Annual Report • Feb 19, 2014
Annual Report
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Annual report 2013
We are unified by a mutual goal: to achieve operational excellence
We facilitate a one-stop-shop approach to increase customer satisfaction
platform
We are streamlining and synchronizing business processes to improve operational efficiency
Dear Shareholders, Customers, Partners and Employees,
In 2013, while operating in a challenging global economic environment, and despite early signs of weakening demand for its digital cinema projectors, Barco staged a repeat performance of its record 2012 year.
Sales increased ever so slightly to €1.158 billion, while operational profitability remained robust at €153 million. Currency translations had a noticeable impact on the reported results: in constant currency terms, sales would have been €31 million higher, and EBITDA some €6 million better.
Continued focus on operational excellence enabled the company to continuously reduce its working capital needs and generate healthy operating cash flow while also absorbing two strategic acquisitions.
Fueled by the solid performance of its projection division, Barco's annual sales exceeded €1 billion for the third consecutive year. The company is gradually transforming its traditional cinema-centric focus to become a broader, digital visualization solutions company.
Early in 2013 – to make Barco even more customer-centric and market driven – we established market divisions alongside our traditional product divisions. Responding to ever-growing demand for integrated systems with expanded functionalities, each of our market divisions now can draw on the full portfolio of Barco's capabilities to develop integrated solutions tailored to its customers' specific needs. The recent acquisitions of AWIND, JAOTech and projectiondesign®, as well as IPVS, have greatly enhanced our ability to offer end-to-end solutions – not just in terms of superior visualization standards, but also in terms of connectivity and user-friendly interactivity.
We trust that, with a book-to-bill ratio above 1 in all of its businesses except Digital Cinema, Barco is well positioned for sustainable and profitable growth.
Herman Daems, Chairman
Barco further increased its market share in a softening cinema market with a capture rate of about 50% and confirmed its leadership with major roll-out deals in Latin America, China and India. Coupled with an exclusive partnership for projection with IMAX, Barco remains the de facto standard for cinema projection.
Building on our reputation for superior technology, we have been actively expanding our product offering to build further on our 'cinema of the future' concept. Thanks to an exclusive deal with DreamWorks Animation, we already have 250 reference installations for the Auro 11.1 immersive 3D sound technology worldwide. Further diversification includes the introduction of smaller footprint projectors, and we are also readying our laser projection offering to capitalize on the ROI and light output benefits of this technology.
The acquisition of Norway-based projectiondesign® proved to be successful. We are making good progress with the integration and are gearing up their products, channels, and know-how to realize Barco's comeback in the professional AV market. Barco's high-end 3-chip DLP® product range was complemented with mid-range 1-chip DLP® projectors – resulting in one of the widest portfolios in the market and providing an answer to any projection need. The launch of the 'Connect' partner program – at our first-ever global partner conference in Malta – clearly shows our commitment to this market segment, and helped us double sales in this segment year-on-year. In venues & hospitality as well, Barco holds a strong position and leads in offering high lumens projection for the experience economy.
Barco kept its dominant market position in diagnostic imaging with the introduction of a complete portfolio of LED displays – an achievement that was honored with the Frost & Sullivan 2013 product line strategy award. Although the diagnostic imaging segment is a mature one, it will remain an important revenue contributor for the division, with a healthy replacement cycle in digitized markets in Western Europe and North America and significant growth potential in the BRIC countries.
While maintaining leadership in diagnostic imaging, the Healthcare division continued its investment strategy in new market segments. Operating theaters are a prime source of revenue for today's healthcare organizations, and the investments we've made for the digital operating room are starting to yield results with reference deals, first partnerships, and installations in Europe and North America.
Orders picked up in the hospital IT segment in Q4, as healthcare enterprises increasingly invest in patient care and clinical workflow solutions. To further accelerate market penetration, Barco secured a partnership with a leading software provider in the UK to offer customers a full solution that encompasses both terminals and software for interactive patient care.
Year-on-year sales in the Advanced Visualization division declined by more than 10%. Volumes remained stable in terms of number of units shipped, but the gradual shift in the market's mid-segment to cheaper, lower-margin LCD video walls is impacting revenue and profitability.
In addition to a number of specific cost-reduction programs, and in response to the challenging market conditions, we strengthened our focus on the traffic & transportation and security & surveillance segments and started to renew and diversify our product portfolio to meet market demand for collaborative visualization and decision-making. In a world full
of sensors, cameras and other data streams, integrated and networked systems are key enablers for our customers in monitoring their businessor life-critical applications. Operators in the field need to be connected to headquarters in real-time so that they and their managers always have all details available to take complex decisions in a split second. With more than 1000 sites worldwide using digital networked video-wall solutions in 2013, Barco reconfirmed its technological leadership position for control rooms.
At the same time, we have been preparing to complement our product portfolio and to further diversify with competitive video-wall solutions, tiled near-seamless LCD video walls, graphics controller portfolio and software, and even cloud-enabled technologies. This approach allows us to further penetrate the mid-segment and grow beyond visualization and video walls to offer customer-integrated systems for collaborative decision-making.
In the first half of 2013, Defense was impacted negatively by the sequestration in the US and budget restrictions on government spending worldwide, which led to reduced order volumes. Avionics, on the other hand, did well – and Barco cockpit displays were among those selected for integration into the first-ever Chinese commercial airliner.
In the first half of the year, we took decisive restructuring measures for our Defense & Aerospace division. Actions were aimed at streamlining the business, helping the business optimize its product portfolio, responding to market opportunities in emerging markets, and (in the US) strengthening the focus on key accounts. Thanks to this approach, we managed to bring the division back to profitability. With a good recovery in order intake at the end of the year, we are confident about our prospects in this business.
When we implemented the venture structure three years ago, we wanted some of our (new) businesses to embrace a more entrepreneurial spirit and introduce new technologies or revamp the portfolio without the burden of a corporate organization.
That approach has proven to be successful. The ClickShare venture brought breakthrough collaboration technology to the meeting room and has already shipped more than 12,000 units worldwide. LiveDots – our LED venture – successfully repositioned its product portfolio and can now proudly boast landmark installations in top locations in cities like Paris, New York, Johannesburg and London. In addition, High End Systems – our digital lighting venture – managed to recover from unfriendly market conditions and has made a comeback in the rental & staging industry.
All ventures are now profitable and have proven their added value. Click-Share has already been gradually integrated into the Barco structure, and High End Systems will be. We intend to decide about the future of the other ventures in the course of 2014.
The acquisitions of projectiondesign® and AWIND have helped us expand our commercial reach and technology portfolio in line with our vision 'to provide best-in-class networked visualization solutions that enable our customers to run their businesses more effectively'.
This entails 'thinking from the customer instead of from the product' – and, based on this customer intimacy and market knowledge, we have to grow Barco beyond visualization into networking and collaboration. Projection and display technologies will remain a core element of our business proposition, but they will be complemented with hardware and software solutions that enable the distribution of images and data streams to support collaboration within and beyond facilities.
For Barco, this means supplementing our display portfolio with software-enabled solutions, exploring new business models that complement the current CAPEX-based approach, adding cloud and multimedia technologies to our offering, and moving from products to solutions and systems.
Barco will celebrate its 80th Anniversary in 2014 – and we are looking to the future with confidence.
In the last few years, we moved forward on our strategy to prepare the company for the next growth stage: moving beyond visualization into networking and collaboration. We are committed to following this course and to creating sustainable value with all businesses in the markets we serve.
To further drive this transformation and realize the company's full potential, the Board reserves most of the company's financial resources for future growth investments. By raising our dividend to €1.50 per share, we want to express our gratitude to our shareholders as we continue to transform the company along the paths of profitable growth.
CEO Chairman
Eric Van Zele Herman Daems
(before restructuring & impairment)
EBIT (after restructuring & impairment)
ORDERS
(before restructuring & impairment)
ORDER BOOK
EBITDA
(after restructuring & impairment)
| (IN THOUSANDS OF EURO) | 2013 | 2012 | 2011 |
|---|---|---|---|
| Income statement before restructuring and goodwill impairment | |||
| Orders | 1,150,470 | 1,133,781 | 1,082,895 |
| Orderbook | 460,856 | 461,157 | 479,918 |
| Net sales | 1,158,015 | 1,155,984 | 1,041,244 |
| Gross profit | 386,496 | 375,633 | 312,932 |
| EBIT | 79,024 | 100,238 | 78,359 |
| EBITDA (a) | 153,234 | 159,476 | 130,223 |
| Ratios | |||
| EBIT on sales | 6.8% | 8.7% | 7.5% |
| EBITDA on sales | 13.2% | 13.8% | 12.5% |
| Net financial cash (/debt) on EBITDA | 68.2% | 69.7% | 47.3% |
| Restructuring and goodwill impairment costs | -9,428 | -2,671 | -10,000 |
| (IN THOUSANDS OF EURO) | 2013 | 2012 | 2011 |
|---|---|---|---|
| Balance sheet & personnel | |||
| Equity | 579,366 | 538,050 | 460,703 |
| Balance sheet total | 1,047,822 | 921,879 | 814,567 |
| Net financial cash/(debt) (f) | 104,435 | 111,166 | 61,635 |
| Operating capital employed (e) | 466,653 | 389,569 | 399,534 |
| Net working capital (e) | 54,782 | 95,425 | 162,222 |
| Personnel on 31 December | 3,979 | 3,727 | 3,507 |
| Ratios | |||
|---|---|---|---|
| DSO (b) | 52 | 48 | 56 |
| Inventory turns (c) | 3,2 | 3,1 | 2,7 |
| DPO (d) | 52 | 57 | 54 |
| ROCE (%) (e) | 15% | 24% | 20% |
(a) EBIT+ depreciation on capital expenditure (PP&E) + amortization on capitalized development cost
(b) DSO = ((Trade debtors, net) / (sales past quarter))*90
(c) Inventory turns = 12 / [Inventory / (Average Monthly Sales x Material Cost of Goods Sold %)]
(d) DPO = trade payables / (material cost + services and other costs + inventory movement
purchases of (in)tangible fixed assets) x 365
(e) For calculation see page 142
| (IN THOUSANDS OF EURO) 2013 |
2012 | 2011 | ||||
|---|---|---|---|---|---|---|
| Income statement after restructuring and goodwill impairment | ||||||
| EBIT | 69,596 | 97,567 | 68,359 | |||
| EBITDA (a) | 143,806 | 159,476 | 130,223 | |||
| Free cash flow (g) | 70,172 | 121,577 | 81,237 | |||
| Profit/(loss) before taxes | 67,434 | 98,656 | 65,829 | |||
| Net income | 59,403 | 94,241 | 75,850 | |||
| Net income attributable to non-controlling interest | 2,284 | |||||
| Net income attributable to the equity holder of the parent | 57,119 | 94,241 | 75,850 | |||
| Ratios | ||||||
| EBIT on sales | 6.0% | 8.4% | 6.6% | |||
| EBITDA on sales | 12.4% | 13.8% | 12.5% | |||
| Net financial cash (/debt) on EBITDA | 72.6% | 69.7% | 47.3% | |||
| (IN EURO) | 2013 | 2012 | 2011 | |||
| Key figures per share | ||||||
| Number of shares on 31 December (in thousands) | 12,989 | 12,757 | 12,755 | |||
| Per share (in euro) | ||||||
| EPS | 4.86 | 7.84 | 6.32 | |||
| Diluted EPS | 4.71 | 7.50 | 6.21 | |||
| Gross dividend | 1.50 1.40 |
1.10 | ||||
| Net dividend | 1.13 | 1.05 | 0.83 | |||
| Gross dividend yield (h) | 2.6% | 2.6% | 2.8% | |||
| Yearly return (i) | 6.6% | 44.2% | -17.4% | |||
| Pay-out ratio (j) | 34.1% | 19.0% | 18.5% | |||
| Price/earnings ratio (k) | 11.7% | 7.0% | 6.1% |
(h)Gross dividend/ closing rate on 31 December 2013
(i) Increase or decrease share price + gross dividend, divided by closing share price of previous year
(j) Gross dividend x number of shares on 31 December / net result (k) Share price 31 December / net result per share
| Share price (in euro) | 2013 | 2012 | 2011 |
|---|---|---|---|
| Average closing price | 59.96 | 48.64 | 46.41 |
| Highest closing price | 69.95 | 58.75 | 59.50 |
| Lowest closing price | 52.58 | 36.52 | 31.20 |
| Closing price on 31 Dec | 56.70 | 54.50 | 38.76 |
| Average number of shares traded daily | 34,105 | 29,298 | 29,722 |
| Stock market capitalization on 31 December (in millions) | 736.5 | 695.3 | 492.7 |
Lucien De Puydt establishes the Belgian American Radio Corporation NV (BARCO). The company specializes in assembling radios with parts from the United States
Barco employees at City Hall of Poperinge (Belgium)
Our first year of production, we assemble 2,000 radios
We present the first Barco television prototypes
Our partner Sosea distributes Barco TVs throughout Senegal and its neighbouring countries
We introduce the Barcobox jukebox
We provide studio monitors to the Belgian national radio and television broadcasting station (BRT). The technical perfection of these systems attracts customers from all over the world
Barco Electronic and Barco Industries merge into a single, international electronics group with worldwide ambitions
Two companies are born: Barco Electronic (broadcasting) and Barco Industries (industrial and professional activities)
772,200
Barco Electronic issues 772,200 shares on the Brussels Stock Exchange
Barco Industries is quoted on the Brussels Stock Exchange. Opening stock price: €65.41
CEO Hugo Vandamme receives the Belgian Oscar for exports
We become a truly global company, with acquisitions and subsidiaries in many countries
Working on CRT projectors in the Barco lab
Since 1997, we are listed on the BEL-20 index of the Brussels Stock Exchange
We become a Next 150 company
one
For the first time in history, we pass the €1 billion in sales landmark
90
We are a global leader in the design and development of visualization products, active in more than 90 countries, with about 4,000 employees
| × | ||
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| Letter from the Chairman | |
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| and the CEO | 11 |
| Key figures | 16 |
| Financial highlights | 17 |
| 80 years of Barco | 18 |
| Our company | 26 |
| Our technology | 30 |
|---|---|
| We trust each other | 31 |
| Our business areas | 32 |
| Our strategy | 34 |
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| We delight our customers | 35 |
| Objectives and progress | 38 |
| Ø | men con- 200 |
- yn yn y |
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| Our people | 48 |
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| We care about our people | 51 |
| Our world | 54 |
| Our planet | 58 |
| We deal openly and ethically | 61 |
| Entertainment & Corporate | 64 |
|---|---|
| We are accountable | 75 |
| Healthcare | 76 |
| We lead by innovation | 85 |
| Industrial & Government | 86 |
| Defense & Aerospace | 96 |
| We encourage team play | 105 |
| Ventures | 106 |
| Corporate governance statement | 113 |
|---|---|
| Statutory auditor | 133 |
| Comments on the results | 134 |
| Information about the share | 150 |
| --- | ||
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| ÷ | $\sim$ | |
| ٠ | ||
| Income statement | 159 |
|---|---|
| Balance sheet | 161 |
| Cash flow statement | 162 |
| Changes in equity | 164 |
| Notes to the consolidated | |
| financial statements | 172 |
| Auditor's report | 223 |
| BARCO NV | 225 |
| Balance sheet after appropriation | 226 |
| Income statement | 227 |
of Barco NV result 227
Contact information 228
Proposed appropriation
page 30
Effective 1 January 2014, Barco took steps to sharpen its focus on markets by promoting the product and solution portfolios of all businesses and cross-selling throughout the company. To emphasize our market focus, the Projection and Advanced Visualization divisions have been renamed, while the High End Systems venture has been integrated into the core:
At the start of 2014, 3 activities remain in the Venture group: LiveDots, Orthogon and Silex.
14 February 2013: Acquisition of WiFi content sharing specialist AWIND
25 February 2013: Acquisition of projectiondesign® completed
» Italy » Norway
» United Kingdom
» India
R&D and/or manufacturing facilities
*Sales per division for 2012 have been restated according to the 2013 organization * Europe, Middle East, Africa, Latin America
We meet the highest requirements in visualization and bring a wide display portfolio to a variety of markets – from high-resolution medical displays, to rear-projection video walls, to rugged displays and LED solutions.
Featuring one-chip or three-chip DLP® technology and brightness levels of up to 40,000 lumens, in 2D and 3D, our high-end and mid-segment projector models can be used for meeting rooms, digital cinema, postproduction, virtual reality, simulation and events.
DISPLAY TECHNOLOGY PROJECTION TECHNOLOGY CONNECTIVITY & COLLABORATION
We bring to market a suite of software-enabled systems, including networking and cloudbased capabilities. Result? All-round connectivity for uninterrupted, shared, and mobile access to data, anytime, anywhere.
Trust is the fundamental pillar in any relationship, whether it is at home or at work. Without trust, you simply cannot win. Many acquisitions fail due to lack of trust. When Barco acquired projec tiondesign, we wondered: would this be a hostile takeover or a friendly one? After all, we had been competitors until then.
Happily, our joining of forces soon appeared to be a beneficial move for all of us. Barco and projectiondesign share the same drive and values, and it was clear that Barco wanted to take everyone to the next level – together. The first seeds of trust were sown, nourishing our willingness to fully collaborate and participate in what was, to us, an undefined adventure.
Throughout the entire integration process, Barco encouraged cul tural diversity and – motivated by our joint ambition to move the company forward as one team – even changed its own habits and processes. Not only did this create reassurance and trust among colleagues, it also led to trust and encouragement among partners.
Earned and built over time, trust is the very heartbeat of a winning company. Only in the climate of trust are people willing to strive for the slightly impossible, to take initiative, to feel accountable, and to take decisions on their own and work effectively. I think we have come a long way in this process, and I truly believe that we can accomplish great things together.
Maria Dahl Aagaard Segment Marketing Management
As a global technology company, Barco designs and develops visualization solutions – encompassing the entire visualization spectrum – for a variety of professional markets. By offering top-quality, user-friendly imaging products, we enable our customers to optimize productivity and business efficiency.
Connecting ideas page 64
Connecting lives page 76
Barco (NYSE, Euronext Brussels: BAR) employs about 4,000 people in over 90 countries. Our facilities for Sales & Marketing, Customer Support, R&D and Manufacturing span the globe – from Europe and the Americas through to Asia-Pacific.
Connecting big data page 86
Connecting missions page 96
14 years in project management have taught me that keeping your customers happy is about doing more than what is expected of you. That's how we delight our customers, instead of merely satisfying them. Customer delight is about providing unexpected extras by fostering open communication, anticipating needs, and building relationships.
I believe building interpersonal relationships with customers, internal or external, is the single most differentiating factor between customer satisfaction and customer delight. At the end of the day, customers do business with people they like and understand. That's why values such as integrity, accountability, trust, and mutual respect are the cornerstone of our code of conduct.
Meeting and exceeding customer expectations requires energy and hard work. At Barco, we make sure that everyone – back office and front office – is close to the customer. Regular touch points, such as customer visits and testimonials, give us insight into what's at stake and fuel relationships.
Every day, we convince people that customer delight is everyone's job. Our Customer Delight test, through which each employee receives a Customer Delight score and immediate action points for improving his/her customer focus, is just one of the tools to make customer delight part of our DNA.
Kathy Verledens Virtual Factory Management
Our stated ambition is: to be a global leader in collaborative visualization systems for professional uses, with the objective of offering best-in-class networked visualization solutions that enable our customers to run their businesses more effectively.
We intend to realize our growth ambitions by moving beyond visualization and including networking and collaboration in the product portfolio.
Read more about our strategy, growth drivers and achievements in our business review (pages 62-109)
We are deploying our strategy for growth in three domains: capabilities, markets, and geographies. In addition, to support these three strategic axes, we will generate resources for these investments and create value by a continued focus on operational excellence.
| OUR | OUR |
|---|---|
| VALUES | STRENGTHS |
| WE DEAL OPENLY & ETHICALLY |
Global code of ethics and business conduct |
| WE DELIGHT | Customer loyalty score of 86 |
| OUR CUSTOMERS | (vs. 70 benchmark) |
| WE TRUST | Integrity score of 89 |
| EACH OTHER | (vs. 75 benchmark) |
| WE ARE ACCOUNTABLE |
4,000 motivated and committed employees |
| WE ENCOURAGE | Teamwork effectiveness score of 84 |
| TEAM PLAY | (vs. 78 benchmark) |
| WE LEAD BY INNOVATION |
Company culture supporting creativity and entrepreneurship |
| WE CARE | Employee engagement score of 72 |
| ABOUT OUR PEOPLE | (vs. 68 benchmark) |
organization
• Defend leadership position in Barco's core markets and expand the share of wallet
Launch of Collaborate range of single-chip DLP projectors to facilitate collaboration in meeting rooms
Grow channel sales worldwide and expand the number of strategic partnerships
• Become the strongest challenger in corporate AV and grow faster than the market in corporate AV
Increase revenue from growth markets through local sales and marketing focus
platform as driver for common processes and systems
Strengthen the company's global position through an optimized organization and engaged employees, with a focus on building a factory of the future
Generate free cash flow through focus on operational excellence
Focus on China, Russia, Middle East and Latin America to take part in the high investments in infrastructure in these regions
Strengthen the market focus of our divisions to support cross-selling and leverage different solutions towards all businesses
• Prepare full implementation of One Platform in 2015
Our plan: to be one
page 48
Our plan: supporting communities through funding and collaboration page 54
Our Planet
Our plan: to reduce environmental footprint
page 58
+80 meeting rooms equipped with our ClickShare wireless presentation system
2 December 2013 Start of construction of One Campus
tobeone reflects our devotion to the idea that all Barco employees – in all of the 90 countries – are one team. A team of equals, unified by a mutual cause: to achieve operational excellence.
We are investing in new ways to facilitate collaboration in the workplace and make easy remote collaboration across the globe a standard way of working. We want to improve audio and video quality, and the remote sharing of applications and data.
+43 meeting rooms revamped with a new audio and video conferencing infrastructure
As part of the Smart at Work program, we will centralize all Kortrijk activities in one location, with a special focus on smart mobility and collaboration in order to enhance flexibility and stimulate creativity on the work floor. The new building – covering 58,000 m² – will unite 1,600 Barco people by 2016.
| One Campus | |
|---|---|
| orten de eente bewaters vanaf het najaar 2015 | |
+500 users on SAP CRM platform by end of 2013
+30 open houses & team events 25 strategy roadshows worldwide
7,900 performance reviews 305 educational programs offered
By 2015, we will have a global SAP-based ERP platform to standardize, simplify, and synchronize all business processes.
We are committed to making corporate decision-making and business operations open to all employees through roadshows, brown bag sessions, open houses featuring guided tours and demonstrations, face-to-face meetings, and online Q&A platforms.
To strengthen employee engagement, we recognize talent by means of an advanced performance management process and highlevel training opportunities.
Strategy roadshow in Taiwan
Barco University
To be one reflects our ambition to create a culture that can be shared not only by our employees, but by our customers, partners, and shareholders as well.
ClickShare partner program
10 September 2013 Analyst & Investor Day
consistently above benchmark
Partners of our Connect! program can rely on a direct communication link with our channel account and marketing managers, backed up by almost 4,000 employees. The program has been developed to help partners sell Barco solutions and services more effectively through professional assistance and technical backup.
Click here to read more about the partner program
Our Analyst & Investor Days are designed to open communication channels between our management teams and leading players in the financial community. They provide a unique opportunity to discuss long-term strategy and help foster relationships between business leaders and investors.
Strong customer relations and loyalty are two of our key performance indicators. With our annual loyalty survey, we learn how our customers and partners think about us, and whether they are satisfied with the services we offer. Thanks to the results of this survey, each employee can contribute to increasing customer loyalty and improving our chances of doing business with them again.
We care about our people, including colleagues, customers, suppli ers, and society in general. A respect for each other's well-being is a major priority for us. Because people determine the success of our organization and make our company thrive.
Our culture of appreciation is reflected in every way we deal with people. Employees are guided on their career path, and strong relationships are built through online communities, buddy programs for new employees, and company events. Fun initiatives – such as the Day of the Barco Engineer and Happy Compliment Day – are significant drivers of this culture.
We involve customers and suppliers in the decisions we make. With mutual respect and their best interests at heart, we move our business forward in a sustainable manner. Our corporate social responsibility task force and the Supplier Sustainability Program are just two of the efforts that reflect our willingness to go the extra mile.
Our approach builds trust and engages hearts, and translates into actions that serve the entire community. Our people take the lead in charity projects, both internal and external, and show their commit ment to the company and the causes we support, time and again.
Catherine Weyne Internal Communications
1 March: Happy Compliment Day 27,650 compliment cards distributed
20 March: Day of the Barco Engineer 800 engineers in the spotlights
In 2010 and 2012, we conducted a survey to measure and understand employee motivation, engagement and satisfaction. In 2013, following the survey, we identified 3 overall focus areas: customer focus, innovation, and leadership development.
*general industry (GI) norm
95% +70%
IT service desk survey: 95% of incidents are resolved +70% of customers are extremely satisfied
The way we engage with the world around us reflects our ambition to give back to society and contribute towards better quality of life.
For every diagnostic display or ClickShare we sell in India, we donate a small amount to SOS Children's Village. In 2013, we donated €5,764 to this cause.
With our children's wellbeing program, we support young people in their education, upbringing, personal development, and care.
35 Barco employees colored the Mont Ventoux 'Barco red' and raised €350 for University Hospital Leuven's Pediatric Cardiology Research Department (Belgium).
Through fundraising contributions and donations, we support the continuation of major charity and relief programs worldwide. Notably, many of our own employees have been involved in fundraising events – e.g. Acerta Brussels Ekiden running tour, Mon Ventoux bike ride, Fredrikstad Triathlon, bake sales,…– demonstrating our commitment to supporting local charitable causes worldwide.
Barco Play Day @ Movie Palace, Karlsruhe (Germany)
Young Barco Technics in First Lego League Benelux Final First Lego League is a robotics program for 9 to 14 year olds, designed to get children excited about science and technology. On 25 January, 4 Barco coaches and 18 children played the Benelux final and took home the Nature's Fury Research Award.
As part of the technology education program, we teach young students how technology is being used today, give them the opportunity to explore high-tech projects and exciting experiments, and encourage them to pursue a career in technology. Over 100 young people participated in our TechnoGirls Day, Technology Olympiad, Science Day (Dag van de Wetenschap), and First Lego League.
Supporting the Berlinale Film Festival with 19 digital cinema projectors and 2 technicians
We firmly believe that environmental, social, and governance investments create financial value for our company. But more than that, we consider it our duty to contribute to improving quality of life. In 2014, our increasing efforts to operate in a highly sustainable manner will be translated into the inauguration of the Barco Foundation. With the Foundation, we aim to create shared value, based on corporate policies and practices, to enable society to advance and our company to grow.
In achieving our goal of supporting the community, we make both financial and non-monetary contributions to organizations worldwide.
Causes and organizations we supported this year:
Moscow Biennale of Contemporary Art
Since 2010, 28 Green Knowledge Owners distribute information about developments on compliance and eco-design across the entire organization
We engaged +1,200 suppliers to use green components
We are reducing our environmental footprint, from the manufacture and use of our products to our global activities within facilities, procurement, product transport, and business travel.
The Green Knowledge Program has been developed to raise awareness of the importance of environmental compliance and enforcement.
Our Supplier Sustainability Program encourages suppliers to share environmental information within the supply chain and phase out non-compliant or at-risk components from product designs by 2016.
| 05 2013 | 74.3% |
|---|---|
| 09 2013 | 83.5% |
| 12 2013 | 89.1% |
Progress of environmental data collection (coverage of supplier parts)
14 million watt hours saved in our first low-energy weekend, which equals the average energy consumption of 4 families in one year
Inbound transportation carbon emissions reduced by 44%
142 key and core suppliers comply with our code of conduct and ethics
We will explore alternative mobility, monitor energy consumption and CO2 emission, and maintain sustainability as a key guiding principle in the construction of One Campus to eliminate 80% of wasted energy sources by 2016.
| 2013 | 135 g/km |
|---|---|
| 2012 | 145 g/km |
| 2011 | 145 g/km |
| 2010 | 165 g/km |
Maximum level of CO2 emission allowed for company cars
Over the last two years, we have been working on a sustainable supplier base and environmentally friendly transportation, replacing air freight by sea freight transportation to reduce our carbon footprint.
| 100% | VOLUME | |
|---|---|---|
| 100% | COST | |
| 2013 | ||
| 65% | VOLUME | 35% |
| 91% | COST | 9% |
Replacing air freight by sea freight
To ensure sustainable procurement, we are urging suppliers to comply with our code of business conduct and ethics. By the end of 2014, we expect all suppliers to comply with our sustainable procurement policy.
Our LED medical displays reduce power consumption by 30%
We are gradually phasing out traditional CCFL and Xenon lamps in our product designs and are replacing them by solid state lighting to save energy and reduce environmental waste.
One Campus opens new windows of opportunity in terms of environmental sustainability. Its technical infrastructure will be evaluated based on environmental performance. The new building will feature "free cooling" units and solar panels, and energy monitoring will help optimize the efficient use of energy.
For us, open and ethical conduct means: ensuring a safe and enjoyable working environment, complying with laws, regulations and policies, and operating in a transparent and socially responsible manner. Every day, we put this philosophy into practice, conducting our business in accordance with the highest standards of ethical behavior.
Because ethical conduct is a joint responsibility, our ethical values have been translated into a formal code of conduct: the 'Barco Code of Ethics and Business Conduct' offers employees – as well as suppliers, partners, and customers – a framework for understanding and acting on our shared responsibilities.
In our team, openness and transparency toward customers and co-workers are crucial. In roadmap discussions, we consider the needs of the market while touching base with R&D, procurement, and strategic marketing. We are always open to debate, never hold back information, and communicate and share our vision for every decision that is made.
This is true for everyone at the company, regardless of position and level of responsibility. The strategy roadshows are a great example of how management is able to get the whole organization to work toward a joint objective through open communication. When it comes to ethical and transparent behavior, we all walk the talk.
Jun Wei Product Management
Connecting
Healthcare
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Forget business as usual. With our state-of-the-art Present, Collaborate and Impress projector series and ClickShare presentation system, meetings will never be the same again. Present content on the screen in no time, share ideas in multiple windows, and make collaboration a breeze for every meeting participant.
87.3
* according to reporting structure of 2013 ** approximate percentages based on sales 2013
Acquisition of AWIND enhances our collaboration capabilities
Launch of 4K digital post-production projector
60 projectors take center stage during the 2013 Eurovision Song Contest in Malmö, Sweden
ClickShare named 2013 Gold Edison Award Winner 11 JUNE
Launch of first Corporate AV projectors
HDX-W20 FLEX
Introduction of 20,000-lumen rental projector with standard light-on-demand functionality
Over 50 films scheduled to be released in Auro 11.1 immersive sound
Expansion of ClickShare portfolio to bring our wireless collaboration technology to any meeting room
Installation of a 250 m² LED display (1,527 C7 tiles) at Les Quatre Temps in Paris, Europe's largest shopping center
Barco 7 November 2013
"Great immersive experience" "Mind blowing" "Terrific sound" "The best sound"... These were few of the comments from visitors who heard #Barco #Auro at #FICCI #MEBC in Bangalore. Have you heard #Auro yet?
Like - Comment - Share 6 1
23 April 2013
Getting ready for the Eurovision Song Contest in Sweden!
Like - Comment - Share 408 28 109
25 June 2013
"The greatest benefit of Auro 11.1 is that it is a great storytelling device. It is a technique to put in the hands of storytellers, artists, film makers and directors that allows them to enhance the movie experience, enhance the storytelling and immerse people into it." Jeffrey Katzenberg (CEO, DreamWorks Animation)
From movie theaters to museums, today it's all about the visitor experience. Additionally, infrastructure investments in the emerging regions are triggering demand for innovative visualization solutions. This is also true for enterprises and corporate organizations, where 'bring your own device' and remote working policies are changing the corporate landscape.
