Annual Report • Apr 15, 2011
Annual Report
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Founded in 1986 in Louvain-la-Neuve, Belgium, IBA develops and markets advanced technologies, pharmaceutical products and customized solutions in the healthcare field, with emphasis on the diagnosis and treatment of cancer.
Leveraging its scientific expertise, IBA is also active in the sterilization and ionization market. IBA is quoted on the pan-European EURONEXT exchange and included in the Bel Mid index (IBA: Reuters IBAB.BR and Bloomberg IBAB.BB).
Sales achieve a growth of 7.9% and reach EUR 387.6 million. Recurring operating income reaches EUR 13.0 million, growing strongly from 2009.
The financial year closes with a net income of EUR 6.6 million.
| 2006 (EUR '000) |
2007 (EUR '000) |
2008 (EUR '000) |
2009 (EUR '000) |
2010 (EUR '000) |
CAGR (%) |
|
|---|---|---|---|---|---|---|
| Sales and services | 170 257 | 213 849 | 332 607 | 359 161 | 387 591 | 22.8% |
| Gross margin | 53 345 | 69 845 | 112 335 | 131 311 | 144 460 | 28.3% |
| REBITDA(1) | 17 963 | 18 269 | 26 143 | 25 433 | 34 046 | 17.3% |
| REBIT(2) | 9 769 | 11 788 | 10 751 | 7 306 | 12 957 | 7.3% |
| REBIT/Sales and services | 5.7% | 5.5% | 3.2% | 2.0% | 3.3% | |
| Net profit | 29 989 | 13 846 | 5 329 | -12 293 | 6 643 | |
| Capital expenditure | 13 585 | 23 772 | 33 701 | 31 328 | 38 249 | 29.5% |
| Research and development expenses | 10 028 | 17 167 | 27 001 | 28 982 | 27 774 | 29.0% |
| Equity | 136 329 | 141 481 | 152 366 | 144 142 | 152 402 | 2.8% |
| Net cash position | 43 996 | 32 028 | 17 806 | -17 061 | -26 956 | |
| Current liabilities | 78 767 | 118 658 | 200 914 | 177 543 | 203 862 | 26.8% |
| Total assets | 266 868 | 324 438 | 509 521 | 479 643 | 528 207 | 18.6% |
| Return on equity | 22.0% | 9.8% | 3.5% | -8.5% | 4.4% | |
| Return on capital employed (ROCE) | 5.2% | 5.7% | 3.5% | 2.4% | 4.0% | |
| Share price at December 31 (Euro) | 18.36 | 19.00 | 7.75 | 8.45 | 8,28 | -18.1% |
| Number of shares | 25 465 066 | 25 800 252 | 26 563 097 | 26 719 155 | 26 992 015 | 1.5% |
| Net earnings per share (Euro per share) | 1.18 | 0.54 | 0.20 | -0.46 | 0.25 | |
| Price/Earnings | 15.59 | 35.40 | 38.63 | -18.37 | 33.64 | |
| Market capitalization | 467 539 | 490 205 | 205 864 | 225 777 | 223 494 | -16.9% |
| Book value per share (Euro per share) | 5.35 | 5.48 | 5.74 | 5.39 | 5.65 | 1.3% |
| Dividend per share | 0.00 | 0.17 | 0.08 | 0.00 | 0.15 | |
| Enterprise value | 423 543 | 458 177 | 188 058 | 242 838 | 250 450 | -49.8% |
| EV/REBITDA | 23.6 | 25.1 | 7.2 | 9.5 | 7.4 | |
| Employees at December 31 | 1 076 | 1 360 | 2 067 | 1 988 | 2 057 | 17.6% |
| 2006 (EUR '000) |
2007 (EUR '000) |
2008 (EUR '000) |
2009 (EUR '000) |
2010 (EUR '000) |
CAGR (%) |
|
|---|---|---|---|---|---|---|
| SALES | ||||||
| Pharmaceuticals | 66 087 | 78 265 | 149 971 | 203 587 | 217 603 | 34.7% |
| Proton therapy | 32 539 | 59 343 | 86 191 | 70 689 | 82 884 | 26.3% |
| Dosimetry | 31 570 | 35 240 | 37 557 | 39 815 | 48 018 | 11.1% |
| Other accelerators | 40 061 | 41 001 | 58 888 | 45 070 | 39 086 | -0.6% |
| RECURRING OPERATIONAL PROFIT/(LOSS) | ||||||
| Pharmaceuticals | 247 | 3 205 | 2 918 | 1 135 | -2 569 | |
| Equipment | 9 522 | 8 583 | 7 833 | 6 171 | 15 526 | 13.0% |
(1) REBITDA: Recurring earnings before interest, taxes, depreciation, and amortization.
(2) REBIT: Recurring earnings before interest and taxes.
Pierre Mottet Chief Executive Officer (right) Jean Stéphenne Chairman of the Board of Directors (left)
Last year will be remembered at IBA as the year that beat all records for equipment orders. Well equipped to resist the vagaries of the market thanks to its appropriate R&D investments, the Company has been able to manage the crisis and overcome its challenges. 2010 can be seen as a year of transition with particularly ambitious objectives in terms of new competencies and increased profitability for traditional competencies. Thank you to all those who have helped carry IBA to this level of performance.
«We can distinguish two major trends. Firstly, a record year for orders in the Equipment sector, essentially in proton therapy, which experienced a growing success in 2010. Secondly, we should note an important transition phase taking place in the Pharmaceutical field: we are now developing new products increasingly linked to our biotechnology research, while until now, our production was focused mostly on generics.
Therefore, on the one hand, we have confirmation of the progress that IBA has achieved in proton therapy, and on the other hand, a change of the Company profile towards patented products with higher added value. This naturally implies longer investment cycles, but also much more attractive prospects in the long term.»
«Yes. But we should put this achievement into context: there is certainly a clear progression in comparison with 2009 but we had recorded a loss due to an exceptional event. If we exclude this external element, 2010 was a rather good year. The 2010 turnover is the result of our order book from the two previous years. I am therefore delighted that this last year has been so successful in order intake. The outlook for 2011 and 2012 looks highly favorable.»
«It is a fact that IBA consists of two different dynamics today, with Equipment on one side, now very profitable, and the Pharmaceutical activity on the other side, in the middle of an investment phase. The book loss of this activity is largely offset by profits from our Equipment business, but their sum does not accurately reflect the potential of the Company as a whole. It is clear that in terms of new product development, we invest more in Pharma R&D than we do in Equipment R&D. It is a winning strategy in the medium and long term, but the effects are not visible yet in a purely financial analysis.
It would not be surprising to see the Pharma activity split off 12 or 18 months from now, perhaps even with a listing on the stock market. Today the Equipment business is more than 50% recurrent, which means that it requires less investment even though we are of course determined to maintain technological leadership. Our research and development investment currently represents 8% of sales and is increasing continuously.»
«For Equipment, I would say the order from Nice for a second-generation proton therapy center. More compact and referred to as a «single-room» center, this new approach brings the technology nearer the patient and makes it accessible to less populated areas. In this way we are playing an active part in a real personalization of medicine.
We should also underline the opening of the Russian market with the order of a first multi-room center. And thirdly, the signing of an agreement, subject to financing, for the construction of a carbon therapy center in Caen, France. This last one aims at improving the therapeutic effectiveness of particle therapy even more and helping maintain IBA's worldwide technological leadership position.
As for Pharmaceutical activities, we should stress the inauguration of the new production plant in Saclay, near Paris. This is the most modern facility of its kind in Europe, a fact recognized by competitors who sub-contract to us what they cannot produce themselves. This project is the result of an investment of almost EUR 70 million.
We should also mention the expansion of our network of Positron diagnostic products. These tracers have a very short life, which compels us to produce them locally. Lastly, we planned to join with an outside partner for the Bioassays business. This was not finalized in 2010 but the objective should be achieved in time.»
«We are maintaining our technological leadership in all our competencies: as far as proton therapy is concerned, we enjoy a market share in excess of 50%; in Dosimetry, we are the clear number 1 with new products that have clearly validated the technological choices we have made. Our tools are in fact totally unique in this area.
As for cyclotrons, we have a market share of 25% to 30% which is entirely satisfactory and motivates us to push the technology even further. In terms of carbon therapy, we are already a step ahead of all the other players who are struggling to enter the market.
In Pharma we want to underline the importance of developing our network worldwide. This led us to form three partnerships in 2010: one for a renal cancer tracer (Redectane®), a product we hope to be approved by the American Food & Drug Administration within the next 12 to 18 months; a second for an apoptosis tracer which enables the effectiveness of cancer treatment to be followed in real time and be adjusted as necessary; and a third one in which we have made a preliminary agreement with Bayer for preparing the distribution of our Alzheimer diagnostics, an area where a lot still needs to be done. It is our competencies alone that have enabled us to conclude these partnerships which also, by the way, attract researchers who can develop new molecules that we have the means to market with the power of an industrial group.
Today, medicine is evolving towards a more personalized approach. The pharmaceutical industry is becoming aware that the generic approach is no longer sufficient: diagnostics lack precision, solutions are less and less targeted, results are less uniform, and costs are exploding.
This personalized approach would be impossible without nuclear medicine and the precise diagnostics that it allows, impossible without high-quality dosimetry, and impossible without ultra-precise treatment of cancer tailored to each individual case. We are contributing to this medicine of tomorrow with passion and determination every day.»
«We have a very full order book to fulfill and numerous technological developments to complete. We have been driving change for 25 years, hiring a wide variety of profiles. We will recruit a further 100 to 150 persons in Belgium in the coming year and some 300 persons within the Group. Naturally we are looking for technical and very diverse profiles, from electrical specialists to doctors in physics and engineers.»
«Our first priority is to fulfill 2010 orders to bring about Group growth. In this respect we are convinced that the development of single-room proton therapy will grow rapidly. But we are still being realistic about our planning: new technologies take time to penetrate.
2011 should be the last transition year in Pharma because the first products developed through research will enter the market in 2012 – subject to approval by the American Food & Drug Administration. We will therefore only start reaping the rewards in 2013. But we reckon they will be significant, both financially and for healthcare progess!»
«Protect, enhance and save lives» is the mission that IBA has set itself. All IBA staff are going to support this mission by contributing actively to the achievement of the Group's vision, by strengthening the Company's teams, both quantitatively (primarily by some important new recruitments in 2011) and qualitatively, by combining top-level training and human resource techniques.
Human talent is the keystone of IBA success today and, even more so, the platform for future development of the Group. For several years therefore, IBA human resources departments have been preparing IBA organizational development along two axes:
The year 2010 saw IBA human resources management develop into a function whose performance can be compared to any of the largest corporations.
One of the crowning achievements of 2010 was the organization in June of a Group-wide employee satisfaction survey; the first of its kind in IBA. Setting up a survey of this type is impossible if the fundamentals have not been established. This research, in its first edition, achieved very high participation. Even more important than the enthusiasm is the satisfaction of finally being able to formalize communication with IBA teams, providing the platform for carrying out the transformation of IBA more effectively. As a result of this survey, a concrete action plan has been established in each Business Unit and will be implemented during 2011 in order to further strengthen employee satisfaction and commitment.
Aware that skills are just as available inside the Company as outside it, IBA has set up several programs aimed at encouraging and facilitating the mobility of employees within the Group. A Mobility Forum across Business Units gives management a view of competencies available in other group entities. Moreover, new posts opening up in IBA are now offered firstly to current employees in the Group through the
widespread use of international «open job postings». These open job postings enable employees to apply transparently for other experiences and opportunities for personal development.
The need for this is extensive: growth of the Group will lead to more than 300 new posts to be filled in 2011, primarily in technical fields.
IBA is preparing its future by aligning vision and resources. Today, for both experts and managers, IBA wishes to enrich Group growth by internal promotion. A development program has been set up enabling managers and experts to take part in around 15 training modules over a period of five years, aimed at strengthening their managerial and technical competencies. Some technical courses of this IBA Academy are also open to customers, enabling them to become familiar with the very specific nature of IBA equipment.
It is also now well established that all managers have the responsibility to propose a development plan for each of their subordinates, thus giving every employee the opportunity to achieve individual objectives and to progress in the organization.
The Company observed that many existing HR procedures and systems – such as performance management systems, personal data access and individual development plans – no longer required explanation and learning phases, having been adopted quite naturally by employees. Accordingly, through a cascading process, employees will in future define their individual objectives by translating directly the objectives of their department or Business Unit. This approach increases both an understanding by each employee of their individual contribution and their adherence to a common goal - the real basis for Group performance.
In order to improve the quality of service to employees, the structure of HR teams has been reoriented towards a matrix organization on a Group level. From now on, each HR team covers both a geographic zone and the population of a Business Unit. This offers a better combination of transactional HR services and strategic support.
The challenge of growth is to keep the pioneering spirit of IBA while at the same time supplying it with the means to continue growing successfully on a multinational scale. This certainly appears to have been achieved according to the satisfaction survey: IBA has a perfect combination of formal approaches in human capital and specific IBA energy. This rare balance is no doubt linked to the low turnover of personnel at IBA.
IBA is still, above all else, IBA: a truly human enterprise with «caring» in the full sense of the word. As reflected by the annual «Thank You Day» initiative (an original, positive and slightly nostalgic event that reminds everyone of the importance of thanking their colleagues in business relationships) and the «Health Week» (a program addressed to all IBA employees which echoes the mission to «protect, enhance and save lives»), IBA remains a company centered on people. IBA is a company that has, this year probably more than others, managed its growth very successfully.
After a slight dip in 2009, the budget allocated to Group R&D in 2010 was re-established at its ongoing rate of 2007 and 2008: approximately 8% of planned revenue. In absolute figures, the amount allocated to R&D activities continues to increase from year to year.
In September 2010, R&D staff represented 12% of Group FTE (Full-Time Equivalent) employment with 242 units (versus 256 in 2009) and was split as follows:
These figures do not include the significant amount of work undertaken by research teams in universities, institutions and other industrial partners. IBA Group R&D departments continue to allocate more and more scientific activities through cooperation contracts, in line with Group strategy introduced five years ago to diversify sources of expertise.
In 2010, expenditure to ensure the intellectual protection of Group inventions was about EUR 1.08 million.
At December 31, 2010, the IBA patent portfolio contained e applications covering 122 inventions. In 2010, tions were introduced or confirmed, of which ted to nine new inventions.
The year 2010 was particularly fruitful for R&D activities in the area of proton therapy with the certification and market introduction of new functionalities and equipment for the Proteus® 235, all of which obtained FDA and CE approval. Namely:
beam, if the tumors move, for example during respiratory movements.
Two major new R&D projects also dawned in this field in 2010:
IBA Proton Therapy R&D teams are also active in many European research projects in partnership with internationally-renowned academic institutions. These projects range from the control of the depth of proton penetration in Vivo to the measurement of dose distribution during irradiation by means of gamma rays induced by the proton beam in the patient. Teams are also developing new technologies aimed at accelerating treatment or verifying treatment programs.
2010 was equally rich in major R&D developments in the particle accelerator field.
³ The completion of the R&D program at LEONI Studer in Switzerland has confirmed the specifications of the eXelis® solution (Rhodotron® TT1000 accelerator and X-ray target), thus confirming its potential for the
replacement of cobalt units (sources of radioactivity) in the X-ray sterilization market.
Instead of continuously improving /modifying cyclotrons at each sold unit, R&D decided in 2010 to merge set of changes in product releases that are delivered to production at scheduled periods. This method already in place in other sectors has demonstrated benefits in production costs, maintenance improvement and spare parts management.
In the Pharmaceutical field, 2010 was marked by the following five market authorizations:
³ Construction of the new 99mTc-generator production line, started in 2009, was completed in 2010. The 99mTc generator itself received market approval for France in October and extension of this approval to the rest of the world is expected in 2011.
Other achievements include the successful completion of phase III clinical trials of Redectane® (diagnostic imaging agent for the diagnosis of clear cell kidney cancer prior to surgery, developed by Wilex AG). Its NDA (New Drug Application) was filed with the FDA and USA market approval is expected for mid-2011.
EarliTest® (18F-ML-10), a tracer for the molecular imaging of apoptosis (programmed natural cell death or cell suicide) is now used in Aposense® phase II clinical trials which were introduced in 2010 to evaluate response to Aposense® treatment of three major forms of cancer.
In 2010, IBA also signed with Bayer Pharma a technology agreement related to the transfer of the Florbetaben chemistry process on the IBA Synthera platform. Florbetaben is a BSP proprietary fluorine-18 labeled tracer for the imaging of amyloïd plaques in Alzheimer disease.
Throughout 2010 Bioassay continued to intensively develop new technologies and products for targeting receptors on the surface of living cells.
The Bioassay Cell2lead research program (EUR 10 million) was awarded a EUR 5.6 million grant by the French government (FUI, Fond Unifié Interministériel). Cell2lead is organized in cooperation with IGF/CNRS (Institute of Functional Genomics) of Montpellier, INSERM and Sanofi-Aventis and is aimed at strengthening the Tag-lite® program – introduced in 2009 and sponsored by Eurobiomed and the Languedoc-Roussillon Region.
Following the establishment of a joint laboratory at IGF in Montpellier, R&D teams from Cisbio-Biossays and IGF/ CNRS have since the beginning of 2010 been working
to develop new technologies to study the behavior of receptors in living cells.
In IBA Dosimetry, R&D has completed several important developments for the therapy sector of the Business Unit, while continuing to improve the new generation of Water Phantom, Blue Phantom 2 (BP2) including:
Other improvements in the field of verification of patient treatment plans were added in spring 2010 through version 2.7 of Compass® software. Market introduction of version 3.0 suffered delays which should however be recovered in 2011.
Following market trends in Medical Imaging IBA Dosimetry R&D further adapted its product portfolio to the needs in digital modalities. Market releases of the color measuring device LX Chroma for QA on display image devices as well as further added functionalities to the multimeter product line have been achieved during the year.
In order to follow market trends, IBA Dosimetry Medical Imaging also adapted its product portfolio through the addition of numerical modalities. The LX Chroma used in AQ for the measurement of colors displayed on-screen and new functionalities of the Multimeter product line were introduced to the market prior to the end of 2010.
After launching its new business activity in the field of Health Physics in 2009, IBA Dosimetry successfully released its first iBeOx installation, a new passive-based radiation/dose measurement system sold to Controlatom, Belgium's largest radiation control services provider. The installation received official approval after being commissioned in August 2010.
In 2010 IBA Dosimetry R&D has continued serving and releasing new solutions for its OEM partners. Amongst other areas, efforts were concentrated on two new software applications for Siemens and Elekta.
In parallel, IBA Dosimetry continued research in the field of 2D detectors and wireless communications between different sets of equipment. New applications are planned to be launched on market in the next 24 months.
| FDG PRODUCTION SITES (57) | |||
|---|---|---|---|
| Albany | USA | ||
| Haverhill | USA | ||
| Cleveland | USA | ||
| Gilroy | USA | ||
| Morgantown | USA | ||
| Orlando | USA | ||
| Richmond | USA | ||
| Romeoville | USA | ||
| Somerset | USA | ||
| Sterling | USA | ||
| Kansas City | USA | ||
| Dallas | USA | ||
| Totowa | USA | ||
| Montreal | Canada | ||
| Bad Oeynhausen | Germany | ||
| Bruxelles | Belgium | ||
| Gand | Belgium | ||
| Fleurus | Belgium | ||
| Lyon | France | ||
| Paris | France | ||
| Sarcelles | France | ||
| Orsay | France | ||
| Rennes | France | ||
| Nîmes | France | Monrol sites | |
| Nancy | France | Istanbul-1 | Turkey |
| Bordeaux | France | Istanbul-2 | Turkey |
| Madrid | Spain | Ankara | Turkey |
| Barcelona | Spain | Adana | Turkey |
| Seville | Spain | Izmir | Turkey |
| Malaga | Spain | HaeDong sites | |
| Santander | Spain | Seoul - 1 | South Korea |
| Milan | Italy | Seoul - 2 | South Korea |
| Rome | Italy | Pyeongchon | South Korea |
| Udine | Italy | Daejun | South Korea |
| Amsterdam | Netherlands | Pusan | South Korea |
| Coimbra | Portugal | Suncheon | South Korea |
| Dinnington | United Kingdom | Daegu | South Korea |
| Guildford | United Kingdom | BioTech sites | |
| Delhi | India | Albuquerque | USA |
| Kuala Lumpur | Malaisya | Las Vegas | USA |
| Casablanca | Maroco | Lubbock | USA |
| IBA Particle Therapy |
|---|
| IRA Industrial |
| IBA Molecular |
| IBA China |
| IBA Dosimetry |
| IBA Molecular |
| CISBIO Bioassays |
| IBA Particle Therapy | Louvain-la-Neuve | Belgium |
|---|---|---|
| IBA Industrial | Louvain-la-Neuve | Belgium |
| IBA Molecular | Dulles | USA |
| IBA China | Beijing | China |
| IBA Dosimetry | Schwarzenbruck | Germany |
| IBA Molecular | Saclay | France |
| CISBIO Bioassays | Marcoule | France |
| IBA Particle Therapy | Jacksonville | USA |
|---|---|---|
| IBA Industrial | Edgewood | USA |
| IBA Dosimetry | Bartlett | USA |
| IBA Dosimetry | Schwarzenbruck | Germany |
Approved by the Board of Directors at its meeting of April 1, 2011 REPORT
This positive change was entirely due to Equipment sector since the profitability of the Pharma sector decreased significantly, principally due to unfavourable changes in the United States market and the increasing level of investments required for the launch of proprietary diagnostic molecules from 2012 which had an impact of more than EUR 5 million on the 2010 result.
It should nevertheless be remembered that the previous year had been severely affected by non-recurring charges on R&D projects.
In view of these positive results and taking forecasts into account, the IBA Board of Directors asked the General Meeting to vote for a dividend of EUR 0.15 per share.
Over the complete year, cash flow improved significantly although it was still restrained by:
The Pharma sector comprising the production and distribution of radiopharmaceutical agents and Bioassays activities.
The Equipment sector which comprises:
PROTON THERAPY which offers turnkey solutions for more precise treatment of cancer, with fewer side effects, through the use of proton beams.
PARTICLE ACCELERATORS which offer a line of cyclotrons used for the production of PET radioisotopes (Positron Emission Tomography) and SPECT (Single Photon Emission Computed Tomography); and a line of industrial accelerators for sterilization and ionization (E-beam and Rhodotron® and Dynamitron® types of X-ray).
DOSIMETRY which offers measurement and quality assurance instruments for radiotherapy and medical imaging, enabling healthcare professionals to verify that
1 PET = Positron Emission Tomography.
3 HTRF = Homogeneous Time-Resolved Fluorescence.
equipment administers the planned doses precisely and accurately.
IBA's two business sectors – Pharmaceuticals and Equipment – incorporate the four IBA business units whose sales and highlights for the year 2010 are presented in this management report.
2 SPECT = Single Proton Emission Computed Tomography.
| 2009 (EUR '000) |
2010 (EUR '000) |
Change (EUR '000) |
Change (%) |
|||
|---|---|---|---|---|---|---|
| Sales and services | 203 587 | 217 603 | 14 016 | 6.9% | ||
| - Radiopharmaceuticals | 165 898 | 178 298 | 12 400 | 7.5% | ||
| - Bioassays | 37 689 | 39 305 | 1 616 | 4.3% | ||
| REBITDA | 16 141 | 13 951 | -2 190 | -13.6% | ||
| % of sales | 7,9% | 6,4% | ||||
| REBIT | 1 135 | -2 569 | -3 704 | N/A | ||
| % of sales | 0.6% | -1,2% | ||||
| Share of profit/(loss) of equity accounted entities |
812 | 1 455 | 643 | 79.2% | ||
| REBIT + EQUITY ACCOUNTED ENTITIES | 1 947 | -1 114 | -3 061 | N/A | ||
| % of sales | 1.0% | -0.5% | ||||
REBITDA: Recurring earnings before interest, taxes, depreciation and amortization. REBIT: Recurring earnings before interest and taxes.
The growth in Pharmaceutical sales and services of 6.9% can be analyzed as follows:
Operating earnings are negative for the whole of 2010. The second half in particular was impacted by the following factors:
Taking account of revenue from equity stakes in which IBA has invested in recent years (principally in Canada, Japan and Spain), the operating loss amounted to EUR 1.1 million in 2010, a decrease from the profit of EUR 1.9 million recorded in 2009.
On the commercial side, on December 23, 2010 IBA announced the four-year renewal of its exclusive contract with Servicio Andaluz de Salud in Andalusia, Spain. Under the terms of the agreement, IBA will supply all radiopharmaceutical products to the 12 nuclear medicine departments of public hospitals in Andalusia as from mid-January 2011. This contract is valued at more than EUR 33 million over the four-year period.
2010 was another active year in the development of the production and distribution network for radiopharmaceutical products.
production and distribution centre in Kuala Lumpur, Malaysia, on March 1, 2011.
³ Throughout 2010, IBA worked to complete the renovation of its production site in Saclay, France. This facility has now become the safest and most modern site in Europe for the production of radiopharmaceutical SPECT for nuclear medicine.
Progress has also been noted in the area of strategic development of new proprietary molecules:
³ On August 27, 2010 IBA announced that it had signed a contract with Bayer Schering Pharma (Bayer) for the development of the chemical process and supply of clinical test doses for Florbetaben, a molecular imaging compound under development which will be used to detect Alzheimer's disease.
³ In October 2010, IBA announced that it had obtained approval from AFSSAPS (French Health Products Safety Agency) for the sale of Filtracis™ in France. Filtracis is a radiopharmaceutical kit for the diagnosis of urinary and renal malfunction.
In the Bioassays sub-sector, the activity continued to contribute positively towards Group results. Despite the fact that IBA has discontinued negotiations with a financial consortium, the Company confirms that the possibility of joining forces with an external partner is still under consideration, and that much interest has been received.
| 2009 (EUR '000) |
2010 (EUR '000) |
Change (EUR '000) |
Change (%) |
|
|---|---|---|---|---|
| Sales and services | 155 574 | 169 988 | 14 414 | 9.3% |
| - Proton therapy | 70 689 | 82 884 | 12 195 | 17.3% |
| - Dosimetry | 39 815 | 48 018 | 8 203 | 20.6% |
| - Accelerators and others | 45 070 | 39 086 | -5 984 | -13.3% |
| REBITDA | 9 292 | 20 095 | 10 803 | 116.3% |
| % Sales | 6.0% | 11.8% | ||
| REBIT | 6 171 | 15 526 | 9 355 | 151.6% |
| % Sales | 4.0% | 9.1% |
REBITDA: Recurring earnings before interest, taxes, depreciation and amortization. REBIT: Recurring earnings before interest and taxes.
A strong increase in revenue during the second half of the year more than compensated for the decline registered in the first half-year.
In terms of operating margin, following a 2009 characterized by non-recurring costs resulting from a revaluation of the schedules for finalizing two projects, IBA confirmed the trend towards improved profitability in this sector which was already highlighted in the first half of the year. This positive trend is due to improvements in production processes and progress in the project experience curve (particularly in proton therapy), as well as to the increasing proportion of service contracts in Group results. Based on orders which are already finalized, service contracts should represent annual revenues of more than EUR 30 million by 2014/2015.
2010 proved to be an exceptional year in terms of order intake, with three firm orders for complete new systems, one order for an additional treatment room and five new selections subject to financing or finalization of contracts. These orders have enabled IBA to strengthen its market share which now exceeds 54% of treatment rooms sold.
and represents between EUR 30 and 45 million in IBA equipment.
centre will have two rooms with an isocentric rotating gantry, one dual-beam treatment room and a small fixed-beam room dedicated to eye treatment. The FSUE won the tender for the entire oncology center valued at 6 917 200 000 rubles (EUR 164 million), for which IBA will supply the proton therapy component equipment.
On the technological level, progress was made in the following areas in 2010:
In addition, the installation of systems already on order proceeded according to plan, placing IBA in a unique position in terms of experience and installed systems compared with its competitors:
As in 2009, there were limited orders for industrial cyclotrons and accelerators during the first half of the year but as expected, prospects in the pipeline became firm orders in the second half. In 2010 IBA recorded a total of 11 orders in this division.
Consolidated sales and services for the year 2010 increased by EUR 28.4 million (+7.9%) compared with 2009 to EUR 387.6 million (EUR 359.2 million in 2009). This increase was due to a progression of 6.9% in the Pharmaceuticals sector and 9.3% in the Equipment sector.
The consolidated gross margin for 2010 totaled EUR 144.5 million, compared with EUR 131.3 million in the previous year, an increase of 10.0%. As a percentage of consolidated sales and services, gross margin reached 37.3% versus 36.6% a year earlier. This improvement resulted principally from an increase in profitability in the Equipment sector.
Overall recurring expenses increased by 6%, mainly due to a strong increase in sales and marketing costs related to preparation for the market introduction of high added-value radiopharmaceutical tracers planned from 2012. Research and development costs decreased slightly (-4.2%) in spite of the ongoing development of new products in the Pharma sector. It should be noted that 2009 levels had been affected by significant expenditure in the Equipment sector and that in 2010 more than EUR 3 million was capitalized in the Pharma sector.
