SOURCE: EVS BROADCAST EQUIPMENT

February 21, 2007 23:13 ET

EVS BROADCAST EQUIPMENT : RECORD 2006 SALES OF 85.2M EUR, UP +64%, DOUBLING NET EARNINGS TO 39.4M EUR

LIEGE, BELGIUM -- (MARKET WIRE) -- February 21, 2007 -- 22 February 2007, EVS Broadcast Equipment S.A. (ISIN BE0003820371, Bloomberg EVS BB, Reuters EVSB.BR), the leader in Professional Digital Video applications for Live, Near-Live and Studio TV Production, today reports its fourth quarter ("4Q06") and full year 2006 ("FY06") financial results and provides a business update:

Highlights:

- 4Q06 SALES OF 19,0 MILLION EUR , UP 16% vs. 4Q05

- RECORD FY06 SALES OF 85,2 MILLION EUR , UP 64% vs. FY05

- 67% EBIT MARGIN FOR FY06

- RECORD FY06 EPS OF 2,89 EUR , +98% vs. FY05

- WINTER ORDER BOOK OF 21,8 MILLION EUR

- DELIVERING ON THE LONG TERM "SPEED TO AIR" STRATEGY

- YEAR 2007 TO BE A TRANSITION YEAR BETWEEN TWO STRONG YEARS

- DIVIDEND OF 1,68 EUR PER SHARE (INCL. INTERIM OF 0,48 EUR )

Group Revenue and Performance

Pierre L'Hoest, CEO of EVS said: "While we were expecting a good year with a weaker second half following the large sport events, our products have continued to gain strong appeal from broadcasters and TV production companies throughout the full year. Overall, we have achieved sales growth of 64% for 2006 to 85,2 million EUR, an additional key milestone in our company history that solidifies market potential for our key digital products XT[2]® and [IP]Director® in all markets. Our teams gave brilliant performances in Torino Winter Games, in Germany World Soccer Cup and mainly in significant near-live studio projects."

Commenting on the results, Jacques Galloy, CFO said: "The growing sales inside fixed studio environments are based on our robust XT[2]® platform combined with dedicated applications. This open and modular system architecture translates into strong operational gearing, leading margins to record levels: 67% EBIT margin for the year 2006, compared to 62% in 2005. Our affiliate, XDC, leader in Digital Cinema, needed additional funding to further expand its network and service organisation across Europe. XDC raised 15,5 million EUR equity in 2006, diluting EVS stake from 60,17% down to 47,20%. XDC is therefore booked at equity in the group accounts, and does no longer negatively influence the margins of the core business: television systems."

+-------------------------+------+------+------+------+---------------+
|Revenues - in million EUR|  4Q05|  4Q06|  FY05|  FY06|  % FY06 / FY05|
+-------------------------+------+------+------+------+---------------+
|TV Systems (Broadcast) 1)|      |      |      |      |               |
+-------------------------+------+------+------+------+---------------+
|Total                    |  16,4|  19,0|  51,9|  85,2|         + 64 %|
+-------------------------+------+------+------+------+---------------+
|Total at constant        |  16,4|  19,0|  51,9|  85,3|         + 64 %|
|exchange rate            |      |      |      |      |               |
+-------------------------+------+------+------+------+---------------+
1) As from June 27, 2006, EVS stake in XDC has been diluted from 60,17% down to 47,20%. Accordingly, XDC S.A. is accounted for at equity and is no longer fully consolidated in EVS group consolidated accounts.

Broadcast

Following a strong 3Q06, the 4Q06 yielded 19,0 million EUR sales, ie. up 16% compared to 4Q05. One should also be reminded that 4Q05 was ahead of large sporting events, which is not the case for 4Q06. EVS revenues for 2006 amounted to 85,2 million EUR and did not show a strong seasonal pattern. This evidence shows that EVS sales became less dependent towards revenues directly derived from large, worldwide sporting events. Still, major broadcasters are adopting our evolutionary platform which fits their complex production workflows.

