Viscom AG — Interim / Quarterly Report 2007

May 29, 2007

Interim Report as of 31 March 2007

Viscom AG

▪	Key Group Figures 3
▪	Foreword by the Executive Board 4
▪	Viscom's Shares 6
▪	Business Development 8
▪	Outlook 13
▪	General Information on the Company 14
▪	Abbreviated IFRS Interim Consolidated Financial Statements 15
	Consolidated income statement 15
	Consolidated balance sheet 16
	Consolidated cash flow statement 18
	Statement of changes in consolidated shareholders' equity 19
▪	Notes to the abbreviated interim consolidated financial statements 20
▪	Financial Calendar 21
▪	Contacts 24

Key Group Figures

	01.01.–31.03.2007	01.01.–31.03.2006
Revenue	10,716 K€	13,075 K€
EBIT	-108 K€	2,864 K€
Financial result	176 K€	83 K€
Income taxes	-10 K€	-1,217 K€
Net profit for the period	58 K€	1,730 K€
Number of shares	9.020.000	67.200
Diluted and undiluted earnings per share	0.01 €	25.74 €
Number of employees	368	296

Foreword by the Executive Board

Dear shareholders,

Ladies and gentlemen,

Our business is highly seasonal in its nature. Our customers often only take major investment decisions towards the end of the year. As a result, the months from January to March are generally weaker than the rest of the year in terms of revenue. However, the first quarter of the current financial year was impacted by factors above and beyond this traditional seasonal fluctuation. Despite this, the challenges we are currently facing also offer opportunities for our future development. With the X7056, we have created an inspection system that is unique on the market. Combining optical and 3D X-ray inspection, the machine allows customers to perform quick, safe and fully automated inspection at an attractive price/performance ratio. The X7056 boasts a profile that has long been in demand on the market. Although not yet available, our customers have already placed orders for the first machines of this type. However, some customers are postponing their investments in conventional systems and choosing instead to wait for new developments, which is currently having a negative impact on the Viscom Group's revenue development.

In the first quarter of 2007, Viscom generated revenue of € 10.7 million, down 18.0 % on the corresponding period of the previous year. This is offset to an extent by the € 2.3 million increase in the order backlog; nevertheless, revenue development failed to meet our expectations by some distance.

Viscom AG is active in a sustainable growth market whose development potential we intend to leverage to the greatest possible extent. With the investments that we have made in recent months in technology, human resources and our global orientation, we are confident that we will be able to meet both your expectations and ours. The substantial and intensive degree of investment in the future performance of our Company is reflected in our current results. Taking into account the additional factor of our unexpected revenue development, Viscom AG's EBIT for the first three months of 2007 amounted to € 0.11 million.

However, we still expect to achieve our target EBIT margin of 15–17 % for the year as a whole, as our investment projects are likely to have a significant positive impact in the second half of the year. In Asia, we are currently pressing ahead with the establishment of the new application centres. The substantial increase in the number of customer evaluations shows that these measures are starting to bear fruit, but the corresponding revenue effects will only be realised at a later date. In the USA, we opened our second application centre in San Jose on 2 March, thereby significantly expanding our customer support and advisory capacities.

We have laid all the necessary foundations for the positive future development of the Viscom Group, and are confident of our ability to achieve our goals. We would like to take this opportunity to thank you for accompanying us along the way.

Sincerely,

Dr. Martin Heuser Volker Pape Ulrich Mohr

Viscom's Shares

ISIN	DE 000 7846867
Market segment	Official Market of the Frankfurt Stock Exchange
	Prime Standard
Number of shares	9.02 million
Free float	33%
Market capitalisation	€ 115 million
High	13.82 €
Low	11.65 €
Average trading volume	12,205
EPS	0.01 €

As of 31 March 2007

Boosted by the positive economic environment, the global stock markets started the year encouragingly, with the Frankfurt Stock Exchange reaching its highest level since February 2001. The European indices continued to present historically low valuations, however, as share price gains were accompanied by corresponding company profits. Growing uncertainty over the ongoing debate on interest rate rises, among other things, led to higher volatility on the equity markets, but this was not enough to spoil the fundamentally positive mood: for almost four years, the European stock markets had enjoyed a sustained upward trend, with the leading indices recording several-year highs on an almost daily basis. Despite the positive market environment, however, there was a certain degree of underlying scepticism due to the prolonged nature of the upturn. On 27 February, the progress of the indices was stopped in its tracks. This development was triggered by the Shanghai Stock Exchange, which experienced its largest crash in ten years, recording a drop of almost nine percent only one day after trading at a record high. Weak company data from the USA served to generate additional uncertainty. In just one week, around US\$1,500 billion was wiped off the global stock exchanges. However, these significant downward adjustments were followed by a phase of concentrated recovery on the stock markets over subsequent weeks.

