R AT OPP R T AT NN U E The 2002 E X E R C I C E CL O S The E 31 M AT RS 2003 CODE FR0004031839 "International Official Licensee in the field of leisure following brands " KALASHNIKOV Ehj??qtignnr? Kiting??Zn E335 25.311 raking .1. gig Iz? iF?: 1.51:. I h. .- :4 535;? ll ll Iguana . - n?fu?l I Eli-4E in 3% . .I. ditrI?IE .. 3 2.: I mutual. 5:33:71; lr-13. . lull-.1; II il?i?l 1E I +l..l11.r.d 1 i .1IIl..r. ll i. Ill-r. l.l.IlI 11 .In? rIri?I IF-TT 1. .IIFI lib-Ll. l. .I 1. ll-IiI lI?I?u. In I 115; n. ..- {Ila?l .7qu I. 1r?; El. 1? FIE l-I 1.1? Fina-r. l- .. Eula-Ill I . .I in .I..I.I.I..url..al I .II [diurnal-.PIE-FE. rain-5.14.. IL Eli-fl- 111-.IIA Ina?.IIn. .I II .I .a..ln.?1.II .I.IJII.1.II rI. .- .1 1. I Illa?!? i' .- .lv-Ju-Irr-I. I.- ilk .I IlIh. In II. lull-Ill]! IIJEII [I'll-Iii: IHI gil?wl .I. 'i?I Eta?furloiili .HFZE. I. i? . Flu??uids. II In l..1r Ill?.I. .jviuxl1laall AH?JIq-ll?lit Eitr .II I1 Liiriau?iin lurk}; I.1-. 1513.11 ills?1 ! vii??ll: i II AI.II I 1 II I IL .11.!11111111. . I.- II lab-l- IIJJ l* I .I .. Ill-11.1.11! -21 . II _l.l uI I Jill?.11 {fill-ii Er! 1.1-I .II. .- aln.ll.1lr? ll. . . Edi-1:1 880 m 2 offices Order picking by "picking" on dynamic rails (Bondoufle investment in late 2000) the flow of goods 2800 m 2 warehouses MT KALASHNIKOV and J. MARSAC (CEO Cybergun) signed an exclusive worldwide license on 11 June 2003 in Bondoufle (17 e license Cybergun SA). BRIDGE TREP FR0004031839 CODE CODE CODE REUTER 3P.PA Technical Scheme of Smith & Wesson® SIGMA 2002 novelty CYBERGUN - ZI Les Bordes - 9-11, rue Henri Dunant 91070 Bondoufle - France Such. : (33) 1 69 11 71 00 - Fax: (33) 1 69 11 71 01 Web: www.cybergun.com - Email: infos@3psa.com RC PARIS B 337 643 795 Message from the President Dear Shareholders, In 2002, Cybergun has decided to focus its efforts on several fronts: industrial, financial and marketing. Your company has invested heavily in research and development, with priorities the improvement tion and reliability of products and the realization of innovations (pistols with integrated power boost) purchase of new molds to expand the range (Thompson Smith & Wesson Sigma, Walther TPH) and creation of new attractive packaging (DPMS Panther, Sig Sauer, Thompson, Colt M16 ...). In July 2002, to finance its efforts Cybergun enters the second market of Euronext. It is in a market context very agitated that the capital increase, with 180 000 shares in AAR ceiling 11.91 Euro is successful on 5 July. This has monopolized the leaders for months, but has enabled your company to return to a better ratio lies indebtedness / equity. The gearing ratio stood at 48.16% today, an improvement of 50 points compared to the situation on 31 March 2002. Thus, Cybergun is equipped to face the strong devel- opments in recent months. Against all odds, this period marked the beginning of a general wait-and in all economic agents wait reinforced by the reluctance of their financial partners. This has particularly affected the areas where your company was strongly present: France, Belgium, the United Kingdom, but also the video game industry (sales Cybergun video games divided by 4!). In addition, the sharp and unexpected depreciation of the US dollar, which now represents 60% of billings, impacted on turnover, margin and profit during this period. Indeed, the dollar rose to 0.8780 against the Euro 1 1 st day of the year (ie 1 st April) to 1,087 against 1 Euro the last days of the year, a depreciation of nearly 24%. However, the marketing efforts of 2 e half of 2002 are beginning to bear fruit in terms of new accounts and new markets. The Eastern Europe wakes up (Romania, Hungary, Turkey, first contacts in Russia), but especially the US market explodes. Indeed, the USA, with 2,939,487 dollars in billings, up on 2002, 24% of sales with a growth rate of 300%. The first months of the year has just begun reveal a quadrupling of capacity in 2003. Cybergun also took this year 2002 to negotiate new licensing agreements with DPMS and Eric Grauffel. Your company also completed long negotia- tions with the Russian brand best known in the world, which led in June 2003 on the signing by Cybergun a license agreement with Michael Timofeievitch KALASHNIKOV. Army today 18 global exclusive licenses Cybergun serenely plans to conduct in 2003 20 million Euro turnover, accompanied by 8% of net income, thanks on the one hand, the strong growth of sales in the US, and, secondly, to the resumption of normal activity in Europe, the first fruits are already being felt in recent days. Indeed, the April 2003 billings compared to the same period last year were up secondly, to the resumption of normal activity in Europe, the first fruits are already being felt in recent days. Indeed, the April 2003 billings compared to the same period last year were up secondly, to the resumption of normal activity in Europe, the first fruits are already being felt in recent days. Indeed, the April 2003 billings compared to the same period last year were up 66.12% than in May rose by 67.40% and it already seems clear that in June will have the same profile. Therefore it is proposed to your assembly to vote the fifth resolution approving the payment of a dividend of 32 Euro cents, together with a tax credit of 16 Euro cents, a total dividend of 48 Euro cents share, which represents a total of 1,046,400 Euro, re CONT-840 000 Euro in 2002, up 20% on last year. In addition, for the first time, Cybergun offers your choice to receive 60% of this dividen- of shares, for the cons-value of 90% of the average of the last 20 trading days preceding the General Meeting. It is therefore with serenity and with your trust and loyalty that Cybergun advance, I thank you. Jerome Marsac, CEO Cybergun SA 1 Company Background In 1983 Jérôme Marsac, enthusiast models, created with Vincent Bouvet his own company: CIMB - Commercial and Industrial Marsac Bouvet - import and distribution business models and radio-controlled models from specialist dealers. With a meteoric rise in business (a business volume of 47MF in 1990 with a workforce of 30 people), and expansion of the range, CIMB quickly became a "leader" in the market for dynamic models in La France. She JOUEF interests the group, national manufacturer of model trains, which it was sold in 1991 for $ 9 million francs. At the same time, the company "The Three Towers" was created in 1986 for business models "ready to fly" (as opposed to the kit). She gradually develops its activity (10 MF turnover in 1990), expands its range of models and became in 1993 an import company and distributor of original products ...: Air Soft Gun®, replica pistols dummy projecting plastic beads 6mm. Low power and therefore harmless, these copies of weapons with multiple reproduction capabilities are reserved for adults only. The company then became an SA sign in 1997 his first European exclusive license agreement (today expanded the world) with Smith & Wesson®. This contract enables the import and distribution of brand models whose intellectual property rights are guaranteed. Other major defense names (COLT®, WALTHER®, GIS SAUER®, TAURUS®, IMI (UZI®), Desert Eagle TM FAMAS, Tanfoglio, MAUSER, THOMPSON, AUTO ORDNANCE ...), aware of the challenges it represents, do not hesitate to follow suit (see certificates inside front cover). "The Three Towers" quickly becomes global market leader of the exact replica pistol licenses. Most of the brands owned by 3P knowing unparalleled reputation, guarantee the company a success story. Between 1996 and 1999 the turnover increased by 400%. And on 9 December 1999 between the Company on the open market of