ISRA VISION AG HIGH(-) EUR 24.00(-) 04 AUGUST 2011

ISRA VISION AG
Recommendation:
BUY(Initial Coverage)
Key data
Risk:
HIGH (-)
Price Target:
EUR 24.00(-)
Capturing the “true” value-add in MV arena…
…by delivering MV systems that allow customers to save costs
▪ ISRA VISION is leading provider of machine vision (MV), operating through
the business divisions Surface Vision and Industrial Automation. The
company is positioned in the MV value chain as a system supplier
integrating various components (i.e. camera, software etc) to a MV system
which is then embedded into the customers‟ manufacturing/production lines.
▪ With its products, ISRA enables users of MV to optimize their processes
and reduce costs (i.e. amortization of investments within 6 months for the
customers). The value-add delivered by ISRA is its 1) broad application
expertise, 2) sound knowledge of the customer production/manufacturing
processes, 3) technological capability of continuously aligning its products
with the requirements and needs of customers, and 4) global service and
distribution network, serving clients from 20 different locations worldwide.
▪ The MV industry is expected to grow at CAGR of 9.3% from 2010–2015 to
USD 15.3bn in 2015. ISRA aims for above industry average growth rates by
introducing new/more cost efficient products (i.e. 25 new product launches)
as well as expanding business to new market verticals and geographies.
▪ Since the IPO in 2000, ISRA VISION increased the top line by a CAGR of
15.3%. Going forward, we forecast revenues to grow at a CAGR of 11.3%
from EUR 64.8m to EUR 89.5m by FY12/13E. Our growth scenario is based
on 1) stable growth in company main business division Surface Vision
(CAGR 11.5% through FY12/13E) and 2) picking up business in Industrial
Automation division (CAGR of 10.5%) after years of declining segment
revenues (CAGR of -7% during 06/07-09/10).
▪ ISRA runs business with an underlying gross margin of 52.9% and EBIT
margin of 17.7%. Going forward, we expect margins to increase since we
believe system suppliers will be able 1) to capture a higher part of the
value-add delivered by MV technology and 2) ISRA, to continue to deliver
cutting-edge systems and solutions (i.e. key enabler of cost savings for the
end users of MV systems). In our view, higher operating margins and lower
interest burden will lead to double digit ROE in the future.
▪ We applied a DCF and Peer Group analysis to derive a fair value of EUR
24.26/share for ISRA VISION. Thus we initiate our coverage on ISRA with
BUY and a PT of EUR 24.00/share. The current multiples (i.e. 11/12 P/E of
7.5) point to an attractive risk/return profile for the stock, in our view.
Y/E 30.09., EURm 07/08 08/09 09/10 10/11E 11/12E 12/13E
Sales 68.3 58.2 64.8 75.4 83.7 89.5
EBITDA 18.6 15.2 17.7 20.9 23.2 24.9
EBIT 12.9 9.3 11.5 13.8 15.8 17.3
Net income 7.6 6.5 7.0 8.9 10.3 11.4
EPS 1.76 1.52 1.62 2.06 2.39 2.64
DPS 0.15 0.15 0.20 0.20 0.20 0.20
EBITDA margin 27.2% 26.1% 27.2% 27.7% 27.7% 27.8%
EBIT margin 18.9% 15.9% 17.7% 18.3% 18.9% 19.3%
Net margin 11.1% 11.1% 10.7% 11.8% 12.4% 12.8%
EV/EBITDA 5.6 6.9 5.9 5.0 4.5 4.2
EV/EBIT 8.1 11.3 9.1 7.6 6.7 6.1
P/E 13.8 11.9 11.1 8.7 7.5 6.8
Source: Company Data, CBS Research AG
04 AUGUST 2011
Share price (dark) vs TecDAX
Sources: CBS Research AG, Bloomberg
Internet: www. isravision.com
WKN: 548810
Reuters: ISRG.DE
Company profile:
Share data:
Share price (EUR, last closing price):
Shares outstanding (in m):
Market capitalisation (EURm):
Enterprise value (EURm):
Ø daily trading volume (3m., no. of shares):
Performance data:
High 52 weeks (EUR):
Low 52 weeks (EUR):
Absolute performance: (12 months)
Relative performance (vs. TecDAX):
1 month
3 months
12 months
Shareholders:
Enis Ersü (CEO
Fidelity
Vision GbR
Argos Investment
DWS Investment
Free float
Financial calender:
3Q Results
Author: Veysel Taze (Analyst)
Sector: Technology
ISIN: DE0005488100
Bloomberg: ISR GY
Founded in 1985, ISRA VISION is a pioneer in
Machine Vision (MV). Within the business
divisions Surface Vision and Industrial Automation
the company serves various market verticals.
Close Brothers Seydler Research AG
Phone: +49 (0)69 - 977 84 56 0
E-Mail: research@cbseydlerresearch.ag
www.cbseydlerresearch.ag
Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at
the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others
in connection with their trading activities, occupation, or employment.
18.00
4.3
78.0
104.9
6,900
20.35
13.50
27.3%
7.9%
25.9%
30.5%%
25.2%
10.0%
5.0%
3.3%
3.1%
53.4%
31 AUG 2011

ISRA VISION AG
Table of content
Investment thesis ............................................................... 3
SWOT Analysis ................................................................... 5
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Strengths ...................................................................................................... 5
Weaknesses ................................................................................................. 5
Opportunities ................................................................................................ 5
Threats .......................................................................................................... 5
Valuation ............................................................................ 6
DCF Valuation .............................................................................................. 6
Peer Group Valuation ................................................................................... 7
Peer group valuation .................................................................................. 9
MV Technology and Industry ............................................ 11
ISRA´s market position in the value chain ................................................ 12
The Company: Pioneer in MV ........................................... 13
History ...................................................................................................... 13
Company Structure .................................................................................. 14
Shareholder Structure .............................................................................. 14
Management ............................................................................................ 14
Business Model........................................................................................... 15
Surface Vision .......................................................................................... 16
Industrial Automation ............................................................................... 17
Growth strategy........................................................................................... 18
MV Market ........................................................................ 19
European machine vision market ............................................................. 19
Financial review ............................................................... 22
1H FY10/11 results .................................................................................. 23
Forecasts .................................................................................................... 23
Balance sheet and cash ........................................................................... 24
Profit and loss account ................................................................................ 26
Balance Sheet .......................................................................................... 27
Cash Flow statement ............................................................................... 28
Close Brothers Seydler Research AG | 2

ISRA VISION AG
Investment thesis
Founded in 1985, ISRA VISION is one of the world´s leading companies of industrial
image processing (machine vision). The ISRA Group offers a broad range of machine
vision systems for surface inspection, robot guidance and quality control. The core
competence of the company is ISRA-BrainWARE®, an innovative software for
intelligent machine vision system. BrainWARE® integrates different technologies in
an advanced software system for standard application in the industry. It combines the
company´s broad application expertise with scientific know-how from optics, image
processing, advanced illumination, intelligent classification, real time software,
cognitive image analysis, 3D measurement, pattern recognition, multi-view and multimode
image capturing. Within the business divisions Surface Vision and Industrial
Automation the company serves various industries holding leading market position in
the market verticals Glass (market share ~80%), Metal (~60%), Automotive (~30%)
and Plastic (~30%).
Technology and positioning: Machine Vision (industrial image processing) is a
key technology in the area of automation, production control and fully automated
quality assurance. ISRA VISION is positioned in the MV value chain as a system
supplier, integrating various components (i.e. camera, software etc) into a MV system
which is then embedded into the customers‟ manufacturing/production line. In our
view ISRA delivers following key competitive advantages 1) broad application
expertise, 2) sound knowledge of the customer production/manufacturing processes,
3) technological capability of continuously aligning its products with the requirements
and needs of customers and 4) global service and distribution network.
Key enabler of cost benefits: In our view, the current technological
requirements (i.e. higher data rates, greater real time image processing etc) allow
components suppliers such as camera and sensor providers to capture a significant
part of the value-add delivered by MV technology. However, going forward, we think
that the application expertise, the knowledge of the customers´ production processes,
the flexibility of the MV system and greater/autonomous robotic capabilities will be
the main factors favoring the business models of system suppliers such as ISRA
VISION. Thus we believe that system suppliers are better positioned to capture a
greater part of the value-add in the future by monetizing on their broad application
expertise and direct access to customers.
Business model: The Company operates through the business segments Surface
Vision and Industrial Automation, serving various end markets on a global scale. The
company offers a broad product range of standardized and customized solutions for
automating both quality inspection and production. With a revenue contribution of
~80% and an underlying EBIT margin of 18%, Surface Vision is by far ISRA´s largest
business segment. In Industrial Automation (EBIT margin >16%) the company
focuses on technology of robot guidance, delivering all core components of the
system from one source. The company supplies its systems and solutions either
directly to end users of their systems or to original equipment manufacturers (OEMs)
who integrate MV systems into their equipment.
Market verticals and benefits: ISRA VISION currently serves eight different
market verticals, ranking among the top three system suppliers in most of its end
markets. The company is particularly strong in industries with a high degree of
automated production and quality inspection such as automotive, metals, glass,
plastics and paper. The company considers Energy, Healthcare, Food,
Transportation and Information as potential growth markets (“mega-markets”)
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Pioneer in MV with
strong market position
in some industries
Positioned as system
supplier within the MV
value chain
From mid-term
perspective we prefer
MV system supplier
over component
providers
Two business segment
with attractive
margins
Serving eight different
market verticals by
providing high return
on investment for its
customers
Close Brothers Seydler Research AG | 3

