SOURCE: EVS BROADCAST EQUIPMENT

September 06, 2007 00:13 ET

EVS BROADCAST EQUIPMENT : 2Q07 EPS OF 0.75 EUR, UP 19%

LIÈGE, BELGIUM--(Marketwire - September 6, 2007) - EVS Broadcast Equipment S.A. (ISIN BE0003820371, Euronext EVS.BR, Bloomberg EVS BB, Reuters EVSB.BR, (BRUSSELS: EVS) (PINKSHEETS: EVBEF), the leader in Professional Digital Video applications for Live, Near-Live and Studio TV Production, today reports its results for the second quarter 2007 ("2Q07") and first half year 2007 ("1H07"):

Highlights:

- 2Q07 SALES BEAT EARLIER EXPECTATIONS : 23,3 MILLION EUR, +6% vs. 2Q06

- AMERICA'S UP 81%, ASIA & PACIFIC UP 61% COMPENSATE EUROPE DOWN 38%

- 2Q07 EBIT OF 14.8 MILLION EUR, UP 10%

- 2Q07 EPS OF 0.75 EUR, UP 19%

- SUMMER ORDERBOOK OF 29,0 MILLION EUR , OR +1%

- STUDIO REPRESENTS 43% OF THAT ORDERBOOK

- A POSITIVE CONSOLIDATION YEAR

- VISIT OUR NEW WEBSITE www.evs-global.com

Group Revenue and Performance

Pierre L'Hoest, CEO of EVS said: "While we were expecting a weaker first half year following the large sport events of 2006, our products have continued to gain market shares at broadcasters and TV production companies. Overall, we have achieved sales growth of 6% for 2Q07 to 23,3 million EUR compared to 2Q06 that was driven by the World Cup. The slowdown in Europe has been more than offset by stronger America's and Asia-Pacific. Our key digital products XT[2]® and [IP]Director® are the right answer to tapeless replacement and HD transition to most of our markets."

Commenting on the results, Jacques Galloy, CFO said: "The group pursues its organic growth. First, we have hired 50% additional staff over the last 24 months, especially to reinforce and speed up R&D. Second, we are opening new offices abroad to strengthen our global footprint. While investing for future growth, we benefit from strong operational gearing as we enter the studio market and we deliver another strong quarter with a 63% EBIT margin."

+-------------------------+------+------+---------------+------+------+
|Revenues - in million    |  2Q06|  2Q07|  % 2Q07 / 2Q06|  1H06|  1H07|
|EUR(1)                   |      |      |               |      |      |
+-------------------------+------+------+---------------+------+------+
|Total reported           |  21,9|  23,3|            +6%|  42,1|  43,2|
+-------------------------+------+------+---------------+------+------+
|Total at constant        |  21,9|  24,1|           +10%|  42,1|  44,6|
|exchange rate            |      |      |               |      |      |
+-------------------------+------+------+---------------+------+------+
|Total at constant        |  20,1|  24,1|           +20%|  38,6|  44,6|
|exchange rate excluding  |      |      |               |      |      |
|big events rentals       |      |      |               |      |      |
+-------------------------+------+------+---------------+------+------+

+-------------------------+---------------+
|Revenues - in million    |  % 1H07 / 1H06|
|EUR(1)                   |               |
+-------------------------+---------------+
|Total reported           |            +3%|
+-------------------------+---------------+
|Total at constant        |            +6%|
|exchange rate            |               |
+-------------------------+---------------+
|Total at constant        |           +16%|
|exchange rate excluding  |               |
|big events rentals       |               |
+-------------------------+---------------+

(1) Refer to the geographical segmentation in annex 2.

As announced in the trading update last July 12, 2007, 2Q07 sales beat expectations and grew by +20% at constant exchange rate and excluding non recurring large rental agreements. First, the American market is pursuing its fast HDTV deployment thus calling for more and more HDTV production tools. Despite the weaker USD currency, the great performance for 2Q07 (sales of 9,5 million EUR, up 81%) is mainly due to the equipment of many new HD OB vans, network affiliates and sport arenas. The seamless video and audio files transfer between EVS and leading post-production applications helps improving our customers' efficiency, thus allowing more valuable time for the creative process. America's represent 41% of group sales for 2Q07. Second, the Asia & Pacific region continues to outperform with 2Q07 sales up 81% to 5,5 million EUR. Ahead of the Beijing Olympics, HD systems have been sold to OB (Outside Broadcast) vans that shall first be used for Chinese sports coverage before being used during the summer Olympics 2008. However, the main growth driver is the sale of many XT[2]® servers combined with the [IP]Director® to replace tape based workflows in near- live multi-camera's studio environments. As expected, the European market booked revenues of 8,3 million EUR, a decrease of 38% compared to a strong 2Q06 driven by big sport events and related rental agreements. Weaker Germany (World Cup 2006) is partly compensated by stronger Mediterranean and Eastern Europe markets. HDTV penetration in the TV homes is increasing linearly and calls for much more HD content.

