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agta record ag Financial report 1st semester 2005

agta record ag Allmendstr. 24 - CH 8320 Fehraltorf Tel. +41 44 954 91 91 - Fax +41 44 954 92 00 E-Mail [email protected]

mailto:[email protected]

Consolidated interim financial statements June 30, 2005 Consolidated income statement 1

Consolidated balance sheet 2

Consolidated statement of changes in equity 3

Consolidated cash flow statement 4

Notes to the consolidated interim financial statements as of June 30, 2005 5

Consolidated interim financial statements June 30, 2005

Notes to the consolidated interim financial statements as of June 30, 2005 .......................................... 5 Consolidation and valuation standards.................................................................................................... 5 Comments on impact of first time adoption of IFRS.............................................................................. 11 1 Comments on main reconciling items ......................................................................................... 13

1.1 Revenue from sales and services........................................................................................... 13 1.2 Finance leases ........................................................................................................................ 13 1.3 Intangible fixed assets............................................................................................................. 15 1.4 Employee stock option plans .................................................................................................. 16 1.5 Severance pay ........................................................................................................................ 16 1.6 Income tax............................................................................................................................... 16

2 Change in the scope of consolidation ......................................................................................... 17 3 Segment reporting....................................................................................................................... 18 4 Seasonality of operations ............................................................................................................ 19 5 Fixed assets ................................................................................................................................ 19 6 Intangible fixed assets................................................................................................................. 20 7 Financial liabilities ....................................................................................................................... 20 8 Comments on other specific events ............................................................................................ 21 9 Contingent liabilities .................................................................................................................... 21 10 Shareholders equity .................................................................................................................... 21

10.1 Share capital and other reserves ........................................................................................ 21 10.2 Transactions with own shares ............................................................................................. 21 10.3 Dividends paid ..................................................................................................................... 21 10.4 Employee stock options plan............................................................................................... 21

11 Earnings per share ...................................................................................................................... 22 12 Related party transactions........................................................................................................... 22 13 Events after the balance sheet date............................................................................................ 23


Consolidated income statement (in thousands of euros) Index 1.1 -

30.6.05 1.1-

30.6.04 Revenue from sales and services 65,565 63,582

Total material costs 20,027 19,849

Gross profit 45,538 43,733

Other operating income 221 204

Income from capitalized development costs

629

157

Personnel expenses 28,281 27,614

Operating expenses 10,556 9,774 Operating profit before depreciation and amortization (EBITDA)

7,551 6,706

Depreciation of tangible fixed assets 5 1,915 1,628

Operating profit before amortization of intangible fixed assets and goodwill (EBITA)

5,636 5,078

Amortization of intangible fixed assets 6 281 266

Operating profit (EBIT) 5,355 4,812

Financial income 238 418

Financial expenses -334 -246 Consolidated profit before taxes 5,259 4,984

Income taxes 1,395 1,478

Consolidated profit 3,864 3,506

Group profit related to

- the shareholders of agta record ag 3,898 3,506

- the minorities -34 0 Earnings per share (basic) (in EUR) 0.298 0.270Earnings per share (diluted) (in EUR) 0.297 0.269

1


Consolidated balance sheet (in thousands of euros) Index 30.6.05 31.12.04

Cash and cash equivalents 15,060 15,329 Fixed term investments (original maturity < 3 months) 5,627 11,702 Trade accounts receivable 36,568 33,833 Current taxes on assets 1,251 182 Other current receivables 4,202 5,608 Inventories 18,161 16,267 Accrued income 2,022 1,253

Current assets 82,891 84,174 Real estate 5 24,511 22,008 Equipment/machinery 5 1,003 615 Other tangible fixed assets 5 8,682 7,258 Financial assets 197 201 Intangible fixed assets 6 13,503 7,239 Deferred tax assets 4,598 4,660

Fixed assets 52,494 41,981 ASSETS 135,385 126,155

Trade accounts payable 10,128 8,012 Current financial liabilities 7 2,372 1,287 Current tax liabilities 1,614 2,032 Other current liabilities 12,747 10,694 Accrued liabilities 15,438 14,492 Current liabilities 42,299 36,517

Non-current financial liabilities 7 6,551 6,862 Other non-current liabilities 2,446 45 Provisions 3,119 3,642 Deferred tax liabilities 4,960 5,164

Non-current liabilities 17,076 15,713

Liabilities 59,375 52,230

Share capital (at historical cost) 8,690 8,673 Other reserves 22,253 21,928 Own shares 10.2 -1,603 -1,236 Retained earnings 42,473 34,705 Result for the fiscal year 3,898 9,855 Shareholders’ equity 75,711 73,925

Minorities 299 0

Shareholders’ equity and minorities 76,010 73,925 LIABILITIES AND SHAREHOLDERS’ EQUITY 135,385 126,155

2


Statement of changes in consolidated equity (in thousands of euros)

Share capital

Other reserves

Own shares

Retained earnings

Foreign currency

translation

Total Minorities Total

Situation as of January 1, 2004 8,591

20,266 -810 40,442 -3,048 65,441 65,441Impact on first adoption of IFRS 256 256 256Situation after adjustment as of January 1, 2004 8,591 20,266 -810 40,698 -3,048 65,697 65,697

Foreign currency translation 425 -20 532 -122 815 815

Net income recognised directly in equity - 425 -20 532 -122 815 815

Consolidated profit (loss) 3,506 3,506 3,506

Total profit (loss) for the financial year - 425 -20 4,038 -122 4,321 4,321

Increase of share capital 24

241 265 265Exercise of options 103 103 103Purchase/sale of own shares 40 -199 -159 -159Dividends paid to the shareholders -2,231 -2,231 -2,231

