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Period Preceding period

Average number of persons employed* 143.0 160.4

- Workers 4.5 4.5

- Employees 138.5 155.9

Workforce charges

- Remuneration and social charges (in thousands EUR) 10 132.5 10 092.5

- Average number of employees in Belgium 123.2 90.9

This table does not include Directors and interim workforces. * Including NETIA.

The reduction in the average number of employees is explained by the deconsolidation of the subsidiary NETIA on 1 July 2004 and its 50 staff (equivalent to an annual average of 25) and the appointment of additional qualified personnel for television activities as well as digital cinema.

XIV.B. Extraordinary items

(in thousands EUR)

2004

Breakdown of extraordinary revenues, if significant

- Capital gain on Netia disposal(1) 2 754.6

- XDC spin-out dilution profit(2) 2 998.5

- Gain on disposal of own shares(3) 239.8

- Miscellaneous extraordinary revenues 20.9

TOTAL 6 013.8

Breakdown of extraordinary costs, if significant

- Waiving of NETIA loan(1) - 750.0

- Buy-back of NETIA warrants(1) - 73.2

- ESOP Provision(4) - 335.7

- Loss on disposal of own shares - 78.8

- Miscellaneous extraordinary costs - 24.8

TOTAL -1 262.5

Extraordinary item 4 751.3

(1) In September 2004, EVS sold its French subsidiary NETIA to the latter company’s management and staff. This sale generated a gain of 2.8 million EUR in the consolidated accounts as well as charges in the amount of 0.8 million EUR, i.e. the waiving of a loan in the amount of 750 thousand EUR as well as the repurchase at a cost of 73 thousand EUR of 18 300 warrants allocated to NETIA employees in the past (exercise price of 14 EUR per share) for a repurchase indemnity of 4 EUR per warrant under the agreements leading to the sale of the subsidiary to its employees, assisted by financial partners.

(2) Digital cinema activities were transferred to a new subsidiary, XDC S.A., in which EVS has a majority holding of 60.17 % following a 9.0 million EUR refinancing operation: 7.0 million EUR through financial partners and 2.0 million EUR through EVS. The pre-money value of the operation was raised to 8.8 million EUR, with this operation generating a consolidated dilution profit of 3.0 million EUR in 2004.

(3) Under Belgian standards, gains realised on the sale of own shares are included in the result, which is not the case under the IFRS standards.

(4) Under the employee profit-sharing scheme through warrants, EVS forms a provision to cover this responsibility under Belgian standards. The annual charge corresponds to the difference between the latent gain of the warrants, amortized over the financial year (“vesting period”), and the histori- cal acquisition value of the own shares for the purpose of covering the plan. This provision is not allowed for under the IFRS standards and has been revoked.

XV. Rights and commitments not reflected in the balance sheet

A.1.

Amount of personal guarantee given or irre-

vocably promised by the Companies included in the consolidation as security for third party debts or commitments. Bank guarantees for an amount of

266.3 thousand EUR were mainly requested as part of international public tenders.

A.2

. Amount of actual guarantee given or irrevoca-

bly promised by the Companies included in the con- solidation on their own assets as security for debts or commitments to these companies. Mortgage

proxies amounting 4 241.6 thousand EUR have been given for the loans financing buildings.

B.

Commitments relating to technical guarantee in

respect of sales or services already provided. EVS

grants a 2-year technical guarantee on products sold subject to the general conditions of sale.

C.

Significant litigation and other significant com-

mitments.

As of 31 December 2004, 41 450 warrants were allotted to the EVS group staff and had not yet been exercised. The average exercise price of these warrants is 35.88 EUR. They may be exercised from November 2005 and in the following years according to local laws in the relevant countries. Shares then issued will have the same rights as existing shares.

In accordance with opinion 138/1 of the C.N.C, EVS books the recoverable advances granted by the Wal- loon Region (“R.A.W.R.”) for R&D activities in the oper- ating incomes and their refunding in the operating charges. As of 31 December 2004, an amount of 2 455.3 thousand EUR had already been received and will have to be repaid during the coming financial years depend- ing on the eventual commercial success of the products developed. It should be noted that, at the time of the transfer of the digital cinema activities to XDC S.A. by EVS Broadcast Equipment S.A. on 1 October 2004, all the rights and obligations of EVS Broadcast Equipment S.A. relating to R.A.W.R. associated with digital cinema, i.e. an amount of 2 472.7 thousand EUR, of which 930.2 thousand EUR are still to be collected as of 31 Decem- ber 2004, have been assigned to XDC S.A.. The Walloon Region gave its approval of this assignment to EVS and XDC on 8 November 2004.

The aim of the 6th Research and Development Frame-

work Programme initiated by the European Commis- sion is to integrate and concentrate research and devel-

opment endeavours around thematic fields so as to strengthen the competitiveness of the European Com- munity. In the field of Information Society Technologies (IST) and the category of Integrated Projects (IP), EVS has introduced a project with 14 other private and pub- lic partners from 8 European countries. The objective of this project, entitled IP-Racine, is to enhance the movie experience for the end-consumer via a series of differ- ent technological improvements. The goal is, in partic- ular, to create a continuous and coherent workflow in the digital cinema production chain from the shooting of the film to its projection. The total project budget is 14.4 million EUR and the subsidy to be awarded to EVS will amount to around 600.0 thousand EUR spread over 4 years and commencing on 1 December 2004. The subsidy covers 50% of the specific expenditure of the project, with no type of repayment provided for in the agreement. As a result of the establishment of the digital cinema subsidiary in October 2004, XDC has replaced EVS as the partner in the project.

The procedure for payment of the subsidies takes place, in particular, in the form of advances. A request has been made for EVS Broadcast Equipment S.A. to sign a let- ter of guarantee for XDC S.A. in favour of the IP-Racine consortium for a maximum amount of 220.0 thousand EUR.

FAR S.A. also took advantage of recoverable advances amounting to 151.0 thousand EUR. EVS Broadcast Equip- ment S.A. is guarantor of the FAR obligations according to the agreement signed with the Walloon Region. On the other hand, as of 31 December 2004 in accor- dance wit its policy of foreign currency hedging, EVS had 6 open forward exchange contracts to sell 5 mil- lion USD at the average rate of exchange of 1.23 with an average maturity date of 17 July 2005.

The aim of the new Belgian legislation known as “Tax Shelter“ is to provide a tax incentive to companies that invest part of their profits in films at least partially pro- duced in Belgium.

EVS has decided to benefit from this legislation in order to help promote digital cinema during the different stages of shooting, post-production and screening of films. A total investment of 450.0 thousand EUR has been made, divided equally between 3 films produced by Belgian companies in the form of loans and stake- holdings.

The films are “Congo River“, a documentary shot in digi- tal high definition, “Vendredi ou un autre jour“, a feature fiction film for partial digital screening in the cinemas, and “Blanche Neige, la suite“, a feature animation film produced entirely in digital and also intended for par- tial digital screening.

The agreements were signed in December 2004, enabling the company to benefit from the tax incentive over this year. The amounts will be released from Janu- ary 2005. The sums lent as well as the interest and other receipts should be recovered for the most part within 18 months. All guarantees have been taken so as to secure the investment made to the maximum extent.

XVI. Relationships with affiliated companies and companies linked

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