IBA Annual Report 2008

IBA Contact Paul-Emmanuel Goethals Director, Corporate Business Development & Investor Relations Tel. : +32 10 47 58 16 E-mail : paul-emmanuel.goethals@iba-group.com

Moving ahead confidently

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Ion Beam Applications, S.A. Chemin du Cyclotron, 3 1348 Louvain-la-Neuve, Belgium Tel. : +32 10 47 58 11 – Fax : +32 10 47 58 10 RPM Nivelles – VAT BE 428.750.985 E-mail : info-worldwide@iba-group.com Website : www.iba-worldwide.com

Annual Report 2008

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IBA Annual report 2008

Published by IBA S.A., Chemin du Cyclotron, 3 1348 Louvain-la-Neuve, Belgium.

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www.iba-worldwide.com

Introduction Founded in 1986 in Louvain-la-Neuve, Belgium, IBA is primarily active in the medical industry.

It develops state-of-the-art equipment and radiopharmaceuticals for cancer diagnosis and treatment. In addition, it uses the scientific expertise thus gained to provide electron beam accelerators for industrial sterilization and ionization. Listed on the panEuropean stock exchange Euronext, IBA is included in the Bel Mid Index (IBA: Reuters IBAB.BR and Bloomberg IBAB.BB).

Key facts and figures for 2008 Sales growth of 55.5 percent to EUR 332.6 million and recurring earnings of EUR 10.8 million across the Group’s four business areas: • Pharmaceuticals Integration of CISBIO and extension of the global FDG production and distribution network.

• Proton therapy Financing closed for a proton therapy center in Chicago. Proton therapy center selected by ProCure.

• Dosimetry Commercial launch of Compass®, a stateof-the-art solution for quality assurance in radiotherapy. First 12 orders received.

• Accelerators Very good year for PET and SPECT cyclotrons.

Nine Rhodotron® and Dynamitron® electron accelerators sold for industrial applications.

Table of Contents 2 4 5

8 10 12 14 27 28 29 30 31 32 33 86 91 95 105 110

Key figures Highlights of 2008 Message from the Chairman and the CEO – Objective met and moving ahead confidently!

Human resources Research and development Geographic presence Management report IFRS consolidated financial statements for the year ended December 31, 2008 – Consolidated balance sheet – Consolidated income statement – Consolidated statement of recognized income and expense – Consolidated statement of changes in the shareholders’ equity – Consolidated cash flow statement – Notes to the consolidated financial statements – Auditor’s report on the consolidated financial statements IBA S.A. annual financial statements after appropriation Corporate governance, management, and control General information The stock market and the shareholders IBA Annual report 2008 | 1

Key figures

2008 (EUR ‘000)

2007 (EUR ‘000)

2006 (EUR ‘000)

2005 (EUR ‘000)

CAGR (%)

Sales and services

332 607

213 849

170 257

136 099

34.7%

Gross margin

112 335

69 845

53 345

43 855

36.8%

REBITDA (1)

31 798

18 269

17 963

11 118

41.9%

REBIT

10 751

11 788

9 769

3 095

51.4%

3.2%

5.5%

5.7%

2.3%

(2)

REBIT/Sales and services

5 329

13 846

29 989

3 048

20.5%

Investment spending

Net profit

33 701

23 772

13 585

6 788

70.6%

Research and development expenses

27 001

17 167

10 028

9 689

40.7%

152 366

141 481

136 329

103 877

13.6%

17 806

32 028

43 996

18 297

-0.9%

Equity Net cash position Current liabilities

200 914

118 658

78 767

58 623

50.8%

Total assets

509 521

324 438

266 868

202 755

36.0%

Return on equity

3.5%

9.8%

22.0%

2.9%

Return on capital employed (ROCE)

3.5%

5.7%

5.2%

2.1%

Share price at December 31 (euro)

7.75

19.00

18.36

7.65

26 563 097

25 800 252

25 465 066

24 842 453

2.3%

0.20

0.54

1.18

0.12

17.8%

Number of shares Net earnings per share (euro per share) Price/Earnings Market capitalization

38.63

35.40

15.59

62.35

205 864

490 205

467 539

190 045

2.7% 11.1%

Book value per share (euro per share)

5.74

5.48

5.35

4.18

Dividend per share

0.08

0.17

0.00

0.00

188 058

458 177

423 543

171 748

5.9

25.1

23.6

15.4

Enterprise value EV/REBITDA

0.4%

3.1%

Employees at December 31

2 067

1 360

1 076

900

31.9%

2007 (EUR ‘000)

2006 (EUR ‘000)

2005 (EUR ‘000)

CAGR (%)

Sales trends by business unit

2008 (EUR ‘000)

Sales Pharmaceuticals Proton therapy

149 971

78 265

66 087

45 713

48.6%

86 191

59 343

32 539

27 190

46.9%

Dosimetry

37 557

35 240

31 570

28 031

10.2%

Other accelerators

58 888

41 001

40 061

35 165

18.8%

Recurring operational profit/(loss) Pharmaceuticals

2 918

3 205

247

-4 545

Equipments

7 833

8 583

9 522

7 640

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

(2) REBIT: Recurring earnings before interest and taxes.

2 | IBA Annual Report 2008

0.8%

Sales trends

R&D 2008

EUR ‘000 300 000 300000 240 000 240000

Pharmaceuticals 25%

■ Other accelerators ■ Dosimetry ■ Proton therapy ■ Pharmaceuticals

180 000 180000 120 000 120000 60 000 60000 Equipments 75%

0 0 2005

2006

2007

2008

Sales trends by geographic sector 2008

USA 40%

R.O.W. 60%

2007

USA 55%

R.O.W. 45%

2006

USA 49%

2005

USA 55%

R.O.W. 45%

R.O.W. 51%

Change in number of employees and employee distribution worldwide Change in number of employees

Employee distribution worldwide

22100 100 Rest of Europe 7%

11800 800 11500 500

Asia 7% USA 28%

Germany 7%

11200 200 900 900 600 600 France 29%

300 300

0

2005

2006

2007

2008

Belgium 22%

IBA Annual report 2008 | 3

Highlights of 2008 January 7, 2008 IBA announces the sale of several Rhodotron® to be used in the medical device sterilization market.

January 14, 2008 IBA invests in Petrobeam, Inc., a technology development

company in the oil extraction business. develop hadron therapy. in Guildford, UK.

February 7, 2008 Archade-IBA partnership formed to

March 13, 2008 IBA opens a new radiopharmaceutical production center

April 1, 2008 IBA and LEONI to build the world’s first X-ray sterilization facility.

May 29, 2008 IBA buys out IRE’s interest in CIS bio International, finalizing its acquisition of the company.

June 6, 2008 Wilex and IBA enter into a worldwide marketing, distribution, and sales

agreement on Redectane® (CA9-SCAN). June facility in Turkey. July

16, 2008 IBA and TAEK close financing of a cyclotron

30, 2008 IBA signs an agreement with Lantheus Medical Imaging for distribution

of two radiopharmaceuticals in Europe. August 13, 2008 IBA and Aposense sign a collaboration agreement under which IBA will radiolabel and distribute Aposense® [18F]-ML-10, a novel agent for molecular imaging of apoptosis, for multicenter clinical trials. September 22, 2008 IBA to supply the proton therapy system for the Proton Therapy Center of Central DuPage Hospital, Chicago. September 24, 2008 ProCure selects IBA for its third U.S. proton therapy center. September 25, 2008 IBA and Hae Dong join forces to develop the PET radiopharmaceutical market in South Korea. November 4, 2008 IBA ships its Cyclone® 30 to the Variable Energy Cyclotron Center and sees future potential for its accelerators in India in the fields of diagnosis and therapy in India.

December 1, 2008 IBA

expands its network through an agreement with Biotech Cyclotron of Texas.

December 2, 2008

IBA opens a new radiopharmaceutical production facility in Dallas, Texas. December

18, 2008 IBA

receives FDA clearance on the first commercial cyclotron-based integrated proton therapy system with Pencil Beam Scanning.

4 | IBA Annual report 2008

Messages from the Chairman and the CEO Peter Vermeeren Chairman of the Board of directors (right) Pierre Mottet Chief Executive Officer (left)

Objective met and moving ahead confidently!

In 2008, the main event of the year was unquestionably the acquisition of CISBIO, a French company specializing in a number of biomedical technologies, mostly in the radiopharmaceutical industry. This investment is in line with the Group’s new strategy of renewing its focus on cancer diagnosis and treatment. Looking at the 2008 achievements, the Company can be proud of the shift in direction it accomplished five years ago. Despite the current crisis, the Company’s future remains promising.

What was the most significant event of 2008?

In 2002, not all observers were optimistic about IBA’s future.

Unquestionably, it was our finalization of the takeover of CISBIO and its seamless integration into the Group. In 2008, our business volume grew by some 55 percent. Of course, we owe the strength of this surge to our acquisition of CISBIO, which accounts for 32 percent of our growth. Nevertheless, organic growth accounted for 23 percent. This is the biggest revenue level the Group has ever achieved.

True, we had some iffy moments back then. But the strategic choices made in 2003 paid off and have put us in a position to confront the current crisis without undue concern. Our Group is bigger now than before we restructured, and we have significantly increased our profitability in a long term prospects.

IBA Annual report 2008 | 5

Aren’t you concerned about the crisis?

No one is really safe. But healthcare affects us all intrinsically. Day-by-day progress in the fight against cancer is vital for humankind. Investments should be maintained. At worst, decisions may take a bit longer in the context of the current crisis.

In proton therapy, for instance, predictions for 2009 remain positive, and the level of investment is substantial—around EUR 50 million per system.

Furthermore, some 70 percent of our revenues are from recurring earnings in our other areas, such as pharmaceuticals. The picture is the same for electron accelerators, which had a very good year. We sold nine systems, including our first X-ray sterilization system, which will replace the cobalt systems and make these operations more environmentally friendly.

Acquisition of CISBIO refocuses the business on Europe. Is IBA returning to its Old World roots?

We have always had a strong presence in Europe, where we got our start, after all. It is true that acquiring CISBIO shifts our center of gravity towards Europe—which has the definite advantage of reducing our exposure to the dollar. That said, we are continuing to consolidate our geographic expansion. China is now well established as our headquarters for Asia. The market for dosimetry and industrial applications there shows good growth. In addition, two new proton therapy sites are scheduled to open in the United States. In Korea and Turkey, we have signed agreements that will allow us to distribute our radiopharmaceutical products without having to build expensive new production facilities.

Last year, you placed particular emphasis on the importance of research and development, for which much larger amounts were budgeted.

Have these investments paid off?

In proton therapy, our R&D program was already well established, and it produces its share of innovations regularly. We have just completed development of a new pencil-beam scanning treatment method. This leading-edge technology makes it possible to shape the radiation dose to tumor cells with unequalled precision. The 6 | IBA Annual Report 2008

first patients have already been treated. In radiopharmaceuticals, two new products are currently in clinical trial, and the first should be available in 2010 or 2011. This product is designed to help doctors diagnose renal cancers. I should also point to another innovation, Compass®, which makes radiation therapy safer by providing on-line analysis of patient dose delivery. Compass® went on the market in 2008 with excellent initial results.

Our R&D investments are still considerable—some 8 percent of our revenues.

Was the 2008 objective met?

Yes, we were targeting operating profits for 2008 as good or better than for 2007 at constant dollars. We achieved this objective, despite a substantial, instantaneous increase in overhead due to the acquisition of CISBIO. We are currently implementing an optimization program to reduce these costs. We are still in a transition period that should end in 2010. And our before-tax profits are up by more than 70 percent.

What is the outlook for IBA in the next few years?

We are cautiously optimistic. For 2009, we are projecting growth despite the difficult environment, which makes predictions more complex. We remain confident in our potential to achieve an overall profit level at least equal to 2008’s. And, in the medium term, we are confident that we can achieve an operating profit objective of 10 percent, although admittedly our attainment of this objective may be slightly postponed in the current economic climate. So our outlook remains optimistic, which is why we will be paying shareholder dividends for the second year in a row.

Messages from the Chairman and the CEO These financial results must be a strong motivating force within the Group.

Clearly, anybody would rather work for a strong company with a promising future. But in our case, we draw our motivation first and foremost from our contribution to medical progress. Nothing is more inspiring for our researchers, our engineers, and our employees as a whole than knowing that their work has a direct impact on people’s health. We are fortunate to be able to say that our business has a very concrete mission whose usefulness no one can question. It is this motivation and all of the people who are driven by it that make IBA what it is.

IBA Annual report 2008 | 7

Human resources IBA: a company of women and men with a mission to serve More than 230 new recruits in 2008 In 2008, IBA experienced a 52 percent growth in personnel. The number of fulltime equivalents (FTEs) rose from 1 360 to 2 067. While this growth is due in large measure to the absorption of CISBIO in June 2008, it also includes 232 new hires, or more than one new hire per working day.

This represents a total of more than 700 new employees who have joined IBA in its fight against cancer.

HR: Building human capital from a solid foundation IBA has set ambitious objectives for financial growth and technological development. For the company to achieve them, human resources 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. The four pillars of IBA’s human resources strategy are: Team building Operational excellence Recruiting high-level talent Fostering IBA culture

1. Team building In 2008, IBA’s human resources team reorganized to be able to deal with growth from a solid foundation. Three HR 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 8 | IBA Annual Report 2008

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 management team.

At the close of 2008, the HR team had 30 fulltime equivalents for a total of 2 067 employees, or a ratio of one HR member to every 69 employees.

The IBA Group has purposely structured the human resources organization so that it will be able to accommodate expected future growth in medicine, particularly in the fight against cancer.

2. Operational excellence Efforts in 2008 also focused on developing procedures and tools that can apply to all parts of the company, no matter where they are located.

Specifically, these include: Writing and implementing a general policy on

foreign reassignments (more than 15 new foreign reassignments) to facilitate major projects to install proton therapy centers 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.

Deploying software or web-based tools in the following areas: personal performance analysis, cascading objective-setting, management of personal development requirements, and e-recruiting.

All of these tools lay a solid foundation for a major project scheduled for completion in 2009: implementation of a Human Resources Information System (HRIS). The goal of this system is to automate and accelerate certain low valued-

added tasks, enhance data reliability, and allow our HR staff to provide better value to their internal customers.

3. Recruiting high-level talent IBA owes its leadership in its fields of operation to its employees’ ability to create constant innovation in the technologies of the future. IBA implements a number of strategies to attract and retain the best talent, including: Using salary benchmarks to ensure pay market

competitiveness Differentiating recruitment channels (e-recruitment,

specialized symposia, radio, on-campus recruitment of identified targets and in emerging markets) Establishing two career paths: a management path and a technical path, both of which provide opportunities for advancement within the Group.

values of the IBA Group Organization of interactive workshops for the entire

Group management to collaborate in devising action plans to integrate IBA culture into workaday life Implementation of programs providing rigorous training in certain key skills areas and assuring our customers of the quality of IBA services and products In 2008, IBA will increase its use of personnel development tools. It will also implement a talent management strategy and employee retention and replacement plans. IBA is convinced of the importance of its human capital and devotes nearly 2 percent of its revenues to implementing its human resources policy, so that the men and women in it can work together to ensure the future success of the Company.

With an average employee turnover of 8.4 percent across the Group (at constant scope) and the hiring of 232 new employees, including many very high-level technical specialists and scientists, IBA’s recruitment teams can be said to have achieved their mission.

4. Fostering IBA culture With about 130 percent growth in three years, IBA needs to 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 are perceived as enthusiastic and service-oriented experts. IBA’s employees appreciate its human scale, its family atmosphere, its cosmopolitan environment, and its many career opportunities.

Here are some of the ‘culture’ achievements for 2008: Deployment of a new IBA image that strengthens the feeling of belonging to a single group Redefinition of our new-employee orientation programs A special program for recently absorbed CISBIO employees to inform them of and instill in them the IBA Annual report 2008 | 9

Research and development This partnership approach is especially evident in the area of radiopharmaceuticals. Today IBA boasts the world’s largest network of radiopharmacies specializing in the production of diagnostic molecules labeled with positron-emitting radioisotopes. IBA also possesses unique knowhow in the production of radioisotopes, as well as in the labeling of radiophamaceuticals under GMP conditions. These factors make IBA the partner of choice for pharmaceutical or biotech companies that have developed new biotracers.

One of IBA’s basic principles is to market products and services that are clearly state of the art. This is particularly true in the field of cancer diagnosis and treatment.

R&D-based technological innovation is an essential component of IBA’s products. From the beginning, IBA has devoted a significant portion of its resources to improving its products and developing novel, innovative solutions. In 2008, it invested EUR 27 million, or slightly more than 8 percent of revenues, in research and development.

The principal research milestones for 2008 are described below by business area.

Distribution of R&D spending between IBA’s two main business areas in 2008

Radiopharmaceuticals Pharmaceuticals 25%

Equipments 75%

Absorption of CISBIO in 2008 brought a significant increase in R&D staff levels, from 192 employees at end-2007 to 265 at end-2008.

But alongside its internal development efforts, IBA’s research policy increasingly looks to promote collaboration with external research partners.

These research partners are either universities and other research institutions or companies with expertise useful for the development of IBA products and services.

10 | IBA Annual Report 2008

In the area of radiopharmaceuticals, there were three major developments: Short-term enrichment of the SPECT product portfolio with European approval for STAMICIS® (99mTc-sestamibi radiolabeling kit for myocardial infusions) Application for European approval of the SCINTIMUN® product (99mTc-radiolabeling kit for the diagnosis of infection/inflammation) Expansion of the PET product portfolio: application submitted for DOPACIS® (18F-fluorodopa for the diagnosis of Parkinson’s disease and neuroendocrine tumors) and development begun on 18F-choline products for the diagnosis of prostate cancers and 18F-Na for the diagnosis of bone metastases.

With respect to innovation, two agreements were signed with biotech companies: An agreement with Wilex AG for distribution rights to Redectane®, a positron-emitter-based diagnostic imaging agent in phase III trial that is designed to help doctors diagnose clear cell renal cancers prior to surgery An agreement with Aposense (formerly NST Ltd.) for the labeling and distribution of Aposense®

[18F]-ML-10, its novel agent for the molecular imaging of apoptosis

can accelerate alpha particles, which are needed to produce new therapeutic radioisotopes like Astatin 211.

Bioassays The year 2008 was especially rewarding for our R&D in the fields of in vitro diagnostics (IVD) and drug discovery. Many projects reached completion, which means new products and technologies went to market. They include: The Transcreener® ADP assay, a product resulting from the agreements with Bellbrook Labs and designed for use in the screening of kinase activity (launched in early 2008) New kits developed for G protein-coupled receptor (GPCR) screening using the new terbium cryptates resulting from our agreement with California’s Lumiphore (launched in mid-2008) The new Chromoa chromogranin A ELISA kit, which complements the existing CGA-RIACT product and can be used by any laboratory to detect and monitor neuroendocrine cancers

Proton therapy The principal research milestone for the year in our proton therapy business was the obtention of approval from the U.S. Food and Drug Administration (FDA) for the new pencil-beam scanning (PBS) treatment method. Pencilbeam scanning was developed by IBA in close collaboration with the team of the Francis H. Burr Proton Therapy Center at Massachusetts General Hospital (MGH), Boston, where the first patient was treated using this modality in December 2008. With pencil-beam scanning, the radiation dose to tumor cells can be shaped with unequalled precision.

This is a world first for a cyclotron-based therapy system.

With respect to industrial applications of particle accelerators (Rhodotron® and Dynamitron®), a Rhodotron® prototype has been shipped to be incorporated in a system for the remote detection of explosives in sea cargo containers in 2008. This project is subsidized by the U.S. Department of Homeland Security.

Dosimetry There were a number of developments in dosimetry in 2008. They include shipment of new versions of OmniPro software and of the Compass® and a number of product launches: the MLIC, a new dosimetry device for proton therapy, and innovative solutions for dosimetry of rotational radiotherapy (Thomotherapy™, RapidArc™, and VMAT®) using the MATRIXX Evolution system. In radiodiagnostic dosimetry, the PC-based, USBpowered MagicMax system is an automatic, precision instrument for simultaneously measuring dose, dose rate, dose per pulse, exposure time, noninvasively practical peak voltage, and total filtration.

Cyclotrons and electron beam accelerators In the area of particle accelerators (PET and SPECT cyclotrons), 2008 saw delivery of the new C70 cyclotron for the Arronax project in Nantes, France. This new cyclotron, designed for research and production of new radioisotopes for medical applications, has unique capabilities that place it at the leading edge of accelerator technology. It can accelerate proton beams to an energy of up to 70 MeV, or a beam power of 50 kW. In addition, it IBA Annual report 2008 | 11

Geographical presence

DG production sites (52) F Albany USA Haverhill USA Cleveland USA Gilroy USA Morgantown USA Orlando USA Richmond USA Romeoville USA Somerset USA Sterling USA Kansas City USA Los Angeles USA Dallas USA Montreal Canada Brussels Belgium Ghent Belgium Fleurus Belgium Lyon France Paris France Sarcelles France Orsay France Rennes France NĂŽmes France Nancy France Bordeaux France Milan Italy Rome Italy Udine Italy Dinnington UK Guildford UK Bad Oeynhausen Germany Madrid Spain Barcelona Spain Seville Spain Malaga Spain Delhi India Kuala Lumpur Malaysia 12 | IBA Annual Report 2008

Monrol sites Istanbul-1 Istanbul-2 Ankara Adana Izmir HaeDong sites Seoul - 1 Seoul - 2 Pyeongchon Daejun Pusan Suncheon Daegu BioTech sites Albuquerque Las Vegas Lubbock

Turkey Turkey Turkey Turkey Turkey South Korea South Korea South Korea South Korea South Korea South Korea South Korea USA USA USA

Headquarters IBA Group

Louvain-la-Neuve Belgium

ther offices (7) O IBA Particle Therapy Louvain-la-Neuve IBA Industrial Louvain-la-Neuve IBA Molecular Dulles IBA China Beijing IBA Dosimetry Schwarzenbruck IBA Molecular Saclay CISBIO Bioassays Marcoule

Belgium Belgium USA China Germany France France

ain Sales or other offices (4) M IBA Particle Therapy Jacksonville IBA Industrial Edgewood IBA Dosimetry Bartlett IBA Dosimetry Uppsala

USA USA USA Sweden IBA Annual report 2008 | 13

Management report Approved by the Board of Directors at its meeting of April 2nd, 2009

Highlights of 2008 The major event of the 2008 was beyond question the June 1st acquisition of CISBIO, a French medical diagnosis company with more than 600 employees and revenues of EUR 100 million plus, in which IBA already held a 19.9 percent interest.

In 2008, revenue growth was spread across IBA’s four business areas: Growth of more than 90 percent in pharmaceuticals, partially as a result of the absorption of CISBIO Revenue growth of 45 percent in proton therapy,

due primarily to progress on projects for contracts signed in 2006 and 2007 Eighteen PET and SPECT cyclotrons and nine electron accelerators sold—an increase of 44 percent Growth of slightly under 7 percent in dosimetry, generated to a large extent by its success in Asia and the U.S. and by the introduction of its new Compass® dosimetry solution

Overview of IBA business segments For financial reporting purposes, IBA is divided into two business segments:

The Pharmaceuticals segment encompasses radiopharmaceutical agents (production and distribution) and bioassay operations.

Radiopharmaceuticals • PET1: primarily fluorodeoxyglucose (FDG), a chemical compound used in molecular imaging for the diagnosis of many diseases (principally cancer).

• SPECT2: used in nuclear medicine for therapy and imaging.

Bioassays • A line of biomarkers used for in vitro medical diagnoses (e.g. radioimmunoassays).

• The Group’s new HTRF®3 technology also gives it a presence in the in vitro screening of new drugs for the pharmaceutical industry and biotech companies.

• More than half of these products are used in the diagnosis and treatment of cancer.

(1) Positron emission tomography (2) Single photon emission computed tomography (3) Homogeneous Time-Resolved Fluorescence

14 | IBA Annual Report 2008

The Equipments segment, which encompasses the following: Proton therapy Particle accelerators (cyclotrons, Rhodotron®, and Dynamitron®) Dosimetry Customer service operations

Business segment

2008 (EUR ‘000)

2007 change (EUR ‘000) (%)

Pharmaceuticals

149 971

78 265

91.6%

Equipments

182 636

135 584

34.7%

Consolidated revenues

332 607

213 849

55.5%

IBA’s two business segments – Pharmaceuticals and Equipments – are made up of four business areas, whose revenues and key events for 2008 are described in this management report.

Pharmaceuticals Proton therapy Cyclotrons et other accelerators Dosimetry

Total sales and services for 2008: EUR 332.6 million

Total sales and services for 2007: EUR 213.8 million

Accelerators 18%

Accelerators 19%

Pharmaceuticals 45%

Dosimetry 11%

Pharmaceuticals 37%

Dosimetry 16%

Proton therapy 26%

Proton therapy 28%

Pharmaceuticals As a result of the late May 2008 acquisition of CISBIO, which has been consolidated with the Group’s accounts since June 1, 2008, the main components of this business area are as follows: Production and distribution of PET radiopharmaceutical agents—especially FDG (fluorodeoxyglucose)—used in molecular imaging to diagnose many diseases (principally cancer)

2008 (EUR ‘000)

Sales and services

149 971

SPECT radiopharmaceuticals, used in nuclear

medicine for therapy and imaging Bioassay operations

The following table presents the summary income statement for Pharmaceuticals:

2007 change change (EUR ‘000) (EUR ‘000) (%) 78 265

71 706

91.6%

REBITDA

% of sales

REBIT

% of sales

20 379 13.6%

8 650

11 729

135.6%

11.1%

2 918

3 205

1.9%

4.1%

-287

-9.0%

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.