the Paris Stock Exchange, Sicovam code 7456. At the beginning of 2000, 3P signs an exclusive worldwide license agreement with Colt® on the brand and all of its models (including video pistols). TAURUS® and Desert Eagle TM are soon to follow. In September 2001, 3P SA became Cybergun SA; 2001 was also the year of the first new orders in the USA. In 2002, the US market is taking off, and will represent the end of the fiscal year (ended March 31, 2003) 24.1% of total sales Cybergun (33.3% of exports). In Europe, sales continue, with the conquest of new markets, particularly in Eastern Europe is, and signing new licenses with stakeholders in the Japanese market. On 5 July 2002, in a difficult market environment, Cybergun managed his transfer to the second market of Euronext. The team An experienced team, with a very strong complementarity: Jerome Marsac President and CEO ODP Insead Fontainebleau 1995/1996 Master of Business Administration, San Francisco 1993 Thierry Naccache Chief Operating Officer Master of Business Administration, San Francisco, 1993 DESCAF, Ceram - Sup. Co Nice Sophia Antipolis, 1985 Vincent Bouvet Head of Legal and Social Law degree François Rabazzani Administrative and financial director Decs (accountant) Lucile Marsac Communication Master of Business Administration, San Francisco 1993 graduate of the Free Institute of International Relations Studies, Paris, 1992 José Rosas marketing DEUG Economics Marc Courcelle data processing Apple Technical Services Modules Olivier Gualdoni Export DESS Marketing Master Physics Jean Pierre Glasse Sales in France, Belgium Keisuke Taketomi and Nicole Huang Sales and Purchase Asia Armen Ekmekdje Multimedia A graduate of the Free Institute of International Relations Studies, Paris, 1992 Jean Louis and Michel Loriente Moioli Inventory and Logistics Micro BTS Mechanics Claudine Puyo and Sylvie Durand Accounting BTS Management Accounting Accountants Financial Studies 3 The Air Soft Gun®: the heart of the leisure civilization Plastic or metal, Air Soft Gun® plan plastic beads with a power of in national journals, payment facilities) In Europe, Cybergun working less than 0.5 joules, thus ensuring perfect safety. The price range with reliable partners, often exclusive, and sometimes bound by a of the products, manufactured exclusively in Asia (Taiwan, purchase contract for the year (Sportsmarketing UK, AB background Japan, South Korea and the Philippines), extends from 15 to 500 Products in Sweden). Euro with an average price below 60 Euro. A global market: Already firmly established internationally (73% of sales in over 20 The 4 markets Cybergun: countries), Cybergun has two key markets outside France. 1 - 1. outdoor sport: excellence in leisure product, providing real Agreements in Asia: Cybergun signed for the first time in December sensations through optimal precision shooting, Air Soft Gun® attract 1999, three agreements sublicense with independent Japanese shooters both amateur and professional. producers that give them the right to manufacture and distribute some of the brands which owns the license Cybergun. 2. videogames: by offering exact replicas of the original weapons including the last multimedia technologies enabling the use of the model on a video screen, Cybergun has in this market with a powerful competitive advantage. 3. Collectors: attracted to the accuracy and authenticity of replicas at a cost quite reasonable, they are for Cybergun loyal customers. Today, 30 agreements were signed, in Japan, in Korea but also in other Asian countries. Thereof allow beneficiaries to market legally Air Soft Gun® on the Asian market, opening Cybergun a considerable market. 1 - The American presence: Cybergun developed there for 4 years now through a company - "Airsoft USA" responsible for the organization and distribution of its products on the 4. Fans of big screen: Cybergun has a special promotion through regular output action movies where guns are important ( "The Matrix," "Lethal Weapon," "James Bond" etc. ...). American continent. After 18 months of study for application of its rights and the upgrading of its products, SOFTAIR USA in 2001 took its first orders from domestic wholesalers (RSR Accusport, VALOR, Electronic Boutique ...). An efficient distribution network: Today, the customer SOFTAIR USA has expanded portfolio with Cybergun has chosen to concentrate its actions on wholesalers and below cons). independent retailers, spread throughout Europe and the USA. more than 1,000 outlets covering virtually throughout the US (see Large retail chains "outdoors" have now set up a permanent SOFTAIR radius between the radius and the Paintball To develop these markets, Cybergun has launched the "windows Gun beam lead. With 63,500 dealers in the US, the potential contracts" (over 240 to date): provision of a window adapted to the turnover in this market is enormous. presentation of exceptional payment products and deadlines. Their success is obvious since on average observed a doubling of sales per outlet following the accession to this commercial offer. More than 30 stores have also become "corners", devoting most of their surface to Air Soft Gun® in return for substantial support Cybergun (free availability of several windows, advertisements A promising future Cover of US territory by Cybergun® Established for nearly 4 years in the US, Cybergun now knows there an undeniable success with 1,000 points of sale, covering almost all of the territory. In 2002, the turnover generated across the Atlantic represents a third of total export Cybergun. The US market becomes the first market Cybergun, and growth seems to be confirmed in the first months of 2003. 5 A promising future Legal expertise in licensing department The licenses brands and models are gradually supplemented to be extended to video games (Smith & Wesson®, GIS SAUER®, UZI®) and lead to guns (UZI®, Tanfoglio®) The number of sub-license agreements is growing, particularly in Asia, This major offensive means: global exclusive licensing is the engine of development. Immediate results: Examples: In Denmark: a counterfeiter was seized. The procedure was concluded by a transaction Cybergun now reaping the fruits of his actions, which generated heavy loads in the past (legal fees, travel ...), however, non-recurring expenses. which infringer recognized the rights of Cybergun, pledged not to violate, paid the costs and compensated Cybergun. 2 new foreclosures have occurred since. These actions constituted: 1. A permanent expansion of the license portfolio: brands, object, territories, period ... 2. An active policy of deposits and brand protection In Switzerland: the stock of an infringer was seized. The procedure was concluded by a transaction in which the infringer has recognized the rights of Cybergun, and pledged not to violate. He paid court fees, compensated Cybergun, and he finally withdrawn. 