Algev Ar 2006

Financial and Legal Aspects
Financial Year 2006
O rdinary General Meeting held on 21 June 2007

Contents
Gvelot Group
Companies in the Gvelot Group Organisation chart Gvelot SA Management Agenda for the Ordinary General Meeting Overview of the 2006 financial year p. 2 p. 3 p. 4 p. 5 p. 7
Accounts 2006
Management report of the Board of Directors Consolidated accounts at 31 December 2006 - Auditors Report Company accounts at 31 December 2006 - Auditors Reports Resolutions submitted to the Ordinary General Meeting p. 9 p. 17 p. 47 p. 49 p. 68 p. 71
2006 documents attached in the appendix Report of the Chairman to the shareholders, under the Financial Security Law (LSF) - Auditors Report Social and environmental information, under the New Economic Regulations Law (NRE)
Limited Liability Company (Socit Anonyme) with capital of 33,514,005 euros Registered office, management and supervision : 6, boulevard Bineau 92532 Levallois-Perret Cedex trade register. : Nanterre B 562 088 542 SIRET number 562 088 542 00369 www.gevelot-sa.fr
Financial 2006
Companies in the Gevelot Group

Addresses and Businesses
Companies Addresses Telephones Faxes Internet/E-mail Business
COMPANY HOLDING
Gvelot
Chairman - Managing Director Paolo MARTIGNONI 6, boulevard Bineau 92532 Levallois-Perret Cedex (France) +33 (0)1 41 49 03 03 +33 (0)1 41 49 03 02 www.gevelot-sa.fr Management of industrial investments and associated services.
SUBSIDIARY COMPANIES
COLD EXTRUSION/MACHINING SECTOR
Gvelot Extrusion
Chairman - Managing Director Michel DOPPLER 6, boulevard Bineau 92532 Levallois-Perret Cedex (France) Langenbacher Strasse 17/19 D-78147 Vhrenbach (Germany) +33 (0)1 41 49 03 33 +33 (0)1 47 48 90 34 www.gevelot-sa.fr +49 (0)7727/509-0 +49 (0)7727/509-166 www.doldgmbh.de Cold extrusion of steel parts. Machining and heat treatment. Cold extrusion of steel parts. Machining and heat treatment.
- Dold Kaltfliesspressteile GmbH
PUMPS/FLUID TECHNOLOGY SECTOR
PCM
Chairman - Managing Director Jacques FAY 17, rue Ernest Laval B.P. 35 92173 Vanves Cedex (France) +33 (0)1 41 08 15 15 +33 (0)1 41 08 15 00 www.pcm.eu
- PCM Group UK Ltd
- PCM Deutschland GmbH
Pilot Road Phoenix Parkway Corby NN17 5YF (United Kingdom) Wiesbadener Landstrasse 18 65203 Wiesbaden (Germany)
+44 (0)1536 740200 +44 (0)1536 740201 www.pcm.eu +49 (0)611/60977-0 +49 (0)611/60977-20 www.delasco.de +1 (713) 896 4888 +1 (713) 896 4806 www.pcmdelasco.com +86(0)2162362521 +86(0)2162362428 +1 403 279 5838 +1 403 279 2192 www.kudupump.com +1 (915) 698 0482 +1 (915) 698 11 55 +(61) 7 3842 3105 +(61) 7 3371 7300 +7 (3272) 71 58 90 +7 (342)260 72 88 +7 (342)260 71 90 +(65) 628 10 667 +(65) 628 10 908 +(86) 21 5488 9599 +(86) 21 5488 9399
Design, manufacture and sale of positive-displacement pumps : PCM Moineau eccentric rotary pumps, PCM Delasco tube pumps, PCM Prci-Pump piston metering pumps, Ecolobe lobe pumps for industry, PCM Moineau Oilfield for the oil industry, Solutions in fluid technology Manufacture, sale and services for positive-displacement pumps Systems for metering reagents and for solutions in fluid technology Manufacture, marketing and services for positive-displacement pumps Management of industrial investments and associated services. Marketing and services of positive-displacement pumps. Manufacture, sale and services for petrol pumps. Marketing and services of positive-displacement pumps
- PCM Flow Technology Inc. - PCM USA Inc.
11940 Brittmoore Park Drive Houston, Tx 77041 (United States) - PCM Trading (Shanghai) Co. Ltd. Unit 10A01 & 10G03, Shanghaimart 2299 Yanan Road (West) 200336 Shanghai (China) - Kudu Industries Inc. 9112 - 40th Street S.E. Calgary AB - T2C 2P3 (Canada) Moineau Texas Corporation 1112 S. Main Street Seminole Texas 79360 (United States) Kudu Australia Pty Ltd L3, 349 Coronation Drive Milton, QLD, 4064 (Australia) Kudu Industries Kazakhstan LLP 51 Zhamakayev Str. Almaty (Kazakhstan) ZAO Canaross 4, Vosstania str. 614014 Perm (Russia) - Ensival Moret Asia (EMA) 9 Tai Seng Drive #02-02 Hesche Building 535227 Singapore (Singapore) Moret Pumps Shanghai (MPS) no. 1590, Li An Road Minhang District 201 100 Shanghai (China)
Manufacture, sale and services for petrol pumps. Design and manufacture of ancillary services for the oil industry Sale and services for petrol pumps. Sale and services for petrol pumps.
Sale and services for petrol pumps. Sale and services for petrol pumps. Manufacture and marketing of industrial pumps.
Manufacture and marketing of industrial pumps.
MECHANICAL ENGINEERING/MOTOR AND GAS EQUIPMENT SECTOR
Gurtner S.A.
Chairman - Managing Director Bruno TRACCO 40, rue de la Libration B.P. 129 25302 Pontarlier Cedex (France) 17, rue Tournire 80530 Bethencourt sur mer (France) +33 (0)3 81 46 70 22 +33 (0)3 81 39 29 50 www.gurtner.fr +33 (0)3 22 30 72 23 +33 (0)3 22 30 45 34 Solutions for the circulation of fluids in the fields of motor and gas equipment. Solutions for the circulation of fluids in the fields of motor and gas equipment.
- Ets Lopold Clr
Gvelot Group Organisation chart

GEVELOT S.A .
Cold extrusion/Machining
Pumps/Fluid technology
Mechanical Engineering/Engine and gas equipment
GVELOT EXTRUSION
99,99 %
PCM
99.99 %
GURTNER
100 %
PCM Group UK Ltd

(United Kingdom)
99.99 %
Ets Lopold CLER

100 %
PCM Deutschland GmbH (Germany)

99.99 %
ENSIVAL MORET ASIA

(Singapore)
25.71 %
(2)
DOLD KALTFLIESSPRESSTEILE
(Germany)
100 %
(1)
PCM Flow Technology

(United States)
99.99 %
MORET PUMPS SHANGHAI (China)

100 %
PCM USA Inc

(United States)
100 %
PCM Trading (Shanghai) Co. Ltd.

100 %
KUDU INDUSTRIES
(Canada)
45 %
(2)
MOINEAU TEXAS Corp.

(USA)
KUDU AUSTRALIA
(Australia)
KUDU KAZAKHSTAN
(Kazakhstan)
CANAROSS
(Russia)
N.B. The percentages shown are the percentages controlled (1) Company 20% controlled by Gvelot SA and 80% controlled by Gvelot Extrusion (2) Companies consolidated using the equity method
Gvelot S.A. Management

at 21 June 2007
Board of Directors
Chairman - Managing Director Board Members Paolo MARTIGNONI Roselyne MARTIGNONI Claudine BIENAIM Charles BIENAIM Pascal HUBERTY Philippe DESTOURS Roberto BARABINO
Direction
Managing Director Acting Managing Director Paolo MARTIGNONI Philippe BARBELANE
Auditors
Permanent Cabinet MAZARS & GUERARD represented by Robert AMOYAL CREA represented by Bernard ROUSSEL Deputy Jean MARI Philippe BAILLIN
Agenda
for the Ordinary General Meeting held on 21 June 2007
Management report of the Board of Directors on the operation of the Company during the 2006 financial year, Auditors Reports on the consolidated company accounts for this financial year, Approval of agreements under the terms of Articles L.225-38, L.225-42-1 and R.225-30 of the Commercial Code, Examination and approval of the Company accounts for the financial year closed on 31 December 2006, Examination and approval of the consolidated accounts for the financial year closed on 31 December 2006, Allocation of the results for the 2006 financial year, Discharge of Board Members, Powers Any other business
Overview
of the 2006 financial year
Key figures
(in thousands of euros) 2006 2005 Variation in %
GROUP
Consolidated turnover before tax Part achieved outside France Current operational result Of which Financial amortizations Of which Depreciation of Assets IAS 36 (net adjustment) Operating income Current result before tax Net result Groups Share Net income from shares (in euros) Minority interests share Internal financing gross margin Workforce 196,832 109,522 6,259 (8,544) 635 6,259 5,117 4,360 4,357 4.55 3 11,712 1,538 200,226 108,672 7,038 (7,916) 223 5,635 5,349 5,255 5,251 5.48 4 13,282 1,560 (1.7) 0.8 (11.1) 7.9 11.1 (4.3) (17.0) (17.0) (17.0) (11.8) (1.4)
GVELOT S.A.
Turnover before tax Current result Extraordinary result Net result Internal financing gross margin Net dividend per share (in euros) Workforce 3,451 2,695 (1,231) 2,171 3,790 2.20 9 3,641 3,645 (1,319) 3,378 5,173 2.20 8 (5.2) (26.1) (35.7) -
Consolidated turnover by business sector

196.8 M 200.2 M
Cold extrusion / Machining Pumps / Fluid technology Mechanical Engineering / Engine and gas equipment
33.3% 58.6% 59.8%
32.3%
8.1%
7.9%
2006
2005
Consolidated results
6,259 K 5,635 K
Current operational result Operating income Share of the Group
6,259 K 4,357 K
5.5 % *
7,038 K 5,251 K
6.3 % *
2006
2005
* The percentages correspond to the current operational result on equity capital
Management report of the Board of Directors

Ladies and Gentlemen, In accordance with the Law and our Articles of association, we have called you to an Ordinary General Meeting to give you an account of the business of our company and its subsidiaries over the last financial year and to submit the company accounts and the consolidated accounts closed on 31 December 2006 for your approval. The consolidated turnover amounted to 196.8 M as against 200.2 M in 2005, a fall of 1.7%. For the Extrusion Sector, the weakness of the European automobile market in 2006, characterised by marked falls in some markets (United Kingdom, France and Spain), has had a particularly unfavourable impact on our major clients. The fall in this Sector came to 3.6%, after correction brought about by the firmness of sales for our subsidiary in Germany (+ 3.4%) in a rising local market. The turnover for the Pumps Sector remains stable (+ 1%). The increase in sales of industrial pumps and the firmness of other fields of activity (food industry and ancillary services for the oil industry) have enabled us to maintain the value of sales in this sector. Thanks to the high level of activity over the last quarter of the year, particularly in the field of carburettors for spare parts which compensated for the fall on the original equipment market, on the one hand, and, on the other hand, the weakness of demand from a major client in the field of natural gas, the turnover of the Mechanical Engineering Sector remained in the end stable. The current consolidated operational result has declined by 11% (6.3M against 7.0 M). The net fall of the Extrusion Sector, due to a marked reduction in business activity in France found over the second half of 2006 for major clients, the continuing effects of the costs of raw materials and the runaway costs of energy and supplies, were compensated for by good business in the Pumps Sector in all fields. The consolidated operating income amounted to 6.3 M against 5.6 M in 2005, a year which included industrial restructuring costs. The financial result is negative at 1.1 M against 0.3 M in 2005, because of the increase in bank debts in the Extrusion Sector and because the positive exchange rates which occurred in the Pumps Sector in 2005 did not recur. In the end, the Groups net consolidated result amounted to 4.4 M as against 5.3 M in 2005. The contribution of the various business sectors to the overall consolidated results is expanded in the Appendix to the consolidated accounts. The businesses of companies included within the Group are expanded below: which includes the contribution of dividends from our subsidiaries which amounts to 1,688 K against 2,501 K in 2005. This fall was essentially caused by the non-renewal of the Extrusion dividend paid during the 2004 financial year on the successful conclusion of earlier disputes. The current result before tax amounts to 2,696 K against 3,645 K in 2005. The extraordinary result is negative at 1,231 K against 1,319 K in 2005. It includes an intra-Group provision for future tax on our Subsidiaries deficits which can be carried over for 916 K, a charge for exceptional net financial amortizations of 345 K. In addition, various exceptional net products have been identified, amounting to 30 K. After a charge for Company tax of 305 K and making a 1,012 K tax saving under the fiscal integration system, the net company profit amounts to 2,171 K against a net positive result of 3,378 K in 2005.
Businesses of the subsidiaries

Extrusion Sector, Machining
The consolidated sales in this sector amounted to 115.4 M, a fall of 3.6% on 2005. Intangible and tangible investments amounted to 12.3 M against 15.5 M in 2005.
Gvelot Extrusion
In a European automobile market which remained stable at + 0.7%, marked by the net fall in volume and market share for French brands, the 2006 turnover amounted to 68,806 K, a fall of 8.5% compared with 2005. The operational result showed a deficit of 995 K (after a charge for financial amortizations increased by 619 K) against a positive result of 369 K in 2005. This fall takes account of the reductions in volumes identified particularly in the third quarter of 2006, persistent industrial malfunctions on the Laval Site (Mayenne) and difficulties in making profitable new products on the Offranville. The financial result of 860 K against 440 K in 2005 appears negative because of the increase in debts at the end of the heavy industrial investment programmes. The extraordinary result is negative at 847 K and includes net allocations to regulated provisions for 1,051 K including 1,040 K of special financial amortizations, in accordance with the French CRC Accounting Rule no. 2002.10 in force since early 2005. Various net products at 191 K have been identified including 120 K for capitalisation of the charges, following the recent tax audit. The net result after tax for the 2006 financial year is therefore negative at 2,808 K against a negative of 4,283 K in 2005, the year which included the costs of closing the Messei Site (Orne). The self-financing capacity is positive at 1,182 K while it was negative at 760 K in 2005. The total number of staff at 31 December 2006 was 687 people including 62 temporary, against 738 in December 2005 including 103 temporary.
Businesses of the Parent Company

Gvelot S.A.
The turnover of the Parent Company, GEVELOT S.A., comprising rents and services, amounted to 3,451 K, 5.2% down on 2005, mainly because our subsidiaries handed back offices in Levallois-Perret which they had been renting since October 2006 and also industrial premises transferred to Messei (Orne) in February 2007. The operational result for the financial year amounted to 540 K against 832 K in 2005. The financial result amounted to 2,155 K against 2,813 K in 2005
Dold Kaltfliesspressteile GmbH (Germany)

The turnover for the 2006 financial year amounted to 47,062 K up by 3.4% on 2005 (45,507 K). Because of substantial destocking, production for the financial year amounted to 45.8 M, or a fall of 1.3%. Because of having managed operating costs better, the operational result shows a net increase and is positive at 1,616 K against a profit of 910 K in 2005. The financial result is negative at 473 K against a negative of 631 K in 2005, since the consolidation of financial advances paid for in company capital by the shareholders in February 2006 enable us to reduce the financial charges. The extraordinary result is negative at 4 K against a positive of 65 K in 2005. After tax expenditure of 352 K, the net result shows a profit at 787 K against a profit of 330 K shown in 2005, before tax because earlier deficits were carried forward. The internal financing capability amounted to 3,075 K against 2,760 K in 2005, up by 11.4%. The total number of staff at 31 December 2006 was 392, including 17 apprentices and 2 temporary, against 422 at 31 December 2005, including 18 apprentices and 5 temporary.
The extraordinary result is positive at 156 K against a negative of 2,453 K in 2005, and includes mainly an adjustment in the provision for tangible assets (+ 627 K), a net allocation of special financial amortizations (- 667 K) an adjustment in the provision for human resource risks (+ 295 K) and client penalties (- 60 K). After a tax on profits of 2,144 K, and employees profit sharing at 566 K, the net profit for the financial year amounts to 6,504 K (5,452 K excluding the merger bonus), against 4,169 K in 2005. The total number of staff at 31 December 2006 is 332 against 313 (including 30 at Dosys) at 31 December 2005, up by 6.1%. Internal financing capability amounted to 6,148 K against 7,555 K in 2005. It is proposed to pay a dividend of 1,279 K for 2006 (the same as 2005).
PCM Group UK Ltd. (Great Britain)

The turnover of this company amounted to 3,413 KGBP against 2,900 KGBP in 2005, up by 17.7%, because of the increase in the sale of systems for industry and water treatment. The net result after Tax for this Company amounts to 281 KGBP against 276 KGBP in 2005. This stable result is explained by a different product mix from 2005 and by taking up environmental markets with lower margins. For 2006, it is proposed to pay a dividend of 150 KGBP (119 KGBP in 2005). There were 29 staff at 31 December 2006 against 22 at the end of 2005.
Pumps and fluid technology sector

The consolidated sales of this Sector amounted to 64.6 M against 64.0 M, up by 1%. Intangible and tangible investments amounted to 2.3 M against an overall 3.2 M in 2005.
PCM
This Company includes the business of PCM Dosys merged with effect from 1st January 2006 through transfer of all assets and liabilities (Transmission Universelle de Patrimoine). In 2006 this Companys turnover amounted to 60.1 M (including 58.5% achieved through exports) against 55.1 M in 2005, or up by 9.2%, recalculated on a like-for-like basis at 0.6%. The turnover of the Industrial Department increased by 9.2% on 2005 and the Food Industry Department remained stable at 0.6%. On the other hand, the turnover of the Energy Department (oil and gas) has suffered a setback because a large export deal was not renewed in 2006. Services, stable at 2.8 M, represent 5% of the overall result. The operational result has suffered a setback to 7,734 K from 8,660 K. This result derives from the combination of a reduction in trade margins in the food and industry sectors, from effects on of margins of the slight fall in oil industry turnover and from the increase in commercial overheads. The financial result is at 1,322 K and includes the merger premium gained during the merger with PCM Dosys for 1,052 K, dividends paid by the subsidiaries for 322 K, compensated for by a net charge caused by variations in the exchange rate of 242 K. The current result before tax amounts to 9,057 K against 9,720 K in 2005.
PCM Deutschland GmbH (Germany)