The first driver for EVS sales growth has been the transition from analog tape-based to digital tape-less workflows, accelerated by the conversion from Standard Television towards High Definition. The recent deployment of HD ready consumer set-top boxes (mainly MPEG4 HD PVRs) helps early stage expansion of HDTV broadcasting in Europe. Nevertheless, the broadcast industry anticipates this major shift by upgrading their facilities.

Geographically, EVS Broadcast sales grew stronger in all regions over 2006. Europe, Middle-East and Africa ("EMEA") with sales up 17 million EUR (+55%). EVS products have been at the digital heart of the Torino Winter Games and the World Cup soccer but also famous reality TV shows like Big Brother in the UK or very popular weekly (near-live) drama's like award winning "Amar en Tiempos Revueltos" on TVE in Spain. America's revenues ("NALA") increased by 8 million USD (+43%) to 26 million USD, thanks to the replacement cycle of outside broadcast trucks migrating to HDTV but also to major studio projects wins like Sunday Night Football on NBC. Last but not least, Asia and Pacific ("APAC") sales grew by +153% (or 10 million EUR) to 16,4 million EUR mainly thanks to Japan, China, India, Australia, Singapore and Korea. Overall, EVS booked 5 million EUR from rental agreements with major events organising committees, a non recurring characteristic of 2007.

Since its launch in 1994, EVS has deployed more than 2.800 systems around the world, most of them being networked in nodes of 4 to 5 units to create modular TV content workout platforms. EVS has gained more than 100 new customers over 2006 from all over the world. HD still only represents 27% of the installed base (compared to 20% at the end of 2005), which calls for further growth potential, considering that 45% of the sales still refer to SD solutions. Current, but mainly future customer needs are at the centre of EVS teams attention.

Operations, margins and result

Consolidated gross profit margin reached 86% for 2006, in line with 2005 proforma since Broadcast sales are mainly derived from software solutions based on standardized hardware. Selling & Administrative expenses increase by 2,5 million EUR to 10,3 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 branch in Dubai Media City. Research and Development expenses are 5,5 million EUR, up 24%, with 24% more engineers joining EVS over the period. The group's staffing as of 31 December 2006 was 167 (excluding XDC), up 25% versus 31 December 2005.

Thanks to higher sales combined with the fixed costs base and the deconsolidation of XDC as from June 27, the FY06 EBIT margin jumped to 67% compared to 62% for FY05, excl. XDC. Taking into account XDC negative operating contribution of 2,5 million EUR which is more than offset by the XDC 3,3 million EUR dilution profit, net profit for FY06 amounts 39,4 million EUR. Basic net profit per share reaches 2,89 EUR over FY06, up 98% compared to 1,46 EUR for FY05. The net current cash-flow from TV operations reached 38 million EUR over the period.

The group has optimized return to shareholders with 22,2 million EUR pay- back: 1,2 EUR per share dividend last June representing 16,5 million EUR and 5,7 million EUR invested in the share buy-back program. Additionally, 200.000 own shares were cancelled in June 2006, representing 1,4% of share capital. Last but not least, the first interim dividend (0,48 EUR per share) has been paid early December 2006.

XDC - Digital Cinema

Following EVS dilution in XDC from 60,17% down to 47,20% last June 27, 2006, XDC is accounted for using the equity accounting method rather than globally consolidated (fully integrated) as this has been the case prior to this date. While only 1% of European screens have been digitised so far, there are major ongoing discussions regarding the business model of Digital Cinema. 2007 should be the breakthrough year for digital cinema in Europe. Over 2006, XDC booked a net loss of 4,4 million EUR, after taking into account the positive impact of the capitalization of JPEG2000 R&D expenses for less than 1 million EUR. XDC is well positioned to become a key player in this digitally shifting market.

Net Cash and Capital

On December 31, 2006, the group balance sheet shows 28,9 million EUR in cash at the bank and 2,7 million EUR in long-term bank debts. Adjusting for the interim dividend of 5,9 million EUR paid out early December 2006, the net cash position would have amounted 32,1 million EUR. At the end of the quarter, EVS share capital equalled 13.875.000 outstanding shares of which 272.209 are owned by the company. At the same date, 170.900 warrants are outstanding with an average strike price of 20,56 EUR and an average maturity of 2,4 years.

