STEMMER IMAGING AG

Quarterly Report • Aug 11, 2021

H1

HALF-YEAR REPORT FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2021

AT A GLANCE

GROUP KEY FIGURES

in KEUR
	01/01–30/06/2021	01/01–30/06/2020
Revenue	64,708	52,212
Gross profit	25,013	19,052
Gross profit margin	38.7%	36.5%
EBITDA	7,913	2,297
EBIT	5,914	–4,288
Consolidated net income	4,437	–5,322
Operating cashflow after income taxes	2,646	4,039
Employees (average)	324	390

	30/06/2021	31/12/2020
Total assets	97,619	96,684
Equity	65,202	64,079
Equity ratio	66.8%	66.3%
Cash and cash equivalents*	12,560	34,718

STEMMER IMAGING IN FIGURES

Order intake: EUR 82.8 million

66.8 per cent Equity ratio

EUR 0.68 earnings per share

5,000 customers

324 employees, 70 per cent with a technical background

This report and results from previous fiscal years in English language versions are available for you to download at

15 subsidiaries and represented in >20 countries

* incl. short-term loan to PRIMEPULSE SE in the amount of 19,654 www.stemmer-imaging.com

CONTENTS

HALF-YEAR REPORT FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2021

Shareholder information

Letter to shareholders	2
STEMMER IMAGING on the capital market	4

Consolidated interim management report

Economic report	8
Net assets and financial position	9
Results of operations	10
Risk and opportunities report	11
Report on expected developments	13

Consolidated financial statements

Consolidated statement of financial position
Consolidated income statement	16
Consolidated statement of comprehensive income	17
Consolidated statement of cash flows	18
Consolidated statement of changes in equity	20
Condensed notes to the consolidated financial statements	21
Responsibility statement by the legal representatives

Additional information

Financial calendar	30
Publication details	31

Rounding may mean that individual figures given in this report do not add up exactly to the given total and that percentages are not the exact result of the figures presented.

LETTER TO SHAREHOLDERS

The STEMMER IMAGING AG Executive Board: Uwe Kemm (COO) and Arne Dehn (CEO)

DEAR SHAREHOLDERS, DEAR READER,

This half-year report clearly shows how our focus on growth and the continuous improvement of our strategic positioning has produced a solid business result.

We succeeded in taking the positive trend from the first quarter and building on it in the second quarter of the year and we have once again surpassed our performance from the previous quarter in a range of important key figures. The robust increase in our order intake to EUR 82.8 million, representing a rise of 56 per cent compared to the same period of the previous year, is a particular highlight. In the first half of the fiscal year, we were able to generate revenue of EUR 64.7 million, up 24 per cent compared to the same period of the previous year, and thereby enabling us to achieve a good ratio of order intake to revenue of 1.3. This makes us optimistic about the second half of 2021 and beyond. EBITDA rose by 245 per cent to a very satisfactory level of EUR 7.9 million in a year-on-year comparison. Supported by the strong order backlog and based on current estimates for the second half of the year, we raised our revenue and earnings forecast for 2021 as a whole on 21 July 2021. We now expect revenue of between EUR 123 million and EUR 131 million and EBITDA of between EUR 12.2 million and EUR 15.4 million for 2021.

Our efforts, especially in the exceptional conditions of the past year, are therefore showing good results. Even though the market situation itself has improved considerably, these are the results of consistent work. Our persistent focus on ongoing market development, particularly at times when perseverance in project development was required, translated into important strategic project successes in the first half of the year. It is particularly important for us that we continue pursuing growth in the target markets set out in our corporate strategy. We would like to take the opportunity here to emphasise that we were once again able to expand our business to a greater-than-average extent with end customers as well as in the field of artificial vision – the business in the area of non-industrial applications. Our focus remains equally centred on industrial applications, a fact demonstrated by our excellent performance in the automotive sector, where we have managed to successfully adopt strategic growth topics such as e-mobility.

The increasingly difficult supply situation coupled with the ongoing shortage of raw materials and intermediate products presented us with new challenges in the second quarter. Long-standing partnerships with our suppliers and close coordination with our customers give us a competitive advantage in the market, even in this challenging environment, the extent of which is unprecedented. The broad base of our portfolio gives us a high degree of flexibility to be able to react to temporary supply shortages. At the same time, customers have been able to benefit from the advantage that our stock of secured warehouses guarantees supply for a manageable period of time at the very least. This is an exemplary service we offer that has a clear benefit for our customers and which is very worthwhile. We thus underline how STEMMER IMAGING gives its customers a real competitive advantage with the services it offers. Expanding the range of these and other added-value services also helped drive the increase in our gross margin to 38.7 per cent in the first half of the year, again highlighting just how much customers appreciate this added value.

The first half of the year continued to be shaped by work to streamline processes within the organisation, further automate them and focus together on our operational and strategically important topics. It is through this work that we are able to find ways to increase efficiency, a fact ultimately reflected in the quality of our results.

Taken together, all these factors mean that we are able to achieve our mid-term target of having an unadjusted EBITDA margin of over 10 per cent for the first time in the period from January to June 2021. We see this as confirmation that the clear focus on implementing our strategic roadmap is bearing fruit, encouraging us to remain true to this course of action. We have been able to respond with flexibility to the challenges faced over the past few months and will continue to do so in the future. The ever-growing reach of digitalisation and the constant focus on sustainability matters have been added as focal points that we consider essential in order to be able to successfully meet the challenges of the future. The growing level of buoyancy in the market fills us with hope and motivates us as a company to take advantage of the many opportunities that arise in the context of digitalisation and automation with the help of machine vision technology.

On behalf of the Executive Board and the entire management team, we would like to thank each and every one of our employees for their outstanding commitment in these challenging times.

Let us all look ahead to the future with optimism.

Arne Dehn Uwe Kemm

Chief Executive Officer Chief Operating Officer

STEMMER IMAGING ON THE CAPITAL MARKET

CAPITAL MARKET ENVIRONMENT

Developments on national and international stock exchanges in the first half of 2021 continued to be guided by the global reach of the Covid-19 pandemic, nevertheless, stock markets performed much better than in the same period of 2020. Europe's economy experienced a noticeable recovery, in spite of a fresh wave of lockdowns and virus mutations coming in from abroad, thanks to the growing number of people of getting vaccinated.

