growth, innovation & profitability

IBA AnnuAl report 2007 | I

Growth, Innovation & ProfitabilityAnnual report 2007

IBA AnnuAl report 2007 | 1

IBA was founded in 1986 in louvain-la-neuve, Belgium. It delivers solutions of exceptional precision in the fields of cancer diagnosis and therapy. It also offers sterilization and ionization solutions for optimal everyday hygiene and safety.

Key facts and figures for 2007Sales growth of 25.6 percent to eur 213.8 million and recurring earnings of eur 11.8 million spread across the Group’s four divisions:

• IBA Molecular record year for pet and SpeCt cyclotrons: 19 orders logged and three new FDG production facilities opened.

• IBA Particle Therapy three orders for proton therapy centers.

• IBA Dosimetry product launch of Compass®, a state-of-the-art solution for quality assurance in radiotherapy.

• IBA Industrial Wave of international success for the rhodotron® and the Dynamitron®, with five orders logged and entry into the petroleum cracking market.

Table of Contents

Key figuresHighlights of 2007Growth, Innovation & profitabilityHuman resourcesGeographic presenceManagement report Corporate governance, Management, and controlthe stock market and the shareholdersIFrS consolidated financial statements for the year ended December 31, 2007

– Consolidated balance sheet– Consolidated income statement– Consolidated statement of

changes in shareholders’ equity – Consolidated cash flow statement – notes to the consolidated

financial statements– Auditor’s report on the consolidated

financial statementsIBA S.A. Annual financial statements after appropriationGeneral information

2458

101225

3235

363738

3940

90

95

99

Introduction

2 | IBA AnnuAl report 2007

2007 2006 2005 CAGR (EUR ‘000) (EUR ‘000) (EUR ‘000) (%)

Sales and services 213,849 170,257 136,099 25.4%

Gross margin 69,845 53,345 43,855 26.2%

reBItDA (1) 18,269 17,963 11,118 28.2%

reBIt (2) 11,788 9,769 3,095 95.2%

net profit (loss) 13,846 29,989 3,048 113.1%

equity 141,481 136,329 103,877 16.7%

net cash position 32,028 43,996 18,297 32.3%

Current liabilities 118,658 78,767 58,623 42.3%

total assets 324,438 266,868 202,755 26.5%

return on equity 9.8% 22.0% 2.9%

return on capital employed (roCe) 5.7% 5.2% 2.1%

Share price at December 31 (euro) 19.00 18.36 7.65 57.6%

number of shares 25,800,252 25,465,066 24,842,453 1.9%

earnings per share (epS) - (euro per share) 0.54 1.18 0.12 109.1%

Market Capitalization 490,205 467,539 190,045 60.6%

enterprise value 458,177 423,543 171,748 63.3%

eV/reBItDA 25.1 23.6 15.4

EMPloyEEs AT DECEMBER 31 1,360 1,076 900 22.9%

2007 2006 2005 CAGR (EUR ‘000) (EUR ‘000) (EUR ‘000) (%)

sales

Molecular Imaging 78,265 66,087 45,713 30.8%

proton therapy 59,343 32,539 27,190 47.7%

Dosimetry 35,240 31,570 28,031 12.1%

other Accelerators 41,001 40,061 35,165 8.0%

Recurring operational profit/(loss)

Molecular Imaging 3,205 247 -4,545

technology & equipment 8,583 9,522 7,640 6.0%

Key figures

sales and operating results by business unit

(1) REBITDA: Recurring earnings before interest, taxes, depreciation, and amortization.(2) REBIT: Recurring earnings before interest and taxes.


sales trends by geographic sector

sales trends

Change in number of employees and employee distribution worldwide

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800

1000

1200

1400

0

30000

60000

90000

120000

150000

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restof World45%

restof World45%

1,400

210,000

EUR ‘000■ other Accelerators■ Dosimetry■ proton therapy■ Molecular Imaging

1,200

180,000

1,000

150,000

800

120,000

600

90,000

400

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30,000

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2005

2005

2006

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2007

2007

restof World51%

Belgium30%

europe(outside Belgium)18%

Asia7%

uSA55%

uSA55%

uSA49%

uSA45%

2007

Change in number of employees

20052006

Employee distribution worldwide

Highlights of 2007January 18, 2007 louvain-la-neuve production capacity increases to meet anticipated increase in

protontherapy demand. February 26, 2007 Cyclone® 30 sold to India. April 20, 2007 european

r&D and radiopharmaceutical production facility opens in Fleurus, Belgium. April 25, 2007 proCure

treatment Centers, Inc. finalizes financing for a protontherapy center to be built and installed by IBA in

oklahoma City. May 10, 2007 new radiopharmaceutical production center opens in Brussels, Belgium.

June 18, 2007 new Asian headquarters opens in Beijing. July 3, 2007 new radiopharmaceutical

production center opens in Dinnington, england. August 20, 2007 optivus proton therapy, Inc. and

loma linda university Medical Center drop all claims against IBA. August 30, 2007 IBA chosen in u.S.

by proCure for its second proton therapy center. September 13, 2007 IBA plans acquisition of CIS

bio international. October 18, 2007 IBA to supply the Helical Dosimetry® suite for the tomotherapy®

Hi-Art® therapy system. October 27, 2007 IBA and elekta enter into strategic alliance on particle

therapy. October 29, 2007 CMS joins the strategic alliance on particle therapy announced by IBA and

elekta. December 3, 2007 Cyclone® 30 sold to Saudi Arabia. December 18, 2007 product

launch of Compass®, a state-of-the-art solution for quality assurance in radiotherapy, which has received

FDA approval. December 20, 2007 Contract finalized with the Hampton university proton therapy

Institute for a large proton therapy system. January 7, 2008 Wave of international success for IBA’s

rhodotron®. January 14, 2008 IBA invests in petroBeam, Inc., a technology development company

in the oil extraction industry. February 7, 2008 Archade-IBA partnership formed to develop hadron

therapy in Caen, France. March 14, 2008 IBA opens a new radiopharmaceutical production center in

Guildford, uK.



you seem satisfied with the Company’s results and confident in the future. Has IBA entered a new stage in its development?peter Vermeeren: looking back, we have no reason to blush. A little more than twenty years ago, we were just a handful of engineers embarking on an ambitious project. By the end of this year, we should number more than two thousand, all wor-king to enhance the development of the best tech-nologies in our four key business areas: diagnosis, therapy, dosimetry, and industrial applications.

With a growth rate of 26 percent, eur 214 million in revenues, and profits of eur 12 million, 2007 is an excellent vintage—the best so far, if you exclude 2006 with its exceptional boost from the revaluation

of assets coming from acquisition of the Schering operation for the symbolic euro.

the fact that we are paying our shareholders dividends for the first time represents a historic moment for IBA, a sign that we have succeeded in balancing growth, innovation and profitability. tomorrow, the challenge will be to raise the bar yet another notch and do everything in our power to continue to expand our ambitions while maintaining this balance.

Focus at IBA on Growth, Innovation & Profitability

Peter Vermeeren Chairman of the Board of Directors (right) Pierre Mottet Chief Executive Officer (left)

For the first time in its history, IBA is preparing to distribute a dividend to its shareholders—proof that the Company has attained a high level of sustainable growth. It will be distributing 30 percent of its net profits. the balance will be used to continue to strengthen its lead in innovation and research in an industry where technological development is imperative. For its Ceo, pierre Mottet, this is a clear sign that IBA has entered a virtuous circle of growth, innovation & profitability.

Message from the Chairman & CEO


speaking of innovation, you gave innovation another shot in the arm in 2007.pierre Mottet: Yes, we increased our research and development spending by over 70 percent. In a such a highly technological sector as ours, this re-presents an investment of eur 17 million in 2007. IBA has never had a more ambitious investment program.

In proton therapy, which is a solid commercial success, we doubled our investment. And in early 2008, we decided to fund the development of a carbon ion accelerator in Caen to serve as a proto-type facility.

In molecular imaging, we have, one, increased research spending by a factor of 2.5 with spe-cial emphasis on the new FDG tracers and, two, developed partnerships with a view to acquiring proprietary molecules. By taking these steps, IBA gains an even stronger foothold in the pharmaceu-tical production and distribution sector.

In dosimetry, we are very proud of our latest pro-duct, Compass, which makes it possible to achieve high precision, real-time measurement of the the-rapy doses administered to a patent.

lastly, in the industrial sector, we are using our technological expertise in the field of particle ac-celerators to develop a cheaper, cleaner system for breaking down heavy oil molecules to recover oil from bituminous sands. the rarefaction of conven-tional oil fields presents a major development opportunity, and IBA intends to exploit it fully.

In 2007, you announced an expansion of production to meet the growth in demand. Does this situation still obtain today?pierre Mottet: even more so! our order book is more than encouraging. In proton therapy, we in-creased production capacity to eight system a year in 2007 and logged three new orders. remember, it takes three years to build a system.

In 2007, we signed nineteen contracts to build cyclotrons for use in molecular imaging, compared

to eight in 2006. We signed five new contracts for industrial electron beam accelerators.

We opened a new plant in China which will allow us to increase production capacity—primarily for cyclotrons—for the Asian and emerging markets.

In pharmaceuticals, we are continuing to expand our network. three new facilities have been opened in europe: in Belgium, england, and Italy. european tracer sales have doubled.

What is the outlook for 2008?peter Vermeeren: In 2006, in the context of acqui-ring certain operations from Schering, we took a 20 percent stake in the French company CISBIo in partnership with our shareholder Ire, which took the other 80 percent. We are planning to take full ownership of CISBIo in 2008. this move will make us a major player in the radiopharmaceutical industry in europe and increase our presence and the quality of our offering to customers in the most dynamic segments—oncology, cardiology, and neurology—with new radiopharmaceutical pro-ducts. CISBIo by itself has revenues of some eur 100 million and will enable us to strengthen our leadership in nuclear medicine.

We are also betting on new commercial develop-ments in proton therapy (new empath Design) and dosimetry, with Compass.

Furthermore, IBA has identified two new niches for our expertise in particle accelerators: a promising market for our rhodotron®, with the petroBeam process, and preselection of our cargo screening system for detecting fissile materials in the u.S.

More generally, we will be confirming and strengthening our presence in europe, Asia, and the united-States.

so growth, innovation and profitability are still the order of the day in 2008. pierre Mottet and I would like to use this forum to give special thanks to our shareholders and employees, whose individual contributions make it possible for IBA to build its expertise and reputa-tion day by day. Without the participation of each

and every one of us and the confidence of our shareholders, IBA would never have reached this level of development. More importantly, this shared commitment allows us to accomplish our mission - to protect, enhance and save lives - to the fullest. We can only thank you all for the confidence you have given us.


Message from the Chairman & Ceo


IBA: a company of women and men with a mission to serve

In 2007, IBA experienced a remarkable 26 percent growth in personnel. the number of fulltime equi-valents (Ftes) rose from 1,076 to 1,360. Adjusting for employee turnover, this represents a total of 390 new employees who have jointed in the fight against cancer.

IBA has set ambitious objectives for financial growth and technological development. For the company to achieve these objectives, human re-sources management must do more than manage personnel; it must develop human capital. Human resources must have both a long and a short-term vision that is grounded equally in company and employee concerns. this consideration, supple-mented by our five-year plan, forms the basis of our human resources strategy and priorities.

the four pillars of IBA’s human resources strategy are:1. team building2. operational excellence3. Winning the talent war4. Fostering IBA culture

1. Team building (short-term orientation/employees)on January 1, 2007, IBA had a human resources team of 15 fulltime equivalents who were respon-sible for providing personnel services to 1,100 employees at over 51 sites in 11 countries, with the additional task of recruiting more than 390 new employees. this considerable challenge required the team to take a critical look at itself, reexamine its method of operations, and recruit to fill new positions in its own organization. three subgroups were created:

Corporate. this group handles projects affecting the entire IBA organization.Shared Services. organized by geographic region, this group is responsible for the bulk of human resource operations and transactions.Hr Business partners. An Hr business partner is assigned to each business unit and is charged with translating the unit’s strategy into a long-term Hr plan and developing the annual plans implemented by Shared Services. each Hr business partner is a full-fledged member of the business unit’s mana-gement team.

In the absence of changes in Group scope, IBA’s Hr team will have 25 fulltime equivalents for an an-ticipated 1,570 fulltime equivalents by the close of 2008, or an Fte ratio of 1:62.5. With this structure the team will be able to meet future challenges.

2. operational excellence (short-term orientation/company)Because IBA is in a mode of rapid expansion in an international environment, it is vital to stress the development of procedures and tools that can apply to all parts of the company, no matter where they are located.

Among the rH team’s 2007 accomplishments:Writing and implementing a general policy on forei-gn assignments (more than 30 new foreign assign-ments) to facilitate major proton therapy installation projects across the globe—in the united-States (oklahoma City, philadelphia, Hampton, Chicago), Germany (essen), and France (orsay)—and to guarantee the availability of IBA’s expert support to its customers and subsidiaries.

Human Resources


Deploying software or web-based tools in the following areas: personal performance analysis, goal setting, assessment of personal development requirements, developing a reporting and measu-rement tool for rH indicators and e-recruiting.

All of these tools lay the foundation for a major pro-ject scheduled for completion in 2008: implemen-tation of a Human resources Information System (HrIS). the goal of this system is to automate and accelerate certain low valued-added tasks, enhan-ce data reliability, and allow our Hr staff to provide better value to their internal customers.

3. Winning the talent war (long-term orientation/company)In 2007, we witnessed a pronounced reduction in the availability of suitable candidates for certain job profiles in our business areas. the anticipated talent war is upon us. to stay abreast of the com-petition, IBA must rival its competitors in creativity in order to attract and retain the best.

Human resources focuses in 2007:using salary benchmarks to keep IBA competitive in its market.Differentiating recruitment channels (e-recruitment, specialized symposia, radio, and on-campus re-cruitment at identified targets and in emerging markets).establishing two carrier paths: a management path and a technical/professional path.

looking at IBA’s low employee turnover—6.9 per-cent on average for the Group—and 400 new hires, we can conclude that IBA has won an important battle in the talent wars. the year 2008 will present further challenges, with an anticipated 200-plus additional job openings (visit our website at www.iba-worldwide.com/career for current listings).

4. Fostering IBA culture (long-term orientation/employees)With a growth rate of 55 percent in three years, IBA must strengthen one of its competitive advantages in the job market: its company culture and values. IBA is recognized by its customers for its capacity to innovate and support technical development to meet their requirements. Its employees appreciate

its human scale, its family atmosphere, its cosmo-politan environment, and its many career opportunities.

While the real focus on IBA culture will be in 2008 and 2009, 2007 was not without progress:Deployment of a new IBA image that strengthens the feeling of belonging to a single group.redefinition of our new-employee orientation pro-grams.Implementation of programs providing rigorous training in certain key skills areas and assuring our customers of the quality of IBA services and products.establishment of new offices in louvain-la-neuve, Belgium, Schwarzenbruck, Germany, and Beijing, China, based on the results functional analysis, as well as to provide a vehicle for IBA’s values and image.Creation of a corporate internal communications function.

In 2008, IBA will increase its use of tools for person-nel development, measurement of commitment to the company’s mission, talent-management strategy development, and employee retention and replace-ment plans. Middle management, a critical link in the development of a corporate culture, will receive special attention over the next few years.

IBA is convinced of the importance of its human capital and devotes nearly 2 percent of its revenues to its human resources policy. By improving, deve-loping, and frequently analyzing its performance in each of these four pillar areas, IBA’s human resour-ces team will be able to stay alert to the needs of the business, its structure, and its people and to contribute to the future success of the company.


Geographic presence

FDG production sites (36) Albany uSA Haverhill uSA Cleveland uSA Gilroy uSA lubbock uSA Morgantown uSA orlando uSA richmond uSA romeoville uSA Somerset uSA Sterling uSA Kansas City uSA los Angeles uSA Dallas uSA Montreal Canada Bruxelles Belgium Gand Belgium Fleurus Belgium lyon France Milan Italy rome Italy udine Italy Dinnington uK Guildford uK Bad oeynhausen Germany Madrid Spain Barcelona Spain

Seville Spain Malaga Spain Delhi India CISBIO Sites Sarcelles France Orsay France Rennes France Nîmes France Nancy France Bordeaux France


Headquarters (6) IBA Group louvain-la-neuve Belgium

other offices (5) IBA particle therapy louvain-la-neuve Belgium IBA Industrial louvain-la-neuve Belgium IBA Molecular Sterling uSA IBA China Beijing China IBA Dosimetry Schwarzenbruck Germany

Main sales or other offices (4) IBA particle therapy Jacksonville uSA IBA Industrial edgewood uSA IBA Dosimetry Bartlett uSA IBA Dosimetry uppsala Sweden


Management report

Highlights of 2007In 2007, IBA confirmed its leadership in mastering the complex technologies associated with parti-cle accelerators and their applications in the war against cancer. Growth in sales and recurring in-come was spread across IBA’s four business areas.record sales of pet and SpeCt cyclotrons, with 19 orders logged, compared to eight in 2006.three orders for proton therapy centers and a stra-tegic alliance with elekta and CMS.product launch of Compass®, a state-of-the-art solution for quality assurance in radiotherapy.Wave of international success for the rhodotron® and the Dynamitron®, with five orders logged and a

potential new market in oil extraction.the year was also marked by major initiatives in research and development, particularly in particle therapy, where progress was made on developing a new particle accelerator that will give protons beams the advantages associated with carbon ion beams while maintaining the incomparable pre-cision and flexibility of our technology. r&D also focused on developing new molecules for nuclear imaging in partnership with various institutions.

BUsInEss AREAs 2007 2006 VARIAnCE (EUR ‘000) (EUR ‘000) (%)

technology and equipment 135,584 104,170 30.2%

radioisotopes 78,265 66,087 18.4%

ConsolIDATED REVEnUEs 213,849 170,257 25.6%

overview of IBA business areas

For financial reporting purposes, IBA is divided into two business areas:Radioisotope Production and Distribution. production and distribution of radiopharmaceutical tracers used in medical imaging, mainly FDG (18F fluorodeoxyglucose).

Technology and Equipment. the technological foundation of a number of the Company’s busi-nesses, t&e encompasses in the development, production, and marketing of equipment, including particle accelerators, for imaging, therapy, dosimetry, or sterilization and ionization.

Approved by the Board of Directors at its Meeting of April 8, 2008


technologyequipement63%

Dosimetry16%

Dosimetry19%

protontherapy28%

protontherapy19%

technologyequipement61%

radioisotopes37%

MolecularImaging

37%

MolecularImaging

39%

Accelerator19%

Accelerator23%

radioisotopes39%

Total sales and service revenues 2007: EUR 213.8 million




IBA’s two business areas—Radioisotope Produc-tion and Distribution and Technology and Equi-pment—cover four business units, each with its own market for which this report details revenues and major events in 2007.

Molecular Imagingproton therapyCyclotrons and other AcceleratorsDosimetry

Radioisotope production and distribution

operations in this business area primarily involve the production and distribution of radiopharma-ceutical agents with a focus on FDG (fluorodeoxy-glucose), a product used in molecular imaging for

the early diagnosis of many diseases (primarily cancer). the following table summarizes the opera-ting results for this area:


2007 2006 CHAnGE CHAnGE (EUR ‘000) (EUR ‘000) (EUR ‘000) (%)

Sales and services 78,265 66,087 12,178 18.4%

reBItDA 8,650 6,484 2,166 33.4%

% of sales 11.1% 9.8%

reBIt 3,205 247 2,958 1,197.6%

% of sales 4.1% 0.4%

FDG/RadiopharmaceuticalsFDG (flurodeoxyglucose, a radioactive sugar) is the primary radiopharmaceutical agent used in pet (positron emission tomography) imaging. this ima-ging technology analyzes cell metabolism and is used for the diagnosis and monitoring of diseases (primarily cancer). pet is the most advanced tech-nology in nuclear medicine.

the year 2007 was marked by expansion of the FDG production and distribution network in europe with the opening of three european facilities: in udine, Italy, Brussels, Belgium, and Dinnington, england. IBA also opened a european r&D and radiopharmaceutical production center in Fleurus, Belgium. As of early 2008, four FDG production and distribution facilities were still under construc-tion: three in europe (in Fleurus and Ghent, Belgium, and Guilford, england) and one in the united-States (in los Angeles). these facilities should start production in 2008 and early 2009. In 2007 as a whole, IBA directly or indirectly operated 35 FDG production centers: 14 in north America, 20 in europe, and one in Asia (India).

In September 2007, IBA announced that it was planning to acquire 100-percent ownership of CIS bio International (CISBIo). By way of background, in May 2006 Ire (Institut national des radioélé-ments, based in Fleurus, Belgium) and IBA pur-chased 100 percent of CISBIo from Schering AG though their radiopharma partners (rpp) consor-tium. this transaction gave Ire an 80.1-percent stake in the company and IBA, a 19.9-percent stake. IBA currently holds a buyout option for CIS-BIo which it is required to exercise before end of the first semester 2008. CISBIo is a european and world leader in biomedical technology; specifically,

in vitro medical diagnostics and the radioactive marking of molecules used in nuclear medicine therapy and imaging. CISBIo is also at the inter-national forefront for the in vitro screening of new drugs, thanks to its HtrF® technology. Its products are used in several fundamental fields of medicine (oncology, cardiology, rheumatology, pneumology, and endocrinology). Headquartered in Saclay, near paris, France, the company has around 570 employees and posted revenues of around 100 million in 2007.

Sales related to the production and distribu-tion of FDG and associated products grew by 18.4 percent in 2007 to eur 78.3 million versus eur 66.1 million in 2006. In 2007, 69 percent of sales were in north America. the relative weight of the u.S. component is down sharply in comparison with 2006, when it represented 83 percent of sales, as a result of the production startup of several european facilities.

Strong sales growth in 2007 was propelled by the expansion of the u.S. and european markets (measured in volume of doses), which grew at an estimated rate of more than 20 percent. However, this increase was partially offset by a decrease in the average sale price per dose and by trends in the dollar. the price decline in 2007 was decidedly smaller than in 2006 and should further diminish or stabilize in 2008.

Above pro forma results presented after allocation of corporate overhead.REBITDA: Recurring earnings before interest, taxes, depreciation, and amortization.REBIT: Recurring earnings before interest and taxes.


Management report

Technology and equipment

this business area includes proton therapy, par-ticle accelerator-based technologies (such as cyclotrons, rhodotrons®, and Dynamitrons®), and dosimetry.

the year 2007 was marked by three proton therapy orders, 19 cyclotron orders, and five industrial par-ticle accelerator orders.