Situation as of June 30, 2004 8,615 21,075 -1,029 42,505 -3,170 67,996 0 67,996

Situation as of January 1, 2004 8,591 20,266 -810 40,442 -3,048 65,441 0 65,441Impact on first adoption of IFRS 256 256 0 256Situation after adjustment as of January 1, 2004 8,591 20,266 -810 40,698 -3,048 65,697 65,697

Foreign currency translation 206 -8 411 -1,120 -511 0 -511

Net income recognised directly in equity 206 -8 411 -1,120 -511 0 -511

Consolidated profit (loss) 9,855 9,855 0 9,855Total profit (loss) for the financial year 0 206 -8 10,266 -1,120 9,344 9,344

Increase of share capital 82 963 1,045 1,045Exercise of options 329 329 329Purchase/sale of own shares 164 -418 -254 -254Dividends paid to the shareholders -2,236 -2,236 -2,236Situation as of June 30, 2004 8,673 21,928 -1,236 48,728 -4,168 73,925 0 73,925

Situation as of January 1, 2005 8,673 21,928 -1,236 48,728 -4,168 73,925 73,925Foreign currency translation -67 4 -95 1,005 847 847

Net income recognised directly in equity -67 4 -95 1,005 847 847

Consolidated profit (loss) 3,898 3,898 -34 3,864Total profit (loss) for the fiscal year -67 4 3,803 1,005 4,745 -34 4,711

Minorities 333 333Increase of share capital 17 98 115 115Exercise of options 49 49 49Purchase/sale of own shares 245 -371 -126 -126Dividends paid to the shareholders -2,997 -2,997 -2,997

Situation as of June 30, 2005 8,690 22,253 -1,603 49,534 -3,163 75,711 299 76,010

3


Consolidated cash flow statement (in thousands of euros)

Index 2005 2004 Consolidated profit 3,864 3,506Depreciation and amortization 5 / 6 2,196 1,895Income from disposal of fixed assets -21 -28Capitalized development costs -540 -157Other non cash items 687 593Operating profit before changes in working capital 6,186 5,809

Increase (decrease) in current assets: Trade accounts receivable 130 -1,295 Other receivables and accruals 246 1,700 Inventories 1,723 1,254

Increase (decrease) in current liabilities Trade accounts payable -188 1,209 Other current liabilities and accrued liabilities -36 -2,323 1,030 580Cash flow from operational activities 3,863 6,389

Investments Purchase of tangible fixed assets 5 -5,267 -2,220 Purchase of intangible fixed assets 6 -129 -300 Investment in loans and other financial investments -2 -1 Acquisition of subsidiaries 2 -4,759 -619 (net of cash acquired) -10,157 -3,140

Divestments Proceeds from tangible fixed assets 5 186 139 Proceeds from intangible fixed assets 6 16 0 Repayment of / proceeds from loans and other financial investments

7 209 8 147

Cash flows from investment activities -9,948 -2,993

Issuance of shares, less transaction costs 409 408 Transactions and results of own shares 10.2 -371 -199 Increase of share capital by minorities 313 0 Increase interest bearing liabilities 0 431 Repayment of interest bearing liabilities -120 -432 Repayment of finance lease liabilities -636 -946 Dividends paid 0 0 Cash flows from financial activities -405 -738

Net changes in cash and cash equivalents -6,490 2,658

Cash and cash equivalents: - January 1, 27,031 25,110 – currency translation 146 449 – June 30, 20,687 28,217Change in cash and cash equivalents -6,490 2,658

Cash flows from operating activities include:

Interest received 218 200Interest paid 209 237Paid income taxes 3,089 1,121

4


Notes to the consolidated interim financial statements as of June 30, 2005

Consolidation and valuation standards

Basic principles

agta record ag (the «company») is a company based in Fehraltorf, Switzerland. The consolidated interim financial statements as of June 30, 2005, comprises agta record ag and its subsidiaries (hereinafter referred to as “group”) as well as investments in associated companies. The company’s Board of Directors approved the publication of the consolidated interim financial statements on November 30, 2005.

For the first time, the consolidated interim financial statements have been prepared in accordance with IAS 34. Also for the first time, the consolidated financial statements for the financial year 2005 will be prepared in accordance with IFRS. Included in this consolidated interim financial statements are all valid IFRS-standards as of June 30, 2005, and interpretations concerning coverage and valuation of assets and liabilities and the resulting profit. Subsequently, the new accounting principles will be disclosed in their entirety. The comparative figures (financial year 2004) have been converted to the new accounting principles. The respective accounting modifications and their impacts on equity and annual resp. semi-annual results are shown in Note 1.

The group generates far more than two thirds of the net turnover in the euro zone. For the most part, accruals as well as expenditure accrue in Euro. Therefore, the consolidated financial statements are established in Euro, the Swiss franc as well as other non-Euro-currencies are treated as foreign currencies in the consolidated financial statements. When not mentioned differently, all amounts are presented in thousand Euro (TEUR).

The consolidated financial statements are prepared on the historical cost basis except for financial assets held for trade and available for sale, as well as derivative financial instruments, which are valuated at their fair value.

The preparation of the consolidated financial statements requires management to make estimations and assumptions that affect the amount of the reported assets and liabilities as well as the disclosure of contingent liabilities at the time of accounting, but also expenditure and income of the respective reporting period. The actual results may deviate from these estimations.

The presentation of the consolidated income statement is based on the classification of expenses by nature method.

Basis of consolidation

In addition to agta record ag, all significant subsidiaries are included in the agta consolidated financial statements, in which agta record ag has a direct or indirect majority stake; or agta record ag retains more than 50% of the voting rights; or the general management is contractually bound or is exercised de facto. The subsidiaries are consolidated according to the purchase method beginning with the day of obtaining control, and excluded from consolidation the day of releasing control.