3. implementation of customs supervision in several European countries 4. Litigation start against pirates, based on the new European regulation, which defines the goods "pirates" to infringe either a trademark or a model or a patent or copyright. induced results: Counterfeiters now aware of the intellectual rights of Cybergun, and protection that Cybergun intends to make its rights become much more timid, gradually giving way to the official distributors of original products. These market share gains, combined with increased credibility with subcontractors enable Cybergun to get these exclusive manufacturing. Thus, the subcontractors do not supply the pirates, but only Cybergun, for higher quantities and thus at tariffs now much more favorable. Another consequence of the recognition of the importance of intellectual rights Cybergun: sub licenses are more numerous, increasing the Cybergun income. The owners of the rights associated with the success of the sub-license, lend their support to legal Cybergun. Video games: the excitement of a new niche The success the corners of the policy: The success of "showcases contracts" signed with distributors, was born the political corners. In partner stores the corner allows Cybergun could sign several exclusive license agreements with Colt® brands, Desert Eagle TM ( the famous gun of Lara Croft), Smith & present in its full range environment, relatively low costs. Today, 34 Wesson®, Walther®, Sig Sauer® Mauser, UZI®, Tanfoglio®, corners are already open in Europe, demonstrate innovative Thompson® Driving Ordnance®, reflecting the strategic commitment marketing that has attracted the distribution. to strengthen its position among distributors video games. There are in Europe more than 5000 stores video games on lequels the appearance of Air Soft Gun®, recent, is already a great success with a younger audience, eager for novelty. By diversifying its activities, Emerging developing markets Cybergun should enjoy the leisure market boom. * Film professionals are in AIR SOFT Gun® a unique product allowing them to significantly reduce security-related investments on film sets or when promoting a film. Note that the release of new films is a constant source of free advertising for Cybergun. For example: "The Road to Perdition," starring Tom Hanks, and the famous gun camembert AL Capone, you can admire its reproduction Airsoft below. * The low cost of SOFT AIR Gun® compared to real weapons make, also a possible substitute for professionals within the workouts fun, because it is better suited than paintball (gendarmerie, police ...). Thompson 1928 Drum Rifle 7 Analysis of activity 1 Evolution of Capital: The Own Funds were multiplied by 12 in 6 years. 2 Sales Evolution 1997-2002 The annual turnover has increased 8 in 6 years (since 1996), but nevertheless recorded a decline in 2002 to 12,253,592 euro. In order to develop a strong organic growth, it was indeed necessary to Cybergun invest both financially (on the Second Marché of Euronext July 5, 2002) and marketing (new packaging, international exhibitions, expansion of the customer wallet across the Atlantic) and industrial (development of new products, buy new molds etc ...). 3 Distribution of revenue The evolution of the last 3 years appears clearly favorable for export, which represents 73% of sales in fiscal 2002 (ended March 31, 2003). The upward trend of export turnover continues on three major areas: * Portfolio Enlargement customers in Europe, including in the Eastern Crescent (Russia, Hungary, Poland, Romania, Turkey), facilitated by the hiring of young talents specialized in these territories. * Explosion of sales in the US, with 56 independent representatives, supervised on site by Eric Duchange (San Francisco) and Eric Gautier (Miami) to SOFTAIR USA, which has delivered more than 1000 point of sales. * Collection of income sublicenses in Asia (26 contracts signed to date). 9 The Shareholder information and investor 1 Evolution of dividends for 6 years: The amount of dividends paid has increased steadily since 1996 and has multiplied by 6 in 6 years. For the year ended 31 March 2002, the gross amount of the dividend - which will be submitted for your approval at the General Meeting of June 24 - will amount to 0.32 Euro, together with a tax of 0, 16 Euro, a total dividend of 0.48 Euro, an increase of 15% over the previous year. 2 Stock information: a) stock price performance from July 2002 to June 2003: In 2002, in a very pessimistic context, your Cybergun share were pretty well behaved, pretty sticky near the benchmark of the second market. The stock reached its low of 5.20 Euro March 17, 2003, to close at 6.75 Euro at the end of the year (31 March 2003). b) More information? To receive more financial or commercial information: Wishing to maintain a real contact with its shareholders, Cybergun regularly • by Internet : www.cybergun.com sends information about the course of action, the articles in the financial press, • by email : infos@3psa.com ( Commercial information) Lucile.marsac@3psa.com ( financial information) or new products. • call: Lucilia Marsac: (33) 6 72 79 79 05 • by mail : Lucile Marsac - Cybergun SA - BP87 91072 BONDOUFLE cedex - France Your opinion interests us ! 11 Council Management Report of Directors at the AGM and the EGM of 24 June 2003 Ladies and Gentlemen, In July 2002, to finance its efforts Cybergun enters the second market of Euronext. It is in a market context very agitated that the capital increase, with 180,000 shares placed during 11,91 Euro, is successful on 5 July. 1: ORDINARY GENERAL MEETING: You are gathered for their annual meeting in order to approve the financial statements for the twelve months ended 31 March 2003. This has monopolized the leaders for months, but has allowed Cybergun back to a better ratio debt / equity. The gearing ratio is set at 48.16% today, an improvement of 2 percentage points compared to the situation at 30 September 2002. Thus Cybergun is equipped to face the strong All corporate documents have been communicated or made available to the conditions and limits provided by law. developments of recent months. Against all odds, this period marked the beginning of a general wait-and in all economic agents wait reinforced by the reluctance of their financial partners. This situation has affected particularly the areas where Cybergun was strongly present: France, KPMG and Fidelio company, auditors, you will also read their reports. Belgium, the United Kingdom, but also the video game industry (sales Cybergun video games divided by 4!). In addition, the sharp and unexpected depreciation of the US dollar, On 4 July 2002 the company changed its stock market by Free Market transfer operation on the Second Marché of Euronext. 1-1: Review of the status of the company: now represents 60% billings, impacted heavily on turnover, margin and profit during this period. Indeed, the dollar rose to 0.8780 against the euro 1 1 st day of the year (ie 1 st 1-1-1: Consolidated financial statements: During the year ended 31 March 2003, the CYBERGUN group achieved April) to 1,087 against 1 euro the last days of the year, a depreciation of nearly 20%. However, the marketing efforts of 2 e half of 2002 are a consolidated turnover excluding taxes of 12.25 million euros, down beginning to bear fruit in terms of new accounts and new markets. The 11.54% over last year. Eastern Europe wakes up (Romania, Hungary, Turkey, first contacts in Russia), but especially the USA explode. Indeed, the USA, with The consolidated group is as follows: - CYBERGUN SA 2,939,487 dollars in billings, up on 2002, 24% of sales with a growth rate of 300%. The first months of the year has just begun reveal a quadrupling of capacity in 2003. - Microtrade (consolidated) In 2002, Cybergun your company decided to focus its efforts on several fronts: industrial, financial and marketing. Your company has provided a major effort in the context of research and development, and on improving the reliability of products, and on achieving innovations guns with integrated power boost, buy new molds to expand range: Thompson, Smith & Wesson Sigma, Walther TPH, new packaging (DPMS Panther, Sig Sauer, Thompson, Colt M16 ...) Cybergun has also benefited from this exercise 2002 to negotiate new licensing agreements with DPMS and Eric