Group financial highlights 4...CHF 75 million and were partially offset by collections on...

3

Group financial highlights 4

Review 2002 7

Corporate governance 21

Group results

Balance sheets 38

Profit and loss accounts 39

Statements of changes in shareholders’ equity 40

Statements of cash flows 41

Notes to the financial statements 43

Report of the Auditors 63

Holding results

Balance sheets 66

Profit and loss accounts 67

Notes to the financial statements 68

Proposal of the Board of Directors for the appropriation

of available retained earnings 70

Report of the Auditors 71

Group – Statistical data over five years 74

Group – Share information 77

Group principal operating and holding companies 78

TABLE OF CONTENTS

54

1998 1999 2000 2001 2002

3 1543 085

2 369 2 332 2 392

Revenues (CHF millions)

1998 1999 2000 2001 2002

165

193

158145

216

Operating income (CHF millions)

1998 1999 2000 2001 2002

5.2%6.3% 6.7% 6.2%

9.0%

Operating income margin

1998 1999 2000 2001 2002

(290)

317

129

(75)

109

Net profit/(loss) (CHF millions)

1998 1999 2000 2001 2002

(36.85)

40.46

16.46

(9.61)

14.02

Earnings/(loss) per share1(CHF)

1998 1999 2000 2001 2002

0.00

4.80

5.80 6.00

7.252

Dividend per share (CHF)

1998 1999 2000 2001 2002

85

616

488446

402

Net cash (CHF millions)

1998 1999 2000 2001 2002

174 179

117 112106

Capital expenditure (CHF millions)

1998 1999 2000 2001 2002

39 144 37 506

30 532 30 625 32 288

Average number of employees

1 For the purpose of calculating earnings per share information, the average number of shares in circulation for the period is used2 As proposed by the Board of Directors

GROUP FINANCIAL

CHF (millions) 2002 2001

Group

Revenues 2 392 2 332

Operating income 216 145

Operating income margin 9.0% 6.2%

Exceptionals (80) (177)

Net profit/(loss) 109 (75)

Net profit (before exceptionals, net of tax) 159 102

Shareholders’ equity 897 982

Net cash 402 446

Earnings per share (in CHF, before exceptionals, net of tax) 20.46 13.09

Earnings per share (in CHF) 14.02 (9.61)

SGS Société Générale de Surveillance Holding

Net profit 93 54

Shareholders’ equity 900 854

Dividends as proposed by the Board of Directors 55 47

Dividends (CHF per share) 6.00 6.00

Special dividend (CHF per share) 1.25 –

98

Dear Shareholders and stakeholders,

With the changes in leadership in the early part of 2002, SGS undertook a structural overhaul of its operations and of its

businesses. We were prompted into action by the clear acknowledgement that notwithstanding being the largest inspection

and testing company in the world, we had fallen substantially behind the competition.

We thus embarked on a 3 year programme designed to clearly establish SGS as the performance standard setter for our

industry. We are proud to present you the first concrete results of our efforts.

Revenue improved to CHF 2 392 million, up 10.2% on last year in local currency terms (+2.6% on a reported basis) in a market

environment that was far from buoyant. We achieved strong revenue growth in our Consumer Testing, Automotive, Systems

and Services Certification and Industrial Services and Emerging Businesses by delivering more than 10% year over year

growth in each of them.

More importantly, we improved operating income at constant currencies by CHF 82 million or 60% to CHF 216 million. Our

operating margins in all businesses improved compared to last year with the most significant gains being achieved in Agricultural,

Minerals and Automotive Services. Our Group margins for the year stand at 9%, boosted by a 10% margin performance in the

second half of the year.

The remaking of SGS triggered a net exceptional charge of CHF 50 million. Restructuring costs net of tax, for the year totalled

CHF 75 million and were partially offset by collections on discontinued government contracts of CHF 25 million. This restructuring

exercise is now complete with no additional exceptional charges expected in 2003. We are, however, continuing our significant

efforts to collect amounts due to the Group in connection with discontinued government contracts. Although they are strictly

a legacy issue irrelevant to the ongoing operational and strategic objectives of the Group, they do constitute substantial

unmonetised assets and progress is expected in 2003.

The Group's net financial income of CHF 13 million is below that of last year reflecting the global reduction in yields.

The normalised tax rate for the year has reduced to approximately 27% and now stands at the upper limit of the range we

expect in the medium term.

Net profit before exceptionals grew 56% to CHF 159 million. Including exceptional items the bottom line improved from a loss

of CHF 75 million to a profit of CHF 109 million.

Earnings per share before exceptionals stand now at CHF 20.46.

Our 2002 accomplishments are not limited to operational improvements.

We have narrowed and set strategic focus on our Industrial, Environmental and Automotive businesses. We now have a clear

direction for our Consumer Testing Services by having defined precisely the range of products and markets which will drive our

growth ambitions. We have clearly confirmed our commitment to, and leadership position in the commodities based business

where we are systematically expanding our service offerings along our customers’ value chain. Our Trade Assurance business

activities supporting global trade and serving government and institutional organisations, have clearly stabilised and product

innovation is beginning to bear the first fruits.

In the first half of 2002, we concluded the acquisition of Lakefield Research Ltd., an international group based in Canada. The

acquisition expanded the service portfolio with upstream extractive metallurgical testing and increased our market presence

in assaying for the non-ferrous and precious metal industries. The Lakefield business contributed revenues of approximately

CHF 30 million in the last eight months of 2002.

As part of the share buyback programme announced in July 2002, we have repurchased 2.06% of the capital. The programme

envisages a repurchase of up to CHF 250 million. These shares are not intended to be cancelled, and will be used for various

corporate purposes, including the funding of stock options and acquisitions.

The Board of Directors is recommending the approval of a dividend of CHF 6.00 per share. On the occasion of our 125th

Anniversary and in view of the 2002 results, it also recommends an additional special dividend of CHF 1.25 per share.

The 2002 results were achieved by refocusing the organisation on the need for leadership. A considerable amount of time

has been spent assessing the quality of the Group’s senior leaders and making the required changes. The Operations Council,

the newly formed senior executive decision-making body of SGS, now includes a wide array of leaders from all geographical

corners of our operations. In addition to bringing the required level of cultural and market sensitivities needed for running a

truly global organisation, the new Operations Council reflects a flat hierarchical organisation where all leaders are required to

be close to and immediately responsive to market needs.

The overall mandate of this Operations Council is to lead our people in embracing and espousing our new competitive and

profit driven culture. It encourages the challenging of the status quo and the promotion of a culture and the nurturing of an

environment where the continuous redesign of our competitive advantages is a way of life. Accountability and performance

ethos are the new leadership traits at SGS.

The Operations Council has undertaken these tasks with rigour, vigour and passion. It has committed to identify and develop

new talents in the organisation and to give them the opportunity and the freedom to act and to deliver. It is also firmly committed

to growth: more than 10% of the Group’s 2003 budgetted operating income has been earmarked to fund new growth initiatives.

The newly deployed corporate identity, with a single brand and image, provides the framework within which the true potential

of the SGS global network can be leveraged.

We remain confident in our future.

Barring any fundamental and lasting deterioration in trading conditions, we expect the Group to improve its net income by at

least 10% in 2003. We will be helped by the continuing positive impact of the restructuring initiatives undertaken in 2002. But

that will not suffice. In order to achieve operational excellence and to ultimately claim the right to leadership in this industry, the

Group will adopt and deploy a Six Sigma operational framework to baseline and improve its operational effectiveness. By focusing

the organisation on customer expectations and imposing measurement rigour in the execution of our activities, we expect this

Six Sigma initiative to provide a measurable tracking of improvement, the creation of a process focus as well as a reinforcement

of our commitment to our customers, their needs and expectations.

We would like to thank our 32 000 people worldwide for their commitment to the change process we have started and for their

trust in our future. And to you, our shareholders, for your continuing commitment and support.

LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE

Georges Muller

Chairman

Sergio Marchionne

Chief Executive

11

The Minerals business revenues grew

by 1.9% (32.5%, including acquisitions,

on a reported basis). With the benefit

of acquisitions and operational improve-

ments margins moved from 6.4% last

year to 10.4% this year.

Good price levels in gold and platinum

positively impacted the Group’s off-site

geochemical laboratory business with

additional volumes from the major and

junior mining companies. Outsourced

laboratory opportunities continue to be

seized with new projects in Africa,

Canada and the USA.

The Group’s coal and coke related

businesses performed solidly for the

period as a result of improving

supply/demand curves in the steel

industry. However, the drop in demand

in the US for steam coal and the loss

of share in the China coke market both

had an adverse impact on revenues.

The continued privatisation and expan-

sion of the Russian coal industry led to

significant new opportunities for the

Group’s services.

The addition of Lakefield Research’s

portfolio of services have enabled the

Group to pursue new business with

the precious metal recycling and

production industries. The operations

in Canada and Chile have suffered from

the downturn in base metal prices in

contrast with positive developments in

Australia and above target performance

in Brazil and South Africa.

MINERALS SERVICES

10

With sales of CHF 250 million, 7.7% up

from 2001 on a comparable basis (-1.6%

reported), the Agricultural business

delivered a significantly improved oper-

ating margin of 10% compared to 4.3%

last year.

Revenue growth was strongest in

Eastern Europe with an increase of

over 40%. This increase was driven by

the export of cereals from the Black

Sea region which more than compen-

sated the low level of exports from

Western Europe.

Revenue growth was also high in Latin

America and particularly in Brazil and

Argentina. In Asia, India led with a very

good performance driven mainly by

activities in rice. In other countries in

the region SGS continued to reinforce

its overall market position.

North America showed a growth of

more than 20% largely attributed to

new services in Canada.

The breadth of our intervention in the

Agricultural Services value chain

expanded with significant gains being

made in the areas of trade finance

(collateral management, e.doc) and

shipment guarantees.

AGRICULTURAL SERVICES


Revenue 254 250

Change in % (1.6)

Change due to

Volume and prices 17

Currency translation (22)

Acquisitions/(disposals) 1


Change in % 127.3

Operating margin % 4.3 10.0


Revenue 203 269

Change in % 32.5

Change due to

Volume and prices 3




Change in % 115.4


13

Life Sciences’ comparable revenues

were up by 2.2% in 2002 (reported -

1.7%) with a margin improvement from

5.2% to 7%.

Healthy revenue growth and profits

were seen in Quality Control Testing for

the Canadian, Belgian and German

operations, though tempered by weak-

er performance in France and the USA.

In Clinical Research Testing moderate

growth and profitability were experi-

enced over the year as activity slowed

somewhat in the second half.

The Group is close to finalising the

leadership choice for this business,

after which the strategic growth options

and initiatives can be fully evaluated,

ideally in the second half of 2003.

LIFE SCIENCE SERVICES

12

Against a highly volatile oil market,

fuelled by concerns over Iraq and

supply disruptions in Venezuela late in

the year, as well as difficult chemical

markets, OGC increased its sales by

1.1% on a comparable basis (-3.9%

reported) and grew operating income to

deliver a margin of 7.8% (7.2% in 2001).

2002 was marked by a dual focus:

restructuring and growth. The restruc-

turing positively impacted overall

efficiency in the operations, countering

the difficult operating environment in

the established markets. A solid base

has been given to future growth with

the implementation of a fully integrated

global sales network and dedicated

development and project teams.

Geographically, good performances in

the core inspection and testing services

were delivered in Europe, South America

and the Caspian. The continuing consol-

idation trend in the oil industry and diffi-

cult market conditions led to flat results

in the US and the Middle East.

Within the privatisation policy of the UK

government, SGS secured, towards the

end of the year, a significant contract

for, among other services, statutory gas

metering and quality control services.

Throughout 2002, SGS further devel-

oped its on-site laboratory network

servicing storage terminal customers

with new laboratories opening in the

Caspian, the Black Sea, Russia and

South Africa.

The set-backs suffered in 2001 in

the Asia region were addressed and

subsequently operations stabilised.

Good, profitable growth was achieved

in China, mainly in the petrochemical

area and through forays into oil. In

Japan, SGS teamed up with a major

local service provider established

throughout the country.

OIL, GAS & CHEMICALS SERVICES (OGC)


Revenue 415 399

Change in % (3.9)

Change due to

Volume and prices 4




Change in % 3.3



Revenue 58 57

Change in % (1.7)

Change due to

Volume and prices 1




Change in % 33.3


15

With sales of CHF 208 million, 10.8%

up from 2001 on a comparable basis

(+3.5% on a reported basis), Systems

& Services Certification business

achieved a strong performance despite

a difficult economic environment in

major countries. Operating margin rose

from 9.5% to 11.5% reflecting improved

efficiency achieved mainly during the

second semester.

During the year, a thorough review of

the worldwide operations was carried

out resulting in the closure/resizing

of SSC activities where market condi-

tions and perspectives did not meet

expectations. Further, additional

resources were allocated to the sales

organisation locally, thus allowing it to

be closer to the market and to better

meet clients’ expectations.

Growth was driven by ISO 9000 market

segment with strong performance in

Western Europe, mostly in Spain,

Belgium and Switzerland. In Asia,

increasing demand for certification

drove good results in China, Japan

and Malaysia.

The ISO 9000 conversion to the

new 2000 version continued.

