired by finance lease contracts are restated in consolidated financial statements if significant. In accordance with IAS 17, contracts that transfer substantially all benefits and risks incident to ownership of an asset are considered as finance leases. If this condition is met, assets thus financed are posted to balance sheet assets for the contract value, which is the lower of the acquisition cost or the present value of minimum payments provided by the contract. They are depreciated over their likely useful lives. The offsetting liability is posted to the balance sheet and finance lease payments are recognized as borrowing repayments and financial expenses. Goods sold through finance leases are also restated in the consolidated financial statements to the extent that they are of a significant nature. When a transaction realized by the Group comes under the scope of IAS 7 as a finance lease, the Group thus being considered as the manufacturer under IAS 17-42, this transaction is posted to: the operating account, under: o o sales, for the present value of lease payments due financial income, for the difference between the present value and nominal value of the lease payments received during the fiscal year. the balance sheet, under trade receivables. A provision is established for all future costs associated with finance leased product maintenance or warranty under accrued expenses upon recognition of the sale. 1.9 Inventories Manufactured products, whether finished or semi finished goods, are recorded at production cost. This includes the cost of materials used, direct and indirect manufacturing costs, and the allocation of depreciation expenses of equipment and machines used in the manufacturing process. Financial expenses are excluded from inventory valuation. Inventory provisions are recorded when their gross book value exceeds their net realizable value. The gross value of materials and supplies includes the purchase price and ancillary expenses, valued in accordance with the weighted average unit cost method. Inventory provisions are established for materials and components to reflect their value in use, determined notably on the basis of their rate of use and prospects of future use Foreign currency transactions Foreign currency denominated transactions are translated at their transaction date rate. Assets and liabilities balances denominated in foreign currencies are translated at the closing rate, with any unrealized foreign exchange gains or losses arising recorded in the Income Statement Trade receivables Trade receivables are valued at their fair value and measured at their amortized cost. As for short-term receivables with no stated interest rate, their fair value is deemed to be the amount invoiced, except if the effective interest rate has a significant impact. A provision for write down is established for doubtful accounts. Non-current trade receivables are discounted at an annual rate of 3.5%, which is the interest rate Riber would be granted on the market for a similar credit facility 1.12 Financial instruments 11

12 Page 12 of 24 A significant portion of international sales is realized in US dollars, whereas the majority of the costs incurred are in Euro. To manage the impact of foreign exchange rate fluctuations, the Group has recourse to forward exchange contracts. These contracts are implemented when a sales order is received for each system and are based on the payment schedule provided for in the sales contract. In compliance with IAS 39, these contracts are revalued at fair value at the closing date, and changes in value are posted to the income statement. This fair value is recorded in the balance sheet, either under other receivables in balance sheet assets if positive or under other liabilities in balance sheet liabilities if negative. The fair value of these instruments is calculated by banking counterparties. As for the specific case of the application of hedge accounting (according to IAS 39 criteria): fair value hedge: the value of assets and liabilities included in an accounting hedge relationship of the fair value hedge type are adjusted for the changes in value associated with the hedged risk, future cash flow hedge: changes in the value of a derivative are deferred to equity, instead of being recorded in the income statement. This reserve is subsequently transferred to the income statement, at the same time as the hedged item Treasury shares Treasury shares are recognized as a reduction of shareholders equity on the basis of their acquisition cost. Gains and losses on the disposal of treasury shares are posted to consolidated reserves Cash and cash equivalents This item includes cash and marketable securities with a maturity date of less than three months as from the acquisition date. Short term deposits are measured at their market value at each year end. Bank overdrafts are recorded as debt under current liabilities in the balance sheet Provisions Provisions for liabilities and charges at the year end concern Group obligations to third parties that will likely generate a cash outflow to these third parties, without any equivalent counterpart expected from them. Provisions for guarantees Systems sold benefit from a one to two year guarantee from the date of their effective commissioning. In this regard, the Group recognizes an estimated liability on all products covered by a guarantee at the end of the fiscal year. This provision is determined in the following manner: a coefficient, corresponding to the ratio of fiscal year guarantee costs to sales that generated these expenses, is applied to sales covered by the guarantee at fiscal year end. Provision for litigation The Company and its subsidiaries may be a party to certain contentious procedures. Provisions are recorded when the Group: has a legal or implicit obligation resulting from a past event; when it is probable that an amount representative of economic benefits will have to be paid out to meet this obligation; and the amount of the obligation can reliably be determined Deferred tax Deferred taxes are calculated using the liability method for: all temporary differences arising from the difference between the tax and accounting treatment of assets and liabilities, except for goodwill and estimated differences relating to nondepreciated assets that can be disposed of separately from the company, tax losses available, restatements and eliminations applied to consolidated financial statements, which have an impact on the tax base of future fiscal years. The income tax rates used are those that were adopted or virtually adopted at year-end. 12