Grauffel. Your company also led to long negotiations with the Russian brand best known in the world: indeed the beginning of June 2003, Cybergun could sign a license agreement with Michael Timofeievitch KALASHNIKOV. Thus, the consolidated operating profit for the year amounted to 386,754 euro 1,867,134 euro against the previous year. 1-1-2-3: Developments and Prospects: Armed now 17 worldwide exclusive licenses Cybergun serenely plans to Due to a negative consolidated financial result (136,069) euro, the resulting current consolidated pre-tax is 250 685 euro, against 1,713,728 euro last year. After taking into account a tax on profits of 93,076 Euro, consolidated net income group share came to 310 406 conduct in 2003, 20 million turnover, together with 8% of net income, thanks on the one hand, the strong increase in sales USA, and, secondly, to the resumption of normal activity in Europe, whose premises are already being felt in recent days. Indeed, the April 2003 billings compared to the same period last year grew by 66.12%, those of May growth euro, against 1,158,372 euro for the previous year. 67.40% and it already seems clear that in June will have the same profile. 1-1-2: Financial statements: During the year ended March 31, 2003, the Cybergun company achieved sales excluding taxes 12.25 million euros, down 11.54% over last year. 1-1-2-4: Profit allocation proposal: It is proposed to allocate the net profit for the year, amounting to 319,100 euro, increased retained earnings of 56,136 euro and other reserves of The operating profit amounted to 427 434 euro against 1,751,456 euro for the previous year. The profit before tax of Euro 2,132,133 euro, amounting to 2,507,369 euro, as follows: 253,173 against Euro 1,726,446 last year. After taking account of income tax of 99 768 euro, net income was Euro 319,100 against Euro 1,303,582 for the previous year. - 10,519 euro to the legal reserve account - 1,748,800 euro account "other reserves" - 697 600 euro dividend, net 0.32 euro / share involves a tax credit of 1-1-2-1: Company activity in research and development: 0.16 / share - 50,450 euro to the account "retained earnings" The dividend will be The expenditure on research and development amounted to 78 873 euro payable as from 24 September 2003. in 2002 and led a 39,436 euro tax credit. 1-1-2-5: Executive compensation: 1-1-2-2: Significant events since the end of the current fiscal year: Subsequent to the closing of accounts, we received a response from the Commission of charge Use of Social Security. It does not bring any new element, we have maintained our position of not provisioned the sum During the twelve months ended March 31, 2003, executives received the following remuneration: - M Jerome Marsac, CEO: 18 293 euro - Mr Thierry NACCACHE, Deputy CEO: 17,857 euro involved. We also decide not to fund a tax penalty for failure to tax clearance certificate from our licensors. 13 Council Management Report of Directors at the AGM and the EGM of 24 June 2003 (continued) 1-1-2-6: Offices held by directors in other companies: • Mr. Eric Gruau, director, holds the following positions: • Jérôme Marsac, CEO, holds the following positions: - Director of SA FIB, ZI Route de Rennes, 53940 ST BERTHEVIN - President of the SA CYBERGUN, 11 rue du Petit Pont, 75005 Paris. - Administrator SAGVS, ZIS Bd Pierre Lefaucheux - Manager of Sarl Microtrade, 3 Rue des Foyers, l-1537 Luxembourg - 72000 LE MANS - Director of SA PICOT, 18 rue de Prony, ZI 2, 37300 JOUE LES TOURS - Manager of Sarl JUILLARD 9-11 Henri Dunant, 91070 Bondoufle. - Administrator of the Local Savings Company of Mayenne - Administrator of the Local Savings Company of Mayenne 8 Street Brea 44000 Nantes. - Manager of SARL GRUAU POLSKA Gmina Daszyna 29 A - 107 99- Gmina Daszyna • Jean-Marc Azoulay, director, holds the following positions: - Chairman of the Board of Directors of SA GRUAU BENELUX Industrial - Director of SA TRAVELIA, 2 rue Alfred de Vigny, 75008 PARIS Boulevard, 135 - 1070 BRUSSELS It is specified that the dividends distributed for the three previous years were as follows: drill Number of shares Net Dividends Per share Tax Per share Total amount Distributed 1999/2000 2,000,000 0.15 2000/2001 2,000,000 0.20 0.10 402 465 euro 2001/2002 2,000,000 0.28 0.14 560.000 euro 0,075 euro 304 898 euro 2: EXTRAORDINARY GENERAL MEETING: Meeting, an option between payment of the dividend in cash or in shares to create enjoyment to April 1 2003. 2-1: Issue of securities To finance the development of the activity - either through internal growth or through acquisitions - and to deal with a public offer to purchase or exchange, you are asked to give the Board authorization to issue shares and to issue securities giving access to the capital of the company, with or without preferential subscription rights. These operations are available on the terms contained in the draft resolutions. This option will cover 60% of the dividend distribution, or 0.192 euro per share. The share issue price to create the dividend payment will be equal to 90% of the average opening price over the twenty trading days preceding the date of this General Meeting less the net amount of the dividend. The ex-dividend on September 1, 2003. Shareholders wishing to opt for payment of a dividend in shares will have a period between 1 September 2003 and 24 September 2003 to make a request to their financial intermediary . Any shareholder who has not exercised his option within this period will receive dividends paid him in cash. The option may be exercised by each shareholder on 60% of their dividend. The dividend will be payable in cash as of September 24, 2003. If the dividend to which each shareholder is entitled does not correspond to a whole number of shares, it will indicate in the application form, at their choice, if he wishes to receive the immediately higher number of shares by paying the difference in cash. This payment must accompany the decision of the shareholder. Otherwise, it will be considered 2-2: Capital increase through a PEE subscribing to the number of shares immediately below. The shares created will be fully assimilated to existing shares subject to their effective date. if he wishes to receive the immediately higher number of shares by paying the difference in cash. This payment must You are also requested to kindly authorize the Board of Directors to increase share issue by capital reserved for members of a company savings plan (PEE). accompany the decision of the shareholder. Otherwise, it will be considered subscribing to the number of shares immediately below. The shares created will be fully assimilated to existing shares subject to their effective date. if he wishes to receive the immediately higher number of shares by paying the difference in cash. This payment must accompany the decision of the shareholder. Otherwise, it will be considered subscribing to the number of shares immediately below. The shares created will be fully assimilated to existing shares subject to their effective 2-3: Options to subscribe for or purchase shares date. The resolutions draft details the conditions under which the board would be authorized to grant to certain employees and officers options to subscribe for or purchase shares of the company. 2-4: Authorization to trade on the stock exchange on own shares of the company 2-6: Ratification of the appointment of two directors The Board of Directors is seeking the renewal of the authorization to operate on the stock exchange on own shares of the company, according to the draft resolution. Finally, you are asked to ratify the appointment of Mr. Eric Gruau, replacing Mr. Robert NACCACHE resigned, and Thierry NACCACHE, as directors of the company. 