barco annual report - ku leuven · barco is a world leader in professional markets, in which it...

2005

Barco annual report

(Isaiah Berlin)

The tricky correlation between seeing and understanding was

the main theme of the optical art movement in the sixties.

Artists well understood that an extra cognitive layer is added to

the information recorded through our eyes, and exploited tricks

of visual perception to confuse understanding.

As a leader in visualization, Barco is well aware of the thin line

between seeing and understanding. We know that missing

pixels keep you in the dark and that processing errors make you

see things in a different light. That's why we are so passionate

about accurate processing and display of visual information. After

all, the more you see, the better you understand.

The more you see, the better you understand. Complex informa-

tion is better understood when visualized. But processing the

information seen through our eyes, or better said, making sense

of a visual image, is a very delicate process.

"To understand is to perceive patterns"

Healthy growth in orders (+12%) and sales (+6%)

Strong regional growth in China and North America, position in Europe consolidated

Improved customer focus and business efficiency through company restructurings in Europe and US

Extended solution offering is driving our enhanced market position

9.5% of sales invested in R&D

Year in brief

4

[ in thousands of euro* ] 2005 2004

Net sales* 711,992 671,923Gross profit* 292,152 290,134

EBITA before restructuring cost* 60,554 71,427EBITA* 52,008 71,427

Current result before taxes and before goodwill amortization* 50,845 72,192Current result after taxes and before goodwill amortization* 39,792 57,152Current result after taxes per share and before goodwill amortization 3.25 4.66

Net income* 38,558 47,338Earnings per share 3.15 3.86Diluted earnings per share 2.97 3.62

Current cash-flow* 97,958 111,469Current cash-flow per share 8.01 9.09

Financial highlights of the year

Key figures

5

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Sales

740

720

700

680

660

640

620

600

Orders

740

720

700

680

660

640

620

600

EBITA

80

70

60

50

40

30

20

10

0

Earnings per share

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

0

732

712

52 3.15

(In million euro)(In million euro)

(In million euro) (In euro)

6

Table of contents

8 Company overview

10 Letter from the Chairman and CEO 13 Targets 200614 Company profile14 Mission statement15 Company values16 Worldwide presence16 Employees17 Organizational structure18 Milestones 200522 Financial highlights per quarter24 Key figures for shareholders26 Sales per division27 Geographical breakdown of sales

28 Market outlook

30 Medical imaging32 Defense & security34 Traffic management36 Avionics38 Media 40 Events42 Digital cinema44 Presentation46 Simulation48 Traffic & surveillance50 Utilities & process control52 Broadcasting54 Textiles & plastics

56 Report of the board of directors

58 Corporate governance

66 Researching for innovation 68 Leveraging brand equity70 Managing employee potential 72 Facilitating best practices74 Synchronizing regional focus

and international expertise76 Optimizing the supply chain78 Participating in society 80 Comments on the results

7

98 Information for the shareholder

100 Information about the share101 Ownership of the company’s

shares101 Evolution of the share price102 Daily average shares traded103 Comments on the evolution

of the share price104 Dividend105 Analysts covering Barco105 Financial calendar106 Investor relations

108 Barco consolidated

110 Income statement111 Balance sheet112 Cash-flow statement113 Changes in equity114 Notes to the consolidated financial

statements153 Auditor’s report

154 Barco nv

153 Balance sheet after appropriation158 Income statement159 Appropriation account

Letter from the Chairman and CEOTargets 2006Company profileMission statementCompany valuesWorldwide presenceEmployeesOrganizational structureMilestones 2005Financial highlights per quarterKey figures for shareholdersSales per divisionGeographical breakdown of sales

Zèbre - Victor Vasarely >>>

Company overview

10

Dear shareholders,

2005 was commercially successful for Barco. Thecompany performed along the strategic lines setforth and sales went up from 672 million euro to712 million euro, an increase of 6% year on year.Orders grew to 732 million euro, a 12% increaseyear on year. Success in our key growth marketsproves that the strategic initiatives taken last yearare starting to pay off.

But 2005 can also be described as a transition year.Laying the foundations for future company growthnecessitated business reorganizations, for whichprovisions had to be made. Reported EBITA over2005 was 52.0 million euro, or 7.3% of sales.Before restructuring costs, EBITA amounted to 60.5million euro, or 8.5% of sales.

In Europe, we streamlined our sales & serviceteam. As of 1 January 2006, all back office func-tions are being moved from the countries to amultinational account management team in ourdivisional headquarters, resulting in improved project management and customer service. In the

US we further consolidated operations. For theBarco Media & Entertainment division all expertiseis being brought together in Sacramento, California,by closing down the Logan, Utah operations. Byclosing our Kennesaw facility, our activities inGeorgia are being consolidated into one facility inDuluth, bringing valuable experience together andcreating bigger teams of specialists devoted to cus-

tomers. These restructurings are complemented bya reorganization of operations within our defensebusiness unit, carried out in the first half of 2006in US and France.

Once completed, we estimate total savings will be

between 4 and 6 million euro per year, with fullsavings to be reached in the second half of 2006.To further improve profitability, we keep focus onimproving working capital in 2006. Particularlyinventory still leaves room for improvement,although there already was a significant improve-ment to be noted end of 2005. Even though therewas strong growth in orders, inventory decreased

Letter from the Chairman and CEOMartin De Prycker CEO Herman Daems Chairman of the board of directors

"Operational excellence is high on our priorities list"

11

from 144 million to 141 million euro year on year. Lean manufacturing, which is gradually beingimplemented into the company, will also furtherreduce cost. Only a few months after its introduc-tion, it reduced production cycles in the BarcoView

division by 25% and repair turnaround times in theBarco Media & Entertainment division by 50%. Todirect Barco's operational excellence program on aglobal company-wide level, Rob Brown wasappointed to the new position of President GlobalOperations & Supply Chain in February 2006. In thisposition, Rob is responsible for the implementation

and alignment of all operations across Barco, withstrong focus on lean manufacturing, inventorymanagement and quality improvement.

Another strategic action point for 2005 was to further

extend Barco's value proposition to the market, byadopting a customer-centric, solution-drivenapproach. This strategic focus of full service offering,project handling and visualization consultancytouches the heart of the customer value chain andallows Barco to fully target its visualization solutionsto the needs of professionals. This process of moving

up the value chain is a lengthy but rewarding one,as the multi-million contracts for Victory Park(Dallas, Texas, US) and Sky News (London, UK)illustrate.

Acquisitions have always been an important tacticin grouping relevant technology expertise and thusenhancing Barco's value proposition. But with mana-gement's attention on improving customer focusand consolidating our activities, only one strategicacquisition was made in 2005, which extends ourfull solution offering to the Rental & Staging market.For the coming year, Barco will actively exploreopportunities for acquisitions in key markets andgrowth regions (North America and Asia-Pacific).

Looking at the key growth markets Barco is active

"Digital revolution opens doors for future growth"

"Extended value proposition is starting to pay off"

12

in, we see a number of trends that definitely offergrowth potential. First of all, there is the ongoingdigitization, offering growing opportunities forinstance in medical imaging and digital cinema. Incinema, hardly 0.5% of complexes featured digitalprojection end of 2005, whereas further double-digit growth is anticipated in the medical imagingmarket over the next five years. PACS (PictureArchiving and Communication System) is movingbeyond the traditional radiology reading room intoa facility-wide digital imaging workflow, therebyincreasing the number of seats per project. This

further penetration of softcopy imaging in moremature markets, coupled with opportunities fromemerging markets in Asia-Pacific and manyEuropean countries, confirm Barco's growth poten-tial in medical imaging.

At the same time there is a demand for increasedsecurity using digital rather than CCTV technology,opening opportunities for networked control roominstallations. We also expect growth from the intro-duction of High Definition projection in the eventsmarket and of our strategic decision to invest inmid-range markets. In this respect, Barco introduced

numerous new products in 2005, for instance thin,light rugged displays for the defense industry,entry-level medical displays and affordable LEDwalls.

As expected, Barco performed solidly on its homeground (with Europe accounting for nearly half ofsales), while sales in Asia-Pasific (APAC) and NorthAmerica rose significantly. Sales in APAC were up7% in 2005. This increase mainly comes from thegrowth economies of the region, China and India.Sales in India rose 25%, and also China realized

double-digit growth in sales (+13%). The increasein orders by 20% further underlines Barco's com-petitive position in APAC. Sales in North Americawent up 13% last year and the relative share ofAmerica in the company's total sales has grown to33.5% (APAC 18.8%, EMEA 47.7%).

Barco has adapted its company strategy in recentyears to mitigate the negative impact of the dollar-euro exchange rate. Global spreading of operations,improving the company's natural hedging position,plays an important role in the company's strategy.But Barco also actively manages exposure to

changes in exchange rates through its financial riskmanagement strategy.

This impressive regional growth, our extendedvalue proposition with strong focus on image pro-cessing, and the ongoing digitization in many ofBarco's key markets, makes us confident that weare well positioned for further organic growth in2006. Growth is mainly expected in key growthmarkets such as medical imaging, digital cinema,events, media and control rooms, where newproducts answer the demand for more affordable

solutions. In 2006 we will also see the first resultsof the actions taken in 2005, including the world-wide redistribution of operational activities andrestructuring exercises.

On behalf of the board of directors and manage-ment, we would like to thank our employees fortheir relentless efforts and you, dear shareholder,for your continued support.

Herman Daems - ChairmanMartin De Prycker - CEO

"Fast-growing Asian economies offer exciting business opportunities"

13

Fully capture benefits of restructuring programs and global spreading of operations

Grow into a customer-centric service provider by extending functionality inimage processing

Improve Return On Capital Employed through lean manufacturing andreduced working capital

Focus on key professional markets offering excellent opportunities for profitable growth

Targets 2006

14

Barco is a world leader in professional markets, inwhich it offers display and visualization solutions.Based upon in-depth market knowledge, the compa-ny designs and develops solutions for large-screenvisualization, display solutions for life-critical applica-tions, and systems for visual inspection.

Currently Barco is active in the markets of medicalimaging, defense & security, traffic management,avionics, media, events, digital cinema, presentation,simulation, traffic & surveillance, utilities & processcontrol, broadcasting and textiles & plastics.

Barco is headquartered in Belgium, and has its ownfacilities for Sales & Marketing, Customer Support,R&D and Manufacturing in Europe, America and Asia-Pacific. Worldwide, Barco employs about 4,200people and realized sales of 712 million euro in2005.

As imaging is revolutionizing the world, accurateprocessing and display of visual information isbusiness-critical for many professionals world-wide. The inherent complexity therefore requiresuser-friendly solutions.

In line with this vision, Barco's mission is to excelin creating stakeholder value, by offering user-friendly imaging solutions to selected professionalmarkets worldwide.

Barco designs and manufactures innovative hard-and software visualization solutions, integrating allaspects of the imaging chain, from image acquisitionand processing to image display and management.

Global presence, technology leadership and wideexperience in B2B markets guarantee customerspioneering visualization that will optimize theirproductivity and business efficiency. Integrating thelatest technologies, these “visual value” solutionsanswer specific customer needs in diverse markets.

Barco enters a partnership with professionalsrequiring visualization for intensive use, looking forpixel-perfect visual information, searching for thelowest total cost of ownership, … professionalswho know more.

Company introduction

Company profile Mission statement

15

Customer focus

Barco wants to be a close business partner whospeaks the customer’s language, who is alert andresponsive, who understands and anticipates hisneeds.

Integrity

Relationships with customers, suppliers, colleaguesand society in general are marked by integrity.Barco wants to be a long-term partner earningrespect, credibility and trust through quality, service,openness and responsiveness.

Creativity

Barco is continuously looking for fresh horizons,new technologies and creative ideas. Originality is an invitation for people to participate in an ambitious project, to express Barco’s authenticitythrough their own personalities.

Passion for achievement

Employees share the same work spirit and passionto meet goals and deadlines. They are driven bythe kicks of exploring new technologies, the pleasureof designing award-winning solutions and the satisfaction of creating added value.

Team spirit

Barco staff are driven by a healthy team spirit. Theyshare the same vision and join hands to achievetheir goals.

Company values

16

Organizational structure

MKT204 SAL

479

ADM389

CS453

R&D851

LOG329

MAN1,517

Sites

Europe & Middle East Asia - Pacific Americas

Belgium Australia BrazilCzech Republic China CanadaDenmark India United StatesFrance JapanGermany MalaysiaIsrael SingaporeItaly South KoreaPoland TaiwanRussian Federation ThailandSpainSwedenSwitzerland R&D and manufacturing facilitiesThe NetherlandsUnited Arab Emirates Belgium IndiaUnited Kingdom China Japan

Czech Republic SwitzerlandFrance United KingdomGermany United States

Total number: 4,222

• MKT: Marketing & Sales• R&D: Research & Development

• MAN: Manufacturing• CS: Customer Service

• ADM: Administration• LOG: Logistics• SAL: Sales

Worldwide presence Employees

17

Barco Presentation & Simulation

Presentation

Simulation

BarcoView

Medical Imaging

Defense & Security

Traffic Management

Avionics

Barco Media & Entertainment

Media

Events

Digital Cinema

BarcoVision

Textiles

Plastics

Barco ManufacturingServices

3.3%

Barco Control Rooms

Traffic & Surveillance

Utilities &

Process Control

Broadcasting

8.1%16.2% 14.3%25.1%33.0%

Organizational structure

18

January February March

- High Definition, 16:9 wide network-centric projector for classroom and conferencing environ-ments launched

- Acquisition of Belgium-based SystemTechnologies adds creative design to Barco's totalsolution offering for rental and staging market

- Barco teams up with Asia's leading businessschool CEIBS

- Paris Charles de Gaulle airport, France, choosesBarco main display stations for airport approachcontrol room

- Swedish Civil Aviation Administration awardsmulti-million euro contract for delivery of over 80main displays

- Barco vessel traffic and control room solutionsselected for Maritime Rescue and CoordinationCenter (MRCC) in Ostend, Belgium

- Barco's medical projection system first ever toreceive FDA 510(k) clearance

- HRH Prince Filip visits Barco control wall atReliance Infocomm network operations center,Mumbai, India

- Barco LED blocks, projectors and image proces-sors take center stage as U2 kicks off "Vertigo"tour in San Diego, US

Milestones 2005MRCC, Belgium

19

April May June

- Centre d'Essais en Vol selects Barco to upgradeFrench Tiger and Rafale mission training simula-tors

- Barco to install largest ever full color LED screenin China at Nanjing Olympic Center

- Extended success in civil avionics market withnew Airbus A380 deal

- Barco supplies display walls for Qi Zhong Center,China, host to the Shanghai Tennis Masters Cup

- Barco digital cinema projectors chosen forEuropean premiere of "Star Wars III - Revenge ofthe Sith"

- Successful test flight of Antonov AN-124, featuringBarco cockpit displays

- Barco to install outdoor LED display solutions forChongqing International Convention & ExhibitionCenter and Chongqing Dahe Advertising Co. Ltd,China

- Kodak and Barco forge strategic alliance to serveworldwide digital cinema market

- Shell upgrades Dutch Virtual Reality center for inter-pretation and modeling of seismic data with BarcoDLP projectors

U2, Vertigo Tour Shanghai Tennis Masters Cup Shell VR Center

20

- Bishop Planetarium, Florida, US, celebrates grandre-opening with Barco technology

- Barco delivers medical display systems to threeSwiss hospitals under the TriPACS program

- Taylor Field, Canada, installs new Barco LEDscoreboard

- Barco announces plans to consolidate its Georgia,US operations. Kennesaw business to be relocatedto Duluth facility

- Barco delivers 5,000th rugged LCD display toLockheed Martin, for US Navy Q-70 program

- Barco-equipped 360° simulator operational withNational Air Traffic Services (NATS) in the UK

- Brand-new line of thin, lightweight, rugged dis-plays selected for EADS OMADA console concept

- Frost & Sullivan grant Growth Strategy Leadershipand Technology Innovation awards for Barco'sefforts in the medical imaging market

- Barco delivers display walls for Saudi AramcoOperations Coordination Center and Vienna TrafficAuthority control center

July August September

Taylor Field, Canada NATS, UK

21

- Multi-million euro contract with EADS forPortuguese Vessel Traffic Control system meansbreakthrough in maritime surveillance & securitymarket

- Barco launches networked display system forfacility-wide broadcast and distribution monitor-ing

- Barco wins manufacturer of the year award atannual AV awards

- Dong Young iTech and Barco bring digital cinemato South Korea: 42 Barco projectors to beinstalled at four major sites in Seoul

- Sky TV (UK) installs LED backdrop for studionewsroom and equips studios and monitoringrooms with Barco projection walls

- RAF Eurofighter Typhoon cockpit trainer, featuringBarco mini-dome simulator, operational. Boeingselects mini-dome for Virtual Warfare Center

- Barco launches industry-first medical diagnosticluminance color display system

- Barco streamlines European Sales & Serviceorganization and forms new US company to bet-ter support government and military customers

- Victory Media Network awards 18 million USDcontract for LED displays in Victory Park, Dallas,US. 40,000 LEDs cast new light on Uniqa Tower,Vienna

- Belgian Association of Financial Analysts gives"2005 award for best financial information" toBarco

October November December

Sky News, UK Uniqa Tower, Austria

22

4th quarter 3rd quarter 2nd quarter 1st quarter[ in thousands of euro* ] 2005 2005 2005 2005

Net sales* 209,971 171,478 176,896 153,647Gross profit* 86,855 69,696 74,790 60,812

EBITA before restructuring cost* 25,500EBITA* 19,072 11,040 15,469 6,427

Current result before taxes and before goodwill amortization* 18,830 10,568 15,142 6,306Current result after taxes and before goodwill amortization* 14,850 8,297 11,771 4,874Current result after taxes per share and before goodwill amortization 1.22 0.68 0.96 0.40

Net income* 13,659 8,347 11,685 4,867Earnings per share 1.12 0.68 0.95 0.40Diluted earnings per share 1.05 0.64 0.90 0.37

Current cash-flow* 31,240 22,712 25,827 18,180Current cash-flow per share 2.56 1.86 2.11 1.49

Total 4,222 4,273 4,327 4,387

Financial highlights per quarter

Key figures per quarter 2005

Number of employees

23

4th quarter 3rd quarter 2nd quarter 1st quarter[ in thousands of euro* ] 2004 2004 2004 2004

Net sales* 193,048 158,118 171,520 149,237Gross profit* 82,727 65,847 75,685 65,875

EBITA before restructuring cost*EBITA* 24,244 13,249 18,618 15,316

Current result before taxes and before goodwill amortization* 24,118 13,298 19,042 15,734Current result after taxes and before goodwill amortization* 20,198 10,632 14,465 11,857Current result after taxes per share and before goodwill amortization 1.65 0.87 1.18 0.96

Net income* 16,154 8,620 12,603 9,960Earnings per share 1.32 0.70 1.03 0.81Diluted earnings per share 1.24 0.66 0.96 0.76

Current cash-flow* 34,315 23,822 29,171 24,161Current cash-flow per share 2.80 1.95 2.38 1.96

Total 4,389 4,384 4,217 4,121

Key figures per quarter 2004

Number of employees

24

[ in euro ] 2005 2004

Number of shares on 31 Dec (in thousands) 12,542 12,464

Per share

Current result (1) after taxes 3.25 4.66Current cash-flow (2) 8.01 9.09Net result 3.15 3.86

Gross dividend 2.15 2.10Net dividend (3) 1.6125 1.575Net dividend (4) 1.8275 1.785Gross dividend yield (%) (5) 3.39 3.09Yearly return (%) (6) -4.00 1.00Pay-out ratio (%) (7) 68.3 54.40Price/earnings ratio (8) 19.54 14.60

Net equity 34.39 32.62

(1) earnings before provision for restructuring, non-operating income, goodwill amortization and tax impact related to afore-mentioned(2) current result after taxes + amortization, depreciation and changes in deferred taxes(3) without VVPR-strip(4) with VVPR-strip(5) gross dividend / closing rate on 31 Dec(6) increase / decrease share price + gross dividend, divided by closing share price(7) gross dividend / net result(8) share price 31 Dec / current result after taxes per share

Key figures for shareholders

25

[ in euro ] 2005 2004

Share price

Average closing price 62.16 69.98Highest closing price 74.40 75.05Lowest closing price 57.20 65.15Closing price on 31 Dec 63.50 68.05

Average number of shares traded daily 39,368 30,166

Stock market capitalization on 31 Dec (in millions) 796.42 848.15

26

2005

Sales per division

2004

Barco Manufacturing Services

3.8%

BarcoVision

8.9%

BarcoView

32.3%Barco Presentation &

Simulation

15.4%

Barco Media &Entertainment

23.6%

Barco Control Rooms

16%Barco Manufacturing Services

3.3%

BarcoVision

8.1%

BarcoView

33%Barco Presentation &

Simulation

14.3%

Barco Media &Entertainment

25.1%

Barco Control Rooms

16.2%

27

2005 2004

Geographical breakdown of sales

EMEA

47.7%

AMERICAS

33.5%

ASIA - PACIFIC

18.8%

EMEA

49.9%

AMERICAS

31.4%

ASIA - PACIFIC

18.7%

EMEA = Europe, Middle East, Africa

Medical imagingDefense & securityTraffic managementAvionicsMedia EventsDigital cinemaPresentationSimulationTraffic & surveillanceUtilities & process controlBroadcastingTextiles & plastics

Arlequin - Victor Vasarely >>>

Market outlook

30

Medical imaging

- Percentage of company's total sales: 14.6%- Geographical distribution of sales:

EMEA 33% - Americas 56% - APAC 11%- Sales growth in euro in 2005: 35%- Barco granted Frost & Sullivan ”Technology Innovation”

award

Cardiology reading

31

The number of images to be processed and displayedin medical imaging centers is increasing at anexponential rate. Image data sets have evolvedfrom some 70 images at the end of the previouscentury to 20,000 images today for a single exami-nation. These technological advances necessitate acomputer-assisted diagnostic workflow, with state-of-the-art visualization, to make diagnoses in a fastand efficient way.