13 Page 13 of 24 Deferred tax assets are only recognized to the extent that it is probable that future taxable profits will be generated, allowing temporary differences to be allocated 1.17 Pensions and other employee commitments The Group s commitments in the areas of retirement indemnities and long-service benefits are accounted for as provisions whose value is estimated on the basis of actuarial valuations. Benefits arising from these provisions are payable at the time an employee retires, on condition that he/she is employed within the Group on his/her retirement date. Commitments are calculated in accordance with the retrospective method, using the following actuarial assumptions and salary projections: - Retirement benefits discount rate 4.50% - Long service benefits discount rate 4.10% to 4.50% - Inflation rate 2.00% - Annual salary inflation rate 3.00% Actuarial differences are immediately recognized in the income statement Profit sharing plan, employee saving plan, share-based payments and related benefits Transitory provisions provided by IFRS 2 were adopted. These provisions limit retrospective mandatory application to equity instruments with an allocation date later than November 7, 2002 and whose rights were not fully acquired at January 1, In December 2006, Riber implemented a free share allocation plan to the benefit of its employees and Directors. The plan was recognized in accordance with IFRS 19. Riber Inc. has established a savings plan for its full-time employees. This plan offers eligible employees the possibility of saving part of their remuneration, to which Riber Inc contributes. On an annual basis, Riber Inc s Board of Directors sets the amount of its contribution, which for the 2007 fiscal year was insignificant Critical accounting estimates and assumptions The preparation of consolidated financial statements in accordance with IFRS requires the use of accounting estimates, which may have a critical impact and are likely to affect amounts of assets and liabilities posted to the balance sheet, as well as revenue and expenses recorded in the income statement. Amounts subsequently known to the Group may differ from estimates and assumptions selected. Estimates and assumptions are updated on an ongoing basis and are based on past information and other factors, in particular forecasts of events, which are deemed reasonable in the light of circumstances prevailing at the time. The main accounting estimates and assumptions used by the Group bear on the following points: Realizable value of certain inventory; Assessment of customer risk and corresponding provisions; Impairment test when the realizable value is measured according to the value in use; Provisions for litigation. 2. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net income by the weighted average number of common shares outstanding during the fiscal year. Diluted earnings per share are calculated using the weighted average number of common shares outstanding, adjusted to take into account the conversion into potentially dilutive common shares of options that have been granted to employees. Anti-dilutive options were disregarded. December 31, 2007 December 31,

14 Page 14 of 24 Weighted average number of common shares outstanding used to calculate basic earnings per share Potential number of common shares if all dilutive equity warrants were exercised 187,817 Weighted average number of common shares used to calculate diluted earnings per share 18,568,466 18,789,601 18,756,283 ======== 107,894 18,897,495 ========= Treasury shares deducted from consolidated shareholders' equity have been excluded from the weighted average number of common shares outstanding at December 31, 2007, being 409,487 shares. This calculation is based on the assumption that the funds were collected on the issue date of the shares and were allocated to purchase shares at the market price. 3. CONSOLIDATION SCOPE Fully consolidated companies: Name Head Office % controlled % held Riber SA 31 rue Casimir Perier BEZONS France Parent company Parent company Name Head Office % controlled % held Riber Inc 15 Liberty Street, Metuchen NJ USA Addon SAS 33 rue Casimir Perier Bezons 4 NOTES TO THE BALANCE SHEET 4.1 GOODWILL Riber fully acquired Addon SAS on March 31, The acquisition cost of the shares amounted to 2,359 thousand. The fair value of Addon assets and liabilities at March 31, 2004 amounted to 203 thousand. Thus positive goodwill of 2,156 thousand was recognized. At each year end, an impairment test was formalized. It consists of comparing Addon assets and liabilities, as well as recognized goodwill with discounted cash flows measured in operating and profitability forecasts of the company. The major assumptions used are as follows: - discount rate after tax: 11.3% (10.8% at December 31, 2006) - forecast time frame: 5 years - terminal operation growth rate: 3% (same as at December 31, 2006). This impairment test led to the recognition at December 31, 2006 of a goodwill impairment of 486 thousand, in order to bring goodwill net value down to 1,670 thousand. An additional 850 thousand writedown was recognized at December 31, 2007 due to the decline in sales of this subsidiary in 2007 and its future sales prospects. The impairment was recognized as part of operating income under Other operating expenses and revenue. The net value of this goodwill was 820 thousand at December 31, INTANGIBLE ASSETS 14