ISRA VISION AG
pursuing an opportunistic business approach in serving the sub-segments of these
mega markets either directly or indirectly. With its systems and solutions, ISRA
enables end users of MV to optimize their processes and reduce costs. Thus the
company´s systems offer an attractive return on investments for its customers
allowing a swift amortization of the investments within the first six months.
Strategy: ISRA pursues a Multi-Branch strategy based on three core strategic
pillars 1) Technologies, 2) Industries and 3) Regions. By implementing the Multi-
Branch strategy ISRA aims to achieve a higher diversification in terms of
applications, customers, verticals and geographies, while focusing at the same time
on long-term profitable growth. This allows the company to become more
independent from industry-specific and regional business cycles as well as
customers. For the upcoming years the management targets organic revenue growth
that exceed the EUR 100m mark.
Financials: Over the period FY06/07-09/10 (i.e. financial year from 1 October to 30
September) ISRA VISION increased sales by a CAGR of 8.2% from EUR 51.3m to
EUR 64.8m in FY 09/10. Going forward we expect growth to accelerate to CAGR of
11.3% from EUR 64.8m to EUR 89.5m over the period FY09/10 to FY12/13E. Our
growth scenario is based on 1) stable double digit growth in company´s core
business division Surface Vision (CAGR of 11.5% to EUR 73.9m by FY12/13E) and
2) recovery in Industrial Automation business (CAGR of 10.5%) after years of
declining segment revenues (CAGR of -7% during 06/07-09/10).
Margin development: ISRA runs business with an underlying gross margin of
52.9% and EBIT margin 17.7% (based on reported IFRS numbers as of FY09/10)
which should continue to increase since we believe system suppliers will be able to
capture a higher part of the value-add delivered by MV technology. Thus we think
ISRA will still have pricing power in the future and continue to deliver cutting-edge
systems (i.e. key enabler of cost savings for the end users of MV systems). This
combined with lean cost platform should allow the company to expand gross margin
to 55.1% and EBIT to 19.3% by FY12/13E. Higher operating margins and lower
interest burden will in our view result on double digit ROE of 10.3% by FY12/13E.
Valuation: We applied a multiple valuation based on a peer group analysis and a
Discounted Cash Flow (DCF) model to determine the fair value of ISRA VISION. By
combining both valuation methods, we arrived at fair value of EUR 24.26 per share.
Thus we initiate our coverage on ISRA with a BUY recommendation and a price
target (PT) of EUR 24.00/share. This indicates an upside potential of more than 33%
to company´s last closing price of EUR 18.00.
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Reducing dependency
on technology,
customers and
verticals through
diversification
Top line CAGR of
11.3% over the period
through FY12/13E....
.... and “room” for
margin expansion in
the future
PT of EUR 24.00/share
Close Brothers Seydler Research AG | 4

ISRA VISION AG
SWOT Analysis
Strengths
� Leading market position in some niches: Global market leader for Surface
Vision with dominant market position in glass, metals, automotive and plastic.
� Diversification benefits: ISRA runs a well diversified business in terms of
technology, market verticals and geographic markets.
� Pioneer in MV systems: ISRA has more than 25 years of expertise in providing
MV systems. Thus the company has allocated broad application and industry
specific engineering know-how over the years.
� Broad customer base: With its key account management, global sales and
service network, the company has excellent access to end users of MV systems.
� Sound margins: Based on reported numbers the company runs business on
gross margin >54% and EBIT margin >18% (as of 1H of FY10/11) which are
among the highest within the MV industry.
Weaknesses
� Inefficient working capital management: The company has a high need of
working capital which leaves room for optimization going forward.
� Industrial Automation: Sales in Industrial Automation division has been
declining over the last years which we think can be turned around considering the
company´s investment in the area of 3D machine vision.
� Some of company´s end markets are highly cyclical.
Opportunities
� Promising market: MV technology is still in early adoption phase in various end
markets. Going forward, we think new application areas and market verticals will
open-up providing promising growth prospects. According to the company, only
~20% of the potential MV applications have been addressed up to now.
� New market verticals: The company considers Energy, Healthcare, Food,
Transportation and Information as potential growth markets (“mega-markets”)
pursuing an opportunistic business approach in serving the sub-segments of
these mega markets either directly or indirectly.
� New geographies: In the past, ISRA generated the core of its revenues in
Europe. However, the company is expanding business activities into fast growing
markets such as Asia, Americas, Middle East and Eastern Europe.
� Acquisitive growth: The MV industry is still highly fragmented, consisting of a
large number of privately held companies that focus on certain niches and
regions. Thus the industry still offers attractive take-over targets.
� Evolving growth prospects from the 3D machine vision technology
Threats
� Growing competition: Given the attractive margins in the MV system business
we think competitive pressure will grow in the future.
� Impairment risk: Considering the high amount of goodwill of EUR 37.3m and
capitalized development costs of EUR 28.1m of (FY09/10) ISRA´s balance sheet
bears risk of potential impairments in case of non-profitability.
� Technological risks: MV industry is driven by short technology cycles and
changing customer requirements. A failure to adopt new technological trends and
customer requirements would harm the company´s profitability.
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ISRA VISION AG
Valuation
We applied a multiple valuation based on a peer group analysis and a Discounted
Cash Flow (DCF) model to determine the fair value of ISRA VISION AG. Our peer
group analysis based on P/E and Enterprise value (EV) multiples resulted in a fair
value of EUR 22.52 per share. Our DCF model yields fair value of EUR 25.01 per
share. By combining both valuation methods, we arrived at fair value of EUR 24.26
per share. Thus we initiate our coverage on ISRA with a BUY recommendation and a
price target (PT) of EUR 24.00 per share. This indicates an upside potential of more
than 33% to company´s last closing price of EUR 18.00.
Valuation methods
Source: CBS Research AG
Although acquisitions are part of ISRA growth strategy, we excluded any possible
future takeovers from our model. Thus we stick to a conservative valuation approach
in deriving the company´s fair value on the basis of organic growth. In order to
incorporate acquisitions into estimates and modelling, we would need to estimate
potential sales and earnings, arisen from new acquisitions as well as corresponding
acquisition costs. Furthermore, the consideration of potential acquisition would also
require further assumptions regarding financing aspects. Thus such assumptions
might distort the model and result in a highly misleading fair value. However, we
would like to highlight the upside potential to our estimates arising from potential
future acquisitions.
DCF Valuation
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Weighting Fair value
factor per share
Peer group valuation 30.0% 22.52
DCF valuation 70.0% 25.01
Fair value per share 24.26
Price Target 24.00
We applied a three stage Discounted Cash Flow (DCF) model to calculate the fair
value of ISRA VISION by discounting the company´s future cash flows. Our DCF
Model is based on the following assumptions:
Weighted average cost of capital (WACC): On the basis of current long-term yields
of German federal bonds, we set the risk-free rate at 3.5%. We assumed an equity
risk premium of 6.0%, and a debt risk premium of 3.0%. We decided to apply a beta
of 1.40 to our DCF valuation which is significantly above its historical value. The
reason for this adjustment was mainly due to cyclical characteristics of its underlying
business as well as potential risks arising from company´s buy and build strategy.
We, furthermore, assumed a long-term target equity ratio of 70%. These premises
led to a WACC of 9.70%.
Phase 1 (10/11E-12/13E): We estimated the free cash flows (FCF) of phase 1
according to our detailed financial forecasts for this period described in the financials
section of this document.
Our price target: EUR
24.00 per share
Our estimates based
on organic growth
WACC of 9.70%
Phase 1: Detailed
forecasts
Close Brothers Seydler Research AG | 6

ISRA VISION AG
Phase 2 (13/14E-19/20E): For Phase 2, we made more general assumptions,
considering the expected industry growth and ISRA´s market position. We believe
that company will yield the fruits of its business expansion. Overall, we allowed
annual revenue growth to decrease successively to 2.0%, resulting in a CAGR
13/14E-19/20E of 3.6%. We assumed that the company can achieve in the long run
an EBIT margin of 16.0%.
Phase 3: We applied a long-term FCF growth rate of 2.0% for the calculation of the
terminal value which we believe is reasonable considering the growth prospects in
company´s underlying business.
Based on these assumptions, we derived a fair value of equity EUR 108.4m,
translating into a fair value of EUR 25.01 per share. We calculated a fair value of the
operating business of EUR 135.3m and added back the company´s cash position of
EUR 6.0m. We furthermore deducted company´s debt of EUR 32.9m to derive the
company´s fair value. Our fair value per share estimates are based on 4.3m shares
outstanding.
DCF Valuation
Source: CBS Research AG
Peer Group Valuation
Along with a DCF Model, we applied a peer group analysis based on common EV
and P/E multiples for the FY10/11E and FY11/12E, respectively. Our peer group
consists of close peers such as Cognex, AVT, Orbotech or Perceptron with main
business emphasis of MV systems as well as the German MV camera suppliers
AUGUSTA Technologies AG and BASLER AG. Despite the differences in the
business model between the German camera suppliers and ISRA VISION we
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PHASE 1 PHASE 2 PHASE 3
EURm 10/11E 11/12E 12/13E 13/14E 14/15E 15/16E 16/17E 17/18E 18/19E 19/20E
Sales 75.4 83.7 89.5 95.3 100.6 105.6 109.8 113.1 115.4 117.7
Y-o-Y grow th 16.3% 10.9% 7.0% 6.5% 5.5% 5.0% 4.0% 3.0% 2.0% 2.0%
EBIT 13.8 15.8 17.3 18.6 19.1 19.0 19.8 19.8 19.6 18.8
EBIT margin 18.3% 18.9% 19.3% 19.5% 19.0% 18.0% 18.0% 17.5% 17.0% 16.0%
Income tax on EBIT -4.1 -4.7 -5.2 -5.6 -5.7 -5.7 -5.9 -5.9 -5.9 -5.6
Depreciation and amortisation 7.1 7.4 7.6 7.7 7.8 7.9 8.0 8.0 8.0 8.0
Change in net working capital 2.1 -1.6 -2.1 -1.7 -1.6 -1.5 -1.3 -1.0 -0.7 -0.7
Net capital expenditure -8.5 -8.4 -8.4 -8.5 -8.4 -8.3 -8.3 -8.2 -8.0 -8.0
Free cash flow 10.3 8.46 9.2 10.5 11.2 11.4 12.3 12.7 13.1 12.6
Present values 9.8 7.3 7.2 7.5 7.2 6.7 6.5 6.1 5.7 5.0 66.2
Present value Phase 1 24.3 Risk free rate 3.50% Target equity ratio 70.0%
Present value Phase 2 44.7 Equity risk premium 6.00% Beta 1.40
Present value Phase 3 66.2 Debt risk premium 3.00% WACC 9.70%
Total present value 135.3 Tax shield (Phase 3) 29.5% Terminal growth 2.00%
+ Excess cash/Non-operating assets 6.0
- Financial debt -32.9
Phase 2: CAGR of 3.6%
Phase 3: 2.0% growth
for terminal value
Fair Value of EUR
25.01 per share
Sensitivity analysis
Terminal growth (Phase 3)
1.0% 1.5% 2.0% 2.5% 3.0%
Fair value of equity 108.4 8.70% 27.11 28.36 29.78 31.44 33.39
9.20% 24.99 26.04 27.23 28.60 30.19
Number of shares outstanding (m) 4.3 WACC 9.70% 23.12 24.00 25.01 26.15 27.46
10.20% 21.44 22.20 23.05 24.01 25.10
Fair value per share 25.01 10.70% 19.95 20.60 21.32 22.13 23.05
Peer group consists of
MV system suppliers
and MV component
providers
Close Brothers Seydler Research AG | 7
8

