Consolidated Financial Statements - SAES Getters

Consolidated Financial Statementsfor the year endedDecember 31, 2005

Consolidated Income Statement(thousands of euro)NotesContinuingoperations2005 2004DiscontinuedoperationsTotalContinuingoperationsDiscontinuedoperationsTotal net sales 3 134,706 3,874 138,580 132,906 8,743 141,649Cost of sales 4 (58,739) (3,398) (62,137) (62,261) (7,497) (69,758)Gross Profit 75,967 476 76,443 70,645 1,246 71,891Research & development expenses 5 (14,629) 0 (14,629) (13,557) 0 (13,557)Selling expenses 5 (14,824) (415) (15,239) (14,647) (1,322) (15,969)General & administrative expenses 5 (13,791) (303) (14,094) (12,872) (455) (13,327)Total operating expenses (43,244) (718) (43,962) (41,076) (1,777) (42,853)Other income (expenses), net 6 355 (72) 283 597 36 633Operating income 33,078 (314) 32,764 30,166 (495) 29,671Interest and other financial income (expenses), net 7 1,299 (3) 1,296 1,570 (97) 1,473Share of result of associates 0 0 0 0Net loss on discontinued operations 11 0 (106) (106)Foreign exchange gains (losses), net 8 1,157 1,157 (1,102) (31) (1,133)Income before taxes 35,534 (423) 35,111 30,634 (623) 30,011Income taxes 9 (14,104) (14,104) (13,950) 86 (13,864)Net Income 21,430 (423) 21,007 16,684 (537) 16,147Net income per ordinary share 10 0.9504 0.9315 0.7211 0.6979Net income per savings share 10 0.9665 0.9476 0.7211 0.6979TotalConsolidated Financial Statements 2005 26

Consolidated Balance Sheet(thousands of euro)SHAREHOLDERS' EQUITY AND LIABILITIESNotesDecember 31,2005December 31,2004ASSETSNon Current AssetsProperty, plant and equipment, net 13 60,493 59,769Intangible assets, net 14 2,695 3,586Investments accounted for using the equity method 15 450 0Deferred tax assets 16 8,655 8,959Other long term assets 17 1,036 1,104Total Non Current Assets 73,329 73,418Current AssetsInventory 18 17,533 15,736Trade receivables 19 29,286 28,581Tax consolidation receivables from parent company 20 4,737 0Prepaid expenses, accrued income and other 21 6,270 7,927Treasury shares 0 2,505Cash and cash equivalents 22 93,243 87,511Total Current Assets 151,069 142,260Total Assets 224,398 215,678Capital stock 12,220 12,220Share issue premium 38,273 38,292Treasury shares (2,618) 0Legal reserve 2,444 2,444Sundry reserves, retained earnings and accumulated losses 99,271 100,147Net income for the period 21,007 16,147Shareholders’ equity 23 170,597 169,250Minority interest in consolidated subsidiaries 0 0Total Shareholders’ equity 170,597 169,250Non Current LiabilitiesNon current financial liabilities 25 3,434 3,691Deferred tax liabilities 26 3,842 2,504Staff leaving indemnity and other employee benefits 27 10,752 9,959Non current provisions 28 940 934Other payables 154 124Total Non Current Liabilities 19,122 17,212Current LiabilitiesTrade payables 29 8,949 9,764Tax consolidation payables to parent company 20 4,318 0Other payables 30 11,630 9,848Accrued income taxes 31 2,989 2,911Current provisions 28 105 867Derivative financial instruments evaluated at fair value (cash flow hedge) 32 893 0Bank overdraft 33 2,798 3,111Current portion of long term debt 25 257 255Accrued liabilities 34 2,740 2,460Total Current Liabilities 34,679 29,216Total Liabilities and Shareholders’ equity 224,398 215,67827Saes Getters Group

Consolidated Statement of Cash flows(thousands of euro)2005 2004Net cash provided from operating activitiesNet income 21,007 16,147Current income taxes 9,586 11,254Change in deferred income tax expense 2,010 2,050Depreciation of property, plant and equipment 9,655 10,924Write down of property, plant and equipment 1,235 143Amortization of intangible assets 1,241 1,187Write down of intangible assets 306 68Net loss (gain) on disposal of property, plant and equipment (104) (920)Net loss (gain) on disposal of investments 328 0Interest and other financial income, net (1,190) (1,473)Accrual for termination indemnities 1,808 1,989Accrual (utilization) for risks and contingencies (832) (542)45,050 40,827Change in operating assets and liabilitiesCash increase (decrease) inAccount receivables and other receivables (113) 1,244Inventories (331) 2,774Trade account payables (154) (753)Other payables 2,476 (1,379)1,878 1,886Payments of termination indemnities (1,274) (1,922)Interest and other financial payments (173) (197)Interest and other financial receipts 1,661 1,422Income taxes paid (9,891) (6,669)Cash flow from operating activities 37,251 35,347Cash flows used by investing activitiesPurchase of property, plant and equipment (9,606) (7,880)Proceeds from sales of property, plant and equipment 174 1,767Purchase of intangible assets (334) (615)Decrease (increase) of non current financial assets (450) 76Proceeds from the sale of investments in subsidiaries, net of cash disposed of 246 0Cash flow from investing activities (9,970) (6,652)Net cash used by financing activitiesProceeds from long-term debt 0 1,493Dividends paid (22,548) (3,470)Purchase of treasury shares (121) 0Repayments of financial debt (257) (293)Cash flow from financing activities (22,926) (2,270)Effect of exchange rate differences 1,690 (706)Increase (decrease) in cash and cash equivalents 6,045 25,719Cash and cash equivalents at beginning of the year* 84,400 61,186Cash and cash equivalents at end of the period 90,445 86,905* The Company has adopted the possibility allowed by the IFRS 1 to define the transition date to the IAS 32 and 39 as from January 1, 2005,Therefore, treasury shares (€2,505 thousand as at December 31, 2004) have been deducted from net equity as from January 1, 2005.Consolidated Financial Statements 2005 28

Statement of Changes in the Consolidated Shareholders' Equityduring the Period Ending December 31, 2005(thousands of euro)Capital stockShare issue premiumTresury sharesBalance at December 31, 2004 12,220 38,292 0 2,444 (1,262) 101,409 100,147 16,147 169,250Reallocation of treasury shares (IAS 32) (2,505) 0 (2,505)Application of cash flow hedge (IAS 39) 1,162 1,162 1,162Appropriation of 2004 income: 16,147 16,147 (16,147) -Dividends paid:- Euro 1.0000 for each of the 15,271,350ordinary shares (of which treasuryshares 302,028) (14,969) (14,969) (14,969)- Euro 1.0161 for each of the 7,460,619savings shares (of which treasuryshares 729) (7,579) (7,579) (7,579)Purchase and sale of treasury shares (113) 9 9 (104)Reserve for cash flow hedge (IAS 39) (1,632) (1,632) (1,632)Exchange rate differences fromconversion of financial statementsdenominated in foreign currencies5,914 5,914 5,914Other movements (19) 72 72 53Net income for the period 21,007 21,007Balance at December 31, 2005 12,220 38,273 (2,618) 2,444 4,652 94,619 99,271 21,007 170,597Legal reserveSundry reserves, retained earningsand accumulated lossesCurrency translationreserveOtherTotalNet income (loss) for theperiodTotal shareholders' equity29Saes Getters Group

Statement of Changes in the Consolidated Shareholders' Equityduring the Period Ending December 31, 2004(thousands of euro)Capital stockShare issue premiumTresury sharesBalance at January 1, 2004 12,220 38,292 0 2,444 0 110,377 110,377 (5,498) 157,835Appropriation of 2003 losses: (5,498) (5,498) 5,498 -Dividends paid:- euro 0.15 for each of the 13,874,930ordinary shares (of which treasury shares191,128)(2,052) (2,052) (2,052)- euro 0.15 for each of the 9,625,070 savingsshares (of which treasury shares 173,306) (1,418) (1,418) (1,418)Exchange rate differences fromconversion of financial statementsdenominated in foreign currencies (1,262) (1,262) (1,262)Net income for the period 16,147 16,147Balance at December 31, 2004 12,220 38,292 0 2,444 (1,262) 101,409 100,147 16,147 169,250Legal reserveSundry reserves, retained earningsand accumulated lossesCurrency translationreserveOtherTotalNet income (loss) for theperiodTotal shareholders' equityConsolidated Financial Statements 2005 30

Accounting principles and notes to consolidated financial statements1. Group profileSaes Getters S.p.A., the parent company, and its subsidiaries operate both in Italy and abroadin the development, production and marketing of getters and other components for cathode raytubes and flat panel displays as well as getters and other components for industrial applications,and in the gas purification industry. The Group also operates in the field of advanced materials,particularly in the development of getters for microelectronic and micromechanical systems,optical crystals, shape memory alloys and metalorganic precursors.The parent company Saes Getters S.p.A. is controlled by S.G.G. Holding S.p.A.The following table shows the companies included in the scope of consolidationaccording to the full consolidation method as of December 31, 2005:Company Currency Capital StockDirectly-Controlled subsidiaries:% OwnershipDirectIndirectSaes Advanced Technologies S.p.A.Avezzano (L’ Aquila - Italy) Euro 2,600,000 100.00 -Saes Getters Usa, Inc.Colorado Springs (Colorado - USA) $USA 9,250,000 100.00 -Saes Getters Japan Co., Ltd.Shinagawa - Tokyo (Japan) Yen 20,000,000 100.00 -Saes Getters (GB) Ltd.Daventry (UK) GBP 20,000 100.00 -Saes Getters (Deutschland) GmbHColonia (Germany) Euro 52,000 100.00 -Saes Getters Singapore Pte Ltd.Singapore $Sing. 300,000 100.00 -Saes Getters International Luxembourg S.A.Luxemburg Euro 11,312,777 99.92 0,08*Indirectly-controlled subsidiaries:Throught Saes Getters Usa, Inc.:Saes Pure Gas, Inc. - San Luis Obispo (California - USA) $USA 7,612,661 - 100.00Throught Saes Getters International Luxembourg S.A.:Saes Getters Korea Corporation - Seoul (Korea) Won 10,497,900,000 37.48 62.52Saes Getters Technical Service (Shanghai) Co., Ltd.Shanghai (People’s Repubblic of China) $USA 4,100,000 - 100.00Saes Getters America, Inc.Cleveland (Ohio - USA) $USA 22,000,000 - 100.00* % held by Saes Advanced Technologies S.p.A.The following table shows the company included in the scope of consolidation accordingto the proportionate consolidation method:Company Currency Capital Stock% OwnershipDirectIndirectNanjing Saes Huadong Getters Co., Ltd.Nanjing (People’s Repubblic of China) $USA 13,570,000 65.00 -31Saes Getters Group

The following table shows the company included in the scope of consolidation accordingto the equity method:Company Currency Capital Stock% OwnershipDirect IndirectScientific Materials Europe S.r.l.Tortolì (Nuoro - Italia) Euro 93,600 30.00 -With respect to December 31, 2004 the following changes in the consolidation areaoccurred:- on September 29, 2005 the liquidation procedure of the subsidiary Saes GettersIreland Limited was completed;- effective July 29, 2005 the subsidiary FST Consulting International, Inc. was sold. Thissubsidiary was excluded from the consolidated financial statements starting from thesame date;- on September 30, 2005 a 30% shareholding of Scientific Materials Europe S.r.l. wasacquired;- on November 23, 2005 Saes Getters America, Inc., was incorporated. In December2005 such company merged with New Trace Analytical, Inc.It should be noted that starting from December 2, 2005 the parent company SaesGetters S.p.A. incorporated a branch in Taiwan. Such office will allow to supply moreefficiently and directly local customers and to take advantage of the interesting businessopportunities offered by this market.2. Summary of main accounting principlesFollowing the entry into force of EC Regulation no. 1606/2002, the Saes Getters Groupadopted IAS/IFRS accounting standards as from January 1, 2005. 2005 Consolidatedfinancial statements were prepared according to IAS/IFRS accounting standards adoptedby the European Union.The same standards were adopted in preparing the comparative balance sheets, incomestatements and cash flow statements, with the exception of the measurement andrecognition of financial instruments, particularly with regard to exchange risk hedges andthe recognition of treasury shares. The Company in fact exercised the option specifiedin IFRS 1 to define the date of transition as January 1, 2005 for IAS 32 and 39.As part of the first-time adoption, IFRS 1 "First-time adoption of International FinancialReporting Standards" was applied. For the description of the effects arising from the transitionto International Financial Reporting Standards (IAS/IFRS), please refer to note no. 40,containing the reconciliation between shareholders' equity according to Italian AccountingPrinciples and according to International Financial Reporting Standards (IAS/IFRS), both as ofthe transition date (January 1, 2004) and as of the reporting date for the last annual financialstatements prepared in accordance with the accounting principles previously utilized(December 31, 2004), and the same reconciliation related to 2004 net income.It should be noted that, having exercised the option specified in Article 4, sub-section 2of Legislative Decree no. 38/2005 on the exercising of the options provided for in ECConsolidated Financial Statements 2005 32