In 2007, t&e earnings totaled eur 135.6 million compared to eur 104.2 million in 2006, an in-crease of 30.2 percent driven primarily by proton therapy. the following table provides a breakdown of t&e sales and service figures by business unit and summarizes this area’s contribution to opera-ting results:

2007 2006 CHAnGE CHAnGE (EUR ‘000) (EUR ‘000) (EUR ‘000) (%)

Sales and service 135,584 104,170 31,414 30.2%

- proton therapy 59,343 32,539 26,804 82.4%

- Dosimetry 35,240 31,570 3,670 11.6%

- other accelerators 41,001 40,061 940 2.3%

reBItDA 9,619 11,479 -1,860 -16.2%

% of sales 7.1% 11.0%

reBIt 8,583 9,522 -939 -9.9%

% of sales 6.3% 9.1%

Above pro forma results presented after allocation of corporate overhead.REBITDA: Recurring earnings before interest, taxes, depreciation, and amortization.REBIT: Recurring earnings before interest and taxes.

Proton therapythe year 2007 was the second big year in a row for proton therapy, with orders for three proton therapy systems: two from proCure treatment Centers, Inc., to be installed in oklahoma City and another, as-yet-undetermined u.S. city, and one from the Hampton university proton therapy Institute in Virginia. In early 2008, IBA signed a letter of intent with Archade to develop the prototype for a new hadron therapy system in Caen, France. the latest advances in hadron therapy are based on using the strong biological action of carbon ion beams to treat certain tumors, such as radiation-resistant tumors, more effectively.

today, with more than 50-percent market share, IBA is the uncontested leader in particle therapy in the international market. thirteen institutions in the uni-ted-States, Asia, and europe have already chosen IBA-equipped proton therapy systems. In order to meet the constantly increasing demand for proton therapy systems, IBA launched an ambitious project to expand production capacity at its louvain-la-neu-

ve site. With the completion of this project during the summer of 2007, it is now able to build eight particle therapy systems a year.

the year’s major sales and marketing initiatives included raising IBA’s profile at major international congresses. At the annual meeting of the American Society for therapeutic radiology and oncology (AStro), for example, IBA exhibited an actual-size model of a proton therapy treatment room and orga-nized a symposium attracting scientists interested in proton therapy. Additionally, in october 2007, IBA formed a strategic alliance with elekta AB and CMS to offer comprehensive, fully integrated, and open cancer therapy solutions in the particle therapy market.

Since August 2002, optivus proton therapy, Inc. (optivus) and IBA had been involved in litigation over various proton therapy-related claims. In August 2007, the Company announced that optivus proton therapy, Inc. and the loma linda university Medical Center had agreed to drop all claims against IBA in


a case that had been before the u.S. District Court for the Central District of California for five years.

proton therapy sales and service revenues soared 82.4 percent in 2007 to eur 59.3 million, up from eur 32.5 million in 2006.

Cyclotrons and electron beam accelerators this business unit encompasses cyclotrons used in the production of pet (positron emission tomography) or SpeCt (Single photon emission Computed tomography) radioisotopes but does not include cyclotrons for proton therapy. It also includes electron beam particle accelerators intended primarily for industrial use (such as rhodotrons® and Dynamitrons®).

the upward trend in pet cyclotron sales, which began in 2005 and 2006, accelerated sharply with the sale of 18 cyclotrons in 2007, compared to seven in 2006. IBA also continued to strengthen its lead in the SpeCt cyclotron (Cyclone® 30) market in 2007 with the signature of a contract to deliver one 30 MeV Cyclone® 30 to the King Faisal Specialist Hospital and research Center in riyadh, Saudi Arabia.

In the field of electron beam accelerators (rhodotron® and Dynamitron® industrial e-beam and X-ray accelerators), the year was marked by the sale of a Dynamitron® to Germany’s BGS for the irradiation of plastic cables, pipes, and tubes, as well as by four orders for rhodotron® accelerators for medical device sterilization in Austria, Brazil, Japan, and Malaysia. In early 2008, IBA also logged a rhodotron® order from petroBeam, Inc., a u.S. technology development company in the oil extraction industry in which IBA holds a 10 percent stake, together with warrants allowing it to raise its holding to around 20 percent. In addition, development of the cargo screening prototype is proceeding on schedule.

Sales and service revenues for the Company’s cyclotron and electron beam accelerator business totaled eur 41.0 million in 2007 compared to eur 40.1 million in 2006, representing an increase of 2.3 percent.

DosimetryDosimetry includes the services and equipment used to control radiation dosage in medical set-tings. IBA’s specialized dosimetry products are essential tools for quality assurance in radiation therapy (therapeutic dosimetry) and medical ima-ging (diagnostic dosimetry).

In diagnostic dosimetry, for the fourth year in a row IBA Dosimetry (IBA’s dosimetry subsidiary) was named Siemens Supplier of the Year. Sales of IBA’s KermaX® dosimetry product for quality assurance in radiation diagnostics showed an increase of their sales in 2007 compared to 2006 due to a new law in Germany requiring KermaX ® to be installed in X-ray imaging units.

In therapeutic dosimetry, the new Compass® dosi-metry product developed with raySearch labora-tories received 510(k) approval from the u.S. FDA in late 2007 and is now being marketed internatio-nally through IBA’s IBA Dosimetry division. Addi-tionally, IBA signed a three-year agreement with tomotherapy, Inc. to supply a Helical Dosimetry® suite for the tomotherapy® Hi-Art® therapy system.

Sales and services revenues for the dosimetry unit totaled eur 35.2 million in 2007 versus eur 31.6 million in 2006, an increase of 11.6 per-cent. Dosimetry sales growth was also fueled by strong growth in the Asian market.


Consolidated annual financial statements

Income statementConsolidated sales and service revenues for 2007 rose 25.6 percent, or eur 43.6 million, over 2006. the total stood at eur 213.8 million for 2007 ver-sus eur 170.3 million for 2006. this increase was the result of strong growth in all business areas.

Consolidated gross margin increased by 30.9 percent to eur 69.8 million, compared to eur 53.3 million for the previous period. As a per-centage of consolidated sales and services, they totaled 32.7 percent versus 31.3 percent in 2006. this increase was essentially due to the improve-ment of margins in radioisotope production and Distribution. overall, recurring costs rose 33.2 percent in 2007 over 2006 levels, with a big increase in both sales and marketing (33.4 percent) and research and development (71.2 percent). this growth reflects the Group’s investment strategy in these areas, particularly in proton therapy, as well as a change in its composition due to the absorption of compa-nies purchased from Schering AG in May 2006.

the Group posted net recurring earnings of eur 11.8 million in 2007 versus eur 9.8 million a year earlier, representing an increase of 20.7 per-cent (29.7 percent at constant eur/uSD exchange rates).

under other operating results, the Company posted a loss of eur 4.7 million for 2007 due primarily to litigation-related losses and provisions, including settlement of the optivus suit, rever-sal of impairment loss previously recognized on machinery and equipment, and write-downs of current assets. In 2006, this heading showed a profit of eur 10.4 million reflecting several factors, including purchase of Schering’s european FDG business in May 2006, sale of Scanditronix Magnet AB, liquidation of Bpr, discontinuation of brachy-therapy operations in Fleurus, booking of non-recurring costs in connection with the decrease in the strike price of IBA employee stock options following refund of additional paid-in capital in 2005, various asset write-downs, and other expen-

ses, including those associated with the optivus litigation and with changing the IBA image.

IBA posted a financial loss of eur 0.5 million in 2007 compared to a profit of eur 0.6 million in 2006. this change was due primarily to charges posted for interest swaps and currency hedging and to an increase in advance payment bond expenses owing to the greater number of projects in progress. Financial figures for 2006 were also impacted with eur1.4 million by the positive effect of IFrS application to one aspect of the acquisition of ownership in CIS bio International.

tax figures for 2007 show an income of eur 7 million compared to eur 7.8 million for the same period in 2006. this income is due to partial recognition of additional deferred tax assets fol-lowing periodic analysis of the probability of future use, partially offset by tax expense in the countries in which the Company does not have useable de-ferred tax losses.

In 2006, profit/(loss) from discontinued opera-tions showed a loss of eur 1.5 million due to the decision to cease production of irradiated wire for brachytherapy in the united-States and, to a lesser extent, the sale of the Swedish firm Scanditronix Magnet AB in January 2006.

entities accounted for by the equity method contri-buted eur 0.3 million to total profit in 2007. In 2006, this contribution stood at eur 2.9 million and resulted primarily from application of IFrS to the acquisition of a minority stake in CISBIo France fol-lowing Schering divestment. this reflected revalua-tion of CISBIo’s assets and liabilities and inclusion of CISBIo’s proportional contribution to results from May to December of 2006.

net earnings totaled eur 13.9 million in 2007 compared to the exceptionally high figure of eur 30.0 million for 2006, which included eur 24.7 million in non-recurring items associated with the Schering transaction.

Management report


Consolidated balance sheet and finan-cial structurenon-current assets increased significantly in 2007, from eur 120.7 million at December 31, 2006 to eur 151.3 million at December 31, 2007. the total difference of eur 30.6 million is attributable prima-rily to the following changes:eur 13.4 million increase in fixed assets due pri-marily to investments in the Company’s radioisotope business (finalizing construction of FDG production facilities in england and Italy plus investments in Spain) and to investments associated with expan-ding the infrastructure at the louvain-la-neuve site.eur 9.9 million increase in long-term receivables due primarily to an increase in advance payments on proton therapy contracts for which the corres-ponding liabilities do not qualify for derecognition under IAS 39.eur 8.3 million increase in deferred tax assets due to increased recognition of such assets after IFrS analysis of probability of future use.the remaining eur 1 million is due to a change in the goodwill, an increase in intangible assets, and recognition of the share of profits of associates accounted for using the equity method.

non-current liabilities rose from eur 51.8 million in 2006 to eur 64.3 million in 2007. this increase is due almost entirely to the booking of advance payments on proton therapy contracts for which the corresponding receivables do not qualify for dere-cognition under IAS 39.

the Group’s net cash position went from eur 44.1 million at December 31, 2006 to eur 32 million at December 31, 2007.

IBA s.A. statutory accounts and appropriation of net profit/(loss) Ion Beam Applications S.A. posted a net profit of eur 4.9 million for 2007, compared to a net loss of eur 0.8 million for 2006. Sales and services increased 66 percent to eur 112.1 million versus eur 67.8 million in 2006, primarily as a consequence of continuing recognition of income from the sale of proton therapy systems, plus three orders for new systems logged during the period. operating results showed a loss of eur 0.5 million in 2007 versus a profit of eur 1.6 million in 2006.

At the extraordinary General Meeting of May 9, 2007, the shareholders of IBA S.A. agreed to defray its loss through a reduction in the additional paid-in capital of eur 87.4 million.

the Board of Directors will ask the shareholders to approve payment of a dividend of eur 0.17 per share at the ordinary General Meeting.

Research and developmentIn 2007, r&D expenses for the group totaled eur 17.2 million, compared to eur 10.0 million in 2006. thanks to this appreciable investment, the Company has been able to maintain its world lea-dership in all of the markets in which it is active.

Acquisitions and divestments in 2007During the period under review, IBA continued its policy of expanding its production and distribution network for radiopharmaceutical tracers in both the united-States and europe. on December 20, 2007, IBA transferred its FDG production facility at university Hospital Ghent, Belgium, to Betaplus pharma for eur 2.4 million as a contribution-in-kind. In return for this contribution, IBA received 1,000 new shares in Betaplus pharma and a claim for eur 1 million. Following this transaction, IBA’s stake in Betaplus pharma S.A. increased from 40 percent to 65 percent, automatically bringing this entity within the IBA Group’s scope of conso-lidation. IBA also paid in cash eur 0.1 million for 10% of Betaplus pharma shares.

there were no divestments in 2007.

Corporate structure and governance please see the “Corporate Governance, Management, and Control” section of this report for information on the procedures stipulated in article 523 of Belgium’s Code des Sociétés (Corporate Code).

At its meeting of June 25, 2007, the Board of Directors was to rule on the Company’s purchase of Institut des radioéléments’ 80.1 percent stake in the company radiopharma partners (rpp), which itself held 100 percent ownership of CIS bio International SAS. this situation gave rise to appli-cation of the procedure stipulated in article 523 of


Belgium’s Code des Sociétés (Corporate Code) for cases of director conflict of interest. this conflict of interest involved Institut des radioéléments.

From the minutes of the meeting: “After the introduction, the members announced that they would begin discussion of this item. The re-presentative of IRE brought up a conflict of interest pursuant to article 523 of the Code des Sociétés.

In the absence of the IRE representative, the mem-bers began discussion. It resulted in a unanimous decision by the participating members to approve purchase by IBA of IRE’s stake in RPP and, conse-quently, to authorize Pierre Mottet to send IRE an official letter elucidating why this was in the inte-rests of both the Company and IRE and explaining the future partnership.

Following this decision, the Board informed the IRE representative of the outcome.”

At this stage, the terms of the CISBIo buyout are under negotiation between IBA and Ire and should be finalized in the first half of 2008, sub-ject to the usual regulatory approvals. the price is expected to be on the order of 20 million euros, to be paid in both cash and shares in IBA S.A., in order to further strengthen the historic partnership between IBA and Ire, one of its founding share-holders. the cash payment will be used as a seed fund for projects useful to the joint development of Ire, CISBIo, and IBA. However, this price should be quickly offset by potential synergies among all of the component businesses of IBA and CIS bio international.

IBA launched a number of employee stock options plans during previous periods to foster employee loyalty and motivation by allowing employees to share in the profits generated by the rising price of company stock. these plans were based on the authorized capital and eliminated the preferential right of existing shareholders. under a new plan launched in 2007, 338,246 additional stock options were issued at a strike price of eur 19.94.

Approval of the launch of the 2007 stock options plan by the Board of Directors at its August 29,

2007 meeting gave rise to application of the procedure stipulated in article 523 of the Code des Sociétés for cases of director conflict of interest. this conflict of interest affected all of the directors except the Chairman of the Board and Jean-Jacques Verdickt, who did not wish to participate in the plan.

From the minutes of the meeting: “The members of the Board discussed launching a 2007 SOP. They approved the principle of launching this plan, as well as the terms of the Board’s special report. It was agreed that the press release on midyear results should contain a reference to the launch of this plan and the stock buyback in order to insure the transparency of the operation.

Management said that no decision had yet been made as to the specific number of stock options to be granted, but that it would fall within a range of 412,000 to 450,000 options.

All Board members were eligible to participate in this plan. However, the Chairman of the Board and Jean-Jacques Verdickt said that they did not wish to be included in the list of beneficiaries. As beneficiaries of the plan, the other directors stated that they had a direct financial interest which gave rise to a conflict-of-interest situation subject to arti-cle 523 of the Code des Sociétés. They would not participate further in the discussion.

After discussion, the Chairman of the Board and Jean-Jacques Verdickt unanimously approved the launch of a stock options plan involving between 412,000 and 450,000 options, with the amount to be determined by the Compensation Commit-tee, and consequently approved the terms of the Board’s draft special report prepared in com-pliance with articles 583, 596, and 598 of the Code des Sociétés, subject to any changes required by Belgium’s Banking, Finance, and Insurance Com-mission (CBFA). They would approve the final stock options grants.”

the plan has no significant impact on the Company’s assets (7,500 stock options).

Management report


shareholders and stock options

Principal risks and uncertainties

number of shares %

Belgian Anchorage 7,773,132 30.13%

Ire (Institut des radioéléments) 878,660 3.41%

Sopartec 529,925 2.05%

uCl (université Catholique de lln) 426,885 1.65%

IBA Investments S.C.r.l.* 358,692 1.39%

public 15,832,958 61.37%

Total 25,800,252 100.00%

(*) At December 31, 2007, IBA held a total of 358,692 of its shares through IBA Investments S.C.R.L., which is a wholly owned indirect subsidiary.

IBA’s operations entail a number of risks. the following is a list of significant risk factors. It is not intended to be exhaustive.

Regulatory approvalAs medical devices, IBA proton therapy products are subject to regulatory approval. Such approval must be obtained in every country in which IBA wishes to install a system. At December 31, 2007, IBA had regulatory approval for the united-States (FDA), the european union (european Commis-sion), China (SDA), and South Korea. there is always a risk that the authorizing authorities may withdraw their approval. Furthermore, because of technological changes in its equipment, IBA must also apply for additional approvals.

Similarly, radioisotope production and distribution is subject to many regulations with which the Com-pany must comply at all times in order to continue to market its products.

Healthcare reimbursementHealthcare reimbursement for pet scanner dia-gnoses or the treatment of certain diseases involving direct or indirect use of IBA equipment is subject to review by the reimbursing institution. these institutions’ healthcare reimbursement polices impact the number of orders that IBA may

potentially obtain. the reimbursement policies of such institutions differ from country to country and can vary widely.

Product liability insurance use of the Company’s products may expose it to certain liability lawsuits. the Company maintains what it believes to be sufficient insurance to protect it in the event of damages arising in a product liability lawsuit or from the use of its products. In a country such as the united-States, where the sligh-test incident may result in major lawsuits, there is always a risk that a patient who is dissatisfied with services delivered using the Company’s products may initiate legal action against it. IBA cannot guarantee that its insurance coverage will always be sufficient to protect it from such risks or that it will always be possible to obtain coverage for such risks.

Foreign exchange risksthe Company is exposed to foreign exchange risks when it signs certain contracts in foreign curren-cies or when it invests abroad. Insofar as possible, the Company employs the financial instruments necessary to limit its exposure to these risks.

the Company’s financial risk management objecti-ves and policy, as well as its policies on price risk,

the Group strives to optimize its capital structure to achieve maximum value for its shareholders while maintaining appropriate flexibility to implement the strategy approved by its Board of Directors.

With this in mind, the Group bought back eur 6.5 million in its own shares (329,509 shares) in 2007.


liquidity risk, and cash flow risk, are described in greater detail in the notes to its consolidated finan-cial statements.

Dependency on certain employees Since the Company’s foundation, the number of highly qualified individuals on its payroll has increased tremendously. However, it is possible that the defection of certain key employees possessing specific expertise could at some point affect one of the Company’s business areas. Dependency on a specific customer or on a limited number of orders In general, IBA’s customers are diversified and are located on several continents.

For its equipment, particularly its proton therapy systems, the Company depends each year on a number of orders that are filled over several ac-counting periods. In this field of business, progress or lack of progress on an order, or changes in an order that were not anticipated at the beginning of the year, can have a significant impact over several accounting periods. on the other hand, the lead time for filling orders gives the Company good visibility in its field several months before they are filled.

Intellectual property (patents)the Company holds intellectual property rights. Some of these rights are generated by employee or production process know-how and are not pro-tected by patent. the Company holds patents, but it cannot guarantee that these patents are broad enough to protect the Company’s intellectual pro-perty rights and to keep its competitors from gai-ning access to similar technologies. the Company cannot guarantee that the defection of certain employees would not have a negative impact on its intellectual property rights.

Competition and risk of rapid product obsolescenceAt the current time, IBA has no direct competitor active in all of the markets in which it is present. However, in some of its markets, it is competing against some of the world’s largest corporations. these corporations have highly developed sales

and marketing networks and, more importantly, extensive financial resources that cannot compare with those of IBA.

Furthermore, there is always the possibility that a new technology (a revolutionary cancer treatment therapy, for example) may be developed that would render a portion of IBA’s current product line ob-solete. However, developing and marketing a new technology takes a relatively long time.

Penalties and warrantiesSome contracts may contain warranties or penal-ties. While the warranty or penalty is generally a few percent of the amount of the contract in the case of conventional sales contracts, it may be significantly higher in the context of public-pri-vate partnerships inasmuch as the penalties must cover the associated financing. Such clauses are applicable to a limited number of contracts and are essentially found only in the context of proton therapy contracts. the possibility that a customer may one day exercise such a warranty or penalty clause cannot be excluded.

Management report


Events subsequent to the end of the reporting period

on January 14, 2008, IBA announced that it had taken a 10-percent stake in petroBeam, Inc. of raleigh, north Carolina, by subscribing to a ca-pital increase and warrants allowing it to raise its holding to around 20 percent at a future stage. the total investment is approximately $6 million. petro-Beam, Inc. is a technology development company engaged in research and development of a patent pending method that uses an electron beam acce-lerator to process and upgrade crude oil (bitumen and heavy oil) and enhance refining operations. this technology is called the petroBeam™ process. In the past few months, IBA and petroBeam have carried out numerous preliminary tests at IBA’s long Island facility (new York, u.S.A.) to validate the process for a small pilot plant. A new pilot plant capable of processing 1,000 barrels a day is being built at the same long Island site. In the context of the agreement, petroBeam, Inc. has ordered a rhodotron® and has committed to buy all future electron beam accelerators firstly from IBA.

on February 7, 2008, IBA announced that it had signed a letter of intent with Archade to develop a new hadron therapy system prototype in Caen, France. Archade is a partnership between Centre François Baclesse, (the cancer treatment center for lower normandy) and the university Hospital (CHu) of Caen. this partnership was formed to de-velop a european hadron therapy resource center in lower normandy. the goal of the preliminary agreement between IBA and Archade is to clear this equipment for therapeutic use before the end of 2011. this new center will be built around a new type of highly sophisticated 400 MeV (million elec-tron volt) supraconducting isochronic cyclotron that can accelerate carbon ions in addition to protons. the latest advances in hadron therapy are based on using the strong biological action of carbon ion beams to treat certain tumors, such as radiation-resistant tumors, more effectively. IBA is investing close to eur 40 million in the development of the prototype, which it is entrusting to Archade. Ar-chade has the option of buying the prototype back as soon as it is approved for therapeutic use.

on March 14, 2008, IBA announced that it had received authorization from the British government to begin production at its new pet (positron emis-sion tomography) radiopharmaceutical plant in Guildford, Surrey, u.K. this new plant is the latest addition to the IBA distribution network, which en-compasses 36 pet radiopharmaceutical produc-tion facilities around the world. this plant will serve southern england. Guildford is part of IBA’s u.K. distribution network, which also includes a plant in Dinnington, South Yorkshire. the Dinnington plant was built to serve northern england and opened for business last year. the Guildford plant is the fourth pet radiopharmaceutical plant that IBA has opened in the past 12 months. together with the first three—in Brussels, Belgium, udine, Italy, and Dinnington, england—it brings to 18 the total num-ber of european facilities in operation.

General outlook for 2008

IBA is confident that, at constant exchange rates, it can achieve higher recurring profit in 2008 than in the period under review while continuing its policy of investing both in research and development and in sales and marketing.

It bases its confidence on the following:1. equipment orders of eur 216 million at De-

cember 31, 2007, plus near-term prospects for finalizing several contracts;

2. predicted growth of the pet radiopharmaceuti-cal market, particularly for FDG, and takeover of CISBIo by mid 2008;

3. opening of new fields of application for electron beam accelerators;

4. positive outlook in Dosimetry, particularly for Compass®.

the Board of Directors has decided to ask the shareholders to approve payment of a dividend of eur 0.17 per share—the first in the history of the Company—at the ordinary General Meeting of May 14, 2008.