2-5: Option for the payment of dividend in shares It is proposed to each shareholder regarding the dividend assessed under Board of directors this 15 BALANCE SHEET ASSETS (in euro) SECTIONS GAP ACQUISITION gross depreciation 128 997 90299 281159 281159 31-Mar-03 31-Mar-02 38698 51598 INTANGIBLE ASSETS Administration fees 64,562 Research and development expenses Concessions, patents, similar rights Leasehold Other intangible assets Intangible assets in progress 2323189 337823 1985366 2075027 38,112 38,112 38,112 6098 6098 6098 52000 52000 PROPERTY grounds constructions Plant, machinery 789980 201166 588814 244668 Other property 401 550 181945 219 605 252957 31860 31937 163577 292069 Advances and deposits INVESTMENTS participations 31860 Other participations Receivables from participations Other investments Loans Other financial assets FIXED ASSETS 213467 4266412 49890 1142282 3124130 3057028 3355512 3451437 INVENTORIES AND WORK IN PROGRESS Stocks of Goods Advances paid to suppliers 3388212 32700 102 072 102 072 RECEIVABLES Customer receivables and accounts piecing Deferred tax assets 2669793 26472 3115 2643321 1954037 3115 other receivables 752769 availability 843483 6208 843483 18975 18975 746 561 503704 1413742 REGULARISATION ACCOUNT Prepaid expenses CURRENT ASSETS 7778419 65,380 7713039 115812 7438732 Deferred expenses over several years 27186 27186 75155 active conversion deviation 98,046 98,046 10718 TOTAL 12,170,063 1 207 662 10 962 401 10 581 633 LIABILITIES (in euro) SECTIONS Share capital Premium Legal reserve Other reserves 31-Mar-03 714993 31-Mar-02 609796 1788060 60980 2132133 60980 1132133 group reservations 55244 200455 Retained earnings 56,136 312554 THE RESULT OF THE EXERCISE 310406 1158372 EQUITY 5117952 3474290 Interest income excluding non-group group MINORITY INTERESTS Provisions for risks and charges 126 059 Deferred tax liabilities PROVISIONS RISKS, CHARGES 24018 3577 126 059 27595 FINANCIAL DEBTS Borrowings from credit institutions Loans and financial debts 2775786 532774 Advances received on contracts in progress 1888812 1885268 65292 EXPLOITATION DEBT Trade payables and related accounts Social and tax debts 1616213 2034014 496 398 979565 209 603 42538 87616 128 437 OTHER DEBTS Other debts REGULARISATION ACCOUNT Deferred DEBTS 5718390 55822 Liabilities Translation differences TOTAL 7023926 10,962,401 10,581,633 17 INCOME STATEMENT 1 era part (in euro) SECTIONS Sale of goods la France 3305041 Export 8214276 31-Mar-03 31-Mar-02 11,519,317 13,527,146 Production sold goods sold production services NET SALES 199492 534784 734 276 327082 3504533 8749060 12,253,593 13,854,228 Immobilised production 15000 Operating grants Reversals depreciation, provisions, expense transfers 163396 366 120 48885 29613 EXPLOITATION PRODUCT 12,480,874 14,249,961 Purchases of goods (and duties) 7052762 6970077 Others products Change in inventories of goods 89698 Purchases of raw materials, supplies 38457 Other purchases, external expenses 2593940 556452 26912 2704481 Taxes and similar payments 128 424 62016 Salaries and treatments 827608 776700 social security costs 301606 245 009 Depreciation Depreciation on fixed assets 407157 386 120 81,075 134 573 Depreciation Depreciation expense to allocate charges to provisions on current assets Depreciation provisions for risks and charges 112 759 13300 Other expenses 460634 507187 12,094,120 12382827 EXPLOITATION CHARGES OPERATING INCOME 386754 Investment income 6060 Products other securities, receivables immob. 1975 1867134 10337 other interests and similar products 86681 11762 Reversals of provisions and expense transfers 23,214 12760 326 140 148 411 444070 183270 Foreign exchange gains Net income transfers securities FINANCIAL PRODUCTS Financial allocations amortization, provisions 49890 23,214 Interest expense 206 276 191207 Foreign exchange losses 323973 122233 Net expenses disposals securities FINANCIAL EXPENSES BOTTOM LINE CURRENT RESULT BEFORE TAX 22 580139 336 676 <136069> <153406> 250685 1713728 INCOME STATEMENT 2 th part (in euro) SECTIONS Extraordinary income from management operations Extraordinary income from capital transactions 31-Mar-03 31-Mar-02 60967 63010 175960 405288 Reversals of provisions and expense transfers EXCEPTIONAL PRODUCTS 236 927 468298 Extraordinary expenses on management operations 68,213 138 210 3017 206339 Extraordinary expenses on capital transactions Exceptional depreciation, amortization, provisions EXTRAORDINARY CHARGES EXCEPTIONAL RESULT 71,230 344549 165 697 123 749 99768 654851 - 6692 11354 employee participation in profit-sharing Income taxes Deferred income taxes Income from consolidated companies Depreciation Depreciation difference acquisition 323306 12900 1171272 12900 consolidated set of results 310406 1158372 Group results 310406 1158372 Profit excluding 19 ANNEX 1.1.1.1. Consolidation methods and principles The Group's accounts are consolidated in accordance with French accounting principles and are prepared in accordance with the provisions of the decree of 22 June 1999 approving the regulation CRC 99-02. The principle of consistent accounting methods is respected. Companies whose importance is not significant within the meaning of Article L233-19 of the Commercial Code and for which the information required for the consolidated accounts can not be obtained without undue cost or timeframe compatible with the production of financial state. As such, are not included in the scope of the group companies with accumulated turnover is less than 1% of consolidated net sales and whose detention rate by the group is less than 50% . The data below are presented in thousands of euro. 1.1.1.2. Important event occurred during exercise Changing Stock Market. On 4 July 2002 the company changed its stock market by Free Market transfer operation on the Second Marché of Euronext. This operation allowed the lifting of 2144 keuro. 1.1.1.3. Events after the balance sheet date 1.1.1.3.3. Consolidation The companies consolidated by the group are: Parent company : CYBERGUN SA 11, the Little Bridge Street - 75005 PARIS - France SIREN No.: 33764379500046 In accordance with CRC 2000-06, contingent liabilities occurred since the end are described below. These were not the subject of provisions in the financial statements at 31 March 2003. Subsidiary : Microtrade 3 Rue des Foyers - L1537 Luxembourg% tax fine interest: 100% - Method: IG The French government has rectified the Cybergun company by issuing a tax fine of 45keuro dated April 27, 2003 under the non-production of its foreign Licensors tax residency certificates. 1.1.1.3.3.1. Change in percentage interest with no change in It was established a protest dossier accepted by the administration and the fine will be waived for the production of so-called certificates. Therefore, this contingent liability is not funded. URSSAF control consolidation method None. 1.1.1.3.3.2. Excluding the perimeter CHL company This company is excluded from the scope of consolidation due to the insignificant nature of its business volume and earnings. Freiburghaus company Cybergun The company has been a URSSAF recovery under ZFU exemptions totaling 150 keuro. Faced with little consistency URSSAF's file and depending CYBERGUN having no significant influence on the FREIBURGHAUS company, on the positions taken by the lawyers of the company, it had been spent no provision in the previous year. On 8 April 2003, the case was reviewed by the it was excluded from the scope of consolidation. Appeals Board of the URSSAF and conclusions now his position is not based on any new information. They are only the resumption of the recovery notification. Consequently, the position adopted by the Cybergun company at the close of March 31, 2002 is maintained and no provision is recognized 1.1.1.3.4. Closing Dates All companies in the scope of consolidation close their financial year on 31 March. 