Annual Report 2005 - RoodMicrotec

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Annual Report 2005 - RoodMicrotec

Rood Testhouse International N.V.

Annual Report 2005

ISO/IEC 17025

DAT-P-025/92-03

ISO/TS 16949:2002

291921 TS2/28847


Rood Technology certifies the integrity of customers’

applications

Rood Testhouse International N.V.

Burgemeester van Roijensingel 13

NL-8011 CT Zwolle

Correspondence address:

P.O. Box 1042

NL-8001 BA Zwolle

Telephone: +31 (0)38 4215216

Fax: +31 (0)38 4216410

Email: info@roodtechnology.com

Website: www.roodtechnology.com

Chamber of Commerce

number 33251008


Contents

Page

Company profile 4

Mission, objectives and strategy 6

Risk management 10

Group structure and management 12

Shareholder information 14

Key figures 16

Report of the supervisory board 17

Corporate governance 19

Report of the board of management

• General 25

• Market developments and market position 26

• Strategic development 26

• Organisation and personnel 26

• Sustainability 27

• IFRS 27

• Sales and result 28

• Dividend proposal 29

• Investments and financing 29

• Research and development 29

• Business unit Test & End-of-line Services 30

• Business unit Test Engineering 30

• Business unit Failure & Technology Analysis 31

• Business unit Qualification 32

• Developments in Dresden 32

• Developments in China 33

• Events after balance sheet date 33

• Outlook 2006 33

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Rood Technology Annual Report 2005


Annual Accounts 2005 34

1 Consolidated IFRS balance sheet 35

2 Consolidated IFRS income statement 36

3 Consolidated IFRS cash flow statement 37

4 Notes to the consolidated IFRS financial statement 38

5 Subsidiaries of Rood Testhouse International N.V. 60

6 Statements of reconciliation on the first adoption of IFRS 61

7 Dutch GAAP annual report 68

8 Dutch GAAP company balance sheet 71

9 Dutch GAAP company income statement 72

10 Notes to the Dutch GAAP company financial statements 73

11 Other information 77

Addresses and business management 79

Rood Technology Annual Report 2005 3


Company profile

General

Rood Testhouse International N.V. (Rood

Technology) is listed on the Officiële Markt

of the Euronext Amsterdam stock exchange

(Euronext N.V.). The organisation consists

of three companies with branches in the

Netherlands and Germany.

increasingly procuring their components

from Asia.

At year-end 2005 the company had 97

employees. In the 2005 financial year a

sales of EUR 8,168,000 was realised with a

net result of EUR 518,000.

The core activities of Test & Related

Services consist of development, production

and service provision to the semiconductor

industry, such as:

• Testing semiconductors (microchips),

which represents the majority of sales;

• Supplying End-of-line manufacture and

service;

• Developing test software for

semiconductors;

• Qualifying semiconductors;

• Qualifying production processes;

• Analysing failures in products;

• Facilitating the purchasing, testing and

acceptance of semiconductors from Asia

(China) for sale in Europe.

In addition to the above the intensive

development of know how is a key activity

of the company, giving Rood Technology a

unique position in the market. Our strong

sales organisation in combination our expert

test engineers enables customers to gain

maximum benefit from the company’s

development work. The majority of its

customers are active in the automotive

sector (over 35%), the telecoms sector

(over 29%) and industry/medical (over

16%).

Rood Technology increasingly facilitates the

purchasing, testing and acceptance of

semiconductors from Asia (China) for sales

in Europe. Thus Rood Technology exploits

the trend among European manufacturers of

History

In 1976 the foundation was laid for Rood

Testhouse by the trading company C.N.

Rood B.V. in Rijswijk, the Netherlands, an

electronic testing equipment trading

company. The activities gradually expanded

to performing testing work for third parties

and to writing the necessary software. As its

activities began to deviate more and more

from the activities of the parent company

due to the increase of semiconductor testing

work, including the manufacture of testing

equipment, it was decided in 1979 to hive

off Rood Testhouse. Meanwhile, the

activities had moved to Heerde, the

Netherlands.

At the end of 2003 the supplying and

manufacture of testing equipment was

disposed of, as a result of which in 2004 the

lowest sales ever in testing equipment was

realised.

Currently, Rood Technology focuses on its

core activity: semiconductor testing and

related services. In 2005 a testing facility

was established in Dresden, Germany, and

4

Rood Technology Annual Report 2005


preparations were made for manufacture in

China.

Market position

Rood Technology mostly has European

based customers. The high level of knowhow

in the organisation allows Rood

Technology to focus on more complex

products, of which ‘mixed signal test’ is an

exponent. Rood Technology is one of the

largest independent test houses currently

operating in the European market. With its

Dresden branch, Rood is the only

independent testhouse with a presence in

‘Silicon Saxony’ (the cluster of

semiconductor companies in the rapidly

developing Dresden area).

Rood Technology Annual Report 2005 5


Mission, objectives and strategy

Mission

Rood Technology aims to:

• Positioning itself as an innovative

testhouse in Europe;

• Developing into an important player in

the semiconductor supply chain from

Asia (China) to Europe.

This requires Rood Technology to:

• Realise annual growth above the annual

semiconductor market;

• Be able to guarantee the financial

structure and cash flow necessary for

continuity and growth;

• To have available enthusiastic and

motivated employees who are

maximally qualified to perform the

duties assigned to them.

Objectives for 2006

Also taking into account current market

expectations

• Net sales of between EUR 9.2 and 10.5

million;

• Recruiting partners for the ‘Re-use of

Test blocks’ project (see page 29,

Research and Development);

• A positive operating result that best

matches the growth strategies in both

Europe and Asia;

• Improving solvency (2005: 35.6%).

Long-term objectives

• In 2004 the objective was defined of a

doubling of sales within 5 years for Test

& Related Services based on an average

annual market growth of 8%;

• An average ‘double digit’ (10% - 20%)

growth of sales for Test & Related

Services in the next three years;

• Generating 20% to 40% of sales in new

markets (such as Silicon Saxony and

China) as per 2008.

Strategy

In 2004 Rood Technology defined a fourstage

strategy:

• Reshaping stage:

Securing growth of sales in tandem

with better quality orders;

• Innovation stage:

Focusing more emphatically on research

and development;

• Expansion stage:

Expansion in growth regions and in

products that grow strongly, as well as

in more complex products;

• Diversification stage:

Supporting the supply chain from Asia

(China) to Europe in conjunction with

the establishment of a test facility in

China.

In the reshaping stage the focus is on:

• Better quality orders;

• Growth in engineering, qualifying and

analysis;

• Better cost control;

• Reducing risks associated with market

downswings;

• Further improving the balance sheet

position.

Many customers use Rood Technology as an

emergency back-up system in case of lack

of capacity, which means that when the

market stabilises or decreases, those orders

dry up. In order to make itself less

vulnerable to this market characteristics

Rood aims to do all the testing work for

certain products, or a significant amount of

it, so as to be less sensitive to market

fluctuations. A higher rate of use of the

equipment can thus also be achieved. A

disadvantage, however, is that this causes

margins to fall. Rood Technology aims to

play an increasingly prominent role in the

areas of developing test programmes,

qualifying and failure analyses of

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Rood Technology Annual Report 2005


semiconductors and/or processes. Across

Europe there is great demand for such

activities. Rood aims for stronger growth in

this area over testing work pure and simple.

High quality personnel is essential and Rood

Technology has implemented a staff training

programme.

By making costs more transparent, it is

easier to control them and to clarify

responsibilities.

Managers have been given more integral

responsibilities than before.

The risks of decreasing markets can be

limited inter alia by working with more

flexible staff. Further developments in this

area are required.

Rood Technology’s solvency (35.6%) is

modest for a company in the semiconductor

market. In 2004 a convertible bond was

issued to increase guarantee equity. Rood

Technology is constantly looking for

opportunities to strengthen the balance

sheet, paying maximum attention to

shareholders’ interests.

In the innovation stage the focus is on:

• Structuring the development of testing

software;

• Standardising testing software;

• Tester independent software;

• Shortening the ‘time-to-market’;

• Replicability of test programme.

This structure allows software for identical

functions to be re-used in different

application areas, making the testing

software development independent of the

testers. Rood Technology has done

successful research in this area under the

name ROT (Re-use of Test blocks) over the

past years, which is recognised by some

leading European semiconductor

manufacturers. Rood has a prominent

position in this market, and as a result is

having talks with a number of large

European semiconductor companies

concerning further joint development. Rood

aims to retain its pivotal position in this area

and will endeavour to continue further

innovative initiatives. These innovations

provide cost price reductions while at the

same time enhancing Rood Technology’s

growth of sales.

In the expansion stage Rood Technology

focuses on:

• Growth markets, i.e. growth regions as

well as high-growth products;

• The more complex test domains, such

as ‘mixed signal’.

Various publications show that the European

semiconductor market is no longer growing;

the Asian market, however, is. Also, the

expectation is that in Europe the

semiconductor industry will further

concentrate in Silicon Saxony. Therefore

Rood Technology focuses on Silicon Saxony,

and within Asia on China. The move to

China is partly based on the strategy of

some of its customers, who also fully or

partly concentrate on China.

Rood Technology’s strategy is to grow as

rapidly as possible in Silicon Saxony, where

a test facility has been established, and

then in China. Both branches must become

profitable shortly after inception. Within the

semiconductor industry there are shifts at

product level (from ‘through hole’

technologies to ‘array’ products). Rood

Technology is increasingly focusing on the

most sophisticated technologies (‘array’

products), but also on the other growth

sectors, such as ‘Micro-Electro-Mechanical

Systems’ (MEMS), ‘Automotive’ and ‘Radio

Frequency’ (RF).

In the diversification stage Rood Technology

focuses mainly on new markets.

The supply chain from Asia to the West is

expected to increase in the next few years.

Rood Technology Annual Report 2005 7


Manufacturers in Europe procure their

components, on the condition of equal

quality, increasingly from Asia (China). Rood

Technology strives to facilitate the

companies who wish to use these low-cost

markets. Preferably by finding supplying

manufacturers in China, by qualifying

products and processes, by testing quality,

by administering the supply chain and by

securing delivery. This enables Rood’s

customers to market their products

competitively.

Critical success factors

In the context of its mission, Rood

Technology identifies the following success

factors:

• Flexibility and dedication of its

employees;

• Innovative power of the organisation;

• Quality and delivery time of products

and services;

• Marketing quality;

• Balanced approach of stakeholders;

• Financial performance.

Flexibility and dedication of employees

The semiconductor market is volatile and

demand can fluctuate strongly. Therefore,

employees must show a high degree of

flexibility and dedication. Rood Technology

is constantly stimulating and motivating its

employees.

Innovative power of the organisation

In this strongly fluctuating market,

characterised by advancing techniques and

technologies, creativity is key. Rood

Technology can only stand out in the market

and remain interesting to large parties by

offering new ideas and solutions in the area

of semiconductor testing and related

services.

Quality and delivery time of products and

services

Semiconductors increasingly demand a ‘zero

failure level’, meaning zero failures in a

million products.

As a testhouse, Rood Technology must

deliver the highest level of quality. The

organisation is fully focused on this and

strives to achieve it by checking its own

processes intensively and by improving

them (continuous improvement).

Marketing quality

The high level of investment associated with

testing requires high marketing quality.

Knowing the concerns of the market and

anticipating on them adequately is a

condition for Rood Technology’s success.

Expansion of commercial capacity will

become visible in 2006.

Balanced approach of stakeholders

In the past few years Rood Technology has

been through a serious decline from which it

is slowly emerging due to the efforts of its

employees and informal investors. Its

employees have taken a pay cut on top of

their increased efforts. Informal investors,

led by TIIN, have provided risk bearing

capital in a risky environment.

There is interaction between the

stakeholders mentioned, which demands a

permanent balance; after all, imbalance can

hurt long-term continuity. For this reason,

business activities must lead to:

• Becoming an attractive investment for

shareholders as expressed in realistic

share price development;

• Offering employees challenging work

with appropriate working conditions;

• Maintaining and improving the quality

of employees’ environment.

8

Rood Technology Annual Report 2005


Financial performance

Rood Technology strives for positive

financial results. This is what makes the

company attractive to shareholders,

releasing funds that enable it to continue to

invest in growth.

Rood Technology Annual Report 2005 9


Risk management

General

Rood Technology’s policy is aimed at growth

in conjunction with comparatively

decreasing market risks. Operational,

market-related and financial aspects play an

increasingly important role in this.

Operational

Sales

The sale in Test & End-of-line Services

makes up more than 80% of total sales.

Rood Technology has a good name in this

sector, and as such has built up a bond of

trust with its major customers, in particular

those in the automotive industry. Demand

from the automotive industry is relatively

constant, which lowers risk. Even though in

a majority of cases Rood Technology has

long-term contracts with its major

customers, these contracts offer no hard

sales guarantees. Risks are reduced to an

important degree by intensive

communication with the company’s

customers on anticipated volumes.

Net sales (x € 1.000)

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

Net sales by Busines Unit

200

BU 1 BU 2 BU 3 BU 4

BU1 = Test & End-of-line Services

BU2 = Qualification

BU3 = Failure Analysis

BU4 = Test Engineering

Costs

Due to globalisation, price levels are

increasingly under pressure, which means

that continuous attention is needed to

2004

2005

controlling costs, cost reductions and

maximising the rate of use of the testing

equipment. Salaries and the associated

pension commitments also have our highest

attention.

Qualified personnel

In view of the technical sophistication of

Rood’s work, the company is highly

dependent on qualified personnel. Since

such personnel is not easily found in the

labour market, Rood Technology has opted

for its own training projects in order to limit

the risks associated with the unavailability

of qualified personnel.

Market-related

Market

Rood Technology operates in a strongly

cyclical market. A market which is flat in

Europe, but is growing in Asia (China).

Within Europe further concentration is

taking place in Silicon Saxony. Rood

chooses, also from the point of view of risk

management, to be active in these growth

sectors since this best guarantees

continuity. Various customers use Rood

Technology as an option to quickly generate

additional sales, which makes the company

vulnerable to market fluctuations. For this

reason Rood increasingly focuses on

customers who wish to outsource testing

activities on a structural basis. This means

that the company will continue to float with

the movements of the markets, but will

generate structural sales, even during a

downswing, for those customers who have

made such a strategic choice.

For Rood the ultimate desired and strived

for form of outsourcing is for customers to

outsource all their testing activities for

certain projects to Rood Technology.

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Rood Technology Annual Report 2005


In the other fast-growing sectors such as

Failure analysis, and Qualification, the risk

of downswings is also present.

An active personnel policy, striving for a

balance between fixed and flexible

employees, will limit Rood Technology’s

risks.

Competition

In Europe Rood Technology is experiencing

competition from various countries. Rood

strives to minimise its risks by operating as

the only independent testhouse in the

Silicon Saxony region. In this, Rood

Technology is supported by the Silicon

Saxony umbrella organisation.

In addition, Rood Technology tries to reduce

risks by offering quality and by being

innovative, so that doors remain open to the

company.

Internal risk management and

control system

General

In order to optimise financial control, a new

IT system will be introduced in 2006. The

various companies, as well as the business

units within them, will operate with the

same system. Central control will take place

at holding company level from the

Nördlingen office. This system will enable us

to better monitor financial results per

responsible sector and per manager.