Clients focused on the improved

elements in the new standards, allowing

the development and marketing of new

added value services, which put

emphasis on management efficiency and

performance enhancement. ISO 14001

(environment) and OHSAS 18001 (health

and safety) are still growing strongly.

Service certification programs are

actively being developed in Western

Europe and North America. These

services are meeting customer demand

for improved service delivery and

better control of the supply chain.

SYSTEMS & SERVICES CERTIFICATION (SSC)

14

Comparable sales increased 12.7% to

CHF 299 million in 2002 (reported

+4.5%). These results can be attributed

to a very strong performance in the

North American and Asian regions.

Operating margins continued to

improve, rising to 9.7% from 7% mostly

driven by the top line growth and a shift

of emphasis into testing. Continued

investments in the Electrical and

Electronic laboratory infrastructure in

Asia negatively impacted the operating

margin with benefits accruing in

2003/2004.

Testing is expanding rapidly and is

now more than 50% of the business.

Activities range from customer require-

ments testing on the final product, to

prototype, performance, regulatory and

the ever more demanding green testing.

The necessary heightened focus on

testing will be delivered without neglect-

ing the still very important inspection

and auditing services within CTS.

Due to the pivotal role of Asia in the

manufacturing of consumer products,

the Business Leadership for CTS was

moved to Hong Kong in the last quarter

of 2002.

CONSUMER TESTING SERVICES (CTS)


Revenue 286 299

Change in % 4.5

Change due to





Change in % 45.0



Revenue 201 208

Change in % 3.5

Change due to





Change in % 26.3


17

Automotive Services comparable

revenues grew by 16.7% versus prior

year (+3.4% reported) with strong

revenue growth in North America and

Ireland and satisfactory performance in

South America in difficult market condi-

tions. Growth was driven primarily by

strong off-lease inspection business in

North America fuelled by aggressive

incentives employed by manufacturers

and financial institutions to promote

early lease termination.

Operating income improved by CHF 17

million to CHF 13 million, with margins

now positive at 6.2%. The major contri-

butions to this improvement were pro-

ductivity/ efficiencies in the European

operations and deployment of IT systems

functionality in North America.

Product enhancements and value added

services developed have received wide-

spread customer acceptance and are

adding to a solid opportunity pipeline.

Inspection web-based reporting and

scheduling, automated call-centre

technology, title hosting, and on-board

diagnostic testing are several of the

initiatives commercialised during the year.

Automotive Ireland continued its excel-

lent first half performance, continuing

to grow strongly in the second half of

2002 with revenue growth for the year

almost 50% up on 2001.

AUTOMOTIVE SERVICES

16

Comparable revenues grew by 10.8%

for this business (reported +3.2%) with

operating income increasing to CHF 39

million from CHF 29 million. Operating

margins improved to 8.0%, compared

to 6.1% in the prior period.

Industrial activities have maintained

their good growth trend particularly in

the construction sector in Spain and the

Far East and in services related to the

oil, gas and energy sector in Africa, the

Middle East and the Far East. A strong

performance was delivered in the supply

of technical staffing in the Middle East

compensating a weaker performance in

Europe in supply to the telecommunica-

tion and information technology sectors.

The Group’s Environmental businesses

showed a healthy revenue growth driven

primarily by Taiwan and Spain. The

acquisition of SSL (Australia) and

Lakefield (Canada) brought additional

environmental business with them

boosting both revenues and margins.

The USA was weak due to economic

conditions and the diversion of public

sector project funding towards

enhanced domestic security.

The Group’s other activities generated

marginally better revenues but slightly

lower operating margins, primarily

driven by a weaker performance in

the Australian business. Overall the

profitability of these activities improved

with the non-recurrence of the 2001

field spend on the SGSonSITE initiative.

INDUSTRIAL SERVICES & EMERGING BUSINESSES


Revenue 474 489

Change in % 3.2

Change due to



Acquisitions/(disposals) (10)


Change in % 34.5



Revenue 204 211

Change in % 3.4

Change due to




Operating income (4) 13

Change in % –

Operating margin % (2.0) 6.2

1918

Revenues of Trade Assurance Services

of CHF 210 million have decreased by

7.7% on a comparable basis (-11.4%

reported) mainly due to the terminated

contracts with the governments of

Argentina, Angola, Kenya and Rwanda.

The operating margin has confirmed

its recovery delivering 11% up from

10.1% last year, reflecting the benefits

of significant restructuring measures

implemented during the year which

were partly offset by the loss of the

above mentioned contracts.

During 2002, Trade Assurance Services

successfully extended or renewed con-

tracts with the Governments of Burundi,

Bolivia, Cameroon, Ethiopia, Guinea

Conakry, Mauritania, Mali, Nigeria and

Papua New Guinea (Forestry).

New forestry contracts were signed in

Congo and Ecuador and a new contract

was negotiated in Indonesia for

monitoring of steel imports.

The weighted average receivable in this

business is slightly less than 4 months

of sales. All revenues on government

contracts that terminated after 31

December 2001 and for which SGS

provided services in the current year

are being recognised on a cash basis.

Collections in 2002 on terminated

contracts were CHF 25 million.

The launch of the new TradeNet project

in Ghana was made in November 2002.

This electronic community network is

part of an important Customs moderni-

sation program in Ghana.

TRADE ASSURANCE SERVICES (TAS)


Revenue 237 210

Change in % (11.4)

Change due to

Volume and prices (18)




Change in % (4.2)


2.3 Changes of capital

At the Annual General Meeting on 10 May 2001, the shareholders accepted the resolution to create a unitary share structure.

All bearer shares were converted into registered shares on the basis of one bearer share being equal to five registered shares.

Changes to the capital and reserves are shown in the table below. All year 2000 data can be found in the 2001 Annual Report.

2322

SGS is committed to good corporate

governance.

This report conforms with the new

directive on information relating to

corporate governance published by

SWX Swiss Exchange on 1 July 2002.

The numbering used in the SWX directive

has been followed. When an item listed

in the directive is not addressed in this

report, this item is either inapplicable to

or immaterial for SGS.

1. Group structure and shareholders

1.1 Group structure

SGS Société Générale de Surveillance

Holding SA, a holding company registered

in Geneva and organised under Swiss law

(herein "the Company"), owns directly or

indirectly all SGS companies worldwide.

Shares of SGS Société Générale de

Surveillance Holding SA are listed on SWX

Swiss Exchange and traded on Virt-X.

The Group is divided into 10 sub-

geographic operations (the name of

the operation is followed by the place

where senior management is located)

and 9 businesses

Europe / Africa / Middle East

South West Europe – Madrid

North West Europe – Antwerp

Central Europe – Hamburg

Eastern Europe – Moscow

South East Europe – Budapest

Africa & Middle East – Geneva

Americas

North America – New York

South America – Lima

Asia Pacific

East Asia – Taipei

South East Asia & Pacific - Perth

Businesses

Agricultural Services

Minerals Services

Oil, Gas & Chemicals Services

Life Sciences Services

Consumer Testing Services

Systems & Services Certification

Industrial Services &

Emerging Businesses

Automotive Services

Trade Assurance Services

Significant companies held by the

Company, directly or indirectly, are listed

on page 78 .

1.2 Significant shareholders

At 31 December 2002, Mr August von

Finck and his family held 23.5% of the

capital and voting rights of the Company,

whilst Worms & Cie held 21.0%.

2. Capital structure

2.1 Capital

The share capital of the Company

amounts to CHF 156 443 320 and is fully

paid-in. The total number of registered

shares of a nominal value of CHF 20

outstanding is 7 822 166.

According to the share buy back pro-

gramme announced on 9 September 2002,

the Company acquired on 20 September

2002 through its subsidiary Supervise

Investment Limited, Jersey, 159 000

registered shares. In total at 31 December

2002, the Company held directly or

indirectly 160 750 of its own shares.

2.5 Bons de jouissance

80 bons de jouissance issued by the Company are still held by third parties. Each bons de jouissance gives the same rights to

the profit and liquidation proceeds as 5 registered shares of the Company. In the event of a capital increase bons de jouissance

also entitle the bearer to preferential subscription rights. The Company owns 1 750 registered shares issued in 1992 following

the offer to exchange the bons de jouissance category A for registered shares.

2.6 Admissibility of nominee registrations

In line with the by-laws of the Company, registered shares acquired in a fiduciary capacity may not be registered in the

shareholders' register, unless the Board of Directors grants a special authorisation. As communicated by SAG Sega on 4

October 2001 such shares are registered in the shareholders' register but do not have the right to vote at shareholders' meetings.

CORPORATE GOVERNANCE

Share capital

Shareholders’ retained earnings

Registered shares Bearer shares Bons de TotalCHF 20 nominal value CHF 100 jouissance share capital

Number of shares nominal value

In circulation Treasury Total issued Number of shares Number CHF

Balance at 1 January 2001 2 594 041 1 750 2 595 791 1 045 275 80 156 443

Conversion of bearer shares into registered shares 5 226 375 5 226 375 (1 045 275) – –

Balance at 31 December 2001 7 820 416 1 750 7 822 166 – 80 156 443

Treasury shares (159 000) 159 000 –


General legal Reserve for Retained TotalCHF (thousands) reserve own shares earnings

Balance at 1 January 2001 33 498 – 655 760 689 258

Dividend paid (45 371) (45 371)

Net profit for the year 54 043 54 043

Balance at 31 December 2001 33 498 – 664 432 697 930

Dividend paid (46 935) (46 935)

Allocation to the reserve for own shares 62 486 (62 486) –

Prescribed dividends 42 42

Net profit for the year 92 692 92 692

Balance at 31 December 2002 33 540 62 486 647 703 743 729

2524

3. Board of Directors

Members of the Board of Directors

(additional details may be viewed on

the Company’s internet site at

http://www.sgs.com)

3.1 Members of the Board of Directors

Chairman

Georges Muller (1940)

Swiss

Lausanne

Honorary professor and attorney at law

Max D. Amstutz (1929)

Swiss

Begnins

(Until 2 May 2002)

Managing Director

Sergio Marchionne (1952)

Canadian-Italian

Cham

SGS Chief Executive

Directors

Dominique Auburtin (1951)

French

Paris

Chairman of the Executive Board of

Worms & Cie

August von Finck (1930)

German

Munich

Industrialist

August François von Finck (1968)

German

Freienbach

Industrialist

Ferruccio Luppi (1950)

Italian

Turin

Chief Financial Officer of the Fiat Group

Thierry Lalive d’Epinay (1944)

Swiss

Freienbach

Chairman of the Board of Directors

of Swiss Federal Railways

(Until 2 May 2002)

Dominique P. Morax (1948)

Swiss

Zurich

Consultant

(Until 6 November 2002)

Ricardo H. Siepmann (1956)

German

Ovendorf

Consultant

(Until 2 May 2002)

Secretary

François Stettler (1961)

Swiss

Coppet

SGS General Counsel

(Since 1 August 2002)

Internal Audit

Ewald van der Helm

Dutch

Bernex

External Auditors

Deloitte & Touche SA, Geneva

2726

3.2 Other activities and functions

Georges Muller

Major Board assignments

Serono SA, Coinsins,Chairman

La Suisse Assurance (Vie/Accidents),

Lausanne, Chairman

Bertarelli & Cie, Chéserex

Banque du Gothard, Lugano

Rentenanstalt / Swiss Life, Zurich

Schindler Aufzüge AG, Ebikon

Other

Fondation pour la création d'un Musée

des Beaux-Arts, Lausanne, Chairman

ISREC, Institut Suisse de Recherche

Expérimentale sur le Cancer,

Epalinges, Chairman

CVCI, Chambre Vaudoise du Commerce

et de l'Industrie, Lausanne

Pro CICR, Association Suisse pour le

soutien du Comité International de la

Croix-Rouge, Neuchâtel

World Arts Forum, Geneva

Sergio Marchionne


Lonza Group, Chairman, Zurich

Serono SA, Coinsins

Dominique Auburtin


Worms & Cie, Paris

Arjo Wiggins SAS, Chairman,

Issy-les-Moulineaux

Permal Group, Paris

Antalis International, Paris

Other

La Gazette du Palais, Paris

August von Finck


Generali Holding Vienna AG, Vienna

Semper idem Underberg AG, Rheinberg

Würzburger Hofbräu AG, Würzburg

August François von Finck


Custodia Holding, Munich

Carlton Holding, Allschwil

Ferruccio Luppi


Fiat auto s.p.a. and various

subsidiaries, Turin

Iveco n.v., Turin

3.4 Elections and terms of office

The by-laws of the Company specify

that the mandate of the Directors is

of a maximum duration of four years.

Directors can be re-elected after this

four year period. There is currently no

rule for a total or staggered renewal

of the Board.

Time of first election and remaining

term for each member of the Board

of Directors

Dominique Auburtin

elected AGM 10 May 2001/re-elected

2 May 2002

Ferruccio Luppi


2 May 2002

Sergio Marchionne


2 May 2002

Georges Muller

elected AGM 2 May 2002

August von Finck

elected 13 October 1998/re-elected

2 May 2002

August François von Finck

elected AGM 2 May 2002

All Board Members at 31 December

2002 have been elected/re-elected on

2 May 2002. D. Auburtin, F. Luppi and

S. Marchionne were first elected on

10 May 2001. All mandates will end at

the AGM to be held in 2006.