IBA Annual report 2008 | 15

PET and SPECT radiopharmaceuticals IBA is active in the production and distribution of PET and SPECT radiopharmaceutical agents.

In 2008, IBA was mainly active in the production and distribution of FDG (fluorodeoxyglucose, a radioactive sugar), which is used in molecular imaging. This imaging technology is utilized to analyze cell metabolism for the diagnosis and monitoring of diseases (primarily cancer). PET is the most advanced technology in nuclear medicine.

PET radiopharmaceuticals (primarily FDG) are produced in numerous cyclotron-equipped production plants. Owing to the nature of the product—PET radiopharmaceuticals have a short half-life—production location must be within a short radius of where the radiopharmaceuticals will be used, i.e. the hospital or medical imaging facility.

In 2008, IBA continued to expand its global FDG production and distribution network. At the close of the year, it had 47 FDG production facilities—17 in North America, 21 in Europe, and 9 in Asia—or 12 more production facilities than at the end of 2007. Of these, IBA has no financial interest in 10, which are part of the global radiopharmaceutical distribution network under various cooperation agreements. The agreement signed in September 2008 with Hae Dong Co. Ltd. for distribution in Korea and the agreement signed in December 2008 with Biotech Cyclotron of Texas for the western United States reflect this strategy of cooperation.

The year 2008 also saw the signature of the first agreements aimed at positioning IBA in the arena of patented radiopharmaceutical tracers. An agreement was signed with Wilex AG to acquire the distribution rights for Redectane®, a product designed to help doctors diagnose clear cell renal cancers prior to surgery. A second agreement was signed with Aposense (formerly NST Ltd.) for the labeling and distribution of Aposense® [18F]-ML-10, its novel agent for the molecular imaging of apoptosis. Subject to the finalization of a distribution agreement to be negotiated in (1) Homogeneous time-resolved fluorescence

16 | IBA Annual Report 2008

the context of a right of first refusal, these new radiopharmaceutical agents will be distributed through IBA’s network of PET facilities.

With its acquisition of CISBIO, IBA entered the business of SPECT radiopharmaceutical production, which is done mainly at IBA’s plant in Saclay, near Paris, France. In late summer 2008, the shutdown of three European reactors needed for the production of SPECT radioisotopes caused a market shortage. The impact on IBA was real, but smaller than had been feared. IBA managed to keep patients from being affected by the shortage by distributing the reduced quantity of available product among its customers and replacing technetium, which had become scarce, with alternative products.

Bioassays As a result of its acquisition of CISBIO, IBA operates a bioassays unit, renamed CISBIO Bioassays. Located in Marcoule, in southern France, CISBIO Bioassays markets a line of biomarkers for in vitro medical diagnosis such as radioimmunoassays, as well as a line of products based on its HTRF®1 technology that are used for the in vitro screening of new drugs for the pharmaceutical industry and biotech companies.

More than half of these products are used in the diagnosis and treatment of cancer. Many enjoy significant commercial and R&D synergies with IBA operations.

Management report

Equipments industrial accelerators. Equipments segment earnings for 2008 totaled EUR 182.6 million, compared with EUR 135.6 million in 2007. This increase of 34.7 percent was due to strong growth in proton therapy and accelerators. The following table provides a breakdown of Equipments sales and service figures by business area, as well as the segment’s overall contribution to income:

This business segment encompasses proton therapy, particle accelerators (cyclotrons, Rhodotron®, and Dynamitron®), dosimetry, and customer service.

In 2008, IBA was selected to equip a proton therapy center in Michigan. It also logged 18 cyclotron orders, as well as 9 orders for

2008 (EUR ‘000)

Sales and services

2007 change change (EUR ‘000) (EUR ‘000) (%)

182 636

135 584

47 052

34.7%

- Proton therapy

86 191

59 343

26 848

45.2%

- Dosimetry

37 557

35 240

2 317

6.6%

- Other accelerators

58 888

41 001

17 887

43.6%

REBITDA

% of sales

REBIT

% of sales

11 419

9 619

1 800

7.1%

7 833

8 583

4.3%

6.3%

18.7%

6.3%

-750

-8.7%

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 therapy Proton therapy is increasingly considered the best radiation therapy for cancer because it provides excellent dose distribution. Protons focus their greatest effective energy on a precisely controlled area at the exact center of the tumor and are gentler on the surrounding healthy tissue. Higher doses of radiation can be delivered to the tumor without increasing the risks of side effects or long-term complications, thereby improving both the outcome and the patient’s quality of life. Unfortunately, at the present time, there are few patients in the world for whom this type of treatment is accessible.

In 2008, despite the difficult financial climate, Procure Treatment Center Inc. obtained funding for the Proton Therapy Center of Central DuPage Hospital in Chicago. This same customer also selected IBA to equip the Proton Therapy Center at William Beaumont Hospital in Royal Oak, Michigan.

Revenues continue to show strong growth (up 45.2 percent), fueled by progress on current projects under contracts signed in 2006 and 2007.

IBA has continued to invest in research and development in proton therapy, which translated to a sharp increase R&D spending in 2008. These investments have produced results. For example, in mid-December, IBA obtained approval from the U.S. Food and Drug Administration for its pencilbeam scanning (PBS) treatment method. Pencilbeam scanning was developed by IBA in close collaboration with the team of the Francis H. Burr Proton Therapy Center at Massachusetts General Hospital, Boston, where the first patient was treated using this modality in December 2008. With pencilbeam scanning, the radiation dose to tumor cells can be shaped with unequalled precision. This is a world first for a cyclotron-based therapy system.

IBA is also working on a hadron (carbon-ion) therapy system. A first prototype is in development.

Currently, IBA is building and installing seven proton therapy centers simultaneously, five of which are on-site installations (three in the United States and two in Europe)—a world first. All projects are on IBA Annual report 2008 | 17

schedule. What is more, six IBA-built proton therapy centers are already treating patients in the United States and Asia daily. The proton therapy facility at the University of Florida Proton Therapy Institute, which celebrated its second year of operation in 2008, now treats around 110 patients a day, which is a major success.

IBA sales and services in proton therapy totaled EUR 86.2 million in 2008, compared with EUR 59.3 million in 2007, an increase of 45.2 percent.

Cyclotrons and electron accelerators This area encompasses cyclotrons used in the production of PET or SPECT radioisotopes and electron beam particle accelerators intended primarily for industrial use, like the Rhodotron® and Dynamitron®. It does not include cyclotrons for proton therapy.

In 2008, IBA sold 18 PET and SPECT cyclotrons, compared with 19 cyclotrons in 2007 and 7 in 2006.

IBA also began installation of 2 Cyclone® 30, SPECT cyclotrons previously sold to the Turkish Atomic Energy Authority (TAEK) and India’s Department of Atomic Energy. In late 2008, IBA sold a new version of the Cyclone® 30 to the Institute of Neurosciences and Medicine (specifically, INM-5, Nuclear Chemistry), a department of Germany’s Forschungszentrum Jülich research center. This cyclotron will be capable of accelerating protons (to 30 MeV ), deuterons (to 15 MeV), and alpha particles (to 30 MeV).

In the field of electron beam accelerators (Rhodotron® and Dynamitron® e-beam/X-ray industrial accelerators), 2008 was a record year, with the sale of nine electron accelerators for industrial applications, including the first X-ray sterilization system using the Rhodotron® TT-1000, which was sold to the LEONI Group in Switzerland.

Another Rhodotron® was sold to 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 ownership to around 20 percent at a later stage.

Sales and service revenues for the Company’s 18 | IBA Annual Report 2008

cyclotron and electron accelerator business totaled EUR 58.9 million in 2008, compared with EUR 41.0 million in 2007, or an increase of 43.6 percent.

Dosimetry Dosimetry encompasses services and equipment to control radiation dosage in medical settings.

IBA’s specialized dosimetry products are essential tools for quality assurance in radiation therapy (therapeutic dosimetry) and medical imaging (diagnostic dosimetry).

In diagnostic dosimetry, for the fourth year in a row, IBA Dosimetry was named Siemens Supplier of the Year.

In therapeutic dosimetry, the year was marked by the introduction of the new Compass® dosimetry solution developed in cooperation with RaySearch Laboratories, for which IBA logged 12 orders in 2008.

Dosimetry met with great success in Asia and the United States in 2008 as well. IBA also launched sales of the first dosimetry system for use in proton therapy.

The Company’s 2008 figure for dosimetry sales and services was EUR 37.5 million, compared with EUR 35.2 million in 2007, or an increase of 6.6 percent.

Management report

Consolidated annual financial statements Income statement Consolidated sales and services for 2008 were up 55.5 percent, or EUR 118.8, million in comparison with 2007, from EUR 213.8 million to EUR 332.6 million. This increase was the result of growth in all business areas, but particularly the Pharmaceuticals segment, owing to the inclusion of CIS Bio International S.A.S. in the scope of consolidation.

Consolidated gross margin for 2008 totaled EUR 112.3 million compared with EUR 69.8 million for the previous period, or an increase of 60.8 percent. As a percentage of consolidated sales and services, they stood at 33.8 percent versus 32.7 percent in 2007. This increase was essentially due to the improvement of margin in the Pharmaceuticals segment.

Atomique, Atomic Energy Commission) to help CIS Bio International S.A.S. meet its obligations in connection with the decommissioning of certain Saclay facilities after 2017. It also includes various amortizations of tangible and intangible assets.

IBA posted a financial loss of EUR 2.6 million in 2008 due to the combined effect of treasury investment products, charges for the discounting of long-term provisions, interest expenses for financial liabilities, and the revaluation of financial instruments. In particular, the Company had invested a small portion of its liquidities in investment instruments that, because of the financial crisis, it was forced to revalue to their assumed market value. At year-end, after recording a financial loss of EUR 2.2 million and reducing the value of these investments to EUR 0.7 million, it reclassified them as long-term assets.

Overall, recurring costs rose 75 percent from 2007 to 2008, with a big increase in sales and marketing expenses (43.9 percent), general and administrative expenses (123.5 percent), and research and development expenses (57.3 percent). This growth reflects the Group’s investment strategy in these areas, particularly in proton therapy, as well as a change in the scope of consolidation due to the absorption of CIS Bio International S.A.S.

Tax figures for 2008 show a tax expense of EUR 6.8 million, compared with a tax income of EUR 7 million in 2007. Recognition of significant deferred tax assets made 2007 an atypical year.

Taking these deferred taxes into account, 2008 tax expense basically represents the normal use of assets previously set aside and has only very minimal impact on the Company’s cash balance.

The Group showed net recurring earnings of EUR 10.8 million in 2008 versus EUR 11.8 million a year earlier, or a decrease of 8.8 percent. At constant EUR/USD exchange rates, this decrease would have been 1.6 percent.

Entities accounted for by the equity method contributed a loss of EUR 2.4 million in 2008. This charge was due primarily to the results of CIS Bio International S.A.S. for the first 5 months of 2008, which were particularly affected by the provision for restructuring which it recorded in February 2008.

Other operating profits for 2008 stood at EUR 6.4 million. This figure primarily reflects the impact of the acquisition of CIS Bio International S.A.S.: specifically, a contribution of EUR 14 million from France’s CEA (Commissariat à l’Energie

Net profit of EUR 5.3 million in 2008 compared with a net profit of EUR 13.9 million in 2007.

IBA Annual report 2008 | 19

Consolidated balance sheet and financial structure

receivables do not qualify for derecognition under IAS 39.

The Group’s consolidated balance sheet and financial structure have been heavily affected by the inclusion of CIS Bio International S.A.S. in its scope of consolidation.

The Group’s net cash position went from EUR 32 million at December 31, 2007 to EUR 17.8 million at December 31, 2008.

Non-current assets increased significantly in fiscal 2008, from EUR 151.3 million at December 31, 2007 to EUR 250.4 million at December 31, 2008. The total difference of EUR 99.1 million is attributable primarily to the following changes: EUR 18.9 million increase in fixed assets due primarily to absorption of CIS Bio International S.A.S., investments in the Pharmaceuticals segment (in the United States, Italy, France, England, and Belgium), and investments at the Louvain-La-Neuve facility.

EUR 33.1 million increase in intangible assets due primarily to the absorption of CIS Bio International S.A.S. (EUR 29.2 million) but also to investments in patents and licenses for the distribution of radiopharmaceutical agents.

EUR 46.5 million increase in other long-term assets due primarily to reserved assets set aside for the future decommissioning and restoration of Group facilities (EUR 29.9 million) and to an increase in down payments collected on proton therapy contracts for which the related receivables do not qualify for derecognition under IAS 39 (EUR 13.6 million).

EUR 0.6 million for changes in goodwill, deferred tax assets, companies accounted for by the equity method, and other investment ownership.

Non-current liabilities rose from EUR 64.3 million at December 31, 2007 to EUR 156.2 million at December 31, 2008. The total difference of EUR 91.9 million was due primarily to the following changes: EUR 6.0 million decrease in long-term liabilities due primarily to their reclassification to short-term liabilities.

EUR 86.1 million increase in provisions due primarily to the inclusion of CIS Bio International S.A.S. in the scope of consolidation.

EUR 11.8 increase in other long-term liabilities due primarily to the recording of down payments on proton therapy contracts for which the related 20 | IBA Annual Report 2008

IBA S.A.’s statutory accounts and appropriation of net profit/(loss) Ion Beam Applications S.A. posted sales and services of EUR 183.4 million in 2008, compared with EUR 112.1 million in 2007, or an increase of 63.6 percent. This growth is primarily the result of the continuing recognition of income from sales of proton therapy systems in 2006 and 2007 and the booking of an additional sale in 2008. It is also due to good cyclotron sales performance in nuclear medicine, where 18 machines were sold in 2008.

Operating results show a loss of EUR 1.7 million in 2008 compared with a loss of EUR 0.5 million in 2007. These 2008 operating results were affected by work subcontracted to IBA Radioisotopes S.A. in the context of new molecules development.

Net profit stood at EUR 6.8 million in 2008, compared with a net profit of EUR 4.9 million in 2007. The 2008 figure is explained principally by positive financial results, strongly impacted by dividends from IBA’s Swedish subsidiary.

The Board of Directors will ask the shareholders to declare a dividend of EUR 0.08 per share at the Ordinary General Meeting of May 13, 2009.

Research and development In 2008, research and development expenses for the Group totaled EUR 27 million, compared with EUR 17.2 million in 2007. This appreciable investment has allowed IBA to maintain its world leadership in all of the markets in which it is active.

Acquisitions and divestments in 2008 On May 19, 2008, IBA exercised its call option for 80.1 percent of Radiopharma Partners S.A. (which had an 80.1 percent ownership interest in CIS Bio International S.A.S.) and 19.9 percent of Sceti Medical Labo KK. The Group’s acquisition of CIS Bio International

Management report

S.A.S. has considerably expanded its product offering, particularly in conventional nuclear medicine and in vitro testing and screening. Many of these products enjoy significant commercial and R&D synergies with Group operations.

Capital increase and granting of subscription rights In the course of the year, the Board of Directors exercised its right to increase the capital with waiver of the preemptive rights of existing shareholders in the context of the authorized capital.

In its decision of June 23, 2008, the Board of Directors increased the capital by EUR 764 447, from EUR 36 460 651.13 (thirty-six million four hundred sixty thousand six hundred fifty-one euros and thirteen cents) to EUR 37 225 098.13 (thirty seven million two hundred twenty-five thousand ninety-eight euros and thirteen cents) by creating 544 611 (five hundred forty-four thousand six hundred eleven) new shares with VVPR strips.

This stock was offered for subscription to the Institut National des Radioéléments (IRE). This subscription, which strengthens the Group’s stable shareholders, was made in the context of agreements related to the purchase of the 80.1 percent interest in Radiopharma Partners held by IRE. In its decision of September 25, 2008, the Board of Directors decided to grant a maximum of 350 000 (three hundred fifty thousand) subscription rights, hereinafter “warrants,” and as a condition precedent to the exercise of 200 000 (two hundred thousand) free warrants maximum and as a double condition precedent to the subscription of 150 000 (one hundred fifty thousand) saleable warrants maximum and subsequent exercise of 150 000 (one hundred fifty thousand) saleable warrants maximum, to increase the capital up to a maximum amount of EUR 491 295 (four hundred ninety-one thousand two hundred ninety-five euros), in order to create a maximum of 350 000 (three hundred fifty thousand) new shares in the Company with VVPR strips. In an official document of December 18, 2008, it was recorded that, of the 200 000 (two hundred thousand) free warrants, 77 283

(seventy-seven thousand two hundred eighty-three) had been accepted, and that of the 150 000 (one hundred fifty thousand) saleable warrants offered for subscription, 38 187 (thirty-eight thousand one hundred eighty-seven) saleable warrants had been subscribed for the price of EUR 0.60 (sixty cents) per warrant, as a consequence of which it was recorded that 122 717 (one hundred twenty-two thousand seven hundred seventeen) free warrants offered by the Board of Directors on September 25, 2008 had been cancelled. This warrant grant was made in the context of the launching the Group’s 2008 employee stock option plan.

The strike price of one option is EUR 14.18.

Corporate structure and governance The following is drawn from the “Corporate Governance, Management, and Control” section of this annual report.

At its meeting of March 4, 2008, the Board of Directors was to rule on the report of the Compensation Committee. This situation gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest.

This conflict involved the managing directors as the heads of management services companies providing services to IBA. After deliberation, the Board unanimously adopted the recommendations made by the Compensation Committee in its report to the Board regarding both the strategic objectives assigned to these management services companies for 2008 and the determination of variable pay for 2007.

Approval of the launch of a stock option plan by the Board of Directors at its August 27, 2008 meeting also gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. This conflict of interest affected all of the directors except Nicole Destexhe, Peter Vermeeren, and Jean-Jacques Verdickt (J.J. Verdickt SPRL). The conflict of interest was recorded as follows: “The members approved the principle of launching this plan, as well as the terms of the special report to the Board. All of the members of the Board were eligible for inclusion in IBA Annual report 2008 | 21

this plan. However, Nicole Destexhe, the Chairman, 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 of Company Law. They would not participate further in the discussion.

After discussion, Nicole Destexhe, the Chairman, and Jean-Jacques Verdickt unanimously approved the launch of a stock option plan involving 350 000 options and, consequently, approved the terms of the Board’s draft special report prepared in compliance with articles 583, 596, and 598 of the Code of Company Law, subject to any changes required by Belgium’s Banking, Finance, and Insurance Commission (CBFA).”

Lastly, at its meeting of December 16 and 17, 2008, the Board of Directors was to rule on bringing the compensation of the Chairman of the Board and the Chairman of the Audit Committee in line with market levels. This situation gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. The

proposed increase was based on a study by Price Waterhouse Coopers indicating that compensation was not in keeping with market levels. This conflict of interest involved the Chairman of the Board and the Chairman of the Audit Committee. This conflict of interest was reported as follows: “Because discussion of the proposal to increase the compensation of the Chairman of the Board of Directors and the Chairman of the Audit Committee placed these directors in a conflict-ofinterest situation under article 523 of the Belgian Code of Company Law, they left the room and did not participate in the discussion. After deliberation, the Board unanimously approved doubling the compensation of the Chairman of the Board and increasing by 50 percent that of the Chairman of the Audit Committee, who would no longer receive stock options.” On returning to the boardroom, the Chairman of the Board of Directors and the Chairman of the Audit Committee asked that implementation of this decision be put on hold until the financial climate improved.

Share ownership and stock options

number of shares

%

Belgian Anchorage

7 773 132

29.26%

IRE (Institut des Radioéléments)

1 423 271

5.36%

Sopartec

529 925

1.99%

UCL (Université Catholique de LLN)

426 885

1.61%

IBA Investments S.C.R.L. (*)

433 692

1.63%

Public

15 976 192

60.14%

Total

26 563 097

100.00%

(*) At December 31, 2008, IBA held a total of 433 692 of its own shares through the company IBA Investments SCRL, a wholly owned indirect subsidiary.

22 | IBA Annual Report 2008

Management report

Principal risks and uncertainties In addition to the risks to which all industrial companies are exposed, IBA is subject to significant risks specific to its operations. These risk factors are described in the following list, which does not claim to be exhaustive.

Regulatory approval A number of IBA products and items of equipment are subject to regulatory approval as medical equipment or pharmaceutical products. Such approval must be obtained in every country in which IBA wishes to sell these products or equipment. For example, for its proton therapy equipment, IBA had regulatory approval for the United States (Food and Drug Administration), the European Union (European Commission), China (State Drug Administration), and South Korea as of December 31, 2008. And in dosimetry, between late 2007 and early 2008, IBA obtained approval for its Compass® product in the United States and the European Union. There is always a risk that the authorizing authorities may withdraw these approvals. Furthermore, when technological innovations occur, additional approvals are required. Thus, in 2008 IBA obtained FDA approval for its pencil-beam scanning treatment method (a form of proton therapy). Similarly, radioisotope production and distribution is subject to many regulations with which the Company must comply at all times in order to continue to market its products.

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 slightest 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. The Company cannot guarantee that its insurance coverage will always be sufficient to protect it from such risks or that it will always be possible to obtain coverage for such risks.

Foreign exchange risks The Company is exposed to foreign exchange risks when it signs certain contracts in foreign currencies 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 objectives and policy, as well as its policies on price risk, liquidity risk, and cash flow risk, are described in greater detail in the notes to its consolidated financial statements.

Asset depreciation risks Technological risks The Company continues to invest heavily in research and development. One cannot overlook the probability that one of its prototypes may not be commercially viable or may become obsolete in development because of competing technological developments.

Healthcare reimbursement Reimbursement by health care reimbursing institutions of charges for PET scans or SPECT scans or for the treatment of certain diseases involving direct or indirect use of IBA equipment is subject to review. These institutions’ healthcare reimbursement polices impact the number of orders that IBA may potentially obtain. The reimbursement policies of

The Company acquires ownership in companies in complementary business sectors. In most cases, these are recently established companies in innovative sectors. IBA cannot guarantee that all of these investments will be profitable in the future or that some projects will not be halted, pure and simple. In some cases, IBA also uses its surplus cash position to invest in very liquid, highly rated (AAA) financial instruments. However, it cannot foresee sudden changes in the ratings of these products or market changes that may impair liquidity.

Decommissioning risks CISBIO recently obtained INB (Basic Nuclear Facility) designation in France. As an INB-designated facility, it is required to set aside resources for the restoration IBA Annual report 2008 | 23

of the operating site where its activities are located at the expiration of a period ending in either 2022 or 2078, as applicable. The required funds have been reserved, based on outside studies and French legal requirements, but the Company cannot be certain that supplemental provisions will not have to be made or additional funds reserved as a result of factors including but not limited to financial market performance or possible changes in the law or restoration technologies.

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 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 accounting 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 protected by patent. The Company holds patents, but it cannot guarantee that these patents are broad enough to protect the Company’s intellectual property rights and to keep its competitors from gaining 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.

24 | IBA Annual Report 2008

Competition and risks of rapid product obsolescence At 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 obsolete. However, developing and marketing a new technology takes a relatively long time.

Penalties and warranties Some contracts may contain warranties or penalties.

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-private 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 In early February 2009, IBA and Eczacibasi-Monrol Nuclear Products AS joined forces to develop the market for PET and SPECT radiopharmaceuticals in the Balkans, the Middle East, North African, and Central and Eastern Europe. This means that IBA’s PET radiopharmaceuticals production and distribution network now links 52 facilities around the world.

In the dispute between IBA and the Swedish National Tax Board, the Swedish administrative court of appeal handed down its decision on March 23, 2009. The court ruled against the Tax Board and in favor of IBA. With the assistance of its tax advisors, IBA is currently weighing the probability that the Tax Board will file a final appeal. Pending completion of its analysis, IBA still considers the risk of losing on appeal to be high and is maintaining the provision of SEK 12.9 million (EUR 1.2 million) presented at December 31, 2008.

Molecular imaging will gain broader use, resulting

in more accurate diagnoses and treatments that are better tailored to the patient.

IBA continues to see itself as present on several growing markets in the coming years.

IBA is the world leader in these niche markets.

Given the Company’s good performance and good cash position, the Board of Directors has decided to ask the shareholders to approve a dividend of EUR 0.08 per share at the Ordinary General Meeting of May 13, 2009. Despite recurring profits on a par with 2007, it believes that it would be prudent to declare a smaller dividend than the EUR 0.17 per share paid in 2008, in view of the uncertainty of the general economic environment.

General outlook for 2009 In view of the current difficult economic climate, management took steps in mid-2008 to control spending, commitments, and investment. Today, the Company is pleased that a growing portion of its operations are either recurring, in a defensive industry (healthcare), or both. In 2008, recurring operations represented 62 percent of the Group total (67 percent with CISBIO over 12 months).