ISRA VISION AG
nevertheless believe that current market multiples for BASLER and AUGUSTA
Technologies provide a reliable indication for a market based valuation approach.
However, it is worth to note that the companies in our peer group considerably vary in
terms of business activities ranging from highly focused small caps such as AVT and
Perceptron to the more diversified large caps such as Cognex or Orbotech. In our
peer group we think the closest peer is Cognex as it targets similar end markets like
ISRA. Below we provide a more detailed overview of the peer companies.
Overview of relevant peers
Company name
Source: Bloomberg, CBS Research AG
Our peer group consists of the following companies:
Cognex Corporation is the world‟s leading provider of MV systems and sensor
supplier. In MV systems the company provides broad range of products targeting
similar markets like ISRA. The company is also a leader in industrial ID readers.
Given the company broad business approach Cognex generates currently the
highest margins within the industry. Revenues for the 1Q2011 (ending 02 April)
increased 26% from the first quarter of 2010 and decreased 12% from the prior
quarter. The underlying operating income amounted to USD 17.4m corresponding to
an EBIT margin of 23% compared to 19% in 1Q2010.
Orbotech Ltd. is a leading supplier of high-speed automated optical inspection (AOI)
systems used to identify defects in the printed circuit boards (PCBs), integrated
circuit packaging, flat-panel displays, and electronic assemblies found in computers,
cell phones, and other communications systems. Through subsidiary Orbograph, it
makes character recognition software used by banks to process checks and detect
fraud. Revenues for 1Q2011 totaled USD 134.2m, compared to USD 128.4m in the
fourth quarter, and USD 100.0m in the first quarter, of 2010. In 1Q2011 operating
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Cognex is closest peer
Market EV EPS EBIT
Sales
cap. 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E
ISRA Vision AG 81.7 108.6 2.06 2.39 2.64 13.8 15.8 17.3 75.4 83.7 89.5
COGNEX CORP 1,499.6 1,254.9 1.58 1.81 - 84.2 101.7 - 322.0 361.2 -
ADVANCED VISION TECHNOLOGY 18.5 14.0 0.28 0.38 0.45 1.9 2.7 3.9 30.6 33.7 37.7
ORBOTECH LTD 420.7 238.1 1.64 1.71 - 81.9 93.9 - 574.0 622.0 -
PERCEPTRON INC 57.9 33.9 0.15 0.26 - 1.6 3.4 - 56.5 62.0 -
BASLER AG 45.7 43.3 1.19 1.32 1.56 7.4 7.9 9.1 55.3 59.5 65.2
AUGUSTA TECHNOLOGIE AG 131.7 132.0 1.90 2.42 2.71 22.5 28.0 31.3 158.5 180.5 195.0
Company name Net margin EBIT-margin
Sales growth
10/11E 11/12E 12/13E 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E
ISRA Vision AG 11.8% 12.4% 12.8% 18.3% 18.9% 19.3% 16.3% 10.9% 7.0%
COGNEX CORP 20.4% 21.7% - 26.2% 28.2% - 8.4% 12.2% -
ADVANCED VISION TECHNOLOGY 5.7% 7.0% 7.5% 6.2% 8.2% 10.2% 4.6% 10.2% 12.0%
ORBOTECH LTD 11.8% 12.6% - 14.3% 15.1% - 8.8% 8.4% -
PERCEPTRON INC 2.5% 3.9% - 2.9% 5.4% - 7.8% 9.7% -
BASLER AG 7.5% 7.8% 8.4% 13.4% 13.3% 13.9% 8.4% 7.6% 9.6%
AUGUSTA TECHNOLOGIE AG 9.1% 10.2% 10.5% 14.2% 15.5% 16.1% 25.1% 13.9% 8.0%
Average 9.5% 10.5% 8.8% 12.9% 14.3% 13.4% 10.5% 10.3% 9.9%
Median 8.3% 9.0% 8.4% 13.8% 14.2% 13.9% 8.4% 10.0% 9.6%
Our peer group
consists of: Cognex...
...Orbotech...
Close Brothers Seydler Research AG | 8