Regulation no. 1606/2002 on accounting standards, the parent company and thesubsidiary Saes Advanced Technologies S.p.A. prepared their financial statements as ofDecember 31, 2005 according to international accounting standards.The main accounting standards applied are described below.Consolidation principlesThe main consolidation principles adopted in drawing up the consolidated financialstatements are as follows:- The book value of investments in share capital is eliminated against the respectiveproportion of shareholders' equity in respect of the assumption of assets andliabilities, according to the full consolidation method.- In accordance with IAS 31, the book value of investments in jointly controlled companiesincluded in the consolidated financial statements according to the proportionateconsolidation method is eliminated against the respective fraction of shareholders' equitypertaining to the Group in respect of the assumption of assets and liabilities for theamount corresponding to the Group's percentage investment. Each item of the incomestatement is also entered in the consolidated financial statements for the amountcorresponding to the Group's percentage investment. Debit and credit items and all othertransactions between the jointly controlled company and the subsidiaries are eliminatedaccording to the Group's percentage ownership. Residual balances are recognized in thebalance sheet and in the income statement together with third party transactions.- Any positive difference between the cost of acquisition and the subsidiaries' equityshare, expressed at the fair value at the time of acquiring the investment, if thenecessary requirements are met, is posted as "Goodwill".- Profits and losses not yet realized arising from transactions between consolidatedcompanies are eliminated as are debit and credit items and all other transactionsbetween the companies included in the scope of consolidation.- The financial statements of foreign subsidiaries are converted into the currency of account(euro) by applying the current year-end exchange rate to assets and liabilities and theaverage exchange rate for the year to income statement entries. The difference betweennet income for the period obtained from converting at average exchange rates and netincome for the period obtained from converting at year-end rates is entered in a special subitemof the shareholders' equity "Currency translation reserve" included in the item "Sundryreserves and retained earnings". The same item also considers the effect on shareholders'equity of changes in exchange rates between the end of the previous financial year and theend of the current financial year. On the disposal of a foreign subsidiary, the cumulativeamount of exchange differences booked in the shareholders' equity for the foreignsubsidiary disposed of are reversed to income statement.Details of the exchange rates applied in the conversion of financial statementsexpressed in a foreign currency are given in note no. 41.Accounting schemesThe balance sheet layout conforms to the minimum content required by internationalaccounting standards and is based on a distinction between current and non-currentassets and liabilities depending on whether these items are realized within or after33Saes Getters Group

twelve months of the balance sheet date. The income statement is based on a costallocation structure.The accounting schemes are consistent with the reports prepared for the internalorganizational and management structure. The statement of cash flows layout is basedon the indirect method.Property, plant and equipmentThese are stated at cost or deemed cost, less accumulated depreciation and impairmentlosses. The cost includes additional charges and direct and indirect production costs inthe amount reasonably attributable to the asset.Maintenance costs incurred after first recognition are capitalized only if they bring aboutan increase in the future economic benefits of the assets to which they relate.Some fixed assets were measured at fair value on the date of transition to InternationalFinancial Reporting Standards (IAS/IFRS) and are measured at deemed cost, whichconsists of the amount adjusted by the Group's Italian companies in accordance with thespecific monetary revaluation laws at the time of these revaluations.Depreciation is calculated on a straight-line basis according to the expected useful life ofthe fixed assets, using the following rates:Buildings 2.5%-3%Machinery and equipment 10%-25%Industrial and commercial equipment 20%-25%Other assets 7%-25%Finance leases are classified as those which transfer to the lessee substantially all therisks and rewards incidental to ownership. Fixed assets acquired under finance leasesare recognized at the lower of fair value and the present value of the minimum leasepayments owed, according to the contracts, and are depreciated on the basis of theirexpected useful life. The liability to the lessor is classified amongst financial liabilities inthe balance sheet. Interest included in the lease payments is charged to the incomestatement for the period as financial expenses.Other leases are considered as operating leases and the respective costs are recognizedon the basis of the conditions stipulated in the respective contracts.Intangible assetsIn accordance with IAS 38, intangible assets are recognized only if they are identifiable, iffuture economic benefits will probably flow from their use and if their cost can be reliablymeasured.Intangible assets are amortized according to their estimated useful life, if finite, asfollows:- Industrial and other patent rights 3-5 years/duration of the contract- Concessions, licenses, trademarksand similar rights3-50 years/duration of the contract- Other 3-8 years/duration of the contractIntangible assets with an indefinite useful life are not amortized but are assessed for impairmentat least annually or according to the frequency determined by impairment risk indications.Consolidated Financial Statements 2005 34

Subsequent expenditure is recognized only if it increases the economic benefitsexpected from the use of the intangible assets to which it relates.GoodwillAny positive difference between the cost of acquisition of a business combination andthe fair value of the assets and liabilities acquired is stated amongst intangible assets asgoodwill. Any negative difference is charged to the income statement at the time ofacquisition.Goodwill is not amortized but must be tested for impairment in accordance with IAS 36Impairment of assets, at least annually or according to the frequency determined byimpairment risk indications. After initial recognition, goodwill is stated at cost less anyimpairments recognized.During the first-time adoption of International Financial Reporting Standards, the Grouptook advantage of the specific exemption allowed under IFRS 1 which makes it possibleto avoid the retrospective application of IFRS 3 Business combinations for acquisitionsmade prior to the date of transition to IFRS. Therefore, the goodwill generated byacquisitions prior to January 1, 2004 is stated at the value determined according to theaccounting principles previously applied, after measuring and recognizing any lastingimpairments.Research and development expensesThe expenses incurred in research activities undertaken to acquire new scientific ortechnical knowledge or to broaden existing knowledge are charged to the incomestatement.The expenses incurred in development activities where research findings are applied tonew or substantially improved products and processes are capitalized if all of thefollowing conditions are met:- technical feasibility, intention to complete the asset for use or sale, ability to useor sell the asset;- likely to generate future economic benefits from the expenditure incurred (inparticular by demonstrating the existence of a market for the asset beingdeveloped);- availability of technical and financial resources to complete the development ofthe asset;- expenditure measured reliably.ImpairmentThe recoverable amount of property, plant and equipment and intangible assets isverified at least annually if there is an indication of impairment. An impairment lossshould be recognized whenever the carrying amount of an asset exceeds itsrecoverable amount. Intangible assets with an indefinite useful life are tested forimpairment annually or according to the frequency determined by impairment riskindications.If it is not possible to determine the recoverable amount for an individual asset, theGroup estimates the recoverable value of the related cash generating unit.The recoverable amount is the higher of an asset's fair value less costs to sell andits value in use. Value in use is determined from estimated future cash flows basedon a pre-tax discount rate that reflects the time value of money and the risksspecific to the asset.Impairment loss is equal to the part of carrying amount exceeding recoverable35Saes Getters Group

amount. If, subsequently, an impairment loss on an asset other than goodwill isreversed or reduced, the carrying amount of the asset is increased based on itsestimated recoverable amount, but not to exceed the amount that the asset wouldhave had if no impairment loss had ever been recognized. Impairment loss andreversal of an impairment loss are recognized in the income statement.Investments in share capital and other financial assetsInvestments in associates, where the Group has a significant influence but not controlor joint control, are accounted for using the equity method. The book value of theinvestment is modified according to the quota of results and changes in the net equityof the associate pertaining to the Group after the acquisition date.Goodwill pertaining to the associate is included in the book value of the investmentand it is not amortized, but tested for impairment. The income statement includes theshare of result of associates pertaining to the Group after the acquisition date.Other financial assets belong to the categories "available-for-sale financial assets" or"held-to-maturity investments" defined by IAS 39. Assets in the first category aremeasured at fair value if a market price is available or at cost if it is not possible todetermine the fair value. Assets in the second category are valued at amortized cost.Inventory and construction contractsInventory is stated at the lower of purchase or production cost, calculated accordingto the FIFO method, and the market value.Production cost includes the direct costs of materials and labor and indirect productioncosts (variable and fixed).Obsolete and slow-moving stock is written down in relation to its possible use orrealization.Construction contracts are measured on the basis of the stage of completion, net ofany advances invoiced to customers. The production cost includes the direct costs ofmaterials and labor and the indirect production costs (variable and fixed) reasonablyattributable to them. Losses on construction contracts, if any, are charged to theincome statement if it is likely that the total estimated expenses will exceed the totalrevenues expected.Trade and other receivablesThese are stated at realizable value, i.e. the nominal value less appropriate allowancesfor estimated losses on receivables.Assets and liabilities held for sale and discontinuing operationsThese are assets and liabilities whose value will be recovered through sale rather thanthrough use, insofar as they are subject to disposal. This specific classification isadopted when the sale occurs or when the assets and liabilities meet the criteria of"held for sale", if known previously.These are measured at the lower of carrying value and fair value, less their costs tosell.Consolidated Financial Statements 2005 36

Impairments at the time of classification of assets and liabilities as held for sale arecharged to the income statement, together with subsequent income and expensesarising from the measurement of these items.Derivative financial instrumentsIn accordance with IAS 39, at the end of the period derivative financial instruments aremeasured at fair value and hedge accounting is applied if all requirements set out bythe standard are met, i.e.:- there is formal designation and documentation of a hedging relationship atinception;- the hedge is expected to be highly effective;- hedge effectiveness is reliably measurable;- the hedge has been highly effective throughout the reporting periods for which itwas designated.If all conditions for the application of hedge accounting are met, derivative financialinstruments are treated according to the cash flow hedge model, which is applied tohedges against changes in cash flows arising from highly probable future transactionsthat may produce effects on the income statement. According to the cash flow hedgemodel, the effective portion of the gain or loss on derivative financial instruments isrecognized in an equity reserve. Cumulative gains or losses recognized in equity arecharged to the income statement for the period in which the hedged transaction isrecognized. The ineffective portion of the gain or loss on financial instruments ischarged directly to the income statement. Cumulative gains or losses related toforecasted hedged transactions that are no longer expected to occur are also chargedto the income statement.If a hedging instrument or relationship is terminated and the forecasted hedgedtransaction has not yet occurred, the cumulative gains or losses recognized in equityat that time are charged to the income statement when the related transactionoccurs.Accrued income/liabilities, prepaid expenses and deferred incomeThese items include portions of costs and revenues which are common to two ormore financial years, in accordance with accrual basis accounting.Shareholders' EquityThe dividends distributed by the parent company are booked as liabilities at the timeof the distribution decision. Transactions involving the purchase and sale of treasuryshares are recognized directly as movements in shareholders' equity, without goingthrough the income statement.Financial liabilitiesThese are initially stated at cost, i.e. the resources received net of the additional37Saes Getters Group

charges to pay off the liability. Subsequently, financial liabilities are valued at amortizedcost, i.e. the amount of the initial liability net of capital repayments and additionalcharges amortized.Staff leaving indemnity and other employee benefitsThis item includes staff leaving indemnity and other employee benefits, set aside tocover the accrued liabilities payable to employees according to the laws, nationalcollective agreements and supplementary company agreements in force in thecountries in which the consolidated companies operate.Both defined contribution and defined benefit plans are included. Under definedcontribution plans, obligations are recorded as expenses on an accrual basis.Under defined benefit plans, obligations are valued by independent actuarialconsultants according to the Projected Unit Credit Method, separately applied toeach plan.As part of the first-time adoption of International Financial Reporting Standards(IAS/IFRS), all actuarial gains and losses existing on January 1, 2004 were recognizedin the special equity reserve, together with the other impacts arising from thetransition. After the date of transition to IFRS, the corridor approach is applied inrespect of actuarial gains and losses, which are recognized for the cumulative partexceeding 10% of the present value of the defined benefit obligation at the end of theprevious period.The liabilities arising from defined benefit plans are made up of the present value ofthe obligation towards employees, adjusted by unrecognized actuarial gains or lossesand past service costs not yet recorded.Payments under defined contribution plans are charged to the income statement ascosts when incurred.Provisions for contingencies and obligationsProvisions for contingencies and obligations are set aside to cover legal or constructiveobligations, arising from past events and their settlement will require a probableoutflow of resources, the amount of which can be reliably estimated.Changes of estimate are recognized in the income statement for the period in whichthe change occurs.If the effect is significant, provisions for contingencies and obligations have to bestated at the present value.Trade and other payablesThese relate respectively to trade or miscellaneous relations and are stated at nominalvalue.Treasury sharesTreasury shares are deducted from equity. The original cost and the items generatedfrom their subsequent sale are recognized as changes in shareholders' equity.Consolidated Financial Statements 2005 38

Revenue recognitionRevenues are recognized to the extent that it is probable that economic benefits willflow to the Group and the amount of revenue can be measured reliably. Revenues arestated net of discounts, allowances and returns.Revenues from the sale of goods are recognized when the transfer to the buyer of therisks and rewards of ownership takes place.Revenues generated from the rendering of services are recognized in the period inwhich the service was rendered.GrantsGrants are recognized in the income statement where there is reasonable assurancethat these will be obtained and that all the conditions for their recognition will be met.Capital grants, in the amount pertaining to the year, are charged to the incomestatement on the basis of the useful life of the assets to which the grants relate. Theproportion of the capital grant that relates to future financial years is entered under theitem "Accrued liabilities".Operating grants are recognized according to the accrual method of accounting in thesame period in which the associated costs are incurred, shown net of these grants.Cost of salesThe cost of sales represents the cost of buying or producing the products and goodsthat have been sold and includes the cost of raw materials, goods and direct andindirect production costs. The cost of sales also includes margins on constructioncontracts recognized by reference to the stage of completion (percentage ofcompletion method).Research and development expensesAll research expenses are charged to the income statement for the year in which theyare incurred. Development expenses must be capitalized if the conditions set out inIAS 38 are met as already described in the notes on intangible assets. If therequirements for the mandatory capitalization of development expenses are not met,the expenses are charged to the income statement for the year in which they areincurred.Selling expensesThese include the expenses that are incurred during the year as a result of sellingproducts.General and administrative expensesThese include the expenses that are incurred during the year in relation to theadministrative structure.39Saes Getters Group

Financial itemsThese include interest income and expense, exchange gains and losses (both realizedand unrealized) and any adjustments to securities.Interest expense of any kind is charged to the income statement for the year in whichit is incurred.Income taxesIncome taxes for the period include both current and deferred taxes and are charged tothe income statement for the year, except those relating to items directly debited orcredited in an item of shareholders' equity for which the tax effect is recognized in equity.Current taxes are recognized on the basis of estimated taxable income in accordancewith the provisions in force, taking account of the applicable exemptions and taxcredits due.Deferred taxes are recognized for temporary differences between the carrying amount ofan asset or liability and its value for tax purposes. Deferred tax assets, including thosearising from tax losses carried forward and unused tax credits, are recognized to the extentthat it is probable that future taxable income will be available to allow for their recovery.Deferred tax assets and liabilities are determined according to the tax rates that areapplicable in the years during which the temporary differences are realized or settledin the respective countries in which the Group's companies operate.The consolidated financial statements recognize provisions for taxes owed in the event ofthe distribution of profits and reserves by subsidiaries, excluding those relating to profitsand reserves that are not considered likely to be distributed in the foreseeable future.Earnings per shareEarnings per share are calculated by dividing the net income for the period attributableto holders of ordinary and savings shares by the weighted average number of sharesin issue during the period.Business segmentsA business segment is a separately identifiable business component whose functionis to provide an individual product or service or series of products and services andwhich is subject to different risks and returns from those of other business segments.Criteria for converting items expressed in foreign currencyConsolidated financial statements are prepared in euro. Group Companies establishthe functional currency for their financial statements. Foreign currency items areinitially booked at the exchange rate (related to the functional currency) on the date ofthe transaction. Monetary assets and liabilities expressed in foreign currency areconverted into the functional currency at the exchange rate on the balance sheet date.Any exchange difference is booked in the income statement. Non monetary itemsmeasured at historical cost expressed in foreign currency are converted by using theforeign exchange rate on the date of first recognition of the transaction.Consolidated Financial Statements 2005 40