We will be able to take 2009 in stride. However, our growth may be affected by the financial crisis, particularly in the area of proton therapy equipment, where sales are often contingent on the customer’s ability to obtain financing. The Group believes it can maintain its overall profit level in 2009 and remains confident that it will be able to achieve its medium-range objective of increasing operating profits by 10 percent, even if attainment may be slightly postponed.

IBA’s long-term strategy is based on the following: The World Health Organization believes that the number of new cancer cases will continue to climb steeply over the next 20 years.

Radiation therapy will continue to be one of the principal means of treatment.

IBA Annual report 2008 | 25

26 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008 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 incorporated and domiciled in Belgium. The address of its registered office is Chemin du Cyclotron, 3; B-1348 Louvain-la-Neuve, Belgium.

Publication of half-yearly and annual consolidated

financial statements prepared in accordance with IFRS Audit of its annual consolidated financial

The Company is listed on the pan-European stock exchange Euronext and is included in the Bel Mid Index.

statements by its auditors in accordance with the auditing standards set forth by the International Federation of Accountants (“IFAC”)

Consequently, IBA has agreed to follow certain rules to enhance the quality of financial information provided to the market. These include:

These consolidated financial statements were approved for release by the Board of Directors on April 2, 2009.

Publication of its annual report, including its

audited annual consolidated financial statements, within four months from the end of the financial year 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

IBA Annual report 2008 | 27

Consolidated balance sheet at December 31, 2008 The Group has chosen to present its balance sheet on a current/non-current basis.

The notes on pages 34 to 85 are an integral part of these consolidated financial statements.

Notes

December 31, 2008 (EUR ‘000)

December 31, 2007 (EUR ‘000)

ASSETS Goodwill

7

28 762

26 538

Other intangible assets

7

37 768

4 619

Property, plant, and equipment

8

78 693

59 792

Investments accounted for using the equity method

10

3 643

6 038

Other investments

10

2 420

2 343

Deferred tax assets

11

33 986

33 312

Other long-term assets

12

65 111

18 641

250 383

151 283

Non-current assets

Inventories and contracts in progress

13

85 759

40 899

Trade receivables

14

74 820

44 243

Other receivables

14

42 341

27 943

Short-term financial assets

21

2 275

1 860

Cash and cash equivalents

15

53 943

58 210

259 138

173 155

Current assets

TOTAL ASSETS

509 521

324 438

EQUITY AND LIABILITIES Capital stock

16

37 285

36 215

Capital surplus

16

124 358

115 199 -6 746

Treasury shares

16

-7 563

Reserves

17

9 220

8 397

Currency translation difference

17

-17 064

-12 309

Retained earnings

17

Capital and reserves

5 446

70

151 682

140 826

Minority interests

684

655

EQUITY

152 366

141 481

Long-term borrowings

18

11 885

Deferred tax liabilities

11

470

369

Provisions

19

98 371

12 313

Other long-term liabilities

20

Non-current liabilities

17 854

45 515

33 763

156 241

64 299

Short-term liabilities

18

24 252

Other short-term liabilities

21

2 498

0

Trade payables

22

71 518

51 191

Current income tax liabilities Other payables

23

Current liabilities

8 328

1 942

1 115

100 704

58 024

200 914

118 658

TOTAL LIABILITIES

357 155

182 957

TOTAL EQUITY AND LIABILITIES 28 | IBA Annual Report 2008

509 521

324 438

IFRS consolidated financial statements for the year ended December 31, 2008

Consolidated income statement for the year ended December 31, 2008 The Group has chosen to present its income statement using the “function of expenses” method.

Notes

December 31, 2008 (EUR ‘000)

December 31, 2007 (EUR ‘000)

Sales and services

332 607

213 849

Cost of sales and services

220 272

144 004

Gross profit

112 335

69 845

Selling and marketing expenses

30 368

21 105

General and administrative expenses

44 215

19 785

Research and development expenses

27 001

17 167

Other operating expenses

24

18 871

8 714

Other operating (income)

24

-25 230

-3 966

Financial expenses

25

13 584

4 353

Financial (income)

25

-10 947

-3 897

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

10

Profit/(loss) before taxes

2 363

-278

12 110

6 862

Tax (income)/expenses

26

6 781

-6 983

Profit for the period from continuing operations

5 329

13 845

Profit/(loss) for the period from discontinued operations

6

0

1

Profit for the year

5 329

13 846

Attributable to: Equity holders of the parent

5 300

Minority interests

29

13 930 -84

5 329

13 846

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

35

0.20

0.54

- Diluted

35

0.20

0.52

Earnings per share from continuing operations (EUR per share) - Basic

35

0.20

0.54

- Diluted

35

0.20

0.52

Earnings per share from discontinued operations (EUR per share) - Basic

35

0.00

-0.06

- Diluted

35

0.00

-0.06

IBA Annual report 2008 | 29

Consolidated statement of recognized income and expense for the year ended December 31, 2008

December 31, 2008 (EUR ‘000)

Changes in available-for-sale financial asset reserves Changes in cash flow hedge reserves Changes in post-employment benefit reserves

December 31, 2007 (EUR ‘000)

65

-194

-1 113

1 580

-323

0

2 052

2 266

142

0

Changes in currency translation difference

-3 942

-7 913

Permanent financing-related changes

-1 914

-474

1 101

0

Changes in share-based payment reserves Other changes in reserves

Income tax-related changes

Net result from continuing operations recognized directly in reserves

-3 955

-4 735

Net income/(expense) from discontinued operations recognized directly in reserves Profit/(loss) for the period

0

0

5 300

13 930

Total recognized income /(expense)

1 345

9 195

Attributable to: Group

1 316

9 279

29

-84

Minority interests

30 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

Consolidated statement of changes in shareholders’ equity (EUR ‘000)

Balance at January 1, 2007

Attributable to equity holders of the Company Capital stock

Capital surplus

Treasury shares

Hedging reserves

Other reserves

Currency translation difference

Retained earnings

35 747

200 899

-256

222

4 523

-3 922

-101 384

Cash flow hedges, net of tax

Total equity

500

136 329

1 580

1 580

Other movements

89

Currency translation difference Net income/(expenses) recognized directly in equity

1 580

-194

-8 387

-194

-8 387

Profit/(loss) for the period Total result for the period

1 580

Purchase of treasury shares

-194

-8 387

239

89

239

-6 673

13 930

-84

13 846

14 019

155

7 173 -6 490

2 266 468

Other movements

328 -8 581

-6 490

Employee stock options Increase/(reduction) of capital stock/capital surplus

Minority interests

2 266

1 735

2 203

-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

Balance at January 01, 2008

36 215

115 199

-6 746

1 802

6 595

-12 309

70

655

141 481

Cash flow hedges, net of tax

-1 113

Changes in postemployment reserves

-1 113 -323

Other movements

-323

207

Currency translation difference

4 488 -4 755

Net income/(expenses) recognized directly in equity

-1 113

-116

-4 755

Profit/(loss) for the period Total result for the period

-1 113

Purchase of treasury shares

-116

-4 755

-4 755 4 488

-1 496

5 300

29

5 329

9 788

29

3 833

-817

-817

Dividends

-4 412

Employee stock options Increase/(reduction) of capital stock/capital surplus

- 4 695

-4 412

2 052 1 070

2 052

9 159

10 229

Other movements Balance at December 31, 2008

0 37 285

124 358

-7 563

689

8 531

-17 064

5 446

684

152 366

IBA Annual report 2008 | 31

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

Notes

CASH FLOW FROM OPERATING ACTIVITIES Net profit/(loss) for the period

December 31, 2008 (EUR ‘000)

December 31, 2007 (EUR ‘000)

5 300

13 930

Adjustments for: Depreciation and impairment of property, plant, and equipment 8 12 586 Amortization and impairment of intangible assets 7 3 404 Write-off on receivables 14 1 122 Changes in fair value of financial assets (gains)/losses 3 897 Change in provisions 19 2 148 Taxes 26 6 781 Share of result of associates and joint ventures accounted for using the equity method 10 2 363 Other non-cash items 28 2 927 Net profit/(loss) before changes in working capital 40 528

Trade receivables, other receivables, and deferrals -6 394 Inventories and contracts in progress -28 414 Trade payables, other payables, and accruals 8 515 Changes in working capital -26 293

Income tax paid/received, net -1 647 Interest paid 1 944 Interest received -2 616 Net cash (used in)/generated from operations 11 916

CASH FLOW FROM INVESTING ACTIVITIES Acquisitions of property, plant, and equipment -18 672 Acquisitions of intangible assets -6 043 Disposals of fixed assets 2 866 Acquisitions of subsidiaries, net of acquired cash 6 47 195 Acquisitions of third party and equity-accounted companies -4 375 Disposals of subsidiaries and equity-accounted companies, net of assigned cash 0 Acquisitions of non-current financial assets and loans granted -34 076 Other investing cash flows 28 -8 986 Net cash (used in)/generated from investing activities

-22 091

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 11 162 Repayments of borrowings -10 810 Interest paid -1 944 Interest received 2 616 Capital increase (or proceeds from issuance of ordinary shares) 10 050 Purchase of treasury shares -818 Dividends paid -4 018 Other financing cash flows 28 -934 Net cash (used in)/generated from financing activities 5 304

Net cash and cash equivalents at beginning of the year 58 210 Change in net cash and cash equivalents -4 871 Exchange gains/(losses) on cash and cash equivalents 604 Net cash and cash equivalents at end of the year 53 943

32 | IBA Annual report 2008

5 755 1 554 -1 489 6 2 546 -6 983 -280 540 15 579 -25 218 1 177 28 771 4 730 -1 701 1 747 -2 321 18 034

-21 668 -2 104 324 51 0 1 0 1 050 -22 346

9 400 -8 173 -1 747 2 321 1 905 -6 490 0 287 -2 497 67 600 -6 809 -2 581 58 210

IFRS consolidated financial statements for the year ended December 31, 2008

Notes to the consolidated financial statements

Page 34 44 50 52 54 55 58 60 61 61 63 64 64 65 66 66 68 69 71 72 72 73 73 73 74 75 76 77 77 78 79 81 82 84 84

Note 1. Summary of significant Group accounting policies under IFRS 2. Description of financial risk management policies 3. Critical accounting estimates and judgments 4. Segment information 5. List of subsidiaries and equity-accounted investments 6. Business combinations and other changes in the composition of the Group 7. Goodwill and other intangible assets 8. Property, plant, and equipment 9. Lease arrangements 10. Investments accounted for using the equity method and other investments 11. Deferred taxes 12. Other long-term assets 13. Inventories and contracts in progress 14. Trade and other receivables 15. Cash and cash equivalents 16. Capital stock and stock options 17. Reserves 18. Borrowings 19. Provisions 20. Other long-term liabilities 21. Other short-term financial assets and liabilities 22. Trade payables 23. Other payables 24. Other operating expenses and income 25. Financial expenses and income 26. Income taxes 27. Employee benefits 28. Cash flow statement 29. Contingent liabilities 30. Commitments 31. Related party transactions 32. Fees for services rendered by the statutory auditors 33. IFRS standards and IFRIC interpretations not yet effective or applied by the Group 34. Events after the balance sheet date 35. Earnings per share IBA Annual report 2008 | 33

1. Summary of significant Group accounting policies under ifrs 1.1 Introduction

1.3 Consolidation

The significant IFRS accounting policies applied by the Group in preparing the IFRS consolidated financial statements are described below.

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

1.2 Basis of preparation IBA’s consolidated financial statements for the year ended December 31, 2008 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, 2008.

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 accrual 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 accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Company’s accounting policies.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

New standards, amendments, and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after January 1, 2009. The Group has not early adopted these standards and is currently assessing the impact of such standards and IFRIC interpretations.

34 | IBA Annual Report 2008

1.3.1 Subsidiaries Assets and liabilities, rights and commitments, and income and expenses of the parent and its controlled subsidiaries are consolidated in full.

Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. It is presumed to exist when the 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 are effectively transferred to the acquirer.

From the date of acquisition, the parent (the acquirer) incorporates into the consolidated income statement the financial performance of the acquiree and recognizes in the consolidated balance sheet the acquired assets and liabilities (at fair value), including any goodwill arising on the acquisition.

Subsidiaries are deconsolidated from the date on which control ceases. The following treatments are applied on consolidation: The carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary is eliminated.

Minority interests in the net assets of consolidated subsidiaries are identified and presented in the consolidated balance sheet separately in 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 in the caption “Result attributable to minority interests.”

IFRS consolidated financial statements for the year ended December 31, 2008

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 like transactions and other events in similar circumstances.

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

All associates are accounted for using the equity method. The participating interests are separately included in the consolidated balance sheet (in 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 consolidated income statement in the caption “Share of profit/loss of companies consolidated using the equity method.”

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

1.3.3 Jointly controlled entities Similarly 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 goodwill Business combinations are the bringing together of separate entities or businesses into one reporting entity. A business is a set of activities and assets applied and managed together in order to provide a return or any other economic benefit to its investors.

In all business combinations, one entity (the acquirer) obtains control that is not transitory of one or more other entities or businesses (the acquiree).

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

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

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

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

Goodwill is not amortized 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 interests The excess of the acquisition cost of minority interests over the balance for these minority interests on the balance sheet is deducted from equity (“economic unit model”).

IBA Annual report 2008 | 35

1.3.6 Translation of financial statements of foreign operations All 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 for conversion to EUR are as follows:

Closing rate at December 31, 2008

Average annual rate 2008

Closing rate at December 31, 2007

Average annual rate 2007

USD

1.4040

1.4712

1.4719

1.3701

SEK

10.8988

9.6254

9.4156

9.2523

GBP

0.9682

0.7962

0.7369

0.6846

CNY

9.5655

10.2481

10.7358

10.4317

INR

68.9817

64.1041

58.0314

56.6065

JPY

126.9440

152.5253

158.1280

161.2972

1.4 Intangible fixed assets Recognition as an intangible fixed asset is required when (1) this asset is identifiable, i.e. separable (it can be sold, transferred, or licensed) or where it arises 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 accumulated impairment loss.

Cost includes the fair value of the consideration given to acquire the asset and any costs directly attributable to the transaction, such as relevant professional fees or 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 Intangible assets Product development costs

IT development costs for the primary softwares (e.g. ERP) Other software Concessions, patents, licenses, know-how, trademarks, and other similar rights Goodwill 36 | IBA Annual Report 2008

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

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

No borrowing cost is included in the acquisition cost of intangible 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: Useful life 3 years, except if a longer useful life is justified (however not exceeding 5 years) 5 years 3 years 3 years, except if a longer useful life is justified Not amortized but tested for impairment at least annually

IFRS consolidated financial statements for the year ended December 31, 2008

Amortization commences only when the asset is available for use in order to achieve proper matching of cost 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 bringing the asset to working condition for its intended use (inclusive of import duties and taxes). Directly attributable costs are the cost of site preparation, delivery costs, installation costs, relevant professional fees, and the estimated cost of dismantling and removing the asset and restoring the site (to the extent that such a cost is recognized as a provision).

Tangible fixed assets Land Office buildings Industrial buildings Cyclotrons and vaults

Laboratory equipment Other technical equipment Hardware Furniture and fittings Vehicles

1.5.1 Lease transactions involving IBA as a lessee A finance lease, which transfers substantially all the risks and rewards incident to ownership, is recognized as an asset and a liability at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments (= sum of capital and interest portions included in the lease payments).

Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The depreciation policy for leased assets is consistent with that for similar assets owned.

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

Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item is separately depreciated over its useful life using the 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 performance of the asset are expensed as incurred.

The applicable useful lives are as follows:

Useful life Not depreciated 33 years 33 years 15 years except in specific rare circumstances where a different useful life is justified 5 years 5 to 10 years 3 to 5 years (5 years for mainframes) 5 to 10 years 2 to 5 years

1.5.2 Investment properties Investment properties for the Group’s own use are carried at acquisition cost less any accumulated depreciation and any impairment loss.

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

When possible, impairment tests have been performed on individual assets. When, however, IBA Annual report 2008 | 37

it is determined that assets do not generate independent cash flows, the test is performed at the level of the cash-generating unit (CGU) to which the asset belongs (CGU = the smallest identifiable group of assets generating inflows that are largely independent from the cash flows from other CGUs).

Goodwill arising on a business combination is allocated among the Group’s CGUs that are expected to benefit from synergies as a result of the business combination. This allocation is based on management’s assessment of the synergies gained and is not dependent on the location of the acquired assets.

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

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

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

The cost of inventories comprises all costs incurred in bringing inventories to their present location and condition, including indirect production costs but excluding borrowing costs.

Administrative overheads that do not contribute to bringing inventories to their present location and condition, selling costs, storage costs, and abnormal amounts of wasted materials are not included in the cost of inventories.

The standard cost method is used. 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 38 | IBA Annual Report 2008

overheads to the production cost of inventories is based on the normal capacity of the production facilities.

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

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

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

IBA applies the following policy for write-down on slow-moving items: If no movement after 1 year: write-off over 3 years; If movement occurs after write-off: reversal of write-off.

However, inventory is valued individually at yearend. Exceptions to the above general rule are made when justified.

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

The transaction is not a sale and revenue is not recognized where (1) IBA retains an obligation for unsatisfactory performance not covered by normal warranty provisions; (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

IFRS consolidated financial statements for the year ended December 31, 2008

completion is applied on a cumulative basis.

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

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

Revenue from the rendering of services is recognized by reference to the stage of completion of the transaction at the balance sheet date using rules similar to those for construction contracts (see next section); in other words, revenue is recognized as the related costs are incurred.

Unless it is clear that costs are not incurred on a straightline basis, revenues are spread evenly over the period of the services.

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

The recognition criteria are applied to the separately identifiable components of a single transaction when it is necessary to reflect the substance of the transaction.

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).

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).

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

1.9 Contracts in progress Contract costs comprise: Direct and indirect production costs (same as for

1.10 Receivables

inventories, see above) Such other costs as are specifically chargeable to

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

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 as production cost increased, according to the stage of completion of the contract, by the difference between the contract price and production cost (“percentage of completion” method). The stage of completion is determined by comparing actual costs incurred to date with estimated costs to completion. (Costs that do not reflect work performed, such as commissions and royalties are excluded for this calculation.) The percentage of

In general, IBA applies the following rule to writedowns of 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 assessed on a case-by-case basis, and exceptions to the above general rule are made when justified.

IBA Annual report 2008 | 39

1.11 Financial assets

investments that can be used for any purpose and have a maturity date not exceeding three months from acquisition date. Cash and cash equivalents include bank overdrafts.

The Group classifies its financial assets in the following categories: loans and receivables, available-for-sale financial assets, and financial assets at fair value through profit or loss.

Amounts dedicated to specific events and invested in liquid instruments that are renewed automatically until the occurrence of that event, are qualified as “restricted” are and reclassified as other long term receivables.

Loans and receivables are non-derivative financial

assets with fixed or determinable payments that are not listed on an active market and are not held for trading. Gains and losses on loans and receivables are recorded when the loans and receivables are derecognized or impaired.

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

Term deposits are classified as loans and receivables under IAS 39.

Investments in interest bearing securities, as

well as investments in shares (other than shares in subsidiaries, joint ventures, and associates) are accounted for as available-for-sale financial assets. They are recorded at fair value, with gains and losses reported in equity, until they are impaired or sold, at which time the gains or losses accumulated in equity are recycled into the income statement. For financial assets that are classified as available for sale, a significant or prolonged decline in the fair value of the investment below its cost is objective evidence of impairment.

Impairment losses on these instruments are charged to income. Increases in their fair value after impairment are recognized directly in equity.

1.14 Deferred charges and accrued income

Deferred charges are the prorated amount of charges incurred in the current or prior financial periods but which are related to one or more subsequent periods. Accrued income is the prorated amount of income earned in the current or prior periods which will be received only in subsequent periods.

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.

Revaluation of certain financial assets used to

manage the Group’s cash position, that includes derivative products, is recorded at fair value through profit or loss if the derivative instrument cannot be valued separately.

1.16 Provisions A 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

When there are indicators of impairment, all financial assets are subject to an impairment test.

The indicators should provide objective evidence of impairment as a result of a past event that occurred subsequent to the initial recognition of the asset. Expected losses as a result of future events are not recognized, no matter how likely.

1.12 Cash and cash equivalents Cash balances are recorded at their nominal value.

Cash equivalents are short-term, highly liquid 40 | IBA Annual Report 2008

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 longterm 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.

IFRS consolidated financial statements for the year ended December 31, 2008

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

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

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

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

1.17 Pensions and other employee benefits 1.17.1 Pensions Premiums paid in relation to a defined contribution plan are expensed as incurred. Defined contribution plans are post-employment benefit plans under which IBA pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

has defined benefit plans. These entitlements arising from commitments to employees of CIS Bio International S.A.S. are recorded in contingency provisions and are as follows: Entitlements of employees active at year-end in the form of benefits, supplements, and other retirement compensation not covered by the pension or insurance funds; and Entitlements conferred as a result of the lowering of the retirement age for employees working or having worked in hazard areas.

Obligations arising from the application of these defined benefit plans are valued according to the projected unit credit method and are discounted because they may be discharged many years after the related services were performed. Actuarial calculations are required to obtain a reliable estimate of the value of accumulated employee benefits for services rendered. Actuarial differences may result from an increase or decrease in the present value of a defined benefit obligation.

These actuarial differences include adjustments based on experience (the impact of disparities between previous actuarial assumptions and what actually happened) and the effect of different actuarial assumptions (such as an adjustment of the employee turnover rate or a change in the discount rate). For the valuation of defined benefit liabilities, the Group has chosen to recognize the entire actuarial differences immediately in equity in a statement of changes in equity called the “Statement of recognized the income and expense.�

The cost of past services is the increase in the present value of the defined benefit obligation arising from employee services in prior years. The cost of past services is recognized (in operating results) on a straightline basis over the average remaining service period before the associated benefits vest. The other elements are included in financial results as other financial (income)/expense.

As from the date of acquisition of CIS Bio International S.A.S. and its subsidiaries, the Group IBA Annual report 2008 | 41

1.17.2 Stock option plans (share-based payments) Share-based payments are transactions to be paid with shares, stock options, or other equity instruments (granted to employees or other parties) and transactions paid in cash or other assets when the amount payable is based on the price of the entity’s shares.

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

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

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.

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 remeasured.

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

There are three exceptions to the general principle that deferred taxes are recognized on all temporary differences. Deferred taxes are not recognized for: Goodwill that is not amortized for tax purposes.

Initial recognition of an asset or liability in a transaction 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 recognized only when IBA has control over the distribution and it is likely that dividends will be distributed in the foreseeable future.

42 | IBA Annual Report 2008

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

1.20 Accrued charges and deferred income Accrued charges are the prorated amount of expenses which will be paid in a subsequent financial period but relate to a prior period.

Deferred income is the prorated amount of income received in the current or prior periods but related to a subsequent period.

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

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

IFRS consolidated financial statements for the year ended December 31, 2008

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

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

Changes in the fair value of derivative instruments are accounted for in the income statement unless they qualify as cash flow hedges under IAS 39. The Group designates certain derivative transactions as hedges of the variability of the fair value of recognized assets or liabilities (fair value hedges); as unrecognized firm commitments; or as hedges of the cash flow variability arising from a specific risk associated with a recognized asset or liability or with a highly probable forecast transaction (cash flow hedges) 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 undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. a) Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

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 ultimately recognized in the income statement.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. c) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Such derivatives are recognized at fair value on the balance sheet, with changes in fair value recognized in the income statement. These instruments are designated as economic hedges to the extent that they are not used to speculate on positions.

1.23 Segment information A business segment is a distinguishable component engaged in providing products or services subject to risks and returns that are different from those of other business segments.

A geographical segment is engaged in providing products or services within a specific economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

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

Amounts accumulated in equity are recycled 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).

IBA Annual report 2008 | 43

2. Description of financial risk management policies 2.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: mainly market risk (including currency risk), credit risk, liquidity risk, and interest rate risk. The Group’s overall financial risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

Financial risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Audit Committee of the Board of Directors. These policies provide written principles for overall financial risk management, as well as written policies covering specific areas, such as foreign exchange risk, use of derivative financial instruments and nonderivative financial instruments, and investing excess liquidity. Group Treasury identifies, evaluates, and hedges financial risks in close cooperation with the Group’s operating units.

2.1.1 Market risk a) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar, the Chinese yuan, the British pound, and the Swedish krona. Foreign exchange risk arises from future and committed commercial transactions, recognized financial assets and liabilities, and net investments in foreign operations.

To manage foreign exchange risk arising from future and committed commercial transactions and from recognized assets and liabilities denominated in a currency different from the entity’s functional currency, entities in the Group use foreign exchange 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 44 | IBA Annual Report 2008

designates contracts with Group Treasury as fair value hedges or cash flow hedges, as appropriate. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities, or committed or future transactions on a gross basis.

The Group’s general hedging policy is to hedge any confirmed sales contracts denominated in a foreign currency as well as expected net operational cash flows when they can be reasonably predicted. Appropriate documentation is prepared in accordance with IAS 39. The CFO approves and the CEO is informed of significant hedging transactions, with reporting to the Audit Committee twice a year.