The Group recorded net recurring earnings of EUR 12.9 million in 2010 versus EUR 7.3 million in 2009, an increase of 77.3%.
Other operating expenses for 2010 reached EUR 3.9 million, significantly down from EUR 10.5 million in 2009 which had reflected more than EUR 9 million in charges resulting from the re-evaluation of completion times of important R&D projects.
The 2010 statement posted a financial loss of EUR 1.1 million, 77.8% below that of 2009 which had been affected by the downward valuation of financial instruments. On the other hand, 2010 reflected the positive impact of restricted assets to cover the dismantling costs of installations in Saclay, France.
Tax liabilities for the year 2010 totaled EUR 2.7 million resulting from the balance between fluctuations of deferred tax assets and current taxes paid, principally in Germany and the USA.
Group share of the earnings of equity-accounted companies totaled EUR 1.4 million in 2010, an increase of 79.2% compared to 2009, resulting primarily from partnerships in the field of molecular imaging.
Net profit totaled EUR 6.6 million in 2010 compared to a loss of EUR 12.3 million in 2009.
As was the case in the previous year, the most significant balance sheet movements in 2010 were brought about by the progress in proton therapy orders under construction as well as by the investment and development programs of Pharma activities.
Non-current assets increased by EUR 25.9 million during 2010, growing from EUR 265.4 million on December 31, 2009 to EUR 291.3 million at the end of 2010. The change is explained principally by the following movements:
remainder related to the positive results from various other investments.
³ Deferred tax assets were practically unchanged at EUR 31.9 million. Other long-term liabilities increased by EUR 10.3 million to EUR 90.4 million, principally due to injections of capital linked to a proton therapy contract for which the trade receivables did not qualify for derecognition according to IAS 39. In addition to the EUR 37.3 million of liabilities, this column also contains EUR 33.6 million of restricted assets for the decommissioning and site restoration of future Group installations.
Concerning current assets, trade receivables, inventories and contracts in progress explain why these have increased from EUR 214.2 million at the end of 2009 to EUR 236.9 million at the end of 2010. This change is explained primarily by the proton therapy centers in construction which have contributed to the record EUR 240 million order book.
Non-current liabilities increased from EUR 158.0 million at the end of 2009 to EUR 171.9 million at the end of 2010. The EUR 14.0 million difference is explained by the following movements:
³ Long-term debts increased significantly
(+EUR 33.6 million), of which EUR 15.0 million is due to the long-term loan granted by the European Investment Bank at the beginning of 2010 to finance R&D programs, and EUR 20.1 million to a supplier credit granted by Dexia Bank in connection with the Trento proton therapy project. The balance results primarily from the transfer of other long-term debts to short-term debts. It should be noted that a significant part of this long-term debt is offset by a net repayment of short-term debt totaling EUR 22.6 million.
³ Provisions and other long-term debt together decreased by EUR 19.5 million. This decrease is explained primarily by transfers made to short-term provisions and other debt. At the end of 2010, provisions totaled EUR 87.2 million, consisting mostly of environmental provisions (EUR 54.0 million) and others linked to pensions (EUR 24.4 million). Other long-term debts
totaling EUR 43.9 million are represented by down payments on proton therapy contracts (EUR 34.0 million) for which the related receivables do not qualify for derecognition according to IAS 39, as well as the balance of recoverable advance payments obtained from public institutions to finance R&D projects.
Current liabilities increased by EUR 26.3 million to EUR 203.9 million. The following factors should be noted:
In 2010, Group research and development expenditure totaled EUR 27.8 million. This has been entered directly into the profit and loss account, to which almost EUR 3 million in capitalized costs should be added. This considerable investment has enabled the Company to maintain its position as one of the world leaders in all markets in which it is active.
IBA did not conduct any significant merger and acquisition operations in 2010.
Over the course of the year, the Board of Directors exercised a capital increase with a waiver of shareholder pre-emptive rights as part of the authorized capital procedure.
In September 2010, the IBA Board of Directors issued 900 000 stock options to Group employees and partners as part of the 2010 share option plan, of which 550 000 options were free and 350 000 payable.
On December 16 2010, it was noted that 329 136 free options and 130 503 payable options had been subscribed. As a result, 220 864 free options were cancelled. The price of an option was EUR 7.8.
On August 27, 2010 the Board of Directors approved the introduction of an IBA share buy-back program in order to neutralize the dilutive effect of share option plans. No shares were repurchased by IBA in 2010.
Ion Beam Applications S.A. posted sales and services of EUR 152.5 million in 2010, an increase of 12% on 2009's total of EUR 136.6 million. This increase was primarily due to progress on current orders.
The operating income, which had posted a loss of EUR 6.8 million in 2009, recorded a profit of EUR 2.0 million in 2010.
The Company showed a net profit of EUR 15.2 million in 2010 after recording a net loss of EUR 10.9 million in 2009. At the Shareholders General Meeting on May 11, 2011 the Board of Directors proposed a dividend of EUR 0.15 (15 Euro cents) for 2010.
At the end of 2010, the Company owned two subsidiaries: in Prague, Czech Republic, and Orsay, France. These subsidiaries were formed to carry out activities in connection with proton therapy.
This topic is covered fully in the «Corporate Governance, Management and Control» section of this annual report.
The Board meeting of March 3, 2010 which was to rule on the change of Chairman of the Board of Directors gave rise to the application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. This conflict of interest concerned Mr. Peter Vermeeren who had accepted a mission to work with Mr. Renaud Dehareng in order to prepare the new
President of the division for his new responsibilities. This conflict of interest concerned (i) the financial conditions of the mission and (ii) the change of chairmanship of the Board, due to the question of whether Mr. Vermeeren could carry out his duties as an independent director having accepted the above mission. After deliberation, the Board unanimously approved the nomination of Innosté S.A., represented by Mr. Jean Stéphenne as Chairman of the Board and Chairman of the Compensation and Nomination Committees replacing Mr. Vermeeren, and the nomination of Mr. Vermeeren as Vice-Chairman of the Board. The Board also approved the nomination of Mr. Yves Windelincx as a member of the Compensation and Nomination Committees in replacement of Mr. Vermeeren.
The Board meeting of August 27, 2010 which was to rule on the introduction of a stock option plan also gave rise to the application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. This conflict of interest concerned all members of the Board as beneficiaries of the above plan, with the
exception of Ms. Nicole Destexhe (National Institute for Radioelements), Chairman of the Board Mr. Jean Stéphenne (Innosté S.A.) and Chairman of the Audit Committee Mr. Yves Windelincx (Windi S.P.R.L.) who although they had every right to be included in the scheme, declared that they did not wish to be beneficiaries. After deliberation, Ms. Destexhe, Mr. Stéphenne and Mr. Windelincx unanimously approved the introduction of a stock option plan of 900 000 warrants as well as the terms of the special Board draft report prepared in application of articles 583, 596 and 598 of the Belgian Code of Company Law.
In accordance with article 96 (paragraph 9) of the Belgian Code of Company Law, the IBA Board of Directors announced that Mr. Yves Windelincx, Chairman of the Audit Committee and member of the Board since 2010, is the ex-General Manager and Chairman of the Management Board of Ducroire Group, specialized in worldwide export credit insurance. In this capacity he had taken part in numerous Audit Committees, as well as analyzed and managed insurance and finance for large, high-risk projects. Mr. Windelincx is also an independent director of various other companies (in particular Besix, Desmet Engineers and Contractors, TCRe, Concordia and the Belgian Foreign Trade Agency). In two of these companies, he is also a member or Chairman of the Audit Committee. Mr. Windelincx no longer carries out executive roles in any Company.
| Nomber of shares | % | |
|---|---|---|
| Belgian Anchorage SCRL | 7 773 132 | 28.80% |
| IBA Investment SCRL* | 610 852 | 2.27% |
| IBA SA* | 75 637 | 0.28% |
| UCL ASBL | 426 885 | 1.58% |
| Sopartec SA | 529 925 | 1.96% |
| Institute for Radioelements PUF | 1 423 271 | 5.27% |
| Public | 16 152 313 | 59.84% |
| TOTAL | 26 992 015 | 100.00% |
(*) As at December 31, 2010 IBA S.A. held a total of 75 637 own shares and 610 852 shares via IBA Investments S.C.R.L. a wholly-owned indirect subsidiary.
In compliance with legal requirements stipulated in the Law of April 6, 2010 and following the recommendations of the Code of Company Governance of 2009, the principal characteristics of the internal control systems and risk management practices set up by IBA as part of the process of providing financial information can be described as follows:
After the Group has established its annual objectives, these are transferred to operational divisions, departments and each member of the staff. The annual evaluation procedure ensures that these objectives are followed.
The organization of the accounting and finance department contributes to this process. The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) jointly agree department objectives and the CFO is then responsible for dividing these between the various levels of hierarchy. The human resources department, working with management, has established a library of functions detailing descriptions of the functions required in the organization of IBA Group activities. Individual responsibilities for maintaining accounts and financial information are identified in this process.
The accounting policies applied across the Group are defined in an accounting manual. This manual, which is available on the Company intranet, is followed by Company subsidiaries during their periodic accounting activities. The process of preparing consolidated financial information is supported by a collection of instructions aimed at guiding subsidiaries in the preparation of their local accounts.
Financial statements are consolidated on a monthly basis. This procedure enables any new accounting issues to be highlighted quickly.
For this purpose, the finance department works closely with the legal department, as well as with external auditors, in order to ensure adequate adaptation to changes in legislation and the evolution of accounting standards.
These efforts are made in order to meet Company objectives concerning the provision of financial information in total compliance with Company law, deadlines and quality standards.
The control of risks which could affect the procedure of establishing financial information is informal. The identification and evaluation of these risks are undertaken by Company management in its daily activities.
Senior management has introduced a range of control and analysis tools in order to identify, evaluate and track financial and operational risks. Amongst these are:
³ The nomination of a Chief Compliance Officer responsible for compliance with various procedures as well as the code of business practice applicable throughout the Group. All employees are required to report to this person any incidents or events likely to represent a risk to the Company.
The responsibilities of each member of staff in the area of risk management are established during the allocation of tasks to be performed for the preparation of the various analysis tools.
The Administration Committee and the Audit Committee fulfill their responsibility for monitoring risk management essentially by reviewing the analysis tools introduced by senior management, such as:
The close control of risks to which the Company is exposed is undertaken by management controllers and an independent financial analyst from the operational divisions. These two functions help to identify new accounting issues, apply suitable accounting procedures and ensure the safeguarding of assets. Through their work they also remain vigilant for any situation that could resemble internal or external fraud. A program of complementary tests and specific actions is conducted if a risk situation is identified.
Controls of procedures for closing of local accounts, approval of payments, invoicing, share management and other regular activities are organised locally. Procedures for establishing financial statements are controlled by local financial management and the management controller of the division to which the entity belongs. This is a cross
structure between staff from operational divisions and financial managers of the legal entities.
Certain operations are centralized on a Group level. Members of senior management are directly involved in the ratification and approval of these operations, thus providing control on the completion of accounting and financial information related to:
Control activities are completed by the fact that the procedures for establishing the financial statements of the Group are applicable in all the units within the scope of consolidation. The results of audits conducted by local external auditors are shared directly with the Group's financial department.
The availability and relevance of accounting and financial information are assured by the analysis tools described above and by the information technology and data processing environment.
Although the current IT environment is heterogeneous, the computing systems are sufficiently secured by:
A portal centralizes incidents, requests for information and other requests that staff may have concerning IT services. The IT department works with consultants based on specific requirements. Work with these service providers is defined by contract.
Security measures are tested periodically in order to ensure their effectiveness. The maintenance of the IT systems is an integral part of the IT department's mission.
Accounting and financial information is communicated to management on a monthly basis in the form of reports from the management controllers and consolidated financial statements. This information is provided directly to division presidents and financial management, and published via a web-based tool. The annual accounts, budget, strategic plan and follow-up on investments and treasury are presented to the Audit Committee before being submitted to the Board of Directors. Furthermore, the Executive Committee is regularly informed about the financial state of the Group via monthly management dashboards.
The communication of financial information to the market is managed by the legal, communication and finance departments of the organization. Shareholder concentration in the Belgian market allows this process to be centralized with a limited number of people, with the CFO playing a leading role. A schedule summarizing the periodic requirements for the communication of financial information is available at Group level, with details of the nature and date of each requirement. A procedure stipulates the persons responsible for preparing, approving and communicating this financial information to the market, based on whether the information is restricted or not, and commercial or financial in nature.
Evaluation of the internal control system takes place primarily when the management bodies review the financial statements and analyses prepared by the Accounting and Finance Department, as well as during the follow-up on the effectiveness of internal control and risk management systems by the Audit Committee.
The analysis tools referred to above are established in line with the accounting principals validated by the Audit Committee and Board of Directors. They are adapted in function of the evolution of the Group's activities and environment as necessary. The pertinence of the information and proper application of accounting principals are reviewed by the Accounting and Finance Department during the preparation of these accounting principals and by management bodies during their successive reviews.
The CEO and CFO present and comment the financial statements to the Audit Committee and Board of Directors every quarter or more frequently if necessary. The Audit Committee receives a summary of the control reviews conducted internally, underlining identified weaknesses. It also receives any comments made by external auditors on the accounting decisions and evaluation rules used in the preparation of financial statements, as well as their proposed action in relation to internal control.
Besides the risks to which all industrial companies are exposed, a list of significant risk factors specific to IBA's activities is described below. This list does not claim to be exhaustive.
A number of IBA products and some of its equipment are subject to regulatory approval for market introduction as medical equipment or pharmaceutical products. This approval must be obtained in each country where IBA wishes to sell these products or equipment. For example at the end of 2010, IBA had market approval for proton therapy equipment in the United States (FDA), the European Union (LRQA), China (SDA) and South Korea (KFDA). These authorizations may at any time be challenged by the relevant authorities. Furthermore, due to the technological development of IBA equipment, additional authorizations must be obtained periodically.
During 2010 IBA obtained the following authorizations: From the FDA for:
From Lloyd's Register Quality Assurance (LRQA) for:
³ Robot V2a (automatic docking);
³ Inclined beam line;
Similarly, the production and distribution of radiopharmaceuticals is subject to strict regulation with which the Company complies continuously, failing which the sale of its products would not be possible. The Company is in the process of introducing a request to the FDA for approval of a product developed in partnership with the Wilex Company. Although the process is well advanced, approval still remains uncertain.
The Company continues to invest heavily in research and development and cannot overlook the possibility that one of its prototypes or new molecules may not be commercially viable or may become obsolete during its development because of competing technological developments.
The subsidization by healthcare reimbursement institutions of costs for diagnostics by PET (Positron Emission Tomography) scans or SPECT (Single Photon Emission Computed Tomography) scans – or for the treatment of certain diseases for which equipment made by IBA is directly or indirectly involved – is subject to review. The healthcare reimbursement policies of these organizations will in turn influence the volume of orders that IBA obtains. These subsidies from reimbursement institutions differ greatly from one country to another.
The use of products made by IBA may expose the Company to certain liability lawsuits. IBA maintains insurance to protect itself in the event of damages arising from a product liability lawsuit or from the use of its products. In a country such as the United States, where the slightest incident may result in major lawsuits, there is always a risk that a patient who is dissatisfied with services received by products delivered by IBA may initiate legal action against it. The Company cannot guarantee that its insurance coverage will always be sufficient to protect it from such risks or that it will always be possible to obtain coverage for such risks.
The Company is exposed to foreign exchange risks when it signs certain contracts in foreign currencies or when it invests abroad. To the fullest extent possible, the Company employs the financial instruments necessary to limit its exposure to these risks. The Company's financial risk management objectives and policy, as well as its policies on price, liquidity and cash flow risk are described in greater detail in the notes to the consolidated financial statements in this report.
IBA invests in companies whose business sector is complementary to its own. In most cases, these are recentlyestablished companies in innovative sectors. IBA cannot guarantee that all of these investments will be profitable in the future or that some projects will not be purely and simply terminated. In certain cases, IBA also invests its surplus cash in very liquid and highly rated (AAA) financial instruments but cannot however, predict sudden changes in these ratings or market modifications leading to the loss of this liquidity.
CISBIO recently obtained INB (Basic Nuclear Facility) designation in France. This status requires the Company to set aside resources for the restoration of the operating site where its activities are located at the expiration of a period ending in either 2022 or 2078, whichever is applicable.
Since IBA was established, the number of highly qualified persons employed by the Company has significantly
increased. However, it is possible that the defection of certain key employees possessing specific expertise could, for a short time, affect one of the Company's activities.
In general, IBA's customers are diversified and located on several continents. The Company depends each year on a number of orders, particularly for its proton therapy systems that are executed over several financial years. The receipt of one additional order or one less order, or changes in an order that were not anticipated at the beginning of the year, are characteristics of this field of business which can have a significant impact over several accounting periods. On the other hand, the lead time for fulfilling orders gives the Company a good view of its level of activity several months in advance.
The Company holds intellectual property rights. Some of these rights are generated by employee or production process know-how and are not protected by patents. The Company has filed patents but it cannot guarantee that these patents are broad enough to protect the Company's intellectual property rights and prevent its competitors from gaining access to similar technologies. The Company cannot guarantee that the defection of certain employees will not have a negative impact on its intellectual property rights.
Currently, IBA has no direct competitor covering all the markets in which it is present. However in certain markets, it is competing against some of the world's largest corporations. These corporations have highly developed sales and marketing networks and more importantly, extensive financial resources beyond comparison with those of IBA. Furthermore, there is always the possibility that a new technology – notably a revolutionary therapy in the treatment of cancer that would render a part of IBA's current product line obsolete – could be developed. The development and
marketing of a new therapy does nevertheless require a relatively long period of time.
Some contracts may contain warranties or penalties which generally represent only a few percent of the amount of the contract in the case of conventional sales contracts. However these amounts may be significantly higher in public-private
partnerships in as much as the penalties must cover the associated financing. Such clauses are applicable only to a limited number of contracts, essentially those relating to proton therapy projects. The possibility that a customer may one day exercise such a warranty or penalty clause cannot be excluded.
On January 17, 2011 IBA announced that the Carl Gustav Carus University Hospital at Dresden Technical University in Germany had selected IBA for the installation of a proton therapy centre with a treatment room equipped with an isocentric gantry and a research room. The contract also includes a long-term maintenance agreement.
On January 20, 2011, financing for the project ordered by Seattle Procure Management LLC to install a proton therapy centre in Seattle, WA, USA was finalized.
The Company forecasts a growth in sales in 2011 compared to the 2010 financial year, thanks in particular to the following elements:
In terms of operating income, on a like-for-like basis the Company expects 2011 to show:
³ A stabilization of results in the traditional Pharma business and a marked increase of investment in new molecules;
³ A stabilization of profitability in the Equipment sector which will support development costs for Proteus ONE™ in 2011.
The profitability of Equipment activity should remain higher than the losses generated by investments in the Pharma business. Therefore, on a consolidated basis, IBA should remain profitable although at a lower level than in 2010.
As announced during the 2010 financial year, it appears increasingly clear that Pharmaceuticals activities and Equipment activities are undergoing very different dynamics and cycles. This observation has led the Company to put in place measures intended to:
³ Optimize non-strategic activities through sales or mergers: the attempt to sell Bioassays activities to a financial consortium was not concluded satisfactorily in 2010 but remains under examination.
³ Pursue the development of the network with global or local partners to meet the needs of the PET and SPECT markets and increase IBA profitability. In addition to the equity stakes taken in Tunisia and Malaysia, IBA is currently examining investment opportunities in Europe
DIRECTORS' DECLARATION
and Asia that may come to fruition during the 2011 financial year.
³ Invest, by the most suitable means available, in the radiopharmaceutical activity in order to speed up the pace of investments in new molecules. This could be achieved by specific fund-raising and result in partial deconsolidation of this activity in the future.
This management report and the accompanying financial statements have been established by the Chief Executive Officer (CEO), Pierre Mottet and the Chief Financial Officer (CFO), Jean-Marc Bothy. To their knowledge: they have been established in accordance with applicable accounting standards, give a true and fair image of the assets, the financial position and the results of the Company and the companies included in the consolidation. The management report contains a faithful account of the important events and principal transactions with related parties for the year 2010 and their effect on the set of consolidated financial statements, as well as a description of the main risks and uncertainties which the Company faces.
Ion Beam Applications SA (the «Company» or the «parent»), founded in 1986, and its subsidiaries (together, the «Group» or «IBA») are committed to technological progress in the field of cancer diagnosis and therapy and deliver efficient, dependable solutions providing unequaled precision. IBA also offers innovative solutions for everyday hygiene and safety.
The Company is a limited company incorporated and domiciled in Belgium. The address of its registered office is Chemin du Cyclotron, 3; B-1348 Louvain-la-Neuve, Belgium.
The Company is listed on the pan-European stock exchange Euronext and is included in the Bel MID Index.
Consequently, IBA has agreed to follow certain rules to enhance the quality of financial information provided to the market. These include:
³ Publication of its annual report, including its audited annual consolidated financial statements, within four months from the end of the financial year;
These consolidated financial statements were approved for release by the Board of Directors on April 1, 2011.
The Group has chosen to present its balance sheet on a current/non-current basis.
The notes on pages 43 to 106 are an integral part of these consolidated financial statements.
| ASSETS Goodwill 7 29 563 31 492 Other intangible assets 7 37 020 40 916 Property, plant, and equipment 8 79 526 86 429 Investments accounted for using the equity method 10 5 097 8 255 Other investments 10 2 377 1 943 Deferred tax assets 11 31 732 31 877 Other long-term assets 12 80 093 90 429 Non-current assets 265 408 291 341 Inventories and contracts in progress 13 97 011 102 694 Trade receivables 14 70 178 89 249 Other receivables 14 26 869 25 286 Short-term financial assets 21 2 591 1 535 Cash and cash equivalents 15 17 586 18 102 Current assets 214 235 236 866 TOTAL ASSETS 479 643 528 207 EQUITY AND LIABILITIES Capital stock 16 37 505 37 888 Capital surplus 16 124 788 125 421 Treasury shares 16 -9 515 -8 655 Reserves 17 16 077 9 878 Currency translation difference 17 -16 377 -9 948 Retained earnings 17 -9 117 -3 269 Capital and reserves 143 361 151 315 Non-controlling interests 781 1 087 EQUITY 144 142 152 402 Long-term borrowings 18 6 372 39 943 Long-term liabilities 21 0 344 Deferred tax liabilities 11 1 004 948 Long-term provisions 19 97 169 87 191 Other long-term liabilities 20 53 413 43 861 Non-current liabilities 157 958 172 287 Short-term provisions 19 0 11 812 Short-term liabilities 18 28 275 5 115 Other short-term liabilities 21 103 751 Trade payables 22 48 264 63 412 Current income tax liabilities 2 198 2 384 Other payables 23 98 703 120 044 Current liabilities 177 543 203 518 TOTAL LIABILITIES 335 501 375 805 TOTAL EQUITY AND LIABILITIES 479 643 528 207 |
December 31, 2009 | December 31, 2010 | |
|---|---|---|---|
| Notes | (EUR '000) | (EUR '000) | |
The Group has chosen to present its income statement using the «function of expenses» method.
| Notes | December 31, 2009 (EUR '000) |
December 31, 2010 (EUR '000) |
|
|---|---|---|---|
| Sales and services | 359 161 | 387 591 | |
| Cost of sales and services | 227 850 | 243 131 | |
| Gross profit | 131 311 | 144 460 | |
| Selling and marketing expenses | 35 316 | 41 845 | |
| General and administrative expenses | 59 707 | 61 884 | |
| Research and development expenses | 28 982 | 27 774 | |
| Other operating expenses | 24 | 18 887 | 11 629 |
| Other operating (income) | 24 | -8 353 | -7 742 |
| Financial expenses | 25 | 11 990 | 16 923 |
| Financial (income) | 25 | -6 865 | -15 785 |
| Share of (profit)/loss of companies consolidated using the equity method | 10 | -812 | -1 455 |
| Profit/(loss) before taxes | -7 541 | 9 387 | |
| Tax (income)/expenses | 26 | 4 752 | 2 744 |
| Profit for the period from continuing operations | -12 293 | 6 643 | |
| Profit/(loss) for the period from discontinued operations | 6 | 0 | 0 |
| Profit/(loss) for the period | -12 293 | 6 643 | |
| Attributable to: | |||
| Equity holders of the parent | -12 492 | 6 228 | |
| Non-controlling interests | 199 | 415 | |
| -12 293 | 6 643 | ||
| Earnings per share from continuing and discontinued operations (EUR per share) | |||
| - basic | 34 | -0.48 | 0.24 |
| - diluted | 34 | -0.47 | 0.23 |
| Earnings per share from continuing operations (EUR per share) | |||
| - basic | 34 | -0.48 | 0.24 |
| - diluted | 34 | -0.47 | 0.23 |
| Earnings per share from discontinued operations (EUR per share) | |||
| - basic | 34 | 0.00 | 0.00 |
| - diluted | 34 | 0.00 | 0.00 |
| December 31, 2009 (EUR '000) |
December 31, 2010 (EUR '000) |
|
|---|---|---|
| Income/(expense) for the period | -12 293 | 6 643 |
| Changes in available-for-sale financial asset reserves | 2 075 | -2 409 |
| Changes in strategic hedge reserves | 1 066 | -2 932 |
| Changes in post-employment benefit reserves | 1 123 | -1 161 |
| Changes in companies accounted for using the equity method | 0 | 525 |
| Changes in currency translation differences | -1 264 | 5 985 |
| Permanent financing-related changes | 2 643 | -81 |
| Income tax-related changes | -692 | 0 |
| Net income/(expenses) recognized directly in equity | 4 951 | -73 |
| Comprehensive income | -7 342 | 6 570 |
| Attributable to: Equity holders of the parent | -7 541 | 6 155 |
| Non-controlling interests | 199 | 415 |
| EUR '000 | Attributable to equity holders of the parent | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Capital stock |
Capital surplus |
Treasury shares |
Hedging reserves |
Other reserves |
Currency translation difference |
Retained earnings |
Non controlling interests |
Share holders' equity |
|
| Balance at January 1, 2009 |
37 285 | 124 358 | -7 563 | 689 | 8 531 | -17 064 | 5 446 | 684 | 152 366 |
| Net income/ (expenses) recognized directly in equity |
0 | 0 | 0 | 1 066 | 3 198 | 687 | 0 | 0 | 4 951 |
| Profit/(loss) for the period |
-12 492 | 199 | -12 293 | ||||||
| Comprehensive income for the period |
0 | 0 | 0 | 1 066 | 3 198 | 687 | -12 492 | 199 | -7 342 |
| Purchase of treasury shares |
-1 952 | -1 952 | |||||||
| Dividends | -2 127 | -2 127 | |||||||
| Employee stock options and share based payments |
2 593 | 2 593 | |||||||
| Increase/(reduction) of capital stock/ capital surplus |
220 | 430 | 650 | ||||||
| Other changes in non-controlling interests |
56 | -102 | -46 | ||||||
| Balance at December 31, 2009 |
37 505 | 124 788 | -9 515 | 1 755 | 14 322 | -16 377 | -9 117 | 781 | 144 142 |
| Balance at | 37 505 | 124 788 | -9 515 | 1 755 | 14 322 | -16 377 | -9 117 | 781 | 144 142 |
| January 1, 2010 | |||||||||
| Net income/ (expenses) recognized directly in equity |
0 | 0 | 0 | -2 932 | -3 570 | 6 429 | 0 | 0 | -73 |
| Profit/(loss) for the period |
|||||||||
| 6 228 | 415 | 6 643 | |||||||
| Comprehensive income for the period |
0 | 0 | 0 | -2 932 | -3 570 | 6 429 | 6 228 | 415 | 6 570 |
| (Acquisitions)/ transfers of treasury shares |
860 | -486 | 374 | ||||||
| Dividends | 0 | 0 | |||||||
| Employee stock options and share based payments |
303 | 303 | |||||||
| Increase/(reduction) of capital stock/ capital surplus |
383 | 633 | 1 016 | ||||||
| Other changes | 106 | -109 | -3 |
The Group has chosen to present the cash flow statement using the indirect method.
| Notes | December 31, 2009 (EUR '000) |
December 31, 2010 (EUR '000) |
|
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Net profit/(loss) for the period attributable to equity holders of the parent | -12 492 | 6 228 | |
| Adjustments for: | |||
| Depreciation and impairment of tangible fixed assets | 8 | 15 460 | 10 741 |
| Amortization and impairment of intangible assets | 7 | 5 810 | 4 245 |
| Write-off on receivables | 14 | 325 | 2 119 |
| Changes in fair value of financial assets (gains)/losses | -1 808 | -465 | |
| Change in provisions | 19 | 7 965 | 8 409 |
| Deffered taxes | 26 | 2 661 | 224 |
| Share of result of associates and joint ventures accounted for using the equity method |
10 | -812 | -1 455 |
| Other non-cash items | 28 | 1 254 | 1 596 |
| Net profit/(loss) before changes in working capital | 18 363 | 31 642 | |
| Trade receivables, other receivables, and deferrals | 18 142 | -15 039 | |
| Inventories and contracts in progress | -11 176 | 6 420 | |
| Trade payables, other payables, and accruals | -22 523 | 12 489 | |
| Changes in working capital | -15 557 | 3 870 | |
| Income tax paid/received, net | -1 137 | -1 323 | |
| Interest expense | 2 387 | 1 623 | |
| Interest income | -2 680 | -4 400 | |
| Net cash used in/generated from operations | 1 376 | 31 412 | |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Acquisition of property, plant, and equipment | 8 | -17 175 | -15 918 |
| Acquisition of intangible assets | 7 | -3 273 | -6 740 |
| Disposals of fixed assets | 322 | 331 | |
| Acquisition of subsidiaries, net of acquired cash | 6 | 0 | 8 |
| Acquisition of third party and equity-accounted companies | -672 | -952 | |
| Disposals of subsidiaries and equity-accounted companies, and other net investments from cash disposed |
-51 | 50 | |
| Other investing cash flows | 28 | -10 880 | -15 591 |
| Net cash used in/generated from investing activities | -31 729 | -38 812 | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Proceeds from borrowings | 23 289 | 36 971 | |
| Repayments of borrowings | -24 222 | -28 014 | |
| Interest paid | -2 387 | -1 623 | |
| Interest received | 1 129 | 441 | |
| Capital increase (or proceeds from issuance of ordinary shares) | 608 | 915 | |
| Purchase of treasury shares | -1 952 | -593 | |
| Dividends paid | -2 039 | -94 | |
| Other financing cash flows | 28 | -1 038 | -266 |
| Net cash used in/generated from financing activities | -6 612 | 7 737 | |
| Net cash and cash equivalents at beginning of the year | 53 943 | 17 586 | |
| Change in net cash and cash equivalents | -36 965 | 337 | |
| Exchange gains/losses on cash and cash equivalents | 608 | 179 | |
| Net cash and cash equivalents at end of the year | 15 | 17 586 | 18 102 |
| 44 | 1. Summary of significant Group accounting policies |
|---|---|
| 58 | 2. Description of financial risk management policies |
| 65 | 3. Critical accounting estimates and judgments |
| 68 | 4. Operating segments |
| 71 | 5. List of subsidiaries and equity-accounted investments |
| 72 | 6. Business combinations and other changes in the composition of the Group |
| 75 | 7. Goodwill and other intangible assets |
| 77 | 8. Property, plant, and equipment |
| 78 | 9. Lease arrangements |
| 78 | 10. Investments accounted for using the equity method |
| 81 | 11. Deferred taxes |
| 82 | 12. Other long-term assets |
| 83 | 13. Inventories and contracts in progress |
| 83 | 14. Trade and other receivables |
| 84 | 15. Cash and cash equivalents |
| 85 | 16. Capital stock and share-based plans |
| 87 | 17. Reserves |
| 88 | 18. Borrowings |
| 90 | 19. Long-term and short-term provisions |
| 92 | 20. Other long-term liabilities |
| 93 | 21. Other financial assets and liabilities |
| 94 | 22. Trade payables |
| 94 | 23. Other payables |
| 95 | 24. Other operating expenses and income |
| 96 | 25. Financial expenses and income |
| 97 | 26. Income taxes |
| 98 | 27. Employee benefits |
| 99 | 28. Cash flow statement |
| 100 | 29. Contingent liabilities |
| 101 | 30. Commitments |
| 102 | 31. Related party transactions |
| 105 | 32. Fees for services rendered by the statutory auditors |
| 105 | 33. Events after the balance sheet date |
| 105 | 34. Net earnings per share |
Page Note
The main IFRS accounting policies applied by the Group in preparing the IFRS consolidated financial statements are described below.