15 Page 15 of 24 Intangible assets comprise software, patents and development costs when they comply with IAS 38 criteria. ( thousands) Gross book value at January, 1 1,266 1,661 Accumulated amortization at January 1 (985) (1,453) book value at January, Change in group structure Additions Disposals (601) Transition to IFRS Amortization charges (98) (133) Amortization reversals 601 Gross book value at June 30 1,391 1,266 book value at June PROPERTY, PLANT AND EQUIPMENT ( thousands) Gross book value at January, Accumulated depreciation at January book values at January 1, 2006 Land, buildings (1) Industrial equipment Fixtures and fittings Motor vehicles Office equipment Assets under construc tion Total 12,717 4,486 2, ,971 (838) (3,347) (1,869) (48) (622) (6,724) 11,879 1, ,247 Translation adjustment (4) (4) Change in group structure Additions 908 4, ,076 Disposals (9,604) (492) (2,543) (171) (246) (13,056) Depreciation and amortization (190) (404) (378) (12) (47) (1,031) charges Depreciation and amortization 1, , ,740 reversals book values at December 31, ,100 1,643 4, ,972 Gross book value at January, Accumulated amortization at January book values at January 1, ,113 4,902 5, ,987 (13) (3,259) (185) (60) (498) (4,015) 3,100 1,643 4, ,972 Translation adjustment (4) (4) Change in group structure Additions ,552 Disposals (2,650) (63) (13) (166) (2,892) Depreciation and amortization (37) (743) (369) (6) (46) (1,202) charges Depreciation and amortization 1, ,505 reversals book values at December 31, , , ,932 Gross book value at January, Accumulated amortization at December 31, 2007 book values at December 31, ,113 3,149 5, ,643 (50) (2,573) (491) (66) (531) (3,711) 3, , ,932 Including Leases 2006 gross values accumulated depreciation (32) (57) (89) 2007 gross values accumulated depreciation (38) (72) (110) 15

16 Page 16 of 24 Lease commitments ( thousands) Lease payments made Lease payments due Balance sheet item FY Accumulate Within 1 year 1 to 5 years Over 5 years Total due d Motor vehicles IT equipment TOTAL Disposals of the fiscal year primarily comprised the sale of a previously capitalized machine. 4.4 INVESTMENTS ( thousands) Tax receivables 0 2,905 Deposits and pledges 3 9 Share liquidity contract cash balance TOTAL 57 3,098 The carry-back receivable of a present value of 2,905 thousand at December 31, 2006 was reclassified under investments at December 31, 2007, since it will mature in May OTHER NON-CURRENT ASSETS ( thousands) Tax receivables Non-current trade receivables 3,318 Total 3, Deferred tax assets Non-current trade receivables concern machines sold in 2006 and 2007 with full or part payment spread over 36 months. 4.6 INVENTORIES ( thousands) Finished goods 3,022 3,908 Provisions for impairment (1,871) (2,223) finished goods 1,151 1,685 Work in progress 4,474 3,087 Provisions for impairment (1,097) (298) work in progress 3,377 2,789 Materials and components 8,884 10,168 Provisions for impairment (6,042) (4,617) materials and components 2,842 5,551 Total gross value 16,380 17,164 Total provisions for impairment (9,010) (7,138) TOTAL NET VALUE 7,370 10,025 At December 31, 2007, the company had an inventory of metals (tantalum and molybdenum) valued at 3.4 million ( 3.6 million at December 31, 2006) of strategic importance for Riber SA's manufacturing activities that are not subject to obsolescence. The sales prospects of products in which these materials are included deteriorated in 2007 and sales forecasts of these products in future fiscal years have been reviewed downwards. Consequently, the provision established at December 31, 2007 in respect of these metals amounted to 2,688 thousand, compared to 1,009 thousand at December 31, 2006, being an increase of 1,872 thousand. This increase accounts for most of the provision charges of the fiscal year. 4.7 TRADE RECEIVABLES 16