ISRA VISION AG
income more than doubled compared to the same quarter of previous year achieving
USD 15.1m.
Advanced Vision Technology, Ltd (AVT) is the world leader in print process control,
quality assurance and color control for the packaging, labels, folding cartons and
commercial print markets. Today, more than 2,300 PrintVision systems for packaging
and labels automatic inspection are installed worldwide. AVT is headquartered in
Hod-Hasharon/Israel with sales, marketing, and support offices in the United States,
Europe and China. The company is listed in the Prime Standard of the Frankfurt
Stock Exchange. In 1Q2011 the company posted revenues of USD 10.6m (yoy
+7.6% and QoQ +4.9%. Operating income was USD 0.4m compared to an operating
loss of USD 0.7m in 4Q2010.
Perceptron, Inc. was founded in 1981 as a supplier of high technology, laserbased,
non-contact measurement systems for industrial manufacturers to reduce process
variation that occurs in the manufacturing process. Today Perceptron has two diverse
lines of business the Industrial Business Unit and the Commercial Products Business
Unit. The company has traditionally a strong market position in automotive industry
but has been expanding business to new market verticals over the last year(s).
AUGUSTA Technologies AG operates in the niche markets of digital imaging (Vision)
and sensing (Sensors & Microsystems Technology). The Group activities are
organized within the business segments Vision and Sensors. In Vision segment the
company focuses on the end market of industrial cameras for various applications.
Although the company currently generates ~60% of its revenues in Sensor business
AUGUSTA has clear strategic focus on Vision business targeting to become a
leading Vision player in the mid-term. In FY2010 the company generated sales of
EUR 45.3m in its Vision business with an underlying EBIT margin of 23.4%.
Founded in 1988, Basler with its approximately 250 employees generated a turnover
of EUR 51m in FY 2010. This makes Basler one of the largest companies in vision
technology. The headquarters of the company is located in Ahrensburg near
Hamburg. In the field of digital, industrial cameras, Basler is among the Top-3 players
worldwide. Apart from cameras the company also provides inspection systems for
display glass which however is not considered as a strategic business going forward.
Peer group valuation
In order to derive the fair value of the company, we applied the median of different
multiples to our peer group analysis. The table on the next page summarizes the
multiples of the relevant peers. However in interpreting the multiples, it is worth to
note the different treatment of capitalization of development costs between IFRS and
US GAAP which leads to different multiples. Under IFRS companies are allowed to
capitalize R&D expenses (only development costs) while under US GAAP a
capitalization is still prohibited. Thus at initial period the capitalization results in higher
margins for companies reporting under IFRS. However like other assets the
capitalized development costs must be written down over a certain period which
results in higher amortization expenses. Overall we believe EV/EBIT and P/E are
better proxies for comparing MV peers even though we also applied EV/EBITDA
multiple in our peer group valuation.
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...AVT...
...Perceptron...
...AUGUSTA...
...Basler
We applied different
multiples
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ISRA VISION AG
Peer group multiples
Company name
Source: Bloomberg, CBS Research AG
The derived multiples represent a relatively wide range. Not surprisingly Cognex is
traded with higher multiples which are justified by company´s higher margins as well
as outstanding market position.
Based on P/E and Enterprise value multiples such as EV/EBIT and EV/EBITDA
multiples for the years 10/11E-11/12E we derived a fair value of EUR 22.52 for the
company. We applied the median of the peer group multiples to our financial
forecasts to derive a fair value of the company. We weight the peer group valuation
with 30% in our overall valuation approach given the limited comparability of business
models among the peers.
Peer group valuation
Source: Bloomberg, CBS Research AG
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P/E EV/EBITDA
EV/EBIT
10/11E 11/12E 12/13E 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E
COGNEX CORP 20.9 18.2 - 12.1 11.0 - 14.9 12.3 -
ADVANCED VISION TECHNOLOGY 13.2 9.7 8.0 - - - 7.4 5.1 3.6
ORBOTECH LTD 7.5 7.1 - - - - 2.9 2.5 -
PERCEPTRON INC n.m. 25.5 - 12.6 7.7 - 20.8 10.1 -
BASLER AG 11.6 10.4 8.8 3.0 2.9 2.5 5.8 5.5 4.8
AUGUSTA TECHNOLOGIE AG 8.2 6.5 5.8 4.8 4.0 3.6 5.9 4.7 4.2
Average 12.3 12.9 7.5 8.1 6.4 3.1 9.6 6.7 4.2
Median 11.6 10.0 8.0 8.4 5.8 3.1 6.6 5.3 4.2
Peer analysis results in
fair value of EUR
22.52/share
EPS EBITDA
EBIT
EURm, except EPS (EUR) 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E 10/11E 11/12E 12/13E
ISRA Vision AG: Financial estimates CBS Research 2.06 2.39 2.64 20.89 23.21 24.86 13.83 15.77 17.30
Applied multiples: Peer group median 11.6 10.0 8.0 8.4 5.8 3.1 6.6 5.3 4.2
Enterprise value (derived) - - - 175.9 135.2 76.5 91.8 83.2 72.9
+ Net debt -26.9
Market capitalisation (derived) 103.4 103.7 - 148.9 108.3 - 64.9 56.3 -
Average 97.6
Premium (discount) vs. Peer Group 0%
Fair market capitalisation 97.6
Number of shares (m) 4.33
Fair value per share (EUR) 22.52
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ISRA VISION AG
MV Technology and Industry
Machine vision (MV) refers to the application of vision technology, which is an electro
optical system (i.e. camera) connected to a processing unit, such as a computer, for
image processing and to control a system. It combines hardware and software to a
vision system that can "see" a target object and deliver information to the user. The
data is recorded by a camera and analyzed by a computer, which filters out the
relevant information and passes on the previously specified results to the control unit,
which then can responds accordingly.
An example of MV System
Camera
+
Sensor
Target object
Source: Cognex, CBS Research AG
Products in MV technology are separated in two main categories Vision Systems and
Vision Components. Although a Vision System can have a variety of physical forms,
depending on the user‟s needs, in its basic form it comprises the following
components 1) one or more digital cameras for acquiring images 2) a sensor for part
detection to trigger image acquisition and processing 3) a software program to
process images (i.e. detect, measure, compare) in order to check whether or not a
quality criteria has been met or to provide type verification or robot control to another
control system 4) interfaces (i.e. digital I/O) or communication links (e.g. Industrial
Ethernet) to report results.
Components of a MV system
Architectures
� PC + camera
�Embedded Vision
�Smart camera
�PC+Smart camera
Optics
�Lenses
�Prisms & Beam splitters
�Color filters
�Polarizers
Processors
�FPGA
�DSP
�RISC
�Frame Grabbers
Source: Frost & Sullivan, CBS Research AG
The placement of the lighting and the quality of the optics (lens) affects the quality of
the image. Thus they are critical in creating the contrast required for the inspection
system to distinguish features in the object under inspection. While the camera and
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Interface
Software
� Identification
� Measurement
� Guidance/Other
Mashine Vision
&
Factory Automation
Interfaces
�Gigabit Ethernet (GigE)
�Firewire
�CameraLink
�USB 2.0
Computer System
+
Software
Assembly line
� CMOS
�CCD
�Others
�Analog
�Digital
Sensors
Data capture
Spectrum/Illumination
�Visible
�Infrared (IR)
�Ultraviolet
�LED, Other
A technology of
“artificial seeing”
Structure of machine
vision system
Technological features
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ISRA VISION AG
the sensor are critical components of a MV system in terms of quality of the picture,
software allows analyzing the captured data and delivering relevant decision making
information to the management.
Traditionally MV systems are mainly utilized in industries with highly automated
manufacturing processes and high quality requirements (i.e. automotive,
semiconductor, glass etc). Thus a vision system requires expertise in various
technological fields delivering following benefits to the end users 1) enabling higher
degree of automation in industrial manufacturing, 2) improving quality and yield in the
production/manufacturing, 3) delivering cost saving potentials and 4) providing a
sound data basis for the optimization of production and workflow processes.
ISRA´s market position in the value chain
The machine vision industry is highly fragmented and consists of various number of
market players which focus on different areas of the value chain. Most market players
can be categorized into MV component manufacturers, MV system suppliers and
integrators. Usually a system supplier integrates various components into a MV
system, which is then embedded into the end users manufacturing/production lines.
In the following chart we summarized some of the major market players positioned in
different parts of the MV value chain. However it is worth to note that there is a large
number of non-listed market players with revenues below EUR 5.0m that focuses on
specific niches and markets.
Overview vision market players
Camera and other hardware
components
MV sensor products
Source: ISRA VISION, CBS Research AG, * It is worth to note that there is a large number of non-listed small players
with revenues below the EUR 5.0m mark
ISRA VISION is positioned in the MV value chain as a system supplier holding a
leading market position in surface inspection and 3D robot guidance. The company
focuses on high-end application standard products and complex generic standard
products. While some component manufactures also offer to certain degree simple
machine vision solutions, in most cases, however, they are usually suppliers of
system providers such as ISRA. However, MV system providers often offer more
complex applications with software solutions for the relevant applications that are not
easy to imitate.
In our view the current technological requirements such as higher data rates and
greater real time image processing allow component suppliers (i.e. camera and
sensor providers) to capture a significant part of the value-add delivered by a MV
technology. However, going forward, we think that the application expertise, the
knowledge of the customers´ production processes, the flexibility of the MV system
and greater/autonomous robotic capabilities will be the factors favoring the business
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Sony Electronics, Augusta Technologies AG, BASLER AG, DALSA, PixeLINK,
JAI, Graftek Imaging
Sony Electronics, Cognex Inc, SICK inc, LMI Technologies, DALSA, Panasonic,
Omron
Vision based robot guidance Cognex, ISRA VISION, Adept Technologies
MV Software/Video analytics Omron, MVTec Software GmbH, Stemmer, NeuroCheck GmbH
MV Systems/solutions
Application Specific standard products: ISRA VISION, AVT, BASLER AG (non
strategic business), Cognex, Dr. Schenck, ORBOTECH, Vitronic, Perceptron, etc.
Generic standard products: ISRA VISION, Cognex, Keyence, SICK, Matsushita,
etc.
Benefits of a MV
system
Market players can be
subdivided into system
and component
suppliers
ISRA is a leading MV
system supplier
From mid-term
perspective we prefer
MV system suppliers
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ISRA VISION AG
models of system suppliers such as ISRA VISION. Thus we consider systems
suppliers such as ISRA more favorably positioned to capture a higher proportion of
the value-add going forward. Particularly their 1) direct access to the users and 2)
application/industry specific engineering expertise will put them into a competitive
position to deliver its customers the desired cost saving and quality improvements
(i.e. a faster amortization of the investment in a MV system). As the MV industry and
technology continues to progress we assume components (i.e. cameras and
sensors) to turn into a commodity business in traditional MV application areas.
The Company: Pioneer in MV
ISRA VISION is a pioneer in Machine Vision industry. The company offers a broad
product range focusing on the technologies for 1) surface vision, 2) robot vision for
automated robot guidance and 3) quality vision. Apart from some components (e.g.
frame grabbers, LED modules) the company sources the main hardware components
of its systems from different suppliers which are then assembled in-house and
integrated into the end users manufacturing and production lines. The key value-add
delivered by the company is the BrainWare® which integrates the company´s broad
application expertise and different technologies into an advanced software system for
standard application in the industry.
Business Overview
Source: ISRA VISION, CBS Research AG
The company has currently more than 440 employees serving a global customer
base from 20 different locations worldwide. The company´s customers are mostly
blue-chip companies that undertake investments in MV systems to 1) cut costs, 2)
improve quality and 3) maximize yield.
History
INDUSTRIAL AUTOMATION
�Automotive
End markets
ISRA was founded by the current Chief Executive Officer and shareholder Enis Ersü
and other experts in robotics and image processing at the Technical University of
Darmstadt in 1985. The company went public in 2000 at the German New Market
and the new company name became ISRA VISION AG. SRA Vision acquired
multiple companies in the machine vision industry and opened up offices outside of
Germany to expand the sales markets and customer service & support. In November
2009 ISRA VISION acquired a minority stake in the Turkish company VISTEK, to
expand its market position in Turkey as well as in the Middle-East and Central Asia.
ISRA VISION furthermore acquired Graphikon, a German machine vision system
supplier well-known for its inspection systems for the solar manufacturing industry.
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�Glass
� Metal
�Paper
Pioneer in Machine Vision: Broad product range for automating both quality inspection and production
Focusing on different
technologies
SURFACE Vision
End markets
Glass
Pioneer in MV
� Print
� Plastics
� Solar
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ISRA VISION AG
With the acquisition, ISRA VISION aims to strengthen its position in this fast growing
industry.
Company Structure
ISRA VISION AG is the holding company of the group and is located in Darmstadt in
Germany, where the central departments finance, R & D, marketing, purchase and
electro-production are concentrated. Currently, the company has subsidiaries in nine
countries and offices on different continents. ISRA VISION AG in Darmstadt in
Germany is the Industrial Automation business unit, while ISRA SURFACE VISION
GmbH in Herten in Germany is operating in the Surface Vision segment. Apart from
the German subsidiaries the company has set up various international units serving
its customers from 20 different locations.
The eight markets where ISRA VISION is currently operative are divided between the
business segments. The automotive industry falls under the Industrial Automation
business unit, the other markets are within the Surface Vision division. The industry
markets currently covered by Surface Vision are: glass, solar, plastics, print, specialty
paper, paper, and metal.
Shareholder Structure
The share capital of ISRA VISION AG equals 4,381,240 shares. With a stake of
25.2% the company´s Chief Executive Officer Enis Ersü is currently ISRA VISION´s
main single shareholder. VISION GbR currently holds another 5% of the company,
the rest being free float.
Shareholder structure
Source: Bloomberg, CBS Research AG
Management
53.4%
The company‟s management board consists of four members:
Mr. Enis Ersü is the founder and is the Chief Executive Officer of the company. He
successfully transformed the company from a spin-off of the University of Darmstadt
in Germany to one of the international market leading machine vision companies. He
is closely involved with all parts of the organisation and his presence in the machine
vision industry since the early beginning of the vision technology greatly contributes
to the company‟s success.
The other members of the board are Mr. Hans-Jürgen Christ (Vice Chairman and
Sales Manager), Mr. Dr. Johannes Giet (R&D Manager), and Mr. Werner Rothermel
(Production Manager).
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25.2%
10.0%
5.0%
3.3%
3.1%
Enis Ersü (CEO)
Fidelity
Vision GbR
Argos Investment
DWS Investment
Free float
National and
international operating
business units
CEO is main single
shareholder
Enis Ersü, the driving
force behind ISRA
VISION
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ISRA VISION AG
Business Model
ISRA VISION AG operates through two business divisions, namely Surface Vision,
which counts for ~80% of the total revenues, and Industrial Automation, which makes
up the remaining 20%. ISRA VISION currently serves eight different industries of
which automotive falls under the in Industrial Inspection segment (i.e. robot vision
and quality vision) while the rest is consolidated within the Surface Vision division. In
all market verticals the company offers a broad range of systems and solution to
optimize the manufacturing processes of its customers and to reduce costs. Thus the
company´s MV systems provide an attractive return on investment for the customers
(i.e. a swift amortization of their investments within the first six months).
Overview business divisions
Industrial
Automation
Automotive
Source: ISRA VISION, CBS Research AG
Although supplying many industries, ISRA generates the core of its revenues in the
end markets Glass (~25%), Metals (~23%), Plastic (~18%) and Automotive (~18%)
where the company has build up a leading market position over the last years. While
ISRA is traditionally strong in industries with a high degree of automated production
and high quality requirements, the company is expanding the business into new
market verticals such as Solar, Healthcare and Food.
Overview end markets and customers
Source: ISRA VISION, CBS Research AG
In most of its end markets, ISRA ranks among the top three system suppliers and
has longstanding business relations with market leaders of the relevant industries.
Particularly in the end markets Glass (market share ~85%), Metals (~60%) and
Automotive (~30%) the company holds a leading market position.
ISRA serves mainly internationally operating conglomerates that require MV system
for various steps in their manufacturing processes. The price range for the
company´s systems can vary significantly (details chart below) depending on the
market vertical and technological requirements. In all market verticals, the company
competes with different players which we have summarized in the chart below.
Cognex seems to be the company main competitor as it targets similar verticals.
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Glass
Sales FY09/10: EUR 11.5m
EBIT Margin FY09/10: 16.3%
Surface Vision
Solar Plastics Print
Specialty
Paper
Sales FY09/10: EUR 53.3m
EBIT FY09/10: 18.0%
Paper Metal
Glass/Display Metals Plastic Automotive
Two business division
Dominant market
position in some
industries
Paper
(incl. Speciality)
Revenue contribution 21% 25% 18% 16% 14% 6%
Market share >80% 60-65% >30% 30% >25% 7-10%
Leading market
position in some
industries...
Print
...depending on market
verticals changing
prices and competitors
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ISRA VISION AG
Overview of competition and prices
Price range of MV System
(in 1,000 EUR)
Source: ISRA VISION, CBS Research aG
Once ISRA gains access to a potential customer the company aims to deliver its
systems into the client‟s various manufacturing processes of the client. Thus
customer retention and customer service are key strategic cornerstones of the
Group´s business strategy. Along with direct access to end customers (i.e. key
account management), ISRA also provides an outstanding service with international
customer support service centers located in 20 different locations. In our view this is
one of ISRA´s main competitive advantages over most of its competitors which are
mostly operating on local level focusing only certain industries.
Surface Vision
In the Surface Vision segment ISRA offers a full range of products from a broadly
diversified array of standard products to customized machine vision solutions based
on application-specific standard products. ISRA claims to be the global market leader
in Surface Vision systems, serving various industries with its systems and solutions.
The company´s MV systems are able to perform a 100% inspection of surfaces on
materials such as metal, paper, glass, foils and film, nonwovens and other printed
materials (even in color), seeking out and detecting defects or quality mismatches.
A key value-add delivered by ISRA is its modular software platform called EPOMI
(Enterprise Production Management Intelligence) which consists of various modules
(EXPERTs) and is developed in-house. The various modules capture, evaluate and
prioritize the data according to specific questions and generate suggestions for
management decision process. The modules are optional parts of the MV system
and can be purchased by the customers according to their specific needs or
requirements. Overall the software platform bundles the company´s more than 25
years of engineering and application expertise in MV industry.
Along with direct access to end users and global service network, ISRA most
remarkable competitive advantage is its broad application expertise allocated over
the last 25 years of being a key player in the machine vision industry. Thus ISRA is
able to provide broad engineering expertise in various industries. In our view the
company´s knowledge of the customer production processes and its capability of
continuously aligning its products with the requirements and needs of customers put
ISRA into a comfortable competitive position to deliver systems and solutions that
enable its customers a faster amortization time. According to ISRA, for a customer
investing in the company´s MV system, the average return on investment is currently
around 6 months. With its latest generation of machines, ISRA can deliver an even
faster amortization time.
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Glass/Display Metals Plastic Automotive
Paper
(incl. Speciality)
Print Solar
100-300 130-400 60 - 250 15 - 450 100 - 650 50-200 40 - 200
Competition Low Low Medium Medium High High High
Key Competitiors
Dr. Schenk,
Kubotek
COGNEX
VAI
COGNEX
Erhardt & Leimer
OCS
Perceptron
Cognex
INOS
VMT
Cognex
ABB
Futec
AVT
BST (Elexis)
Futec
Direct access to
customers
GP Solar
Vitronic
ATM
Dr. Schenck
Delivering value-add
with the software
Application expertise
and direct access to
customers are key
competitive
advantages
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ISRA VISION AG
Industrial Automation
In Industrial Automation ISRA equips industrial robots or production lines with the
relevant MV technology (i.e. Hardware and Software) that they can detect work
pieces with precision, identify them individually, and pick them with accuracy. ISRA´s
robot guidance solutions deliver sustainable improvement of productivity, quality and
profitability for the customers. Since the company was founded in 1985, the
technology of robot guidance has been one of ISRA's core competencies. Meanwhile
the company is able to provide all core components of the system from one source.
Given the high degree of automation in automotive industry (~60% of the robotics
market) most of ISRA´s clients are leading car manufacturers. Additionally, the
company also targets the end markets of machine tool providers, the automation
industry, general industry, plant and system manufacturers as well as OEM markets
in which ISRA products are integrated into customers‟ products. However, given the
high degree of customer concentration, the Industrial Automation segment is more
cyclical following the business cycle in the primary automotive industry. However it is
worth to note that automotive manufacturers usually invest in MV systems when they
are in a down-cycle facing cost saving pressure
Although Industrial Automation has been losing ground against the Surface Vision
segment in terms of revenues, it is still a strategic part of ISRA´s business model.
Thus ISRA continues to invest in Industrial Automation particularly in the area of 3D
Technology. The company is one of the leading providers of 3D machine vision and
robot guidance solutions. ISRA has introduced several innovations for 3D
applications and has recently announced a larger frame agreement (double digit
Euro range) with a leading German car manufacturer.
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Market leader in 3D
technology
High dependency on
primary automotive
industry
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ISRA VISION AG
Growth strategy
ISRA pursues a Multi-Branch strategy based on three core strategic pillars 1)
Technologies, 2) Industries and 3) Regions. With its Multi-Branch strategy ISRA aims
to achieve a higher diversification in terms of applications, end customers and
geographies while focusing at the same time on long-term profitable growth. This
allows the company to reduce its sensitivity to regional and industry-specific
fluctuations and hence to allow for more stable business development. For the
upcoming years the management targets revenues that exceed the EUR 100m mark.
Strategic pillars
Robot Vision
Source: ISRA VISION, CBS Research AG
On the technological side, ISRA aims to expand its product portfolio that allows the
company to tap new end markets and applications. The company intends to monetize
on its 25 years technological expertise to invent new products while increasing the
cost-effectiveness of already existing solutions/systems. ISRA plans to introduce 25
new products over the next year(s) of which one third was already introduced in the
recent past. The driving force behind company´s new innovations is the intention to
provide systems and solution that allow customers a high return on their MV
investments (i.e. swift amortization) by delivering following benefits 1) cost reduction,
2) quality/yield improvements and 3) higher efficiency in the manufacturing process.
A further the key elements of company´s growth strategy is the expansion of
business activities into new market verticals while strengthening at the same time its
market position in existing end markets. The focus will be on acquiring new
customers by offering both existing products and new innovations that have been
specifically designed for industry/customer specific requirements. Going forward,
ISRA intends to tap those industries that 1) will require higher investments in MV
technology and 2) show currently low market penetration. The company considers
particularly the growth prospects in the end markets Energy, Healthcare, Food,
Transportation and Information as attractive. Another cornerstone of ISRA´s strategy
is the geographic expansion of its business activities. ISRA plans to expand into new
geographic markets and to add sales and distribution channels in those markets that
offer an above average growth rate. The company aims for higher revenue
contribution from business expansion to Asia, Americas and other geographies such
as the Middle East or Eastern Europe in the coming years.
Along with organic growth, acquisitions are another important element in the
company´s growth strategy. Over the last years, ISRA VISION acquired eight
companies which have been successfully restructured and integrated into the existing
Group structure. Going forward, we expect to see acquisition in those market
verticals that the company has just recently entered or intends to tap (i.e. energy,
food etc).
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Surface Vision
Quality Vision
Metal
Industries
Paper
Print
Multi-Branch Strategy
Plastics
Technologies Industries Regions
Glass
Solar
Automotive
Europe
Americas
Aiming for EUR 100m
top line in the mid-term
Asia
New product launches
Tapping new market
verticals ....
...and geographies
Acquisitive growth
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ISRA VISION AG
MV Market
The breakthrough of machine vision came in the 1980s and the industry has been
growing ever since. Due to increasing complex solutions and ongoing developments
as well as higher demanded quality and efficiency, more applications are becoming
suitable and interesting for machine vision technology. The global machine vision
market declined in 2009 as a result of the global economic crisis. Companies delayed
their investments in new machines and production facilities, resulting in less demand
for machine vision products.
According to the VDMA, the global machine vision market has recovered from the
lows in 2009 and was worth EUR 7.5bn in 2010. Asia Pacific is the largest market for
the machine vision industry with a market share of 35%. The North American region
follows with a share of 31% (VDMA, 2010).
Global Machine Vision market
Source: VDMA, CBS Research AG
Research firm Markets and Markets reports similar figures estimating the total global
machine vision market to be worth USD 9.83bn in 2010 (Markets and Markets, 2011).
The market is forecasted to grow at a CAGR of 9.3% from 2010–2015 to USD 15.3bn
in 2015. The Asia Pacific region is expected to post highest growth with a CAGR of
11.1% from 2010 to 2015. The camera & smart camera market will be the largest
growing market and will be the second largest in terms of revenues, with a 27.3%
share of the total revenues. The optics, lighting and frame grabbers have the largest
share of the total revenue. The processor, camera and hardware market is expected
to grow to USD 3.6bn, at a CAGR of 8.8% from 2010 to 2015 (Market and Markets,
2011).
European machine vision market
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Other Regions
5%
North America
31%
Asia
35%
Europe
29%
Global MV market value: EUR 7.5bn
Due to the global recession, European machine vision companies saw a turnover
decline of 21% in 2009, compared to the record year of 2008. However post
recession the demand for machine vision technology has recovered substantially,
resulting in double digit growth rates in 2010. According to European Machine Vision
Association (EMVA) the total turnover for European companies increased by 35% to
EUR 1.1bn compared to the previous year. Sales to Asia increased the most in 2010
with a growth rate of 62%. Sales to the American region followed in terms of growth
rates, as the market grew 46% compared to 2009 (EMVA, 2011). However it is worth
to note that the report of the EMVA is based on the data of 225 European machine
vision companies.
A growing industry
Global market size
EUR 7.5bn
Global MV market
expected to grow at
CAGR 9.3% over the
period 2010-15E
Post recession a 35%
growth for European
MV industry
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ISRA VISION AG
Change in turnover of European MV companies
80%
60%
40%
20%
0%
-20%
-40%
Source: EMVA, CBS Research AG
In 2010, all of the different product types showed double digit growth rates, whereby
the camera sales grew the strongest at a rate of 61%. The largest single contributor
to the total machine vision sales is the segment „smart cameras/compact systems &
vision sensors‟. The combined vision components made up 45.3% of the total
machine vision sales in 2010, coming from a 40.6% share in 2009. This strong share
increase is the result of the 50.5% sales increase of the vision components segment
in 2010.
EMVA expects the European machine vision market to grow 20% in 2011 and
thereby to overtake the record year of 2008. Growth per region in 2011 for European
machine vision companies is presented in the graph below.
Growth per region in 2011 for European machine vision companies
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Total Sales Europe Asia Americas Other Regions
20.0%
Source: EMVA, CBS Research AG
MV technology is considered as a key technology in the area of automation,
production control and quality assurance which drove the growth in the past. As can
be seen in the table below, the manufacturing sectors are dominating. The market
share of non-manufacturing applications declined to 10% in 2010, since sales in this
segment stagnated in the same year. However, the non-manufacturing segment
became more important in the last couple of years and is expected to face strong
growth rates in the coming years. The automotive industry became the largest market
in terms of revenues, and the sector saw a strong sales increase of 61.3%. The
largest growth rate is seen in electrical/electronic machines, equipment or devices
applications.
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22.0%
18.0%
19.0%
21.0%
Total Sales Europe Asia Americas Other
Regions
2008-2009
2009-2010
Camera market posted
highest growth in 2010
European MV market
expected to grow at
20% in 2011E
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ISRA VISION AG
Customer of European MV suppliers*
Source: EMVA, * *Sales of machine vision components are not included; **Document Processing,
Entertainment, Intelligent Traffic Systems, Logistics & Postal Sorting, Microscopy & Life Sciences, Security &
Surveillance, Military & Defense
Despite the importance of MV in automated production, according to Frost & Sullivan
non-industrial application such as precision farming, criminology and forensics,
medical engineering and innovative approaches to human-machine-interaction are
key areas where machine vision solutions will make a significant contribution in the
future. Particularly the trend within the machine vision industry towards 3D
technology has started to open up new areas of applications outside of
manufacturing.
Technological Roadmap
Source: Frost & Sullivan
www.cbseydlerresearch.ag
2009 2010
Sales Change
Automotive 15.7% 20.5% 61.3%
Container/Packaging 16.4% 16.4% 23.4%
Food 1.8% 1.3% -6.4%
Glass 7.5% 6.8% 11.4%
Metal 6.5% 5.3% 0.0%
Pharmaceuticals and Cosmetics 6.4% 7.5% 44.9%
Rubber and Plastic 4.6% 4.6% 24.4%
Printing 2.1% 1.9% 6.9%
Electrical/Electronic Machines, Equipment
or Devices (excl. semiconductors) 6.5% 9.6% 82.2%
Semiconductors 4.6% 3.4% -7.5%
Medical Devices 2.9% 3.3% 43.6%
Wood and Paper 7.3% 6.4% 8.8%
Other Manufacturing Sectors 5.3% 3.0% -28.8%
Manufacturing Sectors: 87.6% 90.0% 27.1%
Non-Manufacturing Sectors**: 12.4% 10.0% -0.2%
Total 100.0% 100.0% 23.7%
Components
Influence on
manufacturing
Robotics
Shares of total turnover
2009 2014 2015 2020
� Analog cameras will be replaced by digital
� The need for frame grabbers will decrease
� CMOS Sensors will gain advantage over
CCDS due to lower power consumtion, lower
price and high speed
� High accuracy measurement in 3D and real time
� MV will aid statistical analysis, diagnostics and
maintenance in factories
� Remote control and monitoring of MV systems will
be common
Non-manufacturing
industries will grow
faster going forward
� Embedded, Industry-oriented systems will replace PC-based
systems
� Old-to-new technology replacements (higher sensor
resolution and capture speed
� Multi-spectral sensors will go closer to long IR wavelengths
(~8 microns) and will be limited by lens materials
� Industrial vision systems will become indispensable
part of flexible automation
� MV systems will aid rapid manufacturing
� MV systems will find saftey application in factories
� Vision guided robots will decrease cycle time � Cycle time of vision guided robots shall fall
below 1 second enabling flexible and fast robot operations
� Visual servoing will enable robots to aid flexible precision
machining and other operations
Close Brothers Seydler Research AG | 21