Management report



the Board of Directors is composed of nine mem-bers. the articles of incorporation and Corporate Governance Charter require a balance on the Board of Directors among outside directors, inside directors, and directors representing the share-holders. the Board of Directors must always be made up of at least one third outside directors and one third directors nominated by the managing directors (“inside directors”). the two managing directors, who are responsible for the Company’s day-to-day management, are also considered inside directors.

the Board of Directors meets whenever necessary, but a minimum of four times a year. the major to-pics of discussion include market situation, stra-tegy (particularly as concerns acquisitions during the period), technological developments, financial developments, and human resources manage-ment. reports of minutes of the meetings are sent to the directors first so that they may exercise their duties with full knowledge of the facts.

the Board of Directors met eight times in 2007, each time under the chairmanship of peter Ver-meeren. Attendance at meetings of the Board was very high. A large majority of the directors attended all meetings. only three absences were recorded for all of the meetings, which represents an absentee rate of 4 percent.

At the proposal of the nominating Committee, the ordinary General Meeting of May 9, 2006 elected

Jean-Jacques Verdickt to another term as outside director representing the privately held corporation J.J. Verdickt S.p.r.l. and nicole Destexhe to ano-ther term as “other director” representing Institut des radioéléments (Ire). the same meeting ree-lected Yves Jongen as an inside director.

the Board of Directors was comprised of the fol-lowing nine members at December 31, 2007:

Outside directors 1

Peter Vermeeren, 67Chairman of IBA’s Board of Directors since May 2004. Director since May 2000. elected May 10, 2000; reelected May 12, 2004. Formerly executive Vice president of Mallinckrodt and executive Vice president of ADAC.

Jean Stéphenne, 57. Representative and Mana-ger Director of Innosté S.A.Director since May 2000.elected May 10, 2000; reelected May 12, 2004. Since 1998, president and General Manager of Glaxo-SmithKline Biologicals, Belgium.Member of the Boards of Directors of Société Belge des Bétons, Fortis, and nanocyl.

Pierre Scalliet, 55.Director since May 2005.elected May 11, 2005; reelected May 10, 2006. Chief of Service, oncological radiotherapy. pro-fessor of Clinical oncology, université Catholique de louvain (uCl).

the philosophy, structure, and general principles of IBA corporate governance are presented in the Company’s Corporate Charter (“Charter”), available on the its website www.iba-worldwide.com

Corporate governance, management, and control

1. Board of directors

(1) These directors were presented to the shareholders as outside candidates at the time of their election. However, other directors may also meet the same independence criteria.


Jean-Jacques Verdickt, 63. Representative and Manager of J.J. Verdickt S.P.R.L.Director since May 2006.Chairman of techspace Aero, Vice Chairman of the euroclear group, member of the Boards of Di-rectors of Alcatel Bell, the Magotteaux group, euro-clear Bank, logiver, and uWe (Walloon Business Association).

peter Vermeeren was reelected at the ordinary Ge-neral Meeting of May 14, 2004 for a term expiring at the 2008 ordinary General Meeting to approve the financial statements for 2007. the Board has also appointed peter Vermeeren Chairman of the Board of Directors, Chairman of the nominating Committee, and Chairman of the Compensation Committee.

Jean Stéphenne was elected director represen-ting Innosté S.A. at the ordinary General Meeting of May 10, 2006. His term will expire at the 2008 ordinary General Meeting to approve the financial statements for 2007.

pierre Scalliet was elected at the ordinary General Meeting of May 11, 2005 and was reelected at the ordinary General Meeting of May 10, 2006. His term will expire at the 2009 ordinary General Mee-ting to approve the financial statements for 2008.

Jean-Jacques Verdickt, manager of J.J. Verdickt S.p.r.l., was elected director representing that company at the ordinary General Meeting of May 9, 2007. His term will expire at the 2010 ordinary General Meeting to approve the financial state-ments for 2009.

none of the outside directors have ceased to meet the independence criteria set forth in the Charter during the course of their terms.

Inside directors 2

Pierre Mottet, 46.Chief executive officer.Managing Director since February 2000. elected May 10, 2000; reelected May 12, 2004.Also Vice Chairman of the Board of Directors of Agoria, Vice Chairman of the Board of Directors of e-Capital, and member of the executive Committee of FeB (Federation of enterprises in Belgium).

Yves Jongen, 60.Founder of IBA and Chief research officer.Managing Director since February 1991. elected May 29, 1998; reelected May 9, 2007.Before the establishment of IBA in 1986, Director of the Cyclotron research Center of the université Catholique de louvain (uCl).

Eric de Lamotte, 51. Representative and Mana-ging Director of Bayrime S.A.Managing Director since February 2000.elected May 10, 2000; reelected May 12, 2004.Corporate Director.Formerly Financial Director of IBA (1991-2000). pierre Mottet is Managing Director and Chief executive officer. He was reelected at the ordi-nary General Meeting of May 14, 2004 for a term expiring at the 2008 ordinary General Meeting to approve the financial statements for 2007. Yves Jongen is Managing Director and Chief research officer. He was reelected at the ordinary General Meeting of May 9, 2007 for a term expiring at the 2010 ordinary General Meeting to approve the financial statements for 2009. As managing direc-tors, pierre Mottet and Yves Jongen are responsi-ble for the Company’s day-to-day management.

eric de lamotte, managing director of Bayrime S.A., was approved at the ordinary General Meeting of May 10, 2006 to continue as a direc-tor representing that company. His term remains unchanged. He will serve until the 2008 ordinary General Meeting to approve the financial state-ments for 2007.

(2) As defined in the Charter.


Other directorsOlivier Ralet, 50. Representative and Manager of Olivier Ralet BDM S.P.R.L. Director since June 2000.elected June 28, 2000; reelected May 11, 2005.licentiate of law.Member of the executive Committee of Atenor Group S.A., Belgium.

Nicole Destexhe, 55. Representative of Institut National des Radioéléments (IRE). Director since 1991; reelected May 9, 2007.Financial Director of Ire.

nicole Destexhe, representative and financial direc-tor of Institut national des radioéléments (Ire), and olivier ralet, representing the privately held olivier ralet BDM S.p.r.l., are classified as other directors. nicole Destexhe was reelected as a director re-presenting Ire at the ordinary General Meeting of May 9, 2007. Her term expires at the 2010 ordinary General Meeting to approve the financial statements for 2009. olivier ralet was reelected director repre-senting olivier ralet BDM S.p.r.l. at the ordinary General Meeting of May 10, 2006. His term expires at the 2009 ordinary General Meeting to approve the financial statements for 2008.

2. Compensation committee

3. nominating committee

the Compensation Committee met three times in 2007, each time under the chairmanship of pe-ter Vermeeren. A report on each of its meetings was submitted to the Board. topics of discussion included issues relating to the 2006 and 2007 bonuses, determination of the beneficiaries of the 2007 stock options plan, directors’ compensation, and compensation schemes in general. All of the members attended each meeting.

the Compensation Committee is comprised of peter Vermeeren, Jean Stéphenne (representing Innosté S.A.), and eric de lamotte (representing Bayrime S.A.).

It is chaired by peter Vermeeren. pierre Mottet is invited to attend unless the Committee is deciding on compensation policy or other subjects affecting the managing directors.

the nominating Committee met twice in 2007 for the purpose of analyzing the areas of expertise needed by the Board of Directors to fill expiring directorship positions and of making proposals in this regard to the Board of Directors. Based on its report, the Board of Directors proposed the reappointment to the Board of Ire financial director nicole Destexhe, representing Institut national des radioéléments, and Jean-Jacques Verdickt, representing J.J. Ver-dickt S.p.r.l.

the nominating Committee consists of five mem-bers, including the Chairman of the Board of Direc-tors and a minimum of two outside directors. the nominating Committee is currently comprised of peter Vermeeren, Innosté S.A., Bayrime S.A., pierre Mottet, and Yves Jongen.



4. Audit committee

5. Day-to-day and strategic management

the Audit Committee met four times in 2007, inclu-ding three times in the presence of the auditors. A report on each of its meetings was submitted to the Board of Directors. the main topics were the annual results for 2006 and analysis of the audi-tors’ management letter, analysis of the midyear results, follow-up on implementation of IFrS accounting principles, examination of the 2008 budget, and oversight of a risk exposure study and of establishment of an internal audit function. All of the members attended each meeting.

the Committee is currently comprised of three members.

they are Jean-Jacques Verdickt (representative and manager of J.J. Verdickt S.p.r.l.), eric de lamotte (representative and managing director of Bayrime S.A.), and olivier ralet (representative and manager of olivier ralet BDM S.p.r.l.).

Day-to-day management and corporate responsibili-ty in such matters is delegated to the two managing directors, pierre Mottet, Chief executive officer, and Yves Jongen, Chief research officer. pierre Mottet is specifically responsible for implementing strategy and for day-to-day management.

the Chief executive officer is assisted by a mana-gement team consisting of members of the corpo-rate team and the presidents of the business units. together, they constitute the Group’s Management team.

the Chief executive officer, accompanied by the Chief Financial officer, makes regular reports to the Board of Directors. the Board of Directors also asks the Management team or division heads to report to the Board on at least two occasions: adop-tion of the strategic plan and adoption of the 2008 budget.

the Management team was comprised of the fol-lowing members in 2007: pierre Mottet: Managing Director and Chief execu-tive officer, 46, based in louvain-la-neuve, Belgium. Yves Jongen: Managing Director and Chief re-search officer, 60, based in louvain-la-neuve, Belgium. Jean-Marc Bothy: Chief Financial officer, 43, based in louvain-la-neuve, Belgium.

Jean-Marie Ginion: president, technology Group, 58, based in louvain-la-neuve, Belgium. Frank uytterhaegen: president, IBA China, 54, based in Beijing, China. rob plompen: president, Dosimetry, 44, based in Schwarzenbruck, Germany. olivier legrain: president, Molecular Medicine, 39, based in Sterling, Virginia, u.S.A. Jean-louis Bol: president, Industrial operations (Sterilization & Ionization), 57, based in louvain-la-neuve, Belgium. philippe Audon: president, Customer Service, 54, based in louvain-la-neuve, Belgium.Jean-Marc Andral: president, proton therapy, 58, based in louvain-la-neuve, Belgium.


6. Conflicts of interest

At its meeting of June 25, 2007, the Board of Di-rectors was to rule on the Company’s purchase of Institut des radioéléments’ 80.1 percent stake in the company radiopharma partners (rpp), which itself held 100 percent ownership of CIS bio International SAS. this situation gave rise to application of the procedure stipulated in article 523 of Belgium’s Code des Sociétés (Corporate Code) for cases of director conflict of interest. this conflict of interest involved Institut des radioéléments.

From the minutes of the meeting: “After the introduction, the members announced that they would begin discussion of this item. The re-presentative of IRE brought up a conflict of interest pursuant to article 523 of the Code des Sociétés.

In the absence of the IRE representative, the mem-bers began discussion. It resulted in a unanimous decision by the participating members to approve purchase by IBA of IRE’s stake in RPP and, conse-quently, to authorize Pierre Mottet to send IRE an official letter elucidating why this was in the inte-rests of both the Company and IRE and explaining the future partnership.

Following this decision, the Board informed the IRE representative of the outcome.”

At this stage, the terms of the CISBIo buyout are under negotiation between IBA and Ire and should be finalized in the first half of 2008, subject to the usual regulatory approvals. the price is expected to be on the order of 20 million euros, to be paid in both cash and shares in IBA S.A., in order to further strengthen the historic partnership between IBA and Ire, one of its founding shareholders. the cash payment will be used as a seed fund for projects useful to the joint development of Ire, CISBIo, and IBA. However, this price should be quickly offset by potential synergies among all of the component businesses of IBA and CIS bio international.

Approval of the launch of the 2007 stock options plan by the Board of Directors at its August 29, 2007 meeting gave rise to application of the pro-

cedure stipulated in article 523 of the Code des Sociétés for cases of director conflict of interest. this conflict of interest affected all of the directors except the Chairman of the Board and Jean-Jac-ques Verdickt, who did not wish to participate in the plan.

From the minutes of the meeting: “The members of the Board discussed launching a 2007 SOP. They approved the principle of launching this plan, as well as the terms of the board’s special report. It was agreed that the press release on midyear results should contain a reference to the launch of this plan and the stock buyback in order to insure the transparency of the operation.

Management said that no decision had yet been made as to the specific number of stock options to be granted, but that it would fall within a range of 412,000 to 450,000 options.All Board members were eligible for inclusion in this plan. However, the Chairman of the Board and Jean-Jacques Verdickt said that they did not wish to be included in the list of beneficiaries. As beneficiaries of the plan, the other directors stated that they had a direct financial interest and that this gave rise to a conflict-of-interest situation under article 523 of the Code des Sociétés. They would not participate further in the discussion.

After discussion, the Chairman of the Board and Jean-Jacques Verdickt unanimously approved the launch of a stock options plan involving between 412,000 and 450,000 options, with the exact number to be determined by the Compensation Committee, and consequently approved the terms of the Board’s special report prepared in com-pliance with articles 583, 596, and 598 of the Code des Sociétés, subject to any changes required by Belgium’s Banking, Finance, and Insurance Com-mission (CBFA). They would approve the final stock options grants.”

the plan has no significant impact on the Compa-ny’s assets.



7. Policies and procedures

8. Compensation policy – stock and stock options

the Company has implemented a code of conduct for the handling of sensitive information and secu-rities transactions that has been disseminated to all employees. Furthermore, each of the directors and each member of the management team has signed in acceptance of the code in his or her management capacity

these individuals made the following transactions in their management capacities in 2007:

exercise of a total of 5,000 stock options issued under the 2001 stock options plan;exercise of a total of 61,700 stock options issued under the 2002 stock options plan;exercise of a total of 53,000 stock options issued under the 2004 stock options plan.

to the best of the Company’s knowledge, there were no violations of the code of conduct in 2007.

As indicated in the Charter, the Company does not wish to provide specific information on individual compensation. It believes that information of this kind does not offer added value to the sharehol-ders and is potentially harmful to the Company. However, communication of information on com-pensation policy is important for shareholders and is detailed in the Charter. Actual compensation in 2007 is described below.

8.1. DirectorsFixed compensation paid to members of the Board of Directors for services rendered in 2007 totaled eur 128,000. Directors did not receive variable compensation or any other payment. However, some of them were included in the 2007 stock options plan.

Managing directors were not compensated for attending meetings of the Board of Directors.

8.2. Managing Directors and the Management Teamthe Board is careful to ensure that the managing directors and the management team are compen-sated for direct and indirect services to the Com-pany in a manner consistent with market practices based on level of responsibility, services rendered, and their nature of their duties.

As indicated in the Charter, fixed and variable com-pensation of the managing directors is determined by the Compensation Committee in accordance

with principles approved by the Board. Fixed and variable compensation of the management team is reviewed and determined by the Chief executive officer. It has been reported to the Compensation Committee and the Board of Directors and dis-cussed by both.

the principle of launching a stock options plan in 2007 and the total number of options issued was approved by the Board of Directors. the Compen-sation Committee identified the beneficiaries of the stock options and determined the number of stock options granted to each of them.

the total amount paid by the Company and its subsidiaries in compensation for duties exercised and services rendered directly or indirectly by the two managing directors and the eight members of the management team came to approximately eur 3.2 million in 2007: around eur 2.2 million for fixed compensation and around eur 1.0 million for variable compensation. these amounts are always stated as cost to the company. Without changes in the scopes of consolidation, fixed compensation for management increased by 6%. the remaining difference involves improvement in target attain-ment from 2006 to 2007.

note that fixed compensation includes a Group contribution of eur 0.1 million to a defined contri-bution plan.


9. Relationship with dominant shareholders

Acting in concert, IBA’s dominant shareholders—Belgian Anchorage and Belgian leverage, uCl, Sopartec, and Ire—have entered into an agree-ment that will expire in 2013. In late December 2007, Belgian leverage transferred all of its stock in IBA to its parent company, Belgian Anchorage. the above shareholders’ agreement governs, inter alia, the sharing of information and preferential rights on the sale of IBA stock. the parties to this agreement held 9,967,294 shares of ordinary stock at December 31, 2007, representing 38.63 percent of Company’s voting rights.

under the terms of this agreement, in the event of a new IBA stock offering, if one of the dominant shareholders does not exercise its preferential

subscription right, this right will pass to the other dominant shareholders, with Belgian Anchorage S.A. having first right of purchase. If a participant in the shareholders’ agreement wishes to sell its shares of IBA stock, the other parties to the agreement will have a preemptive right to acquire this stock, with Belgian Anchorage S.A. having first right of purchase. this preemptive right is subject to certain exceptions. In particular, it does not apply in the case of a transfer of stock to Belgian Anchorage S.A.

to the best of the Company’s knowledge, there were no other relationships or specific agreements among the shareholders at December 31, 2007.

At December 31, 2007, all of the directors together held 886,560 shares of IBA stock directly (inclu-ding 878,660 shares held by Ire).

At the same date, the outside directors held 23,400 IBA stock options issued under the 2000, 2001, 2002, 2006, and 2007 stock options plans.

At December 31, 2007, members of the mana-gement team, including the managing directors, held a total of 871,086 stock options distributed as follows:11,500 stock options issued under the 2000 stock options plan at the strike price of eur 24.90

50,000 stock options issued under the 2001 stock options plan at the strike price of eur 12.60261,065 stock options issued under the 2002 stock options plan at the strike price of eur 3.34232,000 stock options issued under the 2004 stock options plan at the strike price of eur 3.7240,000 stock options issued under the 2005 stock options plan at the strike price of eur 6.37160,000 stock options issued under the 2006 stock options plan at the strike price of eur 13.64116,521 stock options issued under the 2007 stock options plan at the strike price of eur 19.94



-0,15

-0,04

0,07

0,18

0,29

0,40

-15,00%

-4,00%

7,00%

18,00%

29,00%

40,00%

IBA stock is continuously traded on euronext Brussels. It is included in the Bel Mid index of the Brussels exchange. It was first listed on June 22, 1998 at eur 11.90 per share (price adjusted for the 5 for 1 split in June 1999). At December 31, 2007, there were no conver-tible bonds or bonds with warrants outstanding. total employee stock options outstanding at end-2007 numbered 2,380,260.

The Stock market and the shareholders

IBA Stock

0100000200000300000400000500000600000700000800000900000

171819202122232425

e 17.00 0

e 18.00 100,000

e 19.00200,000

e 20.00300,000

e 21.00500,000

400,000

e 22.00600,000

e 23.00 700,000

e 24.00 800,000

e 25.00 900,000

2 ja

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22 ja

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7

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21 m

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12 ju

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stock market prices■ Volume■ Market price

■ IBA■ Bel Mid■ Bel 20


2008 General Shareholders’ Meeting May 14, 2008, 10:00 AMpublication of results at June 30, 2008 August 29, 2008publication of results at December 31, 2008 March 5, 20092009 General Shareholders’ Meeting May 13, 2009, 10:00 AM

Shareholders’ calendar

12/31/2007 DIlUTED 12/31/2006 DIlUTED

shareholders number of % number of % number of % number of %

shares shares shares shares

Belgian Anchorage S.A.(1) (2) 7,773,132 30.1% 7,773,132 27.58% 5,698,132 22.4% 5,698,132 20.5%

Belgian leverage(1) (3) 0 0.00% 0 0.00% 2,300,000 9.0% 2,300,000 8.3%

Institut des radioéléments (Ire)(1) 878,660 3.4% 878,660 3.12% 878,660 3.5% 878,660 3.2%

Sopartec (uCl)(1) 529,925 2.1% 529,925 1.88% 670,185 2.6% 670,185 2.4%

université Catholique de louvain (uCl)(1) 426,885 1.7% 426,885 1.51% 426,885 1.7% 426,885 1.5%

IBA Investments(4) 358,692 1.4% 358,692 1.27% 29,183 0.1% 29,183 0.1%

Float 15,832,958 61.4% 18,213,218 64.63% 15,462,021 60.7% 17,839,221 64.0%

Total 25,800,252 100.0% 28,180,512 100.0% 25,465,066 100.0% 27,842,266 100.0%

1 Transparency Statement at December 31, 2007 (most recent published statement).2 Belgian Anchorage is a company established and wholly owned by IBA management and employees.3 Belgian Leverage is a wholly owned subsidiary of Belgian Anchorage.4 IBA Investments is a second-tier subsidiary of IBA S.A.


IFRS consolidated financial statements for the year ended December 31, 2007

Introduction

Ion Beam Applications S.A. (the “Company” or the “parent”), founded in 1986, and its subsidiaries (together, the “Group” or “IBA”) are committed to technological progress in the field of cancer diagnosis and therapy and deliver efficient, dependable solutions providing unequaled precision. IBA also offers innovative solutions for everyday hygiene and safety.

the Company is a limited company incorpora-ted and domiciled in Belgium. the address of its registered office is Chemin du Cyclotron, 3; B-1348 louvain-la-neuve, Belgium.

the Company is listed on the pan-european stock exchange euroneXt. It is a member of the nexteconomy market segment and is included in the BelMid Index.

Consequently, IBA has agreed to follow certain rules to enhance the quality of financial information provided to the market. these include:publication of its annual report, including its audited annual consolidated financial statements, within four months from the end of the financial year, beginning as of 2008;publication of a half-yearly report covering the first six months of the financial year within two months from the end of the second quarter;publication of half-yearly and annual consolidated financial statements prepared in accordance with IFrS;

Audit of its annual consolidated financial sta-tements by its auditors in accordance with the auditing standards set forth by the International Federation of Accountants (“IFAC”).

these consolidated financial statements were approved for release by the Board of Directors on April 8, 2008.


Consolidated balance sheet at December 31, 2007

the Group has chosen to present its balance sheet on a current/non-current basis.the notes on pages 40 to 89 are an integral part of these consolidated financial statements.

notes December 31, 2007 December 31, 2006

(EUR ‘000) (EUR ‘000)

Assets

Goodwill 7 26,538 28,100

other intangible assets 7 4,619 4,115

property, plant, and equipment 8 59,792 46,414

Investments accounted for using the equity method 10 6,038 5,744

other investments 10 2,343 2,560

Deferred tax assets 11 33,312 24,978

other long-term receivables 12 18,641 8,789

non-current assets 151,283 120,700

Inventories and contracts in progress 13 40,899 31,194

trade receivables 14 44,243 37,046

other receivables 14 27,943 10,044

Short-term financial assets 21 1,860 284

Cash and cash equivalents 15 58,210 67,600

Current assets 173,155 146,168

ToTAl AssETs 324,438 266,868

Equity and liabilities

Capital stock 16 36,215 35,747

Capital surplus 16 115,199 200,899

treasury shares 16 -6,746 -256

Hedging and other reserves 17 8,397 4,745

Currency translation difference 17 -12,309 -3,922

retained earnings 17 70 -101,384

Capital and reserves 140,826 135,829

Minority interests 655 500

ToTAl EQUITy 141,481 136,329

Borrowings 18 17,854 18,156

Deferred tax liabilities 11 369 225

provisions 19 12,313 11,813

other long-term liabilities 20 33,763 21,578

non-current liabilities 64,299 51,772

Short-term liabilities 18 8,328 5,448

trade payables 22 51,191 23,437

Current income tax liabilities 1,115 441

other payables 23 58,024 49,441

Current liabilities 118,658 78,767

ToTAl lIABIlITIEs 182,957 130,539

ToTAl EQUITy AnD lIABIlITIEs 324,438 266,868


Consolidated income statement for the year ended December 31, 2007the Group has chosen to present its income statement using the “function of expenses” method.