The development of Viscom's share price reflected that of the wider environment. It increased by around 11 % between the start of the year and 23 February to reach a high of € 13.82. In the wake of the general share price slump on 27 February 2007, Viscom's shares fell substantially, losing 8.8 % of their value in one day. They have since benefited from the overall market recovery to regain some ground, but have yet to return to the level at which they were trading prior to the crash.

The aim of our investor relations activities is to allow all capital market participants to obtain a fair evaluation of the Viscom Group. Accordingly, we provide continuous, transparent communications and are available for open dialogue at all times. In addition, all information relating to Viscom's shares is published in a timely manner on the Company's website at www.viscom.com/en_ir.

Business Development

Revenue and earnings development

The first few months of the year are generally the weakest in terms of revenue development, as many of the Viscom Group's customers enter an intensive phase of investment at the end of each financial year. However, the fall in revenue in the first quarter of 2007 cannot be attributed solely to seasonal fluctuations. There are other reasons for the muted development, particularly the reluctance to invest on the part of customers due to the imminent availability of new inspection systems. The X7056 system constitutes an optimal solution for customers who are increasingly required to inspect both hidden and visible components, offering quick and cost-efficient inspection using both optical and X ray technology. Accordingly, some target customers have postponed their purchase orders for conventional systems in order to allow them to invest in the new X7056 as soon as it becomes available.

EBIT for the first quarter of 2007 amounted to € 0.11 million; this was due to the fact that revenue was lower than expected, as well as the increase in the cost of materials ratio, the higher fixed cost component of staff costs and other operating expenses. One of the reasons for this development was the 30 % increase in the workforce in the past year, which was a necessary step in preparing for the further technical and regional expansion of the Viscom Group. The additional staff costs were recognised in full in the first quarter of 2007. The Viscom Group is constantly driven by a desire to live up to its position as technology and innovation leader. Its research and development team is particularly active at the moment with the X7056 project, the new VM module sensor head, 3D paste inspection and the new programming and user interface, Easy Pro 3D.

Despite the negative EBIT, interest income from the investment of the proceeds from the Company's IPO meant that it was able to record a slightly positive net profit for the period after taxes of € 0.06 million.

Order situation

In the first three months of 2007, the Viscom Group received orders from customers with a total volume of € 10.9 million, meaning that incoming orders were essentially unchanged as against the prior-year period (€ 11.0 million). At € 8.7 million, the order backlog at the end of March was up an impressive 35.9 % on the first quarter of 2006 (€ 6.4 million).

Net assets and financial position

Net cash used in operating activities amounted to € -1.8 million for the first three months of 2007. This negative cash flow is due to the decrease in net profit compared with the previous year and the income taxes paid in the amount of € 1.2 million due to the strong prior-year results. The € 3.5 million reduction in liabilities is offset by a decrease in inventories, receivables and other assets in the amount of € 3.0 million. These developments are attributable to the particularly high level of business recorded towards the end of 2006.

Net cash used in investing activities amounted to € -0.4 million in the first quarter of 2007 compared with € -0.2 million in the same period of the previous year. This was due to investments relating to the establishment of the application centres in Asia and the USA and the corresponding installation of equipment at the new business and office premises.

Interest income from the investment of the proceeds from the Company's IPO resulted in net cash from financing activities of € -0.2 million in the first quarter of 2007, compared with net cash used in financing activities of € 0.02 million in the previous year. Cash and cash equivalents amounted to € 38.1 million at the end of the period under review.

Viscom AG's equity ratio improved by 4.6 % to 86.6 % compared with the end of 2006. The annualised return on equity for the period under review was 0.37 %.