Inter-company loans denominated in foreign currencies are entered into to finance certain subsidiaries and expose the Group to fluctuations in exchange rate.

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

Currency transactional risk: The Group has some transactional currency exposure that arises from sales or purchases by an operating unit in currencies other than the unit’s functional currency. The transactional foreign currency risk mainly arises from open positions in the Belgian entities against the U.S. dollar.

Approximately 18 percent of the Group’s sales are denominated in currencies other than the functional currency of the operating unit making the sale, while almost 95 percent of costs are denominated in the unit’s functional currency.

Where the Group considers that there are no natural hedging opportunities, forward exchange contracts and foreign currency options (vanilla and exotic) are used to cover currency exposure.

IFRS consolidated financial statements for the year ended December 31, 2008

b) Other market risks The Group is exposed to securities risk because of commercial paper and shares held by the Group in the context of its excess cash management. Risk is mitigated by a conservative selection of highly rated, highly liquid investment products. However, the Company cannot foresee sudden changes in the ratings of these products or market changes that may impair liquidity.

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

With respect to its Pharmaceuticals business segment, the Company has instituted a trade credit insurance policy in the United States. For the rest of the world, owing to the generally public nature

of the customers, risk can be held at acceptable levels by closely monitoring customer payments.

The table in section 2.2 presents the financial assets of the Group by valuation method. The carrying amount of these financial assets represents the maximum credit exposure of the Group. The fair value of a financial instrument is the price at which a party would accept the rights and/or obligations of this financial instrument from another independent party.

2.1.3 Liquidity risk Prudent liquidity risk management implies maintaining 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 funding by keeping credit lines available.

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

December 31, 2007 Due Less than 1-2 years 2-5 years (EUR ‘000) 1 year Financial liabilities Bank borrowings 0 2 830 2 537 5 492 Financial leases 0 3 559 2 610 2 061 Other interest-bearing liabilities 0 517 4 079 0 Trade payables 13 500 37 693 0 0 Other ST & LT payables 5 974 37 548 13 629 6 612

Beyond Total 5 years

December 31, 2008 Due Less than 1-2 years 2-5 years (EUR ‘000) 1 year Financial liabilities Bank borrowings 0 3 562 2 996 3 298 Financial leases 0 3 390 4 431 1 081 Other interest-bearing liabilities 645 5 296 517 0 Trade payables 11 875 59 643 0 0 Other ST & LT payables 5 143 100 635 7 788 16 419

Beyond Total 5 years

94 944 0 0 30 597

0 0 0 0 29 097

10 953 9 174 4 596 51 193 94 360

9 856 8 902 6 458 71 518 159 082

IBA Annual report 2008 | 45

2.1.5 Commodity risk The Group’s large automotive fleet for its U.S. radiopharmaceutical distribution business exposes it to fluctuations in the price of gasoline. To cover this risk, the Group entered into a forward oil contract.

2.1.4 Interest rate risk The Group exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates. The Group entered into interest rate swaps in order to limit the impact of interest rate fluctuation on its financial results. IBA does not apply the hedge accounting to these transactions, and this coverage is therefore revalued through profit and loss.

Per IAS 39, this coverage does not qualify for hedge accounting or fair value accounting and is therefore measured through profit and loss.

IBA analyzed the impact of a 1 percent fluctuation in interest rates on its consolidated income statement.

The effect would have been insignificant.

2.2 Financial assets and liabilities, additional information The assets and liabilities of the Group are valued as follows: 12.31.2007 (EUR ‘000)

IAS 39 category

Financial assets Trade receivables Loans and receivables Other LT & ST Loans and receivables receivables Investment in Available for third parties sale Cash and cash Loans and equivalents receivables Derivatives with Cash Flow a hedging relahedge tionship Derivatives-other FVPL1 Financial liabilities Bank borrowings FLAC Financial leases FLAC Other interestFLAC bearing liabilities Trade payables FLAC Other LT & ST FLAC payables

Carrying Amortiamount zed cost

Fair value Fair value Fair value Financial Recognirecognized recognized recognized income/ zed in BS in equity in profit in profit (expenses) according and loss and loss – to IAS 39 (impairother ments)/ (expenses)/ reversals income

Fair value

44 243

46 871

0

0

1 731

0

0

0

44 243

44 931

44 931

0

0

0

0

0

0

44 931

2 343

0

1 855

-202

0

0

0

0

2 343

58 210

58 210

0

0

0

0

2 321

0

58 210

1 860

0

0

1 579

0

171

0

0

1 860

1 462

0

0

0

0

451

0

0

1 462

2 799 9 174 4 596

2 799 0 0

0 0 4 596

0 0 0

0 0 0

0 0 0

-670 -912 -165

0 9 174 0

2 799 9 174 4 596

51 193 94 360

0 0

51 193 94 360

0 0

0 0

0 0

0 0

0 0

51 193 94 360

FLAC: Financial liabilities measured at amortized cost.

FVPL1: Fair value through profit and loss, held for trading.

46 | IBA Annual Report 2008

Cost

IFRS consolidated financial statements for the year ended December 31, 2008

31.12.2008 (EUR ‘000)

IAS 39 category

Financial assets Trade receivables Loans and receivables Other LT & ST Loans and receivables receivables Investment in Available for third parties sale Investment in FVPL2 third parties Cash and cash Loans and equivalents receivables Derivatives with Cash Flow a hedging relahedge tionship Derivatives-other FVPL1 Financial liabilities Bank borrowings FLAC Financial leases FLAC Other interestFLAC bearing liabilities Trade payables FLAC Derivatives with Cash Flow a hedging relahedge tionship Derivatives-other FVPL1 Other LT & ST FLAC payables

Carrying Amortiamount zed cost

Cost

Fair value Fair value Fair value Financial Recognirecognized recognized recognized income/ zed in BS in equity in profit in profit (expenses) according and loss and loss – to IAS 39 (impairother ments)/ (expenses)/ reversals income

Fair value

74 820

83 701

0

0

-1 535

0

0

0

74 820

106 709

106 709

0

0

2 415

0

0

0

106 709

2 420

0

1 867

66

-3 641

0

0

0

2 420

743

0

0

0

-2 257

0

0

0

743

53 943

53 943

0

0

0

0

2 977

0

53 943

2 011

0

0

689

0

1 234

0

0

2 011

264

0

0

0

0

-308

0

0

264

9 856 8 902 6 458

9 856 0 0

0 0 6 458

0 0 0

0 0 0

0 0 0

-1 002 -635 -308

0 8 902 0

9 856 8 902 6 458

71 518 891

0 0

71 518 0

0 0

0 0

0 0

0 0

0 0

71 518 891

1 607 159 082

0 0

0 159 082

0 0

0 0

- 1 724 0

0 0

0 0

1 607 159 082

FLAC: Financial liabilities measured at amortized cost.

FVPL1: Fair value through profit and loss, held for trading.

FVPL2: Fair value through profit and loss, derivative-based asset whose value could not be separated from the underlying notional value.

The caption “Investments, FVPL2,” totaling EUR 0.743 million, covers the fair value of synthetic collateralized debt obligations at December 31, 2008. These synthetic collateralized debt obligations were purchased for EUR 3.0 million in the context of the contract for the sale of the proton therapy system to the University of Pennsylvania. In lieu of requiring an advance payment guarantee, this contract protected the buyer’s down payment by placing it in an escrow account. Seeking a low risk (AAA rated), highly liquid investment, the financial institution working with IBA on this project recommended investing in the most senior tranche of these financial products.

The fair value of these synthetic Collateralized Debt Obligations was determined by a financial institution. Group management considers that the proposed fair value should be corrected at December 31, 2008 by 10 percent illiquidity

discount to better reflect the market value of this product. In all, revaluation to market resulted in a financial charge of EUR 2.2 million in 2008.

The captions “Derivatives with a hedging relationship” in assets and liabilities include the fair value of forward exchange contracts.

Under financial assets for 2007, “Derivative products–other” primarily reflects the fair value of an option to increase ownership interest in an associate (EUR 1.4 million).

Under financial assets for 2008, “Derivative products– other” primarily reflects the fair value of forward exchange contracts and forward currency options.

Under financial liabilities for 2008, “Derivative products-other” primarily reflects the fair value of a forward oil contract for EUR 1.1 million and the fair IBA Annual report 2008 | 47

The Group may acquire and sell (non-controlling) minority interests in outside companies, as dictated by its business strategy. These investments are considered “Available for sale.”

value of interest rate swaps for EUR 0.4 million.

At December 31, 2007, “Other LT & ST receivables” and “Other LT & ST payables” included down payments of EUR 15.5 million on proton therapy contracts for which the corresponding receivable amounts did not qualify for derecognition under IAS 39.

At December 31, 2008, these down payments stood at EUR 29.1 million.

2.3 Hedging activities The following table provides an overview of the derivative financial instruments outstanding at December 31, 2008 and December 31, 2007, by maturity bucket. (‘000)

December 31, 2008

December 31, 2007

Less than 1 year

Between 1 and 2 years

More than 2 years

Less than 1 year

Between 1 and 2 years

More than 2 years

$39 987

$35 328

$12 807

$30 875

$42 689

$4 007

£314

£0

£0

£0

£0

£0

$7 560

$0

$0

$15 931

$0

$0

$7 935

$565

$0

$1 935

$7 935

$399

Foreign currency hedges Forward exchange contracts (USD/EUR) Forward exchange contracts (GBP/USD) Foreign currency options Interest rate hedges Interest rate swaps Other Oil futures

624 000 gallons

58 000 gallons

expected future USD payments from customers.

In comparison, at December 31, 2007, it held 16 forward exchange contracts and no currency options contracts for this purpose.

The fair value of these derivatives is determined by commonly used valuation techniques. These are based on market inputs from reliable financial information providers. Fair values are based on the trade dates of the underlying transactions.

These hedges were assessed to be highly effective per IAS 39. They generated a loss of EUR 1.1 million in 2008, compared to a loss of EUR 1.6 million in 2007. This loss is charged directly to equity.

2.3.1 Cash flow hedge At December 31, 2008, the Group held 20 forward exchange contracts and 12 currency options contracts designated as hedges of Hedge-accounted forward exchange contracts and options (EUR ‘000) At December 31, 2007 Cash flow hedge (USD)

Hedge-instrument maturity Equity

< 1 year

1-2 years

> 2 years

1 801

881

920

0

689

509

-486

665

At December 31, 2008 Cash flow hedge (USD)

48 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

The amount included in equity at December 31, 2007 and transferred to the income statement in 2008 is EUR 1.2 million.

2.3.2. Fair value through income statementâ&#x20AC;&#x201D; Held for trading At December 31, 2008, the Group held two interest rate swap agreements with notional amounts of USD 6 million and USD 2.5 million, respectively.

Under the first swap, the Company received a variable interest rate of 2.04 percent at December 31, 2008 and paid a rate of 5.75 percent. Under the second swap, the Group received an average variable interest rate of 2.90 percent at December 31, 2008 and paid an estimated average rate of 5.52 percent.

of EUR 0.08 per share at the Ordinary General Meeting of May 13, 2009.

The Ordinary General Meeting of May 14, 2008 approved payment of a dividend of EUR 0.17 per share.

Through its U.S. radiopharmaceutical distribution business, the Group has some exposure to fluctuations in the price of gasoline. To manage this risk, the Group entered into a number of futures contracts involving a notional of 624 000 gallons at December 31, 2008.

At December 31, 2008, the Group also held U.S. dollar and British pound currency forward exchange contracts, as well as options on a notional USD 9.3 million, GBP 0.3 million, and USD 4.8 million to cover cash flows in these currencies.

As they do not qualify for hedge accounting under IAS 39, the various hedge instruments in this section are measured at fair value through profit and loss. The loss generated on these hedging instruments totaled EUR 2.1 million at December 31, 2008, compared with a gain of EUR 0.5 million at December 31, 2007.

2 .4 Capital management The Group is continuously optimizing its capital structure to maximize shareholder value while keeping the financial flexibility desirable to execute strategic projects. In 2008, IBA Investments SCRL, a second-tier subsidiary of IBA S.A., initiated an IBA S.A. stock purchase program of EUR 0.8 million (EUR 6.5 million in 2007).

The Board of Directors has decided to ask the shareholders to approve payment of a dividend IBA Annual report 2008 | 49

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 related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Income taxes The Group had accumulated net operating losses usable to offset future taxable profits, essentially in Belgium, France, Italy, Spain, the United Kingdom, and the United States, amounting to EUR 149.6 million at December 31, 2008. It recognized deferred tax assets of EUR 31,8 million for permanent differences and EUR 2.2 million for temporary differences.

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 estimates 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) Provisions for decommissioning costs The production of FDG (Pharmaceutical business segment) generates radiation and results in the contamination of production site facilities. This situation may require the Group to pay restoration costs to comply with regulations in these various jurisdictions, as well as with any legal or constructive obligations.

Analysis and estimates are performed by the 50 | IBA Annual Report 2008

Group, together with its legal advisers, in order to determine the probability, timing, and amount involved in a probable required outflow of resources.

Provisions have been made, when required by local regulations, to cover costs in connection with decommissioning the sites where radiopharmaceutical agents are produced. These provisions are measured at the net present value of the best estimate of the necessary costs.

At December 31, 2007, provisions for the cost of decommissioning sites in Belgium and the United States amounted to EUR 2.8 million. At December 31, 2008, these provisions totaled EUR 34.7 million and were primarily for obligations in connection with a radiopharmaceutical production facility belonging to the Groupâ&#x20AC;&#x2122;s French subsidiary, CIS Bio International S.A.S. Note that in December 2008 the French subsidiary CIS Bio International S.A.S. obtained nuclear operator status, which makes it mandatory to set aside restricted assets for the future decommissioning and restoration of the nuclear medicine facilities at the site in Saclay, France. At December 31, 2008, these restricted assets stood at EUR 28.5 million.

In the U.S., approximately EUR 1.4 million has been deposited in blocked accounts in order to meet legal obligations in certain States (Illinois and California).

(c) Provisions for obligation to take over radioactive equipment and sources In the context of the gradual disengagement from radioactive source production (production of cobalt and cesium) at the site in Saclay, France, a provision has been made to meet obligations for the takeover and disposal of used radioactive sources and certain equipment (irradiators) on French territory. This provision is valued at the net present value of the most probable estimates of unavoidable costs for the treatment and disposal of these used sources. This provision is discounted

IFRS consolidated financial statements for the year ended December 31, 2008

based on the estimated plan for source recovery.

At December 31, 2008, this provision stood at EUR 18.9 million.

plans incorporate various assumptions made by management and approved by the Board as to how the business, profit margins, and investments will evolve. In accordance with IAS 36, additional information is provided in Note 7.1.

(d) Revenue recognition Contracts in progress are valued at their cost of production, increased by income accrued as determined by the stage of completion of the contract activity at the balance sheet date, to the extent that it is probable that the economic benefits associated with the contract will flow to the Group. This probability is based on judgment.

If certain judgmental criteria differ from those used for previously recognized revenues, the Group’s income statement is affected.

(g) Valuation of private equity instruments IBA revalues its private equity holdings using either the discounted cash flow method or the share value assigned to them during the most recent rounds of financing. Note that, at December 31, 2008, IBA had recorded a decline in value of EUR 3.6 million for one private equity investment due to a downward revision of estimated gains from the use of an innovative technology.

When appropriate, the Company revises its estimated margin at completion to take into account the assessment of any residual risk arising from this contract over several years. When the final outcome of these uncertainties differs from initial estimations, the Group’s income statement is affected.

(e) Provisions for defined benefit plans

IBA records provisions for the defined benefit plans of its subsidiary CIS Bio International S.A.S. These benefits are valued in accordance with IAS 19. The following assumptions were made in calculating these provisions at December 31, 2008: Discount rate: 5.2% Mortality table: TH-TF 00-02 Inflation rate: 2% Salary adjustment rate: 2.5% per annum Pension adjustment rate: 1%, excluding inflation Retirement age: 63 for management, 60 for nonmanagement In accordance with IAS 19, additional information is provided in Note 27.2.

(f) Estimating the value in use of intangible and tangible fixed assets The recoverable amounts of tangible and intangible fixed assets are determined on a “value in use” basis. Value in use is determined on the basis of IBA’s most recent business plans, as approved by the Board of Directors. These IBA Annual report 2008 | 51

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 segment reporting format.

Geographical segments are used for its secondary segment reporting format.

4.1 Business segments At December 31, 2008, the Group had two primary business segments for reporting purposes: (1) Equipments and (2) Pharmaceuticals.

Equipments. This segment constitutes the technological basis of the Group’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.

Pharmaceuticals. This segment encompasses

radiopharmaceuticals (production and distribution) and bioassays: • Radiopharmaceuticals. IBA is active in the area of positron emission tomography (PET), where it produces and distributes primarily fluorodeoxyglucose (FDG), a chemical compound used in molecular imaging for the diagnosis of many diseases (principally cancer). IBA also has a presence in the field of single photon emission computed tomography (SPECT).

• Bioassays. IBA produces and distributions a line of biomarkers used for in vitro medical diagnosis.

The Group’s HTRF® technology also gives it a presence in the in vitro screening of new drugs for the pharmaceutical industry and biotech companies.

The table below provides details of the income statement for each segment. Any inter-segment sales are contracted at arm’s length.

Year ended December 31, 2008 (EUR ‘000) Sales and services Inter-segment sales External sales

Equipments Pharmaceuticals

Group

184 276 -1 640 182 636

150 900 -929 149 971

335 176 -2 569 332 607

7 965

14 963

0

-2 363

22 928 -5 818 -2 637 -2 363 12 110 -6 781 5 329

Segment assets Equity-accounted investments allocated to a segment Unallocated assets TOTAL ASSETS

199 979

273 567 3 643

199 979

277 210

Segment liabilities Unallocated liabilities TOTAL LIABILITIES

161 100

195 846

161 100

195 846

4 453 1 816 809 291 973

18 512 10 770 2 595 -940 1 159

Segment result Unallocated expenses Financial (expenses)/income Share of profit/(loss) of companies consolidated using the equity method Result before tax Tax expense RESULT FOR THE PERIOD

OTHER SEGMENT INFORMATION Capital expenditure (incl. fixed assets in companies acquired in 2008) Depreciation and impairment of property, plant, and equipment Amortization of intangible assets Non-cash expenses/(income) Headcount at year-end 52 | IBA Annual Report 2008

473 546 3 643 32 332 509 521 356 946 209 357 155

IFRS consolidated financial statements for the year ended December 31, 2008

Year ended December 31, 2007 (EUR ‘000) Sales and services Inter-segment sales External sales Segment result Unallocated expenses Financial (expenses)/income Share of profit/(loss) of companies consolidated using the equity method Result before tax Tax income RESULT FOR THE PERIOD Segment assets Equity-accounted investments allocated to a segment Unallocated assets TOTAL ASSETS Segment liabilities Unallocated liabilities TOTAL LIABILITIES OTHER SEGMENT INFORMATION Capital expenditure (incl. fixed assets in companies acquired in 2007) Depreciation and impairment of tangible fixed assets Amortization of intangible assets Other non-cash expenses Headcount at year-end

Equipments Pharmaceuticals 136 581

Group

136 581

78 265 -997 77 268

214 846 -997 213 849

11 091

-578

10 513 -3 472 -456 278 6 863 6 983 13 846

278

160 721 13

124 084 6 025

160 734

130 109

130 909

51 986

130 909

51 986

4 993 1 334 718 -2 593 724

21 678 4 421 836 3 298 655

284 805 6 038 33 595 324 438 182 895 62 182 957

Sales between segments are made on the same terms and conditions as sales to outside companies.

4.2 Geographical segments The 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.

Year ended December 31, 2008 (EUR ‘000) Sales Segment assets Investments accounted for using the equity method Unallocated assets TOTAL ASSETS Capital expenditure (incl. fixed assets from acquisitions in 2008)

USA

R.O.W.

Group

133 369

199 238

332 607

92 310 844

381 493 2 799

473 803 3 643 32 075 509 521

8 516

14 449

IBA Annual report 2008 | 53

Year ended December 31, 2007 (EUR â&#x20AC;&#x2DC;000) Sales Segment assets Investments accounted for using the equity method Unallocated assets TOTAL ASSETS Capital expenditure (incl. fixed assets from acquisitions in 2007)

USA

R.O.W.

Group

117 905

95 945

213 849

81 502 970

206 049 5 067

287 551 6 038 30 850 324 438

4 595

22 076

5. Lists of subsidiaries and equity-accounted investments At December 31, 2008, the IBA Group consisted of IBA S.A. and a total of 37 companies and associates in 13 countries. Of these, 32 are fully consolidated and 6 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 Name

IBA RadioIsotopes S.A. (BE 0466.749.548) IBA Molecular Holding (BE 0880.070.706) IBA Pharma S.A. (BE 0860.215.596) IBA Pharma Invest S.A. (BE 0874.830.726) IBA Participations S.P.R.L. (BE 0465.843.290) IBA Investments S.C.R.L. (BE 0471.701.397) IBA Corporate Services S.A. (BE 0471.889.261) Ion Beam Beijing Medical Appliance Technology Service Co. Ltd. Ion Beam Applications Co. Ltd. IBA RadioIsotopes France S.A.S. IBA Dosimetry Gmbh IBA Molecular Imaging (India) Pvt. Ltd. IBA RadioIsotopi Italia S.r.L. IBA Molecular Spain S.A. MediFlash Holding A.B. IBA Dosimetry A.B. IBA Advanced Radiotherapy A.B. (previously Gyrab International A.B.) IBA Molecular UK limited IBA Dosimetry North America Inc. IBA Proton Therapy Inc. IBA Industrial Inc. IBA Molecular North America Inc. RadioMed Corporation IBA USA Inc. IBA Molecular Montreal Holding Corp.

BetaPlus Pharma S.A. (BE 0479.037.569) IBA Particle Therapy Gmbh Radiopharma Partners S.A. (BE 0879.656.475) CIS Bio International S.A.S.1 Cis Bio Spa Cis Bio Gmbh Cis Bio US Inc.

Country of Share of equity Change in % held compared incorporation held (%) to December 31, 2007 Belgium Belgium Belgium Belgium Belgium Belgium Belgium China China France Germany India Italy Spain Sweden Sweden Sweden

99.73% 100% 100% 61.9% 100% 100% 100% 100% 100% 100% 100% 61.9% 100% 100% 100% 100% 100%

4.73% -

United Kingdom USA USA USA USA USA USA USA Belgium Germany Belgium France Italy Germany USA

100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100% 100% 100%

100% 80.1% 80.1% 80.1% 80.1% 80.1%

(1) On August 31, 2008 CIS Bio International France S.A.S. absorbed its subsidiary Positron Paris Nord S.A.S.

54 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

5.2 List of equity-accounted investments Name

Striba Gmbh Pharmalogic Pet Services of Montreal Cie PetLinq L.L.C. Radio Isotope Méditerranée Molypharma Sceti Medical Labo KK

Country of incorporation

Share of equity held (%)

Change in % held compared to December 31, 2007

Germany Canada USA Morocco Spain Japan

50% 48% 40% 25% 24.5% 39.8%

25% 19.9%

6. Business combinations and other changes in the composition of the Group 6.1 Acquisition of companies On May 5, 2006, IBA and IRE (Institut National des Radioéléments, a related party holding 5.36 percent of IBA shares at December 31, 2008) announced that they had signed a sales agreement with Schering AG giving them 100 percent ownership of the French company CIS Bio International S.A.S. and its subsidiaries. This purchase was carried out

by Radiopharma Partners S.A., in which IBA and IRE held ownership interests of 19.9 percent and 80.1 percent, respectively.

In 2006, IBA had also obtained a call option from IRE on 15 percent of Radiopharma Partners S.A. In 2007, IBA and IRE signed an agreement giving IBA a call option on all shares of Radiopharma Partners S.A. not already in its possession (i.e. 80.1 percent), as well as on an additional participation of 19.9 percent of the Japanese firm Sceti Medical Labo KK. This agreement was valid until June 30, 2008.

operations are shown on an equity-accounted basis in the consolidated statements.

As a result of the above transaction of May 31, 2008, IBA holds a 39.8 percent stake in Sceti Medical Labo KK and accounts for its investment in this entity on an equity basis.

IBA has recorded the identifiable assets, liabilities, and contingent liabilities of CIS Bio International S.A.S. and its subsidiaries at fair value at the date of acquisition.

On May 19, 2008, IBA exercised its call option on 80.1 percent of Radiopharma Partners S.A. and 19.9 percent of Sceti Medical Labo KK. The sale took place on May 31, 2008. CIS Bio International S.A.S. and its subsidiaries were brought into the scope of consolidation of the IBA Group as of that date. This means that seven months of results from CIS Bio International S.A.S. and its subsidiaries are shown on a full consolidation basis in the Group’s 2008 financial statements. The first five months of these entities’ IBA Annual report 2008 | 55

The following assets and liabilities of CIS Bio International S.A.S. and its subsidiaries were included in the consolidated accounts: (EUR ‘000)

Fair value

Carrying value of net acquired assets

Cash and cash equivalents

66 617

66 617

Trade and other short-term receivables

45 221

45 221

23 643 18 098 28 859 133 10 362 -69 549 -87 749 -9 626 -83 25 926

16 528 16 615 23 398 133 3 194 -69 549 -87 749 -9 626 -83 4 699

Inventories Property, plant, and equipment Intangible assets Investments accounted for using the equity method Other long-term receivables Trade and other short-term payables Provisions Borrowings Other long-term payables Net acquired assets

Goodwill arising from the inclusion of CIS Bio International S.A.S. and its subsidiaries in the scope of consolidation of the IBA Group is presented as follows: (EUR ‘000) Price paid (EUR ‘000) - Cash - Value of call option for 15% of shares - Direct acquisition-related expenses Fair value of net acquired assets (80.1%) Goodwill (EUR ‘000)

22 178 18 736 2 784 658 20 767 1 412

At December 31, 2008, the contribution of CIS Bio International S.A.S. to Group REBIT was EUR 1.2 million.