Equity method accounting includes joint ventures and enterprises, wherein agta record ag can assert a relevant influence without having control (in general defined as investments with 20% to 50% voting rights). In the consolidated financial statements, profits and losses of the associated company are valued at equity method from the beginning until the end of the relevant influence (IAS 28 Accounting for investments in associates). The share in the losses of an associated company is recorded up to the book value of zero, unless the group has committed to the absorption of losses in of excess of the book value.

The financial statements of agta record ag, as well as the domestic and foreign subsidiaries, are prepared on uniform accounting and valuation principles in accordance with IAS 27.

Intergroup assets/liabilities as well as expenses/revenues and thereof resulting unrealized profits are eliminated. Also eliminated are unrealized profits from transactions with associated companies measured on the share in this company by reducing the book value. Unrealized losses are eliminated the same way as unrealized profits, unless it is a matter of impairments which cause additional depreciations.

5


Translation of foreign currencies

Transactions in foreign currencies are converted at transaction rates or average rates that represent an approximation to transaction rates of a specific number of transactions. Monetary assets and liabilities in foreign currencies are converted to the balance sheet date rate. The resultant translation difference is accounted in the income statement. Financial assets in foreign currency which are available for sale are converted to the balance sheet date rate. The translation difference is recognized in equity as part of the market value fluctuation reserve.

Foreign subsidiaries’ assets and liabilities including goodwill are converted at balance sheet date rates, the income and cash flow statements at average rates. Translation differences between the balance sheets and income statements, due to use of different foreign currency rates, are recognized in equity.

Translation differences on long term loans to foreign subsidiaries, which have the characteristic of economic equity, are booked corresponding to the net investment approach to equity without affecting the operating result.

The following rates have been adopted within the group to convert the primary currencies:

Average exchange rates Balance sheet rates

Jan.-June 2005

Jan.-June 2004

June 30 2005

Dec. 31 2004

100 CHF 64.70 64.35 64.58 64.77

1 GBP 1.46 1.48 1.49 1.41

100 DKK 13.44 13.43 13.43 13.45

100 SEK 10.95 10.91 10.58 11.10

100 HUF 0.40 0.39 0.40 0.41

100 PLN 24.55 21.13 24.77 24.48

1 USD 0.78 0.82 0.83 0.73

Income from sales of goods and services

Income from sales of goods and services are recognized with the change of ownership and risk to the customer, when a price is agreed upon or allocable and its payment can be assumed. Sales revenues are shown without value-added tax, cash discounts, other discounts and credit notes on returns.

Sales revenues relating to non-current commissioned production are recorded according to the percentage of completion method (IAS 18, Revenue, resp. IAS 11, Construction contracts). Only when the result of a manufacturing order can be reliably assigned, profits from the POC-method are realized.

Research and development costs

Research costs are recorded in the income statement as expense in the period they incur. Based upon the acceptance of technical specifications, development costs are only and to a degree capitalized when specific criteria are met and the capitalized amount is recoverable by corresponding future amounts. Capitalization starts when the following conditions are met:

– Clear and well-defined identifiably of the product or procedure. The corresponding costs can be clearly assigned and reliably determined.

– The technical feasibility is proven

– The product will be brought to the market or used for own purposes

– The developments will generate a future profit.

– Sufficient technical, financial and other resources are available to terminate the product.

The capitalized costs include material costs, direct labour costs as well as proportionate overheads. Self-motivated development activity is shown as intangible fixed assets, and prototypes as fixed assets.

Capitalized development costs are amortized over the anticipated useful life on a straight-line basis. The estimated useful life is between 3 – 5 years.

6


Expenses under operating leases

Lease payments on leased assets, which are defined as operating lease, are expensed straight-line over the lease term, provided (??) payments are related to determined conditions.

Expenses under finance lease

Lease payments are apportioned between financing costs and reduction of the outstanding liability. The financing expenses are equally allocated to the period of the leasing agreement.

Financial income and financial expenses

Financial income includes interest income on loans and interest bearing securities, dividend income, profits on foreign currencies, profits on derivative financial instruments not accounted as Hedge transactions and profits from sale of financial assets.

Interest income is recognized in the income statement by using the effective rate method. Dividends are accounted for at accrual of a legal claim.

Financial expenses include interest expenses for financial liabilities, losses in foreign currencies, losses in derivative financial instruments not accounted as Hedge transactions, losses on sale of financial assets and financial expenses on finance lease. The interest part of the lease payment is recorded as financial expense by using the effective rate method. No loan (???) capital costs are capitalized.

Income taxes

Income taxes include both current and deferred income taxes. Income taxes are expensed, except for the income taxes on items directly recognized in equity, for items which are recorded in equity.

The current income taxes comprise the anticipated owed taxes on the tax relevant results, calculated with the applicable or estimated tax rates on the balance sheet date, and possible alignments to tax debts from previous years.

Deferred taxes are accrued on temporary differences between the shown balance sheet values on assets and liabilities and their taxable value according to the Balance-Sheet-Liability-Method. The temporary differences on following items and procedures have not been included: non tax deductible goodwill; capitalization / deterioration of an asset / a debt affecting neither the group result nor the taxable result at the time of transaction; investments in subsidiaries having possible temporary differences in the foreseeable future. The rating of deferred taxes takes into consideration the expected date and how an asset is realized or a debt is settled. For this purpose, tax rates are used which are valid or anticipated on the balance sheet date.

Deferred tax assets are only considered when deferred tax liabilities exist or when future profits will probably enable the disposition of capitalized deferred taxes. Deferred taxes are reduced in such a way that its future realization is not expected.

Possible additional taxes based on dividend payments are recorded at the time the dividend payment is due.

Cash

Cash is defined as cash in hand, post and bank credits as well as current time deposits with an original term of 90 days maximum. This definition complies with the fond underlied by the cash flow statement.