IBA's consolidated financial statements for the year ended December 31, 2010 have been drawn up in compliance with IFRS («International Financial Reporting Standards») and IFRIC interpretations («International Financial Reporting Interpretations Committee») adopted by the European Union, issued and effective or issued and early adopted at December 31, 2010.
These consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial instruments at fair value.
These financial statements have been prepared on an accruals basis and on the assumption that the entity is a going concern and will continue to operate in the foreseeable future.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.
The accounting principles adopted in the preparation of the consolidated accounts comply with IFRS standards and interpretations as adopted by the European Union at December 31, 2010.
These accounting principles are consistent with those used for the preparation of the Group's annual financial statements for the financial year ended December 31, 2009, with the exception of the following standards and interpretations adopted on January 1, 2010, as shown below.
IFRIC 17 Distribution of Non-cash Assets to Owners indicates how to account for distributions in kind to shareholders. A liability must be accounted when the dividend has been properly authorized and is no longer at the discretion of the entity, the measurement of the liability must be based on the fair value of the assets to distribute. Distributions in kind relating to the goods that are controlled by the same party(ies) before and after the distribution (common control transactions) are outside the scope of IFRIC 17. The company adopted this interpretation on January 1, 2010 without any significant impact on its financial results or financial position.
IFRIC 18 Transfers of Assets from Customers applies to the accounting of all transfers of property and equipment received from customers as part of access provision. Accounting for these assets depends on the person controlling the transferred assets. When the assets are accounted for by the access provider, they are measured at their fair value at time of initial accounting. Timing for measuring associated items depends on facts and circumstances.
The company adopted this interpretation on January 1, 2010 without any significant impact on its financial results or financial position.
Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible hedged items specifies how the current principles for hedge accounting should be used in specific situations («eligible hedged items»).
The Company adopted this amendment on January 1, 2010 without any significant impact on its financial results or financial position.
Improvements to IFRS (2009) relate to a series of minor changes to existing standards.
The Company adopted these improvements on January 1, 2010 without any significant impact on its financial results or financial position.
Amendments to IAS 32 Financial Instruments: Presentation – Classification to Right Issues allow rights, options or warrants with the aim to acquire a fixed number of company's equity investments for a fixed amount, in any currency, to be classified as equity instruments, provided that the entity give these rights, options and warrants pro rata to all existing owners of the same class of nonderivative equity instruments.
The Company adopted this amendment on January 1, 2010 without any significant impact on its financial results or financial position.
IAS 24 (revised) Related Party Disclosures amends the definition of a related party and certain terms of disclosure of Information for entities related to public administration. The Company adopted this revised standard on January 1, 2010 without any significant impact on its financial results or financial position.
Amendments to IFRIC 14 and IAS 19 – The limit to a defined benefit asset, minimum funding requirements, and their interaction suppress the unwanted consequences of instalment payments when there is a minimum funding requirement. These amendments result in that contributions payments are recognized as an asset rather than a cost in some circumstances.
The Company adopted this amendment on January 1, 2010 without any significant impact on its financial results or financial position.
Insofar as new provisions to IFRS standards are expected to be applicable in the future, they have been listed below. For the year ending on December 31, 2010, they have not been used in the preparation of the consolidated financial statements.
Amendments to this standard are effective for annual accounts beginning on or after July 1, 2011 and intend to improve the understanding of transfer transactions of financial assets, including the understanding of possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of assets transfers are undertaken at the end of a reporting period.
The Group does not expect the implementation of these amendments to have any impact on its financial statements.
IFRS as issued reflects the first and second working phase of the I.A.S.B. on the replacement of the IAS 39 standard and relates to the classification and measurement of assets and liabilities as defined in IAS 39. This standard will be effective for annual accounts beginning on or after January 1, 2013. In subsequent phases, the I.A.S.B. will address hedge accounting, derecognition, and asset and liability off-setting. This project is expected to be completed in early 2011. The adoption of the first IFRS 9 phase will have an impact on the classification and measurement of the Group's financial assets. The Group will quantify the impact of this standard in conjunction with the other phases once issued, in order to present a comprehensive picture of this impact.
The amended standard will be effective for annual accounts beginning on or after January 1, 2012. The amendment provides a practical solution to the difficult and subjective assessment whether recovery will be done through use or through sale when the asset is measured using the fair value of IAS 40 for Investment Properties, by introducing a presumption that the recovery of the carrying value will usually be done through sale.
The Group does not expect any impact in its financial statements.
Amendments to IAS 32 Financial Instruments: Presentation – Classification of Rights Issues allow rights, options or warrants with the aim to acquire a fixed number of company's equity investments, in any currency, to be classified as equity in instruments, provided that the entity give these rights, options and warrants pro rata to all existing owners of the same of non-derivative equity instruments.
The Company adopted this amendment on January 1, 2010 without any significant impact on its financial results or financial position.
IFRIC 19 is effective for annual accounts beginning on or after July 1, 2010. The interpretation of the standard specifies that the equity instruments issued to a creditor with the view to extinguish a financial liability are deemed paid. The equity instruments are measured and issued at their fair value. Should it not possible to measure them with reliability, the instruments are measured at the fair value of the liability to extinguish. Any gain or loss on equity instruments are immediately recognized in the income statement. The adoption of this interpretation will have no impact on the Group's financial statements.
The parent and all of its controlled subsidiaries are included in the consolidation.
Assets and liabilities, rights and commitments, and income and charges of the parent and its controlled subsidiaries are consolidated in full. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. It is presumed to exist when the Group holds more than 50 percent of the entity's voting rights. This presumption may be rebutted if there is clear evidence to the contrary. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls an entity. Consolidation of a subsidiary takes place from the date of acquisition, which is the date on which control of the net assets and operations of the acquiree are effectively transferred to the acquirer. From the date of acquisition, the parent (the acquirer) incorporates into the consolidated income statement the financial performance of the acquiree and recognizes in the consolidated balance sheet the acquired assets and liabilities (at fair value), including any goodwill arising on the acquisition. Subsidiaries are deconsolidated from the date on which control ceases. The following treatments are applied on consolidation:
Consolidated financial statements are prepared applying uniform accounting policies to like transactions and other events in similar circumstances.
An associate is an entity in which the investor has significant influence, but which is neither a subsidiary nor a joint venture (see next subsection) of the investor. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control those policies. It is presumed to exist when the investor holds at least 20 percent of the investee's voting power but not to exist when less than 20 percent is held.
This presumption may be rebutted if there is clear evidence to the contrary.
All associates are accounted for using the equity method. Participating interests are presented separately in the closing date statement of consolidated financial position (in the caption «Investments accounted for using the equity method») at an amount proportionate to the associate's equity (as restated under IFRS) including the result for the year. Dividends received from an investee reduce the carrying amount of the investment.
The portion of the result of associates attributable to the Group is presented separately in the consolidated income statement in the caption «Share of profit/loss of companies consolidated using the equity method».
Unrealized profits and losses resulting from transactions between an investor (or its consolidated subsidiaries) and associates are eliminated in proportion to the investor's interest in the associate.
As with associates, the equity method is used for entities over which the Group exercises joint control (i.e. joint ventures).
Business combinations are the bringing together of separate entities or businesses into one reporting entity. A business is a set of activities and assets applied and managed together in order to provide a return or any other economic benefit to its investors. In all business combinations, one entity (the acquirer) obtains control that is not transitory of one or more other entities or businesses (the acquiree).
All business combinations (acquisitions of businesses) arising after January 1, 2004 are accounted for using the purchase method. The acquirer measures the cost of the business combination at the acquisition date (the date on which the acquirer obtains control over the net assets of the acquiree) and compares it with the fair value of the acquiree's identifiable net assets, liabilities, and contingent liabilities. The difference between the two represents goodwill (if this difference is positive) or negative goodwill (if this difference is negative).
For all business combinations arising before January 1, 2004, no retrospective restatement to fair value has been made.
Similar rules have been applied to investments accounted for under the equity method, except that any goodwill arising on such investment is included in the carrying amount of the investment.
Negative goodwill arising on such investments is included in the determination of the entity's share of the investee's profit or losses in the period in which the investment is acquired.
Goodwill is not amortized but instead is tested for impairment annually (or more frequently if circumstances so require).
Negative goodwill is recognized as profit.
The excess of the acquisition cost of non-controlling interests over the balance sheet entry for these noncontrolling interests is deducted from equity («economic unit model»).
All monetary and non-monetary assets and liabilities (including goodwill) are translated at the closing rate. Income and expenses are translated at the rate of the date of the transaction (historical exchange rate) or at an average rate for the month.
The principal exchange rates used for conversion to EUR are as follows:
| Closing rate at December 31, 2009 |
Average annual rate 2009 |
Closing rate at December 31, 2010 |
Average annual rate 2010 |
|
|---|---|---|---|---|
| USD | 1.4332 | 1.3939 | 1.3252 | 1.3280 |
| SEK | 10.3111 | 10.6321 | 8.9929 | 9.5586 |
| GBP | 0.8999 | 0.8915 | 0.8566 | 0.8585 |
| CNY | 9.7705 | 9.5354 | 8.7351 | 8.9893 |
| INR | 67.0164 | 67.2465 | 60.0564 | 60.9806 |
| JPY | 134.2040 | 130.3441 | 108.1930 | 116.6139 |
Recognition as an intangible fixed asset is required when
Intangible assets are carried at acquisition cost less any accumulated amortization and any accumulated impairment loss.
Cost includes the fair value of the consideration given to acquire the asset and any costs directly attributable to the transaction, such as relevant professional fees or nonrefundable taxes.
Indirect costs as well as general overheads are not included. Expenditure previously recognized as expense is not included in the cost of the asset.
Costs arising from the research phase of an internal project are expensed as incurred. Costs arising from the development phase of an internal project (product development project or IT project) are recognized as an asset when IBA can demonstrate the following: technical feasibility, intention to complete development, how the intangible asset will generate probable future economic benefits (e.g. the existence of a market for the output of the intangible asset or for the intangible asset itself), availability of resources to complete development, and ability to measure the attributable expenditure reliably.
Maintenance costs, as well as costs for minor upgrades intended to maintain (rather than increase) the level of performance of the asset, are expensed as incurred.
The above recognition criteria are fairly stringent and are applied prudently.
The cost of the intangible assets is allocated on a systematic basis over the useful life of the asset using the straight-line method.
The applicable useful lives are as follows:
| Intangible fixed assets | Useful life |
|---|---|
| Product development costs | costs 3 years, except if a longer useful life is justified (however not exceeding 5 years) |
| IT development costs for the primary software programs (e.g. ERP) | 5 years |
| Other software | 3 years |
| Concessions, patents, licenses, know-how, trademarks, and other similar rights |
3 years, except if a longer useful life is justified |
Amortization commences only when the asset is available for use in order to achieve proper matching of cost and revenue.
Tangible fixed assets are carried at acquisition cost less any accumulated depreciation and any accumulated impairment loss.
Cost includes the fair value of the consideration given to acquire the asset (net of discounts and rebates) and any directly attributable cost of bringing the asset to working condition for its intended use (inclusive of import duties and taxes). Directly attributable costs are the cost of site preparation, delivery costs, installation costs, relevant professional fees, and the estimated cost of dismantling and removing the asset and restoring the site (to the extent that such a cost is recognized as a provision). Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item is separately depreciated over its useful life using the straight-line method. The depreciable amount is the acquisition cost, except for vehicles. For vehicles, it is the acquisition cost less the residual value of the asset at the end of its useful life.
Maintenance or repair costs whose objective is to maintain rather than increase the level of performance of the asset are expensed as incurred. The applicable useful lives are as follows:
| Tangible fixed assets | Useful life |
|---|---|
| Land | Not depreciated |
| Office buildings | 33 years |
| Industrial buildings | 33 years |
| Cyclotrons and vaults | 15 years , except in specific rare circumstances where a different useful life is justified |
| Laboratory equipment | 5 years |
| Other technical equipment | 5 to 10 years |
| Hardware | 3 to 5 years (5 years for mainframes) |
| Furniture and fittings | 5 to 10 years |
| Vehicles | 2 to 5 years |
A finance lease, which transfers substantially all the risks and rewards incident to ownership, is recognized as an asset and a liability at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments (= sum of capital and interest portions included in the lease payments). Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The depreciation policy for leased assets is consistent with that for similar assets owned.
Investment properties for the Group's own use are carried at acquisition cost less any accumulated depreciation and any impairment loss.
An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, which is the higher of the following two amounts: fair value less costs to sell (the money that IBA can recover through sale) or value in use (the money that IBA can recover if it continues to use the asset).
When possible, impairment tests have been performed on individual assets. When, however, it is determined that assets do not generate independent cash flows, the test is performed at the level of the cash-generating unit (CGU) to which the asset belongs (CGU = the smallest identifiable group of assets generating inflows that are largely independent from the cash flows from other CGUs).
Goodwill arising on a business combination is allocated among the Group's CGUs that are expected to benefit from synergies as a result of the business combination. This allocation is based on management's assessment of the synergies gained and is not dependent on the location of the acquired assets.
Since it is not amortized, goodwill is tested for impairment annually, along with the related CGU (or more frequently depending on circumstances), even if no indication of impairment exists. Other intangible and tangible fixed assets/CGUs are tested only if there is an indication that the asset is impaired.
Any impairment loss is first charged against goodwill. Any impairment loss exceeding the book value of goodwill is then charged against the other CGUs' fixed assets only if the recoverable amount is below their net book value. Reversals of impairment losses (other than on goodwill) are recorded if justified.
Inventories are measured at the lower of cost and net realizable value at the balance sheet date.
The cost of inventories comprises all costs incurred in bringing inventories to their present location and condition, including indirect production costs. Administrative overheads that do not contribute to bringing inventories to their present location and condition, selling costs, storage costs, and abnormal amounts of wasted materials are not included in the cost of inventories.
The standard cost method is used. The standard cost of an item of inventory at period-end is adjusted to actual cost. The allocation of fixed production overheads to the production cost of inventories is based on the normal capacity of the production facilities.
The cost of inventories that are ordinarily interchangeable is allocated by using the weighted average cost formula. The same cost formula is used for all inventories that have a similar nature and use to the entity.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale (e.g. sales commissions).
IBA books a write-down when the net realizable value at the balance sheet date is lower than the cost.
IBA applies the following policy for write-down on slowmoving items:
However, inventory is valued individually at year-end. Exceptions to the above general rule are made when justified.
Revenue arising from the sale of goods is recognized when an entity has transferred the significant risks and rewards of ownership and collectability and recovery of the related receivables are reasonably assured.
The transaction is not a sale and revenue is not recognized where
(1) IBA retains an obligation for unsatisfactory performance not covered by normal warranty provisions;
Revenue is normally recognized when the buyer accepts delivery, and installation and inspection are complete. However, revenue is recognized immediately upon the buyer's acceptance of delivery when installation is simple in nature.
Revenue from the rendering of services is recognized by reference to the stage of completion of the transaction at the balance sheet date using rules similar to those for construction contracts (see next section); in other words, revenue is recognized as the related costs are incurred. Unless it is clear that costs are not incurred on a straightline basis, revenues are spread evenly over the period of the services.
The recognition criteria are applied to the separately identifiable components of a single transaction when it is necessary to reflect the substance of the transaction.
Interest income is recognized using the effective yield method. Royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement. Dividends relating to year N are recognized when the shareholder's right to receive payment is established (i.e. in year N+1).
Contract costs comprise:
When the outcome of a construction contract (i.e. estimation of the final margin) can be estimated reliably, contracts in progress are measured at production cost increased, according to the stage of completion of the contract, by the difference between the contract price and production cost («percentage of completion» method). The stage of completion is determined by comparing actual costs incurred to date with estimated costs to completion (costs that do not reflect work performed are excluded from this calculation). The percentage of completion is applied on a cumulative basis.
When the outcome of the contract cannot be estimated reliably, revenue is recognized only to the extent of costs incurred that it is probable will be recovered; contract costs are recognized as an expense as incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is immediately expensed to income, and a loss-at-completion provision is recorded.
The Group presents as an asset the net amount due from customers on contract work for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings. Progress billings not yet paid by customers and retention are included in trade receivables.
The IBA Group presents as a liability the net amount due to customers on contract work for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).
When financial guarantees must be given to third parties in connection with a contract and these guarantees involve a financial risk for IBA, a financial liability is recognized.
Receivables are recognized initially at fair value and subsequently measured at amortized cost, i.e. at the net present value of the receivable amount. Unless the discounting impact is significant, receivables are measured at nominal value. Receivables are written down when receipt of all or part is uncertain or doubtful.
In general, IBA applies the following rule to write-downs of bad or doubtful debts:
However, the recoverability of receivables is assessed on a case-by-case basis, and exceptions to the above general rule are made when justified.
The Group classifies its financial assets in the following categories: loans and receivables, available-for-sale financial assets, and financial assets at fair value through profit or loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not listed on an active market and are not held for trading. Gains and losses on loans and receivables are recorded when receivables have been de-recognized. Losses are recognized as soon as loans and receivables should be impaired. Term deposits with maturities exceeding 3 months are classified as loans and receivables under IAS 39. Investments in interest bearing securities, as well as investments in shares (other than shares in subsidiaries, joint ventures, and associates) are accounted for as available-for-sale financial assets. They are recorded
at fair value, with gains and losses reported in equity, until they are impaired or sold, at which time the gains or losses accumulated in equity are recycled into the income statement. For financial assets that are classified as available for sale, a significant or prolonged decline in the fair value of the investment below its cost is objective evidence of impairment. Impairment losses on these instruments are charged to income. Increases in their fair value after impairment are credited directly to equity.
Revaluation of certain financial assets used to manage the Group's cash position, including derivative products, is recorded at fair value through profit or loss if the derivative instrument cannot be valued separately.
When there are indicators of impairment, all financial assets are subject to an impairment test. The indicators should provide objective evidence of impairment as a result of a past event that occurred subsequent to the initial recognition of the asset. Expected losses as a result of future events are not recognized, no matter how likely.
Cash balances are recorded at their nominal value. Cash equivalents are short-term, highly liquid investments that can be used for any purpose and have a maturity date not exceeding three months from acquisition date. Cash and cash equivalents include bank overdrafts.
If liquid funds are held in a special purpose account in the form of highly liquid investments that are renewed at maturity until needed for the special purpose, these cash equivalents are deemed restricted and are classified as other long-term receivables.
Ordinary shares are classified in the caption «Capital stock». Treasury shares are deducted from equity. Movements on treasury shares do not affect the income statement.
Deferred charges are the prorated amount of charges incurred in the current or prior financial periods but which are related to one or more subsequent periods. Accrued income is the prorated amount of income earned in the current or prior periods which will be received only in subsequent periods.
Capital grants are recorded as deferred income. Grants are recognized as income at the same rate as the depreciation for related fixed assets. When grants relate to a non-capitalized cost, they are systematically recognized as income for the period during which the cost they are supposed to compensate has occurred.
A provision is recognized only when:
When the impact is likely to be material (for long-term provisions), the amount recognized as a provision is estimated on a net present value basis (discount factor). The increase in provision due to the passage of time is recognized as an interest expense.
A present obligation arises from an obligating event and may take the form of either a legal obligation or a constructive obligation. (A constructive obligation exists when IBA has an established pattern of past practice that indicates to other parties that it will accept certain responsibilities and as a result has created a valid expectation on the part of those other parties that it will discharge those responsibilities.) An obligating event leaves IBA no realistic alternative to settling the obligation, independently of its future actions.
Provisions for site repair, restoration, and decommissioning costs are recorded as appropriate in application of the above.
If IBA has an onerous contract (that is, if the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it), the present obligation under the contract is recognized as a provision.
A provision for restructuring is recorded only if IBA can demonstrate that the Company is under an obligation to restructure at the balance sheet date. Such obligation must be demonstrated by (a) preparing a detailed formal plan identifying the main features of the restructuring and (b) raising a valid expectation to those affected that it will carry out the restructuring by starting to implement the plan or by announcing its main features to those affected.
Premiums paid in relation to a defined contribution plan are expensed as incurred. Defined contribution plans are post-employment benefit plans under which IBA pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
As from the date of acquisition of CIS Bio International SAS and its subsidiaries, the Group has defined benefit plans.
The entitlements arising from commitments to employees of CIS Bio International SAS and IBA Radio-isotopes France SAS are recorded in provisions for post-employment benefits and are:
The obligations arising from the application of these benefit plans are retirement plans with defined benefits that set the benefit amount that an employee will receive when retiring, depending generally on one or more factors such as age, years of service and salary. For retirement plans with defined benefits, the costs related to these plans are assessed per retirement plan using the projected unit method. This method considers that each service period gives rise to an additional benefit entitlement unit. According to this method, the plans' cost is recognized as an expense in the income statement so as to spread this cost evenly throughout the employee's career, and this based on the recommendations of actuaries who carry out complete assessments on these retirement plans each year. The amounts recognized in the operating income statement include the cost of performed services, cost of past services and impacts of any plan reduction or settlement. The financial cost and the expected return on these plans' assets (if any) are recognized as financial expenses. The obligations relating to the retirement plans recognized in the balance sheet are assessed based on the present value of future cash flows, calculated using interest rates corresponding to those applicable to first category corporate bonds, whose maturity date is almost similar to that of the corresponding liabilities, less any past services costs not yet recorded and the fair value of all the retirement plans' assets. The past services costs result from the adoption or change brought to a retirement plan. They are recorded as expenses over the average remaining duration until the corresponding entitlements are acquired by the employees. Actuarial differences include, for assets and liabilities, differences between previous actuarial assumptions and what actually happened, and the impact of changes of actuarial assumptions on the plans' liabilities. Actuarial differences are fully recorded in other items of the comprehensive income statement during their period of occurrence.
Share-based payments are transactions to be paid with shares, stock options, or other equity instruments (granted to employees or other parties) and transactions paid in cash or other assets when the amount payable is based on the price of the Group's shares.
All transactions involving share-based payments are recognized as expenses.
Equity-settled share-based payment transactions are measured at the fair value of the goods or services received at the date on which the Group recognizes the goods and services. If the fair value of goods or services cannot be determined, the Group uses the fair value of the equity instruments granted. Equity-settled share-based payments are not remeasured.
Cash-settled share-based payments are measured at the fair value of the liability. IBA does not have plans of this type.
The comprehensive method and the liability method are used. Deferred taxes are recorded on the temporary differences arising between the carrying amount of the balance sheet items and their tax base, using the rate of tax expected to apply when the asset is recovered or the liability is settled.
There are three exceptions to the general principle that deferred taxes are recognized on all temporary differences. Deferred taxes are not recognized for:
A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. The same principle applies to recognition of deferred tax assets for unused tax losses carried forward. This assessment is subject to the principle of prudence.
The Group's pharmaceutical business is currently in a heavy investment phase for the Research and Development of new molecules whose future profits will only be generated in the long term. In order to take this change in profile of IBA's business into account, the Board of Directors has decided to extend the period used for estimating future taxable profits taken into consideration for recognizing deferred tax assets from 4 to 5 years, for the pharmaceutical business only. The 4-year rule remains unchanged for the equipment business. Deferred taxes are calculated for each fiscal entity in the Group. IBA is able to offset deferred tax assets and liabilities only if the deferred balances relate to income taxes levied by the same taxation authority.
Payables after and within one year are measured at amortized cost, i.e. at the net present value of the payable amount. Unless the impact of discounting is significant, the nominal value is taken.
Accrued charges are the prorated amount of expenses which will be paid in a subsequent financial period but relate to a prior period. Deferred income is the prorated amount of income received in the current or prior periods but related to a subsequent period.
Foreign currency transactions are converted into the functional currency of the Group entity party to the transaction using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the conversion at the period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the conversion at the period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Exchange differences arising from the consolidation of currency items that constitute part of the reporting entity's net investment in a foreign entity (i.e. when settlement is neither planned nor likely to occur in the foreseeable future) are recorded in equity if the following two conditions are met:
Derivative instruments are accounted for at fair value as from the date the contracts are entered into. Changes in the fair value of derivative instruments are accounted for in the income statement unless they qualify as cash flow hedges under IAS 39. The Group designates certain derivative transactions as hedges of the variability of the fair value of recognized assets or liabilities (fair value hedges); as unrecognized firm commitments; or as hedges of the cash flow variability arising from a specific risk associated with a recognized asset or liability or with a highly probable forecast transaction (cash flow hedges).
The Group documents at the inception of the transaction the relationship between the hedging instruments and the hedged item, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion of the hedge is recognized immediately in the income statement.
Amounts accumulated in equity are reclassified to income in the periods when the hedged item affects profit or loss (e.g. when the forecast sale that is hedged takes place).
When a hedging instrument expires or is sold, or when a hedge no longer qualifies for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is reclassified to the income statement when the forecast transaction is ultimately recognized in income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Certain derivative instruments do not qualify for hedge accounting. Such derivatives are recognized at fair value on the balance sheet, with changes in fair value recognized in the income statement.
These instruments are designated as economic hedges inasmuch as they are not used to speculate on positions.
A business segment is a distinguishable component engaged in providing products or services subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a specific economic environment subject to risks and returns that are different from those of segments operating in other economic environments.
