English - IRIS

COMMENT ON THE FIGURES
I.R.I.S. is a technological company that develops and markets professional applications and office products
that cover the entire document chain – from the acquisition, identification and recognition of documents to
their management and archiving. These productivity tools address both the “large accounts” and the
individual users. The professional applications generate about 80% of the sales. This explains why I.R.I.S.
books a dominant part of its sales during the second half-year, and why the profitability of the first half-year
does not reflect the objectives for the entire fiscal year.
During the first six months of 2002, I.R.I.S. increased the sales by 40% to 21.1 million Euro. The gross
margin for that period increased by 26.5%, exceeding the budget forecast for 2002. As I.R.I.S. did not
expand its consolidation sphere since the beginning of this year, the progress is particularly remarkable. The
strong internal growth is definitely a very positive element.
In compliance with the growth strategy and the 2002 budget, I.R.I.S. continued its considerable R&D effort
and its investments in marketing and sales to strengthen the technological advance and enter new markets.
This led to increased expenses in the first half-year compared with 2001. The cash flow from operations
shows a profit of 493,317 EUR (-25%). The income from operations is 101,240 EUR (-67%). These figures
are again better than the budget, that foresaw an operational loss of 180,000 EUR.
Amos Monétique and Amos Inc - both companies were acquired in october 2001, have contributed to the
group’s results as follows : sales of 1,369,175 EUR and a loss from operations of 91,269 EUR.
The net income after 6 months is a loss of 641,878 EUR. Two important elements influenced this figure:
- I.R.I.S. booked an exchange and conversion loss, with some other non recurring financial costs,
of 299,985 EUR. This was caused by the brutal change in the dollar-euro exchange rate during
the first half-year. I.R.I.S. realises a significant part of its turnover in the United States and
recorded a conversion loss on its assets on June 30 2002, when the exchange rate was at its
highest (1 Euro = 0.991 dollar). Since June 30, I.R.I.S. booked a conversion profit on the assets
in dollars (accounts receivables, inventories and cash).
- Substantial but non-recurring expenses were incurred to integrate Amos and to make the sales,
development and support teams leaner. These expenses comprise severance payments and are
estimated to amount 200,000 EUR. Although the costs are one-time, we decided to record them
as operational charges.
On the whole, I.R.I.S.’s management expects that the group’s fixed expenses will decrease somewhat in the
second half-year of 2002.
The net current result (before goodwill) on June 30 exceeds the expected figure slightly: a loss of 226,494
EUR vs a budgeted loss of 255,000 EUR. When we exclude the loss caused by the dollar-euro exchange
rate, the net current result is positive. The main indicator is a stronger than expected increase of the gross
margin. Also note that some deliveries of hardware for certain large documentary projects (such as the
automatic reading of VAT forms for the Belgian Ministry of Finance) caused the sales figure to increase even
more than the gross margin. Indeed, the gross margin on software licences and services is substantially
higher than it is for hardware (peripherals such as scanners etc.).
The financial income comprises the following elements:
- Revenues from financial investments: 42,573 EUR.
- Amortisation of the acquisition goodwill: 429,310 EUR.
- Negative conversion differences and exchange losses caused by the weak dollar, and some other
non recurring financial costs: 299,985 EUR (reminder: the dollar lost 12% of its value between
January 1 and June 30 2002)
- Interest expenses on bank loans: 149,992 EUR (interests and reservation costs for “stand-by” credit
lines).
I.R.I.S. Group sa – Half-Year Results 30 June 2002 – Press release 2