Notes to the financial statementsAll amounts stated in the notes and in the financial statements are expressed inthousands of euro unless otherwise specified.3. Net salesConsolidated net sales for 2005 were €138,580 thousand, down by 2.2% on thefigure of €141,649 thousand recorded in 2004. The drop in sales, excluding theexchange rate effect, was 2.9% while the exchange trend of the major foreigncurrencies against the euro produced growth of 0.7%. Of particular note is theexcellent trend in sales of flat panel display components (Flat Panel DisplaysBusiness Area) only partly offset by the downturn in sales in the Cathode Ray TubeBusiness Area due to the decline of the traditional cathode ray tubes market. Alsonoteworthy is the reduction in net sales in the Semiconductors Business Areaprincipally due to the disposal of certain assets as part of the policy of focussingon profitable businesses. Excluding the assets sold, net sales would haveincreased by 3%.A breakdown of net sales according to Business Unit and Business Area is given below:Business Unit and Business Area 2005 2004 Difference Difference %Cathode Ray Tubes 32,217 45,038 (12,821) -28.5%Flat Panel Displays 56,158 38,224 17,934 46.9%Subtotal Information Displays 88,375 83,262 5,113 6.1%Lamps 11,128 11,155 (27) -0.2%Electronic Devices 12,367 11,612 755 6.5%Vacuum Systems and Thermal Insulation 7,079 5,794 1,285 22.2%Semiconductors 18,885 29,826 (10,941) -36.7%Subtotal Industrial Applications 49,459 58,387 (8,928) -15.3%Subtotal Advanced Materials 746 0 746 n.a.Total Net Sales 138,580 141,649 (3,069) -2.2%Legend:Information Displays Business UnitCathode Ray TubesFlat Panel DisplaysIndustrial Applications Business UnitLampsElectronic DevicesVacuum Systems and Thermal InsulationBarium getters for cathode ray tubesGetters and metal dispensers for flat panel displaysGetters and metal dispensers used in discharge lamps andfluorescent lampsGetters and metal dispensers for electron vacuum devicesPumps for vacuum systems and products for thermal insulationSemiconductorsGas purifier systems for semiconductor industry and otherindustries and installations for the telecommunications industryAdvanced Materials Business Development UnitAdvanced MaterialsGetters for microelectronic and micromechanical systems, opticalcrystals, shape memory alloys, metalorganic precursors41Saes Getters Group

4. Cost of salesThe amount posted in the income statement for 2005 was €62,137 thousand,down by €7,621 thousand on the figure of €69,758 thousand recorded in theprevious year.A breakdown of the cost of sales according to Business Unit is given below:2005 2004 DifferenceInformation Displays 29,808 32,127 (2,319)Industrial Applications 31,034 37,102 (6,068)Advanced Materials & Corporate Costs 1,295 529 766Cost of sales 62,137 69,758 (7,621)Both Business Units saw a sharp fall in the cost of sales, mainly as a result of lower netsales and of the positive effects arising from the restructuring operations and disposalsthat took place in both the current and previous period, particularly in terms of personnelcosts.A breakdown of the cost of sales according to category is given below:2005 2004 DifferenceRaw materials 17,824 19,768 (1,944)Direct labor 11,364 13,586 (2,222)Manufacturing overhead 33,360 35,370 (2,010)(Increase) decrease in inventory (411) 1,034 (1,445)Cost of sales 62,137 69,758 (7,621)The reduction in the cost of direct labour and manufacturing overheads is chiefly due tothe aforementioned restructuring operations and disposals.5. Operating expensesOperating expenses totalled €43,962 thousand (€42,853 thousand in the previous year),broken down into the following categories:2005 2004 DifferenceResearch and development expenses 14,629 13,557 1,072Selling expenses 15,239 15,969 (730)General and administrative expenses 14,094 13,327 767Total operating expenses 43,962 42,853 1,109Operating expenses increased by €1,109 thousand, principally as a result of increasedresearch and development expenses and the inclusion, in general and administrativeexpenses, of non-recurring consultancy costs in relation to the voluntary conversion ofsavings shares into ordinary shares which took place in January 2005.Consolidated Financial Statements 2005 42

A breakdown of total expenses included in the cost of sales and in operating expensesis given below:Total costs by nature2005 2004 DifferencePersonnel cost 42,586 44,530 (1,944)Travel expenses 2,088 2,342 (254)Maintenance and repairs 4,121 4,474 (353)Depreciation 9,655 10,908 (1,253)Ammortization 1,241 1,179 62Corporate bodies 2,374 2,115 259Material and office material 4,973 4,879 94Insurance services 810 865 (55)Writedown of fixed assets 1,541 211 1,330Promotion and advertising 405 474 (69)Provision for bad debts 465 492 (27)Consultant fees and legal expenses 4,463 6,462 (1,999)Rent office 555 817 (262)Licenses and patents 1,478 1,389 89Utilities, post, telephone, telex, fax 3,561 3,627 (66)Transport, insurance, freight 1,249 1,385 (136)Commissions 595 225 370General duties (canteen, cleaning, vigilance) 1,446 1,429 17Recovery of transport, insurance, freight (397) (408) 11Other recovery (713) (1,550) 837Other expenses 6,190 5,964 226Total 88,686 91,809 (3,123)The total Personnel cost was €42,586 thousand, lower than the previous year (€44,530thousand), which mainly reflects the decrease in the number of Group employeesresulting from the aforementioned restructuring operations and the disposal of assetsfrom the Semiconductors Business Area.The item "Corporate bodies" includes the fees payable to the Directors (which increasedfrom €2,024 thousand in 2004 to €2,248 thousand in 2005), to the Statutory Auditors(which increased from €77 thousand in 2004 to €80 thousand in 2005), to the AuditCommittee (which increased from €14 thousand in 2004 to €19 thousand in 2005) andto the Oversight Committee (equal to €27 thousand in 2005, in the previous year, thecommittee had not received any fee as it was set up on December 22, 2004).43Saes Getters Group

A breakdown is given below of the fees paid to the Directors, Statutory Auditors andGeneral Managers (pursuant to Art. 78 of CONSOB resolution no. 11971 of May 14, 1999):Surname and nameBoard of Directorsdella Porta Paolodella Porta MassimoPositionPresidentVice President andManagingDirectorDuration ShareholdersResolution datedApril 23, 2003from January 1, 2003until December 31, 2005from January 1, 2003until December 31, 2005Compensationfor thepositionNonmonetarybenefitsBonusand otherincentivesOthercompensation272 210 b 97301 210 b 94Canale GiulioRolando GiuseppeManagingDirectorDirector entrustedwith specificmanagerial powersfrom January 1, 2003until December 31, 2005 236 a 12 210 b 77from January 1, 2003until December 31, 2005 241 a 3 210 d 39Baldi StefanoBerger Roberto ( c )Canale GuidoChristillin EvelinaColombo UmbertoDe Maio Adrianodella Porta GiuseppeGilardoni AndreaSpinola GianlucaUgo RenatoDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorfrom January 1, 2003until December 31, 2005 6 e 1from January 1, 2003until December 31, 2005from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6 f 5from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6from January 1, 2003until December 31, 2005 6 g 18Total Board of Directors 1,104 15 840 331Board of Statutory AuditorsMartinelli PierluigiDonnamaria VincenzoRossetti de Scander AntonioChairman of the Boardof Statutory AuditorsStanding StatutoryAuditorStanding StatutoryAuditofrom January 1, 2003until December 31, 2005 24 h 22from January 1, 2003until December 31, 2005 17 i 11from January 1, 2003until December 31, 200517e 2Total Statutory Auditors 58 0 0 35(a) use of car(b) for the position of director in subsidiaries(c) €6 housand for the position of director and €5 thousand for the position of member of the Audit Committee paid to the company to whichhe belongs(d) of which €30 thousand for the position of director in subsidiaries and €9 thousand for the position of member of the OversightCommitteeConsolidated Financial Statements 2005 44

(e) reimbursement of expenses(f) fee for the position of member of the Audit Committee(g) of which €9 thousand for the position of Chairman of the Audit Committee and €9 thousand for the position of member of theOversight Committee(h) of which €13 thousand for the position of auditor in subsidiaries and €9 thousand for the position of member of the OversightCommittee(i) of which €9 thousand for the position of auditor in subsidiaries and €2 thousand for reimbursement of expensesThe decrease in the item "Consultant fees and legal expenses" is essentially due to thelower outsourcing expenses incurred following the sale of the subsidiary FST ConsultingInternational, Inc. which took place in July 2005.The item "Writedown of non-current assets" includes both writedowns of property, plantand equipment totalling €1,235 thousand, posted by the subsidiaries Saes GettersTechnical Service (Shanghai) Co. Ltd. and Saes Getters Korea Corporation, andwritedowns of intangible assets totalling €306 thousand, posted by the Parent Companyand by the subsidiary Saes Getters Japan Co. Ltd. For further details, refer to notes 13and 14 respectively.6. Other income (expenses), netThe item is broken down as follows:2005 2004 DifferenceCapital gains on disposal of assets 123 804 (681)Gains from financial instruments evaluatedat fair value 164 0 164Other income 975 1,142 (167)Total Other Income 1,262 1,946 (684)Losses on disposal of assets (19) (81) 62Other expenses (960) (1,232) 272Total Other Expenses (979) (1,313) 334Other Income (Expenses), net 283 633 (350)"Other income" recorded in 2005 was €684 thousand lower than the previous year,which included the capital gain (€793 thousand) realised from the sale of the businessdivision relating to gas impurity analysers based on IMS technology of the subsidiaryNew Trace Analytical, Inc. (formerly Molecular Analytics, Inc.), subsequently merged intoSaes Getters America, Inc. in December 2005.The item "Gains from financial instruments evaluated at fair value" includes the incomearising from the fair value measurement of the hedges taken out to protect againstchanges in cash flows expected from foreign currency sale transactions (US dollars,Japanese yen and Korean won). These hedges are recognised according to the cash flowhedge model.The comparative figures relating to last year do not include the effect of IAS 32Financial instruments: Disclosure and presentation and IAS 39 Financialinstruments: Recognition and measurement, after defining January 1, 2005 asbeing the transition date for their application. If IAS 32 and IAS 39 had been45Saes Getters Group

applied for the period under comparison, the value of these financial componentswould have been determined by reference to the effect of the hedges existing atthe end of 2004.The costs included in the item "Other expenses" are lower than the previous period.Recall that during the previous year, greater provisions had been recorded in relation topersonnel.7. Interest and other financial income (expenses), netThe item is broken down as follows:2005 2004 DifferenceBank interest, net 1,513 1,225 288Other financial income (expenses), net (217) 248 (465)Interest and other financial income (expenses), net 1,296 1,473 (177)The item "Bank interest, net" shows a total increase of €288 thousand compared withthe previous year, due principally to greater interest income on bank deposits resultingfrom a higher average level of cash and cash equivalents in the year than in the previousperiod.The decrease in the item "Other financial income (expenses), net" is principally due tothe fact that, in the previous year, a capital gain of €303 thousand had been realised fromthe sale of units in investment trusts by the parent company.8. Foreign exchange gains (losses), netThis item shows a total year-on-year increase of €2,290 thousand and is broken downas follows:2005 2004 DifferenceForeign exchange gains 3,077 2,381 696Foreign exchange losses (1,920) (3,514) 1,594Total 1,157 (1,133) 2,290The change reflects the trend of exchange rates during 2005 in comparison with 2004.9. Income taxesThis item shows a total increase of €240 thousand and is broken down asfollows:2005 2004 DifferenceCurrent income taxes 9,586 10,253 (667)Deferred taxes 4,518 3,611 907Total 14,104 13,864 240Consolidated Financial Statements 2005 46

This item includes current taxes and provisions for deferred taxes which include, interalia, the tax effect of consolidation adjustments.In detail, current taxes fell from €10,253 thousand in 2004 to €9,586 thousand in 2005.This decrease is principally due to the larger contribution made by Group operating incountries with lower income taxes. The item also includes positive adjustments made inrelation to current taxes in the previous year totalling €595 thousand.The net amount of deferred taxes moved from negative €3,611 thousand in 2004 tonegative €4,518 thousand in 2005. The change is principally due to the greater impact ofthe provision for deferred taxes owed in the event of the distribution of the profits andreserves of subsidiaries.Taxes decreased from 46.2% of income before taxes in 2004 to 40.2% for the yearended December 31, 2005, principally as a result of the different effect on an incomebefore taxes that was lower than the aforementioned provision for deferred tax liabilitiesowed in the event of the distribution of the profits and reserves of subsidiaries and as aresult of the greater contribution from Group companies operating in countries withlower income taxes in 2005.The reconciliation between the theoretical taxes payable on the basis of the tax rates inforce in Italy (IRES and IRAP) and the actual taxes payable according to the consolidatedfinancial statements is given below:2005 2004Theoretical rate 37.3% 37.3%Effect of different tax rates applicable to Group companies -10.5% -7.0%Non-deductible expenses and writedowns of deferred tax assets 9.1% 7.1%Taxes on accumulated profits of subsidiaries and taxes on dividends 4.7% 8.7%IRAP 1.7% 2.5%Other -2.1% -2.4%Actual rate 40.2% 46.2%47Saes Getters Group