17 Page 17 of ( thousands) Trade receivables Gross 9,003 7,951 Provisions (307) (87) TOTAL 8,696 7, OTHER RECEIVABLES Other receivables may be analyzed as follows: ( thousands) Advances and payments on orders VAT receivables 479 Prepaid expenses Other receivables Property transaction receivable 0 8,050 Other receivable derivative instruments 8 80 TOTAL OTHER RECEIVABLES 151 8,817 Tax receivables Other financial assets 3,007 0 The 8,050 thousand property transaction receivable at December 31, 2006 was collected as planned during the 2007 fiscal year. The Other financial assets item includes a carry-back receivable of a nominal value of 3,058 thousand, or 3,007 thousand after discounting. This carry-back receivable was transferred to a financial institution within the framework of the Dailly law, with a view to securing a loan of the same value and same maturity. Since this receivable matures in May 2008, it was classified under current financial assets, whereas it was included under non-current financial assets at December 31, CASH AND MARKETABLE SECURITIES ( thousands) Cash and cash equivalents 1,595 2,333 Marketable securities 950 2,912 TOTAL CASH AND MARKETABLE SECURITIES 2,545 5,245 The Group invests its surplus cash balances in highly liquid marketable securities (SICAV). These securities are valued at market value at the end of the fiscal year FINANCIAL LIABILITIES 17

18 Page 18 of 24 ( thousands) Borrowings Finance leases Guarantee deposits ( thousands) TOTAL December 31, 2006 Less than 1 year From 1 to 5 years 3, ,336 More than 5 years Total more than 1 year 3, ,336 December 31, 2007 Less than 1 year 3, ,172 From 1 to 5 years More than 5 years Total more than 1 year A loan of 3,059 thousand was subscribed to in May 2006 in order to partly finance fitting out work at the Bezons site. The loan will be fully redeemable in May 2008 and includes a disposal of a carry-back receivable of the Company from the French State. Since the receivable also matures in May 2008, the repayment of the loan should not generate any cash outflow for the Company. Due to its May 2008 maturity, this loan was reclassified from Non-current financial liabilities at December 31, 2006 to Current financial liabilities at December 31, PROVISIONS NON-CURRENT PROVISIONS ( thousands) Pension Provisions for commitments liabilities TOTAL Balance at 12/31/ Additions Used provisions reversals (4) (4) Unused provision reversals (44) (44) Balance at 12/31/ Additions Used provisions reversals (29) (30) Unused provision reversals (7) (7) Balance at 12/31/ ,266 CURRENT PROVISIONS ( thousands) Provision for guarantees Provision charges Provision Provisions for for litigation liabilities TOTAL Balance at 12/31/ Additions Used provisions reversals (118) (19) (32) (169) Unused provision reversals (48) (48) Balance at 12/31/ Additions ,276 1,678 Used provisions reversals (273) (19) (10) (302) Unused provision reversals (272) (272) Balance at 12/31/ ,276 1,678 Provision for liabilities: The customs audit which was ongoing and had given rise in 2004 to a 240 thousand provision ended with a 10 thousand penalty. The provision was thus reversed in the first half of A 1,570 thousand provision (of which 785 thousand classified under non-current provisions), covering all future costs in a currently ongoing multi-year research program, was established in order to take account of the risk that this program may not generate any future economic benefits for the Group. A 491 thousand provision was established to cover the technical risks of a machine delivered in a prior fiscal year TRADE PAYABLES

19 Page 19 of 24 Trade payables non-current assets > 1 year Trade payables operations 2,677 3,455 Trade payables non-current assets < 1 year OTHER PAYABLES AND ACCRUALS ( thousands) Personnel liabilities Social security Other derivative instrument liabilities Advance payments received on the disposal of assets VAT and other tax liabilities Accrued expenses relating to site sold 80 2,795 Commissions payable to agents Other liabilities and adjustment accounts TOTAL 2,556 4, INCOME TAX AND DEFERRED TAXES Analysis of deferred taxes included in the balance sheet ( thousands) December 2007 December 2006 Provision for pension benefit commitments 9 9 Loss carry forward Total Gross deferred tax Only Addon deferred tax assets prior to the implementation of the tax grouping scheme were recognized, since the probability of recovering the tax losses of this subsidiary in the future is high. The amount of unrecognized deferred tax assets at December 31, 2007 was 5,967 thousand FINANCIAL INSTRUMENTS A significant portion of international sales is realized in US dollars, whereas the majority of the costs incurred are in Euros. To manage the impact of foreign exchange rate fluctuations, the Group has recourse to forward exchange contracts. These contracts are concluded at the time the order is received as a function of the maturity of the payments provided by the contract. The sale of a system is recognized in the period the sale occurs. The corresponding trade receivable is measured at year end rate. Unrealized gains and losses on future hedges are recognized in accordance with IAS 39: application of future cash flow hedging accounting until the date the commercial transaction takes place, application of traditional treatment of derivatives (fair value via income) between the billing date and the collection date. The future hedging contract portfolio at December 31, 2007 may be analyzed as follows: ( thousands) Notional value of future forex contracts 1,770 2,030 Of which derivatives dedicated to future cash flow hedging 1,284 0 Other derivatives 486 2,030 Fair value of derivative instruments (10) 0 19