Tradable securities

Tradable securities are securities held for trade. The first accounting occurs on settlement day at the day rate. They are stated at fair value as of balance sheet date. Profits and losses occurring from the valuation are recognized in the income statement. Derivative financial instruments are recorded initially as original cost. Their valuation is made at fair value on the balance sheet date. Profits and loss occurring from variations in fair value of financial instruments that are intended for hedging future transactions are recognized in equity under hedge reserves until their realization; the others are entered directly into the income statement.

Trade receivables

Trade receivables from sale of goods and services and other receivables are stated at cost less possible provisions for receivables at risk. Provisions refer to either known receivables at risk or are based on historical payment risk surveys.

7


Inventories

Inventories are valued at the lower of cost or net realizable value. Production costs comprise all material and direct labour cost as well as proportionate indirect labour costs. Identifiable impairment due to being out of fashion, overstocked, fallen replacement and sales prices etc. are considered by reducing the stock positions in value. The realizable value is the estimated sales return attainable during normal business operations less the estimated necessary sales costs. Inventories are valued under the FIFO-method or at weighted average prices.

Fixed assets

Property, buildings, technical equipment / machinery and other tangible fixed assets (plant equipment, IT-hardware and motor vehicles) are valued at cost less cumulated depreciations and possible impairment of value. Additional investments are only capitalized at an increase of the economic profit of the capital asset. All other expenses on fixed assets are currently charged to the income statement.

Fixed assets are depreciated on a straight-line basis according to their useful life and are charged to the income statement. The depreciation period is for:

Property and buildings

Property -

Buildings 20 - 40 years

Buildings under construction -

Technical equipment/machinery

Technical equipment and machinery 7 - 10 years

Other fixed assets

Plant equipment 4 - 10 years

IT-hardware 5 years

Motor vehicles 3 - 5 years

Other fixed assets under construction -

Assets from finance leases

Lease agreements economically considered as asset purchases with corresponding financing are classified as finance leases. Assets financed with such lease agreements are stated at the lower of the estimated present value of the minimum lease payments or at fair value. The lease payments are divided into depreciation and an interest component, in order to have a constant return in outstanding liabilities. Assets from finance lease are depreciated over the expected useful life or the shorter of the lease term.

Lease ratios are classified as operating leases when not all essential benefits and risks inherent in ownership of the asset are assigned. In general, lease payments on operating leases are charged on a straight-line basis over the lease term minus possible concessions.

Intangible assets

Goodwill: Goodwill, resulting by acquiring a company, consists of the difference between the acquisition cost and the net current value to be attributed to the identified asset values, debts and contingent liabilities.

By definition, companies are consolidated the day agta record ag attains control of the company in a direct or indirect way. Merger business combinations, effective as from 1.1.2004 are shown at the purchase method (IFRS 3). No change occurs to a goodwill recorded at an earlier period (before 1.1.2004).

The goodwill is tested for impairment on an annual basis. All identifiable intangible assets are shown separately from goodwill.

8


Other intangible assets comprise IT-software and capitalized development costs. They are stated at cost less cumulated amortization and possible impairments. Amortization is calculated on a straight-line basis to the following useful life:

IT-software 3-4 years

Capitalized development costs 3-5 years

Loans and other financial assets

Interest bearing loans are stated at cost less possible provisions for loans at risk. Provisions refer to known loans at risk.

Generally, listed securities are held as other investments. The securities are stated at fair value. Variations in fair value are recorded in the income statement.

Impairment

Value of the capitalized assets is reviewed upon indications of a sustained impairment at each balance sheet date. If any indication of impairment exists, the recoverable amount is estimated. It reflects the higher amount of fair value and value in use.

If the recoverable amount is less than the carrying value or the cash generating unit, an income statement related valuation adjustment is made.

If assumptions in the determination of a recoverable amount change, an impairment of an earlier period is reversed. Goodwill is an exception in which book value will never be reversed.

Trade accounts payable and other liabilities

Trade accounts payable and other liabilities are stated at nominal value.

Financial liabilities

Initially, financial liabilities are stated at cost less transaction costs. Thereafter, the difference between purchase and redemption amount will be recorded in the income statement over the term, using the effective interest rate method. .

Employee benefits

There are different systems of pension schemes within the group. Obligations not covered by external pension funds are to be calculated using insurance conform methods and accounted for as provisions. Obligations to external pension funds are accounted for at full value as liabilities.

Provisions

Provisions are made when a legal, contractual or factual liability has occurred; when the outflow of funds to meet this liability is likely; and when a reliable estimation of the liabilities’ amount is possible. Provisions reflect the best possible estimation in liabilities at the balance sheet date. If the effect of discounting is substantial, the provision is recorded at present value.

Equity

Share capital and own shares

The share capital includes all issued bearer shares. Dividends are considered at the date of the legal claim of payment.

External transaction costs, which relate directly to the issuance of new shares, are deducted from other reserves after deduction of income tax effects.

9


Self-acquired shares by the company or its subsidiaries are valued in the balance sheet at purchase value incl. transaction costs less associated income tax effects and presented as a negative position in equity. The income upon realization of own shares is recorded in equity.

Employee participation scheme/profit sharing

In addition to the ordinary salaries, the group’s top management and managing directors as well as the Board of directors are paid with options. No conditions are in the employee options. It is assumed that the performance of the employee has been rendered at issue date. In this case, the options are valued at fair value and at the same time fully charged to personnel expenses of the previous year. agta record commits to purchase the shares at fair value at their date of issue and as a result, the company enters into a liability for this “take-back” commitment. The option’s fair value is calculated at each balance sheet date as well as at the exercising of the option and the liability is adjusted in the income statement. If the employee takes up the shares, the “take-back” commitment is invalid and the liability is reclassified as equity.