In 2006, the turnover amounted to 2,098 K against 1,923 K in 2005, up by 9.1%. This increase is essentially due to sales of pumps which rose by 25%. The net profit is 124 K against 150 K in 2005, a reduction of 17% because of the reduction in margins in a very competitive market. There were 8 staff at 31 December 2006.
PCM Flow Technology (United States)

This company, a 100% subsidiary of PCM, was created in April 2004, and controls 100% of the business of the company PCM USA Inc.. Its capital was raised to 3,501,000 USD in 2005.
PCM USA Inc. (United States)

Because production of rotors began in autumn 2006 in the USA, following industrial investment, the 2006 turnover amounted to 2,068 KUSD against 1,118 KUSD in 2005. The net result is a loss of 336 KUSD; it was negative at 308 KUSD in 2005. There were 6 staff at 31 December 2006. The transfer to this subsidiary of oil rotor production for the North America region should bring into balance in 2008.
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2006 ANNUAL REPORT - MANAGEMENT REPORT
PCM Trading (Shanghai) Co Ltd (China)

This company, a 100% Subsidiary of PCM, was created in August 2006. Its aim is to develop PCMs commercial business in the AsiaPacific area. The first invoices are expected towards the end of the first half of 2007.
The financial result is highly negative at 713 K and includes supplementary depreciation on the Clr shares and loans to Clr, making a total of 778 K. The current result is therefore positive at 166 K against 497 K in 2005. The extraordinary result is positive at 20 K mainly made up of 157 K of special financial amortizations under the terms of the new Accounting Rules CRC no. 2002.10 and compensated for by carrying over the provision for price rises of 158 K. The net result, after tax on the profits of 57 K and employee profit sharing of 19 K, is in profit at 110 K against 308 K in 2005. The total number of staff at 31 December 2006 was 137 against 141 in December 2005. The internal financing capability amounted to 958 K against 735 K in 2005 It is proposed to pay a dividend of 412 K for 2006 (same level as the previous financial year) taken in part from the balance carried forward.
Kudu Industries Inc. (Canada)

In December 2006, Kudu Industries bought 50% of the Russian Company Canaross Ltd, a company which distributes oil and of gas in Russia. Since this date, the Canaross company accounts have been consolidated with Kudu Industries Inc. The total consolidated turnover of the North America subsidiaries (Canada and Texas), Kazakhstan, Australia, and the new Russian subsidiary, amounts to 65 MCAD against 50.7 MCAD in 2005, or up by 28.2%, due to the dynamic oil markets. The net consolidated result of this grouping, on a like-for-like basis, shows a profit of 2.9 MCAD against 2.8 MCAD in 2005. The result is stable because of a reduction in margins, to take account of the commercial context. For 2006, it is proposed to pay an overall dividend of 750 KCAD including 320.6 KCAD for PCM (214 KCAD in 2005). At 31 December 2006, these companies had 180 staff against 153 in 2005.
tablissements Clr
This company achieved a turnover of 2,991 K in 2006 against 3,311 K in 2005, a fall of 9.7%. The reduction, compared with the 2005 turnover, corresponds to the decline in business for GDF (- 380 K), to the impact of the sale of the drop forging business (- 100 K) and to the transfer of wholesale clients to Gurtner Distribution (-200 K). This reduction is partially compensated for by good business with Industrial clients (spin-offs from GDF) (+ 300 K). The current result is negative at 658 K, due to the repercussions from the cost of raw materials (brass) which could not be passed on in full. After the negative extraordinary result at 169 K, which mainly includes the effects of closing the drop forging business, the effects of the overall depreciation of the business assets (85 K) and allocations of special financial amortizations (55 K), the net result for the 2006 financial year remains negative at 831 K against 491 K in 2005. The total number of staff at 31 December 2006 was 22 against 32 at the end of December 2005.
Ensival Moret Asia Pte Ltd (Singapore)

This purely financial Company controls 100% of the Moret Pumps Shanghai (MPS) manufacturing company (China). MPSs turnover is 45,094 KRMB against 34,871 KRMB in 2005, or up by 29.3%. The turnover essentially comes from the business of our partner Ensival Moret which is responsible for the increase. The net result before tax is positive at 1,943 KRMB against 3,726 KRMB in 2005. This deterioration in the result derives from the impact of the cost of moving the factory which occurred during 2006. Because we have held 25.71% since October 2002, the share of the consolidated result which is due to us amounts to 500 KRMB or 49 K.
Mechanical Engineering Sector, engine and gas equipment

The turnover of this sector amounted to 15.9 M, stable compared with 2005 (+ 0.4%) Industrial investment amounted to 1.3 M against 0.4 M in 2005.
Gurtner
In 2006 net sales amounted to 13,690 K against 13,036 K in 2005, up by 5.0%. For the Engine Equipment business, carburettors for the original equipment market have decreased by 15%; on the other hand, spare parts have shown a strong increase of + 57%. Overall, the Engine Equipment business has increased by 6%. For the Gas Equipment business, with a partial merger of Clr into Gurtner Distribution (trader in natural gas) the turnover has increased by 3.5%. The operational result is in profit at 879 K against 695 K in 2005, due to a very favourable product mix because of the increase of turnover in spare parts. The high increase in raw materials identified in 2006 has, however, had a strong impact on this result, so that the increased number of clients has only marginally compensated for this.
Business of the Gvelot Group

Consolidated accounts
The consolidated turnover for the financial year amounted to 196.8 M. The consolidated operating income before tax is in profit at 6.3 M. After a tax charge on the profits of 1.9 M, the net consolidated result amounts to 4.4 M against 5.3 M in 2005.
Group Investments
Intangible investments amounted to 1.8 M and tangible investments to 14.2 M.
Employment
The Group workforce, not including temporary staff, was 1,538 people (including 456 outside France), against 1,560 at 31 December 2005. At the end of 2006, Gvelot S.A. employed 9 people.
11
Group research and development

For the whole Group, research and development costs amounted to 3.4 M. Only 1.4 K of development costs have been used to meet the provisions of the IAS 38 Standard.
In addition Gurtner has released 242 K for development costs associated with the Fluad TI automotive pump.
Consolidated financial structure

Total assets amount to 221.4 M against 216.7 M at the end of 2005, or up by 4.7 M. Non-current assets have increased by 8.3 M and current assets have reduced by 3.6 M. Debts (apart from provisions for risks and charges) have increased by 2.4 M essentially because of the rise in financial debts for 6.1 M, deferred tax liabilities for 0.2 M, the reduction in operating debts for 3.6 M and debts on assets for 0.3 M. The net consolidated financial structure (cash and cash equivalents, allowing for deductions of loans from credit institutions and various financial debts), still negative, amounts to 14.2 M, or a fall of 9.1 M, because of the reduction of net cash flow (3.3 M) and the increase in financial indebtedness (5.8 M). In total, current assets amounted to 117.2 M which amply covers all debts to third parties held for less than one year, which come to 66.9 M. To summarise, the "indebtedness/equity capital" ratio amounts to 35.9% against 31.9% in 2005. The "Indebtedness/turnover" ratio amounted to 20.9% against 17.7% in 2005. At the end of 2006, the total financial cost of the indebtedness amounted to 1,574 K (0.8% of the turnover) against 1,064 K in 2005 (0.5%).
Gvelot Extrusion
The 2006 programm was mainly concerned with the following work: - Continuation of work on the development of new families of spare parts (Drive shaft couplings for low cost vehicles, ballrace spindles, sliding shafts for steering columns) - Investigation into planetary and satellite differential gears with reinforced teeth - Investigation into short and long pivots These research and development costs amounted to 905 K. For development expenditure, only 283 K have been used in accordance with no. 2004.06 for the chart of accounts.
PCM
PCM paid 393 K in development costs at 31 December 2006. In addition, projects worth 363 K have been amortised over the 2006 financial year The expenditure on which the calculation of the Research Tax Credit is based is the research expenditure accounted for as charges during the financial year. These costs associated with the finalisation of new products and with industrial research studies cover expenditure on staff, operations and financial amortization; they amount to 383 K for the 2006 financial year. These expenses have generated a Research Tax Credit of 38 K. The EcoMoineau range, a new range of Moineau type industrial pumps, was launched during the year. In addition EcoLobe, a range of lobe pumps, arrived to broaden the range of technologies offered by PCM. These new products should generate significant income from 2007. For the oil & gas business, more export trials of the new PCM Vulcain technology for high temperature pumping of oil are being conducted on oil fields; the technology are being finalised and should be in the catalogue during 2007. In December 2006 a new patent was registered on this promising line.
Prospects for the Group for 2007

Parent Company
In 2007, Gvelot S.A.s turnover made up of rents and services is estimated to amount to 3,530 K against 3,451 K in 2006, up by 2.3%, due to the renting out of the offices in Levallois-Perret. This estimate assumes that the rents for the industrial sites provided for Gvelot Extrusion will remain stable, not taking into account the effect of any three-year variation. Because of lower external charges particularly for the maintenance of the extrusion industrial sites, the operational result could amount to 1,060 K against 540 K in 2006. The financial result should be positive at 2,240 K against 2,155 K in 2006. The net result should be positive at 2,670 K against 2,171 K in 2006. Investments for 2007, could be 860 K including 830 K for the industrial sites provided for our subsidiary Gvelot Extrusion. At the end of March 2007, the turnover of the Gvelot Company amounted to 881 K.
Gurtner/Clr
Research and Development have been carried out in the following areas: Engine Equipment: - Finalising the Eu2 carburettor for a new client - Development of a butterfly throttle housing for the injection market - Development of a pressure relief valve for LPG fuelled automobiles - Finalisation and production of the automobile metering pump Gas Equipment: - Development of the new range of stopcocks for GDF - Development of the PE 40 diameter connectors range - Development of the natural gas low pressure stopcocks range The relevant costs, amounting to 1,068 K, have been accounted for in charges on the 2006 financial year and have generated a Research Tax Credit of 107 K.
12
Extrusion Sector, Machining

The budgeted consolidated turnover for this sector could be 120 M, up by 5.7% on 2006. At the end of March 2007, the turnover amounted to 31.9 M up by 3.8%. Business for the early part of the 2007 financial year conforms with the budget.
substantial part of its business to Gurtner. The current result could be negative at around 0.3 M. After taking into account the costs associated with closing the Bthencourt-sur-Mer site and transferring business to the Pontarlier site, the net result would be negative.
Gvelot Extrusion
The 2007 turnover for the French industrial sites could be at around 74.4 M against 68.8 M in 2006, or up by 8.1%. After implementing the restructuring plan in spring 2007 which included on the one hand, various commercial renegotiations to enable margins eroded by runaway industrial costs to be reestablished and, on the other hand, economy measures concerned with staffing and other costs, the operational result is expected to be in profit at 1.9 M against a negative result of 1.0 M in 2006. The financial result will be negative at 1.1 M against a negative of 0.9 M in 2006. The current result will therefore be positive at 0.8 M against a negative of 1.8 M in 2006. After an extraordinary result estimated to be negative at 1.7 M including special financial amortizations for 1.1 M and restructuring charges of 0.6 M, the net result after tax could be negative at 0.9 M against a loss of 2.8 M in 2006.
Information systems and new technologies

Gvelot Extrusion
In 2006, Gvelot Extrusion concentrated on developing information systems in two areas: - In February the new version of the XPPS production management software was installed. This upgrade enabled us to meet the needs of our clients in EDI, particularly with P.S.A. for its Alternative Logistics project. - At the end of the year, upgrading the multi-site computer equipment, with both servers and work stations. This development with better links in CITRIX mode has made communication between sites more flexible. During the year we also investigated and installed our Workflow system to help us exchange data especially with Dold. The first application was devoted to managing clients calls for tender and has been operational since 1st January 2007. Since the current application is becoming outdated, the financial department made a preliminary approach to text editors with a view to changing the accounting software. This project for 2008 will favour an information system with a strong emphasis on reporting. Updating the Computer Systems Master Plan will be a main feature of 2007, as it will direct the selection of computer systems over the coming years.
Dold
Dolds budgeted turnover could be 45.6 M of the same order as in 2006 (47.1 M). The net result, because of increased salary costs, would be lower but still positive.
Pumps Sector, Fluid technology

The budgeted consolidated turnover could be 72 M up by 10.2% on 2006. At 31 March 2007, the turnover for this sector amounted to 18.1 M, up by 6.3%.
PCM
As part of the "Perspective 2010" information systems master plan which will eventually include all the information systems for PCM and its subsidiaries, the plan to replace PCMs accounting system has been successfully completed. All the test stages were completed in 2006, and the new application was fully commissioned for the 2007 financial year. The former subsidiary PCM Dosys was also included in the PCM information systems. At the same time as these modernisation and internationalisation projects, commercial and decision-making applications have been installed so that these tools can be used by all PCM subsidiaries. All these projects, at the heart of PCMs business, are steered by the Information Systems Department which ensures the reliability of systems and data. Because of PCMs international development, the Information Systems Department upgraded its skills in 2006, in both computer system security and the Supply Chain.
PCM
PCMs budgeted turnover, on a like-for-like basis, not including the new subsidiary PCM Trading (Shanghai) Asia, could be 64.2 M, up by 6.7% (Industrial Department + 4.5%, Food Industry Department + 6.7%, Ancillary services for the Oil Industry Department (oil and gas) + 8.7%).
Mechanical Engineering Sector, Engine and gas equipment

The expected net sales in the 2007 budget could amount to 16 M, up by 1.8%. At 31 March 2007, the turnover of this sector amounted to 3.9 M, down by 7%.
Gurtner
The net turnover 2007 could amount to 14 M, up by 2.3%. The net result should be close to equilibrium.
Gurtner
Interfacing databases and information processing common to Gurtner and Clr after the resumption of the natural gas business in Pontarlier was the most significant work done on information systems in 2006. In addition, the work undertaken during 2006 on the website resulted in a new website going on-line in the first quarter of 2007.
Ets Clr
The turnover could amount to 2.7 M after transferring a
13
Operations of Company Bodies

The Board of Directors is composed of seven Members and met three times in 2006. The Audit Committee was created in 2004 and is composed of three Members who met four times in 2006. It has written a Report and has sent the major points and conclusions to Board Members.
Mademoiselle Claudine BIENAIM, Board Member, received the following amounts: In 2006 - Directors fees paid by the Company and by the Controlled Companies Reminder of 2005 20,500
22,300
and carries out the following duties within the Group: Gvelot Extrusion Board Member PCM Board Member Gurtner Board Member Chairman of the Gvelot Audit Committee Duties outside the Group: Member of the Publicis Group SA Board of Directors Terms of reference and Duties carried out in the Publicis Group: Chairman: - Publicis Group Services SAS (France) Board Member: - Publicis Conseil SA (France) - Mdiasystem SA (France)* - Solange Stricker MS&L France SA (France) - Group Zenithoptimedia SA (France) Permanent Representative of Publicis Group SA: - Publicis Technology SA (France) Permanent Representative of Publicis Conseil: - Publicis Finance Services SA (France) - Publicis EtWe SA (France) - Carr Noir SA (France)* - Re: Sources. France SAS (France) - Loeb & Associs SA (France) - World Advertising Movies SA (France) - Publicis Constellation SA (France) Director: - Publicis Group Investments BV (Netherlands) - Publicis Holdings BV (Netherlands) - Publicis Group Holdings BV (Netherlands) - DArcy Masius Benton & Bowles, Inc (United States) - US International Holding Company, Inc (United States) Company Secretary: - Publicis Group SA (France)
Delegation of powers being approved

No powers are currently delegated by the General Meeting to the Board of Directors.
Executives: pay and duties

Under the provisions of Article L 225-102-1 of the Commercial Code, we are giving an account of the pay and fringe benefits of all kinds paid in 2006, in the controlled companies, to each executive of the Gvelot Company S.A., and also the duties performed during the financial year. Monsieur Paolo MARTIGNONI, Chairman-Managing Director, received the following amounts: In 2006 Reminder of 2005 (10 months) 133,337 20,620
- Gross fixed pay paid by the Company - Gross Directors fees paid by the Company and by the controlled companies
160,004 20,900
He carries out the following duties within the Group: Gvelot Board Member Gvelot Extrusion Board Member PCM Board Member Gurtner Board Member Duties outside the Group: Chairman of the Board of Directors and Managing Director of Sopofam Monsieur Philippe BARBELANE, Acting Managing Director, received the following amounts: In 2006 Reminder of 2005 - Gross fixed pay paid by the Company - Fringe benefits in kind issued by the Company, valued at - Directors fees paid by the Company and by the controlled companies - Variable pay (bonuses) 183,326 7,272 8,300 15,000 166,660 7,384 8,020 10,000
Member of the Committee of Direction: - Multi Market Services France Holdings SAS (France) and in addition: Chairman-Managing Director: - Socit Immobilire du Boisdormant SA (France) Acting Managing Director: - Rosclodan SA (France) - Sopofam SA (France) Manager: - SCI Presbourg toile (France) * Term of office ended during 2006
He carries out the following duties within the Group: Permanent Representative of Gvelot, PCM Board Member Permanent Representative of Gvelot, Gurtner Board Member Permanent Representative of Gvelot, Clr Board Member As an executive, Monsieur Barbelane has been granted the following benefit by the Company: Compensation equivalent to one years salary if removed from post. Duties outside the Group: Nil
14
Monsieur Philippe DESTOURS, Board Member, received the following amounts: In 2006
Monsieur Pascal HUBERTY, Board Member, received the following amounts: Reminder of 2005 (2 months) 58,082 In 2006 Reminder of 2005 (6 months) 4,000
- Gross fixed pay paid by the Company - Fringe benefits in kind issued by the Company, valued at 696 - Directors fees paid by the Company and by the controlled companies 19,900 17,700 - Exceptional bonus (severance pay) 45,000 He carries out the following duties within the Group: PCM Board Member Permanent Representative of Gvelot, Gvelot Extrusion Board Member Member of the Audit Committee Duties outside the Group: Nil Madame Roselyne MARTIGNONI, Board Member, received the following amounts: In 2006
- Gross Directors fees paid by the Company and by the Controlled Companies 8,000 and carries out no other duties within Group Duties outside the Group:
Director of the French fresh produce market for the Amcor Flexibles Group This information covers the amounts paid either by our Company or by companies controlled by it under the terms of Article L 233-16 of the Commercial Code.
Social and environmental consequences of the business