Its contribution to net profit or loss from continuing operations was EUR 10.4 million. If CIS Bio International S.A.S. had been acquired on January 1, 2008, at year-end the Group’s net result would have been minus EUR 6.3 million, and sales and services would have been EUR 381.7 million.

Goodwill and net acquired assets from the purchase of IRE (Institut National des Radioéléments) and 19.9 percent of Sceti Medical Labo KK are presented as follows: (YEN ‘000) Cash and cash equivalents Trade receivables Inventories Property, plant, and equipment Other non-current assets Trade payables Borrowings Net acquired assets (JPY ‘000) Net acquired assets (EUR ‘000) Price paid (EUR ‘000) - Cash - Cancellation of payables to seller Fair value of net acquired assets (EUR ‘000) Goodwill (EUR ‘000)

56 | IBA Annual Report 2008

Fair value

Carrying value of net acquired assets

16 211 23 374

16 211 23 374

5 895 65 429 64 -30 558 -72 000 8 414 51 723 0 723 51 672

5 895 65 429 64 -30 558 -72 000 8 414 51

IFRS consolidated financial statements for the year ended December 31, 2008

On December 20, 2007, IBA transferred its FDG production facility at University Hospital Ghent, Belgium, to BetaPlus Pharma S.A. for EUR 2.4 million as a contribution-in-kind. In return for this contribution, IBA received 1 000 new shares in BetaPlus Pharma S.A. and receivables of EUR 1 million. As a result of this transaction, IBA’s stake in BetaPlus Pharma S.A. increased from 40 percent to 65 percent, automatically bringing this entity within the Group’s scope of consolidation. IBA also paid EUR 0.1 million in cash to acquire 10 percent of BetaPlus Pharma S.A.

BetaPlus Pharma S.A. was included in the Group’s consolidated financial statements at December 31, 2007. No gain or losses from BetaPlus Pharma S.A. were integrated on a full consolidation basis into the group results.

Goodwill arising from inclusion of BetaPlus Pharma S.A. in the scope of consolidation of the IBA Group was presented as follows:

(Million EUR) Price paid

1.5

- Cash - Deferred payment - Net contribution in kind - Direct acquisition-related expenses Fair value of net acquired assets

0.1

Goodwill

1.0

1.4 0.5

The following assets and liabilities of BetaPlus Pharma S.A. were included in the consolidated statements at December 31, 2007: (EUR ‘000) Cash and cash equivalents Trade receivables Property, plant, and equipment Intangible assets Investments accounted for using the equity method Other net assets/(liabilities) Trade payables Provisions Borrowings Net acquired assets

Fair value

Carrying value of net acquired assets

150 672

150 672

4 720 528 0 303 -753 -43 -5 027 550

4 720 528 0 303 -753 -43 -5 027 550

6.2 Disposal of companies No companies were sold in fiscal years 2007 and 2008.

IBA Annual report 2008 | 57

7. Goodwill and other intangible assets 7.1 Goodwill Movements of goodwill are detailed as follows: (EUR ‘000) At January 1, 2007 Final adjustments to previously acquired goodwill

28 100 0

Additions through business combinations Goodwill impairment Currency translation difference At December 31, 2007

1 006 0 -2 568 26 538

At January 1, 2008 Final adjustments to previously acquired goodwill Additions through business combinations Goodwill impairment Currency translation difference At December 31, 2008

26 538 0 1 412 0 812 28 762

Goodwill that arose in connection with an acquisition is allocated to the cash-generating units (CGUs) concerned, and an impairment test is carried out annually on the CGUs’ fixed assets (including goodwill).

Inclusion of BetaPlus Pharma S.A. in the Group’s scope of consolidation at December 31, 2007 gave rise to goodwill in the amount of EUR 1.0 million.

In 2008, inclusion of CIS Bio International S.A.S. and its subsidiaries resulted in the recognition of goodwill of EUR 1.4 million Goodwill from the acquisition of 19.9 percent (EUR ‘000)

of Sceti Medical Labo KK on May 31, 2008 is included in the value of the equity-accounted investment.

Additions to goodwill in 2007 and 2008 were allocated to the Pharmaceuticals business segment.

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

Equipments

Pharmaceuticals

Group

3 548 3 741

25 214 22 797

28 762 26 538

9.00 % 2.60 %

9.20 % 2.60 %

Post-tax discount rate applied, 2007

9.50%

10.882%

Long-term growth rate, 2007

2.60%

2.60%

December 31, 2008 December 31, 2007 Post-tax discount rate applied, 2008 Long-term growth rate, 2008

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 four-year period have been extrapolated using the growth rates shown in the table above. Impairment 58 | IBA Annual Report 2008

testing uses gross budgeted operational margins estimated by management on the basis of past performance and future development prospects.

Discount rates used reflect the specific risks related to the segments in question.

No impairment was identified in 2007 and 2008.

IFRS consolidated financial statements for the year ended December 31, 2008

7.2 Other intangible assets (EUR ‘000)

Software

Patents and trademarks

Development costs

Other

Total

Gross carrying amount at January 1, 2007 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Gross carrying amount at December 31, 2007

3 564 897 -229 93 7 -60 4 272

1 395 380 0 0 42 -10 1 807

965 99 0 0 0 -49 1 015

4 509 728 0 46 8 -245 5 046

10 433 2 104 -229 139 57 -364 12 140

Accumulated amortization at January 1, 2007 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Accumulated amortization at December 31, 2007

2 491 535 -223 70 0 -31 2 842

942 332 0 10 2 -11 1 275

363 258 0 0 0 -17 604

2 522 429 -6 -79 8 -74 2 800

6 318 1 554 -229 1 10 -133 7 521

Net carrying amount at January 1, 2007 Net carrying amount at December 31, 2007

1 073 1 430

453 532

603 411

1 987 2 246

4 115 4 619

Gross carrying amount at January 1, 2008 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Gross carrying amount at December 31, 2008

4 272 1 101 -66 32 3 147 128 8 614

1 807 4 306 -64 -124 15 435 7 21 367

1 015 257 -41 238 0 -11 1 458

5 046 378 -57 1 143 38 584 154 45 248

12 140 6 042 -228 1 289 57 166 278 76 687

Accumulated amortization at January 1, 2008 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Accumulated amortization at December 31, 2008

2 842 906 -4 -58 2 887 42 6 615

1 275 307 -64 0 10 232 3 11 753

604 198 -41 0 0 11 772

2 800 1 993 -57 52 14 861 130 19 779

7 521 3 404 -166 -6 27 980 186 38 919

Net carrying amount at January 1, 2008 Net carrying amount at December 31, 2008

1 430 1 999

532 9 614

411 686

2 246 25 469

4 619 37 768

The majority of the intangible assets involve software, licenses for the production and distribution of radiopharmaceutical agents, exclusive distribution rights, and customer lists, accounted for by applying the “purchase method” to acquisitions made by the Group.

The remaining intangible assets have to do primarily with the value of customer relationships, which are amortized over the anticipated life of these relationships.

Amortization expense for intangible assets was recognized in the income statement in the line items “Cost of sales and services,” “Sales and marketing expenses,» General and administrative expenses,” and “Research and development expenses.”

For details on impairment testing, see Note 7.1.

No impairment of intangible assets (as described in this Note) was identified at December 31, 2007 or December 31, 2008.

IBA Annual report 2008 | 59

8. Property, plant, and equipment (EUR ‘000)

Land and buildings

Plant, machinery, and equipment

Gross carrying amount at January 1, 2007 Additions Disposals Disposals through business combinations Transfers Changes in consolidation scope Currency translation difference Gross carrying amount at December 31, 2007

19 680 2 916 -27 0 45 0 -1 149 21 465

50 160 3 734 -1 443 13 1 524 2 563 -3 688 52 863

13 209 2 859 -1 564 -2 -1 476 49 -594 12 481

13 673 12 159 -255 0 -1 133 136 -1 498 23 082

96 719 21 668 -3 289 11 -1 040 2 748 -6 929 109 891

Accumulated depreciation at January 1, 2007 Additions Disposals Disposals through business combinations Transfers Changes in consolidation scope Currency translation difference Accumulated depreciation at December 31, 2007

10 716 1 113 -15 1 0 0 -649 11 166

30 438 2 999 -1 409 9 -241 221 -2 143 29 874

9 157 1 643 -1 543 0 241 22 -461 9 059

-5 0 0 0 0 0 5 0

50 306 5 755 - 2 967 10 0 243 -3 248 50 099

Net carrying amount at January 1, 2007 Net carrying amount at December 31, 2007

8 964 10 299

19 722 22 989

4 051 3 422

13 677 23 082

46 414 59 792

Gross carrying amount at January 1, 2008 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Gross carrying amount at December 31, 2008

21 465 1 153 -69 9 072 55 347 -1 794 85 174

52 863 4 346 -5 597 13 090 62 215 1 443 128 360

12 481 2 121 -1 257 2 123 3 556 -440 18 584

23 082 11 052 -29 -25 579 56 764 -8 65 282

109 891 18 672 -6 952 - 1 294 177 882 -799 297 400

Accumulated depreciation at January 1, 2008 Additions Disposals Transfers Changes in consolidation scope Currency translation difference Accumulated depreciation at December 31, 2008

11 166 1 420 -48 17 48 589 232 61 376

29 874 9 888 -3 780 -9 52 660 863 89 496

9 059 2 218 -1 195 -1 3 255 161 13 497

0 -940 0 0 55 278 0 54 338

50 099 12 586 -5 023 7 159 782 1 256 218 707

Net carrying amount at January 1, 2008 Net carrying amount at December 31, 2008

10 299 23 798

22 989 38 864

3 422 5 087

23 082 10 944

59 792 78 693

Other tangible fixed assets mainly include assets under construction. There are no tangible fixed assets subject to title restrictions.

Depreciation expense for intangible assets was recognized in profit and loss in the line items “Cost of sales and services”, “Sales and marketing expenses”, “General and administrative expenses”, “Research and development expenses”, and “Other operating expenses.”

60 | IBA Annual Report 2008

Furniture, Other properfixtures, and ty, plant, and vehicles equipment

Total

As indicated in Note 7.1, an impairment test was carried out in respect of the non-current assets at December 31, 2007 and December 31, 2008 to verify that the carrying amounts of tangible fixed assets, intangible assets, and goodwill were justified by the recoverable amounts. The key assumptions used to calculate value in use are indicated in Note 7.1.

No impairment was recognized in 2007 and 2008.

IFRS consolidated financial statements for the year ended December 31, 2008

9. Lease arrangements IBA holds the following assets under financial lease contracts: (EUR ‘000)

Gross carrying value Accumulated depreciation Net carrying value

Land and buildings

Plant, machinery, and equipment

Furniture, fixtures, and vehicles

12/31/2008

12/31/2007

12/31/2008

12/31/2007

12/31/2008

12/31/2007

7 325 3 628 3 697

5 614 1 747 3 867

26 236 14 037 12 199

20 248 10 443 9 805

41 10 31

12 0 12

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

10. I nvestments accounted for using the equity method and other investments (EUR ‘000) Investments accounted for using the equity method Other investments TOTAL

December 31, 2008

December 31, 2007

3 643 2 420 6 063

6 038 2 343 8 381

“Other investments” consist of shares in unlisted companies (private equity investments). These shares are revalued using either the discounted cash flow method or on the basis of the share value assigned to them during the most recent rounds of financing.

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

(EUR ‘000) At January 1 Share in (loss)/profit of equity-account companies Additions Other movements At December 31

On May 31, 2008, IBA purchased from IRE (Institut National des Radioéléments, a related party holding a 5.36 percent interest ownership in IBA at December 31, 2008), an additional interest ownership of 19.9 percent in the Japanese firm Sceti Medical Labo KK, bringing its total ownership of that company to 39.8 percent.

As a result of the Group’s May 31, 2008 acquisition of the 80.1 percent of Radiopharma Partners S.A. that it did not already owned, CIS Bio International S.A.S. and its subsidiaries have been fully consolidated with the IBA Group since that time.

The impact of these two transactions is included in “Other movements.”

December 31, 2008

December 31, 2007

6 038 -2 363 0 -32 3 643

5 744 278 0 16 6 038

In December 2007, IBA transferred its FDG production facility at University Hospital Ghent, Belgium, to BetaPlus Pharma S.A. for EUR 2.4 million as a contribution-in-kind. In return for this contribution, IBA received 1 000 new shares in BetaPlus Pharma S.A. and receivables of 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 consolidation. IBA also paid EUR 0.1 million in cash for 10 percent of BetaPlus Pharma S.A.

IBA Annual report 2008 | 61

Details of the Group’s interest in its principal associates, all of which are unlisted, are presented as follows: (EUR ‘000)

2007 MolyPharma CIS Bio International (indirectly via Radiopharma Partners) Radiopharma Partners Pharmalogic Pet Services of Montreal Cie. PetLinq LLC Striba Gmbh 2008 MolyPharma Pharmalogic Pet Services of Montreal Cie. PetLinq L.L.C. Radio Isotope Méditerranée Striba Gmbh Sceti Medilabo KK1

Country of incorporation

Assets

Liabilities

Revenue

Profit/(Loss)

% Interest

(EUR ‘000)

(EUR ‘000)

(EUR ‘000)

(EUR ‘000)

Spain France

9 195 172 972

5 463 158 813

9 138 119 200

-443 1 277

24.5% 19.9%

Belgium Canada

46 3 355

3 3 027

0 3 391

-2 184

19.9% 48.0%

USA Germany

335 48 794

227 48 775

754 24

-14 -3

40.0% 50.0%

Spain Canada

10 174 2 956

5 952 2 626

10 686 4 111

574 100

24.5% 48.0%

USA Morocco

306 5 374

680 4 342

1 276 0

-355 -145

40.0% 25.0%

Germany Japan

80 368 4 571

80 348 4 330

849 1 332

1 -79

50.0% 39.8%

(1) Fiscal year ends September 30. Figures are at December 31, 2008 (three months of operations).

10.2 Jointly controlled companies In 2006, IBA formed a joint venture named Striba GmbH with Strabag Projektenwicklung GmbH (Germany). This joint-venture will provide a proton therapy system and related medical technology to the Universitätsklinikum Essen (North-Rhine, Westphalia, Germany).

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

(EUR ‘000)

December 31, 2008

December 31, 2007

Assets Non-current assets Current assets TOTAL

0 80 368 80 368

0 48 794 48 794

Liabilities Non-current liabilities Current liabilities TOTAL

0 80 348 80 348

0 48 775 48 775

20

19

849 848 1

24 27 -3

Net assets Revenue Expense/(income) Result after tax

62 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

11. Deferred taxes (EUR â&#x20AC;&#x2DC;000)

December 31, 2008

December 31, 2007

Deferred tax assets - Deferred tax asset to be recovered after more than 12 months - Deferred tax asset to be recovered within 12 months TOTAL

28 682 5 304 33 986

26 160 7 152 33 312

Deferred tax liabilities - Deferred tax liabilities to be paid after more than 12 months - Deferred tax liabilities to be paid within 12 months TOTAL Net deferred tax assets

286 184 470 33 516

259 110 369 32 942

Deferred tax assets (EUR â&#x20AC;&#x2DC;000) At January 1, 2007 (Credited)/charged to the income statement Currency translation difference At December 31, 2007 (Credited)/charged to the income statement Acquisition of companies Currency translation difference At December 31, 2008

Deferred tax liabilities (EUR â&#x20AC;&#x2DC;000) At January 1, 2007 Credited/(charged) to the income statement Currency translation difference At December 31, 2007 Credited/(charged) to the income statement Acquisition of companies Currency translation difference At December 31, 2008

Tax losses

Other

Total

(EUR '000) 26 935 9 428 -1 094 35 269 -6 552 7 063 163 35 943

(EUR '000) -1 957

-1 957

(EUR '000) 24 978 9 428 -1 094 33 312 - 6 552 7 063 163 33 986

Other

Total

225 144 0 369 17 84 0 470

225 144 0 369 17 84 0 470

-1 957

Deferred income tax assets are recognized 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, 2008, deferred taxes totaling EUR 19.7 million (EUR 33.8 million in 2007) were not recognized as assets on the balance sheet. The related tax losses do not have an expiration date.

IBA Annual report 2008 | 63

12. Other long-term assets (EUR ‘000)

December 31, 2008

December 31, 2007

29 097

15 545

81

143

29 943 5 990 65 111

0 2 953 18 641

Long-term receivables on contracts in progress Receivables on disposal of subsidiaries Long-term receivables for decommissioning of sites Other assets TOTAL

In December 2008, the French subsidiary CIS Bio International S.A.S. obtained nuclear operator status, which made it mandatory to set aside restricted assets for the future decommissioning and restoration of the nuclear medicine facilities at the site in Saclay, France.

At December 31, 2008, these assets, included in “Long-term receivables for decommissioning of sites,” totaled EUR 28.5 million. This caption also includes deposits of EUR 1.4 million held in blocked accounts in the U.S. in order to meet legal obligations in certain States (Illinois and California).

Long-term liabilities arising from contracts in progress include down payments of

EUR 29.1 million (EUR 15.5 million in December 2007) on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition under IAS 39.

At December 31, 2007, “Other assets” included EUR 1.4 million for the fair value of an option to increase percentage ownership in CIS Bio International S.A.S. At December 31, 2008, “Other assets” consisted primarily of receivables of EUR 3.0 million with associates and of investments in structured products with repayment horizons of more than 12 months.

13. Inventories and contracts in progress Following the sale of two machines in inventory, in 2007 the Group reversed write-downs of EUR 3.2 million previously recorded for these equipments.

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

(EUR ‘000)

December 31, 2008

December 31, 2007

Raw materials and supplies

27 278

11 955

Finished products Work in progress Contracts in progress Write-off on inventories and contracts in progress Inventories and contracts in progress

8 568 24 032 31 882 -6 001 85 759

2 265 5 895 22 267 -1 483 40 899

December 31, 2008

December 31, 2007

160 490 -128 608 31 882

94 481 -72 214 22 267

26 759

31 984

Contracts in progress (EUR ‘000) Costs to date and recognized profit Less: progress billings Contracts in progress Net amounts due to customers for contracts in progress (Note 23)

64 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

14. Trade and other receivables 14.1 Trade receivables Trade accounts receivable can be broken down as follows: (EUR ‘000)

December 31, 2008

December 31, 2007

1 580

11 438

82 121 -8 881 74 820

35 433 -2 628 44 243

Amounts invoiced to customers on contracts in progress but for which payment has not yet been received at balance sheet date Other trade receivables Impairment of doubtful receivables (-) TOTAL

At December 31, 2008, receivables of EUR 4.4 million were given as collateral (EUR 5.7 million in 2007).

At December 31, the repayment schedule for trade receivables (excluding impairments) was as follows: (EUR ‘000)

Total

Not due

<30 days

30-59

60-89

90-179

180-269

270-360

> 1 year

2008 2007

83 701 46 871

38 931 15 566

19 475 9 677

6 721 8 654

5 136 3 291

4 027 3 873

2 939 2 407

1 090 1 330

5 382 2 073

At December 31, 2008, trade receivable impairments totaled EUR 8.9 million. Changes in the provision for doubtful debts for the past two years are as follows: (EUR ‘000) At January 1, 2007 Charge for the year Utilizations Write-backs

4 359 1 207 -603 -2 335

At December 31, 2007 Entry in consolidation scope Charge for the year Utilizations Write-backs Currency translation difference At December 31, 2008

2 628 5 456 1 535 0 -812 74 8 881

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

Other receivables can be broken down as follows: (EUR ‘000) Non-trade receivables and advance payments Deferred charges Accrued income–interest Other current receivables TOTAL

December 31, 2008

December 31, 2007

31 877 4 225 770 5 469 42 341

21 297 5 051 83 1 512 27 943

IBA Annual report 2008 | 65

15. Cash and cash equivalents (EUR ‘000) Cash Restricted cash Short-term bank deposits and commercial paper TOTAL

December 31, 2007

December 31, 2006

24 290 64 29 589 53 943

44 488 1 210 12 512 58 210

At December 31, 2008, the effective interest rate on the cash position was 4.2 percent (3.76 percent in 2007).

Short-term deposits and commercial paper have an average maturity of less than 30 days.

16. Capital stock and stock options 16.1 Capital stock

Balance at January 1, 2007 Stock options exercised Defrayment of loss by reduction of capital surplus Purchase of treasury shares Balance at December 31, 2007 Stock options exercised Capital increase Purchase of treasury shares Balance at December 31, 2008

Number of shares

Ordinary shares (EUR ‘000)

Capital surplus (EUR ‘000)

Treasury shares (EUR ‘000)

Total (EUR ‘000)

25 464 066 335 186

35 747 468

200 898 1 736 -87 435

-256

236 389 2 204 -87 435

25 800 252 218 234 544 611

36 215 306 764

115 199 523 8 636

-6 490 -6 746

26 563 097

37 285

124 358

-6 490 144 668 829 9 400 -817 154 080

-817 -7 563

The Board of Directors approved a capital increase of EUR 9.4 million at its meeting of June 23, 2008. The articles of incorporation of the Group’s parent company were amended to reflect this decision on the same day.

Because this capital increase was carried out in the context of purchasing IRE’s 80.1 percent interest in Radiopharma Partners S.A., the Director representing IRE (Institut National des Radioéléments) did not participate in the Board of Director’s decision of approving the increase.

On April 2, 2009, a dividend of EUR 2.2 million, equivalent to EUR 0.08 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 2008 financial statements.

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

The stock option plans set up in 2000 and 2001 have the following vesting scheme: 25 percent vesting 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.

At December 31, 2008, free float represented 60.14 percent of IBA’s shares on Euronext. Full details of the Group’s shareholders are set out in the section “Shareholders and the Stock Exchange” on page 110 of this annual report.

66 | IBA Annual Report 2008

16.2 Stock options During the period ended December 31, 2008, IBA had eight stock option plans, including a new plan instituted in 2008.

Stock option plans instituted from 2002 onwards have the following vesting scheme: 20 percent vesting at grant date + 1 year, 40 percent at grant date + 2 years, 60 percent at grant date + 3 years,

IFRS consolidated financial statements for the year ended December 31, 2008

80 percent at grant date + 4 years, 100 percent at grant date + 5 years.

In 2005, the Group refunded a capital surplus of EUR 3.1 per share to its shareholders. Following this action, on March 13, 2006, IBAâ&#x20AC;&#x2122;s Board of Directors approved a reduction in the exercise price for IBA employee stock option 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 modification. This change had an impact EUR 0.6 million on the 2007 financial statements and EUR 0.2 million on the 2008 financial statements.

Details of the plans instituted in the course of 2008 and 2007 are given below.

December 31, 2008

December 31, 2007

Stock option 30/11/2008 111 903 14.18 8.74 6 Shares 36.66% 4.75 3.27% 1% 3.5% 1.60 Black & Scholes

Stock option 30/11/2007 338 246 19.94 19.94 6 Shares 39.02% 4.75 4.18% 1% 7.21% 7.91 Black & Scholes

Type of plan Date of grant Number of options granted Exercise price Share price at date of grant Contractual life (years) Settlement Expected volatility Expected option life at grant date (years) Risk-free interest rate Expected dividend (stated as % of share price at grant date) Expected departures at grant date Fair value per granted option at grant date Valuation model

The Company uses the Black & Scholes model to price options, with no vesting conditions other than time. Expected volatility for the stock option plans is based on historical volatility determined by statistical analysis of daily share price movements.

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

At December 31, 2008, a charge of EUR 2.05 million was recognized in the pre-tax financial statements for employee stock options.

The stock options outstanding at December 31, 2008 have the following expiration dates and exercise prices.

Stock option movements can be summarized as follows:

December 31, 2008 Expiration date

February 28, 2009 September 30, 2010 December 31, 2010 September 30, 2011 August 31, 2012 September 30, 2012 September 30, 2013 September 30, 2014 TOTAL outstanding stock options

December 31, 2007

Exercise price (EUR)

Number of stock options

Exercise price (EUR)

Number of stock options

24.90 3.72 12.60 6.37 3.34 13.64 19.94 14.18

167 148 689 300 123 625 90 000 316 457 437 250 338 246 111 903 2 273 929

24.90 3.72 12.60 6.37 3.34 13.64 19.94

167 148 886 000 126 325 90 000 335 291 437 250 338 246 2 380 260

IBA Annual report 2008 | 67

December 31, 2008

Outstanding at January 1 Granted Forfeited (-) Exercised (-) Lapsed (-) Outstanding at December 31 Exercisable at December 31

December 31, 2007

Average exercise price in EUR per share

Number of stock options

Average exercise price in EUR per share

Number of stock options

9.85 14.18

2 380 260 111 903

7.95 19.94

2 377 200 338 246

3.80

-218 234

6.56

-335 186

10.65

2 273 929 1 259 444

9.85

2 380 260 1 071 764

17. Reserves (EUR ‘000) Hedging reserves Other reserves Currency translation difference Retained earnings

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 Belgian Code of Company Law, the legal reserve must equal at least 10 percent of the Company’s capital stock. Until this level is attained, a top slice of at least one-twentieth of the net profit for the year (determined according to Belgian accounting law) must be allocated to building this reserve fund.

