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annual report 2002IMAGE RECOGNITION INTEGRATED SYSTEMS GROUP SARue du Bosquet 10
Parc Scientifique de Louvain-la-Neuve
B-1435 Mont Saint Guibert
T +32/10/45.13.64 - F +32/10/45.34.43
www.irislink.com
key figures table of contents
general presentation
6 An inspiring profession and a sustainable vision for a changing world
7 I.R.I.S. products and services to feed your needs
14 Board and executive management
15 Corporate governance
activity report18 Management report
27 Group structure
28 Composition of the capital
29 Headcount
consolidated accounts of I.R.I.S. group32 Consolidated accounts
36 Appendices to the consolidated accounts
44 Control of the consolidated accounts
statutory accounts of I.R.I.S. group S.A48 Statutory accounts
contacts
54 Coordinates
54 Financial agenda
54 Investor relations and financial communication
2002 2001 2000 EUR EUR EUR
Sales (1) 41,646,974 35,340,034 27,620,317
Cash flow from operations (EBITDA) 3,073,198 3,000,810 2,740,788
Income from operations (EBIT) 2,047,759 2,091,553 2,137,097
Net current income before goodwill 772,049 1,549,210 1,555,989
Net income (share of group) -1,950,760 485,107 1,091,819(2)
Net cash flow 1,251,413 2,228,176 2,401,524
Capital 24,971,186 24,197,125 20,630,653
Capitaux propres 24,422,029 25,531,121 21,529,795
(1) Includes the on-going orders (2) Includes the capital gain on the sale of Asice, a subsidiary of SEPSI-IRIS France, for an amount of EUR 425,489
2002 2001 2000 EUR EUR EUR
Number of outstanding shares (on Dec. 31) 1,480,791 1,453,350 1,338,651
Cash flow from operations (EBITDA) 2.08 2.06 2.05
Income from operations (EBIT) 1.38 1.44 1.60
Net current income before goodwill 0.52 1.07 1.16
Net income (share of group) -1.32 0.34 0.82(1)
Net cash flow 0.85 1.53 1.79
Capital 16.86 16.65 15.41
Net equity 16.49 17.57 16.08
(1) See footnote above
(!) I.R.I.S. issues ”out of the money” options. 2002 2001 2000 This table therefore only has theoretical value, EUR EUR EUR
Number of outstanding shares (on Dec. 31) 1,480,791 1,453,350 1,338,651
Number of outstanding warrants (on Dec. 31) 134,457 28,766 36,362
Number of outstanding shares after dilution 1,615,248 1,482,116 1,375,013
Cash flow from operations (EBITDA) 1.90 2.02 1.99
Income from operations (EBIT) 1.27 1.41 1.55
Net current income before goodwill 0.48 1.05 1.13
Net income (share of group) -1.20 0.33 0.79(!1
Net cash flow 0.77 1.50 1.75
Capital 15.46 16.33 15.00
Net equity 15.12 17.23 15.66(1) See footnote above
CONSOLIDATED KEY FIGURES FISCAL YEAR (ENDS DECEMBER 31)
KEY FIGURES PER SHARE FISCAL YEAR (ENDS DECEMBER 31)
KEY FIGURES PER SHARE (FULLY DILUTED)(!) FISCAL YEAR (ENDS DECEMBER 31)
general presentation
An inspiring profession and a sustainable vision for a changing world
I.R.I.S. products and services to feed your needs
Board and executive management
Corporate governance
annual report 20026 /
Ladies and gentlemen,
I.R.I.S. was 15 years old in 2002.
15 years is very little in the overall scheme of things. Yet it is an age in a world moving at a frantic pace, in which technologies
develop at exponential speed.
Fifteen years ago, I.R.I.S. was a pioneer in Optical Character Recognition (OCR). Around the world, many small teams were
working, more or less efficiently, to develop solutions. After a number of years of consolidation in this sector, only a handful of
companies remain – and I.R.I.S. is No.1 in Europe and No.2 worldwide.
In fifteen years, we have built a strategy which aims to expand progressively to cover every requirement for digitising paper
documents, and then in recognising, managing, archiving, sharing and storing digital documents. The result of the technical
solutions produced by I.R.I.S. is the efficient management of documents, their contents, and consequently of knowledge itself
within organisations.
I.R.I.S. has become a key player in “Document to Knowledge”, and has acquired a truly international standing. Millions of
people worldwide now use our products, and hundreds of companies have used our solutions to improve their productivity.
This is a source of considerable satisfaction for the managers and technicians of I.R.I.S. and for all workers within the group.
Today, we operate in a particularly difficult global environment: uncertainties are enormous and both medium- and long-term
visibility is highly tentative.
I.R.I.S. has adapted, yet maintained the same course. I.R.I.S. remains – of course – a technology-based company which
continues to improve each of its technologies to ensure that they are the best. I.R.I.S. continues to listen to its customers
and to supply them with solutions which improve their productivity. In this way, we will win the satisfaction of countless
more clients.
At the same time, we understand that our shareholders are increasingly preoccupied with the prudent stewardship of the
company. They expect more from us than just a “growth at all costs” model; we must also manage the company intelligently.
We have therefore worked to maintain a solidly-structured balance sheet and a reasonable cost structure. In this way, I.R.I.S.
will be ideally placed when our customers, after several years of reducing costs, relaunch their investment programmes.
Ours is a fascinating profession. We have an enduring vision. The I.R.I.S. management and teams are motivated, and have
faith in the future.
Let the world change: I.R.I.S. is ready to seize new opportunities!
Pierre De Muelenaere Etienne Van de Kerckhove
Chairman of the Board of Directors Associate Administrator
Associate Administrator
I.R.I.S. products and professional software solutions to feed your needs
OUR PRODUCTS FOR INDIVIDUALS AND
ENTERPRISES
The “Office Products & Technologies” division of I.R.I.S.
develops and sells worldwide a full range (for Windows and
MacOS) of fast, easy-to-use OCR products which convert
your paper-based information into editable data.
These products are aimed at individual and professional
users, and are distributed:
- by the major scanner manufacturers under OEM (Original
Equipment Manufacturer) contracts;
- by I.T. distributors and resellers;
- or directly by I.R.I.S. from its e-shopping site
(shop.irislink.com).
READIRIS PRO
> Convert and edit your paper documents and PDFs
Readiris Pro is an easy-to-use text recognition program
which converts scanned paper documents, PDF documents
and image and fax files into editable text
which you can use in your favourite
applications.
You create a new document and
modify the content with ease using the
new “Floating Text” mode. The text flows from one
column or page to the next, while the images, tables and
graphics remain in place for a perfect reproduction of the
page layout.
Readiris Pro is available for Windows and MacOS, and rec-
ognises up to 104 languages.
I.R.I.S. is a leader in the “Document to Knowledge” market, and provides extremely high-quality solutions for converting
paper documents into electronic formats for archiving, storing, managing and sharing digital information.
7
Over the past years, I.R.I.S. has maintained an important R&D effort,
improving constantly the quality of its Optical Character Recogni-
tion products and achieving a leading position on the OCR market.
Today, its high-level technology is recognized and chosen by some
of the biggest scanner manufacturers in the world. They integrate
I.R.I.S.’ OCR into their devices to offer their consumers a fast, easy-
to-use and accurate OCR software for the conversion of their daily
paper documents into digital information.
Selected examples of co-operations
Hewlett-Packard integrates, for several years, I.R.I.S.’ OCR techno-
logy or I.R.I.S.’ OCR software, Readiris Pro, into its LaserJet, Office-
Jet and ScanJet product lines. It offers I.R.I.S. a worldwide visibility,
increasing its OCR market penetration.
Kodak bundles IRISPdf, I.R.I.S.’ professional solution to generate
PDFs, with Kodak Capture Software, Kodak’s high-speed scanning
solution.
Sharp integrates Readiris Pro into some multifunctional peripherals
Panasonic bundles Readiris Pro with some flatbed scanners and
multifunctional peripherals.
Canon Belgium proposes Readiris Pro Corporate Edition, I.R.I.S.’
professional OCR solution for the creation of editable documents
and PDF archives, with its professional scanners and “intelligent
multifunctional peripherals”.
Daewoo Teletech Co., Ltd. integrates I.R.I.S. OCR software into its
new multifunctional peripheral.
Mustek bundles Cardiris, I.R.I.S.’ business card organizer, with its
business card scanner.
Plustek released a ”personal Smart Scanner” bundled with Cardiris.
And more …
WORLDWIDE LEADING SCANNER MANUFACTURERS
CHOOSE I.R.I.S.’ TECHNOLOGY
An inspiring profession and a sustainable vision for a changing world
IRISPEN II
> Capture data instantly and precisely in any application
IRISPen II is a reader pen which allows you to scan pieces
of text, barcodes and hand-written numbers, line by line,
into any Windows or Mac application. The result is editable
text which appears at the cursor point in your current active
application.
You save time and avoid lengthy, painstaking inputting.
Simply slide the IRISPen over your chosen text!
I.R.I.S. BUSINESS CARD READER II
> Scan your business cards and manage your contacts
This practical tool makes it possible to scan, archive, index,
recognise and export business cards to a contact database.
The user simply inserts visiting cards into the scanner, and
the Cardiris software recognises the data and indexes and
archives it to a PDA or contact management application
(such as Outlook).
CARDIRIS
> Convert your business cards into
an electronic address book
After scanning, the business cards’ images are retained and
just one mouse click is needed to transfer the information to
a database or contact management application running on
a PC, under MacOS or on a PDA (Personal Digital Assistant),
such as Outlook or Outlook Express. Cardiris can save the
business card image in colour or in greyscale.
The internal sorting and search tools make it
possible to find a contact, an address or an
e-mail instantly.
IBR
> An original, high-throughput tool for banking
or similar applications
IBR (I.R.I.S. Banking Reader) makes decentralised data
processing a possibility in your workplace. Various differ-
ent types of data can be read: special banking sector fonts
such as “MICR” (Magnetic Ink Character
Recognition) OCR-A, OCR-B, E-13B and CMC-
7, as well as all traditional barcodes (including
PDF 417), hand-written figures and printed or
manually keyed omnifont information.
I.R.I.S. DEVELOPERS’ TOOLKITS
> Add the power of intelligent recognition
to your application
I.R.I.S. is successfully developing a wide range of toolboxes,
based on its unique fifteen years of experience in the optical
character recognition (OCR) field.
We offer toolkits for reading printed information, numeric
and alphabetic handwriting (ICR – Intelligent Character
Recognition), barcodes (also PDF 417), forms and special-
ised OCR-A, OCR-B, E-13B and CMC-7 (MICR) bank fonts.
OUR PROFESSIONAL SOFTWARE SOLUTIONS
The Professional Systems division of I.R.I.S. provides to
the professional world a range of IT services and solutions
covering a wide range of fields going from the demateri-
alization of documents to the management of knowledge
(KM), including Automatic Document Reading, Electronic
Document Management, information sharing, workflow,
and data storage and archiving.
Our approach is a global approach: I.R.I.S. defines the IT
solutions, architecture and infrastructures that best fit your
needs and provides all the IT equipment and software pack-
ages necessary for the implementation of your projects. On
top of standard solutions, we develop fully customized solu-
tions and integrate them into your global system. Our teams
take in charge the implementation as well as the follow up of
your projects: installation of the hardware and software solu-
tions, users’ training, technical support, maintenance etc.
HIGH-SPEED SCANNING
High-performance scanners and scanning
software solutions provide high-speed scan-
ning facilities (large volumes of documents) as
well as numerous image processing features:
creation of batches of documents, bar code
reading, indexing, image rotation, image crop-
ping, image deskew etc.
In the framework of our solutions and projects, we pro-
vide you with the necessary advice for choosing the scan-
ners and software solutions that best respond to your
specific needs.
The high-speed scanning software solution Kodak Capture
Software® features a range of batch output formats for
compatibility Formiris Pro, I.R.I.S. DocCenter and I.R.I.S.
DocShare. IRISPdf is an add-on software package that
complements the high-speed scanning software Kodak
Capture Software®. It executes text recognition in up to 104
languages and produces editable, fully searchable PDF and
RTF documents.
Our teams of experts and developers design, develop, and
integrate into your global solution tailor-made scanning and
In 2002, I.R.I.S. installed the new depart-
mental SPF Finance SCANFIN digitisation
centre. I.R.I.S. will provide operational
support for five years.