Employees

Employees are the key to the Viscom Group's success. Their commitment and creativity help to ensure the Group's position as a technology and innovation leader. In the past year, a great deal of energy was inves-ted in the appointment and induction of new employees and the expansion of the workforce. In the first quarter of 2007 another 22 employees support the Viscom team. The Viscom Group thus employs 368 persons worldwide. The strategic increase in the number of employees with a view to the Group's continued expansion is now essentially complete.

As of 31 March 2007	Europe	Asia	USA	Total
Total	318	31	19	368
of which: full-time	299	29	19	347
of which: part-time	16	1	0	17
of which: interns/students	3	1	0	4
plus trainees	15	0	0	15

Segment information

Europe

The Europe region accounted for 69.2 % of consolidated revenue in the first three months of the year. Europe remains the segment which generates the highest revenue for the Company; however, the steady growth in the proportion of revenue attributable to countries other than Germany serves to underline the Company's increasingly international orientation. Developments in Eastern European countries in particular, such as the Czech Republic, Romania and Hungary, are helping Viscom to establish a broader revenue base. This will mean that temporary fluctuations in revenue in individual regions can be absorbed more easily.

The Czech Republic is proving to be a particularly interesting investment location for major international corporations. Very few countries in the world can currently offer a similarly persuasive combination of a growing economy, a stable political situation, a qualified workforce and low prices. Since launching its programme of investment incentives in October 1998, the Czech Republic has been one of the leading countries in Central Europe in terms of per capita foreign direct investment, with more than 99,000 Czech companies currently being supported by foreign capital. Since 1990, the volume of foreign investment has amounted to approximately US\$ 40 billion. Small and mediumsized companies in the Czech Republic are also starting to develop, evolving into a promising customer group for Viscom as a result. Furthermore, a new trend is now emerging in the Czech Republic: the share of investment in high-end areas such as research, development and high-tech production is increasing significantly. This is an area in which Viscom will be able to fully leverage its competitive strength.

Due to the reluctance to invest on the part of customers, Viscom was unable to repeat its impressive performance in Europe in the first three months of the year. It generated revenue of € 7.4 million, down 18.3 % on the figure of € 9.1 million recorded in the same period of the previous year. High levels of investment in research and development and a sharp increase in costs due to the expansion of the workforce in 2006 meant that EBIT totalled € -0.25 million, compared with € 2.5 million in the previous year.

Europe	Jan.-Mar. 2007	Jan.-Mar. 2006
Revenue (K€)	7,419	9,076
EBIT (K€)	-254	2,522
EBIT margin (%)	-3.4	27.8
Employees	318	269
Representatives	17	16

Asia

One of the greatest challenges facing Viscom on the Asian market is to increase its level of brand awareness and recognition. With the establishment of the application centre in Shanghai, the Group has taken a decisive step towards achieving this aim: the growing degree of confidence in Viscom can already be seen from the fact that Asian customers are increasingly prepared to evaluate Viscom systems and give them the opportunity to prove their worth in a direct comparison with the products manufactured by the Group's competitors. These test runs allow Viscom's machines to demonstrate their technological superiority and win over the Group's Asian customer base. However, there is a comparatively long time delay between this phase and the purchase of a system with a corresponding effect on the Group's revenue, meaning that the effects of this process will only be felt in this region on a gradual basis.

In the first three months of 2007, revenue in Asia increased by 7.9 % to € 1.8 million. However, this positive development does not sufficiently reflect the potential of the market. One extraordinary effect in the first quarter was the unusually late 'Chinese New Year', which resulted in a longer period of comparatively low revenue than would normally be the case. It is difficult to estimate the timing and volume of orders on the Asian market for two reasons: firstly, differences in national mentalities, which mean that business practices vary from country to country, and secondly, the fact that the corporate structure in Asia is different to that of Europe, for example. This region does not have a typical tier of small and mediumsized companies; instead, the market is dominated by large contract manufacturers who produce electronic components on a contract basis across various production lines. This structure means that the number of potential customers is smaller, but the volume of potential orders is substantial. This makes revenue planning in the Asia region extremely difficult.

Due to the cost of establishing the application centres and higher staff costs as a result of the expansion of the Group's sales and service activities in Asia, EBIT for the region fell slightly to € 0.2 million in the first three months of 2007. Compared to the first quarter of the previous year, this represents a decline of some 16.1 %. However, the EBIT margin remained at a comfortable 9.2 %.