Strategic plans

The plans will be turned into budgets which

will be compared periodically with the actual

state of affairs. Reporting takes place on a

monthly basis, and can trigger corrective

measures.

Financial

Currencies and interest

So far, Rood Technology has mostly sold its

products and services in Europe, making it

relatively independent of currency

fluctuations. Rood will continue to watch

this aspect actively, certainly in view of the

international activities the company is

developing.

Since Rood has many short-term loans, the

company pays a comparatively high

interest. In the future Rood intends to make

more use of long-term loans with lower

interest rates. Various initiatives have been

incepted in this area.

Insurance

Rood Technology has adequate liability

insurance for production errors, which is

especially important in the automotive

industry.

Internal evaluations and external audits

Annually a planning is made for internal

evaluations and external audits. This

scheme is carried out by Rood Technology

employees and external auditors. Both the

internal evaluations and the external audits

set in motion corrective measures, while the

management letters resulting from the

external audits will be discussed by the

supervisory board (audit committee).

Audit committee

The audit committee consists of the

supervisory board, which evaluates the

internal and external reporting as

supervisor. The supervisory board meets at

least four times per year.

Letter of representation

The board of management of Rood

Technology annually signs a detailed

statement regarding financial reports and

internal control.

Rood Technology Annual Report 2005 11


Group structure and management

Rood Testhouse International N.V.

Zwolle

Netherlands

Rood Technology

Service GmbH

Noerdlingen

Germany

Rood Technology

Dresden GmbH

Dresden

Germany

Rood Technology

International B.V.

Zwolle

Netherlands

• Test & Related Services

• Test Engineering

• Contracting

• Test Engineering

• Test & Related Services

(Future)

Rood Technology

Deutschland

Beteiligungs GmbH

Noerdlingen

Germany

Rood Technology

Deutschland

GmbH + Co

Noerdlingen

Germany

• Research & Development (R & D)

• Test & Related Services

• Test Engineering

• Qualification

• Failure Analyses

12

Rood Technology Annual Report 2005


Corporate management team

Board of management

Ir. Philip M.G. Nijenhuis (1945), Dutch

Chief Executive Officer since September

2004

Term of office ends 2008

Previous positions: senior management and

director positions with BESI, DTS,

Schlumberger, AT Kearney, ITT/Alcatel,

Scania and Wavin

Members of corporate management team

Dr. Anton Kotz, Dipl.Ing (1954), German

Chief Technical Officer

Member of management team since 1996

Joined Rood in 1983

Wilma H. Gomarus, AA (1967), Dutch

Chief Financial Officer, company secretary

and member of management team since

May 2005

Previous positions: (senior) management

positions with PricewaterhouseCoopers

Left to right: Wilma H. Gomarus, Philip M.G.

Nijenhuis, Dr. Anton Kotz.

Supervisory board

Ir. Cees W.M. Koot (1936), Dutch

Chairman of the board since 1998

Reappointed in 2005

Term of office ends in 2009

Previous positions: senior management and

director positions with Philips Components,

Communications and Semiconductors

Ing.Gerrit Jan O. Wanrooij (1944), Dutch

Member of the board since 2004

Term of office ends in 2006

Current position: Director TIIN (Investment

Company)

Previous positions: senior manager and

director positions with Texas Instruments,

Intel and Signetics

Also a member of the supervisory boards of:

Travel Service International B.V.; Holding

Iwork B.V.; Micronit Microfluidics B.V.

Rood Technology Annual Report 2005 13


Shareholder information

Financial agenda

March 1, 2006 Publication annual figures 2005

March 13, 2006

Press and analysts’ meeting

March 27, 2006

General meeting of shareholders

July 17, 2006 Publication sales figures half year 2006

September 7, 2006 Publication half year figures 2006

January 15, 2006 Publication sales figures full year 2006

Act on Disclosure of Major Holdings

The reports in the context of the Act on

Disclosure of Major Holdings (WMZ), as

known to Rood Technology as per December

31, 2005, were the following:

resources to finance growth, and strives to

increase the market value of the share

through such growth. Consequently, it will

be proposed to the shareholders to add the

entire 2005 profit to the reserve.

Real

ICN Part Rood 6.00%

Rules to prevent insider trading

Rood Technology conforms to the Rules on

the Notification and Regulation of Securities

Transactions (Wte 1995, Securities

Transactions Supervision Act 1995). A wide

circle of employees and consultants is bound

by signing the declaration to abide by the

Rules as meant in article 46d Wte 1995. The

board of management and the supervisory

board have further conformed to the WMZ

1996, as amended on September 1, 2002.

The Authority Financial Markets (AFM)

supervises compliance with this law.

Development of the number of shares in

2005

Position as at January 1: 13,577,570

Position as at December 31: 19,866,570.

As at December 31, 2005 the company held

4100 of its own shares.

Share price development and market

capitalisation Rood Testhouse International

N.V. in 2005

Dividend

Rood Technology so far has not defined a

dividend policy. The company has not done

so since its financial position did not allow it.

Rood’s board of management prefers to

allow the company to grow over the next

few years and to continue to improve its

financial health. Growth requires capital,

and the management prefers as much as

possible to employ the company’s own

Investor relations

Rood Technology is well aware of the

importance of active and open

communication with its stakeholders.

14

Rood Technology Annual Report 2005


Having focused exclusively on the survival

of the company for a number of years, Rood

Technology now intends to pursue a more

active investor relations policy, which will

include meetings with the press, analysts

and investors. On Rood’s website,

www.roodtechnology.com, more attention

will be given to communicating with various

target groups.

relationship with shareholders, SNS

Securities N.V. in Amsterdam was appointed

as liquidity provider as per January 16,

2006.

General meeting of shareholders

2005

The minutes of the meeting can be found on

the company’s website.

Liquidity provider

In order to support the trade in the Rood

Technology share and to optimise the

Rood Technology Annual Report 2005 15


Key Figures

(in EUR x 1,000 unless stated otherwise)

IFRS

2005

IFRS

2004

Dutch

GAAP

2003

Dutch

GAAP

2002

Dutch

GAAP

2001

Result

Net sales 8,168 7,809 8,040 9,095 15,182

Net sales Core Business 8,168 7,229 6,018 n.a n.a.

Gross margin 7,470 6,924 6,413 7,591 12,789

Operating result 238 56 1,116 -5,428 -2,324

Cash flow from operating activities 1,597 1,632 904 -1,695 1,631

Net result 518 -35 773 -5,794 -2,114

Capital

Total assets 8,630 7,653 8,609 9,294 11,496

Group equity 3,075 2,543 3,193 643 4,390

Group equity as a percentage of total assets 35.6 33.2 37.1 6.9 38.2

Net debt as a percentage of equity 23.1 22.2 69.5 796.7 112.3

Assets

Tangible fixed assets 6,597 6,014 6,521 6,926 7,634

Investments 1,405 826 1,017 130 996

Depreciation of tangible fixed assets 822 1,325 1,338 2,927 4,261

Data per share

Capital and reserves 0.15 0.19 0.38 0.09 0.62

Operating results 0.01 0.00 0.13 -0.77 -0.33

Cash flow 0.08 0.12 0.11 -0.24 0.23

Net result 0.03 0.00 0.09 -0.82 -0.30

Share price: year-end 0.56 0.54 0.57 0.23 0.57

Share price: highest 0.73 0.94 0.89 0.61 1.53

Share price: lowest 0.45 0.37 0.18 0.18 0.30

Number of ordinary shares in issue

At year-end (x 1,000) 19,867 13,578 8,389 7,053 7,053

Number of employees

At year-end 97 97 94 173 207

Average 95 94 105 194 225

Sales (total) / employee 86 83 77 47 67

Sales (core-business) / employee 86 78 63 n.a. n.a.

16

Rood Technology Annual Report 2005


Report of the supervisory board

We are pleased to present to shareholders

the 2005 annual report, which was prepared

by the board of management in line with

article 26 of the Articles of Association of

the company. The financial statements were

audited and approved by Mazars

Paardekooper Hoffman N.V., Amsterdam.

We propose to our shareholders to adopt

these financial statements in the general

meeting of shareholders on March 27, 2006.

Furthermore, we propose that they endorse

the conduct of affairs of the board of

management and the supervision exercised

by this supervisory board.

The present composition of the board is:

Mr C.W.M. Koot, chairman

Mr G.J.O.Wanrooij, member

In line with the schedule of retirement Mr

Wanrooij will step down from the board, but

will be available to serve another term. The

reappointment of Mr Wanrooij will therefore

be on the agenda of the general meeting of

shareholders on March 27, 2006.

As Mr Wanrooij was involved in the financial

restructuring during the year 2003, he could

be viewed as being not independent. In the

view of the board the best practice provision

III.2.1 of the Dutch corporate governance

code was and will be adhered to.

Furthermore the board proposes to maintain

a maximum of two board members.

During the year 2005, the supervisory board

met five times with both members present.

In the meetings, which were attended by

the board of management, the following

topics were reviewed and discussed

extensively:

the business update, the overall strategy

including operational and financial targets

(including ratios), the financial position, the

organisation, investments, including

research and development, the structure of

the company and corporate governance

issues (audit, remuneration and

selection/appointment issues).

The supervisory board met without the

board of management to review and discuss

the performance of the supervisory board

itself, the interaction and the relationship

with the board of management and the

performance of the members of the board of

management individually and jointly.

The supervisory board gives high priority to

good corporate governance practice. As fact

that the board consists of only two

members, no separate audit, remuneration

and selection/appointment committees were

formed. These topics were discussed in the

meetings held jointly with the board of

management.

With regards to audit issues the following

topics were discussed: adoption of internal

risk management and control systems,

financial control systems, internal audits (in

particular the performance and the role of

the internal administration), the follow-up of

recommendations and comments of the

internal administration and external auditor,

the role and responsibilities of the external

auditor (including the remuneration of the

auditor), the review of the financial

statements and the annual budget, tax

planning policy, the transition to

International Financial Reporting Standards

(IFRS), financing, and the application of

ICT.

The following topics were discussed

concerning remuneration issues: the salary

of CEO Mr Ph.M.G. Nijenhuis. No changes

were proposed, as his remuneration was

fixed for a period of four years (disclosed at

Rood Technology Annual Report 2005 17


last year’s general meeting of

shareholders).

For the other members of the board of

management, the company aims for market

level salaries.

The following topics were discussed with

regard to selection and appointment issues:

The size and the composition of the

supervisory board and the policy of the

board of management concerning selection

and appointment procedures of the higher

management tier.

The supervisory board recognizes that the

first year of the four-year strategic plan,

which was laid down in 2004, has been

successfully completed. Important

improvements were achieved in the net

result, the balance sheet structure, net debt

and in the market position. We would like to

thank the board of management and all the

staff of the company for their excellent and

enthusiastic support during 2005.

Amsterdam, March 1, 2006

The supervisory board

C.W.M. Koot, chairman

G.J.O. Wanrooij, member

18

Rood Technology Annual Report 2005


Corporate governance

Rood Testhouse International N.V. (further

referred to as Rood Technology) considers

the application of the Dutch Code of

Corporate governance (further referred to

as the Code) in the light of the company’s

scale. Therefore Rood Technology has

decided on a trend-follower position. The

system of the Code will be followed in this

chapter. The numbers used correspond with

the numbers in the Code.

I. Enforcement of and

application of the Code

Rood Technology follows all principles of the

Code and applies almost all best practices.

Deviations from the Code will be explained

in the remainder of the chapter.

II. The board of management

1.7 Tasks and working methods

Our CEO has a four-year contract. In

compliance with article 12 of the Preamble

of the Code, this term shall also apply to

any new board members to be appointed.

The CEO shall resign at the general meeting

of shareholders’ request, provided that it

concerns a broadly supported wish, rather

than the request of one dominant

shareholder. Such a resignation shall be

considered as the company’s notice of

termination of the CEO’s contract.

The supervisory board supervises the policy

of the board of management, as well as the

general courses of the corporate affairs and

business, and provides advice to the board

of management. The board of management

must keep the supervisory board informed,

consult with the supervisory board on

important matters and submit certain

important decisions to the supervisory

board for its prior approval. In the course of

the years it has become tradition that the

supervisory board and the board of

management determine Rood Technology’s

operational and financial objectives and

targets of the company in consultation. This

also applies to the strategy and the

framework conditions to be implemented.

The custom of including the highlights in the

annual report will be continued.

The company has an internal risk

management and control system, which

includes (a) risk analysis of the operational

and financial objectives of the company, (b)

a code of ethics for principal executives and

financial officers and a code of conduct

applicable to the board of management and

employees, which is published on the

company’s website

(www.roodtechnology.com), (c) guidelines

for the layout of financial reports and the

procedures to be followed when drawing up

the reports, (d) a system of disclosure

controls.

The risk management and control system

proved to function adequately and

effectively. This was achieved by extra focus

on the operating and control system. The

organisation was reinforced by a full-time

CFO, which is the basis from which we are

working towards further reinforcement. By

the end of 2005, further organisational

adjustments had been implemented,

including selection of 'empowered'

management. As a result of this decision,

each business unit manager is now

accountable for the performance and

management of his/her business unit and

shall report accordingly in the future.

The need for optimisation of the

organisation was discussed with the

Rood Technology Annual Report 2005 19


supervisory board on several occasions last

year.

document must be provided within 14 days

after the relevant request.

With reference to the section on Risk

Management, sales levels and results are

highly sensitive to upswings and

downswings in the market. However,

customer base structure also plays an

important role.

Employees of Rood Technology have the

opportunity to report suspected

irregularities within the company without

jeopardising their legal position. Rood

Technology’s whistleblower policy enables

employees to report any suspected

irregularities of a general, operational or

financial nature within the company and its

subsidiaries without having to fear for their

legal position. Insofar as the suspected

irregularities do not involve Rood

Technology’s managing director(s) under

the Articles of Association, any such reports

should be addressed to the chairman of

Rood Technology’s board of management.

However, if the report concerns actions or

lack of action by Rood Technology’s

managing director(s) under the Articles of

Association, the whistleblower is to

communicate this to the chairman of Rood

Technology’s supervisory board.

Before an employee may invoke that his/her

legal position has been jeopardised as a

consequence of a report as described above,

the chairman of the board of management

(in the case of a report not involving

suspicions against Rood Technology’s

managing director(s) under the Articles of

Association) or the chairman of the

supervisory board (in the case of a report

involving suspicions against Rood

Technology’s managing director(s) under

the Articles of Association) must issue an

assessment in writing. This assessment

Members of Rood Technology’s board of

management shall not hold the post of

board member in other listed companies.

The contract with board members stipulates

that accepting other posts in a business

environment is subject to approval by Rood

Technology’s supervisory board. Insofar as

this was applicable, the company complied

with this stipulation.

2.1 – 2.14 Remuneration

Options on shares are one of the company’s

remuneration components. Granting these

options is dependent on achieving targets

(which are based on a 4-year strategic plan

of the company), as well as the market

situation in general. An overview of the

options granted can be found in the annual

accounts of the company.

Regarding holdings and transactions of

shares by board members, other than those

issued by the ‘own’ company, the

supervisory board has decided on a

deviation from the Code. It is not permitted

for board members to hold direct or indirect

interests amounting to more than 5% in

other listed companies or companies in the

semiconductor industry, unless the

supervisory board has granted specific

permission. Furthermore, board members

must report changes in share holdings in

other listed or semiconductor companies to

the chairman of the supervisory board.