3.5 Internal organisational structure

The Board of Directors

The Board of Directors defines the

Company’s direction and is ultimately

responsible for the management of SGS

and for the supervision of the persons

entrusted with company management,

especially with regardto compliance

with the law, the Articles of Association,

regulations and directives. A Chairman of

the Board is elected among the Board

members. The Chairman is entrusted

with the convening and the preparation

of Board meetings. The Board elected

among its members a Chief Executive

in charge of the management of the

Company. Between Board meetings

the Chairman and the Chief Executive

review on a regular basis issues relating

to the management of the Company.

The Board assigns to the various

committees selected issues to be

reviewed. At Board meetings the

Chairman reports to the Board on the

activities of the various committees.

Recommendations made by the

committees are discussed and put

to the vote of Board members. In

2002 the Board of Directors held

seven meetings.

The Audit Committee

The Audit Committee of the Group

comprises members of the Board of

Directors. From 1 January to 12 March

2002 Audit Committee members were

D. Morax, M. D. Amstutz, F. Luppi,

S. Marchionne; from 14 March to 2 May,

2002 the members of the Committee

were D. Morax, M. D. Amstutz, F. Luppi;

from 2 May to 31 December 2002 the

members of the Committee were G.

Muller, A.F. von Finck, F. Luppi. The Audit

Committee appraises the internal controls,

reviews the adequacy of the organisational

structure and qualifications of the internal

audit staff. It discusses with the external

auditors the results of their audits.

It reviews with internal and external

auditors as well as with the heads of

Group Control, Group Tax and Group

Treasury, whether the accounting policies

and financial controls are appropriate.

It meets with the management and the

external auditors to review the financial

statements and the annual report. It

reviews the risk control methodology. It

evaluates and makes recommendations

regarding the appointment of the exter-

nal auditors, their remunerations as well

as the scope of their audits. In 2002,

the Audit Committee met twice.

The Nomination and

Remuneration Committee

The Nomination and Remuneration

Committee comprises members of the

Board of Directors. From 1 January to

2 May 2002 these members were T.

Lalive d'Epinay, M. D. Amstutz, D.

Auburtin, A. von Finck; from 2 May to

31 December 2002 the members of

the Committee were G. Muller, D.

Auburtin, A. von Finck. The Committee

ratifies the appointment and dismissal

by the Chief Executive of the members

of the Operations Council. It recom-

mends to the Board the management

development policy and succession

planning of the Company. It approves

the remuneration of the members of

the Operations Council and makes

recommendations to the Board for the

compensation of the Chief Executive

and of the Directors. In 2002, The

Nomination and Remuneration

Committee held five meetings.

The Ethics Committee

The Ethics Committee consists of four

members: the Chairman of the Board

of Directors, the Chief Executive, the

Chief Compliance Officer and an indi-

vidual external to the Group appointed

by the Board. From 1 January to 7

February 2002 members were M. D.

Amstutz, S. Marchionne, J.P. Méan, F.

A. Blankart; from 8 February to 2 May

2002 the members of the Committee

were M. D. Amstutz, S. Marchionne, E.

van der Helm (a.i), F. A. Blankart; from

2 May to 5 August 2002 the members

were G. Muller, S. Marchionne, E. van

der Helm (a.i.), F. A. Blankart, and from

5 August to 31 December 2002 the

members were G. Muller, S.

Marchionne, F. Stettler, F. A. Blankart.

The Ethics Committee insures imple-

mentation of the Code of Ethics within

the Group and advises management

on all issues of business ethics. It also

approves agreements for the procure-

ment of business opportunities with

intermediaries. In 2002, the Ethics

Committee held three meetings.

3.7 Information and control

instruments vis-à-vis the Management

Please refer to section 3.5.


2928

4. Management Board –

The Operations Council

4.1 The Operations Council

The Operations Council is in charge of

the management of the Company. It

consists of the Chief Executive, Executive

Vice Presidents, Chief Operating Officers

and Senior Vice Presidents.

The Operations Council’s

responsibilities include:

Develop the Group’s policy and

strategy for approval by the Board

of Directors

Lead the implementation of policy

and strategy

Organise the Group for

optimal performance

Ensure that appropriate manage-

ment skills, systems and processes

are in place

Control and co-ordinate the activi-

ties of the Operations, Businesses

and Central Group functions

Consider corporate matters

and communicate and

implement decisions

Members of the Operations Council as

of 1 March 2003 (additional details may

be viewed on the Company’s internet

site at http://www.sgs.com)

Sergio Marchionne (1952)

Canadian-Italian

Chief Executive

Heinz Baehni (1953)

Swiss

Group Treasurer

Alessandro Baldi (1952)

Swiss

Group Control

Jean-Luc de Buman (1953)

Swiss

Corporate Communications

& Investor Relations

Hugh Markey (1950)

Canadian

Corporate Development & Taxation

Stefan Schnydrig (1957)

Swiss

Information Technology

Francois Stettler (1961)

Swiss

Legal & Compliance

Jean Tardieu (1944)

French

Agricultural Services

Scott Morrison (1956)

American

Minerals Services

Werner Pluss (1944)

Swiss

Oil, Gas & Chemicals Services

Johan Allegaert (1943)

Belgian

Consumer Testing Services

Francis Lacroze (1953)

French

Systems & Services Certification

Yves Dusonchet (1941)

Swiss

Industrial Services and

Emerging Businesses

Rolf Jeker (1946)

Swiss

Trade Assurance Services

Fernando Basabe (1959)

Spanish

South West Europe

Dirk Hellemans (1958)

Belgian

North West Europe

Friedrich Hecker (1962)

German

Central Europe

Christian Jilch (1957)

Austrian

Eastern Europe

Agnes Berki (1941)

Hungarian

South East Europe

Gerald Houet-Dutruge (1947)

Swiss

Africa & Middle East

Richard Tobin (1963)

American

North America

Alejandro Gomez de la Torre (1959)

Peruvian

South America

Dennis Yang (1949)

Taiwanese

East Asia

Christopher Kirk (1956)

British

South East Asia & Pacific

Former members of the Operations

Council and of the previous Management

Board: Antony Czura, Paul Albrecht,

Claude Battentier, Paul Lilley, Michael

Witthoeft, Bernard Yip.

4.2 Other activities and functions

Jean-Luc de Buman


SWX Swiss Exchange, Zurich

Other

CCIG Chambre de Commerce et

de l'Industrie de Genève, Geneva

Association BES, Geneva

Rolf Jeker


SwissCham, Zurich, Chairman

Other

The Federation of Swiss Direct Investors

(Industrie Holding), Bern

The Latin-American Chamber of

Commerce, Zurich

The South-East Asian Chamber of

Commerce, Zurich

3332

5.6 Options

Options held by executive members of the Board of Directors, members of the Management Board and parties closely linked

to such persons active at 31 December 2002

Options held by non-executive members of the Board of Directors and parties closely linked to such persons active at 31 December 2002

A number of options were granted in 2002 on a one-off basis taking into account changes in the Board of Directors and the

Management Board of the Company.

5.8 Loans granted by governing bodies

Executive members of the Board of Directors, members of the Management Board and parties closely linked to such persons

Total outstanding loans related to share purchase plans (8 beneficiaries): CHF 269 312 with interest at market rates.

5.9 Highest total compensation

The highest compensation for a non-executive Board Member amounted to CHF 574 000.

5. Compensation,

shareholding and loans

5.1 Content and method of

determining the compensation and

of the shareholding programmes

The members of the Board are entitled

to Board member fees.

The Operations Council members are

remunerated by a base salary (fixed

part of remuneration) and a bonus

expressed as a percentage of base

salary (variable part). The bonus depends

on the company’s performance and is

paid partly in cash and partly in options.

The Board of Directors approves the

Board Member fees and compensation

for the Chief Executive.

The Remuneration Committee of the

Board approves all compensation of

the Operations Council.

5.2 Compensation for acting

members of governing bodies

Executive members of the Board of

Directors and members of the

Management Board (includes the

Operations Council and the previous

Management Board)

Total compensation during the

year under review (29 people)

CHF 12 946 000

Non-executive members of the Board

of Directors

Directors’ fees to non-executive

members of the board (nine people)

CHF 1 602 000

Additional severance payments made

in 2002 to members of the previous

Management Board

Severance payments CHF 4 306 000

5.4 Share allotment in the

year under review


Directors, members of the Management

Board and parties closely linked to such

persons active at 31 December 2002

1 650 registered shares were alloted

and purchased in 2002 at an average

price per share of CHF 353. These

shares are blocked for a period of

three years.

5.5 Share ownership


Directors, members of the Management

Board and parties closely linked to such

persons active at 31 December 2002

Total 10 470

Non-executive members of the Board of

Directors and persons closely linked to

such persons active at 31 December 20021

Total 3 499 665

1 The shares held by the family of Mr. August von Finck and the shares held by Worms & Cie have been included in the total.


1999 Strike price Vested number of options Exercisable between

2 500 280 2 500 2003 2005

2002 Strike price Vesting Exercisable betweenYear Number of

options

36 094 319 2003 864 2005 2012

319 2004 865 2005 2012

319 2005 865 2005 2012

250 2005 8 000 2005 2007

350 2006 10 500 2006 2008

450 2007 15 000 2007 2009

2002 Strike price Vesting Exercisable betweenYear Number of

options

8 375 250 2005 2 000 2005 2007

350 2006 2 625 2006 2008

450 2007 3 750 2007 2009

3534

6. Shareholders’ participation rights

6.1 Voting rights restrictions

and representation

Shareholders may only be represented

at shareholders meetings by other reg-

istered shareholders holding a written

power of attorney.

6.2 Statutory quorums

The following resolutions can only be

adopted with a majority of 2/3 of voting

rights of the shares represented at a

General Meeting of the shareholders:

share capital increase

appointment or dismissal of Board

members

maximum number of Board members

amendment of the 2/3 majority rule

6.4 Agenda

In accordance with the bylaws, the

request to include an item on the agenda

by shareholders representing shares of

a minimum par value of CHF 1 million

will only be taken into account if the

request reaches the company at least

forty (40) days prior to the general

meeting.

6.5 Registrations in the share register

There is no specific provision in the

by-laws but a technical notice of two

calendar days is needed.

7. Changes of control and defence

measures

7.2 Clauses of changes of control

There is no general plan or standard

agreement for Board Members or senior

management addressing changes of

control or providing for out of the ordi-

nary compensation in the event of

employment termination.

The contracts of some senior manage-

ment members include change of control

provisions that may trigger the payment

of a maximum of two years compensa-

tion and the immediate vesting of

options granted to them.

8. Auditors

8.1 Duration of the mandate and

term of the lead auditor

Deloitte & Touche, Geneva was first

appointed at the Annual General

Meeting of 11 May 2000 to audit the

2000 financial year.

The current lead auditor, Mr. Gerhard

Ammann began serving in his role

in 2000.

8.2 Auditing fees

The following fees were charged

for professional services rendered by

Deloitte & Touche for the 12 month

period ending 31 December 2002:

CHF 3.4 million.

8.3 Additional fees

CHF 0.5 million were paid to Deloitte

& Touche for other services such as

training and general advice.

8.4 Supervisory and control

instruments vis-à-vis the auditors

The Audit Committee of the Board of

Directors recommends the appoint-

ment and dismissal of the auditors of

the Company. It periodically reviews the

reports of the Auditors and after review

makes recommendations to the Board

of Directors regarding their approval.

9. Information policy

The policy of the Group is to provide

individual investors, institutional

investors directly or through financial

analysts, business journalists or invest-

ment consultants (financial community)

and the employees with information in

a consistent and transparent manner.

The Group publishes annual audited and

half year unaudited consolidated results.

The Group follows the application of

art. 72 of the listing rules (ad hoc

publicity) and its notes published by

the Swiss Admission Board.

In addition, the Group follows informa-

tion or reporting rules included in the

Federal Act on Stock Exchange and

Securities Trading, in the Ordinance on

Stock Exchanges and Security Trading.