(EUR ‘000) (EUR ‘000)

Sales and services 213,849 170,257

Cost of sales and services 144,004 116,912

Gross profit 69,845 53,345

Selling and marketing expenses 21,105 15,815

General and administrative expenses 19,785 17,733

research and development expenses 17,167 10,028

other operating expenses 24 8,714 15,510

other operating (income) 24 -3,966 -25,952

Financial expenses 25 4,353 2,621

Financial (income) 25 -3,897 -3,214

Share of (profit)/loss of companies consolidated using the equity method 10 -278 -2,882

Profit/(loss) before taxes 6,862 23,686

tax (income)/expenses 26 -6,983 -7,827

Profit for the period from continuing operations 13,845 31,513

profit/(loss) for the period from discontinued operations 6 1 -1,524

Profit for the year 13,846 29,989

Attributable to:

equity holders of the parent 13,930 30,007

Minority interests -84 -18

13,846 29,989

Earnings per share from continuing and discontinued operations (EUR per share)

- Basic 35 0.54 1.19

- diluted 35 0.52 1.13

Earnings per share from continuing operations (EUR per share)

- Basic 35 0.54 1.25

- Diluted 35 0.52 1.19

Earnings per share from discontinued operations (EUR per share)

- Basic 35 0.00 -0.06

- Diluted 35 0.00 -0.06

IFrS consolidated financial statements for the year ended December 31, 2007


Consolidated statement of changes in shareholders’ equity

(EUR ‘000) Attributable to equity holders of the Company Minority

interests

Total

equity

Capital stock

Capital surplus

Treasury shares

Hedging reserves

other reserves

Currency translation difference

Retained earnings

Balance at January 1, 2006

34,883 198,887 -256 -705 1,036 905 -131,391 518 103,877

Cash flow hedges, net of tax

927 927

Gains/(losses) on available-for-sale investments

658 658


-4,827 -4,827

net income/(expenses) recognized directly in equity

927 658 -4,827 -3,242

profit/(loss) for the period

30,007 -18 29,989

Total result for the period

927 658 -4,827 30,007 -18 26,747

Dividends

employee stock options 2,829 2,829

Increase/reduction of capital stock/capital surplus

864 2,012 2,876

Balance at December 31, 2006

35,747 200,899 -256 222 4,523 -3,922 -101,384 500 136,329

Balance at January 1, 2007

35,747 200,899 -256 222 4,523 -3,922 -101,384 500 136,329

Cash flow hedges, net of tax

1,580 1,580

other movements 89 239 328


-194 -8,387 -8,581

net income/(expenses) recognized directly in equity

1,580 -194 -8,387 89 239 -6,673

profit/(loss) for the period

13,930 -84 13,846

Total result for the period

1,580 -194 -8,387 14,019 155 7,173

purchase of treasury shares

-6,490 -6,490

employee stock options 2,266 2,266

Increase/reduction of capital stock/capital surplus

468 1,735 2,203

other movements -87,435 87,435 0

Balance at December 31, 2007

36,215 115,199 -6,746 1,802 6,595 -12,309 70 655 141,481


Consolidated cash flow statement

the Group has chosen to present the cash flow statement using the indirect method.


(EUR ‘000) (EUR ‘000)

CAsH FloW FRoM oPERATInG ACTIVITIEs

net profit/(loss) for the period 13,930 30,007

Adjustments for:

Depreciation and impairment of property, plant, and equipment 8 5,755 8,866

Amortization and impairment of intangible assets 7 1,554 2,597

Write-off on receivables 14 -1,489 4,425

Changes in fair value of financial assets (gains)/losses 6 -243

Change in provisions 19 2,546 4,700

taxes 26 -6,983 -7,827

Share of result of associates and joint ventures accounted

for using the equity method 10 -280 -2,882

other non-cash items 28 540 -25,478

net profit/(loss) before changes in working capital 15,579 14,164

trade receivables, other receivables, and deferrals -25,218 -11,772

Inventories and contracts in progress 1,177 2,346

trade payables, other payables, and accruals 28,771 11,430

Changes in working capital 4,730 2,003

Income tax paid/received, net -1,701 -1,092

Interest paid 1,747 1,893

Interest received -2,321 -1,424

net cash (used in)/generated from operations 18,034 15,545

CAsH FloW FRoM InVEsTInG ACTIVITIEs

Acquisitions of property, plant, and equipment -21,668 -12,682

Acquisitions of intangible assets -2,104 -903

Disposals of fixed assets 324 436

Acquisitions of subsidiaries, net of acquired cash 51 25,797

Acquisitions of third party and equity-accounted companies 0 -161

Disposals of subsidiaries and equity-accounted companies,

net of assigned cash 1 156

other investing cash flows 28 1,050 -3,020

net cash (used in)/generated from investing activities -22,346 9,622

CAsH FloW FRoM FInAnCInG ACTIVITIEs

proceeds from borrowings 9,400 2,303

repayments of borrowings -8,173 -8,470

Interest paid -1,747 -1,893

Interest received 2,321 1,424

Capital increase (or proceeds from issuance of ordinary shares) 1,905 2,441

purchase of treasury shares -6,490 0

other financing cash flows 28 287 5,089

net cash (used in)/generated from financing activities -2,497 894

net cash and cash equivalents at beginning of the year 67,600 43,708

Change in net cash and cash equivalents -6,809 26,061

exchange gains/(losses) on cash and cash equivalents -2,581 -2,169

net cash and cash equivalents at end of the year 58,210 67,600



notes to the consolidated financial statements

1. summary of significant Group accounting policies under IFRs

1.1 Introductionthe significant IFrS accounting policies applied by the Group in preparing the IFrS consolidated financial statements are described below.

1.2 Basis of preparationIBA’s consolidated financial statements for the year ended December 31, 2007 have been drawn up in compliance with IFrS (“International Financial reporting Standards”) and IFrIC interpretations (“International Financial reporting Interpretations Committee”) adopted by the european union, issued and effective or issued and early adopted at December 31, 2007.

these consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial instruments at fair value.

these financial statements have been prepared on an accruals basis and on the assumption that the entity is a going concern and will continue in operation in the foreseeable future.

the preparation of financial statements in accor-dance with IFrS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. the areas in-volving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.

new standards, amendments, and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after January 1, 2008. the Group has not early adopted these standards and is currently assessing the impact of such standards and IFrIC interpretations.

1.3 Consolidationthe parent and all of its controlled subsidiaries are included in the consolidation.

1.3.1 subsidiariesAssets and liabilities, rights and commitments, and income and charges of the parent and its controlled subsidiaries are consolidated in full. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its acti-vities. It is presumed to exist when the IBA Group holds more than 50 percent of the entity’s voting rights. this presumption may be rebutted if there is clear evidence to the contrary. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls an entity.

Consolidation of a subsidiary takes place from the date of acquisition, which is the date on which control of the net assets and operations of the acquiree is effectively transferred to the acquirer. From the date of acquisition, the parent (the acqui-rer) incorporates into the consolidated income sta-tement the financial performance of the acquiree and recognizes in the consolidated balance sheet the acquired assets and liabilities (at fair value), including any goodwill arising on the acquisition. Subsidiaries are deconsolidated from the date on which control ceases.

the following treatments are applied on consolidation:

the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary are eliminated.Minority interests in the net assets of consolidated subsidiaries are identified and presented in the consolidated balance sheet separately under the equity caption “Minority interests.”the portion of the result of the fully consolidated subsidiaries attributable to shares held by entities outside the Group is presented in the consolidated


income statement under the caption “result attributable to minority interests”;Intra-group balances and transactions and unrealized gains and losses on transactions between Group companies are eliminated in full.

Consolidated financial statements are prepared applying uniform accounting policies to the same kind of transactions and other events in similar circumstances.

1.3.2 AssociatesAn associate is an entity in which the investor has significant influence, but which is neither a subsi-diary nor a joint venture (see next subsection) of the investor. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not to control those policies. It is presumed to exist when the investor holds at least 20 percent of the investee’s voting rights but not to exist when less than 20 percent is held. this presumption may be rebutted if there is clear evidence to the contrary.

All associates are accounted for using the equity method. the participating interests are separately included in the consolidated balance sheet (under the caption “Investments accounted for using the equity method”) at the closing date at an amount corresponding to the proportion of the associate’s equity (as restated under IFrS), including the result for the year. Dividends received from an investee reduce the carrying amount of the investment.

the portion of the result of associates attributable to the Group is included separately in the consoli-dated income statement under the caption “Share of (profit)/loss of companies consolidated using the equity method”.

unrealized profits and losses resulting from tran-sactions between an investor (or its consolidated subsidiaries) and associates are eliminated to the extent of the investor’s interest in the associate.

1.3.3 Jointly controlled entitiesSimilarly as for associates, the equity method is used for entities over which the Group exercises joint control (i.e. joint ventures).

1.3.4 Treatment of goodwill or negative goodwillBusiness combinations are the bringing together of separate entities or businesses into one reporting entity. A business is a set of activities and assets applied and managed together in order to pro-vide a return or any other economic benefit to its investors. In all business combinations, one entity (the acquirer) obtains control that is not transitory of one or more other entities or businesses (the acquiree).

All business combinations (acquisition of busi-nesses) arising after January 1, 2004 are accoun-ted for using the purchase method. the acquirer measures the cost of the business combination at the acquisition date (the date on which the ac-quirer obtains control over the net assets of the acquiree) and compares it with the fair value of the acquiree’s identifiable net assets, liabilities, and contingent liabilities. the difference between the two represents goodwill (if this difference is positive) or negative goodwill (if this difference is negative).

For all business combinations arising before Ja-nuary 1, 2004, no retrospective restatement to fair value has been made.

Similar rules have been applied to investments accounted for under the equity method, except that any goodwill arising on such investment is included in the carrying amount of the investment.

negative goodwill arising on such investments is included in the determination of the entity’s share of the investee’s profit or losses in the period in which the investment is acquired.

Goodwill is not amortized under IFrS but instead is tested for impairment annually (or more frequently if circumstances so require).

negative goodwill is recognized as profit under IFrS.



1.3.5 Acquisition of minority intereststhe excess of the acquisition cost of minority inte-rests over the balance for these minority interests on the balance sheet is deducted from equity (“economic unit model”).

1.3.6 Translation of financial statements of foreign operationsAll monetary and non-monetary assets (including goodwill) as well as liabilities are translated at the closing rate. Income and expenses are translated at the rate of the date of the transaction (historical exchange rate) or at an average rate for the month.

the principal exchange rates used are as follows:

Closing rate at Average Closing rate at Average December 31, 2007 annual rate 2007 December 31, 2006 annual rate 2006

uSD 1.4719 1.3701 1.3137 1.2558

SeK 9.4156 9.2523 9.0401 9.2588

GBp 0.7369 0.6846 0.6705 0.6821

CnY 10.7358 10.4317 10.2519 10.0221

Inr 58.0314 56.6065 58.1745 56.9409

JpY 158.1280 161.2972 156.0710 146.0660


1.4 Intangible fixed assetsrecognition as an intangible fixed asset is required when (1) this asset is identifiable, i.e. separable (it can be sold, transferred, or licensed) or ari-ses from contractual or other legal rights; (2) it is probable that future economic benefits attributable to the asset will flow to IBA; (3) IBA can control the resource, and (4) the cost of the asset can be measured reliably.

Intangible assets are carried at acquisition cost less any accumulated amortization and any accu-mulated impairment loss.

Cost includes the fair value of the consideration given to acquire the asset and any costs directly attributable to the transaction, such as relevant professional fees or non-refundable taxes.

Indirect costs as well as general overheads are not included. expenditure previously recognized as expense is not included in the cost of the asset.

Costs arising from the research phase of an internal project are expensed as incurred. Costs arising from the development phase of an internal

project (product development project or It project) are recognized as an asset when IBA can demons-trate the following: technical feasibility, intention to complete development, how the intangible asset will generate probable future economic benefits (e.g. the existence of a market for the output of the intangible asset or for the intangible asset itself), availability of resources to complete development, and ability to measure the attributable expenditure reliably. Maintenance costs, as well as costs for minor upgrades intended to maintain (rather than increase) the level of performance of the asset, are expensed as incurred.

the above recognition criteria are fairly stringent and are applied prudently.

no borrowing cost is included in the acquisition cost of intangible fixed assets.

the cost of the intangible assets is allocated on a systematic basis over the useful life of the asset using the straightline method.

the applicable useful lives are as follows:

Intangible assets Useful life

product development costs 3 years, except if a longer useful life is justified.

(however not exceeding 5 years).

It development costs for the primary software (e.g. erp). 5 years

other software 3 years

Concessions, patents, licenses, know-how, trademarks, 3 years, except if a longer useful life is justified.

and other similar rights

Goodwill not amortized but tested for impairment at least annually

Amortization commences only when the asset is available for use, in order to achieve proper matching of costs and revenue.



1.5 Tangible fixed assets (property, plant, and equipment)tangible fixed assets are carried at acquisition cost less any accumulated depreciation and any accumulated impairment loss.

Cost includes the fair value of the consideration given to acquire the asset (net of discounts and rebates) and any directly attributable cost of brin-ging the asset to working condition for its intended use (inclusive of import duties and taxes). Directly attributable costs are the cost of site preparation, delivery, installation costs, relevant professional fees, and the estimated cost of dismantling and removing the asset and restoring the site (to the ex-tent that such a cost is recognized as a provision).

no borrowing cost is included in the acquisition cost of the tangible fixed assets.

each part of an item of property, plant, and equi-pment with a cost that is significant in relation to the total cost of the item is separately depreciated over its useful life using the straightline method. the depreciable amount is the acquisition cost, except for vehicles. For vehicles, it is the acquisition cost less the residual value of the asset at the end of its useful life.

Maintenance or repair costs whose objective is to maintain rather than increase the level of perfor-mance of the asset are expensed as incurred. the applicable useful lives are as follows:

Tangible fixed assets Useful life

land not depreciated

office buildings 33 years

Industrial buildings 33 years

Cyclotrons and vaults 15 years except in specific rare circumstances where

a different useful life is justified

laboratory equipment 5 years

other technical equipment 5 to 10 years

Hardware 3 to 5 years (5 years for mainframes)

Furniture and fittings 5 to 10 years

Vehicles 2 to 5 years

1.5.1 lease transactions involving IBA as a lesseeA finance lease, which transfers substantially all the risks and rewards incident to ownership, is recognized as an asset and a liability at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments (= sum of capital and interest portions included in the lease payments). lease payments are apportioned between the finance charge and the reduction of the outstanding liability. the depreciation policy for leased assets is consistent with that for similar assets owned.

1.5.2 Investment propertiesInvestment properties are carried at acquisition cost less any accumulated depreciation and any impairment loss.


1.6 Impairment of intangible and tangible fixed assetsAn impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, which is the higher of the following two amounts: fair value less costs to sell (the money that IBA can recover through sale) or value in use (the money that IBA can recover if it continues to use the asset).

When possible, impairment tests have been per-formed on individual assets. When, however, it is determined that assets do not generate indepen-dent cash flows, the test is performed at the level of the cash-generating unit (CGu) to which the asset belongs (CGu = the smallest identifiable group of assets generating inflows that are largely indepen-dent from the cash flows from other CGus).

Goodwill arising on a business combination is allo-cated among the Group’s CGus that are expected to benefit from synergies as a result of the business combination. this allocation is based on manage-ment’s assessment of the synergies gained and is not dependent on the location of the acquired assets.

Since it is not amortized, goodwill is tested for impairment annually, along with the related CGu (or more frequently depending on circumstances), even if no indication of impairment exists. other intangi-ble and tangible fixed assets/CGus are tested only if there is an indication that the asset is impaired.

Any impairment loss is first charged against good-will. Any impairment loss exceeding the book value of goodwill is then charged against the other CGus’ fixed assets only if the recoverable amount is below their net book value. reversals of impairment losses (other than on goodwill) are recorded if justified.

1.7 InventoriesInventories are measured at the lower of cost and net realizable value at the balance sheet date.

the cost of inventories comprises all costs incur-red in bringing inventories to their present location and condition, including indirect production costs but excluding borrowing costs. Administrative ove-rheads that do not contribute to bringing invento-ries to their present location and condition, selling costs, storage costs, and abnormal amounts of wasted materials are not included in the cost of inventories.

the standard cost method is used. When the standard cost of an item of inventory at period-end does not approximate its actual cost, it is adjusted to its actual cost. the allocation of fixed production overheads to the production cost of inventories is based on the normal capacity of the production facilities.

the cost of inventories that are ordinarily interchan-geable is allocated using the weighted average cost formula. the same cost formula is used for all inventories that have a similar nature and use to the entity.

net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs ne-cessary to make the sale (e.g. sales commissions).

IBA books a write-down when the net realizable value at the balance sheet date is lower than the cost.

IBA applies the following policy for write-down on slow-moving items:

If no movement after 1 year: write-off over 3 years;If movement occurs after the write-off: reversal of the previous write-off.



1.8 Revenue recognition (excluding contracts in progress, which are covered in the following section)revenue arising from the sale of goods is recogni-zed when an entity transfers the significant risks and rewards of ownership and recovery of the related receivables is reasonably assured.

the transaction is not a sale and revenue is not recognized where (1) IBA retains an obligation for unsatisfactory performance not covered by normal warranty provisions; (2) the receipt of revenue from a particular sale is contingent on the derivation of revenue by the buyer from its sale of the goods; (3) the buyer has the power to rescind the purchase for a reason specified in the sales contract; and (4) IBA is uncertain about the probability of return.

revenue is normally recognized when the buyer accepts delivery, and installation and inspection are complete. However, revenue is recognized im-mediately upon the buyer’s acceptance of delivery when installation is simple in nature.

revenue from the rendering of services is recogni-zed by reference to the stage of completion of the transaction at the balance sheet date, using rules similar to those for construction contracts (see next section): in other words, revenue is recognized as the related costs are incurred. unless it is clear that costs are straightline, revenue are spread evenly over the period of the services.

the recognition criteria are applied to the separa-tely identifiable components of a single transaction when it is necessary to reflect the substance of the transaction.

Interest income is recognized using the effective yield method. royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement. Dividends relating to year n are recognized when the shareholder’s right to receive payment is established (i.e. in year n+1).

1.9 Contracts in progressContract costs comprise:

Direct and indirect production costs (same as for inventories, see above);Such other costs as are specifically chargeable to the customer under the terms of the contract;Costs incurred in securing the contract if they can be separately identified and measured reliably and if it is probable that the contract will be obtained.

When the outcome of a construction contract (i.e. estimation of the final margin) can be estimated reliably, contracts in progress are measured at production cost, increased according to the stage of completion of the contract, by the difference between the contract price and production cost (“percentage of completion” method). the stage of completion is determined by comparing actual costs incurred to date with estimated costs to com-pletion (costs that do not reflect work performed, such as commissions and royalties, are excluded for this calculation). the percentage of completion is applied on a cumulative basis.

When the outcome of the contract cannot be estimated reliably, revenue is recognized only to the extent of costs incurred that it is probable will be recovered; contract costs are recognized as an expense as incurred. When it is probable that total contract costs will exceed total contract revenue, the expected losses are recognized as an expense in the income statement.

the Group presents as an asset the net amount due from customers on contract work for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceeds progress billings. progress billings not yet paid by customers and retentions are included under trade receivables.

the IBA Group presents as a liability the net amount due to customers on contract work for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).


When financial guarantees must be given to third parties in connection with a contract and these guarantees involve a financial risk for IBA, a finan-cial liability is recognized.

1.10 Receivablesreceivables are recognized initially at fair value and subsequently measured at amortized cost, i.e. at the net present value of the receivable amount. unless the impact of discounting is material, the nominal value is taken. receivables are written down when receipt of all or part is uncertain or doubtful.

In general, IBA applies the following rule to write-down bad or doubtful debts:

25% after 90 days overdue;50% after 180 days overdue;75% after 270 days overdue;100% after 360 days overdue.

However, the recoverability of receivables is as-sessed on a case-by-case basis, and exceptions to the above general rule are made when justified.

1.11 Financial assetsthe Group classifies its financial assets in the following categories: loans and receivables and available-for-sale financial assets.

loans and receivables are non-derivative financial assets with fixed or determinable payments that are not listed on an active market and are not held for trading.

term deposits are classified as loans and receiva-bles under IAS 39. Investments in interest bearing securities, as well as investments in shares (other than shares in subsidiaries, joint ventures, and associates) are accounted for as available-for-sale financial assets. they are recorded at fair value with gains and losses reported in equity, until they are impaired or sold, at which time the gains or losses accumulated in equity are released into the income statement.

When there are indicators of impairment, all finan-cial assets are subject to an impairment test. the indicators should provide objective evidence of im-

pairment as a result of a past event that occurred subsequent to the initial recognition of the asset. expected losses as a result of future events are not recognized, no matter how likely.

1.12 Cash and cash equivalentsCash balances are recorded at their nominal value. Cash equivalents are short-term, highly liquid investments with a maturity date not exceeding three months from acquisition date. Cash and cash equivalents include bank overdrafts.

1.13 Capital stockordinary shares are classified under the caption “Capital stock.” treasury shares are deducted from equity. Movements on treasury shares do not affect the income statement.

1.14 Deferred charges and accrued IncomeDeferred charges are the prorated amount of char-ges incurred in the current or prior financial periods but which are related to one or more subsequent periods. Accrued income are the prorated amount of income earned in the current or prior periods which will be received only in subsequent periods.

1.15 Capital grants Capital grants are recorded as deferred income. Grants are recognized as income at the same rate as the rate of depreciation of the related fixed assets.

1.16 ProvisionsA provision is recognized only when:

IBA has a present obligation to transfer economic benefits as a result of past events;It is probable (more likely than not) that such a transfer will be required to settle the obligation; A reliable estimate of the amount of the obligation can be made.

When the impact is likely to be material (for long-term provisions), the amount recognized as a provision is estimated on a net present value basis (discount factor). the increase in provision due to the passage of time is recognized as an interest expense.



A present obligation arises from an obligating event and may take the form of either a legal obligation or a constructive obligation (a constructive obliga-tion exists when IBA has an established pattern of past practice that indicates to other parties that it will accept certain responsibilities and as a result has created a valid expectation on the part of those other parties that it will discharge those responsibilities). An obligating event leaves IBA no realistic alternative to settling the obligation, inde-pendently of its future actions.

provisions for decommissioning and site restoration costs are recorded as appropriate in application of the above.

