EVS Investors 3Q08Earnings 081107 ANALYSTS FINAL · The statements made in this presentation that...

www.evs-global.com

November 13, 2008Pierre L’Hoest, CEO

Jacques Galloy, CFOGeoffroy d’Oultremont, IRO

3Q08 Results

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2www.evs-global.com

Forward Looking Information

The statements made in this presentation that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical fact, which address EVS Group’s (“EVS”, “XDC” or the “Company”) expectations, should be considered as forward-looking statements. Such statements made by EVS are based on knowledge of the environment in which it currently operates. Because of factors beyond its control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, financing risk, acquisition risk, changes in technology, and other risks as outlined in the filings with securities regulators and can also be found at www.evs-global.com

3www.evs-global.com

Agenda

Financials

Business update

Outlook

Corporate

4www.evs-global.com

Agenda

Financials

Business update

Outlook

Corporate

5www.evs-global.com

3Q08 HighlightsRecord revenue (+52.9%) and net profit (+66.0%)

3Q08: EUR 37.2 million revenue (+52.9%, or +56.8% at cst xrate)Strong progression in both OB (+44%) and studio segments (+66%)EUR 7.0 million rentals around Beijing O.G., mainly for studio segmentStrong EMEA (+83.5%), NALA +35.4% at cst xrate, APAC +35.1%

3Q08 EBIT margin of 66.1% (64.9% in 3Q07)Higher margin due to leverage and better product sales mix

3Q08 Net Profit of EUR 16.4 Million, up 66%

Autumn orderbook of EUR 9.0 million at October 31 (-63%)Usual post-big event pattern for EVS (like 2006 and 2004)Overall industry slowdown

Gross Interim Dividend of EUR 1.0 per share, up 25% vs 2007

6www.evs-global.com

Record 3Q08 revenue of EUR 37.2 million

37.2

20.1

16.4

24.1

19.0 19.921.9

19.7

7.88.18.7

16.6

11.9

8.78.58.67.3

9.4

6.27.3

9.86.9

23.324.4

27.225.4

34.4

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Quarter Big Events RentalsQuarter Revenue

In EUR millions

LaunchXT[2]

Launch[IP] Director

V1.0

Launch[IP] Director

V5.1

2002 2003 2004 2005 2006 2007 2008

LaunchXT[1]

7www.evs-global.com

Strong EMEA and Asia3Q EMEA +84%, NALA +35% at cst exchange rate, APAC +35%

3.74.5

7.7

3.34.4

3.8

13.2

9.610.5 10.8

6.98.3

10.9

14.4

18.920.0

15.5

13.3 13.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2004 2005 2006 2007 2008

3.0

5.87.0

3.62.8

2.1

4.6 4.9 4.75.3

8.2

2.5

7.9

9.5

8.1

6.7 6.9

10.0

5.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2004 2005 2006 2007 2008

NALA EMEA APAC

Revenue, EUR millions

2.0 1.6 1.9 1.80.9

1.9 1.8 1.8

4.9

3.42.4

5.75.1 5.5 5.3

4.3

7.26.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2004 2005 2006 2007 2008

20.0

7.210.0

Growing HDTVTraction from Beijing

Studio ~ 39%84% is HD

Weak USD

Traction from BeijingHD take-off signs

Studio ~ 31%53% is HD (vs 43% in ‘07)

Strong 2008

Traction from BeijingJapan, China, Korea, Australia

Studio ~ 45% 68% is HD

9M

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3Q08 Revenue of EUR 37.2 millionReported – higher EBIT Margin despite opex growth

Q3Sales +52.9% vs 3Q07

+58.3% at constant FX

EBIT Rentals, IBC trade fair,

48% opex growth

35% growth without sales coms

Leverage of strong sales, better product mix

EPS: +66% Other financial income

32.5% effective tax rate

3Q07 2Q08 3Q08

Revenues 24.4 34.4 37.2Gross margin 87.4% 85.9% 86.8%

S&A (3.4) (4.5) (5.2)R&D (1.8) (2.4) (2.5)

EBIT 15.8 22.0 24.6EBIT margin 64.9% 64.0% 66.1%

Exchange result (0.4) (0.0) 0.1XDC @equity (0.7) (0.6) (0.7)

Taxes (5.1) (6.6) (7.9)

Net Profit 9.9 15.2 16.4Basic EPS 0.73 1.12 1.21

1) Basic EPS is computed on the adjusted number of shares, i.e. less own shares

1)