Seniority payments and bonus schemes in form of free shares are valued at fair value and expensed as personnel expenses at the allocation date.

Segment reporting

The strategic fields of operations of the agta record group are divided into three geographical segments and two business segments.

As the main opportunities and risks derive from the fact that agta operates in various countries and regions, the geographical segments serve as basis for the primary segment reporting.

The “Euro zone” segment includes Germany, Austria, the Netherlands, Spain, and France.

The “non-euro zone” segment includes Switzerland, the United Kingdom, Sweden, Denmark, Hungary, Slovenia and Poland.

The third segment includes the United States and China.

Inter-segment transactions are conducted "at arm's length" conditions.

10


Comments on impact of first time adoption of IFRS (in thousands of euros) Index 1.1.04 30.6.04 31.12.04 Shareholders’ equity based on previous accounting principles

65,441 67,039 72,710

Adoption of the new revenue recognition method for major projects

1.1 377 477 746

Capitalisation of vehicles and computers under finance leases

1.2 2,175 2,542 2,560

Recognition of finance lease obligations 1.2 -2,208 -2,594 -2,588

Currency translation differences of subsidiaries to Group currency

292

Adjustment of the non-compete clause 1.3 -216 -221 -196

Capitalisation of development costs 1.3 165 686

Recognition of financial liabilities related to the share buyback commitment as a result of the employee stock option plan

1.4 -350 -547 -821

Reversal of the buyback commitment posted to shareholders’ equity upon exercise of the option

103 329

Employee severance pay 1.5 -153 -156 -168

Seniority gifts 1.5 -46 -46 -46

Reversal of goodwill amortization 1.3 437 706

Adjustment of deferred taxes 1.6 673 493 6

Other 6 11 1

Shareholders’ equity based on IFRS 65,699 67,995 73,925

11


(in thousands of euros) Index January – June 2004

2004

Result based on previous accounting principles 3,189 9,211

Adoption of the new revenue recognition method for major projects 1.1 99 368

Reversal of lease charges 496 1,027

Losses from the sale of leased vehicles -19

Finance lease amortization -445 -890

Finance lease interest expense -57 -120

Capitalisation of development costs 1.3 157 680

Reversal of goodwill amortization 1.3 467 913

Goodwill impairment -168

Valuation of the financial liabilities related to the share buyback commitment in the context of the employee stock option plan

1.4 -188 -468

Change to the severance pay 1.5 -3 -15

Adjustment of deferred taxes, in particular capitalisation of loss carry forwards

1.6 -8 -9

Impact on current taxes -186 -676

Other 4 2

Result based on IFRS 3,506 9,855

Difference 317 644

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1 Comments on main reconciling items

1.1 Revenue from sales and services

In accordance with the previous accounting principles, projects in process were recognised under inventories (work in process). With the transition to the IFRS, the projects were divided into sub-projects. For the finished sub-projects, the total turnover including profit was recognized.

As of 1.1.2004, trade receivables for an additional amount of KEUR 377 were capitalized as a result of the first time adoption of the percentage of completion method.

As a consequence of these changes, turnover for 2004 increased by KEUR 368.

1.2 Finance leases

Fixed assets

While the vehicle lease contracts under the previous accounting principles were considered as operating leases they qualifiy as finance leases under IFRS and are therefore capitalized.

Due to the recognition of lease contracts as finance leases, the fixed assets statement changes as follows:

Acquisition costs (in thousands of euros)

Situation as of 1.1.04

under previous

accounting principles

Effect of the

transi-tion to IFRS

Situation as of

1.1.04 IFRS

Change in consolida-tion scope

Ex-change

diffe-rence

Acqui-sitions

Disposals Situation as of

31.12.04

Real estate 24,401 0 24,401 99 162 5,151 340 29,473 Equipment/machinery 2,796 4 2,800 20 21 217 59 2,999

Other tangible fixed assets

12,516 3,475 15,991 118 45 4,090 1,786 18,458

Tangible fixed assets 39,713 3,479 43,192 237 228 9,458 2,185 50,930

Residual value

2004Depreciation (in thousands of euros)


under previous


Effect of the

transi-tion to IFRS

Situation as of

1.1.04 IFRS


Ex-change

diffe-rence

Disposals Current year

Situation as of

31.12.04

1.1. 31.12.

Real estate 6,746 0 6,746 4 45 12 682 7,465 17,655 22,008Equipment/machinery 2,154 0 2,154 15 14 47 248 2,384 646 615


8,460 1,304 9,764 98 34 1,277 2,581 11,200 6,227 7,258

Tangible fixed assets 17,360 1,304 18,664 117 93 1,336 3,511 21,049 24,528 29,881

Residual value 2004 (in thousands of euros)

1.1. 31.12. thereof finance leases as of 1.1.

thereof finance leases as of

31.12.

Real estate 17,655 22,008 2,071 2,449 Equipment/machinery 646 615


6,227 7,258 2,175 2,542

Tangible fixed assets 24,528 29,881 4,246 4,991

13


Financial lease liabilities

Because of the financial nature of vehicle leases, there were, as of January 1, 2004, additional finance lease liabilities for KEUR 2'208. Lease liablities (in thousands of euros) 2004Situation as of 1.1. under previous accounting principles1) 2,282

Adjustments 2,208

Situation as of 1.1. IFRS 4,490

Repayment -1,360Increase 2,036Exchange difference 5

Situation as of 31.12. IFRS 5,171 thereof current 1,144thereof non-current 4,027 1) until now under other non-current liabilities

Discounted future minimum lease payment amounts posted to the balance sheet as of January 1, resp. as of December 31, 2004 are as follows: (in thousands of euros)

Total future minimum lease

payments

Total interest payments

Discounted value of future minimum lease

payments

1.1.04 31.12.04 1.1.04 31.12.04 1.1.04 31.12.04

Maturity - less than 1 year 899 1,250 72 106 827 1,144- between 1 and 5 years 3,727 3,768 622 607 3,105 3,161- more than 5 years 747 1,141 189 275 558 866 Total finance lease liabilities

5,373 6,159 883 988 4,490 5,171

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1.3 Intangible fixed assets

As of January 1, 2004, there was a non-compete clause with a former senior manager from the American subsidiary. The amount capitalized as of January 1, 2004 has been reversed since capitalization is not allowed under IFRS.