The Group's activities expose it to a variety of financial risks, of which the largest is market risk (including currency risk). Other financial risks include credit risk, liquidity risk, interest rate risk, and commodity risk. The Group's overall financial risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Financial risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Audit Committee of the Board of Directors. These policies provide written principles for overall financial risk management, as well as written policies covering specific areas, such as foreign exchange risk, use of derivative financial instruments and non-derivative financial instruments, and investing excess liquidity. Group Treasury identifies, evaluates, and hedges financial risks in close cooperation with the Group's operating units.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar, the Chinese yuan, the British pound, and the Swedish krona. Foreign exchange risk arises from future and committed commercial transactions, recognized financial assets and liabilities, and net investments in foreign operations.
To manage foreign exchange risk arising from future and committed commercial transactions and from recognized assets and liabilities denominated in a currency different from the entity's functional currency, entities in the Group use forward exchange contracts, transacted with Group Treasury. Group Treasury is responsible for hedging the net position in each foreign currency by using forward
exchange contracts entered into with banks when possible and appropriate.
For segment reporting purposes, each subsidiary designates contracts with Group Treasury as fair value hedges or cash flow hedges, as appropriate. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities, or committed or future transactions on a gross basis.
The Group's general hedging policy is to hedge any confirmed sales contracts denominated in a foreign currency as well as expected net operational cash flows when they can be reasonably predicted. Appropriate documentation is prepared in accordance with IAS 39. The CFO approves and the CEO is informed of significant hedging transactions, with reporting to the Audit Committee twice a year.
Intercompany loans denominated in foreign currencies are entered into to finance certain subsidiaries and expose the Group to fluctuations in exchange rate.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group's foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.
The Group has some transactional currency exposure that arises from sales or purchases by an operating unit in currencies other than the unit's functional currency. The transactional foreign currency risk mainly arises from open positions in the Belgian entities against the U.S. dollar.
Approximately 16 percent of the Group's sales are denominated in currencies other than the functional currency of the operating unit making the sale, while almost 92 percent of costs are denominated in the unit's functional currency. Where the Group considers that there are no natural hedging opportunities, forward exchange contracts and forward currency options are used to cover currency exposure.
The Group is exposed to securities risk because of commercial paper and shares held by the Group in the context of its excess cash management. Risk is mitigated by a conservative selection of highly rated, highly liquid investment products. However, the Company cannot foresee sudden changes in the ratings of these products or market changes that may impair liquidity.
The Group has no significant exposure to credit risk. The Company policy for large contracts is to have appropriate letters of credit issued prior to delivery of the equipment. The Company has also a general agreement with the Belgian national export credit insurance institution (OND) that provides systematic coverage of all large equipment transactions. With respect to its Pharmaceuticals business segment, the Company has instituted a trade credit insurance policy in the United States. For the rest of the world, owing to the generally public nature of the customers, risk can be held at acceptable levels by closely monitoring customer payments.
The table in section 2.2 presents the financial assets of the Group by valuation method. The carrying amount of these financial assets represents the maximum credit exposure of the Group.
The fair value of a financial instrument is the price at which a party would accept the rights and/or obligations of this financial instrument from another independent party.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount in outstanding credit facilities. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping credit lines available. In late 2009, IBA strengthened the availability of financing by obtaining a long-term credit facility of EUR 50 million from the EIB (European Investment Bank) to provide financing for research and development projects. Under the terms of this financing, the Group agrees to comply with specific covenants relating to the Group's level of debt. In late 2010, the Group had drawn up to EUR 15 million on this line of credit.
The Group has credit lines totalling EUR 100 million, of which 15.86 percent have been utilized to date.
In addition, in the context of its proton therapy contracts, IBA has negotiated a manufacturing credit facility of EUR 60 million which can be used up to end 2013. At December 31, 2010, EUR 20 million of this credit has been utilized.
The table below summarizes the maturity profile of the Group's financial liabilities:
| December 31, 2009 EUR '000 |
Due | < 1 year | 1-2 years | 2-5 years | > 5 years | Total |
|---|---|---|---|---|---|---|
| FINANCIAL LIABILITIES | ||||||
| Bank borrowings | 403 | 2 025 | 2 861 | 294 | 0 | 5 583 |
| Finance lease liabilities | 0 | 1 924 | 1 123 | 1 451 | 643 | 5 141 |
| Other interest-bearing liabilities | 0 | 267 | 0 | 0 | 0 | 267 |
| Trade payables | 14 597 | 33 667 | 0 | 0 | 0 | 48 264 |
| Other ST & LT payables | 8 678 | 114 033 | 43 705 | 4 273 | 7 281 | 177 970 |
| TOTAL | 23 678 | 151 916 | 47 689 | 6 018 | 7 924 | 237 225 |
| December 31, 2010 EUR '000 |
Due | < 1 year | 1-2 years | 2-5 years | > 5 years | Total |
| FINANCIAL LIABILITIES | ||||||
| Bank borrowings | 0 | 2 245 | 2 745 | 28 756 | 6 250 | 39 996 |
| Finance lease liabilities | 0 | 1 190 | 898 | 869 | 425 | 3 382 |
| Other interest-bearing liabilities | 0 | 0 | 0 | 0 | 0 | 0 |
| Trade payables | 28 461 | 34 951 | 0 | 0 | 0 | 63 412 |
| Other ST & LT payables | 15 713 | 108 555 | 36 443 | 6 462 | 1 891 | 169 064 |
The Group exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. The Group entered into interest rate swaps in order to limit the impact of interest rate fluctuation on its financial results. IBA does not apply hedge accounting to these transactions, and these instruments are therefore revalued through profit and loss.
IBA analyzed the impact of a 1 percent fluctuation in interest rates on its consolidated income statement. The effect would have been insignificant.
The Group's large automotive fleet for its U.S. radiopharmaceutical distribution business exposes it to fluctuations in the price of gasoline. The Group enters into contracts to hedge petroleum product price fluctuations as it deems necessary. The last such contract matured in January 2010.
The assets and liabilities of the Group are valued as follows:
| December 31, 2009 | December 31, 2010 | ||||
|---|---|---|---|---|---|
| EUR '000 | Category | Net carrying value |
Fair value | Net carrying value |
Fair value |
| FINANCIAL ASSETS | |||||
| Trade receivables | Loans and receivables |
70 178 | 70 178 | 89 249 | 89 249 |
| Long-term receivables on contracts in progress |
Loans and receivables |
39 591 | 39 591 | 39 142 | 39 142 |
| Available-for-sale financial assets | Available for sale | 32 192 | 32 192 | 33 557 | 33 557 |
| Long-term receivables for decommissioning of sites |
Loans and receivables |
1 395 | 1 395 | 1 516 | 1 516 |
| Other long-term receivables | Loans and receivables |
6 009 | 6 009 | 16 214 | 16 214 |
| Non-trade receivables and advance payments |
Loans and receivables |
17 414 | 17 414 | 15 704 | 15 704 |
| Other short-term receivables | Loans and receivables |
9 455 | 9 455 | 9 582 | 9 582 |
| Other investments | Available for sale | 2 377 | 2 377 | 1 943 | 1 943 |
| Investments in structured products | FVPL2 | 906 | 906 | 0 | 0 |
| Cash and cash equivalents | Loans and receivables |
17 586 | 17 586 | 18 102 | 18 102 |
| Hedging derivative products | Hedge accounting | 2 433 | 2 433 | 491 | 491 |
| Derivative products – other | FVPL1 | 158 | 158 | 1 043 | 1 043 |
| TOTAL | 199 694 | 199 694 | 226 544 | 226 544 | |
| FINANCIAL LIABILITIES | |||||
| Bank borrowings | FLAC | 5 583 | 5 583 | 39 996 | 39 996 |
| Finance lease liabilities | FLAC | 5 141 | 5 141 | 3 382 | 3 382 |
| Other interest-bearing liabilities | FLAC | 267 | 267 | 0 | 0 |
| Trade payables | FLAC | 48 264 | 48 264 | 63 412 | 63 412 |
| Hedging derivative products | Hedge accounting | 0 | 0 | 871 | 871 |
| Derivative products – other | FVPL1 | 103 | 103 | 224 | 224 |
| Other long-term liabilities | FLAC | 53 413 | 53 413 | 43 861 | 43 861 |
| Amounts due to customers for contracts in progress |
FLAC | 28 933 | 28 933 | 42 143 | 42 143 |
| Social security liabilities | FLAC | 17 066 | 17 066 | 18 454 | 18 454 |
| Other short-term liabilities | FLAC | 52 704 | 52 704 | 59 447 | 59 447 |
| Short-term tax liabilities | FLAC | 2 198 | 2 198 | 2 384 | 2 384 |
| Short-term bank credit | FLAC | 23 656 | 23 656 | 1 680 | 1 680 |
| TOTAL | 237 329 | 237 329 | 275 854 | 275 854 |
FLAC: Financial liabilities measured at amortized cost
FVPL1: Fair value through profit or loss (held for trading).
FVPL2. Fair value through profit or loss (derivative-based asset whose value could not be separated from the underlying notional value)
At December 31, 2010, the net carrying amount of these financial assets and liabilities does not differ from their calculated fair value.
At December 31, 2009, the caption «Investments» (FVPL2) included the fair value of synthetic collateralized obligations. These synthetic collateralized debt obligations were purchased for EUR 3.0 million in the context of the contract for the sale of the proton therapy system to the University of Pennsylvania. In lieu of requiring an advance payment guarantee, this contract protected the buyer's down payment by placing it in an escrow account. Seeking a low risk (AAA rating), highly liquid investment, the financial institution working with IBA on this project recommended investing in the most senior tranche of these financial products. In 2010, these collateralized obligations were transferred to a financial institution and have yielded a capital gain of EUR 0.3 million. As a reminder, the revaluation to market value had in the past led to the recording of a EUR 2.1 million financial expense.
The captions «Hedging derivative products» and «Derivative products – other» in assets and liabilities include the fair value of forward exchange contracts, currency swaps and interest rates caps.
The Group may acquire non-controlling interests from third companies, depending on the evolution of its strategy. These interests are shown in the «available for sale» category.
Fair values of hedging instruments are determined by valuation techniques widely used in financial markets and are provided by reliable financial information sources. Fair values are based on the trade dates of the underlying transactions.
The Group uses the following hierarchy to classify financial instruments recognized at fair value according to the reliability of the valuation methods used:
During this past financial year, there was no transfer between the various categories presented below:
| December 31, | ||||
|---|---|---|---|---|
| (EUR '000) | Level 1 | Level 2 | Level 3 | 2009 |
| - Forward foreign exchange contracts | 1 930 | 1 930 | ||
| - Foreign exchange options | 6 | 6 | ||
| - Interest rate caps | 497 | 497 | ||
| Hedge-accounted financial assets | 2 433 | 2 433 | ||
| Available-for-sale financial assets | 32 192 | 32 192 | ||
| Other available-for-sale assets | 2 377 | 2 377 | ||
| - Forward foreign exchange contracts | 96 | 96 | ||
| - Foreign exchange rate swaps | 13 | 13 | ||
| - Foreign exchange options | 40 | 40 | ||
| - Interest rate swaps | 9 | 9 | ||
| - Synthetic collateralized debt obligations | 906 | 906 | ||
| Financial assets at fair value through the income statement | 158 | 906 | 1 064 | |
| - Oil futures contracts | 53 | 53 | ||
| - Forward foreign exchange contracts | 29 | 29 | ||
| - Foreign exchange rate swaps | 21 | 21 | ||
| Financial liabilities at fair value through profit or loss | 103 | 103 |
| December 31, | ||||
|---|---|---|---|---|
| (EUR '000) | Level 1 | Level 2 | Level 3 | 2010 |
| - Forward foreign exchange contracts | 144 | 144 | ||
| - Foreign exchange options | 208 | 208 | ||
| - Interest rate caps | 139 | 139 | ||
| Hedge-accounted financial assets | 491 | 491 | ||
| Available-for-sale financial assets | 33 557 | 33 557 | ||
| Other available-for-sale assets | 1 943 | 1 943 | ||
| - Forward foreign exchange contracts | 390 | 390 | ||
| - Foreign exchange rate swaps | 654 | 654 | ||
| Financial assets at fair value through the income statement | 1 044 | 1 044 | ||
| - Forward foreign exchange contracts | 465 | 465 | ||
| - Foreign exchange rate swaps | 406 | 406 | ||
| Hedge-accounted financial liabilities | 871 | 871 | ||
| - Forward foreign exchange contracts | 51 | 51 | ||
| - Foreign exchange rate swaps | 173 | 173 | ||
| Financial liabilities at fair value through profit or loss | 224 | 224 |
At December 31, 2010, the Group held 30 forward exchange contracts (26 at December 31, 2009) and 8 foreign exchange swaps (none at December 31, 2009) to cover future USD and Polish zlotys cash flows. These hedges are deemed highly effective.
These hedges generated a EUR 2.9 million loss in 2010 (EUR 1.1 million profit in 2009). This loss is recognized in the other items of the comprehensive income statement.
The Group also holds an interest cap to hedge the interest rate risk associated with the fabrication credit for a proton therapy project. The ineffective part of this instrument was recognized in the income statement.
| Hedge instrument maturities | |||||
|---|---|---|---|---|---|
| (EUR '000) | Equity | < 1 year | 1-2 years | > 2 years | |
| AT DECEMBER 31, 2009 | |||||
| - Foreign exchange hedge in | USD | 1 863 | 614 | 1 249 | |
| - Interest rate hedge in | EUR | -108 | -108 | ||
| 1 755 | 506 | 1 249 | 0 | ||
| AT DECEMBER 31, 2010 | |||||
| - Foreign exchange hedge in | PLN | -237 | -45 | -100 | -92 |
| - Foreign exchange hedge in | USD | -282 | -130 | -108 | -44 |
| - Interest rate hedge in | EUR | 139 | 139 | ||
| -380 | -175 | -208 | 3 |
The amount presented in the other items of the comprehensive income statement at December 31, 2009 and transferred in the income statement in 2010 totals EUR 0.2 million (of which EUR 0.14 million relating to the ineffective part of the financial instruments).
At December 31, 2010, the Group held 6 forward exchange contracts and 35 exchange rates swaps (none at December 31, 2009) to cover future USD, Canadian dollars, Polish zlotys and Czech koruna cash flows. The Group also held interest rates caps to hedge the interest rate risk associated with a manufacturing credit for a proton therapy project. At December 31, 2009, the Group held only an interest rate swap for a notional USD amount.
Through its US radiopharmaceutical distribution business, the Group has some exposure to fluctuations in the price of gasoline.
To manage this risk, the Group had entered into a number of futures contracts involving a notional of 52,000 gallons at December 31, 2009. These contracts matured in January 2010.
As they do not qualify for hedge accounting under the IFRS or have become ineffective, the various hedge instruments discussed in this section are measured at fair value through profit and loss.
The gains generated on these instruments included in the income statement amount to EUR 1 million at December 31, 2010 (gain of EUR 0.1 million at December 31, 2009).
The Group's aim is to optimize the capital structure in order to maximise its value for the shareholders while maintaining the financial flexibility required to carry out the strategy approved by the Board of Directors. Under this management, the Group uses among other things the ratio between the net financial debts divided by the equity plus the net financial debts (GEARING). The Group wishes to maintain this ratio below 35 percent.
The Group has agreed to comply with a debt-to-equity ratio covenant under the terms of a EUR 50 million credit facility received from the EIB for its research and development projects The Group drew EUR 15 million on this line of credit in 2010. In light of its financial situation in late 2010, IBA respects this covenant.
Based on the results for the year, the Group decided to distribute a dividend of EUR 0.15 per share for the 2010 financial year. As a reminder, as the Group had made a loss in 2009, it had decided not to distribute a dividend for the 2009 financial year.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
At December 31, 2010, the Group had accumulated net operating losses of EUR 195.7 million to usable to offset future profits taxable mainly in Belgium, France, Italy, Spain, the United Kingdom and the United States and temporary differences amounting to EUR 100.5 million. The Company recognized deferred tax assets of EUR 30.9 million with the view to use the tax losses carried forward and EUR 1.0 million as temporary differences.
The Group recognizes deferred tax assets on unused losses carried forward provided that taxable profits will be available to offset these assets. The estimates of the amounts recognized in the balance sheet are established with caution on the basis of recent financial information validated by the Board of Directors and depend on certain assessments relating to future taxable profits of the Group's subsidiaries. The Group's pharmaceutical business is currently in a heavy investment phase for the Research and Development of new molecules whose future profits will only be generated in the long term. In order to take this change in profile of IBA's business into account, the Board of Directors has decided to extend the period used for estimating future taxable profits taken into consideration for recognizing deferred tax assets from 4 to 5 years, for the pharmaceutical business only. The 4-year rule remains unchanged for the equipment business. If the company had not changed this internal rule, the impact on IBA's balance sheet would have been a reduction of EUR 4 million of the deferred tax assets.
The production of FDG (Pharmaceutical business segment) generates radiation and results in the contamination of production site facilities. This situation may require the Group to pay restoration costs to comply with regulations in these various jurisdictions, as well as with any legal or constructive obligations.
Analysis and estimates are performed by the Group, together with its legal advisers, in order to determine the probability, timing, and amount involved in a probable required outflow of resources.
Provision has been made for unavoidable costs in connection with decommissioning the sites where radiopharmaceutical agents are produced. These provisions are measured at the net present value of the best estimate of the necessary costs.
At December 31, 2010, these provisions stood at EUR 39.1 million, compared with EUR 36.9 million at December 31, 2009. They were primarily for obligations in connection with a radiopharmaceutical production facility belonging to the Group's French subsidiary, CIS Bio International SAS.
The French subsidiary CIS Bio International SAS has held nuclear operator status since December 2008 and as such is required to set aside restricted assets for the future decommissioning and restoration of the nuclear medicine facilities at the site in Saclay, France. At December 31, 2010, these restricted assets amounted to EUR 33.6 million, compared with EUR 32.2 million at December 31, 2009.
In the U.S., approximately EUR 1.5 million has been deposited in blocked accounts in order to meet legal obligations in certain States (Illinois and California). Potential changes in US legislation may lead the Group to establish additional provisions for decommissioning.
In the context of the gradual disengagement from radioactive source production (production of cobalt and cesium) at the Saclay site in France, a provision has been made to meet obligations for the takeover and disposal of used radioactive
sources and certain equipment (irradiators) in France. This provision is valued at the net present value of the most probable estimates of unavoidable costs for the treatment and disposal of these used sources. This provision is discounted based on the estimated plan for source recovery. At December 31, 2010, this provision stood at EUR 16.4 million, compared with EUR 17.6 million at December 31, 2009.
Contracts in progress are valued at their cost of production, increased by income accrued as determined by the stage of completion of the contract activity at the balance sheet date, to the extent that it is probable that the economic benefits associated with the contract will flow to the Group. This probability is based on judgment. If certain judgmental criteria differ from those used for previously recognized revenues, the Group's income statement is affected.
When appropriate, the Company revises its estimated margin at completion to take into account the assessment of any residual risk arising from this contract over several years. When the final outcome of these uncertainties differs from initial estimations, the Group's income statement is affected.
IBA records provisions for the defined benefit plans of its subsidiaries CIS Bio International SAS and IBA Radioisotopes France SAS. These employee benefit provisions were calculated on the basis of the following assumptions at December 31, 2010:
³ Retirement age: 65 for management, 63 for nonmanagement.
See Note 27.2 for additional information.
The recoverable amounts of tangible and intangible fixed assets are determined on a «value in use» basis. Value in use is determined on the basis of IBA's most recent business plans, as approved by the Board of Directors. These plans incorporate various assumptions made by management and approved by the Board as to how the business, profit margins, and investments will evolve. See Note 7.1 for additional information.
The growth rates used for the impairment tests vary between 0 percent and 11 percent and the discount rates vary between 9.99 percent and 11 percent. At December 31, 2010, the sensitivity tests carried out by the Group through the fluctuation of the growth and discount rates by 100 basis points (towards the top and bottom) have not revealed any significant impairment.
IBA revalues its private equity holdings using either the discounted cash flow method or the share value assigned to them during the most recent rounds of financing. It should be noted that, at December 31, 2010, IBA had recorded an impairment of EUR 0.8 million for one private equity investment due to a downward revision of estimated gains from the use of an innovative technology (EUR 3.6 million had already been recorded for this holding).
Expenses incurred to prepare the Group's facilities for the future commercialization of new molecules in phase 2 development are recognized as assets when management considers it likely that such molecules can be brought to market and that future revenues will offset the development costs incurred. At December 31, 2010, these capitalized expenses stood at EUR 3.7 million compared with EUR 1 million at December 31, 2009 (see Note 7.2)
Consolidated financial statements
Application of IFRS 8 Operating Segments to periods beginning on or after January 1, 2009 had no impact on the segment information in the Group's consolidated financial statements. The Group's management has determined that the operating segments are the same as the previous business segments under IAS 14 Segment Information.
On the basis of its internal financial reports to the Board of Directors and given the Group's primary source of risk and profitability, IBA has identified two levels of operating information:
At December 31, 2010, the Group had two primary business segments for reporting purposes: (1) Equipment and (2) Pharmaceuticals.
The Group's HTRF® technology also gives it a presence in the in vitro screening of new drugs for the pharmaceutical industry and biotech companies.
The following table provides details of the income statement for each segment. Any intersegment sales are contracted at arm's length.
| Equipments | Pharmaceuticals | Group | |
|---|---|---|---|
| (EUR '000) | (EUR '000) | (EUR '000) | |
| YEAR ENDED DECEMBER 31, 2009 | |||
| Net sales and services | 156 878 | 204 803 | 361 681 |
| Intersegment sales External sales |
-1 304 155 574 |
-1 216 203 587 |
-2 520 359 161 |
| Segment result | 537 | -1 902 | -1 365 |
| Unallocated expenses (1) | -1 863 | ||
| Financial (expense)/income (2) | -5 125 | ||
| Share of profit/(loss) of companies consolidated using the equity method | 0 | 812 | 812 |
| Result before tax | -7 541 | ||
| Tax (expense)/income (2) | -4 752 | ||
| RESULT FOR THE PERIOD | -12 293 | ||
| Segment assets | 177 495 | 266 701 | 444 196 |
| Accounted investments allocated to a segment | 5 097 | 5 097 | |
| Unallocated assets (3) | 30 350 | ||
| TOTAL ASSETS | 177 495 | 271 798 | 479 643 |
| Segment liabilities | 159 998 | 175 378 | 335 376 |
| Unallocated liabilities (4) | 125 | ||
| TOTAL LIABILITIES | 159 998 | 175 378 | 335 501 |
| Other segment information | |||
| Capital expenditure | 1 951 | 18 497 | |
| Depreciation and impairment of property, plant, and equipment | 1 969 | 13 491 | |
| Amortization of intangible assets | 901 | 4 908 | |
| Non-cash expense/(income) | 2 125 | 4 670 | |
| Headcount at year-end | 842 | 1 146 | |
| YEAR ENDED DECEMBER 31, 2010 | |||
| Net sales and services | 170 741 | 218 427 | 389 168 |
| Intersegment sales | -753 | -824 | -1 577 |
| External sales | 169 988 | 217 603 | 387 591 |
| Segment result Unallocated expenses (1) |
9 011 | 1 372 | 10 383 -1 313 |
| Financial (expense)/income (2) | -1 138 | ||
| Share of profit/(loss) of companies consolidated using the equity method | 0 | 1 455 | 1 455 |
| Result before tax | 9 387 | ||
| Tax (expense)/income (2) | -2 744 | ||
| RESULT FOR THE PERIOD | 6 643 | ||
| Segment assets | 205 304 | 282 630 | 487 934 |
| Accounted investments allocated to a segment | 8 255 | 8 255 | |
| Unallocated assets (3) | 32 018 | ||
| TOTAL ASSETS | 205 304 | 290 885 | 528 207 |
| Segment liabilities | 207 264 | 168 350 | 375 614 |
| Unallocated liabilities (4) | 191 | ||
| TOTAL LIABILITIES | 207 264 | 168 350 | 375 805 |
| Other segment information | |||
| Capital expenditure | 3 574 | 19 084 | |
| Depreciation and impairment of property, plant, and equipment | 1 812 | 8 929 | |
| Amortization of intangible assets | 1 071 | 3 174 | |
| Non-cash expense/(income) | 5 567 | -2 123 | |
| Headcount at year-end | 913 | 1 144 |
(1) Unallocated expenses consist mainly of expenses for stock option plans and stock plans.
(2) Cash and taxes are handled at the Group level and are therefore presented under unallocated financial/(expense)/income.
(3) Unallocated assets include deferred tax assets and the assets of IBA Participations SPRL, IBA Corporate Services SA, and IBA Investments SCRL.
(4) Unallocated liabilities include the liabilities of IBA Participations SPRL, IBA Corporate Services SA, and IBA Investments SCRL.
The Group's business segments operate in two main geographical areas, the United States and the rest of the world.
These geographical segments have been determined on the basis of economic and political context, the degree of proximity of the business activities, and the specific risks associated with the business activities in a given geographical area.
The sales figures presented below are based on customer location, whereas segment balance sheet items are based on asset location.
| USA (EUR '000) |
ROW (EUR '000) |
Group (EUR '000) |
|
|---|---|---|---|
| YEAR ENDED DECEMBER 31, 2009 | |||
| Net sales and services | 107 291 | 251 870 | 359 161 |
| Segment assets | 73 502 | 369 312 | 442 814 |
| Investments accounted for using the equity method | 1 352 | 3 745 | 5 097 |
| Unallocated assets | 31 732 | ||
| Total assets | 479 643 | ||
| Capital expenditure (incl. fixed assets from acquisitions in 2009) | 4 744 | 15 704 | |
| USA | ROW | Group |
| (EUR '000) | (EUR '000) | (EUR '000) | |
|---|---|---|---|
| YEAR ENDED DECEMBER 31, 2010 | |||
| Net sales and services | 122 069 | 265 522 | 387 591 |
| Segment assets | 97 455 | 390 620 | 488 075 |
| Investments accounted for using the equity method | 2 078 | 6 177 | 8 255 |
| Unallocated assets | 31 877 | ||
| Total assets | 528 207 | ||
| Capital expenditure (incl. fixed assets from acquisitions in 2010) | 9 187 | 13 471 |
At December 31, 2010, the IBA Group consists of IBA SA and 42 companies and associates in 15 countries. 35 of them are fully consolidated and 7 are accounted for using the equity method. The Group has elected not to use the proportional method for joint ventures.
| Name | Country of Incorporation |
Share of equity held (%) |
Change in % held compared to December 31, 2009 |
|---|---|---|---|
| IBA Molecular Holding (BE 0880.070.706) | Belgium | 100.00% | - |
| IBA Pharma SA (BE 0860.215.596) | Belgium | 99.90% | -0.10% |
| IBA Pharma Invest SA (BE 0874.830.726) | Belgium | 68.68% | -0.07% |
| IBA Participations SPRL (BE 0465.843.290) | Belgium | 100% | - |
| IBA Investments SCRL (BE 0471.701.397) | Belgium | 100% | - |
| IBA Corporate Services SA (BE 0471.889.261) | Belgium | 100% | - |
| Molecular Imaging SA (BE 0819.674.051) | Belgium | 99.90% | -0.10% |
| Ion Beam Beijing Medical Appliance Technology Service Co. Ltd. | China | 100% | - |
| Ion Beam Applications Co. Ltd. | China | 100% | - |
| IBA Radio-isotopes France SAS | France | 99.90% | -0.10% |
| IBA Dosimetry GmbH | Germany | 100% | - |
| IBA Molecular Imaging (India) Pvt. Ltd. | India | 68.68% | -0.07% |
| IBA Radio-Isotopi Italia S.r.L. | Italy | 99.90% | -0.10% |
| IBA Molecular Spain SA | Spain | 99.90% | -0.10% |
| MediFlash Holding A.B. | Sweden | 100% | - |
| IBA Dosimetry A.B. (1) | Sweden | 0% | -100% |
| IBA Molecular UK limited | United Kingdom |
99.90% | -0.10% |
| IBA Dosimetry North America Inc. | USA | 100% | - |
| IBA Proton Therapy Inc. | USA | 100% | - |
| IBA Industrial Inc. | USA | 100% | - |
| IBA Molecular North America Inc. | USA | 99.90% | -0.10% |
| RadioMed Corporation | USA | 100% | - |
| IBA USA Inc. | USA | 100% | - |
| IBA Molecular Montreal Holding Corp. | USA | 100% | - |
| BetaPlus Pharma SA (BE 0479.037.569) | Belgium | 74.93% | -0.07% |
| IBA Particle Therapy GmbH | Germany | 100% | - |
| Radiopharma Partners SA (BE 0879.656.475) | Belgium | 99.90% | -0.10% |
| CIS Bio International SAS | France | 99.90% | -0.10% |
| Cis Bio Spa | Italy | 99.90% | -0.10% |
| Cis Bio GmbH | Germany | 99.90% | -0.10% |
| Cis Bio US Inc. | USA | 99.90% | -0.10% |
| IBA Bio Assays SAS | France | 99.90% | -0.10% |
| IBA Molypharma SL | Spain | 99.90% | -0.10% |
| PetLinq L.L.C. | USA | 99.90% | 59.90% |
| IBA Hadronthérapie SAS | France | 100% | 100% |
| Cyclhad SAS | France | 60% | 60% |
(1) In December 2010, the Company was merged with Mediflash Holding A.B.