The aim of the SCANFIN departmental digi-
tisation centre is to provide automation of
the input and processing of information
relating to three VAT documents. These are
the monthly and quarterly VAT declarations
in handwritten or typewritten paper form, the
annual intra community statement and the
annual listing of customers liable to tax. This
corresponds to about 4 million documents to
be processed per year.
SCANFIN allows the current manual encoding
of these different documents to be replaced
by automatic input using a scanning proce-
dure. The aim is to reduce the total encoding
workload for SPF Finances personnel by
transferring this responsibility of the local offi-
ces to a departmental scanning centre.
The infrastructure organisation that has been
implemented provides acceptance and auto-
matic input of the types of documents cited
above by character recognition scanning.
This is then followed by processing by the
SPF Finances information systems. Finally the
documents are archived on electronic media
and made available for consultation and any
follow up through the SPF Finances Intranet.
The project also includes the replacement of
paper archiving of land registry change files
by digital archiving and image handling.
I.R.I.S. have taken responsibility for the de-
finition and implementation of a hardware
and software architecture based on three
input sites (Namur, Ghent and Brussels) and
one archiving site (Brussels). The software
solution is based on technologies developed
by I.R.I.S. for Automatic Document Reading
(ADR), Optical Character Recognition (OCR),
Archiving and Consultation.
Each data input site is equipped with a high
performance KODAK scanner (black and
white and/or colour according to require-
ments to be taken into account), scanning,
correction and validation stations equipped
with ADR and OCR software, and a local
storage server allowing autonomous storage
of document images and associated indexes
for about ten days. The stations and server are
network connected.
The archiving site is equipped with a server
supporting the I.R.I.S. DocCenter (Search-
irisWeb) software running under ORACLE, an
on line storage unit (IBM Shark) with a capa-
city of several Terabytes, two magneto optical
disk libraries and a magnetic tape library (for
backups). The archiving site is also equipped
with centralised backup and storage space
management tools (Tivoli).
The proposed architecture allows easy secure
administration of all the sub systems installed
on the input sites. The input sites are linked
to the archiving site by high-speed lines provi-
ding regular transfer of batches of images and
associated indexes. The archiving site also
supports consultation accesses, from all the
VAT and land registry offices within Belgian
territory, to all the stored images.
I.R.I.S. are also responsible for the provision
of maintenance, support and SPF Finances
personnel training.
I.R.I.S. INSTALL THE SCANFIN DIGITISATION CENTRE FOR THE FEDERAL FINANCE SERVICE
(BELGIAN FINANCE MINISTRY)
annual report 20028 /9
I.R.I.S. products and professional software solutions to feed your needs I.R.I.S. products and professional software solutions to feed your needs
recognition IT applications that are meant to perfectly meet
the specific needs of your activity field. Beyond standard
scanning and pre-processing features, these solutions offer
specific features for: file conversion, the scanning of non-
standard paper formats, hyper compression using the OCR
technology, the automatic segmentation of the information
using advanced techniques (syntax-based localization of
data, specialized sorting agents, semantic analysis etc.).
AUTOMATIC FORM READING
I.R.I.S. proposes Automatic Document Reading (ADR) solu-
tions that can be used for census operations,
voting operations, studies of all types, exam
sheets, etc. The purpose of such solutions are
to recognize, process and make available in
electronic format all types of data traditionally
provided on paper documents: questionnaires, paper
slips, forms, invoices, coupons, cheques, etc.
Our flagship product in ADR is Formiris Pro. Our high-
performance Optical Character Recognition engines can
read machine-printed data, hand-printed data, signs in
check boxes, bar codes and graphical zones. The applica-
tion offers advanced features for the identification of docu-
ments, whether it be traditional forms or less standardized
documents. It may also be used as a completely automated
highly effective sorting machine.
Our Service Bureau provides services for all projects to be
carried out in the fields of scanning and ADR. It provides
a team of experts and technicians as well as all the neces-
sary hardware and software equipments necessary for the
operations.
AUTOMATIC READING OF CHECKS
IT solutions are available for the sorting, reading and
processing of a wide range of payment documents: checks,
(international checks, travellers checks, eurocheques),
credit transfer slips, TIPs, vouchers, coupons, bills of
exchange, and other documents.
With I.R.I.S. ScanChecks, you can:
- digitalize and sort high volumes of checks using highly
effective sorters and scanners,
- capture the data available on the checks thanks to compu-
ter-assisted encoding facilities,
- check the data conformity when compared with other
scanned documents.
- follow-up the perfect check payment procedures.
IBR (I.R.I.S. Banking Reader) is a pen scanner based
on our advanced OCR technology and allows you
to perfectly read data on checks, bonds, coupons,
credit transfers, and standing orders.
A specific toolkit is also available for the reading of bank-
ing data (magnetic ink, E-13B, CMC-7, OCR-A, OCR-B):
DRS 8.0 Pro.
ELECTRONIC DOCUMENT MANAGEMENT (EDM)
We provide standard and customized Electronic
Document Management (EDM) solutions that enable
you to:
- build up a document repository where each document
is carefully indexed, archived and made available for
all users,
- centralize and share documents within a company or
organization or beyond, i.e. among its members and exter-
nal partners (intranet/extranet),
- search and retrieve documents of all formats in an instant
(via the Internet), using advanced technologies.
I.R.I.S. DocCenter and I.R.I.S. Archea are EDM solutions
developed by our teams of experts who have an experience
of 15 years in this high-technology field. We provide cus-
tomized standard solutions as well as tailor-made solutions.
Our experts analyze, develop, adapt, and integrate the solu-
tions that best fit your particular needs or projects.
High-performance indexing and “full text” search engines
such as RetrievalWare® can be integrated into your exis-
ting systems.
WORKFLOW
Our experts in workflow provide services for
the design, development, and integration of
workflow applications using standard workflow
tools. Their experience and competences in all
related IT fields make it easy for them to establish feasibility
studies and rapidly analyze the technical and technological
impacts of the systems to be implemented.
Workflow systems make it possible to increase the response
time of the enterprise processes, to reduce error risks, to
reduce the amount of paper documents and accelerate doc-
ument processing, to improve work coordination within the
company and consequently increase its productivity, end to
ensure a perfect distribution of workload and a perfect fol-
low-up. The most visible benefits of a workflow implemen-
tation are the reduction of response time and a productivity
increase (up to 50% for administrative tasks).
The administrative workflow deals with form distribution
within the company or organization, i.e. mostly internal doc-
uments. The administrative workflow is generally based on
an electronic messaging infrastructure (purchase request
forms, vacation forms, expense reports etc.).
The production workflow deals with the management of
company basic processes. These processes correspond to
processes that do not generally change much in the long
term and for which transactions are repetitive. The produc-
tion workflow deals with the management of a production
activity, i.e. from its reception and follow-up to its final reali-
zation (production of insurance contracts, management of
customer complaints etc.).
The cooperative or collaborative workflow deals with the
management of more changeable procedures, which are
linked to a limited group of people within the company. The
documents concerned are more complex documents and
involve different people.
In this case, the system productivity is less important than its
flexibility (scientific reports, technical documentation etc.).
Workflow systems will be particularly profitable whenever
used in conjunction with imaging and Electronic Document
Management technologies. With just a few clicks of the
annual report 200210 /11
In 2002, I.R.I.S. France was able to confirm
its leadership on the market of family allo-
wance agencies by setting up the 37th site
with form reading, electronic document
management and storage.
Nowadays, the family allowance funds (“Cais-
ses d’Allocations Familiales” or “CAFs”) each
month pay family benefits to more than 10
million people. Their activity originates with
the family policy of the French government is
and is controlled by the Ministry of Social Af-
fairs. These government agencies receive an
ever increasing volume of correspondence.
To meet the demand and continue to offer
good-quality services to the beneficiaries, the
family allowance funds turned to form reading
and document management technologies.
The custom solution I.R.I.S. France has de-
veloped for these agencies comprehends a
scanning module, the automatic identification
of unstructured documents, automated do-
cument recognition, the document indexing
and archiving. The forms to be processed are
pay slips, receipts for the payment of rent and
school certificates. The archiving solution of
I.R.I.S. France is the first one to be accepted
as a “legally binding archiving solution” by the
pilot site. Two types of media are used for the
storage of the documents: magnetic media
allow fast access, optical storage ensures
the safety of the data. The “dematerialized”
electronic documents are accepted as legally
binding documents, the paper documents can
be destroyed once they’re scanned in.
The automated processing of a person’s file is
carried out in five steps:
– A family’s records are collected. Any com-
posing element (pay slip, receipt for the
payment of rent, forms etc.) is scanned.
– The solution automatically identifies the kind
of document thanks to specialized I.R.I.S.
technology designed to identify “unstruc-
tured” documents. The image then gets
processed.
– The various documents are sent to the ser-
vices in charge of their follow-up. From this
moment on, a family’s file is available to the
public for consultation in electronic format
so that beneficiaries can check the status of
their file.
– The last step is the legal archiving. I.R.I.S.
France is the first company whose solution
is accepted as a “legally binding” archiving
solution by the pilot site.
IN FRANCE, 37 FAMILY ALLOWANCE AGENCIES (“CAFS”) HAVE SELECTED THE FORM READING,
ELECTRONIC DOCUMENT MANAGEMENT AND STORAGE SOLUTIONS OF I.R.I.S. TO INCREASE
THE QUALITY OF THEIR SERVICES
I.R.I.S. products and professional software solutions to feed your needs I.R.I.S. products and professional software solutions to feed your needs
mouse, the company’s employees can access all the docu-
ments available in electronic format as well as all the infor-
mation necessary to carry out their tasks.
Some workflow systems are specifically dedicated to the
automated processing of invoices. They can be combined
with I.R.I.S.’s advanced OCR solutions to form a global solu-
tion able to dramatically reduce the administrative workload
of the companies’ accounting departments.
E-COMMUNICATIONS PLATFORM
Our department eCommunication provides a solution spe-
cifically designed for the sharing of information and know-
ledge: the I.R.I.S. DocShare portal.
I.R.I.S. DocShare is a Web-based document and knowledge
management solution. Via its tailor-made portal the users
can publish, transmit and easily share information within
their company or organization or within a well-defined
group of people.
I.R.I.S. DocShare is specifically dedicated to large accounts.
We have also developed an Internet communication plat-
form for the use of international associations and profes-
sional federations.
ELECTRONIC PRESS REVIEWS
I.R.I.S. ScanNews is an advanced IT solution for the auto-
mated creation and publishing of electronic press reviews.
With just of few clicks of the mouse, your press articles are
scanned, cut, reassembled, and distributed either in paper
format or in electronic format via your intranet/
extranet site. With I.R.I.S. ScanNews,
you can also import in your press
reviews all types of articles in elec-
tronic format (PDF, HTML).
You can create your press reviews
not only from newspapers, maga-
zines, but also from electronic documents in PDF or HTML
format. An easy-to-use cutting screen is available. The
scanned articles are automatically cut into colored blocks.
In the blink of an eye, you can directly distinguish the arti-
cles’ titles, subtitles, photographs, and graphics. Your press
reviews are directly available for further distribution over
your intranet/extranet site.
The scanned or imported articles are indexed according
to your filing system, and are used for building up a press
review database. You can then easily retrieve articles
by performing searches on their content and/or on their
metadata.
STORAGE AND ARCHIVING
Our Storage & Systems department distributes all hardware
and software equipments for the implementation of archiv-
ing, storage and consolidation systems.
Our team of experts is made of Project Managers, sys-
tem engineers, SAN specialists, and specialists in secu-
rity issues. They provide their expertise for the design and
architecture of the systems that will best fit your needs:
management of the high availability issue, disaster recovery,
data backup, life cycle management, tuning, data security,
and encryption. Our technicians and experts also provide
the necessary services linked to the systems’ implementa-
tion and follow up.
I.R.I.S. is “IBM Premier Business Partner” and consequently
offers all services linked to IBM environments. However,
our know-how extends to the integration:
- in the HP, SUN, HP-UX, SUN Solaris environments,
- of magnetic disks, magnetic tapes, optical disks, SAN, etc.
- of the Oracle, Informix, Sybase, and DB2 databases.
KNOWLEDGE MANAGEMENT
Because of the tremendous increase in information resour-
ces, of the complexity of all new IT
systems, and of the need to accelerate
processes and productivity, companies
and organizations nowadays have to
constantly redefine their information and knowledge manage-
ment strategy.
Our consultants in Knowledge Management (KM) offer
to carefully analyze your specific needs in Knowledge
Management (KM) and clearly determine the technological
means, practices and methods that will enable your com-
pany to appropriately manage and develop its intellectual
capital. Their approach follows a proven methodology and
takes into account the global strategy of the company, as
well as its type of activities, its existing IT structure, its
competences, and its particular organizational structure.