The composition of the deferred tax assets posted in the balance sheet of theconsolidated financial statements as at December 31, 2005 and December 31, 2004respectively is given below according to the nature of the temporary differences thatgenerated the deferred tax effects:December 31, 2005 December 31, 2004TemporarydifferencesFiscaleffectTemporarydifferencesFiscaleffectIntercompany profit elimination 19,961 4,847 20,255 4,964Writedowns of inventory 3,132 1,170 3,227 1,221Writedowns of receivables 510 82 555 92IAS 17 effect (4,519) (1,683) (4,072) (1,515)Application of cash flow hedge IAS 39 644 261Writedowns of investments 6,166 2,035 8,357 2,758Taxed provisions 1,574 551 1,939 747Cash deductible fees 2,193 779 1,771 596Other 2,877 613 1,220 86Losses that can be carried forward by foreign companies 50,993 15,308 48,006 14,715Value adjustments of deferred tax assets to losses that canbe carried forward by foreign companies (15,308) (14,705)Deferred tax assets 8,655 8,959The composition of the deferred tax liabilities recorded in the consolidated financialstatements as at December 31, 2005 and December 31, 2004 respectively is givenbelow according to the nature of the temporary differences that generated the deferredtax effects:December 31, 2005 December 31, 2004TemporarydifferencesFiscaleffectTemporarydifferencesFiscaleffectTaxes due on distribution of earnings accumulated bysubsidiaries 26,976 3,842 14,853 2,213IAS 17 effect 767 291Deferred tax liabilities 3,842 2,504Deferred tax liabilities resulting from the application of IAS 17 by a Group company werereclassified under deferred tax assets in 2005.It should be noted that, with effect from May 12, 2005, the parent company Saes GettersS.p.A. and the subsidiary Saes Advanced Technologies S.p.A. signed an agreement fortax consolidation with S.G.G. Holding S.p.A., the company that controls Saes GettersS.p.A., thus exercising the group taxation option offered in Article 117 of the Income TaxAct (TUIR), with the effects set out in Article 118 of that Act.Consolidated Financial Statements 2005 48

10. Net income per shareNet income per share is calculated by dividing the period income of the Saes GettersGroup by the average number of shares in circulation in 2005. The table below showsthe net income per share for 2005 compared with the corresponding value for 2004,calculated both on the basis of the average number of shares in circulation postconversation, and on the basis of the average number of shares in circulation as atDecember 31, 2004.Earnings per share 2005 2004* 2004Number of ordinary shares: 15,271,350 15,271,350 13,874,930Number of savings shares: 7,460,619 7,460,619 9,625,070Total number of shares: 22,731,969 22,731,969 23,500,000Average number of ordinary treasury shares: 302,028 302,028 191,128Average number of savings treasury shares: 6,885 - 173,306Average number of treasury shares: 308,913 302,028 364,434Average number of outstanding ordinary shares: 14,969,322 14,969,322 13,683,802Average number of outstanding savings shares: 7,453,734 7,460,619 9,451,764Average number of outstanding shares: 22,423,056 22,429,941 23,135,566Earnings attributable to ordinary sharesfrom continuing operations 14,226 11,134 9,868Earnings attributable to savings sharesfrom continuing operations 7,204 5,550 6,816Earnings attributable to shareholdersfrom continuing operations (€/000) 21,430 16,684 16,684Losses attributable to ordinary sharesfrom discontinued operations (282) (358) (318)Losses attributable to savings sharesfrom discontinued operations (141) (179) (219)Losses attributable to shareholdersfrom continuing operations (€/000) (423) (537) (537)Earnings attributable to ordinary shares 13,944 10,776 9,550Earnings attributable to savings shares 7,063 5,371 6,597Earnings attributable to shareholders (€/000) 21,007 16,147 16,147Earnings per share from continuing operations (€) :- ordinary shares 0.9504 0.7438 0.7211- savings shares 0.9665 0.7438 0.7211Losses per share from discontinued operations (€):- ordinary shares (0.0189) (0.0239) (0.0232)- savings shares (0.0189) (0.0239) (0.0232)Earnings per share (€) :- ordinary shares 0.9315 0.7199 0.6979- savings shares 0.9476 0.7199 0.6979* Between January 3, 2005 and January 14, 2005 inclusive, the voluntary conversion of savings shares into ordinary shares took place. Theconversion was performed with 2,164,451 savings shares, corresponding to 22.49% of the total number of savings shares. The figuresfor 2004 have been restated on the basis of the average number of shares in circulation post conversion.49Saes Getters Group

11. Discontinued operationsAs part of the strategy of moving away from non-synergic businesses and focussing onprofitable activities, the Group sold the subsidiary FST Consulting International, Inc.(hereinafter FST) based in San Luis Obispo, California (USA) with effect from July 29,2005.The company was engaged in the installation of towers for thetelecommunications sector. It should be recalled that FST also provided qualitycontrol and certification services for the semiconductor market, a businessdivision sold on April 1, 2004. The selling price, after a partial reduction anddistribution of capital stock to the parent company Saes Getters InternationalLuxembourg S.A. in the amount of $2.1 million, was $300 thousand in cash.The column "Discontinued operations" for 2005 includes the period figures for FST untilthe time of its sale, the costs of selling the company, the capital loss realised excludingthe release of the translation reserve arising from the conversion of financial statementsexpressed in foreign currency.The net loss from discontinued operations for 2005 is shown below:Subsidiary losses until disposal (251)Loss on disposal of the subsidiary (328)Reversal of currency translation reserve 222Selling costs (66)Net result of discontinued operations (423)2005A summary is given below of the cash flow statement of the sold company relating tothe years 2005 (until the time of the sale) and 2004 respectively:July 29, 2005 December 31, 2004Cash flow from operating activities 2,050 210Cash flow from investing activities - 479Cash flow from financing activities (1,737) 5,960Increase (decrease) in cash and cash equivalents 313 6,649The main asset and liability classes of FST at the time of its disposal and as at December31, 2004 are given below:July 29, 2005 December 31, 2004Property, plant and equipment, net 297 329Other non current assets 7 38Receivables and other current assets 653 3,458Non current liabilities - (23)Payables and other current liabilities (381) (1,520)576 2,282Consolidated Financial Statements 2005 50

12. Segment reportingThe income statement and balance sheet values shown in the following analyticalstatements are described for primary business segments in accordance with IAS 14.There are two primary business segments identified on the basis of the products developedand sold: Information Displays and Industrial Applications. The column "Not allocated"includes corporate income statement and balance sheet values and income statement andbalance sheet values relating to research and development projects undertaken to achievediversification in the area of advanced materials, as well as any other income statement andbalance sheet values that cannot be allocated to primary segments. The presentation shownreflects the Group's organisational structure and the internal reporting structure.It is pointed out that the result of discontinued operations presented in the consolidatedincome statement relates totally to the Industrial Applications Business Unit.The main income statement figures relating to the primary business segments identifiedare as follows:Consolidated Income Statement by primary business segmentsInformationDisplaysContinuing OperationsIndustrialApplicationsNotallocatedDiscontinuedOperationsIndustrialApplications2005 2004 2005 2004 2005 2004 2005 2004 2005 2004Total Net Sales 88,375 83,262 45,585 49,644 746 - 3,874 8,743 138,580 141,649Gross Profit (Loss) 58,567 51,135 17,949 20,039 (549) (529) 476 1,246 76,443 71,891% on net sales 66.3% 61.4% 39.4% 40.4% -73.6% n.a. 12.3% 14.3% 55.2% 50.8%Total operating expenses (16,715) (14,138) (16,366) (19,116) (10,163) (7,822) (718) (1,777) (43,962) (42,853)Other income (expenses), net (80) (418) 401 1,015 34 - (72) 36 283 633Operating Income (Loss) 41,772 36,579 1,984 1,938 (10,678) (8,351) (314) (495) 32,764 29,671Interest and other financialincome (expenses), net% on net sales 47.3% 43.9% 4.4% 3.9% -1,431.4% n.a. -8.1% -5.7% 23.6% 20.9%Total1,190 1,473Foreign exchange gains (losses), net 1,157 (1,133)Income before taxes 35,111 30,011Income taxes (14,104) (13,864)Net income 21,007 16.147The main balance sheet figures relating to the primary business segments are as follows:Information Displays Industrial Applications Not allocated TotalAssets and liabilities December December December December December December December December31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004Non current assets 32,128 32,525 21,482 22,080 19,719 18,813 73,329 73,418Current assets 29,376 24,928 21,570 22,429 100,123 94,903 151,069 142,260Total assets 61,504 57,453 43,052 44,509 119,842 113,716 224,398 215,678Non current liabilities 5,763 5,147 4,986 4,111 8,373 7,235 19,122 16,493Current liabilities 10,407 10,270 8,958 8,796 15,314 10,869 34,679 29,935Total liabilities 16,170 15,417 13,944 12,907 23,687 18,104 53,801 46,428Other segment informationCapital expenditure 4,674 3,885 3,311 2,331 1,955 2,419 9,940 8,635Depreciation and Amortization 5,277 5,598 3,769 4,920 1,850 1,594 10,896 12,112Non-cash expenses other thanDepreciation and Amortization 1,410 1,559 2,303 2,522 274 197 3,987 4,27851Saes Getters Group

The following table shows an analysis of net sales by geographical location of customers:Revenues by geographical location of customer 2005 2004 DifferenceItaly 760 1,459 (699)Other UE and Europe 19,289 20,894 (1,605)North America 20,976 24,901 (3,925)Japan 36,442 32,851 3,591Asia (excl. Japan) 58,763 58,845 (82)Other 2,350 2,699 (349)Total Net sales 138,580 141,649 (3,069)Of particular note is the fall in net sales on the North American market and in Europeancountries, due principally to the downturn in sales of getters for cathode ray tubes andto the disposal, in both 2004 and 2005, of the assets relating to gas impurity analysersand quality assurance and control services as well as the disposal of the subsidiary FSTConsulting International, Inc.Japan recorded a 10.9% increase on the previous year, due to increased sales ofmercury dispensers used in cold cathode lamps (Flat Panel Displays Business Area).2005Geographical AreasItalyOtherEuropeUnitedStatesof AmericaJapanAsiaRest ofAsiaAdjustments(6) ConsolidatedDirect sales (1)) 26,260 42 28,192 48,530 35,556 0 138,580Inter-segment sales (2) 51,476 1,393 1,380 804 1,247 (56,300) 0Total sales 77,736 1,435 29,572 49,334 36,803 (56,300) 138,580Operating income (loss) (3) 9,514 (271) 3,733 5,513 15,087 (812) 32,764Total assets (4) 187,732 15,844 22,001 18,592 38,348 (58,119) 224,398Capital expenditure (5) 8,643 34 370 0 893 0 9,9402004EuropeDirect sales (1) 29,820 0 33,773 43,745 34,311 0 141,649Inter-segment sales (2) 49,064 1,964 6,094 521 2,473 (60,116) 0Total sales 78,884 1,964 39,867 44,266 36,784 (60,116) 141,649Operating income (loss) (3) 11,169 (316) 2,008 4,936 9,899 1,975 29,671Total assets (4) 189,067 16,193 21,290 14,041 40,873 (65,786) 215,678Capital expenditure (5) 7,343 12 181 0 959 0 8,495(1) Direct sales to unaffiliated customers include sales by Group companies from that geographical segment.(2) Inter-segment sales include sales made by Group companies both within the segment and to Group companies located in other geographicalareas. Inter-segment sales are generally priced at cost plus an appropriate mark-up for profit.(3) This refers to the operating income (loss) posted by Group companies belonging to the segment, net of adjustments made for consolidationpurposes in respect of transactions carried out between Group companies belonging to the same geographical area.(4) This includes the total assets carried in the balance sheet of Group companies belonging to the segment, net of adjustments made forconsolidation purposes in respect of transactions carried out between Group companies belonging to the same geographical area.(5) This includes the total investments made by Group companies belonging to the segment, net of adjustments made for consolidation purposes inrespect of transactions carried out between Group companies belonging to the same geographical area.(6) This refers to adjustments made for consolidation purposes in respect of transactions carried out between Group companies belonging to differentgeographical areas.Consolidated Financial Statements 2005 52

Accounts receivables by geographical area, based on the residence of the creditor as atDecember 31, 2005, are broken down as follows:ItalyOtherEuropeUnited Statesof AmericaJapan Other Asia Other ConsolidatedTrade receivables 372 3,530 3,302 9,578 12,302 202 29,286Other receivables 10,643 197 597 232 374 0 12,043Total receivables 11,015 3,727 3,899 9,810 12,676 202 41,329Accounts payable by geographical area, according to the residence of the debtor as atDecember 31, 2005, are broken down as follows:ItalyOtherEuropeUnited Statesof AmericaJapan Other Asia Other ConsolidatedBank overdraft 4,515 0 1,696 0 1,171 0 7,382Trade payables 6,465 529 1,158 457 340 0 8,949Other payables 13,687 330 1,087 2,177 1,810 0 19,091Total payables 24,667 859 3,941 2,634 3,321 0 35,42253Saes Getters Group

Non-current assets13. Property, plant and equipment, netTotal property, plant and equipment, less accumulated depreciation, was €60,493thousand and €59,769 thousand as at December 31, 2005 and December 31, 2004respectively.The changes are shown below:Net book valueLand andbuildingsMachinery andequipmentAssets underconstruction andadvancesBalance at December 31, 2004 27,340 29,507 2,922 59,769Additions 208 4,217 5,181 9,606Disposals (24) (52) (76)Reclassifications 1,656 3,785 (5,567) (126)Changes in consolidation area (288) (288)Depreciation (1,208) (8,509) (9,717)Writedowns (785) (450) (1,235)Conversion differences 1,323 1,230 7 2,560Balance at December 31, 2005 28,510 29,440 2,543 60,493Balance at December 31, 2004Historical cost 38,055 98,450 2,922 139,427Accumulated depreciation and writedowns (10,715) (68,943) 0 (79,658)Net book value 27,340 29,507 2,922 59,769Balance at December 31, 2005Historical cost 41,887 104,267 2,543 148,697Accumulated depreciation and writedowns (13,377) (74,827) 0 (88,204)Net book value 28,510 29,440 2,543 60,493TotalThe item "Land and buildings" and the item "Machinery and equipment" include assetsredeemed by the Group's Italian companies at the end of finance lease agreementswith a net book value of €4,438 thousand and €78 thousand respectively as atDecember 31, 2005 (compared with €4,626 thousand and €207 thousandrespectively as at December 31, 2004). There are no finance leases currently inprogress.With regard to the assets belonging to the Group's Italian companies previouslyaffected by the application of specific monetary revaluation laws, the Group decidedto exercise the exemption allowed under IFRS 1 First-time Adoption of InternationalFinancial Reporting Standards in relation to the possibility of the selective adoption offair value on the date of transition to IFRS. Therefore, these assets are measured onthe basis of the deemed cost, which is the restated amount at the time of makingthese revaluations. The net carrying amount of the revaluations made, net of theamortised portion, on the transition date was €460 thousand and €640 thousand forthe assets in the category of "Land and buildings" and in the category of "Machineryand equipment" respectively.The changes occurring during the previous year are shown below:Consolidated Financial Statements 2005 54