In entertainment, we will maintain our focus on capturing market share in the emerging countries and lower-end segments, as we also extend our share of wallet beyond projectors – by, for example, offering a dedicated services portfolio. For venues and hospitality, we will strengthen our focus on the fixed installations market (in addition to the rental & staging markets) to drive visitor experiences. However, our biggest opportunities lie in corporate AV.
Solid-state illumination, networking capabilities that enable visual collaboration, and the development of best-in-class, hassle-free, immersive solutions will be our core activities.
With big-screen TVs present in almost every home, quick theater-to-DVD turnarounds, and video-on-demand providing inexpensive movies right in your living room, the cinema industry needs to step up its game fast. The cinema of the future is no longer about movies alone. Instead, moviegoers expect a premium entertainment experience from entrance to exit.
New innovations and technologies – such as high frame rates for increased image quality, 4K resolution, 3D sound and video, and laser projection – help create a premium immersive experience and are driving the industry forward. 3D ticket sales, for example, have proven to drive high revenue. However, today's movie theaters are operating at just 20% occupancy, which means the industry is eager to find ways to fill the 80% of unused capacity.
Theaters worldwide have already been expanding from feature-film only to alternative content, such as live streaming of opera or sports events. But the real game-changers will be provided by digital signage (in the lobby and corridors or on facades) and smart interactive cinema (by pushing content to smartphones, for example) to provide visitors with a truly immersive cinema experience.
The venues and hospitality industries are also shifting towards this so-called 'experience economy'. Museums, houses of worship, planetariums, and shopping malls are incorporating interactive and creative technologies to engage with their audiences. Creating unique, memorable, and personal experiences will be key in drawing visitors and guests back, time and again.
dZine and Manganelli Group France jointly won a DailyDOOH Award in the Best Quick Service Restaurant/Bar or Restaurant Deployment category. The award-winning digital signage solution – display units that broadcast a mix of product information and entertainment, while pushing dishes that have sufficient stock on the menu board – was developed for Flunch Restaurants Europe, a chain with 200 restaurants in France, Spain, Portugal, Italy, Poland and Russia.
Designed along three spatial axes (width, depth and height), rather than the two axes of traditional surround sound, the Auro 11.1 immersive sound format provides an immersive cinema audio experience, with lifelike sound coming from all directions.
Laser illumination is a logical next step in maximizing the opportunities of digital in the 'cinema of the future'. The impact of laser on the cinema industry could be bigger than that of any other technology introduction so far! We unveiled our 55,000 lumens 4K prototype laser projector to the public for the first time in January 2012. But where does it go from here?
Right now – via product development, setting up framework agreements with suppliers, testing and certification – we are developing the prototype into a real finished product. We cannot give away all of our secrets – but we do commit to delivering a product that meets and exceeds the requirements of cinema exhibition.
By continually pushing the boundaries in product design, the laser projector is bound to redefine the industry standard once it has been perfected. What you can do with it, how you can use it, the maintenance required over its lifetime – all will be a significant improvement on what exhibitors are used to now.
MARKET TRENDS [02]
Because the digital cinema projector market is nearing saturation in North America and Western Europe, growth is being driven mainly by strong demand in the emerging markets. To attract a growing middle class in these markets – as well as Hollywood and Western European movie distributors – traditional cinemas are converting to digital projection, and investments in ambitious multiplex projects are on the rise.
Additionally, world-class sporting events are increasingly being staged in the BRIC nations – e.g. the FIFA World Cup 2014 and the 2016 Olympic Games in Brazil, the World Cup 2018 in Russia, the 2010 Commonwealth Games in India, and the 2008 Olympics in China – which is triggering new infrastructure investments and growing demand for media, entertainment, and AV solutions in these emerging markets.
Click here to learn everything about laser on our laser blog.
Auro 11.1 takes over the Indian cinema industry with installations in Manasa Theatre (Bangalore), Dhanya Theatre (Kollam), and 'Tollywood' (Suresh Productions and Ramanaidu Studios).
12 FLM-HD20 projectors brought the official World Cup ball to life during a massive projection mapping in Rio De Janeiro's Parque Lage.
10,000 digital cinema projectors installed in Greater China. We are the first manufacturer to reach this number!
Through agreements with Cinemark International, Cinesystem Cinemas, and Cinemex, we expanded our digital footprint throughout Brazil and Central and South America. With the Cinemex deal, our Latin American market share in digital cinema grew to over 70%!
Enterprise mobility continues to grow worldwide. According to our 'Meeting room of the future' survey, which we jointly organized with InAVate and PFM magazine, 91% of business managers work remotely on a regular basis, with 27% working remotely almost daily. When attending a meeting, 82% bring their own device (the majority of these are laptops, but other mobile devices are on the rise).
The future is mobile – and, as increasing numbers of employees are working remotely, meeting spaces must become more flexible and support a greater range of technologies and demands for virtual conferencing. Today's changing work environment requires new visualization and collaboration technologies that improve efficiency and productivity in meeting rooms, board rooms, and auditoriums.
With ClickShare for wireless presentation at the click of a button, we significantly improved meeting dynamics and reduced setup times. But because there are big differences between the needs of small, standard meeting rooms and those of high-profile meeting rooms, boardrooms and conference rooms, we now offer ClickShare in two flavors: the new CSM Base Unit and the original full-featured CSC Base Unit.
Click here to read the full results of the 'Meeting room of the future' survey.
Accountability is one of the fundamentals of a successful organization. As business professionals, it's our responsibility to be accountable to our colleagues and customers. By taking full ownership of tasks, actions, and results, and by continuously challenging and evaluating ourselves, we help our company thrive.
As part of the sales team, customers are my greatest responsibility. The whole team focuses on a core set of KPIs, such as on-time delivery and customer satisfaction, as we constantly look for new ways to improve customer focus. Some of my colleagues are now 'divisional experts' – providing specific product- or procedure-related support – so that we can find the best solution for our customers.
But more than that, accountability is key throughout our entire company culture. We take ownership both individually and collectively. People are proud of being part of the Barco family – and this pride drives them to find ways to take the company forward, even if it requires extra personal effort.
From product managers diversifying the product portfolio so that we can reach multiple markets to sales administrators developing their skills in the Six Sigma tools, everyone of us meets challenges with a positive attitude. And we all know that a positive mind leads to positive solutions. Is there a better way to keep customers and colleagues satisfied?
Alberto Caycho Polonio Sales Coordination
CareConnex connects lives by helping patients keep in touch with friends and family at home. By helping build relationships between patients and their caregivers. And by making vital patient information available to those who make life-defining decisions.
New segments
(IN MILLIONS OF EURO) SALES 195.7
(IN MILLIONS OF EURO)
23.8
* approximate percentages based on sales 2013
The driving forces behind our activities are: the need for increased efficiency and value in healthcare, demand in emerging markets, the consumerization of healthcare – turning patients into medical shoppers and shifting more responsibility to them – and 'the network' as a universal platform for new technologies.
We're gearing up for sustainable growth over the next few years – especially in the new market segments of surgical imaging and healthcare IT – while securing our leadership position in diagnostic imaging and mammography. Our extended geographic focus will be on Brazil, China, Russia and the Middle East.
Through a continuous focus on innovation in display technology, we continue to improve diagnostic image quality while bringing economic value to radiology. Additionally, we will incorporate new functionality into our digital OR offering and expand our interactive patient care solutions.
Targeting the dental and clinical markets with the attractive, fully cleanable 22" Eonis display
Smart bedside terminals installed at Oost-Limburg Hospital – a first in Belgium
Launch of CareConnex in partnership with Hospedia: a complete interactive patient care solution
With the Nio Color 3MP LED diagnostic display system, Barco brings dependable diagnostic imaging to its true potential. Now combining high-bright and lowpower LED backlights with a brand-new, stylish design, Nio defines today's industry standard for diagnostic imaging. See more shades of gray to detect sensor for intervention-free calibration. And make confident diagnostic decisions, while reducing footprint and extending lifespan. Nio Color 3MP LED
www.barco.com/healthcare
Introduction of 3MP diagnostic displays with LED backlights allow radiologists to see more detail
Recognized by the Frost & Sullivan 2013 product line strategy award for diagnostic imaging displays that increase radiologist productivity and maintain the best possible image quality
Launch of complete line of network-enabled (Nexxis-compatible) surgical displays
Lifestyle-linked diseases (e.g. cardiovascular diseases, diabetes, etc.) continue to grow globally, while an ageing population increases the level of care required by patients. By 2050, the number of patients per doctor is expected to double, driving the need for faster and more efficient diagnoses.
At the same time, healthcare spending is under scrutiny. The Affordable Care Act in the United States, for example, urges the US healthcare industry to save €563 billion in the next decade. Hence, the industry needs new ways to deliver care more efficiently and more effectively.
Our entire product portfolio has been built to reduce the total cost of ownership and provide a high return on investment. As a proof point of what our solutions can do, we gladly refer to a study carried out by Deloitte and Hospedia which indicates that CareConnex for interactive patient care can help save hospitals no less than €2.8 million per year!
With the introduction of the Coronis Fusion 6MP with LED backlights – for viewing of multi-modality diagnostic images side-by-side on a single screen – we managed to increase a radiologist's reading productivity by up to 19% while reducing eye strain (see Montefiore study).
Did you know that, compared to a dual-head 3MP system, a 6MP diagnostic display has proven to increase productivity by up to 19% while reducing eye strain? For even better performance, Barco has now optimized its 6MP diagnostic display with LED backlight technology. Boost brightness levels for enhanced diagnostic accuracy, while saving energy and extending lifespan. See more shades of gray to detect subtle details more quickly. And reduce windowing and leveling time to read more studies each day.
In a time when better quality of life is rapidly becoming a habit of life, active healthcare is shifting from institutions to individuals. Consumerization of healthcare refers to the trend of transforming patients into consumers and shifting more responsibility for care to the patient. Patients today are 'medical shoppers', empowered by the Internet to actively research, assess, and rate healthcare and healthcare delivery organizations.
In the USA, for example, the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey provides a standardized methodology for measuring patients' perspectives on hospital care. These scores directly impact reimbursements from healthcare insurers and give good healthcare providers a competitive edge.
With our interactive patient care solutions, we enable healthcare providers to position themselves for success. Offering a host of patient-focused services (e.g. TV, Internet, video-on-demand, and extensive patient education and feedback options), CareConnex has a significant impact on patient satisfaction, which is a valuable indicator of the quality of care delivered and can even impact hospital reimbursement.
New trends – such as e-health, Electronic Medical Records, remote surgery, among others – are radically transforming healthcare delivery. Therefore, patient records, diagnostic information, and even the operating theater are increasingly relying on networked technologies to change the way we access and share health information.
Providing a universal IT platform, IP technology is able to link patient data from previously disconnected systems, offering medical staff a patient-centric view of health information. Facilitating access, retrieval, and sharing of patient data, this technology enables healthcare professionals worldwide to provide safer, timelier and more effective care.
We introduced a complete line of network-enabled surgical displays (MDSC) that feature an integrated IP decoder and are fully compatible with the Nexxis digital OR solution. This way, surgeons can easily distribute uncompressed video and data over the IP network, to any location, and without delay.
+500
+500 orders for Nexxis digital OR
Barco has always operated at the forefront of technology. Over the years, we've introduced a number of firsts in many industries, including the healthcare industry: the first 10MP diagnostic display, the first seamless multi-modality display, MediCal QAWeb for online QA and asset management, and many more.
Additionally, we have developed a host of patented image-enhancing technologies to present radiologists with the best possible diagnostic image quality. With about 60 technology patents in healthcare imaging – over 200 Barco-wide – we have an astonishing legacy of technological breakthroughs.
Our most recent innovation is the LED backlights that have been designed specifically for healthcare applications. They render more JNDs (Just Noticeable Differences) to help radiologists see more shades of gray. We have also re-designed our patented uniformity technologies for the unique characteristics of LED backlit displays to make it easier to detect the smallest abnormalities.
By making subtle details more noticeable more quickly, we can reduce windowing and leveling time so that radiologists can read more studies each day – and, ultimately, deliver better care. It's amazing to see how you can make a difference by putting people and technology together.
Tom Kimpe Technology & Innovation Healthcare
29 JANUARY Introduction of free-standing OBLX structure for tiled LCD video walls
180 partners and customers attended the Brazilian AVS Days, a one-day event zooming in on networked visualization
25 MARCH Visualizing 3,000 cameras and 60,000 passengers per year for Delhi International Airport
Dassault Systèmes selects our Galaxy projectors and powerwalls to demonstrate immersive 3D experiences in its new state-of-the-art Executive Briefing Center
New version of networked visualization system for faster response times and better decision-making
Release of two new rear-projection video wall cubes in the OverView M series (MVL-621 & MVL-721)
Supporting intelligent traffic monitoring in 5 Brazilian Operation Control Centers
The rise of the smart city, natural resources exploration, and energy management systems, combined with a growing demand for effective visualization in emerging and mid-end markets, are our key drivers.
With big data and collaboration becoming increasingly important, the main focus will be on networked visualization. Additionally, we'll be expanding into the mid-segment with a smart and tiled LCD offering.
We will invest in new screen technologies and LCD-based solutions. The development of enhanced and integrated networking and collaboration technologies will remain at the center of our activities. Additionally, we will leverage our professional services as a differentiator.
Our TransForm N networking technology is being used in 1,000 digital control rooms worldwide.
A global need for efficient energy usage is fueling the rise of smart grids – which connect thousands of smart meters that communicate over an intelligent network to monitor energy performance and anticipate usage patterns. IBM predicts that, by 2020, smart grid technology will be a €32 billion business – up from €3.6 billion in 2011.
Networked technologies are re-defining the industrial and governmental landscape – with emergency, traffic, security and process control centers increasingly sharing information and collaborating to enhance situational awareness. As the volume of data to be monitored and analyzed continues to grow at an astonishing rate, clear and accurate data representation is becoming central to networked operations.
Click here to discover how Barco control rooms enable a smarter tomorrow
Our new digital control room solution accelerates response times when navigating through 'big data' and improves decision-making. Including major security, synchronization, performance and applicability improvements, the new version is an even smarter solution for collaboration, enabling governments and companies to distribute any visual information to any location.
Industrial and urban growth is driving large infrastructure investments in the emerging BRIC markets. For example, Brazil's infrastructure budget for the 2016 Olympics is €10 billion. Goldman Sachs estimates that, over the next 10 years alone, India will require €1.2 trillion in infrastructure investment. And in 2013, the Chinese government approved plans for €115 billion in infrastructure spending.
Diverse infrastructure projects in airports, railways, roads, urban transport, stadiums, hotels, and telecommunications are raising demand for control room technology as well as smart city management systems.
40 OVL display cubes installed at Arteris S.A., one of Brazil's largest toll road concession holders.
China's largest control center display – comprising 68 OVL display cubes – is at the heart of the country's State Grid System.
Big data, networked collaboration, and new infrastructures are increasing demand for large-display technology in small to medium-sized control and collaboration rooms. For these mid-end markets, tiled LCD video walls provide a flexible, cost-effective, easy-to-install, and easy-to-maintain alternative to rear-projection video walls.
OBLX free-standing structure for LCD video wall displays
The introduction of the OBLX free-standing LCD video wall structure enables users to position a video wall at any location. Because no wall support is needed, an OBLX can be placed in control rooms, meeting rooms, lobbies, emergency operations centers, or even art exhibitions and retail stores. Moreover, using extension kits, a 2x2 LCD video wall can be expanded with virtually no horizontal limit!
Our solutions for defense and aerospace applications bring you the clearest and most accurate images. Connect to mission-critical information in no time, make life-saving decisions thanks to increased situational awareness, and improve mission effectiveness.
New wide-screen tower display for air traffic control
20 MAY New U.S Training & Simulation Demo Center
Installation of the first simulation and virtual reality training system for China's commercial aviation industry
Introduction of extremely lightweight avionics display (FDU-2108)
CDMS-3000
Russian authorities place follow-on order for 6 Beriev aircraft
Introduction of the cockpit of the future at Paris Air Show
Introduction of rugged desktop-over-IP solution (Nexxis RNA)
ISIS 2Kx2K main display for air traffic control redesigned for more comfort and higher performance
Launch of the world's most compact 120 Hz WQXGA projector for training & simulation
Watch more on our YouTube channel
We notice three major trends in our industry. The first is a focus on 'lowest cost, technically acceptable' solutions due to government budget restraints. The second is growth in the BRICT countries where we see increased airline travel, new airports and additional defense and security needs. Finally, we see an increase in unmanned systems taking over critical jobs where danger and risks are very high.
There is a distinct shift from military to civil aerospace business so we will focus our portfolio on this area, especially for civil flight simulation as well as the civil airline industry. The principles that define the defense market will remain however, so we will continue to adapt our products to also meet the future needs of this segment.
We will focus on products that are lower weight, lower cost, using multi-touch and networked technologies. These will be targeted to unmanned systems, civil simulators and avionics environments with a special regional focus on the BRICT and APAC regions.
With budgetary pressures increasing (mainly in the US, which represents 40 - 50% of the global defense market), governments are adopting a 'low price, technically acceptable' attitude in order to decrease military spending. They are selecting those products that meet the minimal requirements and come with a lower price tag, rather than their high-level, best-value counterparts.
Cost-conscious strategies are also driving the need for commercial and military aircraft to become more fuel-efficient. For most airlines, fuel costs (about 40% of operations) have surpassed labor costs as their largest expense. This is prompting the industry to implement fuel-saving practices, such as simulator-based training, the use of light-weight materials, and new flight techniques.
Commercial Aircraft Corporation of China Ltd. (COMAC) has selected our simulation and virtual reality training system for the day-to-day training of its aerospace engineers. This is the first simulation and virtual reality system in China's commercial aviation industry.
We introduced the FDU-2108, the lightest 12" flight display for business jet cockpits. Weighing only 2 kg, and without compromising on image quality and reliability, the FDU marks a major breakthrough in cockpit display design.
Just as they seek self-sufficiency in their economy, developing countries are pursuing self-reliance in defense technology. Establishing an indigenous defense industry helps meet domestic needs and protect national security.
Needless to say, this evolution opens up opportunities. In India, for example, military spending will likely total nearly €110 million by 2017 (McKinsey). The BRIC countries and the Asia-Pacific region in particular will offer tremendous export potential for global defense industries, especially for those with a local presence.
Brazilian Airspace Control System Implementation Commission (CISCEA) has ordered no less than 437 ISIS displays for use in its air traffic control and training centers for military operations across the country.
These remotely piloted, or self-piloted, aircraft systems can be used for military (e.g. reconnaissance & surveillance) as well as civil applications (e.g. firefighting, law enforcement, pipeline monitoring). The civilian air space will reportedly be open to all kinds of UAS in the US by 2015, and in Europe by 2016.
Additionally, despite increasing budget constraints in the defense and aerospace industries, the international market for unmanned aircraft systems is expected to double to €100 billion in the next decade (according to the Association for Unmanned Vehicle Systems International).
Our Nexxis RNA adapters support uncompressed streaming of desktop content (DVI, audio, USB) over the IP network, enabling real-time interaction with remote servers or computers – without dedicated video switches and without sacrificing image quality!
With the new HD-30 rugged display, we added new technologies to improve operator performance and comfort in mobile shelters and ground stations, from which UAS are typically operated. Minimal power consumption, noiseless operation, ultra-fast image rendering, and highly accurate Infrared technology are just a few of the differentiators.
Good team players act in the best interests of the company. They put aside differences to resolve issues and move forward for the common good. They treat colleagues with respect. And they are confident and trusting, encouraging team members to get the job done.
Team play is a crucial asset in our project deployment team. Collective effort and mutual cooperation are second nature to us. By working together as one team – across geographic and organizational boundaries – we achieve common goals and ultimately get the results we're after.
Winning as a team is one of our greatest motivators, driving us to do things better – together. With the iXL program (our employee-driven improvement program), for example, we motivate colleagues worldwide to share their ideas and best practices through a dedicated online platform.
In addition to all of those aspects of team play, we collaborate on helping people grow personally as well as professionally. Last year, about one hundred of our colleagues organized and participated in the Barco Play Days, providing games and activities for children in need. That's team play reaching out to the world.
Kenny De Cloedt Program Office Management
LiveDots lights up Johannesburg with 20 million LEDs – the largest LED solution to date!
Silex FPGA design speeds transactions in award-winning Atos Worldline Hardware Security Module (HSM)
LiveDots adds C8 to its C-series LED display family
3 JULY
12 September
18 December
Orthogon wins Best-in-Class award at the SESAR SWIM Master Class
Silex launches Video over IP with JPEG 2000 reference design
LiveDots introduces V14m, a 14mm transparent LED display
Orthogon extends proven air traffic management software to support airports and airlines
The undersigned declare that:
Eric Van Zele, CEO Carl Peeters, CFO
On 31 December 2013, the capital amounted to 55,533,952.32 euro, represented by 12,988,829 shares. Ownership of the company's shares was as follows:
| Gimv (*) | 9.62% | (1,249,921) |
|---|---|---|
| Dr. Ir. U. Vandeurzen Management Firm Nv (*) | 2.85% | (369,861) |
| Norges Bank (the Central Bank of Norway) | 3.23% | (418,742) |
| Templeton Investment Counsel, LLC | 4.90% | (636,239) |
| Barco | 5.50% | (715,206) |
| Public | 73.90% | (9,598,860) |
| Total | 100% | (12,988,829) |
| Fully diluted | ||
| Gimv (*) | 9.47% | (1,249,921) |
| Dr. Ir. U. Vandeurzen Management Firm Nv (*) | 2.81% | (369,861) |
| Norges Bank (the Central Bank of Norway) | 3.18% | (418,742) |
| Templeton Investment Counsel, LLC | 4.82% | (636,239) |
| Barco | 5.41% | (715,206) |
| Public | 74.31% | (9,810,683) |
| Total | 100% | (13,200,652) |
(*) acting in concert
In accordance with article 96, §2 of the Companies Code, Barco applies the Corporate Governance Code 2009 as reference code. This code can be downloaded via the link www.corporategovernancecommittee.be.
Barco's Corporate Governance Charter is available for download at www.barco.com/investors/corporategovernance.
BOARD OF DIRECTORS Situation on 1 March 2014
| Chairman | Herman Daems (1) | 2016* | |
|---|---|---|---|
| President & CEO | Eric Van Zele (3) | 2014* | |
| Directors | ADP Vision BVBA (represented by Antoon De Proft) (2) | 2015* | |
| Praksis BVBA (represented by Bruno Holthof) (2) | 2014* | ||
| Lumis NV (represented by Luc Missorten) (2) | 2014* | ||
| Oosterveld Nederland B.V. (represented by Jan P. Oosterveld) (1) | 2014* | ||
| KANKU BVBA (represented by Christina von Wackerbarth) (2) | 2016* | ||
| Adisys Corporation (represented by Ashok K. Jain) (2) | 2017* | ||
| Secretary | Kurt Verheggen | General Counsel | |
(1) non-executive directors // (2) non-executive independent directors // (3) executive director * Date on which the term of office expires: end of the annual meeting
[06] is Chairman of the Board of Directors of Barco and BNP Paribas Fortis. He is also Chairman of the International Private Equity Valuation Guidelines Board and he holds several other Board positions. Professor Daems is on the faculty of the K.U. Leuven. He studied theoretical physics and economics and holds a PhD in Economics.
[05] has been President and CEO of Barco since 2009. He is Chairman of the Board of Reynaers Aluminium NV. Previously, he held top management positions at the Indian Avantha Group, Pauwels International, Telindus NV and Raychem Corporation. Mr. Van Zele holds a Master's degree in Mechanical Engineering from the K.U. Leuven and post-graduate degrees in Management from Stanford University.
[08] holds a Master's degree in Electrical Engineering and a post-graduate degree in Medical Engineering. He has been President & CEO of ICOS Vision Systems Corporation. Today, Mr. De Proft has his own consultancy company, and he serves on several Boards, including a position as Chairman of IMEC.
[07] is CEO of the Antwerp Hospital Network, a major Belgian hospital group. Prior to this, he was a partner at McKinsey & Company, where he became an expert in the areas of strategy, organization and operations. He is also a Board member of bpost, Belgium's postal service. Mr. Holthof holds an MBA from Harvard Business School and an MD/PhD from the K.U. Leuven.
[04] is CEO of Corelio, a leading Belgian multimedia company, and CEO of Mediahuis, a joint venture between media groups Corelio and Concentra. He serves on the Board of LMS and Bank Degroof. Before joining Corelio, he was CFO at Inbev and UCB. Mr. Missorten holds a Law degree from the K.U. Leuven, a Master of Laws from the University of California – Berkeley, and a Certificate of Advanced European Studies from the College of Europe in Bruges.
[02] held several senior management positions at Royal Philips Electronics before he retired in 2004. He is a professor at IESE, owns a consultancy company, and holds several Board positions. Mr. Oosterveld holds a Master's degree in Mechanical Engineering from the Technical University Eindhoven and an MBA from the IESE Business School, Barcelona.
[03] has held several top positions at VNU Belgium, VNU Magazines International, and the Flemish public broadcasting company VRT. Today, she is active as a Media Consultant and Executive Coach, and she serves on the Board of telecom operator Mobistar. Ms. von Wackerbarth holds a degree in Romance Philology and Linguistics, has completed an Advanced Management Program at Insead, and holds a Master's degree in Consulting and Clinical Coaching from HEC Versailles/Insead.
[01] holds a Master of Technology degree from the Indian Institute of Technology in Delhi, India. During his career, Mr. Jain has founded several technology start-ups and has converted them into successful businesses through strong leadership coupled with insights into emerging opportunities and trends in the global economy. Mr. Jain was founder and Chairman of the Board of IP Video Systems, which was acquired by Barco in February 2012. He currently serves as Chairman on the Board of Directors of Teraburst Networks Inc. and is an advisor to Rocket Fuel Inc. Mr. Jain is of Indian origin and has US citizenship.
serves as Company Secretary of the Board. He is the General Counsel of Barco. He started his career with the law firm Linklaters and then worked as Legal Counsel for CMB, GDF Suez and General Electric. He holds a law degree from the K.U. Leuven, a Master of Laws from Tulane University Law School in New Orleans, and a Master's degree in Real Estate from the Antwerp Management School.
In 2013, following his temporary appointment by the Board, Mr. Ashok K. Jain (Adisys Corporation) was definitively appointed by the shareholders at the general meeting of 25 April 2013.
All non-executive directors hold or have held senior positions in leading international companies or organizations. Their biographies can be found on pages 114 - 116 of this annual report.
Further to the changes in the Board, the composition of the various committees has also been adapted accordingly.
The audit committee is composed of three members, namely: Mr. Luc Missorten, who acts as Chairman, Mr. Bruno Holthof, and Mr. Jan P. Oosterveld. Mr. Missorten and Mr. Holthof are independent non-executive directors. The audit committee's members have relevant expertise in financial, accounting and legal matters as shown in the biographies on pages 114 - 116. The Board of Directors therefore opines that the audit committee meets the statutory requirements of independence and expertise in accounting and auditing. Each year, the audit committee assesses its composition and its operation, evaluates its own effectiveness, and makes the necessary recommendations regarding these matters to the Board of Directors.
Both the statutory auditor and the head of the internal audit have direct and unlimited access to the Chairman of the audit committee and to the Chairman of the Board of Directors.
The Board of Directors has made use of the possibility to combine the remuneration committee and the nomination committee into a single committee.
The remuneration & nomination committee consists of three independent directors: Christina von Wackerbarth who acts as Chairman, Luc Missorten and Antoon De Proft, all being independent non-executive directors.
The members of the strategic committee are Herman Daems (Chairman), Eric Van Zele, Jan P. Oosterveld, Bruno Holthof, and Antoon De Proft. On 25 November 2013, the Board also appointed Mr. Ashok K. Jain as member of the strategic committee.
Piet Candeel [03] General Manager Healthcare Wim Buyens [05] General Manager Entertainment & Corporate Ney Corsino [06] General Manager International Sales & Sales Operations
Jan Van Acoleyen [08] Chief Human Resources Officer
Filip Pintelon [09] Chief Operating Officer
joined Barco in 1986 after obtaining a degree in Electronic Engineering. He took up sales and product management roles in the former Barco Graphics division and was responsible for the start-up and expansion of Barco Graphics in Asia-Pacific. In 2000, he was appointed President Barco Japan, and in 2005, he was promoted to President Barco Asia-Pacific. In 2011, Mr. Bertrand became Chief Sales Officer of Barco and moved back to Belgium. In August 2013, he was appointed President of the Industrial & Government division.
Paul Matthijs is General Manager of the Retail & Advertising and Venturing divisions. Prior to this position, he held several positions in R&D, product management and general management in the Medical Imaging, Entertainment and Venture divisions of Barco. Mr. Matthijs holds a Master's degree in Electronic Engineering and an MBA from Vlerick Business School.
is General Manager of the Healthcare division. Prior to his present position, he held several positions in marketing, sales, and general management in a variety of business units in Barco over a span of 25 years. Mr. Candeel holds an Officer Degree in Nautical Electronics, a post-graduate degree in Marketing from EHSAL Brussels and an MBA from the University of Antwerp (UFSIA). He is also a graduate of Stanford University's Executive Program (SEP).
started with Barco in 1987 and held the positions of Marketing Manager and Division Manager in the former Barco Graphics division. Later, he was responsible for mergers and acquisitions, and he was appointed CFO of BarcoNet when this division became a separate public company. After the delisting of BarcoNet in 2002, Mr. Peeters rejoined Barco, where he was appointed CFO in 2010. He holds a Master's degree in Applied Economics and a post-graduate degree in Business Administration.
is General Manager of the Entertainment & Corporate division. He started at Barco in November 2007 as Vice President Digital Cinema within the Media & Entertainment division. Prior to joining Barco, he held several management positions at the Danish technology company Bruel & Kjaer. Mr. Buyens holds a degree in Engineering and obtained his executive management education at Stanford University and IMD in Lausanne.
is General Manager International Sales and Sales Operations. Prior to this, he managed Barco Latin America. Before joining Barco, he held several management positions at Philips. Mr. Corsino is originally from Brazil and holds a Bachelor's degree in Electronic Engineering and a post-graduate degree in Economics.
is General Manager of the Defense & Aerospace division. He holds a degree in Electrical Engineering from Virginia Polytechnic Institute and state University. Mr. Scott was co-founder of Chromatics Inc., which was acquired by Barco in 1990. In 2001, he became Chief Operating Officer for BarcoView and, in January 2004, he was appointed President Barco North America. In 2010, Mr. Scott assumed his present position while maintaining legal responsibility for managing the North American region as the Head of Barco, Inc.
is Chief Human Resources Officer. Prior to joining Barco in 2007, he held senior HR positions in high-tech companies such as Alcatel and Agfa-Gevaert. Mr. Van Acoleyen holds a Master's degree in Educational sciences from the K.U. Leuven and an Executive MBA from the University of Antwerp.
joined Barco in 2008 as President of Avionics & Simulation and President of Media, Entertainment & Simulation, before assuming the roles of COO and General Manager of the Networking division. Prior to joining Barco, he held top positions at LMS, Andersen Consulting and The Boston Consulting Group. After graduating from the K.U. Leuven with a Master's degree in Mathematics/Informatics in 1986, Mr. Pintelon earned an MBA from Vlerick Leuven Gent Management school.
Reference is made to Title 1 and 2 of Barco's Corporate Governance Charter for an overview of the responsibilities of the Board of Directors and its committees.