Asien	Jan.-Mar. 2007	Jan.-Mar. 2006
Revenue (K€)	1,757	1,628
EBIT (K€)	161	192
EBIT margin (%)	9.2	11.8
Employees	31	13
Representatives	7	6

Americas

The Viscom Group's activities in the Americas region are currently impacted by pronounced seasonal effects, with large corporations extremely reluctant to invest at present. Although the Group's business with small and medium-sized companies is increasingly promising, this was not sufficient to offset the temporary lack of revenue from its major customers.

In the USA, too, the Viscom Group's overriding objective is to improve its brand awareness, establish itself on the market as a provider of high-end inspection systems, and hence gain the confidence of small- and medium-sized companies in the region.

One decisive step towards this aim was the opening of the application centre in San Jose, in the heart of Silicon Valley, on 2 March 2007. A large number of current and potential customers of Viscom AG are based in the west of the USA. The application centre, which has an area of 675 m², means that these customers can now obtain an impression of the high performance of Viscom's systems and its corporate culture. The first revenue effects of the new application centre are expected from the second half of 2007 onwards.

In the first three months of 2007, the Americas region generated revenue of € 1.5 million, compared with 2.4 million in the same period of the previous year. Due to the cost of establishing the application centres, the lower level of revenue, and expenses relating to the Apex in California – the most important trade fair for Viscom alongside the Nepcon in Shanghai, the Produktronica in Munich and the SMT in Nuremberg – Viscom recorded EBIT of € -0.02 million as against € 0.15 million in the first quarter of 2007.

Americas	Jan.-Mar. 2007	Jan.-Mar. 2006
Revenue (K€)	1,540	2,371
EBIT (K€)	-15	150
EBIT margin (%)	-1.0	6.3
Employees	19	14
Representatives	13	14

Outlook

The growth prospects of the Viscom Group are extremely promising. The Company is continuing to expand its presence around the world, thus enabling the development of "Viscom" into a high-quality global brand. Recognition, presence, service and quality all add up to a degree of confidence that forms the basis of strong business relationships: this is a privilege that Viscom has long enjoyed in its home market of Germany, and that it is steadily establishing outside Germany, too. The growing number of customer enquiries in the Asian region serves to underline the success of this concept.

The business of the Viscom Group is being promoted due to new production lines being developed or retrofitted, particularly in the automotive industry, which accounts for around 70 % of the Group's revenue in Europe. The growth in automobile production, and in particular the increasing use of electronic components in vehicles, will have a positive effect on the creation of new production lines in this sector. At the same time, the particularly high quality and safety requirements of the automotive industry mean that existing production lines are regularly upgraded, with new, more effective inspection systems replacing older models as soon as they become available. The Viscom Group's role as the innovation and technology leader allows it to continually position new inspection systems.

The Group is increasingly gaining new customer groups beyond the automotive industry, particularly on the Asian market. In the area of consumer and leisure electronics, the available product range is constantly increasing, as is the number of electronic components in the individual products. Both of these factors are resulting in the creation of new production lines. There is a comparatively high degree of price pressure in the consumer and leisure electronics sector, which has often led to the use of low-price inspection systems or even manual inspection in the past. However, growing levels of brand and quality awareness and a more pronounced trend towards image-building in this sector mean that attitudes towards inspection are changing, with the result that customers are increasingly prepared to invest in high-quality systems.

With its global approach and the state-of-the-art inspection technologies that it develops, Viscom is in an excellent position to leverage the resulting opportunities.

General Information on the Company

Viscom AG is domiciled in Hanover, Germany, and is entered in the local commercial register under HR B 59616. The Company's business address is Viscom AG, Carl-Buderus-Str. 9–15, 30455 Hanover, Germany.

The Company's business activities consist of the development, manufacture and sale of automated inspection systems for industrial production. Inspection is performed by the computer-based optical and/or X-ray comparison of the inspected objects with the specifications defined in the inspection system.

Declaration of compliance

The present interim financial statements for the first three months of 2007 were prepared on the basis of uniform accounting principles and comply with all of the applicable International Financial Reporting Standards (IFRSs) and International Accounting Standards (IASs) at the reporting date 31 March 2007, and in particular IAS 34 (Interim Financial Reporting).