The DAX rose by 13.2 per cent at the end of the reporting period compared to the closing price on 30 December 2020 (13,718.78 points). The DAX started the first half of the 2021 trading year on 4 January 2021 at 13,890.22 points and closed the reporting period on 30 June at 15,531.04 points. STEMMER IMAGING's comparable technology stock index (TecDAX) increased by 10.9 per cent in the reporting period.

SHARE INFORMATION

Exchange market	Xetra, Frankfurt, Berlin, Düsseldorf, Hamburg, Munich, Stuttgart, Tradegate
Symbol	S9I
Total number of shares	6,500,000
Share capital	EUR 6,500,000
ISIN	DE000A2G9MZ9
WKN	A2G9MZ
Market segment	Regulated Market
Transparency level	Prime Standard
Designated sponsor	Hauck & Aufhäuser Privatbankiers AG

The STEMMER IMAGING AG share opened at a price of EUR 20.50 on 4 January 2021 and closed at EUR 26.70 on 30 June 2021. This corresponds to a rise of 26.7 per cent compared to the closing price of EUR 21.08 on 30 December 2020. The high for the reporting period was EUR 29.10 on 14 June 2021, while the low came in at EUR 19.50 on 7 January 2021. Based on the closing price of EUR 26.70 on 30 June 2021, STEMMER IMAGING AG's market capitalisation was EUR 173.55 million with a total of 6,500,000 shares issued (30 December 2020: EUR 137.0 million with the same number of shares and a price of EUR 21.08 (all figures based on Xetra prices).

SHARE: PRICE PERFORMANCE AND TRADING VOLUME

The average daily trading volume was 5,004 shares in the first half of 2021, compared to 8,898 shares in the first half of 2020.

SHARE PERFORMANCE

Opening price	4 January 2021	EUR 20.50
Low	7 January 2021	EUR 19.50
High	14 June 2021	EUR 29.10
Closing price	30 June 2021	EUR 26.70
Market capitalisation	As of 30 June 2021	EUR 173.55 million

ANNUAL GENERAL MEETING

On 9 June 2021, the Executive Board of STEMMER IMAGING AG informed the shareholders at the second virtual Annual General Meeting about the course of the 2020 fiscal year and responded to their questions. When the vote was taken, 83.4 per cent of the share capital was represented. The shareholders expressed their satisfaction with the company's development and adopted the proposed resolutions of the Executive Board and Supervisory Board by a large majority. This included a resolution on the appropriation of retained profit. A dividend of EUR 0.50 per eligible share was paid out to shareholders for the 2020 fiscal year.

The results of the votes taken at the Annual General Meeting may be viewed at www.stemmer-imaging.com/Hauptversammlung.

SHAREHOLDER STRUCTURE

The company has a balance between free float and the majority holding of a strategic anchor investor. As of 30 June, 24.0 per cent of the shares were in free float. The largest shareholder of STEMMER IMAGING AG is PRIMEPULSE SE, which holds 59.0 per cent of the voting rights. The Management held 9.0 per cent of the shares as at the same date.

ANALYST RESEARCH

The shares of STEMMER IMAGING AG have been listed in the Prime Standard of the Frankfurt Stock Exchange since 10 May 2019 and are regularly evaluated by qualified securities analysts. The share is currently covered by Hauck & Aufhäuser Privatbankiers, Warburg Research and Berenberg Bank. All three analysts take a positive view of the medium and long-term potential of STEMMER IMAGING AG and have largely made a Buy recommendation with an average price target of EUR 34.34, as shown in the current analyst recommendations for the STEMMER IMAGING share as of 22 July 2021.

ANALYST EVALUATIONS

Publisher	Date	Recommendation	Target price
Hauck & Aufhäuser Research	25/06/2021	Buy	EUR 38.00
Berenberg Research	14/05/2021	Hold	EUR 29.00
Warburg Research	22/07/2021	Buy	EUR 36.00

More detailed information is available to potential investors at www.stemmer-imaging.com under Investor Relations/Share.

INVESTOR RELATIONS ACTIVITIES

During the reporting period, the Executive Board informed investores and analysts among others about the performance of STEMMER IMAGING AG at the virtual German Spring Conference.

ACTIVITIES

22 February 2021	Publication of the preliminary figures for the 2020 fiscal year
2 March 2021	Berenberg Industrial Technologies Conference, virtual
24 March 2021	Publication of the consolidated financial statements for the 2020 fiscal year
11 May 2021	Publication of Q1/3M 2021 interim report
17–19 May 2021	German Spring Conference, virtual
9 June 2021	Virtual Annual General Meeting

In addition, the Executive Board maintained close contact with investors, analysts and the financial and business press. The Investor Relations section of the STEMMER IMAGING AG website (stemmer-imaging.com/investors) – provides a comprehensive insight into the company's performance, the latest news and a summary of upcoming events.

Hauck & Aufhäuser Privatbankiers AG acted as a designated sponsor in the first half of the fiscal year and ensured the continuous tradability of the STEMMER IMAGING share by posting binding buy and sell offers.

The financial calendar with all dates until the end of the year can be found on page 30.

CONSOLIDATED INTERIM MANAGEMENT REPORT

ECONOMIC REPORT

GENERAL ECONOMIC ENVIRONMENT

The global economic recovery under way since the middle of last year continued apace in the first half of 2021. The IMF currently forecasts global economic growth of 6 per cent for 2021. Reasons for this include additional monetary policy support being provided in a number of large economies, the anticipated recovery as a result of more people being vaccinated, and the ongoing adjustment of economic activity.

The economy performed better in industrialised countries, with the slowdown being more noticeable in the emerging markets.

According to its recently published 2021 summer forecast, the European Commission expects business activity in the EU and the euro area to increase by 4.8 per cent, and 3.6 per cent in Germany.

The expectation is that rising energy and commodity prices, production bottlenecks brought on by capacity problems and the shortages being experienced for numerous construction components and commodities paired with strong demand at home and abroad this year will fuel inflation. This is why inflation in the EU is now forecast to reach an average of 2.2 per cent this year, falling slightly to 1.9 per cent for the euro area in 2021.