The table below provides a comprehensive overview of the directors' attendance at the Board of Directors and committees' meetings:
| Board of Directors | Audit committee | Remuneration & nomination committee |
Strategic committee | |
|---|---|---|---|---|
| Eric Van Zele (3) | 7 | 5 | 3 | 2 |
| Herman Daems (1) | 7 | 1 | 2 | |
| Bruno Holthof (2) | 7 | 5 | 2 | |
| Luc Missorten (2) | 6 | 5 | 3 | |
| Jan P. Oosterveld (1) | 7 | 5 | 2 | |
| Christina von Wackerbarth (2) | 7 | 3 | ||
| Antoon De Proft (2) | 7 | 3 | 2 | |
| Ashok K. Jain (2) | 7 | 1 |
(1) non-executive directors (2) non-executive independent directors (3) executive director
In 2013, the Board of Directors met 7 times. One of the meetings was held in the offices of projectiondesign® in Frederikstad (Norway).
At every meeting, the Board of Directors reviewed and discussed the financial results as well as the short to mid-term financial forecast of the company. In the beginning of the year, upon recommendation by the audit committee, the Board approved the financial results of 2012 and proposed the dividend for approval by the shareholders. It also deliberated on the renewal of the director's mandates as presented by the Remuneration and nomination committee. It deliberated on and subsequently approved the acquisition of AWIND. At dedicated meetings, the Board, in close concert with the core leadership team, reflected on each of the divisions' and ventures' strategies for the short to mid-term and approved the 2014 financial budget.
At regular intervals, the Board has reviewed the company's structure against its long term strategy, evaluated possible acquisition opportunities presented by the strategic committee, examined the divestment of assets deemed no longer strategic. The Board closely monitored the implementation of strategic projects such as the consolidation of the company's activities in Kortrijk on one campus or the implementation of one common ERP-system. Finally, the Board has also attended several demonstrations of new technologies in areas such as networked connectivity and wireless presentation.
The audit committee meets at least twice a year with the statutory auditor and the head of internal audit to consult with them about matters falling under the power of the audit committee and about any matters arising from the audit. The CEO and CFO also attend the meetings of the audit committee, unless the members of the audit committee wish to meet separately.
The audit committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the:
In 2013, the audit committee convened five times. The Chairman of the audit committee reported the outcome of each meeting to the Board of Directors. The yearly report of the activities of the audit committee, including the audit committee's self-assessment, has been submitted to the Board of Directors.
The statutory auditor attended three meetings during which it reported on the results of its audit procedures and highlighted specific attention points. The statutory auditor's management letter contained no recommendations for material adjustments.
The audit committee reviewed the Group's overall risk areas and risk management and control procedures related to the following areas: legal & compliance risks, IT risks, currency and treasury instrument risks, health, safety and environmental risks, internal control risks and insurance program.
Each quarter, the financial reports are discussed, with special attention to the critical accounting judgments and uncertainties, consistent application of valuation rules and off balance sheet obligations. The audit committee meeting of December is dedicated to the preparation of the year-end closing, with a particular focus on the review of the impairment testing procedures performed on goodwill and on capitalized development cost.
The remuneration and nomination committee meets at least two times per year, as well as whenever changes are necessary in the composition of the Board of Directors, be they appointments or reappointments. The committee is aware of the importance of diversity in the composition of the Board of Directors in general, and of gender diversity in particular. The committee takes this into account whenever new directors need to be appointed. In this respect, the Board is in the process of identifying potential candidates for future nominations given the upcoming membership renewals. The CEO participates in the meetings when the remuneration and nomination plan proposed by the CEO for members of the core leadership team is discussed, but not when his own remuneration is being decided.
In fulfilling its responsibilities, the remuneration and nomination committee has access to all resources that it deems appropriate, including external advice.
In 2013, the remuneration & nomination committee met 3 times.
The remuneration & nomination committee has reviewed the remuneration of the senior leadership team and the CEO. This included the definition and evaluation of bonus criteria, bonus deferral principles as well as an overall assessment of composition and positioning of the reward packages based on external data. This was done with regard to the 2013 bonus review as well as the 2013 salary review and bonus plans. In preparation for the general meeting, the committee prepared and reviewed the remuneration report. The nomination of new Board members and the performance as well as succession of the senior leadership team were also on the agenda. In 2013 the Chairman of the remuneration and nomination committee conducted individual interviews with key leaders in Barco supporting the strategy for 2014 and beyond.
With regard to the stock option plan 2013, the committee took the opportunity to investigate different equity-based reward practices and the characteristics of the stock option plan before approving and submitting it for Board approval. Upon the CEO's recommendation, the committee approved the grants for the senior leadership team and the principles for eligibility of Barco employees. The grant for the CEO was proposed and reviewed by the committee in preparation for Board approval.
The Board of Directors has set up a strategic committee, including the Chairman and the CEO. The Chairman presides over this strategic committee. Members of the executive management and other members can be invited to attend meetings of the strategic committee. The committee meets when an issue is introduced by the CEO. The committee meets at least one time per year to evaluate the existing strategy.
Upon the proposal of the CEO, the strategic committee discusses options that could influence the company's strategic path. Possible topics that may be discussed in this committee include acquisitions, mergers and the sale of a given activity. Other important strategic choices can also be discussed in the committee, such as investing in new technologies, markets or regions that could have an important impact on the future of the company. This relates to investments running over a number of years that involve a minimum engagement by the company of 10 million euro over the entire duration of the project.
In 2013, the strategic committee met 2 times.
The executive management presented a selected number of proposals for acquisitions. The strategic committee conducted in-depth discussions about the strategic value of the proposed transactions in view of the company's long-term strategy. The committee also evaluated the opportunities as well as the risk profiles of the projects and gave appropriate instructions regarding the transaction parameters.
The Board of Directors regularly carries out a process of self-evaluation. The intention is to evaluate the functioning of the Board as a whole and of its committees. In this respect individual and private interviews are held with each of the directors, leading to a report which is submitted to the full Board for review and action. The topics discussed are: the quality of the interaction between management and the Board, the quality of the information and documents submitted to the Board, the preparation of the Board meetings, the quality of the discussions and decision-making of the Board, the extent to which all relevant strategic, organizational and managerial issues are addressed by the Board, and the contribution of all Board members to the decision-making process at the Board. This process
allows for actions to be taken, aiming at the continuous improvement of the governance of the company. Moreover, prior to a director's (re-) appointment, the remuneration & nomination committee discusses and evaluates the individual director's contribution to the Board.
The above is fully in line with the Corporate Governance Code. Reference is also made to Title 1 (1.3) of the company's Corporate Governance Charter on www.barco.com/investors/corporategovernance.
On 25 April 2013, pursuant to article 17 of the articles of association, the general meeting set the aggregate annual remuneration for the year 2013 at 2,354,075 euro for the entire Board of Directors. This amount also includes the remuneration for the executive director. The balance of the amount was apportioned amongst the other members of the Board in line with its internal rules.
Also in line with the internal rules, a fixed remuneration of 20,500 euro is granted to non-executive directors and an additional amount based on attendance at meetings of the Board and of the committees. The attendance fee per meeting of the Board and the committees is set at 2,550 euro. The Chairman of the audit committee receives an attendance fee of 5,125 euro per meeting. These remunerations are charged as general costs.
Directors do not receive any remuneration linked to performance or results.
There were no shares granted.
| Fixed Remuneration | Board attendance | Committee attendance | Total 2013 | |
|---|---|---|---|---|
| Herman Daems | 205,000* | 205,000 | ||
| Bruno Holthof | 20,500 | 17,850 | 17,850 | 56,200 |
| Luc Missorten | 20,500 | 15,300 | 33,275 | 69,075 |
| Jan P. Oosterveld | 20,500 | 17,850 | 17,850 | 56,200 |
| Christina von Wackerbarth | 20,500 | 17,850 | 7,650 | 46,000 |
| Antoon De Proft | 20,500 | 17,850 | 12,750 | 51,100 |
| Ashok K. Jain | 20,500 | 17,850 | 2,550 | 40,900 |
* 161,000 euro plus 44,000 euro in retirement benefits
At the company's request, the following directors have taken up specific assignments outside the scope of their directorship for which they have been compensated as described hereafter:
Jan P. Oosterveld: 12,000 euro
Ashok K. Jain: 11,482.40 USD
For the executive director and the corporate senior Vice Presidents, the remuneration is determined by the remuneration & nomination committee, in line with the rules described in the company's 'Corporate Governance Charter' under Title 4 ('Remuneration'), available on www.barco.com/ investors/corporategovernance.
Barco wants to be an attractive company for top talent in the technology market space, based on sustainable human resources practices. Competitive reward, together with career and development opportunities, is at the heart of Barco's employee value proposition. Overall, Barco strives for a position above the market median on the total reward proposition, with a substantial variable part based on company, team and individual performance.
2013 variable payment was based on company (40%), divisional/functional (30%) and individual performance (30%).
The reward packages of the senior executive and extended management teams are reviewed by the remuneration and nomination committee on an annual basis. The committee assesses overall market competitiveness (based on bi-annual external market data), individual market positioning and sustained individual performance. This review results in updated individual reward packages and reward policies, as well as the criteria for the annual Barco Bonus plan.
The 2013 variable payment is based on EBIT, free cash flow, costs, orders, sales and individual targets. If the target variable part of the compensation of individual members of the executive management should exceed the 25% threshold on total compensation, the deferral will be based on sustained profitability.
» contribution for retirement benefits of 300,000 euro. » other components of the remuneration: 24,248 euro.
There is no claw back provision. The assessment of the performance is based on audited results.
In 2013, 25,000 stock options were granted to the CEO. 15,000 warrants/ stock options were exercised and no warrants/stock options lapsed. Since stock option grants are based on neither individual nor company performance, these are not to be considered variable remuneration as defined by the Law on Corporate Governance.
There were no shares granted.
There is no claw back provision. The assessment of the performance is based on audited results.
In 2013, 18,000 stock options were granted to and accepted by Corporate Senior Vice Presidents, members of the core leadership team. Since stock option grants are based on neither individual nor company performance, these are not to be considered variable remuneration as defined by the Law on Corporate Governance.
| Jacques Bertrand: | 3,000 |
|---|---|
| Wim Buyens: | 5,000 |
| Piet Candeel: | 3,000 |
| Carl Peeters: | 1,000 |
| Filip Pintelon: | 3,000 |
| Dave Scott: | 3,000 |
A total of 35,850 warrants/stock options were exercised, while 3,786 warrants granted in 2000 at an exercise price of 91.92 euro expired on 13 July 2013.
There were no shares granted.
Reference is made to page 212 of this annual report for an overview of the warrants and stock options exercisable under the warrant and stock option plans.
The group of Corporate Senior Vice Presidents in office on 1 March 2014 is presented on pages 118 - 120 in this annual report.
Contract between Barco and Eric Van Zele, CEO In case of termination of the contract by Barco the contract provides a notice period or compensation in lieu of 6 months.
The employment contracts of Jacques Bertrand, Wim Buyens, Piet Candeel, Carl Peeters, Filip Pintelon and Jan Van Acoleyen were signed before the Belgian Corporate Governance Law of 6 April 2010 came into force. The total compensation in case of termination is based on age, seniority in the Barco Group and the total of the individual compensation and benefits. Dave Scott has a US employment agreement. There is no contractual arrangement in case of termination and the Barco US Termination and Severance Policy will therefore be applicable. His contract was signed before the Belgian Corporate Governance Law of 6 April 2010 came into force. Steve Leyland has a French employment agreement with a contractual arrangement in case of termination. The total compensation in case of termination is equivalent to 6 months of total compensation during the first 36 months of employment and to 12 months of total compensation after 36 months of employment.
The Remuneration Report will be submitted for vote to the shareholders at the shareholders' meeting of 24 April 2014.
In line with the Royal Decree of 5 March 2006, members of the Board of Directors and the core leadership team must notify the FSMA (Financial Services Market Authority) of any transactions involving shares or other financial instruments of Barco within 5 business days after the transaction. Transactions by the core leadership team following the exercise of warrants and options have been made public on the website of the FSMA (www.fsma.be) in May and June 2013. The Compliance Officer has also published on the Barco website (www.barco.com/investors/ corporategovernance), all transactions by insiders at the end of the first month following every quarter.
Reference is also made to Title 7 (1) of the Company's Corporate Governance Charter on www.barco.com/investors/corporategovernance.
A director who is a director or business manager of a customer or supplier or who is employed by a customer or supplier shall report this fact to the Board of Directors prior to the deliberations concerning a topic on the agenda relating (whether directly or indirectly) to this customer or supplier. This obligation also applies when a family member of the director is in the above-mentioned position.
The same rule applies when a director or his or her family members (whether directly or indirectly) hold more than 5% of the shares with voting rights of a customer or supplier.
Subsequently, the director in question:
These provisions are not applicable when the customer or supplier is a listed company and the participation of the director (or his or her family members) takes place within the framework of assets that have been placed under the management of an asset manager who manages these assets in accordance with his own judgment, without taking the director (or his or her family members) into account.
Barco operates a risk management and control framework in accordance with the Companies Law Code and the Corporate Governance Code 2009. Barco is exposed to a wide variety of risks within the context of its business operations that can result in the objectives being affected or not achieved. Controlling those risks is a core task of the Board of Directors, the core leadership team and all other employees with managerial responsibilities.
The risk management and control system has been set up to reach the following goals:
The principles of the COSO reference framework and the ISO 31000 risk management standard have served as a source of inspiration to Barco in the set up of its risk management and control system.
Barco strives for an overall compliance and a risk-awareness attitude by defining clear roles and responsibilities in all relevant domains. This way, the company fosters an environment in which its business objectives and strategies are pursued in a controlled manner. This environment is created through the implementation of different companywide policies and procedures such as:
The core leadership team fully endorses these initiatives. The employees are regularly informed and trained on these subjects in order to develop sufficient risk management and control at all levels and in all areas of the organization. The Risk and Compliance Manager is in charge of the overall coordination of the risk management and control process.
All employees are accountable for the timely identification and qualitative assessment of the risks (and significant changes to them) within their area of responsibility.
Within the different key, management, assurance, and supporting processes, the risks associated with the business are identified, analyzed, pre-evaluated and challenged by internal and external assessments.
In addition to these integrated risk reviews, periodic assessments are performed to check whether proper risk review and control measures are in place and to discover unidentified or unreported risks. This process is driven by the risk and compliance manager.
The risks are further evaluated to set the right prioritization by allocating them in a consistent manner to an impact scale on the one hand, and a likelihood scale on the other hand. The scale for impact and likelihood are based on the acceptable level of risk exposure that is determined by the Board of Directors.
All risks are recorded in the risk register of the related process with a specification of their impact and likelihood. In addition, each risk is allocated to a risk owner who is responsible for setting up and implementing the mitigation action plan and the monitoring and follow-up of his/her risk. On a corporate level, the risk matrix is drawn up based on the risk score (impact x likelihood), whereby risks are classified as 'Unacceptable risk', 'Risk under observation' or 'Acceptable risk'.
'Unacceptable risks' are contained by means of an action plan to minimize the effects of such risks on the organization's ability to achieve its objectives. Also, the risks 'under observation' are monitored by a member of the core leadership team.
These processes are facilitated by the risk and compliance manager by:
All risks are specified in the Barco risk universe, which can be divided into five categories:
Barco has identified and analyzed its corporate risks. While this list is not exhaustive, Barco specifically recognizes that the following risks deserve attention:
Part of Barco's long-term growth strategy is based on acquisitions. Despite the fact that Barco has well-defined parameters for potential acquisitions and carries out due-diligence processes with the utmost care, acquisitions always entail risks. These risks may be associated with the integration of the acquired company into the group. The growth of the acquired business may be slower than forecast, or the acquired technological knowledge may not be as valuable as anticipated. These risks may result in impaired goodwill.
Beyond Barco's immediate business environment, an overall negative economic climate, a lack of liquidity in the financial markets, or a global stock market collapse may have a negative effect on Barco, its customers and its partners. A recession may slow Barco's customers and partners down or render them unable to secure the funds for planned investments. To mitigate its own risks in terms of liquidity, Barco increased its committed credit facilities to €115 million in December 2011 and continued to focus on a pro-active cash generating strategy. These committed credit facilities have recently been extended in tenor and have been increased with another €50 million, leading to total available committed credit lines of €165 million per 31 December 2013, which are for the biggest part undrawn. On the other hand, the fact that Barco conducts business in a variety of markets and geographical regions may reduce the impact of bad economic conditions, as they may not affect all markets and regions equally.
Barco is active in very specialized, selected professional markets for visualization technologies. In order to maintain, or attain, market-leader status in each of its key markets, the company annually invests considerably in research & development. In 2013, this investment amounted to €95.5 million, or 8.2% of sales. With regard to the selected professional markets, the company's main challenge is to define the right products to introduce into each market. Risks associated with this challenge are: » not being the first to market a new product, which may lead to
The continuous improvement of the New Product Introduction (NPI) program is driven by the green and the red teams and is supported by several competence groups. In 2013, two of the objectives were: » performing better requirements & risk management » empowering the NPI project managers
Expected sales volumes may not be achieved due to a shortage of components. This shortage may be a global phenomenon, due to an economic crisis or a major natural disaster. It may, however, also be linked to the introduction of new products that require new components, which may not yet be available in the required volumes. Key components sourced by a single source receive dedicated follow-up with mandatory high management attention.
Barco's global procurement team tracks suppliers closely to anticipate potential disruptions. By reducing its supplier database, Barco seeks to build a more collaborative relationship with its suppliers to Barco's advantage.
Barco makes extensive use of IT systems and platforms to support its operations. As configuration, hardware or software failures may occur, which can hamper these operations, proper fail-safe and recovery procedures are in place to mitigate these risks.
In addressing safety risks inherent to any modern IT infrastructure, Barco's facility and IT management is fully compliant with ITAR and C-TPAT guidelines, proactively scans its network for vulnerabilities, strictly regulates access to its networks, and regularly performs disaster recovery exercises. Barco is in the process of implementing a new ERP (Enterprise Resource Planning) system and selected SAP ECC as its main platform. In combination with this, Barco also wants to lift its processes to a higher level. The implementation of ERP systems has been a challenge for many organizations in the past. Therefore, Barco is continuously identifying the risks and setting proper controls during the new ERP implementation. By controlling and minimizing the major business risks in the first instance, the scene can be set for a successful implementation of the new ERP system.
The risks measures related to the accounting and financial reporting risks are described in the 'Barco consolidated' section.
In a company of Barco's size and scope, an employee's actions can result in a breach of laws and regulations or company ethics. Any resulting criminal prosecution or fine can of course have a negative effect on the company's image, business and share value. This risk is higher in emerging markets, as the knowledge of local laws and regulations, or the monitoring of ethical standards, may still be less developed than in more mature markets.
Compliance rules affect each employee in his or her daily work. All associates exert effort to comply with legal, corporate and local Barco policies and procedures and to strive together towards a truly compliant organization based on Barco's Code of Ethics and Business Conduct. The Legal, Risk and Compliance department assists in ensuring compliance by collecting and sharing the knowledge of functional, regional and divisional compliance owners supported by local Legal & Compliance Managers. The compliance management system and the Barco compliance overview guide the organization through the complex web of rules and regulations.
Events of an exceptional nature (such as a fire) may affect the company itself, or events on a larger scale (such as flooding, earthquake or extreme weather conditions) may affect component suppliers. These kinds of events, which can also include terrorist attacks or disease epidemics (Human related force majeure risks), can destabilize part or all of the world's economy.
Especially in the case of an R&D and/or a manufacturing site (Site related force majeure risks), those events may seriously affect the company's competitive position, as they may disrupt deliveries to customers or postpone new product releases. Barco has set up an international insurance program with reputable underwriters to cover both its assets and loss of income in case of business interruption due to such exceptional events. The coverage as well as the insured amounts are reviewed regularly and benchmarked with the assistance of professional insurance brokers. Nevertheless, it is impossible to calculate beforehand what the negative impact of such events might actually be.
Control measures are in place to minimize the effect of risk on Barco's ability to achieve its objectives. These control activities are embedded in the company's key processes and systems to assure that the risk responses and the company's overall objectives are carried out as designed. Control activities are conducted throughout the organization, at all levels and all departments.
The Risk and Compliance Manager supports the adoption of clear processes and procedures for a wide range of business operations related to compliance and export control. The Risk and Compliance Manager reports on his activities to the core leadership team and to the audit committee. In addition to these control activities, an insurance program is being implemented for selected risk categories that cannot be absorbed without material effect on the company's balance sheet.
Timely, complete and accurate information flow – both top-down as well as bottom-up – is a cornerstone of effective risk management.
In operational domains, Barco has implemented a management control and reporting system (MCRS) to support efficient management and reporting of business transactions and risks. This system enables Barco's management to capture relevant information on particular areas of business operations at regular time intervals. The process enforces clear assignment of roles and responsibilities, thus ensuring consistent communication to all stakeholders regarding external and internal changes or risks impacting their areas of responsibility.
In addition to the MCRS, the company has put several measures in place to assure security of confidential information and to provide a communication channel for employees to report any (suspected) violations of laws, regulations, company policies or ethical values.
Monitoring helps to ensure that internal control continues to operate effectively.
The continuity and the quality of Barco's risk management and control framework is assessed by the following actors:
The accurate and consistent application of accounting rules throughout the company is assured by means of Finance and Accounting Manuals, which are available for the key accounting sections.
Specifically within the financial domain, a quarterly, bottom-up risk analysis is conducted to identify and document the current risk factors. Action plans are defined for all key risks. The results of this analysis are discussed with the statutory auditor.
The accounting teams are responsible for producing the accounting figures (closing bookings, reconciliations, etc.), whereas the controlling teams check the validity of these figures. These audits include coherence tests by comparison with historical and budget figures, as well as sample checks of transactions according to their materiality.
All material areas of the financial statements concerning critical accounting judgments and uncertainties are periodically reported to the audit committee.
Specific internal control activities with respect to financial reporting are in place, including the use of a periodic closing and reporting checklist. This checklist assures clear communication of timelines, completeness of tasks, and clear assignment of responsibilities. Specific identification procedures for financial risks are in place to assure the completeness of financial accruals.
Uniform reporting of financial information throughout the organization ensures a consistent flow of information, which allows the detection of potential anomalies.
An external financial calendar is planned in consultation with the Board and the core leadership team, and this calendar is announced to the external stakeholders. The objective of this external financial reporting is to provide Barco's stakeholders with the information necessary for making sound business decisions.
At the annual shareholders meeting of 26 April 2012, Ernst & Young Bedrijfsrevisoren BCVBA, De Kleetlaan 2, 1831 Brussels, was re-appointed as statutory auditor of the company for a period of 3 years. Given the retirement of Mr. Jan De Luyck in 2013, Ernst & Young Bedrijfsrevisoren BCVBA is now represented by Mrs. Lieve Cornelis and Mr. Marnix Van Dooren.
In 2013, remuneration paid to the statutory auditor for auditing activities amounted to 475,355 euro. Remuneration paid to the statutory auditor for special assignments was 10,917 euro.
Barco advanced its strategy to move beyond Digital Cinema. While maintaining its market leadership in Digital Cinema, Barco positioned the company to penetrate the corporate AV segment. The addition of projectiondesign® contributed to profitable growth of 9% for the Projection division.
Barco also saw increasing momentum in order intake from new market segments, notably Digital Surgery, Patient Care and ClickShare. This illustrates the traction the company is gaining in executing its strategy to capture share in new and mid segment markets.
However, Advanced Visualization experienced competitive pressures in the mid segment in addition to ongoing soft demand for control room solutions. After introducing new mid segment solutions, orders began to rebound during the fourth quarter.
A continued focus on operational performance and excellence enabled Barco to maintain profitability and generate strong cash flow while absorbing two strategic acquisitions. EBITDA performance for the year was in line with 2012 reflecting the combination of a strengthening gross margin and improved cost discipline across the board that compensated for the acquisition-related increase in operating expenses.
Unfavorable foreign currency effects prevented Barco from achieving its goal of delivering another year of profitable growth. In constant currency, sales grew 3% or 31 million euro and our EBITDA was approaching 160 million euro.
In terms of profitability, the strategic acquisitions weighed on 2013 EBIT and net earnings. Separately, the improvements Barco made in operational profitability in Healthcare and Defense & Aerospace resulted in a 13.7% EBITDA margin for the second half of the year. In the short term the company will continue to implement a number of cost down programs and adjust selected operating expenses.
As Barco reaps the benefits of operational excellence and gains further traction with is growth initiatives, the company remains committed to delivering sustainable profitable growth.
The Board will propose to the general assembly to increase the dividend from 1.40 euro per share paid in 2013 to 1.50 euro per share to be paid out in 2014. It remains Barco's objective to generate consistent dividend growth for the shareholders.
The Board will also propose the authorization to initiate a share buyback program within the statutory limits.
The results of the China Joint Venture and of projectiondesign® have been fully consolidated as of 1 January 2013; the results of AWIND have been consolidated as of 1 April 2013.
Order intake was 1,150.5 million euro, up 1.5% as Healthcare and Defense & Aerospace registered strong gains while Projection and Advanced Visualization were essentially flat. By geography, strong growth in APAC was offset by softness in the EMEALA region and to a lesser extent North America.
For the year, order intake was roughly equivalent to sales. However, the relationship between order intake and sales was different in the two semesters. For 1H13, sales exceeded orders by 38 million euro; for 2H13, the trend reversed and orders exceeded sales by 34 million euro. By comparison, for 2H12, orders were lagging sales by 34 million euro. The order book recovered in the second semester to 460.9 million euro, after dipping in the first semester, to a level that was comparable to the second semester of 2012.
Sales of 1,158.0 million euro reflect growth in Projection and the Ventures offset by declines in the other divisions. Sales grew strongly in the APAC region, offsetting a decline in North America, with the EMEALA-region being flat.
EMEALA region includes Europe, Middle East, Africa and Latin America
| IN MILLIONS OF EURO | 2013 | 2012 | ||
|---|---|---|---|---|
| Sales | 1,158.00 | 100.00% | 1,156.00 | 100.00% |
| Cost of goods sold | -771.5 | -66.60% | -780.4 | -67.50% |
| Gross profit | 386.5 | 33.40% | 375.6 | 32.50% |
| Research & development | -95.5 | -8.20% | -84.1 | -7.30% |
| Sales & marketing | -160.7 | -13.90% | -142.2 | -12.30% |
| General & administration | -55.7 | -4.80% | -52.2 | -4.50% |
| Other operating result | 4.4 | 0.40% | 3.0 | 0.30% |
| EBIT before restructuring and goodwill impairment | 79.0 | 6.80% | 100.2 | 8.70% |
| Restructuring and goodwill impairment costs | -9.4 | -0.80% | -2.7 | -0.20% |
| EBIT after restructuring and goodwill impairment | 69.6 | 6.00% | 97.6 | 8.40% |
| Interest expense, net | -2.2 | -0.20% | 1.1 | 0.10% |
| Income taxes | -8.1 | -0.70% | -5.0 | -0.40% |
| Share in the result of JV's | 0.1 | 0.00% | 0.5 | 0.00% |
| Net income | 59.4 | 5.10% | 94.2 | 8.20% |
| EBITDA | 153.2 | 13.20% | 159.5 | 13.80% |
Gross profit increased 2.9% to 386.5 million euro from 375.6 million euro. As a result the gross profit margin improved further to 33.4%, compared to 32.5% in 2012.
Total indirect expenses represent 27% of sales and increased 10.2% from 24% of sales in 2012 and 2011. This increase is largely due to the addition of projectiondesign® and AWIND with a higher indirect cost structure and strengthened by associated amortization of intangibles.
Research & Development expenses increased 10.2 million euro to 107.5 million euro, reflecting new product development projects in the Advanced Visualization division, the addition of projectiondesign® and amortization of technology acquired from projectiondesign® and AWIND. As a percent of sales, research and development expenses increased to 9.3% from 8.4% last year. Sales & Marketing expenses increased 18.5 million euro to 160.7 million euro compared to 142.2 million euro last year, in large part due to the above-mentioned acquisitions. As a percent of sales, Sales & Marketing expenses rose to 13.9%, compared to 12.3% last year. General & administration expenses were 55.7 million euro, compared to 52.2 million euro last year or 4.8% of sales versus 4.5% last year.
Other operating results amounted to 4.4 million euro, compared to 3.0 million euro last year.
| IN THOUSANDS OF EURO | 2013 | |||
|---|---|---|---|---|
| sales | EBITDA | % EBITDA | ||
| Projection | 522.5 | 83.4 | 16.0% | |
| Healthcare | 195.7 | 26.3 | 13.4% | |
| Advanced Visualization | 192.5 | 13.3 | 6.9% | |
| Defense & Aerospace | 149.7 | 20.2 | 13.5% | |
| Ventures | 101.0 | 9.9 | 9.8% | |
| Intra-group eliminations | -3.5 | |||
| Group | 1,158.0 | 153.2 | 13.2% |
EBITDA was 153.2 million euro, a decrease of 6.2 million euro compared to 159.5 million euro the year before. EBITDA margin was 13.2% versus 13.8% in 2012. EBITDA margin improved in 2H13 to a 13.7% level, compared to a 12.8% for 1H13. Barco's operational profit margin remained healthy considering the company made important investments to its growth, including acquisitions, and incurred costs related to those acquisitions.
EBIT before restructuring was 79.0 million euro or 6.8%, compared to 100.2 million euro or 8.7% in 2012.
The decline in EBIT in comparison to EBITDA is due to increased amortizations as follows:
As a result the gap between EBITDA margin and EBIT margin versus sales widened from 5.1ppts of sales in 2012 to 6.4ppts in 2013.
The company will continue to record amortization on knowhow/technology and customer list in 2014; Trade names (1.2 million euro) and costs related to the inventory step-up & retention bonus (3.8 million euro) were fully amortized & absorbed in 2013.
In 2013 taxes were 8.1 million euro, for a tax rate of 12.0%, compared to 5.0 million euro in 2012, or a tax rate of 5.0%.
Net income for the year was 59.4 million euro, including 9.4 million euro in charges, consisting of a non-recurring restructuring charge and an impairment charge, that were booked in connection with actions taken to right size selected operations primarily in the Defense & Aerospace and Advanced Visualization divisions. These non-recurring charges in combination with an increased tax-rate resulted in a decrease in net income attributable to equity holders compared to last year.
Net earnings per ordinary share (EPS) for the year were 4.86 euro, down from 7.84 euro in 2012. Fully diluted net earnings per share were 4.71 euro, compared to 7.50 euro last year.