This methodology is based on an experience of more than
10 years in the field.
The KM program defines the strategic plan to be launched
to update the management of knowledge within the com-
pany. This strategic plan considers all organizational, infor-
mational and IT aspects.
annual report 200212 /13
Fideuram Bank (Luxembourg), a subsidiary of Banca Fideuram S.p.A.,
is known in financial circles in Luxembourg for its extensive range of
wealth management services for private clients as well as its services
for collective investment organisations. It was because of its princi-
ples of confidentiality and efficiency that it chose I.R.I.S. Luxembourg
– a local partner and expert in Document Management – to set up a
global electronic storage system for a subsidiary in Switzerland.
The first stage of this project was to scan, index, file and store secu-
rely all customer documents, including account opening forms, con-
tracts, powers of attorney and correspondence. Every user has been
given access rights to certain functions (lookup, indexing etc.).
An encryption system using long-term storage media (optical disks)
has also been put in place to ensure confidentiality of data, especially
when being sent to the storage firm and stored there.
The processing and storage of quarterly statements (cash state-
ments, statements of securities, evaluation reports, ”outstanding”
transactions, graphic portfolio distribution) completes the first stage
of this project, with advanced storage and printing functions – ”Hold-
Mail” and ”Print Manager”.
One of the special features of the system put in place by I.R.I.S.
Luxembourg is the multi-site archive support produced for the Luga-
no and Zurich offices of the subsidiary, Fideuram Bank (Switzerland).
In addition, this software solution can be used in several languages,
such as French and Italian.
The solution implemented enables thousands of pages to be pro-
cessed every month. The dematerialised documents can be in black
and white or colour and of varying formats (A3, A4, 3-fold, etc.).
I.R.I.S. LUXEMBOURG IMPLEMENTS AND INSTALLS AN
ARCHIVING AND DOCUMENT MANAGEMENT SOLUTION
AT FIDEURAM BANK (SWITZERLAND)
I.R.I.S. products and professional software solutions to feed your needs I.R.I.S. products and professional software solutions to feed your needs
annual report 200214 /
Board and executive management Corporate governance
BOARD OF DIRECTORS
EXECUTIVE MEMBERS End of mandate
Pierre De Muelenaere President and Chief Executive Officer 17 May 2005
Director of E-Capital SA
Director of Parc Paradisio SA
Etienne Van de Kerckhove Chief Executive Officer 17 May 2005
Director of Stratefi SA
Serge Dahan Director 17 May 2005
President of Aproged
INDEPENDENT MEMBERS End of mandate
Pierre Rion Honorary Chairman 17 May 2005
Director of Fondation Roi Baudoin
Director of Parc Paradisio SA
Eric Domb Director 17 May 2005
President of Parc Paradisio SA
President of “Association du Management”
Director of “Parc d’Aventures Scientifiques” (Pass)
Alain Marsily Director Until December 31, 2002
Director of Hemeris SA
Pierre Sonveaux Director Since March 20, 2003 > May 17, 2005
President of Sonaca SA
Director of FN-Herstal SA
Director of Parc Paradisio SA
Director of Pégard SA
EXECUTIVE COMMITEE
Pierre De Muelenaere President Since March 20, 2003
Serge Dahan President Until March 20, 2003
Etienne Van de Kerckhove Secretary General
Colette Darconnat
AUDITORS
ERNST & YOUNG AUDITORS End of mandate
Represented by Eric Golenvaux 17 May 2005
CORPORATE GOVERNANCE
INDEPENDENT DIRECTORS
The Board of Directors is composed of three directors employed by the company and three non-executive directors.
The Board Members Eric Domb, Alain Marsily and Pierre Sonveaux are independent from the management and the key
shareholders, and they are therefore independent in the sens of the guidelines of the Banking and Finance Commission
(BFC), prepared by the Belgian Committee for Corporate Governance.
AUDIT COMMITTEE
President Etienne Van de Kerckhove
Members Eric Domb Until March 20, 2003
Alain Marsily Until December 31, 2002
Pierre Sonveaux Since March 20, 2003
The audit committee’s statutory mission is to assist the Board of Directors in maintaining the company’s financial integrity
by supervising the financial reporting, executing internal and external audits, performing internal verifications and handling
the financial relation between the company and its shareholders.
The members of the audit committee have the largest possible investigative authority in executing their supervising mission.
In essence, they have the same investigative authority as the one assigned by law to the company’s auditors.
The audit committee held two meetings in 2002 to discuss the following topics: an in-depth discussion with the company’s
auditor about the internal and external auditing, a review of the project management procedures, the establishment of a
Management Information System (“MIS”) and the adoption of international accounting standard (IAS/IFRS).
COMPENSATION COMMITTEE
President Pierre De Muelenaere
Members Alain Marsily Until December 31, 2002
Eric Domb Since March 20, 2003
Pierre Rion Since March 20, 2003
The compensation committee’s statutory mission is to assist the Board of Directors in determining the remuneration and
fees of the company’s directors (chairman, CEOs, general managers and employees that report directly to them).
REMUNERATION OF THE BOARD OF DIRECTORS AND COMMISSIONERS
In 2002, the non-executive administrators of the I.R.I.S. Group received a total remuneration of EUR 31,002 in the form of
attendance fees and fixed remuneration.
The executive administrators received a total remuneration of EUR 468,290 in 2002.
As of 31st December 2002, the administrators of the Group and its subsidiaries held a combined total of:
- 2,065 warrants under the 1999 stock option plan (S.O.P.)
- 52,000 warrants under the Horizon 2005 S.O.P.
During 2002, the remuneration for the fixed mandate of the commissioners of I.R.I.S. Group and its subsidiaries was
EUR 51,200.
15
activity report
Management report
Group structure
Composition of the capital
Headcount
GROWTH OF BUSINESS IN 2002
I.R.I.S. achieved strong growth in a
depressed economic climate
I.R.I.S. achieved a turnover of 41.6 million EUR. Sales
growth in 2002 reached 18%, a remarkable performance.
I.R.I.S. made no acquisitions in 2002, except for the 40%
share of I.R.I.S. B2B Technologies which remained in the
hands of the founders of this subsidiary. This had no effect
on the composition of consolidation.
However, I.R.I.S. did buy the AMOS Monétique (France)
and AMOS Inc (USA) companies in October 2001. Based on
a consistent composition (that is, excluding the contribution
of these companies in 2001 and 2002), the I.R.I.S. group’s
internal (organic) growth reached 15%.
In 2001, the AMOS companies achieved a total turnover
of 4.5 million EUR, EUR 981,115 of which was from the
fourth quarter consolidated into the I.R.I.S. accounts for
2001. AMOS therefore experienced an unexpected fall of
33% in annual turnover in 2002.
The economic climate has been a very difficult one, and
particularly in the IT (Information Technologies) sector. The
sustained growth of I.R.I.S. is a testimony to the interest
of large administrations, the business world and individual
users in the technologies developed by I.R.I.S.
In 2002, I.R.I.S. made significant progress in a number of
markets. With the notable exception of AMOS, each I.R.I.S.
business area made a positive contribution to the group’s
growth and profitability in 2002.
Progress in the United States was particularly good
(+ 75%), with I.R.I.S. recording 11.2% of its sales here.
I.R.I.S. maintained its overall gross margins
It is important to stress that I.R.I.S. succeeded in maintain-
ing its gross margin at 58%, the same level as previous
years. This too is a reason for satisfaction, at a time when
competitive pressure was particularly strong in the wake of
an overall reduction in IT investment.
PROFESSIONAL SYSTEMS
This division provides professional solutions for:
- Document Capture: scanning, recognition and automated
reading of paper documents, as well as electronic data
input for electronic document management applications.
- Document Management: electronic management, sharing
and storage of digital documents.
Teams active in the fields of automated document read-
ing (ADR) and electronic document management (EDM)
installed numerous systems, most notably at the Belgian
Ministry of Finance (automated recognition and reading of
VAT declaration forms), in the French government préfec-
tures (automated reading of vehicle-related documents),
the Luxembourg Chamber of Deputies (integrated docu-
ment portal), the Office of the President of the European
Commission (incoming mail management), at UNICE (infor-
mation sharing), etc.
The introduction of Formiris Pro 4.0 and IRISPdf has
strengthened the position of I.R.I.S. in the sectors of auto-
mated form recognition, production OCR and conversion
to PDF format.
DocShare has experienced remarkable success as an eCom-
munication tool among many large national, European and
international professional associations.
The growth of ScanNews was checked by the problem of
copyright, but companies now seem to have adapted to this
new concept.
It should be noted that there was a sudden fall in busi-
ness in October and November 2002, followed by a rise
in December. As a result, a few projects were carried over
into 2003.
OFFICE PRODUCTS & TECHNOLOGIES
This division produces and sells the Group’s office products
for optical character recognition (OCR), high-speed scan-
ning, penscanners and business card reading systems.
I.R.I.S. strongly increased sales of its Readiris Pro, IRISPen
II and I.R.I.S. Business Card Reader products in 2002. This
Ladies and gentlemen,
It is the privilege of the Board of Directors of the I.R.I.S. Group to give an account of its management for the year ending
31st December 2002.
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TURNOVER (000 EUR)
The sales figure of 2002 includes the on-going orders (for a total sum of 234,000 EUR).
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GROSS MARGIN
EUR AMOS MONETIQUE AMOS INC TOTAL
Turnover 2002
2,253,425 744,979 2,998,404
Professional Systems 2002 2001 2000
Turnover (in EUR) 35,511,805 30,123,697 22,307,229
Gross Margin (in EUR) 19,518,351 16,165,504 11,772,273
Gross Margin (%) 54.96 53.66 52.77
Office Products 2002 2001 2000& Technologies
Turnover (in EUR) 6,135,169 5,216,337 5,313,088
Gross Margin (in EUR) 4,657,440 4,321,441 4,637,178
Gross Margin (%) 75.91 82.84 87.28
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GROSS MARGIN BY BUSINESS
annual report 200218 /19
Management report
can be explained by sales growth in the distribution chan-
nels and a sharp rise in Internet sales. These two trends are
particularly strong in the United States, but have also been
prominent in Europe and Asia.
I.R.I.S. also continued to provide its character recognition
and document processing technology under OEM licence
contracts to major clients such as Hewlett-Packard, Kodak,
Panasonic, Fujitsu, Teco, etc.
Good performance of these packaged products and the
licence agreements gave I.R.I.S. record growth in its
U.S. sales.
2002 saw another rise in turnover for products with a
hardware component (IRISPen and Business Card Reader),
which accounts for the slight reduction in the division’s
gross margin.
I.R.I.S. posted a record operating cash flow
The operating cash flow (EBITDA) reached a record level of
EUR 3,073,198 (+ 2.4%). Despite a rise in R&D investment
(which did not require extra funds and was covered by the
expenses of the fiscal year) and reorganisation costs in the
interests of improved integration in a stricter budgetary
environment, the EBITDA margin was 7.4%.
After deducting operating amortisations, operating profit
(EBIT) stood at much the same level as in 2001 (-2.1%) at
EUR 2,047,759.
The weaker performance of EBITDA can be explained
mainly by the following factors:
- In a depressed market, I.R.I.S. was obliged to acquire
more new clients to ensure its growth. However, the cost
of acquiring new “key accounts” is high, in terms of both
sales and pre-sales (staff required for trialling and produc-
ing offers which are often complex).
- We were expecting slightly higher sales in 2002, and we
were surprised by the temporary drop in orders in October
and November.
- We had not predicted the AMOS slowdown, which had a
negative rather than positive effect on the group’s oper-
ating result. Furthermore, reorganisation costs for the
business unit AMOS were incurred for over EUR 150,000
(spent on severance payments, cancelled contracts and
the move of an office); this cost is covered by the opera-
tional expenses.
Despite these events, I.R.I.S. ended 2002 with figures
very close to the targets set at the beginning of the year.
Furthermore, we start 2003 with an orderbook and recurring
revenue (project maintenance) at record levels for I.R.I.S.
The financial result was hit hard by the fall in the dollar
In 2002, I.R.I.S.’s business on the other side of the Atlantic
grew strongly (+75%). The brutal decline of the dollar dur-
ing the first months of 2002 resulted in extremely significant
exchange rate losses and negative conversion discrepan-
cies by the end of June. Despite hopes to the contrary,
these losses did not abate in the last six months of the year,
with the dollar continuing to sink still further against the
euro. In total, the fall of the dollar generated a loss of EUR
342,562 (compared to a gain of EUR 108,282 in 2001).