+-------------------------+---------------+----------------+--------------+
|Profit & Loss            | 4Q05 Unaudited|  4Q06 Unaudited|  2005 Audited|
+-------------------------+---------------+----------------+--------------+
|Key Consolidated figures |               |                |              |
|- IFRS in million EUR    |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Revenue                  |           16,4|            19,0|          51,9|
+-------------------------+---------------+----------------+--------------+
|Gross Profit %           |            88%|             87%|           86%|
+-------------------------+---------------+----------------+--------------+
|Operating result - EBIT  |           10,8|            12,2|          32,0|
+-------------------------+---------------+----------------+--------------+
|EBIT margin %            |            66%|             64%|           62%|
+-------------------------+---------------+----------------+--------------+
|Profit before taxes and  |           11,0|            12,2|          32,7|
|exceptions               |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Income taxes             |           -3,5|            -3,7|         -10,4|
+-------------------------+---------------+----------------+--------------+
|Net gain/(loss)          |           -0,5|            -0,1|          -2,3|
|associated with the      |               |                |              |
|discontinued operation   |               |                |              |
|(1)                      |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Net profit - Group share |            7,1|             8,4|          20,0|
+-------------------------+---------------+----------------+--------------+
|Net profit from          |            7,1|             8,6|          20,2|
|operations - Group share |               |                |              |
|(2)                      |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Net profit margin %      |            44%|             45%|           39%|
+-------------------------+---------------+----------------+--------------+
|Per share in EUR         |           4Q05|            4Q06|          2005|
+-------------------------+---------------+----------------+--------------+
|Weighted average number  |     13.727.568|      13.585.621|    13.716.934|
|of subscribed shares for |               |                |              |
|the period less treasury |               |                |              |
|shares                   |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Weighted average number  |     13.928.046|      13.775.380|    13.939.819|
|of fully diluted number  |               |                |              |
|of shares                |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Basic earnings - share of|           0,51|            0,62|          1,46|
|the Group per share      |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Fully diluted earnings - |           0,51|            0,62|          1,44|
|share of the Group per   |               |                |              |
|share                    |               |                |              |
+-------------------------+---------------+----------------+--------------+
|Basic net profit from    |           0,52|            0,63|          1,47|
|operations - share of the|               |                |              |
|Group per share          |               |                |              |
+-------------------------+---------------+----------------+--------------+

+-------------------------+--------------+-------------+
|Profit & Loss            |  2006 Audited|  2006 / 2005|
+-------------------------+--------------+-------------+
|Key Consolidated figures |              |             |
|- IFRS in million EUR    |              |             |
+-------------------------+--------------+-------------+
|Revenue                  |          85,2|          64%|
+-------------------------+--------------+-------------+
|Gross Profit %           |           86%|       +0 pct|
+-------------------------+--------------+-------------+
|Operating result - EBIT  |          56,9|          78%|
+-------------------------+--------------+-------------+
|EBIT margin %            |           67%|       +5 pct|
+-------------------------+--------------+-------------+
|Profit before taxes and  |          57,0|          74%|
|exceptions               |              |             |
+-------------------------+--------------+-------------+
|Income taxes             |         -18,5|          77%|
+-------------------------+--------------+-------------+
|Net gain/(loss)          |           0,9|             |
|associated with the      |              |             |
|discontinued operation   |              |             |
|(1)                      |              |             |
+-------------------------+--------------+-------------+
|Net profit - Group share |          39,4|          97%|
+-------------------------+--------------+-------------+
|Net profit from          |          36,9|          83%|
|operations - Group share |              |             |
|(2)                      |              |             |
+-------------------------+--------------+-------------+
|Net profit margin %      |           43%|       +4 pct|
+-------------------------+--------------+-------------+
|Per share in EUR         |          2006|  2006 / 2005|
+-------------------------+--------------+-------------+
|Weighted average number  |    13.630.464|             |
|of subscribed shares for |              |             |
|the period less treasury |              |             |
|shares                   |              |             |
+-------------------------+--------------+-------------+
|Weighted average number  |    13.801.018|             |
|of fully diluted number  |              |             |
|of shares                |              |             |
+-------------------------+--------------+-------------+
|Basic earnings - share of|          2,89|          98%|
|the Group per share      |              |             |
+-------------------------+--------------+-------------+
|Fully diluted earnings - |          2,86|          99%|
|share of the Group per   |              |             |
|share                    |              |             |
+-------------------------+--------------+-------------+
|Basic net profit from    |          2,71|          84%|
|operations - share of the|              |             |
|Group per share          |              |             |
+-------------------------+--------------+-------------+
(1) EVS share in XDC has decreased to 47,20% from 60,17%, leading to a change in the consolidation method of XDC stake in the consolidated accounts of EVS: XDC 47,20% stake is booked at equity method as from June 27, 2006.