EUR millions, IFRS

9www.evs-global.com

Efficient natural and financial hedging3Q08 impact: EUR 1.5 mio on revenue, EUR 1.0 mio on net profit

3Q07 3Q08 3Q08 VarReported Reported @Const $ 3Q08

Revenues 24.4 37.2 38.6 -1.4Gross margin 87.4% 86.8% 86.8% -

S&A (3.4) (5.2) (5.4) -0.2R&D (1.8) (2.5) (2.5) -

EBIT 15.8 24.6 25.7 -1.1EBIT margin 64.9% 66.1% 66.3% -0.2pp

Exchange result (0.2) 0.1 0.1 -XDC @equity (0.7) (0.7) (0.7) -Taxes (5.1) (7.9) (8.0) -0.1

Net Profit 9.9 16.4 17.4 -1.0Basic EPS 0.73 1.21 1.25


1)

Q3EUR millions, IFRS, at constant exchange rate

3.9% lower sales

4.2% lower EBIT

5.7% lower net profit

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9M08 Revenue of EUR 97.0 millionReported – strong EBIT margin

9M07 9M08Revenues 67.5 97.0Gross margin 87.6% 86.8%

S&A (9.9) (12.9)R&D (4.8) (7.0)

EBIT 43.5 63.7EBIT margin 64.5% 65.7%

Exchange result (0.7) 0.7XDC @equity (1.7) (2.1)

Taxes (14.0) (20.1)

Net Profit 28.0 43.3Basic EPS 2.06 3.19


1)

9MEUR millions, IFRS

Sales +43.7% vs 9M07

+48.4% at constant FX

EBIT +35% opex growth, driven by staff increase and trade fairs

Leverage of strong sales

EPS: +54.8% Other financial income

31.6% effective tax rate


Breakdown of +15.3m net result variance

43.3

-0.4

43.7

+25.1

28.0

+0.5+1.4-6.1

-2.2-2.9

9M07

Gr Pft

S&A

R&D TaxExc

hange r

esult

Other

9M08

excl

XDC

XDC

9M08

Net Result

9M08 net profit of EUR 43.3 million, +15.3m54.7% growth mainly due to operational leverage

9M08 – EUR millions

Highlights

Strong EMEA sales

Gross margin leverage !

Margin on Events rentals

Opex growth

Higher taxes

Stable XDC

* Of which EUR 6.5 mio due to big event rentals

*


Start of the large scale deploymentFirst deployment in Austria; EVS owns 47.2% of XDC

1. Studios to co-finance 75% value of max 8.000 screens First company to sign 6 major US studios (Virtual Print Fees model) 5 years for deployment, 10 years of Virtual Prints Fees

2. Added value of XDC Technology development & integration Service to exhibitors (deployment and maintenance) Service to distributors (content lab, network management)

3. Deployment status Major VPF deal with 193 Cineplexx Austria screens – EUR 24 million – 8 years XDC = #1 in Europe, 300 rented screens + 193 Cineplexx

4. Next steps Sign similar VPF agreements with European movie distributors Sell the VPF proposal to exhibitors Secure debt + mezzanine + equity financing Break-even not before 2012


9M08 Income Statement

Contribution of EUR -2.1 millionto EVS Group over 9M08

XDC 100% 9M07 9M08in thousands of EUR

Revenue 1,912 4,193

EBITDA -1,136 -291

Net result -3,612 -4,402

EVS share x 47.2% x 47.2%XDC contribution -1,705 -2,077

Leading EU deployment

47% affiliate of EVS

Sales multiplied by 2

Strong team of 50 FTE’s

Ongoing negotiationsExhibitorsBanks


EVS strong balance sheetRoE 76%; Dividend yield ~5%

Before int. dividend 13mDSO ~64 daysIncl R&D & Demo’sXDC at equity + bond

9.1m tax provisions

=76% of total B/S, after final dividend cash-out (20m)

106.175.0TOTAL LIABILITIES

80.662.1Shareholders’ equity

4.74.3Non current liabilities19.78.6Current liabilities1.10.2Dividend payable

106.175.0TOTAL ASSETS

13.511.3Non current assets5.17.2XDC at equity + bond9.05.6Inventories

23.115.4Current assets55.435.5Cash

30 September 2008

31 Dec 2007EUR millions


Agenda

Financials

Business update

Outlook

Corporate


Takeaways from 2008, best year so far

Double assembling output over 1H08 … what demonstrates scalability

Successful risk taking First Olympics in HD Strong AVID’s DNxHD & APPLE PRORES interoperability Pre-release IP Director v5.1 On time delivery on 8-8-08 Managing XT2 market capacity around the event