In addition, increased turnover produced a significant rise
in working capital requirement, resulting in an increased
dependency on bank credit lines. Interest charges, bank
charges (international payments, etc.) and long-term credit
line reservation fees thus increased overall: EUR 478,790
(as opposed to EUR 181,901 in 2001).
Furthermore, the fall in investments and in the rate of inter-
est earned resulted in a drop in financial revenue: EUR
46,343 (against EUR 112,947 in 2001).
Lastly, amortisation of goodwill acquisition stands at EUR
858,237 (compared to EUR 701,706 in 2001).
It should be remembered that I.R.I.S. has credit lines with
the Fortis, CBC, Artesia and BBL banks. These credit lines
operate through fixed-term advances or in the form of cash
credit to a total value of EUR 12,000,000. The larger part of
these lines (EUR 8,750,000) cannot be rescinded for a period
of between 4 and 5 years starting from June 2001, in return
for payment of a fixed annual reservation commission.
Exceptional factors have led to a net loss
The exceptional results include some highly significant
components in 2002.
The Board of Directors, meeting on 20th March 2003, exam-
ined group holdings as a whole with the aim of evaluating
them and presenting an accurate image of its holdings. The
Board observed that the mediocre performance of AMOS in
2002 led the management to make a long-term downward
reassessment of AMOS’ business plan. Despite positive
projections for AMOS’ profits in 2003, the Board decided to
perform an extraordinary amortisation operation on a EUR
1,300,000 share of the consolidation differential (goodwill)
for the AMOS Monétique holding. This in no way compro-
mises either operating profitability or cash flow within the
group, either in 2002 or in the years to come.
No other reduction in value is justified either for AMOS
Monétique or for our other acquisitions, which all contrib-
uted to operating profits in 2002.
In the United States, I.R.I.S. has been sued, along with
other software publishers and IT manufacturers, by an indi-
vidual claiming that all of these companies have infringed
an invention patent dating back to 1983. Although no
infringement has been proven, I.R.I.S. has had to disburse
substantial fees in defending itself in the USA. The case is
currently approaching final settlement. In order to present
a faithful image of I.R.I.S.’s position, the Board of Directors
decided to record all charges relating to this lawsuit (a total
of EUR 587,487) under the 2002 period.
With regard to exceptional revenue, the main picture is that
of a surplus (EUR 60,905) arising from the sale of assets
acquired in 2001.
Result for the period
The scale of the exceptional losses, non-recurring in nature,
led to a net consolidated loss of EUR 1,950,760.
It should be noted that most of the non-recurring charges
(extraordinary amortisation on the AMOS holding and
conversion losses on the dollar) are not tax-deductible;
the same is true of the annual amortisation of the con-
solidation goodwill. Furthermore, the company has its
head office in Belgium and does not benefit from any fiscal
consolidation.De plus, le groupe a son siège en Belgique et
ne bénéficie d’aucune consolidation fiscale. For this reason,
I.R.I.S. remains liable for tax during the 2002 period, to a
value of EUR 533,140.
We do not propose to distribute any dividends for the
2002 period.
Net result from operations excluding goodwill
The result from operations (excluding goodwill) still shows
a benefit of EUR 772,049 despite the impact of the loss on
the dollar and despite the fact that all reorganisation costs
(particularly in the Amos business unit) were covered by the
operational expenses.
I.R.I.S. retains a very solid balance sheet structure
The key ratios at 31st December 2002 show high solvency
and liquidity:
- ratio between capital and reserves/balance sheet total:
57.53%
- current assets/debts under one year old: 1.57.
I.R.I.S.’s debts exceeding one year are zero.
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OPERATING CASH FLOW (000 EUR)
EUR AMOS MONETIQUE AMOS INC TOTAL
2002 operating result
-229,458 96,514 -132,944
annual report 200220 /21
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NET RESULT FROM OPERATIONS (000 EUR)
Management report Management report
Net cash reserves (available securities + financial invest-
ments – financial debts), which is traditionally at its lowest
point at the end of the year, was slightly negative as of 31st
December 2002 at EUR (120,234).
Given its capital and reserves of EUR 24,422,029 and a prof-
itable outlook for the future, I.R.I.S. is thus easily capable of
financing its growth itself.
STATUTORY ACCOUNTS ON DECEMBER 31, 2002
The statutory accounts only reflect the financial position of
the parent company as a holding company. They do not
give an accurate view of the group’s activity. This explains
why the current report also discusses the consolidated
accounts (refer to the next section).
The fiscal year 2002 shows a net loss of EUR 1,049,505. The
balance sheet total is EUR 26,688,153.
This result can be analysed as follows:
Proposal of appropriation of the result to be attributed
The Board of Directors proposes to carry the loss forward.
Application of accounting rules in situation of continuity
The loss of the fiscal year 2002 in the statutory accounts
creates a loss carried forward in the statutory accounts of
the company I.R.I.S. Group.
Nevertheless, the Board of Directors has applied consist-
ent accounting rules to close the accounts, based on the
continuity of the business, because the loss carried forward
is mainly caused by the amortisation of the participations in
AMOS and by the absence of dividends from the subsidiar-
ies that use their profit to finance their further development.
The very strong financial health and the global profit in the
consolidated accounts eliminate any doubt that I.R.I.S.
Group, disposing of a net equity of more than EUR 24 mil-
lions would be in a situation to discontinue the business.
Still, the Board intends to oblige the subsidiary companies
to distribute dividends so as to re-establish the net equity
at a substantially higher level than the current capital of
I.R.I.S. Group.
CONSOLIDATED ACCOUNTS ON
DECEMBER 31, 2001
Given the absence of any operational activity within the
holding company I.R.I.S. Group, we refer to the consoli-
dated annual accounts to get a real view of the evolution of
the group and, thus, of the parent company.
The group’s share in the consolidated loss is EUR
(1,950,760,-). This result can be analysed as follows:
KEY EVENTS OF 2002
Capital
Over the course of 2002, staff exercised warrants (stock
options) allocated in April 1999, thus increasing capital by
EUR 22,341.34 in return for the issue of 1,406 I.R.I.S. shares
with VVPR strips. These shares were issued at a fixed price
of EUR 15.89 per share.
On 5th March 2002, the founders of I.R.I.S. B2B Technologies
subscribed to a capital increase of EUR 400,000, with the
issue of 17,928 shares with VVPR strips. These shares were
issued at the contractual price of EUR 22.31 per share. Their
subscription was reserved as part of the sale of their IRIS
B2B Technologies shares in January 2002. The shares were
issued under the terms of authorised capital (see below: use
of authorised capital).
On 21st May 2002, a former shareholder of Paperless sub-
scribed to a capital increase of EUR 351,719.56, with the
issue of 8,107 shares with VVPR strips. These shares were
issued at the contractual price of EUR 43.38 per share. His
subscription was reserved as part of the sale of his shares.
The shares were issued under the terms of authorised capi-
tal (see below: use of authorised capital).
R&D activity
More than ever, I.R.I.S. is determined to strengthen its tech-
nology base. I.R.I.S.’s goal is to sell products and solutions
based mainly on proprietary technologies.
Management fees from subsidiaries 484,813
- General and administrative expenses -459,022
- Depreciation on fixed assets -5,047
- Other operating expenses -282
= Income from operations 20,462
+ Interest income from subsidiaries 637,757
+ Interest income from cash and deposits 7,253
+ Other financial income 5,795
- Interests and bank costs -197,430
= Current income before income tax 473,837
- Amortisation of participation in Amos -1,300,000
- Other extraordinary charges -8,397
= Net result before income tax -834,560
- Income tax -214,945
= Net benefit (loss) to be attributed -1,049,505
The statutory accounts and balance sheets are detailed in the appen-dices of this annual report..
Sales Office Products and Technologies
6,135,169
+ Sales Professional Systems 35,511,805
= Consolidated sales 41,646,974 (+17.9%) 100.0%
- Cost of goods sold -17,471,183
= Gross margin 24,175,791 (+18.0%) 58.0%
+ Other income from operations
422,392
- General and administrative expenses
-9,131,866
- Personnel expenses -11,825,404
- Allowance for doubtful accounts
-105,382
- Provision for general risks 0
- Other operating expenses -462,333
= Cash flow from operations
(EBITDA)
3,073,198 7.4%
- Depreciation on fixed assets -1,025,439
= Income from operations (EBIT)
2,047,759 4.9%
+ Financial income 183,151
- Financial expenses excl. acquisition goodwill
-1,012,002
= Current income before acquisition goodwill
1,218,908
- Depreciation on acquisition goodwill
-858,237
= Current income before income tax
360,671
+ Extraordinary income 165,140
- Extraordinary costs -2,029,712
= Net income before income tax
-1,503,901
+ Deferred taxes 86,281
- Income tax -533,140
= Consolidated income -1,950,760
- Minority interests 0
= Net income (group share) -1,950,760
annual report 200222 /23
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R&D (000 EUR)
Le comptes consolidés détaillés sont annexés.
Management report Management report
I.R.I.S. Group SA itself has not invested in research and
development. However, its subsidiaries have spent EUR
3,523,838 on R&D (+19%).
It should be emphasised that these investments were not
recorded as a balance sheet asset, but absorbed directly
during the year.
The R&D efforts of teams from I.R.I.S. and Euriged (Sepsi-
I.R.I.S. France) in the field of ADR (automated document
reading) and ADC (automatic document capture) have been
centred on developing a new, unique product constituting a
major advance for I.R.I.S. in these markets: Formiris Pro 4.0.
In addition, new products were launched – such as IRISpdf,
which combines document scanning with a function to
export these documents in PDF and text format (following
OCR) to databases to facilitate searches and the use of the
information contained in the documents.
Each of the group’s products has enjoyed continuous
R&D work for the continuous improvement of its features,
usability and performance: Readiris Pro 8.0 (OCR), I.R.I.S.
DocCenter (EDM), I.R.I.S. DocShare (EDM), IRISPen II (pen-
scanner), IBCR (business card reader), etc.
It should be emphasised that these investments were not
recorded as a balance sheet asset, but absorbed directly
during the year.
Acquisitions
In January 2002, I.R.I.S. bought a 40% share in I.R.I.S. B2B
Technologies, which at the time still belonged to the found-
ers of this subsidiary. This operation had no impact on the
composition of consolidation.
QUALITY SYSTEM
Following in the footsteps of the Belgian subsidiaries, I.R.I.S.
Luxembourg has now obtained the ISO 9001 certification.
This fulfils I.R.I.S.’s need for continuous improvement in the
quality of the products, applications and solutions it deliv-
ers to clients. Certification also opens the doors to public
mass markets.
The I.R.I.S. quality system (QS) is monitored continuously,
implying not only particular attention from the management
but also a considerable amount of training and modifica-
tions to the procedures.
ACQUISITION OF OWN SHARES
I.R.I.S. Group SA acquired and resold 725 own shares in
2002, leaving it with no own shares by 31st December
2002. The acquisition price of these own shares was EUR
10,316.77, and the selling price was EUR 11,312.06.
This purchase and sale was caused by the mission given
to a stock exchange company to avoid too large changes
in the stock price at those moments when the difference
between the asked selling price and offered purchase price
of stock exceeded 5%.
USE OF AUTHORISED CAPITAL
On three occasions in 2002, the Board used the power with
which it is invested to conduct a capital increase for the
company, with removal of preferential rights for the group’s
shareholders:
- EUR 2,981,537.50: capital increase with a condition
precedent of the exercise of 121,250 warrants, under the
Stock Option Plan Horizon 2005 issue. The exercise price
of each warrant was EUR 24.59 per share (one share
per warrant).
- EUR 400,000: capital increase with issue of 17,928 shares
with VVPR strips, restricted to former shareholders of
I.R.I.S. B2B Technologies. The issue price was EUR 22.31
per share.
- EUR 351,719.56: capital increase with issue of 8,107
shares with VVPR strips, restricted to former shareholders
of Paperless. The issue price was EUR 43.38 per share.
Each share or warrant issue was covered in a special report
by the Board of Directors, an auditor’s report, an exemption
from publishing a prospectus by the Commission bancaire
et financière (Banking and Financial Commission), and a
listing admission by Euronext.
As of 31st December 2002, the authorised capital remain-
ing at the disposal of the Board of Directors up to 6th
September 2006 stood at EUR 18,386,005.94.