3938

CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER

(BEFORE APPROPRIATION OF AVAILABLE RETAINED EARNINGS)

CHF (thousands) Notes 2002 2001

Assets

Non-current assets

Land, buildings and equipment 3 373 896 392 425

Investments in associated and other companies 2 930 2 560

Deferred tax and other long-term assets 4 85 593 85 321

Goodwill and other intangible assets 5 106 673 65 139

Total non-current assets 569 092 545 445

Current assets

Work-in-progress and inventories 6 108 422 111 905

Trade accounts and notes receivable 7 494 676 513 285

Other receivables and prepayments 8 145 992 170 819

Marketable securities 9 112 067 159 047

Cash and cash equivalents 419 276 490 171

Total current assets 1 280 433 1 445 227

Total 1 849 525 1 990 672

Shareholders’ equity and liabilities

Shareholders’ equity

Share capital 12 156 443 156 443

Reserves 740 189 825 213

Total shareholders’ equity 896 632 981 656

Minority interests 18 122 25 835

Non-current liabilities

Long-term loans 13 47 834 42 210

Deferred tax liabilities 22 54 451 41 958

Provisions 14 217 598 228 219

Total non-current liabilities 319 883 312 387

Current liabilities

Loans 16 81 931 161 412

Trade and other payables 259 853 272 207

Current tax liabilities 21 274 27 985

Other creditors and accruals 17 251 830 209 190

Total current liabilities 614 888 670 794

Total liabilities 934 771 983 181

Total 1 849 525 1 990 672

CONSOLIDATED PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER


Revenues 18 2 391 923 2 331 993

Salaries and wages (1 252 326) (1 254 641)

Subcontractors’ expenses (142 047) (133 111)

Depreciation (95 191) (101 305)

Other operating expenses 19 (686 769) (697 360)

Operating income 18 215 590 145 576

Exceptionals, net 20 (79 647) (177 515)

Goodwill amortisation (8 678) (8 464)

Earnings before interest and tax (EBIT) 127 265 (40 403)

Financial income/(expense), net 21 13 159 17 129

Profit/(loss) before taxes and minority interests 140 424 (23 274)

Taxes 22 (27 472) (43 548)

Profit/(loss) after taxes 112 952 (66 822)

Minority interests (3 841) (8 341)

Net profit/(loss) 109 111 (75 163)

Earnings per share (in CHF) 23 14.02 (9.61)

Dividends per share (in CHF) 7.251 6.00

1 As proposed by the Board of Directors and including the special dividend of CHF 1.25.

4140

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED 31 DECEMBER

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER

Share capital General legal Cumulative Retained Deferred Total equityreserve exchange earnings and financial

CHF (thousands) adjustment Group reserve gains/losses

Balance at 1 January 2001 156 443 33 498 (25 909) 935 280 0 1 099 312

Effect of adopting IAS 391 – – – 551 2 705 3 256

Deferred gains recognised in the profit and loss account – – – – (2 416) (2 416)

Fair value adjustments for marketable securities – – – – 1 822 1 822

Dividend paid – – – (45 371) – (45 371)

Net (loss) for the year – – – (75 163) – (75 163)

Exchange differences2 – – 216 – – 216

Balance at 31 December 2001 156 443 33 498 (25 693) 815 297 2 111 981 656

Deferred gains recognised in the profit and loss account – – – – (2 251) (2 251)

Fair value adjustments for marketable securities – – – – (441) (441)

Dividend paid – – – (46 935) – (46 935)

Prescribed dividends3 – 42 – – – 42

Net profit for the year – – – 109 111 – 109 111

Exchange differences2 – – (82 064) – – (82 064)

Treasury shares – – – (62 486) – (62 486)

Balance at 31 December 2002 156 443 33 540 (107 757) 814 987 (581) 896 632

1 On 1 January 2001, the Group adopted IAS 39 "Financial Instruments: Recognition and Measurement". The cumulative net effect of this change in

accounting policy as at 1 January 2001 amounting to a CHF 3.3 million increase in net assets has been reported as an adjustment to the opening

balance of retained earnings in accordance with the benchmark treatment of IAS 8.

2 In 2002, exchange differences include net exchange losses of CHF 22.4 million on long-term loans of an investment nature (2001: losses of

CHF 12.0 million).

3 In accordance with the statutes of SGS Société Générale de Surveillance Holding SA, dividends not claimed after 5 years are transferred to the

general legal reserve.


Net profit/(loss) 109 111 (75 163)

Adjustments for:

Goodwill amortisation 8 678 8 464

Depreciation 95 191 101 305

Financial income, net (13 159) (17 129)

Changes in provisions (11 936) (33 752)

Effect of change in accounting policy – 177 515

Cash received on terminated TAS contracts (24 861) –

Taxes 27 472 43 548

Minority interests 3 841 8 341

Profit on sale of fixed assets/investments (162) (1 919)

194 175 211 210

Working capital movements:

(Increase)/Decrease in work-in-progress and inventories (7 657) 2 427

Decrease/(Increase) in trade accounts and notes receivable 13 456 (62 206)

Decrease in other receivables and prepayments 48 392 44 024

(Decrease) in trade and other payables (530) (2 453)

Increase/(Decrease) in other creditors and accruals 67 075 (24 965)

Taxes paid (24 945) (32 854)

Net cash from operating activities 289 966 135 183

Purchase of land, buildings and equipment (120 689) (116 721)

Cash paid for acquisitions less cash acquired 10 (53 842) (35 284)

Cash received on disposals less cash sold – 15 028

(Increase)/Decrease in investments in associated and other companies (830) 3 444

Decrease in marketable securities 28 284 45 624

(Increase)/Decrease in long-term loans and other assets (7 425) 267

Interest and dividends received 26 679 26 174

Proceeds from sale of land, buildings and equipment 9 963 10 892

Net cash (used in) investing activities (117 860) (50 576)

Payment of dividend (46 935) (45 371)

Purchase of treasury shares (62 486) –

Interest paid (11 707) (10 043)

(Decrease)/Increase of minority interests in net assets (11 231) 1 651

Increase/(Decrease) in long-term loans 5 674 (2 332)

(Decrease)/Increase in short-term loans (82 108) 24 925

Net cash (used in) financing activities (208 793) (31 170)

Net (Decrease)/Increase of cash and cash equivalents at average exchange rates (36 687) 53 437

Translation adjustment (34 208) (5 592)

Cash and cash equivalents at 1 January 490 171 442 326

Cash and cash equivalents at 31 December 419 276 490 171

4544

1 Activities of the Group


Holding SA and its subsidiaries (the

“Group”) is the world’s leading verifica-

tion, testing and certification organisation.


Holding SA has its registered office

in Geneva and services to clients are

rendered by its subsidiaries located

throughout the world.

2 Significant accounting policies

Basis of preparation of

financial statements

The consolidated financial statements

of the Group are prepared in accordance

with the accounting and reporting

requirements of the International

Financial Reporting Standards (IFRS) as

issued by the International Accounting

Standards Board (IASB) and with the

Standing Interpretations issued by the

Standing Interpretation Committee of

the IASB.

The accounts have been prepared

under the historical cost convention

as modified for the revaluation of

marketable securities.

Basis of consolidation

Full consolidation has been applied to

all subsidiaries. The term “subsidiary”

applies to those companies in which

the Group owns, either directly or indi-

rectly, more than 50% of the voting

rights or in which the Group exercises

management control and has a signifi-

cant minority interest. The equity and

net profit attributable to minority share-

holders’ interests are shown separately

in the consolidated balance sheet and

profit and loss account, respectively.

All inter-company transactions and bal-

ances are eliminated. Companies

acquired during the year are consolidated

from their date of acquisition.

The principal operating and holding

companies of the Group are listed

on pages 78 to 85.

Investments in associated companies

are accounted for by the equity method.

These are companies for which the

Group owns between 20% and 50% of

the voting rights and over which the

Group exercises significant influence,

but not control. Joint venture companies

are consolidated on a proportional basis.

Investments in other companies are valued

at the lower of historical cost and market

value. Dividends received from invest-

ments in other companies are included

in “Financial income/(expense), net”.

Currency translation

Assets and liabilities of foreign sub-

sidiaries are translated into Swiss

Francs at year-end exchange rates.

Revenues and expenses are translated

at average rates of exchange during the

year. Resulting exchange differences on

translation are included in shareholders’

retained earnings.

Exchange differences arising from for-

eign currency transactions are included

in other operating income/(expense) or

financial income/(expense), net,

according to their nature.

Exchange differences arising on long-

term loans of an investment nature to

subsidiaries are classified as part of

shareholders’ retained earnings.

Average rates of exchange have been

used to translate the cash flows of

foreign subsidiaries in compiling the

consolidated statements of cash flows.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The most significant currencies for the Group were translated at the following exchange rates:

Land, buildings and equipment

Buildings and equipment are stated at historical cost less accumulated depreciation. Land is stated at historical cost and is not

depreciated. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Assets acquired under lease agree-

ments which provide the Group with

substantially all the risks and rewards

of ownership are capitalised at

amounts equivalent to the estimated

present value of the underlying lease

payments. The corresponding rental

obligations, net of finance charges, are

included in liabilities. These leased

assets are depreciated over the lease

period or their estimated useful lives,

whichever is shorter.

Work-in-progress and inventories

Work-in-progress is measured at the

lower of the cost incurred in providing

the service or its eventual invoice price.

This category also includes work com-

pleted which has not yet been invoiced.

Inventories are shown at the lower of

cost and net realisable value. Cost is

determined using the first-in, first-out

(FIFO) or weighted average methods.

Receivables

Trade receivables as well as other

receivables are disclosed at nominal

values less expected economic adjust-

ments at fair value.

Intangible assets

Intangible assets comprise principally

goodwill, being the excess of the cost

of an acquired company over the fair

value of its attributable net assets,

which is amortised on a straight-line

basis over its expected useful life of

between 5 and 20 years.

Other intangible assets including soft-

ware purchased from third parties are

capitalised and amortised on a straight-

line basis over their estimated useful

lives (not exceeding 5 years).

Cash and cash equivalents

For the purposes of the cash flow

statement, cash and cash equivalents

comprise cash in hand, deposits held

at call with banks and investments in

money market instruments with an

original maturity of three months or

less. In the balance sheet, bank over-

drafts are included within loans in

current liabilities.

Marketable securities

Marketable securities are recognised in

the balance sheet at fair value. The

Group has invested in money market

funds and in US Mortgage Backed

Securities, and in accordance with IAS 39,

these investments are designated as

held for trading. Movements in fair value

for the marketable securities designated

as held for trading are reported in the

profit and loss account as financial

income/(expense), net. The Group also

invests in other marketable securities

which are held for the long term and are

designated as available for sale. For

marketable securities designated as

available for sale, the movements in fair

value are reported as a component of

shareholder's equity and on disposal are

recognised as financial income/(expense),

net, in the profit and loss account.

Derivative financial instruments

Derivative financial instruments are

recognised in the balance sheet at fair

value based on the market values at

year end. Changes in the fair value of

derivative financial instruments are

reported as a component of financial

income/(expense), net, or operating

profit/(loss) depending on the nature

of the underlying hedged transaction.

Buildings 12 - 40 years

Equipment 3 - 10 years

Year-end rates Annual average rates

2002 2001 2002 2001

Australia AUD 100 78.65 85.81 84.55 87.28

Euro EUR 100 145.48 148.05 146.70 151.03

Great Britain GBP 100 223.78 243.42 233.43 242.97

USA USD 100 139.55 168.10 155.68 168.78

4746

Employee benefits

The Group maintains many defined

benefit and defined contribution pension

plans in accordance with local conditions

and practices in the countries concerned.

Payments to defined contribution plans

are recognised as an expense in the

profit and loss account as incurred.

The Group's obligation in respect of the

defined benefit pension plans and the

annual cost recognised in the profit and

loss account is determined by inde-

pendent actuaries using the projected

unit credit method. Significant actuarial

gains and losses greater than 10% of

the higher of the present value of the

obligation or the fair value of plan

assets are recognised in the profit and

loss statement over the average

remaining service lives of the employ-

ees in the plan. The amount recognised

in the balance sheet represents the

excess or deficit of the fair value of the

plan assets over the present value of

the obligation, adjusted for any

unrecognised actuarial gains and losses.

The Group operates a number of post

employment defined benefit schemes

including life insurance and healthcare

plans. The method of accounting and

the frequency of valuations are similar

to those used for the defined benefit

pension plans.

The Group provides additional benefits

to certain members of senior manage-

ment through equity compensation

plans (see note 27). No expense is

recognised in the profit and loss

account for shares and options granted

to members of senior management

under these plans.

Revenue recognition

Revenues represent fees for services

rendered to third parties after deduction

of discounts and sales taxes. Only the

gross margin on both transit/handling

operations and contract hire of technical

personnel is included in revenues.

Taxes

Taxes include current and deferred

income taxes arising from current year

profits and adjustments to prior year

tax provisions.

Current taxes represent amounts paid

or payable to tax authorities in each

jurisdiction. Deferred taxes are calculat-

ed using the full liability method under

which the tax consequences are recog-

nised for all differences arising between

the tax bases of assets and liabilities

and the carrying amounts in the consol-

idated financial statements.

Deferred tax assets and liabilities are

measured using the enacted tax rate in

the respective jurisdictions in which the

Group operates that are expected to

apply to taxable income in the years in

which those temporary differences are

expected to be recovered or settled.

Provisions

Provisions are recognised when the

Group has a present obligation as a

result of past events, it is probable that

an outflow of resources embodying

economic benefits will be required to

settle the obligation, and a reliable esti-

mate of the amount of the obligation

can be made.

Use of estimates

The assets and liabilities are recorded

at management’s best estimates of the

amounts recoverable or payable. The

preparation of financial statements and

related disclosures in conformity with

International Financial Reporting

Standards requires management to

make estimates and assumptions that

affect the reported amounts of assets

and liabilities and disclosure of contin-

gent assets and liabilities at the date of

the financial statements and revenue

and expenses during the period report-

ed. Actual results could differ from

those estimates. Estimates are used

in accounting for bad debt provisions

on accounts receivables, inventory

obsolescence, depreciation, employee

benefits, taxes, restructuring reserves

and contingencies. Estimates and

assumptions are reviewed periodically

and the effects of revisions are reflected

in the financial statements in the period

they are determined to be necessary.

Accounting policy change 2001

In 2001 the Group changed its account-

ing policy in respect of outstanding

receivables on terminated Trade

Assurance Services contracts. At 31

December 2001, all these receivables

were recorded at zero value in the

balance sheet.