As a worldwide leader in radiology softcopy displaytechnology, Barco answers the industry's need fordiagnostic confidence and productivity through itsrange of diagnostic displays, 3D imaging softwareand customer imaging solutions. 2005 milestonesinclude the launch of color LCD displays for diag-nostic viewing, FDA-certified 5MP mammographydisplay systems, a new integrated suite of cardiacanalysis application software and technology col-laboration with 3D graphics specialist ATI.

Customers include leading medical integrators likePhilips, GE, Fuji, Agfa, Siemens and Kodak and reference contracts were signed for the SwissTriPACS program and Fuji's Synapse PACS system.For its efforts in the medical imaging market Barcoreceived the Frost & Sullivan "Growth strategy leader-ship of the year" and "Technology innovation"awards.

Clinical imaging

32

Defense & security

- Percentage of company's total sales: 8%- Geographical distribution of sales:

EMEA 38% - Americas 47% - APAC 15%- Sales growth in euro in 2005: -15%- Introduction of next generation of thin, lightweight rugged

displays

Shadow Tactical Ground Station (photo courtesy AII corporation)

33

Information superiority allows commanders tomake accurate and timely decisions. It gives thema decisive strategic advantage over their adversaries.By increasing situational awareness, operationaldecision makers have a deeper understanding and a clearer view of battlefield movements.Interactive, real-time image generation and sharingbetween forces and command centers is a crucialfactor in today's network-centric warfare.

Barco masters the complete imaging chain indefense and security applications. From image pro-cessing and fusion to networked distribution anddisplay, Barco's integrated solutions ensure reliableimage management. Target application platformsinclude fixed and rotary wing aircraft, surface ships,submarines, ground vehicles, mobile applicationsand command & control centers. Next to a fullrange of rugged large and small format displays,Barco offers graphics controllers, network centricproducts, rugged computers, workstations, consolesand software components for use in operationaldisplay systems.

In 2005 Barco introduced a new range of thin,lightweight rugged displays for use in (non) mission-critical applications. The new display hasalready been selected by EADS for a network-centric console concept, whereas RheinmetallLandsysteme awarded a long-term cooperationagreement, making Barco its prime supplier forrugged displays. In the US, a major follow-on orderwas signed for delivery of flat panel displays andgraphics generators for the Q-70 program, forwhich Barco has delivered more than 5,000 ruggeddisplays over the last years.

STN Atlas IMCM system (photo courtesy STN Atlas)

34

Traffic management


EMEA 50% - Americas 44% - APAC 6%- Sales growth in euro in 2005: -8%- Delivery of 1,500th LCD main display for FAA

replacement program

DFS Bremen (Courtesy of Deutsche Flugsicherung GmbH)

35

Air traffic demand is expected to keep on growingby an annual rate of at least five percent, doublingthe number of passengers by 2020. Given thisstrong increase, the safe and efficient handling offlights poses ever greater demand on air trafficcontrollers and their communication technology. To keep a close eye on traffic, controllers rely oncontent-rich LCD screens and supporting HMI soft-ware, displaying all required information for theirlife-critical decision making in real-time.

With Aviation Authorities opting more and more formodular systems, allowing for seamless technologyinsertion, Barco focuses on the design, developmentand manufacturing of real-time graphics displaysystems and software components. To expand thedisplay capacity of controller working positions, thecompany's hardware and software offering for theoperations room and control tower was enhancedwith a 24" auxiliary display.

Barco's visualization solutions for OperationalDisplay Systems have been selected by leadingsystem integrators and air navigation serviceproviders worldwide. In 2005, Charles de Gaulleairport Paris chose Barco display stations for theapproach control room and the Swedish CivilAviation Administration awarded a contract formore than 80 ATC main displays. In China, the CivilAviation Administration contracted Barco for themaintenance of the ATC centers in Beijng, Shanghaiand Ghuangzhou. And Barco's software compo-nents were selected for slot optimization at Munichairport and for the HMI development of a new,nation-wide control center in Czech Republic.

Christchurch, New Zealand (Courtesy of Airways New Zealand)

36

RC-135 (copyright Benjamin Freer)

Avionics


EMEA 59% - Americas 32% - APAC 9%- Sales growth in euro in 2005: 33%- Five Barco units in the Airbus A380 cockpit

37

In today's cockpit, a multitude of data and informa-tion sources has to be processed, displayed andmonitored in real-time. Pilots rely on multi-functionaldisplays showing critical flight, system and weatherinformation to make their flight control decisions.Accurate processing and timely display of datafrom a multitude of information sources enhancessituational awareness and safety, but at the sametime requires powerful image processing and visu-alization solutions.

Barco focuses on the visual interface between pilotand equipment. Its displays are intelligent units,able to communicate with a wide range of avionicssystems and capable of displaying video, flight andsystem information. At the heart of Barco's hardwaresolutions, is an open modular software platform,allowing for easy software insertion by systemintegrators. Barco's extensive range of products forthe cockpit environment includes video displayunits, smart display units, multi-purpose controldisplay units, electronic flight instrument systemsand electronic flight bags.

In 2005 Barco received an important follow-oncontract, with a potential value of 30 million euro,for the Onboard Maintenance Terminal andTerminal Processing Unit of the Airbus A380.Barco's cockpit solutions were also selected for theRussian Ilyushin 114-100 airliner and Kamov heli-copter and performed excellently during test flightsof the PC-21 trainer and Antonov 124-100 freighter.Given the growing importance of repair services, adedicated regional service center was opened inZhukovsky, Russia, next to the existing facilities inthe US and Belgium.

Airbus A380 (copyright Airbus - Image Graphique I3M)

38

Media


EMEA 33% - Americas 40% - APAC 27%- Sales growth in euro in 2005: 23% - 18 million USD contract awarded for LED visualization

at Victory Park, Dallas

Bank of America, Times Square, New York (copyright Clear Channel Spectacolor)

39

In a world full of advertising, precisely targetingyour message makes the difference betweenmoney wasted and a successful campaign. Digitalsignage offers marketeers and advertisers a uniqueand innovative tool to bring classic advertising tolife. Networks of digital advertising displays showanimated messages, precisely targeted at the audience, be it fans in a stadium, commuters goinghome, or visitors of your company's headquarters. Barco's programmable, networked LCD and LED display solutions offer a dynamic, high-impact

medium to entertain and inform. They give fansthe ultimate sports experience, capture the atten-tion of the crowd on high-profile locations andmaximize the visibility of corporate brands.

In 2005 Barco received an 18 million USD contractfor the installation of LED displays at Victory Park inDallas, US. Other branding projects included theUniqa tower in Vienna, Austria, and installations forChongqing International Convention & ExhibitionCenter and Chongqing Dahe Advertising Co. Ltd in

China. Also in China, Barco received a contract toinstall 300 m2 of LED signage at the NanjingOlympic Center. Croke Park (Ireland), Taylor Field(Canada) and Colorado State University (US) are buta few of the many other stadiums that installedBarco video displays and scoreboards in the courseof 2005. At the annual InfoComm exhibition,Barco's LCD displays received the "Best digital signage product" award, whereas Crown Fountainin Chicago received the award for "Best architecturalintegration project".

Taylor Field, Canada

40

Events


EMEA 43% - Americas 39% - APAC 18%- Sales growth in euro in 2005: 12%- U2 Vertigo tour a feast for the eye with revolutionary

Barco technology

Tokyo Car Show

41Eurovision Songfestival

Artists, designers and corporations turn to digitalsignage for stunning video and lighting effects.Mixing video, lighting and multimedia, theyimmerse the audience in a visual spectacle, onlylimited by imagination. Video display systems anddigital lighting, merging creativity and technology,draw the public into a new visual reality at con-certs, sporting events, theater performances ortradeshows.

Barco provides rental and staging companiesworldwide with premier large format display solutions, including LED displays, projectors, LCDsolutions and image processing equipment. Itssolutions form a complete rental range for indoorand outdoor events, including exhibitions, concerts,car shows, company presentations and fashionevents. In response to the market's demand, Barcolaunched circular LED building blocks and diffusers,allowing stage designers to create any shape theywant.

U2, Eminem, Foo Fighters, Destiny's Child andDuran Duran are but a few of the many artists thatwere on tour with Barco equipment in 2005.Barco's LED solutions dominated car shows on allcontinents and were also used at the 77th AcademyAwards, the Redbull Formula 1 launch andMicrosoft's partner conference. For its efforts incustom-designing the LED modules for U2's Vertigo tour, Barco received the AV Magazine"Manufacturer of the year award" and the ENCORE

video processing and control system was awardedat InfoComm.

42

Digital cinema


EMEA 52% - Americas 20% - APAC 28%- Sales growth in euro in 2005: 60%- Star Wars Episode III premiered on Barco projector at

Cannes Film Festival

Shanghai Stellar Cinema City, China

43

When the lights go down, the audience is ready toleave everyday reality behind and enter an imagi-nary world. Comfortably seated in soft seats, theywant to be immersed in a digital world with crystalclear images that takes them to places they couldnever imagine. The exceptional visual clarity of digital cinema brings them a unique film experi-ence, and makes them live adventure, drama andemotion like never before.

Barco is one of only three licensees of the TexasInstruments DLP Cinema™ technology. Replacingtraditional film reels with streams of bits and bytes,Barco's digital cinema solutions open up a newworld of theatrical, advertising and business oppor-tunities. From digital mastering to premier qualityfeature film screenings, from alternative presenta-tions in the auditorium to advertising and informationdisplays, Barco's digital cinema offering brings thesolution. 2005 highlights include the European pre-

miere of Star Wars Episode III – Revenge of the Sithat the Cannes Film Festival and the collaborationwith Dolby Laboratories for the 3D premiere ofDisney's Chicken Little in the US. A strategicalliance was forged with Kodak to strengthen bothcompanies' worldwide offering, and a major contract was signed with Korea's premier motionpicture exhibitor Megabox Cineplex Inc. for 42 digital projectors.

Kinepolis Brussels, Belgium

44

Presentation

Coca Cola European Visitors Center


EMEA 45% - Americas 18% - APAC 37%- Sales growth in euro in 2005: -2%- Record sales in China for presentation solutions

45

Advances in information and communication technology have opened new ways for remoteexchange of ideas and virtual collaboration.Network-centric visualization is one of the strategicenablers of this fast and efficient knowledge sharing.Simultaneously displaying live video, multimedia,spreadsheets and presentations across multiplesites opens the way for virtual collaboration in thetruest sense of the word.

Barco's networked projection solutions open newwindows of opportunity for collaborative informationdisplay in higher education classroom environ-ments, briefing rooms, corporate boardrooms, andvideoconferencing rooms. Beginning of 2005, thecompany officially introduced the first 16:9 projec-tor with HD resolution, winning the "Best ofInfoComm" award.

At the annual World Economic Forum in Davos,Switzerland, Barco projectors were used in all conference rooms, the congress hall and theExecutives' lounge. Coca Cola turned to Barco toequip its European Visitors Center, and the RoyalBritish Columbia Museum, Canada, set up the firstpermanent 3D display on climate, using satelliteimages and Barco projectors.

World Economic Forum, Davos, Switzerland

46

Simulation

Tycho Brahe planetarium, Denmark


EMEA 41% - Americas 40% - APAC 19%- Sales growth in euro in 2005: -2%- Barco systems omnipresent at World Expo in Aichi, Japan

47

Virtual reality, 3D visualization and simulation opena world of immersive opportunities. Combininghigh resolution projection and computer graphicsallows operators to practice life-critical situationswith no risk involved, brings complex data to lifefor scientists and researchers and engages visitorsof museums and leisure centers in an interactiveworld.

Barco's stereoscopic visualization and immersivedisplay solutions allow for stunning special effectsin leisure centers, museums, theme parks andplanetariums. Also for training pilots and air trafficcontrollers, virtual drilling for oil and gas, studyingmolecular structures or visualizing engineering concepts, Barco's visual display solutions hold theanswer. Visualizing complex and large datasets,Barco's immersive solutions are used for digitalprototyping, scientific research, geological modelingand a wide range of trainers and simulators.

In 2005, Indiana University (US), Naples University(Italy), Shell Rijswijk (Netherlands) and ErasmusMC (Netherlands), equipped their virtual realitycenters with Barco display systems. Pilots of theTiger helicopters in France, Gripen combat aircraftin Sweden, and the RAF Eurofighter are all beingtrained in Barco-equipped simulators. Planetariumsinstalling Barco solutions include the Bishop planetarium (Florida, US), Tussauds London plane-tarium (UK), Tycho Brahe Planetarium (Denmark)and the Armagh Planetarium (Ireland). And theFrench, Belgian and Russian pavilions were but afew of the many featuring Barco projectors at theWorld Expo in Aichi, Japan.

NATS ATC simulator, UK

48

Traffic & surveillance

- Percentage of Barco Control Rooms division in company'stotal sales: 16.5%

- Geographical distribution of division sales: EMEA 55% - Americas 16% - APAC 29%

- Sales growth of Barco Control Rooms division in euro in 2005: 7%

- Canary Wharf installs Barco control room

Rijkswaterstaat ZWN, the Netherlands

49

In many metropolitan areas, operators are constantlymonitoring traffic flows and surveying public infra-structure. Allowing for prompt detection andresponse to incidents, these surveillance systemsincrease safety and optimize capacity. To keep a real-time status overview, a growing number of imagesand data, from cameras, sensors and other intelligentdevices, have to be processed, displayed and sharedbetween operators on large video walls.

Barco's networked solutions for traffic and surveil-lance visualize life-critical information in real-time.Data and video feeds are processed and displayed ongiant screens in the central operations hub, allowingcommanders to efficiently coordinate responses toevents and incidents. In this way, Barco enables collaborative decision making in the truest sense ofthe word, offering increased safety.

Optimized for traffic management, surveillance andcommand and control centers, Barco's control roomsolutions were selected for a wide range of applica-tions in 2005. Reference projects include CanaryWharf (UK), Camden City Council (UK), Departmentsof Traffic (Florida, US), Highways Agency (UK),Rijkswaterstaat (Netherlands), Vienna TrafficAuthority (Austria), National Roads Agency (SouthAfrica), Center for Disease Control (US) and the USDepartments of Justice and Defense.

Canary Wharf surveillance room, UK

50

Utilities & process control




- 200 m2 display wall for production monitoring at SaudiAramco

Saudi Aramco, Saudi Arabia

51

Providing operators with all key information of theproduction or distribution chain is mission-critical inutilities and process control. Large-screen displaywalls visually integrate real-time signals and information sources (data, schematics and video),helping operators identify problems, improve operational efficiency and properly respond toevents, 24 hours a day, 7 days a week.

In electricity, water, oil and gas plants, Barco visualizes all dynamic data, from detailed networkdistribution information to topological overviews.Barco's control room solutions feature direct net-work connectivity, allowing to share and exchangecontents between control centers.

In 2005 Barco installed a 67 by 3 meter displaywall at the Saudi Aramco Operations CoordinationCenter. The new curved wall serves as the real-time nerve center, visualizing all critical operationsin oil, gas, shipping, pipelines and refining. Othersuccessful utilities projects include New EnglandISO (USA), Mid-West ISO (USA), Hawaii Electric(USA), NLP (Indonesia), Vattenfall (Norway),Scottish Power (UK), RWE (Germany) and EnBW(Germany).

ZNL Esslingen control room, Germany

52

Reuters, UK

Broadcasting




- Barco total solution provider for Sky News facilities

53Sky News, UK

In today's highly competitive broadcasting busi-ness, channels and broadcasters are constantlylooking for new creative technologies to engageviewers. To make an impact on the audience in thestudio and impress the viewer at home, they turnto large screen displays, combining graphics andvideo footage. Interactive and dynamic, thesebackdrops give the viewer a sense of "live" coverage in the news studio and add sparkling creativity to live shows.

Barco provides a wide range of display solutions forbroadcasting and broadcast monitoring. Seamlessrear-projection display walls and LED screens bringbroadcasters maximum flexibility as video back-drop in TV studios and live shows. In addition,Barco's monitoring solutions for production control,master control and distribution control, offer atotal, networked solution to monitor a wide rangeof incoming signals on multiple screens. This allowsbroadcasters to manage their broadcast feeds in afast, flexible and efficient way.

In 2005, Barco backdrop solutions and monitoringcontrol solutions were deployed by Sky News,London which used an LED backdrop, Barco projectors and monitoring systems. Other mile-stone projects include Channel 4 News in the UK,Discovery Channel Master Control (Ascent Media) inUS and UK, Saturday Night Live Production Control(NBC) in US, Late Show Production Control in US,and Al Jazeera News in Dubai (UAE).

54


EMEA 72% - Americas 9% - APAC 19%- Sales growth in euro in 2005: -3%- Polypropylene clearer available for Open End machines

Textiles & plastics

Central Fabrics, China

55

Real-time visibility in process monitoring is crucialto remain competitive in today's high-speed businessclimate. Gathering and analyzing production andquality data or fall-out rates, allows optimizing theproduction chain and maximizing return on plantassets.

Barco is a leader in sensor- and camera-based quality management, offering computerized pro-duction planning and monitoring systems for thetextiles, plastics and pharmaceutical industries.These solutions improve the efficiency of the produc-tion process, from raw material to final product. In2005 Barco premiered a new high-speed on-loomfabric inspection system, tripling the scanningspeed.

Cormar Carpets (UK) selected Barco's wirelessmonitoring system for its tufting plant, whereasCentral Fabrics was the first to use Barco's real-timetextiles production monitoring and planning systemin China. Portola Packaging (UK) and Wyeth MedicaIreland are but a few of the customers usingBarco's Manufacturing Execution System.

Wyeth Medica, Ireland

Corporate governance Researching for innovation Leveraging brand equityManaging employee potential Facilitating best practicesSynchronizing regional focus and international expertiseOptimizing the supply chainParticipating in society Comments on the results

Andromède - Victor Vasarely >>>

Report of theboard of directors

58

Board of directors*

Chairman Herman Daems (1) Chairman of the board of directors Gimv 2006

CEO Martin De Prycker (3) 2008

Directors Jozef Cornu (2) Advisor to the Chairman of Alcatel 2010

Philippe Naert (2) Dean TIAS Business School, Tilburg University (NL) 2008

Marc Ooms (1) Managing Director Petercam nv 2010

Jan P. Oosterveld (2) Member of various boards, Professor at IESE Business School Barcelona, Spain 2007

Eric Van Zele (2) Managing Director Omniform S.A., Chairman Pauwels International and Reynaers Aluminium 2010

Marc Vercruysse (1) Chief Financial Officer Gimv 2006

Robert J. Verhoeven (2) Managing Director BMT nv 2007

Secretary Antoon Van Petegem

(1) non-executive directors (2) non-executive independent directors

(3) executive director

* On 16 February 2006

Date on which the termof office expires: end of

Main non-Barco position the annual general meeting

Corporate governance

Barco’s “Corporate Governance Charter” is avail-

able for downloading at the Investors corner of the

barco.com website.