The existing employment contract with the

CEO includes a clause regarding

compensation in case of termination of

employment. This redundancy payment

amounts to a maximum of one annual

salary. No personal loans or guarantees

were provided to the CEO.

20

Rood Technology Annual Report 2005


The remuneration of the CEO consists of a

fixed salary plus a variable part that will be

paid out in share options. The granting of

options as mentioned depends on the

achievement of targets set by the

supervisory board and are a consequence of

the four-year plan of the company. The

achievement of the targets by the CEO will

be evaluated every six months and new

targets will be set, taking significant

changes in circumstances such as market

developments into account. The targets for

the CEO in 2005 are defined and evaluated

by the supervisory board.

The contract length of the CEO is four years.

The employment may be terminated by

giving six months’ notice in writing to the

end of each calendar month. With regard to

provision II.2.7 Rood Technology applies the

Code.

Rood Technology has no formal pension

scheme concerning the CEO. However, the

pension contribution makes up 10% of the

salary of the CEO. Furthermore there are no

early retirement clauses for the CEO.

3.1 – 3.4 Conflicting interests

According to article 22 of Rood Technology’s

Articles of Association, the company shall be

represented by the chairman of the

supervisory board in the event of a conflict

of interest with a managing director. The

company complies with all stipulations of

the Code regarding refraining from

competing with the company, accepting or

requesting gifts for the managing director

and/or his/her immediate family, providing

unjustifiable benefits charged to the

company, the managing director and/or

his/her immediate family using business

opportunities that are intended for the

company, and the obligation to report a

potential conflict of interest to the chairman

of the supervisory board. Furthermore, the

managing director will remain aloof from the

discussion about the event in which he/she

has a conflict of interest. Moreover, all

transactions concerning a conflict of interest

have to be approved by the supervisory

board and will be reported in the annual

report.

III. The supervisory board

1.9 Task and working methods

Some years ago the supervisory board

prepared a set of rules for its operation,

which are available for shareholders’ and

stakeholders’ inspection at the company

offices. These include regulations for the

intercourse with the board of management.

The Articles of Association of the company

provide regulations regarding the

intercourse with the shareholders. The

report of the supervisory board, which is

included in this annual report, shall include

specific details regarding the members of

the supervisory board as required by the

Code.

2.1 – 2.3 Independence

Rood Technology complies with the Code,

which recommends that the supervisory

board should not include more than one

non-independent member.

3.1 – 3.6 Expertise and composition

The profile of the supervisory board is

available on Rood Technology’s website.

In view of the scale of the company, Rood

Technology does not comply with the Code’s

provision regarding having a financial expert

on the supervisory board. However, the

financial knowledge of the members of the

supervisory board in general is adequate.

All new members of the supervisory board

shall be required to attend an introduction

programme which addresses general

Rood Technology Annual Report 2005 21


financial and legal issues, the financial

reporting of the company, specific aspects

of the company’s activities and the

responsibilities of a supervisor. Current

supervisory board members will annually

evaluate their need of training. The

company shall play a facilitating role in this.

supervisory board and the supervisor will

remain aloof from the discussion on the

topic, on which the supervisor has a conflict

of interest. Moreover, all transactions

concerning a conflict of interest have to be

approved by the supervisory board and will

be reported in the annual report.

Rood Technology’s Articles of Association

stipulate that a member of the supervisory

board shall be appointed for a maximum

term of four years, and be reappointed for a

maximum of three times. The retirement

roster is included in the report of the

supervisory board.

4.1 – 4.3 Role of the chairman of the

supervisory board and the company

secretary

Rood Technology applies these stipulations

of the Code. The company appointed a

company secretary, who assures the usage

of certain procedures and assures that the

company operates in accordance with legal

obligations and in compliance with the

Articles of Association.

5.1 – 5.13 Composition and the role of three

core committees of the supervisory board

The company does not intend to extend the

supervisory board, which currently consists

of two members. If this should change in

the future, the relevant committees (audit

committee, remuneration committee and

selection and appointment committee) shall

be installed. The company shall, in that

event, apply the relevant stipulations of the

Code regarding this topic. As long as this is

not the case, the responsibilities of the core

committees shall be carried out by the

entire supervisory board.

6.1 – 6.7 Conflict of interest

A supervisor who has a conflict of interest

as described in provision III.6.1 of the Code

reports this to the chairman of the

If relevant, the company shall comply with

the provision 6.4 concerning transactions

between the company and natural persons

or legal entities holding 10% or more of the

company’s share capital.

Regulations regarding dealing with

(potentially) conflicting interests of CEOs,

managing directors, board members,

including supervisory board members, and

the external auditor shall be added under

the regulations of the supervisory board.

The company shares the Committee’s

opinion regarding the tasks and authority of

a delegated member of the supervisory

board.

7.1 – 7.4 Remuneration

The remuneration of the supervisory board

shall be approved by the general meeting of

shareholders (see also article 24 sub 4 of

the Articles of Association). Regarding the

remuneration of the supervisory board,

shares and/or options on shares as part of

the remuneration will not be granted. The

regulations of the supervisory board, to be

published on the company website, shall be

extended with the relevant articles of the

Code.

In contrast to the Code, it has been

determined that a member of the

supervisory board is not permitted to hold

direct or indirect interests amounting to

more than 5% in the share capital of other

listed companies or companies in the

semiconductor industry. Furthermore,

22

Rood Technology Annual Report 2005


supervisors must report changes in

possession of shares in other listed or

semiconductor companies to the chairman

of the supervisory board.

2.1 – 2.8 Certifications of shares

No share certificates have been issued;

therefore this part of the Code is not

applicable to Rood Technology.

Rood Technology has not provided personal

loans or guarantees to members of the

supervisory board.

IV. The (general meeting of)

shareholders

1.7 Scope of authority

The general meeting of shareholders has

authority regarding the suspension or

removal of managing and supervisory

directors, unless there is a majority of

votes, according to the Articles of

Association of Rood Technology.

The company complies with the Code

regarding decision-making of the general

meeting of shareholders on the following

items:

The voting rights on finance-preferential

shares;

The public announcement and motivation of

the board’s point of view with regard to a

published, serious private bid on a company

division or participation in the company,

with a value exceeding the limit as stated in

the new Article 2:107a BW (Dutch Civil

Code), first sub, point c;

The allocation and dividend policy, as well

as the proposal regarding paying out

dividends and giving discharge to CEOs,

managing directors and members of the

supervisory board as separate items on the

agenda of the general meeting of

shareholders;

The setting of a registration date for

exercising voting and attendance rights.

3.1 – 3.9 Providing information / logistics of

the general meeting of shareholders

The best-practice provisions are in

accordance with the methods as practiced

within the company, aiming to inform

shareholders and other parties on the

financial market simultaneously and equally

regarding issues that may affect the share

price. The company however, will, based on

assessment of costs and benefits, not spend

money on technology aimed at attending

meetings remotely.

The company shall continue to provide the

general meeting of shareholders with all

relevant information required for properly

exercising its rights and authorities, unless

a substantial company interest prevents it

from sharing certain information. In

accordance with the Code, Rood Technology

publishes presentations to analysts on its

website after the event. If necessary, the

company shall request to suspend trade in

Rood Technology shares during such

presentations.

Rood Technology will publish or make

available all information pursuant to

corporate law and securities legislation.

In accordance with best-practice provision

3.7, the company will inform the general

meeting of shareholders by circular letter

about all facts and circumstances relevant

for approval, delegation or authorisation by

the general meeting of shareholders. The

circular letter will be published on the

website of the company.

Furthermore, the company shall, at first

request, make the minutes of any general

Rood Technology Annual Report 2005 23


meeting of shareholders available to all

shareholders at the latest three months

after the date of the relevant meeting.

Shareholders for their part have three

months to submit reactions to the minutes.

Subsequently, the minutes shall be

approved by the chairman of the meeting

and the person who prepared the minutes,

in accordance with article 31, sub 1 of Rood

Technology’s Articles of Association.

The company does not have a protective

construction against take-overs. The reason

for this is that in the case of a relatively

small company such as Rood Technology it

would be unfavourable neither for the

shareholders nor for the operational entity

itself to be part of a bigger framework in the

semiconductor industry.

4.1 – 4.3 Responsibilities of institutional

investors

Currently, Rood Technology does not have

any institutional investors. If this should

change in the future, Rood Technology will

request the institutional investors to apply

the best-practices provisions of the Code.

However, Rood Technology does not regard

application of the best-practice provisions as

a requirement, since the company does not

want to restrict any potential institutional

investors.

V. The audit of financial

reporting and the position of the

internal audit function and the

external auditor

1.3 Financial reporting

Rood Technology’s supervisory board

monitors the reporting and publication of

the annual report, the annual accounts and

other financial information that needs to be

gathered according to internal procedures.

The board of management carries the

responsibility for the internal procedures

that assure the adequacy, accuracy and

reliability of external financial reporting.

2.1 – 1.3 Roles, appointment, remuneration

and assessment of the external auditor’s

performance

The external auditor shall attend the general

meeting of shareholders in order to be

available for questioning regarding the

accuracy of the annual accounts. The

company’s board of management reports

annually to the supervisory board regarding

developments in the relationship with the

external auditor. According to the

company’s Articles of Association (article 25

sub 2), the general meeting of shareholders

has the authority to appoint the external

auditor.

3.1 Internal audit function

Rood Technology does not have an internal

auditor.

4.1 – 4.3 Relation and communication with

the external auditor and the departments of

the company

The external auditor is present during

meetings of the supervisory board where

the external auditor’s report and the annual

accounts are discussed. Furthermore, the

external auditor receives all financial

information he/she requires for performing

his/her tasks. The external auditor submits

an annual management letter to the board

of management and the supervisory board,

which is discussed during the combined

board of management and supervisory

board meeting.

24

Rood Technology Annual Report 2005


Report of the board of management

General

In the 2005 reporting year, Rood

Technology showed a positive development

of sales and of the result. While the market

decreased during the first half of 2005 and

grew during the second, net sales of Test &

Related Services increased by 13% to

EUR 8,186,000.

The net result improved in 2005 to

EUR 518,000 (2004: EUR -35,000). This

result includes a deferred tax liability of

EUR 428,000 resulting from an offsettable

loss. Without the tax claim just mentioned,

the net result rose to EUR 91,000 (2004:

EUR -56.000). The discontinuation of the

equipment branch in 2003 and the

reshaping of the organisation which was

started in the past year and is still in full

swing, are to create the conditions for

continuous positive growth over the next

few years.

The reporting year was characterised by the

following projects and developments:

• Growth in sales in Test & End-of-line

Services of 9%, while during the

reporting year the margin for part of

the sales fell substantially, inter alia

since we accepted, for tactical reasons,

orders for the Asian market which we

carried out in the relatively expensive

Germany (sales approx. EUR 599,000);

• A disappointing development of sales in

Test Engineering. In this business unit

preparations have been and are being

made for further development;

• Explosive growth in the business unit

Failure Analysis of 324%, a sector

which has been prepared further for

ongoing growth;

• Growth in the business unit

Qualification of 9%. During the

reporting year this business unit was

developed further for even stronger

growth in the coming year;

• The opening and further preparation of

a branch in Silicon Saxony (Dresden),

as well as the appointment of a

qualified manager for this sector;

• Development of the Asian (Chinese)

activities, partly through the

appointment of a qualified sales

manager;

• Attracting major manufacturers in the

semiconductor market as customers;

• Generating significant interest in the

ROT project (Re-use of Test blocks)

among major parties in the

semiconductor industry.

The second half of the year under review

showed further improvement of the

operating result compared to the first half of

2005.

Sales increased substantially, with

personnel and other costs not increasing

proportionally. It should be noted that the

developments in Silicon Saxony and China

generated start-up costs, while not yet

contributing comparably to net sales.

In 2004 Rood Technology formulated a

strategic plan aimed at growth, balance

sheet improvement and risk control.

During the 2006 reporting year the

reshaping of the company, the branches in

Silicon Saxony and China and diversification

must be developed further. Therefore Rood

Technology focuses on:

• Starting up the Dresden branch;

• Developing business in relation to Asia

(China);

• Improving the rate of use of our

equipment (equipment load) at

Nördlingen;

Rood Technology Annual Report 2005 25


• Increasing productivity of the business

units;

• Realising further growth of sales in

Failure Analysis and Qualification;

• Further improving cost control;

• Ongoing professionalisation of

management.

More customers than in the past are

reconsidering their core business and core

competences, which causes production

facilities to be outsourced. For Rood

Technology this means an extra opportunity

for new business.

Due to globalisation, pressure on prices is

Equipment Load

increasing as a result of price development

90,0

in low-wage countries. Rood’s answer to

80,0

70,0

60,0

50,0

%

40,0

30,0

20,0

10,0

0,0

Q1 Q2 Q3 Q4

2004

2005

that is twofold: on the one hand working

towards cost reduction, higher efficiency

and a higher rate of use, while on the other

hand focusing on production in Asia (China).

The reshaping is aimed in particular at

further detailing responsibilities per business

unit. When these are in place, Rood

Technology expects to realise a better net

result and to create possibilities for

expansion.

Strategic development

Rood Technology emphatically strives for

autonomous growth by way of expansion of

locations and diversification. Furthermore,

Rood continues to pursue improvement of

the balance sheet.

Next to the developments mentioned above,

Market developments and market

position

In the semiconductor industry the following

trends can be identified:

• A continuation of globalisation and the

associated pressure on prices;

• An ongoing shift to low-wage countries;

• A reorientation of customers’ core

competences.

Rood Technology anticipates on these

developments by focusing particularly on

the high-end market, i.e. the more complex

Rood seeks collaboration and/or a merger

with other companies in order for the

company’s vulnerability to be reduced and

for it to become more attractive to all its

stakeholders.

For autonomous development Rood

Technology anticipates renewed capital

requirements. For the moment, present

options are being exploited maximally.

However, a doubling of sales in the next few

years can only be realised with periodic

capital injections. For that reason, more

attention will be devoted to communication

with the world of finance.

semiconductors, in particular on ‘mixed

signal’ products. For these products,

comparatively more know-how is required.

In addition, many customers in the

automotive sector wish to maintain

European know-how and protect it. For that

reason, Rood Technology focuses on this

sector and is establishing itself in Silicon

Saxony.

Organisation and personnel

At year-end 2005 Rood Technology had 97

employees on permanent staff, which is

equal to year-end 2004 (97).

Sales per employee in the core business

Test & Related Services increased by

approximately 10% from EUR 78,000 in

26

Rood Technology Annual Report 2005


2004 to EUR 86,000 in 2005. This growth of

sales has been achieved to a great degree

due to the dedication of the employees and

their willingness to work constructively

towards the necessary development of the

company.

On May 1, 2005, Ms Wilma H. Gomarus

joined the company as financial director

(CFO). Ms Gomarus came over from

PricewaterhouseCoopers. Previously the

company’s accounts were kept by Brouwer

Management Consultants Harderwijk.

On September 1, 2005 Mr Peter Maarten

Bijkerk, Dipl.Kfm., was appointed as sales

manager International Business Rood

Technology International with focus on

China. Mr Bijkerk came from Mystar, a

subsidiary of MSI.

On November 2005 Mr Josef Wolf joined the

company as general manager Rood

Technology Dresden. He came over from

EADS.