Basic principles of preparation

The IFRS interim financial statements are prepared in euros (€). Figures are generally presented in thousands of euros (€ thousands).

The same accounting policies and calculation methods were applied as for the 2006 consolidated financial statements.

The income statement was prepared in accordance with the nature of expense method.

In accordance with IAS 1, assets and liabilities are broken down into current and noncurrent items on the face of the balance sheet. Assets and liabilities are classified as current if they have a remaining term of one year or less.

The preparation of the interim financial statements requires certain assumptions and estimates to be made which affect the amounts and the classification of the assets, liabilities, income, expenses and contingent liabilities recognised. Actual amounts may differ from these estimates.

Exchange differences

At 31 March 2007, other operating income and expenses included exchange differences of € 32 thousand (previous year: € 69 thousand).

Events after the balance sheet date

No significant events occurred after 31 March 2007.

Abbreviated IFRS Interim Consolidated Financial Statements as of 31 March 2007 Income Statement

Consolidated income statement	1 Jan.–31 Mar. 2007	1 Jan.–31 Mar. 2006
	K€	K€
Revenue	10,716	13,075
Other operating income	163	196
	10,879	13,271
Changes in finished goods and work in progress	1,664	1,568
Cost of materials	-5,589	-5,928
Staff costs	-4,644	-3,722
Depreciation and amortisation expense	-189	-159
Other operating expenses	-2,229	-2,166
Total operating expenses	-10,987	-10,407
Operating profit/loss	-108	2,864
Interest income	196	91
Interest expense	-20	-8
Taxes on income	-10	-1,217
Net profit for the period	58	1,730
Earnings per share (diluted and undiluted) in €	0.01	25.74

Balance Sheet: Assets

Assets	31 Mar. 2007	31 Dec. 2006
	K€	K€
Current assets
Cash and cash equivalents	38,098	40,144
Trade receivables	12,187	17,186
Current income tax assets	3,539	2,412
Inventories	14,611	12,997
Other receivables and assets	607	520
Total current assets	69,042	73,259
Noncurrent assets
Property, plant and equipment	2,278	2,142
Intangible assets	134	139
Loans originated by the Company	51	91
Deferred tax assets	675	684
Other noncurrent assets	164	0
Total noncurrent assets	3,302	3,056
Total assets	72,344	76,315

Balance Sheet: Liabilities and shareholders' equity

Liabilities and shareholders' equity	31 Mar. 2007 K€	31 Dec. 2006 K€
Current liabilities
Trade payables	1,912	2,035
Advanced payments received	256	0
Provisions	3,063	3,240
Current income tax liabilities	787	4,376
Other current liabilities	3,705	4,090
Total current liabilities	9,723	13,741
Total noncurrent liabilities	0	0
Shareholders' equity
Subscribed capital	9,020	9,020
Capital reserves	42,082	42,082
Retained earnings	11,536	11,478
Exchange differences	-17	-6
Total shareholders' equity	62,621	62,574
Total liabilities and shareholders' equity	72,344	76,315

Cash flow statement

Consolidated cash flow statement	1 Jan.–31 Mar. 2007	1 Jan.–31 Mar. 2006
	K€	K€
Cash flow from operating activities
Net profit for the period after interest and taxes	58	1,730
Adjustment of net profit for income tax expense (+)	10	1,217
Adjustment of net profit for interest expense (+)	20	8
Adjustment of net profit for interest income (-)	-196	-91
Adjustment of net profit for depreciation and amortisation	189	158
expense (+)
Increase (+) / Decrease (-) in provisions	-188	-29
Gains (-) / Losses (+) on the disposal of noncurrent assets	-16	-10
Increase (-) / Decrease (+) in inventories, receivables and	2,991	633
other assets
Increase (+) / Decrease (-) in liabilities	-3,516	-525
Income taxes paid (-)	-1,151	-388
Net cash used in/from operating activities	-1,799	2,703
Cash flow from investing activities
Proceeds (+) from the disposal of noncurrent assets	21	16
Acquisition (-) of property, plant and equipment and noncurrent	-422	-209
intangible assets
Net cash used in investing activities	-401	-193
Cash flow from financing activities
Repayment (-) of loans	0	-48
Interest paid (-)	-26	-4
Interest received (+)	193	31
Net cash from/used in financing activities	167	-21
Changes in cash and cash equivalents due to changes in	-13	-18
interest rates
Cash and cash equivalents
Changes in cash and cash equivalents	-2.033	2,489
Cash and cash equivalents at 1 January	40,144	11,286
Total cash and cash equivalents	38,098	13,757