Gvelot S.A., a Company quoted on EUROLIST Compartment C of Euronext Paris, is publishing as an appendix to its Management report a consolidated document relating to sustainable development, bringing together social and environmental information, in accordance with the provisions initially set down in Articles D 148-2 and 148-3 of the Decree of 23 March 1967, and amended by Decree no. 2002.221 of 20 February 2002.
Reminder of 2005
- Gross Directors fees paid by the Company and by the Controlled Companies 20,900 19,500 and carries out the following duties within the Group: Gvelot Extrusion Board Member PCM Board Member Gurtner Board Member Duties outside the Group: Board Member of Sopofam Board Member of Rosclodan Board Member of Socit Immobilire du Boisdormant S.A. Monsieur Charles BIENAIM, Board Member, received the following amounts: In 2006
Risk management
The following major risks which may be met by the Group have been identified.
General risks
1. Market Risks The Group is not exposed to risks encountered in the Financial markets. 2. Country risks The Group is exposed to country risks for a small part of its business mainly in the Ancillary services for the oil industry Sector. However, these risks are not significant.
Reminder of 2005
- Directors fees paid by the Company and by the Controlled Companies 12,600 12,600 and carries out the following duties within the Group: Gvelot Extrusion Board Member Duties outside the Group: Chairman of the Board of Directors of Rosclodan Member of the Board of directors of Meeschaert Family Office Member of the Board of directors of the Meeschaert financing company Board Member of the Meeschaert financing company Monsieur Roberto BARABINO, Board Member, received the following amounts In 2006 Reminder of 2005
Financial risks
By the nature of its business, the Group is exposed to various kinds of financial risk. These risks are associated with the Groups industrial and commercial businesses, its needs for financing and also to its investment policy in particular internationally. The risks are mainly connected to variations in the exchange rate and of rate of interest but also to sudden variations in the price of raw materials. 1. Risks for the industrial and commercial businesses - Risks in exchange rates The Gvelot Groups industrial and commercial businesses are not particularly exposed to financial risks which might result from variation in the exchange rates for some currencies because of the relative positions of its sales areas, and its production sites which are mainly in the euro zone. Risk management for exchange rates in the Pumps and Fluid Technology business is based on the fact that the groups production companies invoice the marketing companies in their local currency or in euros. This inter-company invoicing is given fixed term exchange risk cover if the amounts are significant. Because the Group does not take out any firm exchange risk cover on its future sales, the operational margin is subject to variations in the future depending on variations in the exchange rate. However, each operation which might present a significant risk for the Group
- Gross Directors fees paid by the Company and by the Controlled Companies 14,000 12,600 and carries out the following duties within the Group: PCM Board Member Duties outside the Group: Board Member of Ansaldo Superconduttori spa Board Member of Ferrania Technologies spa Board Member of Omba Impianti & Engineering spa Board Member of Sima Impianti + Tectubi spa Board Member of Tectubi spa Board Member of Trametal spa
15
or for a Division is given fixed term exchange risk cover. Analysis has not shown future changes in a currency to be sufficiently large to make it necessary to use optional exchange risk cover. The Groups industrial and commercial businesses are not significantly exposed to variations in the rate of interest. - Risks of price variations The Group is sensitive to variations in the price of its raw materials. This is particularly true in the Extrusion Sector, as a supplier to the automobile industry. In order to meet future variations which could have a significant impact on the operational margin, the Group is developing a range of sources of supply and where possible using contracts containing clauses covering bracketed price for its suppliers and clients. - Credit risks The Group pays particular attention to the security of payments for goods and services which it delivers to its clients but in any event there is no great concentration of credit risk. Payments from other clients of the Group are covered by appropriate security measures. 2. Risks associated with financing The Group uses the banking sector for financing its industrial and commercial businesses which find it necessary. - Risks of variation in interest rate Where necessary the Group uses tools to cover variations in the rate of interest for long-term variable rate loans for substantial amounts. To do this the Groups centralised Treasurers Department analyses the portfolio and proposes the appropriate tools (interest rate swaps) in order to keep future risks within the limits of appropriate controlled costs. 3. Risks associated with investment - Exchange risks The Group has investments abroad, and outside the euro zone, whose net assets are exposed to currency conversion risks. These net assets, mainly situated in the USA, are however for modest amounts and are not currently covered.
You are reminded, in accordance with legal requirements, that the following distribution of dividend was made over the three previous financial years:
Dividend Financial Year Net tax credit Tax credit Gross Number of shares
Paid-up total
2003 2004 2005
2.00 2.10 2.20
1.00 -
() ()
3.00 -
957,543 957,543 957,543
983,480 983,480 983,480
() for the record
Stock market
Following the combined general meeting which was held on 22 June 2006, during which an increase in company capital was approved, Company Capital at 31 December 2006 amounted to 33,514,005 divided into 957,543 shares with a nominal value of 35 . During 2006, the price of the share, quoted by Euronext Paris on the Eurolist Compartment C single regulated market moved as follows: Euros Quoted price at the end of 2005 Lowest quoted price Highest quoted price Quoted price at the end of 2006 Number of securities exchanged in 2006 2005 84,476 113,668 50.95 51.00 63.50 57.50
At 30 March 2007 the quoted price of a share was 59 with 33,844 securities exchanged since the beginning of the year.
Shareholders
At 31 December 2006, the GEVELOT Company was controlled mainly by: - The SOCIT DE PORTEFEUILLE FAMILIAL (SOPOFAM), with more than one third, - Company ROSCLODAN, more than a twentieth. In addition, the mutual fund STOCK PICKING France and the FINANCIRE DE LCHIQUIER, an independent portfolio management company, each hold more than a twentieth. Finally, no company controlled by Gvelot holds any shares in this Company.
Allocation of the result

The following allocation of results will be proposed: - Profit for the financial year - Previous balance carried forward 2,171,310.10 1,764,526.04
- Total to be distributed - Legal reserve - Dividends 108,565.50 2,106,594.60 2,215,160.10
3,935,836.14
Non-deductible charges
(Law of 12 July 1965 Article 27) General costs reincorporated into the taxable profits during the 2006 financial year amounted to 14,117 against 17,362 in 2005.
Balance carried forward after allocation 1,720,676.04 If the distribution shown above is approved, a dividend of 2.20 per share, which is eligible for the 40% tax allowance given to individuals with a capped Tax Credit, will be distributed after 2 July 2007.
The Board of Directors
16
2006 ANNUAL REPORT - CONSOLIDATED ACCOUNTS
Consolidated accounts at 31 December 2006
17
Consolidated balance sheet at 31 December 2006 (Based on IFRS)

ASSETS
(in thousands of euros) Net amount at 12.31.2006
Note 4 1,182 2,186 2,886 1,009 6,081 29,633 54,883 3,457 2,740 89 90,802 50 2 413 137 602 Note 5 Note 9 5,508 -
Net amount at 12.31.2005

1,646 694 2,834 1,402 4,930 29,581 45,502 3,453 4,048 2,071 84,655 3 476 126 605 4,068 -
NON-CURRENT ASSETS (I)

Consolidated goodwill (A) Intangible assets (B) Research and development costs Concessions, patents, licences, brands, processes, rights and similar values Business assets Current Intangible assets Total intangible assets (B) Tangible assets (C) Land/Buildings Plant, equipment and industrial apparatus Other assets Current tangible assets Advances and down payments Total tangible assets (C) Long-term financial assets (D) Investments Other long-term investments Loans Other Total non-current financial assets (D) Securities on a like-for-like basis (E) Deferred tax assets (F) Other non-current assets (G)
Note 4
Note 4
TOTAL (I) NON-CURRENT ASSETS (A+B+C+D+E+F+G) CURRENT ASSETS (II)

Stocks and in-process materials (H) Raw materials and other supplies In-process materials for production Intermediate and finished products Merchandise Total stocks and in-process materials (H) Client debt and other accounts payable (I) Other debtors (J) Advances and down payments on orders Debts Charges identified in advance Total other debtors (J) Tax due for payment (K) Financial assets Short-term (L) Loans Derivatives Securities valued at their fair value offset against results Total current financial assets (L) Cash and cash equivalents(M) Note 10
104,175
95,904
12,975 11,030 10,519 2,097 36,621 Note 11 45,283 305 4,639 876 5,820 175 194 42 1,350 1,586 27,764
11,749 12,094 9,224 973 34,040 47,147 256 4,843 758 5,857 583 202 2,220 2,422 30,743
Note 12
TOTAL (II) CURRENT ASSETS (H+I+J+K+L+M) GENERAL TOTAL (I+II)
117,249 221,424
120,792 216,696
18
LIABILITIES
(in thousands of euros) Net amount at 12.31.2006
Note 3 33,514 76,878 4,357 Note 3 114,749 25 3 28
Net amount at 12.31.2005

30,488 78,212 5,251 (1,361) 112,590 26 4 30
EQUITY CAPITAL (I)

Capital Consolidated reserves Result for the financial year Cross-shareholding Subtotal of equity capital attributable to the consolidating company Minority interests: - in the equity capital (before result) - in the result Subtotal of minority interests
TOTAL OF ALL EQUITY CAPITAL (I) NON-CURRENT LIABILITIES (II)

Provisions for long-term risks and charges (IIa) Provisions for risks Provisions for charges Total long-term provisions (IIa) Long-term financial debts (IIb) Loans and debts with Credit Institutions Various loans and financial debts Total non-current financial liabilities (IIb) Deferred tax liabilities (IIc) Note 8 Note 9 Note 7
114,777
112,620
179 2,183 2,362 24,499 503 25,002 10,786
186 1,696 1,882 21,389 498 21,887 10,612
TOTAL NON-CURRENT LIABILITIES (II) (IIA+IIB+IIC) CURRENT LIABILITIES (III)

Debts to operational suppliers (IIIa) Debts to suppliers of assets (IIIb) Provisions for short-term risks and charges (IIIc) Other creditors (IIId) Advances and down payments received on orders Tax debts apart from company tax, Debts for staffing and benefits Products identified in advance Other debts Total of other creditors (IIId) Liabilities of tax due for payment (IIIe) Short-term financial debts (IIIf) Loans and debts with Credit Institutions Various loans and financial debts Derivatives Total current financial liabilities (IIIf) Note 8 Note 8 Note 16 Note 7
38,150
27,555 3,321 1,606 656 14,303 784 2,684 18,427 642 16,731 215 16,946
34,381
29,177 3,629 1,960 332 16,671 818 3,035 20 856 78 13,934 61 13,995
TOTAL CURRENT LIABILITIES (III) (IIIA+IIIB+IIIC+IIID+IIIE+IIIF) TOTAL DEBTS (II+III)
68,497 106,647
69,695 104,076
TOTAL GENERAL (I + II + III)
221,424
216,696
19
Consolidated result 2006

(Based on IFRS)
CONSOLIDATED RESULT ACCOUNTS
(in thousands of euros)
PRODUCTS OF THE CURRENT BUSINESS (1) Sales of merchandise Production sold: . goods . services AMOUNT OF TURNOVER Production subsidies Write-back of provisions Other products Other products of the business In-stock production capitalised production Total products of the current business (1) CURRENT OPERATIONAL CHARGES (2) Purchase of merchandise Variations in merchandise stock Purchase of raw materials and other supplies Variation in raw materials stock and other supplies Other purchases and external charges Staffing charges Tax, and similar payments Allocations to financial amortizations and provisions On assets On non-current assets On current assets For risks and charges Other charges Total current operational charges (2) - allocations aux financial amortizations - allocations to provisions for loss of value - allocations to provisions - allocations to provisions 8,544 137 2,259 871 656 194,783 7,916 2,700 1,466 232 1,034 199,468 4,549 (1,051) 68,457 (2,988) 40,485 67,549 5,315 3,831 44 69,691 (2,562) 39,604 69,453 6,059 83,760 298 87,310 103,916 613 109,522 Note 14 187,676 911 196,832 167 1,234 859 2,260 513 1,437 201,042 190,718 723 200,226 176 2,892 2,276 5,344 131 805 206,506 3,252 4,993 8,245 8,785
France
Abroad
Financial year 2006
Financial year 2005
I - CURRENT OPERATIONAL RESULT (3) = 1-2

OTHER OPERATIONAL PRODUCTS (4a) Write-back of provisions for client disputes Other operational products Total operational products (4a) OTHER OPERATIONAL CHARGES (4b) Cost of disputes with clients Restructuring charges Other operational charges Total other operational charges (4b)
Note 14
6,259
-
7,038
1,774 1,774 2,857 320 3,177
II - OPERATIONAL RESULT (5) = 3+(4a-4b)
Note 14
6,259
5,635
20
CONSOLIDATED RESULT ACCOUNTS

PRODUCTS OF CASH AND CASH EQUIVALENTS (6a) Interest generated by cash and cash equivalents Net products on transfers of invested securities Result of covering changes in interest and exchange rates on cash and cash equivalents Total products of cash and cash equivalents (6a) COST OF GROSS FINANCIAL INDEBTEDNESS (6B) Interest charges on financing operations Result of covering changes in interest and exchange rates on gross financial indebtedness Total cost of gross financial indebtedness (6b) Total cost of net financial indebtedness (7) = 6a - 6b OTHER FINANCIAL PRODUCTS (8A) Financial products of other securities and capitalised assets Products on financial instruments Financial products of discounting Positive variation in fair value of financial assets and liabilities assessed at fair value Result of covering changes in interest and exchange rates associated with other financial products Other financial products Total other financial products (8a) OTHER FINANCIAL CHARGES (8b) Losses on financial instruments Financial discounting charges Negative variation in fair value of financial assets and liabilities assessed at fair value Result of covering changes in interest and exchange rates associated with other financial charges Other financial charges Total other financial charges (8b) Result of other products and financial charges (9) = 8a - 8b -
Financial year 2006

108 619 727 1,574 1,574 (847) 28 54 385 194 661 1 164 147 549 95 956 (295)
Financial year 2005

62 413 475 1,064 1,064 (589) 186 685 316 1,187 33 271 144 333 103 884 303
III - FINANCIAL RESULT 10 = 7+9 IV - CURRENT RESULT BEFORE INTEGRATED COMPANY TAX 11 = 5 + 10
Tax due for payments (12a) Deferred taxes (12b) (charges) Deferred taxes (12b) (products) Tax Charge 12 = 12a+12b
(1,142) Note 14 5,117

1,673 167 1,840
(286) 5,349
1,857 (730) 1,127
Note 9
V - NET RESULT INTEGRATED COMPANIES 13 = 11-12

Proportion in the results of the Companies on a like-for-like basis (14) Result of abandoned businesses (15) TOTAL DES PRODUCTS (1+4a+6a+8a+14+15) TOTAL DES CHARGES (2+4b+6b+8b+12)
3,277
1,083 203,513 199,153
4,222
1,033 210,975 205,720
VI - NET RESULT OF THE CONSOLIDATED WHOLE

VII - SHARE GOING TO MINORITY INTERESTS
Note 14
4,360
3
5,255
4
VIII- RESULT GOING TO THE CONSOLIDATING COMPANY RESULT PER SHARE (= DILUTED RESULT PER SHARE)
4,357 4.55
5,251 5.48
The result is calculated by dividing the Shareholders distributable net result by the average weighted number of ordinary shares in circulation at the financial years quoted price, excluding ordinary shares bought by the Group or held as own shares. There are no potentially dilutive shares. The number of shares used in calculation of the Result per share is 957,543 (see. Note no. 3 - Company Capital) for the financial years 2005 and 2006.
21
Table of variation in equity capital and minority interests

(in thousands of euros) Capital Internally Consolidated held reserves securities
(1,141) (220) (1,361) 1,361 67,970 8,730 1,545 (1) (9) 78,235 (3,830) (557) 3,129 47 444 77,468 54
Difference arising on revaluation

54 54 -
Conversion rate adjustment

(203) (10) 136 (77) 13 (580) (644)
Net result
10,513 (2,013) (8,500) 5,251 5,251 (2,109) (3,142) 4,357 4,357
Equity capital
107,681 (2,013) 5,251 1,545 (1) 127 112,590 (2,109) 4,357 47 (136) 114,749
Minority interests
30 4 (4) 30 3 (5) 28
Total
SITUATION AT 12.31.2004 Operations on the capital
30,488 30,488 3,830 33,514
107,711 (2,013) 5,255 1,545 (1) 123 112,620 (2,109) 4,360 47 (141) 114,777
Operations on internally held securities Distributions Allocation of undistributed results Result for the 2005 financial year Reprocessing stocks Financial instruments: variations in fair value Conversions and various variations SITUATION AT 12.31.2005 Operations on capital (*) Distributions Allocation of undistributed results Result for the 2006 financial year Financial instruments: variations in fair value Conversions and various variations SITUATION AT 12.31.2006 (*) See Note no. 3
Operations on internally held securities (*) (804)
22
Consolidated cash flow tables 2006

CONSOLIDATED CASH FLOW
BUSINESS OPERATIONS Net result for the Integrated companies Elimination of charges and products with no effect on cash flow or not associated with the business: - Financial amortizations and provisions - Discounting of financial assets and liabilities - Variation in deferred taxes - Transfer plus-values, net of tax Gross margin of internal financing of Integrated companies - Dividends received from Companies on a like-for-like basis - Variation in stocks - Variation in client debt - Variation in other operational debts - Variation in suppliers debts - Variation in other operational debts Variation of the need for working capital 8,041 (12) 167 239 11,712 170 (2,588) 1,287 474 (1,053) (1,852) (3,732) 9,046 224 (730) 520 13,282 134 (3,952) (3,679) (1,831) 1,860 (1,083) (8,685) 3,277 4,222
2006
2005
NET CASH FLOW GENERATED BY THE BUSINESS

INVESTMENT OPERATIONS - Acquisitions of intangible and tangible assets - Acquisitions and increases of financial assets Total - Transfers of intangible and tangible assets net of tax - Transfers and reductions of financial assets Total Effect of variations of scope
8,150
4,731
(16,158) (137) (16,295) 218 1,023 1,241 (9)
(18,982) (285) (19,267) 377 194 571 -
NET CASH FLOW RELATED TO INVESTMENT OPERATIONS