The fixed assets table is as follows:


Situation as of

1.1.04 under

previous accounting

principles

Effect of the

transi-tion to IFRS

Situation as of

1.1.04 IFRS


Ex-change

diffe-rence

Acquisi-tions


31.12.04

Goodwill 11,233 -318 10,915 0 -312 66 0 10,669 Development projects 0 0 0 686 0 686 Other intangible fixed assets 3,773 0 3,773 112 28 1,382 101 5,194

Intangible fixed assets 15,006 -318 14,688 112 -284 2,134 101 16,549

Residual

value 2004Amortization (in thousands of euros)


under previous


Effect of the

transi-tion to IFRS

Situation as of

1.1.04 IFRS


Ex-change

diffe-rence


Situation as of

31.12.04

01.1. 31.12.

Goodwill 5,036 -102 4,934 0 -98 0 441 5,277 5,981 5,392Development projects 0 0 0 0 0 0 0 0 686

Other intangible fixed assets 2,753 -3 2,750 32 18 100 1,333 4,033 1,023 1,161

Intangible fixed assets 7,789 -105 7,684 32 -80 100 1,774 9,310 7,004 7,239

In FY 2004 development costs totalling KEUR 686 (as of 30.6.2004 KEUR 157) where capitalized under IFRS since the respective criteria are met, while under previous accounting principles such costs were expensed. They will be amortized over the product life cycle.

Goodwill resulting from the acquisition of a company will no longer be amortized but will be subjected to an annual impairment test. The impact on this change in accounting principle totals KEUR 913 (as of 30.6.2004: KEUR 467).

In the context of the preparation of the 2004 budget and of the group’s strategic planning, impairment tests have been carried out for the goodwill of various companies within the group. Because of the expected losses, the goodwill of the following companies has been amortized as follows.

Company (in thousands of euros)

Goodwill Impairment

record industry SA 132 118

F-Group 1,581 50Additional impairment required 168

record Türautomation AG 318 273

Total 441

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1.4 Employee stock option plans

IFRS 2 requires shares based payments received by employees for their performance to be recognised as personnel expense. Employee stock option plans are not subject to any waiting period. The charges are thus recognised under personnel expense when the options are granted. Furthermore, agta record ag undertakes to buy the shares back from its employees once an option has been exercised. This generates for agta record ag an obligation. Should an employee decide, upon the exercise of an option, to keep the shares or to sell them on the market, the buyback obligation will be invalid.

Thus, an obligation in the amount of KEUR 350 has been recognised as of January 1, 2004. In 2004, for the first time, a personnel expense in the amount of KEUR 205 (as of 30.6.04: KEUR 11) was recognised following the grant of options. KEUR 263 (as of 30.6.2004: KEUR 177) were added to that amount following the adjustment of the obligation for the market value of these options.

1.5 Severance pay

In accordance with Austrian law, employees leaving a company receive severance pay. In the past, this situation was taken into consideration in the balance sheet of the Austrian subsidiary. However, with the introduction of IFRS, this amount had to be recalculated based on IAS 19. The amount thus increased by KEUR 153 as of January 1, 2004. At the end of 2004, the severance pay amounts to KEUR 168.

1.6 Income tax

Following the introduction of IFRS, the book value of several balance sheet positions had to be adjusted. As a result there were deferred taxes in the amount of KEUR 29 as of 1.1.2004.

After estimating the use of loss carry forwards, agta record ag decided to capitalize a loss carry forward in the amount of KEUR 702.

The net positive effect thus was KEUR 673 as of January 1, 2004.

(in thousands of euros) 1.1.20040 31.12.2004 Loss carry

forwards according to the

previous accounting

principles

Capitalized loss carry forwards

according to IFRS

Loss carry forwards2)

Loss carry forwards

according to the previous


Capitalized loss carry forwards

according to IFRS

Loss carry forwards2)

One year 72 72 71 71 Two years 63 63 65 65 Three years 65 65 18 18 Four years 18 18 288 288 Five years 439 275 164More than 5 years 1) 2,244 1,955 289 1,222 1,196 26

Total 2,462 2,173 289 2,103 1,913 190

thereof deferred taxes 702 614

1) The difference compared to the 2004 financial report relates to an adjustment in France (Industry)

2) The excess loss carry forward (Spain and Hungary) was not capitalized since it was not expected to realise profit in the near future.

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2 Change in the scope of consolidation

record Automatic Door Co., Shanghai, was founded on June 1, 2005. Its share capital is KEUR 1,000. The ownership interest of agta record ag is KEUR 667. It is a joint venture. This joint venture will be fully consoli-dated and minorities are presented accordingly.

record avtomatska vrata d.o.o, Lijubliana, was founded on June 1, 2005. This company acquired the fixed assets of TEC d.o.o for the amount of KEUR 170.

On July 3, 2005, agta record ag acquired 100% of the shares of Premier Systems ltd, for KEUR 7,280. The purpose of the company is the production, installation, assembling and maintenance of automatic door systems and construction of shop fronts.

(in thousands euros)

Balance sheet of Premier Systems ltd.