While Germany's economic performance in the first quarter of 2021 was less-than-impressive, early signs of a recovery could be seen in the retail, hospitality and tourism industries, as well as stabilisation in the manufacturing industry during April, May and June. However, supply shortages were largely responsible for dampening expectations, causing production problems in the construction, engineering and processing industries.

SECTOR DEVELOPMENT

2020 was overall a negative year for the robotics and automation industry, particularly in light of the coronavirus pandemic, despite the fact that the decline in revenue both at home and abroad was less severe than originally expected, coming in at minus 18 per cent.

Based on the current industry data presented by the German Mechanical Engineering Industry Association (VDMA) for the first six months of the current year, the robotics and automation sector saw market growth of 6 per cent.

As regards the industrial machine vision industry, the VDMA expects market growth for Germany for machine vision to reach 1 per cent and an increase in order intake of 19 per cent for the first six months of 2021. The VDMA anticipates growth of 2 per cent and a deline in order intake of minus 3 per cent for the European market.

Note: The statements of the German Mechanical Engineering Industry Association still contain estimates at the time of publication and are merely preliminary figures.

NET ASSETS AND FINANCIAL POSITION

The total assets of the STEMMER IMAGING Group amounted to EUR 97.62 million as at 30 June 2021, a slight increase compared to 31 December 2020 (EUR 96.68 million).

Non-current assets went down to EUR 32.68 million as at 30 June 2021 (31 December 2020: EUR 34.26 million). The decrease was caused by the depreciation and impairment of property, plant and equipment and intangible assets, including the value of leases, in accordance with IFRS 16. These were only countered by a low level of investment.

Trade receivables rose from EUR 15.11 million to EUR 18.12 million as a result of the positive development of revenue.

Inventories were also built up in the course of the second quarter of the 2021 fiscal year to EUR 12.54 million (31 December 2020: EUR 11.05 million) with a view to counteracting potential supply shortages.

Equity totalled EUR 65.20 million as at 30 June 2021 (31 December 2020: EUR 64.08 million). The equity ratio came to 66.8 per cent, meaning that it has risen despite dividends being paid out in the reporting period (31 December 2020: 66.3 per cent).

Non-current liabilities came to EUR 8.61 million as at 30 June 2021 (31 December 2020: EUR 10.01 million). The decline is attributable to the fact that a repayment of EUR 1.00 million was made to the long-term bank loan and that non-current liabilities related to finance leases changed by EUR –0.28 million.

Current liabilities of EUR 22.60 million increased to EUR 23.80 million, primarily due to the increase in current trade payables of EUR 1.27 million.

Operating cash flow came to EUR 2.65 million in the first half of the 2021 fiscal year (1 January to 30 June 2020: EUR 4.04 million). The increase in working capital is largely due to the additional revenue generated as part of the economic recovery and the increase in inventories made by building up stocks to ward off potential supply shortages in the future. All this means that cash flow from operating activities did not develop as positively as it did in the same period of the previous year.

Cash flow from investing activities came to EUR –19.72 million (1 January to 30 June 2020: EUR –0.27 million), a fact primarily attributable to the current loan made to PRIMEPULSE SE (EUR 19.65 million).

Cash flow from financing activities was affected by paying out EUR 3.25 million in dividends to shareholders (1 January to 30 June 2020: EUR 0 million), making repayments on the bank loan and on finance lease liabilities amounting to EUR 1.91 million (1 January to 30 June 2020: EUR 2.07 million). Net debt came to EUR –6.06 million (incl. short-term loan to PRIMEPULSE SE in the amount of EUR 19.65 million).

RESULTS OF OPERATIONS

The second quarter of 2021 was clearly characterised by the path of recovery seen in the second half of 2020 and the first quarter of this fiscal year, and thus by an ever-growing level of economic activity. The gathering pace of economic growth was therefore a feature of the entire first half of the year, resulting in strong business figures.

At EUR 47.22 million, the record level of order intake experienced in the second quarter of 2021 was 32.6 per cent above that of the previous quarter. The figures for the first half of the year also rose strongly, coming in at EUR 82.83 million (1 January to 30 June 2020: EUR 53.20 million).

The revenue generated by STEMMER IMAGING in the second quarter of 2021 was again up on the previous quarter (1 January to 31 March 2021: EUR 31.73 million) by 4.0 per cent, rising by 43.5 per cent to EUR 32.98 million compared to 2020 (1 April to 30 June 2020: EUR 22.98 million). As a result, in a six-month comparison revenue was up significantly (23.9 per cent) over the first half of 2020 (1 January to 30 June 2020: EUR 52.21 million) at EUR 64.71 million.

Thanks to the increasing business recovery, nearly all subsidiaries saw revenue up on the first half of 2020. Of particular note in the second quarter of 2021 is the revenue development in Germany, France and the Iberica and Nordics regions. Brexit resulted in revenue shifts at the start of the year in particular, yet it was possible to compensate for this development in the course of the first half of the year.

The machine vision industry was not spared the difficulties being faced by the global supply situation with the persistent shortage of raw materials and preliminary products. Having already been felt in the first quarter, shortages in the procurement of electronic components and materials intensified throughout the first half of the year, preventing an even robuster upswing and causing delivery delays in some cases during the first half of the year. Appropriate measures were taken in procurement, warehousing and order processing to offset this effect.

At 38.2 per cent, the gross profit margin in the second quarter of 2021 was slightly below the level of the previous quarter (39.2 per cent), showing signs of a strong upward trend compared to the second quarter of 2020 (35.9 per cent) and the second half of 2020 (37.1 per cent). The gross profit margin benefited here from the additional revenue generated by value-added services, an altered revenue structure in favour of high-margin regions and more favourable market conditions generally. There were no major effects pushing costs up to be seen in the first half of the year as a result of the global supply shortages, and any that were incurred could be passed on to the market. For the second half of the year, the company is counting on corresponding price increases to counter the pressure on margins.