20 Page 20 of 24 Of which derivatives dedicated to future cash flow hedging (10) 0 Other derivatives The fair value transferred from shareholders equity to income during the 2007 fiscal year was nil OTHER COMMITMENTS ( thousands) December 2007 December 2006 Guarantees granted to customers Miscellaneous banking guarantees Future hedge commitments 1,770 2,030 Mortgages Transferred receivable 3,059 3,059 Other Operating lease commitments Due within Due within Due within 3 1 year 2 years years Property leasing SHARE CAPITAL On March 14, 2000, the parent company converted the par value of its shares into Euro, resulting in an increase in share capital of 113,250. On May 24, 2000, the parent company issued 3,720,930 shares with a par value each of 0.16 at a price of 10 per share, within the framework of an international private share placement and the listing of its share on the Nouveau Marché. The new share issuance transaction resulted in proceeds of 37,209,300 (including 595, allocated to share capital), less 3,517,375 in after-tax transaction costs incurred. During the 2007 fiscal year, 157 new shares were issued following the exercise of share subscription options. The share capital was increased by 25 as a result. At December 31, 2007, the share capital totaled 3,036,472, made up of 18,977,953 shares with par value of 0.16 each. No dividend was paid in respect of the 2004 and 2005 fiscal years. A dividend of 0.04 per share was paid in August 2007 in respect of the 2006 fiscal year, for a total of 759 thousand SHARE SUBSCRIPTION WARRANTS AND OPTIONS The 300,000 stock subscription options allocated by the Executive Board on October 19, 2001 at an exercise price of 3.08 may only be exercised in three equal installments four years after their allocation, which is with effect from October The maximum share capital increase arising from the exercise of these warrants is 48,000, consisting of 300,000 shares with a par value each of The Executive Board allocated 100,000 subscription warrants on August 26, 2002 at an exercise price of A third of these warrants may be exercised each year, starting four years after they were granted, that is from August 2006 to August 25, The maximum share capital increase arising from the exercise of these warrants is 16,000, consisting of 100,000 shares with a par value each of At December 31, 2006, 5,776 options were exercised, resulting in a share capital increase of 924. During the 2007 fiscal year, 157 options were exercised, resulting in a 25 share capital increase. The par value and additional paid in capital of newly subscribed shares in 2007 through the exercise of options were full paid up, for a total of 155. No new subscription warrants were allocated during the 2004, 2005, 2006 and 2007 fiscal years. Pursuant to the authorization given by the Combined General Meeting of June 15, 2006, Riber SA s Executive Board allocated 349,950 free shares to employees and Directors of the Company on December 21, The allocation of free shares to the beneficiaries will only become final after a two year ownership period, being from December 21, Share may not be traded for a further holding period of two years from the final allocation, being until December 21, Beneficiaries will be obliged to 20

21 Page 21 of 24 retain their shares during this period. The maximum share capital increase resulting form the allocation of these free shares is 349,950 shares of a 0.16 par value, being 55,992. The expense recognized as part of operating income for the 2007 fiscal year in respect of the plan is 332, SHARE BUYBACK A share buyback plan was established by the Executive Board pursuant to the authorization granted to it by the Combined General Meeting of June 13, 2002, confirmed by the Combined General Meetings of June 13, 2003, June 17, 2004, June 16, 2005, June 15, 2006 and June An information note describing this share buyback plan was submitted to the Annual General meeting of June 15, 2007 and published. At December 31, 2007, the Company held 231,202 treasury shares, recognized as a reduction of shareholders equity for a gross amount of 309,194. Based on a price per share of 1.67, corresponding to the December 2007 average share price, the market value of these shares at December 31, 2007 was 386,107. In addition, within the framework of its share liquidity contract, Riber SA held at December 31, ,285 shares, also recognized as a reduction of shareholders equity for a gross amount of 298,692. Based on a price per share of 1.67, corresponding to the December 2007 average share price, the market value of these shares at December 31, 2007 was 297,736. Cash allocated to the liquidity contract amounted to 53,649 at December 31, 2007 and was also classified under investments in the balance sheet. 5. NOTES TO THE INCOME STATEMENT 5.1 SALES INFORMATION Sales are presented below by product line and geographical region: Sales by product line ( thousands) December 2007 December 2006 Production machines 4,476 9,579 Research and development machines 8,192 5,078 Accessories and components 4,324 5,356 TOTAL 16,992 20,013 Sales by geographic region ( thousands) December 2007 December 2006 North America 789 7,209 Asia 5,939 7,614 Europe 10,167 5,100 Other TOTAL 16,992 20, RESEARCH AND DEVELOPMENT COSTS ( millions) Gross cost of which expenditure allocated to machine production costs