Studio growth Successful major studio projects Wider product portfolio for Near-Live Multicam Customer satisfaction paves the way for the future

Growing addressable market


Team Growth, +23% over 1 year… to pursue long term growth

Headcount evolution

60

110

160

210

260

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Leverage effect on future sales

227

in FTEsand %

In FTEs

3214%

10345%

9241%

Operations

R&D

S&A

Stable in 2009 (~230)

Creative process Strengthen Keep internal

Benefit from Available skills on the market new niche opportunities

Preparing 2010-2012 More software applications Geo expansion


0%

50%

100%

150%

200%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Tapes

50P/3DServers

Full HDServers

HD ReadyServers

SD Servers

OB Market driven by tapeless & HD transitions as structural long term drivers

SD

* Theoretical model, assuming 5% annual market growth, and 95% server penetration in 2016** Consumer Bly-Ray systems are already 50P/3D ready

Tape

Servers

Recorders / players market in Outside Broadcast trucksTheoretical linear model *

50P-3D

CAGR +5%

200850% tapeless45% servers HD

upgrades

following usual sport e

ventswaves

**


Mediapro (Barcelona) is the owner of

The major Spanish football team rights for the next 8 years

Major international leagues rights for the Spanish market

“Speed highlights gun machine”

Full EVS tapeless solution : XT2, IPD, CE, NAS/SAN, interop w/ Avid

End-to-end workflow: ingest, production, play-out

GOLtv by MediaproNear-live multifeed STUDIO tapeless workflow by EVS


SPIEF forum 2,358 representatives from 75 countries 620 journalists

Temporary set up by production company VGTRK 2 XT[2] servers – 2 IPDirector - 1 XF[2] - support Full integration with post production Avid Media Composer

Applications program creation archive for Russian federation website feeding

Advantages fast turnaround instant transfer to post production go live instantly and with high reliability

XII St. Petersburg Int. Economic ForumEVS technology at the heart of the Internal Television Studio


Agenda

Financials

Business update

Outlook

Corporate


13

710

7 7

1316

69

7

26

13

25 2428

15

2218

29

24

3634

39

9

1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08

Quarter RevenueSeasonal orderbook

Autumn orderbook of EUR 9.0 millionusual post olympic but also macroeconomic slowdown

In EUR millions

2003 2004 2005 2006 2007 2008

-60%

-40%

9

*

*

* Variation vs average two last seasonal orderbooks


13,8

6,1

4,71,01,6

2,9

10,2

2,6

2007 2008

Big eventsrentals (Y+1)

Orders for Y+2

Orders for Y+1

OrdersOctober (Y)

BL 01/10, excl.Events rentals

Autumn Order Book of EUR 9.0m, -63%Unusual strong october 2007 as comparison basisUsual post olympic move, industry-wide slow down

24.0

9.0-63%

-64%Y

Y+1

Usual geo mix

Usual impact of post big event phenomenon

No loss of market share

Studio 41% of orderbookLonger leadtime36% of order intake 10M

HD ~ 35% only

2.6m for 2009

*

* In October 2007, RTBF Studio project for 3m (incl.1m for 2009) and Alfacam deal for 5.5m


67,2

88,1

0,3

8,9

13,9

6,12,9

10,1

2007 2008

Orders Octoberfor current year

BL 01/10, excl.Events rentals

Big eventsrentals 9M

Revenue 9M

Secured sales 2008 @ 31/10: EUR 106.0 mioUp 16% vs 2007, incl EUR 8.9m rentals

+16%

91.5

106.0Usual geo mix

Big Events Rentals2,0m for Euro’08 (Q2)6,9m for Beijing’08 (Q3)

Studio 38% of secured sales76% of rentals36% of order intake 10M

and 35% excl rentals

HD ~64%

+44%

-63%

24.0

9.0


Guidance 2008Double digit growth, despite limited visibility, weak Q4 and U$ evolution

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Studio Production

Outside Broadcast

27 30

5246

34

17

28

EVS TV Sales In EUR millions Growth year

Sales (double digit)

EPS

Big events

Euro 2008 (Q2)

Beijing 2008 (Q3)