Net book valueLand andbuildingsMachinery andequipmentAssets underconstruction andadvancesBalance at January 1, 2004 28,754 34,709 949 64,412Additions 148 4,299 3,433 7,880Disposals (35) (945) (980)Reclassifications 333 1,248 (1,441) 140Changes in consolidation area (7) (7)Depreciation (1,306) (9,612) (10,918)Writedowns (136) (3) (4) (143)Conversion differences (418) (182) (15) (615)Balance at December 31, 2004 27,340 29,507 2,922 59,769Balance at January 1, 2004Historical cost 38,349 100,622 949 139,920Accumulated depreciation and writedowns (9,595) (65,913) 0 (75,508)Net book value 28,754 34,709 949 64,412Balance at December 31, 2004Historical cost 38,055 98,450 2,922 139,427Accumulated depreciation and writedowns (10,715) (68,943) 0 (79,658)Net book value 27,340 29,507 2,922 59,769TotalThe main changes affecting property, plant and equipment can be summarised as follows:Land and buildingsCompared with the previous year, this item recorded a net increase of €1,170 thousand,including new purchases of €208 thousand and reclassifications from the item "Assets underconstruction and advances" totalling €1,656 thousand, principally due to the completion ofindustrial buildings to be used for new production lines by the subsidiary Saes AdvancedTechnologies S.p.A. The figure also includes net disposals of €24 thousand, positivedifferences from the conversion of foreign currency items totalling €1,323 thousand anddepreciation of €1,208 thousand. During the year, writedowns totalling €785 thousand weremade in order to bring the book value of the land and buildings of the subsidiary Saes GettersTechnical Service (Shanghai) Co. Ltd. into line with their recoverable amount.Period increases were predominantly related to the completion of improvements to buildingsby the Group's Italian companies.Machinery and equipmentA total net decrease of €67 thousand was recorded in comparison with the previous year.Period increases consisted of new purchases (€4,217 thousand), reclassifications fromassets under construction (€3,785 thousand) and positive differences from theconversion of foreign currency items (€1,230 thousand). New purchases were principallymade to equip or expand production facilities in the area of advanced materials, inparticular those relating to thin getter films for MEMS applications and shape memoryalloys, as well as to procure special machinery and equipment for the creation of newproduction lines for mercury dispensers intended for the liquid crystal displays market,activities predominantly involving the Group's Italian companies.As far as decreases were concerned, these consisted of period depreciation (€8,50955Saes Getters Group

thousand), net disposals (€52 thousand) and changes in the scope of consolidation(€288 thousand), as a result of the sale of the subsidiary FST Consulting International,Inc. with effect from July 29, 2005. Total writedowns of €450 thousand were madefollowing the decision to suspend production at the subsidiary Saes Getters TechnicalService (Shanghai) Co. Ltd., and to sell off a production line by the subsidiary SaesGetters Korea Corporation.Assets under construction and advancesThe balance as at December 31, 2005 was €2,543 thousand compared with €2,922thousand in the previous year.The decrease since December 31, 2004 is due to the higher value of the projects forlaboratory instruments, improvements to buildings, machinery and equipment for thecreation of new production lines and for the expansion of existing production lines whichhave been completed compared with those capitalised during the year, principally by theGroup's Italian companies.14. Intangible assets, netTotal intangible assets, less amortisation, was €2,695 thousand and €3,586 thousand as atDecember 31, 2005 and December 31, 2004 respectively.The changes are shown below:Net book valueIndustrialand otherpatent rightsConcessions,licences, trademarksandsimilar rightsOtherintangibleassetsAssets inprogress andadvancesTotalBalance at December 31, 2004681 1,695 379 831 3,586Additions 175 62 30 67 334Disposals 0Reclassifications 183 552 28 (637) 126Amortization (406) (685) (158) (1,249)Writedowns (113) (193) (306)Conversion differences 19 114 71 204Balance at December 31, 2005652 1,738 237 68 2,695Balance at December 31, 2004Historical cost 1,483 4,288 4,695 831 11,297Accumulated amortization and writedowns (802) (2,593) (4,316) 0 (7,711)Net book value 681 1,695 379 831 3,586Balance at December 31, 2005Historical cost 1,880 5,246 4,258 261 11,645Accumulated amortization and writedowns (1,228) (3,508) (4,021) (193) (8,950)Net book value 652 1,738 237 68 2,695All intangibile assets have a defined useful life. There are no development costs thatmeet the requirements for mandatory capitalisation as at December 3, 2005.Consolidated Financial Statements 2005 56

The changes occurring during the previous year are shown below:Net book valueIndustrialand otherpatent rightsConcessions,licences, trademarksandsimilar rightsOtherintangibleassetsAssets inprogress andadvancesTotalBalance at January 1, 2004863 1,850 813 813 4,339Additions 194 352 49 160 755Disposals 0Reclassifications 41 110 (149) (142) (140)Amortization (352) (559) (264) (1,175)Writedowns (44) (24) (68)Conversion differences (21) (58) (46) (125)Balance at December 31, 2004681 1,695 379 831 3,586Balance at January 1, 2004Historical cost 1,206 3,710 4,703 813 10,432Accumulated amortization and writedowns (343) (1,860) (3,890) 0 (6,093)Net book value 863 1,850 813 813 4,339Balance at December 31, 2004Historical cost 1,483 4,288 4,695 831 11,297Accumulated amortization and writedowns (802) (2,593) (4,316) 0 (7,711)Net book value 681 1,695 379 831 3,586The main changes affecting intangible assets can be summarised as follows:Industrial and other patent rightsThe balance as at December 31, 2005 was €652 thousand compared with €681thousand as at December 31, 2004.Increases of €175 thousand were recorded during the year principallycorresponding to the purchase of software on an ownership basis and/or on thebasis of a user licence, and decreases of €406 thousand owing to amortisation forthe period. Positive changes also included foreign currency translation differences(€19 thousand) and reclassifications from assets in progress (€183 thousand),following the conclusion and subsequent capitalisation of projects to upgrade theGroup's information system.Concessions, licenses, trademarks and similar rightsThe end-of-year balance was €1,738 thousand compared with €1,695 thousand atthe end of the previous year.This item relates principally to the balances of the parent company with regard tolicences (€760 thousand) and of the Chinese companies, for the share pertainingto the Group, with regard to the building lease on the land which the respectiveplants were built (€716 thousand in total), amortised over the term of thecontracts, namely 50 years.57Saes Getters Group

Period increases were due to reclassifications from assets in progress (€552thousand), following the completion of projects to upgrade the Group'sinformation system, as well as new purchases (€62 thousand).Amortisation for the period totalled €685 thousand whilst foreign currencytranslation differences produced a gain of €114 thousand.Other intangible assetsAt the end of the year, this item amounted to €237 thousand compared with€379 thousand as at December 31, 2004.Period increases amounted to €30 thousand, whilst other period changes weredue to positive reclassifications (€28 thousand), writedowns (€113 thousand)amortisation (€158 thousand) and positive translation differences (€71thousand).The writedown included in the item relates to the associated company SaesGetters Japan Co. Ltd.'s elimination of the residual value of certain marketingrights as no future economic benefits are expected to flow from their use.Assets in progress and advancesIn 2005, this item decreased by €763 thousand, as a result of reclassifications due tothe completion of a number of projects to upgrade the Group's information system, aswell as the writedown performed by the parent company (€193 thousand) following theabandonment of a number of projects relating to the development of informationsystems currently used.15. Investments accounted for using the equity methodAs at December 31, 2005, this item, which is included under non-current assets, wasmade up of the 30% shareholding held in the company Scientific Materials Europe S.r.l.,based in Tortolì (NU). This shareholding, bought on September 30, 2005, is valuedaccording to the equity method.16. Deferred tax assetsThis item posted a balance of €8,655 thousand as at December 31, 2005 compared with€8,959 thousand one year previously and reflects the net balance of deferred taxes on thetemporary differences between the value ascribed to assets or liabilities according tostatutory criteria and the value ascribed for tax purposes, as well as the effect ofconsolidation adjustments.The item included the deferred tax effect (positive effect of €302 thousand) associatedwith the recognition of a special reserve (negative balance as at December 31, 2005) in theshareholders' equity following the application of the cash flow hedge model to exchangerisk hedging transactions.Tax losses that can be carried forward totalled €50,993 thousand (of which €34,816 canbe carried forward without time limit) as at December 31, 2005. Potential deferred taxassets (€15,308 thousand as at December 31, 2005) were not recognised as a result ofuncertainty over their recoverability.Consolidated Financial Statements 2005 58

17. Other long-term assetsThese are broken down as follows:December 31, 2005 December 31, 2004 DifferenceGuarantee deposits 440 531 (91)Other 596 573 23Total 1,036 1,104 (68)The item "Other" mainly consisted of investments made by the US subsidiaries in relationto the agreements for supplementary pension allowances agreed locally with employees.Current assets18. InventoryThe item in question is broken down as follows:December 31, 2005 December 31, 2004 DifferenceRaw materials, auxiliary materials and spare parts 5,199 4,313 886Work in progress and semi-finished goods 3,856 3,330 526Finished products and goods 8,478 8,093 385Total 17,533 15,736 1,797Inventory values are expressed net of the inventory allowance €3,469 thousand as atDecember 31, 2005 compared with €3,790 thousand as at December 31, 2004) in orderto bring these into line with their estimated realisable value.During the period, inventory writedowns of €550 thousand were charged to the incomestatement.The overall increase in inventory compared with December 31, 2004 is essentially dueto contingent production plans and to the effect of positive translation differencesresulting from the trend of the euro against the major foreign currencies.The item "Work in progress" includes the valuation according to the percentage ofcompletion method of the construction contracts undertaken by the parent company,whose accrued margin amounted to €205 thousand as at December 31, 2005 comparedwith €252 thousand as at December 31, 2004.19. Trade receivablesAs at December 31, 2005, the item was made up as follows:Gross valueDecember 31,2005Bad debtprovisionDecember 31,2005Net valueDecember 31,2005Net valueDecember 31,2004DifferenceTrade receivables 30,056 (770) 29,286 28,581 70559Saes Getters Group

Trade receivables (all due within one year) relate to ordinary sales transactions.The bad debt provision shown above reflects an adjustment made to bring the value ofreceivables in line with their estimated realisable value.The net increase in trade receivables since December 31, 2004 is substantially due tothe high level of net sales achieved in the final month of the year and to positivetranslation differences resulting from the trend of the euro against the major currencies,partly offset by the impact of the sale of the subsidiary FST Consulting International Inc.,which took place in 2005.20. Tax consolidation receivables from parent companyTax consolidation payables to parent companyThe items "Tax consolidation receivables from parent company" and "Tax consolidationpayables to parent company" include, respectively, the amount receivable by SaesGetters S.p.A. and the amount payable by Saes Advanced Technologies S.p.A. as a resultof the Group's Italian companies subscribing to the national tax consolidation with thecontrolling company S.G.G. Holding S.p.A.There were no balances as at December 31, 2004 because of the different scope of thenational tax consolidation, which did not include the company S.G.G. Holding S.p.A. andwhich depended on Saes Getters S.p.A., as the consolidating company.21. Prepaid expenses, accrued income and otherThis item, which includes current non-trade receivables from third parties, along withprepaid expenses and accrued income, showed a balance of €6,270 thousand as atDecember 31, 2005 compared with €7,927 thousand one year earlier.The balances are broken down as follows:December 31, 2005 December 31, 2004 DifferenceIncome taxes receivable 341 734 (393)VAT receivables 3,943 4,203 (260)Other tax receivables 70 53 17Social security receivables 91 93 (2)Personnel 92 170 (78)Short-term guarantee deposits 7 80 (73)Receivables in respect of public grants 791 1,414 (623)Other 243 268 (25)Total other receivables 5,578 7,015 (1,437)Interest receivable 2 10 (8)Total accrued income 2 10 (8)Rents payable 2 18 (16)Insurance premiums 163 296 (133)Other 525 588 (63)Total prepaid expenses 690 902 (212)Total prepaid expenses, accrued income and other 6,270 7,927 (1,657)Consolidated Financial Statements 2005 60

The item "Income tax receivable" refers mainly to amounts receivable as a result of excessadvance payment of corporate tax (IRAP), carried in the accounts of the parent company.The lower balance as at December 31, 2005 compared with one year earlier is due to thefact that, as a result of the new national tax consolidation, where the consolidatingcompany is S.G.G. Holding S.p.A., the tax receivables (IRES) of Saes Getters S.p.A. are nolonger entered under this item, but transferred to the new consolidating company.The item "Receivables in respect of public grants" includes the amounts accrued as atDecember 31, 2005 by the parent company (€515 thousand compared with €1,138thousand as at December 30, 2004) principally in relation to grants to cover the operatingexpenses of research projects in progress, and the residual sums claimed by the subsidiarySaes Advanced Technologies S.p.A. from the Ministry of Treasury, Budget and EconomicPlanning (€276 thousand, unchanged since December 31, 2004) in relation to the incentivesoutlined in the "Territorial Agreement for the Marsica Area". The decrease since December 31,2004 is chiefly due to the collection of some of this public funding by the parent company.22. Cash and cash equivalentsThe respective balances are broken down as follows:December 31, 2005 December 31, 2004 DifferenceBank deposits 93,214 87,480 5,734Cash on hand 29 31 (2)Total 93,243 87,511 5,732The increase in the item "Bank deposits" compared with December 31, 2004 isprincipally due to the greater amount of cash generated from current operations, onlypartly offset by the higher sums paid out for investments and dividends paid during2005.The item "Bank deposits" mainly consists of short-term deposits held by the parentcompany and by the subsidiary Saes Getters International Luxembourg S.A. with leadingcredit institutions.The item "Bank deposits" includes time deposits made by the parent company (€64,300thousand) all maturing within the first fifteen days of February 2006.The cash and cash equivalents held by the Group as at December 31, 2005 areprincipally expressed in euro.61Saes Getters Group