Fair Value Adjustments

Book values

Current assets -3,524 0 -3,524

Fixed assets -420 0 -420

Current liabilities 1,776 0 1,776

Non-current liabilities 0 0 0

Net assets purchased -2,168 0 -2,168

Acquired goodwill -5,629 0 -5,629

+ unpaid goodwill 2,474 0 2,474

Purchase price -5,323 0 -5,323

less cash acquired 517 0 517

Net cash invested -4,806 0 -4,806

Exchange difference 47 0 47

Net cash invested at average exchange rate -4,759 0 -4,759

The purchase price was calculated based on an earn-out model and divided into three instalments. The first instalment was based on the audited results as of March 31, 2003 and March 31, 2004. They have been taken into account in the calculation of a purchase price for a 35% weighted average. The payment amounted to KEUR 4,759 and was paid in cash. In addition 19'332 agta shares (market value of the share on June 3, 2005: EUR 13.08) for a total value of KEUR 253 are to be transferred to former owners of the company.

The second and third instalments are related to the yearly results for 2006 and 2007, their weighting being 32.5% each. These instalments will be paid in April 2007 and in April 2008 respectively. The payments will be made in cash and 10% of the purchase price in shares.

The price determined above may thus be adjusted depending on the result for 2006 and respectively for 2007.

Currently, the fair values of the assets and liabilities are being valued.

Purchased goodwill includes values that cannot be allocated to assets such as management know how, company reputation and synergies with the existing subsidiary.

Premier‘s turnover for the period from June 3 to June 30, 2005, was KEUR 448. The loss of the company is KEUR 104. If the company would have been part of the group’s scope of consolidation since January 1, 2005, the consolidated turnover would have been KEUR 68,989 and the consolidated profit would have been KEUR 4'041.

17


3 Segment reporting

The key figures by segment are as follows: Segment reporting 30.06.2004 Euro zone Non-euro

zoneUSA/Asia

Other/ Reconciliation

to Group

Consolidated accounts

30.6.04 30.6.04 30.6.04 30.6.04 30.6.04

Sales to third parties 45,129 15,076 3,377 63,582Sales to other segments 1,986 18,865 0 -20,851 0Total turnover 47,115 33,942 3,377 -20,851 63,582

Operating income (EBITA) 1,235 5,652 403 -2,212 5,078Depreciation of tangible fixed assets 980 607 26 15 1,628

Amortization of intangible fixed assets 80 185 0 1 266

Charges related to employee stock options

188 188

31.12.04 31.12.04 31.12.04 31.12.04 31.12.04

Segment assets *) 61,963 51,058 6,114 7,020 126,155Segment liabilities **) 24,952 8,773 782 17,722 52,230

Investments 4,983 4,251 64 160 9,458

Segment reporting 30/6/2005 Euro zone Non-euro

zoneUSA/Asia

Other/ Reconciliation

to Group

Consolidated accounts

30.6.05 30.6.05 30.6.05 30.6.05 30.6.05

Sales to third parties 45,541 16,197 3,827 0 65,565Sales to other segments 2,114 20,136 0 -22,250 0Total turnover 47,655 36,334 3,827 -22,250 65,565

Operating income (EBITA) 69 6,819 241 -1,494 5,636Depreciation of tangible fixed assets 1,156 709 33 18 1,915

Amortization of intangible fixed assets 95 175 0 11 281

Charges related to employee stock options

-95 -95

30.6.05 30.6.05 30.6.05 30.6.05 30.6.05

Segment assets *) 63,314 58,453 8,206 5,412 135,385Segment liabilities **) 24,763 11,167 939 3,986 59,375

Investments 2,791 3,095 167 2 6,055 *) Deferred tax receivables are listed under “Reconciliation to Group” **) Current and non-current financial liabilities as well as deferred and current taxes are included in “Reconciliation to Group”.

18


4 Seasonality of operations

The pace of the segment “products” varies in the different periods of the year. Results in the 1st half of the year are generally lower than those in the second. In fact, 50% of fixed costs are recognised during the 1st half of the year, while only 45% of the annual turnover are recorded for the same period.

5 Fixed assets


Situation as of

1.1.05


Exchange difference

Acquisi-tions


30.06.05

Real estate 29,473 287 -57 2,783 18 32,468 Equipments/machinery 2,999 0 -7 561 60 3,493

Other tangible fixed assets 18,458 469 35 2,711 1,387 20,286

Tangible fixed assets 50,930 756 -29 6,055 1,465 56,247

Residual value

30.6.05Depreciation (in thousands of euros)

Situation as of

1.1.05


Exchange difference


Situation as of

30.06.05

1.1. 30.6.

Real estate 7,465 85 -14 15 436 7,957 22,008 24,511Equipments/machinery 2,384 0 -6 44 156 2,490 615 1,003

Other tangible fixed assets 11,200 247 13 1,179 1,323 11,604 7,258 8,682

Tangible fixed assets 21,049 332 -7 1,238 1,915 22,051 29,881 34,196

Net book value 30.6.05 (in thousands of euros)

1.1. 30.6. thereof finance leases 1.1.

thereof finance leases 30.6.

Real estate 22,008 24,511 2,449 2,183 Equipments/machinery 615 1,003

Other tangible fixed assets 7,258 8,682 2,542 2,815

Tangible fixed assets 29,881 34,196 4,991 4,998

The additions of buildings relate to the new office building in Fehraltorf.

The additions of other tangible fixed assets mostly relate to own vehicles for KEUR 1’000 and leased vehicles for KEUR 788.

19


6 Intangible fixed assets


Situation as of

1.1.05


Exchange difference

Acqui-sitions


30.6.05

Goodwill 10,669 0 426 5,629 0 16,724

Development costs 686 0 -2 540 0 1,224 Other intangible fixed assets 5,194 0 -10 129 0 5,313

Intangible fixed assets 16,549 0 414 6,298 0 23,261

Residual value

30.6.05Amortization (in thousands of euros)



Exchange difference


Situation as of

30.6.05

1.1. 30.6.