ISRA VISION AG
Financial review
ISRA VISION has experienced an impressive growth since the IPO in 2000 (i.e. top
line CAGR of 15.3%) through organic as well as acquisitive growth. In recent past
(period FY06/07-09/10 with financial year ending in 30 September) sales growth has
slowed down to a CAGR of 8.2% from EUR 51.3m to EUR 64.8m in FY09/10. While
sales in Surface Vision segment experienced a steady growth of CAGR of 12.9% to
EUR 53.3m, the Industrial Inspection business was showing a declining trend with
sales dropping to EUR 11.5m from EUR 14.2m in FY06/07. With exception of
FY08/09, which was affected by global economic crises, ISRA VISION was able to
increase gross margin from 50.9% to 52.9% at the end of FY09/10.
Sales and gross margin development
70
60
50
40
30
20
10
0
37.0
50.9%
14.2
Source: ISRA VISION, CBS Research AG
After successful acquisition and integration of Parsytec in FY06/07 the company´s
EBITDA and EBIT margins (based on reported IFRS numbers) have improved
significantly from 21.3% and 12.0% to 27.2% and 18.9% in FY08, respectively. Even
during the recession the company was able to keep margins stable while most of its
competitors had to digest a stronger drop in operating margins with some even
posting operating losses. In the bottom line the company has been constantly
running the business with an underlying net margin of > 10% over the period
FY06/07-09/10.
Margin development
55.0%
45.0%
35.0%
25.0%
15.0%
5.0%
-5.0%
Source: ISRA VISION, CBS Research AG
www.cbseydlerresearch.ag
52.4%
52.4
15.8
51.6%
47.3
52.9%
53.3
10.9 11.5
06/07 07/08 08/09 09/10
Industrial Automation Surface Vision Gross margin
50.9% 52.4% 51.6% 52.9%
21.3%
12.0%
10.0%
27.2% 26.1%
18.9% 15.9% 17.7%
11.1%
11.1%
27.2%
10.7%
06/07 07/08 08/09 09/10
Gross margin EBITDA Margin EBIT margin Net margin
Top line growth of
15.3% since IPO.
53.5%
53.0%
52.5%
52.0%
51.5%
51.0%
50.5%
50.0%
49.5%
Net margins >10%
Close Brothers Seydler Research AG | 22