1.1.1.3.5. foreign companies Conversion Methods The single consolidated foreign company is considered autonomous, the accounts of the company are held in euro. 1.1.1.3.1. Consolidation methods The consolidation method used is the global integration for companies in which the group directly or indirectly controls more than 50% of capital. Are integrated into the parent company's accounts the elements of the consolidated accounts of companies, after any restatements to ensure consistency with the accounting policies of the group. 1.1.1.3.6. Comparability of accounts 1.1.1.3.6.1. United synthesis The published statements (balance sheet, income statement, changes in equity tables and cash flow) have values ​at March 31, 2003 (or 1 April 2002 to 31 March 2003) compared to 31 March 2002 (or April 1 2001au 31 March 2002). 1.1.1.3.2. Transactions between consolidated companies and internal profits and losses are eliminated. 1.1.1.3.6.2. Entries in the scope of consolidation Only are left out of some consolidation None. 1.1.1.4. Accounting principles and valuation methods Designation The consolidated financial statements at 31 March 2003 are prepared in accordance with the accounting rules in compliance with the principles of Construction prudence, independence exercises and business continuity. duration fixtures The Group has complied with from 1 April 2002 to CRC Regulation 2000-06 relating to liabilities. Its application had no impact on the accounts. 20 years 5 to 10 years Linear Linear showcases sustainable and equipment 1.1.1.4.1. Changes in accounting policies Fashion of depreciation amortization Transportation equipment 10 years 3 years furniture 4 to 5 years office and computer equipment 4 to 5 years demonstration equipment 5 years Linear Linear Linear Linear or declining Linear 1.1.1.4.2. deviations acquisition Goodwill is the difference between the cost of acquisition and evaluation of the 1.1.1.4.5. Leasing share of assets and liabilities at the acquisition date and recorded at fair value. The Group applies the preferred method of reprocessing of finance lease contracts. 1.1.1.4.2.1. Positive Goodwill Positive differences are amortized on a straight over periods determined case by case depending on the assumptions used in the acquisition. 1.1.1.4.6. Non-consolidated investments Non-consolidated investments are capitalized for historical gross value, that is to say at their acquisition cost or their contribution value. When the book value of equity is lower than the gross value, a provision is made for the difference. The differences by the Group are amortized over a period of ten years. 1.1.1.4.2.2. Negative goodwill None. 1.1.1.4.3. intangible assets The inventory value is determined by reference to the net book value and the utility value of the company. 1.1.1.4.7. stocks Administration fees These IPO costs, depreciated over a 3 year period using the straight. Inventories of goods and accessories are valued at average weighted purchase cost per unit. Unlike past years, during which the exchange rates and purchasing prices were slightly fluctuating, these have been the year of the amplitudes of variations such as the previously chosen valuation method was no Concessions, patents, trademarks longer appropriate. These new terms, reflecting better information on 31 March 2003, would not have a material impact on the value of the stock on March 31, 2002. The slow-moving items are subject to a valuation allowance. The trademark registration rights, trademarks registrations paid by INPI, WIPO and other organizations provide protections for 10 years minimum. They are then renewed for a period of 10 years. These investments are amortized over 10 years on a straight. The COLT reproduction exclusive license is depreciated according to the term of the contract is 30 years, using the straight. 1.1.1.4.8. Consideration of unfinished contracts at year end The exclusive license to reproduce SIG SAUER depreciated according to the duration of the contract is 10 years, using the straight. None. 1.1.1.4.9. Receivables and payables Software is depreciated over 1 year on a straight. 1.1.1.4.4. tangible assets Land, buildings, technical installations and other fixed assets are valued at acquisition cost or production. Depreciation is generally charged the following rates and methods: Receivables and payables are stated at their nominal value. A provision for impairment is recorded when there is a probable loss in accordance with the precautionary principle. Provisions for impairment recognized are individualized and not the result of an overall estimate. 1.1.1.4.10. Investment grants None. 1.1.1.4.11.Provisions for risks and charges A provision is recognized when there is a legal or constructive obligation to a third party, resulting from past events, probably or certainly lead to an outflow of resources and whose assessment can be carried out with sufficient reliability. 21 Method The practice group's liability method. Provisions include: • pension obligations and other benefits • Deferred tax liabilities rates used • provisions for foreign exchange losses The interest rate is the rate provided for French companies at 31 March 2003 is 34.33% broken down as follows: 1.1.1.4.12. Pensions and other benefits granted to employees of French companies • tax rate on corporations. . . . . . . . . . . . . . . . . . . . .33,33% • Additional contribution from 6 to 3% or This rate was also 34.33% on 31 March 2002. The retirement indemnity commitments are taken into account by provisions for retirement in the group companies. . . . . . 1.00% 1.1.1.4.14. professional liability risks The pension provisions were calculated by evaluating using the retrospective method that the Group should pay its employees who retire based on: nothingness • social legislation and the collective agreement, • the remaining service period of employees expected to present at the 1.1.1.4.15. Receivables and payables in foreign currencies time of retirement based on the employee turnover rates and mortality Receivables and payables in foreign currencies are recorded at the day of the tables • salaries revalued until the retirement date • the discount rate. transaction. At the balance sheet date they are valued using the current sheet date. The resulting translation differences are recognized in the balance sheet under "Translation adjustments Assets and Liabilities". The active conversion gap representing a latent loss is then provisioned. 1.1.1.4.13. deferred taxes The corporate income tax is recognized taking into account the deferred tax but also latent: 1.1.1.4.16. exceptional result Extraordinary items are income or expenses resulting from events or transactions clearly distinct group's ordinary activities and which are not, therefore, expected to recur on a frequent or regular basis. "Deferred" related to temporary differences between an asset or a liability to its carrying value and the tax value, "latent": specifically related to takeovers where the tax value of depreciation is different from those calculated on the fair value . 