59

Martin De Prycker Chief Executive Officer

Antoon Van Petegem Chief Financial Officer

Rob Brown President Global Operations & Supply Chain

Donald Defoort President Human Resources & Corporate Affairs

Miel Schamp President Information Technologies

JP Tanghe President Corporate Communication & Investor Relations

Jacques Bertrand President Asia-Pacific

Bernard Dursin President Europe, Middle East, Africa and Latin America

Dave Scott President North America

Bernard Cruycke President BarcoVision

Patrick Luyssen President Barco Manufacturing Services

Stephan Paridaen President Barco Media & Entertainment

Carl Peeters President Barco Control Rooms

Luc Vandenbroucke President BarcoView

Michel Vandeplas President Barco Presentation & Simulation

* On 16 February 2006

Executive committee*

60

Herman Daems is Chairman of the board of Barco andGimv, a publicly listed Private Equity and VentureCapital firm. He is also a member of the board ofCoWare Inc. (San Jose, CA, USA) and EVCA (EuropeanVenture Capital Association). Before, he held boardpositions with Belgacom and Glaverbel and wasProfessor in International Management and Strategy atthe Department of Applied Economics of the CatholicUniversity of Leuven (Belgium). He also taughtCompetition & Strategy at Harvard Business School andwas at the faculty of the University of California, LosAngeles. Herman Daems holds degrees inMathematical Physics and Economics and has a doctor-ate in Economics. He received grants and prizes fromseveral international organizations.

Martin De Prycker held several positions with Alcatelbetween 1982 and 1996. He was President of thedivision for ADSL broadband products from 1996until 2000. From 2000 until 2002 he was ChiefTechnology Officer and a member of the ExecutiveCommittee. In February 2002 he became CEO ofBarco, refocusing the company on visualization forprofessional markets. He is also on the board ofdirectors of FLV Fund and Agoria (Belgian multisectorfederation for the technology industry). Martin DePrycker holds a PhD in Computer Science.

Herman Daems Martin De Prycker

61

After three years of research at the Brown Boveriresearch laboratories in Baden, Switzerland, JozefCornu started his career within Bell Telephone (ITT)in 1973. During his career he was General Managerof Mietec and Bell Telephone (ITT), a member of theboard of management of Alcatel nv from 1988 until1995 and COO of Alcatel Telecom from 1995 until1999. Since 2000 he has been on the board of direc-tors of Alcatel. He is a member of the Supervisoryboard of Alcatel SEL (Germany) and a member of theboard of Alcatel CIT (France). Jozef Cornu is alsoChairman of the Board of Directors of Alcatel Bell nvand he is a director of KBC Group, Agfa-Gevaert andArinso International. Since 2005 he is the chairmanof the Information Society Technologies AdvisoryGroup (ISTAG) of the European Union.

Marc Ooms joined Petercam as Managing Director in1988, became Managing Partner of the PetercamGroup in 1992 and Chairman of Petercam Nederlandin 1999. He is in charge of corporate finance inBelgium and the Netherlands. He is a member of theboard of directors of several companies, includingGimv.

Philippe Naert is dean of TIAS, the business school ofTilburg University and Technische UniversiteitEindhoven (NL). He is a director of KBC Group,Concordia Textiles, Nuon Belgium and De Koninck.He was also dean of INSEAD (FR), director of theEIASM (Brussels) and academic director of theInstituto Universitario Euroforum Escorial (ES). Hegraduated in Electrical Engineering from the CatholicUniversity of Leuven. He further holds a postgradu-ate degree in Management Science (University ofManchester, UK) and a PhD (Cornell University, USA).He is Doctor honoris causa of the Helsinki School ofeconomics.

Jozef Cornu Marc Ooms Philippe Naert

62 Eric Van Zele Marc Vercruysse Robert J. Verhoeven

Eric Van Zele is President and CEO of PauwelsInternational, President of Omniform S.A. and chair-man of Reynaers Aluminium. Prior to his currentpositions, he served as President & CEO of Telindusand as Vice-President of Raychem Corporation.

Marc Vercruysse has been CFO and member of theExecutive Committee of Gimv since 1998. Beforebecoming CFO, he was internal auditor with Gimv,senior investment manager and head of StructuredFinance. He is also on the board of directors of several unlisted companies.

For almost twenty years Robert J. Verhoeven heldseveral senior management positions in the connec-tor industry. Since 1991 he has been CEO of the BMTGroup. This company is active in 11 countries with 18manufacturing plants. He is also on the board of LVDcompany (Belgium), PCD Brush (Belgium) and DTS(France).

63Jan P. Oosterveld

Jan P. Oosterveld joined Philips in 1972. He held various international management positions andbecame a member of the group management teamin 1998. Until his retirement in 2004 he was incharge of Philips' corporate strategy, corporatealliances and was responsible for the joint venturesfor LCD and CRT with LGE Korea. He was also CEO ofPhilips Asia Pacific. Jan P. Oosterveld holds degreesin Mechanical Engineering from the TechnicalUniversity Eindhoven, the Netherlands and BusinessAdministration from the IESE Business School,

Barcelona, Spain. He is a lecturer in Strategy,Entrepreneurship and International Management atleading business schools around the world and wasappointed professor at IESE in 2002. Since May 2003he is a member of the supervisory board ofContinental AG, Hannover, Germany. In 2004 he wasappointed as a member of the Supervisory Board ofAtos Origin S.A. in Paris, France, Crucell nv in Leiden,the Netherlands and of Cookson Electronics Plc,London, UK.

64

Appointment of Directors

The board consists of 9 directors:

One executive director

Martin De Prycker, Chief Executive Officer

Three non-executive directors

Herman Daems, Chairman,

Marc Ooms,

Marc Vercruysse

Five independent, non-executive directors

Jozef Cornu,

Philippe Naert,

Jan P. Oosterveld,

Eric Van Zele,

Robert J. Verhoeven

All non-executive directors hold senior positions in

leading international companies or organizations.

Baron Hugo Vandamme, Vice Chairman of the board

of directors, resigned at the closing of the annual

shareholders meeting, held on 4 May 2005.

Two new directors have been nominated for appoint-

ment by the general shareholders meeting on 3 May

2006: Mrs Christina von Wackerbarth and Mr John

Hughes.

Activity report on board and boardcommittees meetings

Reference is made to the Corporate Governance

Charter on www.barco.com for an overview of the

responsibilities of the board of directors and its com-

mittees, and for a survey of topics discussed at board

meetings.

Board of directors

In 2005 the board of directors met nine times. In six

of these meetings all members participated. At one

of the nine meetings two directors were excused

and at another two meetings one member was

excused.

Baron Hugo Vandamme participated in four of the

nine meetings prior to his resignation from the board

on 4 May 2005.

Audit committee

The audit committee consists of Robert J. Verhoeven

(chairman), Marc Vercruysse and Philippe Naert, who

all are non-executive directors. In 2005 the audit

committee met six times. One member was not

present at one meeting.

The audit committee discussed quarterly reports,

internal auditing aspects of the introduction of new

ERP software, IFRS compliance (specifically impair-

ment of goodwill). The audit committee also worked

on the Corporate Governance Charter and planning of

the internal audit program.

Remuneration & nomination committee

The remuneration & nomination committee consists

of 3 non-executive directors: Herman Daems

(chairman), Jozef Cornu and Marc Ooms. The commit-

tee met five times. At one occasion one member did

not attend.

The remuneration & nomination committee discussed

remuneration of CEO, directors and members of the

executive committee. The committee also discussed

nominations of new directors.

Strategic committee

The strategic committee met on two occasions in

2005. The members of this committee are Herman

Daems (chairman), Martin De Prycker, Jozef Cornu,

Eric Van Zele and Jan P. Oosterveld. All members

were present at all meetings.

The strategic committee discussed potential acquisi-

tions and disposals, as well as handling of strategic

decision making processes.

Remuneration for directors and members of the

executive committee

Pursuant to article 17 of the articles of association,

on 4 May 2005, the general meeting set the aggre-

gate annual remuneration of the entire board of

directors at 1,870,000 euro for the year 2005. This

amount was apportioned amongst all the members

of the board in line with the internal rules.

65

The general meeting grants a fixed remuneration of

euro 20,000 to directors and an additional amount

linked to attending meetings of committee(s) a

director is a member of. These remunerations are

charged to general costs.

In 2005 the remuneration paid to directors totaled

587,500 euro, consisting of:

- 340,000 euro fixed remuneration

- 247,500 euro remuneration, based on attending

the meetings of the board and the committees

Individual total remuneration of the directors in

2005:

Herman Daems, Chairman: 200,000 euro*

Jo Cornu: 60,000 euro

Philippe Naert: 57,500 euro

Marc Ooms: 52,500 euro

Jan P. Oosterveld: 45,000 euro

Eric Van Zele: 47,500 euro

Marc Vercruysse: 52,500 euro *

Robert J. Verhoeven: 72,500 euro

* Paid to Gimv

No stock options were granted to directors in 2005.

For the executive director and the members of the

executive committee the remuneration is determined

by the remuneration & nomination committee, in line

with the rules described in the company’s “Corporate

Governance Charter”, available on www.barco.com.

The 2005 remuneration package of the CEO

consisted of:

- fixed salary of 538,428 euro, i.e. an increase of

1% compared to 2004

- bonus of 255,546 euro, i.e. 25.9% lower than in

2004

- contribution for personal risk insurance and retire-

ment benefits of 270,464 euro.

Remuneration for the members of the executive

committee, excluding the CEO:

- total fixed remuneration of 2,410,720 euro,

including the employer’s contributions to person-

al risk insurances and retirement, i.e. a decrease

of 4.3% compared to 2004

- total bonus of 681,200 euro, i.e. minus 20.1%

compared to 2004

In 2005 the executive committee, excluding the CEO,

counted 14 members, 1 of whom served for only

half of the year. In 2004 the executive committee,

excluding the CEO, consisted of 14 members

throughout the year.

The total number of stock options granted in 2005 to

the members of the executive committee, including

the CEO, was 20,750.

Compliance with “The BelgianCode on Corporate Governance”

Reference is made to Barco’s Corporate Governance

Charter available for download from the Investors

corner on Barco’s website.

Barco complies to a large extent to all corporate

governance rules, as can be found in “The Belgian

Code on Corporate Governance”, which can be con-

sulted on www.corporategovernancecommittee.be.

The principles and guidelines of the code that Barco

does not comply with, along with an explanation of

the reasons for non-compliance, can also be found in

the Corporate Governance section on the Investors

corner of the Barco website.

Statutory auditor

Ernst & Young Bedrijfsrevisoren S.C.C.

Marcel Thirylaan 204

1200 Brussel

represented by Ludo Swolfs and Marc Van Hoecke

In 2005, remuneration paid to the statutory auditor

for auditing activities amounted to 386,750 euro.

Remuneration paid to the statutory auditor for spe-

cial assignments and to the persons with whom the

statutory auditor collaborates in his professional

capacity amounted to 96,597 euro over the past

financial year. Payments to the statutory auditor for

special assignments were granted mainly for audit

requests by the EU with respect to EU investment

grants. The persons with whom the statutory auditor

collaborates professionally were paid with funds

designated for fiscal consulting services.

66

In today's digital age, the number of data andinformation sources to be processed and visualizedis expanding at an exponential rate. Often undersevere time constraints, professionals have toreview and interpret large volumes of dynamicinformation, increasing the complexity of theirdecision making.

To keep an overview of all information available,users are in need of intelligent, Human MachineInterface-centric systems, which reduce the overall

complexity. Supported by user-friendly tools thatfilter data, enhance information or issue alerts,they are moving away from operational tasks andare assuming a more supervisory role. In this way,users only intervene at critical moments in thedecision making process.

With the ever-growing importance of computer-assisted decision making in many key professionalmarkets, Barco's R&D teams are devoting theirefforts on hardware and software for intelligent

Researching for innovation

- 50% of R&D efforts devoted to software- Open, modular system approach- Networked visualization - 40 patent filings in 2005 (23 filings in 2003 and 25 in 2004)- 1 out of 5 Barco employees active in R&D- R&D amounts to 9.5% of sales in 2005

67

image analysis. Their networked visualization anduser-friendly image processing solutions reduce theoverall complexity in key markets like surveillance,medical imaging, broadcasting or traffic manage-ment, where operators are under constant pressureto improve both efficiency and safety.Barco's dedicated centers of competence all overthe world each focus their attention on one ormore aspects of the imaging chain. Examples arethe Japanese R&D team which is fully concentratedon emerging projection technologies, the Beijing

researchers who are constantly looking for lowercost LED products, the Beaverton and Sacramentoteams who are devoted to image processing, theDuluth center working on sensor and image pro-cessing, the Edinburgh staff focused on 3D medicalimaging software and the dedicated cell ofresearchers in Belgium for networked visualizationand image management tools.

In its constant quest for innovation, Barco alsokeeps a close eye on promising technologies like

reflective displays, Micro-Electro-MechanicalSystems (MEMS) LED projection (Light EmittingDiode) and LCoS (Liquid Crystal on Silicon). About50% of all research activities are done in Belgium,with an additional 20% in other European countries.But the impact of other regions in R&D is constantlygrowing, as 10% of all research is done in the Asia-Pacific region, and 20% in Barco's US facilities.Moreover, researchers worldwide are constantlyexchanging knowledge through cross-divisionalcollaboration and technology forums.

"Intelligent image and data analysis tools reducethe overall complexity in the decision makingprocess"

Johan Remmerie Chief Technology Officer

68

Leveraging brand equity

Building brands was long considered as being anasset in consumer markets. Research, however,shows that intangible or emotional aspects of thebrand play an increasingly important role in B2Bmarkets. Customers today attach a great deal ofimportance to the good reputation of a brand, nextto tangible aspects like quality and functionality.

In 2005 Barco was established as a master brand.Benefits of this strategy are enhanced brand recog-nition without additional cost, further cost savingson trademarking and better search engine resultsthrough generic terminology usage.

Given the importance of branding, it is crucial thatthe true value of the brand is monitored andunderstood to maximize return on marketinginvestment. In a B2B environment, where it oftentakes months or years for a deal to materialize,quantifying marketing ROI and brand value can notbe taken for granted. We have therefore defined aframework for brand measurement. Within thisframework, both an internal branding survey andwebsite-related satisfaction surveys have beenconducted in 2005.

The company-wide internal branding survey, heldin the spring of 2005, explored how employeesperceive the brand and in how far they are ambas-sadors for the company. In comparison with resultsfrom other B2B companies, Barco had medium togood scores.

With a year-on-year increase of traffic with 20%,the website is a prime sales and marketing tool forBarco. Through website visitor satisfaction surveys,a “contact us” survey and an in-depth internal andexternal expectation level survey we do not onlywant to assess satisfaction of website visitors, but

- Master brand approach established and laid down in brand charter

- Company vision, mission and values reinforced throughout the organization

- Employee brand ambassadorship in line with industry average- Overall website satisfaction 71% - Web visitor sessions increased by 20%

69

"Determining marketing ROI is vital in building aperformance-driven marketing organization"

also better identify the business needs and expecta-tions of our target groups, so that we can graduallyfurther improve on our customer interaction. Overall satisfaction with the site was 71%, which isin line with the industry average, and more than60% of web visitors were willing to recommendthe Barco website to others. But even thoughappreciation for the website's functionality is high,a number of accessibility issues were identified andwill be addressed in the coming year.

In 2006 we will be working on visualizing the"intangibles" of the brand, through consistently

monitoring the return on marketing investment.Therefore a large-scale company-wide customersatisfaction survey and action plan will be set up inclose cooperation with Barco’s divisions. In addi-tion, marketing performance indicators will beidentified for key brand components like eventsand pr activities.

These measuring efforts are in line with the moreanalytical, consultative approach we favor. Fromour company-wide perspective, we identify thestrategy to realize Barco's premium brand approachacross markets and business divisions, and deter-

mines the metrics to measure marketing progressin general. But at the same time, we value theclose collaboration with the marketing teams ofthe several business divisions, who define theappropriate marketing tactics in each of their indi-vidual businesses.

Last year, the foundations were laid for marketingaccountability within Barco. In 2006 our marketingefforts will keep on focusing on the total brandexperience, on leveraging the best of corporateand business division capabilities, with a keen eyefor marketing metrics and content improvement.

Ann Galland Corporate Director Marketing

70

In 2005, the total number of employees decreasedfrom 4,389 end of 2004 to 4,222 end of last year.Business consolidation and improved efficiencyreduced the number of personnel in Europe andNorth America. In APAC on the other hand, newpositions were created, mainly at the LED manufac-turing site of the BarcoLeyard joint venture.

Also within the human resources department,increased efficiency and cost reduction were thefocal point in 2005. Several initiatives, often web-

based, were taken to increase administrative effi-ciency. Examples are an e-platform to managestock options and an automated solution to processexpense notes.

Time-saving efforts like these open new windowsof opportunity within Human Resources and allowto focus more on employee communication andcompetence management. Competence is the drivingforce of business success, especially in an interna-tional, customer-focused organization. Identifying,

Managing employee potential

- Strong focus on competence management- Number of employees decreased by 167 to 4,222- One out of five employees active in R&D- Strong employee growth in APAC (+57) in line with company

growth strategy- Increased administrative efficiency

71

assessing and developing capabilities alignsemployees with business strategy, and at the sametime allows them to develop their careers.

Competence management is all the more impor-tant in a 'flat', non-hierarchical organization likeBarco's, where performance improvement on apersonal level directly results in improved organiza-tional performance. In the competitive, internationalenvironment Barco is active in, competences likeinnovation and creativity, customer orientation,

project and team management, teamwork, andintercultural skills, are key to success. Dedicatedprograms are in place to define the capabilities andcore strengths of the organization, identify emplo-yees' potential and aspirations and link their personal career path with the overall company roadmap. In this respect, a worldwide benchmarkingprogram of job description, ranking and remunerationwas carried out in the course of last year.

In 2006 mobility will be the Human Resources key-word. In Barco's global, high-tech organization, it isimportant to keep close to the customer and gatherfirst-hand market knowledge through internationalexchange programs and internal job rotation. Barcohas set itself a strategic "mobility" target of 3%,ensuring that experiences gained in one market,company division or key technology are sharedwithin the whole Barco group.

"Aligning employee potential with the overall com-pany mission and vision is the core challenge ofHuman Resources Management"

Donald Defoort President Human Resources & Corporate Affairs

72

Information and Communication Technology (ICT) isa critical enabler for company growth and compet-itiveness. With the start of the implementation ofthe SSA ERP system outside Europe and the company-wide migration to the latest Windowsand messaging platform, major milestones werereached, which lay the foundations for continuousbusiness improvement.

In 2005 the ERP implementation program gainedmomentum. All Belgian sites are now operatingalong a common set of processes supported by thenew SSA ERP system. The manufacturing centers inKarlsruhe (Germany) and Noida (India) went live atthe end of 2005. North America is next on theimplementation list and is scheduled to go live in

the course of 2006, realizing even more synergiesfor the company. Also in 2006, implementation forour Chinese manufacturing center will be prepared.

The roll-out of the company-wide ERP system notonly allows for supply chain optimization but alsofacilitates synchronizing front and back office operations of the sales & service organization.Furthermore, consolidating the back office activitiesfrom the European subsidiaries into the respectivedivisional headquarters will yield better responsetimes for customers and increased efficiency.

Last year Barco also undertook a large-scaleWindows and mail system upgrade program. Thistechnology streamlining project lays the foundations

Facilitating best practices

- SSA ERP system used worldwide by 1200 users- 1500 man days of training on new processes during 2005 - First APAC site live on SSA ERP- Strong focus on business process optimization, integration

and automation- 80% of users migrated to MS Windows and MS Exchange

2003

73

for future process integration and multimedia collaboration, as all users worldwide are now usingthe same platform. This complex and challengingproject resulted in a considerable reduction of thenumber of servers throughout the company, thusreducing cost of ownership. At the same time itpaves the way to implement a portfolio of basicservices ranging from enhanced data security toenabling worldwide collaboration, scheduled tobecome available in 2006.

The worldwide roll-out of the ERP system and thetechnology migration program are key enablers ofcontinuous business improvement. Barco's dedicatedteam of business and process analysts was expanded last year to expedite business process

optimization, integration and automation, in linewith the company's strategic objectives. In thecoming year several business processes will be fur-ther analyzed and improved, for better marketalignment, timely solution delivery, improvedinventory management and adequate resourceallocation.

Information is essential in today's global knowledgeeconomy and consequently, secure informationaccessibility and availability are high on the agendaof a high-tech company like Barco. For informationsecurity, Barco implements the ISO 17799 guide-lines along with market specific standards, both forinternal processes and systems. To guaranteeworldwide accessibility and availability, Barco has

selected a global partner for the roll-out of aninternational Quality-of-Service network during2006.

2006 promises to be even more challenging than2005 with the ongoing roll-out of SSA ERP, streamlining of IT platforms in APAC and the imple-mentation of a modular management dashboard,providing the tools to set expectations for each ofthe company's divisions and business units andmonitor that performance against the key perform-ance indicators set.