ISRA VISION AG
1H FY10/11 results
In the first half of the ongoing FY10/11, ending 31 March 2011, the company reported
significant yoy top line growth of 20% to EUR 32.6m. On operating level, EBIT came
in at EUR 6.1m (EBIT margin 18.7%). In Surface Vision sales surged yoy by almost
22% to EUR 27.8m with an underlying EBIT margin of 18.6% (vs 1H FY09/10
18.4%). In Industrial Automation division growth pace took place at a much slower
rate, achieving yoy 9% to EUR 4.8m. In the bottom line, the company reported net
income of EUR 3.9m (net margin 12.0% vs 11% in 1HFY09/10).
At end of May 2011 the company had an order backlog of more than EUR 40m.
Furthermore mid of June the company announced a long-term framework agreement
in the double-digit-million euro range with a leading premium automobile
manufacturer in the area of 3D measurement engineering.
For the FY10/11E the company guided a double digit revenue growth to more than
EUR 70m and the goal of further improving the margins. From mid-term perspective
the management aims for revenues above the EUR 100m mark with stable margin
development.
Forecasts
Based on the Group´s current revenue model Surface Vision and Industrial
Automation, we forecast revenues to grow by a CAGR of 11.3% from EUR 64.8m to
EUR 89.5m over the period FY09/10 to FY12/13E. After years of declining revenues
in Industrial Automation business (-7% over the period 06/07-09/10), we think the
company will successfully turnaround this trend going forward. Considering the
recent order and growing demand for 3D solutions we expect the company´s
Industrial Automation business to grow at CAGR of 10.5% over the period FY09/10-
12/13E. In Surface Vision, we expect the double digit growth to continue projecting
revenue growth of CAGR 11.5% to EUR 73.9m by FY12/13E. Our growth
assumptions are based on 1) business expansion to new market verticals such as
food, healthcare and energy and application areas 2) geographic expansion of
business activities and 3) new product launches attracting new investments in
existing markets.
Segment revenues and margins
Source: CBS Research AG
www.cbseydlerresearch.ag
09/10 10/11E 11/12E 12/13E CAGR
Industrial Automation 11.5 12.6 14.6 15.6 10.5%
EBIT Margin 16.3% 18.1% 18.9% 19.4%
yoy 5.9% 9.6% 15.4% 6.8%
as % of total revenues 18% 17% 17% 17%
Surface Vision 53.3 62.8 69.1 73.9 11.5%
EBIT margin 18.0% 18.4% 18.8% 19.3%
yoy 14.8% 17.8% 10.0% 7.0%
as % of total revenues 82% 83% 83% 83%
Total revenues 64.8 75.4 83.7 89.5 11.3%
yoy 1.7% 16.3% 10.9% 7.0%
Our current estimates are based on standalone business in both segments which
could be topped by potential acquisitions. Considering the company´s business
expansion ambitions to new market verticals, we see good chances to see additional
revenue potential from possible acquisitions, going forward.
Significant growth in
1H FY10/11E
Confident order
backlog
FY10/11E guidance
Double digit top line
CAGR going forward
Acquisitive growth
might even accelerate
growth
Close Brothers Seydler Research AG | 23