Bio Assays SAS, Molecular Imaging SA, and IBA Molypharma SL were established in 2009 and therefore do not give rise to goodwill.
IBA Hadronthérapie SAS and Cyclhad SAS were established in 2010 and therefore do not give rise to goodwill.
| Name | Country of Incorporation |
Share of equity held (%) |
Change in % held compared to December 31, 2009 |
|---|---|---|---|
| Striba GmbH | Germany | 50% | - |
| Pharmalogic Pet Services of Montreal Cie | Canada | 48% | - |
| Radio Isotope Méditerranée | Morocco | 25% | - |
| Molypharma | Spain | 24.5% | - |
| Swan Isotopen AG | Switzerland | 20.2% | - |
| Sceti Medical Labo KK | Japan | 39.8% | - |
| Bio Molecular Industries SDN | Malaysia | 36.83% | 36.83% |
In September 2010, IBA constituted Cyclhad SAS with Saphyn (SAnté et PHYsique Nucléaire, Health and Nuclear Physics, a public-private partnership based in Caen) and financial partners. IBA has a 60 percent majority stake in Cyclhad SAS. IBA will provide Cyclhad SAS with the prototype of its carbon ion therapy system based on an advanced 400 MeV (mega electrons volts) superconductive isochronous cyclotron capable of accelerating carbon ions used for cancer treatment. At the same time, IBA also signed a research and development contract with SAPHYN to jointly develop the potential of carbon ion therapy.
On October 1, 2010, IBA increased its stake by 60 percent in PETLINQ L.L.C. Since then, the Company was fully consolidated.
The net acquired assets and goodwill arising from the purchase of the stake in Petlinq L.L.C. in October 2010, are as follows:
| (USD '000) | Fair value | Carrying amount of net acquired assets |
|---|---|---|
| Cash and cash equivalents | 11 | 11 |
| Other receivables | 40 | 40 |
| Fixed assets | 13 | 13 |
| Intangible fixed assets | 1 369 | 190 |
| Trade payables | -710 | -710 |
| Other current debts | -36 | -36 |
| Current bank debts | -44 | -44 |
| Provisions | -262 | -262 |
| Other non-current debts | -381 | -381 |
| Net acquired assets (USD '000) | 0 | -1 179 |
| Net acquired assets (EUR '000) | 0 | -866 |
| Price paid (EUR '000) | 0 | |
| - Amount paid in cash | 0 | |
| Fair value of the net acquired assets (EUR '000) | 0 | |
| Goodwill (EUR '000) | 0 |
At December 31, 2010, the contribution of Petlinq L.L.C. to Group REBIT was EUR 0.23 million. Its contribution to net profit from continuing operations was EUR 0.23 million. If Petlinq L.L.C. had been acquired on January 1, 2010, at year end the Group's net result would have been EUR 6.3 million and sales and services would have been EUR 388.5 million.
In January 2009, IBA had participated in the capital increase of the Swiss company Swan Isotopen AG.
The net acquired assets and goodwill arising from its January 2009 purchase of equity in Swan Isotopen AG were as follows:
| (CHF '000) | Fair value | Carrying amount of net acquired assets |
|---|---|---|
| Cash and cash equivalents | 800 | 800 |
| Other receivables | 14 | 14 |
| Property, plant, and equipment | 163 | 163 |
| Intangible fixed assets | 35 | 35 |
| Trade payables | -12 | -12 |
| Other payables | -72 | -72 |
| Net acquired assets (CHF '000) | 928 | 928 |
| Net acquired assets (EUR '000) | 623 | 623 |
| Price paid (EUR '000) | 669 | |
| - Cash | 669 | |
| Fair value of net acquired assets (EUR '000) | 623 | |
| Goodwill (EUR '000) | 46 |
No company was disposed of during the 2010 financial year.
In September 2009, the Group had sold its subsidiary IBA Advanced Radiotherapy AB. Net assets disposed of in this sale were as follows:
| (SEK '000) | Fair value | Carrying amount of net disposed assets |
|---|---|---|
| Cash and cash equivalents | 166 | 166 |
| Trade receivables | 3 791 | 3 791 |
| Other receivables | 310 | 310 |
| Inventories | 4 856 | 4 856 |
| Property, plant, and equipment | 23 | 23 |
| Trade payables | -5 886 | -5 886 |
| Other payables | -1 299 | -1 299 |
| Provisions | -1 500 | -1 500 |
| Net assets disposed (SEK '000) | 461 | 461 |
| Net assets disposed (EUR '000) | 51 | |
| Price received (EUR '000) | 0 | |
| - Cash | 0 | |
| Fair value of net assets disposed of (EUR '000) | 51 | |
| Loss (EUR '000) | (51) |
Movements of goodwill are detailed as follows.
| (EUR '000) | |
|---|---|
| At January 1, 2009 | 29 936 |
| Final adjustments to previously acquired goodwill | 0 |
| Additions through business combinations | 0 |
| Goodwill impairment | 0 |
| Currency translation difference | -373 |
| At December 31, 2009 | 29 563 |
| At January 1, 2010 | 29 563 |
| Final adjustments to previously acquired goodwill | 0 |
| Additions through business combinations | 0 |
| Goodwill impairment | 0 |
| Currency translation difference | 1 929 |
| At December 31, 2010 | 31 492 |
The goodwill generated by an acquisition is allocated to the cash-generating units (CGUs) concerned, and an impairment test is carried out annually on the CGUs' fixed assets (including goodwill).
The following table summarizes allocation of the carrying amount of goodwill by business segment:
| (EUR '000) | Equipment | Pharmaceutical | Group |
|---|---|---|---|
| December 31, 2009 | 3 618 | 25 945 | 29 563 |
| December 31, 2010 | 3 807 | 27 685 | 31 492 |
| Post-tax discount rate applied in 2009 | 10.86% | 10.76% | |
| Long-term growth rate 2009 (*) | 2.60% | 3.00% | |
| Post-tax discount rate applied in 2010 | 9.82% | 9.99% | |
| Long-term growth rate 2010 (*) | 2.60% | 3.00% |
(*) Rate consistent with expected growth in the segment
The recoverable amounts of subsidiaries' fixed assets have been determined on a «value in use» basis. Value in use has been determined on the basis of IBA's latest business plans, as approved by the Board of Directors in the context of the strategic plan. The cash flows beyond a four-year period have been extrapolated using the growth rates shown in the table above. Impairment testing uses gross budgeted operational margins estimated by management on the basis of past
performance and future development prospects. Discount rates used reflect the specific risks related to the segments in question.
If the growth rate is decreased by 100 basis points and the discount rate is increased by 100 basis points, the recoverable amount remains greater than the carrying amount of the tested assets. No impairment was identified in 2009 or 2010.
| Patents and | Development | ||||
|---|---|---|---|---|---|
| (EUR '000) | Software | trademarks | costs | Other | Total |
| Gross carrying amount at January 1, 2009 | 8 614 | 21 367 | 1 458 | 45 248 | 76 687 |
| Additions | 1 625 | 723 | 761 | 164 | 3 273 |
| Disposals | -6 | -1 | -1 | 0 | -8 |
| Transfers | 784 | 266 | -340 | 1 211 | 1 921 |
| Changes in consolidation scope | 0 | 0 | 0 | 0 | 0 |
| Currency translation difference | -51 | -3 | 13 | -68 | -109 |
| Gross carrying amount at December 31, 2009 | 10 966 | 22 352 | 1 891 | 46 555 | 81 764 |
| Accumulated depreciation at January 1, 2009 | 6 615 | 11 753 | 772 | 19 779 | 38 919 |
| Additions | 1 255 | 1 143 | 105 | 3 307 | 5 810 |
| Disposals | -6 | -4 | 0 | 0 | -10 |
| Transfers | -215 | 372 | 3 | -3 | 157 |
| Changes in consolidation scope | 0 | 0 | 0 | 0 | 0 |
| Currency translation difference | -35 | -1 | -10 | -86 | -132 |
| Accumulated depreciation at December 31, 2009 | 7 614 | 13 263 | 870 | 22 997 | 44 744 |
| Net carrying amount at January 1, 2009 | 1 999 | 9 614 | 686 | 25 469 | 37 768 |
| Net carrying amount at December 31, 2009 | 3 352 | 9 089 | 1 021 | 23 558 | 37 020 |
| Gross carrying amount at January 1, 2010 | 10 966 | 22 352 | 1 891 | 46 555 | 81 764 |
| Additions | 2 256 | 939 | 3 295 | 250 | 6 740 |
| Disposals | -228 | 0 | 0 | -1 | -229 |
| Transfers | 489 | -358 | 1 042 | -708 | 465 |
| Changes in consolidation scope | 11 | 0 | 179 | 1 061 | 1 251 |
| Currency translation difference | 139 | 10 | 77 | 85 | 311 |
| Gross carrying amount at December 31, 2010 | 13 633 | 22 943 | 6 484 | 47 242 | 90 302 |
| Accumulated depreciation at January 1, 2010 Additions |
7 614 1 289 |
13 263 195 |
870 274 |
22 997 2 487 |
44 744 4 245 |
| Disposals | -228 | 0 | 0 | 0 | -228 |
| Transfers | 299 | 164 | 0 | -195 | 268 |
| Changes in consolidation scope | 6 | 0 | 84 | 77 | 167 |
| Currency translation difference | 96 | 6 | 26 | 62 | 190 |
| Accumulated depreciation at December 31, 2010 | 9 076 | 13 628 | 1 254 | 25 428 | 49 386 |
| Net carrying amount at January 1, 2010 | 3 352 | 9 089 | 1 021 | 23 558 | 37 020 |
| Net carrying amount at December 31, 2010 | 4 557 | 9 315 | 5 230 | 21 814 | 40 916 |
The majority of the intangible assets involve software, licenses for the production and distribution of radiopharmaceutical agents, exclusive distribution rights, development costs for new molecules, and customer lists, accounted for by applying the purchase method to acquisitions made by the Group.
The remaining intangible assets have to do primarily with the value of customer relationships, which are amortized over the anticipated life of these relationships.
Amortization expense for intangible assets was recognized in the income statement in the line items «Cost of sales and services», «Sales and marketing expenses», «General and administrative expenses», and «Research and development expenses».
For details on impairment testing, see Note 7.1.
No impairment of the intangible assets discussed in this Note was identified at December 31, 2009 or December 31, 2010.
In 2010, the Group capitalized EUR 1.0 million in development costs for new labeled molecules for EUR 3.7 million, part of which is in tangible fixed assets (EUR 1.0 million in 2009).
| Plant, ma | Furniture, | Other proper | |||
|---|---|---|---|---|---|
| (EUR '000) | Land and buildings |
chinery, and equipment |
fixtures, and vehicles |
ty, plant, and equipment |
Total |
| Gross carrying amount at January 1, 2009 | 85 174 | 128 360 | 18 584 | 65 282 | 297 400 |
| Additions | 2 002 | 3 171 | 629 | 13 298 | 19 100 |
| Disposals | -145 | -859 | -1 080 | -122 | -2 206 |
| Transfers | 4 596 | 9 059 | 33 | -15 609 | -1 921 |
| Changes in consolidation scope | 0 | 0 | 0 | 0 | 0 |
| Currency translation difference | 174 | -340 | 80 | -120 | -206 |
| Gross carrying amount at December 31, 2009 | 91 801 | 139 391 | 18 246 | 62 729 | 312 167 |
| Accumulated depreciation at January 1, 2009 | 61 376 | 89 496 | 13 497 | 54 338 | 218 707 |
| Additions | 4 296 | 8 913 | 2 275 | 1 460 | 16 944 |
| Disposals | -145 | -638 | -1 004 | -95 | -1 882 |
| Transfers | 3 022 | 5 868 | -116 | -8 931 | -157 |
| Changes in consolidation scope | 0 | 0 | 0 | 0 | 0 |
| Currency translation difference | -211 | -655 | -51 | -54 | -971 |
| Accumulated depreciation at December 31, 2009 | 68 338 | 102 984 | 14 601 | 46 718 | 232 641 |
| Net carrying amount at January 1, 2009 | 23 798 | 38 864 | 5 087 | 10 944 | 78 693 |
| Net carrying amount at December 31, 2009 | 23 463 | 36 407 | 3 645 | 16 011 | 79 526 |
| Gross carrying amount at January 1, 2010 | 91 801 | 139 391 | 18 246 | 62 729 | 312 167 |
| Additions | 411 | 3 774 | 1 783 | 9 950 | 15 918 |
| Disposals | -46 | -7 699 | -1 035 | 0 | -8 780 |
| Transfers | 8 035 | 9 227 | 18 | -17 745 | -465 |
| Changes in consolidation scope | 0 | 30 | 5 | 0 | 35 |
| Currency translation difference | 1 509 | 3 494 | 564 | 57 | 5 624 |
| Gross carrying amount at December 31, 2010 | 101 710 | 148 217 | 19 581 | 54 991 | 324 499 |
| Accumulated depreciation at January 1, 2010 | 68 338 | 102 984 | 14 601 | 46 718 | 232 641 |
| Additions | 2 150 | 8 137 | 1 916 | -1 462 | 10 741 |
| Disposals | -44 | -7 423 | -997 | 0 | -8 464 |
| Transfers | 1 165 | 4 000 | 3 | -5 436 | -268 |
| Changes in consolidation scope | 0 | 22 | 3 | 0 | 25 |
| Currency translation difference | 699 | 2 287 | 409 | 0 | 3 395 |
| Accumulated depreciation at December 31, 2010 | 72 308 | 110 007 | 15 935 | 39 820 | 238 070 |
| Net carrying amount at January 1, 2010 | 23 463 | 36 407 | 3 645 | 16 011 | 79 526 |
| Net carrying amount at December 31, 2010 | 29 402 | 38 210 | 3 646 | 15 171 | 86 429 |
Other tangible fixed assets mainly include assets under construction. There are no tangible fixed assets subject to title restrictions.
Depreciation expense for intangible assets was recognized in profit and loss in the line items «Cost of sales and services», «Sales and marketing expenses», «General and administrative expenses», «Research and development expenses», and «Other operating expenses».
As indicated in Note 7.1, an impairment test was carried out in respect of the non-current assets at December 31, 2009 and December 31, 2010 to verify that the carrying amounts of tangible fixed assets, intangible assets, and goodwill were justified by the recoverable amounts. The key assumptions used to calculate value in use are indicated in Note 7.1. No impairment was recognized in 2009 or 2010.
IBA holds the following assets under finance lease contracts:
| Plant, machinery, and equipment |
Furniture, fixtures, and vehicles |
||||
|---|---|---|---|---|---|
| December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
| 7 325 | 7 325 | 25 752 | 29 352 | 41 | 59 |
| 3 799 | 3 969 | 15 787 | 19 433 | 18 | 9 |
| 3 526 | 3 356 | 9 965 | 9 919 | 23 | 50 |
| Land and buildings |
Details of lease payments on finance liabilities relating to leased assets are set out in Note 18.2. These amounts are included in intangible fixed assets.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Investments accounted for using the equity method | 5 097 | 8 255 |
| Other investments | 2 377 | 1 943 |
| TOTAL | 7 474 | 10 198 |
Equity-accounted companies are listed in Note 5.2.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| At January 1 | 3 643 | 5 097 |
| Share in (loss)/profit of equity-accounted investments | 812 | 1 455 |
| Acquisitions | 672 | 1 639 |
| Dividends | 0 | -387 |
| Currency translation difference | -30 | 451 |
| At December 31 | 5 097 | 8 255 |
In August 2010, IBA acquired a 36.83 percent stake in the capital of Bio Molecular Industries SDN.
In January 2009, IBA acquired a 20.2 percent stake in the Swiss company Swan Isotopen AG.
The Group's holdings in its principal associates, all of which are unlisted, are as follows:
| (EUR '000) | Country of incorporation |
Assets | Liabilities | Revenue | Profit/ (Loss) |
% Interest |
|---|---|---|---|---|---|---|
| 2009 | ||||||
| Molypharma | Spain | 12 122 | 6 687 | 12 541 | 1 205 | 24.5% |
| Pharmalogic Pet Services of Montreal Cie |
Canada | 3 402 | 1 818 | 5 306 | 1 150 | 48.0% |
| PetLinq L.L.C. | USA | 340 | 694 | 1 280 | -67 | 40.0% |
| Radio Isotope Méditerranée | Morocco | 4 719 | 4 407 | 0 | -820 | 25.0% |
| Striba GmbH | Germany | 94 396 | 94 376 | 949 | 0 | 50.0% |
| Sceti Medilabo KK | Japan | 4 430 | 3 873 | 6 616 | 341 | 39.8% |
| Swan Isotopen AG | Switzerland | 4 446 | 1 749 | 1 | -390 | 20.2% |
| 2010 | ||||||
| Molypharma | Spain | 12 087 | 5 353 | 13 223 | 1 008 | 24.5% |
| Pharmalogic Pet Services | Canada | 4 995 | 1 906 | 7 641 | 2 322 | 48.0% |
| of Montreal Cie | ||||||
|---|---|---|---|---|---|---|
| Radio Isotope Méditerranée | Morocco | 5 631 | 6 379 | 580 | -445 | 25.0% |
| Striba GmbH | Germany | 98 111 | 98 073 | 1 790 | 18 | 50.0% |
| Sceti Medilabo KK | Japan | 6 895 | 5 773 | 8 146 | 634 | 39.8% |
| Swan Isotopen AG | Switzerland | 7 918 | 5 569 | 220 | -775 | 20.2% |
| Bio Molecular Industries SDN |
Malaysia | 6 980 | 2 668 | 0 | -17 | 36.8% |
At December 31, 2010, outstanding balances with equity-accounted companies amounted to EUR 13.1 million for long-term assets, EUR 5.5 million for trade receivables, EUR 0.3 million for other current assets, EUR 2.9 million for trade payables and EUR 0.1 million for amounts owed to customers for work in progress.
At December 31, 2009, outstanding balances with equity-accounted companies amounted to EUR 2.7 million for other longterm assets and EUR 0.3 million for amounts owed to customers for work in progress.
The «Other investments» are comprised of shares of unlisted companies. These shares are reassessed either on the basis of the discount method for expected future cash flows, or on the basis of the value granted to them during the most recent operation to raise additional capital.
| (EUR '000) | Total |
|---|---|
| At December 31, 2009 | 2 377 |
| Equity stake | 200 |
| Capital reductions | -50 |
| Impairment | -712 |
| Movements through reserves | 128 |
| Au December 31, 2010 | 1 943 |
In 2006, IBA formed a joint venture named Striba GmbH with Strabag Projektenwicklung GmbH (Germany).
This joint venture will provide a proton therapy system and related medical technology to the Universitätsklinikum Essen (North-Rhine, Westphalia, Germany).
The assets and liabilities of this joint venture (consolidated using the equity method) are as follows:
| Assets Non-current assets 0 0 Current assets 94 396 98 111 TOTAL 94 396 98 111 Liabilities Non-current liabilities 0 0 Current liabilities 94 376 98 073 TOTAL 94 376 98 073 Net assets 20 38 Revenue 949 1 790 Expense/(income) 949 1 773 Result after tax 0 18 |
(EUR '000) | December 31, 2009 Audited accounts |
December 31, 2010 Unaudited accounts |
|---|---|---|---|
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Deferred tax assets | ||
| - Deferred tax asset to be recovered after more than 12 months | 24 573 | 24 596 |
| - Deferred tax asset to be recovered within 12 months | 7 159 | 7 281 |
| TOTAL | 31 732 | 31 877 |
| Deferred tax liabilities | ||
| - Deferred tax liabilities to be paid after more than 12 months | 659 | 720 |
| - Deferred tax liabilities to be paid within 12 months | 345 | 228 |
| TOTAL | 1 004 | 948 |
| Net deferred tax assets | 30 728 | 30 929 |
| (EUR '000) | Total | |
|---|---|---|
| Deferred tax assets | ||
| At January 1, 2009 | 33 986 | |
| Credited/(charged) to the income statement | - 2 090 | |
| Acquisition of companies | 0 | |
| Currency translation difference | -164 | |
| At December 31, 2009 | 31 732 | |
| Credited/(charged) to the income statement | - 343 | |
| Acquisition of companies | 0 | |
| Currency translation difference | 488 | |
| At December 31, 2010 | 31 877 |
| (EUR '000) | Total | |
|---|---|---|
| Deferred tax liabilities | ||
| At January 1, 2009 | 470 | |
| (Credited)/charged to the income statement | 524 | |
| Acquisition of companies | 0 | |
| Currency translation difference | 10 | |
| At December 31, 2009 | 1 004 | |
| (Credited)/charged to the income statement | -119 | |
| Acquisition of companies | 0 | |
| Currency translation difference | 63 | |
| At December 31, 2010 | 948 |
Deferred income tax assets are recognized as tax loss carry-forwards to the extent that it is likely they can be recovered through future earnings. Note 3 explains the estimates and judgments used by IBA in making this assessment.
At December 31, 2010, deferred taxes amounting to EUR 69.7 million (EUR 61.3 million in 2009) were not recognized as assets in the balance sheet. Tax losses (excluding Italy for EUR 6 million) and corresponding temporary differences have no expiry dates.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Long-term receivables on contracts in progress | 39 591 | 39 142 |
| Available-for-sale financial assets | 32 192 | 33 557 |
| Long-term receivables for decommissioning of sites | 1 395 | 1 516 |
| Other assets | 6 915 | 16 214 |
| TOTAL | 80 093 | 90 429 |
The French subsidiary CIS Bio International SAS has held nuclear operator status since December 2008 and as such is required to set aside restricted assets for the future decommissioning and restoration of the nuclear medicine facilities at the site in Saclay, France.
At December 31, 2010, these assets, shown in «Available-for-sale financial assets», came to EUR 33.6 million. The caption «Longterm receivables for decommissioning of sites» includes deposits of EUR 1.5 million held in blocked accounts in the U.S. in order to meet legal obligations in certain States (Illinois and California).
Long-term liabilities arising from contracts in progress include down payments of EUR 37.7 million (EUR 39.6 million in December 2009) on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition and a provision for bills to process within the scope of the proton therapy project for an amount of EUR 1.4 million.
At December 31, 2010, «Other assets» consisted primarily of EUR 3.7 million in receivables with associated companies, EUR 1.6 million in advances for the development of new labeled molecules, the subscription to a EUR 4.7 million bond, and EUR 5.0 million in advances for an associate company.
At December 31, 2009, «Other assets» consisted primarily of EUR 3.4 million in receivables with associated companies, EUR 1.5 million in advances for the development of new labeled molecules and amounts invested in structured products with repayment horizons of more than 12 months.
Work in progress relates to production of inventory for which a customer has not yet been secured, while contracts in progress relate to production for specific customers in performance of a signed contract.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Raw materials and supplies | 31 581 | 40 366 |
| Finished products | 6 437 | 7 265 |
| Work in progress | 18 442 | 13 511 |
| Contracts in progress | 46 706 | 49 268 |
| Write-off on inventories and contracts in progress | -6 155 | -7 716 |
| Inventories and contracts in progress | 97 011 | 102 694 |
| Costs to date and recognized profit | 135 565 | 250 803 |
| Less: progress billings | -88 859 | -201 535 |
| Contracts in progress | 46 706 | 49 268 |
| Net amounts due to customers for contracts in progress (Note 23) | 28 933 | 42 143 |
It should be noted that part of the orders in progress related to a proton therapy contract will be set as warranty when the billing will have been established since financing for this contract is provided by the Group through a fabrication credit.
Trade accounts receivable are detailed as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Amounts invoiced to customers on contracts in progress but for which payment has not yet been received at balance sheet date |
1 794 | 1 333 |
| Other trade receivables | 74 139 | 94 168 |
| Impairment of doubtful receivables (-) | -5 755 | -6 252 |
| TOTAL | 70 178 | 89 249 |
At December 31, 2010, receivables of EUR 0.3 million were given as collateral (EUR 0.9 million in 2009).
At December 31, the repayment schedule for trade receivables (excluding impairments) was as follows:
| (EUR '000) | TOTAL | Not due | <30 days | 30-59 | 60-89 | 90-179 | 180-269 | 270-360 | > 1 year |
|---|---|---|---|---|---|---|---|---|---|
| 2009 | 75 933 | 24 510 | 17 523 | 6 917 | 3 473 | 4 183 | 4 492 | 5 097 | 9 738 |
| 2010 | 95 501 | 44 017 | 21 103 | 7 518 | 6 798 | 4 382 | 2 779 | 1 472 | 7 432 |
At December 31, 2010, trade receivable impairments totaled EUR 6.3 million. Changes in the provision for doubtful debts for the past two years are as follows:
| At January 1, 2009 | 8 881 |
|---|---|
| Charge for the year | 2 113 |
| Utilizations | -3 593 |
| Write-backs | -1 607 |
| Currency translation difference | -39 |
| At December 31, 2009 | 5 755 |
| Charge for the year | 3 605 |
| Utilizations | -1 745 |
| Write-backs | -1 486 |
| Currency translation difference | 123 |
| At December 31, 2010 | 6 252 |
Other receivables on the balance sheet primarily involve advance payments on orders, deferred charges, and accrued income.
Other receivables are detailed as follows:
| TOTAL | 26 869 | 25 286 |
|---|---|---|
| Other current receivables | 2 954 | 3 893 |
| Accrued income–interest | 2 455 | 2 062 |
| Deferred charges | 4 046 | 3 627 |
| Non-trade receivables and advance payments | 17 414 | 15 704 |
| (EUR '000) | December 31, 2009 | December 31, 2010 |
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Bank balances and cash | 12 512 | 16 372 |
| Accounts with restrictions shorter than 3 months | 142 | 67 |
| Short-term bank deposits and commercial paper | 4 932 | 1 663 |
| TOTAL | 17 586 | 18 102 |
At December 31, 2010, the effective interest rate on the cash position was 0.76 percent (2.16 percent in 2009). Short-term deposits and commercial paper have an average maturity of less than 30 days.
| Number of shares |
Capital stock (EUR '000) |
Capital surplus (EUR '000) |
Treasury shares (EUR '000) |
Total (EUR '000) |
|
|---|---|---|---|---|---|
| Balance at January 1, 2009 | 26 563 097 | 37 285 | 124 358 | -7 563 | 154 080 |
| Stock options exercised | 34 220 | 48 | 103 | 151 | |
| Capital increases | 121 838 | 172 | 327 | 499 | |
| (Additions)/disposals of treasury shares | -1 952 | -1 952 | |||
| Balance at December 31, 2009 | 26 719 155 | 37 505 | 124 788 | -9 515 | 152 778 |
| Stock options exercised | 272 860 | 383 | 633 | 1 016 | |
| Capital increases | 0 | 0 | 0 | 0 | |
| (Additions)/disposals of treasury shares | 860 | 860 | |||
| Balance at December 31, 2010 | 26 992 015 | 37 888 | 125 421 | -8 655 | 154 654 |
At December 31, 2010, 59.85 percent of IBA's stock was trading on Euronext. Full details of the Group's shareholders are set out in the section «The stock market and shareholders» on page 130 of this annual report.
On April 1, 2011, the Board of Directors proposed a dividend equal to EUR 0.15 per share. In accordance with the IAS10 «events after the reporting period», the dividend has not yet been recorded in the 2010 financial statements.
Group employees and management can purchase or obtain IBA stock through various stock option and stock plans. Option strike prices are set at the market price of the underlying stock on the date of grant. In the case of the stock plans, the benefit awarded is either the market value of the stock at the grant date or a discount of 16.67 percent on the value of the stock at the grant date.
Stock ownership vests irrevocably on the date of grant. However, stock must be held for three years following grant. In the case of stock option plans, the fair value of the benefit awarded is measured using a Black & Scholes model, as described below. The benefit granted is recognized as an employee expense, and the share-based payment reserve is increased accordingly.
During the period ended December 31, 2010, IBA had eight stock option plans, including a new plan launched in 2010.
Stock option plans launched from 2002 onwards have the following vesting scheme: 20 percent vesting at grant date + 1 year, 40 percent at grant date + 2 years, 60 percent at grant date + 3 years, 80 percent at grant date + 4 years, 100 percent at grant date +5 years.
In 2005, the Group refunded a capital surplus of EUR 3.1 per share to its shareholders. Following this action, on March 13, 2006, IBA's Board of Directors approved a reduction in the exercise price for IBA employee stock option plans launched in 2000, 2001, 2002, and 2004. Under IFRS 2, this repricing qualifies as a modification of the terms of options granted under the 2000, 2001, 2002, and 2004 plans. The impact of this change on the 2009 accounts amounted to EUR 0.04 million.