CONFLICTS OF INTEREST BETWEEN THE
ADMINISTRATORS AND THE COMPANY
The Board of Directors of I.R.I.S. Group was not aware of
any decision potentially falling within the scope of Articles
523 or 524 of the Code des Sociétés (Companies’ Code).
SPECIAL REMUNERATION OF AUDITORS
The auditors conducted several special tasks related to
special reports for authorised capital share issues, special
reports when exercising warrants through the staff, special
reports when increasing capital through contributions in
kind and preparation for compliance with the IAS-IFRS
standards, etc., earning a total of EUR 71.676 in 2002.
SUBSIDIARIES ABROAD
The group’s activity abroad is handled by legally sepa-
rate subsidiaries; the group does not have any branches
shares abroad.
CHANGE IN STOCK MARKET RATES IN 2002
I.R.I.S. shares are listed on Euronext, and form part of the
“Next Economy” quality sector, which buys shares from
growth companies in the technological sphere.
The stock market environment in 2002 was an extremely
difficult one, depending on the share market. This change,
coming after what had already been two years of heavy
decline, is underpinned by a correction of the P/E (price/
earning) ratios and a downward revision of the anticipated
profits for the various business sectors, particularly techno-
logical. All of this took place in an environment of political,
economic and social uncertainty.
This phenomenon also affected I.R.I.S., whose share price
fell from EUR 22.67 to EUR 13.78. The market valuation of
31st December 2002 was EUR 20.4 million (- 38,7% over
one year).
Average daily volume was 1,199 shares/day in 2002 (-16.7%
compared to 2001), giving a rotation of 21.4% of capital
during the 2002 period. This represents good share liquidity,
and points to a sustained interest in I.R.I.S. shares.
SIGNIFICANT EVENTS SINCE 1/1/2003
No significant events occurred after January 1, 2003.
OUTLOOK FOR 2003 AND DESCRIPTION OF
EVENTS WHICH MAY HAVE A KEY INFLUENCE
ON THE COMPANY’S FUTURE STRATEGY
I.R.I.S.’s strategic plan is to become the European leader
in the “Document to Knowledge” market. The pillars of this
plan are:
- the constant improvement of the products and technolo-
gies developed within the Group;
- the continuation of the geographical extension of the
“Professional Systems” division’s business;
- a sharp improvement in the Group’s profitability.
Despite the difficult and highly uncertain economic envi-
ronment, the management of I.R.I.S. is optimistic for 2003:
- I.R.I.S.’s order books are progressing strongly in comparison
to 2002, and the same is true of the start-of-year invoicing;
0
7000
14000
21000
28000
35000
��
20
30
40
50
0
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CHANGE IN STOCK MARKET RATES IN 2002
annual report 200224 /25
Management report Management report
- in 2003, I.R.I.S. will reap the benefits of several cost inte-
gration and optimisation measures implemented in 2002.
Given the general economic situation, the management of
I.R.I.S. naturally remains circumspect with regard to the
current period. However, we are counting on growing sales
and improved profitability.
2003 started well:
- in France, I.R.I.S. is continuing to deploy a number of
licences with Préfectures, CAFs and URSSAFs;
- in Belgium, the implementation of a second phase of
the Photothèque de la Police Fédérale (Federal Police
Photo Library) has started; final acceptance is expected
in late summer.
- the creation of a Cadastre numérique (Digital Cadastre)
for the Belgian Ministry of Finance will also be completed
before the end of the year;
- business with European institutions is growing rapidly,
just as with the major professional associations;
- in Luxembourg, new contracts have been signed with
major banks and administrations, such as the Centre de
Surveillance des Services Financiers (Financial Services
Monitoring Centre) and the Entreprise des Postes et Télé-
communications (Post and Telecommunications Company);
these contracts relate to solutions for electronic document
management, groupware, document archiving and storage;
- sales of products over the Internet (e-shopping) continue
to grow at the start of the year, as do sales through tradi-
tional distribution channels.
APPROPRIATION OF THE RESULT
The statutory (non-consolidated) result of the fiscal year to
be appropriated on December 31, 2002 is a loss of EUR
1,383,770.27 We propose to carry this loss forward.
DISCHARGE FOR THE ADMINISTRATORS AND
THE AUDITOR
It is proposed that discharge be granted to the administra-
tors and the Auditor.
The Board thanks Mr. Alain Marsily, who resigned his
administrator’s post effective as of 31st December 2002,
for his contribution to the work of the Board over a period
of nearly four years.
NOMINATION OF AN ADMINISTRATOR
The Board co-opted Mr. Pierre Sonveaux to the position
of administrator on 20th March 2003. His mandate, which
will be remunerated to the value of 3,000 EUR per year in
addition to attendance fees. The Board requests that the
Meeting confirm this nomination that will expire on 17th
May 2005.
Mr. Sonveaux is the Chairman of Sonaca (aeronautics), vice-
president of FN-Herstal (armaments) and an administrator
of several other companies such as Parc Paradisio (leisure)
and Pégard (metal construction). The Board of Directors
believes that Mr. Sonveaux’ experience and independence
will be of benefit to the quality of the Board’s work.
Drawn up in Louvain-la-Neuve on 15th April 2003, and
signed by circulation.
Pierre De Muelenaere Etienne Van de Kerckhove
Serge Dahan Pierre Rion
Eric Domb Pierre Sonveaux
ORGANISATION CHART AS OF DECEMBER 31, 2002
I.R.I.S. GROUP SA
I.R.I.S. Services SA (Belgium)
I.R.I.S. SA (Belgium)
I.R.I.S. Clinical SA (Belgium)
I.R.I.S. France SA (France)
SEPSI-IRIS France SA (France)
I.R.I.S. Inc (USA)
Amos Inc (USA)
I.R.I.S. Luxembourg SA (Luxemburg)
100%
100% 100%
100% 100%
100%
100% 75% 25%
Group structure
annual report 200226 /27
Management report
DATE OPERATION CAPITAL (EUR) SHARES
08/14/1992 Incorporation 30,987.00 1,250
12/14/1996 Capital increase through the incorporation of reserves without the creation of new shares
Replacement of 1,250 existing shares by 625,000 new shares (division by 500)
Capital increase in cashPrivate placement with an issue premium
Capital increase through the incorporation of issue premiums without the creation of new shares
+ 216,907.00247,894.00
-
+ 45,906.00293,799.00
+ 1,503,429.001,797,228.00
-
625,000
+ 115,740740,740
-
12/04/1997 Capital increase in cashUSD 1 million contribution from Parexel with issue premium
+ 880,022.002,677,250.00
+ 55,755796,495
05/17/1999 Capital increase in cashInitial public offering (IPO) and listing on stock exchange
+ 17,352,547.0020,029,797.00
+ 510,3691,306,864
11/17/1999 Capital increase in cashExercising of warrants from stock option programme
+ 148,396.0020,178,193.00
+ 9,3391,316,203
04/25/2000 Capital increase in cashExercising of warrants from stock option programme
+ 62,162.0020,240,355.00
+ 3,9121,320,115
08/02/2000 Capital increase in cashExercising of warrants from stock option programme
+ 9,566.0020,249,921.00
+ 6021,320,717
11/10/2000 Capital increase in cashContribution from former shareholders of SEPSI
+ 160,846.0020,410,767.00
+ 4,0961,324,813
11/23/2000 Capital increase in cashExercising of warrants from stock option programme
+ 219,885.0020,630,652.00
+13,8381,338,651
03/31/2001 Capital increase in cashContribution from former shareholders of IT-Vision
+ 2,571,329.0023,201,982.00
+ 64,8301,403,481
05/09/2001 Capital increase in cashExercising of warrants from stock option programme
+ 8,342.0023,210,324.00
+ 5251,404,006
08/02/2001 Capital increase through the incorporation of reserves without the creation of new shares
+ 39,676.0023,250,000.00
08/02/2001 Capital increase in cashExercising of warrants from stock option programme
+ 9,581.4523,259,581.65
+ 6031,404,609
10/12/2001 Capital increase in cashContribution from old shareholders of Amos
+ 880,737.0024,140,318.65
+ 45,1661,449,775
11/26/2001 Capital increase in cashExercising of warrants from stock option programme
+ 56,806.6624,197,125.31
+ 3,5751,453,350
03/05/2002 Capital increase in cashContribution from old shareholders of I.R.I.S. B2B Technologies
+ 400,000.0024,597,125.31
+ 17,9281,471,278
04/25/2002 Capital increase in cashExercising of warrants from stock option programme
+ 22,341.3424,619,466.65
+ 1,4061,472,684
05/21/2002 Capital increase in cashContribution from old shareholders of Paperless
+ 351,719.5624,971,186.21
+ 8,1071,480,791
SHAREHOLDER NUMBER OF SHARES
PERCENTAGE OF CAPITAL
DATE OF DECLARATION
Pierre De Muelenaere
125,785 shares
8.49% 29 December 1999
Pierre Rion 70,000 shares
4.73% 26 December 2001
EMPLOYEE PARTICIPATION IN THE CAPITAL
Stock option programme 1999
On April 14, 1999, I.R.I.S. Group created 71,265 nominative
warrants, that were freely allotted to directors, employees
and some regular sub-contractors of the company and its
subsidiaries. Every warrant entitles the owner to subscribe
to a new share at an exercise price of EUR 15.89 per share.
The owners can exercise their warrants three times a year;
the stock option programme runs progressively from July
1999 to April 2003.
As of December 31, 2002, 22,207 warrants of this pro-
gramme remained to be exercised.
This programme ends on April 15, 2003.
Stock option plan 2005
On March 5, 2002 I.R.I.S. Group created 121,250 nomina-
tive warrants, that were freely allotted to directors, employ-
ees and some regular sub-contractors of the company and
its subsidiaries. Every warrant entitles the owner to sub-
scribe to a new share at an exercise price of EUR 24,59 per
share. The owners can exercise their warrants three times a
year; the stock option programme runs progressively from
April 2003 to December 2006.
As of December 31, 2002, 112,250 warrants of this pro-
gramme remained to be exercised.
Declaration of Transparency
Based on the declarations received to date:
HEADCOUNT
Evolution of the headcount
The number of employees came from 220 to 216 at the end
of the fiscal year. 71.76% of the staff are male and 28.24% are
female. The average age went up from 32.9 to 35.42 years.