22 Page 22 of NET INCOME FROM PROPERTY TRANSACTIONS The net impact on income for the fiscal year of property transactions conducted by the Group (sale of the Rueil Malmaison site, fitting out and installation of the Bezons site) was isolated in this operating account item. 5.4 WORKFORCE SIZE AND PERSONNEL COSTS Average workforce size by position: December 2007 December 2006 Managers and engineers Supervisors Employees and technicians TOTAL Group personnel costs for 2007 amounted to 6,702 compared to 6,457 thousand for REMUNERATION OF EXECUTIVE BOARD AND SUPERVISORY BOARD During the 2007 fiscal year, 1,094,209 in remuneration was paid to members of the Executive Board and senior management, comprising ten individuals, compared with 1,032,676 for Members of the Supervisory Board received 35 thousand in directors fees for the year They had received remuneration of 70 thousand in Members of the Executive Board do not benefit from a specific pension scheme different from the statutory management pension plan, which cost amounted to 30 thousand for the 2007 fiscal year. Executive Board members did not benefit from any stock option plans during the 2006 and 2007 fiscal years. Executive Board members benefited in 2006 from the free share allocation plan granted to a majority of employees according to the same conditions as other employees. The number of free shares allocated to the Executive Board was 219,800, representing a 209 thousand expense for the 2007 fiscal year. No agreement provides for the payment of severance pay other than the application of legal provisions. The Group has no other related parties other than its Directors. 5.6 PERSONNEL TRAINING The number of hours of DIF (individual rights to a training) accumulated and not used by personnel totaled 3,560 hours at December 31, OTHER OPERATING INCOME (EXPENSE) ( thousands) Goodwill impairment (see Note 4.1 ) (850) (486) Provision for liability reversals (charges) (see Note 4.11 ) (1,789) 108 Provision for doubtful account reversals (charges) (656) 762 Other operating income (expenses) (125) 279 TOTAL (3,420) NET FINANCE INCOME (EXPENSE) ( thousands) Income from marketable securities Interest expenses (88) (373) TOTAL NET INTEREST COST 35 (279) Other financial expenses (25) (36) Financial asset and liability fair value adjustment

23 Page 23 of 24 Hedging instrument fair value adjustments (4) 150 Translation adjustment (141) (186) TOTAL OTHER (27) INCOME TAX AND DEFERRED TAX Analysis of tax charge for the fiscal year ( thousands) December 2007 December 2006 Current tax (39) (36) Deferred tax TOTAL (39) (36) Reconciliation of theoretical income tax expense and Income Statement income tax expense ( thousands) December 2007 December 2006 Pretax income/(loss) (9,734) 10,449 Theoretical income tax expense (using (3,244) (3,483) applicable rate for consolidating company) Application of prior losses 3,483 Other differences (39) (36) Unrecognized deferred tax assets 3,244 Reversal of previous deferred tax assets TOTAL (39) (36) The income tax rate used in the calculation of deferred tax at December 31, 2007 is 33.33%, identical to the rate used at December 31, SEGMENT INFORMATION The breakdown of sales by product line and geographic region is presented in Note 5.1 above. The Company does not manage operating profit or loss by product line or geographic region, the main reason being that industrial equipment and human resources associated with the manufacturing process are common and concentrated on a single production site for systems and two production sites for components. Consequently, information by production line and geographic region is only generated at sales level. 7. POST BALANCE SHEET EVENTS In February 2008, Riber initiated a reorganization and restructuring plan, resulting in 9 redundancies on economic grounds. 23