Details of the plans launched in 2010 and 2009 are given in this section.
| December 31, 2010 | |
|---|---|
| Stock option | |
| 30/11/2010 | |
| 459 639 | |
| 7.80 | |
| 9.14 | |
| 6 | 6 |
| Actions | Actions |
| 40.00% | 39.69% |
| 4.75 | 4.75 |
| 2.46% | 3.04% |
| 1% | 1.79% |
| 3.5% | 2.5% |
| 3.78 | 3.43 |
| Black & Scholes | Black & Scholes |
| December 31, 2009 Stock option 30/11/2009 435 771 8.26 9.17 |
The Company uses the Black & Scholes model to price options, with no vesting conditions other than time. Expected volatility for the stock option plans is based on historical volatility determined by statistical analysis of daily share price movements.
The fair value of shares for the stock options plans was based on the average share price for the 30 days preceding the grant date.
At December 31, 2010, a charge of EUR 1.3 million was recognized in the pre-tax financial statements for employee stock options (EUR 1.8 million in 2009).
The stock options outstanding at December 31, 2010 have the following expiration dates and exercise prices. Changes since December 31, 2009 are due to the new 2010 stock option plan.
| December 31, 2009 | December 31, 2010 | |||
|---|---|---|---|---|
| Expiration date | Exercise price (EUR) | Number of stock options |
Exercise price (EUR) | Number of stock options |
| September 30, 2010 (1) | 3.72 | 374 620 | 3.72 | 0 |
| December 31, 2010 | 12.60 | 123 625 | 12.60 | 0 |
| September 30, 2011 | 6.37 | 40 913 | 6.37 | 21 913 |
| August 31, 2012 | 3.34 | 316 337 | 3.34 | 304 607 |
| September 30, 2012 | 13.64 | 331 408 | 13.64 | 269 408 |
| September 30, 2013 | 19.94 | 257 025 | 19.94 | 219 025 |
| September 30, 2013 | 3.72 | 289 580 | 3.72 | 252 280 |
| September 30, 2014 | 14.18 | 111 903 | 14.18 | 106 970 |
| September 30, 2014 | 6.37 | 40 087 | 6.37 | 40 087 |
| September 30, 2015 | 13.64 | 105 842 | 13.64 | 105 842 |
| September 30, 2015 | 8.26 | 435 771 | 8.26 | 426 271 |
| September 30, 2016 | 19.94 | 81 221 | 19.94 | 81 221 |
| September 30, 2016 | 7.80 | 459 639 | ||
| TOTAL outstanding stock options | 2 508 332 | 2 287 263 |
(1) 37 490 options relating to the 2004 plan were not included in the above table despite the fact that they are still in circulation because they lapsed on September 30, 2010.
Stock option movements can be summarized as follows:
| December 31, 2009 | December 31, 2010 | |||
|---|---|---|---|---|
| Average exercise price in EUR per share |
Number of stock options |
Average exercise price in EUR per share |
Number of stock options |
|
| Outstanding at January 1 | 10.65 | 2 273 929 | 9.37 | 2 508 332 |
| Issued (2) | 8.26 | 435 771 | 7.85 | 463 206 |
| Forfeited (-) | 24.90 | -167 148 | 10.42 | -373 925 |
| Exercised (-) | 4.42 | -34 220 | 3.72 | -272 860 |
| Lapsed (-) (1) | 3.72 | -37 490 | ||
| Outstanding at December 31 | 9.37 | 2 508 332 | 9.65 | 2 287 263 |
| Exercisable at December 31 | 1 402 407 | 1 050 448 |
(1) 37 490 options relating to the 2004 plan were not included in the above table despite the fact that they are still in circulation because they lapsed on September 30, 2010.
(2) The number of stock options includes a correction of the 2008 plan by 3 567 options at EUR 14.18.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Hedging reserves | 1 755 | -1 177 |
| Other reserves | 14 322 | 11 055 |
| Currency translation difference | -16 377 | -9 948 |
| Retained earnings | -9 117 | -3 269 |
According to the Belgian Code of Company Law, the legal reserve must equal at least 10 percent of the Company's capital stock. Until such time as this level is attained, a top slice of at least one-twentieth of the net profit for the year (determined according to Belgian accounting law) must be allocated to building this reserve fund.
The hedging reserve includes changes in the fair value of financial instruments used to hedge cash flows of future transactions.
Other reserves involve the fair value adjustment of availablefor-sale investments, the valuation of employee stock option plans and share-based employee payments, and actuarial gains and losses on defined benefit plans.
Cumulative translation difference includes differences related to the translation of financial statements of consolidated entities whose functional currency is not the euro. It also includes foreign exchange differences arising on long-term loans that are part of the Group's net investment in foreign operations.
In 2010, after-tax profits of 0.08 million on the retranslation of these loans were reclassified to equity in order to offset gain or loss arising on the translation of net investment in subsidiaries.
At December 31, 2010, the loans below to subsidiaries are designated as Group's net investments in foreign operations:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| NON-CURRENT | ||
| Bank debts (Note18.1) | 3 155 | 37 751 |
| Other debts (Note 18.3) | 0 | 0 |
| Financial lease liabilities (Note 18.2) | 3 217 | 2 192 |
| TOTAL | 6 372 | 39 943 |
| CURRENT | ||
| Short-term bank loans | 23 656 | 1 680 |
| Bank borrowings (Note 18.1) | 2 428 | 2 245 |
| Other borrowings (Note 18.3) | 267 | 0 |
| Financial lease liabilities (Note 18.2) | 1 924 | 1 190 |
| TOTAL | 28 275 | 5 115 |
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Non-current | 3 155 | 37 751 |
| Current | 2 428 | 2 245 |
| TOTAL | 5 583 | 39 996 |
| Changes in bank borrowings are as follows: | ||
| (EUR '000) | December 31, 2009 | December 31, 2010 |
| Opening amount New debts (1) |
9 856 172 |
5 583 36 205 |
| Repayment of borrowings | -4 468 | -1 852 |
| Currency translation difference | 23 | 60 |
(1) The new debts amount includes EUR 1.3 million in undisbursed interest charges.
The maturities of bank borrowings are detailed as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| One year or less | 2 428 | 2 245 |
| Between 1 and 2 years | 2 861 | 2 745 |
| Between 2 and 5 years | 294 | 28 756 |
| Over 5 years | 0 | 6 250 |
| TOTAL | 5 583 | 39 996 |
The effective interest rates for bank borrowings at the balance sheet date were as follows:
| December 31, 2009 | December 31, 2010 | |||
|---|---|---|---|---|
| EUR | USD | EUR | USD | |
| Bank debts | 5.22% | 6.33% | 4.68% | 5.54% |
The carrying amounts of the Group's borrowings are denominated in the following currencies:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| EUR | 4 530 | 23 644 |
| USD | 1 053 | 1 352 |
| CNY | 0 | 0 |
| TOTAL | 5 583 | 24 996 |
Unutilized credit facilities are as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| FLOATING RATE | ||
| – expiring within one year | 0 | 10 000 |
| – expiring beyond one year | 77 970 | 74 815 |
| FIXED RATE | ||
| – expiring within one year | 0 | 0 |
| TOTAL | 77 970 | 84 815 |
The facilities expiring within one year are annual facilities subject to review at various dates during the 12 months following the end of the fiscal year. The other facilities have been arranged to help to finance the proposed expansion of the Group's activities.
Changes in financial lease liabilities are as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Opening amount | 8 902 | 5 141 |
| New borrowings | 117 | 2 019 |
| Repayment of borrowings | -3 990 | -3 880 |
| Entry to consolidation | 0 | 0 |
| Exit from consolidation | 0 | 0 |
| Currency translation difference | 112 | 102 |
| Closing amount | 5 141 | 3 382 |
Minimum lease payments on finance lease liabilities are as follows:
| December 31, 2009 | December 31, 2010 |
|---|---|
| 2 151 | 1 339 |
| 2 997 | 2 051 |
| 690 | 452 |
| 5 838 | 3 842 |
| -697 | -460 |
| 5 141 | 3 382 |
The present value of finance lease liabilities is as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| One year or less | 1 924 | 1 190 |
| From one to five years | 2 574 | 1 767 |
| Over five years | 643 | 425 |
| TOTAL | 5 141 | 3 382 |
The carrying amounts of finance lease liabilities are denominated in the following currencies:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| EUR | 3 773 | 3 030 |
| CNY | 3 | 50 |
| USD | 1 365 | 302 |
| TOTAL | 5 141 | 3 382 |
At December 31, 2010, the average interest rate paid on lease financing debts was 4.30 percent (4.51 percent in 2009).
| Defined employee |
Other employee |
||||||
|---|---|---|---|---|---|---|---|
| Environment | Warranties | Litigation | benefits | benefits | Other | Total | |
| At January 1, 2009 | 53 541 | 948 | 2 381 | 19 969 | 1 649 | 21 057 | 99 545 |
| Additions (+) | 2 633 | 1 010 | 530 | 2 152 | 202 | 6 698 | 13 225 |
| Write-backs (-) | 0 | -177 | -1 508 | 0 | -25 | -3 031 | -4 741 |
| Utilizations (-) | -1 699 | -785 | -555 | -517 | -472 | - 6 067 | -10 095 |
| Actuarial (gains) and losses for the period |
0 | 0 | 0 | -1 123 | 0 | 0 | -1 123 |
| Reclassifications | 0 | 0 | -40 | 0 | 0 | 40 | 0 |
| Changes in consolidation scope |
0 | 0 | 0 | 0 | 0 | 292 | 292 |
| Currency translation difference |
-18 | 15 | 78 | 0 | 0 | -9 | 66 |
| Total movement | 916 | 63 | -1 495 | 512 | -295 | -2 077 | -2 376 |
| At December 31, 2009 | 54 457 | 1 011 | 886 | 20 481 | 1 354 | 18 980 | 97 169 |
| Environment | Warranties | Litigation | Defined employee benefits |
Other employee benefits |
Other | Total | |
|---|---|---|---|---|---|---|---|
| At January 1, 2010 | 54 457 | 1 011 | 886 | 20 481 | 1 354 | 18 980 | 97 169 |
| Additions (+) | 2 644 | 1 713 | 384 | 2 273 | 480 | 4 317 | 11 811 |
| Write-backs (-) | 0 | -864 | -127 | 0 | -21 | -2 556 | -3 568 |
| Utilizations (-) | -1 761 | -352 | -156 | -323 | -394 | - 4 859 | -7 845 |
| Actuarial (gains)/losses generated during the year |
0 | 0 | 0 | 1 161 | 0 | 0 | 1 161 |
| Reclassifications | 47 | 0 | 25 | 0 | 0 | -163 | -91 |
| Changes in consolidation scope |
0 | 0 | 0 | 0 | 0 | 198 | 198 |
| Currency translation difference |
70 | 0 | 0 | 0 | 0 | 98 | 168 |
| Total movement | 1 000 | 497 | 126 | 3 111 | 65 | -2 965 | 1 834 |
| At December 31, 2010 | 55 457 | 1 508 | 1 012 | 23 592 | 1 419 | 16 015 | 99 003 |
Provisions for decommissioning costs related to the Group sites where radiopharmaceutical agents are produced have been recognized where an obligation exists to incur these costs. This caption also includes provisions for obligations in connection with disposing of used radioactive sources and equipment. These provisions are measured at the net present value of the best estimate of the costs that will need to be incurred. For more information on these provisions, see Note 3 of this report.
Provisions for warranties cover warranties for machines sold to customers.
Provisions for litigation relate to litigation of a social nature for which a EUR 1.0 million provision was presented at December 31, 2010.
Provisions for employee benefits at December 31, 2010 were primarily for the following:
The history of actuarial gains and losses for defined benefits plans found in other reserves is as follows:
| December 31, 2007 | December 31, 2008 | December 31, 2009 | December 31, 2010 |
|---|---|---|---|
| 0 | -323 | +800 | -361 |
Other provisions at December 31, 2010 consisted primarily of the following:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Advances received from local government | 13 791 | 9 722 |
| Other | 39 622 | 34 139 |
| TOTAL | 53 413 | 43 861 |
In 2010, the Group received EUR 0.3 million in interest-free cash advances from the local government agencies and repaid EUR 0.1 million. It also reclassified advances of EUR 4.24 to other short-term liabilities.
At December 31, 2010, other long-term liabilities include down payments of EUR 34.1 million (EUR 39.6 million in December 2009) received on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition.
In 2009, the Group received EUR 0.1 million in interest-free cash advances from the Walloon Region of Belgium and repaid EUR 1.3 million. It also reclassified advances of EUR 1.47 million to other short-term liabilities. At December 31, 2009, other long-term liabilities include down payments of EUR 39.6 million (EUR 29.1 million in December 2008) received on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| HEDGE-ACCOUNTED FINANCIAL INSTRUMENTS | ||
| - Forward foreign exchange contracts | 1 930 | 0 |
| - Foreign exchange swaps | 0 | 144 |
| - Foreign exchange options | 6 | 208 |
| - Interest rate caps | 497 | 139 |
| INSTRUMENTS RECOGNIZED AT FAIR VALUE | ||
| - Forward foreign exchange contracts | 95 | 390 |
| - Foreign exchange swaps | 13 | 654 |
| - Foreign exchange options | 40 | 0 |
| - Interest rate swaps | 9 | 0 |
| Short-term financial assets | 2 591 | 1 535 |
| HEDGE-ACCOUNTED FINANCIAL INSTRUMENTS | ||
| - Forward foreign exchange contracts | 29 | 121 |
| - Foreign exchange swaps | 21 | 406 |
| - Oil futures contracts | 54 | 0 |
| INSTRUMENTS RECOGNIZED AT FAIR VALUE | ||
| - Forward foreign exchange contracts | 0 | 51 |
| - Foreign exchange swaps | 0 | 173 |
| Short-term financial liabilities | 103 | 751 |
| HEDGE-ACCOUNTED INSTRUMENTS | ||
| Forward foreign exchange contracts | 0 | 344 |
| Long-term financial liabilities | 0 | 344 |
The Group's policy on use of financial instruments is detailed in Note 1.22 on Group accounting policies and Note 2 on financial risk management.
At December 31, 2010, an amount of EUR 1.53 million recognized as a short-term financial asset represented EUR 0.49 million in cash flow hedging instruments and EUR 1.04 million in hedging instruments recognized at fair value through profit and loss.
At December 31, 2009, an amount of EUR 2.6 million recognized as a short-term financial asset represented EUR 2.4 million in cash flow hedging instruments and EUR 0.2 million in hedging instruments recognized at fair value through profit and loss.
At December 31, 2010, an amount of EUR 0.75 million recognized as a short-term financial liability represented EUR 0.52 million in cash flow hedging instruments and EUR 0.23 million in hedging instruments recognized at fair value through profit and loss.
At December 31, 2009, an amount of EUR 0.1 million recognized as a short-term financial liability represented hedging instruments accounted for at fair value through profit and loss.
At December 31, 2010, an amount of EUR 0.3 million was recognized as a long-term financial liability and relates to cash flow hedging instruments.
Some of these financial instruments are designated as hedging instruments inasmuch as they hedge specific exchange rate risks to which the Group is exposed. Hedge accounting has been applied to these contracts because they are deemed to be effective hedges. For these cash flow hedges, movements are recognized directly in equity and released to the income statement to offset the income statement impact of the underlying transactions.
At December 31, 2010, a cumulative loss of EUR 1.2 million was therefore directly accounted in the equity (under «Hedging Reserves»). At December 31, 2010, a cumulated loss of EUR 1.2 million was therefore recognized in the comprehensive income statement (in the «Hedging reserves» section). At December 31, 2009, the cumulated gain amounted to EUR 1.8 million.
At December 31, the payment schedule for trade payables was as follows:
| Total ('000) | Due < 3 months | 4-12 months |
1-5 years | > 5 years | ||
|---|---|---|---|---|---|---|
| 2009 | 48 264 | 14 597 | 31 868 | 1 799 | 0 | 0 |
| 2010 | 63 412 | 28 461 | 34 555 | 396 | 0 | 0 |
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Amounts due to customers on contracts in progress (or advances received on contracts in progress) |
28 933 | 42 143 |
| Social security liabilities | 17 066 | 18 454 |
| Accrued charges | 30 694 | 27 364 |
| Accrued interest charges | 80 | 196 |
| Deferred income | 3 042 | 4 106 |
| Capital grants | 834 | 1 349 |
| Non-trade payables | 3 068 | 4 203 |
| Other | 14 986 | 22 229 |
| TOTAL | 98 703 | 120 044 |
In 2010, there remains EUR 5.4 million in the accrued charges that relate to modernization works to be done to the Saclay (France) site in compliance with the safety and pharmaceutical standards.
Other operating expenses can be broken down as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Legal costs | 345 | 452 |
| Cost of share-based payments | 1 845 | 1 270 |
| Depreciation and impairment | 2 423 | 2 252 |
| Amortization of revaluation to fair value of assets on the balance sheet of CIS Bio International SAS |
3 079 | 0 |
| Revaluation of the R&D projects portfolio & contractual commitments to projects |
9 140 | 4 205 |
| Others | 2 055 | 3 450 |
| TOTAL | 18 887 | 11 629 |
At December 31, 2010, the depreciation and impairment include mainly impairments of trade receivables and participations for EUR 1.7 million.
At December 31, 2009, the «depreciation and impairment» caption includes depreciation of the radiopharmaceutical business (EUR 2.4 million).
Other operating income can be broken down as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Reversal of provisions for legal costs | -1 438 | 0 |
| Reversal of provisions for other employee benefits | -953 | -1 860 |
| Reversal of depreciation and impairment | 0 | -3 889 |
| Earn-out on sale of a CIS Bio International SAS subsidiary | -2 123 | 0 |
| Other | - 3 839 | - 1 993 |
| TOTAL | -8 353 | -7 742 |
In 2010, the «Reversal of depreciation and impairment» heading includes the impact of the reversal of impairment losses on investments made in single photon emission computed tomography (SPECT). This reversal is justified by an improved strategic plan linked to this activity, thanks in particular to the sales price increase, better productivity and higher sales volumes especially on Asian markets. These assets were fully depreciated in the past and have been brought back to their utility value. The discount rate used is 11%.
In 2010, the «Other» heading includes mainly the recognition of a payment received on a project in the income statement (EUR -0.8 million).
In 2009, the caption «Other» primarily includes discharge of a client's debt (EUR 3.0 million) by reversal of an impairment provision for a loan on IBA's books.
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Interest paid on debts | 2 386 | 1 623 |
| Foreign exchange differences | 3 636 | 8 708 |
| Changes in fair value of derivatives | 1 393 | 244 |
| Other | 4 575 | 6 348 |
| TOTAL | 11 990 | 16 923 |
At December 31, 2010, the «Other» category includes mainly the impact of the discount cost of the retirement plans with defined benefits for EUR 1.0 million as well as the costs related to the discount of provisions for decommissioning for EUR 1.84 million, interest expenses as part of a proton therapy project for EUR 1.4 million, commissions on bank guarantees for EUR 0.5 million and other provisions for EUR 0.5 million.
At December 31, 2009, the caption «Other» mainly includes cost of the discounting of defined benefit plans (EUR 1.1 million), as well as expenses from the revaluation of decommissioning provisions (EUR 1.62 million) and other provisions (EUR 0.5 million).
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Interest received on receivables and cash | -2 680 | -4 214 |
| Foreign exchange differences | -2 630 | -8 231 |
| Changes in fair value of derivatives | -1 249 | -1 205 |
| Other | - 306 | - 2 135 |
| TOTAL | -6 865 | -15 785 |
At December 31, 2010, the «Other» category includes mainly the gain on the sale of synthetic collateralized bonds for EUR 0.3 million and proceeds from future rebilling of interests charges as part of a proton therapy project for EUR 1.4 million.
At December 31, 2009, the caption «Other» mainly includes the impact of revaluation of financial assets to fair value through profit and loss (EUR 0.16 million).
The tax charge for the year can be broken down as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Current taxes | 1 446 | 2 520 |
| Deferred taxes | 3 306 | 224 |
| TOTAL | 4 752 | 2 744 |
The tax charge on IBA's result before taxes differs from the theoretical amount that would have resulted from application of the average applicable tax rates to the profits of the consolidated companies. The analysis is as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Result before tax | -7 541 | 9 387 |
| Taxes calculated on the basis of local tax rates | -2 692 | 3 291 |
| Unrecognized deferred taxes | 4 680 | 3 290 |
| Tax-exempt transactions | 2 196 | 223 |
| Adjustments to deferred taxes of previous years | 81 | 126 |
| Impairment on recognized deferred taxes | 3 047 | -99 |
| Loss available to offset against future taxable income | -1 476 | 0 |
| Utilization of unrecognized tax losses | -1 597 | -3 875 |
| Local tax expense eliminated in consolidation | 123 | -133 |
| Other tax (income)/expenses | 390 | -79 |
| Reported tax expense | 4 752 | 2 744 |
| Theoretical tax rate | 35.7% | 35.1% |
| Effective tax rate | -63.0% | 29.2% |
Given the available tax losses, IBA did not calculate deferred taxes on items credited or charged directly to equity.
At December 31, 2010, the Group recognized expenses of EUR 0.9 million for defined contribution plans (EUR 0.9 million at December 31, 2009).
IBA records provisions for the defined benefit plans of its CIS Bio International SAS and IBA Radio-isotopes France SAS subsidiaries (from 2010).
Changes in the present value of defined benefit obligations are presented as follows:
| (EUR '000) | December 31, 2009 |
|---|---|
| Defined benefit obligations at January 1, 2009 | 19 969 |
| Cost of services rendered for the period | 1 061 |
| Cost of discounting | 1 091 |
| Plan termination | 0 |
| Benefits paid | -517 |
| Actuarial (gains) and losses for the period | -1 123 |
| Defined benefit obligations at December 31, 2009 | 20 481 |
| (EUR '000) | December 31, 2010 |
| Defined benefit obligations at January 1, 2010 | 20 481 |
| Cost of services rendered for the period | 1 267 |
| Cost of discounting | 1 006 |
| Plan termination | 0 |
| Benefits paid | -323 |
| Actuarial (gains) and losses for the period | 1 161 |
| Defined benefit obligations at December 31, 2010 | 23 592 |
Defined benefit plan expenses recognized through profit and loss can be broken down as follows:
| (EUR '000) | December 31, 2008 | December 31, 2009 | December 31, 2010 |
|---|---|---|---|
| Cost of services rendered for the period | 694 | 1 061 | 1 267 |
| Cost of discounting | 722 | 1 091 | 1 006 |
| Expenses/(income) for the period | 1 416 | 2 152 | 2 273 |
Defined benefit plan expenses accounted for through profit and loss are included in the following income statement captions:
| (EUR '000) | December 31, 2008 | December 31, 2009 | December 31, 2010 |
|---|---|---|---|
| General and administrative expenses | 694 | 1 061 | 1 267 |
| Financial expenses – Other | 722 | 1 091 | 1 006 |
| Expenses/(income) for the period | 1 416 | 2 152 | 2 273 |
The principal actuarial assumptions at the date of closing are summarized in 3 (e) above.
At December 31, 2010, the caption «Other non-cash items» includes expenses in connection with employee stock option plans and stock plans (+EUR 1.3 million), inventory losses and write-downs and outstanding orders (EUR +1.4 million), the impact of the revaluation of noncurrent assets (EUR -1.8 million) and the impact of taking into account unrealized foreign exchange differences on the revaluation of the intercompany balance sheet positions of the Group (EUR +0.6 million).
At December 31, 2010, «Other cash flows from investing activities» primarily includes investments made to bring the site at Saclay, France, into compliance with safety and pharmaceutical standards (EUR -5.5 million), the purchase of subordinate bond (EUR -4.7 million), recoverable advances granted within the scope of the proton therapy activities of the Group (EUR -6.8 million) and the sale of synthetic collateralized obligations (C.D.O.) for EUR +1.2 million.
At December 31, 2010, «Other cash flows from financing activities» include grants and interest-free cash advances received from various public agencies (EUR +0.7 million), repayment of grants and advances from the Walloon Region of Belgium (EUR -0.8 million) and changes in liabilities towards Group employees in connection with the exercise of stock option plans (EUR -0.2 million).
At December 31, 2009, the caption «Other non-cash items» included expenses in connection with employee stock option plans (EUR 1.8 million); inventory losses and write-downs, including the results of reversing asset revaluations during fair value revaluation of the balance sheet of CIS Bio International SAS (EUR 2.3 million), the non-cash impact of the settlement of the debt towards a client (EUR +3.0 million) and the impact of including unrealized foreign exchange differences on the revaluation of the Group's intercompany balance sheet positions (EUR +0.2 million).
At December 31, 2009, «Other cash flows from investing activities» included investments made to bring the site at Saclay, France, into compliance with safety and pharmaceutical standards (EUR -9.5 million) and investments under an exclusive collaboration agreement to market Aposense [18]-ML-10 (EUR -1.5 million). At December 31, 2009, «Other cash flows from financing activities» include grants and interest-free cash advances from the Walloon Region of Belgium for (EUR +0.4 million), the repayment of grants and advances from the Walloon Region for (EUR -1.5 million), the repayment of cash credits for (EUR -0.3 million), and the changes in liabilities towards Group's employees in connection with the exercise of the stock option plans (EUR +0.3 million).
The Group is currently involved in certain legal proceedings. The potential risks connected with these proceedings are deemed to be insignificant or unquantifiable or, where potential damages are quantifiable, adequately covered by provisions.
Developments in litigation mentioned in the 2009 annual report as well as the principal cases pending at December 31, 2010 are presented in this Note.
LITIGATION MENTIONED IN THE 2009 ANNUAL REPORT AND SETTLED AT DECEMBER 31, 2010
³ Cancellation of Skandion's tender for a proton therapy system in Uppsala, Sweden. Skandion had issued a tender for the delivery and installation of a complete proton therapy treatment center in the form of turnkey project in Uppsala, Sweden. The procedure was conducted as a negotiated procedure. On August 19, 2009, the Joint Authority awarded the tender to a German company, Varian Medical Systems Particle Therapy (Varian Germany). On December 3, 2009, at the request of IBA, the Uppsala County Administrative Court decided to cancel the tender. Skandion has decided not to appeal this decision and issued a new call to tender on February 26, 2010. Further to this new tender, the Joint Authority has awarded the tender to IBA.
As a consequence, the unsuccessful candidates, namely Varian Medical Systems Particle Therapy (Varian Germany) and Sumitomo Heavy Industries, appealed the decision. The Uppsala Administrative County Court dismissed these appeals by decisions of November 24, 2010. None of these decisions was appealed. The contract was then finalized and signed with IBA on March 17, 2011.
In the context of the acquisition of CIS Bio International SA, the parties agreed that Bayer Schering Pharma AG would pay an additional EUR 4 million in the event that CISBIO obtained INB (Basic Nuclear Facility) designation before December 31, 2008. This amount was meant to aid CISBIO to set up the reserves required by the law for all INB installations so as to cover dismantling costs of such installations. A French decree of December 15, 2008 conferred INB status on CISBIO, and Bayer Schering Pharma AG was asked for the EUR 4 million. Bayer Schering Pharma AG refused to pay on the pretext that the law allows the use of means other than cash to establish the guarantee and that its contractual commitment applied only in the case of a mandatory cash reserve. IBA believed that Bayer Schering Pharma AG had no basis for its position and has instituted arbitration proceedings for payment through AFA (Association Française d'Arbitrage, French Arbitration Association). IBA and Bayer Schering Pharma AG are also involved in a litigation in relation with the take-over of Japanese business, in which Bayer Schering Pharma AG maintains that IBA has not complied with its best reasonable effort obligation in order to guarantee the transfer of the employees concerned by the take-over. Bayer Schering Pharma AG has submitted a counterclaim in the aforementioned arbitration proceedings demanding payment of JPY 180 076 111 and EUR 200 000 in severance compensation for the employees in question. IBA considers that it has fully complied with its best effort obligation and contends that, if only 20 of the 38 employees joined IBA, it was for reasons attributable exclusively to Bayer Schering Pharma AG. Both litigations were joined. The matter has been submitted for decision and a decision shall be made at the latest in October 2011.
In November 2009, STRIBA Protonentherapiezentrum GmbH, a joint venture in which IBA holds a 50 percent share, initiated arbitration against Westdeutsches Protonentherapiezentrum Essen GmbH («WPE») to determine, in the context of the public private partnership, the exact extent of Striba's contractual obligations to supply a proton therapy facility to Essen, Germany, under turnkey contract.
WPE disputes the quality of the patient management software proposed by IBA. WPE considers that it is entitled to request delivery of a system currently in development for continuous treatment of mobile tumors. IBA has refused to honor this request in the context of the public-private partnership but remains open to research collaboration in this area. Given WPE's insistence on having this system included in the publicprivate partnership, IBA initiated arbitration proceedings in order to obtain confirmation that the system proposed by IBA followed the rules of the art and complied with the formal requirements specification with regard to both mobile tumor
treatment and treatment speed, and that WPE was not entitled to reduce the fee owed to Striba. As part of the same file, WPE brought two counterclaims early in 2011. The first one is a claim for compensation for delay for EUR 4 088 000 in principal and EUR 777 000 in VAT because of Striba's alleged delay in providing a proton therapy center to WPE. The second is to declare that the clinical commissioning to be performed by WPE after the provision of the system must be finalized by WPE before it is forced to start paying the rent due under the PPP. Both claims have been formally challenged by Striba and IBA. All procedures are still on-going and a decision is not expected before the end of the 2011 financial year.