Recoveries of these amounts in subse-

quent years will be reported as excep-

tional items when the cash is received.


Included in land, buildings and equipment are construction in progress projects amounting to CHF 10.7 million (2001: CHF 4,9 million).

At 31 December 2002 the net capitalised cost of land, buildings and equipment acquired under lease agreements amounts to

CHF 14.5 million (2001: CHF 17.4 million).

The values of buildings and equipment for fire insurance purposes are as follows:

At 31 December 2002, long-term loans granted to associated companies amounted to CHF 0.1 million (2001: 1 million).

The loan to the “Fondation pour l'intéressement du personnel au développement du Groupe SGS” was repaid during 2002

(2001: CHF 4.3 million).

3 Land, buildings and equipment

4 Deferred tax and other long-term assets

CHF (thousands) Land Buildings Equipment Total

Cost

At 1 January 2002 23 708 257 356 785 545 1 066 609

Additions 41 13 970 92 132 106 143

Acquisitions of subsidiaries 1 659 4 308 15 530 21 497

Sale of subsidiaries – – (118) (118)

Disposals (18) (4 051) (59 329) (63 398)

Exchange differences (6 167) (22 876) (83 691) (112 734)

At 31 December 2002 19 223 248 707 750 069 1 017 999

Accumulated depreciation

At 1 January 2002 – 91 269 582 915 674 184

Depreciation for the year – 10 635 78 617 89 252

Acquisitions of subsidiaries – 733 7 573 8 306

Sale of subsidiaries – – (75) (75)

Disposals – (1 778) (52 929) (54 707)

Exchange differences – (11 031) (61 826) (72 857)

At 31 December 2002 – 89 828 554 275 644 103

Net book value 2002 19 223 158 879 195 794 373 896

Net book value 2001 23 708 166 087 202 630 392 425

CHF (thousands) 2002 2001

Buildings 256 752 277 954

Equipment 764 692 752 127


Long-term loans to third parties 3 451 10 025

Other long-term assets 16 009 27 734

Deferred tax assets 66 133 47 562

Total 85 593 85 321

4948

7 Trade accounts and notes receivable

Included in trade accounts and notes receivable are balances owing from various governments and international institutions

amounting to CHF 372.6 million at 31 December 2002 (2001: CHF 454.9 million) for which an amount of CHF 323.8 million has

been provided for collection risks as at 31 December 2002 (2001: CHF 384.7 million).

In 2001, CHF 177.5 million of accounts receivable balances on terminated TAS contracts have been recorded in the balance

sheet at zero and the adjustment charged as an exceptional item in the profit and loss account. As at 31 December 2002,

CHF 24.9 million has been collected on these receivables.

5 Goodwill and other intangible assets

6 Work-in-progress and inventories


8 Other receivables and prepayments

10 Acquisition of subsidiaries

On 24 April 2002, the Group acquired 100% of the issued share capital and voting rights of Lakefield Research Inc, for a total

purchase price of CHF 45.8 million. This transaction has been accounted for by using the purchase method of accounting.

During the year the Group also acquired other companies and increased its percentage holding in certain subsidiaries.

The fair values of assets acquired and liabilities assumed were as follows:

The balance as at 31 December 2002 of unrealised gains or losses on marketable securities designated as available for sale

which have been recognised in the financial statements as an adjustment to shareholder's equity was a loss of CHF 0.6 million

(2001: gain CHF 2.1 million).

9 Marketable securities

Goodwill Other intangible TotalCHF (thousands) assets

Cost

At 1 January 2002 76 637 38 148 114 785

Additions 52 014 14 545 66 559

Acquisition of subsidiaries – 392 392

Disposals (9 045) (1 684) (10 729)

Exchange differences (8 406) (4 101) (12 507)

At 31 December 2002 111 200 47 300 158 500

Accumulated amortisation

At 1 January 2002 18 625 31 021 49 646

Amortisation/depreciation for the year 8 678 5 939 14 617

Acquisition of subsidiaries – 291 291

Disposals (6 592) (1 314) (7 906)

Exchange differences (2 023) (2 798) (4 821)

At 31 December 2002 18 688 33 139 51 827

Net book value 2002 92 512 14 161 106 673

Net book value 2001 58 012 7 127 65 139


Work-in-progress 93 059 94 283

Inventories 15 363 17 622

Total 108 422 111 905


Trade accounts and notes receivable 898 666 974 694

Provision for doubtful debts (251 336) (283 894)

Provision on terminated Trade Assurance Services contracts (152 654) (177 515)

Total 494 676 513 285

CHF (thousands) Lakefield Other 2002 2001

Goodwill 39 677 12 337 52 014 39 518

Fixed assets 13 864 221 14 085 17 725

Current assets excluding cash and cash equivalents 12 320 455 12 775 28 018

Cash and cash equivalents (165) 510 345 9 677

Interest bearing loans (10 312) – (10 312) (28 903)

Current liabilities (8 097) (1 870) (9 967) (15 775)

Long-term liabilities (1 438) – (1 438) (1 846)

Minority interests – (12) (12) (920)

Total purchase price 45 849 11 641 57 490 47 494

Less:

Cash/(overdrafts) acquired 165 (510) (345) (9 677)

Outstanding transaction fees – (3 303) (3 303) (2 533)

Cash outflow on acquisition 46 014 7 828 53 842 35 284


Held for trading 100 400 130 788

Available for sale 11 667 28 259

Total 112 067 159 047


Prepayments 53 960 57 440

Other receivables 92 032 113 379

Total 145 992 170 819

5150

12 Share capital

11 Derivative financial instruments

The Group utilises derivative financial instruments such as foreign exchange forward contracts and currency options to manage

its exposure to foreign exchange rate fluctuations and interest rate risks.

Foreign exchange risk management

The Group enters into forward exchange contracts to hedge foreign currency risks related to assets and liabilities denominated in

foreign currencies. Gains and losses on these instruments are compensated by the respective losses or gains on the hedged items.

Concentration of credit risk

Derivative instruments also give rise to credit risks due to possible non-performance by counterparties. However, the Group,

through its ongoing control procedures, monitors the creditworthiness of its counterparties and considers the risk to be

acceptable. Counterparties are restricted to a limited number of international banks.

Outstanding derivative financial instruments at 31 December are as follows:


13 Long-term loans

14 Provisions

During 2002 the remaining CHF 150 million line of credit on the three year syndicated multi-currency revolving credit facility,

which SGS Société Générale de Surveillance Holding SA entered into in 1999, expired. Credits used under the facility which

were in existence at the time of expiry were replaced by new bilateral banking loans. All loans carry interest at normal market

rates. The fair value of these loans does not differ significantly from their book value. The long-term loans and the capital lease

obligations mature as follows:

In the normal course of business, claims have been made against certain companies within the Group. Provisions have

been established based on management’s assessment of the likely outcome of these claims and have been included in

other provisions above.

Notional value Carrying value

CHF (million) 2002 2001 2002 2001

Foreign exchange forward contracts 234.0 95.8 9.3 (1.0)

Registered shares Bearer shares Bons de TotalCHF 20 nominal value CHF 100 jouissance share capital

Number of shares nominal value

In circulation Treasury Total issued Number of shares Number CHF

Balance at 1 January 2001 2 594 041 1 750 2 595 791 1 045 275 80 156 443

Conversion of bearer shares into registered shares1 5 226 375 – 5 226 375 (1 045 275) – –


Treasury shares2 (159 000) 159 000 – – – –


1 At the Annual General Meeting on 10 May 2001, the shareholders accepted the resolution to create a unitary share structure. All the bearer

shares were converted into registered shares on the basis of one bearer share being equal to five registered shares.

2 According to the share buy back program announced on 9 September 2002, the Group purchased 159 000 registered shares at CHF 392.50

each on 20 September 2002. Furthermore, the Group owns 1 750 shares issued in 1992 following the offer to exchange the bons de jouissance

category A for registered shares. No bons de jouissance category A were exchanged against registered shares in 2002 and 2001. These treasury

shares remain at the disposal of the Board of Directors.


Long-term loans 37 142 29 527

Lease obligations 10 692 12 683

Total 47 834 42 210

CHF (thousands) Long-term loans Lease obligations

2004–2005 35 992 4 697

2006–2007 17 2 686

After 2007 1 133 3 309

Total 37 142 10 692

31 December Charged Released Utilised/ Exchange 31 DecemberCHF (thousands) 2001 to P&L to P&L transferred differences 2002

Provision for employee benefit obligations 104 984 18 228 – (19 867) (9 333) 94 012

Other provisions 123 235 14 454 (3 021) 4 346 (15 428) 123 586

Total 228 219 32 682 (3 021) (15 521) (24 761) 217 598

5352

Movements in the net liability during the period are as follows:

The amounts recognised in the income statement are as follows:

15 Employee benefits

The information set out below summarises details of the defined benefit pension and other post employment plans in the

Group. Contributions to the pension plans are normally paid into independent funds. Where this is not the case a provision is

included in the Group balance sheet. The other post employment benefits are principally healthcare plans in the USA.

The amounts recognised in the balance sheet at 31 December are as follows:


Actuarial assumptions vary according to local prevailing economic and social conditions. The principal weighted average actuarial

assumptions used in determining the cost of benefits for both 2002 and 2001 are as follows:

The amount recognised as an expense in respect of defined contribution plans during 2002 was CHF 15.2 million

(2001: CHF 12.8 million).

The syndicated loan facility (see note 13) expired in 2002. The borrowings on this facility at 31 December 2001 were

CHF 70.8 million.

16 Loans

17 Other creditors and accruals

Pension plans Other plans

CHF (thousands) 2002 2001 2002 2001

Present value of funded obligations 656 579 692 733 28 081 44 530

Fair value of plan assets (525 959) (612 656) (3 771) (5 734)

Net funded status 130 620 80 077 24 310 38 796

Present value of unfunded obligation 55 606 50 502 – –

Actuarial (losses)/gains not yet recognised (138 639) (79 270) (10 276) (15 254)

Unrecognised asset 32 391 30 133 – –

Liability included in the balance sheet 79 978 81 442 14 034 23 542


CHF (thousands) 2002 2001 2002 2001

Current service cost 17 075 18 833 78 76

Interest cost 35 934 37 189 2,197 3 175

Expected return on plan assets (41 310) (48 847) (434) (452)

Actuarial losses/(gains) recognised 2 065 (231) 709 820

Past service cost 136 139 – –

Transfer to the unrecognised asset 1 778 4 061 – –

Total included in salaries and wages 15 678 11 144 2 550 3 619



Net liability at 1 January 81 442 23 542

Exchange differences (5 876) (3 457)

Expense recognised in the income statement 15 678 2 550

Contributions paid by the Group (13 236) (4 891)

Benefits paid (1 740) –

Transfer between plans 3 710 (3 710)

Net liability at 31 December 79 978 14 034


Accrued expenses 221 820 183 914

Advance billings 17 399 14 099

Advances from clients 12 611 11 177

Total 251 830 209 190


Bank loans 66 855 137 182

Overdrafts 11 468 19 959

Short term portion of long-term loans 488 779

Lease obligations, short-term 3 120 3 492

Total 81 931 161 412


2002 2001 2002 2001

Discount rate 5.3% 5.7% 6.8% 7.3%

Return on assets 6.6% 7.3% 8.5% 9.5%

Salary progression rate 2.8% 3.2% 3.3% 3.5%

Healthcare cost increase – – 9.0% 10.0%

5554

18 Information by business segment and geographical area

The 2001 business segment information has been adjusted to reflect the new organisational structure and to reflect a full

allocation of overheads to the businesses.


CHF (millions) 2002 % 2001 %

Operating assets by business segment

Agricultural Services 127.7 10.0 166.1 11.0

Minerals Services 219.0 17.0 200.1 13.3

Oil, Gas & Chemical Services 191.3 15.0 234.7 15.6

Life Science Services 25.7 2.0 15.4 1.0

Consumer Testing Services 135.8 10.6 166.6 11.1

System & Services Certification 69.8 5.5 75.9 5.0

Industrial Services & Emerging Businesses 286.0 22.4 335.5 22.4

Automotive Services 70.5 5.5 75.4 5.0

Trade Assurance Services 152.8 12.0 234.5 15.6

Total 1 278.6 100.0 1 504.2 100.0

Operating assets by geographical area

Europe/Africa/Middle East 459.6 35.9 758.8 50.5

Americas 341.0 26.7 272.8 18.1

Asia/Pacific 478.0 37.4 472.6 31.4

Total 1 278.6 100.0 1 504.2 100.0

CHF (millions) 2002 % 2001 %

Revenues by business segment








Automotive Services 211.3 8.8 204.1 8.8


Total 2 391.9 100 2 332.0 100.0

Revenues by geographical area

Europe/Africa/Middle East 1 328.3 55.5 1 293.6 55.4

Americas 628.9 26.3 659.1 28.3

Asia/Pacific 434.7 18.2 379.3 16.3

Total 2 391.9 100.0 2 332.0 100.0

The revenues by geographical area reflect the geographical location of the SGS customers.