If IBA has an onerous contract (that is, if the una-voidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it), the present obligation under the contract is recognized as a provision.

A provision for restructuring is recorded only if IBA can demonstrate that the Company is under an obligation to restructure at the balance sheet date. Such obligation must be demonstrated by (a) preparing a detailed formal plan identifying the main features of the restructuring; and (b) raising a valid expectation to those affected that it will carry out the restructuring by starting to implement the plan or by announcing its main features to those affected.

1.17 Pensions and other employee benefits1.17.1 Pensionspremiums paid in relation to a defined contribution plan are expensed as incurred. Defined contri-bution plans are post-employment benefit plans under which IBA pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

IBA did not have any defined benefit plans at De-cember 31, 2007 neither December 31, 2006.

1.17.2 stock options plans (share-based payments)Share-based payments are transactions to be sett-led by shares, stock options, or other equity instru-ments (granted to employees or other parties), or in cash or other assets (cash-settled transactions) when the amount payable is based on the price of the entity’s shares.

All transactions involving share-based pay-ments are recognized as assets or expenses, as appropriate.

equity-settled share-based payment transactions are measured at the fair value of the goods or services received at the date on which the entity recognizes the goods and services. If the fair value of goods or services cannot be estimated reliably (as in the case of employee services), the entity should use the fair value of the equity instruments granted. equity-settled share-based payments are not re-measured.

Cash-settled share-based payments are measured at the fair value of the liability. IBA does not have plans of this type.

1.18 Deferred taxesthe comprehensive method and the liability method are used. Deferred taxes are recorded on the temporary differences arising between the carrying amount of the balance sheet items and their tax base, using the rate of tax expected to apply when the asset is recovered or the liability is settled.

there are three exceptions to the general principle that deferred taxes are recognized on all tempo-rary differences. Deferred taxes are not recognized for:

Goodwill that is not amortized for tax purposes;Initial recognition of an asset or liability in a tran-saction that is not a business combination and that affects neither accounting profit nor taxable profit;Investments in subsidiaries, branches, associates, and joint ventures – deferred taxes may be reco-gnized only when IBA has control over the distribu-tion and it is likely that dividends will be distributed in the foreseeable future.


A deferred tax asset is recognized for all deduc-tible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. the same principles apply to recognition of deferred tax assets for unused tax losses carried forward. this assessment is subject to the principle of prudence.

Deferred taxes are calculated for each fiscal entity in the Group. IBA is able to offset deferred tax assets and liabilities only if the deferred balances relate to income taxes levied by the same taxation authority.

1.19 Payables after and within one yearpayables after and within one year are measured at amortized cost, i.e. at the net present value of the payable amount. unless the impact of discounting is material, the nominal value is taken.

1.20 Accrued charges and deferred incomeAccrued charges are the prorated amount of expenses which will be paid in a subsequent financial period but relate to a prior period. De-ferred income are the prorated amount of income received in the current or prior periods but relate to a subsequent period.

1.21 Foreign currency transactionsForeign currency transactions are converted into the functional currency of the Group entity party to the transaction using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the conversion at the period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

exchange differences arising from the consolida-tion of currency items that constitute part of the reporting entity’s net investment in a foreign entity (i.e. when settlement is neither planned nor likely to occur in the foreseeable future) are recorded in equity if the following two conditions are met: (1) the loan is made in either the functional currency of the reporting entity or the foreign operation and

(2) the loan is made between the reporting entity and a foreign operation.

1.22 Derivatives and hedging activitiesDerivative instruments are accounted for at fair value as from the date the contracts are entered into.

Changes in the fair value of derivative instruments are accounted for in the income statement unless they qualify as cash flow hedges under IAS 39. the Group designates certain derivative transactions as hedges of the variability of the fair value of recognized assets or liabilities (fair value hedges); as unrecognized firm commitments; or as hedges of the cash flow variability arising from a specific risk associated with a recognized asset or liability or with a highly probable forecast transaction (cash flow hedges) or from net investments in foreign operations.

the Group documents at the inception of the transaction the relationship between the hedging instruments and the hedged item, as well as its risk management objective and strategy for un-dertaking various hedge transactions. the Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

a) Fair value hedgesChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

b) Cash flow hedgesthe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. the gain or loss relating to the ineffective portion of the hedge is recognized immediately in the income statement.

Amounts accumulated in equity are released in the income statement in the periods when the hedged item affects profit or loss (e.g. when the forecast sale that is hedged takes place).


When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ulti-mately recognized in the income statement. When a forecast transaction is no longer expected to oc-cur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

c) Derivatives that do not qualify for hedge accountingCertain derivative instruments do not qualify for hedge accounting. Such derivatives are recogni-zed at fair value on the balance sheet, with chan-ges in fair value recognized in the income statement.

these instruments are designated as economic hedges to the extent that they are not used to spe-culate on positions.

1.23 segment informationA business segment is a distinguishable compo-nent engaged in providing products or services subject to risks and returns that are different from those of other business segments. A geographi-cal segment is engaged in providing products or services within a specific economic environment subject to risks and returns that are different from those of segments operating in other economic environments.



2. Description of financial risk management policies


2.1 Financial risk factorsthe Group’s activities expose it to a variety of financial risks: mainly market risk (including curren-cy risk), credit risk, liquidity risk and interest rate risk. the Group’s overall financial risk management program focuses on the unpredictability of finan-cial markets and seeks to minimize potential ad-verse effects on the Group’s financial performance. the Group uses derivative financial instruments to hedge certain risk exposures.Financial risk management is carried out by a cen-tral treasury department (Group treasury) under policies approved by the Audit Committee of the Board of Directors. these policies provide written principles for overall financial risk management, as well as written policies covering specific areas, such as foreign exchange risk, use of derivative financial instruments and non-derivative financial instruments, and investing excess liquidity. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.

2.1.1 Market riska) Foreign exchange riskthe Group operates internationally and is exposed to foreign exchange risk arising from various cur-rency exposures, primarily with respect to the uS Dollar and Swedish Krona. Foreign exchange risk arises from future and committed commercial tran-sactions, recognized financial assets and liabilities and net investments in foreign operations.

to manage foreign exchange risk arising from future and committed commercial transactions, recognized assets and liabilities denominated in a currency different from the entity’s functional currency, entities in the Group use foreign ex-change contracts, transacted with Group treasury. Group treasury is responsible for hedging the net position in each foreign currency by using foreign exchange contracts entered into with banks when possible and appropriate.

For segment reporting purposes, each subsidiary designates contracts with Group treasury as fair value hedges, fair value hedge through profit and

loss or cash flow hedges, as appropriate. exter-nal foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities or committed or future transactions on a gross basis.

the Group’s general hedging policy is to hedge any confirmed sales contracts denominated in a foreign currency as well as expected net opera-tional cash flows when they can be reasonably predicted. Appropriate documentation is prepared in accordance with IAS 39. the CFo approves and the Ceo is informed of significant hedging transactions, with reporting to the audit committee twice a year.

Inter-company loans denominated in foreign cur-rencies are entered into to finance certain sub-sidiaries and expose the Group to fluctuations in exchange rate.

the Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency expo-sure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

Currency transactional risk:the Group has some transactional currency expo-sure that arises from the sales or purchases by an operating unit in currencies other than the unit’s functional currency.the transactional foreign currency risk mainly arises from open positions in the Belgian entities against the uS dollar.Approximately 15% of the Group’s sales are de-nominated in currencies other than the functional currency of the operating unit making the sale, whilst almost 96% of costs are denominated in the unit’s functional currency.Whereas the Group considers that there are no natural hedging opportunities, forward exchange contracts and foreign currency options (vanilla and exotics) are used to eliminate the currency exposure.


b) other market risksthe Group is exposed to securities risk because of commercial paper and shares of investments funds held by the Group in the context of its excess cash management. risk is mitigated by a conservative selection of commercial paper, rating of the instruments and limitation of the investment’s maturities.

2.1.2 Credit riskthe Group has no significant exposure to credit risk. the Company policy for large contracts is to get appropriate letters of credit issued prior to delivery of the equipment. the Company has also a general agreement with the Belgian national export credit insurance institution (onD) that fo-resees systematic coverage of all large equipment transactions.

the table disclosed in section 21.2 presents the

financial assets of the Group by valuation method.the carrying amount of these financial assets represents the maximum credit exposure of the Group.the fair value of a financial instrument is the price at which a party would accept the rights and/or obligations of this financial instrument from another independent party.

2.1.3 liquidity riskprudent liquidity risk management implies main-taining sufficient cash and marketable securities and the availability of funding through an adequate amount of outstanding credit facilities. Due to the dynamic nature of the underlying businesses, Group treasury aims to maintain flexibility in fun-ding by keeping credit lines available.

the table below summarises the maturity profile of the Group’s financial liabilities.

31 december 2006 on demand less than 1-2 2-5 Above Total (EUR ‘000) 1 year year years 5 years

Financial liabilities

Bank borrowings 0 595 1,744 2,896 1,143 6,378

Financial leasings 0 5,758 3,943 2,958 0 12,659

other interest bearing liabilities 0 0 4,567 0 0 4,567

trade payables 6,760 16,322 355 0 0 23,437

other St & lt payables 4,681 23,183 10,914 9,452 17,136 65,365

31 december 2007 on demand less than 1-2 2-5 Above Total (EUR ‘000) 1 year year years 5 years


Bank borrowings 0 2,830 2,537 5,492 94 10,953

Financial leasings 0 3,559 2,610 2,061 944 9,174

other interest bearing liabilities 0 517 4,079 0 0 4,596

trade payables 13,500 37,576 117 0 0 51,193

other St & lt payables 5,974 27,902 13,629 6,612 30,597 84,714


2.1.4 Interest rate riskthe Group exposure to the risk of changes in mar-ket interest rates relates primarily to the Group’s long term debt obligations with floating interest rates. the Group entered into interest rate swaps in order to limit the impacts of the fluctuation of the interest rates on the financial results of the Group. IBA doesn’t apply the hedge accounting, the cove-rages are therefore revaluated through the pl. IBA analyzed the impact of the fluctuation of the in-terest rates by 1% on its consolidated income sta-tements, the effect would have been insignificant.

2.1.5 Commodity risk

through its activity of distribution of radioisotopes, the Group has a limited exposure to the fluctuation of the price of the gasoline.to manage this risk the Group enters into forward oil price agreements.As per IAS 39, the coverage currently in place doesn’t quality for the cash flow hedge or fair value hedges and therefore is revaluated through the pl.

2.2 Financial assets and liabilities, additional informationFinancial assets and liabilities of the Group are valuated as follow:

12.31.2006(EUR ‘000)

Categories as per IAs 39

Carrying amount

Amortized cost

Cost Fair value recognized

in equity

Fair value recognized

in profit and loss

2006- (im-pairments)/

reversal


in profit and loss

2006- other gain/

(losses)

Financial income/

(expenses)

Recognized in Bs as

per IAs 19

Fair value

Financial assets

trade receivables loans and receivables

37,046 41,405 0 0 -225 0 0 0 37,046

other lt & St receivables

loans and receivables

17,396 17,396 0 0 0 -3,000 0 0 17,396

Investment third parties

Available for sale

2,560 0 1,855 705 0 0 0 0 2,560

Cash and cash equivalents


67,600 67,600 0 0 0 0 1,637 0 67,600

Derivatives with an hedging rela-tionship

Cash Flow hedge

284 0 0 927 0 -276 0 0 284

Derivatives wi-thout an hedging relationship

FVpl - held for trading

1,438 0 0 0 0 1,779 0 0 1,438


Bank borrowings FlAC 6,378 6,378 0 0 0 0 -244 0 6,378

Financial leasings FlAC 12,659 0 0 0 0 0 -1,498 12,659 12,659

other interest bearing liabilities

FlAC 4,567 0 4,567 0 0 0 -170 0 4,567

trade payables FlAC 23,437 0 23,437 0 0 0 0 0 23,437

other lt & St payables

FlAC 65,366 0 65,366 0 0 0 0 0 65,366

FLAC: Financial liabilities measured at amortized costsFVPL: Fair Value through PL



12.31.2007(EUR ‘000)

Categories as per IAs 39

Carrying amount

Amortized cost

Cost Fair value recognized

in equity


in profit and loss

2007- (im-pairments)/

reversal


in profit and loss

2007- other gain/

(losses)

Financial income/

(expenses)

Recognized in Bs as

per IAs 19

Fair value

Financial assets

trade receivables loans and receivables

44,243 46,871 0 0 1,731 0 0 0 44,243

other lt & St receivables


44,931 44,931 0 0 0 0 0 0 44,931

Investment third parties

Available for sale

2,343 0 1,855 -202 0 0 0 0 2,343

Cash and cash equivalents


58,210 58,210 0 0 0 0 2,321 0 58,210

Derivatives with an hedging rela-tionship

Cash Flow hedge

1,860 0 0 1,579 0 171 0 0 1,860

Derivatives wi-thout an hedging relationship

FVpl - held for trading

1,462 0 0 0 0 451 0 0 1,462


Bank borrowings FlAC 2,799 2,799 0 0 0 0 -670 0 2,799

Financial leasings FlAC 9,174 0 0 0 0 0 -912 9,174 9,174

other interest bearing liabilities

FlAC 4,596 0 4,596 0 0 0 -165 0 4,596

trade payables FlAC 51,193 0 51,193 0 0 0 0 0 51,193

other lt & St payables

FlAC 84,715 0 84,715 0 0 0 0 0 84,715

FLAC: Financial liabilities measured at amortized costsFVPL: Fair Value through PL

“Derivatives with an hedging relationship” includes the fair value of the currency forward exchange contracts.“Derivatives without any hedging relationship” include principally the fair value of an option to increase the percentage of ownership in an asso-ciate (eur 1.4 million).

the Group may acquire and sell, in the course of its operations and dependent of the evolution of its business strategy, some minority participation in third party companies (without any noticeable influence on those companies). those investments are considered as “Available for sales”.

At 31 December 2007, other lt receivable and other lt payable include down-payments of eur 15.5 million (eur 3.1 million at 31 December 2006) received on protontherapy contracts and for which the corresponding receivable amounts do not qualify for derecognition under IAS 39.


($ ‘000) December 31, 2007 December 31, 2006

one year or less

Between 1 and 2 years

over 2 years one years or less

Between 1 and 2 years

over 2 years

Foreign currency

Forward exchange contracts $30,875 $42,689 $4,007 $5,412 $0 $0

Foreign currency options $15,931 $0 $0 $6,000 $0 $0

Interest rate hedges

Interest rate swaps $1,935 $7,935 $399 $1,935 $1,935 $8,741

other

oil futures 58,000 gallons 696,000 gallons

Forward exchange contracts

(EUR ‘000) Timing of realization of hedged items

Equity Within the year 1-2 years Above 2 years

At December 31, 2006

Coverage of cash flows expressed in uSD 222 189 17 16

At December 31, 2007

Coverage of cash flows expressed in uSD 1.801 881 920

2.3 Hedging activitiesthe following table provides an overview of the derivative financial instruments outstanding at year-end by maturity bucket. the amounts included in this table are the notional amounts.

the fair value of the derivatives used by the Group is determined by commonly used valuation tech-niques. these are based on market inputs from reliable financial information providers.

the fair values are based on the trade dates of the underlying transactions.

2.3.1 Cash flow hedgeAt 31 December 2006, the Group held 14 forward currency contracts designated as hedges of ex-pected future down payments from customers. At 31 December 2007 the Group held 16 forward

currency contracts designated as hedges of ex-pected future down payments from customers.

the cash flow hedges were assessed to be highly effective and a net unrealized gain of eur 1,8 million is included into the equity.In 2006, an unrealized gain amounted to eur 0,2 million was included into the equity.

the amount included into the equity at 31 Decem-ber 2006 and transferred to the income statement in 2007 amounts to eur 0,2 Million.

2.3.2. Fair value through income statement - Held for tradingAt 31 December 2007, the Group held 2 interest rates swap agreements with a notional amount of respectively uSD 6 Million and uSD 4,2 Million.the first one receives a variable rate of interest of 3.43% and pays a rate equal to 2.2%the second one receives a variable rate of interest

of 4.82% and pays a fixed rate equal to 3.45 %.through its radioisotope distribution business, the Group has limited exposure to fluctuations in gasoline prices. nevertheless, the Group decided to enter into a futures contract involving a notional 58,000 gallons at December 31, 2007.


At 31 December 2007, the Group held as well cur-rency options as hedged of expected future usd cash inflows for a total notional of uSD 8,4 Million.As they don’t qualify for hedge accounting, the here above instruments are designated as fair value hedges through pl as far as it still covers an economical risk of the Group.

the gain generated on those hedging instruments amounted respectively to eur 0,5 Million in 2007 and eur 0,3 million in 2006.

2.4 Capital management the Group is continuously optimizing its capital structure targeting to maximize shareholder value while keeping the desired financial flexibility to execute the strategic projects. In 2007, the Group executed a share buy-back program amounting to eur 6.5 million.Moreover the Board of Directors has decided to ask the shareholders to approve payment of a dividend of eur 0.17 per share at the ordinary General Meeting of May 14, 2008.



3. Critical accounting estimates and judgments

the Group makes estimates and assumptions concerning the future. the resulting accounting estimates will, by definition, seldom equal the rela-ted actual results. the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are dis-cussed below.

(a) Income taxesthe Group had accumulated net operating losses useable to offset future taxable profits, essenti-ally in Belgium, Sweden, and the united-States, amounting to eur 126 million at December 31, 2007. the Company has recognized deferred tax assets amounting to eur 33 million.

the valuation of these assets depends on a number of judgmental assumptions regarding the future probable taxable profits of different Group subsidiaries in different jurisdictions. these estima-tes are established prudently on the basis of the most recent information available to the Company. If circumstances change and the final tax outcome is different from that amounts initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

In order to mitigate this risk and given the rapid evolution of the technological environment in which the Group operates, estimated taxable profits beyond a horizon of four years are not considered.

(b) Provision for decommissioning coststhe production of FDG (radioisotope business segment) generates radiation and results in the contamination of production site facilities. this situation may require the Group to pay restoration costs to comply with regulations in these various ju-risdictions, as well as with any legal or constructive obligations.

Analysis and estimates are performed by the Group, together with its legal advisers, in order to determine the probability, timing, and amount invol-ved with probable required outflow of resources.

In this context, provision has been made for una-voidable costs in connection with decommissioning the sites where radioisotopes are produced. these provisions are measured at the net present value of the best estimate of the necessary costs.

In the u.S., approximately eur 1.2 million has been classified as restricted cash in order to meet these legal obligations in certain specific States (Illinois and California).

At December 31, 2007, provisions for decommis-sioning costs amounted to eur 2.8 million.

(c) Revenue recognitionContracts in progress are valued at their cost of production, increased by income accrued as determined by the stage of completion of the contract activity at the balance sheet date, to the extent that it is probable that the economic benefits associated with the contract will flow to the Group. this probability is based on judgment. If certain judgmental criteria differ from those used for pre-viously recognized revenues, the Group’s income statement is affected.

When appropriate, the Company revises its estima-ted margin at completion to take into account the assessment of any residual risk arising from this contract over several years. When the final out-come of these uncertainties differs from initial esti-mations, the Group’s income statement is affected.



4. segment information

on the basis of its internal financial reports to the Board of Directors and given the Group’s primary source of risk and profitability, IBA has identified two reporting segments.Business segments are used for its primary seg-ment reporting format;Geographical segments are used for its secondary segment reporting format.

4.1 Business segmentsAt December 31, 2007, the Group had two primary business segments for reporting purposes: (1) technology and equipment and (2) radioisotopes.

Technology and Equipment. this segment consti-tutes the technological basis of the Company’s many businesses and encompasses development,

fabrication, and services associated with medical and industrial particle accelerators, proton therapy systems, and a wide range of dosimetry products and radiation therapy solutions.Radioisotopes Production and Distribution. this segment encompasses the businesses involved in the production and distribution of FDG (18F fluorodeoxyglucose, a radiopharmaceutical used in medical imaging). Development of advanced brachytherapy products, previously presented under the radioisotopes segment, was discontinued in 2006.

the table below provides details of the income sta-tement for each segment. Any inter-segment sales are contracted at arms length.

year ended December 31, 2007(EUR ‘000)

Equipment Radioisotopes Group

Sales and services 136,581 78,265 214,846

Inter-segment sales 0 -997 -997

External sales 136,581 77,268 213,849

segment result 11,091 -578 10,513

unallocated expenses -3,472

Financial result -456

Share of (profit)/loss of companies consolidated using the equity method -278 -278

Result before tax 6,863

tax income 6,983

loss for the period from discontinued operations 0

REsUlT FoR THE PERIoD 13,846

Segment assets 160,721 124,084 284,805

equity-accounted investments allocated to a segment 13 6,025 6,038

unallocated assets 33,595

ToTAl AssETs 160,734 130,109 324,438

Segment liabilities 130,909 51,986 182,895

unallocated liabilities 62

ToTAl lIABIlITIEs 130,909 51,986 182,957

oTHER sEGMEnT InFoRMATIon

Capital expenditure (incl. fixed assets in companies acquired in 2007) 4,993 21,678

Depreciation and write-downs on tangible fixed assets 1,334 4,421

Amortization on intangible fixed assets 718 836

non-cash expenses/(income) -2,593 3,298

Headcount at year-end 724 655



U.s.A. R.o.W. Group

sales 117,905 95,945 213,849

Segment assets 81,502 206,049 287,551



ToTAl AssETs 324,438

Capital expenditure (incl. fixed assets from acquisitions in 2007) 4,595 22,076


Equipment Radioisotopes Group

Sales and services 106,512 66,087 172,599

Inter-segment sales -2,342 0 -2,342

External sales 104,170 66,087 170,257

segment result 6,216 23,884 30,100

unallocated expenses -9,889

Financial result 593

Share of (profit)/loss of companies consolidated using the equity method -106 -2,776 -2,882

Result before tax 23,686

tax income 7,827

loss for the period from discontinued operations -1,524

REsUlT FoR THE PERIoD 29,989

Segment assets 117,893 114,745 232,638

equity-accounted investments allocated to a segment 24 5,720 5,744


ToTAl AssETs 117,917 120,465 266,868

Segment liabilities 84,441 45,602 130,043

unallocated liabilities 496


oTHER sEGMEnT InFoRMATIon

Capital expenditure (incl. fixed assets in companies acquired in 2006) 1,054 25,814

Depreciation and write-downs on tangible fixed assets 1,165 7,701

Amortization on intangible fixed assets 621 1,976

non-cash expenses/(income) 6,730 6,024

Headcount at year-end 513 542

4.2 Geographical segmentsthe Group’s business segments operate in two main geographical areas, the united-States and the rest of the world (r.o.W.).

these geographical segments have been determined on the basis of economic and political context, the degree of proximity of the business activities, and the specific risks associated with the business activities in a given geographical area.

the sales figures presented below are based on customer location, whereas segment balance sheet items are based on asset location.