Personnel expenses came to EUR 13.01 million in the first six months of the 2021 fiscal year (1 January to 30 June 2020: EUR 11.86 million). The year-on-year increase is attributable in particular to the fact that temporary cost-saving measures were introduced in the previous year in response to the first wave of the Covid-19 pandemic and the effect of employees voluntarily waiving their pay was felt. Despite the rise in personnel expenses in absolute terms, the personnel expense ratio improved to 20.1 per cent thanks to the sharp rise in revenue (1 January to 30 June 2020: 22.7 per cent). Personnel expenses in the previous year's period include government grants provided to support short-time work measures and other similar government grants.

Other operating expenses amounted to EUR 5.37 million (1 January to 30 June 2020: EUR 6.16 million). The present year remains characterised by a low level of activity for travel and trade fair expenses, as well as a generally low cost level caused by market conditions and sound cost management. The foreign exchange result in particular saw a yearon-year improvement to EUR 0.32 million (1 January to 30 June 2020: EUR –0.80 million) thanks to the Mexican peso and the Brazilian real experiencing a stable exchange rate development. Expenses in the first half of 2021 also contain, as already reported in the supplementary report of the Annual Report 2020, one-time expenses amounting to EUR 1.04 million.

EBITDA came to EUR 7.91 million in the first half of the 2021 fiscal year (EBITDA margin: 12.2 per cent), a significant increase compared to the figure from the previous year of EUR 2.30 million (EBITDA margin: 4.4 per cent) and within the mid-term target set of having an EBITDA margin >10 per cent. The primary factors behind the substantial year-on-year improvement include, as already explained, the sharp rise in revenue, the considerable improvement in the gross margin and the stable cost situation. Operating earnings (EBIT) came to EUR 5.91 million for the first six months of the year (1 January to 30 June 2020: EUR – 4.29 million). The EBIT margin went up from – 8.2 per cent in the previous year to 9.1 per cent. The financial result came to EUR –0.02 million in the first half of 2021 and mostly comprised income from the loan to PRIMEPULSE SE and expenses for the loan taken out with UniCredit Bank AG. The consolidated net income of the STEMMER IMAGING Group came to EUR 4.44 million for the first half of the 2021 fiscal year (1 January to 30 June 2020: EUR –5.32 million).

RISK AND OPPORTUNITIES REPORT

The risk and opportunities management system in place at STEMMER IMAGING concentrates on detecting and evaluating on an ongoing basis potential risks and opportunities facing the company.

Material risks that are currently relevant for STEMMER IMAGING comprise both market and industry-related risks as well as business-related risks and those linked to the Covid-19 pandemic.

Opportunities can be found in the fields of Products & Markets, Acquisitions & Mergers, Processes & Technology and Compliance, as well as in connection with the Covid-19 pandemic.

Keeping the risk matrix up-to-date is an integral part of corporate governance, as this matrix is used to detect, analyse and evaluate risks. The result of updating this matrix on a regular basis is that new risks and opportunities can be detected, while at the same time making it possible to derive risk avoidance measures as well as ways of tapping new potential.

No new risks of any significance were detected in the past reporting period which go beyond the scope of the risks already described in the 2020 Annual Report. Some modifications were, however, made to the risk system to reflect changes in how risks are evaluated.

There were material changes here in the areas of supplier dependency & product risks, risks attributable to the skills shortage and those attributable to the Covid-19 pandemic.

Shortages in the supply of electronic components and preliminary products becoming evident to a growing extent in the course of the first quarter of 2021 meant that the risk evaluation for supplier dependency & product risks was modified, with other immediate measures being taken to minimise risks, such as those to proactively manage shortages and for active escalation management.

The way in which risks attributable to skills shortage are evaluated was changed to reflect the growing level of volatility on the labour market. The aim of STEMMER IMAGING is to be an attractive employer, to train key employees and keep them in the company over the long term and secure the broadest base possible for the relevant know-how. It is to this end that established measures such as management and specialist training courses, structured succession planning and the company's employer branding programme should be further pursued and expanded.

The business-related risks have been expanded in the area of compliance to include the aspect of cybercrime. STEMMER IMAGING sees, for example, various methods of attack on business secrets and data security with the aim of causing (financial) damage to the company as a current and relevant risk. Current risk prevention measures include the expansion of internal controls, the introduction of media changes in approval processes and regular employee training.

The risk of negative effects caused by the Covid-19 pandemic is believed to be lower now than it was the case when the 2020 Annual Report was prepared. Although there is still uncertainty surrounding its future progression, STEMMER IMAGING takes the view that the risk is much lower than in the previous year. The reasons for this are the vaccinerelated recovery and normalisation of economic activity.

Other risks that STEMMER IMAGING is currently unaware of or those that are currently deemed to be of minor significance may also have an impact on the company's future business performance. No risks have been detected at present that pose an existential threat to the company, either on their own or in combination with other risks.

STEMMER IMAGING believes that, aside from the risks, there are many opportunities to achieve a sustainably positive business performance. As it is the case with the change in how risks are evaluated, the scope of potential opportunities has changed compared with the information presented in the 2020 Annual Report.

By reacting swiftly to the looming shortage of supply of certain components, STEMMER IMAGING sees a golden opportunity to boost and build on its market position and improve its ability to compete with measures such as timely procurement, proactive supplier management and alternative sourcing.

Opportunities related to the measures put in place to deal with the growing skills shortage might include having better access to suitable candidates on the market and securing the long-term loyalty of employees. Setting priorities by modifying the way in which risks are evaluated opens the door to improving the focus on opportunities to attract and retain employees.

The success of STEMMER IMAGING's future business performance is predicated on taking full advantage of potential opportunities. The potential opportunities have been presented in a way that reflects the company's current opinion and are subject to change on an ongoing basis, which means that as yet unidentified opportunities could become more significant in a short space of time. This makes identifying and evaluating current potential opportunities a key element in efforts to harness these.

REPORT ON EXPECTED DEVELOPMENTS

FUTURE ECONOMIC AND SECTOR DEVELOPMENT

According to the OECD, the global economy is currently in the process of recovering from the impact of the coronavirus pandemic, though the extent of this recovery differs from country to country. While highly developed economies have had success in rolling the vaccine out to their respective populations, this very strategy represents a major problem in many emerging markets. The assumption is that current and future outbreaks of the virus will force weaker economies to maintain strict protective measures for the sake of public health.