Concerning ‘planet’, Rood has initiated an

active environmental policy. This project

consists of the introduction of an

environmental care programme and of

preventive actions aimed at monitoring

environmental risks and keeping them

within acceptable limits. Rood Technology

aims to gain ISO 14001 certification in

2006.

Rood is already ISO TS 16949 certified,

which certification is the result of a

collaboration between ISO and IATF

(International Automotive Task Force) and

is recognised by all automotive QS-9000

and VDA 6.1 oriented industries

respectively.

Sales Core-business / employee

Employee

102

100

98

96

94

92

90

88

2003 2004 2005

Years

Employee Sales Core Business / Employee

100

90

80

70

60

50

40

30

20

10

0

Sales (core

business

/employee)

Some members of the management team Rood

Technology Germany

IFRS

As a listed company on the stock exchange,

as of 2005 Rood Testhouse International

Sustainability

‘People, planet and profit’ play an important

role for Rood. In the area of ‘people’, the

assessment systems including the

associated objectives were further

introduced in 2005.

Rood plays an active role in the area of

‘continuous improvement’ within the

organisation improvement programme

(TOP), which was developed in Germany

and is supported by the German federal

government.

N.V. has to draw up its financial statements

in accordance with International Financial

Reporting Standards (IFRS). Rood

Testhouse International has decided to

adopt IFRS and report on the 2005 financial

year in accordance with IFRS as endorsed

by the European Union, with comparative

figures for 2004 and 2005. The 2004 results

under IFRS are lower compared to the 2004

Dutch GAAP results. The implementation of

IFRS demanded serious effort.

The items in RTI annual account that are

subject to more significant changes in

Rood Technology Annual Report 2005 27


valuation and/or presentation due to the

transition to IFRS are:

• Pension liabilities, since pension

liabilities relating to a ‘defined benefit

plan’ under IFRS must recognise in the

balance sheet.

• Legal reserves, since under IFRS a legal

reserve for capitalised expenditure on

research and development is no longer

required.

In the table 6.3 the statements of

reconciliation between Dutch GAAP and

IFRS for the relevant periods (equity as of

January 1, 2004, December 31, 2004 and

December 31, 2005) are shown. Table 6.4

shows the reconciliation of the 2004 and

2005 results. It must be noted that the net

result under IFRS is expected structurally to

be EUR 50,000 - EUR 150,000 below the

Dutch GAAP result. Shareholders’ equity has

been corrected by EUR 416,000 as at

January 1, 2004 and will develop as from

this starting position.

Explanation

According to IAS 19 a pension liability is

recognised for defined benefit plans as

being the total of the net present value of

the defined benefit obligation at balance

sheet date, plus any actuarial gains (less

actuarial losses).

Sales and result

In 2005 sales in the telecoms sector

increased substantially in line with market

developments. Sales in the sectors

automotive, industrial/medical and

Electronic Data Processing showed a limited

increase. In the automotive sector, pressure

on prices was a limiting factor on sales.

Nevertheless customer relations in this

sector were strengthened in 2005.

The breakdown of net sales per customer

category/sector is shown in the following

table:

2004 2005

(x EUR 1,000)

Automotive (S1) 3,036 2,859

Telecoms (S2) 1,518 2,450

Industrial/Medical (S3) 1,229 1,307

Electronic Data

Processing (S4) 1,084 1,144

Consumer (S5) 217 327

Military/Space (S6) 145 81

7,229 8,168

(x € 1,000)

3500

3000

2500

2000

1500

1000

500

0

Sales per Market Sector

S1 S2 S3 S4 S5 S6

Rood Technology’s consolidated net sales

rose by 13% to EUR 8,168,000 (2004:

EUR 7,229,000; excluding sales of

equipment EUR 580,000), while the

operating result improved by 425% to

EUR 238,000 (2004: EUR 56,000).

The 2005 operating result was influenced

inter alia by various incidental costs:

• Start-up costs of the Dresden branch of

approximately EUR 50,000;

• Start-up costs of the Asian activities of

approximately EUR 170,000;

• Initial costs of approximately

EUR 100,000 in wafer testing;

• A loss on initial costs in the business

unit Qualification;

• Higher pension costs of approximately

EUR 98,000.

Not due to incidental factors, but due to a

sales and performance related salary

component, partly as a consequence of a

2004

2005

28

Rood Technology Annual Report 2005


eduction of fixed salaries in 2003, Rood

had a year-on-year variable personnel

expense of EUR 299,000 in 2005.

For strategic reasons we produce a Chinese

order in Germany, with a significant lower

margin (effect of approximately

EUR 55,000).

In the 2005 financial year the internal cost

structure improved further, partly due to

more working hours per employee without a

wage increase. Rood Technology strives to

keep working towards higher labour

productivity.

Increased energy costs impacted costs

negatively.

The investments could partly be financed

from operational cash flow.

At year-end 2005 shareholders’ equity

amounted to EUR 3 million, an increase of

21% compared to year-end 2004. Solvency

increased to 35.6% (year-end 2004:

33.2%). For the next few years Rood

Technology anticipates that investment will

increase.

Research and development

With its many years’ experience in the

semiconductor market, Rood Technology

works towards permanent developments

and improvement, such as:

• Improvement of yield

• Time to market

• Price/quality improvement

Works council

On balance, net result rose to EUR 518,000

(2004: EUR -35,000). This corresponds to a

profit of EUR 0.03 (2004: EUR 0.00) per

share (average number in issue throughout

the reporting year).

Profit appropriation

With reference to the information for

shareholders, Rood Technology proposes to

add the entire 2005 profits to the reserve.

Investments and financing

In 2005, net investment in tangible fixed

assets amounted to EUR 1.4 million (2004:

EUR 0.8 million). Depreciation amounted to

EUR 0.9 million (2004: EUR 1.4 million).

In this context Rood has set up a

development programme entitled ‘Re-use of

Test blocks’ (ROT), a development which is

supported inter alia by the German

government and the EU. The purpose of this

development programme is to halve

development time of test software through

standardisation and re-use, which benefits

the time to market of new products.

The project mentioned is recognised in the

industry as one of the most innovative

development programmes, gaining Rood a

great deal of interest from other

semiconductor companies. For that reason

Rood strives towards collaborating on

further developments in this area with other

companies with a view to achieving

significant cost savings for this sector. In

order to be able to pursue this kind of

development more vigorously, Rood has

given R & D a more central position in the

company.

Rood Technology Annual Report 2005 29


Business unit Test & End-of-line

Services

Profile of testing activities

The business unit Test & End-of-line

Services concentrates on testing

semiconductors as a subcontractor of the

semiconductor industry. Rood Technology is

one of the biggest independent test houses

in Europe. For these activities Rood

Technology has 14 testers in addition to

other equipment for Test & End-of-Line

Services

• Increase of testing capacity with extra

testing equipment.

• Adaptation to the growth sectors of new

packages (QFN/MLF etc.)

• Expansion and modernisation of

programming equipment.

• Expansion of Test & End-of-Line

Services.

• Further improvement of customer

relations through additional services.


Major developments in 2005

• Increase of the rate of use of the

testers to over 80%.

• Expansion of wafer testing by addition

of an extra test cell.

• Intensification of the collaboration with

existing customers through taking over

their testing activities.

• Widening of the customer base,

particularly with Fabless Design houses.

• Increasing use of employee flexibility.

• Quality improvements, process

optimisation and further cost reduction.

• Increase of sales by 9% to

EUR 6,602,000 (2004: EUR 6,071,000).

Outlook for 2006

• Capacity increase for wafer testing and

expansion of the clean room facility.

Business unit Test Engineering

Profile of test programme development

In this part of the business unit Test

Engineering Rood Technology concentrates

on the development of test programme

including the necessary hardware

developments. The test equipment is

selected based on the previously mentioned

test programme developments. The

business unit also develops new methods in

order to optimise test programme

development. In the business unit Test

Engineering broad know-how is present

focused on inter alia the following tester

platforms:

• Teradyne

• Credence SZ

• Credence Duo

• Digital

• Advantest

• PC based measuring techniques

Application know-how has been developed

for in particular:

30

Rood Technology Annual Report 2005


• Mixed Signal

• Digital

• Analog

• Memory

• RF

Qualification-related Analysis as well as

specialised modification and/or performing

services (FIB services). These various kinds

of analytical investigations can be

performed as part of reliability assessment.

The business unit Test Engineering has a

wide range of customers, especially in the

field of mixed signal applications in the

market sectors automotive, radio frequency

and industrial.

Major developments in 2005

A breakthrough was achieved in the

development of the ROT (Re-use of Test

blocks) project. In this breakthrough, many

elements of the project have been brought

to practical implementation, leading to a

shortening of development time and a

higher level of quality.

Further developments on the Teradyne

tester platform.

Failure Analysis

An analysis of defective devices (failure

analysis) is carried out by using physical,

chemical and metallurgical analytical

methods. These methods are applied to

confirm customer complained failures, to

detect the area of the defect, and to identify

the failure mechanisms and initiate

corrective actions for quality improvement.

Outlook for 2006

• Agreement with big IC manufacturers

concerning further implementation of

our ROT project.

• Strengthening of the developments on

the tester platforms, Teradyne, LTX and

Verigy (Agilent) and in the area PC

based measuring techniques (e.g.

Labview)

• Setting up test engineering capability in

or benefiting Dresden and China.

• Strengthening the market position of

the business unit Test Engineering with

a view to achieving further growth.

Construction Analysis and DPA

Construction Analysis and Destructive

Physical Analysis (DPA) can be performed as

part of a reliability assessment. The

objective of Construction Analysis is the

early identification of potential deficiencies

which can cause zero hour failures or

reliability problems.

Business unit Failure and

Technology Analysis

Profile of Failure and Technology Analysis

Rood Technology's extensively equipped

failure analysis laboratory is capable of

providing Failure, Construction and

Qualification-related Analysis

Qualification-related Analysis is carried out

before and after various qualification tests

performed by Rood’s own Q & R laboratory.

The purpose of these investigations is to

determine the influence of these

Rood Technology Annual Report 2005 31


environmental tests on package and chiprelated

problems.

FIB Service

We offer our customers the option of

making modifications and/or performing

analyses at the early stages of the design

and development of new devices (chip

modification/circuit editing, micro crosssectioning,

TEM lamella preparation,

micromachining, Applications of Material

Science etc.)

This service is a further contribution to the

consistent implementation of the company

road map to support our customers in yield

improvement and cost reduction.

Business unit Qualification

Profile of Qualification

The business unit Qualification concentrates

on evaluation of semiconductors in various

environments, during which the products

are exposed to extreme temperature

fluctuations and other influences. The

outcome of the evaluations determines

whether the semiconductors qualify or not.

The business unit is one of the leading

independent certified test houses in Europe.

The products to be tested are particularly

from the sectors military/space and

automotive.

The business unit has a large number of

customers, particularly in the automotive,

aeronautical and space industries.

Major developments in 2005

• Demand for Failure Analysis in 2005

increased by approximately 215%, in

particular in the automotive sector.

• Investment in the new Bond-Pull tester

and in a new light microscope.

• Increase of level of know-how and

expansion of the capabilities of the

Failure Analysis group.

Outlook for 2006

• Expansion of laboratory capacity.

• Expansion of personnel in the Failure

Analysis group.

• Investment in Focused Ion Beam (FIB)

equipment and expansion of service in

that area, with Fabless Design houses

as a special target group.

• Strong increase of sales in 2006

compared to 2005.

• Expansion of certification conforming to

ISO 17025.

Major developments in 2005

• Strengthening of the market position in

the automotive industry, particularly

through growth in sensor technology.

• Further growth in Micro-Electronic-

Mechanical Systems (MEMS).

• Growth in the telecoms sector, in

particular in high-speed communication

and telephone applications.

• Growth in the sector military/space.

• Growth in the sector medical.

These growth sectors are largely due to the

certification of this business unit.

Outlook for 2006

In 2006 the business unit will expand its

services due to increasing complexity, but

will also concentrate more on a wider range

of products.

32

Rood Technology Annual Report 2005


Due to the above, sales will continue to

grow and the business unit will be able to

strengthen its market position further.

Developments in Dresden

Stimulated by developments in and demand

from the Sachsen region, Rood Technology

has decided to open a branch there. The

activities in Dresden have started up in the

second half of 2005, and are expected to

start generating sales in the course of 2006.

Currently, Rood is investing in Dresden.

Rood aims to perform work in that region

for AMD, Infineon, ZMD and Fabless Design

houses. The activities that will initially be

carried out are chiefly test activities, both of

wafers and of end-products.

Developments in China

Rood is developing into a major player in

the Asia - Europe supply chain. The

company started setting up these activities

in the middle of 2005. Rood uses two

business models for the Asia – Europe

supply chain:

• Contracting for European customers. In

this model Rood Technology supports

European customers who wish to import

good quality products from Asia, by

qualifying and testing suppliers and

products. Rood also executes project

management for this process.

• Testing activities in China for its

customers. A number of Rood

Technology’s customers procure ever

more semiconductors from Asia;

following in the footsteps of its

customers Rood is extending its test

facilities to China. Based on this

strategy Rood is currently testing

semiconductors in Germany; when in

due time critical mass is achieved, this

testing work will be carried out in

China. Rood intends to move this

development forward vigorously in

2006.

Events after balance sheet date

No significant events have taken place after

balance sheet date.

Outlook for 2006

Worldwide further growth of the

semiconductor market is forecast, once

more with focus on China. Partly based on

market forecasts Rood Technology

anticipates significant (12% - 20%) yearon-year

growth of its core business Test &

Related Services, with clear emphasis on

the second half of 2006.

Also, the efforts that have so far gone into

developing the Silicon Saxony and China

markets are expected to contribute to this

growth. Rood Technology has set itself the

goal of achieving an acceleration of growth

at the end of 2006.

Rood Technology will also seek further

collaboration with other parties in the

semiconductor market.

Furthermore, a year-on-year improvement

of the operating result is anticipated in

2006.