Studio +85% YTD

Build the future

Local presence

New products

85

95

8-24 Aug 08

7-29 Jun 08


IABM forecasts +5% growth in 2009after strong 2007 & 2008

Source: IABM / Screen Digest

+15%+13%

+5%

*

* International Association of Broadcast Manufacturers, © 2008


$364bn Broadcast Industry Revenue Mix - 2008 * Highlights

Both tech spend and sport rights weight 5-10% of broadcast revenues

Global Revs 364 bn$ 47% Ad (Free TV) 45% Subs (Pay-TV) 8% Public Fee (EMEA/APAC)

Global 24 bn$ Tech spend 10% in EMEA 5-6% in NALA/APAC

Global 24 bn$ Sports TV 40% NALA,

NFL = 4 bn for 250 games@30 cam 40% EMEA,

Soccer = 5 bn for 5.000 games@10 cam

Sport mainly on Pay-TV & Public

Uprising web

84

5037

89

48

28

23

5

NALA EMEA APAC

Publ Fee

TV Subs

TV Ad

10 10 49 124

NALA EMEA APAC

SportRights

EquipmSpend

6%10%5%

173

121

70

* Sources : PWC 2008-2012 Global Media Outlook (summer 2008)ScreenDigest/IABM (summer 2008)

NALA EMEA APAC


Global Broadcast Revenue Evolution – in Bn $* Highlights

Pay TV more resilient in economic slowdownSport is key Pay-TV content while olympics mainly on public TV

CAGR 2008-2012: +8.0%

Public Fees: +3%

Advertising: +5%

Pay TV subs: +11%

In 2001-2004:

Advertising: +5%

Pay TV subs: +60%0

50

100

150

200

250

300

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pay TV Subs

TV advertising

Public license fees

Post TMT Bubble

* Source: PWC Global Media Outlook 2008-2012 (summer 2008)


Evolution of TV Sport Rights – in bn U$ Highlights

Sport rights dependent on even yearsbut sports are usually long term agreements

CAGR 2008-2012: 6.5%

2009

No big sporting event

Flat league right prices

Hedge : usual long term TV

agreements

EMEA > NALA post ’08

APAC

Low GDP & TV penetration

watches Intl sport

0

5

10

15

20

25

30

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

APAC

EMEA

NALA

24

Source: PWC Global Media Outlook 2008-2012 (summer 2008)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

% HD Ready Sets in US

% HD TV signals in US

% US Trucks in HD

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

% HD Ready Sets in EU

% HD TV signals in EU

% EU Trucks in HD

Ongoing HD penetrationSlow for EU consumers but one way forward

3Q0825%3%35%

Start HD in US

Start HD in EU

3Q0845%25%50%

United StatesUnited States EuropeEurope

(MPEG2)

Swap MPEG2 to MPEG4

(MPEG4)


Agenda

Financials

Business update

Outlook

Corporate


Treasury shares2.1%

Unidentified64.5%

Cytindus2.2%

BIP5.3%

Lazard AM3.0%

Founders18.7%

Fortis IM4.2%

EVS shareholding as of Nov. 12, 2008in % shares and issued warrants – based on last received shareholders statements

Nov. 12, 2008 stock data:

Basis : 13,875,000 ordinary sharesOutstanding warrants : 126,650 @46Treasury shares : 288,634 shares @37Mkt Cap @48: EUR 670 million

9M08 stock data:

Standard velocity: 83.9%Average daily volume:

- 45,500 shares- EUR 2.8 million

EVS has bought back 103K shares over 10M08 at an avg price of EUR 60equiv. to EUR 6.2 million

* Board members

*

*

*


Gross Interim dividend of EUR 1.00 per shareEx-date Nov 17, Pay-date Nov 24

0,48

1,000,80

0,20

1,001,20

1,20

1,48

0,100,100,120,08

0,60

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Capitalreimbursement

Finaldividend

InterimDividend(November)

(June)

Evolution of EVS dividend to shareholders, in EUR per share

Current dividend yield = 5-7%


Corporate Calendar

Monday November 17, 2008: ex-date interim dividend (cpn #7)

Monday November 24, 2008: payment date interim dividend (cpn #7)

Friday November 28, 2008: EGM DWESAB merger (effective Oct. 1, 2008)

Wednesday December 24, 2008: Postponed EGM DWESAB

Thursday February 19, 2009: 4Q08 revenue & earnings

Thursday May 14, 2009: 1Q09 revenue & earnings

www.evs-global.com

Record 3Q08 revenue, EUR 37.2m, +53%

Higher 3Q08 EBIT margin: 66.1%

Lower order book of EUR 9.0 m, -63%

2008: double-digit sales & EPS growth

2009: transition year

Interim dividend EUR 1.0 gross, +25%

Conclusions


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