Operations, margins and result

Consolidated gross profit margin reached 88% for 2Q07, up from 83% over 2Q06 where margins were lower due to the contribution of less profitable big event rentals. Broadcast sales are mainly derived from software solutions based on standardized hardware. Operating expenses grew by 21% compared to the same quarter last year. First, Selling & Administrative expenses increased by 0,7 million EUR to 3,7 million EUR, mainly due to the reinforcement of the marketing efforts and also to the recruitment of sales executives in overseas offices. For instance, EVS has just opened a new subsidiary in Madrid (Spain). One should notice that the important NAB trade fair is expensed over 2Q. Second, Research and Development expenses are 1,5 million EUR, up 13%, more engineers joining EVS over the period. The group's staffing as of 30 June 2007 was 178 (excluding XDC), averaging 171 over 1H07, up 20% versus 1H06. The Shareholders Meeting of May 15, 2007 has granted 5.113 EVS shares to EVS employees as shares bonus incentive plan, what translates into 0,3 million expense over 2Q07.

The combination of higher sales, 21% operating expenses increase and absence of big event rentals lead to 2Q07 EBIT margin of 63% compared to 62% for 2Q06.

The 47,2% affiliate XDC (pioneer in Digital Cinema) is deploying the 3rd generation of dedicated Digital Cinema Advanced servers and negotiating with distributors and exhibitors for the massive roll-out of digital screens. XDC contributed an operating loss of 0,5 million EUR at equity to EVS for 2Q07. This is an improvement compared to the loss of 1,8 million EUR for 2Q06 at a time EVS had higher exposure (60.17%) in XDC. That loss was more than compensated by the 60,17% to 47,20% dilution profit of 3,4 million EUR in 2Q06 EVS books.

Net profit for 2Q07 amounts 9,6 million EUR while net profit from operations is 10,2 million EUR, or 19% higher than 2Q06. Basic net profit from operations per share reaches 0,75 EUR over 2Q07, up 19% compared to 0,63 EUR for 2Q06. Excluding the negative contribution from affiliate XDC, the basic net earnings per share for 2Q07 is 0,74 EUR.

Net Cash and Capital

The net current cash-flow from TV operations reaches 18,5 million EUR over 1H07. On June 30, 2007, the group balance sheet shows 42,2 million EUR in cash at the bank and 2,5 million EUR in long-term bank debts. Taking into account the cash-out of the final 2006 dividend of 13,3 million EUR early July 2007, the adjusted net cash position amounts 26,4 million EUR. At the end of the quarter, there is 13.583.129 EVS outstanding shares, ie. 13.875.000 subscribed shares out of which 291.871 are owned by the company. At the same date, 171.650 warrants are outstanding.