Zwolle, March 1, 2006

Board of management

Ph.M.G. Nijenhuis

Rood Technology Annual Report 2005 33


Annual Accounts 2005

Page

1 Consolidated IFRS balance sheet 35

2 Consolidated IFRS income statement 36

3 Consolidated IFRS cash flow statement 37

4 Notes to the consolidated IFRS financial statement 38

5 Subsidiaries of Rood Testhouse International N.V. 60

6 Statements of reconciliation on the first adoption of IFRS 61

7 Dutch GAAP annual report 68

8 Dutch GAAP company balance sheet 71

9 Dutch GAAP company income statement 72

10 Notes to the Dutch GAAP company financial statements 73

11 Other information 77

Addresses and business management 79

34

Rood Technology Annual Report 2005


1. Consolidated IFRS balance sheet (before appropriation of net-result)

(x EUR 1,000)

As at 31 December

2005 2004

Assets

Non-current assets

4.21 Property, plant and equipment 6,597 6,014

4.22 Intangible assets 108 196

4.24 Deferred income tax assets 328 0

7,033 6,210

Current assets

4.25 Inventories 157 186

4.26 Trade and other receivables 1,274 1,243

4.24 Deferred income tax assets 100 0

4.27 Cash and cash equivalents 66 14

1,597 1,443

Total assets 8,630 7,653

Equity

Capital and reserves attributable to the

company’s equity holders

Share capital and share premium 18,887 18,178

Other reserves -16,330 -15,600

Retained earnings 518 -35

4.28 Total equity 3,075 2,543

Liabilities

Non-current liabilities

4.29 Interest-bearing loans and borrowing 532 0

4.30 Convertible loan 750 0

4.31 Deferred income tax liabilities 1,402 1,401

4.32 Retirement benefit obligations 666 660

3,350 2,061

Current liabilities

4.27 Bank overdrafts 444 1,490

4.29 Current portion of long-term debt 266 210

4.33 Trade accounts and other payables 1,195 1,075

Current tax liabilities 300 274

2,205 3,049

Total liabilities 5,555 5,110

Total equity and liabilities 8,630 7,653

Rood Technology Annual Report 2005 35


2 Consolidated IFRS income statement

(x EUR 1,000)

For the year ended

2005 2004

4.34 Net sales 8,168 7,809

Change in work in process/own work

Capitalized 19 49

Cost of raw materials and consumables 679 836

4.35 Personnel expenses 4,774 4,121

4.36 Depreciation of fixed assets 903 1,372

4.37 Other operating expenses 1,555 1,375

Total operating expenses 7,930 7,753

Operating result 238 56

4.38 Financial income and expenses -147 -114

Result before income tax 91 -58

4.39 Income tax expenses 427 23

Net result 518 -35

Basic earnings per share 0.03 0.00

Diluted earnings per share 0.02 0.00

36

Rood Technology Annual Report 2005


3 Consolidated IFRS cash flow statement

(x EUR 1,000)

For the year ended

2005 2004

Cash flows from operating activities

Net result 518 -35

Depreciation 903 1,372

Increase/decrease of provisions/options to equity 132 2

Result disposal of tangible fixed assets -21

Changes in assets and liabilities

- inventories 29 78

- trade, other receivables and deferred income tax assets -131 418

- current liabilities 146 -182

Cash flows from operating activities 1,597 1,632

Cash flows from investing activities

Purchases of property, plant and equipment -1,405 -826

Purchases of intangibles assets 7 -103

Increase deferred tax assets -328 0

Disposal of tangible fixed assets 0 29

Cash flows from investing activities -1,726 -900

Cash flows from financing activities

Issuances of new shares 0 22

Proceeds from other reserves 0 -60

Proceeds from issuance of convertible loan 0 0

Proceeds from issuance of new convertible loan 750 0

Proceeds from new interest bearing loans 798 420

Repayment of borrowings -210 -617

Dividend (=interest of convertible loan) -107 -157

Capital tax -4 -4

Cash flows from financing activities 1,227 -396

Net (decrease)/increase in cash and bank

overdrafts 1,098 336

Cash and bank overdrafts at beginning

of the year -1,476 -1,812

Cash and bank overdrafts at end of the year -378 -1,476

Change in cash at banks and bank overdrafts 1,098 336

Rood Technology Annual Report 2005 37


4 Notes to the consolidated IFRS financial statements

4.1 General

Rood Testhouse International N.V. is a company domiciled in Amsterdam, the Netherlands. The

consolidated IFRS financial statements of the company for the year ended 31 December 2005

comprise the company and its subsidiaries (together referred to as the ‘Group’). The Group

includes the wholly-owned subsidiaries Rood Technology Deutschland GmbH + Co (Nördlingen,

Germany), Rood Technology Dresden GmbH (Dresden, Germany) and Rood Technology

International B.V. (Zwolle, The Netherlands) (previously Roses Electronics B.V. (Heerde, The

Netherlands)). The financial statements 2005 have been prepared by the Board of Management

and released for publication on March 13, 2006.The financial statements 2005 have been adopted

by the Supervisory board on March 1, 2006 and will be submitted for approval to the Annual

General Meeting of Shareholders on March 27, 2006.

4.2 Statement of Compliance

The consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards (IFRS endorsed by the European Union) and its interpretations

adopted by the International Accounting Standards Board (IASB). These are the Group’s first

consolidated financial statements in accordance with IFRS. The group has applied IFRS 1. An

explanation of how the transition to IFRS has affected the reported financial position, financial

performance and cash flows of the group is provided in chapter 5.

Significant accounting policies

4.3 Basis of preparation

The financial statements are presented in EUR 1,000, unless stated otherwise. For Rood

Testhouse International the euro is the functional and presentation currency. The financial

statements are prepared on historical cost basis, except that the following assets and liabilities

are stated at their fair value: the assets land and building, and the liability employee benefits

resulting from Defined Benefit plans.

The preparation of the financial statements in accordance with IFRS requires management to

make judgements, estimates and assumptions that affect the application of policies and reported

amounts of assets and liabilities, income and expenses. The estimates and assumptions are

based on historical experience and various factors that are believed to be reasonable under the

circumstances, the result of which form the basis of making judgements about the carrying

values of the assets and liabilities that are not readily apparent from other sources. Actual results

may differ from these estimates.

The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only

that period or in the period of the revision and future periods if the revision affects both current

and future periods.

38

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

The accounting policies have been consistently applied by Group entities to all periods presented

in these consolidated financial statements and in preparing an opening IFRS balance sheet at

1 January 2004 for the purposes of transition to IFRS.

4.4 Basis of consolidation

4.4.1 Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the

power to govern the financial and operating policies generally accompanying a shareholding of

more than one half of the voting rights. The existence and effect of potential voting rights that

are currently exercisable or convertible are considered when assessing whether the Group

controls another entity. Subsidiaries are fully consolidated from the date on which control is

transferred to the Group. They are de-consolidated from the date on which control ceases.

4.5 Property, plant and equipment

4.5.1 Owned assets

Property, plant and equipment are stated at cost, except for land and buildings, which are carried

at an actual value. The cost of self-constructed assets includes the cost of materials, direct labour

and an appropriate proportion of directly allocated overheads. Property that is being constructed

or developed for future use is classified as property, plant and equipment and stated at cost until

construction and development is complete, at which time it is classified as property, plant or

equipment. Where an item of property, plant and equipment comprises major components having

different useful lives, these components are accounted for as separate items of property, plant

and equipment.

4.5.2 Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership

are classified as finance leases. Plant and equipment acquired by way of finance lease is stated at

an amount equal to the lower of its fair value and the present value of the minimum lease

payments at inception of the lease, less accumulated depreciation (refer to accounting policy

4.5.4) and impairment losses (refer accounting policy 4.10). Lease payments are accounted for

as described in accounting policy 4.18.1 and 4.18.2.

4.5.3 Subsequent cost

The Group recognises in the carrying amount of an item of property, plant and equipment the

cost of replacing part of such an item when that cost is incurred if it is probable that the future

economic benefits embodied with the item will flow to the Group and the cost of the item can be

measured reliably. All other costs are recognised in the income statement as an expense as

incurred.

Rood Technology Annual Report 2005 39


Notes to the consolidated IFRS financial statements – continued

4.5.4 Depreciation

Depreciation on assets is calculated using the straight-line method to allocate the cost of each

asset to its residual value over its estimated useful life. Land is not depreciated. The useful

economical life various among the different items of the tangible fixed assets are:

Category

Years

Buildings 70

Machinery and equipment 2-10

Other fixed assets 4-10

4.6 Intangible assets

4.6.1 Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or

technical knowledge and understanding, is recognised as an expense in the period in which it is

incurred. An internally-generated intangible asset arising from the Group’s development is

recognised only if all of the following conditions are met:

• An asset is created that can be identified (such as software and new processes);

• It is probable that the asset created will generate future economic benefits;

• The development cost of the asset can be measured reliably.

4.6.2 Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated

useful lives of intangible assets unless such lives are indefinite. Intangible assets with an

indefinite life are systematically tested for impairment at each balance sheet date.

4.7 Inventories

Inventories are stated at the lower cost and net realisable value. Costs comprise direct materials

and, where applicable, direct labour costs and those overheads that have been incurred in

bringing the inventories to their present location and condition. Cost is calculated using the

weighted average method. Net realisable value represents the estimated selling price less all

estimated costs to be incurred in marketing, selling and distribution.

4.8 Trade and other receivables

4.8.1 Work in progress

Work in progress concerning services rendered on work not yet completed is stated at cost plus a

mark up for directly attributable overheads. Costs include all expenditure related directly to

specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract

activities based on normal operating capacity.

40

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.8.2 Other trade and other receivables

Trade and other receivables are stated at their cost less impairment losses (refer accounting

policy 4.10).

4.9 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other shortterm

highly liquid investments with original maturities of three months or less, and bank

overdrafts. Bank overdrafts are shown within borrowing in current liabilities on the balance sheet.

4.10 Impairment

The carrying amounts of assets, inventories and deferred tax assets are reviewed at each balance

sheet date to determine whether there is any indication of impairment. If any such indication

exists, the asset’s recoverable amount is calculated. For intangible assets that are not available

for use, the recoverable amount is determined at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash

generating unit exceeds its recoverable amount. Impairment losses are recognised in the income

statement.

4.11 Share capital

4.11.1 Share capital

Share capital is classified as equity. The Group has not issued preference shares.

4.11.2 Repurchase of Share capital

When Share capital recognised as equity is repurchased, the amount of the consideration paid,

including directly attributable costs, is recognised as a change in equity. Repurchased shares are

reported as reserve for own shares and presented as a deduction from total equity.

4.11.3 Dividends

Dividends are viewed as a liability in the period in which they are declared.

4.12 Convertible loan notes

Convertible loan notes are regarded as compound instruments, consisting of a liability component

and an equity component. At the date of issue, the fair value of the liability component is

estimated using the prevailing market interest rate for similar non-convertible debt. The

difference between the proceeds of issue of the convertible loan notes and the fair value assigned

to the liability component, representing the embedded option for the holder to convert the loan

note into equity of the Group, is included in equity (capital reserves).

Rood Technology Annual Report 2005 41


Notes to the consolidated IFRS financial statements – continued

Issue costs are apportioned between the liability and equity components of the convertible loan

notes based on their relative carrying amounts at the date of issue. The portion relating to the

equity component is charged directly to equity.

The interest expense on the liability component is calculated by applying the prevailing market

interest rate for similar non-convertible debt to the liability component of the instrument. The

difference between this amount and the interest paid is added to the carrying amount of the

convertible loan notes.

4.13 Borrowings

Interest-bearing borrowings are recognised initially at fair value, less attributable transaction

costs. Borrowings are subsequently stated at amortised cost.

4.14 Employee benefits

4.14.1 Defined contribution plan

Obligations for contributions to defined contribution pension plans and related plans are

recognised as an expense in the income statement as incurred.

4.14.2 Defined benefit plans

The Group’s net obligation in respect of defined benefit pension plans and related plans is

calculated separately for each plan by calculating the present value of future benefits that

employees have earned in return for their service in current and prior periods; that benefit is

discounted to determine the present value and the fair value of any plan assets is deducted. The

discount rate is the yield at balance sheet date on high quality corporate or government bonds

that have maturity dates approximating the terms of the Group’s obligations. The calculation is

performed by qualified actuaries using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit relating to past

service by employees is recognised as an expense in the income statement on a straight-line

basis over the average period until the benefits are vested. To the extent that benefits vest

immediately, the expense is recognised immediately in the income statement.

Under IFRS 1, all actuarial gains and losses at 1 January 2004, the date of transition to IFRS,

were recognised. In respect of actuarial gains and losses that arise subsequent to 1 January 2004

in calculating the Group’s obligation in respect of a plan, the Group has adopted the IAS 19

amendment of December 2004 which permits an entity to recognise all actuarial gains and losses

in the period in which they occur outside profit and loss in the statement of total result of the

period.

Where the calculation results in a benefit to the Group, the recognised asset is limited to the net

total of any unrecognised actuarial losses and past service costs and the present value of any

future refunds from the plan or reductions in future contributions to the plan.

42

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.14.3 Share based payment transactions

The shared option programme allows employees of the Group to acquire shares of the Company.

The fair value of options is recognised as an employee expense with the corresponding increase

in equity. The fair value is measured at grant date and spread over the period during which the

employees become unconditionally entitled to the options.

4.15 Provisions

A provision is recognised in the balance sheet when the Group has a legal or constructive

obligation as a result of a past event, and it is probable that an outflow of economic benefits will

be required to settle the obligation. If the effect is material, provisions are determined by

discounting the expected future cash flows at a pre-tax rate that reflects current market

assessments of the time value of money and, where appropriate, the risks specific to the liability.

4.16 Trade and other payables

Trade and other payables are stated at cost.

4.17 Net sales

4.17.1 Net sales

Net sales comprises the fair value of the sales of goods and services, net of value-added tax,

rebates and discounts and after eliminating sales within the Group. Sales represent the proceeds

of goods and services supplied to third parties. All amounts referred to in the income statement

are stated at historical cost.

4.17.2 Government grants

An unconditional government grant is recognised in the balance sheet when the grant becomes

receivable. Any other government grant is initially recognised in the balance sheet as deferred

income when there is reasonable assurance that it will be received and that the Group will comply

with the conditions attaching to it. Grants that compensate the Group for expenses incurred are

recognised as revenue in the income statement on a systematic basis in the same periods in

which the expenses are incurred. Grants that compensate the Group for the cost of an asset are

recognised in the income statement as revenue on a systematic basis over the useful life of the

asset.

4.17.3 Other income

Other income regards income not related to the key business activities of the Group, like income

from the sale of non-monetary assets or liabilities, exceptional and/or non-recurring items.

Rood Technology Annual Report 2005 43


Notes to the consolidated IFRS financial statements – continued

4.18 Expenses

4.18.1 Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line

basis over the term of the lease. Lease incentives are recognised in the income statement as an

integral part of the total lease expense.

4.18.2 Financial lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the

outstanding liability. The finance charge is allocated to each period in such way that this results in

a constant periodical interest rate for the remaining balance of the liability during the lease term.

4.18.3 Net financing costs

Net financing costs comprise interest payable on borrowings calculated using the effective

interest rate method. The interest expenses component of finance lease payments is recognised

in the income statement using the effective interest rate method.

4.19 Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is

recognised in the income statement except to the extent that it relates to items recognised

directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantially enacted at the balance sheet date and any adjustment to tax in respect

of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for taxation purposes. The following temporary differences are not

provided for: the initial recognition of assets or liabilities that affect neither accounting nor

taxable profit, and differences relating to investments in subsidiaries to the extent that they will

probably not reverse in the foreseeable future. The amount of deferred tax provided is based on

the expected manner of realisation or settlement of the carrying amount of assets and liabilities,

using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits

will be available against which the asset can be utilised. Deferred tax assets are reduced to the

extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same

time as the liability to pay the related dividend.

44

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.20 Statement of cash flow

The statement of cash flow is prepared using the indirect method. The cash flow statement

distinguishes between operational, investing and financing activities. Payments and receipts of

corporate taxes are included as cash flow from operational activities and interest is shown as cash

flow from financing activities as far as the interest is related to long-term financing; remaining

interest is included in the operational cash flow. Cash flow as a result from divestment of financial

interest in group company and subsidiaries are included as cash flow from investing activities,

taking into account the available cash in these interests. Dividends paid are part of the cash flow

from financing activities.