Goodwill 5,277 0 159 0 0 5,436 5,392 11,273Development projects 0 0 0 0 53 53 686 1,171Other intangible fixed assets 4,033 0 -7 0 227 4,253 1,161 1,059

Intangible fixed assets 9,310 0 152 0 280 9,742 7,239 13,503

The addition of goodwill relates to the purchase of the UK company “Premier”.

7 Financial liabilities

Lease liabilities (in thousands of euros) 2004 2005Situation as of 1.1. 4,490 5,171

Repayment -1,360 -664Increase 2,036 785Exchange difference 5

Situation as of 31.12. / 30.06. 5,171 5,292

thereof current 1,144 1,501thereof non-current 4,027 3,791

Discounted future minimum lease payments posted to the balance sheet are as follows as of June 30, 2005:

(in thousands of euros)

Total minimum future lease payments

Total interest payments

Discounted value of the future minimum

lease payments

30.6.05 31.12.04 30.6.05 31.12.04 30.6.05 31.12.04Maturity - less than 1 year 1,609 1,250 108 106 1,501 1,144- between 1 and 5 years 3,655 3,768 595 607 3,060 3,161- more than 5 years 963 1,141 232 275 731 866

Total finance lease liabilities 6,227 6,159 935 988 5,292 5,171

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8 Comments on other specific events

There are no specific events or unusual expense or revenue to be disclosed among the events already discussed in the previous comments.

9 Contingent liabilities

There are no contingent liabilities as of 30.6.2005.

10 Shareholders equity

10.1 Share capital and other reserves

During the 1st half of the year, the share capital of agta record ag has been increased by EUR 17 following the exercise of options granted to the employees. This corresponds to 27,300 shares (total shares as of June 30, 2005: 13,237,300, as of 31.12.2004: 13,210,000). Following this transaction other reserves increased by KEUR 147.

10.2 Transactions with own shares

Based on an employee stock option plan, agta record ag has an obligation to buy back at their market value the shares from the options exercised by the employees.

agta record ag has a further obligation to acquire the shares that the employees have subscribed on the date of their listing that they now want to sell.

Small transactions result from the buying/selling of shares by market makers by virtue of a contract (animation contracts) between agta record and a broker. Market makers are responsible for fixing the price (in general a share) when there is a risk that no trading takes place at that date. During the year, this is a negligible volume.

Situation as of

1.1. Increase Decrease Exchange

difference Situation as of

31.12.2004*Quantity Value Quantity Value Quantity Value Quantity Value

104,950 810 149,582 1,595 -118,941 -1,177 9 135,591 1,236

Situation as of

1.1. Increase Decrease Exchange

difference Situation as of

30.6.05*Quantity Value Quantity Value Quantity Value Quantity Value

135,591 1,236 37,992 505 -11,300 -134 -5 162,283 1,603

(Value in thousands of euros)

10.3 Dividends paid

On 28 June 2005, the ordinary general meeting approved the payment of a dividend of CHF 0.35 per share, or a total of KEUR 2,997 as proposed by the Board of Directors.

10.4 Employee stock options plan

68,100 options were granted to the employees during the first half of 2005.

By exercising their options, the employees had the possibility to sell back their shares to agta record ag. agta record ag has an obligation to buy the shares back at market value.

A personnel expense for KEUR 105 was recognised during the first half of the year in order to adjust the liability resulting from the obligation to buy back options at their market value.

21


The market values of the three types of options are calculated as follows:

Expiry date Exercise

price Quantity Market value

per optionTotal market

valueDividend

per option Total

dividend

EUR EUR KEUR KEUR May 31, 2006 8.47 13,200 4.50 59 0.233 23May 31, 2007 8.80 15,600 4.26 66 0.255 25May 31, 2008 13.11 68,100 1.73 118 0.233 23

TOTAL 96,900 244 70

11 Earnings per share

30.6.05 30.6.04

Earnings (in KEUR) 3,898 3,506

Average number of shares outstanding 13,088,499 13,008,310

Non diluted earnings per outstanding share 0.298 0.270

Average number of outstanding shares 13,088,499 13,008,310

Dilution effect of employee options 15,557 16,402

Average number of diluted outstanding shares 13,104,056 13,024,712

Diluted earnings per outstanding share 0.297 0.269

12 Related party transactions

The new building construction contract for the head office in Fehraltorf was granted to the architectural firm Rota Architekten AG. The co-owner of this company is Mrs. Michèle Rota, who is also a member of the Board of Directors of agta record ag. Considering that the final invoice has not yet been prepared, the amount of the fees was not known at the time this report was prepared.

For the architect fee for the the new building, the company budgeted an amount of KEUR 420.

Dr. W. Sprenger and Dr. P. Altorfer are members of the Board of Directors and consulted in their capacity as attorneys for legal advice.

The following transactions have taken place: (in thousands of euros)

1.1. -

30.6.04 1.1. -

31.12.04 1.1. -

30.6.05

Rota Architekten AG, Zurich 130 180 159 (Architect fees advances)

Dr. iur W. Sprenger, Zurich 13 58 0

Dr. iur P. Altorfer, Zurich 4 3 1

22


13 Events after the balance sheet date

The publication of the interim consolidated accounts was approved by the Board of Directors on 30.11.2005.

No event that could have an effect on the consolidated financial statements or that would require to be disclosed in this report has occurred between the closing date and the date on which said accounts were approved by the Board of Directors on 30.11.2005.

The German text of these interim consolidated financial statements as of 30.6.2005 shall prevail.

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