FINANCING OPERATIONS - Increase / (reduction ) of capital - Dividends allocated to shareholders of the Parent Company - Other variations TOTAL - Setting up loans and financial debts - Refunding financial loans and debts Variation in loans and financial debts Variation in the need for working capital and miscellaneous
(15,063)
(18,696)
(2,109) 77 (2,032) 11,140 (5,410) 5,730 (103)
(2,013) 1,545 (468) 15,942 (5,003) 10,939 33
NET CASH FLOW ASSOCIATED WITH FINANCING OPERATIONS NET VARIATION OF CASH FLOW
Cash flow at opening Cash flow at close Profits / (losses) in exchange on the cash flow Note 12
3,595 (3,318)
21,566 18,190 58 (3,318)
10,504 (3,461)
25,027 21,566 (3,461)
23
24
Appendix to the consolidated accounts at 31 December 2006

Notes nos. 1 to 21 below are an integral part of the consolidated accounts. Unless stated otherwise, all amounts are expressed in thousands of euros. These consolidated accounts were drawn up by the Board of Directors on 13 April 2007.
Note no. 1: Information relating to the scope of consolidation a) Scope of consolidation at 31 December 2006
the following have been consolidated according to the full consolidation method: Companies Headquarters SIREN no. SIRET no.
562088542 56208854200369 399198951 39919895100010 100.00 572180198 57218019800010 99.99 99.99 99.99 99.99 99.94 99.94 99.99 100.00 99.99 100.00 99.94 99.99 99.99 99.99
% of control at at 12.31.2006 12.31.2005
% of interests at 12.31.2006
Gvelot Gvelot Extrusion Dold Kaltfliesspressteile GmbH PCM PCM Deutschland GmbH PCM Flow Technology Inc.
6, boulevard Bineau 92532 Levallois-Perret Cedex 6, boulevard Bineau 92532 Levallois-Perret Cedex Langenbacher Strasse 17/19 D-78147 Vhrenbach (Germany) 17, rue Ernest Laval B.P. 35 92173 Vanves Cedex Wiesbadener Landstrasse 18 65203 Wiesbaden (Germany) 11940 Brittmoore Park Drive Houston Texas 77041 (United-States) PCM USA Inc. 11940 Brittmoore Park Drive Houston Texas 77041 (United-States) Pilot Road Phoenix Parkway Corby NN17 5YF (United Kingdom)
Company 100% owned by PCM Flow Technology 99.99 99.99 99.99 99.94 99.94
PCM Group UK Ltd.
PCM Trading (Shangha) Co Ltd. Unit 10A01 & 10G03 Shanghaimart

2299 Yanan Road (West) 200336 Shangha (China)
Gurtner tablissements Lopold Clr
40, rue de la Libration B.P. 129 25302 Pontarlier 17, rue Tournire 80530 Bthencourt-sur-Mer
542103635 54210363500026 349171355 34917135500010
100.00 100.00
100.00 100.00
99.95 99.95
Consolidated on a like-for-like basis: Kudu Industries Inc.

MOINEAU TEXAS CORP.. KUDU AUSTRALIA PTY LTD. KUDU INDUSTRIES KAZAKHSTAN LLP Canaross 9112 - 40 th street S.E. CALGARY ALBERTA T2C 2P3 (Canada) 1112 S. Main Street L3, 349 Coronation Drive Milton, QLD, 4064 (Australia) 51, Zhamakayev str. Almaty (Kazakhstan) 4, Vosstania str. 614014 Perm (Russia) Seminole Texas 79360 (United-States) 45.00 45.00 44.98
}}
Companies 100% owned by Kudu Industries Inc Companies 50% owned by Kudu Industries Inc 25.71 25.71 25.69
Ensival Moret Asia Pte Ltd.
9, Tai Seng Drive #02-02 Hesche Building 535227 Singapore (Singapore)
MORET PUMPS SHANGHA CO Ltd.
no. 1590, Li An Rd Minhang District 201 100 Shangha (China)
Company 100% owned by Ensival Moret Asia Pte Ltd.
25
Note no. 1 (continued): Information relating to the scope of consolidation b) Remarks on the scope of consolidation and the conditions of control
- The PCM Dosys Company, a 100% subsidiary, had all assets and liabilities transferred to the PCM Company. This operation became effective on 1st January 2006 and, in consequence, at this date the PCM Dosys Company was dissolved. - The PCM Trading (Shanghai) Co. Ltd was created on 27 October 2006. It is 100% owned by the PCM Company. The cash flow generated by this Company since its creation is not significant. - No other changes in the scope of consolidation occurred in 2006. - The financial year for all companies in the Group ends on 31 December. - To our knowledge there are no significant restrictions on subsidiaries to transfer funds to the Parent Company, Gvelot S.A., in the form of dividends in cash or refunds of loans or advances.
26
CONSOLIDATED ACCOUNTS - 2006 APPENDIX
Note no. 2: Accounting rules and methods Significant facts for the financial year
A. ACCOUNTING RULES AND METHODS

The Gvelot Groups consolidated financial statement has been drawn up in accordance with the International Financial Reporting Standards (IFRS), adopted by the European Union, published in the French Official Journal dated 13 October 2003 and which applied from 1st January 2005. The consolidated financial statement is presented in thousands of euros, the form used by the Group for operations and presentation. The accounting methods described below have been universally applied all the periods presented in the consolidated financial statement. The new standards, amendments and interpretations, whose adoption was made compulsory for all financial years opened on or after 1st January 2006, do not apply to Gvelot Group Accounts, or are irrelevant to them. The group has not opted for the amendment to IAS 19, which enables actuarial gains and losses to be assessed by equity capital. These are: Amendments to IAS 39 on the fair value option and covering cash flow for future intra-group transactions, Amendment to IAS 21 on the effects of variations in the quoted price in foreign currencies, IFRIC 4 interpretation of the conditions which determine if an agreement contains renting out, Standard IFRS 6 relating to the exploration and valuation of mineral resources, IFRIC 5 interpretation relating to the rights to interest issued by management funds devoted to refunding the costs of decommissioning and reinstating sites, IFRIC 6 interpretation relating to liabilities resulting from investment in a specific market waste electrical and electronic equipment. The Group has not applied any amendment or any standard or interpretation in advance, in particular the following texts, already published and adopted by the European Union, but which do not become compulsory until later. The Group does not expect any significant effect on its financial statement when these texts are applied in the future: Amendment to the standard IAS 1, covering information to be supplied on capital, Standard IFRS 7, relating to information to be supplied on financial instruments, IFRIC 7 interpretation relating to comparative information to be produced under the terms of IAS 29 Financial information in hyperinflationary economies, IFRIC 8 interpretation on IFRS 2s field of application, IFRIC 9 interpretation relating to the evaluation of embedded derivatives. In addition, the standard IFRS 8 relating to aux operating segments and the interpretations IFRIC 10 (depreciation of assets in interim financial reporting), IFRIC 11 (options granted within a group and own shares acquired to cover a share option plan) and IFRIC 12 (franchise contracts) have not yet been adopted by the European Union.
In order to draw up its IFRS opening balance sheet for 1 January 2004, the Group has complied with the provisions of the IFRS 1 standard dealing with First-time Adoption of International Financial Reporting Standards and the exceptions to the principle of retrospective application of all the IFRS standards. The Gvelot Group has decided on the following options for the retrospective adjustments of assets and des liabilities in accordance with the IFRS standards: companies consolidated before 1st January 2004 are not covered by of retrospective adjustments, the actuarial gains and losses on pension commitments have been identified in exchange for equity capital for their cumulated amount at 1st January 2004, the cumulated amount of conversion rate adjustments at 1st January 2004 has been balanced in exchange for consolidated reserves and the amount of hedging equity capital remains unchanged. Conversion rate adjustments before the changeover date to IFRS will not, therefore, be taken into account in the results of future transfer of consolidated entitles or partners. the fair value of assets at 1st January 2004 has been kept as presumed cost. The revaluation arising from this has been shown as equity capital. On 13 April 2007, the Board of Directors drew up and authorised the publication of Gvelot SAs consolidated financial statement for the 2006 financial year. This financial statement may be amended as long as it has not been approved by the General Meeting. Presentation of the consolidated accounts: The balance sheet is shown with current/non-current entries. Current means the assets and liabilities directly associated with the operating cycle, except for short-term financial assets and liabilities which are classified as current. The consolidated result account is shown by type under Charges and Products.
2.1. Accounting principles specific to the consolidation

2.1.1 Scope of consolidation All the subsidiaries and holdings under the direct or indirect control of the Parent Company, or which it exercises an appreciable influence over, are included in the scope of the consolidation. The companies over which the Gvelot Group does not have control are consolidated on a like-for-like basis, or by total integration in the case of Companies under joint control. 2.1.2 Conversion of accounts expressed in foreign currency The financial statements of foreign subsidiaries are converted into euros in the following way: - items in the Balance Sheet are converted at the exchange rate in force on the date the financial year closed, - items in the Profit and Loss account are converted at the average rate, - Cash flows are converted at the average rate. Therefore any disparities of conversion in the consolidated Equity capital arise from:
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- the variation between the rates at the close of the previous financial year and those of the current financial year on the equity capital at the opening of the year, - the difference between average exchange rates and exchange rates at the close, on the profits or losses over the period and on the flow of variation in equity capital. 2.1.3 Transactions in foreign currency Transactions in foreign currency are converted into euros by applying the exchange rate in force at the date of the transaction. The cash assets and liabilities expressed in foreign currency are converted at the exchange rate in force at the date of closure, and the resultant exchange differences are accounted for in the Profit and Loss account as a profit or loss in exchange. Non-cash assets and liabilities expressed in foreign currency are accounted for at the historic rate in force on the date of the transaction. Rates of conversion of accounts drawn up in foreign currency: The proportions of results of Companies on a like-for-like basis, KUDU Industries (a Canadian company) and the Company EMA (Singapore) have been converted at the closing rate on 31 December 2006, i.e: - 1 Canadian dollar = 0.65441 euro - 1 Singapore dollar = 0.49500 euro Items on the balance sheets of the companies: PCM Flow Technology (an American company) and PCM Group UK Ltd. (an English company) have been converted at the closing rates on 31 December 2006, i.e: - 1 dollar US = 0.75930 euro - 1 pound sterling = 1.48920 euro and the income and expenditure accounts at the average rates i.e: - 1 US dollar = 0.79639 euros - 1 pound sterling = 1.46666 euros
Development costs must be entered as assets (IAS 38) if the company can demonstrate: - that the project is clearly identified and the costs of the asset thus immobilised can be separated out and reliably monitored, and that it has the intention and the technical and financial ability to carry the development project through, - that it is probable that the future economic advantages deriving from the expenditure will come to the company. Intangible assets are subject to a linear financial amortization over a useful life foreseen for each category of goods. Useful life: Development costs: lifetime of the projects themselves, generally between 3 and 5 years. Software: useful life of software, between 2 and 15 years. Others (patents, etc.): over periods that correspond to the expected useful life but not more than 20 years. The methods of depreciation tests adopted by the Group are described in the paragraph "Depreciation of fixed assets" in Note point 2.2.4. 2.2.3 Tangible assets Tangible assets, mainly composed of land, buildings, technical installations and plant, are accounted for at their cost of acquisition reduced by cumulative financial amortizations and any loss in value, in accordance with standard IAS 16. The Gvelot Group has opted for the method of periodic revaluation of its land and buildings with financial amortizations over their useful life and periodic revaluation of the nett value against a market value estimated by qualified professional valuers. These valuations take place every three years. In the Extrusion Sector, special tools are bought or made to produce items for a specific order from the client. When they are contractually financed by the client, any part of these costs that was not financed is accounted for as tangible assets. > Cost price of fixed assets The costs of acquiring fixed assets are incorporated at their true gross amount including tax. According to the reference procedure in standard IAS 23, the costs of borrowing are accounted for as charges in the financial year during which they are incurred. > Direct financing leases Goods which the Group is provided with through a direct financing lease are handled in the balance sheet and the consolidated profit and loss account as if they had been acquired with a loan, if the effect of the contract is to transfer virtually all the risks and advantages inherent in the ownership of these goods to the Group. In consequence, the amounts originally financed by the lessor have been entered as tangible assets, and matched by a "borrowed" item in the liabilities. Annual instalments of rent are eliminated and replaced by: - an allocation to financial amortizations corresponding to the fixed assets concerned, - a financial charge relating to the loan. Goods under a direct financing lease are amortized at a constant rate over their estimated useful lifetime similarly to other fixed assets of the same kind or over the duration of the contract if that is less and if the Company is not certain to become the owner at the completion date.
2.2 Accounting Principles specific to the Balance Sheet

2.2.1 Company grouping The groupings of companies are accounted for according to the acquisition method in accordance with standard IFRS 3. On the date of acquisition, goodwills were valued as the surplus of the cost of the company grouping over the share of interest of the purchaser in the net fair value of the identifiable Assets, Liabilities and potential Liabilities acquired. Goodwills are not amortised. Their depreciation is checked each year or more often if events or changed circumstances suggest that they have depreciated. Any depreciation found is then irreversible. The depreciation test methods used by the Group are described in the paragraph "Depreciation of Assets" in Note 2.2.4. 2.2.2 Intangible assets Intangible assets acquired separately appear on the balance sheet at their historic cost. They are then valued at their amortised cost in accordance with the reference procedure in standard IAS 38. Intangible assets resulting from the valuation of the assets of Entities acquired are recorded on the balance sheet at their fair value. Research costs are entered as charges in the financial year when they were incurred, as are unspent development costs. In the Extrusion Sector, research is undertaken with a view to producing items as part of a specific order from a client. When they are contractually financed by the client, these costs are accounted for as intangible assets up to the amount that was not financed.
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> Amortizations Amortizations are calculated on the basis of the components with distinct useful lives that make up these fixed assets; in general they correspond to the following periods: - Land: not amortizable, - Buildings (structure, alterations, restoration, water-tightness): 10 to 40 years, - Technical installations, industrial tools and equipment: 3 to 40 years, with exceptions, - Computer equipment: 3 to 5 years. 2.2.4 Depreciation of Fixed assets In application of standard IAS 36, the Group ensures that the net book value of its assets does not exceed their recoverable value, i.e. the amount which will be recovered by their use or sale. Apart from business assets and intangible fixed assets with an indefinite life which have to be subjected to regular annual depreciation tests, the recoverable value of an asset is estimated whenever there is an indicator showing that this asset may have lost its value. The recoverable value of an asset is either its net sale price or its utility value, whichever is the greater. The net sale price is the amount which can be obtained from the sale of an asset in a transaction under conditions of normal competition between well-informed and consenting parties, minus the costs of disposal. The utility value is the updated value of future cash flow expected from the continued use of an asset and of disposing of it at the end of its useful life, estimated on the basis of plans or budgets established over 3 years maximum. Beyond this, cash flows are extrapolated by applying a constant or diminishing growth rate. Depreciation tests are performed at the level of Cash-Generating Units (CGUs). The Group has defined its cash-generating units as follows: - Extrusion: each company and each production unit has been considered as an independent CGU. The support assets common to a company have been shared proportionately between the production units of the company, - Pumps: each company has been considered as an independent CGU, - Mechanical Engineering: each company has been considered as an independent CGU. A specific discount rate has been determined for each activity (see note No. 4). These discount rates correspond to the rates before tax of the yield of investments without risks, corrected by a risk premium from the Shares market, and of specific risks related to the activity. For the Gvelot Group, no specific risk related to the activity was identified. A loss of value is accounted for once the book value of the asset or of the CGU it belongs to exceeds its recoverable value. 2.2.5 Financial assets Financial assets consist essentially of Loans and Credits. They are mainly composed of deposits and loans to staff for mortgages. They are valued at the amortized cost, using the staff-interest-rate method. Long-term loans and credits that are not repaid or repaid at lower than the market rate are updated if the sums are significant.
Any depreciation is recorded in the results. Financial assets are initially accounted for at a cost corresponding to the fair value of the price paid, increased by the costs of acquisition. Clients and other operating credits Client credits are recognised and accounted for for the initial amount of the invoice, minus provision for depreciation and amounts written off as non-recoverable. Client credits are retained as assets on the balance sheet so long as all the risks and advantages associated with them have not been transferred to a third party. Provision is made for depreciation if specifics risks of non-payment appear on credits held by the companies of the Group. However, older credits (over 6 months) not paid can be subject to depreciation on all or part of the credit. 2.2.6 Stocks and work in progress According to standard IAS 2 "Stocks", the cost of stocks must include all the costs of acquisition, costs of transformation and other costs incurred in making the stocks available; sales discounts, reductions and other similar elements are deducted in determining the cost of acquisition. Stocks are valued according to the price method or the average weighted cost. Stocks are costed at their lowest manufacturing cost and their net realisable value. The realisable value is equal to the net estimated sale price of the costs still to be incurred to complete the products and the sale. Stocks do not include any cost of borrowing. Raw materials, merchandise and other provisions are valued according to one of the following methods, depending on the Site: price of purchasing of the last batch, last known purchase price, average weighted unit cost. Manufactured products (in process and completed) are valued at their production cost including: - The cost of materials consumed, - Direct production charges, - Indirect production charges in so far as they can be reasonably attributed to the production of the goods. If the net realisable value falls below the gross value, provision is made for the difference. In the Extrusion Sector, research is undertaken and special tools are bought or made to produce items for a specific order from the client. When they are contractually financed by the client, the costs incurred for the research and tools are recorded as stocks of work in progress to the extent of the amount financed. 2.2.7 Cash and cash equivalents Cash and cash equivalents include liquid assets and short-term investments without risk of change of value. 2.2.8 Equity capital Own Shares: when the Group buys its own shares, they are recorded at their cost of acquisition and the equity capital is diminished. The product from any sale of Own Shares is written directly as an increase in equity capital, so that any capital gains or losses, net of the effect of related tax, do not affect the net result of the financial year.
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2.2.9 Provisions > Pensions and similar commitments On the basis of national laws and practices, there are several different pension systems in the Group for the benefit of certain staff. Retirement schemes, similar compensation and other welfare benefits which are analysed as Schemes for Defined Services (schemes in which the Group undertakes to guarantee a defined amount or level of service), are accounted for on the balance sheet on the basis of an actuarial valuation of the commitments to the date of closure, minus the fair value of the assets related to and committed to the scheme. The subscriptions paid into the schemes which are analysed as Schemes with Defined Subscriptions, (i.e. when the Group has no other obligation than the payment of subscriptions) are accounted for in the charges of the financial year. In France, the Group has made commitments to its staff regarding retirement. The provision appearing in the consolidated accounts is valued using the Projected Unit Credit method and takes account of the associated welfare benefits. In applying local rules, the German subsidiary Dold faces up to the welfare commitments that it has made towards its staff as part of contracts concluded with insurance companies. What is sometimes called "actuarial error or actuarial deviance is the mismatch between the hypotheses used and reality, or the modification of hypotheses in calculating commitments and the assets allocated to covering them: - rate of staff turnover - rate of salary increase - discount rate - death rate - rate of return on assets The variation in actuarial deviances on retirement benefits is accounted for in the results by applying the Corridor Principle, spreading any variations that exceed 10% of the highest value between the amount of the commitment and the market value of hedge assets. These gains or losses are recognised over the expected average remaining working life of the members of staff benefiting from these schemes. Provision is made for the prizes given when the national employment medals are awarded or as part of the Companys own agreements. The latter are costed by taking account of the probability that the staff reach the length of service required for each level, and are updated. > Other provisions Provisions are made whenever the Group has a current obligation (legal or implicit) arising from a past event, whose fulfilment should result in an expenditure of resources representing economic advantages for the Group. The provisions correspond to specifically identified risks and charges. Any liabilities correspond to potential obligations resulting from past events whose existence will only be confirmed by the occurrence of uncertain future events beyond the control of the entity, or to current obligations for which an expenditure of resources is not probable. Apart from those resulting from a Company grouping, they are not accounted for but information is given on them in an Appendix. A provision for restructuring is only accounted for if there is an implicit obligation to a third party, arising from a decision of Management which, before the date of closure, was planned in detail, formalised and announced to the people concerned. Other long term provisions have been updated.
2.2.10 Financial liabilities Borrowings are accounted for at their amortized cost, except for the hedge accounting (see below, Derivatives and hedge accounting). Issuing costs, discounts and redemption premiums are shown subtracted from borrowings and are taken into account in determining the actual rate of interest. > Derivatives and hedge accounting All the derivatives (swaps) are accounted for on the balance sheet at their fair value and any variation in their fair value is accounted for in the results. The Group takes the option offered by standard IAS 39 of applying hedge accounting: - in the case of cover of fair value (borrowing at a fixed rate swapped to a variable rate for example), the debt is accounted for at its fair value and any variation in fair value is entered in the results. The variation in the fair value of the derivative is also entered in the results. If the cover is totally effective, the two effects cancel out exactly. - in the case of cash flow cover (borrowing at a variable rate swapped to a fixed rate for example), the variation in the fair value of the derivative is entered as equity capital for the effective part and entered in the results in parallel to the account of the cash-flow covered, and in the result for the ineffective part. 2.2.11 Deferred Taxes In accordance with standard IAS 12 Tax on results, deferred taxes are recorded on all the temporary differences between the book values of assets and liabilities, and their assessed values according to the liability method of tax allocation. Future tax relief because of the use of tax losses carried forward is only recognised if is can reasonably be expected to occur. At 31 December 2006, deferred tax assets have been retained in the accounts, because it seemed probable that they would be recouped. Deferred tax assets and liabilities, whenever they fall due, have been offset when they concern a single tax entity. In accordance with standard IAS 12, deferred tax assets and liabilities are not updated.
2.3 Accounting Principles specific to the Profit and Loss account

2.3.1 Products of ordinary activities In accordance with standard IAS 18 "Products of ordinary activities" the sale of goods, minus discounts granted, is accounted for as turnover on the date of transfer of ownership which transfers to the purchaser the economic risks and advantages of the goods. In general this transfer takes place when the goods are delivered. In the Extrusion Sector, research is undertaken and special tools are bought or made to produce items for a specific order from the client. When they are contractually financed by the client, this financing comes within the scope of Products of ordinary activities as defined by standard IAS 18. The product is recorded as turnover as and when the technical stages are confirmed by the client. 2.3.2 Current operational result and Operating income Standard IAS 1 allows for a minimum number of headings: Operating income, Financial expenses, Proportion of results in the Companies on a like-for-like basis, Results of activities halted or in process of sale,
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- Tax expenses, - Profit or loss (broken down between the Group share and minority shareholders). Consequently, the operating income can be defined as the difference between all the income and expenditure not resulting from financial activities, from companies on a like-for-like basis, from activities halted or in process of sale, or from tax. The Gvelot Group has opted to present a current operational result defined as the difference between the total operating income as defined above and the "Other Operational Income and Expenditure" which represents unusual and infrequent events. These are defined in a very restrictive way but cannot be taken as exceptional or extraordinary. The current operational result is a management figure which is intended to make it easier to understand the performance of the company. 2.3.3 Financial expenses 2.3.3.1 Cost of net financial indebtedness The cost of net financial indebtedness consists of all the results produced by the elements constituting net financial indebtedness during the period (bank loans and investments, and results of investment security transactions). 2.3.3.2 Other financial income and expenditure Essentially, other income and expenditure means the results of transactions to hedge against interest and exchange rates.
a) Estimated depreciation of business assets The Group submits business assets to an annual depreciation test, in accordance with the accounting method described in Note 2.2.4. Future cash flow as derived from budgets is used to calculate the recoverable value of cash-generating units. These calculations mean having recourse to estimates. In the end, the impact of variations in discount rate and variation in future cash flow is insignificant from the point of view of estimated business assets. b) Depreciation in fixed assets of production. The recoverable value of an asset is estimated whenever there is an indicator showing that this asset may have lost its value as indicated in Note 2.2.4. The calculations employed in establishing the recoverable value or the utility value of an asset use predictions based on budgets over 3 years and cash flows extrapolated by the application of growth rates beyond that. These flows are then updated at rates specific to each activity. c) The land and buildings are revalued periodically by independent valuers. Between each valuation, the Group checks that there are no indicators to suggest a loss in values.
D. AMENDMENTS TO CONSOLIDATED ACCOUNTS

PUBLISHED EARLIER
CORRECTION OF ERRORS IN THE STOCK ACCOUNTS The subsidiary Gevelot Extrusion has altered its stock management system, at the same time taking account of tools and maintenance items previously not accounted for. In the consolidated accounts, the stock accounts have therefore been increased by 2,357 K in exchange the reserve account has reduced by 1,545 K and the deferred tax account by 812 K. Since this correction comes from earlier financial years, there is no impact on the consolidated profit and loss account for the financial year 2006.
2.4 Sectorial Information

In application of standard IAS 14, the first level of sectorial information is organised by business sector, and the second by geographical sector. This presentation is based on the internal organisation and the management structure of the Group. The business sectors of the Gvelot Group have been defined as: - Holdings - Cold extrusion, Machining - Pumps, Fluid technologies - Mechanical engineering, motor and gas equipment
E. EVENTS AFTER THE CLOSE

OF THE BALANCE SHEET
None
B. SIGNIFICANT FACTS
None
C. DETERMINING ESTIMATES AND JUDGEMENTS

The estimates and judgements, which are continually updated, are based on historic information and other factors, including the expectations of future events deemed reasonable in the circumstances. Determining accounting estimates and hypotheses The Group makes estimates and adopts hypotheses concerning the future. The resultant accounting estimates are, by definition, rarely identical to the actual results as they finally emerge. The estimates and hypotheses that seriously risk leading to a significant adjustment of the book value of assets and liabilities in the following period are analysed below.
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Note no. 3 : Share capital
(in euros) Ordinary

ORDINARY SHARES Number Nominal value 957,543 31
Own Shares
25,937 31
12.31.05
983,480 31
Cancelled
25,937 31
Alterations to face value by incorporation of reserves

957,543 4
12.31.2006
957,543 35
Total
29,683,833
804,047
30,487,880
804,047
3,830,172
33,514,005
Composition of the share capital: At 31 December 2006, the authorised capital amounted to 33,514 thousand euros. It consisted of 957,543 ordinary shares at 35 euros each, issued and fully paid up. In the course of the financial year, the following transactions were effected: - variation in the number of shares from 983,480 at 31 December 2005 to 957,543 shares at 31 December 2006 by cancelling the 25,937 shares that Gvelot SA itself held at the close of 2005; - raising of the face value from 31 euros to 35 euros per share after the incorporation of reserves for an amount of 3,830 thousand euros. The Group has no option plans for share purchase, by which options to buy Company shares would be offered to certain staff and managers.
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Note no. 4: Goodwill, intangible fixed assets, tangible assets

Gross values 01.01.2006 Acquisitions including direct financing Translation differential Sales and Decommissions Depreciation carried forward Virements between headings 12.31.2006 Net values 12.31.2006
GOODWILL
Depreciation
1,646
-
23
-
(487)(3)
-
1,182
-
1,182
-
INTANGIBLES
Research and development costs Concessions, patents licences, brands Business assets Intangible fixed assets in progress Advances and deposits Total intangibles 1,402 8,343 995 1,800 (685)(1) (17) (291) 269 (1,371) 62 (4) 1,009 9,914 (3,833) 1,009 5,906 171 225 (274) 228 6,085 171 2,886 864 580 1,205 2,649 2,186
Financial amortizations and depreciation (3,413)
Total net intangibles TANGIBLES

Land Buildings Technical installations, equipment and industrial tools Other Tangible fixed assets in progress Advances and deposits Total tangibles Financial amortizations and depreciation
4,930
7,445 25,546 162,239 10,583 4,048 2,071 211,932 (127,277)
1,115
373 8,035 735 3,934 1,110 14,187 (7,996)(2)
(28) (94) (14) 1 (135) (3)
(22)
(53) (7,012) (613) (1) (33) (7,712) 7,092
772
58
666 7,378 194 (5,241) (3,059) (62) 4, 7,417 26,438 170,626 10,900 2,740 89 218,210 (127,408)
6,081
7,052 22,581 54,883 3,457 2,740 89
Total net tangibles TOTAL FIXED ASSETS
84,655 91,231
6,191 7,306
(138) (115)
(620) (642)
772 772
(58) (487) 98,065
90,802 98,065
The total of intangible and tangible investments therefore rose to 15,987 K. The acquisitions in the financial year mainly concerned industrial investments in capacity and production. (1) including financial amortizations including provisions (2) including financial amortizations including provisions (7,859) (137) (685)
(3) reclassified as securities on a like-for-like basis
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Note no. 4 (continued): Goodwill, intangible fixed assets, tangible assets

Treatment of goods in direct financing
Goods on direct financing leases are being treated differently and are now entered into the corresponding asset accounts as if they had been bought outright. Rents have been split between the two headings of financial depreciation allowance and financial expenses. Gross values
01.01.2006 Acquisitions (1) Equipment and industrial tools (3) Other 5,749 505 5,016 154 (71) (287) 10,694 372 220 375 494 110 (7) (268) 707 217 9,987 155 Sales and Decommissions (2) 12.31.2006 01.01.2006
Financial depreciation
Allowances (1) Sales and 12.31.2006
Net values
12.31.2006
Decommissions (2)
Total
6,254
5,170
(358)
11,066
595
604
(275)
924
10,142
(1) Included in the acquisitions for the financial year (2) Included in the sales and decommissions for the financial year (3) Only concerns the Extrusion Sector
Goodwill, intangible fixed assets, tangible assets

In accordance with the principle described in Note 2.2.4, on 31 December 2006 the Group made a comparison between the net book value of its assets and their utility value. This calculation was made on the companies in the Group for which indications of a loss in value, or conversely a rise in value, could be expected. The calculations of impairment tests made have not revealed any significant modification in utility values. There was no reversal or additional allowance to provide for depreciation of the assets concerned by these calculations of impairment tests. For the 2006 financial year, the calculations of impairment tests related to 56.7 M of net fixed assets out of a Group total of net fixed assets of 98.1 M. The difference came mainly from the land and buildings of Gvelot S.A. valued by independent valuers and by the Pumps Division for which no calculation was made in the absence of indicators of loss of value. The calculations of impairment tests are made on the basis of future cash flow predictions based on the three-year activity and investment plans. The growth rates used in extrapolating cash flow predictions beyond three years are 2% for the Extrusion Division and 1% for the Mechanical Engineering Division. Future cash flows are updated on a period corresponding to the average residual lifetime of the fixed assets. The discount rates are 6.5% for the Extrusion Division, 8.5% for the Pumps Division and of 7% for the Mechanical Engineering Division. The future cash flows predictions made for financial years 2007 to 2009 take account of an expected improvement in the profitability of the sites in Laval, Toucy and Dold in Germany. The Offranville site is still suffering from uncertain prospects. The sensitivity of calculations of utility value measured on the Extrusion Division (not significant on the Pumps and Mechanical Engineering Divisions) is 4.1 M for a modification of 1% in the discount rate and 8.2 M for a modification of 10% in the operating cash flows. Revaluation of Land and Buildings Land and buildings have been revalued to their fair value at 1 January 2004 according to estimates by independent valuers (approach by the market value on the one hand and by the rental on the other) except for the Companies that were acquired later. For these, the acquisition cost was taken as the fair value. The revaluation differentials initially found at the time of the transition to IFRS standards were 12,747 K at 31 December 2005 and 12,562 K at 31 December 2006, the difference corresponding to 185 K in outflow of fixed assets. There is no restriction on the distribution of this revaluation differential to the shareholders, since the differential has been entered in a special reserve account and the financial amortizations are at the same level. Valuations are carried out periodically every three years unless facts or indicators exist that might lead one to expect a significant variation in value. At 31 December 2006, our tests and verifications did not lead us to believe there was any indication of loss of value.
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Note no. 5 : Securities on a like-for-like basis

Shareholdings on a like-for-like basis are: (In thousands of euros)
Kudu Industries Inc. Ensival Moret Asia Pte Ltd. / Moret Pumps Shangha Co Ltd. KEUR 372 48 475 895(1) KEUR
12.31.2005
3,696
Results of the financial year

1,035
Other movements
(118)
12.31.2006
4,613
Total
(1) Including consolidated goodwill of 474 k.
4,068
1,083
357
5,508
The principal financial data relating to companies on a like-for-like basis are: (In thousands of foreign currency)
Kudu Industries Inc. Ensival Moret Asia Pte Ltd. / Moret Pumps Shangha Co Ltd. KEUR 4,417 3,663 1,727 1,538 189 463 KCAD
Turnover 12.31.2006 12.31.2005

65,041 50,749
Equity capital 12.31.2006 12.31.2005

15,916 12,402
Result of the financial year 12.31.2006 12.31.2005

3,514 2,788
There are distribution contracts for the supply of pumps, linking PCM to its subsidiary Kudu Industries Inc. More than half of the turnover of Kudu Industries Inc. consists of products from PCM. Moret Pumps Shangha (M.P.S.), a subsidiary of Ensival Moret Asia (E.M.A.), is linked to PCM by a sales agreement covering: - the production of items by M.P.S. for PCM, - the import by M.P.S. of PCM products for resale and/or building in, for PCM clients.
Note no. 6 : Non-consolidated shareholdings

Holding companies Shareholdings Value of securities held
22.72% NC NC 10.00% - 31 K - 182 K 50 0 0
Depreciation
Gvelot S.A.
Techniques de Fixation (in liquidation)
% Shareholding Equity capital Result 2006
Gurtner
G.V. S.r.l.
% Shareholding Equity capital Result 2006
In June 2006, the Gurtner took a 10% shareholding in the capital of GV S.r.L., a company in Italian law.
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Note no. 7 : Provisions for risks and charges

01.01.2006 Allocations Reversals Provision Provision used not used
(40) (54) (37) (26)
Total
12.31.2006 Of which less Of which more than a year than a year

169 40 15 26 138
Provisions for risks . Provisions for employment disputes . Provisions for industrial risks . Other provisions for risks 93 26 200 168 58 184 26 178
Total
Provisions for liabilities and charges . Other provisions for charges . Provisions for restructuring . Provisions related to staff . Provisions for pensions . Provisions for employment medals
319
915 296 536 1,468 308
226
634 343 5
(94)
(52) (218) (241) (15)
(63)
(7) (295) (95) (2)
388
1,490* 78 1,716 296
209
1,397 -
179
93 78 1,716 296
Total Total provisions for risks and charges

* The Other provisions for charges include:
3,523 3,842
982 1,208
(526) (620)
(399) (462)
3,580 3,968
1,397 1,606
2,183 2,362
- provisions for charges related to operations - provisions for employment-related charges - provisions for sales-related charges
546 712 232
1,490 The provisions for pensions are detailed in Note no. 13 "Staff benefits
Note no. 8 : Borrowings and financial debts
Borrowings
2006 Non current
Bank loans Miscellaneous borrowings and financial debts Total non-current borrowings 24,499 503 25,002 9,574 7,157 215 16,946 41,948 21,389 498 21,887 9,177 4,757 13,934 35,821
2005
Current
Bank overdrafts (note no. 12) Bank loans Miscellaneous borrowings and financial debts Total current borrowings Total borrowings
Variations in borrowings and financial debts

01.01.2006
Loans and debts from credit institutions (including direct financing) Miscellaneous borrowings and financial debts
Repayments
Reclassification
New borrowings
20,599 115
12.31.2006
35,323 498
(14,414) (173)
(278) 278
41,230 718
Total
35,821
(14,587)
20,714
41,948
36
Note no. 8 (continued): Borrowings and financial debts

Breakdown of borrowings and financial debts by redemption date
Total 2006
Loans and debts from credit institutions (including direct financing) Miscellaneous borrowings and financial debts
2005
1 year and less 2006 2005
Between 1 and 5 years 2006 2005
More than 5 years 2006 2005
41,230 718
35,323 498
16,731 215
13,934 -
22,827 488
18,116 498
1,672 15
3,273 -
Total
41,948
35,821
16,946
13,934
23,315
18,614
1,687
3,273
Loans from credit institutions and miscellaneous borrowings are covered by collateral to the extent of 3,204 K (see note no. 20).
Analysis of financial debts related to direct financing leases

Total
2006 Debts and leases 9,933 2005 5,568
1 year and less

2006 1,185 2005 676
Between 1 and 5 years

2006 7,895 2005 3,400
More than 5 years

2006 853 2005 1,492
Total
9,933
5,568
1,185
676
7,895
3,400
853
1,492
Breakdown of borrowings and financial debts by principal foreign currencies