4.21 Property, plant and equipment

(x EUR 1,000)

Land and

buildings

Machinery

and

equipment Other Total

At 1 January 2004

Cost or valuation 7,686 15,422 1,424 24,532

Accumulated depreciation -3,190 -13,503 -1,318 -18,011

Net book amount 4,496 1,919 106 6,521

Year ended 31 December 2004

Opening net amount 4,496 1,919 106 6,521

Additions 0 728 98 826

Disposals 0 0 -8 -8

Depreciation charge -74 -1,178 -73 -1,325

Closing net book amount 4,422 1,469 123 6,014

At 31 December 2004

Cost or valuation 7,686 16,150 1,387 25,223

Accumulated depreciation -3,264 -14,681 -1,264 -19,209

Net book amount 4,422 1,469 123 6,014

Year ended 31 December 2005

Opening net amount 4,422 1,469 123 6,014

Additions 55 1,233 117 1,405

Depreciation charge -78 -658 -86 -822

Closing net book amount 4,399 2,044 154 6,597

At 31 December 2005

Cost or valuation 7,741 15,427 1,072 24,240

Accumulated depreciation -3,342 -13,383 -918 -17,643

Net book amount 4,399 2,044 154 6,597

Rood Technology Annual Report 2005 45


Notes to the consolidated IFRS financial statements – continued

4.21.1 Impairment loss and subsequent reversal

The company has not incurred nor reversed any impairment losses in 2005 and 2004.

4.21.2 Assets under construction

Assets under construction included in other amount to EUR 0 (2004: EUR 0).

4.21.3 Security

The following securities have been provided for long-term and current liabilities:

• Mortgage to a total sum of EUR 3,323,379 on the real estate situated at Oettinger

Strasse 6, Nördlingen, Germany.

• Pledge on machinery and equipment.

4.21.4 Valuation land and buildings

According to the valuation report dated June 2005, as prepared by Dipl.Ing. (FH) Hermann

Illenberger the actual value amounts to EUR 4.750.000.

4.22 Intangible assets

(x EUR 1,000)

Other

Total

At 1 January 2004

Cost or valuation 140 140

Accumulated depreciation 0 0

Net book amount 140 140

Year ended 31 December 2004

Opening net amount 140 140

Additions 103 103

Disposals 0 0

Depreciation charge -47 -47

Closing net book amount 196 196

At 31 December 2004

Cost or valuation 243 243

Accumulated depreciation -47 -47

Net book amount 196 196

Year ended 31 December 2005

Opening net amount 196 196

Additions -7 0

Depreciation charge -81 0

Closing net book amount 108 196

At 31 December 2005

Cost or valuation 236 243

Accumulated depreciation -128 -47

Net book amount 108 196

46

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.23 Financial fixed assets

The Group holds the following long-term receivables:

(x EUR 1,000)

2005 2004

Other long-term receivables 0 0

Deferred tax assets 328 0

Total 328 0

4.24 Deferred income tax assets

Deferred tax assets and liabilities are attributed to the following items in the table.

(x EUR 1,000)

Assets Liabilities Net

2005 2004 2005 2004 2005 2004

Tax value of recognised loss

carry-forwards

- non-current assets 328 0 0 0 328 0

- current assets 100 0 0 0 100 0

Tax (assets)/liabilities 0 0 -1,402 -1,401 -1,402 -1,401

set off of tax

Net tax (assets)/liabilities 428 0 -1,402 -1,401 -974 -1,401

4.24.1 Unrecognised deferred tax assets

Of the total recognised and unrecognised deferred tax assets an amount of EUR 328.000 expires

in periods varying from two to five years. Deferred tax assets have not been recognised in

respect of these items because it is not probable that future taxable profit will be available

against which the Group can utilise these benefits. The unrecognised tax losses in the

Netherlands amount to approximately EUR 14 million. The unrecognised tax losses in Germany

amount to approximately EUR 11 million ‘Körperschaftssteuer’ and approximately EUR 5 million

‘Gewerbe-ertragssteuer’.

4.25 Inventories

(x EUR 1,000)

2005 2004

Raw materials and consumables 99 109

Work in progress 58 77

Finished goods and goods for resale 0 0

Total 157 186

Rood Technology Annual Report 2005 47


Notes to the consolidated IFRS financial statements – continued

4.26 Trade and other receivables

(x EUR 1,000)

2005 2004

Trade accounts receivable 1,185 1,188

Taxation and social security 6 2

Other 83 53

Total 1,274 1,243

Trade receivables are shown net of impairment losses amounting to EUR 26,000 (2004:

EUR 24,000) arising from identified doubtful receivables from customers.

4.27 Cash and cash equivalents

(x EUR 1,000)

2005 2004

Bank balances, cash and cash equivalents 66 14

Bank overdrafts -444 -1,490

Cash and cash equivalents at 31 December -378 -1,476

The securities mentioned under long-term liabilities (note 4.29.2) have also been provided for the

current liabilities to German credit institutions. The credit line with the banks as of 31 December

2005 amounted to EUR 950,000. The interest rate is 7,5% (2004: 5%).

The credit line with the credit institutions in the Netherlands as of 31 December 2005 amounted

of EUR 25.000, without any securities.

4.28 Capital and reserves

(x EUR 1,000)

Share Share Convertible Revaluation Other Total

capital premium loan reserve reserve equity

Balance at 1 January 2004 923 16,442 1,916 2,046 -18,610 2,717

Total recognised gains and

losses

Share options exercised by

employees

Share options exercised

through convertible loan

-5 23 18

107 233 -340 0

464 14 -478 0 0

Addition to reserves -34 34 0

Dividends to shareholders -157 -157

Net results year 2004 -35 -35

Balance at

31 December 2004

1,494 16,684 1,438 2,012 -19,085 2,543

48

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

Share Share Convertible Revaluation Other Total

capital premium loan reserve reserve equity

Balance at 1 January 2005 1,494 16,684 1,438 2,012 -19,085 2,543

Total recognised gains and

losses

Share options exercised by

employees

Share options exercised

through convertible loan

-4 125 121

691 22 -713 0

Addition to reserves 89 -89 0

Dividends to shareholders -107 -107

2,185 16,702 725 2,101 -19,156 2,557

Net result year 2005 518 518

Balance at

31 December 2005

2,185 16,702 725 2,101 -18,638 3,075

0

4.28.1 Share capital

(x EUR 1,000)

Ordinary shares

2005 2004

Shares in issue at 1 January 13,577,570 8,388,831

Employee share options exercised 0 968,369

Conversion of subordinate loan 6,289,000 4,220,370

Shares in issue at 31 December 19,866,570 13,577,570

At 31 December 2005 the authorised share capital comprised 35,900,000 ordinary shares (2004:

35,900,000). The shares have a nominal value of EUR 0.11 each. At December 2005 a number of

19,866,570 common shares (2004: 13,577,570) were in issue. As of this date the members of

the board of management and the members of the supervisory board did not hold any shares in

the company. The company held 4,100 common shares (2004: 4,100) in its own share capital.

The number of treasury shares held by the company at the end of the year under review amounts

to 0,02% of the issued and paid up capital (2004: 0,03%).

4.28.2 Share premium

The share premium is considered to be paid in capital.

4.28.3 Convertible loan

This item refers to a 9% interest bearing subordinated convertible loan. Repayment will take

place by converting the agreed twelve quarterly instalments, varying from EUR 83,000 up to

EUR 255,000, into newly issued ordinary shares of the Company at a fixed conversion price of

EUR 0.1134.

4.28.4 Dividend

The interest on the convertible loan amounting to EUR 107,000 (2004: EUR 157,000) is regarded

as dividend payment.

Rood Technology Annual Report 2005 49


Notes to the consolidated IFRS financial statements – continued

4.29 Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans

and borrowings. For more information about the Group’s exposure to interest and currency risk,

refer to note 4.29.3

(x EUR 1,000)

2005 2004

Secured bank loans 798 210

Convertible notes 750 0

1,548 210

Less: current portion of long-term loans -266 -210

1,282 0

4.29.1 Terms and debt repayment schedule

(x EUR 1,000)

Total 1 year 1 to 2 2 to .5 more than

or less years years 5 years

Secured bank loans 798 266 266 266

Convertible notes 750 500 250

1,548 266 266 766 250

4.29.2 Secured bank loans

In 2005 a loan facility of EUR 842,000 was agreed with the Bayerische Hypo- und Vereinsbank AG

in Augsburg (Germany). The loan has a term of three years. The interest rate is 6.5%.

The bank loans and the current liabilities to credit institutions are secured by a mortgage on land

and buildings with a carrying amount of EUR 3,323,397, with pledge on machinery and

equipment and pledge on trade receivables and inventories.

4.29.3 Interest rates

The average interests paid were as follows:

Year

Ended

2005

Year

Ended

2004

Bank overdrafts 7.5% 5.0%

Bank loans 6.5% 5.2%

The bank loan is arranged at fixed interest rate.

50

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.30 Convertible loan notes

The convertible loan amounts to a total of EUR 1,000,000. On 31 December 2005 an amount of

EUR 750,000 had received by the company. The fourth instalment will take place on 15 January

2006. The convertible notes were issued on 29 April 2005.

The loan shall be redeemed by the Company in four consecutive annual payments starting 15

April 2009. The amount of each redemption will be EUR 250,000. Interest of 4.5% will be paid

annually up till that settlement date.

After 1 January 2008 the Company has the right to redeem the outstanding amount of the loan in

shares, subject to the average share price exceeding 130% - during 30 consecutive training days

– of the conversion price of EUR 0.84. The share related to this early redemption will be

transferred to the lender within five days after the 30 days period ended.

(x EUR 1,000)

2005 2004

Nominal value of convertible loan notes issued 1,475 1,438

Equity component (net of deferred tax) -725 -1,438

Deferred tax liabilities 0 0

Liability components at date of issue 750 0

Interest charged 0 0

Interest paid 0 0

Liability component at 31 December 750 0

4.31 Deferred income tax liabilities

(x EUR 1,000)

2005 2004

Balance at 1 January 1,401 1,364

Debt from equity 0 60

Release change to the statement of earnings 1 -23

Balance at 31 December 1,402 1,401

As a result of the revaluation of land and buildings in 2002, a provision for deferred tax liabilities

has been formed amounting to 40% of the difference.

Rood Technology Annual Report 2005 51


Notes to the consolidated IFRS financial statements – continued

4.32 Retirement benefit obligations

(x EUR 1,000)

2005 2004

Pension obligation 3,433 3,285

Plan assets to be netted off 1,365 1,306

Pension liability 2,068 1,979

Pension assets 1,402 1,319

Total 666 660

4.32.1 Liability for defined benefit obligations

The Group makes contributions to a number of defined benefit plans that provide pension benefits

for employees upon retirement in Germany. In the Netherlands the pension plan is classified as a

Defined Contribution plan and/or similar arrangements for employees, if customary, are

maintained, taking local circumstances into account. In Germany the defined benefit pension plan

comprising mitigated final pay arrangements is fully re-insured. In determining the annual costs

the nature of the plan is recognised which includes (conditional) indexation of pension benefits

insofar as the return on the separated investments surpasses the actuarial required interest. The

required reserves of these obligations are recognised, net of plan assets, in the balance sheet.

The most recent actuarial valuations of plan assets and the present value of the defined benefit

obligation were carried out on 31 December 2005 by Höfer Vorsorge-Management GmbH & Co.

KG, Mülheim an der Ruhr. The present value of the defined benefit obligation, and the related

current service cost and past service cost, were measured using the projected unit credit method.

(x EUR 1,000)

2005 2004

Discount rate at 31 December 4.5% 5.5%

Expected return on plan assets at 31 December 4.0% 4.1%

Future salary increase 0% 0%

Medical cost trend rate 0% 0%

Future pension increases 1% 1%

4.32.2 Expenses recognised in the income statement

(x EUR 1,000)

2005 2004

Current service costs 30 29

Interest on obligation 173 172

Expected return on plan assets -107 -116

Actuarial losses recognised in the year

Total 96 85

52

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

The charge for the year is included in the employee benefits expense in the income statement.

The actual return on plan assets was EUR 58.000 (2004: EUR 65.000).

Changes in the present value of the defined benefit obligation are as follows:

(x EUR 1,000)

2005 2004

Opening defined benefit obligation 3,215 3,217

Service costs 30 29

Interest costs 173 172

Actuarial gain (-) or losses 509 -56

Pension payments -147 -147

Closing present value of the defined benefit

obligation 3,780 3,215

Changes in the fair value of plan assets are as follows:

(x EUR 1,000)

2005 2004

Opening fair value of plan assets 1,306 1,241

Expected return 54 51

Actuarial gain (-) or losses 5 14

Contributions by employer 33 33

Pension payments -33 -33

Benefits paid 0 0

Closing fair value of plan assets 1,365 1,306

The plan assets do not include any of the Group’s own financial instruments, nor any property

occupied by or other assets used by the Group.

The expected rates of return on individual categories of plan assets are determined by reference

to relevant indices published by the A Stock Exchange. The overall expected rate of return is

calculated by weighting the individual rates in accordance with the anticipated balance in the

plan’s investment portfolio.

The history of the plan for the current and prior period is as follows:

(x EUR 1,000)

2005 2004

Present value of defined benefit obligation 3,781 3,215

Fair plan of plan assets 1,365 1,306

Difference 2,416 1,909

Rood Technology Annual Report 2005 53


Notes to the consolidated IFRS financial statements – continued

In accordance with the transitory provisions for the amendments to IAS 19 Employee Benefits in

December 2004, the disclosures above are determined prospectively from the 2004 reporting

period.

The Group expects to contribute approximately EUR 151.000 to its defined benefit plan in 2006.

4.33 Trade accounts payable

(x EUR 1,000)

2005 2004

Suppliers and trade credits 578 659

Non-trade payables and accrued expenses 617 416

Total 1,195 1,075

4.34 Net sales

(x EUR 1,000)

2005 2004

EU 7,884 7,157

Outside EU 284 652

Total 8,168 7,809

4.34.1 Government grants

The company has not been awarded any significant government grants.

4.35 Personnel expenses

(x EUR 1,000)

2005 2004

Salaries 3,893 3,492

Social security 707 647

Pension charges 213 59

Own work capitalised -39 -77

Total 4,774 4,121

The average number of people employed by the Group in 2005 on a full-time basis was 95 (2004:

94).

54

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.35.1 Employee share option rights

The overview of all employee option rights still outstanding on 31 December 2005 is as follows.

(x EUR 1,000)

Granted Options Granted Exercised Expired Options Exercise First date Last date

In 01-01-05 in 2005 in 2005 in 2005 31-12-05 price in € of exercise Of exercise

2000 42,500 0 0 42,500 0 1.48 4 Feb 03 3 Feb 05

2001 44,000 0 0 0 44,000 1.12 2 Jan 04 1 Jan 06

2002 52,000 0 0 0 52,000 0.51 3 Jan 05 31 Mar 07

2004 63,000 0 0 0 63,000 0.68 1 Apr 07 31 Mar 09

2005 0 63,000 0 0 63,000 0.46 4 Jan 08 3 Jan 10

Total 201,500 63,000 0 42,500 222,000

On 31 December 2005, the members of the supervisory board did not hold any options on shares

in the company.

4.35.2 Options Mr Ph.M.G. Nijenhuis

Options of Mr Ph.M.G. Nijenhuis, CEO of the company, can be shown as follows.