(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

EVS'"Speed to Air" strategy is about delivering a complete workflow solution for Live Broadcast Production from outside broadcasts to fixed studios within TV stations, making their production smoother, quicker, more reliable and allowing them to be able to offer the best live or near-live images for their audience.

EVS pursues its double growth strategy: first, to benefit from its leadership in Mobile TV Production and the transition of all production trucks to HDTV over the next 5-8 years; Second, develop the Near-Live Studio Production market, for which the XT[2]® platform combined with the IP Director® suite will become the core engine. Servicing and advising customers as well as training hundreds of highly-skilled operators remain other key EVS priorities for future years. The broadcast industry is converting from analog to digital and there are still new markets to explore and develop. The re-shaping of current heavy tape-based operations and the HDTV replacement market are new long term objectives for EVS business and will allow for higher penetration of servers in TV production areas. HDTV will impact the business over a long period of time and shall follow usual equipment acquisition wave patterns.

The global winter orderbook (ie. orders to be invoiced over 2007) is now up to 21,8 million EUR compared to 25,4 million EUR on the same date one year ago, that is -14%, but the early 2006 figure included 5,1 million EUR rental agreements relating to 2006 major sport events which were mainly signed mid-2005. Excluding the rentals, the order book is slightly growing by 7%. The open order book as of 1 January 2007 amounted to 7,5 million EUR and orders intake between 1 January 2007 until yesterday, 21 February 2007 has been 14,3 million EUR.

Based on current analysis, market conditions and medium to long term products requirements from existing customers, the Board of Directors expect long term growth from both revenues and results. Despite buoyant market conditions, visibility remains limited as usual. Depending on the overall economic climate, geo-political risks and the USD currency evolution, the Board believes that 2007 shall be a consolidation year between two strong years. The group shall reinforce its R&D and Sales and Project Engineering teams over 2007 to pursue its organic long term growth. The second half of 2007 will benefit from some market traction due to big near-live studio projects but also to big sporting events foreseen in 2008: the Olympic Summer Games and the European Soccer Finals.

Last but not least, and as it did since 1998, IPO, the Board, has decided to optimize cash return to shareholders through dividend distribution and/or treasury shares repurchase program. The Board shall propose a total gross 1,68 EUR dividend (including the 0,48 EUR interim) amount to the Ordinary General Meeting of Shareholders to be held next May 15, 2007, implying a final gross dividend of 1,20 EUR to be paid in June 2007.

Analyst & Press meeting and Conference Call

EVS will hold today a press conference in Liège at 9:30 AM CET, followed by an analyst meeting in Liège at 11:00 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.

Statutory Auditors Ernst & Young statement

The Statutory Auditor confirmed that his controls which are substantially finished did not reveal significant correction that should be brought to accounting information mentioned in the press release.

Corporate Calendar:

Thursday 10 May 2007: 1Q07 sales & earnings

Tuesday 15 May 2007: Annual General Meeting of Shareholders

Wednesday 20 June 2007: Dividend pay-out

Thursday 6 September 2007: 2Q07 sales & earnings

Thursday 8 November 2007: 3Q07 sales & earnings

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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