"ICT plays a crucial role in business process optimization"

Miel Schamp President Information Technologies

74

Being successful in niche markets requires a world-wide scope, especially in the technology-drivenmarkets Barco is active in. But being successful inniche markets also calls for strong regional presence. Combining the expertise of a globalenterprise with local, customer-focused teams, isBarco's guarantee for customer intimacy and market understanding.

Understanding and anticipating customer needsrequires a strong local presence. Therefore Barcokeeps investing in strongly growing Asianeconomies like India and China. In response to the"Go West" policy of the Chinese government, Barcoopened offices in Nanjing and Chongqing. Localmanufacturing is also a key asset in Barco's regionalapproach. In this respect, production of the 10,000th

LED tile by the BarcoLeyard joint venture in Beijingmarked an important milestone. To further

strengthen its position in Asia-Pacific, Barco willmove to a new manufacturing and R&D facility in2006 in Noida, India.

Sales in the Asia-Pacific region as a whole were up7%, whereas orders rose 28.5%. Sales and ordersincreased by 13% and 20% in China, where Barcoholds strong positions in its key professional mar-kets. In a quickly changing environment, with laborcost rising quickly and margins under pressure,Barco maintained healthy margins by focusing onbrand positioning, technology leadership and itsservice organization. India is booming as well(sales +25%, orders +62%), driven by governmentinvestments in the utilities market. Japan realizedmoderate growth, thanks to successes in the mar-kets of medical imaging, broadcasting and eventengineering, and Australia also recorded a strongincrease in sales.

To further increase customer satisfaction and orga-nizational efficiencies in North America, functionalreorganizations were effected during 2005. Barco’sSacramento facility was expanded, with 40,000square feet added to existing operations; theexpansion, along with the relocation of Barco’sLogan, Utah business to California, brought togethercombined experience in the media and entertain-ment market. Consolidation of Georgia’s operationsenabled Barco to increase efficiency as well as tocapitalize on existing synergies and strategic coope-ration in the display and large-screen visualizationmarkets; the Duluth, Georgia facility expansion of37,000 square feet, completed during 4Q05, hasresulted in one major center for sales, manufacturingand service on the East coast.

In 2005, Barco recorded an increase of 13% in salesand 14% in orders in North America. To better

"10,000th LED tile marks manufacturingmilestone for Barco in China"

"Growth in key professional markets ensures commercial success in North America"

Synchronizing regional focus and international expertise

Jacques Bertrand President Asia-Pacific

Dave Scott President North America

75

respond to opportunities in the public sector, Barcoannounced the creation of a dedicated businessdivision Barco Federal Systems (BFS), based inDuluth, Georgia. The formation of BFS is a majorstep for Barco and for our US customers, signifyingour commitment to providing the highest level oftechnology and expertise in serving governmentand military customers.

Growth in the region mainly came from Barco's key professional markets. Barco medical displayscontinue to dominate the PACS market; creativeentertainment solutions were used by leadingartists like U2, Gwen Stefani and Tom Petty; Barco'sLED solutions were selected for digital signage atVictory Park, Dallas; the 1,500th ultra high resolutionLCD display was delivered for the National En-routeAir Traffic Control System; and the 5,000th rugged

LCD display was delivered in support of the USNavy’s Q-70 program.

With a forecasted annual economic growth rate ofless than 2% in the euro zone, business outlook forEMEA (Europe, Middle East & Africa) is more mod-erate than in other regions. Still Barco managed torealize modest growth in sales and orders, account-ing for nearly half of the company's annual sales.

In Germany, Switzerland and Austria, salesincreased by by 9%. In Southern Europe, Spain per-formed solidly with a 16% growth in sales and45% in order intake, thanks mainly to a prestigiouscontrol room installation at the Madrid Aena airport.The UK market returned a 4% increase in sales,whereas France did not perform as expected due tothe weak situation in the defense and other

commercial markets. A strong increase in sales andorders has been recorded in the Middle East mar-ket where we continue to strengthen our position.

Just like in North America, improving internal operational efficiency was necessary in Europe tofurther strengthen Barco's market position. All backoffice functions of the European sales & serviceorganization were grouped into the divisionalheadquarters. This reorganization became effectiveon 1 January 2006. Thanks to the realigned sales &service organization, local sales managers andservice engineers will be better supported, andinteraction between customers and Barco's dedi-cated centers of competence will be intensified.

"Grouping European back officeoperations emphasizes

service-oriented approach"

Bernard Dursin President Europe, Middle East, Africa and Latin America

76

In a globally competitive environment, an integrat-ed supply chain and lean manufacturing are keydifferentiators. Harmonizing technological differen-tiation and customer predictability increases thecomplexity of the supply chain challenge. Focusedon customer responsiveness, a lean companycreates flexibility with the shortest possible leadtimes, through active management of worldwidesuppliers, manufacturing processes, logistics andcustomer operations. Inventory velocity plays a critical role in supply

chain optimization. Barco started an improvementprogram in 2005, which reduced inventory from144 to 141 million euro year on year whilst grow-ing orders by 12% in the same period. To furtherimprove inventory turns and working capital, thisprogram will continue to receive increased focus in2006. For operational excellence, lean manufacturing isthe key. The BarcoView division is leading the wayand introduced the concept in 2005, resulting in a25% reduction in production lead times. The bene-

fits of lean manufacturing will be rolled outthroughout the Barco group worldwide, allowing allbusiness divisions to deliver similar improvements.

Supply chain & Operations can not be seen asfunctional silos in the organization. To anticipatemarket demand, a lean customer-centric companycoordinates processes across functions and busi-ness units. The ongoing roll-out of the SSA ERP sys-tem opens perspectives for optimized supply chainas it provides the linkage for sales and marketing,

Optimizing the supply chain

- Focus on customer predictability, lean manufacturing, inventory management and quality improvement

- Inventory decreased from 144 to 141 million euro year on yearwhilst growing orders by 12%

- Lean manufacturing reduces production cycles with 25%- European sales & service organization streamlined from

1 January onwards

77

research & development, finance, customer supportand other departments. Moreover, this company-wide ERP system makes powerful data easily avail-able for business analysis and executive decisionmaking.

Leveraging access to low cost supply chain solu-tions (inside and outside Barco) is also key.Therefore Barco will continue to optimize use ofR&D and production capabilities and facilitiesworldwide, finding the balance between added

value through engineering and lower cost opera-tional execution.

Process alignment is another foundation for opti-mizing the supply chain. Cross-functional planningand coordination allows for a low-cost approach. Inthis respect the reorganization of the Europeansales and service organization (with a centralizedback office) and the consolidation of US facilitiesleads to synergies, generating annual savingsbetween 4 and 6 million euro. Ensuring customers

receive the right product at the right time, or opti-mizing the supply chain into a lean manufacturingorganization, not only underlines Barco's customer-centric approach, but more importantly, guaranteesmaximum predictability and visibility to customers.

"Balancing customer predictability with innovationand Supply Chain Optimization is key to Barco'scompetitiveness "

Rob Brown President Global Operations & Supply Chain

78

Being successful and profitable is a prerequisite toany strategy for future growth, and all the more sofor a stocklisted company. But at the same time,our responsibility to customers, suppliers, sharehold-ers, employees, neighbors and other stakeholders,requires harmonious cooperation with mankind andsociety, without endangering chances of futuregenerations. Balancing the three P's, profit, people,and planet therefore is an integral part of Barco'sbusiness principles.

Historically Barco's sustainability approach was notlaid down in charters but realized through initiativesof individual company departments and businessdivisions. Human Resources for instance detailedBarco's respectful way of dealing with people ingeneral, and employees in particular. Heads of

operations took the lead in making sure that allmanufacturing plants respect local environmentaland security guidelines. And through daily contactswith analysts, shareholders, investors and journa-lists, the Investor Relations department expressedthe company's strive for openness and transparen-cy. The publication of Barco's corporate governancecharter in 2005 was a first step in this respect.

By living the company values and respectingBarco's unwritten code of honorable behavior,management and employees were setting a goodexample. But as a global market player, Barco feelsit is its duty to lay down guiding principles and per-formance indicators for its sustainability approachand give the public an annual update on progressin this field. That is why, in the future, Barco plans

Participating in society

- Associates raised over 100,000 euro for charities throughout2005

- Barco awards for promising student engineers handed out for16th time

- Sponsorship for multimedia exhibitions in museums and theaters in London

79

to publish a separate corporate sustainabilityreport, detailing our guiding principles on the roadto sustainability and the measures by which share-holders, employees, business partners and otherstakeholders can monitor our progress.

Sustainability is of course a long-term investment.This means that we will be continuously monitor-ing our environmental, economic, social and safetyperformance and adapt where and when needed.The guidelines set out in the Global ReportingInitiative (GRI) will serve as a framework forreporting and offer a structure for policies, proce-dures and organization. Key performance indicatorswill include environmental, economic and socialfigures.

Current initiatives to protect the environmentinclude ecological packaging, product design optimized for reuse and recycling, and strict com-pliance with the European RoHS (Restriction of theuse of Hazardous Substances) directive. What ismore, Barco products often help reducing theimpact on the environment. As an example, VirtualReality projection allows for virtual drilling for oil& gas, and Barco’s arrival management softwareoptimizes slot utilization, reducing airplane fuelconsumption. In its social role, Barco is not onlycommitted to internationally recognized labor andsocial standards but also actively supports huma-nitarian, cultural and social causes by means ofdonations and sponsorships. In its economic impacton society, Barco strives for long-term relationshipswith shareholders, customers and suppliers, illus-

trated by the numerous investor meetings, theannual analyst and investor day, training coursesfor operators, the annual supplier day, and regularpartner and distributor meetings.

Balancing the three P's and reporting on them willshow that integrity is one of the most importantcompany values and that we are a trustworthypartner for employees, neighbors, customers,shareholders and society in general.

"Balancing the three P's is an integral part of Barco'sbusiness principles"


80

Compared to 2004 sales grew 6% to 712.0 million

euro. This increase was realized to a large extent by

a 7% growth in sales in the Barco Control Rooms

and BarcoView divisions. The Barco Media &

Entertainment division increased its sales by 17%,

whereas the divisions Barco Presentation &

Simulation and BarcoVision saw their sales decrease

by almost 2% and 3% respectively.

Sales to Europe, Middle East and Africa (EMEA)

represented 47.7% of consolidated sales, remaining

stable in absolute figures compared to 2004. 33.5%

of sales were realized in the Americas, an increase

of 12.8% year-on-year in absolute figures. Asia-

Pacific (APAC) accounted for 18.8% of 2005 sales, a

growth of 6.7% versus the year before.

Growth in 2005 was mainly organic and came from

the medical imaging, events, control rooms and

digital cinema markets in all three geographical

regions. The simulation market performed well in

the Americas and Asia-Pacific.

Orders increased by 11.8% in 2005 compared to

2004, with the Barco Control Rooms division

increasing its orders by 18.7% and the Barco Media

& Entertainment division by 25%. Orders in the

divisions Barco Presentation & Simulation and

BarcoView grew by almost 9%, while the division

BarcoVision had a decline in orders of 7.3%. Growth

in orders was the strongest in APAC (+28.5%), follo-

wed by the Americas (+13.6%) and EMEA (+5%).

The strongest order growth worldwide was recorded

in the control rooms, medical imaging, events and

digital cinema markets, while the simulation market

did well in EMEA. So did the media market in the

Americas and APAC. The presentation market did

especially well in APAC, whereas a remarkable

growth in orders was recorded for the division

BarcoVision in India.

The book-to-bill ratio over 2005 was 1.03 versus

0.97 in 2004, increasing our order book significantly

end 2005 versus end 2004.

In 2005 Barco increased focus on operational

excellence, in order to achieve a more streamlined

organization. Several efficiency projects were started

up in Europe as well as in the US, resulting in cen-

tralization of competences and improved customer

service. This streamlining had a negative impact on

profitability, with restructuring costs of euro 8.5

million in 2005. The streamlining started in 2005, to

continue in 1H06. Full savings will be reached upon

completion of these reorganization schemes, as of

2H06. On an annual basis these savings will be

between euro 4 and 6 million.

From the low 39.6% in 1Q05, gross profit margin

gradually improved throughout the year to end up at

41.0% for the full year. This was still lower than

43.2% in 2004 because of higher inventory write-

offs in 2005 versus 2004. Higher stock write-offs of

euro 5.5 million, which had a negative impact on

gross profit margin, were caused by an excessive

build-up of inventory mid 2005.

Despite higher anticipated sales, inventory decreased

at the end of 2005, compared to the year before,

highlighting the first successes in the actions taken

to improve inventory.

At 7.4% of sales, general and administration expen-

ses remained flat. The same is true for investments

in research & development at 9.5% and sales and

marketing investments at 16.1% of sales.

Comments on the results

81

� 2004

� 2005

� 2004

� 2005

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

�% 2004 3.0 3.1 8.4 8.8

Q1 Q2 Q3 Q4

�% 2004 12.1 3.9 10.7 21.5

Evolution of orders per quarter, 2004 - 2005

250,000

200,000

150,000

100,000

50,000

0

Evolution of sales per quarter, 2004 - 2005

(‘000 euro)

Q1 Q2 Q3 Q4

250,000

200,000

150,000

100,000

50,000

0

(‘000 euro)

Sales in ‘000 euro & current EBITA in %

2005 % EBITA 2004 % EBITA

BarcoView 236,031 10.5 220,449 16.8Barco Media & Entertainment 188,348 -0.2 160,903 1.6Barco Control Rooms 117,429 13.1 109,552 12.1Barco Presentation & Simulation 103,206 6.8 105,233 10.0BarcoVision 57,750 14.0 59,556 12.3Barco Manufacturing Services 93,372 -3.2 112,083 0.7Eliminations -84,144 -95,853

Total 711,992 7.3 671,923 10.6

82

�

�

2004 2005

220 236

BarcoView sales & EBITA, 2004 - 2005

250

200

150

100

50

0

(In million euro)

16.8% 10.5%

Avionics

7.2%

Medical Imaging

44.2%

Traffic Management

24.3%

Defense & Security

24.4%

BarcoView

Orders and sales

Orders at the BarcoView division increased by 8.8% and sales by 7.1%.

With growth in every quarter of 2005 compared to the year before, total

increase of sales was 34.7% in the medical market. Sales increased worldwide

with highest growth rate in the Americas. Barco further consolidated its

leadership position in the PACS (Picture Archiving and Communication Systems)

market. In the 3D clinical software market, Barco introduced its first application

software packages.

In the defense & security market sales remained stable in North America,

compared to 2004, but were significantly lower in Europe and Asia-Pacific. The

traffic management market showed a similar pattern as far as the Americas and

Asia-Pacific are concerned, but had an increase in sales in Europe. In the

avionics market Barco increased its sales by 33.2%, with a substantial growth

in Asia-Pacific and Europe and good growth in the American market.

The book-to-bill ratio for the year 2005 was 0.96. The medical imaging and

avionics markets performed very well with respectively 40.7% and 32.7%

increase in orders. Defense & security and traffic management had a decrease

in orders versus 2004.

Sales

EBITA

83

Luc Vandenbroucke President BarcoView

� 2004

� 2005

Q1 Q2 Q3 Q4

�% 2004 -20.5 -14.3 -2.2 -22.8

Evolution of Defense & Securitysales per quarter, 2004 - 2005

Q1 Q2 Q3 Q4

25,000

20,000

15,000

10,000

5,000

0

(‘000 euro)

84

� 2004

� 2005

Q1 Q2 Q3 Q4

(‘000 euro)

Evolution of Traffic Managementsales per quarter, 2004 - 2005

25,000

20,000

15,000

10,000

5,000

0

Q1 Q2 Q3 Q4

�% 2004 3.8 -19.2 -1.7 -12.0

EBITA

The EBITA margin went down to 10.5% from 16.8% the year before, due to a

large extent to lower sales volumes in the defense & security and traffic

management markets, combined with restructuring costs in defense.

R&D investments

Total expenditures for research & development amounted to 12.5% of sales.

Number of employees

At the end of 2005 the division BarcoView counted 1,208 employees world-

wide, versus 1,215 end 2004.

85

� 2004

� 2005

� 2004

� 2005

Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4

Evolution of Avionics sales per quarter, 2004 - 2005

(‘000 euro)

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

(‘000 euro)

Q1 Q2 Q3 Q4

�% 2004 18.2 56.2 44.1 27.0

Q1 Q2 Q3 Q4

�% 2004 -12.4 -0.7 99.1 51.5

Evolution of Medical Imagingsales per quarter, 2004 - 2005

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

86

Events

57.9%

Digital Cinema

10.2%Media

31.9%

Barco Media & Entertainment

Orders and sales

In 2005 orders increased by 25.0% and sales by 17.1% in the Barco Media &

Entertainment division.

Growth in the events market was very outspoken in the Asia-Pacific market, lead-

ing to a global increase in sales of 11.7%. The media market also did very well

in Asia-Pacific and the Americas. Total growth was 23.2% worldwide. The most

substantial growth in the division was recorded by digital cinema, which grew by

59.7% on a global basis. An increase of 164.3% in the American market

contributed to this worldwide success.

The book-to-bill ratio for 2005 was 1.1. All three markets of the division Barco

Media & Entertainment realized considerable increases in order input in 2005:

growth in the events market was 22.4%; in the media market it was 26.5%;

orders for digital cinema increased by 74.8%.

87

2004 2005

161 188

�

�

Sales

EBITA

1.6% -0.2%

Stephan Paridaen President Barco Media & Entertainment

Barco Media & Entertainmentsales & EBITA, 2004 - 2005

200

150

100

50

0

-50

(In million euro)

88

� 2004

� 2005

Q1 Q2 Q3 Q4

�% 2004 34.9 129.8 -12.9 1.1

EBITA

Restructuring costs, loss on the sale of a building in Logan, Utah, higher

warranty costs and bad debt had a negative impact on the EBITA margin, which

decreased to -0.2% compared to 1.6% in 2004.

R&D investments


Number of employees

At the end of 2005 the division Media & Entertainment counted 560 employees

worldwide, versus 564 end 2004.

Evolution of Mediasales per quarter, 2004 - 2005

18,00016,00014,00012,00010,0008,0006,0004,0002,000

0

(‘000 euro)

Q1 Q2 Q3 Q4

89

� 2004

� 2005

� 2004

� 2005

Q1 Q2 Q3 Q4

(‘000 euro)(‘000 euro)

Q1 Q2 Q3 Q4

�% 2004 -9.1 -24.3 28.0 72.3

Q1 Q2 Q3 Q4

�% 2004 -7.6 56.5 89.7 77.5

Evolution of Digital Cinemasales per quarter, 2004 - 2005

Evolution of Eventssales per quarter, 2004 - 2005

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

9,0008,0007,0006,0005,0004,0003,0002,0001,000

0Q1 Q2 Q3 Q4

90

� 2004

� 2005

Orders grew 18.7% in the division Control Rooms, while sales increased by 7.2%.

Sales growth was moderate in EMEA, while there was a decline in the American

market in 2005. Growth in Asia-Pacific on the other hand was very impressive

(25.2%), particularly in South East Asia, Taiwan and China.

The Barco Control Rooms division had a book-to-bill ratio of 1.04. Whereas sales

declined in the Americas in 2005, orders were up 14%. With growth rates in

EMEA of 18% and Asia-Pacific of 29.4% the total increase in orders worldwide

was 18.7%.

EBITA

EBITA margin increased by 1% to 13.1% of sales, thanks to a growing gross profit

margin throughout the year and a higher sales volume.

R&D investments


Number of employees

At the end of 2005 the division Barco Control Rooms counted 568 employees

worldwide, versus 569 end 2004.

Barco Control Rooms

Orders and sales

Q1 Q2 Q3 Q4

Evolution of Barco Control Rooms sales per quarter, 2004 - 2005

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

(‘000 euro)

Q1 Q2 Q3 Q4

�% 2004 10.3 18.1 4.2 -0.4

91

�

�

2004 2005

Sales

EBITA

Carl Peeters President Barco Control Rooms

110 117

Barco Control Roomssales & EBITA, 2004 - 2005

140

120

100

80

60

40

20

0

(In million euro)

12.1% 13.1%

92

�

�

Sales

EBITA

2004 2005

105 103

Presentation

38.0%

Simulation

62.0%

Barco Presentation & Simulationsales & EBITA, 2004 - 2005

120

100

80

60

40

20

0

(In million euro)

10.0% 6.8%

Barco Presentation & Simulation

Orders and sales

Orders at the Presentation & Simulation division increased by 8.5% while sales

decreased by 1.9%.