1.1.1.4.17. Earnings per share The adjustments made to the financial statements of the consolidated companies to make them consistent with Group accounting principles or to Per share basic result is calculated by dividing the net result, Group share by the weighted average number of shares outstanding during the year. The calculation of diluted earnings per share takes into account as appropriate, the eliminate the effect of tax laws and the existence of timing differences on taxation, generate differences between taxable income and profit before tax. These differences result in the recognition of deferred taxes presented as consequences would have had all dilutive instruments on the calculation of the period and the number of shares. assets or liabilities by tax entity. 1.1.1.5. Explanations of balance sheet items and their variations NOTE 1 GOODWILL Job description positive goodwill in thousands of euro: Amortization deviations acquisition companies Acquisition date concerned Microtrade Beginning of period End of period Augment. Gross value 04/01/00 TOTAL Gross value beginning endowment period End duration period 129 129 77 13 90 10 years 129 129 77 13 90 10 years NOTE 2: INTANGIBLE ASSETS Changes in intangible assets and depreciation in thousands of euro are: assets Beginning of period acquisitions Mvts perimeter disposals End of period Administration fees Other intangible assets 281 - - - 281 2347 111 - 38 2420 Total 2628 111 38 2701 depreciation Beginning of period Depreciation Mvts perimeter Reversals End of period Administration fees 217 64 - - 281 Other intangible assets 227 127 - 16 338 Total 444 191 - 16 619 NOTE 3: PROPERTY Changes in thousands of euro are as follows: assets Beginning of the period Acquisitions Mvts perimeter Other movements End of period disposals grounds Construct. on home soil Plant and tool. Industrials. 790 442 348 General installations, fittings, various 259 Transport equipment (1) 6 253 17 128 21 21 Office supplies, 141 4 computers, furniture Advance payments 748 Total 467 1192 23 (1) Including reprocessing Leasing: 21 Keuro depreciation Beginning of period Depreciation Mvts perimeter Decreases Other movements End of period grounds Buildings on own land 103 110 198 15 Technical installations, tools Transport equipment (1) 3 3 Other property Total 147 55 20 182 250 168 35 383 (1) Including reprocessing Leasing 3 Keuro NOTE 4: FINANCIAL ASSETS Changes in financial assets in thousands of euro: beginning Evolution Acquisitions Disposals Allowance Reversal period perimeter Increases End period the prov Non-consolidated and other investments participation 32 32 Securities Other financial assets (1) 304 8 98 214 Total 336 8 98 246 8 98 Provisions (1) - 12 Net value 324 - 50 12 - 50 - 50 12 196 Non-consolidated investments include: companies Percentage of capital in% Equity Earnings for the previous year Net value Freiburghaus 22.22 191 80 25 CHL 50,00 20 10 4 Various 3 TOTAL 32 (1) Shareholders Action On 31 March 2003, 7052 dinancières assets include treasury shares (Cybergun shares) for a total purchase price of 97 491 euro, against 6863 shares at 31 March 2002. These actions are provided for at 49 890 euro to reflect the decline in market value over the period. 23 NOTE 5: RECEIVABLES Breakdown of receivables by type and maturity in thousands of euro: Deadline Nature Trade accounts receivable (1) Gross total - 1 year 2670 2670 0 0 Deferred tax assets 3 - 753 Active conversion gap Total 3 2644 0 - 3 747 6 98 3521 Net total Depreciation 0 753 98 3524 + 5 years 26 Advances, payments on orders other receivables Year 1 98 0 3 3492 32 (1) March 31, 2003, the Company Cybergun has a debt of 1769 Keuro (including 1737 K US $ valued at the closing) to society Softair USA, principal partner Cybergun in its development in North America. As of writing paths pre-, this debt decreased by 337 Keuro. NOTE 6: DEFERRED TAX ASSETS The amount of the deferred tax liability is analyzed as follows: 31/03/2003 31/03/2002 Deferred taxes due to temporary differences 3 0 Tax credits - - Tax loss carryforwards - - Total 3 0 NOTE 7: EQUITY Statement of changes in consolidated equity, Group share (in thousands of euro): Other reserves profit of Capital Consolidated Premiums Goodwill Goodwill of of Securities of Grant Competition totals investment capital Currency translation re now consolidating own Situation at the end 31-03-01 1618 610 491 0 0 0 0 2718 movements • Allocation of profit last year 88 • The result of the exercise - 88 1158 1158 - 403 - 403 • Changes in capital of the parent company • Acquisition or disposal of treasury shares • Impact of revaluations • Distributions made by the consolidating company • Changes in translation differences • change accounting policy • other movements Situation at the end 31-03-02 610 1706 1158 598 - 598 0 0 0 0 3474 movements • Allocation of profit last year • The result of the exercise 310 310 • Changes in capital of the parent company 105 1893 1788 • Acquisition or disposal of treasury shares • Impact of revaluations • Distributions made by the consolidating company - 560 - 560 • Changes in translation differences • change accounting policy • other movements Situation at the end 31-03-03 715 1788 2304 310 0 0 0 0 5117 (1) 2144 keuro raised during the transfer of the free market on the Second Marché, were assigned to the increase in capital to 105 Keuro, and the item "share premium" for the balance. The related costs were deducted from the share premium amounting to 251 Keuro after impact of the corporate tax. The issue premium net thus amounts to 1788 keuro. 25 NOTE 8: MINORITY INTERESTS None. NOTE 9: PROVISIONS FOR LIABILITIES AND CHARGES Provisions for risks and charges are broken down as follows (in thousands of euro): Increase Transfer station / post Beginning of period Decrease Risk provisions 11 107 Provisions for expenses 13 5 Total 24 112 End of period 108 10 18 126 10 NOTE 10: GOODWILL DETAIL JOB ACQUISITION NEGATIVE None. NOTE 11: DEFERRED TAX LIABILITIES The amount of the provision for deferred taxes can be analyzed as follows (in thousands of euro): 31/03/2002 31/03/2003 Deferred taxes due to temporary differences - 4 deferred taxes - - Total - 4 NOTE 12: LOANS AND BORROWINGS Details of loans by type and maturity (in thousands of euro): Nature Loans from banks Amount Amount Exercise 1 year or less and more than 5 years Totaling more 5 years 1270 1017 2287 Liabilities on finance leases Amount to over 1 year 20 5 Bank overdrafts 469 469 Other 533 533 15 Accrued interest 1285 2024 3309 Total NOTE 13: FINANCIAL INSTRUMENTS • Risk variable rate Interest rate risk Less than a year 1 to 5 years Over 5 years TOTAL bank loans with variable rates TOTAL 177 186 364 177 186 364 • Risk of change The Cybergun Group conducts its business mainly in Euro and US Dollars. To hedge its foreign currency risk to variations unfavorable tion of the course of these two currencies, Cybergun cover its debts by currency equivalent amounts of debt. 1.1.1.6. Explanation of items in the income statement and their variations NOTE 14: LISTED ON DEPRECIATION AND PROVISIONS The depreciation, amortization and provisions break down as follows: 31/03/2002 31/03/2003 operating provisions Resume financial provisions Resume 31/03/2001 31/03/2002 163 345 23 13 186 379 exceptional provisions Resume Transfer of charges Total 21 NOTE 15: OTHER PURCHASES AND EXTERNAL CHARGES 31/03/2003 31/03/2002 Subcontracting 148 154 Rent, service charges 306 357 Maintenance and repairs 15 24 Insurance premiums 94 88 external staff 31 79 Fees 353 220 Communication 366 403 postage and telecommunications. 