Operating income








Automotive Services 13.1 6.1 (3.9) (2.7)


Total 215.6 100.0 145.6 100.0

Operating income

Europe/Africa/Middle East 125.0 57.9 91.6 63.0

Americas 31.0 14.4 13.6 9.3

Asia/Pacific 59.6 27.7 40.4 27.7

Total 215.6 100 145.6 100

2002 2001

Reconciliation of operating assets to balance sheet assets

Operating assets as above 1 278.6 1 504.2

Non operating assets 570.9 486.5

Total assets per balance sheet 1 849.5 1 990.7

Average number of employees by geographical area

Europe/Africa/Middle East 16 649 15 887

Americas 7 413 7 045

Asia/Pacific 8 226 7 693

Total 32 288 30 625

Number of employees at year-end 32 008 32 020

5756

19 Other operating expenses

20 Exceptionals, net


Included in other operating expenses are operating lease expenses totalling CHF 17.1 million (2001: CHF 19.5 million).

21 Financial income/(expense), net

22 Taxes

As at 31 December 2001, CHF 177.5 million of accounts receivable balances on terminated TAS contracts have been recorded in

the balance sheet at zero and the adjustment charged as an exceptional item in the profit and loss account. In 2002, CHF 24.9

million in cash has been received relating to the outstanding receivables on these terminated contracts.

During 2002, the new management of SGS Société Générale de Surveillance Holding SA implemented a significant restructuring

programme across the whole Group. The cost of this exercise amounted to CHF 104.5 million, all of which consists of personnel costs.

The Group has operations in various countries which have differing tax laws and rates. Consequently, the effective tax rate on

consolidated income varies from year to year. A reconciliation between the reported income tax expense and the amount that

would arise using the weighted average statutory tax rate of the Group is as follows:


Rental expenses, insurance, utilities and sundry supplies 142 882 137 989

Communication costs 71 260 72 138

Other administrative costs 308 389 312 125

Travel costs 164 238 175 108

Total 686 769 697 360


Effect of change in accounting policy – TAS trade receivables – (177 515)

Cash received on fully provided TAS trade receivables 24 861 –

Restructuring costs (104 508) –

Total (79 647) (177 515)


Reconciliation of tax expense

Tax at the domestic rates applicable to the profits earned in the country concerned 13 831 7 344

Tax effect of expenses that are not tax deductible 1 809 1 164

Tax charge from unrecognised tax losses 9 828 38 968

Tax benefit from tax rate changes (284) –

All other, net 2 288 (3 928)

Tax charge 27 472 43 548


Major components of tax expense

Current taxes 40 750 42 717

Deferred tax expense/(income) relating to the origination andreversal of temporary differences (12 994) 831

Deferred tax expense/(income) resulting from tax rate changes (284) –

Total 27 472 43 548


Total liabilities by geographical area

Europe/Africa/Middle East 439.1 709.3

Americas 243.8 122.0

Asia/Pacific 251.9 151.9

Total 934.8 983.2

Capital expenditure by geographical area


Americas 19.8 25.1


Total 106.1 112.1

Depreciation expense by geographical area


Americas 20.1 25.2


Total 95.2 101.3


Income from cash, deposits and marketable securities 19 525 28 132

Dividend income 437 1 148

Financial expenses (11 740) (9 526)

Foreign exchange gains/(losses) 4 937 (2 625)

Total 13 159 17 129

5958

25 Guarantees and assets pledged

At 31 December 2002 there were guarantees of CHF 151.3 million (2001: CHF 111.0 million) and pledged assets of CHF 0.1 million

(2001: CHF 11.2 million) arising in the ordinary course of business.

23 Earnings per share

Earnings per share is calculated by dividing the net profit by the weighted average number of shares in issue during the year.

The basic earnings per share figure is as follows:

24 Contingent liabilities

Claims arising in the normal course of business have been made against certain companies within the Group. Based on legal

opinion, provisions have been recognised for these claims and management considers that the outcome of these actions is

unlikely to have a materially adverse effect on the Group’s financial position.

There is no diluting factor to the basic earnings per share.

Unrecognised tax loss carryforwards amount to CHF 143 million of which CHF 104.4 million expires within the next 5 years.


26 Operating leases

Operating lease rentals are payable as follows:

27 Equity compensation plans

The Group established an employee

share purchase plan and a share option

plan for eligible members of senior

management. Certain of the share options

and grants were issued based on the

bearer shares of SGS Société Générale

de Surveillance Holding SA. Following

the introduction of the unitary regis-

tered share on 10 May 2001 these ben-

efits will now be provided as registered

shares with appropriate adjustment to

the plan terms to reflect the introduc-

tion of the unitary registered share.

The number of shares and share prices

in this note are therefore reflected as

registered shares in SGS Société

Générale de Surveillance Holding SA

and have been converted at the rate of

one bearer share to 5 registered shares.

(a) Employee share purchase plan

The Group has one employee share

purchase plan (the “Plan”). In 1997,

1999, and 2001 a grant was made to

eligible members of senior manage-

ment for the right to purchase shares in


Holding SA at a 20 - 50% discount to

the market value. In 2002, grants were

made to 132 senior managers giving

them the right to purchase shares in


Holding SA at a 20% discount to the

market value.

The market value of the shares is

determined as the average price of

the shares in the 20 days following

the announcement of the annual results.

The beneficiaries are required to

purchase the shares at the time they

exercise their right, but the shares

remain blocked by the Plan during the

vesting period. Should a beneficiary

leave the Group prior to the end of the

vesting period, he will receive a portion

of any associated capital gain. During the

vesting period, the beneficiaries are

entitled to the voting rights and

dividends attached to these shares.

Full legal title to the shares is transferred

to the beneficiaries after the vesting

period has expired.

The terms and conditions of the active

grants under the Plan are:


Components of deferred income tax balances

Operating provisions 56 994 25 627

Fixed assets 38 911

Tax loss carryforwards 9 101 21 023

Other items, net (54 451) (41 957)

Net deferred tax assets 11 682 5 604


Reflected in the balance sheet as follows:

Deferred tax assets 66 133 47 562

Deferred tax liabilities (54 451) (41 958)

Net deferred tax assets 11 682 5 604

2002 2001

Net profit/(loss) (CHF millions) 109 (75)

Weighted average number of shares 7 773 243 7 822 166

Earnings/(loss) per share (in CHF) 14.02 (9.61)

Year of grant Purchase price CHF Date of grant Exercise date Vesting period to

1997 296 13 June 1997 30 June 1997 31 May 2003

1999 127 21 June 1999 31 July 1999 31 July 2004

2001 271 27 June 2001 31 July 2001 31 July 2004

2002 353 8 July 2002 31 July 2002 31 July 2005


Less than one year 16 444 23 232

Between one and five years 20 350 36 472

More than five years 12 883 14 107

Total 49 677 73 811

6160


For the 4 415 shares purchased by the beneficiaries under the 2002 grant, the Foundation received CHF 1.6 million.

The fair value of these shares at the exercise date of 31 July 2002 was CHF 1.8 million. The number of shares held by the

Foundation on behalf of the related parties (see note 28) at 31 December 2002 was 7 120 (2001:5 930).

(b) Share option plans

The Group has issued share options to selected members of management. The terms of the share option plans for these related

parties are as follows:

The shares held by the Foundation (Fondation pour l’intéressement du personnel au développement du Groupe SGS) on behalf

of the employees in respect of active grants are summarised below:

The share purchase and option plans are administered by a legally independent Swiss foundation (“Fondation pour l’intéresse-

ment du personnel au développement du Groupe SGS”). This entity is not consolidated in the Group financial statements.

Movements in the SGS shares held by the employee participation foundation, excluding the blocked shares held on behalf of

the beneficiaries of the plans under the Plan, are as follows:

The market value of these unblocked shares at 31 December 2002 was CHF 33.4 million (2001: CHF 33.3 million).

Related parties participate in the employee share purchase plan as disclosed in note 27(a), and in the share option plan as

disclosed in note 27(b).

28 Related parties

Related parties able to exercise significant influence are considered to include the Board of Directors, members of the

Management Board, close family members and any companies related to these individuals. The individuals who comprise the

Board of Directors and the Management Board are summarised on pages 25 to 29 of the Corporate Governance section of the

Annual Report.

The transactions, comprising of remuneration, salaries and related benefits, between the Group and the related parties may be

summarised as follows:

SharesShares held Shares Shares Shares Shares purchased Shares Shares

Shares initially at 1 January granted to purchased repurchased by held at 31 Shares granted by repurchased by held at 31 Year of grant purchased 2001 employees by employees the Foundation December 2001 to employees employees the Foundation December 2002

1995 33 440 22 165 (4 490) – (15 185) 2 490 (1 990) – (400) 100

1997 34 580 22 945 – – (700) 22 245 – – (1 545) 20 700

1999 26 120 24 080 – – (1 275) 22 805 – – (2 045) 20 760

2001 3 594 – – 3 594 – 3 594 – – (290) 3 304

2002 4 415 – – – – – – 4 415 – 4 415

Total 102 149 69 190 (4 490) 3 594 (17 160) 51 134 (1 990) 4 415 (4 280) 49 279

Market value of shares CHF (million) 32.5 13.6 20.5

Options Options Options

Exercise outstanding outstanding outstanding

Exercise period price at 1 January at 31 December at 31 December

from to CHF 2001 Granted Exercised Cancelled 2001 Granted Exercised Cancelled 2002

31 Dec 2000 1 July 2012 20 3 750 – (1 250) 2 500 – (2 500) – –

31 July 2003 31 July 2005 280 14 000 – – (1 025) 12 975 – (3 500) (2 600) 6 875

31 May 2004 31 May 2009 387 – 12 594 – – 12 594 – (7 749) 4 845

21 Mar 2005 21 Mar 2012 250 to – – – – – 47 329 – (1 906) 45 423450

Total 17 750 12 594 (1 250) (1 025) 28 069 47 329 (6 000) (12 255) 57 143

Number of bearer shares Number of registered shares

At 1 January 2001 18 098 32 935

Partial repurchase 340 15 460

Conversion of bearer shares into registered shares (18 438) 92 190

Issued under 2001 grant – (3 594)

Options granted – (12 594)

Options cancelled – 1 025

Sale of shares – (800)

At 31 December 2001 – 124 622

Partial repurchase (Plan) – 4 280

Partial repurchase (share option plan) – 1 000

Issued under 2002 grant – (4 415)

Options granted – (47 329)

Options cancelled – 12 255

Sale of shares – (10 000)

At 31 December 2002 – 80 413


Executive members of the Board of Directors and Management Board 17.3 16.6

Non executive members of the Board of Directors 1.6 1.5

6362

29 Significant shareholders

At 31 December 2002, Mr. August von Finck and his family held 23.5% of the capital and voting rights of the Company,


30 Approval of financial statements and subsequent events

The financial statements were approved by the Board of Directors on 15 January 2003.

No events occured between 31 December 2002 and 15 January 2003, that would require an adjustment or amendment to

these financial statements. These financial statements will be presented at the Annual General Meeting on 14 May 2003.

REPORT OF THE GROUP AUDITORS TO THE GENERAL MEETING OF SGS SOCIÉTÉ GÉNÉRALE DE SURVEILLANCE HOLDING SA

To the General Meeting

of SGS Société Générale de Surveillance Holding SA

As Group auditors, we have audited the consolidated financial statements presented

on pages 38 to 62 of the SGS Group for the year ended 31 December 2002.

These consolidated financial statements are the responsibility of the Board of

Directors. Our responsibility is to express an opinion on these consolidated financial

statements based on our audit. We confirm that we meet the legal requirements

concerning professional qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by

the Swiss profession and with the International Standards on Auditing issued by

the International Federation of Accountants (IFAC), which require that an audit be

planned and performed to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement. We have examined on a

test basis evidence supporting the amounts and disclosures in the consolidated

financial statements. We have also assessed the accounting principles used, significant

estimates made and the overall consolidated financial statements presentation.

We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the

financial position, the results of operations and the cash flows in accordance with

the International Financial Reporting Standards (IFRS) and comply with Swiss law.

We recommend that the consolidated financial statements submitted to

you be approved.

DELOITTE & TOUCHE SA

Gerhard Ammann Christian Hinze

Auditor in charge

Geneva, 15 January 2003

6766

BALANCE SHEETS AT 31 DECEMBER

(BEFORE APPROPRIATION OF AVAILABLE RETAINED EARNINGS)

PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER


Assets

Non-current assets

Tangible assets 10 275 10 450

Financial assets

Investments in subsidiaries 491 824 481 416

Loans to subsidiaries 238 009 111 522

Other financial assets 624 5 211

Total non-current assets 740 732 608 599

Current assets

Amounts due from subsidiaries 154 670 237 480

Withholding taxes recoverable 9 489 1 891

Other current assets 4 384 4 549

Marketable securities – 5 101

Cash and deposits 98 693 161 666

Total current assets 267 236 410 687

Total assets 1 007 968 1 019 286

Shareholders’ equity and liabilities

Shareholders’ equity

Share capital 156 443 156 443

General legal reserve 33 540 33 498

Reserve for own shares 62 486 –

Retained earnings 647 703 664 432

Total shareholders’ equity 900 172 854 373

Liabilities

Provisions 46 647 54 634

Amounts due to subsidiaries 55 518 104 799

Other short-term creditors 1 572 2 600

Accruals 4 059 2 880

Total liabilities 107 796 164 913

Total shareholders’ equity and liabilities 1 007 968 1 019 286


Income

Dividends from subsidiaries 97 187 73 294

Interest income 11 591 9 137

Profit on sale of subsidiaries 10 676 2 833

Other financial income 1 836 1 993

Other income 1 138 2 127

Total income 122 428 89 384

Expenditure

Salaries and wages (1 331) (10 654)

Administrative expenses (5 856) (18 877)

Depreciation (1 237) (1 775)

Exchange losses (13 056) (953)

Financial expenses (1 928) (2 057)

Provisions (4 286) 2 593

Total expenditure (27 694) (31 723)

Profit

Profit before taxes 94 734 57 661

Taxes (2 042) (3 618)

Net profit 92 692 54 043

6968

2 Shares

The total number of registered shares outstanding of nominal value CHF 20 is 7 822 166 (2001: 7 822 166) - the Company held

directly or indirectly 160 750 of its own shares (2001: 1 750).