U.s.A. R.o.W. Group

sAlEs 82,705 87,552 170,257

Segment assets 81,033 155,113 236,146



ToTAl AssETs 266,868

Capital expenditure (incl. fixed assets from acquisitions in 2006) 5,621 21,247

name Country of incorporation

share of equity held (%)

Change in % held compared to Decem-

ber 31, 2006

IBA radioIsotopes S.A. (Be 0466 749 548) Belgium 95% -

IBA Molecular Holding (Be 0880 070 706) Belgium 100% -

IBA phama S.A. (Be 0860 215 596) Belgium 100% -

IBA pharma Invest S.A. (Be 0874 830 726) Belgium 61.90% -

IBA participations S.p.r.l. (Be 0465 843 290) Belgium 100% -

IBA Investment S.C.r.l. (Be 0471 701 397) Belgium 100% -

IBA Corporate Services S.A. (Be 0471 889 261) Belgium 100% -

Ion Beam Beijing Medical Appliance technology Service Co. ltd. China 100% -

Ion Beam Applications Co ltd China 100% -

IBA radioIsotopes France S.A.S. France 100% -

IBA Dosimetry GmbH (formerly Scanditronix Wellhöfer Dosimetry GmbH) Germany 100% -

IBA Molecular Imaging (India) pvt. ltd. India 61.90% -

IBA radioIsotopi Italia S.r.l. Italy 100% -

IBA Molecular Spain Spain 100% -

MediFlash Holding A.B. Sweden 100% -

IBA Dosimetry A.B. (formerly Scanditronix Wellhöfer A.B.) Sweden 100% -

IBA Advanced radiotherapy A.B. (formerly Gyrab International A.B.) Sweden 100% -

IBA Molecular uK limited u.K. 100% -

IBA Dosimetry Americas Inc. (formerly Scanditronix Wellhöfer north America Inc.)

u.S.A. 100% -

IBA proton therapy Inc. u.S.A. 100% -

IBA Industrial Inc. (formerly radiation Dynamics Inc.) u.S.A. 100% -

radioMed Corporation u.S.A. 100% -

IBA Molecular north America * u.S.A. 100% -

IBA uSA Inc. u.S.A. 100% -

IBA Molecular Montreal Holding Corp. u.S.A. 100% -

Betaplus pharma S.A. (Be 0471 037 569) Belgium 75% 35%

(*) On March 30, 2007, New Mexico Positron LP, Lubbock West Texas Positron LLC, Pharmalogic PET Services of NJ LLC, Pharmalogic Pet Services of Massachusetts LLC, Phar-malogic PET Services of NY LLC , IBA RadioIsotopes Inc., and Cyclotech LLC, wholly owned subsidiaries of the Group , were combined to form the company Eastern Isotopes Inc., also a subsidiary of the Group. Eastern Isotopes was subsequently renamed IBA Molecular North America.

5. list of subsidiaries and equity-accounted investments

At December 31, 2007, the IBA Group consisted of IBA S.A. and a total of 31 companies and associated companies in 11 countries. of these, 26 are fully consolidated and 5 are accounted for using the equity method. the Group has elected not to use the proportional method for any of the joint companies.

5.1 list of subsidiaries


6. Business combinations and other changes in the composition of the Group

name Country of incorporation

share of equity held (%)

Change in % held compared to

December 31, 2006

Striba Gmbh Germany 50.0% -

pharmalogic pet Services of Montreal Cie Canada 48% -

petlinq l.l.C. u.S.A. 40% -

radiopharma partners SA (Be 0879 656 475) (consolidated - including CIS bio international)

Belgium 19.9% -

Molypharma Spain 24.5% -

5.2 list of equity-accounted Investments

the Group has significant influence in radiopharma partners S.A. to the extent that it is represented on the Board of Directors.

Additionally, one employee is employed by both IBA and CIS bio international. nevertheless, the IBA Group does not have any decision-making power or control over CIS bio international.

6.1 Acquisition of companieson may 5, 2006, Ire (related party – holder of 3.41 percent of IBA shares at December 31, 2007) and IBA announced that the consortium they formed had signed a purchase agreement for the acquisition of Schering AG’s european FDG division and CIS bio International radiopharmaceutical business. the transaction included CIS uS and CIS Japan. CIS bio International markets a broad range of therapeutic and diagnostic products for detection, treatment, and monitoring in a several essential fields of medi-cine, including oncology, cardiology, rheumatology, and endocrinology. In the context of the consortium, Ire holds an 80.1 percent share and IBA a 19.9 percent share in CIS bio International. In addition, IBA took over Schering AG’s european FDG division (Italy, Germany, u.K., and Spain) and joined forces with CISBIo for the distribution of radiopharmaceuti-cal products in europe.

on December 20, 2007, IBA transferred its FDG production facility at university Hospital Ghent, Belgium, to Betaplus pharma for eur 2.4 million as a contribution-in-kind. In return for this contri-bution, IBA received 1,000 new shares in Beta-plus pharma and a receivable of eur 1 million.

Following this transaction, IBA’s stake in Betaplus pharma increased from 40 percent to 65 percent, automatically bringing this entity within the IBA Group’s scope of consolidation. IBA also paid in cash eur 0.1 million for 10% of Betaplus pharma shares. Betaplus pharma was included in IBA’s consolida-ted financial statements at December 31, 2007. no profits were recorded for Betaplus pharma in 2007. Betaplus pharma posted a loss of eur 0.1 million for the period.



the following assets and liabilities were included in the consolidated accounts at December 31, 2007:

Million of EUR

price paid

- Cash amount 0.1

- Deferred payment

- Contribution-in-kind 1.4

- Direct costs associated with the acquisition

Fair value of net acquired assets 0.5

Goodwill -1

(EUR ‘000) Fair value net book value of net acquired

assets

Cash and cash equivalents 150 150

trade receivables 672 672

property, plant, and equipment 4,720 4,720

Intangible assets 528 528

Investments accounted for using the equity method 0 0

other net assets (liabilities) 303 303

trade payables -753 -753

provisions -43 -43

Borrowings -5,027 -5,027

net acquired assets 550 550

Goodwill arising from inclusion of Betaplus pharma in the scope of consolidation of the IBA Group is shown below:


(EUR ‘000) December 31, 2007 December 31, 2006

revenue 0 51

expenses 0 1 ,556

Profit/(loss) from discontinued operations before tax 0 -1,505

Income tax expense 0 0

Profit/(loss) from discontinued operations 0 -1,505

Capital gain 0 -19

Result from discontinued operations 0 -1,524

(EUR ‘000)

At January 1, 2006 31,072

Final adjustments to previously acquired goodwill 649

Goodwill impairment -1,106

Currency translation difference -2,515

At December 31, 2006 28,100

At January 1, 2007 28,100

Additions through business combinations 1,006

Currency translation difference -2,568

At December 31, 2007 26,538

6.2 Disposal of companiesIn early January 2006, IBA sold 90.1 percent of its investment in its Swedish subsidiary ScandiMa-gnet A.B. as part of its strategy to refocus on its core business, cancer diagnosis and treatment. the transaction was settled for a sale price of SeK 2 million, paid in cash at closing, and generated a capital loss of eur 19,000.

As previously indicated, IBA decided in 2006 to discontinue its brachytherapy business. All p&l elements relating to this business were reclas-sified to the section “profit/(loss) for the period from discontinued operations” and amounted to eur 1.5 million.

the goodwill arising from an acquisition is alloca-ted to the cash-generating units (CGus) concer-ned, and an impairment test is carried out annually on the CGus’ fixed assets (including goodwill).

Following provisional accounting at acquisition in 2005 of the u.S. entities pharmalogic pet Services and Cyclotech llC, a final adjustment of eur 0.6 million was made to goodwill in the course of 2006.

Inclusion of Betaplus pharma S.A. in IBA’s scope of consolidation at December 31, 2007 gave rise to goodwill for an amount of eur 1.0 million.

Additions and adjustments to goodwill in 2007 and 2006 were allocated to the radioisotopes business segment.

7. Goodwill and other intangible assets

7.1 GoodwillMovements of goodwill are detailed as follows.



the following table summarizes allocation of the carrying amount of goodwill by business segment:

the recoverable amounts of subsidiaries’ fixed assets have been determined on a “value in use” basis. Value in use has been determined on the basis of IBA’s latest business plans, as approved by the Board of Directors in the context of the five-year strategic plan. the cash flows beyond the five-year period have been extrapolated using the growth rates shown in the table above. Impairment testing uses gross budgeted operational margins estimated by management on the basis of past performance and future development prospects.

Discount rates used reflect the specific risks rela-ted to the segments in question.

on the basis of these assumptions, an impairment of eur 1.1 million was identified in 2006 on the goodwill previously recognized on the acquisition of the u.S. companies new Mexico positron lp and lubbock West texas positron llC.

no additional goodwill impairment was identified in the course of the year 2007.

(EUR ‘000) Equipment Radioisotopes Total

December 31, 2007 3,741 22,797 26,538

December 31, 2006 3,806 24,294 28,100

Discount rate applied 9.50% 10.882%

long-term growth rate 2.60% 2.60%

7.2 other intangible assets

(EUR ‘000) software Patents and trademarks

Development costs

other Total

Gross carrying amount at January 1, 2006 3,163 1,276 772 4,339 9,550

Additions 270 129 226 279 904

Additions through business combinations 0 0 0 0 0

Disposals 0 0 0 0 0

transfers 170 0 0 0 170

Changes in consolidation scope 2 3 0 158 163

Currency translation difference -41 -13 -33 -267 -354

Gross carrying amount at December 31, 2006 3,564 1,395 965 4,509 10,433

Accumulated amortization at January 1, 2006 2,245 671 104 1,909 4,929

Additions 406 278 265 542 1,491


Disposals 0 0 0 0 0

transfers -135 0 0 135 0



Accumulated amortization at December 31, 2006 2,491 942 363 2,522 6,318

net carrying amount at January 1, 2006 918 605 668 2,430 4,621

net carrying amount at December 31, 2006 1,073 453 602 1,987 4,115


the majority of the intangible assets relate to software, licenses for the production and distribu-tion of radioisotopes, and customer lists, accoun-ted for by applying the purchase method to the acquisitions made by the Group.

For details of impairment testing, see note 7.1.

no impairment has been identified on other intangi-ble assets (as shown in this note) either at Decem-ber 31, 2007 or at December 31, 2006.

(EUR ‘000) software Patents and trademarks

Development costs

other Total

Gross carrying amount at January 1, 2007 3,564 1,395 965 4,509 10,433

Additions 897 380 99 728 2,104


Disposals -229 0 0 0 -229

transfers 93 0 0 46 139



Gross carrying amount at December 31, 2007 4,272 1,807 1,015 5,046 12,140

Accumulated amortization at January 1, 2007 2,491 942 363 2,522 6,318

Additions 535 332 258 429 1,554


Disposals -223 0 0 -6 -229

transfers 70 10 0 -79 1



Accumulated amortization at December 31, 2007 2,842 1,275 604 2,800 7,521

net carrying amount at January 1, 2007 1,073 453 603 1,987 4,115

net carrying amount at December 31, 2007 1,430 532 411 2,246 4,619



8. Property, plant, and equipment

(EUR ‘000) land and buildings

Plant, ma-chinery, and

equipment

Furniture, fixtures, and

vehicles

other property, plant, and

equipment

Total

Gross carrying amount at January 1, 2006 18,898 47,661 10,207 2,079 78,845

Additions 1,369 2,318 2,984 6,011 12,682

Additions through business combinations 664 1,243 65 0 1,972

Disposals -520 -326 -499 -12 -1,356

transfers 709 -643 704 -1,526 -756

Changes in consolidation scope -342 3,402 228 7,212 10,499

Currency translation difference -1,098 -3,496 -479 -93 -5,166


Accumulated depreciation at January 1, 2006 10,757 25,637 8,551 -6 44,939

Additions 982 6,618 1,266 0 8,866


Disposals -321 -201 -405 0 -927

transfers 0 0 73 0 73

Changes in consolidation scope -113 134 59 0 80

Currency translation difference -589 -1,750 -387 1 -2,725

Accumulated depreciation at December 31, 2006 10,716 30,438 9,157 -5 50,306

net carrying amount at January 1, 2006 8,141 22,024 1,656 2,085 33,906

net carrying amount at December 31, 2006 8,964 19,722 4,051 13,677 46,414

Gross carrying amount at January 1, 2007 19,680 50,160 13,209 13,673 96,719

Additions 2,916 3,734 2,859 12,159 21,668

Additions through business combinations 0 0 0 0

Disposals -27 -1,443 -1,564 -255 -3,289

Disposals through business combinations 0 13 -2 0 11

transfers 45 1,524 -1,476 -1,133 -1,040

Changes in consolidation scope 0 2,563 49 136 2,748

Currency translation difference -1,149 -3,688 -594 -1,498 -6,929


Accumulated depreciation at January 1, 2007 10,716 30,438 9,157 -5 50,306

Additions 1,113 2,999 1,643 0 5,755


Disposals -15 -1,409 -1,543 0 -2,967

Disposals through business combinations 1 9 0 0 10

transfers 0 -241 241 0 0


Currency translation difference -649 -2,143 -461 5 -3,248

Accumulated depreciation at December 31, 2007 11,166 29,874 9,059 0 50,099

net carrying amount at January 1, 2007 8,964 19,722 4,051 13,677 46,414

net carrying amount at December 31, 2007 10,299 22,989 3,422 23,082 59,792


9. lease arrangements

10. Investments accounted for using the equity method

other tangible fixed assets mainly include assets under construction. there are no tangible fixed assets subject to title restrictions.

As indicated in note 7.1, an impairment test was carried out in respect of the non-current assets on the date of transition as well as at December 31, 2007 and December 31, 2006 to verify that the carrying amounts of tangible fixed assets, intangi-ble fixed assets, and goodwill were justified by the recoverable amounts. the key assumptions used to

calculate values in use at end-2007 are set out in note 7.1.

on the basis of this test, impairment of eur 2.9 million (included in additions to deprecia-tion) was identified on tangible fixed assets, and eur 1.1 million was identified on the goodwill value belonging to the radioisotopes segment at December 31, 2006.

no impairment was recognized in 2007.

IBA holds the following assets under financial lease contracts:

Details of lease payments on financial liabilities relating to leased assets are set out in note 18.2.

“other investments” consist of shares in unlisted companies. these shares are revalued using either the dis-counted cash flow method or on the basis of the share value assigned to them during the most recent rounds of financing.

(EUR ‘000) land and buildings Plant, machinery, and equipment

Furniture, fixtures, and vehicles

2007-12-31 2006-12-31 2007-12-31 2006-12-31 2007-12-31 2006-12-31

Gross carrying value 5,614 3,413 20,248 21,992 12 11

Accumulated depreciation 1,747 1,687 10,443 10,179 0 0

net carrying value 3,866 1,726 9,805 11,813 12 11


Investments accounted for using the equity method 6,038 5,744

other investments 2,343 2,560

ToTAl 8,381 8,304



10.1 Movements in equity-accounted investments equity-accounted companies are listed in note 5.2.

on December 20, 2007, IBA transferred its FDG production facility at university Hospital Ghent, Belgium, to Betaplus pharma for eur 2.4 million as a contribution-in-kind. In return for this contri-bution, IBA received 1,000 new shares in Beta-plus pharma and a receivable of eur 1 million. Following this transaction, IBA’s stake in Betaplus pharma increased from 40 percent to 65 percent,

automatically bringing this entity within the IBA Group’s scope of consolidation. IBA also paid in cash eur 0.1 million for 10% of Betaplus pharma shares.

Details of the Group’s interest in its principal asso-ciates, all of which are unlisted, were as follows:

the Group has significant influence in radio-pharma partners S.A. to the extent that it is repre-sented on the Board of Directors. Additionally, one employee is employed by both IBA and CIS bio international. nevertheless, the IBA Group does not have any decision-making power or control over CIS bio international (see page 61 of this report).


At January 1 5,744 1,525

Share in (loss)/profit of equity-accounted companies 278 2,882

Additions 0 1,897

other movements 16 -560

At December 31 6,038 5,744

Country of incorporation

Assets liabilities Revenue Profit/(loss) Interest held

(EUR ‘000) (EUR ‘000) (EUR ‘000) (EUR ‘000) %

2006

BetaPlus Pharma s.A. Belgium 2,660 3,448 88 -730 40.0%

MolyPharma Spain 7,881 3,706 8,325 228 24.5%

CIs bio International (in-directly via RadioPharma Partners)

France 175,938 164,596 120,442 -90,167 19.9%

RadioPharma Partners Belgium 45 0 0 -16 19.9%

Pharmalogic Pet services of Montreal Cie.

Canada 3,207 3,063 2,059 -696 48.0%

Petlinq l.l.C. u.S.A. 175 53 338 -8 40.0%

striba Gmbh Germany 18,148 18,126 0 138 50.0%

2007

MolyPharma Spain 9,195 5,463 9,138 -443 24.5%

CIs bio International (in-directly via RadioPharma Partners)

France 172,972 158,813 119,200 1,277 19.9%

RadioPharma Partners Belgium 46 3 0 -2 19.9%

Pharmalogic Pet services of Montreal Cie.

Canada 3,355 3,027 3,391 184 48.0%

Petlinq l.l.C. u.S.A. 335 227 754 -14 40.0%

striba Gmbh Germany 48,794 48,775 24 -3 50.0%


10.2 Jointly controlled companiesIn 2006, IBA formed a joint venture named Striba GmbH with Strabag projektenwicklung GmbH (Germany). this joint venture will provide a proton therapy system and related medical technology to the universitätskli-nikum essen (north-rhine, Westphalia, Germany).

the assets and liabilities of these joint ventures (consolidated using the equity method) are detailed below:


Assets

non-current assets 0 0

Current assets 48,794 18,148

ToTAl 48,794 18,148

liabilities

non-current liabilities 0 0

Current liabilities 48,775 18,126

ToTAl 48,775 18,126

net assets 19 22

revenue 24 0

expenses/(income) 27 -138

Result after tax -3 138

11. Deferred taxes


Deferred tax assets

- Deferred tax assets to be recovered after more than 12 months 26,160 20,057

- Deferred tax assets to be recovered within 12 months 7,152 4,921

ToTAl 33,312 24,978

Deferred tax liabilities

- Deferred tax liabilities to be paid after more than 12 months 259 225

- Deferred tax liabilities to be paid within 12 months 110 0

ToTAl 369 225

net deferred tax assets 32,942 24,753

Deferred tax assets(EUR ‘000)

Tax losses other Total

(eur '000) (eur '000) (eur '000)

At January 1, 2006 18,472 -1,957 16,515

Credited/(charged) to the income statement 9,584 9,584

Currency translation difference -1,121 -1,121

At December 31, 2006 26,935 -1,957 24,978

Credited/(charged) to the income statement 9,428 9,428


At December 31, 2007 35,269 -1,957 33,312



Deferred tax liabilities(EUR ‘000)

other Total

At January 1, 2006 40 40

(Credited)/charged to the income statement 222 222

Currency translation difference -37 -37

At December 31, 2006 225 225

(Credited)/charged to the income statement 144 144

Currency translation difference 0 0

At December 31, 2007 369 369

Deferred income tax assets are recognized as tax loss carry-forwards to the extent that it is likely they can be recovered through future earnings. note 3 explains the estimates and judgments used by IBA in making this assessment.

At December 31, 2007, deferred taxes totaling eur 33.8 million (eur 55.8 million in 2006) were not reco-gnized as tax losses carried forward on the balance sheet. these tax losses do not have an expiration date.

At December 31, 2007, “other receivables” included the fair value of an option to increase percentage of ownership in an associate. this option, which was acquired in 2006, was valued at eur 1.4 million on the basis of expected future cash flows from this company’s operational activity. the value of the option as calculated at December 31, 2006 was confirmed at December 31, 2007.

long-term liabilities arising from contracts in progress include advance payments of eur 15.5 million (eur 3.1 million in December 2006) on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition under IAS 39.

12. other long-term receivables

13. Inventories and contracts in progress


loans to joint ventures 0 1,550

long-term receivables on contracts in progress 15,545 3,109

receivables on disposal of subsidiaries 143 385

other receivables 2,953 3,745

ToTAl 18,641 8,789


raw materials and supplies 11,955 7,825

Finished products 2,265 2,963

Work in progress 5,895 4,410

Contracts in progress 22,267 20,291

Write-off on inventories and contracts in progress -1,483 -4,296

Inventories and contracts in progress 40,899 31,194


Following the sale of two machines in inventory in 2007, the Group reversed write-downs of eur 3.2 million previously recorded for those equipments.

Work in progress relates to production of inventory for which a client has not yet been secured, while contracts in progress relate to production for specific clients in performance of a signed contract.

14.1 Trade receivablestrade receivables can be broken down as follows:

At December 31, the repayment schedule for trade receivables (excluding impairments) was as follows:

At December 31, 2007, trade receivables impairments totaled eur 2.6 million.

Changes in the provision for doubtful debts over the past two years are as follows:

14. Trade and other receivables


Amounts invoiced to customers on contracts in progress but for which payment has not yet been received at balance sheet date

11,438 6,079

other trade receivables 35,433 35,327

Impairment of doubtful receivables (-) -2,628 -4,359

ToTAl 44,243 37,046

Total ('000) not due < 30 days 30 - 59 60 - 89 90-179 180-269 270-360 > 1 year

2007 46,871 15,566 9,677 8,654 3,291 3,873 2,407 1,330 2,073

2006 41,406 11,518 9,049 6,221 2,096 4,301 1,062 3,625 3,534

(EUR ‘000)

At January 1, 2006 4,134

Charge for the year 599

Write-backs -374

At December 31, 2006 4,359

Charge for the year 1,207

utilizations -603

Write-backs -2,335

At December 31, 2007 2,628

Contracts in progress(EUR ‘000)

December 31, 2007 December 31, 2006

Costs to date and recognized profit 94,481 34,444

less: progress billings -72,214 -14,153

Contracts in progress 22,267 20,291

net amounts due to customers for contracts in progress (note 23) 31,984 23,806



14.2 Other receivablesother receivables on the balance sheet primarily involve advance payments on orders, deferred charges, and accrued income.

other receivables can be broken down as follows:

At December 31, 2007, the effective interest rate on the cash position was 3.76 percent (2.99 percent in 2006).Short-term deposits and commercial papers have an average maturity of less than 30 days.

16.1 Capital stock

At the extraordinary General Meeting of May 9, 2007, the Group’s shareholders agreed to defray its loss through a reduction of capital surplus by eur 87.4 million.