Composition of the capital
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HEADCOUNT AT END OF FISCAL YEAR
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FUNCTION
annual report 200228 /29
Headcount
consolidated accounts of I.R.I.S. Group
Consolidated accounts
Appendices to the consolidated accounts
Control of the consolidated accounts
annual report 200232 /33
CONSOLIDATED ASSETS (EUR) 2002 2001 2000
FIXED ASSETS 15,837,817 17,131,721 13,213,818
I. Formation costs 0 10,967 35,289
II. Intangible fixed assets 1,332,520 1,380,732 448,300
III. Consolidation differences (positive) 13,296,218 14,297,523 11,165,895
IV. Tangible fixed assets 848,853 1,205,959 1,412,649
A. Land and buildings 0 133,069 650,027
B. Plant, machinery and equipment 404,066 418,093 349,206
C. Furniture and vehicles 233,019 276,906 230,690
D. Leasing and similar rights 2,673 7,108 13,306
E. Other tangible fixed assets 209,095 246,647 169,422
F. Fixed assets in progress and down payments 0 124,136 0
V. Financial fixed assets 360,226 236,540 151,684
B. Other enterprises 360,226 236,540 151,684
2. Amounts receivable 360,226 236,540 151,684
CURRENT ASSETS 26,614,978 26,012,609 23,387,638
VII. Inventories and orders in progress 884,099 757,393 829,689
A. Inventories 650,097 757,393 829,689
1. Raw materials and supplies 328,275 495,410 377,016
3. Finished products 26,540 0 779
4. Goods for resale 295,282 261,983 451,893
B. On-going orders 234,002
VIII. Amounts receivable within one year 22,548,594 18,855,158 16,301,419
A. Trade receivables 21,704,095 17,659,001 15,471,314
B. Other amounts receivable 844,499 1,196,157 829,962
IX. Current investments 98,422 715,794 1,416,211
B. Other investments 98,422 715,794 1,416,211
X. Cash 2,345,286 4,613,285 3,935,417
XI. Deferred charges and accrued income 738,577 1,070,979 904,902
TOTAL 42,452,795 43,144,330 36,601,455
CONSOLIDATED LIABILITIES AND EQUITY (EUR) 2002 2001 2000
STOCKHOLDERS’ EQUITY 24,422,029 25,531,121 21,529,795
I. Capital 24,971,186 24,197,125 20,630,653
A. Issued capital 24,971,186 24,197,125 20,630,653
II. Issue premium 6,610 6,610 6,610
IV. Consolidated reserves -655,570 1,295,192 849,762
V. Consolidation differences (negative) 28,667 28,667 28,667
VI. Conversion differences 71,136 -605 9,159
VII. Subsidies in capital 0 4,132 4,944
MINORITY INTERESTS 0 181,200 163,259
VIII. Minority interests 181,200 163,259
PROVISIONS AND DEFERRED TAXES 111,820 237,287 264,113
IX. A. Provisions for liabilities and charges 111,820 151,006 45,091
2. Tax provisions 0 0
4. Other provisions 111,820 151,006 45,091
B. Deferred taxes 0 86,281 219,022
LIABILITIES 17,918,946 17,194,722 14,644,289
X. Amounts payable after one year 0 950,844 480,078
A. Financial debts 0 950,844 480,078
3. Leasing and similar debts 0 0 4,336
4. Credit institutions 0 950,844 475,742
XI. Amounts payable within one year 16,959,138 15,150,781 13,612,754
A. Current portion of debts over one year 319,683 40,566 82,633
B. Financial debts 2,563,942 2,785,520 974,742
1. Credit institutions 2,563,942 2,785,520 974,742
C. Trade debts 9,174,574 7,393,881 7,498,281
1. Suppliers 9,174,574 7,393,881 7,498,281
D. Down payments received on orders 248,571 24,967 46,309
E. Taxes, salaries and social debts 3,580,052 4,080,963 2,132,686
1. Taxes 2,042,179 2,639,156 1,198,263
2. Salaries and social costs 1,537,873 1,441,807 934,423
F. Other debts 1,072,316 824,884 2,878,102
XII. Deferred income and accrued charges 959,808 1,093,097 551,457
TOTAL 42,452,795 43,144,330 36,601,455
Consolidated accounts
annual report 200234 /35
CONSOLIDATED INCOME STATEMENT (EUR) 2002 2001 2000
I. Operational revenues 42,069,366 35,930,090 27,835,481
A. Sales 41,412,972 35,340,034 27,620,317
B. Differences between finished products 234,002 0 0 and on-going orders
C. Activated production 0 0
D. Other operating income 422,392 590,056 215,164
II. Operational expenses -40,021,607 -33,838,537 -25,698,385
A. Cost of goods sold -17,471,183 -14,853,089 -11,210,866
1. Purchases -17,446,796 -14,780,793 -11,563,266
2. Inventory variations -24,387 -72,296 352,400
B. Administrative and general expenses -9,131,866 -8,138,421 -5,579,536
C. Personnel expenses -11,825,404 -9,768,639 -7,736,912
D. Depreciation on fixed assets -1,025,439 -909,257 -603,691
E. Allowance for doubtful accounts -105,382 -18,936 -63,929
F. Provisions for liabilities and charges 0 5,272 -5,468
G. Other operating expenses -462,333 -155,467 -497,982
H. Restructuring expenses 0 0 0
III. Income from operations 2,047,759 2,091,553 2,137,097
IV. Financial income 183,151 733,723 697,842
A. Income from financial fixed assets 13,909 0 425
B. Income from current assets 32,434 112,947 277,134
C. Other financial income 136,808 620,776 420,283
V. Financial expenses -1,870,239 -1,396,101 -1,077,906
A. Interests on financial debt -360,279 -181,901 -135,258
B. Depreciation on positive consolidation differences -858,237 -701,706 -655,037
D. Other financial expenses -651,723 -512,494 -287,611
VI. Current income before income tax 360,671 1,429,175 1,757,033
VII. Extraordinary income 165,140 80,791 542,218
B. Red. of depreciation on consolidation differences 0 0 47,676
D. Red. of allowance for doubtful accounts. 86,885 0 6,269
E. Benefits on sale of fixed assets 60,905 70,420 461,792
F. Other extraordinary income 17,350 10,371 26,481
VIII. Extraordinary expenses -2,029,712 -428,847 -356,692
A. Extraordinary amortisation and depreciation -166 0
B. Exceptional amortisation on positive -1,300,000 0 0 consolidation differences
D. Provisions for extraordinary risks and charges 0 -118,276 -35,524
E. Losses on sale of fixed assets -252 -8,138 -36,778
F. Other extraordinary expenses -729,460 -302,267 -284,391
IX. Net income before taxes -1,503,901 1,081,119 1,942,558
X. A. Application of deferred taxes 86,281 129,422 1,660
B. Transfer to deferred taxes 0 0 -215,703
XI. Income tax -533,140 -711,093 -642,038
A. Taxes -535,608 -1,010,656 -647,018
B. Tax regularizations 2,468 299,563 4,981
XII. Net income -1,950,760 499,448 1,086,477
XIV. Consolidated income -1,950,760 499,448 1,086,477
A. Minority interests share 0 14,341 -5,342
B. Group share -1,950,760 485,107 1,091,819
Transfer to consolidated reserves -1,950,760 485,107 1,091,819
CONSOLIDATED CASH FLOW STATEMENT (EUR) 2002 2001 2000
Net income (group share) -1,950,760 485,106 1,091,819
Share of income from the acquisitions 0 0 0 during the fiscal year
Depreciation on fixed assets and formation costs 1,025,439 909,257 603,691
Allowance on doubtful accounts 105,382 19,102 63,929
Provision for liabilities and charges -86,885 113,004 34,723
Provision for deferred taxes -86,281 -129,422 214,043
Depreciation on positive consolidation differences 2,158,237 697,490 607,361
Cash flow from current operations 1,165,132 2,094,537 2,615,567
Receivables and advance payments -123,686 -84,856 -57,590
Inventory -126,706 72,296 -352,400
Receivables within one year -3,798,818 -2,572,675 -9,155,028
Deferred charges and accrued income (assets) 332,402 -166,077 -789,120
Minority interests -181,200 17,941 163,259
Conversion differences 71,741 -9,764 431
Trade debts 1,780,693 -104,400 4,614,398
Down payments on orders in progress 223,604 -21,342 46,309
Taxes, salaries and social debts -500,911 1,948,277 1,179,066
Other liabilities 247,432 -2,053,218 905,613
Deferred charges and accrued income (liabilities) -133,291 541,640 463,735
Changes in working capital -2,208,740 -2,432,178 -2,981,327
Cash flow from operations -1,043,608 -337,641 -365,760
Capital 774,061 3,526,796 452,459
Subsidies -4,132 -812 4,944
Provision for liabilities and charges 47,699 -7,089 -7,700
Provision for deferred taxes 0 -3,319 4,979
Changes in stockholders’ equity excl. income 817,628 3,515,576 454,682
Financial liabilities -671,727 428,699 403,947
Changes in financial liabilities -671,727 428,699 403,947
Cash flow from financial activities 145,901 3,944,275 858,629
Consolidation differences (positive) -1,156,932 -3,829,118 -8,571,036
Acquisitions during the fiscal year -1,156,932 -3,829,118 -8,571,036
Investments in fixed assets and formation costs -609,154 -1,610,842 -2,150,265
Investments in operations -609,154 -1,610,842 -2,150,265
Cash flow from investment activities -1,766,086 -5,439,960 -10,721,302
Changes in sources and uses of funds -2,663,793 -1,833,326 -10,228,432
Cash and equivalent at start of fiscal year 2,543,559 4,376,885 14,853,211
Correction on 1/1/1999 (reimbursed loan) 0 -247,894
Cash and equivalent at end of fiscal year -120,234 2,543,559 4,376,885
Changes in cash 2,663,793 1,833,326 10,228,432
Consolidated accounts Consolidated accounts
I. LIST OF FULLY CONSOLIDATED ENTITIES
I.R.I.S. Group operates in this consolidation as the parent com-
pany and consolidating enterprise.
The consolidated entities are:
> Image Recognition Integrated Systems Group S.A. (abbreviated I.R.I.S.Group)Parc Scientifique of Louvain-la-Neuve
Rue du Bosquet 10
B-1435 Mont St Guibert, Belgium
VAT BE-448.040.624
> Image Recognition Integrated Systems Services S.A. (abbreviated I.R.I.S. Services)Parc Scientifique of Louvain-la-Neuve
Rue du Bosquet 10
B-1435 Mont St Guibert, Belgium
VAT BE-469.947.083
(% de participation: 2000: 100%; 2001: 100%; 2002: 100%)
> Image Recognition Integrated Systems S.A. (abbreviated I.R.I.S.)Parc Scientifique of Louvain-la-Neuve
Rue du Bosquet 10
B-1435 Mont St Guibert, Belgium
VAT BE-430.824.708
(% de participation: 2000: 100%; 2001: 100%; 2002: 100%)
Division ”eCommunications”Rue de Stalle 65
B-1180 Bruxelles, Belgium
> I.R.I.S. Clinical S.A.Parc Scientifique of Louvain-la-Neuve
Rue du Bosquet 10
B-1435 Mont St Guibert, Belgium
VAT BE-457.859.992
(share: 2000: 100%; 2001: 100%; 2002: 100%)
> Image Recognition Integrated Systems France S.A. (abbreviated I.R.I.S.France)Rue du Saule Trapu 19
Parc du Moulin de Massy
F-91300 Massy, France
(share: 2000: 100%; 2001: 100%; 2002: 100%)
> SEPSI-IRIS France S.A.Rue du Saule Trapu 19
Parc du Moulin de Massy
F-91300 Massy, France
(share: 2000: 100%; 2001: 100%; 2002: 100%)
> Image Recognition Integrated Systems Inc. (abbreviated I.R.I.S.Inc.) Delray Office Plaza
4731 West Atlantic Avenue, Suite B1 & B2
Delray Beach, Florida 33445, USA
(share: 2000: 100%; 2001: 100%; 2002: 100%)
> Amos IncDelray Office Plaza
4731 West Atlantic Avenue, Suite B1 & B2
Delray Beach, Florida 33445, USA
(share: 2000: 100%; 2001: 100%; 2002: 100%)
> Image Recognition Integrated Systems Luxembourg S.A. (abbreviated I.R.I.S.Luxembourg)Route des 3 Cantons 11
L-8399 Windhof
Grandy Duchy of Luxembourg
(share: 2000: 100%; 2001: 100%; 2002: 100%)
V. APPLICATION CRITERIA FOR THE CONSOLIDATION METHODS
Subsidiaries over which the consolidating company exercises
control “de iure” or “de facto” are fully consolidated.
Proportional integration is applied to subsidiaries owned and
managed jointly by a limited number of shareholders.
Affiliated companies in which one or more of the companies
included in the consolidation exercise a significant influence, are
accounted for by the equity method.
VI. A. VALUATION RULES
A. General principlesThe consolidated accounts are prepared in conformity with
the accounting principles and consolidation rules of the
Belgian accounting legislation. The consolidated accounts
are drawn up on December 31, the closing date for all the
consolidated entities.
B. Consolidation differencesThe amount by which the price paid to acquire subsidiaries
exceeds the share of the corresponding capital and reser-
ves at the date of acquisition is appropriated, by decision
of the Board of Directors, to the appropriate balance sheet
headings. These are then depreciated or included in the
income statement according to the rules that apply to these
headings.
The remaining surplus not appropriated in this way consti-
tutes a consolidation difference, which is depreciated on an
individual basis, over a period that does not exceed 20 years.
Additional or extraordinary depreciation is applied to these
differences whenever a change in the economic situation
means that there is no longer any justification for maintai-
ning them in the consolidated balance sheet at this value.
In the consolidated accounts, the consolidation differences
are depreciated on a straight-line basis over a 20 year period,
pro rata to the period of the fiscal year during which the
accounts of the subsidiary are consolidated.
C. Conversion of financial reports drawn up in foreign currencies
Financial reports expressed in foreign currencies are con-
verted by the closing rate method. All balance sheet items,
with the exception of capital and reserves, are converted at
the exchange rate prevailing at the balance sheet closing
date. Income statement items are converted at the average
exchange rate for the fiscal year. The difference resulting
from the application of these exchange rates is recorded
in capital and reserves under the line item “Conversion
differences”.
D. Provisions for pensionsRetirement pensions due under the various mandatory
retirement schemes to which employers and employees
contribute are, in general, handled by specialised outside
organisations. The contributions due for the fiscal year are
included in the income statement for the period.
There are no complementary retirement schemes applicable
to the consolidated companies that generate obligations for
the companies concerned.