Sales in the simulation market increased by 27.5% in the Asia-Pacific region and

by 17.3% in the Americas. A decline in sales in EMEA however, brought sales for

the full year down by 2.1%. Presentation sales increased moderately in the EMEA

and Asia-Pacific regions, but were weak in the Americas, leading to a decrease

on a global basis of 2.6%.

The book-to-bill ratio for the division was 1.09. Order intake for simulation went

up 8%, thanks to a 21.1% increase in EMEA and a 13.2% increase in Asia-Pacific,

positively offsetting the decline in the Americas. Besides stable order intake in

EMEA and the Americas, the presentation market recorded an increase of 21.6%

in Asia-Pacific, bringing the worldwide growth in orders for 2005 to 7.3%.

EBITA

At 6.8% EBITA margin for 2005 was lower than the margin of 10% realized in

2004. The decrease was due to a lower sales volume and a lower gross profit

margin, the latter due to price pressure in the mid range projector market in

1H05 and increased inventory write-off.

R&D investments


Number of employees

At the end of 2005 the division Barco Presentation & Simulation counted 455

employees worldwide, versus 502 end 2004.

93

� 2004

� 2005

� 2004

� 2005

Michel Vandeplas President Barco Presentation & Simulation

Evolution of Simulation sales per quarter, 2004 - 2005

Q1 Q2 Q3 Q4

25,000

20,000

15,000

10,000

5,000

0

(‘000 euro)

Q1 Q2 Q3 Q4

�% 2004 9.7 -14.3 -15.4 13.6

Evolution of Presentationsales per quarter, 2004 - 2005

Q1 Q2 Q3 Q4

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

(‘000 euro)

Q1 Q2 Q3 Q4

�% 2004 -8.0 8.4 -1.4 -8.1

94

� 2004

� 2005

BarcoVision

Orders and sales

Orders at the division BarcoVision decreased by 7.3% and sales 3%.

The decline in sales can be noted in all three regions of the world and is due

to the ongoing weak investment climate in the textile machine market.

Nevertheless, the increase in sales in India was noteworthy.

The book-to-bill ratio for the year 2005 was 0.96. Only the Asia-Pacific region

showed an increase of sales for the division by 19.8%, carried mainly by the

growth in orders in India.

EBITA

EBITA margin increased to 14% from 12.3% the year before. The positive impact

on the margin of the sale of two buildings, was offset to a certain degree by

the operational cost, which was not in line with the sales decline, because of

investment in new products.

R&D investments


Number of employees

At the end of 2005 the division BarcoVision counted 365 employees worldwide,

versus 403 end 2004.

Q1 Q2 Q3 Q4

�% 2004 6.5 -0.6 4.5 -20.3

Evolution of BarcoVision sales per quarter, 2004 - 2005

18,00016,00014,00012,00010,0008,0006,0004,0002,000

0Q1 Q2 Q3 Q4

(‘000 euro)

95

�

�

Bernard Cruycke President BarcoVision

2004 2005

60 58

BarcoVision sales & EBITA, 2004 - 2005

70

60

50

40

30

20

10

0

(In million euro)

12.3% 14.0%

Sales

EBITA

96

Barco Manufacturing Services

Orders and sales

Orders at the Barco Manufacturing Services division declined by 26.1% and sales

by 16.7%.

The decline in orders and sales for the division is due to the shift of some of

Barco’s manufacturing activities to Asia, where Barco works with local subcon-

tractors.

EBITA

EBITA margin was -3.2% versus 0.7% in 2004, due to the lower sales volume. In

2005 operational costs were further decreased by reducing the number of temps

employed by the division.

Number of employees*

At the end of 2005 the division Barco Manufacturing Services counted 709

employees worldwide, versus 805 end 2004.

* Next to staff dedicated to one particular division, Barco also has a global number of 357 employees who hold sales, commercial and administrative positions.

97

�

�

Patrick Luyssen President Barco Manufacturing Services

2004 2005

112 93

Barco Manufacturing Servicessales & EBITA, 2004 - 2005

120

100

80

60

40

20

0

(In million euro)

0.7% -3.1%

Sales

EBITA

Information about the shareOwnership of the company’s sharesEvolution of the share priceDaily average shares tradedComments on the evolution of the share priceDividendAnalysts covering BarcoFinancial calendarInvestor relations

Tlinko - Victor Vasarely >>>

Information for the shareholder

100

Information for the shareholder

Information about the share

Euronext Brussels

Barco share BAR ISIN BE0003790079

Barco VVPR-strip BARS ISIN BE0005583548

Reuters BARBt.BR

Bloomberg BAR BB

Market capitalization 31 Dec 05 796,417,889 euro

Highest capitalization 933,125,842 euro

Lowest capitalization 717,403,201 euro

Share price 31 Dec 04 68.05 euro

Share price 31 Dec 05 63.50 euro

Average number of shares traded on daily basis (2005) 39,368

Yearly volume 2005 631,412,581.50 euro

Velocity 2005 82.12%


101

-------------

180

160

140

120

100

80

60

40

20

0

� Barco � BEL 20 � Next 150

-------------

180

160

140

120

100

80

60

40

20

0

� Barco � Eurostoxx 50 � Eurostoxx Technology

03 0

105

03 0

305

03 0

505

03 0

705

03 0

905

03 1

105

31 1

205

03 0

105

03 0

305

03 0

505

03 0

705

03 0

905

03 1

105

31 1

205

Barco/BEL 20/Next 150 Barco/Eurostoxx 50/Eurostoxx Technology

Evolution of the share price

Ownership of the company’s shares

On 31 December 2005, ownership of the company’s shares was as follows:

Gimv: 9.37% (1,174,921 shares) fully diluted: Gimv: 8.86% (1,174,921 shares)

Barco: 3.06% (383,320 shares) Barco: 2.89% (383,320 shares)

Public: 87.57% (10,983,773 shares) Public: 88.25% (11,706,583 shares)

Total: 100% (12,542,014 shares) Total: 100% (13,264,824 shares)

102

2005 2004

65,000

60,000

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

65,000

60,000

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Janua

ry

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Octo

ber

Nove

mbe

r

Dece

mbe

r

Janua

ry

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Octo

ber

Nove

mbe

r

Dece

mbe

r

Daily average shares traded

103

-------------

--------------------

� Barco � BEL 20

Comments on the evolution of the share price

Barco's share price in 2005 did not reflect the strong performance of theBEL 20 index. Although the company realized a remarkable growth in salesand particularly in orders, operational profit did not follow suit.

Fierce worldwide competition of USD-based competitors, for a large extentdue to the USD/euro exchange rate, weighed on Barco’s gross margins inseveral of its markets. In response to this new competitive landscape, Barcotook thorough measures in 2005.

Several restructuring projects were set up, some of which are still continu-ing into 1Q06. At the same time, Barco went on redistributing its operationsacross the globe, strengthening its natural hedging position and reducing itseuro-handicap versus competition.

Clear communication with investors worldwide at the time FY04 resultswere announced, resulted in a relatively stable share price between 59 euroand 62 euro, after an initial drop. Investors’ confidence picked up again afterthe publication of the 3Q05 results, showing their trust in the measuresBarco was taking to improve performance in operational profitability. Therise in share price continued into the beginning of 2006, stimulated by thehealthy growth in orders over 2005.

2005 also saw a significant increase in daily average shares traded, up 31%to 39,368 versus 30,166 at the end of 2004, clearly reflecting the ongoingglobalization of Barco’s shareholdership.

03 0

105

03 0

305

03 0

505

03 0

705

03 0

905

03 1

105

31 1

205

(euro)

80

75

70

65

60

55

50

02 0

101

02 0

401

02 0

701

02 1

001

02 0

102

02 0

402

02 0

702

02 1

002

02 0

103

02 0

403

02 0

703

02 1

003

02 0

104

02 0

404

02 0

704

02 1

004

02 0

105

02 0

405

02 0

705

02 1

005

(euro)

140

120

100

80

60

40

20

0

BEL 20 & Barco 2001-2005

Barco’s share price 2005

104

2000 2001 2002 2003 2004 2005

1.88 1.88 1.92 2.00 2.10 2.15

2

1.5

1

0.5

0

Evolution dividendDividend

The board of directors will propose to the annual general shareholders'

meeting on 3 May 2006 to raise the dividend to 2.15 euro gross, this is

1.6125 euro net, on withholding tax of 25%, and 1.8275 euro net on with-

holding tax of 15% (with VVPR strip). Dividends will be payable from 24

May 2006. At 2.15 euro, the pay-out ratio is 68.3%.

105Cazenove François Berlioz

Cheuvreux Marcel Achterberg

Corluy Patrick Millecam

Degroof François Van Leeuw

Delta Lloyd Securities Dinant Wansink

Dexia Securities Peter Van Assche

Flemish Federation of Investors and Investor Clubs Xavier VandoorneGert De Mesure

Fortis Bank Wim Lewi

ING Jean-Marc Mayeur

KBC Securities Nico Melsens

Merrill Lynch Christer Beckard

Petercam S.A. Stefaan Genoe

SG Bank De Maertelaere Danny Van Quaethem

Announcement of preliminary results 4Q05 and FY05 26 January 2006

Announcement of results 4Q05 and FY05 16 February 2006

Annual report 2005 available on www.barco.com 16 February 2006

Announcement of results 1Q06 26 April 2006

Annual General Meeting of Shareholders 3 May 2006

Payment dividend (coupon number 6) 24 May 2006

Announcement of results 2Q06 25 July 2006

Announcement of results 3Q06 25 October 2006

Analysts covering Barco

Financial calendar

106

Investor Relations

Barco's continuous strive for transparent financialcommunication and dialogue with the company'sstakeholders was greatly appreciated by the analystand investor community in 2005. For its ongoingefforts, Barco received, after two second places inthe two preceding years, the Award of BestFinancial Information, a yearly award handed outby the Belgian Association of Financial Analysts.The jury praised Barco for the quality of its annualreport, financial press releases and investor rela-tions website, and for the responsiveness of theInvestor Relations team.

Personal contact with analysts and investors isindeed one of the cornerstones of the company'sInvestor Relations strategy. In 2005, more than 300meetings were set up, including conference callsand face-to-face meetings at Barco premises or onroadshows worldwide. All investor meetings arelogged into a database, guaranteeing the neces-sary follow up and giving us a better view on all

present and potential shareholders. Furthermore,Barco tries to always have an updated image of itsworldwide shareholder structure. This also helps toorganize future roadshows in a more efficient way.In 2005, a substantial increase of investors wasregistered particularly in the United States, France,Germany, Italy, Sweden and Luxembourg.

The growing number of financial analysts coveringBarco indicates the increased interest for Barco inthe financial world. Gradually more and more non-Belgium based analysts start covering Barco, whichstrongly increases Barco’s visibility towards theinvestors' community worldwide and consequentlyimproves the liquidity of the share.

Barco considers its Investor Relations website as aprime instrument for communication with share-holders and investors worldwide. Research by anindependent consultancy firm indicated that visi-tors greatly appreciate the contents of the website,

illustrated by a website satisfaction visitor scoreabove the industry average. A 21% increase in visitor sessions compared to 2004 further confirmsthe quality of Barco's IR website and the world-wide interest in Barco. The results of the surveyhave been studied in detail and will lead to furtherenhancements of the website. The introduction ofthe Corporate Governance Charter on the websiteand the implementation of a press release alert,were the most significant changes carried out in2005. In 2006 the Investor Relations website willbe part of a complete overhaul of the Barco web-site.

The third edition of the Analyst & Investor Day, held on 16 September 2005, was well attended.Besides giving detailed information on productsand markets, the presentations from the company'sexecutive management offered a deeper insightinto Barco's business strategy.

107

Distribution of identified registered shareholders in number of shares

Distribution of identified registered shareholders in number of shareholders

Belgium

43.8%Germany

10.9%

United States

8.5%

United Kingdom

17.0%

France

5.0%

Italy

4.2%

Luxembourg

2.7%Sweden

1.3%

Switzerland

1.3%Netherlands

1.1%Rest of Europe

1.7%

Rest of World

2.4%

Belgium

SingaporeCanada Ireland Spain

Austria

Japan

Germany

United States

United Kingdom

France

Italy

Luxembourg

Sweden

Switzerland

Netherlands

Hong Kong SAR

Denmark

Income statementBalance sheetCash-flow statementChanges in equityNotes to the consolidated financial statementsAuditor’s report

Vonal - Victor Vasarely >>>

Barco consolidated

110

[ in thousands of euro ] Note 2005 2004

Net sales 4 711,992 671,923Cost of goods sold 5 -419,839 -381,789

Gross profit 292,152 290,134

Research and development expenses 6 -67,734 -66,758Sales and marketing expenses 7 -114,809 -109,709General and administration expenses 8 -52,653 -48,091Other operating income (expense) - net 9 3,598 5,850

EBITA before restructuring cost 60,554 71,427

Restructuring cost 10 -8,546

Operating result before goodwill amortization/impairment (EBITA) 52,008 71,427

Goodwill amortization/impairment 16 -4,002 -9,963

Operating result 48,006 61,463

Interest income (expense) - net 12 -1,163 765Other non-operating income (expense) - net 13 2,078 -181

Income before taxes 48,921 62,047

Income taxes 14 -10,333 -14,704

Net income 38,588 47,343

Minority interest 26 -31 -5

Net income attributable to equityholders of the parent 38,558 47,338

Earnings per share 15 3.15 3.86Diluted earnings per share 15 2.97 3.62

Income statement

111

[ in thousands of euro ] Note 31 Dec 2005 31 Dec 2004

Assets

Goodwill 16 60,954 64,403Capitalized development cost 17 65,315 58,289Other intangible assets 17 2,107 2,152Land and buildings 18 62,583 65,554Assets under construction 18 1,137 1,954Other tangible assets 18 38,812 40,958Investments 19 377 2,096Deferred tax assets 20 15,938 12,061Other non-current assets 19 4,063 3,871

Non-current assets 251,287 251,340

Inventory 21 141,364 144,049Trade debtors 22 188,757 166,212Other amounts receivable 22 24,590 19,399Deposits and cash at bank and in hand 23 106,256 90,610Prepaid expenses and accrued income 24 9,111 9,410

Current assets 470,078 429,680

Total assets 721,365 681,019

Equity and liabilities

Equity attributable to equityholders of the parent 25 418,083 398,845Minority interest 26 1,176 1,030

Equity 419,258 399,875

Long-term debts 27 22,564 26,014Deferred tax liabilities 20 4,628 3,469Other long-term liabilities 27 511 2,129

Non-current liabilities 27,703 31,612

Current portion of long-term debts 27 4,780 8,646Short-term debts 28 56,967 23,294Trade payables 66,063 83,326Advances received on contracts in progress 14,985 11,152Tax payables 23,195 18,600Employee benefits 41,535 41,962Other current liabilities 29 6,645 8,528Accrued charges and deferred income 30 17,157 15,871Provisions for liabilities and charges 31 43,077 38,154

Current liabilities 274,403 249,533

Total equity and liabilities 721,365 681,019

Balance sheet

112

[ in thousands of euro ] Note 2005 2004

Cash-flow from operating activities

Operating result before goodwill amortization/impairment (EBITA) 52,008 71,426Amortization capitalized development cost 39,664 36,107Depreciation of tangible and intangible fixed assets 18,502 18,210Gains and losses on tangible fixed assets -1,094 214Share options recognized as cost 450 354

Gross operating cash-flow 109,529 126,311

Changes in trade receivables -19,300 -15,772Changes in inventory 5,930 -40,552Changes in trade payables -17,264 24,781Other changes in net working capital 6,541 -10,823

Change in net working capital -24,093 -42,366

Net operating cash-flow 85,436 83,945

Interest income/expense -1,163 765Income taxes -12,058 -13,560

Cash-flow from operating activities 72,216 71,151

Cash-flow from investing activities

Expenditure on product development -45,256 -38,354Purchases of tangible and intangible fixed assets -12,353 -23,904Proceeds on disposals of tangible and intangible fixed assets 4,426 651Acquisition of Group companies, net of acquired cash -1,760 -48,633Disposal of Group companies, net of disposed cash 395Other investing activities 1,719

Cash-flow from investing activities -53,224 -109,846

Cash-flow from financing activities

Dividends paid -25,278 -24,828Share issue 3,727 2,357Acquisition of own shares -8,152 -10,272Proceeds from (+), payments of (-) long-term liabilities -3,450 8,779Proceeds from (+), payments of (-) short-term liabilities 29,806 19,852

Cash-flow from financing activities -3,346 -4,111

Net decrease/increase in cash and cash equivalents 15,646 -42,806

Cash and cash equivalents at beginning of period 90,610 133,416

Cash and cash equivalents at end of period 106,256 90,610

Cash-flow statement (note 36)

113

Changes in equity (note 25)

Share Retained Share- Cumulative Derivatives Convertible Own Equity Minority Equity

capital earnings based translation bond shares attributable to interest

and premium payments adjustment equityholders

[in thousands of euro] of the parent

Balance on 1 January 2004 173,625 239,832 99 -22,234 -443 188 -4,978 386,088 1,122 387,210

Net income 47,338 47,338 5 47,344

Dividend -24,828 -24,828 -24,828

Translation adjustment -3,513 -3,513 -97 -3,610

Cash-flow hedge 1,320 1,320 1,320

Capital increase 2,357 2,357 2,357

Acquisition of own shares -10,272 -10,272 -10,272

Share-based payment 354 354 354

Balance on 31 December 2004 175,982 262,342 453 -25,747 877 188 -15,250 398,845 1,030 399,874

Balance on 1 January 2005 175,982 262,342 453 -25,747 877 188 -15,250 398,845 1,030 399,874

Net income 38,558 38,558 31 38,588

Dividend -25,278 -25,278 -25,278

Translation adjustment 11,205 11,205 115 11,320

Cash-flow hedge -1,272 -1,272 -1,272

Capital increase 3,727 3,727 3,727

Acquisition of own shares -8,152 -8,152 -8,152

Shared-based payment 450 450 450

Convertible bond 188 -188

Balance on 31 December 2005 179,708 275,811 903 -14,543 -395 -23,402 418,083 1,176 419,258

114

1. Accounting principles

2. Consolidated companies

2.1 List of consolidated companies

2.2 Changes in group structure

3. Segment reporting

3.1 Basis of segment reporting

3.2 BarcoView

3.3 Barco Media & Entertainment

3.4 Barco Control Rooms

3.5 Barco Presentation & Simulation

3.6 BarcoVision

3.7 Barco Manufacturing Services

3.8 Reconciliation of segment information with group information

3.9 Key data by region

4. Net sales

5. Cost of goods sold

6. Research and development expenses

7. Sales and marketing expenses

8. General and administration expenses

9. Other operating income (expense) - net

10. Restructuring cost

11. Revenues & expenses by nature

12. Interest income (expense) - net

13. Non-operating income (expense) - net

14. Income taxes

15. Earnings per share

16. Goodwill

17. Intangible assets

18. Property, plant and equipment

19. Investments - other non-current assets

20. Deferred tax assets - deferred tax liabilities

21. Inventory

22. Amounts receivable

23. Deposits and cash at bank and in hand

24. Prepaid expenses and accrued income

25. Equity attributable to equityholders of the parent

26. Minority interest

27. Long-term debts

28. Short-term debts

29. Other current liabilities

30. Accrued charges and deferred income

31. Provisions

32. Derivative financial instruments

33. Operating leases

34. Rights and commitments not reflected in the balance sheet

35. Related party transactions

36. Cash-flow statement: effect of acquisitions and disposals

37. Events subsequent to the balance sheet date

38. Recent IFRS accounting pronouncements

39. Recent developments

Notes to the consolidated financial statements

Antoon Van Petegem Chief Financial Officer

115

1. Accounting principles

1. Statement of compliance and basis ofpresentation

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.

The financial statements are presented in thou-

sands of euro and are prepared under the histori-

cal cost convention, except for the measurement at

fair value of investments and derivative financial

instruments. The financial statements were autho-

rized for issue by the board of directors on 13

March 2006. The chairman has the power to

amend the financial statements until the sharehol-

ders’ meeting of 3 May 2006.

2. Principles of consolidation

General

The consolidated financial statements comprise the

accounts of the parent company, Barco nv, and its

controlled subsidiaries, after the elimination of all

intercompany transactions.

Subsidiaries

Subsidiaries are consolidated from the date the

parent obtains control until the date of control cea-

ses. 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.

Investments in associated companies

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

116

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.

Joint ventures

The Company’s interest in the jointly controlled

entity is accounted for by proportionate consolida-

tion, which involves recognizing a proportionate

share of the joint venture’s assets, liabilities,

income and expenses with similar items in the

consolidated financial statements on a line-by-line

basis.