Subject to changes in the litigation at December 31, 2009, no significant litigation has occurred during the 2010 financial year.
The Group has a number of non-cancelable operating leases relating to vehicle, equipment, and office space rental. Total future minimum lease payments under non-cancelable operating leases are as follows:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| One year or less | 4 873 | 6 291 |
| From one to five years | 9 953 | 12 496 |
| Over five years | 12 378 | 6 234 |
| TOTAL | 27 204 | 25 021 |
Total operating lease payments included in the income statement in 2010 amounted to EUR 6.8 million (EUR 7.3 million in 2009).
At December 31, 2010, IBA held financial guarantees for EUR 97.8 million given by Group's entities as security for debts or commitments, mainly in advance payment guarantees. Of these EUR 97.8 million, EUR 10.5 million are for guarantees granted by the parent company to cover lease financing debts and the bank debts of its subsidiaries.
A list of subsidiaries and equity-accounted companies is provided in Note 5.
The following table shows IBA shareholders at December 31, 2010:
| (EUR '000) | Number of shares | % |
|---|---|---|
| Belgian Anchorage | 7 773 132 | 28,80% |
| IRE (Institut des Radioéléments) | 1 423 271 | 5,27% |
| Sopartec SA | 529 925 | 1,96% |
| UCL A.S.B.L | 426 885 | 1,58% |
| IBA Investments SCRL (*) | 610 852 | 2,26% |
| Ion Beam Applications SA (*) | 75 637 | 0,28% |
| Public | 16 152 313 | 59,85% |
| Total | 26 992 015 | 100% |
* At December 31, 2010, IBA held a total of 75,637 of its own shares and 610,852 through the company IBA Investments SCRL, a wholly owned indirect subsidiary.
IBA's dominant shareholders, Belgian Anchorage, UCL, Sopartec and IRE, have declared to have acted jointly and have concluded an agreement which will expire in 2013. This shareholder agreement governs, inter alia, the sharing of information and preferential rights to purchase IBA shares. The parties to the agreement held 10 153 213 ordinary shares at December 31, 2010, representing 37.62 percent of the Company's voting rights.
Under the terms of this agreement, in the event of a new IBA stock offering, if one of the shareholders does not exercise its preferential subscription right, this right will pass to the other dominant shareholders (with Belgian Anchorage having first right). If a party to the agreement wishes to sell its IBA shares, the other parties to the agreement will have a preemptive right to acquire these shares. This preemptive right is subject to certain exceptions, in particular it does not apply in the case of a transfer of stock to Belgian Anchorage SA
In an agreement signed on February 19, 2008, IRE granted IBA a call option on the shares it holds in Radiopharma Partners (that is 80.1 percent) and in Sceti Medical Labo KK (that is 19.9 percent). On May 29, 2008, IBA exercised
this call option for about EUR 20 million, 50% in cash and 50% in IBA SA shares. Without prejudice to the rights and obligations arising under other agreements between the shareholders, IRE has agreed to hold these shares for 5 years, to grant IBA a preemptive right to purchase this stock and to continue to strive to maintain the Belgian presence amongst IBA shareholders.
As indicated in the corporate Charter, the Company does not wish to provide specific information on individual compensation, as long as it is not required to do so legally. It believes that information of this kind does not offer added value to the shareholders and is potentially harmful to the Company. However, communication of information on compensation policy is important for shareholders and is detailed in the Charter.
Actual compensation in 2010 is described in this section.
It should be noted that directors receive a fixed amount of EUR 6 000 plus EUR 1 000 per meeting they attend (this amount is increased to EUR 2 000 for the Chairman and EUR 1500 for the Audit Committee Chairman). Fixed compensation paid to members of the Board of Directors for services rendered in 2009 totaled EUR 118 000. Managing directors were not compensated for attending meetings of the Board of Directors. Non-managing directors did not receive any compensation or other direct or indirect benefit from the Company or any other entity belonging to the Group for their services.
With the exception of Ms. Nicole Destexhe (IRE FUP) and Messrs Jean Stéphenne (Innosté SA) and Yves Windelincx (Windi SPRL), all directors were included as beneficiaries of the 2010 stock option plan. The number of stock options granted being limited to 1250 options for directors other than the managing directors, the Company believes that granting these options does not interfere with the judgment of the recipient directors.
The Board is careful to ensure that the managing directors and the Management Team are compensated for direct and indirect services to the Company in a manner consistent with market practices based on level of responsibility, services rendered, and nature of duties.
As indicated in the Charter, fixed and variable compensation of the managing directors is determined by the Compensation Committee in accordance with principles approved by the Board. Fixed and variable compensation of the Management Team is reviewed and determined by the Chief Executive Officer. It has been reported to the Compensation Committee and the Board of Directors and discussed by both.
The principle of launching of a 2010 stock option plan and the total number of options to be issued were approved by the Board of Directors.
The Compensation Committee identified the beneficiaries of the stock options and validated the number of stock options to be granted to each of them.
The total amount paid by the Company and any other entity in the Group in compensation for the duties exercised and services rendered directly or indirectly by the two managing directors and members of the Management Team (1) came to about EUR 2.6 million for 2010 of which about EUR 2.5 million as fixed compensation and about EUR 0.1 million as variable compensation for services rendered during 2010. Note that fixed compensation includes a Group contribution of EUR 0.1 million to a defined contribution retirement plan.
The total amount paid by the Company and any other entity in the Group in compensation for the duties exercised and services rendered by the CEO directly or indirectly, all benefits included, came to EUR 345 620 in 2010. No variable compensation was paid to the CEO in 2010 since the objectives set for him by the Company were not met.
At December 31, 2010, all of the directors together held 1 507 0701 shares of IBA stock directly (including 1 423 271 shares held by IRE).
At the same date, the non-managing directors still held:
At December 31, 2010, members of the Management Team, including the managing directors, held a total of 850 125 stock options distributed as follows:
At December 31, 2010, the CEO held a total of 310 980 stock options distributed as follows:
The Company believes that (i) the number of shares, stock options, or any other option purchase rights granted to during the financial year to the members of the executive management besides the CEO and (ii) the principal contract provisions regarding the hiring or departure of executive managers are not relevant to this report.
It should however be noted that these are perfectly in line with market practices.
Ernst & Young Réviseurs d'Entreprises SCCRL, auditors of the statutory accounts of IBA SA and auditors of the consolidated accounts of IBA, provided the following services during the year:
| (EUR '000) | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Remuneration for statutory audits and audit of consolidated accounts | 543 | 655 |
| Tax-related services | 57 | 32 |
| Other services | 57 | 84 |
| TOTAL | 657 | 771 |
On January 17, 2011, IBA announced that the Carl Gustav Carus University Clinic of the Dresden University of Technology, in Germany, selected IBA to install a proton therapy center which will have a treatment room fitted with an isocentric portal and a research room. The contract also includes a long-term service agreement. On January 20, 2011 the funding of the project ordered by Seattle Procure Management LLC to install a proton therapy system in Seattle, WA, United States, was finalized.
Basic earnings per share are calculated by dividing the net profit attributable to Company shareholders by the weighted average number of ordinary shares outstanding during the period. The weighted average number of ordinary shares excludes shares purchased by the Company and held as treasury shares.
| BASIC EARNINGS PER SHARE | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Weighted average number of ordinary shares | 26 077 237 | 26 203 673 |
| Earnings attributable to parent equity holders (EUR '000) | -12 492 | 6 228 |
| Basic earnings per share from continuing and discontinued operations (EUR per share) |
-0.48 | 0.24 |
| Earnings from continuing operations attributable to parent equity holders (EUR '000) | -12 492 | 6 228 |
| Weighted average number of ordinary shares | 26 077 237 | 26 203 673 |
| Basic earnings per share from continuing operations (EUR per share) | -0.48 | 0.24 |
| Earnings from discontinued operations attributable to parent equity holders (EUR '000) | 0.00 | 0.00 |
| Weighted average number of ordinary shares | 26 077 237 | 26 203 673 |
| Basic earnings per share from discontinued operations (EUR per share) | 0.00 | 0.00 |
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding for the effects of conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: stock options.
The calculation is performed for the stock options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding stock options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the stock options.
| DILUTED EARNINGS PER SHARE | December 31, 2009 | December 31, 2010 |
|---|---|---|
| Weighted average number of ordinary shares | 26 077 237 | 26 203 673 |
| Weighted average number of stock options | 1 061 537 | 618 887 |
| Average share price over period | 7.21 | 8.16 |
| Dilution effect from weighted number of stock options | 500 918 | 330 631 |
| Weighted average number of ordinary shares for diluted earnings per share | 26 578 155 | 26 534 304 |
| Earnings attributable to equity holders of the parent (EUR '000) | -12 492 | 6 228 |
| Diluted earnings per share from continuing and discontinued operations (EUR per share) |
-0.47 | 0.23 |
| Earnings from continuing operations attributable to equity holders of the parent (EUR '000) |
-12 492 | 6 228 |
| Diluted earnings per share from continuing operations (EUR per share) | -0.47 | 0.23 |
| Earnings from discontinued operations attributable to parent equity holders (EUR '000) |
0 | 0 |
| Diluted earnings per share from discontinued operations (EUR per share) | 0.00 | 0.00 |
Pursuant to the Royal Decree of November 14, 2007, IBA declares that this annual statement was prepared by Pierre Mottet, Chief Executive Officer (CEO), and Jean-Marc Bothy, Chief Financial Officer (CFO), who declare that, to their knowledge:
In accordance with article 105 of the Belgian Code of Company Law, the following statements represent a condensed version of the annual financial statements. The full text is available on request from the headquarters of the Company and will be filed with the National Bank of Belgium. This condensed version does not contain all of the appendices or the report of the auditor, who expressed an unqualified opinion.
| ASSETS (EUR '000) | 2008 | 2009 | 2010 |
|---|---|---|---|
| FIXED ASSETS | 242 820 | 150 941 | 92 118 |
| Formation expenses | 4 | 2 | 1 |
| Intangible fixed assets | 1 201 | 1 711 | 2 606 |
| Tangible fixed assets | 7 287 | 5 902 | 5 876 |
| Land and buildings | 1 070 | 909 | 700 |
| Plant, machinery and equipment | 367 | 249 | 173 |
| Furniture and vehicles | 1 088 | 622 | 497 |
| Leases and similar rights | 3 714 | 3 563 | 3 382 |
| Assets under construction and advance payments | 1 048 | 559 | 1 124 |
| Financial assets | 234 328 | 143 326 | 83 635 |
| Affiliated companies | 232 556 | 141 552 | 77 720 |
| Other companies | 0 | 0 | 0 |
| Other financial assets | 1 771 | 1 774 | 5 915 |
| CURRENT ASSETS | 444 522 | 558 974 | 685 612 |
| Accounts receivable after one year | 297 | 47 | 1 441 |
| Inventories and contracts in progress | 339 775 | 401 849 | 473 142 |
| Inventories | 24 810 | 22 113 | 20 289 |
| Contracts in progress | 314 966 | 379 736 | 452 853 |
| Amounts receivable within one year | 71 359 | 153 108 | 205 652 |
| Trade debtors | 61 709 | 44 183 | 40 122 |
| Other amounts receivable | 9 650 | 108 925 | 165 530 |
| Investments | 25 654 | 1 596 | 689 |
| Cash at bank and in hand | 6 855 | 282 | 1 621 |
| Deferred charges and accrued income | 583 | 2 092 | 3 067 |
| TOTAL ASSETS | 687 342 | 709 915 | 777 730 |
| LIABILITIES AND EQUITY (EUR '000) | 2008 | 2009 | 2010 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | 167 961 | 157 526 | 170 743 |
| Capital | 37 285 | 37 505 | 37 888 |
| Additional paid-in capital | 124 358 | 124 788 | 125 421 |
| Reserves | 1 329 | 2 019 | 2 779 |
| Legal reserve | 1 126 | 1 126 | 1 887 |
| Reserves not available for distribution | 689 | 689 | |
| Untaxed reserves | 203 | 203 | 203 |
| Retained earnings | 4 558 | -7 030 | 3 370 |
| Capital grants | 430 | 245 | 1 285 |
| PROVISIONS AND DEFERRED TAXES | 1 371 | 5 064 | 9 018 |
| CREDITORS | 518 009 | 547 325 | 597 969 |
| Amounts payable after one year | 190 183 | 189 347 | 125 111 |
| Financial debts | 1 757 | 1 390 | 36 291 |
| Advances received on contracts in progress | 78 981 | 141 532 | 79 822 |
| Other amounts payable | 109 445 | 46 426 | 8 998 |
| Amounts payable within one year | 324 859 | 356 577 | 469 888 |
| Current portion of amounts payable after one year | 3 710 | 57 641 | 45 820 |
| Financial debts | 10 000 | 23 000 | 985 |
| Trade debts | 62 026 | 34 298 | 41 280 |
| Advances received on contracts in progress | 230 601 | 224 162 | 368 438 |
| Current tax and payroll liabilities | 4 203 | 4 086 | 8 392 |
| Other amounts payable | 14 319 | 13 390 | 4 973 |
| Accrued charges and deferred income | 2 968 | 1 401 | 2 970 |
| TOTAL LIABILITIES | 687 342 | 709 915 | 777 730 |
| INCOME STATEMENT (EUR '000) | 2008 | 2009 | 2010 |
|---|---|---|---|
| ----------------------------- | ------ | ------ | ------ |
| Operating income | 183 445 | 136 626 | 152 523 |
|---|---|---|---|
| Operating expenses (-) | -185 127 | -143 430 | -150 487 |
| Raw materials, consumables, and goods for resale | -95 724 | -47 150 | -42 507 |
| Services and other goods | -45 826 | -46 043 | -49 647 |
| Salaries, social security, and pensions | -25 476 | -28 029 | -28 709 |
| Depreciation and write-offs on fixed assets | -16 203 | -15 097 | -24 416 |
| Increase/(decrease) in write-downs on inventories, work in progress and trade debtors |
- 808 | -1 448 | - 988 |
| Provisions for liabilities and charges | 569 | -3 692 | -3 954 |
| Other operating expenses | -1 658 | -1 971 | - 265 |
| Operating Profit/(Loss) | -1 682 | -6 804 | 2 036 |
| Financial income | 25 724 | 9 136 | 32 228 |
| Income from financial assets | 11 500 | 1 790 | 13 364 |
| Income from current assets | 4 574 | 3 667 | 4 898 |
| Other financial income | 9 651 | 3 678 | 13 966 |
| Financial expenses (-) | -13 578 | -9 055 | -15 988 |
| Interest expense | -4 375 | -4 680 | -2 088 |
| Amounts written off on current assets other than inventories, work in progress and trade debtors - increase (decrease) |
-2 271 | 163 | 0 |
| Other financial charges | -6 933 | -4 538 | -13 900 |
| Profit/(loss) on ordinary activities before taxes | 10 464 | -6 723 | 18 276 |
| Extraordinary income (+) | 17 | 3 000 | 0 |
| Gain on sale of fixed assets | 0 | 0 | 0 |
| Other extraordinary income | 17 | 3 000 | 0 |
| Extraordinary expenses (-) | -3 675 | -7 165 | -3 029 |
| Extraordinary depreciation and write-offs on fixed assets |
| 2008 2009 |
2010 |
|---|---|
| 0 | 0 |
| -7 165 | -3 029 |
| -10 888 | 15 246 |
| - 10 | - 38 |
| -10 899 | 15 209 |
| -10 899 | 15 209 |
| -3 653 - 21 6 807 0 6 807 6 807 |
| APPROPRIATION OF RESULTS (EUR '000) | 2008 | 2009 | 2010 |
|---|---|---|---|
| Loss to be appropriated (-) | 7 024 | -6 340 | 8 179 |
| Profit for the period available for appropriation | 6 807 | -10 899 | 15 209 |
| Loss carried forward (-) | 217 | 4 558 | -7 030 |
| Transfers to capital and reserves | 0 | 0 | 0 |
| Transfer from capital and share premium account | 0 | 0 | 0 |
| Transfer from reserves | |||
| Appropriations to capital and reserves | 341 | 689 | 760 |
| Appropriation to capital and share premium account | |||
| Appropriation to legal reserve | 341 | 0 | 0 |
| Appropriation to other reserves | 689 | 760 | |
| Profit/(loss) to be carried forward | 4 558 | -7 030 | 3 370 |
| Profit to distribute | 2 125 | 0 | 4 049 |
| Dividends | 2 125 | 0 | 4 049 |
| STATEMENT OF CAPITAL (EUR '000) |
Amount (EUR '000) |
Number of shares |
|---|---|---|
| Capital | ||
| 1. Issued capital | ||
| At the end of the previous financial year | 37 505 | |
| Changes during the financial year | 383 | 272 860 |
| At the end of the financial year | 37 888 | |
| 2. Structure of the capital | ||
| 2.1. Categories of shares | ||
| s/RDINARYSHARESWITHOUTDESIGNATIONOFFACEVALUE | 20 507 | 14 734 590 |
| s/RDINARYSHARESWITHOUTDESIGNATIONOFFACEVALUEWITH6602STRIP | 17 380 | 12 257 425 |
| 2.2. Registered or bearer shares | ||
| s2EGISTEREDSHARES | 9 551 367 | |
| s"EARERSHARES | 17 440 648 | |
| Own shares held by | ||
| s4HE#OMPANYITSELF | 106 | 75 637 |
| s)TSSUBSIDIARIES | 857 | 610 851 |
| Share issue commitments | ||
| Following exercise of share options | ||
| s.UMBEROFOUTSTANDINGSHAREOPTIONS | 2 324 753 | |
| s!MOUNTOFCAPITALTOBEISSUED | 5 229 | |
| Maximum number of shares to be issued | 2 324 753 | |
| Amount of non-issued authorized capital | 24 355 |
The philosophy, structure, and general principles of IBA corporate governance are presented in the Company's Corporate Charter («Charter»). The Charter is available on the Company's website www.iba-worldwide.com. The Company has adopted the 2009 Belgian Code of Corporate Governance as its reference Code.
The Board of Directors is composed of nine members. The articles of incorporation and the Charter require a balance on the Board of Directors among outside directors, inside directors, and directors representing the shareholders.
The Board of Directors must always be made up of at least one third outside directors and one third directors nominated by the managing directors («inside directors»). The two managing directors, who are responsible for the Company's day-to-day management, are also considered inside directors.
The Board of Directors meets whenever necessary, but a minimum of four times a year. The major topics of discussion include market situation, strategy (particularly as concerns acquisitions during the period), technological developments, financial developments, and human resources management. Reports on topics dealt with at Board meetings are sent to the directors first, so that they can exercise their duties with a full knowledge of the facts.
The Board of Directors met seven times in 2010, under the CHAIRMANSHIPOF0ETER6ERMEERENlRSTANDTHEN-R*EAN Stéphenne. Attendance at meetings of the Board was high. A large majority of the directors attended all meetings. Only eight absences were recorded for all of the meetings, which represent an absentee rate of approximately 15 percent. The Company believes that the attendance record of individual directors is not pertinent in the context of this report.
At the proposal of the Nominating Committee, the Ordinary General Meeting of May 12, 2010 approved (i) the appointment of Windi SPRL, represented by its manager Mr. Yves Windelincx as an outside director; this appointment shall expire at the 2011 Ordinary General Meeting to be held to approve the financial statements for 2010 and (ii) the reappointment of the Institut des Radio-Eléments FUP, represented by Mrs. Nicole Destexhe as an other director; this appointment shall expire at the 2013 Ordinary General Meeting to be held to approve the financial statements for 2012.
At the proposal of the managing directors, the Ordinary General Meeting of May 12, 2010 approved the REAPPOINTMENTOF-R9VES*ONGENASANINSIDEDIRECTOR this appointment shall expire at the 2013 Ordinary General Meeting to be held to approve the financial statements for 2012.
| Nom | Age | Start of term |
End of term |
Duties at IBA | Primary duties outside IBA |
|---|---|---|---|---|---|
| Pierre Mottet(1) | 49 | 1998 | OGM 2011 |
Chief Executive Officer Inside director Managing Director NC |
Member of the Executive Committees of FEB (Federation of Belgian Enterprises) and Agoria Wallonia; Director of UWE (Walloon Union of Companies) and several startups |
| Yves Jongen(1) | 63 | 1991 | OGM 2013 |
Chief Research Officer Inside director Managing Director NC |
Before the establishment of IBA in 1986, Director of the Cyclotron Research Center of the Université Catholique de Louvain (UCL) |
| Bayrime S.A. (represented by Eric de Lamotte)(1) |
54 | 2000 | OGM 2011 |
Inside director CC, NC, AC |
Corporate director. Formerly Financial Director of IBA (1991-2000) |
| Peter Vermeeren | 70 | 2000 | OGM 2011 |
6ICE #HAIRMANOFTHE"OARD of Directors |
&ORMERLY%XECUTIVE6ICE0RESIDENTOF-ALLINCKRODT AND%XECUTIVE6ICE0RESIDENTOF!\$!# |
| PSL Management Consulting SCS (represented by Pierre Scalliet) |
58 | 2005 | OGM 2012 |
Outside director | Chief of Service, Oncological Radiotherapy Professor of Clinical Oncology, Université Catholique de Louvain (UCL) |
| Innosté S.A. (represented by Jean Stéphenne)(2) |
60 | 2000 | OGM 2011 |
Chairman of the Board of Directors Outside director CC, NC |
Chairman and President of GSK Biologicals 0RESIDENTOF"ESIXAND6ESALIUS Director of BNP Fortis and GBL Nanocyl President of Biowin Member of the Steering Committee of FEB and UWE office |
| Windi SPRL (represented by Yves Windelincx)(2) |
63 | 2010 | OGM 2011 |
Outside director CC, NC, AC |
Outside director of Besix, Desmet Engineers and Contractors, TCRe, Concordia, Agency for Foreign Trade |
| Olivier Ralet BDM SPRL (represented by Olivier Ralet) |
53 | 2000 | OGM 2012 |
Other director AC |
Bachelor of Civil Law Member of the Executive Committee of Atenor Group S.A., Belgium |
| Institut National des Radioéléments FUP (represented by Nicole Destexhe) |
58 | 1991 | OGM 2013 |
Other director | Financial Director of IRE |
CC: Compensation Committee – NC: Nominating Committee – AC: Audit Committee
(1) As defined in the Charter.
(2) These directors were presented to the shareholders as outside candidates at the time of their election. However, other directors may also meet the same independence criteria. During the course of the year, none of the outside directors ceased to meet the requirements for independence, which are reiterated in the Charter.
The Compensation Committee met three times in 2010. A report on each of its meetings was submitted to the Board.
Topics of discussion included issues relating to the 2009 bonuses, determination of beneficiaries of the 2010 stock option plan, directors' compensation, and compensation schemes in general. All of the members attended each meeting.
The Compensation Committee is comprised of Innosté 3!REPRESENTEDBY-R*EAN3TÏPHENNE "AYRIME3! represented by Mr. Eric de Lamotte, Windi S.P.R.L. represented by Mr. Yves Windelincx. It is chaired by Innosté 3! REPRESENTEDBY-R*EAN3TÏPHENNE
Mr. Pierre Mottet is invited to attend unless the Committee is deciding on compensation policy or other subjects affecting the managing directors.
The Nominating Committee met twice in 2010 for the purpose of analyzing the areas of expertise needed by the Board of Directors to fill expiring directorship positions and of making proposals in this regard to the Board of Directors. Based on its report, in May 2010 the Board of Directors proposed the appointment of Windi S.P.R.L. represented by its manager Mr. Yves Windelincx as an outside director and the reappointment of the Institut des Radio-Eléments FUP, represented by Mrs. Nicole Destexhe as an «other» director.
All of the members attended each meeting. The Nominating Committee consists of five members, including the
Chairman of the Board of Directors and a minimum of two outside directors.
The Compensation Committee is comprised of Innosté 3! REPRESENTEDBY-R*EAN3TÏPHENNE "AYRIME3! represented by Mr. Eric de Lamotte, Windi S.P.R.L., represented by Mr. Yves Windelincx and Messrs. Pierre -OTTETAND9VES*ONGEN)TISCHAIREDBY-R*EAN Stéphenne.
The Audit Committee met four times in 2010, including three times in the presence of the auditors. A report on each of its meetings was submitted to the Board of Directors. The main topics were the annual results for 2009 and analysis of the auditors' management letter, analysis of the midyear results, follow-up of implementation of IFRS accounting principles, examination of the 2011 budget, and follow-up of inside audit and risk management.
The Company ensures a close control of the risks that it is subject to with through the intermediary of its management controllers active in each of the services. The risks thus
identified are reported to the Management Team which submits a report to the Audit Committee and elaborates an appropriate solution together with the Audit Committee and the person in charge of insurance. All of the members attended each meeting.
The Committee is currently comprised of three members: Windi S.P.R.L., represented by Mr. Yves Windelincx, Olivier Ralet BMD S.P.R.L., represented by Mr. Olivier Ralet and Bayrime S.A., represented by Mr. Eric de Lamotte. It is chaired by Mr. Yves Windelincx.
Day-to-day management and corporate responsibility in such matters is delegated to two managing directors, currently -R0IERRE-OTTET #HIEF%XECUTIVE/FlCER AND-R9VES*ONGEN #HIEF2ESEARCH/FlCER
The Chief Executive Officer is specifically responsible for implementing strategy and for day-to-day management and is assisted by a Management Team consisting of certain members of the corporate team and the presidents of the Business Units. Together, they constitute the Group's Management Team.
The Chief Executive Officer, accompanied by the Chief Financial Officer, makes regular reports to the Board of Directors. The Board of Directors also asked Management Team members or division heads to report to the Board on two occasions: adoption of the strategic plan and adoption of the 2011 budget.
The Management Team was comprised of the following members on December 31, 2010:
| Name | Title | Age | Location |
|---|---|---|---|
| 1. Pierre Mottet | Chief Executive Officer | 49 | Louvain-la-Neuve, Belgium |
| 2. Yves Jongen | Chief Research Officer | 63 | Louvain-la-Neuve, Belgium |
| 3. Jean-Marc Bothy | Chief Financial Officer | 46 | Louvain-la-Neuve, Belgium |
| 4. Frank Uytterhaegen | President IBA China | 57 | Beijing, China |
| 5. Rob Plompen | President IBA Dosimetry | 47 | Schwarzenbruck, Germany |
| 6. Renaud Dehareng | President IBA Molecular | 38 | Saclay, France |
| 7. Jean-Marc Andral | President IBA Particle Therapy | 61 | Louvain-la-Neuve, Belgium |
| 8. Serge Lamisse | President IBA Industrial | 47 | Louvain-la-Neuve, Belgium |
| 9. Didier Cloquet | Chief of Staff | 46 | Louvain-la-Neuve, Belgium |
The Board meeting of May 12, 2010 during which the Board had to rule on the change of President of the Board of Directors, gave rise to the application of the procedure relating to the director conflict of interest stipulated in article 523 of the Belgian Code of Company Law. This conflict OFINTERESTCONCERNED-R0ETER6ERMEERENWHOACCEPTED an active support role of Mr. Renaud Dehareng so as to prepare the latter to his new position. The conflict of interest concerned (i) the financial conditions of this mission and (ii) the change of presidency of the Board of Directors, as a CONSEQUENCEOFTHERECONSIDERATIONOF-R0ETER6ERMEEREN in his quality of outside director further to the acceptation of the above mentioned mission. After deliberation, the Board unanimously adopted the appointment of Innosté S.A., REPRESENTEDBY-R*EAN3TÏPHENNE AS0RESIDENTOFTHE Board and President of the Compensation and Nominating #OMMITTEESTOREPLACE-R0ETER6ERMEERENANDTHE APPOINTMENTOF-R0ETER6ERMEERENAS6ICE
0RESIDENTOFTHE Board. The Board also approved the appointment of
Mr. Yves Windelincx as member of the Nominating and #OMPENSATION#OMMITTEESTOREPLACE-R0ETER6ERMEEREN
Lastly, the Board meeting of August 27, 2010, which was to rule on the launch of a stock option plan gave rise to the application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. This conflict concerned all of the members of the Board, as beneficiaries of the plan in question, with the exception of Ms. Nicole Destexhe (Institut des Radio Eléments &50 OFTHE0RESIDENTOFTHE"OARD -R*EAN3TÏPHENNE (Innosté S.A.) and of the President of the Audit Committee, Mr. Yves Windelincx (Windi S.P.R.L.) who, although eligible to participate in this plan, stated that they did not wish to be included in the list of beneficiaries. After deliberation, the Board unanimously approved the launch of a stock option plan up to 900 000 stock options and the terms of the special report project of the Board prepared in accordance with articles 583, 596, and 598 of the Belgian Code of Company Law.
The Company is committed to the honest, ethical, and honorable conduct of its business. It believes that ethical management is the lynchpin of its continued growth and success will enable it to maintain its good reputation and achieve its strategic mission of protecting, enhancing, and saving lives. For this reason, it has worked to create a code of ethical conduct.