+------------------------+---------------+---------------+--------------+
|Profit & Loss           | 2Q06 Unaudited| 2Q07 Unaudited| 1H06 Reviewed|
+------------------------+---------------+---------------+--------------+
|Key Consolidated figures|               |               |              |
|- IFRS in million EUR   |               |               |              |
+------------------------+---------------+---------------+--------------+
|Revenue                 |           22,0|           23,3|          42,1|
+------------------------+---------------+---------------+--------------+
|Gross Profit %          |            83%|            88%|           85%|
+------------------------+---------------+---------------+--------------+
|Operating result - EBIT |           13,5|           14,8|          27,6|
+------------------------+---------------+---------------+--------------+
|EBIT margin %           |            62%|            63%|           66%|
+------------------------+---------------+---------------+--------------+
|Profit before taxes and |           10,1|           14,3|          24,3|
|exceptional XDC dilution|               |               |              |
|profit                  |               |               |              |
+------------------------+---------------+---------------+--------------+
|Contribution from 47%   |               |               |              |
|XDC affiliate           |           -1,1|           -0,5|          -1,8|
+------------------------+---------------+---------------+--------------+
|Exceptional XDC dilution|            3,4|              -|           3,4|
|profit (1)              |               |               |              |
+------------------------+---------------+---------------+--------------+
|Income taxes            |           -4,3|           -4,8|          -9,1|
+------------------------+---------------+---------------+--------------+
|Net profit - Group share|           11,5|            9,6|          20,1|
+------------------------+---------------+---------------+--------------+
|Net profit from         |            8,6|           10,2|          17,3|
|operations - Group share|               |               |              |
|(2)                     |               |               |              |
+------------------------+---------------+---------------+--------------+
|Net profit margin %     |            39%|            44%|           41%|
+------------------------+---------------+---------------+--------------+
|Per share in EUR        | 2Q06 Unaudited| 2Q07 Unaudited| 1H06 Reviewed|
+------------------------+---------------+---------------+--------------+
|Weighted average number |     13.649.553|     13.588.852|    13.677.916|
|of subscribed shares for|               |               |              |
|the period less treasury|               |               |              |
|shares                  |               |               |              |
+------------------------+---------------+---------------+--------------+
|Weighted average number |     13.796.553|     13.760.365|    13.824.916|
|of fully diluted number |               |               |              |
|of shares               |               |               |              |
+------------------------+---------------+---------------+--------------+
|Basic earnings - share  |               |               |              |
|of the Group per share  |           0,84|           0,70|          1,47|
+------------------------+---------------+---------------+--------------+
|Fully diluted earnings -|           0,83|           0,70|          1,46|
|share of the Group per  |               |               |              |
|share                   |               |               |              |
+------------------------+---------------+---------------+--------------+
|Basic net profit from   |           0,63|           0,75|          1,26|
|operations - share of   |               |               |              |
|the Group per share     |               |               |              |
+------------------------+---------------+---------------+--------------+

+-------------------------+---------------+-------------+
|Profit & Loss            |  1H07 Reviewed|  1H07 / 1H06|
+-------------------------+---------------+-------------+
|Key Consolidated figures |               |             |
|- IFRS in million EUR    |               |             |
+-------------------------+---------------+-------------+
|Revenue                  |           43,2|           3%|
+-------------------------+---------------+-------------+
|Gross Profit %           |            88%|       +3 pct|
+-------------------------+---------------+-------------+
|Operating result - EBIT  |           27,7|           0%|
+-------------------------+---------------+-------------+
|EBIT margin %            |            64%|       -2 pct|
+-------------------------+---------------+-------------+
|Profit before taxes and  |           27,0|          11%|
|exceptional XDC dilution |               |             |
|profit                   |               |             |
+-------------------------+---------------+-------------+
|Contribution from 47% XDC|           -1,0|         -44%|
|affiliate                |               |             |
+-------------------------+---------------+-------------+
|Exceptional XDC dilution |              -|         n.a.|
|profit (1)               |               |             |
+-------------------------+---------------+-------------+
|Income taxes             |           -8,9|          -2%|
+-------------------------+---------------+-------------+
|Net profit - Group share |           18,1|         -10%|
+-------------------------+---------------+-------------+
|Net profit from          |           18,9|           9%|
|operations - Group share |               |             |
|(2)                      |               |             |
+-------------------------+---------------+-------------+
|Net profit margin %      |            44%|       +3 pct|
+-------------------------+---------------+-------------+
|Per share in EUR         |  1H07 Reviewed|  1H07 / 1H06|
+-------------------------+---------------+-------------+
|Weighted average number  |     13.593.936|             |
|of subscribed shares for |               |             |
|the period less treasury |               |             |
|shares                   |               |             |
+-------------------------+---------------+-------------+
|Weighted average number  |     13.765.145|             |
|of fully diluted number  |               |             |
|of shares                |               |             |
+-------------------------+---------------+-------------+
|Basic earnings - share of|           1,33|          -9%|
|the Group per share      |               |             |
+-------------------------+---------------+-------------+
|Fully diluted earnings - |           1,32|         -10%|
|share of the Group per   |               |             |
|share                    |               |             |
+-------------------------+---------------+-------------+
|Basic net profit from    |           1,39|          10%|
|operations - share of the|               |             |
|Group per share          |               |             |
+-------------------------+---------------+-------------+

(1) EVS share in XDC has decreased to 47,20% from 60,17% in June 2006, leading to a dilution profit and a change in the consolidation method of XDC stake in the consolidated accounts of EVS: XDC 47,20% stake is booked at equity method.

(2) The net profit from operations is the net profit (share of the group) excluding non-recurring exceptional results, taking into account tax items.