(x EUR 1,000)

Granted Options Granted Exercised Expired Options Exercise First date Last date

In 01-01-05 in 2005 in 2005 in 2005 31-12-05 price in € of exercise of exercise

2005 0 100,000 0 0 100,000 0.11 6 Apr 05 5 Apr 08

2005 0 186,792 0 0 186,792 0.11 17 Sep 05 30 Sep 09

Total 0 286,792 0 0 286,792

During the coming years Mr Ph.M.G. Nijenhuis, CEO of the company, will be granted a maximum

of 1,300,000 options depending on the fulfilment of certain conditions related to the company’s

performance. The options will be granted in one part of 100,000 options and six half yearly parts

of 200,000 options. The targets are defined by the supervisory board.

4.35.3 Options Mr W. Wagner

The options held by Mr W. Wagner, former CEO of the company can be shown as follows. In the

cancellation contract it had been agreed that all outstanding options would expire at 28 February

2005, except for the options granted in 2002, which would expire on 31 December 2005.

(x EUR 1,000)

Granted Options Granted Exercised Expired Options Exercise First date Last date

In 01-01-05 in 2005 in 2005 in 2005 31-12-05 price in € of exercise of exercise

2000 10,000 0 0 10,000 0 1.48 4 Feb 03 28 Feb 05

2001 10,000 0 0 10,000 0 1.12 2 Jan 04 28 Feb 05

2002 15,000 0 0 15,000 0 0.51 3 Jan 05 31 Dec 05

2004 15,000 0 0 15,000 0 0.68 1 Apr 07 28 Feb 05

Total 50,000 0 0 50,000 0

Rood Technology Annual Report 2005 55


Notes to the consolidated IFRS financial statements – continued

4.36 Depreciation of fixed assets

(x EUR 1,000)

2005 2004

Intangible fixed assets

Intangible fixed assets 81 47

Tangible fixed assets

Land and buildings 78 74

Machinery and equipment 658 1,178

Other fixed assets 86 73

Total 903 1,372

4.37 Other operating expenses

(x EUR 1,000)

2005 2004

Other operating expenses 1,578 1,396

Special items

Result selling off tangible fixed assets -23 -21

Total 1,555 1,375

The most important task of the external auditor is the audit of the annual accounts of Rood

Testhouse International. Furthermore, the external auditor assists with annual accounts-related

work. Tax advice is in principle given by specialist firms or specialised departments of local audit

firms, which are rarely involved in the audit of the annual accounts of the relevant subsidiary.

Other than these advisory services, Rood Testhouse International makes only limited use of the

external advisors. If such services are required specialists are engaged that are not associated

with the external auditor. The fees for the abovementioned services, which are included in Other

Expenses, are evaluated on a regular basis and in line with the market.

4.38 Financial income and expenses

(x EUR 1,000)

2005 2004

Interest expenses -147 -114

Total -147 -114

56

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.39 Income tax expense

(x EUR 1,000)

2005 2004

Current tax expense

Current year 0 0

Deferred tax from expense

Origination from and reversal of timing differences -1 23

Benefit of tax losses recognised 428 0

Total 427 23

4.40 Off balance sheet commitments

4.40.1 Operational leases as lessee

(x EUR 1,000)

2005 2004

Less than one year 148 54

Between one and five years 314 64

More than five years 0 0

Total 462 118

The Group leases a number of vehicles and equipment under operating leases. The leases

typically run for an initial period of between two and five years, with an option to renew the lease

after that date. Lease payments are increased annually to reflect market rentals. None of the

leases includes contingent rentals.

The Group does, in principle, not act as a lessor.

4.40.2 Rental commitments

The group rents its office in Zwolle (the Netherlands) for a period of five years with renewal

rights. The yearly rent amounts EUR 16,800.

4.40.3 Capital commitments

During the year ended 31 December 2005 the Group entered into a contract to purchase

property, plant and equipment for EUR 392,000 (2004: EUR nil).

4.40.4 Contingencies

The holding company has given a guarantee amounting to EUR 5,950 to a third party

The holding company and the majority of the Dutch operating companies form a fiscal unit for

corporate tax. Each of the operating companies is severally liable for tax to be paid by all

companies that belong to the fiscal unit.

Rood Technology Annual Report 2005 57


Notes to the consolidated IFRS financial statements – continued

4.41 Subsequent events

No significant events have taken place after balance sheet date.

4.42 Related parties

4.42.1 Remuneration of the statutory directors

In addition to their salaries, the Group contributes to a post-employment defined benefit plan on

their behalf. The CEO also participates in the Group’s share option programme (refer to 4.35.1).

(x EUR 1,000)

Fixed Valuation Total Total

Salary Bonus Pension Options 2005 2004

Mr Ph.M.G. Nijenhuis (CEO) 86,625 0 0 123,308 209,933 27,000

Mr W.Wagner (former CEO) 0 0 0 0 0 172,000

Total 86,625 0 0 123,308 209,933 199,000

The statutory director has been provided with a mobile telephone and also receives a limited

monthly allowance to cover expenses for a company car.

The remuneration of former director Mr W. Wagner in 2004, includes a redundancy payment. The

remuneration of the statutory directors is determined by the supervisory board. The

remunerations are adjusted as from 2004 based on the ‘managing directors agreement’ as of the

employment of the statutory director in September 2004. Upon determining the level of granted

options the realisation of company and personal targets are taken into account. The supervisory

board will define the targets each half year.

There are no guarantees or obligations towards or on behalf of the statutory directors. The

information of the options granted to members of the statutory directors is given on an individual

basis (see notes 4.35.1).

4.42.2 Remuneration of the Supervisory board

(x EUR 1,000)

2005

Mr C.W.M. Koot (Chairman) 11,345

Mr G.J.O. Wanrooy 9,076

Total 20,421

No options have been granted and no assets are available to the members of the supervisory

board. There are no loans outstanding to the members of the supervisory board and no

guarantees given on behalf of members of the supervisory board.

58

Rood Technology Annual Report 2005


Notes to the consolidated IFRS financial statements – continued

4.42.3 Other related party transactions

The group has not entered into any joint ventures

4.43 Parent company’s profit and loss account

The facility provided by Section 402, Part.9, Book2, of the Netherlands Civil Code has been

utilised in the preparation of the non-consolidated profit and loss account.

Rood Technology Annual Report 2005 59


5 Subsidiaries of Rood Testhouse International N.V.

(Including registered office and interest)

Unless stated otherwise, the direct of indirect interest of Rood Testhouse International N.V.

amounts to 100%. Insignificant subsidiary companies in terms of third party revenue and balance

sheet total have been deleted.

These subsidiary companies are fully incorporated into the consolidated annual accounts of Rood

Testhouse International N.V., unless stated otherwise.

Company % Office Country

Rood Technology International B.V. 100 Zwolle The Netherlands

Rood Technology Service GmbH 100 Nördlingen Germany

Rood Technology Deutschland Beteiligungs GmbH 100 Nördlingen Germany

Rood Technology Deutschland GmbH + Co 100 Nördlingen Germany

Rood Technology Dresden GmbH 100 Dresden Germany

60

Rood Technology Annual Report 2005


6 Statements of reconciliation on the first time adoption of IFRS

6.1 Introduction

As stated in note 4.1, these financial consolidated statements are the Group’s first statements

prepared in accordance with IFRS.

The accounting policies set out in note 4.3 until note 4.20 have been applied in preparing the

financial statements for the year ended at 31 December 2005, the comparative information

presented in these financial statements for the year ended at 31 December 2004 and in

preparation of an opening IFRS balance sheet as at 1 January 2004, (the Group’s date of

transition).

In preparing its opening IFRS balance sheet, the Group had adjusted amounts reported

previously in financial statements prepared in accordance with the Dutch GAAP. Explanation of

how the transition from Dutch GAAP to IFRS has affected the Group’s financial position, financial

performance and cash flows are set out in the following tables and the notes that accompany the

tables.

Rood Technology Annual Report 2005 61


6.2 Reconciliation of opening IFRS balance sheet

As at 1 January 2004 (x EUR 1,000)

1 January 2004

Effect of

Dutch

Gaap

transition

to IFRS IFRS

Assets

Non-current assets

Property, plant and equipment 6,521 6,521

Intangible assets 140 140

Deferred income tax assets 0 0

6,661 6,661

Current assets

Inventories 264 264

Trade and other receivables 1,661 1,661

Deferred income tax assets 0 0

Cash and cash equivalents 23 23

1,948 1,948

Total assets 8,609 8,609

Equity

Capital and reserves attributable to the

company’s equity holders

Share capital 17,365 17,365

Other reserves -14,172 -416 -14,588

Retained earnings 0 0

Total equity 3,193 -416 2,777

Liabilities

Non-current liabilities

Interest-bearing loans and borrowing 27 27

Convertible loan 0 0

Deferred income tax liabilities 1,364 1,364

Retirement benefit obligations 279 416 695

1,670 416 2,086

Current liabilities

Bank overdrafts 1,835 1,835

Current portion of long-term debt 380 380

Trade accounts and other payables 1,224 1,224

Current tax liabilities 307 307

3,746 3,746

Total liabilities 3,746 416 5,832

Total equity and liabilities 8,609 8,609

62

Rood Technology Annual Report 2005


6.3 Reconciliation of IFRS balance sheet

As at 31 December 2005, respectively 31 December 2004

(x EUR 1,000)

2005 2004

Dutch

Gaap

Assets

Non-current assets

Effect of

transition

to IFRS IFRS

Dutch

Gaap

Effect of

transition

to IFRS IFRS

Property, plant and equipment 6,597 6,597 6,014 6,014

Intangible assets 108 108 196 196

Deferred income tax assets 328 328 0 0

7,033 7,033 6,210 6,210

Current assets

Inventories 157 157 186 186

Trade and other receivables 1,274 1,274 1,243 1,243

Deferred income tax assets 100 100 0 0

Cash and cash equivalents 66 66 14 14

1,597 1,597 1,443 1,443

Total assets 8,630 8,630 7,653 7,653

Equity

Capital and reserves

attributable to the

Company’s equity holders

Share capital 18,887 18,887 18,178 18,178

Other reserves -15,860 -470 -16,330 -15,184 -416 -15,600

Retained earnings 603 -85 518 19 -54 -35

Total equity 3,630 -555 3,075 3,013 -470 2,543

Liabilities

Non-current liabilities

Interest-bearing loans and

borrowing 532 532 0 0

Convertible loan 750 750 0 0

Deferred income tax liabilities 1,402 1,402 1,401 1,401

Retirement benefit obligations 111 555 666 190 470 660

2,795 555 3,350 1,591 470 2,061

Current liabilities

Bank overdrafts 444 444 1,490 1,490

Current portion of long-term debt 266 266 210 210

Trade accounts and other payables 1,195 1,195 1,075 1,075

Current tax liabilities 300 300 274 274

2,205 2,205 3,049 3,049

Total liabilities 5,000 555 5,555 4,640 470 5,110

Total equity and liabilities 8,630 8,630 7,653 7,653

Rood Technology Annual Report 2005 63


6.4 Reconciliation of IFRS income statement

For the financial year 2005, respectively 2004

(x EUR 1,000)

2005 2004

Effect of

Effect of

Dutch

transition

Dutch

transition

Gaap

to IFRS

IFRS

Gaap

to IFRS

IFRS

Net sales 8,168 8,168 7,809 7,809

Change in work in progress 19 19 49 49

Costs of raw materials and

consumables 679 679 836 836

Personnel expenses 4,689 85 4,774 4,067 54 4,121

Depreciation of fixed assets 903 903 1,372 1,372

Other operating expenses 1,555 1,555 1,375 1,375

Total operating

expenses 7,845 85 7,930 7,699 54 7,753

Operating result 323 -85 238 110 -54 56

Financial income and expenses -147 -147 -114 -114

Result before income tax 176 -85 91 -4 -54 -58

Income tax expenses 427 427 23 23

Net result 603 -85 518 19 -54 -35

64

Rood Technology Annual Report 2005


6.5 Reconciliation of IFRS cash flow statement

As at 31 December 2005 and 31 December 2004 respectively

(x EUR 1,000)

2005 2004

Effect of

Effect of

Dutch

transition

Dutch

transition

Gaap

to IFRS

IFRS

Gaap

to IFRS

IFRS

Cash flows from

operating activities

Net result 603 -85 518 19 -54 -35

Depreciation 903 903 1,372 1,372

Decrease of provisions 147 85 232 -52 54 2

Result disposal of tangible

fixed assets 0 0 -21 -21

Changes in assets and

liabilities

- inventories 29 29 78 78

- trade receivables -131 -131 418 418

- deferred income tax assets -100 -100 0 0

- other receivables 146 146 -182 -182

Cash flows from

operating activities 1,597 0 1,597 1,632 0 1,632

Cash flows from

investing activities

Purchases of property, plant

and equipment -1,405 -1,405 -826

-

826

Purchases of intangibles

7 7 -103 -103

assets

Increase deferred tax assets -328 -328 0 0

Disposal of tangible fixed

0 0 29 29

assets

Cash flows from

investing activities -1,726 -1,726 -900 -900

Rood Technology Annual Report 2005 65


2005 2004

Dutch

Gaap

Effect of

transition

to IFRS IFRS

Dutch

Gaap

Effect of

transition

to IFRS IFRS

Cash flows from

financing

Issuances of new shares 0 0 22 22

Proceeds from other reserves 0 0 -60 -60

Proceeds from issuance of

convertible loan

Proceeds from issuance of

new convertible loan 750 750 0 0

Proceeds from new interest

bearing loans 798 798 420 420

Repayment of borrowings -210 -210 -617 -617

Dividend (=interest of

convertible loan) -107 -107 -157 -157

Capital tax -4 -4 -4 -4

Cash flows from

financing

1,227 1,227 -396 -396

Net decrease)/increase

in cash and bank

overdrafts 1,098 1,098 336 336

Cash and bank overdrafts at

the beginning of the year -1,476 -1,476 -1,812 -1,812

Cash and bank overdrafts at

end of the year -378 -378 -1,476 -1,476

Change in cash at banks

and bank overdrafts 1,098 1,098 336 336

66

Rood Technology Annual Report 2005


6.6 Explanation of transition to IFRS

6.6.1 Equity

In the transition to IFRS shareholders’ equity has been corrected by a decrease of EUR 416,000

as at 1 January 2004; by a decrease of EUR 470,000 as at 31 December 2004; and by a decrease

of EUR 555,000 as at 31 December 2005.

6.6.2 Employee benefits

6.6.2.1 Pensions

Under Dutch GAAP the Group recognised the contribution and the related staff costs on the basis

of premiums charged. The Group has adopted the IAS 19 amendment of December 2004 which

permits an entity to recognise all actuarial gains and losses in the period in which they occur

outside profit and loss in the statement of recognised income and expense. The Group has

elected under IFRS to recognise all cumulative actuarial gains and losses at the date of transition

to IFRS. As a consequence the employee benefits have been corrected by EUR 416,000 as at 1

January 2004; by EUR 470,000 as at 31 December 2004; and by EUR 555,000 as at 31

December 2005, in the transition from Dutch GAAP to IFRS.

6.6.2.2 Share-based payments

The Group applied IFRS 2 to its active share-based arrangements on 1 January 2005, except for

equity-settled share-based payment arrangements granted before 7 November 2005. Under

Dutch GAAP these equity-settled share-based payments arrangements were not valued at

balance sheet date (but only disclosed in notes to the financial statements).