E. Deferred taxesTemporary tax timing differences caused, on the one hand,
by certain restatements of local accounts in order to make
them homogenous with the Group’s accounting consolida-
tion principles and, on the other, by certain tax carryforwards,
give rise to deferred tax items which are calculated using the
variable carryforward method. Deferred tax assets are not
included in he accounts.
F. Restatements and eliminationsThe application of homogenous accounting rules and
evaluation methods within the group make it possible to
present the accounts of the consolidated companies on an
identical basis, and leads to a restatement of the unconso-
lidated accounts, in accordance with the accounting princi-
ples described below.
In this way, in the consolidation, economic depreciation,
reductions in value and provisions that are not justified
economically are corrected providing that the required
information regarding these items can be obtained in time
and without disproportional expense and in so far as these
restatements significantly impact the capital and reserves
and the profit of the group.
After aggregation of the balance sheets and income state-
ments, restated where appropriate, the reciprocal balances,
as well as losses and profits on operations between group
companies, are eliminated.
G. Special rulesThe various expenses and fixed assets are capitalised at their
acquisition value when they are acquired from third parties.
Other fixed assets are capitalised at their production cost.
INCORPORATION EXPENSES
Incorporation expenses are depreciated as follows: 20% to
100%, on a straight-line basis.
INTANGIBLE FIXED ASSETS
Research and development charges are not capitalised, but
are charged during the fiscal year in which they are incurred.
annual report 200236 /37
Appendices to the consolidated accounts
Licences are amortised at 33% to 100%.
Intellectual property rights, patents and know-how acquired
from third parties are depreciated from 20% to 100% on a
straight-line basis.
Businesses that include essentially technology or customer-
ship are depreciated at a 5% rate on a straight-line basis.
TANGIBLE FIXED ASSETS
Tangible fixed assets are depreciated from the outset. For
the first year, depending on the country concerned, depre-
ciation is taken pro rata to the amount of time held or for a
whole year. These assets are depreciated on a straight-line
basis at the following rates:
Computer equipment
(hardware and software) 20% à 33%
Office equipment 10% à 20%
Office furniture 10% à 20%
Building alterations 10% à 20%
New vehicles 20% à 25%
Second-hand vehicles 33%
FINANCIAL FIXED ASSETS
Financial fixed assets are valued periodically. Reductions in
value are applied case by case, based on the information
available to the Board of Directors.
INVENTORIES
Stocks of goods for resale and raw materials and consuma-
bles acquired from third parties are valued at their acquisi-
tion cost, using the “First In First Out” (FIFO) method.
Reductions in value on stocks are taken case by case, based
on the judgement of the Board of Directors.
TRADE RECEIVABLES
Trade receivables are valued individually.
Reductions in value are decided case by case, based on the
information available to the Board of Directors.
TRADE DEBTS
Trade debts are valued individually.
FIXED-PRICE CONTRACTS
Most contracts entered into by the company are fixed price
contracts. Their income is recorded in accordance with
their invoicing. The accounting department verifies on a
regular basis that the invoiced amounts correctly reflect the
progress of the services rendered. The company records
the amount of work done at the end of the fiscal year but
not yet invoiced and paid as on-going order. Work that
hasn’t been done yet but was invoiced at the end of the
fiscal year is registered under the heading ”Products to be
carried forward”.
ASSET AND LIABILITIES ITEMS EXPRESSED IN FOREIGN CURRENCIES
At the balance sheet closing date:
> the non-monetary items in the balance sheet, i.e. intan-
gible, tangible and financial fixed assets, capital and
reserve items, are maintained at their value expressed in
Euro at the time of their acquisition, whatever the closing
rate of the currency in which the acquisition took place.
> The monetary items in the balance sheet, i.e. amounts
receivable after or within one year, current investments,
amounts at the bank and in hand, provisions for liabili-
ties and charges, amounts payable after and within one
year, and deferred and accrued income and charges, are
valued at the exchange rate applicable at the balance
sheet closing date.
For each currency the conversion differences are aggrega-
ted and the positive or negative difference recorded in the
income statement.
OTHER HEADINGS
With regard to the other headings, we refer to the valuation
rules that apply to the unconsolidated annual accounts.
VI. B. DEFERRED TAXES AND TAX LATENCIES
BREAKDOWN OF HEADING IX.B. OF LIABILITIES AND EQUITY 0
- Deferred taxes 0
- Tax latencies 0
VII. SCHEDULE OF INCORPORATION EXPENSES (EN EUR)
NET BOOK VALUE AT THE END OF THE PREVIOUS FISCAL YEAR 10,967
Changes during the fiscal year: - New expenses incurred 6,831
- Depreciation -17,798
NET BOOK VALUE AT THE END OF THE FISCAL YEAR 0
of which: - cost of incorporation and capital increase, loan issue costs, redemption
premiums and other incorporation expenses
0
R&D COSTS PATENTS,
LICENCES,
FRANCHISES, ETC.
A. ACQUISITION VALUE
At the end of the previous fiscal year: 0 2,203,608
Changes during the fiscal year: - Acquisitions, including own production 0 267,504
- Sales and decommissioning -606
- Transfer from and to other headings 0 62,547
- Consolidation differences -2,841
- Other changes 0 -13,960
At the end of the fiscal year: 0 2,516,252
C. DEPRECIATION AND WRITTEN-OFF AMOUNTS
At the end of the previous fiscal year: 0 822,876
Changes during the fiscal year: - Recorded 0 363,063
- Cancelled because of sales and decommissioning -606
- Transfer from and to other headings 0 0
- Consolidation differences -1,601
- Other changes 0 0
At the end of the fiscal year: 0 1,183,732
D. NET BOOK VALUE AT THE END OF THE FISCAL YEAR 0 1,332,520
VIII. SCHEDULE OF INTANGIBLE ASSETS
LAND AND
BUILDING
PLANT,
MACHINERY
AND EQUIPMENT.
FURNITURE AND
VEHICLES
A. ACQUISITION VALUE
At the end of the previous fiscal year: 218,688 1,428,888 775,434
Changes during the fiscal year: - Acquisitions, including own production 0 191,862 84,712
- Disposals and deallocation -218,688 0 -20,301
- Transferred from and to
other headings
0 127,974 0
- Conversion differences 0 -2,118 -15,237
- Other changes 0 0 0
At the end of the fiscal year: 0 1,746,606 824,608
C. DEPRECIATION AND WRITTEN-OFF AMOUNTS
At the end of the previous fiscal year: 85,619 1,010,795 498,528
Changes during the fiscal year: - Recorded 0 322,573 119,878
- Cancelled after disposal/deallocation -85,619 0 -17,135
- Transferred from and to
other headings
0 10,909 0
- Conversion differences 0 -1,737 -9,682
- Other changes 0 0
At the end of the fiscal year: 0 1,342,540 591,589
D. NET BOOK VALUE AT THE END OF THE FISCAL YEAR 0 404,066 233,019
IX. SCHEDULE OF TANGIBLE FIXED ASSETS (EN EUR)
annual report 200238 /39
Appendices to the consolidated accounts Appendices to the consolidated accounts
IX. SCHEDULE OF TANGIBLE FIXED ASSETS (EN EUR)
LEASING
AND SIMILAR
RIGHTS.
OTHER
TANGIBLE
ASSETS
FIXED ASSETS
IN PROGRESS &
DOWNPAYMENT
A. ACQUISITION VALUE
At the end of the previous fiscal year: 30,988 420,632 124,136
Changes during the fiscal year: - Acquisitions, including own
production
0 15,569 55,110
- Disposals and deallocation -17,624
- Transferred to other item in
accounts
0 -11,275 -179,246
- Conversion differences 1
At the end of the fiscal year: 13,364 424,927 0
C. DEPRECIATION AND WRITTEN-OFF AMOUNTS
At the end of the previous fiscal year: 23,880 173,985 0
Changes during the fiscal year: - Recorded 2,673 52,756 0
- Transferred from and to other
headings
-15,862 0 0
- Conversion differences -10,909
- Other changes 0 0 0
At the end of the fiscal year: 10,691 215,832 0
D. NET BOOK VALUE AT THE END OF THE FISCAL YEAR 2,673 209,095 0
X. SCHEDULE OF FINANCIAL FIXED ASSETS (EN EUR)
ENTERPRISES
ACCOUNTED BY
EQUITY METHOD
OTHER
ENTERPRISES
2. AMOUNTS RECEIVABLE
NET BOOK VALUE AT THE END OF THE PREVIOUS FISCAL YEAR 0 236,540
Changes during the fiscal year: - Additions 0 146,148
- Refundings 0 -20,519
- Consolidation differences -307
- Other changes 0 -1,636
NET BOOK VALUE AT THE END OF THE FISCAL YEAR 0 360,226
ACCRUED ALLOWANCE FOR DOUBTFUL ACCOUNTS
AT THE END OF THE FISCAL YEAR
0 0
XI. SCHEDULE OF CONSOLIDATED RESERVES (EN EUR)
CONSOLIDATED RESERVES AT THE END OF THE PREVIOUS FISCAL YEAR 1,295,192
Changes during the fiscal year: - Other changes -2
- Group’s share in consolidated income -1,950,760
CONSOLIDATED RESERVES AT THE END OF THE FISCAL YEAR -655,570
CONSOLIDATION DIFFERENCES
POSITIVE NEGATIVE
NET BOOK VALUE AT THE END OF THE PREVIOUS YEAR 14,297,523 28,667
Changes during the fiscal year: - Changes due to an increase
in the percentage of detention
578,199
- Depreciation -2,158,237 0
- Other changes 578,733 0
NET BOOK VALUE AT THE END OF THE FISCAL YEAR 13,296,218 0
XII. SCHEDULE OF CONSOLIDATION DIFFERENCES (EN EUR)
A. BREAKDOWN OF DEBTS ORIGINALLY PAYABLE AFTER ONE YEAR, BY REMAINING TERM
LESS THAN 1
YEAR.
1 TO 5
YEARS
ABOVE 5
YEARS.
Financial debts 319,683 0 0
- Leasing and similar debts 0 0 0
- Credit institutions 319,683 0 0
TOTAL 319,683 0 0
B. DEBTS GUARANTEED BY REAL GUARANTEES GIVEN OR IRREVOCABLY PROMISED ON COMPANY ASSETS
Financial debts 319,683
- Leasing and similar debts
- Credit institutions 319,683
TOTAL 319,683
XIII. SCHEDULE OF DEBTS (EN EUR)
annual report 200240 /41
Appendices to the consolidated accounts Appendices to the consolidated accounts
XIV. RESULTS OF CURRENT PERIOD AND PREVIOUS PERIOD (EN EUR)
CURRENT
PERIOD
PREVIOUS
PERIOD
A. NET TURNOVER
A.1 Broken down by geographical market
- Belgium 16,185,807 14,488,904
- France 11,514,181 10,309,096
- Grand Duchy of Luxembourg 7,190,618 4,863,377
- Other Western European countries 1,492,431 2,753,814
- Eastern Europe 33,523 107,928
- North America 4,679,816 2,458,168
- Asia/Australasia 499,285 322,041
- Other 51,313 36,706
TOTAL 41,646,974 35,340,034
A.2 Aggregated group figures in Belgium 16,185,807 14,488,904
B. AVERAGE STAFF LEVELS AND STAFF COSTS
B.1. Average staff levels 206.52 196.14
Employees 174.34 167.57
Management personnel 32.18 28.57
B.2. Staff costs
Remuneration and social security payments 11,825,404 9,768,639
B.3. Average staff numbers in Belgium working
for companies of the Group
101.59 99.96
C. EXTRAORDINARY RESULTS
C.1. Breakdown of other extraordinary products, where significant:
- Use of provisions for legal actions 86,885 0
- Surplus on realisation of tangible assets 60,905 0
- Other extraordinary products 17,350 0
C.2. Breakdown of other exceptional costs, where significant:
- Extraordinary amortisements on positive consolidation differential for AMOS 1,300,000 0
- Costs of lawsuit over industrial property 589,960 0
- Industrial lawsuits 114,014 0
- Costs arising from nullity of SOP 2005 8,397 0
- Other extraordinary costs 17,341 0
- Internal reorganisation expenditure 0 249,350
D. TAX ON THE RESULT
D.2. Influence of extraordinary results on the value of taxes on the result from the period 135,398 56,922
XV. NON-BALANCE SHEET DUTIES AND OBLIGATIONS (EN EUR)
A.2. Amount of guarantees given or irrevocably promised by the consolidated companies on their as-
sets, to guarantee debts and liabilities of companies that participate in the consolidation: 319,683
C. MAJOR LITIGATION AND OTHER SIGNIFICANT COMMITMENTS
I.R.I.S. Group carries is co-debtor of consolidated subsidiaries an amount of bank debts
on December 31, 2001 of: 1,000,000
I.R.I.S. Group has issued warrants in favour of its personnel (Stock option plan 1999). The number of
warrants still outstanding at the end of year is:
22,207 warrants at
the price of EUR
15.89 per share
I.R.I.S. Group has taken the commitment to issue warrants in favour of its personnel (Stock option plan
Horizon 2005). After issuance, the number of warrants still outstanding is:
112,250 warrants
at the price of EUR
24.59 per share
Lawsuit pertaining to unfair competition in Luxembourg
I.R.I.S. is the defendant in a court case in which the plaintiff alleges unfair competition through the
appointment of a member of its management staff, and requests compensation of 2,479 thousand EUR.
The ruling, delivered on 13th May 2002, dismissed the plaintiff’s action, declaring it to be unfounded.
However, the plaintiff appealed against the ruling on 19th August 2002. I.R.I.S.’s advisors are confident
of a favourable outcome to the case. The risks to I.R.I.S. remain limited. I.R.I.S. has therefore made no
provision for this lawsuit.
Lawsuit pertaining to industrial property in the United States
I.R.I.S. has been sued, along with other software publishers and IT manufacturers, by a person claiming
an invention patent dating back to 1983. Although no infringement has been proven, I.R.I.S. has had to
disburse substantial fees in defending itself in the USA. The case is currently approaching final settle-
ment. In order to present a faithful image of I.R.I.S.’s position, the Board of Directors decided to record
all charges relating to this lawsuit ($US 587m) under the 2002 period.
Industrial lawsuit in the United States
The former Managing Director of Amos Inc. was dismissed at the start of the second semester of 2002
for misconduct. He is claiming compensation of $US 125,000. I.R.I.S. has set aside a provision
of $US 50,000 as a proposed settlement.
Tax lawsuit in Belgium
The I.R.I.S. SA company has received a demand from the Belgian tax authorities for a figure of around
500,000 EUR, based on an interpretation of the concept of innovation capital, with regard to I.R.I.S.’s
specific tax status as an innovation company. More than half of these taxes have been paid to the
Treasury, but I.R.I.S. is contesting the interpretation which underlies the demand, using legal arguments.
The matter is still at the administrative stage. I.R.I.S.’s risks remain limited. I.R.I.S. has therefore made no
provision for this lawsuit.
XVII. FINANCIAL RELATIONSHIP WITH DIRECTORS OF THE COMPANY
OR ITS SUBSIDIARIES (EN EUR)
A. Global amount of salaries paid to the directors and managers of the parent company due to their func-
tions in the parent company, its subsidiaries and related companies, including the pensions paid to the
former directors and managers: 499,292
annual report 200242 /43
Appendices to the consolidated accounts Appendices to the consolidated accounts
Control of the consolidated accounts
The statutory and consolidated accounts on December 31,
2000, 2001 and 2002 have been verified and stated without
reserve by:
Ernst & Young Auditors S.C.C.
Avenue Marcel Thiry 204
1200 Brussels
Represented by Eric Golenvaux, Partner
AUDITOR’S REPORT ON THE CONSOLIDATED
ACCOUNTS OF DECEMBER 31, 2002
It is with pleasure that we comply with the legal and statutory
requirements by communicating the results of our auditing.
We have audited the annual consolidated accounts of
the S.A. I.R.I.S Group, prepared under the responsibility
of the Board of Directors, for the fiscal year that ends on
December 31, 2002, with a balance sheet total of 42,453
thousand Euro and an income statement closing with a
consolidated loss for the fiscal year of 1,951 thousand Euro.
We have also verified the management report.
STATEMENT WITHOUT RESERVE OF THE
CONSOLIDATED ACCOUNTS
Our audit was undertaken in accordance with the standards
of the Belgian Institute of Company Auditors. These profes-
sional standards require our audit to be organised and car-
ried out in such a way as to obtain a reasonable measure
of certainty that the consolidated annual accounts do not
contain any significant inaccuracies, given all Belgian legal
and regulatory provisions.
In accordance with these standards, we have taken into
account the administrative and book-keeping organisation
of the consolidated whole, as well as the internal control
procedures. We have received the explanations and infor-
mation we required for our audit. Using random samples,
we have examined the justified nature of the amounts given
in the consolidated annual accounts. We have assessed the
validity of the consolidation and valuation rules, of the sig-
nificant accounting estimates made by the company and of
the presentation of the consolidated annual accounts as a
whole. We believe that these efforts constitute a reasonable
basis to express our opinion.
We therefore state that, in our opinion, the consolidated
annual accounts for the fiscal year that ends on December
31, 2002 give a true and fair view of the net financial assets,
the financial situation and the earnings of the consolidated
whole, in accordance with the applicable Belgian legal and
regulatory provisions. We also state that the information
held in the appendices is adequate.
Additionnally, the management report contains the information
required by law and is complies with the consolidated accounts.
Brussels, May 2, 2003
Ernst & Young Auditors S.C.C. (B 160)
Represented by Eric Golenvaux, Partner
annual report 200244 /45
statutory accounts of I.R.I.S. Group S.A.
Statutory accounts
Statutory accounts
The statutory accounts as we publish them below are abridged. They do not comprise all appendices or the auditor’s report
that verifies and states the statutory accounts without reserve.
The complete version of these accounts will be transmitted to the Belgian National Bank and can be consulted at the com-
pany’s head office.
ASSETS (EUR) 2002 2001 2000
FIXED ASSETS 20,566,826.10 20,528,694.30 17,031,969.98
IV. Financial fixed assets 20,566,826.10 20,528,694.30 17,031,969.98
A. Affiliated enterprises 20,566,826.10 19,232,892.90 15,736,168.58
1. Participating interests 19,271,024.70 19,232,892.90 15,736,168.58
2. Amounts receivable 1,295,801.40 1,295,801.40 1,295,801.40
CURRENT ASSETS 8,121,326.55 7,296,639.16 8,064,504.08
VII. Amounts receivable within one year 7,908,743.10 6,171,505.08 6,599,792.49
A. Trade receivables 149,586.50 399,441.91 541,660.47
B. Others amounts receivable 7,759,156.50 5,772,063.17 6,058,132.02
VIII. Current investments 0 25,000.00 995,480.95
B. Other investments 0 25,000.00 995,480.95
X. Cash 209,873.85 1,097,939.85 463,528.10
X. Deferred charges and accrued income 2,709.60 2,194.23 5,702.54
TOTAL 28,688,152.65 27,825,333.46 25,096,474.06
LIABILITIES AND STOCKHOLDERS EQUITY (EUR) 2002 2001 2000
STOCKHOLDERS’ EQUITY 25,179,570.36 25,455,014.17 22,262,483.03
I. Capital 24,971,186.35 24,197,125.45 20,630,652.51
A. Issued capital 24,971,186.35 24,197,125.45 20,630,652.51
II. Issue premium 6,610.33 6,610.33 6,610.33
IV. Reserves 1,585,543.95 1,585,543.95 1,625,220.19
A. Legal reserve 112,358.07 112,358.07 112,358.06
D. Available reserve 1,473,185.88 1,473,185.88 1,512,862.13
V. Profit/loss carried forward -1,383,770.27 -334,265.56 0
PROVISIONS AND DIFFERED TAXES 34,717.00 34,717.00 0
VII. A. Provisions for general risks 34,717.00 34,717.00 0
4. Other provisions 34,717.00 34,717.00 0
DEBTS 34,738,865.29 2,335,602.29 2,833,991.05
VIII. Amounts payable after one year 0 0 36,254.43
A. Financial debts 0 0 36,254.43
4. Credit institutions 0 0 36,254.43
IX. Amounts payable within one year 3,463,481.97 2,326,009.26 2,797,736.62
A. Current portion of debts over one year 0 36,254.42 48,339.24
B. Financial debts 2,500,000.00 1,623,918.37 0
1. Credit institutions 2,500,000.00 1,623,918.37 0
C. Trade debts 36,761.36 117,117.03 80,586.52
1. Suppliers 36,761.36 117,117.03 80,586.52
E. Taxes, salaries and social debts 377,241.19 197,810.66 16,327.09
1. Taxes 377,241.19 197,810.66 16,096.20
2. Salaries and social debts 0 0 230.89
F. Other debts 549,479.42 350,908.78 2,652,483.77
X. Deferred income and accrued charges 10,383.32 9,593.03 0
TOTAL 28,688,152.65 27,825,333.46 25,096,474.08
annual report 200248 /49
INCOME STATEMENT (EUR) 2002 2001 2000
I. Sales 484,813.09 436,374.97 381,962.13
A. Turnover 484,813.09 0 0
D. Other operating income 0 436,374.97 381,962.13
II. Operating expenses -464,350.14 -479,531.46 -380,599.31
B. Administrative and general expenses -459,021.89 -417,860.25 -380,594.14
C. Personnel expenses 0 0 0
D. Depreciation on fixed assets -5,046.65 -59,221.78 0
G. Other operating expenses -281.60 -2,449.43 -5.16
III. Operating income 20,462.95 -43,156.49 1,362.82
IV. Financial income 650,805.13 528,791.68 1,457,433.11
A. Income from financial fixed assets 637,757.39 472,489.20 1,287,836.53
B. Income from current assets 7,253.20 22,556.69 169,273.60
C. Other financial income -5,794,54 33,746.79 322.98
V. Financial expenses -197,430.57 -42,677.18 -21,622.19
A. Interests on debts -160,555.15 -33,786.20 -6,906.96
C. Other financial expenses -36,875.42 -8,890.98 -14,715.23
VI. Current income before taxes 473,837.51 442,958.01 1,437,173.74
VIII. Extraordinary expenses -1,308,397.04 -592,064.29 -7,423.10
B. Depreciation on participating interests -1,300,000 -552,539.40 0
C. Provisions for liabilities and charges 0 -34,717.00 0
E. Other extraordinary expenses -8,397.04 -4,807.89 -7,423.10
IX. Net income before taxes -834,559.53 -149,106.28 1,429,750.64
X. Income tax -214,945.18 -185,159.28 -46,811.32
A. Income tax -214,945.18 -191,706.25 -46,811.32
B. Tax regularisation 0 6,546.97 0
XI. Net income -1,049,504.71 -334,265.56 1,382,939.32
Profit (loss) available for appropriation -1,383,770.27 -334,265.56 967,591.79
Profit (loss) of the fiscal year for appropriation -1,049,504.71 -334,265.56 1,382,939.32
Profit (loss) carried forward from the previous year -334,265.56 0 -415,347.53
Profit (loss) to carry forward to the next years -1,383,770.27 -334,265.56 0
Assigned to legal reserve 0 0 74,368.06
Assigned to available reserve 0 0 893,223.73
annual report 200250 /51
Statutory accounts
contacts
Coordinates
Financial agenda
Investor relations and financial communication
Contacts
COORDINATES
Image Recognition Integrated Systems Group S.A.
(abbreviated I.R.I.S. Group S.A.)
Rue du Bosquet 10 – Parc Scientifique of Louvain-la-Neuve – B-1435 Mont Saint Guibert – Belgium
Tel +32/10/45.13.64 – Fax +32/10/45.74.73
www.irislink.com
R.C. Nivelles 72.057
TVA BE-448.040.624
FINANCIAL AGENDA
Ordinary general meeting 3rd Tuesday of May – May 20, 2003 at 2 p.m.
Announcement of annual results 4th week of March – March 29, 2003
Announcement of half-year results 3rd week of September – September 20, 2003
INVESTOR RELATIONS AND FINANCIAL COMMUNICATION
Etienne Van de Kerckhove, CEO
Rue du Bosquet 10 – Parc Scientifique of Louvain-la-Neuve – B-1435 Mont Saint Guibert – Belgium
Tel +32/10/487.460 – Fax +32/10/457.468 – E-mail: [email protected]
RESPONSIBLE EDITORS
Pierre De Muelenaere & Etienne Van de Kerckhove
Rue du Bosquet 10 – Parc Scientifique of Louvain-la-Neuve – B-1435 Mont Saint Guibert – Belgium
RAPPORT ANNUEL
Ce rapport annuel est également disponible en français.
OFFICIAL VERSION
The French version of this annual report is construed as the exclusive official annual report.
Any other version is a translation that does not legally bind the company.
Design: www.hoetethoet.be
annual report 200254 /55