Shareholders' equity23. Shareholders' equityAs at December 31, 2005, shareholders' equity stood at €170,597 thousand, up by€1,347 thousand on December 31, 2004. The changes that occurred during the periodare described in the statement of movements in shareholders' equity.The consolidated financial statements include provisions for any taxes owed in theevent of the distribution of the profits accumulated in previous years by thesubsidiaries, excluding those associated with taxable temporary differences thatare not expected to be settled in the foreseeable future in the form of a dividenddistribution.Capital stockAs at December 31, 2005, the capital stock, fully subscribed and paid-up, amounted to€12,220 thousand and was made up of 15,271,350 ordinary shares and 7,460,619savings shares, making a total of 22,731,969 shares. As at December 31, 2004, thecapital stock consisted of 13,874,930 ordinary shares and 9,625,070 savings shares,making a total of 23,500,000 shares.Between January 3 and January 14, 2005 (inclusive), the optional conversion of savingsshares into ordinary shares took place at a ratio of 20 ordinary shares for every 31savings shares. This operation resulted in the conversion of 2,164,451 savings shares,corresponding to 22.49% of the total number of savings shares. As a result of thisoperation, the par book value increased from €0.52 per share as at December 31, 2004to €0.537569 per share as at December 31, 2005.The changes in the number of shares in issue during 2005 are shown below:No of shares atDec. 31, 2004IncreaseDecreaseNo of shares atDec. 31, 2005Total number of shares 23,500,000 1,396,420 (2,164,451) 22,731,969- Ordinary shares 13,874,930 1,396,420 15,271,350- Savings shares 9,625,070 (2,164,451) 7,460,619Treasury shares 364,434 120,913 (173,306) 312,041- Ordinary shares 191,128 110,900 302,028- Savings shares 173,306 10,013 (173,306) 10,013Outstanding shares 23,135,566 1,275,507 (1,991,145) 22,419,928- Ordinary shares 13,683,802 1,285,520 0 14,969,322- Savings shares 9,451,764 (10,013) (1,991,145) 7,450,606The parent company's ordinary and savings shares are listed on Borsa ItalianaS.p.A.'s Mercato Telematico Azionario. In 2001 the company was a foundingmember of the new segment of the Mercato Telematico Azionario called STAR(Securities with High Requirements), dedicated to small-caps and mid-caps thatmeet specific requirements with regard to reporting transparency, liquidity andcorporate governance.Consolidated Financial Statements 2005 62

Share issue premiumThis item includes amounts paid by shareholders over the par value of sharesunderwritten by capital increases.As at December 31, 2005, this was €38,273 thousand compared with €38,292thousand at the end of the previous year.Treasury sharesThese have been reclassified away from shareholders' equity as from January 1, 2005 inaccordance with IAS 32. As at December 31, 2004, the book value of treasury shares wasincluded among current assets in a total amount of €2,505 thousand, reclassified negativelyunder shareholders' equity by changing the opening balances following January 1, 2005 beingdefined as the transition date for the application of both IAS 32 (Financial instruments:Disclosure and presentation) and IAS 39 (Financial instruments: Recognition andmeasurement). The comparative figures relating to last year do not therefore include the effectof the aforementioned standards. If IAS 32 and IAS 39 had been applied for the period undercomparison, the reclassification of the book value of treasury shares negatively inshareholders' equity would have been based on the values existing as at December 31, 2004.In accordance with the resolution of the shareholders' meeting adopted pursuant to Articles2357 and 2357ter of the Civil Code, the parent company sold and bought treasury sharesduring the year. In particular, as a result of the voluntary conversion of savings shares intoordinary shares, which took place in January 2005, the parent company sold no. 1,392savings treasury shares in order to allow shareholders to hold entire multiples for conversion,and submitted for conversion no. 171,895 shares and sold the remaining no. 19 shares on themarket. The conversion ratio was 20 ordinary shares for every 31 savings shares.Ordinay SharesNumber of sharesUnit values(euro)Book ValuesTotal values(thousands of euro)Balances at December 31, 2004 191,128 8.36 1,598AdditionsDisposalsConversion 110,900 8.11 899Balances at December 31, 2005 302,028 8.27 2,497Savings SharesNumber of sharesUnit values(euro)Book ValuesTotal values(thousands of euro)Balances at December 31, 2004 173,306 5.23 907Additions 10,013 12.10 121Disposals (1,411) 5.23 (8)Conversion (171,895) 5.23 (899)Balances at December 31, 2005 10,013 12.10 121Total treasury shares 2,618SAES Getters ordinary shares held in the company’s portfolio as at December 31, 2005have a par book value of €162 thousand and represent 1.33% of the capital stock (1.98%of ordinary shares).SAES Getters savings shares held in the company's portfolio as at December 31,2005 have a par book value of €5 thousand and represent 0.04% of the capital63Saes Getters Group

stock (0.13% of savings shares).The higher market value of treasury shares compared with their book value is shown inthe table below (in thousands of euro):OrdinarysharesTreasurysharesHigher market value* (at December 30, 2005) than the book value 3,586 40Higher market value* (average December 2005) than the book value 3,652 42Higher market value* (average february 2006) than the book value 4,215 60* calculated on the basis of official pricesLegal reserveThis item corresponds to the parent company's legal reserve of €2,444 thousand as atDecember 31, 2005 and is unchanged from December 31, 2004.Sundry reserves, retained earnings and accumulated lossesThis item includes:- the reserve for treasury shares, which had a balance of €2,618 thousand as atDecember 31, 2005, equal to the book value of Saes Getters ordinary andsavings shares at the end of the period;- the cash flow hedge reserve (negative balance of €489 thousand as atDecember 31, 2005), generated by the fair value measurement of the hedgestaken out by the Group's Italian companies and by the US subsidiary Saes PureGas, Inc. to protect against changes in cash flows expected from foreigncurrency sale transactions (US dollars and Korean won), which arepredominantly inter-company in nature. Following the definition of January 1,2005 as being the transition date for the application of IAS 32 and IAS 39 bothrelating to financial instruments, this reserve was set up in 2005 by restatingthe opening balances for the year, according to the treatment prescribed by IAS8 in the case of a change in accounting policies. The comparative figuresrelating to last year do not include the effect of IAS 32 Financial instruments:Disclosure and presentation and IAS 39 Financial instruments: Recognition andmeasurement, after defining January 1, 2005 as being the transition date fortheir application. If IAS 32 and IAS 39 had been applied for the period undercomparison, the value of this reserve as at December 31, 2004 would havebeen determined by reference to the effect of the hedges existing at the endof the previous year.- the reserves (€3,026 thousand) formed from the monetary revaluation creditbalances resulting from the application of Law 72 of March 19, 1983 (€574thousand), Law 413 of December 30, 1991 (€762 thousand) and Law 342 ofNovember 21, 2000 (€1,690 thousand) by the Group's Italian Companies. Therevaluation reserves, pursuant to Law 413/1991 and Law 342/2000, are shownnet of substitute taxes totalling €166 thousand and €397 thousandrespectively. Refer to note no. 13 for further details;- the reserve for purchase of treasury shares allocated but not yet utilised,totalling €10,406 thousand as at December 31, 2005, compared with €10,500thousand one year earlier;Consolidated Financial Statements 2005 64

- sundry reserves of subsidiaries, the reserve generated from the transition tointernational accounting standards, retained earnings, other equity itemsrelating to the Group's companies which are not eliminated as part of theconsolidation process and exchanges differences arising from the conversion offinancial statements expressed in foreign currencies. The translation reservehad a positive balance of €4,652 thousand as at December 31, 2005, anincrease of €5,914 thousand on the loss of €1,262 thousand recorded one yearearlier. This decrease is due to the overall impact on consolidated shareholders'equity caused by translating the financial statements of foreign subsidiariesexpressed in foreign currencies into euro, as well as by the respectiveconsolidation adjustments.The Group exercised the exemption allowed under IFRS 1 First-time Adoption ofInternational Financial Reporting Standards regarding the possibility of writing off theaccumulated profits or losses generated by the consolidation of foreign subsidiariesas at January 1, 2004 and therefore the translation reserve only includes thetranslation gains or losses generated after the date of transition to IFRS.The following table shows the income and expenses recognised directly in shareholders'equity in 2005:Gain on sale of treasury shares 9Cash flow hedge reserve movements (1,632)Exchange rate differences from conversion of financial statements denominated in foreign currency 5,914Total income (expenses) recognised directly in the equity 4,291The reconciliation between the net income and shareholders' equity of Saes GettersS.p.A. and the consolidated net income and consolidated shareholders' equity as atDecember 31, 2005 and December 31, 2004 is set out below (thousands of euro):December 31, 2005 December 31, 2004NetincomeShareholders'EquityNetincomeShareholders'EquityGroup's Parent CompanySaes Getters S.p.A. 17,922 118,598 19,321 125,988Difference between the consolidatedcompanies' shareholders' equity and thebook value epresented by the investment 61,420 60,223Net profit (losses) of the consolidatedcompanies net of dividends distributedand investment writedowns 3,665 (2,170)Elimination of profits arising from intercompanytransactions, net of therelated tax effect 219 (5,561) 730 (15,263)Appropriation of deferred taxes relatedto subsidiaries' reserves for which isforeseeable distribution (1,641) (3,842) (2,060) (2,201)Other minor adjustments 842 (18) 326 503Consolidated accounts 21,007 170,597 16,147 169,25065Saes Getters Group

24. Investment in jointly controlled companiesAll subsidiaries are wholly owned, except for the jointly controlled company Nanjing SaesHuadong Getters Co. Ltd., for which the proportional consolidation method applies.The Group's 65% stake in the assets, liabilities, income and expenses of the jointlycontrolled company Nanjing Saes Huadong Getters Co. Ltd., included in the consolidatedfinancial statements according to the proportional consolidation method, is shown below(thousands of euro):December 31, 2005 December 31, 2004Non current assets 4,644 4,577Current assets 7,696 7,392Total assets 12,340 11,969Shareholders' equity 11,522 11,006Non current liabilities 0 0Current liabilities 818 963Total liabilities and shareholders' equity 12,340 11,9692005 2004Net sales 6,016 7,334Cost of sales (3,528) (3,718)Operating expenses (835) (891)Other income (expenses), net 3 2Non operating income (expenses) net 31 6Income before taxes 1,687 2,733Income taxes (170) (201)Net income 1,517 2,532In January 2006, the Group completed the acquisition of the 35% minority shareholdingin the above company. For further details, refer to note 39.Consolidated Financial Statements 2005 66

Non current liabilities25. Non current financial liabilitiesThis item consists of subsidised loans from the special applied research fund granted tothe parent company by the Ministry of Productive Activities through the bank SanPaoloIMI.The maturities of the loans are shown below:December 31, 2005 December 31, 2004 DifferenceLess than 1 year 257 255 2Between 1 and 2 years 763 257 506Between 2 and 3 years 772 689 83Between 3 and 4 years 781 698 83Between 4 and 5 years 571 708 (137)Over 5 years 547 1,339 (792)Total 3,691 3,946 (255)The average borrowing rate in 2005 was 1.17%.26. Deferred tax liabilitiesThis item consists of the provision for deferred taxes owed in the event of thedistribution of the profits and reserves of the subsidiaries, excluding those relating toprofits and reserves that are not considered likely to be distributed in the foreseeablefuture.The increase since December 31, 2004 is due to the higher profits accumulated by thesubsidiaries in the period results, partially counterbalanced by their use in relation totaxes and withholdings recorded upon the collection of dividends during 2005 by theparent company and by Saes Getters International Luxembourg S.A.27. Staff leaving indemnity and other employee benefitsIt should be noted that this item includes liabilities to employees under both definedcontribution and defined benefits plans existing in certain Group companies inaccordance with the contractual and legal obligations existing in Italy, Japan and Korea.The changes that occurred during the period were as follows:Balance at January 1, 2005 9,959Provision for the period recorded in the income statement 1,808Indemnities paid during the period (1,274)Differences arising from the translation of financial statements denominatedin foreign currencies259Balance at December 31, 2005 10,75267Saes Getters Group

The amounts recognised in the income statement as broken down as follows:Current service cost 1,466Interest cost (defined benefit plans) 345Net actuarial losses (gains) recognised in the period (3)Provision for the period recorded in the income statement 1,808The obligations relating to defined benefit plans are measured annually by independentactuarial consultants according to the projected unit credit method, separately applied toeach plan. The reconciliations as at December 31, 2005 and December 31, 2004respectively are shown below:Dec. 31, 2005 Dec. 31, 2004Present value of defined benefit obligations 8,817 8,408Fair value of plan assets 0 0Unrecognised actuarial (gains) losses (31) (73)Expenses from past service cost not yet recognised 0 0Accounting liabilities in respect of defined benefit obligations 8,786 8,335Accounting liabilities in respect of defined contribution obligations 1,966 1,624Staff leaving indemnity and similar obligations 10,752 9,959The main assumptions used for the actuarial valuations as at December 31, 2005 andDecember 31, 2004 of the defined benefits plans are given below:Italy Japan KoreaDec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004Discount rate 4.0% 4.0% 2.5% 2.5% 5.0% 5.0%Espected salary increase rate 2.0 - 2.5% 2.0 - 2.5% 2.0% 2.0% 4.5% 4.5%As at December 31, 2005, the number of employees was 825 (of which 314 employedoutside Italy), compared with 885 at the end of the previous year. The reduction of 60 isprincipally due to the sale of the company FST Consulting International, Inc. in 2005.As at December 31, 2005, the Group's employees were distributed as follows:December 31,2005December 31,2004Average2005Average2004Managers 57 58 58 64Employees and middlemanagement345 414 373 467Workers 423 413 430 415Total 825 885 861 946It should be noted that the number of staff at the jointly controlled company NanjingSaes Huadong Getters Co. Ltd. was 101 as at December 31, 2005 (of which 8 managers,31 employees and middle managers and 62 workers). This headcount is included in theconsolidated financial statements on the basis of percentage stake held by the Group(65%).Consolidated Financial Statements 2005 68