3. Goodwill

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.

For business combinations for which the agree-

ment date is before 31 March 2004, goodwill was

amortized until the end of 2004, using the straight-

line method over its expected useful life, and the

general estimate of useful life was 10 years, unless

a longer or shorter period could be justified. This

period did not exceed 20 years.

This change in accounting principles stems from

the publication of IFRS 3, issued in March 2004.

4. Research and development costs

Research and development costs are expensed as

incurred, except for development costs, which rela-

te 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 peri-

od does not exceed 4 years.

5. Other intangible assets

Intangible assets acquired separately are capitali-

zed 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. Other

intangible assets are amortized on a straight-line

basis not exceeding 5 years.


Property, plant and equipment are stated at cost

less accumulated depreciation. Generally, deprecia-

tion 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

- leasehold improvements

cfr underlying asset, limited to

outstanding period of lease contract

- demo material 1 to 3 years

7. Leases

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 net present value

of the minimum lease payments. The correspon-

ding 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. Capitalized leased

117

assets are depreciated over the useful life as men-

tioned under “property, plant and equipment”.

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.

8. Investments

Investments are treated as financial assets availa-

ble 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 mea-

sure 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 recover-

able amount.

9. Other non-current assets

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.

10. Inventories

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 estimated costs of completion and

the estimated costs of completing the sale. In addi-

tion to the cost of materials and direct labor, the

relevant proportion of production overhead is inclu-

ded in the inventory values.

11. Revenue recognition

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 determi-

nable, and collectibility is probable.

For contract revenue, the percentage of completion

method is used, provided that the outcome of the

contract can be assessed with reasonable certainty.

For sales of services, revenue is recognized by

reference to the stage of completion.

12. Government grants

Government grants are recognized as income in

proportion to the depreciation of the underlying

fixed assets. Other forms of government assistance

are recognized as income upon irreversible achie-

vement and by reference to the relevant expenses

incurred.

13. Trade debtors and other amountsreceivable

Trade debtors and other amounts receivable are

shown on the balance sheet at nominal value (in

general, the original amount invoiced) less an allo-

wance 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 indi-

vidual basis, and on a portfolio basis for groups of

receivables that are not individually identified as

impaired.

14. Cash and cash equivalents

Cash and cash equivalents consist of cash on hand

and balances with banks and short-term invest-

ments. It is the group’s policy to hold investments

to maturity. All investments are initially recognized

118

at cost. Gains and losses are recognized in income

when the investments are redeemed or impaired,

as well as through the amortization process.

15. Provisions

Provisions are recorded when the group has a pre-

sent legal or constructive obligation as a result of

a past event, when it is probable that an outflow

of resources embodying economic benefits will be

required to settle the obligation and when a relia-

ble estimate can be made for the amount of the

obligation.

The group recognizes the estimated liability to

repair or replace products still under warranty at

balance sheet date. The provision is calculated

based on historical experience of the level of

repairs and replacements.

16. Equity – Costs of an equity transaction

The transaction costs of an equity transaction are

accounted for as a deduction from equity, net of

any related income tax benefit.

17. Interest-bearing loans and borrowings

All loans and borrowings are initially recognized at

cost, being the fair value of the consideration recei-

ved 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 premi-

um on settlement.

18. Trade and other payables

Trade and other payables are stated at cost.

19. Employee benefits

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 exchan-

ge 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 defi-

ned benefit type.

20. Transactions in foreign currencies

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 accoun-

ting 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 los-

ses are recognized in the income statement in the

period in which they arise.

21. Foreign group companies

In the consolidated accounts all items in the profit

and loss accounts of foreign subsidiaries are trans-

lated 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 as

equity 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). Transaction

costs are considered in the initial measurement of

all financial assets and liabilities. Subsequent to ini-

tial 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

119

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 state-

ment.

Where a derivative financial instrument is designa-

ted 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 equity, with the ineffective

part recognized directly in income statement.

23. Income taxes

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 deter-

mined, using the liability method, for all tempora-

ry differences arising between the tax basis of

assets and liabilities and their carrying values for

financial reporting purposes. Tax rates are used that

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 sub-

stantially enacted at the balance sheet date.

Deferred tax assets are recognized for all deducti-

ble temporary differences, carry-forward of unused

tax credits and unused tax losses, to the extent

that it is probable that taxable profit will be avai-

lable against which the deductible temporary diffe-

rences, carry-forward of unused tax credits and tax

losses can be utilized.

24. Impairment of 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 determi-

ne 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. For

goodwill a full impairment test is done every year.

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.

25. Share-based payment

Barco created warrants for staff and non-executive

directors as well as for individuals who play an

important role for the company. From 2005

onwards, the cost of share-based payment trans-

actions is reflected in the income statement, with

restatement of the 2004 figures. Cost of share-

based payments is recognized for all warrants

granted from 7 November 2002 onwards.

The warrants are valued at grant date, based on

the share price at grant date, exercise price, expec-

ted volatility, dividend estimates, and interest

rates. Warrant cost is taken into result on a straight-

line basis from the grant date until the first exerci-

se date.

This change in accounting principles is caused by

the publication of IFRS 2, which was issued in

February 2004.


The group calculates both basic and diluted ear-

nings per share in accordance with IAS 33, Earnings

per share. Under IAS 33, a basic earnings per share

is computed using the weighted average number

of shares outstanding during the period. Diluted

earnings per share is computed using the weighted

average number of shares outstanding during the

period plus the dilutive effect of warrants and stock

options outstanding during the period.

120

2. Consolidated companies2.1. List of consolidated companies on 31 December 2005

Europe, Middle East and Africa

Belgium Innovative Designs nv President Kennedypark 35, 8500 Kortrijk, BE 0427.422.976, RPR Kortrijk 100%Belgium Barco Coordination Center nv President Kennedypark 35, 8500 Kortrijk, BE 0431.157.278, RPR Kortrijk 100%Belgium Barco Creative Systems nv President Kennedypark 35, 8500 Kortrijk, BE 0429.790.271, RPR Kortrijk 100%Belgium Barco Silex nv Scientific Parc, rue du Bosquet 7, 1348 Ottignies-Louvain-La-Neuve, BE 0445.977.591, RPR Kortrijk 100%Czech republic Barco Manufacturing s.r.o. Billundska 2756, 272 01 Kladno-Krocehlavy 100%Denmark Barco A/S Tobaksvejen 23A, 2860 Soeborg 100%France Barco S.A. Z.A. Urbaparc 1, Boulevard de la Libération 6, 93200 Saint-Denis 99,99%France Barco Silex S.A. ZI Rousset-Peynier, Route de Trets, 13790 Peynier 99,99%France BarcoView Texen S.A. 7 rue Roger Camboulives, 31000 Toulouse 99,98%Germany Barco Control Rooms GmbH An der Rossweid 5, 76229 Karlsruhe 100%Germany Barco GmbH Greschbachstrasse 2-4, 76229 Karlsruhe 100%Germany Barco Orthogon GmbH Hastedter Osterdeich 222, 28207 Bremen 100%Germany Barco Sedo GmbH Neuwies 1, 35794 Mengerskirchen 100%Italy Barco Loepfe s.r.l. Via El Alamein 11/c, 22100 Como 100%Italy Barco s.r.l. Via Montferrato 7, CAP 20094 Corsico, Milano 100%Netherlands Barco Holding bv Marinus van Meelweg 20, 5657 EN Eindhoven 100%Netherlands Barco Folsom bv Marinus van Meelweg 20, 5657 EN Eindhoven 100%Poland Barco Sp. z o.o. Ul. Marywilska 16, 03-228 Warsaw 100%Russia Barco Services OOO Novorogozhkaya Ul 32, Stroyeniye 1, 109544 Moscow 100%Spain Barco Electronic Systems S.A. Travesera de Las Corts, 371, 08029 Barcelona 100%Sweden Barco Sverige AB Kungsgatan 15, Box 2230, 403 14 Göteborg 100%Switzerland Barco AG Kastellstrasse 10, 8623 Wetzikon 99,93%Switzerland Gebrüder Loepfe AG Kastellstrasse 10, 8623 Wetzikon 99,99%Switzerland Dyeing Technologies AG Kastellstrasse 10, 8623 Wetzikon 100%United Kingdom Barco Ltd 50 Suttons Business Park, Reading, Berkshire RG6 1AZ 100%United Kingdom Barco Vision Ltd Philips Road., Blackburn, Lancashire, BB1 5SN 100%United Kingdom Voxar Ltd Bonnington Bond, 2 Anderson Place, Edinburgh, EH6 5NP 100%

121

Americas

Brazil Barco, Ltda Av. Dr. Cardoso de Melo, Nr. 1855- 8° Andar - Cj. 81- 04548-005 Vila Olympia, Sao Paulo 100%Canada Barco Visual Solutions, Inc. 5925 Airport Road, Suite 200, Mississauga, Ontario, L4V 1W1 100%Canada Voxar Canada, Inc. 40 King Street West, Toronto, Ontario 100%USA Barco Visual Solutions, LLC 1209 Orange Street, Wilmington, Delaware 19801 100%USA Barco Simulation, LLC 600 Bellbrook Avenue, Xenia, OH 45385 100%USA Barco, Inc. 1209 Orange Street, Wilmington, Delaware 19801 100%USA Barco Media, LLC 1651 North 1000 West, Logan UT 84321 100%USA Orthogon, LLC 29 South New York Rd, Suite 400 Smithville NJ 08205 100%USA BarcoView, LLC 1209 Orange Street, Wilmington, Delaware 19801 100%USA BarcoVision, LLC 4420 Taggart Creek Rd. Ste 101, Charlotte NC 28208 100%USA Barco Folsom, LLC 11101-A Trade Center Drive, 95670 Rancho Cardova 100%USA Voxar, Inc. 945 Concord Street, Framingham 01701 100%

Asia-Pacific

Australia Barco Systems Pty Ltd 2 Rocklea Drive, Port Melbourne, Vic 3207 100%China Barco Leyard Electronic Technology Co Ltd 18 Harbour Road, Wanchai, Hong Kong 80%China Barco Ltd 18 Harbour Road, Wanchai, Hong Kong 100%China Barco Trading (Shanghai) Co., Ltd 66 Lujiazui Road, Pudong, Shangai 200120 100%China Beijing Barco Leyard Electric Technology Co Ltd Changping Park, No. 16 Changsheng Road, 102 200 Changping District, Bejing 80%India Barco Electronic Systems Pvt., Ltd 14, LSC, Community Centre, Pushp Vihar, Madangir, New Delhi 11-0062 100%India Barco Hotline Pvt. Ltd B-26, Qutab Institutional Area, New Delhi-110016 100%Israel Barco Electronic Systems Ltd 6 Kriminitzky Street, Tel Aviv 67899 100%Israel BarcoView Ltd 6 Kriminitzky Street, Tel Aviv 67899 100%Japan Barco Co., Ltd Yamato International Bldg 8F, 5-1-1 Heiwajima, Ohta-ku, Tokyo 143-0006 100%Japan Barco Toyo Medical Systems Japan Co. Ltd. Chuo-ku, Tokyo 50%Korea Barco Ltd 165-2 Samsung-dong, Kangnam-ku, Seoul, 135-881 100%Korea BarcoView Co. Ltd 165-2 Samsung-dong, Kangnam-ku, Seoul, 135-881 100%Malaysia Barco Sdn. Bhd. Level 17, Menara Milenium, 50490 Kuala Lumpur 100%Singapore Barco Pte Ltd Block 750 E Chai Chee Road, # 05-03 Technopark@Chai Chee, 469005 100%Taiwan Barco Ltd 17F, Kuohwa Building, 868-6, Chungcheng Road, Chungho City, Taipei County 35 Taiwan 100%Thailand Barco Ltd 99/349 Chaengwatana Road, Tungsonghong, Laksi, Bangkok 10210 49%

122

2.2. Changes in group structure during 2005

In March 2005 Aesthedes nv acquired the business of System Technologies.

Results of this business were incorporated in the consolidated income statement

from 1 April 2005 onwards. Aesthedes nv was renamed into Innovative Designs nv.

The Dutch company Barco bv was sold in March 2005. The only asset of this

company was a building in Eindhoven, Netherlands.

BarcoView GmbH was liquidated during 2005. Business of this company was

taken over by Barco Orthogon GmbH.

In the Netherlands Folsom Research bv was renamed in Barco Folsom bv.

3. Segment reporting

3.1. Basis of segment reporting

Segment reporting is based on two segment reporting formats.

Primary reporting format presents the organizational structure with following

divisions:

- BarcoView (3.2.)

- Barco Media & Entertainment (3.3.)

- Barco Control Rooms (3.4.)

- Barco Presentation & Simulation (3.5.)

- BarcoVision (3.6.)

- Barco Manufacturing Services (3.7.)

The activities of each of the divisions are described in “Organizational structure

2005” on page 16 of this report. Results by division are commented on from

page 80 onwards. Reconciliation of division reporting with group reporting is

made in 3.8.

Secondary reporting (3.9.) presents the geographical markets:

- Europe, Middle East and Africa

- Americas

- Asia-Pacific

123

3.2. BarcoView

2005 2004 Variance[ in thousands of euro ] 2005-2004

Net sales 236,650 100.0% 220,449 100.0% 16,201

- external sales 235,368 99.5% 217,027 98.4% 18,341

- interdivision sales 1,283 0.5% 3,422 1.6% -2,140

Cost of goods sold -124,839 -52.8% -115,918 -52.6% -8,921

Gross profit 111,811 47.2% 104,531 47.4% 7,280

EBITA 24,746 10.5% 37,081 16.8% -12,335

Goodwill amortization / impairment -4,002 -1.7% -4,656 -2.1% 654

Operating result 20,744 8.8% 32,425 14.7% -11,681

Amortization capitalized development 18,085 7.6% 14,010 6.4% 4,075

Depreciation PP&E and other intangible assets 4,989 2.1% 4,437 2.0% 552

EBITDA 47,820 20.2% 55,528 25.2% -7,708

Capitalized development 24,940 10.5% 17,276 7.8% 7,664

Capital expenditure PP&E and other intangible assets 4,730 2.0% 11,490 5.2% -6,760

Segment assets 211,376 196,881

Segment liabilities 51,763 49,898

Number of employees at year end 1,208 1,215

124

3.3. Barco Media & Entertainment


Net sales 188,753 100.0% 159,226 100.0% 29,527

- external sales 178,662 94.7% 158,519 99.6% 20,142

- interdivision sales 10,091 5.3% 707 0.4% 9,384


Gross profit 54,208 28.7% 54,752 34.4% -544

EBITA -290 -0.2% 2,500 1.6% -2,790

Goodwill amortization / impairment -2,002 -1.3% 2,002

Operating result -290 -0.2% 498 0.3% -788

Amortization capitalized development 9,024 4.8% 8,980 5.6% 44

Depreciation PP&E and other intangible assets 1,821 1.0% 2,934 1.8% -1,113

EBITDA 10,555 5.6% 14,414 9.1% -3,860

Capitalized development 9,341 4.9% 8,009 5.0% 1,332

Capital expenditure PP&E and other intangible assets 2,366 1.3% 2,580 1.6% -215



Number of employees at year end 560 564

125

3.4. Barco Control Rooms


Net sales 117,706 100.0% 108,626 100.0% 9,081

- external sales 115,408 98.0% 107,339 98.8% 8,068

- interdivision sales 2,299 2.0% 1,286 1.2% 1,012


Gross profit 53,500 45.5% 49,338 45.4% 4,162

EBITA 15,386 13.1% 13,247 12.2% 2,139

Goodwill amortization / impairment -1,544 -1.4% 1,544

Operating result 15,386 13.1% 11,703 10.8% 3,683



EBITDA 21,523 18.3% 18,819 17.3% 2,704

Capitalized development 4,187 3.6% 4,340 4.0% -153





126

3.5. Barco Presentation & Simulation


Net sales 103,517 100.0% 104,101 100.0% -585

- external sales 101,686 98.2% 103,866 99.8% -2,180

- interdivision sales 1,831 1.8% 235 0.2% 1,595


Gross profit 43,094 41.6% 48,521 46.6% -5,427

EBITA 7,029 6.8% 10,477 10.1% -3,448

Goodwill amortization / impairment -921 -0.9% 921

Operating result 7,029 6.8% 9,556 9.2% -2,527

Amortization capitalized development 3,608 3.5% 4,469 4.3% -861


EBITDA 13,231 12.8% 17,435 16.7% -4,204

Capitalized development 4,823 4.7% 3,892 3.7% 931





127

3.6. BarcoVision


Net sales 57,890 100.0% 59,556 100.0% -1,666

- external sales 57,597 99.5% 59,481 99.9% -1,884

- interdivision sales 293 0.5% 75 0.1% 218

Cost of goods sold -30,512 -52.7% -32,351 -54.3% 1,839

Gross profit 27,378 47.3% 27,205 45.7% 173

EBITA 8,100 14.0% 7,326 12.3% 774

Goodwill amortization / impairment -840 -1.4% 840

Operating result 8,100 14.0% 6,486 10.9% 1,614


Depreciation PP&E and other intangible assets 1,326 2.3% 1,495 2.5% -169

EBITDA 14,088 24.3% 13,409 22.5% 680

Capitalized development 4,462 7.7% 4,837 8.1% -375

Capital expenditure PP&E and other intangible assets 1,171 2.0% 932 1.6% 239




128

3.7. Barco Manufacturing Services


Net sales 93,549 100.0% 112,083 100.0% -18,534

- external sales 23,271 24.9% 25,691 22.9% -2,419

- interdivision sales 70,278 75.1% 86,392 77.1% -16,114

Cost of goods sold -91,388 -97.7% -106,296 -94.8% 14,907

Gross profit 2,161 2.3% 5,787 5.2% -3,626

EBITA -2,964 -3.2% 795 0.7% -3,759

Goodwill amortization / impairment

Operating result -2,964 -3.2% 795 0.7% -3,759

Amortization capitalized development


EBITDA 2,029 2.2% 5,580 5.0% -3,551

Capitalized development

Capital expenditure PP&E and other intangible assets 1,405 1.5% 5,070 4.5% -3,665




129

3.8. Reconciliation of segment information with group information

2005 2004[ in thousands of euro ]

External sales

Total external sales segments 711,992 671,923

Net Income

Operating result Barco Control Rooms 15,386 11,703Operating result Barco Presentation & Simulation 7,029 9,556Operating result Barco Media & Entertainment -290 498Operating result BarcoView 20,744 32,425Operating result BarcoVision 8,100 6,486Operating result Barco Manufacturing Services -2,964 795Total operating results segments 48,005 61,463Interest income (expense) - net -1,163 765Other non-operating income (expense) - net 2,078 -181Income taxes -10,333 -14,703Minority interest -31 -5Net Income attributable to equityholders of the parent 38,557 47,339

Assets

Total segment assets 585,134 564,798Investments 377 2,096Deferred tax assets 15,938 12,061Deposits and cash at bank and in hand 106,256 90,610Other non-allocated assets 13,660 11,454Total assets 721,365 681,019

Liabilities

Total segment liabilities 177,084 199,683Equity attributable to equityholders of the parent 418,083 398,845Minority interest 1,176 1,030Long-term debts 22,564 26,014Deferred tax liabilities 4,628 3,469Current portion of long-term debts 4,780 8,646Short-term debts 56,967 23,294Other non-allocated liabilities 36,083 20,037Total equity and liabilities 721,365 681,019

Number of employees at year end

Barco Control Rooms 568 569Barco Presentation & Simulation 455 502Barco Media & Entertainment 560 564BarcoView 1,208 1,215BarcoVision 365 403Barco Manufacturing Services 709 805Commercial & Admin personnel worldwide 218 222General Services 139 109

Total 4,222 4,389

130

3.9. Key data by region


Net sales

Europe - Middle East - Africa 339,963 47.7% 335,412 49.9% 4,550

Americas 238,215 33.5% 211,065 31.4% 27,150

Asia-Pacific 133,814 18.8% 125,446 18.7% 8,367

Total 711,992 100.0% 671,923 100.0% 40,068

Total assets

Europe - Middle East - Africa 445,409 61.7% 466,027 68.6% -20,617

Americas 120,762 16.7% 95,247 14.0% 25,515

Asia-Pacific 100,334 13.9% 64,878 9.5% 35,456

Group corrections 54,859 7.6% 53,402 7.9% 1,457

Total 721,365 100.0% 679,553 100.0% 41,812

Capitalized development

Europe - Middle East - Africa 39,325 86.9% 31,844 83.0% 7,481

Americas 5,449 12.0% 6,510 17.0% -1,062

Asia-Pacific 483 1.1% 483

Total 45,256 100.0% 38,354 100.0% 6,902

Capital expenditure PP&E and other intangible assets

Europe - Middle East - Africa 9,449 76.5% 19,857 83.1% -10,407

Americas 1,120 9.1% 2,601 10.9% -1,481

Asia-Pacific 1,784 14.4% 1,447 6.1% 337

Group corrections 0 0

Total 12,353 100.0% 23,904 100.0% -11,551

The split of net sales shows the revenue from external customers based on the geographical location of the customers to whom the invoice is issued.Total assets and capital expenditure are detailed by geographical location of the assets. Group corrections on assets mainly relate to goodwill and the elimination ofintercompany margin on inventory.