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

68 | IBA Annual Report 2008

December 31, 2008

December 31, 2007

689 8 531 -17 064 5 446

1 802 6 595 -12 309 70

Other reserves involve the fair value adjustment of available-for-sale investments, the valuation of employee stock option plans, and actuarial gains and losses on defined benefit plans.

Cumulative translation difference includes differences related to the translation of financial statements of consolidated entities whose functional currency is not the euro. It also includes foreign exchange differences arising on long-term loans that are part of the Group’s net investment in its foreign operations with related parties as defined in IAS 21.

IFRS consolidated financial statements for the year ended December 31, 2008

18. Borrowings (EUR ‘000)

December 31, 2008

December 31, 2007

Non-current Bank borrowings (Note18.1) Other borrowings (Note 18.3) Financial lease liabilities (Note 18.2) TOTAL

6 295 2 5 588 11 885

8 154 4 079 5 621 17 854

Current Short-term bank loans Bank borrowings (Note 18.1) Other borrowings (Note 18.3) Financial lease liabilities (Note 18.2) TOTAL

10 921 3 561 6 455 3 314 24 252

1 458 2 799 517 3 554 8 328

(EUR ‘000)

December 31, 2008

December 31, 2007

Non-current Current TOTAL

6 295 3 561 9 856

8 154 2 799 10 953

December 31, 2008

December 31, 2007

10 953 503 -3 397 1 714 83 9 856

6 378 7 138 -3 384 920 -98 10 953

December 31, 2008

December 31, 2007

3 562 2 996 3 298 0 9 856

2 799 2 568 5 492 94 10 953

18.1 Bank borrowings

Movements on bank borrowings can be detailed as follows: (EUR ‘000) Opening amount New borrowings Repayment of borrowings Entry in consolidation scope Currency translation difference Closing amount

The maturities of bank borrowings are detailed as follows: (EUR ‘000) One year or less Between 1 and 2 years Between 2 and 5 years Over 5 years TOTAL

The effective interest rates for bank borrowings at the balance sheet date were as follows: December 31, 2008

Bank borrowings

December 31, 2007

EUR

USD

EUR

USD

5.97 %

7.07 %

5.97%

6.81%

IBA Annual report 2008 | 69

The carrying amounts of the Group’s borrowings are denominated in the following currencies: (EUR ‘000)

December 31, 2008

December 31, 2007

8 030 1 826 0 9 856

8 530 2 423 0 10 953

December 31, 2008

December 31, 2007

EUR USD RMB

Unutilized credit facilities are as follows: (EUR ‘000) Floating rate - Expiring within one year

0

259

- Expiring beyond one year

40 918

12 716

Fixed rate - Expiring within one year TOTAL

0 40 918

0 12 975

The facilities expiring within one year are annual facilities subject to review at various dates during the 12 months following the end of the fiscal year. The other facilities have been arranged to help to finance the proposed expansion of the Group’s activities.

18.2 Financial lease liabilities Minimum lease payments on finance lease liabilities are as follows: (EUR ‘000) One year or less Later than one year and not later than five years Later than five years

December 31, 2008

December 31, 2007

3 853 5 009

4 063 5 253

1 202

1 111

10 064 -1 162 8 902

10 426 -1 252 9 174

December 31, 2008

December 31, 2007

One year or less Later than one year and not later than five years

3 390 4 431

3 554 4 675

Later than five years

1 081

945

TOTAL

8 902

9 174

Future finance charges on financial leases (-) Present value of finance lease liabilities

The present value of finance lease liabilities is as follows: (EUR ‘000)

The carrying amounts of finance lease liabilities are denominated in the following currencies: (EUR ‘000)

December 31, 2008

December 31, 2007

EUR RMB USD

4 634 77 4 191

2 391 0 6 784

TOTAL

8 902

9 174

The average interest rate paid on finance lease liabilities at December 31, 2008 was 6.91 percent (7.93 percent in 2007).

70 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

18.3 Other borrowings Other 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 January 2009.

19. Provisions

At January 1, 2008 Additions (+) Write-backs (-) Utilizations (-) Actuarial (gains) and losses for the period Reclassifications Changes in consolidation scope Currency translation difference Total movement At December 31, 2008

Environment

Guarantees

Litigation

Employee benefits recognized under IAS 19

Other employee benefits

Other

Total

2 835 10 344 -3 878 -1 310 0

1 453 413 -164 -737 0

3 501 367 -1 484 0 0

0 1 416 -4 795 -209 323

750 150 -102 -164 0

3 774 388 -774 - 1 409 0

12 313 13 078 -11 197 -3 829 323

0 45 510

0 0

0 21

0 23 234

-99 1 114

3 17 871

-96 87 750

40

-17

-24

0

0

30

29

50 706 53 541

-505 948

-1 120 2 381

19 969 19 969

899 1 649

16 109 19 883

86 058 98 371

19.1 Environment Provisions for decommissioning costs related to the Group sites where radiopharmaceutical agents are produced have been recognized where an obligation exists to incur these costs. This caption also includes provisions for obligations in connection with disposing of used radioactive sources and equipment. These provisions are measured at the net present value of the best estimate of the costs that will need to be incurred.

More information on these provisions is included in Note 3 of this report.

19.2 Guarantees Provisions for guarantees cover guarantees for machines sold to customers.

19.3 Litigation Provisions for litigation at December 31, 2008 are primarily for the following: Potential tax litigation in Sweden, for which a provision of EUR 1.2 million is presented at December 31, 2008.

Litigation in the United States, for which a provision of USD 3 million was presented at December 31, 2007. This provision was reduced to USD 1 million

at December 31, 2008 (see Note 29).

Labor-related litigation in France for which a provision of EUR 0.4 million is presented at December 31, 2008.

19.4 Provisions for employee benefits Provisions for employee benefits at December 31, 2008 are primarily for the following: Obligations of EUR 7.8 million incurred by CIS Bio International S.A.S. for entitlements of employees active at year-end, in the form of benefits, supplements, and other retirement compensation not covered by the pension or insurance funds ( lump-sum retirement payments, known as IDRs).

Obligations of EUR 12.3 million incurred by CIS Bio International S.A.S. for entitlements arising from the lowering of the retirement age for employees working or having worked in hazard areas.

Note that in 2008 these provisions were decreased

by EUR 4.9 million due to the partial termination of a labor agreement with CIS Bio International S.A.S. that governs various entitlements and benefits previously granted to employees and retired employees (see Note 27).

IBA Annual report 2008 | 71

19.5 Other Other provisions at December 31, 2008 consisted primarily of the following: EUR 12.0 million for obligations incurred by CIS Bio International S.A.S. upon formalization of a restructuring plan (prior to joining the IBA Group).

EUR 4.6 million for obligations related to the

treatment of production wastes and disposal of equipment.

EUR 1.3 million for commitments made on acquisition of Schering AG’s FDG business in 2006.

20. Other long-term liabilities (EUR ‘000) Advances received from local government Liabilities to shareholders Other TOTAL

In 2008, the Group received advances of EUR 1.2 million in cash from the Walloon Region of Belgium, free of interest.

The Group repaid EUR 76.4 million to its shareholders in January 2005. Of this amount, EUR 0.4 million remained unclaimed at December 31, 2007. In 2008, these liabilities to shareholders were reclassified as other short-term liabilities

December 31, 2008

December 31, 2007

16 305 0 29 210 45 515

15 097 403 18 263 33 763

in view of their due dates (EUR 0.2 million at December 31, 2008).

Other long-term liabilities include down payments of EUR 29.1 million (EUR 15.5 million in December 2007) received on proton therapy contracts for which the corresponding receivable amounts do not qualify for derecognition under IAS 39.

21. Other short-term financial assets and liabilities The Group’s policy on use of financial instruments is detailed in Note 1.22 on Group accounting policies and Note 2 on financial risk management.

At December 31, 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 expressed in USD. At December 31, 2008, this amount stood at EUR 2.3 million and included both cash flow hedge instruments (EUR 2.0 million) and hedging instruments accounted for at fair value through profit and loss (EUR 0.3 million).

At December 31, 2008, an amount of EUR 2.5 million was designated as a short-term financial liability and represented the value of cash flow hedge instruments (EUR 0.9 million), as well as that of hedging instruments accounted for at fair 72 | IBA Annual Report 2008

value through profit and loss (EUR 1.6 million).

Some of these financial instruments are designated as hedging instruments inasmuch as they hedge specific exchange rate risks to which the Group is exposed. Hedge accounting has been applied to these contracts because they are deemed to be effective hedges 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 0.7 million were recognized directly in equity (in the “Hedging reserves” caption) at December 31, 2008. At December 31, 2007, these cumulative gains stood at EUR 1.8 million.

IFRS consolidated financial statements for the year ended December 31, 2008

22. Trade payables At December 31, the payment schedule for trade payables was as follows: Total (‘000)

2008 2007

71 518 51 191

Due < 3 months

11 875 13 498

55 857 36 949

4-12 months

1-5 years

> 5 years

3 786 743

0 0

0 0

23. Other payables (EUR ‘000)

December 31, 2008

December 31, 2007

26 759

31 984

18 818 42 417 2 157 1 019 9 534 100 704

8 530 5 893 4 471 750 6 396 58 024

Amounts due to customers on contracts in progress (or advances received on contracts in progress) Social security liabilities Accrued charges Deferred income Capital grants Other Other payables

In 2008, accrued charges increased by EUR 38.8 million as a consequence of the integration of CIS Bio International S.A.S. Most of this (EUR 20 million) was for work required to bring the site at Saclay, France, into compliance with

safety and pharmaceutical standards.

In 2008, social security liabilities increased by EUR 9.8 million as a result of the integration of CIS Bio International S.A.S.

24. Other operating expenses and income 24.1 Other operating expenses Other operating expenses are as follows: (EUR ‘000) Legal costs Stock option plan expenses Depreciation and impairment Amortization of revaluation to fair value of assets on the balance sheet of CIS Bio International S.A.S. Other TOTAL

Legal costs at December 31, 2007 included costs associated with settling the lawsuit with Optivus Proton Therapy Inc (EUR 1.9 million) and provision for a suit affecting the U.S. subsidiary IBA Molecular North America Inc (EUR 2.1 million) (see Notes 24.2 and 29).

At December 31, 2007, the caption “depreciation and

December 31, 2008

December 31, 2007

0 2 052 9 480 5 851

4 329 2 266 1 692 0

1 488 18 871

427 8 714

impairment” included a EUR 1.5 million impairment of trade receivables for a customer in the United States.

At December 31, 2008, the caption “depreciation and impairment” includes an impairment of a thirdparty investment (EUR 3.7 million) and depreciation on decommissioning assets related to the Radiopharmaceuticals activity (EUR 5.4 million).

IBA Annual report 2008 | 73

24.2 Other operating income The following is a breakdown of other operating income: (EUR ‘000) Recovery of provisions for legal costs (see Note 29) Recovery of provisions for post-employment benefits (see Note 27.2) Recovery of provisions for other employee benefits Reversal of depreciation and impairment CEA contribution to restricted assets Gains on sale of fixed assets Other TOTAL

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

In 2008, the caption “Reversal of depreciation and impairment” primarily reflects the reversal of a write-down posted during the previous period on a receivable of EUR 2.2 million with an associate.

In December 2008, the French subsidiary CIS Bio International S.A.S. obtained nuclear operator status, which makes it mandatory to set aside restricted assets over time to cover the future restoration and decommissioning of the nuclear facilities at the site in Saclay, France.

December 31, 2008

December 31, 2007

-1 484 -4 795 -103 -2 226 -14 050 -1 679 -893 -25 230

0 0 0 -3 966 0 0 0 -3 966

In this context, CIS Bio International S.A.S. has signed a memorandum of agreement with the CEA (Commissariat à l’Energie Atomique), a public organism organized under French law, previous owner of the nuclear facilities of CIS Bio International S.A.S. The CEA agreed to pay monetary compensation of EUR 14.05 million to definitively extinguish its obligation to contribute to the future costs of restoring and decommissioning the nuclear facilities of CIS Bio International S.A.S. In 2008, the Group also sold the assets at two radiopharmaceutical production facilities in the United States, which generated gains of EUR 1.7 million.

25. Financial expenses and income 25.1 Financial expenses (EUR ‘000) Interest paid on debts Foreign exchange differences Changes in fair value of derivatives Other TOTAL

December 31, 2008

December 31, 2007

1 945 3 444 2 266 5 929 13 584

1 747 1 477 171 958 4 353

At December 31, 2008, the caption “Other” mainly reflected the impact of the revaluation of financial assets to fair value through profit and loss (EUR 2.26 million) (see Note 2.2), the cost of discounting defined benefit retirement plans (EUR 0.7 million), and expenses related to the discounting of provisions for decommissioning (EUR 1.97 million).

74 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

25.2 Financial income (EUR ‘000) Interest received on receivables and cash position Foreign exchange differences Changes in fair value of derivatives Other TOTAL

December 31, 2008

December 31, 2007

-2 616 -5 728 -611 - 1 992 -10 947

-2 321 -1 222 0 -354 -3 897

At December 31, 2008, the caption “Other” mainly reflected the impact of revaluation to fair value of an option allowing the Group to increase its percentage ownership in CIS Bio International S.A.S. and subsidiaries (EUR 1.35 million).

26. Income taxes The tax charge for the year can be broken down as follows: (EUR ‘000) Current taxes Deferred taxes TOTAL

December 31, 2008

December 31, 2007

212 6 569 6 781

2 301 -9 284 -6 983

The tax charge on IBA’s result before taxes differs from the theoretical amount that would have resulted from application of the average applicable tax rates to the profits of the consolidated companies. The analysis is as follows: (EUR ‘000) Profit/(loss) before taxes Taxes calculated on the basis of national tax rates Unrecognized deferred taxes Tax-exempt transactions Prior year adjustments on deferred taxes Write-down of previously recognized deferred tax assets Loss available for offset against future taxable income Utilization of previously unrecognized tax losses Local tax expense eliminated in consolidation Other tax (income)/expenses Reported tax charge Theoretical tax rate Effective tax rate

December 31, 2008

December 31, 2007

12 110 4 251 5 053 2 482 0 2 177 0 -5 240 -1 101 -841 6 781 35.1% 56.0%

6 862 2 130 691 3 880 -2 157 0 -5 931 -5 669 0 73 -6 983 31.0% -101.8%

Given the extent of available tax losses, IBA did not calculate deferred taxes on items credited or charged directly to equity.

IBA Annual report 2008 | 75

27. Employee benefits 27.1 Defined contribution plans At December 31, 2008, the Group recognized expenses of EUR 0.6 million for defined contribution plans (EUR 1.1 million at December 31, 2007).

27.2 Defined benefit plans IBA records provisions for the defined benefit plans of its subsidiary CIS Bio International S.A.S. At December 31, 2007, IBA did not have any defined benefit plans.

Changes in the present value of defined benefit obligations are presented as follows: (EUR ‘000)

December 31, 2008

Defined benefit obligations at May 31, 2008 Cost of services rendered for the period Cost of discounting Plan termination Benefits paid Actuarial (gains) and losses for the period Defined benefit obligations at December 31, 2008

23 234 694 722 - 4 795 -209 323 19 969

The impact of plan termination was recorded in “Other operating income” (see Note 24.2).

Defined benefit plan expenses recognized through profit and loss can be broken down as follows: (EUR ‘000)

December 31, 2008

Cost of services rendered for the period Cost of discounting Expenses/(income) for the period

694 722 1 416

Defined benefit plan expenses accounted for through profit and loss are included in the following income statement captions: (EUR ‘000)

December 31, 2008

General and administrative expenses Financial expenses, other Expenses/(income) for the period

The principal actuarial assumptions at the date of closing are summarized in the note 3(e) above.

76 | IBA Annual Report 2008

694 722 1 416

IFRS consolidated financial statements for the year ended December 31, 2008

28. Cash flow statement At December 31, 2008, the caption “Other noncash items” included expenses in connection with employee stock option plans (EUR 2.1 million); inventory losses and write-downs, including the results of reversing asset revaluations during fair value revaluation of the balance sheet of CIS Bio International S.A.S. (EUR 5.4 million); actuarial gains and losses on employee benefits (EUR -0.3 million); the impact of revaluations and gains on the sale of fixed assets (EUR -2.4 million); and the impact of including unrealized foreign exchange differences on the revaluation of the intercompany balance sheet positions of the Group (EUR -1.8 million) .

At December 31, 2008, “Other cash flows from investing activities” reflected investments made to bring the site at Saclay, France, into compliance with safety and pharmaceutical standards.

At December 31, 2008, “Other cash flows from financing activities” included grants and interestfree cash advances from the Walloon Region of Belgium (EUR 1.6 million), repayment of a loan to a

company of the Group, Schering (EUR -1.5 million), and changes in liabilities to Group employees in connection with the exercise of stock option plans (EUR -0.9 million).

At December 31, 2007, the caption “Other non-cash items” included expenses for employee stock option plans as well as inventory losses and write-downs.

At December 31, 2007, “Other cash flows from investing activities” mainly include repayment of a loan made to a customer in the context of the sale of a system.

At December 31, 2007, “Other cash flows from financing activities” 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 tranche of a 2005 company acquisition (EUR 1.4 million), and changes in liabilities to Group employees in connection with the exercise of stock option plan (EUR -0.6 million).

29. Contingent liabilities 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 the end of 2007 as well as the principal cases pending at December 31, 2008 are presented in this Note.

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 2009. A provision of SEK 12.9 million (EUR 1.2 million) was set aside during a prior period.

Developments in litigation pending at December 31, 2008 mentioned in the 2007 annual report

Litigation with Bayer Schering Pharma AG IBA and Schering AG (now Bayer Schering Pharma AG) disagreed on the amount of the net cash flow position when the sale of CIS Bio International was made. Bayer Schering Pharma AG demanded a payment of EUR 0.3 million. The dispute was submitted for arbitration to KPMG France, which sided with IBA. Despite this decision, Bayer Schering Pharma AG is still demanding payment of this amount. However, there are no proceedings pending.

Tax litigation in Sweden The Company is involved in a tax dispute with the Swedish National Tax Board. The case involves interest paid by the IBA Group from Belgium to an IBA 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

IBA Annual report 2008 | 77

Additionally, in connection with the takeover of the Japanese operations, 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. No formal litigation has been instigated to date.

efforts to contest the Court’s decision and to obtain fuller compensation from Pharmalogic’s previous insurers. This litigation is pending.

Action for damages against IBA Molecular North America Inc In 2005, IBA Molecular North America Inc took over three FDG production facilities from the Pharmalogic 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 involving a police vehicle and injured a police officer. The case went to jury trial. On February 19, 2008, the court found Pharmalogic 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 offer, and damages of USD 3 million were awarded for which Pharmalogic is responsible. Pharmalogic was ordered to pay this amount.

Litigation in 2008 In the context of the acquisition of CIS Bio International S.A.S., the parties agreed that Bayer Schering Pharma AG would pay an additional EUR 4 million in the event that CISBIO obtained the INB (Basic Nuclear Facility) designation before December 31, 2008. This amount was intended to help CISBIO set aside the reserves required by law of all INB-designated facilities to cover any costs for decommissioning their facilities. A French decree of December 15, 2008 conferred INB status on CISBIO, and Bayer Schering Pharma AG was asked for the EUR 4 million.

Bayer Schering Pharma AG refused to pay on the pretext that the law allows the use of means other than cash to establish the guarantee and that its contractual commitment applied only in the case of a mandatory cash reserve. IBA believes that Bayer Schering Pharma AG has no basis for its position and will institute arbitration proceedings for payment through AFA (Association Française d’Arbitrage, French Arbitration Association) in the near future.

In 2008, acting on a post trial motion, the Court reduced the damage amount to USD 2.3 million.

IBA was able to obtain compensation from Pharmalogic’s previous insurers for any amount in excess of USD 1 million. IBA is continuing its

The provision of USD 3 million set aside in 2007 has been reduced to USD 1 million.

30. Commitments 30.1 Operating leases The Group has a number of non-cancelable operating leases relating to vehicle and office space rental.

Total future minimum lease payments under non-cancelable operating leases are as follows: (EUR ‘000) One year or less From one to five years Over five years TOTAL

December 31, 2008

December 31, 2007

6 029 11 402 6 820 24 251

3 936 9 884 6 903 20 723

Total operating lease payments included in the income statement in 2008 amounted to EUR 5.1 million (EUR 3.9 million in 2007), of which EUR 1.4 million were for CIS Bio International S.A.S.

78 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

30.2 Financial guarantees At December 31, 2008, IBA held financial guarantees for EUR 90 million given by Group entities as security for debts or commitments. Of

this amount, EUR 10.4 million cover guarantees given by the parent company to cover its subsidiaries’ financial lease liabilities and bank borrowings.

31. Related party transactions 31.1 Consolidated companies A list of subsidiaries and equity-accounted companies is provided in Note 5.

31.2 Shareholder relationships The following table shows IBA shareholders at December 31, 2008:

Belgian Anchorage IRE (Institut des Radioéléments) Sopartec UCL IBA Investments SCRL * Public Total

Number of shares

%

7 773 132 1 423 271 529 925 426 885 433 692 15 976 192 26 563 097

29.26% 5.36% 1.99% 1.61% 1.63% 60.14%

* At December 31, 2008, IBA held a total of 433 692 of its own shares through the company IBA Investments SCRL, a wholly owned indirect subsidiary.

IBA’s dominant shareholders—Belgian Anchorage, Belgian Leverage, UCL, Sopartec, and IRE—have declared that they are acting jointly and have entered into an agreement which expires in 2013. In late December 2007, Belgian Leverage transferred all of its stock in IBA to its parent, Belgian Anchorage. The above shareholders’ agreement governs, inter alia, the sharing of information and preferential rights to purchase IBA stock. The parties to this agreement held 10 153 213 shares of ordinary stock at December 31, 2008, representing 38.22 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 exceptions. In particular, it does not apply in the case of a transfer of stock to Belgian Anchorage S.A. In an agreement signed February 19, 2008, IRE granted IBA a call option on its entire interest in Radiopharma Partners (80.1 percent) and Sceti Medical Labo KK (19.9 percent). This call option was conditional on receipt of notice from IBA of compliance with French regulations applicable to CISBIO regarding the notification to employees.

Should it exercise this option, IBA would pay the agreed price in a combination of cash and IBA shares. Without prejudice to the rights and obligations arising under other shareholder agreements, IRE agreed to hold these shares for five years, to grant IBA a preemptive right to purchase these share, and to continue to strive to maintain the “Belgian mooring” of IBA’s shareholders.

On May 29, 2008, IBA exercised this call option to purchase IRE’s 80.1 percent interest in Radiopharma Partners and 19.9 percent interest IBA Annual report 2008 | 79

in Sceti Medical Labo KK. The approximately EUR 20 million price of the transaction was paid half in cash and half in IBA S.A. stock in order to further strengthen the historic relationship between IBA and IRE, one of its founding shareholders. The cash payment will provide venture capital to fund projects useful for the joint development of IRE, CIS Bio International S.A.S., and IBA. IBA and IRE have also agreed to develop different collaborative projects in which synergies can be optimized by pooling expertise and scientific, technical, and commercial resources.

31.3 Directors and management As indicated in the corporate charter (the â&#x20AC;&#x153;Charterâ&#x20AC;?), 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 shareholders and is potentially harmful to the Company. However, communication of information on compensation policy is important for shareholders and is detailed in the Charter.

Actual compensation in 2008 is described below.

31.3.1 Directors Fixed compensation paid to members of the Board of Directors for services rendered in 2008 totaled EUR 0.13 million. Managing directors were not compensated for attending meetings of the Board of Directors. Non-managing directors did not receive any compensation or other direct or indirect benefit from the Company or any other entity belonging to the Group for their services.

However, with the exception of Nicole Destexhe, Peter Vermeeren, and Jean-Jacques Verdickt (J.J. Verdickt SPRL), all of the directors were included as beneficiaries of the 2008 stock option plan.

Because the number of options involved is quite small, the Company believes that granting these options does not interfere with the judgment of the recipient directors.

The Company considers that the amount of compensation or other benefits given directly or indirectly to individual directors by the Company or any other entity in the Group is not relevant to this report and should not be included in it.

80 | IBA Annual Report 2008

31.3.2 The Chief Executive Officer, the managing directors, and the management team The Board is careful to ensure that the managing directors and the management team are compensated for direct and indirect services to the Company in a manner consistent with market practices based on level of responsibility, services rendered, and nature of duties.

As indicated in the Charter, fixed and variable compensation of the managing directors is determined by the Compensation Committee in accordance with principles approved by the Board. Fixed and variable compensation of the management team is reviewed and determined by the Chief Executive Officer. It has been reported to the Compensation Committee and the Board of Directors and discussed by both.

The principle of launching a stock option plan in 2008 and the total number of options issued was approved by the Board of Directors. The Compensation 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 all other entities in the Group in compensation for duties exercised and services rendered directly or indirectly by the two managing directors and the nine members of the management team came to approximately EUR 3.5 million in 2008: around EURÂ 2.5 million for fixed compensation and around EUR 1 million for variable compensation, given the performance realized in 2007. These amounts are always stated as cost to the company. Note that fixed compensation includes a Group contribution of EUR 0.2 million to a defined contribution plan.

The Company considers that the amount of compensation or other benefits given directly or indirectly to the Chief Executive Officer or to the members of the management team by the Company or any other entity in the Group is not relevant to this report and should not be included in it.

At December 31, 2008, all of the directors together held 1 431 171 shares of IBA stock directly (including 1 423 271 shares held by IRE).

IFRS consolidated financial statements for the year ended December 31, 2008

At the same date, the non-managing directors still held: 600 IBA stock options granted under the 2000 stock option plans 600 IBA stock options granted under the 2001 stock option plans 600 IBA stock options granted under the 2002 stock option plans 15 000 IBA stock options granted under the 2006 stock option plans 6 000 IBA stock options granted under the 2007 stock option plans 1 000 IBA stock options granted under the 2008 stock option plans

255 500 options granted under the 2002 stock

At December 31, 2008, members of the management team, including the managing directors, held a total of 785 436 stock options distributed as follows: 6 500 options granted under the 2000 stock option plan at the strike price of EUR 24.90 50 000 options granted under the 2001 stock option plan at the strike price of EUR 12.60

option plan at the strike price of EUR 3.34 176 500 options granted under the 2004 stock option plan at the strike price of EUR 3.72 10 000 options granted under the 2005 stock option plan at the strike price of EUR 6.37 124 000 options granted under the 2006 stock option plan at the strike price of EUR 13.64 107 261 options granted under the 2007 stock option plan at the strike price of EUR 19.94 55 675 options granted under the 2008 stock option plan at the strike price of EUR 14.18 The Company believes that (i) the number of shares, stock options, or any other option purchase rights granted to the Chief Executive Officer or any other members of executive management during the course of the year and (ii) the principal contract provisions regarding the departure of executive managers are not relevant to this report and should not be included in it.

32. F ees for services rendered by the statutory auditors Ernst & Young Reviseurs dâ&#x20AC;&#x2122;Entreprises SCRL, auditors of the statutory accounts of IBA S.A. and auditors of the consolidated accounts of IBA, provided the following services during the year: (EUR â&#x20AC;&#x2DC;000) Remuneration for statutory audits and audit of consolidated accounts Tax-related services Other services TOTAL

December 31, 2008 643 7 26 676

IBA Annual report 2008 | 81

33. I frs standards and ifric interpretations not yet effective or applied by the Group The IFRS standards and IFRIC interpretations below will be mandatory after 2008 but have not yet been applied by the Group.

expects that this interpretation will have no impact on the Group’s financial statements as no such schemes currently exist.

IAS 23 – Borrowing costs A revised IAS 23 Borrowing Costs was issued in March 2007 and becomes effective for financial years beginning on or after January 1, 2009. The standard was revised to require capitalization of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial amount of time to get ready for its intended use or sale. In accordance with the transitional requirements in the standard, the Group will adopt this as a prospective change. Accordingly, borrowing costs will be capitalized on qualifying assets with a commencement date after January 1, 2009. No changes will be made for borrowing costs incurred to this date that have been expensed.

IFRIC 14 IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction IFRIC Interpretation 14 was issued in July 2007 and becomes effective for annual periods beginning on or after January 1, 2009. 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. Implementation of this interpretation will have no impact on the Group’s financial statements.

IFRIC 12 – Service concession arrangements IFRIC Interpretation 12 was issued in November 2006 and becomes effective for annual periods beginning on or after January 1, 2008. This interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession agreements. Because this standard had not been endorsed by the European Union at December 31, 2008, the Group has not implemented it. Also, no member of the Group is a concession operator, and hence this interpretation will have no impact on the Group.

IFRIC 13 – Customer loyalty programs IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual periods after December 31, 2008. This interpretation requires customer loyalty award credits to be accounted 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 82 | IBA Annual Report 2008

IFRIC 15 – Agreements for the construction of real estate IFRIC Interpretation 15 was issued in July 2008 and becomes effective for annual periods beginning on or after January 1, 2009. It is to be applied retrospectively. It clarifies when and how revenue and related expenses from the sale of a real estate unit should be recognized if an agreement between a developer and a buyer is reached before the construction of the real estate is completed. Furthermore, the interpretation provides guidance on how to determine whether an agreement is within the scope of IAS 11 or IAS 18. IFRIC Interpretation 15 will have no impact on the Group’s consolidate financial statements as it is not involved in activities of this kind.

IFRIC 16 – Hedges of a net investment in a foreign operation IFRIC Interpretation 16 was issued in July 2008 and becomes effective for annual periods beginning on or after October 1, 2008. It is to be applied prospectively. The interpretation provides guidance on accounting for the hedge of a net investment in a foreign operation. It clarifies which foreign exchange risks qualify for hedge accounting and where within the group the hedging instrument can be held. It also clarifies what amounts should

IFRS consolidated financial statements for the year ended December 31, 2008

be reclassified to profit or loss on disposal of a hedged foreign operation with respect to exchange differences from translation of the foreign operation and gains and losses arising from the hedging instrument. An analysis is underway within the Group to determine which accounting treatments apply when a foreign operation is disposed of.

IFRS 2 – Share-based payments: Vesting conditions and cancellations This amendment to IFRS 2 Share-based Payments was published in January 2008 and becomes effective for annual periods beginning on or after January 1, 2009. The standard restricts the definition of “vesting condition” to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are nonvesting 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-vesting conditions attached and, therefore, does not expect any significant impact on its accounting for share-based payments.

Amendments to IFRS 1 – First-time adoption of IFRS and IAS 27 – Consolidated and separate financial statements The amendment to IFRS 1 allows first-time adopters to determine the cost of investments in subsidiaries, jointly controlled entities, or associates either in accordance with IAS 27 or using a deemed cost. The amendment to IAS 27 requires all dividends from a subsidiary, jointly controlled entity, or associate to be recognized in profit and loss in the separate financial statements of the parent company. These two amendments become effective for annual periods beginning on or after January 1, 2009. The amendment of IAS 27 is to be applied prospectively. These new obligations will have an impact on the separate financial statements of the parent company but will not affect the consolidated financial statements.

IFRS 3R – Business Combinations and IAS 27R Consolidated and separate financial statements These revised standards were issued in January 2008 and become effective for annual periods beginning on or after July 1, 2009. IFRS 3R introduces a number of changes in accounting for business combinations after this date that will impact the amount of goodwill recognized, the results in the period that an acquisition occurs, and future reported results. IAS 27R clarifies the treatment of a change in the ownership interest in a subsidiary that does not result in loss of control and requires that this change be accounted for as an equity transaction. Therefore, such transactions will have no impact on goodwill, nor will they give rise to a gain or loss. Accounting treatment has also changed for losses incurred by a subsidiary, as well as for loss of control of a subsidiary.

Changes have been made in consequence to IAS 7 Statement of Cash Flows; IAS 12 Income Taxes; IAS 21 The Effects of Changes in Foreign Exchange Rates; IAS 28 Investments in Associates; and IAS 31 Interests in Joint Ventures. IFRS 3R and IAS 27R must be applied prospectively to future acquisitions or disposals and to transactions with minority interests. Early adoption is permitted.

However, the Group did not elect this option.

IAS 1 – (Revised) Presentation of financial statements The revised standard was issued in September 2007 and becomes effective for annual periods beginning on or before January 1, 2009. The standard distinguishes between changes in equity arising from owner transactions and changes in equity arising from non-owner transactions. The Statement of Changes in Equity may show only the details of transactions with owners. Nonowner changes in equity must be presented separately. Furthermore, the standard introduces a new presentation option: the statement of comprehensive income, which includes all items of income and expense a single statement rather than two related statements. The Group has not yet decided whether to publish one statement or two.

IBA Annual report 2008 | 83

IAS 32 – Financial instruments: Presentation and IAS 1 Presentation of financial statements – Puttable financial instruments and obligations arising on liquidation These amendments to IAS 32 and IAS 1 were issued in February 2008 and become effective for annual periods beginning on or before January 1, 2009. They allow the classification of puttable financial instruments as equity, provided that they meet certain specific, restrictive criteria. These amendments will have no impact on the Group’s financial position or performance as it has never issued instruments of this type.

IAS 39 – Financial instruments: Recognition and measurement – Eligible hedged items This amendment to IFRS 39 was issued in August 2008 and becomes effective for accounting periods beginning on or after July 1, 2009. This amendment addresses one-sided risks on hedged items and the designation of inflation as a hedged risk or portion of cash flow in particular situations.

It clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow

variability of a financial instrument as a hedged item. This amendment will have no impact on the Group’s financial position or performance as it has not engaged in transactions of this type.

IFRS 8 – Operating segments IFRS 8 was issued in November 2006 and becomes effective for annual periods on or after January 1, 2009. This standard adopts the same approach to the presentation of operating segments in the notes to financial statements as used by management for its own internal reporting requirements. The Group has not applied this standard and does not expect these changes to have an impact on the Group’s financial statements.

Other changes in IFRS In May 2008, the IASB announced a series of changes in various standards and interpretations designed to eliminate inconsistencies and clarify certain terms. These changes have not been applied in the Group’s financial statements.

34. Events after the balance sheet date In early February 2009, IBA and Eczacibasi-

Monrol Nuclear Products AS joined forces to develop the market for PET (positron emission tomography) and SPECT (single photon computed tomography) radiopharmaceuticals in the Balkans, the Middle East, North African, and Central and Eastern Europe. This means that IBA’s PET radiopharmaceuticals production and distribution network now links 52 facilities around the world.

In the dispute between IBA and the Swedish

National Tax Board, the Swedish administrative court of appeal handed down its decision on March 23, 2009. The court ruled against the Tax Board and in favor of IBA. With the assistance of its tax advisors, IBA is currently weighing the probability that the Tax Board will file a final appeal. Pending completion of its analysis, IBA still considers the risk to be high and is maintaining the provision of SEK 12.9 million (EUR 1.2 million) presented at December 31, 2008.

35. Earnings per share 35.1 Basic earnings Basic earnings per share are calculated by dividing the net profit attributable to Company shareholders by the weighted average number of ordinary shares outstanding during the period. The weighted

84 | IBA Annual Report 2008

average number of ordinary shares excludes shares purchased by the Company and held as treasury shares.

IFRS consolidated financial statements for the year ended December 31, 2008

Basic earnings per share

December 31, 2008 December 31, 2007

Weighted average number of ordinary shares

26 264 308

25 682 274

5 300 0.20

13 930 0.54

Earnings from continuing operations attributable to equity holders of the Group (EUR ‘000) Weighted average number of ordinary shares Basic earnings per share from continuing operations (EUR per share)

5 300 26 264 308 0.20

13 929 25 682 274 0.54

Earnings from discontinued operations attributable to equity holders of the Group (EUR ‘000) Weighted average number of ordinary shares Basic earnings per share from discontinued operations (EUR ‘000)

0 26 264 308 -

1 25 682 274 -

Profit attributable to equity holders of the Group (EUR ‘000) Basic earnings per share from continuing and discontinued operations (EUR per share)

35.2 Diluted earnings Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding for the effects of conversion of all dilutive potential ordinary shares. The Company has only one category of potentially dilutive ordinary shares: stock options.

have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding stock options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the stock options.

The calculation is performed for the stock options to determine the number of shares that could Diluted earnings per share Weighted average number of ordinary shares Weighted average number of stock options Average share price over period Dilution effect from weighted number of stock options Weighted average number of ordinary shares for diluted earnings per share

December 31, 2008 December 31, 2007 26 264 308 1 656 632 14.03 821 762 27 086 070

25 682 274 1 789 081 21.64 1 334 946 27 017 220

Profit attributable to equity holders of the Group (EUR ‘000) Diluted earnings per share from continuing and discontinued operations (EUR per share)

5 300 0.20

13 930 0.52

Earnings/loss from continuing operations attributable to equity holders of the Group (EUR ‘000) Diluted earnings per share from continuing operations (EUR per share)

5 300 0.20

13 929 0.52

Earnings/loss from discontinued operations attributable to equity holders of the Group (EUR ‘000) Diluted earnings per share from discontinued operations (EUR ‘000)

0 -

1 -

IBA Annual report 2008 | 85

Auditorâ&#x20AC;&#x2122;s report on the consolidated financial statements

86 | IBA Annual Report 2008

IFRS consolidated financial statements for the year ended December 31, 2008

IBA Annual report 2008 | 87

Pursuant to the Royal Decree of November 14, 2007, IBA declares that this annual statement was prepared

by Pierre Mottet, Chief Executive Officer (CEO), and Jean-Marc Bothy, Chief Financial Officer (CFO), who declare that, to their knowledge: The consolidated statements for 2008 have been prepared in accordance with applicable accounting standards and accurately reflect the assets, financial position, and earnings of IBA and the undertakings included in the consolidation; The management report gives a true and fair view of the business situation, the earnings, and the position of IBA and the undertakings included in the consolidation, as well as a description of the principal risks and uncertainties facing them.

88 | IBA Annual Report 2008

IBA Annual report 2008 | 89

90 | IBA Annual Report 2008

IBA S.A. annual financial statements In accordance with article 105 of the Belgian Code of Company Law, the following statements represent a condensed version of the annual financial statements. The full text is available on request from the headquarters of the Company and will be filed with the National Bank of Belgium. This condensed version does not contain all of the appendices or the report of the auditor, who expressed an unqualified opinion.

ASSETS (EUR â&#x20AC;&#x2DC;000) FIXED ASSETS Formation expenses Intangible fixed assets Tangible fixed assets Land and buildings Plant, machinery and equipment Furniture and vehicles Leases and similar rights Assets under construction and advance payments Financial assets Affiliated companies Other companies Other financial assets CURRENT ASSETS Accounts receivable after one year Inventories and contracts in progress Inventories Contracts in progress Amounts receivable within one year Trade debtors Other amounts receivable Investments Cash at bank and in hand Deferred charges and accrued income TOTAL ASSETS

2008

2007

2006

242 820 4 1 201 7 287 1 070 367 1 088 3 714 1 048 234 328 232 556 0 1 771 444 522 297 339 775 24 810 314 966 71 359 61 709 9 650 25 654 6 855 583 687 342

193 876 0 801 6 368 879 107 1 251 3 889 242 186 707 185 614 0 1 093 276 022 344 190 898 10 980 179 918 50 787 46 705 4 082 3 000 29 817 1 176 469 898

179 478 0 884 3 457 635 45 862 1 812 103 175 137 172 393 0 2 744 182 807 1 342 121 610 11 385 110 225 24 748 22 740 2 008 33 261 669 1 177 362 285

IBA Annual report 2008 | 91

LIABILITIES AND EQUITY (eur ‘000) SHAREHOLDERS’ EQUITY Capital Additional paid-in capital Reserves Legal reserve Untaxed reserves Retained earnings Capital grants PROVISIONS AND DEFERRED TAXES CREDITORS Amounts payable after one year Financial debts Advances received on contracts in progress Other amounts payable Amounts payable within one year Current portion of amounts payable after one year Financial debts Trade debts Advances received on contracts in progress Current tax and payroll liabilities Other amounts payable Accrued charges and deferred income TOTAL LIABILITIES INCOME STATEMENT (EUR ‘000) Operating income Operating expenses (-) Raw materials, consumables, and goods for resale Services and other goods Salaries, social security, and pensions Depreciation and write-offs on fixed assets Increase/(decrease) in write-downs on inventories, work in progress and trade debtors Provisions for liabilities and charges Other operating expenses Operating Profit/(Loss) Financial income Income from financial assets Income from current assets Other financial income Financial expenses (-) Interest expense Amounts written off on current assets other than inventories, work in progress and trade debtors - increase (decrease) Other financial charges Profit/(loss) on ordinary activities before taxes Extraordinary income (+) Gain on sale of fixed assets Other extraordinary income Extraordinary expenses (-) Extraordinary depreciation and write-offs on fixed assets Amounts written off financial fixed assets Other extraordinary expenses Profit/(Loss) for the period before taxes Income taxes (-) (+) Profit for the period (+) Transfer to tax free reserves (-) Profit/(Loss) for the period available for appropriation 92 | IBA Annual Report 2008

2008

2007

2006

167 961 37 285 124 358 1 329 1 126 203 4 558 430 1 371 518 009 190 183 1 757 78 981 109 445 324 859 3 710 10 000 62 026 230 601 4 203 14 319 2 968 687 342

152 780 36 215 115 198 989 786 203 217 161 1 940 315 178 142 937 2 126 88 375 52 436 171 074 4 337 0 44 933 102 229 4 092 15 483 1 167 469 898

150 124 35 747 200 898 745 542 203 -87 435 169 3 781 208 380 71 789 870 19 546 51 373 135 402 4 562 0 16 238 102 674 2 334 9 594 1 189 362 285

2008

2007

2006

183 445 -185 127 -95 724 -45 826 -25 476 -16 203 - 808 569 -1 658 -1 682 25 724 11 500 4 574 9 651 -13 578 -4 375 -2 271

112 102 -112 649 -54 104 -28 686 -20 309 -8 954 973 1 840 -3 409 - 547 4 998 0 2 353 2 645 -5 313 -1 490 0

67 798 -66 151 -21 191 -22 653 -15 658 -4 822 - 341 - 163 -1 323 1 647 10 634 7 608 1 224 1 802 -9 846 -3 510 0

-6 933 10 464 17 0 17 -3 675

-3 823 - 862 5 735 5 735 0 -1

-6 336 2 435 0 0 0 -3 207

-3 653 - 21 6 807 0 6 807

0 -1 4 872 0 4 872

- 199 -3 008 - 772 0 - 772

6 807

4 872

- 772

IBA S.A. annual financial statements

APPROPRIATION OF RESULTS (EUR ‘000)

2008

2007

2006

Profit/(Loss) to be appropriated Profit for the period available for appropriation Loss carried forward (-) Transfers to capital and reserves Transfer from capital and share premium account Transfer from reserves Appropriations to capital and reserves Appropriation to capital and share premium account Appropriation to legal reserve Appropriation to other reserves Profit/(loss) to be carried forward

7 024 6 807 217 0 0

-82 564 4 872 -87 436 87 436 87 436

-87 436 - 772 -86 664

341

244

341

244

4 558

217

Profit to distribute Dividends

2 125 2 125

4 412 4 412

STATEMENT OF CAPITAL

Capital 1. Issued capital At the end of the previous financial year Changes during the financial year At the end of the financial year 2. Structure of the capital 2.1. Categories of shares • Ordinary shares without designation of face value • Ordinary shares without designation of face value with VVPR strip 2.2. Registered or bearer shares • Registered shares • Bearer shares Own shares held by • The Company itself • Its subsidiaries Share issue commitments Following exercise of share options • Number of outstanding share options • Amount of capital to be issued Maximum number of shares to be issued Amount of non-issued authorized capital

-87 436

Amount (EUR ‘000)

Number of shares

36 215 1 070 37 285

762 845

20 507 16 778

14 734 590 11 828 507 9 500 537 17 062 560

608

433 692

2 273 929 3 183 2 273 929 23 744

IBA Annual report 2008 | 93

94 | IBA Annual Report 2008

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

1. Board of Directors The Board of Directors is composed of nine members. 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 shareholders. The Board of Directors must always be made up of at least one third outside directors and one third directors nominated by the managing directors (“inside directors”). The two managing directors, who are responsible for the Company’s day-to-day management, are also considered inside directors.

The Board of Directors meets whenever necessary, but a minimum of four times a year. The major topics of discussion include market situation, strategy (particularly as concerns acquisitions during the period), technological developments, financial developments, and human resources management. Reports 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 2008, each time under the chairmanship of Peter Vermeeren. Attendance at meetings of the Board was high. A large majority of the directors attended all meetings. Only seven absences were recorded for all of the meetings, which represents an absentee rate of approximately 9.7 percent. The Company considers that the attendance record of individual directors is not relevant to this report and should not be included in it.

At the proposal of the Nominating Committee, the Ordinary General Meeting of May 14, 2008 elected Jean Stephenne to another term as outside director representing Innosté S.A., and Peter Vermeeren to another term as outside director and Chairman of the Board of Directors. It also reelected Pierre Mottet and Eric de Lamotte, the latter representing Bayrime S.A., as inside directors. All of these terms will expire at the 2011 Ordinary General Meeting to approve the financial statements for 2010.

IBA Annual report 2008 | 95

The Board of Directors was comprised of the following nine members at December 31, 2008: Name

Age

Start of term

End of term

Duties at iba

Major duties outside iba

Pierre Mottet (1)

47

1998

2011 OGSM

Chief Executive Officer Inside director Managing director NC

Member of the Executive Committee of FEB (Federation of Enterprises in Belgium) and Agoria Wallonie, board member of AWEX (Walloon Business Association) and several startup companies.

Yves Jongen (1)

61

1991

2010 OGSM

Chief Research Officer Inside director Managing director NC

Before the establishment of IBA in 1986, Director of the Cyclotron Research Center of the Université Catholique de Louvain (UCL)

Eric de Lamotte (1) representing Bayrime S.A.

52

2000

2011 OGSM

Inside director CC, NC, AC

Corporate director Formerly Financial Director of IBA (1991-2000)

Peter Vermeeren (2)

68

2000

2011 OGSM

Chairman of the Board of Directors Outside director CC, NC

Formerly Executive Vice President of Mallinckrodt and Executive Vice President of ADAC

Pierre Scalliet (2) representing S.C.S. PSL Management Consulting

56

2005

2009 OGSM

Outside director

Chief of Service, Oncological Radiotherapy. Professor of Clinical Oncology, Université Catholique de Louvain (UCL)

Jean Stéphenne (2) representing Innosté S.A.

58

2000

2011 OGSM

Outside director CC, NC

Since 1998, President and General Manager of Glaxo-SmithKline Biologicals, Belgium Other offices: Member of the Boards of Directors of Société Belge des Bétons, Fortis, and Nanocyl

Jean-Jacques Verdickt (2) representing SRPL J.J. Verdickt

64

2006

2010 OGSM

Outside director AC

Chairman of Techspace Aero, Vice Chairman of the Euroclear group, member of the Boards of Directors of Alcatel Bell, the Magotteaux group, Euroclear Bank, Logiver, and AWEX (Walloon Business Association)

Olivier Ralet representing Olivier Ralet BDM SPRL

51

2000

2009 OGSM

Other director AC

Licentiate of Law Member of the Executive Committee of Atenor Group S.A., Belgium

Nicole Destexhe representing Institut National des Radioéléments

56

1991

2010 OGSM

Other director

Financial Director of IRE

CC: Compensation Committee – NC: Nominating Committee – AC: Audit Committee (1) As defined in the Charter.

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

No director ceased to meet the independence criteria defined in the Charter during the period.

2. Compensation Committee The Compensation Committee met three times in 2008. A report on each of its meetings was submitted to the Board. Topics of discussion included issues relating to the 2007 bonuses, determination of the beneficiaries of the 2008 stock option plan, directors’ compensation, and compensation schemes in general. All of the members attended each meeting.

96 | IBA Annual Report 2008

The Compensation Committee is comprised of Peter Vermeeren, Jean Stephenne (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.

Corporate governance, management and control

3. Nominating Committee The Nominating Committee met once in 2008 for the purpose of analyzing the areas of expertise needed by the Board of Directors to fill expiring directorship positions and of making proposals in this regard to the Board of Directors. Based on its report, in May 2008 the Board of Directors proposed the reappointment to the Board of Jean Stephenne (representative and managing director of Innosté S.A.), as an outside director, and Peter Vermeeren, as an outside director and Chairman of the Board.

All of the members were present at all meetings.

The Nominating Committee consists of five members, including the Chairman of the Board of Directors and a minimum of two outside directors.

The Nominating Committee is currently comprised of Peter Vermeeren, Jean Stephenne (representative of Innosté S.A.), Eric de Lamotte (representative of Bayrime S.A.), Pierre Mottet, and Yves Jongen. It is chaired by Peter Vermeeren.

4. Audit Committee The Audit Committee met four times in 2008, including three times in the presence of the auditors. A report on each of its meetings was submitted to the Board of Directors. The main topics were the annual results for 2007 and analysis of the auditors’ management letter, analysis of the midyear results, oversight of implementation of IFRS accounting principles, examination of the 2009 budget, and oversight of establishment of an internal audit function. In all of the meetings, there was only one absence.

The Committee is currently comprised of three members: Jean-Jacques Verdickt (representative and manager of J.J. Verdickt SPRL), Oliver Ralet (representative and manager of Olivier Ralet BMD SPRL), and Eric de Lamotte (representative and managing director of Bayrime S.A.). It is chaired by Jean-Jacques Verdickt.

5. Day-to-day and strategic management Day-to-day management and corporate responsibility in such matters is delegated to two managing directors, currently Pierre Mottet, Chief Executive Officer, and Yves Jongen, Chief Research Officer.

asks the management team or division heads to report to the Board on two occasions: adoption of the strategic plan and adoption of the 2009 budget.

The management team was comprised of the following members at December 31, 2008:

The Chief Executive Officer is specifically responsible for implementing strategy and for day-to-day management and is assisted by a management team consisting of certain members of the corporate team and the presidents of the business units. Together, they constitute the Group’s management team.

The Chief Executive Officer, accompanied by the Chief Financial Officer, makes regular reports to the Board of Directors. The Board of Directors also IBA Annual report 2008 | 97

Name

Title

Age

Location

Pierre Mottet

Chief Executive Officer

47

Louvain-la-Neuve, Belgium

Yves Jongen

Chief Research Officer

61

Louvain-la-Neuve, Belgium

Jean-Marc Bothy

Chief Financial Officer

44

Louvain-la-Neuve, Belgium

Jean-Marie Ginion

President Technology Group

59

Louvain-la-Neuve, Belgium

Frank Uytterhaegen

President IBA China

55

Beijing, China

Rob Plompen

President IBA Dosimetry

45

Schwarzenbruck, Germany

Olivier Legrain

President IBA Molecular

40

Saclay, France

Jean-Marc Andral

President IBA Particle Therapy

59

Louvain-la-Neuve, Belgium

Bernard Reculeau

President CISBIO Bioassays

58

Saclay, France

Serge Lamisse

President IBA Industrial

45

Louvain-la-Neuve, Belgium

Didier Cloquet

Chief of Staff

44

Louvain-la-Neuve, Belgium

6. Conflicts of interest At its meeting of March 4, 2008, the Board of Directors was to rule on the report of the Compensation Committee. This situation gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest. After deliberation, the Board unanimously adopted the recommendations made by the Compensation Committee in its report to the Board regarding both the strategic objectives assigned to the managing directors for 2008 and the determination of variable pay for 2007. The managing directors were then informed of the Board’s decision.

Approval of the launch of a stock option plan by the Board of Directors at its August 27, 2008 meeting also gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest.

This conflict of interest affected all of the directors except the Nicole Destexhe, Peter Vermeeren, and Jean-Jacques Verdickt (J.J. Verdickt SPRL).

From the minutes of the meeting: The members approved the principle of launching this plan, as well as the terms of the special report to the Board.

All of the members of the Board were eligible for inclusion in this plan. However, Nicole Destexhe, the Chairman, and Jean-Jacques Verdickt said that they 98 | IBA Annual Report 2008

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 of Company Law. They would not participate further in the discussion.

After discussion, Nicole Destexhe, the Chairman, and Jean-Jacques Verdickt unanimously approved the launch of a stock option plan involving 350 000 options and, consequently, approved the terms of the Board’s special report prepared in compliance with articles 583, 596, and 598 of the Code of Company Law, subject to any changes required by Belgium’s Banking, Finance, and Insurance Commission (CBFA).

Lastly, at its meeting of December 16 and 17, 2008, the Board of Directors was to rule on bringing the compensation of the Chairman of the Board and the Chairman of the Audit Committee in line with market levels. This situation gave rise to application of the procedure stipulated in article 523 of the Belgian Code of Company Law for cases of director conflict of interest.

From the minutes of the meeting: Because discussion of the proposal to increase the compensation of the Chairman of the Board of Directors and the Chairman of the Audit Committee placed these directors in a conflict-of-interest situation under article 523 of the Belgian Code

Corporate governance, management and control

of Company Law, they left the room and did not participate in the discussion.

After deliberation, the Board unanimously approved doubling the compensation of the Chairman of the Board and increasing by 50 percent that of the Chairman of the Audit Committee, who would no longer receive stock options.

On returning to the boardroom, the Chairman of the Board of Directors and the Chairman of the Audit Committee asked that implementation of this decision be put on hold until the financial climate improved.

7. Codes of conduct 7.1 Code of conduct to combat insider trading and market abuse The Company has implemented a code of conduct to combat insider trading and market abuse. This code has been disseminated to all employees.

Furthermore, each of the directors and each member of the management team have signed in acceptance of the code in his or her management capacity.

These individuals made the following transactions in their management capacities in 2008: Exercise of a total of 500 stock options issued under the 2002 stock option plan Exercise of a total of 22 000 stock options issued under the 2004 stock option plan To the best of the Companyâ&#x20AC;&#x2122;s knowledge, there were no violations of the code of conduct in 2008.

7.2 Code of conduct on contractual relationships between the Company or its related companies and parties related to them The Company has implemented a code of conduct governing transactions and other contractual relationships between IBA or its related companies and parties related to them. A transaction with a related party is an operation between the Company or one of its subsidiaries and (a) a member of the Board of Directors of IBA S.A., (b) a member of the Groupâ&#x20AC;&#x2122;s management team, (c) a person living under the same roof as these persons, or (d) an undertaking in which a party referred to in (a), (b), or (c) holds significant voting power, whether directly or indirectly. Such transactions must be conducted in accordance with the normal rules of the market. This code was disseminated to all of the aforementioned parties and signed by them.

8. Compensation policy - Stock and stock options 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 shareholders and is potentially harmful to the Company. However, communication of information on compensation policy is important for shareholders and is detailed in the Charter. Actual compensation in 2008 is described below.

8.1. Directors Fixed compensation paid to members of the Board of Directors for services rendered in 2008 totaled EUR 0.13 million. Managing directors were

not compensated for attending meetings of the Board of Directors. Non-managing directors did not receive any compensation or other direct or indirect benefit from the Company or any other entity belonging to the Group for their services.

However, with the exception of Nicole Destexhe, Peter Vermeeren, and Jean-Jacques Verdickt (J.J. Verdickt SPRL), all of the directors were included as beneficiaries of the 2008 stock option plan.

Because the number of options involved is quite small, the Company believes that granting these options does not interfere with the judgment of the recipient directors.

IBA Annual report 2008 | 99

is not relevant to this report and should not be included in it.

The Company considers that the amount of compensation or other benefits given directly or indirectly to individual directors by the Company or any other entity in the Group is not relevant to this report and should not be included in it.

8.2. The Chief Executive Officer, the managing directors, and the management team The Board is careful to ensure that the managing directors and the management team are compensated for direct and indirect services to the Company in a manner consistent with market practices based on level of responsibility, services rendered, and nature of duties.

At December 31, 2008, all of the directors together held 1 431 171 shares of IBA stock directly (including 1 423 271 shares held by IRE).

As indicated in the Charter, fixed and variable compensation of the managing directors is determined by the Compensation Committee in accordance with principles approved by the Board. Fixed and variable compensation of the management team is reviewed and determined by the Chief Executive Officer. It has been reported to the Compensation Committee and the Board of Directors and discussed by both.

The principle of launching a stock option plan in 2008 and the total number of options issued was approved by the Board of Directors.

The Compensation Committee identified the beneficiaries of the stock options and determined the number of stock options granted to each of them.

The cost to the Company and all other entities in the Group of compensation for duties exercised and services rendered directly or indirectly by the two managing directors and the nine members of the management team was approximately EUR 3.5 million in 2008: around EUR 2.5 million for fixed compensation and around EUR 1 million for variable compensation. These amounts are always stated as cost to the company. Note that fixed compensation includes a Group contribution of EUR 0.2 million to a defined contribution plan.

The Company believes that the amount of compensation and other benefits given directly or indirectly to the Chief Executive Officer individually by the Company or any other entity in the Group 100 | IBA Annual Report 2008

At the same date, the non-managing directors still held: 600 IBA stock options granted under the 2000 stock option plans 600 IBA stock options granted under the 2001 stock option plans 600 IBA stock options granted under the 2002 stock option plans 15 000 IBA stock options granted under the 2006 stock option plans 6 000 IBA stock options granted under the 2007 stock option plans 1 000 IBA stock options granted under the 2008 stock option plans At December 31, 2008, members of the management team, including the managing directors, held a total of 785 436 stock options distributed as follows: 6 500 options granted under the 2000 stock option plan at the strike price of EUR 24.90 50 000 options granted under the 2001 stock option plan at the strike price of EUR 12.60 255 500 options granted under the 2002 stock option plan at the strike price of EUR 3.34 176 500 options granted under the 2004 stock option plan at the strike price of EUR 3.72 10 000 options granted under the 2005 stock option plan at the strike price of EUR 6.37 124 000 options granted under the 2006 stock option plan at the strike price of EUR 13.64 107 261 options granted under the 2007 stock option plan at the strike price of EUR 19.94 55 675 options granted under the 2008 stock option plan at the strike price of EUR 14.18 The Company believes that (i) the number of shares, stock options, or any other option purchase rights granted to the CEO or any other members of executive management during the course of the year and (ii) the principal contract provisions regarding the departure of executive managers are not relevant to this report and should not be included in it.

Corporate governance, management and control

9. Relationship with dominant shareholders Acting in concert, IBA’s dominant shareholders— Belgian Anchorage SCRL, UCL, and Sopartec S.A., IRE FUP, and IBA Investments SCRL—have entered into an agreement that will expire in 2013.

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 10 586 905 shares of ordinary stock at December 31, 2008, representing 39.85 percent of Company’s voting rights.

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.

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

To the best of the Company’s knowledge, there were no other relationships or specific agreements among the shareholders at December 31, 2008.

IBA Annual report 2008 | 101

10. Takeover declarations In application of article 74, para. 7, of the Takeover Bid Act of April 1, 2007 (“Act”), Ion Beam Applications has received the following two takeover declarations pursuant to article 74, para.

6, of the Act:

1. Declaration by related parties, dated October 30, 2007 On October 30, 2007, IBA S.A. acknowledged receipt of a declaration by related parties on behalf of the following companies: Belgian Anchorage S.A. (registered office located at avenue Charles Madoux 13-15, 1160 Brussels), as the owner of 21.22 percent of IBA S.A. capital stock (5 473 132 shares) Belgian Leverage S.A. (registered office located at 3 chemin du Cyclotron, 1348 Louvain-la-Neuve), as a related company of Belgian Anchorage S.A. and the owner of 8.92 percent of IBA S.A. capital stock (2 300 000 shares) IBA Investments SCRL (registered office located at 3 chemin du Cyclotron, 1348 Louvain-la-Neuve), as a related company of Belgian Anchorage S.A. and the owner of 0.11 percent of IBA S.A. capital stock (29 183 shares) In all, the October 31 declaration involved 7 802 315 shares, or 30.25 percent, of IBA S.A.’s capital stock.

2. Declaration by parties acting in concert, dated February 14, 2008 On February 14, 2008, IBA S.A. acknowledged receipt of a declaration by parties acting in concert on behalf of the following companies: Belgian Anchorage S.A. (registered office located at avenue Charles Madoux 13-15, 1160 Brussels), as the owner of 21.22 percent of IBA S.A. capital stock (5 473 132 shares) Belgian Leverage S.A. (registered office located at 3 chemin du Cyclotron, 1348 Louvain-la-Neuve), as a related company of Belgian Anchorage S.A. and the owner of 8.92 percent of IBA S.A. capital stock (2 300 000 shares) IBA Investments SCRL (registered office located at 3 chemin du Cyclotron, 1348 Louvain-la-Neuve), as a related company of Belgian Anchorage S.A. and 102 | IBA Annual Report 2008

the owner of 0.11 percent of IBA S.A. capital stock (29 183 shares) Institut National des Radioéléments (registered office located at Zoning Industriel, Avenue de l’Espérance 1, 6220 Fleurus), acting in concert with the three other declarants (the related parties) and the owner of 3.41 percent of IBA S.A. capital stock (878 660 shares) In all, the February 14 declaration involved 8 680 975 shares, or 33.66 percent, of IBA S.A.’s capital stock.

3. Subsequent events At the end of 2008, IBA S.A. took note of the following events: Belgian Anchorage S.A. had taken over Belgian Leverage S.A., thereby increasing its ownership interest in IBA to a total of 7 773 132 shares, or 29.26 percent, at December 31, 2008.

IBA Investments SCRL had increased its ownership interest to a total of 433 692 shares, or 1.63 percent, at December 31, 2008.

Institut National des Radioéléments had increased its ownership interest to a total of 1 423 271 shares, or 5.36 percent, at December 31, 2008.

As a result, at December 31, 2008, the declaration by related parties in 1 above involved 8 206 824 shares, or 30.89 percent of IBA S.A.’s capital stock.

As a result, at December 31, 2008, the declaration by parties acting in concert in 2 above involved 9 630 095 shares, or 36.25 percent of IBA S.A.’s capital stock.

IBA Annual report 2008 | 103

104 | IBA Annual rapportReport annuel2008 2008

General Information Corporate name Ion Beam Applications S.A., abbreviated IBA S.A.

shareholder request to the Company’s registered office.

Registered office

Capital stock

Chemin du Cyclotron, 3 B-1348 Louvain-la-Neuve; Belgium V.A.T. BE 428 750 985, Nivelles Trade Register

At December 31, 2008, IBA’s capital stock was valued at EUR 37 285 426.37 and consisted of 26 563 097 fully paid shares with no par value, including 11 828 507 shares with VVPR strips.

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 the Belgian Code of Company Law and a company that has issued equity to the public pursuant to article 438 of the Belgian Code of Company Law.

Corporate purpose (article 3 of the articles of incorporation) The purpose of the Company is to engage in research and development and to acquire intellectual property rights with a view to the exploitation, fabrication, and marketing of applications and equipment in the field of applied physics. It may engage in any and all securities, real-estate, financial, commercial, and industrial operations that are directly or indirectly related to its corporate purpose. It may acquire an interest, by contribution, merger, purchase of shares, or any other means, in companies, partnerships, or corporations whose purpose is similar, analogous, related, or useful to the achievement of its corporate purpose in whole or in part.

Consultation of corporate documents The Company’s statutory and consolidated statements are on file with the National Bank of Belgium. Copies of the Company’s consolidated articles of incorporation, its annual and semiannual reports, and all other shareholder documentation may be obtained at the Company’s website (www.iba-worldwide.com) or by

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 allowed 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, 2008, 167 148 of the 2000 Plan stock options remained outstanding.

In October 2001, the Company issued 500 000 stock options for Group employees (“2001 Plan”).

Of these options, 121 100 were canceled by notarial act on July 9, 2002, and 118 375 were canceled 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 procedures during specific periods between December 1, 2002 and December 31, 2010. The following options were exercised in 2008: 1 500 by notarial act of January 16, 2008; 600 by notarial act of July 16, 2008; and 600 by notarial act of October 17, 2008. At December 31, 2008, 123 625 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 IBA Annual report 2008 | 105

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 2008: 7 270 by notarial act of January 16, 2008; 7 500 by notarial act of April 15, 2008; 3 434 by notarial act of July 16, 2008, and 630 by notarial act of October 17, 2008. At December 31, 2008, 316 457 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 subsidiaries and Specific Persons subject to the Belgian Employment Action Plan Act of March 26, 1999 (“free stock options”). Another 500 000 of these options were offered at 4 percent of the strike price to employees and Specific Persons not subject to the Belgian Employment Action Plan Act of March 26, 1999 (“purchasable stock options”). This segment was intended essentially for employees and Specific Persons associated with subsidiaries of IBA 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 beneficiaries 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 during specific periods between December 1, 2007 and September 30, 2010. The following options were exercised in 2008: 143 450 by notarial act on January 16, 2008, 15 500 by notarial act on April 15, 2008, 26 900 by notarial act on July 16, 2008, and 10 850 by notarial act on October 17, 2008. At December 31, 2008, a total of 689 300 of the 2004 Plan stock 106 | IBA Annual Report 2008

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 September 30, 2011. At December 31, 2008, a total of 90 000 of the 2005 Plan stock options remained outstanding.

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 purchasable stock options, 149 750 had been purchased. Consequently, the Board of Directors canceled 44 500 free stock options that had not been accepted by notarial act. At December 31, 2008, there were 437 250 options from this plan.

None of these options was exercisable.

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 purchasable stock options, 118 458 had been purchased. Consequently, 39 212 free stock options were cancelled. At December 31, 2008, there were 338 246 stock options from this plan.

None of these options was exercisable at that date.

In October 2008, the Board of Directors of IBA S.A. decided to issue 350 000 stock options for Group employees (“2008 Plan”). The offered was distributed in much the same way as for the 2004 Plan. As recorded by notarial act on December 18, 2008, of the 200 000 free stock options, 77 283 had been accepted, and of the 150 000 purchasable stock options, 38 187 had been purchased. Consequently, 122 717 free stock options were cancelled. At December 31, 2008,

General Information

there were 115 470 options from this plan. None of these options was exercisable at that date.

Thus, at December 31, 2008, 2 277 496 stock options were issued and outstanding.

All stock options may also 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 14, 2008 authorized the Board of Directors to increase the Companyâ&#x20AC;&#x2122;s capital through one or more stock offerings up to a maximum of EUR 25 000 000.

This authorization is valid for five years from the date of publication in the Moniteur Belge of the decision of the Extraordinary General Meeting of May 14, 2008; that is, until June 10, 2013. At December 31, 2008, following the launching of the 2008 stock option plan, the authorized capital was valued at EUR 23 744 258.

Patents and technologies IBA is careful to patent all aspects of its technology for which a patent provides a commercial advantage.

In addition, the Company has maintained the secrecy of a significant portion of its know-how that is unpatentable or for which the Company believes secrecy is more effective than publication in a patent application. More fundamentally, the Company believes that the best way to protect itself from its competitors is not by patenting its inventions, but by maintaining its technological lead.

IBA also licenses patents from third parties and pays royalties on them.

Licensing and cooperation agreements IBA has licensing agreements involving various aspects of its technology. Listing and explaining the nature and terms of these licensing agreements is beyond the scope of this annual report. These agreements involve, for example, certain aspects of its particle accelerator technology and a number of components of its proton therapy equipment.

IBA Annual report 2008 | 107

Five-Year Capital History Shares Number of Number of Operation New Shares Total Shares 03/09/04 Exercise of 1998 Stock options plan + 106 120 24 634 963 07/13/04 Exercise of 2002 Stock options plan + 5 700 24 640 663 10/08/04 Exercise of 2002 Stock options plan +1 790 24 642 453 03/23/05 Exercise of 2002 Stock options plan + 200 000 24 842 453 02/17/06 Exercise of 2002 Stock options plan +350 000 25 192 453 04/18/06 Exercise of 2002 Stock options plan +7 930 25 200 383 07/14/06 Exercise of 2002 Stock options plan +159 823 25 360 206 10/17/06 Exercise of 2002 Stock options plan +87 110 25 447 316 10/17/06 Exercise of 2001 Stock options plan +17 750 25 465 066 01/15/07 Exercise of 2001 Stock options plan +82 550 25 547 616 01/15/07 Exercise of 2002 Stock options plan +118 180 25 665 796 04/17/07 Exercise of 2001 Stock options plan +20 050 25 685 846 04/17/07 Exercise of 2002 Stock options plan +43 280 25 729 126 07/17/07 Exercise of 2001 Stock options plan +10 500 25 739 626 07/17/07 Exercise of 2002 Stock options plan +56 636 25 796 262 10/16/07 Exercise of 2001 Stock options plan +3 350 25 799 612 10/16/07 Exercise of 2002 Stock options plan +640 25 800 252 01/16/2008 Exercise of 2001 Stock options plan +1 500 25 801 752 01/16/2008 Exercise of 2002 Stock options plan +7 270 25 809 022 01/16/2008 Exercise of 2004 Stock options plan +143 450 25 952 472 04/15/08 Exercise of 2002 Stock options plan +7 500 25 959 972 04/15/08 Exercise of 2004 Stock options plan +15 500 25 975 472 06/23/08 Capital increase +544 611 26 520 083 07/16/08 Exercise of 2001 Stock options plan +600 26 520 683 07/16/08 Exercise of 2002 Stock options plan +3 434 26 524 117 07/16/08 Exercise of 2004 Stock options plan +26 900 26 551 017 10/17/2008 Exercise of 2001 Stock options plan +600 26 551 617 10/17/2008 Exercise of 2002 Stock options plan +630 26 552 247 10/17/2008 Exercise of 2004 Stock options plan +10 850 26 563 097

108 | IBA Annual Report 2008

Capital (EUR ) Change (â&#x2C6;&#x2020;) Total +455 255 34 594 192 + 7 933 34 602 125 +2 491 34 604 615 + 278 340 34 882 956 + 487 095 35 370 051 +11 036 35 381 087 +222 426 35 603 513 +121 231 35 724 743 +24 555 35 749 299 +114 197 35 863 495 +164 471 36 027 967 +27 737 36 055 703 +60 233 36 115 936 +14 525 36 130 462 +78 820 36 209 282 +4 634 36 213 916 +891 36 214 807 +2 075 36 216 882 +10 118 36 227 000 +201 447 36 428 447 +10 438 36 438 884 +21 767 36 460 651 +764 447 37 225 098 +830 37 225 928 +4 779 37 230 707 +37 776 37 268 483 +830 37 269 313 +877 37 270 190 +15 237 37 285 426

IBA Annual report 2008 | 109

The stock market and the shareholders IBA stock 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 to 1 split in June 1999). At December 31, 2008, there were no conversion bonds or bonds with warrants outstanding. Total employee stock options outstanding at end-2008 numbered 2 277 496.

Stock market prices ■ Volume ■ Market price

18

e 18.00

16

e 16.00

14

e 14.00

12

e 12.00

10

e 10.00

8

e 8.00

6

24 dec 08

4 dec 08

14 nov 08

27 oct 08

7 oct 08

17 sep 08

28 aug 08

8 aug 08

1 jul 08 23 jun 08

21 jul 08

11 jun 08 2 jun 08

22 may 08

2 may 08

11 apr 08

20 mar 08

39 feb 08

11 feb 08

22 jan 08

2 jan 08

e 6.00

5.00% 0,05 -5.00% -0,05

-0,15

-15.00%

-0,25

-25.00%

-0,35

-35.00%

-0,45

110 | IBA Annual Report 2008

8 dec 08

17 nov 08

27 oct 08

6 oct 08

15 sep 08

25 aug 08

4 aug 08

14 jul 08

12 mey 08

18 apr 08

28 mar 08

5 mar 08

2 jan 08

-0,65

13 feb 08

-0,55

-55.00%

23 jan 08

■ IBA ■ Bel Mid ■ BEL 20

-45.00%

220000 200 000 200000 180 000 180000 160000 160 000 140000 140 000 120000 120 000 100000 100 000 80000 80 000 60000 60 000 40000 20 000 20000 0 0 220 000

IBA stock underwent a major share price correction in 2008, closing at EUR 7.75 at December 31, 2008, down 59 percent from 2007. While IBA could not escape the sharp downturn in the stock markets, it did meet guidances. IBA recorded recurring profit on a par with 2007 (at constant exchange rates). Its recurring earnings before depreciation and amortization (REBITDA) rose a very substantial 74 percent over 2007, and its equity increased by close to 8 percent.

12/31/2008 Diluted 12/31/2007 Diluted Shareholders Number % Number % Number % Number %

of shares of shares of shares of shares Belgian Anchorage S.A.(1) (2) Institut des Radioéléments (IRE) (1)

Sopartec (UCL)(1)

7 773 132 29.26%

7 773 132 26.95%

7 773 132

30.1%

7 773 132 27.58%

1 423 271

5.36%

1 423 271

4.93%

878 660

3.4%

878 660 3.12%

529 925

1.99%

529 925

1.84%

529 925

2.1%

529 925 1.88%

Université Catholique de Louvain (UCL)(1)

426 885

1.61%

426 885

1.48%

426 885

1.7%

426 885 1.51%

IBA Investments(3)

433 692

1.63%

433 692

1.50%

358 692

1.4%

358 692 1.27%

Float

15 976 192 60.14% 18 253 688 63.29% 15 832 958

61.4% 18 213 218 64.63%

Total

26 563 097 100.00% 28 840 593 100.00% 25 800 252 100.0% 28 180 512 100.0%

(1) Transparency statement at October 30, 2008 (most recent published statement).

(2) Belgian Anchorage is a company established and wholly owned by IBA management and employees (3) IBA Investments is a second-tier subsidiary of IBA S.A.

Shareholders’ calendar Interim statement, first quarter 2009 2009 General Shareholders’ Meeting Publication of results at June 30, 2008 Interim statement, third quarter 2009 Publication of results at December 31, 2009

May 12, 2009 May 13, 2009, 10:00 AM August 31, 2009 November 18, 2009 March 15, 2010

IBA Annual report 2008 | 111

Notes ............................................................................................................................................................................ ............................................................................................................................................................................ ............................................................................................................................................................................ ............................................................................................................................................................................ ............................................................................................................................................................................ 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112 | IBA Annual Report 2008

IBA Contact Paul-Emmanuel Goethals Director, Corporate Business Development & Investor Relations Tel. : +32 10 47 58 16 E-mail : paul-emmanuel.goethals@iba-group.com

Moving ahead confidently

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Annual Report 2008

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IBA Annual report 2008

Published by IBA S.A., Chemin du Cyclotron, 3 1348 Louvain-la-Neuve, Belgium.

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