The OECD expects the recovery to pick up pace during the second half of the year in particular, and that the global economy will grow. It has calculated that global economic performance in the present year will increase by 5.8 per cent and by 4.5 per cent in 2022. In this scenario, the GDP of the euro area is expected to rise by 4.3 per cent. The experts expect US economic output to increase by 7.0 per cent.

According to the VDMA Robotics + Automation Association (VDMA R+A), the robotics and automation sector in Germany is also back on track for growth, having close ties to the industrial machine vision business. Pent-up demand is the driving factor here, with investments having been postponed during the pandemic now filling order books, coupled with societal trends towards climate neutrality and the conservation of resources creating new business. Putting the brakes on this positive development are the supply shortages being experienced for key components. VDMA R+A now expects revenue growth of 11.0 per cent for 2021, an increase over the original assumption of 6.0 per cent for global growth.

FORECAST FOR THE STEMMER IMAGING GROUP

The positive development seen in the second half of 2020 and the first quarter of 2021 continued in the second quarter of the year.

Despite the worsening global supply situation seen in the second quarter, the company was able to capitalise on robustly positive market trends and the fact that it had successfully shifted its strategic position to focus on value-added services in industrialised and non-industrialised end markets. Earnings improved thanks both to the above-average development in revenue and gross margin and to the combination of low costs due to market conditions and good cost management.

Coupled with the positive figures achieved in the first half of the year, STEMMER IMAGING believes it is in a strong position to navigate the second half the year with a record amount of order intake totalling EUR 82.8 million and a book-to-bill ratio of 1.3.

On the basis of the half-year figures and current estimates for the second half of the year, the Executive Board has increased its forecast for the 2021 fiscal year. The Executive Board now forecasts revenue of between EUR 123 million and EUR 131 million for the full year (previous forecast: upper end of EUR 111 million to EUR 121 million) and an EBITDA of between EUR 12.2 million and EUR 15.4 million (previous forecast: upper end of EUR 7.8 million to EUR 10.2 million).

The forecast is generally based on the assumptions that there will be no further lockdowns causing economic restrictions as the Covid-19 pandemic progresses and that the current supply situation, which is already challenging, does not get worse. The forecast ranges have factored in customers and suppliers being positively and negatively affected to a certain extent.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2021

ASSETS in KEUR

	30/06/2021	31/12/2020
Non-current assets
Property, plant and equipment	4,984	5,894
Goodwill	19,434	19,418
Other intangible assets	7,821	8,543
Other investment securities	27	36
Other financial assets	60	43
Deferred tax assets	356	325
Total Non-current assets	32,682	34,259
Current assets
Inventories	12,541	11,048
Trade receivables	18,117	15,114
Contract assets	26	95
Receivables from affiliated companies	19,654	0
Other financial assets	72	195
Income tax receivables	495	385
Other assets and prepaid expenses	1,472	870
Cash and cash equivalents	12,560	34,718
Total current assets	64,937	62,425
Total assets	97,619	96,684

30/06/2021 31/12/2020

Subscribed capital	6,500	6,500
Capital reserves	47,495	47,495
Revenue reserves	11,207	10,084
Total equity	65,202	64,079
Non-current liabilities
Non-current loans	4,502	5,503
Provisions for pensions and similar obligations	42	42
Other financial liabilities	2,078	2,354
Other liabilities	263	250
Other provisions	199	193
Deferred tax liabilities	1,529	1,667
Total non-current liabilities	8,613	10,009
Current liabilities
Current loans	2,003	2,002
Other provisions	381	230
Trade payables	10,909	9,635
Contract liabilities and advance payments received on orders	1,192	2,222
Liabilities to affiliated companies	16	35
Liabilities to associated companies	0	50
Other financial liabilities	1,772	2,159
Income tax liabilities	1,804	1,288
Other liabilities	5,727	4,975
Total current liabilities	23,804	22,596
Total liabilities	32,417	32,605
Total equity and liabilities	97,619	96,684

EQUITY AND LIABILITIES in KEUR

Capital and reserves

CONSOLIDATED INCOME STATEMENT

DEVELOPMENT FROM 1 JANUARY 2021 TO 30 JUNE 2021 in KEUR

	01/01–30/06/2021	01/01–30/06/2020	01/04–30/06/2021	01/04–30/06/2020
Revenue	64,708	52,212	32,981	22,977
Cost of materials	–39,695	–33,160	–20,391	–14,720
Gross profit	25,013	19,052	12,590	8,257
Other operating income	1,278	1,265	405	575
Personnel expenses	–13,009	–11,857	–6,796	–5,018
Other operating expenses	–5,369	–6,163	–1,988	–2,526
EBITDA	7,913	2,297	4,211	1,288
Depreciation and impairment of property, plant and equipment	–1,268	–1,451	–626	–715
EBITA	6,645	846	3,585	573
Amortisation of intangible assets	–731	–5,134	–364	–4,738
Operating earnings (EBIT)	5,914	–4,288	3,221	–4,165
Loss from investments accounted for using the equity method	–90	–600	–90	–595
Finance income	121	5	77	1
Finance costs	–46	–58	–25	32
Profit before income taxes	5,899	–4,941	3,183	–4,726
Taxes on income	–1,462	–381	–746	–223
Consolidated net income	4,437	–5,322	2,437	–4,949
Of which:
Shareholders of the parent company	4,437	–5,322	2,437	–4,949
Number of shares (weighted average)	6,500,000	6,500,000	6,500,000	6,500,000
Earnings per share in EUR (diluted and basic)	0.68	–0.82	0.37	–0.76

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

DEVELOPMENT FROM 1 JANUARY 2021 TO 30 JUNE 2021 in KEUR

	01/01–30/06/2021	01/01–30/06/2020
Consolidatd net income	4,437	–5,322
Other comprehensive income
Items that will be reclassified to profit or loss in future under certain conditions
Exchange differences that arose during the reporting period	–64	217
Other comprehensive income after income taxes	–64	217
Total comprehensive income	4,373	–5,105
Of which:
Shareholders of the parent company	4,373	–5,105