Free cash flow for the year was 70.2 million euro compared to 121.6 million euro for 2012 and consisted of negative cash flow of 11.6 million euro for the first semester, offset by positive cash flow of 81.8 million euro for the second semester.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| EBIT after restructuring and goodwill impairment | 69,596 | 97,567 | 68,359 |
| Impairment of capitalized development costs and goodwill | 858 | 3,644 | 11,328 |
| Restructuring provision (personnel) | -2,890 | - | -3,351 |
| Unrealized foreign currency translation gain on Kladno liquidation | - | -3,735 | - |
| Amortization capitalized development cost | 49,145 | 42,138 | 36,448 |
| Depreciation of tangible and intangible fixed assets | 24,207 | 16,126 | 14,088 |
| Gain/(Loss) on tangible fixed assets | 10 | -24 | -85 |
| Share in the profit/(loss) of joint ventures and associates | 61 | 547 | - |
| Gross operating free cash flow | 140,986 | 156,263 | 126,787 |
| Changes in trade receivables | 25,775 | 8,267 | 12,462 |
| Changes in inventory | 29,282 | 10,460 | -2,483 |
| Changes in trade payables | -29,889 | 10,567 | -14,693 |
| Other changes in net working capital | 9,746 | 19,015 | 35,923 |
| Change in net working capital | 34,915 | 48,310 | 31,208 |
| Net operating free cash flow | 175,901 | 204,574 | 157,995 |
| Interest received | 1,394 | 2,826 | 912 |
| Interest paid | -3,556 | -1,738 | -3,442 |
| Income taxes | -18,886 | -4,200 | -10,718 |
| Cash flow from operating activities | 154,853 | 201,462 | 144,748 |
| Expenditure on product development | -62,072 | -56,296 | -46,454 |
| Purchases of tangible & intangible fixed assets | -22,869 | -24,853 | -20,302 |
| Proceeds on disposals of tangible & intangible fixed assets | 260 | 1,264 | 3,245 |
| Cash flow from investing activities (excluding acquisitions) | -84,681 | -79,885 | -63,511 |
| Free cash flow | 70,172 | 121,577 | 81,237 |
Barco generated 140.9 million euro in gross operating cash flow and decreased working capital by 34.9 million euro, primarily payables and inventories, achieving a net working capital balance of 4.7% on sales, versus 8.2% year-end 2012.*
*Barco did not acquire any of its own shares in 2013. The company now owns 715,206 of its own shares or 5.51% before dilution.
| IN THOUSANDS OF EURO | NOTE | 31/12/2013 | 31/12/2012 | 31/12/2011 |
|---|---|---|---|---|
| ASSETS | ||||
| Goodwill | 9 | 145,705 | 68,809 | 43,921 |
| Capitalized development cost | 10 | 93,248 | 81,978 | 69,020 |
| Other intangible assets | 11 | 55,169 | 25,093 | 14,565 |
| Land and buildings | 11 | 27,017 | 28,744 | 30,569 |
| Other tangible assets | 11 | 40,120 | 30,661 | 27,479 |
| Investments | 8 | 11,824 | 44,445 | 9,300 |
| Deferred tax assets | 12 | 62,333 | 61,948 | 56,763 |
| Other non-current assets | 14 | 14,286 | 18,041 | 19,134 |
| Non-current assets | 449,702 | 359,719 | 270,751 | |
| Inventory | 13 | 211,575 | 223,677 | 233,928 |
| Trade debtors | 14 | 177,467 | 183,082 | 187,114 |
| Other amounts receivable | 14 | 44,102 | 29,053 | 35,197 |
| Cash and cash equivalents | 15 | 156,545 | 122,139 | 79,165 |
| Prepaid expenses and accrued income | 8,431 | 4,209 | 8,412 | |
| Current assets | 598,120 | 562,160 | 543,816 | |
| Total assets | 1,047,822 | 921,879 | 814,567 | |
| EQUITY AND LIABILITIES | ||||
| Equity | 579,366 | 538,050 | 460,703 | |
| Long-term debts | 15 | 40,410 | 12,695 | 19,014 |
| Deferred tax liabilities | 12 | 11,721 | 3,089 | 5,005 |
| Other long-term liabilities | 16 | 15,322 | 10,161 | 8,117 |
| Non-current liabilities | 67,453 | 25,945 | 32,136 | |
| Current portion of long-term debts | 15 | 3,582 | 4,105 | 1,691 |
| Short-term debts | 15 | 11,657 | 1,302 | 6,593 |
| Trade payables | 18 | 114,133 | 127,528 | 110,791 |
| Advances received from customers | 18 | 93,562 | 73,587 | 55,748 |
| Tax payables | 30,124 | 25,012 | 21,556 | |
| Employee benefit liabilities | 57,248 | 57,958 | 51,741 | |
| Other current liabilities | 12,115 | 8,241 | 8,045 | |
| Accrued charges and deferred income | 31,778 | 20,763 | 23,488 | |
| Provisions | 19 | 46,804 | 39,388 | 42,075 |
| Current liabilities | 401,003 | 357,884 | 321,728 | |
| Total equity and liabilities | 1,047,822 | 921,879 | 814,567 |
Barco ended 2013 with a net financial cash position of 104.4 million euro, compared to 24.2 million euro on 30 June 2013 and 111.2 million euro on 31 December 2012.
Over 2013, changes in trade receivables were 25.8 million euro positive, while changes in inventory were 29.3 million euro offset by negative changes in trade payables for an amount of 29.9 million euro. Other changes in working capital for 9.7 million euro include advances on customer projects and increase in other liabilities.
At the end of 2013, trade receivables were 177.5 million euro, 5.6 million lower than than 31 December 2012. DSO were at 52 days, compared to 57 days as of 30 June 2013 and 48 days as of 31 December 2012.
At 211.6 million euro inventory was 12.1 million euro lower than on 31 December 2012 and 39.8 million euro lower than on June 2013. Inventory turns were at 3.2, compared to 3.0, at the end of June 2013 and 3.1 at the end of December 2012.
Trade payables stood at 114.1 million euro at the end of December 2013,
compared to 118.4 million euro at the end of June 2013 and compared to 127.5 million euro at the end of December 2012.
Goodwill increased to 145.7 million euro on 31 December 2013 from 68.8 million on 31 December 2012. The increase in goodwill was driven by the acquisitions of projectiondesign® and AWIND.
Other intangible assets increased from 25.0 million euro on 31 December 2012 to 55.2 million euro while non-current liabilities increased from 25.9 million euro on 31 December 2012 to 67.5 million euro. Other intangible assets increased due to fair value adjustments (according to IFRS) on the acquisitions and due to the investments in the new ERP package SAP (other intangible assets under construction). Non-current liabilities increased from 25.9 million euro on 31 December 2012 to 67.5 million euro mainly due to a financial leasing related to the acquisition of projectiondesign® and a draw down on Barco's credit facility from the European Investment Bank.
Capital expenditure, excluding capitalized development, was 22.9 million euro, compared to 24.9 million euro for the same period last year.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Trade debtors | 177,467 | 183,082 | 187,114 |
| Inventory | 211,575 | 223,677 | 233,928 |
| Trade payables | -114,133 | -127,528 | -110,791 |
| Other working capital | -220,126 | -183,806 | -148,028 |
| Total working capital | 54,782 | 95,425 | 162,222 |
| Long term assets & liabilities | 266,166 | 225,335 | 193,391 |
| Operating capital employed | 320,948 | 320,760 | 355,613 |
| Goodwill | 145,705 | 68,809 | 43,921 |
| Operating capital employed (incl goodwill) | 466,653 | 389,569 | 399,534 |
| EBIT before restructuring & impairment | 79,024 | 100,238 | 78,359 |
| ROCE after tax (%) (a) | 15.00% | 24.00% | 20.00% |
(a) Tax rate used is the effective tax rate, i.e. 12% in 2013, 5% in 2012, 0% in 2011 (in 2011, effective tax rate was positive, therefore kept at 0%).
ROCE (after Tax) stood at 15%, compared to 16% at 30 June 2013 and 24% at 31 December 2012. The decrease reflects the impact of acquisitions on goodwill and intangibles and the higher effective tax rate of 12.0% compared to 5.0% last year.
| IN THOUSANDS OF EURO | 2013 FULL YEAR | 2012 FULL YEAR |
|---|---|---|
| Sales | ||
| Projection | 522,492 | 479,711 |
| Healthcare | 195,708 | 206,455 |
| Advanced Visualization | 192,540 | 227,682 |
| Defense & Aerospace | 149,716 | 130,682 |
| Ventures | 101,033 | 112,173 |
| Intra-group eliminations | -3,473 | -719 |
| Group | 1,158,015 | 1,155,984 |
| EBITDA before restructuring | ||
| Projection | 83,450 | 87,278 |
| Healthcare | 26,348 | 23,809 |
| Advanced Visualization | 13,338 | 26,392 |
| Defense & Aerospace | 20,193 | 12,757 |
| Ventures | 9,905 | 9,240 |
| Group | 153,234 | 159,476 |
Effective 1 January 2014, Barco took steps to sharpen the organization's focus on markets by promoting the product and solution portfolios of all businesses and cross selling throughout the company.
To emphasize the market focus, the Projection and the Advanced Visualization divisions have been renamed and the venture High End Systems has been integrated into the core. For details about the new organizational structure please go to the description of our business areas on page 26 For the analysis of the 2013 results the composition and the naming of the divisions remain unchanged.
Sales and order intake in the projection division continued to shift in favor of Professional AV as a result of the addition of projectiondesign® during fiscal 2013. For the year, Professional AV accounted for 30% of sales versus 25% last year and 35% of order intake versus 25% last year.
Within Digital Cinema, Barco reached a capture rate of 50% and further expanded its market share with program wins and roll-outs in Latin America, China and India. With more than 40,000 digital cinema projectors delivered over the last 6 years, Barco is market leader and is well positioned to reap the benefits of a large installed base with service and maintenance-contracts and future upgrade and replacement programs. In the Professional AV segment, Barco successfully implemented its plans to integrate projectiondesign® and the company is on track to align projectiondesign®'s profitability with Barco's financial targets for the Projection division by optimizing manufacturing and supply chain operations, and sales and marketing resources. Barco continued to penetrate the mid venue and corporate projection segments, extending its global network and launching 11 new projectors during the second semester, and is now well positioned to drive growth in this market.
Barco began to realize the benefits of its strategic investments in new market segments including digital surgery, patient care and dentistry. In the second semester order intake increased by 21.0% compared to 2H12 and gross profit margin improved. As a result, the division met its EBITDA margin performance target for 2H13.
At the same time, the company maintained its leadership position in diagnostic imaging and modality, despite a somewhat weaker demand in the EMEALA region in the second and third quarters.
» Order intake rebounded in the fourth quarter with strong contributions evenly divided between the traditional and new market segments. North America delivered most of the growth while the other regions remained a flat performance in order intake.
» Sales declined modestly driven by softness for the second and third quarters. Flat or weaker performances in the Traditional diagnostic and the modality markets were flat while the new segments started to generate sales.
» EBITDA increased as a result of gross profit margin improvements, cost down programs and a more favorable product mix.
The Advanced Visualization division posted lower sales for the year. Development of solutions for the mid segment took longer than anticipated, control room projects were delayed and demand from customers in Europe was soft. With the introduction of solutions for the mid segment in the second semester, order intake improved towards the end of the year. As a result of lower sales and higher R&D expenses, EBITDA declined year over year.
Cost down programs on the videowall cubes & LCD-solutions and operating cost reduction programs are both ongoing. These programs are expected to position the division for restored profit contribution in 2014.
Sales of ClickShare steadily increased each quarter. Since launching ClickShare in the fourth quarter of 2012, Barco has been certified to sell ClickShare in more than 60 countries worldwide and has sold over 12,500 units while adding new partners and channels.
Growth in avionics during 2013 was overshadowed by the ongoing reduction in defense spending worldwide which led to project delays and cancellations. However, demand among defense customers improved during the second semester with new and delayed business starting to kick-in. As a result, Barco signed new frame agreements, saw order intake increase and ended the year with a book-to-bill ratio of 1.05.
Sales remained flat year-on-year while the profitability increased thanks to sustained profitability in LiveDots and turnaround for High End Systems.
The following statements are forward looking and actual results may differ materially.
For 2014, Barco anticipates that the macro-economic environment will remain challenging and that currency translations may have a significant effect on reported results.
Nevertheless, the company expects to generate sales growth albeit in low single digits.
The combination of strategic growth initiatives, cost reductions and spending control is expected to result in improved profitability.
While executing on the strategic priorities, management also plans to strengthen its global competitive positioning through continued focus on operational excellence, and to make decisions regarding Barco's portfolio of venture companies and to execute on its plan to deploy financial resources to support growth initiatives in Barco's core activities.
The Board will propose to the general assembly to extend the mandate of Eric Van Zele in order to ensure continuity of the company's strategic direction and to build on the strong track record of Barco's current executive team in realizing the company's strategic objectives.
| IN EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Number of shares (in thousands): | 12,989 | 12,757 | 12,755 |
| Per share (in euro) | |||
| EPS | 4.86 | 7.84 | 6.32 |
| Diluted EPS | 4.71 | 7.50 | 6.21 |
| Gross dividend | 1.50 | 1.40 | 1.10 |
| Net dividend | 1.125 | 1.05 | 0.825 |
| Gross dividend yield (a) | 2.6% | 2.6% | 2.8% |
| Yearly return (b) | 6.6% | 44.2% | -17.4% |
| Pay-out ratio (c) | 34.1% | 19.0% | 18.5% |
| Price/earnings ratio (d) | 11.7 | 7.0 | 6.1 |
(a) Gross dividend/ closing rate on 31 December 2013
(b) Increase or decrease share price + gross dividend, divided by closing share price of previous year
(c) Gross dividend x number of shares on 31 December / net result
(d) share price 31 December / net result per share
| IN EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Share price | |||
| Average closing price | 59.96 | 48.64 | 46.41 |
| Highest closing price | 69.95 | 58.75 | 59.50 |
| Lowest closing price | 52.58 | 36.52 | 31.20 |
| Closing price on 31 December | 56.70 | 54.50 | 38.76 |
| Average number of shares traded daily | 34,105 (e) | 29,298 (e) | 29,722 (e) |
| Stock market capitalization on 31 December (in millions) | 736.5 | 695.3 | 492.7 |
(e) The average number of shares traded daily for 2013 is taking into account the trades on NYSE Euronext as well as registered trades on alternative platforms BATS, Chi-X, Turquoise and Equiduct. On average for 2013, 87% of these trades were registered on NYSE Euronext and 13% on the alternative platforms combined.
Euronext Brussels
| Barco share Barco VVPR-strip |
BAR BARS |
ISIN BE0003790079 ISIN BE0005583548 |
Market capitalization (31 December 2013) Highest capitalization (14 March 2013) Lowest capitalization (28 August 2013) |
718.4 million euro 886.3 million euro 671.0 million euro |
|
|---|---|---|---|---|---|
| Reuters | BARBt.BR | Share price 31 December 2012 | 54.50 euro | ||
| Bloomberg | BAR BB | Share price 31 December 2013 | 56.7 euro | ||
| Velocity (2013) | 59.80% | ||||
| LIQUIDITY | SOURCE | 2013 | 2012 | ||
| Fidessa (1) | 8,674,804 | 7,500,210 | 7,638,624 | ||
| Total yearly volume (shares) | Euronext | 7,576,594 | 6,620,286 | 7,222,595 | |
| Fidessa | 34,105 | 29,298 | 29,722 | ||
| Average number of shares traded | Euronext | 29,787 | 25,860 | 28,010 | |
| Total yearly volume (turnover) | Fidessa | 517.99 million euro | 365.07 million euro | 347.27 million euro | |
| Euronext | 453.95 million euro | 384.71 million euro | 330.57 million euro |
Comment (1): Based on the Fidessa stock report: http://fragmentation.fidessa.com/ The numbers referenced here take into account the trades in the Lit-category: Euronext and the alternative platforms BATS Chi-X, Turquiose and Equiduct. We have excluded the Dark pools, the SI and the off-book transactions.
According to this data, the portion traded on alternative platforms has evolved from 5% in 2011, 12% in 2012 and 13% in 2013.
The Board of Directors decided to recommend to the general assembly to pay a dividend of 1.5 euro (gross) per share over 2013. This is 1.125 euro net, on withholding tax of 25%.
At 1.50 euro, the pay-out ratio is 32.8%.
| ABN AMRO Bank | Marc Hesselink |
|---|---|
| Bank Degroof | Bart Jooris |
| Exane BNP Paribas | David Vagman |
| Flemish Federation of Investors and Investor Clubs |
Gert De Mesure |
| Goldman Sachs International | Benjamin Moore |
| Carl Hazeley | |
| ING | Emmanuel Carlier |
| KBC Securities | Guy Sips |
| Kempen & Co. | Erwin Dut |
| Leleux Associated Brokers | Geert Van Herck |
| Petercam | Stefaan Genoe |
| Kepler Cheuvreux | Peter Olofsen |
| Announcement of results 2H13 and FY13 | Friday 7 February 2014 |
|---|---|
| Trading update 1Q14 | Thursday 24 April 2014 |
| Extraordinary General Shareholders meeting | Thursday 24 April 2014 |
| Annual General Shareholders meeting | Thursday 24 April 2014 |
| Announcement of results 1H14 | Wednesday 23 July 2014 |
| Trading update 3Q14 | Wednesday 22 October 2014 |
The Barco share price closed at €56.70 on 31 December 2013 – 2.2% higher than the closing price of €54.50 the year before.
On the back of a strong track record and good performances, closing and average prices have returned to pre-financial-crisis levels: the average closing price is at its highest level since 2007, and the closing price on 31 December is the best since 2006.
This evolution pushed the market capitalization of the company to around €700 million. Overall, analyst expectations varied during the year between €60 and €70, to close the year with a consensus target price of €62.
Over the last few years, Barco's share volatility has been typically higher than that of the indexes, reflected in higher price variations versus the market. In 2013, however – and despite some very specific spike effects – volatility decreased compared to previous years, with the lowest absolute and relative variance gap (between lowest & highest share price) in 8 years.
Liquidity of the share has again improved for the second year in a row – with approximately 10% more volume traded on Euronext, and a similar increase on the alternative platforms.
The full year performance of the share for 2013 was rather soft. Major indices – such as the CAC40 (+18%) and the BEL20 (+18%) – booked impressive gains, while Barco's share won 2.2% over the full year. However, the behavior of the stock price in 2013 was rather atypical and contrary to the major indices, with a much stronger performance in the first half of the year, a downward correction in the summer, and a comparable performance over the last 4 months of the year.
In the first three months of the year, the share price rose strongly (+25%), reaching a peak of €69.60 on 15 March, followed by a fairly stable period for the full first semester. Concerns about the impact of the anticipated slowdown of the digital cinema market as of Q3 started to have an effect from July onward, resulting in a steep decline on 1 and 2 July, which pushed the share price back to the level of the beginning of the year.
After a short upward correction following the quite good results of the
first half, the share price slipped down again in August (to a level around €53 - €55), and then started a new, more moderate, rise toward €61 following the analyst and investor day. The Q3 results – announcing a slightly weaker sales performance against a challenging comparison base – triggered a hefty day ("sell on the news"), which resulted in an exceptional trading volume (more than 200,000 shares traded) and a -9% hit. Subsequently, the share price hovered between €53 and €55 in the fourth quarter, and then finally closed the year on a positive note at €56.70.
Since July 2013, some first shorters were registered on the Barco share. A first US fund went short on the share in August and moved out again in October, after which a London-based fund developed a short position of 1.5% by the end of October – a position that they still had by the end of the year.
The increased liquidity of the share reflects continued interest in the market.
Barco started the year with a buy recommendation across the board, supported by listings in a number of preference lists. By the end of the first half, and after the peak performance at about €69, the share was removed from most preference lists and was downgraded by a number of brokers.
Despite a very decent performance in the first half of 2013, the investment community remained somewhat concerned about Barco's resilience against a slowdown in the cinema market and the impact that would have on the earnings. The general trend is acknowledgement of Barco's strategy as being the right way forward, with concern regarding the timing of the outcomes of the growth initiatives.
Between the end of 2008 (with a closing price of €17.90) and the end of 2013 (with a closing price of €56.70), the Barco share realized a 215% increase in value – a perfect illustration of the positive impact of the turn-around strategy kicked off in 2009 and the company's positive performance track record.
Barco thanks its shareholders for their continued confidence in the company, its board of directors, its management and its employees, as the company progresses on its path of sustainable growth.
Barco / Bel 20 / Next 150
A study of Barco's global shareholdership at 31 December 2013* identified ownership of almost 90% of the company, with identified institutional investors holding 64% of all shares, 5.5% being treasury shares held by the company and 24% held by retail investors.
2013 was a tale of two halves for Barco – with weaker Q3 sales arresting the strong performance of the projection division in the first half. In the first six months of the year, substantial upside was registered on Barco's share, with entries of both growth and value investors. From July onwards, analyst perception started to turn, and the flat guidance given in the release of 3Q earnings caused a sell-off with shares slumping by 8.8% in the last 6 months.
In the first six months of the year, Barco seems to have mirrored the market trend, with an early market rally offset by pullback driven by profit taking, softer macro data, and the potential for US fiscal stimulus withdrawals. In the first quarter, the share rose by 25% – outperforming the market – and then softened in 2Q to land at around €60 for the first semester, which was still a good 12% rise. There was good turnover in this period, with 6 new firms entering the Top 10 buyers. In this first semester, Barco's share was attractive for growth-oriented firms and with an attractive valuation to appeal to value investors as well. Good inflows were noted from the United Kingdom and the United States.
Following this strong first-half performance, Barco's investment case took a hit in the second half of the year – triggered by analysts downgrading their recommendation and strengthening the profit-taking trend. Weaker Q3 sales and flat EBITDA guidance prompted a sell-off across institutional investors and an 8.8% drag on share price performance over the full semester. Substantial outflows occurred in Germany and the United States in the second half, offset by inflows from Belgium (through GIMV), the Nordic region (with Norges bank), London, Switzerland and New York.
At the end of the year, 34% of the institutional shares were owned in North America (United States & Canada), down from around 40% a year before. 33% were owned in Belgium (up from 30% in 2012), 13% were owned in the UK (down from 8% the year before), and 6% in France (flat year-on-year). The remaining shares are owned in the rest of Europe: Germany, Switzerland, the Nordic regions, and the Netherlands.
Over the year, positions rose in the UK, Belgium and the rest of Europe. Shareholdership was stable for the United States but fell for Canada, France and Germany.
Although the second-half evolution impacted the presence of growth investors, Barco's investment case became more appealing to valueoriented investors. The stock remains a good value play, residing in the top 20% of underpriced securities globally. Margin growth resulting from reducing cost and restructuring measures and a contingency of the downside risk could fuel upside.
In addition, Barco's dividend yield can also prove to be fair compensation for shares, which may underperform in the near term.
Value investors have taken 35% of the shareholder base (coming from 33% last year), while the combination of growth- and GARP-investors has declined from 22% at end 2012 to 19% at the end of 2013. GARP investors hold 16% of the institutionally owned shares (up from 15% at end 2012).
We welcomed 4 newcomers to the Top 10 holders over the year.
Share price concentration went down in the first six months of the year, and then rebounded to the level of end 2012. The Top 10, Top 25 and Top 50 represent 38%, 51% and 59% of the free float, respectively. Compared to the Mid Cap client benchmark, Barco is below average in terms of shareholder concentration, which should result in less share price volatility if a top investor decides to divest. A majority of Barco's institutional shares are held by investors classified as 'low turnover' (expected holding periods exceeding 24 months), which should also prove to be a stabilizing factor.
There is selected exposure to hedge funds: One US fund in Q3 was replaced by a London-based hedge fund in Q4 and is still holding the position.
Despite a challenging macro-economic environment, and the abovementioned shift from growth to a more value-oriented investment case, Barco continued its investor relations efforts in roadshows, conference calls and company visits with regular visits to the tier 1 cities such as London, New York, Brussels, Paris and Frankfurt, while exploring and maintaining other geographies as well.
We organized another successful and well-attended Analyst & Investor Day in September 2013, kicked-off the consensus-gathering with institutional research analysts, and released the first shareholder guide.
For 2014, we intend to advance this strategy to reach out to the worldwide IR community through roadshows, conference calls and company visits and to extend and strengthen the portfolio of IR-related material. This includes upgrading the investor relations website and the release of new or updated IR-related deliverables such as a fact sheet, consensus and research reports, and the shareholder guide.
This chapter of the Annual Report contains the IFRS audited consolidated financial statements including the notes thereon prepared in accordance with the International Financial Reporting Standards as adopted by the European Union.
The chapter 'Comments on the results' provides an analysis of the developments during the financial year 2013 and the results and is based on the IFRS consolidated financial statements and should be read in conjunction with these statements.
| IN THOUSANDS OF EURO | NOTE | 2013 | 2012 | 2011 |
|---|---|---|---|---|
| Net sales | 3 | 1,158,015 | 1,155,984 | 1,041,244 |
| Cost of goods sold | 3 | -771,519 | -780,351 | -728,313 |
| Gross profit | 3 | 386,496 | 375,633 | 312,932 |
| Research and development expenses | 3 | -95,476 | -84,124 | -74,650 |
| Sales and marketing expenses | 3 | -160,670 | -142,157 | -122,493 |
| General and administration expenses | 3 | -55,689 | -52,155 | -50,221 |
| Other operating income (expense) - net | 3 | 4,362 | 3,040 | 12,792 |
| EBIT before restructuring and goodwill impairment | 3 | 79,024 | 100,238 | 78,359 |
| Restructuring and goodwill impairment costs | 5 | -9,428 | -2,671 | -10,000 |
| EBIT after restructuring and goodwill impairment | 69,596 | 97,567 | 68,359 | |
| Interest income | 1,394 | 2,826 | 912 | |
| Interest expense | -3,556 | -1,738 | -3,442 | |
| Income before taxes | 67,434 | 98,656 | 65,829 | |
| Income taxes | 6 | -8,092 | -4,962 | 10,407 |
| Result after taxes | 59,342 | 93,694 | 76,236 | |
| Share in the result of joint ventures and associates | 8 | 61 | 547 | -386 |
| Net income | 59,403 | 94,241 | 75,850 | |
| Net income attributable to non-controlling interest | 2,284 | - | - | |
| Net income attributable to the equity holder of the parent | 57,119 | 94,241 | 75,850 | |
| Earnings per share (in euro) | 7 | 4,86 | 7,84 | 6,32 |
| Diluted earnings per share (in euro) | 7 | 4,71 | 7,50 | 6,21 |
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Net income | 59,403 | 94,241 | 75,850 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: | |||
| Exchange differences on translation of foreign operations (a) | -14,411 | -6,683 | -1,787 |
| Net gain/(loss) on cash flow hedges | 596 | 361 | -550 |
| Income tax | -72 | -18 | - |
| Net gain/(loss) on cash flow hedges, net of tax | 524 | 343 | -550 |
| Other comprehensive income (loss) for the period, net of tax | -13,887 | -6,340 | -2,337 |
| Other comprehensive income (loss) for the period, net of tax, attributable to equity holders of the parent | -13,810 | -6,340 | -2,337 |
| Other comprehensive income (loss) for the period, net of tax, non-controlling interest | -77 | - | - |
| Total comprehensive income for the period, net of tax, attributable to equity holder of the parent | 45,594 | 87,901 | 73,513 |
| Total comprehensive income for the period, net of tax, non-controlling interest | -77 | - | - |
The accompanying notes are an integral part of this income statement.
(a) Translation exposure gives rise to non-cash exchange gains/losses. Examples are foreign equity and other long-term investments abroad. These long-term investments give rise to periodic translation gains/losses that are non-cash in nature until the investment is realized or liquidated. The comprehensive income line commonly shows a positive result in case the foreign currency in countries where investments were made appreciates versus the euro, and a negative result in case the foreign currency depreciates.
In 2013, the negative exchange differences in the comprehensive income line were mainly booked on foreign operations held in Indian Rupee, US Dollar and Norwegian Krone.
| IN THOUSANDS OF EURO | NOTE | 31/12/2013 | 31/12/2012 | 31/12/2011 |
|---|---|---|---|---|
| ASSETS | ||||
| Goodwill | 9 | 145,705 | 68,809 | 43,921 |
| Capitalized development cost | 10 | 93,248 | 81,978 | 69,020 |
| Other intangible assets | 11 | 55,169 | 25,093 | 14,565 |
| Land and buildings | 11 | 27,017 | 28,744 | 30,569 |
| Other tangible assets | 11 | 40,120 | 30,661 | 27,479 |
| Investments | 8 | 11,824 | 44,445 | 9,300 |
| Deferred tax assets | 12 | 62,333 | 61,948 | 56,763 |
| Other non-current assets | 14 | 14,286 | 18,041 | 19,134 |
| Non-current assets | 449,702 | 359,719 | 270,751 | |
| Inventory | 13 | 211,575 | 223,677 | 233,928 |
| Trade debtors | 14 | 177,467 | 183,082 | 187,114 |
| Other amounts receivable | 14 | 44,102 | 29,053 | 35,197 |
| Cash and cash equivalents | 15 | 156,545 | 122,139 | 79,165 |
| Prepaid expenses and accrued income | 8,431 | 4,209 | 8,412 | |
| Current assets | 598,120 | 562,160 | 543,816 | |
| Total assets | 1,047,822 | 921,879 | 814,567 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to equityholders of the parent | 17 | 574,943 | 538,050 | 460,703 |
| Non-controlling interests | 1.2. | 4,423 | - | - |
| Equity | 579,366 | 538,050 | 460,703 | |
| Long-term debts | 15 | 40,410 | 12,695 | 19,014 |
| Deferred tax liabilities | 12 | 11,721 | 3,089 | 5,005 |
| Other long-term liabilities | 16 | 15,322 | 10,161 | 8,117 |
| Non-current liabilities | 67,453 | 25,945 | 32,136 | |
| Current portion of long-term debts | 15 | 3,582 | 4,105 | 1,691 |
| Short-term debts | 15 | 11,657 | 1,302 | 6,593 |
| Trade payables | 18 | 114,133 | 127,528 | 110,791 |
| Advances received from customers | 18 | 93,562 | 73,587 | 55,748 |
| Tax payables | 30,124 | 25,012 | 21,556 | |
| Employee benefit liabilities | 57,248 | 57,958 | 51,741 | |
| Other current liabilities | 12,115 | 8,241 | 8,045 | |
| Accrued charges and deferred income | 31,778 | 20,763 | 23,488 | |
| Provisions | 19 | 46,804 | 39,388 | 42,075 |
| Current liabilities | 401,003 | 357,884 | 321,728 | |
| Total equity and liabilities | 1,047,822 | 921,879 | 814,567 |
The accompanying notes are an integral part of this balance sheet.
| IN THOUSANDS OF EURO | NOTE | 2013 | 2012 | 2011 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| EBIT after restructuring and goodwill impairment | 69,596 | 97,567 | 68,359 | |
| Impairment of capitalized development costs and goodwill | 9 | 858 | 3,644 | 11,328 |
| Restructuring provision (personnel) | -2,890 | - | -3,351 | |
| Unrealized foreign currency translation gain on Kladno liquidation | - | -3,735 | - | |
| Amortization capitalized development cost | 3 | 49,145 | 42,138 | 36,448 |
| Depreciation of tangible and intangible fixed assets | 10 | 24,207 | 16,126 | 14,088 |
| Gain/(Loss) on tangible fixed assets | 10 | -24 | -85 | |
| Share options recognized as cost | 17 | 1,337 | 782 | 676 |
| Share in the profit/(loss) of joint ventures and associates | 8 | 61 | 547 | -386 |
| Gross operating cash flow | 142,323 | 157,046 | 127,076 | |
| Changes in trade receivables | 25,775 | 8,267 | 12,462 | |
| Changes in inventory | 29,282 | 10,460 | -2,483 | |
| Changes in trade payables | -29,889 | 10,567 | -14,693 | |
| Other changes in net working capital | 9,746 | 19,015 | 35,923 | |
| Change in net working capital | 34,915 | 48,310 | 31,208 | |
| Net operating cash flow | 177,238 | 205,356 | 158,284 | |
| Interest received | 1,394 | 2,826 | 912 | |
| Interest paid | -3,556 | -1,738 | -3,442 | |
| Income taxes | -18,886 | -4,200 | -10,718 | |
| Cash flow from operating activities | 156,190 | 202,245 | 145,037 | |
| Cash flow from investing activities | ||||
| Expenditure on product development | 3 | -62,072 | -56,296 | -46,454 |
| Purchases of tangible and intangible fixed assets | 10 | -22,869 | -24,853 | -20,302 |
| Proceeds on disposals of tangible and intangible fixed assets | 260 | 1,264 | 3,245 | |
| Acquisition of Group companies, net of acquired cash | 1.2, 24 | -51,686 | -27,994 | -9,316 |
| Disposal of Group companies, net of disposed cash | 1.2, 24 | - | - | -1,460 |
| Other investing activities | 8 | -3,060 | -33,358 | -8,000 |
| Interest in joint-ventures | 8 | - | -1,253 | -974 |
| Cash flow from investing activities | -139,428 | -142,491 | -83,261 | |
| (including acquisitions and divestments) |
| IN THOUSANDS OF EURO | NOTE | 2013 | 2012 | 2011 |
|---|---|---|---|---|
| Cash flow from financing activities | ||||
| Dividends paid | -16,856 | -13,153 | -12,670 | |
| Share issue | 7,713 | 1,144 | 3,593 | |
| Acquisition of own shares | 1,390 | - | - | |
| Proceeds from (+) payments (-) of long-term liabilities | 17,860 | -3,603 | -1,255 | |
| Proceeds from (+) payments (-) of short-term liabilities | 12,646 | -666 | -18,399 | |
| Cash flow from financing activities | 22,753 | -16,278 | -28,730 | |
| Net increase/(decrease) in cash and cash equivalents | 39,515 | 43,476 | 33,046 | |
| Cash and cash equivalents at beginning of period | 122,139 | 79,164 | 46,042 | |
| Cash and cash equivalents (CTA) | (a) | -5,109 | -502 | |
| Change in consolidation method | 77 | |||
| Cash and cash equivalents at end of period | 156,545 | 122,139 | 79,164 |
The accompanying notes are an integral part of this income statement.