Total
2006 Loans and debts from credit institutions (including direct financing) Miscellaneous borrowings and financial debts 2005 2006
Euros
2005
American dollars
2006 2005
Pounds sterling
2006 2005
41,230 718
35,323 498
41,227 718
35,322 498
3 -
1 -
Total
41,948
35,821
41,945
35,820
Breakdown of borrowings and financial debts by nature of rate

2006
Floating rates covered Floating rates not covered(*) Fixed rates Interest Overdrafts Direct financing 7,296 1,866 13,198 81 9,574 9,933
2005
5,223 6,165 9,626 62 9,177 5,568
Total (*) Loans at floating rates not covered have redemption dates between 2007 and 2012.
41,948
35,821
37
Note no. 9 : Tax

Deferred taxes
Variations of fair value on the financial instruments
15 15
01.01.2006
Deferred tax assets Deferred tax liabilities (1,871) 12,483
Movements
(171) 338
Miscellaneous (including translation differential)

(23)
12.31.2006
(2,027) 12,813
Total
10,612
167
30
(23)
10,786
The credits and debts on deferred taxes are related to temporary differences.
Tax on results
The breakdown of tax on the Profit and Loss account is as follows: 2006
Tax due Deferred taxes 1,673 167(*)
2005
1,857 (730)
Total
(*) Deferred tax expenditure is analysed as follows: Products from allocations to financial amortizations of tangible and intangible assets Charges on net reversals of provisions for depreciation of tangible and intangible assets Charges on reversals of regulated provisions and miscellaneous taxes Other products and miscellaneous charges Temporary differences
1,840
1,127
566 (177) (887) 45 286 (167)
Total charge of deferred tax
The comparison between the theoretical tax expenditure and the tax expenditure accounted for is as follows: 2006
Current results before tax of integrated companies Theoretical tax expenditure in France Theoretical tax expenditure in Germany Theoretical tax expenditure in England Total theoretical tax expenditure Net impact of charges and returns definitively not deductible or taxable Actual tax expenditure on current activities (783) (946) (176) (1,905) 65 (1,840) 5,117
(1)
Net results of integrated companies

(1) No deferred tax was identified on the deficit in 2006 of 268 K of the subsidiary PCM USA Inc. (United States) Essentially, the net impact of charges and returns definitively not deductible or taxable consists of permanent mismatches.
3,277
2006
Rate of business tax France Germany England 34.43 % 37.50 % 30.00 %
38
Note no. 10 : Stocks and work in progress

2006
. Raw materials and other supplies . Materials undergoing processing . Intermediate and finished products . Merchandise 14,136 11,864 11,388 2,285 12,876 12,953 10,010 998
2005
Gross amount
. Raw materials and other supplies . Materials undergoing processing . Intermediate and finished products . Merchandise Depreciation (1,161) (834) (869) (188)
39,673
(1,127) (859) (786) (25) (3,052)
36,837
(2,797)
Total
36,621
34,040
Note no. 11 : Receivables and related accounts

2006
Receivables and related accounts Depreciation 46,368 (1,085)
2005
47,990 (843)
Total
45,283
47,147
Note no. 12 : Cash and cash equivalents

2006
Liquid assets Investment securities Bills for collection 8,768 18,371 625
2005
10,132 17,616 2,995
Cash and cash equivalents
27,764
30,743
In the consolidated cash flow table, Cash and Bank Overdrafts breaks down as follows: 2006
Cash and cash equivalents Bank overdrafts 27,764 (9,574)
2005
30,743 ( 9,177)
Net cash at the close
18,190
21,566
39
Note no. 13 : Staff benefits

Pensions and severance payments
France
Provision on the balance sheet Updated value of obligations covered Fair value of assets of the scheme Sub-total Updated value of obligations not covered Actuarial gains/(Losses) not accounted for Cost of past services not yet accounted for Provision accounted for on balance sheet Fair value of the assets of the scheme Fair value at start of financial year Actual yield Subscriptions Services paid for Variations of scope Exchange variations Fair value of assets of the scheme Variation in provisions Provision at start of financial year Charges in the financial year Disbursements Variations of scope Exchange variations Variation in provisions Total charge accounted for in results Cost of services rendered Financial cost Expected yield from assets Actuarial deviance accounted for (corridor) Effect of reductions / liquidations Exchange variations Principal actuarial hypotheses 145 242 (175) (93) 119 149 19 (31) 137 294 261 (206) (93) 256 778 119 897 693 137 (11) 819 1,471 256 (11) 1,716 4,162 175 (242) 4,095 776 31 55 (74) 788 4,938 206 55 (316) 4,883 4,052 (4,095) (43) 940 897 1,607 (788) 819 819 5,659 (4,883) 776 940 1,716
Allemagne
Total au 31.12.2006
Principal actuarial hypotheses

Discount rate Rates of increase of salaries Retirement age Expected rate of yield from assets 4.25 % 1 % and 2 % 61 years (non-executive) 64 ans (executives) 4.00 % 4.50 % 1% 65 years 4.50 %
Projected PBO(*) 12.31.2005

Actuarial deviance 2005/projected 2005 at 31/12/04 Analysis of the actuarial deviance (deviations compared with hypotheses) Updating of turnover tables Change of retirement age Reduction of average age and average length of service Reduction in workforce (other than restructuring plan) 6,313
PBO(*) 12.31.2005
5,373
Actuarial deviance
940
542 K 133 K 161 K 104 K
(*) PBO: Projected Benefit Obligation. This corresponds to the probable current value of the commitment, with projection of salaries relative to rights acquired at the date of the calculation. Retirement commitments are costed by independent actuaries. The provision for employment medals awarded by the companies in the Group to their staff has been calculated by an independent actuary (see note No.. 7).
40
Sectorial information
Breakdown of fixed assets

At 12.31.2006 Pumps Mechanical
917 4,042 9,169 150 42 13,403 9,914 33,855 181,526 2,740 89 218,210 32 19,437 111 112 2 19,662 3,287 5,514 145,241 3,791 1,506 156,052 4,332 4,117 18,350 118 529 23,114 692 3,923 9,120 27 34 13,104 8,343 32,991 172,822 4,048 2,071 211,932 1,182 1,646 1,646
By business sector Total Holding Extrusion Mechanical Total

1,182 5,028 4,484 19,253 196 23,933
Holding
Extrusion
At 12.31.2005 Pumps
Goodwill(1)
Total intangibles 40 Land and buildings 19,601 Industrial and miscellaneous equipment 116 Tangible assets in progress 2 Advances and deposits Total tangibles 19,719
3,929 5,728 152,988 2,392 47 161,155
Gross values
11,667 7,704 131,241 949 110,622 11,115
19,759 18,476
1,554 412 8,681 450 7,973 1,785 In 2005 the total of intangible and tangible investments came to: Holding: Extrusion, Machining: Pumps and Fluid technology Mechanical Engineering, Motor and Gas Equipment:
165,084 6,616 98,065 18,745 48,717 17,977
30,143
14,320
229,306
19,694
159,339
29,092
13,796
8,004
221,921
130,690
Financial amortizations / cumulated depreciation
1,508
110,362
Net values
18,251
54,722
5,792
408
91,231
10,616
Note no. 14 : Sectorial information
Allocation for the financial year
590
6,125
The total of intangible and tangible investments therefore amounts to: Holding: Extrusion, Machining: Pumps and Fluid technology: Mechanical Engineering, Motor and Gas Equipment: 111 12,252 2,323 1,301 15,987
350 15,473 3,247 443 19,513
(1)
Concerns PCM Group UK Ltd.
By geographical area Total France
France
At 12.31.2006 Germany America England Canada

2,235 1,500 3,735 9,914 33,855 181,526 2,740 89 218,210 1,182 1,182 7,417 25,125 132,168 3,779 2,071 163,143
At 12.31.2005 Germany
America England Canada Singapore

926 5,514 39,913 269 45,696 1,646 2,352 741 3,093
Total
Goodwill(1)
1,646 8,343 32,991 172,822 4,048 2,071 211,932
Total intangibles 8,775 Land and buildings 25,892 Industrial and miscellaneous equipment 138,300 Tangible assets in progress 1,485 Advances and deposits 89 Total tangibles 165,766
1,139 5,728 41,726 1,255 48,709
Gross values
529
174,541 4,388
181
49,848
4,917
229,306
131,241
170,560
102,126
46,622
28,162
4,739
402
221,921
130,690
41
Financial amortizations / cumulated depreciation 101,591
29,121
Net values
72,950
20 727
98,065
8,681
68,434,
8,326
18,460
2,166
4,337
124
91,231
10,616
Allocation of the financial year
6,649
1,851
(1) concerns PCM Group UK Ltd.
Note no14 (continued): Sectorial information

Variations in borrowings and financial debts
01.01.2006
Borrowings and debts with credit institutions (including direct financing) Holding Cold extrusion / Machining Pumps / Fluid technology Mechanical Engineering / Motor and gas equipment Sub-total Miscellaneous borrowings and financial debts 8 33,746 675 894 35,323 498 (8) (13,157) (395) (854) (14,414) (173) (278) (278) 278 1 19,520 229 849 20,599 115 1 40,109 231 889 41,230 718
Repayments
Reclassification
New borrowings
12.31.2006
Total
35,821
(14,587)
20,714
41,948
Consolidated turnover
Breakdown by business sector 2006
Cold extrusion / Machining Pumps / Fluid technology Mechanical Engineering / Motor and gas equipment Provision of services and miscellaneous 115,356 64,654 15,911 911 58.6 % 32.8 % 8.1 % 0.5 % 119,686 63,977 15,840 723
2005
59.8 % 32.0 % 7.9 % 0.3 %
Total Breakdown by geographical area
196,832
100.0 %
200,226
100.0 %
2006
France . Countries of the European Union . Other countries of Europe . America . Other geographical areas Foreign 75,577 2,669 20,232 11,044 109,522 55.6 % 87,310 44.4 % 74,567 2,552 14,652 16,901 108,672 91,554
2005
45.7 %
54.3 %
Total
196,832
100.0 %
200,226
100.0 %
42
Note no14 (continued): Sectorial information

Current operational result(1)
2006
Holding Cold extrusion / Machining Pumps / Fluid technology Mechanical Engineering / Motor and gas equipment 322 (1,335) 7,300 (28)
2005
815 123 6,160 (60)
Total
6,259
7,038
Operating income(1)
2006
2005
1,058 (2,307) 6,944 (60)
Total
6,259
5,635
Current result before tax of integrated companies(1)

2006
2005
1,361 (3,568) 7,704 (148)
Total
5,117
5,349
Net result of the consolidated whole(1)

2006
Holding Cold extrusion / Machining Pumps / Fluid technology Mechanical Engineering / Motor and gas equipment 1,504 (2,858) 5,716 (2)
2005
2,370 (3,466) 6,459 (108)
Total
(1) before eliminating intra-Group transactions without effect on the consolidated result.
4,360
5,255
43
Note no. 15 : Research and Development

For the entire Group, Research and Development expenses have risen to 3,396 K. Of these expenses, 1,366 K have been activated under the provisions of standard IAS 38.
Note no. 16 : Financial instruments

Gross value FINANCIAL ASSETS - Building loans of more than a year - Building loans of less of a year - Derivatives - Securities valued at their fair value offset against results FINANCIAL LIABILITIES - Derivatives 662 194 42 1,350 < 1 year 1-5 years 662 194 42 1,350 3.5% > 5 years Discount rate Actual value n-1 438 (Loss) actual adjustment/ value financial year 12/31/06 12 450 194 Depreciation (37) Value on balance sheet 413 194 42 1,350 -
Building loans are loans to staff with over 20 years. These interest-free loans are updated to take account of the loss over time of the value of future repayments. Derivatives are financial tools used by the Company to cover its interest or exchange-rate risks. They are essentially a swap of interest rates on floating-rate loans. Their fair value is calculated by an independent expert. MANAGEMENT OF FINANCIAL RISKS Apart from its borrowings at floating rates, the Group has no significant market risk on its debts and financials borrowings or on its investment securities. The Groups portfolio of investment securities is mainly composed of monetary investments. The Group has a few investment securities partially based on shares, but for them the overall risk of loss of value is negligible given the very short time they are held and the guarantees provided. The repayment rates are close to those of the market. The Group encounters a few exchange risks with its exports. When these risks are significant, they are generally covered by exchange cover transactions (purchasing/selling foreign currency on the forward market). Securities valued at their fair value offset against the result represent OPCVM securities which, because of the application of the AMF Recommendation of 9 March 2006, have been reclassified under this heading (and no longer in Cash Flow) since their characteristics did not meet the liquidity, convertibility and risk criteria.
44
Note no. 17 : Leasing contracts

Total Updated Gross value Average future value of period payments under-lyings Currency remaining <1 year
Type of Contract Simple lease - Exploitation Simple lease - not Exploitation Hire purchase 1,043 502 11,109 10,449 11,066 Euro Euro Euro 3 years 2 years 5 years 316 167 1,581 710 335 9,211 317 3.70% 17 n/a n/a 3.50%
1-5 ans >5 years
Rate of interest
Discount rate
Leasing contracts are simple leases with periods of between 3 years and 10 years. Exploitation basically refers to leases of storage space and materials-handling equipment. Not Exploitation covers computer equipment, office machinery and Company vehicles. A charge of about 0.9 million euros has been accounted for in the 2006 financial year.
Note no. 18 : Directors fees

2006
Short-term benefits Welfare benefits 494 143
2005
535 161
Total The Directors are the members of the Board of Directors and the Audit Committee. Their fees include gross salary, bonuses, fringe benefits and attendance fees. Directors enjoy no specific retirement scheme.
637
696
Note no. 19 : Average staff

2006
Directors and senior managers Junior management, white collar and blue collar 217 1,376
2005
226 1,367
Total
Temporary staff
1,593
103
1,593
152
Note no. 20 : Off-balance-sheet commitments

Commitments made
2006
Guarantees and securities Discounted bills not matured Debts for which the consolidated companies have given a guarantee Including loans from credit institutions Other commitments made 3,204 555 435 1,498 3,204 4,124 564
2005
515 19 4,124
Total
5,692
5,222
Commitments received
2006
Guarantees and securities Miscellaneous 65 -
2005
34 -
Total
65
34
45
Note no. 21 : Affiliated companies

2006
(In thousands of euros)
2005 Amount outstanding

1,625 29
Amount of transactions
55
Amount of transactions
Amount outstanding
1,475 124
Fixed assets Loans Debts
Charges Products
1,347 10,622
1,689 7,672
The transactions with the affiliated parties summarised above relate mainly to current transactions with companies over which the Group exercises notable influence. They are consolidated using the equity method. These transactions are made on the basis of market prices. Transactions with affiliated parties who are individuals (Board Members, Managers and members of their families) are not significant.
46
Auditors Report on the Consolidated accounts

2006 financial year (period from 1 January to 31 December 2006)
Ladies and Gentlemen,

In carrying out the remit entrusted to us by your General Meeting, we have checked the consolidated accounts of the company Gvelot for the financial year ending on 31 December 2006, as attached to the present report. The consolidated accounts were drawn up by the Board of Directors. It is our duty, on the basis of our audit, to express an opinion on these accounts.
1- Opinion on the Consolidated accounts

We have carried out our audit according to the professional standards applicable in France. These standards require us to use methods that will give a reasonable assurance that the consolidated accounts contain no significant anomalies. An audit consists of examining, by sampling, the proof behind the data contained in these accounts. It also consists of assessing the accounting principles followed and the significant estimates adopted in drawing up the accounts and to assess their presentation as a whole. We consider that our checks provide a reasonable basis for the opinion expressed below. We certify that the consolidated accounts for the financial year are accurate and honest, in the view of the IFRS reference adopted in the European Union, and give a true picture of the assets, the financial situation, and the results of the whole of the people and entities included in the consolidation. Without prejudice to the opinion expressed above, we draw your attention to note No. 2 Rules and accounting methods in the Appendix. This explains in paragraph D the changes made to accounts published previously, relating to stocks in the Extrusion Division, which leads to an increase in the equity capital of 1.5 M after business tax.
2- Justification of our assessments

Under the provisions of Article L. 823-9 of the Commercial Code relating to the justification of our assessments, we draw the following items to your attention: If there is an indicator that its fixed assets have fallen in value, the Company carries out depreciation tests using the methods described in note 2.2.4. to the Financial Statements. As regards the application of these depreciation tests, our work has largely been to examine the cash flow predictions and the hypotheses used, and to review the calculations made by the Company. The Company has opted for the method of periodically revaluing its land and buildings, as explained in note 2.2.3. to the Financial Statements. We ensured ourselves that the estimates made in valuing these assets were reasonable. The assessments that we arrived at are part of our procedure in auditing the consolidated accounts, taken as a whole, and have therefore contributed to us forming the opinion expressed in the first part of this Report.
3- Specific checks
In addition, in accordance with the professional standards applicable in France, we have also checked the information given in the report on the management of the Group. We have no observations to make on their sincerity and their agreement with the consolidated accounts.
Paris, 25 May 2007 The Auditors MAZARS & GUERARD Robert AMOYAL CREA Bernard ROUSSEL
47
48
2006 ANNUAL REPORT - COMPANY ACCOUNTS
Company accounts at 31 December 2006
49
Balance sheet at 31 December 2006

ASSETS
(in thousands of euros) Gross amount on 12.31.2006 FIXED ASSETS (I)
Intangible fixed assets (A) Concessions, patents, licences, brands processes, fees and similar values Total A Tangible assets (B) Land Buildings Other Tangible assets in process of manufacture Advances and deposits Total B Fixed financial assets (C) (1) Shareholdings Dues relating to shareholdings Loans Other
(3)
Financial amortizations or depreciation
Net amount on 12.31.2006
40 40
22 22
18 18
4 4
2,559 16,776 116 2 19,453
241 10,609 68 10,918
2,318 6,167 48 2 8,535
2,349 6,329 14 112 2 8,806
30,771 1,074 75 6 31,926
30,771 1,074 75 6 31,926
30,271 1,523 125 1,370 33,289
Total C
Total (I) fixed assets (A + B + C) CURRENT ASSETS (II)