CONSOLIDATED STATEMENT OF CASH FLOWS

FROM 1 JANUARY 2021 TO 30 JUNE 2021

in KEUR

	01/01–30/06/2021	01/01–30/06/2020	01/04–30/06/2021	01/04–30/06/2020
Cash flows from operating activities
Consolidated net income	4,437	–5,322	2,437	–4,949
Income tax expense recognised in profit or loss	1,462	381	746	223
Finance costs/income recognised in profit or loss	–75	53	–52	–32
Amortisation and depreciation of intangible assets, property, plant and equipment, and investment securities	1,999	7,185	990	6,052
Increase (+)/decrease (–) in provisions	211	4	128	12
Other non-cash expenses/income	–133	–342	–80	–331
Gain/loss on disposal of property, plant and equipment and intangible assets	0	–2	0	0
Increase (–)/decrease (+) in inventories, trade receivables and other assets	–4,845	2,449	–1,575	4,785
Increase (+)/decrease (–) in liabilities and other liabilities	694	–1,174	–171	–3,994
Interest received	121	5	77	1
Cash flows from operating activities	3,871	3,237	2,500	1,767
Income taxes paid	–1,225	802	–766	1,270
Net cash flows from operating activities	2,646	4,039	1,734	3,037
Cash flows from investing activities
Payments for intangible assets	–10	–33	–10	–11
Proceeds from disposals of property, plant and equipment	74	64	6	47
Payments for investments in property, plant and equipment	–118	–299	–83	–166
Proceeds from disposal of fiancial assets	12	0	–2	0
Payments for investments in financial assets	–19	0	–14	0
Payments for financial investments as part of short-term treasury management	–19,654	0	81	0
Net cash flows used in investing activities	–19,715	–268	–22	–130

FROM 1 JANUARY 2021 TO 30 JUNE 2021 in KEUR

	01/01–30/06/2021	01/01–30/06/2020	01/04–30/06/2021	01/04–30/06/2020
Cash flows from financing activities
Repayment of loans	–1,907	–2,065	–923	–1,024
Proceeds from grants received	83	274	42	263
Dividends paid to shareholders of the parent conpany	–1,918	0	–1,918	0
Dividends paid on free float shares	–1,332	0	–1,332	0
Interest paid	–46	–52	–25	34
Net cash flows used in financing activities	–5,120	–1,843	–4,156	–727
Net decrease/-increase in cash and cash equivalents	–22,189	1,927	–2,444	2,180
Cash and cash equivalents at the beginning of the fiscal year	34,718	27,974	14,969	27,381
Changes in cash due to exchange rate movements and remeasure ment	31	–286	35	55
Cash and cash equivalents at the end of the fiscal year	12,560	29,616	12,560	29,616
Of which cash in hand and bank balances	12,560	29,616	12,560	29,616

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FROM 1 JANUARY 2020 TO 30 JUNE 2020 in KEUR

			Revenue reserves
	Subscribed capital	Capital reserves	Reserve for actuarial gains/losses	Currency translation reserve	Other revenue reserve	Total	Total
As of 1 January 2020	6,500	47,495	10	–81	13,289	13,218	67,213
Consolidated net income	0	0	0	0	–5,322	–5,322	–5,322
Currency adjustments	0	0	0	217	0	217	217
As of 30 June 2020	6,500	47,495	10	136	7,967	8,113	62,108

FROM 1 JANUARY 2021 TO 30 JUNE 2021

in KEUR

	Subscribed capital		Revenue reserves
		Capital reserves	Reserve for actuarial gains/losses	Currency translation reserve	Other revenue reserve	Total	Total
As of 1 January 2021	6,500	47,495	8	110	9,966	10,084	64,079
Consolidated net income	0	0	0	0	4,437	4,437	4,437
Distributions to shareholders of the parent company	0	0	0	0	–1,918	–1,918	–1,918
Distributions to shares in free float	0	0	0	0	–1,332	–1,332	–1,332
Currency adjustments	0	0	0	–64	0	–64	–64
As of 30 June 2021	6,500	47,495	8	46	11,153	11,207	65,202

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2021

BASIS FOR PREPARI NG TH E HALF-YEARLY FI NANCIAL REPORT

The consolidated interim financial statements ending 30 June 2021 have been prepared in accordance with the International Financial Reporting Standards (IFRS, as adopted by the EU) applicable on the reporting date and the additional requirements of German commercial law.

This condensed consolidated interim financial report has been prepared in accordance with the provisions set forth under IAS 34. The interim financial statements were prepared in euro.

The interim financial report does not include all of the disclosures normally contained in the financial statements for a full fiscal year. This means that this interim financial report should be read together with the annual financial statements for the fiscal year ending 31 December 2020 and all other public statements issued by STEMMER IMAGING during the reporting period.

The accounting policies used here are the same as those used in the prior fiscal year and the associated interim financial reporting period, along with new and amended standards which were adopted for the first time as explained below.

The consolidated statement of financial position as at 30 June 2021, the consolidated income statement, the consolidated statement of comprehensive income and the consolidated statement of cash flows for the reporting periods ending 30 June 2021 and 2020 and the condensed notes to the consolidated financial statements have not been audited or subjected to an auditor's review.

APPLICATION OF NEW ACCOUNTING STANDARDS

The amendments stemming from the "Interest Rate Benchmark Reform – Phase 2 (Changes to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)" to be applied from 1 January 2021 are of minor significance for accounting within the STEMMER IMAGING Group.

STEMMER IMAGING did not make use of the option extended by the IASB to simplify the accounting for leases in accordance with IFRS 16 in the reporting period from 1 January to 30 June 2021. The lessor did not make any rent concessions.

A number of new or amended standards took effect in the current reporting period. These did not, however, have an impact on the Group's accounting policies or result in the need to make any retroactive adjustments.

KEY CHANGES IN THE CURRENT REPORTING PERIOD

SIGNIFICANT EVENTS AND TRANSACTIONS

In March, the Executive Board became aware that funds of the Dutch subsidiary totalling EUR 1.04 million had been misdirected with unknown whereabouts. The case is currently being analysed and can therefore not yet be assessed conclusively. The expenses from the loss of funds have been fully recognised in the earnings for the first half of 2021. Further expenses directly related to the incident are not expected.