(a) From 2012 onwards, Barco is working with a new consolidation package, which makes it possible to exclude the FX impact out of the cash flow movements. The net FX impact on the cash flow movement is therefore shown on a separate line 'CTA on cash and cash equivalents' from 2012 onwards.
| IN THOUSANDS OF EURO | Share capital and premium |
Retained earnings |
Share based payments |
Cumulative translation adjustment |
Cash flow hedge reserve |
Own shares |
Equity attributable to equityholders of the parent |
Non Controlling Interest |
Equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance on 1 January 2011 | 185,319 | 282,166 | 3,478 | -28,757 | -975 | -45,641 | 395,590 | 1 | 395,591 |
| Net income | - | 75,850 | - | - | - | - | 75,850 | - | 75,850 |
| Dividend | - | -12,670 | - | - | - | - | -12,670 | - | -12,670 |
| Capital increase | 3,593 | - | - | - | - | - | 3,593 | - | 3,593 |
| Other comprehensive income -loss for the period, net of tax |
- | - | - | -1,787 | -549 | - | -2,336 | -1 | -2,337 |
| Share-based payment | - | - | 676 | - | - | - | 676 | - | 676 |
| Balance on 31 December 2011 | 188,912 | 345,347 | 4,154 | -30,544 | -1,524 | -45,641 | 460,703 | - | 460,703 |
| Balance on 1 January 2012 | 188,912 | 345,347 | 4,154 | -30,544 | -1,524 | -45,641 | 460,703 | - | 460,703 |
| Net income | - | 94,241 | - | - | - | - | 94,241 | - | 94,241 |
| Dividend | - | -12,480 | - | - | - | - | -12,480 | - | -12,480 |
| Capital increase | 1,144 | - | - | - | - | - | 1,144 | - | 1,144 |
| Other comprehensive income (loss) for the period, net of tax |
- | - | - | -6,683 | 343 | - | -6,340 | - | -6,340 |
| Share-based payment | - | - | 782 | - | - | - | 782 | - | 782 |
| Balance on 31 December 2012 | 190,056 | 427,107 | 4,936 | -37,227 | -1,181 | -45,641 | 538,050 | - | 538,050 |
| Balance on 1 January 2013 | 190,056 | 427,107 | 4,936 | -37,227 | -1,181 | -45,641 | 538,050 | - | 538,050 |
| Net income attributable to equity holders of the parent |
- | 57,119 | - | - | - | - | 57,119 | 2,284 | 59,403 |
| Dividend | - | -16,856 | - | - | - | - | -16,856 | - | -16,856 |
| Capital increase | 7,713 | - | - | - | - | - | 7,713 | - | 7,713 |
| Other comprehensive income (loss) for the period, net of tax |
- | - | - | -14,334 | 524 | - | -13,810 | -77 | -13,887 |
| Exercise of options | - | - | - | - | - | 1,390 | 1,390 | 1,390 | |
| Share-based payment | - | - | 1,337 | - | - | - | 1,337 | - | 1,337 |
| Change in consolidation method | 2,216 | 2,216 | |||||||
| Balance on 31 December 2013 | 197,769 | 467,370 | 6,273 | -51,561 | -657 | -44,250 | 574,943 | 4,423 | 579,367 |
The accompanying notes are an integral part of this income statement.
The consolidated financial statements of the Barco group have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted for use in the EU. All standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) effective year-end 2013 and adopted by the European Union are applied by Barco.
The consolidated financial statements are presented in thousands of euro and are prepared under the historical cost convention, except for the measurement at fair value of investments and derivative financial instruments. The financial statements were authorized for issue by the Board of Directors on 4 February 2014. The chairman has the power to amend the financial statements until the shareholders' meeting of 24 April 2014.
The consolidated financial statements comprise the financial statements of the parent company, Barco nv, and its controlled subsidiaries, after the elimination of all intercompany transactions.
Subsidiaries are consolidated from the date the parent obtains control until the date control ceases. Acquisitions of subsidiaries are accounted for using the purchase method of accounting. Control exists when Barco has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are prepared according to the parent's company reporting schedule, using consistent accounting policies.
Non-controlling Interests represent the portion of profit or loss and net assets not held by the group and are presented separately in the income statement and within equity in the consolidated balance sheet, separately from shareholder's equity.
Investments in associated companies over which the company has significant influence (typically those that are 20-50% owned) are accounted for under the equity method of accounting and are carried in the balance sheet at the lower of the equity method amount and the recoverable amount, and the pro rata share of income (loss) of associated companies is included in income.
The company's interest in jointly controlled entities is recognized using the equity method, which involves recognizing a proportionate share of the joint ventures on the face of its income statement. The investment is presented as non-current asset on the face of the balance sheet.
Goodwill represents the excess of the cost of the acquisition over the fair value of identifiable net assets and contingent liabilities of a subsidiary or associated company at the date of acquisition.
Goodwill is carried at cost less any accumulated impairment losses.
Research and development costs are expensed as incurred, except for development costs, which relate to the design and testing of new or improved materials, products or technologies, which are capitalized to the extent that it is expected that such assets will generate future economic benefits and the recognition criteria of IFRS are met. Capitalized development costs are amortized on a systematic basis over their expected useful lives. General estimate of useful life is 2 years, unless a longer or shorter period can be justified. This period is not exceeding 4 years.
Intangible assets acquired separately are capitalized at cost.
Intangible assets acquired as part of a business combination are capitalized at fair value separately from goodwill if the fair value can be measured reliably on initial recognition and are amortized over their economic life time. Other intangible assets are amortized on a straightline basis not exceeding 7 years.
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Generally, depreciation is computed on a straight-line basis over the estimated useful life of the asset. The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.
Estimated useful life is:
| - buildings | 20 years |
|---|---|
| - installations | 10 years |
| - production machinery | 5 years |
| - measurement equipment | 4 years |
| - tools and models | 3 years |
| - furniture | 10 years |
| - office equipment | 5 years |
| - computer equipment | 3 years |
| - vehicles | 5 years |
| - demo material | 1 to 3 years |
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in profit or loss in the year the asset is derecognized.
Finance leases, which effectively transfer to the group substantially all risks and benefits incidental to ownership of the leased item, are capitalized as property, plant and equipment at the fair value of the leased property, or, if lower, at the present value of the minimum lease payments. The corresponding liabilities are recorded as long-term or current liabilities depending on the period in which they are due. Lease interest is charged to the income statement as a financial cost using the effective interest method. Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating leases, where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term, are classified as operating leases. Operating lease payments are expressed in the income statement on a straight line basis over the lease term.
Investments are treated as financial assets available for sale and are initially recognized at cost, being the fair value of the consideration given and including acquisition costs associated with the investment. For investments quoted in an active market, the quoted market price is the best measure of fair value. For investments not quoted in an active market, the carrying amount is the historical cost, if a reliable estimate of the fair value cannot be made. An impairment loss is recorded when the carrying amount exceeds the estimated recoverable amount.
Other non-current assets include long-term interest-bearing receivables and cash guarantees. Such long-term receivables are accounted for as loans and receivables originated by the company and are carried at amortized cost. An impairment loss is recorded when the carrying amount exceeds the estimated recoverable amount.
Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first in first out (FIFO) basis. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs of completing the sale. In addition to the cost of materials and direct labor, the relevant proportion of production overhead is included in the inventory values.
Revenue is recognized when it is probable that the economic benefits will flow to the group and the revenue can be reliably measured.
For product sales, revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, and collectability is probable.
For revenue out of projects, the percentage of completion method is used, provided that the outcome of the project can be assessed with reasonable certainty. These projects generally have a lifetime of less than one year. For sales of services, revenue is recognized by reference to the stage of completion.
Government grants related to development projects, for which costs are capitalized, are classified as deferred income and recognized as income in proportion to the depreciation of the underlying fixed assets. Government grants related to research projects and other forms of government assistance are recognized as income upon irreversible achievement and by reference to the relevant expenses incurred.
Trade debtors and other amounts receivable are shown on the balance sheet at nominal value (in general, the original amount invoiced) less an allowance for doubtful debts. Such an allowance is recorded in operating income when it is probable that the company will not be able to collect all amounts due. Allowances are calculated on an individual basis, and on a portfolio basis for groups of receivables that are not individually identified as impaired. The calculation of the allowances is based on an aging analysis of the trade debtors.
Cash and cash equivalents consist of cash on hand and balances with banks and short-term investments with an original maturity date or notice period of three months or less. It is the group's policy to hold investments to maturity. All investments are initially recognized at fair value, which is the cost at recognition date. Gains and losses are recognized in income when the investments are redeemed or impaired, as well as through the amortization process.
Provisions are recorded when the group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made to the amount of the obligation.
The group recognizes the estimated liability to repair or replace products still under warranty at the balance sheet date. The provision is calculated based on historical experience of the level of repairs and replacements.
A provision for restructuring is only recognized when the group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly before the balance sheet date.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit.
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the loan/borrowing. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any issue costs and any discount or premium on settlement.
Trade and other payables are stated at fair value, which is the cost at recognition date.
Employee benefits are recognized as an expense when the group consumes the economic benefit arising from service provided by an employee in exchange for employee benefits, and as a liability when an employee has provided service in exchange for employee benefits to be paid in the future. General pension plans are defined contribution plans. Obligations for these plans are recognized as an expense in the income statement as incurred. Pension obligations caused by legal requirements and some exceptional cases where the additional pension plan includes defined benefit obligations, are treated as post employment benefits of a defined benefit type.
Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date of transaction or at the end of the month before the date of the transaction. At the end of the accounting period the unsettled balances on foreign currency receivables and liabilities are valued at the rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses are recognized in the income statement in the period in which they arise.
In the consolidated accounts all items in the profit and loss accounts of foreign subsidiaries are translated into euro at the average exchange rates for the accounting period. The balance sheets of foreign group companies are translated into euro at the rates of exchange ruling at the year-end. The resulting exchange differences are classified in a separate component of 'other comprehensive income', until disposal of the investment.
Derivative financial instruments are recognized initially at cost, which is the fair value of the consideration given (in the case of an asset) or received (in the case of a liability) for it. Transaction costs are considered in the initial measurement of all financial assets and liabilities. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The fair values of derivative interest contracts are estimated by discounting expected future cash flows using current market interest rates and yield curve over the remaining term of the instrument. The fair value of forward exchange contracts is their market price at the balance sheet date.
Derivative financial instruments that are either hedging instruments that are not designated or do not qualify as hedges are carried at fair value with changes in value included in the income statement.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognized asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognized directly in 'other comprehensive income' with the ineffective part recognized directly in profit and loss.
Current taxes are based on the results of the group companies and are calculated according to local tax rules.
Deferred tax assets and liabilities are determined, using the liability method, for all temporary differences arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Tax rates used are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax credits and tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
Goodwill is reviewed for impairment at least annually. For other tangible and intangible assets, at each balance sheet date, an assessment is made as to whether any indication exists that assets may be impaired. If any such indication exists, an impairment test is carried out in order to determine if and to what extent a valuation allowance is necessary to reduce the asset to its value in use (the present value of estimated future cash flows) or, if higher, to its fair value less cost to sell. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs to sell while value in use is the present value of the future cash flows expected to be derived from an asset. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the assets belong. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the income statement. Reversal of impairment losses recognized in prior years is included as income when there is an indication that the impairment losses recognized for the asset are no longer needed or the need has decreased, except for impairment losses on goodwill, which are never reversed.
Barco created warrants for staff and non-executive directors as well as for individuals who play an important role for the company. According to the publication of IFRS2, the cost of share-based payment transactions is reflected in the income statement.
The warrants are valued at grant date, based on the share price at grant date, exercise price, expected volatility, dividend estimates, and interest rates. Warrant cost is taken into result on a straight-line basis from the grant date until the first exercise date.
The group calculates both basic and diluted earnings per share in accordance with IAS 33, Earnings per share. Under IAS 33, basic earnings per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of shares outstanding during the period plus the dilutive effect of warrants outstanding during the period. As diluted earnings per share can not be higher than basic earnings per share, diluted earnings per share are kept equal to basic earnings per share in case of negative net earnings.
A discontinued operation is a component of the group that either has been disposed of, or is classified as held for sale and represents a separate major line of business and is part of a single coordinated plan to dispose of a separate major line of business or is a subsidiary acquired exclusively with a view to resale.
The group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transac tion rather than through continuing use. Immediately before classification as held for sale, the group measures the carrying amount of the asset (or all the assets and liabilities in the disposal group) in accordance with applicable IFRSs. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amounts and fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
Several amendments apply for the first time in 2013. However they do not impact the annual consolidated financial statements of the Group. The nature and the impact of each of the following new standards, amendments and/or interpretations are described below:
The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g. net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on availablefor-sale financial assets) now have to be presented separately from items that will never be reclassified (e.g. actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affected presentation only and had no impact on the Group's financial position or performance.
IAS 19R includes a number of amendments to the accounting for defined benefit plans, including actuarial gains and losses that are now recognized in other comprehensive income (OCI) and permanently excluded from profit and loss; expected returns on plan assets that are no longer recognized in profit or loss, instead, there is a requirement to recognize interest on the net defined benefit liability (asset) in profit or loss, calculated using the discount rate used to measure the defined benefit obligation, and; unvested past service costs are now recognized in profit or loss at the earlier of when the amendment occurs or when the related restructuring or termination costs are recognized. Other amendments include new disclosures, such as, quantitative sensitivity disclosures.
In case of the Group, the transition to IAS 19R had no material impact on the net defined benefit plan obligations.
The amendment requires an entity to disclose information about rights to set-off financial instruments and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity's financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32. The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether the financial instruments are set off in accordance with IAS 32. As the Group is not setting off financial instruments in accordance with IAS 32 and does not have relevant offsetting arrangements, the amendment does not have an impact on the Group.
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when fair value is required to be used, but rather provides guidance on how to measure fair value under IFRS. IFRS 13 defined fair value as an exit price. Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Fair value hierarchy is provided in Note 20.
IFRIC 20 applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity. This interpretation did not have an impact on the Group's financial position and performance.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
In May 2012, the IASB issued the 2009-2011 cycle improvements to its standards and interpretations, primarily with a view to removing inconsistencies and clarifying wording. When the adoption of an improvement is deemed to have an impact on the financial statements or the performance of the Group, its impact is described below:
Standards and interpretations issued but not yet effective up to the date of issuance of the Group's financial statements are listed below. The listing of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards and interpretations when they become effective.
1 Not yet endorsed by the EU as per 31 December 2013
We refer to the chapter 'Risk factors' for an overview of the risks affecting businesses of the Barco Group
| Argentina | Barco Argentina S.R.L. | c/o Grant Thornton Argentina, Avenida Corrientes 327 piso 3, C1043AAD Buenos Aires | 100% |
|---|---|---|---|
| Belgium | Barco Coordination Center NV | President Kennedypark 35, 8500 Kortrijk | 100% |
| Belgium | Barco Integrated Solutions NV | President Kennedypark 35, 8500 Kortrijk | 100% |
| Belgium | Innovative Designs NV | President Kennedypark 35, 8500 Kortrijk | 100% |
| Belgium | Barco Silex SA | Scientific Parc, rue du Bosquet 7, 1348 Ottignies, Louvain-La-Neuve | 100% |
| Belgium | dZine NV | t Hoge 49, 8500 Kortrijk | 100% |
| Brazil | Barco Ltda. | Av. Ibirapuera, 2332, 8° andar, conj 82, Torre II, Moema, 04028-002 São Paulo | 100% |
| Colombia | Barco Colombia SAS | Calle 90 N° 8-31, apt 60, 110221 Bogota | 100% |
| Denmark | Barco A/S | c/o PwC, att. RAS Strandvejen 44, 2900 Hellerup | 100% |
| France | Barco SAS | 177 Avenue Georges Clémenceau, Immeuble "Le Plein Ouest", 92000 Nanterre | 100% |
| France | Barco Silex SAS | ZI Rousset-Peynier, Immeuble CCE-CD6, Route de Trets, 13790 Peynier | 100% |
| France | Barco Texen | 7 rue Roger Camboulives, Parc Technologique de Basso Cambo, 31000 Toulouse | 100% |
| Germany | Barco Control Rooms GmbH | Greschbachstrasse 5 a, 76229 Karlsruhe | 100% |
| Germany | Barco Orthogon GmbH | Hastedter Osterdeich 222, 28207 Bremen | 100% |
| Germany | Barco GmbH | Greschbachstrasse 5 a, 76229 Karlsruhe | 100% |
| Israel | Barco Electronic Systems Ltd. | 53 Etzel Street, 75706 Rishon Lezion | 100% |
| Italy | Barco S.r.l. | Via Monferrato 7, 20094 Corsico-MI | 100% |
| Italy | FIMI S.r.l. | c/o Studio Ciavarella, via Vittor Pisani n. 6, 20124 Milano | 100% |
| Mexico | Barco Visual Solutions S.A. de C.V. | Mariano Escobedo No. 476 Piso 10 Col. Anzures, C.P. 11590 D.F. México | 100% |
| Netherlands | Barco B.V. | Schootense Dreef 22, 5708HZ Helmond | 100% |
| Norway | Barco Norway AS | c/o Grant Thornton, Bogstadveien 30, 0355 Oslo | 100% |
| Norway | Projection Holding AS | Habornveien 53, 1630 Gamle Fredrikstad | 100% |
| Norway | Projectiondesign AS | Habornveien 53, 1630 Gamle Fredrikstad | 100% |
| Poland | Barco Sp. z o.o. | Marywilska 16, 03-228 Warsaw | 100% |
| Russia | Barco Services OOO | ulitsa Kondratyuka, 3, 129515 Moscow | 100% |
| Spain | Barco Electronic Systems, S.A. | Travesera de las Corts 371, 08029 Barcelona | 100% |
| Sweden | Barco Sverige AB | Kyrkvägen 1, 192 72 Sollentuna | 100% |
| United Kingdom | Barco Ltd. | Venture House, Downshire Way, Arlington Square, RG12 1WA Bracknell | 100% |
| United Kingdom | JAOtech Ltd. | Unit 7 Perrywood Business Park, Honeycrock Lane, RH1 5DZ Redhill, Surrey | 100% |
| Canada | Barco Visual Solutions, Inc. | 2000 Mansfield Drive, Suite 1400, Montreal, H3A 3A2 Quebec | 100% |
|---|---|---|---|
| United States | Barco Federal Systems LLC | 1209 Orange Street, 19801 Wilmington-DE | 100% |
| United States | Barco, Inc. | 1209 Orange Street, 19801 Wilmington-DE | 100% |
| United States | Barco Lighting Systems, Inc. | 350 N. St. Paul St., 75201 Dallas-TX | 100% |
| Asia-Pacific | |||
| Australia | Barco Systems Pty. Ltd. | 2 Rocklea Drive, VIC 3207 Port Melbourne | 100 % |
| China | Barco Trading (Shanghai) Co., Ltd. | Rm501, 180 Hua Shen Road, Wai Gao Qiao Free Trade Zone, 200031 Shanghai | 100 % |
| China | Barco Visual (Beijing) Electronics Co., Ltd. | No. 16 Changsheng Road, Chang Ping Park, Zhong Guan Cun Science Park, | |
| Chang Ping District, 102200 Beijing | 100 % | ||
| China | Barco Visual (Beijing) Trading Co., Ltd. | No. 16 Changsheng Road, Chang Ping Park, Zhong Guan Cun Science Park, | |
| Chang Ping District, 102200 Beijing | 100 % | ||
| China | CFG Barco (Beijing) Electronics Co., Ltd. | No. 16 Changsheng Road, Chang Ping Park, Zhong Guan Cun Science Park, | |
| Chang Ping District, 102200 Beijing | 58 % | ||
| Hong Kong | Barco Ltd. | Suite 2808, 28/F., Central Plaza, 18 Harbour Road, Wanchai | 100 % |
| Hong Kong | Barco Visual Electronics Co., Ltd. | Suite 2808, 28/F., Central Plaza, 18 Harbour Road, Wanchai | 100 % |
| Hong Kong | Barco China (Holding) Ltd. | Suite 2808, 28/F., Central Plaza, 18 Harbour Road, Wanchai | 100 % |
| India | Barco Electronic Systems Pvt. Ltd. | c/o Perfect Accounting & Shared Services P.Ltd., E-20, 1st & 2nd Floor, | |
| Main Market, Hauz Khas, 110016 New Delhi | 100 % | ||
| Japan | Barco Co., Ltd. | Yamato International Bldg 8F, 5-1-1 Heiwajima, Ota-ku, 143-0006 Tokyo | 100 % |
| Korea | Barco Ltd. | 42 Youngdongdaero 106-Gil, Gangnam-Gu, 135-881 Seoul | 100 % |
| Malaysia | Barco Sdn. Bhd. | No. 13A, Jalan SS21/56B, Damansara Utama, 47400 Petaling Jaya, Selangor | 100 % |
| Singapore | Barco Pte Ltd. | No. 10 Changi South Lane, #04-01 Ossia Building, 486162 Singapore | 100 % |
| Taiwan | Barco Ltd. | 12F-2, 88, Dunhua N. Rd., 105 Taipei City | 100 % |
| Taiwan | JAOtech (Taiwan) Ltd. | 5F, No. 59, Lane 77, Xing-ai Road, Naihu District, 11494 Taipei | 100 % |
| Taiwan | Awind Inc. | 17th Floor, No. 866-5, Zhongzhen Road, Zhonghe District, 235 New Taipei City | 100 % |
| Europe, Middle-East and Africa | |||||
|---|---|---|---|---|---|
| Norway | Habornveien 53 AS | Haborneveien 53, 1630 Gamle Fredrikstad | 42% |
(a) This company is a joint venture and accounted for using the equity method.
Per 21 February 2013, Barco acquired the remaining shares of the Norway-based company projectiondesign, after acquiring 61% of the shares on 19 December 2012. The acquisition reflects Barco's strategy to strengthen its leading position in high-performance projection technology by advancing further into the mid-segment of its target markets.
The effective control was transferred on 1 January 2013. projectiondesign is integrated in Barco's Projection division.
The acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations (Revised). In 2013, projectiondesign has contributed 51.7 million euro to the total turnover of the Group, resulting 1.9 million euro EBITDA. This contribution in the first year was negatively impacted by IFRS restatements recorded in the opening balance sheet. The IFRS restatements related to fair value adjustments on inventory and the valuation of other intangible fixed assets: technology (amortized over 6 years), customer list (amortized over 6 years) and trade names (amortized over 1 year).
The following table summarizes the consideration paid for projectiondesign and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.
| 01/01/13 | |||
|---|---|---|---|
| IN THOUSANDS OF EURO | BEFORE ACQUISITION | FAIR VALUE RESTATEMENTS | AFTER ACQUISITION |
| Other intangible fixed assets | 157 | 18,384 | 18,541 |
| Leased buildings | 11,782 | - | 11,782 |
| Other non-current assets | 2,261 | - | 2,261 |
| Total non-current assets | 14,200 | 18,384 | 32,584 |
| Inventory | 16,184 | -2,322 | 13,863 |
| Trade receivables | 11,143 | - | 11,143 |
| Other current assets | 1,182 | - | 1,182 |
| Total current assets | 28,509 | -2,322 | 26,188 |
| Provisions | -203 | -4,245 | -4,448 |
| Leasing debt | -12,016 | - | -12,016 |
| Financial debt | -3,183 | - | -3,183 |
| Deferred tax liability | 1,701 | -3,436 | -1,735 |
| Total non-current liabilities | -13.701 | -7.681 | -21.382 |
| Other current liabilities | -7,511 | - | -7,511 |
| Total current liabilities | -7,511 | - | -7,511 |
| Cash | -716 | - | -716 |
| Total net assets acquired | 20,782 | 8,381 | 29,163 |
| Total acquisition cost | 64,762 | ||
| Goodwill | 35,599 |
Note: Fair value restatements also include restatements from local (Norwegian) Gaap to IFRS.
| IN THOUSANDS OF EURO | ||
|---|---|---|
| Cash flow on acquisition | ||
| Net cash acquired with the subsidiary | -716 | |
| Cash paid | -50,832 | |
| Net cash flow on acquisition | -51,547 |
The total acquisition cost includes the amount paid at closing of 17.8 million euro in 2013, the amount paid per 19 December 2012 of 33 million euro and a vendor loan of 13.9 million euro (101.5 million NOK) to be paid to the former shareholders, which is considered as a pre-existing right at the moment of the acquisition and repayable in 2014, 2015 and 2016. The contract provided for additional earn-out payments, depending on the adjusted EBITDA realized in 2013 (minimum 50 million NOK). Per end of 2013 the requirements for the earn-out payment are not met. The goodwill recognized at acquisition is related to the assembled workforce, the company's ability to develop state-of-the-art technologies and synergies resulting from the combination of projectiondesign with Barco. Barco is becoming a market leader in projection solutions for both large and mid-venue markets after this acquisition. The goodwill is not tax deductible.
Per 26 March 2013, Barco acquired 100% of the shares of the Taiwan-based company AWIND, a leading provider of wireless content sharing and WIFI-enabled presentations. This transaction advances Barco's strategy of leveraging its strengths in visualization to establish a leadership position in professional networking and collaboration. The effective control was transferred on 1 April 2013.
The acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations (Revised). In 2013, AWIND has contributed 6.9 million euro to the total turnover of the Group, resulting 1.1 million euro EBITDA. This contribution in the first year was negatively impacted by IFRS restatements recorded in the opening balance sheet. The IFRS restatements related to fair value adjustments on the valuation of other intangible fixed assets: technology (amortized over 6 years), customer list (amortized over 5 years) and trade names (amortized over 1 year).
The following table summarizes the consideration paid for AWIND and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.
Assets and Liabilities AWIND
| 01/04/13 | |||
|---|---|---|---|
| IN THOUSANDS OF EURO | BEFORE ACQUISITION | FAIR VALUE RESTATEMENTS | AFTER ACQUISITION |
| Other intangible fixed assets | 80 | 12,653 | 12,733 |
| Other tangible fixed assets | 125 | - | 125 |
| Total non-current assets | 205 | 12,653 | 12,858 |
| Inventory | 786 | - | 786 |
| Trade receivables | 919 | - | 919 |
| Other current assets | 276 | - | 276 |
| Total current assets | 1,980 | - | 1,980 |
| Deferred tax liability | - | -2,151 | -2,151 |
| Total non-current liabilities | - | -2,151 | -2,151 |
| Other current liabilities | -743 | - | -743 |
| Total current liabilities | -743 | - | -743 |
| Cash | 2,508 | - | 2,508 |
| Total net assets acquired | 3,949 | 10,502 | 14,451 |
| Upfront consideration | 51,621 | ||
| Deferred consideration | 4,615 | ||
| Total acquisition cost | 56,236 | ||
| Goodwill | 41,785 | ||
| IN THOUSANDS OF EURO | |||
| Cash flow on acquisition | |||
| Net cash acquired with the subsidiary | 2,508 | ||
| Cash paid | -51,621 | ||
| Net cash flow on acquisition | -49,113 | ||
The total acquisition cost includes the amount paid at closing of 52.1 million US dollar (40 million euro recalculated at FX rate acquisition date), 15 million US dollar (11.6 million euro recalculated at FX rate on the acquisition date) put in escrow for 24 months and 6 million US dollar deferred consideration (4.6 million euro recalculated at FX rate on the acquisition date), retained for 15 months.
The goodwill recognized at acquisition is related to the future cash flows Barco expects to realize based on the sale of products using the AWIND technology. The goodwill is not tax deductible.
The goodwill has been assigned to the Advanced Visualization division.
Effective as of 1 January 2013, the contract with Barco's joint venture partner China Film Group has been modified, resulting in Barco obtaining control over CFG Barco (Beijing) Electronics Co, Ltd. Barco' s ownership in the company of 58% remained unchanged and no additional consideration was paid for the change in control. As a result of obtaining control CFG Barco has been fully consolidated as from 1 January 2013 onwards. As a result of the full consolidation, a non-controlling interest of 42% is shown as from 1 January 2013. Until 31 December 2012, CFG Barco has been taken up at equity method.
The step acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations (Revised). Since CFG Barco has been established in 2011 and has taken over all manufacturing activities from Barco China with respect to the projectors for the Chinese market end 2012, the re-measurement of the acquisition date fair value of the equity interest in CFG Barco, held immediately before the acquisition date did not materially differ from the equity interest in the company before the business combination. Therefore no gain or loss needed to be recognized as a result of re-measuring to fair value the equity interest in CFG Barco.
The following table summarizes the amounts of the assets acquired and liabilities assumed of CFG recognized at the date of transfer of control.
| 01/01/13 | |||
|---|---|---|---|
| IN THOUSANDS OF EURO | BEFORE TRANSFER OF CONTROL | FAIR VALUE RESTATEMENTS | AFTER TRANSFER OF CONTROL |
| Deferred tax assets | 728 | - | 728 |
| Other non-current assets | 684 | - | 684 |
| Total non-current assets | 1,412 | - | 1,412 |
| Inventory | 9,959 | - | 9,959 |
| Trade receivables | 14,314 | - | 14,314 |
| Other current assets | 5,919 | - | 5,919 |
| Total current assets | 30,192 | - | 30,192 |
| Trade payables | -13,111 | - | -13,111 |
| Other current liabilities | -12,867 | - | -12,867 |
| Advances received on contracts in progress | -18,480 | - | -18,480 |
| Total current liabilities | -44,457 | - | -44,457 |
| Cash | 18,138 | - | 18,138 |
| Total net assets acquired | 5,285 | - | 5,285 |
In 2013, CFG Barco has contributed 48 million euro to the total turnover of the Group, resulting 8.1 million euro EBITDA.
| IN THOUSANDS OF EURO | ||
|---|---|---|
| Cash flow on the date of transfer of control | ||
| Net cash acquired with the subsidiary | 18,138 | |
| Cash paid | - | |
| Net cash flow on the date of transfer of control | 18,138 |
Per 19 December 2012, Barco acquired 61% of the shares of projectiondesign, a Norway-based leader in projection technology, from the private equity fund Herkules Capital. The transaction advances Barco's strategy to expand into the mid-segment of its target markets and to strengthen its number one position in high-performance projection technology. The amount paid at closing is 244m NOK (33.4 million euro). The effective control is only transferred on 1 January 2013.
Per 3 February 2012, Barco acquired 100% of the shares of the UK-based company JAOTech Ltd, a leading manufacturer of patient entertainment and point-of-care terminals for hospitals. The acquisition fits within Barco's long-term vision of increasing healthcare efficiency and its growth strategy of expanding into multiple healthcare segments.
The acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations (Revised). The following table summarizes the consideration paid for JAOTech Ltd and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.
| 01/01/12 | |||
|---|---|---|---|
| IN THOUSANDS OF EURO | OPENING B/S | FAIR VALUE RESTATEMENTS | IFRS OPENING B/S |
| Total non-current assets | 837 | -686 | 151 |
| Inventory | 2,732 | -720 | 2,011 |
| Trade receivables | 5,507 | -16 | 5,491 |
| Other current assets | 453 | -16 | 437 |
| Total current assets | 8,691 | -753 | 7,939 |
| Total non-current liabilities | -308 | -537 | -845 |
| Trade payables | -4,784 | - | -4,784 |
| Other current liabilities | -4,452 | -160 | -4,612 |
| Total current liabilities | -9,236 | -160 | -9,396 |
| Cash | 562 | 562 | |
| Total net assets | 546 | -2,135 | -1,589 |
| Total acquisition cost (excl net cash) | 13,628 | ||
| Goodwill | 15,217 | ||
| IN THOUSANDS OF EURO | ||
|---|---|---|
| Cash flow on acquisition | ||
| Net cash acquired with the subsidiary | 562 | |
| Cash paid | -9,628 | |
| Net cash flow on acquisition | -9,065 |
The total acquisition cost includes the amount paid at closing of 9.6 million euro and a deferred consideration of 1 million euro, payable early 2014. The contract further provides for additional earn-out payments. The earn-out payments depend on the cumulative gross margin generated for the financial years ended 31 December 2012 to 31 December 2014. There are no minimum or maximum earn-out payments stipulated in the contract. Total earn-out payments of 3 million euro were at moment of acquisition assumed to be probable and are therefore added to the acquisition cost. There have been no earn-out payments made per 31 December 2012 and 31 December 2013. The requirements for the earn-out cannot be met anymore and therefore the 3 million euro assumed earn-out payable has been taken in other operating income in 2013. See note 3.d. The goodwill recognized at acquisition is related to the 'surprix' Barco was willing to pay because of the commercial and operational synergies expected to be achieved from integrating JAOtech into the Healthcare division and is not tax deductable.
In 2012, JAOTech contributed 9.7 million euro to the total turnover of the group and contributed negative 2.1 million euro to the total profit before taxes of the group.
Per 31 January 2012, Barco acquired the networked visualization activities of IP Video Systems (IPVS), a California-based innovator in networked visualization solutions. The acquisition fits within Barco's overall strategy to invest in high-performance networked visualization technology, and will strengthen the company's product portfolio in a large number of markets.
Barco mainly acquired the products, know-how and warranty obligations of the IP Video Systems business, all through an asset deal. The asset deal needs to be seen as a business combination since Barco acquired all of the company's personnel on top of the agreed purchased assets. Therefore the acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations Revised.
The following table summarizes the consideration paid for IP Video Systems and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.
The total acquisition cost includes the amount paid at closing of 20 million USD (15.2 million euro recalculated at FX rate at acquisition date). The goodwill recognized at acquisition is related to the technology developed by IPVS and the future cash flows Barco will be able to realize based on the sale of products using the IPVS technology. The acquisition fits in Barco's corporate strategy to invest in high-performance networked visualization technologies. The total goodwill amount is tax deductible in Barco Inc over a period of 15 years.
| IN THOUSANDS OF EURO | BEFORE ACQUISITION DATE | FAIR VALUE RESTATEMENTS | AFTER ACQUISITION DATE |
|---|---|---|---|
| Know-how | - | 4,673 | 4,673 |
| Tangible fixed assets | 7 | -3 | 4 |
| Deferred tax assets | - | 695 | 695 |
| Total non-current assets | 7 | 5,365 | 5,372 |
| Inventory | 285 | - | 285 |
| Total current assets | 285 | - | 285 |
| Warranty provision | - | -35 | -35 |
| Total non-current liabilities | - | -35 | -35 |
| Retention bonus accrual | - | -1,748 | -1,748 |
| Total current liabilities | - | -1,748 | -1,748 |
| Total net assets | 292 | 3,582 | 3,874 |
| Acquisition price | 15,179 | ||
| Goodwill | 11,305 |
Per 31 March 2011, Barco acquired the CineStore activities of cinema solutions provider XDC, based in Liège, Belgium. The acquisition is an extension of the Digital Cinema product offering of the Group and fits within Barco's broader strategy to move up in the value chain from digital projection supplier to provider of total cinema visualization solutions.
Barco mainly acquired the products, know-how and warranty obligations of the XDC CineStore business through an asset deal. The total acquisition cost amounts to 6.4 million euro and equals the fair value of the acquired net assets, which are as follows:
The total acquisition cost paid at closing of the deal amounts to 6.4 million euro. The contract further provided for two additional earn-out payments. The first additional earn-out payment is determined based on the number of servers, originally developed by XDC, sold to the XDC group over the coming 4 years. The second earn-out payment is a percentage on the sales realized by Barco on all products sold to third parties within the framework of the CineStore activities over the coming 4 years. There are no minimum or maximum earn-out payments foreseen in the contract.
The goodwill and the know-how recognized at acquisition are related to specific server technology developed by XDC. The total goodwill of 1 million euro is allocated to the Projection division.
In 2011 the CineStore activities contributed 1.7 million euro to the total turnover of the group.
| IN THOUSANDS OF EURO | BEFORE ACQUISITION DATE | 01/04/11 |
|---|---|---|
| Know-how | - | 4,702 |
| Other tangible and intangible assets | 763 | 600 |
| Total non-current assets | 763 | 5,302 |
| Inventory | 2,714 | 2,714 |
| Other current assets | - | 145 |
| Total current assets | 2,714 | 2,859 |
| Warranty provision | -1,964 | -2,547 |
| Total non-current liabilities | -1,964 | -2,547 |
| Total current liabilities | -225 | -225 |
| Net assets | 1,288 | 5,389 |
| Acquisition cost | 6,419 | |
| Goodwill | 1,030 |
Effective 1 January 2013, Barco changed the composition of three divisions as follows:
Management (Core Leadership Team is considered to be the Chief Operating Decision Maker) monitors the results of each of the core divisions and the ventures as 5 divisions separately so as to make decisions about resource allocation and performance assessment. Division performance is evaluated based on EBITDA. Group financing (including finance costs and finance revenue) and income taxes are managed on a group basis and are not allocated to the operating divisions.
As a consequence, the group aligned its segment reporting with this business structure, resulting in 5 operating segments. The 2012 financials have been restated for comparison reasons.
Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.
We refer to p62 for more explanation on the activities performed by each division.
| IN THOUSANDS OF EURO | 2013 | 2012 | VARIANCE | ||
|---|---|---|---|---|---|
| 2013-2012 | |||||
| Net sales | 522,492 | 100.0% | 479,711 | 100.0% | 42,778 |
| external sales | 522,344 | 100.0% | 479,562 | 100.0% | 42,782 |
| interdivision sales | 150 | 0.0% | 149 | 0.0% | - |
| Cost of goods sold | -354,855 | -67.9% | -334,745 | -69.8% | -20,113 |
| Gross profit | 167,637 | 32.1% | 144,968 | 30.2% | 22,666 |
| EBIT before restructuring and goodwill impairment | 62,095 | 11.9% | 74,175 | 15.5% | -12,080 |
| Amortization capitalized development | 10,940 | 2.1% | 8,382 | 1.7% | 2,557 |
| Depreciation TFA and software | 10,415 | 2.0% | 4,720 | 1.0% | 5,695 |
| EBITDA | 83,450 | 16.0% | 87,278 | 18.2% | -3,828 |
| Capitalized development | 19,196 | 3.7% | 15,453 | 3.2% | 3,743 |
| Capital expenditures TFA and software | 7,037 | 1.3% | 6,526 | 1.4% | 510 |
| Segment assets | 255,459 | 179,855 | |||
| Segment liabilities | 195,790 | 139,241 |
| IN THOUSANDS OF EURO | 2013 | 2012 | VARIANCE | ||
|---|---|---|---|---|---|
| 2013-2012 | |||||
| Net sales | 195,708 | 100.0% | 206,455 | 100.0% | -10,748 |
| external sales | 195,697 | 100.0% | 206,371 | 100.0% | -10,674 |
| interdivision sales | 11 | 0.0% | 84 | 0.0% | -73 |
| Cost of goods sold | -127,849 | -65.3% | -136,243 | -66.0% | 8,393 |
| Gross profit | 67,858 | 34.7% | 70,213 | 34.0% | -2,354 |
| EBIT before restructuring and goodwill impairment | 9,428 | 4.8% | 11,045 | 5.3% | -1,617 |
| Amortization capitalized development | 12,750 | 6.5% | 8,817 | 4.3% | 3,933 |
| Depreciation TFA and software | 4,171 | 2.1% | 3,947 | 1.9% | 224 |
| EBITDA | 26,348 | 13.5% | 23,809 | 11.5% | 2,539 |
| Capitalized development | 15,300 | 7.8% | 13,992 | 6.8% | 1,307 |
| Capital expenditures TFA and software | 4,116 | 2.1% | 4,836 | 2.3% | -720 |
| Segment assets | 127,825 | 126,473 | |||
| Segment liabilities | 44,435 | 50,980 |
| IN THOUSANDS OF EURO | 2013 | 2012 | VARIANCE | ||
|---|---|---|---|---|---|
| 2013-2012 | |||||
| Net sales | 192,540 | 100.0% | 205,162 | 100.0% | -12,622 |
| external sales | 190,567 | 99.0% | 204,828 | 99.8% | -14,261 |
| interdivision sales | 1,973 | 1.0% | 334 | 0.2% | 1,639 |
| Cost of goods sold | -120,649 | -62.7% | -124,649 | -60.8% | 4,000 |
| Gross profit | 71,890 | 37.3% | 80,513 | 39.2% | -8,622 |
| EBIT before restructuring and goodwill impairment | -2,888 | -1.5% | 11,115 | 5.4% | -14,003 |
| Amortization capitalized development | 10,077 | 5.2% | 9,016 | 4.4% | 1,061 |
| Depreciation TFA and software | 6,148 | 3.2% | 3,722 | 1.8% | 2,427 |
| EBITDA | 13,338 | 6.9% | 23,852 | 11.6% | -10,515 |
| Capitalized development | 13,145 | 6.8% | 11,480 | 5.6% | 1,665 |
| Capital expenditures TFA and software | 6,928 | 3.6% | 8,537 | 4.2% | -1,609 |
| Segment assets | 182,649 | 137,689 | |||
| Segment liabilities | 58,346 | 59,999 |
| IN THOUSANDS OF EURO | 2013 | 2012 | VARIANCE | |||
|---|---|---|---|---|---|---|
| Net sales | 149,716 | 100.0% | 167,277 | 100.0% | -17,562 | |
| external sales | 149,516 | 99.9% | 166,959 | 99.8% | -17,444 | |
| interdivision sales | 200 | 0.1% | 318 | 0.2% | -118 | |
| Cost of goods sold | -100,012 | -66.8% | -114,802 | -68.6% | 14,790 | |
| Gross profit | 49,704 | 33.2% | 52,475 | 31.4% | -2,772 | |
| EBIT before restructuring and goodwill impairment | 8,430 | 5.6% | 5,098 | 3.0% | 3,332 | |
| Amortization capitalized development | 9,071 | 6.1% | 9,279 | 5.5% | -208 | |
| Depreciation TFA and software | 2,692 | 1.8% | 3,182 | 1.9% | -491 | |
| EBITDA | 20,193 | 13.5% | 17,560 | 10.5% | 2,633 | |
| Capitalized development | 7,299 | 4.9% | 9,449 | 5.6% | -2,150 | |
| Capital expenditures TFA and software | 4,113 | 2.7% | 4,192 | 2.5% | -79 | |
| Segment assets | 129,336 | 135,656 | ||||
| Segment liabilities | 38,353 | 35,765 |
| IN THOUSANDS OF EURO | 2013 | 2012 | VARIANCE | ||
|---|---|---|---|---|---|
| Net sales | 101,033 | 100.0% | 98,269 | 100.0% | 2,764 |
| external sales | 99,891 | 98.9% | 98,263 | 100.0% | 1,628 |
| interdivision sales | 1,142 | 1.1% | 6 | 0.0% | 1,136 |
| Cost of goods sold | -70,835 | -70.1% | -70,874 | -72.1% | 39 |
| Gross profit | 30,198 | 29.9% | 27,395 | 27.9% | 2,803 |
| EBIT before restructuring and goodwill impairment | 1,959 | 1.9% | -1,195 | -1.2% | 3,154 |
| Amortization capitalized development | 7,166 | 7.1% | 7,617 | 7.8% | -452 |
| Depreciation TFA and software | 781 | 0.8% | 555 | 0.6% | 226 |
| EBITDA | 9,905 | 9.8% | 6,977 | 7.1% | 2,928 |
| Capitalized development | 7,132 | 7.1% | 5,919 | 6.0% | 1,213 |
| Capital expenditures TFA and software | 675 | 0.7% | 762 | 0.8% | -87 |
| Segment assets | 52,585 | 63,736 | |||
| Segment liabilities | 16,021 | 22,906 |
| IN THOUSANDS OF EURO | 2013 | 2012 |
|---|---|---|
| External sales | ||
| Projection | 522,344 | 479,562 |
| Healthcare | 195,697 | 206,371 |
| Advanced Visualization | 190,567 | 204,828 |
| Defense and Aerospace | 149,516 | 166,959 |
| Ventures | 99,891 | 98,263 |
| Total external sales segments | 1,158,015 | 1,155,984 |
| Net Income | ||
| EBITDA before restructuring | ||
| Projection | 83,450 | 87,278 |
| Healthcare | 26,348 | 23,809 |
| Advanced Visualization | 13,338 | 23,852 |
| Defense and Aerospace | 20,193 | 17,560 |
| Ventures | 9,905 | 6,977 |
| IN THOUSANDS OF EURO | 2013 | 2012 |
|---|---|---|
| Amortization | ||
| Projection | 10,940 | 8,382 |
| Healthcare | 12,750 | 8,817 |
| Advanced Visualization | 10,077 | 9,016 |
| Defense and Aerospace | 9,071 | 9,279 |
| Ventures | 7,166 | 7,617 |
| Depreciation | ||
| Projection | 10,415 | 4,720 |
| Healthcare | 4,171 | 3,947 |
| Advanced Visualization | 6,148 | 3,722 |
| Defense and Aerospace | 2,692 | 3,182 |
| Ventures | 781 | 555 |
| EBIT before restructuring and goodwill impairment | ||
| Projection | 62,095 | 74,175 |
| Healthcare | 9,428 | 11,045 |
| Advanced Visualization | -2,888 | 11,115 |
| Defense and Aerospace | 8,430 | 5,098 |
| Ventures | 1,959 | -1,195 |
| Restructuring and goodwill impairment costs | -9,428 | -2,671 |
| Total EBIT after restructuring and goodwill impairment | 69,596 | 97,567 |
| Interest income (expense) - net | -2,161 | 1,089 |
| Income taxes | -8,092 | -4,962 |
| Result after taxes | 59,342 | 93,694 |
| Share in the result of joint ventures and associates | 61 | 547 |
| Net income | 59,403 | 94,241 |
| Net income attributable to non-controlling interest | 2,284 | - |
| Net Income attributable to equityholders of the parent | 57,119 | 94,241 |
| IN THOUSANDS OF EURO | 2013 | 2012 |
|---|---|---|
| Assets | ||
| Segment assets | ||
| Projection | 255,459 | 179,855 |
| Healthcare | 127,825 | 126,473 |
| Advanced Visualization | 182,649 | 137,689 |
| Defense and Aerospace | 129,336 | 135,656 |
| Ventures | 52,585 | 63,736 |
| Total segment assets | 747,853 | 643,409 |
| Investments | 11,824 | 44,445 |
| Deferred tax assets | 62,333 | 61,948 |
| Cash and cash equivalents | 156,545 | 122,139 |
| Other non-allocated assets | 69,267 | 50,022 |
| Total assets | 1,047,822 | 921,879 |
| Liabilities | ||
| Segment liabilities | ||
| Projection | 195,790 | 139,241 |
| Healthcare | 44,435 | 50,980 |
| Advanced Visualization | 58,346 | 64,975 |
| Defense and Aerospace | 38,353 | 27,974 |
| Ventures | 16,021 | 25,721 |
| Total segment liabilities | 352,946 | 308,890 |
| Equity attributable to equityholders of the parent | 574,943 | 538,050 |
| Non-controlling interest | 4,423 | - |
| Long-term debts | 40,410 | 12,695 |
| Deferred tax liabilities | 11,721 | 3,089 |
| Current portion of long-term debts | 3,582 | 4,105 |
| Short-term debts | 11,657 | 1,302 |
| Other non-allocated liabilities | 48,141 | 53,748 |
| Total equity and liabilities | 1,047,822 | 921,879 |
Management directs sales of the Group based on the regions to which the goods are shipped or the services are rendered and has three reportable regions Europe, Middle East, Africa and Latin America (EMEALA), North America (NA) and Asia-Pacific (APAC).
We refer to the 'Comments on the results' on p134 for a split of revenue from external customers based on the geographical location of the customers to whom the invoice is issued. There is no significant (i.e. representing more than 10% of the Group's revenue) concentration of Barco's revenues with one customer.
Sales to Belgium represent 38.4 million euro of the Group revenues in 2013 versus 43.7 million 2012.
Barco has no customers which represent more than 10% of total turnover of the group.
Below table gives an overview of the assets per region and the most important capital expenditures in non-current assets per region:
| IN THOUSANDS OF EURO | 2013 | 2012 | |||
|---|---|---|---|---|---|
| Net sales | |||||
| Europe - Middle East - Africa - Latin Americ | 499,899 | 43.2% | 504,068 | 43.6% | |
| North America | 361,076 | 31.2% | 391,035 | 33.8% | |
| Asia-Pacific | 297,040 | 25.7% | 260,881 | 22.6% | |
| Total | 1,158,015 | 100.0% | 1,155,984 | 100.0% | |
| Total assets | |||||
| Europe - Middle East - Africa - Latin America | 606,435 | 57.9% | 621,730 | 67.4% | |
| North America | 169,037 | 16.1% | 155,895 | 16.9% | |
| Asia-Pacific | 267,792 | 25.6% | 126,457 | 13.7% | |
| Group | 4,558 | 0.4% | 17,796 | 1.9% | |
| Total | 1,047,822 | 100.0% | 921,879 | 100.0% | |
| Capitalized development | |||||
| Europe - Middle East - Africa - Latin America | 54,863 | 88.4% | 48,272 | 85.7% | |
| North America | 6,293 | 10.1% | 6,786 | 12.1% | |
| Asia-Pacific | 916 | 1.5% | 1,237 | 2.2% | |
| Group | - | 0.0% | - | 0.0% | |
| Total | 62,072 | 100% | 56,296 | 100% | |
| Purchases of tangible and intangible fixed assets | |||||
| Europe - Middle East - Africa - Latin America | 17,716 | 71.3% | 17,716 | 71.3% | |
| North America | 2,221 | 8.9% | 2,221 | 8.9% | |
| Asia-Pacific | 4,916 | 19.8% | 4,916 | 19.8% | |
| Total | 22,869 | 100% | 24,851 | 100% |
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Net Sales | 1,158,015 | 1,155,984 | 1,041,244 |
| Cost of goods sold | -771,519 | -780,351 | -728,313 |
| Gross profit | 386,496 | 375,633 | 312,932 |
| Gross profit as % of sales | 33.4% | 32.5% | 30.1% |
| Indirect costs | -311,835 | -278,435 | -247,364 |
| Other operating income (expenses) - net | 4,362 | 3,040 | 12,792 |
| EBIT before restructuring and goodwill impairment | 79,024 | 100,238 | 78,359 |
| EBIT before restructuring and goodwill impairment as % of sales | 6.8% | 8.7% | 7.5% |
The steady increase in EBIT over the last years has come to an end in 2013, the result from higher indirect costs, as sales remained stable (+ 0.2%) and gross profit margins were higher than previous years.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |||
|---|---|---|---|---|---|---|
| Product sales | 808,570 | 70% | 748,385 | 65% | 659,667 | 63% |
| Project sales | 257,737 | 22% | 322,318 | 28% | 308,591 | 30% |
| Service sales | 91,708 | 8% | 85,282 | 7% | 72,982 | 7% |
| Sales | 1,158,015 | 1,155,984 | 1,041,240 |
Major part of the sales relate to product sales (in 2013: 70%, in 2012: 65%, 2011: 63%). Project sales include combined sales from products, installations, and services. Most of these project sales have a lifetime of less than one year.
We refer to note 2.Segment Information and to the chapter 'Comments on the results' for more explanation on sales and income from operations.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Research and development epxenses (a) | -95,476 | -84,124 | -74,650 |
| Sales and marketing expenses (b) | -160,670 | -142,157 | -122,493 |
| General and administration expenses ( c ) | -55,689 | -52,155 | -50,221 |
| Indirect costs | -311,835 | -278,435 | -247,364 |
| Other operating income (expenses) - net (d) | 4,362 | 3,040 | 12,792 |
| Indirect costs and other operating income (expenses) - net | -307,472 | -275,395 | -234,572 |
| Amortization intangibles on acquisitions included in indirect costs | -9,318 | -3,507 | -2,175 |
| Indirect costs excluding amortizations on intangibles acquisitions | -302,516 | -274,928 | -245,189 |
Indirect costs represent 27% of sales in 2013 versus 24% of sales in 2012 and 23% of sales in 2011. The higher indirect costs in 2013 are affected by the new acquisitions done in 2013, which had on the one hand a higher indirect cost structure than Barco and on the other hand have led to higher amortizations on intangibles (result of fair value adjustments), included in the indirect costs. Excluding the amortizations on intangibles, indirect costs represent 26% of sales in 2013 versus 24% in 2012 and 2011.
Right sizing actions in the new acquired entities were undertaken. Barco has also announced a formal restructuring plan in order to lower indirect costs again to alevel in line with corporate objectives.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Research & development expenses | 107,545 | 97,308 | 83,327 |
| Capitalized development expenses | -62,072 | -56,296 | -46,454 |
| Amortization capitalized development expenses | 49,145 | 42,138 | 36,448 |
| Impairment of capitalized development expenses | 858 | 973 | 1,328 |
| Capitalized development, net | -12,069 | -13,184 | -8,677 |
| Research and development expenses, net | 95,476 | 84,124 | 74,650 |
In order to sustain our technological leadership, Barco strongly invests in R&D, new technologies, and innovation. We refer to 'Our strategy' for more details.
Research and development cash expenses represent 9.3% of sales in 2013 compared to 8.4% of sales in 2012 and 8.0% in 2011. In 2013, the higher development expenses have led to higher capitalization (58% of total research and development expenses in 2013, 58% in 2012, 56% in 2011) compared to amortization expenses, which had a positive impact on the income from operations (EBIT) of 12 million euro (compared to a positive impact of the 13.2 million euro in 2012 and 8.7 million euro in 2011).
The increase in the research and development cash expenses are impacted by the acquisitions performed in 2013, which have led to higher amortizations on intangibles (result from the fair value adjustments) for a total amount of 5.1 million euro. Excluding this impact research and development cash expenses represent 8.8% of sales in 2013. Note that the line 'Amortization capitalized development expenses' only include the amortization charges on own development projects. The amortization on acquired technology is included in the line 'Research & Development expenses'.
Impairment costs on capitalized development expenses are presented on the line "Research and development expenses". For more explanation on impairment costs on capitalized development we refer to note 10.
Research and development activities are spread over the divisions as follows:
| IN THOUSANDS OF EURO | GROUP | ADVANCED VISUALIZATION | PROJECTION |
|---|---|---|---|
| Research & development expenses | 107,545 | 23,162 | 37,548 |
| Capitalized development expenses | -62,072 | -13,145 | -19,196 |
| Amortization capitalized development expenses | 49,145 | 10,077 | 10,842 |
| Impairment of capitalized development expenses | 858 | - | 98 |
| Capitalized development, net | -12,069 | -3,068 | -8,256 |
| Research & development expenses | 95,476 | 20,094 | 29,292 |
| IN THOUSANDS OF EURO | HEALTHCARE | DEFENSE AND AEROSPACE | VENTURES |
|---|---|---|---|
| Research & development expenses | 24,551 | 13,091 | 9,194 |
| Capitalized development expenses | -15,300 | -7,299 | -7,132 |
| Amortization capitalized development expenses | 12,398 | 8,952 | 6,876 |
| Impairment of capitalized development expenses | 352 | 119 | 290 |
| Capitalized development, net | -2,550 | 1,773 | 33 |
| Research & development expenses | 22,001 | 14,863 | 9,227 |
| IN THOUSANDS OF EURO | 2013 | % OF SALES | 2012 | % OF SALES | 2011 | % OF SALES |
|---|---|---|---|---|---|---|
| Sales and marketing expenses | 160,670 | 13,9% | 142,157 | 12,3% | 122,493 | 11,8% |
Sales and marketing expenses include all indirect costs related to the sales and customer service organization which are not billed as part of a product or service to the customer as well as the costs related to regional or divisional marketing activities.
The higher sales and marketing expenses were partly caused by the new acquisitions done in 2013, which had on the one hand higher indirect sales and marketing expenses than Barco and on the other hand have led to higher amortizations on intangibles (caused by fair value adjustments) for an amount of 4.2 million euro, included in the sales and marketing expenses. Excluding the amortizations on intangibles sales and marketing expenses represent 13.5% of sales.
| IN THOUSANDS OF EURO | 2013 | % OF SALES | 2012 | % OF SALES | 2011 | % OF SALES |
|---|---|---|---|---|---|---|
| General and administration expenses | 55,689 | 4,8% | 52,155 | 4,5% | 50,221 | 4,8% |
General and administration expenses include the costs related to general and divisional management, finance and accounting, information technology, human resources and investor relations.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Exchange gains and losses (net) | 923 | -1,431 | 2,563 |
| Bank charges | -1,501 | -1,596 | -2,021 |
| Bad debt provisions (net of write-offs and reversals of write-offs) | -125 | -1,541 | 1,991 |
| Other provisions (net of additions and reversals of provisions) | -3,199 | 1,098 | 4,115 |
| Cost of share-based payments | -1,337 | -782 | -676 |
| Gains/(Loss) on disposal of tangible fixed assets | -10 | 24 | 278 |
| Rental income | 310 | 470 | 704 |
| Investment grants | 5,196 | 3,996 | 6,433 |
| Reversal earn-out (b) | 3,547 | - | - |
| CTA on liquidation Barco Manufacturing SRO (a) | - | 3,735 | - |
| Other (net) | 557 | -932 | -595 |
| Total | 4,362 | 3,040 | 12,792 |
(a) In 2012, the investment in Czech, Barco Manufacturing SRO has been liquidated, resulting in the realization of the foreign currency translation for an amount of 3.7million euro.
(b) Reversal of the accrual related to the earn-out of JAOTech. We refer to note 1.2. Acquisitions and divestments for more explanation.
The table below provides information on the major items contributing to the EBIT, categorized by nature.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Sales (note 3) | 1,158,015 | 1,155,984 | 1,041,244 |
| Material cost | -653,685 | -670,604 | -585,245 |
| Services and other costs | -122,145 | -117,359 | -137,461 |
| Personnel cost | -295,384 | -267,882 | -247,562 |
| Capitalized development cost (note 10) | 62,072 | 56,296 | 46,454 |
| Amortization and impairment of capitalized development | -50,004 | -43,112 | -37,776 |
| Depreciation property, plant, equipment and software | -24,207 | -16,126 | -14,088 |
| Other operating income (expense) - net (note 3) | 4,362 | 3,040 | 12,792 |
| EBIT before restructuring and impairment | 79,024 | 100,238 | 78,359 |
Personnel cost includes the cost for temporary personnel for an amount of 3.5 million euro (in 2012: 7.6 million euro, in 2011: 6.2 million euro). Average number of employees in 2013 was 3,979 (versus 3,665 in 2012 and 3,527 in 2011), including 2,946 white-collars (in 2012: 2,652; in 2011: 2,487) and 1,033 blue-collars (in 2012: 1,013; in 2011: 1,040)
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Lay off costs | 7,059 | - | - |
| Inventory write offs | 1,096 | - | - |
| Impairment on work in progress | 820 | - | - |
| Provision for other risks and claims | 454 | - | - |
| Restructuring costs | 9,428 | - | - |
| Impairment goodwill (a) | - | 2,671 | 10,000 |
| Impairment costs | - | 2,671 | 10,000 |
| Total restructuring and impairment | 9,428 | 2,671 | 10,000 |
(a) Please refer to note 9. Goodwill for explanation on impairment goodwill
Barco has announced a formal restructuring plan in order to rightsize certain activities, mainly in Defense and Aerospace and Advanced Visualization.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Current versus deferred income taxes | ||||
| Current income taxes | -3,802 | -12,103 | -6,647 | |
| Deferred income taxes | -4,290 | 7,142 | 17,054 | |
| Income taxes | -8,092 | -4,962 | 10,407 | |
| Income taxes versus income before taxes | ||||
| EBIT after restructuring and goodwill impairment | 69,596 | 97,567 | 68,359 | |
| Interest income (expense) - net | -2,161 | 1,089 | -2,530 | |
| Income before taxes | 67,434 | 98,656 | 65,829 | |
| Income taxes | -8,092 | -4,962 | 10,407 | |
| Effective income tax rate | % | -12,0% | -5,0% | 15,8% |
| Income before taxes | 67,434 | 98,656 | 65,829 | |
| Theoretical tax rate | 34% | 34% | 34% | |
| Theoretical tax credit/(cost) | -22,928 | -33,543 | -22,382 | |
| Non deductible expenses/non taxable income for tax purposes | ||||
| Impairment of goodwill | - | -908 | -3,399 | |
| CTA impact on liquidation Barco Manufacturing SRO | (d) | - | 1,270 | - |
| Other non-deductible expenses | -1,456 | -1,765 | -1,295 | |
| Income not taxed | ||||
| Government grants exempt from tax | 1,460 | 944 | 1,764 | |
| Mutual agreement procedure - transfer price adjustment | (f) | 6,293 | - | - |
| Patent income deduction (PID) | (c) | 2,208 | 6,627 | 9,689 |
| Notional interest deduction (NID) | (e) | 2,369 | 2,714 | 5,028 |
| Investment allowances | (a) | 213 | 872 | 741 |
| (Use)/Set-up of deferred tax assets, not recognised in prior years | -358 | 14,627 | 16,262 | |
| Deferred tax assets, derecognised in current year (b) | -4,909 | -938 | -117 | |
| Effect of different tax rates in foreign companies | 6,322 | 3,740 | 2,138 | |
| Tax adjustments related to prior periods | 2,695 | 1,399 | 1,978 | |
| Reported taxes related to current income before taxes | -8,092 | -4,962 | 10,407 |
(a) Spread taxation on capital expenditure and research and development costs of prior years
(b) See note 12
(c) The PID is applicable in Barco NV as of fiscal year 2010. The deduction in the consolidated figures is only included as from 2011 upon obtaining the formal approval from the tax authorities.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Net income | 59,403 | 94,241 | 75,850 | |
| Weighted average of shares | 12,213,492 | 12,018,573 | 11,995,483 | |
| Basic earnings per share (in euro) | 4.86 | 7.84 | 6.32 | |
| Basic earnings per share | 4.86 | 7.84 | 6.32 | |
| Net income | 59,403 | 94,241 | 75,850 | |
| Weighted average of shares (diluted) | 12,608,396 | 12,560,900 | 12,217,326 | |
| Diluted earnings per share (in euro) | (a) | 4.71 | 7.50 | 6.21 |
| Diluted earnings per share | (a) | 4.71 | 7.50 | 6.21 |
(a) The difference between the weighted average of shares and weighted average of shares (diluted) is due to exercisable warrants, which are in the money (which means that the closing rate of the Barco share was higher than the exercise price). For more detailed information concerning the shares and warrants, we refer to note 17.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Investments | (a) | 10,947 | 41,377 | 8,326 |
| Interest in joint ventures and associates | (b) | 877 | 3,068 | 973 |
| Total investments | 11,824 | 44,445 | 9,300 |
(a) In 2013 and 2011, investments include entities in which Barco owns less than 20% of the shares. In 2012, investments included, on top of entities in which Barco owns less than 20%, the acquisition of 61% of the shares of projectiondesign for an amount of 33.4 million euro, which took place 19 December 2012. The effective control was only transferred on 1 January 2013.