According to the share buy back program announced on 9 September 2002, the Company acquired on 20 September 2002

through its subsidiary Supervise Investment Limited, Jersey, 159 000 registered shares at CHF 392.50 each.

Furthermore, the Company owns 1 750 registered shares issued in 1992 following the offer to exchange the bons de jouissance

category A for registered shares. No bons de jouissance category A were exchanged against registered shares in 2002 and

2001. The shares remain at the disposal of the Board of Directors.

SGS Société Générale de Surveillance Holding SA is the holding company of the Group which owns and finances either directly

or indirectly its subsidiaries and joint-ventures throughout the world. The financial statements are prepared in accordance with

the accounting principles of Swiss law. During the year, there were no changes in accounting policies.

1 Reserves and retained earnings

NOTES TO THE FINANCIAL STATEMENTS

The Company has unconditionally guaranteed or provided comfort to financial institutions providing credit (loans and guarantee

bonds) to its subsidiaries. In addition, it has issued performance bonds to commercial customers on behalf of its subsidiaries.

3 Guarantees and comfort letters

5 Subsidiaries

The list of principal subsidiaries appears on page 78 to 85 of the Annual Report.

6 Significant shareholders

At 31 December 2002, Mr. August von Finck and his family held 23.5% of the capital and voting rights of the Company,


4 Fire insurance value of fixed assets

General legal Reserve for Retained TotalCHF (thousands) reserve own shares earnings

Balance at 1 January 2001 33 498 – 655 760 689 258

Dividend paid – – (45 371) (45 371)

Net profit for the year – – 54 043 54 043

Balance at 31 December 2001 33 498 – 664 432 697 930

Dividend paid – – (46 935) (46 935)

Allocation to the reserve for own shares – 62 486 (62 486) –

Prescribed dividends 42 – – 42

Net profit for the year – – 92 692 92 692

Balance at 31 December 2002 33 540 62 486 647 703 743 729

2002 2002 2001 2001CHF (thousands) Issued Utilised Issued Utilised

Guarantees 257 823 185 291 352 059 214 961

Comfort letters 9 661 9 661 66 781 29 563

Performance bonds 8 312 8 312 8 460 8 460

Total 275 796 203 264 427 300 252 984


Properties 13 790 13 790

7170

PROPOSAL OF THE BOARD OF DIRECTORS FOR THE APPROPRIATION OF AVAILABLE RETAINED EARNINGS

To the General Meeting

of SGS Société Générale de Surveillance Holding SA

As statutory auditors, we have audited the accounting records and the financial

statements of SGS Société Générale de Surveillance Holding SA, for the year

ended 31December 2002.

These financial statements are the responsibility of the Board of Directors.

Our responsibility is to express an opinion on these financial statements based on

our audit. We confirm that we meet the legal requirements concerning professional

qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by

the Swiss profession, which require that an audit be planned and performed to

obtain reasonable assurance about whether the financial statements are free of

material misstatement. We have examined on a test basis evidence supporting the

amounts and disclosures in the financial statements. We have also assessed the

accounting principles used, significant estimates made and the overall financial

statements presentation. We believe that our audit provides a reasonable basis

for our opinion.

In our opinion, the accounting records, the financial statements and the proposed

appropriation of available earnings comply with Swiss law and the Company’s

articles of incorporation.

We recommend that the financial statements submitted to you be approved.

DELOITTE & TOUCHE SA

Gerhard Ammann Christian Hinze

Auditor in charge

Geneva, 15 January 2003

REPORT OF THE STATUTORY AUDITORS TO THE GENERAL MEETING OF SGS SOCIÉTÉ GÉNÉRALE DE SURVEILLANCE HOLDING SA

CHF 2002 2001

Net profit for the year 92 692 381 54 043 026

Balance brought forward from previous year 617 496 389 610 388 759

Allocation to the reserve for own shares (62 485 534) –

Total retained earnings available for appropriation 647 703 236 664 431 785

Proposal of the Board of Directors:

Dividend (55 548 166) (46 935 396)

Balance carried forward 592 155 070 617 496 389

Proposed ordinary dividend per:

Registered share 6.00 6.00

Bon de jouissance 30.00 30.00

Proposed special dividend per:

Registered share 1.25 –

Bon de jouissance 6.25 –

7574

GROUP – STATISTICAL DATA OVER FIVE YEARSCONSOLIDATED BALANCE SHEETS AT 31 DECEMBER

GROUP – STATISTICAL DATA OVER FIVE YEARSCONSOLIDATED PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER

CHF (thousands) 2002 2001 2000 1999 1998

Land, buildings and equipment 373 896 392 425 386 485 403 752 515 822

Investments in associated and other companies 2 930 2 560 6 439 7 213 8 507

Deferred tax and other long-term assets 85 593 85 321 85 841 88 171 70 533

Goodwill and other intangible assets 106 673 65 139 33 180 33 214 110 198

Total non-current assets 569 092 545 445 511 945 532 350 705 060

Work-in-progress and inventories 108 422 111 905 113 977 117 672 182 606

Trade accounts and notes receivable 494 676 513 285 641 526 607 486 654 936

Other receivables and prepayments 145 992 170 819 212 546 233 146 195 686

Cash and marketable securities 531 343 649 218 641 577 762 545 555 178

Total current assets 1 280 433 1 445 227 1 609 626 1 720 849 1 588 406

Total 1 849 525 1 990 672 2 121 571 2 253 199 2 293 466

Share capital 156 443 156 443 156 443 156 443 156 443

Reserves 740 189 825 213 942 869 840 954 309 928

Total shareholders’ equity 896 632 981 656 1 099 312 997 397 466 371

Minority interests 18 122 25 835 20 469 21 731 49 278

Long-term loans 47 834 42 210 43 831 48 212 176 774

Deferred tax liabilities 54 451 41 958 48 958 45 308 6 739

Provisions 217 598 228 219 264 952 351 954 478 747

Total long-term liabilities 319 883 312 387 357 741 445 474 662 260

Loans 81 931 161 412 109 540 98 193 293 232

Trade and other payables 259 853 272 207 283 305 369 688 424 802

Current tax liabilities 21 274 27 985 19 472 21 074 39 850

Other creditors and accruals 251 830 209 190 231 732 299 642 357 673

Total current liabilities 614 888 670 794 644 049 788 597 1 115 557

Total liabilities 934 771 983 181 1 001 790 1 234 071 1 777 817

Total shareholders’ equity and liabilities 1 849 525 1 990 672 2 121 571 2 253 199 2 293 466

Capital expenditure

Land, buildings and equipment 106 143 112 141 116 511 178 958 173 564

CHF (thousands) 2002 2001 2000 1999 1998

Revenues 2 391 923 2 331 993 2 368 862 3 085 057 3 154 149

Salaries and wages (1 252 326) (1 254 641) (1 245 828) (1 673 413) (1 724 708)

Subcontractors’ expenses (142 047) (133 111) (146 676) (170 361) (179 814)

Depreciation (95 191) (101 305) (103 502) (144 304) (145 849)

Other operating expenses (686 769) (697 360) (714 982) (903 691) (938 510)

Operating income 215 590 145 576 157 874 193 288 165 268

Exceptionals, net (79 647) (177 515) 15 259 – (411 975)

Goodwill amortisation (8 678) (8 464) (4 314) (10 685) (9 549)

Earnings before interest and tax (EBIT) 127 265 (40 403) 168 819 182 603 (256 256)

Financial income/(expense), net 13 159 17 129 18 002 4 619 2 268

Profit /(loss) before taxes and minority interests 140 424 (23 274) 186 821 187 222 (253 988)

Taxes (27 472) (43 548) (51 358) (57 167) (23 929)

Profit /(loss) after taxes 112 952 (66 822) 135 463 130 055 (277 917)

Minority interests (3 841) (8 341) (6 749) (16 452) (11 831)

Net profit /(loss) before disposals 109 111 (75 163) 128 714 113 603 (289 748)

Gain on disposals, net – – – 202 867 –

Net profit /(loss) 109 111 (75 163) 128 714 316 470 (289 748)

Employees

Average number of employees 32 288 30 625 30 532 37 506 39 144

7776

GROUP – STATISTICAL DATA OVER FIVE YEARS GROUP – SHARE INFORMATION

Share transfer

SGS Société Générale de Surveillance Holding SA has no restrictions as to share ownership, except that registered shares acquired in a

fiduciary capacity by third parties may not be registered in the shareholders’ register, unless a special authorisation has been granted by the

Board of Directors. As communicated by SAG Sega on 4 October 2001, such shares are registered in the shareholders’ register but do not

have the right to vote at shareholders’ meetings.

Market capitalisation

At the end of 2002, market capitalisation was CHF 3 254 million (2001: CHF 2 089 million). Shares are listed on the SWX Swiss Exchange

and traded on Virt-X.

2003200220012000

Swiss Performance Index (monthly close)High price

Low price

Close

D J F M A M J J A S O N D J F M A M J J A S O N D J F

600

550

500

450

400

350

300

250

200

150

5500

5000

4500

4000

3500

3000

CHF (unless indicated otherwise) 2002 2001 2000 1999 1998

Share information

Registered shares

Number of shares issued 7 822 166 7 822 166 2 595 791 2 595 991 2 595 991

Number of shares with dividend rights 7 822 166 7 822 166 2 595 791 2 595 991 2 595 991

Price:

High 530 519 785 728 636

Low 258 178 431 283 231

Year-end 416 267 500 491 324

Par value 20 20 20 20 20

Bearer shares3

Number of shares outstanding fully diluted – – 1 045 275 1 045 235 1 045 235

Number of shares with dividend rights – – 1 045 275 1 045 235 1 045 235

Price:

High – – 3 680 3 090 2 919

Low – – 1 959 1 065 865

Year-end – – 2 350 2 030 1 435

Par value – – 100 100 100

Bons de jouissance1

Number of bons de jouissance 80 80 80 89 93

Key figures by shares

Shareholders’ equity per

Registered share 117.03 125.50 140.54 127.51 59.62

Bearer share – – 702.70 637.55 298.10

Earnings/(loss) per

Registered share 14.02 (9.61) 16.46 40.46 (36.85)

Bearer share – – 82.30 202.30 (184.25)

Dividend per

Registered share 6.002 6.00 5.80 4.80 –

Bearer share – – 29.00 24.00 –

Special dividend perRegistered share 1.252 – – – –

Dividend CHF (thousands)

Ordinary 55 548 46 935 45 371 37 549 –

1 Bons de jouissance have been de-listed from the stock exchange as of 15 November 1993.

2 As proposed by the Board of Directors.

3 At the Annual General Meeting on 10 May 2001, the shareholders accepted the resolution to create a unitary share structure.

All the bearer shares were converted into registered shares on the basis of one bearer share being equal to five registered shares.