28. ProvisionsThe composition of these provisions and the related changes are set out below:January 1,2005ProvisionsUsesConversiondifferencesDecember 31,2005Provision for warranty onproducts sold185 7 (55) 27 164Provision for penalties 80 (80) 0Other provisions 1,536 137 (835) 43 881Total 1,801 144 (970) 70 1,045The decrease in the item "Other provisions" is mainly due to the full use of the provision(€443 thousand as at December 31, 2004) set aside in relation to the liabilities expectedfrom the stoppage of the operating activities of the indirectly controlled subsidiary NewTrace Analytical, Inc. (formerly Molecular Analytics, Inc.). This company was merged intoSaes Getters America, Inc. in December 2005.The table below distinguishes between provisions included amongst current and noncurrentprovisions:Dec. 31, 2005 Dec. 31, 2004 DifferenceCurrent provisions 105 867 (762)Non current provisions 940 934 6Total 1,045 1,801 (756)69Saes Getters Group

Current liabilities29. Trade payablesAs at December 31, 2005 these amounted to €8,949 thousand, posting a decrease of€815 thousand compared with December 31, 2004.All trade payables fall due within one year and arise from commercial transactions.30. Other payablesThe item "Other payables" includes amounts that are not strictly classified as "tradepayables" and amounted to €11,630 as at December 31, 2005 compared with €9,848thousand at the end of the previous year.These are broken down as follows:Dec. 31, 2005 Dec. 31, 2004 DifferencePayables to employees (holidays, wages and staff leaving) 6,595 4,412 2,183Insurance premiums payable 32 72 (40)Social security payables 1,348 1,306 42Tax payables (excluding income taxes) 1,218 2,124 (906)Other 2,437 1,934 503Total 11,630 9,848 1,782The item "Payables to employees (holidays, wages and staff leaving)" includes, as at December31, 2005, the amounts set aside for personnel indemnities by the parent company.The item "Social security payables" essentially consists of amounts payable by theGroup's Italian companies to the INPS (Italian social security system) as employer'scontributions.The item "Tax payables" (excluding income taxes) as at December 31, 2004 included theappropriation (€745 thousand) for withholdings on the dividends distributed in December2004 by the associated company Saes Getters Korea Corporation. These withholdingswere paid during 2005.The increase in the item "Other" compared with December 31, 2004 is principally due tothe larger amount set aside for the variable fees due to the Directors of the parentcompany, and to the larger amount payable for advances on financed projects currentlybeing undertaken by the Parent Company.These payables are all due within one year.31. Accrued income taxesAs at December 31, 2005, this item totalled €2,989 thousand, up by €78 thousand onthe figure for the previous year.Consolidated Financial Statements 2005 70

The balance does not include the IRAP advances (€1,239 thousand) paid by the subsidiary SaesAdvanced Technologies S.p.A. while the IRES advances (€4,018 thousand) relating to the samecompany were paid to the controlling company S.G.G. Holding S.p.A. as part of the subscriptionto the national tax consolidation and are therefore included in the item "Amounts payable tocontrolling company for tax consolidation". Refer to note no. 20 for further details.Tax payables are all payable within one year.32. Derivative financial instruments evaluated at fair value (cash flow hedge)This item includes the liabilities arising from the fair value measurement of hedgesagainst changes in cash flows originated from future foreign exchangetransactions, which are predominantly inter-company in nature, expected duringthe following year. These hedges are recognised according to the cash flow hedgemodel.The comparative figures relating to last year do not include the effect of IAS 32Financial instruments: Disclosure and presentation and IAS 39 Financialinstruments: Recognition and measurement, after defining January 1, 2005 asbeing the transition date for their application. If IAS 32 and IAS 39 had beenapplied for the period under comparison, the value of the receivables or payablesas at December 31, 2004 arising from the fair value measurement of hedgesexisting at the end of last year would have been determined in relation to changesin cash flows originated by future foreign exchange transactions.33. Bank overdraftThis item consists of liabilities arising from overdrafts on transfer accounts held withbanks.The year-on-year reduction is due to the payment of financial liabilities by the USsubsidiary Saes Pure Gas, Inc. and by the Japanese subsidiary, and to the sale of thesubsidiary FST Consulting International, Inc., which took place in the second half of theyear. These effects were partly offset by the bank overdraft of the subsidiary SaesGetters America, Inc., created in November 2005, and by the effect of the depreciationof the euro against the major foreign currencies.Bank loans are expressed in US dollars.34. Accrued liabilitiesThese are broken down as follows:Dec. 31, 2005 Dec. 31, 2004 DifferenceAccrued expenses:- Interest payables 5 3 2- Other accrued expenses 335 496 (161)Total accrued expenses 340 499 (159)Deferred income 2,400 1,961 439Total accrued expenses and deferred income 2,740 2,460 28071Saes Getters Group

The reduction in the item "Other accrued expenses" is principally due to the sale ofthe subsidiary FST Consulting International, Inc, which took place in the second halfof 2005.The item "Deferred income" includes the part relating to future years of the capital grantsgranted by the Ministry of the Treasury, Budget and Economic Planning to SaesAdvanced Technologies S.p.A. (€1,125 thousand) and by the Ministry for ProductiveActivities (MAP), the Ministry for Education, University and Research (MIUR, formerlyMURST) and the European Union (€221 thousand) in relation to investments made inprevious years.The increase in the item compared with the figure recorded for the previous year isprincipally due to the fact that proportions of income that did not meet the conditions forrecognition in the year ended December 31, 2005 were recorded by the US subsidiarySaes Pure Gas, Inc., partly offset by the aforementioned reduction in deferred income ongrants in relation to the part relating to the year.35. Financial risk management: objectives and criteriaThe Group's main financial instruments, other than derivative instruments, includingshort-term bank loans as well as sight and short-term bank deposits. The main objectiveof these instruments is to finance the Group's operating activities. The Group also hasfinancial assets and liabilities, such as trade payables and receivables, arising fromoperating activities.The Group performs transactions involving derivative instruments, principally foreigncurrency forward contracts. The aim is to manage the exchange rate risk generated bythe Group's operations. The Group's policy is not to trade in financial instruments.The main risk generated by the Group's financial instruments is the exchange risk. TheBoard of Directors re-examines and agrees upon the policies for managing such risks, assummarised below. The Group's accounting policies in relation to derivatives areindicated in note 2.Interest rate riskThe Group's exposure to market risk owing to interest rate changes is not significantinsofar as the money it borrows comes from subsidised fixed-rate loans for appliedresearch.Exchange risksThe Group is exposed to foreign currency exchange risk. Such exposure isgenerated predominantly by sales in currencies other than the reference currency.Around 85% of Group sales and around 37% of the Group's operating costs aredenominated in a currency different from the consolidation currency.In order to reduce the economic impact of fluctuations in the US dollar exchangerate, the Group, and in particular, the two Italian companies, have entered intoforward sale agreements in relation to the currency to be hedged. The maturities ofthe hedging derivatives tend to tally with the end dates of the transactions to behedged so as maximise their effectiveness.As at December 31, 2005, the Group hedged around 70% of the net cash flowsexpected in foreign currency estimated for 2006 on behalf of the two Italiancompanies.Occasionally, the Group also performs hedging transactions for specific commercialtransactions in a currency other than the reporting currency.Consolidated Financial Statements 2005 72

Commodity price riskThe Group's exposure to commodity price risk is limited. The Group does not enter intolong-term supply agreements but makes purchases according to requirements.Generally, the Group has more than one supplier for each commodity deemed criticaland in order to reduce exposure to the risk of price variations, it enters into annual supplyagreements aimed at controlling the price volatility of commodities.Credit riskThe Group deals predominantly with well-known and reliable customers. The balance ofcredits is monitored throughout the year so that the amount of potential exposures tolosses is not significant.Liquidity riskThe Group's objective is to maintain a balance between controlling borrowing andflexibility through the use of overdrafts. Given the dynamic nature of the businesses inwhich it operates, the Group gives preference to flexibility in securing funds throughcredit lines for short-term uses taken out at market rates.As at December 31, 2005, the Group has no significant exposure to the liquidity riskthanks to the availability of assets and bank deposits and limited use of borrowing.As prescribed in IAS 32, a comparison is given below between the value entered in thebalance sheet as at December 31, 2005 and the fair value of financial assets and liabilities:Book ValueFair ValueFinancial assetsOther long term assets 1,036 1,036Trade receivables 29,286 29,286Tax consolidation receivables from parent company 4,737 4,737Prepaid expenses, accrued income and other 6,270 6,270Cash and cash equivalents 93,243 93,243Financial liabilitiesNon current financial liabilities 3,434 3,434Other payables (non current and current) 11,784 11,784Trade payables 8,949 8,949Derivative financial instruments evaluated at fair value (cash flow hedge) 893 893Bank overdraft 2,798 2,798Current portion of long term debt 257 25736. Cash flow statementThe cash provided from operating activities was €37,251 thousand compared with €35,347thousand in the previous year. The increase is principally due to higher income for the period,partly offset by the rise in taxes paid.The cash flows used by investing activities totalled €9,970 thousand, an increase on thefigure of €6,652 thousand recorded in the previous year. This growth is principally due togreater investments in property, plant and equipment.The cash used by financing activities increased from €2,270 thousand in 2004 to €22,926thousand in 2005. This change is mainly attributable to the payment of higher dividendscompared with the previous year.73Saes Getters Group

Net cash and cash equivalents are stated net of "Bank overdraft", insofar as the latter fallsunder the category of liabilities to be repaid on request by the bank. A reconciliation is givenbelow between the cash and cash equivalents shown in the balance sheet and what isshown in the cash flow statement.December 31, 2005Cash and cash equivalents 93,243Bank overdraft (2,798)Cash and cash equivalents, net 90,445The comparative figures relating to the previous year do not include the effect of IAS 32Financial instruments: Disclosure and presentation and IAS 39 Financial instruments:Recognition and measurement, after defining January 1, 2005 as being the transitiondate for their application.If IAS 32 and IAS 39 had been applied for the period under comparison, the net cash andcash equivalents would have been stated net of treasury shares, i.e. €84,400 thousandas at December 31, 2004.37. Potential liabilities and commitmentsThe following table shows the guarantees provided by the Group to third parties andother off balance-sheet items:December 31, 2005 December 31, 2004 DifferenceGuarantees in favour of third parties 14,703 14,658 45Total guarantees provided by the Group 14,703 14,658 45Forward exchange contracts 23,327 19,945 3,382Total commitments 23,327 19,945 3,382The item "Guarantees in favour of third parties" is principally made up of guaranteesgiven to the VAT Office totalling €14,577 thousand (€14,123 thousand as at December31, 2004) to guarantee refunds applied for.The maturities for operating lease payments in force as at December 31, 2005 areshown below:Less than1 yearBetween 1and 5 yearsOver5 yearsOperating lease obligations 154 193 0 347TotalThe guarantees provided by the Group in respect of credit facilities, in the interest ofsubsidiaries, which were not utilised on the reporting date, totalled €21,694 thousandas at December 31, 2005 (compared with €24,616 thousand one year earlier).The item "Forward exchange contracts" includes the value of transactions performed tohedge against the risks of fluctuation of the exchange rates in force on the balance sheetdate. These transactions carried out by the parent company and by the subsidiaries SaesConsolidated Financial Statements 2005 74

Advanced Technologies S.p.A. and Saes Pure Gas, Inc., consist of forward agreementson the US dollar (notional value of $27,360 thousand) and on the Korean won (notionalvalue of 3,752 million Korean won), associated with receivables existing on the balancesheet date and future receivables, relating to sales in US dollars and Korean won. Thesecontracts will extend into the 2006 financial year. As regards contracts on the US dollar,the average spot exchange rate fixed with credit institutions is 1.2203 against the euro.As regards contracts on the Korean won, carried out by the US subsidiary Saes PureGas, Inc., the spot exchange rate fixed with credit institutions is 1,038.50 against the USdollar.38. Related party transactionsFor the purposes of identifying Related Parties, refer to IAS 24.In this case, the Related Parties include:- S.G.G. Holding S.p.A., controlling company, which is both creditor and debtor ofthe Saes Getters group as a result of the subscription by the Group's Italiancompanies to the national tax consolidation.- Scientific Materials Europe S.r.l., associated company (30%), which is engagedin the production, manufacture and marketing of synthetic crystals for industriallaser applications and for research; Saes Getters S.p.A. distributes its products.- K Studio Associato, tax, legal and financial consultancy firm whose foundingmember is Vicenzo Donnamaria, statutory auditor of Saes Getters S.p.A.Provides tax, legal and financial consultancy services.- Managers with strategic responsibilities: these include the members of theBoard of Directors, including non-executive members, the Group HumanResources Director, the Group Commercial Director and the Group ChiefOperations Officer.- The statutory auditors.The following table shows the total values of the related party transactions carried outin the years 2005 and 2004.Costs Revenues Payables Receivables2005 2004 2005 2004 2005 2004 2005 2004S.G.G. Holding S.p.A. - - - - 4,318 - 4,737 -Scientific Materials Europe S.r.l 62 - 27 - 74 - 32 -K Studio Associato 175 100 - - - 100 - -The following table shows the salaries paid to managers with strategic responsibilitiesas identified above:Short-term employee benefits 2,935Post-employment benefits -Other long-term benefits -Termination benefits 433Share-based payments -Total compensations to key management personnel 3,368200575Saes Getters Group

