APPENDIX I – PROGRESS OF BUSINESS

1. Explanation of advance results.

The advance results that we enclose shows a considerable decrease in sales during the third quarter, speeding up the drop shown in the last two months of the second quarter.
The immediate consequence of this drop in sales was a sharp fall in profits for the third quarter. It should be pointed out that during the third quarter positive results were recorded as a result of previous financial years amounting to 3,482 thousand euros.(*)

This situation, which we consider to be associated with the economic climate, has been due to:

• The dissuasive effect of the declarations made by the public authorities on the banning of vending machines planned in the National Anti-Smoking Plan.
• The international economic recession with its particular effects on our vending and catering markets.
• The sluggishness of our markets with regard to products that were partly or totally replaced in order to adapt them to the euro in the previous financial year and during the first quarter of this financial year.

The company has reacted to these difficult circumstances by taking the first measures that it considered to be necessary and appropriate during August and September. These measures involved both reducing costs and increasing income.
In terms of reducing costs there were the adjustments to the direct and indirect work force, not renewing temporary contracts and optimising our own production while reducing external production and subcontracting.
As far as income is concerned the R&D in progress is being stepped up and new products are being launched onto the market.
These measures have been taken without risking the Company’s strategy of diversification and growth.

2. Forecast for end of year.

Despite the measures adopted, the effects of which will be incorporated into the budgets for 2003 onwards, it is not foreseen that the current negative trend will alter before 31 December 2002, therefore sales and results for the financial year will be affected by the causes mentioned above.
In accordance with the Company’s last estimates, profits before tax on 31 December will be around 1.5 million euros, which represents to some extent a curb on the drop in sales and results compared with previous months. This can be explained by the particular impact of the crisis during recent months and by the necessary adjustments that will have to be made and incorporated into accounting as a result of the measures adopted.

3. Forecasts for the next financial year.

The Company is currently drawing up the budgets for the next financial year. These are being approached on the basis of particularly cautious theories regarding expectations for coming out of recession.

These theories are:

• Our negative growth will bottom out during the fourth quarter of this year.
• During 2003 the measures adopted will take effect and it is foreseeable that the way will open up for recovery and growth from the second half of the year.
• During the last quarter of this year the demands of the National Anti-Smoking Plan will have been clarified regarding vending machines.
• The market for replacement of machines will gradually recover from the euro effect.

The Company is aware that it has solid foundations and sufficient workforce to deal with the effects of this crisis, taking into account that its position in the market has not only not changed negatively, but that it is improving compared to other European competitors that are weaker in this crisis situation.

(*) This 3,482 is made up of:

a) Lower taxes in 2001 by 3,465 thousand euros, which is the difference between the tax estimate in the annual accounts for 2001 and the final payment made in July 2002, due to the application of all the possible tax deductions.

b) Other positive results from previous years of 17 thousand euros.

In the first half negative results were recorded from previous years of 782. Therefore the positive results from previous years accumulated in September of this year are 2,700 thousand euros.