Outlook 2007

Executing the "Speed to Air" strategy, EVS serves hundreds of TV stations worldwide with its high-end digital video and audio applications, especially in the field of live sports and near-live studio production where the company has developed leadership positions on niche markets. The migration from tape-based operations towards integrated tapeless workflows is underway and will last during the next decade. This process is accelerated by the transition from Standard Television to High Definition Television because new equipment needs to interoperate with digital solutions which shall be High Definition.

Hence, EVS directly benefits from the following long term growth drivers: increasing number video distribution channels like IPTV, transition to tapeless workflows from 70% tapebased penetration today, replacement market due to HD format conversion, launch of new products to address the near- live studio production needs, demand of new "speedclipping" tools to fragment the content to multimedia environments, and an increased focus of broadcasters / IPTV and advertisers on large popular sports to gain new viewers. EVS currently benefits from this strong momentum due to all of these drivers. The Board and the teams believe that the underlying demand for EVS products will continue to be supported by the transition to HDTV which shall impact the business over a long period of time and shall follow usual equipment acquisition wave patterns.

The global summer orderbook reaches 29,0 million EUR compared to 28,7 million EUR on the same date one year ago, that is +1%. The summer order book is made first of the open order book as of 1 July 2007 to be invoiced over the current fiscal year amounted to 16,5 million EUR (vs. 19,2 million in 2006, incl. 2,0 million EUR big events rentals) and secondly of orders received in July and August for sales to be invoiced in 2007 reaches 12,5 million EUR (vs. 9,5 million in 2006). Studio sales represent 43% of the orderbook and shall be around 30% of annual sales.

Although visibility remains limited as usual and the weakening dollar is not a favourable factor, based on current market conditions, the Board expects 2007 to constitute a positive consolidation between 2 strong years.

Analyst & Press meeting and Conference Call

EVS will hold today an analyst and journalist meeting in Liège at 10:30 CET, with Pierre L'Hoest, CEO EVS Broadcast and Jacques Galloy, Group CFO. A conference call in English will be held at 4:00 PM (CET) to offer another opportunity to discuss the results and recent developments. Please contact corpcom@evs.tv to receive the dial-in number and the presentation.

Corporate Calendar:

Thursday 8 November 2007: 3Q07 sales & earnings

Thursday 21 February 2008: FY07 sales & earnings

Thursday 15 May 2008: 1Q08 sales & earnings

Tuesday 20 May 2008: Annual Shareholders Meeting

For more information, please contact:

Jacques GALLOY, Director & CFO, EVS Broadcast Equipment

Liege Science Park, 16 rue du Bois Saint-Jean, B-4102 Liège-Ougree, Belgium

Tel : +32 4 361 7014. E-mail : corpcom@evs.tv; www.evs-global.com

Forward Looking Statements

This press release contains forward-looking statements with respect to the business, financial condition, and results of operations of EVS and its affiliates. These statements are based on the current expectations or beliefs of EVS's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company's concentration on one industry, decline in demand for the company's products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition which could cause the actual results or performance of the company to differ materially from those contemplated in such forward- looking statements. EVS undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

About EVS Group

EVS Group designs, develops and markets professional digital equipment for Television (EVS Broadcast) and Cinema (XDC). The Group employs over 170 persons for broadcast equipment in 11 countries and sells its products to professionals of the video and audio sectors in more than 80 countries. EVS is a public company traded on Euronext Brussels: EVS, ISIN: BE0003820371. For more information, refer to www.evs-global.com

EVS Broadcast is the world leader for Live TV Production Digital Disk Recorders and Related Software Applications, especially in the field of sports. The company's dedicated hardware and software suite offer a complete production platform: live slow motion (LSM), high speed slow motion, replay only, clips generation, quick clips editing, real-time SD/HD video files transfer, time delay, multi-camera recording, metadata association, graphics storage and play-out, digital transmission, multi- format ingest and play-back, audio record & edit, webcasting, mobile phone clipping. Main software applications like the "IP Director®" are running on the dedicated robust and flexible hardware the "XT[2]® Platform". The world's leading broadcasters, such as NBC, BSkyB, FOX, RTL, NHK, CANAL+, ABC, ESPN, TF1, CCTV, PBS, CBS, BBC, ZDF and many others use EVS' solutions.

EVS 47,20% affiliate XDC is pioneering Digital Cinema Logistics and Play- out and operates between the movies distributors and exhibitors. XDC has installed more than 250 digital screens in Europe where it is market leader for end-to-end digital cinema solutions.

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