Advances and deposits made on orders
51,419
10,940
40,479
42,099
Receivables
(2)
Due from clients and related accounts Other Investment securities Liquid assets
105 355 15,931 983
105 355 15,931 983
96 2,738 11,861 951
ADJUSTMENT ACCOUNTS
Charges recorded in advance (2) 27 27 42
Total (II) current assets

Positive translation differential (III)
17,407
-
17,407
-
15,688
-
GRAND TOTAL (I + II + III)

(1) Including less than a year (2) Including more than a year (3) Including Own Shares
68,826
10,940
57,886
50 34 -
57,787
88 20 1,361
50
LIABILITIES
(in thousands of euros) Before allocation Net amount on 12.31.2006 EQUITY CAPITAL (I)
Capital Premiums, discounts and merger surpluses Revaluation differential Reserves: - Legal reserve - Special reserves of net long term capital gains - Other Carried forward Result of the financial year Sub-total: net position Investment subsidy Provisions required by law 2,603 12,753 1,764 2,171 52,805 13 798 2,434 17,140 662 3,378 54,102 12 453 2,712 12,753 1,720 50,699 13 798 2,603 17,140 1,764 51,995 12 453 33,514 30,488 33,514 30,488 -
After allocation Net amount on 12.31.2006

(a)
Net amount on 12.31.2005(b)
Total of all equity capital (I) PROVISIONS (II)

Provisions for risks Provisions for charges
53,616
54,567
51,510
52,460
2,290
1,381
2,290
1,381
Total Provisions (II) DEBTS (III)

(1)
2,290
1,381
2,290
1,381
Other debenture loans Borrowings and debts with credit institutions Miscellaneous borrowings and financial debts Advances and deposits received on orders in progress Owing to suppliers and related accounts Tax and social security owed Debts on fixed assets and related accounts Other debts Income recorded in advance
(2)
1 683 357 481 59 399 -
718 401 397 58 265 -
1 683 357 481 59 2,505 -
718 401 397 58 2,372 -
Total Debts (III)

Translation differential liability (IV)
1,980
-
1,839
-
4,086
-
3,946
-
GRAND TOTAL (I + II + III + IV)

(1) Including more than a year Including less than a year (2) Including current bank support and bank overdrafts
57,886
697 1,283 1
57,787
708 1,131 -
57,886
697 3,389 1
57,787
708 3,238 -
a) After distribution submitted to the Ordinary General Meeting on 21 June 2007. b) After approval of Resolution Four submitted to the joint General Meeting of 22 June 2006 and Resolution Ten on the reduction of capital by cancelling internally held shares.
51
Results 2006
Profit and loss account
(in thousands of euros) Operating revenue
Provision of services Net turnover Other income (1) Total operating revenue (I)
Financial year 2006

3,451 3,451 92 3,543 1,095 451 725 306 251 115 60 3,003 540
Financial year 2005

3,641 3,641 81 3,722 1,184 437 688 288 234 59 2,890 832
Operating expenditure
Other purchases and external charges Tax and similar payments Wages and salaries Welfare benefits Allocations to financial amortizations on fixed assets Allocations to depreciation on fixed assets Other charges Total operating expenditure (II) 1 OPERATING RESULT (I - II)
(2)
Financial income
From shareholdings
(3) (3)
1,688 467 2,155 2,155 2,695
2,501 312 2,813 2,813 3,645
Other interests and similar income Positive exchange differentials Total financial income (III)
Drawdown from provisions and transferred charges
Financial charges
Allocations to financial amortizations and provisions Interests and similar charges
(4)
Negative exchange differentials Total financial charges (IV) 2 - FINANCIAL RESULT (III - IV) 3 - CURRENT RESULT BEFORE TAX (I - II) + (III - IV)
Extraordinary items
Extraordinary items on management operations Extraordinary items on capital operations Drawdown from provisions and transferred charges Total extraordinary items (V) 24 4 31 59 3 2 1,285 1,290 (1,231) (707) 5,757 3,586 243 2 1 246 2 1 1,562 1,565 (1,319) (1,052) 6,781 3,403
Extraordinary charges
Extraordinary charges on management operations Extraordinary charges on capital operations Extraordinary allocations to financial amortizations and provisions Total extraordinary charges (VI) 4 EXTRAORDINARY RESULTS (V - VI) Tax on profits (VII) Total income (I + III + V) Total charges (II + IV + VI + VII)
5 - PROFIT
(1) Including operating income relating to previous financial years (2) Including operating expenditure Including to previous financial years (3) Including income concerning affiliated companies (4) Including interests concerning affiliated companies
2,171
4 111 1,735 -
3,378
(2) (4) 2,534 -
52
Cash flow tables 2006

CASH FLOW
(in thousands of euros) BUSINESS OPERATIONS
Net result Elimination of income and expenditure that do not affect the cash flow or not related to the business: - Financial amortizations - Provisions - Capital gain or loss on sales, net of tax Gross margin of internal financing - Variation of stocks and goods in progress - Variation in clients - Variation in suppliers - Other variations Variation in working capital requirements
2006
2005
2,171
3,378
366 1,254 (1) 3,790 (9) (44) 2,610 2,557
235 1,560 5,173 (2) 168 (4,052) (3,886)
NET CASH FLOW GENERATED BY THE BUSINESS INVESTMENT OPERATIONS

- Acquisitions of intangible and tangible fixed assets - Acquisitions and increases in financial fixed assets Total - Sales of intangible and tangible fixed assets net of tax - Sales and reductions of financial fixed assets Total Net investments over the period Variation in working capital requirements and miscellaneous
6,347
1,287
(111) (551) (662) 2 1,914 1,916 (1,254) 2
(349) (1,263) (1,612) 1 1 2 (1,610) (207)
NET CASH FLOW RELATED TO INVESTMENT OPERATIONS FINANCING OPERATIONS

- Increase/(reduction) of capital - Dividends allocated to the Shareholders of the Company - Other distributions Total Variation in borrowings and financial debts Variation in working capital requirements and miscellaneous
1,256
(1,817)
(1,361) (2,106) (3,467) (35) -
(2,011) (2,011) (18) -
NET CASH FLOW RELATED TO FINANCING OPERATIONS NET VARIATION IN CASH FLOW Liquidity at the opening Liquidity at the close
(3,502) 4,101 12,812 16,913 4,101
(2,029) (2,559) 15,371 12,812 (2,559)
53
54
Appendix to Company accounts at 31 December 2006

This Appendix completes and comments on the balance sheet before distribution for the financial year ending 31 December 2006, the total of which is 57,886,932.93 euros and the Profit and Loss account of the financial year, presented in the form of a list, the total of which is 5,756,580.02 euros and which reveals profits of 2,171,310.10 euros. Notes nos. 1 to 18 below, are an integral part of the annual accounts. Unless stated otherwise, all the amounts are expressed in thousands of euros. The financial year has lasted 12 months, covering the period from 1 January 2006 to 31 December 2006. These annual accounts were drawn up on 13 April 2007 by the Board of Directors. Depreciation of assets When there is an indication that an asset or a group of assets may have lost value, a depreciation test is carried out. An asset or group of assets depreciates if its net book value is greater than its present value. The present value of an asset or group of assets is either its net sale price or the value of the future economic advantages expected from its use, whichever is the greater. Shareholdings Shareholdings are accounted for at their cost of purchase or subscription, minus ancillary costs, or at their transfer value unless revalued by law. This book value is compared with the proportion held in the accounting equity capital of the company concerned. If this proportion is less than the book value, a further analyse is done to estimate the utility value of the shareholding in terms of its profitability and its future prospects. If the utility value thus determined is less than the book value of the shareholding, there is depreciation by the amount of the difference between these two values. Other fixed financial assets Own Shares The 25,937 Own Shares held by Gvelot S.A. have been annulled in accordance with the decision of the Joint General Meeting of 22 June 2006, resolution ten. Other elements of the assets At the close, the net book value of assets other than intangible and tangible fixed assets is compared with their actual value at the same date. If this actual value is less than the book value, depreciation is recorded for the difference. Investment securities These are valued at their cost of purchase or subscription, minus ancillary costs. If the net asset value or probable sale value at the close of the financial year is less than that, depreciation is recorded for the difference. The market value of investment securities at 31 December 2006 consisting of certificates of deposit and money market funds, amounted to 15.9 M. Investment subsidies Investment subsidies are recorded as soon as they are paid. They form part of the results and are entered as extraordinary items. In case of partial subsidies, they are reversed for an amount equal to the amortization expenses multiplied by the ratio subsidies on assets; Legally required provisions Legally required provisions appearing on the balance sheet correspond to dispensatory financial amortizations on intangible and tangible fixed assets. The movements of these provisions are balanced by extraordinary charges and items in the Profit and Loss account.
Note no. 1: Accounting principles and rules for drawing up the company accounts
The annual accounts of Gvelot S.A. have been drawn up in accordance with the French regulations.
a) Principal methods used

Intangible fixed assets Intangible fixed assets consist of software which, for accounting purposes, is subject to straight-line depreciation over 3 to 15 years. Tangible assets The tangible assets are valued at their acquisition cost (purchase price plus costs of acquisition minus costs of borrowing) with the exception of fixed assets acquired before 31 December 1976 which have been revalued as required by law. Since 1 January 2005, assets have been calculated differently. For the first time the Assets Regulations provisions have had to be applied, which relate to the financial amortization and depreciation of assets (C.R.C. Rule no. 2002-10), and the definition and valuation of assets and how they are accounted for (C.R.C. Rule no. 2004-06). Therefore Gvelot S.A., has made an exception to the general principle of retrospective application. As required by the provisions on the first application of new rules, it has adopted a prospective approach known as the method of reallocating net book values. The financial amortizations for depreciation are calculated as a straight-line graph according to the expected useful life, based on the acquisition cost minus the estimated residual value at the end of the useful life. The useful lives applied are: - office buildings: linear over 40 years - industrial buildings: linear over 50 years - other tangible assets: linear over 5 to 20 years. We itemise below the fixed assets and the methods that have been applied: - Buildings - Structure: linear over 40 and 50 years - alterations and fittings: linear over 20 to 30 years - Restoration: linear over 10 years - Water-tightness: linear over 20 years
55
Provisions Provisions correspond to risks and charges identified specifically in accordance with the General Accounting Plan.
d) Individual right to training (DIF)

In the context of Advice no. 2004-F of 13 October 2004 from the Emergency Committee of the C.N.C, relating to accounting for the individual right to training, Gvelot had no recorded debts at 31 December 2006. The number of cumulated hours of training corresponding to rights acquired under this head is 345 hours. Since this number of hours did not give rise to any application, no provision was made at the end of the 2006 financial year.
b) Tax integration
Since 1 January 1995, Gvelot S.A. has opted for the Group Tax Scheme. Because of this, it only pays the tax due on the results of the group as a whole. Under the tax integration agreements signed with the companies within the scope of the integration, each company accounts for tax expenditure as if there were no integration. The Group is formed of the Parent Company, Gvelot S.A. the Head of the Group and the following French subsidiaries: Gvelot Extrusion, PCM, Gurtner and Ets Lopold Clr. The product net of tax of 707 K includes: - the tax on Gvelot S.A.s own results - 305 K - tax proceeds relating to the integrated subsidiaries 1,015 K - additional tax assessments for the years 2003 and 2004 following tax inspection of Gvelot Extrusion - 3 K In addition, an additional intra-Group provision of 916 K was recorded at 31 December 2006 and will probably be returned as tax savings to the subsidiaries under this scheme.
e) Additional information
- Under the terms of the decisions of the Joint General Meeting of 22 June 2006, the share capital was: - reduced by 804,047 euros by cancelling the 25,937 Own Shares held by Gvelot S.A., at a face value of 31 euros; - increased by 3,830,172 euros by incorporation of reserves so as to raise the face value of the 957,543 remaining shares from 31 euros to 35 euros. Share capital is now set at 33,514,005 euros divided into 957,543 shares of 35 euros each, fully paid up and all of the same category. - Concerning the costs of reinstating the industrial site in Meudon, a provision has been made to cover the obligations incumbent on Gvelot S.A. under Law no. 2003-699 of 31 July 2003. In early 2007, the Prfecture of the department of Hauts de Seine informed Gvelot S.A. that no further rehabilitation would be required of it as the last operator of the site. In these conditions, the provision of 262 K appearing as a liability of the Company since 31 December 2002 remains unchanged. - in February 2007 Gvelot S.A. sold all the property in Messei. Industrial activity on this site had ceased in July 2005.
c) Pensions
When they retire, members of staff receive payments under agreements or contracts. The corresponding commitments are largely covered by insurance. The residual part not covered is not accounted for and therefore appears as an off-balance sheet commitment.
56
COMPANY ACCOUNTS - 2006 APPENDIX
Note no. 2 : Fixed assets and financial amortizations

Fixed assets Headings and items Gross value at the start of the 2006 financial year Increases Financial amortizations and depreciation Gross value Cumulated Cumulated Reductions at the end at the start Increases Reductions at the end of the 2006 of the 2006 of the 2006 financial year financial year financial year
Intangible fixed assets

Concessions, patents, licences, brands, processes, fees and similar values 32 15 7 40 28 1 7 22
Total Tangible assets

Land Buildings Other tangible assets Tangible assets in course of manufacture Advances and deposits
32
2,559 16,612 86 112 2
15
164 44 96 -
7
14 206 2
40
2,559 16,776 116 2 -
28
210 10,283 72 -
1
31 326 8 -
7
12 -
22
241 10,609 68 -
Total Financial fixed assets

Shareholdings Credits attached to shareholdings Loans Other financial fixed assets
19,371
30,271 1,523 125 1,370
304
500 51 -
222
500 50 1,364
19,453
30,771 1,074 75 6
10,565
-
365
-
12
-
10,918
-
Total
33,289
551
1,914
31,926
Note no. 3 : Provisions

Headings and items Amount at the start of the 2006 financial year Increases and contributions Reductions Amounts Amounts not used during used during the 2006 the 2006 financial year financial year 24 Amount at the end of the 2006 financial year 798
Provisions required by law:

Dispensatory financial amortizations 453 369
Total Provisions for risks:

Provisions for disputes Provisions for exchange losses
453
-
369
-
24
-
798
-
Total Provisions for charges:

Provision for tax Provision for restoring Meudon industrial site Intra-Group provision for back tax that seems likely because of tax integration
7 262 1,112
916
7 -
262 2,028
Total Depreciation:
Depreciation on fixed assets Depreciation on investment securities Other depreciation
1,381
-
916
115 -
7
-
2,290
115 -
Total
115
115
57
Note no. 4 : Statement of repayment of credits and debts

Headings and items Gross amount at 12.31.2006 Payable in 1 year or less Payable in more than 1 year
Credits Credits on fixed assets

Credits relating to shareholdings Loans(1) Other 1,074 75 6 105 355 27 50 104 333 16 1,074 25 6 1 22 11
Credits on current assets

Client credits and related accounts (6) Other Subscribed capital called up, not paid Charges recorded in advance
Total Debts
Other debenture loans(2) Borrowings and debts with credit institutions (2) (3) Miscellaneous borrowings and financial debts Debts to suppliers and related accounts(6) Tax and social security owed Debts on fixed assets and related accounts(6) Other debts(4) Income recorded in advance
(2) (5)
1,642
1 683 357 481 59 399 -
503
1 345 480 59 398 -
1,139
683 12 1 1 -
Total
(1) Loans given in the course of the financial year Loans repaid in the course of the financial year 50
1,980
1,283
697
50 17 51
(2) Borrowings and financial debts taken out in the course of the financial year 17 Borrowings repaid and transferred in the course of the financial year 51 (3) including: - of two years maximum at the start 1 - of more than two years at the start (4) Including owed to partners 394 (5) Debts repayable at more than 5 years 683 (6) Including commercial papers
1 394 683 -
58
Note no. 5 : Items concerning affiliated companies and shareholdings

Items affiliated companies (2)
Advances and deposits on fixed assets Shareholdings Credits related to shareholdings Loans Advances and deposits paid on orders (current assets) Client credits and related accounts Other credits Subscribed capital called up, not paid Other debenture loans Borrowings and debts with credit institutions Miscellaneous borrowings and financial debts Advances and deposits received on orders in progress Supplier debts and related accounts Debts on fixed assets and related accounts Other debts Income from shares Other financial income Financial charges (1) In net amounts. (2) Affiliated companies are the businesses consolidated by the full consolidation method. 30,771 1,074 104 105 668 18 394 1,688 47 -
Amount at 12.31.2006 concerning (1) companies with which the Company has shareholding links
-
Note no. 6 : Revaluation

Postes Variations in the revaluation reserve at 12.31.2006 Amount at Reductions Other Amount at the start of due to variations the end of the 2006 sales the 2006 financial year financial year
-
For the record: variance incorporated into capital

2,222 (2,222) (431) -
Land Shares Revaluation reserve (1976) Special revaluation reserve (1959) Free revaluation differential Other differentials from revaluation of capped fixed assets
Total
Note no. 7 : Receivables

Amount of receivables included in the following items of the balance sheet
Credits related to shareholdings Client credits and related accounts Other credits Investment securities
Amount at 12.31.2006
13 10 2 4
Total
29
59
Note no. 8 : Charges payable

Amount of charges payable included in the following items of the balance sheet
Borrowings and debts with credit institutions Supplier debts and related accounts Owed to tax and social security Debts on fixed assets and related accounts Other debts
1 211 85 53 4
Total
354
Note no. 9 : Charges and income recorded in advance

Amount at 12.31.2006 Charges
Operating charges/income Financial charges/income Extraordinary charges/ items 27 -
Income
-
Total
27
Note no. 10 : Composition of the share capital

Number
Shares composing the share capital at the start of the 2006 financial year Shares issued during the financial year Shares redeemed during the financial year Shares cancelled during the financial year(*) Modification of the nominal value by incorporating reserves(*) Shares composing the share capital at the end of the 2006 financial year 983,480 (25,937) 957,543
Nominal value
31.00 4.00 35.00
I.e. a share capital of 33,514,005 . (*) See Note no. 1 e)
Note no. 11 : Table of variations in equity capital