This code defines the fundamental principles of ethical business conduct and provides guidance for the Group's employees and co-contracting parties on such matters as business partnerships, conflicts of interest, and confidentiality. All employees have read and approved this code.
The Company has implemented a code of conduct to combat insider trading and market abuse. All employees have received a copy of this code. Furthermore, each of the directors and each member of the Management Team have signed and acknowledged the code in his or her management capacity.
In 2010, these individuals exercised, in their capacity of person holding management duties, a total of 12 000 stock options issued under the 2004 stock option plan.
To the best of the Company's knowledge, there were no violations of this code of conduct in 2010.
The Company has implemented a code of conduct governing transactions and other contractual relationships between IBA or its affiliated companies and persons affiliated with them. A transaction with an affiliated person is an transaction between the Company or one of its subsidiaries and (a) a member of the Board of Directors
of IBA SA, (b) a member of the Group's Management Team, (c) a person living under the same roof as these individuals, or (d) an enterprise in which a person referred to in (a), (b), or (c) holds significant voting power, whether directly or indirectly. Such transactions must be conducted in accordance with the market practice. This code has been read and signed by all affiliated persons.
As indicated in the Charter, the Company does not wish to provide specific information on individual compensation as long as it is not legally compelled to do so. It believes that information of this kind does not offer added value to the shareholders and is potentially harmful to the Company. However, communication of information on compensation policy is important for shareholders and is detailed in the Charter. Compensation actually paid in 2010 is described below.
Directors earn a yearly fixed fee amounting to EUR 6 000 increased by EUR 1 000 per meeting they actually attended (EUR 2 000 for the Chairman and EUR 1 500 for the Chairman of the Audit Committee).
Fixed compensation paid to members of the Board of Directors for services rendered in 2010 totaled EUR 118 000. Managing directors were not compensated for attending meetings of the Board of Directors. Nonmanaging directors did not receive any compensation or other direct or indirect benefit from the Company or any other entity belonging to the Group for their services. However, with the exception of Ms. Nicole Destexhe and -ESSRS*EAN3TÏPHENNE)NNOSTÏ3! AND9VES7INDELINCX (Windi S.P.R.L.), all of the directors were included as beneficiaries of the 2010 stock option plan. Because the number of options involved is limited to 1 250 options for
directors other than the managing directors, the Company considers that granting these options does not interfere with the judgment of the recipient directors.
The Company considers that the amount of compensation or other benefits given directly or indirectly to directors by the Company or any other entity in the Group is not relevant to, and therefore not mentioned in, this report.
The Board is careful to ensure that the managing directors and the Management Team are compensated for direct and indirect services to the Company in a manner consistent with market practices and based on level of responsibility, services rendered, and nature of duties.
As indicated in the Charter, fixed and variable compensation of the managing directors is determined by the Compensation Committee in accordance with principles approved by the Board. Fixed and variable compensation of the Management Team is reviewed and determined by the Chief Executive Officer. It has been reported to the Compensation Committee and the Board of Directors and discussed by both.
The principle of launching a 2010 stock option plan and the total number of options to be issued were approved by the Board of Directors.
The Compensation Committee identified the beneficiaries of the stock options and determined the number of stock options to be granted to each of them.
The total amount paid by the Company and all other entities in the Group in compensation for duties exercised and services rendered directly or indirectly by the two managing directors and the members of the Management Team came to approximately EUR 2.6 million in 2010, of which around EUR 2.5 million for fixed compensation and around EUR 0.1 million for variable compensation payable for services performed in 2009. Note that fixed compensation includes a Group contribution of EUR 0.1 to a defined contribution plan. The total amount paid by the Company and all of other entities in the Group in compensation for duties exercised and services rendered directly or indirectly by the CEO, all benefits included, came to EUR 345 620 in 2010. No variable compensation was paid to the CEO in 2010 as the
objectives set for him were not met.
These amounts are always stated at total company cost.
As at December 31, 2010, all of the directors together held 1 507 071 shares of IBA stock directly (including 1 423 271 shares held by IRE).
At the same date, the non-managing directors still held:
As at December 31, 2010, members of the Management Team, including the managing directors, held a total of 850 125 stock options distributed as follows:
At December 31, 2010, the CEO held a total of 310 530 stock options distributed as follows:
The Company believes that (i) on an individual basis, the number of shares, stock options, and other option purchase rights granted during the financial year to the members of the executive management excluding the CEO, and (ii) the principal contract provisions regarding the hiring or departure of executive managers are not relevant to, and therefore not mentioned in, this report. The Company notes however that these provisions are in line with the market standards.
IBA's reference shareholders, Belgian Anchorage, UCL, Sopartec, and IRE have disclosed that they are acting in concert and have entered into an agreement that will expire in 2013. This shareholders' agreement governs, inter alia, the sharing of information and preferential rights on the sale of IBA stock.
The parties to this agreement held 10 153 213 shares of common stock at December 31, 2010, representing 37.62 percent of the Company's voting rights.
Under the terms of this agreement, in the event of a new IBA stock offering, if one of the dominant shareholders does not exercise its preferential subscription right, this right will pass to the other dominant shareholders (with Belgian Anchorage having first right of purchase). If a participant in the shareholders' agreement wishes to sell its IBA's stock shares, the other parties to the agreement will have a preemptive right to acquire this stock (with Belgian Anchorage having first right of purchase). This preemptive
right is subject to certain exceptions and it does not apply, in particular, in the case of a transfer of stock to Belgian Anchorage S.A.
Under an agreement signed on February 19, 2008, IRE has granted IBA a purchase right for the shares it holds in Radiopharma Partners (that is 80.1 percent) and Sceti Medical Labo KK (that is 19.9 percent). On May 29, 2008, IBA exercised this option for about EUR 20 million as 50 percent in cash and 50 percent in IBA S.A. shares. Without prejudice to rights and obligations arising from other agreements between shareholders, IRE has agreed to hold these stock shares for 5 years, to grant IBA a preemptive right for any transfer of these stock shares and to keep defending a Belgian hold on IBA shares.
To the best of the Company's knowledge, there were no other relationships or specific agreements among the shareholders at December 31, 2010.
In accordance with the Act of May 2, 2007 on the disclosure of significant holdings in issuers whose securities are admitted to trading on a regulated market and its implementing royal decree of February 14, 2008 (both effective September 1, 2008), and on the basis of article 34 of the articles of Incorporation of IBA SA, IBA's shareholders are required to report their holdings to the CBFA (Belgium's financial market regulator) and to IBA SA whenever these holdings reach a threshold of 3%, 5%, or multiples of 5%. IBA SA did not receive any disclosures of this nature in 2010.
Under article 74 of the Takeover Offer Act of April 1, 2007, single or concerted parties that hold more than 30 percent of the voting shares of a Belgian Company admitted to trading on a regulated market as of September 1, 2007 are not bound by the obligation to make a takeover offer for the stock of said Company, subject to certain conditions, including having notified the CBFA in accordance with the applicable regulation and by the prescribed deadlines.
In this context, IBA transmitted on September 30, 2010 to the CBFA the data updated up to September 1, 2010 of the notification carried out under article 74, §6 of the law on takeover bids:
³ To the best of IBA SA's knowledge, Sopartec SA, whose registered office is located at 1348 Louvain-la-Neuve, place de l'Université 1, enterprise number VAT BE 0402.978.679, RPM Nivelles, has continued to hold its participation in IBA SA's capital during these last twelve months with 529 925 shares (that is 1.97% of the voting shares in IBA SA at September 1, 2010)
In view of the above, at September 1, 2010, these parties held therefore together a participation in IBA SA's capital of 10 153 213 shares (that is 37.74% of the voting shares). Although IBA Investments SCRL is associated to Belgian Anchorage SCRL, it is not part of the agreement of collaborating action to which Belgian Anchorage SCRL, the Institut des Radioéléments FUP, UCL and Sopartec SA participate.»
The situation was as follows at December 31, 2010:
| Situation of denominator | 31/12/2010 26 992 015 |
|||||||
|---|---|---|---|---|---|---|---|---|
| REFERENCE SHAREHOLDERS |
PARTIES ACTING IN | CONCERT | AFFILIATED PERSONS GROUP A |
AFFILIATED PERSONS GROUP B |
||||
| Number of shares |
% | Number of shares |
% | Number of shares |
% | Number of shares |
% | |
| Belgian Anchorage SCRL | 7 773 132 | 28.80% | 7 773 132 | 28.80% | 7 773 132 | 28.80% | ||
| IBA Investment SCRL | 610 852 | 2.26% | 610 852 | 2.26% | ||||
| IBA SA | 75 637 | 0.28% | 75 637 | 0.28% | ||||
| UCL ASBL | 426 885 | 1.58% | 426 885 | 1.58% | 426 885 | 1.58% | ||
| Sopartec SA | 529 925 | 1.96% | 529 925 | 1.96% | 529 925 | 1.96% | ||
| Institut des Radioéléments FUP | 1 423 271 | 5.27% | 1 423 271 | 5.27% | ||||
| 10 839 702 | 40.16% | 10 153 213 | 37.62% | 8 459 621 | 31.34% | 956 810 | 3.54% | |
Ion Beam Applications SA, abbreviated IBA SA.
Chemin du Cyclotron, 3 B-1348 Louvain-la-Neuve, Belgium %NTERPRISENUMBER6!4"% RLP Nivelles
IBA was incorporated for an indefinite period on March 28, 1986 as a société anonyme under Belgian law. It is a listed Company pursuant to article 4 of the Belgian Code of Company Law and a Company having offered securities to the public pursuant to article 438 of the Belgian Code of Company Law.
The purpose of the Company is to engage in research and development and to acquire intellectual property rights with a view to the exploitation, fabrication, and marketing of applications and equipment in the field of applied physics. It may engage in any and all securities, real-estate, financial, commercial, and industrial operations that are directly or indirectly related to its corporate purpose. It may acquire an interest, by contribution, merger, purchase of shares, or any other means, in companies, partnerships, or corporations whose purpose is similar, analogous, related, or useful to the achievement of its corporate purpose in whole or in part.
The Company's statutory and consolidated statements are filed with the National Bank of Belgium. Copies of the Company's consolidated articles of incorporation, its annual and semi-annual reports, and all other shareholder documentation may be obtained at the Company's website (www.iba-worldwide.com) or by shareholder request to the Company's registered office.
At December 31, 2010, IBA's capital stock was valued at EUR 37 887 624.51 and consisted of 26 992 015 fully paid shares with no par value, including 12 257 425 shares with 6602STRIPS
In September 2002, the Company issued 3 000 000 stock options for Group employees («2002 Plan»). Of these OPTIONS WERECANCELEDBYNOTARIALACTON*ULY WERECANCELEDBYNOTARIALACTON*ULY ANDWERECANCELEDBYNOTARIALACTON*ULY 11, 2005. Most of these stock options allow the beneficiary to purchase a new share at EUR 3.34 following certain procedures during specific periods between December 1, 2003 and August 31, 2012.
During 2010, the following exercises and cancellations were noted: exercise of 3 000 stock options by notarial act on April 21, 2010, exercise of 150 stock options by notarial ACTON*ULY EXERCISEOF STOCKOPTIONSAND cancellation of 7,300 stock options by notarial act on November 8, 2010. At December 31, 2010, 304 607 stock options of the 2002 plan remained and had not yet been exercised.
In October 2004, the Company issued 1 000 000 stock options for Group employees («2004 Plan»). Of these options, 500 000 were awarded free of charge to employees of IBA and its Belgian subsidiaries and Specific Persons subject to the Belgian Employment Action Plan Act of March 26, 1999 («free stock options»). Another 500 000 of these options were offered at 4 percent of the strike price to employees and Specific Persons not subject to the Belgian Employment Action Plan Act of March 26, 1999 («purchasable stock options»). This segment was intended essentially for employees and Specific Persons associated with subsidiaries of IBA SA in countries outside Belgium, where stock options are taxed when they are exercised rather than when they are granted. In order to distribute the impact of the tax burden on beneficiaries subject the Belgian Employment Action Plan Act, instead of giving these stock options away, the Company issued
them at a price approximately equal to the marginal tax rate burden for beneficiaries subject to the Act. Of the total offer, 496 000 free stock options were accepted, and 390 000 purchasable options were subscribed to. Consequently, 4 000 unaccepted free stock options were canceled, as recorded by notarial act on December 22, 2004. These stock options allow the beneficiary to purchase a new share at EUR 3.72 following certain procedures during specific periods between December 1, 2007 and September 30, 2010.
During 2010, the following exercises and cancellations were noted: exercise of 79 300 stock options by notarial ACTON*ANUARY EXERCISEOFSTOCKOPTIONS by notarial act on April 21, 2010, exercise of 31 300 stock OPTIONSBYNOTARIALACTOF*ULY EXERCISEOF stock options and cancellation of 107 000 stock options by notarial act on November 8, 2010. At December 31, 2010, 289 770 stock options of the 2004 plan remained and had not yet been exercised.
In October 2005, the Company issued 90 000 stock options for Group employees («2005 Plan»). All of the stock options were accepted. They allow the beneficiary to purchase a new share at EUR 6.37 following certain procedures during specific periods between December 1, 2008 and September 30, 2011. During 2010, the following exercises and cancellations were noted: exercise of 1 000 stock options and cancellation of 18 000 stock options by notarial act on November 8, 2010. At December 31, 2010, 62 000 stock options of the 2005 plan remained and had not yet been exercised.
In October 2006, the Company issued 575 000 stock options for Group employees («2006 Plan»). The offering was distributed in much the same way as for the 2004 Plan. As recorded by notarial act on December 22, 2006, of the 332 000 free stock options, 287 500 were accepted, and of the 243 000 purchasable stock options, 149 750 were purchased. Consequently, 44 500 unaccepted free stock options were canceled, as recorded by notarial act. They allow the beneficiary to purchase a new share at EUR
13.64 following certain procedures during specific periods between December 1, 2009 and September 30, 2012. During 2010, 62 000 stock options were canceled by notarial act on November 8, 2010. At December 31, 2010, 375 250 stock options of the 2006 plan remained and had not yet been exercised.
In October 2007, Company issued 450 000 stock options for Group employees («2007 Plan»). The offering was distributed in much the same way as for the 2004 Plan. As recorded by notarial act on December 20, 2007, of the 259 000 free stock options, 219 788 were accepted, and of the 191 000 purchasable stock options, 118 458 were purchased. Consequently, 39 212 free stock options were canceled, as recorded by notarial act. They allow the beneficiary to purchase a new share at EUR 19.94 following certain procedures during specific periods between December 1, 2010 and September 30, 2013. During 2010, 38 000 stock options were canceled by notarial act on November 8, 2010. At December 31, 2010, 300 246 stock options remained of that plan. None of these stock options could be exercised at December 31, 2010.
In September 2008, the Company issued 350 000 stock options for Group employees («2008 Plan»). The offering was distributed in much the same way as for the 2004 Plan. As recorded by notarial act on December 18, 2008, of the 200 000 free stock options, 77 283 were accepted, and of the 150 000 purchasable stock options, 38 187 were purchased. Consequently, 122 717 free stock options were canceled, as recorded by notarial act. They allow the beneficiary to purchase a new share at EUR 14.18 following certain procedures during specific periods between December 1, 2011 and September 30, 2014. During 2010, 8 500 stock options were canceled by notarial act on November 8, 2010. At December 31, 2010, there remained therefore 106 970 stock options of that plan. None of these stock options could be exercised at December 31, 2010.
In May 2009, as authorized by law, the Board of Directors decided to propose a three-year extension of the exercise periods for free options granted under the 2004, 2005,
2006, and 2007 stock option plans, with certain restrictions applying to persons holding options with a total value of more than EUR 100 000 (calculated as the strike price times the number of options).
In September 2009, the Company issued 1 000 000 stock options for Group employees («2009 Plan»). The offering was distributed in much the same way as for the 2004 Plan. As recorded by notarial act on December 16, 2009, of the 620 000 free stock options, 346 578 were accepted, and of the 380 000 purchasable stock options, 89 193 were purchased. Consequently, 273 422 free stock options were canceled, as recorded by notarial act. They allow the beneficiary to purchase a new share at EUR 8.26 following certain procedures during specific periods between December 1, 2012 and September 30, 2015. During 2010, 9 500 stock options were canceled by notarial act on November 8, 2010. At December 31, 2009, there remained therefore 426 271 stock options from this plan. None of these options was exercisable at December 31, 2010.
In September 2010, the Company issued 900 000 stock options for Group employees («2010 plan»). The offering was distributed very much in the same manner as for the 2004 plan. As recorded by notarial act on December 16, 2010, it was noted that of the 550 000 free stock options, 329 136 free stock options were definitely accepted and that of the 350 000 purchasable stock options, 130 503 stock options were purchased.
Consequently, 220 864 free stock options were canceled. They allow the beneficiary to purchase a new share at EUR 7.8 following certain procedures during specific PERIODSBETWEEN*ANUARY AND3EPTEMBER At December 3, 2010, there remained 459 639 stock options of this plan. None of these stock options could be exercised at December 31, 2010.
The total number of stock options in circulation at December 31, 2010 is therefore of 2 324 753.
All stock options may also be exercised in the event of a takeover bid for IBA or of a capital increase with preferential rights.
In April 2009, the Company offered 200 000 shares for subscription by Group employees (2009 ESP Plan). As recorded by notarial act on May 29, 2009, of the 200 000 new shares offered for purchase, 121 838 were purchased at a price of EUR 4.09 per share. The shares offered for purchase were registered common stock shares of IBA CAPITALSTOCKWITH6602STRIPSANDOWNERSHIPGRANTEDAS from 2009. They were offered at a purchase price equal to the average market price for 30 days prior to the offer, less a discount of 16.67 percent. The shares may not be sold for three years as from the end of the purchase period.
The Extraordinary General Meeting of May 12, 2010 authorized the Board of Directors to increase the Company's capital through one or more stock offerings up to a maximum of EUR 25 000 000.
This authorization is valid for five years from the date of publication in the Moniteur Belge of the decision of the Extraordinary General Meeting of May 12, 2010; that is, UNTIL*UNE
At December 31, 2010, following the launch of the 2010 stock option plan, the authorized capital was valued at EUR 24 354 804.74.
IBA is careful to patent all aspects of its technology for which a patent provides a commercial advantage.
In addition, the Company has maintained the secrecy of a significant portion of its know-how that is not patentable or for which the Company believes secrecy is more effective than publication in a patent application. More fundamentally, the Company believes that the best way to protect itself from its competitors is not by patenting its inventions, but by maintaining its technological lead.
IBA also licenses patents from third parties and pays royalties on them.
IBA has licensing agreements involving various aspects of its technology. Listing and explaining the nature and terms of these licensing agreements is beyond the scope of this annual report. These agreements involve, for example,
certain aspects of its particle accelerator technology and a number of components of its proton therapy equipment. Several agreements relate to Bioassays business. Eventually, more recent agreements were entered into with regards to the future commercialization of proprietary molecules in medical imaging.
| SHARES | CAPITAL (IN EUR) | ||||
|---|---|---|---|---|---|
| Transaction | New shares | Total shares | Change (6) | Total | |
| 17/02/2006 exercise of options under 2002 stock option plan | +350 000 | 25 192 453 | + 487 095.00 | 35 370 051.00 | |
| 18/04/2006 exercise of options under 2002 stock option plan | +7 930 | 25 200 383 | +11 036.00 | 35 381 087.00 | |
| 14/07/2006 exercise of options under 2002 stock option plan | +159 823 | 25 360 206 | +222 426.00 | 35 603 513.00 | |
| 17/10/2006 exercise of options under 2002 stock option plan | +87 110 | 25 447 316 | +121 231.00 | 35 724 743.00 | |
| 17/10/2006 exercise of options under 2001 stock option plan | +17 750 | 25 465 066 | +24 555.00 | 35 749 299.00 | |
| 15/01/2007 exercise of options under 2001 stock option plan | +82 550 | 25 547 616 | +114 197.00 | 35 863 495.00 | |
| 15/01/2007 exercise of options under 2002 stock option plan | +118 180 | 25 665 796 | +164 471.00 | 36 027 967.00 | |
| 17/04/2007 exercise of options under 2001 stock option plan | +20 050 | 25 685 846 | +27 737.00 | 36 055 703.00 | |
| 17/04/2007 exercise of options under 2002 stock option plan | +43 280 | 25 729 126 | +60 233.00 | 36 115 936.00 | |
| 17/07/2007 exercise of options under 2001 stock option plan | +10 500 | 25 739 626 | +14 525.00 | 36 130 462.00 | |
| 17/07/2007 exercise of options under 2002 stock option plan | +56 636 | 25 796 262 | +78 820.00 | 36 209 282.00 | |
| 16/10/2007 exercise of options under 2001 stock option plan | +3 350 | 25 799 612 | +4 634.00 | 36 213 916.00 | |
| 16/10/2007 exercise of options under 2002 stock option plan | +640 | 25 800 252 | +891.00 | 36 214 807.00 | |
| 16/01/2008 exercise of options under 2001 stock option plan | +1 500 | 25 801 752 | +2 075.00 | 36 216 882.00 | |
| 16/01/2008 exercise of options under 2002 stock option plan | +7 270 | 25 809 022 | +10 118.00 | 36 227 000.00 | |
| 16/01/2008 exercise of options under 2004 stock option plan | +143 450 | 25 952 472 | +201 447.00 | 36 428 447.00 | |
| 15/04/2008 exercise of options under 2002 stock option plan | +7 500 | 25 959 972 | +10 438.00 | 36 438 884.00 | |
| 15/04/2008 exercise of options under 2004 stock option plan | +15 500 | 25 975 472 | +21 767.00 | 36 460 651.00 | |
| 23/06/2008 capital increase | +544 611 | 26 520 083 | +764 447.00 | 37 225 098.00 | |
| 16/07/2008 exercise of options under 2001 stock option plan | +600 | 26 520 683 | +830.00 | 37 225 928.00 | |
| 16/07/2008 exercise of options under 2002 stock option plan | +3 434 | 26 524 117 | +4 779.00 | 37 230 707.00 | |
| 16/07/2008 exercise of options under 2004 stock option plan | +26 900 | 26 551 017 | +37 776.00 | 37 268 483.00 | |
| 17/10/2008 exercise of options under 2001 stock option plan | +600 | 26 551 617 | +830.00 | 37 269 313.00 | |
| 17/10/2008 exercise of options under 2002 stock option plan | +630 | 26 552 247 | +877.00 | 37 270 190.00 | |
| 17/10/2008 exercise of options under 2004 stock option plan | +10 850 | 26 563 097 | +15 237.00 | 37 285 426.00 | |
| 21/01/2009 exercise of options under 2004 stock option plan | +12 750 | 26 575 847 | +17 905.00 | 37 303 331.00 | |
| 16/04/2009 exercise of options under 2004 stock option plan | +350 | 26 576 197 | +492.00 | 37 303 823.00 | |
| 29/05/2009 ESP Plan. 2009 | +121 838 | 26 698 035 | +17 1024.00 | 37 474 847.00 | |
| 14/07/2009 exercise of options under 2004 stock option plan | +5 450 | 26 703 485 | +7 653.00 | 37 482 500.15 | |
| 16/10/2009 exercise of options under 2002 stock option plan | +120 | 26 703 605 | +167.00 | 37 482 667.15 | |
| 16/10/2009 exercise of options under 2004 stock option plan | +6 550 | 26 710 155 | +9 198.00 | 37 491 865.32 | |
| 16/10/2009 exercise of options under 2005 stock option plan | +9 000 | 26 719 155 | +12 638.00 | 37 504 503.12 |
| SHARES | CAPITAL (IN EUR) | ||||
|---|---|---|---|---|---|
| Transaction | New shares | Total shares | Change (6) | Total | |
| 20/01/2010 exercise of options under 2004 stock option plan | +55 900 | 26 775 055 | +78 500.00 | 37 583 003.49 | |
| 20/01/2010 exercise of options under 2004 extended plan | +23 400 | 26 798 455 | +32 861.00 | 37 615 864.11 | |
| 21/04/2010 exercise of options under 2002 short-term US plan |
3 000 | 26 801 455 | 4 175.10 | 37 620 039.21 | |
| 21/04/2010 exercise of options under 2004 stock option plan | 64 200 | 26 865 655 | 90 156.06 | 37 710 195.27 | |
| 21/04/2010 exercise of options under 2004 extended plan | 7 400 | 26 873 055 | 10 391.82 | 37 720 587.09 | |
| 26/07/2010 exercise of options under 2002 long-term plan | 150 | 26 873 205 | 208.76 | 37 720 795.85 | |
| 26/07/2010 exercise of options under 2004 stock option plan | 28 300 | 26 901 505 | 39 741.69 | 37 760 537.54 | |
| 26/07/2010 exercise of options under 2004 extended plan | 3 000 | 26 904 505 | 4 212.90 | 37 764 750.44 | |
| 8/11/2010 exercise of options under 2002 stock option plan | 680 | 26 905 185 | 946.36 | 37 765 696.79 | |
| 8/11/2010 exercise of options under 2002 stock option plan | 600 | 26 905 785 | 835.02 | 37 766 531.81 | |
| 8/11/2010 exercise of options under 2004 stock option plan | 81 730 | 26 987 515 | 114 773.44 | 37 881 305.25 | |
| 8/11/2010 exercise of options under 2004 extended plan | 3 500 | 26 991 015 | 4 915.05 | 37 886 220.31 | |
| 8/11/2010 exercise of options under 2005 stock option plan | 1 000 | 26 992 015 | 1 404.20 | 37 887 624.51 | |
| 21/02/2011 exercise of options under 2002 stock option plan | 6.140 | 26.998.155 | 8 545.04 | 37 896 169.55 | |
| 21/02/2011 exercise of options under 2004 stock option plan | 4 000 | 27 002 155 | 5 617.20 | 37 901 786.75 | |
| 21/02/2011 exercise of options under 2005 stock option plan | 12 000 | 27 014 155 | 16 850.40 | 37 918 637.15 |
General information
IBA stock is quoted on the Euronext Brussels continuous market. It is part of the Euronext "RUSSELS"ELL-IDINDEX)TWASINTRODUCEDONTHE3TOCK%XCHANGEON*UNE ATAPRICE OF%52ADJUSTEDFORATOSPLITIN*UNE 4HEREWERENOCONVERTIBLEBONDSOR warrants issued as of December 31, 2010.
During 2010, IBA stock followed the stock markets, closing at EUR 8.28 at the end of December 2010.
The total number of stock options issued for personnel rose to 2 324 753 at the end of 2010.
| December 31, 2009 | Diluted | December 31, 2010 | Diluted | |||||
|---|---|---|---|---|---|---|---|---|
| Actionnaires | Number of shares |
% | Number of shares |
% | Number of shares |
% | Number of shares |
% |
| Belgian Anchorage S.A.(1)(2) | 7 773 132 | 28.80% | 7 773 132 | 29.09% | 7 773 132 | 29.09% | 7 773 132 | 29.09% |
| Institut des Radioéléments (IRE)(1) |
1 423 271 | 5.27% | 1 423 271 | 5.33% | 1 423 271 | 5.33% | 1 423 271 | 5.33% |
| Sopartec (UCL)(1) | 529 925 | 1.96% | 529 925 | 1.98% | 529 925 | 1.98% | 529 925 | 1.98% |
| Université Catholique de Louvain (UCL)(1) |
426 885 | 1.58% | 426 885 | 1.60% | 426 885 | 1.60% | 426 885 | 1.60% |
| IBA Investments(3) | 635 530 | 2.26% | 635 530 | 2.38% | 610 852 | 2.29% | 610 852 | 2.29% |
| IBA S.A. | 75 637 | 0.27% | 75 637 | 0.28% | 75 637 | 0.28% | 75 637 | 0.28% |
| Float | 15 854 775 | 59.84% | 18 363 107 | 68.73% | 16 152 313 | 60.45% | 18 477 066 | 69.15% |
| TOTAL | 26 719 155 100.00% | 29 227 487 100.00% | 26 992 015 100.00% | 29 316 768 100.00% |
(1) Transparency statement at October 26, 2009 (most recent published statement).
(2) Belgian Anchorage is a company established and wholly owned by IBA management and employees.
(3) IBA Investments is a second-tier subsidiary of IBA S.A.
Interim statements, first quarter 2011 May 11, 2011
2011 Annual Shareholder's Meeting May 11, 2011
0UBLICATIONOFTHESEMI
ANNUALRESULTSASOF*UNE !UGUST Interim statements, third quarter 2011 November 15, 2011
Publication of the annual results on December 31, 2011 March 15, 2012
The stock market and...
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Jean-Marc Bothy Chief Financial Officer Ph.: +32 10 47 58 90 E-mail: [email protected]
Version française disponible sur demande.
Chemin du Cyclotron, 3 1348 Louvain-la-Neuve, Belgium Ph.: +32 10 47 58 11 – Fax: +32 10 47 58 10 RPM Nivelles - VAT BE 428.750.985 E-mail: [email protected] Website: www.iba-worldwide.com
Published by IBA S.A., Chemin du Cyclotron, 3 1348 Louvain-la-Neuve, Belgium.
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