(b) In 2011, the Group had a 50% interest in Barco Toyo Medical Systems Japan Co, a jointly controlled entity which was part of the Healthcare division and a 58% interest in CFG Barco (Beijing) Electronics Co., LTD, a jointly controlled entity which was part of the Projection division. In 2012, Barco acquired the remaining 50% interest in Barco Toyo Medical Systems Japan Co. The acquisition cost was limited (about 50 thousand euros). After the acquisition, Barco Toyo has been merged with Barco Co, Ltd. The interest in joint ventures in 2012 therefore only includes the 58% interest in CFG Barco (Beijing) Electronics Co., LTD. Effective as of 1 January 2013, the contract with Barco's joint venture partner China Film Group has been modified, resulting in Barco obtaining control over CFG Barco (Beijing) Electronics Co, Ltd. Barco's ownership in the company of 58% remained unchanged and no additional consideration was paid for the change in control. As a result of obtaining control CFG Barco has been fully consolidated as from 1 January 2013 onwards.
In 2013, the Group has obtained a 42% interest in Habornveien 53, AS, through the acquisition of projectiondesign, which is part of the Projection division.
The Group's share of the assets and liabilities as at 31 December 2013, 2012 and 2011 and income and expenses of the jointly controlled entities and associates for the year ended 31 December 2013, 2012 and 2011, which are accounted for using the equity method:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Share of the joint ventures' and associates' balance sheet: | |||
| Current assets | 117 | 28,060 | 6,652 |
| Non-current assets | 4,384 | 820 | 113 |
| Current liabilities | 260 | 25,812 | 5,792 |
| Non-current liabilities | 3,364 | - | - |
| Equity | 877 | 3,068 | 973 |
| Share of the joint ventures' and associates' revenue and profit: | |||
| Sales | 388 | 40,305 | 3,632 |
| Gross profit | 255 | 3,254 | 389 |
| EBIT | 253 | 812 | -411 |
| Profit/(Loss) of the year | 61 | 547 | -386 |
The Group has no share of any contingent liabilities or capital commitments as at 31 December 2013, 2012 and 2011.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| At cost | |||
| On 1 January | 107,616 | 80,057 | 79,027 |
| Acquisitions | 77,384 | 27,567 | 1,030 |
| Translation (losses)/gains | -488 | -8 | - |
| On 31 December | 184,512 | 107,616 | 80,057 |
| Impairment | |||
| On 1 January | 38,807 | 36,136 | 26,136 |
| Impairment losses | - | 2,671 | 10,000 |
| On 31 December | 38,807 | 38,807 | 36,136 |
| Net book value | |||
| On 1 January | 68,809 | 43,922 | 52,892 |
| On 31 December | 145,705 | 68,809 | 43,921 |
Acquisitions in 2013 include goodwill related to the acquisition of projectiondesign for 35.6 million euro and AWIND for 41.8 million euro. In 2012, acquisitions include goodwill related to the acquisition of JAOTech for 15.2 million euro and IP Video Systems for 11.3 million euro. On top, additional earn-out payments on previous acquisitions of € 0.6 million euro are assumed to be probable and were added to the goodwill, and the acquisition of 50% of the remaining shares in Barco Toyo Medical Systems Japan Co resulted in 0.4 million euro additional goodwill. In 2011, acquisitions fully consist of the CineStore business combination. For more detailed information concerning these acquisitions, we refer to note 1.2.
In 2013, the impairment tests on goodwill did not result in any impairment.
In 2012, the impairment tests on goodwill resulted in impairment charges recorded for an amount of 2.7 million euro, fully related to dZine as a result of lower sales generated in the digital signage market compared to business plan targets at acquisition date.
The impairment tests on goodwill in 2011 resulted in impairment charges recorded for an amount of 10 million euro, fully related to Barco's Ventures, more specifically to High End Systems. There is no remaining goodwill on High End Systems after this impairment was booked.
The global recession, which started end of 2008, had a profound impact on the fundamentals of the Media, Entertainment & Simulation business group. Total spending in the events markets dropped to less than half of levels recorded before the crisis and the conversion of analog to digital billboards came to a virtual standstill (-80%). Consequently, the value of the acquisition Barco made in prior years to strengthen its position in these markets dropped very substantially which in turn fuelled the need for impairments on goodwill. In the years after 2009, the events market recovered but High End Systems was not able to achieve a sales growth minimum required to assure a break-even EBIT result.
See below for explanations on the impairment testing performed.
Goodwill acquired in a business combination is allocated on acquisition to the cash-generating units that are expected to benefit from that business combination. These cash-generating units correspond to the division level. Therefore, impairment testing is performed at division level. An exception is made for the Ventures, where the impairment testing is performed on a business unit level, which is one level below the division level.
The carrying amount of goodwill (after impairment) has been allocated to the cash generating units as follows (in thousands of euro):
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Cash generating units | |||
| Advanced Visualization | 50,793 | 8,255 | 6,145 |
| Projection | 43,564 | 7,964 | 7,304 |
| Healthcare | 37,704 | 37,889 | 17,843 |
| Defense and Aerospace | 12,042 | 10,427 | 5,684 |
| Ventures | 1,602 | 4,273 | 6,945 |
| Total goodwill (net book value) | 145,705 | 68,809 | 43,921 |
The goodwill (net book value) of Barco's Ventures relates to the remaining goodwill on Orthogon. In 2013, the goodwill on the acquisition of projectiondesign has been allocated to the division Projection, the acquisition of AWIND has been allocated to the Advanced Visualization division.
The group performed its annual impairment test in the fourth quarter of 2013 consistently with prior years.
The group looks at the relationship between its market capitalization and its book value, amongst other factors, when reviewing the indicators of impairment. At 31 December 2013, the market capitalization of the group exceeded the equity of the group with more than 28%. As such, this general test does not show an indication for impairment.
The annual impairment tests were performed for each cash-generating unit. The recoverable amount for each of the cash generating units has been determined based on a value-in-use calculation using cash flow projections generated by divisional management covering a five year period. Due to the level of uncertainty around future years, these financial projections have been adjusted to more conservative levels for the purpose of our impairment testing. The pre-tax discount rate applied to projected cash flows is 10.7% (2012: 9.9%, 2011: 10.2%) and cash flows beyond the five year period are extrapolated using a conservative growth rate of 0% (2012: 0%, 2011: 0%). A sensitivity analysis is performed on all cash generating units with respect to the discount rate (see Sensitivity to changes in assumptions – Discount rate).
The assumptions of the annual impairment test are consistent with external sources. Based upon the outcome of the impairment tests, management did not identify impairments for any of the cash-generating units.
The calculation of value-in-use for all divisions is most sensitive to the following assumptions:
Sales growth rate used during the projection period – Sales growth rate used over the projected period has been kept conservatively at zero percent for the cash-generating units within the business segments Projection and Healthcare, since even then there is no risk for impairment. For Advanced visualization, growth rate in the first year of the projected period has been set at 15%, taken into account management's expected increase in sales of the Collaboration products. In the following years of the projected period, a growth rate of 3% is assumed, same as for all other cash-generating units for which a growth rate of 3% per year is assumed for the 5 year period.
EBIT as percentage of sales – EBIT as percentage of sales is based on average percentages over the three years preceding the start of the budget period. EBIT levels increase over the projected period for anticipated efficiency improvements. Efficiency improvements can be cost reductions as well as margin improvements. An increase of 1 to 1.5 percentage point per annum was applied for all divisions, except for Healthcare and Projection. For the Healthcare division, a stable EBIT as percentage of sales is kept at 8% over the whole budget period, which is 1% higher than the average over the last three years.
For the Projection division, a stable EBIT as percentage of sales is kept at 9% over the whole budget period, which is below the average over the last three years, since even then there is no risk for impairment.
Growth rate estimates – The long-term rate used to extrapolate the projection has been kept conservatively at zero % for all divisions.
Discount rates – Discount rates reflect the current market assessment of the risks specific to Barco Group. The discount rate was estimated based on a (long-term) pre-tax cost of capital, the risks being implicit in the cash flows. The long term discount rate was determined on group level and amounted to 10.7% for the year 2013 and has been applied to all cash-generating units.
With regard to the assessment of value-in-use of the Projection division and Orthogon (part of the Ventures), management believes, based on sensitivity analysis performed, that no reasonable possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.
For the other divisions, per 31 December 2013, the estimated recoverable amount, after impairment of capitalized development recorded, is closer to its carrying value and, consequently, changes in the key assumption could result in impairment losses. The implications of the key assumptions for the recoverable amount are discussed below:
Sales growth rate used during the budget period – Management has considered the possibility of lower than budgeted sales growth during the budget period. For Healthcare and Defense & Aerospace, changes in the sales growth rate during the budget period does not cause the carrying value of the division to materially exceed its recoverable amount. For Advanced Visualization no or negative sales growth over the budget period would result in an impairment.
EBIT percentage on sales – Management has considered the possibility of lower than budgeted EBIT percentages on sales.
For Healthcare, an EBIT level which remains at 7% (instead of 8%) at a constant sales level, would lead to impairment.
For the Defense & Aerospace division, a reduction of more than 1% in the last year of the budget period would result in an impairment and for Advanced Visualization, any deviation from the EBIT level in the last year of the budget period would have an impairment as result.
Discount rates – change in the weighted average cost with 2% would result in an impairment for Advanced Visualization.
Growth rate estimate – a sales decline beyond the budget period would result in an impairment for Advanced Visualization if the decline would be more than 1%.
Even a decrease (which would result in a negative sales evolution) in the long-term rate, used to extrapolate the projection beyond the budget period, would not result in an additional impairment for all the other divisions, in case the decrease would be less than 3%.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| At cost | |||
| On 1 January | 308,496 | 355,680 | 322,708 |
| Expenditure | 62,072 | 56,296 | 46,454 |
| Sales and disposals | -4,131 | -102,237 | -15,017 |
| Acquisition of subsidiary | - | - | 957 |
| Disposal of subsidiary | - | - | - |
| Translation (losses)/gains | -2,979 | -1,244 | 579 |
| On 31 December | 363,457 | 308,496 | 355,680 |
| Impairment | |||
| On 1 January | 20,061 | 19,088 | 17,760 |
| Expenditure | 858 | 973 | 1,328 |
| On 31 December | 20,920 | 20,061 | 19,088 |
| Amortization | |||
| On 1 January | 206,456 | 267,571 | 245,570 |
| Amortization | 49,145 | 42,138 | 36,448 |
| Sales and disposals | -4,131 | -102,237 | -15,017 |
| Acquisition of subsidiary | - | - | 570 |
| Disposal of subsidiary | - | - | - |
| Translation (losses)/gains | -2,181 | -1,017 | - |
| On 31 December | 249,289 | 206,456 | 267,571 |
| Net book value | |||
| On 1 January | 81,978 | 69,020 | 59,378 |
| On 31 December | 93,248 | 81,978 | 69,020 |
Consistent with the tests performed in the previous years, Barco performed impairment tests in the fourth quarter of 2013. Based upon these tests, impairment costs have been recognized for an amount of 0.9 million euro. Similar impairment tests revealed the need to recognize impairment losses on capitalized development in 2012 and 2011 for 1 million euro and 1.3 million respectively. The impairment losses recognized represent the write down of certain specific capitalized development projects.
The recognized impairment losses on capitalized development are allocated to the business segments as follows:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Advanced Visualization | - | 15 | 302 |
| Projection | 98 | 703 | 416 |
| Healthcare | 352 | - | 220 |
| Defense and Aerospace | 119 | - | - |
| Ventures | 290 | 255 | 390 |
| Total | 858 | 973 | 1,328 |
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Intangible assets Other |
Other Intangible assets under contruction |
Total other intangible assets |
Land and buildings |
Machinery and equipment Plant, |
Furniture, office equipment and vehicles |
Other property, equipment plant and |
Assets under construction |
Total Other tangi ble assets |
Total | Total | Total | |
| At cost | ||||||||||||
| On 1 January | 35,661 | 13,623 | 49,284 | 64,928 | 92,608 | 37,163 | 9,441 | 4,356 | 143,568 | 257,780 | 244,710 | 246,222 |
| Expenditure | 2,125 | 10,095 | 12,219 | 581 | 3,184 | 3,705 | 1,715 | 1,464 | 10,068 | 22,869 | 24,851 | 20,302 |
| Sales and disposals | -832 | - | -832 | - | -3,804 | -3,612 | -689 | - | -8,105 | -8,938 | -15,229 | -27,440 |
| Acquisition of subsidiary | 31,915 | - | 31,915 | 212 | 7,614 | 1,335 | 12,301 | - | 21,250 | 53,377 | 4,909 | 5,285 |
| Disposal of subsidiary | - | - | - | - | - | - | - | - | - | - | - | - |
| Transfers | - | - | - | - | - | - | - | - | - | - | - | - |
| Translation (losses)/gains | -3,405 | - | -3,405 | -519 | -1,994 | -973 | -2,136 | -150 | -5,253 | -9,178 | -1,461 | 341 |
| On 31 Dec 2013 | 65,464 | 23,717 | 89,181 | 65,202 | 97,607 | 37,618 | 20,633 | 5,670 | 161,528 | 315,911 | 257,780 | 244,710 |
| Depreciation | ||||||||||||
| On 1 January | 24,192 | - | 24,192 | 36,184 | 78,778 | 26,825 | 7,304 | - | 112,907 | 173,283 | 172,097 | 181,467 |
| Depreciation | 10,496 | - | 10,496 | 2,248 | 5,109 | 4,727 | 1,631 | - | 11,466 | 24,210 | 16,126 | 14,088 |
| Sales and disposals | -818 | - | -818 | - | -3,792 | -3,411 | -648 | - | -7,850 | -8,668 | -13,913 | -24,265 |
| Acquisition of subsidiary | 612 | - | 612 | 5 | 6,663 | 621 | 498 | - | 7,782 | 8,400 | 23 | 369 |
| Disposal of subsidiary | - | - | - | - | - | - | - | - | - | - | - | - |
| Transfers | - | - | - | - | - | - | - | - | - | - | - | - |
| Translation (losses)/gains | -470 | - | -470 | -252 | -1,665 | -686 | -547 | - | -2,898 | -3,620 | -1,051 | 438 |
| On 31 Dec 2013 | 34,012 | - | 34,012 | 38,185 | 85,093 | 28,076 | 8,238 | - | 121,407 | 193,604 | 173,283 | 172,097 |
| Carrying amount | ||||||||||||
| On 1 January 2013 | 11,470 | 13,623 | 25,093 | 28,744 | 13,830 | 10,338 | 2,137 | 4,356 | 30,661 | 84,497 | 72,613 | 64,755 |
| On 31 Dec 2013 |
In 2013, the capital expenditures amount to 22.9 million euro, compared to 24.9 million euro in 2012 and 20.3 million euro in 2011.
Other intangible assets under construction relate for the major part to the investment in the new ERP system, for which the capital expenditures amount to 10 million euro in 2013 (8.3 million euro in 2012). The capital expenditures in the other tangible assets relate for the major part to R&D and IT equipment.
The net book value of the other intangible assets and tangible fixed assets acquired in 2013 through acquisitions amounts to 44.7 million euro. Other intangible assets for an amount of 31.9 million euro: 17.7 million technology, 12.1 million customer relations and 1.2 million trade names. We refer to Note 1.2 on "Acquisitions and divestments" and Note 23 on "Cash flow statement: effect of acquisitions and disposals" for more details on these transactions.
| Assets | Liabilities | Net asset/(liability) | |||||||
|---|---|---|---|---|---|---|---|---|---|
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Capitalized development cost | 181 | 83 | 53 | -8,448 | -8,222 | -7,928 | -8,267 | -8,139 | -7,875 |
| Patents, licenses, | - | - | 205 | -5,247 | - | - | -5,247 | - | 205 |
| Tangible fixed assets and software | 2,191 | 2,146 | 1,944 | -2,544 | -2,725 | -2,820 | -353 | -579 | -876 |
| Inventory | 16,389 | 14,261 | 15,001 | -313 | -725 | -775 | 16,076 | 13,536 | 14,226 |
| Trade debtors | 872 | 1,038 | 960 | -981 | -739 | -5,069 | -109 | 299 | -4,109 |
| Provisions | 9,594 | 4,932 | 2,091 | -1,603 | -24 | -67 | 7,991 | 4,908 | 2,024 |
| Employee benefits | 990 | 2,389 | 1,431 | - | - | - | 990 | 2,389 | 1,431 |
| Deferred revenue | 2,011 | 2,024 | 1,488 | -9 | -35 | - | 2,002 | 1,989 | 1,488 |
| Other items | 4,067 | 3,911 | 3,624 | -2,976 | -2,225 | -2,074 | 1,091 | 1,686 | 1,550 |
Deferred tax assets and liabilities are attributable to the following items:
Movements in the deferred tax assets / (liabilities) arise from the following:
| IN THOUSANDS OF EURO | As at 1 January |
Recognized through income statement |
Recognized through equity |
Acquisitions and disposals |
Exchange gains and losses |
As at 31 December |
|---|---|---|---|---|---|---|
| Capitalized development cost | -8,139 | -386 | - | - | 258 | -8,267 |
| Patents, licenses, | - | 1,357 | - | -6,930 | 326 | -5,247 |
| Tangible fixed assets and software | -579 | 334 | - | 4 | -112 | -353 |
| Inventory | 13,536 | 2,237 | - | 875 | -572 | 16,076 |
| Trade debtors | 299 | -393 | - | 18 | -33 | -109 |
| Provisions | 4,908 | 2,523 | - | 1,025 | -465 | 7,991 |
| Employee benefits | 2,389 | -1,470 | - | 223 | -153 | 990 |
| Deferred revenue | 1,989 | 142 | - | - | -129 | 2,002 |
| Other items | 1,686 | -724 | - | 223 | -93 | 1,091 |
| Tax value of loss carry forwards | 22,182 | -4,909 | - | 1,611 | -35 | 18,849 |
| Tax value of tax credits | 20,587 | -3,001 | - | - | - | 17,586 |
| Total | 58,858 | -4,290 | - | -2,950 | -1,008 | 50,611 |
Tax value of loss carry forwards 18,849 22,182 22,399 - - - 18,849 22,182 22,399 Tax value of tax credits 18,197 21,103 21,929 -611 -516 -634 17,586 20,587 21,295 Gross tax assets/(liabilities) 73,342 74,069 71,125 -22,731 -15,211 -19,367 50,611 58,858 51,759 Offset of tax -11,010 -12,122 -14,361 11,010 12,122 14,361 - - - Net tax assets/(liabilities) 62,333 61,947 56,764 -11,721 -3,089 -5,006 50,612 58,858 51,759 On top of the tax losses and tax credits for which a net deferred tax is recognized (net deferred tax asset of respectively 18.9 million euro and 18.2 million euro), the Group owns tax losses carried forward and other temporary differences on which no deferred tax asset is recognized amounting to 61.7 million euro as of 31 December 2013 (at 34% tax rate resulting in a non recognized deferred tax asset of rounded 21 million euro). Deferred tax assets have not been recognized on these items because it is not probable that future profit will be available in the near future against which the benefits can be utilized. The tax losses carried forward and other temporary differences on which no deferred tax asset is recognized have no expiration date.
Deferred tax assets relate for the major part to the tax value of loss carry forwards and tax credits and almost fully relate to Belgium. In assessing the realizability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will be realized within the foreseeable future. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the group will need to generate future taxable income in the countries where the net operating losses were incurred. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes as at 31 December 2013, it is probable that the group will realize all of the recognized benefits of these deductible differences.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Raw materials and consumables | 95,491 | 89,910 | 102,417 |
| Work in progress | 86,865 | 94,083 | 93,694 |
| Finished goods | 128,292 | 126,747 | 116,446 |
| Write-off on inventories | -99,072 | -87,063 | -78,628 |
| Inventory | 211,575 | 223,677 | 233,928 |
| Inventory turns (a) |
3.2 | 3.1 | 2.7 |
(a) Inventory turns = 12 / [Inventory / (Average Monthly Sales last 12 months x Material Cost of Goods Sold %)]
The amount of write-offs recognized as expense in 2013 amounts to 15.4 million euro (2012: 16.5 million euro, 2011: 14.8 million euro). The inventory turns further improved compared to the previous years, reaching 3.2 at the end of 2013.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Trade debtors - gross | 183,805 | 190,278 | 193,925 | |
| Trade debtors - bad debt reserve | (a) | -6,338 | -7,196 | -6,811 |
| Trade debtors - net | (b) | 177,467 | 183,082 | 187,114 |
| V.A.T. Receivable | 11,122 | 7,141 | 6,793 | |
| Taxes receivable | 30,207 | 16,992 | 21,738 | |
| Currency rate swap (note 20) | 361 | -644 | 40 | |
| Guarantees paid | 226 | 1,484 | 1,613 | |
| Other | 2,186 | 4,079 | 5,013 | |
| Other amounts receivable | 44,102 | 29,053 | 35,197 | |
| Other non-current assets | (c) | 14,286 | 18,041 | 19,134 |
| Number of days sales outstanding (DSO) (d) | (d) | 52 | 48 | 56 |
Per 31 December 2013, the number of days sales outstanding are at a level between the very low 2012 and normal 2011 level, reaching 52 days at the end of 2013. The outstanding trade debtors are lower than the 2012 and 2011 level.
The bad debt reserve in proportion to the gross amount of trade debtors remains under control: 3.5% per 31 December 2013 (2012: 3.8%, 2011: 3.5%).
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| On 1 January | -7,196 | -6,811 | -10,145 |
| Acquisition of subsidiaries | -562 | -83 | - |
| Additional provisions | -2,678 | -5,731 | -1,279 |
| Amounts used | 1,374 | 1,190 | 1,399 |
| Amounts unused | 2,553 | 4,189 | 3,229 |
| Translation (losses) / gains | 171 | -50 | -15 |
| On 31 December | -6,338 | -7,196 | -6,811 |
( b ) At 31 December 2013, the aging analysis of trade receivables is as follows:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Not due | 148,038 | 154,304 | 156,647 |
| Overdue less than 30 days | 17,925 | 19,146 | 17,424 |
| Overdue between 30 and 90 days | 9,422 | 8,337 | 10,414 |
| Overdue more than 90 days | 8,420 | 8,491 | 9,440 |
| Total gross | 183,805 | 190,278 | 193,925 |
| Bad debt reserve | -6,338 | -7,196 | -6,811 |
| Total | 177,467 | 183,082 | 187,114 |
In 2013, total overdue amounts remained stable compared to the previous periods at a total amount of 35.8 million euro (2012: 36 million euro, 2011: 37.3 million euro).
In 2013, the bad debt reserve amounts to 75% of the trade receivables more than 90 days overdue (2012: 85%, 2011: 72%).
The decrease in the other non-current assets during 2013 mainly relates to long-term receivables in the frame of vendor financing programs, amounting to 3.5 million euro per 31 December 2013, of which 3.5 million (see note 15) are offset by a long-term debt of the same amount (2012: 11 million euro, of which 7.1 million euro offset by a long-term debt, 2011: 12.5 million euro, of which 9.8 million euro offset by a long-term debt).
DSO = (( Trade debtors, net) / (sales past quarter)) * 90
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Deposits | (a) | 13,646 | 15,338 | 1,264 |
| Cash at bank | (b) | 142,796 | 106,706 | 77,817 |
| Cash in hand | 103 | 95 | 83 | |
| Cash and cash equivalents | 156,545 | 122,139 | 79,165 | |
| Long-term financial receivables | (c) | 3,539 | 7,129 | 9,768 |
| Long-term debts | (c) (d) | -40,410 | -12,695 | -19,014 |
| Current portion of long-term debts | (d) | -3,582 | -4,105 | -1,691 |
| Short-term debts | (e) | -11,657 | -1,302 | -6,593 |
| Net financial cash / (debt) | 104,435 | 111,166 | 61,635 |
The net financial cash remained at a high level in 2013. This is the net result of the free cash flow generated (70.2 million euro in 2013 versus 121.6 million euro in 2012 and 81.2 million in 2011) and the cash outflows related to acquisitions and dividends paid out.
Deposits are short-term, highly liquid investments, which are readily convertible to known amounts of cash. The short-term deposits do not carry a material risk of change in valuation.
At closing date, deposits include:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| » deposits in INR, with an average interest rate of 7.34% | 1,665 | 1,304 | 992 |
| » deposits in EUR | - | 10,000 | - |
| » deposits in USD, with an average interest rate of 0.07% | 1,994 | 3,790 | - |
| » deposits in CNY, with an average interest rate of 1.49% | 9,589 | - | - |
| » deposits in other currencies | 398 | 244 | 272 |
| Total deposits | 13,646 | 15,338 | 1,264 |
The average rate of the deposits in INR is 7.34%, in CNY 1.49% and USD 0.07%
Cash at bank is immediately available. Most of the cash is held on accounts with higher interest-yield compared to classical cash accounts. It is denominated in the following currencies:
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| » EUR | 40.0% | 57.3% | 62.7% |
| » USD | 8.0% | 18.6% | 17.3% |
| » CNY | 38.6% | 11.4% | 5.0% |
| » INR | 0.1% | 0.0% | 1.5% |
| » Other | 13.3% | 12.7% | 13.5% |
Since 2010, Barco entered into a specific vendor financing program granted to a selective number of international customers. The purpose of vendor financing is to grant extended payment terms to such customers, whilst Barco continues to benefit from prompt payment of the open accounts receivable position by having a financial institution in the middle. The financial institution will directly (buyer credit) or following a receivable sale (supplier credit) open a credit in favor of the customer, thereby assuming the risk of non-payment on the spread payment plan in all material respect.
In the case of a supplier credit, Barco continues to serve as collection agent after the sale of the accounts receivable on a non-recourse basis, which leads to a long-term financial receivable from the customer (in line "Other non-current assets") this being offset by a long-term financial debt position towards the financial institution for the same amount (in line "Long-term debts"). Due to its non-recourse character, both positions are being eliminated in the net financial cash/(debt). Per the end of 2013, the outstanding long-term financial receivables have decreased to 3.5 million euro compared to 7.1 million euro in 2012. When the vendor financing takes the form of a buyer credit (direct financial contract between customer and financial institution, and no role for Barco as collection agent), no positions are being reflected in the balance sheet.
Where Barco assumes a small residual risk on the customer's payment behavior with recourse character (either in the form of supplier credit or buyer credit), provisions are being account for.
A linearly amortizing 15 million euro credit facility backed by a cap-floor agreement in relation to Belgian real estate financing was early terminated in 2013. A financial leasing contract of 10.5 million euro was added following the projectiondesign acquisition.
Besides specific real-estate financing in US & Norway, the Barco Group has a total of 165 million euro committed credit facilities available, following a new debt portfolio restructuring in December 2013. The portfolio consists of 3 major tranches:
As at 31 December 2013, an amount of 25 million euro is drawn under the RDI Credit Facility from the European Investment Bank.
Barco is meeting all requirements of the loan covenants on its available credit facilities.
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| - EUR | 25,177 | 2,781 | 4,813 |
| - USD | 7,058 | 11,186 | 15,570 |
| - NOK | 10,554 | - | - |
| - Other | 1,202 | 2,833 | 322 |
| Total | 43,991 | 16,800 | 20,705 |
Analysis of long-term financial debts, including the current portion of long-term financial debts, as to currencies:
Analysis of long-term financial debts including the current portion of long-term financial debts, as to interest rates:
| TYPE OF INTEREST RATE | MATURITY | 31 December 2013 | 31 December 2012 | 31 December 2011 |
|---|---|---|---|---|
| Analysis of long-term financial debts including the current portion of long-term financial debts, as to interest rates: Real Estate financing: |
||||
| - variable, limited by cap-floor agreements (Belgium) | - | 2,250 | 3,750 | |
| - variable, swapped into fixed (US) | Later than 2018 | 3,671 | 4,548 | 6,705 |
| - fixed, financial leasing (Norway) | Later than 2018 | 10,554 | - | - |
| RDI financing: | ||||
| - fixed, European Investment Bank | Later than 2018 | 25,000 | - | - |
| Vendor financing (offset by long-term receivable) | 3,539 | 7,129 | 9,793 | |
| Other | 1,227 | 2,874 | 457 | |
| Total long-term financial debts | 43,991 | 16,800 | 20,705 |
| Per 31 December 2013 | Per 31 December 2012 | Per 31 December 2011 | |||
|---|---|---|---|---|---|
| Payable in 2015 | 11,166 | Payable in 2014 | 7,982 | Payable in 2013 | 9,783 |
| Payable in 2016 | 6,515 | Payable in 2015 | 576 | Payable in 2014 | 3,659 |
| Payable in 2017 | 6,358 | Payable in 2016 | 355 | Payable in 2015 | 259 |
| Payable in 2018 | 6,275 | Payable in 2017 | 176 | Payable in 2016 | 259 |
| Later | 22,964 | Later | 5,425 | Later | 7,999 |
| Total long-term debts | 53,277 | Total long-term debts | 14,514 | Total long-term debts | 21,958 |
The long-term debts (including interests due), excluding the current portion of the long-term debts, are payable as follows:
Analysis of the short-term financial debts on 31 December:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |||
|---|---|---|---|---|---|---|
| Effective interest rate |
Balance | Effective interest rate |
Balance | Effective interest rate |
Balance | |
| » EUR | 1.0% | 10,502 | 2.0% | 300 | - | - |
| » USD | - | - | 3.0% | 7 | 2.4% | 5,796 |
| » CNY | - | - | - | - | - | - |
| » Other | 2.5% | 1,155 | 2.8% | 996 | 3.2% | 797 |
| Total | 11,657 | 1,302 | 6,593 |
Limited usage per 31 December 2013 is mainly executed on uncommitted bank facilities. The available 85 million euro bilateral Credit Facilities that when used also translate in a short term debt position were almost completely undrawn.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Governmental loans | 2,993 | 3,114 | 3,117 |
| Earn-out payments (a) |
- | 6,047 | 5,000 |
| Deferred consideration (b) |
- | 1,000 | - |
| Vendor Loan (c) |
12,329 | - | - |
| Other long-term liabilities | 15,322 | 10,161 | 8,117 |
In the agreement with Royal Philips Electronics relating to the acquisition of FIMI Srl in 2010, an additional earn-out of 10 million euro was foreseen, payable by Barco NV over the period 2011 until 2014. The earn-out equals to 35% of the cumulative net purchase value of the Philips Group with FIMI over the five years following the acquisition date and is limited to 2.5 million euro per year. In 2013, 2012 and 2011 an earn-out portion of 7.5 million euro was paid. The 2.5 million euro earn-out payable early 2014 is presented on the line "Other current liabilities".
The JAOTech acquisition contract provided for additional earn-out payments, which depend on the cumulative gross margin generated for the financial years ended 31 December 2012 to 31 December 2014. There are no minimum or maximum earn-out payments stipulated in the contract. Total earnout payments of 3 million euro were assumed to be probable and were assumed to become payable early 2015. However in 2013 it became clear that the minimum requirements cannot be met anymore and therefore the outstanding loan was reversed in 2013. (see note 1.2 and note 3.d Other operating income and expense)
The JAOTech acquisition agreement further provides for a deferred consideration of 1 million euro, recognized as liability in 2012. As the deferred consideration is payable early 2014, the 1 million euro is presented on the line 'Other current liabilities'.