Statement of changes in shareholders' equity

Shareholders' equity	Subscribed capital	Capital reserves	Exchange differences	Retained earnings	Total
	K€	K€	K€	K€	K€
Shareholders' equity at 1 January 2006	67	7,913	174	12,177	20,331
Exchange differences	0	0	-216	0	-216
= Non-operating loss	0	0	-216	0	-216
+ Net profit for the period	0	0	0	1,730	1,730
Shareholders' equity at 31 March 2006	67	7,913	-42	13,907	21,845
Shareholders' equity at 1 January 2007	9,020	42,082	-6	11,478	62,574
Exchange differences	0	0	-11	0	-11
= Non-operating loss	0	0	-11	0	-11
+ Net profit for the period	0	0	0	58	58
Shareholders' equity at 31 March 2007	9,020	42,082	-17	11,536	62,621

Disclosures on the Group's	Europe		Asia		Americas		Total
geographical segments bro ken down by sales market (in € thousands)	1 Jan.– 31 Mar. 2007	1 Jan.– 31 Mar. 2006	1 Jan.– 31 Mar. 2007	1 Jan.– 31 Mar. 2006	1 Jan.– 31 Mar. 2007	1 Jan.– 31 Mar. 2006	1 Jan.– 31 Mar. 2007	1 Jan.– 31 Mar. 2006
Revenue	7,419	9,076	1,757	1,628	1,540	2,371	10,716	13,075
EBIT	-254	2,522	161	192	-15	150	-108	2,864
plus financial result	179	86	0	0	-3	-3	176	83
less income taxes	3	1,137	35	38	-28	42	10	1,217
Net profit for the period	-78	1,471	126	154	10	105	58	1,730

Notes to the abbreviated interim consolidated financial statements

Financial calendar

Viscom AG

Dr. Jürgen Knorr (Chairman)
Hans E. Damisch (Deputy Chairman)
Prof. Dr. Claus-Eberhard Liedtke a.D.
Dr. Martin Heuser
Volker Pape
Ulrich Mohr
Carl-Buderus-Str. 9–15, 30455 Hanover, Germany
Entered in the commercial register of Hanover Local Court
under HR B 59616
Viscom France S.A.R.L., Cergy Pontoise Cedex, France
Viscom Inc., Atlanta, Georgia, USA
Viscom Machine Vision Pte Ltd., Singapore
Viscom Machine Vision (Shanghai) Trading Co., Ltd.

Credits

Credits

Published by	Viscom AG, Carl-Buderus-Str. 9–15, 30455 Hanover, Germany
	Tel. +49 511 94996-0, Fax +49 511 94996-900
	info@viscom.de, www.viscom.de
Responsibility	Viscom AG, represented by the Executive Board
Editors	Dr. Martin Heuser (Executive Board)
	Volker Pape (Executive Board)
	Ulrich Mohr (Executive Board)
	Katharina Blanke (Investor Relations Manager)
Layout and design	corinna.lorenz.grafik.design., Hanover
Photography	Franz Fender, www.franzfender.de
	Blue Studios, www.bluestudios.de
Printing and production	Druckhaus Benatzky, www.benatzky.de
Commercial register and registration number	Viscom AG
	Court of registration: Hanover Local Court
	Registration number: HR B 59616
	VAT ID number in accordance with section 27a of the
	German VAT Act: DE 115675169
Copyright notice	All photographs and text contained in this report are protected
	by copyright. Reproductions of any kind require the express
	written permission of Viscom AG.

Head office

Viscom AG Carl-Buderus-Str. 9–15 30455 Hanover Germany Tel.: +49 511 94996-0 Fax: +49 511 94996-900 info@viscom.de

Investor Relations

Viscom AG Katharina Blanke Carl-Buderus-Str. 9–15 30455 Hanover Germany Tel.: +49 511 94996-861 Fax: +49 511 94996-501 katharina.blanke@viscom.de

www.viscom.com