ISRA VISION AG
Since we believe MV system suppliers will capture a higher proportion of the valueadd
delivered by MV technology in the future, we expect margin development to be
stable in MV system business. Furthermore, considering ISRA´s current product
initiative (~ 25 new systems/solutions), we are positive that ISRA should be able to
gradually improve its margins over the next years. Assuming lean cost platform, we
project EBITDA, EBIT and net margin to increase to 27.8%, 19.3% and 12.8%, by
FY12/13E, respectivly.
Overview margins
56.0%
46.0%
36.0%
26.0%
16.0%
6.0%
-4.0%
Source: CBS Research AG
In recent economic recession the company´s ROE dropped to 7.9%, mainly due to
lower EBIT margin. Going forward we expect ROE to improve gradually to double
digit by FY11/12E which will be driven by higher operating margins as well as lower
debt (i.e. interest burden) and more efficient asset utilization. With ROE above 10%
ISRA should be able to offer one of the highest return on equity within the MV
industry.
Decomposition of ROE*
Source: CBS Research AG, * Balance sheet numbers based on average numbers to eliminate seasonality effects
Balance sheet and cash
AT the end of FY09/10 the company total balance sheet amounted to EUR 160.9m
with an underlying equity ratio of 54.8%. With EUR 80.4m, half of company‟s assets
comprised intangible assets of which EUR 37.3m is goodwill. The major part of the
remaining intangible assets is capitalized development expenses which we expect to
grow at a much slower pace as the underlying asset base has been grown
considerably (EUR 28.1m) over the last years resulting resulting in significant annual
amortization expenses. For FY10/11E we expect amortization of R&D expenses to
amount to EUR 4.4m (FY09/10 EUR 3.8m) compared to new capitalization of R&D
EUR 7.7m (FY09/10 EUR 7.7m). A further large position in the balance sheet is
current assets which comprises 44% of company‟s total assets. Inventories and trade
receivables are the two main asset classes within the current assets.
ISRA currently runs business with a net debt position of EUR 26.9m (as of 1H
FY10/11) with interest bearing debt of EUR 32.9m. Going forward we expect the
www.cbseydlerresearch.ag
52.9% 53.8% 54.5% 55.1%
27.2% 27.7% 27.7%
27.8%
17.7% 18.3% 18.9% 19.3%
10.7% 12.0% 12.5% 12.8%
09/10 10/11E 11/12E 12/13E
Gross margin EBITDA Margin EBIT margin Net margin
Tax burden X
Interest
burden
X Ebit margin X
Total asset
turnover
X Financial
Leverage
Gradual improvement
in margin
ROE >10%, going
forward
= ROE
08/09 77.7% 89.2% 15.9% 41.0% 1.7 7.9%
09/10 66.0% 92.3% 17.7% 42.8% 1.8 8.3%
10/11E 70.0% 92.9% 18.3% 45.6% 1.8 9.7%
11/12E 70.0% 93.8% 18.9% 48.1% 1.7 10.2%
12/13E 70.0% 94.3% 19.3% 48.9% 1.6 10.3%
Balance sheet inflated
by intangibles
Net debt of 26.9m
Close Brothers Seydler Research AG | 24

ISRA VISION AG
company to reduce its debt level with scheduled principal payments in the range of
EUR 2.2m to EUR 2.5m over the next years. Thus we project debt to equity ratio to
decline from 36% (based on only interest bearing debt) in FY09/10 to 28% in
FY12/13E.
Overview Balance sheet
70.1
70.2
90.8
Source: ISRA VISION, CBS Research AG
A weak spot of the company´s balance sheet is the high amount of working capital
which is above the industry level. This has lead in the past to a long cash conversion
cycle as result of inefficient working capital management. However this weakness
can be partly explained by company‟s current business approach of being a pure
system supplier (i.e. certain projects revenues are recognized as percentage of
completion method resulting in high amount of receivables till project is finalized and
handed over to the customer) as well as customer composition which mainly
comprising large blue-chip companies. Going forward we think the management will
put higher attention on optimizing working capital. Thus we expect FCF to turn
positive (FY09/10 EUR-2.4m) in the future.
www.cbseydlerresearch.ag
FY 09/10 FY 12/13E
88.3
29.2
43.5
Assets Equity and Liabilities
Equity
Current liabilities
Non-current liabilities
93.3
Current assets
94.2
Non-current assets
116.4
32.4
38.7
Assets Equity and Liabilities
Equity
Current liabilities
Non-current liabilities
Current assets
Non-current assets
Anticipating higher
working capital
efficiency
Close Brothers Seydler Research AG | 25

ISRA VISION AG
Profit and loss account
Source: Company data, CBS Research AG,
www.cbseydlerresearch.ag
IFRS EURm 08/09 09/10 10/11E 11/12E 12/13E
Revenues 58.15 64.85 75.44 83.67 89.53
YoY grow th -14.8% 11.5% 16.3% 10.9% 7.0%
Cost of sales -28.17 -30.52 -34.85 -38.10 -40.20
Gross profit 29.99 34.33 40.59 45.58 49.33
as % of revenues 51.6% 52.9% 53.8% 54.5% 55.1%
Selling and Marketing expenses -10.27 -11.52 -13.35 -14.89 -15.85
as % of revenues -17.7% -17.8% -17.7% -17.8% -17.7%
Research and Development expenses -7.70 -8.35 -9.17 -10.21 -11.05
as % of revenues -13.2% -12.9% -12.2% -12.2% -12.3%
General and Administrative expenses -3.78 -3.84 -4.24 -4.70 -5.14
as % of revenues -6.5% -5.9% -5.6% -5.6% -5.7%
Other operating expenses/income 1.02 0.87 0.00 0.00 0.00
as % of revenues 1.8% 1.3% 0.0% 0.0% 0.0%
EBITDA 15.18 17.65 20.89 23.21 24.86
as % of revenues 26.1% 27.2% 27.7% 27.7% 27.8%
Depreciation and Amortization -5.92 -6.17 -7.06 -7.44 -7.57
as % of revenues -10.2% -9.5% -9.4% -8.9% -8.5%
EBIT 9.26 11.49 13.83 15.77 17.30
as % of revenues 15.9% 17.7% 18.3% 18.9% 19.3%
Net financial result -1.00 -0.89 -0.98 -0.91 -0.87
as % of revenues -1.7% -1.4% -1.3% -1.1% -1.0%
EBT
8.26 10.60 12.85 14.86 16.42
as % of revenues 14.2% 16.4% 17.0% 17.8% 18.3%
Income taxes -1.84 -3.60 -3.85 -4.46 -4.93
as % of EBT -22.3% -34.0% -30.0% -30.0% -30.0%
Net income 6.42 7.00 8.99 10.40 11.50
as % of revenues 11.0% 10.8% 11.9% 12.4% 12.8%
Discontinued operations 0.00 0.00 0.00 0.00 0.00
Minorities -0.05 0.05 0.06 0.07 0.07
Net income attributable to shareholders 6.47 6.95 8.93 10.34 11.43
as % of revenues 11.1% 10.7% 11.8% 12.4% 12.8%
Weight. Average of shares outstanding (in m) 4.26 4.30 4.33 4.33 4.33
Earnings per share 1.52 1.62 2.06 2.39 2.64
Close Brothers Seydler Research AG | 26

ISRA VISION AG
Balance Sheet
Assets
Source: Company Data, CBS Research AG
www.cbseydlerresearch.ag
IFRS EURm 08/09 09/10 10/11E 11/12E 12/13E
Noncurrent assets 81.2 90.8 92.3 93.3 94.2
as % of total assets 57.3% 56.4% 54.4% 52.3% 50.2%
Intangible assets 71.5 80.4 82.1 83.3 84.3
Property, plant and equipment 2.7 2.8 2.6 2.4 2.3
Financial assets 0.9 1.2 1.2 1.2 1.2
Other assets (incl. deferred taxes) 6.2 6.5 6.5 6.5 6.5
Current assets 60.6 70.1 77.4 85.2 93.5
as % of total assets 42.7% 43.6% 45.6% 47.7% 49.8%
Inventories 15.1 14.1 15.8 17.7 19.0
Trade accounts receivable 37.1 46.9 46.0 47.7 50.1
Other financial assets 1.5 2.1 2.3 2.5 2.7
Other current assets 1.5 0.2 0.2 0.2 0.2
Cash and cash equivalents 5.4 6.8 13.2 17.2 21.5
Total assets 141.8 160.9 169.7 178.5 187.6
Shareholders´ equity and liabilities
Shareholders´ equity 81.2 88.3 96.4 105.9 116.6
as % of total equity and liabilities 57.3% 54.8% 56.8% 59.3% 62.1%
Subscribed capital 4.4 4.4 4.4 4.4 4.4
Reserves 78.2 84.8 92.8 102.3 112.9
Own shares -0.5 -0.9 -0.9 -0.9 -0.9
Accumulated other comprehensive income -1.7 -0.8 -0.8 -0.8 -0.8
Minority interests 0.8 0.8 0.9 0.9 1.0
Noncurrent Liabilities 41.8 43.5 42.2 40.5 38.7
as % of total equity and liabilities 29.4% 27.0% 24.9% 22.7% 20.6%
Pension plans and similiar commitments 1.8 1.9 1.9 1.9 1.9
Financial debt 26.9 23.2 21.9 20.7 19.6
Other long-term financial liabilities (incl. deferred taxes) 13.0 18.4 18.4 17.9 17.3
Current Liabilities 18.9 29.2 31.1 32.1 32.4
as % of total equity and liabilities 13.3% 18.1% 18.3% 18.0% 17.3%
Provisions 0.8 0.8 0.8 0.9 1.0
Tax liabilities 1.9 0.6 1.8 2.5 3.0
Financial debt 2.2 11.3 10.2 8.9 7.4
Other financial liabilities 8.2 9.4 10.4 11.4 12.2
Accounts payable 5.3 7.1 7.9 8.4 8.9
Other current liabilities 0.4 0.0 0.0 0.0 0.0
Total equity and liabilities 141.8 160.9 169.7 178.5 187.6
Close Brothers Seydler Research AG | 27