Pursuant to Consob communications of February 20, 1997 and February 28, 1998, andto IAS 24, it is pointed out that, in 2005, all Related Party transactions were performedunder economic and financial conditions in line with market conditions and no atypical,unusual or non-standard Related Party transactions were carried out.39. Events subsequent to the end of the yearOn January 11, 2006, the Groups signed the final contract for the acquisition of the 35%minority shareholding in Nanjing Saes Huadong Getters Co. Ltd., based in Nanjing,Jiangsu, China, from Nanjing Huadong Electronic Information Technology Co. Ltd.,previously a partner in the joint venture. By means of this acquisition, the Group becamethe sole shareholder of the company Nanjing Saes Huadong Getters Co. Ltd. Thetransaction was completed on January 25, 2006.The purchase price was $11 million in cash, of which $5 million was paid upon signingthe final contract and the remaining $6 million on closing.In January 2006, the Group decided to suspend production, during the first half of theyear, of the subsidiary Saes Getters Technical Service (Shanghai) Co. Ltd., involved in theproduction of pure gas distribution systems, as part of the policy of focussing onprofitable businesses.On March 1, 2006, the Group announced that it had signed a binding letter of intent tobuy a 50% stake in the company Memory-Metalle GmbH based in Weil am Rhein,Germany. The company markets semi-finished goods and shape memory alloycomponents for medicinal and industrial applications. The acquisition is conditional uponthe due diligence process and upon the negotiation of the final contract andsupplementary agreements. The transaction is expected to be completed by the end ofApril 2006. The purchase price will be €1.7 million, subject to possible adjustments, andwill be paid in cash on closing.The branch of the parent company Saes Getters S.p.A., incorporated in Taiwan during2005, started operating as from March 1, 2006.40. Effects of the transition to the ifrs international accounting standardsThe reconciliations for the balance sheet and income statement as required byIFRS 1 “First-time adoption of International Financial Reporting Standards”,accompanied by explanatory notes of the principles adopted and the items thatappear in the reconciliations, are given below.The balance sheet and income statement prepared according to the layoutsrequired by the Legislative Decree No. 127/1991 have been restated in short formto comply with the presentation criteria which will be adopted to prepare IFRSfinancial statements.In 2004 income statement, witholding taxes (€1,020 thousand), related to netresults and retained earnings of subsidiaries, whose distribution is foreseeable,were reclassified from “Other income (expenses), net” to “Income taxes”, in orderto obtain a better comparability of data and in line with the classification criteriaadopted during the period 2005.Consolidated Financial Statements 2005 76

In the first time adoption of international accounting standards IFRS the Companytook advantage of the following possibilities allowed by the IFRS 1:- to define the transition date for the IAS 32 (“Financial Instruments: Disclosureand Presentation”) and IAS 39 (“Financial Instruments: Recognition andMeasurement”) as from January 1, 2005. Therefore comparative data reportedfor the previous period do not consider the impact of such standards;- possibility of avoiding retrospective application of IFRS 3 (“BusinessCombinations”) to companies or business assets acquisitions made before thedate of transition to IFRS;- booking of cumulative actuarial gains and losses on employee benefits existingat the transition date to IFRS, while the “corridor approach” will be applied, asindicated by IAS 19, for actuarial gains and losses originated as from January 1,2004;- cumulative translation differences arising from the consolidation of foreignsubsidiaries are deemed to be zero as of January 1, 2004. Gains or losses fromany possible future disposal of foreign subsidiaries will include only translationdifferences originated after the date of transition to IFRS;- adoption of the fair value option as deemed cost for some categories of fixedassets which were revaluated during previous years.To be noticed that the application of IAS 32 and IAS 39 determined an adjustmentof the net equity opening balance as of January 1, 2005 related to the followingitems:- Treasury shares: reclassified as a reduction of the net equity (€2,505thousand);- Derivative financial instruments: increase by €1,162 thousand of the net equitydue to the accounting at fair value.The auditing firm Reconta Ernst & Young S.p.A. completed the audits on the abovereconciliations as of the transition date and as of December 31, 2004 and issueda report, on July 27, 2005, certifying the conformity of the IFRS reconciliationstatements with the criteria and principles defined in Article 82-bis of theRegulations for Issuers.77Saes Getters Group

Balance sheet reconciliation as of the date of transition (January 1, 2004)NotesJanuary 1, 2004Italian GaapFacultative Accountingexemptions and standards differenceson openingmandatoryexceptions net equityJanuary 1, 2004IFRSASSETSNon current assetsProperty, plant and equipment, net 1 59,261 5,151 64,412Intangible assets, net 2 4,369 (30) 4,339Investments in share capital and otherfinancial assets0 0Deferred tax assets 3 11,735 (1,925) 9,810Other long term assets 1,181 1,181Total non current assets 76,546 0 3,196 79,742Current assetsInventory 4 18,518 (3) 18,515Trade receivables 26,744 26,744Prepaid expenses, accrued income and other 14,128 14,128Investments in share capital and otherfinancial assets5,192 5,192Cash and cash equivalents 70,404 70,404Total current assets 134,986 0 (3) 134,983Total assets 211,532 0 3,193 214,725SHAREHOLDERS' EQUITY AND LIABILITIESCapital stock 12,220 12,220Conversion reserve (2,003) 2,003 0Other reserves 150,059 (2,003) 3,057 151,113Net income (loss) (5,498) (5,498)Total shareholders' equity 5 154,778 0 3,057 157,835Non current liabilitiesNon current financial liabilities 2,574 2,574Deferred tax liabilities 6 0 298 298Staff leaving indemnity and similarobligations 7 10,190 (162) 10,028Non current provisions 719 719Other payables 98 98Total non current liabilities 13,581 0 136 13,717Current liabilitiesTrade payables 10,455 10,455Other payables 8,936 8,936Accrued income taxes 3,922 3,922Current provisions 1,655 1,655Derivative financial instruments evaluatedat fair value (cash flow hedge) 0 0Bank overdraft 14,410 14,410Current portion of long term debt 172 172Accrued liabilities 3,623 3,623Total current liabilities 43,173 0 0 43,173Total liabilities and shareholders' equity 211,532 0 3,193 214,725Consolidated Financial Statements 2005 78

Balance sheet reconciliation as of December 31, 2004NotesDecember 31,2004Italian GaapFacultativeexemptions andmandatoryexceptionsAccountingstandardsdifferences onclosing net equityDecember 31,2004IFRSASSETSNon current assetsProperty, plant and equipment, net 1 54,929 4,840 59,769Intangible assets, net 2 3,604 (18) 3,586Investments in share capital and otherfinancial assets0 0Deferred tax assets 3 10,833 (1,874) 8,959Other long term assets 1,104 1,104Total non current assets 70,470 0 2,948 73,418Current assetsInventory 4 15,492 244 15,736Trade receivables 28,581 28,581Prepaid expenses, accrued income and other 7,927 7,927Investments in share capital and otherfinancial assets2,505 2,505Cash and cash equivalents 87,511 87,511Total current assets 142,016 0 244 142,260Total assets 212,486 0 3,192 215,678SHAREHOLDERS' EQUITY AND LIABILITIESCapital stock 12,220 12,220Retained earnings 137,826 3,057 140,883Net income (loss) 16,141 6 16,147Total shareholders' equity 5 166,187 0 3,063 169,250Non current liabilitiesNon current financial liabilities 3,691 3,691Deferred tax liabilities 6 2,213 291 2,504Staff leaving indemnity and similarobligations 7 10,121 (162) 9,959Non current provisions 934 934Other payables 124 124Total non current liabilities 17,083 0 129 17,212Current liabilitiesTrade payables 9,764 9,764Other payables 9,848 9,848Accrued income taxes 2,911 2,911Current provisions 867 867Derivative financial instruments evaluatedat fair value (cash flow hedge) 0 0Bank overdraft 3,111 3,111Current portion of long term debt 255 255Accrued liabilities 2,460 2,460Total current liabilities 29,216 0 0 29,216Total liabilities and shareholders' equity 212,486 0 3,192 215,67879Saes Getters Group

Notes to the balance sheet reconciliations1. Property, plant and equipment: by applying the finance method to leasingtransactions, as prescribed by IAS 17, the net book value of property, plant andequipment acquired under leases by the Group's Italian companies is recognised inopening equity according to IFRS.As at December 31, 2004, all leases were terminated, financial liabilities were settledand assets redeemed.The difference between the values of property, plant and equipment recognisedaccording to Italian accounting principles and those calculated on the basis ofinternational accounting standards on the date of December 31, 2004 is the net bookvalue of the assets recognised on the date of transition to IFRS, less depreciation forthe year 2004.Under Italian accounting principles, no asset was recognised until the moment ofredemption in respect of finance leases, while disclosure on the effects of thefinance method was given in the accompanying notes.2. Intangible assets: in accordance with IAS 38, some categories of costs such as startupand expansion do not meet the conditions to be recognised as an intangible asset.The residual values on the date of transition to IFRS were therefore eliminated. Thedifference between the values of intangible assets on the date of December 31, 2004also reflects amortisation for the year 2004 respectively according to Italianaccounting principles.3. Deferred tax assets: the difference on the dates of January 1, 2004 and December31, 2004 includes the tax effect generated by restatements for the application ofIFRS on the respective dates.4. Inventory: the difference vis-à-vis Italian accounting principles includes theeffect of the valuation based on the percentage of completion method ofconstruction contracts in force at the parent company, in accordance with IAS11, totalling €1 thousand on the date of transition to IFRS, and €252 thousandas at December 31, 2004. This positive effect is partially offset by the reversal ofthe value of spare parts entered as stock and not capitalisable in accordancewith IAS 2.5. Shareholders' equity: the total amount of adjustments owing to differentaccounting principles on the transition date of January 1, 2004 is €3,057thousand and is posted to a reserve, in accordance with IFRS 1. The differencesgenerated after the date of transition to IFRS have had an effect on the incomefor the period.It should be noted that there was a reclassification from the translation reserve toother reserves in the negative amount of €2,003 thousand, as a result of the Group'sdecision to elect the optional exemption contained in IFRS 1, which allows theConsolidated Financial Statements 2005 80

possibility of writing off the accumulated profits or losses generated by theconsolidation of foreign subsidiaries on the date of transition to IFRS. Gains or lossesrelating to possible disposals of foreign subsidiaries after January 1, 2004 will onlyinclude the translation differences generated after the date of transition to IFRS.6. Deferred tax liabilities: the restatement is due to the tax effect generated by theapplication of IAS 17 by one of the Group's Italian companies.7. Staff leaving indemnity and other employee benefits: in accordance with IAS 19, thebenefits for employees in the category of defined benefit plans are treated accordingto the actuarial method. This valuation has led to a reduction in opening liabilitiesequal to €162 thousand at Group level.Income statement reconciliation for 20042004Italian GaapAccountingstandardsdifferencesNet sales 141,649 141,649Cost of sales (69,913) 155 (69,758)Gross profit 71,736 155 71,891R&D expenses (13,428) (129) (13,557)Selling expenses (15,966) (3) (15,969)G&A expenses (13,255) (72) (13,327)Total operating expenses (42,649) (204) (42,853)Other income (expenses), net 633 633Operating income 29,720 (49) 29,671Interest and other financial income (expenses), net 1,473 1,473Foreign exchange gains (losses), net (1,133) (1,133)Income before taxes 30,060 (49) 30,011Income taxes (13,919) 55 (13,864)Net income 16,141 6 16,1472004IFRS81Saes Getters Group

Notes to the income statement reconciliationsA summary is given below of the accounting differences applicable to the incomestatement in relation to the year 2004:2004ItalianGaap1Financiallease(IAS 17)2Constructioncontracts(IAS 11)3Employeebenefits(IAS 19)4Intangibleassetswritedown(IAS 38)5Tax eff.consolid.adj(IAS 12)Totaldiff.2004IFRSNet sales 141,649 141,649Cost of sales (69,913) (110) 251 4 10 155 (69,758)Gross profit 71,736 (110) 251 4 10 0 155 71,891R&D expenses (13,428) (129) (129) (13,557)Selling expenses (15,966) (3) (3) (15,969)G&A expenses (13,255) (78) 6 (72) (13,327)Total operating expenses (42,649) (207) 0 (3) 6 0 (204) (42,853)Other income (expenses), net 633 633Operating income 29,720 (317) 251 1 16 0 (49) 29,671Interest and other financialincome (expenses), net1,473 1,473Foreign exchange gains(losses), net(1,133) (1,133)Income before taxes 30,060 (317) 251 1 16 0 (49) 30,011Income taxes (13,919) 117 (92) (2) 32 55 (13,864)Net income 16,141 (200) 159 1 14 32 6 16,1471. By applying the finance method to leasing transactions, as prescribed by IAS 17, thedepreciation of property, plant and equipment was recognised according to therespective depreciation schedules.According to Italian accounting principles, the lease payment was booked for thequota attributable to the period.On the date of transition to IFRS (December 31, 2003), all lease contracts wereterminated. Consequently, no other economic impacts arising from the transition toIFRS are recorded.2. In accordance with IAS 11, construction contracts specifically for the production oftangible assets for certain customers are measured according to the percentage ofcompletion method. The respective margin was therefore recognised.According to Italian accounting principles, the construction contracts undertaken bythe parent company were measured at cost and the margin was recognised wheninvoiced.3. In accordance with IAS 19, the benefits for employees in the category of definedbenefit plans are treated according to the actuarial method. The effects on the incomestatement of the various Group companies concerned are not significant.4. Amortisation of start-up and expansion costs recorded according to Italian accountingprinciples which do not meet the requirements for recognition as an intangible assetaccording to IAS 38 was reversed.Consolidated Financial Statements 2005 82

5. In accordance with IAS 12, the rate applied in the calculation of deferred tax assetsassociated with consolidation adjustments for the reversal of the unrealised marginin the final stocks acquired by Group companies, is that of the purchasing company,whereas under Italian accounting principles, the rate in force in the seller's country isapplied.The reconciliation between net income according to Italian accounting principles and netincome according to IAS is shown in the following table:2004Net income according Italian Gaap 16,141- Depreciation of tangible fixed assets acquired by means of finance leases contracts (IAS 17) (317)- Evaluation of construction contracts on the basis of the percentage of completion (IAS 11) 251- Elimination of amortization of intangible assets written down (IAS 38) 16- Actuarial evaluation of defined benefit plans in favour of employees (IAS 19) 1- Tax effects on the above adjustments 23- Different calculation of tax effects on adjusments to eliminate intercompany profit on inventory acquiredfrom Group companies (IAS 12) 32Net income according IFRS 16,147There is no significant impact on the cash flow statement for the year 2004 owing toIFRS transition.41. Exchange rates applied in the conversion of financial statements expressed ina foreign currencyThe following table shows the exchange rates applied in converting foreign financialstatements:Expressed in foreign currency (per 1 euro)CurrencyDecember 31, 2005 December 31, 2004Average rate Final rate Average rate Final rateUS Dollars 1.244 1.180 1.243 1.362JPY 136.849 138.900 134.381 139.650Korean Won 1,273.610 1,184.420 1,422.549 1,410.050Renminbi (People's Republic of China) 10.196 9.520 10.292 11.278Singapore Dollars 2.070 1.963 2.100 2.226New Taiwan Dollars 40.859 38.739 41.472 43.954UK Pounds 0.684 0.685 0.678 0.705Lainate (MI), March 24, 2006On behalf of the Board of DirectorsThe ChairmanPaolo della Porta83Saes Getters Group