The STEMMER IMAGING Group includes a subsidiary based in the United Kingdom. The changes associated with Brexit are included in the statement of financial position and the income statement in the first half of the 2021 fiscal year, but are not explained due to the negligible size of the amount.

RESOLUTION OF THE ANNUAL GENERAL MEETING ON 9 JUNE 2021

At the virtual Annual General Meeting of STEMMER IMAGING AG on 9 June 2021, a resolution was passed to use the retained profit for the 2020 fiscal year of EUR 10,042,232.95 to pay a dividend of EUR 0.50 on the 6,500,000 eligible no-par value shares (EUR 3,250,000.00) and to carry forward the remaining amount of EUR 6,792,232.95 to new account.

The dividend was paid on 14 June 2021 after deducting 25 per cent capital gains tax and 5.5 per cent solidarity surcharge on the capital gains tax (total deduction 26.375 per cent) and, where applicable, church tax on the capital gains tax by the credit institutions involved in handling the payment of the dividends.

NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

INTANGIBLE ASSETS

The carrying amount of intangible assets on the reporting date is calculated as follows:

in KEUR	30/06/2021	31/12/2020
Goodwill	19,434	19,418
Concessions, property rights and patents	1,096	1,252
Customer base	4,915	5,341
Order backlog	27	55
Brand	1,094	1,137
Technology	689	758
Total	27,255	27,961

In the reporting period from 1 January to 30 June 2021, new intangible assets were acquired with a value of minor significance. The change is almost entirely attributable to amortisation in the reporting period and adjustments due to the measurement of goodwill denominated in a foreign currency.

As at the end of 30 June 2021, there was no indication of a need for an impairment charge to be applied to the Group's goodwill. This is in contrast to the same period last year (1 January to 30 June 2020), in which an impairment loss of KEUR 4,349 was identified for INFAIMON S. L.U. and charged accordingly as a result of a triggering event in accordance with IAS 36 being detected and the subsequent impairment test.

INVENTORIES

Inventories are composed as follows:

in KEUR	30/06/2021	31/12/2020
Raw materials and supplies	203	203
Merchandise	11,204	10,552
Advance payments	1,134	293
Total	12,541	11,048

In connection with inventories, KEUR 39,695 (1 January to 31 December 2020: KEUR 66,500) was expensed as cost of materials during the first half of the 2021 fiscal year.

The total cost of inventories recognised as expenses in the cost of materials includes write-downs to the net realisable value of KEUR 190 (1 January to 31 December 2020: KEUR 784) due to overreach, obsolescence, reduced marketability or subsequent costs.

Supply shortages mean that the STEMMER IMAGING Group has been forced to stock up inventories and make advance payments on goods in order to satisfy order intake.

The inventories are expected to be used within twelve months.

TRADE RECEIVABLES

in KEUR	30/06/2021	31/12/2020
Trade receivables	19,007	15,831
Impairment losses	–890	–717
Total	18,117	15,114

The Group companies – with the exception of the INFAIMON Group – generally give payment terms of between 30 and 45 days. The Group does not charge interest to the customer for this period of time.

Late payment interest will be subsequently charged on the outstanding amount in individual cases and in accordance with customary business practices in the respective country.

For trade receivables, valuation allowances are made using the expected loss method in accordance with IFRS 9.

Impairments for trade receivables developed as follows:

in KEUR	01/01–30/06/2021	01/01–31/12/2020
As of the beginning of the fiscal year	–717	– 414
Additions	–283	–548
Utilisation	24	42
Reversals	86	197
Currency adjustments, other changes	0	6
Total	–890	–717

Please refer to the consolidated financial statements as at 31 December 2020, section B, note 13 for an explanation of how the impairment is measured.

CASH AND CASH EQUIVALENTS

in KEUR	30/06/2021	31/12/2020
Cash and cash equivalents	12,570	34,746
Impairment losses	–10	–28
Total	12,560	34,718

The decline in this item as at 30 June 2021 is largely due to the issuing of a loan to PRIMEPULSE SE in the amount of KEUR 19,65.

For cash and cash equivalents, valuation allowances are made using the expected loss method in accordance with IFRS 9.

The following table shows the development of the valuation allowance for cash and cash equivalents:

in KEUR	01/01–30/06/2021	01/01–31/12/2020
As of the beginning of the fiscal year	–28	0
Additions	0	–28
Utilisation	0	0
Reversals	18	0
Currency adjustments, other changes	0	0
Total	–10	–28

How impairments are calculated is explained in the consolidated financial statements as at 31 December 2020, section B, note 13.

DIVIDENDS

in KEUR	01/01–30/06/2021	01/01–31/06/2020
Dividends paid in the six month	3,250	0

FINANCIAL INSTRUMENTS

The following table reconciles the financial instrument items from the statement of financial position as at 30 June 2021 with the classes and measurement categories of IFRS 9. The aggregated carrying amounts per measurement category and the fair values for each class are also presented.

in KEUR			Measurement in accordance with IFRS 9
	Category under IFRS 9	Carrying amount 30/06/2021	Amortised cost	Fair value through other comprehensive income	Fair value through profit or loss	Measurement in accordance with IFRS 9	Of which assets and liabilities under IFRS 16	Fair value 30/06/2021
Assets
Trade receivables	Amortised cost	18,117	18,117	0	0	18,117	0	18,117
Receivables from affiliated companies	Amortised cost	19,654	19,654	0	0	19,654	0	19,654
Other investment securities	FVTPL	27	0	0	27	27	0	27
Other financial assets	Amortised cost	132	132	0	0	132	0	132
Cash and cash equivalents	Amortised cost	12,560	12,560	0	0	12,560	0	12,560
Equity and liabilities
Current and non-current loans	Amortised cost	6,505	6,505	0	0	6,505	0	6,505
Trade payables	Amortised cost	10,909	10,909	0	0	10,909	0	10,909
Liabilities to affiliated companies	Amortised cost	16	16	0	0	16	0	16
Other financial obligations	Amortised cost	1,084	1,084	0	0	1,084	0	1,084
Liabilities from leases	n.a.	2,766	0	0	0	0	2,766	2,766