82 99 other accounts 1198 1280 Total 2593 2704 NOTE 16: EMPLOYEES The workforce includes employees eligible employees, that is to say all persons having an employment contract and paid directly by the company and staff available, temporary staff and seconded or loaned to the business for entities fully consolidated. Average number of employees broken down by category: Average number of employees at 31/03/2003 employees Average number of employees at 31/03/2002 20 27 8 5 28 32 Supervisors Managers Available Total NOTE 17: AMORTIZATION AND PROVISIONS Depreciation and amortization in thousands of euro are distributed as follows: 31/03/2003 31/03/2002 Depreciation and amortization : • Intangible assets 191 194 • Tangible assets 168 143 • Of deferred charges 48 49 • Outstanding capital 0 0 • Property leased funding 0 0 Additions to provisions: • For impairment of assets • Impairment of current assets • For risks and charges • Impairment of financial items • Impairment exceptional items Total 0 81 0 135 113 13 50 23 0 636 0 557 27 NOTE 18: FINANCIAL RESULT Financial income in thousands of euro breaks down as follows: 31/03/2003 31/03/2002 Financial products : • Financial income from investments, securities and receivables 7 10 • other interests and similar products 89 12 • Reversals of provisions and expense transfers 23 13 326 148 • Foreign exchange gains • Net gains on sale of securities Total financial income 0 0 445 183 206 191 Financial expenses • Interest expense related • Financial depreciation and provisions • Foreign exchange losses 50 23 324 122 • Net losses on sale of securities Total financial expenses bottom line 0 0 580 - 135 336 - 153 NOTE 19: EXCEPTIONAL Exceptional items in thousands of euro may break down as follows: 31/03/2003 Proceeds from sales of assets sold 176 31/03/2002 405 Reversals of provisions Other Expense transfers 61 Net book value of assets sold 63 -3 - 109 - 68 - 235 Exceptional depreciation Provisions for risks Other charges exceptional result 166 124 NOTE 20: INCOME TAXES Rationalization of taxes: Income tax - Deferred taxes = Charges tax on the consolidated results - Theoretical tax rate 34.33% ... = Tax Difference Analysis of this difference: 31/03/2003 31/03/2002 666 100 -7 - 11 - 655 93 143 644 - 50 11 loads products Effects of permanent differences between consolidated profit and taxable results Using loss carry previously unactivated 25 0 0 0 Taxation of earnings of companies at different rates 0 0 issuance costs included in the premium 0 75 Tax credits 0 0 other differences - Total 25 net difference 50 75 1.1.1.7. Other information 1.1.1.7.1 Segment Information In thousands of euro The Group operates in a single business: the distribution of fake replica weapons for shooting sports or leisure, video games and collectors. Location la France Rest of the world TOTAL 31/03/2002 exercise Net Tangible Assets Turnover 237 261 4775 9079 498 13854 31/03/2003 exercise Net Tangible Assets Turnover 207 602 3505 8749 809 12254 1.1.1.7.2 Reconciliation of between statutory and consolidated accounts (In thousands of euro) Social outcomes: 328 restatements: Leasing Regulated provisions and retirement benefits recognition of unrealized foreign exchange gains 50 Internal transactions: Elimination of internal transactions group Elimination of dividends from subsidiaries 27 - 20 Deferred taxes Deferred taxes for the year -7 NET INCOME FROM CONSOLIDATED COMPANIES 323 Net amortization of goodwill - 13 Income from equity affiliates Minority interests CONSOLIDATED INCOME GROUP SHARE 310 1.1.1.7.3 Executive Compensation Total remuneration paid to members of the Board of Directors of the parent company: 32 Keuro 1.1.1.7.4 Commitments and contingencies Commitments given or received in thousands of euro by the Group are analyzed as follows: Engagement Categories Total commitments given guarantees Pledge of goodwill Notes receivable discounted Leasing (1) 1352 338 20 commitments received Guarantees of Mr. Jerome Marsac 968 (1) The company has signed in August 2002 a lease agreement for a period of 4 years on a passenger car of a new value of 20 keuro. 29 1.1.1.7.5 Cash flow 31/03/2002 31/03/2003 Cash flows for the activity Net income of consolidated companies 310 1158 Elimination of expenses and income not affecting cash or not related to operations: - Amortization and provisions - Change in deferred taxes - Gain on sale, net of tax 4 415 -7 - 176 - 199 Translation differences on CIF Cash flow from consolidated companies 2 542 965 working capital requirement Changes related to operating activities - Inventories (net) 96 461 - Trade receivables (net) - 810 448 - Exploitation debt - 774 2003 net cash flow generated by the activity (A) - 946 3877 Cash flows from investing activities Acquisitions of fixed assets Disposals of property Net cash used in investing activities (B) 586 - 159 - 427 987 - 484 - 503 Cash flows from financing activities Dividends paid to shareholders of the parent company Change in other equity Net change in loans Net cash used in financing activities (C) cash change (A - B + C) Opening cash Closing cash - 560 - 403 1893 - 986 347 2574 - 2977 - 1026 397 1414 1017 388 1414 General Report of the Statutory Auditors Ladies and gentlemen, In compliance with the assignment entrusted to us by your General Meeting, we hereby present our report for the year ended 31 March 2003 on: * the audit of the annual accounts of the company Cybergun SA, as attached to this report; * The specific procedures and information required by law. The annual accounts were approved by the Board of Directors of May 24, 2003. It is our responsibility, based on our audit, to express an opinion on these accounts. 1 - Opinion on the annual accounts We conducted our audit in accordance with professional standards applicable in France; These standards require the implementation of procedures to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. It also includes assessing the accounting principles used and significant estimates made in preparing the financial statements and evaluating their overall presentation. We believe that our audit provides a reasonable basis for the opinion expressed below. We certify that the financial statements are in accordance with French accounting rules and principles, 2 - Specific verifications and information We also performed in accordance with professional standards in France, the specific verifications required by law. We have no comment to make on the sincerity and consistency with the financial statements of the information given in the management report of the Board of Directors and the documents sent to shareholders on the financial position and financial statements. In law enforcement, we verified that the information concerning the purchase of investments and controlling interests and the identity of the shareholders has been properly disclosed in the management report. Auditors Laval and Paris, 6 June 2003 Pascal Chancereul Frank Associated Jean-Louis Rouzé associate associate Christmas KPMG Audit Department of KPMG SA Company Auditors 7 rue Paradis 53000 FIDELIO SA Company Auditors 41, avenue de Friedland 75008 PARIS LAVAL 31 Mints-111 Tmmpeeaw-I ?ill-HI rte-lawman Ann-m Twin-1m" Hay-1t ?maul-n Wm Thu: urhEIEIgI-ed. HIIHII. [Irina-ital II 31-h. :lA. I 4h. Illa-Ht. dl?lTI'? Human Inclemllcu, hereby declarinhm: and Izmir-ml} Ell-t and Ill Frupi-rlr rigl'lla. iwlndill?d?i??. Dill? Ell- Trig-em": 'Htl H'ill'lI'II-I-l 5A. E'Irnilclulie. hull-unkind inluxfu'hhkr Hurll?il HI. U1: mluiur wart-?uid: linens-H: la Ilu; .nd ndtdI'l'l-Safl: Ind tag-J Funlialin-g in In un-ing ?lm-1mm Fumurrl In d1: Hahn hn ?trighl lain: ?nu-1 I EH hnid't l'iEhI tn Ilkt? llL'IiEll. in Iii-i:- h: [Hamli-l {Hap-any. mcuunamn?mm Ihirdpulj-?m?mgem r" Hlklun Ialf??gil?u.