At December 31, 2007, 61.37 percent of IBA’s shares were trading on euronext. Full details of the Group’s shareholders are set out in the section “the stock market and the shareholders” on page 32 of this annual report.

on March 4, 2008, a dividend of eur 4.5 million, equivalent to eur 0.17 per share, was proposed by the Board of Directors. In accordance with IAS 10 “Events After the Balance Sheet Date”, the dividend was not recognized in the 2007 financial statements.


non-trade receivables and advance payments 21,297 5,733

Deferred charges 5,051 2,931

Accrued income – interest 83 18

other current receivables 1,512 1,362

ToTAl 27,943 10,044


Cash 44,488 12,840

restricted cash 1,210 15,876

Short-term bank deposits and commercial papers 12,512 38,884

TOTAL 58,210 67,600

15. Cash and cash equivalents

16. Capital stock and stock options

(EUR ‘000) number of shares

ordinary shares

Capital surplus Treasury shares

Total

Balance at January 1, 2006 24,842,453 34,883 198,887 -256 233,514

Stock options exercised 622 ,613 864 2,011 0 2,875

Balance at December 31, 2006 25,465,066 35,747 200,898 -256 236,389

Stock options exercised 335,186 468 1,736 0 2,204

Defrayment of loss by reduction of capital surplus

0 0 -87,435 0 -87,435

purchase of treasury shares 0 0 0 -6,490 -6,490

Balance at December 31, 2007 25,800,252 36,215 115,199 -6,746 144,668



type of plan Stock options Stock options

Date of grant 30/11/2007 14/12/2006

number of options granted 338,246 437,250

exercise price 19.94 13.64

Share price at date of grant 19.94 17.52

Contractual life (years) 6 6

Settlement Stock Stock

expected volatility 39.02% 40.98%

expected option life at grant date (years) 4.75 4.10

risk-free interest rate 4.18% 3.77%

expected dividend (stated as % of share price at date of grant) 1% 0%

expected departures at grant date 7.21% 7.21%

Fair value per granted option at grant date 7.91 8.11

Valuation model Black & Scholes Black & Scholes


16.2 Stock optionsDuring the period ended December 31, 2007, IBA had seven stock options plans, including one new plan instituted in 2007.

the stock options plans set up in 2000 and 2001 have the following vesting scheme: 25 percent ves-ting at grant date + 1 year, 50 percent at grant date + 2 years, 75 percent at grant date + 3 years, 100 percent at grant date + 4 years.

Stock options plans instituted from 2002 onwards have the following vesting scheme: 20 percent ves-ting at grant date + 1 year, 40 percent at grant date + 2 years, 60 percent at grant date + 3 years, 80 percent at grant date + 4 years, 100 percent at grant date + 5 years.

In 2005, the Group refunded a capital surplus of eur 3.10 per share to its shareholders. Following this action, on March 13, 2006, IBA’s Board of Direc-tors approved a reduction in the exercise price for IBA employee stock options plans instituted in 2000, 2001, 2002, and 2004. under IFrS 2, this repricing qualifies as a modification of the terms of the grants of the instruments in the 2000, 2001, 2002, and 2004 plans. A charge of eur 2.4 million was recognized in the 2006 income statement to reflect this modifica-tion. this change has an impact of eur 0.6 million on the 2007 financial statements.

the details of the plans instituted in the course of 2007 and 2006 are described below.


the Company uses the Black & Scholes model to value options with no vesting conditions other than time. expected volatility for the stock options plans is based on historical volatility determined by sta-tistical analysis of daily share price movements.

the fair value of shares for the stock options plans was based on the average share price for the 30 days preceding the grant date.

At December 31, 2007, a charge of eur 2.3 million was recognized in the financial statements (before taxes) for employee stock options.

the stock options outstanding at December 31, 2007 have the following expiration dates and exer-cise prices.

Stock options movements can be summarized as follows:


Expiration date Exercise price (EUR)

number of stock options

Exercise price (EUR)


February 28, 2009 24.90 167,148 24.90 167,148

September 30, 2010 3.72 886,000 3.72 886,000

December 31, 2010 12.60 126,325 12.60 242,775

September 30, 2011 6.37 90,000 6.37 90,000

August 31, 2012 3.34 335,291 3.34 554,027

September 30, 2012 13.64 437,250 13.64 437,250

September 30, 2013 19.94 338,246

ToTAl outstanding stock options 2,380,260 2,377,200


Average exer-cise price in

EUR per share


Average exer-cise price in

EUR per share


outstanding at January 1 7.95 2,377,200 8.16 2,562,563

Granted 19.94 338,246 13.64 437,250

Forfeited (-)

exercised (-) 6.56 -335,186 3.60 -622,613

lapsed (-)

outstanding at December 31 9.85 2,380,260 7.95 2,377,200

Exercisable at year-end 1,071,764 963,950


At the extraordinary General Meeting of May 9, 2007, the Group’s shareholders agreed to defray its loss through a reduction in the surplus capital of eur 87.4 million.

According to the Corporate Code (Code des Sociétés), the legal reserve must equal at least 10 percent of the Company’s capital stock. until such time as this level is attained, a top slice of at least one-twentieth of the net profit for the year (determined according to Belgian accounting law) must be allocated to constituting this reserve fund. the current level of the legal reserve is sufficient to meet the statutory requirement.

the hedging reserve includes changes in the fair value of financial instruments used to hedge cash flows of future transactions.

other reserves involve the fair value adjustment on available-for-sale investments, as well as the valua-tion of employee stock options plans.

Currency translation difference includes differen-ces related to the translation of financial state-ments of consolidated entities whose functional currency is not the euro. they also include foreign exchange differences arising on long-term loans that are part of the Group’s net investment in fo-reign operations as defined in IAS 21.


Hedging reserves 1,802 215

other reserves 6,595 4,530


retained earnings 70 -101,384


non-current

Bank borrowings (note18.1) 8,154 5,783

other borrowings (note 18.3) 4,079 4,567

Financial lease liabilities (note 18.2) 5,621 7,806

ToTAl 17,854 18,156

Current

Short-term bank loans 1,458 0

Bank borrowings (note 18.1) 2,799 595

other borrowings (note 18.3) 517 0

Financial lease liabilities (note 18.2) 3,554 4,853

ToTAl 8,328 5,448

17. Reserves

18. Borrowings



18.1 Bank borrowings

Movements on bank borrowings can be detailed as follows:

the maturities of bank borrowings are detailed as follows:

the effective interest rates for bank borrowings at the balance sheet date were as follows:

the carrying amounts of the Group’s borrowings are denominated in the following currencies:


non-current 8,154 5,783

Current 2,799 595

TOTAL 10,953 6,378


opening amount 6,378 1,721

new borrowings 7,138 1,959

repayment of borrowings -3,384 -1,486

entry in consolidation scope 920 4,374

exit from consolidation scope 0 -196

Currency translation difference -98 6

Closing amount 10,953 6,378


one year or less 2,799 595

Between 1 and 2 years 2,568 1,744

Between 2 and 5 years 5,492 2,896

over 5 years 94 1,143

ToTAl 10,953 6,378


eur 8,530 5,414

uSD 2,423 901

rMB 0 63

10,953 6,378


EUR UsD EUR UsD

Bank borrowings 5.97% 6.81% 5.39% 7.32%


unutilized credit facilities are as follows:

the present value of financial lease liabilities is as follows:

the carrying amounts of financial lease liabilities are denominated in the following currencies:

the average interest rate paid on financial lease liabilities at December 31, 2007 was 7.93 percent (7.55 percent in 2006).

18.3 Other borrowingsother borrowings primarily involve an Industrial Development revenue Bond issued by the town of Islip, new York, on behalf of one of the u.S. entities belonging to the IBA Group. this bond matures in 2009.

the facilities expiring within one year are annual facilities subject to review at various dates during the year 2008. the other facilities have been arranged to help to finance the proposed expansion of the Group’s activities.

18.2 Financial lease liabilitiesMinimum lease payments on financial lease liabilities are as follows:


Floating rate

- expiring within one year 259 131

- expiring beyond one year 12,716 9,778

Fixed rate

- expiring within one year

ToTAl 12,975 9,909


one year or less 3,554 4 ,853

later than one year and not later than five years 4,675 7,806

later than five years 945 0

ToTAl 9,174 12,659


eur 2,391 1,092

uSD 6,784 11,567

ToTAl 9,174 12,659


one year or less 4,063 5,758

later than one year and not later than five years 5,253 8,506

later than five years 1,111 0

10,426 14,265

Future finance charges on financial leases (-) -1,252 -1,605

Present value of financial lease liabilities 9,174 12,659



19. Provisions

20. other long-term liabilities

Environment Guarantees litigation other Total

At January 1, 2007 2,709 4,144 1 ,415 3,545 11,813

Additions (+) 170 717 2,167 1,293 4,347

Write-backs (-) 0 -1,133 -3 -665 -1,801

utilizations (-) 0 -1,437 0 -1,117 -2,554

reclassifications 0 -826 0 1,522 696



Total movement 126 -2,691 2,086 979 500

At December 31, 2007 2,835 1,453 3,501 4,524 12,313

provisions for decommissioning costs related to the Group’ sites where radioisotopes are produced have been recognized where an obligation exists to incur these costs. these provisions are measured at the net present value of the best estimate of the costs that will need to be incurred. More informa-tion on these provisions is included in note 3 of this report.

provisions for guarantees cover the warranties given on machines sold to clients.

provisions for litigation at December 31, 2007 are primarily for the following:potential tax litigation in Sweden for which a pro-vision of eur 1.4 million is presented at Decem-ber 31, 2007.litigation in the united-States for which a provision of uSD 3 million is presented at December 31, 2007 (see note 29).

other provisions include eur 1.9 million to cover the commitments made on acquisition of Schering AG’s FDG business in 2006.

In 2007, the Group received advances of eur 1 million in cash from the Walloon region of Belgium (interest free).

the Group repaid eur 76.4 million to its sharehol-ders in January 2005. of this amount, eur 0.4 mil-lion remained unclaimed at December 31, 2007 (eur 0.7 million at December 31, 2006).

other long-term liabilities include down-payments of eur 15.5 million (eur 3.1 million in December 2006) received on proton therapy contracts for

which the corresponding receivable amounts do not qualify for derecognition under IAS 39.

Deferred payments on acquisitions include the long-term portion of amounts to be paid on the acquisitions made by the Group.


Advances received from local government 15,097 14,033

liabilities towards shareholders 403 699

other 18,263 6,379

Deferred payments on acquisitions 0 467

ToTAl 33,763 21,578


21. other short-term financial assets and liabilities

22. Trade payables

23. other payables

the Group’s policy for use of financial instruments is detailed in note 1.22 on Group accounting poli-cies and note 2 on financial risk management.

At December 31, 2006, the amount of eur 0.3 million recognized as a short-term financial asset represented the fair value of forward exchange contracts (eur 0.1 million) and options (eur 0.2 million) used to hedge future commercial cash flows stated in uSD. these contracts had a matu-rity of one year or less at December 31, 2006.

At December 31, 2007, the amount of eur 1.8 million recognized as a short-term financial asset represented the fair value of forward exchange contracts used to hedge future commercial cash flows that were mainly in uSD.

Some of these financial instruments are designa-ted as hedging instruments inasmuch as they hedge specific exchange rate risks to which the Group is exposed. Hedge accounting has been applied to these contracts because they are deemed to be effective hedges as defined in IAS 39. For these cash flow hedges, movements are recognized directly in equity and released to the income statement to offset the income statement impact of the underlying transactions. Cumulative gains of eur 1.8 million were recognized directly in equity (under the caption “Hedging reserves”) at December 31, 2007.

At December 31, the payment schedule for trade payables was as follows:


Amounts due to customers on contracts in progress (or advances received on contracts in progress)

31,984 23,806

Social liabilities 8,530 5,654

Accrued charges 5,893 5,673

Deferred income 4,471 5,416

Capital grants 750 846

other 6,396 8,046

other payables 58,024 49,441

Total (‘000) Due < 3 months 4-12 months

1-5 years > 5 years

2007 51,191 13,498 36,949 627 116 0

2006 23,437 6,760 15,838 484 354 0



24. other operating expenses and income


legal costs 4,329 346

Stock options plan expenses 2,266 2,830

Depreciation and write-downs 1,692 10,751

other 427 1,583

ToTAl 8,714 15,510


net negative goodwill 0 -25,952

Write-back of depreciation and write-downs -3,966 0

ToTAl -3,966 -25,952

24.1 Other operating expensesother operating expenses are as follows:

At December 31, 2006, the Group recogni-zed impairment losses on tangible fixed assets (eur 2.9 million), goodwill (eur 1.1 million), inventories (eur 3.6 million), and other receivables (eur 3 million).

Included under the caption “other” at December 31, 2006 were Group costs for rebranding of IBA image and rental fees futher to discontinuation of operations at a radioisotope facility in the united-States.

legal costs at December 31, 2007 included costs associated with settling the optivus lawsuit (eur 1.9 million) and provision for a suit affecting a u.S. subsidiary of the Group (eur 2.1 million) (see note 29).

At December 31, 2007, depreciation and write-downs included a eur 1.5 million impairment of trade receivables for a customer in the united-States.

At December 31, 2006, acquisition of Schering’s european FDG network (net of the impact of acquisition of a minority interests in CIS bio inter-national through radiopharma partners S.A.) had given rise to net negative goodwill of eur 26 mil-lion, which was recognized directly in the income statement.

Following the sale of two machines in inven-tory in 2007, the Group reversed write-downs of eur 3.2 million previously recorded for those equipments.

24.2 Other operating Incomethe following is a breakdown of other operating income:


25. Financial expenses and income

26. Income taxes


Interest paid on debts 1,747 1,912

Foreign exchange differences 1,477 709

Changes in fair value of derivatives 171 0

other 958 0

ToTAl 4,353 2,621


Current taxes 2,301 1,535

Deferred taxes -9,284 -9,362

ToTAl -6,983 -7,827


Interest received on receivables and cash position -2,321 -1,637

Foreign exchange differences -1,222 0

Changes in fair value of derivatives 0 -243

other -354 -1,334

ToTAl -3,897 -3,214

25.1 Financial expenses

the tax charge for the year can be broken down as follows:

25.2 Financial income

At December 31, 2006, the caption “other” included the fair value of an option to increase percentage ownership in an associate company.



profit/(loss) before taxes 6,862 23,686

Taxes calculated on the basis of national tax rates 2,130 6,560

unrecognized deferred taxes 691 2,575

tax-exempt transactions 3,880 -6,319

prior year adjustments on deferred taxes -2,157 227

loss available for offset against future taxable income -5,931 -9,600

utilization of previously unrecognized tax losses -5,669 -1,517

other tax charges 73 245

Reported tax charge -6,983 -7,827

Theoretical tax rate 31.0% 27.7%

Effective tax rate -101.8% -33.0%

Given the extent of available tax losses, IBA did not calculate deferred taxes on items credited or charged directly to equity.

the tax charge on IBA’s result before taxes differs from the theoretical amount that would have resulted from application of the average applicable tax rates to the profits of the consolidated companies. the analysis is as follows:


At December 31, 2007, the Group recognized an expense of eur 1.1 million for defined contribution plans.

At December 31, 2007, the caption “other non-cash items” included expenses for employee stock options plans as well as inventory impairments and write-downs.

At December 31, 2007, other investing cash flows consisted mainly of repayment of an advance made to a customer in the context of the sale of a system.

At December 31, 2007, other financing cash flows included interest-free cash advances from the Walloon region of Belgium (eur 1 million), a cash credit (eur 1.3 million), payment of the final tran-che of a 2005 company buyout (eur 1.4 million), and changes in liabilities to Group employees in connection with the exercise of stock options plan (-eur 0.6 million).

At December 31, 2006, the caption “other non-cash items” included the impact of negative goodwill arising from the acquisition of Schering AG’s european FDG network and the fair value revaluation of options, partially offset by expenses for employee stock options plans and inventory impairments. other investing cash flows consist mainly of loans to associate companies.

At December 31, 2006, other financing cash flows included interest-free cash advances from the Wal-loon region of Belgium and cash received from employees for the exercise of the options under the stock options plan for which the Company increased its capital after year-end closing.

27. Defined contribution plans

28. Cash flow statement

the Group is currently involved in certain legal proceedings. the potential risks connected with these proceedings are deemed to be insignificant or unquantifiable or, where potential damages are quantifiable, adequately covered by provisions. Developments in litigation pending at end 2006 as well as the principal case pending at December 31, 2007 are presented in this note.

Developments in litigation pending at December 31 2007 mentioned in the 2006 annual report.

Tax litigation in Swedenthe Company is involved in a tax dispute with the Swedish national tax Board. the case involves in-terest paid by the Group from Belgium to a Group company in Sweden from 1999 to 2001. tax was withheld in Belgium, and the income was released to the taxable income of the Swedish subsidiary. IBA claimed that it was eligible for a tax credit on

the amount withheld in Belgium. the Swedish tax board disputed this claim. IBA won its case in the court of first instance. However, the tax board has appealed the decision. the appeals court should issue a decision on the case in the course of 2008.

A provision of eur 1.4 million has been set aside for this litigation.

Litigation with Bayer Schering Pharma AGuntil April 30, 2006, IBA and Schering AG (now Bayer Schering pharma AG) were partners in a joint venture to establish a network of FDG ma-nufacturing sites in Italy and the united Kingdom. on April 30, 2006, in the context of closing a package deal for the sale of its radiopharmaceu-tical business to IBA and Ire (Institut national des radioéléments), Bayer Schering pharma AG sold its British and Italian holdings to IBA for a symbolic euro. During closing, the parties disagreed over the handling of loans made by each of the par-

29. Contingent liabilities



tners to their joint British subsidiary. Bayer Schering pharma AG immediately initiated an arbitration procedure with the Association Française d’Arbi-trage (“AFA”), which ruled in its favor in December 2007. this means that IBA’s British subsidiary is required to repay a loan of GBp 1,144,000 to Bayer Schering pharma AG. the loan should be repaid in the course of 2008.

the parties also disagreed as to the amount of the net cash position adjustment at closing. Bayer Schering pharma AG demanded a payment of eur 300,000. the dispute was submitted to ar-bitration by KpMG France, which sided with IBA. Despite this decision, Bayer Schering pharma AG is still demanding payment of this amount. Howe-ver, there are no proceedings pending.

lastly, in connection with the takeover of the Japanese operation, the parties are involved in a dispute in which Bayer Schering pharma AG maintains that IBA and Ire have not complied with their best effort obligation. However, there are no proceedings pending.

Litigation with Optivus Proton Therapyoptivus proton therapy, Inc. (optivus) and IBA became involved in litigation over various proton therapy-related claims in August 2002. In August 2007, the Company announced that optivus proton therapy, Inc. and the loma linda univer-sity Medical Center had agreed to drop all claims against IBA in a case that had been before the u.S. District Court for the Central District of California for five years. the Group recognized a charge of eur 1.9 million in 2007 in the context of this case.

Litigation in 2007Action for damages against IBA Molecular North AmericaIn 2005, IBA Molecular north America took over three FDG production facilities from the pharmalo-gic company. one of its facilities was involved in a suit for damages. A pharmalogic driver had used his vehicle without authorization outside working hours. He committed a theft, and while fleeing, caused an accident with a police vehicle and injured a police officer. the case went to jury trial. on February 19, 2008, the court found pharmalo-

gic negligent in hiring the driver and entrusting him with a vehicle. rather surprisingly, this negligence was deemed a substantial cause of the injury to the police officer, and damages of uSD 3 million were awarded for which pharmalogic is responsi-ble. naturally, IBA will appeal this decision and will analyze the potential for litigation against pharma-logic, salers and its insurers.

A provision of uSD 3.0 million has been set aside to cover this litigation.


31.1 Consolidated companiesA list of subsidiaries and equity-accounted companies is provided in note 5.

31.2 Shareholders relationshipsthe following table shows IBA shareholders at December 31, 2007:

30.1 Operating leasesthe Group has a number of non-cancelable operating leases relating to vehicles and office space rental. total future minimum lease payments under non-cancelable operating leases are as follows:

total lease payments included in the income statement in 2007 amounted to eur 3.9 million (eur 2.9 mil-lion in 2006).

30.2 Financial guaranteesAt December 31, 2007, IBA held financial guarantees for eur 84 million given by Group entities as security for debts or commitments. of this amount, eur 15 million cover guarantees given by the parent company to cover its subsidiaries’ financial lease liabilities and bank borrowings.

* At December 31, 2007, IBA held a total of 358,692 of its own shares through the company IBA Investments S.C.R.L., a wholly owned indirect subsidiary.

30. Commitments

31. Related party transactions


one year or less 3,936 2,610

From one to five years 9,884 7,287

over five years 6,903 5,454

ToTAl 20,723 15,351

number of shares %

Belgian Anchorage 7,773,132 30.13%

Belgian leverage 0 0.00%

Ire (Institut des radioéléments) 878,660 3.41%

Sopartec 529,925 2.05%

uCl 426,885 1.65%

IBA Investments S.C.r.l. * 358,692 1.39%

public 15,832,958 61.37%

Total 25,800,252


IBA’s dominant shareholders—Belgian Anchorage, Belgian leverage, uCl, Sopartec, and Ire—have declared that they are acting jointly and have en-tered into an agreement which expires in 2013. In late December 2007, Belgian leverage transferred all of its stock in IBA to its parent, Belgian Ancho-rage. the above shareholders’ agreement governs, inter alia, the sharing of information and preferen-tial rights to purchase IBA stock. the parties to this agreement held 9,608,602 shares of ordinary stock at December 31, 2007, representing 37.24 percent of Company’s voting rights.

under the terms of this agreement, in the event of a new IBA stock offering, if one of the dominant shareholders does not exercise its preferential subscription right, this right will pass to the other dominant shareholders, with Belgian Anchorage S.A. having first right of purchase. If a party to the shareholders’ agreement wishes to sell its shares of IBA stock, the other parties to the agreement will have a preemptive right to acquire this stock, with Belgian Anchorage S.A. having first right of purchase.

this preemptive right is subject to certain excep-tions. In particular, it does not apply in the case of a transfer of stock to Belgian Anchorage S.A.

When Schering AG’s radiopharmaceutical busi-ness was acquired in April 2006, the shareholders of radiopharma partners S.A. —IBA Group and Ire—agreed with their local Japanese partner to refinance the Japanese company, in which IBA obtained a minority interest.

the financing was to be provided by IBA on behalf of both radiopharma partners shareholders. Following the agreement with Ire, at December 31, 2006 IBA recognized an asset equal to Ire’s estimated contribution to the refinancing. Future payments to IBA from Ire are dependent on the improved profitability of the Japanese entity. Based on a discounted cash flow analysis of this Japa-nese entity performed at December 2006, the IBA Group recognized a write-off of eur 0.5 million on this asset. At December 2007, no additional valua-tion adjustment had been recorded.