The following table reconciles the financial instrument items from the statement of financial position as at 31 December 2020 with the classes and measurement categories of IFRS 9. The aggregated carrying amounts per measurement category and the fair values for each class are also presented.

in KEUR			Measurement in accordance with IFRS 9
	Category under IFRS 9	Carrying amount 31/12/2020	Amortised cost	Fair value through other comprehensive income	Fair value through profit or loss	Measurement in accordance with IFRS 9	Of which assets and liabilities under IFRS 16	Fair value 31/12/2020
Assets
Trade receivables	Amortised cost	15,114	15,114	0	0	15,114	0	15,114
Other investment securities	FVTPL	36	0	0	36	36	0	36
Other financial assets	Amortised cost	238	238	0	0	238	0	238
Cash and cash equivalents	Amortised cost	34,718	34,718	0	0	34,718	0	34,718
Equity and liabilities
Current and non-current loans	Amortised cost	7,505	7,505	0	0	7,505	0	7,505
Trade payables	Amortised cost	9,635	9,635	0	0	9,635	0	9,635
Liabilities to associated companies	Amortised cost	50	50	0	0	50	0	50
Liabilities to affiliated companies	Amortised cost	35	35	0	0	35	0	35
Other financial obligations	Amortised cost	1,158	1,158	0	0	1,158	0	1,158
Liabilities from leases	n.a.	3,355	0	0	0	0	3,355	3,355

IFRS 13 regulates how fair value is determined along with the related disclosures in the notes. The standard does not explicitly set out in which cases the fair value must be used. Fair value is defined as the price that independent market participants would receive to sell an asset or pay to transfer a liability in an arm's length transaction at the measurement date. The assets and liabilities measured at fair value are allocated to the three levels of the fair value hierarchy in accordance with IFRS 13. The individual levels of the fair value hierarchy are defined as follows:

Level 1:

Quoted market prices in active markets for identical assets or liabilities

Level 2:

Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3:

Unobservable inputs for the asset or liability

The following table shows the fair value hierarchies of assets and liabilities measured at fair value in the statement of financial position.

in KEUR		30/06/2021			31/12/2020
Fair Value hierarchy	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Assets
Other investment securities			27			36

The fair value in Level 1 is calculated using quoted prices (unadjusted) in an active market for identical assets or liabilities to which STEMMER IMAGING has access at the reporting date.

For Level 2, fair value is determined using a discounted cash flow model based on inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. Level 3 fair values are calculated using valuation techniques that incorporate inputs that are not observable in the active market.

The assessment of whether there has been a transfer between levels of the fair value hierarchy for financial assets and liabilities carried at fair value is made at the end of each reporting period. No reclassifications were made in the past reporting period.

Equity instruments are classified as at fair value through other comprehensive income.

NOTES TO THE CONSOLIDATED INCOME STATEMENT

REVENUE

in KEUR	01/01–30/06/2021	01/01–30/06/2020
Machine vision technology	64,708	52,212

STEMMER IMAGING AG analyses revenue with customers broken down by region:

in KEUR	01/01–30/06/2021	01/01–30/06/2020
Germany	21,422	19,397
Europe	41,215	30,946
Rest of world	2,071	1,869
Total	64,708	52,212

The breakdown of revenue by region is based on the location of the customer, i. e. the place of delivery. Neither in the first half of the 2021 fiscal year nor in the 2020 fiscal year did STEMMER IMAGING generate more than 10 per cent of its total revenue with any one customer.

OTHER DISCLOSURES

RELATED PARTIES

A loan agreement for EUR 20 million was concluded with PRIMEPULSE SE on 28 January 2021. Sums of EUR 15.00 million and USD 5.50 million have been paid out so far. For the moment, the loan is limited to 31 December 2021.

For more information, please refer to the explanations in the consolidated financial statements as at 31 December 2020.

OTHER FINANCIAL OBLIGATIONS

As at the reporting date, guarantees exist in the amount of KEUR 75 (31 December 2020: KEUR 165). The risk of these guarantees being exercised is classified as low to medium.

There are other financial obligations from order commitments that fall within the scope of normal business activities. There are no significant rental and leasing obligations in the first half of the 2021 fiscal year.

EVENTS AFTER THE END OF THE REPORTING PERIOD

There were no significant events for STEMMER IMAGING after the end of the reporting period.

RESPONSIBILITY STATEMENT BY THE LEGAL REPRESENTATIVES

To the best of our knowledge, and in accordance with the applicable reporting principles, the half-year consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.

Puchheim, 11 August 2021

STEMMER IMAGING AG Executive Board

Arne Dehn Uwe Kemm Chief Executive Officer Chief Operating Officer

FINANCIAL CALENDAR ¹

Wednesday–Friday

STOCKHOLM

2021

01/–03/09

HAI B STOCKPICKER SUMMIT,

Monday–Wednesday

$$20/-22/09$$

BERENBERG & GOLDMAN SACHS GERMAN CORPORATE CON FERENCE, VIRTUAL

Wednesday 10/ 11 2021 PUBLICATION OF Q3/9M 2021 INTERIM REPORT

Monday–Wednesday 22/–24/11 2021

GERMAN EQUITY FORUM, VIRTUAL

1 Dates may change at short notice.

PUBLICATION DETAILS

STEMMER IMAGING AG

Gutenbergstraße 9–13 82178 Puchheim Germany

Tel.: +49 89 80902-0 Fax: +49 89 80902-116 de.info@stemmer-imaging.com

Executive Board: Arne Dehn (CEO), Uwe Kemm (COO) Chairman of the Supervisory Board: Klaus Weinmann Commercial register: Munich HRB 237247 VAT no.: DE 128 245 559

Company responsible: STEMMER IMAGING AG Text and editing: STEMMER IMAGING AG Conception and design: Anzinger und Rasp Kommunikation GmbH Title: MAD Werbeagentur GmbH & Co.KG

CONTACT

Arne Dehn CEO

ir@stemmer-imaging.com www.stemmer-imaging.com/investor-relations

The half-year report of STEMMER IMAGING AG is available in German and English. The German version is legally binding.

STEMMER IMAGING is an active member of: