The acquisition of the Italian company COGES in June 2005 is generating significant commercial and product synergies

• The Company anticipates revitalization in sales after the new Tobacco Law comes into force.
• All business segments show increases over the previous year, with the exception of tobacco vending machines and payment systems, in spite of the fact that the total sales evolution shows a drop of 5.29%.

March 1, 2006.- The Azkoyen Group closed the 2005 fiscal year with a 34.2% drop in its net benefits, while the first two months of 2006 have confirmed the trend towards positive change, as was hinted at during the fourth quarter of last year.

Last fiscal year’s acquisition of COGES, European leader in the development, production and distribution of "cashless" payment systems (electronic cards and keys) for vending machines, is generating significant commercial and product synergies. The operation for purchasing COGES represented a valuation of the company at 47.6 million euros debt-free, under conditions that were quite favorable for Azkoyen: a cash payment of 22,615,860 euros, 700,000 shares from their bought-back stock and an instalment payment of 20,000,000 euros. COGES will continue to consolidate its figures in the Azkoyen group throughout the entire 2006 fiscal year.

Business segments including Vending machines, Hotel and Restaurant machines, Coffee and Consumable items and Machinery and installations have experienced increases in their respective areas. Among these, Vending machines (17.88%) is especially noteworthy, due to the uncertainty generated by the delay in the passing of the Tobacco Law.  However, declines in the business figures for Tobacco machines (-32.84%) and for Payment Systems (-13.03%) have prevented the Azkoyen Group from obtaining the sales and benefits they had expected for 2005.

For Miguel Iraburu, Azkoyen president, “The sales of tobacco vending machines, which have declined 32.8% in 2005, have been affected by legislative pressure on tobacco consumption in the European markets and the long process involved in passing the Tobacco Law in Spain. However, once the new law was published, an important revitalization in sales occurred during the first two months of 2006.”

This revitalization in sales was confirmed by the data available for the provisional close of January and February 2006. If the tendency continues throughout the year, this would allow the company to meet and improve upon the objectives established in the Strategic Plan for 2005-2007.

In 2005, Azkoyen increased their capital charged to unrestricted reserves in the amount of 512,000 euros by issuing 853,500 new shares of common stock with a face value of 0.60 euros each.