Rood Technology Annual Report 2005 67


7 Dutch GAAP annual report

7.1 General

The annual accounts of Rood Testhouse International N.V. as presented hereafter are prepared in

conformity with Generally Accepted Accounting Principles in the Netherlands and compliant with

the legal requirements concerning annual reporting as included in Part 9 of Book 2 of the

Netherlands Civil Code. Note that the consolidated Dutch GAAP financial statements are already

presented in the forgoing chapter 6: Statements of reconciliation on the first time adoption of

IFRS.

These accounting principles are generally in accordance with the valuation principles as applied in

the primary consolidated annual accounts prepared under IFRS. Reference is made to the

accounting principles set out in note 4.3 until note 4.20 of this annual report.

The notes to the consolidated Annual Accounts under IFRS form an integral part of the Annual

Accounts prepared under Dutch GAAP. Material differences are separately disclosed in this

section.

7.2 Presentation

Referring to article 362, clause 4 of Part 9 of Book 2 of the Netherlands Civil Code, there is a

deviation from the rules on Models of Annual Accounts for the presentation of profit and loss

account. This deviation is amongst others because of comparison purposes.

7.3 Research and development

The Group is deeply committed to research and development. However, as research and

development is frequently contained within projects at cost price, or lower, a precise

quantification of the amounts incurred is not possible.

7.4 Tangible fixed assets

Refer to note 4.5 to the consolidated IFRS financial statements.

7.5 Financial fixed assets

Long-term receivables included here are stated at nominal value less any provisions considered

necessary.

7.6 Stocks of consumables and work in progress

Refer to note 4.7 and 4.8.1. Unlike under IFRS work in progress is presented in total separately

from advances received in total which are included in short-term liabilities.

68

Rood Technology Annual Report 2005


7.7 Receivables

These receivables are stated at nominal value less a provision for doubtful debts if required.

7.8 Liquid assets

Refer to note 4.9 to the consolidated IFRS financial statements.

7.9 Liabilities and loans

Long-term and current liabilities and loans are stated at their nominal amounts.

7.10 Provisions

Provisions are built up for actual or legally enforceable obligations and are taken into account at

nominal value except for those relating to the Group’s obligations for pension back service, which

are based upon actuarial valuations.

7.11 Deferred taxes

Deferred taxes arise as a result of temporary differences between the business economic and

fiscal valuation of assets and liabilities. The deferred taxes are included at nominal value and

calculated using the tax rates valid on the balance sheet date. Deferred tax receivables are only

included as far as they are offset by deferred tax obligations that relate to the same periods or if

in some other manner there is high degree of probability that these deferred receivables can be

realised. Deferred tax assets are included as other receivables.

7.12 Contingent liabilities

These include conditional and unconditional liabilities resulting from agreements such as

guarantees, lease obligations etcetera.

7.13 Net sales

Refer to note 4.17 to the consolidated IFRS financial statements.

7.14 Depreciation

Refer to note 4.5.4 to the consolidated IFRS financial statements.

7.15 Impairment of assets

Refer to note 4.10 to the consolidated IFRS financial statements.

7.16 Personnel expenses and other operating costs

Personnel expenses and other operating costs are reported in the period to which they relate.

Rood Technology Annual Report 2005 69


7.17 Interest receivable (payable)

These relate to interest income receivable from and expenses payable to third parties.

7.18 Taxes

These are computed on the commercial result before tax and after taking into account all fiscal

facilities available. Taxes on profit are computed in accordance with the rates of taxation in the

various countries in which companies of the Group operate. Amounts of tax which have not yet

fallen due and are caused by timing differences are included in the deferred tax assets / liabilities.

7.19 Accounting principles for the cash flow statement

Refer to note 4.20 to the consolidated IFRS financial statements.

70

Rood Technology Annual Report 2005


8 Dutch GAAP company balance sheet (before appropriation of net-result)

(x EUR 1,000)

As at 31 December

2005 2004

Assets

Non-current assets

Fixed assets

Property, plant and equipment 11 0

Financial fixed assets

10.1.1 Group companies 1,764 1,006

10.1.2 Loans to group companies 2,134 2,334

3,909 3,340

Current assets

Receivables

Group companies 45 0

Taxation and social security 6 1

Other receivables 0 0

Cash and cash equivalents 40 11

91 12

Total assets 4,000 3,352

Equity

Share capital 2,185 1,494

Paid in surplus 16,702 16,684

Legal reserve 2,209 2,208

Other reserves -19,156 -18,673

Retained earnings 411 -138

10.2 Total equity 2,351 1,575

Liabilities

Non-current liabilities

10.3 Subordinated convertible loan 750 732

Current liabilities

Bank overdrafts 0 0

10.3 Current portion of long-term debt 724 706

Group companies 57 294

Trade accounts and other payables 90 41

Current tax liabilities 28 4

Total liabilities 1,649 1,777

Total equity and liabilities 4,000 3,352

Rood Technology Annual Report 2005 71


9 Dutch GAAP company income statement

(x EUR 1,000)

For the year ended

2005 2004

Net profit from group companies 703 171

Other income -292 -309

9.4 Net profit 411 -138

72

Rood Technology Annual Report 2005


10 Notes to the Dutch GAAP company financial statements

10.1 Financial fixed assets

10.1.1 Group companies

This item relates to wholly-owned subsidiaries. Movements in this item in the year under review

were as follows:

(x EUR 1,000)

2005 2004

Balance as at 1 January 1,006 58

Effect IFRS -470 0

Addition tax provision/other reserve 0 -60

Addition due to partial loan conversion 500 1,000

Profit of group companies 703 171

Addition due to Share capital group companies 25 0

Change in provision on loans to group companies -163

Balance as at 31 December 1,764 1,006

10.1.2 Loans to group companies

This item relates to three subordinated loans issued to the German group company. A loan

amounting to EUR 1,034,000 is subordinated to all other liabilities. A loan amounting to

EUR 800,000 and a loan amounting EUR 300,000 is subordinated to bank debts. During 2005 and

2004 part of the loans issued to the German Group company was converted into equity. The

converting during 2005 took place under conditions.

The interest rate is between 4.5% and 9%.

Movements in this item were as follows:

(x EUR 1,000)

2005 2004

Balance as at 1 January 2,334 3,171

New loan 300 0

Conversion into equity -500 -1,000

Change in provision on loans to group companies -163

Balance as at 31 December 2,134 2,334

Rood Technology Annual Report 2005 73


Notes to the Dutch GAAP company financial statements – continued

10.2 Equity

10.2.1 Legal reserves

This item comprises of the revaluation reserve related to land and buildings, as well as the legal

reserve for capitalised development costs. The movements were as follows:

(x EUR 1,000)

Develop-

Revaluation

ment

Total

Total

reserve

Costs

2005

2004

Balance as at 1 January 2,012 196 2,208 2,186

Addition due to correction revaluation

reserve 88 0 88 0

Addition due to capitalised

development costs 0 -7 -7 103

Realised through depreciation 1 -81 -80 -81

Balance as at 31 December 2,101 108 2,209 2,208

10.2.2 Movements in total equity

The movements in equity were as follows:

(x EUR 1,000)

Issued

Share- Paid-in Legal Other Total Total

capital surplus reserve reserves 2005 2004

Balance as at 1 January 1,494 16,684 2,208 -18,811 1,575 1,277

Effect IFRS 0 0 0 -470 -470 0

Addition other reserve 0 0 0 0 0 -60

Employee options exercised 0 0 0 3 3 0

Valuation options granted 0 0 0 123 123 0

Capital tax 0 -4 0 0 -4 -4

Placement costs 0 0 0 0 0 22

Conversion convertible loan 691 22 0 0 713 478

Reserve development costs 0 0 89 -89 0 0

Reserve building revaluation 0 0 -88 88 0 0

2,185 16,702 2,209 -19,156 1,940 1,713

Appropriation of result 0 0 0 411 411 -138

Balance as at 31 December 2,185 16,702 2,209 -18,745 2,351 1,575

74

Rood Technology Annual Report 2005


Notes to the Dutch GAAP company financial statements – continued

10.2.3 Reconciliation with total equity in the Consolidated IFRS balance sheet

The total equity amounting to EUR 3,075,000 (2004: EUR 2,543,000) differs from the Group’s

total equity in IFRS presented in the reconciliation of IFRS balance sheet (refer to note 6.2). Due

to the obliged conversion, the subordinated convertible loan is regarded as part of the equity in

the consolidated IFRS balance sheet (refer to note 6.2). The reconciliation can be shown as

follows:

(x EUR 1,000)

2005 2004

Total equity in Company balance sheet 2,351 1,575

Effect IFRS 0 -470

Subordinated convertible loan as at 31 December 724 1,438

Group equity in Consolidated Dutch IFRS

balance sheet 3,075 2,543

10.3 Subordinated convertible loan

This item refers to a 9% interest-bearing subordinated convertible loan. Repayment will take

place by converting the agreed thirteen quarterly instalments, varying from EUR 83,000 up to

EUR 211,000, into newly issued ordinary shares of the Company at a fixed conversion price of

EUR 0.1134.

The new convertible loan amounts to a total of EUR 1,000,000. At 31 December 2005 the amount

of EUR 750,000 has been received by the Company. The fourth instalment will find place on 15

January 2006. The convertible notes were issued on 29 April 2005.

The loan shall be redeemed by the Company in four consecutive annual payments starting 15

April 2009. The amount of each redemption will be EUR 250,000. Interest of 4.5% will be paid

annually up tilt that settlement date.

After 1 January 2008 the Company has the right to redeem the outstanding amount of the loan in

shares, subject to the average share price exceeding 130% - during 30 consecutive training days

– of the conversion price of EUR 0.84. The share related to this early redemption will be

transferred to the lender within five days after the 30 days period ended.

Movements in this item were as follows:

(x EUR 1,000)

2005 2004

Balance as at 1 January 1,438 1,916

New loan 750 0

Conversions -713 -478

Balance as at 31 December 1,475 1,438

Rood Technology Annual Report 2005 75


Notes to the Dutch GAAP company financial statements – continued

(x EUR 1,000)

2005 2004

Presented under

Non-current liabilities:

Subordinated convertible loan 750 732

Current liabilities

Current portion of long-term debt 725 706

Total 1,475 1,438

10.4 Reconciliation with profit in the Consolidated IFRS income statement

The net profit amounting EUR 411,000 (2004: EUR -138,000) differs from the Group’s net profit

in IFRS presented in the reconciliation of IFRS income statement (refer to note 5.3). The

difference is resulting from the fact that in the consolidated IFRS income statement the interest

payment of the convertible loan amounting to EUR 107,000 (2004: EUR 157,000) is regarded as

a dividend payment. In the Company income statement this amount is taken into account as

interest expenses.

(x EUR 1,000)

2005

Net profit in the Company income statement 411

Interest on the convertible loan 107

Net profit in Consolidated IFRS income

statement 518

10.5 Guarantees

In principle the company does not provide parent company guarantees in favour of its

subsidiaries.

Amsterdam, 1 March 2005

Board of Management

Ph. M.G. Nijenhuis, CEO

Corporate Management Team

Ph. M.G. Nijenhuis, Group CEO

Dr. A. Kotz Dipl.-Ing., Group CTO

W.H. Gomarus AA, Group CFO

Supervisory board

C.W.M. Koot, Chairman

G.J.O. Wanrooy

76

Rood Technology Annual Report 2005


11 Other information

11.1 Auditors’ report

11.1.1 Introduction

We have audited the Annual Report of Rood Testhouse International N.V., Amsterdam, for the

year 2005 as set out on page 35 to 76. This Annual Report consists of the consolidated financial

statements and the company financial statements. This Annual Report is the responsibility of the

company’s management. Our responsibility is to express an opinion on this Annual Report based

on our audit.

11.1.2 Scope

We conducted our audit in accordance with auditing standards generally accepted in the

Netherlands. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the Annual Report is free of material misstatements. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the Annual

Report. An audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the Annual Report. We

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

11.1.3 Opinion with respect to the consolidated financial statements

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

position of the company as at 31 December 2005 and of the result and the cash flow for the year

then ended in accordance with International Financial Reporting Standards as is explained in this

Annual Report and as adopted by the EU and also comply with the financial reporting

requirements included in Part 9 of Book 2 of the Netherlands Civil Code as far as applicable.

Furthermore we have established to the extent possible that the Annual Report is constitent with

the consolidated financial statements.

11.1.4 Opinion with respect to the company financial statements

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

of the company as at 31 December 2005 and of the result for the year then ended in accordance

with accounting principles as explained in this Annual Report and as generally accepted in the

Netherlands and also comply with the financial reporting requirements included in Part 9 of Book

2 of the Netherlands Civil Code.

Furthermore we have established to the extent possible that the Annual Report is consistent with

the company financial statements.

Amsterdam, 1 March 2005

MAZARS PAARDEKOOPER HOFFMAN N.V.

P.J. Steman RA

Rood Technology Annual Report 2005 77


Post balance sheet date events

Reference is made to note 4.41

11.2 Profit appropriation

Article 27 of the Articles of Association contains ‘inter alia’ the following provisions for profit

appropriation:

1. The company may pay dividends and make other distributions only to the extent that its

equity exceeds the amount of the paid-up and called-up portion of the Share capital plus

the reserves which must be maintained by law and under these articles.

2. Subject to the prior approval of the Supervisory board, the Management Board is

authorised to add any profit in whole or in part to the reserves.

3. Any profit remaining after reservation referred to in the preceding paragraph shall be at

the disposal of the Annual General Meeting.

4. To the extent that the General Meeting of Shareholders does not resolve to distribute the

profit for any financial year, such profit shall be added to the reserves.

11.3 Proposed profit appropriation

In accordance with Article 27 of the Articles of Association we propose to add the whole result to

the reserves.

78

Rood Technology Annual Report 2005


Addresses and business management

Rood Testhouse International N.V.

Burgemeester van Roijensingel 13

NL-8011 CT Zwolle

Board of management

Ph.M.G. Nijenhuis, CEO

Registered office:

Rokin 55, NL-1012 KK Amsterdam

Correspondence address:

P.O. Box 1042

NL-8001 BA Zwolle

Members of corporate

management

Dr. A. Kotz, CTO

W.H. Gomarus, CFO

Telephone: +31 (0) 38 4215 216

Fax: +31 (0) 38 4216 410

Email:

info@roodtechnology.com

Website: www.roodtechnology.com

Companies

Rood Technology Deutschland GmbH & Co

Management

Oettinger Strasse 6

Rood Technology Deutschland

D-86720 Nördlingen Beteiligungs GmbH

Telephone: +49 (0) 9081 804-0

Fax: +49 (0) 9081 804-208

Rood Technology Service GmbH

Management

Oettinger Strasse 6

Ph.M.G. Nijenhuis

D-86720 Nördlingen Dr. A. Kotz

Rood Technology Deutschland Beteiligungs GmbH Management

Oettinger Strasse 6

Ph.M.G. Nijenhuis

D-86720 Nördlingen Dr. A. Kotz

Rood Technology Dresden GmbH

Management

Maria–Reiche-Strasse 7

Dr. A. Kotz

D-1109 Dresden W.H. Gomarus

Telephone: +49 (0) 351 205 666-0

Rood Technology Annual Report 2005 79


Rood Testhouse International N.V.

Annual Report 2005