131

4. Net sales

[ in thousands of euro ] 2005 2004 %

711,992 671,923 +6.0%

Sales were favourably affected by organic growth (4.9%) and new acquisitions (0.8%). There was a small positive currency impact of +0.3%.

Sales per division and per geographic region are disclosed in the section on “Segment reporting” (note 3), and in the “Comments on the results” from page 80onwards.

5. Cost of goods sold


419,839 381,789 +10.0%

Cost of goods sold includes direct selling cost, direct and indirect production cost, warranty cost and cost of inventory obsolescence.

Cost of goods sold increased as a percentage of sales: 59.0% in 2005 versus 56.8% in 2004. Higher cost of goods sold is mainly caused by a change in product mix, lower margins in the divisions Barco Media & Entertainment and Barco Presentation &Simulation, and higher cost of inventory obsolescence.

6. Research and development expenses


Research & development 73,325 69,005 +6.3%

Capitalized development -45,256 -38,354 +18.0%

Amortization capitalized development 39,664 36,107 +9.9%

Research and development expenses 67,734 66,758 +1.5%

Higher research & development and higher capitalized development is caused by increased development efforts in the BarcoView division. These efforts mainlyrelate to the development of a new platform for Air Traffic Control, development in 3D image processing in the medical market, and long-term development effortsin the avionics market. Research and development expenses decreased as a percentage of sales, from 9.9% in 2004 to 9.5% in 2005.

132

7. Sales and marketing expenses


114,809 109,709 +4.6%

Sales and marketing cost includes customer service, sales, marketing and strategic marketing. Sales and marketing cost decreased as a percentage of sales: 16.1% in 2005 versus 16.3% in 2004.

8. General and administration expenses


52,653 48,091 +9.5%

General and administration expenses include human resources management, finance and accounting, information technology and general administration. General and administration expenses increased as percentage of sales: 7.4% in 2005 versus 7.2% in 2004.

9. Other operating income (expense) - net

[ in thousands of euro ] 2005 2004

Addition to (-)/ reversals of (+) provisions for liabilities and charges (1) -292 755Losses on bad debts (including write-offs and reversals of write-offs) (2) -468 -2,645Exchange gains and losses (3) 1,337 -1,383Bank charges -1,133 -946Other financial results -59 272Investment grants (4) 3,367 3,572Operating grants (5) 73 4,285Gains on disposals of tangible fixed assets 370 301Other operating income (6) 1,867 3,343Losses on disposal of tangible fixed assets -421 -515Other operating expenses (7) -594 -835Cost of share-based payment (8) -450 -354

Total 3,596 5,850

(1) Provisions for liabilities and charges basically result from the additional provisions, the amounts used, and unused amounts reversed (see also note 31).(2) Losses on bad debts were lower in 2005 than in 2004 because of the reduction of the losses in the division Barco Media & Entertainment.(3) Exchange gains and losses were positive in 2005 and negative in 2004, because of the reverse evolution of the USD versus EUR in both years.(4) Investment grants mainly relate to the efforts in research and development.(5) Operating grants were specifically high in 2004, because of a one-time grant received for capital expenditure and additional employment in the BarcoView division, Belgium.(6) Other operating income mainly includes cost recuperations and additional risk premiums which can be invoiced on clients appealing on the vendor lease program as disclosedin note 31. (7) Other operating expenses mainly include taxes other than income taxes.(8) According to IFRS 2, the cost of share-based payment transactions is reflected in the income statement from 2005 onwards, with restatement of the 2004 figures. Cost of share-based payments is recognized for all warrants granted from 7 November 2002 onwards.

133

10. Restructuring cost


Severance payments -9,692

Gains on disposals of land and buildings 2,093

Losses on disposals of land and buildings -947

Restructuring cost -8,546

Severance payments include costs for following reorganizations:- in Europe sales & service back office functions are centralized in the divisional headquarters- in the United States all resources of the Barco Media & Entertainment division are being concentrated in Sacramento, California- in Georgia the Kennesaw and Duluth activities are being consolidated in Duluth- reorganization in our defense business units in the United States and France.The disposal of redundant buildings in the Netherlands, United Kingdom and Utah, United States, resulted in gains and losses of euro 2,093K and euro 947K respec-tively.

11. Revenues and expenses by nature


Sales 711,992 671,923

Material cost -301,663 -260,417

Services and other costs -101,774 -99,485

Personnel cost -238,688 -230,482

Amortization capitalized development cost -39,664 -36,107

Capitalized development cost 45,256 38,354

Depreciation property, plant, equipment and software -18,502 -18,210

Other operating income (expense) - net (cfr note 9) 3,598 5,850

Restructuring cost (cfr note 10) -8,546

Operating result before goodwill amortization/impairment 52,008 71,426

Personnel cost includes cost for temporary personnel for an amount of euro 9,730K (in 2004 euro 10,193K). Cost for employees amounts to euro 228,958K(in 2004 euro 220,289K). Average number of employees in 2005 was 4,321 (in 2004 4,230), including 2,793 white-collars (in 2004 2,680) and 1,528 blue-collars(in 2004 1,549).

134

12. Interest income (expense) - net


Interest income 1,462 2,252

Interest expenses -2,625 -1,487

Interest income - expenses (net) -1,163 765

13. Non-operating income (expense) - net


Non-operating income - expense (net) 2,078 -181

Non-operating results include the results on the sale of a division or business unit. The positive result in 2005 is the result of the divestment of Barco's investment in

Mania, a participation Barco still held after the sale of the Graphics division in 2002. In 2004 non-operating results include the sale of the Home Cinema activity to

French TEC, and further results on the settlement of the exits dd 2003 from Esko-Graphics, dotrix and Machine Vision.

135

14. Income taxes


Current versus deferred income taxes

Current income taxes -13,052 -10,738Deferred income taxes 2,719 -3,966

Income taxes -10,333 -14,704

Income taxes versus income before taxes

Operating result before goodwill amortization/impairment 52,008 71,427Interest income (expense) - net -1,163 765Current income before taxes 50,845 72,192Taxes related to current income before taxes (1) -11,052 -15,040

21.7% 20.8%

Goodwill amortization/impairment -4,002 -9,963Taxes related to goodwill amortization/impairment 0,0% 0,0%

Other non-operating income and expenses 2,078 -181Taxes related to other non-operating income and expenses (2) 719 336

-34.6% 185.6%

Income before taxes 48,921 62,048Income taxes -10,333 -14,704

21.1% 23.7%

1) Taxes related to current income before taxes

Current income before taxes 50,845 72,192

Theoretical tax rate 34.0% 34.0%

Theoretical taxes related to current income before taxes -17,287 -24,548

Non-deductible items -1,267 -1,138Special tax status 6,736 8,278Investment allowances 1,737 1,932Use of deferred tax assets, not recognised in prior years 97 25Deferred tax assets, not recognised in current year -667 -302Tax adjustments related to prior periods -401 712

Reported taxes related to current income before taxes -11,052 -15,041

2) Taxes related to other non-operating income and expenses

Taxes are related to the non-operating results on the divestment from the Graphics division (2005 and 2004), and the Home Theater business unit (2004).

136



Basic earnings per share

Net income attributable to shareholders 38,558 47,338Weighted average of shares 12,228,515 12,261,848Basic earnings per share 3.15 3.86

Diluted earnings per share

Net income attributable to shareholders 38,558 47,338Weighted average of shares (diluted) 12,993,896 13,082,577Basic earnings per share 2.97 3.62

The difference between the weighted average of shares and weighted average of shares (diluted) is due to exercisable options and debt linked derivatives.The company has issued share options to its employees and non-executive directors. For more detailed information concerning the exercisable options and debtlinked derivatives, please refer to note 25.

16. Goodwill


At cost

On 1 January 138,316 96,072Expenditure 553 42,244Reclassification as a result of the adoption of IFRS 3 -73,913On 31 December 64,956 138,316

Amortization/Impairment

On 1 January 73,913 63,949Amortization 7,319Impairment losses 4,002 2,644Reclassification as a result of the adoption of IFRS 3 -73,913On 31 December 4,002 73,913

Net book value

On 1 January 64,403 32,123On 31 December 60,954 64,403

Expenditure on goodwill in 2005 mainly relates to the acquisition of Innovative Design. Expenditure in 2004 relates to the acquisitions of Folsom and Voxar.For business combinations for which the agreement date is before 31 March 2004, goodwill was amortized until the end of 2004, using the straight-line method overits expected useful life, and the general estimate of useful life was 10 years, unless a longer or shorter period could be justified. This period did not exceed 20 years.On 31 March 2004 the IASB issued IFRS 3 'Business combinations' together with a revised version of IAS 38 'Intangible assets'. The main change introduced is thatamortization of goodwill and intangible assets with indefinite lives is prohibited and these are tested annually for impairment. In accordance with the requirementsBarco discontinued amortization of goodwill effective from 1 January 2005. Impairment losses of euro 4,002K are related to Voxar. Although the strategic rationalebehind the Voxar acquisition still stands, and positive results are planned in the future, an impairment loss was recognized because of the slower than expected marketadoption of 3D imaging in the medical market. If goodwill was amortized in 2005, amortization cost would have amounted to euro 9,613K. In 2005 the impairmentcost amounts to euro 4,002K. According to the transitional provisions of IFRS 3, accumulated amortization was set off against goodwill on 1 January 2005 for an amountof euro 73,913K.

137

17. Intangible assets

2005 2004Capitalized Other intangible Total Total

[ in thousands of euro ] development assets

At cost

On 1 January 160,090 10,447 170,537 145,892

Expenditure 45,256 1,002 46,259 38,910

Sales and disposals -4,354 -92 -4,446 -19,014

Acquisition of subsidiary 6,278

Disposal of subsidiary

Translation (losses)/gains 7,199 1,146 8,345 -1,529

On 31 December 208,192 12,503 220,694 170,537

Amortization

On 1 January 101,802 8,295 110,096 90,871

Amortization 39,664 1,117 40,781 37,006

Sales and disposals -4,354 -91 -4,444 -18,692

Acquisition of subsidiary 1,694


Translation (losses)/gains 5,765 1,075 6,840 -783

On 31 December 142,876 10,396 153,272 110,096

Net book value

On 1 January 58,289 2,152 60,441 55,021

On 31 December 65,315 2,107 67,422 60,441

138


2005 2004

Land and Plant, Furniture, Leasing and Other Assets under Total Totalbuildings machinery office other similar property, construction

and equipment rights plant and[ in thousands of euro ] equipment and vehicles equipment

At cost

On 1 January 97,362 126,808 45,329 251 4,918 1,954 276,622 260,525

Expenditure 1,159 5,224 3,529 67 937 435 11,351 23,349

Sales and disposals -5,331 -1,538 -4,246 -87 -435 -11,638 -7,029

Acquisition of subsidiary 68 68 1,102


Transfers 825 434 -1,259

Translation (losses)/gains 2,498 2,107 1,179 14 285 7 6,090 -1,325

On 31 December 96,513 133,034 45,859 245 5,704 1,137 282,493 276,622

Depreciation

On 1 January 31,808 96,712 36,101 111 3,424 168,156 156,605

Depreciation 4,070 8,758 3,782 61 715 17,385 17,395

Sales and disposals -2,266 -1,450 -4,244 -66 -282 -8,308 -5,781

Acquisition of subsidiary 717


Transfers

Translation (losses)/gains 318 1,196 1,073 4 138 2,728 -779

On 31 December 33,930 105,216 36,711 109 3,995 179,961 168,156

Carrying amount

On 1 January 65,554 30,096 9,228 140 1,493 1,954 108,467 103,920

On 31 December 62,583 27,818 9,148 136 1,709 1,137 102,532 108,467

Capital expenditure in 2004 was high because of the new building and manufacturing plant for the BarcoView division in Belgium (Kortrijk).

139

19. Investments - Other non-current assets


Investments

Mania-Technologie AG, Germany 925

ManiaBarco GmbH, Germany 455

Innovatie- en Incubatiecentrum Kortrijk nv, Belgium 124 124

Barco Graphics France S.A. 430

Flabel S.A., Belgium 74

Nv Bedrijvencentrum Regio Kortrijk, Belgium 45 45

IGEBA, Baugenossenschaft, Switzerland 32 33

Expo Kortrijk, Belgium 10 10

Intellect, Australia 141

Vlerick School, Belgium 25

Investments 377 2,096

Other non-current assets

Amounts receivable on Mania-Barco GmbH 417

Cash guarantees / deposits 3,817 3,116

Other amounts receivable on more than one year 247 338

Other non-current assets 4,063 3,871

The remaining investments resulting from the exit from the Graphics division, Mania-Technologie AG, ManiaBarco GmbH and Barco Graphics France S.A., weredivested in 2005, with a positive result of euro 2,078K (see note 13 Non-operating income - expense). The investment in Intellect is measured at fair value,the remaining investments are measured at cost.

140

20. Deferred tax assets - deferred tax liabilities

Assets Liabilities Net-asset Income statement

[ in thousands of euro ] 2005 2004 2005 2004 2005 2004 2005 2004

Capitalized development cost 7,821 7,801 -7,821 -7,801 -20 1,406

Patents, licenses, ... 12 878 12 878 -866 -395

Tangible fixed assets and software 746 498 6,884 7,198 -6,138 -6,700 562 -156

Other investments 82 19 -19 82 -101 -8,518

Inventory 8,336 7,877 2,641 2,340 5,694 5,538 157 -52

Trade debtors 626 530 345 217 281 313 -32 -322

Provisions 2,893 2,428 981 799 1,912 1,629 283 -201

Employee benefits 2,590 2,347 2,590 2,347 243 -335

Deferred revenue 379 697 379 697 -318 -399

Other items 1,156 1,368 188 309 968 1,059 -91 311

Tax value of loss carry forwards 9,733 7,643 9,733 7,643 2,090 2,723

Tax value of tax credits 3,719 2,907 3,719 2,907 812 1,973

Gross tax assets/(liabilities) 30,190 27,255 18,880 18,664 11,310 8,591 2,719 -3,966

Set off of tax 14,252 15,195 14,252 15,195

Net tax assets/(liabilities) 15,938 12,060 4,628 3,469 11,310 8,591

Temporary differences for which no deferred tax asset is recognized:

Tax losses carried forward and other temporary differences on which no deferred tax asset is recognized amount to euro 8,035K (2004: 7,418K). Deferred tax assetshave not been recognized on these items because it is not probable that future profit will be available against which the benefits can be utilized.

141

21. Inventory


Raw materials and consumables 90,326 98,322

Work in progress 34,023 43,625

Finished goods 72,841 55,564

Advance payments

Contracts in progress 4,847 6,274

Amounts written-off inventory -60,672 -59,737

Inventory 141,364 144,049

Inventory decreased from euro 144 million to euro 141 million despite higher anticipated sales. This is the first success of the actions taken to improveinventory, based on lean manufacturing which is gradually implemented through the company.

22. Amounts receivable


Trade debtors (accounts receivable) - gross 195,603 174,131

Trade debtors (accounts receivable) - amounts written down -6,846 -7,919

Trade debtors (accounts receivable) - net 188,757 166,212

V.A.T. receivable 6,639 3,668

Taxes receivable 12,938 9,356

Interest rate swap (note 32) 46 82

Currency rate swap (note 32) 2,712

Other 4,967 3,581

Other amounts receivable 24,590 19,399

142

23. Deposits and cash at bank and in hand


Deposits (1) 40,397 51,404

Cash at bank (2) 65,663 39,075

Cash in hand 195 131

Deposits and cash at bank and in hand 106,256 90,610

(1) Deposits are short-term, highly liquid investments, that are readily convertible

to known amounts of cash.

On 31 December 2005, deposits include:

- deposits in EUR, with an average interest rate of 2.58% 31,602

- deposits in CHF with an average interest rate of 1.14% 8,485

- deposits in AUD with an average interest rate of 5.23% 310

40,397

Deposits are held to maturity. Due to the nature of the products, differences between cost and fair value are minimal.

(2) Cash at bank is immediately available. It is denominated in the following currencies:

- EUR 36%

- USD 35%

- others 29%

24. Prepaid expenses and accrued income


Prepaid expenses 8,585 9,127

Accrued income 526 284

Prepaid expenses and accrued income 9,111 9,410

143

25. Equity attributable to equityholders of the parent


Share capital 53,622 53,286

Share premium 126,087 122,695

Share-based payments 903 453

Acquired own shares -23,402 -15,250

Convertible bond 188

Retained earnings 275,811 262,342

Cumulative translation adjustment 14,543 -25,747

Derivatives -395 877

Equity attributable to equityholders of the parent 418,083 386,088

1. Share capital

In 2005 78,374 warrants under the existing warrant plans were exercised. As a result the capital increased on 9 February 2005 with euro 335,440.72 from euro

53,286,143.40 to euro 53,621,584.12 and the total number of shares outstanding increased from 12,463,640 to 12,542,014.

On 31 December 2005 the capital amounted to euro 53,621,584.12 represented by 12,542,014 shares. All shares are fully paid.

2. Share premium

On 9 february 2005 78,374 warrants were converted into shares. As a result the share premium increased from euro 122,695,365 to euro 126,086,608. Exercise price

of these warrants contains a share premium of euro 43.27 per share, leading to a new share premium of euro 3,391,243.

3. Share-based payments

On 9 November 2000 the extraordinary shareholders' meeting decided that the board of directors could create 400,000 warrants for staff and non-executive directors

as well as for individuals who play an important role for the company. In 2005 1,905 warrants were granted. On 31 December 2005 this option plan became obso-

lete. In 2004 the extraordinary shareholders' meeting approved a new warrant scheme effective for a period of five (5) years and decided that the board of directors

could create for the benefit of the staff up to 400,000 warrants, each one entitling subscription to one (1) share. In 2005 73,117 warrants were granted. On 31

December 2005 the total number of warrants still to be granted under the new warrant plan amounted to 326,883.

144

Warrants exercisable under the warrant plans

The total number of outstanding warrants on 31 December 2005 amounted to 722,810 which can lead to the creation of the same number of shares. These

warrants may be exercised under the following conditions:

Allocation date Last exercise Exercise Balance on Granted Exercised Discharged Expired Balance on date price 31 Dec 2004 in 2005 in 2005 in 2005 in 2005 31 Dec 2005

09/16/99 (personnel) Sep/09* 93.58 euro 127,961 -1,237 -588 126,136

05/16/00 (personnel) Dec/06 95.64 euro 8,510 -587 7,923

07/13/00 (personnel) Jun/10* 91.92 euro 147,064 -740 -2,514 143,810

07/13/00 (personnel) Jun/05* 93,27 euro 2,000 -2,000 0

06/18/02 (personnel) Jun/12* 42.01 euro 184,558 -3,004 181,554

06/18/02 (non-personnel) Jun/07 46.36 euro 5,400 5,400

06/24/02 (personnel UK) Jun/12 40.55 euro 4,752 -220 4,532

06/24/02 (personnel) Jun/12* 42.70 euro 10,000 10,000

11/04/02 (personnel) Sep/12* 42.40 euro 25,900 25,900

06/23/03 (personnel) Jun/13 50.75 euro 71,075 -2,797 68,278

06/23/03 (non-personnel) Jun/08 52.17 euro 2,400 2,400

06/23/03 (personnel UK) Jun/13 50.50 euro 1,605 -125 1,480

09/15/03 (personnel) Sep/13 57.52 euro 5,350 -400 4,950

03/29/04 (personnel) Dec/13 67.00 euro 67,165 -2,610 64,555

03/29/04 (personnel UK) Dec/13 66.50 euro 1,385 -250 1,135

09/12/05 (personnel) Sep/15 60.51 euro 60,462 60,462

09/12/05 (personnel UK) Sep/15 63.15 euro 1,905 1,905

09/12/05 (personnel US) Sep/15 61.35 euro 12,655 -265 12,390

665,125 75,022 0 -11,648 -5,689 722,810

* For a large number of warrants this latest exercise date was extended with three (3) years according to article 407 of the law of 24 December 2002.