Equity capital on the final balance sheet of the 2005 financial year before profits Allocation of the 2005 result to the net position by the Joint General Meeting of 22 June 2006 Equity capital at the start of the 2006 financial year Variations over the financial year: - Variations in premiums, reserves, carried forward - Variation in legally required provisions and equipment subsidies - Cancellation of Own Shares Equity capital on the final balance sheet of the 2006 financial year before profits 57 346 (1,361) 51,445 51,189 1,214 52,403 (958)
60
Note no. 12 : Breakdown of the net turnover

a) Division by business sector Amount 2006
Provision of services 3,451
Amount 2005
3,641
Total b) b) Division by geographical markets
3,451
3,641
Amount 2006
France Germany 3,438 13
Amount 2005
3,626 15
Total
3,451
3,641
Note no. 13 : Extraordinary result

The principal components of the extraordinary result are the following: Headings
Intra-Group provision for probable return of tax saved in the context of tax integration Dispensatory financial amortizations Miscellaneous net
Amount 2006
(916) (345) 30
Total
(1,231)
Note no. 14 : Tax on profits

The breakdown of the tax on profits between the current result and the extraordinary result is the following: Rubriques Result before tax at 12.31.2006
2,695 (1,231) -
Amount of the tax on the 2006 profits

412 (107) (1,015) 3
Net result at 12.31.2006

2,283 (1,124) 1,015 (3)
Current result Extraordinary result Impact of tax integration Impact of tax inspection
Net final account
1,464
(707)
2,171
The impact on the financial year taxes of the dispensatory tax assessments, due to the dispensatory financial amortizations is 115 K. Rise and fall of the future tax debt: The future tax debt will fall by 40 K because of provisions not deductible in the year they were entered on the books; it will rise by 266 K because of the write-back of dispensatory financial amortizations.
61
Note no. 15 : Off balance sheet commitments

Commitments given
Guarantees and securities issued in favour of subsidiaries
200
Other commitments given:

Debts for which the company has provided security - for its own borrowings - for borrowings contracted by subsidiaries Hire-purchase commitments including tax Pension commitments 29
Total Commitments received

Guarantees and securities received Miscellaneous
229 Amount at 12.31.2006

-
Total Hire-purchase commitments: Headings Historical cost ex tax Financial amortizations

Cumulated over previous financial years Allocations in the financial year
Total transport equipment 25

13 5
Furniture and computer equipment -
Total at 12.31.2006 25
13 5
Total Instalments paid ex tax

Cumulated over previous financial years Financial year
18
22 5
18
22 5
Total Instalments still to pay ex tax

In a year at most In between one and five years In more than five years
27
-
27
-
Total Residual values ex tax

In a year at most In between one and five years
Total
Net amount committed in the financial year
Pension commitments (I.F.C.) The commitment to severance pay and pensions is calculated for each of the categories: employees, management, according to length of service and average salary, including welfare benefits, using the "projected unit credit" method in accordance with Recommendation 03-R.1 of 1 April 2003 of the C.N.C.. The figure arrived at, 29 K, is equal to the amount of the IFC social liability of 101 K, reduced by the value of the funds at 31 December 2006 (72 K) held by the Fdration Continentale (GENERALI group) under a contract that allows part of these commitments to be externalised.
Note no. 16 : Directors pay

The total pay to Directors and Management came to 425,602 for the 2006 financial year.
Note no. 17 : Average staff 2006

Payroll
Management Junior management, technicians, white collar 5 4
Staff available to the company

-
Total
62
Subsidiaries and shareholdings at 31 December 2006
Companies
Share of the capital held in % (1) by the Company and not yet repaid Company financial year by the financial year financial year during the security given complete last complete Company securities held granted collateral and tax of the last loss of the issued by the Book values of Loans and advances Amount of Turnover before Profit or Dividends
Capital
Equity capital
other than
the capital before
allocation
of results
Gross
Net
A - SUBSIDIARIES
(at least 50% of the capital
held by the Company) 99.99 20,397 20,397 1,070 68,806 (2,808) -
GEVELOT EXTRUSION S.A.
15,120
13,373
6, boulevard Bineau
92532 Levallois-Perret Cedex 99.94 6,509 6,509 200 60,137 6,504 1,277
PCM S.A.
10,155
15,908
17, rue Ernest-Laval - B.P. 35
92173 Vanves Cedex 99.95 1,225 1,225 13,691 111 411
GURTNER S.A.
3,090
4,586
40, rue de la Libration - B.P. 129
25302 Pontarlier Cedex
B - SHAREHOLDINGS
(10 to 50% of the capital
Note no. 18 : Subsidiaries and shareholdings at 31 December 2006
held by the Company)
Foreign shareholdings
(in thousands of euros) 20.00 2,640 2,640 4 47,062 787 -
63
22.72 -
DOLD KALTFLIESSPRESSTEILE GmbH
13,000
(461)
Langenbacherstrasse 17/19
D-78147 Vhrenbach (Germany) NC NC -
TECHNIQUES DE FIXATION
110
NC
Belgium (in liquidation)
(1) Including simple loans.
64
Result and equity capital

Result of the financial year and table of variations in equity capital
Result of the financial year
Total in thousands of euros and in euros per share
Number of shares at 31 December
Rappel 2005
983,480
2006
957,543
Accounting income
3,378 3.43 514 0.52 2,107 2.20
2,171 2.27 403 0.42 2,107 2.20
Variation in equity capital excluding structural transactions Suggested dividend
K K
Table of variations in equity capital

(in thousands of euros) Equity capital on the final balance sheet for the financial year 2005 before profits
Allocation of the 2005 result to the net situation by the Joint General Meeting of 22 June 2006
2006 51,189
1,214
Equity capital at the start of the 2006 financial year Variations over the financial year:
- Variation in premiums, reserves and carried forward - Variation in legally required provisions and equipment subsidies - Cancellation of Own Shares 57 346 (1,361)
52,403 (958)
Equity capital on the final balance sheet of the 2006 financial year before profits
Allocation of the 2006 result to the net situation recommended to the Ordinary General Meeting of 21 June 2007
51,445
65
Equity capital after proposed allocation
51,510
65
Securities
Shareholding securities at 31 December 2006
Amount Companies Nominal Capital divided into
1,260,000 75,222 25,750 33,000 4,400 13,000,000
Percentage of shareholding
99.99 99.85 99.85 0.01 22.72 20.00
Stock-taking value in euros

20,397,233.92 6,509,266,75 1,225,348.01 16.00 2,639,599.76
French Companies 1,259,992 shares 75,108 shares 25,707 shares 1 share Shareholdings abroad 1,000 shares 7 units Techniques de Fixation (Company in liquidation) (Belgium) Dold Kaltfliesspressteile GmbH capital 25 Gvelot Extrusion PCM Gurtner Etablissements Lopold Clr 12 135 120 15.27
Total
30,771,464.44
Investment securities and similar credits at 31 December 2006

296 shares 14 units 136 units 40 units 25 units 1 certificate of deposit 1 certificate of deposit 150 units 80 units 1 BMTN SICAV SogeMoneplus (S.G.) FCP B.N.P. Paribas Euribor 3 Mois (B.N.P. Paribas) FCP Barep Court Terme (S.G.) FCP CL Dynam Garanti Juin (L.C.L.) FCP Dexia Money 6M (Dexia I.S.B.) (L.C.L.) (B.N.P. Paribas) FCP Dexia Money + Risk Arbitrage (Dexia I.S.B.) FCP Groupama Entreprises Calyon "Call Up & Out Rebate" (L.C.L.) 6,270,709.68 2,842,272.86 2,220,569.92 1,432,434.40 1,004,414.00 750,000.00 750,000.00 345,715.50 160,838.40 150,000.00
Total
15,926,954.76
66
Financial results
Financial results of the Company over the last five financial years
(Articles 133, 135 and 148 of the Decree on Commercial Companies)
(in euros) NATURE OF INDICATIONS 2006 2005 2004 2003 2002
I - CAPITAL AT END OF FINANCIAL YEAR

a) Share capital b) Number of ordinary shares in existence c) Number of preference shares (without voting right) in existence d) Maximum number of future shares to be created d.1 by conversion of obligations d.2 by exercise of subscription rights
(*)
33,514,005.00 957,543
30,487,880.00 983,480
30,487,880.00 983,480
30,487,880.00 983,480
30,487,880.00 983,480
II - OPERATIONS AND RESULT OF THE FINANCIAL YEAR

a) Turnover before tax b) Result before tax, staff shareholdings, financial amortizations and provisions c) Tax on profits d) Staff shareholdings due for the financial year e) Result after tax, staff shareholdings, financial amortizations and provisions f) Result distributed 2,171,310.10 2,106,594.60 3,378,393.57 2,106,594.60 2,250,858.25 2,010,840.30 942,700.65 1,915,086.00 2,378,141.46 1,915,086.00 3,084,009.93 4,121,180.54 3,328,205.33 2,057,684.00 3,251,506.29 581,805.00 3,276,834.30 (163,167.62) 3,451,132.93 3,641,600.73 3,693,779.73 3,459,909.30 3,605,501.39
(706,918.00) (1,052,315.00) -
III - RESULT PER SHARE

a) Result after tax, staff shareholding but before financial amortizations and provisions b) Result after tax, staff shareholding, financial amortizations and provisions c) Dividend allocated to each share 2.27 2.20 3.44 2.20 2.29 2.10 0.96 2.00 2.42 2.00 3.96 5.26 1.29 2.71 3.50
IV - STAFF
a) Average on payroll during the financial year b) Amount of the wage bill c) Amount paid out in welfare benefits in the financial year (social security, social welfare, etc.) 306,285.94 288,091.48 263,674.26 240,956.37 232,416.03 9 724,402.39 7 688,365.60 7 676,305.96 7 587,134.80 7 585,580.30
(*) In accordance with the decisions of the Joint General Meeting of 22 June 2006, capital reduced by 804,047 by cancelling 25,937 Own Shares held by Gvelot S.A. and capital increased by 3,830,172 by incorporation of reserves to raise the face value of the 957,543 remaining shares from 31 to 35 . On 31 December 2006 the share capital consisted therefore of 957,543 shares with a face value of 35 each, totalling 33,514,005 .
67
General Auditors Report on the Annual Accounts

2006 financial year (Period from 1 January to 31 December 2006)
In carrying out the remit entrusted to us by your General Meeting, we present our Report relating to the financial year ending on 31 December 2006, on: - our inspection of the Gvelot annual accounts, attached to the present report, - the justification of our assessments, - the specific checks and information required by Law. The annual accounts were drawn up by the Board of Directors. It is our duty, on the basis of our audit, to express an opinion on these accounts.
1- Opinion on the annual accounts

We have carried out our audit according to the professional standards applicable in France. These standards require us to use methods that will give reasonable assurance that the annual accounts contain no significant anomalies. An audit consists of examining, by sampling, the proof behind the data contained in these accounts. It also consists of assessing the accounting principles followed and the significant estimates adopted in drawing up the accounts and to assess their presentation as a whole. We consider that our checks provide a reasonable basis for the opinion expressed below. We certify that the Annual accounts are accurate and honest, in the view of the French accounting rules and principles, and give a true picture of the results of operations in the past financial year and of the assets and the financial situation of the Company at the end of this financial year.
2- Justification of our assessments

Under the provisions of Article L. 823-9 of the Commercial Code relating to the justification of our assessments, we draw the following items to your attention: note no. 1 in the appendix explains the accounting rules and methods applied to shareholdings, particularly as regards monitoring their value. In the context of our assessment of the accounting estimates, we are confident of the relevance of the methods described and their correct application. The assessments that we arrived at are part of our procedure in auditing the Annual accounts, taken as a whole, and have therefore contributed to us forming the opinion expressed in the first part of this Report.
3- Specific checks and information

In accordance with the professional standards applicable in France, we have also made the specific checks required in Law. We have no observation to make: - on the sincerity and the concordance with the annual accounts of the information given in the Board of Directors management report and in the documents sent to shareholders on the financial situation and the annual accounts; - on the sincerity of the information given in the management report on the payments and benefits given to the Directors concerned and the commitments made in their favour when they took up, ended or changed their functions or afterwards. As required by Law, we are confident that the miscellaneous information relating to the identity of holders of capital has been given you in the Management report.
Paris, 25 May 2007 The Auditors MAZARS & GUERARD Robert AMOYAL CREA Bernard ROUSSEL
68
Special Auditors Report on Legally Required Agreements and Commitments

2006 financial year (Period from 1 January to 31 December 2006)
As the auditors to your company, we present our report on the legally required agreements of which we have been informed. It is not within our remit to search for the existence of agreements or commitments but to inform you, on the basis of the information we have been given, of the essential features and methods of those we have been told of, without any comment on their usefulness or their soundness. Under the terms of article R.225-31 of the Commercial Code, it is up to you to assess the value to the company of signing these agreements and commitments, and whether you should approve them. Agreements and commitments authorised in the course of the financial year We inform you that we have been given no notice of any agreement or commitment subject to articles L. 225-38 and L. 22542-1 of the Commercial Code. Agreements and commitments approved in the course of previous financial years which continue in force during this financial year However, under the provisions of article R.225-30 of the Commercial Code, we have been informed that the following agreement, approved in an earlier financial year, continued in force during the last financial year:
With the Limited company PCM

GEVELOT S.A. had provided collateral to the value of 199,708.21 euros for the commitments contracted by the company PCM, in application of a building lease that it signed with the company Batiroc Pays de la Loire, for land in Champtoc-sur-Loire. No commission was required for this letter of guarantee. We have carried out our work according to the professional standards that apply in France; these standards require us to use care to check that the information we have been given matches the original documents from which it is derived.
Paris, 25 May 2007
The Auditors MAZARS & GUERARD Robert AMOYAL CREA Bernard ROUSSEL
69
70
Resolutions
submitted to the Ordinary General Meeting of 21 June 2007
Resolution One
That the General Meeting, having heard the management report from the Board of Directors and the general auditors report, approve these reports in their entirety, and approve the Companys annual accounts 2006 which reveal a net profit of 2,171,310.10 and in consequence discharge the board members for their management of the companys affairs in the course of that financial year.
Resolution Five
That the General Meeting discharge the Board Members for the execution of their mandate for the 2006 financial year.
Resolution Six
That full powers be given to the bearer of originals, copies or extracts of the present minutes to make any publications and deposits required by Law and generally carry out all legal formalities.
Resolution Two
That the General Meeting, having heard the reports of the Board of Directors and the auditors, approve the consolidated annual accounts as presented which reveal for the 2006 financial year a net profit of the Groups share of the consolidated whole, of 4.4 M.
Resolution Three
That the General Meeting note the Special Auditors Report on transactions covered by articles L.225-38, L.225-42-1 and R.225-30 of the Commercial Code and approve these transactions.
Resolution Four
That the General Meeting decide of to allocate the profit for the financial year of 2,171,310.10 increased by 1,764,526.04 making a distributable profit of as follows: Allocation to the legal reserve (5% of the 2006 result) Payment of a dividend of (2.20 x 957,543 shares) Remainder carried forward 108,565.50 2,106,594.60 3,935,836.14
2,215,160.10 1,720,676.04
The dividend of 2.20 per share, eligible to tax relief of 40% for individuals who enjoy a capped Tax Credit, will be distributed from 2 July 2007 onwards. That the General Meeting recall that, in accordance with the legal provisions in force, the following dividends have been distributed in the course of the last three financial years:
Financial Year Dividend Net tax credit Tax credit Number of shares Gross
Paid-up Total
2003 2004 2005
2.00 2.10 2.20
1.00 -
3.00 -
957,543 957,543 957,543
983,480 983,480 983,480
for the record
71
Notes
72
Limited Liability Company (Socit Anonyme) with capital of 33,514,005 euros Registered office, management and supervision : 6, boulevard Bineau 92532 Levallois-Perret Cedex trade register. : Nanterre B 562 088 542 SIRET number 562 088 542 00369 www.gevelot-sa.fr
Cration : www.dep.fr

Algev Ar 2006

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Algev Ar 2006

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Financial and Legal Aspects

Financial Year 2006

O rdinary General Meeting held on 21 June 2007

Companies in the Gevelot Group

- Dold Kaltfliesspressteile GmbH

PUMPS/FLUID TECHNOLOGY SECTOR

- PCM Group UK Ltd

- PCM Deutschland GmbH

- PCM Flow Technology Inc. - PCM USA Inc.

Manufacture and marketing of industrial pumps.

MECHANICAL ENGINEERING/MOTOR AND GAS EQUIPMENT SECTOR

- Ets Lopold Clr

Gvelot Group Organisation chart

Mechanical Engineering/Engine and gas equipment

PCM Group UK Ltd

Ets Lopold CLER

PCM Deutschland GmbH (Germany)

ENSIVAL MORET ASIA

PCM Flow Technology

MORET PUMPS SHANGHAI (China)

PCM USA Inc

PCM Trading (Shanghai) Co. Ltd.

MOINEAU TEXAS Corp.

Gvelot S.A. Management

Consolidated turnover by business sector

33.3% 58.6% 59.8%

Current operational result Operating income Share of the Group

* The percentages correspond to the current operational result on equity capital

Management report of the Board of Directors

Businesses of the subsidiaries

Businesses of the Parent Company

Dold Kaltfliesspressteile GmbH (Germany)

PCM Group UK Ltd. (Great Britain)

Pumps and fluid technology sector

PCM Deutschland GmbH (Germany)

PCM Flow Technology (United States)

PCM USA Inc. (United States)

2006 ANNUAL REPORT - MANAGEMENT REPORT

PCM Trading (Shanghai) Co Ltd (China)

Kudu Industries Inc. (Canada)

Ensival Moret Asia Pte Ltd (Singapore)

Mechanical Engineering Sector, engine and gas equipment

Business of the Gvelot Group

Group research and development

Consolidated financial structure

Prospects for the Group for 2007

2006 ANNUAL REPORT - MANAGEMENT REPORT

Extrusion Sector, Machining

Information systems and new technologies

Pumps Sector, Fluid technology

Mechanical Engineering Sector, Engine and gas equipment

Operations of Company Bodies

Delegation of powers being approved

Executives: pay and duties

2006 ANNUAL REPORT - MANAGEMENT REPORT

Social and environmental consequences of the business

2003 2004 2005

2.00 2.10 2.20

957,543 957,543 957,543

983,480 983,480 983,480

() for the record

Allocation of the result

- Total to be distributed - Legal reserve - Dividends 108,565.50 2,106,594.60 2,215,160.10