In an agreement signed February 19, 2008, Ire granted IBA a call option on its entire interest in radiopharma partners (81.1 percent) and Sceti Me-dilabo KK (19.9 percent). this call option is conditio-nal on receipt of notice from IBA of compliance with French regulations applicable to CISBIo regarding the notification of employees. Should it exercise this option, IBA will pay the agreed price in a combina-tion of cash and IBA shares. Without prejudice to the rights and obligations arising under shareholder agreements, Ire has agreed to hold these shares for five years, to grant IBA a preemptive right to purchase these shares, and to continue to strive to maintain the “Belgian mooring” (ancrage belge) of IBA’s shareholders.

31.3 Directors and management31.3.1 DirectorsFixed compensation paid to members of the Board of Directors for services rendered in 2007 totaled eur 128,000. Directors did not receive variable compensation or any other payment. However, some of them were included in the 2007 stock options plan.

Managing directors were not compensated for attending meetings of the Board of Directors.

31.3.2 Managing directors and the management teamthe total amount paid by the IBA Group in com-pensation for duties exercised and services rende-red directly or indirectly by the managing directors and the members of the management team came to approximately eur 3.2 million in 2007: around eur 2.2 million for fixed compensation and around eur 1.0 million for variable compensation. Fixed compensation includes a Group contribution of eur 0.1 million to a defined contribution plan.At December 31, 2007, all of the directors together held 886,560 shares of IBA (including 878,660 shares held by Ire).

At that date, with the exception of the managing directors, the directors still held 23,400 IBA stock options issued under the 2000, 2001, 2002, 2006, and 2007 stock options plans.



At December 31, 2007, members of the mana-gement team, including the managing directors, held a total of 871,086 stock options distributed as follows:

11,500 options issued under the 2000 plan at the strike price of eur 24.90.50,000 options issued under the 2001 plan at the strike price of eur 12.60.261,065 options issued under the 2002 plan at the strike price of eur 3.34.232,000 options issued under the 2004 plan at the strike price of eur 3.72.

40,000 options issued under the 2005 plan at the strike price of eur 6.37.160,000 options issued under the 2006 plan at the strike price of eur 13.64.116,521 options issued under the 2007 plan at the strike price of eur 19.94.

32. Fees for services rendered by the statutory auditors

33. IFRs standards and IFRIC interpretations not anticipated by the group

ernst & Young réviseurs d’entreprises S.C.r.l, auditor of the statutory accounts of IBA S.A., and auditor of the consolidated accounts of IBA, provided the following services during the year:

(EUR ‘000) December 31, 2007

remuneration for statutory audits & audit of consolidated accounts 415

tax related services 4

other services 15

ToTAl 434

IFrS standards and IFrIC interpretations for which the Group has not anticipated compulsory applica-tion after 2007:

IAS 23 Borrowing costsA revised IAS 23 Borrowing costs was issued in March 2007, and becomes effective for financial years beginning on or after 1 January 2009. the standard has been revised to require capitalisa-tion of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. In ac-cordance with the transitional requirements in the Standard, the Group will adopt this as a prospec-tive change. Accordingly, borrowing costs will be capitalised on qualifying assets with a commence-ment date after 1 January 2009. no changes will

be made for borrowing costs incurred to this date that have been expensed.

IFRIC 12 Service concession arrangementsIFrIC Interpretation 12 was issued in november 2006 and becomes effective for annual periods beginning on or after 1 January 2008.this Interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in ser-vice concession arrangements. no member of the Group is an operator and hence this Interpretation will have no impact on the Group.



IFRIC 13 Customer loyalty programmesIFrIC Interpretation 13 was issued in June 2007 and becomes effective for annual periods begin-ning on or after 1 July 2008. this Interpretation requires customer loyalty award credits to be ac-counted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. the Group expects that this interpretation will have no impact on the Group’s financial statements as no such schemes currently exist.

IFRIC 14 IAS 19 - The limit on a defined Benefit asset, minimum funding requirements and their interactionIFrIC Interpretation 14 was issued in July 2007 and becomes effective for annual periods begin-ning on or after 1 January 2008. this Interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be recognized as an asset under IAS 19 employee Benefits. this Interpretation will have no impact on the financial statements as far the Group doesn’t have any defined benefit schemes at this stage.

IFRS 2 share-based payments – vesting conditions and cancellationsthis amendment to IFrS 2 Share-based payments was published in January 2008 and becomes effective for financial years beginning on or after 1 January 2009. the Standard restricts the definition of “vesting condition” to a condition that inclu-des an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. the Group has not entered into share-based payment schemes with non-ves-ting conditions attached and, therefore, does not expect significant implications on its accounting for share-based payments.

IFRS 3R Business combinations and IAS 27R consolidated and separate financial statementsthe revised standards were issued in January 2008 and become effective for financial years beginning on or after 1 July 2009. IFrS 3r intro-duces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognized, the reported results in the period that an acquisition occurs, and future repor-ted results. IAS 27r requires that a change in the ownership interest of a subsidiary is accounted for as an equity transaction. therefore, such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore, the amended stan-dard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. the changes introduced by IFrS 3r and IAS 27r must be applied prospectively and will affect future acquisitions and transactions with minority interests.

IAS 1 Revised presentation of financial statementsthe revised IAS 1 presentation of Financial State-ments was issued in September 2007 and be-comes effective for financial years beginning on or after 1 January 2009. the Standard separates owner and non-owner changes in equity. the state-ment of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, the Standard introduces the statement of comprehensive income: it represents all items of incomes and expense recognized in profit or loss, together with all other items of recognized income and expense, either in one single statement, or in two linked statements. the Group is still evaluating whether it will have one or two statements.

Amendments to IAs 32 and IAs 1 Puttable Financial Instruments Amendments to IAS 32 and IAS1 were issued in February 2008 and become effective for annual periods beginning on or after 1 January 2009. the amendment to IAS 32 requires certain putta-ble financial instruments and obligations arising on liquidation to be classified as equity if certain criteria are met. the amendment to IAS1 requires


34. Events after the balance sheet date

35. Earnings per share

on January 14, 2008, IBA took a 10-percent stake in petroBeam, Inc. of raleigh, north Carolina, by subscribing to a capital increase and warrants al-lowing it to raise its holding to around 20 percent at a future stage. the total investment is approximately uSD 6 million.

petroBeam, Inc. is a technology development company engaged in research and development of a patent pending method that uses an electron beam accelerator to process and upgrade crude oil (bitumen and heavy oil) and enhance refining ope-rations. this technology is called the petroBeam™ process.

on February 7, 2008, IBA signed a letter of intent with ArCHADe to develop a new hadron therapy system prototype in Caen, France. this new center will be built around a new type of highly sophistica-ted 400 MeV (million electron volt) supraconducting isochronic cyclotron that can accelerate carbon ions in addition to protons.

on March 13, 2008, IBA announced that it had re-ceived authorization from the British government to begin production at its new pet (positron emission tomography) radiopharmaceutical plant in Guild-ford, Surrey, u.K.

35.1 Basic earningsBasic earnings per share are calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period. the weighted average number of ordinary shares excludes shares purchased by the Company and held as treasury shares.

Basic earnings per share December 31, 2007 December 31, 2006

Weighted average number of ordinary shares 25,682,274 25,249,108

profit attributable to equity holders of the Group (eur ‘000) 13,930 30,007

Basic earnings per share from continuing and discontinued ope-rations (EUR per share)

0.54 1.19

earnings from continuing operations attributable to equity holders of the Group (eur ‘000)

13,929 31,513


Basic earnings per share from continuing operations (EUR per share)

0.54 1.25

earnings from discontinued operations attributable to equity holders of the Group (eur ‘000)

1 -1,524


Basic earnings per share from discontinued operations (EUR ‘000)

0 -0.06

disclosure of certain information relating to putta-ble instruments classified as equity. IBA does not expect these amendments to impact the financial statements of the Group.

IFRS 8 Operating segmentsIFrS 8 was issued in november 2006 and is

effective for annual periods beginning on or after January 1, 2009. the Standard requires adoption of the same approach to presenting segmental information in the notes to the financial statements as is used by management for internal reporting purposes. IBA does not expect these amendments to impact the financial statements of the Group.



35.2 Diluted earningsDiluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding for the effects of conversion of all dilutive potential ordinary shares. the Company has only one category of dilutive potential ordinary shares: stock options.

the calculation is performed for the stock options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding stock options. the number of shares calculated as above is compared with the number of shares that would have been issued assuming the exer-cise of the stock options.

Diluted earnings per share December 31, 2007 December 31, 2006


Weighted average number of stock options 1,789,081 1,731,892

Average share price over period 21.64 11.93

Dilution effect from weighted number of stock options 1,334,946 1,195,807

Weighted average number of ordinary shares for diluted earnings per share

27,017,220 26,444,915

profit attributable to equity holders of the Group (eur ‘000) 13,930 30,007

Diluted earnings per share from continuing and discontinued operations (EUR per share)

0.52 1.13

earnings (loss) from continuing operations attributable to equity holders of the Group (eur ‘000)

13,929 31,513

Diluted earnings per share from continuing operations (EUR per share)

0.52 1.19

earnings from discontinued operations attributable to equity holders of the Group (eur ‘000)

1 -1,524

Diluted earnings per share from discontinued operations (EUR ‘000)

0 -0.06


Auditor’s report on the consolidated financial statements


Bilan

IBA S.A. Annual financial statements after appropriation

Assets (EUR ‘000) 2007 2006 2005

Fixed assets 193,876 179,478 307,383

Formation expenses 0 0 0

Intangible fixed assets 801 884 1,070

Tangible fixed assets 6,368 3,457 3,157

land and buildings 879 635 625

plant, machinery and equipment 107 45 82

Furniture and vehicles 1,251 862 550

leases and similar rights 3,889 1,812 1,900

Assets under construction and advance payments 242 103 0

Financial assets 186,707 175,137 303,156

Affiliated companies 185,614 172,393 302,499

other companies 0 0 311

other financial assets 1,093 2,744 346

Current assets 276,022 182,807 135,715

Accounts receivable after one year 344 1,342 202

Inventories and contracts in progress 190,898 121,610 87,391

Inventories 10,980 11,385 15,893

Contracts in progress 179,918 110,225 71,498

Amounts receivable within one year 50,787 24,748 25,327

trade debtors 46,705 22,740 20,517

other amounts receivable 4,082 2,008 4,810

Investments 3,000 33,261 15,976

Cash at bank and in hand 29,817 669 5,882

Deferred charges and accrued income 1,176 1,177 937

ToTAl AssETs 469,898 362,285 443,098

IBA S.A. financial statements are presented in a condensed version. In accordance with company law, the full set of financial statements and the auditor’s report are filed with the national Bank of Belgium. these documents can also be obtained on request from IBA headquarters in Belgium.


Income statement (EUR ‘000) 2007 2006 2005

operating income 112,102 67,798 62,054

operating expenses (-) -112,649 -66,151 -62,055

raw materials, consumables, and goods for resale -54,104 -21,191 -19,309

Services and other goods -28,686 -22,653 -17,285

Salaries, social security, and pensions -20,309 -15,658 -15,596

Depreciation and write-offs on fixed assets -8,954 -4,822 -5,129

Increase/(decrease) in write-downs on inventories, 973 -341 -1,715

provisions for liabilities and charges 1,840 -163 -1,843

other operating expenses -3,409 -1,323 -1,178

operating Profit/(loss) -547 1,647 -1

Financial income 4,998 10,634 12,648

Income from financial assets 0 7,608 531

Income from current assets 2,353 1,224 495

other financial income 2,645 1,802 11,622

Financial expenses (-) -5,313 -9,846 -19,853

Interest expense -1,490 -3,510 -4,165

other financial charges -3,823 -6,336 -15,688

Profit/(loss) on ordinary activities before taxes -862 2,435 -7,206

Extraordinary income (+) 5,735 0 314

Gain on sale of fixed assets 5,735 0 314

Extraordinary expenses (-) -1 -3,207 -855

Amounts written off financial fixed assets 0 -199 0

other extraordinary expenses -1 -3,008 -855

Profit/(loss) for the period before taxes 4,872 -772 -7,747

Income taxes (-) (+) 0 0 -10

Profit for the period (+) 4,872 -772 -7,757

Transfer to tax free reserves (-) 0 0 0

Profit/(loss) for the period available for appropriation 4,872 -772 -7,757

liabilities and equity (EUR ‘000) 2007 2006 2005

shareholders’ equity 152,780 150,124 148,040

Capital 36,215 35,747 34,883

Additional paid-in capital 115,198 200,898 198,887

Reserves 989 745 745

legal reserve 786 542 542

untaxed reserves 203 203 203

Retained earnings 217 -87,435 -86,664

Capital grants 161 169 189

Provisions and deferred taxes 1,940 3,781 3,617

Creditors 315,178 208,380 291,441

Amounts payable after one year 142,937 71,789 241,107

Financial debts 2,126 870 1,075

Advances received on contracts in progress 88,375 19,546 59,318

other amounts payable 52,436 51,373 180,714

Amounts payable within one year 171,074 135,402 49,943

Current portion of amounts payable after one year 4,337 4,562 3,698

Financial debts 0 0 3 814

trade debts 44,933 16,238 10,279

Advances received on contracts in progress 102,229 102,674 24,892

Current tax and payroll liabilities 4,092 2,334 2,155

other amounts payable 15,483 9,594 5,105

Accrued charges and deferred income 1,167 1,189 391



Statement of capital Amount(EUR ‘000)

number of shares

Capital

1. Issued capital

At the end of the previous financial year 35,749

Changes during the financial year 466 335,184

At the end of the financial year 36,215

2. Structure of the capital

2.1. Categories of shares

• Ordinary shares without designation of face value 20,507 14,734,590

• Ordinary shares without designation of face value with VVPR strip 15,707 11,065,662

2.2. registered or bearer shares

• Registered shares 8,471,261

• Bearer shares 17,328,991

own shares held by

• The Company itself

• Its subsidiaries 503 358,692

share issue commitments

Following exercise of share options

• Number of outstanding share options 2,380,260

• Amount of capital to be issued 3,323

Maximum number of shares to be issued 2,380,260

Amount of non-issued authorized capital 23,561

IBA S.A. Financial statements after appropriation

Appropriation of results (EUR ‘000) 2007 2006 2005

loss to be appropriated (-) -82.564 -87.436 -86.664

profit for the period available for appropriation 4.872 -772 -7.757

loss carried forward (-) -87.436 -86.664 -78.907

Transfers to capital and reserves 87,436

transfer from capital and share premium account 87,436

transfer from reserves

Appropriations to capital and reserves 244

Appropriation to capital and share premium account

Appropriation to legal reserve 244

Appropriation to other reserves

Profit/(loss) to be carried forward 216 -87,436 -86,664

Profit to distribute 4,412

Dividends 4,412


General informationCorporate nameIon Beam Applications S.A., abbreviated IBA.

Registered officeChemin du Cyclotron, 3B-1348 louvain-la-neuve (Belgium).Company no. 428 750 985.

Date, form, and period of incorporation IBA was incorporated for an indefinite period on March 28, 1986 as a société anonyme under Belgian law. It is a listed corporation pursuant to article 4 of Belgium’s Code des Sociétés (Corpo-rate Code).

Corporate purpose (article 3 of the articles of incorporation) the purpose of the Company is to engage in research and development and to acquire intellec-tual property rights with a view to the exploitation, fabrication, and marketing of applications and equipment in the field of applied physics. It may engage in any and all securities, real-estate, finan-cial, commercial, and industrial operations that are directly or indirectly related to its corporate purpo-se. It may acquire an interest, by contribution, merger, purchase of shares, or any other means, in companies, partnerships, or corporations whose purpose is similar, analogous, related, or useful to the achievement of its corporate purpose in whole or in part.

Consultation of corporate documents the Company’s statutory and consolidated state-ments are filed with the national Bank of Belgium. Copies of the Company’s consolidated articles of incorporation, its annual and semi-annual reports, and all other shareholder documentation may be obtained at the Company’s website (www.iba-worldwide.com) or by shareholder request to the Company’s registered office.

Capital stock At December 31, 2007, IBA’s capital stock was valued at eur 36,214,807.18 and consisted of 25,800,252 fully paid shares with no par value, including 11,065,662 shares with VVpr strips.

In June 2000, the Company issued 427,000 stock options for Group employees (“2000 plan”). of these options, 185,778 were canceled by notarial act on July 9, 2002, and 74,074 were canceled by notarial act on July 13, 2004. Most of these stock options allow the beneficiary to purchase a new share at eur 24.90 following certain procedures during specific periods between June 1, 2001 and February 28, 2009. At December 31, 2007, 167,148 of the 2000 plan stock options remained outstanding. none of these options has been exer-cised to date.

In october 2001, the Company issued 500,000 stock options for Group employees (“2001 plan”). of these options, 121,100 were canceled by nota-rial act on July 9, 2002, and 118,375 were cance-led by notarial act on July 13, 2004. Most of these stock options allow the beneficiary to purchase a new share at eur 12.60 following certain proce-dures during specific periods between December 1, 2002 and December 31, 2010. the following options were exercised in 2007: 82,550 by notarial act of January 15, 2007; 20,050 by notarial act of April 17, 2007; 10,500 by notarial act of July 17, 2007, and 3,350 by notarial act of october 16, 2007. At December 31, 2007, 126,325 of the 2001 plan stock options remained outstanding.

In September 2002, the Company issued 3,000,000 stock options for Group employees (“2002 plan”). of these options, 167,650 were canceled by notarial act on June 17, 2003; 991,750 were canceled by notarial act on July 13, 2004, and 474,220 were canceled by notarial act on July 11, 2005. Most of these stock options allow


the beneficiary to purchase a new share at eur 3.34 following certain procedures during specific periods between December 1, 2003 and August 31, 2012. the following options were exercised in 2007: 118,180 by notarial act of January 15, 2007; 43,280 by notarial act of April 17, 2007; 56,636 by notarial act of July 17, 2007, and 640 by notarial act of october 16, 2007. At December 31, 2007, 335,291 of the 2002 plan stock options remained outstanding.

In october 2004, the Company issued 1,000,000 stock options for Group employees (“2004 plan”). of these options, 500,000 were given free of charge to employees of IBA and its Belgian subsi-diaries and Specific persons subject to the Belgian employment Action plan Act of March 26, 1999 (“free stock options”). Another 500,000 of these options were offered at 4 percent of the strike price to employees and Specific persons not subject to the Belgian employment Action plan Act of March 26, 1999 (“purchasable stock options”). this seg-ment was intended essentially for employees and Specific persons associated with subsidiaries of IBA S.A. in countries outside Belgium, where stock options are taxed when they are exercised rather than when they are granted. In order to distribute the impact of the tax burden on beneficiaries subject the Belgian employment Action plan Act, instead of giving these stock options away, the Company issued them at a price approximately equal to the marginal tax rate burden for bene-ficiaries subject to the Act. of the total offering, 496,000 free stock options were accepted, and 390,000 purchasable options were purchased. Consequently, 4,000 options were canceled by notarial act on December 22, 2004. these stock options allow the beneficiary to purchase a new share at eur 3.72 following certain procedures du-ring specific periods between December 1, 2007 and September 30, 2010. At December 31, 2007, a total of 886,000 of the 2004 plan stock options remained outstanding.

In october 2005, the Company issued 90,000 stock options for Group employees (“2005 plan”). All of the stock options were accepted. they allow the beneficiary to purchase a new share at eur 6.37 following certain procedures during specific

periods between December 1, 2008 and Septem-ber 30, 2011. none of these options has been exercised to date.

In october 2006, the Board of Directors of IBA S.A. decided to issue 575,000 stock options for Group employees (“2006 plan”). the offering was distributed in much the same way as for the 2004 plan. As recorded by notarial act on December 22, 2006, of the 332,000 free stock options, 287,500 had been accepted, and of the 243,000 purcha-sable stock options, 149,750 had been purchased. Consequently, the Board of Directors canceled 44,500 free stock options. At December 31, 2007, there were 437,250 stock options from this plan.

In october 2007, the Board of Directors of IBA S.A. decided to issue 450,000 stock options for Group employees (“2007 plan”). the offering was distributed in much the same way as for the 2004 plan. As recorded by notarial act on December 20, 2007, of the 259,000 free stock options, 219,788 had been accepted, and of the 191,000 purcha-sable stock options, 118,458 had been purchased. Consequently, the Board of Directors canceled 39,212 free stock options. At December 31, 2007, there were 338,246 stock options from this plan.

A total of 2,380,260 stock options are issued and outstanding.

All stock options may be exercised in the event of a takeover bid for IBA or of a capital increase with preferential rights.

Authorized capital the extraordinary General Meeting of May 10, 2006 authorized the Board of Directors to increase the Company’s capital through one or more stock offerings up to a maximum of eur 25,000,000. this authorization is valid for five years from the date of publication in the Moniteur Belge of the de-cision of the extraordinary General Meeting of May 10, 2006; that is, until May 29, 2011. At December 31, 2007, following the launching of the 2007 stock options plan, the authorized capital was valued at eur 23,561,092.50.


Patents and technologies IBA is careful to patent all aspects of its techno-logy for which a patent provides a commercial advantage.

In addition, the Company has maintained the se-crecy of a significant portion of its know-how that is unpatentable or for which the Company believes secrecy is more effective than publication in a pa-tent application. More fundamentally, the Company believes that the best way to protect itself from its competitors is not by patenting its inventions, but by maintaining its technological lead.

IBA also licenses patents from third parties and pays royalties on them, as in the case of the rhodotron®.

licensing and cooperation agreements IBA has licensing agreements involving various aspects of its technology. listing and explaining the nature and terms of these agreements is beyond the scope of this annual report. technologies licensed under these agreements include those involved in the cyclotron, the rhodotron®, and seve-ral components of the Company’s proton therapy installations.

sHAREs CAPITAl (In EUR )

operation Movement Total Change (∆) Total

14/11/04 exercise of 1998 Stock options plan + 1,125 24,528,843 + 4,826 34,138,937



08/10/04 exercise of 2002 Stock options plan +1,790 24,642,453 +2,491 34,604,616


17/02/06 exercise of 2002 Stock options plan +350,000 25,192,453 + 487,095 35,370,051












16/10/07 exercise of 2002 Stock options plan +640 25,800,252 +891 36,214,807

Five-year capital history

General information


Notes

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IBAContactpaul-emmanuel GoethalsDirector, Corporate Business Development & Investor relationstel. : +32 10 47 58 16e-mail : [email protected]

Version française disponible sur demande.

Ion Beam Applications, S.A.Chemin du Cyclotron, 3 1348 louvain-la-neuve, Belgiumtel. : +32 10 47 58 11 – Fax : +32 10 47 58 10rpM nivelles – VAt Be 428.750.985e-mail : [email protected] Website : www.iba-worldwide.com

published by IBA S.A., Chemin du Cyclotron, 3 1348 louvain-la-neuve, Belgium.

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It was produced in plants that comply with ISO 14001,

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