7978

GROUP – PRINCIPAL OPERATING AND HOLDING COMPANIES GROUP – PRINCIPAL OPERATING AND HOLDING COMPANIES

1 Direct or Indirect investment in the subsidiary by SGS Société Générale de Surveillance Holding SA 1 Direct or Indirect investment in the subsidiary by SGS Société Générale de Surveillance Holding SA

EUROPE/AFRICA/MIDDLE EAST

Europe Currency Issued capital % Group Direct(D)/Indirect(I)1

Austria

SGS Austria Controll-Co. Ges.m.b.H. EUR 185 000 100 D

Azerbaijan

SGS Azeri Ltd. USD 100 000 100 D

Belarus

SGS Minsk Ltd. USD 20 000 100 D

Belgium

SGS Cortex (N.V.) EUR 62 000 100 I

SGS Belgium (N.V.) EUR 2 065 000 100 I

Bulgaria

SGS Bulgaria Ltd. BGN 10 000 100 D

Croatia

SGS Adriatica, w.l.l. HRK 1 300 000 100 D

Czech Republic

SGS Czech Republic s.r.o. CZK 7 607 000 100 I

Denmark

SGS Danmark A/S DKK 500 000 100 I

Estonia

SGS Estonia Ltd. EEK 660 000 100 I

Finland

SGS Inspection Services Oy EUR 102 000 100 I

SGS Fimko Oy EUR 260 000 100 I

France

SGS Holding France (S.A.) EUR 9 172 613 100 I

SGS Multilab (S.A.S.) EUR 100 000 100 I

SGS Qualitest Industrie (S.A.S.) EUR 200 000 100 I

Georgia

SGS Georgia Ltd. USD 80 000 100 D

Germany

SGS Société Générale de SurveillanceHolding (Deutschland) GmbH EUR 1 330 000 100 D

Natec Institut für naturwissenschaftlich-technische Dienste GmbH EUR 26 000 100 I

SGS-ICS Gesellschaft für ZertifizierungenmbH und Umweltgutachter EUR 26 000 100 I

SGS Controll-Co. mbH EUR 1 200 000 100 I

SGS-TÜV Saarland Forster GmbH EUR 25 000 40 I

Greece

Société Hellénique de Surveillance S.A. EUR 310 807 100 D

Europe (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Hungaria

SGS Hungária Kft. HUF 18 000 000 100 I

Ireland

SGS Ireland (Holdings) Limited EUR 50 000 100 I

National Car Testing Service Limited EUR 2 748 753 100 I

Italy

SGS Italia S.r.l. EUR 1 032 910 100 I

SGS Société Générale de Surveillance Italia Holding SpA EUR 2 500 000 100 I

Kazakhstan

SGS Kazakhstan Limited USD 69 200 100 D

Latvia

SGS Latvija Limited LVL 83 183 100 I

Lithuania

SGS Klaipeda Ltd. LTL 40 000 100 I

Luxembourg

Société Luxembourgeoise d’Expertises CETEX [SáRL] LUF 1 500 000 100 I

SGS Finance (Luxembourg) S.A. EUR 25 000 000 100 D

Moldavia

SGS (Moldova) S.A. USD 10 000 100 D

Netherlands

SGS Inspection Services B.V. EUR 250 000 100 I

SGS European Holding B.V. EUR 5 000 000 100 D

Norway

SGS Norge A/S NOK 800 000 100 I

Poland

SGS Polska Sp.z o.o. PLZ 879 800 100 I

Portugal

SGS Portugal – Sociedade Geral de Superintendência S.A. EUR 500 000 100 I

Romania

SGS Romania S.A. CHF 200 000 100 D

Russia

SGS Vostok Limited RUR 105 900 000 100 D

Slovakia

SGS Slovakia spol. s.r.o. SKK 600 000 100 I

81



80

Europe (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Slovenia

SGS Slovenija d.o.o – Podjetje za kontol blaga SIT 2 500 000 100 I

Spain

SGS Española de Control S.A. EUR 240 000 100 I

SGS Tecnos S.A., Sociedad Unipersonal EUR 12 072 041 100 I

SGS International Certification Services Ibérica S.A. EUR 60 101 100 I

Sweden

SGS Sweden AB SEK 1 500 000 100 I

Switzerland

SGS Société Générale de Surveillance Holding S.A. CHF 156 443 320 – –

SGS Société Générale de Surveillance S.A. CHF 10 000 000 100 D

SGS Switzerland S.A. CHF 500 000 100 D

SGS Group Management S.A. CHF 100 000 100 D

Turkey

SGS Supervise Gözetme Etüd Kontrol Servisleri Anonim Sirketi TRL 5 000 000 000 100 D

Turkmenistan

SGS Turkmen Ltd. USD 50 000 100 D

Ukraine

SGS Ukraine USD 100 000 100 D

United Kingdom

SGS United Kingdom Limited GBP 8 000 000 100 I

Technology Project Service PLC GBP 494 565 100 I

Uzbekistan

SGS Tashkent Ltd. USD 50 000 100 D

Yugoslavia

SGS Beograd d.o.o. CHF 150 000 100 I

Africa/Middle East

Algeria

Qualitest Algérie SPA DZD 50 000 000 51 D

Angola

SGS Angola Limitada USD 100 000 100 D

Benin

SGS Bénin S.A. XOF 10 000 000 100 D

Africa/Middle East (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Botswana

Société Générale de Surveillance (Botswana) (Pty) Ltd. BWP 1 000 100 D

Cameroon

SGS Cameroun S.A. XAF 10 000 000 100 D

Congo

SGS Congo (S.A.) XAF 10 000 000 100 D

Djibouti

SGS Djibouti Sàrl DJF 1 000 000 100 I

Egypt

SGS Egypt Ltd. EGP 500 000 51 D

Equatorial Guinea

Guinée Equatoriale S.A. XAF 10 000 000 100 D

Ethiopia

SGS Ethiopia Private Ltd. ETB 15 000 99.93 I

Gabon

Société de Surveillance Gabon S.A. XAF 10 000 000 100 I

Ghana

SGS Ghana Limited GHC 52 020 000 100 I

Guinea

SGS Guinée Conakry S.A. GNF 50 000 000 100 D

Iran

SGS (Iran) Limited IRR 50 000 000 100 D

Ivory Coast

SGS Côte d’Ivoire S.A. XOF 300 000 000 80 D

Société Ivoirienne de Contrôles Techniques Automobiles et Industriels S.A. XOF 200 000 000 95 D

Kenya

SGS Kenya Limited KES 2 000 000 100 D

Kuwait

SGS Kuwait W.L.L. KWD 50 000 49 I

Lebanon

SGS (Liban) S.A.L. LBP 30 000 000 99.99 D

Libya

Redwood International S.A. (Branch office) – – – –

Malawi

SGS Malawi Limited MWK 2 100 D

8382



AMERICAS

Africa/Middle East (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Mali

SGS Mali S.A. XOF 10 000 000 100 D

Mauritius

Société Générale de Surveillance (Mauritius) Limited MUR 100 000 100 D

Morocco

SGS Maroc S.A. MAD 7 500 000 100 D

Mozambique

SGS Moçambique, Limitada MZM 100 000 000 100 D

Namibia

Richlab Namibia (Pty) Ltd. NAD 2 100 I

Nigeria

SGS Inspection Services Nigeria Limited NGN 200 000 50 D

Rwanda

SGS Rwanda Sàrl RWF 4 000 000 100 D

Saudi Arabia

SGS Inspection Services Saudi Arabia Ltd. SAR 1 000 000 75 D

Senegal

SGS Sénégal S.A. XOF 35 000 000 100 D

South Africa

SGS South Africa (Proprietary) Limited ZAR 1 100 000 100 D

Tanzania

SGS Tanzania Superintendence Co. Limited TZS 250 000 100 D

Togo

SGS Togo S.A. XOF 10 000 000 100 D

Tunisia

SGS Tunisie S.A. TND 50 000 50 I

Uganda

SGS Uganda Limited UGS 5 000 000 100 D

United Arab Emirates

SGS Gulf Limited (Branch office) – – – –

Zambia

SGS Zambia Limited ZMK 2 000 000 100 D

Zimbabwe

SGS Zimbabwe (Private) Limited ZWD 5 000 100 D

North America Currency Issued capital % Group Direct(D)/Indirect(I)1

Bahamas

Moore, Barret & Redwood (Bahamas) Ltd. BSD 5 000 100 D

Bermuda

Transmonde Services Insurance Company Limited USD 120 000 100 I

Cayman Islands

Lakefield Research Caribbean Limited USD 4 526 000 100 I

Canada

SGS Canada Inc. CAD 6 900 000 100 D

SGS Lakefield Research Ltd. CAD 18 800 000 100 D

Haiti

SGS Haïti S.A. USD 5 000 100 D

Jamaica

SGS Supervise Jamaica Limited JMD 1 569 520 100 D

Mexico

Société Générale de Surveillance de Mexico S.A. de C.V. MXN 7 065 828 100 D

Netherland Antilles

SGS Redwood (Curaçao) N.V. ANG 10 000 100 I

United States

SGS Control Services Inc. USD 850 000 100 I

SGS North America Inc. USD 75 400 996 100 D

SGS Automotive Services Inc. USD 400 100 I

Commercial Testing & Engineering Co. USD 300 100 I

SGS U.S. Testing Company Inc. USD 303 625 100 I

SGS International Certification Services Inc. USD 1 000 100 I

Testcom Inc. USD 125 000 87 I

CT & E Environmental Services Inc. USD 5 169 487 100 I

South America

Argentina

SGS Argentina S.A. ARS 4 170 336 100 D

Bolivia

SGS Bolivia S.A. BOB 41 900 100 D

Brazil

SGS do Brasil Ltda. BRL 47 969 996 100 D

8584



South America (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Chile

SGS Chile Limitada CLP 180 000 000 100 D

Colombia

SGS Colombia S.A. COP 84 965 360 100 D

Ecuador

SGS del Ecuador S.A. USD 7 680 100 D

Guatemala

SGS de Guatemala S.A. GTQ 1 068 000 100 D

Panama

SGS Panama Control Services Inc. USD 500 000 100 D

Paraguay

SGS Paraguay S.A. PYG 1 686 000 000 100 D

Peru

SGS del Perù S.A.C. PEN 300 000 100 D

Uruguay

SGS Uruguay Limitada UYU 1 500 100 D

Venezuela

SGS Venezuela S.A. VEB 243 237 000 100 D

ASIA/PACIFIC

Australia

SGS Australia Holdings Pty. Ltd AUD 2 675 000 100 D

SGS Scientific Services Limited AUD 30 198 853 100 I

Gearhart Australia Limited AUD 5 609 210 100 I

Bangladesh

SGS Bangladesh Limited BDT 100 000 100 D

China

SGS CSTC Standards Technical Services Ltd. USD 700 000 65 D

Guam

SGS Guam USD 25 000 100 D

Hong Kong

SGS Hong Kong Limited HKD 100 000 100 D

India

SGS India Private Ltd. INR 800 000 100 D

Indonesia

P.T. Sucofindo (Persero) IDR 75 000 000 000 5 D

P.T. SGS International Certification Services Indonesia USD 200 000 100 D

Asia/Pacific (continued) Currency Issued capital % Group Direct(D)/Indirect(I)1

Japan

SGS Japan Inc. JPY 350 000 000 100 D

Korea (South)

SGS Korea Co., Ltd. KRW 217 540 000 100 D

Malaysia

SGS (Malaysia) Sdn. Bhd. MYR 60 000 100 I

Mongolia

Analabs Co. Ltd. USD 700 000 100 I

Myanmar

SGS (Myanmar) Limited MMK 300 000 100 D

New Zealand

SGS New Zealand Limited NZD 4 522 190 100 D

Pakistan

SGS Pakistan (Private) Limited PKR 2 300 000 100 D

Papua New Guinea

SGS PNG Pty. Limited PGK 2 100 I

Philippines

SGS Philippines, Inc. PHP 33 620 000 100 D

Singapore

SGS Singapore (Pte) Limited SGD 100 000 100 I

SGS Testing & Control Services Singapore Pte. Ltd. SGD 100 000 100 D

Sri Lanka

SGS Lanka (Private) Limited LKR 9 000 000 100 I

Taiwan

SGS Taiwan Limited TWD 12 000 000 100 D

Thailand

SGS (Thailand) Limited THB 20 000 000 100 D

Vietnam

SGS Vietnam Ltd. USD 288 000 100 D

CONCEPT, DESIGN, REALISATION AND PRODUCTION

Young & Rubicam Business Communications SA

Geneva, Switzerland

Paintings

Roger Pfund

Geneva

January 2003

SGS SOCIÉTÉ GÉNÉRALE DE SURVEILLANCE HOLDING SA

CORPORATE OFFICE

1 place des Alpes

P.O. Box 2152

CH – 1211 Geneva 1

t +41 (0)22 739 91 11

f +41 (0)22 739 98 86

e [email protected]

www.sgs.com

STOCK EXCHANGE LISTING

SWX Swiss Exchange, SGSN

STOCK EXCHANGE TRADING

Virt-X

COMMON STOCK SYMBOLS

Bloomberg: Registered Share: SGSN

Reuters: Registered Share: SGSZn.S

Telekurs: Registered Share: SGSN

ISIN: Registered Share: CH0002497466

ANNUAL GENERAL MEETING OF SHAREHOLDERS

Wednesday, 14 May 2003, 15:00

Location: Ramada Park Hotel, Geneva

CORPORATE COMMUNICATIONS & INVESTOR RELATIONS

Jean-Luc de Buman

SGS Société Générale de Surveillance Holding SA

1 place des Alpes

P.O. Box 2152

CH – 1211 Geneva 1

t +41 (0)22 739 93 31

f +41 (0)22 739 98 61

www.sgs.com

PROJECT MANAGEMENT

Jean-Luc de Buman

Carole Streng

PRINTED BY

Linkgroup

on Ikono silk white

The 2002 results and financial statements are also

published in French.

English version is binding.

Printed in Switzerland, March 2003.

© 2003 SGS Société Générale de Surveillance Holding SA

All rights reserved.

THE

SYMBOLISM

OF THE BIRD

Roger Pfund uses a bird in flight to convey the guiding

principles of SGS: trust, confidence and security. The

bird in flight with wind beneath its wings reflects the

global role of SGS. The bird in flight offers a positive

connotation, flight, departure, success, mastery and

beauty. In parallel, the image also signifies dynamism.

This symbol is carried through to the new SGS certificates.

This theme is freely expressed through nine paintings

in gouache, natural pigments, graphite and collage.

The energetic stroke of the paintbrush and the systematic

repetition of the wings reflects the idea of constant

forward movement.

Group financial highlights 4...CHF 75 million and were partially offset by collections on...

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