From 2005 onwards, cost of these option plans is included in the income statement, with a restatement of the figures for the year 2004. Cost of share-based

payments is recognized for all warrants granted from 7 November 2002 onwards. 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. This change in accounting principles is caused by the publication of IFRS 2, which was issued in February 2004.

145

4. Acquired own shares

During the year 2005, Barco acquired 138,044 own shares for a total amount of euro 8,151,845.72. As a result the number of own shares owned by the Company

increased from 245,186 on 31 December 2004 to 383,230 on 31 December 2005.

5. Convertible bond loan

On 21 November 2005 the convertible bond loan was completely reimbursed. Therefore no obligations have been converted into shares.

6. Retained earnings

Change in retained earnings is caused by net income of 2005 and the dividend declaration by the annual general meeting in 2005. According to IFRS-rules, the

proposed dividend with respect to the year 2005 for payment in 2006, is still included in the retained earnings on 31 December 2005. The board of directors will

propose to the annual general meeting of 2006 to distribute a dividend of euro 2.15 per share.

7. Cumulative translation adjustment

Positive evolution in translation adjustment is the result of the weaker euro, in comparison with the currencies of some foreign group companies, mainly US com-

panies.

8. Derivatives

Derivative financial instruments are disclosed in note 32 below.

146

26. Minority interest


Balance on 1 January 1,030 1,122

Share of minority shareholders in net profit 31 5

First consolidation

Decrease/(increase) in ownership

Translation gains/(losses) 115 -97

Balance on 31 December 1,176 1,030

Most important part is the 20% minority interest in Barco Leyard Beijing and Barco Leyard Hong Kong.

27. Long-term debts

31 December 2005 Payable Payable Payable Payable Payable Payable Payable[ in thousands of euro ] in 2006 in 2007 in 2008 in 2009 in 2010 later

Financial debts 4,780 7,969 1,518 1,500 1,500 10,077 27,344

Other debts 0 452 16 16 16 11 511

Total 4,780 8,420 1,534 1,516 1,516 10,088 27,855

Analysis of long-term financial debts as to currencies: Analysis of long-term financial debts as to interest rate:

EUR 12,774 - fixed (average 4.74%) 3,803

GBP 3,301 - variable swapped into fixed (average 4.38%) 4,827

USD 10,791 - variable, limited by cap-floor agreements as described in note 32 18,713

Other 477 Total 27,344

Total 27,344

Long-term debts are valued at amortized cost, which approximates fair value. The other debts relate to governmental loans.

147

28. Short-term debts


Short-term debts 56,967 23,294

Analysis of short-term financial debts on 31 December 2005:

- EUR, fixed interest rate 28,429

- American dollar, variable interest rate 8,731

- Japanese Yen, fixed interest rate 6,983

- Hong-Kong dollar, variable interest rate 8,258

- other 4,566

Total 56,967

For short-term debts, the carrying amount reported in the balance sheet approximates fair value, considering their short maturity.

29. Other current liabilities


Dividends payable 2,175 2,332

Currency rate swap (note 32) 959 12

Interest rate swap (note 32) 178 349

Other liabilities 3,333 5,835

Other current liabilities 6,645 8,528

30. Accrued charges and deferred income


Investment grants 5,471 5,313

Accrued charges 6,142 4,188

Deferred income 5,543 6,369

Accrued charges and deferred income 17,157 15,871

148

31. Provisions

Balance Balance Additional Amounts Unusedsheet sheet provisions used amounts

[ in thousands of euro ] 31 Dec 2005 31 Dec 2004 made reversed

Pension obligations (1) 4,770 3,923 1,409 -563

Technical warranty (2) 18,084 17,003 17,208 -16,351 -326

Restructuring provision (3) 6,969 1,786 6,497 -1,314

Risk on buy-back agreements (4) 1,991 3,436 1,145 -2,591

Risk on contracts in progress 607 644 607 -644

Risk on disposed activities 67 650 -583

Environmental risk 2,367 2,717 -98 -252

Social claims and severance payments 809 1,154 8 -353

Other claims and risks 7,413 6,841 3,463 -2,159 -796

Provisions 43,077 38,154 30,338 -24,656 -1,374

(1) In general, pension plans at Barco are defined contribution plans. Obligations for these plans are recognized as an expense in the income statement as incurred.

Expenses for these plans amount to euro 7,946K in 2005 (euro 8,062K in 2004).

In some specific cases a pension plan includes a defined benefit obligation. According to IAS 19, provisions are set up in these situations:

- early retirement plans in Belgium 2,502

- local legal requirements (mainly France, Japan, Korea and Italy) 1,365

- a small number of individual plans which existed before the employee joined Barco 903

Increase in provision for pension obligations is due to new early retirement plans in Belgium.

Early retirement plans are recognized as liability and an expense when the company is committed to terminate the employment of the employees affected before

the normal retirement date.

(2) Provisions for technical warranty are based on:

- historical experience of the level of repairs and replacements

- and additional provisions are set up when a technical problem is detected.

(3) Restructuring provision includes a remaining provision for the reorganization of the Barco Manufacturing Services division dd 2003 for an amount of euro 472K,

and new reorganizations dd 2005:

- in Europe sales & service back office functions are centralized in the divisional headquarters

- in the United States all resources of the Barco Media & Entertainment division are being concentrated in Sacramento, California

- in Georgia the Kennesaw and Duluth activities are being consolidated in Duluth

- reorganization in our defense business units in the United States and France.

(4) Barco appeals on a vendor-lease program with the obligation to take back sold goods, in case of insolvency of the client. A provision is set up for this risk.

Total possible value of the obligation to take back sold goods is 22.0 mln euro (versus 33.4 mln euro in 2004). Average remaining duration of these contracts is

17 months. For the main classes of provision the timing of the resulting outflow of economic benefits is expected on a short-term basis.

149


Derivative financial instruments are used to reduce the exposure to fluctuations in foreign exchange rates and interest rates. These instruments are subject to therisk of market rates changing subsequent to acquisition. These changes are generally offset by opposite effects on the item being hedged.

Foreign currency risk

Recognized assets and liabilities

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 risksmay be naturally covered when a receivable in a given currency is matched with a payable in the same currency.

Forward exchange contracts and option contracts are used to manage the currency risk arising from recognized receivables and payables, which are not naturallyhedged. This is particularly the case for the US dollar, for which receivables are systematically higher than payables. No hedge accounting is applied to these con-tracts.

The balances on foreign currency receivables and payables are valued at the rates of exchange prevailing at the end of the accounting period. Derivative financialinstruments 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 valueof derivative financial instruments are recognized in the income statement.

Forecasted transactions

In January 2004, Barco started to designate forward contracts to forecasted sales and costs. Hedge accounting is applied to these contracts. The portion of the gainor loss on the hedging instrument that will be determined as an effective hedge is recognized directly in equity.

Interest rate risk

Barco uses following hedging instruments to manage its interest rate risk:

Swap on outstanding loanAn outstanding loan of USD 5,695K (euro 4,827K) with variable interest swapped into fixed 4.38%.This hedging instrument is treated as a cash-flow hedge, and gains or losses are recognized directly into equity.

Cap/Floor on loan agreementsBarco entered in 2004 into following loan agreements with variable interest rates, for which the variability is limited by a cap/floor:

- An outstanding loan of euro 12,750K, with variable interest rate which is limited between 2% and 5%;- An outstanding loan of USD 3,680K (euro 3,119K) with variable interest rate which is limited between 2.74% and 7.00%;- An outstanding loan of USD 3,355K (euro 2,884K) with variable interest rate which is limited between 2.49% and 4.89%

The cap/floor loan agreements do not meet the hedging requirements of IAS 39 and are therefore treated as financial instruments held for trading. They are val-ued at fair value and changes in fair value are recognized in the income statement.

Credit risk

Credit risk on accounts receivableCredit 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 casescollateral 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 inorder to minimize the credit risk.

Credit risk on liquid securities and short-term investmentsA policy defining acceptable counter parties and the maximum risk per counter party is in place. Short-term investments are done in marketable securities or infixed term deposits with reputable banks.

150

33. Operating leases


Non-cancellable operating leases are payable as follows:

Less than one year 5,014 5,118

Between one and five years 8,822 8,405

More than five years 527 476

Total 14,363 13,999

Non-cancellable operating leases mainly relate to leases of factory facilities, warehouses and sales offices.During the current year, 5,164K euro was recognized as an expense in the income statement in respect of operating leases of factory facilities, warehouses andsales offices (2004: 4,970K euro).

34. Rights and commitments not reflected in the balance sheet


Guarantees given to third parties (1) 11,054 7,633

Mortgage obligations given as security(2)

- book value of the relevant assets 16,177 19,386

- total of the mortgage 15,981 15,981

The above amounts represent the maximum exposure.(1) Guarantees given to third parties mainly relate to guarantees given to customers for ongoing projects, and to authorities for commitments related to VAT, duties, etc.

(2) There are no outstanding debts guaranteed by the mortgage obligations.

35. Related party transactions

For more information with respect to remuneration for directors and members of the executive committee, please refer to the “Corporate governance” section on

page 58 of this annual report.

151

36. Cash-flow statement: effect of acquisitions and disposals

Acquisitions Disposals[ in thousands of euro ] 2005 2004 2005 2004

Non-current assets 69 9,261

Capitalized development cost 3,622

Tangible assets and other intangible assets 69 1,422

Deferred tax assets 4,217

Other investments

Current assets 5,112

Inventory 2,290

Trade debtors 2,370

Other receivables 452

Foreign exchange adjustments

Minority interest

Non-current liabilities

Long-term debts, interest-bearing liabilities

Current liabilities -1,138 8,796

Trade payables 1,441

Other payables -1,138 7,355

Net-identifiable assets and liabilities 1,207 5,577

Non-operating profit (losses) on disposals 395

Goodwill on acquisitions 553 43,056

Received consideration 395

Acquired cash

Purchase price -1,760 -48,633

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 theacquisition.The other payables of -1,138K euro relate to a price correction on a former acquisition.

Acquisitions and disposals of group companies have a negative influence on EBITA in 2005 versus 2004 of 1,325K euro.

152

37. Events subsequent to the balance sheet date

There are no major events subsequent to the balance sheet date which have a major impact on the further evolution of the company.

38. Recent IFRS accounting pronouncements

There are no standards or interpretations issued by the IASB but not effective, and which have a significant impact on the company's financial statement.

39. Recent developments

To the best of our actual knowledge, there are no circumstances and developments, which have a major impact on the further evolution of the company.

153

Statutory auditor’s report to the general meeting of shareholders of Barco nv

on the consolidated financial statements for the year ended 31 December

2005

In accordance with legal and statutory requirements, we report to you on the

performance of the audit mandate which you have entrusted to us.

We have audited the consolidated financial statements for the year ended 31

December 2005, prepared in accordance with International Financial Reporting

Standards as adopted for use in the European Union and with the legal and

regulatory requirements applicable in Belgium, which show a balance sheet

total of EUR 721,365 thousands and a net income for the year of EUR 38,588

thousands. We have also carried out the specific additional audit procedures

required by law.

The preparation of the consolidated financial statements and the assessment of

the information to be included in the consolidated directors’ report, are the

responsibility of the board of directors.

Our audit of the consolidated financial statements was carried out in accordance

with the auditing standards applicable in Belgium, as issued by the “Institut des

Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren”.

Unqualified audit opinion on the consolidated financial statements

The above mentioned auditing standards require that we plan and perform the

audit to obtain reasonable assurance about whether the consolidated financial

statements are free of material misstatement.

In accordance with those standards, we considered the group’s administrative

and accounting organization, as well as its internal control procedures.

Company’s officials have responded clearly to our requests for explanations and

information. We have examined, on a test basis, the evidence supporting the

amounts included in the consolidated financial statements. We have assessed

the accounting policies, the consolidation principles, the significant accounting

estimates made by the company and the overall consolidated financial state-

ment presentation. We believe that our audit provides a reasonable basis for our

opinion.

In our opinion, taking into account the legal and regulatory requirements appli-

cable in Belgium, the consolidated financial statements for the year ended 31

December 2005 give a true and fair view of the group’s assets, liabilities, finan-

cial position, the results of operations and its cash-flows, in accordance with

International Financial Reporting Standards as adopted for use in the European

Union.

Additional certifications and information

We supplement our report with the following certifications and information

which do not modify our audit opinion on the consolidated financial statements:

The consolidated directors’ report includes the information required by law and

is consistent with the consolidated financial statements. We are, however,

unable to comment on the description of the principal risks and uncertainties

which the group is facing, and of its situation, its foreseeable evolution or the

significant influence of certain facts on its future development. We can never-

theless confirm that the matters disclosed do not present any obvious contra-

dictions with the information of which we became aware during our audit.

As disclosed in note 1 to the consolidated financial statements, the accounting

policies applied when preparing these consolidated financial statements have

been modified compared to previous year. These modifications result from the

adoption of IFRS 2 ‘Share-based payment’ and IFRS 3 ‘Business Combinations’,

both standards were issued in 2004.

Brussels, 14 March, 2006

Ernst & Young Reviseurs d'Entreprises SCC/Bedrijfsrevisoren BCV (B 160)

Statutory auditor

represented by

Ludo Swolfs Marc Van Hoecke

Partner Partner

Auditor’s report

Balance sheet after appropriationIncome statementAppropriation account

Barco nv

Summary version of statutory accounts Barco nv

The following pages are extracts of the statutory annual accounts of Barco nv.

The accounting principles used for the statutory annual accounts of Barco nv

differ significantly from the accounting principles used for the consolidated

annual accounts: the statutory annual accounts follow the Belgian legal requi-

rements, 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 sta-

tutory periods. These documents are available on request from Barco’s Investor

Relations department, and at www.barco.com.

156


ASSETS

FIXED ASSETS 658,592 627,007

II. Intangible fixed assets 68,120 32,398

III. Tangible fixed assets 39,138 41,611A. Land and buildings 21,221 23,046B. Plant, machinery and equipment 13,846 13,798C. Furniture and vehicles 2,699 2,773E. Other tangible fixed assets 529 108F. Assets under construction and advance payments 843 1,886

IV. Financial fixed assets 551,334 552,998A. Affiliated enterprises 549,908 549,978

1. Investments 549,908 549,9782. Amounts receivable

B. Other enterprises linked by participating interests 1,8911. Investments 1,4542. Amounts receivable 437

C. Other financial fixed assets 1,426 1,1291. Shares 263 1792. Amounts receivable and cash guarantees 1,163 950

CURRENT ASSETS 251,040 236,334

V. Amounts receivable after more than one year 247A. Trade debtors 247

VI. Stocks and contracts in progress 84,535 82,860A. Stocks 83,274 82,262

1. Raw materials and consumables 42,418 45,2032. Work in process 13,628 21,7113. Finished goods 27,228 15,348

B. Contracts in progress 1,261 598

VII. Amounts receivable within one year 141,012 127,985A. Trade debtors 126,046 102,741B. Other amounts receivable 14,966 25,244

VIII. Investments 23,608 15,456A. Own shares 23,608 15,456

IX. Cash at bank and in hand 238 4,428

X. Deferred charges and accrued income 1,400 5,605

TOTAL ASSETS 909,632 863,341

Balance sheet after appropriation

157


LIABILITIES

CAPITAL AND RESERVES 355,402 378,647

I. Capital 53,621 53,286A. Issued capital 53,621 53,286

II. Share premium account 126,087 122,695

IV. Reserves 29,847 21,715A. Legal reserve 6,182 6,182B. Reserves not available for distribution 23,608 15,456

1. In respect of own shares held 23,608 15,456C. Untaxed reserves 57 77

V. Accumulated profits 140,640 177,086

VI. Investment grants 5,207 3,865

PROVISIONS AND DEFERRED TAXES 19,606 20,574

VII. A. Provisions for liabilities and charges 19,596 20,0261. Pensions and similar obligations 2,226 1,6023. Major repairs and maintenance 2,246 2,2154. Other liabilities and charges 15,124 16,209

B. Deferred taxes 10 548

CREDITORS 534,624 464,120

VIII. Amounts payable after more than one year 75,637 92,422A. Financial debts 73,140 90,843

2. Bonds 3,301 3,7744. Credit institutions 69,839 87,069

D. Other amounts payable 2,497 1,579

IX. Amounts payable within one year 456,326 369,678A. Current portion of amounts payable after one year 50,528 32,857B. Financial debts 275,805 182,785

1. Credit institutions 275,805 182,785C. Trade debts 71,633 78,488

1. Suppliers 71,633 78,488D. Advances received on contracts in progress 6,403 3,939E. Taxes, remuneration and social security 22,869 24,396

1. Taxes 6,072 6,6112. Remuneration and social security 16,797 17,785

F. Other amounts payable 29,088 47,213

X. Accrued charges and deferred income 2,661 2,020

TOTAL LIABILITIES 909,632 863,341

158


I. Operating income 489,327 456,167

A. Sales 420,360 408,449B. Increase (+), decrease (-) in stocks of finished goods,

work in process and contracts in progress 4,010 5,011C. Fixed assets - own construction 30,433 22,289D. Other operating income 34,524 20,418

II. Operating charges (-) -482,575 -435,944

A. Raw materials, consumables and goods for resale 260,730 244,7281. Purchases 259,425 253,8982. Increase (-), decrease (+) in stocks 1,305 -9,170

B. Services and other goods 79,746 73,320C. Remuneration, social security costs and pensions 102,600 98,298D. Depreciation of and other amounts written off on formation expenses,

intangible and tangible fixed assets 32,830 27,875E. Increase (+), decrease (-) in amounts written off on stocks, contracts

in progress and trade debtors -318 -7,457F. Increase (+), decrease (-) in provisions for liabilities

and charges 942 -2,111G. Other operating charges 6,045 1,291

III. Operating profit (+) 6,752 20,223

IV. Financial income 10,176 8,314

A. Income from financial fixed assets 6 1B. Income from current assets 3 2C. Other financial income 10,167 8,311

V. Financial charges (-) -20,060 -18,411

A. Interest and other debt charges 12,697 10,848C. Other financial charges 7,363 7,563

VI. Profit on ordinary activities before income taxes (+) 10,126Loss on ordinary activities before income taxes (-) -3,132

Income statement

159


VII. Extraordinary income 3,014 199,724

B. Write-back of amounts written off financial fixed assets 2,078 4,154C. Write-back of provisions for extraordinary liabilities and charges 936 3,915D. Gain on disposal of fixed assets 191,655

VIII.Extraordinary charges -2,102 -6,993

B. Amounts written off on financial fixed assets 1,868C. Provisions for extraordinary risks and charges -134D. Losses on disposal of fixed assets 368E. Other extraordinary charges 6,993

IX. Profit for the year before income taxes (+) 202,857Loss for the year before income taxes (-) -2,220

IX bis. A. Transfer from deferred taxes (+) 35 34

X. Income taxes -42 -589

A. Income taxes -42 -589B. Adjustment of income taxes and write-back of tax provisions

XI. Profit for the year 202,302Loss for the year -2,227

XIII.Profit for the year for appropriation 202,302Loss for the year available for appropriation -2,227


A. Profit to be appropriated 174,859 212,8401. Profit for the year for appropriation 202,302

Loss for the year available for appropriation (-) -2,2272. Profit brought forward 177,086 10,538

C. Transfers to capital and reserves -8,152 -10,4763. to other reserves 8,152 10,476

D. Result to be carried forward1. Profit to be carried forward (-) -140,640 -177,086

F. Distribution of profit (-) -26,067 -25,2781. Dividend 26,067 25,278

Appropriation account

160

Registered office

Pres. Kennedypark 35

BE-8500 Kortrijk

Tel.: +32 (0)56 23 32 11

Fax: +32 (0)56 26 22 62

Group management

Pres. Kennedypark 35

BE-8500 Kortrijk

Tel.: +32 (0)56 23 32 11

Fax: +32 (0)56 26 22 62

Stock exchange

Euronext Brussels

Financial information

More information can be obtained at the

Investor Relations Department of the group

management:

Mr JP Tanghe,

President Corp. Comm. and Investor Relations

Tel.: +32 (0)56 26 23 22

Fax: +32 (0)56 26 22 62

E-mail: [email protected]

Ms Sigrid Desanghere,

Corp. Comm. and Investor Relations Executive

Tel.: +32 (0)56 26 23 21

Fax: +32 (0)56 26 22 62

E-mail: [email protected]

Copyright© 2006 Barco nv

All rights reserved

Realization

Barco Corporate Marketing

Publisher

JP Tanghe

President Corporate Communication

& Investor Relations

Barco

President Kennedypark 35

8500 Kortrijk - Belgium

Backcover

www.barco.com

barco annual report - ku leuven · barco is a world leader in professional markets, in which it...

Documents