ISRA VISION AG
Cash Flow statement
Source: Company Data, CBS Research AG
www.cbseydlerresearch.ag
IFRS EURm 08/09 09/10 10/11E 11/12E 12/13E
Net income 6.4 7.0 9.0 10.4 11.5
Depreciation and amortization
Change in accruals
5.9 6.2 7.1 7.4 7.6
0.2 -0.2 0.0 0.1 0.1
Income tax payments (incl. changes in deferred taxes) 3.1 4.5 1.2 0.2 -0.2
"Cash flow" 15.7 17.5 17.3 18.2 18.9
Change in accounts receivable
2.0 -10.9 0.8 -1.7 -2.4
Change in inventories 2.2 0.4 -1.6 -1.9 -1.3
Change in other assets 0.0 0.0 -0.1 -0.2 -0.2
Change pension provisions 0.0 0.0 1.0 1.0 0.8
Change in accounts payables -4.5 -0.2 0.9 0.4 0.5
Change in other liabilities 0.0 0.0 1.0 1.0 0.8
Interests (income, expense) 1.0 0.9 1.0 0.9 0.9
Cash flow from operations 16.4 7.7 19.2 16.7 17.2
CAPEX -8.9 -8.3 -8.5 -8.4 -8.4
Investments in financial assets 0.0 -0.2 0.0 0.0 0.0
Investments in acquisitions -1.9 -1.6 0.0 0.0 0.0
Cash flow from investing activities -10.8 -10.2 -8.5 -8.4 -8.4
Net change in interest bearing loans
-9.2 4.7 -2.4 -2.5 -2.7
Payments for acquisition of own shares -0.6 -0.6 0.0 0.0 0.0
Deposits froms ales of own shares
0.6 0.5 0.0 0.0 0.0
Acquisition of minority interests in subsidiaries 0.0 -0.1 0.0 0.0 0.0
Dividend payment -0.6 -0.7 -0.9 -0.9 -0.9
Interests (income, expense)
-1.0 -0.9 -1.0 -0.9 -0.9
Cash flow from financing activities -10.8 3.0 -4.2 -4.3 -4.4
Change in cash and cash equivalents -5.3 0.6 6.4 4.0 4.4
Adjustments to funds caused by exchange rate fluc.
-0.1 0.3 0.0 0.0 0.0
Total change in cash and cash equivalents -5.4 0.9 6.4 4.0 4.4
Cash at the begining of the year 12.5 7.2 8.0 14.4 18.4
Cash and cash equivalents at the end of the period
- Cash and cash equivalents classified as
7.2 8.0 14.4 18.4 22.7
noncurrent asset
Cash and cash equivalents at the end of
1.7 1.2 1.2 1.2 1.2
the period (consolidated balance sheet) 5.4 6.8 13.2 17.2 21.5
Close Brothers Seydler Research AG | 28

ISRA VISION AG
Research
Schillerstrasse 27 - 29
60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
Roger Peeters +49 (0)69 -977 8456- 12
Member of the Board Roger.Peeters@cbseydlerresearch.ag
Martin Decot +49 (0)69 -977 8456- 13 Kristina Kardum +49 (0)69 -977 8456- 21
Martin.Decot@cbseydlerresearch.ag Kristina.Kardum@cbseydlerresearch.ag
Rabeya Khan +49 (0)69 -977 8456- 10 Igor Kim +49 (0)69 -977 8456- 15
Rabeya.Khan@cbseydlerresearch.ag Igor.Kim@cbseydlerresearch.ag
Ralf Marinoni +49 (0)69 -977 8456- 17 Manuel Martin +49 (0)69 -977 8456- 16
Ralf.Marinoni@cbseydlerresearch.ag Manuel.Martin@cbseydlerresearch.ag
Enid Omerovic +49 (0)69 -977 8456- 19 Felix Parmantier +49 (0)69 -977 8456- 22
Enid.Omerovic@cbseydlerresearch.ag Felix.Parmantier@cbseydlerresearch.ag
Marcus Silbe +49 (0)69 -977 8456- 14 Veysel Taze +49 (0)69 -977 8456- 18
Marcus.Silbe@cbseydlerresearch.ag Veysel.Taze@cbseydlerresearch.ag
Institutional Sales
Schillerstrasse 27 – 29 25 Dowgate Hill
60313 Frankfurt am Main London EC4R 2GA
Phone: +49 (0)69 – 9 20 54-400
Raimar Bock +49 (0)69 -9 20 54-115
Head of Sales Raimar.Bock@cbseydler.com
Henriette Domhardt +49 (0)69 -9 20 54-137 Rüdiger Eich +49 (0)69 -9 20 54-119
(Austria, Germany) Henriette.Domhardt@cbseydler.com (Germany, Switzerland) Ruediger.Eich@cbseydler.com
Sule Erkan +49 (0)69 -9 20 54-107 Uwe Gerhardt +49 (0)69 -9 20 54-168
(Sales-Support) Sule.Erkan@cbseydler.com (Germany, Switzerland) Uwe.Gerhardt@cbseydler.com
Klaus Korzilius +49 (0)69 -9 20 54-114 Stefan Krewinkel +49 (0)69 -9 20 54-118
(Benelux, Germany) Klaus.Korzilius@cbseydler.com (Execution, UK) Stefan.Krewinkel@cbseydler.com
Markus Laifle +49 (0)69 -9 20 54-120 Bruno de Lencquesaing +49 (0)69 -9 20 54-116
(Execution) Markus.Laifle@cbseydler.com (Benelux, France) Bruno.deLencquesaing@cbseydler.com
Christopher Seedorf +49 (0)69 -9 20 54-110 Janine Theobald +49 (0)69 -9 20 54-116
(Sales-Support) Christopher.Seedorf@cbseydler.com (Germany) Janine.Theobald@cbseydler.com
Bas-Jan Walhof +49 (0)69 -9 20 54-105
(Benelux) Bas-Jan.Walhof@cbseydler.com
www.cbseydlerresearch.ag
Close Brothers Seydler Research AG | 29

ISRA VISION AG
Disclaimer and statement according to § 34b German Securities
Trading Act (“Wertpapierhandelsgesetz”) in combination with the
provisions on financial analysis (“Finanzanalyseverordnung” FinAnV)
This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG
and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or
individually called the „author‟). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or
its cooperation partners, the Company or its shareholders has independently verified any of the information given in
this document.
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a
security analysis to point out possible conflicts of interest with respect to the company that is the subject of the
analysis.
Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter
´CBS´). However, Close Brothers Seydler Research AG (hereafter ´CBSR´) provides its research work independent
from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity
providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as
follows (additional information and disclosures will be made available upon request):
a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis.
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financial instruments, which themselves or their issuer is the subject of this financial analysis within the last
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c. CBS has provided investment banking and/or consulting services during the last 12 months for the company
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banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis.
No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views
expressed.
Recommendation System:
Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time
horizon of up to 6 months:
BUY: The expected performance of the share price is above +10%.
HOLD: The expected performance of the share price is between 0% and +10%.
SELL: The expected performance of the share price is below 0%.
Recommendation history over the last 12 months for the company analysed in this report:
Date Recommendation Price at change date Price target
04 August 2011 BUY (Initiation of Coverage) EUR 18.00 EUR 24.00
Risk-scaling System:
Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up
to 6 months:
LOW: The volatility is expected to be lower than the volatility of the benchmark
MEDIUM: The volatility is expected to be equal to the volatility of the benchmark
HIGH: The volatility is expected to be higher than the volatility of the benchmark
The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash
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flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation
approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The
valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and
assumptions concerning the economy. In addition, market moods influence the valuation of companies.
The figures taken from the income statement, the cash flow statement and the balance sheet upon which the
evaluation of companies is based are estimates referring to given dates and therefore subject to risks.
These may change at any time without prior notice.
The opinions and forecasts contained in this report are those of the author alone. Material sources of information for
preparing this report are publications in domestic and foreign media such as information services (including but not
limited to Reuters, VWD, Bloomberg, DPA-AFX), business press (including but not limited to Börsenzeitung,
Handelsblatt, Frankfurter Allgemeine Zeitung, Financial Times), professional publications, published statistics, rating
agencies as well as publications of the analysed issuers. Furthermore, discussions were held with the management
for the purpose of preparing the analysis. Potentially parts of the analysis have been provided to the issuer prior to
going to press; no significant changes were made afterwards, however. Any information in this report is based on
data considered to be reliable, but no representations or guarantees are made by the author with regard to the
accuracy or completeness of the data. The opinions and estimates contained herein constitute our best judgment at
this date and time, and are subject to change without notice. Possible errors or incompleteness of the information do
not constitute grounds for liability, neither with regard to indirect nor to direct or consequential damages. The views
presented on the covered company accurately reflect the personal views of the author. All employees of the author's
company who are involved with the preparation and/or the offering of financial analyzes are subject to internal
compliance regulations.
The report is for information purposes, it is not intended to be and should not be construed as a recommendation,
offer or solicitation to acquire, or dispose of, any of the securities mentioned in this report. Any reference to past
performance should not be taken as indication of future performance. The author does not accept any liabil ity
whatsoever for any direct or consequential loss arising from any use of material contained in this report. The report
is confidential and it is submitted to selected recipients only. The report is prepared for professional investors only
and it is not intended for private investors. Consequently, it should not be distributed to any such persons. Also, the
report may be communicated electronically before physical copies are available. It may not be reproduced (in whole
or in part) to any other investment firm or any other individual person without the prior written approval from the
author. The author is not registered in the United Kingdom nor with any U.S. regulatory body.
It has not been determined in advance whether and in what intervals this report will be updated. Unless otherwise
stated current prices refer to the closing price of the previous trading day. Any reference to past performance should
not be taken as indication of future performance. The author maintains the right to change his opinions without
notice, i.e. the opinions given reflect the author‟s judgment on the date of this report.
This analysis is intended to provide information to assist institutional investors in making their own investment
decisions, not to provide investment advice to any specific investor.
By accepting this report the recipient accepts that the above restrictions are binding. German law shall be applicable
and court of jurisdiction for all disputes shall be Frankfurt am Main (Germany).
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investors" (within the meaning of SEC Rule 15a-6 and applicable interpretations relating thereto) that are also
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interpretations relating thereto. The offer or sale of certain securities in the United States may be made to QIBs in
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