Upon acquisition of projectiondesign, a vendor loan of 12.3 million euro (103.1 million NOK) was taken over and will have to be paid to the former shareholders of projectiondesign.
| Per 31 December 2013 Per 31 December 2012 |
Per 31 December 2011 | ||||
|---|---|---|---|---|---|
| Payable in 2015 | 8,798 | Payable in 2014 | 3,914 | Payable in 2013 | 2,533 |
| Payable in 2016 | 3,527 | Payable in 2015 | 3,140 | Payable in 2014 | 2,533 |
| Payable in 2017 | 0 | Payable in 2016 | 0 | Payable in 2015 | 33 |
| Payable in 2018 | 0 | Payable in 2017 | 0 | Payable in 2016 | 33 |
| Later | 2,997 | Later | 3,108 | Later | 2,985 |
| Total long-term debts | 15,322 | Total long-term debts | 10,161 | Total long-term debts | 8,117 |
The other long-term liabilities, excluding the current portion of the long-term liabilities, are repayable as follows:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Share capital | 55,533 | 54,631 | 54,532 |
| Share premium | 142,235 | 135,425 | 134,381 |
| Share-based payments | 6,273 | 4,936 | 4,154 |
| Acquired own shares | -44,250 | -45,641 | -45,641 |
| Retained earnings | 467,370 | 427,107 | 345,348 |
| Cumulative translation adjustment | -51,561 | -37,227 | -30,546 |
| Derivatives | -657 | -1,181 | -1,524 |
| Equity attributable to equity holders of the parent | 574,943 | 538,050 | 460,703 |
The following capital increases took place in 2013:
As a result thereof the company's share capital amounts to 55.5 million euro on 31 December 2013, consisting of 12,988,829 fully paid shares. The share premium amounts to 142.2 million euro.
On 16 September 2013, 3 new option plans have been approved by the Board of Directors. These 3 option plans entitled the Board of Directors to grant maximum 149,050 stock options before 31 December 2013. Each stock option gives right to the acquisition of one (1) share. In 2013, 124,550 stock options have been granted to employees and management of the group based upon these option plans. On 31 December 2013, no options remained available for distribution under the 2013 stock option schemes given the expiry dates of the plans per 31 December 2013.
The total number of outstanding warrants on 31 December 2013 amounted to 211,823 which can lead to the creation of 211,823 new shares. Since 2010, stock options have been granted. The total number of outstanding stock options on 31 December 2013 amounted to 397,505. The company's own shares will be used under the outstanding stock option plan to fulfill the commitment. During 2013, 210,783 warrants and 22,750 stock options have been exercised; in 2012, 23,370 warrants have been exercised; in 2011 84,721 warrants were exercised. These warrants and stock options may be exercised the earliest 3 years after the allocation date over a period of maximum 10 years and during a couple of fixed periods over the year. Below an overview is given of the outstanding warrant and stock option plans:
| Allocation date | End term | Exercise price (in euro) |
Balance on 31 Dec 2012 |
Granted in 2013 |
Exercised in 2013 |
Cancelled in 2013 |
Expired in 2013 |
Balance on 31 Dec 2013 |
|---|---|---|---|---|---|---|---|---|
| Warrants | ||||||||
| 09/16/99 | 09/15/091 | 93.58 | - | - | - | - | - | - |
| 07/13/00 | 07/12/101 | 91.92 | 128,459 | - | -67 | - | -128,392 | - |
| 06/18/02 | 06/17/121 | 42.01 | 23,082 | - | -13,866 | - | -60 | 9,156 |
| 06/24/022 | 06/23/12 | 40.55 | - | - | - | - | - | - |
| 11/04/02 | 11/03/121 | 42.40 | 3,400 | - | -3,400 | - | - | - |
| 06/23/03 | 06/22/13 | 50.75 | 37,019 | - | -26,907 | - | -10,112 | - |
| 06/23/032 | 06/22/13 | 50.50 | 380 | - | -300 | - | -80 | - |
| 09/15/03 | 09/14/13 | 57.52 | 800 | - | - | - | -800 | - |
| 03/29/04 | 03/28/14 | 67.00 | 57,572 | - | -1,670 | - | -82 | 55,820 |
| 03/29/042 | 03/28/14 | 66.50 | 585 | - | -30 | - | - | 555 |
| 09/12/052 | 11/09/15 | 60.51 | 52,227 | - | -10,108 | - | -90 | 42,029 |
| 09/12/05 | 11/09/15 | 63.15 | 1,210 | - | -160 | - | - | 1,050 |
| 09/12/053 | 11/09/15 | 61.35 | 8,470 | - | -2,300 | - | -80 | 6,090 |
| 11/09/06 | 11/08/16 | 65.05 | 59,956 | - | -5,575 | - | -285 | 54,096 |
| 11/09/062 | 11/08/16 | 66.15 | 1,155 | - | -80 | - | - | 1,075 |
| 11/12/07 | 11/11/17 | 50.68 | 66,045 | - | -40,340 | - | -200 | 25,505 |
| 11/12/072 | 11/11/17 | 51.53 | 2,737 | - | -800 | - | - | 1,937 |
| 12/15/07 | 12/14/17 | 50.48 | 20,970 | - | -20,970 | - | - | - |
| 05/28/09 | 05/27/19 | 19.62 | 85,700 | - | -74,110 | -200 | - | 11,390 |
| 05/28/092 | 05/27/19 | 24.00 | 12,920 | - | -9,700 | - | -100 | 3,120 |
| 05/28/093 | 05/27/19 | 23.57 | 400 | - | -400 | - | - | - |
| Total number of warrants | 563,087 | - | -210,783 | -200 | -140,281 | 211,823 | ||
| Stock options | ||||||||
| 10/28/10 | 10/27/15 | 35.85 | 32,300 | - | -8,500 | -100 | - | 23,700 |
| 10/28/10 | 10/27/20 | 35.85 | 34,750 | - | - | - | - | 34,750 |
| 10/28/103 | 10/27/15 | 41.75 | 20,600 | - | -14,250 | - | -100 | 6,250 |
| 10/28/11 | 10/27/16 | 36.65 | 31,900 | - | - | -650 | - | 31,250 |
| 10/28/11 | 10/27/21 | 36.65 | 29,435 | - | - | -100 | - | 29,335 |
| 10/28/113 | 10/27/16 | 41.70 | 27,415 | - | - | -250 | - | 27,165 |
| 10/31/12 | 10/30/22 | 52.37 | 55,260 | - | - | - | - | 55,260 |
| 10/31/12 | 10/30/20 | 52.37 | 26,860 | - | - | -200 | - | 26,660 |
| 10/31/122 | 10/30/22 | 53.28 | 2,000 | - | - | - | - | 2,000 |
| 10/31/123 | 10/30/20 | 53.00 | 36,935 | - | - | -350 | - | 36,585 |
| 10/21/13 | 10/20/23 | 59.03 | - | 58,350 | - | - | - | 58,350 |
| 10/21/13 | 10/20/21 | 59.03 | - | 29,900 | - | - | - | 29,900 |
| 10/21/133 | 10/20/21 | 60.94 | - | 36,300 | - | - | - | 36,300 |
| Total number of stock options | 297,455 | 124,550 | -22,750 | -1.650 | -100 | 397,505 |
(1) For a large number of warrants this last exercise date was extended with three (3) years according to article 407 of the law of 24 December 2002
(2) Deviation of exercise price as a result of the implementation of the UK sub plan
(3) Deviation of exercise price as a result of the implementation of the US sub plan
The cost of these warrant/stock option plans is included in the income statement. The warrants/stock options are valued at grant date, based on the share price at grant date, exercise price, expected volatility, dividend estimates and interest rates. The warrant/stock option cost is taken into result on a straight-line basis from the grant date until the first exercise date. The share-based payment expenses amounted to 1.3 million euro in 2013 (2012: 0.8 million euro; 2011: 0.7 million euro; 2010).
Barco did not acquire own shares in 2013, 2012 and 2011. Barco sold 21,807 own shares upon the exercise of 21,807 stock options per 24 June 2013 with a resulting decrease of the own shares of 1,332 ('000) euro, 600 own shares through the exercise of 600 stock options per 20 September 2013 with a resulting decrease of the own shares of 36 ('000) euro and 350 own shares through the exercise of 350 stock options per 20 December 2013 with a resulting decrease of the own shares of 22 ('000) euro.
The number of own shares acquired by Barco NV up to 31 December 2013 therefore decreased to 715,206 own shares (2012: 737,963, 2011: 737,963).
The change in retained earnings includes the net income of 2013 and the distribution of 16.9 million euro dividend, as approved by the general shareholders meeting of 25 April 2013.
In 2013, exchange differences on translation of foreign operations have a negative impact of 14.3 million, mainly relating to the Indian Rupee (4.8 million euro), US Dollar (2.3 million euro), Norwegian Krone (2 million euro), Australian Dollar (1.4 million euro) and Taiwan Dollar (1.2 million euro).
In 2012, exchange differences on translation of foreign operations have a negative impact of 6.7 million euro, mainly relating to the liquidation of the investment in Czech, Barco Manufacturing SRO, resulting in the realization of the foreign currency translation for an amount of 3.7million euro positive impact on the result of the year (see note 3 (d)). The remaining negative exchange differences mainly relate to the Indian Rupee (1.8 million euro negative impact on equity) and the American dollar (0.7 million euro negative impact on equity).
In 2011, exchange differences on translation of foreign operations have a negative impact on the consolidated equity of 1.8 million euro, mainly relating to the Indian Rupee (4.2 million euro negative impact on equity) offset by 1.1 million euro positive impact of the American dollar and the 1.3 million euro of the Chinese Yen.
Derivative financial instruments are disclosed in note 20.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Trade payables | 114,133 | 127,528 | 110,791 | |
| Days payable outstanding (DPO) | (a) | 52 | 57 | 54 |
| Advances received from customers | (b) | 93,562 | 73,587 | 55,748 |
(a) DPO = trade payables / (material cost + services and other costs + inventory movement + purchases of (in)tangible fixed assets) x 365
(b) Most payment terms of customers define that 30% of the total invoice needs to be prepaid before delivery of the goods. The increase in 2013 is caused by the change in consolidation method of CFG Barco and the acquisition of projectiondesign, as both entities have important amounts of advances.
| IN THOUSANDS OF EURO | Balance sheet 2013 |
Acquisition of subsidiaries |
Additional provisions made |
Amounts used |
Unused amounts reversed |
Transfers (e) |
Translation (losses) / gains |
Balance sheet 2012 |
Balance sheet 2011 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Technical warranty | (a) | 27,019 | 2,583 | 4,431 | -2,655 | -4,097 | - | -723 | 27,480 | 28,898 |
| Risks on work in progress | - | - | - | - | - | - | - | - | 1,910 | |
| Pension obligations | (b) | 7,075 | - | 1,032 | -669 | -90 | - | -201 | 7,003 | 5,670 |
| Restructuring provision | (c) | 4,552 | 2,394 | 6,473 | -4,209 | - | - | -106 | - | 622 |
| Other claims and risks | (d) | 8,158 | 837 | 4,075 | -359 | -1,014 | - | -286 | 4,905 | 4,974 |
| Provisions | 46,804 | 5,814 | 16,011 | -7,892 | -5,201 | - | -1,316 | 39,388 | 42,075 |
Provisions for technical warranty are based on historical experience of the level of repairs and replacements. Additional provisions are set up when a technical problem is detected. There are three different technical warranty provisions: provisions related to 'normal' (mostly 2 years) warranty period, provisions related to extended warranty periods and provisions for specific claims/issues.
In general, pension plans at Barco are defined contribution plans. Obligations for these plans are recognized as an expense in the income statements as incurred. In some specific cases a pension plan includes a defined benefit obligation. According to IAS 19, provisions are set up in these situations.
As per 31 December 2013, the defined benefit obligations are composed of:
| » | Early retirement plans in Belgium | 1,540 |
|---|---|---|
| » | Local legal requirements | |
| (mainly France, Japan, Korea and Italy) | 5,457 | |
| » | A small number of individual plans | 79 |
| Total | 7,075 |
|---|---|
| ------- | ------- |
Early retirement plans are recognized as liability and expense when the company is committed to terminate the employment of the employees affected before the normal retirement date.
In 2013, a new restructuring provision has been set up to reduce costs mainly in the Defense & Aerospace and Advanced Visualization divisions. See also note 5. Restructuring and impairment costs.
The restructuring plans, initiated in 2009, have all been finalized during 2011.
This provision relates to disputes with suppliers and specific customer warranty disputes. Barco can not provide details on the specific cases, as this could cause considerable harm to Barco in the particular disputes.
General risk factors are described in the director's report 'Risk Factors'.
Derivative financial instruments are used to reduce the exposure to fluctuations in foreign exchange rates and interest rates. These instruments are subject to the risk of market rates changing subsequent to acquisition. These changes are generally offset by opposite effects on the item being hedged.
Barco incurs foreign currency risk on recognized assets and liabilities when they are denominated in a currency other than the company's local currency. Such risks may be naturally covered when a monetary item at the asset side (such as a trade receivable or cash deposit) in a given currency is matched with a monetary item at the liability side (such as a trade payable or loan) in the same currency.
Forward exchange contracts and selectively option contracts are used to manage the currency risk arising from recognized receivables and payables, which are not naturally hedged. This is particularly the case for the USD (and USD-related currencies), for which receivables are systematically higher than payables. No hedge accounting is applied to these contracts.
The balances on foreign currency monetary items are valued at the rates of exchange prevailing at the end of the accounting period. Derivative financial instruments that are used to reduce the exposure of these balances are rated in the balance sheet at fair value. Both changes in foreign currency balances and in fair value of derivative financial instruments are recognized in the income statement.
Barco selectively designates forward contracts to forecasted sales. Hedge accounting is applied to these contracts. The portion of the gain or loss on the hedging instrument that will be determined as an effective hedge is recognized directly in comprehensive income. On 31 December 2013, there were no forward contracts outstanding under hedge accounting treatment.
Main sensitivity to currency fluctuations is related to the evolution of the USD versus the euro. This sensitivity is caused by following factors:
Barco uses following hedging instruments to manage its interest rate risk:
Barco has an outstanding variable loan of 5.1 million US dollar (3.7 million euro) in place, of which variable interest rate conditions have been swapped into a fixed 3.86%.
Barco also concluded an interest rate swap of 5.7 million euro by means of a pre-hedge of expected future drawings under the 30 million euro bilateral committed Credit Facilities that aim at financing Barco's new HQ campus. This instrument swaps the variable interest rate into a fixed 2.45%.
Both swaps are determined as an effective hedge of outstanding or anticipated borrowings and meet the hedging requirements of IAS 39. The fair values of the effective portion of the hedging instrument are therefore recognized directly in comprehensive income under hedge accounting treatment.
As the US dollar swap is only partially hedge effective, the fair value of the swap for its non-effective portion (difference between notional amount of 9.4 million US dollar or 6.8 million euro equivalent and outstanding loan amount) is recognized in the income statement.
Management doesn't expect the short-term interest rate to increase significantly in the immediate foreseeable future, which limits the interest exposure on the short-term debt portfolio.
With reference to the Fair Values table below, more than 90% of Barco's outstanding long-term debt portfolio has a fixed interest rate character, which again limits the exposure of the company to interest rate fluctuations. This ratio increases to over 95% when including the swap instruments disclosed above.
Credit evaluations are performed on all customers requiring credit over a certain amount. The credit risk is monitored on a continuous basis. In a number of cases collateral is being requested before a credit risk is accepted. Specific trade finance instruments such as letters of credit and bills of exchange are regularly used in order to minimize the credit risk.
In 2013, Barco continued to conclude credit insurances in order to cover credit risks on specific customers with whom Barco entered into vendor financing agreements. Such vendor financing agreements are concluded and monitored on a case by case basis.
A policy defining acceptable counter parties and the maximum risk per counter party is in place. Short-term investments are done in marketable securities, cash holdings or in fixed term deposits with reputable banks.
Set out below is an overview of the carrying amounts of the group's financial instruments that are showing in the financial statements. In general, the carrying amounts are assumed to be a close approximation of the fair value.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | ||
|---|---|---|---|---|---|
| Carrying amount / Fair value (approx,) | |||||
| Financial assets | |||||
| Trade receivables | 177,467 | 183,082 | 187,114 | ||
| Other receivables | 44,102 | 29,053 | 35,197 | ||
| Loan and other receivables | 43,888 | 28,198 | 35,157 | ||
| Interest rate swap | - | - | 0 | ||
| Currency rate swap | 214 | 855 | 40 | ||
| Other non-current assets | 14,286 | 18,041 | 19,134 | ||
| Cash and short-term deposits | 156,545 | 122,139 | 79,165 | ||
| Total | 392,400 | 352,315 | 320,610 | ||
| Financial liabilities | |||||
| Financial debts | 38,121 | 15,453 | 18,492 | ||
| Floating rate borrowings | 3,686 | 5,730 | 8,605 | ||
| Fixed rate borrowings | 34,435 | 9,723 | 9,887 | ||
| Other debts | 15,322 | 10,161 | 8,117 | ||
| Short-term debts | 11,657 | 1,302 | 6,593 | ||
| Trade payables | 114,133 | 127,528 | 110,791 | ||
| Dividends payable | 2,105 | 2,121 | 2,946 | ||
| Interest rate swap | 1,129 | 17 | 1,843 | ||
| Other liabilities | 10,994 | 8,241 | 8,045 | ||
| Total | 193,462 | 164,823 | 156,825 |
The fair value of the financial assets and liabilities is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
» Long term fixed rate and variable rate other assets are evaluated by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As at 31 December 2013, the carrying amounts of such receivables, net of allowances, are assumed not to be materially different from their calculated fair values.
» The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases as well as other noncurrent financial liabilities is estimated by discounting future cash flows using the effective interest rates currently available for debt on similar terms, credit risk and remaining maturities. As at 31 December 2013, the effective interest rate is not materially different from the nominal interest rate of the financial obligation.
As at 31 December 2013, the Group held the following financial instruments measured at fair value:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Assets measured at fair value | |||
| Financial assets at fair value through profit or loss | |||
| Foreign exchange contracts - non-hedged | 276 | 140 | 467 |
| Interest rate swap | - | - | - |
| Financial assets at fair value through equity | |||
| Foreign exchange contracts - hedged | - | - | - |
| Liabilities measured at fair value | |||
| Financial liabilities at fair value through profit or loss | |||
| Foreign exchange contracts - non-hedged | 62 | 784 | 428 |
| Interest rate swap | 534 | 690 | 317 |
| Financial liabilities at fair value through equity | |||
| Foreign exchange contracts - hedged | - | - | - |
| Interest rate swap | 630 | 1,162 | 1,526 |
The group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair values mentioned in the above table relate to Level 2.
During the reporting period ending 31 December 2013, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Management evaluates its capital needs based on following data:
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Net financial cash / (debt) | 104,435 | 111,166 | 61,635 |
| Equity | 579,366 | 538,050 | 460,703 |
| % Net financial cash (debt) / Equity | 18,0% | 20,7% | 13,4% |
| IN THOUSANDS OF EURO | 2012 | 2011 | 2010 |
| Equity | 579,366 | 538,050 | 460,703 |
| Total equity and liabilities | 1,047,822 | 921,879 | 814,567 |
| % Equity / Total equity and liabilities | 55,3% | 58,4% | 56,6% |
In 2013, Barco had another year of solid cash flow generation, which has led to a net cash position consolidating at a level of 104.4 million euro per 31 December 2013 compared to 111.2 million euro as per end of 2012, even after the acquisition activity elsewhere disclosed. Also, the solvency position and other current ratios consolidated at very healthy levels.
Together with the in 2013 enlarged and extended committed credit facilities, management considers that it has secured a very healthy liquidity profile and strong capital base for the further development of the group.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Non-cancellable operating leases are payable as follows: | |||
| Less than one year | 6,916 | 6,282 | 5,850 |
| Between one and five years | 13,705 | 10,320 | 7,209 |
| More than five years | 20,605 | 4,774 | - |
| Total | 41,226 | 21,376 | 13,059 |
Non-cancellable operating leases mainly relate to leases of factory facilities, warehouses and sales offices. During the current year, the total rent expenses recognized in the income statement amounted to 16.7 million euro, whereof 9.7 million euro relating to rent of buildings.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 | |
|---|---|---|---|---|
| Guarantees given to third parties | (a) | 10,703 | 11,566 | 19,303 |
| Mortgage obligations given as security | (b) | |||
| » book value of the relevant assets | 2,555 | 3,001 | 3,600 | |
| » total of the mortgage | 6,798 | 8,345 | 9,629 | |
| Buy back obligations | (c) | 5,684 | 7,673 | 10,258 |
| Purchase commitment | (d) | 29,400 | - | - |
(a) Guarantees given to third parties mainly relate to guarantees given to customers for ongoing projects, guarantees given to suppliers for investment projects and to authorities for commitments related to VAT, duties, etc.
(b) The outstanding debts guaranteed by the mortgage obligations amount to 3.7 million euro per 31 December 2013.
For more information with respect to remuneration for directors and members of the executive management, we refer to the 'Corporate governance' chapter on of the annual report.
The table below shows the effect of acquisitions and disposals on the balance sheet movement of the group. The 2013 acquisition relates to the projectiondesign and AWIND business combinations. The 2012 acquisition relates to the IPVS and JAOTech business combinations. The 2011 acquisition fully relates to the CineStore asset deal. See Note 1.2 for more information on these acquisitions.
| IN THOUSANDS OF EURO | ACQUISITIONS | DISPOSALS | |||||
|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||
| Non-current assets | 45,442 | 5,733 | 5,690 | - | - | - | |
| Capitalized development cost | - | 387 | - | - | - | ||
| Customer list | 12,124 | - | - | - | - | - | |
| Know-how | 19,149 | 4,882 | 4,702 | - | - | - | |
| Leased building | 11,782 | ||||||
| Tangible assets and other intangible assets | 1,231 | 4 | 600 | - | - | - | |
| Deferred tax assets | 846 | - | - | - | - | ||
| Other non-current assets | 1,155 | - | - | - | - | - | |
| Current assets | 28,167 | 9,603 | 2,859 | - | - | - | |
| Inventory | 14,648 | 2,745 | 2,714 | - | - | - | |
| Trade debtors & other receivables | 13,519 | 6,858 | 145 | - | - | -1,992 | |
| Other current assets | |||||||
| Non-current liabilities | 42,079 | 5,090 | 2,547 | - | - | - | |
| Long-term debts, interest-bearing liabilities | 33,745 | 4,000 | - | - | - | - | |
| Deferrred tax liabilities | 3,886 | 164 | - | - | - | 3,452 | |
| Provisions | 4,448 | 927 | 2,547 | - | - | - | |
| Current liabilities | 5,768 | 10,707 | -2,672 | - | - | - | |
| Trade payables | 523 | 6,989 | 225 | - | - | - | |
| Other payables | 5,245 | 3,718 | -2,897 | - | - | - | |
| Net-identifiable assets and liabilities | 25,763 | -461 | 8,673 | - | - | - | |
| Goodwill on acquisitions | 77,398 | 27,574 | 1,690 | - | - | - | |
| Received/(paid) consideration | - | - | - | - | -1,460 | ||
| Acquired cash | 1,792 | 882 | - | - | - | - | |
| Purchase price | 104,953 | 27,994 | 10,363 | - | - | - |
The total purchase price in 2013 relates to the acquisition of projectiondesign of 50.8 million euro, the acquisition of AWIND of 51.6 million euro and current year's earn-out payment on the 2010 Fimi acquisition for an amount of 2.5 million euro.
The cash flow statement acquisitions show net of acquired cash of projectiondesign and AWIND and the cash received via the change in consolidation method of the Chinese joint venture (in total 20 million euro) and excluding the amount paid at the end of 2012 on the acquisition of projectiondesign of 33.4 million euro.
The total purchase price in 2012 relates to the acquisition of the IP Video Systems activities of 20 million USD and the JAOTech acquisition for an amount of 9.6 million euro upfront payment and the 2012 earn-out payment on the 2010 Fimi acquisition for an amount of 2.5 million euro.
The total purchase price in 2011 relates to the acquisition of the CineStore activities of 6.4 million euro and the 2011 earn-out payment on the 2010 Fimi acquisition for an amount of 2.9 million euro.
The 2011 disposals relate to the remaining part of the sales price of the 2009 divestment of Barco's Advanced Visualization (AVIS) business, which was put in escrow and received in 2011, and the taxes paid in 2011 on the plus value realized on this sale.
We refer to the Cash flow statement and note 1.2 on acquisitions.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are carried in terms of historical cost using the exchange rate at the date of the acquisition.
There are no major events subsequent to the balance sheet date which have a major impact on the further evolution of the company.
In accordance with the legal requirements, we report to you on the execution of our mandate as statutory auditor. This report contains our opinion on the consolidated balance sheet as of 31 December 2013, the consolidated income statement, consolidated statement of realized and unrealized income, consolidated statement of changes in equity, and consolidated cash flow statement for the year ended 31 December 2013, and on the notes, and includes the required additional statements.
We have audited the consolidated financial statements of Barco NV ('the Company') and its subsidiaries (jointly 'the Group') for the year ended 31 December 2013, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, with a balance sheet total of €1,047,822,000 and net income (attributable to the equity holders of the parent) of €57,119,000.
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for the implementation of internal control that it considers necessary for the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing (ISA). Those standards require us to comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal controls relevant to the Group's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used, the reasonableness of significant accounting estimates made by the Board of Directors, and the presentation of the consolidated financial statements taken as a whole.
We have obtained from the Board of Directors and the company's and group's officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the consolidated financial statements of the Company for the year ended 31 December 2013 give a true and fair view of the Group's financial position as at 31 December 2013 and of the results of its operations and its cash flows in accordance with the International Financial Reporting Standards as adopted by the European Union.
The preparation and the assessment of the information that should be included in the directors' report on the consolidated financial statements are the directors' responsibility.
Within the context of our mandate, it is our responsibility to report, in all material respects, our findings with regard to certain legal and regulatory obligations. On this basis, we make the following comment, which does not modify the scope of our opinion on the financial statements:
The directors' report on the consolidated financial statements includes the information required by law and is consistent with the consolidated financial statements and does not contain any inconsistencies with the information that we became aware of during the execution of our mandate.
Ghent, 4 February 2014
Ernst & Young Auditors BCVBA Statutory auditor represented by
Partner Partner
Lieve Cornelis Marnix Van Dooren
The financial statements of the parent company, Barco NV, are presented below in a condensed form.
The accounting principles used for the statutory annual accounts of Barco NV differ from the accounting principles used for the consolidated annual accounts: the statutory annual accounts follow the Belgian legal require ments, while the consolidated annual accounts follow the International Financial Reporting Standards. Only the consolidated annual financial statements as set forth in the preceding pages present a true and fair view of the financial position and performance of the Barco Group.
The management report of the Board of Directors to the Annual General Meeting of Shareholders and the annual accounts of Barco NV, as well as the Auditor's Report, will be filed with the National Bank of Belgium within the statutory periods. These documents are available on request from Barco's Investor Relations department, and at www.barco.com.
The statutory auditor's report is unqualified and certifies that the non-consolidated financial statements of Barco NV for the year ended 31 December 2013 give a true and fair view of the financial position and results of the company in accordance with all legal and regulatory dispositions.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Non-current assets | 861,926 | 762,327 | 706,089 |
| Intangible fixed assets | 101,503 | 88,729 | 63,353 |
| Tangible fixed assets | 21,849 | 23,257 | 22,536 |
| Financial fixed assets | 728,431 | 637,292 | 606,238 |
| Amounts receivable after more than one year | 10,143 | 13,049 | 13,962 |
| Current assets | 272,239 | 312,282 | 327,388 |
| Stocks and contracts in progress | 95,403 | 113,002 | 133,222 |
| Amounts receivable within one year | 116,713 | 134,119 | 134,024 |
| Investments (own shared) | 44,431 | 45,845 | 45,845 |
| Cash at bank and in hand | 209 | 656 | 38 |
| Deferred charges and accrued income | 15,483 | 18,660 | 14,259 |
| TOTAL ASSETS | 1,134,165 | 1,074,609 | 1,033,477 |
| Equity | 444,062 | 414,118 | 398,808 |
| Capital | 55,534 | 54,632 | 54,532 |
| Share premium account | 142,726 | 135,425 | 134,381 |
| Reserves | 50,645 | 52,058 | 52,059 |
| Accumulated profits | 193,305 | 170,627 | 156,503 |
| Investment grants | 1,852 | 1,376 | 1,333 |
| Provisions and deferred taxes | 16,597 | 15,737 | 19,656 |
| Provisions for liabilities and charges | 16,597 | 15,737 | 19,656 |
| Creditors | 673,506 | 644,754 | 615,013 |
| Amounts payable after more than one year | 45,194 | 34,059 | 39,421 |
| Amounts payable within one year | 628,312 | 610,695 | 575,592 |
| TOTAL LIABILITIES | 1,134,165 | 1,074,609 | 1,033,477 |
The increase of the intangible fixed assets of 13 million euro in 2013 is mainly caused by the implementation cost of SAP ERP software (10 million euro increase in 2013 compared to 8.3 million in 2012). The capital expenditures related to the new SAP ERP-software are not yet amortized as the project is still in the design phase of the global template and no roll-outs have been performed yet. The first roll-out is planned April 2014 in India.
The increase of 91 million euro of financial fixed assets consists the acquisition of the shares of AWIND (56 million euro), the purchase of the remaining shares in projectiondesign for an amount of 17 million euro (61% of the shares were bought end 2012 for 33 million euro), and the capital increase of Barco US of 18 million euro.
The liabilities mainly include intercompany debts (466 million euro), for the major part towards Barco Coordination Center NV.
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Sales | 668,830 | 745,103 | 654,512 |
| Operating income/(loss) | 30,809 | 43,681 | 47,072 |
| Financial result | 5,277 | -3,710 | -5,166 |
| Extra-ordinary result | -568 | -14,345 | 12,358 |
| Income taxes | 4,158 | 5,354 | 9,839 |
| Profit/(loss) for the year | 39,676 | 30,980 | 64,103 |
| IN THOUSANDS OF EURO | 2013 | 2012 | 2011 |
|---|---|---|---|
| Profit/(loss) for the year for appropriation | 39,676 | 30,980 | 64,103 |
| Profit brought forward | 170,627 | 156,503 | 104,881 |
| Profit to be appropriated | 210,302 | 187,483 | 168,984 |
| Transfer to other reserves | 1,413 | - | - |
| Profit to be carried forward | 193,305 | 170,627 | 156,503 |
| Gross dividends | 18,410 | 16,856 | 12,481 |
| Total | 210,302 | 187,483 | 168,984 |
Barco NV sales in 2013 amounts to 669 million euro, which is 10% lower than in 2012, mainly due to decrease in sales in Digital Cinema, but still 2% higher than the sales realized in 2011. The operating income decreased by 27% in 2013 to 31 million euro, compared to an operating income of 43 million euro in 2012.
The financial results increased from -3.7 million euro in 2012 to +5.3 million euro in 2013 due to dividends received in 2013 for an amount of 8.9 million euro (5 million euro of Barco Singapore & 3.9 million euro of Barco Silex).
The extra-ordinary result in 2012 of -14 million euro related to the statutory impairment on the investment in Barco AS (Denmark) for an amount of 7.5 million euro and on the investment in JaoTech Ltd for an amount of 7 million euro. In 2013, the extra-ordinary charges of 0.6 million euro are caused by the realisation loss on own shares through the exercise of stock options.
The profit on Income Taxes of 4 million euro in 2013 and +5 million euro in 2012 is related to a tax credit on research and development expenses.
The Board of Directors of Barco NV proposed a gross dividend of 1.5 euro per share relating to the 2013 result.
Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62
Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62
Stock exchange NYSE Euronext Brussels
More information can be obtained at the Investor Relations Department of the group management:
Director Investor Relations Tel.: +32 (0)56 26 23 22 Fax: +32 (0)56 26 22 62 E-mail: [email protected]
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Barco Corporate Marketing Focus Advertising
Carl Peeters Senior VP-CFO
President Kennedypark 35 8500 Kortrijk – Belgium
www.barco.com
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