The extraordinary income includes the following elements:
- The reduction of provisions thanks to the successful termination of a minor litigation in France:
22,846 EUR.
- Other extraordinary income: 6,814 EUR.
- Other extraordinary expenses: 15,734 EUR.
COMMENTS ON THE BUSINESS
I.R.I.S. Group has met its main objectives:
- I.R.I.S. is a major “player” on the “Document to Knowledge” market in Europe. We were able to
satisfy all our clients and have conquered new “large accounts” that make our client reference roster
even more impressive. A dynamic sales effort allowed to increase the client prospection and led to
further growth despite a globally depressed market.
- Thanks to our two offices in the United States, the company was able to sell more office products and
increase its presence on the market for professional applications. I.R.I.S. expects a significant
increase of the sales in the United States.
- I.R.I.S. has introduced Formiris Pro 4.0 in the first half of September. This product combines all
automatic reading and document recognition technologies that the group has developed so far. A
new range of office products was introduced for the Mac OS platform, and some other product
launches are planned before the end of the year.
- The major partnerships with Hewlett Packard, Kodak, IBM etc. continue in a harmonious atmosphere.
The I.R.I.S. management remains optimistic for the second half-year, despite the very difficult ICT market.
The company maintains its profit forecast and expects a significant increase of the gross margin (above
20%).
The group’s costs should decrease somewhat during the second half-year. The company disposes of a
healthy number of orders in France, Belgium and Luxembourg. Our large clients and our partners have more
confidence in I.R.I.S. than ever before. The upcoming launch of new products will help to increase the sales
figure.
ANALYSIS OF THE BALANCE SHEET
I.R.I.S. Group is a very healthy company, with a very solid balance sheet structure. The net equity was
increased up to 25,691,556 EUR on June 30 2002.
The major indicators on June 30 2002 show the company’s strong solvability and liquidity:
- ratio “net equity / total balance” : 57 %
- ratio “current assets / short term liabilities” : 1.6.
I.R.I.S.’s long-term debt (more than 1 year before maturity) dropped to 895,627 EUR. This debt was actually
inherited from companies that were acquired in the year 2000 and is largely insignificant given the net equity.
On June 30 2002, no more than 2.9 million Euro of the credit lines were taken up, even if the need for
working capital amounted 10.5 million Euro (a necessity given the fast growth of the sales figure) and the
available cash amounted 1.6 million Euro. Remind that I.R.I.S. can count on “stand-by” credit lines for 12
million Euro, 8.7 million of which are non-revokable for a period of 4 years.
This clean bill of financial health allows the group to roll out its development plan for the years 2002 and
2003.
I.R.I.S. Group sa – Half-Year Results 30 June 2002 – Press release 3

MAJOR EVENTS
The company purchased the remaining 40% of the shares of I.R.I.S. B2B Technologies that still belonged to
the former owners of the company. As a result, I.R.I.S. owns all the shares of every subsidiary. There are no
longer any minority shares in the consolidating enterprise.
Furthermore, the S.A. I.R.I.S. has absorbed the S.A. I.R.I.S. B2B Technologies, as of January 1 2002. This
merger completes the integration not only of the operational and commercial management but also of the
development and support teams. On the French territory, and inspired by the same wish to keep the
organisation transparent and rational, SEPSI-IRIS France has absorbed Amos Monétique as of January 1
2002. The R&D team of Amos has joined SEPSI’s team in Massy, while the after sales support and hotline
services were concentrated in Rueil-Malmaison.
I.R.I.S. has continued its R&D effort and put strategic emphasis on form reading and ADR (“Automatic
Document Recognition”), which allowed to launch the new product Formiris Pro 4.0. I.R.I.S. maintains its
technological mission in every segment of its activities. New versions of the company’s wide product range
are being prepared.
The group’s capital was increased by 774,061 EUR. These capital increases were reserved for the former
owners of I.R.I.S. B2B Technologies and Paperless (as last variable segment of the purchase price) and for
employees that participate in the “stock option programme” of April 1999.
OUTLOOK FOR THE FISCAL YEAR
The expected sales figure was met on June 30 2002; even better, the figures are ahead of the predicted
bugdet. As usually, it is the second half-year that determines the global result for the fiscal year: it accounts
for the major part of the sales figure and the gross margin but only takes about half of the fixed charges.
Given the current prospects and the on-going deliveries, we confirm the expected turnover for the fiscal year
2002 and a 20% increase of the gross margin compared with 2001.
Given the uncertain economic environment, the management has decided to adopt a careful policy. The
evolution of the on-going orders will be followed closely, which will allow to correct the fixed expenses rapidly
should this prove necessary. We remind that the fixed expenses should decrease in the second half-year of
2002 and the first half-year of 2003.
Visit www.irislink.com to learn more about I.R.I.S.
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IMAGE RECOGNITION INTEGRATED SYSTEMS GROUP S.A.
Rue du Bosquet 10, Parc Scientifique of Louvain-la-Neuve
1435 Mont Saint-Guibert (Belgium)
Tel.: +32-10-45 13 64
E-mail: etienne.vdk@irislink.com
I.R.I.S. Group sa – Half-Year Results 30 June 2002 – Press release 4